Challenge for
Growth andEvolution
Ishihara Sangyo Kaisha
Annual Report 2020
Year Ended March 31, 2020

Contents
Consolidated Financial Highlights...........................................................................1
To Our Shareholders and Friends.............................................................................2
Business Overview.............................................................................................................5
Financial Statements
Consolidated Balance Sheet................................................................................6
Consolidated Statement of Income................................................................8
Consolidated Statement of Comprehensive Income...........................9
Forward-Looking Statements
Forward-looking statements in this report relating to operational
result forecasts are based on certain assumptions that theCompany believes are reasonable and involve risks anduncertainties. Actual results may differ significantly from these
forecasts, affected by various material factors.

Consolidated Statement of Changes in Net Assets............................10
Consolidated Statement of Cash Flows.....................................................11
Notes to Consolidated Financial Statements..........................................12
Report of Independent Public Accountants...........................................38
Corporate Data..........................................................................................................39

Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Consolidated Financial Highlights
For the year ended March 31, 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2020

2019

2018

2020

For the years ended March 31,
Net sales:
Domestic...........................................................................................

¥

51,591¥

52,829¥50,309$474,138

Overseas...........................................................................................

49,476

53,612

57,692454,701

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

101,067

106,441

108,001

928,839

Inorganic chemicals...........................................................................

51,52854,88354,441

473,560

Organic chemicals.............................................................................

46,17447,67250,461

424,354

Other businesses..............................................................................

3,365

3,886

3,099

30,925

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

101,067

106,441

108,001

928,839

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

6,189

11,372

10,02256,879Net income...........................................................................................

2,359

8,683

3,442

21,680Depreciation and amortization of property, plant and equipment.........

4,855

4,631

4,639

44,619Research and development costs.........................................................

9,150

8,071

8,707

84,092Current assets......................................................................................

110,324

107,080

103,387

1,013,914

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

172,437

168,690

159,767

1,584,753

Current liabilities....................................................................................

43,73844,712

47,985401,967

Net assets.............................................................................................

76,67075,335

67,137

704,622

Sales classified by business segment:

As of March 31,

U.S. dollars(Note)Yen

Per share data
Net income...........................................................................................

¥

59.04

¥

217.26

¥

86.12

$

0.54

Net assets.............................................................................................

1,918.63

1,885.01

1,679.77

17.63

Number of employees (as of March 31).................................................

1,704

1,642

1,578

–

Note 1: The U.S. dollar amounts in this report have been translated from the yen amounts, for convenience only, at ¥108.81 =U.S.$1.00, the rate ofexchange prevailing on March 31, 2020.

Ishihara Sangyo Kaisha, Ltd.

1

To Our Shareholders and Friends
Looking at global markets during the current fiscal year, overall there was a slowdown driven
by the instability internationally, including difficulties in Brexit negotiations, in addition to
the protraction of US-China trade tension and the slowdown in China’s economy. Despite
weakness seen in exports and production, Japan’s economy was supported by strong
personal consumption buoyed by the improving employment and income environment, but
after the consumption tax hike there were growing clouds on the horizon signaling economic
stagnation. Moreover, the emergence of the COVID-19 pandemic toward the end of the fiscal
year disrupted worldwide economic activities, leading to a rapid deterioration in businesssentiment in Japan and around the world.
Under such conditions, during the second year of our 7th Medium-term Business Plan,
our Group firmed up its defensive posture while moving ahead with aggressive initiatives
aimed at growth, but we faced a severe business situation mainly in the inorganic chemicals
business. Looking at the market environment influencing the main operations, in terms of
Kenichi Tanaka
President & CEOtitanium dioxide, domestic demand, which had been firm through the first half, softened after
the hike in the consumption tax, while overseas demand declined mainly in Asia following theslowdown in China’s economy. Consequently, market conditions were on a downward trend.
The worldwide shipment value of agrochemicals continued to recover thanks to strong grain
production in Brazil, a major agricultural country. In our Group’s mainstay markets of Japanand Europe, shipments were impacted due to extreme weather.
As a result, the current fiscal year resulted in net sales of ¥101.0 billion [US$929 million](down ¥5.3 billion YoY) and operating income decreased to ¥6.1 billion [US$57 million](down ¥5.1 billion YoY). In terms of non-operating income, ordinary income was ¥5.3 billion[US$49 million] (down ¥5.7 billion YoY) due to losses on currency exchange compared
to profits in the previous year. Net income attributable to owners of parent decreased to¥2.3 billion [US$22 million] (down ¥6.3 billion YoY).
In 2009, we established “A strong and responsible chemical company with excellent
brand power” as the ideal model for our Group to achieve by 2020, our 100th anniversary.
Since then, our Group has made steady progress in achieving this vision through its efforts
under three different medium-term business plans. Under the 7th Medium-term Business
Plan initiated in FY2018, while solidifying our footholds in existing businesses by reinforcing
aggressive initiatives for further growth, as the final stage. Our Group initiated growth into
“becoming a chemical company that is attractive to all stakeholders” to fulfill its promise ofrestoring its dividend as quickly as possible during the term of the plan.
In FY2018, the first fiscal year of the plan, the performance greatly outpaced targets,driven by robust demand for titanium dioxide and other products in the inorganic chemicals
business. Our Group was able to increase its operating income for the third consecutive year
and archive to restore its dividend in June of 2019. However, in FY2019, the second year of
the plan, we faced a deteriorating business environment than expected, as performancereversed course and fell below our targets. In the inorganic chemicals business, there was a
slowdown in demand and weaker market conditions for titanium dioxide mainly in Asia, while
prices of titanium ore, a major raw material, remained elevated. As a result, our Group saw
weaker performance in terms of sales and cost price. In the organic chemicals business,sales of main agrochemicals saw some positives, including strong growth in insecticide sales
overseas, but overall performance was subdued because of extreme weather that occurred
around the world.
In FY2020, the final fiscal year of the plan, we will make steady progress with measures
toward our next aggressive approach while further solidifying defensive aspects of ourbusiness, despite concerns about the impact on performance from the further spread andprotraction of COVID-19.
In the inorganic chemicals business, we will further accelerate initiatives to shift our

2Ishihara Sangyo Kaisha, Ltd.

focus from commodity to the development and sales of highly functional, high value added
products, in order transition to a business structure that can secure stable profits even inchallenging business environments.
Specifically, for titanium dioxide, we will step up initiatives aimed at the full-scale salesof finishes products for matte coating, whose evaluation is being progressed by customers,
and expand sales overseas of super weatherability pigments, which have seen steady
growth in Japan.
For functional materials, we will capture growing demand for high-purity titanium dioxideand barium titanate for electronic products, as well as for electro-conductive materials with
antistatic function, driven by advancing automotive electronics and the introduction of 5G(fifth generation technology standard for cellular networks). Toward this end, we will steadily
continue establishing development, production, and sales structures.
For organic chemical products, we will work to turnaround the declining trend in salesof main agrochemicals and maximize the value of proprietary agents to quickly return to a
growth trajectory.
For sales, we will maximize sales volume by formulating sales strategies tailored to theneeds of each region and market, in order to capture growing demand overseas.
In addition, we will work to strengthen development capabilities, including boosting sales
coverage and target crops. At the same time, we will expand our product lineup with mixturesand new formulations utilizing our unique characteristic that in-house developed agentsoccupy a large share of sales. For production, we will work to reduce production costs andimprove quality as we increase the cost competitiveness of proprietary agents, in addition
to continuously reviewing operations aimed at establishment of optimal production andprocurement systems for active ingredients and intermediates.
We will strive to secure increased profitability and sustainable growth by maximizing thevalue of proprietary agents.
For product segments other than agrochemicals, we will promote market penetration
for the world’s first anti-pancreatitis drug for dogs, which we launched in Japan, andspeed up development aimed at releasing the drug in Europe and North America. The
biopharmaceutical HVJ-E we are developing in collaboration with the University of Osaka is
steadily progressing with Phase II clinical trials, and we will quickly establish partnerships withexternal companies to compensate for functions that aren’t found in our Group.

The Group has formulated a “Basic Philosophy” and “Code of Conduct” to represent thefundamental and universal values shared by all its members of the group in the execution of
their work activities.

Basic Philosophy• Contribute to social development, protection of life and environmental preservation• Respect shareholders, customers, suppliers, local communities and employees• Abide by laws and regulations; maintain transparency in business activities

Code of Conduct• At Ishihara Group, we will strictly observe laws, regulations, social norms and Company rules,
while steadfastly adhering to high ethical standards, so as to gain social trust in our business.
• In manufacturing activities, we will place the utmost priority on global environmental
protection, as well as on worker safety, and will work to prevent any workplace accident ordisaster.
• On the basis of respect for human rights, we will promote mutual understanding andcooperation among employees, in order to create an open and friendly workplace.
Ishihara Sangyo Kaisha, Ltd.

3

• To maintain transparency in our business activities, we will promote communication with local
communities and society, and will disclose corporate information in a timely and appropriatemanner.
With all its members of the group constantly mindful of and practicing the Basic Philosophy and
Code of Conduct, the ISK Group will strive to foster progress of society through growth as arobust development-oriented corporation that adapts to the changing times and environment.
We look forward to your ongoing support and understanding.

Kenichi Tanaka
President & CEO

4

Ishihara Sangyo Kaisha, Ltd.

Business Overview
Inorganic Chemicals BusinessNet sales of titanium dioxide were ¥39.7 billion [US$365 million]

Looking at profits and losses, both sales and cost price(down ¥2.8 billion YoY). This was attributed to a significant drop in

exerted downward pressure on profit due to the sustained

shipment volume on weaker exports throughout the year, despite

elevated price of titanium ore, in addition to rising fixed costs

sales in Japan that were on par with the previous year thanks to afrom operational adjustments associated with the decline in sales

strong first half, which offset the drop in volume leading up to thevolume of titanium dioxide.

end of the fiscal year.
Net sales of functional materials were ¥11.7 billion [US$108

As a result, net sales for the inorganic chemicals businesswere ¥51.5 billion [US$474 million] (down ¥3.3 billion YoY)

million] (down ¥0.5 billion YoY). This was caused by a year-over-

and operating income was ¥3.7 billion [US$34 million] (downyear decline due to sluggish demand for electronic components¥3.5 billion YoY).

in related sectors, despite a year-over-year increase in sales ofelectro-conductive materials.

Organic Chemicals Business
Sales of agrochemicals in Japan fell below the previous year

For product segments other than agrochemicals, sales ofgiven the severe sales environment caused by major damages toanimal health products and active pharmaceutical ingredients

agricultural production suffered at the hands of torrential rainfall

manufactured on consignment declined year over year.

and typhoons.
Overseas sales also fell year over year after no longer
carrying other companies’ products, despite an increase in

Looking at profits and losses, overall profits were down due
to a decrease in sales and increase in R&D expenses.
As a result, net sales for the organic chemicals businessrevenue from the full-fledged launch of sales of new products

were ¥46.1 billion [US$424 million] (down ¥1.4 billion YoY) andin main markets and significant growth of insecticide sales fromoperating income decreased to ¥4.4 billion [US$41 million] (downtheir label expansion on crops in Europe.

¥1.4 billion YoY).

Other Businesses
Net sales of other businesses were ¥3.3 billion [US$31 million](down ¥0.5 billion YoY) and operating income was ¥0.5 billion[US$5 million] (down ¥70 million YoY).

Ishihara Sangyo Kaisha, Ltd.

5

Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet
As of March 31, 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2020

2019

2020

AssetsCurrent assets:
Cash and deposits (Notes 5 and 18) ........................................................................
Trade receivables (Notes 18):
Notes ....................................................................................................................
Accounts...............................................................................................................

¥

20,925¥23,984$

192,308

Less allowance for doubtful receivables....................................................................
Trade receivables, net............................................................................................

3,600
28,46032,060(1,060)31,0003,259
30,63933,898(469)
33,42933,085261,557
294,642(9,742)284,900

Inventories (Note 8)....................................................................................................
Other current assets..................................................................................................
Total current assets................................................................................................

53,715
4,684
110,324

46,783
2,884
107,080493,659
43,047
1,013,914

Property, plant and equipment:
Land (Note 10)...........................................................................................................
Buildings and structures (Note 8 and 10)...................................................................
Machinery and equipment (Note 8 and 10)................................................................
Leased assets...........................................................................................................
Construction in progress...........................................................................................

5,374
39,904
114,970
2,675
6,633

5,399
39,583
115,459
2,615
3,683

49,389366,731
1,056,613
24,58460,959Less accumulated depreciation.................................................................................
Property, plant and equipment, net (Notes 24).......................................................

169,556(123,285)
46,271

166,739(123,572)
43,167

1,558,276(1,133,030)
425,246

Investments and other assets:
Investments in securities (Notes 6, 10 and 18):
Unconsolidated subsidiaries and affiliates.............................................................
Other.....................................................................................................................

2,175
3,758

2,248
4,771

19,98934,537

Total investments in securities..............................................................................

5,933

7,019

54,526

Deferred income taxes (Notes 14)..............................................................................
Asset for retirement benefits (Note 12).......................................................................
Other.........................................................................................................................
Total investments and other assets.......................................................................

8,428
10
1,471
15,842

9,604
12
1,808
18,44377,45692
13,519145,593

168,690$ 1,584,753

Total assets (Note 24)....................................................................................................

6

Ishihara Sangyo Kaisha, Ltd.

¥

172,437¥

Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheet
As of March 31, 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2020
Liabilities and net assets
Current liabilities:
Short-term bank loans (Notes 10 and 18)..................................................................
Current portion of long-term bank loans (Notes 10 and 18).......................................
Current portion of bonds (Notes 10 and 18)..............................................................
Trade payables (Notes 18):
Notes.....................................................................................................................
Accounts...............................................................................................................

¥

Lease obligations (Notes 10, 18 and 21)....................................................................
Accrued income taxes (Note 14)................................................................................
Accrued expenses.....................................................................................................
Accrued bonuses for employees...............................................................................
Reserve for sales returns...........................................................................................
Reserve for implementation of environmental and safety arrangements....................
Provision for maintenance.........................................................................................
Other current liabilities...............................................................................................
Total current liabilities.......................................................................................
Long-term liabilities:
Long-term bank loans (Notes 10 and 18)...................................................................
Bonds (Notes 10 and 18)...........................................................................................
Lease obligations (Notes 10, 18 and 21)....................................................................
Liability for retirement benefits (Note 12)....................................................................
Reserve for implementation of environmental and safety arrangements....................
Asset retirement obligations (Note 11)........................................................................
Provision for repairs...................................................................................................
Liabilities from application of equity method..............................................................
Other long-term liabilities...........................................................................................
Total long-term liabilities...................................................................................

7,932
7,938
684

2019

¥

8,000
10,102
390

2020

$

72,89872,9536,286

2,658
14,775
17,433
468
261
4,359
667
24
34
382
3,556
43,7383,537
11,856
15,393
451
471
4,547
734
35
84
–
4,505
44,712

24,428135,787
160,2154,301
2,399
40,061
6,130
221
312
3,511
32,680401,967

28,053
3,036
686
12,884
2,052
683
–
400
4,235
52,02925,6981,620
616
12,882
2,878
710
150
663
3,426
48,643257,816
27,902
6,305
118,408
18,859
6,277
–
3,676
38,921
478,164

43,421
10,62725,29943,421
10,627
23,419399,053
97,666
232,506(728)
78,619(723)
76,744(6,691)
722,534(430)(1,216)(303)(1,949)76,670172,437478(1,444)(443)(1,409)75,335
168,690(3,952)(11,175)(2,785)(17,912)704,622
1,584,753

Contingent liabilities (Note 13)
Net assets:
Shareholders’ equity (Note 15):
Common stock:
Authorized: 100,000 thousand shares in 2020 and 2019
Issued:40,384 thousand shares in 2020 and 2019.....................................
Capital surplus.......................................................................................................
Retained earnings..................................................................................................
Less treasury stock, at cost:
423 thousand shares in 2020 and 418 thousand shares in 2019........................
Total shareholders’ equity................................................................................
Accumulated other comprehensive income (loss):
Net unrealized holding (loss) gain on securities......................................................
Translation adjustments.........................................................................................
Retirement benefits liability adjustments................................................................
Total accumulated other comprehensive loss..................................................
Total net assets (Note 22).................................................................................
Total liabilities and net assets........................................................................................

¥¥

Ishihara Sangyo Kaisha, Ltd.

7

Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Income
For the year ended March 31,2020Thousands of
U.S. dollars(Note 1)Millions of yen

Net sales (Note 24)........................................................................................................

¥

2020
101,067¥2019
106,441$2020
928,839

Cost of sales (Notes 7 and 16)......................................................................................

69,99270,668643,250

Gross profit...................................................................................................................

31,07535,773

285,589

Selling, general and administrative expenses (Note 16).................................................

24,886

24,401

228,710

Operating income (Note 24)..........................................................................................

6,189

11,37256,879Interest and dividend income....................................................................................

343

160

3,152

Other income:Equity in earnings of affiliates.....................................................................................

215

393

1,976

Foreign exchange gain, net.......................................................................................

–

141

–

Commission fee........................................................................................................

–

121

–

Gain on sales of raw materials...................................................................................

93

75

855

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

248

269

2,279

899

1,159

8,262

Other expenses:
Interest expense........................................................................................................

610

718

5,606

Financial fee..............................................................................................................

275

388

2,527

Foreign exchange loss, net........................................................................................

490

–

4,503

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

368

281

3,383

1,743

1,387

16,0195,345

11,144

49,122Gain on sales of fixed assets.....................................................................................

–

182

–

Gain on insurance claim............................................................................................

194

63

1,783

194

245

1,783
5,587

Ordinary income...........................................................................................................
Extraordinary gains:

Extraordinary losses:
Loss on disposal of fixed assets................................................................................

608

729

Loss on disaster........................................................................................................

–

311

–

Loss on impairment of fixed assets (Notes 8 and 24).................................................

420

121

3,860

Loss on liquidation of a subsidiary (Notes 9)..............................................................

334

–

3,070

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

81

–

744

1,443

1,161

13,261

4,096

10,22837,644Current......................................................................................................................

458

1,391

4,209

Deferred....................................................................................................................

1,279

154

11,755

1,737

1,545

15,964

2,359

8,683

21,680

Income before income taxes.........................................................................................
Income taxes (Note 14):

Net income (Note 22)....................................................................................................
Net income attributable to:
Owners of parent.......................................................................................................

8

Ishihara Sangyo Kaisha, Ltd.

¥

2,359

¥

8,683

$

21,680Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Comprehensive Income
For the year ended March 31, 2020
Thousands of
U.S. dollars(Note 1Millions of yen

Net income...................................................................................................................

¥

2020
2,359

¥

2019
8,683

$

2020
21,680

Other comprehensive loss (Note 22):
Net unrealized loss on securities...............................................................................

(907)

(191)

(8,336)

Translation adjustments.............................................................................................

167

(379)

1,535

Retirement benefits liability adjustments....................................................................

140

82

1,287

Share of other comprehensive income of affiliates accounted
for by the equity method attributable to the Company............................................

60

6

551

Total other comprehensive loss.................................................................................

(540)

(482)

(4,963)Comprehensive income................................................................................................

¥

1,819

¥

8,201

$

16,717

¥

1,819

¥

8,201

$

16,717

Total comprehensive income attributable to:
Owners of parent.......................................................................................................

Ishihara Sangyo Kaisha, Ltd.

9

Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Changes in Net Assets
Year ended March 31, 2020
Millions of yen
Accumulated other comprehensive income(loss)

Shareholders’ equity
Number ofshares ofcommonstock in issue

Commonstock

CapitalsurplusRetainedearnings

Treasurystock, at cost

Balance at April 1, 2018................................ 40,383,943 ¥ 43,421 ¥ 10,627 ¥ 14,736 ¥

(720)

Net
unrealized
holding gain
on securities¥

Translation
adjustments

670 ¥Retirement
benefits
liability
adjustments(1,072) ¥Total net
assets(525) ¥ 67,137

Net income attributable to ownersof parent for the period..............................

–

–

–

8,683

–

–

–

–

8,683

Acquisition of treasury stock ........................

–

–

–

–

(3)

–

–

–

(3)

Disposition of treasury stock........................

–

–

0

–

0

–

–

–

0

Other changes .............................................

–

–

–

–

–

(192)

(372)

82

(482)

478 ¥

(1,444) ¥––Balance at April 1, 2019................................ 40,383,943 ¥ 43,421 ¥ 10,627 ¥ 23,419 ¥Dividends paid..............................................

–

–

–

(479)

(723)

¥

–

(443) ¥ 75,335
–

(479)

–

–

2,359

–

–

(5)

Net income attributable to ownersof parent for the period..............................

–

–

–

2,359

–

–

Acquisition of treasury stock.........................

–

–

–

–

(5)

–

Disposition of treasury stock........................

–

–

0

–

0

–

–

–

0

Other changes..............................................

–

–

–

–

–

(908)

228

140

(540)

(430) ¥

(1,216) ¥Balance at March 31, 2020.......................... 40,383,943 ¥ 43,421 ¥ 10,627 ¥ 25,299 ¥

(728)

¥

(303) ¥ 76,670

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Shareholders’ equity

Commonstock

Balance at April 1, 2019................................

Capitalsurplus(loss)

Retainedearnings$ 399,053 $ 97,666 $ 215,228 $Dividends paid..............................................

––(4,402)

Net income attributable to ownersof parent for the period..............................

––

Acquisition of treasury stock.........................

––

Disposition of treasury stock........................

–

Other changes..............................................

–

Balance at March 31, 2020..................

$ 399,053

10

Ishihara Sangyo Kaisha, Ltd.

Treasurystock, at cost

(6,645)Net
unrealized
holding gain
on securities$

Translation
adjustments

Retirement
benefits
liability
adjustments

4,393 $ (13,271) $Total net
assets(4,071) $ 692,353

–

–

–

–

(4,402)

21,680––––21,680

–

(46)

–

–

–

(46)

0

–

0

–

–

–

0

–

–

–

(8,345)

2,095

1,287

(4,963)$ 97,666 $ 232,506 $(6,691)$(3,952) $ (11,175) $(2,785) $ 704,622

Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
For the year ended March 31, 2020
Thousands of
U.S. dollars(Note 1)Millions of yen

2020
Cash flows from operating activities
Income before income taxes.........................................................................................
Adjustments for:
Depreciation and amortization...................................................................................
Loss on disaster........................................................................................................
Loss on impairment of fixed assets...........................................................................
Loss on liquidation of a subsidiary.............................................................................
Increase in liabilities for retirement benefits, net.........................................................
Decrease in provision for loss on liquidation of a subsidiary......................................
Decrease in reserve for implementationof environmental and safety arrangements.............................................................
Interest and dividend income....................................................................................
Interest expense........................................................................................................
Foreign exchange loss, net........................................................................................
Equity in earnings of affiliates, net..............................................................................
Loss (gain) on disposal or sales of fixed assets, net..................................................
Other.........................................................................................................................
Changes in operating assets and liabilities:
Trade receivables...................................................................................................
Inventories.............................................................................................................
Other current assets..............................................................................................
Trade payables......................................................................................................
Accrued expenses and other current liabilities.......................................................
Subtotal..............................................................................................................
Interest and dividends received....................................................................................
Interest paid..................................................................................................................
Insurance claim received...............................................................................................
Disaster loss paid..........................................................................................................
Income taxes paid.........................................................................................................
Net cash provided by operating activities..................................................................
Cash flows from investing activities
Purchase of investment securities.............................................................................
Purchases of property, plant and equipment.............................................................
Proceeds from sales of property, plant and equipment.............................................
Increase in long-term loans receivable......................................................................
Collection of long-term loans receivables..................................................................
Other.........................................................................................................................
Net cash used in investing activities.......................................................................
Cash flows from financing activities
Proceeds from issuance of bonds.............................................................................
Redemption of bonds................................................................................................
Decrease in short-term bank loans, net.....................................................................
Proceeds from long-term bank loans........................................................................
Repayment of long-term bank loans..........................................................................
Repayment of lease obligations.................................................................................
Repayment of installment payable.............................................................................
Dividends paid...........................................................................................................
Proceeds from deposits received..............................................................................
Repayment of deposits received...............................................................................
Increase in treasury stock, net...................................................................................
Net cash provided by (used in) financing activities.................................................
Effect of exchange rate changes on cash and cash equivalents...................................
Decrease in cash and cash equivalents........................................................................
Cash and cash equivalents at the beginning of the year...............................................
Cash and cash equivalents at the end of the year (Note5)............................................

¥

¥
¥

¥

4,096

2019
¥

10,2282020$

37,644

4,856
–
420
334
211
–

4,631
311
121
–
234
(1)

44,619
–
3,860
3,070
1,939
–

(875)
(343)
610
31
(131)
181
476

(813)
(160)
718
142
(352)
(20)
(270)

(8,042)(3,152)
5,606
285(1,204)
1,663
4,375

1,697
(7,245)(1,229)
2,388
(920)
4,556
340
(602)
302
(282)
(997)
3,317

(4,385)(5,763)
(732)
3,457
369
7,715
155
(739)
127
(49)
(2,302)
4,907

15,596(66,584)(11,295)
21,946(8,455)41,871
3,125(5,533)
2,775(2,592)(9,162)30,484(141)(6,716)
108
(353)
159
21
(6,922)
2,100
(390)
(68)
12,150(11,959)
(534)
(262)
(480)
–
–
(5)
552
(5)
(3,058)23,98420,925¥¥¥(2,899)(6,473)
701
(286)
359
7
(8,591)
–
(390)
(410)
15,000(15,313)
(497)
(211)
–
1,002
(1,652)(4)(2,475)(154)(6,313)30,29723,984$$$(1,296)(61,722)993(3,244)
1,461
193(63,615)
19,300(3,584)(625)
111,662(109,907)(4,908)(2,408)(4,411)
–
–
(46)
5,073
(55)
(28,113)220,421
192,308

Ishihara Sangyo Kaisha, Ltd.

11

Ishihara Sangyo Kaisha, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
Year ended March 31, 2020

1. Basis of Preparation of Consolidated Financial Statements
The accompanying consolidated financial statements of Ishihara

consolidated financial statements include information which is not

Sangyo Kaisha, Ltd. (the “Company”) and its consolidated

required under accounting principles generally accepted in Japansubsidiaries have been prepared on the basis of accounting

but is presented herein as additional information.

principles generally accepted in Japan, which are different in

Certain amounts in the prior year’s consolidated financial

certain respects as to the application and disclosure requirements

statements have been reclassified to conform to the currentof International Financial Reporting Standards, and are compiled

year’s presentation. Such reclassifications had no effect on

from the consolidated financial statements prepared by the

consolidated profit or net assets.

Company as required by the Financial Instruments and Exchange
Act of Japan.

The translation of yen amounts into U.S. dollar amounts
is included solely for convenience, as a matter of arithmetic

In preparing the accompanying consolidated financial

computation only, at ¥108.81 = U.S.$1.00, the approximate rate ofstatements, certain reclassifications and rearrangements haveexchange in effect on March 31, 2020. This translation should notbeen made to the consolidated financial statements issued

be construed as a representation that yen have been, could havein Japan in order to present them in a format which is morebeen, or could in the future be, converted into U.S. dollars at thefamiliar to readers outside Japan. In addition, the notes to theabove or any other rate.

2. Summary of Significant Accounting Policies(a) Principles of consolidation and accounting for investments inunconsolidated subsidiaries and affiliates(b) Foreign currency translation
Foreign currency transactions

The accompanying consolidated financial statements include

All monetary assets and liabilities denominated in foreign

the accounts of the Company and its 12 significant consolidated

currencies are translated into yen amounts at the rates ofsubsidiaries, consisting of ISK Bioscience K.K., the ISK

exchange in effect at the balance sheet date, except thatAMERICAS INCORPORATED Group (5 subsidiaries), ISK

receivables and payables hedged by qualified forward foreign

BIOSCIENCES EUROPE N.V., ISK Taiwan Co., Ltd., Fuji Titanium

exchange contracts are translated at their corresponding

Industry Co., Ltd., Ishihara Techno Corporation, ISK Engineering

contracted rates.

Partners Corporation and ISK ANIMAL HEALTH, LLC.

Revenue and expense items arising from transactions

At a meeting on the shareholders of the Company held on

denominated in foreign currencies are generally translated into yen

December 23, 2019, the dissolution of ISK SINGAPORE PTE. LTD.

at the exchange rates in effect at the respective transaction dates.

was resolved, and therefore, it has been excluded from the scope

Foreign exchange gain or loss is credited or charged to incomeof consolidation.

in the year in which such gain or loss is recognized for financial

The Company’s remaining subsidiaries including ISK

reporting purposes.

BIOSCIENCES KOREA LTD., have not been consolidated because
they are not significant in terms of total assets, retained earnings,

Financial statements of overseas consolidated subsidiaries

net sales and net income.

The balance sheet accounts of the overseas consolidated

The equity method is applied to investments in three affiliatedsubsidiaries are translated into yen at the rates of exchange incompanies. Those affiliates accounted for under the equity

effect at the balance sheet date, except that the components ofmethod are BELCHIM CROP PROTECTION N.V., HOKUSAN

net assets are translated at their historical rates. Revenue andCO.,LTD and SUMMIT AGRO USA,LLC.

expense accounts are translated at the average rates of exchange

Investments in significant affiliates are stated at theirunderlying net equity after the elimination of intercompany income.
Investments in unconsolidated subsidiaries and the remaining
affiliate companies are stated at cost.
The overseas consolidated subsidiaries are consolidated

in effect during the year. Differences resulting from translating
financial statements denominated in foreign currencies have notbeen included in the determination of net income but are reported
as translation adjustments which are components of accumulated
other comprehensive income (loss).

on the basis of a fiscal period ending December 31, which
differs from the balance sheet date of the Company. As a result,(c) Cash and cash equivalents

adjustments have been made for any significant intercompany

For the purposes of the consolidated statements of cash flows,transactions which took place during the period between the year

cash and cash equivalents consist of cash on hand, cash in banks

end of these overseas consolidated subsidiaries and the year end

which can be withdrawn at any time and short-term investmentsof the Company.

with a maturity of three months or less when purchased which

12

Ishihara Sangyo Kaisha, Ltd.

can easily be converted to cash and are subject to little risk of

However, the assessment of interest rate swaps which the specialchange in value.

method is applied is omitted.

(d) Inventories(g) Property, plant and equipment and depreciation (except forInventories of the Company and its domestic consolidated

leased assets)

subsidiaries are principally stated at lower of cost or net selling

Property, plant and equipment are stated at cost. Depreciation

value, cost being determined by the gross average method.

of property, plant and equipment is recognized primarily by
the straight-line method over the estimated useful lives of(e) Securities

the respective assets. The useful lives of property, plant andSecurities are classified into two categories: held-to-maturity

equipment are principally as follows:

debt securities and other securities. Held-to-maturity debt

Buildings and structures...........................3 to 55 years

securities are carried at amortized cost. Marketable securities

Machinery and equipment........................2 to 20 years

classified as other securities are carried at fair value, with any

Costs for maintenance, repairs and minor renewals arechanges in unrealized holding gain or loss, net of the applicablecharged to income as incurred. Major renewals and betterments

income taxes, reported as a separate component of accumulated

are capitalized.

other comprehensive income (loss). Non-marketable securities
classified as other securities are carried at cost. Cost of securities(h) Intangible assets (except for leased assets)sold is determined by the moving average method.

Intangible assets are amortized by the straight-line method over

Investments in investment business limited liability

the useful lives of the respective assets. Expenditures relating

partnerships and other similar partnerships, which are deemed toto computer software developed for internal use are charged to

be securities under Article 2, Clause 2 of the Financial Instruments

income as incurred, except if these are deemed to contributeand Exchange Act of Japan, are valued at the amount of theto the generation of future income or cost savings. Suchunderlying equity in their net assets based on the latest financial

expenditures are capitalized as assets and amortized by thestatements available as of the closing date stipulated in thestraight-line method over their estimated useful lives of 5 years.

partnership agreement.
(i) Research and development costs(f) Derivatives and hedging activities

Research and development costs are charged to income as

Derivative financial instruments are utilized by the Company andincurred.

its domestic consolidated subsidiaries principally in order tomanage risk arising from adverse fluctuation in foreign exchange(j) Leased assets

rates and interest rates. The Company and its domestic

Leased assets under finance leases that transfer ownership ofconsolidated subsidiaries have established a control environment

the assets are depreciated by using the economic useful lives ofwhich includes policies and procedures for risk assessment,

leased assets.

including an assessment of the effectiveness of their hedging

Leased assets under finance lease contracts that do not

activities, and for the approval, reporting and monitoring oftransfer ownership to the lessee are depreciated to a residualtransactions involving derivatives.

value of zero by the straight-line method using the term of the

Derivatives are carried at fair value with any changes incontract as the useful life.

unrealized gain or loss credited or charged to income, except
for those which meet the criteria for deferral hedge accounting(k) Allowance for doubtful receivables

under which unrealized gain or loss is deferred and reported as a

The Company and its domestic consolidated subsidiaries havecomponent of accumulated other comprehensive income (loss).

provided an allowance for doubtful receivables based on their

Receivables and payables hedged by forward foreign exchange

historical experience of bad debts on ordinary receivables plus ancontracts which meet certain conditions are translated at theiradditional estimate of probable specific doubtful accounts fromcontracted rates (the “allocation method”). Interest-rate swaps

customers experiencing financial difficulties.

which meet certain conditions are accounted for as if the interest

The allowance for doubtful receivables of the overseas

rates which apply to the swaps had originally applied to theconsolidated subsidiaries has been provided at the estimatedunderlying debt (the “special method”).

aggregate amount of their probable bad debts.

The effectiveness of hedges is assessed based oncomparison of the cumulative changes in markets or cash flowsof the hedged items and those of the hedging instruments.
Ishihara Sangyo Kaisha, Ltd.

13

(l) Accrued bonuses for employees(r) Accounting standard issued but not effective

Accrued employees’ bonuses are accounted for at an estimatedAccounting Standard and Implementation Guidance on Revenue

amount of the bonuses to be paid as allocated to the current

Recognition

fiscal year.

On March 30, 2018, Accounting Standards Board of Japan(“ASBJ”) issued “Accounting Standard for Revenue Recognition”(m) Reserve for sales returns(ASBJ Statement No. 29) and “Implementation Guidance on

Reserve for sales returns is provided for estimated losses incurring

Accounting Standard for Revenue Recognition” (ASBJ Guidance

due to the return of finished goods and merchandise sold during

No. 30).

the fiscal year subsequent to the balance sheet date, using thehistorical rate of such returns in prior years.

(1) Overview
This is a comprehensive accounting standard for revenue(n) Reserve for implementation of environmental and safety
arrangements

recognition. Specifically, the accounting standard establishes
the following five-step model that will apply to revenue fromThe Company has provided the reserve for estimatedcustomers:

expenditures to promote environmental and safety arrangements.

1. Identify the contract(s) with a customer

In addition, the Company has also provided the reserve for2. Identify the performance obligations in the contractthe expenses related to the remediation of soil and groundwater

3. Determine the transaction pricecontamination and measures for buried waste at Yokkaichi Plant.

4. Allocate the transaction price to the performance(o) Provision for maintenance

5. Recognize revenue when (or as) the entity satisfies aobligations in the contract
Provision for maintenance is provided in an amount estimatedperformance obligation

to be necessary for the maintenance for certain machinery andequipment.

(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and(p) Retirement benefits

implementation guidance from the beginning of the fiscal year

Liability for retirement benefits is provided at an amount calculated

ending March 31, 2022.

based on the retirement benefit obligation and the fair value of thepension plan assets as of the balance sheet date.
The retirement benefit obligation for employees is attributed(3) Impact of the adoption of accounting standard andimplementation guidance

to each period by the straight-line method over the estimated

The Company is currently evaluating the effect of the adoption

years of service of the eligible employees.

of this accounting standard and implementation guidance on

Actuarial gain or loss is amortized in the following year in

its consolidated financial statements.

which such gain or loss is recognized, principally by the straightline method, over the estimated average remaining years of

Accounting Standard for Accounting Policy Disclosures,

service of the employees participating in the plans.

Accounting Changes and Error Corrections

Prior service cost is amortized as incurred by the straight-line

On March 31, 2020, the ASBJ issued the revised “Accounting

method over the estimated average remaining years of service ofStandard for Accounting Policy Disclosures, Accounting Changes

the employees participating in the plans.

and Error Corrections” (ASBJ Statement No.24)(q) Income taxes(1) Overview

Income taxes are calculated based on taxable income andThis accounting standard has been released to provide ancharged to income on an accrual basis. Certain temporary

outline of the applicable accounting principles and procedures

differences exist between taxable income and income reported forin cases where directly relevant accounting standards are notfinancial statement purposes which enter into the determination

available.

of taxable income in a different period. The Company andits consolidated subsidiaries recognize the tax effect of such
temporary differences in their consolidated financial statements.

(2) Scheduled date of adoption
The Company expects to adopt the accounting standard fromthe end of the fiscal year ending March 31, 2021.

14

Ishihara Sangyo Kaisha, Ltd.

Accounting Standard for Disclosure of Accounting Estimates(1) Overview

On March 31, 2020, the ASBJ issued the “Accounting Standard

The ASBJ has developed an “Accounting Standard for Fair

for Disclosure of Accounting Estimates” (ASBJ Statement No.31)

Value Measurement” and “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (hereinafter(1) Overview

collectively, the “Fair Value Measurement Standard”), which

This accounting standard has been released to provide

provide guidance for fair value measurement in order toguidance on disclosure of information that deepens the

improve comparability with internationally recognizedunderstanding of users of the financial statements aboutaccounting standards.

estimates that embody a risk of a significant impact on thefinancial statements of the following accounting period.

The Fair Value Measurement Standard is applied withrespect to the fair value of the following items;• Financial instruments defined in “Accounting Standard for(2) Scheduled date of adoption
The Company expects to adopt the accounting standard fromthe end of the fiscal year ending March 31, 2021.

Financial Instruments”• Inventories held for trading purposes defined in “AccountingStandard for Measurement of Inventories”• On July 4, 2019, the ASBJ issued “Accounting Standard for
Fair Value Measurement” (ASBJ Guidance No. 30)

Furthermore, “Implementation Guidance on Disclosures about• On July 4, 2019, the ASBJ issued “Implementation

Fair Value of Financial Instruments” has been updated, detail

Guidance on Accounting Standard for Fair Valueof Fair Value of Financial Instruments by each level is disclosed

Measurement” (ASBJ Statement No. 31)

in Note.

• On July 4, 2019, the ASBJ issued “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No. 9)• On July 4, 2019, the ASBJ issued “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10)• On March 31, 2020, the ASBJ issued “Implementation(2) Scheduled date of adoption
The Company expects to adopt the accounting standard andimplementation guidance from the beginning of the fiscal year
ending March 31, 2022.

Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No. 19)(3) Impact of the adoption of accounting standard andimplementation guidance
The Company is currently evaluating the effect of the adoptionof this accounting standard and implementation guidance on
its consolidated financial statements.

3. Change in Accounting Policy and Additional Information(Application of International Financial Reporting Standards (“IFRS”)

consolidated financial statements, the Company has applied“Lease”

IFRS 16 from the beginning of the fiscal year ended March 31,

With regard to certain consolidated subsidiaries applying
IFRS 16, the accounting treatment for all recorded leases

2020, and the effect of the adoption on the consolidated financial
statements for the year ended March 31, 2020 was immaterial.

have been clarified as assets and liabilities in preparing the

4. Additional Information
Accounting estimates of probable Deferred income taxes

financial statements for the fiscal year ending March 31, 2021.

receivables are based on the premise that the recovery from the

However, if there are second or third waves of COVID-19

global economic stagnation from COVID-19 outbreak will begin

outbreaks, there is a risk of long-term global economic stagnation

around this summer, the Group will promote strategies for the nextthat may decrease the demand of the Company’s products, andfiscal year. In line with this estimation, the impact of COVID-19

that may have a significant effect on the consolidated financial

outbreak is expected to be immaterial on the consolidated

statements for the fiscal year ending March 31, 2021.

Ishihara Sangyo Kaisha, Ltd.

15

5. Cash and Deposits
The reconciliation between cash and cash equivalents in the accompanying consolidated statements of cash flows and cash anddeposits in the accompanying consolidated balance sheets as of March 31, 2020 and 2019 is presented as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and deposits........................................................................................................

¥

2020
20,925¥2019
23,984$

2020
192,308

Cash and cash equivalents...........................................................................................

¥

20,925¥23,984$

192,308

6. Investments in Securities
Marketable securities classified as held-to-maturity debt securities and other securities at March 31, 2020 and 2019 were as follows:(a) Held-to-maturity debt securities
Millions of yen

Carrying value

2020

2019

Estimated fairvalue

Estimated fairvalue

Unrealized gain

Carrying value

Unrealized gain

Securities whose estimated fair value exceeds theircarrying value..........................................................

¥

9

¥

10

¥

0

¥

9

¥

10

¥

1

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

¥

9

¥

10

¥

0

¥

9

¥

10

¥

1

Thousands of U.S. dollars

2020
Carrying value

Estimated fairvalue

Unrealized gain

Securities whose estimated fair value exceeds theircarrying value..........................................................

$

92

$

92

$

0

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

$

92

$

92

$

0

16

Ishihara Sangyo Kaisha, Ltd.

(b) Other securities
Millions of yen

2019

2020
Carrying value

Acquisition cost

Unrealized gain
(loss)

Securities whose carrying value exceeds theiracquisition cost: Equity securities............................

¥ 1,102¥¥440¥ 1,326

Subtotal..............................................................

1,102

662

440

1,326

651

675

Securities whose acquisition cost exceeds theircarrying value: Equity securities...............................

96

140

(44)

109

140

(31)

Subtotal..............................................................

96

140

(44)

109

140

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

¥ 1,198396¥ 1,435

¥

662

802

¥

Carrying value

Acquisition cost

Unrealized gain
(loss)

¥

¥

¥

651

675

(31)

791

¥

644

Thousands of U.S. dollars

2020
Carrying value

Acquisition cost

Unrealized gain
(loss)

Securities whose carrying value exceeds theiracquisition cost: Equity securities............................

$ 10,128$ 6,084$ 4,044

Subtotal..............................................................

10,128

6,084

4,044

Securities whose acquisition cost exceeds theircarrying value: Equity securities...............................

882

1,287

(405)

Subtotal..............................................................

882

1,287

(405)

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

$ 11,010$ 7,371$ 3,639

The redemption schedule subsequent to March 31, 2020 for held-to-maturity debt securities classified as other securities is described in
Note 18.

7. Inventories
Inventories at March 31, 2020 and 2019 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Finished goods and merchandise.................................................................................

¥

2020
32,664¥201925,217$2020
300,193

Work in process............................................................................................................

6,047

5,976

55,574

Raw materials and supplies..........................................................................................

15,004

15,590137,892

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

¥

53,715¥46,783$493,659

Net loss on devaluation of inventories included in cost of sales amounted to ¥584 million ($5,368 thousand) for the years ended March 31,
2020, and net gain on reversal of devaluation of inventories included in cost of sales amounted to ¥277 million for the year ended
March 31, 2019.

Ishihara Sangyo Kaisha, Ltd.

17

8. Loss on Impairment of Fixed Assets
For the year ended March 31, 2020, the Company recorded a loss on impairment of fixed assets. The main components of loss on
impairment of fixed assets are as follows:
Thousands of U.S.
dollars

Millions of yen

Location

Major use

Classification

Yokkaichi Plant(Yokkaichi City, Mie Prefecture)

Production equipment

Buildings and structures

2020¥

Machinery and equipment

119

¥

$

1,094

298

2,738

3

28

Other
Total

2020

420

$

3,860

The Company and its consolidated subsidiaries group theirPlant in the above table, such as equipment for organic

assets based on the business segment and production processcompound, is not anticipated to be utilized in the future, thefor assessment of loss on impairment. Idle assets which are notCompany classified the production equipment as idle assets andanticipated to be utilized in the future and leased real estate arerecorded a loss on impairment and the net book value of theseclassified as individual cash-generating units. Assets not definitely

assets were reduced to zero.

linked to a specific business, such as the head-office building,

For the year ended March 31, 2019, the Company recorded a

the facilities for research and development and the facilities forloss on impairment of fixed assets. The main components of loss

welfare, are classified as corporate assets.

on impairment of fixed assets are as follows:

As a part of production equipment located at the Yokkaichi
Millions of yen

Location
Sasagawa company house(Yokkaichi City, Mie Prefecture)

Major use
Company-owned housing

Classification
Land¥

Buildings and structures

57

Other
Total
The Company plans to sell land used for company-owned

2019
64
0

¥

121

The recoverable amount of the land was measured at net

housing as part of Sasagawa company house in the above table.

selling value, which was reasonably estimated by considering the

The Company recognized the land as an asset held for sale andmarket value.

recorded a loss on impairment.

9. Loss on Liquidation of Subsidiary
The loss relates to foreign currency translation adjustments accompanying the liquidation of ISK SINGAPORE PTE. LTD., which had beena specified subsidiary of the Company.

18

Ishihara Sangyo Kaisha, Ltd.

10. Short-Term Bank Loans, Long-Term Bank Loans, Lease Obligations and Bonds
The average annual interest rate on short-term bank loans at March 31, 2020 and 2019 were approximately 1.0% and 1.2%, respectively.
Long-term bank loans, including the current portion of long-term bank loans, at March 31, 2020 and 2019 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Secured bank loans......................................................................................................

¥

2020
12,1652019
14,214¥$

2020
111,800

Unsecured bank loans..................................................................................................

23,826

21,586

218,969

Subtotal........................................................................................................................

35,99135,800330,769

Less amounts due within one year................................................................................

(7,938)(10,102)(72,953)

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

¥

28,053¥25,698$257,816

The annual average interest rates applicable to long-term bank loans due within one year presented in the above table at March 31, 2020
and 2019 were 1.3% and 1.5%, respectively.
The annual average interest rates applicable to long-term bank loans due after more than one year presented in the above table atMarch 31, 2020 and 2019 were 1.0% and 1.2%, respectively.
These bank loans become due from April 2021 through to October 2028.
Bonds at March 31, 2020 and 2019 were as follows:
Thousands of
U.S. dollars

Millions of yen

Unsecured bonds, payable in yen at rate of 0.27%, due 2027......................................

¥

2020
3,720

¥

3,036

Less amounts due within one year................................................................................
Total..............................................................................................................................

¥

2019
2,010

¥

1,620

$

2020
34,188$27,902

(390)

(684)

(6,286)

Lease obligations at March 31, 2020 and 2019 were as follows:
Thousands of
U.S. dollars

Millions of yen

Finance lease obligations (ownership not transferred to the lessee)..............................

¥

Less amounts due within one year................................................................................
Total..............................................................................................................................

2020
1,154

2019
1,067

¥

(451)

(468)
¥

686

$

¥

616

2020
10,606(4,301)$

6,305

Information on the payment schedules of long-term bank loans, bonds, and lease obligations subsequent to March 31, 2020 is describedin Notes 17 and 18.
At March 31, 2020 and 2019, the following assets were pledged as collateral for short-term bank loans, the current portion of longterm bank loans and long-term bank loans:Thousands of
U.S. dollars

Millions of yen

Property, plant and equipment, net of accumulated depreciation.................................

¥

2020
24,023¥24,041

Investments in securities...............................................................................................
Total..............................................................................................................................

¥

2019
23,408¥23,435$

2020
220,780$

220,945

27

18

165

Ishihara Sangyo Kaisha, Ltd.

19

Short-term bank loans, the current portion of long-term bank loans and long-term bank loans secured by such collateral at March 31,
2020 and 2019 were as follows:
Thousands of
U.S. dollars

Millions of yen

Short-term bank loans..................................................................................................

¥

2020
6,020

¥

2019
6,020

2020
55,326$

Current portion of long-term bank loans.......................................................................

3,850

5,799

35,383Long-term bank loans...................................................................................................

8,315

8,415

76,417

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

¥

18,185¥

20,234$

167,126

11. Asset Retirement Obligations
The asset retirement obligations include legal obligations for

The asset retirement obligations are measured at present

disposal of items including polychlorobiphenyl pursuant to thevalue calculated based on the discount rate applicable to“Law Concerning Special Measures Against PCB Waste” andgovernment bonds and the estimated useful lives of the assets,other legal obligations for the removal of leasehold improvements

which are estimated to be from 3 years to 8 years since theirand restoration of premises around the Yokkaichi Plant to theiracquisitions.

original condition upon termination of lease contracts.
The following is a summary of changes in the carrying amounts of the asset retirement obligations for the years ended March 31, 2020
and 2019.
Thousands of
U.S. dollars

Millions of yen

Asset retirement obligation balance at the beginning of the year..................................

¥

2020
710

¥

2019
717

$

2020
6,525

Accretion expense........................................................................................................

0

0

0

Liabilities settled............................................................................................................

(27)

(7)

(248)

Asset retirement obligation balance at the end of the year............................................

¥

683

¥

710

$

6,277

12. Retirement Benefits
The Company and certain consolidated subsidiaries have a

Certain consolidated subsidiaries have calculated their

lump-sum payment plan as a retirement benefit plan for eligible

retirement benefit obligations and retirement benefit expenses

employees upon retirement. Retirement payments are determinedbased on the amount which would be payable at the year end

by reference to basic salary, years of service and certain otherif all eligible employees terminated their services voluntarily (thefactors. In addition to this, the Company and certain domestic“Simplified Method”).

consolidated subsidiaries have defined contribution pension plans.

20

Ishihara Sangyo Kaisha, Ltd.

The changes in retirement benefit obligations during the years ended March 31, 2020 and 2019 are as follows::
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligations at the beginning of the year...........................................

¥

2020
12,1662019
12,068¥$2020
111,810Service cost..................................................................................................................

585

593

Interest cost..................................................................................................................

11

11

101

Actuarial gain................................................................................................................

(110)

(22)

(1,011)Retirement benefits paid...............................................................................................

(435)

(474)

(3,998)Other.............................................................................................................................

(7)

(10)

Retirement benefit obligations at the end of the year....................................................

¥

12,210¥12,166

5,376

(64)
$

112,214

The changes in plan assets during the years ended March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen

Plan assets at the beginning of the year........................................................................

2020
195

¥

2019
178

¥

$

2020
1,793

Expected return on plan assets....................................................................................

1

1

Actuarial gain (loss).......................................................................................................

1

(6)

9

Contributions paid by the Company and subsidiaries...................................................

34

31

312

Retirement benefits paid...............................................................................................

(15)

(9)

(138)

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

–(0)Plan assets at the end of the year.................................................................................

¥

216

¥

195

9

–
$

1,985

The changes in retirement benefit obligations calculated by the Simplified Method during the years ended March 31, 2020 and 2019 are
as follows:
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligations at the beginning of the year...........................................

2020
899

¥

2019
873

¥

$

2020
8,263

Retirement benefit expenses.........................................................................................

80

82

735

Retirement benefits paid...............................................................................................

(98)

(56)

(901)

Retirement benefit obligations at the end of the year....................................................

¥

881

¥

899

$

8,097

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March
31, 2020 and 2019 for the Company’s and the consolidated subsidiaries’ defined benefit plans:
Thousands of
U.S. dollars

Millions of yen

Funded retirement benefit obligation.............................................................................

¥

Plan assets at fair value.................................................................................................
Unfunded retirement benefit obligation.........................................................................

2020
420

¥

2019
335

$

2020
3,860

(216)

(195)

(1,985)

204

140

1,875

12,67012,730116,441

Net amount of asset and liability for retirement benefits
in the consolidated balance sheet..............................................................................

12,874

12,870118,316

Liability for retirement benefits......................................................................................

12,884

12,882

118,408

Asset for retirement benefits.........................................................................................

(10)

(12)

(92)

Net amount of asset and liability for retirement benefits
in the consolidated balance sheet..............................................................................

¥

12,874¥

12,870$118,316

Ishihara Sangyo Kaisha, Ltd.

21

The components of retirement benefit expenses for the years ended March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen

Service cost..................................................................................................................

¥

2020
585

¥

2019
593

$

2020
5,376

Interest cost..................................................................................................................

11

11

101

Expected return on plan assets....................................................................................

(1)

(1)

(9)

Amortization:
Actuarial loss.............................................................................................................

70

83

643

Prior service cost.......................................................................................................

20

20

184

Retirement benefit expenses calculated by the Simplified Method............................

80

82

735

Retirement benefit expenses.........................................................................................

¥

765

¥

788

$

7,030

The components of retirement benefits liability adjustments included in other comprehensive loss (before tax effect) for the years ended
March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen

Actuarial gain and loss..................................................................................................

¥

2020
180

¥

2019
100

$

2020
1,654

Prior service cost..........................................................................................................

20

20

184

Others...........................................................................................................................

(1)

(2)

(9)

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

¥

199

¥

118

$

1,829

The components of retirement benefits liability adjustments included in accumulated other comprehensive income (loss) (before tax
effect) as of March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial gain and loss...........................................................................

¥

Unrecognized prior service cost...................................................................................
Total..............................................................................................................................

2020
315

¥

428

$

133

113
¥

2019
494

¥

627

2020
2,894
1,039

$

3,933

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2020 and 2019 are as follows:

Debt securities..............................................................................................................

2020
86%

2019
84%
10

Equity securities............................................................................................................

9Cash and deposits........................................................................................................

5

6

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

100%

100%

The expected return on plan assets has been estimated based on the anticipated allocation to each asset class at present and in the
future and the expected long-term returns on assets held in each category at present and in the future.
The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2020 and 2019 are as follows:

Discount rate.................................................................................................................

2020
Principally 0.1%

2019
Principally 0.1%

Expected long-term rate of return on plan assets.........................................................

Principally 0.6%

Principally 1.7%

Expected rates of salary increase.................................................................................

Principally 6.1%

Principally 6.3%

Total contributions paid by the Company and certain consolidated subsidiaries to the defined contribution pension plans for the years
ended March 31, 2020 and 2019 amounted to ¥92 million ($842 thousand) and ¥89 million, respectively.

22

Ishihara Sangyo Kaisha, Ltd.

13. Contingent Liabilities
Guarantees
At March 31, 2020 and 2019, the Company was contingently liable for the following:Thousands of
U.S. dollars

Millions of yen

Trade notes receivable discounted with banks..............................................................

¥

2020
45

2019
69

¥

$

2020
414

Liabilities, such as loans from financial institutions, that the Group guarantees under joint signature for companies and employees are as
follows:
Thousands of
U.S. dollars

Millions of yen

ISK (SHANGHAI) CHEMICAL CO., LTD.........................................................................

¥

2020
188

2019
–

$

2020
1,728

14. Income Taxes
Income taxes applicable to the Company and its domestic

the years ended March 31, 2020 and 2019 was 30.2%. Overseas

consolidated subsidiaries consist of corporation, inhabitants’ andsubsidiaries are subject to the income taxes of the respective

enterprise taxes. The applicable statutory tax rate in Japan for

countries in which they operate.

The effective tax rates reflected in the accompanying consolidated statements of income for the years ended March 31, 2020 and 2019differs from the above statutory tax rate for the following reasons:Statutory tax rate......................................................................................................................................

2020
30.2%

2019
30.2%

Permanently non-deductible expenses.................................................................................................

1.1

0.3

Permanently non-taxable income..........................................................................................................

(2.0)

(0.1)

Per capita portion of inhabitants’ taxes.................................................................................................

1.1

0.3

Tax deduction for experiment and research expenses..........................................................................

(2.7)

(3.5)

Share of profit of equity method affiliates...............................................................................................

(1.6)

(1.1)

Unrealized gain on intercompany transactions......................................................................................

0.2

(0.6)

Changes in valuation allowance.............................................................................................................

9.8(13.5)

Difference tax rates applied to subsidiaries...........................................................................................

(0.3)

(0.3)

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

6.7

3.4

Effective tax rate.......................................................................................................................................

42.4%

15.1%

Ishihara Sangyo Kaisha, Ltd.

23

Deferred income taxes reflect the net tax effect of the temporary differences between the carrying amounts of the assets and liabilities
for financial reporting purposes and the corresponding amounts for income tax purposes. The significant components of the Company’s
and consolidated subsidiaries’ deferred tax assets and liabilities at March 31, 2020 and 2019 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

Deferred tax assets:
Tax loss carryforwards..............................................................................................

¥

8,399

¥

10,475$77,190Liability for retirement benefits...................................................................................

3,895

3,913

Loss on devaluation of inventories.............................................................................

258

293

2,371

Unrealized gain on intercompany transactions..........................................................

1,475

1,657

13,55635,796

Accrued expenses.....................................................................................................

426

518

3,915

Accrued bonuses for employees...............................................................................

204

224

1,875

Asset retirement obligations......................................................................................

206

214

1,893

Reserve for implementation of environmental and safety arrangements....................

630

895

5,790

Loss on liquidation of a subsidiary.............................................................................

–

16

–

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

1,968

2,007

18,105Gross deferred tax assets.............................................................................................

17,461

20,212

160,491

Valuation allowance for tax loss carryforwards (Note 2)................................................

(6,048)(8,562)(55,592)

Valuation allowance for total future deductible temporary differences etc.....................

(2,531)(1,504)(23,261)

Less: total valuation allowance (Note 1).........................................................................

(8,579)(10,066)(78,853)

Total deferred tax assets...............................................................................................

8,882

10,146

81,638Deferred tax liabilities:
Property, plant and equipment..................................................................................

(21)

(21)

(193)

Unrealized holding gain on securities........................................................................

(39)

(126)

(358)

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

(397)

(409)

(3,649)Total deferred tax liabilities............................................................................................
Net deferred tax assets.................................................................................................

(556)

(457)
¥

8,426

¥

9,590

(4,200)$77,438Note 1: Valuation allowance decreased by ¥1,486 million ($13,657 thousand) in the year ended March 31, 2020. This decrease is mainly due to decreaseof the valuation allowance for tax loss carryforwards in the amount of ¥688 million ($6,323 thousand), increase of the valuation allowance for lessallowance for doubtful receivables in the amount of ¥178 million ($1,636 thousand), increase of the valuation allowance for other future deductible
temporary differences in the amount of ¥346 million ($3,180 thousand), and decrease of the valuation allowance for tax loss carryforwards in theamount of ¥1,671 million ($15,357 thousand) due to liquidation of a consolidated subsidiary, ISK SINGAPORE PTE. LTD.

24

Ishihara Sangyo Kaisha, Ltd.

Note 2: A breakdown of tax loss carryforwards and valuation allowance by expiry date as of March 31, 2020 will expire as follows:
Millions of yen

2020
Due in 1 year
or less

Net operating loss carryforwards (*)......

¥

Valuation allowance...............................
Deferred tax assets...............................

–

Due after 1 year
through 2 years

¥

–
¥

–

–

Due after 2 years Due after 3 years Due after 4 years
through 3 years
through 4 years
through 5 years

¥

–
¥

–

–

¥

–

–
¥

–

¥

¥ 4,971–(2,620)–¥ 2,351

Due after
5 years

Total¥ 3,428(3,428)¥–¥ 8,399(6,048)¥ 2,351 (**)

Millions of yen

2019
Due in 1 year
or less

Net operating loss carryforwards (*)......

¥

Valuation allowance...............................
Deferred tax assets...............................

–

Due after 1 year
through 2 years

¥

–
¥

–

–

Due after 2 years Due after 3 years Due after 4 years
through 3 years
through 4 years
through 5 years

¥

–
¥

–

–

¥

–

–
¥

–

¥

–
¥

–

¥

–

Due after
5 years

Total¥ 10,475–(8,562)–¥ 1,913¥ 10,475(8,562)¥ 1,913 (**)

Thousands of U.S. dollars

2020
Net operating loss carryforwards (*)......

Due in 1 year
or less

Due after 1 year
through 2 years

Due after 2 years Due after 3 years Due after 4 years
through 3 years
through 4 years
through 5 years

$

$

$

Valuation allowance...............................
Deferred tax assets...............................

–
–

$

–

–
–

$

–

–

$

–
$

–

$

–

$ 45,685–(24,083)–$ 21,606

Due after
5 years

Total$ 31,504(31,509)$–$ 77,190(55,592)$ 21,606 (**)(*) The amount is determined by multiplying the corresponding net operating loss carryforwards by the effective statutory tax rate.
(**) The Company and consolidated subsidiaries have recorded tax loss carryforwards for the years ended March 31, 2020 and 2019 in the amount of¥8,399 million ($77,190 thousand) and ¥10,475 million after multiplying statutory tax rates, and recognize deferred tax assets in the amount of ¥2,351
million ($21,606 thousand) and ¥1,913 million for the tax loss carryforwards. These deferred tax assets are all recognized for part of the Company’s
tax loss carryforwards for the years ended March 31, 2020 and 2019 in the amount of ¥4,971 million ($45,685 thousand) and ¥5,221 million. These tax
loss carryforwards, for which the deferred tax assets are recognized, arose mainly due to the taxable loss related to closing of ISK SINGAPORE PTE.
LTD., a consolidated subsidiary of the Company, recorded during the year ended March 31, 2016, and were assessed to be recoverable based on theestimated taxable income in the future period.

15. Shareholders’ Equity
The Company Act of Japan (the “Act”) provides that an amountcertain conditions are met.

equal to 10% of the amount to be disbursed as distributions

Under the Act, upon the issuance and sale of new shares ofof capital surplus (other than the capital reserve) and retainedcommon stock, the entire amount of the proceeds is required toearnings (other than the legal reserve) be transferred to the capitalbe accounted for as common stock, although a company may, byreserve and the legal reserve, respectively, until the sum of theresolution of the Board of Directors, account for an amount not

capital reserve and the legal reserve equals 25% of the capital

exceeding one-half of the proceeds of the sale of new shares asstock account. Such distributions can be made at any time byadditional paid-in capital.

resolution of the shareholders or by the Board of Directors if

Ishihara Sangyo Kaisha, Ltd.

25

Common stock and treasury stock
Movements in common stock and treasury stock during the years ended March 31, 2020 and 2019 are summarized as follows:
Thousands of shares

2020
April 1, 2019

Increase

Decrease

March 31, 2020

Common stock....................................................................

40,384––40,384

Treasury stock.....................................................................

418

5

0

423

Thousands of shares

2019
April 1, 2018

Increase

Decrease

March 31, 2019

Common stock....................................................................

40,384––40,384

Treasury stock.....................................................................

416

2

0

418

The increases in treasury stock were due to purchases of shares

March 31, 2020 and 2019 was mainly due to sales of shares atof less than one voting unit for the years ended March 31, 2020

requests of shareholders who own less than one voting unit.

and 2019. The decrease in treasury stock for the year ended

16. Research and Development Costs
Research and development costs included in manufacturing

years ended March 31, 2020 and 2019 totaled ¥9,150 million

costs and selling, general and administrative expenses for the($84,092 thousand) and ¥8,071 million, respectively.

17. Leases
Operating lease transactions
Future minimum lease payments subsequent to March 31, 2020 under non-cancelable operating leases are summarized as follows:Year ending March 31,

Millions of yen

2021.......................................................................................................................................................

¥

233

¥

442

2022 and thereafter...............................................................................................................................
Total.......................................................................................................................................................

Thousands of U.S.
dollars

$

209

2,141
1,921

$

4,062

18. Financial Instruments
Overview(2) Types of financial instruments and related risk

(1) Policy for financial instruments

Trade receivables – trade notes and accounts receivable – are

In consideration of plans for capital expenditures or cash

exposed to credit risk in relation to customers. In addition,

management, the Company and its consolidated subsidiaries

the Group has global operations and the percentage of sales(collectively, the “Group”) raise funds through bank loans ortransactions denominated in foreign currencies is high. As a

issuing bonds for its domestic and overseas business. The Group

result, the Group is exposed to foreign currency exchange risk

manages temporary cash surpluses through low-risk financial

arising from receivables denominated in foreign currencies.

assets. The Group uses derivatives for the purpose of reducing

Marketable securities and investments in securities are

fluctuation risk of foreign exchange and interest rates. However,exposed to market risk. Those securities are composed of mainly

the use of derivatives is limited within the extent of risk at theheld-to-maturity debt securities and the shares of common

basis of the actual demand and the Group does not enter into

stock of other companies with which the Group has businessderivatives for speculative or trading purposes.

relationships, or affiliated companies. The Group has also loans
receivable from other companies with which it has business
relationships. These loans receivable are exposed to credit risk.
Regarding trade payables – trade notes and accounts

26

Ishihara Sangyo Kaisha, Ltd.

payable – the Group is exposed to the risk of failure of settlement

the unfavorable impact caused by foreign currency exchangeof these payables at the due date because of working capitalfluctuations on accounts receivable deriving from forecasted

issue, which may result in loss of credit. The Group is also

export sales transactions, the Group may enter into forward

exposed to foreign currency exchange risk arising from thoseforeign exchange contracts to the extent it is probable that thosepayables denominated in foreign currencies due to the import offorecasted export sales take place. In order to mitigate the interest

raw materials and other supplies.

rate risk for loans payable and bonds bearing interest at variable

A portion of bank loans and bonds has some financial

rates, the Group may also enter into interest rate swap transactions.

covenants, which may result in the risk of early repayment

For marketable securities and investments in securities,

depending on the fluctuation of the financial position of thethe Group periodically reviews the fair values of such financial

Group. Short-term and long-term bank loans with variable

instruments and the financial position of the issuers. In addition,interest rates are exposed to interest rate fluctuation risk. The

the Group continuously evaluates whether securities otherrepayment dates of the debt extend up to 8 years from thethan those classified as held-to-maturity debt securities should

balance sheet date.

be maintained taking into account their fair values and theRegarding derivatives, the Group enters into forward foreignexchange contracts to reduce the foreign currency exchange

relationships with the issuers.
In conducting derivative transactions, the division in charge ofrisk arising from the receivables and payables denominated inderivative transactions follows the internal policies, and requests

foreign currencies. The Group also enters into interest rate swap

divisions that perform such derivative transactions to report thesetransactions to reduce fluctuation risk deriving from interest

transactions, and reconciles this information with transaction

payable for long-term bank loans bearing interest at variabledetails obtained from financial institutions. The division prepares

rates. Information regarding the method of hedge accounting ismonthly reports which include actual transaction data, thedescribed in Note 2 (f).

contracted amounts, principals, fair value of these derivatives andvaluation gains or losses. These reports are then submitted to the(3) Risk management for financial instruments

Board of Directors for their review.

(a) Monitoring of credit risk (the risk that customers or
counterparties may default)
In accordance with the internal policies for credit limit(c) Monitoring of liquidity risk (the risk that the Group may not beable to meet its obligations on scheduled due dates)

management, the Group reduces certain risks arising from credit

Based on the reports from each cash management division, thetransactions with customers by setting credit limits for individualGroup prepares and updates its cash flow plans on a monthly

customers, managing maturity dates and outstanding amounts,

basis to manage liquidity risk. The Group also reports theserecognizing the existing risks and controlling all receivables

plans to the Board of Directors and takes actions if necessary toappropriately. The Group monitors the financial situation ofmaintain a specified level of cash position.

its main customers periodically and compares outstanding
receivables balances with the amounts of credit limit by eachcustomer periodically and confirms that the internal policies areappropriately applied.
In accordance with the internal policies for asset(4) Supplementary explanation of the estimated fair value offinancial instruments
The fair value of financial instruments is based on their quoted
market price, if available. When there is no quoted market pricemanagement, the Group invests in held-to-maturity debt securities

available, fair value is reasonably estimated. Since various

with high credit ratings. Accordingly, the Group believes that theassumptions and factors are reflected in estimating the fair value,credit risk deriving from such debt securities is insignificant.

different assumptions and factors could result in different fair

The Group also believes that the credit risk of derivatives

value. In addition, the notional amounts of derivatives in Note 18

is insignificant as it enters into derivative transactions only withare not necessarily indicative of the actual market risk involved infinancial institutions or trading companies which have a soundthe derivative transactions.

credit profile.
Estimated Fair Value of Financial Instruments(b) Monitoring of market risks (the risks arising from fluctuations in

The carrying value of financial instruments on the consolidated

foreign exchange rates, interest rates and others)balance sheets, estimated fair value and the differences as of

For trade receivables and payables denominated in foreign

March 31, 2020 and 2019 are shown in the following table. The

currencies, the Group identifies the foreign currency exchange

following table does not include financial instruments for which it isrisk for each currency on a monthly basis and enters into forward

extremely difficult to determine the fair value. (Please refer to Noteforeign exchange contracts to hedge such risk. In order to mitigate

18 (b) below)
Ishihara Sangyo Kaisha, Ltd.

27

(a) Estimated fair value of financial instruments
Millions of yen

2020

2019

Carrying value

Estimated fairvalue

Difference

Carrying value

Estimated fairvalue

Difference(1) Cash and deposits.................................................

¥ 20,925¥ 20,925¥–¥ 23,984¥ 23,984¥(2) Trade receivables...................................................

32,06032,060–33,89833,898

–

10

10

0

9

10

1

Assets:–(3) Securities and investments in securities:
Held-to-maturity debt securities............................
Other securities.....................................................

1,199

1,199

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

¥ 54,194¥ 54,194

–

1,435

1,435

0

¥ 59,326¥ 59,327(1) Trade payables.......................................................

17,433(2) Short-term bank loans............................................

7,932

17,433–

15,393

15,393

–

7,932

–

8,000

8,000

–

¥

–
¥

1

Liabilities:(3) Long-term bank loans, including current portion....

35,99136,356365

35,80036,211

Total liabilities..............................................................

¥ 61,356¥ 61,721¥

365¥ 59,193¥ 59,604¥

411

Derivatives (*)..............................................................

¥

¥

¥

–

¥

¥

¥

–

(6)

(6)

5

5

411

Thousands of U.S. dollars

2020
Carrying value

Estimated fairvalue

Difference(1) Cash and deposits.................................................

$ 192,308$ 192,308$(2) Trade receivables...................................................

294,642

294,642–

Assets:–(3) Securities and investments in securities:
Held-to-maturity debt securities............................

92

92

0

Other securities.....................................................

11,01911,019–Total assets.................................................................

$ 498,061$ 498,061(1) Trade payables.......................................................

160,215160,215(2) Short-term bank loans............................................

72,89872,898–(3) Long-term bank loans, including current portion....

330,769

334,123

3,354

Total liabilities..............................................................

$ 563,882$ 567,236

$

3,354

Derivatives (*)..............................................................

$

$

$

–

$

0

Liabilities:

(55)

(55)

–

(*) Assets and liabilities arising from derivatives are shown at net value with the amount in parentheses representing net liability position.

Methods to determine the estimated fair value of financial(3) Securities and investments in securities

instruments and other matters related to securities and derivative

The fair value of equity and debt securities is based on quoted

transactions are as follows:market prices. Regarding the information on securities andinvestments in securities corresponding to holding purposes,

Assets:please refer to Note 7.

(1) Cash and deposits and (2) Trade receivables
Since these items are settled in a short time period, their carrying

Liabilities:

value approximates estimated fair value.

(1) Trade payables and (2) Short-term bank loans
Since these items are settled in a short time period, their carrying
value approximates estimated fair value.

28

Ishihara Sangyo Kaisha, Ltd.

(3) Long-term bank loans, including current portion

principal and interest discounted by the interest rate to be applied

For long-term bank loans with floating interest rates, their carrying

assuming new loans under the similar conditions to existing loansvalue approximates estimated fair value because their interest rate

are made.

reflects the market interest rate.
The estimated fair value of long-term bank loans withDerivatives:

fixed interest rates is based on the present value of the total of

Please refer to Note 19 “Derivatives.”(b) Financial instruments whose fair values were extremely difficult to determine
Thousands of
U.S. dollars

Millions of yen

Unlisted equity securities..............................................................................................

¥

2020
4,724

Investments in limited partnerships...............................................................................

2019
5,572

¥

2020
43,415$2

1

9Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are notincluded in the preceding table.
(c) Redemption schedule of deposits, monetary receivables and securities with maturities
Millions of yen

Millions of yen

2020

2019

Due in 1 year
or less

Due after 1 year Due after 5 years
through 5 years through 10 years

Due after 10
years

Due in 1 year
or less

Due after 1 year Due after 5 years
through 5 years through 10 years

Due after 10
years

Deposits....................................

¥ 20,917¥¥–¥ 23,975¥¥

Trade receivables......................

32,060–33,898

–

¥

–

–
–

–

¥

–

–
–

–
–

Investments in securities:
Held-to-maturity debt
securities.............................

–

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

¥ 52,977

10
¥

10

–
¥

–

¥

–

–

–

¥ 57,873

9
¥

9

–
¥

–

–
¥

–

Thousands of U.S. dollars

2020
Due in 1 year
or less

Due after 1 year Due after 5 years
through 5 years through 10 years

Due after 10
years

Deposits....................................

$ 192,234$$

Trade receivables......................

294,642

–

$

–

–
–

–
–

Investments in securities:
Held-to-maturity debt
securities.............................

–

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

$ 486,876

92
$

92

–
$

–

–
$

–

Ishihara Sangyo Kaisha, Ltd.

29

(d) Redemption schedule of long-term debt
Millions of yen

2020
Due in 1 year or lessLong-term bank loans...................................

¥

7,938

Bonds...........................................................

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years

¥

¥

¥

¥

¥

7,721

684

Lease obligations..........................................
Total..............................................................

Due after 1 year
through 2 years

684

468
¥

9,089

6,411
684

331
¥

8,736

5,294
504

199
¥

7,294

2,698

87
¥

5,929

534

630

37

5,885

¥

3,269

32
¥

6,591

Thousands of U.S. dollars

2020
Due in 1 year or lessLong-term bank loans...................................

$

72,953Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years

$

$

$

$

$

70,95958,91948,654

24,79654,489Bonds...........................................................

6,286

6,286

6,286

4,632

4,908

5,790

Lease obligations..........................................

4,301

3,042

1,829

800

340

294

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

$

83,531$80,287$

67,034$54,086$30,044$60,573

19. Derivatives
The notional amounts and the estimated fair value of the derivative instruments outstanding which did not qualify for deferral hedge
accounting at March 31, 2020 and 2019 were as follows:(a) Currency-related transactions
Forward foreign exchange contracts:
Millions of yen

2020

2019

Notional amount

Notional amount(over one year)

Estimated fairvalue (*)

Unrealized gain
(loss)

Notional amount

Notional amount(over one year)

Estimated fairvalue (*)

Unrealized gain
(loss)

¥

¥

¥

¥

¥

¥

¥

¥

Buy:
Japanese yen...............
U.S. dollars...................
Total.................................

431
42

¥

473

–

(6)

–
¥

–

(0)
¥

(6)

(6)

¥

(6)

369
39

(0)
¥

408

–
–

¥

–

5
(0)

¥

5

¥

Thousands of U.S. dollars

2020
Notional amount

Notional amount(over one year)

Estimated fairvalue (*)

Unrealized gain
(loss)

$

3,961

$

$

(55)

$

(55)

$

4,347

$

(55)

$

(55)

Buy:
Japanese yen...............
U.S. dollars...................
Total.................................

386

–
–

$

–

(0)

(0)

(*) The estimated fair value of forward foreign currency exchange contracts is computed using prices provided by counterparty financial institutions.

30

Ishihara Sangyo Kaisha, Ltd.

5
(0)
5

(b) Interest-related transactions (hedge accounting is applied)
Millions of yen

2019

2020
Method of accounting

The special
methodClassification

Receive/ floating
and pay/fixed

Hedged item

Long-termbank loans

Notional amount

Notional amount(over 1 year)

Estimated fairvalue (*)

¥

¥

¥

5,430

3,786

(**)

Notional amount

Notional amount(over 1 year)

Estimated fairvalue (*)

¥

¥

¥

7,188

4,280

(**)

Thousands of U.S. dollars

2020
Method of accounting

The special
methodClassification

Receive/ floating
and pay/fixed

Hedged item

Long-termbank loans

Notional amount

Notional amount(over 1 year)

Estimated fairvalue (*)$$$

49,90434,795(**)(*) The estimated fair value of forward foreign currency exchange contracts is computed using prices provided by counterparty financial institutions.
(**) Because interest rate swap agreements are accounted for as if the interest rates applied to the swaps had originally applied to the long-term bankloans, their estimated fair values were included in estimated fair value of long-term bank loans.

20. Other Comprehensive Loss
The following table presents remeasurements and tax effects for components of other comprehensive loss for the years ended March 31,
2020 and 2019:
Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

Net unrealized holding loss on securities:
Amount arising during the year..................................................................................

¥

(960)

¥

(266)

$

(8,823)Remeasurements......................................................................................................

(34)

–

(312)

Before tax effect....................................................................................................

(994)

(266)

(9,135)

Tax effect...............................................................................................................

87

75

799

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

(907)

(191)

(8,336)

Amounts arising during the year................................................................................

(167)

(379)

(1,535)Remeasurements......................................................................................................

334

–

3,070

Before tax effect....................................................................................................

167

(379)

1,535

Tax effect...............................................................................................................

–

–

–

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

167

(379)

1,535

Translation adjustments:

Retirement benefits liability adjustments:
Amount arising during the year..................................................................................

109

13

1,002

Reclassification adjustments for gain and loss included in net income......................

90

105

827

Before tax effect....................................................................................................

199

118

1,829

Tax effect...............................................................................................................

(59)

(36)

(542)

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

140

82

1,287

Other comprehensive income of affiliates accounted for by the equity method
attributable to the Company.......................................................................................
Total other comprehensive loss.....................................................................................

6

60
¥

(540)

¥

(482)

551
$

(4,963)

Ishihara Sangyo Kaisha, Ltd.

31

21. Supplemental Information to Consolidated Statements of Cash Flows
Information on significant non-cash transactions
The Company and its consolidated subsidiaries recorded new leased assets of ¥587 million ($5,395 thousand) and ¥366 million andlease obligations of ¥620 million ($5,698 thousand) and ¥395 million under finance leases for the years ended March 31, 2020 and 2019,respectively.

22. Amounts per ShareYen

Net assets per share.....................................................................................................

¥Net income attributable to owners of parent per share.................................................
Net income attributable to owners of parent per share is based

2020
1,918.63

U.S. dollars¥

20191,885.01

2020
17.63

$

217.26

59.04

0.54

year end.
Diluted net income attributable to owners of parent per shareon the net income attributable to shareholders of common stockand the weighted-average number of shares of common stock

for the years ended March 31, 2020 and 2019 is not presented

outstanding during each year. Net assets per share are based

since no potentially dilutive securities have been issued.

on the number of shares of common stock outstanding at the
The financial data for the computation of basic net income attributable to owners of parent per share for the years ended March 31, 2020
and 2019 in the table above is summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

Information on basic net income attributable to owners of parent per share:
Net income attributable to owners of parent.................................................................

¥Net income not attributable to common shareholders..................................................
Adjusted net income attributable to common shareholders..........................................

2,359

¥

8,683

¥

2,359

$

21,680$21,680

–

–
¥

8,683

–

Thousands of shares

2020
39,963Weighted-average number of shares of common stock outstanding during the year....

2019
39,967

The financial data for the computation of net assets per share at March 31, 2020 and 2019 in the above table is summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Total net assets.............................................................................................................

¥

2020
76,670¥76,670¥2019
75,335¥75,335$

2020
704,622$704,622

Deductions from total net assets:
Non-controlling interests...........................................................................................
Total net assets used in the calculation of net assets per share....................................

––

Thousands of shares

Number of shares used in the calculation of net assets per share................................

32

Ishihara Sangyo Kaisha, Ltd.

2020
39,961

2019
39,965–

23. Related Party Transactions
Major transactions and balances between the Company and an affiliated company for the years ended and as of March 31, 2019 and2018 were as follows:
Transactions

BalancesThousands of
U.S. dollars

Millions of yen
Name of affiliated company

Type of transaction

BELCHIM CROPPROTECTION N.V.

Sales of products

2020

2019

2020

¥ 11,300 ¥ 11,267 $103,851

Thousands of
U.S. dollars

Millions of yen

2020

Account

Trade receivables

2019

2020

¥ 2,943 ¥ 2,755 $ 27,047

The condensed financial statements of BELCHIM CROP PROTECTION N.V as the significant related party as of and for the years ended
March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen
March 31

Current assets..............................................................................................................

¥

Fixed assets..................................................................................................................

2020
40,224

March 312019
55,839

¥

$

7,154

7,041

2020
369,672
64,709Total assets...............................................................................................................

¥

47,265¥62,993$434,381

Current liabilities............................................................................................................

¥

44,129¥57,065$405,560

Long-term liabilities.......................................................................................................

9,578

11,26888,025

Total liabilities.........................................................................................................

53,707

68,333

493,585

Total net assets......................................................................................................

(6,442)(5,340)(59,204)

Total liabilities and net assets....................................................................................

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

¥¥

47,265¥62,993$434,381Millions of yen

Thousands of
U.S. dollars

For the years ended March 31

For the year ended
March 312020
54,083¥

2019
54,626$

2020
497,041

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

(905)(2,648)(8,317)Net loss.........................................................................................................................

(1,331)(3,504)(12,232)

Ishihara Sangyo Kaisha, Ltd.

33

24. Segment Information(a) Overview of the reportable segments

Organic chemicals

The Company’s reportable segments are determined on the basis

This reportable segment includes the business of manufacturingthat such segments provide the Board of Directors with specificand sales of organic intermediates such as agrochemicals andinformation to determine the business activity policy and allocation

active pharmaceutical ingredients.

of management resources and to evaluate their businessperformance. Consequently, the Company has classified its

Other businesses

business into three reportable segments of “Inorganic chemicals,”This reportable segment principally includes the trading business“Organic chemicals,” and “Other businesses” based on theand the construction business.

properties of products and services sold, manufacturing methods
and processes.

(b) Valuation method for reportable segment sales, income andassetsInorganic chemicals

The accounting policies for the reportable business segments areThis reportable segment includes the business of manufacturing

the same as those described in Note 2. Intersegment sales areand sales of titanium dioxide, functional materials, which arerecorded at the same prices used in transactions with third parties.

value-added products designed to take advantage of thecharacteristics of titanium dioxide and other inorganic chemicals.
(c) Reportable segment information
Millions of yen

2020
Reportable segments
Inorganic
chemicals

Organic
chemicals

Other businesses

Subtotal

Elimination andcorporate (*1)

Consolidated (*2)

Net sales and operating income:Net sales:
External customers...............................................

51,528 ¥46,174 ¥Intersegment.........................................................

¥

0

–

3,365 ¥ 101,067 ¥
5,532

5,532

(5,532)–¥ 101,067–

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

51,52846,174

8,897

106,599(5,532)

101,067(2,538) ¥6,189

Segment income..........................................................

¥

3,734 ¥

4,408 ¥

Segment assets...........................................................

¥

83,479 ¥60,487 ¥Depreciation and amortization of intangible
assets.................................................................

3,392

849

53

4,294

152

Loss on impairment of fixed assets.......................

–

420

–

420

–

420

Increase in fixed tangible and intangible assets....

6,585

1,266

53

7,904

394

8,298

585 ¥

8,727 ¥

3,851 ¥ 147,817 ¥

24,620 ¥ 172,437

Other items:

34

Ishihara Sangyo Kaisha, Ltd.

4,446

Millions of yen

2019
Reportable segments
Inorganic
chemicals

Organic
chemicals

Other businesses

Elimination andcorporate (*1)

Subtotal

Consolidated (*2)

Net sales and operating income:Net sales:
External customers...............................................

54,883 ¥47,672 ¥Intersegment.........................................................

¥

–

–

3,886 ¥ 106,441 ¥
5,538

5,538

(5,538)–Net sales...............................................................

54,88347,6729,424

111,979(5,538)106,441(2,463) ¥11,372664 ¥

13,835 ¥–¥ 106,441

Segment income..........................................................

¥

7,268 ¥

5,903 ¥

Segment assets...........................................................

¥

78,592 ¥57,746 ¥Depreciation and amortization of intangible
assets.................................................................

3,229

851

49

4,129

137

Loss on impairment of fixed assets.......................

–

–

–

–

121

121

Increase in fixed tangible and intangible assets....

6,165

915

96

7,176

63

7,239

Elimination andcorporate (*1)

Consolidated (*2)

3,697 ¥ 140,035 ¥

28,655 ¥ 168,690

Other items:
4,266

Thousands of U.S. dollars

2020
Reportable segments
Inorganic
chemicals

Organic
chemicals

Other businesses

Subtotal

Net sales and operating income:Net sales:
External customers...............................................

$ 473,560 $ 424,354 $

30,925 $ 928,839 $–$ 928,839

Intersegment.........................................................

––

50,84150,841(50,841)–

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

473,560

424,354

81,766

979,680(50,841)

928,839

34,317 $

40,511 $5,376 $

80,204 $(23,325) $56,879Segment income..........................................................

$

Segment assets...........................................................

$ 767,199 $ 555,896 $

35,392 $ 1,358,487 $ 226,266 $ 1,584,753

Other items:
Depreciation and amortization of intangible
assets.................................................................

31,1737,803

487

39,463

1,397

Loss on impairment of fixed assets.......................

–

3,860

–

3,860

–

3,860

Increase in fixed tangible and intangible assets....

60,518

11,635487

72,6403,621

76,26140,860(*1)		 The elimination and corporate applicable to segment income amounted to ¥2,538 million ($23,325 thousand) and ¥2,463 million in the above tables
and includes ¥78 million ($717 thousand) and ¥120 million of eliminations of intersegment transactions and ¥2,460 million ($22,608 thousand)and ¥2,343 million of corporate expenses, which are not allocable to the reportable segments for the years ended March 31, 2020 and 2019,respectively. Corporate expenses mainly comprise expenses incurred by the administration department of the Company, which are not allocable
to any reportable segment.
		 The elimination and corporate applicable to segment assets amounted to ¥24,620 million ($226,266 thousand) and ¥28,655 million includes¥1,081 million ($9,935 thousand) and ¥1,142 million of offset of inter-segment receivables and payables, and ¥25,701 million ($236,201 thousand)and ¥29,797 million of corporate assets, which are not allocable to a reportable segment as of March 31, 2020 and 2019, respectively. Corporate
assets consist of investments of surplus funds (cash and securities), long-term investments (investments in securities), assets of the administration
department and so forth.
(*2)		 Segment income corresponds to operating income in the consolidated statements of income.

Ishihara Sangyo Kaisha, Ltd.

35

Related information
Products and services information
The information on each product and service is omitted because it is the same as that of reportable segment information for the years
ended March 31, 2020 and 2019.
Geographical information
Net sales by geographical segment for the years ended March 31, 2020 and 2019 are summarized as follows:
Millions of yen

Year ended March 31, 2020
Japan

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

¥

Asia

51,591 ¥America

20,436 ¥Europe13,495 ¥Other

15,391 ¥

Total

154 ¥

101,067

Millions of yen

Year ended March 31, 2019Japan

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

¥

Asia

52,829 ¥America

22,930 ¥Europe14,955 ¥Other

15,466 ¥

Total

261 ¥

106,441

Thousands of U.S. dollars

Year ended March 31, 2020
Net sales.......................................................

$

Japan

Asia

474,138 $

187,814 $America

Europe124,024 $Other

141,448 $Total

1,415 $

928,839

The regions are determined on the basis of geographic proximity and the Company’s business activities as follows:
Asia:

China, Taiwan, South Korea, Thailand, Indonesia, Singapore and India

America: The United States, Canada, Brazil, Argentina and Mexico
Europe: Germany, the Netherlands, France, the United Kingdom, Belgium, Italy, Eastern Europe and the Middle East
Other:

Australia, New Zealand and Africa

Property, plant and equipment by geographical segment as of March 31, 2020 and 2019 are summarized as follows:
Millions of yen

At March 31, 2020
Japan

Property, plant and equipment..............................................

¥

Asia

45,051 ¥America149 ¥Europe

882 ¥

Total

189 ¥

46,271Millions of yen

At March 31, 2019
Japan

Property, plant and equipment..............................................

¥

Asia

42,180 ¥America133 ¥Europe

827 ¥

Total

27 ¥

43,167

Thousands of U.S. dollars

At March 31, 2020
Japan

Property, plant and equipment..............................................

36

Ishihara Sangyo Kaisha, Ltd.

$

414,034 $Asia1,369 $

America

8,106 $

Europe1,737 $

Total

425,246

Geographical segments are determined on the basis of geographic proximity and the Company’s business activity as follows:
Asia:

TaiwanAmerica: The United States
Europe: Belgium
Information on sales transactions with major customers
Sales transactions with a major customer for the year ended March 31, 2020 and 2019 are as follows:
Thousands of
U.S. dollars

Millions of yen
Customer name

NAGASE & CO., LTD.

Relevant reportable segments

Inorganic chemicals and Organic chemicals...................

¥

2020
10,128$2020
93,080Millions of yen
Customer name

MITSUI & CO., LTD.

Relevant reportable segments

Inorganic chemicals and Organic chemicals...................

¥

201911,92025. Subsequent Events
Cash dividends
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated financial
statements for the year ended March 31, 2020 was approved at a meeting on the shareholders of the Company held on June 25, 2020:
Millions of yen

Cash dividends (¥20.00 = US $0.18 per share).........................................................................................

¥

799

Thousands of U.S.
dollars$

7,343

Ishihara Sangyo Kaisha, Ltd.

37

Report of Independent Public Accountants

38

Ishihara Sangyo Kaisha, Ltd.

Ishihara Sangyo Kaisha, Ltd.

39

40

Ishihara Sangyo Kaisha, Ltd.

Corporate Data
(As of June 26, 2020)

Head Office

Overseas Affiliated Companies

1-3-15 Edobori, Nishi-ku, Osaka 550-0002, Japan
Tel: +81-6-6444-1451 (General Affairs Division)
Fax: +81-6-6445-7798 (General Affairs Division)

ISK Taiwan Co., Ltd
Empire Bldg., Fl 11-1., 87, Sung Chiang Road
Taipei, Taiwan
Tel: +886-2-2504-5387 Fax: +886-2-2509-4961

Board of Directors
Executive Director President
Kenichi Tanaka
Directors
Teruaki Matsue
Kiyomitsu Yoshida
Yasunobu Kawazoe
Hideo Takahashi
Masaki Shimojo
Outside Directors
Hiroshi Katsumata
Tatsuo Hanazawa
Satoshi Ando

Board of Corporate Auditors(Standing) Corporate Auditor
Taizo Kato
Michiyoshi Arata
Outside Corporate Auditors
Yoshitaka Akikuni
Masaaki Harima

Executive Officers
President & Chief Executive Officer
Kenichi Tanaka
Managing Executive Officers
Teruaki Matsue
Kiyomitsu Yoshida
Yasunobu Kawazoe
Hideo Takahashi
Masaki Shimojo

ISK KOREA CORPORATION#421 Cheonggu Blueville, 11-1 Sunae-dong, Bundang-gu
Seongnam-City, Gyeonggi-do,
463-825 Korea
Tel: +82-31-778-6393 Fax: +82-31-778-6392
ISK Biosciences Korea Ltd.
4F Kairos Bldg., 837-2 Yeoksam-dong, Gangnam-gu,
Seoul, 135-937 Korea
Tel: +82-2-555-1401 Fax: +82-2-563-1408
ISK Americas, Incorporated
7474 Auburn Road
Concord, OH 44077-9703, U.S.A.
Tel: +1-440-357-4600 Fax: +1-440-357-4611
ISK Biosciences Corporation
7470 Auburn Road, Suite A
Concord, OH 44077-9703, U.S.A.
Tel: +1-440-357-4640 Fax: +1-440-357-4661
ISK Biocides, Inc.
416 East Brooks Road, Memphis, TN 38109-0158, U.S.A.
Tel: +1-901-344-5350 Fax: +1-901-344-5387
ISHIHARA CORPORATION (U.S.A.)
601 California Street Suite 1700
San Francisco, CA 94108, U.S.A.
Tel: +1-415-421-8207 Fax: +1-415-397-5403
ISK Biosciences Europe N.V.
Pegasus Park Building 6, 4th Floor De Kleetlaan
12B – Box9 1831 Diegem Belgium
Tel: +32-2-627-8611 Fax: +32-2-627-8600

Executive Officers
Yoichi Kobayashi
Hisashi Takenaka
Kiyoshi Masuda
Hiroshi Kimura
Mikiya Horie
Shigeru Mitani
Hiroyuki Watanabe
Hiroshi Okubo

Ishihara Sangyo Kaisha, Ltd.

39

Ishihara Sangyo Kaisha, Ltd.

Printed in Japan