Sustained Growththrough Value
Creation
INTEGRATED REPORT2019

The Kanematsu Group’s Value Creation Process

The Kanematsu Group is utilizing its capital in its corporate
to society and increase its enterprise value as it works to

Corporate Principle“Let us sow and nurture the seeds of global prosperity”“Sow a seed now,” and take action to beneﬁt people around the globe, bade our founder, Fusajiro Kanematsu,
setting a standard of public duty that we at Kanematsu continue to uphold through a commitment to ethicalbusiness principles and corporate responsibility.
The beliefs and philosophies that inspired Fusajiro Kanematsu in the late nineteenth century Meiji period,a time when Japan was striving to build a national economy, remain the core of our efforts to contribute tosociety, humanity, and the environment, 130 years later.

Five Key Issues

A
Responding to changes inmarket characteristics andlocation and changes incustomer needs

B
Mutual development withlocal communities

The Kanematsu Group’s Capital

Organizational
CapitalHuman andIntellectual
CapitalC
Consideration of the global
environment

DEnhancing governance

Financial
CapitalSocial and
Relationship
Capital• Five divisions, organized by business ﬁeld, each withspeciﬁc expertise• Organizational functions that support businessactivities from specialized perspectives• Locations around the world• Highly specialized Group companies• Wide range of business ﬁelds• Expertise and technical capabilities regarding
industries and products• Accumulated know-how• Global professionals/Diverse professionals• Business creation and proposal abilities• Sound ﬁnancial position (Net D/E ratio of less than 1.0)
• Stable earnings base
• Average annual cash ﬂows of approximately ¥20 billion• High quality and quantity of business partners• Contribution to local communities• Trust built over a period of 130 years

E
Promoting respect for humanrights, human resource
development, and diversity

NaturalCapital• Biodiversity (animals, plants, fungi, etc.)• Sunlight, air, forests, and soil
• Geothermal, wind, and other forms of renewable energy

Contents
Kanematsu’s Progress and Strengths

activities to provide new value
address its ﬁve key issues.

Kanematsu’s Progress and Strengths
1 The Kanematsu Group’s Value Creation Process
2 Kanematsu’s History
4 Message from the President

Special Features
14 Special Feature
Growth Strategy by Business under the
future 135 Medium-Term Vision

Our Beliefs: Kanematsu’s Guiding Principles

20 Message from the CFO
Aiming to Increase Shareholder Value
Special Features

1. Reﬂecting the pioneering spirit of our predecessors, we believe that fairness and justice
should guide our business dealings and the wise use of creative imagination andingenuity will bring prosperity
2. Our purpose as a Company is not only to build a sound and ﬂourishing business, but tofulﬁll our responsibilities as a corporate citizen, contributing to society and the security
and well-being of all.
3. As members of a corporation, we act not as individuals but as representatives of thatorganization and as such we are bound by Company rules and attendant loyalties andmust work together with a spirit of cooperation while cultivating mutual understanding
and respect for fellow members.

Review of Operations
22 Review of Operations
24 Electronics & Devices
26 Foods & Grain
28 Steel, Materials & Plant
30 Motor Vehicles & Aerospace

Sustainability
32 Sustainability
42 Corporate GovernanceBusinesses in the areas
where we have strength and expertiseElectronics&
DevicesCustomers
and business
partners

47 Corporate Officers

Financial Section and Company
Information
48 Financial and ESG Highlights
50 Management’s Discussion and Analysis

Foods & Grain

Motor Vehicles&
Aerospace

46 Messages from the Outside Directors

52 Business Risks
Shareholders
andinvestors

54 Consolidated Financial Statements
60 Notes to Consolidated Financial Statements
117 Independent Auditor’s Report
118 Network / Organization Chart

Sustainability

Steel, Materials&
Plant

Where We
Provide Value

Review of Operations

What We Do

119 Major Group Companies
120 Network
Employees

122 Corporate ProﬁleBolstering the management base
• Strengthen governance• Increase sophistication of investment
risk management• Develop global professionals

Local
communities• Environmental management system• Social contribution activities

The global
environment

Financial Section and Company Information

Contributing to local communities andthe environment

Editorial Policy
The content of the Kanematsu Group annual
reports is based on an integrated reporting
approach with reference to the International
Integrated Reporting Council’s International
Integrated Reporting Framework, the G4
Sustainability Reporting Guidelines, a set ofinternational standards created by the Global
Reporting Initiative, and ISO 26000. We hopethat the report will help readers deepen theirunderstanding of the Kanematsu Group.
Forward-Looking Statements
This annual report contains statements regarding the Kanematsu Group's plans, strategies,
and expectations for future performance. Suchstatements are inherently subject to risk anduncertainty. Actual results could diverge materially from the Group's projections due to changes
in the economic and market environment surrounding the Group's business areas, such as
exchange rate ﬂuctuation.

KANEMATSU Integrated Report 20191

Kanematsu’s History
Since its founding, contribution to the public good has
been the basis of Kanematsu’s corporate activities. Inline with this stance, Kanematsu has innovated andevolved with the times, continually creating and providing value unique to Kanematsu.
Going forward, we will continue to leverage thestrengths and experience built up over our long history to advance cooperation and mutual developmentwith our customers and business partners and contribute to solving social issues.

1989

2005

100th anniversary of theCompany’s founding

Acquired a majority stake in
Shintoa Corp. (100% stakeacquired in 2010)

1990
Company name changed toKanematsu Corporation

1991
1889

1967

Fusajiro Kanematsu Shoten of Australian
Trading founded by Fusajiro Kanematsuin KobeMerged with the Gosho Company
to form Kanematsu-Gosho, Ltd.

1890
Branch opened in Sydney
Direct importing of Australian wool began

1918
Company name changed to Kanematsu
Shoten Company

1936

1968
Kanematsu Denshi Service Ltd.
established (now Kanematsu
Electronics Ltd.)1973
Listed on the ﬁrst section of theTokyo Stock Exchange

Branches opened in New York and Seattle

1974

1943

Kanematsu Computer Systems
Ltd. established (now Kanematsu
Communications Ltd.)

Company name changed to Kanematsu
Corporation

Kanematsu Electronics Ltd. listed on theﬁrst section of the Tokyo Stock Exchange

1993
Kanematsu Computer Systems Ltd.
(now Kanematsu Communications Ltd.)
began mobile phone sales

1999
Implemented large-scale businessselection and concentration

Net sales* Figures for ﬁscal 2017 onward are IFRS-basis
proﬁt before tax.

1951
Overseas affiliate established in New York, theﬁrst overseas office established by a Japanesetrading company after World War II

2000

1889 –1950s
Guided by Kanematsu’s founder,a pioneer in trade between Japanand Australia, Kanematsu weathered ﬁnancial panics and built asolid foundation. Eventually, theCompany expanded to the UnitedStates and other countries.

2001

2002

2003

2004

2005

2006

1960s–1980s

1990s –2000s

Kanematsu grows larger,
diversifying functions as a
trading company andexpanding geographically.

Following the expansion and collapse of Japan’s economic
bubble and the Asian Financial Crisis, Kanematsu carried out
decisive business selection and concentration aimed at reinforcing its management framework. The Company also
worked to improve and strengthen its ﬁnancial base.

In step with Japan’s rapid economic
growth, Kanematsu proactively developed
third-county trading as well as importingand exporting between companies inJapan and overseas. At the same time, theGroup promoted infrastructure development in developing countries.

Responding to the rapid uptake of IT throughout society,
Kanematsu advanced business development in line with theneeds of the information age, entering the mobile businessand reinforcing information and communication technology(ICT) functions.

Solving Social Problems
Kanematsu expanded its international trading beyond
Australia, opening overseas
branches and building a foundation for the development oftrade with Japan.

2

KANEMATSU Integrated Report 2019

2012
Acquired North American oilﬁeld tubing company Benoit
Machine LLC

2013
Paid ﬁrst dividends in 15 years

Kanematsu’s Progress and Strengths

2019

2014

130th anniversary of theCompany’s founding

Acquired a majority stake in
Kanematsu-NNK Corp. (nowKanematsu Sustech Corporation)

2016
Carried out an absorption-type merger
with Diamondtelecom, Inc., aimed at
expanding the mobile businessSpecial Features

April 2018 – March 2024

Medium-Term Vision“VISION-130”

Medium-Term Vision

Review of Operations

April 2014 – March 2018

– future 135 –Sustainability

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2010 –

Financial Section and Company Information

Kanematsu has enhanced its management base through business selection and concentration.
Implementing M&A in highly specialized ﬁelds and business expansion, we are shifting toan aggressive management stance.

Kanematsu focused on developing products and services that take into account sustainability insuch areas as food resources and the environment. The Group worked to create new, high-valueadded business models, with an eye to responding to such technological innovation as AI and IoT.

KANEMATSU Integrated Report 20193

Message from the President

1 Kanematsu’s Social Mission
This year marks the 130th anniversary of theKanematsu Group’s founding in 1889. In linewith the entrepreneurial spirit that ﬂows
through the core of our business activities,
which span three centuries, we believe thattaking a broad view of international society
and ambitiously working to solve social problems through our businesses is our mission.
Kanematsu has long played an important rolein society by creating businesses that provide
new added value, contributing to the

4

KANEMATSU Integrated Report 2019

development of the Japanese and global
economies.
Today, in agreement with the principlesof the United Nations’ Sustainable
Development Goals (SDGs), we are encouraging development in areas rooted in social
issues and problem solving within ﬁelds
unique to Kanematsu, where other trading
companies do not operate. At the selection
stage of each project, including the formulation of the of the medium-term vision, weKanematsu’s Progress and Strengths

Kanematsu is pushing ahead with future 135, its medium-term vision for the six
years beginning ﬁscal 2019. Under future 135, we have established the priority
initiatives of sustainable growth in fundamental businesses and the expansionof the revenue base through business investment, response to technical

Special Features

innovation, and establishment of management infrastructure for achieving
sustainable growth. Leveraging our stable earnings structure and ﬁnancial
structure, we are advancing into the next stage of growth, with the aspiration of
being a unique general trading company.
President

Review of Operations

Kaoru Tanigawa

Sustainability(TCFD), more comprehensively examine
climate-related risks and opportunities, andfactor such considerations into our businesses
going forward.
Top management must take the lead in
making clear their company’s role in society,mission, and growth trajectory so that eachand every employee can understand their own
social mission and social impact, and always
act accordingly. To this end, we are proactively
working to share timely information and messages from management through such means
as an internal Group website established in
October 2018 that is accessible from overseas
Group locations and Group companies.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

explore the project’s relevance to the SDGs. As
a result of this approach, over the past year, I
have noticed a rise in responsiveness to SDGrelated topics both within the Company andamong our suppliers and business partners. As
a trading company, Kanematsu controls entire
supply chains and coordinates operations
across countries, regions, cultures, and levelsof economic development. Accordingly, I thinkthat communicating the importance of theSDGs from our positions at key nodes of business is extremely important. In addition, I thinkthat we need to deepen our understanding of
the role of the Financial Stability Board’s Task
Force on Climate-related Financial Disclosures5

2 Where Kanematsu Stands and the Challenges Ahead
Under future 135, Kanematsu’s medium-term
vision launched in ﬁscal 2019, we are taking along-term perspective to ensure that
Kanematsu continues to grow in the future.
Kanematsu’s business model is rooted in
trading, the very foundation of a trading company. Kanematsu is a unique presence; while
we do not invest in such volatile markets as
natural resources, our business activities
extend over a broad range of ﬁelds, and weengage in professionalized businesses basedon sophisticated expertise in areas of strength.
We are aiming for further scale expansion inthese ﬁelds while focusing on securing greater
added value in areas of strength. By doing so, I
hope that the Kanematsu Group will be seen
as leader in numerous areas of expertise.
Furthermore, we are carefully reading market
trends as we focus efforts on developing businesses centered on AI, IoT, and otheradvanced technologies.
Turning to the challenges ahead, the longprocess of rebuilding our management basehas taken the edge off the speed ofKanematsu’s business creation. This is an issue
we have been facing for some time. Quick
management decision making requires humanresources with the know-how to maintain acomprehensive view of all operations, evenwhen dealing with individual processes. We
see the reinforcement of management personnel development as the most importantmeasure we can take to resolve the businesschallenges we face. Accordingly, during the six

6

KANEMATSU Integrated Report 2019years of the medium-term vision, we will strive
to raise the level of management expertiseand rebuild the Company as a dynamic organization to speed up business creation.
Speciﬁcally, in July 2019, we reinforced
and systematized our existing human resource
training systems, creating a training systemcalled Kanematsu University to guide andteach employees over their ﬁrst ten years with
the Company. We are also conducting management education not only for current executives, but at varying scales in accordance witheach individual’s capabilities, regardless ofgender or age. Winning the trust of our business partners, so that they are conﬁdent letting Kanematsu handle their business
management, is a guidepost in determining
the ideal as a trading company that we should
aim for going forward. As president, I takepride in the high quality of the KanematsuGroup’s employees. By further reinforcing ourhuman resource development, I feel that wewill secure the people who will drive theCompany toward our vision for the future. I
therefore have tremendous expectations forthe future of the Kanematsu Group. By taking
a long-term approach to human resource
development, spanning 20, or even 30 years, I
hope, as a member of the Group’s leadership,
to foster a sense of unity and trust within the
Company.

Kanematsu’s Progress and Strengths

which beneﬁted from continued synergy fromthe merger of two mobile phone sales subsidiaries, the feedstuff business, which beneﬁtted
from stable mixed feedstuff prices, and theaerospace business, which saw favorable sales
to Japanese government agencies and overseas
aircraft part transactions. As a result, both revenues and sales rose year on year, and proﬁt
before tax reached a new record high.
Furthermore, reﬂecting the recording ofretained earnings, the equity ratio* increased
to 22.8%, and the net D/E ratio came to 0.4.
However, these results are merely a pointon the way to the long-term growth we aimfor. By focusing on how the Kanematsu Groupcan grow and contribute to society as society
continues to evolve, we aim to reach evengreater heights.

Review of Operations

In ﬁscal 2019, the year ended March 31, 2019,
gradual economic growth continued in andoutside Japan, despite concerns about modulations in global ﬁnancial markets and increasingly serious trade frictions. Within the
Kanematsu Group, the energy business, which
was affected by falling crude oil prices, themotor vehicles and parts business, which saw
reduced shipments to the Middle East due to
U.S. economic sanctions, and the semiconductor parts and equipment business, which was
impacted by U.S.-China trade frictions, eachrecorded year-on-year declines in revenue andproﬁt. However, several other businesses
achieved increased revenue and proﬁt, driving
the Group’s overall performance. These included
the ICT solutions business, which enjoyed robust
IT investment demand, the mobile business,

Special Features

3 Fiscal 2019 Performance

Sustainability

Change of Operating Proﬁt in Main Segments(¥ billion)

Electronics & Devices

Foods & Grain

Steel, Materials & Plant

Motor Vehicles & Aerospace

35.0
30.0
25.0
20.0

18.5
18.5
17.6

15.0
10.0

4.0

4.0
5.0

1.4
3.4

0

2.5
2.8

2.1
3.9

5.5

4.4

3.0

2.2

2.5

2.5

2.5

FY2016FY2017FY2018FY2019FY2020(Forecast)

VISION-130

Financial Section and Company Information

10.7

14.3

future 135

Note The Other segment is not included.

KANEMATSU Integrated Report 20197

Medium-Term
VisionQuantitative
Targets

April 2018 – March 2024

Consolidated proﬁt for FY2024(Proﬁt for the year attributable to owners of the parents)

ROE
Total return ratio
Essentials¥25 billion
13% – 15%25% – 30%

By further enhancing our strong business and achieving sustainable growth in the business segments ofour stable revenue base, pursue the expansion of scale and the acquisition of added value with aneffective investment in our business.
Target a consolidated proﬁt for FY2024 of ¥25 billion.
Based on a stable earnings structure/ﬁnancial structure, the dividend payout ratio (total return ratio) is
set at 25%–30%, promoting management with the emphasis placed on capital efficiency.
The new Medium-Term Vision is for the six years from the ﬁscal year ending March 2019 to the ﬁscal year
ending March 2024.
(Three years after the initiation of the Medium-Term Vision, the direction will be reconﬁrmed, including
the progress of business investment.)

Image ofgrowthAdded
value
Function

Stable earnings
base

Investment ininnovation(seeds)Expansion ofscale

Customer • Market • SharePriority
Initiatives

Sustainable growth in fundamental businesses and the expansion of the revenue basethrough business investment• Achieve sustainable growth by maintaining a stable revenue structure• Carry out business investment while achieving a balance between capital and risk assets based on a stableﬁnancial structure• Promote business investment in areas of strength through two strategies focused on “revenue base expansion”
and “value added”

Response to technical innovation• Promote and expand new businesses with advanced technology (IoT, AI, etc.) (“innovation investment”)

Establishment of management infrastructure for achieving sustainable growth• Build a framework for global strategy• Cultivate management-level human resources• Improve employee satisfaction (ES)8KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths
Sustainability

III. Third is “Establishment of management
infrastructure for achieving sustainablegrowth.” We recognize that people are thefoundation of all we do, and, accordingly, there
are many things we must work on. First, weurgently need to cultivate management personnel. To this end, we are creating new training programs and enhancing other educational
measures aimed at raising the quality of ouremployees. At the same time, we are implementing measures to raise employee satisfaction as well as work style reforms. Each

KANEMATSU Integrated Report 2019

Financial Section and Company Information

I. The ﬁrst priority initiative under future 135 is“Sustainable growth in fundamental businesses
and the expansion of the revenue base throughbusiness investments.” Our existing businesses
will remain the foundation of the KanematsuGroup’s revenue, and we will continue working
toward sustained, steady growth in these businesses. The feedstuff business, which plays animportant part in food supply in Japan, is agood example. Going forward, as technologies
evolve and needs change, some businesses will
fade away, while other, new businesses
emerge; in such an environment, I think thatimagination and ingenuity will be particularly
crucial to expansion in existing businesses.
Technological innovation may bring more
opportunities for investment in efficiencies andother areas. To make sure we do not drop theball, we will advance collaboration between
businesses and expand our revenue basethrough appropriate investment and M&A inareas where we have deep insight. The timespan of the new vision, six years, is rather long.
Each business must therefore set goals, such as,
for example, doubling revenue in existingﬁelds, and consider what is necessary to meetthose goals as we move forward.

II. Second, “Response to technical innovation,”as exempliﬁed by such technologies as IoT andAI, will be indispensable as we build theKanematsu Group’s future. Across all businessﬁelds, the application and integration of IoT
and other new technologies are advancing, creating needs for structural innovation. In thisenvironment, the Electronics & Devices Division
is focusing on offering high-value-added business models using new technologies.
Going forward, trading companies will need tocreate added value that transcends individual
business areas. We will promote the coordination of businesses that possess cutting-edge
technologies with other businesses and ourpartners, further reinforcing business creation
through broad-reaching collaboration acrossbusiness areas. From ﬁscal 2019, we have created the position of Chief Officer ofTechnologies and Business Collaboration, andwe are working to accelerate the creation of
new businesses and develop them into pillars
of growth by harnessing technological innovation. By building new businesses in step withchanges in society, the Kanematsu Group aims
to fulﬁll its mission.

Review of Operations

While maintaining and strengthening thesound ﬁnancial base we have established, we
will focus on more deeply developing our areasof strength and work to build businesses using
innovative new technologies. Our targets forﬁscal 2024, the ﬁnal year of future 135, are consolidated net income of ¥25 billion, ROE of
13%–15%, and a total return ratio of 25%–30%. Implementing the vision’s three priority
initiatives, we are moving forward on the past
to growth.

Special Features

4 Priority Initiatives under future 135

9individual has different values, so it is extremely
difficult to create something that everyone willbe 100% satisﬁed with. It is important, however, that we create frameworks in which employees can ﬁnd meaning in their work and enjoy
the use of their imagination and ingenuity andthen operate such frameworks while enhancing communication. Furthermore, as we work
toward global business expansion, we areaiming to increase the number of specialized
operating companies in key overseas markets.
To this end, we are working to enhance ourinternal systems. We plan to complete these
initiatives during the ﬁrst half of the mediumterm vision. In addition, we will implement systems to quantitatively assess our management
situation and related risks.

5 Progress in the First Year of the future 135 Medium-Term Vision
Looking back at the ﬁrst year of future 135, I am
conﬁdent that we have made steady, if gradual,
progress on such fronts as replacing portfolio
assets, advanced technology initiatives, and promoting consolidated management.
At the same time, I feel that growth was alittle slow. Business creation and expansion are
possible only if a business opportunity is identiﬁed, researched, and assessed to determine its
future potential. I have felt that we need to further accelerate this process leading up to businessdevelopment. The most important factors in making accurate judgments are the amount of ﬁrsthand information obtained and the discernment
to interpret it, and fostering such discernment
entails equipping human resources with management knowledge. Therefore, human resource
development is a pressing and essential task.
Looking at progress by segment, in theElectronics & Devices segment, which boasts a
stable earnings base, the market for the ICT solutions business of Kanematsu Electronics Ltd. is in
the midst of rapid technological innovation,
which we believe will present further business
opportunities going forward. Over the past 30
years, reﬂecting the tide of innovation from analog to digital technologies, the segment has
steadily grown stronger and larger, becoming

10

KANEMATSU Integrated Report 2019

one of the Group’s mainstay divisions. Today, theconcept of digital transformation is causing a
new wave of digitization in corporate operations. By seizing on the opportunities presented
by this shift, we expect the Electronics & Devices
segment to develop and evolve immensely
going forward.
The Foods & Grain segment maintains
strong competitive advantages. However, theimportance of developing new technologies
and products is increasing, particularly in theareas of raw ingredients, processed foods, andcooked foods. As such, I think that we need todevelop businesses in these areas even moreaggressively.
In the Steel, Materials & Plant segment, we
continue to aim for scale expansion centered on
business investment and M&A in the areas ofsteel, chemicals and machinery and working tobring highly specialized human resources into
the Group.
In the Motor Vehicles & Aerospace segment, our strength is in our proposal- and problem solving-based business model that leverages
abundant information resources. Businessexpansion in next-generation automobile markets as well as efforts in the space business areprogressing smoothly.

Kanematsu’s Progress and Strengths
Special Features
Review of Operations

investment. We will realize cross-division collaboration focused on advanced technologies,
such as AI and IoT, to create new businesses.
In light of the importance of advanced
technologies and business collaboration, in
November 2018, we established theTechnologies and Business Collaboration Teamto coordinate across all segments andassigned an executive officer to manage it. By
fostering collaboration within the Group andwith overseas businesses, this team will accelerate new business creation. Going forward,
we will intensify our response to technicalinnovation and advance investment in business creation and innovation in pursuit of the
expansion of scale and acquisition of added
value based on effective business investment.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

Expansion of scale, acquisition of added value,
and investment in innovation (seeds) are theaxes of growth strategy under future 135. The
ﬁrst, expansion of the scale, is aimed at growing our customer base, markets, and market
share. In addition to investing in theElectronics & Devices segment, which encompasses numerous business areas where we arehighly competitive, I think that the machineryand chemicals businesses in the Steel,Materials & Plant segment need a boost. The
main areas for the acquisition of added value
include feedstuff, foods, and steel, where wewill add new functions to existing businesses.
Looking at investment in innovation aimed atsowing the seeds of the future, we will needto take a new approach to business

Sustainability

6 Growth Strategy by Business under future 135

117 Investment in Growth under future 135
In ﬁscal 2019, we made new investments
totaling approximately ¥8 billion in areas
where we have strength and insight. In theElectronics and Devices segment, we madeG-Printec, Inc., a domestic card printer company, a wholly owned subsidiary. G-Printec has
already contributed to division results. In theMotor Vehicles & Aerospace segment, weinvested in Cyber Innovation Partners II, a U.S.
cyber security fund. Through this fund, which
is set up by AllegisCyber Capital, a U.S. venture
capital ﬁrm, we aim to uncover advanced
technologies in the cyber security ﬁeld, whichis expected to see continued growth, and tocontribute funds toward the growth of suchtechnologies. Furthermore, by purchasingused aircraft, we built up the assets of the aircraft part business. In addition, we made anequity-method investment in a South Korean
steel sheet and plate processer and established a company for the primary processing
and sale of meat products in China.
In terms of investment projects, weformed a business tie-up with WERUINVESTMENT Co. Ltd., a venture capital entitythat originated at a major Japanese university.
By linking Kanematsu’s business base with

12

KANEMATSU Integrated Report 2019

WERU INVESTMENT’s venture capital investment platform, we aim to reinforce our framework for ﬁnding and nurturing start-ups inand outside Japan that have promisingadvanced technologies or business models.
Going forward, innovation through long-term
R&D in such areas as space, AI, neurotechnology, synthetic biology, and quantum technology is expected to prompt the creation of new
industries and revolutionize existing ones,
driving sustained economic growth. We are
therefore looking to focus efforts on developing such areas. Over the remainder of future
135, we plan to invest approximately ¥60 billion to ¥100 billion in such projects along theaxes of expansion of scale, acquisition ofadded value, and innovation in each segment.
We are currently considering speciﬁc pipeline
projects in and outside Japan.
While we aim for ongoing growth, every
investment will be carefully scrutinized toensure that none becomes a burden down theline. To this end, we will rigorously apply ourstandards to investment decisions while proactively selecting our ﬁelds of specializationand honing our precision.

Kanematsu’s Progress and Strengths

a shortage in management personnel as a matterof urgent concern, and we are working to strategically develop human resources. Respect fordiversity is deeply embedded in the bedrock of
the Kanematsu Group. I think that the Group
has the necessary resources and conditions,
including the aforementioned respect for diversity, to develop the diverse human resources it
needs. In addition, we are now even moreaggressively advancing work style reform initiatives. We believe that employee-friendly workplaces increase motivation, ultimately helping
improve revenue. Convincing others of the true
beneﬁt of such efforts and promoting theirthorough adoption is one of the duties of top
management, and we are working assiduously
to do so.

Review of Operations

In ﬁscal 2019, Kanematsu made major changes
to its corporate governance and management
framework. Speciﬁcally, we reduced the number of directors to improve ﬂexibility and efficiency, took steps to better separate
management oversight from business execution, and appointed a female outside director,
helping to promote diversity. We also raised thenumber of overseas executive officers with aneye to expanding overseas businesses.
Furthermore, in ﬁscal 2019, we introduced aperformance-linked stock incentive plan for
directors. By more closely linking director compensation with corporate performance andstock price, this system helps increase directors’
awareness of shareholder and investor value.
As I touched on earlier, we see preventing

Special Features

8 Our Management Baseconsistently fulﬁll our responsibilities toshareholders.
Kanematsu has continuously pursued
growth for 130 years. As we celebrate thismilestone, we promise to never be complacent, but always look for new, better
approaches in all aspects of our corporate
activities, from the management base to business creation. We will then return the resultsof these efforts to our stakeholders. Going forward, we will endeavor to ensure that stakeholders will be eager to deepen theirrelationships with Kanematsu by enhancing
our enterprise value with a focus on growth.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

In ﬁscal 2020, we are planning for revenues of¥740.0 billion, up 2.2% year on year, operating proﬁt of ¥31.0 billion, up 2.1%, and proﬁt
for the year attributable to owners of the
Parent of ¥17.0 billion, up 2.4%.
The Kanematsu Group considers providing returns to shareholders to be one of its
most important tasks. Since resuming the payment of dividends in ﬁscal 2014, we haveincreased said payments each year. Under
future 135, we have established a target total
return ratio of 25% to 30%. We will continue
to balance careful decision making withaggressive investment as we move into a
steady growth trajectory and endeavor to

Sustainability

9 Fiscal 2020 Outlook and Message to Stakeholders

13

Special Feature
Growth Strategy by Business under the future 135 Medium-Term Vision

Initiatives to Reach the Consolidated Proﬁt Target
While maintaining and strengthening the sound ﬁnancial base we have established, we will focus on more deeply
developing our areas of strength and work to build businesses using innovative new technologies. By doing so, wewill aggressively advance business expansion and creation. To do this, we must realize effective corporate
governance to ensure exacting oversight in business management and investment as well as a corporate culture inwhich imagination and ingenuity are a constant while constructing mechanisms to achieve business creation.

2

1

Mobile Business

Acquisition ofadded value

Strategic scale expansion
Reinforcement of store revenue

Stable earnings
base

ICT Solution BusinessElectronics

Sustained growth using our strengths
Reorganization and reinforcementof the printer businessFoods & Grain

Reorganization and reinforcementof semiconductor business

Scale expansion of meat products
business

Stableearnings base

Expansion in the food markets in Asia
New businesses based on
advanced technologies such as
AI/loT as a core

Steel, Plant, Energy, and Chemicals
Horizontal development in themachinery and chemicals businesses

4

Investment ininnovation (seeds)

3

Motor Vehicles & Aerospace
Expansion into thespace-related area

Accumulation of assets inthe aerospace business

Expansion of scale

Composition of Revenue Growth
Through growth in core businesses and new business investment, we aim to raise operating proﬁt to approximately ¥45 billion.

Increase operating proﬁt approximately¥10 billion through new business investment

Projected Growth in Operating Profit(Billions of yen)

Approx.
45.0(YoY increasein ﬁscal 2019)

30.3
26.2

23.5

22.6
18.8

FY2015FY2016FY2017FY2018FY2019Core
businessesNewbusiness
investment

FY2021

FY2022

FY2020First three years

VISION-130
14

KANEMATSU Integrated Report 2019

FY2023

Last three years

future 135

FY2024

Kanematsu’s Progress and Strengths

1

Stableearnings
baseStable earnings base
ICT Solution Business: Sustained Growth Using Our Strengths

Develop one-stop IT infrastructure services

KEY REGIONSJapan, Asia (China, Southeast Asia)

KEY REGIONSJapan

KEY BUSINESSCOMPANIES

Kanematsu Electronics Ltd.,
Nippon Office Systems Ltd.

KEY BUSINESSCOMPANIESKEL Technical Service Ltd.

Special Features

Leverage Kanematsu’s competitive advantage asa provider of multi-vendor solutions to bolster
sales capabilities

Market Environment
In the IT market, investment in digital technologies has
been expanding, spurred by work style reforms and digitaltransformation (DX) initiatives. In addition to strategic IT
investment, corporate demand for system investment aimed
at improving productivity and efficiency as well as saving
labor is expected to be ﬁrm.
Moreover, with customer requirements for IT investment
growing more advanced and complex, many companies are
shifting from ownership to cloud-based usage models, driving
rapid changes in business formats.

Review of Operations

As a provider of multi-vendor solutions not bound to any
speciﬁc manufacturer, Kanematsu operates businesses invirtualization solutions and infrastructure development, areasin which it has a strong track record, as well as a security business serving mainly large corporations as end users.
Furthermore, by providing services ranging from thedesign and construction of corporate information services totheir maintenance and operation through a one-stop framework, we are working to differentiate our business and secure
a competitive advantage.

Year One Progress

Sustainability

Over the past year, we continued to focus efforts on theinfrastructure development business, drawing on our accumulated technological capabilities, and on our core solution
businesses, including virtualization and security, thereby
advancing business expansion.
Speciﬁcally, we continued to focus on building virtual
desktop infrastructure (VDI), which is enjoying ﬁrm demand
for use as a part of work style reforms, and the storage platform building business, which is seeing robust capital expenditure, reﬂecting growing data volumes within companies.
In addition, we continued to promote IT infrastructure
replacement aimed at improving system efficiency and security.
Furthermore, we advanced initiatives to transition toward
services, such as pay-as-you-go billing options that allow
customers to use only the IT resources required by their
speciﬁc business strategies.

Financial Section and Company Information

Path to Achieving the Medium-Term Vision
In this rapidly changing industry, we aim to expand ourexisting business areas and provide optimized ICT environments while maintaining a clear vision for the future, securing
outstanding human resources to provide cutting-edge, valuable services, and improving our technological capabilities.
To establish comprehensive relationships with ourcustomers as a strategic partner, we will make investments
aimed at providing wide-ranging services and proactively
form alliances. By doing so, we will strive to increase

enterprise value and achieve sustained growth.
Furthermore, through the ICT solutions business, we will
help create platforms for industry and technological innovation. At the same time, we will support the creation of designand development environments for globalizing manufacturing industries and promote the utilization of ICT in educational and medical institutions. In these ways, we will help
solve social issues.

KANEMATSU Integrated Report 201915

Growth Strategy by Business under the future 135 Medium-Term Vision

2

Added
value

Acquisition of added value
Electronics: Reorganization and Reinforcement of the Printer Business
Expansion of the printer business

KEY REGIONSJapan, United States, Europe, Asia

KEY BUSINESSCOMPANIES

G-Printec, Inc.

Market Environment
In the photo, card, and label printing industries—our mainmarkets—demand for desktop printers is gradually
expanding, buoyed by innovation in basic technologies andimprovements in image quality. The aggressive market entryof manufacturers overseas is contributing to intensifying
market competition.

Year One Progress
In March 2017, Kanematsu welcomed G-Printec, Inc. into theGroup. Since then, we have realized synergy based on
Kanematsu’s overseas sales network and extensive businessexperience and worked to maintain and expand G-Printec’s OEM
trading. Furthermore, we worked with domestic manufacturers
with which we have longstanding relationships to begin efforts
to cultivate global markets. These efforts began to yield results.

Path to Achieving the Medium-Term Vision
We will further expand and diversify our manufacturer functions, centered on the product planning, design, and development functions of G-Printec, Inc. In addition, as a close partner
to domestic manufacturers, we will invest human resources
and capital to coordinate and secure overseas sales channels,
aggressively working to enter downstream areas.

Foods & Grain: Expansion in the Food Markets in Asia
Developing food markets in Asia
KEY REGIONSAsia

KEY BUSINESSCOMPANIES

Kanematsu Corporation, P.T. Kanemory Food Service,
PT. Abadi Tunggal Lestari

Market Environment
Indonesia boasts Southeast Asia’s largest population (approximately 270 million) and GDP (approximately ¥110 trillion,
steadily growing at more than 5% per year), *with a demographic dividend that is expected to continue until around 2045,
the 100th anniversary of the nation’s independence. Goingforward, Indonesia’s standards of living and internal demand,
especially in the food market, are expected to continue rising.
Furthermore, as approximately 90% of the population is Muslim,
Indonesia is attracting considerable attention and presents great
opportunity as a halal market (the country’s Halal Product
Assurance Law is slated to go into effect in October 2019).
*JETRO ﬁgures for 2018.

Year One Progress
Kanemory Food Service (KFS) is a Kanematsu Group foodprocessing joint venture company focused mainly on delicatessens that operates a halal-certiﬁed factory in Indonesia.
The factory is now in its ﬁfth year of operation. KFS is leveraging the sales channels of its joint venture partner and ofoverseas affiliate Kanematsu Trading Indonesia (KTI), including Japanese-owned restaurant franchise businesses inwhich Kanematsu has invested, to steadily expand its sales,
mainly to the restaurant market and to Japanese-owned
16

KANEMATSU Integrated Report 2019

convenience stores and mass retailers. In addition, Dunia
Express Transindo (DUNEX), in which Kanematsu has invested, is one of the largest Japanese-owned warehousing andlogistics companies in Indonesia. Targeting the refrigerated
and frozen foods market, which is expected to grow going
forward, in October 2018, DUNEX established a warehousewith three temperature zones (cooled, refrigerated, andfrozen; halal certiﬁcation application in process). By addingstorage functions to its existing cold transport business,
DUNEX is expanding its areas of business.
Path to Achieving the Medium-Term Vision
We will expand the scale and sales channels of KTI’s import,
export, procurement, and wholesaling functions as well as therestaurant franchise business, strengthen coordination with
DUNEX, which boasts refrigerated warehousing and distribution functions, and reinforce KFS’s product development capabilities, which can accommodate customer needs ranging fromsmall-volume, high-variety orders to mass production.
Furthermore, we are considering reinforcing manufacturingfunctions though coordination with Kanematsu KGK Indonesia,
which has strengths in the food machinery ﬁeld, as well as additional investment aimed at expansion, namely, the establishment of a second factory.
We will bring to bear
the Group’s integrated
strength, centered on KFS’s
processing functions, totarget halal markets bothin Indonesia and nearby
countries. By doing so, wewill expand the food business and build value chains.

Kanematsu’s Progress and Strengths

3Expansion of scale

Expansionof scale

Mobile Business: Strategic Scale Expansion/Reinforcement of Store Revenue
Strategic expansion of scale
Kanematsu Communications Ltd.

• Nationwide network of mobile phone sales outlets• Directly operated stores: 157
Secondary agency stores: 269 (As of June 30, 2019)Market Environment

Kanematsu maintains a nationwide network of stores whileproviding services closely tailored to local needs. We are
striving to improve the skills of our store staff so that they canprovide clear, useful explanations and offer optimal services
for each customer. We believe that such initiatives will be ﬂexibly adaptable to changes in the market structure. Goingforward, we aim to continue expanding our store network toleverage merits of scale.
In addition, we aim to create new business models for the
coming 5G market.

Special Features

KEY BUSINESSCOMPANY

Path to Achieving the Medium-Term Vision

Review of Operations

Revisions to the Telecommunications Business Act will soonrequire the complete separation of telecom data fees fromdevice prices, causing dramatic changes in Japan’s mobile
industry from ﬁscal 2020 onward. Going forward, as competition increases, efficient store operations and securing humanresources will be more important than ever.

Year One Progress
By working to develop our human resources and improvetheir skills, we increased the earnings power of our stores.
Furthermore, the implementation of a service reservation
system at stores has further improved operational efficiency.

Foods & Grain: Scale Expansion of the Meat Products BusinessJapan, Asia (China, Southeast Asia)

KEY BUSINESSCOMPANIES

Kanematsu Corporation,
Kanematsu Shintoa Foods Corp.

Path to Achieving the Medium-Term VisionMarket Environment

Year One Progress
We expanded our beef business in China. Based on ﬁrm relationships with suppliers developed through the trading ofJapan-bound goods, we reinforced China-bound purchasing.
In addition, leveraging the processing functions of our affiliate
Dalian Matsutomo Foods Co., Ltd., we reinforced beef ingredient sales by providing additional value. Among other Japanbound products, following the lifting of a 19-year ban on

Through business tie-ups with and investment in suppliers inNorth America, South America, Australia, and elsewhere, wewill strengthen functions in upstream areas of the value chain
and reinforce our beef ingredient procurement. Furthermore,
we will build value chains in key locations in Southeast Asia andexpand our sales network, focusing mainly on processing andsales functions. At the same time, in the Japanese market, we
will reinforce sales of Japanese beef in and outside Japan. By
handling beef produced in Japan, in addition to imported beef,
which has long
been an area ofstrength, we aim
to provide a stablesupply of beef toconsumers.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

In the Japanese market, demand for animal products is expected
to increase over the short and medium terms, reﬂecting suchtrade agreements as the TPP, the EPA with the EU, and the TAG
with the United States, as well as the lifting of age restrictions on
U.S. beef, and increasingly diverse production regions. However,
the market is expected to shrink in the long term, due to demographic graying and population decline.

Sustainability

KEY REGIONS

Uruguayan beef, Kanematsu moved ahead of the competition
to begin trading in related products. We also began handling
Canadian beef, which beneﬁtted from a decrease in tariffs
under the TPP. Through these efforts, we diversiﬁed the
production regions with which we do businesses.

Scale expansion of the meat products business

17

Growth Strategy by Business under the future 135 Medium-Term Vision

Expansionof scaleMotor Vehicles & Aerospace: Accumulation of Assets in the Aircraft Parts Business

Scale expansion of the aircraft parts business
KEY REGIONS

EuropeKEY BUSINESSCOMPANIESKG Aircraft Rotables Co., Ltd. (KGAR)

Market Environment
Robust passenger demand is expected over the long term,
and the number of aircraft in service is forecast to steadily
increase. Demand for single-aisle, narrow body aircraft, suchas the Boeing 737 series and Airbus A320 series, is expected
to be especially strong, with over 10,000 such aircraft to bedelivered over the coming decade.

Path to Achieving the Medium-Term Vision
We will continue to expand the part-out business, in which
we purchase used aircraft and disassemble them to sell thecomponents. While expanding our customer base in Asia, weare considering opportunities to add new services, such as
expanding the range of parts we handle and internally maintaining and repairing aircraft parts. As we advance such
efforts, we aim to remain a trusted supplier. Through theaircraft rotable parts and part-out businesses, we will
promote the reuse of aircraft parts while expanding anddiversifying our businesses.

Year One ProgressIn ﬁscal 2019, we purchased retired aircraft. Aiming to expand inscale, we dispatched our employee to Dublin, Ireland, working to
improve business performance and reinforce inventory management systems. Furthermore, we began signiﬁcant market
research efforts in coordination with Kanematsu’s Aerospace
Department with an eye to moving into Asian markets.

Steel: Horizontal Development in the Machinery and Chemical Businesses

Scale expansion in the steel plate processing business18

KEY REGIONSSouth Korea, United States, Mexico, others

KEY BUSINESSCOMPANIES

Kanematsu Corporation, Kanematsu Korea Corporation,
Kanematsu USA Inc.

Year One ProgressThrough our long-established trading relationships, we havebuilt up a wealth of insight regarding this business’s market
environment and products. Using this insight, we invested inoverseas partners who can help us achieve differentiation inorder to expand going forward.

Market Environment

Path to Achieving the Medium-Term Vision

High-value-added household appliances, one of our key business areas, are expected to see stable growth going forward.
In addition, we are expanding sales of products for solar
energy, smart farms, commercial vehicles, and other areas
expected to see growth.

By advancing and deepening post-merger integration, we
will reinforce the integrated strength of the Group. At thesame time, we will expand the business areas in which we
operate.

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

4

Investment ininnovation(seeds)Investment in innovation(seeds)AI/IoT: New Businesses Based on Advanced Technologies
Path to Achieving the Medium-Term Vision

Rapidly ascending start-ups and venture capital investment
remain brisk, most notably in Silicon Valley, and market conditions are expected to remain favorable for Kanematsu’s goalsof uncovering advanced technologies and business models
while supporting start-up growth.

We will effectively utilize information provided by Cyber
Innovation Partners II and Kanematsu’s own networks todeepen coordination with Kanematsu Group companies
while developing new businesses. In addition, we will
endeavor to cultivate networks not only in Silicon Valley, but
in Japan, Israel, India, and China to serve as the core of theGroup’s innovation investment.

Year One ProgressSpecial Features

Market Environment

Review of Operations

Kanematsu has invested in Cyber Innovation Partners II, afund established by AllegisCyber Capital, a venture capitalﬁrm based in Silicon Valley that specializes in cyber security.
In addition, through our own networks, we expanded
communications with a wide range of startups, accelerating
business creation efforts.

Sustainability
Financial Section and Company Information

KANEMATSU Integrated Report 201919

Message from the CFO

Aiming to Increase
Shareholder Value

Tetsuro Tsutano
Director, Senior Executive Officer, CFO

The Roadmap for future 135
The Kanematsu Group has entered the second year of its
medium-term vision, future 135. As we progress further into
the term of the vision, I would like to explain the roadmap
for reaching the consolidated proﬁt target for its ﬁnal year,¥25 billion.

Reaching ¥25 Billion in Consolidated Proﬁt
Compared with other trading companies, dividend income
and proﬁts from investments accounted for using the equity
method represent only a small portion of Kanematsu’s proﬁt.
This gives Kanematsu the unique characteristic of having
little difference between its operating proﬁt and proﬁt
before tax. As such, when our consolidated proﬁt reaches¥25 billion, operating proﬁt will be approximately ¥45
billion.
The medium-term vision calls for increasing operating

proﬁt by around ¥20 billion over six years from the ¥26.2
billion recorded in ﬁscal 2018. Around half of this increase
will come from growth in core businesses, while the otherhalf will come from revenue growth and increased added
value via new business investment.
Fiscal 2019, the ﬁrst year of future 135, marked a solid
start, with operating proﬁt increasing more than ¥4 billion
year on year to ¥30.3 billion, mainly due to growth in corebusinesses.

Assumptions Underlying Business Investment
Business investment in ﬁscal 2019 totaled approximately ¥8billion. In order to increase operating proﬁt by around ¥10billion under the vision, we plan to make another ¥60 billion
to ¥100 billion in business investments over the coming ﬁve
years. Kanematsu’s ﬁnancial position is very sound, with a
net D/E ratio of 0.4 at the end of ﬁscal 2019. Even if wemake business investments of ¥100 billion over the next ﬁve

Figure 1. Operating Proﬁt/Proﬁt for the Year Attributable to Owners of the Parent(Billions of yen)

50

45.0
40

31.0

30.3

30

26.2
20

16.3

16.6

17.0
80

Half of theapproximately ¥20
billion increase inoperating proﬁt tocome from business
investment

25.0

10

0

FY2018Operating profit

20

FY2019Profit for the year attributable to owners of the Parent

KANEMATSU Integrated Report 2019

FY2020(Forecast)

FY2024(Forecast)ing ROIC in excess of WACC and ROE of 13% to 15%.

Our Stock Price

Rationale behind the ROE Target
Under the medium-term vision, Kanematsu is targeting ROE(consolidated proﬁt ÷ shareholders’ equity) of 13% to 15%.
We expect Kanematsu’s gross consolidated ﬁnancial leverage (shareholders’ equity to gross interest-bearing debt) to
be close to 1:1, and if we were, for example, to maintain
ROE of 13%, ROIC (return on invested capital, calculated as
consolidated proﬁt ÷ (shareholder’s equity + gross interestbearing debt)) would be around half of that, or 6.5%. By
working to keep ROIC in the 6.5% to 7.5% range, we will
maintain our target ROE.
In the vision’s ﬁrst year, Kanematsu recorded ¥16.6 billion
in consolidated proﬁt, for ROIC of 6.4% and ROE of 13.8%,
within our target range.

Figure 2. ROE/ROIC(%)(Billions of yen)

20

20

Sustainability

Going forward, we will strive to maintain active communication with shareholders and investors and take their views
into account as we work to enhance shareholder value.

Increasing Shareholder Value

Review of Operations

As mentioned above, our cost of equity is approximately 7%,
and, given the current zero-interest environment, ourweighted average cost of capital (WACC) is less than 5%. We
are working to provide greater shareholder value by achiev-

March 2021, the end of the vision’s third year, will mark its
midway point. If at that point new business investment has
not proceeded as planned, cash and bank deposits will
increase instead, as will shareholders’ equity, and the net
D/E ratio will further improve, at the cost of ROE. At thishalfway point, we will reassess our direction going forward,
including such scenarios.

Special Features

Comparison with WACC

Since March 2016, Kanematsu’s stock price has moved morethan either the Nikkei average or TOPIX, steadily rising andboosted in part by our efforts to raise shareholder returns
every year (Figure 3). While the dividend yield has increased
from 3% to 4.9%, the price-earnings ratio has fallen from 7.9
to around 6 times, and the price-to-book ratio has been
almost ﬂat.
By leveraging the unique characteristics of Kanematsu as
listed below, we will work to ensure Kanematsu’s true enterprise value is clear to the market so as to maintain an appropriate stock price.
• We are focusing business investment on businesses where
we have insight in key areas and use a hurdle rate basedon the cost of equity to make investment decisions, striving to maintain ROE and ROIC.
• The Group’s ﬁnancial base is solid, with a net D/E ratio of
0.4, a risk asset ratio of just over 0.3, and very low risk of
impairment on goodwill.
• Our stable revenue structure, with its relatively low portionof proﬁts from investments accounted for using the equity
method, makes it easy to return consolidated cash ﬂows toshareholders.
• Although we aim to expand overseas going forward, alarge portion of our total revenue—83%—is currently
from domestic businesses, providing insulation from theimpact of international developments, such as the recent
U.S.-China trade frictions and Brexit.
• We have withdrawn from such high-risk businesses as
natural resource and real estate investment.

The Third-Year Midway Point

Kanematsu’s Progress and Strengths

years, since operating cash ﬂows will stably generate ¥10billion to ¥20 billion per year, the net D/E ratio is expected toremain close to 0.5.
Furthermore, we are selecting business investments
based on a hurdle rate of 8%, above our 7% cost of equity.

Figure 3. Comparison of Kanematsu’s Stock Price, theNikkei Average, and TOPIX
2.2
2.1

16.3

16.6

17.0

15

15

Nikkei Average

1.8

TOPIX

1.7

13.8

10

Kanematsu

1.9

Financial Section and Company Information

15.1

2.0

10

1.6
1.5

8.0

1.4

8.4
5

1.3

6.7

6.4

5

1.2
1.1

3.5

1.0

0

0

FY2017
ROE (Left)

FY2018
ROIC (Left)

FY2019FY2020(Forecast)Profit for the year (Right)

0.9
16/3 16/5 16/7 16/9 16/11 17/1 17/3 17/5 17/7 17/917/11 18/1 18/3 18/5 18/7 18/9 18/11 19/1 19/3 19/5
(Year/Month)

Note Increase or decrease, with the value at March 31, 2016 as 1

KANEMATSU Integrated Report 201921

Review of Operations

Electronics & Devices
Semiconductor
Equipment

Semiconductor/LCD Manufacturing Equipment
Semiconductor manufacturing and testing equipment;
LCD manufacturing and testing equipment; OLED
production equipment

ICT Solutions

ICT and communications
equipment and devices; ICT andcommunication services; System
integration

Electronic
Components
and Materials

Electronic Components
Amusement related products; Vehicle equipment;
AV related products; Camera modules; Micro-lenses;
System boards; Printed circuit boards and materials

MobileMobile communication terminals;
Mobile internet system andservices

CCTV Systems

Sale andinstallation of
CCTV systems(security
devices)

Semiconductors/LCD Materials
LED components; OLED materials; Solar cell components;
Battery components; Metal materials for electronic andfunctional components; Surface treatment agents;
Functional ﬁlms
Optical Device Materials
Components for display devices and optical devices
Industrial Printers
Industrial printers and related consumables

Ele
ctr
on
ic
s

Industrial
Electronics

Livingwares
Batteries; Household supplies

Semiconductors& Devices

&

s
ce
vi
e
D

Semiconductors & Devices
Semiconductor devices; Sensor devices; LCD panels;
Components for smartphones and tablets; Control
modules for lithium ion batteries; Image sensors;
image sensor back-end processing; Board assembly;
Finished EMS products; IoT solutions

Processed fruits (frozen/canned); Concentrated fruit/
vegetable juices; Confectionery ingredients (nuts, dry
fruits, dairy products, couverture chocolate, cocoa
powder, etc.); Coffee; Teas; Alcoholic beverages (wine,
whiskey, sake, etc.); Sesame seeds; Sugar; Honey; Peanuts;
Pulses and peas; Nuts and seeds; Cooked foods; Others

Meat and Marine
Products

Meat products: Beef; Pork; Chicken; Mutton/Lamb; Special
poultry such as turkey and duck; Horsemeat; Others

F
o
od
s&

Foods

n
ai
Gr

Foods & Grain

Marine products: Cephalopods (octopus, squid, etc.);
Crustaceans (shrimp, etc.); Frozen ﬁsh; Seafood ingredientsfor sushi; Others

22

Grain, Food
Soybeans, Oilseeds

Rice; Wheat; Barley; Corn; Soybeans (for food, for oil);
Defatted soya-ﬂake for soy sauce production;
Buckwheat; Corn grits; Corn starch; High-fructose cornsyrup; Rapeseed; Cottonseed; Others

Processed
Processed wheat (wheat ﬂour,
Agricultural Products pasta, frozen bread dough,etc.); Cereal ingredients;
Vegetable oil; Olive oil; Others

Feedstuff

Feed grain (corn, milo, soybeans, etc.); Plant protein
meal (soybean meal, rapeseed meal, etc.); Animal
protein meal (Fish meal, etc.); Other by-products; Dairy
products for feed (skim milk, whey powder); Roughage(baled hay, beet pulp pellets, etc.); Fish oil; Prebiotics(Laxel Force); Fertilizer; Others

Pet Products andGroceries

KANEMATSU Integrated Report 2019

Pet food and snacks; Pet products;
Tropical ﬁsh; Raw ingredients forpet food and snacks; Products
wholesaled to DIY stores (homeimprovement retailers)Steel, Materials & Plant
Steel

Foreign Trade of Iron and Steel
Export of various kinds of steel sheets,
plates, bar products, and pipe andtubing products; Export of porcelain
enamel steel sheets

Materials

Functional Chemicals
Incense materials; Lubricant-related materials;
Fertilizer materials; Papermaking chemicals;
Synthetic rubber; Petrochemical products
Healthcare
Functional food materials; Health supplements

Foreign Trade of Specialty Steel
Export and third-country trading ofstainless steel sheets and plates, specialty
ferrous wire materials and bar products,
and welding materials

Life Science
Pharmaceuticals and pharmaceutical andagrichemical intermediates; Pharmaceuticalingredients

Domestic and Foreign Trade of a Full
Range of Steel Products
Import and third-country trade offerrous raw materials; Export and importof steel materials and sub-materials

Crude Oil, Petroleum Products
Crude oil; Jet fuel oil; Gasoline; Kerosene; Diesel
oil; Fuel oil (bunker A and C); Lubricant oil andadditives for industrial and automobile use
LPG
LPG (propane, butane, autogas)

Ste
el,
M
at
er
i

Biomass fuel
PKS; Wood pelletss&alDevelopment of Environment-RelatedMaterials and New Technologies
Heat reﬂective paint; Carbon credit trading; Heat
reﬂective paint; Carbon credit trading; Biomass fueltanPlPlant & Ships

Plants, Environmental Business
Chemical and petrochemical plants; Industrial
plants (papermaking plants, auto-manufacturing
plants and other plants); Utility and processsystems for oil and gas plants; Infrastructure
facilities; Scrap-processing facilities; Environmental
facilities
Cargo Vessels
Shipbuilding; Used ships; Equipment package
deals for new ships (including ship design,
engineering)
Machine Tools and Industrial Machinery
Machine tools; Industrial machinery andperipheral equipment

Mo
t
o
rV
e
h
icl
es

Electric Power Cable Projects
Electric power and communication cable projects;
Power generation plants (including design,
engineering, installation)
ODA
ODA projects (medicine/pharmaceuticals,
insurance, broadcasting and communications,power generation, environment, infrastructure,
water supply, education)

&

e
ac
sp
ro
Ae

Motor Vehicles & Aerospace
Motor Vehicles
and Parts

Motorcycle and automobile
parts; Complete Built Up (CBU)
vehicles; Construction &industrial machinery; Powerproducts

Aerospace

Fixed-wing aircraft; Helicopters; Equipment andComponents/Parts for aircraft & helicopters;
Aircraft rotable parts; Small satellites; Spacerelated products, Small launch vehicles
Night vision goggles

KANEMATSU Integrated Report 201923

Electronics & Devices
Our operations include the ICT solutions and the mobile businesses aswell as value chains ranging from electronics-related materials tocomponents and equipment. Using our wealth of electronics technology
and know-how, we are advancing new initiatives in the IoT and AI ﬁelds
and offering new value to contribute to society.
Masahiro Harada
Senior Executive Officer,
Chief Officer, Electronics &Devices Division

Segment Vision

Constantly provide solutions to international society by leveraging advanced
technologies in all ﬁelds

Division Composition
The Electronics & Devices Division comprises ﬁve business areas: 1. electronic devices and materials, 2. semiconductor equipment and components, 3. ICT solutions,4. the mobile business, and 5. CCTV systems. We arebuilding supply chains and sales networks for thesebusiness areas in and outside Japan. In addition to ourlongstanding businesses in electronic devices, mainly for
consumer and automotive use, and hardware component and material value chains, we offer services tomeet a wide range of customer needs, including in thecloud solutions, security equipment, and mobile communications businesses, which have been growing inrecent years, as well as areas related to the Internet ofThings (IoT).
Review of the First Year of future 135
Technological innovation in the ICT solutions business,
mobile business and electronics industry is advancing rapidly, and globalized and ﬂattered markets are becoming thenorm are becoming the norm. While tech giants wielding
powerful IT platforms are increasingly dominating markets,
moves toward avoiding tech oligopolies have recently been
emerging around the world. Furthermore, the impact ofpolitics on economics has gradually been increasing, as with
the U.S.-China trade frictions. The world thus faces turning
points on a number of fronts. At the same time, demand for
AI and the importance of internet solutions are growing,
and new demand for self-driving and electric vehicles is
expanding in the automobile industry. Such changing mar24

KANEMATSU Integrated Report 2019

kets are presenting growing needs for precisely tailored services and total solutions for increasingly global customers.
During the ﬁrst year of future 135, we realized further
synergies from the M&A conducted under VISION-130 andincreased our holdings in a major player within a niche area
to 100%, helping increase revenue. At the same time, we
continued to advance measures to expand in scale andsecure added value. Furthermore, following the spinoff ofhighly specialized sections, demand for semiconductors
used in automobiles rose, and we ﬁnished the ﬁrst year of
future 135 on solid footing. We successfully captured growing investment in LCD manufacturing equipment in China,
leading to orders received that will be ﬁlled over the next
several years. Meanwhile, we weathered somewhat challenging conditions in semiconductor manufacturing equipment as a result of rapid market shrinkage.
Measures to Achieve future 135
The Electronics & Devices Division has assumed a policy
aimed at coordination with the Group and growth. By pursuing business tie-ups, capital alliances, business acquisitions, and R&D investment both within Kanematsu andthroughout the Group, we will further develop andstrengthen our current mainstay businesses to enhance synergies and achieve scale expansion. We especially plan toadvance M&A and innovation investment in and outside
Japan. Meanwhile, we continue to work toward greater differentiation. Speciﬁcally, we are adding value through the
supply of modules using electronics manufacturing services(EMS) and other services, including design and development; package solutions; and just-in-time supply backed byadvanced warehouse functions. Furthermore, in ICT, we arereinforcing one-stop solutions and security services andmaking aggressive, future-oriented investments. Leveraging
Kanematsu’s strengths as a trading company, we are collaborating with other divisions, aiming to create new markets
using IT, AI, and IoT in other business formats. Overseas, theElectronics & Devices Division continues to create support
structures near customer sites in China, Southeast Asia,
North and Central America, Europe, and elsewhere, as weFY2019

Segment Proﬁt
FY2020 (Forecast)(¥ billion)
20.0

Revenue–external¥265.5billion

Kanematsu’s Progress and Strengths

Business Results and Forecasts

17.6¥270.0billion

15.0

10.0

18.5

18.5

FY2019FY2020(Forecast)

14.3
10.7

Segment proﬁt¥18.5billion

5.0

Special Features¥18.5billion

0

FY2016

work to establish global value chains. By actively incorporating such innovations as IoT, M2M, CASE,1 MaaS,2 SaaS,3 cloudservice, cyber security, ﬁntech, and blockchain technologies,
we will offer more advanced, ﬂexible business models.

Strengths and Tasks to AddressGroup company’s comment
G-Printec, Inc.

G-Printec, Inc. is a card
printer manufacturer
established in March 2017,
when Kanematsu took over
JVCKENWOOD
Corporation’s printerbusiness.
More than 20 years after
the launch of the world’s
Kiyoharu Ohtani
ﬁrst dye sublimation
President & CEO,re-transfer card printer in
G-Printec, Inc.
1997, we continue to stepup our printer development capabilities and control
technologies, realizing Group synergies with
Kanematsu’s overseas sales network and businessexperience as we aim for global business expansion.
Demand for cards for veriﬁcation applications,such as government-issued IDs and driver licenses, isshifting from conventional magnetic cards to moresecure smart cards embedded with IC chips. This shift
is the result of the growing needs for counterfeit andmanipulation prevention and for use with software
applications. G-Printec offers a robust lineup of
printers and peripheral equipment to meet these andother needs, including high-resolution, high-end
printers for precision microtext printing that helps
prevent counterfeiting.
Under the slogan “Global and Growing Printing
Technology—G-Printec, Inc.,” we strive to contribute tosociety throughprinting technology.

Sustainability
Financial Section and Company Information

Our ICT solutions and mobile businesses boast solid foundations within the industry and are generating stable profits. However, we believe that we can further exercise ourstrengths and raise our industry position. In the semiconductor component and equipment as well as the electronic devices and materials ﬁelds, we maintain expansive
supply chains handling items ranging from large LCDrelated equipment to components and materials as well
as a robust customer base, allowing us to offer uniqueproposals and solutions. In our Industrial Electronics business, we enjoy stable operations around the world inbusiness printers, a niche market, supplying a wide portfolio
of printer products and consumables. While this businessarea is small, it is growing steadily. We also offer such
unique added value as industrial CMOS image sensors aswell as component and module supply chains for theamusement market. Furthermore, in electronic materials,
by providing just-in-time services, we are playing a crucialrole in helping customers build their supply chains.
At the same time, we continue to face a variety of challenges, such as rapid changes in Japan’s major electronics
companies, changes in markets and their major players
due to technological innovation, the saturation of PC markets, the slowdown of smartphone markets, the impact ofrate structure changes on mobile phone sales agencies,
and supply chain changes due to U.S.-China trade friction.
Going forward, working toward further expansion by
rallying overall Group strengths to continue advancing
new initiatives and creating new businesses remains apressing task.

FY2018

Review of Operations

1. An abbreviation for four trends in the automotive industry: connected,
autonomous, shared & services, and electric
2. Mobility as a service
3. Software as a service

FY2017

Dye sublimation
re-transfer card printer

KANEMATSU Integrated Report 201925

Foods & Grain
Committed to safe, secure food, this segment works to ensure stablesupplies of a wide range of foods, including grains, raw oil and fat
materials, animal feedstuff, marine products, and other high-valueadded items, through an integrated supply system spanning raw
material procurement to ﬁnished product processing.
Masayuki Hamasaki
Senior Executive Officer,
Chief Officer, Grain, Oilseeds &Feedstuff Division and Foods
Division

Segment Vision

Support people in Japan and across Asia
by providing a stable supply of safe,
reliable food ingredients

Division Composition
As of April 1, 2016, to increase specialization, more
effectively implement strategies, and strengthen customer relationships while reinforcing business development, the former Foods & Grain Division was split into
the Grain, Oilseeds & Feedstuff Division, which handles
such products as grain and animal feedstuff, and the
Foods Division, which handles such products as processed foods and animal products. These two divisions
provide a wide range of goods and services related tofood for people and their pets, spanning everythingfrom grain, agricultural products, meat and marine
products, ingredients for desserts, alcoholic and nonalcoholic beverages, frozen foods, and processed foods
to animal feedstuff and fertilizer.
Review of the First Year of future 135
Foods Division Under future 135, we aim to expand ourearnings base, mainly by securing added value to add newfunctions to existing businesses, with a particular focus on
scale expansion in the meat products business and developing food markets in Asia.
future 135 got off to a smooth start in its ﬁrst year. We
established Dalian Matsutomo Foods Co., Ltd. in China tohandle the primary processing and sales of beef and othermeat products, setting up a ﬁrm foundation for the scale
expansion of the meat products business in the Chinese
market, which is seeing ongoing growth. Furthermore, webegan importing Uruguayan beef in February 2019, cultivating markets in and outside Japan to expand the beef

26

KANEMATSU Integrated Report 2019business. To develop food markets in Asia, in Indonesia, weleveraged the refrigerated warehouse infrastructure of
DUNEX, a Group comprehensive logistics company, to construct a cold chain for distributing processed food products
produced at a Kanematsu Group cooked foods factory inthat country to restaurants and mass retailers in and outside
the Group.
Grain, Oilseeds & Feedstuff Division Under future 135, theGrain, Oilseeds & Feedstuff Division is advancing up-, midand downstream strategies to achieve its vision of contributing to agriculture, the food supply, and the enjoyment offood around the world. Upstream, we are establishing logistics bases in raw material producing regions to secure a stable supply of grain and feedstuff materials and promotesales in both domestic and overseas markets. Midstream,
we are reinforcing the sales functions of Group companies
to create frameworks to more quickly and precisely meetcustomer needs, thereby aiming for scale expansion.
Downstream, we are actively developing restaurant andother businesses, focusing mainly on the Be Smile Project, a“sixth industry” business entity.
future 135 got off to a good start. In particular, weentered the business of manufacturing and selling puffedsoybeans, a feedstuff material, in the city of Dalian, China,
with the aim of securing a share of the growing Chinese
market by capturing added value.
Measures to Achieve future 135
Foods Division We aim to evolve from mere trading operations by implementing internal reforms to emphasize speciﬁc functions and roles in order to build value chains.
Moreover, we are actively implementing business investments and M&A in order to improve the functions of theKanematsu Group in up-, mid-, and downstream roles andrealize scale expansion. Speciﬁcally, we are capturing
important suppliers using exclusive contracts and investment as our strategy for producing regions while securing
processing functions overseas, mainly in Asia, as our added
value strategy. Furthermore, as our scale expansion

FY2019

Kanematsu’s Progress and Strengths

Business Results and Forecasts

Segment Proﬁt
FY2020 (Forecast)(¥ billion)
5.0

Revenue–external
4.0¥244.9billion ¥250.0billion

4.0

4.0

FY2019FY2020(Forecast)

3.0

2.5
2.1

2.0

Segment proﬁt

1.4¥4.0billion

Special Features¥4.0billion

1.00

FY2016FY2017FY2018strategy, we are pursuing horizontal integration via M&A.

Group company’s comment

Grain, Oilseeds & Feedstuff Division We are helping Japan’s
dairy and other farmers improve their productivity andcompetitiveness, aiming to achieve global business expansion alongside them. In terms of asset strategy, we are
actively investing in logistics bases at production and consumption sites, working to ensure the stable supply of grain
and feedstuff materials and expand sales channels in Japanand abroad. Using value chains built through vertical integration, we aim to offer superior, highly differentiated services in such areas as pet-related businesses and foodsoybeans. Furthermore, Kanematsu is leveraging its
strengths in business development that crosses industry
boundaries to accelerate business creation in the smart
agriculture ﬁeld leveraging AI and IoT technologies.

Kanematsu Soytech Corp.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

Grain, Oilseeds & Feedstuff Division From grain, food soybeans, oilseeds, feedstuff materials, fertilizer, and processed
agricultural products to pet-related businesses, all of theGrain, Oilseeds & Feedstuff Division’s businesses boast differentiated products and provide added value, aKanematsu hallmark. These are the division’s strengths. In
terms of scale, however, these businesses have considerable
room for growth. Through collaboration and alliances with
our partner companies, we will improve the functions of
the Kanematsu Group at every stage of the value chain toexpand business scale and provide useful products and services to even more customers.

Sustainability

Foods Division Kanematsu’s strengths lie in the ﬁrm relationships with business partners and customers that it has cultivated over the years as well as in its product manufacturing
and development, which go beyond mere trading. At present, we face the urgent task of leveraging these strengths
to horizontally expand and create new businesses. By optimizing roles within the Group to improve the responsiveness of sales divisions and improving the new businessacceleration framework, we will achieve robust growth.

Review of Operations

Strengths and Tasks to Address

Kanematsu Soytech began
in 1883 as the Iimura Tofu
Shop. In 1952, Iimura
Trading Company was
founded and, in 2006, its
tofu ingredient sales division
was split off to create Iimura
Agri Co., Ltd., which, upon
becoming a fully owned
Masanobu Nanse
subsidiary of Kanematsu
President,
Kanematsu Soytech Corp. Corporation, was renamed
Kanematsu Soytech Corp.
While procuring non-genetically-modiﬁed (nonGMO) soybeans for the Japanese market has become
increasingly difficult in recent years, we have secured
numerous suppliers, most notably an affiliate thatgathers and sorts non-GMO soybeans in Ohio, in the
United States, to meet demand. Thanks in part to thisnetwork, the volume of soybeans handled by the
Kanematsu Group is among the highest in theindustry.
In our grain business, which handles Japanese
sweets, cooked beans, and red bean paste, we
leverage expert knowledge of bean quality andingredients to ensure a stable supply. Our
procurement routes extend across Japan, North
America, China, and as far as South America, to offer
the best possible beans and pulses.
As important ingredients in traditional Japanesecuisine, soybeans and other beans and pulses are
essential to daily life in Japan. Thanks to increases inhealth consciousness, expectations regarding soy andother beans are expanding from East Asia to theworld. We see the stewardship of the knowledge andculture of these crucial foods as a vital mission. With
that in mind, we strive to be the most trusted vendor
of beans and pulses in Japan.

27

Steel, Materials &Plant
This segment engages in operations covering the full range of iron andsteel products, energy solutions, functional chemicals, and industrial
plant and infrastructure facilities. While this segment handles a wide
variety of operations, in each business area we boast highly specialized
staff who uphold our commitment to supplying and developing highvalue-added products.

Eiji KanManaging Executive Officer,
Chief Officer, Steel, Materials &Plant Division

Segment Vision

Change society by providing high-valueadded products through businesses that
support infrastructure

Division Composition
The Steel, Materials & Plant Division was launched in
April 2013, integrating three divisions that, until then,had operated independently. By gathering experts inthe ﬁelds of steel, materials (centered mainly on functional chemicals and energy), and plant to share information and insights, we believe that we can generate
substantial synergies.
Businesses that span the ﬁelds of steel, materials
and plant are already beginning to grow into pillars of
proﬁt. Such businesses include the oilﬁeld tubing business and the specialty steel business for petrochemicalplants, which supplies chimney desulfurization equipment and other products. At the same time, we are
actively working to develop a new generation of businesses for the future.

Review of the First Year of future 135
Under future 135, the Steel, Materials & Plant divisionaims to increase revenues from existing businesses basedon the pillars of scale expansion and increased added
value through business investment, one of Kanematsu’sCompanywide priority initiatives.
During the ﬁrst year of the vision, our North American
oilﬁeld tubing business performed very well. Backed bybooming drilling demand in the United States, which is
now the world’s leading oil producer, this business contributed signiﬁcantly to increasing segment revenue. We

28

KANEMATSU Integrated Report 2019

expect a new technical center to be completed by theend of 2019 and a new factory to begin operations insummer 2020 to help meet rising demand for shale gas
and oil drilling. We also intend to meet demand for offshore production, which is expected to see further recovery going forward.
In March 2019, we invested in a South Korean steel
sheet and plate processer. This company is a primary vendor of major South Korean electronics makers and boasts
not only processing but product development capabilities, making it a highly valuable strategic partner. Goingforward, we will work to strengthen our relationships
with electronics manufacturers through said company
while pursuing opportunities related to supplying
Japanese-made steel sheets and plates and working to
expand sales of our investee’s products worldwide byleveraging our overseas branches.
In the energy business, we commenced operations inJanuary 2019 at a solar power generation business situated on a formerly idle tract of land in Kobe owned by aGroup company. The facility has been steadily producing
power since its launch, and it promises to contribute signiﬁcantly not only to consolidated revenue, but the environment as well.
The pharmaceuticals and machinery-related businesses, areas of strength for Kanematsu, have also begun tosteadily see the fruits of M&A and innovation investment.
While some businesses were somewhat impacted bytrade-related problems originating in the United States,
the segment as a whole is beginning to see the positiveeffects of wide-ranging, well-balanced initiatives.
Measures to Achieve future 135
We will make future 135 achievable by focusing on revenue expansion. This will be supported mainly by businesscollaboration with suppliers and business partners withwhom we have built strong relationships through yearsof trading and by investment in focus areas. In addition
to business investment, we will seek to increase ourFY2019

Segment Proﬁt
FY2020 (Forecast)(¥ billion)
6.0

5.5

Revenue–external

5.0¥139.4billion ¥150.0billion

4.4
4.0

3.9
3.4

3.0

Segment proﬁt

2.8

2.0

¥5.5billion

1.0

Special Features¥4.4billion

Kanematsu’s Progress and Strengths

Business Results and Forecasts

0

FY2016

Strengths and Tasks to Address

FY2019FY2020(Forecast)

TopicsRenewable Energy

Expanding renewable energy sales channels is a key
measure for the energy business. Because wood andvegetable-oil biomass is a carbon-neutral resource,
biomass power generation, which uses these fuels,
helps reduce greenhouse gas emissions and mitigate
global warming.
We began to supply biomass fuels (wood pellets,
palm kernel shells, etc.) for electric power generation
around 2015. Today, we import such fuels fromSoutheast Asia and supply them to customers inJapan, helping reduce CO2 emissions. We continue
working hard to expand this business.
The importance of safe and environmentallyfriendly renewable energy is only growing. Building on
this business, we will strive to advance additional
initiatives to reduce the environmental burden andcontribute to sustainable development.

Sustainability

Even as they pursue development in their own nicheﬁelds, the division’s departments have grown together
into a solid, uniﬁed business, building a wealth of personal relationships and business know-how. These are
valuable assets and strengths of the segment.
While fully leveraging the synergies of integration
remains a task we must address, we are seeing the sure
beginnings of progress.
Furthermore, by advancing REDD+ initiatives basedon cacao farming in Indonesia, the segment aims to help
reduce CO2 emissions and relieve poverty in developing
countries. We also boast expertise in the renewable energy business, including biomass and solar energy. Goingforward, we will dutifully carry out our social responsibility of contributing to a sustainable society and the global
environment.

FY2018

Review of Operations

usefulness to customers in our existing trading operations. For example, in the domestic iron and steel business, we have put together a team to reform businessmodels with a focus on upstream strategy and are developing and promoting new methods based on a tie-up
with a design ﬁrm. Through such initiatives, we will
increase the added value Kanematsu provides.

FY2017

Financial Section and Company Information

Wood pellets

Palm kernel shells

KANEMATSU Integrated Report 201929

Motor Vehicles &Aerospace
This division comprises the motor vehicles and parts business, whichhandles motorcycle and automobile parts as well as completed built up
vehicles, and the aerospace business, which handles aircraft and parts aswell as space-related products. Leveraging its superb expertise andextensive information resources, the division operates these businesses
on a global scale.

Yoshiya Miyabe
Director, Senior Managing
Executive Officer,
Chief Officer, Motor Vehicles &Aerospace Division

Segment Vision

Contribute to society through proactive, nextgeneration business creation, one step aheadof changes in the business environment

Division Composition
The Motor Vehicles & Aerospace Division was formed in
April 2013 as an integration and concentration of thehighly competitive automobile- and aerospace-related
business units that previously existed as part of theElectronics & IT, Iron & Steel, and Machinery & Plant divisions. By integrating and concentrating our motor vehicles businesses, for which global demand is expected togrow, we aim to connect the supply chains and customer bases of our motorcycle and automobile businesses
and thereby strengthen our sales and sourcing capabilities. Also, bringing the aerospace-related business units
into this division has facilitated the sharing of information about cutting-edge aerospace technologies thatcan be used in the motor vehicles and parts ﬁeld, andsynergies between the aerospace and automotive units
are helping create new businesses.
Since the launch of this division, we have been
improving our global frameworks to reinforce our roles
and functions and better serve our customers and business partners while constantly making future-oriented
investments to create new businesses.
Review of the First Year of future 135
In our motorcycle and automobile businesses, as part ofefforts to work with key business partners to build new
businesses, a strategy carried over from VISION-130, weestablished a joint venture motorcycle electronics manufacturing company in Tamil Nadu, India, with one of our

30

KANEMATSU Integrated Report 2019suppliers in Japan and a partner in India.
To enhance our global framework and reinforce logistics we focused mainly on Asia, opening a sales office in
Sriracha, Thailand, and launching operations at warehouses in the cities of Pune, Bawal, and Chennai, India. In
the aircraft business, we advanced measures to strengthen the personnel and business frameworks of theEuropean private aircraft parts business while carryingout research and preparations aimed at entering Asianmarkets, which are expected to see major growth going
forward. In the space business, the rocket downrange
operations business gathered momentum, and small
launch vehicle services attracted strong interest in Japanand other Asian countries. Furthermore, aiming to ﬁnd
cutting-edge technologies and new business models, we
dispatched employees to Silicon Valley, established
Kanematsu Ventures Inc., and invested in a Silicon Valley
venture capital fund managed by AllegisCyber Capital,
thereby kicking off efforts to build innovative new businesses.
Measures to Achieve future 135
In our motorcycle and automobile businesses, in addition
to existing OEM components trading, we are advancing
initiatives in a number of new businesses. These include
trading new products in the CASE1 and MaaS2 areas,
data services that combine hardware with vehicle, driving, and other data, and maintenance components services for growing markets in India and Asia. In the aircraftbusiness, we are seeking expansion in scale and added
value. To this end, we are extending the European private aircraft components business to Asia and North
America, building on our business supplying special mission aircraft made by Textron Aviation to Japanese government agencies and helicopters made by the Italiancompany Leonardo to the Japan National Police Agency.
We are also expanding into the maintenance, repair andoperation (MRO) ﬁeld. In the space business, we aim tocommercialize the small launch vehicle business andFY2019

Kanematsu’s Progress and Strengths

Business Results and Forecasts

Segment Proﬁt
FY2020 (Forecast)(¥ billion)
4.0

Revenue–external¥62.1billion¥60.0billion

3.0

3.0
2.5

2.5

2.5

FY2018FY2019FY2020(Forecast)

2.2

2.0

Segment proﬁt¥2.5billion

Special Features¥2.5billion

1.00

FY2016

1. An abbreviation for four trends in the automotive industry: connected,
autonomous, shared & services, and electric
2. Mobility as a service

Strengths and Tasks to Address

New Space Initiatives

As a sales agency for European and American spacerelated manufacturers, Kanematsu is working to expand
Japan’s space industry.
We provide overseas launch support for the H-IIA/B,
the primary launch vehicles currently used by the Japan
Aerospace Exploration Agency (JAXA). Furthermore, toenhance international competitiveness, we are working
with the government to set up overseas downrange
operation stations for the H3 launch vehicle, a nextgeneration ﬂagship rocket currently in development, in
anticipation of its maiden ﬂight in ﬁscal 2020.
In addition to the conventional government-led
space business, Kanematsu has been quick to get into
the private-sector space business, making a forwardlooking strategic investment in Vector, an Americancompany developing micro satellite launch vehicles.
Going forward, we aim to utilize data from positioning
and micro satellite constellations with AI and big datatechnologies across our operations to further expand ourbusiness foundations.
In addition, we are proactively engaging in initiatives
related to space safety, gathering data about spaceconditions, and dealing with space debris as we advancebusinesses related to space development and use.

Sustainability
Financial Section and Company Information

Our greatest strength is the customer base and roster ofbusiness partners we have built up over the decades by
doing business together. We have a global network that
includes industry-leading customers and partners. In ourefforts to ﬁnd cutting-edge technologies and new business models, we talk with many startups, a practice thathas the potential to generate numerous business opportunities as we look to match their needs with ourstrengths. In recent years, commonalities between theaerospace and motor vehicles industries have been
growing, expanding synergies and creating more opportunities for cross-business projects within the segment insuch areas as ﬂying cars. In this once-in-century time oftechnological innovation, we are focusing on quickly
making the necessary investments that will keep us at
the head of the pack and create new businesses.

Topics

Review of Operations

establish a new data business model using data frompositioning and micro satellite constellations.
Furthermore, we will apply cutting-edge technologies
from Silicon Valley, Israel, India, and China as well as
information on startups to create new business models in
the motorcycle and automobile, aircraft, and space businesses. In the course of doing so, we aim to invest in
cutting-edge technologies and establish joint businesses
with our business partners.

FY2017

Vector rocket engine test ﬁring

KANEMATSU Integrated Report 201931

Sustainability

Our Approach to Sustainability
The Kanematsu Group has codiﬁed the entrepreneurial spirit of Kanematsu’s founder, Fusajiro Kanematsu, in its
Corporate Principle. We engage in business in Japan and around the globe based on our mission of contributing tointernational society and economic development.
The challenges facing international society today, such as climate change and other increasingly serious socialand environmental problems, are growing more diverse and complex. We believe that carrying out corporate
activities proactively, with an awareness of these challenges and a sense of mission, serves to both help address
such challenges and promote the growth of the Kanematsu Group.
With an eye toward cooperation and mutual development with our customers and business partners, we willcontinue to leverage the insight and know-how built up over Kanematsu’s long history to provide goods andservices with added value. Through these corporate activities, we aim to achieve the sustained development of the
global environment, society, economy, and of the Kanematsu Group.

Addressing the Five Key Issues
Business activities

Social contribution activities, etc.

A
Responding to changes in market
characteristics and location andchanges in customer needs

Business in high-value-added
health foods for healthierliving
Initiatives to introduce ICT tolivestock farming

p35

Security business to guard
against cyber attacks

B
Mutual developmentwith local communities

Ensure health and safety through our
corporate and social contribution activities
to achieve mutual growth anddevelopment with local communities.

Offering services closely
tailored to local needs atmobile phone shops
Sustainable coffee
plantation-related initiatives
Kanematsu Foundation for
p34
the Research of Foreign Trade
Volunteering in areas
affected by the Great East
Japan Earthquake

p35

Supporting Amputee Soccer p34
e-Net Caravan activities

Enhancing the corporate
governance system
Enhancing internal control
and risk management
systems

32

KANEMATSU Integrated Report 2019

p42
p44

D
Enhancing governance

Increase management transparency,
enhance appropriate oversight functions
and systems, and promote sound corporate
management to achieve sustained growth.

Kanematsu’s Progress and Strengths

Determining Materiality
The Kanematsu Group aims to take on social challenges based on abroad view of international society in order to create new markets
and value. In this way we seek to contribute to the global
environment, sustainable social development, and the growth of theKanematsu Group.
At the start of the future 135 medium-term vision in ﬁscal 2019,
we sought to determine which issues the Kanematsu Group should
focus on in its corporate activities, taking into account internationaltargets and standards—such as the Sustainable Development Goals(SDGs)—as well as stakeholder expectations, Kanematsu’s Corporate
Principle, and importance to management. Through these efforts, weestablished ﬁve key issues (issues of high materiality).

• Responding to changes in market
characteristics and location and changes incustomer needs• Mutual development with local communities• Consideration of the global environment• Enhancing governance• Promoting respect for human rights, humanresource development, and diversity

Special Features
Review of Operations

Meet the needs of people in many countries
and regions by achieving the stableprocurement and supply of goods andservices to realize richer, comfortable living.

Aircraft rotable parts business/
part-out business
Forest conservation initiatives
in Indonesia (REDD+)

p36

Demonstration project toincrease effective EV range

p35

Solar panel and converter supply
business
Renewable energy power plant
construction businessC
Consideration of the
global environment

Work to address environmental issues,
including mitigating global warming andconserving biodiversity, through our
corporate and social contribution activities.

Sustainability

Business supplying highefficiency industrial machinery
employing low-carbon
technologies
Business supplying heat reﬂective
paint to combat global warming
Business selling biomass fuels tocombat global warming
Lumber preservation treatment
technology helping reduce global
warming
Environmentally friendly ground
improvement using wooden piles

Promoting respect for human rights,
human resource development, and diversity

Respect human rights, build sustainable value chains, and contribute toemployment in emerging counties in our global corporate activities. Maintainenvironments in which diverse human resources can exercise their individuality
and abilities while promoting the development of every employee.

Development of mealwormbased feedstuff materials

Financial Section and Company Information

E

Business in implementing
switches to LP gas fuelDeveloping and utilizing
global professionals in the
IT industry
Promoting work-lifebalancep40

Human resource
development initiatives

p37

Activities to support theindependence of persons
with disabilities

KANEMATSU Integrated Report 201933

Kanematsu’s Code of Conduct
We became involved in corporate activities to serve our various stakeholders by providing socially valuable goods
and services in accordance with the aim of our founder to realize a sustainable society.
Our corporate activities are conducted in compliance with laws and ordinances in Japan and abroad, internationalrules and practices, and internal rules as well as with social common sense.
3. Information management Information is properly managed to protect personal information, customer information, and intellectual property& disclosure
and is disclosed in a timely and proper manner to establish mutual trust between Kanematsu and the community
and maintain a high level of transparency.
4. Respect for human rights
We respect human rights and do not discriminate. Employee career development and capability development are
actively supported. Diversity, personality, and character are respected so as to create a dynamic corporate culture.
5. Consideration of the global We exercise sufficient consideration in our corporate activities to maintain a sound global environment forenvironment
sustainable growth.
6. Social contribution
We are aware of the importance of our social responsibility as good corporate citizens, and proactively undertakesocial contribution activities. Employee activities to contribute to community development and to comfortable andsafe living are supported.
1. Origin of corporate
activities
2. Fair transactions

Environmental Initiatives
Kanematsu is engaged in environmental businesses in Japan and overseas that help protect and improve the global environment. The global Group also continuously works to improve its ISO 14001-based environmental management system.
By effectively operating this system, the Group is reducing electricity and paper consumption, promoting comprehensive
waste sorting and reduction, and helping to reduce CO2 emissions. Through these efforts, the Group strives to contribute to
the creation of a low-carbon, recycling-oriented society.
For more details, please refer to Kanematsu’s Environmental Report.

http://www.kanematsu.co.jp/en/csr/environment/environmental_report.html

Social Contribution
The Kanematsu Foundation for the Research of Foreign Trade
The Kanematsu Foundation for the Research of Foreign Tradewas established in 1940 with the purpose of contributing toeconomic development through support and funding for
research into trade and international economics. The
Foundation is jointly operated by the Research Institute for
Economics and Business Administration of Kobe University
and Kanematsu.
In 1993, the Kanematsu Prize—a Kanematsu postgraduate research scholarship—was jointly established by the
Research Institute for Economics and Business Administrationof Kobe University, the Kanematsu Foundation for the
Research of Foreign Trade, and Kanematsu Corporation. Every
year, graduate students are invited to submit their dissertations to apply for the prize. The Kanematsu Prize thus
provides graduate students in the ﬁelds of economics,
management, and accounting across Japan with opportunities to win a research fellowship and to present their research.
Beginning with the 2018 prize, the economics divisionand management
division are judged
separately. Throughsuch efforts,
Kanematsu willcontinue to support
research in the ﬁeldsof economics,
management, andaccounting throughthe Kanematsu Prize.

34

KANEMATSU Integrated Report 2019

Supporting Amputee Football
In April 2019, Kanematsu formed a partnership agreement with
the Japan Amputee Football Association (JAFA).
As part of initiatives to address our ﬁve key issues of mutual
development with local communities and promoting respect forhuman rights, human resource development, and diversity, weare supporting the parasport of amputee football.
In agreement with JAFA’s mission of realizing an inclusive
society for all, regardless of disability, through soccer, Kanematsu
supports amputee football.
This support is given inrecognition of the value of
diversity and to contributeto the realization of an
inclusive society in which
everyone can express theirindividuality and utilize
their talents.

Operational Support and Platform Provision
Since October 2018, Kanematsu has provided a meetingroom at its Tokyo Head Office for JAFA to use as an office.
Based on our partnership agreement, we send employee
volunteers to JAFA tournaments and actively engage inefforts to spread awareness of amputee football, broadly
communicating the appeal and excitement of the sport.

Provision of the Kanematsu Tsuga Ground (Chiba City, Chiba)
The Chiba Prefecture amputee football team AFC BumbleBee
Chiba holds practices at Kanematsu’s Tsuga Ground around
twice a month.

Awareness Raising through Experience Event

Reconstruction Support Volunteer Activities

Volunteering in Areas Affected by the Great East Japan Earthquake
Kanematsu conducts volunteer efforts to support recovery in
Rikuzentakata, Iwate, an area affected by the Great East Japan
Earthquake, on an ongoing basis. From summer 2011 to autumn
2018, a total of more than 300 Kanematsu Group employees
have taken part in 19 volunteer trips. On the 19th trip,
employees volunteered to help operate the 2018 Road toSupport for Areas Affected by Flooding in July 2018
Kanematsu sent a donation of ¥10,000,000 from theCompany as well as donations from employees and executives to areas in Western Japan impacted by severe ﬂooding
through the Japanese Red Cross Society.
In addition, under the new support system, employee
volunteers went to Kure, Hiroshima, and Seiyo, Ehime, from
August 8 to 12, 2018, to remove ﬂood sediment from andclean homes affected by ﬂooding.

Supporting Volunteering at the 2020 Tokyo Olympics andParalympics

Review of Operations

Kanematsu is broadening the scope of the support it provides
for volunteer activities in areas affected by natural disasters
with the aim of encouraging employees to volunteer.
Speciﬁcally, the Company has amended its volunteer
support system to cover transportation and lodging costs not
only for Company-organized volunteer efforts, but also
employee’s self-directed efforts.

Recovery Rikuzentakata Marathon, held on November 18. This
marathon, of which Kanematsu is a corporate sponsor, brought
together runners and volunteers from around the country withlocal citizens in a shared hope for recovery.
Going forward, we will continue to support community
building and recovery in Rikuzentaka through a variety of efforts.

Special Features

At the ﬁfth annual Kanematsu Invitational Kids’ Soccer
Tournament, held January 13, 2019, after the matches concluded,
we held an amputee soccer experience event to spread awarenessamong the participating children.
This event served as an opportunity to not only allow the children
to see ﬁrst-hand how fun and interesting amputee soccer is, but also
to spark an interest in parasports
and communicate the value ofhuman life and resilience.

Kanematsu’s Progress and Strengths

Furthermore, the ﬁrst match of the ﬁrst tournament of theEastern Japan Amputee Football League, inaugurated in ﬁscal
2018, was held at the Kanematsu Tsuga Ground. Kanematsuplans to not only provide its grounds, but wide-ranging cooperation with the aim of spreading league matches nationwide.

Kanematsu has designated special paid leave* to support thevolunteer activities of its employees related to the 2020 Tokyo
Olympics and Paralympics as part of its CSR activities.
* Employees can take up to 15 special days of paid leave, separate fromnormal volunteer leave, to act as volunteers in Olympic-related activities
taking place on workdays (this leave may also be used for training
before the events).

Addressing the Five Key Issues
Bringing ICT to Farming

Demonstration Project to Increase Effective EV Range

In northern California, in the United States, Kanematsu is working
with Nissan Motor Co., Ltd. and Nissan North America, Inc. on ademonstration project commissioned by the New Energy
Industrial Technology and Development Organization (NEDO)
aimed at expanding the effective range of electric vehicles (EVs).
This project is providing EV drivers with a smartphone app
called DRIVEtheARC. Introduced in ﬁscal 2019, this app allows
users to reserve EV charging stations. The project’s charging
infrastructure now includes two CHAdeMO 100 kW high-power
fast chargers. Under the project, 57 rapid chargers have been
installed at 26 locations in the northern part of the state. The
project is expected tohelp improve the usabilityof EVs and promote theiradoption.
Through such projects, we will continue towork toward the creationof a low-carbon society
while preventing air
pollution and reducing
global warming.
KANEMATSU Integrated Report 2019

Financial Section and Company Information

Reﬂecting demographic graying and a shrinking populationof farming professionals, dairy farms are seeking to maketheir operations more efficient and effective. The KanematsuGroup is working with Farmnote Holdings to develop
systems that can assist with livestock management by using
IoT-connected sensors to identify individual cattle, recognize
their behavior using AI, and alert users to abnormalities(such as signs of oestrus or illness). Working together, we
aim to realize efficient, next-generation dairy farming
through the use of smart barns and other new initiatives
utilizing ICT.
Through suchinitiatives, we will
respond to changes
in markets andcustomer needs
while contributing to
the development of
dairy farming byleveraging new,Groupwide perspectives and ideas.

C

SustainabilityA

35

Forest Conservation Initiatives in Indonesia: REDD+
Kanematsu is involved in REDD+ initiatives, which it believes have great potential as SDG-related businesses.* Since 2011, Kanematsu has been working with Indonesia’s inﬂuential Gobel Group on a forest
conservation project in Gorontalo Province.
Gorontalo Province is located on theeastern Indonesian island of Sulawesi.
Accompanying an increase in theprovince’s population, deforestation iscausing a number of environmental
problems. Depleted forests are unable
to absorb heavy rains, leading tofrequent ﬂooding, while sedimentfrom mountainous areas being
washed downstream is causing Lake
Limboto, a very important resource
for local communities, to shrink. In
addition, the deforestation itself is amajor source of greenhouse gas emissions. As these environmental problems are closely linked with poverty,
providing appropriate support to thepoor farmers living near forests is
crucial to addressing said problems.

Slash-and-burn corn farming is afactor contributing to deforestation.
However, local farmers depend on
this crop for their livelihoods, so
simply prohibiting such farming is nota viable option.
Nevertheless, the region needs
solutions to its environmental andpoverty problems. To this end,
Kanematsu is working with chocolatecompanies in Indonesia and Japan,
providing technical guidance to local
farmers to help them produce highquality cacao—highly lucrative but
much less devastating to the local
ecosystems—while advancing value
chain development, including cacaopurchasing and marketing.
We aim to continue to work

closely with local residents to market
products made with cacao from thisregion in the Indonesian andJapanese chocolate markets and hope
to expand this project.
Through this project, Kanematsu
is helping protect the natural environment, including forests and lakes, andreduce greenhouse gas emissions.

* REDD+ (reducing emissions from deforestation and forest degradation) is an initiative aimed at reducing
forest loss and degradation and promoting sustainable forest management in developing countries.

SDG-Aligned Business Model of REDD+

Working toward the SDGs
1. No Poverty
13. Climate Action
15. Life on Land

Kanematsu and the Gobel Group in Indonesia
1. Forest conservation in collaboration with cacao farmers
2. Chocolate made from cacao harvested through the project is sold in
n Japan
3. A portion of sales revenues are returned to cacao farmers

CO

Reducing
2
by reducing
slash-and-burnfarming• Technical guidance• Skills development• Building value chains

Forest conservation in Boalemo,
Gorontalo Province,
Indonesia

36

KANEMATSU Integrated Report 2019

• Chocolate sales
Appeal to consumers whovalue social contribution
and environmental
conservation

Sales of chocolate inJapan help reduce CO2
emissions, combat
poverty, address
climate change, andconserve forests

Chocolate markets

Kanematsu’s Progress and Strengths

Human Resource Development Initiatives
Human resources are a vital asset for Kanematsu, and retaining and training human resources is important for theCompany’s growth. Kanematsu maintains systems to promote work-life balance, including child care support and familycare support systems, seeking to create workplaces that are comfortable and rewarding for employees. Furthermore, we
focus considerable effort on human resource development, an indispensable part of Kanematsu’s growth.

Message from the Chief Officer of Human Resources & General Affairs

Special Features

Creating Rewarding, EmployeeFriendly Workplaces by Developing
Professionals with Individuality
Kazuo Tanaka
Senior Executive Officer,
Chief Officer, Human Resources & General Affairs

Review of Operations

resources who can effectively manage businesses. Our
aim is for employees to acquire not only basic knowledge and know-how, but broad, long-term perspectives that encompass the entire Company. By doing so,
we will realize qualitative improvement, nurturing thenext generation of Kanematsu leaders.
Furthermore, in ﬁscal 2018, we conducted an
employee engagement survey. We believe that whenemployees feel more strongly connected to theCompany, they aim higher and are more self-motivated,
increasing productivity. Accordingly, based on employee
feedback and opinions, we are advancing initiatives toenhance our personnel systems and implement work
style reforms with the aim of making the Company
more rewarding and employee-friendly. Improving
each employee’s physical health, mental health, andmotivation contributes to work efficiency and new
business creation. We thus aim to maintain environments in which diverse human resources can exercise
their individuality and abilities while promoting thedevelopment of every employee and contributing to
the achievement of the SDGs.

Sustainability

Human resources are the Kanematsu Group’s mostvaluable assets. Our Corporate Principle, establishedbased on the entrepreneurial spirit of our founder,
Fusajiro Kanematsu, includes the passage, “Ourpurpose as a Company is not only to build a sound andﬂourishing business, but to fulﬁll our responsibilities asa corporate citizen, contributing to society and the
security and well-being of all.” Since the Group’s
founding 130 years ago, Kanematsu has strived todevelop its people and create employee-friendly workplaces, growing and developing alongside a talented
workforce.
One of the priority initiatives of the future 135
medium-term vision is the establishment of management infrastructure for achieving sustainable growth,under which we aim to build a framework for global
strategy, cultivate management-level human resources,
and improve employee satisfaction.
To develop management personnel, in July 2019,
we launched Kanematsu University, a reinforced, more
systematic version of our existing training systems. To
make business investments and achieve the ongoinggrowth of the Kanematsu Group, we need human

Financial Section and Company Information

Kanematsu University
Kanematsu University, a reinforced, more systematic versionof our existing training systems, was launched in July 2019 todevelop management professionals who will create new businesses.
All employees of Kanematsu and Group companies who
have been with the Group for less than ten years are required
to participate in the system, which grants credits and certiﬁcations. The curriculum comprises the three categories ofgeneral education, interpersonal knowledge and skills, andprofessional knowledge and skills. The system provides a richrange of courses administered via e-learning or grouptraining, depending on the content. Content ranges from thefundamental, such as business manners and foreign
languages, to specialized knowledge and skills, such as business investment, legal matters, and anger management.
Using Kanematsu University, we are developing the next
generation of management-level human resources.

KANEMATSU Integrated Report 201937

Executive Management Training
Kanematsu created a new executive management training
system in ﬁscal 2017 to foster the skills to operate businesses
and organizations from an executive management perspective. Speciﬁcally, the targets of this training are to (1) foster
strategy formulation and human resource management abilities and (2) acquire the basic knowledge necessary to an

executive manager. In the ﬁrst year, we implemented thistraining for general manager-level employees. Since ﬁscal
2018, we have been gradually expanding this training to thedivision manager level and below, planning to eventually
include employees who are in approximately their 10th yearwith the Company.

Training in Business Plan Formulation
Kanematsu aims to improve corporate value by further developing areas of strength, making new investments for businesscreation, and taking on other new challenges. To this end, we have created training courses covering business plan formulation to
impart the skills necessary for drafting road maps to the creation and successful launch of new businesses.

Business Plan Formulation Trainee’s Perspective

Masahiro Marushima
Meat Department No. 1,
Pork Section

I decided to take part in this training because I
wanted to learn the skills to not just come up with
an idea, but to turn it into a real business.
The training comprised text-based study andapplied group work. In the study sessions, we
worked on problems we had received in advanceto train our logical thinking and output abilities,
using speciﬁc frameworks to systematically learn
the basic skills needed to create a business.
In the group work portion, we applied ourstudy to the creation of business plans fromscratch. As my team discussed, researched, andtested our ideas together, I really felt my understanding of the process deepen.
In addition, getting advice from the instructors and working with team members from otherindustries exposed me to many new ways ofthinking and looking at things, making every day
eye-opening. This experience was extremely valuable in terms of developing both my skills andmindset.
Going forward, I will put what I learned inthis training into practice, and I hope to take on
exciting new business creation.

Overseas Dispatch Training System
Kanematsu operates an overseas training system for employees in their ﬁrst ﬁve years with the Company. Participants aredispatched to overseas subsidiaries, representative offices, and business corporations to experience local life- and workstyles foraround six months. This system exposes employees to diverse values and provides the experiences, insights, and knowledge thatmembers of a globally operating trading company need.

Overseas Dispatch Training System Trainee’s Perspective
During my overseas training in Detroit, in the United States,
I mainly took part in handling customer audits anddeveloping and launching new products. My most vivid
memory from this experience was a time when, due to insuffi cient
production capacity, we had a problem with productdelivery, and a customer’s production line almost had to be
stopped. I will never forget the experience of going to the
production ﬂ oor in Mexico to work on the line alongside
the other staff , just barely managing to avoid a failure todeliver.

In addition, during our daily teleconferences, I felt ﬁrsthand the urgency of our customers and the particularitiesof the ways they do business. I think that this has enabled
me to communicate information from customers to our
suppliers with a greater sense of immediacy, even after
returning to Japan. I also learned how diffi cult—and howinteresting—it is to advance talks and projects while making
sure to protect our interests and proﬁ t when negotiating
contract terms, such as price and technical speciﬁ cations,while each side is pushing for this and that.

Diversity
Promoting Greater Professional Success for Women
Action Plan to Help Women Excel
In ﬁscal 2017, we adopted new systems aimed at helping
women succeed professionally.
1. A system to allow non-career-track employees to take division
manager or assistant manager positions
2. A system for rehiring employees who left the Company toaccompany a spouse who was transferred to another location

38

KANEMATSU Integrated Report 2019

Furthermore, in ﬁscal 2018, we began the following new
initiatives.
1. Extended eligibility for shortened working hours for childcare to the end of the child’s third year of elementary school
2. Individual staggered work hours until the child ﬁnishes
elementary school
3. Flexi-time system

Kanematsu’s Progress and Strengths

Action Plan for Helping Women Excel (Outline) Plan duration: April 1, 2019 to March 31, 2024
Issues theCompany Faces

Although Kanematsu hires a certain number of women every year, the percentages of women among all new
graduate hires, employees in core operations, and employees in management positions are low.

Targets

1. Increase the number of women working in core operations in assistant section manager-level or higher
positions to 35 (from 27 as of March 31, 2019)
2. Increase the percentage of women among new graduate hires to 42% (from 34% in ﬁscal 2018).

Initiatives

Increasing the percentage of women among new graduate hires and creating systems to promote female employee
retention

FY2015FY2016FY2017FY2018FY2019Female career-track
employees*

51

55

54

56

54

52

Responsibility band 3

16

21

22

22

22

27

Special Features

FY2014* Work location is determined according to the Company’s needs and not restricted to any speciﬁc area. These employees eventually move into core operations.

Perspective of a Female Employee Working Overseas

The Representative ofKanematsu Corporation Yangon
Plant & Machinery Division
Deputy Manager

to expand our market share.
Working in Kanematsu has been rewarding because I not only get to meet and workwith amazing people but have had the privilege of participating in a training program
held in Japan. It was a good program forbrushing up useful skills and knowledge thathave fallen by the wayside since University, likethose related to ﬁnance or critical thinking.
Female employees in a Japanese company
or business in general provide a complementary perspective to the male. Where I tend to
focus on details and empathize, my malecolleagues tend to look at the big picture andtake it at face value. Combining both qualities
makes a great team. Moving forward, I plan to
improve my shortcomings and work efficiently
to be a bigger asset to the company.

Review of Operations

Sandy Tun

Sustainability

Kanematsu Yangon is a small and interdependent representative office with a history ofover 60 years in Myanmar. Being small meansthat each employee’s input matters, and ouroffice’s interdependency with Japan andbranch offices like those in Thailand endows us
with tremendous support in working towards
our shared goals.
I am in charge of Plant & Machinery,
where we focus primarily on Japan Official
Development Assistance projects ranging frompower generation equipment to shipbuilding
and ﬁnding new markets for machinery. All ofwhich are very intriguing and play a vital rolein developing the Myanmar economy. Electronics
is another industry I am handling; it mainly
involves developing the card printer business byappointing local distributors and ﬁnding ways

Global Professionals
Global Staff Perspective

Kanematsu USA Inc.
Chicago Head Office /Finance Department

core businesses, but got to see the businessfrom new perspectives, better understand thelinks between Kanematsu and its subsidiaries,
and—by working with the staff of the parent
company—experience Kanematsu’s corporate
culture ﬁrst-hand.
I believe that teamwork is the key tosuccess. I enjoy working every day with mysupervisors and kind coworkers who encourage me to grow and always offer me advice.
Going forward, I hope to put my experience to
use within my team to contribute to thesuccess of Kanematsu.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

Hoai Nguyen

I joined Kanematsu USA in 2017, and currently
work in ﬁnance. My main duties are day-to-day
bookkeeping and providing ﬁnance-related
support to our branch offices, as well as sometasks related to taxes and preparing ﬁnancial
statements. Maintaining an overall view of our
ﬁnances and accounting takes time and work,and I am doing my utmost to help theCompany take on challenges in many ﬁelds.
In August 2018, I had the opportunity totake part in a month-long training course inJapan. I not only gained new knowledge, suchas about ﬁnancial operations that are uncommon in American companies and Kanematsu’s

39Work-Life BalanceKanematsu is proactively committed to ensuring a good work-life balance and discourages long working hours in order to foster ahealthy workforce. We have been improving the working environment so that employees can treasure the time they spend with
their families as well as the time spent on hobbies and participating in social activities.

Child Care Support
In addition to maternity and childcare leave systems, we havea number of systems in place to allow parents to continue
working while pregnant or raising children. These include
reduced duties and time off for doctor’s visits during pregnancy, time off to care for sick children, and shortened work
hours and ﬂexi-time after returning from leave. From ﬁscal
2019, the period after returning from leave during which
employees are eligible for reduced work hours has been
extended from up to the child’s third birthday to the end of
the child’s third year of elementary school. In addition,
employees may work reduced hours with no reduction in pay
until the child’s third birthday.

Many mothers take childcare leave, and when they return
to work, as a rule, they are placed in the divisions in which
they worked before. These measures are taken to create apleasant working environment.

Number of Employees Taking Childcare Leave
FY2016FY2017FY2018FY2019

17*

14

18

20**

* Includes two male employees** Includes two male employees

Family Care Support
In addition to the conventional family care leave system, Kanematsu has recently enabled special paid holidays for family care.
We also have in place a child-raising and care consultation office for one-to-one consultation on these matters.

Systems for Using Paid Vacation
Bronze Week
Since ﬁscal 2016, Kanematsu has maintained a “Bronze
Week” system for systematically encouraging the use ofannual paid vacation days. This is intended to make it easierfor employees to take off the time they are entitled to,improve work-life balance, and create workplaces that are
comfortable and rewarding. Since the system’s introduction,

the rate of annual vacation days used has risen steadily,
reaching 73.7% in ﬁscal 2018. In ﬁscal 2019, we raised theminimum number of days employees are required to use fromtwo to four, aiming to create even more employee-friendly
workplaces and further increase the paid annual vacation
usage rate.

Bronze Week System Outline• Makes it easier to take off a bridge day between two ordinary days off or the day before or after a three-day weekend,
effectively extending the number of consecutive days off for the individual to four or more.
• This system is aimed at helping employees have special experiences that are difficult to realize with one or two days off sothat they will feel refreshed and have new ideas that they can then put to use in their work.
• The system is designed to allow employees to choose their own days off. At the start of the ﬁscal year, each section
designates at least four days in the year as candidate days for paid vacation, and each individual then chooses at least fourof these to take off.
• Applies to all employees, in principle, excluding those on dispatch within Japan, stationed overseas, or on leave.
• The system, which encourages the use of paid annual vacation, especially multiple consecutive days off, is named “Bronze
Week” in reference to the yearly clusters of public holidays in Japan popularly known as “Golden Week” and “Silver Week.”

My Weekend System
In ﬁscal 2019, we established the “My Weekend” system toencourage employees to take their paid annual vacation to,for example, pursue their hobbies or enjoy special family occasions. This system is aimed at helping employees feel comfortable taking days off for important events and giving greaterpriority to their personal lives. In particular, managerial
employees, who often ﬁnd it particularly difficult to take timeoff, are asked to use at least ﬁve days per year. This systemthus provides support to help employees prioritize both theirwork and private lives.

My Weekend System Outline• By encouraging employees to take off not only ordinary weekends, but days of personal signiﬁcance, such as theirwedding anniversaries or the birthdays of family members, as “my weekends,” this system is aimed at helping employees
take time for their personal interests and important family occasions.
• Managerial employees are asked to take at least ﬁve days off per year through the My Weekend system alone (no usage
requirement has been set for non-managerial employees).

40

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

Hourly Use of Paid Annual Vacation
In ﬁscal 2019, we introduced an hour-based system for using
paid annual vacation. This provides even more ﬂexibility thanthe previous system, which required employees to take anentire half day in the morning or afternoon, to better accommodate employee’s private lives.

Annual Vacation Usage Rate
(%)
80

73.7
70

65.6
60

60.4

59.7

FY2014FY201566.7

50FY2016FY2017FY2018Special Features

Outline of Hourly Use of Paid Annual Vacation• Paid annual vacation, which previously could only be used in one-day or half-day units, can now be used in hourly units.
•Up to 40 hours per year of paid annual vacation (the equivalent of ﬁve 8-hour days) can be used in hourly units; inprinciple, managerial employees and non-full-time employees are not eligible to use this system.
•By expanding the range of options for using paid annual vacation, Kanematsu is creating work environments that are
more accommodating of individual circumstances and promoting more ﬂexible work styles.

Individual Flexi-Time System

Review of Operations

In ﬁscal 2019, we implemented a ﬂexi-time system that applies at the individual rather than sectional level, as was previously thecase. Now, in principle, individuals can freely adjust the times they come to and leave work in accordance with the varying
demands of their own schedules.

Overview of the Individual Flexi-Time System• Employees must be at work during core time (10:00–15:30), but outside of this time, they are, in principle, free to decide
what time to come to and leave work.
•To use this system, in principle, employees must submit notice of their planned arrival and departure times by the end of
the previous week. However, after such plans are submitted, they may be revised as needed to accommodate urgent
errands, illness, or other individual circumstances.

Sustainability

General Employer Action Plan
In December 2010, Kanematsu was awarded the “Kurumin”
certiﬁcation of support for the nurturing of the next generation by the Ministry of Health, Labour and Welfare’s Tokyo
Labour Bureau. In January 2017, we received the “Kurumin”
certiﬁcation a second time.
In October 2016, we formulated our fourth General
Employer Action Plan. Based on this plan, we are continuingmeasures to fully harness employee potential by encouraging a better balance
between work and childcare duties and bycreating a more pleasant workplace for all.

Bring Your Child to Work Day
the company president and executives, and made paper fanswith messages of encouragement for their working parents.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

In ﬁscal 2019, Kanematsu held its third annual Bring YourChild to Work Day. By helping to deepen colleagues’ understanding of and build support for their workmates balancing
work and childcare while enhancing communication andunderstanding among families regarding work and theCompany, this event is intended to increase employee motivation and foster a sense of belonging within the Company.
We also hope that it will provide an opportunity for all
employees to think about their own work-life balance. On the
day of the ﬁscal 2019 event, the participating children saw
displays of the products handled by each division, took a tourof the Company, practiced exchanging business cards with41

Corporate Governance

Our Basic Stance on Corporate Governance
Kanematsu’s founder himself put down the words “Let us sow and nurture the seeds of global prosperity.” The
Kanematsu Group recognizes the pioneering spirit fostered by our predecessors along with the wise use of our creative imagination and ingenuity, fulﬁlling our corporate social responsibilities through sound, ﬂourishing businesses, and adherence to Company rules as key parts of its Corporate Principle. We operate in accordance with thisprinciple and our Code of Conduct, striving to carry out corporate activities to serve our various stakeholders andhelp realize a sustainable society by providing socially valuable goods and services.
To this end, Kanematsu endeavors to strengthen corporate governance to increase the transparency of management and create a more equitable, efficient, and sound company. We work to improve corporate governancewith the aim of increasing our enterprise value and winning the support of all our stakeholders, including shareholders, customers, business partners, and employees.

System of Corporate Governance
Board of Directors
Directors are appointed to the Board for one-year terms toallow the Board to respond appropriately to changes in thebusiness environment. Kanematsu has adopted an executive
officer system to improve the ﬂexibility of business execution, speed up management decision making, and further
clarify roles and responsibilities through the separation ofsupervisory and executive functions.

The Board of Directors is made up of six directors. The Board
decides on matters required of it as set out in law andKanematsu’s Articles of Incorporation as well as business
policies and other important matters and oversees businessexecution by directors. Two of the six directors are outside
directors to ensure that the Board conducts appropriate
decision making and to further reinforce the supervision ofbusiness execution. In principle, the Board of Directors meetsonce a month, with additional meetings held as necessary.

Advisory Bodies
and dismissal of directors and the necessary policy, rules, andprocedures for reaching related resolutions• Compensation Committee: Comprises the president as committee chair and the two outside directors. The committee
provides recommendations to the Board of Directors basedon deliberations regarding such matters as policy regarding
the setting of compensation levels and types for individual
directors and executive officers as well as the necessary policy,
rules, and procedures for reaching related resolutions.

To reinforce the objectivity, independence, and accountabilityof the Board of Directors, Kanematsu has established a
Nominating Committee and Compensation Committee asadvisory bodies under the Board of Directors.
• Nominating Committee: Comprises the president as committee chair and the two outside directors. The committee
provides recommendations to the Board of Directors basedon deliberations regarding such matters as proposals for the
General Meeting of Shareholders related to the appointment

Corporate Governance Structure
General Meeting of Shareholders
Appointment/Dismissal
Consultation

Board of Directors

Advice/Suggestions

Six directors(including two
outside directors)

Nominating Committee
Compensation Committee

Appointment/Dismissal/
Supervision

President

Appointment/
Dismissal

Appointment/Dismissal
Audit

Audit & Supervisory Board
Four Audit & Supervisory
Board Members(including three outside members)

Collaboration

Audit
Collaboration

Management Committee
Project Deliberation Committee
Internal Control and Compliance Committee

Internal Auditing
Department
Internal
controls

CSR Committee

Accounting audit

Accounting Auditor

Collaboration

Marketing Area/Support Area, Domestic and Overseas Offices(As of June 21, 2019)

42

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

Management Committee
To facilitate rapid decision making and ﬂexible management,
Kanematsu has set up a Management Committee composedof executive officers, including the president. In principle, theCommittee meets at least twice a month. The Committee

establishes basic policies for general business execution inaccordance with basic policies determined by the Board of
Directors and provides instruction and guidance on the execution of business.

Project Deliberation Committee
The Project Deliberation Committee was established toenhance debate and speed up decision making on important
projects. The Committee considers and discusses matters froma Companywide perspective and submits recommendations

to the designated decision makers for each item before thedecision must be made. In principle, the Committee meets atleast twice a month.

Special Features

Audit & Supervisory Board
The Audit & Supervisory Board acts as an independent organ
to audit directors’ performance of their duties. Speciﬁcally, thefour Audit & Supervisory Board members, including three outside members, receive reports from directors and employeeson the performance of their duties as required, and attend
meetings of the Board of Directors, Management Committee,
Project Deliberation Committee, Internal Control andCompliance Committee, and other important meetings.

Reasons for Selection of Outside Directors and Outside Audit & Supervisory Board Members
NameFiscal 2018 attendance

Yuko Tahara

So that she can provide advice to management and appropriate oversight ofbusiness execution based on her wealth of experience in corporate managementand deep insight gained through experience in human resources andorganizational consulting.

Sohei Ogawa

So that he can audit Kanematsu based on his abundant experience in theinternal management of ﬁnancial institutions and wide-ranging insight.

23 of 23 Board of Directors meetings
15 of 15 Audit & Supervisory Board meetings

Tsukasa Miyachi

So that he can audit Kanematsu based on his expert knowledge and experience
as a certiﬁed public accountant.

23 of 23 Board of Directors meetings
15 of 15 Audit & Supervisory Board meetings

Review of Operations

Seiichi Katayama
OutsideDirectors

Outside Audit& Supervisory
Board members

Reasons for selection

So that he can utilize his wide-ranging knowledge and insight regarding corporate
management as well as expertise amassed as a professor of economics—albeit
23 of 23 Board of Directors meetings
with no direct experience in management other than as an outside director—in
Kanematsu’s management and provide management oversight.

—*

So that he can audit Kanematsu based on his expert knowledge and experience

Yusaku Kurahashi as a lawyer.

—** As Ms. Tahara and Mr. Kurahashi were appointed at the June 21, 2019 General Meeting of Shareholders, they did not attend meetings in ﬁscal 2018.

Sustainability

Director and Audit & Supervisory Board Member Compensation
Breakdown of Director and Audit & Supervisory Board Member Compensation
Total compensation by type (millions of yen)

Number of individuals
receiving
Retirement beneﬁts
compensation

Basic compensation

Stock incentives

Bonuses

Directors (excluding outside directors)

271

200

29

41

—

6

Audit & Supervisory Board members(excluding outside members)

27

27

—

—

—

1

Outside directors and Audit &Supervisory Board members

72

72

—

—

—

6

Financial Section and Company Information

Total compensation(millions of yen)

Note The above table includes one director who retired as of the conclusion of the June 22, 2018 General Meeting of Shareholders

Performance-Linked Compensation Plan
To clarify directors’ management responsibilities and enhancetheir incentives to improve corporate performance, Kanematsu
has adopted a performance-linked compensation plan.
Furthermore, the May 9, 2018 Board of Directors meeting andJune 22, 2018 General Meeting of Shareholders passed resolutions to introduce a performance-linked stock incentive plan
employing a trust for Kanematsu’s directors (excluding outside
directors). The Company also implemented a similar perfor-

mance-linked stock incentive plan for its executive officers. The
new plan is aimed at more closely linking director compensation
with corporate performance and stock price and better motivating directors to improve corporate performance and enterprise value over the medium term by having directors sharewith other shareholders the potential beneﬁts and risks ofshare price changes.

KANEMATSU Integrated Report 201943

Internal Auditing
To ensure that proper accounting records are kept and to monitor appropriate business execution, Kanematsu has establishedauditing rules, in accordance with which the Internal Auditing Department conducts internal audits of all divisions and consolidated
subsidiaries.

Internal Control System and Risk Management System
Maintaining the Internal Control System
To comprehensively assess risks facing the KanematsuGroup, to comply with laws and regulations relating to operational effectiveness and efficiency and business activities, toprotect its assets, and to ensure the reliability of its ﬁnancial
reporting, the Kanematsu Group has built an internal control
system. To operate this system effectively and efficiently, we

have also established the Internal Control and Compliance
Committee. We develop, operate, assess, and improve internal controls related to ﬁnancial reporting to ensure the correctness of the Group’s reporting in line with the internal
control reporting systems deﬁned in the Financial
Instruments and Exchange Law.

Compliance
In light of the importance of corporate legal compliance, wehave set up internal control systems for the Company and theGroup as well as an Internal Control and Compliance Committee
to implement said systems, seeking to strengthen our internal
compliance system. In addition to preparing a ComplianceHandbook that covers all Group companies, we work toenhance awareness of and training on sensible behavioral ethics.
The Group also maintains a hotline system that allows employees to directly report to or consult with the Internal Control andCompliance Committee or an outside lawyer.

Diagram of the Kanematsu Group Compliance System
Instructions, Feedback
Board of Directors

Management Committee

Reports, Consultation

Audit & Supervisory Board

Internal Control and Compliance Committee
Internal Control and Compliance Committee Members
Promotion Office: Legal & Compliance Department(For units that do not have a controlling division at Kanematsu Corporation)

Marketing Area/Support Area

Group Companies

Departmental Compliance Officers

Compliance Officer(Chief officers of business divisions and administrative departments)(President of Head of Location)

Officers & Employees of Kanematsu Corporation

Officers & Employees of Group companies*Sub-subsidiaries report through their immediate parent companies(As of June 21, 2019)

Elimination of Antisocial Forces
One of Kanematsu’s compliance commitments is to take aﬁrm stand against and eschew all relationships with antisocial
forces. To promote the elimination of antisocial forces,
Kanematsu belongs to the Tokyo Metropolitan Police
Department’s Special Violence Prevention Countermeasures
Association, cooperating closely on a regular basis by sharing

44

KANEMATSU Integrated Report 2019

information. The Human Resources & General Affairs
Department is designated to coordinate Companywide
response and information gathering to address any unreasonable demands from antisocial forces, and the Company maintains a framework for responding in coordination withoutside organizations, including the police and attorneys.

Kanematsu’s Progress and Strengths

Information Management System
With regard to information management, we have established standards for the custody, retention, and disposal of
accounting records, balance sheets, agreements and contracts concerning the basic rights and obligations ofKanematsu, certiﬁcates related to properties, and other similar documents.
As information is a valuable corporate asset, we have also
formulated, and work to reinforce, rules on information security management with the aim of protecting and managing
personal data and other information in line with compliancerequirements.
With regard to the security of information systems, theGroup has established information security management
rules aimed at preventing leaks and losses of important information and established standardized rules covering the use ofPCs, networks, and e-mail to protect corporate and personal
information. Furthermore, the Group continually reviews its
systems framework aimed at enhancing security and operates
and maintains said framework to ensure that security is maintained at necessary and appropriate levels.

Special Features

Risk Management
the Internal Control and Compliance Committee as aGroupwide organization. We have established an approval
request system based on designated levels of authority to minimize business risks. The Project Deliberation Committee considers important investments and loans by comprehensively
examining relevant risks.
To address the risk of crises related to the occurrence ofmajor events, such as natural disasters, we have put in place asystem, including speciﬁc rules and policies of action, to ensure
the appropriate management of the Group at such extraordinary times.

Review of Operations

With respect to business risks that may affect our operations,
Kanematsu has designated departments responsible for eachtype of risk, established internal regulations and detailed
enforcement regulations, and prepared operational guidelines.
We furthermore use training and other means to ensure thorough awareness of risk management. The Company also sets up
cross-departmental committees as necessary to control risks.
To comprehensively assess risks facing the Kanematsu Group,
promote operational effectiveness and efficiency, maintain legal
compliance in business activities, protect Group assets, andensure the reliability of ﬁnancial reporting, we have established

Quantifying and Monitoring Risk
Risk Assets(Billions of yen)(Times)

0.7

140

125

120
100

116
92

0.49
90

80

0.48

100

0.6
0.5

0.44
0.40

0.4

0.33
0.3

60
40

44

44

46

44

41

Sustainability

The Kanematsu Group has laid out basic guidelines for controlling and managing risk in its Risk Management Guidelines.
Based on said guidelines, we classify and deﬁne risks, thenrespond to each appropriately, aiming to minimize losses to theKanematsu Group and achieve sound business growth anddevelopment.
The Group monitors quantiﬁable risks (market risk, credit
risk, investment risk, country risk, etc.) by regularly measuring
such risks and reporting the results to management. Speciﬁcally,
to measure maximum possible losses (risk assets) we apply a
proprietary weighting scheme corresponding to the potential
loss risk to all assets included in the Consolidated Statement of
Financial Position as well as off-balance sheet items.
Recently, to achieve more sophisticated capital management, we set an upper limit on the risk asset ratio, aiming toensure a sound balance of risk assets and risk buffer (shareholder’sequity) and maintain a sound ﬁnancial position while
increasing enterprise value through business creation andrevenue expansion.

0.2
0.1

20

0

0

FY2015
Risk assets

FY2016FY2017

Shareholders’ equity

FY2018FY2019Risk-asset ratio

Groupwide Activities
Financial Section and Company Information

Group company presidents meet twice a year and at other times as necessary to share information on Groupwide business activities. These meetings are aimed at ensuring mutual understanding and awareness with regard to corporate governance issues.

Disclosure
We promote proper and transparent management by promptly and accurately disclosing important corporate information about
management to shareholders and all other stakeholders, institutional investors, analysts, and the media. In addition to registering
information with ﬁnancial instruments exchanges, we disclose information through our website and engage actively in IR activities,
including regular brieﬁngs for institutional investors and analysts and meetings.

KANEMATSU Integrated Report 201945

Messages from the Outside Directors

Management for a New Era

Seiichi Katayama
Outside Director

This year, Kanematsu marked the 130th anniversary of its founding. The Company issteadily pushing forward with its medium-term vision, future 135, toward further
growth and development.
Aiming to increase its enterprise value, Kanematsu has adopted a management
structure with both a chairman and a president and adjusted its executive officer
lineup. The decision to shift to the new management structure was based on extensive deliberation and aimed at moving Kanematsu’s management into a new era ofgrowth. I am conﬁdent that the new structure will support the realization of
Kanematsu’s medium-term vision. To raise capital efficiency, Kanematsu has set
concrete targets under future 135 and is working to achieve expansion of scale andincrease added value. There is a need for greater labor productivity across Japan’s
economy as a whole. All Kanematsu employees, too, must work together to create
greater added value. To that end, the Company has introduced a new compensation
system for directors that incentivizes them to improve medium-term performance.
This system is focused on ensuring that directors work effectively for the Company.
Going forward, it may be useful to think of systems to incentivize labor productivity
at other levels, Companywide.
Geopolitical conditions have been growing more complex, reﬂecting changes inpost war Pax Americana free-trade regimes, while, at the same time, long-term
economic stagnation is deepening. In such challenging circumstances, developing
new revenue sources while protecting a stable earnings base is essential. I hope to
do my part to help Kanematsu do so.

New Value Creation through Human Resource Development

Yuko Tahara
Outside Director

46

KANEMATSU Integrated Report 2019

Kanematsu has considerable intangible and intellectual assets, such as know-how
and expertise accumulated through the various business processes it undertakes
around the world. These are a key part of new value creation. Such value creation isrealized, however, by human resources. A company is only as good as its people; assuch, human resource and organizational education and development are essential
to a company’s success, and the growth of human resources is directly linked tocorporate performance and growth.
Under future 135, Kanematsu has made the establishment of management infrastructure for achieving sustainable growth a priority initiative, under which it isworking to build a framework for global strategy, cultivate management-level
human resources, and improve employee satisfaction. Furthermore, Japan as awhole is rapidly approaching a turning point in human resource development andpersonnel strategy. Accordingly, companies are transitioning to new management
styles, including the use of talent management and talent development approaches
aimed at developing and leveraging the strengths of human resources, as well as HR
technologies. Building on Kanematsu’s traditions, I intend to do my utmost to
nurture outstanding personnel and organizations that are passionate, dynamic,
trusted, and in possession of the utmost integrity and good judgment. Furthermore,
I will strive to implement corporate governance with a proper balance of aggressive
execution and careful oversight, in line with Japan’s Corporate Governance Code,focusing on ensuring effective monitoring while working to further increase
Kanematsu’s enterprise value.

Corporate Officers(As of June 21, 2019)

Kanematsu’s Progress and Strengths

Directors and Audit & Supervisory Board Members

Kaoru Tanigawa

ChairmanPresident

1974 Joined Kanematsu- Gosho Ltd.
2010 President & CEO
2017 Chairman (incumbent)

1981 Joined Kanematsu- Gosho Ltd.
2015 Director, Senior Managing Executive
Officer
2017 President (incumbent)

Yoshiya Miyabe

Tetsuro Tsutano

Seiichi Katayama

Director

Director

Director

Director

1983 Joined Kanematsu-Gosho Ltd.
2018 Director, Senior Managing Executive
Officer (incumbent)

1992 Joined Kanematsu Corporation2017 Director, Executive Officer
2018 Director, Senior Executive Officer(incumbent)

2000 Director, Research Institute for Economics
and Business Administration, Kobe
University
2007 Professor Emeritus, Kobe University(incumbent)
2015 Director, Kanematsu Corporation (incumbent)
2017 Research Fellow, Faculty of Economics,
Aichi Gakuin University (incumbent)

1998 President and CEO, Basic Inc. (incumbent)
2012 Representative Director, Framework
Promotion Association (incumbent)
2018 Outside Director & Member of the Audit andSupervisory Committee, Sanyo Homes
Corporation (incumbent)
2019 Director, Kanematsu Corporation(incumbent)

Testuro Murao

Sohei Ogawa

Tsukasa Miyachi

Yusaku Kurahashi

Audit & Supervisory Board Member (full-time)

Audit & Supervisory Board Member (full-time)

Audit & Supervisory Board Member

Audit & Supervisory Board Member

1976 Joined Kanematsu- Gosho Ltd.
2015 President, Shintoa Corporation
2019 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

1984 Joined The Norinchukin Bank
2015 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

1970 Joined Chuo Audit Corporation2007 Opens Miyachi public accounting ﬁrm(incumbent)
2015 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

2007 Registered as attorney at law andjoined Nakamura, Tsunoda &Matsumoto2015 Partner of Nakamura, Tsunoda &Matsumoto (incumbent))
2019 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)Special Features

Masayuki Shimojima

Yuko Tahara

Review of Operations
Sustainability

1. Mr. Seiichi Katayama and Ms. Yuko Tahara are Outside Directors.
2. Mr. Sohei Ogawa, Mr. Tsukasa Miyachi and Mr. Yusaku Kurahashi are Outside Audit & Supervisory Board Members.
3. Mr. Seiichi Katayama, Ms. Yuko Tahara, Mr. Tsukasa Miyachi and Mr. Yusaku Kurahashi are Independent Officers, as deﬁned in the Securities Listing Regulations.

Executive Officers

KANEMATSU Integrated Report 2019

Financial Section and Company Information

President
Kaoru Tanigawa
Chief Officer, Motor Vehicles & Aerospace Division,
Senior Managing Executive Yoshiya Miyabe
General Manager, Osaka Branch; General Manager, Nagoya Branch, Chief Officer, Technologies and Business Collaboration
Officers
Toshihide Motoshita Chief Officer, Credit Control, Legal and Compliance
Chief Officer, Steel, Materials & Plant Division
Managing Executive
Eiji Kan
Officer
Senior Executive Officers Masayuki Hamasaki Chief Officer, Grain, Oilseeds & Feedstuff Division; Chief Officer, Foods Division
Chief Officer, Electronics & Devices Division
Masahiro Harada
Chief Officer, Human Resources & General Affairs, Traffic & Insurance
Kazuo Tanaka
Chief Officer, Finance, Accounting, Business Accounting
Tetsuro Tsutano
Deputy Chief Officer, Motor Vehicles & Aerospace Division
Executive Officers
Koichi Koizumi
President, Kanematsu USA Inc.
Ryoichi Kidokoro
Deputy Chief Officer, Steel, Materials & Plant Division
Osamu Iwata
Hiroshi Yamashina President, Kanematsu G.m.b.H; President, Kanematsu Europe PLC
Yoichiro Muramatsu Chief Officer, Corporate Planning, IT Planning
Deputy Chief Officer, Grain, Oilseeds & Feedstuff; General Manager, Grain & Feedstuff Dept
Jun Nakajima

47

Financial and ESG Highlights
JGAAP(As of March 31)

2009

2010

2011

2012

2013

¥1,138,755—
86,292
19,027¥861,277—
74,104
12,186¥936,891—
76,90518,029¥1,006,365—
80,90021,426¥1,019,232—
80,021
18,262

Income (loss) before income taxes andminority interests/Proﬁt before tax

77

8,407

13,03013,52916,781

Net income (loss)/Proﬁt for the year
attributable to owners of the Parent3(12,787)

3,528

9,175

6,110

9,564

17,177(370)
16,807

26,441(19,149)
7,292

7,827
17,32225,14915,822
1,291
17,113

1,355
1,466
2,821

Net assets/Total equity

414,928
42,035

398,62945,804

388,676
49,576

399,753
55,992

399,186
75,912

Shareholders’ equity/Total equity
attributable to owners of the Parent

24,93628,916

33,10139,00854,519Net interest-bearing debt

134,582

109,350

104,61290,01286,439¥(30.56)¥ 8.44¥21.93¥14.60¥ 22.80

59.61

69.15

79.07

93.16

129.82

—

—

—

—

—

(36.26)
6.0
5.4

13.10
7.3
3.8

29.59
8.5
3.2

16.95
9.8
2.3

20.45
13.7
1.6

For the year:
Net sales3
Revenue
Gross proﬁt
Operating income/Operating proﬁt

Cash ﬂows from operating activities
Cash ﬂows from investing activities
Free cash ﬂow
At year-end:
Total assets

Per share (yen):
Net income/Basic earnings per share
attributable to owners of the Parent3
Net assets/Equity attributable to ownersof the parent
Cash dividends
Financial indicators:
Return on equity (ROE) (%)
Equity ratio (%)
Net D/E ratio (times)

ESG* (Non-Financial) Data: *ESG: Short for environmental, social, and corporate governance.
Employees—consolidated
Employees—non-consolidated (women)
Percentage of women among
employees—non-consolidated (%)
6, 7

CO2 emissions (t-CO2)

Total paper use (sheets)7
External disposal of general waste (t)7
Directors (outside directors)8
Audit & Supervisory Board members8(outside Audit & Supervisory Board members)
Average length of service (years)
Three-year job separation rate (%)9
Average overtime worked (hours/month)

4,874
890 (262)

4,871
850 (264)

4,770
832 (250)

4,770
795 (238)

5,522
782 (242)

29

31

30

30

31

598.15
8,153,681
87.17
10 (0)

731.927,504,63787.80
10 (0)

644.76
6,801,305
71.50
10 (0)

443.83
7,062,310
46.57
10 (0)

471.42
6,874,521
48.95
10 (0)

4 (3)

4 (3)

4 (3)

4 (3)

4 (3)

14.6
10.0
11.5

14.3
9.8
9.3

15.1
6.5
7.2

15.5
10.3
10.1

16.0
0
8.3

Notes For the above items with two titles, the ﬁrst applies to ﬁgures under JGAAP and the second to ﬁgures under IFRS.
1. Figures are rounded down to the nearest million yen. Percentages have been rounded off.
2. The U.S. dollar amounts represent the arithmetical results of translating yen to dollars at the rate of ¥110.99 to U.S.$1.00, the exchange rate prevailing on March 31,
2019.
3. Net sales shown here for ﬁscal 2015 and after are based on accounting principles generally accepted in Japan, calculated as the sum of transactions in which theGroup acted as a party to the contract and transactions in which the Group acted as agent.
4. Kanematsu executed a share consolidation on October 1, 2017, at a ratio of ﬁve common shares to one. The calculation of the above ﬁgures assumes that said shareconsolidation was implemented on April 1, 2014.
5. Kanematsu executed a share consolidation on October 1, 2017, at a ratio of ﬁve common shares to one. The calculation of the above ﬁgure assumes that said shareconsolidation was implemented on April 1, 2017.

48

KANEMATSU Integrated Report 2019IFRS
Thousands of
U.S. dollars2

2019

2019

2018

¥1,114,539—
86,402
19,776—¥704,211
87,88023,547—¥668,374
86,23818,772—¥675,579
100,139
22,633—¥714,790
106,371
26,160——¥723,849
110,01430,349$6,521,752
991,215
273,441

19,07522,373

18,122

17,87526,04329,177

262,888

11,79910,546

8,959

8,049

16,317

16,605

149,613

22,384(1,111)
21,273

6,758(6,649)109

33,024(4,214)
28,81011,852(14,691)(2,839)

434
1,103
1,537

24,698(6,575)
18,123

222,533(59,242)
163,291

428,459
96,204

466,314
119,015

443,592
120,706

479,717
129,863

519,889
147,050

549,459

4,950,532

158,698

1,429,847

71,657

90,244

91,599100,357

116,012125,246

1,128,452

68,03872,155

48,81355,42959,04549,969450,217¥ 28.09¥ 125.494¥ 106.464¥

95.644¥ 193.794¥ 198.224$ 1.79170.54

1,072.204

1,088.454

1,192.214

1,377.664

1,499.864

13.51

3.00

4.00

5.00

6.00

48.00560.005

0.54

18.70
16.7
0.9

12.99
19.4
0.8

9.85
20.6
0.5

8.39
20.9
0.6

15.08
22.3
0.5

13.77
22.8
0.4

5,747
800 (246)

6,002
813 (253)

5,832
816 (259)

6,727
835 (273)

6,666
842 (282)

6,915

765 (263)

31

31

32

33

33

34

456.44
6,648,353
37.60
6 (1)

377.54
6,645,797
33.40
7 (2)

392.586,087,765
31.90
7 (2)

398.68400.74358.31

6,256,363

5,920,960

5,510,121

32.70

29.50

35.00

8 (3)

8 (3)

6 (2)

4 (2)

4 (3)

4 (3)

4 (3)

4 (3)

4 (3)

15.7
2.6
8.0

15.5
3.5
8.8

13.8
4.8
8.1

15.4

15.5
—
12.1

15.0
—
12.5

5.2
11.6

Financial Section and Company Information2017

Sustainability

2016

Review of Operations

2015

Special Features

2014

Kanematsu’s Progress and Strengths

Millions of yen1

6. The coefficients used to calculate the above ﬁgures are the most recent values published by the Japan Foreign Trade Council (originally publishedby the Electric Power Council for a Low Carbon Society via the Japan Business Federation).
7. The ﬁgures above are the totals for Kanematsu’s domestic locations on a non-consolidated basis and are subject to change due to changes in
office space due to the consolidation of branches or sales offices, etc.
8. The number following the General Meeting of Shareholders, after the year-end.
9. The percent of employees hired in the year in question who had left the Group as of three years later (for example, of the 42 employees hired in
April 2015, 2 had left the Group as of April 2018, so the rate for the year ended March 31, 2016 is calculated as (2/42)×100).

KANEMATSU Integrated Report 201949

Management’s Discussion and Analysis

Business Results
For the ﬁscal year ended March 31, 2019, revenue rose ¥9,059
million (1.3%) from the previous ﬁscal year to ¥723,849 million. Gross proﬁt increased ¥3,643 million (3.4%) from the previous ﬁscal year to ¥110,014 million. Operating proﬁt rose
¥4,189 million (16.0%) from the previous ﬁscal year to ¥30,349
million, reﬂecting the increase in gross proﬁt. Proﬁt before tax
increased ¥3,134 million (12.0%) from the previous ﬁscal yearto ¥29,177 million, reﬂecting a decrease in ﬁnance costs,
despite deterioration in proﬁt (loss) of investments accounted
for using the equity method. Proﬁt for the year attributable toowners of the Parent increased ¥288 million (1.8%) from theprevious ﬁscal year to ¥16,605 million. As a result, return on
equity (ROE) calculated on the basis of total equity attributableto owners of the Parent (shareholders’ equity) came to 13.8%.

Segment Information
Results for each business segment are described below.

Electronics & Devices
Performance in the ICT solutions business remained ﬁrm,
reﬂecting IT investment demand for servers and storage, mainly in the manufacturing and service industries and from theJapanese government. Performance in the mobile business
was solid, due to the continued effects of the integration of
two mobile phone sales subsidiaries. Results in the industrial
electronics business improved, due to large orders secured in
the fourth quarter by a card printer manufacturer that wasmade a wholly owned subsidiary in December 2018. However,the semiconductor parts and equipment business faced challenging conditions due to a decline in demand.
As a result, revenue in the Electronics & Devices segmentrose ¥2,220 million year on year to ¥265,530 million, and operating proﬁt increased ¥977 million to ¥18,533 million.

Foods & GrainIn the feedstuff business, animal feedstuff prices in Japan weresteady, and sales of animal feedstuff for meat and marine
product farming were especially strong. In the food business,processed agricultural product trading was ﬁrm, supported bystable raw ingredient prices and robust demand due to increasing health consciousness. The meat products business enjoyedﬁrm performance, despite ﬂuctuations in market prices.
As a result, in the Foods & Grain segment, revenue
increased ¥13,599 million year on year to ¥244,859 million,
and operating proﬁt rose ¥1,802 million to ¥3,951 million.

Steel, Materials & Plant
The energy business faced challenging conditions, reﬂecting atemporary drop in crude oil prices. In the iron and steel business, while some export transactions were impacted by trade
problems, business in Japan was solid, backed by ﬁrm domestic demand. Performance in the North American oilﬁeld tubing
business was solid, backed by robust drilling demand.
Performance in the machine tools and industrial machinery
business was strong, supported by ﬁrm demand, mainly inJapan. In the chemicals business, pharmaceuticals-related trading was particularly favorable.
As a result, revenue in the Steel, Materials & Plant segment
decreased ¥13,639 million year on year to ¥139,436 million.
Operating proﬁt increased ¥507 million to ¥4,437 million.

Motor Vehicles & Aerospace
In the aerospace business, performance in the mainstay aircraft
parts business was solid. In addition, the segment expanded thescope of its businesses, including operations in the small vehicle
launch business. In the motor vehicles and parts business,
although shipments to the Middle East were down, the mainstay components business was ﬁrm, reﬂecting the expansion of
Asian markets. Furthermore, the segment established an investment office in Silicon Valley in the United States to handle
advanced technologies in anticipation of widespread shifts
toward the era of CASE (connected, autonomous, shared, electric) and MaaS (mobility as a service) businesses.
As a result, revenue in the Motor Vehicles & Aerospace segment increased ¥7,610 million year on year to ¥62,063 million.
Operating proﬁt grew ¥8 million to ¥2,549 million.

Other
In other, revenue decreased ¥731 million year on year to ¥11,960
million. However, due to a rebound from impairment on ﬁxed

Revenue

Operating Profit(Millions of yen)

(Millions of yen)

(Millions of yen)

800,000

35,00020,000704,211

668,374

675,579

714,790

723,849

600,000

Profit for the Year Attributable to Ownersof the Parent / Basic Earnings per Share*200

193.7930,34930,00025,00020,000400,000

26,16023,547

16,317

16,60515,00022,633150

125.4918,772

10,000

10,546106.46
8,959

15,00010,000200,000(Yen)

198.22

95.64

100

8,049

5,000

50

5,000
0

0

FY2015 FY2016 FY2017 FY2018

FY20190

FY2015 FY2016 FY2017 FY2018

FY20190

FY2015 FY2016 FY2017 FY2018

FY2019Profit for the Year Attributable to Owners of the Parent
Basic Earnings per Share50

KANEMATSU Integrated Report 2019

* Kanematsu executed a share consolidation on
October 1, 2017, at a ratio of ﬁve shares to one.
The calculation of the above ﬁgures assumes thatsaid share consolidation was implemented on
April 1, 2014.

Analysis of Financial Status
Assets, Liabilities and Net Assets

In the year under review, net cash provided by operating activities totaled ¥24,698 million. Net cash used in investing activities amounted to ¥6,575 million. Net cash used in ﬁnancing
activities amounted to ¥7,158 million. As a result, after theeffect of exchange rate changes on cash and cash equivalents,
cash and cash equivalents at the end of the ﬁscal year underreview stood at ¥88,941 million, up ¥11,210 million from theend of the previous ﬁscal year.

Fundraising

Total Equity / Equity Attributable to
Owners of the Parent per Share*(Millions of yen)(Times)80,0002.0(Millions of yen)

1,499.86

200,000(Yen)(Millions of yen)

(%)

1,500

140,000

35

1.5

1,072.20

55,42949,96948,813

120,706

147,050

0.8
0.5

0.6

0.5

0.4

0

0.5

0

FY2015 FY2016 FY2017 FY2018
Net Interest-Bearing Debt

FY2019900

Net D/E Ratio*1 Net interest-bearing debt = Interest-bearing
debt –Cash and cash equivalents*2 Net D/E ratio = Net interest-bearing debt / Total
equity attributable to owners of the Parent

80,000600

40,000300

00FY2015 FY2016 FY2017 FY2018

100,357

100,000

129,863

90,244FY201960,000

19.4

25

20.6

20.9

22.3

22.8

20
15

40,00010

20,0005
00FY2015 FY2016 FY2017 FY2018

FY2019Total Equity

Total Equity Attributable to Owners of the Parent

Equity Attributable to Owners of the Parent per Share

Ratio of Equity Attributable to Owners of the Parent* Kanematsu executed a share consolidation on
October 1, 2017, at a ratio of ﬁve shares to one. The
calculation of the above ﬁgures assumes that said
share consolidation was implemented on April 1, 2014.

30

91,59980,0001.0

40,000116,012

158,698 1,200

Financial Section and Company Information

120,000 119,015

1,088.45

125,246

120,000

1,192.21

160,000

59,04560,00020,000Total Equity Attributable to Owners of
the Parent / Ratio of Equity Attributable to
Owners of the Parent

1,377.66

72,155

Sustainability

The Kanematsu Group carries out fundraising in line witha basic policy of stably procuring funds at low cost as needed

Review of Operations

Cash Flows

Special Features

Total assets at the end of the ﬁscal year under review increased¥29,570 million from the end of the previous ﬁscal year to¥549,459 million.
Current assets increased ¥29,781 million from the end of
the previous ﬁscal year to ¥444,443 million, reﬂecting a rise inother current assets, mainly cash and bank deposits on handand advance payments. Non-current assets decreased ¥210
million year on year to ¥105,016 million, due to a decrease inother investments as a result of decreases in stock prices,
despite increases in goodwill due to new investments, intangible assets, and the balance of equity-method investments.
Total liabilities increased ¥17,922 million year on year to¥390,760 million, due to an increase in other current liabilities,
mainly comprising contract liabilities and advance payments,
despite the redemption of bonds.
Total equity attributable to owners of the Parent increased¥9,234 million to ¥125,246 million, reﬂecting the recording ofretained earnings as a result of the proﬁt for the year attributable to owners of the Parent.
As a result, the equity ratio at the end of the ﬁscal year
under review was 22.8%. The net D/E ratio stood at 0.4 times.

Net Interest-Bearing Debt*1 /Net D/E Ratio*2

Kanematsu’s Progress and Strengths

to realize sustainable growth in line with its six-year mediumterm vision, future 135.
The Group raises funds primarily through indirect ﬁnancing
based on good relations with its main banks, regional banks, lifeand non-life insurers, and other ﬁnancial institutions. Kanematsu
also raises funds from capital markets by issuing straight corporate bonds as a means of long-term capital procurement. In the
period under review, Kanematsu redeemed ¥5,000 million instraight corporate bonds. At the end of the ﬁscal period underreview, debt procurement through direct ﬁnancing accounted
for 11% of consolidated interest-bearing debt.
To facilitate capital procurement, Kanematsu receives ratingsfrom Japan Credit Rating Agency, Ltd. (JCR) and Rating andInvestment Information, Inc. (R&I). The Group’s long-term ratings
as of the end of the ﬁscal year under review are BBB+ (stable)from JCR and BBB (stable) from R&I.
To secure liquidity on hand, the Group maintains an ample
balance of cash and bank deposits as well as cash equivalents
and has established commitment lines with major ﬁnancial
institutions.
To efficiently procure capital on a consolidated basis, theGroup has adopted a cash management system under whichfundraising for major domestic subsidiaries and affiliates isconcentrated at the Parent Company and proceeds are thenallocated in response to capital requirements. At the end of
the ﬁscal period under review, the Company’s interest-bearing
debt accounted for 67% of the consolidated Group’s interestbearing debt, a reﬂection of the concentration of fund procurement at the Parent Company.
As a result of the above fundraising activities, at the end of
the ﬁscal period under review, gross interest-bearing debt stoodat ¥139,504 million, an increase of ¥2,178 million from the endof the previous ﬁscal year. Net interest-bearing debt stood at¥49,969 million, down ¥9,076 million from the end of the previous ﬁscal year, due to an increase in cash and cash equivalents.
As a result, the net D/E ratio stood at 0.4, and Kanematsu’s
ﬁnancial position remained sound.
Corporate bonds and long-term borrowings (including thecurrent portion of corporate bonds and long-term borrowings)
accounted for 65% of the balance of interest-bearing debt at
the end of the ﬁscal year under review (or 89% on a non-consolidated basis). As such, Kanematsu’s fundraising was stable.

assets due to the transfer of the golf business posted in theprevious ﬁscal year, operating proﬁt was ¥850 million, an ¥870
million turnaround from ﬁscal 2018.

KANEMATSU Integrated Report 201951

Business Risks

Below are details of the risks that could affect the business performance and ﬁnancial position of the Group.
The forward-looking statements below are based on information available as of June 21, 2019.
The Group takes all risk that it faces on a daily basis in the course of its business very seriously. Risk control isundertaken through management mechanisms and methods tailored to the nature of each category of risk.

Risk of Macro Economic Change
The Group is engaged in wide-ranging global businesses,
including the trading of goods, business investment, and theprovision of services in and outside Japan. As such, economic
deceleration in Japan, the United States, China, Europe,
emerging nations in Asia, or in the global economy as a whole
could cause demand to stagnate, leading to decreases in sales
and signiﬁcant drops in market prices. Such developments
could negatively affect the Group’s operating results andﬁnancial position.

Market Risk
Many of the risks related to ﬂuctuations in currency exchange
rates, interest rates, and the product prices attendant to theGroup’s business transactions are hedged against in the termsof transactions agreed upon with its business partners. In
addition, individual internal units and Group companies set
position limits and loss limits based on risk level and revenue
for foreign currency exchange, interest rates on fund procurement, inventories, and their derivative products so that if
these limits are exceeded, the Group can promptly reduce its
position. Furthermore, the Group utilizes derivatives as hedging instruments to reduce the risk of ﬂuctuation in the pricesof such positions. The status of these positions is regularly
reported to the Management Committee. When a position
limit is exceeded, it is promptly analyzed before the positionin question is reduced.

Foreign Currency Risk
Incidental to its export and import trading, the Group is
engaged in foreign currency transactions in a number of currencies and under a variety of terms. The Group participates inderivatives transactions such as forward contracts to reduce
the risk of currency ﬂuctuations.
The Group also includes local subsidiaries and business corporations overseas. Account balances at these companies areconverted into yen at the exchange rates prevailing at thetime of account closing for the purposes of preparing consolidated ﬁnancial statements. Total equity attributable to owners of the Parent may thus change as a result of translation
adjustments related to overseas operations due to exchange
rate ﬂuctuations. This could affect the Group’s operating
results and ﬁnancial standing.

Interest Rate Risk
The Group raises the majority of funds needed for operating
and ﬁnancing activities in the form of borrowings from ﬁnancial institutions at variable interest rates, with the exception ofcertain loans. Such borrowings and fund management are
exposed to interest rate risk, as interest paid by the Groupmay increase due to a rise in interest rates.
In its asset-liability management, the Group regards the
portion of its short-term investments, long-term assets, andother non-interest-sensitive assets that are procured at variable interest rates as constituting its position subject to interest rate risk. The Group uses interest rate swaps to avoid
interest rate risk related to borrowings, thereby reducing theinterest rate risk pertaining to a portion of this position.
However, the impact of interest rate ﬂuctuations cannot be
avoided completely and may affect the Group’s operating
performance and ﬁnancial standing.

Risk Related to Supply and Demand and Prices of Goods
In its mainstay commodity trading business in Japan and overseas, the Group deals with grains, meat products, petroleum
products and other products that are readily inﬂuenced bymarket conditions. Although the Group uses commodity

52

KANEMATSU Integrated Report 2019

futures trading to reduce the risk of price ﬂuctuations ofcertain goods, when its positions vis-à-vis such commodities
increase, such factors as rapid movements in commodities
prices or declines in demand may lead to unexpected losses
and impact the Group’s operating performance.

Price Fluctuation Risk of Marketable Securities, etc.
The Group may hold shares in trade partners as means ofstrengthening its relationship with them. There is a risk ofprice ﬂuctuation inherent in these shares, which could havean effect on the ﬁnancial position of the Group due to changes in ﬁnancial assets measured at fair value through othercomprehensive income.

Credit Risk
The Group extends credit in a number of forms, including
accounts receivable, advance payments, loans, and guarantees, as part of diverse business transactions with its trading
partners in Japan and abroad. For this reason, deterioration in
the ﬁnancial standing of its trading partners or other such circumstances may result in late repayment or default. In thecourse of forming and carrying out commodity supply agreements, subcontract agreements, or other agreements, theGroup could also be forced to honor obligations and thereby
incur a monetary loss if a trade partner were to default on its
obligation or contract. Although the Group has set aside anallowance for such losses in its accounting using certain estimates, an additional loss could arise if the loss exceeds thescope of the allowance. This could negatively impact theGroup’s operating performance.
For the purposes of extending credit to trading partners inJapan and abroad, the Group regularly rates its trading partners based on their ﬁnancial data and other information. It
sets credit limits based on these ratings and the type of credit
in question and insures credit where necessary. The Group
ensures that total credit extended stays within these credit
limits. Such credit includes transactional credit arising fromnormal business transactions as well as that related to ﬁnancing, guarantees, and other activities. The Group periodicallymonitors credit collection and delinquency status and takes
steps to protect its interests as needed. However, these control efforts are not a guarantee that credit risk will be entirely
avoided. Furthermore, if a business partner’s credit worsens,
the Group will reduce its dealings with said partner or takesteps to protect its receivables. Moreover, the Group establishes resolution policies for use if such a partner were to go
bankrupt. In these ways, the Group strives to collect receivables. However, if receivables or other forms of credit become
unrecoverable, the Group’s operating performance may be
negatively affected.

Country Risk
The Group engages in transactions, loans, and investments inother countries. The collection of receivables may be delayedor rendered impossible as a result of political or economic
developments in these countries. To minimize losses that
could arise should a country risk be realized, the Group regularly sets limits based on ratings given to each country andregion according to the scale of their respective country risk
and avoids overexposure to any particular country or region.
The Group takes such steps as enrolling in trade insurance
programs as warranted by ratings and project details in an
attempt to minimize recovery risks. However, continuing relevant businesses and transactions may be difficult if such risks
actualize in certain countries and regions, potentially affecting
the business results of the Group.

Risk of Impairment on Long-Term Assets

Fundraising Risk

Legal Risk Related to Changes in Laws

Legal Risk Related to Lawsuits and Disputes

Information Security Risk
The Group builds and operates information systems for sharing
information and streamlining its operations. The Group has
adopted information security control rules and takes thoroughgoing steps to realize effective crisis control response to ensure
the safety of its information system operations. However, information systems cannot be made entirely invulnerable to theunauthorized disclosure of sensitive business information or
personal information as a result of unauthorized access, computer viruses or other threats, nor to inoperability due to suchfactors as natural disasters, destruction of information systemfacilities attributable to accidents and other causes, and communication line problems. Such issues may reduce the efficiency of operations that depend on information systems and,depending on the scale of damage, seriously affect the business results and ﬁnancial position of the Group.

Disaster Risk
In the event of an earthquake, major storm, ﬂood, or othernatural disaster or extreme weather event, outbreak of inﬂuenza or other infectious disease, a major accident, an act ofterrorism, a riot, or other unforeseen circumstance, theGroup’s employees and assets, such as systems, facilities andequipment, including offices, warehouses, and manufacturing
plants in Japan and overseas, may be impacted, impairing
business or production activities. The Group also owns cargo
being stored or transported in and outside Japan for business
transactions. Such assets may be damaged or deteriorate as aresult of natural disasters, accidents, or other developments,
and the businesses of the Group may be suspended due tosuch developments as earthquakes, ﬁres, ﬂoods, and riots.
The Group takes steps to mitigate such risk, including the
adoption of employee safety conﬁrmation systems, formulation of disaster manuals and business continuity plans (BCPs),
measures to protect buildings, facilities, and systems fromearthquake damage (including data backup), disaster readiness training, preparation of stocks of necessary supplies, andcoordination and information sharing with business locations
and affiliates in and outside Japan. Nevertheless, dependingon the extent of the damage, such incidents may affect theoperating results and ﬁnancial position of the Group.

Financial Section and Company Information

The business activities undertaken by the Group are subject toa wide range of legal regulations in Japan and other countries. The Group takes the utmost care to abide by these regulations and may become unable to continue certaintransactions because of factors such as unexpected changes
in laws, changes in export and import regulations, including
punitive tariffs introduced unilaterally following changes in
the international political environment, and changes in regulations, such as requirements for permits and licenses related
to the sale and handling of products. In addition, lawsuits ororders issued by the relevant authorities in relation to suchdevelopments may result in unexpected expenses for theGroup. This risk also includes the risk of changes in tax rates ortax arrangements imposed by the relevant authorities or
between countries under international taxation arrangements. Changes in legal systems could thus inﬂuence theoperating results and ﬁnancial position of the Group.

The Group operates businesses to buy, sell, and provide a
broad array of products and services in Japan and overseas
and carefully monitors laws and regulations, including thoserelated to security export control and other aspects of exporting and importing, that are established and enforced forthese products and services both domestically and abroad.
To ensure comprehensive monitoring of relevant laws andcompliance, the Company has established the Internal
Control and Compliance Committee, which implements regular reviews of compliance maintenance and responds to sudden issues. However, it is difficult to ensure the completely
consistent execution of related procedures across the Group’s
wide range of trading operations, which often involve multiple parties. Although the Group has in place a number ofmeasures to prevent violations, there is a risk that these may
fail to prevent a legal violation or instance of improper conduct. If such violation or conduct is material, the operating
results and ﬁnancial position of the Group could be affected.

Sustainability

The Group procures business capital via borrowings fromﬁnancial institutions in and outside Japan, corporate bonds,
and other means. The Group strives to maintain good business relationships with ﬁnancial institutions and effective
asset-liability management as well as to minimize liquidity risk
by fundraising as warranted by its asset holdings. However,disorder in ﬁnancial markets, a major downgrading of theCompany’s credit ratings from a ratings institution, or othersuch developments could constrain the Group’s fundraisingability or increase fundraising costs.

Compliance and Improper Conduct Risk

Review of Operations

The Group’s property, plant and equipment, goodwill, andintangible assets are exposed to impairment risk. As necessary,
if the value of such an asset decreases, the Group records said
decline as impairment, which may affect its operating performance. In particular, under the future 135 medium-term vision,
the Group seeks growth through business investment and,accordingly, its goodwill and identiﬁable intangible assets may
increase as a result of corporate mergers going forward.

proceedings, including lawsuits, or other disputes in thecourse of business activities undertaken in Japan and overseas. Such lawsuits and other disputes are generally unpredictable, and resolving them is often very time-consuming.
Furthermore, any prediction of their results involves uncertainty. If such lawsuits or disputes arise and lead to unexpected outcomes, the Group’s operating results and ﬁnancial
position may be affected.

Special Features

Under the future 135 medium-term vision, the Group aims forsustainable growth in business ﬁelds where it has stable earnings structures while securing scale expansion and added
value through effective and appropriate business investment
in areas of strength.
The Group establishes investment criteria for these business investments, with a focus mainly on investing in areas ofstrength. Based on their objectives, content, business proﬁtability estimated on a cash ﬂow basis, and evaluations andanalyses of risk factors, these investments are deliberated by
the corporate areas. Major projects over a certain size aredeliberated by the Project Deliberation Committee.
Investments are made after establishing criteria for businesswithdrawal, following which the Project Deliberation
Committee regularly reevaluates and reviews their businesspotential and investment value to minimize any loss.
However, the value of business investments may ﬂuctuate
according to the ﬁnancial condition of the investment targets
and the success or failure of the business.
Local laws and relationships with partners may prevent theGroup from executing its policy for operating or withdrawing
from a business, leading to the loss of part or all of the investment, or to a need to provide additional funding. This may
negatively affect the Group’s operating performance.

Kanematsu’s Progress and Strengths

Business Investment Risk

The Group’s business operations and associated assets andliabilities may become subject in various ways to legal
KANEMATSU Integrated Report 201953

Consolidated Financial Statements
Consolidated Statement of Financial Position
For the ﬁscal year ended March 31, 2019 and 2018
JPY

2019

USD (Note 2)

2018

2019

(Assets)
I. Current assets
1. Cash and cash equivalents (Note 27)

88,94177,731

801,350

2. Trade and other receivables (Note 8)

227,300

220,583

2,047,939

3. Inventories (Note 9)96,232

93,957

867,041

4. Other ﬁnancial assets (Note 30)

3,546

2,433

31,957

5. Other current assets (Note 14)
Total current assets

28,42019,955

256,067

444,443414,662

4,004,353

22,09021,900199,034

II. Non-current assets
1. Property, plant and equipment (Note 10)
2. Goodwill (Note 11)

8,810

6,571

79,382

3. Intangible assets (Note 11)

23,051

20,377

207,692

4. Investments accounted for using the equity method (Note 12)

6,867

5,169

61,872

5. Trade and other receivables (Note 8)

1,449

1,582

13,056

6. Other investments (Note 13)

32,41637,969292,063

7. Other ﬁnancial assets (Note 30)

4,216

4,479

37,991

8. Deferred tax assets (Note 29)

2,609

3,696

23,512

9. Other non-current assets (Note 14)

3,504

3,478

31,578

Total non-current assets

105,016

105,226

946,179

Total assets

549,459

519,889

4,950,532(Notes) Presentation of ﬁscal year and amounts (Japanese Yen and U.S. dollars)
1. “2019” refers to the Company’s consolidated ﬁscal year ended March 31, 2019 and the other ﬁscal year is referred to in the corresponding manner.
2. “JPY” means millions of Japanese Yen and “USD” means thousands of U.S. dollars.

54

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

JPY

USD (Note 2)

2019

2018

2019

(Liabilities)
I. Current liabilities
1. Trade and other payables (Note 15)

196,054

188,791

1,766,417

2. Bonds and borrowings (Note 16)

74,316

61,210669,574

3. Other ﬁnancial liabilities (Note 30)

6,093

7,009

54,898

4. Income taxes payable

3,469

3,773

31,257

5. Provisions (Note 17)

156

1,703

32,321

23,371

291,211

Total current liabilities

312,443284,3132,815,061

1. Bonds and borrowings (Note 16)

65,18876,116587,339

2. Other ﬁnancial liabilities (Note 30)

2,636

2,853

23,756

3. Retirement beneﬁt liabilities (Note 28)

6,555

6,340

59,0604. Provisions (Note 17)

1,368

1,639

12,332

5. Deferred tax liabilities (Note 29)

1,362

641

12,273Special Features

189

6. Other current liabilities (Note 18)
II. Non-current liabilities

1,205

933

10,865

Total non-current liabilities

6. Other non-current liabilities (Note 18)

78,31788,525705,625

Total liabilities

390,760

372,838

3,520,686

1. Share capital (Note 19)

27,781

27,781

250,303

2. Capital surplus (Note 19)

26,882

26,810242,210

3. Retained earnings (Note 19)

60,74848,559547,331

4. Treasury stock (Note 19)(1,318)(193)(11,882)

1) Exchange differences on translation of foreign operations

1,865

1,275

16,8092) Financial assets measured at fair value through othercomprehensive income

9,580

12,68486,323(Equity)
Review of Operations

5. Other components of equity (Note 26)3) Cash ﬂow hedges
Total other components of equity
Total equity attributable to owners of the Parent
6. Non-controlling interests

(293)

(905)

(2,642)

11,153

13,055

100,490

125,246

116,012

1,128,452

31,037

301,395

158,698

147,050

1,429,847

Total liabilities and equity

549,459

519,889

4,950,532

Sustainability

33,451

Total equity

Financial Section and Company Information

KANEMATSU Integrated Report 201955

Consolidated Statement of Income and Consolidated Statement ofComprehensive Income: (a) Consolidated Statement of Income
JPY

For the ﬁscal year ended March 31, 2019 and 2018

USD (Note 2)

2019

2018

2019

I. Revenue (Notes 6 & 7)

723,849

714,790

6,521,752

II. Cost of sales(613,834)(608,419)(5,530,537)

Gross proﬁt

110,014106,371991,215

III. Selling, general and administrative expenses (Note 20)(80,393)(78,420)(724,331)

1. Gain (loss) on sale or disposal of property, plant and equipment andintangible assets, net (Note 21)

(238)

(250)

(2,147)

2. Impairment loss on property, plant and equipment and intangible
assets (Note 22)(111)(2,148)(1,002)

3. Other income

2,669

1,560

24,0504. Other expenses(1,592)(950)(14,344)

IV. Other income (expenses)

Total other income (expenses)

727(1,790)6,558

30,34926,160273,441

1. Interest income (Note 24)

371

363

3,351

2. Dividend income (Note 24)

1,189

1,073

10,720

—

10

—

1,561

1,447

14,071(2,662)(2,414)(23,985)

Operating proﬁt (Note 7)
V. Finance income

3. Other ﬁnance income (Notes 24 & 30)
Total ﬁnance income
VI. Finance costs
1. Interest expenses (Note 24)
2. Other ﬁnance costs (Notes 24 & 30)

(434)

(730)

(3,916)(3,096)(3,144)(27,901)

363

1,579

3,277

Proﬁt before tax

29,17726,043262,888

Income tax expense (Note 29)(8,728)(6,384)(78,640)

Proﬁt for the year

20,44919,658184,248

Owners of the Parent

16,605

16,317

149,613

Non-controlling interests

3,844

3,341

34,636

Total

20,44919,658184,248

Total ﬁnance costs
VII. Share of proﬁt (loss) of investments accounted for using
the equity method (Note 12)

Proﬁt for the year attributable to:

Yen

U.S. dollars

Earnings per share attributable to owners of the Parent:

56

Basic earnings per share (Note 25)

198.22

193.79

1.79

Diluted earnings per share (Note 25)

198.15193.79

1.79

KANEMATSU Integrated Report 2019

Consolidated Statement of Income and Consolidated Statement ofComprehensive Income: (b) Consolidated Statement of Comprehensive Income
USD (Note 2)

2019

2018

2019

20,44919,658184,248(3,031)

3,402(27,312)

2. Remeasurement of deﬁned beneﬁt pension plans (Note 26)

199

307

1,795

3. Share of other comprehensive income of investments accounted
for using the equity method (Note 26)

(23)

0

(210)

(2,855)

3,710(25,727)

1. Exchange differences on translation of foreign operations (Note 26)948(1,427)8,547

2. Cash ﬂow hedges (Notes 26 & 30)

584

(485)

5,266

3. Share of other comprehensive income of investments accounted
for using the equity method (Note 26)

(19)

(57)

(172)

I. Proﬁt for the year

Kanematsu’s Progress and Strengths

JPY

For the ﬁscal year ended March 31, 2019 and 2018

II. Other comprehensive income
Items that will not be reclassiﬁed to proﬁt or loss:
1. Financial assets measured at fair value throughother comprehensive income (Note 26)

Total items that will not be reclassiﬁed to proﬁt or loss

Total items that may be reclassiﬁed to proﬁt or loss

1,514

(1,970)13,642Other comprehensive income for the year, net of tax(1,341)

1,740(12,085)

Total comprehensive income for the year

19,10821,398172,163

Owners of the Parent

15,00318,354135,183

Non-controlling interests

4,104

3,044

36,980

Total

19,10821,398172,163

Special Features

Items that may be reclassiﬁed to proﬁt or loss:

Total comprehensive income for the year attributable to:

Review of Operations
Sustainability
Financial Section and Company Information

KANEMATSU Integrated Report 201957

Consolidated Statement of Changes in Equity
For the ﬁscal years ended March 31, 2019 and 2018
(JPY)
Equity attributable to owners of the Parent
Other components of equity

As of April 1, 2017
Proﬁt for the year
Other comprehensive income
Total comprehensive income for the year
Dividends (Note 19)
Dividends to non-controlling interests
Acquisition of treasury stock
Disposition of treasury stock
Equity transactions with non-controlling interests
Total transactions with owners
Reclassiﬁcation from other components ofequity to retained earnings (Note 26)
As of March 31, 2018
Cumulative effects of changes inaccounting policies (Note 2)
Restated balance at the beginning of
the ﬁnancial year
Proﬁt for the year
Other comprehensive income
Total comprehensive income for the year
Dividends (Note 19)
Dividends to non-controlling interests
Acquisition of treasury stock
Disposition of treasury stock
Equity transactions with non-controlling interests
Share-based payment transaction (Note 37)
Total transactions with owners
Reclassiﬁcation from other components ofequity to retained earnings (Note 26)
As of March 31, 2019

Exchangedifferences ontranslation offoreign
operations

Financial assets
measured atfair value
through othercomprehensive
incomeCash ﬂow
hedgesSharecapitalCapitalsurplusRetainedearnings

Treasurystock

27,781

26,797

34,57916,317

(217)

2,349

9,455

(388)

—

—

16,317(2,736)—(1,073)(1,073)

3,351
3,351

(516)
(516)

—

13
(0)
13

(2,736)

23

—

—

—

27,781

26,81048,559

(193)

1,275

12,684

(905)

(193)

1,275

12,684

(905)

—

589
589

(2,940)(2,940)

612
612

—

—

(6)
30

398

(123)

(61)
27,781

26,81048,49816,605——

16,605(4,655)

—

8
(0)
64
72

(1,128)4(4,655)(1,124)—300
27,781

26,88260,748(163)(1,318)

1,865

9,580

(293)
(JPY)

Equity attributable to owners of the Parent
Other components of equity

As of April 1, 2017
Proﬁt for the year
Other comprehensive income
Total comprehensive income for the year
Dividends (Note 19)
Dividends to non-controlling interests
Acquisition of treasury stock
Disposition of treasury stock
Equity transactions with non-controlling interests
Total transactions with owners
Reclassiﬁcation from other components ofequity to retained earnings (Note 26)
As of March 31, 2018
Cumulative effects of changes inaccounting policies (Note 2)
Restated balance at the beginning of
the ﬁnancial year
Proﬁt for the year
Other comprehensive income
Total comprehensive income for the year
Dividends (Note 19)
Dividends to non-controlling interests
Acquisition of treasury stock
Disposition of treasury stock
Equity transactions with non-controlling interests
Share-based payment transaction (Note 37)
Total transactions with owners
Reclassiﬁcation from other components ofequity to retained earnings (Note 26)
As of March 31, 2019

58

KANEMATSU Integrated Report 2019

Remeasurement ofdeﬁned beneﬁt
pension plans

Total othercomponentsof equity

Total equity
attributable toowners of
the Parent——

11,416
—
2,037
2,037
—
—
—
—
—
—

100,357
16,317
2,037
18,354(2,736)
—
(6)
43
(0)
(2,698)

(275)

(398)

—

—

13,055116,012—(61)

13,055

115,951

31,037

146,989—(1,601)(1,601)
—
—
—
—
—
—
—

16,605(1,601)
15,003(4,655)—(1,128)12(0)64(5,708)

3,844
260
4,104

(1,690)20,449(1,341)
19,108(4,655)(1,689)(1,128)12(1)
64(7,398)33,451

158,698

275
275

—
137
137

—
(137)

(300)

—

—

11,153

125,246

Non-controllinginterests

Total
equity29,506
3,341
(297)
3,044

129,863
19,6581,740
21,398(2,736)(1,511)(6)43(1)(4,211)(1,511)(1)(1,512)—
31,037147,050(61)(1,689)(0)—Kanematsu’s Progress and Strengths(USD)
Equity attributable to owners of the Parent
Other components of equity

As of March 31, 2018

CapitalsurplusRetainedearnings

Treasury
stock

250,303

241,561

437,513(1,748)

11,495

114,287(8,156)(1,748)

11,495

114,287(8,156)

5,314(26,494)

5,515

5,314

(26,494)

5,515

—

—

—

(552)
250,303

241,561

436,961

Proﬁt for the year

149,613——

149,613

Dividends (Note 19)—

Special Features

Other comprehensive income
Total comprehensive income for the year

Cash ﬂow
hedgesSharecapitalCumulative effects of changes inaccounting policies (Note 2)
Restated balance at the beginning of
the ﬁnancial year

Financial assets
measured atfair value
through othercomprehensive
incomeExchangedifferences ontranslation offoreign
operations(41,948)

Dividends to non-controlling interests
Acquisition of treasury stock(10,172)

Disposition of treasury stock79

Equity transactions with non-controlling interests(6)

Share-based payment transaction (Note 37)
Total transactions with owners

577
—

649

Reclassiﬁcation from other components ofequity to retained earnings (Note 26)
As of March 31, 201937

(41,948)(10,135)

2,705
250,303242,210547,331(1,470)(11,882)

16,80986,323(2,642)

Review of Operations(USD)
Equity attributable to owners of the Parent
Other components of equity
Remeasurement ofdeﬁned beneﬁt
pension plans

Total othercomponentsof equity

Total equity
attributable toowners of
the Parent

Non-controllinginterests

Total
equity—117,625

1,045,255

279,643

1,324,897

—

(552)

—

117,625

1,044,702

279,643

1,324,345—

149,61334,636

184,248

1,235(14,430)(14,430)

2,345(12,085)

1,235(14,430)

135,183

36,980172,163

Dividends (Note 19)—(41,948)

Dividends to non-controlling interests——

Acquisition of treasury stock—(10,172)

Disposition of treasury stock—

116

Equity transactions with non-controlling interests—(6)

Share-based payment transaction (Note 37)

—

577

—

—

(51,433)(1,235)(2,705)——

100,490

1,128,452

As of March 31, 2018
Cumulative effects of changes inaccounting policies (Note 2)
Restated balance at the beginning of
the ﬁnancial year
Proﬁt for the year
Total comprehensive income for the year

Total transactions with owners
Reclassiﬁcation from other components ofequity to retained earnings (Note 26)
As of March 31, 2019

Sustainability

Other comprehensive income(552)(41,948)(15,224)(15,224)(10,172)
116

(4)

(10)
577

(15,228)(66,662)—

301,395

1,429,847

Financial Section and Company Information

KANEMATSU Integrated Report 201959

Consolidated Statement of Cash Flows
For the ﬁscal years ended March 31, 2019 and 2018
JPY

I. Cash ﬂows from operating activities
Proﬁt for the year
Depreciation and amortization
Impairment loss on property, plant and equipment and intangible assets
Finance income and costs
Share of (proﬁt) loss of investments accounted for using
the equity method(Gain) loss on sale or disposal of property, plant and equipment andintangible assets, net
Income tax expense(Increase) decrease in trade and other receivables(Increase) decrease in inventories
Increase (decrease) in trade and other payables
Increase (decrease) in retirement beneﬁts liabilities
Other (Note 6)
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
II. Cash ﬂows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intangible assets
Purchases of other investments
Proceeds from sale of other investments
Purchases of other ﬁnancial assets
Proceeds from sale of other ﬁnancial assets
Proceeds from (payments for) acquisition of subsidiaries (Notes 5 & 27)
Proceeds from (payments for) sale of subsidiaries (Note 27)
Proceeds from transfer of business
Increase in loans receivable
Proceeds from collection of loans receivable
Other
Net cash provided by (used in) investing activities
III. Cash ﬂows from ﬁnancing activities
Increase (decrease) in short-term borrowings, net (Note 27)
Proceeds from long-term borrowings (Note 27)
Repayment of long-term borrowings (Note 27)
Proceeds from issuance of bonds (Note 27)
Redemption of Bonds (Note 27)
Dividends paid
Payments for purchase of treasury stock
Dividends paid to non-controlling interests
Other (Note 27)
Net cash provided by (used in) ﬁnancing activities
IV. Increase (decrease) in cash and cash equivalents, net
V. Cash and cash equivalents at the beginning of the year
VI. Effect of exchange rate changes on cash and cash equivalents
VII. Cash and cash equivalents at the end of the year (Note 27)

60

KANEMATSU Integrated Report 2019

USD (Note 2)

2019

2018

2019

20,449
3,274
111
1,535

19,658
3,145
2,148
1,696

184,248
29,505
1,002
13,830(363)(1,579)(3,277)

238

250

2,147

8,728
(6,295)(1,132)(2,067)(285)
7,632
31,826375
1,579(2,639)(6,442)
24,6986,384(33,261)(13,729)
23,798(297)(1,395)
6,821
358
2,159
(2,381)(6,523)434

78,640(56,718)(10,204)(18,624)(2,569)68,771
286,750
3,380
14,228(23,779)(58,046)
222,533(3,128)443(419)(3,109)
1,490
(0)
15
(1,729)
—
—
(62)
296
(369)
(6,575)(2,136)
1,365
(544)
(117)
292
—
1,010
(362)
(22)
1,452
(1,522)
1,378
309
1,103

(28,191)
3,992(3,783)(28,020)
13,429(1)
135(15,583)
—
—
(567)
2,676
(3,329)(59,242)

5,708
13,871(14,035)—(5,000)(4,643)(1,130)(1,709)(220)(7,158)
10,96477,731
245
88,941

2,510
15,508(24,229)
9,928—(2,730)(7)(1,542)
(277)
(842)
694
77,566(529)
77,731

51,434
124,983(126,457)—(45,049)(41,840)(10,182)(15,402)(1,986)(64,499)
98,792
700,349
2,209
801,350

Notes to Consolidated Financial Statements
For the ﬁscal years ended March 31, 2019 and 2018

Kanematsu’s Progress and Strengths

1. Reporting Entity
Kanematsu Corporation (the “Company”) is a company locatedin Japan. The addresses of the Company’s registered headquarters and main offices are available on its corporate website(http://www.kanematsu.co.jp/en/). The consolidated ﬁnancial
statements of the Company as of and for the year ended March
31, 2019 comprise the Company and its subsidiaries (collectively,
the “Consolidated Group”), and the Consolidated Group’s interests in associates and joint ventures. The Consolidated Group
operates its businesses as an integrated trading company byproviding a broad array of products and services through theorganic integration of domestic and international business networks; expertise acquired in various ﬁelds; and the functions of a
trading company, including commodities trading, information
gathering, market exploration, business development and organization, risk management, and distribution. Detailed information on the business operations for each reportable segment areprovided in Note 7 Segment Information.

(1) Statement of compliance with IFRSThe consolidated ﬁnancial statements have been prepared inaccordance with International Financial Reporting Standards(“IFRSs”) pursuant to the provision of Article 93 of the Ordinanceon Terminology, Forms, and Preparation Methods of Consolidated
Financial Statements (Ordinance of the Ministry of Finance No.
28 of 1976) as all the requirements of the “Speciﬁed Company
for Designated IFRSs” set forth in Article 1-2 of said Ordinancehave been fulﬁlled.
The consolidated ﬁnancial statements were authorized by theboard of directors meeting on June 21, 2019.

The consolidated ﬁnancial statements have been prepared ona historical cost basis except for:• ﬁnancial assets and liabilities measured at fair value throughproﬁt or loss, which are measured at fair value;• ﬁnancial assets measured at fair value through other comprehensive income, which are measured at fair value;• deﬁned beneﬁt assets or liabilities, which are measured at thepresent value of the deﬁned beneﬁt obligations less the fairvalue of plan assets; and• Impairment of non-ﬁnancial assets, which are measured atvalue in use or fair value.

(5) Changes in Presentation Methods(Consolidated statements of cash ﬂows)“Purchase of treasury stock,” which was included “Other” in“Cash ﬂows from ﬁnancing activities” in the previous ﬁscal year,
is presented separately in the ﬁscal year under review because it
become material due to the signiﬁcance of its amount.
Accordingly, (¥285) million presented in “Other” in “Cash ﬂows
from ﬁnancing activities” in the consolidated statements of cash
ﬂows in the previous ﬁscal year has been reclassiﬁed into
“Purchase of treasury stock” of (¥7) million and “Other” of(¥277) million.

Financial Section and Company Information

The consolidated ﬁnancial statements are presented in Japaneseyen, which is the Company’s functional currency. All ﬁnancial
information presented in Japanese yen has been rounded down
to the nearest million.
The U.S. dollar amounts appearing in the consolidated ﬁnancial statements and the notes thereto represent the arithmeticalresults of translating yen to dollars at the rate of ¥110.99 to
U.S.$1.00, the approximate exchange rate prevailing on March
31, 2019. The translation of such dollar amounts is solely forconvenience of the readers outside Japan and should not be
construed as a representation that the Japanese yen amounts
have been, or could be readily converted, realized or settled indollars at the above, or any other rate.

• Note 3. Signiﬁcant Accounting Policies: (1) Basis of consolidation• Note 3. Signiﬁcant Accounting Policies: (11) Revenue
The following notes include information on uncertainties ofassumptions and estimates that have a signiﬁcant risk to causematerial revisions in the next ﬁscal year:• Note 22. Impairment Loss
• Note 28. Employee Beneﬁts• Note 29. Current and Deferred Income Tax• Note 30. Financial Instruments: (6) Fair value of ﬁnancial
instruments
When measuring the fair value of an asset or a liability, theConsolidated Group uses observable market data as much as it
is available. Fair values are categorized into the following threehierarchy levels based on the inputs to the valuation techniques:• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Consolidated Group can accessat the measurement date
• Level 2: inputs other than quoted prices included within Level
1 that are observable, either directly or indirectly• Level 3: unobservable inputs
The following notes include detailed information on assumptions made when measuring the fair value:• Note 22. Impairment Loss
• Note 30. Financial Instruments: (6) Fair value of ﬁnancial
instruments

Sustainability(3) Functional currency and presentation currency

a signiﬁcant effect on the amounts recognized in the consolidated ﬁnancial statements:

Review of Operations(2) Basis of measurement

Special Features

2. Basis of Preparing Consolidated Financial Statements(4) Use of estimates and judgments
The preparation of the consolidated ﬁnancial statements in accordance with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Actual results could differ from these estimates.
The estimates and underlying assumptions are reviewed on
an ongoing basis. The effect of a change in an accounting estimate is recognized in the period of the change and future periods. The following notes include information on critical
judgments in the application of accounting policies that have(6) Changes in accounting policies
Signiﬁcant accounting policies applied to the consolidated
ﬁnancial statements of the Consolidated Group are the same as
the accounting policies applied to the consolidated ﬁnancial
statements for the previous ﬁscal year, except for the following.
(IFRS 15 “Revenue from Contracts with Customers”)
The Consolidated Group has adopted IFRS 15 “Revenue fromContracts with Customers” from the current ﬁscal year. On transition of the IFRS 15, the Consolidated Group has adopted thisKANEMATSU Integrated Report 201961

standard retrospectively by recognizing the cumulative effect of
initially application of this standard .
Information on critical judgments in the application of
accounting policies that have a signiﬁcant effect on the amounts
recognized in the consolidated ﬁnancial statements is provided
in “Note 3. Signiﬁcant Accounting Policies.”
In conjunction with the application of this standard, theCompany applied the standard by identifying contracts withcustomers and performance obligations and determining thetransaction prices based on the ﬁve-step approach and comparing revenue recognized based on this approach with revenue
recognized based on the prior and existing accounting standards. A difference has occurred in the time of recognizing thesatisfaction of the performance obligations in some transactions. It also results in reversing a provision (non-current) of¥209 million and recognizing other current assets of ¥1 million,
other non-current assets of ¥4 million, other current liabilities of¥46 million, and other non-current liabilities of ¥228 million at
the beginning of the current ﬁscal year in the consolidated
statement of ﬁnancial position in comparison with the casewhere the prior and existing accounting standards were applied,
retained earnings have decreased by ¥61 million.
Revenue, cost of sales, and other expenses decreased by ¥103
million, ¥118 million, and ¥25 million, respectively, comparedwith those if the prior accounting standard was applied, in the
consolidated statement of income or loss in the current ﬁscal
year. In addition, in the consolidated statements of ﬁnancial
position at the end of the current ﬁscal year, trade and otherreceivables (current), other current assets, other non-current
assets, other current liabilities and other non-current liabilities
increased by ¥35 million, ¥2 million, ¥5 million, ¥54 million and¥216 million, respectively, while inventories and provisions (noncurrent) decreased by ¥23 million and ¥230 million, respectively.

3. Signiﬁcant Accounting Policies
The accounting policies set out below have been applied consistently to all the periods presented in these consolidated ﬁnancial statements, and have been applied consistently by theConsolidated Group.

(1) Basis of consolidation
1) Subsidiaries
Subsidiaries are entities which are controlled by theConsolidated Group. The Consolidated Group controls an entity
when it is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. When the Consolidated
Group holds more than half of the voting rights of another entity, such entity is included in the subsidiaries of the Consolidated
Group as it is determined that control exists, unless it can beclearly demonstrated that such ownership does not constitutecontrol. In addition, even when the Consolidated Group holds
only half or less of the voting rights of another entity, such entity
is included in the subsidiaries of the Consolidated Group if it isdetermined through agreements with other investors that theConsolidated Group has control over such entity’s ﬁnancial andoperating policies and thus has the ability to affect returns fromsuch entity.
The ﬁnancial statements of subsidiaries are included in the
consolidated ﬁnancial statements of the Consolidated Group
from the date the Consolidated Group obtains control of thesubsidiaries until the date it loses such control of the subsidiaries. When the accounting policies adopted by the subsidiaries
are different from those adopted by the Consolidated Groupand the difference is considered material, the ﬁnancial statements of the subsidiaries are adjusted as necessary.
Changes in the Consolidated Group’s interest in a subsidiarythat do not result in a loss of control are accounted for as equity
transactions. The Company recognizes directly in equity any difference between the amounts by which the non-controllinginterests are adjusted and the fair value of the consideration
paid or received, and attribute it to the owners of the Company.
If the Consolidated Group loses control of a subsidiary, theConsolidated Group derecognizes the assets and liabilities of theformer subsidiary, and any non-controlling interests and othercomponents of equity related to the former subsidiary. Any
gains or losses arising from such loss of control are recognized in

62

KANEMATSU Integrated Report 2019

proﬁt or loss. If the Consolidated Group retains any interest in
the former subsidiary after the control is lost, such interest ismeasured at fair value at the date that control is lost.
2) Associates and joint ventures
Associates are those entities over which the Consolidated Group
has signiﬁcant inﬂuence, where signiﬁcant inﬂuence is deﬁned
as the power to participate in the ﬁnancial and operating policy
decisions of the entities but is not control or joint control of
those entities. If the Consolidated Group holds between 20 percent and 50 percent of the voting rights of each those entities, it
is presumed that the Consolidated Group has signiﬁcant inﬂuence over each of those entities.
Even if the Consolidated Group holds less than 20 percent of
the voting rights of another entity, such entity is included in theassociates of the Consolidated Group as long as it is determinedthat the Consolidated Group has signiﬁcant inﬂuence over theentity through the dispatch of the board members, the shareholders’ agreement or the like.
Joint ventures are those entities with respect to which multiple parties, including the Consolidated Group, have joint control
over the economic activities by contract and unanimous consent
of all of such parties is required when deciding on the relevant
activities, whereby the Consolidated Group has rights to the net
assets of the arrangement.
Except for those that are classiﬁed as assets held for sale inaccordance with IFRS 5 Non-current Assets Held for Sale andDiscontinued Operations, investments in associates and joint
ventures (“equity method investee”) are measured at the carrying amount following the application of the equity method(including goodwill recognized at the time of acquisition) lessany accumulated impairment losses.
The consolidated ﬁnancial statements include theConsolidated Group’s share of proﬁt or loss and other comprehensive income of the associates and joint ventures from thedate the Consolidated Group obtains signiﬁcant inﬂuence or
joint control until the date it loses such signiﬁcant inﬂuence or
joint control. When the accounting policies adopted by theequity method investees are different from those adopted by
the Consolidated Group, the ﬁnancial statements of the equity
method investees are adjusted as necessary.

Cash and cash equivalents are comprised of cash on hand;demand deposits; and short-term, highly liquid investments witha maturity of three months or less from the date of acquisition
that are readily convertible to known amount of cash and which
are subject to an insigniﬁcant risk of changes in value.

(4) Inventories
Inventories are measured at the lower of cost determined by themoving-average method and net realizable value.

(5) Property, plant and equipment
The Consolidated Group uses the cost model to measure an
item of property, plant and equipment after initial recognitionand carries it at its cost less any accumulated depreciation andany accumulated impairment losses. The cost of property, plantand equipment include the cost directly attributable to theacquisition of the asset.
Property, plant and equipment are depreciated using thestraight-line method over the estimated useful life of each component thereof. The ranges of principal estimated useful lives
are presented as follows:
Buildings and structures:
3 to 50 years
Machinery, vehicles, tools, furniture & ﬁxtures: 2 to 20 years
Leased assets are fully depreciated over the shorter of thelease term and their estimated useful lives if there is no reasonable certainty that the Consolidated Group will obtain ownership by the end of the lease term.
The depreciation method, useful life and residual value of anasset are reviewed at least at the end of each reporting period
and amended as necessary.

Sustainability(6) Goodwill and intangible assets
1) Goodwill
Goodwill is carried at cost less any accumulated impairment losses.
2) Intangible assets
The Consolidated Group uses the cost model to measure an
intangible asset after initial recognition and carries it at its costless any accumulated amortization and any accumulated impairment losses.
A separately acquired intangible asset is initially recognized
and measured at cost. The cost of an intangible asset acquired
in a business combination is its fair value at the acquisition date.
With respect to an internally generated intangible asset that
does not qualify for asset recognition, expenditures on such an

KANEMATSU Integrated Report 2019

Financial Section and Company Information

1) Translation of foreign currency transactions
Foreign currency transactions are translated into functional currencies of individual companies using the exchange rates at thedates of such transactions. At the end of each reporting period,
monetary assets and liabilities denominated in foreign currencies are translated into functional currencies using the exchange
rate at the end of each reporting period. Exchange differences
on monetary items are recognized in proﬁt or loss in the period
in which they arise. Non-monetary items that are measured ona historical cost basis in a foreign currency are translated into
the functional currency using the exchange rate at the date of
the transaction. Non-monetary items that are measured at fairvalue in a foreign currency are translated into the functional currency using the exchange rates at the date when the fair value
was measured.
With respect to the exchange differences of a non-monetary
item, when a gain or loss on a non-monetary item is recognizedin other comprehensive income, the Consolidated Group recognizes any exchange component of that gain or loss in othercomprehensive income. Conversely, when a gain or loss on a
non-monetary items is recognized in proﬁt or loss, theConsolidated Group recognizes any exchange component ofthat gain or loss in proﬁt or loss.

(3) Cash and cash equivalents

Review of Operations(2) Foreign currency translation

2) Translation of foreign operations
The assets and liabilities of foreign operations, including any goodwill and fair value adjustments arising on the acquisition of foreign
operations, are translated using the exchange rate at the end of thereporting period. In addition, income and expenses of foreign operations are translated using the average exchange rate for the reporting period unless exchange rates ﬂuctuate signiﬁcantly.
Exchange differences arising from the translation are recognized in other comprehensive income and the cumulative
amounts of the exchange differences are included in other components of equity. When the Consolidated Group’s foreign operations are disposed of, the cumulative amounts of the exchange
differences related to foreign operations are reclassiﬁed to proﬁt
or loss when the gain or loss on disposal is recognized.

Special Features

4) Transactions eliminated in consolidation
Intragroup balances and transactions, as well as any unrealized
gains and losses arising from intragroup transactions, are eliminated when preparing the consolidated ﬁnancial statements.

Kanematsu’s Progress and Strengths

3) Business combinations
Business combinations are accounted for using the acquisition
method. The Consolidated Group recognizes goodwill as thesum of the fair value of the consideration transferred, theamounts of any non-controlling interests in the acquiree andthe fair value of the acquirer’s previously held equity interest in
the acquiree measured at the acquisition date; less the net ofthe acquisition-date amounts of the identiﬁable assets acquired
and the liabilities assumed (generally measured at fair value).
When such difference results in a negative balance, it is immediately recognized in proﬁt or loss. Non-controlling interests aremeasured either at fair value or at the non-controlling interests’
proportionate share in the recognized amounts of the acquiree’s
identiﬁable net assets. The measurement method to be appliedat the acquisition date is determined on a transaction-by-transaction basis. Acquisition-related costs, which are costs that theConsolidated Group incurs to effect a business combination(excluding costs to issue debt or equity securities), are accounted for as expenses in the periods in which the costs are incurred,
and thus not included in the cost of goodwill. In a business combination achieved in stages, the Consolidated Group remeasures
its previously held equity interest in the acquiree at its acquisition-date fair value and recognizes any gains or losses arisingfrom such remeasurement in proﬁt or loss. Changes in the valueof the Consolidated Group’s equity interest in the acquiree that
had been recognized in other comprehensive income prior to
the acquisition date are recognized in proﬁt or loss, or othercomprehensive income, on the same basis as would be required
if the Consolidated Group had disposed of the previously held
equity interest.

63internally generated intangible asset are recognized as expenses
when they are incurred. Conversely, the cost of an internallygenerated intangible asset that qualiﬁes for asset recognition is
the sum of expenditures incurred from the date when it ﬁrst
meets the recognition criteria.
An intangible asset with a ﬁnite useful life is amortized using
the straight-line method over its estimated useful life. The
Consolidated Group’s intangible assets with ﬁnite useful lives
are comprised mainly of software whose estimated useful life is
5 years.
The amortization method, useful life and residual value of an
intangible asset with a ﬁnite useful life are reviewed at the endof each reporting period and amended as necessary.
Certain intangible assets with indeﬁnite useful lives such as
carrier shop operating rights are not amortized, but instead tested for impairment based on the cash-generating unit at least
once a year and whenever there is an indication that they may
be impaired.

(7) Impairment of non-ﬁnancial assets
The Consolidated Group assesses at the end of each reporting
period whether there is any indication that an asset may be
impaired. If any such indication exists, it estimates the recoverable amount of the asset or the cash-generating unit to which
the asset belongs. Goodwill and an intangible asset with anindeﬁnite useful life are tested for impairment annually andwhenever there is an indication that such assets may be
impaired. If the carrying amount of an individual asset or the
cash-generating unit exceeds its recoverable amount, the carrying amount of the asset is reduced to its recoverable amountand that reduction is recognized as an impairment loss.
The Consolidated Group assesses at the end of each reporting
period whether there is any indication that an impairment loss
recognized in prior ﬁscal years for an asset other than goodwill
may no longer exist or may have decreased. If any such indication exists, the Consolidated Group will estimate the recoverable
amount of that asset. If the recoverable amount exceeds the carrying amount of that asset or the cash-generating unit to which
the asset belongs, the carrying amount is increased to its recoverable amount, which is, however, limited up to the carrying
amount that would have been determined (net of amortization
or depreciation) had no impairment loss been recognized forthe asset in prior ﬁscal years; and that increase is recognized as areversal of an impairment loss. An impairment loss recognized
for goodwill is not reversed in a subsequent period.
In addition, because goodwill that forms part of the carrying
amount of an investment in an equity method investee is notseparately recognized, it is not tested for impairment separately.
If it is indicated that the investment in an equity method investee may be impaired, the entire carrying amount of the investment is tested for impairment as a single asset, by comparing its
recoverable amount with its carrying amount.

(8) Financial instruments
1) Financial assets
The Consolidated Group classiﬁes ﬁnancial assets at initial recognition as ﬁnancial assets measured at fair value through proﬁt
or loss, ﬁnancial assets measured at fair value through othercomprehensive income or ﬁnancial assets measured at amortized cost. The Consolidated Group initially recognizes ﬁnancial
assets measured at amortized cost on the date that they arise
and the other ﬁnancial assets on the transaction date.

64

KANEMATSU Integrated Report 2019

The Consolidated Group derecognizes a ﬁnancial asset when,and only when (a) the contractual rights to cash ﬂows from theﬁnancial asset expire, or (b) it transfers the contractual rights tocash ﬂows and substantially all the risks and rewards of ownership of the ﬁnancial asset.
(i) Financial assets measured at amortized cost
A ﬁnancial asset that meets both of the following conditions isclassiﬁed as a ﬁnancial asset measured at amortized cost:• The ﬁnancial asset is held within a business model whose
objective is to hold ﬁnancial assets in order to collect contractual cash ﬂow and,• The contractual terms of the ﬁnancial asset give rise on speciﬁed dates to cash ﬂows that are solely payments of principal
and interest on the principal amount outstanding.
The Consolidated Group initially recognizes and measures aﬁnancial asset measured at amortized cost at its fair value plus
any transaction costs directly attributable to the acquisition of
the ﬁnancial asset. The Consolidated Group subsequently measures it at amortized cost using the effective interest method.
(ii) Financial assets measured at fair value through othercomprehensive income(a) Debt instruments
Debt instruments that meet both of the following conditions isclassiﬁed as a ﬁnancial asset measured at fair value throughother comprehensive income:• The ﬁnancial asset is held within a business model whose
objective is achieved by both collecting contractual cash ﬂow
and selling ﬁnancial assets and,• The contractual terms of the ﬁnancial asset give rise on speciﬁed dates to cash ﬂows that are solely payments of principal
and interest on the principal amount outstanding.
The Consolidated Group initially recognizes and measures aﬁnancial asset measured at fair value through other comprehensive income at its fair value plus any transaction costs directly
attributable to the acquisition of the ﬁnancial asset. The
Consolidated Group subsequently measures it at fair value andrecognizes the subsequent changes in fair value as other comprehensive income. When the ﬁnancial asset is derecognized,
the cumulative gain or loss is reclassiﬁed to proﬁt or loss.
(b) Equity instruments
With regard to a ﬁnancial asset that has classiﬁed as a ﬁnancial
asset measured at fair value through proﬁt or loss, IFRS 9 permits an entity to make an irrevocable election to present inother comprehensive income changes in fair value of an investment in an equity instrument that is not held for trading. The
Consolidated Group makes this election on an instrument-byinstrument basis.
The Consolidated Group initially recognizes and measures anequity instrument measured at fair value through other comprehensive income at its fair value plus any transaction costs directly
attributable to the acquisition of the ﬁnancial asset. The
Consolidated Group subsequently measures it at fair value andrecognizes the subsequent changes in fair value as other comprehensive income. When the equity instrument is derecognized, or
its fair value substantially decreases, the Consolidated Group
reclassiﬁes the cumulative amount of other comprehensive
income to retained earnings and not to proﬁt or loss. Dividends
are recognized in proﬁt or loss unless the dividend clearly represents a recovery of part of the cost of the investment.

(i) Fair value hedge
The Consolidated Group recognizes the changes in fair value ofa derivative used as a hedging instrument in proﬁt or loss, andthe changes in fair value of a hedged item attributable to thehedged risk in proﬁt or loss by adjusting the carrying amount of
the hedged item.
(ii) Cash ﬂow hedge
Of the changes in fair value of a derivative used as a hedging
instrument, the portion determined to be effective is recognizedin other comprehensive income and the cumulative amount isincluded in other components of equity. Conversely, the portion
determined to be ineffective is recognized in proﬁt or loss. The
amounts accumulated in other components of equity are reclassiﬁed from other components of equity to proﬁt or loss in thesame period that the transaction of the hedged item affects profit or loss; provided, however, that if hedging of a forecast transaction subsequently results in the recognition of a non-ﬁnancial
asset or liability, the amounts accumulated in other componentsof equity are then accounted for as an adjustment to the initialcarrying amount of the non-ﬁnancial asset or liability.
When the hedging instrument expires or is sold, terminatedor exercised; or when the hedge no longer meets the criteria forthe hedge accounting, the Consolidated Group discontinues thehedge accounting prospectively. The amounts accumulated inother components of equity remain in equity when hedge
accounting is discontinued and are recognized in proﬁt or loss
when the forecast transaction is recognized in proﬁt or loss.
However, if the forecast transaction is no longer expected tooccur, the amounts accumulated in other components of equity
are reclassiﬁed immediately from other components of equity to
proﬁt or loss.

Financial Section and Company Information

KANEMATSU Integrated Report 2019

Sustainability(i) Financial liabilities measured at amortized cost
The Consolidated Group classiﬁed ﬁnancial liabilities, other thanﬁnancial liabilities measured at fair value through proﬁt or loss,
as ﬁnancial liabilities measured at amortized cost. The
Consolidated Group initially recognizes and measures a ﬁnancial
liability measured at amortized cost at its fair value less any
transaction costs directly attributable to incurring of the liability,
and subsequently measures it at amortized cost using the effective interest method.

4) Derivatives and hedge accounting
In order to hedge the foreign currency ﬂuctuation risk, interest
rate ﬂuctuation risk and commodity price ﬂuctuation risk, theConsolidated Group enters into derivative transactions, such as
forward exchange transactions, interest rate swap transactions
and commodity futures and forwards transactions.
When initiating a hedge, the Consolidated Group designatesand documents the risk management purposes and strategies
regarding the hedge relationship and initiation of such hedge.
Such documentation includes the designation of the hedging
instrument, the hedged item or transaction, the nature of therisk being hedged and methods of assessing the hedging instrument’s effectiveness in offsetting the exposure to changes in thehedged item’s fair value or cash ﬂows attributable to thehedged risk. In addition, such hedging is assessed on an ongoing basis whether it was actually effective throughout thereporting periods was designated.
The Consolidated Group initially recognizes and measures derivatives at fair value and subsequently measures them at fair value andaccounts for subsequent changes in fair value as follows:

Review of Operations

3) Financial liabilities
The Consolidated Group classiﬁes ﬁnancial liabilities at initialrecognition as ﬁnancial liabilities measured at fair value throughproﬁt or loss or ﬁnancial liabilities measured at amortized cost.
The Consolidated Group initially recognizes ﬁnancial liabilities
measured at amortized cost on the date that they arise and theother ﬁnancial liabilities on the transaction date.
The Consolidated Group derecognizes ﬁnancial liabilities
when they are extinguished, i.e., when obligations speciﬁed
under a contract is discharged, cancelled or expires.

(ii) Financial liabilities measured at fair value through proﬁt
or loss
The Consolidated Group initially recognizes and measures aﬁnancial liability measured at fair value through proﬁt or loss at
its fair value, and subsequently measures it at fair value and recognizes subsequent changes in fair value in proﬁt or loss.

Special Features2) Impairment of ﬁnancial assets
The Consolidated Group assesses impairment of ﬁnancial assets
measured at amortized cost and ﬁnancial assets measured atfair value through other compressive income based on the
expected credit loss approach.
If, at the reporting date, the credit risk on a ﬁnancial instrument
has not increased signiﬁcantly since initial recognition, theConsolidated Group measures the loss allowance for that ﬁnancial instrument at an amount equal to the 12-month expectedcredit losses, i.e., the expected credit losses that result fromdefault events on that ﬁnancial instrument that are possible within the 12 months after the reporting date. Conversely, if, at thereporting date, the credit risk on that ﬁnancial instrument has
increased signiﬁcantly since initial recognition, the Consolidated
Group measures the loss allowance for that ﬁnancial instrument
at an amount equal to the lifetime expected credit losses, i.e., theexpected credit losses that result from all possible default events
over the expected life of that ﬁnancial instrument.
However, the Consolidated Group always measures the loss
allowance for trade receivables, contract assets and lease receivables at an amount equal to the lifetime expected credit losses
despite the above requirement.
If there is any objective evidence that ﬁnancial assets are credit-impaired, such as a borrower’s signiﬁcant ﬁnancial difficulty, abreach of contract of default or delinquency by the borrower,
etc., the Consolidated Group measured interest income to net
carrying amount after deducting loss allowance following theeffective interest method.
Detailed information on the assessment of signiﬁcant increases incredit risk and the measurement of expected credit losses is provided in Note 30. Financial Instruments: (3) Credit risk management.

Kanematsu’s Progress and Strengths(iii) Financial assets measured at fair value through proﬁt or loss
A ﬁnancial asset other than those classiﬁed as (i), (ii) and (iii)
above is classiﬁed as a ﬁnancial asset measured at fair value
through proﬁt or loss.
The Consolidated Group initially recognizes and measures aﬁnancial asset measured at fair value through proﬁt or loss at its
fair value and expenses the transaction costs as incurred that are
directly attributable to the acquisition of the ﬁnancial asset. The
Consolidated Group subsequently measures it at fair value andrecognizes the subsequent changes in fair value in proﬁt or loss.

65

(iii) Derivatives not designated as hedging instruments
The Consolidated Group recognizes the changes in fair value ofderivatives not designated as hedging instruments in proﬁt or loss.

If the Consolidated Group receives the consideration from thecustomer before satisfying the performance obligations, theConsolidated Group recognizes it as a contract liability.

5) Offsetting of ﬁnancial assets and ﬁnancial liabilities
Financial assets and ﬁnancial liabilities are offset and the net
amount of such offset is presented in the consolidated statements of ﬁnancial position only when the Consolidated Group
has a legally enforceable right to offset the recognized amounts
and intends either to settle them on a net basis or realize theassets and settle the liabilities simultaneously.

2) Presentation of revenue
If the Consolidated Group conducts a transaction as a principal,
the Consolidated Group presents revenue at the total amount ofconsideration received from the customer. If the Consolidated
Group conducts a transaction as an agent for a third party, theConsolidated Group presents revenue at the net amount of thecommission.
When the Consolidated Group determines whether it conducts
a transaction as a principal or as an agent for a third party, theConsolidated Group takes the following indicators into account.
• Whether the other party is primarily responsible for fulﬁlling
the premise.
• Whether the Consolidated Group has inventory risk both during shipping and upon return around the time when the customer places an order for the goods.
• Whether the beneﬁts that the Consolidated Group can obtainfrom the goods or services of the other party are limited
because of the fact that the Consolidated Group does not havediscretion in establishing the price for the goods or services ofthe other party.

(9) Provisions
The Consolidated Group recognizes a provision when, only
when (a) the Consolidated Group has a present obligation (legal
or constructive) as a result of a past event; (b) it is probable thatan outﬂow of resources embodying economic beneﬁts will be
required to settle the obligation; and (c) a reliable estimate canbe made of the amount of the obligation.
Where the effect of the time value of money is material, theConsolidated Group recognizes the provision by discounting it
using a current pre-tax discount rate that reﬂects the risks specific to the liability.

(10) Equity
When the Consolidated Group repurchases the shares of treasury stock, it is measured at cost and is presented as a deduction
from equity. Transaction costs directly attributable to the repurchase of the shares of treasury stock are deducted from capitalsurplus. When the Consolidated Group sells the shares of treasury stock, the consideration received is recognized as anincrease in equity.

(11) Revenue
1) Recognition of revenue
The Consolidated Group recognizes revenue from contracts withcustomers based on the following ﬁve-step approach.
Step 1: Identifying the contracts with customers
Step 2: Identifying the performance obligations in the contracts
Step 3: Determining the transaction price
Step 4: Allocating the transaction price to the performanceobligations in the contracts
Step 5: Recognizing revenue when (or as) an entity satisﬁes
the performance obligations
The Consolidated Group’s principal business is mainly to sellgoods in its four segments of Electronics & Devices, Foods &Grain, Steel, Materials & Plant, and Motor Vehicles & Aerospace.
It recognizes revenue from the sale of these goods at the time
when promised assets are delivered that is, because customers
obtain control of the goods and the performance obligations
are satisﬁed at the time of delivery. In the provision of services,
the Consolidated Group recognizes revenue in accordance withthe performance obligations that will be satisﬁed over time
according to the progress of individual contracts.
The Consolidated Group also measures revenue at an amountobtained by deducting discounts, rebates and returned goods
from the promised consideration in the contract with the customer. If there is more than one identiﬁable performance obligation in a single contract, the contract is divided into eachperformance obligations, and revenue is recognized for eachperformance obligation. In addition, if an economic reality is notpresented unless multiple contracts are considered as one, theConsolidated Group recognizes revenue by combining the multiple contracts.

66

KANEMATSU Integrated Report 2019(12) Finance income and ﬁnance costs
Finance income comprises interest income, dividend income,gain on sale of ﬁnancial instruments and gain arising fromchanges in fair value of ﬁnancial instruments. Interest income isrecognized at the time of receipt by using the effective interest
method. Dividend income is recognized on the date when theConsolidated Group’s right to receive payment is established.
Finance costs comprise interest expenses, loss on sale of ﬁnancial instruments and loss arising from changes in the fair value ofﬁnancial instruments.

(13) Employee beneﬁts
1) Post-retirement beneﬁts(i) Deﬁned beneﬁt plans
Deﬁned beneﬁt plans are retirement beneﬁt plans other thandeﬁned contribution plans. Deﬁned beneﬁt obligations are calculated separately for each plan by estimating the future
amounts of beneﬁts that employees will have earned in returnfor their services provided in the current and prior periods, anddiscounting such amounts in order to determine the present
value. The fair value of any plan assets is deducted from thepresent value of the deﬁned beneﬁt obligations. The discountrate is determined by reference to the market yields on highly
rated corporate bonds at the ﬁscal year-end that have maturity
terms that are approximately the same as those of theConsolidated Group’s deﬁned beneﬁt obligations and use thesame currencies as those used for future beneﬁts payments.
When the retirement beneﬁt plans are amended, the change
in deﬁned beneﬁt obligations related to past service by employees is immediately recognized in proﬁt or loss.
The Consolidated Group recognizes the changes in the net
deﬁned beneﬁt liability (asset) due to remeasurements in othercomprehensive income and immediately reclassiﬁes them toretained earnings.

3) Short-term employee beneﬁts
The Consolidated Group recognizes short-term employee beneﬁts as a liability and an expense by estimating the amounts thatwill be paid to the employees in return for their services without
discounting those amounts. The Consolidated Group recognizes
bonuses to be paid pursuant to the bonus system as a liability
when it has present legal or constructive obligations to pay as aresult of past employee service, and when the amounts of theobligations can be estimated reliably.

The Consolidated Group determines whether an agreement is,or contains, a lease based on the substance of the agreement at
inception of the lease. The substance of an agreement isassessed based on (a) whether fulﬁllment of the arrangement isdependent on the use of a speciﬁed asset or assets; and (b)whether the agreement conveys a right to use the asset.
1) Finance lease
A ﬁnance lease is a lease that transfers substantially all the risks
and rewards incidental to ownership of an asset. The
Consolidated Group initially recognizes a leased asset at thelower of the fair value of the leased asset and the present valueof the minimum lease payments, and subsequently accounts forthe lease asset based on the applicable accounting policies.
Minimum lease payments are apportioned between the ﬁnancecharge and the reduction of the outstanding liability. The
ﬁnance charge is allocated to each period during the lease termso as to produce a constant periodic rate of interest on theremaining balance of the liability.

Sustainability2) Operating lease
An operating lease is a lease other than a ﬁnance lease. The
Consolidated Group recognizes lease payments under an operatinglease as an expense on a straight-line basis mainly over the lease
term. When the Consolidated Group is the lessor of assets under anoperating lease, it presents the assets subject to the operating leasein its consolidated statements of ﬁnancial position.

Financial Section and Company Information

Income tax expenses comprises current tax expense anddeferred tax expense. The Consolidated Group recognizes themin proﬁt or loss, except when they arise from items that are recognized in other comprehensive income or directly equity, andfrom business combinations.
Current tax expense is measured by the expected taxes receivable from or taxes payable to tax authorities, and the tax rates
or tax laws that are used to calculate the tax amount are thosethat have been enacted or substantially enacted by the end of
the ﬁscal year.
The Consolidated Group recognizes deferred tax assets anddeferred tax liabilities for temporary differences between the
carrying amount of an asset and liability in the statements ofﬁnancial position and its tax base, the unused tax losses carriedforward and unused tax credits carried forward. The amounts ofdeferred tax assets and deferred tax liabilities are calculated byapplying the expected tax rate or tax law applicable as of theperiod in which assets are realized or liabilities are settled inaccordance with a statutory tax rate or a substantially enacted
statutory tax rate and the tax law as of the ﬁscal year-end. The
Consolidated Group does not recognize deferred tax assets anddeferred tax liabilities in the following cases:• when taxable temporary differences arise from the initial recognition of goodwill;• when they arise from the initial recognition of an asset or a liability in a transaction which is not a business combination; andon the transaction date, affects neither accounting proﬁt nor
taxable proﬁt (tax loss); or,• with respect to taxable temporary differences associated withinvestments in subsidiaries and associates, when theConsolidated Group is able to control the timing of the reversalof the temporary differences; and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are offset only
when the Consolidated Group has a legally enforceable right to(15) Leases
Review of Operations(14) Income taxes

set off the current tax assets against current tax liabilities, and,such deferred tax assets and liabilities relate to income taxes levied on the same taxation entity. However, even in the case ofdifferent taxable entities, the Consolidated Group can set off if
the tax taxable entities intend either to settle current tax liabilities and assets on a net bases, or to realize the assets and settle
the liabilities simultaneously. Deferred tax assets are recognizedfor deductible temporary differences, the unused tax losses carried forward and unused tax credits carried forward to theextent that it is probable that they can be used against futuretaxable proﬁt. The carrying amounts of deferred tax assets arereassessed at each ﬁscal year-end, and such carrying amount will
be reduced to the extent it is no longer probable that related tax
beneﬁts from such assets will be realized. Unrecognizeddeferred tax assets are also reassessed at the end of each reporting period and are recognized to the extent that it is probablethat future taxable proﬁt will be available to recover thedeferred tax assets.
The Company and its wholly owned domestic subsidiaries
apply the consolidated tax payment system, by which theCompany and its wholly owned domestic subsidiaries areallowed to ﬁle a tax return and pay the corporation tax as a consolidated tax ﬁling group.

Special Features2) Other long-term employee beneﬁts
The Consolidated Group recognizes obligations for long-term
employee beneﬁts other than post-employment beneﬁts as aliability by estimating the amounts as of the reporting date thatwill be paid to the employees in return for their services without
discounting that amounts unless it is material.

Kanematsu’s Progress and Strengths(ii) Deﬁned contribution plans
Deﬁned contribution plans are retirement beneﬁt plans underwhich an employer pays ﬁxed contributions into a separate entity and will have no legal or constructive obligation to pay further contributions. The obligations already paid or to be paid ascontributions under the deﬁned contribution plans are recognized as expenses in the period in which the employees render
the related services.

(16) Share-based payments
The Consolidated Group introduces a performance-linked stockcompensation plan as an incentive plan for its Directors andExecutive Officers. The equity-settled share-based payment planmeasures at the fair value on the date of grant, recognizing it as an
expense from the date of grant through the vesting period and recognizing the same amount as an increase in capital surplus.

KANEMATSU Integrated Report 201967

4. Standards and Interpretations Issued but Not Yet Adopted
The following are the major standards and interpretations thathave been newly issued or amended prior to the date of authorization for issuance of the consolidated ﬁnancial statements.

Standard

IFRS 16

Title

LeasesMandatory application(from ﬁscal years
beginning on or after)

January 1, 2019

Under IFRS 16 (hereinafter referred to as the “Standard”), theConsolidated Group will recognize a right-of-use assets representing its right to use the underlying leased asset and a Leaseliabilities representing its obligation to make lease payments foralmost all lease contracts.
The adoption of the Standard is expected to increase of assets
and liabilities for leases previously classiﬁed as operating leases
under IAS 17 “Leases”. Operating lease payments that were
expensed in the consolidated statement of income as incurred
will be recorded as depreciation expense for right-of-use assets

The Consolidated Group has not yet adopted this standard forthe ﬁscal year ended March 31, 2019.

Fiscal year in which theConsolidated Group will apply
the standard

Fiscal year ending
March 31, 2020

Summary of new or amended standard

Amendment of accounting treatment
for lease contracts

and interest cost for Lease liabilities, and reclassiﬁed from a
reduction in cash ﬂows from operating activities to a reduction
in cash ﬂows from ﬁnancing activities in the consolidated statement of cash ﬂows.
The Consolidated Group expects that right-of-use assets andLease liabilities will increase approximately ¥17 billion each on
the initial application date (April 1, 2019). The effect of the consolidated statement of income of the ﬁscal year ending March
31, 2020 would be negligible.

5. Business Combinations
No major business combinations took place in the previous ﬁscal
year (from April 1, 2017 to March 31, 2018).
The major business combination that took place in the ﬁscal year
under review (April 1, 2018 to March 31, 2019) was as follows.

(3) Acquisition costs and the detail
Fair value on the acquisition date of shares of theacquired company held immediately before theacquisition date

1,440(1) Contents of the business combination

Fair value of shares of the acquired company
additionally acquired on the acquisition date

2,160

Acquisition cost

3,600

Name of the acquiredcompany

G-Printec, Inc.

Contents of business

Development, manufactureand sale of card printers andrelated devices

Date of the businesscombination

December 3, 2018

Legal form of
the business combination

Acquisition of shares withcash as consideration

Company name after
the combination

G-Printec, Inc.

Percentage of the voting
rights acquired

Percentage share of voting
rights owned immediately
before the acquisition date
40.0%
Percentage share of voting
rights additionally acquired on
the acquisition date 60.0%
Percentage share of voting
rights after acquisition
100.0%(2) Purpose of the business combination
The card printer business, one of the key businesses in theElectronics & Devices segment, has been focusing on the distribution of card printers for many years. We position G-Printec,
Inc. as an important strategic function to further enhance theadded value of the card printer business, and we have decided
that the acquisition of the printer design and development
functions of G-Printec, Inc. will contribute to the enhancementof the corporate value of the Consolidated Group, because it
will enable us to mutually generate synergistic effects by meeting even more diversiﬁed customer needs.

68

KANEMATSU Integrated Report 2019

JPY

(4) Acquisiton-related costs and its line item
Gain from remeasurement relating to business combinations of¥610 million is recorded in “Other income” in the consolidated
statements of income as a result of re-measuring the fair valueon the acquisition date of equity interest in the acquired company held immediately before the acquisition date.

(5) Assets and liabilities on the day of the businesscombination
JPY

Fair value of the consideration paid

3,600

Cash and cash equivalents

439

Trade receivables

845

Inventories

301

Other current assets

91

Property, plant and equipment

124

Intangible assets
Other non-current assets

2,856
25

Current liabilities(1,740)Non-current liabilities(1,831)

Goodwill (Note)
Total

2,485
3,600

(Note) The details of goodwill are mainly excess earning power and synergy
effects with the existing businesses. The amount of goodwill recognized
does not include the amount that is expected to be deductible for tax
purposes.

JPY

Payments for acquisition costs (cash consideration)
Cash and cash equivalents on the acquisition date
Payments for acquisition of subsidiaries

Kanematsu’s Progress and Strengths(6) Impacts on cash ﬂows through business combination(7) Impacts on the operating results of the Consolidated
Group
Operating results at the acquired company from the date ofacquisition to March 31, 2019 are as follows:(2,160)439

JPY(1,720)

Revenue
Proﬁt

1,628
287

Pro-forma information (unaudited information) concerning consolidated operating results in the ﬁscal year under review in thecase that the business combination is assumed to be conductedat the beginning of the period is revenue of ¥726,220 million andproﬁt attributable to owners of the Parent of ¥16,760 million.

Special Features

6. Revenue(1) Disaggregation of revenue
As disclosed in Note 7 Segment information, the Consolidated Group has four reportable segments: Electronics & Devices, Foods & Grain,
Steel, Materials & Plant and Motor Vehicles & Aerospace. In addition, the Consolidated Group disaggregates revenue in Electronics &Devices recognized from contracts with customers into three categories: ICT solutions, Mobile and Others. Similarly , revenue in Steel,Materials & Plant is disaggregated into Energy and Others. The reconciliations of the disaggregated revenue with the group’s sales components are as follows.
The accounting methods for the revenue are consistent with those stated in Note 3. Significant Accounting Policies.
JPY

2019

USD

2018

2019

ICT solution

65,56160,556590,695

Mobile135,094

131,9101,217,182

Others64,53070,550581,408

Foods & Grain

244,859

231,260

2,206,136

Energy73,19996,432659,511

Others

66,23456,640596,761

61,93854,204

558,056

711,417

701,555

6,409,748

11,96012,691

107,763

723,378

714,247

6,517,512

Review of Operations

Electronics & Devices

Steel, Materials & Plant

Motor Vehicles & Aerospace
Total reportable segment
Others
Revenue arising from other sources
Total

470

543

4,241

723,849

714,790

6,521,752

Sustainability

Total revenue arising from contracts with customers(Notes) Revenue arising from other sources includes revenue recognized in accordance with IAS 17 “Lease”.

(2) Contract balances
Information on contract assets and liabilities arising from contracts with customers are as follows:
JPY

2019

Contract assets
Contract liabilities

2019

7

168

67

11,273

4,504

101,571
Financial Section and Company Information

Contract assets primarily relate to the consolidated group’s
rights to receive consideration for performance obligations thathave been completed, but not yet billed for, as of the reporting
date. Contract assets are reclassiﬁed as receivables when theConsolidated Group’s right to payment becomes unconditional.
Contract liabilities mainly relate to consideration received
from customers before the Consolidated Group delivers goods
or products to customers, based on receivables management
and other considerations. The balance may ﬂuctuate temporarily

USD

The date of
intial application(April 1, 2018)at the timing of the contract. The Consolidated Group recognized revenue on all of the balance of contract liabillities as ofApril 1, 2018 during the ﬁscal year ended March 31, 2019. There
are no signiﬁcant amounts of revenue recognized during theyear ended March 31, 2019 from performance obligations satisﬁed in the prior ﬁscal year. The increase of contract liabilities is
included in a reduction of other from operating activities in theConsolidated Statement of Cash Flows.

KANEMATSU Integrated Report 201969

(3) Transaction price allocated to the remaining performance obligations
Regarding performance obligation satisfy over time in maintenance and warranty with service, the Consolidated Group recognize as acontract liability received consideration and the revenue has been allocated according to maintenance period or satisfaction of performance obligation. In addition, the Consolidated Group recognize as a contract liability that already received a part of consideration upondelivery of goods.
Transaction price allocated to the remaining performance obligations are as follows. It`s not included expected transactions term within
one years.
JPY

USD

2019

2019

Within one year

10,517

94,762

Over one years

11,387

102,599

21,905

197,361

Total(Notes) The transaction for remaining performance transaction by over one year is mainly sales of goods as of year ended March 31 ,2019. The performance obligation
expect to satisfy within three years.

(4) Assets recognized from the costs of obtaining or fulﬁlling contracts with customers
There are no assets recognized from the costs of obtaining or fulﬁlling contracts with customers as of the year ended March 31, 2019. In
addition, if the amortization period of the assets that the group otherwise would have recognized is one year or less, the group applies thepractical expedient of recognizing the incremental costs of obtaining the contract as an expense when incurred.

7. Segment Information(1) Overview of reportable segments
The reportable segments of the Consolidated Group are components of the Consolidated Group for which discrete ﬁnancial
information is available and are reviewed by the Board of
Directors of the Company normally and regularly assesses its
business performance and examines the allocation of management resources.
The Consolidated Group offers a broad array of merchandiseand services, using expertise in each business ﬁeld and trading
function from Japan and its international network. Trading functions include commercial trade, information gathering, market
development, business development and arrangement, risk
management and logistics.
The Consolidated Group therefore consists of merchandiseand service segments based on its business units: “Electronics &Devices”, “Foods & Grain”, “Steel, Materials & Plant”, and “Motor
Vehicles & Aerospace”.
The principal merchandise and services handled by each segment are presented as follows:(Electronics & Devices)
The Electronics & Devices segment provides a wide range of
products including electronic parts and components, semiconductor and LCD manufacturing equipment, materials andindirect materials related to electronics, coupled with development and proposal services. This segment also deals with mobile
communications terminals, mobile internet systems, and information and telecommunication equipment and security
equipment and services.

70

KANEMATSU Integrated Report 2019

(Foods & Grain)
The Foods & Grain segment integrates the handling of a broadarray of food and foodstuffs, with operations ranging fromsourcing raw materials reliably to providing food and foodstuffs,
including high value-added products. Merchandise in this segment includes cooked foods, processed fruits, processed agricultural products, beverage ingredients, animal and ﬁsheryproducts, wheat, rice, soybeans, feedstuff and pet foods.
(Steel, Materials & Plant)
The Steel, Materials & Plant segment operates the domestic andinternational trade of general steel products including steel
plates, bars and wire rods, pipes, and stainless products, carries
out overseas projects such as plant and infrastructure development, and sells machine tools and industrial machinery.
Additionally, this segment operates the domestic and international trade of crude oil, petroleum products, LPG, functional
chemicals and food products, pharmaceuticals and pharmaceutical intermediates, and other products. It also operates businesses related to environmental and emissions rights.
(Motor Vehicles & Aerospace)
The Motor Vehicles & Aerospace segment primarily operates
international trade of aircrafts and aircraft parts, satellite- andaerospace-related products, automobiles, motorcycles and related parts, industrial vehicles, construction machinery, etc., and also
provides products with added value based on demand or use.

Kanematsu’s Progress and Strengths(2) Information on reportable segments
The accounting methods for the reportable operating segments are largely consistent with those stated in Note 3. Significant
Accounting Policies. Inter-segment revenue and transfers are based on the transaction prices to external customers.
Fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)(JPY)

Reportable segment
Electronics &Devices

Foods & Grain

Steel,
Materials &
Plant

Motor
Vehicles &Aerospace

Total

Others(Note 1)

Adjustment(Note 2)

Consolidated

265,530

244,859

139,436

62,063

711,888

282

1

66

24

374

11,960—723,849

103

(478)

Total revenue

265,812244,860

139,50262,087—712,262

12,064(478)

723,849

Segment proﬁt (loss)

18,533

3,951

4,437

2,549

29,472850

26

30,349

1,345

579

864

390

3,179

116

(21)

3,274

(78)

53

28

32

35

327

—

363

197,389

124,172

133,762

48,296503,621

9,520

36,318549,459

—

1,407

2,521

350

4,279

2,591

(3)

6,867

1,377

335

1,101

701

3,516

251

415

4,183

Revenue
External
Inter-segment

Special Features

Other proﬁt or loss:
Depreciation andamortization
Share of proﬁt (loss) ofinvestments accounted
for using the equity
methodSegment assets
Other assets:
Investments accounted
for using the equity
methodFiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)

Review of Operations

Capital expenditures(USD)

Reportable segment
Electronics &Devices

Foods & Grain

Steel,
Materials &
Plant

Motor
Vehicles &Aerospace

Total

Others(Note 1)

Adjustment(Note 2)

Consolidated

2,392,379

2,206,136

1,256,294

559,180

6,413,989

107,763—

6,521,752(4,307)—

Revenue
External
Inter-segment

2,543

14

595

220

3,372

935

Total revenue

2,394,922

2,206,150

1,256,889

559,399

6,417,361

108,698

Segment proﬁt (loss)

166,988

35,60039,98322,968265,538

7,665

238

273,441

12,124

5,218

7,786

3,520

28,647

1,048

(190)

29,505

(708)

485

254

293

324

2,953

—

3,277

1,778,447

1,118,775

1,205,172

435,1424,537,536

85,776327,220

4,950,532—

12,68322,715

3,160

38,55823,346(32)

61,872

12,409

3,026

9,925

6,324

31,684

2,264

3,740

37,688(4,307) 6,521,752
Sustainability

Other proﬁt or loss:
Depreciation andamortization
Share of proﬁt (loss) ofinvestments accounted
for using the equity
methodSegment assets
Other assets:
Investments accounted
for using the equity
methodCapital expenditures

Financial Section and Company Information(Notes) 1. The “Others” column is a business segment that is not included in the reportable segments and includes the logistics and insurance service business and thegeotech business.
2. Adjustments are presented as follows:(1) Adjustment for segment proﬁt (loss) of ¥26 million ($238 thousand) includes inter-segment elimination of ¥26 million ($238 thousand).
(2) Adjustment for segment assets of ¥36,318 million ($327,220 thousand) includes inter-segment elimination of ¥(10,141) million ($(91,373) thousand) andcorporate assets of ¥46,459 million ($418,593 thousand) that are not allocated to any reportable segment. The corporate assets consist mainly of cash andbank deposits associated with ﬁnancing activities and assets such as investment securities.
(3) Adjustment for depreciation and amortization of ¥(21) million ($(190) thousand) includes inter-segment elimination of ¥(21) million ($(190) thousand).
(4) Adjustment for investments accounted for using the equity method of ¥(3) million ($(32) thousand) includes inter-segment elimination of ¥(3) million($(32) thousand).
(5) Adjustment for capital expenditures of ¥415 million ($3,740 thousand) includes corporate assets of ¥415 million ($3,740 thousand) that are not allocatedto any reportable segment. The corporate assets consist mainly of lease equipment related to the information system of the subsidiary.

KANEMATSU Integrated Report 201971

Fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)(JPY)

Reportable segment
Others(Note 1)

Adjustment(Note 2)

Consolidated

12,691—

714,790

62

(436)

—

702,743

12,753(436)

714,790

2,541

26,179(20)

226,160

838

425

3,032

135

(21)

3,145

62

19

33

476

1,102

0

1,579

194,788

118,829

121,456

42,898477,972

9,112

32,803519,889

Investments accounted
for using the equity
method

873

1,337

83

326

2,620

2,552

(3)

5,169

Capital expenditures

1,359

600

486

384

2,831

120

153

3,105

Electronics &Devices

Foods & Grain

Steel,
Materials &
Plant

Motor
Vehicles &Aerospace

263,310231,260

153,075

54,453702,099

277

4

80

11

374

Total revenue

263,587

231,265

153,155

54,464

Segment proﬁt (loss)

17,556

2,149

3,930

1,205

562

361

Total

Revenue
External
Inter-segment

Other proﬁt or loss:
Depreciation andamortization
Share of proﬁt (loss) ofinvestments accounted
for using the equity
methodSegment assets
Other assets:(Notes) 1. The “Others” column is a business segment that is not included in the reportable segments and includes the logistics and insurance service business and thegeotech business.
2. Adjustments are presented as follows:(1) Adjustment for segment proﬁt (loss) of ¥2 million includes inter-segment elimination of ¥2 million.
(2)Adjustment for segment assets of ¥32,803 million includes inter-segment elimination of ¥(15,610) million and corporate assets of ¥48,414 million that are
not allocated to any reportable segment. The corporate assets consist mainly of cash and bank deposits associated with ﬁnancing activities and assets suchas investment securities.
(3) Adjustment for depreciation and amortization of ¥(21) million includes inter-segment elimination of ¥(21) million.
(4) Adjustment for Share of proﬁt (loss) of investments accounted for using the equity method of ¥0 million includes inter-segment elimination of ¥0 million.
(5) Adjustment for investments accounted for using the equity method of ¥(3) million includes inter-segment elimination of ¥(3) million.
(6Adjustment for capital expenditures of ¥153 million includes inter-segment elimination of ¥(0) million and corporate assets of ¥153 million that are notallocated to any reportable segment. The corporate assets consist mainly of lease equipment related to the information system of the subsidiary.

Adjustments from segment proﬁt (operating proﬁt) to proﬁt before tax presented in the consolidated statements of income arepresented as follows:
JPY

2018

2019

Segment proﬁt

30,34926,160273,441

Finance income and ﬁnance costs(1,535)(1,696)(13,830)

363

1,579

3,277

29,17726,043262,888

Share of proﬁt (loss) of investments accounted forusing the equity method
Proﬁt before tax(3) Information on products and services
The information on products and services is disclosed in Note 6. Revenue.

72

USD

2019

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths(4) Geographic information
1) External revenue
JPY

USD

2019

2018

2019

Japan

597,774592,687

5,385,845

Asia

51,15751,411

460,922

North America

53,70848,665483,902

Europe16,492

17,397

148,592

Others

4,716

4,627

42,492

723,849

714,790

6,521,752

2019

2018

2019

Japan

47,292

42,172

426,100

Asia

1,172

991

10,567

North America

6,750

6,548

60,824

Europe

2,216

2,580

19,971Others

24

35

223

57,45752,328517,685

Total

Revenue is classiﬁed by country or region based on the locations of customers.
Special Features

2) Non-current assets (excluding ﬁnancial assets and deferred tax assets)
JPY

Total

USD

(5) Information on major customers
Review of Operations

There is no customer whose transaction volume is equal to or more than 10% of the Consolidated Group’s revenue for the ﬁscal years
ended March 31, 2019 and March 31, 2018.

8. Trade and Other Receivables
The breakdown of trade and other receivables is presented as follows:
JPY

Notes and accounts receivable

USD

2019

2018

2019

222,551

215,705

2,005,148

Loans receivable

3,195

3,425

28,790

Other

4,830

5,021

43,518Less: loss allowance
Current assets
Non-current assets
Total(1,827)(1,985)(16,462)

228,749

222,166

2,060,995

227,300

220,583

2,047,939

1,449

1,582

13,056

228,749

222,166

2,060,995

Sustainability

Total

Information on changes in loss allowance is provided in Note 30. Financial Instruments: (3) Credit risk management..

9. Inventories
The breakdown of inventories is presented as follows:
JPY

USD

2018

2019

Merchandise and ﬁnished goods

93,29991,334

840,614

Raw materials and supplies

2,335

2,045

21,046

597

577

5,381

96,232

93,957

867,041

Work in progress
Total

Financial Section and Company Information

2019

The amounts of inventory write downs that were recognized as expense during the ﬁscal year ended March 31, 2019 and March 31,2018 are ¥597,766 million ($5,385,767 thousand) and ¥592,212 million, respectively.
The amounts of inventory write downs that were recognized as expense during the ﬁscal years ended March 31, 2019 and March 31,2018 are ¥276 million ($2,490 thousand) and ¥365 million, respectively.

KANEMATSU Integrated Report 201973

10. Property, Plant and Equipment
Changes in costs, accumulated depreciation and accumulated impairment losses of property, plant and equipment are presented asfollows:[Costs]

As of April 1, 2017
Acquisitions
Acquisitions through businesscombinations
Transfers from construction in progress(JPY)
Buildings andstructures

Machinery, vehicles,
tools, furniture andﬁxturesLand

16,43927,974

10,572588

55,575

822

1,331

2

336

2,493

1

4

—

—

6

Construction inprogress

Total

80

478

25

(591)

(6)

(2,427)(2,676)(2,365)(0)(7,470)Exchange differences

(6)

(289)

(6)

(13)

(316)

Increases (decreases) due to a change inthe scope of consolidation

(12)

(18)

—

—

(31)

Disposals

Other

500

21

75

(16)

580

15,40026,8258,303

301

50,831

Acquisitions

514

2,179

—

522

3,216

Acquisitions through businesscombinations

25

101

—

2

129

As of March 31, 2018

Transfers from construction in progress

108

214

—

(293)

28

Disposals(546)(2,021)—(1)(2,569)Exchange differences

(33)

149

(1)

12

126

Other

99

(174)

—

0

(75)

15,56727,274

8,301

544

51,688

As of March 31, 2019

[Accumulated depreciation and accumulated impairment losses]
Buildings andstructures

As of April 1, 2017Land

Construction inprogress

Total(9,663)(19,016)(37)—(28,717)

Depreciation(630)(1,787)——(2,417)

Impairment losses

(69)

(1)

(2,074)—(2,146)

2,047

1,369

963

—

4,380

Exchange differences

4

91

—

—

96

Increases (decreases) due to a change inthe scope of consolidation

10

15

—

—

26

Disposals

Other

(112)

35

(75)

—

(152)

(8,413)(19,293)(1,224)—(28,930)

Depreciation(759)(1,793)——(2,552)

Impairment losses

(58)

(20)

—

—

(78)

Disposals

390

1,573

—

—

1,963

6

(31)

—

—

(25)

As of March 31, 2018

Exchange differences
Other
As of March 31, 2019

74

(JPY)

Machinery, vehicles,
tools, furniture andﬁxtures

KANEMATSU Integrated Report 2019

4

22

—

—

26

(8,830)(19,543)(1,224)—(29,597)

(JPY)
Buildings andstructures

Machinery, vehicles,
tools, furniture andﬁxturesLand

As of March 31, 2018

6,986

7,532

7,079

301

21,900

As of March 31, 2019

6,737

7,731

7,077

544

22,090Construction inprogress

Total[Costs]

As of March 31, 2018
Acquisitions

Transfers from construction in progress
Disposals(USD)
Buildings andstructures

Machinery, vehicles,
tools, furniture andﬁxturesLand

138,753

241,694

74,8152,720

457,982

4,638

19,636—

4,709

28,983

233

918

—

20

1,171

974

1,929

—

(2,643)259(4,925)(18,213)—(16)(23,155)
1,141

Construction inprogress

Total

Exchange differences

(304)

1,350

(16)

111

Other

896

(1,576)

—

2

(678)

140,264

245,738

74,7994,903

465,703

As of March 31, 2019

[Accumulated depreciation and accumulated impairment losses](USD)

Buildings andstructures

Machinery, vehicles,
tools, furniture andﬁxturesLand

As of March 31, 2018(75,804)(173,828)(11,030)—(260,662)

Depreciation(6,839)(16,163)——(23,001)

Impairment losses

(523)

(183)

—

—

(705)

Disposals

Construction inprogress

Total

14,177——

17,692

54

(288)

—

—

(234)

Other

38

203

—

—

241

(79,558)(176,082)(11,030)—(266,670)

Buildings andstructures

Machinery, vehicles,
tools, furniture andﬁxturesLand

60,70669,656

63,769[Carrying amount](USD)
Construction inprogress

4,903

Total

199,034

Sustainability

As of March 31, 2019

Review of Operations

3,515

Exchange differences
As of March 31, 2019

Special Features

Acquisitions through businesscombinations

Kanematsu’s Progress and Strengths[Carrying amount]

The amounts of expenditures relating to property, plant and equipment under construction are presented in the table above as“Construction in progress”.
Depreciation for property, plant and equipment are included in “Cost of sales” and “Selling, general and administrative expenses” inthe consolidated statement of income.

Financial Section and Company Information

KANEMATSU Integrated Report 201975

11. Goodwill and Intangible Assets(1) Goodwill
1) Costs, accumulated impairment losses and carrying amount
Changes in costs, accumulated impairment losses and carrying amount of goodwill are presented as follows:[Costs]
JPY

USD

2019

2018

2019

Balance at the beginning of the year

7,578

7,203

68,277

Acquisitions through business combinations

2,485

495

22,396

96

(121)

871

10,1607,578

91,544

2019

2018

2019

(1,006)(899)(9,065)

(343)

(107)

(3,096)(1,349)(1,006)(12,162)

2019

2018

2019

8,810

6,571

79,382

Exchange differences
Balance at the end of the year

[Accumulated impairment losses]
JPY

Balance at the beginning of the year
Impairment losses
Balance at the end of the year

USD

[Carrying amount]
JPY

Carrying amountUSD2) Impairment test
The Consolidated Group’s cash-generating units to which goodwill has been allocated are tested for impairment annually, and whenever there is an indication that the Consolidated Groups may be impaired. The carrying amount of signiﬁcant goodwill allocated to theConsolidated Group’s cash-generating units was as follows:
JPY

USD

2019

2018

2019

Electronics business of the domestic subsidiaries

4,248

1,763

38,282

Mobile business of the domestic subsidiaries

2,098

2,123

18,909

—

319

—

2,247

2,151

20,250Electronics & Devices segment

Foods & Grain segment
Pet-related businesses of the domestic subsidiaries
Steel, Materials & Plant segment
Oilﬁeld tubing business of the foreign subsidiaries

The recoverable amounts of the Consolidated Group’s cashgenerating units to which signiﬁcant goodwill has been allocated were calculated based on its value in use founded on theﬁve-year forecast that was approved by management.
The ﬁve-year forecast of cash ﬂows is based on future plans
reﬂecting past performance. In addition, the main assumption
used to determine such forecast was the growth rates of gross

76

KANEMATSU Integrated Report 2019

proﬁts through such terms, such growth rates being consistent
with the forecasts of the nominal GDP growth rates or the like ofthe countries in which such Consolidated Group’s cash-generating
units are situated. The ultimate growth rates are determined byconsidering the average long-term growth rates of the markets
or countries to which the Consolidated Group’s cash-generating
units belong.

Kanematsu’s Progress and Strengths

The pre-tax discount rates which were used in calculating the value in use of the Consolidated Group’s cash-generating units towhich signiﬁcant goodwill has been allocated were as follows:
2019

2018

Electronics business of the domestic
subsidiaries

6.2%

2.8%

Mobile business of the domestic
subsidiaries

8.9%

6.6%

7.0%

5.6%

11.8%

13.4%

Electronics & Devices segment

Foods & Grain segment
Pet-related businesses of the domestic
subsidiaries
Oilﬁeld tubing business of the foreignsubsidiaries

Special Features

Steel, Materials & Plant segment

With respect to goodwill that has been allocated to the Consolidated Group’s cash-generating units, the recoverable amount of such
goodwill exceeds its carrying amount. Thus, even if major assumptions are changed to a reasonable extent, it is unlikely that such changes
in major assumptions will reduce the recoverable amounts of the Consolidated Group’s cash-generating units below the carrying amount.

(2) Intangible assets
Changes in costs, accumulated amortization and accumulated impairment losses of intangible assets are presented as follows:[Costs]
As of April 1, 2017
Acquisitions throughbusiness combinations

Carrier shop operating rights

Other

Total

8,596

17,1404,427

30,164

322

—

63

386

0

—

1

1

Disposals

(313)

—

(14)

(328)

Exchange differences

(18)

—

(180)

(198)

Other

(19)

—

(1)

(20)

8,568

17,140

4,295

30,004

Acquisitions

418

—

17

435

Acquisitions throughbusiness combinations

52

—

2,804

2,856

As of March 31, 2018

Disposals

—

(21)

(226)

14

—

144

158

Other

54

—

(104)

(49)

8,904

17,1407,134

33,179

Other

Total

As of March 31, 2019

[Accumulated amortization and accumulated impairment losses]
Software

As of April 1, 2017

(JPY)

Carrier shop operating rights(234)(1,611)(9,228)

(465)

—

(314)

(780)

(1)

—

(1)

(2)

Disposals

279

—

0

279

Exchange differences

15

—

61

77

Other

25

—

1

27

(7,528)(234)(1,863)(9,626)

Amortization

(396)

—

(368)

(765)

Impairment losses

(32)

—

—

(32)

Disposals

200

—

4

205

Exchange differences

(12)

—

(52)

(64)

Other

25

—

131

156

(7,744)(234)(2,148)(10,128)

Impairment losses

As of March 31, 2018

As of March 31, 2019

KANEMATSU Integrated Report 2019

Financial Section and Company Information(7,383)

Amortization

Sustainability(204)

Exchange differences

Review of Operations

Acquisitions(JPY)
Software77

[Carrying amount](JPY)
Software

Carrier shop operating rights

Other

Total

As of March 31, 2018

1,039

16,906

2,432

20,377

As of March 31, 2019

1,159

16,906

4,986

23,051

Software

Carrier shop operating rights

Other

Total

As of March 31, 201877,198

154,436

38,704

270,337

Acquisitions

3,771

—

156

3,928

475

—

25,26425,739[Costs]Acquisitions throughbusiness combinations
Disposals(USD)(1,846)—(195)(2,041)

Exchange differences

132

—

1,298

1,430

Other

495

—

(942)

(448)

80,225

154,436

64,284

298,945

As of March 31, 2019

[Accumulated amortization and accumulated impairment losses](USD)

Software

Carrier shop operating rights

Other

Total

As of March 31, 2018

(67,834)(2,113)(16,790)(86,737)

Amortization(6,897)(3,574)—(3,323)

Impairment losses

(297)

—

—

(297)

Disposals

1,809

—

41

1,850

Exchange differences

(115)

—

(470)

(585)

Other

230

—

1,182

1,412

(69,780)(2,113)(19,360)(91,253)

Software

Carrier shop operating rights

Other

Total

10,445

152,32244,925

207,692

As of March 31, 2019
[Carrying amount]
As of March 31, 2019

(USD)

The carrier shop operating rights were recognized as intangible assets upon acquisition of the mobile business by the consolidated subsidiary of the Company. Fundamentally the rights are
expected to exist as long as the business continues, they are
determined to be classiﬁed as intangible assets with indeﬁnite
useful lives.
The recoverable amounts of the Consolidated Group’s cashgenerating units including the carrier shop operating rights were
calculated based on its ﬁve-year forecast’s value in use that wasapproved by management. The ﬁve-year forecast of cash ﬂows isbased on the future plans anticipated based on past performance. In addition, the main assumption used to determine

such forecast was the growth rates of gross proﬁts through suchterms, such growth rates is consistent with the forecasts of thenominal GDP growth rates or similar the countries in which such
Consolidated Group’s cash-generating units are situated.
The ultimate growth rates are determined by considering the
average long-term growth rates of the markets or countries towhich the Consolidated Group’s cash-generating units belong.
There were no material internally-generated intangible assets
as of March 31, 2019 and March 31, 2018.
Amortization expenses are included in “Cost of sales” and“Selling, general and administrative expenses” in the consolidated statement of income.

The discount rates before tax used to determine the value in use of the Consolidated Group’s cash-generating units are presented as follows:
2019

2018

8.3%

6.5%

Electronics & Devices segment
Mobile business of the domestic subsidiaries

With respect to the carrier shop operating rights, the recoverable amounts of the Consolidated Group’s cash-generating units exceed
their carrying amounts. Thus, even if major assumptions are changed to a reasonable extent, it is unlikely that such changes in major
assumptions will reduce the recoverable amounts of the Consolidated Group’s cash-generating units below the carrying amount.

78

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

12. Interests in Associates and Joint Ventures
There are no associates or joint ventures that are material to the Consolidated Group.
The aggregate amounts of interests in individually immaterial associates and joint ventures that are accounted for using the equity
method are presented as follows:[Aggregate carrying amount]
JPY

Associates
Joint ventures

USD

2019

2018

2019

6,749

5,057

60,807

118

112

1,065

2018

2019

JPY

2019

Special Features[Proﬁt or loss from continuing business]
USD

Associates

304

814

2,740

Joint ventures

59

764

537

2018

2019

[Other comprehensive income]
JPY

2019

USD

(42)

(57)

(381)

Joint ventures

—

—

—

2018

2019

Review of Operations

Associates[Total comprehensive income]
JPY

2019

USD

Associates

261

757

2,358

Joint ventures

59

764

537

2018

2019

13. Other Investments
The breakdown of other investments is presented as follows:
JPY

2019

USD

3,962

4,168

35,706

Financial assets measured at fair value through other comprehensive income

28,45332,805

256,357

Financial assets measured at amortized cost

—

994

—

Total

32,41637,969292,063

2019

2018

2019

Advance payments

19,666

11,001

177,193

Prepaid expenses

4,809

4,766

43,336

7

—

67

7,441

7,666

67,04931,92523,433

287,645

Current assets

28,42019,955

256,067

Non-current assets

3,504

3,478

31,57831,92523,433

287,645

Sustainability

Financial assets measured at fair value through proﬁt or loss

14. Other Current Assets and Other Non-current Assets
The breakdown of other current assets and other non-current assets is presented as follows:
JPY

Other
Total

Total

KANEMATSU Integrated Report 2019

Financial Section and Company Information

Contract assets

USD

79

15. Trade and Other Payables
The breakdown of trade and other payables is presented as follows:
JPY

USD

2019

2018

2019

Notes and accounts payable

142,951

141,292

1,287,965

Import bills payable

42,44336,468382,405

Accounts payable - commission
Total
Current liabilities

10,66011,03096,047

196,054

188,791

1,766,417

196,054

188,791

1,766,417———

196,054

188,791

1,766,417

Non-current liabilities
Total

16. Bonds and Borrowings
The breakdown of bonds and borrowings is presented as follows:
2019

2018

JPY

Current portion of bonds

USD

JPY

Averageinterest rate
(Note)

Maturity date

—

—

—

4,987

—

Short-term borrowings

48,463436,649

42,653

1.48%—

Current portion of long-term borrowings

25,852

232,925

13,568

1.18%—

Bonds (excluding the current portion)

14,930134,518

14,910

—

—

1.00%

September2020
to October
2029

Long-term borrowings (excluding the current portion)
Total

50,258452,820

61,205
137,326

139,504

1,256,913

Current liabilities

74,316

669,574

61,210Non-current liabilities

65,188587,339

76,116

139,504

1,256,913

137,326

Total(Note) The “average interest rate” is presented as the weighted average interest rate against the borrowings outstanding at the end of the ﬁscal year. The interest rate
for bonds is presented in the “Details of bonds” below.

[Details of bonds]
IssuerBond Name

Issue dateKanematsu
Corporation

Unsecured Straight
Bonds No 1
(3-year bonds)

Kanematsu
Corporation

Unsecured Straight
Bonds No 2(5-year bonds)

2019

2018

Coupon rate

Collateral

Maturity date

4,987

0.40% per
annum

None

March
8, 2019

44,922

4,9780.64% per
annum

None

March
10, 2021

4,972

44,8054,965

0.42% per
annum

None

December
14, 2022

4,971

44,792

4,966

0.57% per
annum

None

December13, 2024

JPY

USD

JPY

March
10, 2016

—

—

March
10, 2016

4,985

Kanematsu
Corporation

Unsecured Straight
DecemberBonds No 3
14, 2017(5-year bonds)

Kanematsu
Corporation

Unsecured Straight
DecemberBonds No 4
14, 2017(7-year bonds)(Note) The maturity schedule of bonds after the end of the current ﬁscal year is presented as follows:

Within one year

Corporate bonds

80

Over one year andwithin two years

Over two years andwithin three years

Over three years andwithin four years

Over four years andwithin ﬁve years

Over ﬁve years

JPY

USD

JPY

USD

JPY

USD

JPY

USD

JPY

USD

JPY

USD

—

—

4,985

44,922

—

—

4,972

44,805

—

—

4,971

44,792KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

17. Provisions
Changes in provisions are presented as follows:(JPY)
Asset retirement obligations

Balance as of April 1, 2018
Adjustment for IFRS15
Restated balance as of April 1, 2018

Other

Total

1,310

485

1,796

—

(209)

(209)
1,587

276

124

27

151

Provisions used

(115)

(53)

(168)

Provisions reversed

—

(39)

(39)

Unwinding of discount

19

—

19

Foreign exchange translation differences

—

7

7

1,338

218

1,557

Balance as of March 31, 2019

Special Features

1,310

Provisions made

(USD)
Asset retirement obligations

Balance as of April 1, 2018
Adjustment for IFRS15
Restated balance as of April 1, 2018

Other

Total

11,810

4,375

16,185—(1,880)(1,880)11,8102,495

14,305

Provisions made

1,118

245

1,364

Provisions used

(1,036)(484)(1,520)

Provisions reversed
Unwinding of discountBalance as of March 31, 2019

(351)

(351)

—

172

—

66

66

12,064

1,971

14,035

Review of Operations

Foreign exchange translation differences—
172

The current and non-current portions of provisions are presented as follows:
JPY

2019

Current liabilities
Non-current liabilities
Total

USD

2018

2019

189

156

1,703

1,368

1,639

12,332

1,557

1,796

14,035

Asset retirement obligations are obligations for restoring offices and shops in accordance with provisions of the property leasing contracts. While these expenditures will be made after at least one year has passed, the amounts may be affected by the future businessplan and other factors.
Sustainability

18. Other Current Liabilities and Other Non-current Liabilities
The breakdown of other current liabilities and other non-current liabilities is presented as follows:
JPY

USD

2019

2018

Advances received

7,940

8,392

71,544Contract liabilities

11,273—

101,571

Accrued expenses

3,464

3,337

31,216

Unearned revenue

74

3,029

667

10,774

9,545

97,077

Other
Total

2019

24,304

302,076

32,321

23,371

291,211

Non-current liabilities

1,205

933

10,86533,52724,304

302,076

Total

KANEMATSU Integrated Report 2019

Financial Section and Company Information

33,527

Current liabilities8119. Equity(1) Capital management
The Consolidated Group has a basic policy of increasing shareholders’ equity (See Note 1) up to a certain level and strengthening its ﬁnancial base to enhance its enterprise value throughbuilding new businesses and increasing revenues while maintaining a sound ﬁnancial position.
The Company sets the maximum ratio of risk assets (SeeNote 2) and examines the appropriateness of scale of shareholders’ equity in terms of it being a risk buffer to potential loss that
could result from a deterioration in the companies’ respective
businesses, so that it could manage shareholders’ equity minutely.
The key indices which the Consolidated Group uses for management of shareholders’ equity are as follows, and these indices are periodically reported to and monitored by management.

• Ratio of risk assets• Net DER (See Note 3)(Note 1)Shareholders’ equity is deﬁned as equity attributable to owners of
the Parent.
(Note 2) Ratio of risk assets is deﬁned as a ratio of the amount of maximum
potential loss to shareholders’ equity. The amount of maximum
potential loss is the amount of all assets and off balance sheettransactions on the consolidated ﬁnancial statements multiplied by
the original risk weight set by our consolidated group according to thepotential risk of loss.
(Note 3) Net DER is deﬁned as a ratio of net interest-bearing debt toshareholders’ equity, while net interest-bearing debt is the total
amount of interest-bearing debt less cash and cash equivalents.

The ﬁgures of net DER as of March 31, 2019 and March 31, 2018 are presented as follows:(Unit: times)
Net DER

2019

2018

0.4

0.5

The Consolidated Group is not subjected to any externally imposed capital requirements (except for general requirements, such as
those in the Companies Act).

(2) Number of shares authorized to be issued, issued shares and shares of treasury stock(Unit: share)
Shares authorized to be issued(No-par common stock)
Issued shares(No-par common stock)
Balance at the beginning of the year
Changes during the period
Balance at the end of the year

2019

2018

200,000,000

200,000,000

84,500,202—
84,500,202

84,500,202—
84,500,202

1,068,136

390,123

Shares of treasury stock(No-par common stock)(Notes) 1. Shares of treasury stock in the current ﬁscal year includes 100,000 shares of the Company held by the associate and 711,500 shares of the Company held by
the stock issuance trust for officers.
2.The Company consolidated its common shares at a ratio of ﬁve shares to one share on the effective date of October 1, 2017. Assuming that the company
consolidated its shares on April 1, 2016, the number of shares after share consolidation is provided.

(3) Surplus
1) Capital surplus
Capital surplus mainly consists of legal capital surplus.
2) Retained earnings
Retained earnings consist of legal retained earnings and otherretained earnings.
The Companies Act of Japan provides that an amount equal
to 10% of distribution of surplus for each ﬁscal year must be

82

KANEMATSU Integrated Report 2019

appropriated as legal capital surplus or legal retained earnings
until the total aggregate amount of legal capital surplus andlegal retained earnings equals 25% of share capital.
Under the Companies Act, the amounts available for distribution are calculated based on the amounts of capital surplus andretained earnings, exclusive of legal capital surplus and legal
retained earnings, all of which are recorded in accordance withthe accounting principles generally accepted in Japan.

Kanematsu’s Progress and Strengths(4) Dividends
1) Amounts of dividends paid
Resolution

Type of stock

Source ofdividends

Dividends
per share

Total amounts of dividends
JPY

USD

Yen

U.S.$

Record date

Effective dateCommonstock

Retainedearnings

2,569

23,151

30.50

0.275

Mar. 31, 2018

Jun. 4, 2018

Oct. 31, 2018
Board of Directors
meeting

Commonstock

Retainedearnings

2,106

18,976

25.00

0.225

Sep. 30, 2018

Dec. 3, 2018

Resolution

Type ofstock

Source ofdividends

Record date

Effective date

May 22, 2017
Board of Directors
meeting

Commonstock

Oct. 31, 2017
Board of Directors
meeting

Commonstock

Total amounts ofdividends

Dividends
per share

JPY

Yen

Retainedearnings

1,263

3.00

Mar. 31, 2017

Jun. 5, 2017

Retainedearnings

1,474

3.50

Sep. 30, 2017

Dec. 1, 2017

Special Features

May 21, 2018
Board of Directors
meeting(Notes) 1. The dividends per share resolved by the board of directors meeting on May 22 and October 31, 2017, with record date on March 31 and September 30,
2017 are provided as the amounts before share consolidation as of October 1, 2017.
2. The total amount of dividends resolved by the board of directors meeting on October 31, 2018 includes ¥17 million ($160 thousand) of the dividends to theshares of the Company held by the stock issuance trust for officers.

2) Dividends with record date in the current ﬁscal year, and effective date in the following ﬁscal year

May 20, 2019
Board of Directors
meetingType of stock

Commonstock

Source ofdividends

Retainedearnings

Dividends
per share

Total amounts of dividends
JPY

USD

Yen

U.S.$

2,948

26,566

35.00

0.315

Record date

Effective dateMar. 31, 2019

Jun. 3, 2019

Review of Operations

Resolution* The total amount of dividends resolved by the board of directors meeting on May 20, 2019 includes ¥24 million ($224 thousand) of the dividends to the shares of theCompany held by the stock issuance trust for officers.

20. Selling, General and Administrative Expenses
The breakdown of selling, general and administrative expenses is presented as follows:
JPY

USD

2018

2019

Depreciation and amortization

2,174

2,027

19,594

Personnel expenses

44,94443,444404,943

Outsourcing service charges

7,670

7,264

69,108Rent expenses

6,512

6,742

58,677Other

19,091

18,941

172,009

80,39378,420724,331

Total

Sustainability

2019

Financial Section and Company Information

KANEMATSU Integrated Report 201983

21. Gain or Loss on Sale or Disposal of Property, Plant and Equipment and Intangible Assets
The breakdown of gain or loss on sale or disposal of property, plant and equipment and intangible assets is presented as follows:
JPY

Gain on sale of property, plant and equipment
Total gain on sale of property, plant and equipment and intangible assets
Loss on sale of property, plant and equipment
Total loss on sale of property, plant and equipment and intangible assets
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets

USD

2019

2018

2019

32

43

295

32

43

295

(8)

(68)

(73)

(8)

(68)

(73)

(241)

(192)

(2,178)

(21)

(34)

(190)

Total loss on disposal of property, plant and equipment and intangible assets

(262)

(226)

(2,368)Gain (loss) on sale or disposal of property, plant and equipment andintangible assets, net

(238)

(250)

(2,147)

22. Impairment Loss
(1) Breakdown of impairment loss by each class of assets
The breakdown of impairment losses by class of assets is presented as follows. Impairment losses for property, plant and equipment
and intangible assets are included in “Impairment loss on property, plant and equipment and intangible assets” , and impairment losses
for goodwill are included in “Other expenses” in the consolidated statement of income.
JPY

2019

USD

2018

2019

Property, plant and equipment(78)(2,146)(705)

Goodwill

(343)

(107)

(3,096)

Intangible assets

(32)

(2)

(297)

(454)

(2,255)(4,098)

2018

2019

Total

(2) Breakdown by reportable segment
The breakdown of impairment losses by reportable segment is presented as follows:
JPY

2019

Electronics & Devices

(77)

(2)

(701)

Foods & Grain

(377)

(107)

(3,397)—

Steel, Materials & Plant—(5)

Other/Adjustment and elimination—(2,141)—(454)(2,255)(4,098)Total
For the ﬁscal year ended March 31, 2018, an impairment loss of¥1,161 million was recognized as a result of reducing the carrying amount of idle land owned in Japan to the recoverable
amount of ¥602 million. An impairment loss of ¥975 million was
also recognized as a result of reducing the carrying amount ofassets for transfer of golf business to the recoverable amount of¥1,566 million. The recoverable amount is based on fair valueless costs of disposal and the fair value is estimated mainly
based on sale value. The asset belongs to the Other segment.
Regarding the pet-related business of the domestic subsidiary,an impairment loss of ¥107 million was recognized as a result of
reducing the carrying amount of goodwill to the recoverable
amount of ¥359 million because future cash ﬂows anticipated tobe generated was judged to be lower than originally assumed.
The recoverable amount is based on the value in use and it wasestimated by discounting future cash ﬂows at a pre-tax rate of
6.55%. The asset belongs to the Foods & Grain segment.

84

USD

KANEMATSU Integrated Report 2019

For the ﬁscal year ended March 31, 2019, the pet-related business of the domestic subsidiary recognized, an impairment lossof ¥319 million ($2,875 thousand) as a result of reducing thecarrying amount of goodwill to the recoverable amount of ¥950
million ($8,563 thousand) because future cash ﬂows is anticipated to be lower than its originally value. The recoverable amountis based on the value in use and it was estimated by discounting
future cash ﬂows at a pre-tax rate of 7.01%. The asset belongs
to the Foods & Grain segment.
While fair values are categorized into three levels depending
on inputs to valuation techniques used, all the fair values above
are categorized within Level 3 of the fair value hierarchy with its
details described in Note 2. Basis of Preparing Consolidated
Financial Statements, (4) Use of estimates and judgments.

Kanematsu’s Progress and Strengths

23. Exchange Differences
Exchange differences recognized in proﬁt or loss for the ﬁscal
years ended March 31, 2019 and March 31, 2018 were ¥646
million ($5,828 thousand) and ¥521 million, respectively and areincluded in “Other income” in the consolidated statement ofincome. In addition, each amount includes gains or losses arisingfrom currency-related derivative transactions that were enteredinto for the purpose of hedging the foreign currency risk. Gains
and losses arising from translating assets and liabilities denominated in a currency other than the functional currency or fromsettling such items are included in proﬁt or loss as they arise.

24. Finance Income and Finance Costs
The breakdown of ﬁnance income and ﬁnance costs is presented as follows:
JPY

2019

USD

2018

2019

Special Features

Interest income
Financial assets measured at amortized cost
Financial assets measured at fair value through proﬁt or loss
Total interest income

371

352

—

11

3,351
—

371

363

3,351

227

268

2,046

Dividend income
Financial assets measured at fair value through proﬁt or loss
Financial assets measured at fair value through other comprehensive income

962

805

8,674

1,189

1,073

10,720

Other ﬁnance income

—

10

—

Total other ﬁnance income

—

10

—

1,561

1,447

14,071(2,446)(2,144)(22,044)

(215)

(269)

(1,941)(2,662)(2,414)(23,985)

Total dividend income
Other ﬁnance income (Note)

Review of Operations

Total ﬁnance income
Interest expenses
Financial liabilities measured at amortized cost
Derivatives
Total interest expenses
Other ﬁnance costs (Note)
Other ﬁnance costs

(434)

(730)

(3,916)

Total other ﬁnance costs

(434)

(730)

(3,916)

Total ﬁnance costs(3,096)(3,144)(27,901)(Note) The amounts of other ﬁnance income and other ﬁnance costs are those related to ﬁnancial assets measured at fair value through proﬁt or loss and the details
are presented in Note 30. Financial Instruments: (6) -3) - (ii) Recurring fair value measurements categorized within Level 3 of the fair value hierarchy.

Sustainability

25. Earnings Per Share Attributable to Owners of the Parent(1) Basic earnings per share
Yen

U.S. dollar

2019

2018

Basic earnings per share

198.22

193.792019

1.79

Diluted earnings per share

198.15193.79

1.79

The amount of diluted earnings per share is calculated by deeming the shares authorized to be issued subject to conditions which are
expected to be provided under the performance-linked stock compensation plan as potential shares.

Financial Section and Company Information

KANEMATSU Integrated Report 201985

(2) Bases for calculation of basic earnings per share
JPY

Proﬁt attributable to owners of the Parent
Amount not attributable to common shareholders of the Parent

USD

2019

2018

2019

16,605

16,317

149,613———

Proﬁt used to calculate basic earnings per share

16,605

16,317

149,613

Proﬁt used to calculate diluted earnings per share

16,605

16,317

149,613

Thousand shares

Weighted average number of common shares
Increase due to performance-linked stock compensation plan
Weighted average number of common shares adjusted for dilution

2019

2018

83,77384,20231—

83,80484,202(Notes) 1. The Company consolidated its common shares at a ratio of ﬁve shares to one share on the effective date of October 1, 2017. Assuming that the company
consolidated its shares on April 1, 2016, earnings per share attributable to owners of the parent is provided.
2. In the calculation of the basic earnings per share, the shares of the Company owned by the stock issuance trust for officers below are included in the treasury
stock which is deducted in the calculation of average number of shares during the ﬁscal year.
Previous consolidated ﬁscal year
— shares
Consolidated ﬁscal year under review
437,846 shares

26. Other Components of Equity and Other Comprehensive Income
Changes in other components of equity are presented as follows:
JPY

2019

USD

2018

2019

11,495

Exchange differences on translation of foreign operations
Balance at the beginning of the year

1,275

2,349

Changes during the period589(1,073)

5,314

Balance at the end of the year

1,865

1,275

16,809Financial assets measured at fair value through other comprehensive income
Balance at the beginning of the year

12,684

9,455

114,287

Changes during the period(2,940)3,351(26,494)

Reclassiﬁcation to retained earnings

(163)

(123)

(1,470)

Balance at the end of the year

9,580

12,68486,323

Balance at the beginning of the year

(905)

(388)

(8,156)

Changes during the period

612

(516)

5,515

Balance at the end of the year

(293)

(905)

(2,642)

Cash ﬂow hedges

Remeasurements of deﬁned beneﬁt pension plans
Balance at the beginning of the year

—

—

—

Changes during the period

137

275

1,235

Reclassiﬁcation to retained earnings

(137)

(275)

(1,235)———

Balance at the beginning of the year

13,055

11,416

117,625

Changes during the period(1,601)

2,037(14,430)

(300)

(398)

(2,705)

11,153

13,055

100,490

Balance at the end of the year
Other components of equity

Reclassiﬁcation to retained earnings
Balance at the end of the year

86

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

The breakdown for the amounts of reclassiﬁcation adjustments and deferred tax in other comprehensive income is presented as follows:
JPY

USD

2019

2018

2019

Amount arising during the year

(4,440)

4,980(40,004)

Amount before deferred tax(4,440)

4,980(40,004)

Deferred tax

1,408(1,577)

12,692Financial assets measured at fair value through other comprehensive
income(3,031)

3,402(27,312)Amount arising during the year

263

322

2,372

Amount before deferred tax

263

322

2,372

Deferred tax

(64)

(14)

(578)

Remeasurements of deﬁned beneﬁt pension plans

199

307

1,795

Amount arising during the year948

(1,427)

8,547

Reclassiﬁcation adjustments

—

—

—

948

(1,427)

8,547

Amount arising during the year

104

(751)

946

Reclassiﬁcation adjustments

737

49

6,646

Amount before deferred tax

842

(701)

7,592

Deferred tax

(258)

216

(2,325)

Cash ﬂow hedges

584

(485)

5,266

Amount arising during the year

(70)

(25)

(632)

Reclassiﬁcation adjustments

27

(31)

250

(42)

(57)

(381)

(1,341)

1,740(12,085)

Financial assets measured at fair value through other comprehensive income

Remeasurements of deﬁned beneﬁt pension plans

Special Features

Exchange differences on translation of foreign operations

Exchange differences on translation of foreign operations
Cash ﬂow hedges

Review of Operations

Share of other comprehensive income of investments accounted for using theequity method

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

27. Cash Flow Information(1) Cash and cash equivalents
Sustainability

The breakdown of cash and cash equivalents and its reconciliation to the amounts presented in the consolidated statement of ﬁnancial
position are as follows:
JPY

USD

2019

2018

2019

88,94177,731

801,350———

Cash and cash equivalentsin the consolidated statement of ﬁnancial position

88,94177,731

801,350

Cash and cash equivalentsin the consolidated statement of cash ﬂows

88,94177,731

801,350

Cash and bank deposits except for time deposits with original term of morethan three months
Short-term investments with original maturity of three months or less

Financial Section and Company Information

KANEMATSU Integrated Report 201987

(2) Net payment for acquisition of subsidiaries
The breakdown of the main assets and liabilities of newly acquired subsidiaries at the time control thereof was acquired, and the reconciliation between consideration paid and net payment for the acquisition are presented as follows:
JPY

USD

2019

2018

2019

Current assets (including cash and cash equivalents)

1,700

1,274

15,322

Non-current assets

3,012

145

27,143Current liabilities(1,749)(242)(15,766)

Non-current liabilities(1,831)(232)(16,500)

Breakdown of assets at the acquisition date

Breakdown of liabilities at the acquisition date

Goodwill

2,480

154

22,353

Fair value of consideration paid

(3,612)(1,099)(32,551)

Fair value of holding shares of the acquired companies

1,440

—

12,974

443

737

3,994

(1,729)(362)(15,583)

Cash and cash equivalents of the acquiree
Net proceeds from (payment for) acquisition of subsidiaries(3) Net proceeds from sale of subsidiaries and transfer of business
The breakdown of the main assets and liabilities upon loss of control in the subsidiaries or other businesses over which control was lostas a result of the sale, and the relationship between consideration received and net proceeds from the sale are presented as follows:
JPY

2019

USD

2018

2019

Breakdown of assets upon loss of control
Current assets (including cash and cash equivalents)

—

505

—

Non-current assets

—

1,600

—

Breakdown of liabilities upon loss of control
Current liabilities

—

(360)

—

Non-current liabilities

—

(105)

—

2019

2018

2019

JPY

USD

Consideration received

—

1,638

—

Cash and cash equivalents included in the assets at the time control thereof
was lost

—

(207)

—

Net proceeds from (payment for) sale of subsidiaries

—

(22)

—

Net proceeds from transfer of business

—

1,452

—

(4) Changes in liabilities for ﬁnancing activities
Changes in liabilities for ﬁnancing activities are as follows:
Fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)(JPY)
Non-cash movements

April 1, 2018

Cash ﬂows

Exchangedifferences

Increase anddecrease fromacquisition ofsubsidiaries

OthersMarch 31, 2019

Borrowings

117,428

5,545

101

1,500

—

124,574

Bonds

19,898(5,000)——32

14,930

Lease obligations

1,170

(214)

0

—

85

1,041

138,497

331

101

1,500

117

140,546

Total

(USD)
Non-cash movements

April 1, 2018

Borrowings

Exchangedifferences

Increase anddecrease fromacquisition ofsubsidiaries

OthersMarch 31, 2019

1,058,009

49,960911

13,515—

1,122,394

Bonds

179,282(45,049)

—

—

286

134,518

Lease obligations

10,550(1,928)

0

—

761

9,382

1,247,841

2,982

911

13,515

1,046

1,266,295

Total

88

Cash ﬂows

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

Fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)(JPY)
Non-cash movements

Borrowings

April 1, 2017

Cash ﬂows

Exchangedifferences

Increase anddecrease fromacquisition ofsubsidiaries

OthersMarch 31, 2018

123,899(6,211)

(259)

—

—

117,428

Bonds

9,945

9,928

—

—

24

19,898

Lease obligations

1,285

(240)

0

—

125

1,170

135,130

3,476

(258)

—

150

138,497

Total(5) Signiﬁcant non-cash transactions
Special Features

There were no signiﬁcant non-cash transactions for the ﬁscal years ended March 31, 2019 and March 31, 2018.

28. Employee Beneﬁts(1) Post-employment beneﬁts

Matters such as asset management performance, status of
the plan and accounting treatment are reported to theManagement Committee by the Finance Department and the
Personnel & General Affairs Department, which are in charge of
operation of the pension plan. These departments hold a meeting on a timely manner to discuss the matters such as a revision
to the plan and a change in the asset investment policy.
Most of the subsidiaries have unfunded retirement beneﬁtplans and/or funded pension plans. Employees, other thandirectors, are entitled to, under most circumstances, upon mandatory retirement at normal retirement age or earlier termination of employment, a lump-sum retirement beneﬁt based oncompensation at the time of retirement, years of service andother factors. Certain subsidiaries have adopted the deﬁned
contribution retirement beneﬁt plan.

Review of Operations

1) Outline of retirement beneﬁt plans adopted by theConsolidated GroupThe Company has a deﬁned beneﬁt pension plan and lump-sum
retirement beneﬁt plan covering substantially all employees
other than directors and executive officers. The beneﬁt amounts
for the deﬁned beneﬁt pension plan are determined based on
the period of employees’ enrollment in the plan, contribution
granted to employees and other factors. The Company has a
responsibility to manage pension assets faithfully and has an
obligation to make contributions for the employees enrolled in
the plan in compliance with applicable laws and regulations.
The pension plan that the Company maintains is a contracttype deﬁned beneﬁt pension plan.

2) Deﬁned beneﬁt plan(i) Net deﬁned beneﬁt liability (asset)
Reconciliation of the beginning and ending balances of net deﬁned beneﬁt liability (asset) and the components for the years ended
March 31, 2019 and March 31, 2018 are presented as follows:(JPY)
Present valueof the deﬁned
beneﬁt obligation

Fair value of plan
assets

Effect of the asset
ceiling

As of March 31, 201719,625(13,305)

261

6,581

Current service cost

1,439

—

—

1,439

Net interest

69

(59)

—

9

Remeasurements

98

(159)

(261)

(322)

Foreign exchange translation difference

(30)

8

—

(22)

Employer contributions to the plan

—

(959)

—

(959)
(544)

Beneﬁts paid

1,024

—

21

—

—

21

Other

5

8

—

13

As of March 31, 2018

19,659(13,442)—

6,217

Current service cost

1,425

—

—

1,425

62

(60)

—

2

(248)

(14)

—

(263)

Net interest
Remeasurements
Foreign currency translation difference

3

(7)

—

(4)

Employer contributions to the plan—

(1,013)—(1,013)(422)

Beneﬁts paid

(1,469)1,047—

Effect of business combinations and disposals

492

—

—

492

Other

111

9

—

120

20,036(13,481)—

6,555

As of March 31, 2019

KANEMATSU Integrated Report 2019

Financial Section and Company Information(1,569)Effect of business combinations and disposals

Sustainability

Net deﬁned beneﬁt
liability (asset)

89

(USD)
Present valueof the deﬁned
beneﬁt obligation

Fair value of plan
assets

As of March 31, 2018

177,127(121,112)—

56,016

Current service cost

12,844——

12,844

563

(543)

—

19
(2,372)

Net interest
Remeasurements

Effect of the asset
ceiling

Net deﬁned beneﬁt
liability (asset)(2,241)(132)—

Foreign currency translation difference

30

(71)

—

(41)

Employer contributions to the plan—

(9,130)—(9,130)Beneﬁts paid

(13,241)9,438—(3,804)

Effect of business combinations and disposals

4,439

—

—

4,439

Other

1,001

88

—

1,089

180,522(121,462)—

59,060

As of March 31, 2019

Remeasurements of the deﬁned beneﬁt obligation for the ﬁscal years ended March 31, 2019 and March 31, 2018 are the differences
arising primarily from changes in ﬁnancial assumptions.
(ii) Reconciliation of ending balances of deﬁned beneﬁt obligation/plan assets and net deﬁned beneﬁt liability/asset presented
on the consolidated statements of ﬁnancial position
JPY

2019

USD

2018

2019

Deﬁned beneﬁt obligations of funded plan

15,726

16,046

141,696

Plan assets(13,481)(13,442)(121,462)

Net deﬁned beneﬁt liability of funded plan

2,245

2,604

20,235Deﬁned beneﬁt obligations of unfunded plan

4,309

3,613

38,826Net liability or asset presented on the consolidated statements of ﬁnancial
position (Before the effect of the asset ceiling)

6,555

6,217

59,060The measurement date used to determine the main beneﬁt obligations is March 31 of each year.
The Company’s funding policy is based on a number of factors
including the tax deductibility of contributions, funded status,
actuarial calculations and other considerations. Contributions
are intended to provide not only for beneﬁts attributable to service to date, but also for those expected to be earned in the
future. In addition, the Company may contribute cash to an
employee retirement beneﬁt trust for any funding deﬁcits in
beneﬁt obligations at the ﬁscal year end.
The Company’s investment policy is designed to increase thevalue of plan assets within acceptable risk levels to ensure payments of pension beneﬁts to eligible participants, including
future participants. Taking into account the return and risk onplan assets thereon, the Consolidated Group formulates

a strategic asset mix which aims at an optimal portfolio on
a long-term basis and supervise asset management by selecting
investment management companies and monitoring asset allocations. The strategic asset mix is subject to review in responseto changes in expected market conditions or funded status. The
strategic asset mix is not based on limitations but guidelines,
and therefore, the actual allocation may temporarily exceed orfall below the guidelines. The Company’s target allocation is10% equity securities, 44% debt securities, 36% life insurancecompany general accounts and 10% others.
The Company holds a meeting regularly with the asset management institutions and discusses important issues regarding
pension assets investment.

(iii) Plan assets
The composition of the plan assets as of March 31, 2019.
Plan assets with a quoted market price inan active market

JPY

USD

JPY

Equity securities

1,383

12,463——

Debt securities

201

1,819

4,839

43,605USD

54,489Life insurance company general accounts

—

—

6,047

Other

58

528

949

8,557

1,643

14,811

11,837

106,651

Total

90

Plan assets without a quoted market pricein an active market

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

The composition of the plan assets as of March 31, 2018.
Plan assets with a quoted market price inan active market

Plan assets without a quoted market pricein an active market

JPY

JPY

Equity securities

1,382

(12)

Debt securities

4,242

Life insurance company general accounts

445
—

Other
Total

5,965

96

1,323

5,721

7,721

(iv) Signiﬁcant actuarial assumptions
2019

2018

0.4%

0.4%

Special Features

Discount rate

The assumptions used for the actuarial calculation include the expected rate of salary increase, the mortality rate and the retirement
rate other than the above.
(v) Sensitivity analysis of deﬁned beneﬁt obligations
JPY

USD

2019

2018

2019

Increase in the deﬁned beneﬁt obligation with a 50-basis-point decrease in
the discount rate

617

735

5,559

Decrease in the deﬁned beneﬁt obligation with a 50-basis-point increase in
the discount rate

(926)

(969)

(8,346)
Review of Operations

This analysis is based on the premise that the actuarial assumptions other than the discount rate do not ﬂuctuate and that only the discount rate ﬂuctuates. This method of analysis is based on assumptions, and it is possible that the actual calculation could be inﬂuenced
by ﬂuctuations in other variables. Even if the discount rate falls below 0%, the calculation is performed assuming the lower limit of the
discount rate is 0%.
(vi) Information on maturity proﬁle of the deﬁned beneﬁt obligation
The weighted average duration of the deﬁned beneﬁt obligation for the years ended March 31, 2019 and March 31, 2018 were 10.6
year and 10.9 year, respectively.
(vii) Expected contribution to the plan for the year ending March 31, 2019
The amount of contribution to be made by the Consolidated Group to plan for the year ending March 31, 2019 is estimated to be¥1,003 million ($9,041 thousand).

Sustainability3) Deﬁned contribution plan
Expenses recognized for the deﬁned contribution plan for the years ended March 31, 2019 and March 31, 2018 were ¥3,368 million($30,349 thousand) and ¥172 million, respectively.

(2) Employee beneﬁt expenses
Employee beneﬁt expenses recognized for the years ended March 31, 2019 and March 31, 2018 were ¥4,868 million ($43,866 thousand) and ¥1,744 million, respectively. Employee beneﬁt expenses are included in “Cost of sales” and “Selling, general and administration expenses” in the consolidated statement of income.

Financial Section and Company Information

KANEMATSU Integrated Report 201991

29. Current and Deferred Income Tax(1) Deferred taxes
1) Breakdown of deferred tax assets and deferred tax liabilities
The breakdown of main deferred tax assets and deferred tax liabilities by component is as follows:
JPY

2019

USD

2018

2019

16,801

Deferred tax assets
1,864

1,643

Loss allowance

Retirement beneﬁts liabilities

540

2,770

4,867

Inventories

482

463

4,345

Impairment loss

802

776

7,233

Other investments

484

649

4,362

Golf club memberships

111

112

1,004

Tax losses carried forward

2,279

2,188

20,539Cash ﬂow hedges
Goodwill

20

383

188

1,775

1,872

15,995

Other

4,732

4,323

42,636

Total deferred tax assets

13,093

15,183

117,971(10,484)(11,487)(94,460)

2,609

3,696

23,512

Offset against deferred tax liabilities
Total deferred tax assets, net
Deferred tax liabilities
Retained earnings in subsidiaries

(450)

(423)

(4,058)Financial assets measured at fair value through other comprehensive income(4,273)(5,682)(38,508)

Intangible assets(6,216)(5,287)(56,010)

(905)

(734)

(8,157)

Total deferred tax liabilities(11,846)(12,129)(106,733)

Other
Offset against deferred tax assets

10,484

11,487

94,460Total deferred tax liabilities, net(1,362)(641)(12,273)

Net deferred tax assets

1,247

3,054

11,238

2019

2018

2019

Beginning balance of net deferred tax assets

3,054

4,594

27,521

Deferred tax expense(2,782)(330)(25,072)

Income tax on other comprehensive income

1,086(1,376)

9,789

Acquisition through business combinations

(88)

70

(799)

Other

(22)

97

(201)

1,247

3,054

11,2382) Details of changes in deferred tax assets and deferred tax liabilities
Details of changes in deferred tax assets and deferred tax liabilities are presented as follows:
JPY

Ending balance of net deferred tax assets

92

KANEMATSU Integrated Report 2019

USD

Kanematsu’s Progress and Strengths3) Deductible temporary differences and unused tax losses carried forward for which deferred tax assets were not recognized
The breakdown of deductible temporary differences and unused tax losses carried forward (by expiry date), for which deferred tax
assets were not recognized in the consolidated statement of ﬁnancial position are presented as follows:
JPY

Deductible temporary differences

USD

2019

2018

2019

8,172

9,982

73,629Tax losses carried forward
Within one year to expiry

19,444

5,229

23,304

24,637

209,974

Between ﬁve and ten years to expiry

10,587

3,257

95,387

62

223

567

34,53547,563

311,157

Over ten years to expiry
Total tax losses carried forward
4) Temporary differences associated with investments in
subsidiaries for which deferred tax liabilities were notrecognized
The total amounts of temporary differences associated withinvestments in subsidiaries for which deferred tax liabilities were
not recognized as of March 31, 2019 and March 31, 2018 areSpecial Features

580

Between one and ﬁve years to expiry¥28,397 million ($255,854 thousand) and ¥24,562 million,
respectively. Because the Consolidated Group is able to control
the timing of the reversal of such temporary differences, and it isprobable that such temporary differences will not be reversed
within the foreseeable future, it did not recognize deferred tax
liabilities with respect to such temporary differences.

(2) Income taxes
1) Breakdown of income taxes
The breakdown of income taxes is presented as follows:
JPY

2018

2019

(5,945)(6,053)(53,567)(2,771)(2,473)(24,972)

(11)

2,143

(100)

(2,782)(330)(25,072)(8,728)(6,384)(78,640)

Review of Operations

Current tax expense (Note 1)

USD

2019

Deferred tax expense (Note 2)
Origination and reversal of temporary differences
Reassessment of recoverability of deferred tax assets
Total deferred tax expense
Total income taxes(Notes) 1. The amounts of the beneﬁts arising from previously unrecognized tax losses or temporary differences of a prior period that were used to reduce current tax
expenses for the years ended March 31, 2019 and March 31, 2018 were ¥12 million ($108 thousand) and ¥685 million, respectively, and these beneﬁts were
included in the current tax expenses.
2.Major causes for deferred tax expense by type are loss allowance of ¥(2,230) million ($(20,093) thousand) and goodwill of ¥(790) million ($(7,125) thousand) for
the ﬁscal year ended March 31, 2019, and loss allowance of ¥2,181 million and tax losses forward of ¥(1,715) million for the ﬁscal year ended March 31, 2018.

Sustainability

2) Reconciliation of statutory effective income tax rate in Japan
Reconciliations between the statutory effective tax rate in Japan and the average effective tax rate of the Consolidated Group were as follows:
2019

2018

30.6%

30.8%

Permanent differences—additions
such as entertainment expenses

1.2%

0.6%

Effect of reassessment of recoverability ofdeferred tax assets

0.0%(8.2)%

Effect of tax rate differences(0.1)%

1.0%

Share of proﬁt (loss) of investments
accounted for using the equity method(0.2)%(0.8)%

Other(1.7)%

1.2%

29.9%

24.5%

Statutory effective tax rate
(Adjustments)

Financial Section and Company Information

Average effective tax rate

The statutory effective tax rate for the ﬁscal year ended March 31, 2019 and March 31, 2018 are calculated to be 30.6% and 30.8%
based on the Corporation Tax, Inhabitant Tax and Business Tax in Japan.

KANEMATSU Integrated Report 201993

30. Financial Instruments(1) Classiﬁcation of ﬁnancial instruments
The breakdown of ﬁnancial instruments for each classiﬁcation is presented as follows:
JPY

USD

2019

2018

2019

88,94177,731

801,350

228,749

222,166

2,060,995

—

994

—

7,188

6,531

64,766

235,938

229,692

2,125,761

Other investments

3,962

4,168

35,706

Other ﬁnancial assets

575

382

5,181

4,538

4,550

40,887

Other investments

28,45332,805

256,357

Total ﬁnancial assets measured at fair value through other comprehensive
income28,45332,805

256,357

Total ﬁnancial assets

357,871344,7813,224,355

Trade and other payables

196,054

188,791

1,766,417

Bonds and borrowings

139,504

137,326

1,256,913

Other ﬁnancial liabilities

7,225

7,456

65,096

342,784

333,574

3,088,426

Financial assets
Cash and cash equivalents
Financial assets measured at amortized cost
Trade and other receivables
Other investments
Other ﬁnancial assets
Total ﬁnancial assets measured at amortized cost
Financial assets measured at fair value through proﬁt or loss

Total ﬁnancial assets measured at fair value through proﬁt or loss
Financial assets measured at fair value through other comprehensive income

Financial liabilities
Financial liabilities measured at amortized cost

Total ﬁnancial liabilities measured at amortized cost
Financial liabilities measured at fair value through proﬁt or loss
Other ﬁnancial liabilities

1,504

2,406

13,557

Total ﬁnancial liabilities measured at fair value through proﬁt or loss

1,504

2,406

13,557344,289

335,981

3,101,983

Total ﬁnancial liabilities(2) Basic policies for risk management of ﬁnancial
instruments
The Consolidated Group is an integrated trading company
engaged in a wide range of business activities on a global basis.
Its headquarters includes business sections that handle merchandising, trading, product manufacturing, services, projectplanning and management, investments and ﬁnancing activities, both domestically and internationally. Such businesses are
inherently exposed to various risks. The Consolidated Group
deﬁnes and classiﬁes risks per risk item and manages each ofthem in accordance with its nature.

(3) Credit risk management
1) Credit risks of ﬁnancial assets owned by the Company(risk exposure and the occurrence of the relevant risk)
The Consolidated Group extends credit to a large number ofcustomers in Japan and abroad in diverse business transactions,
resulting in a number of ﬁnancial assets such as trade receivables, loans and other ﬁnancial assets. These ﬁnancial assets

94

KANEMATSU Integrated Report 2019provide credit accommodation to the various customers; therefore, the Consolidated Group is mainly exposed to the credit
risks related to those customers.
Moreover, other investments include debt instruments thatare the investments in the customers, which expose theConsolidated Group to the credit risk arising from deteriorationin the ﬁnancial position of issuers.
Each department manages credit exposure to each customer
by assigning credit ratings on a customer-by-customer basis andsetting credit exposure limits within the framework of theConsolidated Group’s credit risk control.
2) Responses to the risk owned by the Company (purpose,
policy and procedure of the risk management andmethod used to measure such risks)
The Consolidated Group manages its credit risk to the customers
by deﬁning risk management methods and management systems for speciﬁc risks in accordance with the regulations on risk
management. Based on such regulations, the Consolidated

Kanematsu’s Progress and Strengths

trade receivables are recovered. With regard to past due receivables, the Consolidated Group estimates the lifetime credit losses on the ﬁnancial instruments individually and measures theamount of loss allowance based upon historical credit loss experience and future recoverable amount. Moreover, as performing
trade receivables comprise a number of customers, theConsolidated Group measures expected credit loss collectively
by grouping those receivables and considering historical credit
loss experience. When those receivables are affected by a material economic change, the provision rate calculated based upon
the historical credit loss experience is adjusted to reﬂect current
and future economic prospect.
Even when a late payment or request for grace period has
occurred, the Consolidated Group does not regard them as past
due receivables if such late payment or request for grace period
would be attributable to temporary cash shortage as the risk ofdefault would be low, and the debtors are evaluated to have astrong ability to fulﬁll the obligation of contractual cash ﬂow in
the near future.

Special Features(ii) Measurement of expected credit losses on other receivables
When credit risk related to loans has not increased signiﬁcantly
since the initial recognition at the end of the reporting period,
the Consolidated Group calculates the amount of loss allowanceof the ﬁnancial instruments by estimating the 12-months
expected credit losses collectively based upon historical credit
loss experience. When those receivables are affected by a material economic change, the provision rate calculated based upon
the historical credit loss experience is adjusted to reﬂect current
and future economic prospect.
However, when there has been a signiﬁcant increase in credit
risk since initial recognition as of the end of the ﬁscal year, theConsolidated Group estimates the lifetime credit losses on theﬁnancial instruments individually and measures the amount ofloss allowance based upon historical credit loss experience andfuture recoverable amount.

Review of Operations(iii) Measurement of the expected credit losses on the otherinvestments (debt securities)
When credit risk related to debt securities has not increased signiﬁcantly since initial recognition at the end of the reporting
period, the Consolidated Group calculates the amount of loss
allowance of the ﬁnancial instruments by estimating the
12-months expected credit losses. However, when there has
been a signiﬁcant increase in credit risk since initial recognition
as of the end of the ﬁscal year, the Consolidated Group estimates the lifetime credit losses on the ﬁnancial instruments andmeasures the amount of loss allowance of the ﬁnancial instruments. When estimating such expected credit losses, theConsolidated Group uses the default rate published by major
rating agencies.

SustainabilityGroup mitigates credit risk through periodical monitoring of thecustomer’s credit status and undertaking the maturity control
and account balance control, while detecting promptly any
doubtful accounts caused by deterioration in the ﬁnancial conditions of customers and other factors. Expected credit losses arerecognized and measured through transactions and ﬁnancial
information related to customers available in the course of suchcredit risk management, while taking macroeconomic conditions such as the number of bankruptcies into consideration.
With regard to loans, the Consolidated Group determines
there has been a signiﬁcant increase in credit risk of the ﬁnancial
assets since initial recognition in cases where the cash collectionof the ﬁnancial assets was delayed (as well as the case of request
for a grace period) after the trade date. However, even when alate payment or request for grace period occurs, theConsolidated Group does not determine that there has been asigniﬁcant increase in credit risk if such late payment or request
for grace period would be attributable to temporary cash shortage, the risk of default would be low and objective data such asexternal credit ratings would reveal their ability to fulﬁll the obligation of contractual cash ﬂow in the near future.
However, the Consolidated Group determines that the credit of
the ﬁnancial assets are impaired, when late payment or request
for grace period do not arise from temporary cash shortage but
signiﬁcant ﬁnancial difficulty of the debtor and the recoverabilityof the modiﬁed ﬁnancial assets is signiﬁcantly doubtful.
The Consolidated Group determines there has been a signiﬁcant
increase in the credit risk of debt instruments since initial recognition when an “investment grade” at the initial recognition deteriorates to the level below investment grade. For such purpose, rating
information provided by major rating agencies is used.
When guaranteeing the debts of its customers, theConsolidated Group establishes the guarantee limit amounts
based upon the ﬁnancial position and business condition of thecustomers. The guarantee limit amounts are periodicallyreviewed and maintained at appropriate levels.
When entering into derivative transactions, the Consolidated
Group only deals with major ﬁnancial institutions with high credit
ratings assigned by independent rating agencies so as to minimize
the credit risks. In addition, the Consolidated Group periodicallyreviews credit limits in accordance with the internal regulations.
The Consolidated Group considers trade receivables, loans receivable, and debt instruments as default when all or part of thoseﬁnancial instruments are not recovered or the recoverability of
those ﬁnancial instruments is determined to be extremely difficult.
Moreover, the Consolidated Group directly writes off the grosscarrying amounts of the credit-impaired ﬁnancial assets when allor part of the ﬁnancial assets are evaluated to be uncollectible
and determined that it is appropriate to be written off as a resultof credit check.

Financial Section and Company Information(i) Measurement of expected credit losses on trade receivables
As trade receivables do not contain a signiﬁcant ﬁnancing component, the Consolidated Group measures loss allowance at an
amount equal to the lifetime expected credit losses until the

KANEMATSU Integrated Report 2019953) Quantitative and qualitative information on the amounts arising from expected credit losses(i) Trade and other receivables(JPY)
Loss allowance

Lifetime expected credit losses
Collective assessment

Credit-impaired ﬁnancial assets

As of April 1, 2017

3

2,135

1. Reclassiﬁcation to credit-impaired ﬁnancial
assets—37

2. Incurrence or collection

0

(106)

3. Direct write-off

—

(80)

4. Changes due to foreign exchange—(3)

5. Increase (decrease) resulting from changes in
the provision rate based on historical credit loss
experience(0)—

As of March 31, 2018

3

1,981

1. Reclassiﬁcation to credit-impaired ﬁnancial
assets—75

2. Incurrence or collection

0

(62)

3. Direct write-off

—

(185)

4. Changes due to foreign exchange—

2

5. Increase (decrease) resulting from changes in
the provision rate based on historical credit loss
experience10—

As of March 31, 2019

15

1,811
(JPY)

Gross carrying amount

As of April 1, 2017
1. Financial assets reclassiﬁed to credit-impaired
ﬁnancial assets
2. Incurrence or collection

Lifetime expected credit losses
Collective assessment

Credit-impaired ﬁnancial assets

192,085

2,416

(42)

42

29,869(134)

3. Direct write-off

—

(80)

4. Changes due to foreign exchange—(3)221,912

2,239

(75)

75

As of March 31, 2018
1. Financial assets reclassiﬁed to credit-impaired
ﬁnancial assets
2. Incurrence or collection
3. Direct write-off
4. Changes due to foreign exchange
As of March 31, 2019

6,681

(74)

—

(185)

—

2

228,519

2,057
(USD)

Loss allowance

96

Lifetime expected credit losses
Collective assessment

Credit-impaired ﬁnancial assets

As of March 31, 201836

17,857

1. Reclassiﬁcation to credit-impaired ﬁnancial
assets—676

2. Incurrence or collection

4

(564)

3. Direct write-off—(1,667)

4. Changes due to foreign exchange—

23

5. Increase (decrease) resulting from changes in
the provision rate based on historical credit loss
experience97—

As of March 31, 2019

136

16,325KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths(USD)
Gross carrying amount

Lifetime expected credit losses
Collective assessment

Credit-impaired ﬁnancial assets

1,999,395

20,181(676)

676

As of March 31, 2018
1. Financial assets reclassiﬁed to credit-impaired
ﬁnancial assets
2. Incurrence or collection
3. Direct write-off
4. Changes due to foreign exchange
As of March 31, 201960,198(673)—(1,667)—23

2,058,917

18,540(ii) Other investments (debt instrument securities)
Special Features(JPY)
Expected credit losses
Loss allowance

12 months

Lifetime
Individual assessment

Credit-impaired ﬁnancial assets

As of April 1, 2017

5

—

—

1 Changes in ﬁnancial instruments recognized at
the beginning of the period

—

—

—

(a) Reclassiﬁed to lifetime expected credit losses

—

—

—

(b) Reclassiﬁed to credit-impaired ﬁnancial
assets———(c) Individual ﬁnancial assets reclassiﬁed fromcredit-impaired ﬁnancial assets

—

—

—

—

—

—

3. Direct write-off

—

—

—

4. Increase (decrease) due to changes in default
rate

(0)

—

—

As of March 31, 2018

5

—

—

1 Changes in ﬁnancial instruments recognized at
the beginning of the period

—

—

—

(a) Reclassiﬁed to lifetime expected credit losses

—

—

—

(b) Reclassiﬁed to credit-impaired ﬁnancial
assets———(c) Individual ﬁnancial assets reclassiﬁed fromcredit-impaired ﬁnancial assets

—

—

—

(5)

—

—

3. Direct write-off

—

—

—

4. Increase (decrease) due to changes in default
rate

—

—

—

As of March 31, 2019

—

—

—

Sustainability

2. Incurrence or collection

Review of Operations

2. Incurrence or collection

Financial Section and Company Information

KANEMATSU Integrated Report 2019

97

(JPY)
Expected credit losses
Gross carrying amount

As of April 1, 2017
1. Changes in ﬁnancial instruments recognized at
the beginning of the period

12 months

Lifetime
Individual assessment

Credit-impaired ﬁnancial assets

1,000

—

—

—

—

—

(a) Reclassiﬁed to lifetime expected credit losses

—

—

—

(b) Reclassiﬁed to credit-impaired ﬁnancial assets

—

—

—

(c) Individual ﬁnancial assets reclassiﬁed fromcredit-impaired ﬁnancial assets

—

—

—

2. Incurrence or collection

—

—

—

3. Direct write-off

—

—

—

4. Other changes

—

—

—

1,000

—

—

1. Changes in ﬁnancial instruments recognized at
the beginning of the period

—

—

—

(a) Reclassiﬁed to lifetime expected credit losses

—

—

—

(b) Reclassiﬁed to credit-impaired ﬁnancial
assets———(c) Individual ﬁnancial assets reclassiﬁed fromcredit-impaired ﬁnancial assets

—

—

—

As of March 31, 2018

2. Incurrence or collection(1,000)——3. Direct write-off

—

—

—

4. Other changes

—

—

—

As of March 31, 2019

—

—

—
(USD)

Expected credit losses
Loss allowance

12 months

Lifetime
Individual assessment

Credit-impaired ﬁnancial assets

As of March 31, 2018

45

—

—

1. Changes in ﬁnancial instruments recognized at
the beginning of the period

—

—

—

(a) Reclassiﬁed to lifetime expected credit losses

—

—

—

(b) Reclassiﬁed to credit-impaired ﬁnancial assets

—

—

—

(c) Individual ﬁnancial assets reclassiﬁed fromcredit-impaired ﬁnancial assets

—

—

—

2. Incurrence or collection

(45)

—

—

3. Direct write-off

—

—

—

4. Increase (decrease) due to changes in default
rate

—

—

—

As of March 31, 2019

—

—

—
(USD)

Expected credit losses
Gross carrying amount

As of March 31, 2018
1. Changes in ﬁnancial instruments recognized at
the beginning of the period

12 months

Lifetime
Individual assessment

Credit-impaired ﬁnancial assets

9,010

—

—

—

—

—

(a) Reclassiﬁed to lifetime expected credit losses

—

—

—

(b) Reclassiﬁed to credit-impaired ﬁnancial assets

—

—

—

(c) Individual ﬁnancial assets reclassiﬁed fromcredit-impaired ﬁnancial assets

—

—

—

(9,010)——3. Direct write-off

—

—

—

4. Other changes

—

—

—

As of March 31, 2019

—

—

—

2. Incurrence or collection(iii) There is no contractual, uncollected balance for ﬁnancial assets written off during the ﬁscal year ended March 31, 2019, forwhich collecting efforts are still being made.

98

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths4) Credit risk exposure(i) Trade and other receivables
As of March 31, 2019
Balance of receivables (gross)

Provision rate based on
historical credit loss
experience

Lifetime expected credit losses

JPY

USD

JPY

USD

Performing receivables

228,519

2,058,917

0.01%

15

136

Past due receivables

2,057

18,54088.05%

1,811

16,325

Total

230,576

2,077,457

—

1,827

16,462

Past due receivables include loans receivable of ¥1,724 million ($15,541 thousand), for which a loss allowance of ¥1,479 million($13,326 thousand) has been already recognized.

Balance of receivables (gross)

Lifetime expected credit losses

JPY

Provision rate based on historical credit
loss experience

Performing receivables

221,9120.00%

3

Past due receivables

2,239

88.49%

1,981

224,152

—

1,985

Total

Special Features

As of March 31, 2018
JPY

Past due receivables include loans receivable of ¥1,760 million, for which a loss allowance of ¥1,502 million has been already recognized.
(ii) Other investments (Debt instrument securities)
As of March 31, 2018
Gross carrying amount
Debt instrument securities
Lifetime

12 months

JPY

JPY

AAA-AA

—

—

A

—

—

BBB-BB

—

1,000

B
Total

—

—

—

1,000

Review of Operations

External rating

There were no debt instrument securities for the ﬁscal year ended March 31, 2019.

Sustainability5) Maximum exposure to credit risks
The Consolidated Group’s maximum exposure to credit risks is as follows:
The Consolidated Group’s maximum credit risk exposure (gross) represents the amount of the maximum exposure with respect tocredit risks without taking into account any collateral held or other credit enhancement. The Consolidated Group’s maximum credit risk
exposure (net) represents the amount of the maximum exposure with respect to credit risks reﬂecting the mitigation effect of the collateral held or other credit enhancement.
As of March 31, 2019
Gross
carrying amount

Cash and cash
equivalents

Maximum
credit risk exposure(gross)Lossallowance

JPY

USD

JPY

USD

88,941

801,350——

230,576 2,077,457(1,827)(16,462)

JPY

USD

88,941

Total collaterals pledged
and credit enhancements
JPY

USD

801,350——

228,749 2,060,995(173)(1,562)

Maximum
credit risk
exposure (net)
JPY

USD

88,941

801,350

Financial assets
measured atamortized cost

Other ﬁnancial
assetsOther
investments
Total

Financial Section and Company Information

Trade and otherreceivables

228,576 2,059,433

7,188

64,766

—

—

7,188

64,766

—

—

7,188

64,766

—

—

—

—

—

—

—

—

—

—

326,707 2,943,572(1,827)(16,462)

324,880 2,927,111(173)(1,562)

324,706 2,925,549

The amount of loss allowance for credit-impaired ﬁnancial assets is reduced by ¥173 million ($1,562 thousand) through collateralpledged and credit enhancements.

KANEMATSU Integrated Report 201999

As of March 31, 2018
Gross
carrying amountLossallowance

Maximum
credit risk exposure(gross)Total collaterals
pledged and credit
enhancements

Maximum
credit risk
exposure (net)

JPY

JPY

JPY

JPY

JPY

Cash and cash equivalents

77,731—77,731—77,731

Financial assets measured atamortized cost
Trade and other receivables

224,152(1,985)

222,166(126)

222,040

Other ﬁnancial assets

6,913

—

6,913

—

6,913

Other investments

1,000

(5)

994

—

994

Total

309,798(1,991)

307,806(126)

307,680

The amount of loss allowance for credit-impaired ﬁnancial assets is reduced by ¥126 million through collateral pledged and credit
enhancements.

(4) Liquidity risk management
The Consolidated Group raises funds through borrowings from ﬁnancial institutions or issuance of bonds. Accordingly, in the event of a
disruption to the ﬁnancial system or ﬁnancial/capital markets, or a major downgrade of the Consolidated Group’s credit rating by a rating agency, the Consolidated Group’s fundraising becomes constrained and consequently there is a possibility that the Consolidated
Group will not be able to carry out the payment on the date of payment.
The Consolidated Group has sufficient levels of cash and cash equivalents and maintains a long-term (unused) commitment line agreement with a major ﬁnancial institution in the amount of ¥10.0 billion ($90,098 thousand) to ensure liquidity and stability of funds. The
Consolidated Group makes efforts to maintain good relationships with each ﬁnancial institution.
1) Non-derivative ﬁnancial liabilities
The breakdown of non-derivative ﬁnancial liabilities by due date is presented as follows:
As of March 31, 2019

Trade and other payables
Bonds
Borrowings

Within one year

Between one andﬁve years

JPY

JPY

USD

196,054 1,766,417

Over
ﬁve years

USD

—

JPY

Total
USD

JPY

—

—

—

USD

196,054 1,766,417

81

736

10,201

91,9105,020

45,23015,30275,238677,889

48,886440,458

2,466

22,219126,591 1,140,566

137,876

Lease obligations

410

3,699

674

6,076

69

630

1,154

10,405

Deposits received

3,506

31,593

—

—

0

3

3,506

31,596

938

8,456

17

160

1,608

14,4892,564

23,105

112

1,014

—

—

—

—

112

1,014

276,343 2,489,804

59,779538,604

9,164

82,570

Guarantee deposits received
Other
Total

345,287 3,110,978

As of March 31, 2018

Trade and other payables

Within one year

Between one andﬁve years

Overﬁve years

Total

JPY

JPY

JPY

JPY

188,791——

188,791

Bonds

5,100

10,254

5,048

20,403

Borrowings

57,122

61,4191,283

119,826

Lease obligations

428

778

113

1,319

Deposits received

3,728

—

0

3,729

Guarantee deposits received

951

—

1,498

2,449

Other

106

—

—

106

256,22972,451

7,944

336,625

Total

The Consolidated Group has guarantee obligations of ¥1,165 million ($10,501 thousand) and ¥1,830 million as of March 31, 2019 andMarch 31, 2018 respectively

100

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths2) Derivative liabilities
The breakdown of derivative liabilities by due date is presented as follows:
As of March 31, 2019
Within one year

Between one andﬁve years

Overﬁve years

JPY

USD

JPY

35,357

318,56258

531

35,849323,002

60

543

492

4,440

1

12

Interest rate-related derivatives

194

1,753

207

1,871

Commodity-related derivatives

579

5,218

—

1,266

11,411

209

USD

JPY

Total
USD

JPY

USD

—

35,416

319,093——

35,910323,545

—

—

494

4,452

—

—

402

3,624

—

—

—

579

5,218

1,883

—

—

1,475

13,294Currency-related derivatives
Cash inﬂows
Cash outﬂows
Sub total

Special Features

Total

—

As of March 31, 2018
Within one year

Between one andﬁve years

Overﬁve years

Total

JPY

JPY

JPY

JPY

Currency-related derivatives
Cash inﬂows

44,421

2,496

581

47,499Cash outﬂows

45,9832,585

627

49,196
1,697

Sub total

89

45

215

400

—

615

Commodity-related derivatives

128

—

—

128

1,906

489

45

2,441

Total

Review of Operations

1,562

Interest rate-related derivatives(5) Market risk management(ii) Sensitivity analysis of foreign currency risk
In regards to ﬁnancial instruments held by the Consolidated
Group as of the end of the consolidated year, the following
chart shows the amounts affecting proﬁt before tax and othercomprehensive income (before tax effect adjustments), as
reported in the consolidated ﬁnancial statements, that would
result from 1% appreciation of Japanese Yen against U.S. dollars.
Such analysis is based on the assumption that other factors
are held constant.
In addition, such analysis does not include the affectedamounts based on translations (into Japanese yen) of ﬁnancial
instruments denominated in functional currency, income andexpenses denominated in foreign currency and assets and liabilities of foreign operations.

KANEMATSU Integrated Report 2019

Financial Section and Company Information

1) Foreign currency risk(i) Nature of foreign currency risk and its management policy
The Consolidated Group is engaged in foreign currency transactions in various currencies and terms incidental to its export andimport trading. The Consolidated Group participates in derivatives transactions such as forward contracts to reduce the risk ofcurrency ﬂuctuation.
The Company also has local subsidiaries and business corporations overseas. Account balances at these companies are converted into yen at the exchange rates prevailing at the end of
the reporting period, for the purposes of preparing consolidated

ﬁnancial statements. As a result, equity attributable to ownersof the Parent may change through exchange difference of foreign operations associated with exchange rate ﬂuctuations.
In principle, the Consolidated Group enters into forward
exchange contracts to hedge against the exchange rate currency
ﬂuctuation risk of foreign currency-denominated receivables
and payables that are controlled by currency and by contract
month. The Consolidated Group also enters into forward
exchange contracts to hedge against foreign currency-denominated receivables and payables that are highly probable to arise
from export/import-related forecast transactions.

Sustainability

In many cases, the foreign currency risk, interest rate risk and riskof price ﬂuctuations associated with goods traded incidental tobusiness transactions are hedged in with the transaction termswith trade partners, etc. In addition, the Consolidated Group has
established a system under which a limit (position limit) and aloss limit are set for foreign exchange, interest rates (funds),
products and their derivatives, taking into account the scale of
the risk and the income of each internal unit and company, sothat it can quickly reduce its position when the predetermined
limit is exceeded. Also, the price ﬂuctuation risk of these positions are mitigated by using derivatives as a hedge. The positions
are reported to management meeting regularly. When the predetermined limit is exceeded, the Consolidated Group mitigatesthese positions after the analysis of the reason without delay.

101

JPY

USD

2019

2018

2019

10

(4)

94

(181)

(246)

(1,637)

Proﬁt before tax
U.S. dollar
Other comprehensive income
U.S. dollar

2) Interest rate risk(i) Nature of interest rate risk and its management policy
The Consolidated Group raises most funds needed for operating
and ﬁnancing activities in the form of borrowings from ﬁnancial
institutions at variable interest rates, with the exception of certain loans. Since these borrowings and fund management are
exposed to an interest rate risk, interest expenses for theConsolidated Group may increase with a rise in interest rates.
The Company and certain consolidated subsidiaries enter into
interest rate swap contracts to avoid the interest rate ﬂuctuation
risk stemming from the borrowings.

(ii) Sensitivity analysis of interest rate risk
In regards to ﬁnancial instruments held by the Consolidated
Group at the end of the reporting period, the following tableshows the amounts affecting proﬁt before tax assuming that theinterest rate increases by 1%.
Under the analysis, the amounts affecting proﬁt before tax are
calculated by multiplying the net balance of ﬂoating rate ﬁnancial instruments as of March 31, 2019 and 2018 by 1%, without
considering future changes in the net balance, currency
exchange ﬂuctuations and dispersing effects for ﬂoating rateborrowings derived from the difference in timing of reﬁnancing
and resetting of the interest rate, and based on the assumptionthat all the other variables are held constant.
JPY

Proﬁt before tax3) Commodity price risk(i) Nature of commodity price risk and its management policy
In its mainstay commodity trading business in Japan and overseas, the Consolidated Group deals with grains, meat products
and petroleum products which are inﬂuenced by market conditions. When the positions in these commodities increase, theConsolidated Group will be exposed to the commodity priceﬂuctuation risk stemming from rapid movements in commodities prices or a decline in demand.
The Consolidate Group strives to reduce our exposure to pricevolatility by hedge-selling commodities, matching the quantity
and timing of buying and selling, and utilizing commodity-related derivatives for hedging purposes.

USD

2019

2018

2019

(883)

(779)

(7,964)(ii) Sensitivity analysis of commodity price risk
In regards to commodity-related derivatives held by theConsolidated Group at the end of the reporting period, the following table shows the amounts affecting proﬁt before tax andother comprehensive income (before the tax effect) assumingthat the commodity price decreases by 1%.
The analysis is performed based on the assumption that all
the other variables are held constant.

JPY

2019

Proﬁt before tax

USD

2018

(74)

(67)

(667)

Foods

(59)

(47)

(540)

Fuels

(14)

(19)

(127)

(1)

(2)

(9)

Foods

(1)

(2)

(9)

Fuels

—

—

—

Other comprehensive income4) Share price risk(i) Nature of share price risk and its management policy
The Consolidated Group holds marketable securities, which areexposed to the market price ﬂuctuation risk.
The Consolidated Group attempts to reduce share price risk
by periodically reviewing its shares held by the Consolidated
Group and selling those shares that it holds without strong
rationale.

(ii) Sensitivity analysis of share price risk
In regards to listed shares held by the Consolidated Group at theend of the reporting period, the following table shows theamounts affecting other comprehensive income (before the tax
effect) assuming that the share price decreases by 1%.
The analysis is performed based on the assumption that all
the other variables are held constant.
JPY

Other comprehensive income

102

2019

KANEMATSU Integrated Report 2019

USD

2019

2018

2019

(164)

(186)

(1,481)Kanematsu’s Progress and Strengths(6) Fair value of ﬁnancial instruments
1) Fair value measurement
Fair values of ﬁnancial instruments are presented as follows:
Fair values are categorized into three levels of the fair value hierarchy depending on inputs to valuation techniques; details aredescribed in Note 2. Basis of Preparing Consolidated Financial Statements: (4) Use of estimates and judgments.
2) Financial instruments measured at amortized cost
2019
Type

2018

Carrying amount

Fair value

Carrying amount

Fair value

JPY

USD

JPY

USD

JPY

1,449

13,056

1,449

13,056

1,582

1,582

—

—

—

—

994

994

Guarantee deposits

3,592

32,372

3,592

32,372

3,867

3,867

Other ﬁnancial assets

623

5,619

623

5,619

612

612

Total

5,665

51,047

5,665

51,047

7,057

7,057

Financial assets
Trade and other receivablesSpecial Features

Other investments (Debt instrument
securities)

Financial liabilities
65,188587,339

65,393589,184

76,11676,269Long-term lease obligations

Bonds and borrowings

670

6,041

670

6,041

788

788

Long-term deposits received

0

3

0

3

0

0

1,625

14,6491,625

14,649

1,498

1,498

67,485608,031

67,690609,876

78,40378,555Long-term guarantee deposits
received
Total

Review of Operations

The carrying amounts of trade and other receivables, other ﬁnancial assets, trade and other payables, bonds and borrowings and otherﬁnancial liabilities, all of which are categorized into current assets or current liabilities of ﬁnancial instruments measured at amortized
cost, approximate their fair values; therefore, those amounts are not included in the table above.
The fair values stated above are calculated as follows:(vi) Long-term lease obligations
The fair value of long-term lease obligations is the present valueof future cash ﬂows discounted by an interest rate that reﬂects
time to maturity and credit risk.

(ii) Other investments (Debt instrument securities)
The fair value of other investments is the present value of future
cash ﬂows discounted by an interest rate applicable to similar
ﬁnancial assets.

(vii) Long-term deposits received
The fair value of the long-term deposits received is the present
value of future cash ﬂows discounted by an interest rate thatreﬂects time to maturity and credit risk.

(iii) Guarantee deposits
The fair value of guarantee deposits is the present value of
future cash ﬂows discounted by an interest rate that reﬂects
time to maturity and credit risk.

(viii) Long-term guarantee deposits received
The fair value of long-term guarantee deposits received is thepresent value of future cash ﬂows discounted by an interest ratethat reﬂects time to maturity and credit risk.
Financial assets and liabilities measured at amortized cost are
categorized within Level 2 of the fair value hierarchy.

(iv) Other ﬁnancial assets
The fair value of other ﬁnancial assets is the present value of
future cash ﬂows discounted by an interest rate that reﬂects
time to maturity and credit risk.

Sustainability(i) Trade and other receivables
The fair value of trade and other receivables is the present valueof future cash ﬂows discounted by an interest rate that reﬂects
time to maturity and credit risk.

Financial Section and Company Information(v) Bonds and borrowings
The fair value of bonds is determined based on their market price.
The fair value of borrowings is the present value of the sum of
principal and interest payments discounted using an assumed
interest rate on equivalent incremental borrowings.

KANEMATSU Integrated Report 2019103

3) Financial instruments measured at fair value(i) Analysis of fair value by hierarchy level
The following tables provide the breakdown by hierarchy level of ﬁnancial assets and liabilities that are measured at fair value on arecurring basis. No ﬁnancial assets and liabilities are measured at fair value on a non-recurring basis. There were no material transfers
between different levels for the ﬁscal years ended March 31, 2019 and March 31, 2018.
As of March 31, 2019
Level 1

Level 2JPY

USD

Level 3

JPY

USD

Total

JPY

USD

JPY

USD

AssetsOther investments
Financial assets measured at fairvalue through proﬁt or loss
Stock

—

—

—

—

3,962

35,706

3,962

35,706

16,590149,477——

11,862

106,880

28,453

256,357

—

—

530

4,782

—

—

530

4,782

Financial assets measured at fairvalue through othercomprehensive income
Stock
Other ﬁnancial assets
Derivative transactions:
Foreign exchangeInterest rate

—

—

—

—

—

—

—

—

Commodity

44

400

—

—

—

—

44

400

Foreign exchange

—

—

(494)

(4,452)

—

—

(494)

(4,452)

Interest rate

—

—

(431)

(3,887)

—

—

(431)

(3,887)

Commodity(579)(5,218)

—

—

—

—

(579)

(5,218)16,055

144,658(394)(3,557)

15,825

142,586

31,486283,687

Liabilities
Other ﬁnancial liabilities
Derivative transactions:

Total
As of March 31, 2018

Level 1

Level 2

Level 3

Total

JPY

JPY

JPY

JPY

AssetsOther investments
Financial assets measured at fairvalue through proﬁt or loss
Stock

—

—

4,168

4,168

18,672—

14,13332,805

Foreign exchange

—

286

—

286

Interest rate

—

—

—

—

Commodity

96

—

—

96

Foreign exchange—(1,697)—(1,697)

Interest rate

—

(580)

—

(580)

Financial assets measured at fairvalue through othercomprehensive income
Stock
Other ﬁnancial assets
Derivative transactions:

Liabilities
Other ﬁnancial liabilities
Derivative transactions:

Commodity
Total

104

KANEMATSU Integrated Report 2019

(128)

—

—

(128)

18,639(1,992)

18,302

34,950Kanematsu’s Progress and Strengths

The methods of determining the fair value of the above instruments are described as follows:(b) Derivative ﬁnancial assets and liabilities
Currency-related derivatives
The fair value of forward exchange transactions is calculated
based on the forward exchange rate at the end of the ﬁscal year.

(a) Other investments
The fair value of listed shares is the quoted price in an active
market, and is categorized within fair value hierarchy Level 1.
The fair value of unlisted shares is calculated using valuation
methods including discounted future cash ﬂows, market pricesof comparable companies, net asset value, and other valuation
methods, and is categorized within fair value hierarchy Level 3.
Measuring the fair value of unlisted shares involves the use ofunobservable inputs such as discount rate and valuation multiples, as well as any necessary adjustments including discounts
for a lack of liquidity.
The Company determines the policies and procedures formeasuring the fair value of unlisted shares and convertible
bonds, and reviews the approach to measuring fair value on arecurring basis including the valuation model, by obtaining theinformation on business operations and business plans associated with each equity issuer and conﬁrming the data from comparable public companies.

Interest rate-related derivatives
The fair value of interest-rate swaps is the present value of
future cash ﬂows discounted by an interest rate that reﬂects
time to settlement, as well as market conditions.

Special Features

Commodity-related derivatives
The fair value of commodity futures transactions is calculatedusing ﬁnal prices on commodities exchanges as of the ﬁscal
year-end. The fair value of commodity swap transactions is calculated based on the index prices publicly announced at the endof the ﬁscal year.
Commodity futures transactions are categorized within Level 1of fair value hierarchy. All other derivative ﬁnancial assets and liabilities are categorized within Level 2 of the fair value hierarchy.

2019

2018

Other investments
FVPL
JPY

Balance atthe beginning of the year

4,168

Other investments

Total

FVOCI
USD

JPY

Review of Operations(ii) Recurring fair value measurements categorized within Level 3 of the fair value hierarchy
The changes in ﬁnancial assets and liabilities that are measured at fair value on a recurring basis and are categorized within Level 3 ofthe fair value hierarchy are presented as follows. There were no material transfers between different levels for the years ended March
31, 2019 and March 31, 2018.

USD

JPY

USD

37,558 14,133 127,344 18,302 164,902

Otherﬁnancial
assets

Total

FVPL

FVOCI

FVPL

JPY

JPY

JPY

JPY

5,054

12,0491,033

18,137

Total gains or losses
Proﬁt or loss (Note 1)
Other comprehensive income (Note 2)

Foreign currency translationdifference
Increase (decrease) due to changes
in scope of consolidation
Other
Balance at the end of the year(434) (3,916)

(730)

—

10

(720)

(2,161) (19,478) (2,161) (19,478)

—

—

—

2,106

—

2,106

61

—

61

(117) (1,010)(1,127)

—

—

110

1,000

156

1,407

267

2,407

—

—

—

(264)

(2,383)(264) (2,383)

—

118

1,064

0

6

118

1,070

(158)

—

—

(158)

—

—

—

—

—

—

—

0

—

0

—

(1)

(15)

(1)

(15)

2

35

(33)

3

35,706 11,862 106,880 15,825 142,586

4,168

14,133—18,302—
3,962

Sustainability

Purchase
Sale(434) (3,916)

KANEMATSU Integrated Report 2019

Financial Section and Company Information

FVPL: Financial assets measured at fair value through proﬁt or loss.
FVOCI: Financial assets measured at fair value through other comprehensive income.
(Notes) 1. The gains or losses are included in “Other ﬁnance income” or “Other ﬁnance costs” in the consolidated statement of income. Of those gains or losses
recognized in proﬁt or loss, the amounts arising from ﬁnancial instruments that were held at the period end are ¥(434) million ($(3,916) thousand) for theﬁscal year ended March 31, 2019 and ¥(730) million for the ﬁscal year ended March 31, 2018.
2. The gains or losses are included in “Financial assets measured at fair value through other comprehensive income” in the consolidated statement ofcomprehensive income.

105

(iii) Quantitative Information about the ﬁnancial instruments categorized within fair value hierarchy Level 3
The following tables present quantitative information on the material assets categorized within Level 3 of the fair value hierarchy,
which were measured at fair value on a recurring basis.
As of March 31, 2019
Fair value
Category

Valuation techniqueSigniﬁcant unobservable inputs

Weighted
average of input
valuesJPY

USD

Financial assets measured atfair value through proﬁt
or loss

2,351

21,191

Discounted cash ﬂow
methodDiscount rate

3.1%

Financial assets measured atfair value through proﬁt
or loss

1,610

14,515

Net asset value method——

Financial assets measured atfair value through othercomprehensive income

10,863

97,882Market multiple method

P/B ratio
Illiquidity discount

1.1times
30.0%

Financial assets measured atfair value through othercomprehensive income

998

8,998

Net asset value method——

As of March 31, 2018
Category

Fair value

Valuation techniqueSigniﬁcant unobservable inputs

Weighted
average of input
valuesDiscount rate

3.3 %

JPY

Financial assets measured at fair value
through proﬁt or loss

2,668

Discounted cash ﬂow method

Financial assets measured at fair value
through proﬁt or loss

1,500

Net asset value method——

Financial assets measured at fair value
through other comprehensive income

13,119Market multiple method

P/B ratio
Illiquidity discount

1.3 times
30.0 %

Financial assets measured at fair value
through other comprehensive income

1,014

Net asset value method——

The signiﬁcant unobservable inputs used in measuring the fair value of unlisted shares are the discount rate, illiquidity discount and P/Bratio (price-to-book ratio). A substantial increase (or decrease) in the discount rate or illiquidity discount causes the fair value to substantially fall (or rise), while a substantial increase (or decrease) in the P/B ratio causes the fair value to substantially rise (or fall).

106

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths(7) Financial assets measured at fair value through other comprehensive income
With respect to investments in equity instruments held for the purpose of maintaining and strengthening relationships with business
partners, the Consolidated Group has designated such investments as ﬁnancial assets to be measured at fair value through other comprehensive income in view of the holding purpose.
1) Fair value of major items of investment
The following tables present the fair value of major items of investment in equity instruments designated as ﬁnancial assets measured
at fair value through other comprehensive income.
As of March 31, 2019
Name of issuer

Amount3,209

28,913Nisshin Seifun Group Inc.

2,311

20,826MARUDAI FOOD CO., LTD.

2,258

20,345

SOTSU CORPORATION

1,299

11,706

BOT Lease Co., Ltd.

1,148

10,351SHIN KURUSHIMA DOCKYARD CO., LTD.

1,049

9,454

Daio Paper Corporation

1,042

9,397

nms Holdings Corporation

974

8,782

The Norinchukin Bank

937

8,446

F.C.C. Co., Ltd.

723

6,521

13,498

121,615

Other

Review of Operations

USD

Tokio Marine Holdings, Inc.

Special Features

JPY

As of March 31, 2018
Name of issuer

AmountJPY

MARUDAI FOOD CO., LTD.

3,078

Tokio Marine Holdings, Inc.

2,837

Nisshin Seifun Group Inc.

1,919

nms Holdings Corporation

1,910

BOT Lease Co., Ltd.

1,701

SOTSU CORPORATION

1,687
1,299

Daio Paper Corporation

1,152

The Norinchukin Bank

1,011

F.C.C. Co., Ltd.
Other

Sustainability

SHIN KURUSHIMA DOCKYARD CO., LTD.

924
15,283Financial Section and Company Information

KANEMATSU Integrated Report 20191072) Dividend income
JPY

2019

USD

2018

2019

Investments derecognized during the year

0

0

0

Investments held at the end of the year

962

804

8,674

962

805

8,674

Total

3) Financial assets measured at fair value through other comprehensive income that were derecognized during the ﬁscal year
The Consolidated Group periodically reviews its held shares and sells those shares that it holds without a strong rationale with gains orlosses on sale recognized in other comprehensive income. The following table presents the fair value on the date of sale and cumulative
gains or losses on sale.
JPY

USD

2019

2018

2019

Fair value on the date of sale

267

242

2,406

Cumulative gains (losses) on sale

257

130

2,324

4) Reclassiﬁcation to retained earnings
The Consolidated Group reclassiﬁes to retained earnings cumulative gains or losses arising from changes in the fair value of ﬁnancial
assets measured at fair value through other comprehensive income in either of the following cases: when an investment is disposed of,or when there is a signiﬁcant decline in the fair value. Such cumulative gains or losses in other comprehensive income that were reclassiﬁed to retained earnings for the years ended March 31, 2019 and March 31, 2018 were ¥163 million ($1,470 thousand) and ¥123 million, respectively.

(8) Hedge accounting(Cash Flow Hedge)
A cash ﬂow hedge is a hedge of the exposure to variability in future cash ﬂows arising from a forecast transaction or recognized assets
or liabilities. While a hedge is designated as cash ﬂow hedge as long as the hedge is effective, the changes in the fair value of qualifying
hedging instrument should be recorded as other comprehensive income in the Consolidated Statement of Comprehensive Income. The
Consolidated Group continues such accounting treatment until variability in future cash ﬂows arising from unrecognized forecast transactions or recognized assets or liabilities designated as hedged items are recorded in proﬁt or loss. Moreover, portions determined to beineffective for hedging accounting are recognized in proﬁt or loss.
The Consolidated Group designates the following instruments as cash ﬂow hedges: forward exchange contracts to ﬁx cash ﬂows
from foreign currency denominated receivables and payables, foreign currency denominated ﬁrm commitments and foreign currency
denominated forecast transactions, interest rate swaps to ﬁx variable interest rate on ﬂoating rate ﬁnancial liabilities, and commodity
futures to ﬁx cash ﬂows from forecast transactions of commodity trade.
When applying hedge accounting, the Consolidated Group conﬁrms that there are economic relationships between the hedged
items and hedging instruments through qualitative assessments, which show whether the critical terms of the hedging instruments
and the hedged items match exactly or are closely aligned, and quantitative assessments, which show ﬂuctuations of the value ofhedged items and hedging instruments by the same risk offset each other, in order to conﬁrm there are economic relationships thatvariability in fair value or cash ﬂows of the hedged items that are attributable to the hedged risk shall be offset by the changes in fairvalue or cash ﬂows of the hedging instruments. The Consolidated Group also establishes appropriate hedge ratios considering an economic relationship between hedging instruments and hedged items as well as risk management strategy.
The amounts recognized in proﬁt or loss for the ineffective portion of the hedge are not material both for the ﬁscal years ended
March 31, 2019 and March 31, 2018. In addition, the amounts reclassiﬁed from valuation differences on cash ﬂow hedges to proﬁt orloss are immaterial because the forecast transactions are no longer expected to occur.
Following are the carrying amounts of the hedging instruments as of March 31, 2019 and March 31, 2018. The fair value of ﬁnancial
assets related to hedging instruments is included in “Other ﬁnancial assets” while the fair value of ﬁnancial liabilities related to hedging
instruments is included in “Other ﬁnancial liabilities” in the consolidated statements of ﬁnancial position.
As of March 31, 2019
Carrying amount

Notional amount

Derivative assets
JPY

Derivative liabilities

JPY

USD

USD

JPY

USD

31,429283,177

220

1,985

164

1,478

21,100190,107

—

—

431

3,887

281

2,535

2

26

27

244

Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

108

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

As of March 31, 2018
Carrying amount

Notional amount

Derivative assets

Derivative liabilities

JPY

JPY

JPY

30,82367

720

23,500

—

580

686

8

38

Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

Special Features

The longest terms of hedging cash ﬂow ﬂuctuation risks by “Forward exchange contracts”, “Interest rate swap contracts” and“Commodity price risk” are about 5 years 6 months, 3 years 6 months and 6 months, respectively.
The following tables present the carrying amount of cash ﬂow hedge reserve as of March 31, 2019 and March 31, 2018.
As of March 31, 2019
Cash ﬂow hedge reservefor discontinuing hedge accounting(before tax)

Cash ﬂow hedge reservefor continuing hedges(before tax)
JPY

USD

JPY

USD

Foreign currency risk
Forward exchange contracts

56

506

—

—

(431)

(3,887)

—

—

(24)

(218)

(24)

(224)

Interest rate risk
Interest rate swap contracts
Commodity price risk
Review of Operations

Commodity futures contracts

As of March 31, 2018
Cash ﬂow hedge reservefor continuing hedges(before tax)

Cash ﬂow hedge reservefor discontinuing hedge accounting(before tax)

JPY

JPY

Foreign currency risk
Forward exchange contracts

(653)

—

(580)

—

(30)

(3)

Interest rate risk
Interest rate swap contracts
Commodity price risk
Sustainability

Commodity futures contracts

The following tables present the carrying amounts of transactions that affected the consolidated statements of comprehensive income
as a result of applying hedge accounting for the ﬁscal years ended March 31, 2019 and March 31, 2018.
Fiscal year ended March 31, 2019 (from April 1, 2018 to March 31, 2019)
Change in value of hedging
instruments recognized in othercomprehensive income

Reclassiﬁcation from cash ﬂow hedge
reserve to proﬁt or loss

Line item for which proﬁt or loss wasaffected by reclassiﬁcation

JPY

USD

JPY

USD

220

1,985

488

4,405

Other income

(66)

(596)

215

1,941

Interest expenses

(49)

(443)

33

300

Cost of sales

Foreign currency risk
Forward exchange contracts
Interest rate risk
Financial Section and Company Information

Interest rate swap contracts
Commodity price risk
Commodity futures contracts

KANEMATSU Integrated Report 2019109

Fiscal year ended March 31, 2018 (from April 1, 2017 to March 31, 2018)
Change in value of hedging
instruments recognized in othercomprehensive income

Reclassiﬁcation from cash ﬂow hedge
reserve to proﬁt or loss

JPY

JPY

(706)

(199)

Other expenses

(11)

269

Interest expenses

(33)

(20)

Cost of sales

Line item for which proﬁt or loss wasaffected by reclassiﬁcation

Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts(9) Transfer of ﬁnancial assets
The Consolidated Group liquidates certain trade receivables by discounting notes or the like. However, with respect to some liquidated
receivables, the Consolidated Group may be obligated to make payments as recourse for non-payment by the debtor. The Consolidated
Group continues to recognize such liquidated receivables as they do not meet the criteria for derecognition of ﬁnancial assets.
The Consolidated Group recognized such liquidated assets as “Trade and other receivables” in the amount of ¥5,028 million ($45,305
thousand) and ¥5,273 million as of March 31, 2019 and March 31, 2018, respectively. In addition, liabilities relating to the deposit
amounts which arose upon the transfer of such assets were accounted for as “Bonds and borrowings” in the amount of ¥5,028 million($45,305 thousand) and ¥5,273 million as of March 31, 2019 and March 31, 2018, respectively. Such liabilities are settled when payments for such liquidated assets are made, and the Consolidated Group may not use such liquidated assets until such settlement occurs.

(10) Offsetting ﬁnancial assets and ﬁnancial liabilities
The following tables present the ﬁnancial assets and ﬁnancial liabilities recognized for the same counterparties including ﬁnancial
instruments that were not offset even though they were covered by an enforceable master netting arrangement or similar agreement
because they did not meet some or all of the offsetting criteria as of March 31, 2019 and March 31, 2018.
JPY

Amounts of ﬁnancial assets presented in the consolidated statement ofﬁnancial position
Foreign exchange

USD

2019

2018

2019

575

382

5,181

530

286

4,782

Interest rate

—

—

—

Commodity

44

96

400

(265)

(247)

(2,393)

309

135

2,788

2019

2018

2019

1,504

2,406

13,557

Foreign exchange

494

1,697

4,452

Interest rate

431

580

3,887

Commodity

579

128

5,218

Amounts that were not offset even though they were covered by an
enforceable master netting arrangement or similar agreement because they
did not meet some or all of the offsetting criteria

(265)

(247)

(2,393)Financial collateral pledged

(534)

(56)

(4,819)

704

2,103

6,345

Amounts that were not offset even though they were covered by an
enforceable master netting arrangement or similar agreement because they
did not meet some or all of the offsetting criteria
Net amounts

JPY

Amounts of ﬁnancial liabilities presented in the consolidated statements ofﬁnancial position

Net amounts

USD

Certain ﬁnancial assets and ﬁnancial liabilities have not been offset because they do not meet some or all of the criteria for offsetting
ﬁnancial assets and ﬁnancial liabilities. The rights to offset such ﬁnancial assets and ﬁnancial liabilities become enforceable only underparticular circumstances, such as when the other party fails to discharge an obligation due to its bankruptcy or other such reasons.

110

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

31. Leases(1) Lessee
1) Finance leases
The Consolidated Group leases computer-related equipment for the enterprise system (tools, furniture and ﬁxtures) and other assets
for ﬁnance leases.
The carrying amounts of the leased assets, net of accumulated depreciation and accumulated impairment losses, as of March 31,
2019 and March 31, 2018 are as follows:
JPY

2019

USD

2018

2019

694

770

6,257

250

287

2,255

944

1,058

8,512

Total

Special Features

Machinery, equipment, vehicle, tools and ﬁxtures
Other

The future minimum lease payments for ﬁnance leases as of March 31, 2019 and March 31, 2018 are as follows:
Present value of
future minimum lease payments

Future minimum lease payments
JPY

2019

USD

2018

JPY

2019

USD

2019

2018

2019

Within one year

410

428

3,699

370

382

3,341

Between one and ﬁve years

674

778

6,076

609

690

5,492

Over ﬁve years

69

113

630

60

97

549

1,154

1,319

10,405

1,041

1,170

9,382

Total

(113)

(148)

(1,023)

1,041

1,170

9,382

Review of Operations

Less future ﬁnance costs
Present value of future minimum lease payments

The future minimum lease payments receivable under the non-cancellable subleases as of March 31, 2019 and March 31, 2018 are ¥4
million ($39 thousand) and ¥8 million, respectively.
2) Operating leases
The Consolidated Group leases office buildings, system equipment and other assets as cancellable or non-cancellable operating leases.
The future minimum lease payments for non-cancellable operating leases as of March 31, 2019 and March 31, 2018 are as follows:
JPY

USD

2018

2019

Within one year

1,222

141

11,017

Between one and ﬁve years

3,062

387

27,594

Over ﬁve years

1,196

145

10,7805,481

674

49,390

Total

Sustainability

2019

The total lease payments recognized as expenses under the cancellable or non-cancellable operating leases for the ﬁscal year ended
March 31, 2019 and March 31, 2018 are ¥7,209 million ($64,953 thousand) and ¥7,442 million, respectively.
The future minimum lease payments receivable under the non-cancellable subleases as of March 31, 2019 and March 31, 2018 are¥303 million ($2,738 thousand) and ¥316 million, respectively.

Financial Section and Company Information

KANEMATSU Integrated Report 2019111

(2) Lessor
1) Finance leases
The Consolidated Group leases out machinery, equipment and other assets that are classiﬁed as ﬁnance leases. The future minimum
lease payments receivable for ﬁnance leases as of March 31, 2019 and March 31, 2018 are as follows:
Future minimum lease payments receivableand unguaranteed residual value
JPY

2019

Present value of
future minimum lease payments receivable

USD

2018

JPY

2019

2019

USD

2018

2019

Within one year

8

6

74

5

4

50

Between one and ﬁve years

29

26

270

20

16

184

Over ﬁve years

15

13

142

11

8

102

53

45

485

37

29

337

Unguaranteed residual value

—

—

—

Less future ﬁnance income

(16)

(16)

(149)

Present value of future minimum lease payments
receivable

37

29

337

Total

32. Pledged Assets(1) Pledged assets and associated secured obligations
Details of pledged assets and associated secured obligations are as follows:
JPY

2019

USD

2018

2019

Pledged assets:
Other ﬁnancial assets (non-current)

20

20

180

Property, plant and equipment

632

643

5,694

652

663

5,875

1,162

1,130

10,474

Total
Associated secured obligations:Short-term borrowings (current)Long-term borrowings (non-current)
Total

645

747

5,819

1,808

1,878

16,293

Trust receipts issued under customary import ﬁnancing arrangements give banks a security interest in the goods imported or sales proceeds resulting from the sales of the goods. However, due to the large volume of transactions, it is impracticable to determine theaggregate amounts of assets covered by outstanding trust receipts and those transactions were not included in the above amounts.

(2) Assets pledged in lieu of guarantee money
The breakdown of assets pledged in lieu of guarantee money or the like is as follows:
JPY

USD

2019

2018

2019

Other ﬁnancial assets (current)

51

49

465

Other ﬁnancial assets (non-current)

60

30

541

3,605

3,216

32,488

3,717

3,296

33,494

Assets pledged in lieu of guarantee money or guarantee funds

Other investments
Total

33. Contingent Liabilities
The Consolidated Group is contingently liable for guarantees on bank borrowings and trade payables owed by entities that do notbelong to the Consolidated Group.
The Group may become responsible for the amounts that are unpayable by the borrower and for losses attached to the unpayableamounts.
JPY

2019

Debt guarantees for equity method investees
Debt guarantees for third parties
Total

USD

2018

2019

1,245

138

156

1,027

1,673

9,257

1,165

1,830

10,501(Notes) 1. The above amounts include those for quasi-guarantee acts.
2. Debt guarantees for third parties include the debt guarantees covered by the insurance agreements that is limited to ¥1,011 million ($9,117 thousand) for
the ﬁscal year ended March 31, 2019 and ¥1,609 million for the ﬁscal year ended March 31, 2018, respectively.

112

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

34. Signiﬁcant Subsidiaries(1) Signiﬁcant subsidiaries of the Company are as follows:
Trade nameLocation

Details of major operations

Percentage of voting rights (%)

2019

2018

58.32
(0.40)

58.32(0.40)[Electronics & Devices]

Nippon Office Systems Ltd.

Koto-ku, Tokyo, Japan

Development of software for andsales and maintenance of computersand computer peripherals, etc.

100.00(100.00)

100.00(100.00)

Kanematsu Communications
Ltd.

Shibuya-ku, Tokyo, Japan

Sales of mobile communications
devices; Mobile internet systems andservices

100.00100.00Kanematsu Granks, Corp.

Shinjuku-ku, Tokyo, Japan

Mobile contents delivery and mobilerelated solution business100.00(100.00)

100.00(100.00)

Kanematsu BD
Communications Ltd.

Kurume-shi, Fukuoka, Japan

Sales of mobile communication
device100.00(100.00)

100.00(100.00)

Kanematsu Sustech Corp.

Chuo-ku, Tokyo, Japan

Manufacture and sales of homeconstruction materials; Groundinspection services and improvement
work; Sales of security systems

52.97

52.96

Kanematsu Advanced
Materials Corp.

Chuo-ku, Tokyo, Japan

Import, export, storage, sales, andprocessing of materials andcomponents for vehicle equipment,
industrial electronics, andcommunication devices

100.00100.00G-Printec, Inc.

Saiwai-ku, Kawasaki-shi,
Kanagawa, Japan

Development, manufacturing andsales of card printer and related
device100.0040.00

Kanematsu Futuretech
Solutions Corporation

Chuo-ku, Tokyo, Japan

Import, export, development, design,
manufacturing, sales and EMS of
semiconductor, electronic
components and modular products

100.00100.00Tanashin (Europe) GmbH

Dusseldorf, Germany

Sales and maintenance of parts for
car audio systems

100.00(20.00)100.00(20.00)

Kanekoh Electronics(Shanghai) Co., Ltd.

Shanghai, China

Development, manufacture, and salesof control modules for lithium ion
batteries

70.00

70.00

Kanematsu Industrial andDalian, China
Trading (Dalian F.T.Z.) Co., Ltd.

Manufacture of materials forelectronic precision parts and import,
export and sales of electronic
components

100.00(100.00)

100.00(100.00)

Kanematsu Advanced
Materials USA, Inc.

Texas, USA

Import, export, storage, sales andprocessing of materials andcomponents for vehicle equipment,
industrial electronics, andcommunication devices

100.00(100.00)

100.00(100.00)

Kanematsu Shintoa
Foods Corp.

Minato-ku, Tokyo, Japan

Food wholesaling and cold storage

100.00100.00Kanematsu Agritec Co., Ltd.

Matsudo-shi, Chiba, Japan

Manufacture and sales of feed andfertilizer

100.00100.00

Sustainability

System integration of ICT andcommunications equipment

Review of Operations

Chuo-ku, Tokyo, Japan

Special Features

Kanematsu Electronics Ltd.

[Foods & Grain]

Chuo-ku, Osaka, Japan

Sales of soybeans, millet, and grain

100.00100.00

North Pet Co., Ltd.

Kuriyama-cho, Yubari-gun,
Hokkaido, Japan

Manufacture of pet snacks(jerky, dried meat, biscuits)

100.00100.00KG Agri Products, Inc.

Ohio, U.S.A.

Seed development, contract farming,sorting and sales of edible soybean

100.00100.00Kai Enterprises, Inc.

Washington, U.S.A.

Sales of hay and roughage

100.00(15.00)100.00(15.00)P.T. Kanemory Food Service

Serang, Indonesia

Manufacture of processed foods forcentral kitchen and home-meal
replacement

59.90(10.00)59.90(10.00)KANEMATSU Integrated Report 2019

Financial Section and Company Information

Kanematsu Soytech Corp.

113

Trade nameLocation

Details of major operations

Percentage of voting rights (%)

2019

2018

[Steel, Materials & Plants]
Kanematsu Trading Corp.

Chuo-ku, Tokyo, Japan

Sales of steel and construction
materials

100.00100.00

Kyowa Steel Co., Ltd.

Kasai-shi, Hyogo, Japan

Cutting and processing of steel sheet;
Sales of construction materials

100.00(100.00)

100.00(100.00)

Kanematsu Chemicals Corp.

Chuo-ku, Tokyo, Japan

Sales of petrochemicals andautomobile-related chemicals

100.00100.00Kanematsu Wellness Corp.

Chuo-ku, Tokyo, Japan

Sales of health foods and provision of
medical information

100.00(100.00)

100.00(100.00)

Kanematsu Petroleum Corp.

Chiyoda-ku, Tokyo, Japan

Sales of petroleum products and LPG

100.00100.00Kanematsu Yuso Co., Ltd.

Chiyoda-ku, Tokyo, Japan

Delivery and storage of petroleum
products and LPG

100.00100.00Kanematsu KGK Corp.

Nerima-ku, Tokyo, Japan

Sales of machine tools and industrial
machinery

97.89

97.89

Benoit Holding Company

Illinois, U.S.A.

Holding company

85.18(85.18)85.18(85.18)

Benoit Premium Threading,
LLC

Louisiana, U.S.A.

Oil well casing fabrication;
Manufacture and sales of oil wellrelated parts

54.00(54.00)54.00(54.00)

Steel Service
Oilﬁeld Tubular, Inc.

Oklahoma, U.S.A.

Sales of steel materials for oil
excavation

51.00(51.00)51.00(51.00)KGK International Corp.

Illinois, U.S.A.

Sales of machine tools

100.00(100.00)

100.00(100.00)

Kanematsu Aerospace Corp.

Minato-ku, Tokyo, Japan

Sales of aircraft, defense, andaerospace-related products

100.00100.00Aries Motor Ltd.

Warsaw, Poland

Sales of automobiles

93.59

93.59

Aries Power Equipment Ltd.

Warsaw, Poland

Sales of engines, generators, andother general-purpose machinery

60.00

60.00

KG Aircraft Rotables Co., Ltd.

Dublin, Ireland

Replacement and maintenance of
aircraft rotable components; Leasing

96.67

96.67

Shintoa Corp.

Chiyoda-ku, Tokyo, Japan

Beverage-vending machine
operations; Imports, exports, andsales of aircraft engines and feedstuffs

100.00100.00Kanematsu Logistics &Insurance Ltd.

Chuo-ku, Tokyo, Japan

Insurance agency; Consigned freight
forwarding business100.00100.00Kanematsu USA Inc.

Illinois, U.S.A.

Export, import and sales ofmerchandise

100.00100.00Kanematsu (Hong Kong) Ltd.

Hong Kong, China

Export, import and sales ofmerchandise

100.00100.00Kanematsu (China) Co., Ltd.

Shanghai, China

Export, import and sales ofmerchandise

100.00(100.00)

100.00(100.00)

Kanematsu (Thailand) Ltd.

Bangkok, Thailand

Export, import and sales ofmerchandise

100.00(100.00)

100.00(100.00)

Watana Inter-Trade Co., Ltd.
(Notes) 1

Bangkok, Thailand

Export, import and sales ofmerchandise

49.00(49.00)49.00(49.00)Kanematsu (Singapore)
Pte. Ltd.

Singapore, Singapore

Export, import and sales ofmerchandise

100.00(100.00)

100.00(100.00)

Kanematsu Taiwan Corp.

Taipei, Taiwan

Export, import and sales ofmerchandise

100.00(100.00)

100.00(100.00)

Kanematsu Europe Plc

London, U.K.

Export, import and sales ofmerchandise

100.00(100.00)

100.00(100.00)

Kanematsu GmbH

Dusseldorf, Germany

Export, import and sales ofmerchandise

100.00100.00Kanematsu Australia Ltd.

Sydney, Australia

Export, import and sales ofmerchandise

100.00100.00Kanematsu New Zealand Ltd.

Auckland, New Zealand

Export, import and sales ofmerchandise

100.00100.00[Motor Vehicles & Aerospace][Others][Overseas local subsidiaries](Notes) 1. It is treated as a subsidiary because the Consolidated Group has a substantial control of the ﬁnance and management policy over the company through thedispatch of the majority of board members.
2. The ﬁgures in the parentheses in “Percentage of voting rights” indicate the indirect ownership ratio included in the total.

114

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths(2) Non-controlling interests
The subsidiary with non-controlling interests that is signiﬁcant for the Consolidated Group is Kanematsu Electronics Ltd. Its condensed
ﬁnancial information is presented as follows. The amounts presented below are before the elimination of intra-company transactions.
[Condensed statement of ﬁnancial position]
JPY

USD

2018

2019

Current assets

63,38758,881

571,112Current liabilities

17,17915,810154,785

Current assets (net)46,20843,071

416,327

Non-current assets

5,243

5,621

47,240Non-current liabilities

2,028

2,561

18,275

Non-current assets (net)

3,214

3,059

28,965Equity49,423

46,131

445,292

Cumulative amounts of non-controlling interests

20,672

19,294

186,260

2019

2018

2019

Revenue

67,39462,222607,211

Proﬁt for the year

6,770

6,590

61,002Other comprehensive income

(462)

32

(4,166)

Total comprehensive income

6,308

6,623

56,836

Proﬁt for the year attributable to non-controlling interests

2,826

2,746

25,470

Dividends paid to non-controlling interests

1,431

1,133

12,900

2019

2018

2019

Cash ﬂows from operating activities

7,719

5,822

69,553

Cash ﬂows from investing activities

(542)

(220)

(4,885)

Cash ﬂows from ﬁnancing activities(3,442)(2,731)(31,018)

Increase (decrease) in cash and cash equivalents, net

3,734

2,869

33,651

Special Features

2019[Condensed statements of income and comprehensive income]
JPY

USD

Review of Operations[Condensed statement of cash ﬂows]
JPY

USD

Sustainability(3) Transaction with non-controlling interests
There was no transaction with signiﬁcant non-controlling interests for the ﬁscal year ended March 31, 2019 and March 31, 2018.

35. Related Parties(1) Related party transactions
For the ﬁscal year ended March 31, 2019
Transaction amount

Outstanding amount

JPY

USD

JPY

USD

Associate(including subsidiaries of Kantatsu Co., Ltd.
the associate)

Purchase of merchandise

9,904

89,241

2,758

24,849

Associate

Ogura Industrial Corp.

Sales of merchandise

3,225

29,063631

5,686

Associate

HOKUSHIN CO., LTD.

Sales of merchandise

84

763

1,576

14,201

Associate

Sage Hill Northwest, Inc.

Purchase of merchandise

1,456

13,123

128

1,155

Name

Financial Section and Company Information

Detail of related party
relationship

Type(Notes) 1. The related party transaction amounts are determined through negotiation with consideration given to the prevailing market prices.
2. As described in Note 33 Contingent Liabilities, debt guarantees are provided to the equity method investees.
3. As the Consolidated Group conducts a transaction as a party involved, transaction amount of HOKUSHIN CO., LTD. is presented in the net amount of the commission.

KANEMATSU Integrated Report 2019115

For the ﬁscal year ended March 31, 2018
Name

Detail of related party
relationshipTransaction amount

Outstanding amount

JPY

JPY

Sage Hill Northwest, Inc.

Purchase of merchandise

1,397

136

Purchase of merchandise

895

1,223

Type

Associate

Associate(including subsidiaries of Kantatsu Co., Ltd.
the associate)
Associate

Shangdong Lufeng
Foods Shanghai Corp.

Purchase of merchandise

1,138

1

Associate

Growth D Ltd.

Purchase of merchandise

1,041

—

(Notes) 1. The related party transaction amounts are determined through negotiation with consideration given to the prevailing market prices.
2. As described in Note 33 Contingent Liabilities, debt guarantees are provided to the equity method investees.
3. Growth D Ltd. was excluded from scope of consolidation due to sale of shares for the ﬁscal year ended March 31, 2018.

(2) Remuneration to management executives
The remuneration to the Company’s directors and auditors consists of base salary, directors’ bonus and share-based payments.
The amount of remuneration to the Company’s directors and audit & supervisory board members are as follows:
JPY

USD

2019

2018

2019

Base salary and directors’ bonus

342

307

3,088

Share-based payments

29

—

268

372

307

3,356

Total

36. Subsequent Events
Not applicable.

37. Share-based Payments(1) Performance-Linked Stock Compensation Plan
The Company implemented a Performance-Linked Stock Compensation Plan for Directors and Executive Officers. The aim of adoptionof the Plan is to further clarify the linkage between compensation of Directors and Executive Officers and the corporate performanceand stock value of the Company, and to encourage them to contribute to mid- to long-term improvement in the corporate performance and expansion of corporate value because they will share the beneﬁts and risks of stock price ﬂuctuations with the shareholders.
The vesting condition is that after granted date they will work continuously until achieving certain performance goals and vesting. The
stocks will be granted to Directors and Executive Officers in the ﬁnal year of the mid-term management plan (from April 1, 2018 toMarch 31, 2024), or the ﬁscal year that achieved the medium-term business plan.

(2) Granted stocks and granted prices of shares
The fair value of the granted date was estimated using the Black-Scholes model considering expected dividend based on past dividend
results. The number of stocks granted during the period are as follows. The weighted average share price on the granted date was¥1,583 in the year ended March 31, 2019.
Number of shares

2019

As of beginning of the year—

Granted

40,704

Exercised—

Forfeited
As of end of the year
Exercisable balance as of end of the year—
40,704—(3) Stock compensation expenses
Performance-Linked Stock compensation Plan is equity-settled share-based payment transaction. Expenses are recorded ¥64 million
during the ﬁscal year ended March 31, 2019.

116

KANEMATSU Integrated Report 2019

Kanematsu’s Progress and Strengths

Special Features

Review of Operations

Sustainability

Financial Section and Company Information

117

KANEMATSU Integrated Report 2019

Network (As of March 31, 2019)

Kanematsu supplies products and services through its large network of business bases in Japan and overseas. In addition to theCompany, the Kanematsu Group comprises 116 companies (90 consolidated subsidiaries and 26 equity-method affiliates)
operating global businesses around the world.

6
1

2

3
4

33
5

32
11
24

8

10

23

7

15
21

29
27 28

31
30

9
12
13 14
16

18
17

34

20

NORTH AMERICA

19

27 Chicago

22

EUROPE

28 Somerset

1 London2 Dusseldorf
3 Munich

29 Detroit

ASIA & THE MIDDLE EAST

35

30 Houston

25
26

4 Milan

8 Seoul17 Ho Chi Minh City

5 Budapest

9 Shanghai

18 Bangkok

6 Moscow

10 Chongqing

19 Singapore

7 Las Palmas

11 Dalian

20 Manila

25 Sydney

12 Shenzhen

21 Yangon

26 Auckland

31 Silicon Valley

CENTRAL &SOUTH AMERICA

32 Portland
33 Vancouver

OCEANIA34 Silao
35 Sao Paulo

13 Hong Kong 22 Jakarta

Overseas subsidiaries
and their branches

14 Taipei

23 New Delhi

15 Hanoi

24 Tehran

DOMESTIC OFFICES
4

16 Haiphong

1 Tokyo Head Office
2 Osaka

Representative offices

Midosuji Office

Branches

3 Nagoya
2

3

1

5

4 Hokkaido
5 Kyushu

Organization Chart (As of April 1, 2019)
Shareholder’s Meeting
Audit & Supervisory Board
Board of Directors
Management Committee

Marketing Area

Support Area
Foods Division

Steel, Materials & Plant Division

Motor Vehicles & Aerospace Division

Industrial Electronics Dept.

Electronics & Devices Division

Foods Dept. No. 1

Iron & Steel Foreign Trade Dept.

Aerospace Dept.

Semiconductor Equipment Dept.

Foods Dept. No. 2

Specialty Steel Foreign Trade Dept.

Motor Vehicles & Parts Dept. No. 1

Human Resources & General Affairs
Dept.

Components & Material Dept.

Meat Dept. No. 1

Functional Chemicals Dept.

Motor Vehicles & Parts Dept. No. 2

Finance Dept.

Electronics Planning Office

Meat Dept. No. 2

Energy Dept.

Accounting Dept.

Foods & Grain Planning OfficePlant & Ships Dept.

Motor Vehicles &Aerospace Planning Office

Food Safety Management Office

Steel, Materials & Plant Planning Office

Legal & Compliance Dept.

Grain, Oilseeds & Feedstuff Division

Food Safety Management Office

Credit Control Dept.

Grain & Feedstuff Dept.
Grain & Oilseeds Dept.
Domestic Sections
Foods & Grain Planning Office
Food Safety Management Office118

KANEMATSU Integrated Report 2019

Business Accounting Dept.

Traffic & Insurance Dept.
IT Planning Dept.
Internal Auditing Dept.
Corporate Planning Dept.

Major Group Companies (As of April 1, 2019)* Companies with shares listed on a stock exchange
Japan
Kanematsu Electronics Ltd.*
Nippon Office Systems Ltd.
Kanematsu Sustech Corporation*
Kanematsu Communications Ltd.
Kanematsu Granks, Corp.
Kanematsu Futuretech Solutions Corporation
Kanematsu Advanced Materials Corp.
Kanematsu PWS LTD.

Foods & GrainJapan
Kanematsu Shintoa Foods Corp.
Kanematsu Agritec Co., Ltd.
Kanematsu Soytech Corp.

Steel, Materials & Plant

Food wholesaling and cold storage
Manufacture and sales of feed and fertilizer
Sales of soybeans, pulses & peas, and grain; Development and marketing of tofu and other ingredientsfor processed foods
Sales of pet food and other products
Manufacture of dim sum and delicatessens
Production of processed vegetables and fruits
Wholesale of confectionery and baking ingredients
Primary processing of beef
Processing and sales of aloe vera
Manufacture of processed foods; Management of central kitchen
Operation of Japanese cuisine restaurant chain
Operation of Japanese cuisine restaurant chain
Sales of hay and roughage
Production of hay
Seed development; Contract farming; Sorting, processing, and sales of food soybeans
Sales of steel and construction materials
Cutting and processing of steel sheet; Sales of construction materials
Processing and sales of stainless steel, titanium, and high-alloy steels
Sales of petroleum products and LPG
Delivery and storage of petroleum products
Sales of petrochemicals, automobile-related chemicals, health food ingredients, and pharmaceuticals
Sales of health foods and provision of medical information
Sales of machine tools and industrial machinery
Repair and sales of machine tools; Sales of paper-manufacturing machinery

Sustainability

Japan
Kanematsu Trading Corp.
Kyowa Steel Co., Ltd.
Eiwa Metal Co., Ltd.
Kanematsu Petroleum Corp.
Kanematsu Yuso Co., Ltd.
Kanematsu Chemicals Corp.
Kanematsu Wellness Corp.
Kanematsu KGK Corp.
KGK Engineering Corp.
China
Kanematsu KGK Trade & Sales (Shanghai) Co., Ltd.
ThailandKGK Engineering (Thai) Co., Ltd.
U.S.A.
Steel Service Oilﬁeld Tubular, Inc.
Benoit Premium Threading, LLC
KGK International Corp.

Development, manufacture, and sales of control modules for lithium ion batteries

Review of Operations

GPC Holdings Co., Ltd.
China
Dalian Tiantianli Food Co., Ltd.
Shangdong Lufeng Foods Shanghai Corp.
Iwase-Esta Kanematsu Co., Ltd.
Dalian Matsutomo Foods Co., Ltd.
ThailandSiam Aloe Vera (2005) Co., Ltd.
Indonesia
P.T. Kanemory Food Service
PT. Abadi Tunggal Lestari
PT. Agrapana Niaga Gemilang
U.S.A.
KAI Enterprises, Inc.
Sage Hill Northwest, Inc.
KG Agri Products, Inc.

System integration of ICT and communications equipment
Development, sales and maintenance of software for computers and computer peripherals, etc.
Manufacture and sales of home-construction materials; Ground inspection services and improvement
work; Sales of security cameras
Sales of mobile communications devices; Mobile internet systems and services
Website planning, building, and operation; Content planning, production, and sales
Import, export, processing, development, design, manufacture, sales of semiconductors,
electronic components, and module products; EMS business.
Import, export, storage, sales, and processing of materials and components for vehicle equipment,
industrial electronics, and communication devices
Design, development, and sales of semiconductor production equipment, testing equipment and related
components; Technical services
Development, manufacture, and sales (OEM) of card printers and related equipment

Special Features

G-Printec, Inc.
China
Kanekoh Electronics (Shanghai) Co., Ltd.

Kanematsu’s Progress and Strengths

Electronics & Devices

Sales of machine tools and industrial machinery
Sales of machine tools and industrial machinery
Sales of steel materials for oil excavation
Oil well casing fabrication; Manufacture and sales of oil well-related parts
Sales of machine tools

Motor Vehicles & Aerospace Japan

Other

Japan
Kaneyo Co., Ltd.*
Hokushin Co., Ltd.*
Shintoa Corp.
Kanematsu Logistics & Insurance Ltd.
Japan Logistics Co., Ltd.
Indonesia
PT. Dunia Express Transindo

Sales of aircraft, defense, and aerospace-related products

Financial Section and Company Information

Kanematsu Aerospace Corp.
Ireland
KG Aircraft Rotables Co., Ltd.
PolandAries Motor Ltd.
Aries Power Equipment Ltd.
U.S.A.
Kanematsu Ventures Inc.

Replacement and maintenance of aircraft rotable components; Leasing; Sales
Sales and maintenance of automobiles
Sales of engines, generators, lawnmowers, and other general-purpose machinery
Investment in VC funds; Seeking out advanced technologies; Growth support for startups
Sales of bedding materials and products, general merchandise, and interior goods
Manufacture and sales of medium-density ﬁberboard
Beverage-vending machine operations; Imports, exports, and sales of aircraft engines
Insurance agency and forwarding business; Consigned freight forwarding business
Warehouse and self-storage operation
Total logistics services

KANEMATSU Integrated Report 2019

119Network (As of June 30, 2019)

Japan

Overseas

Tokyo Head Office

ASIA & THE MIDDLE EAST

2-1, Shibaura 1-chome, Minato-ku,
Tokyo 105-8005, Japan
TEL: 81-3-5440-8111
FAX: 81-3-5440-6500

Osaka
Awaji-machi Dai Building, 1-9, Awaji-machi
3-chome, Chuo-ku, Osaka 541-8560, Japan
TEL: 81-6-6205-3111
FAX: 81-6-6205-3322

Midosuji Office
Midosuji Daiwa Building, 6-8, Kyutaro-machi
3-chome, Chuo-ku, Osaka 541-0056, Japan
TEL: 81-6-6251-7700
FAX: 81-6-6251-7770

Nagoya9-3, Sakae 2-chome, Naka-ku,
Nagoya 460-0008, Japan
TEL: 81-52-202-5111
FAX: 81-52-202-4605

Hokkaido

KOREA
Kanematsu Korea Corporation

Koreana Bldg. 602, 135 Sejong-Daero,Jung-Gu, Seoul, 04519, Korea
TEL: 82-2-737-5795
FAX: 82-2-737-5799
CHINA
Kanematsu (China) Co., Ltd.
Shanghai Head Office
Shanghai Branch

18th Floor Raffles City (Office Tower), 268 Xi Zang
Middle Road, Shanghai 200001, P.R. China
TEL: 86-21-6340-3456
FAX: 86-21-6340-4290
Chongqing Liaison Office

Room 2106, International Trade Centre, No. 38
Qingnian Road, Yuzhong District, Chongqing
400010, China
TEL: 86-23-63235676
FAX: 86-23-63235650
Beijing Branch

Beijing Lufthansa Center C610A, 50 Liang Ma
Qiao Road, Chaoyang District,
Beijing 100125, China
TEL: 86-10-8591-1031
FAX: 86-10-8591-1535

The Representative of Kanematsu
Corporation
Hanoi

Room No. 1209, 12th ﬂoor, Daeha
Business Center, 360 Kim Ma St., Ba Dinh Dist.,
Hanoi, S.R. Vietnam
TEL: 84-4-3771-5642
FAX: 84-4-3771-5641, 3771-5648
Haiphong

H-Tower 3rd Floor, 195 Van Cao Street,
Haiphong, S.R. Vietnam
TEL: 84-225-368-6371
FAX: 84-225-368-6373
Kanematsu Vietnam Company Limited

Unit 608 Saigon Tower, 29 Le Duan St.,
District 1, Ho Chi Minh City, S.R. Vietnam
TEL: 84-28-3910-5536, 5537
FAX: 84-28-3910-5539
THAILAND
Kanematsu (Thailand) Ltd.
Watana Inter-Trade Co., Ltd.

25F Thaniya Plaza Building, 52 Silom Road,
Suriyawongse Bangrak, Bangkok 10500, Thailand
TEL: 66-2-632-8060
FAX: 66-2-632-8083, 8084
SINGAPORE

Sapporo-Kokusai Building, 4-1, Kitashijou-nishi,
Chuo-ku, Sapporo 060-0004, Japan
TEL: 81-11-261-5631
FAX: 81-11-261-5630

Dalian Branch

Kanematsu (Singapore) Pte. Ltd.

Room 602, Furama Hotel, 60 Renmin Road,
Dalian 116001, P.R. China
TEL: 86-411-8263-9105, 7481
FAX: 86-411-8280-5534

100 Tras Street, #12-01 100 AM, Singapore 079027
TEL: 65-6320-6000
FAX: 65-6320-6041
PHILIPPINES

KyushuShenzhen Branch

Kanematsu Corporation Manila Branch

Tenjin Twin Building, 6-8, Tenjin 1-chome,
Chuo-ku, Fukuoka 810-0001, Japan
TEL: 81-92-715-7820
FAX: 81-92-715-7830

Room 8, 10/F, Office Tower,
Di Wang Commercial Centre,
5002 Shen Nan Dong Road, Luohu District,
Shenzhen 518001, P.R. China
TEL: 86-755-8235-4850
FAX: 86-755-8223-8980

17th Floor Tower 2, The Enterprise Center 6766,
Ayala Avenue, cor. Paseo de Roxas, Makati City,
Philippines
TEL: 63-2-845-2017
FAX: 63-2-887-0030

Kobe Head Office

Kanematsu (Hong Kong) Ltd.

119 Ito-machi, Chuo-ku, Kobe,
Hyogo 650-0032, Japan

Rooms 1116-1117, 11/F, The Metropolis Tower,
10 Metropolis Drive, Hunghom, Kowloon,
Hong Kong
TEL: 852-2821-6200
FAX: 852-2527-0465
TAIWAN
Kanematsu Taiwan Corporation

10F., No. 451, Changchun Rd., Songshan Dist.,
Taipei City 10547, Taiwan
TEL: 886-2-2717-1222
FAX: 886-2-2717-7927

120

VIETNAMKANEMATSU Integrated Report 2019

MYANMARThe Representative of Kanematsu
Corporation
YangonUnion Business Center (UBC) Suite 03-08,
Nat Mauk Road, Bo Cho Quarter, Bahan Township,
Yangon, Myanmar
TEL: 95-1-860-4370
FAX: 95-1-860-4380
INDONESIA
P.T. Kanematsu Trading Indonesia

ANZ Tower 15th Floor, Jalan Jend. Sudirman Kav.
33A Jakarta 10220, Indonesia
TEL: 62-21-572-1220, 1225, 1228, 1230, 1238
FAX: 62-21-572-1188, 1237

Kanematsu’s Progress and Strengths

Overseas
INDIA
Kanematsu India Private Limited

Tower 1, Block-A, Unit No. 2, DLF Corporate Park,
Gurgaon, Haryana - 122 002, India
TEL: 91-124-4001461, 4001462, 4001362
FAX: 91-124-4001371
IRAN
Kanematsu Iran Ltd.

EUROPE

Silicon Valley Branch2043 Zanker Road, San Jose, California 95131,
U.S.A.
TEL: 1-408-501-1400
FAX: 1-408-501-1499

AUSTRALIA
Kanematsu Australia Ltd.

Suite 1 Level 15, 15 Castlereagh Street,
Sydney, NSW, Australia
TEL: 61-2-8278-7004, 61-2-9993-0748,
61-2-9283-3347
FAX: 61-2-9283-3095

Portland Branch

NEW ZEALAND

4380 SW Macadam Avenue, Suite 170, Portland,
Oregon 97239, U.S.A.
TEL: 1-503-224-7755
FAX: 1-503-228-5067

Kanematsu New Zealand Ltd.

CANADALavender House, 27 Lilburn Street, Warkworth 0910,
P.O. Box 327, Warkworth 0941, New Zealand
TEL: 64-9-302-5660
FAX: 64-9-309-3877

The Representative of Kanematsu
Corporation
Vancouver

UNITED KINGDOM
Kanematsu Europe PLC.

160 Euston Road, London NW1 2DX,
United Kingdom
TEL: 44-20-7529-8120
FAX: 44-20-7387-4582
GERMANY

Oststrasse 34, D-40211 Duesseldorf, Germany
TEL: 49-211-36890
FAX: 49-211-3689-111
Muenchen BranchKarl-Theodo-Str.55, Muenchen, Germany D-80803
TEL: 49-89-307-481-712
FAX: 49-89-307-481-729
ITALY
Kanematsu G.m.b.H.
Milano Liaison Office

HUNGARY
The Representative of Kanematsu
G.m.b.H.
Budapest Office

Kanematsu USA Inc.
Chicago Head Office

CENTRAL & SOUTH AMERICA

543 West Algonquin Road, Arlington Heights,
Illinois 60005, U.S.A.
TEL: 1-847-981-5600
FAX: 1-847-981-6760

MEXICO
Kanematsu Mexico S. de R.L. de C.V.

Suite C, Multitenant III, Av. Mineral de Valencia,
No. 202 Col. Parque Santa Fe, C.P. 36275,
Guanajuato Puerto Interior Silao, Mexico
TEL: 52-472-748-9187, 9327, 9329
FAX: 52-472-748-9221

Somerset Branch

100 Randolph Road, Somerset,
New Jersey 08873, U.S.A.
TEL: 1-732-271-7300
FAX: 1-732-271-7357

BRAZIL

Detroit Office41700 Gardenbrook Rd., Novi Garden Office B,
Suite 140, Novi, Michigan 48375, U.S.A.
TEL: 1-248-347-3216
FAX: 1-248-347-3219
Houston Branch

Kanematsu America do Sul Importacao e
Exportacao Ltda.

Avenida Paulista, 1337/1343, conjunto 71 Bela
Vista, São Paulo – SP CEP: 01311-200 Brazil
TEL: 55-11-3266-3967
Mobile: 55-11-9-4137-7178

1800 Augusta, Suite 390, Houston,
Texas 77057, U.S.A.
TEL: 1-713-975-7200
FAX: 1-713-975-7966

Sustainability

Piazza Duca d’Aosta 8, Milano, Italy
TEL: 39-02-6749-3538
FAX: 39-02-6707-7364

U.S.A.

205-8988 Fraserton Court, Burnaby, B.C.
V5J 5H8, Canada
TEL: 1-604-689-0550
FAX: 1-604-689-0655

Review of Operations

Kanematsu G.m.b.H.
Duesseldorf Head Office

NORTH AMERICA

Special Features

Unit #5, 3rd Floor, Monaco Building, No. 27,
Ordibehesht, Mahmudiyeh St., Parkway, Tehran,1986645416 IRAN
TEL: 98-21-2265-9041

OCEANIA

H-1034 Budapest Becsi ut 126-128.I.103. Hungary
TEL: 36-1-320-4952
FAX: 36-1-320-4953
RUSSIAN FEDERATIONThe Representative of Kanematsu
Corporation
Moscow

Segment Information:
Number of employees and number of Group companies (As of March 31, 2019)

Electronics & Devices

SPAIN

Steel, Materials & Plant

The Representative of Kanematsu
Corporation
Las Palmas

Motor Vehicles & Aerospace259

8 (Japan:1, Overseas:7)

Others222

16 (Japan:12, Overseas:4)

Companywide (common)

408

Calle Eduardo Benot 51, Ediﬁcio Atlansea,
4-izqda, 35008 Las Palmas de Gran Canaria,
Spain
TEL: 34-928-275634, 275680
FAX: 34-928-275632

Foods & Grain

4,158

22 (Japan:15, Overseas:7)778

25 (Japan:13, Overseas:12)

1,090

25 (Japan:13, Overseas:12)

Overseas subsidiaries
Total

Number of Affiliated Companies

Financial Section and Company Information

Number of Employees(consolidated basis)Tverskaya 16/2, Building 1, Business Centre,
125009, Moscow, Russian Federation
TEL: 7-495-935-89-40, 42, 43
FAX: 7-495-935-8948

18
6,915

114

Notes:
1. Number of employees on a non-consolidated basis is 765.
2. Of affiliated companies, 90 are consolidated subsidiaries and 26 are equity-method affiliates.

KANEMATSU Integrated Report 2019121

Corporate ProﬁleCorporate ProﬁleCompany Name
EstablishedFoundation
President
Head Office

KANEMATSU CORPORATION
August 15, 1889
March 18, 1918
Kaoru Tanigawa
2-1, Shibaura 1-chome, Minato-ku,
Tokyo 105-8005, Japan

Paid-in Capital*
Fiscal Year
General Meeting of
Shareholders
Number of Offices*¥27,781 million
April 1 to March 31
June

Domestic: Tokyo Head Office, Kobe Head Officeand branches 5
Overseas: 35
Number of Employees* 765 (Consolidated: 6,915)* As of March 31, 2019

Investor Information(As of March 31, 2019)

Stock Exchange Listings
Stock CodeTransfer Agentfor Common Stock
Shares Authorized
Shares Outstanding
Minimum Trading Unit*
Number of Shareholders

Composition of Shareholders

Tokyo
8020
Sumitomo Mitsui Trust Bank, Limited
200,000,000
84,500,202 (including 256,636 treasury shares)
100
18,694

Financial institutions

42.90%

Foreign institutions
and individuals

30.99%

Individuals and others(including treasury shares)18.80%
Other corporations

5.77%

Securities ﬁrms

1.54%

Principal Shareholders

Number of shares held (thousands)

Percentage of voting rights (%)

Japan Trustee Services Bank, Ltd. (trust account)

11,674

13.85

The Master Trust Bank of Japan, Ltd. (trust account)

5,560

6.60

SSBTC CLIENT OMNIBUS ACCOUNT

2,521

2.99

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,322

2.75

GOVERNMENT OF NORWAY

2,290

2.71

Japan Trustee Services Bank, Ltd. (trust account 9)

1,861

2.20

Japan Trustee Services Bank, Ltd. (trust account 5)

1,550

1.84

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1,417

1.68

JP Morgan Chase Bank 385151

1,333

1.58

The Norinchukin Bank

1,249

1.48

Note: Calculated after deduction of treasury shares (256,636 shares)

Stock Price/Trading Volume
Trading Volume

Stock price(¥)(Thousands of shares)

1,800

100,000

1,200

80,000600

60,000040,00020,0000
14/4 6810

12 15/2 4

6

8

10

12 16/2 4

6

8

10

12 17/2 4

6

8

10

12 18/2 4

6

8

10

12 19/2

Note: Kanematsu executed a share consolidation on October 1, 2017, at a ratio of ﬁve shares to one. Figures for all periods in the above graph are calculated based on
the assumption that said consolidation had already occurred.

122

KANEMATSU Integrated Report 2019

Kanematsu stock has been selected for inclusion in the JPX-Nikkei
Index 400 and the JPX-Nikkei Mid and Small Cap Index for,respectively, the last six and three consecutive years.

Our Website
Detailed additional information about theKanematsu Group is available on our website in English, Japanese and Chinese.
Content includes information about theCompany and its businesses, press releases,
investor relations materials (for shareholders
and investors), and details on sustainability,
employment opportunities and other topics
are available.

English: http://www.kanematsu.co.jp/en/

KANEMATSU Integrated Report 2019123

For more information on this Integrated Report, or to obtain
additional copies, please contact:
Public & Investor Relations Section, Finance Department,
Kanematsu Corporation
2-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8005, Japan
Tel: 81-3-5440-8000
Fax: 81-3-5440-6503

Printed in Japan