Balance Sheet
As of March 31, 2020

Account
AssetsCurrent assets
Cash and deposits
Notes receivable-trade
Electronically recorded monetary claims-operating

Accounts receivable-trade
Merchandise
Advance payments
Accounts receivable-otherConsumption taxes receivable
Other current assets
Allowance for doubtful receivables

Non-current assets
Tangible fixed assets
Buildings
Furniture and fixtures
Machinery and equipment
Land
Leased assets
Intangible fixed assets
SoftwareInvestments and other assets
Investment securities
Investment securities in subsidiaries and associates
Lease and guarantee deposits
Deferred tax assets
Prepaid pension cost
Other investments and other assets
Allowance for doubtful receivables

AmountAccount
Liabilities

52,636,494
9,364
1,906,261
3,842,415
37,643,014
1,607,284
5,092,813
297,793174,095
2,082,224(18,772)

Current liabilities
Notes payable-trade
Electronically recorded obligations-operating
Accounts payable-trade
Short-term loan payable
Lease obligations
Accounts payable-other
Income taxes payable
Advance received
Deposits received
Provision for bonuses
Other current liabilities

45,446,668
462,217
4,874,567
31,229,388
1,496,987
68,941801,055
153,698
5,683,307
47,637440,637
188,229

1,998,490
704,958
178,668
51,40950,5801,776
422,524

Non-current liabilities
Lease obligations
Provision for directors' retirement benefits
Asset retirement obligations
Other non-current liabilities

584,953
351,678
19,331200,004
13,93967,78467,7841,225,748
291,773
88,627329,353
241,756
200,71783,928(10,409)

Total liabilities

46,031,622

Net assets
Shareholders' equity
Common stock
Capital surplus
Additional paid-in capital

8,653,1905,300,000
3,831
3,831

Retained earnings
Appropriated for legal reserve
Other retained earnings
General reserve
Retained earnings brought forward

3,349,359
287,418
3,061,940
781,241
2,280,699

Valuation and translation adjustments(49,827)
29,737(79,565)
8,603,362
54,634,985

Net unrealized holding gains on available-for-sale securities

Total assets¥ in thousands
Amount54,634,985

Net unrealized gains (losses) on hedges
Total net assets
Total liabilities and net assets

Statement of Income
From April 1, 2019
To March 31, 2020
¥ in thousands

AccountAmountSales

88,828,706

Cost of sales

79,074,170
9,754,536

Gross profit

7,213,953

Selling, general and administrative expenses

2,540,583

Operating profit
Non-operating income
Interest income

338

Dividend income

18,442

Purchase discounts

32,590Tax refund of individually attributable amounts of consolidated taxes

Other non-operating income

296,098
10,161

357,632

Non-operating expenses
Interest expenses

9,338

Foreign exchange losses

43,906

Other non-operating expenses

13,092

66,337
2,831,878

Ordinary profit
Extraordinary gains
Gains on disposal of non-current assets

10,638

10,638Extraordinary losses
Impairment losses

58,200Loss on sales of investment securities

251

Loss on disposal of non-current assets

10,794

2,773,270

Net income before income taxes
Income taxes - current
Income taxes - deferred
Net income

69,246750,035
21,379771,4152,001,855

Statement of Changes in Net Assets
From April 1, 2019 to March 31, 2020

¥ in thousands
Shareholders' equity
Capital surplus

Retained earnings

Retainedearnings
brought forward

Total retained
earnings

Total
shareholders'equity4,376,844

5,445,504

6,614,335

Other retained earnings

Balance at the beginning of the year

Common stock

Additional
paid-in capital

Total capitalsurplus1,165,000

3,831

3,831

Appropriatedfor legal
General reserve
reserve
287,418

781,241

Changes of items during the year
Issuance of shares

4,135,000

4,135,000

Dividends of surplus(4,098,000)(4,098,000)(4,098,000)

Net income

2,001,855

2,001,855

2,001,855

Net changes of items other thanshareholders' equity during the year

Total changes of items during the year

4,135,000----(2,096,144)(2,096,144)

2,038,855

Balance at the end of the year

5,300,000

3,831

3,831

287,418

781,241

2,280,699

3,349,359

8,653,190

Valuation and translation adjustments
Net unrealized
Net unrealized
holding gains ongains (losses)
available-for-saleon hedges
securities
Balance at the beginning of the year

70,767(15,636)

Total valuation Total net assets
and translation
adjustments

55,1306,669,466

Changes of items during the year
Issuance of shares

4,135,000

Dividends of surplus(4,098,000)

Net income

2,001,855

Net changes of items other thanshareholders' equity during the year

(41,029)(63,928)(104,958)(104,958)

Total changes of items during the year

(41,029)(63,928)(104,958)

1,933,896

Balance at the end of the year

29,737(79,565)(49,827)

8,603,362

Notes to Non-Consolidated Financial Statements
Notes to matters concerning significant accounting policies
1. Basis and methods of valuation of assets(1)

Valuation basis and methods for securities
Available-for-sale securities
Investment securities with fair value

Stated at fair value based upon the quoted market prices at the end of the fiscal year
(Unrealized holding gains and losses are included as a separate component of net assets
until realized and the cost of securities sold is determined by the moving averagemethod.)

Investment securities without market
valueStated at cost, determined by the moving-average method

Investment securities in subsidiaries and associates

Stated at cost, determined by the moving-average method(2)

Valuation basis and method for derivatives

Stated at fair value(3)

Valuation basis and method for inventories

Stated at cost, determined by the moving-average method(Book value is written down when the market price declines below cost.)

2. Depreciation methods of fixed assets(1)

Tangible fixed assets(except for leased assets)(2)

Intangible fixed assets
Software(3)

Leased assets

Declining-balance method. However, the straight-line method is used for buildings
acquired on or after April 2016.

Computer software for internal use is amortized by the straight-line method over its
economic useful life of five (5) years.
Leased assets under finance leases that do not transfer the legal title of the assets to thelessee are depreciated to a residual value of zero (0) by the straight-line method over thelease periods.

3. Basis of recording allowances(1)

Allowance for doubtful receivables

An allowance for doubtful receivables is provided for the estimated amounts ofuncollectible accounts receivable from customers.
As for general receivables, an allowance is estimated based on the customers' financial
position and internal credit rating.
As for specific doubtful accounts, their collectibility is individually reviewed andallowances are provided for the estimated uncollectible amounts.

(2)

Provision for bonuses

Provision for bonus is provided for the estimated payment attributable to this year in
preparation for the payment of bonuses to employees.

(3)Provision for retirement benefits

Provision for retirement benefits for employees is provided based on projected retirement
benefit obligations and plan assets at the end of the year.
In determining the projected retirement benefit obligations, a benefit calculation

formula is used to attribute the expected retirement benefit payments to periodsof service until the end of the year.
If the plan assets exceed the projected retirement benefit obligations at the end of theyear, the excess amount is recognized as prepaid pension cost.
Unrecognized prior service cost is amortized by the straight-line method over a period(13 years) that is within the employees' average remaining years of service.
Unrecognized actuarial gains and losses are amortized by the straight-line method over aperiod (13 years) that is within the employees' average remaining years of service, fromthe year following the year in which the gains or losses occur.

(4)

Provision for directors' retirement benefits

4. Hedging accounting

Provision for directors' retirement benefits is provided based on amounts that are payableat the end of the year in accordance with the Company's Directors' Retirement Benefits
Payment Rule.
Method of hedge accounting
Gains and losses on derivatives are principally deferred until realization of the designatedhedge items.
Hedging instruments, hedged items, and hedging policy
The Company employs hedging instruments to manage risk exposure to fluctuations inforeign currency exchange rates in accordance with its internal rules.
The hedging instruments and hedged items to which hedge accounting is applied during
the term are as follows:
Hedging instruments:

Forward exchange contracts

Hedged items:

Forecasted transactions denominated in foreign currencies

Assessment of hedge effectiveness
When the critical terms between forecasted transactions and forward exchange contracts
match, the hedge relationship is assumed to be perfectly effective and therefore thequantitative effectiveness test is omitted.

5. Accounting for consumption taxes and other taxes

Consumption tax is accounted for by the segregated method under which consumption
tax is excluded from presentation of sales, cost of sales and expenses.

6. OtherThe Company adopts a consolidated tax payment system as a consolidated subsidiary of
Sumitomo Corporation, which is its parent company under the consolidated tax payment
system.
Adoption of tax effect accounting for the transition from the consolidated tax payment
system to the group tax sharing system.
As for the items subjected to the transition to the group tax sharing system establishedunder the Act for Partial Amendment to the Income Tax Act, etc.,(Act No.8 of 2020), as
well as to the review of the non-consolidated taxation system in association therewith, theCompany has not applied the provisions of Section 44 of the Implementation Guidanceon Tax Effect Accounting (ASBJ Guidance No.28.February 16,2018), but has applied
the provisions of the Income Tax Act before the amendment to the amounts of deferred
tax assets and deferred tax liabilities, by virtue of Section 3 of the Practical Solution on
the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System (PITF No.39, March 31,2020).

7. Notes to accounting standard issued but not yet effective“Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020, Accounting Standard Board of Japan(ASBJ))“Implementation Guidance on Accounting Standard for Revenue Recognition”(ASBJ Guidance No. 30, March 31, 2020, Accounting Standard Board of Japan (ASBJ))(1)

Overview

The International Accounting Standard Board (IASB) and the Financial AccountingStandard Board (FASB) jointly developed a comprehensive accounting standard forrevenue recognition. In May 2014, the IASB and the FASB jointly issued a new revenue
standard “Revenue from Contracts with Customers” (known as IFRS 15 by the IASBand as Topic 606 by the FASB). IFRS 15 became effective in the business year startingon or after January 1, 2018 whereas Topic 606 became effective from the business year
starting on or after December 15, 2017. In light of this, the ASBJ developed and issued
its comprehensive accounting standard for revenue recognition, together with relevant
implementation guidance. When developing the Accounting Standard for Revenue
Recognition, the ASBJ adopted the fundamental principles of IFRS 15 and proceeded toestablish its accounting standard.
The adoption of the fundamental principles of IFRS 15 enhances the comparability offinancial statements. The ASBJ also stated that if attention needs to be paid to any
specific issues concerning normal accounting practices in Japan, alternative accounting
policies may be adopted to the extent that financial statement comparability is nothindered.

(2)

Scheduled date of application

The above accounting standard will be applied from the beginning of the year ending
March 2022.

(3)

Impact of the application of the above accounting
standard etc.

The impact of the application of the “Accounting Standard for Revenue Recognition”
and other standards on financial statements is under review.

Notes to the balance sheet
1. Accumulated depreciation of tangible fixed assets

269,209 thousand yen

2. Guarantee obligations
A guarantee is provided for a subsidiary's debt obligations to a financial institution.
334,000 thousand yen

SC Machinex Asia Ltd.
3. Monetary receivables and payables to subsidiaries and affiliates
Short-term monetary receivables
Long-term monetary receivables

3,350,860 thousand yen
295,590 thousand yen

Short-term monetary payables

844,437 thousand yen

4. Accounting for retirement benefits
The Company participates in a defined benefit plan that shares risks among entities under common control (SumitomoCorporation Affiliated-Employer Employees Pension Fund). The company accounts for the contribution as expenses.
(1) Funded status of the pension fund (as of March 31, 2020)
Plan assets

43,104,830 thousand yen

Pension obligations under pension financial calculation

38,146,192 thousand yen

Balance

4,958,638 thousand yen(2) Percentage of contributions paid by the Company under the scheme (as of March 31, 2020)
1.84%
Notes to the Statement of Income
1. Operating transactions with subsidiaries and affiliates
Sales

3,850,413 thousand yen

Purchases

725,492 thousand yen

Selling, general, and administrative expenses

911,985 thousand yen

2. Non-operating transactions with subsidiaries and affiliates

279,728 thousand yen

Notes to the Statement of Changes in Net Assets
1. Number of issued shares as of the end of the year
Ordinary shares
2. Matters concerning the distribution of surplus made during
the year

2,000,000 shares
The payment of year-end dividends was approved at a shareholders'meeting held on June 25, 2019 as follows:
Dividends:
Dividend per share:
Date of right allotment:
Effective date:

3. Matters concerning the distribution of surplus to be madeafter the end of the year

¥4,098,000,000¥4,098.00
March 31, 2019
June 25, 2019

The payment of year-end dividends is proposed at a shareholders' meeting
to be held on June 23, 2020 as follows:
Dividends:
Dividend per share:
Date of right allotment:
Effective date:
Dividends are paid out of:¥1,885,000,000¥942.50
March 31, 2020
June 23, 2020
Other retained earnings

Notes to tax effect accounting1. Breakdown of major components for deferred tax assets and deferred tax liabilities
Deferred tax assets
Allowance for doubtful receivables
Losses on valuation of inventories

5,819 thousand yen

Provision for bonuses

15,883 thousand yen
136,597 thousand yen

Business taxes payable

31,622 thousand yen

Unrealized gains or losses on hedges

35,746 thousand yen

Asset retirement obligations

62,001 thousand yen

Loss on valuation of investment securities in subsidiaries and associates

43,613 thousand yen

Depreciation

18,506 thousand yen

Other20,106 thousand yen

Total deferred tax assets

369,897 thousand yen

Deferred tax liabilities
Unrealized gain on available-for-sale securities(13,360) thousand yen

Prepaid pension cost

(62,222) thousand yen

Asset retirement cost

(52,558) thousand yen

Total deferred tax liabilities(128,141) thousand yen

Net deferred tax assets

241,756 thousand yen

Notes to transactions with related parties

Note 1: The transaction amounts do not include consumption taxes.
Note 2: The Company receives a tax refund of certain individually attributable portions of income taxes
paid on a consolidated basis.
Note 3: Regarding fund deposits, since it is difficult to grasp the transaction amount and the settlementof funds is being performed at any time, the average balance during the period is stated.
Notes to per share information
1. Net assets per share¥4,301.68

2. Net income per share¥1,176.05

Significant subsequent events
1. Business combination by stock acquisition
The Company acquired 85% of the issued shares of SC Hiroshima Energy Corporation(hereinafter"SCHE”) from Sumitomo Corporation on April 1, 2020.
(1) Purpose of stock acquisition
The Company provided technical support and administrative service for SCHE, and contributed
to SCHE’s stable operation. As a result of this acquisition, the Company will be responsible formanagement and sales of SCHE. The Company aims to further increase the corporate value ofSCHE by enhancing communication, accelerating its decision making process, and effectively
utilizing internal resources of the Company.
(2)The other party for stock acquisition
Sumitomo Corporation(3)The company whose shares were acquired
1.NameSC Hiroshima Energy Corporation
2. Business content
Energy supply
3. Scale at the end of FY2019
Common stock 490,000 thousand yen(4)Timing of stock acquisition
April 1, 2020(5)Number of shares acquired, acquisition price, ownership ratio after acquisition
1)Number of shares acquired : 8,330 shares
2)Acquisition price : 520,625 thousand yen3)Ownership ratio after acquisition : 95%