Integrated Report 2022
Financial Section

Nissan Chemical Corporation

Table of Contents for Attached Materials
Long Term Financial Performance Trend........................................................................................................... 2

Financial Review ........................................................................................................................................... 3
Overview by segments................................................................................................................................... 5

Consolidated Balance Sheets.......................................................................................................................... 7

Consolidated Statements of Income and Statements of Comprehensive Income........................................................... 9

Consolidated Statements of Changes in Net Assets ..............................................................................................11
Consolidated Statements of Cash Flows............................................................................................................14

Notes to Consolidated Financial Statements....................................................................................................... 15

1. Basis for presenting Consolidated Financial Statements .................................................................................. 15
2. Summary of Significant Accounting Policies.................................................................................................15...............................................................................................................................16

3. U.S. dollar Amounts

4. Significant accounting estimates...............................................................................................................16

5. Unapplied Accounting Standards ............................................................................................................... 18...................................................................................................................................18

6. Reclassifications

7. Collateral Assets and Liabilities ................................................................................................................. 19
8. Research and Development Expenses
9. Comprehensive Income
10. Common Shares.......................................................................................................20..........................................................................................................................21.................................................................................................................................21............................................................................................................................21

11. Investment securities

12. Financial instruments ............................................................................................................................ 22
13. Securities ............................................................................................................................................23
14. Retirement Benefits .............................................................................................................................. 24
15. Income Taxes.....................................................................................................................................24

16. Revenue Recognition...........................................................................................................................25

17. Segment Information............................................................................................................................26

18. Amounts per Share..............................................................................................................................27

1

Long Term Financial Performance Trend(Billions of Yen)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Sales

154.2

148.6

153.8

163.7

171.2

176.9

180.3

193.4

204.9

206.8

209.1

208.0

Operating Profit

19.8

15.5

19.5

22.2

25.3

28.6

31.4

35.0

37.1

38.6

42.5

51.0

Ordinary Income

19.4

15.9

20.5

23.7

26.4

29.5

31.7

36.2

39.1

40.0

43.9

53.7

Net Income

13.0

11.0

13.9

16.7

18.2

22.4

24.0

27.1

29.4

30.8

33.5

38.8

EBITDA

30.3

25.9

29.1

30.8

33.8

38.3

40.3

45.5

48.0

49.2

53.0

61.2

OP Margin

12.9% 10.4% 12.7% 13.6% 14.8% 16.2% 17.4% 18.1% 18.1% 18.7% 20.3% 24.5%

ROE

11.9%

9.5% 11.4% 12.7% 12.7% 14.6% 15.1% 16.1% 16.6% 16.9% 17.5% 19.2%

EPS(\/share)

75.94

64.52

24

24

Dividend(\/share)
Dividend Payout Ratio

Share Repurchase

83.74 102.11 113.99 143.37 156.97 180.30 197.67 210.09 231.73 271.88
26

30

36

44

52

68

82

90

104

122

31.6% 37.2% 31.0% 29.4% 31.6% 30.7% 33.1% 37.7% 41.5% 42.8% 44.9% 44.9%
2.8

-

5.0

5.0

6.0

9.0

9.0

9.0

9.0

10.0

10.0

12.0

Total Assets

183.4

190.1

199.2

208.0

223.9

228.2

231.7

246.0

247.0

249.5

265.5

279.7

Net Assets

112.4

119.6

126.7

137.8

151.3

156.9

163.7

176.4

182.1

185.5

200.6

208.0

Cash

21.1

27.9

31.9

30.8

31.3

35.3

35.7

37.7

36.2

30.6

32.4

34.7

Liabilities with Interest

39.9

38.9

38.1

36.1

35.1

33.1

30.8

28.6

26.6

24.6

22.7

22.7

Equity Ratio

60.7% 62.4% 63.0% 65.7% 66.9% 68.1% 69.9% 71.0% 73.0% 73.7% 74.9% 73.6%

Capex

9.6

8.3

7.9

8.8

9.8

10.2

14.3

13.7

9.9

15.7

15.8

11.0

Depreciation

10.4

10.5

9.5

8.5

8.5

9.7

8.9

10.5

10.9

10.5

10.4

10.2

R&D Expenses

12.6

13.6

13.7

14.2

15.0

15.8

16.1

17.2

17.8

17.2

16.5

16.0

R&D Expenses/Sales

8.2%

9.2%

8.9%

8.7%

8.7%

8.9%

8.9%

8.9%

8.7%

8.3%

7.9%

7.7%

2

Overview by segments
The Chemicals Segment
In Basic chemicals, net sales of melamine (adhesives agent for particle board), urea,
AdBlue®* (high-grade urea solution), and high purity sulfuric acid (agent used for cleaning
semiconductors) increased. In Fine Chemicals, net sales of "TEPIC" (powder coating agent
for paint, sealants, etc.) and cyanuric acid (raw material for sterilizing and disinfecting agents)
of environmental chemicals also performed well.
As a result, net sales of this segment were 37,648 million yen (an increase of 5,739 million
yen) and operating income was 3,796 million yen (an increase of 2,313 million yen).
Compared to the outlook, net sales were above 0.3 billion yen and operating income wasabove 0.6 billion yen.
* AdBlue® is a registered trademark of the Verband der Automobilindustrie (VDA).
The Performance Materials Segment
In Display Materials, net sales of "SUNEVER" (LCD alignment coating) for notebook PCs
and monitors performed well. In Semiconductor Materials, net sales of anti-reflective coating
for semiconductors (ARC®*) and multilayer materials (OptiStack®*) increased, reflecting
favorable operation by customers. In Inorganic Colloid, net sales of "SNOWTEX" for polishingelectronic materials and hard coating, and Organo / Monomer sol (various kinds of coating
materials, resin additive) were steady.
As a result, net sales of this segment were 81,665 million yen (an increase of 10,016 million
yen) and operating income was 27,719 million yen (an increase of 5,302 million yen).
Compared to the outlook, net sales were above 0.4 billion yen and operating income wasabove 0.4 billion yen.
* ARC®, OptiStack® are registered trademarks of Brewer Science, Inc.
The Agricultural Chemicals Segment
Net sales of Fluralaner (active ingredients for veterinary pharmaceuticals) declined due todecreased shipments caused by customer inventories and other factors, however, royalty
income was strong. In Japanese domestic market, net sales of “ROUNDUP” (non-selective
foliar application herbicide) were firm, but shipments of “ALTAIR” (paddy rice herbicide) andGRACIA (insecticide) declined. In the overseas market, net sales of "GRACIA" decreased,
but net sales of "TARGA" (herbicide), "SANMITE" (insecticide and acaricide) and "QUINTEC"(fungicide) performed well. In addition, "DITHANE" (fungicide), which was acquired in thethird quarter of FY2020, contributed to net sales both domestically and overseas.

3

As a result, net sales of this segment were 65,819 million yen (an increase of 1,971 million)
and operating income was 18,338 million yen (an increase of 135 million yen). Compared tothe outlook, net sales were below 0.7 billion yen and operating income was below 1.0 billion
yen.
The Pharmaceuticals Segment
Net sales of "LIVALO" (anti-cholesterol drug) increased in Japan, but, decreased overseas
due to the impact of increased net sales of generic drugs. In "Custom Chemicals", net salesof active pharmaceutical ingredients (generic) increased.
As a result, net sales of this segment were 6,630 million yen (a decrease of 22 million) andoperating income was 947 million yen (an increase of 590 million yen). Compared to theoutlook, net sales were above 0.2 billion yen and operating income was above 0.3 billion yen.
Trading
Net sales of this segment were 80,437 million yen (an increase of 10,616 million yen) andoperating income was 2,903 million yen (an increase of 404 million yen). Compared to theoutlook, net sales were above 3.1 billion yen and operating income was above 0.4 billion yen.
Others
Net sales of this segment were 23,595 million yen (a decrease of 168 million yen) andoperating income was 692 million yen (a decrease of 139 million yen).

4

FINANCIAL REVIEW
Financial Review of the Year Ended March 31, 2022
Overview
In the current fiscal year (April 1, 2021 to March 31, 2022), the domestic economy showed a temporary
recovery trend in private consumption. However, it failed to achieve a full-fledged recovery due to the spreadof the COVID-19 and recurrence of state of emergency. Under these circumstances, sales of Basic
Chemicals and Fine Chemicals increased in the Chemicals Segment. In the Performance Materials Segment,
Display Materials, Semiconductor Materials and Inorganic Colloid all performed well. In the Agricultural
Chemicals segment, sales increased. In the Pharmaceuticals segment, sales of “Custom Chemicals”(custom manufacturing and solution proposal business for pharmaceutical companies) increased, but salesof the Drug Discovery decreased.
As a result, operating and ordinary income achieved record highs for the eight consecutive year and net
income attributable to owners of parent for the nine consecutive year, exceeding the earnings outlooks
announced in February.

Operating Results
As a result, the Company's results for the current fiscal year were net sales 207,972 million yen (a decreaseof 1,149 million yen), operating income 50,959 million yen (an increase of 8,429 million yen) and ordinary
income 53,690 million yen (an increase of 9,797 million yen), and net income attributable to owners of parent
38,776 million yen (an increase of 5,306 million yen). Operating and ordinary income achieved record highs
for the eight consecutive year and net income attributable to owners of parent for the nine consecutive year,
exceeding the earnings outlook announced in November.
ROE was 19.2% and we have achieved the Mid-Term Plan StageⅡ target (maintain above 16%) in thecurrent fiscal year.
Dividend was 122 yen and dividend payout ratio became 44.9%. We have repurchased share of 12.0 billion
yen and total payout ratio was 75.6%.

Financial Position
Total assets as of March 31, 2022 were 279,687 million yen (an increase of 14,178 million yen from theprevious year). It is mainly due to the increase of notes and accounts receivable-trade, merchandise andfinished goods and long-term loans receivable.
Total liabilities as of March 31, 2022 were 71,678 million yen (an increase of 6,730 million yen). It ismainly due to the increase of notes and accounts payable-trade.
Net assets as of March 31, 2022 were 208,009 million yen (an increase of 7,447 million yen).
As a result of these factors, equity ratio was 73.6% (a decrease of 1.3% from March 31, 2021).

Position of Cash Flow
Deducting income taxes paid from income before income taxes and non-controlling interests, depreciationand gain and loss in working capital, net cash provided by operating activities for the consolidated fiscal year
ended March 31, 2022 was 41,949 million yen (39,939 million yen for the previous year).

5Due to investment on plant and equipment, net cash used in investing activities for the consolidated fiscal
year ended March 31, 2022 was12,395 million yen (12,854 million yen for the previous year).
Due to share repurchase, payment for dividends and of long-term loans payable, net cash used in financing
activities for the consolidated fiscal year ended March 31, 2022 was 27,868 million yen (25,629 million yen
for the previous year).
As a result of these factors, cash and cash equivalents for the consolidated fiscal year ended March 31,
2022 were 34,658 million yen (32,380 million yen for the previous year), reflecting exchange of 591 million
yen. It increased by 2,277 million yen compared to the previous year.

6Consolidated Balance Sheets(Millions of Yen)FY2020(Thousands of
U.S. dollars)
FY2021

34,65879,97937,66415
14,496
2,824
1,541
4,140
(41)
175,279

32,38073,937
33,77423
12,853
2,534
1,223
2,892
(31)
159,588283,130
653,370
307,687
123
118,422
23,07012,58933,821(335)
1,431,901

69,443(45,158)
24,284145,129(132,567)
12,561
41,345(37,384)
3,960
8,809
3,561
53,17768,438(43,601)
24,837140,790(128,053)
12,736
39,775(36,742)
3,033
8,996
2,233
51,837567,298(368,908)
198,382
1,185,598(1,082,975)
102,614337,758(305,400)
32,35071,96329,091
434,417

1,736
10,044
11,780548
11,581
12,12914,182
82,052
96,23430,217
3,323
918
1,844
3,256
(110)
39,450104,408
279,687

35,894
2
205
2,478
3,483
(110)
41,953105,921265,509

246,851
27,146
7,499
15,064
26,599(899)
322,278
852,937
2,284,838

FY2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade, and contract assets
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Accounts receivable - other
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation and impairment loss
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation and impairment loss
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation and impairment loss
Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

7

(Millions of Yen)FY2020(Thousands of
U.S. dollars)
FY2021

19,043
20,981
552
8,710
2,285
14,39865,971

16,29820,937
552
7,113
2,250
7
12,58559,744

155,567
171,399
4,509
71,154
18,667
117,621538,935

1,182
69
698
626
200
290
2,638
5,706
71,678

1,184
1,310
171
91
249
2,196
5,202
64,947

9,656
564
5,702
5,114
1,634
2,369
21,551
46,614
585,557

18,942
13,613
172,393(8,261)
196,688

18,942
13,613
161,708(7,340)186,923

154,742
111,208
1,408,324(67,486)
1,606,797

8,304
898
21
9,223
2,097
208,009279,687

11,35981463
11,904
1,733
200,562
265,50967,8387,336
172
75,345
17,131
1,699,281
2,284,838

FY2021
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Provision for directors' bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Deferred tax liabilities
Provision for business structure improvement
Provision for loss on business of subsidiaries and affiliates
Provision for share awards for directors (and other officers)
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

8Consolidated Statements of Income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of affiliates
Foreigh exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on disposal of non-current assets
Loss on sales of non-current assets
Plant stop losses
Foreign exchange losses
Other
Total non- operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities
Business restructuring expenses
Loss on business of subsidiaries and associates
Total extraordinary losses
Income before income taxes and non-controlling interests
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

9(Thousands of
U.S. dollars)
FY2021
1,698,979
873,156
825,823
409,517416,298

FY2021
207,972
106,883
101,089
50,12950,959(Millions of Yen)FY2020209,121
121,376
87,74545,21442,530

49
768
950
1,134
918
3,821

16
981
1,123
668
2,790

7,499
31,215

73
682
116
108
109
1,090
53,690

69
696
4
177
52
426
1,427
43,893

596
5,571
948
882
890
8,905
438,608

3,366
3,366

1,588
1,588

27,49827,498

477
1,792
626
2,896
54,16014,713
312
15,026
39,134357
38,77645,481
12,037(50)
11,98633,49525
33,4703,897
14,6395,114
23,658442,448
120,194
2,549
122,751
319,696
2,916
316,772

400
6,274
7,761

Consolidated Statements of Comprehensive Income(Millions of Yen)FY2021
FY202039,13433,495

Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)
Owners of parent
Non-controlling interests

10(Thousands of
U.S. dollars)
FY2021
319,696(3,055)
875
(442)

3,575
1,075
514

(24,957)
7,148(3,611)010(2,622)36,511

5,167
38,663(21,420)
298,268

36,095416

38,540122

294,8703,398

Consolidated Statements of Changes in Net Assets

For FY2021(Millions of Yen)
Total shareholders' equity

Balance at beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

Capital stock

Capital surplus¥18,942¥13,613Retainedearnings

Treasury shares

Total
shareholders'equity(¥7,340)¥186,923¥161,708(1,548)¥18,942¥13,613(1,548)¥160,160(¥7,340)¥185,375

Changes of items during period
Dividends of surplus(15,468)(15,468)

Net income attributable to ownersof parent

38,776

38,776

Share repurchase(12,003)(12,003)88

Disposal of treasury shares

0Cancellation of treasury shares(0)(11,074)

11,074--

12,233(920)

11,313¥18,942¥13,613¥172,393(¥8,261)¥196,688-

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period

Accumulated other comprehensive income
Valuation
Foreign currency Remeasurements
difference ontranslationof defined benefit
available-for-saleadjustment
plans
securities

Balance at beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance¥11,359

¥81

¥463

Total
accumulated
othercomprehensive
income¥11,904

Non-controllinginterests¥1,733Total
net assets¥200,562(1,548)¥11,359¥81¥463¥11,904¥1,733¥199,013

Changes of items during period
Dividends of surplus(15,468)

Net income attributable to ownersof parent

38,776

Share repurchase(12,003)
8

Disposal of treasury shares-

Cancellation of treasury shares
Net changes of items other thanshareholders' equity(3,055)

816

(442)

(2,680)363(2,317)

Total changes of items during period(3,055)

816

(442)

(2,680)

363

8,995

Balance at end of current period¥8,304¥898¥21¥9,223¥2,097¥208,009

11

For FY2020(Millions of Yen)
Total shareholders' equity

Balance at beginning of current
periodCapital stock

Capital surplus¥18,942¥13,613Retainedearnings

Treasury shares

Total
shareholders'equity(¥2,470)¥177,082¥146,997

Changes of items during period
Dividends of surplus(13,629)(13,629)

Net income attributable to ownersof parent

33,47033,470(10,002)(10,002)1

1(5,130)5,130-

Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period--

14,710(4,870)9,840¥18,942¥13,613¥161,708(¥7,340)¥186,923

Accumulated other comprehensive income
Valuation
Foreign currency Remeasurements
difference ontranslationof defined benefit
available-for-saleadjustment
plans
securities

Balance at beginning of current
period¥7,782(¥896)

(¥51)

Total
accumulated
othercomprehensive
income¥6,834Non-controllinginterests¥1,610Total
net assets¥185,528

Changes of items during period
Dividends of surplus(13,629)

Net income attributable to ownersof parent

33,470Share repurchase(10,002)

Disposal of treasury shares

1

Cancellation of treasury shares-

Net changes of items other thanshareholders' equity

3,577

978

514

5,070

123

5,193

Total changes of items during period

3,577

978

514

5,070

123

15,033¥11,359¥81¥463¥11,904¥1,733¥200,562

Balance at end of current period

12For FY2021(Thousands of U.S. dollars)
Total shareholders' equity
Capital stock

Balance at beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

Capital surplus$154,742$111,208

Retainedearnings

Treasury shares$1,321,036($59,962)(12,646)$154,742$111,208

Total
shareholders'equity$1,527,024(12,646)$1,308,390($59,962)$1,514,378

Changes of items during period
Dividends of surplus(126,362)(126,362)

Net income attributable to ownersof parent

316,772

316,772

Share repurchase(98,056)(98,056)

65

65

Disposal of treasury shares

0Cancellation of treasury shares(0)(90,466)

90,466---99,935(7,516)

92,419$154,742$111,208$1,408,324($67,486)$1,606,797

Net changes of items other thanshareholders' equity
Total changes of items during period
Balance at end of current period

Accumulated other comprehensive income
Valuation
Foreign currency Remeasurements
difference ontranslationof defined benefit
available-for-saleadjustment
plans
securities

Balance at beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance$92,795$662$3,782

Total
accumulated
othercomprehensive
income$97,247

Non-controllinginterests$14,157

Total
net assets$1,638,445(12,646)$92,795$662$3,782$97,247$14,157$1,625,790

Changes of items during period
Dividends of surplus(126,362)

Net income attributable to ownersof parent

316,772

Share repurchase(98,056)
65

Disposal of treasury shares-

Cancellation of treasury shares
Net changes of items other thanshareholders' equity(24,957)

6,666(3,611)(21,894)

2,965(18,928)

Total changes of items during period(24,957)

6,666(3,611)(21,894)

2,965

73,483

Balance at end of current period$67,838$7,336$172$75,345$17,131$1,699,281

13

Consolidated Statements of Cash Flows(Millions of Yen)FY2020(Thousands of
U.S. dollars)
FY2021

54,160
10,119
1,792
626
477
103
(817)
(3,366)73
682(5,704)(6,230)2,523(1,163)53,277
1,913(73)(13,168)
41,94945,481
10,34678(997)(1,588)69696(1,016)(2,398)(842)(671)
49,1591,925(69)(11,076)
39,939442,448
82,665
14,639
5,114
3,897
841
(6,674)(27,498)
596
5,571(46,598)(50,895)
20,611(9,501)
435,234
15,628-596(107,573)
342,693

(190)
4,248
(22)
(11,253)(466)(1,133)(3,322)
(262)
(188)
196
(12,395)

(159)
3,063
(1,209)(8,254)(598)(688)(5,384)
522
(222)
77
(12,854)-1,552
34,703(180)(91,929)-3,807(9,256)(27,138)(2,140)(1,536)
1,601(101,258)

(345)
550
(552)
(15,468)(48)(12,003)
0(27,868)591
2,277
32,38034,658(2,017)660(640)(13,629)(10,002)(25,629)284
1,741
30,63932,380(2,818)4,493(4,509)(126,362)(392)(98,056)
0(227,661)
4,828
18,601
264,521283,130

FY2021
Cash flows from operating activities
Income before income taxes and non-controlling interests
Depreciation and amortization
Business restructuring expenses
Loss on business of subsidiaries and associates
Loss on valuation of investment securities
Amortization of goodwill
Interest and dividend income
Loss (gain) on sales of investment securities
Interest expenses
Loss (gain) on disposal of non-current assets
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries
Purchase of property, plant and equipment
Payments for retirement of property, plant and equipment
Purchase of intangible assets
Payments for transfer of business
Payments of long-term loans receivable
Net decrease (increase) in short-term loans receivable
Purchase of long-term prepaid expenses
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Dividends paid to non-controlling interests
Share repurchase
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period(Note 1)The consolidated financial statements are a translation of the Japanese annual securities report’s consolidated financial statements.
(Note 2)The consolidated financial statements are expressed in Japanese yen as of and for the year ended March 31, 2022 after being
converted from the currency of the country in which the Company operates. The translation of Japanese yen amounts toUnited States dollar amounts is included solely for the convenience of the readers outside Japan, and has been made at the rateof ￥122.41 to US $1, which is the approximate closing exchange rate reported by the Tokyo Foreign Exchange Market on
March 31, 2022. This translation should not be construed to indicate that the Japanese yen amounts shown can be converted
to United States dollars at the above rate.

14Notes to Consolidated Financial Statements
1. Basis for presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments andExchange Act, the related accounting regulations, and the accounting principles generally accepted in Japan ("J-GAAP"), which differ in certain aspects from theapplication and disclosure requirements of the accounting principles generally accepted in the United States of America ("US-GAAP") and International Financial
Reporting Standards ("IFRS").
In preparing these consolidated financial statements, certain reclassification and rearrangements have been made to the consolidated financial statements issued
in Japan in order to present them in a form that is more familiar to readers in other countries.
2. Summary of Significant Accounting Policies
a. Consolidation
The consolidated financial statements as of March 31, 2022 include the account of Nissan Chemical Corporation. (the "Company") and its eight main(eight in FY2021) subsidiaries (together, the "Companies"). The Company does not consolidate other subsidiaries due to their immateriality in termsof consolidated total assets, net sales, net income, and retained earnings.
Under the control or influence concept, those companies in which the Company, either directly or indirectly, is able to exercise control over operations
are fully consolidated. Those companies over which the Company has the ability to exercise significant influence are accounted for by the equity method.
Investments in two affiliated companies (two in FY2021) are accounted for by the equity method.
The assets and liabilities of the newly consolidated subsidiaries are stated at fair value as of the respective dates on which they were acquired.
All significant inter-company balances and transactions have been eliminated in consolidation.
All material unrealized profits included in assets resulting from transactions within the Companies are eliminated.
For companies accounted for by the equity method that have different fiscal year-ends,
the financial statements of those companies for their respective fiscal years are used.
b. Securities
The Company’s marketable securities are reported at fair value. Unrealized holding gains and losses, net of the related tax effect, on marketablesecurities are excluded from earnings. Instead, they are reported as a separate component of other comprehensive income until realized.
Realized gains and losses for securities are included in earnings, and are derived using the moving average method for determining the cost of securities sold.
Non-marketable securities in companies over which the Company is incapable of exercising significant influence are stated at cost and reviewed
periodically for impairment.
c. Inventories
Inventories are stated at the lower of cost or net realizable value. The cost is determined by the weighted average method.
d. Property, Plant and Equipment (excluding Leased Assets)
Property, plant and equipment are stated at cost. In general, the depreciation of property, plant and equipment is computedby the declining-balance method over the estimated useful lives of these assets.
The estimated useful life ranges are 2 years to 50 years for buildings and structures, and 2 years to 12 years formachinery and equipment.
e. Goodwill and other Intangible Assets
Goodwill is amortized by the straight-line method within 20 years. Other intangible assets are also amortized using the straight-line method.
The main useful lives of major intangible assets are as follows:
Software
Other intangible assets

5 year5～16 year

f. Leased Assets
Leased assets arising from finance lease transactions which do not transfer ownership to the lessee are depreciatedby the straight-line method with no residual value, using the contract term as the useful life.
g. Allowance for Doubtful Accounts
Allowance for doubtful accounts is the Companies’ best estimate for the amount of probable credit losses in the Companies' existing trade receivables.
An additional reserve for individual receivable is recorded when the Company become aware of a customer’s inability to meet its financial obligations,such as when customers files for bankruptcy or when the its operating results or financial position deteriorates.
If the customer's circumstances change, estimates of the recoverability of receivables are further adjusted.
h. Provision for Bonuses
The Companies provide accrued bonuses for employees based on the estimated amounts to be paid for the fiscal year.
i. Provision for share-based remuneration for directors (and other officers)
The Company provides for the estimated amount of share benefit obligations as of the end of the current consolidated fiscal year to cover the benefitof shares to the Company's directors, etc., in accordance with the regulations for the delivery of shares to directors, etc.,
j. Provision for Business Structure Improvement
The Company provides a reserve at the estimated amount to cover the expenses and losses to be incurred in association with structural improvement.
k. Provision for Loss on Business of Subsidiaries and Affiliates
The Company provides a reserve at the estimated amount to cover the losses on business of subsidiaries and affiliates in consideration of their financial position.
l. Provision for Retirement Benefits
The Company has a defined benefit plan and a retirement plan that substantially covers all of its employees.
The method for calculating the estimated amount of all retirement benefits to be paid at future retirement dates is based on the benefit formula.
Actuarial gains and losses are primarily amortized using the declining-balance method over the average of the estimated remaining service years (16 years)
commencing from the period which the gains and losses occurred.
Certain consolidated subsidiaries use a simplified method for calculating retirement benefits.
In this method, the retirement benefit obligation is the same amount as the necessary payment related to retirement benefits.

15

m. Basis for recording significant revenues and expenses
The Company and its consolidated subsidiaries are principally engaged in the manufacture and sale of chemicals, functional materials, agrochemicals,
pharmaceuticals, wholesaling and other businesses.The main performance obligations in these businesses are as stated below.
The Company recognizes revenue at the time of shipment to the customer, based on the terms and conditions of the trade, since the performance obligation isdeemed to be satisfied when the customer has obtained control over the product, etc., in light of the terms and conditions of the contract.
For transactions in which the Company's role in providing goods to customers constitutes that of an agent, the Company recognizes revenue at the net amountreceived from the customer less the amount paid to the supplier of the goods.
For transactions that include variable consideration in the contract with a customer, only the portion of the transaction price that is likely not to be significantly
reduced when the uncertainty is resolved after the fact is included in the transaction price.
Revenue from the granting of licenses is recognized over a specified period of time if the nature of the commitment in granting the license to the customer isthe right to access the intellectual property over the term of the license, or at a point in time if the right to use the intellectual property is at the time the license is granted.
n. Translation of Foreign Currency
The assets and liabilities of the Company’s subsidiaries located outside Japan are translated into Japanese yen at the spot exchange rate in effect on the balance
sheet date. Revenue and expense items are translated at the prevailing average exchange rates for the year. Gains and losses resulting from foreign currencytransactions are included in other income (deductions), and those resulting from the translation of financial statements are excluded from the statements of income.
Instead, they are accumulated in net assets as a component of accumulated other comprehensive income (loss).
o. Derivatives and Hedge Accounting
The Company enters into interest rate swap contracts to hedge the risk of changes in interest rates over borrowings.
Derivatives are carried at fair value with all changes in unrealized gains and losses charged to income, except for those which meet the criteria for deferral
hedge accounting under which unrealized gains or losses, net of the applicable income taxes, are reported as components of accumulated othercomprehensive income (loss).
If interest rates swap contracts meet certain criteria, the net amount to be paid or received under the interest rate swap contract is added to or deductedfrom the interest on the assets or liabilities for which the swap contract is executed.
p. Cash and Cash Equivalent
The Companies consider cash equivalents include all highly fluid investments, which have been purchased with original maturities of three months or less.
q. Other Important Matters for Preparation of Consolidated Financial Statements
Consolidated tax payment system is applied. The Company and some of its domestic consolidated subsidiaries will transition from the consolidated tax payment system
to the group totalization system from the following fiscal year. However, with respect to the transition to the group totalization systemestablished by the "Law Partially Revising the Income Tax Law" (Law No. 8, 2020) and items for which the non-consolidated tax payment system was revisedin conjunction with the transition to the group totalization system, the "Treatment of Application of Tax Effect Accounting for Transition
from the Consolidated Tax Payment System to the Group Totalization System" (PITF No. 39, March 31, 2020) and the "Guidance on Accounting Standard
for Tax Effect Accounting" (PITF No. 28, February 16, 2018) are applied in Paragraph 3. In accordance with the treatment in Paragraph 3 of the" Practical Solution on Application of Accounting Standard for Tax Effect Accounting (ASBJ PITF No. 39, March 31, 2020),
the provisions in Paragraph 44 of the "Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ Guidance No. 28, February 16, 2018)
are not applied and the amounts of deferred tax assets and deferred tax liabilities are calculated based on the tax law before the revision.
The amount of deferred tax assets and deferred tax liabilities are based on the provisions of the tax law before the revision.
Effective from the beginning of the next consolidated fiscal year, the Company will apply the "Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements" (ASBJ PITF No. 42, August 12, 2021),
which provides for accounting treatment and disclosure of corporate and local income taxes and tax effect accounting in the casewhere a group totalization system is applied.
3. U.S. dollar Amounts
The accompanying consolidated financial statements are expressed in Japanese yen as of and for the year ended March 31, 2022 after being converted
from the currency of the country in which the Company operates. The translation of Japanese yen amounts to United States dollar amounts is included
solely for the convenience of the readers outside Japan, and has been made at the rate of \122.41 to US $1, which is the approximate closing exchange
rate reported by the Tokyo Foreign Exchange Market on March 31, 2022. This translation should not be construed to indicate that the Japanese yenamounts shown can be converted to United States dollars at the above rate.
4. Significant accounting estimatesa. Impairment of fixed assets(1) Amount recorded in the consolidated financial statements for the current fiscal year ended March 31, 2022

Non-current assets
Intangible assets
Impairment loss

(Millions of Yen)
¥53,177
11,780※784(Thousands of U.S.
dollars)$434,417
96,234
6,405※Impairment loss of 784 million yen for the fiscal year ended March 31, 2022 is included in non-operating expenses and other of 9 million yen
and in business structure improvement expenses of 775 million yen in the consolidated statements of income.
(2) Information on the nature of significant accounting estimates for identified items‐Calculation method
In principle, the Group groups its assets according to the smallest unit that generates independent cash flows.
For asset groups for which indications of impairment have been identified and for which it is judged necessary to recognize impairment, the carrying
amount is reduced to the recoverable amount, and the amount of the reduction is recognized as an impairment loss.
The recoverable amount is the higher of value in use or net realizable value.
‐Main assumptions
Future cash flows are used to determine whether an impairment loss should be recognized and to calculate value in use, and the discount rate,economic growth rate, sales growth rate, obsolescence rate, and other factors that form the basis for the calculation are used as key assumptions.
‐Effect on the consolidated financial statements for the following fiscal year
The recoverable amount is reasonably determined based on the information and materials available at the time of closing of accounts,
but if the profit plan needs to be revised due to uncertain future changes in economic conditions, additional impairment losses may occur.

16

b. Provision for retirement benefits(1) Amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2022

Net defined benefit asset
Net defined benefit liability(Thousands of U.S.
dollars)
FY2021$15,064
2,369(Millions of Yen)FY2021
FY2020¥1,844¥2,478290249(2) Information on the nature of significant accounting estimates for identified items‐Calculation method
In order to prepare for the payment of future retirement benefits, the Group records retirement benefits based on the estimated amount of retirement benefit obligations
and pension assets at the end of the current fiscal year, which are primarily calculated based on actuarial assumptions.These assumptions include discount rates,
future salary levels, retirement rates, mortality rates, etc. Each of these conditions has been calculated using methods that are currently considered sufficiently
reasonable.Certain consolidated subsidiaries have adopted the simplified method for the calculation of liabilities for retirement benefits and retirement benefit expenses,
using the method of treating the amount payable at the end of the term for retirement benefits as the retirement benefit obligation.
‐Main assumptions
The expected rate of return is assumed to be 2.0% and the discount rate is assumed to be 0.8% per annum.
‐Effect on the consolidated financial statements for the following fiscal year
The Company believes that if actual results differ from the assumptions, or if the assumptions are changed, it may have a material impact on the consolidated financial
statements for the next and subsequent fiscal years, as it may affect the costs and liabilities recognized in future periods.
c. Business Combinations(1) Amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2022
‐The fungicide "Quinoxyfen" business

Intangible fixed assets and others (Product registration right)
Intangible fixed assets and others (Non-competition agreement)
Intangible fixed assets and others (Goodwill)
Total

FY2021
Amount¥3,832459
168¥4,460(Millions of Yen)FY2020
Amount¥4,415588
233¥5,236FY2021
Amount¥3,685
1,081
134¥4,901(Millions of Yen)FY2020
Amount¥3,936
1,155
171¥5,263

Amortization Period
9 year
6 year
5 year‐The fungicide "Manzeb" business

Intangible fixed assets and others (Sales rights)
Intangible fixed assets and others (Trademarks)
Intangible fixed assets and others (Goodwill)
Total

Amortization Period
16 year16 year
5 year(Thousandsof U.S.
FY2021
Amount$31,305
3,750
1,372$36,435(Thousandsof U.S.
FY2021
Amount$30,104
8,831
1,095$40,038(2) Information on the nature of significant accounting estimates for identified items‐Calculation method
Business combinations are accounted for using the purchase method. Under the purchase method, all assets acquired are recognized and measured based on
their fair value at the date of acquisition of control. The determination of fair value involves significant estimates, including projections of future cash flows, discountrates and perpetual growth rates.
‐Main assumptions
The main assumptions underlying the determination of fair value are discounted future cash flows, discount rate and perpetual growth rate.
‐Effect on the consolidated financial statements for the following fiscal year
Although we believe that the estimates used to calculate the fair value in processing the business combination are reasonable, unpredictable changes in the assumptions
on which the estimates are based could result in revisions to the fair value, which could lead to the recording of impairment losses on the acquired assets in the future.
d. Loss on valuation of inventories(1) Amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2022
(Millions of Yen)FY2021
FY2020(¥76)¥354
Loss on valuation of inventories(Note) In FY2021 includes 121 million yen recorded as business structure improvement expenses.

(Thousands of U.S.
dollars)
FY2021($621)(2) Information on the nature of significant accounting estimates for identified items‐Calculation method
In valuing inventories at the end of the fiscal year, if the net selling price is lower than the book value, the book value is reduced to the net selling price, andthe amount of the reduction is recorded as a loss on valuation of inventories.
‐Main assumptions
For finished goods and merchandise, the net realizable value is estimated based on historical experience of sales deductions and transportation costs from total sales.
For raw materials, the net realizable value is estimated based on the last purchase price.
‐Effect on the consolidated financial statements for the following fiscal year
In estimating valuation losses, the Company makes judgments based on past purchasing and shipping records, information available at the time of valuation,and other factors considered reasonable. However, if the market environment deteriorates more than expected and the net selling price declines, it may be necessary
to record additional valuation losses.

17

5. Changes in Accounting Policy
a. Revenue Recognition
The Company adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others from the beginning of thecurrent fiscal year, and recognized revenue at the amount expected to be received in exchange for the promised goods or services when control of the goods
or services is transferred to the customers. The main changes resulting from the adoption of the new accounting standard for revenue recognition are as follows(1) Revenue Recognition for Agent Transactions
For transactions in which the Company's role in providing goods to customers is that of an agent, the Company recognizes revenue at the net amount received
from the customer less the amount paid to the supplier of the goods.
(2) Variable consideration
For transactions that include variable consideration in the contract with a customer, the Company includes in the transaction price only that portion of thetransaction price for which it is probable that a significant reduction in revenue will not occur when the uncertainty is subsequently resolved.
(3) Licensing
Revenue from the granting of licenses was previously recognized at the time of receipt of payment. However, the Company now recognizes revenue over a specified
period if the nature of the commitment to grant a license to a customer is the right to access intellectual property over the term of the license, and revenue isrecognized over a specified period of time. The Company changed its accounting method to recognize revenue at one point in time if the nature of the promise to
grant a customer is the right to access intellectual property over the term of the license.
In accordance with the transitional treatment prescribed in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition, the cumulative
effect of retrospective application of the new accounting policy prior to the beginning of the current fiscal year is added to or deducted from retained earnings
at the beginning of the current fiscal year, and the new accounting policy is applied from such beginning balance. The new accounting policy is applied
from the balance at the beginning of the current fiscal year. However, the new accounting policy was not applied retrospectively to contracts for which almost all
revenue amounts were recognized in accordance with the previous treatment prior to the beginning of the current fiscal year by applying the method prescribedin Paragraph 86 of the Accounting Standard for Revenue Recognition. In addition, the Company has applied the method prescribed in Paragraph 86 (1)of the Accounting Standard for Revenue Recognition to account for contract modifications made prior to the beginning of the current fiscal year based on thecontract terms after reflecting all contract modifications, and the cumulative effect of such modifications has been added to or subtracted from retained earnings
at the beginning of the current fiscal year.
Due to the adoption of the Accounting Standard for Revenue Recognition, "Notes and accounts receivable - trade," which were included in "Current assets" in the
consolidated balance sheets in the previous consolidated fiscal year, are included in "Notes and accounts receivable- trade, and contract assets" from the current
consolidated fiscal year.In addition, "Advances received," which was included in "Other" under "Current liabilities" in the consolidated balance sheets forthe previous fiscal year, is now included in "Other" under "current liabilities" as "contract liabilities" for the current fiscal year.
However, in accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Earnings Recognition, no reclassification
has been made for the previous fiscal year using the new presentation.
As a result, the consolidated statement of income for the current fiscal year shows that net sales decreased by 22,730 million yen, cost of sales decreased by
22,807 million yen, and operating income, ordinary income, and income before income taxes and non-controlling interests increased by 77 million yen, respectively,
compared with those before the adoption of the revenue recognition accounting standard.
The consolidated balance sheets shows an increase of 0 million yen in notes and accounts receivable-trade and contract assets, and a decrease of
77 million yen in other current liabilities.
The consolidated statement of cash flows for the current fiscal year shows that, in cash flows from operating activities, income before income taxes andnon-controlling interestsincreased by 77 million yen, trade receivables increased by 0 million yen, and other decreased by 77 million yen.
The beginning balance of retained earnings in the consolidated statement of changes in net assets decreased by 1,548 million yen due to the cumulative effectreflected in net assets at the beginning of the current fiscal year.
The impact on per share information is stated in the relevant section.
In accordance with the transitional treatment stipulated in Paragraph 89-3 of the Accounting Standard for Revenue Recognition,notes related to revenue recognition for the previous fiscal year are not presented.

b. Fair Value Measurement
Accounting Standard for Fair Value Calculation" (ASBJ Statement No. 30, July 4, 2019. Hereinafter referred to as "Accounting Standard for Fair Value Calculation")and others are applied from the beginning of the current fiscal year, and the new accounting policies prescribed by the Accounting Standard for Fair Value Calculationand others are applied prospectively in accordance with the transitional treatment prescribed in paragraph 19 of the Accounting Standard for Fair Value Calculationand paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). There is no impact on the
consolidated financial statements.
In addition, in the notes to "Financial Instruments," the Company will provide notes on items such as the breakdown of the market value of financial instruments by level.
The Company has adopted the "Guidance on Disclosures about Fair Value of Financial Instruments" (ASBJ Guidance No. 19, 2019). However, in accordancewith the transitional treatment prescribed in paragraph 7-4 of the "Guidance on Disclosures about Fair Value of Financial Instruments"(ASBJ Guidance No. 19, July 4, 2019), such notes for the current fiscal year are not included.
6.Reclassifications(Notes to Consolidated Balance Sheets)
In the previous fiscal year, "long-term loans" which was included in "Other" under " Investments and other assets"
has increased in monetary materiality, it is presented as a separate item from the current fiscal year.In order to reflect this change in presentation,
the consolidated financial statements for the previous fiscal year have been reclassified.
As a result, 3,485 million yen presented as "Other" under " Investments and other assets" has been reclassified as "long-term loans"of 2 million yen and "Other" of 3,483 million yen in the consolidated balance sheets for the previous fiscal year.
(Notes to Consolidated Statements of Income)In the previous fiscal year, "Loss on sales of fixed assets" which was included in "Other" under " Non-operating expenses"
exceeded 10/100 of total non-operating expenses, it is presented as a separate item from the current fiscal year.In order to reflect this change in presentation,
the consolidated financial statements for the previous fiscal year have been reclassified.
As a result, 431 million yen presented as "Other" under " Non-operating expenses" has been reclassified as "Loss on sales of fixed assets"of 4 million yen and "Other" of 426 million yen in the consolidated statements of income for the previous fiscal year.

187. Notes to Consolidated Balance Sheets(1)Notes and accounts receivable - trade, and contract assets arising from contracts with customers are as follows.

(Millions of Yen)
¥3,99275,9870

notes receivable - tradeaccounts receivable - tradecontract assets(Thousands of U.S.
dollars)$32,612620,7580(2)Contract liabilities of FY2021 in "Other" of "Current liabilities" are as follows .

(Millions of Yen)
¥155

(Thousands of U.S.
dollars)$1,266

Investment securities
Gurantee deposits(Millions of Yen)FY2021
FY2020
¥180
¥205
10
10

(Thousands of U.S.
dollars)
FY2021$1,47082

Account payable(Millions of Yen)FY2021
FY2020¥284¥293(Thousands of U.S.
dollars)
FY2021$2,320contract liabilities(3)Collateral Assets and Liabilities
Collateral assets and liabilities as of FY2021 and FY2020 are as follows:(4) The amounts due to unconsolidated subsidiaries and affiliated companies are as follows.

Investment securities(stocks)
Investments and other assets
Other" (investments in capital)(Millions of Yen)FY2021
FY2020¥8,778¥8,823¥824(Thousands of U.S.
dollars)
FY2021$71,710¥824$6,731(5)guaranteed liabilities
The Company guarantees loans from financial institutions for employees and companies other than consolidated companies, etc.

Toyama Kyodo Jikahatsuden Co., Ltd.
Nissan Chemical Materials Research (Suzhou) Co., Ltd.
Nissan Chemical Taiwan Co., Ltd.
Philagro France S.A.S.
Total(Millions of Yen)FY2021
FY2020¥1,400
¥500
124
409
25
100
116
¥1,549¥1,125(Thousands of U.S.
dollars)
FY2021$11,4371,013
204$12,654(6)Loan commitments
The Company and its consolidated subsidiaries have entered into revolving credit line agreements with subsidiaries and affiliates
and have established maximum loan amounts.The following are unused lines of credit based on these agreements as of the end of the current fiscal year.
(Thousands of U.S.
(Millions of Yen)
dollars)
FY2021
FY2020
FY2021
Total Amount of Loan Limits¥4,514¥4,390$36,876
Outstanding Loans
1,541
1,223
12,589Net unused loan balance¥2,973¥3,167$24,287
The total amount of loans, the balance of executed loans, and the balance of unexecuted loans net of the amount of loans include foreign currencies.

198. Notes to Consolidated Statements of Income(1)Revenue from contracts with customers
Revenues are not broken down into revenues from contracts with customers and other revenues.
The amount of revenue arising from contracts with customers is presented in
Notes to Consolidated Financial Statements (Revenue Recognition), 1. Information on revenue broken down from contracts with customers.
(2) Major items of selling, general and administrative expenses(Millions of Yen)FY2021
FY2020transportation rates or expenses¥1,020¥865
labor cost
16,664
16,031(Of which, retirement benefit expenses
641
533(Of which, provision for bonuses
1,600
1,508
Provision for directors' bonuses
7
Provision for directors' and corporate auditors' stock benefits
136
48
test cost
5,052
4,381
Depreciation and amortization
3,851
3,628
Allowance for doubtful accounts
7
2(Thousands of U.S.
dollars)
FY2021$8,333
136,133
5,237
13,071
1,111
41,271
31,46057(3)Research and Development Expenses
Research and development expenses included in selling, general and administrative expenses and manufacturing costs for FY2021 and FY2020 are as follows:(Thousands of U.S.
(Millions of Yen)
dollars)
FY2021
FY2020
FY2021$130,896¥16,023¥16,459(4)Business restructuring expenses
The expenses were related to the decision to suspend melamine operations in the Chemicals segment,
and consisted of 895 million yen in dismantling and removal costs, etc., 775 million yen in impairment loss, and 121 million yen in loss on revaluation of inventories.
775 million yen in impairment loss, and 121 million yen in loss on revaluation of inventories.
The details of the impairment loss are as follows.
In principle, the Group groups its assets according to the smallest unit that generates independent cash flows.
In recent years, global melamine production capacity has greatly exceeded demand, and competition with overseas manufacturers has intensified,significantly worsening the profitability of this business.
In addition, the plant is deteriorating over time and the costs required for maintenance and renewal are increasing.
The decision to halt melamine production was based on the judgment that it would be difficult to secure medium- to long-term profits.
In response to this decision to cease production, the Group reduced the book value of the melamine plant to its recoverable amountand recorded the reduction as an impairment loss (775 million yen) under extraordinary losses in the current fiscal year.
(Millions of Yen)
Location
Use
Impairment loss
Type
Buildings and structures¥250
Machinery, equipment and vehicles
151
Toyama City,
Tools, furniture and fixtures
0
Factory assets
Construction in progress
372
Toyama Prefecture
Software
0
Total
¥775
The recoverable amount of this asset group is measured by its value in use, but since no future cash flows are expected,
it is measured by value in use.

20

9. Comprehensive Income(Thousands of
U.S. dollars)
FY2021(Millions of Yen)FY2021
FY2020
Valuation difference on available-for-sale securities:
Gains (losses) arising during the year
Reclassification adjustment
Amount before tax effectTax effect
Valuation difference on available-for-sale securities, net of tax
Foreign currency translation adjustment:
Gains (losses) arising during the year
Reclassification adjustment
Amount before tax effectTax effectForeign currency translation adjustment, net of tax(¥1,020)(3,366)(4,387)1,331(3,055)¥6,742(1,588)
5,154(1,578)3,575($8,333)(27,498)(35,839)
10,873(24,957)

875

1,075

7,148

-

875

1,075

7,148
7,148

(549)
(89)
(638)
196
(442)

732
9
741
(227)
514

(4,485)(727)(5,212)
1,601(3,611)0(¥2,622)

1¥5,167

0($21,420)

875

1,075

-

Remeasurements of defined benefit plans:
Gains (losses) arising during the year
Reclassification adjustment
Amount before tax effectTax effectRemeasurements of defined benefit plans, net of tax
Share of other comprehensive income ofaffiliates accounted for using equity methods:
Gains (losses) arising during the year
Total other comprehensive income-

10. Common Shares(1) Dividends
Cash dividends charged to retained earnings for the years ended March 31, 2022 and 2021 represent the dividends paidout during those years. The accompanying consolidated financial statements do not include any provisions for adividend approved by the Annual Shareholders Meeting of 58 yen per share with an aggregate 8,341 million yen
for the year ended March 31, 2021.
(2) Retained Earnings
Retained earnings on a consolidated basis consist of legal reserve and retained earnings. In accordance with
provisions of the Companies Act of Japan, the Company has provided a legal reserve as an appropriation of retained
earnings. The Code states that while neither legal capital surplus nor legal retained earnings are available for dividends,
both may be used to reduce or eliminate a deficit by a resolution of the shareholders' meeting, or may be transferred tostated capital common stock by a resolution of the Board of Directors. Legal reserve in the accompanying consolidated
financial statement includes only that of the Company. Retained earnings of the Company and its consolidated
subsidiaries include a certain special reserve for the purpose of obtaining tax benefits in accordance with the Special
Taxation Law of Japan.
11. Investment securities(Millions of Yen)FY2021
FY2020¥18,871¥24,397
8,778
8,823
2,568
2,673
¥30,217¥35,894

Equity securities
Unlisted securities of affiliates
Unlisted securities
Total

21

(Thousands of
U.S. dollars)
FY2021$154,162
71,71020,979$246,851

12.Financial instruments(1) Matters Concerning the Status of Financial Instruments
The Group limits fund management to short-term deposits, etc., and procures necessary funds mainly through bank loans.
Trade receivables such as notes and accounts receivable-trade and accounts receivable-other related to the purchaseof raw materials on behalf of customers are exposed to customer credit risk. The Company manages this risk by controllingdue dates and outstanding balances for each counterparty in accordance with credit management rules, etc.,
and by periodically monitoring the credit status of major counterparties. Short-term loans receivable and long-term loans receivable aremainly to affiliated companies, and the Company periodically monitors the financial conditions of the borrowers.
Investment securities, which are stocks, are exposed to the risk of market price fluctuations, but are mainly stocks of companies
with which the Company has business relationships. The fair values of these securities are reported
to the Board of Directors on a regular basis. Trade payables, trade notes and accounts payable, are due within one year.
In addition, the Company hedges against the risk of exchange rate fluctuations related to foreign currency-denominated trade receivables
and trade payables mainly through the use of foreign currency-denominated borrowings and other instruments.
Of the loans payable, short-term loans payable are mainly to finance operating transactions, and long-term loans payable are mainly to finance capital
expenditures.In addition, trade payables and borrowings are exposed to liquidity risk (risk of being unable to make payments on due dates).
However, the Finance Department prepares appropriate cash management plans and maintains liquidity on hand.
Since variable factors are incorporated in the calculation of the fair value of financial instruments,
such values may vary due to the adoption of different assumptions and other factors.
(2) Matters related to fair value of financial instruments
Consolidated balance sheet amount, fair value and their differences are as follows.
(Millions of Yen)
Consolidated balancemarket value
sheet amountFY2021(1)Investments in securities¥18,871¥18,871
Available-for-sale securities
3,323
3,339
Total assets¥22,195¥22,211(1) Long-term borrowing
1,734
1,736
Total liabilities¥1,734¥1,736(Notes)1. "Cash and deposits," "Notes and accounts receivable-trade," "Accounts receivable-other,"
Short-term loans receivable, "Notes and accounts payable-trade" and "Short-term loans payable" are not statedbecause they are cash and their fair values approximate their book values due to their short maturities.
2. Non-marketable equity securities are not included in "(1) Investment securities".
The consolidated balance sheet amounts of such financial instruments are as follows
Year ending March 31
31-Mar-22(Millions of Yen)
¥11,346

difference
15
¥15
2
¥2

(Thousands of
U.S. dollars)$92,689

Scheduled redemption amount of monetary claims after the consolidated balance sheet date

FY2021
Cash on hand and in banks
Notes, accounts receivable and contract assets
Accounts receivable
Short-term loans receivable
Long-term loans
Total(Millions of Yen)
Over 1 year 5 years or more
Over 10 years'Within 5'10 years or¥34,658
79,979
2,824
1,541
0
3,322
¥119,003¥3,322-

Within 1 year

Scheduled repayment of long-term debt and other interest-bearing liabilities after the consolidated balance sheet date

FY2021
Short-term loans payable
Long-term loans payable
Total

Within 1 year
¥20,981552¥21,534(Millions of Yen)
Over 2 year
Over 3 year Over 4 year
Over 5 years'Within 3 years'Within 4'Within 5
468
362
242
110
¥468
¥362
¥242
¥110
-

Over 1 year
'Within 2(3) Matters concerning the breakdown of the fair value of financial instruments by level, etc.
The fair value of financial instruments is classified into the following three levels based on the observability andmateriality of the inputs used to calculate fair value.
Level 1 fair value: Fair value calculated based on (unadjusted) quoted prices in active markets for identical assets or liabilities
Level 2 fair value: Fair value calculated using directly or indirectly observable inputs other than Level 1 inputs
Level 3 fair value: Fair value calculated using significant unobservable inputs
When multiple inputs that have a significant impact on the calculation of fair value are used, fair value is classified to the levelwith the lowest priority in the calculation of fair value among the levels to which each of those inputs belongs.

22

① Financial instruments carried on the consolidated balance sheet at fair value(Millions of Yen)FY2021
Investments in securities
Available-for-sale securities
Stock (company)
Total

market value
Level2
Level3

Level1¥18,871¥18,871

-

Total

-

¥18,871¥18,871(Note) Explanation of valuation techniques used in the calculation of fair value and inputs related to the calculation of fair value
Investments in securities
Listed stocks are valued using quoted market prices. Since listed stocks are traded in active markets, their fair value is classified as Level 1 valuation.
②Financial instruments other than those recorded on the consolidated balance sheets at fair value(Millions of Yen)FY2021Long-term loans
Total assets
Long-term borrowing
Total liabilities

Level1-market value
Level2
Level3¥3,339¥3,3391,736¥1,736-

Total¥3,339¥3,3391,736¥1,736(Note) Explanation of valuation techniques used in the calculation of fair value and inputs related to the calculation of fair value
long-term loans
The fair value of long-term loans receivable is calculated using the discounted present value method based on their future cash flows
and the interest rate obtained by adding a credit spread to an appropriate index such as the yield of government bonds, etc.,
for each credit risk category under credit management, classified by a certain period of time, and classified as Level 2 fair value.
Long-term borrowing
The fair value of long-term debt is determined using the discounted present value method based on the sum of the principal interest rate
and an interest rate that takes into account the remaining term of the debt and credit risk, and is classified as Level 2 fair value.
13. Securities(1) Other securities(Millions of Yen)
Consolidated balance
sheet amount as of theconsolidated balance
sheet dateObtaining theoriginal pricedifference
FY2021
Securities whose reported amounts in the
consolidated balance sheets exceed acquisition cost
Stock (company)¥17,878¥5,331¥12,547
Bond
Other
Subtotal
17,8785,331
12,547
Securities whose reported amounts in the
consolidated balance sheets do not exceed acquisition
Stock (company)
993
1,298
(305)
Bond
Other
Subtotal
993
1,298
(305)
Total
¥18,871¥6,629¥12,241(Note) Unlisted stocks (consolidated balance sheet amount: 11,346 million yen) are not included in "Available-for-sale securities" in the above table.
(2)Other securities sold(Millions of Yen)
Consolidated balance
sheet amount as of theconsolidated balance
sheet dateObtaining thedifference
original price
FY2021
Stock (company)¥4,247¥3,316
Bond
Other
Total
¥4,247¥3,316(Note) Sales of unlisted stocks and other securities (sales amount: 73 million yen, total gain on sales: 54 million yen, total loss on sales: 3 million yen)
are not included in the above table.
(3) Securities for which impairment losses were recognized
In the current consolidated fiscal year, impairment loss of 477 million yen (477 million yen for stocks of other securities) was recognized for marketablesecurities.

23

14. Retirement Benefits(1) The liability for retirement benefits as of FY2021 and FY2020 were as follows:

Retirement benefit obligation
Plan asset
Unfunded retirement benefit obligation
Net retirement benefit obligation
Net defined benefit liability
Net defined benefit asset
Net retirement benefit obligation(Millions of Yen)FY2021
FY2020¥12,879¥12,771(14,724)(15,249)(1,844)(2,478)290
249(1,553)(2,229)290
249(1,844)(2,478)(¥1,553)(¥2,229)(Thousands of
U.S. dollars)
FY2021$105,212(120,284)(15,064)
2,369(12,687)2,369(15,064)($12,687)(2) Actuarial assumptions
The principal actuarial assumptions as of FY2021 and FY2020 were as follows:
FY2021
Discount rate
0.8%
Long-term expected rate of return
2.0%
Expected rate of salary increase (forecast)
3.6 to 9.0%
(Note) Expected rate of salary increase is calculated based on our point system.

FY20200.8%
2.0%
3.6 to 9.0%

15. Income Taxes
The Company is subject to a number of taxes based on income. The statutory income tax rates wereapproximately 30.36% for the year ended March 31,2022 and 30.62% for the year ended March 31, 2021.
The tax effects on significant temporary differences which resulted in deferred tax assets and liabilities as of FY2021
and FY2020 were as follows:(Millions of Yen)FY2021
FY2020
Deferred tax assets:
Provision for bonuses
Inventory
Overdepreciation
Business restructuring expenses
Loss on devaluation of marketable securities
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gain on securities
Net defined benefit asset
Reserve for advanced
depreciation of non-current assets
Other
Total deferred tax liabilities
Net deferred tax assets(Thousands of
U.S. dollars)
FY2021

¥701
644
627
544
442
2,630
5,590
(109)
5,481

¥700
777
693
309
2,769
5,250
(120)
5,130

$5,727
5,261(3,827)(484)(5,294)(695)(31,264)(3,954)

(235)

(244)

(1,920)(85)(4,632)¥849(6,234)(¥1,104)(694)(37,840)$6,936

4,444
21,48545,666(890)
44,776The differences between the statutory tax rate and the effective tax rate for the years ended FY2021 and FY2020 were as follows:

Statutory tax rate
(Reconciliation)
Dividend and other items excluded permanently from
Elimination of intercompany dividend income
Equity in earnings of affiliates
Difference between the Company's statutory tax rate
andEntertainment and other permanently non-deductible
expenseTax credit
Other, net
Effective tax rate

FY202130.36%FY202030.62%-1.87%
1.81(0.53)-1.53%
1.35(0.76)(0.38)

0.13

0.09

0.07

(2.99)
1.25
27.74%(3.73)
0.20
26.35%

24

16. Revenue Recognition(1) Information that disaggregates revenue arising from contracts with customers
Our revenues are primarily revenues recognized from contracts with customers, broken down by our reportable segments by type of goods or services.

FY2021

Chemicals

Performance
Materials

Millions of Yen
Agricultural
Pharmaceuticals
Trading
Chemicals
―
―
―
―
―
―
―
―
―
56,636
―
―
―
2,441
―
―
4,138
―
―
―
39,598―――OthersAdjustments(Note)
―
―
―
―
―
―
―
15

Basic Chemicals¥15,561――
Fine chemical
9,050
―
―
Functional Materials―
69,654―
Agrochemicals―――
Drug discovery―――
Finetech―――
Wholesale―――
Others――10,877
Revenue from contracts
with customers
24,611
69,65456,636
6,580
39,598
10,877
Net sales toexternal customers¥24,611¥69,654¥56,636¥6,580¥39,598¥10,877
Notes:(1)The "Other" segment is a business segment not included in the reportable segments.
(2)Elimination of (22,807) million yen in proxy transactions resulting from the application of the revenue recognition accounting standard, etc.,
is included in the adjustment amount in the segment information.
However, this amount is reflected in each reportable segment in the information that breaks down revenues from contracts with customers.

Total¥15,561
9,050
69,65456,6362,441
4,138
39,598
10,89215

207,972¥15¥207,972(2)Information that provides a basis for understanding revenue arising from contracts with customers
Basis for understanding revenues and expenses is as described in "2.m Basis for recording significant revenues and expenses.
(3)Information about the relationship between the satisfaction of performance obligations under contracts with customers and cash flows from such contracts,
and the amount and timing of revenue expected to be recognized from contracts with customers that existed at the end of the fiscal year ended March 31, 2022
and are expected to be recognized in the following fiscal year.
Receivables, contract assets and contract liabilities arising from contracts with customers of FY2021 are as follows
Balance at beginning Balance at endof yearof year(Millions of Yen)
Claims arising from contracts with customers¥73,937¥79,979
Contract asset
11
0
Contract liabilities
193
155
Contract assets relate to the rights of the Company and its consolidated subsidiaries to consideration for goods or services completed but unbilled as of the balance sheet
date.Contract liabilities consist primarily of advances received from customers and are included in "Other" current liabilities on the consolidated balance sheets.
The amount of revenue recognized in the current fiscal year that was included in the contract liability balance at the beginning of the period was 127 million yen.

25

17. Segment Information(1) General Information about reportable segments
In regard to reportable segments, the Company is able to obtain discrete financial data from its component units.
Accordingly, its segments are subject to regular review to help the Board of Directors decide how to allocate managerial resourcesand evaluate business performance.
Divisions by products and services are located at headquarters. Each division works out a comprehensive
strategy applicable to their products and services and carries out their business activities.
Therefore, the Company consists of segments based on the following divisions:
Segment
Chemicals
Performance Materials
Agricultural Chemicals
Pharmaceuticals
Trading
OthersMain Products
Basic chemicals (melamine, sulfuric acid, nitric acid, ammonia, etc.)
Fine chemicals (epoxy compound for LED sealants, flame retardants, chlorinated cyanuric acid for sterilizing, etc.)
Display materials (LCD alignment coating, etc.)
Semiconductor materials (bottom anti-reflective coating for semiconductors, etc.)
Inorganic materials (hard coating materials, electronic information materials, polishing materials, etc.)
Agrochemicals (herbicides, insecticides, fungicides, combination fungicide and insecticide, and plant growth regulators)
Animal health products
LIVALO®(anti-cholesterol drugs), etc.
Finetech®(custom chemicals and process researching services for pharmaceutical companies)
Trading, etc.
Transportation, landscaping, engineering, fertilizer, etc.

(2) Basis for the measurement of reported segment sales, profit or loss, segment assets, liabilities, and other material items
The accounting policies for the reportable segments are consistent with the Company's accounting policies used in
the preparation of its consolidated financial statements.
Intersegment sales and transfers are based on current market prices.
（3）Matters related to changes in reportable segments, etc.
As described in "Changes in Accounting Policies," the Company has applied the Accounting Standard for Revenue Recognition, etc.,from the beginning of the current consolidated fiscal year, and has changed the accounting method for revenue recognition.
As a result of this change, sales and segment income in the agrochemicals segment increased by 77 million yen and sales in the other segment
increased by 0 million yen, compared with the previous accounting method.
(4) Information on sales, profit (loss), assets, liabilities, and other item amounts by reportable segment
Millions of Yen
Performance
Agricultural
Consolidated
Adjustments
Chemicals
Trading
Others
FY2020Materials
Chemicals Pharmaceuticals
Total(Note)Net sales
Sales to outside customers¥21,867¥62,600¥57,541¥6,609¥50,833¥9,657¥12¥209,121Intersegment sales
10,041
9,047
6,306
43
18,987
14,106(58,533)
Total
31,90871,64863,848
6,652
69,82023,763(58,521)
209,121
Segment profit(loss)
1,482
22,41618,202
357
2,498
831
(3,260)42,530
Segment assets
30,76351,014
82,822
9,646
26,205
12,78952,268265,509
Other items
Depreciation and amortization
2,241
4,477
2,527
517
80
311
191
10,346
Amortization of goodwill
1
―
77
―
―
―
―
78
Increase of property, plant andequipment, and intangible assets¥4,903¥3,174¥6,426
¥475
¥137
¥388
¥296
¥15,800
Notes: The adjustments are as follows:(1) The (3,260) million yen adjustments in segment profit includes 33 million yen in intersegment eliminations, 12 million yen sales not allocated to any reporting
segments, and (3,305) million yen corporate expenses not allocated to any reporting segments.
The corporate expenses are mainly group administrative expenses which do not belong to segments.
(2) The 52,268 million yen adjustments in segment assets includes (12,958) million yen in intersegment eliminations and 65,226
million yen in corporate assets not allocated to any reporting segments. The corporate assets are mainly group administrative assets
which do not belong to segments.
(3) The 191 million yen adjustments in depreciation and amortization is corporate expenses.
(4) The 296 million yen adjustments in increase of property, plant and equipment and intangible assets is corporate assets. The corporate assets
are mainly group administrative assets which do not belong to segments.

Performance
Materials

Millions of Yen
Agricultural
Pharmaceuticals
Trading
Chemicals

Consolidated
Adjustments
Others
FY2021
Total(Note)Net sales
Sales to outside customers¥26,032¥69,664¥57,965¥6,580¥59,644¥10,877(¥22,792)¥207,972
Intersegment sales
11,61512,0007,853
49
20,792
12,717(65,031)
Total
37,64881,66565,8196,630
80,437
23,595(87,823)
207,972
Segment profit(loss)
3,796
27,71918,338
947
2,903
692
(3,438)50,959Segment assets
32,101
55,13390,6589,157
31,48912,175
48,972
279,687
Other items
Depreciation and amortization
2,547
3,860
2,563
541
73
299
233
10,119Amortization of goodwill
1
101
103
Increase of property, plant andequipment, and intangible assets¥2,338¥5,725¥1,472
¥651
¥20
¥614
¥127
¥10,951
Notes: The adjustments are as follows:(1) The (22,792) million yen adjustments to sales to outside customers includes elimination of proxy transactions of (22,807) million yen
due to the application of revenue recognition accounting standards, etc., and sales of 15 million yen that do not belong to any reportable segment.
(2) The (3,438) million yen adjustments in segment profit includes (72) million yen in intersegment eliminations, 15 million yen sales not allocatedto any reporting segments, and (3,381) million yen corporate expenses not allocated to any reporting segments.
The corporate expenses are mainly group administrative expenses which do not belong to segments.
(3) The 48,972 million yen adjustments in segment assets includes (14,985) million yen in intersegment eliminations and 63,958
million yen in corporate assets not allocated to any reporting segments. The corporate assets are mainly group administrative assets
which do not belong to segments.
(4) The 233 million yen adjustments in depreciation and amortization is corporate expenses.
(5) The 127 million yen adjustments in increase of property, plant and equipment and intangible assets is corporate assets. The corporate assets
are mainly group administrative assets which do not belong to segments.
Chemicals

26

Chemicals

Performance
Materials

Thousands of U.S. dollars
Agricultural
Pharmaceuticals
Trading
Chemicals

FY2021
Net sales
Sales to outside customers$212,662$569,104$473,532$53,754$487,248
Intersegment sales
94,88698,03164,153400
169,855
Total
307,557
667,143537,693
54,162
657,111
Segment profit(loss)
31,011
226,444
149,808
7,736
23,715
Segment assets
262,242450,396
740,60974,806257,242
Other items
Depreciation and amortization
20,807
31,53320,938
4,420
596
Amortization of goodwill
8
－
825
－
－
Increase of property, plant andequipment, and intangible assets$19,100$46,769$12,025$5,318$163
Overseas operations, which represent sales to customers outside Japan for FY2021 and FY2020 were as follows:

OthersJapan¥108,443

China¥26,476

Korea¥21,481

Other Asia
¥25,175($186,194)(531,256)(717,450)(28,086)
400,065$1,698,979－
1,698,979
416,298
2,284,838

2,443
－

1,903
－

82,665841$5,016$1,037$89,462

Europe andthe United¥27,544

Consolidated
Total¥209,121

Europe andthe United¥28,537

Consolidated
Total¥207,972

Millions of Yen
FY2021
Net salesJapan¥99,167

China¥30,191

Korea¥21,395

Other Asia
¥28,678

Thousands of U.S. dollars
FY2021
Net salesJapan$810,122

China$246,638

Korea$174,781

Other Asia
$234,278

Europe and Consolidated
the UnitedTotal$233,126$1,698,979

18. Amounts per Share
Net income per share is based on the weighted average number of shares of common stock outstanding during the year.
Cash dividends per share attributable to the period represent dividends declared as applicable to the year.
Amounts per share of net income and cash dividends for FY2021 and FY2020 were as follows:

Net income
Cash dividends(Yen)
FY2021
FY2020¥271.88¥231.73¥122.00¥104.00(U.S. dollars)
FY2021
$2.22
$1.00

27

Consolidated
Total$88,857
103,889
192,754
5,653
99,461Millions of Yen
FY2020Net sales

Adjustments(Note)

28

29