Annual Report 2022
For the Year Ended 31st March 2022

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

CONTENTSFINANCIAL HIGHLIGHTS .............................................................................. 1
TO OUR SHAREHOLDERS ............................................................................. 2
PRODUCTS ........................................................................................................ 3
CONSOLIDATED BALANCE SHEETS ........................................................... 5
CONSOLIDATED STATEMENTS OF INCOME ............................................. 7
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ........... 8CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS ............. 9
CONSOLIDATED STATEMENTS OF CASH FLOWS .................................. 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ........................ 11
INDEPENDENT AUDITOR’S REPORT ......................................................... 44
DIRECTORS AND STATUTORY AUDITORS ............................................... 49
OUTLINE OF THE COMPANY ...................................................................... 50

MARUDAI FOOD CO., LTD.

FINANCIAL HIGHLIGHTS
For the Years Ended 31st March 2022 and 2021
(Consolidated basis)

The Marudai Food Group applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan(ASBJ) Statement No. 29, 31st March 2020) and other related standards from the beginning of the fiscal year ended 31st March
2022. The Group has also changed its method for recording distribution expenses. The figures for the fiscal year ended 31st
March 2021 have been retrospectively adjusted to reflect the change.

Thousands of
U.S. dollars, except
per share amounts (Note)

Millions of yen,
except per share amounts
2022

2021

2022

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

¥ 218,610¥ 223,001$ 1,785,884

Profit (loss) attributable to owners of parent ...........................................

(376)

412

(3,072)

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

(14.88)16.23(0.12)

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

–

–

–

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

30.00

30.00

0.25

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

¥ 128,904¥ 131,343$ 1,053,051

Per share (yen and dollars):

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥122.41 to U.S.$1.00.

1MARUDAI FOOD CO., LTD.

TO OUR SHAREHOLDERS

infection caused by a mutant strain(Omicron), which isfeared to be highly infectious, and uncertainty due to thesituation in Ukraine.
The industry in which the Marudai Food Group operates
is facing an environment that remains severe as rising raw
material, energy, and logistics costs weighed heavily on
corporate earnings, state of emergency declarations andpriority measures to combat COVID-19 continued to beissued, and consumers become more budget-conscious due
to uncertainty about the economic outlook.
Regarding the meat market, the market prices ofdomestic beef recovered in the first half of the year after
a decline in the previous year caused by decreased
demand. However, the recovery in restaurant demand
was slow, as restaurants were asked to shorten theiroperating hours, and the market is currently below theprevious year’s level. The market prices of domestic pork,
which had been rising due to rising demand for homeconsumption, have settled, but the market prices ofdomestic pork are currently higher than they were in theprevious year, mainly due to the soaring market prices ofimported pork. In addition, throughout the year, imported
meat prices, mainly those of meat from the U.S., remained
significantly higher than in the previous year due toincreased overseas demand and soaring feed prices.
In these circumstances, the Marudai Food Group
conducted its corporate activities with the aim ofadvancing its reputation as an enterprise with a social
mission, namely, a comprehensive food products
company offering merchandise satisfying the highest
standards of safety and reliability.

With the issuance of our company’s 74th annual report,
we hope that our shareholders are enjoying health andprosperity. We would also like to take this opportunity to
express our deep appreciation for your continued support.

As a result, consolidated net sales for the fiscal year
ended 31st March 2022 decreased by 2.0% year on year to¥218,610 million. Operating loss was ¥865 million,
compared to operating loss of ¥333 million in the same
period of the previous year, and loss attributable toowners of parent was ¥376 million, compared to profit
attributable to owners of parent of ¥412 million in thesame period of the previous year.

The Marudai Food Group applied the AccountingStandard for Revenue Recognition (Accounting Standards
Board of Japan (ASBJ) Statement No. 29, 31st March 2020)and other related standards from the beginning of the fiscal
year ended 31st March 2022. The Group has also changed
its me th o d for re co r di ng d is t r ib ut i o n e x p e n s e s .
Comparisons and analysis against the previous fiscal year
have been undertaken using figures to which these changes
in accounting policies have been retroactively applied.

Once again we would like to thank you, ourshareholders, for your support and trust that we can rely
on your continued confidence.
June 2022.

During the fiscal year ended 31st March 2022, theJapanese economy continued to pick up, despite someweakness, due primarily to vaccination efforts and theeffects of government policies in the ongoing severe
situation caused by COVID-19. However, the outlook forthe economy remains unpredictable, mainly due to supply
constraints and downside risks caused by trends in raw
material prices amid concerns about the spread of

Yuji Sato
President and Representative Director

2

MARUDAI FOOD CO., LTD.

PRODUCTS

The Marudai Food Group applied the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan(ASBJ) Statement No. 29, 31st March 2020) and other related standards from the beginning of the fiscal year ended 31st March
2022. The Group has also changed its method for recording distribution expenses. The figures for the fiscal year ended 31st
March 2021 have been retrospectively adjusted to reflect the change.
The following table shows an analysis of the consolidated sales of MARUDAI FOOD CO., LTD. and its consolidated
subsidiaries (together, the “Companies”) by product categories for the years ended 31st March 2022 and 2021:

Millions of yen(percent of total net sales)

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

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

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

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

2022

2021

¥ 148,012¥ 151,762(67.7%)(68.0%)

70,45571,088(32.2%)(31.9%)

143

151(0.1%)(0.1%)¥ 218,610¥ 223,001

2022

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥122.41 to U.S.$1.00.

3

Thousands of
U.S. dollars (Note)$ 1,209,150

575,566

1,168$ 1,785,884

Processed Food Products
The Ham & Sausage Products operations registered the 14th of every month as “Marudai Kunseiya Juicy Day” based on the
combination of the syllables “ju” (Japanese pronunciation of “10”) and “shi” (Japanese pronunciation of “4”). “Marudai
Kunseiya Juicy Day” will be a commemorative day to promote the juiciness of mainstay products such as “Kunseiya-Ripened
Pork Sausage.” We also implemented various other campaigns to increase sales. In addition, we introduced new products, such as
the “Full Flavour Thanks to Dashi” series, which consists of products with 25% less salt than regular products and boosted
flavour from the addition of dashi stock to roast ham, bacon, etc. However, sales competition with competitors intensified andsales of midyear and year-end gifts were sluggish. As a result, sales in the Ham & Sausage Products operations decreased by
6.6% year on year.
In our Precooked & Processed Foods operations, sales of large-bag “Chicken Nuggets” and the “Salad Chicken” series, whichmeet the needs of health-conscious consumers, remained strong due to lifestyle changes, such as increased time spent at homeduring the COVID-19 pandemic. In addition, the Company strove to expand its market share through sales promotions utilizing
social networking services, focusing on the “Sundubu” series, which is now in its 15th year on the market. While sales ofbeverages containing black tapioca declined significantly, there was a recovery in sales of rice products for convenience stores,
and sales of “Rakuraku Whip,” a ready-whipped cream product that can be used right out of the refrigerator, and other products ofToraku Foods co., Ltd. which joined the Marudai Food Group on 1st of July, 2020, contributed to revenues. As a result, sales in
the Precooked & Processed Foods operations increased by 1.1% year on year.
As a result, sales in the Processed Food Products segment amounted to ¥148,012 million, a decrease of 2.5% year on year.
Segment loss of ¥1,077 million was recorded (compared to segment loss of ¥938 million in the same period of the previous fiscal
year) owing mainly to reduced sales, lower sales prices resulting from intensified sales competition, and higher raw material andenergy costs, despite of our efforts to reduce to reduce costs through rationalization.
Meat Products
With regard to beef, sales of Japanese beef to restaurants showed a recovery, but sales to mass retailers remained sluggish,
resulting in a decline in sales. Sales of imported beef increased due to higher unit sales prices, and overall beef sales were above
the previous year’s level. Regarding pork, sales of both domestic and imported meat were lower than the previous year’s level due
to a review of our product range and sluggish growth of pre-pack products.
As a result, sales in the Meat Products segment decreased by 0.9% year on year to ¥70,455 million. Segment income
decreased by 68.4% year on year to ¥173 million, due mainly to sluggish sales growth and failure of efforts to pass on priceincreases in response to the sharp rise in purchase prices of imported meat.
Other
Sales in the Other business decreased by 4.9% year on year to ¥143 million, and operating income decreased by 32.8% to ¥39
million.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
31st March 2022 and 2021

Millions of yen
2022

ASSETS
Current assets:
Cash and time deposits (Notes 3 and 18) ...........................................
Receivables:
Trade notes and accounts (Note 3) ..............................................
Other ............................................................................................
Allowance for doubtful accounts .................................................
Inventories (Note 6) ...........................................................................
Advances and other current assets ....................................................
Total current assets ......................................................................
Investments and other assets:
Investment securities (Notes 3 and 4)
Affiliates ......................................................................................
Other ............................................................................................
Retirement benefit asset (Note 10) .....................................................
Deferred tax assets (Note 11) ............................................................
Other ..................................................................................................
Allowance for doubtful accounts ......................................................
Total investments and other assets ...............................................
Property, plant and equipment, at cost:
Land (Note 8) ....................................................................................
Buildings and structures (Note 8) .....................................................
Machinery and equipment (Note 8) ..................................................
Lease assets .......................................................................................
Construction in progress ...................................................................
Less accumulated depreciation ..........................................................
Net property, plant and equipment ...............................................
Intangible assets ....................................................................................
Total assets ........................................................................................
See accompanying Notes to Consolidated Financial Statements.

5

¥

7,991

2021

¥

8,476

Thousands of
U.S. dollars (Note 1)
2022$

65,281

23,4371,076(11)
16,874446
49,813

23,8331,382(13)
15,868519
50,065

191,4638,790(90)
137,848
3,644
406,936

218
11,719
2,131
320
2,480
(130)
16,738167
13,314
1,580
318
2,885
(113)
18,151

1,781
95,736
17,4092,614
20,259
(1,062)
136,737

18,72362,79578,2629,205
500
169,485(109,399)
60,0862,267¥ 128,904

18,84061,92875,035
8,345
909
165,057(104,710)
60,3472,780¥ 131,343

152,953
512,989
639,343
75,1984,085
1,384,568(893,710)
490,858
18,520$ 1,053,051

Millions of yen
2022
2021

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars (Note 1)
2022

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

¥ 20,914
6,216
8,100
2,818
1,084
171
810
1,617
41,730¥ 20,237
6,842
7,890
2,658
905
187
851
1,641
41,211$ 170,852
50,78066,171
23,021
8,855
1,397
6,617
13,210340,903

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

4,551
4,119
992
1,379
644
11,685

4,649
4,296
1,470
1,309
658
12,382

37,17833,6498,104
11,265
5,262
95,458NET ASSETS (Note 13)
Shareholders’ equity:
Common stock
Authorised — 40,000,000 shares in 2022 (40,000,000 shares in 2021)
Issued — 26,505,581 shares in 2022 (26,505,581 shares in 2021) .......
Capital surplus ...................................................................................
Retained earnings ..............................................................................
Treasury stock, at cost .......................................................................
Total shareholders’ equity ...........................................................

6,716
22,08644,133(3,066)69,8696,716
22,08645,271(2,697)
71,37654,865
180,426
360,535(25,047)
570,779

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

4,990
71
34
(133)
4,962

5,944
35
34
(252)
5,761

40,765580
278(1,087)40,536658
75,489¥ 128,904

613
77,750¥ 131,343

5,375
616,690$ 1,053,051

Contingent liabilities (Note 12)

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

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME
Years Ended 31st March 2022 and 2021

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

Millions of yen
2022
2021
¥ 218,610¥ 223,001
186,652
188,488

Thousands of
U.S. dollars (Note 1)2022$ 1,785,884
1,524,810

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

31,95832,82334,513
34,846

261,074
268,140

Operating loss ....................................................................................

(865)

(333)

(7,066)

379
163
(221)
430
(220)
–
(20)
(9)
134

338
173
(233)
1
56
998
(204)
(300)
236

3,096
1,332
(1,805)
3,513(1,797)
–
(163)
(74)
1,093

636

1,065

5,195

Profit (loss) before income taxes ...........................................................

(229)

732

(1,871)

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

239
(141)

329
(80)

1,952
(1,152)

98

249

800

(327)
(49)

483
(71)

(2,671)(401)

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

Profit (loss) ............................................................................................
Profit attributable to noncontrolling interests ....................................
Profit (loss) attributable to owners of parent .......................................

¥

(376)

¥

412

¥ (14.88)

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

–Dividends per share (Note 13) ..............................................................
See accompanying Notes to Consolidated Financial Statements.

7

¥

30.00

(3,072)

U.S. dollars (Note 1)

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

$

¥

16.23

$

–
¥

30.00

(0.12)–$

0.25

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended 31st March 2022 and 2021

Profit (loss) .............................................................................................
Other comprehensive income:Unrealised gains on securities ...........................................................
Deferred gains on hedges ..................................................................
Adjustments for retirement benefits ..................................................
Share of other comprehensive income of associates accounted for using equity method ...
Total other comprehensive income (Note 19) .............................
Comprehensive income .........................................................................
Comprehensive income attributable to:
Owners of the parent .........................................................................
Noncontrolling interests ....................................................................
See accompanying Notes to Consolidated Financial Statements.

8

Millions of yen
2022
2021
¥ (327)¥ 483

Thousands of
U.S. dollars (Note 1)2022$ (2,671)

(954)
36
119
(0)
(799)
¥ (1,126)

2,111
38
930
(6)
3,073
¥ 3,556(7,793)294
972(0)(6,527)$ (9,198)¥ (1,175)¥49¥ 3,485¥ 71$ (9,599)$ 401

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years Ended 31st March 2022 and 2021

Thousands of
U.S. dollars (Note 1)
2022

Millions of yen
2022
2021
Common stock:
Balance at beginning and end of the year .........................................

¥ 6,716¥ 6,716$ 54,865

Capital surplus:
Balance at beginning and end of the year .........................................

¥ 22,086¥ 22,086$ 180,426

Retained earnings:
Balance at beginning of the year .......................................................
Cumulative financial impact of the change in accounting policy ......
Balance at the beginning of the year reflecting the change in accounting policy ...
Cash dividends paid ..........................................................................
Profit (loss) attributable to owners of parent ......................................
Balance at end of the year .................................................................

¥ 45,271–¥ 45,271
(762)
(376)
¥ 44,133¥ 45,67772¥ 45,749(890)
412¥ 45,271$ 369,832–$ 369,832(6,225)(3,072)$ 360,535

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

¥ (2,697)(369)¥ (3,066)¥ (2,658)(39)¥ (2,697)$ (22,033)(3,014)$ (25,047)

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

¥ 5,944(954)¥ 4,990¥ 3,833
2,111¥ 5,944$ 48,558(7,793)$ 40,765

¥

¥

(3)
38
35

$

41
(7)
34

$

Deferred gains (losses) on hedges:
Balance at beginning of the year .......................................................
Increase for the year ..........................................................................
Balance at end of the year .................................................................
Foreign currency translation adjustments:
Balance at beginning of the year .......................................................
Decrease for the year .........................................................................
Balance at end of the year .................................................................
Adjustments for retirement benefits:
Balance at beginning of the year .......................................................
Increase for the year ..........................................................................
Balance at end of the year .................................................................
Noncontrolling interests:
Balance at beginning of the year .......................................................
Increase for the year ..........................................................................
Balance at end of the year .................................................................
See accompanying Notes to Consolidated Financial Statements.

9

¥
¥
¥
¥
¥
¥
¥

35
36
71
34
(0)
34

¥
¥
¥

$

$

286
294
580
278
(0)
278

(252)
119
(133)

¥ (1,182)
930¥ (252)$ (2,059)972$ (1,087)

613
45
658

¥

$

¥

546
67
613

$

5,008
367
5,375

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended 31st March 2022 and 2021

Millions of yen
2022
2021

Thousands of
U.S. dollars (Note 1)
2022

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

¥ (229)
7,946
9
15
(322)
–
20
(379)
221
(430)
30
220
406
(1,013)
707
44
(299)
6,946
358
(221)
(298)
450
(204)
7,031

¥

732
7,798
300
(7)
(267)
(998)
204
(338)
233
(1)
–
(56)
2,220
2,289
(3,567)
(199)
(84)
8,259
336
(233)
(597)
–
(91)
7,674

$ (1,871)
64,91374
123(2,631)–163(3,096)
1,805(3,513)
245
1,797
3,317
(8,275)5,776
359(2,442)56,7442,925(1,805)(2,435)
3,676(1,667)57,438Cash flows from investing activities:
Purchase of short-term investments and investment securities ..........
Proceeds from sale of short-term investments and investment securities ...
Purchase of property, plant and equipment ...........................................
Proceeds from sale of property, plant and equipment .......................
Purchase of shares of subsidiaries resulting in change in scope of consolidation ...
Other, net ..........................................................................................
Net cash used in investing activities ............................................

(35)
681
(6,778)647–(204)(5,689)(34)
3(5,418)1,008(1,195)247(5,389)

(286)
5,563
(55,371)
5,286–(1,667)(46,475)

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

210
2,720
(2,658)
(964)
(762)
(369)
(4)
(1,827)

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

1,716
22,220(21,714)(7,875)(6,225)(3,014)(33)(14,925)

Net increase (decrease) in cash and cash equivalents ........................
Cash and cash equivalents at beginning of year .................................
Cash and cash equivalents at end of year (Note 18) ...........................

(485)
8,476
¥ 7,991

232
8,244¥ 8,476(3,962)
69,243$ 65,281

See accompanying Notes to Consolidated Financial Statements.
10

MARUDAI FOOD CO., LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For years Ended 31st March 2022 and 2021

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of MARUDAI FOOD CO., LTD. (the “Company”) and its consolidated
subsidiaries (together, the “Companies”) have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Act. Certain supplementary
information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation,
is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at 31st March 2022, which was ¥122.41 to U.S. $1.00. These translations should not be
construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into
U.S. dollars at this or any other rate of exchange.
2. Significant accounting policies
Consolidation - The consolidated financial statements include the accounts of the Company and its 27 subsidiaries.
Kyomigawa Co., Ltd. has been excluded from the scope of consolidation as it completed its liquidation in the fiscal year ended
31st March 2022. ALL of the Company’s subsidiaries have the same fiscal year end as the Company, 31st March.
All significant intercompany balances, transactions and profits have been eliminated. In the elimination of investments in
subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to noncontrolling shareholders, areevaluated using the fair value at the time the Company acquired control of the respective subsidiary. The difference between thecost of an investment and the equity in the assets at the date of acquisition is amortized over five years. Equity method accounting
is applied to affiliates which are substantially controlled by the Company. Betagro MF Deli Co., Ltd. is being included in thescope of the Companies to which the equity method is applied.
Cash and cash equivalents - Cash on hand, readily available deposits and short-term highly liquid investments with maturities
not exceeding three months at the time of purchase are considered cash and cash equivalents.
Securities - Available-for-sale securities with available fair market value are stated at fair market value. Unrealized gains andlosses on these securities are reported, net of applicable income taxes, as a separate component of shareholders’ equity. Securities
other than stocks with no market price are calculated using the market value method. Valuation differences are recorded directlyin net assets, and cost of products sold is calculated using the moving average method. Stocks with no market price are calculatedusing the moving average cost method.
If the market value of equity securities or available-for-sale securities declines significantly, the difference between the fairmarket value and the carrying amount is recognized as loss in the period of the decline. If the market price of equity securities is
not readily available, such securities are written down to net asset value with a corresponding charge in the consolidated statementof income in the event the net asset value declines significantly. In these cases, the fair market value or the net asset value will be
the carrying amount of the securities at the beginning of the next year.
Derivatives and hedge accounting - The Companies account for derivative financial instruments at fair value and recognizechanges in the fair value as gain or loss unless the derivative financial instrument is used for hedging purposes. If derivative
financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gain or loss
resulting from changes in the fair value of the derivative financial instrument until the related loss or gain on the hedged item isrecognized. However, foreign monetary obligations denominated in foreign currencies for which foreign exchange forward
contracts are used to hedge foreign currency fluctuations are translated at the contracted rate if the forward contracts qualify forhedge accounting (“the alternative method”). Also, if interest rate swap contracts are used as hedges and meet certain hedging
criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the11assets or liabilities for which the swap contract was executed (“the special treatment”).
Allowance for doubtful accounts - An allowance for doubtful accounts is provided to cover possible losses on collection. With
respect to normal trade accounts receivable, it is stated at an amount based on the actual rate of historical bad debts. For certain
doubtful receivables, the uncollectible amounts are individually estimated.
Inventories - The Company and its domestic consolidated subsidiaries state inventories at the lower of average cost or net
realizable value.
Property, plant and equipment - Property, plant and equipment are stated at cost. Depreciation is computed primarily using thedeclining balance method. However, the straight-line method is applied for depreciation of buildings acquired on or after 1st April
1998 and facilities attached to buildings and structures acquired on or after 1st April 2016. The useful life of buildings andstructures ranges from 12 to 50 years. The useful life of machinery and equipment ranges from 4 to 10 years.
Software - The Company and its consolidated domestic subsidiaries include software in intangible assets and amortize it using
the straight-line method over the estimated useful life of 5 years.
Goodwill - Goodwill is amortized over a period of 5 years using the straight-line method.
Lease assets - Assets under finance leases that do not transfer ownership of the lease assets are amortized using the straight-line
method over the lease term with the assumption that the useful life coincides with the lease term and the residual value is zero.
Research and development expenses - Research and development expenses for the improvement of existing products and thedevelopment of new products, including basic research and fundamental development costs, are charged to expenses as incurred.
Bonuses - The Company and its consolidated domestic subsidiaries follow the general Japanese practice of paying bonuses to
employees in July and December. The allowance for bonuses is determined based upon the estimated amounts to be paid in thesubsequent period.
Translation of foreign currencies - Short-term and long-term receivables and payables denominated in foreign currencies aretranslated into Japanese yen at year-end rates.
Accounting for Retirement Benefits - Projected benefit obligations are attributed to periods on a benefit formula basis indetermining retirement benefit obligations. Actuarial gains and losses are amortized by the straight-line method over a fixed
period of 10 years, which is within the average remaining service years of the eligible employees, beginning in the fiscal year
following the year in which the gains and losses are recognized. In determining the amount of retirement benefit obligations andretirement benefit costs, some small sized consolidated subsidiaries have adopted a simplified method in which the amount thatwould be required if all the employees retired voluntarily at the fiscal year end is treated as retirement benefit obligation.
Accounting policy for recognition of significant revenues and expenses
1. Principal performance obligations in the entity’s principal businesses
The Group’s principal business segments are the Processed Food Products segment (production and sale of ham and sausages,
and precooked and processed foods) and the Meat Products segment (processing and sale of beef, pork, chicken, etc.). In thesesegments, the Group identifies the delivery of these goods and products to customers as performance obligations.
2. Company recognizes of the satisfaction of performance obligations
The Company applies the alternative treatment prescribed in Paragraph 98 of the “Guidance on Accounting Standard for
Revenue Recognition” and, in principle, recognizes revenue at the point in time when control has transferred to the customer andthe performance obligation is satisfied at the time of shipment of goods and products.
The transaction price is calculated based on the consideration promised in the contract with the customer, less certain
distribution expenses and promotion expenses.

12

Income taxes - The asset-liability approach is used to recognize deferred tax assets and liabilities for tax loss carryforwards
and the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes.
Amounts per share - The computations of profit attributable to owners of parent per share of common stock shown on the
consolidated statements of income are based on the weighted average number of shares outstanding during each financial period.
Cash dividends per share shown in the consolidated statements of income are the amounts applicable to the respective years.
Diluted profit attributable to owners of parent is not disclosed because the Company had no outstanding securities which might
have diluted the per share amounts for the years ended 31st March 2022 and 2021.
Corporate taxes - Consolidation taxation system has been adopted.
Application of tax effect accounting for transition from the consolidated taxation system to the group tax sharing system - The
Company and some of its domestic consolidated subsidiaries will transition from the consolidated taxation system to the grouptax sharing system since the year ending 31st March, 2023. Having regard to paragraph 3 of “Practical Solution on the Treatment
of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (PITF No.
39, 31st March, 2020), however, the Company and its domestic consolidated subsidiaries do not follow paragraph 44 of“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, 16th February, 2018) but apply provisions of preamended tax laws when calculating the amounts of deferred tax assets and liabilities that relate to transitioning to the group
taxation system and related amendments of tax laws for transitioning to the single tax payment system. “Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System” (PITF No. 42, 12th August, 2021), which sets out accounting
and disclosure of corporation and local taxes and tax effect accounting under the group tax sharing system, will be applied fromthe beginning of the year ending 31st March, 2023.
Accounting for nondeductible consumption taxes, etc. on assets - Nondeductible consumption taxes and local consumption
taxes on assets are expensed in the fiscal year ended 31st March 2022.
Significant accounting estimates
1. Impairment of fixed assets(1) Amount recorded in the consolidated financial statements for the fiscal year ended 31st March 2022
The book value of business assets (including common assets) of the Company for the fiscal year ended 31st March 2022 was¥33,999 million ($277,747 thousand). (Property, plant and equipment was ¥31,940 million ($260,926 thousand), andintangible assets were reported in the amount of ¥2,059 million ($16,821 thousand))The Company determined that there was an indication of impairment of the business assets of the Company due to thecontinuous recording of operating loss and reviewed the necessity of recording an impairment loss. However, as it was determinedthat the undiscounted future cash flows would exceed the book value of the business assets, including the common assets of theCompany, the Company did not record any impairment loss.
(2) Significant accounting estimates for identified items① Calculation method
When an indication of impairment exists for an asset or asset group, the Company conducts an assessment of whether
recording an impairment loss is required based on the future cash flows of the asset.
The Company groups its cash generating units, which are the units used to determine whether recognizing impairment isrequired, into business assets, rental assets, idle assets and artwork. Regarding business assets, the management accounting
business category in which income and expenditure are continuously monitored is considered one asset group, and future
cash flows are calculated based on the profit plan formulated on the basis of the management plan approved by the Board of
Directors. Regarding rental assets, idle assets and artwork, individual assets are used as the smallest unit for grouping. The
future cash flows of rental assets are estimated by the net selling price on the basis of appraisal values, etc., or future cash
flows on the basis of rental income, etc., while future cash flows of idle assets and artwork are estimated based on the net
selling price on the basis of the appraisal values, etc.

13

② Key assumptions
The key assumptions used in the calculation of undiscounted future cash flows are subject to a high degree of uncertainty.
- The net sales plan is an estimate of net sales made by downwardly adjusting numerical values based on numerical plans
formulated for each department, the budget achievement in the past, and the decrease in net sales in the fiscal year ended
31st March 2022, and then adjusting the value to reflect the effect of increased sales due to the price revisions expectedfrom the latest business negotiations, etc. In the second and subsequent years, we assume that, taking into consideration
the market environment for mainstay ham and sausage products, net sales will remain constant as in the plan for the
fiscal year ending 31st March 2023.
- The cost of sales plan reflects the impact of recent increases in raw material prices and energy costs, and the effect of
decreasing manufacturing costs expected from capital investment in the production department.
With regard to the impact of COVID-19, we assume that demand for commercial food products from restaurants, etc.
will begin to recover, albeit slowly, due to the lifting of priority measures to prevent the spread of the virus and progress invaccination.
③ Effect on the consolidated financial statements for the fiscal year ending 31st March 2023
There may be a significant impact on the consolidated financial statements for the fiscal year ending 31st March 2023 if
actual amounts differ from the estimates due to uncertain future economic conditions or changes in the businessenvironment.
2. Recoverability of deferred tax assets(1) Amount recorded in the consolidated financial statements for the fiscal year ended 31st March 2022
Deferred tax assets before offsetting with deferred tax liabilities in the fiscal year ended 31st March 2022 was ¥2,212 million($18,070 thousand).
(2) Significant accounting estimates for identified items① Calculation method
Deferred tax assets are recognized to the extent that it is highly probable that taxable income will be available against
which the unused portion of tax loss carryforwards and future deductible temporary differences can be utilized. In
determining the taxable income to be generated, the Company calculates the timing and amount of taxable income that canbe earned in the future based on the future profit plan formulated on the basis of the management plan approved by the
Board of Directors.
② Key assumptions
For the Company, the estimated amount of taxable income is calculated based on the figures linked to the profit planreferred to above in this Note in Subsection 1 (2) ②, “Key assumptions.”
Among the consolidated subsidiaries that have a significant impact on the amount of taxable income, for those companies
whose management plans for the next fiscal year, as approved by the Board of Directors, are expected to increasesignificantly as compared to the actual results of the current fiscal year, taxable income is estimated based on the assumptionthat profits from the next fiscal year will remain at the same level as those in the current fiscal year, except for items that are
expected to improve in the next fiscal year.
③ Effect on the consolidated financial statements for the fiscal year ending 31st March 2023
There may be a significant impact on the consolidated financial statements for the fiscal year ending 31st March 2023 if
the actual timing and amounts differ from the estimates due to uncertain future economic conditions or changes in thebusiness environment. In addition, changes in the effective statutory tax rate due to tax reforms may also have a significant
impact on those consolidated financial statements.

14

Accounting changes(Application of the Accounting Standard for Revenue Recognition and other related standards)
The Group applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, 31st March 2020) and otherrelated standards from the beginning of the year ended 31st March 2022, instituting a policy of recognising revenue matching theamount expected to be received in exchange for promised goods or services when control of the goods or services has transferredto the customer. As a result, the Group has changed to a method of deducting a portion of the distribution expenses and promotion
expenses, etc., which were previously recorded as selling, general and administrative expenses, from net sales. This change inaccounting policy was in principle applied retroactively; the financial statements for the previous fiscal year are the consolidated
financial statements following retroactive application of the standard. However, the Company has applied the following method
prescribed in Paragraph 85 of the Accounting Standard for Revenue Recognition:- A method whereby comparative information for contracts for which almost all revenue amounts were recognized inaccordance with the previous treatment prior to the beginning of the previous fiscal year is not retrospectively adjusted.
As a result, net sales and selling, general and administrative expenses in the previous fiscal year each decreased by ¥11,151
million ($91,095 thousand), compared to the amounts recorded prior to the retrospective application of the Accounting Standard
for Revenue Recognition. In addition, accounts payable and accounts receivable in the previous fiscal year each decreased by¥2,305 million ($18,830 thousand).
In accordance with the transitional treatment provided in Paragraph 89-3 of the Accounting Standard for Revenue
Recognition, notes pertaining to revenue recognition for the fiscal year ended 31st March 2021 are not presented.
(Application of the Accounting Standard for Fair Value Measurement and other related standards)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, 4th July 2019;
hereinafter “the Fair Value Measurement Standard”) and other related standards from the beginning of the fiscal year ended 31st
March 2022, and will prospectively apply the new accounting policy stipulated by the Fair Value Measurement Standard, etc. inaccordance with the transitional treatment provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, 4th July 2019). There has been no impact on
the consolidated financial statements.
In addition, the Company has include notes on fair value information by level within the fair value hierarchy in the notes on
financial instruments. However, in accordance with the transitional treatment provided in Paragraph 7-4 of the “Implementation
Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, 4th July 2019), notes pertaining to
the previous fiscal year are not presented.
(Change in the method of recording distribution expenses)
The Group decided to record a portion of distribution expenses in manufacturing costs from the beginning of the fiscal year
ended 31st March 2022. Previously, this amount had been recorded in selling, general and administrative expenses. This change
was made to implement more realistic profit-and-loss management (departments, items, customers, etc.), including a review of
the allocation method of recording distribution expenses, as the Company and its major consolidated subsidiaries unified theirsystems following the renewal of their core systems, amid the increasing importance of distribution expenses in the Group.
The Company has applied this change in accounting policy retrospectively, and the consolidated financial statements for theprevious fiscal year have been prepared on a retrospective basis. As a result, compared to the amounts before the retrospective
application, the consolidated balance sheet for the previous fiscal year shows increases of ¥101 million ($825 thousand) inmerchandise and finished goods, ¥31 million ($253 thousand) in deferred tax liabilities, and ¥70 million ($572 thousand) inretained earnings, while the consolidated statement of income for the same fiscal year shows an increase of ¥3,800 million($31,043 thousand) in cost of sales, a decrease of ¥3,797 million ($31,019 thousand) in selling, general and administrative
expenses, an increase of ¥3 million ($25 thousand) in operating loss, a decreases of ¥3 million ($25 thousand) in income before
income taxes, and decreases of ¥2 million ($16 thousand) each in profit, and profit attributable to owners of parent. Due to the
cumulative effect reflected in net assets at the beginning of the previous fiscal year, the beginning balance of retained earnings in
the consolidated statement of changes in net assets increased by ¥72 million ($588 thousand) after retrospective application.
Compared to the amount prior to retrospective application, net income per share in the fiscal year ended 31st March 2021
decreased by ¥0.08 ($0.001).

15

3. Financial instruments(1) Current status of financial instruments① Policy concerning financial instruments
The Group makes it a policy to limit fund investments to bank deposits and other investments in which the principal isfree from risk and raise funds principally through borrowings from financial institutions such as banks and issuance ofcorporate bonds. The Group uses derivatives to reduce foreign exchange and interest rate fluctuation risks but does notengage in any speculative transactions.
② Details of financial instruments and their risks and the Group’s risk management system
The Group is exposed to credit risk arising from operating receivables such as trade notes and accounts receivable. To
limit the risk, the Company conducts due date and outstanding receivable management by customer in accordance with its“credit exposure management guidelines” and has a grading system to evaluate the credit condition of its major customers
every six months. The consolidated subsidiaries manage credit risk similarly, following the Company’s “credit exposure
management guidelines”.
Investment securities held by the Company are comprised of exchange listed shares (strategic shareholdings) and 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 sustained growth and medium- to long-term corporate value enhancement. Individual
investment securities, including unlisted stocks, are subject to verification of their holding purpose and rationale, etc. andreported each year to the Board of Directors for comprehensive deliberation regarding the justification of their holding.
Verification of shareholding rationale includes verification that benefits and risks resulting from the shareholdings areproportionate to the cost of capital.
Operating payables, such as trade notes and accounts payables, and other payables, are generally payable within one
year. Some arise in connection with the import of raw materials and goods that are denominated in foreign currencies. The
Company uses foreign currency forward contracts to reduce foreign currency fluctuation risk that arises from operating
payables in foreign currencies.
The Group primarily uses loans to procure operating funds and lease receivables from finance leases to raise funds forcapital expenditure. The amount of interest expenses has been fixed for the long-term portion of borrowings through the useof individual fixed-rate contracts as well as interest rate swap transactions as hedging instruments, in order to avoid the riskof interest rate fluctuations. No interest swap transactions were current as of 31st March, 2022. To minimize counterparty
risk, the Company follows its “derivative transaction rules” and enters such transactions only with highly rated financial
institutions.
The Company is exposed to liquidity risk arising from its operating obligations and loan payables. To minimize this risk,
the Accounting Department prepares statements of cash flows based on other divisions’ reports and regularly updates thestatements. The consolidated subsidiaries also manage liquidity risk in accordance with the methods used by the Company.
③ Supplementary explanation on fair values of financial instruments
Since variable factors are incorporated in the measurement of the fair value of financial instruments, the fair value may
change due to the adoption of different assumptions and other factors.
The contract amounts of the derivative transactions stated in “(2) Fair value of financial instruments” do not reflect themarket risk involved in the derivative transactions themselves.
(2) Fair value of financial instruments
The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2022.

16

Millions of yen
Consolidatedbalance sheet
amounts¥37① Trade notes ...........................................
23,400② Accounts receivable .............................
③ Investment securities
Available-for-sale securities ................
11,671
Total assets ...........................................
35,10820,914① Trade notes and accounts payable ........
6,216② Payables - other ....................................
8,100③ Short-term borrowings .........................
7,369④ Long-term debt .....................................
Lease
obligations
5,203⑤.................................
Total liabilities .....................................
47,802Derivatives (*3) ....................................
103

Fair value¥

37
23,40011,671
35,10820,914
6,216
8,100
7,364
5,229
47,823
103

Thousands of U.S. dollars (Note 1)
2022
Consolidated
Difference balance sheet Fair value
Difference
amounts
¥ –
$
302
$
302
$ –
–
191,161
191,161
–
–
–
–
–
–
(5)
26
21
–

95,344
286,807
170,852
50,78066,17160,19942,504
390,506
841

95,344
286,807
170,852
50,78066,17160,15842,717
390,678
841

–
–
–
–
–
(41)
213
172
–

(*1) Cash and time deposits are omitted because they are cash and the fair value approximates the book value as deposits aresettled in a short period of time.
(*2) Unlisted stocks and stocks of subsidiaries and affiliates are not included in the above table as no market prices for thesesecurities are available. The consolidated balance sheet amounts of such financial instruments are as follows.
Millions of yen

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

Thousands of U.S. dollars (Note 1)
2022
Consolidated balance sheet amounts Consolidated balance sheet amounts
¥ 48
$ 392
218
1,781

(*3) Derivative assets and liabilities are presented on a net basis.
(*4) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the
consolidated balance sheet dateMillions of yen

Thousands of U.S. dollars (Note 1)
2022
Over fiveyears

Within one
year¥ 7,99137
23,400Over one year
but within
five years
–
–
–

–
–
–

–
¥ 31,428––––

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

Over fiveyears$ 65,281
302
191,161Over one year
but within
five years––––$ 256,744

–
–

–
–

–
–
–

(*5) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7,“Short-term borrowings, long-term debt and lease obligations.”

17

The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2021. However, financial instruments whose fair values were deemed difficult to determine are notincluded in the table (refer below to (*2)).
Millions of yen
2021
Consolidated
Difference
balance sheet Fair value
amounts¥ 23,833¥ 23,833¥ –① Trade notes and accounts receivable ...
② Investment securities
Available-for-sale securities ...............
13,267
13,267–
Total assets ..........................................
37,10037,100–20,237
20,237–① Trade notes and accounts payable ......
6,842
6,842
–
② Payables - other ...................................
7,890
7,890
–
③ Short-term borrowings ........................
7,307
7,303
(4)
④ Long-term debt ...................................
5,201
5,236
35
⑤ Lease obligations ................................
Total liabilities ....................................
47,47747,50831
Derivatives (b) .....................................
5050–(a) Cash and time deposits are omitted because they are cash and the fair value approximates the book value as deposits aresettled in a short period of time.
(b) Derivative assets and liabilities are presented on a net basis.
(*1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions
ASSETS① Trade notes and accounts receivable
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
② Investment securities
The fair value of these securities are based on prices on securities exchanges. For information on securities
classified by the purpose for which they are held, refer to Note 4, “Securities.”
LIABILITIES① Trade notes and accounts payable, ② Payables - other and ③ Short-term borrowings
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
④ Long-term debt and ⑤ Lease obligations
The fair value for these items has been calculated as the present value of the sum of principal and interest amounts,
discounted using the estimated rates for new borrowings of the same kind or lease transactions.
DERIVATIVES
Refer to Note 5, “Derivative financial instruments and hedging transactions.”(*2) Financial instruments whose fair values were deemed extremely difficult to determine

18Millions of yen
2021
Category

Consolidated balance sheet amounts

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

¥ 47
167

Since no market prices were available for unlisted stocks, and their fair values were difficult to determine by an estimation of
the future cash flows, these items were not included in “② Investment securities - Available-for-sale securities.”
The fair values of stocks of subsidiaries and affiliates have not been disclosed, as no market prices for these securities wereavailable and their fair values are deemed extremely difficult to determine by an estimation of the future cash flows.
(*3) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the
consolidated balance sheet dateMillions of yen
2021
one year Over five
Within one Overbut within
years
year
five years
Cash and time deposits ..................................
Trade notes and accounts receivable .............
Investment securities
Available-for-sale securities withmaturity dates (bonds) ................................
Total ..............................................................

¥ 8,476
23,833–––––¥ 32,309––––(*4) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7, “Shortterm borrowings, long-term debt and lease obligations.”(3) Breakdown of the fair value of financial instruments by level
The fair value of financial instruments is classified into the following three levels according to the observability andsignificance of the inputs used to measure the fair value.
Level 1: Fair value measured using (unadjusted) quoted prices in active markets for identical assets or liabilities
Level 2: Fair value measured using directly or indirectly observable inputs other than Level 1 inputs
Level 3: Fair value measured using significant unobservable inputs
If multiple inputs are used that are significant to the fair value measurement, the fair value is categorized by the lowest
level of priority in the fair value measurement among the levels each input belongs to.

19

① Financial instruments measured at fair value on the consolidated balance sheets

Level 1
Investment securities
Available-for-sale securities ......................
Shares ....................................................
Receivables ............................................
Other ......................................................
Derivatives ....................................................
Currency related ........................................
Interest rate related ....................................
Total assets ....................................................

¥ 11,671
11,671–––––¥ 11,671

Millions of yen
2022
Fair value
Level 2
Level 3
¥

–
–
–
–
103
103
–
¥103

Total
–
–
–
–
–
–
–
–

¥ 11,671
11,671
–
–
103
103
–
¥ 11,774

Thousands of U.S. dollars (Note 1)
2022
Fair value
Level 2
Level 3
Total
Level 1
Investment securities
Available-for-sale securities ......................
Shares ....................................................
Receivables ............................................
Other ......................................................
Derivatives ....................................................
Currency related ........................................
Interest rate related ....................................
Total assets ....................................................

$ 95,344
95,344–––––$ 95,344

$

–
–
–
–
841
841
–
$841

20

–
–
–
–
–
–
–
–

$ 95,344
95,344
–
–
841
841
–
$ 96,185

② Financial instruments other than those measured at fair value on the consolidated balance sheets

Level 1
Trade notes ....................................................
Accounts receivable ......................................
Total assets ....................................................
Trade notes and accounts payable ..............
Payables-other ............................................
Short-term borrowings ................................
Long-term debt ...........................................
Lease obligations ........................................
Total liabilities ...............................................

Trade notes ....................................................
Accounts receivable ......................................
Total assets ....................................................
Trade notes and accounts payable ..............
Payables-other ............................................
Short-term borrowings ................................
Long-term debt ...........................................
Lease obligations ........................................
Total liabilities ...............................................

–
–
–
–
–
–
–
–
–

Millions of yen
2022
Fair value
Level 2
Level 3¥37–
23,400–23,437–
20,914
–
6,216
–
8,100
–
7,364
–
5,229
–
¥47,823
–

Total
¥
37
23,40023,437
20,914
6,216
8,100
7,364
5,229
¥47,823

Thousands of U.S. dollars (Note 1)
2022
Fair value
Level 2
Level 3
Total
Level 1
–
$
302
–
$
302
–
191,161–
191,161–
191,463–
191,463–
170,852–
170,852–
50,780–50,780–66,171–
66,171–60,158–60,158–42,717–42,717–$390,678–$390,678

Note: Description of valuation techniques and inputs used in the measurement of fair value
Investment securities
Other securities
Other securities are valued using prices on the stock exchange and are classified as Level 1 fair value.
Derivative transactions
Derivative transactions are all forward exchange contracts and are valued using prices, etc., provided by financial
institutions with which the Company has transactions, and are classified as Level 2 fair value.
Trade notes and accounts receivable
Trade notes and accounts receivable are valued using the book value because the fair value approximates the book value
as they are settled in a short period of time, and are classified as Level 2 fair value.
Trade notes and accounts payable, payables - other, and short-term borrowings
Trade notes and accounts payable, payables - other, and short-term borrowings are valued using their book value
because their fair value approximates their book value as they are settled in a short period of time, and are classified as
Level 2 fair value.
Long-term debt and lease obligations
The fair value of Long-term debt and lease obligations is measured using the present value of the total principal andinterest discounted at the interest rate that would be applicable to a similar new loan or lease transaction, and is classified
as Level 2 fair value.
21

4. Securities
The following tables summarize historical costs and book values (fair values) of available-for-sale securities with available
fair market values as of 31st March 2022 and 2021.
Securities with book values
exceeding historical cost:

Millions of yen

TypeHistorical
cost

2022
Book
value

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

¥ 4,277––¥ 4,277¥ 11,434––¥ 11,434

Historical
cost

2022
Book
value

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

¥ 293
–
–
¥ 293

¥ 237
–
–
¥ 237

Thousands of U.S. dollars (Note 1)

Gain

Historical
cost

2021
Book
value

¥ 7,157––¥ 7,157¥ 4,551––¥ 4,551¥ 13,060––¥ 13,060

Loss

Historical
cost

2021
Book
value

¥ (56)––¥ (56)

¥ 265
–
–
¥ 265

¥ 207
–
–
¥ 207

Gain

Historical
cost

2022
Book
value

¥ 8,509––¥ 8,509$ 34,940––$ 34,940$ 93,408––$ 93,408

Loss

Historical
cost

2022
Book
value

¥ (58)––¥ (58)$ 2,394––$ 2,394$ 1,936––$ 1,936

Gain$ 58,468––$ 58,468

Loss$ (458)––$ (458)Unlisted stocks (carrying amount of ¥48 million ($392 thousand)) as of 31st March 2022 were not included in the above table
as no market prices for these securities were available.
Unlisted stocks (carrying amount of ¥47 million) as of 31st March 2021 were not included in the above table as no market
prices for these securities were available and their fair values were deemed extremely difficult to determine by an estimation of the
future cash flows.
Available-for-sale securities
sold during the year:
Type
Equity securities ...................
Bonds ...................................
Others ...................................
Total .....................................

Millions of yen
Proceeds
¥ 681
–
–
¥ 681

2022
Gains
on salesLosseson salesProceeds

¥ 430
–
–
¥ 430

–
–
–
–

¥3
–
–
¥3

Thousands of U.S. dollars (Note 1)
2021
Gains
on salesLosseson salesProceeds

¥1
–
–
¥1

–
–
–
–

$ 5,563––$ 5,5632022
Gains
on salesLosseson sales$ 3,513––$ 3,513––––

The Group recognized impairment loss on investment securities categorised as other securities with market value in the amountof ¥30 million ($245 thousand) for the year ended 31st March 2022.
There was no impairment of investment securities during the fiscal year ended 31st March, 2021.
When the value of stocks depreciated from 30% to 50%, the Company determined impairment loss by analyzing the operational
performance of the issuing entities based on prevailing financial data and market value information such as discrepancies between
the book value and the highest or lowest market value during the year.

225. Derivative financial instruments and hedging transactions
Derivative financial instruments and hedging transactions at 31st March 2022 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Thousands of U.S. dollars (Note 1)
2022
Contract
amounts

Transaction types

Major hedged
items

Contract
amounts

Due overone year

Fair
value

Foreign exchange trading
On purchased
U.S. dollar
Total

Accounts
payable¥ 2,955–¥ 103¥ 2,955–¥ 103

Due overone year

Fair
value

$ 24,140–$ 841$ 24,140–$ 841(2) Interest related
Not applicable for the year ended 31st March 2022.
Derivative financial instruments and hedging transactions at 31st March 2021 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Transaction types

Major hedged
items

Contract
amounts2021
Due overone year

Foreign exchange trading
On purchased
U.S. dollar
Total

Accounts
payable¥ 1,651–¥ 50¥ 1,651–¥ 50(2) Interest related
Not applicable for the year ended 31st March 2021.

23

Fair
value

6. Inventories
Inventories at 31st March 2022 and 2021 consisted of the following:Thousands of
U.S. dollars (Note 1)

Millions of yen
Merchandise and finished goods .............................................................
Work in progress .....................................................................................
Raw materials and supplies .....................................................................

2022

2021

2022

¥ 11,228464
5,182¥ 16,874¥ 9,693377
5,798¥ 15,868$ 91,724
3,791
42,333$ 137,848

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

Millions of yen
2022
Loss on valuation of inventories .............................................................

24

¥ 47

2021
¥ (25)2022$ 384

7. Short-term borrowings, long-term debt and lease obligations
Short-term borrowing at 31st March 2022 and 2021 consisted of short-term notes, which generally mature within one year,with average interest rates of 0.42% and 0.42%, respectively.
Long-term debt at 31st March 2022 and 2021 consisted of the following:
Millions of yen
2022
2021
Loans from banks, insurance companies and otherfinancial institution at 0.16% to 1.00% maturing through 2028
Secured ....................................................................................................
Unsecured ...............................................................................................
Less current portion ................................................................................

¥

99
7,270
7,369
(2,818)¥ 4,551

Thousands of
U.S. dollars (Note 1)
2022

¥

138
7,169
7,307
(2,658)¥ 4,649$

809
59,39060,199(23,021)$ 37,178

The aggregate annual maturities of long-term debt as of 31st March 2022 were as follows:

Years ending 31st March,2023 .................................................................................................
2024 .................................................................................................
2025 .................................................................................................
2026 .................................................................................................
2027 .................................................................................................
2028 and thereafter .........................................................................

Millions of yen

Thousands of U.S. dollars (Note 1)

2022

2022
¥ 2,818
2,078
1,482
588
388
15
¥ 7,369$ 23,021
16,976
12,107
4,803
3,170
122
$ 60,199

The aggregate annual maturities of lease obligations as of 31st March 2022 were as follows:

Years ending 31st March,2023 .................................................................................................
2024 .................................................................................................
2025 .................................................................................................
2026 .................................................................................................
2027 .................................................................................................
2028 and thereafter .........................................................................

25

Millions of yen

Thousands of U.S. dollars (Note 1)

2022

2022
¥ 1,084
961
929
712
535
982
¥ 5,203$ 8,855
7,851
7,589
5,816
4,371
8,022
$ 42,504

8. Pledged assets
Assets were pledged as collateral for the current portion of long-term debt of ¥38 million ($310 thousand) and long-term debtof ¥61 million ($498 thousand) as of 31st March 2022 and for the current portion of long-term debt of ¥38 million and long-term
debt of ¥99 million as of 31st March 2021. The assets pledged are summarized as follows:

Land ........................................................................................................
Buildings and structures ..........................................................................
Machinery and equipment .......................................................................

Millions of yen
2022
2021
¥ 4
¥ 4
36
40
43
63
¥ 83
¥ 107

Thousands of
U.S. dollars (Note 1)
2022
$ 33
294
351
$ 678

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

Total amounts in the overdraft agreements .............................................
Borrowing balance ..................................................................................
Difference ................................................................................................

26

Millions of yen
2022
2021
¥ 32,770¥ 32,760
8,000
7,790
¥ 24,770¥ 24,970

Thousands of
U.S. dollars (Note 1)
2022$ 267,707
65,354$ 202,353

10. Retirement benefits(1) Outline of retirement benefit plans adopted
The Company and its consolidated subsidiaries have defined benefit corporate pension plans (fund type) and lump-sum
retirement allowance plans as well as defined contribution plans. In the case of certain defined contribution plans, employees canselect a defined contribution plan or advanced payment of retirement benefits. In some cases, additional severance benefits may
be paid to the employees upon retirement.
(2) Defined Benefit Obligation① The changes in retirement benefit obligation for the fiscal years ended 31st March 2022 and 2021 (excluding those forwhich the simplified method was applied) were as follows:

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

Millions of yen
2022
2021
¥ 12,833¥ 13,211
296
311
103
106
(172)
20
(786)
(815)
¥ 12,274¥ 12,833

Thousands of
U.S. dollars (Note 1)
2022$ 104,836
2,418
842(1,405)(6,421)$ 100,270② The changes in plan assets for the fiscal years ended 31st March 2022 and 2021 (excluding those for which the simplified
method was applied) were as follows:

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

27

Millions of yen
2022
2021
¥ 14,941¥ 13,780
374
413
(149)
981
384
394
(602)
(627)
¥ 14,948¥ 14,941

Thousands of
U.S. dollars (Note 1)
2022$ 122,057
3,055(1,217)
3,137(4,918)$ 122,114

③ The changes in liabilities for retirement benefits of the plans for which the simplified method was applied for the fiscal
years ended 31st March 2022 and 2021 were as follows:

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

Millions of yen
2022
2021
¥ 1,836¥ 1,351
174
172
(89)
(98)
456
–
–
¥ 1,921

Thousands of
U.S. dollars (Note 1)
2022$ 14,999
1,421
(727)
–
–
$ 15,693(45)¥ 1,836④ Reconciliation between the ending balance of projected benefit obligation and plan assets and liability and asset for
retirement benefits recorded in the consolidated balance sheet

Funded retirement benefit obligation ......................................................
Plan assets ...............................................................................................
Unfunded retirement benefit obligation ..................................................
Net liability (asset) for retirement benefits recordedin the consolidated balance sheet ..........................................................
Retirement benefit asset ..........................................................................
Liabilities for retirement benefits ...........................................................
Net liability (asset) for retirement benefits recordedin the consolidated balance sheet ..........................................................
Note: The plans to which the simplified method is applied are included.

28

Millions of yen
2022
2021
¥ 12,817¥ 13,361(14,948)(14,941)(2,131)(1,580)
1,379
1,309
(752)
(2,131)
1,379
¥

(752)

Thousands of
U.S. dollars (Note 1)
2022$ 104,705(122,114)(17,409)
11,265(271)(1,580)
1,309
¥

(271)

(6,144)(17,409)
11,265$(6,144)

⑤ The components of retirement benefit expenses were as follows:

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

Millions of yen
2022
2021
¥ 297
¥ 310
103
106
(374)
(413)
135
282
174
172
335
457
20
204

Thousands of
U.S. dollars (Note 1)
2022$ 2,426842(3,055)
1,103
1,421
2,737
163

(*) Recorded under other expenses. Special retirement expenses in the fiscal year ended 31st March 2021 are extra retirement
payments for early retirees, whereas special retirement expenses for the fiscal year ended 31st March 2022 are extra retirement
payments to employees transferred to consolidated subsidiaries.
⑥ Adjustments for retirement benefits
The components of adjustments for retirement benefits (before tax effect) were as follows:

Actuarial gains and losses .......................................................................
Total ........................................................................................................

Millions of yen
2022
2021
¥ 159
¥ 1,243¥ 159¥ 1,243

Thousands of
U.S. dollars (Note 1)2022$ 1,299$ 1,299⑦ Accumulated adjustments for retirement benefits
The components of accumulated adjustments for retirement benefits (before tax effect) were as follows:

Unrecognised actuarial gains and losses .................................................
Total ........................................................................................................

29

Millions of yen
2022
2021
¥ 176
¥ 334
¥ 176
¥ 334

Thousands of
U.S. dollars (Note 1)2022$ 1,438$ 1,438

⑧ Plan assets
The components of plan assets were as follows:2022
Debt securities .................................................................................
Alternatives .....................................................................................
Equity securities ..............................................................................
General account ..............................................................................
Short-term assets .............................................................................
Total ................................................................................................

2021
43.5%
23.7
22.7
7.8
2.3
100.0%

43.0%
24.7
22.4
7.8
2.1
100.0%

Note: Regarding alternatives, hedge fund investments are made for the purpose of risk diversification.
Method of determining long-term expected rate of return
The long-term expected rate of return on plan assets is determined by taking into consideration the allocation of plan
assets which are expected currently and in the future and the long-term rates of return which are expected currently and in
the future from the various components of the plan assets.
⑨ Assumptions used for actuarial calculations for the fiscal years ended 31st March 2022 and 2021 were as follows:
2022
Discount rate ...................................................................................
Long-term expected rate of return ..................................................
Expected rate of salary increase:
Lump-sum payment plans ..............................................................

2021
0.8%
2.5

0.8%
3.0

4.6

4.6

Note: Because the defined benefit corporate pension plan (fund type) is a fixed amount system (point system) based on thenumber of years of service, the expected rate of salary increase is not used.
(3) Define Contribution Plans
The amount of required contribution to the defined contribution plans of the Companies was ¥244 million ($1,993 thousand)for the year ended 31st March 2022 and ¥253 million for the year ended 31st March 2021.

30

11. Income taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise corporate taxes, inhabitants
taxes and enterprise taxes which, in the aggregate, resulted in a statutory tax rate of 30.6% for the year ended 31st March 2021.
The following table summarises the significant differences between the statutory income tax rate and the Companies’ effective
tax rate for financial statement purposes for the years ended 31st March 2022 and 2021.

2022
Statutory tax rate ....................................................................................................................
Nondeductible expenses, including entertainment expenses ...........................................
Nontaxable income, including dividend received ............................................................
Per capita inhabitants tax .................................................................................................
Changes in valuation allowance .......................................................................................
Tax rate difference between the Company and consolidated subsidiaries .......................
Income taxes for prior periods .........................................................................................
Gain on bargain purchase .................................................................................................
Other .................................................................................................................................
Effective tax rate ....................................................................................................................

–
–
–
–
–
–
–
–
–
–

2021
30.6%
3.7
(2.7)
13.6
23.0
6.2
1.0
(41.7)
0.2
33.9%(*1) Notes are omitted because the Company posted a loss before income taxes for the fiscal year ended 31st March 2022.
(*2) The Company made changes in accounting policies in the fiscal year ended 31st March 2022, and the ratio of income tax
after the application of tax effect accounting for the fiscal year ended 31st March 2021 and the breakdown by major itemthat caused the difference are the ratios after retrospective application.

31

Significant components of the Companies’ deferred tax assets and liabilities as of 31st March 2022 and 2021 were as follows:

Deferred tax assets:
Loss carryforwards (*3) ....................................................................
Loss on impairment of assets ............................................................
Denied sales discounts and others .....................................................
Liabilities for retirement benefits .....................................................
Allowance for bonuses ......................................................................
Long-term trade receivables ..............................................................
Allowance for doubtful accounts ......................................................
Other .................................................................................................
Total deferred tax assets ..........................................................................
Valuation allowance for loss carryforwards (*3) ..............................
Valuation allowance for deductible temporary differences ...............
Total valuation allowance (*1) ..........................................................
Net deferred tax assets ............................................................................

Millions of yen
2022
2021
¥ 1,106
¥ 729
794
920
684
665
470
439
262
275
215
215
47
42
522
718
4,100
4,003
(497)
(405)
(1,391)(1,410)(1,888)(1,815)
2,212
2,188

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

(2,114)
(652)
(29)
(89)
(2,884)¥ (672)(2,509)
(484)
(30)
(317)
(3,340)¥ (1,152)

Thousands of
U.S. dollars (Note 1)2022$ 9,035
6,486
5,588
3,840
2,140
1,756
384
4,265
33,494(4,060)(11,364)(15,424)
18,070(17,270)(5,326)(237)(727)(23,560)$ (5,490)(*1) Valuation allowance increased by ¥73 million ($596 thousand) from the fiscal year ended 31st March 2021. The increase
was due mainly to a ¥92 million ($752 thousand) increase in the valuation allowance for loss carryforwards.
(*2) The Company changed its accounting policy in the fiscal year ended 31st March 2022, and the figures for the fiscal year
ended 31st March 2021 have been retrospectively adjusted to reflect the change.

32

(*3) Loss carryforwards and deferred tax assets by expiration periods for the years ended 31st March 2022 and 2021
Loss carryforwards and deferred tax assets by expiration periods as of and for the fiscal year ended 31st March 2022 were as
follows:
Millions of yen
2022
2028 and
2023
2024
2025
2026
2027
Total
thereafter
Loss carryforwards (a) .........
¥ 10
¥ 11
¥ 14
¥ 9
¥ 47
¥ 1,015¥ 1,106
Valuation allowance ..............
(10)
(11)
(14)
(9)
(32)
(421)
(497)
Deferred tax assets ...............
–
–
0
0
15
594
(b) 609
Thousands of U.S. dollars (Note 1)
2022
2023
Loss carryforwards (a) .........
Valuation allowance .............
Deferred tax assets ...............

$ 82
(82)
–

2024
$ 90
(90)
–

2025
$ 114
(114)
0

2026
$ 74
(74)
0

2027
$ 384
(261)
123

2028 and
thereafter$ 8,291(3,439)
4,852

Total
$ 9,035(4,060)(b) 4,975(a) Loss carryforwards shown in the above table are after multiplying the statutory tax rate.
(b) With respect to ¥1,106 million ($9,035 thousand) in tax loss carryforwards (after application of the statutory tax rate),¥609 million ($4,975 thousand) in deferred tax assets has been recognised. This ¥609 million ($4,975 thousand) in
deferred tax assets was recognised as loss carryforwards recoverable based on projected future taxable income out of the¥1,106 million ($9,035 thousand) balance in tax loss carryforwards (after application of the statutory tax rate) at theCompany and twelve consolidated subsidiaries.
Loss carryforwards and its deferred tax assets by expiration periods as of and for the fiscal year ended 31st March 2021 wereas follows:
Millions of yen
2021
2022
Loss carryforwards (a) .........
Valuation allowance .............
Deferred tax assets ...............

¥ 14
(14)
–

2023

2024

¥ 10
(10)
–

¥ 11
(11)
–

2025
¥ 14
(14)
0

2026
¥ 9
(9)
0

2027 and
thereafter
¥ 671
(347)
324

Total
¥ 729
(405)
(b) 324(a) Loss carryforwards shown in the above table are after multiplying the statutory tax rate.
(b) With respect to ¥729 million in tax loss carryforwards (after application of the statutory tax rate), ¥324 million in deferred
tax assets has been recognised. This ¥324 million in deferred tax assets was recognised as loss carryforwards recoverable
based on projected future taxable income out of the ¥729 million balance in tax loss carryforwards (mainly inhabitants
tax and enterprise tax) (after application of the statutory tax rate) at the Company and twelve consolidated subsidiaries.
(Changes in presentation method)
Since “Denied sales discounts” and “Accounts payable on distribution expenses” were both deducted from net sales in thefiscal year ended 31st March 2021, they were consolidated into “Denied sales discounts and others” in the fiscal year ended 31st
March 2022 to increase the clarity of disclosure. To reflect this change in presentation, the notes for the fiscal year ended 31st
March 2021 have been reclassified. As a result, “Accounts payable on distribution expenses” of ¥362 million and “Denied sales
discounts” of ¥303 million in the fiscal year ended 31st March 2021 were reclassified to “Denied sales discounts and others” of¥665 million.

33

12. Contingent liabilities
There are no matters to be reported.
13. Net assets
Under the Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital, which is included in capital surplus. Under the Japanese Corporate Law (“the Law”),
in cases in which a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess,if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside asadditional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets. Under the Law, both of these appropriations generally require a resolution of the shareholders’meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which arepotentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on thenonconsolidated financial statements of the Company in accordance with Japanese laws and regulations.
At the general shareholders’ meeting held on 24th June 2022, appropriations of retained earnings for year-end dividends
applicable to the year ended 31st March 2022 were duly approved as follows:
Millions of yen

Thousands of U.S. dollars

2022

2022

Cash dividends: ¥30.00 ($0.25) per share .......................................

¥ 756$ 6,176

Millions of yen
2021
Cash dividends: ¥30.00 per share ...................................................

¥ 762

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

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

Millions of yen
2022
2021
¥ 12,482¥ 13,018
6,252
6,499
373
401
316
400
3
3

Thousands of
U.S. dollars (Note 1)
2022$ 101,969
51,074
3,047
2,581
25

Research and development expenses included in selling, general and administrative expenses for the years ended 31st March2022 and 2021 were ¥674 million ($5,506 thousand) and ¥ 673 million, respectively.

3415. Loss on impairment of assets
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2022. The Company classified
fixed assets into four categories: business assets, rental assets, idle assets and artwork. The Company groups its business assets bycash generating units and rental assets, idle assets and artwork by individual asset as these represent the smallest identifiable
assets generating cash inflows. As a result, where the recoverable value of idle assets or rental assets has fallen below book value,
due to declines in market prices or profitability, the book value of these assets has been reduced to their recoverable value. The
total impairment loss for the year ended 31st March 2022 consisted of ¥9 million ($74 thousand) for investment and rental
properties (Investments and other assets “Other”).
The recoverable value of rental assets is measured by the net realisable value or the value in use. The recoverable value of
idle assets is measured by the net realisable value. The net realisable value is assessed based on the appraisal value, etc. and value
in used is calculated by discounting future cash flows by 2.7%.
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2021. The Company classified
fixed assets into four categories: business assets, rental assets, idle assets and artwork. The Company groups its business assets bycash generating units and rental assets, idle assets and artwork by individual asset as these represent the smallest identifiable
assets generating cash inflows. As a result, where the recoverable value of idle assets has fallen below the book value due todeclines in market prices, the book value of these assets has been reduced to their recoverable value. The total impairment loss forthe year ended 31st March 2021 consisted of ¥300 million for investment and rental properties (Investments and other assets“Other”).
The recoverable value of idle assets were measured based on value in exchange, which was determined using independent
appraisals.
16. Revenue Recognition(1) Disaggregation of revenue from contracts with customers
Information on disaggregation of revenue from contracts with customers is presented in the “Notes (Segment
Information)” section.
(2) Information that provides the basis for understanding revenue from contracts with customers
The basis for understanding revenue is described in “2. Significant accounting Policy Basis for Recognizing Significant
Revenues and Expenses.”(3) Information about the relationship between the satisfaction of performance obligations under contracts with customers andcash flows from such contracts, and the amount and timing of revenue expected to be recognized from contracts withcustomers that existed at the end of the fiscal year ended 31st March 2022 and are expected to be recognized in or after the
fiscal year ending 31st March 2023.
The balances of receivables from contracts with customers are as follows. There are no beginning or ending balances ofcontract assets or contract liabilities.

Receivables from contracts with customers (beginning balance) ...
Receivables from contracts with customers (ending balance) ........

35

Millions of yen

Thousands of U.S. dollars

2022

2022
¥23,833
23,437$194,698
191,46317. Segment information(1) Overview of the reportable segments① Method for determining reportable segments
The Group’s reportable segments are determined based on the availability of separate financial information for suchsegments that is examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and to assess business performance. The Group has divided its business operations into two reportable segments
and an “Other” segment. Its reportable segments are “the Processed Food Products” segment and “the Meat Products”
segment.
②Description of the businesses that constitute each reportable segment
In the Processed Food Products segment, the Company purchases, manufactures and sells ham, sausage and cooked andprocessed foods. In the Meat Products segment, the Company purchases, manufactures and sells meat products.
(2) Methods of measurement for sales, profit (loss), assets, liabilities and other items for each reportable segment
Accounting policies adopted by the reportable segments are identical to those described in Note 2, “Significant Accounting
Policies.”(Application of the Accounting Standard for Revenue Recognition and other related standards)
As described in “Notes 2,” the Company applied the Accounting Standard for Revenue Recognition and other related
standards for the consolidated financial statements for the fiscal year ended 31st March 2022, and has been changed theaccounting method for revenue recognition. Accordingly, changed the method for calculating profit and loss by businesssegment in the same manner.
Segment information for the previous fiscal year has been prepared using the method for calculating segment income orloss after the change.
(Change in the method of recording distribution expenses)
Because the Group changed its method for recording distribution expenses in the consolidated financial statements for the
fiscal year ended 31st March 2022, the method for calculating segment income or loss has been changed in the same way.
Segment information for the previous fiscal year has been prepared using the method for calculating segment income orloss after the change.

36

(3) Segment information for the years ended 31st March 2022 and 2021
Segment information as of and for the fiscal year ended 31st March 2022 was as follows:

Reportable segments
Processed
Meat
Total
Food Products
Products

Sales:
Ham & Sausage ............................ ¥ 66,485
Precooked & Processed Foods .....
81,527
Meat Products ..............................
––
Other ............................................
148,012
Revenue from contracts with customers ...
Sales to third parties ..................... ¥ 148,012–
Intersegment sales and transfers ...
Net sales .......................................
148,012Segment income (loss) .................
(1,077)
Segment assets .............................
85,353
Other items:
Depreciation and amortisation (*4) ..
7,519
Increase in property, plant andequipment and intangible
6,994
assets (*4) ......................................

¥––
70,455–70,455¥ 70,455–
70,455173
19,818¥ 66,485
81,52770,455–
218,467¥ 218,467–
218,467(904)
105,171

418
382

Millions of yen
2022
Other
(*1)

Total

¥

–
–
–
143
143
¥ 143
722
865
39
201

¥ 66,485
81,52770,455
143
218,610¥ 218,610
722
219,332(865)
105,372

7,937

9

7,376

–

Adjustments(*2)¥

Consolidated
(*3)

–
–
–
–
–
¥
–
(722)
(722)
–
23,532¥ 66,485
81,52770,455
143
218,610¥ 218,610–
218,610(865)
128,904

7,946

–

7,946

7,376

1

7,377

Adjustments(*2)

Consolidated(*3)

Thousands of U.S. dollars (Note 1)
2022

Reportable segments
Processed
Meat
Total
Food Products
Products

Sales:
Ham & Sausage ............................ $ 543,134 $–Precooked & Processed Foods .....
666,016–
Meat Products ..............................
–
575,566––
Other ............................................
Revenue from contracts with customers ... 1,209,150
575,566
Sales to third parties ..................... $ 1,209,150 $ 575,566––Intersegment sales and transfers ...
Net sales ....................................... 1,209,150
575,566
Segment income (loss) .................
(8,798)
1,413
Segment assets .............................
697,271
161,899
Other items:
Depreciation and amortisation (*4) ..
61,425
3,415
Increase in property, plant andequipment and intangible
57,1363,121
assets (*4) ......................................

Other
(*1)

Total

$ 543,134
666,016
575,566–
1,784,716$ 1,784,716–
1,784,716(7,385)859,170

$

–
–
–
1,168
1,168
$ 1,168
5,898
7,066
319
1,642

$ 543,134 $– $ 543,134
666,016–
666,016
575,566–
575,566
1,168
–
1,168
1,785,884–
1,785,884$ 1,785,884 $– $ 1,785,884
5,898(5,898)–
1,791,782(5,898)
1,785,884(7,066)–(7,066)
860,812
192,239
1,053,051

64,84073

64,913–64,91360,257–60,257

8

60,265(*1) The “Other” segment is business other than that of the reportable segments and includes the insurance agency business.
(*2) Adjustments for total assets of ¥23,532 million ($192,239 thousand) indicate assets not attributed to any other segments andcomprise mainly cash and time deposits, investments in securities and investment and rental properties.
(*3) Segment income (loss) is equal to the operating loss in the consolidated statements of income.
(*4) Depreciation and amortisation and increase in property, plant and equipment and intangible assets include long-term prepaid expenses.

37

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

Sales:
Sales to third parties ..................... ¥ 151,762–
Intersegment sales and transfers ...
Net sales ....................................... 151,762
Segment income (loss) .................
(938)
Segment assets .............................
87,406
Other items:
Depreciation and amortisation (*4) ..
7,414
Increase in property, plant andequipment and intangible
5,448
assets (*4) ......................................

Other
(*1)

Total

Adjustments(*2)

Consolidated
(*3)

¥

–
(746)
(746)
–
25,901¥ 223,001–
223,001(333)
131,343¥ 71,088–
71,088548
17,822¥ 222,850–
222,850(390)
105,228

¥ 151
746
897
57
214

¥ 223,001
746
223,747(333)
105,442

374

7,788

10

7,798

–

7,798

679

6,127

13

6,140

7

6,147

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

(4) Information about loss on impairment of assets by reportable segment
Information about loss on impairment of assets by reportable segments as of and for the fiscal year ended 31st March 2022
was as follows:
Millions of yen
2022
Reportable segments
Processed
Meat
Total
Food Products
Products

Loss on impairment of assets .......

–

–

Other

–

Total

–

–

Adjustments

Consolidated¥9¥9Adjustments

Consolidated

$ 74

$ 74

Thousands of U.S. dollars (Note 1)
2022
Reportable segments
Processed
Meat
Total
Food Products
Products

Loss on impairment of assets .......

–

–

Other

–

38

Total

–

–

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

Loss on impairment of assets .......

–

–

Other

–

Total

–

–

Adjustments

Consolidated

¥ 300

¥ 300

(5) Information about amortisation and balance of goodwill by reportable segment
Regarding information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended
31st March 2022 there are no matters to be reported.
Regarding information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended
31st March 2021, there are no matters to be reported.
(6) Information on gain on bargain purchase by reportable segment
Information on gain on negative goodwill by reportable segment for the fiscal year ended 31st March 2022 is not applicable.
In the Processed Food Products segment, the Company recorded gain on bargain purchase of ¥998 million in the fiscal year
ended 31st March 2021 due to the acquisition of shares of Toraku Foods Co., Ltd. in the second quarter ended 30th September
2020.

39

18. Cash flow information
The reconciliation of cash and time deposits in the consolidated balance sheets and cash and cash equivalents in the
consolidated statements of cash flows as of 31st March 2022 and 2021 were as follows:

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

Millions of yen
2022
2021
¥ 7,991¥ 8,476¥ 7,991¥ 8,476

Thousands of
U.S. dollars (Note 1)2022$ 65,281$ 65,281

Significant non-cash transactions as of 31st March 2022 and 2021 were as follows:
Newly recorded assets and liablities related to finance lease transactions were as follows:

Lease assets and obligations ...................................................................

Millions of yen
2022
2021
¥ 967
¥ 549

Thousands of
U.S. dollars (Note 1)2022$ 7,900

Breakdown of the major assets and liabilities of a company that became a newly consolidated subsidiary through acquisitionof shares were as follows as of 31st March 2021:
The breakdown of the assets and liabilities at the time of the consolidation of Toraku Foods Co., Ltd. due to the acquisitionof its shares and the relationship between the acquisition price of that company and the expenditure (net) for the acquisition
were as follows:
Millions of yen
2021
Current assets ..................................................................................
Noncurrent assets ............................................................................
Current liabilities ............................................................................
Long-term liabilities ........................................................................
Gain on bargain purchase ................................................................
Acquisition price of shares ..............................................................
Cash and cash equivalents ...............................................................
Net: Expenditures for the acquisition .............................................

40¥ 1,836
3,553(1,198)(1,993)
(998)
1,200
(5)
¥ 1,195

19. Comprehensive income
Amounts reclassified to profit attributable to owners of parent in the current period that were recognised in othercomprehensive income in the current or previous periods and the tax effects for each component of other comprehensive income
were as follows:
Thousands of
U.S. dollars (Note 1)
2022

Millions of yen
2022
2021
Unrealised gains on securities:
Increase (decrease) during the year ...................................................
Reclassification adjustments .............................................................
Amount before tax effect ...................................................................
Tax effect ...........................................................................................
Subtotal .............................................................................................
Deferred gains on hedges:
Increase during the year ....................................................................
Amount before tax effect ...................................................................
Tax effect ...........................................................................................
Subtotal .............................................................................................
Adjustments for retirement benefits:
Increase during the year ....................................................................
Reclassification adjustments .............................................................
Amount before tax effect ...................................................................
Tax effect ...........................................................................................
Subtotal .............................................................................................
Share of other comprehensive income of associates accounted for using equity method:
Decrease during the year ..................................................................
Total other comprehensive income .........................................................

41

¥

¥

(949)
(400)
(1,349)395(954)¥ 2,995
(1)
2,994
(883)
2,111

$ (7,752)(3,268)(11,020)
3,227(7,793)

52
52
(16)
36

54
54
(16)
38

425
425
(131)
294

23
136
159
(40)
119

960
283
1,243
(313)
930

188
1,111
1,299
(327)
972

(0)
(799)

(6)
¥ 3,073(0)$ (6,527)20. Business combinations
Business combination by acquisition(1) Overview of business combination① Name and business line of acquiree
Name of acquiree: Toraku Foods Co., Ltd.
Business line: Manufacturing and sales of dairy processed food
② Main reason for the business combination
Toraku Foods Co., Ltd. has a prominent line-up of brands and products including “Kobe Pudding,” one of the most favoured
souvenir items from Kobe, and “Rakuraku Whip,” a ready-whipped cream product boasting top market share. The Company
seeks to further expand its dessert category by adding Toraku Foods to the Group.
③ Date of business combination
1st July 2020
④ Legal form of business combination
Acquisition of shares with cash as consideration⑤ Company name after business combination
No change⑥ Voting rights acquired
100%⑦ Main grounds for determining the acquirer
The Company acquired 100% of the voting rights through the acquisition of shares in exchange for cash.
(2) Period during which the business performance of acquiree is included in the consolidated financial statements
1st July 2020, to 31st March 2021
(3) Cost for acquiring the acquiree and breakdown of consideration by typeCash
¥ 1,200 million
Consideration for acquisition:¥ 1,200 million
Acquisition cost(4) Details and amount of major acquisition related expenses
Advisory expenses, etc.
¥41 million(5) Amount and cause of gain on bargain purchase① Amount of gain on bargain purchase¥998 million② CauseAs the market prices of net assets at the time of the business combination exceeded the acquisition cost, the difference wasrecognized as a gain on bargain purchase.

42

(6) Breakdown and amount of major assets and liabilities assumed on the date of business combination
Millions of yen
Current assets ..................................................................................
Noncurrent assets ............................................................................
Total assets ......................................................................................
Current liabilities ............................................................................
Long-term liabilities ........................................................................
Total liabilities .................................................................................

¥ 1,836
3,553
5,389
1,198
1,993
¥ 3,191(7) Estimated amounts and calculation method used to determine the impact of the business combination on the consolidated
statement of income for the fiscal year ended 31st March 2021 on the assumption that the business combination wascompleted as of the beginning of the fiscal year
Millions of yen
Net sales ..........................................................................................
Operating loss .................................................................................
Loss attributable to owners of parent ..............................................

¥ 1,377
(109)
(239)

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

43

Independent auditor’s report
To the Board of Directors of MARUDAI FOOD Co., Ltd.:
OpinionWe have audited the accompanying consolidated financial statements of MARUDAI FOOD Co., Ltd.
(“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), which
comprise the consolidated balance sheets as at March 31, 2022 and 2021, the consolidated statements ofincome and comprehensive income, changes in net assets and cash flows for the years then ended, andnotes, comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2022 and 2021, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Appropriateness of the Company’s judgment as to whether an impairment loss should be recognizedon fixed assets

The key audit matter

How the matter was addressed in our audit

Property, plant and equipment of ¥60,086
million and intangible assets of ¥2,267 million
were recognized in the consolidated balance
sheet of Marudai Food Co., Ltd. (the“Company”) and its consolidated subsidiaries
as of March 31, 2022. Of this, property, plantand equipment and intangible assets in business

The primary procedures we performed to assess theappropriateness of the Company’s judgment with respect
to the recognition of an impairment loss included thefollowing:(1) Internal control testing
We tested the design and operating effectiveness of44

assets, including corporate assets, amounted to¥31,940 million and ¥2,059 million,
respectively, as described in Note 2. Significant
accounting policies, “Significant accounting
estimates, 1. Impairment of fixed assets” to theconsolidated financial statements. These total
amounts represent 26.3% of the total
consolidated assets for the current fiscal year.
While these assets are depreciated/amortized ina systematic manner, they need to be tested for
impairment whenever there is an impairment
indicator. The impairment test is performed bycomparing the undiscounted future cash flowsthat are expected to be generated from therelated asset group with their carrying amounts.
If the recognition of an impairment loss isdeemed necessary, the carrying amount isreduced to the recoverable amount, and theresulting decrease in the carrying amount isrecognized as an impairment loss.
The Company has incurred operating losses forthe fifth consecutive fiscal period mainly due tocontinued severe environments such as lower
sales prices resulting from intensified sales
competition and higher raw material, energy,
and distribution costs. Accordingly, theCompany assessed whether an impairment loss
should be recognized on its business assets,
including corporate assets, in the current fiscal
year. The estimated undiscounted future cash
flows used in the assessment were based on the
Company’s business plan prepared bymanagement. In particular, net sales estimatedby taking into account the status ofachievement of the budget for the current fiscal
year and changes in market environments,
prospects of unit prices of raw materials basedon market trends, and cost-reduction effects ofcapital investment in the production division
involved a high degree of uncertainty, and theCompany’s determination thereon had asignificant effect on the estimated future cash
flows.

certain of the Company’s internal controls relevant todetermining impairment losses to be recognized.

(2) Assessment of the reasonableness of theestimated undiscounted future cash flows
In order to assess the appropriateness of the major
assumptions adopted in developing the Company’sbusiness plan, which served as the basis for estimating
undiscounted future cash flows, we inquired of thepersonnel responsible for each division about the basis ofthese assumptions. In addition, we performed thefollowing procedures:

 To assess the estimated net sales in the businessplan, we:–performed trend analysis using past businessplans and actual results and monitoring of theachievement of the recent sales price revision,and assessed the feasibility of the sales pricerevision, which was a key assumption of thecurrent business plan; and–assessed whether the estimated net sales wereconsistent with statistical information onmarket trends of ham and sausage published by
the Ministry of Internal Affairs andCommunications (MIC) and Japan
Ham&Sausage Processors Cooperative
Association, and also assessed its consistency
with statistical information on market trends ofprocessed foods published by the Japan Readymade Meal Association.

 trend analysis using actual unit prices of raw

materials purchased in the past to assess theestimated unit prices in the business plan, andassessment on whether the estimated unit prices
were consistent with statistical information onmarket trends published by the Agriculture &Livestock Industries Corporation; and assessment of the reasonableness of estimated costreduction effects by capital investment in thebusiness plan by inspecting administrative data of
the cost-reduction effects by capital investment
performed in the past.

We, therefore, determined that our assessmenton the appropriateness of the Company’s
judgment as to whether an impairment loss
should be recognized on fixed assets was of themost significance in our audit of theconsolidated financial statements for thecurrent fiscal year, and accordingly, a key audit

45

matter.

Other Information
The other information comprises the information included in the Annual Report but does not include
the consolidated financial statements, the financial statements, and our auditor’s reports thereon.
Management is responsible for the preparation and presentation of the other information. Corporate
auditors and the board of corporate auditors are responsible for overseeing the directors’ performanceof their duties with regard to the design, implementation and maintenance of the reporting process forthe other information.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.

Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors
for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.

46

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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



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

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

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we
determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in

47

extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2022 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Takahide Nakahata
Designated Engagement Partner
Certified Public Accountant
Satoru Komatsuno
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Osaka Office, Japan
July 27, 2022
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

48

DIRECTORS AND STATUTORY AUDITORS(As of 27th June 2022)
President andRepresentative Director:

Yuji Sato

Director and Chairman:

Tokuo Kudara

Directors:

Nobuyoshi Katoh
Toshio Tanaka

Outside Directors:

Masahiro Fuchizaki
Keiko Kaneko

Statutory Auditor:

Toru Miyachi

Outside Statutory Auditors:

Takashi Matsuzawa
Motoaki Nishimura

49

OUTLINE OF THE COMPANY(As of 31st March 2022)
Established:

10th June 1958

Major Subsidiaries:
Hokkaido Marudai Food Co., Ltd.

Stated Capital:¥6,716 million

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

Number of Employees: 2,066

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

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

Kyushu Marudai Food Co., Ltd.

Osaka, Japan

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

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

Toraku Foods Co., Ltd.

Tokyo, Japan

Marushin Foods Co., Ltd.
Pioneer Foods Co., Ltd.

Sales Offices:

The sales headquarters at the

Umeya Co., Ltd.

Company’s head office in Osaka

Yahata Food Co., Ltd.

controls 10 distribution centers andHornmeier Co., Ltd.

6 regional sales departments which

Marudaifood Co., Ltd.

service 23 local outlets.

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

Plants:Hokkaido, Iwate,

Marbest Trading Co., Ltd.

Niigata, Kanto,

Marudai Service Co., Ltd.

Ibaraki, Yokosuka, Shonan,

8 Other subsidiaries

Shizuoka, Matsusaka,
Takatsuki, Okayama,

Associated Company:

Hiroshima, Karatsu

Betagro MF Deli Co., Ltd.

50

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