Annual Report 2020
For the Year Ended 31st March 2020

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 .......................................................... 35
DIRECTORS AND STATUTORY AUDITORS ................................................ 38
OUTLINE OF THE COMPANY ....................................................................... 39

MARUDAI FOOD CO., LTD.

FINANCIAL HIGHLIGHTS
For the Years Ended 31st March 2020 and 2019
(Consolidated basis)Thousands of
U.S. dollars, except
per share amounts (Note)

Millions of yen,
except per share amounts
2020

2019

2020

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

¥ 245,820¥ 243,031$ 2,259,167

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

1,654

1,464

15,201

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

65.04

57.48

0.60

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

–

–

–

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

35.00

35.00

0.32

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

¥ 131,854¥ 132,627$ 1,211,782

Per share (yen and dollars):

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥108.81 to U.S.$1.00.

1MARUDAI FOOD CO., LTD.

TO OUR SHAREHOLDERS

present impact of COVID-19 as competition intensifies
among companies in the context of a consumer trend
towards low priced products as well as chronic labour
shortages and increases in logistics costs. Regarding themeat market, domestic beef prices fell significantly with
the impact of stay-at-home requests while imported beef
prices were temporarily subject to significant pricemovements and remained higher than the previous year’slevel. The outlook for the meat market is uncertain, withfactors such as volatility in the pork market due to theimpact of swine epidemics in Japan and overseas.
In these circumstances, the Marudai Food Group
conducted its corporate activities with the aim ofadvancing reputation as an enterprise with a social
mission, namely, a comprehensive food products
company offering merchandise satisfying the highest
standards of safety and reliability.
As a result, consolidated net sales for the fiscal year
ended 31st March 2020 increased by 1.1% year on year to¥245,820 million. Operating income increased by 16.1% to¥2,617 million, and profit attributable to owners of parent
increased by 13.0% to ¥1,654 million.

With the issuance of our company’s 72th annual report,
we hope that our shareholders are enjoying health andprosperity. We would also like to take this opportunity to

Once again we would like t o thank yo u , ourexpress our deep appreciation for your continued
support.

shareholders, for your support and trust that we canrely on your continued confidence.

During the fiscal year ended 31st March 2020, theJune 2020.

Japanese economy initially showed signs of a moderate
recovery, but conditions swiftly deteriorated due to theimpact of COVID-19 and remain extremely challenging.
Conditions are expected to remain extremely challenging
going forward, with a high risk of the epidemic causing
further economic downturns in Japan and overseas.

Toshiharu Inoue

In the industry in which the Marudai Food Group

President and Representative Director

operates, sales to restaurants are declining under the2

MARUDAI FOOD CO., LTD.

PRODUCTS

The following table shows an analysis of the consolidated sales of MARUDAI FOOD CO., LTD. and its consolidated
subsidiaries (together, the “Companies”) by product categories for the years ended 31st March 2020 and 2019:

Millions of yen(percent of total net sales)

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

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

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

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

2020

2019

¥ 170,649¥ 169,388(69.4%)(69.7%)

75,02473,482(30.5%)(30.2%)

147

161(0.1%)(0.1%)¥ 245,820¥ 243,031

2020

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥108.81 to U.S.$1.00.

3

Thousands of
U.S. dollars (Note)$ 1,568,321

689,495

1,351$ 2,259,167

Processed Food Products
The Ham & Sausage Products operations implemented various advertising campaigns as an official supporter of the 2020
Olympic and Paralympic Games and made efforts to promote sales centering on mainstay products such as the “KunseiyaRipened Pork Sausage” with specially designed packaging supporting Tokyo 2020. We expanded sales of “Loin Ham” in alarger package and products such as “Fish Sausage (Chiko-chan),” featuring a popular character, as well as strove to increase
sales through the introduction of new products such as the “Kunseiya-Ripened Pork Sausage: White.” Despite these efforts, sales
in the Ham & Sausage Products operations decreased by 2.6% year on year, amid a persistently challenging environment due tofactors such as intensified competition among companies in the context of a trend towards low priced products.
In our Precooked & Processed Foods operations, sales of retort curry products such as the “Chef no Takumi” series performed
well, and we expanded sales of other products including our “Chicken Nugget” and “Salad Chicken” series. We also launched
new products, including the “Soy Life” series using soy meat. As for our desserts and beverages, sales of our beverages containing
black tapioca such as the “TAPIOKA TIME” series grew for the fiscal year, despite the entry of competitors. As a result, sales in
the Precooked & Processed Foods operations increased by 3.8% year on year.
As a result, sales in the Processed Food Products segment amounted to ¥170,649 million, an increase of 0.7% year on year.
Segment income grew 113.5% year on year to ¥1,668 million, owing mainly to the contribution of increased sales in thePrecooked & Processed Foods operations and improved profitability attributable to the full-scale operation of a new plant for
products for convenience stores and despite a decrease in sales in the mainstay Ham & Sausage Products operations.
Meat Products
With regard to beef, the sales volume of imported beef increased as we focused on sales of branded beef, and with an increasein the sales of Japanese beef, overall beef sales increased compared to those of the previous year. Regarding pork, overall porksales were down slightly compared to the previous year’s levels, with declines in sales volumes for both domestic and imported
pork in the context of a volatile market and despite increased sales of pre-packaged imported pork.
As a result, sales in the Meat Products segment increased by 2.1% year on year to ¥75,024 million. Segment income
decreased by 35.2% year on year to ¥901 million, mainly because of a decline in profitability due to an increase in thepurchase price of pork and an increase in logistics costs.
Other
Sales in the Other business decreased by 8.8% year on year to ¥147 million, and operating income decreased by 41.2% to ¥48
million.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
31st March 2020 and 2019

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

5

2020

2019

¥

¥

8,244

8,127

Thousands of
U.S. dollars (Note 1)
2020$

75,76527,502
1,662(16)
17,593613

30,700747(16)
15,772598

252,753
15,274(147)
161,686
5,633

55,59855,928510,964

121
10,283
72
278
3,496
(117)
14,13317
12,298
–
318
3,514
(128)
16,0191,112
94,504662
2,555
32,129(1,075)
129,887

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

18,96653,33464,4088,650
1,464
146,822(88,978)
57,8442,836¥ 132,627

169,038
498,658
619,272
72,411
23,3891,382,768(839,868)
542,900
28,031$ 1,211,782

Millions of yen
2020
2019

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars (Note 1)
2020

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 ..................................................................

¥ 23,166
8,943
8,080
1,888
855
524
850
1,839
46,145¥ 23,058
8,780
6,380
1,927
1,088
488
921
2,580
45,222Long-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 .............................................................

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

3,972
4,650
1,282
718
688
11,31036,15542,809
5,055
7,849
6,036
97,904

NET ASSETS (Note 13)
Shareholders’ equity:
Common stock
Authorised — 40,000,000 shares in 2020 (40,000,000 shares in 2019)
Issued — 26,505,581 shares in 2020 (26,505,581 shares in 2019)........
Capital surplus ....................................................................................
Retained earnings ...............................................................................
Treasury stock, at cost ........................................................................
Total shareholders’ equity �����������������������������������������������������������

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

6,716
22,08644,913(2,635)71,08061,722
202,978
419,787(24,428)660,059

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

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

5,274
9
36
(823)
4,496

35,227(28)
377(10,863)
24,713546
75,056¥ 131,854

519
76,095¥ 132,627

5,018
689,790$ 1,211,782$

212,90382,18974,25817,351
7,858
4,816
7,812
16,901
424,088

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 2020 and 2019

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

Millions of yen
2020
2019
¥ 245,820¥ 243,031
190,340
188,973

Thousands of
U.S. dollars (Note 1)2020$ 2,259,167
1,749,287

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

55,48052,86354,05851,805509,880
485,829

Operating income ...............................................................................

2,617

2,253

24,051

348
167
(216)
7
(165)
(91)
(85)
–
155

337
182
(214)
281
(262)
(182)
(27)
(56)
164

3,198
1,535
(1,985)64(1,516)
(836)
(781)
–
1,424

120

223

1,103

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

2,737

2,476

25,154

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

1,028
24

956
10

9,448
220

1,052

966

9,668

1,685
(31)

1,510
(46)

15,486(285)

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

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

¥

1,654

¥

1,464

¥

Profit attributable to owners of parent, diluted per share (Note 2) ...
Dividends per share (Note 13) ...............................................................
See accompanying Notes to Consolidated Financial Statements.

7

65.04

¥

–
¥

35.00

15,201

U.S. dollars (Note 1)

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

$

57.48

$

–
¥

35.00

0.60
–

$

0.32

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended 31st March 2020 and 2019

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

8

Millions of yen
2020
2019
¥ 1,685¥ 1,510

Thousands of
U.S. dollars (Note 1)
2020$ 15,486(1,441)
(12)
(359)
4
(1,808)¥ (123)(1,122)18(93)
1(1,196)¥ 314(13,243)(111)(3,299)37(16,616)$ (1,130)¥ (154)¥ 31¥¥$ (1,415)
$ 285

268
46

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years Ended 31st March 2020 and 2019

Thousands of
U.S. dollars (Note 1)
2020

Millions of yen
2020
2019
Common stock:
Balance at beginning and end of the year �����������������������������������������

¥ 6,716¥ 6,716$ 61,722

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

¥ 22,086¥ 22,086$ 202,978

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

¥ 44,913
(890)
1,654
¥ 45,677¥ 44,470(1,021)
1,464¥ 44,913$ 412,765(8,179)15,201$ 419,787

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

¥ (2,635)(23)¥ (2,658)¥ (2,457)(178)¥ (2,635)$ (24,217)(211)$ (24,428)

Unrealised gains on securities:
Balance at beginning of the year �������������������������������������������������������
Decrease for the year �������������������������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������

¥ 5,274(1,441)¥ 3,833¥ 6,396(1,122)¥ 5,274$ 48,470(13,243)$ 35,227

¥

¥

(9)
18
9

$

35
1
36

$

Deferred gains (losses) on hedges:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
Foreign currency translation adjustments:
Balance at beginning of the year �������������������������������������������������������
Increase for the year ��������������������������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
Adjustments for retirement benefits:
Balance at beginning of the year �������������������������������������������������������
Decrease 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

¥
¥

9
(12)
(3)

¥

36
5
41

¥

(823)
(359)
¥ (1,182)

¥

¥

¥

¥
¥

¥

519
27
546

¥

¥

¥

$

$

83
(111)
(28)
331
46
377

(730)
(93)
(823)

$ (7,564)(3,299)$ (10,863)

477
42
519

$
$

4,770
248
5,018

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended 31st March 2020 and 2019

Millions of yen
2020
2019

Thousands of
U.S. dollars (Note 1)
2020

Cash flows from operating activities:
Income before income taxes ...............................................................
Depreciation and amortisation ...........................................................
Loss on impairment of assets .............................................................
Decrease in allowance for doubtful accounts .....................................
Decrease in liabilities for retirement benefits ....................................
Special retirement expenses ...............................................................
Interest and dividend income .............................................................
Interest expense ..................................................................................
Gain on sale of securities, net ............................................................
Loss on valuation of investment securities .........................................
Loss on disposal of property, plant and equipment, net .....................
Decrease (increase) 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 ...............................................................................
Payments for special retirement expenses ..........................................
Net cash provided by operating activities .....................................

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

¥ 2,476
6,434
27
(7)
(200)
182
(337)
214
(281)
2
262
(1,654)
267
(236)
190
(115)
7,224
324
(214)
(612)
(26)
6,696

$ 25,154
62,513781(101)(3,805)836(3,198)
1,985
(64)
–
1,516
29,483(16,745)772(1,838)(11,617)85,672
3,189(1,994)(6,084)(1,664)
79,119Cash 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 ........................
Other, net ............................................................................................
Net cash used in investing activities .............................................

(34)
23(8,740)460
19(8,272)(32)
533(8,434)495(97)(7,535)(312)
211(80,323)
4,228
174

Cash flows from financing activities:
Net increase 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 provided by (used in) financing activities ......................

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

1,250
2,840
(1,669)(962)(1,020)
(179)
(4)
256

15,62417,002(17,710)(8,510)(8,189)(202)(37)(2,022)

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 17) ............................

117
8,127
¥ 8,244

(583)
8,710
¥ 8,127

1,075
74,690$ 75,765

See accompanying Notes to Consolidated Financial Statements.

10(76,022)MARUDAI FOOD CO., LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For years Ended 31st March 2020 and 2019

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 2020, which was ¥108.81 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 26 subsidiaries. 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. Realized
gains and losses on the sale of such securities are computed using the moving average cost method. Debt securities with noavailable fair market value are stated at amortized cost, net of the amount considered not collectible. Other securities with noavailable fair market value are stated using the moving average cost method.
If the market value of equity securities or available-for-sale securities declines significantly, the difference between the fairmarket value and the carrying amount is recognized as loss in the period of the decline. If the fair market value of equity securities
is not readily available, such securities are written down to net asset value with a corresponding charge in the consolidated
statement of income in the event the net asset value declines significantly. In these cases, the fair market value or the net asset
value will be the carrying amount of the securities at the beginning of the next year.
Derivatives and hedge accounting - The Companies account for derivative financial instruments at fair value and recognizechanges in the fair value as gain or loss unless the derivative financial instrument is used for hedging purposes. If derivative
financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gain or loss
resulting from changes in the fair value of the derivative financial instrument until the related loss or gain on the hedged item isrecognized. However, foreign monetary obligations denominated in foreign currencies for which foreign exchange forward
contracts are used to hedge foreign currency fluctuations are translated at the contracted rate if the forward contracts qualify forhedge accounting (“the alternative method”). Also, if interest rate swap contracts are used as hedges and meet certain hedging
criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on theassets or liabilities for which the swap contract was executed (“the special treatment”).

11Allowance for doubtful accounts - An allowance for doubtful accounts is provided to cover possible losses on collection. With
respect to normal trade accounts receivable, it is stated at an amount based on the actual rate of historical bad debts. For certain
doubtful receivables, the uncollectible amounts are individually estimated.
Inventories - The Company and its domestic consolidated subsidiaries state inventories at the lower of average cost or net
realizable value.
Property, plant and equipment - Property, plant and equipment are stated at cost. Depreciation is computed primarily using thedeclining balance method. However, the straight-line method is applied for depreciation of buildings acquired on or after 1st April
1998 and facilities attached to buildings and structures acquired on or after 1st April 2016. The useful life of buildings andstructures ranges from 12 to 50 years. The useful life of machinery and equipment ranges from 4 to 10 years.
Software - The Company and its consolidated domestic subsidiaries include software in intangible assets and amortize it using
the straight-line method over the estimated useful life of 5 years.
Goodwill - Goodwill is amortized over a period of 5 years using the straight-line method.
Lease assets - Assets under finance leases that do not transfer ownership of the lease assets are amortized using the straight-line
method over the lease term with the assumption that the useful life coincides with the lease term and the residual value is zero.
Research and development expenses - Research and development expenses for the improvement of existing products and thedevelopment of new products, including basic research and fundamental development costs, are charged to expenses as incurred.
Bonuses - The Company and its consolidated domestic subsidiaries follow the general Japanese practice of paying bonuses to
employees in July and December. The allowance for bonuses is determined based upon the estimated amounts to be paid in thesubsequent period.
Translation of foreign currencies - Short-term and long-term receivables and payables denominated in foreign currencies aretranslated into Japanese yen at year-end rates.
Accounting for Retirement Benefits - Projected benefit obligations are attributed to periods on a benefit formula basis indetermining retirement benefit obligations. Actuarial gains and losses are amortized by the straight-line method over a fixed
period of 10 years, which is within the average remaining service years of the eligible employees, beginning in the fiscal year
following the year in which the gains and losses are recognized. In determining the amount of retirement benefit obligations andretirement benefit costs, some small sized consolidated subsidiaries have adopted a simplified method in which the amount thatwould be required if all the employees retired voluntarily at the fiscal year end is treated as retirement benefit obligation.
Income taxes - The asset-liability approach is used to recognize deferred tax assets and liabilities for tax loss carryforwards
and the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes.
Amounts per share - The computations of profit attributable to owners of parent per share of common stock shown on the
consolidated statements of income are based on the weighted average number of shares outstanding during each financial
period. The Company consolidated shares of its common stock at a ratio of 5-to-1 on 1st October 2018, the effective date.
Profit attributable to owners of parent per share is computed based on the assumption that the said consolidation of shares
was conducted at the beginning of the previous year. Cash dividends per share shown in the consolidated statements ofincome 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 2020 and 2019.
Corporate taxes - Consolidation taxation system has been adopted.

12Application of tax effect accounting related to the transition from a consolidated taxation system to a group tax sharing system- Regarding items that have been transitioned to a group tax sharing system established under the Act for Partial Amendment of
the Income Tax Act, etc. (Act No. 8 of 2020) and for which a revision of the non-consolidated taxation system has been carriedout pursuant to this transition, the Company and some of its consolidated subsidiaries in Japan have not applied the provisions in
Paragraph 44 of Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, 16th February, 2018), in
accordance with the treatment prescribed in Paragraph 3 of Practical Solution on the Treatment of Tax Effect Accounting for theTransition from the Consolidation Taxation System to the Group Tax Sharing System (PITF No. 39, 31st March, 2020). The
amounts of deferred tax assets and deferred tax liabilities for these items are based on taxation law as it was before amendment.
Accounting standards and relevant regulations that have not yet been adopted- Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, 31st March 2020)- Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, 31st March 2020)(1) Summary
The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) jointly
developed a comprehensive accounting standard for revenue recognition and announced “Revenue from Contracts with
Customers” (IFRS 15 by IASB and Topic 606 by FASB) in May 2014. As IFRS 15 and Topic 606 were to be applied fromthe fiscal years beginning on or after 1st January 2018 and after 15th December 2017, respectively, the ASBJ developed acomprehensive accounting standard for revenue recognition and announced it together with an implementation guidance.
The ASBJ’s basic policy for developing the accounting standard for revenue recognition was to determine an accounting
standard upon incorporating the basic principles of IFRS 15 for comparability between financial statements, which is one of thebenefits of compatibility with IFRS 15, and to add an alternative treatment to the extent it does not impair comparability for any
items that require special consideration regarding business practices customary in Japan.
(2) Effective date
The standards are scheduled to be applied from the beginning of the fiscal year ending 31st March 2022.
(3) Effect of application of the standards
The total numerical value of the effect of the application of the revised standard had not been determined as of the preparationof these consolidated financial statements.
- Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, 4th July 2019)- Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9, 4th July 2019)- Accounting Standard for Financial Instruments (ASBJ Statement No. 10, 4th July 2019)- Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, 4th July 2019)- Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, 31st March 2020)(1) Summary
As the IASB and FASB have both formulated similar detailed guidances on fair value measurement (IFRS 13 Fair Value
Measurement under International Financial Reporting Standards (IFRS), and Accounting Standards Codification Topic 820 Fair
Value Measurement under US GAAP), the ASBJ announced “Accounting Standard for Fair Value Measurement” and otherstandards to seek compatibility between Japanese GAAP and international accounting standards mainly relating to guidances anddisclosure about fair value of financial instruments.
The ASBJ’s basic policy for developing the Accounting Standard for Fair Value Measurement was to incorporate basically all
the provisions of IFRS 13 to improve the comparability between financial statements of corporations both inside and outside
Japan by adopting a unified calculation method, as well as to establish other treatments for individual items in consideration ofbusiness practices customary in Japan to the extent it does not greatly impair comparability between different financial statements.
(2) Effective date
The standards are scheduled to be applied from the beginning of the fiscal year ending 31st March 2022.

13

(3) Effect of application of the standards
The total numerical value of the effect of the application of the revised standard had not been determined as of the preparationof these consolidated financial statements.
Changes in presentation method(Changes due to adoption of “Partial Amendments to Accounting Standard for Tax Effect Accounting”)
Upon application of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, 16th
February 2018 (hereinafter, “Statement No. 28”)) from the beginning of the fiscal year ended 31st March 2019, the Company and its
domestic subsidiaries changed the presentation and related notes of deferred tax assets and deferred tax liabilities such that deferred
tax assets and deferred tax liabilities are now classified as part of “Investments and other assets” and “Long-term liabilities,” respectively.
The notes related to tax effect accounting additionally included those described in Notes 8 (excluding total amount ofvaluation reserves) and 9 of “Accounting Standard for Tax Effect Accounting,” which are required in Paragraphs 3 to 5 ofStatement No. 28.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year's presentation.
Additional information
The Group is addressing the impact of coronavirus disease (COVID-19) by continuing its business activities upon taking rigorous
countermeasures to prevent infection and currently maintains operations at a level more or less equivalent to pre-COVID times.
Accounting estimates and assumptions are made based on the Group’s performance outlook and the current situation assumingthat the impact of COVID-19 will continue in the first half and conditions will recover from the second half. However, as theimpact of COVID-19 involves numerous uncertainties, these estimates may diverge from actual future performance.
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.

14

The Group primarily uses loans to procure operating funds and lease receivables from finance leases to raise funds for capital
expenditure. The amount of interest expense has been fixed for the long-term portion of borrowings through the use of individual
fixed-rate contracts as well as interest rate swap transactions as hedging instruments, in order to avoid the risk of interest rate
fluctuations. No interest swap transactions were current as of 31st March, 2020. To minimize counterparty risk, theCompany follows its derivative transaction rules and enters such transactions only with highly rated financial institutions.
The Company is exposed to liquidity risk arising from its operating obligations and loan payables. To minimize this risk,
the Accounting Department prepares statements of cash flows based on other divisions’ reports and regularly updates thestatements. The consolidated subsidiaries also manage liquidity risk in accordance with the methods used by the Company.
③ Supplementary explanation on fair values of financial instruments
The fair values of financial instruments include values based on market prices or reasonably calculated values whenmarket prices are not available. Because a variety of factors, some of which are variable, are taken into account whencalculating the values, the adoption of different assumptions may result in different values.
The contract amounts of the derivative transactions stated in “(2) Fair value of financial instruments” do not reflect themarket risk involved in the derivative transactions themselves.
(2) Fair value of financial instruments
The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2020. However, financial instruments whose fair values were deemed difficult to determine are notincluded in the table (refer below to (*2)).
Millions of yen① Cash and time deposits ���������������������������
② Trade notes and accounts receivable ��������
③ Investment securities
Available-for-sale securities ��������������������
Total assets ��������������������������������������������
① Trade notes and accounts payable ������������
② Payables - other ������������������������������������
③ Short-term borrowings ����������������������������
④ Long-term debt ��������������������������������������
⑤ Lease obligations �����������������������������������
Total liabilities ���������������������������������������
Derivatives (*) ���������������������������������������

Consolidatedbalance sheet
amounts

Fair value¥ 8,244
27,502¥ 8,244
27,502

10,241
45,987
23,166
8,943
8,080
5,822
5,513
51,524(4)

10,241
45,987
23,166
8,943
8,080
5,810
5,566
51,565(4)

Thousands of U.S. dollars (Note 1)
2020
Consolidated
Difference balance sheet Fair value
Difference
amounts¥––$ 75,765
252,753$ 75,765
252,753

$

–
–

–
–
–
–
–
(12)
53
41
–

94,118422,636
212,90382,18974,25853,506
50,667473,523(37)

94,118422,636
212,90382,18974,25853,396
51,153473,899
(37)

–
–
–
–
–
(110)
486
376
–

(*) Derivative assets and liabilities are presented on a net basis.
(*1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions
ASSETS① Cash and time deposits and ② Trade notes and accounts receivable
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Investment securities
The fair value of these securities are based on prices on securities exchanges. For information on securities
classified by the purpose for which they are held, refer to Note 4,“Securities.”

15

LIABILITIES① Trade notes and accounts payable, ② Payables - other and ③ Short-term borrowings
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
④ Long-term debt and ⑤ Lease obligations
The fair value for these items has been calculated as the present value of the sum of principal and interest amounts,
discounted using the estimated rates for new borrowings of the same kind or lease transactions.
DERIVATIVES
Refer to Note 5, “Derivative financial instruments and hedging transactions.”(*2) Financial instruments whose fair values were deemed extremely difficult to determine
Millions of yen

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

Thousands of U.S. dollars (Note 1)
2020
Consolidated balance sheet amounts Consolidated balance sheet amounts
¥ 42
$ 386
121
1,112

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

Thousands of U.S. dollar (Note 1)
2020
Over fiveyears

Within one
year¥ 8,244
27,502

Over one year
but within
five years
–
–

–
–

–
¥ 35,746––––

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

Over fiveyears$ 75,765
252,753

Over one year
but within
five years–––$ 328,518

–
–

–
–

–
–

(*4) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7,“Short-term borrowings, long-term debt and lease obligations.”
The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2019. However, financial instruments whose fair values were deemed difficult to determine are notincluded in the table (refer below to (*2)).

16

Millions of yen
2019
Consolidatedbalance sheet
amounts

Fair value

Difference¥ 8,127¥ 8,127① Cash and time deposits ........................
30,70030,700② Trade notes and accounts receivable ....
③ Investment securities
12,256
12,256
Available-for-sale securities ................
51,08351,083
Total assets ...........................................
23,05823,058① Trade notes and accounts payable .......
8,780
8,780
② Payables - other....................................
6,380
6,380
③ Short-term borrowings .........................
5,899
5,891
④ Long-term debt ....................................
5,738
5,776
Lease
obligations.................................
⑤
49,85549,885
Total liabilities .....................................
12
12
Derivatives (*) ......................................
(*) Derivative assets and liabilities are presented on a net basis.

¥ –
–
–
–
–
–
–
(8)
38
30
–

(*1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions
ASSETS① Cash and time deposits and ② Trade notes and accounts receivable
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Investment securities
The fair value of these securities are based on prices on securities exchanges. For information on securities
classified by the purpose for which they are held, refer to Note 4, “Securities.”
LIABILITIES① Trade notes and accounts payable, ② Payables - other and ③ Short-term borrowings
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
④ Long-term debt and ⑤ Lease obligations
To calculate the fair value of these items, the combined amount of principal and interest is discounted by theinterest rate considered applicable to similar new loans or lease transactions. For the fair value of long-term debt withfloating interest rates subject to special treatment for interest rate swaps, the combined amount of principal andinterest processed as a single item with the interest swap is calculated by discounting a reasonably estimated interest
rate considered applicable to similar new loans.
DERIVATIVES
Refer to Note 5, “Derivative financial instruments and hedging transactions.”(*2) Financial instruments whose fair values were deemed extremely difficult to determine
Millions of yen
2019
Category

Consolidated balance sheet amounts

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

¥ 42
17

17

Since no market prices were available for unlisted stocks, and their fair values were difficult to determine by an estimation of
the future cash flows, these items were not included in “③Investment 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
2019
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 ...............................................................

¥ 8,127
30,700

–

–

–

–

–

–

–

¥ 38,827––(*4) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7,“Short-term borrowings, long-term debt and lease obligations.”
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 2020 and 2019.
Securities with book values
exceeding historical cost:

Millions of yen

TypeHistorical
cost

2020
Book
value

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

¥ 4,094––¥ 4,094¥ 9,692––¥ 9,692

Historical
cost

2020
Book
value

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

¥ 690
–
–
¥ 690

¥ 549
–
–
¥ 549

Thousands of U.S. dollars (Note 1)

Gain

Historical
cost

2019
Book
value

¥ 5,598––¥ 5,598¥ 4,599––¥ 4,599¥ 12,121––¥ 12,121

Historical
cost

2019
Book
Value

Loss
¥ (141)––¥ (141)

¥ 167
–
–
¥ 167

¥ 135
–
–
¥ 135

Gain

Historical
cost

2020
Book
value

¥ 7,522––¥ 7,522$ 37,625––$ 37,625$ 89,073––$ 89,073

Loss

Historical
cost

2020
Book
value

¥ (32)––¥ (32)$ 6,341––$ 6,341$ 5,045––$ 5,045

Gain$ 51,448––$ 51,448Loss$ (1,296)––$ (1,296)

Unlisted stocks (carrying amount of ¥42 million ($386 thousand)) as of 31st March 2020 and unlisted stocks (carrying amountof ¥42 million) as of 31st March 2019 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.

18

Available-for-sale securities
sold during the year:
Type

Millions of yen
Proceeds

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

¥ 23
–
–
¥ 23

2020
Gains
on salesLosseson salesProceeds

¥7
–
–
¥7

–
–
–
–

¥ 533
–
–
¥ 533

Thousands of U.S. dollars (Note 1)
2019
Gains
on salesLosseson salesProceeds

¥ 281
–
–
¥ 281

–
–
–
–

$ 211
–
–
$ 211

2020
Gains
on salesLosseson sales

$ 64
–
–
$ 64

–
–
–
–

There was no impairment of investment securities during the fiscal year ended 31st March, 2020.
The Group recognized impairment loss on investment securities categorised as other securities with market value in theamount of ¥2 million for the year ended 31st March 2019.
When the value of stocks depreciated from 30% to 50%, the Company determined impairment loss by analyzing theoperational performance of the issuing entities based on prevailing financial data and market value information such as
discrepancies between the book value and the highest or lowest market value during the year.
5. Derivative financial instruments and hedging transactions
Derivative financial instruments and hedging transactions at 31st March 2020 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Thousands of U.S. dollars (Note 1)
2020
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¥ 2,353–(*) ¥ (4)$ 21,625–$ (37)¥ 2,353–¥ (4)$ 21,625–$ (37)(*) Fair value is based on information provided by financial institutions at the end of the fiscal year.
(2) Interest related
Not applicable for the year ended 31st March 2020.
Derivative financial instruments and hedging transactions at 31st March 2019 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Transaction types

Major hedged
items

Contract
amounts2019
Due overone year

Foreign exchange trading
On purchased
U.S. dollar
Total

Accounts
payable¥ 1,595–(*) ¥ 12

¥ 1,595

–

¥ 12

Fair
value

(*) Fair value is based on information provided by financial institutions at the end of the fiscal year.
19

Due overone year

Fair
value

(2) Interest related
Millions of yen
Hedge accounting
methodSpecial treatment

Transaction types

Major hedged
items

Contract
amounts2019
Due overone yearInterest rate swaps
Pay fixed,
receive floating
Total

Long-term
debt

¥ 246

–

(*) –

¥ 246

–

–

Fair
value

(*) According to the special treatment for interest rate swaps as applied to integrated and long-term debt, the fair value of thederivative financial instrument is included in the fair value of the long-term debt.
6. Inventories
Inventories at 31st March 2020 and 2019 consisted of the following:Thousands of
U.S. dollars (Note 1)

Millions of yen
Finished goods and merchandise ������������������������������������������������������������
Work in progress �������������������������������������������������������������������������������������
Raw materials and supplies ���������������������������������������������������������������������

2020

2019

2020

¥ 11,058
648
5,887¥ 17,593¥ 9,242592
5,938¥ 15,772$ 101,627
5,955
54,104$ 161,686

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
2020
Loss on valuation of inventories �������������������������������������������������������������

20

¥ 26

2019
¥ (98)2020$ 239

7. Short-term borrowings, long-term debt and lease obligations
Short-term borrowing at 31st March 2020 and 2019 consisted of short-term notes, which generally mature within one year,with average interest rates of 0.43% and 0.43%, respectively.
Long-term debt at 31st March 2020 and 2019 consisted of the following:
Millions of yen
2020
2019
Loans from banks, insurance companies and otherfinancial institution at 0.16% to 1.00% maturing through 2028
Secured ����������������������������������������������������������������������������������������������������
Unsecured �����������������������������������������������������������������������������������������������
Less current portion ��������������������������������������������������������������������������������

¥

176
5,646
5,822
(1,888)¥ 3,934

Thousands of
U.S. dollars (Note 1)
2020

¥

214
5,685
5,899
(1,927)¥ 3,972$ 1,61751,88953,506(17,351)$ 36,155

The aggregate annual maturities of long-term debt as of 31st March 2020 were as follows:

Years ending 31st March,
2021 ������������������������������������������������������������������������������������������������
2022 ������������������������������������������������������������������������������������������������
2023 ������������������������������������������������������������������������������������������������
2024 ������������������������������������������������������������������������������������������������
2025 ������������������������������������������������������������������������������������������������
2026 and thereafter �������������������������������������������������������������������������

Millions of yen

Thousands of U.S. dollars (Note 1)

2020

2020
¥ 1,888
1,704
1,215
705
274
36
¥ 5,822$ 17,351
15,661
11,166
6,479
2,518
331
$ 53,506

The aggregate annual maturities of lease obligations as of 31st March 2020 were as follows:

Years ending 31st March,
2021 ������������������������������������������������������������������������������������������������
2022 ������������������������������������������������������������������������������������������������
2023 ������������������������������������������������������������������������������������������������
2024 ������������������������������������������������������������������������������������������������
2025 ������������������������������������������������������������������������������������������������
2026 and thereafter �������������������������������������������������������������������������

21

Millions of yen

Thousands of U.S. dollars (Note 1)

2020

2020
¥

855
835
924
799
766
1,334
¥ 5,513$ 7,858
7,674
8,492
7,343
7,040
12,260$ 50,667

8. Pledged assets
Assets were pledged as collateral for the current portion of long-term debt of ¥38 million ($349 thousand) and long-term debtof ¥138 million ($1,268 thousand) as of 31st March 2020 and for the current portion of long-term debt of ¥38 million and longterm debt of ¥176 million as of 31st March 2019. The assets pledged are summarized as follows:

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

Millions of yen
2020
2019
¥ 4
¥ 4
46
53
85
108
¥ 135
¥ 165

Thousands of
U.S. dollars (Note 1)
2020
$ 37
423
781
$ 1,241

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

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

Millions of yen
2020
2019
¥ 22,250¥ 22,250
7,980
6,280
¥ 14,270¥ 15,970

Thousands of
U.S. dollars (Note 1)
2020$ 204,485
73,339$ 131,146

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 2020 and 2019 (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 ������������������������������������

22

Millions of yen
2020
2019
¥ 13,752¥ 14,018
333
348
110
112
(39)
134
(945)
(860)
¥ 13,211¥ 13,752

Thousands of
U.S. dollars (Note 1)
2020$ 126,385
3,060
1,011
(358)
(8,685)$ 121,413

② The changes in plan assets for the fiscal years ended 31st March 2020 and 2019 (excluding those for which the simplified
method was applied) were as follows:

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

Millions of yen
2020
2019
¥ 14,309¥ 14,434
429
433
(653)
(375)
401
413
(706)
(596)
¥ 13,780¥ 14,309

Thousands of
U.S. dollars (Note 1)
2020$ 131,504
3,943(6,001)
3,685(6,488)$ 126,643③ The changes in liabilities for retirement benefits of the plans for which the simplified method was applied for the fiscal years
ended 31st March 2020 and 2019 were as follows:

Beginning balance of liabilities for retirement benefits ��������������������������
Retirement benefit expenses �������������������������������������������������������������������
Retirement benefits paid �������������������������������������������������������������������������
Ending balance of liabilities for retirement benefits �������������������������������

Millions of yen
2020
2019
¥ 1,275¥ 1,209
129
134
(53)
(68)
¥ 1,351¥ 1,275

Thousands of
U.S. dollars (Note 1)
2020$ 11,718
1,185
(487)
$ 12,416④ 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.

23

Millions of yen
2020
2019
¥13,708¥14,315(13,780)(14,309)
(72)
6
854
712
782
(72)
854
¥782

Thousands of
U.S. dollars (Note 1)
2020$125,981(126,643)
(662)
7,849

718
–
718
¥

718

7,187
(662)
7,849
$

7,187

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
2020
2019
¥332
¥347
110
112
(429)
(433)
136
383
129
134
278
543
91
182

Thousands of
U.S. dollars (Note 1)2020$ 3,051
1,011(3,943)
1,250
1,186
2,555
836

(*) Recorded under other expenses. Special retirement expenses for the fiscal year ended 31st March 2019 consisted of extra
retirement payments for retirees under early retirement schemes and lump-sum payments to employees who were transferred
to a consolidated subsidiary. Special retirement expenses for the fiscal year ended 31st March 2020 consisted of extra
retirement payments for retirees under early retirement schemes.
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
2020
2019
¥ (478)¥ (126)¥ (478)¥ (126)

Thousands of
U.S. dollars (Note 1)2020$ (4,393)$ (4,393)⑦ Accumulated adjustments for retirement benefits
The components of accumulated adjustments for retirement benefits (before tax effect) were as follows:

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

24

Millions of yen
2020
2019
¥ 1,577¥ 1,100¥ 1,577¥ 1,100

Thousands of
U.S. dollars (Note 1)
2020$ 14,493$ 14,493

⑧ Plan assets
The components of plan assets were as follows:2020
Debt securities ���������������������������������������������������������������������������������
Alternatives �������������������������������������������������������������������������������������
Equity securities ������������������������������������������������������������������������������
General account ������������������������������������������������������������������������������
Short-term assets �����������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������

2019
46.4%
25.3
17.6
8.3
2.4
100.0%

44.1%
24.0
21.7
7.9
2.3
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 2020 and 2019 were as follows:
2020
Discount rate �����������������������������������������������������������������������������������
Long-term expected rate of return ��������������������������������������������������
Expected rate of salary increase:
Lump-sum payment plans ��������������������������������������������������������������

2019
0.8%
3.0

0.8%
3.0

4.6

4.6

Note: Because the defined benefit corporate pension plan (fund type) is a fixed amount system (point system) based on thenumber of years of service, the expected rate of salary increase is not used.
(3) Define Contribution Plans
The amount of required contribution to the defined contribution plans of the Companies was ¥244 million ($2,242 thousand)for the year ended 31st March 2020 and ¥268 million for the year ended 31st March 2019.
11. Income taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise corporate taxes, inhabitants
taxes and enterprise taxes which, in the aggregate, resulted in a statutory tax rate of 30.6% and 30.6% for the years ended 31st
March 2020 and 2019, respectively.

25

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 2020 and 2019

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

2020
30.6%
1.4
(0.7)
3.9
2.0
(1.3)
2.1
0.5
38.5%

2019
30.6%
1.7
(0.7)
4.2
2.3
(2.1)
3.4
(0.4)
39.0%

Significant components of the Companies’ deferred tax assets and liabilities as of 31st March 2020 and 2019 were as follows:

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

Millions of yen
2020
2019
¥ 891
¥ 912
417
383
301
292
279
153
272
295
215
215
215
199
44
47
519
502
3,153
2,998
(261)
(229)
(1,311)(1,289)(1,572)(1,518)1,581
1,480(1,627)(30)(196)(1,853)¥ (272)(2,219)(30)(195)(2,444)¥ (964)

Thousands of
U.S. dollars (Note 1)
2020$ 8,189
3,832
2,766
2,564
2,500
1,976
1,976
404
4,770
28,977(2,399)(12,048)(14,447)
14,530(14,953)(276)(1,801)(17,030)$ (2,500)(*1) Valuation allowance increased ¥54 million ($496 thousand) year on year. This was due mainly to increases of ¥17
million ($156 thousand) in valuation allowance for impairment losses and ¥32 million ($294 thousand) in valuation
allowance for tax loss carryforwards.
26

(*2) Loss carryforwards and deferred tax assets by expiration periods for the years ended 31st March 2020 and 2019
Loss carryforwards and deferred tax assets by expiration periods as of and for the fiscal year ended 31st March 2020 were as
follows:
Millions of yen
2020
2021
Loss carryforwards (a) ..........
Valuation allowance ..............
Deferred tax assets ................

¥ 25
(12)
13

2022

2023

¥ 13
(13)
–

¥ 10
(10)
–

2024
¥ 11
(11)
–

2025
¥ 14
(14)
0

2026 and
thereafter
¥ 228
(201)
27

Total
¥

301
(261)
(b) 40Thousands of U.S. dollars (Note 1)
2020
2021
Loss carryforwards (a) ..........
Valuation allowance ..............
Deferred tax assets ................

$ 230
(111)
119

2022

2023

$ 119
(119)
–

$ 92
(92)
–

2024
$ 101
(101)
–

2025
$ 129
(129)
0

2026 and
thereafter$ 2,095(1,847)
248

Total
$

2,766
(2,399)(b) 367(a) Loss carryforwards shown in the above table are after multiplying the statutory tax rate.
(b) With respect to ¥301 million ($2,766 thousand) in tax loss carryforwards (after application of the statutory tax rate), ¥40
million ($367 thousand) in deferred tax asset has been recognised. This ¥40 million ($367 thousand) in deferred tax assets
was recognised as loss carryforwards recoverable based on projected future taxable income out of the ¥301 million($2,766 thousand) balance in tax loss carryforwards (mainly inhabitants tax and enterprise tax) (after application of thestatutory tax rate) at the Company and six consolidated subsidiaries.
Loss carryforward and its deferred tax assets by expiration periods as of and for the fiscal year ended 31st March 2019 wereas follows:
Millions of yen
2019
2020
Loss carryforwards (a) ..........
Valuation allowance ..............
Deferred tax assets ................

¥ 32
(9)
23

2021

2022

¥ 24
(24)
–

¥ 13
(13)
–

2023
¥ 10
(10)
–

2024
¥ 11
(11)
–

2025 and
thereafter
¥ 202
(162)
40

Total
¥

292
(229)
(b) 63(a) Loss carryforwards shown in the above table are after multiplying the statutory tax rate.
(b) With respect to ¥292 million in tax loss carryforwards (after application of the statutory tax rate), ¥63 million in deferred
tax asset has been recognised. This ¥63 million in deferred tax assets was recognised as loss carryforwards recoverable
based on projected future taxable income out of the ¥292 million balance in tax loss carryforwards (mainly inhabitants tax
and enterprise tax) (after application of the statutory tax rate) at the Company and six consolidated subsidiaries.
12. Contingent liabilities
There are no matters to be reported.

27

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 26th June 2020, appropriations of retained earnings for year-end dividends
applicable to the year ended 31st March 2020 were duly approved as follows:
Millions of yen

Thousands of U.S. dollars

2020

2020

Cash dividends: ¥35.00 ($0.32) per share ���������������������������������������

¥ 890$ 8,179

Millions of yen
2019
Cash dividends: ¥35.00 per share����������������������������������������������������

¥ 890

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

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

Millions of yen
2020
2019
¥ 30,053¥ 28,665
6,596
6,879
427
457
311
489
22
15

Thousands of
U.S. dollars (Note 1)
2020$ 276,197
60,619
3,924
2,858
202

Research and development expenses included in selling, general and administrative expenses for the years ended 31st March
2020 and 2019 were ¥733 million ($6,737 thousand) and ¥852 million, respectively.

28

15. Loss on impairment of assets
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2020. The Company classified
fixed assets into four categories: business assets, rental assets, idle assets and artwork. The Company groups its business assets bycash generating units and rental assets, idle assets and artwork by individual asset as these represent the smallest identifiable
assets generating cash inflows. As a result, where the recoverable value of idle assets or rental assets has fallen below book value
due to declines in market prices or profitability or where market prices for artworks have declined significantly, the book value ofthese assets has been reduced to their recoverable value. The total impairment loss for the year ended 31st March 2020 consistedof ¥52 million ($478 thousand) for investment and rental properties (Investments and other assets “Other”), ¥25 million ($230
thousand) for tools, furniture and fixtures and ¥8 million ($73 thousand) for structures.
The recoverable value of rental assets is measured by the net realisable value or the value in use. The recoverable value of idle
assets is measured by the net realisable value. The net realisable value is assessed based on the appraisal value, etc. and value in
used is calculated by discounting future cash flows by 3.2%. The recoverable amounts for artwork were calculated based on
independent appraisals obtained from third-party art experts and others. The Company records impairment loss on artwork when
the carrying amount is significantly below the estimated recoverable amount.
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2019. 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 rental assets or idle assets has fallen below book value
due to declines in market prices or profitability the book value of these assets has been reduced to their recoverable value. The
total impairment loss for the year ended 31st March 2019 consisted of ¥27 million 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 3.0%.
16. Segment information(1) Overview of the reportable segments① Method for determining reportable segments
The Group’s reportable segments are determined based on the availability of separate financial information for suchsegments that is examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and to assess business performance. The Group has divided its business operations into two reportable segments andan “Other” segment. Its reportable segments are “the Processed Food Products” segment and “the Meat Products” segment.
② Description of the businesses that constitute each reportable segment
In the Processed Food Products segment, the Company purchases, manufactures and sells ham, sausage and cooked andprocessed foods. In the Meat Products segment, the Company purchases, manufactures and sells meat products.
(2) Methods of measurement for sales, profit (loss), assets, liabilities and other items for each reportable segment
Accounting policies adopted by the reportable segments are identical to those described in Note 2, “Significant
Accounting Policies. ”

29

(3) Segment information for the years ended 31st March 2020 and 2019
Segment information as of and for the fiscal year ended 31st March 2020 was as follows:
Millions of yen
2020
Reportable segments
Processed
Meat
Total
Food Products
Products

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

Other
(*1)

Total

¥ 75,024–
75,024901
18,903¥ 245,673–
245,673
2,569
108,680

¥ 147
776
923
48
218

¥ 245,820
776
246,596
2,617
108,898

326

6,785

17

484

9,165

3

Adjustments(*2)¥

Consolidated
(*3)

–
(776)
(776)
–
22,956¥ 245,820–
245,820
2,617
131,854

6,802

–

6,802

9,168

14

9,182

Adjustments(*2)

Consolidated(*3)

Thousands of U.S. dollars (Note 1)
2020
Reportable segments
Processed
Meat
Total
Food Products
Products

Sales:
Sales to third parties ��������������������� $ 1,568,321–
Intersegment sales and transfers���
Net sales ��������������������������������������� 1,568,321
15,329Segment income ���������������������������
825,080
Segment assets �����������������������������
Other items:
59,360Depreciation and amortisation (*4)��
Increase in property, plant andequipment and intangible
79,781
assets (*4)��������������������������������������

Other
(*1)

Total

$ 689,495–
689,495
8,280
173,725$ 2,257,816–
2,257,816
23,609998,805$ 1,351
7,132
8,483
442
2,004

$ 2,259,167
7,132
2,266,299
24,0511,000,809$– $ 2,259,167(7,132)–(7,132)
2,259,167–
24,051
210,973
1,211,782

2,996

62,356

157

62,513–62,513

4,448

84,22928

84,257

129

84,386(*1) The “Other” segment is business other than that of the reportable segments and includes the insurance agency business.
(*2)	Adjustments for total assets of ¥22,956 million ($210,973 thousand) indicate assets not attributed to any other segments and comprisemainly cash and time deposits, investments in securities and investment and rental properties.
(*3)	Total segment income of the reportable segments and “Other” is equal to the operating income in the consolidated statements ofincome.
(*4)	Depreciation and amortisation and increase in property, plant and equipment and intangible assets include long-term prepaid expenses.

30

Segment information as of and for the fiscal year ended 31st March 2019 was as follows:
Millions of yen
2019
Reportable segments
Processed
Meat
Total
Food Products
Products

Sales:
Sales to third parties ��������������������� ¥ 169,388–
Intersegment sales and transfers���
169,388
Net sales ���������������������������������������
781
Segment income ���������������������������
89,257
Segment assets �����������������������������
Other items:
6,097
Depreciation and amortisation (*4)��
Increase in property, plant andequipment and intangible
9,160
assets (*4)��������������������������������������

Other
(*1)

Adjustments
(*2)

Total

¥ 73,482–
73,482
1,389
18,434¥ 242,870–
242,870
2,170
107,691

¥ 161
803
964
83
262

¥ 243,031
803
243,834
2,253
107,953

305

6,402

32

443

9,603

15

¥

Consolidated
(*3)

–
(803)
(803)
–
24,674¥ 243,031–
243,0312,253
132,627

6,434

–

6,434

9,618

0

9,618

(*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 ¥24,674 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)	Total segment income of the reportable segments and “Other” is equal to the operating income in the consolidated statements ofincome.
(*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 2020
was as follows:
Millions of yen
2020
Reportable segments
Processed
Meat
Total
Food Products
Products

Loss on impairment of assets �������

–

–

Other
–

Total
–

–

Adjustments

Consolidated

¥ 85

¥ 85

Adjustments

Consolidated

$ 781

$ 781

Thousands of U.S. dollars (Note 1)
2020
Reportable segments
Processed
Meat
Total
Food Products
Products–––
Loss on impairment of assets �������

31

Other

Total
–

–

Information about loss on impairment of assets by reportable segment as of and for the fiscal year ended 31st March 2019
was as follows:
Millions of yen
2019
Reportable segments
Processed
Meat
Total
Food Products
Products–––
Loss on impairment of assets �������

Other

Total
–

–

Adjustments

Consolidated

¥ 27

¥ 27

(5) Information about amortisation and balance of goodwill by reportable segment
Information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended 31st March
2020 was as follows:
Millions of yen
2020
Reportable segments
Processed
Meat
Total
Food Products
Products¥3–¥3
Amortisation of goodwill �������������
–––Balance of goodwill ���������������������

Other

Total
–
–

¥3
–

Adjustments

Consolidated

–
–

¥3
–

Adjustments

Consolidated

–
–

$ 28
–

Thousands of U.S. dollars (Note 1)
2020
Reportable segments
Processed
Meat
Total
Food Products
Products
$ 28
–
$ 28
Amortisation of goodwill �������������
–––Balance of goodwill ���������������������

Other

Total
–
–

$ 28
–

Information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended 31st March
2019 was as follows:
Millions of yen
2019
Reportable segments
Processed
Meat
Total
Food Products
Products

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

Other

Total

Adjustments

Consolidated

¥3

–

¥3

–

¥3

–

¥3

3

–

3

–

3

–

3

32

17. Cash flow information
The reconciliation of cash and time deposits in the consolidated balance sheets and cash and cash equivalents in the
consolidated statements of cash flows as of 31st March 2020 and 2019 was as follows:
Thousands ofMillions of yen
U.S. dollars (Note 1)
2020
2019
2020
Cash and time deposits in the consolidated balance sheets ��������������������
¥ 8,244¥ 8,127$ 75,765
Cash and cash equivalents in the consolidated statements of cash flows ����
¥ 8,244¥ 8,127$ 75,765
Significant non-cash transactions as of 31st March 2020 and 2019 were as follows:
Newly recorded assets and liablities related to finance lease transactions were as follows:

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

Millions of yen
2020
2019
¥ 865
¥ 1,705

Thousands of
U.S. dollars (Note 1)2020$ 7,950

18. Comprehensive income
Amounts reclassified to profit attributable to owners of parent in the current period that were recognised in othercomprehensive income in the current or previous periods and the tax effects for each component of other comprehensive income
were as follows:
Thousands of
U.S. dollars (Note 1)
2020

Millions of yen
2020
2019
Unrealised gains on securities:
Decrease during the year ....................................................................
Reclassification adjustments ..............................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Deferred gains (losses) on hedges:
Increase (decrease) during the year ....................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Adjustments for retirement benefits:
Decrease during the year ....................................................................
Reclassification adjustments ..............................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Share of other comprehensive income of associates accounted for using equity method:
Increase during the year .....................................................................
Total other comprehensive income ..........................................................

33¥ (2,026)¥ (1,297)(7)(2,033)592(1,441)(281)(1,578)456(1,122)$ (18,620)(64)(18,684)
5,441(13,243)

(17)
(17)
5
(12)

26
26
(8)
18

(157)
(157)
46
(111)

(614)
136
(478)
119
(359)

(509)
383
(126)
33
(93)

(5,643)
1,250(4,393)
1,094(3,299)4

1¥ (1,808)¥ (1,196)37$ (16,616)

19. Subsequent events
Business combination by acquisition
The Company signed a share transfer agreement to acquire shares of Toraku Foods Co., Ltd. on 12th May 2020 and made it asubsidiary.
The shares were acquired on 1st July 2020.
(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 shares⑤ Company name after business combination
Toraku Foods Co., Ltd.
⑥ Voting rights acquired
100%⑦ Main grounds for determining the acquirer
The Company is the acquirer because it acquired shares in exchange for cash.
(2) Cost for acquiring the acquiree and breakdown of consideration by typeCash
¥ 1,200 million
Consideration for acquisition:¥ 1,200 million
Acquisition cost(3) Details and amount of major acquisition related expenses
To be determined.
(4) Amount, cause, amortization method and period of goodwill generated
To be determined.
(5) Amount and major breakdown of assets and liabilities assumed on the date of business combination
To be determined.

34

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 31st March 2020 and 2019, the consolidated statements
of income, comprehensive income, changes in net assets and cash flows for the years then ended, andnotes, comprising a summary of significant accounting policies, 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 31st March 2020 and 2019, and its consolidated
financial performance and cash flows for the years then ended in accordance 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 Auditof the Consolidated Financial Statements section of our report. We are independent of the Group inaccordance 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 to provide
a basis for our opinion.
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 including the design, implementation and maintenance of the Group’s
financial reporting process.

35

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 a guaranteethat 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 areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence
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 andbased 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 to cease
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, and whether the
consolidated financial statements represent the underlying transactions and events in a manner 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.

36

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended 31st March 2020 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.
Hirohisa Nishino
Designated Engagement Partner
Certified Public Accountant
Satoru Komatsuno
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Osaka Office, Japan
31st July 2020
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.

37

DIRECTORS AND STATUTORY AUDITORS(As of 29th June 2020)
Chairman and
Representative Director:

Tokuo Kudara

President andRepresentative Director:

Toshiharu Inoue

Senior Executive andManaging Directors:

Yoshio Kuramori

Managing Director:

Yasushi Sawada

Directors:

Shigeki Fukushima
Nobuyoshi Katoh
Kouji Mishima

Outside Directors:

Susumu Shimadzu
Keiko Kaneko

Statutory Auditor:

Yoshikazu Sawanaka

Outside Statutory Auditors:

Takashi Matsuzawa
Motoaki Nishimura

38

OUTLINE OF THE COMPANY(As of 31st March 2020)
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: 1,938

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

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

Kyushu Marudai Food Co., Ltd.

Osaka, Japan

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

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

Marushin Foods Co., Ltd.

Tokyo, Japan

Pioneer Foods Co., Ltd.
Umeya Co., Ltd.

Sales Offices:

The sales headquarters at the

Yahata Food Co., Ltd.

Company’s head office in Osaka

Hornmeier Co., Ltd.

controls 10 distribution centers andMarudaifood Co., Ltd.

7 regional sales departments which

Marudai Meat Co., Ltd.

service 29 local outlets.

Meat Supply Co., Ltd.
Marbest Trading Co., Ltd.

Plants:Hokkaido, Iwate,

Marudai Service Co., Ltd.

Niigata, Kanto,

8 Other subsidiaries

Ibaraki, Yokosuka, Shounan,
Shizuoka, Matsusaka,

Associated Company:

Takatsuki, Okayama,

Betagro MF Deli Co., Ltd.

Hiroshima, Karatsu

Overseas Office:

Chicago, U.S.A

39

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