Annual Securities Report(Report pursuant to Article 24, Paragraph 1 of the Financial Instruments and ExchangeAct)

The 72nd Fiscal Year
(From April 1, 2019 to March 31, 2020)

Marudai Food Co., Ltd.
E00458- 1 -1. This is an English translation of the Annual Securities Report (“Yukashoken
Hokokusho”) pursuant to Article 24, Paragraph 1 of the Financial Instruments andExchange Act filed via the Electronic Disclosure for Investors’ Network(“EDINET”) system as set forth in Article 27-30-2 of the same Act. The translation
includes a table of contents and pagination that are not included in the electronic
filing.
2. Appended to the back of this document are the independent auditors’ report that
was attached to the Annual Securities Report when it was filed in the
aforementioned manner, and the confirmation letter and the internal control reportthat were filed at the same time as the Annual Securities Report.

- 2 -Contents

Page

Annual Securities Report for the 72nd Fiscal Year
Cover Page ......................................................................................................................................................... 4
Part I Company Information .............................................................................................................................. 5
I. Overview of Company ................................................................................................................................ 5
1. Key financial data of reporting company ........................................................................................... 5
2. History ............................................................................................................................................... 9
3. Description of business .................................................................................................................... 10
4. Subsidiaries and other affiliated entities .......................................................................................... 12
5. Employees ........................................................................................................................................ 14
II. Overview of Business .............................................................................................................................. 15
1. Management policy, business environment, issues to address ......................................................... 15
2. Business risks ................................................................................................................................... 19
3. Management analysis of financial position, operating results and cash flows ................................. 22
4. Material contracts, etc. ..................................................................................................................... 31
5. Research and development activities ............................................................................................... 32
III. Information about Facilities ................................................................................................................... 33
1. Overview of capital expenditures..................................................................................................... 33
2. Major facilities ................................................................................................................................. 33
3. Planned addition, retirement, and other changes of facilities ........................................................... 35
IV. Information about Reporting Company .................................................................................................. 36
1. Company’s shares, etc. ..................................................................................................................... 36
2. Acquisition and disposal of treasury shares ..................................................................................... 39
3. Dividend policy ................................................................................................................................ 40
4. Corporate governance ...................................................................................................................... 42
V. Financial Information .............................................................................................................................. 69
1. Consolidated Financial Statements, etc. ........................................................................................... 70
2. Non-consolidated Financial Statements, etc. ..................................................................................113
VI. Outline of Share-Related Administration of Reporting Company ....................................................... 128
VII. Reference Information of Reporting Company .................................................................................. 129
Part II Information about Reporting Company’s Guarantor, etc. ................................................................... 130
Independent Auditors’ Report
Confirmation Letter
Internal Control Report- 3 -[Cover Page][Document Title]

Annual Securities Report[Clause of Stipulation]

Article 24, Paragraph 1 of the Financial Instruments and Exchange
Act[Place of Filing]

Director-General, Kanto Local Finance Bureau[Filing Date]

June 29, 2020

[Fiscal Year]The 72nd fiscal year (from April 1, 2019 to March 31, 2020)[Company Name]

Marudai Shokuhin Kabushiki Kaisha[Company Name in English]

Marudai Food Co., Ltd.

[Title and Name of Representative]

Toshiharu Inoue, President and Representative Director[Address of Registered Head Office]21-3 Midoricho, Takatsuki-shi, Osaka[Telephone Number]

072-661-2518[Name of Contact Person]

Nobuyoshi Katoh, Director, General Manager of Accounting Dept.

[Nearest Place of Contact]

21-3 Midoricho, Takatsuki-shi, Osaka[Telephone Number]

072-661-2518[Name of Contact Person]

Nobuyoshi Katoh, Director, General Manager of Accounting Dept.

[Place for Public Inspection]

Tokyo Branch of Marudai Food Co., Ltd.
(4-7-5 Tsukiji, Chuo-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)- 4 -Part I Company Information

I. Overview of Company

1. Key financial data
(1) Key financial data of group

Fiscal period
Period of account

68th fiscal
year

69th fiscal
year

70th fiscal
year

71st fiscal
year

72nd fiscal
year

March 2016

March 2017

March 2018

March 2019

March 2020

229,543

232,436

239,586

243,030

245,820

4,543

5,378

2,820

2,724

3,118

2,617

3,284

1,842

1,463

1,653

2,097

4,884

3,692

314

(122)

72,322

76,29076,98476,09475,056(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)(Millionsof yen)(Yen)

124,522

129,339

131,146

132,626

131,854

2,736.56

2,885.99

2,998.47

2,971.34

2,930.66

Profit per share

(Yen)

99.24

124.98

70.39

57.48

65.04

Diluted profit per share

(Yen)

–

–

–

–

–

Equity ratio

(%)

57.8

58.6

58.3

57.0

56.5

Return on equity

(%)

3.7

4.4

2.4

1.9

2.2

(Times)

22.0

19.5

36.4

32.7

30.1

(Millionsof yen)11,613

8,758

3,152

6,695

8,608

(Millionsof yen)(2,943)(5,716)(7,554)(7,534)(8,271)(Millionsof yen)(5,592)(3,672)(3,258)

255

(219)

(Millionsof yen)17,001

16,370

8,709

8,127

8,244

2,030

2,046

2,064

2,023

1,938

[3,837][3,638][3,429][3,431][3,225]Net sales
Ordinary profit
Profit attributable toowners of parent
Comprehensive income
Net assets
Total assets
Net assets per share

Price earnings ratio
Net cash provided by(used in) operating
activities
Net cash provided by(used in) investing
activities
Net cash provided by(used in) financing
activities
Cash and cash
equivalents at end of
periodNumber of employees[Average number of parttime employees notincluded in the above
numbers]- 5 -(Notes) 1.
Net sales are exclusive of consumption taxes, etc.
2. Diluted profit per share is not stated because there is no dilutive security.
3. The Company has applied the “Partial Amendments to Accounting Standard for Tax
Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) from the beginning of
the 71st fiscal year. Accordingly, key financial data for the 70th fiscal year are statedas figures to which the above accounting standard has been retrospectively applied.
4. Effective October 1, 2018, the Company conducted a one-for-five share consolidation of
its common stock. Accordingly, we have calculated net assets per share and profit per
share on the assumption that the consolidation of shares was conducted at the
beginning of the 68th fiscal year.

- 6 -(2) Key financial data of reporting company

68th fiscal
year

71st fiscal
year

72nd fiscal
year

Period of accountMarch 2016 March 2017 March 2018 March 2019
(Millions of
Net sales
158,732
161,778
166,570
164,746
yen)(Millions of
Ordinary profit
1,742
3,191
417
399
yen)
(Millions ofProfit
1,403
2,283
756
459
yen)
(Millions ofShare capital
6,716
6,716
6,716
6,716
yen)
Total number of issued(Shares) 132,527,909 132,527,909 132,527,909 26,505,581
shares(Millions of
Net assets
67,53569,534
68,63866,798yen)(Millions of
Total assets
103,923
107,079
105,116
105,609yen)
Net assets per share(Yen)
2,569.49
2,645.61
2,690.07
2,626.24

March 2020

Fiscal period

Dividends per share(Yen)(Of the above, interim
dividends per share)

69th fiscal
year

70th fiscal
year

165,846
1,443
1,166
6,716
26,505,581
65,599104,365
2,580.18

7.00

8.00

8.00

35.00

35.00

(–)

(–)

(–)

(–)

(–)

Profit per share

(Yen)

53.22

86.88

28.91

18.05

45.88

Diluted profit per share

(Yen)

–

–

–

–

–

Equity ratio

(%)

65.0

64.9

65.3

63.3

62.9

Return on equity

(%)

2.1

3.3

1.1

0.7

1.8

(Times)

41.1

28.0

88.8

104.2

42.6

(%)

65.8

46.0

138.4

193.9

76.3

1,065

1,068

1,057

1,004

915

[1,016]

[942]

[889]

[859]

[795]

(%)

108.8

123.0

131.4

99.6

104.9

(%)

(89.2)(102.3)(118.5)(112.5)(101.8)Highest share price

(Yen)

518

527

559

Lowest share price

(Yen)

398

415

470

Price earnings ratio
Dividend payout ratio
Number of employees[Average number ofpart-time employees
not included in theabove numbers]
Total shareholder
return(Comparison index:
TOPIX total returnindex)

2,327
(545)
1,605
(424)

2,474
1,495

(Notes) 1.
Net sales are exclusive of consumption taxes, etc.
2. Diluted profit per share is not stated because there is no dilutive security.
3. The highest and lowest share prices refer to those at the First Section of the Tokyo
Stock Exchange. The share prices for the 71st fiscal year refer to the highest and lowest
after the share consolidation, with the figures in brackets “( )” showing the highest andlowest before the consolidation.

- 7 -4. The Company has applied the “Partial Amendments to Accounting Standard for Tax
Effect Accounting” (ASBJ Statement No. 28, February 16, 2018) from the beginning of
the 71st fiscal year. Accordingly, key financial data for the 70th fiscal year are statedas figures to which the above accounting standard has been retrospectively applied.
5. Effective October 1, 2018, the Company conducted a one-for-five share consolidation of
its common stock. Accordingly, we have calculated net assets per share and profit per
share on the assumption that the consolidation of shares was conducted at the
beginning of the 68th fiscal year.

- 8 -2. History
Since the Company conducted a merger to change its par value, its founding date has been
officially registered as February 8, 1950, which is the founding date of former Marudai Food Shoji
K.K. Meanwhile, the founding date of the de facto existing company, former Marudai Food Co., Ltd.,is June 10, 1958.

Month/YearOverview

October 1954

The late Mr. Toshiyuki Komori founded a company engaging in manufacturing and sale offish ham and sausages in Fukushima-ku, Osaka-shi, and named it the Marudai Food Factory.
Moved the factory to Oyodo-ku, Osaka-shi and incorporated it under the trade name of
Marudai Food Co., Ltd.

June 1958
September
1961

Began manufacturing and selling meat ham and sausages.

January 1963

Merged by Marudai Food Shoji K.K. to change the par value from 500 yen to 50 yen.

February 1963 Renamed Marudai Food Co., Ltd. after the merger.
April 1963

Established the Tokyo Branch Office in Chuo-ku, Tokyo.

June 1963

Listed in the Second Section of the Osaka Securities Exchange.

June 1964

Established the Takatsuki Plant in Takatsuki-shi, Osaka.

May 1965
September
1968

Moved the head office from Oyodo-ku, Osaka-shi to Takatsuki-shi, Osaka.

October 1969

Established the Kanto Plant in Ishibashi-machi (present Shimotsuke-shi), Tochigi Prefecture.

October 1970

Established the Karatsu Plant in Karatsu-shi, Saga Prefecture.

November
1971
September
1972
November
1976

Listed in the Second Section of the Tokyo Stock Exchange.

Established the Niigata Plant in Ogata-machi (present Joetsu-shi), Niigata Prefecture.
Designated to be listed in the First Sections of the Tokyo Stock Exchange and the Osaka
Securities Exchange.
Established the Hiroshima Plant in Miyoshi-shi, Hiroshima Prefecture.

March 1978
September
1978
November
1978

Moved the Tokyo Branch Office to Minato-ku, Tokyo.
Established the Second Matsusaka Plant (present Matsusaka Plant) in Matsusaka-shi, Mie
Prefecture.

October 1981

Established the Iwate Plant in Ishidoriya-cho (present Hanamaki-shi), Iwate Prefecture.

June 1989

Established the Shizuoka Plant in Kakegawa-shi, Shizuoka Prefecture.

April 1994

Established the Yokosuka Plant in Yokosuka-shi, Kanagawa Prefecture.

March 2004

Moved the Tokyo Branch Office to Chuo-ku, Tokyo.
Marudai Meat Kanto Co., Ltd., one of the Company’s subsidiaries, merged Marudai Meat
Kansai Co., Ltd. and four other companies to be incorporated as Marudai Meat Co., Ltd.,
which is now one of the Company’s consolidated subsidiaries.
Marudaifood West Japan Co., Ltd., one of the Company’s subsidiaries, merged Marudaifood
East Japan Co., Ltd. and Marudaifood Tokai Co., Ltd. to be incorporated as Marudaifood Co.,
Ltd., which is now one of the Company’s consolidated subsidiaries.
Acquired Marushin Foods Co., Ltd., headquartered in Chuo-ku, Tokyo, which is now one of
the Company’s consolidated subsidiaries.

April 2009

October 2009

October 2011

Listed on the Frankfurt Stock Exchange.

- 9 -3. Description of business
The Group, comprising Marudai Food Co., Ltd. (the Company) and its 26 consolidated
subsidiaries and one associated company, mainly engages in the Processed Food Products
operations and the Meat Products operations. In connection with these operations, it also offers
insurance agency services and other services.
The below explains how the Company is linked with its consolidated subsidiaries and associatedcompany. The following categories are consistent with the business segments.
Processed Food Products operations
Manufacture and sell ham, sausages, and precooked and processed food products at the Company
as well as at Toda Foods Co., Ltd., Azumino Food Co., Ltd., and Marushin Foods Co., Ltd., among
others.
Meat Products operations
Process and sell meat (beef, pork, chicken, etc.) at the Company as well as at Marudai Meat Co.,
Ltd., Marudaifood Co., Ltd., and Meat Supply Co., Ltd., among others.
Other
Marudai Service Co., Ltd. offers insurance agency services and other services.

- 10 -

The diagram below illustrates the businesses of the Group.

- 11 -

4. Subsidiaries and other affiliated entities
As of March 31, 2020

Company name

Address

Sharecapital orinvestments
in capital(Millions ofyen)

Description ofprincipal
business

Ratio ofvotingrightsholding(%)

Relationship
Number of
concurrent
Directors/
Statutory
Auditors

Loans(Millionsof yen)Operational transactions

Lease offacilities(Consolidated subsidiaries)
Hokkaido Marudai Food Co., Ltd.

Iwamizawa-shi,
Hokkaido

10

Processed Food
Products
operations

100.0

1

–

Contract manufacturing

No

Tohoku Marudai Food Co., Ltd.

Hanamaki-shi, Iwate
Prefecture

10

Processed Food
Products
operations

100.0

–

–

Contract manufacturingNo

Shin-etsu Marudai Food Co., Ltd.

Joetsu-shi, Niigata
Prefecture

10

Processed Food
Products
operations

100.0

1

–

Contract manufacturing

No

Chubu Marudai Food Co., Ltd.

Matsusaka-shi, Mie
Prefecture

10

Processed Food
Products
operations

100.0

–

–

Contract manufacturing

No

Chu-Shikoku Marudai Food Co., Ltd.

Miyoshi-shi,
Hiroshima Prefecture

10

Processed Food
Products
operations

100.0

1

–

Contract manufacturing

No

Kyushu Marudai Food Co., Ltd.

Karatsu-shi, Saga
Prefecture

10

Processed Food
Products
operations

100.0

1

–

Contract manufacturingNo

Toda Foods Co., Ltd.

Toda-shi, Saitama
Prefecture

349

Processed Food
Products
operations

100.0(11.7)

1

4,139

Selling processed foods

Yes

Azumino Food Co., Ltd.

Matsumoto-shi,
Nagano Prefecture

495

Processed Food
Products
operations

100.0

1

1,105

Purchasing processed
foods

Yes

Marushin Foods Co., Ltd.

Moka-shi, Tochigi
Prefecture

100

Processed Food
Products
operations

100.0

1

56

Purchasing processed
foods, among otheroperations

Yes

Pioneer Foods Co., Ltd.
(Note 5)

Kyogoku-cho, Abutagun, Hokkaido

360

Processed Food
Products
operations

63.1

2

–

Purchasing processed
foods, among otheroperations

Yes

Umeya Co., Ltd.

Tanabe-shi, Wakayama
Prefecture

37

Processed Food
Products
operations

92.7

1

120

Purchasing processed
foods

Yes

Yahata Food Co., Ltd. (Note 5)

Kan-onji-shi, Kagawa
Prefecture

50

Processed Food
Products
operations

100.0

1

380

Purchasing processed
foods, among otheroperations

Yes

Hornmeier Co., Ltd.

Takatsuki-shi, Osaka

340

Processed Food
Products
operations

100.0

1

771

Contracting sale ofprocessed foods

Yes

Marudaifood Co., Ltd.

Nishinari-ku, Osakashi

80

Processed Food
Products
operations
Meat Products
operations

100.0

1

–

Selling processed foods
and meat products

Yes

Marudai Meat Co., Ltd. (Notes 3 and 6)

Ota-ku, Tokyo

30

Meat Products
operations

100.0

–

–

Selling meat products

Yes

Meat Supply Co., Ltd.

Takatsuki-shi, Osaka

30

Meat Products
operations

100.0

–

–

Supplying raw
materials, among otheroperations

Yes

Marbest Trading Co., Ltd. (Note 3)

Takatsuki-shi, Osaka

20

Meat Products
operations

100.0

–

–

Purchasing meat, among
others

Yes
Yes

No

Marudai Service Co., Ltd.

Takatsuki-shi, Osaka95

Lop Buri, theKingdom of Thailand

330,000
thousand
baht

Other

100.0

1

397

Offering insurance
agency services, among
other services

Processed Food
Products
operations

20.0

–

–

Purchasing processedfoods

and eight other companies(Associate accounted for using equity
method)Betagro MF Deli Co., Ltd.

- 12 -

(Notes) 1.
Names of the operations in “Description of principal business” are the same as
those stated in the segment information.
2. The ratio of voting rights holding indirectly is shown in parentheses “( )” in “Ratio ofvoting rights holding.”
3. These companies with (Note 3) fall under the category of specified subsidiaries.
4. None of the above companies have filed Securities Registration Statements or Annual
Securities Reports.
5. The Company guarantees the loans to these companies with (Note 5).
6. Net sales of Marudai Meat Co., Ltd. (excluding inter-segment net sales among
consolidated subsidiaries) accounted for more than 10% of consolidated net sales.
Key profit/loss information:
1) Net sales
37,039 million yen
2) Ordinary profit
102 million yen
3) Profit
60 million yen
4) Net assets
862 million yen5) Total assets
5,076 million yen- 13 -

5. Employees(1) Information about group

As of March 31,
2020
Name of business segment
Number of employees
1,425
Processed Food Products operations(2,810)399
Meat Products operations
(356)
7
Other
(22)
107
Company-wide (shared)
(37)
1,938
Total
(3,225)(Notes) 1.
The number of employees refers to that of full-time employees, excluding thosetransferred to companies outside the Group.
2. The average number of temporary employees during the current fiscal year is shown inparentheses “( )” in “Number of employees.”(2) Information about reporting company

Number of employees

Average age (Years old)

Average length of service(Years)

As of March 31,
2020
Average annual salary(Thousands of yen)

915
(795)

44.0

21.8

6,346

Name of business segment

Number of employees

787
(750)
21
Meat Products operations
(8)
–
Other
(–)
107
Company-wide (shared)
(37)
915
Total
(795)
(Notes) 1.
The number of employees refers to that of full-time employees, excluding thosetransferred from the Company to other companies, but including those transferred to
the Company from other companies.
2. Average annual salary includes bonuses and non-standard wages.
3. The average number of temporary employees during the current fiscal year is shown inparentheses “( )” in “Number of employees.”
Processed Food Products operations(3) Status of labor union
The labor union of the Company and part of its consolidated subsidiaries is named the Federation of Marudai
Food Group Labor Unions and belongs to UA Zensen. The relationship between management and labor unionis stable, without any special issues to mention.
The other consolidated subsidiaries whose employees are not members of the Federation of Marudai FoodGroup Labor Unions do not have their own labor unions, but the relationship between management and labor
unions there is stable.

- 14 -

II. Overview of Business

1. Management policy, business environment, issues to address
The forward-looking statements included in the following description are based on our judgment
as of March 31, 2020.
(1) The Company’s basic management policy

1) The Company’s credo:

Sincerity can move heaven2) Management philosophy:

We will contribute to society by devoting ourselves to daily
operations and acting with complete sincerity.
3) Management policy and vision:
Pursuing more delicious food and healthier life, theMarudai Food Group offers safe food products to make consumers’
diet more enjoyable.
4) Slogan:
Make it more delicious, enjoyable, and edgy5) Values:- We will make delicious food products to please consumers.
- We will make our company a place where we can freely dream of our
future and obtain high job satisfaction.
- We will create new values in response to trends as times change.

6) Conduct policy:

Toward consumers:

We will continue to make our products safer andbetter.
We will make our consumers’ diet healthier andmore enjoyable.
TowardWe will strengthen our management foundation
shareholders:and expand our operations with the aim ofenhancing the corporate value.
Toward employees: We will create a workplace where employees candevelop themselves through daily operations.
We will pursue the happiness of employees andtheir families.
Toward society:We will fulfill our social responsibilities bycontributing to our local communities andprotecting the environment.

(2) Management environment
Japan has been facing the issue of a dwindling population, and we have seen various relevant changes affecting management
environment of the Group. Management environment surrounding the Group is as follows:
1) Decreases in Japan’s total population and working-age population, its declining birthrate and rapidly aging population- Needs to raise minimum wages as the jobs-to-applicants ratio remains high; how to respond to the demand for equal
work, equal pay
2) Saturated processed food market in terms of volume, or rather a shrinking trend of the market- Stronger purchasing power of retailers and wholesalers, fiercer competition among food manufacturers3) Increases in dual-income households and the ratio of women in the working-age population- Changes in lifestyles and consumption behavior
4) Expansion of e-commerce, rapidly advancing drug stores- An increase in logistics costs, a wider consumer trend toward lower-priced goods5) Animal epidemics both in Japan and abroad, U.S.-China trade friction- A rise in the raw material prices for meat production, and unstable market prices
Since the processed food market, particularly the ham and sausage market, has been saturated, which is the Group’s coresegment, the purchasing power of retailers and wholesalers are growing stronger. This situation is causing fiercer competition
among food manufacturers. In addition, costs for raw materials, human resources, logistics, etc. continue to rise, posing aheadwind to our management environment.

- 15 -

(3) Operational and financial issues we must address as soon as possible
The management environment surrounding the Company is expected to remain severe due to intensified sales competition
from structural changes in Japan’s consumption system caused by its dwindling and aging population, a rise in costs for humanresources, logistics, etc. against a backdrop of a chronic labor shortage, and increase in raw material prices for meat driven
by animal epidemics in Japan and abroad, among other factors. Amid the worsening COVID-19 pandemic, consumer spendingis rapidly decreasing, leading to concerns over how this factor may affect our economy overall.
Under this environment, we started our 3-Year Medium-Term Plan in April 2020 to resolve our management issues. By
achieving the targets set by the said Plan, the Marudai Food Group will continue to grow and enhance its corporate value. To
do so, we will seek to be a company whose social existence values are widely and thoroughly understood, work on ambitious
initiatives step by step, and never stop taking up challenges while having a sense of urgency and trying not to miss a good
opportunity.
(4) Medium-term management strategy (the 3-Year Medium-Term Plan)
The Medium-Term Management Plan starting on April 1, 2020 through March 31, 2023 stipulates its basic policy as
follows:
1) Strategy for gaining an advantage in product competition
To differentiate and centralize our products and reduce costs as part of our value-added policy, we will carry out themarketing mix that takes into consideration products, prices, locations, and sales promotion from the consumer
perspective. By doing so, we will develop more attractive products. Our efforts will also include strengthening our
production technology by taking up new manufacturing methods and materials, among others.
2) Reform in earnings structure
We will implement a policy for improving productivity and cost competitiveness in all departments. The selling
department will continue reform to change the mindset toward profitability by displaying profitability data when selling
products. The manufacturing department will aim to reduce manufacturing costs through a further reform and also goahead with logistics reform by reviewing and analyzing logistics costs.
3) Strategy for diversification
We will evolve the Group’s management further to address environmental changes and also examine the possibility ofdeveloping new businesses to launch new product categories in response to changes in the social environment.
4) Developing human resources and implementing the work style reform
We will reform our personnel system to become a company that can adapt to diversified work styles and provide our
employees with high job satisfaction. Our goal is to develop talent who will lead the Company in the future in accordancewith career plans.
5) Strategy for improving our corporate value
Our aim is to achieve higher social credibility including our sustainable growth and medium-term earnings. To do so,
we will strengthen our corporate governance and risk management, as well as improve our product quality by obtaining
more FSSC 22000 and ISO 22000 certifications. We will also enhance the quality of our employees as well as that of our
products. Our efforts will encompass initiatives to address environment, social, and governance (ESG) issues and achieve
the United Nation’s Sustainable Development Goals (SDGs), among others, so that we can fulfill our social
responsibilities.
In addition, the below shows each segment’s strategy by category:
Processed Food Products operations
Aiming to create products that can satisfy consumer needs, we will create a new format that can provide a lineup
designed from the consumer perspective and that can respond to diverse eating needs. We will then develop new materials
and manufacturing processes, too. Aiming at high productivity based on reduced costs, we will go ahead with efficient
capital expenditure and improvement initiatives.

1)

A. The Ham & Sausage Products department
In order to address more diversifying consumer needs, we will work to develop microwavable products that aredelicious but easy to prepare and facilitate the shift to environment-friendly packaging materials, such as paper trays
with a reduced environmental impact by implementing marketing mix based on all the relevant information. In
addition, we will continue to provide safe and healthy products by reviewing food additives. Regarding productionlines, we strive to achieve the efficient production of ham and sausage products by establishing facilities that adopt
new manufacturing methods and those that can complement the reduction in the workforce.
B. The Precooked & Processed Foods department

We strive to increase the sales of soup items such as retort-pouch instant curries and “Sundubu,”
for which we have extended production lines. In addition, we will increase facilities for
manufacturing dessert and beverage products that are gaining momentum, as well as increase salesof meat substitutes made from soybean, targeting health-conscious consumers, and value-added
products that have grilled or fried materials containing ham and sausages. Regarding productdevelopment, we will propose new items by further developing precooked and processed foodproducts led by “Salad Chicken” that has increased its presence in the market recently and try toincrease the lineup of cold chain products, which can keep for a long time and excel in convenience.
Furthermore, we will enhance our Precooked & Processed Foods department by scaling up the size
- 16 -

of the Group companies by launching new businesses and through mergers and acquisitions.
C. Other initiatives
The Company is carrying out the research of “plasmalogen extracted from chicken breast,” a material that can
support the cognitive function, aiming to utilize it to create a new health food product that can support consumers’
health.

- 17 -

2)

Meat Products operations

In the domestic market, we will establish our value chain to focus on handling our own original brands andreduce costs. In addition, we aim to strengthen the meat processing business, which handles pre-pack products
and meat-based pre-cooked foods.
(5) Impact of the COVID-19 pandemic and our response
Worsening situations of the COVID-19 pandemic led to state of emergency and stay-at-home request by the governments,
currently forcing people to stay at home for a longer time than before and creating the persistent atmosphere of self-restraint
even after the state of emergency is lifted. As a result, we expect a decrease in net sales of products mainly for the restaurant
industry and convenience stores in urban areas, and part of commercial food products, as well as reductions in the demand
for gift products. On the other hand, stay-at-home demand and consumption led us to expect a rise in the demand for eat-in
and ready-to-eat meals. Given this, we project a rise in sales at grocery chains, drugstores, discount stores, and through the ecommerce. In addition, concerns over the prospects of the economy and employment will make consumers more savingoriented, resulting in increase in demand for value products. As a result, there are concerns of increased competition among
companies and decline in profitability.
Meanwhile, we expect more uncertainty and instability in the outlook for the raw material market because of concerns overreduced imports caused by the suspension of production at overseas suppliers and price fluctuations.
The Group will continue to go ahead with each segment’s strategy by category in accordance with the Medium-Term
Management Plan for a period from April 1, 2020 through March 31, 2023. At the same time, we will execute our social
mission and fulfill our responsibilities to each of our stakeholders by monitoring when the pandemic will be contained andappropriately responding to the economic trend and private consumption once the pandemic ebbs.
(6) Objective financial data to determine achievement status of management targets
In our previous Medium-Term Management Plan for a period from April 1, 2017 through March 31, 2020, the Group set
the target of achieving consolidated net sales of 260,000 million yen, consolidated operating profit margin of 2.5%, andconsolidated operating profit of 6,500 million yen as our financial data for the fiscal year ended March 31, 2020. However,the financial results for the current fiscal year, the final year of the said Management Plan, were consolidated net sales of
245,820 million yen, consolidated operating profit margin of 1.1%, and consolidated operating profit of 2,617 million yen,
not attaining the target.
Regarding performance forecasts under our new Medium-Term Management Plan starting on April 1, 2020 through March
31, 2023, we were planning to use net sales, operating profit margin, operating profit as objective financial data. However,since we find it almost impossible to reasonably calculate the impact of the worsening COVID-19 pandemic at this moment,
we will announce numerical targets in the future after recalculating and reviewing them.
We expect our consolidated earnings performance for the fiscal year ending March 31, 2021 to be as follows: net sales of
240,000 million yen, operating profit margin of 0.8%, and operating profit of 2,000 million yen. This estimation is based on
our presumption that the management environment will remain severe due to the COVID-19 pandemic into the first half ofthe fiscal year ending March 31, 2021 at earliest, and the economy will then start picking up in the second half. We find it
almost impossible to reasonably forecast when the pandemic will be contained and how the economy and private consumption
will then react. Our estimation is that the pandemic could still have an enormous impact on our operations. Since earnings
outlook is based on our estimation of the impacts deemed possible when we made this estimation, we may need to announce
revisions depending on the development of the situation.

- 18 -

2. Business risks
Of the matters stated in the sections of Overview of Business, Financial Information, etc. in thisAnnual Securities Report, management recognizes that the following matters may have a material
impact on the financial condition, results of operations, and cash flows of the Group companies on
a consolidated basis.
The forward-looking statements included in the following description are based on our judgment
as of March 31, 2020.
(1) Financial risks

Risk details

Impairment
risk

Customers’bankruptcy
riskMarketfluctuation
risk
Currency
fluctuation
risk
Risk ofinfectious
diseasesand natural
disasters
Risk ofretirement
benefitobligations

Major measures- Impairment risk in non-current assets on a nonconsolidated basis; showing a sign of impairmentwith operating deficit continuing for three fiscal
years in a row- A subsidiary or an equivalent acquired by us
unable to achieve operational targets- Risk of fluctuations in the market value of assets,such as real estate or securities- Unexpected bankruptcy of customers- Formulate and implement sufficient measures toincrease future cash flows- Development of livestock epidemics- Concerns over a limit on imports and a rise inpurchasing prices when the government takes asafeguard measure- Global changes in the supply-demand balance- Impact of the fluctuations in crude oil prices- Fluctuations in foreign exchange rates on local
currencies- Diversify raw material procurement channels and takeother measures to procure raw materials stably- Work to develop highly value-added products- The pandemic of a new virus or an equivalent- Suspension of operations caused by the effects ofa natural disaster, such as an earthquake or atyphoon- Establish an appropriate management system toprevent infection or its expansion- Work further to improve a system for disasterprevention and mitigation, and risk management,
aiming to minimize the damage and casualties caused
by natural disasters- As an asset owner of a corporate pension, we monitor
how assets are managed, as needed, by deploying
appropriate personnel to a corporate pension fund
- Reduced risk by transferring part of the defined-benefit
pension plans to a defined-contribution pension plan in
the fiscal year ended March 31, 2017

- A case where there is a fluctuation in the market
value of plan assets or when there is a change in
the assumptions, such as an investment return or
discount rates, that are used to calculate
retirement benefit obligations- Provide follow-up support to create synergy after
mergers and acquisitions- Make use of or sell idle assets- Gather information, manage credit, etc., preserve
account receivables- Reduce risk by importing part of products on a yenbasis and, for foreign-currency trade, using foreignexchange futures contracts

Although state of emergency declarations and stay-at-home request by the governments amid
worsening situations of the COVID-19 pandemic were lifted, concerns over the second wave of
infection are still lingering. While the demand for eat-in and ready-to-eat meals is growing, we are
expecting a reduction in sales of the products mainly for the restaurant industry and convenience
stores in urban areas for the time being. There are also concerns over the impact of reduced imports
caused by the suspension of production at overseas suppliers and over price fluctuations.
The Group, a comprehensive food manufacturer, places a top priority on stably supplying
consumers with safer and healthier food products. We are determined to establish a thoroughmanagement system to prevent infection so that we will not face the suspension of our operations.
For this purpose, our preparation also includes responses to the demand for necessary funds.
With regard to the future outlook, we find it almost impossible to reasonably forecast when the
pandemic will be contained and how the economy and private consumption will then react. Ourestimation is that the pandemic could still have an enormous impact on our operations.
Our countermeasures against COVID-19 at this moment are as follows:
1) Thoroughly comply with bans or self-restraint requests against the following (We may review the bans or requests
when the pandemic deteriorates or is contained)
Overseas travel, business trips in Japan, meetings, contact with large numbers of the general public, lunch or dinnerparties, events at offices, etc.
2) Measures to prevent infection
Wearing a mask, taking temperature, sanitizing hands and disinfecting facilities and equipment, ventilating rooms
regularly, etc.

- 19 -

3) Measures for work styles
Working from home, flexible hours, a satellite office system, staggered working hours, recommendation to use an
employee’s car to and from the office, recommendation to take paid holidays, etc.
4) Postponement of a press conference on financial results for the fiscal year ended March 31, 2020, thorough measures
to prevent infection at the General Meeting of Shareholders

The Risk Management Committee, chaired by a Director/Statutory Auditor with a special title
and made up mainly of Directors of the Company, addresses infection risks; swiftly gathers andcommunicates information; and makes decisions and gives directions without delay.

- 20 -

(2) Materiality items

Ensuring safety

Risk details

Major measures- Occurrence of social disorder or an unpredictable
accident such as a quality issue affecting the entire
society- Effect of the damage caused by rumors- Jeopardized social credibility due to complaints about
product quality, among others- Increase the number of the FSSC 22000 or ISO 22000 certified facilities
based on the HACCP system- Establish a strict quality management system by the quality assurance
department- Strengthen our efforts to secure safety and improve product quality as
well as to prevent the occurrence of products of poor quality or defects- Restriction on operations when laws and regulations
are changed- Comply with all applicable laws and regulations, including the Food
Sanitation Act, the Act on Japanese Agricultural Standards (the JASAct), and the Food Labeling Act, among others, all of which are related
to food safety, in addition to the laws and regulations related to theenvironmental protection and recycling- Establish a system to thoroughly comply with relevant laws andregulations in close cooperation between each responsible department
and the legal department- Possible loss of our growth opportunity due to thedelay in catching up with diverse values and changes
in the consumer lifestyles- Strengthen our capabilities to swiftly respond to the market needs
through our food products- Implement appropriate methods, from the consumer perspective, for
supplying products, providing services, and communicating information- Delay in responding to social and environmental issues
at each stage of our supply chain- Risk of climate change and geopolitical risk

- Comply with relevant laws and regulations and promote fair trading andbusiness practices- Promote the operations aimed at mutually sustainable businessdevelopment with suppliers- Depletion of food resources- Jeopardized social credibility due to delay in taking
measures to reduce food waste- Improve manufacturing methods so that they will contribute to reducing
food waste in the manufacturing process- Make the shelf life of products longer to reduce the food loss resulting
from discarding food products before they reach consumers, decrease
defective products returned from retailers or consumers- Increased production costs resulting from delay intaking measures to reduce greenhouse gas emissions- Jeopardized social credibility due to delay in taking
measures against global warming- Reduce environmental footprint by promoting energy saving- Strengthen our efforts to reduce the amount of energy used for
production by introducing the facility using less energy or an equivalent- Strengthen our efforts to reduce the greenhouse gasses generated bylogistics or transportation by encouraging the transport modal shift, etc.

- Increased production costs resulting from delay intaking measures to reduce waste- Jeopardized social credibility due to delay in shifting
to using environment-friendly packaging materials- Promote an initiative to reduce waste by using lightweight wrapping andpackaging materials- Promote a 3R strategy—Reduce, Reuse, and Recycle—for wrapping
and packaging materials- Promote the recycling of food waste into livestock feed or manure- Promote the adoption of environment-friendly wrapping and packaging
materials- Suspension of production caused by droughts, floods,
and deteriorating water quality- Conserve and maintain wastewater treatment facilities- Promote environmental conservation through an activity to forest hills
or mountains- Needs to acquire organizational capabilities that give
us a competitive advantage- A labor shortage and a rise in costs caused bydiversified recruiting channels and intensified
recruiting competition- Jeopardized social credibility due to delay in taking
measures for a health management system- Strengthen the management of personnel training programs with a focus
on diverse values and specialties- Promote the work style reform- Promote diversity and launch an initiative to enhance opportunities for
women- Promote an initiative aimed for health management- Enhance a system that provides stress checkups and monitors mental
health conditions- An increase in risks that threaten the corporate
management due to a fragile governance system- Impacts on our business continuity brought by delay inestablishing a risk management system- Confusion that affects organizational management or areduction in operational profitability, caused byunstable political, economic, or social situations, suchas a financial crisis or trade war- Reduced competitiveness resulting from theincapability of catching up with digital transformation- Reduced competitiveness resulting from a fragile IT
management system- Impacts on operations caused by intellectual propertyrisk- Educate all the employees of the Marudai Food Group about the
Marudai Food Group’s Code of Conduct to make them thoroughly
understand it- Strengthen our corporate governance system by establishing the Risk
Management Committee, the Corporate Ethics Committee, theCompliance Committee, and the Nomination and Remuneration
Committee.
- Establish the Marudai counseling line (a whistleblowing system)- Introduce a new system to visualize data

Response to
publicregulations

Changes in
consumerlifestyles
Sustainable raw
material
procurement

Reduction offood waste
Adaptation tochanging
climate andmitigation of its
impactContribution torealizing a
recyclingsocietyWaterconservation

Thriving oftalent withdiversebackgrounds

Strengthened
corporate
governance- 21 -- Strengthen the information security by formulating IT management andoperation rules- Manage intellectual property risk

3. Management analysis of financial position, operating results and cash flows(1) Overview of operating results, etc.
An overview of the financial position, operating results, and cash flows (“operating results, etc.”) of the Group (theCompany, its consolidated subsidiaries, and associate accounted for using equity method) for the fiscal year ended March 31,
2020 is as follows:
1) Financial position and operating results
During the fiscal year ended March 31, 2020, the Japanese economy initially showed gradual recovery, but theconditions rapidly worsened due to the impact of COVID-19 and have remained extremely severe. There are also
downward economic risks both in Japan and abroad, and the overall outlook for the economy is expected to remain
extremely severe.
The industry in which the Marudai Food Group operates is facing chronic labor shortages and increase in costs forlogistics, etc., as well as increased competition among companies due to the behavior of consumers who look for lowerpriced products. Looking at the current situation, the sales for the restaurant industry is decreasing due to the impact of
COVID-19. Regarding the meat market, the prices of domestic beef significantly fell partly due to the impact of consumers’
staying at home, but the prices of imported beef exceeded the previous year’s levels with temporary huge fluctuations.
The outlook of the meat market is unclear with factors such as unstable pork prices due to animal epidemics both in Japanand abroad.
In this situation, the Group, a comprehensive food manufacturer that supplies consumers with safer and healthier foodproducts, has pushed ahead with its corporate operations, aiming to be a company whose own value is thoroughly
recognized in society.
As a result, our consolidated financial position and operating results for the fiscal year ended March 31, 2020 were as
follows:
A. Financial position
Consolidated total assets as of March 31, 2020 were 131,854 million yen, a decrease of 772 million yen from the endof the previous fiscal year. Consolidated liabilities were 56,798 million yen, an increase of 266 million yen from theend of the previous fiscal year. Consolidated net assets were 75,056 million yen, a decrease of 1,038 million yen fromthe end of the previous fiscal year.
B. Operating results
Consolidated net sales during the fiscal year ended March 31, 2020 were 245,820 million yen, an increase of 1.1%
year on year, consolidated operating profit was 2,617 million yen, an increase of 16.1% year on year, consolidated
ordinary profit was 3,118 million yen, an increase of 14.5% year on year, and consolidated profit attributable to ownersof parent was 1,653 million yen, an increase of 13.0% year on year.

Operating results for each segment are as follows:- 22 -

(Processed Food Products operations)
The Ham & Sausage Products department, as an official sponsor of the Olympic andParalympic Games Tokyo 2020, carried out various Olympic/Paralympic featuring
campaigns to promote its products, with the focus on key products such as “ KunseiyaRipened Pork Sausage,” whose package adopted the special design to support the Games.
In addition, we strove to expand the operations’ overall sales by promoting volume-packloin ham products and a fish sausage product featuring popular TV character Chiko-chan
and introducing new products, such as “Kunseiya-Ripened Pork Sausage: White,” whitesausage from the “Kunseiya” series. Despite these initiatives, increased competition
among companies due to the consumer trend toward lower-priced products kept market
conditions severe. As a result, sales in the Ham & Sausage Products operations decreasedby 2.6% year on year.
In our Precooked & Processed Foods department, the sales of retort-pouch instantcurries such as “Chef ’s Craft” series remained brisk and the sales of “Chicken Nugget”
series and “Salad Chicken” series expanded. We also introduced novel products including“Daizu Life” series, which use soy meat. Dessert and beverage products saw increase insales for the full year despite the increased number of competitors entering the market
of beverages containing black tapioca balls, where we market the “TAPIOCA TIME”
series. As a result, sales in the Precooked & Processed Foods department increased by
3.8% year on year.
As a result, sales in the Processed Food Products operations segment amounted to170,648 million yen, an increase of 0.7% year on year. Regarding segment income, while
the Ham & Sausage Products department, which is the mainstay of this segment, saw adecline in its revenue, that of the Precooked & Processed Foods department increased.
Furthermore, overall profitability was improved thanks to the start of the full-scale
operation of a new plant that produces products for convenience stores. As a result,segment income in the Processed Food Products operations amounted to 1,668 million
yen, an increase of 113.5% year on year.
(Meat Products operations)With regard to beef, we successfully increased the sales volume of imported beef by
focusing on branded beef while the sales of domestic beef also grew. As a result, the overall
beef sales exceeded the previous year’s level. Regarding pork, while we expanded thelineup of pre-pack products, market prices continued to fluctuate and sales volume ofboth domestic and imported pork decreased. As a result, the overall pork sales wereslightly below the previous year’s level.
As a result of the above, sales in the Meat Products operations segment increased by
2.1% year on year to 75,024 million yen. Segment income decreased by 35.2% year on
year to 900 million yen, due mainly to decline in profitability due to increase inpurchasing prices of pork and increase in logistics costs.
(Other)Sales in Other segment decreased by 8.8% year on year to 147 million yen, and segment
income decreased by 41.2% year on year to 48 million yen.
(Impact of the COVID-19 pandemic)
In the fourth quarter of the fiscal year ended March 31, 2020, since March in particular,
in order to prevent the spread of COVID-19, various measures were taken, including
request for the closure of primary/junior high/high schools as well as special-needs schools
nationwide; local governments’ request for self-restraint on going out, holding events, andcrossing
prefecturalborders;
voluntary
self-restraint
on
the
part
of
individuals/companies. As a result, people stayed at home for longer time than ever,which led to decrease in sales of products for the restaurant industry and convenience
stores in urban areas and some commercial products. On the other hand, as a result of
growing demand for eat-in and ready-to-eat meals for home use thanks to stay-at-homedemand and consumption, we saw an increase in net sales of the ham and sausage- 23 -

products and retort products in March. The Meat Products operations segment posted arise in net sales of the pre-pack products.
A slowdown in the demand from the restaurant industry led to decline in the price ofdomestic beef, and the suspension of production at overseas suppliers destabilized thepork market, from which we mainly procure raw materials for ham and sausages. These
factors impact our costs.
As part of our operational efforts, we strengthened the production of products for the
eat-in and ready-to-eat meals to satisfy the growing demand, addressed shortages ofmasks and disinfectant at our plants, offered special paid holidays to the employees
whose children faced school closures, and took care of foreign technical intern trainees inorder to ensure smooth plant operations.

- 24 -

2) Cash flows(Millions of yen)
Fiscal year ended
March 31, 2019
Net cash provided by (used in)operating activities
Net cash provided by (used in)investing activities
Net cash provided by (used in)financing activities
Net increase in cash and cash
equivalents
Cash and cash equivalents at end of
periodFiscal year ended
March 31, 2020

Changes

6,695

8,608

1,912

(7,534)(8,271)

(737)

255

(219)

(475)

(582)

117

699

8,127

8,244

117

Net cash provided by (used in) operating activities increased by 8,608 million yen due mainly to therecording of depreciation and profit before income taxes, which offset the payment of income taxes.
Net cash provided by (used in) investing activities decreased by 8,271 million yen due mainly to thepurchase of non-current assets to expand, streamline, and improve production facilities and to improve
product quality, despite posting proceeds from sale of non-current assets.
Net cash provided by (used in) financing activities decreased by 219 million yen due mainly to payment
of dividends and purchase of treasury shares despite increases in interest-bearing liabilities.
As a result, consolidated cash and cash equivalents at the end of period as of March 31, 2020
increased by 117 million yen from the end of the previous fiscal year to 8,244 million yen.
3) Production, orders received, and sales
A. Production results
Production results by segment for the fiscal year ended March 31, 2020 on a consolidated basis are as follows:

Name of business segment

Year-on-year change(%)

Production (Ton)Processed Food Products operations

224,724

1.5

Meat Products operations

13,118

5.2––

237,843

1.7

Other
Total

B. Orders received
The Group produces based on our projection made from the consumer trend forecast.
C. Sales results
Sales results by segment for the fiscal year ended March 31, 2020 on a consolidated basis are as follows:

Year-on-year change(%)

Name of business segment

Sales (Millions of yen)

Processed Food Products operations

170,648

0.7

Meat Products operations

75,024

2.1

147

(8.8)

Other

Total
245,820(Notes) 1.
Transactions between segments are offset and eliminated.
2. The amounts above are exclusive of consumption taxes, etc.

- 25 -

1.1

(2) Details of analysis and examination of the status of operating results, etc. from management’s perspective
Details of the recognition, analysis, and examination of the status of operating results, etc. of the Group from management’s
perspective are as follows. The forward-looking statements included in the following description are based on our judgment
as of March 31, 2020.
1) Details of the recognition, analysis, and examination of the status of operating results, etc. for the fiscal year ended
March 31, 2020
A. Operating results(Net sales)
While net sales of the Ham & Sausage Products department were below the previous fiscal year’s level, theperformance of Precooked & Processed Food Products department and Meat operations remained robust. As a result,consolidated net sales amounted to 245,820 million yen, an increase of 1.1% year on year. By segment, net sales of theProcessed Food Products operations were 170,648 million yen, an increase of 0.7% year on year, net sales of the Meat
Products operations were 75,024 million yen, an increase of 2.1% year on year, and net sales of Other were 147 million
yen, a decrease of 8.8% year on year.
(Cost of sales, gross profit)
Consolidated cost of sales increased by 0.7% year on year to 190,340 million yen due mainly to an increase in thepurchase of merchandise and raw materials resulting from increased net sales. The ratio of cost of sales to net sales
decreased by 0.4 percentage points year on year to 77.4%.
Consolidated gross profit increased by 2.6% year on year to 55,480 million yen due mainly to the increased net salesof Precooked & Processed Foods department and improved profitability thanks to the start of the full-scale operationof a new plant that produces products for convenience stores.
(Selling, general and administrative expenses; operating profit)
Consolidated selling, general and administrative expenses increased by 2.0% year on year to 52,862 million yen
owing mainly to the increased net sales and the growing logistics costs although we strove to reduce costs throughstreamlining.
Operating profit rose by 16.1% year on year to 2,617 million yen, operating profit margin grew 0.2 percent points
year on year to 1.1%.
By segment, segment income for the Processed Food Products operations increased by 113.5% year on year to 1,668
million yen, segment income for the Meat Products operations declined by 35.2% to 900 million yen, and segment
income for Other was 48 million yen, down 41.2% year on year. Operating results for each segment are stated in “(1)Overview of operating results, etc., 1) Financial position and operating results, B. Operating results.”(Ordinary profit; profit attributable to owners of parent)
Consolidated ordinary profit increased by 14.5% year on year to 3,118 million yen due mainly to an increase inoperating profit.
Consolidated profit attributable to owners of parent grew by 13.0% year on year to 1,653 million yen due mainly toa drop in extraordinary losses such as extra retirement payments, offsetting a decrease in extraordinary income such as
gain on sale of investment securities.
(Status of achievement of previous Medium-Term Management Plan)
In our previous Medium-Term Management Plan for a period from April 1, 2017 through March 31, 2020, the Group
set the target of achieving consolidated net sales of 260,000 million yen, consolidated operating profit margin (ratio to
net sales) of 2.5%, and consolidated operating profit of 6,500 million yen as our financial data for the fiscal year ended
March 31, 2020. However, the financial results for the current fiscal year, the final year of the said Management Plan,
were consolidated net sales of 245,820 million yen, consolidated operating profit margin of 1.1%, and consolidated
operating profit of 2,617 million yen, not attaining the target.

- 26 -

(Millions of yen)
Fiscal year
ended March
31, 2017(base year)
ActualNet sales
Processed Food Products
operations
Ham & Sausage Products
department
Precooked & Processed
Foods department
Meat Products operations

Fiscal year ended March 31, 2020

Plan

ActualChange frombase year(amount)

Change frombase year(%)

Compare toplan

232,436

260,000

245,820

13,383

5.8%(14,179)

163,057

187,000

170,648

7,591

4.7%

(16,351)

86,997–78,854(8,143)(9.4)%–

76,059–91,794

15,735

20.7%–

69,21972,80075,024

5,804

8.4%

2,224

Other

160

200

147

(13)

(8.2)%(52)

Operating profit

4,710

6,500

2,617

(2,093)(44.4)%(3,882)

Ratio to net sales

2.0%

2.5%

1.1%

(0.9)%–(1.4)%

Ordinary profit

5,378

6,700

3,118

(2,259)(42.0)%(3,581)

Ratio to net sales

2.3%

2.6%

1.3%

(1.0)%–(1.3)%

Profit attributable to owners of parent

3,284

4,200

1,653

(1,630)(49.6)%(2,546)

Ratio to net sales

1.4%

1.6%

0.7%

(0.7)%–(0.9)%

During the past three years, consolidated net sales increased by 13,383 million yen, or 5.8%. However, they were
14,179 million yen short of the original target of 260,000 million yen. While the net sales of the Ham & Sausage
Products department decreased 8,143 million yen, or 9.4%, that of the Precooked & Processed Foods department
increased 15,735 million yen, or 20.7%, resulting in an increase in the net sales of the Processed Food Products
operations of 7,591 million yen, or 4.7%. The net sales of the Meat Products operations increased 5,804 million yen, or
8.4%.
In our mainstay Ham & Sausage Products department, profitability declined as the streamlining of production andconsolidation of sales offices could not absorb an increase in the rate of fixed costs due to declined net sales, decreases
in sales prices due to fiercer competition, and increases in costs such as those for raw materials, human resources, andlogistics.
On the other hand, the net sales of the Precooked & Processed Foods department exceeded that of the Ham & Sausage
Products department, by recording an increase of 15,735 million yen during the three-year period. Although the net
sales of vendor operations carried out by a Group company increased and dessert and beverage products contributed interms of both net sales and profit, these factors did not offset the slump of the Ham & Sausage Products department,
resulting in decline in consolidated profit.
The profit of the Meat Products operations did not grow, as the robust sales of pre-pack products and those for therestaurant industry were offset by fluctuations in raw material prices for meat driven by animal epidemics in Japan andabroad, fiercer competition, and increases in costs of logistics, etc.
Overall, the Group achieved a certain level of growth. However, we believe that the expansion of our core operations,centered on the Ham & Sausage Products department, continues to be our challenge.

- 27 -

B. Financial position(Millions ofyen)

Total assets

As of March 31,
2019132,626

As of March 31,
2020
131,854

Liabilities

56,531

56,798266

Net assets

76,09475,056(1,038)Equity ratio

57.0%

56.5%

(0.5)%

2,971.34 yen

2,930.66 yen(40.68) yen

Net assets per share

Changes(772)

Consolidated total assets as of March 31, 2020 were 131,854 million yen, a decrease of 772 million yen from the endof the previous fiscal year, due mainly to a decrease in notes and accounts receivable - trade of 3,197 million yen,offsetting increases in merchandise and finished goods of 1,815 million yen and in property, plant and equipment of
1,228 million yen.
Consolidated liabilities increased by 266 million yen from the end of the previous fiscal year to 56,798 million yen,
due mainly to an increase in interest-bearing liabilities of 1,398 million yen, despite a decrease in deferred tax liabilitiesof 731 million.
Consolidated net assets decreased by 1,038 million yen from the end of the previous fiscal year to 75,056 million
yen, due mainly to a decrease in valuation difference on available-for-sale securities of 1,441 million yen and dividendof surplus of 890 million yen, despite posting of profit attributable to owners of parent of 1,653 million yen.
As a result, equity ratio as of March 31, 2020 stood at 56.5%, a decrease of 0.5% from the end of the previous fiscal
year. Since it remained at the same level as in the previous fiscal year, we have determined that the Group’s financial
standing has been sound at a certain level.
By segment, total assets of the Processed Food Products operations were 89,777 million yen compared to89,256million yen for the previous fiscal year, total assets of the Meat Products operations were 18,903 million yen
compared to 18,434million yen for the previous fiscal year, and total assets of Other and corporate assets not allocatedto the reportable segments were 23,173 million yen compared to 24,935 million yen for the previous fiscal year. The
primary factor for an increase in total assets of the Processed Food Products operations was an increase in merchandiseand finished goods, and acquisition of property, plant and equipment, production facilities in particular, to streamline
production lines and enhance production capacity.
C. Cash flows, capital resources, and cash liquidity

Equity ratio
Equity ratio on amarket value basis
Ratio of cash flows
to interest-bearing
liabilities
Interest coverage
ratio
Capital expenditure(Millions of yen)
Depreciation(Millions of yen)
Research anddevelopment
expenses(Millions of yen)

Fiscal year
ended March
31, 2016
57.8%

Fiscal year
ended March
31, 2017
58.6%

Fiscal year
ended March
31, 2018
58.3%

Fiscal year
ended March
31, 2019
57.0%

Fiscal year
ended March
31, 2020
56.5%

46.1%

49.5%

49.9%

36.1%

37.7%

1.3 years

1.6 years

4.7 years

2.7 years

2.3 years

54.4 times

42.5 times

17.3 times

31.3 times

39.7 times

5,716

9,880

10,850

9,589

9,167

5,206

5,442

5,688

6,433

6,801

742

848

963

852

732

(Note) Equity ratio = Owners’ equity / Total assets
Equity ratio on a market value basis = Aggregate market value / Total assets
Ratio of cash flows to interest-bearing liabilities = Interest-bearing liabilities / Operating cash flows
Interest coverage ratio = Operating cash flows / Interest payment* Each indicator is calculated based on the consolidated financial data.
* Aggregate market value is calculated by multiplying the closing price of shares at end of periodby the number of issued shares (after deducting the number of treasury shares).
- 28 -

* For operating cash flows, we use cash flows from operating activities in the consolidated statementof cash flows.
* Of the liabilities in the consolidated balance sheet, interest-bearing liabilities refer to all of thosefor which we pay interest. Interest payment refers to the interest paid in the consolidated statementof cash flows.
* The Company has applied the “Partial Amendments to Accounting Standard for Tax EffectAccounting” (ASBJ Statement No. 28, February 16, 2018) from the beginning of the fiscal year
ended March 31, 2019. Accordingly, equity ratio and equity ratio on a market value basis for the
fiscal year ended March 31, 2018 are stated as figures to which the above accounting standard has
been retrospectively applied.

- 29 -

With regard to capital resources, the Group views as one of the top priorities to secure appropriate funds for ouroperations, to maintain liquidity of funds, and to create stable operating cash flows aimed for a sound financial position.
To increase shareholders’ value, we must prepare an environment in which we can raise funds based on ourcontinuously growing operations while maintaining a steadfast financial standing.
Since the fiscal year ended March 31, 2016, we have maintained the level of capital expenditure higher thandepreciation. In this situation, equity ratio, the ratio of cash flows to interest-bearing liabilities, and the interest coverage
ratio, among other indicators, have remained at unquestionable levels. For this reason, we have determined that theGroup has maintained a financial standing that enables us to remain sound at a certain level and to raise funds for
implementing our growth strategy.
As consolidated cash flows for the fiscal year ended March 31, 2020 are stated in “(1) Overview of operating results,
etc., 2) Cash flows,” net cash provided by (used in) operating activities rose by 8,608 million yen, and net cash providedby (used in) investing activities fell by 8,271 million yen, which led us to secure free cash flows of 336 million yen.
While interest-bearing liabilities increased by 697 million yen, we paid dividends of 890 million yen, purchased treasury
shares of 21 million yen. As a result, cash and cash equivalents increased by 117 million yen.
As dividend policy is stated in “IV. Information about Reporting Company, 3. Dividend policy,” the Group views thereturn of profits to shareholders as a key management issue. Taking into consideration consolidated earnings
performance and financial conditions, and based on our basic policy to maintain stable dividends, we have decided onan ordinary dividend of 35 yen per share for the current fiscal year, as for the previous fiscal year.
The Group made a provisional calculation of capital cost as a reference when formulating the Medium-Term
Management Plan and to verify the reasonableness of cross-shareholdings. However, since there are various ways ofthinking about what numerical data should be used for calculation, we refrain from making public the specific data weused. Capital cost is the returns investors should expect, so we would like to understand what an appropriate capital
cost is through dialogue with institutional investors and other investors, aiming to leverage it to achieve operationaltargets and maximize shareholder returns.
The Group’s working capital is most needed by operating expenses for manufacturing products, including material
costs, labor costs, expenses, and selling, general and administrative expenses. Meanwhile, the capital intended forinvestment is most needed by the capital expenditure to expand, streamline, and improve production facilities and to
improve product quality. We raise these necessary funds through our own capital, which are mainly from operating cash
flows. We did not conduct material fundraising, including an increase in capital or issuance of corporate bonds, during
the fiscal year ended March 31, 2020. Capital expenditure on an asset basis for the fiscal year ending March 31, 2021
is estimated at 8,730 million yen in total, a majority of which we are planning to raise through our own capital andleases.
The Group has entered into overdraft contracts with our banks for effective fundraising on a consolidated basis, andthe unexercised portion of facilities based on these contracts is 14,270 million yen as of March 31, 2020. Adding thisamount to cash and deposits of 8,244 million yen as of March 31, 2020 will bring the total to 22,514 million yen, whichsurpasses the equivalent of a month’s net sales for the fiscal year ended March 31, 2020. For this reason, we havedetermined that we are at a certain level in terms of fund capabilities for any emergent demand. We have agreed toincrease the facility of overdraft contract by 10,000 million yen after the end of the fiscal year ended March 31, 2020to prepare ourselves for any possible adversity caused by the COVID-19 pandemic. As of March 31, 2020, we completed
a shelf registration of corporate bonds with the planned issuance amount of 20,000 million yen, although details about
their new issuance are yet to be worked out. This new issuance would prepare us for the demand for funds, including
those for facilities, investment and financing, repayments of borrowings, and working capital.

- 30 -

2) Significant accounting policies and estimates
The consolidated financial statements of the Group are prepared on the basis of accounting principles generally
accepted in Japan. We calculated the estimates needed to prepare these consolidated financial statements based onreasonable standards.
We have judged these estimates based on the various factors we deemed appropriate in light of past results or according
to the information available when making the estimates. However, the estimates might differ from actual results in the
future if there is any change in the conditions used as assumptions for the estimates or in the business environment.
Regarding the impact of COVID-19, the Group currently maintains operations at a close-to-pre-pandemic level while
carrying on business with strict infection prevention measures in place.
In preparing accounting estimates, an assumption that the effects of the COVID-19 pandemic will last into the first halfof the fiscal year ending March 31, 2021 and things will then recover in the second half as well as the latest businessconditions were used. However, since the effects of the pandemic still largely remain uncertain, the estimates might differ
from actual results in the future.
Among significant accounting policies, the followings are those which we consider will have a significant impact on
the consolidated financial statement with their estimates and assumptions:- Impairment of non-current assets
The Group classifies non-current assets into four categories: business assets, rental assets, idle assets, and artwork. The
Group groups its business assets by business units that are continuously monitored in management accounting; and rental
assets, idle assets, and artwork by individual asset.
When an indication of impairment exists for a business asset or business asset group, if the Group determines that the
total undiscounted future cash flows of the asset or asset group have fallen below their book value, the book value of theasset or asset group is reduced to their recoverable value and an impairment loss is recorded. The total undiscounted future
cash flows of business assets are calculated based on earnings projection derived from our business plan.
With regard to rental assets and idle assets whose recoverable value has fallen below their book value due to declines
in market prices or profitability and artwork whose market prices have declined significantly, their book value is reduced
to their recoverable value. The recoverable value of rental assets is measured by the net realizable value or the value in
use. The recoverable value of idle assets and artwork is measured by the net realizable value that is assessed based on theappraisal value, etc.
As for the Group’s effort not to miss an indication of impairment of these assets or asset groups and the recording andmeasurement of impairment losses, it may be required to record impairment losses in the case where the recoverable valueof these assets is expected to drop significantly due to changes in the management environment or market environment
in the future.
Undiscounted future cash flows of business assets for the current fiscal year are calculated using earnings forecasts,
based on the assumption that the impact of COVID-19 continues through the first half of the fiscal year ending March 31,
2021, followed by a recovery in the second half, and the most recent business conditions.
- Deferred tax assets
In determining the recoverability of deferred tax assets, deferred tax assets are only recognized for future deductible
temporary differences recoverable within the scope of forecast taxable income that was reasonably estimated based on
the future profit plan.
If the Group’s performance is affected by changes in its operating environment in the future or the effective statutory
tax rate is revised due to tax reforms, there may be an impact on the recoverability of deferred tax assets.
Taxable income for the current fiscal year is calculated using earnings forecasts, based on the assumption that the
impact of COVID-19 continues through the first half of the fiscal year ending March 31, 2021, followed by a recovery inthe second half, and the most recent business conditions.
- Allowance for doubtful accounts
In recording allowance for doubtful accounts, with respect to normal trade accounts receivable, it is stated at an amountbased on the actual rate of historical bad debts. For certain doubtful receivables, the uncollectible amounts are individuallyestimated. There may be additional allowance to be recorded due to concerns over credit standing of our business partners
or increases in delays in the collection of receivables.
While COVID-19 may have an impact on the recording of allowance for doubtful accounts in the future, significant
changes in risks associated with bad debts, such as those from the bankruptcies of business partners, are currently notobserved. As a result, we consider that its impact is minimal for the time being.

4. Material contracts, etc.
Not applicable- 31 -

5. Research and development activities
The Group encourages the product development underpinned by basic research to create productsthat are safe and sensitive to the latest trends, and also promotes the planning supported bystrategic marketing. Using the development concept based on the latest marketing data and market
analysis, we work on the product development with the theme of pursuing consumer needs andinclination as well as a new taste. Our efforts also include sweeping marketing research including
monitoring surveys. In this way, we are eager to develop a product that is truly meaningful toconsumers.
The research and development expenses paid by the Group during the fiscal year ended March
31, 2020 were 732 million yen in total, mainly for the research and development activities of theProcessed Food Products operations.
(Processed Food Products operations)
The Ham & Sausage Products department offered new types of dishes by launching as part of Kunseiya series,“Kunseiya-Ripened Pork Sausage: White,” white pork sausage with the impressive aroma and flavor of black
pepper and “Goma Abura de Taberu Gyu Nama Ham - Uncured Beef Ham Enjoyed with Sesame Oil,” chopped
uncured beef ham that can be enjoyed in a Korean yukhoe style by putting accompanied sesame oil. The department
also rolled out “Obento no Aka Cheese Iri - Red Sausages for Lunch Box with Cheese,” lunch-box-size red sausages
containing processed cheese made of Cheddar, Goshred, and Gouda.
The Precooked & Processed Foods department expanded the lineup of the “Daizu Life - Soy Life” series that isbased on soy meat made from soy protein with meat-like texture and contains dietary fiber by adding products
featuring hamburg steak and zhajiangmian, a kind of Chinese noodle dish. In addition, the department launched“Spice Cafe Series,” a new brand with exquisite aroma of pungent spices, which enables consumers to enjoy thetaste of specialty restaurants only by microwaving the products without opening the package. With regard todesserts and beverages, the Company launched the first pre-packaged tapioca milk tea products in Japan in 2002
after many trials and errors to keep the texture of tapioca for a long period of time. While Japan saw the third boom
in tapioca sales in 2019, our “TAPIOCA TIME Tapioca Milk Tea” won the Excellent Blockbuster Award at the 38th
Food Products Blockbuster Award sponsored by The Japan Food Journal Co., Ltd.
The Central Research Institute is driving various types of basic research as well as joint research with outsideorganizations under the theme of food and health. It has been striving to improve our product quality by
establishing an inspection system to ensure food safety, so that consumers can enjoy any of the Group’s products
without worrying about food safety. With regard to the research and development of livestock-derived functional
materials, we have filed an application with the Consumer Affairs Agency to label our supplement using thechicken breast plasmalogen, which relates to maintaining cognitive functions, Foods with Function Claims andreceived acceptance from it. The Agency’s acceptance is based on a report, which has been proven to be thescientific evidence, that plasmalogen has a function that maintains the ability of the middle-aged and the elderly
to memorize and recall words.
(Meat Products operations and Other)
No applicable matters to report.

- 32 -

III. Information about Facilities

1. Overview of capital expenditures
The Group spent capital expenditure of 9,167 million yen in total for the fiscal year ended March
31, 2020, mainly for the investment in expansion, streamlining, and quality improvement of
production facilities, and in the development of the main system. The total amount of capital
expenditure also includes the investment in property, plant and equipment and in intangible assets.

2. Major facilities(1) Reporting company

As of March 31,
2020
Book value (Millions of yen)

Name ofbusinesssegment

Details offacilities

Hokkaido Plant(Iwamizawa-shi, Hokkaido)

Processed Food
Products
operations

Iwate Plant(Hanamaki-shi, Iwate
Prefecture)

Business place (Location)

Buildings
andstructures

Machinery,equipment
and vehicles

Land(Area in m2)

Manufacturing
facility

506

189

116
(43,460)

Processed Food
Products
operations

Manufacturing
facility

273

408

Niigata Plant(Joetsu-shi, Niigata
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

778

Kanto Plant(Shimotsuke-shi, Tochigi
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

Ibaraki Plant(Inashiki-shi, Ibaraki
Prefecture)

Processed Food
Products
operations

Yokosuka Plant(Yokosuka-shi, Kanagawa
Prefecture)

LeasedassetsNumber of
employees

Other

Total

0

12

825

5

254
(42,335)

8

2

948

5

1,258

227
(51,483)

10

26

2,302

8

1,296

2,038

181
(66,193)

1

52

3,569

71

Manufacturing
facility

191

500

152
(14,932)

3

4

852

11

Processed Food
Products
operations

Manufacturing
facility

161

227

2,476
(6,412)

4

3

2,872

8

Shonan Plant(Hiratsuka-shi, Kanagawa
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

271

205

1,004
(13,937)

1

0

1,484

9

Shizuoka Plant(Kakegawa-shi, Shizuoka
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

177

259

359
(34,862)

1

11

808

15

Matsusaka Plant(Matsusaka-shi, Mie
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

154

307

146
(12,010)

0

4

612

9

Takatsuki Plant(Takatsuki-shi, Osaka)

Processed Food
Products
operations

Manufacturing
facility

589

1,323

323
(54,030)

3

31

2,271

56

Okayama Plant(Tsuyama-shi, Okayama
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

189

221

454
(42,891)

0

5

872

9

Hiroshima Plant(Miyoshi-shi, Hiroshima
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

387

971

335
(48,753)

3

16

1,713

9

Karatsu Plant(Karatsu-shi, Saga
Prefecture)

Processed Food
Products
operations

Manufacturing
facility

1,790

2,946

501
(39,228)

9

43

5,292

26

Processed Food
Hokkaido Sales Dept.
Products(Sapporo-shi, Hokkaido, and operations
other locations)
Meat Products
operations

Sales facility

47

3

135
(6,852)

1

2

191

12

Processed Food
Products
operations
Meat Products
operations

Sales facility

138

14

258
(6,206)

3

4

419

24

Tohoku Sales Dept.
(Natori-shi, Miyagi
Prefecture, and otherlocations)- 33 -

Business place (Location)

Name ofbusinesssegment

Book value (Millions of yen)
Details offacilities

Buildings
andstructures

Machinery,equipment
and vehicles

Land(Area in m2)

Leasedassets

Other

Total

Number of
employees

East Japan Sales Dept.
(Chuo-ku, Tokyo, and otherlocations)

Processed Food
Products
operations
Meat Products
operations

Sales facility

293

13

766
(8,847)

13

14

1,101

139

Chubu Sales Dept.
(Komaki-shi, Aichi
Prefecture, and otherlocations)

Processed Food
Products
operations
Meat Products
operations

Sales facility

206

14

683
(11,164)

5

6

916

46

Kansai Sales Dept.
(Nishinari-ku, Osaka-shi,and other locations)

Processed Food
Products
operations
Meat Products
operations

Sales facility

232

8

835
(12,182)

11

12

1,100

95

Chu-Shikoku Sales Dept.
(Nishi-ku, Hiroshima-shi,and other locations)

Processed Food
Products
operations
Meat Products
operations

Sales facility

239

5

441
(10,188)

5

8

700

43

Kyushu Sales Dept.
(Kasuya-gun, Fukuoka
Prefecture, and otherlocations)

Processed Food
Products
operations
Meat Products
operations

Sales facility

222

18

490
(13,308)

5

11

748

46

- 34 -

(2) Subsidiaries in Japan

As of March 31,
2020
Book value (Millions of yen)

Business place(Location)

Name ofbusinesssegment

Details offacilities

Toda Foods
Co., Ltd.

Head Office andplant(Toda-shi, Saitama
Prefecture, and otherlocations)

Processed
Food
Products
operations

Azumino Food
Co., Ltd.

Head Office andplant(Matsumoto-shi,
Nagano Prefecture,and other locations)

Processed
Food
Products
operations

Company
nameNumber of
employees

Buildings
andstructures

Machinery,equipment
and vehicles

Land(Area in m2)

Leasedassets

Other

Total

Manufacturing
facility

3,528

1,762

1,152
(21,270)

950

74

7,469

148

Manufacturing
facility

1,313

694

905
(55,711)

2,538

125

5,577

86

(Notes) 1.
There are no major facilities out of operation.
2. The amounts above are exclusive of consumption taxes, etc.
3. The “Other” item under book value refers to a total of tools, furniture and fixtures, andintangible assets.
4. The figures for the reporting company’s Takatsuki Plant include the land of the Head
Office.
3. Planned addition, retirement, and other changes of facilities(1) Planned addition of material facilities
The Group plans to add or repair material facilities as of March 31, 2020 as follows. Capital expenditure on an asset basis
for the fiscal year ending March 31, 2021 is estimated at 8,730 million yen in total.
(Planned amounts ofinvestment)
Fundraising
methodStarting date

Estimatedcompletion
date

432

By our own
capitalJuly 2018

March 2021

3,000

2,959

By our own
capitalJune 2016

March 2021

2,100

1,505

By our own
capital andlease

June 2019

April 2020

Total
amount(Millionsof yen)Amountalreadypaid(Millionsof yen)Manufacturing
facility, etc.

4,090

Processed Food
Products
operations
Other

Replacement
and update of
the mainsystemProcessed Food
Products
operations

Chilledbeverage
manufacturing
facility, etc.

Business place(Location)

Name of businesssegment

Details offacilities

Reportingcompany

Takatsuki Plant(Takatsuki-shi, Osaka)

Processed Food
Products
operations

Reportingcompany

Head Office(Takatsuki-shi, Osaka,
and other locations)

Azumino Food
Co., Ltd.

Yamanashi Plant(Nirasaki-shi,
Yamanashi Prefecture)

Company name(Note) The amounts above are exclusive of consumption taxes, etc.
(2) Planned retirement of material facilities
Not applicable, except for the removal of operating facilities for regular renovation.

- 35 -

IV. Information about Reporting Company

1. Company’s shares, etc.
(1) Total number of shares, etc.
1) Authorized sharesClass

As of March 31,
2020
Total number of shares authorized to be issued (Shares)

Common stock

40,000,000

Total

40,000,0002) Issued sharesClass

As of the end of thecurrent fiscal year
(Shares)(March 31, 2020)

As of the filing date
(Shares)(June 29, 2020)

Stock exchange on which
the Company is listed

Common stock

26,505,581

Tokyo Stock Exchange
26,505,581 (First Section)
Frankfurt Stock Exchange

Total

26,505,581

26,505,581–

Details
A minimum
trading unit:
100 shares–(2) Share acquisition rights
1) Employee share option plans
Not applicable2) Rights plans
Not applicable3) Share acquisition rights for other uses
Not applicable(3) Exercises of moving strike convertible bonds, etc.
Not applicable(4) Changes in total number of issued shares, share capital and legal capital surplus

Date

Changes in
Balance of
Changes inChanges in
Balance ofthe total
the total
legal capital
number of
number of share capital share capitalsurplusissued shares issued shares (Millions of (Millions of(Millions of(Thousands (Thousands
yen)
yen)
yen)
of shares)of shares)

Balance oflegal capitalsurplus(Millions ofyen)

October 1, 2018 (Note)(106,022)
26,505–
6,716–
21,685(Note) This is attributable to the Company’s one-for-five share consolidation of its common stock.

- 36 -

(5) Shareholding by shareholder category

As of March 31,
2020
Status of shares (the minimum unit consists of 100 shares)
Government
and local
municipalities

Japanesefinancial
institutions
andinsurancecompanies

Financial
instruments
business
operators

Other
Japanese
corporations

Number ofshareholders

–

44

21

160

Number ofshares held
(Units)–85,104

1,314

Percentage ofshares held (%)

–

32.15

0.50

Category

Foreign corporations, etc.

Status ofsharesbelow unit
(Shares)

Individuals

Individuals,
others129

918,891

19,254–

52,10433,13921

92,991

264,673

38,281

19.69

12.52

0.01

35.13

100.00–

Others

Total(Note) 1,081,261 shares of treasury shares consist of 10,812 units listed under “Individuals,
others” and 61 shares listed under “Status of shares below unit.” The actual number oftreasury shares is 1,081,261 as of March 31, 2020.
(6) Major shareholders

Name

Marudai Kyoei Kai

Address

2,114

8.31

1,192

4.69

1,175

4.62

1,050

4.12

1-1-2 Marunouchi, Chiyoda-ku, Tokyo

887

3.49

1-4-1 Marunouchi, Chiyoda-ku, Tokyo

864

3.40

7-18-24 Tsukiji, Chuo-ku, Tokyo

860

3.38

1-8-11 Harumi, Chuo-ku, Tokyo

807

3.17

PALISADES WEST 6300, BEE CAVE
ROAD BUILDING ONE AUSTIN TX
78746 US
(6-27-30 Shinjuku, Shinjuku-ku, Tokyo)

646

2.54

1-13-2 Yuraku-cho, Chiyoda-ku, Tokyo

642

2.52

Total
–
10,241(Notes) 1.
Number of shares held is rounded down to the nearest thousand.
2. Percentage of shares held is rounded down to the second decimal place.

40.28

Kanematsu Corporation
The Master Trust Bank of Japan,
Ltd. (Trust Account)
Komori Memorial Foundation
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Life Insurance Company
Japan Trustee Services Bank, Ltd.
(Trust Account)
DFA INTL SMALL CAP VALUE
PORTFOLIO(Standing proxy: Citibank, N.A.,
Tokyo Branch)
The Norinchukin Bank

21-3 Midori-cho, Takatsuki-shi, Osaka

As of March 31,
2020
Percentage ofshares held tothe total
Number of
number ofshares held
issued shares(Thousands of(excluding
shares)shares oftreasuryshares) (%)

119 Ito-machi, Chuo-ku, Kobe-shi, Hyogo
Prefecture
2-11-3 Hamamatsu-cho, Minato-ku,
Tokyo
Inside the Head Office of Marudai Food
Co., Ltd. at 21-3 Midori-cho, Takatsukishi, Osaka- 37 -

3. The Company owns 1,081,261 shares of treasury shares but excludes itself from the
major shareholders above.
4. Komori Memorial Foundation is a public interest incorporated foundation establishedin accordance with the last will of the Company’s founding president, the late Mr.
Toshiyuki Komori. This Foundation is aimed to provide monetary support forscholarship programs and academic research, among others, using the dividends, etc.
gained by managing its base assets, which mainly consist of the Company’s shares.
5. The following shares fall into the shares related to trust business:
The Master Trust Bank of Japan, Ltd. (Trust Account):
1,175 thousand shares
Japan Trustee Services Bank, Ltd. (Trust Account):
807 thousand
shares
6. The change report on large shareholdings that was made available to the public on
April 6, 2020 states that Sumitomo Mitsui Trust Bank, Limited and its joint holders,
Sumitomo Mitsui Trust Asset Management Co., Ltd. and Nikko Asset Management Co.,
Ltd., owned the following shares as of March 31, 2020. However, since the Company
has not been able to confirm the actual number of shares alleged to be held by the twocompanies other than Sumitomo Mitsui Trust Bank, Limited as of March 31, 2020, theCompany does not include the information of those two companies in the major
shareholders above.
The details of the change report on large shareholdings are as follows:
Number of sharecertificates, etc.
held(Thousands ofshares)Percentage ofshare certificates,etc. held
(%)

864

3.26

1-1-1 Shibakoen, Minato-ku, Tokyo

749

2.83

9-7-1 Akasaka, Minato-ku, Tokyo

246

0.93

–

1,861

7.02

Name
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Trust AssetManagement Co., Ltd.
Nikko Asset Management Co.,
Ltd.
Total

Address
1-4-1 Marunouchi,Tokyo

Chiyoda-ku,(7) Voting rights
1) Issued shares

As of March 31,
2020
Category

Number of shares (Shares)

Shares without voting rights
Shares with limited voting
rights (treasury shares, etc.)
Shares with limited voting
rights (others)–

Number of voting rights(Units)
–

–

–

–

–

–

–

–

–

Shares with full voting rights(treasury shares, etc.)
Shares with full voting rights(others)
Shares below one unit
Total number of issued shares
Total voting rights held by all(Treasury shares)
Common1,081,200
stock
Common25,386,100
stock
Common38,281stock
26,505,581–- 38 -

253,861–

Details––––
253,861––

shareholders(Note) The number of shares of common stock in “Shares below one unit” includes the 61 shares
held by the Company as treasury shares.
2) Treasury shares, etc.

Number ofshares held
under thenames ofothers(Shares)

As of March 31,
2020
Percentage ofshares held toTotal number
the totalof shares heldnumber of(Shares)issued shares(%)

Address ofshareholder

Number ofshares held
under own
name(Shares)21-3 Midori-cho,Marudai Food Co., Ltd. Takatsuki-shi,
Osaka

1,081,200–

1,081,200

4.07

1,081,200–

1,081,200

4.07

Shareholder(Treasury shares)

Total

–

2. Acquisition and disposal of treasury shares
Acquisition of common stock in accordance with Article 155, Items 3 and 7
Class of shares, etc.:of the Companies Act(1) Acquisition by resolution of shareholders meeting
Not applicable- 39 -

(2) Acquisition by resolution of board of directors meeting

Acquisition in accordance with Article 155, Item 3 of the Companies Act

Category

Number of shares (Shares)

Total amount (Millions ofyen)

11,60023––

10,500

21

1,100

2

9.48

9.48

Resolution at the meeting of the Board of Directors
as of August 26, 2019
(Acquired from August 27, 2019 to August 27, 2019)
Treasury shares acquired before the current fiscal
year
Treasury shares acquired during the current fiscal
year
Total number and amount of remaining shares to beacquired by resolution
Percentage of unexercised portion as of the end of thecurrent fiscal year (%)

Treasury shares acquired during the period reported––
Percentage of unexercised portion as of the filing date
9.48
9.48
(%)
(Note) These shares were acquired through ToSTNeT-3, the off-auction treasury shares
repurchase system of the Tokyo Stock Exchange.
(3) Acquisition not based on resolution of shareholders meeting or board of directors meeting
Acquisition in accordance with Article 155, Item 7 of the Companies Act

Category

Number of shares (Shares)

Total amount (Millions of
yen)

130

0

Treasury shares acquired during the current fiscal
year

Treasury shares acquired during the period reported
110(Note) “Treasury shares acquired during the period reported” does not include the number ofshares below one unit acquired during the period from June 1, 2020, to the filing date ofthis Annual Securities Report.
(4) Disposal of acquired treasury shares and number of treasury shares held

Current fiscal year
Category
Acquired treasury shares forwhich subscribers were solicited
Acquired treasury shares thatwere disposed ofTreasury shares transferred due tomerger, stock exchange, or
corporate separation

Number of shares(Shares)

The period reported

Total amount
Total amount
Number of sharesdisposeddisposed(Shares)(Millions of yen)
(Millions of yen)

–

–

–

–

–

–

–

–

–

–

–

–

Number of shares of treasury
1,081,261–
1,081,272–
shares held
(Note) “Number of shares of treasury shares held” during the period reported does not include
the number of shares below one unit acquired during the period from June 1, 2020, to thefiling date of this Annual Securities Report.
3. Dividend policy- 40 -

The Company views the return of profits to shareholders as a key management issue. The
Company will make it a basic policy to maintain stable dividends, while taking into consideration
consolidated earnings performance and financial conditions.
Our dividends of surplus are paid basically once a year as a year-end dividend, the amount of
which is decided by the General Meeting of Shareholders.
We intend to make effective use of internal reserves to strengthen our management foundationand competitiveness, aiming to increase our corporate value further by establishing a profitableearnings basis.
Based on the abovementioned policy, we have decided on an ordinary dividend of 35 yen per sharefor the current fiscal year.
(Note) Dividends of surplus whose record date falls on the current fiscal year are as follows:

Date of resolution

Total amount of dividends(Millions of yen)

Resolution at the Ordinary
General Meeting of Shareholders
held on June 26, 2020889

- 41 -

Dividends per share
(Yen)
35

4. Corporate governance(1) Overview of corporate governance1) Basic policy on corporate governance
The Company’s basic policy on corporate governance is to commit ourselves to the corporate management to gain
credibility from consumers. Given the growing consumer interest in the food safety, we will strive to strengthen our
quality assurance system further to provide consumers with safer and healthier food products. To do so, we will establish
a comprehensive hygiene management system, such as the HACCP management system, and ensure that we appropriately
label products in accordance with safety requirements as well as with laws and regulations.
The Company formulated the Marudai Food Group’s Code of Conduct in January 2004 to comply with the laws andregulations relevant to overall corporate operations as well as corporate ethics, and to further raise the awareness of theGroup’s Directors/Statutory Auditors and employees, aiming to be a company broadly supported in society by consumers,
shareholders, business partners, etc.
2) Overview of the Company’s corporate governance system and the reason for adopting this system
The Company’s systems for business execution and internal control, as well as the implementation status of measures,are as follows:(The Company’s administrative bodies)
The Company has the General Meeting of Shareholders, the Board of Directors, the Nomination and Remuneration
Committee, the Management Meeting, the Executive Officers’ Meeting, and the Group Meeting as management bodies
to maintain a system for swift decision-making and business execution. Meanwhile, the Company also has the Compliance
Committee and the Corporate Ethics Committee in place to maintain a system of continuously monitoring and supervising
the status of the Company’s compliance with laws and regulations. Since we have judged that each Statutory Auditor aswell as the Board of Statutory Auditors has been functioning as a supervisor to management, we have chosen to be a
Company with a Board of Statutory Auditors.
A. Board of Directors
In addition to a monthly regular meeting, the Board of Directors holds an extraordinary meeting in a timely manner,
if necessary, to make decisions on material matters related to management and to oversee each Director’s execution of
their duties. We have nine Directors, two of whom are Outside Directors including one woman. By appointing talent
with abundant experience and advanced expertise and techniques as Directors, we are striving to make our operations
more transparent and fairer.
The meetings of the Board of Directors were held 13 times during the fiscal year ended March 31, 2020, with theattendance rate of Directors being 99% and that of Statutory Auditors being 100%.

- 42 -

B. Nomination and Remuneration Committee
We have the Nomination and Remuneration Committee in place as of the filing date to ensure the transparency andobjectivity of the process to decide the candidates for Directors and Statutory Auditors and to decide Directors’
remuneration. The Nomination and Remuneration Committee comprises three members, two of whom are Independent
Outside Directors, and deliberates the following matters, etc. and advises the Board of Directors.
- Matters related to the election of candidates for Directors and Statutory Auditors- Matters related to the dismissal of Directors and Statutory Auditors- Matters related to the selection and dismissal of Representative Director- Matters related to the plan for successors- Matters related to the policy concerning a decision on the details of Directors’ remuneration, etc.
- Matters related to a decision on details of each Director’s remuneration, etc.
C. Corporate Ethics Committee
We have the Corporate Ethics Committee in place, chaired by a Director with a special title. It conducts fact-finding
surveys concerning violations of corporate ethics, the cases reported by an insider, etc., and examines and formulates
prevention measures.
D. Compliance Committee
We have the Compliance Committee in place, chaired by an Independent Outside Director, to oversee the Group’s
compliance situation and promote observance of laws. With regard to the Compliance Awareness Survey that covers all
the employees of the Group, the Compliance Committee reports to the Board of Directors on the survey results inaddition to the cases, etc. deliberated at the Corporate Ethics Committee. By so doing, it strives to raise the awarenessabout compliance based on corporate ethics and to make the importance of such compliance thoroughly understood, in
addition to the importance of observance of laws.
E. Management Meeting
The Management Meeting comprises full-time Directors and is attended by those other than full-time Directors, if
necessary. It is held once a week, in principle, to deliberate in advance matters subject to resolution by the Board of
Directors and to deliberate and examine other material matters related to management.
F. Group Meeting
The Group Meeting comprises Directors including Outside Directors, Statutory Auditors, and presidents of major
subsidiaries. It is held once every three months, in principle, to report, deliberate, and examine subsidiaries’ operating
results, financial conditions, and other material matters.
G. Executive Officers’ Meeting
We have introduced an executive officer system, in which Executive Officers execute their duties under the directionof President and Representative Director in accordance with the decisions by the Board of Directors. The Executive
Officers’ Meeting comprises Directors including Outside Directors, Statutory Auditors, and Executive Officers. It is
held once a month, in principle, to report, deliberate, and examine Executive Officers’ execution of their duties.
H. Statutory Auditors and the Board of Statutory Auditors
We have three Statutory Auditors, two of whom are Outside Statutory Auditors, one of whom is a full-time Statutory
Auditor. Statutory Auditors attend the meeting of the Board of Directors and other material meetings and hold a regularmeeting to exchange views with Directors, Executive Officers, and employees, to oversee Directors’ business execution.
The meeting of the Board of Statutory Auditors is held once a month, in principle, to resolve, discuss, and deliberatematerial matters related to the audit policy and plan as well as audits. The Board of Statutory Auditors has a system inplace to grasp the Group’s condition in a timely and appropriate manner by closely working with the Accounting Auditor
and the internal auditing departments.
The meetings of the Board of Statutory Auditors were held 14 times during the fiscal year ended March 31, 2020,
with the attendance rate of Statutory Auditors being 100%.
I. Internal Audit Office
We have the Internal Audit Office under the direct authority of President as one of the internal auditing departmentsthat conducts the Group’s internal business audits and evaluates the status of its internal control. It comprises nine
members and works closely with Statutory Auditors concerning the results of audits and evaluation.

- 43 -

3) Other matters related to corporate governance
Basic policy on internal control system and the establishment of such system
A. Basic policy
The Company strives to appropriately establish and operate its internal control system so that all the companies anddepartments of the Marudai Food Group can fulfill their own roles, with the aim of achieving its corporate philosophy
and operational targets and of improving its corporate value and sustainably growing.
With regard to the internal control system, the Internal Audit Office, under the direct authority of President, plays acore role in evaluating how the internal control system is implemented at the Company’s individual departments andthe Group’s companies overall and in making proposals accordingly.
The Company resolved a proposal for the “Systems for Ensuring Proper Business Activities (internal control system)”stipulated by the Companies Act and the Regulations for Enforcement of the Companies Act at the meeting of the Boardof Directors held in May 2006, and resolved a proposal for partially amending the said resolution at the meeting of theBoard of Directors held in May 2015. We will continue to enhance transparency of our overall management throughactive disclosure of information.
B. Business execution and internal control system(A) A system to ensure that Directors and employees execute their duties in compliance with laws and regulations aswell as with the Articles of Incorporation of the Company
The Directors and employees of the Company and its subsidiaries shall execute their duties in accordance with
the Marudai Food Group’s Code of Conduct, which stipulates the observance of laws and regulations, the Articles
of Incorporation, and social ethics. The Compliance Committee, chaired by an Independent Outside Director,
shall oversee the Marudai Food Group’s overall compliance situation and promote observance of laws andregulations, etc.
We shall also formulate the Marudai Food Group’s Whistleblowing Rules as part of our internal whistleblowing
system and make Directors and employees fully understand it to prevent any violation of laws and regulations or
the Articles of Incorporation.
(B) A system to store and manage the information related to Directors’ execution of duties
We shall appropriately store and manage the minutes of the meeting of the Board of Directors and relevant
documents, as well as the material information, etc. related to Directors’ execution of duties, in accordance with
the Document Rules.
(C) Rules and other systems to manage the risk of loss
The Company and its subsidiaries shall formulate the Marudai Food Group’s Risk Management Rules toestablish and implement a system that ensures food safety as a group of food companies and that prepares us torespond swiftly in the event of a material accident or natural disaster.
(D) A system to ensure Directors’ efficient execution of duties
We shall make a swift and appropriate decision on management matters at a regular meeting of the Board of
Directors after deliberating such matters in advance at the Management Meeting, in accordance with the Rules
for the Board of Directors and the Guidelines for Operation of the Board of Directors. We shall also formulate theRules for Division of Duties and Authority for Organization to ensure that the Directors and employees of theCompany and its subsidiaries efficiently execute duties. By so doing, we shall set standards for duties and authority,
our chain of command, and other organizational matters to clarify the division of roles, etc. among the Directors
and employees of the Company and its subsidiaries.
(E) A system to ensure the appropriateness of the business activities by the group consisting of the Company and its
subsidiaries
In the Company, the Internal Audit Office, independent of the business execution departments, shall audit theGroup and regularly report to the Board of Directors and the Board of Statutory Auditors about how ourcompliance system is established and operated.
(F) Matters related to the report to the Company about execution of duties by Directors, etc. of its subsidiaries
The Company shall regularly hold a meeting of the Group companies attended by Directors of the Company
and directors of its major subsidiaries, where the subsidiaries are obliged to regularly report about their operating
results, financial conditions, and other material information. We shall also have a system in place for them toreport without delay to the Company about material matters that could affect the Company’s operations, including
an event that might cause the Company material damage or an event that is in violation of laws and regulationsor the Articles of Incorporation.
(G) Matters related to any employee hired as an assistant for Statutory Auditors if requested by them
If Statutory Auditors request that we hire an employee as an assistant to effectively conduct the audits by
Statutory Auditors, Directors shall properly deploy personnel after discussion with Statutory Auditors.

- 44 -

(H) Matters related to independence from Directors of the said employee stipulated in a preceding item andeffectiveness of directions
Any decision on personnel matters concerning the employee as an assistant for Statutory Auditors, including
the nomination, transfer, and evaluation of the said employee, shall necessitate the prior consent of the Board of
Statutory Auditors. Any directions to such employee shall be given by Statutory Auditors.
(I)

A system for Directors and employees of the Company and its subsidiaries to report to Statutory Auditors andsystems related to other reports to Statutory Auditors
We shall have a system in place in which the Directors and employees of the Company and its subsidiaries shallreport to Statutory Auditors without delay about any event that might cause the Company or its subsidiaries
material damage, any case, etc. that is in violation of laws and regulations or the Articles of Incorporation, anycase in which such Directors or employees have received a report about the abovementioned event or case, or any
report to the whistleblowing contact points. The Internal Audit Office and the Quality Assurance Dept. shall reportto Statutory Auditors about audit results regularly and if necessary.

(J)

A system to prevent anyone who has reported to Statutory Auditors from being treated unfavorably on grounds ofmaking such report
We shall formulate an internal rule that bans treating unfavorably any Director or employee of the Company or
its subsidiaries who has reported to Statutory Auditors, or anyone who has reported to Statutory Auditors uponreceiving a report from such Director or employee, on grounds of making such report. We also shall make the
Directors and employees of the Company and its subsidiaries fully understand the rule.

(K) Matters related to the policy for prepayment or reimbursement of the expenses incurred when Statutory Auditors
execute duties and the policy for dealing with other expenses and obligations incurred when they execute duties
If Statutory Auditors request prepayment or reimbursement of the expenses incurred when Statutory Auditors
execute duties, the Company shall promptly deal with such expenses or obligations.
(L) Other systems to ensure that Statutory Auditors’ audit is effectively conducted
The Board of Statutory Auditors shall hold a regular meeting to exchange views with Representative Director
and Directors including Outside Directors and work closely with the Accounting Auditor and the internal auditing
departments, including the Internal Audit Office and the Quality Assurance Dept.
C. Initiatives to eliminate antisocial forces(A) Basic policy for eliminating antisocial forces
The Company shall act in accordance with the Guidelines for Enterprises to Prevent Damage Caused by
Antisocial Forces (Agreement at a Meeting of Cabinet Ministers Responsible for Anti-Crime Measures as of June
19, 2007) and also in conformity with the Basic Principle resolved at the meeting of the Board of Directors heldon January 28, 2008.
(B) Status of establishment of measures to eliminate antisocial forcesa.
We work on an initiative to eliminate antisocial forces as a corporate body, with the General Affairs Section of
the General Affairs and Human Resources Dept. serving as the secretariat for such an initiative.
b. We work together with outside specialist bodies: police stations throughout Japan, Osaka Center for Removalof Criminal Organizations, and Osaka Corporate Defense Countermeasures Federation.
c.
We have no relationship with any antisocial forces, including any business relationship.
d. Should we face any civil or criminal case against antisocial forces, we shall act in accordance with instructions
from our corporate lawyer.
e.
Not only to ban doing any behind-the-scenes deal with antisocial forces and supplying funds to them, have webeen putting all our energies into our corporate-wide efforts to make the Three No Campaign to Eliminate
Antisocial Forces, “No fears, no money, and no use,” fully understood throughout our corporate operations.

- 45 -

4) Overview of limited liability agreement

Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company has entered into agreement with
Directors, excluding executive Directors and employees, and with Outside Statutory Auditors to limit their
liability for damages pursuant to Article 423, Paragraph 1 of the Companies Act. The maximum amount of
the liability for damages pursuant to the agreement shall be the amount stipulated by laws and regulations.
This limited liability is applicable only if such Directors, excluding executive Directors and employees, andsuch Outside Statutory Auditors conducted the duty that has caused liability in good faith and without grossnegligence.
5) Requisite number of Directors

The Company stipulates in its Articles of Incorporation that the Board of Directors shall comprise notmore than ten Directors. With Directors having diverse specialties and experiences, the Board of Directors
shall oversee business execution and make a material decision while ensuring swiftness.
6) Requirement for resolution of the election of Directors

The Company stipulates in its Articles of Incorporation that a resolution for the election of Directors shallbe passed with the presence of shareholders who represent one-third or more of the total voting rights, andby a majority of the voting rights held by those shareholders present entitled to exercise their voting rights,
but not by cumulative votes.
7) Purchase of treasury shares

The Company stipulates in its Articles of Incorporation that it may purchase its own shares via the market,
etc., subject to a resolution of the Board of Directors in accordance with Article 165, Paragraph 2 of theCompanies Act. This is aimed to flexibly carry out management measures such as financial policy inresponse to any changes in economic conditions.
8) Requirement for special resolution at the General Meeting of Shareholders

The Company stipulates in its Articles of Incorporation that special resolutions as stipulated in Article
309, Paragraph 2 of the Companies Act shall be passed with the presence of shareholders who represent
one-third or more of the total voting rights, and by two-thirds or more of the voting rights held by thoseshareholders present entitled to exercise their voting rights. This is aimed to maintain smooth operation of
the General Meeting of Shareholders.
9) Transactions with related parties

In the case of conducting transactions with related parties, such as Directors or major shareholders, theCompany requires the approval at the meeting of the Board of Directors in accordance with its internal rules.

- 46 -

(2) Directors (and other officers)
1) List of Directors/Statutory Auditors

Male: 11, Female: 1 (Ratio of female to Directors/Statutory Auditors:
8.3%)
Title and position

Chairman and
Representative
Director

President andRepresentative
Director

Senior Executive
and Managing
Director
In charge ofGeneral Affairs andHuman Resources
Dept., Food Supply
Sales Dept., andQuality Assurance
Dept.
Managing Director
In charge ofProcessed Food
Products Div.,
Affiliates
Management Dept.,
Information
Systems Dept., andTokyo Branch,
General Manager ofCorporate Strategy
OfficeName

Tokuo Kudara

Toshiharu
Inoue

YoshioKuramori

Yasushi
SawadaDate of birth

February 2,
1939

January 11,
1953

June 30, 1953

April 5, 1956

Career summary

February 1960

Joined the Company

March 1970

General Manager, Purchasing Dept.

April 1973

Director

October 1981

Managing Director

April 2001

President and Representative Director

June 2019

Chairman and Representative Director (to present)

October 1975

Joined the Company

June 2003

Executive Officer

June 2005

Director

June 2007

Managing Director

April 2011

Senior Executive and Managing Director

June 2014
October 2017

President and Representative Director, MarudaiService Co., Ltd.
Managing Executive Officer

June 2018

Senior Executive and Managing Director

June 2019

President and Representative Director (to present)

April 1976

Joined the Company

June 2003

Executive Officer

May 2010

Managing Executive Officer

June 2013

Director

June 2014

Managing Director

June 2017

Senior Executive and Managing Director (to present)

April 1982

Joined the Company

June 2004

Executive Officer

June 2005

Director

April 2011

Managing Director (to present)

April 1987

Joined the Company

April 2011

Executive Officer, General Manager of Overseas
Business Dept.
Executive Officer, General Manager of Overseas Food
Marketing Dept.
Senior Executive Officer, General Manager of MeatBusiness Div.
Director, General Manager of Meat Business Div.

April 2013
Director
In charge of MeatBusiness Div.,
General Manager ofSales Div.

Shigeki
Fukushima

October 9,
1963April 2017
June 2017
June 2018
April 2019
June 2019
April 2010

Director
General Manager of
Accounting Dept.

Nobuyoshi
Katoh

January 14,
1960

As of June 29, 2020

May 2012
May 2012

Term

Number ofshares of theCompany
held(Shares)(Note 3)42,400(Note 3)3,200

(Note 3)3,700

(Note 3)4,000

(Note 3)2,800

(Note 3)

4,600

Director, General Manager of Meat Business Div.,
General Manager of Business Planning OfficeDirector, General Manager of Business Planning
OfficeDirector, General Manager of Sales Div. (to present)
General Manager of Tennoji-ekimae Corporate Sales
Dept., Sumitomo Mitsui Banking Corporation
Joined the Company
Executive Officer, General Manager of Accounting
Dept.

- 47 -

Title and position

Name

Date of birth

Career summary

June 2013

Director, General Manager of Accounting Dept. (topresent)- 48 -

Term

Number ofshares of theCompany
held(Shares)Title and position

Director
In charge ofProcurement Div.,
Logistics Div.,
Central ResearchInstitute, General
Manager of Ham &Sausage Products
Div., General
Manager of Ham &Sausage Production
Dept.

Name

Kouji Mishima

Date of birth

Career summary

April 1988

Joined the Company

April 2016

General Manager of Kanto Plant

April 2017

Executive Officer, General Manager of Kanto Plant

April 2018

Executive Officer, General Manager of Ham &Sausage Production Dept., General Manager of Ham& Sausage Products Planning Dept.
Director, General Manager of Ham & Sausage
Products Div., General Manager of Ham & Sausage
Production Dept., General Manager of Ham &Sausage Products Planning Dept.
Director, General Manager of Ham & Sausage
Products Div., General Manager of Ham & Sausage
Production Dept. (to present)

April 1, 1966
June 2019

October 2019

April 1969

Director

SusumuShimadzu

January 20,
1947

June 1997

Joined The Sumitomo Bank, Limited (currently
Sumitomo Mitsui Banking Corporation)
Director, General Manager of Hibiya Branch

June 1998

Managing Director, Kumagai Gumi Co., Ltd.

May 2001

President and Representative Director, Sumigin
Guarantee Company Limited (currently SMBC
Guarantee Co., Ltd.)
Representative Director and Senior Managing
Director, RENOWN INCORPORATED
President and Representative Director, GINSEN CO.,LTD.
Advisor

April 2003
April 2006
June 2010
June 2012

April 1981

April 2014
November 27,
1958

October 2014
June 2016
April 2018
June 2019
April 2001

Full-time Statutory
AuditorYoshikazu
SawanakaJune 1, 1949

300

(Note 3)–(Note 3)–(Note 4)

19,200Joined Matsushita Electric Industrial Co., Ltd.
(currently Panasonic Corporation)
Director, Corporate Information Security Division

April 2007

Keiko Kaneko(Note 3)Retired from the position of Advisor of GINSEN CO.,LTD.
Outside Director, the Company (to present)

June 2015

Director

Term

Number ofshares oftheCompany
held(Shares)

Assistant to Director, Senior Counsel for Personal
Information Protection, Legal Division
General Manager, Security Compliance Division,
Benesse Holdings, Inc.
General Manager, Information Security Division
Associate Professor, Department of Business Law,
Faculty of Business Administration, Osaka Universityof Economics (to present)
Outside Director of the Company (to present)

May 2002

Senior Credit Officer, Credit Dept. III, Corporate
Business Unit, Sumitomo Mitsui Banking Corporation
Joined the Company

June 2002

Director, General Manager of Accounting Dept.

June 2003

Managing Director

June 2012

Full-time Statutory Auditor (to present)- 49 -

Title and position

Full-time Statutory
AuditorName

TakashiMatsuzawa

Date of birthJanuary 2,
1962

Career summary
April 1984
February 2007

Joined The Norinchukin Bank
Deputy General Manager of Internal Audit Division

August 2008

June 2020

Deputy General Manager of Agriculture, Fishery andForestry Financing Division
General Manager of Office of Audit & Supervisory
Board Members
Executive Officer, General Manager of Administration
Div., NOCHU INFORMATION SYSTEM CO., LTD.
Outside Statutory Auditor of the Company (to present)

April 1972

Registered as attorney-at-law (Osaka Bar Association)

June 2012

Outside Auditor, Nikkato Co., Ltd.

June 2013

Outside Statutory Auditor of the Company (to present)

June 2015

Outside Director (Audit & Supervisory Committee
Member), Nikkato Co., Ltd. (to present)

July 2013
June 2015

Statutory Auditor

MotoakiNishimura

July 9, 1943

Total

Term

Number ofshares of theCompany
held(Shares)(Note 5)–(Note 6)–80,200(Notes) 1.
Directors Mr. Susumu Shimadzu and Ms. Keiko Kaneko are Outside Directors.
2. Statutory Auditors Mr. Takashi Matsuzawa and Mr. Motoaki Nishimura are Outside
Statutory Auditors.
3. The term of office for Directors is from the conclusion of the Ordinary General Meetingof Shareholders for the fiscal year ended March 31, 2019, to the conclusion of theOrdinary General Meeting of Shareholders for the fiscal year ending March 31, 2021.
4. The term of office for Statutory Auditor Mr. Yoshikazu Sawanaka is from the conclusionof the Ordinary General Meeting of Shareholders for the fiscal year ended March 31,
2017, to the conclusion of the Ordinary General Meeting of Shareholders for the fiscal
year ending March 31, 2021.
5. The term of office for Statutory Auditor Mr. Takashi Matsuzawa is from the conclusionof the Ordinary General Meeting of Shareholders for the fiscal year ended March 31,
2020, to the conclusion of the Ordinary General Meeting of Shareholders for the fiscal
year ending March 31, 2024.
6. The term of office for Statutory Auditor Mr. Motoaki Nishimura is from the conclusionof the Ordinary General Meeting of Shareholders for the fiscal year ended March 31,
2019, to the conclusion of the Ordinary General Meeting of Shareholders for the fiscal
year ending March 31, 2023.
7. In order to ensure that the number of incumbent Statutory Auditors does not fall shortof that required by laws and regulations, the Company has nominated one substituteStatutory Auditor as stipulated in Article 329, Paragraph 3 of the Companies Act.
The career summary of the candidate for substitute Statutory Auditor is as follows.
Name

Date of birth

Career summary
April 1990

Kenji Tabuchi

May 18, 1959

April 1995
June 2001

Registered as attorney-at-law(Osaka Bar Association)
Joined Tsukaguchi Law OfficeOpened Tabuchi Law OfficeTerm

Number ofshares of theCompany held
(Shares)(Note)–

Opened Tabuchi Nishino Law
Office (to present)(Note)The term of office for a substitute Statutory Auditor is from theconclusion of the Ordinary General Meeting of Shareholders for the fiscal year
ended March 31, 2020, to the beginning of the Ordinary General Meeting of
Shareholders for the fiscal year ending March 31, 2021.

- 50 -

2) Outside Directors (and other officers)
We have two Outside Directors and two Outside Statutory Auditors.
Mr. Susumu Shimadzu has a wealth of experience and profound insight through his involvement in corporate
management over the years. He provides advice concerning overall management of the Company and thereby fulfills his
duties as an Outside Director of the Company. For these reasons, the Company judges that he is a suitable person to
oversee business execution of the Company in its pursuit of sustainable growth and medium- to long-term enhancementof corporate value and has nominated him as a candidate for Outside Director.
Ms. Keiko Kaneko has assumed various important posts so far, having served as Director, Corporate Information
Security Division, Panasonic Corporation; General Manager, Security Compliance Division, Benesse Holdings, Inc.;
Associate Professor, Department of Business Law, Faculty of Business Administration, Osaka University of Economics,
etc. She therefore has professional knowledge in the legal and information security operations as well as a wealth ofexperience and profound insight. She is providing advice concerning overall management of the Company and is fulfillingher duties as an Outside Director of the Company. For these reasons, the Company judges that she is a suitable person to
oversee business execution of the Company in its pursuit of sustainable growth and medium-to long-term enhancementof corporate value and has nominated her as a candidate for Outside Director.
Mr. Takashi Matsuzawa has years of experience at a financial institution and profound insight into financial affairs andother related matters. The Company judges that he is capable of contributing to enhancing the Company’s audit systems.
For these reasons, the Company judges that he is indispensable for the Company’s audit systems and has nominated him
as a candidate for Outside Statutory Auditor.
Mr. Motoaki Nishimura has professional knowledge and experience as an attorney-at-law and is contributing toenhancing the Company’s audit systems. For these reasons, the Company judges that he is indispensable for theCompany’s audit systems and has nominated him as a candidate for Outside Statutory Auditor.
There are no human relationships, financial relationships, transaction relationships, or any other interests between
Outside Directors/Statutory Auditors and the Company.
We have formulated and made public our Independence Standards for Outside Directors/Statutory Auditors as the
specific criteria for us to make a judgment concerning their independence, based on the independence criteria set forth bya relevant financial instruments exchange.
The Independence Standards for Outside Directors/Statutory Auditors formulated by the Company are as follows:[Independence Standards for Outside Directors/Statutory Auditors]
If any of the following attributes applies to an Outside Director/Statutory Auditor of the Company, the Company
judges that such Outside Director/Statutory Auditor is not fully independent from the Company.
(1)

An executive person (Note 1) of the Company or consolidated subsidiaries of the Company (hereinafter referred
to as the “Marudai Food Group”)(2) A party to whom any of 1) to 9) below applied in the past three years
1) A party whose principal business partner is the Marudai Food Group (Note 2) or its executive person
2) A principal business partner of the Marudai Food Group (Note 3) or its executive person
3) A principal lender to the Marudai Food Group (Note 4) or its executive person4) A major shareholder (directly or indirectly holding 10% or more of the total voting rights) of the Company
or its executive person5) A party of which the Company is a major shareholder (directly or indirectly holding 10% or more of the total
voting rights) or the executive person6) A party affiliated with an audit firm that is the accounting auditor of the Marudai Food Group
7) A party who received remuneration exceeding 10 million yen a year excluding the Directors’ or Auditors’
remuneration
8) A party who received donations exceeding a certain limit (Note 5) from the Marudai Food Group or its
executive person
9) An executive person of an entity for which an executive person of the Marudai Food Group serves as a
Director/Statutory Auditor- 51 -

(3)The spouse or relative in the second degree of kinship of a party to whom (1) or (2) above applies and who
holds an important position (Note 6)(Notes)

1.
2.
3.
4.
5.
6.

An “executive person” means an executive director, an executive officer, a general manager, a party
in a similar position, and an employee of an organization such as a corporation.
A “party whose principal business partner is the Marudai Food Group” means a party who received
payment from the Company equal to 2% or more of the party’s consolidated annual sales in the mostrecent fiscal year.
A “principal business partner of the Marudai Food Group” means a party whose payment to theCompany was equal to 2% or more of the Company’s consolidated annual sales in the most recent
fiscal year.
A “principal lender to the Marudai Food Group” is a lender from which the Marudai Food Groupborrows an amount equal to 2% or more of consolidated total assets.
“Donations exceeding a certain limit” means donations to an organization such as a corporation thatamount to 10 million yen a year or more or that are equal to 2% or more of net sales or total revenuesof such organization, whichever is larger.
A “party who holds an important position” means a director, an executive, an executive officer, or aparty who executes important business and holds the position of general manager or higher.

In light of guaranteeing the objectivity and independence of the Board of Directors overall, the Company has notified
the Tokyo Stock Exchange of Outside Directors Mr. Susumu Shimadzu and Ms. Keiko Kaneko and Outside Statutory
Auditors Mr. Takashi Matsuzawa and Mr. Motoaki Nishimura as Independent Directors/Statutory Auditors, in accordancewith the standards above.
If the Company’s Outside Directors/Statutory Auditors concurrently serve as director or auditor at publicly listedcompanies other than the Company, they will limit the liabilities they assume to a reasonable range, taking into
consideration their own fiduciary duties.
Outside Directors contribute to strengthening our corporate governance by providing advice concerning overallmanagement of the Company while overseeing its management. Outside Statutory Auditors’ efforts to conduct effective
audits include overseeing business execution of the Company in light of the professional knowledge in financial and legal
areas they have acquired through abundant operational experience; closely working with the Internal Audit Office, asupervising department in charge of internal audits and control; and exchanging information and views with the
Accounting Auditor. With regard to our elected Outside Directors/Statutory Auditors, we consider that the current system
to oversee and supervise business execution of the Company is adequate, given our business scale, operations, etc.
(3) Audits
1) Audits by Statutory Auditors
A. Organization and personnel of the Board of Statutory Auditors
The Board of Statutory Auditors of the Company comprises three members, two of whom are Outside Statutory
Auditors. The two Outside Statutory Auditors are those who have satisfied the requirements for Independent Statutory
Auditors set forth by the Company. Meanwhile, two full-time Statutory Auditors are selected: one internal Statutory
Auditor and one Outside Statutory Auditor. Full-time Statutory Auditor Mr. Yoshikazu Sawanaka has abundant
knowledge about financial and accounting affairs through his involvement in accounting operations at the Company
over the years. Outside Statutory Auditor Mr. Motoaki Nishimura has professional knowledge in legal matters as an
attorney-at-law. We have no full-time staff members who provide support for the Board of Statutory Auditors. We
instead have a system in which each department provides Statutory Auditors in a timely and accurate manner with theinformation, material, etc. necessary for them to execute duties.

The Company’s whistleblowing system is managed appropriately with various measures including
Outside Statutory Auditor Mr. Motoaki Nishimura’s serving as an outside contact point for the system.
B. Activities of Statutory Auditors and the Board of Statutory Auditors
The meetings of the Board of Statutory Auditors were held 14 times during the current fiscal year. All of the Statutory
Auditors of the Company attended all of the said meetings.
The meeting of the Board of Statutory Auditors is held to resolve, discuss, and deliberate material matters related tothe audit policy and plan as well as audits. The Board of Statutory Auditors also holds a regular meeting to exchange
views with Chairman and Representative Director, President, Directors, and Executive Officers once every six months.
In addition, the Board of Statutory Auditors has a system in place to grasp the Company’s condition in a timely andappropriate manner by holding regular meetings, and working closely with the Accounting Auditor, the internal auditing
departments, including the Internal Audit Office and the Quality Assurance Dept., and subsidiaries’ Statutory Auditors.
In accordance with the Rules for the Board of Statutory Auditors, the Standards for Statutory Auditors, the audit
policy and the division of duties stipulated by the Board of Statutory Auditors, etc., Statutory Auditors attended themeeting of the Board of Directors and other material meetings to receive reports from Directors, etc. on how they had
executed their duties, and reviewed important approval documents and other material. They also conducted audits atthe Head Office and also by visiting major operational bases and subsidiaries, with a focus on how Directors, Executive
Officers, and other employees had executed their duties, how they had worked on the compliance with laws andregulations, and how they had established and operated the internal control system.

- 52 -

2) Internal audits
The Company has the Internal Audit Office, which comprises nine members, under the direct authority of President as
one of the internal auditing departments. The establishment of the said Office has allowed the Company to ensure a system
for making a fair and objective judgment about whether the Group’s operations have been executed properly in terms ofcompliance with laws and regulations, operational efficiency, credibility of financial statements, and preservation of assets,
as well as providing advice or recommendations accordingly.
The Internal Audit Office reports to personnel in charge of relevant departments about evaluation results of businessaudits and internal control situations, and also to the Board of Directors and the Board of Statutory Auditors, whennecessary, so that audits are conducted under close cooperation with them. The Internal Audit Office also exchanges views
with an audit firm as the Accounting Auditor about the information on the internal control status, risk evaluations, etc.
obtained by the audit firm as well as about audit results, maintaining close cooperation with the audit firm.
3) Accounting audits
A. Name of the audit firm
KPMG AZSA LLC
B. Consecutive auditing period
29 years
C. Certified public accountants engaged in the accounting audit services
Designated Engagement Partner, Hirohisa Nishino
Designated Engagement Partner, Satoru Komatsuno
Neither of them has engaged in the Company’s audits for more than seven consecutive fiscal periods.
D. Assistants for the accounting audits
Certified public accountants: 6 persons
Persons who have passed the CPA examination: 7 persons
Other: 8 persons
E. Policy and reason for selecting audit firm
The Board of Statutory Auditors has set the following policy: it shall verify the appropriateness of the reason why
the executive management departments have selected the Accounting Auditor as a candidate for the Company’s
Accounting Auditor and the appropriateness of the process in which the executive management departments haveexamined candidates for an Accounting Auditor; the Board of Statutory Auditors shall have discussions with thecandidates concerning the following items, etc. If the Board of Statutory Auditors judges a certain candidate appropriate,
it shall decide to select the said candidate as an Accounting Auditor.
- Overview of a candidate for an Accounting Auditor- Any factor for disqualification- The candidate’s internal control system- Standards for audit remuneration- Matters related to the execution of duties, such as those concerning the Accounting Auditor’s independence
stipulated in Article 131 of the Regulations on Corporate Accounting
In the case of reappointment of the Accounting Auditor, the Board of Statutory Auditors determines whether or not
the said Accounting Auditor is appropriate for reappointment based on its audit activities, including how the said
Accounting Auditor has executed duties, how its audit system is structured, how independent its audit is, how
specialized it is, and through what process the executive management departments have examined and decided on thereappointment of it.
As for the policy for dismissal and non-reappointment of the Accounting Auditor, the Board of Statutory Auditors
shall dismiss the Accounting Auditor with the consent of all the Statutory Auditors if the Accounting Auditor is deemed
to fall under any one of the items in Article 340, Paragraph 1 of the Companies Act. In such a case, the Statutory Auditor
selected by the Board of Statutory Auditors shall report the fact that it has dismissed the Accounting Auditor and thereason for the dismissal at the first General Meeting of Shareholders to be held after such dismissal.
Besides the above case, if the Board of Statutory Auditors determines that the said Accounting Auditor is unable toconduct proper audits because it is not appropriate as an Accounting Auditor or independent enough, or that a changeof the Accounting Auditor is deemed reasonable to improve the appropriateness of audits, the Board of Statutory
Auditors shall dismiss or shall not reappoint the Accounting Auditor and shall instead submit a proposal to the General
Meeting of Shareholders to elect a new Accounting Auditor.
Pursuant to the policy above, the Board of Statutory Auditors collected the relevant information and carried out
careful review, and determined that it was reasonable to reappoint KPMG AZSA LLC.

- 53 -

F. Assessment of the audit firm by Statutory Auditors and the Board of Statutory Auditors
The Board of Statutory Auditors has evaluated the appropriateness of the following items, etc. regarding the audit
activities carried out by the Accounting Auditor every fiscal year.
- How the audit firm manages quality- How the independence of the audit firm (team) is ensured- How adequate and reasonable the audit firm’s audit plan and activities are- Whether the audit firm has made audit reports in accordance with laws and regulations, and how cooperative theaudit firm has been with Statutory Auditors- Whether or not the audit firm’s estimation of the time required for an audit as well as audit remuneration areappropriate, etc.
In addition to these items, the Board of Statutory Auditors had a deliberation by referring to the evaluation of the
Accounting Auditor by the executive management departments and internal auditing departments. As a result, the Boardof Statutory Auditors has determined that KPMG AZSA LLC has conducted adequate audits and the evaluation results
are appropriate, and judged that its reappointment is therefore reasonable.

- 54 -

4) Details of audit remuneration
A. Details of remuneration for auditing certified public accountants, etc.

(Millionsyen)
Fiscal year ended March 31, 2019
Categoryof

Fiscal year ended March 31, 2020

Remuneration in
Remuneration in
Remuneration in
Remuneration inaccordance with audit accordance with non- accordance with audit accordance with noncertification
audit certification
certification
audit certification

Reporting company

64

–

69

1

Consolidated
subsidiaries

–

–

–

–

Total

64

–

69

1

B. Remuneration to the same network (KPMG) as auditing certified public accountants, etc. (excluding A)(Millions of Thai
baht)
Fiscal year ended March 31, 2019
Category

Reporting company
Consolidated
subsidiaries
Total

Fiscal year ended March 31, 2020

Remuneration in
Remuneration in
Remuneration in
Remuneration inaccordance with audit accordance with non- accordance with audit accordance with noncertification
audit certification
certification
audit certification
–

0

–

0

–

–

–

–

–

0

–

0

As non-audit certification for the Company, we pay remuneration for the business managementadvisory services and the income tax return services for the representatives at our Thailand office.
C. Details of remuneration in accordance with other important audit certification services
Not applicable
D. Policy for deciding audit remuneration
Not applicable
E. Reasons for the Board of Statutory Auditors’ consent to remuneration, etc. for the Accounting Auditor
The Board of Statutory Auditors conducted necessary verification on what the Accounting Auditor’s audit plan was,
how the Accounting Auditor had been conducting accounting audits for the previous fiscal years, and whether the basefor calculating the estimated remuneration was appropriate, by obtaining necessary material or reports from Directors,
relevant divisions in the Company, and the Accounting Auditor. As a result, the Board of Statutory Auditors has
determined that the Accounting Auditor ensured audit quality and guaranteed its independence in a reasonable manner,and therefore given the consent specified in Article 399, Paragraph 1 of the Companies Act to the amount of the
remuneration, etc. for the Accounting Auditor.

- 55 -

(4) Remuneration for Directors and Statutory Auditors
1) Matters relating to the policy for determining the amount of remuneration for Directors and Statutory Auditors or the
method of calculating such amountThe Company’s policy for determining the amount of remuneration for Directors and Statutory Auditors or the methodof calculating such amount provides that such matters shall be determined by considering both existing payment criteria
based on the Company’s performance, practices, etc. and their contribution to the Company performance, etc., for the
purpose of motivating Directors to contribute to the Company’s sustained growth and medium- to long-term corporate
value enhancement.
In addition, the Company has established the Nomination and Remuneration Committee to ensure the transparency andobjectivity of remuneration for Directors and Statutory Auditors. At the request of the Board of Directors andRepresentative Directors, the Nomination and Remuneration Committee will deliberate on the amount of remuneration
for Directors and Statutory Auditors or the method of calculating such amount and return their findings to the Board of
Directors. The Board of Directors then determines the amount of remuneration based on the Committee’s findings as wellas internal rules.
The Company has introduced short-term performance-linked remuneration, the total of which is determined tocorrespond to about 1% of the consolidated operating profit.
The resolution at the Ordinary General Meeting of Shareholders held on June 29, 2011 stipulated that the maximum
monthly remuneration for Directors and Statutory Auditors shall be 30 million yen (including 3 million yen for Outside
Directors but excluding the employee portion of salaries of employees concurrently serving as Directors; the number of
Directors stipulated in the Company’s Articles of Incorporation is ten or less).
The Company’s policy for determining the amount of remuneration for Directors and Statutory Auditors or the methodof calculating such amount stipulates that at the request of the Board of Directors and Representative Directors, theNomination and Remuneration Committee will deliberate on the amount of remuneration for Directors and Statutory
Auditors or the method of calculating such amount and return their findings to the Board of Directors. Based on theCommittee’s findings, the Representative Directors then determine the amount of remuneration for individual
Directors/Statutory Auditors pursuant to internal rules.
The Company’s policy on the determination of the payment ratio of performance-linked remuneration andcompensation other than performance-linked remuneration provides that it shall be determined taking into account theexisting payment criteria based on the Company’s performance, practices, etc. as well as remuneration standards among
companies with similar business scale.
The performance indicator chosen as the basis for calculating the amount of performance-linked remuneration is theconsolidated operating profit. While forecast consolidated operating profit for the fiscal year ended March 31, 2020 at the
beginning of the period was 3,500 million yen, actual operating profit for the period was 2,617 million yen.
2) Total amount of remuneration by categories and type, and the number of paid Directors and Statutory Auditors

Category

Directors(excluding Outside
Directors)
Statutory Auditors(excluding Outside
Statutory Auditors)
OutsideDirectors/Statutory
Auditors

Total amount of remuneration by type(Millions of yen)TotalamountPerformance
Fixed
Bonuses and(Millions of-linkedremuneratio
retirementyen)
remunerationbenefitsn

Number of
persons

169

144

25

–

8

13

13

–

–

1

28

28

–

–

5

3) The total amounts of remuneration paid to individual Directors and Statutory Auditors of the Company
This information is omitted as none of Directors and Statutory Auditors of the Company received aggregatedconsolidated remuneration of 100 million yen and above.
4) Significant amount of employee’s salary paid to Directors who concurrently serve as employees
Not applicable.

- 56 -

(5) Shareholdings
1) Criteria for and approach to the classification of investment securities
The Company classifies investment securities into two types: securities held to yield profit through changes in theirvalue and receiving dividend are classified as investment securities held for pure investment purposes; and the othersecurities are classified as investment securities held for purposes other than pure investment (strategic shareholdings).
The Company only holds investment securities held for purposes other than pure investment (strategic shareholdings),
and does not hold any investment securities held for pure investment purposes.
2) About investment securities held for purposes other than pure investment (strategic shareholdings)
A. Policy on strategic shareholdings
The Company believes that it is critical to cooperate with a variety of companies at every phase of business operations
such as research and development, manufacturing, logistics, sales, services and financing. Based on this belief, theCompany makes it its policy to own shares in another company as strategic shareholding only when the Company
decides that it will contribute to the Company’s sustained growth and medium- to long-term corporate valueenhancement, taking overall business relationship/strategy, etc. into consideration.
B. Means to verify the appropriateness of shareholding and the Board of Directors’ verification of the appropriatenessof individual holdings
Individual strategic shareholdings are subject to verification of their holding purpose and rationale, etc., taking into
consideration factors such as the Company’s sustained growth and medium- to long-term corporate value enhancement
as well as the maintenance and enhancement of overall relationship with the relevant business partners, and reported
each year to the Board of Directors for comprehensive deliberation regarding the justification of their holding.
The verification of shareholding rationale includes determining whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.
C. Criteria for exercising voting rights associated with strategic shareholdings
The Company exercises its voting rights appropriately through a comprehensive assessment of whether theshareholding concerned contributes to the sustained growth of and medium- to long-term corporate value enhancement
for the Company and the companies in which it invests.
D. Number of stocks and their book value on the balance sheet

Unlisted stocks
Stocks otherunlisted stocks

thanNumber ofissues(Issue)Total book value on thebalance sheet(Millions of yen)

9

38

60

10,212(Stocks in which the Company increased its stake during the current fiscal year)

Total amount of
Number of purchase costs relating
issuesto the increase in number(issue)of shares (Millions ofyen)
Unlisted stocks
Stocks otherunlisted stocks

thanReason for increase

–

–

–

19

32

Purchase through business partner’s
shareholding association(Stocks in which the Company decreased its stake during the current fiscal year)

Unlisted stocks
Stocks otherunlisted stocks

thanNumber ofissues(issue)Total amount of sales
value relating to thedecrease in number ofshares(Millions of yen)

–

–

3

22

- 57 -

E. Information on the number of shares and book value on the balance sheet, etc. per specified investment stocks

Specified investment stocks

Issue

Current fiscal year
Number of shares(Shares)Book value on thebalance sheet(Millions of yen)

1,040,086

Previous fiscal year
Number of shares(Shares)Book value on thebalance sheet(Millions of yen)

1,032,758

Aeon Co., Ltd.

2,495

2,392

1,239,000

1,239,000

Sumitomo
Corporation
1,535

1,896

381,260

381,260

Izumi Co., Ltd.
1,136

1,967

206,067

206,067

Sumitomo
Mitsui TrustHoldings, Inc.

Sumitomo
Mitsui
Financial
Group, Inc.

643

819

213,000

213,000

558

825

653,000

653,000

Rengo Co.,
Ltd.
549

677

47,50047,500

NipponShinyaku Co.,
Ltd.
402

382

Purpose and quantitative effect of shareholding and reason for increase in its stake

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital. The number of shares of the company concerned that theCompany holds increased by 5,768 shares through purchase by the business
partner’s shareholding association. In addition, effective March 1, 2020, a stock
swap was carried out in which Aeon Co., Ltd. would become the sole parent
company of Maxvalu Tohoku Co., Ltd. and Maxvalu Tohoku Co., Ltd. would
become the wholly owned subsidiary of Aeon Co., Ltd. As a result, the number ofshares that the Company holds in Aeon Co., Ltd. increased by 1,560 shares.
The Company purchases raw materials etc. from the consolidated subsidiaries of
the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.
The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.
The Company conducts financial transactions with the consolidated subsidiaries of
the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance stable financial relationship with it. It is difficult to state the quantitative
effect of shareholding. However, the Company verifies the rationale for holding a
stake in the company concerned by assessing the appropriateness of the purpose ofshareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.
The Company conducts financial transactions with the consolidated subsidiaries of
the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance stable financial relationship with it. It is difficult to state the quantitative
effect of shareholding. However, the Company verifies the rationale for holding a
stake in the company concerned by assessing the appropriateness of the purpose ofshareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.
The Company purchases materials etc. from the company concerned. Taking thisbusiness relationship into consideration, the Company has been holding a stake inthe company concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.
The Company purchases raw materials etc. from the company concerned. Taking
this business relationship into consideration, the Company has been holding a
stake in the company concerned to maintain and enhance the business relationshipand cooperation with it. It is difficult to state the quantitative effect ofshareholding. However, the Company verifies the rationale for holding a stake inthe company concerned by assessing the appropriateness of the purpose ofshareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.

- 58 -

Whether theissuer holds
a stake in the
Company

No

Yes

No

No
(Note) 3

No(Note) 4

Yes

Yes

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

115,000OUG Holdings
Inc.
308

39,658
Lawson, Inc.
235

109,200
SapporoHoldings
Limited217

180,733
United Super
Markets
Holdings Inc.
173

55,537
Life
Corporation
165

36,520Seven & i
Holdings Co.,
Ltd.
130

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whether theissuer holds
a stake in the
Company

The Company purchases raw materials etc. from the consolidated subsidiaries of
115,000 the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
295 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

Yes

The Company conducts transactions in processed food products etc. with the
39,658 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
243 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company has maintained a collaborative business relationship with the
109,200 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the relationship with it. It is difficult to state the quantitative effect ofshareholding. However, the Company verifies the rationale for holding a stake inthe company concerned by assessing the appropriateness of the purpose of
263 shareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.

Yes

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
180,733 relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
197 concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the55,177 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
131 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 360 shares throughpurchase by the business partner’s shareholding association.

No

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
36,520 relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
152 concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

No- 59 -

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

126,351
Kansai Super
Market Ltd.
128

69,725Inageya Co.,
Ltd.
110

42,600
KanekaCorporation
110

55,929Fuji Co., Ltd.
100

82,000Kanematsu
Corporation
90

127,906
Retail Partners
Co., Ltd.
80

20,089Axial RetailingInc.
79

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whether theissuer holds
a stake in the
Company

The Company conducts transactions in processed food products etc. with the company
concerned. Taking this business relationship into consideration, the Company has been
123,006 holding a stake in the company concerned to maintain and enhance the business
relationship and cooperation with it. It is difficult to state the quantitative effect ofshareholding. However, the Company verifies the rationale for holding a stake in thecompany concerned by assessing the appropriateness of the purpose of shareholding and
126 whether risks and benefits resulting from the shareholdings are proportionate to the cost ofcapital. The number of shares of the company concerned that the Company holds increased
by 3,345 shares through purchase by the business partner’s shareholding association.

No

The Company conducts transactions in processed food products etc. with the company
concerned. Taking this business relationship into consideration, the Company has been
68,516 holding a stake in the company concerned to maintain and enhance the business
relationship and cooperation with it. It is difficult to state the quantitative effect ofshareholding. However, the Company verifies the rationale for holding a stake in thecompany concerned by assessing the appropriateness of the purpose of shareholding and
87 whether risks and benefits resulting from the shareholdings are proportionate to the cost ofcapital. The number of shares of the company concerned that the Company holds increased
by 1,209 shares through purchase by the business partner’s shareholding association.

No

The Company purchases raw materials etc. from the consolidated subsidiaries of42,600 the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
176 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

Yes

The Company conducts transactions in processed food products etc. with the company
concerned. Taking this business relationship into consideration, the Company has been
55,168 holding a stake in the company concerned to maintain and enhance the business
relationship and cooperation with it. It is difficult to state the quantitative effect ofshareholding. However, the Company verifies the rationale for holding a stake in thecompany concerned by assessing the appropriateness of the purpose of shareholding and
105 whether risks and benefits resulting from the shareholdings are proportionate to the cost ofcapital. The number of shares of the company concerned that the Company holds increasedby 761 shares through purchase by the business partner’s shareholding association.

No

The Company purchases raw materials etc. from the company concerned. Taking
82,000 this business relationship into consideration, the Company has been holding a
stake in the company concerned to maintain and enhance the business relationshipand cooperation with it. It is difficult to state the quantitative effect ofshareholding. However, the Company verifies the rationale for holding a stake inthe company concerned by assessing the appropriateness of the purpose of
103 shareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.

Yes

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business relationship
125,320 into consideration, the Company has been holding a stake in the company concerned tomaintain and enhance the business relationship and cooperation with it. It is difficult tostate the quantitative effect of shareholding. However, the Company verifies therationale for holding a stake in the company concerned by assessing the appropriatenessof the purpose of shareholding and whether risks and benefits resulting from the
146 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 2,586 shares throughpurchase by the business partner’s shareholding association.

No(Note) 5

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
19,917 relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
67 the cost of capital. The number of shares of the company concerned that theCompany holds increased by 172 shares through purchase by the business
partner’s shareholding association.

No- 60 -

IssueCurrent fiscal
year
Number ofshares (Shares)
Book value on thebalance sheet(Millions of yen)

42,106

Previous fiscal
year
Number ofshares (Shares)
Book value on thebalance sheet(Millions of yen)

40,179Okuwa Co.,Ltd.
73

33,82644

33,659Arcs
Company,
Limited65

81

67,20067,200

The Chugoku
Bank, Ltd.
64

69

158,300

158,300

Mitsubishi
UFJ Financial
Group, Inc.
63

87

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whetherthe issuer
holds astake intheCompany

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state
the quantitative effect of shareholding. However, the Company verifies therationale for holding a stake in the company concerned by assessing theappropriateness of the purpose of shareholding and whether risks and benefits
resulting from the shareholdings are proportionate to the cost of capital. The
number of shares of the company concerned that the Company holds increased
by 1,927 shares through purchase by the business partner’s shareholding
association.

No

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital. The number of shares of the company concerned that theCompany holds increased by 167 shares through purchase by the business
partner’s shareholding association.

No

The Company conducts financial transactions with the company concerned.
Taking this business relationship into consideration, the Company has been
holding a stake in the company concerned to maintain and enhance stablefinancial relationship with it. It is difficult to state the quantitative effect ofshareholding. However, the Company verifies the rationale for holding a stake inthe company concerned by assessing the appropriateness of the purpose ofshareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.

Yes

The Company conducts financial transactions with the consolidated subsidiariesof the company concerned. Taking this business relationship into consideration,
the Company has been holding a stake in the company concerned to maintain andenhance stable financial relationship with it. It is difficult to state the quantitative
effect of shareholding. However, the Company verifies the rationale for holding a
stake in the company concerned by assessing the appropriateness of the purposeof shareholding and whether risks and benefits resulting from the shareholdings
are proportionate to the cost of capital.

No(Note) 6- 61 -

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

108,150
The San-in
Godo Bank,Ltd.
59

75,900AEON
Hokkaido
Corporation
56

33,674MINISTOP
Co., Ltd.
49

89,250
The Chiba
Bank, Ltd.
42

19,180
Albis Co., Ltd.
39

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whether theissuer holds
a stake in the
Company

The Company conducts financial transactions with the company concerned.
108,150 Taking this business relationship into consideration, the Company has been
holding a stake in the company concerned to maintain and enhance stable financial
relationship with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding and
85 whether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

Yes

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain and
15,900enhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital. Effective March 1, 2020, an
absorption-type merger was carried out in which AEON Hokkaido Corporation, a
11 surviving company, absorbed Maxvalu Hokkaido Co., Ltd., an extinct company.
As a result, the number of shares that the Company holds in AEON Hokkaido
Corporation increased by 60,000 shares.

No

The Company conducts transactions in processed food products etc. with the
33,674 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
57 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts financial transactions with the company concerned.
Taking this business relationship into consideration, the Company has been
holding a stake in the company concerned to maintain and enhance stable financial
relationship with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding and
53 whether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

Yes

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the18,686 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
43 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 494 shares throughpurchase by the business partner’s shareholding association.

No89,250- 62 -

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

47,250H2O Retailing
Corporation
37

37,990OM2 Network
Co., Ltd.
34

149,292
Mebuki
Financial
Group, Inc.
32

15,840
Valor Holdings
Co., Ltd.
30

63,467
Poplar Co.,
Ltd.
29

8,000
The Bank of
Kyoto, Ltd.
27

60,500
The Hiroshima
Bank, Ltd.
27

4,400
Belc Co., Ltd.
25

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whether theissuer holds
a stake in the
Company

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
47,250 relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
72 concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

No

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
36,439 relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
42 the cost of capital. The number of shares of the company concerned that theCompany holds increased by 1,551 shares through purchase by the business
partner’s shareholding association.

No

The Company conducts financial transactions with the consolidated subsidiaries of
149,292 the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance stable financial relationship with it. It is difficult to state the quantitative
effect of shareholding. However, the Company verifies the rationale for holding a
stake in the company concerned by assessing the appropriateness of the purpose of
42 shareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.

No(Note) 7

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
15,840 relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
42 concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the62,759 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
35 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 708 shares throughpurchase by the business partner’s shareholding association.

No

The Company conducts financial transactions with the company concerned.
8,000 Taking this business relationship into consideration, the Company has been
holding a stake in the company concerned to maintain and enhance stable financial
relationship with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
37 concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

Yes

The Company conducts financial transactions with the company concerned.
Taking this business relationship into consideration, the Company has been
holding a stake in the company concerned to maintain and enhance stable financial
relationship with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding and
34 whether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

Yes

The Company conducts transactions in processed food products etc. with the
4,400 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
22 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No60,500- 63 -

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

11,000HEIWADO
Co., Ltd.
20

34,000
Yamaguchi
Financial
Group, Inc.
20

10,000
Eco’s Co., Ltd.
16

6,000
Halows Co.,Ltd.
16

44,200ResonaHoldings, Inc.
14

6,917
AEON
Kyushu Co.,Ltd.
12

21,854
Yamanaka Co.,
Ltd.
12

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whether theissuer holds
a stake in the
Company

The Company conducts transactions in processed food products etc. with the
11,000 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
25 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts financial transactions with the consolidated subsidiaries of
34,000 the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance stable financial relationship with it. It is difficult to state the quantitative
effect of shareholding. However, the Company verifies the rationale for holding a
stake in the company concerned by assessing the appropriateness of the purpose of
31 shareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.

No(Note) 8

The Company conducts transactions in processed food products etc. with the
10,000 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
15 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts transactions in processed food products etc. with the
6,000 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
13 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts financial transactions with the consolidated subsidiaries of
44,200 the company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance stable financial relationship with it. It is difficult to state the quantitative
effect of shareholding. However, the Company verifies the rationale for holding a
stake in the company concerned by assessing the appropriateness of the purpose of
21 shareholding and whether risks and benefits resulting from the shareholdings areproportionate to the cost of capital.

No(Note) 9

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the6,588 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
13 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 329 shares throughpurchase by the business partner’s shareholding association.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the20,997 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
18 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 857 shares throughpurchase by the business partner’s shareholding association.

No- 64 -

IssueCurrent fiscal
year
Number ofshares (Shares)
Book value on thebalance sheet(Millions of yen)Previous fiscal
year
Number ofshares (Shares)
Book value on
the balance sheet(Millions of yen)

4,163
Kanemi Co.,
Ltd.
11

5,000
Mammy Mart
Corporation
9

15,202
Oomitsu Co.,Ltd.
9

Maxvalu
Kyushu Co.,
Ltd.

5,000

9

10,000Ocean System
Corporation
8

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whetherthe issuer
holds astake intheCompany

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the3,903 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
11 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 260 shares throughpurchase by the business partner’s shareholding association.

No

The Company conducts transactions in processed food products etc. with the
5,000 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
8 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the14,104 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
9 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 1,098 shares throughpurchase by the business partner’s shareholding association.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the
5,000Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
10 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts transactions in processed food products etc. with the
10,000 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
8 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No- 65 -

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

5,845
Maxvalu
NishinihonCo., Ltd.
8

3,000Central Forest
Group, Inc.
5

2,000
Maruyoshi
Center Inc.
4

1,762
Kakiyasu
Honten Co.,
Ltd.
4

5,500
Olympic Group
Corporation
3

Purpose and quantitative effect of shareholding and reason for increase in its stake

The Company conducts transactions in processed food products etc. with the
5,845 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
10 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.
The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business– relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to– the cost of capital. Effective April 1, 2019, Tokan Co., Ltd. and Kokubu Chubu
Corp. jointly established the company concerned and carried out a share transfer.
As a result, the number of shares that the Company holds in Central Forest Group,
Inc. increased by 3,000 shares.

Whether theissuer holds
a stake in the
Company

No

No(Note) 10

The Company conducts transactions in processed food products etc. with the
2,000 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
6 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the1,568 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
3 shareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 194 shares throughpurchase by the business partner’s shareholding association.

No

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business
5,500 relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
3 concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

No- 66 -

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

3,300
GourmetKineya Co.,
Ltd.
3

100
COSMOS
Pharmaceutical
Corporation

2

2,052
Sagami
Holdings
Corporation
2

6,050
Three F Co.,
Ltd.
1

708
Maxvalu
Tokai Co.,
Ltd.
1

1,492
IsetanMitsukoshi
Holdings Ltd.
0–
Maxvalu
Hokkaido
Co., Ltd.
–

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whether theissuer holds
a stake in the
Company

The Company conducts transactions in processed food products etc. with the
3,300 company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of
3 the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducts transactions in processed food products etc. with the* company concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness of*the purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.

No

The Company conducted transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business* relationship into consideration, the Company has been holding a stake in thecompany concerned to enhance the business relationship and cooperation with it.
It is difficult to state the quantitative effect of shareholding. However, theCompany verifies the rationale for holding a stake in the company concerned by* assessing the appropriateness of the purpose of shareholding and whether risks
and benefits resulting from the shareholdings are proportionate to the cost ofcapital.

No

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business* relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company* concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to
the cost of capital.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain and–enhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital. In addition, effective
September 1, 2019, an absorption-type merger was carried out in which Maxvalu– Tokai Co., Ltd., a surviving company, absorbed Maxvalu Chubu Co., Ltd., an
extinct company. As a result, the number of shares that the Company holds in
Maxvalu Tokai Co., Ltd. increased by 708 shares.

No

The Company conducts transactions in processed food products etc. with theconsolidated subsidiaries of the company concerned. Taking this business* relationship into consideration, the Company has been holding a stake in thecompany concerned to maintain and enhance the business relationship andcooperation with it. It is difficult to state the quantitative effect of shareholding.
However, the Company verifies the rationale for holding a stake in the company
concerned by assessing the appropriateness of the purpose of shareholding andwhether risks and benefits resulting from the shareholdings are proportionate to* the cost of capital. The number of shares of the company concerned that theCompany holds increased by 150 shares through purchase by the business
partner’s shareholding association.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, theCompany has been holding a stake in the company concerned to maintain and
12,541enhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital. The number of shares of thecompany concerned that the Company holds increased by 31 shares through43 purchase by the business partner’s shareholding association. In addition, effective
March 1, 2020, an absorption-type merger was carried out in which AEON
Hokkaido Corporation, a surviving company, absorbed Maxvalu Hokkaido Co.,
Ltd., an extinct company.

- 67 -

No

IssueCurrent fiscal year

Previous fiscal year

Number of shares(Shares)Number of shares(Shares)Book value on thebalance sheet(Millions of yen)Book value on thebalance sheet(Millions of yen)

Kawanishi
Warehouse
Co., Ltd.

–

Hokuhoku
Financial
Group, Inc.

–

–

–

–
Tokan Co.,Ltd.
–

Kisoji Co.,
Ltd.

–
–

–
Maxvalu
Tohoku Co.,Ltd.
–

Purpose and quantitative effect of shareholding and reason for increase in its stake

Whether theissuer holds
a stake in the
Company

The Company has maintained a collaborative business relationship with the
10,000 company concerned. Taking this business relationship into consideration, theCompany had held a stake in the company concerned to maintain and enhance therelationship with it. However, the Company sold all of its stake in Kawanishi
13 Warehouse Co., Ltd. during the current fiscal year.

Yes

The Company conducts financial transactions with the consolidated subsidiaries
6,880 of the company concerned. Taking this business relationship into consideration,
the Company had held a stake in the company concerned to maintain and enhancestable financial relationship with it. However, the Company sold all of its stake in
7 Hokuhoku Financial Group, Inc. during the current fiscal year.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the3,000 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from the
4 shareholdings are proportionate to the cost of capital. Effective April 1, 2019,
Tokan Co., Ltd. and Kokubu Chubu Corp. jointly established Central Forest
Group, Inc. and carried out a share transfer.

Yes

The Company has striven to promote business relationship with the company
1,530 concerned. Taking this business relationship into consideration, the Company had
held a stake in the company concerned to enhance the business relationship and4 cooperation with it. However, the Company sold all of its stake in Kisoji Co., Ltd.
during the current fiscal year.

No

The Company conducts transactions in processed food products etc. with thecompany concerned. Taking this business relationship into consideration, the2,400 Company has been holding a stake in the company concerned to maintain andenhance the business relationship and cooperation with it. It is difficult to state thequantitative effect of shareholding. However, the Company verifies the rationale
for holding a stake in the company concerned by assessing the appropriateness ofthe purpose of shareholding and whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital. In addition, effective March
3 1, 2020, a stock swap was carried out in which Aeon Co., Ltd. would become thesole parent company of Maxvalu Tohoku Co., Ltd. and Maxvalu Tohoku Co., Ltd.
would become the wholly owned subsidiary of Aeon Co., Ltd.

No

(Notes) 1.
“–” denotes that such stocks are not held. “*” indicates the fact that the bookvalues of the stocks on the consolidated balance sheet are not larger than 1% of theCompany’s share capital and these stocks are not among the top 60 issues.
2. Although the book values of the stocks of Arcs Company, Limited and the companies
thereunder on the consolidated balance sheet are not larger than 1% of the Company’s
share capital, we covered the top 60 issues in this section.
3. Sumitomo Mitsui Trust Bank, Limited, a consolidated subsidiary of Sumitomo Mitsui
Trust Holdings, Inc., holds the Company’s shares.
4. Sumitomo Mitsui Banking Corporation, a consolidated subsidiary of Sumitomo Mitsui
Financial Group, Inc., holds the Company’s shares.
5. Marukyu Co., Ltd., a consolidated subsidiary of Retail Partners Co., Ltd., holds theCompany’s shares.
6. MUFG Bank, Ltd., a consolidated subsidiary of Mitsubishi UFJ Financial Group, Inc.,
holds the Company’s shares.
7. Joyo Bank, Ltd., a consolidated subsidiary of Mebuki Financial Group, Inc., hold theCompany’s shares.
8. The Yamaguchi Bank, Ltd., a consolidated subsidiary of Yamaguchi Financial Group,
Inc., holds the Company’s shares.
9. Resona Bank, Limited., a consolidated subsidiary of Resona Holdings, Inc., holds theCompany’s shares.
10. Tokan Co., Ltd., a consolidated subsidiary of Central Forest Group, Inc., holds theCompany’s shares.

- 68 -

V. Financial Information

1. Preparation of the consolidated/non-consolidated financial statements(1) The Company’s consolidated financial statements are prepared in accordance with the “Regulation on Terminology, Forms,
and Preparation Methods of Consolidated Financial Statements” (Ordinance of Ministry of Finance No. 28, 1976 /hereinafter referred to as the “Consolidated Financial Statements Regulations”).
(2) The Company’s non-consolidated financial statements are prepared in accordance with the “Regulation on Terminology,
Forms, and Preparation Methods of Financial Statements” (Ordinance of Ministry of Finance No. 59, 1963 / hereinafterreferred to as the “Non-Consolidated Financial Statements Regulations”).
As a company designated for the submission of financial statements prepared in accordance with special provision, theCompany prepares its non-consolidated financial statements pursuant to Article 127 of the Non-Consolidated Financial
Statements Regulations.

2. Independent auditor’s report
Pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, the Company’s
consolidated/non-consolidated financial statements for the current fiscal year (from April 1, 2019 through March
31, 2020) were audited by KPMG AZSA LLC.
3. Specific efforts to secure the appropriateness of the consolidated financial statements, etc.
The Company makes specific efforts to secure the appropriateness of the consolidated financial statements, etc.
For example, in order to establish a mechanism to correctly understand the details of accounting standards, theCompany has joined the Financial Accounting Standards Foundation. In addition, the Company attends the relevant
seminars organized by external institutions and subscribes to accounting magazines to address any change inaccounting standards etc. in a timely manner.

- 69 -

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements
1) Consolidated Balance Sheets(Millions of yen)Previous fiscal year
(As of March 31, 2019)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles,net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

8,127
30,699
9,242
591
5,937
1,344
(16)
55,927

8,244
27,501
11,057
647
5,887
2,274
(15)
55,597*2

53,333(36,914)
16,41959,635(45,965)*2

54,258(37,644)
16,61362,664(48,118)*2

13,670*2

14,545

*3

*2

4,772
(3,088)
1,683
18,966
8,649(3,009)5,640
1,464
57,843
2,835
12,297
17
30
–
317
3,484
(127)
16,01976,699132,626*1- 70 -

Current fiscal year
(As of March 31, 2020)

*2

4,718
(3,154)
1,563
18,3927,879(2,467)
5,411
2,545
59,072
3,050
10,282
121
22
71
277
3,474
(117)
14,13376,256
131,854*1

(Millions of yen)Previous fiscal year
(As of March 31, 2019)
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Lease obligations
Accounts payable - other
Income taxes payable
Accrued consumption taxes
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Lease obligations
Deferred tax liabilities
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets

23,058
6,380
*2
1,927
1,087
8,779
488
647
920
*3
1,932
45,221*2- 71 -

3,971
4,650
1,281
718
688
11,30956,531

Current fiscal year
(As of March 31, 2020)

23,165
8,080
*2
1,887
855
8,942
523
448
850
1,391
46,145
*2

3,933
4,658
550
854
656
10,652
56,7986,716
22,08644,912(2,635)71,0796,716
22,08645,676(2,657)
71,821

5,273

3,832

8
36
(822)

(2)
40
(1,181)

4,496

2,688

519
76,094
132,626545
75,056
131,854

2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Rental income from real estate
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on abandonment of inventories
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on disposal of non-current assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Impairment loss
Extra retirement payments
Costs related to voluntary recovery of productCompensation for loss
Loss on valuation of investment securities
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Previous fiscal year
(From April 1, 2018
to March 31, 2019)
243,030*1
188,973
54,057*2
51,804
2,253(Millions of yen)
Current fiscal year
(From April 1, 2019
to March 31, 2020)
245,820*1
190,340
55,480*2
52,862
2,617

17
318
181
361
879

17
331
166
383
899

213
48
146
408
2,724

216
56
124
397
3,118

*3

*4

280
27
181
–
56
1
547
2,475
955
9
965
1,510
46
1,463

*5

- 72 -

18
280
298

144
7
151

*3

*4

309
84
90
47
–
–
532
2,737
1,028
24
1,052
1,684
30
1,653

*5

Consolidated Statements of Comprehensive Income

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans, netof taxShare of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests

Previous fiscal year
(From April 1, 2018
to March 31, 2019)
1,510(Millions of yen)
Current fiscal year
(From April 1, 2019
to March 31, 2020)
1,684(1,122)(1,441)

17

(11)

(92)

(358)

0

4

*

- 73 -(1,196)314*(1,807)
(122)

267

(153)

46

30

3) Consolidated Statements of Changes in Net Assets
For the previous fiscal year (From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCapital surplus

6,716

Retained earnings

22,086

Treasury shares

44,469Total shareholders’equity(2,456)70,815

Changes during period
Dividends of surplus(1,020)(1,020)

Profit attributable toowners of parent

1,463

1,463

Purchase of treasury shares

(178)

(178)

Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

–

–

443

(178)

264

6,716

22,08644,912(2,635)71,079

Accumulated other comprehensive income
Total
Valuation
Foreign currency Remeasurements accumulated Non-controlling Total net assets
difference on Deferred gains orinterests
translationof defined benefit
otheravailable-for-sale losses on hedges
adjustment
planscomprehensive
securities
incomeBalance at beginning of
period

6,395

(9)

35

(730)

5,692

476

76,984

Changes during period
Dividends of surplus(1,020)

Profit attributable toowners of parent

1,463

Purchase of treasury shares(178)

Net changes in items otherthan shareholders’ equity(1,122)

17

0

(92)

(1,196)42(1,153)

Total changes during period(1,122)

17

0

(92)

(1,196)42(889)

Balance at end of period

5,273

8

36

(822)

4,496

519

76,094- 74 -

For the current fiscal year (From April 1, 2019 to March 31, 2020)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCapital surplus

6,716

Retained earnings

22,086

Treasury shares

44,912

Total shareholders’equity(2,635)71,079Changes during period
Dividends of surplus

(890)

(890)

Profit attributable toowners of parent

1,653

1,653

Purchase of treasury shares

(21)

(21)

Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

–

–

763

(21)

741

6,716

22,08645,676(2,657)

71,821

Accumulated other comprehensive income
Total
Valuation
Foreign currency Remeasurements accumulated Non-controlling Total net assets
difference on Deferred gains orinterests
translationof defined benefit
otheravailable-for-sale losses on hedges
adjustment
planscomprehensive
securities
incomeBalance at beginning of
period

5,273

8

36

(822)

4,496

519

76,094

Changes during period
Dividends of surplus(890)

Profit attributable toowners of parent

1,653

Purchase of treasury shares(21)

Net changes in items otherthan shareholders’ equity(1,441)(11)

Total changes during period(1,441)(11)

Balance at end of period

3,832

(2)

4

(358)

(1,807)4(358)(1,807)26(1,038)40(1,181)

2,688

545

75,056- 75 -

26(1,780)4) Consolidated Statements of Cash Flows(Millions of yen)
Current fiscal year
(From April 1, 2019
to March 31, 2020)

Previous fiscal year
(From April 1, 2018
to March 31, 2019)
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in retirement benefit
liability
Extra retirement payments
Interest and dividend income
Interest expenses
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment
securities
Loss (gain) on disposal of non-current assets
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption
taxes
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Extra retirement payments
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of non-current assets
Proceeds from sales of non-current assets
Other, net
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Net increase (decrease) in short-termborrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease obligations
Dividends paid
Purchase of treasury shares
Other, net
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period*1- 76 -

2,475
6,433
27

2,737
6,801
84

(7)

(10)

(200)

(413)

181
(336)
213
(280)

90
(348)
216
(7)

1

–

261
(1,654)
266
(235)

165
3,208
(1,821)
84

189

(199)

(113)
7,224
323
(213)
(611)
(26)

(1,265)
9,322
346
(216)
(662)
(181)

6,695

8,608

(32)
532
(8,433)
494
(96)

(33)
22
(8,739)460
18(7,534)(8,271)

1,250

1,700

2,840
(1,669)(962)(1,019)
(178)
(3)

1,850
(1,927)
(925)
(890)
(21)
(3)

255

(219)

(582)

117

8,709
8,127

*1

8,127
8,244

[Notes](Uncertainties of entity's ability to continue as going concern)
Not applicable.
(Significant accounting policies for preparation of consolidated financial statements)
1. Disclosure of scope of consolidation(1) Number of consolidated subsidiaries:
26
Names of major consolidated subsidiaries are referred to in “4. Subsidiaries and other affiliated entities” under “I. Overview
of Company,” therefore they are omitted here.
(2) Non-consolidated subsidiaries:
Not applicable.

2. Disclosure about application of equity method(1) Non-consolidated subsidiaries to which the equity method is applied:
Not applicable.
(2) Number of subsidiaries and associates to which the equity method is applied:1
Name of the company concerned:
Betagro MF Deli Co., Ltd.
(3) Non-consolidated subsidiaries and associates to which the equity method is not applied:
Not applicable.

3. Book-closing date of consolidated subsidiaries
Consolidated subsidiaries whose book-closing date differ from that of the Company:
Not applicable.
4. Disclosure of accounting policies(1) Basis and method concerning valuation of important assets
1) Securities
Available-for-sale securities- Those with fair value
Stated at fair value as of the book-closing date.
(Any valuation difference is booked directly to net assets and the cost of securities sold are computed by the movingaverage method.)- Those without fair value
Stated at their cost determined by the moving-average method.

2) Derivatives
Stated at fair value.
3) Inventories
Merchandise and finished goods, work in process, and raw materials and supplies
Stated at their cost determined by the weighted average method.
(Balance sheet values reflect write-downs for decreased profitability.)(2) Depreciation and amortization methods of major depreciable assets
1) Property, plant and equipment (excluding leased assets)
Primarily applying the declining balance method. However, the straight-line method is applied for the buildings(excluding the facilities attached to buildings) acquired on and after 1st April 1998 and the facilities attached to buildings
and structures acquired on and after April 1, 2016.
Useful lives of assets are principally as follows:
Buildings and structures:
12-50 years
Machinery, equipment and vehicles: 4-10 years
2) Intangible assets (excluding leased assets)
Applying the straight-line method. For software for its own use, the straight-line method is applied based on theinternally estimated useful life of 5 years.
3) Leased assets
Leased assets under finance leases that do not transfer its ownership- 77 -

Leased assets under finance lease transactions that do not transfer their ownership are amortized using the straightline method over the lease term with a residual value of zero.

- 78 -

(3) Accounting policies for significant allowances and provisions
1) Allowance for doubtful accounts
An allowance for doubtful accounts is provided to cover bad-debt losses. 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, theuncollectible amounts are individually estimated.
2) Provision for bonuses
To provide for payments of employees’ bonuses, an amount accrued for the current fiscal year among the estimatedfuture obligations is recorded as provisions.
(4) Accounting for retirement benefits
1) Periodic attribution of projected retirement benefits
Projected benefit obligations are attributed to the periods of service until the end of the current fiscal year on a benefit
formula basis in determining retirement benefit obligations.
2) Amortization method for actuarial gains or losses
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.
3) Adoption of a simplified method to certain small-scale group companies
Several consolidated subsidiaries adopt, in calculating their retirement benefit liability and retirement benefit expenses,
a simplified method in which the amount that would be required if all the employees retired voluntarily at the fiscal year
end is treated as retirement benefit obligation.
(5) Significant hedge accounting method
1) Hedge accounting method
Exceptional accounting treatments are applied to interest rate swaps because they meet specific conditions. In addition,accounts receivable and accounts payable in a foreign currency hedged by fixed-rate contracts, etc., are treated withdesignated hedge accounting.
2) Hedging instrument and hedged items- Hedging instrument: Derivative transactions (fixed-rate contracts and interest rate swap transactions)- Hedged items: Items that have risks associated with foreign exchange fluctuations, etc. that are not reflected in theirvalue; and items that avoid the risks associated with foreign exchange fluctuations with their cash flow being fixed.
3) Hedging policy
The Company adopts a hedging policy that stipulates only risks associated with foreign exchange/interest rate
fluctuations in the future should be hedged. Therefore, the Company does not engage in any speculative transactions orderivative transactions that aim for short-term gains.
4) Assessment of the effectiveness of hedging
Important conditions for the hedging instrument and the hedged items are the same and the Company’s hedging
approach is expected to offset or limit to certain extent the effects of foreign exchange/interest rate fluctuations at the startof hedging and throughout subsequent periods. Hence, the assessment of the effectiveness of hedging is omitted.
5) Other risk management methods relating to hedge accounting
Derivative transactions are carried out based on our internal rules that define transaction-related authority, amountlimits, procedures, etc.
(6) Method and period for goodwill amortization
Goodwill is amortized over a period of 5 years using the straight-line method.

- 79 -

(7) Cash and cash equivalents in the consolidated statement of cash flows
Cash and cash equivalents as stated in the consolidated statement of cash flows consist of cash in hand, readily available
deposits, and any short-term liquid investments with a maturity not exceeding three months from the acquisition date whose
value is not subject to significant fluctuation risk.
(8) Other important matters in preparing the consolidated financial statements
1) Accounting treatment of consumption tax
National and local consumption taxes are excluded from the reported amounts in accounting procedures.
2) Application of consolidated taxation system
The Company applies a consolidated taxation system.
3) Application of tax effect accounting related to the transition from a consolidated taxation system to a group tax sharing
systemRegarding items that have been transitioned to a group tax sharing system established under the “Act for Partial
Amendment to 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 the “Implementation Guidance on Tax Effect Accounting” (ASBJ
Guidance No. 28, February 16, 2018), in accordance with the treatment prescribed in Paragraph 3 of the “Practical
Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to theGroup Tax Sharing System” (PITF No. 39, March 31, 2020). The amounts of deferred tax assets and deferred tax liabilities
for these items are based on taxation law as it was before amendment.

- 80 -

(New accounting standards not yet applied)- Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No.
29, March 31, 2020)- Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March
31, 2020)(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 fromthe fiscal years beginning on or after January 1, 2018 and after December 15, 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
the benefits 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 March 31, 2022.
(3) Effect of application of the standards
The total numerical value of the effect of the application is undetermined as of the time of preparation of these consolidated
financial statements.
- Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019)- Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9, July 4, 2019)- Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019)- Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, July 4, 2019)- Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, March 31,
2020)(1) Summary
As the IASB and FASB have both formulated similar detailed guidance 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
guidance on, and the disclosure of the 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 March 31, 2022.
(3) Effect of application of the standards
The total numerical value of the effect of the application is undetermined as of the time of preparation of these consolidated
financial statements.

(Changes in presentation)(Consolidated statements of income)“Subsidiary income,” listed independently under “Non-operating income” in the previous fiscal year, hasbeen disclosed as part of “Other” under “Non-operating income” from the fiscal year ended March 31, 2020,
as its proportion to the total amount of non-operating income has decreased to 10% or smaller. The consolidated
financial statements for the previous fiscal year have been reclassified to reflect this change in presentation.
As a result, “Subsidiary income” of 7 million yen and “Other” of 354 million yen under “Non-operating
income” in the statement of income for the previous fiscal year have been reclassified as “Other” of 361 millionyen.

- 81 -

(Additional information)
Regarding the impact of COVID-19, the Group currently maintains operations at a close-to-pre-pandemic level while
carrying on business with strict infection prevention measures in place.
In preparing accounting estimates, an assumption that the effects of the COVID-19 pandemic will last into the first halfof the fiscal year ending March 31, 2021 and things will then recover in the second half as well as the latest businessconditions were used. However, since the effects of the pandemic still largely remain uncertain, the estimates might differ
from actual results in the future.

(Consolidated balance sheets)*1. The following are related to subsidiaries and associates:

Shares of subsidiaries and associates

Previous fiscal year
(As of March 31, 2019)17 million yen

Current fiscal year
(As of March 31, 2020)
121 million yen

Previous fiscal year
(As of March 31, 2019)
Millions of yen
52
108
3
164

Current fiscal year
(As of March 31, 2020)
Millions of yen
46
84
3
134

Previous fiscal year
(As of March 31, 2019)
Millions of yen
38
175
213

Current fiscal year
(As of March 31, 2020)
Millions of yen
38
137
175

*2. Pledged assets and secured debts
Pledged assets and secured debts are as follows:
Pledged assets

Buildings and structures
Machinery, equipment and vehicles
Land
Total
Secured debts

Current portion of long-term borrowings
Long-term borrowings
Total*3. The settlement of notes maturing on the last day of fiscal years is accounted on the clearance day.
Due to a bank holiday that coincided with the last day of a fiscal year, the following notes have been included in
the balance at the end of the relevant fiscal year.

Previous fiscal year
(As of March 31, 2019)
Notes receivable - trade
Notes payable - facilities

20 million yen
1 million yen

Current fiscal year
(As of March 31,
2020)
–
–

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

Total amounts in the overdraft
agreements
Borrowing balance
Difference

Previous fiscal year
(As of March 31, 2019)

Current fiscal year
(As of March 31,
2020)22,250 million yen

22,250 million yen

6,280 million yen
15,970 million yen

7,980 million yen
14,270 million yen- 82 -

(Consolidated statements of income)*1. Loss on valuation of inventories
The balance of inventories at the end of the fiscal year is the amount after a reduction of bookvalue in line with a decline in profitability, and the following loss on valuation of inventories is
included in cost of sales. The amount below has been offset against reversal amounts:

Previous fiscal year
(From April 1, 2018 to March 31, 2019)(98) million yen

Current fiscal year
(From April 1, 2019 to March 31, 2020)
25 million yen*2. Selling, general and administrative expenses(1) Major items and their amounts were as follows:

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

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)28,664 million yen
6,878 million yen
457 million yen
488 million yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
30,052 million yen
6,595 million yen
426 million yen
310 million yen

14 million yen

21 million yen(2) Research and development expenses included in general and administrative expenses are as follows (they are
not included in manufacturing cost for the current fiscal year):Previous fiscal year
(From April 1, 2018 to March 31, 2019)
852 million yen

Current fiscal year
(From April 1, 2019 to March 31, 2020)
732 million yen*3. Gain on disposal of non-current assets
Primarily generated from the sales of real estate for rent and other.
*4. Loss on disposal of non-current assets
Primarily comprised of loss on retirement of, and removal expenses for buildings and structures and machinery,equipment and vehicles.
*5. Impairment loss
The Group recorded impairment losses on the following assets:
Previous fiscal year (From April 1, 2018 to March 31, 2019)

CategoryType

Rental assets

Land, buildings, etc.

Idle assets

Land

Total

Location
Tochigi
Prefecture, etc.
Mie Prefecture,
etc.
–

–

Amount16 million yen
11 million yen
27 million yen

The Company classifies non-current assets into four categories: business assets, rental assets, idle assets andartwork. The Company groups its business assets by business units that are continuously monitored inmanagement accounting; and rental assets, idle assets and artwork by individual asset. As a result, when therecoverable value of rental assets or idle assets has fallen below book value due to declines in market prices
or profitability, the book value of these assets has been reduced to their recoverable value. All of theimpairment loss of 27 million yen relates to real estate for rent and other (“Other” under “Investments andother assets”).
The recoverable value of rental assets is measured by the net realizable value or the value in use. The
recoverable value of idle assets is measured by the net realizable value. The net realizable value is assessed
based on the appraisal value, etc. and value in use is calculated by discounting the future cash flows by 3.0 %.
Current fiscal year (From April 1, 2019 to March 31, 2020)- 83 -

Category
Idle assets
Artwork
Rental assets
Total

Type
Land, buildings, etc.
Tools, furniture and fixtures,and structures
Buildings–

Location
Fukushima
Prefecture, etc.
Osaka
Prefecture, etc.
Ehime Prefecture–

Amount51 million yen
33 million yen
0 million yen
84 million yen

The Company classifies non-current assets into four categories: business assets, rental assets, idle assets andartwork. The Company groups its business assets by business units that are continuously monitored inmanagement accounting; and rental assets, idle assets and artwork by individual asset. As a result, when therecoverable value of idle assets or rental assets has fallen below book value due to declines in market prices
or profitability or when market prices for artworks have declined significantly, the book value of these assets
has been reduced to their recoverable value. The impairment losses consisted of 51 million yen for real estate
for rent and other (“Other” under “Investments and other assets”), 25 million yen for tools, furniture andfixtures and 8 million yen for structures.
The recoverable value of rental assets is measured by the net realizable value or the value in use. The
recoverable value of idle assets is measured by the net realizable value. The net realizable value is assessed
based on the appraisal value, etc. and value in use is calculated by discounting the future cash flows by 3.2%.
The recoverable amounts for artwork were calculated based on independent appraisals obtained from thirdparty art experts and others. If the estimated recoverable amount is significantly below the carrying amount,
the Company records an impairment loss on artwork by writing down the carrying amount to the recoverable
amount.

- 84 -

(Consolidated statements of comprehensive income)* Reclassification adjustment and tax effect relating to other comprehensive income(Millions of yen)Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
Valuation difference on available-for-salesecurities
Increase (decrease) during the year
Reclassification adjustments
Amount before tax effectTax effect
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Increase (decrease) during the year
Amount before tax effectTax effect
Deferred gains or losses on hedges
Adjustments for retirement benefits
Increase (decrease) during the year
Reclassification adjustments
Amount before tax effectTax effect
Adjustments for retirement benefits
Share of other comprehensive income ofassociates accounted for using equity method
Increase (decrease) during the year
Total other comprehensive income- 85 -

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)(1,297)(280)(1,578)456(2,025)(7)(2,033)591(1,122)(1,441)

25
25
(7)
17

(16)
(16)
5
(11)

(508)
382
(125)
33
(92)

(613)
135
(477)
119
(358)

0
(1,196)

4(1,807)

(Consolidated statements of changes in net assets)
Previous fiscal year (From April 1, 2018 to March 31, 2019)
1. Class and total number of issued shares and treasury shares

Balance at beginning
Increase during theof the fiscal year
fiscal year (Shares)(Shares)

Decrease during the Balance at end of the
fiscal year (Shares) fiscal year (Shares)

Issued shares
Common stock
132,527,909–
106,022,328
26,505,581
Total
132,527,909–
106,022,328
26,505,581
Treasury shares
Common stock
4,949,831
401,4034,280,603
1,070,631
Total
4,949,831
401,4034,280,603
1,070,631(Notes) 1.
Effective October 1, 2018, the Company conducted a one-for-five shareconsolidation of its common stock.
2. Decrease in issued shares of 106,022,328 shares was due to the said share consolidation.
3. Increase in treasury shares of 401,403 shares consists of an acquisition of 400,000
shares through the off-hours trading system (ToSTNeT-3), an acquisiton of fractional
shares of 417 shares derived from the said share consolidation, and purchase of odd
lots of 986 shares.
4. Decrease in treasury shares of 4,280,603 shares was due to the said share consolidation.
2. Dividends(1) Dividends paid

Resolution

Class ofshares

Source ofdividends

Total amountof dividends Dividends per(Millions of share (Yen)yen)

Record date

Effective dateOrdinary General
Meeting ofCommon Retained
1,020
8 March 31, 2018 June 29, 2018
Shareholders heldstock
earnings
on June 28, 2018
(Note) The amount shown under “Dividends per share” is that before the share consolidation
on October 1, 2018.
(2) Dividends whose record date falls in the current fiscal year but whose effective date comes after March 31,
2019Class ofshares

Source ofdividends

Ordinary General
Meeting ofCommonShareholders heldstock
on June 27, 2019

Retainedearnings

Resolution

Total amountof dividends Dividends per(Millions of share (Yen)
yen)
890

Record date

35 March 31, 2019

Effective dateJune 28, 2019

Current fiscal year (From April 1, 2019 to March 31, 2020)
1. Class and total number of issued shares and treasury shares

Balance at beginning
Increase during theof the fiscal year
fiscal year (Shares)(Shares)

Decrease during the Balance at end of the
fiscal year (Shares) fiscal year (Shares)

Issued shares
Common stock
26,505,581––
26,505,581
Total
26,505,581––
26,505,581
Treasury shares
Common stock
1,070,631
10,630–1,081,261
Total
1,070,631
10,630–1,081,261(Note) Increase in treasury shares of 10,630 shares consists of an acquisition of 10,500 shares- 86 -

through the off-hours trading system (ToSTNeT-3) and purchase of odd lots of 130 shares.

- 87 -

2. Dividends(1) Dividends paid

Class ofshares

Source ofdividends

Ordinary General
Meeting ofCommonShareholders heldstock
on June 27, 2019

Retainedearnings

Resolution

Total amountof dividends Dividends per(Millions of share (Yen)
yen)
890

Record date

35 March 31, 2019

Effective dateJune 28, 2019(2) Dividends whose record date falls in the current fiscal year but whose effective date comes after March 31,
2020

Class ofshares

Source ofdividends

Ordinary General
Meeting ofCommonShareholders heldstock
on June 26, 2020

Retainedearnings

Resolution

Total amountof dividends Dividends per(Millions of share (Yen)
yen)
889

- 88 -

Record date

35 March 31, 2020

Effective dateJune 29, 2020

(Consolidated statements of cash flows)*1. Relationship between the cash and cash equivalents at end of period and the amount of consolidated balance sheet
items is as follows:

Cash and deposits
Cash and cash equivalents

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
million
8,127
yen
million8,127
yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
million
8,244
yen
million
8,244
yen

2. Significant non-cash transactions
Newly recorded assets and liabilities related to finance lease transactions were as follows:

Assets and liabilities related to finance leasetransactions

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
million
1,705
yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
million865
yen(Leases)
Finance lease transactions(Lessee side)
Finance leases that do not transfer its ownership(1) Leased assets
Property, plant and equipment
Primarily concerning production facilities (machinery and equipment) of Processed Food Products operations.
(2) Depreciation and amortization method for leased assets
Leased assets under finance lease transactions that do not transfer their ownership are amortized using the straight-line
method over the lease term with a residual value of zero.

- 89 -

(Financial instruments)
1. Current status of financial instruments(1) Policy concerning financial instruments
The Group makes it a policy to limit fund investments to bank deposits and other investments in which the principal is freefrom risk and raise funds principally through borrowings from financial institutions such as banks and issuance of corporate
bonds.
The Group uses derivatives to reduce foreign exchange and interest rate fluctuation risks but does not engage 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 on a customer-by-customer basis inaccordance 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 risks similarly, following the Company’s
credit exposure management guidelines.
Investment securities held by the Company are comprised of exchange listed shares (strategic shareholdings) and unlisted
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 the Company’s sustained growth and medium- to long-term corporate valueenhancement. 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 justificationof their holding. The verification of shareholding rationale includes determining whether risks and benefits resulting from theshareholdings are proportionate to the cost of capital.
Operating payables, such as trade notes and accounts payables, and other account payables, are generally due 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. Lease obligations from finance leases are incurred to raise
funds for capital expenditure. The amount of interest expenses has been fixed for the long-term portion of borrowings throughthe use of individual fixed-rate contracts as well as interest rate swap transactions as hedging instruments, in order to avoid
the risk of interest rate fluctuations. No interest swap transactions were current as of March 31, 2020.
To minimize counterparty risk, the Company follows its derivative transaction rules and enters such transactions only withhighly 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 cash flow plans based on other divisions’ reports and regularly updates the statements.
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 when market
prices are not available. As a variety of factors, some of which are variable, are taken into account when calculating 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.

- 90 -

2. Fair value of financial instruments
The following table shows consolidated balance sheet amounts, fair value and any difference between book value
and fair value. However, financial instruments whose fair values were deemed difficult to determine are not includedin the table (please refer to (Note 2)).
Previous fiscal year (As of March 31, 2019)(Millions of yen)Book value on the
consolidated balance
sheet

Fair value

Difference(1) Cash and deposits

8,127

8,127

–

(2) Notes and accounts receivable trade30,69930,699–12,255

12,255–

Total assets

51,082

51,082–(1) Notes and accounts payable trade

23,05823,058–(2) Accounts payable - other

8,779

8,779

–

(3) Short-term borrowings

6,380

6,380

–

(4) Long-term borrowings

5,898

5,891

(7)

(5) Lease obligations

5,738

5,775

37

Total Liabilities

49,85449,88429

Derivatives transactions (*)

12

12

–

(3) Investment securities
Available-for-sale securities(*) Derivative receivables and payables are presented on a net basis.
Current fiscal year (As of March 31, 2020)(Millions of yen)Book value on the
consolidated balance
sheet

Fair value

Difference(1) Cash and deposits

8,244

8,244

–

(2) Notes and accounts receivable trade27,501

27,501–

10,240

10,240–Total assets

45,98645,986–(1) Notes and accounts payable trade23,16523,165–(2) Accounts payable - other

8,942

8,942

–

(3) Short-term borrowings

8,080

8,080

–

(4) Long-term borrowings

5,821

5,810

(11)

(5) Lease obligations

5,513

5,566

52

Total Liabilities

51,52451,56440

Derivatives transactions (*)

(4)

(4)

–

(3) Investment securities
Available-for-sale securities- 91 -

(*) Derivative receivables and payables are presented on a net basis.

- 92 -

(Note 1) Determination of fair value for financial instruments and matters concerning securities
and derivative transactions
Assets(1) Cash and deposits and (2) Notes and accounts receivable - trade
The fair value of these items is stated at book value. Because these instruments are settled in a short period of time, bookvalue approximates fair value.
(3) Investment securities
Available-for-sale securities
The fair value of these securities is based on prices on securities exchanges. For information on securities classified by the
purpose for which they are held, please refer to [Notes] under the “Securities” section.

Liabilities(1) Notes and accounts payable - trade, (2) Accounts payable - other, and (3) Short-term borrowings
The fair value of these items is stated at book value. Because these instruments are settled in a short period of time, bookvalue approximates fair value.
(4) Long-term borrowings 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 transactions
Please refer to “Notes” under the “Derivatives” section.

(Note 2)
Book value on the consolidated balance sheet of financial instruments whose
fair value is deemed to be considerably difficult to estimate(Millions of yen)
Category

March 31, 2019

Unlisted stocks

March 31, 2020
42

42

Shares of subsidiaries and17121
associates
Since no market prices were available for unlisted stocks, and their fair values weredifficult to determine by an estimation of the future cash flows, unlisted stocks are notincluded in “(3) Investment securities (Available-for-sale securities)” under “Assets.”
The fair values of stocks of subsidiaries and affiliates have not been disclosed as no market
prices for these securities are available and their fair values are deemed extremely
difficult to determine by an estimation of the future cash flows.
(Note 3)
Estimated redemption amounts of monetary assets and available-for-salesecurities with maturity dates after the consolidated balance sheet datePrevious fiscal year (As of March 31, 2019)(Millions of yen)

Within 1 year

Over 1 year but
within 5 years

Over 5 years

Cash and deposits

8,127

–

–

Notes and accounts receivable - trade30,699

–

–

–

–

–

38,826––

Within 1 year

Over 1 year but
within 5 years

Over 5 years

Cash and deposits

8,244

–

–

Notes and accounts receivable - trade27,501––

Investment securities
Available-for-sale securities with maturity dates
Total
Current fiscal year (As of March 31, 2020)(Millions of yen)

Investment securities- 93 -

Available-for-sale securities with maturity dates
Total- 94 -

Within 1 year

Over 1 year but
within 5 years

Over 5 years

–

–

–

35,746––

(Note 4)
Estimated repayment amounts of long-term borrowings, lease obligations andother interest-bearing debts after the closing date of each fiscal year
Previous fiscal year (As of March 31, 2019)(Millions of yen)Over 2
Over 1 year
Within 1
years but
but within 2
yearwithin 3
years
years

Over 3
years butwithin 4
years

Over 4
years butwithin 5
years

Over 5years

Short-term borrowings

6,380

–

–

–

–

–

Long-term borrowings

1,927

1,447

1,263

774

441

45

Lease obligations

1,087

753

727

808

699

1,661

9,395

2,200

1,990

1,582

1,141

1,707

Over 2
Over 1 year
Within 1
years but
but within 2
yearwithin 3
years
years

Over 3
years butwithin 4
years

Over 4
years butwithin 5
years

Total

Current fiscal year (As of March 31, 2020)(Millions of yen)Over 5years

Short-term borrowings

8,080

–

–

–

–

–

Long-term borrowings

1,887

1,703

1,214

705

274

35

855

835

924

798

765

1,334

10,823

2,539

2,139

1,504

1,039

1,369

Lease obligations
Total(Securities)
1. Available-for-sale securities
Previous fiscal year (As of March 31, 2019)(Millionsyen)
Category

Book value on the
consolidated balance sheet

Historical costofDifference

Securities with bookvaluesexceedinghistorical cost:
1) Equity securities

12,120

4,598

7,521

2) Bonds–––

3) Other–––

12,120

4,598

7,521

134

167

(32)

2) Bonds–––

3) Other–––

Subtotal

134

167

(32)

Total

12,255

4,766

7,489

Subtotal
Securities with bookvalues not exceeding
historical cost:
1) Equity securities- 95 -

(Note) Unlisted stocks (carrying amount of 42 million yen) 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.

- 96 -

Current fiscal year (As of March 31, 2020)(Millionsyen)
Category

Book value on the
consolidated balance sheet

Historical costofDifference

Securities with bookvaluesexceedinghistorical cost:
1) Equity securities

9,691

4,094

5,597

2) Bonds–––

3) Other

–

–

–

9,691

4,094

5,597

548

689

(141)

2) Bonds–––

3) Other–––

Subtotal

548

689

(141)

Total

10,240

4,784

5,456

Subtotal
Securities with bookvalues not exceeding
historical cost:
1) Equity securities(Note) Unlisted stocks (carrying amount of 42 million yen) 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.
2. Available-for-sale securities sold during the year
Previous fiscal year (From April 1, 2018 to March 31, 2019)(Millionsyen)
Category

Proceeds

Equity securities
Bonds
Other
Total

Gains on salesofLosses on sales

532
–
–

280
–
–

–
–
–

532

280

–

Current fiscal year (From April 1, 2019 to March 31, 2020)(Millionsyen)
Category
Equity securities
Bonds
Other
Total

Proceeds

Gains on salesofLosses on sales

22
–
–

7
–
–

–
–
–

22

7

–

3. Impairment of investment securities
For the fiscal year ended March 31, 2019, the Company recorded an impairment loss of 1 million yen on
investment securities.
There was no impairment of investment securities during the fiscal year ended March 31, 2020.
When the value of stocks depreciated from 30% to 50%, the Company determined impairment loss by analyzing
the operational performance of their respective issuing entities based on their published financial statements as wellas each stock’s fair value information such as discrepancies between the book value and the highest or lowest market- 97 -

value during the year.

- 98 -

(Derivatives transactions)
1. Derivative transactions not subject to the application of hedge accounting
Not applicable.
2. Derivative transactions subject to the application of hedge accounting
The contract amount or the amount equivalent to the principal set forth in the contract, etc. by hedge accounting
method on the consolidated closing date are as follows:(1) Currency-related derivatives

Previous fiscal year (As of March 31, 2019)(Millions of yen)

Hedge accounting method Transaction types
Designated hedge
accounting such as
fixed-rate contracts

Fixed-ratetransaction
On purchased
U.S. dollar

Major hedged
items
Accounts
payable - trade

Total

Contract amountDue over 1
year

Fair value

1,594

–

12

1,594

–

12

(Note) The calculation of fair value is based on the prices and other information presented by financial institutions.
Current fiscal year (As of March 31, 2020)(Millions of yen)

Hedge accounting method Transaction types
Designated hedge
accounting such as
fixed-rate contracts

Fixed-ratetransaction
On purchased
U.S. dollar

Major hedged
items
Accounts
payable - trade

Total

Contract amountDue over 1
year

Fair value

2,352

–

(4)

2,352

–

(4)

(Note) The calculation of fair value is based on the prices and other information presented by financial institutions.
(2) Interest-related derivatives
Previous fiscal year (As of March 31, 2019)(Millions of yen)

Hedge accounting method Transaction types

Exceptional accounting
treatments of interest
rate swaps

Interest rate
swap transaction
Fixed interest
payment andfloating interest
receivables

Major hedged
itemsLong-term
borrowings

Total

Contract amountDue over 1
year

Fair value

246–(Note)

246––(Note) Interest rate swaps subject to exceptional accounting treatments are recognized together with their hedging
items (i.e., long-term borrowings), and therefore their fair values are included in the fair values of the relevant
long-term borrowings.
Current fiscal year (As of March 31, 2020)
Not applicable.

- 99 -

(Retirement benefits)
1. Outline of retirement benefit plans adopted
The Company and its consolidated subsidiaries have defined benefit corporate pension plans (fund type) andlump-sum retirement allowance plans as well as defined contribution plans. In the case of certain defined
contribution plans, employees can select a defined contribution plan or advanced payment of retirement benefits. In
some cases, additional severance benefits may be paid to the employees upon retirement.
2. Defined benefit obligation(1) The changes in retirement benefit obligation for the fiscal years ended March 31, 2020 and 2019 (excluding those for which
the simplified method was applied)

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
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

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)

14,017 million yen

13,752 million yen

347 million yen
112 million yen
133 million yen(859) million yen
13,752 million yen

333 million yen
110 million yen(39) million yen(944) million yen
13,210 million yen(2) The changes in plan assets for the fiscal years ended March 31, 2020 and 2019 (excluding those for which the simplified
method was applied)

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

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)14,434 million yen
433 million yen(374) million yen
413 million yen(596) million yen
14,309 million yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
14,309 million yen
429 million yen(653) million yen
400 million yen(705) million yen
13,780 million yen(3) The changes in retirement benefit liability of the plans for which the simplified method was applied for the fiscal years
ended March 31, 2020 and 2019

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
Beginning balance of retirement benefit
liability
Retirement benefit expenses
Retirement benefits paid
Ending balance of retirement benefit liability- 100 -

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)

1,209 million yen

1,275 million yen

134 million yen(68) million yen
1,275 million yen

129 million yen(52) million yen
1,351 million yen

(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
recorded in the consolidated balance sheet

Previous fiscal year
(As of March 31, 2019)
14,315 million yen(14,309) million yen
6 million yen
711 million yen

Current fiscal year
(As of March 31, 2020)
13,708 million yen(13,780) million yen(71) million yen
854 million yen

718 million yen

782 million yen– million yen
718 million yen(71) million yen
854 million yen

718 million yen

782 million yen

Retirement benefit asset
Retirement benefit liability
Net liability (asset) for retirement benefits
recorded in the consolidated balance sheet(Note) The plans to which the simplified method is applied are included.
(5) The components of retirement benefit expenses

Service cost - benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial differences
Retirement benefit expenses calculated using
the simplified method
Retirement benefit expenses on defined benefit
plans
Extra retirement payments (Note)Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
347 million yen
112 million yen(433) million yen
382 million yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
332 million yen
110 million yen(429) million yen
135 million yen

133 million yen

129 million yen

543 million yen

278 million yen

181 million yen

90 million yen(Note) Recorded under extraordinary losses. Extra retirement payments for the fiscal year ended
March 31, 2019 are additional severance benefits for early retirees and lump-sum transfer
benefits for those who were transferred to consolidated subsidiaries and those for the fiscal
year ended March 31, 2020 are additional severance benefits 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

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)(125) million yen(125) million yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)(477) million yen(477) million yen(7) Remeasurements of defined benefit plans

The components of remeasurements of defined benefit plans (before tax effect) were as follows:

Unrecognized actuarial gain or loss
Total

Previous fiscal year
(As of March 31, 2019)
1,099 million yen
1,099 million yen- 101 -

Current fiscal year
(As of March 31, 2020)
1,577 million yen
1,577 million yen

(8) Plan assets
1) Major components of plan assets
The components of plan assets were as follows:

Bonds
Alternatives (Note)
Equity securities
General accountShort-term assets
Total

Previous fiscal year
(As of March 31, 2019)44.1 %
24.0 %
21.7 %
7.9 %
2.3 %
100 %

Current fiscal year
(As of March 31, 2020)
46.4 %
25.3 %
17.6 %
8.3 %
2.4 %
100 %

(Note) Regarding alternatives, hedge fund investments are made for the purpose of risk diversification.
2) 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 andin the future from the various components of the plan assets.
(9) Assumptions used for actuarial calculations
Key basis for actuarial calculations

Discount rateLong-term expected rate of return
Expected rate of salary increase (Note)
Lump-sum payment plans

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
0.8 %
3.0 %
4.6 %

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
0.8 %
3.0 %
4.6 %

(Note) As the defined benefit corporate pension plan (fund type) is a fixed amount system (point system) basedon the number of years of service, the expected rate of salary increase is not used.
3. Defined contribution plans
The amount of required contribution to the defined contribution plans of the Company and its consolidated
subsidiaries was 243 million yen for the year ended March 31, 2020 and 267 million yen for the year ended March
31, 2019.

- 102 -(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities

Previous fiscal year
Current fiscal year
(As of March 31, 2019) (As of March 31, 2020)
Deferred tax assets
Impairment losses
Accounts payable on distribution expenses
Tax loss carryforwards (Note) 2
Denied sales discounts
Provision for bonuses
Long-term trade receivables
Retirement benefit liability
Allowance for doubtful accounts
Other
Deferred tax assets subtotal
Valuation allowance for tax loss carryforwards (Note)
2
Valuation allowance for deductible temporary
differences
Valuation allowances subtotal (Note) 1
Total deferred tax assets

911 million yen
383 million yen
292 million yen
152 million yen
294 million yen
215 million yen
198 million yen
47 million yen
501 million yen
2,997 million yen

890 million yen
417 million yen
300 million yen
279 million yen
272 million yen
215 million yen
215 million yen
43 million yen
517 million yen
3,152 million yen(229) million yen(260) million yen(1,288) million yen(1,310) million yen(1,517) million yen
1,480 million yen(1,571) million yen
1,580 million yen

Deferred tax liabilities
Valuation difference on available-for-sale securities(2,218) million yen(1,626) million yen
Reserve for advanced depreciation of non-current(30) million yen(30) million yen
assetsOther(195) million yen(196) million yen
Total deferred tax liabilities(2,444) million yen(1,852) million yen
Net deferred tax assets (liabilities)(964) million yen(272) million yen(Notes) 1.
Valuation allowance increased 54 million yen year on year. This was primarily
due to a 16 million yen increase in the valuation allowance for the impairment loss anda 31 million yen increase in the valuation allowance for tax loss carryforwards.
2. Tax loss carryforwards and deferred tax assets by expiration periods
Previous fiscal year (As of March 31, 2019)(Millions ofyen)Over 2
Over 1 year
Within 1
years but
but within
year
within 3
2 years
years
Tax loss carryforwards(*1)
Valuation allowances
Deferred tax assets
(*1)
(*2)

Over 3
years butwithin 4
years

Over 4
years butwithin 5
years

Over 5
years

Total

32

24

13

9

11

201

292

(8)

(24)

(13)

(9)

(11)

(161)

23

–

–

–

–

39

(229)
(*2)
63

Tax loss carryforwards shown in the above table are after multiplying the statutory tax rate.
With respect to 292 million yen in tax loss carryforwards (after application of the statutory tax rate), 63 million yen indeferred tax assets has been recognized. This 63 million yen in deferred tax assets was recognized as loss
carryforwards recoverable based on projected future taxable income out of the 292 million yen 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.

- 103 -

Current fiscal year (As of March 31, 2020)(Millions ofyen)Over 2
Over 1 year
Within 1
years but
but within
year
within 3
2 years
years

Over 3
years butwithin 4
years

Over 4
years butwithin 5
years

Over 5
years

Total

Tax loss carryforwards(*1)
Valuation allowances

24

13

9

11

14

227

300

(11)

(13)

(9)

(11)

(13)

(200)

Deferred tax assets

12

–

–

–

0

26

(260)
(*2)
39

(*1)
(*2)

Tax loss carryforwards shown in the above table are after multiplying the statutory tax rate.
With respect to 300 million yen in tax loss carryforwards (after application of the statutory tax rate), 39 million yen indeferred tax assets has been recognized. This 39 million yen in deferred tax assets was recognized as loss
carryforwards recoverable based on projected future taxable income out of the 300 million yen balance in tax loss
carryforwards (mainly inhabitants tax and enterprise tax) (after application of the statutory tax rate) at the Company
and seven consolidated subsidiaries.

2. Breakdown of major items that caused the significant difference between the statutory tax rate and the effective
tax rate after applying tax effect accounting

Statutory tax rate
Adjustment:
Nondeductible expenses, including
entertainment expenses
Nontaxable income, including dividend
incomePer capita inhabitants tax
Changes in valuation allowance
Tax credit for testing and research expenses
Tax rate difference between the Company
and consolidated subsidiaries
Other
Effective tax rate after applying tax effectaccounting- 104 -

Previous fiscal year
(As of March 31,
2019)
30.6%

Current fiscal year
(As of March 31,
2020)
30.6%

1.7%

1.4%

(0.7)%(0.7)%

4.2%
2.3%(2.1)%

3.9%
2.0%(1.3)%

3.4%

2.1%(0.4)%

0.5%

39.0%

38.5%

(Asset retirement obligations)This note has been omitted due to the insignificance of the total amount of asset retirement obligations.
(Real estate for lease, etc.)
This note has been omitted due to the insignificance of the total amount of real estate for lease, etc.
(Segment information, etc.)[Segment information]
1. Description of reportable segments(1) 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, based on their respective product categories:
The “Processed Food Products” operations segment and the “Meat Products” operations segment.
(2) Description of the businesses that constitute each reportable segment
In the Processed Food Products operations segment, the Company manufactures and sells ham, sausage and precooked andprocessed foods. In the Meat Products operations segment, the Company manufactures and sells meat (beef, pork, chicken,etc.) 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“Significant accounting policies for preparation of consolidated financial statements. ”- 105 -

3. Disclosure of sales, profit (loss), asset, liability, and other items for each reportable segment
Previous fiscal year (From April 1, 2018 to March 31, 2019)

Reportable segment(Millions of yen)Book valueon theAdjustment
consolidatesd financial(Note) 2
statements(Note) 3

Processed
Meat
Food
Products
Products
operations
operations

Total

169,387

73,481

242,869161

243,030–

243,030

–

–

–

803

803

(803)

–

169,387

73,481

242,869965

243,834(803)

243,030

Segment income

781

1,389

2,170

82

2,253

–

2,253

Segment assets

89,256

18,434

107,690261

107,952

24,674

132,626

Other(Note) 1

Total

Net sales
Sales to externalcustomers
Intersegment sales
and transfers
Total

Other items
Depreciation and
6,097
304
6,402
31
6,433
–
6,433
amortization (Note) 4
Increase in property,
plant and equipment,
9,159
443
9,602
14
9,617
0
9,617
and intangible assets(Note) 4(Notes) 1.
The “Other” segment is business other than that of the reportable segments andincludes the insurance agency business.
2. Adjustments for segment assets of 24,674 million yen refer to corporate assets that arecomprised mainly of cash and deposits, investment securities and real estate for rent
and other.
3. The total of segment income of the reportable segments and that of the “Other” segment
is equal to the operating income in the consolidated statements of income.
4. Depreciation and amortization and increase in property, plant and equipment andintangible assets include long-term prepaid expenses.
Current fiscal year (From April 1, 2019 to March 31, 2020)

Reportable segment
Processed
Meat
Food
Products
Products
operations
operations

Other(Note) 1

Total

Total

(Millions of yen)Book valueon theAdjustment
consolidatesd financial(Note) 2
statements(Note) 3

Net sales
Sales to externalcustomers
Intersegment sales
and transfers

170,648

75,024

245,672147

245,820–

245,820

–

–

–

776

776

(776)

–

170,648

75,024

245,672923

246,596(776)

245,820

Segment income

1,668

900

2,568

48

2,617

–

2,617

Segment assets

89,777

18,903

108,680217

108,898

22,955

131,854

Total

Other items- 106 -

Depreciation and
6,459
326
6,785
15
6,801
–
6,801
amortization (Note) 4
Increase in property,
plant and equipment,
8,680
484
9,164
3
9,168
13
9,181
and intangible assets(Note) 4(Notes) 1.
The “Other” segment is business other than that of the reportable segments andincludes the insurance agency business.
2. Adjustments for segment assets of 22,955 million yen refer to corporate assets that arecomprised mainly of cash and deposits, investment securities and real estate for rent
and other.
3. The total of segment income of the reportable segments and that of the “Other” segment
is equal to the operating income in the consolidated statements of income.
4. Depreciation and amortization and increase in property, plant and equipment andintangible assets include long-term prepaid expenses.
[Related information]
Previous fiscal year (From April 1, 2018 to March 31, 2019)
1. Information by product and services(Millions of yen)
Ham & Sausage Precooked &Meat Products
Products
Processed Foods
Sales to externalcustomers

80,95488,433

Other

73,481

Total
161

243,030

2. Information by geographic area
(1) Net sales
Not applicable as the Company’s external customers were based solely in Japan.
(2) Property, plant and equipment
Not applicable as the Company’s property, plant and equipment were located solely in Japan.
3. Information by major customer
This statement is omitted because there were no sales to specific customers that account for 10%
or more of net sales in the consolidated statement of income.
Current fiscal year (From April 1, 2019 to March 31, 2020)
1. Information by product and services(Millions of yen)
Ham & Sausage Precooked &Meat Products
Products
Processed Foods
Sales to externalcustomers

78,854

91,79475,024

Other

Total
147

245,820

2. Information by geographic area
(1) Net sales
Not applicable as the Company’s external customers were based solely in Japan.
(2) Property, plant and equipment
Not applicable as the Company’s property, plant and equipment were located solely in Japan.
3. Information by major customer
This statement is omitted because there were no sales to specific customers that account for 10%
or more of net sales in the consolidated statement of income.

- 107 -

[Information on impairment loss on non-current assets by reportable segment]
Previous fiscal year (From April 1, 2018 to March 31, 2019)(Millionsofyen)Amountrecorded on
Adjustment
thesconsolidate(Note)
d statementof income

Reportable segment
Processed
Meat
Food
Products
Products
operations
operations
Impairment loss

–

Other

Total

–

–

Total

–

–

27

27

(Note) Impairment loss of 27 million yen has been recognized due to decrease in recoverable
value for real estate for rent and other, etc. not belonging to any segment.
Current fiscal year (From April 1, 2019 to March 31, 2020)(Millionsofyen)Amountrecorded on
Adjustment
thesconsolidate(Note)
d statementof income

Reportable segment
Processed
Meat
Food
Products
Products
operations
operations
Impairment loss

–

Other

Total

–

–

Total

–

–

84

84

(Note) Impairment loss of 84 million yen has been recognized due to decrease in recoverable
value for real estate for rent and other, etc. not belonging to any segment.
[Information about amortization and balance of goodwill by reportable segment]
Previous fiscal year (From April 1, 2018 to March 31, 2019)(Millionsyen)
Reportable segment
Processed
Meat
Food
Products
Products
operations
operations
Amortization during theperiodBalance at the end of
period

Other

Total

of

Book valueon theAdjustment
consolidatesd financial
statements

Total

2

–

2

–

2

–

2

2

–

2

–

2

–

2

(Millionsyen)ofCurrent fiscal year (From April 1, 2019 to March 31, 2020)

Reportable segment
Processed
Meat
Food
Products
Products
operations
operations
Amortization during theperiodBalance at the end of
period

Other

Total

Book valueon theAdjustment
consolidatesd financial
statements

Total

2

–

2

–

2

–

2

–

–

–

–

–

–

–

[Information on gain on bargain purchase by reportable segment]- 108 -

Previous fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable.
Current fiscal year (From April 1, 2019 to March 31, 2020)
Not applicable.

- 109 -

[Related parties]
Previous fiscal year (From April 1, 2018 to March 31, 2019)
Not applicable.
Current fiscal year (From April 1, 2019 to March 31, 2020)
Not applicable.
(Per share information)

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)

2,971.34 yen

2,930.66 yen

57.48 yen

65.04 yen

Net assets per share
Profit per share(Notes) 1. Diluted profit per share is not stated because there are no dilutive security.
2. Effective October 1, 2018, the Company conducted a one-for-five share consolidationof its common stock. Accordingly, we have calculated net assets per share and profit per
share on the assumption that the consolidation of shares was conducted at the
beginning of the previous fiscal year.
3. Basis of calculation(1) The basis of calculation of profit per share is as follows:
Previous fiscal year
Current fiscal year
Item
(From April 1, 2018 to(From April 1, 2019 toMarch 31, 2019)
March 31, 2020)
Profit attributable to owners of parent
1,463
1,653
(Millions of yen)Amount not attributable to common––shareholders (Millions of yen)
Profit attributable to owners of parent
associated with common stock (Millions of
1,463
1,653
yen)
Weighted average number of common shares
25,46725,428during the fiscal year (Thousand shares)(2) The basis of calculation of net assets per share is as follows:
Previous fiscal year
Item
(As of March 31, 2019)
Total net assets (Millions of yen)Amount deducted from total net assets(Millions of yen)(Non-controlling interests included in theabove) (Millions of yen)Amounts of net assets related to common
stock at the end of the fiscal year (Millions ofyen)
Number of common stock used to calculate
net assets per share at the end of the fiscal
year (Thousand shares)- 110 -

Current fiscal year
(As of March 31, 2020)

76,09475,056

519

545

(519)

(545)

75,57574,51025,43425,424(Significant events after reporting period)
Business combination by acquisition
On May 12, 2020, the Company concluded a share transfer agreement with Toraku Foods Co., Ltd. to acquire its
shares and make it our subsidiary.
The Company plans to acquire the shares in Toraku Foods on July 1, 2020.
(1) Overview of business combination
1) Name and business of acquiree
Name of acquiree: Toraku Foods Co., Ltd.
Description of business: Manufacturing and sales of dairy processed food2) 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 mostfavored 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
July 1, 2020 (planned)
4) Legal form of business combination
Acquisition of shares
5) Company name after business combination
Toraku Foods Co., Ltd.
6) Voting rights acquired
100%7) Main grounds for determining the acquirer
The Company acquired shares in exchange for cash.
(2) Cost for acquiring the acquiree and breakdown of consideration by type

Consideration for acquisition: CashHistorical cost

1,200 million yen
1,200 million yen(3) Details and amount of major acquisition related expenses
Not determined yet.
(4) Amount, cause, and amortization methods and periods of goodwill
Not determined yet.
(5) Breakdown and amount of major assets and liabilities assumed on the date of business combination
Not determined yet.

- 111 -

5) Annexed consolidated detailed schedules[Annexed consolidated detailed schedule of corporate bonds]
Not applicable.
[Annexed consolidated detailed schedule of borrowings]

Balance at
beginning of Balance at end
Averageperiodof period
interest rate
(Millions of (Millions of yen)
(%)
yen)

Category

Short-term borrowings
Current portion of long-termborrowings
Current portion of leaseobligations
Long-term borrowings(excluding a current portion)
Lease obligations (excluding acurrent portion)

Repayment
deadline

6,380

8,080

0.43

–

1,927

1,887

0.85

–

1,087

855

2.77

–

3,971

3,933

0.79

4,650

4,658

2.74

April 2021 toSeptember 2028
April 2021 toMarch 2029

Total
18,017
19,415––(Notes) 1.
Average interest rate represents weighted average interest rate for thebalance of borrowings, etc. at the end of the current fiscal year.
2. Scheduled annual repayment of long-term borrowings and lease obligations(excluding the current portion) for 5 years subsequent to March 31, 2020.
Over 1 year but
Over 2 years but Over 3 years but Over 4 years but
within 2 years
within 3 years
within 4 years
within 5 years
Category(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)
Long-term
1,703
1,214
705
274
borrowings
Lease obligations

835

924

798

765

[Annexed consolidated detailed schedule of asset retirement obligations]
The amounts of asset retirement obligations at the beginning and the end of the current fiscal year are notlarger than 1% of the total amount of liabilities and net assets at the beginning and the end of the current
fiscal year. Consequently, this information is omitted.
(2) Other
Quarterly information for the fiscal year ended March 31, 2020

(Cumulative period)
Net sales
Profit before income
taxes
Profit attributable toowners of parent

1st Quarter(Millions ofyen)(Millions ofyen)(Millions ofyen)Profit per share(Yen)(Accounting period)
Profit (loss) per share

3rd Quarter

Current fiscal
year

61,393

124,667

190,994

245,820

1,647

2,334

3,625

2,737

1,119

1,434

2,157

1,653

44.00

56.42

84.83

65.04

1st Quarter(Yen)

2nd Quarter

44.0- 112 -

2nd Quarter
12.42

3rd Quarter
28.40

4th Quarter(19.79)

2. Non-consolidated Financial Statements, etc.
(1) Non-consolidated Financial Statements
1) Non-consolidated Balance Sheets(Millions of yen)Previous fiscal year
(As of March 31, 2019)
AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Real estate for rent and other
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

946
51
22,203
6,720
238
4,610
2,371
2,237
(6)
39,374471
29
19,557
8,236
253
4,550
2,313
3,942
(8)
39,347

7,887
542
9,942
14
1,424
11,57695
1,229
32,712
2,640

8,337
607
10,9929
1,330
11,301
137
376
33,093
2,868

12,266
4,040
8,392
7,001
(819)
30,881
66,234
105,609

10,250
4,096
8,277
7,245
(813)
29,05665,018104,365*3- 113 -

Current fiscal year
(As of March 31, 2020)

(Millions of yen)Previous fiscal year
(As of March 31, 2019)
Liabilities
Current liabilities
Notes payable - trade
Accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Lease obligations
Accounts payable - other
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Lease obligations
Deferred tax liabilities
Provision for loss on business of
subsidiaries and associates
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surpluses
Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Reserve for tax purpose reduction
entry of non-current assets
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 114 -

Current fiscal year
(As of March 31, 2020)

100
17,004
5,680
1,889
48
6,271
146
456
*3
1,094
32,69096
17,124
7,430
1,849
50
5,398
324
422
513
33,210

3,796
72
1,970

3,796
133
1,381

10

7

270
6,120
38,810237
5,555
38,766

6,716

6,716

21,685387
22,073

21,685387
22,073

1,676

1,676

20,05020,05068

68

13,57335,369(2,635)61,523

13,85035,645(2,657)
61,777

5,266

3,824

8
5,274
66,798105,609(2)
3,821
65,599104,365

2) Non-consolidated Statements of Income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating loss
Non-operating income
Interest and dividend income
Rental income from real estate
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rental expenses on real estate
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on disposal of non-current assets
Gain on sales of investment securities
Reversal of provision for loss on business of
subsidiaries and associates
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Impairment loss
Extra retirement payments
Costs related to voluntary recovery of productLoss on business of and investment in
subsidiaries and affiliates
Compensation for loss
Loss on valuation of investment securities
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitPrevious fiscal year
(From April 1, 2018
to March 31, 2019)
164,746
130,92233,823*1
35,446(1,622)(Millions of yen)
Current fiscal year
(From April 1, 2019
to March 31, 2020)
165,846
131,756
34,089*1
35,190(1,101)

1,647
598
315
2,560

2,129
573
358
3,061

78
328
132
538
399

85
311
117
515
1,443

12
280

*3

47

2

340

148

245
17
176
–

*4

*5

1

56
1
499
240
(333)
114
(219)
459

- 115 -

138
7

*3

291
84
90
47

*4

*5

3

–
–
518
1,073
(100)
7
(92)
1,166

3) Non-consolidated Statements of Changes in Net Assets
For the previous fiscal year (From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital Legal capital Other capital Total capital Legal retained
surplussurplussurplusearnings

Balance at beginning of
period6,716

21,685387

22,073

1,676

Reserve for tax
purpose
Retained earnings
reduction entry
brought forward
of non-current
assetsGeneralreserve

20,05069

14,134

Changes during period
Dividends of surplus(1,020)

Reversal of reserve for tax
purpose reduction entry of
non-current assets(0)Profit0459

Purchase of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

–

–

–

–

–

–

(0)

(560)

6,716

21,685387

22,073

1,676

20,05068

13,573

Shareholders’ equity
Retained earnings
Total retained
earnings
Balance at beginning of
period35,929Treasuryshares(2,456)

Valuation and translation adjustments
Valuation
Total
Total valuation and Total net assets
difference on Deferred gains orshareholders’translation
available-for-sale losses on hedges
equityadjustments
securities
62,263

6,385

(9)

6,375

68,638Changes during period
Dividends of surplus
Reversal of reserve for tax
purpose reduction entry of
non-current assets
Profit(1,020)(1,020)(1,020)

–

–

–

459

459

459

(178)

(178)

Purchase of treasury shares(178)

Net changes in items otherthan shareholders’ equity(1,118)17(1,100)(1,100)Total changes during period

(560)

(178)

(739)

(1,118)17(1,100)(1,840)

Balance at end of period

35,369(2,635)61,523

5,266

8

5,274

66,798- 116 -

For the current fiscal year (From April 1, 2019 to March 31, 2020)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital Legal capital Other capital Total capital Legal retained
surplussurplussurplusearnings

Balance at beginning of
period6,716

21,685387

22,073

1,676

Reserve for tax
purpose
Retained earnings
reduction entry
brought forward
of non-current
assetsGeneralreserve

20,05068

13,573

Changes during period
Dividends of surplus(890)

Reversal of reserve for tax
purpose reduction entry of
non-current assets(0)Profit0
1,166

Purchase of treasury shares
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

–

–

–

–

–

–

(0)

277

6,716

21,685387

22,073

1,676

20,05068

13,850Shareholders’ equity
Retained earnings
Total retained
earnings
Balance at beginning of
period35,369Treasuryshares(2,635)

Valuation and translation adjustments
Valuation
Total
Total valuation and Total net assets
difference on Deferred gains orshareholders’translation
available-for-sale losses on hedges
equityadjustments
securities
61,523

5,266

8

5,274

66,798Changes during period
Dividends of surplus
Reversal of reserve for tax
purpose reduction entry of
non-current assets
Profit

(890)

(890)

(890)

–

–

–

1,166

1,166

(21)

(21)

1,166

Purchase of treasury shares(21)

Net changes in items otherthan shareholders’ equity(1,441)(11)(1,453)(1,453)

Total changes during period

276

(21)

254

(1,441)(11)(1,453)(1,198)

Balance at end of period

35,645(2,657)

61,777

3,824

(2)

3,821

65,599- 117 -

[Notes](Uncertainties of entity's ability to continue as going concern)
Not applicable.
(Significant accounting policies)
1. Basis and method concerning valuation of assets(1) Basis and method concerning valuation of securities
1) Shares of subsidiaries and associates
Stated at their cost determined by the moving-average method.
2) Available-for-sale securities- Those with fair value
Stated at fair value as of the book-closing date.
(Any valuation difference is booked directly to net assets and the cost of securities sold are computed by the movingaverage method.)- Those without fair value
Stated at their cost determined by the moving-average method.
(2) Basis and method concerning valuation of derivatives
Derivatives
Stated at fair value.
(3) Basis and method concerning valuation of inventories
Merchandise and finished goods, work in process, and raw materials and supplies
Stated at their cost determined by the weighted average method.
(Balance sheet values reflect write-downs for decreased profitability.)

2. Depreciation and amortization methods for non-current assets(1) Property, plant and equipment (excluding leased assets)
Applying the declining balance method. However, the straight-line method is applied for the buildings (excluding thefacilities attached to buildings) acquired on and after April 1, 1998 and the facilities attached to buildings and structuresacquired on and after April 1, 2016.
(2) Intangible assets (excluding leased assets)
Applying the straight-line method. For software for its own use, the straight-line method is applied based on theinternally estimated useful life of 5 years.
(3) Leased assets
Leased assets under finance leases that do not transfer its ownership
Leased assets under finance lease transactions that do not transfer their ownership are amortized using the straightline method over the lease term with a residual value of zero.

3. Accounting policies for allowances and provisions(1) Allowance for doubtful accounts
An allowance for doubtful accounts is provided to cover bad-debt losses. 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.
(2) Provision for bonuses
To provide for payments of employees’ bonuses, an amount accrued for the current fiscal year among the estimated future
obligations is recorded as provisions.

- 118 -

(3) Provision for retirement benefits
Provision for retirement benefits is provided at an amount based on the projected retirement benefit obligation and plan
assets at the end of the current fiscal year. When the estimated amount of plan assets is smaller than the projected amount of
retirement benefit obligations adjusted by unrecognized actuarial gain or loss, the difference is recorded as provision for
retirement benefits. When it exceeds the adjusted retirement benefit obligations, the difference is recorded as prepaid pension
expenses. As the estimated plan assets exceeded the adjusted retirement benefit obligations at the end of the current fiscal
year, prepaid pension expenses were recorded in “Other” under “Investments and other assets.”
1) Periodic attribution of projected retirement benefits
Projected benefit obligations are attributed to the periods of service until the end of the current fiscal year on a benefit
formula basis in determining retirement benefit obligations.

2) Amortization method for actuarial gains or losses
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.
(4) Provision for loss on business of subsidiaries and associates
Provision for loss on business of subsidiaries and associates is provided for the estimated loss that the Company would
need to bear above its investment, taking into consideration the financial position and operational performance, etc. of thesubsidiaries and associates.

4. Other significant accounting policies for preparation of consolidated financial statements(1) Hedge accounting
Exceptional accounting treatments are applied to interest rate swaps because they meet specific conditions. In addition,accounts receivable and accounts payable in a foreign currency hedged by fixed-rate contracts, etc., are treated with designatedhedge accounting.
(2) Accounting treatment of retirement benefits
The accounting treatment of unrecognized actuarial gain or loss relating to retirement benefits is different from theaccounting treatment of unrecognized actuarial gain or loss in the consolidated financial statements.
(3) Accounting treatment of consumption tax
National and local consumption taxes are excluded from the reported amounts in accounting procedures.
(4) Application of consolidated taxation system
The Company applies a consolidated taxation system.
(5) Application of tax effect accounting related to the transition from a consolidated taxation system to a group tax sharing
systemRegarding items that have been transitioned to a group tax sharing system established under the “Act for Partial Amendment
to 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 has not applied the provisions in Paragraph 44 of the “Implementation
Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018), in accordance with the treatmentprescribed in Paragraph 3 of the “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (PITF No. 39, March 31, 2020). The amounts of deferred
tax assets and deferred tax liabilities for these items are based on taxation law as it was before amendment.

- 119 -

(Additional information)
Regarding the impact of COVID-19, the Company currently maintains operations at a close-to-pre-pandemic level while
carrying on business with strict infection prevention measures in place.
In preparing accounting estimates, an assumption that the effects of the COVID-19 pandemic will last into the first halfof the fiscal year ending March 31, 2021 and things will then recover in the second half as well as the latest businessconditions were used. However, since the effects of the pandemic still largely remain uncertain, the estimates might differ
from actual results in the future.

- 120 -

(Non-consolidated balance sheets)
1. Monetary claims and obligations to subsidiaries and associates
Monetary claims and obligations to the subsidiaries and associates concerned, excluding those presented
separately, are as follows:

Previous fiscal year
(As of March 31, 2019)
8,470 million yen
5,008 million yen
8,821 million yen

Short-term monetary claims
Long-term monetary claims
Short-term monetary claims

Current fiscal year
(As of March 31, 2020)
8,392 million yen
4,891 million yen
7,550 million yen

2. Guarantee obligation
Loans to the following companies have been guaranteed by the Company: Loan guarantees refer to guarantees
on borrowings from financial institutions.
Previous fiscal year (As of March 31, 2019)

Guarantee
Yahata Food Co., Ltd.

Guaranteed amount(Millions of yen)
100

Pioneer Foods Co., Ltd.

8

Total

Description
Loan guarantees
Transaction
guarantees

108

Current fiscal year (As of March 31, 2020)

Guarantee
Yahata Food Co., Ltd.

Guaranteed amount(Millions of yen)
100

Pioneer Foods Co., Ltd.
Total

20

Description
Loan guarantees
Transaction
guarantees

120*3. The settlement of notes maturing on the last day of fiscal years is accounted on the clearance day.
Due to a bank holiday that coincided with the last day of a fiscal year, the following notes have been includedin the balance at the end of the relevant fiscal year.

Previous fiscal year
(As of March 31,
2019)
16 million yen
1 million yen

Notes receivable - trade
Notes payable - facilities

Current fiscal year
(As of March 31,
2020)
–
–

4. Overdraft agreements
The Company has signed overdraft agreements with its correspondent banks to efficiently procure working
capital. The unrealized borrowings under these agreements at the end of the fiscal year were as follows:

Previous fiscal year
(As of March 31,
2019)20,800 million yen
5,680 million yen
15,120 million yen

Total amounts in the overdraft agreements
Borrowing balance
Difference- 121 -

Current fiscal year
(As of March 31,
2020)
20,800 million yen
7,430 million yen
13,370 million yen

(Non-consolidated statements of income)*1. The percentages of selling expenses among total expenses for the previous fiscal year and the current fiscal year
were some 89% and 91%, respectively, while those of general and administrative expenses were some 11% and
9%, respectively.
Major items and their amount included in selling, general and administrative expenses are as follows:

Distribution expenses
Salaries and allowances
Depreciation and amortization
Provision for bonuses
Retirement benefit expenses
Provision of allowance for doubtful accounts

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
19,403 million yen
3,970 million yen
322 million yen
249 million yen
345 million yen
10 million yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
20,587 million yen
3,648 million yen
538 million yen
222 million yen
192 million yen
5 million yen

2. Amount of business transactions with subsidiaries and associates and transactions with subsidiaries andassociates other than business transactions are as follows:

Operating revenue
Operating expenses
Amount of transactions other than business
transactions

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)37,730 million yen
29,458 million yen

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
38,486 million yen
30,216 million yen

642 million yen

617 million yen*3. Gain on disposal of non-current assets were brought mainly by the sales of real estate for rent and other.
*4. The breakdown of loss on disposal of non-current assets are as follows:

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)
156 million yen
86 million yen
2 million yen
245 million yen

Buildings and structures
Machinery and equipment
Other
Total

Current fiscal year
(From April 1, 2019 toMarch 31, 2020)
228 million yen
62 million yen
1 million yen
291 million yen*5. The breakdown of loss on business of and investment in subsidiaries and affiliates are as follows:

Provision of allowance for doubtful accounts

Previous fiscal year
(From April 1, 2018 toMarch 31, 2019)1 million yen

Current fiscal year
(From 1st April 1, 2019
to March 31, 2020)
3 million yen(Securities)
Shares in subsidiaries and associates do not have market prices and the fair values of those shares are judged to be
extremely difficult to estimate. As a result, their fair values are not stated.
The book values of the shares in subsidiaries and associates whose fair values are deemed to be considerably difficult
to estimate on the balance sheet are as follows:(Millions of yen)

Category
Shares of subsidiaries
Shares of associates
Total

Previous fiscal year
(As of March 31, 2019)
4,040
0
4,040

- 122 -

Current fiscal year
(As of March 31, 2020)
4,040
55
4,096

(Tax effect accounting)
1. Significant components of deferred tax assets and liabilities

Deferred tax assets
Impairment losses
Loss on valuation of shares of subsidiaries andassociates
Allowance for doubtful accounts
Accounts payable on distribution expenses
Denied sales discounts
Long-term trade receivables
Tax loss carryforwards
Provision for bonuses
Other
Deferred tax assets subtotal
Valuation allowances
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-salesecurities
Prepaid pension costs
Reserve for advanced depreciation of noncurrent assets
Deferred gains or losses on hedges
Total deferred tax liabilities
Net deferred tax assets (liabilities)

Previous fiscal year
(As of March 31,
2019)

Current fiscal year
(As of March 31,
2020)

868 million yen

851 million yen

465 million yen

465 million yen

253 million yen
206 million yen
115 million yen
208 million yen
189 million yen
139 million yen
232 million yen
2,680 million yen(1,937) million yen
742 million yen

251 million yen
247 million yen
235 million yen
208 million yen
199 million yen
129 million yen
260 million yen
2,849 million yen(1,975) million yen
874 million yen(2,216) million yen(1,624) million yen(462) million yen(601) million yen(30) million yen(30) million yen(3) million yen(2,712) million yen(1,970) million yen–(2,255) million yen(1,381) million yen(Changes in presentation)“Denied sales discounts,” which was included in “Other” under “Differed tax assets” in the previous
fiscal year, is presented separately in the current fiscal year due to the increased materiality of the amountto the total deferred tax assets. The notes to the previous fiscal year have been reclassified to reflect thischange in presentation.
As a result, “Other” of 347 million yen under “Differed tax assets” for the previous fiscal year has been
reclassified as “Denied sales discounts” of 115 million yen and “Other” of 232 million yen.”
2. Breakdown of major items that caused the significant difference between the statutory tax rate and the effective tax
rate after applying tax effect accounting

Statutory tax rate
Adjustment:
Nondeductible expenses, including
entertainment expenses
Nontaxable income, including dividend
incomePer capita inhabitants tax
Changes in valuation allowance
Tax credit for testing and research expenses
Bonuses for Directors and Statutory Auditors
Other
Effective tax rate after applying tax effectaccounting- 123 -

Previous fiscal year
(As of March 31,
2019)
30.6%

Current fiscal year
(As of March 31,
2020)
30.6%

14.3%

2.9%

(165.1)%(50.8)%

29.9%
14.2%
(17.7)%
2.5%
0.2%

6.8%
3.5%
(2.7)%
0.7%
0.3%(91.1)%(8.7)%

(Significant events after reporting period)
Business combination by acquisition
As “[Notes] (Significant events after reporting period)” in the consolidated financial statements has
identical contents, this note item is omitted here.

- 124 -

4) Annexed detailed schedules[Annexed detailed schedule of property, plant and equipment, etc.]

Category

Property, plantand equipment

Type of asset(Millions ofyen)
Accumulat
Depreciatio
ed
Balance at Increase Decreasen andBalance at
depreciatio
beginning during the during the amortizatio the end ofn andof period
year
year
n during the period
amortizatio
periodn

Buildings

7,887

1,303

90

762

8,337

24,077Structures

542

132

14
(8)

53

607

3,140

9,942

3,844

64

2,730

10,99238,159

14
1,424

5
132

10
200

9
1,330

402
2,085

11,576

–

0
25
(25)
275

–

11,301–

Leased assets

95

88

0

45

137

91

Construction inprogress

1,229

1,683

2,535

–

376

–

32,712

7,189

3,006

3,802

33,093

67,956

Intangible assets
Total
2,640
2,448
1,893
327
(Notes) 1. Major increases in “Increase during the year” are as follows:

2,868

–

Machinery andequipment
VehiclesTools, furnitureand fixtures
Land

Total

Buildings:

Primarily for renovation work on plants.
Major increases during the year by plant are as follows:

Karatsu Plant
Hiroshima
Plant
Kanto Plant

976 million yen
141 million yen
71 million yen

Machinery and equipment: For the reinforcement of existing production facilities and the acquisition of
new machinery and equipment to streamline the operations.
Major increases during the year by plant are as follows:

Karatsu Plant 1,671 million yen
million
Kanto Plant
644
yen
Hiroshima
million
533
Plant
yen
Construction inprogress:

Karatsu Plant
Takatsuki
Plant
Hiroshima
Plant

711 million yen
354 million yen
281 million yen

2. Major decreases in “Decrease during the year” are as follows:

Construction in progress:Primarily due to reclassification to buildings, machinery and equipment.

- 125 -

The figures in the parenthesis in the “Decrease during the year” indicate the portions that wererecognized as impairment loss.

- 126 -

[Annexed detailed schedule of provisions](Millionsof yen)Category

Balance at
beginning of
periodDecrease during
the year
Decrease during
Increase during
Balance at the(Used forthe yearthe yearend of period
primary(Other)purposes)

Allowance for doubtful
accounts

826

16

14

8

821

Provision for bonuses

456

422

456

–

422

Provision for loss on
business of subsidiaries
10
–
–
2
7
and associates(Notes) 1.
“Decrease during the year (Other)” in the allowance for doubtful accounts wasdue to the collection of receivables, etc.
2. “Decrease during the year (Other)” in the provision for loss on business of subsidiaries
and associates was due to the reversal of a portion thereof in line with the improved
performance of subsidiaries and associates.
(2) Components of major assets and liabilities
This information is omitted because the Company prepares consolidated financial statements.

(3) Other
Not applicable.

- 127 -

VI. Outline of Share-Related Administration of Reporting Company

Fiscal year
Ordinary
GeneralMeeting of Shareholders
Record date
Record date fordividends of surplus
Number of sharesconsisting of aminimum trading unit
Purchase of shares lessthan one unit
Handling officeTransfer agent
Transfer office
Purchasing fee

Method of public notice

Shareholders’ privileges

From April 1 to March 31
June
March 31
March 31100

Stock Transfer Agency Business Planning Dept., Sumitomo Mitsui Trust Bank,
Limited
4-5-33 Kitahama, Chuo-ku, Osaka-shi, Osaka
Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku, Tokyo–FreeThe Company’s method of public notice is by electronic public notice.
However, if the Company is unable to give an electronic public notice due to an
accident or other unavoidable reason, the public notice shall be posted on the Nihon
Keizai Shimbun.
The Company’s URL for public notice:
http://www.marudai.jp/
Each shareholder listed on the shareholder list and holding 2 units (200 shares) ormore as of September 30 each year will receive 3,000 yen worth of products ofMarudai Food Co., Ltd.

- 128 -

VII. Reference Information of Reporting Company

1. Information about parent of reporting company
The Company does not have a parent company or other entity that is provided for in Article 24-7, Paragraph 1 of
the Financial Instruments and Exchange Act.

2. Other reference information
The Company filed the following documents during the period from the starting date of the current fiscal year to
the filing date of the Annual Securities Report.
(1) Annual Securities Report and documents attached thereto, and Confirmation Letter thereof
For the 71st fiscal year (from April 1, 2018 to March 31, 2019)
Filed to the Director-General of Kanto Local Finance Bureau on June 28, 2019(2) Internal Control Report
For the 71st fiscal year (from April 1, 2018 to March 31, 2019)
Filed to the Director-General of Kanto Local Finance Bureau on June 28, 2019(3) Quarterly Securities Reports and Confirmation Letters thereof
For the first quarter of the 72nd fiscal year (from April 1, 2019 to June 30, 2019)
Filed to the Director-General of Kanto Local Finance Bureau on August 9, 2019
For the second quarter of the 72nd fiscal year (from July 1, 2019 to September 30, 2019)
Filed to the Director-General of Kanto Local Finance Bureau on November 13, 2019
For the third quarter of the 72nd fiscal year (from October 1, 2019 to December 31, 2019)
Filed to the Director-General of Kanto Local Finance Bureau on February 14, 2020
(4) Extraordinary Report
An Extraordinary Report pursuant to Article 19, Paragraph 2, Item 9-2 (Results of the Exercise of Voting Rights
at General Meetings of Shareholders) of the Cabinet Office Order on Disclosure of Corporate Affairs
Filed to the Director-General of Kanto Local Finance Bureau on July 1, 2019(5) Share Buyback Report
Filed to the Director-General of Kanto Local Finance Bureau on September 6, 2019(6) Amended Shelf Registration Statement (straight bonds)
Filed to the Director-General of Kanto Local Finance Bureau on July 1, 2019

- 129 -

Part II Information about Reporting Company’s Guarantor, etc.

Not applicable.

- 130 -

Independent Auditors’ Report on Consolidated Financial Statements and Internal Control
June 26, 2020
To the Board of Directors of Marudai Food Co., Ltd.
KPMG AZSA LLC
Osaka OfficeHirohisa Nishino (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Satoru Komatsuno (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant<Financial Statements Audit>
Audit Opinion
Pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act of Japan, we have audited
the consolidated financial statements of Marudai Food Co., Ltd. included in “Financial Information” for the fiscal year
from April 1, 2019 to March 31, 2020, which comprise the consolidated balance sheets, the consolidated statements
of income, the consolidated statements of comprehensive income, the consolidated statements of changes in net assets,
the consolidated statements of cash flows, significant accounting policies for preparation of consolidated financial
statements, other notes and the annexed consolidated detailed schedules.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial positions of Marudai Food Co., Ltd. and its consolidated subsidiaries as of March 31, 2020, and their resultsof operations and their cash flows for the fiscal year then ended in conformity with accounting principles generally
accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility under
the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Consolidated Financial Statements.”
We are independent of the Company and its consolidated subsidiaries in accordance with the provisions related toprofessional ethics in Japan, and are fulfilling other ethical responsibilities as an auditor. We believe that we haveobtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.
Responsibilities of the Management, Statutory Auditors and the Board of Statutory Auditors for the Consolidated
Financial Statements
The management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for designing and operating such internal
control as the management determines is necessary to enable the preparation and fair presentation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements in accordance with the premise of a going concern, andfor disclosing matters relating to going concern when it is required to do so in accordance with accounting principles
generally accepted in Japan.
Statutory Auditors and the Board of Statutory Auditors are responsible for monitoring the execution of Directors’
duties related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our responsibility is 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 express an opinion on the consolidated
financial statements from an independent standpoint in an audit report, based on our audit. Misstatements can occur- 131 -

as a result of fraud or error, and are deemed material if they can be reasonably expected to, either individually orcollectively, influence the decisions of users taken on the basis of the consolidated financial statements.
Auditors make professional judgment in the audit process in accordance with auditing standards generally acceptedin Japan, and perform the following while maintaining professional skepticism.
・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement audit
procedures to address the risks of material misstatement. The audit procedures shall be selected and applied asdetermined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained to provide a basis
for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in order todesign audit procedures that are appropriate in the circumstances, although the purpose of the audit of theconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by the management and the method of their application,
as well as the reasonableness of accounting estimates made by the management and the adequacy of related notes.
・ Determine whether it is appropriate for the management to prepare the consolidated financial statements on thepremise of a going concern and, based on the audit evidence obtained, determine whether there is a significant
uncertainty in regard to events or conditions that may cast significant doubt on the entity’s ability to continue as agoing concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor is required
to call attention to the notes to the consolidated financial statements in the audit report, or if the notes to theconsolidated financial statements pertaining to the significant uncertainty are inappropriate, issue a modified
opinion on the consolidated financial statements. While the conclusions of the auditor are based on the audit
evidence obtained up to the date of the audit report, depending on future events or conditions, an entity may beunable to continue as a going concern.
・ Besides assessing whether the presentation of and notes to the consolidated financial statements are in accordancewith accounting principles generally accepted in Japan, assess the presentation, structure, and content of theconsolidated financial statements including related notes, and whether the consolidated financial statements fairly
present the transactions and accounting events on which they are based.
・ Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
consolidated subsidiaries in order to express an opinion on the consolidated financial statements. The auditor is
responsible for instructing, supervising, and implementing the audit of the consolidated financial statements, and issolely responsible for the audit opinion.
The auditor reports to Statutory Auditors and the Board of Statutory Auditors regarding the scope and timing of
implementation of the planned audit, material audit findings including material weaknesses in internal control
identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to Statutory Auditors and the Board of Statutory Auditors regarding the observance of provisions
related to professional ethics in Japan as well as matters that are reasonably considered to have an impact on theauditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.
<Internal Control Audit>
Audit Opinion
Pursuant to Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act of Japan, we also have audited
the Internal Control Report of Marudai Food Co., Ltd. as of March 31, 2020.
In our opinion, the Internal Control Report referred to above, which represents that the internal control over financial
reporting of Marudai Food Co., Ltd. as of March 31, 2020 is effectively maintained, presents fairly, in all material
respects, the result of the assessment on internal control over financial reporting in conformity with assessment
standards for internal control over financial reporting generally accepted in Japan.
Basis for the Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial
reporting generally accepted in Japan. Our responsibility under the auditing standards for internal control overfinancial reporting is described in “Auditor’s Responsibility for the Internal Control Audit.” We are independent of
the Company and its consolidated subsidiaries in accordance with the provisions related to professional ethics in Japan,
and are fulfilling other ethical responsibility as an auditor. We believe that we have obtained sufficient and appropriate
audit evidence to provide a basis for our audit opinion.

- 132 -

Responsibilities of the Management, Statutory Auditors and the Board of Statutory Auditors for the Internal Control
Report
The management is responsible for designing and operating internal control over financial reporting, and for the
preparation and fair presentation of Internal Control Report in accordance with assessment standards for internal
control over financial reporting generally accepted in Japan.
Statutory Auditors and the Board of Statutory Auditors are responsible for monitoring and examining the designand operations of internal control over financial reporting.
There is a possibility that misstatements may not be completely prevented or detected by internal control overfinancial reporting.
Auditor’s Responsibility for the Internal Control Audit
Our responsibility is to obtain reasonable assurance about whether the Internal Control Report is free from material
misstatement and to express an opinion on the Internal Control Report from an independent standpoint in an Internal
Control Audit Report, based on our internal control audit.
Auditors make professional judgment in the audit process in accordance with auditing standards for internal control
over financial reporting generally accepted in Japan, and perform the following while maintaining professional
skepticism.
・ Perform procedures to obtain audit evidence about the result of the assessment of internal control over financial
reporting in the Internal Control Report. The procedures of internal control audit are selected at the auditor’s
judgment, based on the significance of effects on reliability of financial reporting.
・ Examine presentations on the scope, procedures and results of the assessment of internal control over financial
reporting made by the management, as well as evaluate the overall presentation of Internal Control Report oninternal control.
・ Obtain sufficient and appropriate audit evidence about the result of the assessment of internal control over financial
reporting in Internal Control Report. The auditor is responsible for instructing, supervising, and implementing theaudit of Internal Control Report on internal control, and is solely responsible for the audit opinion.
The auditor reports to Statutory Auditors and the Board of Statutory Auditors regarding the scope and timing of
implementation of the planned audit, audit findings including material weaknesses in internal control subject todisclosure, a follow-up on fixing the weaknesses, and other matters required under the auditing standards.
The auditor reports to Statutory Auditors and the Board of Statutory Auditors regarding the observance of provisions
related to professional ethics in Japan as well as matters that are reasonably considered to have an impact on theauditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.
Conflicts of Interest
Our firm and the engagement partners have no interest in the Company and its consolidated subsidiaries whichshould be disclosed under the provisions of the Certified Public Accountants Act.
End

(Notes) 1. The above is an electronic version of the original copy of the Independent Auditors’ Report on
Consolidated Financial Statements and Internal Control, and the original report is maintained by theCompany (a company that files annual securities reports).
2. XBRL data are not subject to the audit.

- 133 -

Independent Auditors’ Report
June 26, 2020
To the Board of Directors of Marudai Food Co., Ltd.
KPMG AZSA LLC
Osaka OfficeHirohisa Nishino (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Satoru Komatsuno (Seal)
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Audit Opinion
Pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act of Japan, we have audited
the non-consolidated financial statements of Marudai Food Co., Ltd. included in “Financial Information” for the 72nd
fiscal year from April 1, 2019 to March 31, 2020, which comprise the non-consolidated balance sheets, the nonconsolidated statements of income, the non-consolidated statements of changes in net assets, significant accounting
policies, other related notes and the annexed detailed schedules.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects,
the financial position of Marudai Food Co., Ltd. as of March 31, 2020 and the results of operations for the fiscal year
then ended in conformity with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility under
the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Non-consolidated Financial
Statements.” We are independent of the Company in accordance with the provisions related to professional ethics inJapan, and are fulfilling other ethical responsibilities as an auditor. We believe that we have obtained sufficient andappropriate audit evidence to provide a basis for our audit opinion.
Responsibilities of the Management, Statutory Auditors and the Board of Statutory Auditors for the Non-consolidated
Financial Statements
The management is responsible for the preparation and fair presentation of the non-consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for designing and operating suchinternal control as the management determines is necessary to enable the preparation and fair presentation of the nonconsolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements, the management is responsible for assessing whether it isappropriate to prepare the non-consolidated financial statements in accordance with the premise of a going concern,and for disclosing matters relating to going concern when it is required to do so in accordance with accounting
principles generally accepted in Japan.
Statutory Auditors and the Board of Statutory Auditors are responsible for monitoring the execution of Directors’
duties related to designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Non-consolidated Financial Statements
Our responsibility is to obtain reasonable assurance about whether the non-consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to express an opinion on the nonconsolidated financial statements from an independent standpoint in an audit report, based on our audit. Misstatements
can occur as a result of fraud or error, and are deemed material if they can be reasonably expected to, either individuallyor collectively, influence the decisions of users taken on the basis of the non-consolidated financial statements.
Auditors make professional judgment in the audit process in accordance with auditing standards generally accepted- 134 -

in Japan, and perform the following while maintaining professional skepticism.

- 135 -

・ Identify and assess the risks of material misstatement, whether due to fraud or error. Design and implement audit
procedures to address the risks of material misstatement. The audit procedures shall be selected and applied asdetermined by the auditor. In addition, sufficient and appropriate audit evidence shall be obtained to provide a basis
for the audit opinion.
・ In making those risk assessments, the auditor considers internal control relevant to the entity’s audit in order todesign audit procedures that are appropriate in the circumstances, although the purpose of the audit of the nonconsolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control.
・ Assess the appropriateness of accounting policies adopted by the management and the method of their application,
as well as the reasonableness of accounting estimates made by the management and the adequacy of related notes.
・ Determine whether it is appropriate for the management to prepare the non-consolidated financial statements on
the premise of a going concern and, based on the audit evidence obtained, determine whether there is a significant
uncertainty in regard to events or conditions that may cast significant doubt on the entity’s ability to continue as agoing concern. If there is a significant uncertainty concerning the premise of a going concern, the auditor is required
to call attention to the notes to the non-consolidated financial statements in the audit report, or if the notes to thenon-consolidated financial statements pertaining to the significant uncertainty are inappropriate, issue a modified
opinion on the non-consolidated financial statements. While the conclusions of the auditor are based on the audit
evidence obtained up to the date of the audit report, depending on future events or conditions, an entity may beunable to continue as a going concern.
Besides assessing whether the presentation of and notes to the non-consolidated financial statements are in accordancewith accounting principles generally accepted in Japan, assess the presentation, structure, and content of the nonconsolidated financial statements including related notes, and whether the non-consolidated financial statements
fairly present the transactions and accounting events on which they are based.
The auditor reports to Statutory Auditors and the Board of Statutory Auditors regarding the scope and timing of
implementation of the planned audit, material audit findings including material weaknesses in internal control
identified in the course of the audit, and other matters required under the auditing standards.
The auditor reports to Statutory Auditors and the Board of Statutory Auditors regarding the observance ofprovisions related to professional ethics in Japan as well as matters that are reasonably considered to have an impact
on the auditor’s independence and any safeguards that are in place to reduce or eliminate obstacles.
Conflicts of Interest
There are no special interests between the engagement partners/audit firm and the Company that should be disclosed
under the provisions of the Certified Public Accountants Act.

(Notes) 1. The above is an electronic version of the original copy of the Independent Auditors’ Report, and theoriginal report is maintained by the Company (a company that files annual securities reports).
2. XBRL data are not subject to the audit.

- 136 -

[Cover Page][Document Title]

Confirmation Letter[Clause of Stipulation]

Article 24-4-2, Paragraph 1 of the Financial Instruments andExchange Act[Place of Filing]

Director-General, Kanto Local Finance Bureau[Filing Date]

June 29, 2020

[Company Name]

Marudai Shokuhin Kabushiki Kaisha[Company Name in English]

Marudai Food Co., Ltd.

[Title and Name of Representative]

Toshiharu Inoue, President and Representative Director[Title and Name of Chief Financial Officer] Not applicable[Address of Registered Head Office]21-3 Midoricho, Takatsuki-shi, Osaka[Place for Public Inspection]

Tokyo Branch of Marudai Food Co., Ltd.
(4-7-5 Tsukiji, Chuo-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)- 137 -

1. Appropriateness of the Content of Statements in this Annual Securities Report
Toshiharu Inoue, President and Representative Director of Marudai Food Co., Ltd. (the Company), has confirmedthat the Annual Securities Report for the 72nd fiscal year (from April 1, 2019 to March 31, 2020) of the Company
is reasonably and fairly stated in accordance with the Financial Instruments and Exchange Act and related
regulations.

2. Special Notes
There are no noteworthy matters that are pertinent to this Annual Securities Report.

- 138 -

[Cover Page][Document Title]

Internal Control Report[Clause of Stipulation]

Article 24-4-4, Paragraph 1 of the Financial Instruments andExchange Act[Place of Filing]

Director-General, Kanto Local Finance Bureau[Filing Date]

June 29, 2020

[Company Name]

Marudai Shokuhin Kabushiki Kaisha[Company Name in English]

Marudai Food Co., Ltd.

[Title and Name of Representative]

Toshiharu Inoue, President and Representative Director[Title and Name of Chief Financial Officer] Not applicable[Address of Registered Head Office][Place for Public Inspection]

21-3 Midoricho, Takatsuki-shi, Osaka

Tokyo Branch of Marudai Food Co., Ltd.
(4-7-5 Tsukiji, Chuo-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)- 139 -

1. Basic Framework of the Internal Control over Financial Reporting
Toshiharu Inoue, President and Representative Director of Marudai Food Co., Ltd. (the Company), having the
responsibility to design and operate internal control over financial reporting of the Company, designs and operates
such internal control of the Company in accordance with the basic framework set forth in “On the Setting of theStandards and Practice Standards for Management Assessment and Audit concerning Internal Control Over
Financial Reporting (Council Opinions)” published by the Business Accounting Council.
Note that internal control aims at achieving its objectives to a reasonable extent, given that all basic components
of internal control are organically linked and function as a whole. Thus, internal control over financial reporting
may not be able to completely prevent or detect misstatement in financial reporting.

2. Scope of Assessment, Assessment Date and Assessment Procedure
Assessment of internal control over financial reporting was performed as of March 31, 2020 (i.e., the last dayof the current fiscal year) in accordance with assessment standards for internal control over financial reporting
generally accepted in Japan.
In this assessment, the management first assessed company-level controls that would have a material impact
on the reliability of overall financial reporting on a consolidated basis, and based on the results, then selectedindividual business processes to be assessed. In the selected individual process assessment, the management
assessed the effectiveness of internal control by analyzing the business processes in scope, identifying key
controls that would have a material impact on the reliability of the financial reporting, and assessing the designand operation of such key controls.
The management determined the scope for the internal control over financial reporting assessment by selecting
the Company itself, consolidated subsidiaries, and companies accounted for by the equity method based on theirmateriality on the reliability of financial reporting. The materiality on the reliability of financial reporting wasdetermined in consideration of both quantitative and qualitative aspects. The management thus reasonably
determined the process-level control assessment scope based on the results of the company-level control
assessment, which covered the Company and 22 consolidated subsidiaries. Note that the impact of 4 consolidated
subsidiaries and 1 equity method affiliate were determined to be both quantitatively and qualitatively insignificant
and were therefore not included in the scope of assessment of company-level controls.
To specifically determine the process-level control assessment scope, 2 business locations were selected as“Significant Business Locations.” The 2 business locations were the top two in net sales (after eliminatingintercompany transactions) for the previous fiscal year and accounted for approximately two-thirds of theCompany’s consolidated net sales in the aggregate for the previous fiscal year. In such Significant Business
Locations, all business processes related to the accounts that are closely associated with the Company’s businessobjectives, such as net sales, accounts receivable - trade, and inventories, were included in the scope of assessment.
Additionally, business processes in which risks of significant misstatements are high and significant accounts
involving estimates and financial forecasts were added into the scope of assessment as material business processes,
considering the impact on financial reporting. Such business processes include processes from businesses in any
applicable business location, whether or not they are Significant Business Locations.

3. Assessment Result
Based on the assessment results, the management concluded that the internal control over financial reportingat the end of thecurrent fiscal year was effective.

4. Supplementary Information
The Company concluded a share transfer agreement with Toraku Foods Co., Ltd. on May 12, 2020 and madeToraku Foods Co., Ltd. a subsidiary by acquiring its shares as of July 1, 2020. This event may have a material
influence on the assessment of the effectiveness of the internal controls over the financial reporting of theCompany in the coming fiscal years.

5. Special Notes
Not applicable.

- 140 -

Certification

regarding the registration as a third-country audit firm according to § 134 Section 1
in conjunction with § 38 number 5 WPO (German Public Accounting Act)KPMG AZSA LLC, Tokyo/Japanis registered as a third-country audit firm in the public professional register of the
Wirtschaftsprüferkammer effective April 12, 2022, registration number 205001600 after
compliance with the requirements for registration according to § 134 Section 2 WPO.
With regard to the activity according to § 134 Section 1 WPO, the aforementioned firm issubject to the provisions of quality control (§§ 57a – 57g WPO), professional oversight(§§ 61a – 71 WPO), as well as professional jurisdiction (§§ 71a – 127 WPO). A quality
assurance review may be waived if the registered third-country audit firm has already been
subject to a quality assurance review in another member state of the European Union within
the past three years. The same applies if within the past three years a quality assurance reviewof the third-country audit firm has been performed in a third country, provided that the quality
assurance review of that country was recognized as being equivalent based on an evaluationaccording to § 134 Section 4 WPO.

Berlin, April 12, 2022

Dr. Peter Uhlmann
Head of Division Member Affairs

Manuela Schwoy
Head of Department Member Affairs