type B1-E

CONSOLIDATEDFINANCIALSTATEMENTS
For the Fiscal Year Ended March 31, 2023

CONTENTS
01

Consolidated Financial Statements

01 Consolidated Statement of		 Financial Position
02 Consolidated Statement of Profit or Loss
02 Consolidated Statement of		 Comprehensive Income
03 Consolidated Statement of
		 Changes in Equity
04 Consolidated Statement of Cash Flows
This document has been extracted and translated from the Japanese originalreport (Yukashoken-Hokokusho) issued on June 20, 2023 for reference purposes

1-3-26 Koyama, Shinagawa-ku, Tokyo 142-0062, Japan
Tel: +81-3-5788-8512
https://www.nipponsanso-hd.co.jp/en/

05

Notes to Consolidated Financial
Statements

47

Independent Auditor’s Report

only. In the event of any discrepancy between this translated document andJapanese version, the Japanese version shall prevail.

Consolidated Financial Statements
Nippon Sanso Holdings and Consolidated Subsidiaries

Consolidated Statement of Financial Position

Consolidated Statement of Profit or Loss

(Millions of yen)

(Millions of yen)

Notes

AssetsCurrent assets
Cash and cash equivalents
Trade receivables
Inventories
Other financial assets
Other current assets
Subtotal
Assets held for sale
Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Investments accounted for using the equity method
Other financial assets
Retirement benefit asset
Other non-current assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities and equity
Liabilities
Current liabilities
Trade payables
Bonds and borrowings
Income taxes payable
Other financial liabilities
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Bonds and borrowings
Other financial liabilities
Retirement benefit liability
Provisions
Other non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Treasury shares
Retained earnings
Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity

6
7
8
13
14
24

9
10
10
12
13
19
14
30

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)¥   132,217
243,541
97,612
22,47926,152522,003
5,070
527,074¥   93,697
218,480
80,064
7,310
22,940422,493—
422,493

776,148
513,685
242,334
38,23046,763
2,810
8,461
3,442
1,631,875¥2,158,950

729,658
485,190
241,320
35,70055,410
2,468
1,163
3,619
1,554,532¥1,977,026

Notes

Revenue
Cost of sales
Gross profit

4, 27

Selling, general and administrative expenses
Other operating income
Other operating expenses
Share of profit of investments accounted for using the equity method
Operating profit

28
28
12

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥1,186,683(748,053)
438,630¥ 957,169(598,597)
358,572(315,191)
5,182(12,650)
3,553
119,524(259,204)
2,241(3,937)3,512
101,183

Finance income
Finance costs
Profit before income taxes

29
29

2,182
(16,203)
105,503

2,192(11,765)
91,611

Income taxes
Profit30(29,538)¥   75,965(24,973)¥   66,637¥   73,080
2,884¥   64,103
2,534

31

¥   168.85¥   148.13

Notes

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥ 75,965¥ 66,637

25
25

(337)
1,814

6,773
607

25

(42)
1,434

70
7,451

25
25

40,744(659)

55,994
299

25

1,374
41,45942,894¥118,859

1,979
58,27365,725¥132,363¥115,466
3,392¥129,325
3,038

Profit attributable to:
Owners of parent
Non-controlling interests
Earnings per share
Basic earnings per share (Yen)
See notes to consolidated financial statements.

15
16
17
20
21

16
17
19
20
21
30

22
22
22
22
22

See notes to consolidated financial statements.

¥   128,197
140,540
16,191102,119284
37,824425,157¥   115,123
110,595
9,746
65,228
1,068
29,832
331,595

759,480
35,693
14,117
5,440
20,364
140,700
975,796
1,400,953

779,749
31,231
14,165
5,107
20,918133,120984,292
1,315,888

37,344
51,610(233)
537,867
97,724
724,31433,682757,996¥2,158,950

37,34455,945(281)
476,589
59,115
628,71432,423
661,137¥1,977,026

Consolidated Statement of Comprehensive Income

ProfitOther comprehensive income
Items that will not be reclassified to profit or loss
Financial assets measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using the equity method
Total of items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Effective portion of net change in fair value of cash flow hedges
Share of other comprehensive income of investments
accounted for using the equity method
Total of items that may be reclassified subsequently to profit or loss
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
See notes to consolidated financial statements.

1(Millions of yen)2

Consolidated Financial Statements
Nippon Sanso Holdings and Consolidated Subsidiaries

Consolidated Statement of Changes in Equity(Millions of yen)
Notes

Balance at April 1, 2022
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity to retained earnings
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2023

25
22
22
23

FYE2023 (From April 1, 2022 to March 31, 2023)
Share capital

Capital surplus

Treasury shares

Retained earnings¥37,344
—
—
—
—
—
—
—
—
—
—
—
—
¥37,344¥55,945——————(4,334)————(4,334)¥51,610¥(281)
—
—
—
(5)
53
—
—
—
—
—
—
48
¥(233)¥476,589
73,080—73,080——(15,579)
—
—
3,777
—
—
(11,802)¥537,867

Total equity
attributable toowners of parent

Non-controllinginterests

Other components of equity
Notes

Balance at April 1, 2022
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity
to retained earnings
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2023

Financial assets
Exchange
Effective portion of
measured at fair Remeasurements ofdifferences on
net change in fairvalue through other defined benefit
translation ofvalue of cash flow
comprehensive
plans
foreign operations
hedgesincome

25
22
22
23

Total

Total equity¥39,428—
41,744
41,744
—
—
—
—
—

¥ 368
—
(652)
(652)
—
—
—
—
—

¥19,319
—
(507)
(507)
—
—
—
—
—

¥    —
—
1,802
1,802
—
—
—
—
—

¥59,115—
42,38642,386—————¥628,714
73,08042,386
115,466(5)
53(15,579)(4,334)—¥32,423
2,884
507
3,392
—
—
(1,018)(1,907)389¥661,137
75,96542,894
118,859(5)
53(16,598)(6,242)
389

—
—
—
—
¥81,172————¥(284)(1,975)——(1,975)¥16,836(1,802)——(1,802)¥    —(3,777)——(3,777)¥97,724———(19,866)¥724,314——
402(2,133)¥33,682——402(22,000)¥757,996(Millions of yen)
Notes

Balance at April 1, 2021
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity to retained earnings
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2022

25
22
22
23

FYE2022 (From April 1, 2021 to March 31, 2022)
Share capital

Capital surplus

Treasury shares

Retained earnings¥37,344
—
—
—
—
—
—
—
—
—
—
—
—
¥37,344¥55,901
—
—
—
—
0
—
43
—
—
—
—
43
¥55,945¥(273)
—
—
—
(7)
0
—
—
—
—
—
—
(7)
¥(281)¥422,838
64,103—64,103——(13,853)
—
—
3,459
41
—
(10,352)¥476,589

Total equity
attributable toowners of parent

Non-controllinginterests

Other components of equity
Notes

Balance at April 1, 2021
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity
to retained earnings
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2022

25
22
22
23

Financial assets
Exchange
Effective portion of
measured at fair Remeasurements ofdifferences on
net change in fairvalue through other defined benefit
translation ofvalue of cash flow
comprehensive
plans
foreign operations
hedgesincomeTotal

Total equity¥(18,029)—
57,45757,457
—
—
—
—
—

¥ 71
—
296
296
—
—
—
—
—

¥15,310
—
6,844
6,844
—
—
—
—
—

¥  —
—
623
623
—
—
—
—
—

¥ (2,646)—
65,222
65,222—————¥513,164
64,10365,222
129,325(7)
0(13,853)43—¥30,736
2,534
503
3,038
—
—
(991)
(379)
—

¥543,900
66,63765,725
132,363(7)
0(14,844)
(335)
—

—
—
—
—
¥39,428

—
—
—
—
¥368

(2,836)——(2,836)¥19,319

(623)
—
—
(623)
¥  —

(3,459)——(3,459)¥59,115—
41—(13,775)¥628,714—
5
14(1,350)¥32,423—46
14(15,126)¥661,137

See notes to consolidated financial statements.

Consolidated Statement of Cash Flows(Millions of yen)

Notes

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization
Impairment losses
Interest and dividend income
Interest expenses
Share of (profit) loss of investments accounted for using
the equity method
Loss (gain) on sales and retirement of property, plant and equipment
and intangible assets(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables(Increase) decrease in retirement benefit asset
Increase (decrease) in retirement benefit liability
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes refund (paid)
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investments
Proceeds from sales and redemption of investments
Payments for acquisition of subsidiaries
Proceeds from sales of subsidiaries
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial papers
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Repayments of lease liabilities
Purchase of investments in subsidiaries not resulting in change
in scope of consolidation
Dividends paid
Dividends paid to non-controlling interests
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Balance of cash and cash equivalents at beginning of the fiscal year

23

Increase (decrease) in cash and cash equivalents resulting from change
in scope of consolidation
Increase in cash and cash equivalents resulting from merger
Balance of cash and cash equivalents at end of the fiscal year

6

See notes to consolidated financial statements.

3

4

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥105,503
105,7312,140(1,640)16,165¥ 91,611
92,435
1,216(965)
11,601(3,553)(3,512)375(16,810)(14,204)
8,758
(710)
2,366
15,730219,852729
5,596(12,752)(25,466)
187,959449(28,158)(6,764)
14,264
(580)
1,095
4,756
177,451201
3,720(10,842)(21,770)
148,760(91,825)
1,925(2,804)
4,276
(122)
—
(9,523)(98,073)(74,478)
1,516(1,560)
6,083
(520)
0
(1,900)(70,858)

3,232
19,00030,433(76,277)——(11,998)

8,016(10,000)
25,105(86,466)
25,000(15,000)(9,437)(2,885)(15,579)(1,018)662(54,430)
2,961
38,416
93,697(276)(13,853)(991)(43)(77,946)
2,416
2,371
91,058—104¥132,217

266—¥ 93,697

Notes to Consolidated Financial Statements

1.

(7) New accounting standards and interpretations that are

Reporting Entity

Nippon Sanso Holdings Corporation (the “Company”) is a company

Japan and overseas, mainly for customers in the steel, chemical, andlocated in Japan and is listed on the Prime Market of the Tokyo Stockelectronics industries. In addition, the NSHD Group manufactures andExchange. The registered address of the Company’s head office issells housewares such as stainless steel vacuum-insulated bottles.

disclosed on its website (https://www.nipponsanso-hd.co.jp). The

Details are described in Note “4. Segment Information.”

consolidated financial statements of the Company and its subsidiaries

The Company’s parent changed its business name from Mitsubishi(collectively, the “NSHD Group”) comprise interests in the NSHD

Chemical Holdings Corporation to Mitsubishi Chemical Group

Group, its associates, and joint arrangements, with March 31 as the

Corporation on July 1, 2022.

end of the fiscal year. The NSHD Group conducts gas businesses in

2.

for FYE2023, the NSHD Group has applied all those accounting

not yet applied

Basis of Preparation(1) Conformity with IFRSNSHD Group’s consolidated financial statements is as follows:

The consolidated financial statements of the NSHD Group have• Impairment of non-financial assets (Note “11. Impairment Losses”)

been prepared in compliance with International Financial Reporting• Recoverability of deferred tax assets (Note “30. Income Taxes”)

Standards (IFRS) published by the International Accounting Standards• Measurement of defined benefit obligations

Board. Since the Company meets the requirements of a “Specified(Note “19. Post-employment Benefits”)• Fair value of financial instruments (Note “33. Financial Instruments”)

Company Applying Designated IFRS” prescribed under Article 1-2of the Japanese Ordinance on Terminology, Forms, and Preparation
Methods of Consolidated Financial Statements, the Company has(6) New accounting standards applied

adopted the provisions of Article 93 of said ordinance.

The NSHD Group has applied the following accounting standards andinterpretations from FYE2023.

(2) Approval of financial statements
The NSHD Group’s consolidated financial statements were approved

Accounting standards
and interpretations

Overview of establishment and amendment to standard

Incometaxes

Temporary exceptional accounting treatment for deferredtaxes arising from the application of Pillar Two Model Rules

IAS 12by Toshihiko Hamada, President CEO of the Company, andAlan David Draper, Chief Financial Officer, on June 20, 2023.
(3) Basis of measurement
The NSHD Group’s consolidated financial statements were preparedin Note “3. Significant Accounting Policies.”(4) Presentation currency
The NSHD Group’s consolidated financial statements are presented inamounts are rounded down to the nearest million yen.
(5) Use of judgments, estimates, and assumptions

Significant Accounting Policies(1) Basis of consolidation

Investments in associates under the equity method are recognized1) Subsidiaries

at cost at the time of acquisition and recorded in the consolidated

Subsidiaries refer to companies controlled by the NSHD Group. The

statement of financial position after adjusting the NSHD Group’s

NSHD Group judges that it controls a company if the NSHD Group has

interests in changes in net assets of the associates after acquisition.

the exposure or rights to variable returns arising from its involvement

The consolidated statement of profit or loss reflects the NSHD

in the investee and has the ability to influence such returns due toGroup’s interests in the performance of associates. If there is a change

power over the investee.

in the amount recognized in other comprehensive income of associates,

In preparing the consolidated financial statements, the financial

the NSHD Group’s interests in such change are recognized in otherstatements of each Group company prepared at the same closing datecomprehensive income.

based on the unified accounting policies of the NSHD Group are used.

Adjustments are made to consolidated financial statements in orderIf accounting policies applied by a subsidiary are different from theto eliminate the NSHD Group’s interests in unrealized gains and losses

accounting policies applied by the NSHD Group, adjustments are

arising from transactions between the NSHD Group and associates.

made to the financial statements of such subsidiary as necessary.

Financial statements of associates are prepared for the same

Consolidation of subsidiaries begins on the date when the NSHD

reporting period as the NSHD Group. Adjustments are made toGroup acquires control over the subsidiaries until the date when themake accounting policies of the associates consistent with thecontrol over the subsidiaries is lost.

NSHD Group’s accounting policies.

Transactions between consolidated companies, as well as the

In the event of loss of significant influence over associates, thebalance of receivables and payables and unrealized gains and losses

NSHD Group measures and recognizes the remaining investment atarising from such transactions, are eliminated in preparing the consoli-

fair value on the date when significant influence is lost. Gains anddated financial statements.

losses arising from the loss of significant influence are recognized in

involving a loss of control, it is accounted for as an equity transaction.

(“IAS”) 12)” effective from FYE2023.

The difference between the adjustment amount of the non-controlling

3) Joint arrangementsinterests and the fair value of the consideration is recognized directly

Joint arrangements refer to arrangements that require the unanimousin equity as equity attributable to owners of parent.

consent of the parties sharing control over decision-making on

profit or loss.

OECD’s(Note 1) Pillar Two of the BEPS (Note 2), the Global Anti-BaseIn the event of a loss of control, the NSHD Group measures and

Erosion (GloBE: global minimum tax) Rules. However, the amendments

recognizes the remaining investment at fair value on the date when

A joint venture (jointly controlled entity) refers to a joint agreement

provide a mandatory temporary exception to requirements regarding

the control has been lost. Gains and losses arising from the loss of

where parties with joint control over the arrangement have the rightthe recognition and disclosure of deferred tax assets and liabilities forcontrol are recognized in profit or loss.

to the net assets of such arrangement.

relevant activities.

Non-controlling interests in consolidated subsidiaries’ net assets are

If the NSHD Group has a share in a joint venture, the NSHD GroupFor income taxes arising from the global minimum tax system, theidentified separately from the NSHD Group’s interests. Comprehensive

NSHD Group applies the exceptional treatment prescribed in IAS 12 andincome of consolidated subsidiaries is attributable to owners of parent

does not recognize or disclose associated deferred tax assets and liabilities.

and non-controlling interests, even if this results in the non-controllingwhich parties with joint control substantially have the right to assetsinterests having a deficit balance.

and the obligation to liabilities related to joint arrangements.

Reform Act (“Act for Partial Revision of the Income Tax Act, etc.” (Act2) Associates

Group recognizes the investment concerning such joint operation

No. 3 of 2023), the “revised Income Tax Act”), including provisions

Associates refer to companies over which the NSHD Group has aonly at the equivalent amount of the NSHD Group’s interests in therelated to the global minimum tax system, was enacted on March 28,

significant influence on their financial and operating policies but does

assets, liabilities, income, and expenses arising from jointly controlled

2023. The revised Income Tax Act implements the Income Inclusion

not have control or joint control.

operating activities. Transactions between the NSHD Group compa-

In Japan, a corporate tax system corresponding to the global

In preparing the NSHD Group’s consolidated financial statements in

3.

Model Rules (Amendments to International Accounting Standards

income taxes arising from the global minimum tax rules.

Japanese yen, which is the functional currency of the Company, andhave potential significant impacts on the consolidated financial statements.

to the approval date of the consolidated financial statements as of and

If there is a change in interests in consolidated subsidiaries notfrom tax law enacted or substantively enacted to implement theincluding financial instruments measured at fair value as described

Regarding major accounting standards and interpretations issued prior

The NSHD Group has applied “International Tax Reform–Pillar Two

The amendments clarify that IAS 12 applies to income taxes arisingon a historical cost basis, except for certain assets and liabilities

standards and interpretations, including early application, that would

accounts for such share using the equity method.
A joint operation (jointly controlled business) refers to a business inminimum tax was established in the Tax Reform of 2023, and the Tax

accordance with IFRS, management is required to make judgments,
estimates, and assumptions that affect the application of accounting
policies and reported amounts of assets, liabilities, income, and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing

Rule (IIR), which is one of the global minimum tax rules of BEPS.

basis. The impacts of changes in accounting estimates are recognizedStarting from the fiscal year beginning April 1, 2024, parent compa-

in the accounting period in which the estimates are changed andIf the NSHD Group has a share in a joint operation, the NSHDThe NSHD Group accounts for investments in associates using thenies, as well as the balance of receivables and payables and unrealized

equity method.

gains and losses arising from such transactions, are eliminated.

nies located in Japan will be additionally (top-up) taxed until the tax

in future accounting periods affected.
Major information on accounting judgments, estimates, andassumptions that may have significant impacts on the5

The NSHD Group has more than 50% of the voting rights ofburdens of its subsidiaries reaches the minimum tax rate (15%).

Sakai Gas Center, Inc. The NSHD Group judges that said company

Notes: 1. OECD: “Organisation for Economic Co-operation and Development”
2. BEPS: “Base Erosion and Profit Shifting”

qualifies as a joint operation.
6

Notes to Consolidated Financial Statements(2) Business combinations

Transactions denominated in a foreign currency are translated into

Business combinations are accounted for using the acquisition method.

		functional currencies at the spot exchange rate at the transaction date

If the initial accounting for business combinations has not beenor at a rate similar thereto.

completed by the end of the period in which the business combina-

Monetary assets and liabilities denominated in a foreign currency		• Financial assets are held based on a business model with

If there is a significant increase in credit risk from the time of initial

an objective of collecting contractual cash flows and sellingrecognition, expected credit losses over the remaining period arefinancial assets.

recognized as allowance for doubtful accounts.

• Contractual terms of financial assets give rise to cash flows

Whether or not the credit risk has significantly increased is judged

tions occurred, they are accounted for at a provisional amount for theare translated into functional currencies at the spot exchange ratethat are solely payments of principal and interest on thebased on a change in the default risk. In judging whether there isitems for which the accounting is incomplete. The provisional amountat the end of the reporting period. Translation differences arisingprincipal amount outstanding on a specified date.

any change in the default risk, overdue status (past-due information)is adjusted during the measurement period, which is within one year

from such translation and settlement are recognized in profit or loss.

from the acquisition date.

However, financial instruments designated as hedging instruments ofmeasured at fair value through other comprehensive income,The consideration transferred in a business combination is calcu-

net investments in foreign operations, financial assets measured throughand such designation is applied on an ongoing basis.

lated as the sum of acquisition-date fair value of assets transferred byother comprehensive income, and translation differences arising fromthe acquirer, liabilities incurred by the acquirer to former owners ofcash flow hedges are recognized in other comprehensive income.

the acquiree, and equity interests issued by the acquirer.

The assets and liabilities of foreign operations are translated into			 Equity financial assets are designated as financial assets

is mostly considered.
In addition, expected credit losses are measured based on the
discounted present value of the difference between the amount			 Financial assets measured at fair value through otherreceivable on a contract basis and the amount expected to be received

comprehensive income are measured at fair value plus

based on past credit losses, etc.

transaction costs directly attributable to the acquisition
2) Financial liabilities (excluding derivatives)

Non-controlling interests in the acquiree are measured for each

Japanese yen at the spot exchange rate at the end of the reporting

business combination either at fair value or at the amount equivalent

period, and the income and expenses of foreign operations are trans-

to the non-controlling interests in proportion to the fair value oflated into Japanese yen at the spot exchange rate at the transaction(ii) Subsequent measurement

The NSHD Group classifies its financial liabilities into (a) financial liabilities

identifiable net assets of the acquiree.

date or at a rate similar thereto. The translation differences are

After initial recognition, financial assets are measured according tomeasured at amortized cost and (b) financial liabilities measured at fairrecognized in other comprehensive income.

their classification as follows:

value through profit or loss. The classification is determined at initial

Acquisition-related costs incurred in connection with businesscombinations are recognized as expenses for the period in which such

If a foreign operation is disposed of, the cumulative translation

costs were incurred.

differences related to such operation are recognized in profit or loss

When the NSHD Group acquires a business, it classifies and desig-

for the period in which the disposal occurs.

nates assets to be acquired and liabilities to be assumed based onof such financial assets.

(i) Initial recognition and measurement(a) Financial assets measured at amortized cost

recognition of the financial liabilities. All financial liabilities are initially		Financial assets measured at amortized cost are measured

measured at fair value. However, financial liabilities measured at

at amortized cost using the effective interest method.

amortized cost are measured at fair value less transaction costs directly(b)	Financial assets measured at fair value through othercontract terms, economic conditions, and related conditions at the(4) Financial instruments

acquisition date. In addition, identifiable assets acquired and liabilities

1) Financial assets (excluding derivatives)

assumed are in principle measured at fair value on the acquisition date.

(i) Initial recognition and measurement

If a business combination is achieved in stages, the interest held

The NSHD Group initially recognizes trade receivables at a point in

attributable to such financial liabilities.

comprehensive income(ii) Subsequent measurement

		Financial assets other than financial assets measured atamortized cost are measured at fair value.

After initial recognition, financial liabilities are measured according to			 For financial assets measured at fair value through other

their classification as follows:

before acquiring the control of the acquiree is revalued at fair value attime when a performance obligation is satisfied and an unconditional

comprehensive income, changes in fair value are recognized(a) Financial liabilities measured at amortized cost

the acquisition date, and the difference is recognized in profit or loss.

right to consideration is acquired in accordance with IFRS 15. All otherin other comprehensive income. If they are derecognized or

The amount of the interest in the acquiree that was recorded in otherfinancial assets are initially recognized at the transaction date when

their fair value significantly declines, they are transferred toat amortized cost using the effective interest method after

comprehensive income before the acquisition date is accounted for in thethe NSHD Group becomes a contractual party to such financial assets.

retained earnings.

initial recognition. Amortization by the effective interest method

same manner as in the case where the acquirer disposed of its interests.

The NSHD Group classifies its financial assets into (a) financial

Goodwill is measured as the amount of the aggregate amount		Financial liabilities measured at amortized cost are measured

and gains and losses from derecognition are recognized in

assets measured at amortized cost and (b) financial assets measured(iii) Derecognitionof the consideration transferred and the amount recognized as

at fair value through other comprehensive income. The classification

The NSHD Group derecognizes financial assets only if contractual

non-controlling interests exceeding the net of identifiable assets

is determined at the time of initial recognition of the financial assets.

rights to cash flows arising from the financial assets cease to exist, or		For financial liabilities measured at fair value through profit orif the financial assets are transferred and substantially all the risks andloss, the portion related to changes in the NSHD Group’s credit

rewards have been transferred.

risk from changes in fair value is recognized in other compre-

acquired and liabilities assumed.

(a) Financial assets measured at amortized cost

If the aggregate amount recognized as the consideration trans-		Debt financial assets are classified as financial assets measured

ferred and non-controlling interests is less than the net of identifiable

at amortized cost if both of the following criteria are met:

assets acquired and liabilities assumed, the difference is recognized in		

profit or loss.
After initial recognition, goodwill acquired through a businesscombination is not amortized but is recorded at the amount initially		

objective of holding financial assets to recover contractual

ferred, recognition of such financial assets is continued to the extent

cash flows.

to which the NSHD Group has a continuing involvement, and in that(iii) Derecognition

case, related liabilities are also recognized.

The NSHD Group derecognizes financial liabilities in cases of the• Contractual terms of financial assets give rise to cash flows

impairment tests are performed each year and whenever there

principal amount outstanding on a specified date.

The consolidated financial statements of the NSHD Group are

performance, exemption, or expiration of the obligation of financial
liabilities, and when the exchange occurs under substantially different			 Financial assets measured at amortized cost are measured

The NSHD Group recognizes impairment of financial assets based onterms, or when there has been a substantial modification of the terms.

at fair value plus transaction costs directly attributable to thewhether there is a significant increase in credit risk from the time ofacquisition of such financial assets.

initial recognition in financial assets or financial asset groups measured3) Offset of financial instruments

at amortized cost at the end of each reporting period.

Financial assets and financial liabilities are offset only if there is acomprehensive income

In addition, each company within the NSHD Group designates its own

amount is recognized in profit or loss.

(iv) Impairment(b)	Financial assets measured at fair value through otherpresented in Japanese yen, the functional currency of the Company.

hensive income after initial recognition, and the remaining

risks or rewards but continues to control the financial assets trans-

that are solely payments of principal and interest on the(3) Foreign currency translation

If the NSHD Group does not transfer or retain substantially all the• Financial assets are held based on a business model with anrecognized less the accumulated impairment loss. In addition,is an indication of impairment.

profit or loss.
(b) Financial liabilities measured at fair value through profit or loss

		Debt financial assets are classified as financial assets measured

For financial assets or financial asset groups measured at amortizedcurrent enforceable legal right to offset the recognized amounts,

cost, expected credit losses for 12 months are recognized as allowanceand if there is an intention to settle at a net amount or realize thefunctional currency, and transactions of each company are measured

at fair value through other comprehensive income if both of thefor doubtful accounts if credit risk has not significantly increased fromassets and settle the liabilities simultaneously. They are then recorded

in its functional currency.

following criteria are met:

the time of initial recognition. However, for trade receivables, expected

at a net amount in the consolidated statement of financial position.

credit losses over the remaining period are recognized.

78

Notes to Consolidated Financial Statements

4) Derivatives and hedge accounting

previously recognized in equity through other comprehensive income

Buildings and structures:

3 to 50 years

In addition, for leases with a lease term of 12 months or less and

The NSHD Group uses derivatives such as forward exchange contracts,

is continuously recorded in equity until the forecasted transaction

Machinery and vehicles:

3 to 20 years

leases for which the underlying asset is of low value, lease paymentsinterest rate swap contracts, and currency swap contracts to hedge

occurs, or is no longer expected to occur.

Tools, furniture and fixtures:

2 to 25 years

associated with such leases are recognized as an expense on a regularcurrency risks and interest rate risks. These derivatives are initiallybasis over the lease term.

measured at fair value at the time when the contracts were entered(iii) Hedges of net investments in foreign operations(8) Intangible assets

and remeasured at fair value thereafter.

As to hedges of net investments in foreign operations, the NSHDThe NSHD Group adopts the cost model for measurement of(10) Impairment of assets

Group applies the same accounting treatment as to cash flow hedges.

intangible assets.

1) Impairment of non-financial assets

Fair value changes of derivatives are recognized in profit or loss.
However, the effective portion of cash flow hedges and hedges of

The effective portion of gain or loss on the hedging instruments is

net investments in foreign operations is recognized in otherrecognized in other comprehensive income, and the ineffective portion­comprehensive income.

is immediately recognized in profit or loss. When a foreign operation

Intangible assets acquired separately are initially measured at cost.

such indication exists, and if assets need to be annually tested for impair-is disposed, cumulative gain or loss previously recognized in equity

The cost of intangible assets acquired through business combinations

ment, the NSHD Group estimates the recoverable amount of the asset.

through other comprehensive income is reclassified to profit or loss.

is measured at fair value as of the acquisition date. For internallyThe recoverable amount of the asset is the higher of an asset’s fairgenerated intangible assets, except for development costs that qualify

value less costs of disposal and its value in use. If the recoverable

At inception of the hedge, the NSHD Group formally designates anddocuments the hedging relationships to which hedge accounting isapplied and the risk management objective and strategy for undertaking

Intangible assets are presented at cost less accumulated

The NSHD Group assesses at the end of each reporting period

amortization and accumulated impairment losses.

whether there is any indication that an asset may be impaired. If any

the hedge. Such documentation includes specific hedging instruments,

5) Fair value of financial instruments

for capitalization, all expenditures are recognized as expenses for theamount of each asset cannot be estimated, the recoverable amounthedged items or transactions, the nature of the risk being hedged,

The fair value of financial instruments traded in active financial

periods when they are incurred.

of a cash-generating unit or a group of cash-generating units toand how the NSHD Group will assess effectiveness of the hedging

markets as of the end of the reporting period refers to quoted prices

instruments in fair value changes when offsetting the exposure toin markets or dealer prices.

Intangible assets with finite useful lives are amortized over their

which the asset belongs is estimated. If the carrying amount of aestimated useful lives using the straight-line method. Impairment

cash-generating unit or a group of cash-generating units exceeds thechanges in fair value or cash flows of the hedged items attributable to

The fair value of financial instruments for which active markets do

tests are performed whenever there is an indication of impairment.

recoverable amount, impairment loss of the asset is recognized andthe hedged risks. The NSHD Group evaluates whether or not derivatives

not exist is calculated by referring to appropriate valuation techniques

Estimated useful lives and method of amortization of intangible assets

write-downs of the asset are recorded up to the recoverable amount.

used for hedging transactions are effective for offsetting changes inor prices provided by counterparty financial institutions.

with finite useful lives are reviewed at the end of each reporting

In measuring the value in use, the discounted present value ofperiod, and if there is any change, it is applied prospectively as a

expected future cash flows is calculated using the pre-tax discountchange in accounting estimates.

rate that reflects current market assessments of the time value offair value or cash flows of the hedged items at inception of the hedge
and on an ongoing basis. Specifically, the NSHD Group determines that

(5) Cash and cash equivalents

a hedge is effective in the case where the economic relationship between

Cash and cash equivalents consist of cash on hand, deposits that can be

Estimated useful lives of major intangible assets are as follows:money and the risks specific to the asset. The business plan used tothe hedged item and the hedging instruments results in an offset.

withdrawn at any time, and short-term investments with a maturity ofCustomer-related intangible assets:

estimate future cash flows is in principle limited to five years. Future

three months or less from the acquisition date that are readily convertible

Intangible assets with indefinite useful lives and intangible

cash flows beyond the projected period of the business plan are

assets not available for use are not amortized. Impairment tests arecalculated based on the long-term average growth rate according

performed separately or by a cash-generating unit whenever there

to individual circumstances.

Hedges that meet strict criteria for hedge accounting are classified

5 to 30 years

and accounted for under IFRS 9 as follows.

into cash and subject to an insignificant risk of changes in value.

(i) Fair value hedges(6) Inventories

Fair value changes in derivatives are recognized in profit or loss. For

The cost of inventories includes costs of purchase, costs of conversion,

fair value changes in the hedged items attributable to the risks to be

and all other costs incurred in bringing the inventories to their present(9) Leases

hedged, the carrying amount of the hedged items is adjusted andlocation and condition.

A contract is, or contains, a lease when the right to control the use ofrecognized in profit or loss.

is an indication of impairment.

In calculating fair value less costs of disposal, the NSHD Group
uses an appropriate valuation model that is supported by indices offair value available.
Goodwill is allocated to individual cash-generating units or groups

Inventories are measured at the lower of cost and net realizable value.

an identified asset is transferred for a period of time in the exchangeof cash-generating units that are expected to benefit from thesynergies of a business combination after the acquisition date.

The weighted average method is principally used to calculate the cost.

for consideration, and the NSHD Group recognizes a right-of-use asset(ii) Cash flow hedges

In addition, the net realizable value is calculated at the estimated selling

and a lease liability at the commencement date of the lease. The

Goodwill or intangible assets with indefinite useful lives, andThe effective portion of gain or loss on the hedging instruments

price in the ordinary course of business less the estimated costs of

NSHD Group determines whether a contract is, or contains, a leaseintangible assets not available for use, are tested for impairment

is recognized in other comprehensive income, and the ineffective

completion and the estimated costs necessary to make the sale.

based on the substance of the contract, even if the contract does notannually or whenever there is an indication of impairment.

portion is immediately recognized in profit or loss.

take the legal form of a lease.
(7) Property, plant and equipment

The amount related to the hedging instruments recorded in other2) Reversal of an impairment loss

The lease liability is measured at the present value of the total lease

comprehensive income is transferred to profit or loss when hedged

The NSHD Group adopts the cost model for measurement of property,

payments payable at the commencement date of the lease. The

For assets other than goodwill, impairment losses recognized in thetransactions affect profit or loss. If the hedged item results in theplant and equipment.

right-of-use asset is initially measured at the amount of the leaseprevious fiscal years are assessed at the end of the reporting period as

liability, adjusted for any initial direct costs and other costs such as

to whether or not there is any indication of the possibility of a decrease

prepaid lease payments as well as costs such as restoration obligations

or extinguishment of loss due to factors such as a change in theas required by the lease contract.

assumption used in calculating the recoverable amount. If such indica-

recognition of non-financial assets or non-financial liabilities, theProperty, plant and equipment are presented at cost less accumulated

amount recognized in other comprehensive income is treated as andepreciation and accumulated impairment losses.

adjustment of the initial carrying amount of the non-financial assets

The cost includes the costs directly attributable to the acquisition ofor non-financial liabilities.

the assets, the costs of their dismantlement, removal or restoration,

If forecasted transactions are no longer expected to occur, theand the borrowing costs that meet the recognition criteria.

cumulative gain or loss previously recognized as equity through otherAll property, plant and equipment other than land are depreciatedcomprehensive income is transferred to profit or loss.

so that the depreciable amount, which is cost less the residual value atIf the hedging instrument is terminated or exercised without expira-the end of the fiscal year, is allocated on a systematic basis using thetion, sale, or exchange or renewal to another hedging instrument, or

straight-line method.

if it no longer qualifies for hedge accounting due to events such as

Estimated useful lives of major property, plant and equipment area change in risk management objective, the cumulative gain or loss

as follows:

The lease payments are allocated between repayments of the leasetion exists, the recoverable amount of such assets, cash-generating

liability and finance charges so as to achieve a constant rate of interest

units, or groups of cash-generating units is estimated. If such recoverable

on the outstanding balance of the lease liability, and the financeamount exceeds the carrying amount of such assets, cash-generating

charges are recognized in profit or loss.

units, or groups of cash-generating units, the impairment loss is

A right-of-use asset is depreciated over its useful life on a systematic

reversed up to the lower of the recoverable amount calculated andbasis if ownership of the underlying asset is transferred to the lessee

the carrying amount less the accumulated depreciation if the impair-by the end of the lease term or if the cost of the right-of-use asset

ment loss was not recognized in previous fiscal years. The reversal ofreflects the exercise of a purchase option, otherwise it is depreciatedimpairment loss is recognized in profit or loss.

over the shorter of its useful life or the term of the lease.
9

For goodwill, impairment loss is not reversed.
10Notes to Consolidated Financial Statements(11) Assets held for sale and discontinued operations

present value, the NSHD Group uses a pre-tax discount rate that

Government grants are recognized in profit or loss on a systematic• For deductible temporary differences associated with investments

Non-current assets (or disposal groups) are classified as “assets heldreflects current market assessments of the time value of money andbasis over the periods in which the NSHD Group recognizes expenses

in subsidiaries and associates, and interests in joint arrangements,

for sale” if their carrying amount is expected to be recovered princi-

those risks specific to the liability.

for the related costs for which the grants are intended to compensate.

when it is probable that the reversal will not occur in the foreseeable

Government grants related to assets are recorded by deducting thefuture, or it is less probable that taxable profit will be available against

pally through a sale transaction rather than through continuing use.
The above requirements only apply if the sale is highly probable(15) Equity

within one year and such assets (or disposal groups) are available for1) Ordinary shares

immediate sale in their present condition. Non-current assets (orThe issue price of ordinary shares is recorded in share capital and(18) Income taxes

subsidiaries and associates, and interests in joint arrangements,

disposal groups) classified as assets held for sale are measured at

capital surplus.

Current taxes for the current and prior periods are calculated at thewhen the NSHD Group is able to control the timing of thethe lower of their carrying amount and fair value less costs to sell.
Property, plant and equipment and intangible assets classified asassets held for sale are not depreciated or amortized.
Discontinued operations include a component of an entity that has
already been disposed of or classified as assets held for sale, and theyamount of such grants from the cost of the assets.

which the deductible temporary differences can be utilized, and• For taxable temporary differences associated with investments inamount expected to be paid to (or recovered from) taxation authori-

reversal of the temporary differences and it is probable that

2) Treasury sharesties. The rates and laws used to calculate the tax amount are those

the reversal will not occur in the foreseeable future.

When the NSHD Group purchases treasury shares, the considerationthat have been enacted or substantively enacted at the end of thepaid is recognized as a deduction from equity.

reporting period.

When the NSHD Group disposes of treasury shares, the difference

The carrying amount of deferred tax assets and liabilities (including
unrecognized deferred tax assets) is reviewed at the end of eachDeferred taxes are recorded as the difference between the tax

reporting period. Deferred tax assets and liabilities are calculated atare recognized if they constitute one operation of the NSHD Groupbetween the carrying amount and the consideration at the time ofbases and the carrying amounts of assets and liabilities at the end

the tax rates that are expected to apply to the period when the assets

and if there is a plan to dispose of one of the operations.

disposal is recognized in capital surplus.

of the reporting period (temporary difference) using the asset andare realized or liabilities are settled, based on tax rates and laws

liability method.

that have been enacted or substantively enacted at the end of the(12) Borrowing costs(16) Revenue

For assets that necessarily take a substantial period of time to prepare

The NSHD Group recognizes revenue in an amount that reflects the

temporary differences. Deferred tax assets are recognized for deduct-

for intended use or sale, borrowing costs directly attributable to acqui-compensation to which the entities expect to be entitled in exchange

ible temporary differences, unused tax losses, and unused tax credits(19) Earnings per sharesition, construction, or production of such assets are capitalized as

for goods and services transferred to customers based on theto the extent that it is probable that taxable profit will be available

The amount of basic earnings per share is calculated by dividing profit

part of the cost of such assets. Other borrowing costs are recognizedfollowing five-step model.

against which the deductible temporary differences can be utilized.

attributable to ordinary shareholders of the Company by the weighted

as an expense for the period when they are incurred.

Step 1: Identify the contract with the customer
Step 2: Identify performance obligations in the contract

Deferred tax liabilities are in principle recognized for all taxable

reporting period.

However, there are exceptions in which deferred tax assets andaverage number of ordinary shares outstanding after adjusting for

liabilities are not recorded for the following temporary differences:treasury shares during the period. The amount of diluted earnings per(13) Post-employment benefits

Step 3: Determine the transaction price• Arising from initial recognition of goodwill

share is calculated by adjusting the effects of all dilutive potential

The NSHD Group provides defined benefit plans and defined

Step 4: A llocate the transaction price to the performance• Arising from initial recognition of an asset or liability in a transac-

ordinary shares with dilutive effects.

contribution plans as retirement benefit plans for employees.

obligations in the contract

The NSHD Group separately calculates the present value of theStep 5: R ecognize revenue when (or as) the performance

defined benefit obligations, related current service costs, and pastobligations are satisfied

tion other than a business combination which does not affecteither the accounting income or the taxable profit (or loss) at thetime of the transaction

service costs for each plan using the projected unit credit method.
The discount rate is calculated based on market yields at the end

The NSHD Group conducts gas businesses in Japan and overseas,of the reporting period on high-quality corporate bonds.

mainly for customers in the steel, chemical, and electronics industries,

Liabilities or assets related to the defined benefit plans are calcu-

and has built production and sales structures for its main products

lated by deducting the fair value of plan assets from the present value

in Japan, the United States, Europe, and Asia and Oceania. In addition,of defined benefit obligations.

the NSHD Group manufactures and sells housewares such as stainless

Remeasurements of liabilities or assets relating to the definedsteel vacuum-insulated bottles.

benefit plans are all recognized in other comprehensive income for the

Regarding product sales in these businesses, because a customer

period when they are incurred, and immediately reflected in retained

acquires control over a product at the time the product is delivered,earnings. In addition, past service costs are expensed for the period

the NSHD Group judges that its performance obligations have been

when they are incurred.

satisfied and recognizes revenue at the time the product is delivered.

Expenses related to defined contribution plans are recognized as

Revenue is measured at the price promised in the contract withexpenses for the period when they are incurred.

the customer, after deducting such amounts as discounts, rebates,
and returns.

(14) Provisions

The amount of the price in the sales contract of a product is generally

A provision is recognized when the NSHD Group has a present obligationcollected within one year from the time when control over the product(legal or constructive) as a result of a past event, when it is probableis transferred to a customer, and does not include a significant

that an outflow of resources embodying economic benefits will befinancing component.

4.

Segment Information(1) Overview of reportable segments(Changes in names of reportable segments)

The reportable segments of the NSHD Group are those for which

The names of reportable segments were previously “Gas Businessdiscrete financial information is available and whose operating resultsin Japan,” “Gas Business in the United States,” “Gas Business inare regularly reviewed by the Board of Directors to make decisions

Europe,” “Gas Business in Asia and Oceania” and “Thermos

about resource allocation and to assess performance.

Business.” Effective from FYE2023, these names were changed to

The NSHD Group conducts gas businesses in Japan and overseas,“Japan,” “United States,” “Europe,” “Asia & Oceania,” andmainly for customers in the steel, chemical, and electronics industries,“Thermos,” respectively.

and has built production and sales structures for its main products in

There is no impact on the segment information from this change.

Japan, the United States, Europe, and Asia and Oceania. In addition,

The names of reportable segments for the previous fiscal year

the NSHD Group manufactures and sells housewares such as stainless(FYE2022) have been changed to conform to the current fiscal year’s

steel vacuum-insulated bottles. Therefore, the Company has establishedpresentation.

the following five reportable segments: Japan, United States, Europe,
Asia & Oceania, and Thermos.

required to settle the obligation, and when a reliable estimate can be(17) Government grants

made of the amount of the obligation.
The NSHD Group measures the provisions at the present value ofA government grant is recognized at fair value when there is reason-

expenditures expected to be required to settle the obligation, whenable assurance that the NSHD Group will comply with any conditions

the effect of the time value of money is material. In calculating theattached to the grant and the grant will be received.

1112

Notes to Consolidated Financial Statements

The principal products and services included in the five segments are shown in the table below.
Reportable segments

Reconciliation of segment profit with profit before income taxes is as follows:(Millions of yen)

Major products and services

Japan

Oxygen, nitrogen, argon, carbon dioxide, helium, hydrogen, acetylene, gas-related equipment, specialty gases

United States(electronic materials gases, pure gases, etc.), electronics-related equipment and installation, semiconductor

Europemanufacturing equipment, cutting and welding equipment, welding materials, plants and machinery, liquefied petroleum

Asia & Oceaniagas (LPG) and related equipment, medical-use gases (oxygen, nitrous oxide, etc.), medical equipment, stable isotopes

Thermos

Housewares

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥123,124¥102,710

Gain on sale of fixed assets

615—

Loss on arbitration award(3,520)

—

(144)

(172)

—

(1,075)

Segment profit

Share of profit (loss) of investments accounted for using the equity method

The accounting methods adopted for the reportable operating segments are the same as the accounting policies adopted for the preparation of

Impairment losses

(549)

(278)

119,524

101,183

Other

the consolidated financial statements.

Operating profit

Revenue from intersegment transactions and transfers is based primarily on prevailing market prices.
(2) Revenue and profit (loss) amounts by reportable segment

Finance income

2,182

2,192

Finance costs(16,203)(11,765)¥105,503¥ 91,611

Profit before income taxes

FYE2023 (From April 1, 2022 to March 31, 2023)
Reportable segment

Revenue
Revenues from external customers
Intersegment revenues andtransfers
Total
Segment profit (Note 2)
Other items
Depreciation and amortization
Impairment losses
Share of profit (loss) ofinvestments accounted forusing the equity method

Japan

United States

EuropeAsia & Oceania

Thermos

Total¥420,452¥303,090¥272,888¥159,965¥30,190 ¥1,186,587

Reconciling
items(Note 1)

(Millions of yen)Amounts on the
consolidated
statement of
profit or loss

A breakdown of revenues from external customers and non-current assets by geographical area are as follows:
Revenues from external customers

13,694434,147
31,68019,111—

21,377324,468
37,074
40,669—236
273,125
34,90435,061
2,138

3,334
163,300
15,4659,317
1

1730,207
6,021
1,471
—

38,6601,225,248
125,146
105,6312,140¥    95 ¥1,186,683(38,660)—(38,564) 1,186,683(2,021)
123,124
99—

105,7312,140(Millions of yen)

177

—

52

297

3,171

3,698

(0)

3,698

FYE2022 (From April 1, 2021 to March 31, 2022)
Reportable segment
Japan

United States

EuropeAsia & Oceania

Thermos

Total

Reconciling
items(Note 1)

(Millions of yen)Amounts on the
consolidated
statement of
profit or loss

¥224,801¥209,778¥123,533¥26,849¥956,996¥    173¥957,169

10,929382,963
30,93917,020241,822
27,314

148
209,926
26,303

3,314
126,848
12,83718
26,867
6,441

31,432
988,428
103,837(31,432)(31,258)(1,127)—957,169
102,710

19,351
4

31,987—31,736
—

7,935
136

1,315
—

92,326140108—92,435
140

298

—

41

184

3,159

3,683

0

3,684

Notes: 1.	The reconciling item for segment profit, in the amount of ¥(1,127) million, is comprised of ¥102 million of intersegment eliminations and companywide expenses of ¥(1,229) million
that were not allocated to any particular reportable segment. These companywide expenses related principally to the Company’s group administrative expenses that were not allocatedto a particular reportable segment.
2.	Segment profit represents core operating profit, which is calculated as operating profit excluding certain gains or losses attributable to non-recurring factors (losses incurred by businesswithdrawals, streamlining, and others).

13

FYE2022(From April 1, 2021
to March 31, 2022)¥  429,443¥384,388

294,194

214,087

Europe282,667

213,886

Asia, Oceania and others

180,377

144,806¥1,186,683¥957,169

Note: Revenue is classified by country or region based on the customers’ location.

Non-current assets(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)¥  175,632¥   170,709

The United States

453,145408,944

Europe762,880

734,718

Asia, Oceania and others

148,971

142,959¥1,540,629¥1,457,333

Japan

Total
¥372,033

FYE2023(From April 1, 2022
to March 31, 2023)

The United States

Japan

Total

Notes: 1.	The reconciling item for segment profit, in the amount of ¥(2,021) million, is comprised of ¥(743) million of intersegment eliminations and companywide expenses of ¥(1,278) million
that were not allocated to any particular reportable segment. These companywide expenses related principally to the Company’s group administrative expenses that were not allocatedto a particular reportable segment.
2.	Segment profit represents core operating profit, which is calculated as operating profit excluding certain gains or losses attributable to non-recurring factors (losses incurred by businesswithdrawals, streamlining, and others).

Revenue
Revenues from external customers
Intersegment revenues andtransfers
Total
Segment profit (Note 2)
Other items
Depreciation and amortization
Impairment losses
Share of profit (loss) ofinvestments accounted forusing the equity method(3) Information about geographical areas

Note: Non-current assets are classified by their location, and they do not include financial assets, deferred tax assets, or retirement benefit asset.

(4) Information about major customers
Information about major customers is not disclosed since there is no single external customer that accounts for 10% or more of revenue.

5.

Business Combinations

FYE2023 (From April 1, 2022 to March 31, 2023)
There were no significant business combinations.
FYE2022 (From April 1, 2021 to March 31, 2022)
There were no significant business combinations.

14Notes to Consolidated Financial Statements

6.

9.

Cash and Cash Equivalents

Property, Plant and Equipment(1) Table of changes

A breakdown of cash and cash equivalents is as follows:(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

Cash and deposits¥132,217¥93,697

Total¥132,217¥93,697

Changes in costs, accumulated depreciation and accumulated impairment losses, and the carrying amounts of property, plant and equipment are
as follows:
FYE2023 (From April 1, 2022 to March 31, 2023)
Costs(Millions of yen)

7.

Trade Receivables

A breakdown of trade receivables is as follows:(Millions of yen)

FYE2023(March 31, 2023)¥252,757

Notes and accounts receivable–trade
Allowance for doubtful accounts
Total

FYE2022(March 31, 2022)¥226,588(9,216)(8,107)¥243,541¥218,480

Buildings andstructures

Land¥1,043,359
57,639—180(20,768)(2,427)39,671¥1,117,656¥210,560
13,050—24(5,580)571
7,388¥226,014¥64,263
1,537
—
212
(627)
40
1,386
¥66,813

Constructionin progress¥48,645
15,889
—
—
(85)
694
1,630
¥66,774

Tools, furnitureand fixtures

Total¥192,985 ¥1,559,814
17,573
105,691——
1419(6,710)(33,772)84(1,035)
10,43060,508¥214,366 ¥1,691,624

Note: Individual acquisition in the construction in progress column represents the net amount of an increase due to new acquisitions after reclassifying to respective accounts of property,
plant and equipment.

Trade receivables are classified as financial assets measured at amortized cost.

8.

Balance at April 1, 2022
Individual acquisition (Note)
Impairment losses
Business combinations, business divestitures, etc.
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2023

Machinery andvehiclesAccumulated depreciation and accumulated impairment losses

Inventories(Millions of yen)
Machinery andvehiclesA breakdown of inventories is as follows:(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

Merchandise and finished goods¥58,105¥49,696

Work in process

18,456

14,836

Raw materials and supplies

21,04915,530

Total¥97,612¥80,064

Balance at April 1, 2022
Depreciation
Impairment losses
Business divestitures, etc.
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2023

Buildings andstructures¥(610,932) ¥(108,349)(64,199)(11,878)(1,995)(139)——
19,565
3,932
(235)
(227)
(17,207)(3,056)¥(675,006) ¥(119,719)

Land¥(4,274)
(702)
(1)
—
128
0
(73)
¥(4,923)

Constructionin progress

¥—
—
—
—
—
—
—
¥—

Tools, furnitureand fixtures

Total¥(106,599) ¥(830,156)(12,106)(88,887)(2)(2,140)——6,571
30,19828(435)(3,717)(24,055)¥(115,826) ¥(915,476)

Amounts of inventories measured based on net realizable value at March 31, 2023 and 2022 were ¥5,154 million and ¥3,874 million, respectively.
Amounts of write-downs of inventories recognized as expenses for FYE2023 and FYE2022 were ¥211 million and ¥163 million, respectively.

Carrying amounts(Millions of yen)

Balance at April 1, 2022
Balance at March 31, 2023

15

Machinery andvehiclesBuildings andstructures

Land¥432,427¥442,650¥102,210¥106,294¥59,989¥61,89016

Constructionin progress

Tools, furnitureand fixtures¥48,645¥66,774¥86,386¥98,539

Total¥729,658¥776,148

Notes to Consolidated Financial Statements

FYE2022 (From April 1, 2021 to March 31, 2022)

10.

Costs
(Millions of yen)

Balance at April 1, 2021
Individual acquisition (Note)
Impairment losses
Business combinations, business divestitures, etc.
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2022

Constructionin progress

Machinery andvehiclesBuildings andstructuresLand¥ 945,348
55,923—
13(8,761)(1,117)51,953¥1,043,359¥194,928
10,596—
10(3,793)59
8,758¥210,560¥60,768
1,972
—
—
(129)
(165)
1,817
¥64,263¥47,374(1,717)
(1)
—
(27)
(105)
3,123
¥48,645

Tools, furnitureand fixtures

Total¥170,379 ¥1,418,798
13,39080,165
—
(1)
216
240
(4,160)(16,872)(279)(1,608)13,43979,091¥192,985 ¥1,559,814

Note: Individual acquisition in the construction in progress column represents the net amount of an increase due to new acquisitions after reclassifying to respective accounts of property,
plant and equipment.

Accumulated depreciation and accumulated impairment losses(Millions of yen)

Balance at April 1, 2021
Depreciation
Impairment losses
Business divestitures, etc.
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2022

Machinery andvehiclesBuildings andstructuresLand¥(539,061)(57,091)
(493)
—
7,768
923
(22,978)¥(610,932)¥ (97,887)(9,299)
(584)
—
2,312
510
(3,401)¥(108,349)¥(3,650)
(586)
—
—
15
0
(53)
¥(4,274)

Machinery andvehiclesBuildings andstructures

Land¥406,286¥432,427¥ 97,041¥102,210¥57,118¥59,989

Constructionin progress

Tools, furnitureand fixtures

Total

¥—
—
—
—
—
—
—
¥—

¥ (92,465)(10,416)
(4)
—
3,448
158
(7,319)¥(106,599)¥(733,065)(77,392)(1,082)—
13,543
1,592(33,752)¥(830,156)

Constructionin progress

Tools, furnitureand fixtures¥47,374¥48,645¥77,913¥86,386

Carrying amounts(Millions of yen)

Balance at April 1, 2021
Balance at March 31, 2022

Total

¥685,733¥729,658

Goodwill and Intangible Assets(1) Table of changes
Changes in costs, accumulated amortization and accumulated impairment losses, and the carrying amounts of goodwill and intangible assets are
as follows:
FYE2023 (From April 1, 2022 to March 31, 2023)
Costs(Millions of yen)
Intangible assets
Goodwill

Balance at April 1, 2022
Individual acquisition
Business combinations, business divestitures, etc.
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2023

¥487,113—
739—
27,937¥515,790

Customer-related
intangible assets¥300,876
—
173
(489)
14,355¥314,916

Other

Total

¥25,309
1,384
377
(226)
4,999
¥31,843¥326,185
1,384
550
(716)
19,355¥346,760

Accumulated amortization and accumulated impairment losses(Millions of yen)
Intangible assets
Goodwill¥(1,922)
—
—
—
—
(181)
¥(2,104)

Balance at April 1, 2022
Amortization
Impairment losses
Business divestitures, etc.
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2023

Customer-related
intangible assets¥(68,528)(14,685)——489(1,025)¥(83,749)

Other¥(16,336)(2,151)——174(2,362)¥(20,676)(Millions of yen)
Intangible assets

Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses” in the

Goodwill

consolidated statement of profit or loss.
Balance at April 1, 2022
Balance at March 31, 2023

(2) Right-of-use assets¥485,190¥513,685

Carrying amounts of right-of-use assets included in property, plant and equipment are as follows:(Millions of yen)

FYE2022(March 31, 2022)

Machinery and vehicles¥11,603¥ 9,881

Buildings and structures

23,46522,142

Land

1,610

1,776

Tools, furniture and fixtures

2,397

2,768

¥39,076¥36,568

Total

17¥ (84,865)(16,836)——
664(3,387)¥(104,425)

Carrying amounts

The right-of-use assets (capital expenditure amount) increased by ¥11,961 million and ¥8,450 million for FYE2023 and FYE2022, respectively.

FYE2023(March 31, 2023)

Total

18

Customer-related
intangible assets¥232,348¥231,167

Other

Total

¥ 8,972¥11,167¥241,320¥242,334

Notes to Consolidated Financial Statements

FYE2022 (From April 1, 2021 to March 31, 2022)

11.

Costs
(Millions of yen)
Intangible assets
Goodwill

Balance at April 1, 2021
Individual acquisition
Business combinations, business divestitures, etc.
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2022

Customer-related
intangible assets¥456,775—
1,403—
28,934¥487,113¥279,868—201(23)
20,830¥300,876

Other

Total

¥21,194
1,214
610
(438)
2,727
¥25,309¥301,063
1,214
811
(462)
23,558¥326,185

Impairment Losses

The NSHD Group groups assets into the smallest cash-generating units that generate cash flows largely independently. For idle assets, recognitionof impairment loss is determined by individual assets.
Impairment losses for FYE2023 and FYE2022 were ¥2,140 million and ¥1,216 million, respectively. Impairment losses were included in “Other
operating expenses” in the consolidated statement of profit or loss.
Major assets for which impairment losses were recognized are as follows:
FYE2023 (From April 1, 2022 to March 31, 2023)
There were no individually significant impairment losses.

Accumulated amortization and accumulated impairment losses(Millions of yen)

There were no individually significant impairment losses.

Intangible assets
Goodwill

Balance at April 1, 2021
Amortization
Impairment losses
Business divestitures, etc.
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2022

Customer-related
intangible assets¥(1,739)
—
—
—
—
(183)
¥(1,922)¥(50,315)(13,295)——
23(4,940)¥(68,528)

FYE2022 (From April 1, 2021 to March 31, 2022)

Other

Total

¥(12,995)(1,746)——416(2,010)¥(16,336)¥(63,311)(15,042)——440(6,951)¥(84,865)

Carrying amounts

Carrying amounts of goodwill and intangible assets with indefinite useful lives allocated to cash-generating units (group of cash-generating units)
are as follows:(Millions of yen)

FYE2023(March 31, 2023)

Cash-generating units(group of cash-generating units)

FYE2022(March 31, 2022)

Nippon Gases Euro-Holding S.L.U.

¥352,647¥334,278

Matheson Tri-Gas, Inc.

119,927

111,142

NSC (Australia) Pty Ltd (Note)

26,977

27,672Other

15,352

13,347

Total¥514,905¥486,441(Millions of yen)
Goodwill

Balance at April 1, 2021
Balance at March 31, 2022

Customer-related
intangible assets¥455,036¥485,190¥229,553¥232,348

Intangible assets

The carrying amounts of intangible assets with indefinite useful

The estimated period of future cash flows is approximately 10 years

Other

lives at March 31, 2023 and 2022 were ¥1,219 million and ¥1,251

for fair value less costs of disposal and generally limited to five years

million, respectively, and were included in NSC (Australia) Pty Ltd.

for the value in use. Cash flows exceeding the estimated period are

Total¥8,198¥8,972¥237,751¥241,320

determined by referring to the long-term average growth rate of
As to goodwill and intangible assets with indefinite useful lives,

There were no significant internally generated intangible assets for

The carrying amount of assets with indefinite useful lives in the

FYE2023 or FYE2022.

a market or a country to which the cash-generating unit (group of

the NSHD Group performs impairment tests every year and each time

cash-generating units) belongs.

intangible assets above was ¥1,219 million and ¥1,251 million at

when there is an indicator of impairment. The recoverable amountMarch 31, 2023 and 2022, respectively. Principally, the assets wereof a cash-generating unit (group of cash-generating units) is measured

long-term growth rates, and the discount rates are the major assump-“Selling, general and administrative expenses” in the consolidated

trademarks acquired at the time of a business combination, and theas the higher of an asset’s fair value less costs of disposal and its

tions used for impairment tests of goodwill. The business plan may

statement of profit or loss.

NSHD Group determined that their useful lives cannot be estimatedvalue in use.

be affected mainly by the growth rate of revenue, and these major

Amortization of intangible assets is included in “Cost of sales” andResearch and development costs recognized as expenses for FYE2023

because the assets will exist for as long as the business continues.

and FYE2022 were ¥3,515 million and ¥3,569 million, respectively.

The business plan prepared and approved by the management, theAn asset’s fair value less costs of disposal and its value in use areassumptions may be affected by the results of changes in future

calculated by discounting estimated future cash flows projected based

uncertain conditions of the economy. Thus, when the assumed circum-on the business plan, which is prepared by reflecting past experience

stances were changed, the result of calculation of the recoverable(2) Significant intangible assets

and external information and approved by the management. The

amount may differ.

Significant intangible assets recorded in the consolidated statement of financial position are customer-related intangible assets held bydiscount rate used is a pre-tax rate reflecting current market assess-

Nippon Gases Euro-Holding S.L.U. and Matheson Tri-Gas, Inc., which are consolidated subsidiaries. Their carrying amounts and the remaining

ments of the time value of money and the risks specific to the asset.

The fair value is categorized as Level 3 of the fair value hierarchy
based on inputs used to develop those measurements.

period of amortization are as follows:(Millions of yen)

FYE2023(March 31, 2023)

Nippon Gases Euro-Holding S.L.U.
Matheson Tri-Gas, Inc.

FYE2022(March 31, 2022)

Remaining period ofamortization¥188,773¥188,326

Mainly 25 years

35,03236,093Mainly 13 years

Long-term growth rates and discount rates used in the measurement of the recoverable amount are as follows:
Cash-generating units(group of cash-generating units)

FYE2023(March 31, 2023)
Long-term growth rate

FYE2022(March 31, 2022)

Discount rateLong-term growth rate

Discount rate

Nippon Gases Euro-Holding S.L.U.

2.4%

7.5%

1.9%

6.0%

Matheson Tri-Gas, Inc.

3.5%

10.0%

3.5%

8.5%

NSC (Australia) Pty Ltd (Note)

2.5%

8.6%

2.5%

8.5%

Note: The recoverable amount measured by value in use of Nippon Gases Euro-Holding S.L.U. at March 31, 2023 exceeded its carrying amount by ¥193,388 million; it is estimated that if the
discount rate rises by 1.5% these amounts would be approximately the same.

19

20

Notes to Consolidated Financial Statements

12.

FYE2023 (March 31, 2023)

Investments Accounted for Using the Equity Method

FYE2022 (March 31, 2022)(Millions of yen)

The carrying amount of investments in joint ventures accounted for using the equity method that are individually insignificant is as follows:(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)¥8,462Carrying amount of investments in joint ventures¥7,671

Share of comprehensive income of joint ventures accounted for using the equity method is as follows:(Millions of yen)AmountName

Name

AmountIBIDEN CO., LTD.

¥6,965IBIDEN CO., LTD.

¥8,012

Tosoh Corporation

4,014

Tosoh Corporation

4,048

Koatsu Gas Kogyo Co., Ltd.

2,393

Velo3D, Inc.

3,741

RIKEN KEIKI Co., Ltd.

1,938

JiLin OLED Material Tech Co., Ltd.

3,567

KUREHA CORPORATION

1,038

Koatsu Gas Kogyo Co., Ltd.

2,237

In order to improve the efficiency and effective utilization of assets held, the NSHD Group conducts sales (derecognition) of equity financial(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Share of profit¥ (11)¥153

Share of other comprehensive income

(125)

202

Total share of comprehensive income¥(137)¥356

The carrying amount of investments in associates accounted for using the equity method that are insignificant is as follows:

assets measured at fair value through other comprehensive income. The fair value at the time of sales and cumulative gains or losses on sales are
as follows. Cumulative gains or losses (after tax) recognized in other comprehensive income in equity were transferred to retained earnings at thetime of sales.
(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Fair value¥4,276¥6,052

Cumulative gains or losses

2,025

3,741

(Millions of yen)

FYE2023(March 31, 2023)¥29,767

Carrying amount of investments in associates

FYE2022(March 31, 2022)

For equity financial assets measured at fair value through other comprehensive income, dividends received were recognized as follows:(Millions of yen)

¥28,029

Share of comprehensive income of associates accounted for using the equity method is as follows:(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Share of profit¥3,564¥3,358

Share of other comprehensive income

1,458

1,847

Total share of comprehensive income¥5,023¥5,206FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Financial assets that were derecognized

¥116

¥ 73

Financial assets held at end of the fiscal year

781

686

14.

Other Assets

A breakdown of other assets is as follows:(Millions of yen)

13.

FYE2023(March 31, 2023)

Other Financial Assets

A breakdown of other financial assets is as follows:(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

Equity securities and investments in capital¥34,787¥44,086

Other

35,695

19,659Allowance for doubtful accounts(1,240)(1,024)

Total¥69,242¥62,721

Current assets¥22,479¥ 7,310Non-current assets

46,76355,410

Total¥69,242¥62,721

Prepaid expenses¥14,961

Other

19,651

15,992

Total¥34,613¥24,104

Current assets¥26,152¥22,940

Non-current assets
Total

15.

Equity securities are designated as equity financial assets measured at fair value through other comprehensive income because they are held
mainly for the purpose of maintaining and strengthening business and collaborative relationships and financial transaction relationships, etc.

8,461

1,163

¥34,613¥24,104

A breakdown of trade payables is as follows:(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

Notes and accounts payable–trade¥128,197¥115,123

Total¥128,197¥115,123

Trade payables are classified as financial liabilities measured at amortized cost.

Names of issuers and fair value of principal equity financial assets measured at fair value through other comprehensive income are as follows:21¥ 8,112Trade Payables

Equity securities and investments in capital are classified as equity financial assets measured at fair value through other comprehensive income.
Other is classified mainly as financial assets measured at amortized cost.

FYE2022(March 31, 2022)

22

Notes to Consolidated Financial Statements

16.

Assets pledged as collateral and secured obligations are as follows:

Bonds and Borrowings

Assets pledged as collateral

A breakdown of bonds and borrowings is as follows:(Millions of yen)

(Millions of yen)

FYE2023(March 31, 2023)

Short-term borrowings
Current portion of long-term borrowings

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)¥ 32,238¥ 26,632

82,301

76,963

Property, plant and equipment¥1,016¥1,249Total¥1,016¥1,249Commercial papers

26,0007,000

Long-term borrowings

561,814582,309

Bonds

197,665

197,440

Total¥900,020¥890,344

Current liabilities¥140,540¥110,595

Non-current liabilities

759,480

779,749

Bonds and borrowings

Total¥900,020¥890,344

Other financial liabilities (current)

Secured obligations(Millions of yen)

FYE2023(March 31, 2023)

¥404

Total

Bonds and borrowings are classified as financial liabilities measured at amortized cost.

FYE2022(March 31, 2022)

FYE2022(March 31, 2022)

¥616

32

28

¥437

¥645

The average interest rates applicable to short-term borrowings and long-term borrowings at March 31, 2023 were 5.06% and 2.32%, respectively.
The average interest rates applicable to short-term borrowings and long-term borrowings at March 31, 2022 were 1.66% and 1.24%, respectively.
The repayment term of long-term borrowings at March 31, 2023 is from 2023 to 2059.

17.

Other Financial Liabilities

A breakdown of other financial liabilities is as follows:(Millions of yen)

A breakdown of bonds is as follows:

FYE2023(March 31, 2023)(Millions of yen)Company
name

Name

Issuance date

FYE2023
FYE2022(March 31, 2023) (March 31, 2022)

The 14th Domestic Unsecured Straight
Corporate Bonds

December 15,
2016

*1

The 1st Series Deferrable Interest andCallable Unsecured Subordinated Bonds

January 29,
2019

*1

The 2nd Series Deferrable Interest andCallable Unsecured Subordinated Bonds

January 29,
2019

7,945

7,937

*1

The 15th Domestic Unsecured Straight
Corporate Bonds

October 16,
2019

19,96819,948*1

The 16th Domestic Unsecured Straight
Corporate Bonds

October 16,
2019

9,971

9,963

*1

The 17th Domestic Unsecured Straight
Corporate Bonds

October 16,
2019

19,930*1

The 1st Domestic Unsecured Straight
Corporate Bonds

October 14,
2021

*1

The 2nd Domestic Unsecured Straight
Corporate Bonds

October 14,
2021

*1

Collateral

Maturity date

None

December 15,
2026

None

January 29,
2054

1.87 (*3)

NoneJanuary 29,
2059

0.13

None

October 16,
2024

0.19

None

October 16,
2026

19,9200.30

None

October 16,
2029

15,00015,0000.11

None

October 14,
2026

10,00010,0000.28

None

October 14,
2031¥197,665¥197,440¥ 15,000
99,849Total

Interest rate(%)

¥ 15,000
99,6710.39
1.41 (*2)

Lease liabilities¥ 41,762¥38,872

Accrued expenses

77,15445,895

Accounts payable–other

16,993

10,138

Other

1,902

1,553

Total

¥137,813¥96,460

Current liabilities¥102,119¥65,228

Non-current liabilities
Total
Other financial liabilities are mainly classified as financial liabilities measured at amortized cost.

*1 The bonds were issued by the Company.
*2 A fixed interest rate is applied to the period between the day following January 29, 2019 and January 29, 2024, while a variable interest rate is to be applied from the day following January
29, 2024 (step-up in interest rate occurring on January 30, 2024).
*3 A fixed interest rate is applied to the period between the day following January 29, 2019 and January 29, 2029, while a variable interest rate is to be applied from the day following January
29, 2029 (step-up in interest rate occurring on January 30, 2029).

23

FYE2022(March 31, 2022)

24

35,693

31,231¥137,813¥96,460

Notes to Consolidated Financial Statements

18.

Amounts related to defined benefit plans in the consolidated statement of financial position are as follows:

Lease Transactions(Millions of yen)

FYE2023(March 31, 2023)(1) Gain or loss and cash outflows related to lease transactions
Gain or loss and cash outflows related to lease transactions are as follows:(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Depreciation charges for right-of-use assets
Land, buildings and structures as underlying assets¥ 5,370

Tools, furniture and fixtures as underlying assets

1,012

996

Machinery and vehicles as underlying assets

3,923

3,070

Total depreciation charges

10,305

7,355

Expenses relating to leases of low-value assets

1,823

1,822

¥13,821¥11,260

Total cash outflows for leases¥ 3,289

FYE2022(March 31, 2022)

Present value of defined benefit obligations¥ 41,475

Fair value of plan assets(30,168)(31,809)¥ 11,307¥ 11,697¥ 14,117¥ 14,165

Net amount of defined benefit obligations and assets
Retirement benefit liability
Retirement benefit asset
Net amount of defined benefit obligations and assets¥ 43,506(2,810)(2,468)¥ 11,307¥ 11,697

For defined benefit plans, amounts recognized as expenses in the consolidated statement of profit or loss are as follows:(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥1,877

Please see Note “9. Property, Plant and Equipment” for information on increases in right-of-use assets.

Current service cost

¥2,173

Please see Note “33. Financial Instruments” for information on balances of lease liabilities by due date.

Interest expenses

364

335

Interest income

(186)

(219)

¥2,352¥1,993

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Total(2) Additional information related to lease transactions
The majority of the NSHD Group’s lease transactions involve property leases, primarily leasing land and buildings as office and factory sites. Someof these leases are covered by options to extend or terminate the leases to ensure business flexibility. The NSHD Group determines the term of theleases after evaluating whether it is reasonably certain that the NSHD Group will exercise the options to extend the leases or will not exercise theChanges related to the present value of defined benefit obligations are as follows:(Millions of yen)options to terminate the leases.
The NSHD Group’s leasing activities do not include significant sales and lease-back transactions and restrictions or covenants imposed by leases.

¥43,506¥44,552

Current service cost

2,173

1,877

Interest expenses

364

335

Balance at beginning of the fiscal year

19.

Post-employment Benefits

Remeasurements

Certain consolidated subsidiaries of the Company have funded anddetermined taking into consideration the yield on government bonds.

unfunded retirement defined benefit plans and defined contribution

In accordance with laws and regulations, the pension plans areplans for employees’ retirement benefits, and the plans cover substan-

managed by the Company’s consolidated subsidiaries or a pension

tially all the employees.

fund that is legally separate from the Company’s consolidated subsidiaries. The Company’s consolidated subsidiaries, or the Board of

Balance at end of the fiscal year

(1) Defined benefit plans

Directors of the pension fund and the trustees of pension fund

Major defined benefit plans of the Company’s consolidated subsidiaries

management, are required by laws and regulations to act in the best

are cash balance plans. Benefits under the cash balance plans are set

interest of policyholders and are responsible for operating plan assets

based on various conditions such as years of service, points based on

based on the prescribed policies.

——(3,638)(1,057)Retirement benefits paid

(3,923)(2,291)

Other

2,992

90

¥41,475¥43,506

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥31,809¥32,982186

219

Actuarial gains and losses arising from changes in demographic assumptions
Actuarial gains and losses arising from changes in financial assumptions

Changes related to the fair value of plan assets are as follows:(Millions of yen)achievements during the service period, etc. The investment yield isBalance at beginning of the fiscal year
Interest income
Remeasurements(1,031)(196)

Contributions from companies

1,716

1,117

Retirement benefits paid

(3,543)(1,993)

Other

1,031

(319)

¥30,168¥31,809

Return on plan assets

Balance at end of the fiscal year

25

26

Notes to Consolidated Financial Statements

Under the NSHD Group’s plan asset management policy, theThe key actuarial assumption used to calculate the present value of defined benefit obligations is as follows:
FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

1.11%

Discount rate

0.70%

If the discount rate, which is the key actuarial assumption, fluctuates, the present value of defined benefit obligations at March 31, 2023 andreviews asset allocation according to the situation as necessary, suchover the medium and long term to the extent of allowable risks

as when there is a significant change in the market environment.

in order to ensure payments of the benefits of the defined benefit

Contributions to the defined benefit plans are readjusted based on

obligations in the future.

periodic actuarial reviews in order to ensure balanced pension financeFor plan assets, the NSHD Group seeks to reduce risks by diversi-

2022 changes as follows. This sensitivity analysis is based on the assumption that all actuarial assumptions, other than actuarial assumptions
subject to the analysis, remain constant.
(Millions of yen)

FYE2023(March 31, 2023)

and actual management results of each asset. The NSHD Grouppurpose of management is to secure the required combined returns

FYE2022(March 31, 2022)

Increase by 0.5%¥(1,779)¥(2,011)

Decrease by 0.5%

1,941

2,281

in the future. In such actuarial reviews, the adequacy of the contribution

fying investments widely in domestic and foreign equity securities,

is verified by reviewing the basic rates for determining contributions

debt securities, and life insurance general accounts based on asset(such as expected rate of interest, expected mortality, and expected

allocation objectives of a policy asset mix that is formulated to achieverate of withdrawal).

management objectives.

For FYE2024, the NSHD Group plans to contribute ¥1,765 million

For asset allocation, the NSHD Group sets the allocation to be

to plan assets.

maintained for the medium and long term, based on the correlation

The weighted average durations of the defined benefit obligation at

between expected risks and returns for the medium and long term

March 31, 2023 and 2022 were 11.6 years and 11.9 years, respectively.

The fair value of plan assets at March 31, 2023 is as follows:(Millions of yen)

Cash and cash equivalents

Plan assets for which
there are quoted
market prices inan active market

Plan assets for which
there are no quoted
market prices inan active market¥3,635¥    —¥ 3,635

—

2,622

2,622

—

2,622

2,622

—

13,967

13,967—

13,967

13,967

—

9,692

9,692

(2) Defined contribution plans and public pension systems
Amounts recognized as expenses under defined contribution plans and public pension systems are as follows:

Total(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Expenses under defined contribution plans¥5,008¥3,808

Expenses under public pension systems

4,475

4,819

Equity financial instruments
Jointly managed trusts
Total equity financial instruments
Debt financial instruments
Jointly managed trusts
Total debt financial instruments
Life insurance general accounts
Other

—

249

249

Total

¥3,635¥26,532¥30,168

20.

Provisions

A breakdown of changes in provisions is as follows:
FYE2023 (From April 1, 2022 to March 31, 2023)(Millions of yen)

The fair value of plan assets at March 31, 2022 is as follows:

Provision for
construction warranties(Millions of yen)

Cash and cash equivalents

Plan assets for which
there are quoted
market prices inan active market

Plan assets for which
there are no quoted
market prices inan active market¥2,386¥    —¥ 2,386

Equity financial instruments
Total equity financial instruments¥5,782

¥ 208

33

60

—

93

Decrease during the fiscal year (Intended use)

—

(858)

(208)

(1,067)

Decrease during the fiscal year (Reversal)

(23)

(156)

—

(180)

0

703

—

704

1,450

1,450

Balance at March 31, 2023

¥195

¥5,530¥  —¥ 5,725

—

1,450

1,450

Current liabilities¥195¥   89¥  —¥   284

—

5,440

—

5,440

¥195

¥5,530¥  —¥ 5,725

Non-current liabilities

Total debt financial instruments—

16,723

16,723—

16,723

16,723

Life insurance general accounts—

11,208

11,208

Other

—

41

41

Total

¥2,386¥29,422¥31,80927¥ 6,175—

Debt financial instruments
Jointly managed trusts

Total

¥183

Other

Jointly managed trusts

Other provisions

Increase during the fiscal year

Balance at April 1, 2022

Total

Asset retirement
obligations

Total

28

Notes to Consolidated Financial Statements

FYE2022 (From April 1, 2021 to March 31, 2022)(Millions of yen)

Provision for
construction warranties

Balance at April 1, 2021

Asset retirement
obligations

Other provisions

22.

Equity(1) Share capital and treasury shares

Total

Numbers of shares authorized and shares issued are as follows:¥ 355¥3,870¥ 114¥4,340

37

1,610

208

1,856

Decrease during the fiscal year (Intended use)

(138)

(243)

(114)

(496)

Decrease during the fiscal year (Reversal)

(73)

(0)

—

(73)

3

545

—

548

Balance at March 31, 2022

¥ 183

¥5,782¥ 208¥6,175Current liabilities¥ 183¥  675¥ 208¥1,068

Beginning of the fiscal year

—

5,107

—

5,107

Changes during the fiscal year

¥ 183

¥5,782¥ 208¥6,175End of the fiscal year

Increase during the fiscal year

Other

Non-current liabilities
Total

Asset retirement obligations

In order to prepare for construction-related compensation expenses forIf the NSHD Group has legal obligations required by laws and regulations

machinery and device products, provision for construction warranties isor contracts concerning retirement of fixed assets that are used for therecorded based on the latest actual amount of compensation arising fromordinary course of business, such as obligations to restore the original

shipment amounts of machinery and device products in the previous

condition accompanying lease contracts of factory facilities and properties

fiscal year. Of these, amounts expected to be paid within one year areused by the NSHD Group, asset retirement obligations are recognizedrecorded. However, the occurrence of construction-related compensation

based on the estimated amount of future expenditures calculated based

expenses is subject to uncertainty.

on historical results, etc.
Although these expenses are expected to be paid mainly after one year
or more, they will be affected by future business plans, etc.

1,600,000

1,600,000

433,092

433,092

Number of shares authorized
Number of shares issued——

433,092

433,092

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Beginning of the fiscal year

344

342

Increase (Note 1)

150

2

Decrease (Note 2)

(262)

(0)

End of the fiscal year

232

344

A breakdown of other liabilities is as follows:(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

Advances received¥ 9,803¥ 4,977

Deferred income

5,339

5,681

Employees’ bonuses

6,422

6,203

Employees’ paid absence

4,096

4,049

Other

32,527

29,839Total¥58,189¥37,824

Changes in the number of treasury shares during the fiscal year are as follows:(Thousands of shares)

Notes: 1.	The increase of 150 thousand shares during FYE2023 consisted of (i) 147 thousand shares belonging to the Company as treasury shares (the Company’s stock) as a result of a change inownership ratio of an associate, previously accounted for using the equity method, that became a consolidated subsidiary and (ii) 2 thousand shares due to the purchase of shares lessthan one unit. The increase of 2 thousand shares during FYE2022 was due to the purchase of shares less than one unit.
2.	The decrease of 262 thousand shares during FYE2023 was due to the sale of treasury shares (the Company’s stock) that were sold by a consolidated subsidiary. The decrease of
0 thousand shares during FYE2022 was due to the sale of shares less than one unit.

Other Liabilities

Current liabilities

FYE2022(From April 1, 2021
to March 31, 2022)

All shares are ordinary shares with no par value. Shares issued are fully paid.

Provision for construction warranties

21.

(Thousands of shares)

FYE2023(From April 1, 2022
to March 31, 2023)(2) Capital surplus and retained earnings

differences arising when consolidating the financial statements

Capital surplus consists of amounts not included in share capital asof foreign operations prepared in foreign currencies and cumulative

part of the amounts arising from capital transactions, and the mainamounts of effective portion of gain or loss on hedging instrumentscomponent is capital reserve. Retained earnings consist of legal

designated as hedges of net investments in foreign operations.

retained earnings and other reserves.
The Companies Act of Japan (the “Act”) stipulates that more than(Effective portion of net change in fair value of cash flow hedges)

one-half of payments or delivery in relation to the issuance of shares

The effective portion of net change in fair value of cash flow hedges¥50,750

shall be included in share capital, and the remaining shall be included

is the cumulative amount of the effective portion of hedges as part of¥29,832

in capital reserve. Capital reserve may be incorporated into sharegains or losses arising from changes in fair value of the hedging instru-

capital by resolutions of the shareholders’ meeting.

ment related to cash flow hedges.

Non-current liabilities

20,364

20,918

Total¥58,189¥50,750

In addition, the Act stipulates that one-tenth of the amount to be
paid as cash dividends from surplus shall be appropriated as capital(Financial assets measured at fair value through otherreserve or legal retained earnings until the total amount of capitalcomprehensive income)reserve and legal retained earnings equals one-fourth of share capital.

Other components of equity include valuation differences in fair value of

The accumulated legal retained earnings may be used to eliminate

financial assets measured at fair value through other comprehensive income.

or reduce a deficit, and the legal retained earnings may be reversed by(Remeasurements of defined benefit plans)

resolution of the shareholders’ meeting.

Remeasurements of defined benefit plans are the effect of differences(3) Other components of equity

between actuarial assumptions at the beginning of the fiscal year andOther components of equity are as follows:

the actual results and the effect of changes in actuarial assumptions.
These are recognized in other comprehensive income when incurred

29(Exchange differences on translation of foreign operations)and immediately transferred from other components of equity to

Exchange differences on translation of foreign operations are translation

retained earnings.

30

Notes to Consolidated Financial Statements

23.

25.

Dividends

Payments of dividends are as follows:

Other Comprehensive Income

Changes in each item in other comprehensive income during the fiscal year are as follows:(Millions of yen)

FYE2023 (From April 1, 2022 to March 31, 2023)
Type of stock

Resolution

Ordinary General Meeting of Shareholders
held on June 17, 2022
Board of Directors’ meeting
held on November 1, 2022

Total cash dividends(Millions of yen)

OrdinarysharesOrdinaryshares¥7,792
7,792

Dividends per share
(Yen)

¥18
18

Record date

March 31, 2022
September 30,
2022

Effective dateJune 20, 2022
December 1,
2022

FYE2022 (From April 1, 2021 to March 31, 2022)
Type of stock

Resolution

Ordinary General Meeting of Shareholders
held on June 18, 2021
Board of Directors’ meeting
held on November 1, 2021

Total cash dividends(Millions of yen)

OrdinarysharesOrdinaryshares¥6,926
6,926

Dividends per share
(Yen)

¥16
16

Record date

March 31, 2021
September 30,
2021

Effective dateJune 21, 2021
December 1,
2021

Amount arising during the fiscal year
Tax effects
Net amount

24.

6,773

2,607

861

Tax effects

(793)

(254)

1,814

607

40,74455,99440,74455,994

Net amount
Exchange differences on translation of foreign operations
Amount arising during the fiscal year
Net amount
Effective portion of net change in fair value of cash flow hedges
Amount arising during the fiscal year

Amount arising during the fiscal year
Total cash dividends(Millions of yen)

Ordinaryshares¥8,658Dividends per share
(Yen)

¥20

Record date

204

586

(1,145)

(166)

281

(120)

(659)

299

1,332

2,050

1,332

2,050

¥42,894¥65,725

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Wages and salaries¥152,871¥130,487

Total¥152,871¥130,487

Net amount

Effective date

Total other comprehensive income
March 31, 2023

June 21, 2023

26.
Type of stock

Ordinary General Meeting of Shareholders
held on June 17, 2022

(2,471)(337)

Amount arising during the fiscal year

Net amountFYE2022 (From April 1, 2021 to March 31, 2022)
Resolution¥ 9,244

432

Share of other comprehensive income of investments accounted for using the equity method
Type of stock

Ordinary General Meeting of Shareholders
held on June 20, 2023¥  (770)

Remeasurements of defined benefit plans

Tax effects

FYE2023 (From April 1, 2022 to March 31, 2023)
Resolution

FYE2022(From April 1, 2021
to March 31, 2022)

Financial assets measured at fair value through other comprehensive income

Reclassification adjustments
Dividends whose effective date falls in the following fiscal year are as follows:

FYE2023(From April 1, 2022
to March 31, 2023)

Total cash dividends(Millions of yen)

Ordinaryshares¥7,792

Dividends per share
(Yen)

¥18

Record date

Effective date

Employee Benefit Expenses

Employee benefit expenses other than post-employment benefits are as follows:(Millions of yen)March 31, 2022

June 20, 2022

Assets Held for Sale

Assets held for sale are as follows:(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

Assets held for sale
Other financial assets
Total¥5,070¥—¥5,070¥—

The NSHD Group continuously reviews the significance of its stock holding policy of stocks. The stocks that the NSHD Group decided to sell due tolack of significance to hold as a result of the continuous review, those to be sold within one year are classified as assets held for sale as of March
31, 2023. The stocks classified as assets held for sales are listed stocks and classified as Level 1 of the fair value hierarchy.
As of March 31, 2023, other components of equity related to assets held for sale amounted to ¥3,660 million.

3132

Notes to Consolidated Financial Statements

27.

28.

Revenue(1) The disaggregation of revenue

Other Operating Income and Other Operating Expenses

A breakdown of other operating income is as follows:(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Grant income¥   60¥   45Gain on sales of property, plant and equipment

1,043

197

Other

4,078

1,998

Total

¥5,182¥2,241FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥ 2,140¥1,216

1,419

647

—

45

FYE2023 (From April 1, 2022 to March 31, 2023)(Millions of yen)
Reportable segment
Japan

Revenue
Gas
Equipment and otherHousewares
Total¥284,363
136,089—¥420,452

United States¥227,545
75,544—¥303,090

EuropeAsia & Oceania¥256,162
16,726—¥272,888¥126,385
33,580—¥159,965

Total

Reconciling
items

Thermos¥    ——
30,190¥30,190

¥—
95
—
¥95

¥   894,457
262,036
30,190¥1,186,683

A breakdown of other operating expenses is as follows:(Millions of yen)

FYE2022 (From April 1, 2021 to March 31, 2022)(Millions of yen)
Reportable segment
Japan

Revenue
Gas
Equipment and otherHousewares
Total¥245,103
126,930—¥372,033

United States¥176,555
48,245—¥224,801

EuropeAsia & Oceania¥194,807
14,970—¥209,778¥ 96,039
27,494—¥123,533

Total

Reconciling
items

Thermos¥    ——
26,849¥26,849

Impairment losses
Loss on sales and retirement of property, plant and equipment

¥ —
173
—
¥173

¥712,505
217,814
26,849¥957,169

Loss on reduction of property, plant and equipment
Loss on arbitration award

3,520

—

Other

5,570

2,028

Total

¥12,650¥3,937FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥   742¥   204

Determination of the timing of the fulfillment of performance obligations in contracts with customers, and the method for calculating thetransaction price and its allocation to performance obligations, are as described in Note “3. Significant Accounting Policies.” The amount ofrevenue recognized arising from other revenue sources is insignificant.
The NSHD Group has changed the names of its reportable segments from FYE2023. The names of the reportable segments for the previous

29.

Finance Income and Finance Costs

A breakdown of finance income is as follows:

fiscal year shown above have been changed to conform to the current fiscal year’s presentation. Please see Note “4. Segment Information.”(Millions of yen)

(2) Contract balances
Contract assets mainly comprise consideration for construction in progress. Contract liabilities mainly comprise consideration received fromInterest income

customers prior to the delivery of products. Receivables, contract assets, and contract liabilities derived from contracts with customers are as follows:(Millions of yen)

FYE2023(March 31, 2023)

Receivables arising from contracts with customers

FYE2022(March 31, 2022)¥252,757

At the beginning of
FYE2022(April 1, 2021)¥226,588¥190,343

Contract assets

4,997

5,204

3,936

Contract liabilities

18,554

13,03012,239Of the outstanding amounts of contract liabilities, as of the beginning of FYE2023 and FYE2022, the amounts recognized as revenue for the

Financial assets measured at amortized cost
Dividend income
Financial assets measured at fair value through other comprehensive income
Foreign exchange gains

760

501

1,169

Other

40

58

Total

¥2,182¥2,192FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥16,165¥11,601

A breakdown of finance costs is as follows:(Millions of yen)fiscal years are insignificant. For FYE2023 and FYE2022, the amounts of revenue recognized based on the performance obligations that were fulfilledin prior periods are also insignificant. Balances of contract assets and contract liabilities have not undergone any significant changes.
Interest expenses(3) Transaction price allocated to remaining performance obligations
The following is a breakdown of the total transaction price allocated to remaining performance obligations and the period for which revenue
is expected to be recognized. These amounts do not include any transaction whose expected contractual term is within one year. In addition,
all significant considerations are included in the transaction price arising from contracts with customers.

Financial liabilities measured at amortized cost
Other

37

163

Total

¥16,203¥11,765(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)

One year or less

¥24,483¥ 8,025

More than one year
Total

13,521¥38,005

6,204¥14,230

33

897

34

Notes to Consolidated Financial Statements

30.

Income Taxes(1) Deferred tax assets and deferred tax liabilities
Major factors giving rise to deferred tax assets and deferred tax liabilities and their changes are as follows:
FYE2023 (From April 1, 2022 to March 31, 2023)(Millions of yen)
April 1, 2022

Deferred tax assets
Employees’ bonuses
Accrued expenses
Property, plant and equipment andintangible assets
Retirement benefit liability
Unused tax losses
Unrealized gains (inventories and property,
plant and equipment)
Other
Total
Deferred tax liabilities
Securities and other investments
Property, plant and equipment andintangible assets
Undistributed earnings of overseas
consolidated subsidiaries, etc.
Other
Total
Net deferred tax liabilities

Recognized in
profit or loss

Recognized in othercomprehensive income

Other (Note)benefits will be realized based on historical taxable income levels andthe possibility that some or all deductible temporary differences andthe projection of future taxable income during periods when deductible

unused tax losses will be available for future taxable income. For the

temporary differences and unused tax losses may be used.

assessment of the recoverability of deferred tax assets, the NSHD

Deductible temporary differences for which deferred tax assets

Group considers the planned reversal of deferred tax liabilities,

have not been recognized at March 31, 2023 and 2022 were ¥20,793

projected future taxable income, and tax planning. For deferred tax

million and ¥21,738 million, respectively.

assets recognized, the NSHD Group believes that it is probable the tax

March 31, 2023

(2) Income taxes¥   2,462
3,655¥  (105)
(92)

¥  —
—

¥    —
253¥   2,356
3,816

2,959
3,482
4,944

15
(1)
(4,506)

—
(682)
—

(0)
93
504

2,975
2,891
943

2,404
6,777
¥  26,685

312
378¥(3,999)—32¥(650)—
600¥ 1,452

2,717
7,788
¥  23,489¥  (8,440)¥    —¥ 487¥   687¥   (7,265)(137,541)

5,638

—

(9,758)(141,661)(7,602)(2,601)¥(156,187)¥(129,501)(1,461)(223)¥ 3,954¥   (44)

—
82
¥ 570
¥  (79)—(13)¥(9,084)¥(7,631)(9,063)(2,756)¥(160,747)¥(137,257)

A breakdown of income taxes is as follows:(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Current income taxes¥29,493¥21,770

Deferred income taxes

44

3,202

¥29,538¥24,973

Total(3) Table of reconciliation of effective tax rates
The Company is mainly subject to corporate income tax, inhabitant tax, and enterprise tax. The statutory tax rate based on these taxes for FYE2023
and FYE2022 was 30.62%. Overseas subsidiaries are subject to the corporate income tax, etc., of their location.
A breakdown of major items that caused differences between the statutory tax rate and the effective tax rate is as follows:

FYE2022 (From April 1, 2021 to March 31, 2022)(Millions of yen)
April 1, 2021

Deferred tax assets
Employees’ bonuses
Accrued expenses
Property, plant and equipment andintangible assets
Retirement benefit liability
Unused tax losses
Unrealized gains (inventories and property,
plant and equipment)
Other
Total
Deferred tax liabilities
Securities and other investments
Property, plant and equipment andintangible assets
Undistributed earnings of overseas
consolidated subsidiaries, etc.
Other
Total
Net deferred tax liabilities

For recognition of deferred tax assets, the NSHD Group considers

Recognized in
profit or loss

Recognized in othercomprehensive income

Other (Note)

March 31, 2022¥   2,364
4,020¥    98(640)¥    ——¥    —
275¥   2,462
3,655

3,065
3,657
6,483

(106)
(55)
(2,025)

—
(209)
—

0
90
486

2,959
3,482
4,944

2,309
7,144
¥   29,044

95
12¥(2,621)—(829)¥(1,039)—450¥ 1,303

2,404
6,777
¥  26,685¥  (6,999)¥     —¥(1,619)¥  178¥  (8,440)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

30.62%

30.62%

Permanently non-deductible or non-taxable items

0.79

0.80

Unrecognized deferred tax assets

0.72

0.18

Differences in tax rates for overseas consolidated subsidiaries(4.55)(4.10)

Statutory tax rate

Tax effects on undistributed earnings

1.38

1.65

Share of profit of investments accounted for using the equity method(1.03)(1.17)

Other
Effective tax rate

31.

0.06

(0.72)

28.00%

27.26%

Earnings per Share

Basic earnings per share and the basis of calculation are as follows:(128,462)

318—(9,398)(137,541)(6,092)(2,997)¥(144,552)¥(115,507)(1,510)610¥  (580)¥(3,202)—(186)¥(1,806)¥(2,845)—(28)¥(9,247)¥(7,944)(7,602)(2,601)¥(156,187)¥(129,501)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Profit attributable to owners of parent (Millions of yen)

¥ 73,080¥ 64,103

Average number of shares during the fiscal year (Thousands of shares)

432,812432,749

Basic earnings per share (Yen)¥ 168.85¥ 148.13

Note: Diluted earnings per share are not presented as there are no dilutive potential shares.

Note: Other includes exchange differences on translation of foreign operations and changes from business combinations, etc.

3536Notes to Consolidated Financial Statements

32.

33.

Cash Flow Information

Financial Instruments

Changes in liabilities arising from financing activities(1) Equity management

Changes in liabilities arising from financing activities are as follows:

The NSHD Group manages equity aiming at maximizing corporate value through sustainable growth. The major indices used by the Company inequity management are return on capital employed (ROCE) and adjusted net debt-to-equity (D/E) ratio.

FYE2023 (From April 1, 2022 to March 31, 2023)

FYE2023(March 31, 2023)(Millions of yen)
Non-cash changes

Short-term borrowings
Commercial papers
Long-term borrowings (Note)
Bonds (Note)
Lease liabilities (Note)

Balanceat April 1, 2022

Changes fromcash flows¥ 26,632
7,000
659,272
197,440
38,872¥  3,232
19,000(45,844)—(11,998)

New lease
Changes fromtransactions andbusinesschanges in leasecombinations, etc.
contracts, etc.

¥ —
—
3
—
190

¥    ————¥10,084

Exchangedifferences ontranslationof foreign
operations, etc.

Balance
at March 31,
2023¥ 2,373—
30,684225
4,613¥ 32,238
26,000644,116
197,665
41,762

Note: Balances include the current portion.

FYE2022 (From April 1, 2021 to March 31, 2022)(Millions of yen)
Non-cash changes

Short-term borrowings
Commercial papers
Long-term borrowings (Note)
Bonds (Note)
Lease liabilities (Note)

Balanceat April 1, 2021

Changes fromcash flows¥ 16,421
17,000691,978
187,217
36,625¥  8,016(10,000)(61,360)
10,000(9,437)

Note: Balances include the current portion.

New lease
Changes fromtransactions andbusinesschanges in leasecombinations, etc.
contracts, etc.

¥150
—
221
—
—

¥   —
—
—
—
8,662

FYE2022(March 31, 2022)

ROCE (Note 1)

7.6%

6.8%

Adjusted net D/E ratio (Note 2)

0.81

0.94

Notes: 1. Core operating profit / invested capital (average of the beginning and the end of the fiscal year)
Invested capital refers to the total of interest-bearing liabilities and equity attributable to owners of parent.
Notes: 2.	It is an indicator of financial stability and calculated using the following formula: (Net interest-bearing liabilities – equity-type liabilities) / (equity attributable to owners ofparent + equity-type liabilities).
	The “equity-type liabilities” is the Company’s internal terminology, referring to the 50% portion of the ¥250 billion in funds obtained through hybrid financing, which are certified as“equity” portion by credit rating agencies.

(2) Matters related to risk management

In accordance with internal policies of each Group company, such

The NSHD Group is exposed to financial risks in the course ofas credit management regulations, the NSHD Group monitors due

conducting business activities in various countries and regions

dates and outstanding balances of individual customers and estab-throughout a wide range of fields. In order to reduce or avoid such

lishes a system to periodically assess credit status. The NSHD Grouprisks, the NSHD Group manages risks based on certain policies, etc.

thereby aims to identify and alleviate collection concerns due to

In addition, derivative transactions are used to hedge currency

a deteriorating financial situation at an early stage. In addition,

fluctuation risk, interest rate fluctuation risk, or price fluctuation risk.

derivative transactions are limited to financial institutions with highExchangedifferences ontranslationof foreign
operations, etc.

Balance
at March 31,
2022

In principle, derivative transactions are only conducted based on actual

creditworthiness in order to minimize counterparties’ credit risk related

demand and not used for speculative purposes.

to contract default.

¥ 2,045—
28,432
222
3,022¥ 26,632
7,000
659,272
197,440
38,872(3) Credit risk

unrecoverable amount for individually significant financial assets, andTrade receivables, etc., which are receivables arising from the NSHD

at an amount based on historical experience, etc., for individuallyGroup’s business activities, are exposed to the credit risk of customers.

insignificant financial assets, at the end of each fiscal year. Allowance

In addition, derivative transactions that the NSHD Group uses tofor doubtful accounts related to such financial assets is included inhedge financial risks are exposed to the credit risk of financial institu-“Trade receivables” and “Other financial assets” in the consolidated

tions that are counterparties to the transactions.

statement of financial position.

The NSHD Group records allowance for doubtful accounts at an

Allowance for doubtful accounts is as follows. Since the amount of expected credit losses for 12 months is not material, it is included in theamount of the expected credit losses for the entire period.
(Millions of yen)

Balance at beginning of the fiscal year

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)¥ 9,132¥ 9,458

Increase during the fiscal year

4,004

895

Decrease during the fiscal year (Intended use)

(2,350)(1,445)Decrease during the fiscal year (Reversal)

(898)

(367)

Other

567

590

¥10,456¥ 9,132

Balance at end of the fiscal year

The maximum exposure to credit risk of financial assets is the carrying amount after impairment that is presented in the consolidated
financial statements.

37

38

Notes to Consolidated Financial Statements(4) Liquidity risk

(5) Currency risk

The NSHD Group’s trade payables and borrowings, etc., are exposed to liquidity risk. The NSHD Group manages the risk by preparing cash

Receivables and payables denominated in foreign currencies arising from the NSHD Group’s global business development are exposed to the risk ofmanagement plans and secures liquidity by establishing commitment lines with several financial institutions.

exchange rate fluctuations. The NSHD Group hedges trade receivables and payables denominated in foreign currencies, borrowings, and loans byusing forward exchange contracts and currency swaps as necessary.

Balances of financial liabilities (including derivative instruments) by due date are as follows:

The NSHD Group’s net investments in foreign operations are exposed to the risk of exchange rate fluctuations. The NSHD Group hedges the risk
by using borrowings denominated in foreign currencies as necessary.

FYE2023 (March 31, 2023)

Non-derivative financial liabilities
Trade payables
Accounts payable–other
Short-term borrowings
Long-term borrowings
Commercial papers
Bonds
Lease liabilities
Accrued expenses
Other
Derivative liabilities
Forward exchange contracts
Currency swaps
Interest rate swaps
Other(Millions of yen)
Undiscounted
contractual
cash flows

One yearor lessMore than one
year but within
two years

More than two
years but within
three years

More than three
years but withinfour years

More than four
years but within
five years

Currency sensitivity analysis

Carrying
amountMore than
five years

The following is the impact on profit before income taxes on the consolidated statement of profit or loss from the foreign currency financial¥128,197
16,99332,238644,116
26,000197,665
41,762
77,154
1,506¥128,197
16,99332,238646,639
26,000198,000
44,661
77,154
1,506¥128,197
13,07732,23882,301
26,000—11,387
77,154719¥     —
868—
97,455—20,00010,008—3¥     ———
55,280
—
—
6,428
—
1

¥     ———
49,771—40,0005,037—
1¥     —
2,985—
51,731
—
—
3,312
—
1

¥      
—62
—310,099—
138,000
8,487
—
778

125
0
—
269

125
0
—
269

125
0
—
268

—
—
—
0

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

at the end of the fiscal year.
This analysis is calculated by multiplying each exposure of currency risk by 1%. It is assumed that there is no impact of the fluctuation of eachexchange rate on other variables (foreign exchange rates of other currencies, interest rates, etc.).
(Millions of yen)

FYE2023(March 31, 2023)

U.S. dollar (1% appreciation of the yen)Euro (1% appreciation of the yen)

FYE2022(March 31, 2022)

¥(91)

¥(28)

(5)

0

(6) Interest rate risk
The NSHD Group’s interest rate risk arises from interest-bearing liabilities, net of cash equivalents, etc. Borrowings and corporate bonds that are
based on floating interest rates are exposed to interest rate fluctuation risk.
The NSHD Group hedges such risks by using derivative transactions (interest rate swaps) as necessary.
Interest rate sensitivity analysis

FYE2022 (March 31, 2022)(Millions of yen)More than one
year but within
two years

More than two
years but within
three years

More than three
years but withinfour years

More than four
years but within
five years

More than
five years¥115,123
10,13826,632
76,963
7,000
—
8,870
45,895720¥     ———
78,712
—
—
7,697
—
21

¥     ———
90,190—20,0006,130—1¥     ———
47,475
—
—
4,780
—
1

¥     ———
46,429—40,0003,765—1¥      ——
—322,611—138,000
10,019
—
722

50
0
—
—

33
—
—
—

—
—
0
—

—
—
—
—

—
—
—
—

—
—
—
—

Undiscounted
contractual
cash flows

One yearor less¥115,123
10,13826,632659,272
7,000
197,440
38,87245,895
1,469¥115,123
10,13826,632
662,3817,000
198,000
41,26345,895
1,469

83
0
0
—

83
0
0
—

Carrying
amountNon-derivative financial liabilities
Trade payables
Accounts payable–other
Short-term borrowings
Long-term borrowings
Commercial papers
Bonds
Lease liabilities
Accrued expenses
Other
Derivative liabilities
Forward exchange contracts
Currency swaps
Interest rate swaps
Other

instruments held by the NSHD Group at the end of the fiscal year, if the yen appreciates by 1% against the U.S. dollar and euro, respectively,

The following is the impact on profit before income taxes on the consolidated statement of profit or loss if the interest rate rises by 1% for financial
instruments held by the NSHD Group at the end of the fiscal year.
This analysis is intended for financial instruments impacted by fluctuations in interest rates, and it is assumed that other factors, such as theimpact of exchange rate fluctuations, remain constant.
(Millions of yen)

FYE2023(March 31, 2023)

FYE2022(March 31, 2022)¥(2,739)

Profit before income taxes¥(2,806)(7) Risk of market price fluctuations
Securities, etc., held by the NSHD Group are exposed to the risk of market price fluctuations.
The NSHD Group periodically evaluates the fair value and the financial status of issuers (business partners) for securities, etc., and each supervising
department reviews the holding status taking into consideration the relationship with the business partners on an ongoing basis.
(8) Fair value of financial instruments
For fair value hierarchy of financial instruments, Level 1 to Level 3 is categorized as follows:
Level 1: Fair value measured by the unadjusted quoted prices in active markets of identical assets or liabilities
Level 2: Fair value calculated using observable prices directly or indirectly, other than Level 1
Level 3: Fair value calculated by valuation techniques including inputs not based on significant observable market data
Transfers between levels of financial instruments are determined at the end of each reporting period. In FYE2023, certain equity securities werereclassified from Level 3 to Level 2 since the issuer was listed on the TOKYO PRO Market, but no quoted price in an active market could be recognized due to infrequent trading in the market.
In FYE2022, certain equity securities were reclassified from Level 3 to Level 1 since the issuers went public and were listed on a regulated market.

3940

Notes to Consolidated Financial Statements(Millions of yen)

1) Financial instruments measured at fair value on a recurring basis
Financial instruments measured at fair value are as follows:(Millions of yen)

Level 1

Level 2

Level 3

Total

¥ 9,048¥ 8,751

443

7,635

2,028

590

¥24,748

Equity securities and investments in capital
held for sale

¥370

5,070

¥9,668—¥34,787—

Other comprehensive income (Note)
Purchase

(8)

(14)

(1,550)

(243)

(370)

(7,675)

Sale

Assets5,070

Change in scope of consolidation
Reclassification from Level 377

4¥ 9,668¥ 9,048

Other changes
Balance at end of the fiscal year

—

96

—

96

¥29,819¥467¥9,668¥39,955

Note: This is included in “Financial assets measured at fair value through other comprehensive income” in the consolidated statement of comprehensive income.

¥     
—

¥395

¥    
—

¥   395

2) Financial instruments measured at amortized cost¥     
—

¥395

¥    
—

¥   395

The carrying amount and fair value of financial instruments measured at amortized cost are as follows:

Derivative assets
Total

FYE2022(From April 1, 2021
to March 31, 2022)

Balance at beginning of the fiscal year

FYE2023 (March 31, 2023)

Equity securities and investments in capital

FYE2023(From April 1, 2022
to March 31, 2023)

Liabilities
Derivative liabilities
Total

FYE2023 (March 31, 2023)

FYE2022 (March 31, 2022)(Millions of yen)

(Millions of yen)

Level 1

Level 2

Level 3

Total

Carrying amount

AssetsEquity securities and investments in capital
Derivative assets
Total¥35,038¥  —¥9,048¥44,086

—

672

—

672

¥35,038¥672¥9,048¥44,759¥     
—

¥ 84

¥    
—

¥    84¥     
—

¥ 84

¥    
—

¥    84

Liabilities
Derivative liabilities
Total

Fair value
Level 1

Level 2

Level 3

Total

Liabilities
Long-term borrowings¥644,116¥—¥640,253

¥—

Bonds

197,665—

196,706—

196,706¥841,781¥—¥836,959¥—¥836,959

Total¥640,253

FYE2022 (March 31, 2022)(Millions of yen)

Fair value

Carrying amount

Equity securities and investments in capital
The fair value of marketable equity securities categorized as Level 1 is based on unadjusted quoted prices in active markets of identical assets
or liabilities.
The fair value of marketable equity securities categorized as Level 2 is calculated using quoted prices of the same or similar assets or liabilities ininactive markets.
The fair value of unlisted stocks categorized as Level 3, for which quoted prices are not available in active markets, is calculated using the similar
discounts, etc., are considered as necessary.

Level 2

Level 3

Total

Liabilities
Long-term borrowings¥659,272¥—¥662,868

¥—

Bonds

197,440—

198,236—

198,236¥856,712¥—¥861,105¥—¥861,105

Total

company comparison method or other appropriate valuation techniques based on reasonably available inputs. In addition, certain illiquidity

Level 1

¥662,868

For financial instruments measured at amortized cost other than long-term borrowings and bonds, their fair value reasonably approximates the
carrying amount.
Long-term borrowings

Derivative assets and liabilities
The fair value of derivative assets and derivative liabilities categorized as Level 2 is calculated based on observable inputs such as prices provided
by counterparty financial institutions or exchange rates and interest rates.
For financial instruments categorized as Level 3, the evaluator determines the valuation techniques to measure each financial instrument
covered in accordance with valuation policies and procedures including valuation techniques to measure fair value approved by the appropriate
authorized person, and the fair value is calculated. The results are reviewed and approved by the appropriate authorized person.
Changes in financial instruments classified as Level 3 are as follows:

The fair value of long-term borrowings is calculated based on the present value calculated by discounting the total amount of principal and interestby the interest rate assumed when similar borrowings are newly made.
Bonds
The fair value of bonds is calculated based on market price.
(9) Transfer of financial assets
At March 31, 2023 and 2022, for trade receivables transferred without meeting the requirements for derecognition of financial assets, ¥1,381
million and ¥1,032 million were included in “Trade receivables,” respectively, and the amounts received due to the transfer of ¥1,072 million and¥733 million were included in “Bonds and borrowings,” respectively. Of these trade receivables, it is determined that the NSHD Group holds
almost all of the risks and rewards related to ownership of the transferred assets, because it will assume the payment obligations if the issuer ofthe notes or the debtor fails to make payment.

4142Notes to Consolidated Financial Statements(10) Derivative transactions

Amounts related to items designated as hedging instruments are as follows:

1) Derivative transactions for which hedge accounting is applied
FYE2023 (March 31, 2023)

Analysis of contract amounts, etc., of the hedging instruments by due date is as follows:(Millions of yen)

FYE2023 (March 31, 2023)

Contract
amounts, etc.

(Millions of yen)Contract
amounts, etc.

More than one
year but within
two years

One yearor lessMore than two
years but within
three years

More than three
years but withinfour years

More than four
years but within
five years

More than
five years

Cash flow hedges
Price risk
Commodity swaps
Currency risk
Forward exchange contracts
Hedges of net investments
Currency risk
Borrowings denominated inforeign currencies¥ 3,233
2,775

91,075¥2,631
2,775

—

¥601
—

—

¥—
—

—

¥—

¥—

—

—

—

—

Cash flow hedges
Price risk
Commodity swaps
Currency risk

Carrying amount
AssetsLiabilities¥ 3,233¥—¥   269

Other financial liabilities¥  (899)

2,775

5

122

Other financial assets
Other financial liabilities(46)

91,075—91,075

Bonds and borrowings(5,637)¥    ——

Forward exchange contracts
Hedges of net investments
Currency risk
Borrowings denominated inforeign currencies

Changes in fair value
Items on the consolidated
used to calculatestatement of financial position
ineffective portion ofhedges for the fiscal year

91,075FYE2022 (March 31, 2022)(Millions of yen)

FYE2022 (March 31, 2022)(Millions of yen)Contract
amounts, etc.

Cash flow hedges
Price risk
Commodity swaps
Currency risk
Forward exchange contracts
Hedges of net investments
Currency risk
Borrowings denominated inforeign currencies

One yearor lessMore than one
year but within
two years

More than two
years but within
three years

More than three
years but withinfour years

More than four
years but within
five years

More than
five years¥ 1,705¥1,705

¥ —

¥—

¥—

¥—

¥     —

2,125

1,389

736

—

—

—

—

85,437

—

—

—

—

—

85,437

Cash flow hedges
Price risk
Commodity swaps
Currency risk
Forward exchange contracts
Hedges of net investments
Currency risk
Borrowings denominated inforeign currencies

Liabilities¥ 1,705¥630¥    —

Other financial assets¥   397

2,125

9

81

Other financial assets
Other financial liabilities

23

85,437—85,437

Bonds and borrowings(4,312)(Millions of yen)

FYE2022(March 31, 2022)

FYE2023(March 31, 2023)

Cash flow hedges
Currency risk
Forward exchange contracts
U.S. dollar¥112.99–¥125.12¥110.25–¥120.56

Euro¥142.12–¥145.13¥133.03–¥133.03

43

AssetsChanges in fair value
Items on the consolidated
used to calculatestatement of financial position
ineffective portion ofhedges for the fiscal year

Amounts related to items designated as hedged items are as follows:

Major forward rates of foreign exchange contracts and major interest rates of interest rate swaps are as follows:
FYE2023(March 31, 2023)

Contract
amounts, etc.

Carrying amount

Cash flow hedges
Price risk
Planned purchase
Currency risk
Planned purchase
Hedges of net investments
Currency risk
Effect of exchange ratechanges on net investments

FYE2022(March 31, 2022)

Changes in fairvalue used to
calculate ineffective
portion of hedges
for the fiscal year

Cash flow hedge
reserves

Foreign currencytranslation
reserve

Changes in fairvalue used to
calculate ineffective
portion of hedges
for the fiscal year

Cash flow hedge
reserves

Foreign currencytranslation
reserve¥   899¥(180)¥    —¥ (397)¥434¥    —

46

(103)

—

(23)

(65)

—

5,637

—

(15,418)

4,312—(9,781)44

Notes to Consolidated Financial Statements

Details of cash flow hedges are as follows:

35.

FYE2023 (From April 1, 2022 to March 31, 2023)(Millions of yen)

Changes in fair value
Items on theof hedging
consolidated
Ineffective portion of
instruments
statement of profit orhedges recognized inrecognized in otherloss that include
profit or loss
comprehensive
ineffective portion ofincomegain or loss on hedges

Cash flow hedges
Price risk
Commodity swaps
Currency risk
Forward exchange contracts
Hedges of net investments
Currency risk
Borrowings denominated in   foreign currencies

Reclassification
adjustments fromcash flow hedge
reserves to profit
or loss

Items on the
consolidated
statement of profit orloss that include gainor loss due toreclassification
adjustments¥(899)¥——¥(742)

Finance costs

(46)

—

—

(58)

Finance costs

Related Parties

Remuneration for major executives
Remuneration for the NSHD Group’s major executives is as follows:(Millions of yen)

FYE2023(From April 1, 2022
to March 31, 2023)

FYE2022(From April 1, 2021
to March 31, 2022)

Remuneration and bonuses

¥310

¥337

Total

¥310

¥337

36.

Commitments

Commitments on acquisition of property, plant and equipment and intangible assets are as follows:(Millions of yen)

(5,637)———FYE2023(March 31, 2023)—¥29,938

Acquisition of property, plant and equipment and intangible assets

FYE2022(March 31, 2022)¥3,049FYE2022 (From April 1, 2021 to March 31, 2022)(Millions of yen)

Changes in fair value
Items on theof hedging
consolidated
Ineffective portion of
instruments
statement of profit orhedges recognized inrecognized in otherloss that include
profit or loss
comprehensive
ineffective portion ofincomegain or loss on hedges

Cash flow hedges
Price risk
Commodity swaps
Currency risk
Forward exchange contracts
Hedges of net investments
Currency risk
Borrowings denominated in   foreign currencies

Reclassification
adjustments fromcash flow hedge
reserves to profit
or loss

Items on the
consolidated
statement of profit orloss that include gainor loss due toreclassification
adjustments

37.

Contingent Liabilities

Guaranteed obligations
Guarantees and quasi-guarantees for borrowings from financial institutions are as follows:(Millions of yen)

FYE2023(March 31, 2023)¥   397

¥—

23

—

—
—

¥(124)
7

Finance costs
Finance costs

FYE2022(March 31, 2022)¥   41¥   68

Associates

744

180

Other (Note)

717

788

¥1,502¥1,037

Joint ventures

Total
Note: Other mainly consists of guarantees for employees’ bank loans based on the employees’ house ownership support system.

(4,312)

—

—

—

—

38.

2) Derivative transactions for which hedge accounting is not applied

Subsequent Events

Not applicable.

Amounts related to items not designated as hedging instruments are as follows:(Millions of yen)

FYE2023(March 31, 2023)
Contract amount, etc.

Forward exchange
contracts
Interest rate swaps
Currency swaps

34.

¥986
853
435

More than one year

FYE2022(March 31, 2022)
Fair value

¥ —
853
197

¥ (2)
35
54

Contract amount, etc.

¥   668
1,014
284

Subsidiaries

For FYE2023 or FYE2022, there were no subsidiaries with individually significant non-controlling interests.

More than one year

¥   —
1,014
272

Fair value

¥ 4
0
24

Quarterly information for FYE2023 (From April 1, 2022 to March 31, 2023)(Cumulative period)First half of
FYE2023First three quarters of
FYE2023

FYE2023¥276,006¥573,699¥873,042¥1,186,683

Profit before income taxes (Millions of yen)

25,54049,64174,757

105,503

Profit attributable to owners of parent (Millions of yen)

17,28535,14952,40073,080

Basic earnings per share (Yen)

39.95

81.22

121.07168.85

Revenue (Millions of yen)

(Quarterly period)

Basic earnings per share (Yen)45

First quarter of
FYE2023First quarter¥39.95

46

Second quarter¥41.27

Third quarter¥39.85

Fourth quarter¥47.77

Independent Auditor’s Report

English Translation
Independent Auditor’s Report
June 20, 2023

Valuation of goodwill recorded at Nippon Gases Euro-Holding S.L.U.
The Board of Directors
Nippon Sanso Holdings Corporation

Description of Key Audit Matter
Ernst & Young ShinNihon LLC
Tokyo, Japan
Takao Maruyama
Designated Engagement Partner
Certified Public Accountant
Tetsuya Kawawaki
Designated Engagement Partner
Certified Public Accountant

OpinionWe have audited the accompanying consolidated financial statements of Nippon Sanso Holdings
Corporation (the Company) and its subsidiaries (collectively, the Group), which comprise theconsolidated statement of financial position as at March 31, 2023, and the consolidated statements
of profit or loss, comprehensive income, changes in equity, and cash flows for the year then ended,and notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2023, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with International Financial Reporting Standards (IFRSs).
Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.

47

Auditor’s Response

The Company recorded goodwill andintangible assets with indefinite useful livesof ¥514,905 million in its consolidated
statement of financial position as of March
31, 2023, including goodwill attributable to
Nippon Gases Euro-Holding S.L.U., aconsolidated subsidiary in Europe, in theamount of ¥352,647 million, accounting
for approximately 16.3% of the Company’s
total assets. The assumptions used in
impairment tests of goodwill are disclosed in
Note 11 to the consolidated financial
statements.
In the impairment test, the Company
measures the recoverable amount of the
cash-generating unit including goodwill
based on value in use. The value in use ismeasured using discounted future cash
flows. The future cash flows are based on thefive-year projections reflecting the businessplan approved by management. The cash
flows after the fifth year are estimated using
a long-term growth rate (the “LTGR”)
incorporating future uncertainties. The
Company uses the pre-tax discount rate thatreflects current market assessments of thetime value of money and risks specific to theasset.
The significant assumptions in estimating
the value in use are the growth rate used for
future cash flows for the five-year period, the
LTGR and the discount rate.
The process of measuring value in use for the
impairment test of goodwill is complex andthe estimation of the growth rate used for
future cash flows for the five-year period, the
LTGR and the discount rate, which could
significantly affect its measurement, involve
uncertainty due to changes in future
economic
conditions
whilstthedetermination of these assumptions requires
management’s judgment.

We involved the component auditor andperformed the following procedures to assess
impairment test of goodwill, among others:-Valuation methodology
・ With the involvement of valuation specialistsof our network firm, we assessed theconsistency of the valuation methodology
with valuation methodologies that are
generally accepted in practice and that areused in similar circumstances.
- The future cash flows based on the five-year
projections
・ We assessed the future cash flows for the
five-year period by evaluating consistency
with the business plan approved bymanagement.
・ With the involvement of valuation
specialists of our network firm, we
compared the growth rate for the five-year
period with the analysts’ estimates of peergroup.
・ In order to evaluate the effectiveness ofmanagement’s projection process, we
compared the actual results with theestimated future cash flows the Company
used in its impairment test of goodwill inprior year.
- LTGR after the fifth year and discount rate
・ With the involvement of valuation
specialists of our network firm, we
independently calculated the LTGR and thediscount rate and compared the results of
our own calculations with those ofmanagement.
・ With the involvement of valuation
specialists of our network firm, we
performed sensitivity analyses for the
LTGR and the discount rate and verified
that the value in use wouldn’t be less thanits carrying value even when taking certain
Further, as the audit of the goodwill
risks into account.
impairment test requires that we apply
professional judgment, we determined it to
be a key audit matter.

48

Independent Auditor’s Report

Other Information
The other information comprises the information included in the annual report (Yukashoken
Hokokusho) that contains audited consolidated financial statements but does not include theconsolidated financial statements and our auditor’s report thereon. Management is responsible forpreparation and disclosure of the other information. The Corporate Auditor and the Audit &Supervisory Board are responsible for overseeing the Group’s reporting process of the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to readthe other information and, in doing so, consider whether the other information is materiallyinconsistent with the consolidated financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management, the Corporate Auditor and the Audit & Supervisory
Board for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with IFRSs, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by IFRSs, mattersrelated to going concern.
The Corporate Auditor and the Audit & Supervisory Board are responsible for overseeing theGroup’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered 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 an 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,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

49

・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’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 ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report 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 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 inaccordance with IFRSs.
・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Audit & Supervisory Board regarding,among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Audit & Supervisory Board with a statement that
we have complied with the ethical requirements regarding independence that are relevant to our
audit of the consolidated financial statements in Japan, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
From the matters communicated with the Corporate Auditor and the Audit & Supervisory Board,
we determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these mattersin our auditor’s report unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, we determine that a matter should not be communicatedin our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

50