Consolidated Financial Results
for the Year Ended March 31, 2022 [Japanese GAAP]May 13, 2022
Company:
Hokuetsu Corporation
Stock Exchange Listing: Tokyo
Stock Code:3865
URL: http://www.hokuetsucorp.com
Representative: Sekio Kishimoto, President & CEO
Contact:
Tomonari Maruyama, General Manager, Corporate Management Department TEL: +81-3-3245-4500
Scheduled date of ordinary general meeting of shareholders: June 29, 2022
Scheduled date of commencement of dividend payments:
June 30, 2022
Scheduled date of filing annual securities report:
June 29, 2022
Supplementary documents for financial results:
Yes
Results briefing:
Yes (for institutional investors and analysts)(Figures rounded down to the nearest million yen)
1. Consolidated financial results for the year ended March 31, 2022 (April 1, 2021 through March 31, 2022)(1) Consolidated results of operations(% change from the previous corresponding period)
Profit attributable to
Net sales
Operating profit
Ordinary profit
owners of parent
Million yen%
Million yen%
Million yen%
Million yen%
Year ended March 31, 2022
261,616
17.6
20,455–29,514 202.5
21,206
49.6
Year ended March 31, 2021
222,454 (15.9)
1,701 (84.8)
9,756(37.7)
14,17275.6(Note) Comprehensive income:Year ended March 31, 2022:
24,088 million yen (43.6%)
Year ended March 31, 2021:
16,776 million yen(–%)
Basic earnings
Diluted earnings
Ratio of ordinary Ratio of operating
Return on equity
per shareper share
profit to total assets profit to net sales
Yen
Yen
%
%
%
Year ended March 31, 2022
126.22126.0910.3
8.0
7.8
Year ended March 31, 2021
84.40
83.00
7.6
2.8
0.8
(Reference) Investment income by equity method: Year ended March 31, 2022:
5,861 million yen
Year ended March 31, 2021:
5,587 million yen(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen%
Yen
As of March 31, 2022
376,956
216,97457.4
1,286.82
As of March 31, 2021
363,075
195,41953.6
1,159.49(Reference) Equity:
As of March 31, 2022:
216,252 million yen
As of March 31, 2021:
194,702 million yen(3) Consolidated cash flows
Cash flows from
Cash flows from
Cash flows from
Cash and cash equivalents
operating activities
investing activities
financing activities
at end of the year
Million yen
Million yen
Million yen
Million yen
Year ended March 31, 2022
20,186(1,648)(19,187)
30,275
Year ended March 31, 2021
23,760(19,575)
4,358
29,846
2. Dividends
Annual dividend per share
End of 1Q End of 2Q End of 3Q Year-end

Total

Ratio of
Dividend
dividend to
payout ratio
net assets(Consolidated)(Consolidated)
Million yen
%
%
2,359
16.6
1.3
4,047
19.0
2.0
Total
dividends(Total)

Yen
Yen
Yen
Yen
Yen
Year ended March 31, 2021
–
7.00
–
7.00
14.00
Year ended March 31, 2022
–
7.00
–
17.00
24.00
Year ending March 31, 2023
–
9.00
–
9.00
18.00
30.2
(forecast)
Breakdown of year-end dividends for the fiscal year ending March 31, 2022: Ordinary dividend: 7.00 yen Special dividend: 10.00 yen

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2023 (April 1, 2022 through March 31, 2023)(% change from the previous corresponding period)
Basic
Profit attributable to
Net sales
Operating profit
Ordinary profit
earnings perowners of parent
shareMillion yen% Million yen% Million yen% Million yen%
Yen
2Q (Accumulated)
130,000
2.9
1,500 (86.1)
2,000 (86.5)
1,000 (93.8)
5.95
Full year
280,000
7.0
11,000 (46.2)
14,000 (52.6)
10,000 (52.8)
59.51

-1-

* Notes(1) Changes in significant subsidiaries during the year (changes in specified subsidiaries accompanying changes in the scope of
consolidation): None
(2) Changes in accounting policies, accounting estimates and restatement of prior period financial statements(i) Changes in accounting policies due to amendment to accounting standards: Yes(ii) Changes in accounting policies other than (i): None(iii) Changes in accounting estimates: None(iv) Restatement of prior period financial statements: None
(3) Shares outstanding (common stock)(i) Number of shares outstanding at year-end (treasury stock included):
As of March 31, 2022

188,053,114 shares

As of March 31, 2021

188,053,114 shares

20,001,115 shares

As of March 31, 2021

20,131,789 shares

168,018,990 shares

For the year ended March 31, 2021

167,919,947 shares(ii) Number of treasury stock at year-end:
As of March 31, 2022(iii) Average number of shares during the year:
For the year ended March 31, 2022

(Reference) Overview of non-consolidated financial results
1. Non-consolidated financial results for the year ended March 31, 2022 (April 1, 2021 through March 31, 2022)(1) Non-consolidated results of operations(% change from the previous corresponding period)
Net sales
Operating profit
Ordinary profit
Net profit
Million yen%
Million yen%
Million yen%
Million yen%
Year ended March 31, 2022
164,681
12.0
7,291
270.9
13,091
97.4
7,368(38.7)
Year ended March 31, 2021
146,976(15.9)
1,965(34.4)
6,632(32.5)
12,029340.2
Basic earnings
per share

Diluted earnings
per share
Yen
43.66
71.30

Yen
Year ended March 31, 2022
43.70
Year ended March 31, 2021
71.39(2) Non-consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of March 31, 2022
268,469
131,785
49.1
As of March 31, 2021
271,560
126,647
46.6(Reference) Equity:
As of March 31, 2022:
131,708 million yen
As of March 31, 2021:
126,545 million yen

Net assets per share
Yen
781.04751.01* The summary of financial results is exempt from audits conducted by certified public accountants or an audit corporation.
* Explanation regarding appropriate use of business forecasts and other special instructions(Caution regarding forward-looking statements)
The forward-looking statements such as forecasts of financial results contained in this material are based on information available to theCompany at the time of the publication of this document and certain assumptions that the Company considers to be reasonable, and may
differ materially from the actual results due to various factors. For assumptions of business forecasts and a note about the use of business
forecasts, please refer to page 5 “1. Summary of Operating Results (4) Future outlook.”* This document is an excerpt translation of the original in Japanese and is for reference purposes only. In case of any discrepancy
between this document and the original in Japanese, the latter shall take precedence.

-2-

1. Summary of Operating Results(1) Summary of operating results during the year
(Operating results during the year)
For the current fiscal year, demand showed signs of a recovery from the previous fiscal year, where demand declined significantly across theindustry. Sales volumes increased for paper and white paperboard and the sales price of pulp rose. That led to increases in both sales andprofit. The Group’s consolidated financial results for the current fiscal year were as follows:
Net sales

261,616 million yen (up 17.6% year on year)

Operating profit

20,455 million yen (compared to an operating profit of 1,701 million yen a year ago)

Ordinary profit

29,514 million yen (up 202.5% year on year)

Profit attributable to owners of parent

21,206 million yen (up 49.6% year on year)

The performance of major segments is as follows:(i) Pulp and paper business(Million yen)Previous year
Net sales

Current year

Difference

198,770

240,002

41,231

673

19,241

18,568Operating profit

In the pulp and paper business, demand declined significantly across the industry in the previous fiscal year under the effects of COVID19. However, signs of a recovery appeared in the current fiscal year. Sales volumes increased, which resulted in increases in sales andprofits.
By product type, sales of paper were higher than in the previous fiscal year as a whole. After the state of emergency was lifted in the second
half of current year, orders for applications of pamphlets for travel rallied and sales for the purpose of flyers for sale at the end of fiscal
year expanded. Exports also increased from the previous fiscal year after recovery of economic activities amid global progress in COVID19 vaccination.
Sales of paperboard also exceeded the level attained in the previous fiscal year, like those of paper. By grade, special white paperboard andcoated duplex board (with gray-back) made solid sales for applications of primary food containers, containers related to take-home foods
and boxes used for retort-pouch foods. Outside Japan, however, sales volumes decreased in China. Sales of high-grade white paperboard
grew year on year. For applications of cosmetics and pharmaceuticals, sales remained as sluggish as in the previous fiscal year whereas
sales for point-of-purchase (POP) store ads and different types of cards surged. Sales volumes of containerboard base paper, of which
commercial production was commenced in April 2020, increased steadily during the current fiscal year and exceeded the previous fiscal
year’s level.
With respect to performance materials, solid sales of automotive battery separators, chip carrier tape base paper for transporting electronic
components and abrasive base paper were achieved and sales for functional paper as a whole was higher than in the preceding fiscal year.
Sales of communication paper were stagnant overall due to the entrenchment of teleworking and other impacts of the COVID-19 pandemic.
Pulp sales surpassed the figure in the previous fiscal year, supported by the rise in sales prices following the recovery of overseas economic
activities from the COVID-19 pandemic.
(ii) Packaging/Paper processing business(Million yen)Previous year
Net sales
Operating profit

Current year

Difference

15,59913,609(1,990)

89

(71)

(161)

In the packaging/paper processing business, sales and profits decreased mainly due to the transfer of business in the area of information
media and a fall in orders received for liquid containers as a result of their shape changes.
-3-

(iii) Other businesses(Million yen)Previous year
Net sales
Operating profit

Current year

Difference

8,083

8,004

(78)

326

759

433

In other businesses, including wood material business, used paper wholesale business, construction business, and logistics business,external orders increased but sales decreased primarily due to the termination of certain business operations. In terms of profitability, an
increase in profits was recorded, mainly reflecting the effect of a range of cost reduction initiatives.
(2) Summary of financial conditions during the fiscal year
(Million yen)
End of previous year

End of current year

ChangeTotal assets

363,075

376,956

13,880Net assets

195,419

216,974

21,555Equity ratio
Net assets per share
Interest-bearing debt at year-end

53.6%

57.4%

3.7%

1,159.49 yen

1,286.82 yen

127.33 yen

113,991

99,088(14,903)

Total assets increased 13,880 million yen from the end of the previous fiscal year, to 376,956 million yen. Significant factors included
increases in notes and accounts receivable - trade, and contract assets of 11,095 million yen, electronically recorded monetary claims operating of 1,431 million yen, merchandise and finished goods of 4,885 million yen, raw materials and supplies of 3,757 million yen, whichmore than offset decreases in property, plant and equipment of 11,066 million yen due in part to depreciation.
Total liabilities decreased 7,674 million yen from the end of the previous year, to 159,981 million yen. This was due chiefly to increases innotes and accounts payable - trade of 2,788 million yen, income tax payable of 3,293 million yen and deferred tax liabilities of 1,700 million
yen, which more than offset a decrease in interest-bearing debt of 14,903 million yen.
Net assets rose 21,555 million yen from the end of the previous fiscal year, to 216,974 million yen. This mainly reflected increases in retained
earnings of 18,724 million yen due to profit attributable to owners of parent and foreign currency translation adjustment of 2,581 million yen.
(3) Summary of cash flow during the fiscal year
(Million yen)Previous year

Current year

ChangeCash flows from operating activities

23,76020,186(3,574)

Cash flows from investing activities(19,575)(1,648)17,927

Cash flows from financing activities

4,358(19,187)(23,545)

(80)

1,078

1,158

Net increase (decrease) in cash and cash equivalents

8,463

428

(8,034)

Cash and cash equivalents at beginning of the year

21,38329,846

8,463

Cash and cash equivalents at end of the year

29,84630,275428

Effect of exchange rate change on cash and cash equivalents

Cash and cash equivalents as of the end of current year increased 428 million yen year on year, to 30,275 million yen.
(Cash flow from operating activities)
Net cash provided by operating activities was 20,186 million yen (down 15.0% year on year.)
Major inflows were profit before income taxes of 27,358 million yen, depreciation of 13,213 million yen, impairment loss of 7,855 million
yen and an increase in notes and accounts payable - trade of 2,849 million yen. Major outflows were share of profit of entities accounted for-4-using equity method of 5,861 million yen, gain on sales and retirement of non-current assets of 6,111 million yen and an increase in tradereceivables - trade of 11,586 million yen.
(Cash flow from investing activities)
Net cash used in investing activities amounted to 1,648 million yen (down 91.6% year on year).
Major outflows were purchase of investment securities of 775 million yen and the purchase of property, plant and equipment of 12,918
million yen. Major inflows were proceeds from sale of property, plant and equipment of 11,291 million yen and proceeds from sale ofbusinesses of 1,500 million yen.
(Cash flow from financing activities)
Net cash used in financing activities was 19,187 million yen (Inflow of 4,358 million yen in the previous year).
Major outflows were a decrease in short-term loans of 4,133 million yen, repayment of long-term loans of 5,372 million yen, redemption ofbonds of 20,000 million yen and dividends paid of 2,352 million yen.
Major inflows were a net increase in commercial paper of 3,000 million yen and proceeds from issuance of bonds of 10,000 million yen.
(4) Future outlook(i) Forecast on financial results for the next fiscal year
The Japanese economy is expected to turn around, given full infection control measures amid a relaxation of the severe situation associatedwith the COVID-19 pandemic, the effects of policies as well as improvements in overseas economies. However, there are concerns thatsoaring material and fuel prices resulting from the situation in Ukraine may place downward pressure on the economy.
Under these circumstances, uncertainty over business conditions in the pulp and paper industry continues, with rapid changes in domestic
demand trends, movements in global market prices and the rises in material and fuel prices. Implemented in the fiscal year ended March
31, 2022, the price revisions are expected to produce positive effects on the Group throughout the fiscal year. Moreover, the Group willfurther continue to work on full-scale cost reductions to strengthen its financial conditions.
The following business forecast was prepared by considering these circumstances comprehensively.
The following forecast was based on information currently available to the Company at the time of the release of these materials. Actual
result may differ from the above forecast due to various factors.

Operating profit

Ordinary profit

Profitattributable toowners of parent

Basic earnings
per share

Million yen

Million yen

Million yen

Million yen

Yen

Year ending March 31, 2023 (forecast)

280,000

11,00014,00010,00059.51

Year ended March 31, 2022 (actual)

261,616

20,45529,514

21,206126.22

7.0(46.2)(52.6)(52.8)Net sales% change from the previous
corresponding period(ii) Forecast on dividends for the next fiscal year

The Company continues to make investments for growth to boost its corporate value consistently and from a long-term perspective. With
this in mind, it established the basic guidelines for capital policy with an emphasis on the implementation of continuous and stable dividend
payments based on the capital policy of maintaining a balance between financial soundness, capital efficiency and shareholder returns.
The Company has made certain achievements in management initiatives implemented based on its long-term management vision. Taking
these achievements and other factors comprehensively into consideration, with respect to dividend forecasts for the next fiscal year, thecompany plans to increase its interim dividends to 9 yen per share, year-end dividends to 9 yen per share and annual dividends to 18 yen
per share.
2. Our Basic Philosophy on the Selection of Accounting Standards
Taking into account the period comparability of consolidated financial statements, the Group currently prepares consolidated financial
statements based on Japanese GAAP. With respect to the International Financial Reporting Standards (IFRSs) the Company will address theissue appropriately with consideration to the various circumstances in Japan and overseas.

-5-

3. Consolidated Financial Statements(1) Consolidated Balance Sheet(Million yen)
As of March 31, 2021

As of March 31, 2022

29,84649,653–
5,701
22,374
2,378
22,7127,355(3)30,275–60,7497,133
27,2602,684
26,4695,741(5)140,020

160,308

85,263(53,994)

85,623(54,260)

Buildings and structures, net

31,26831,363

Machinery, equipment and vehicles
Accumulated depreciation

431,975(369,170)

432,919(374,780)

62,805

58,1386,404(5,079)6,509(5,219)

1,324

1,290

22,412408(318)

17,850185(119)(Assets)
Current assets
Cash and deposits
Notes and accounts receivable - trade
Notes and accounts receivable - trade, and contract assets
Electronically recorded monetary claims - operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation

Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation

90

65

Right-of-use assets
Accumulated depreciation

2,557
(471)

2,596
(540)

Right-of-use assets, net

2,086

2,056

3,989
2,470

2,166
2,449

Leased assets, net

Construction in progress
Forestland
Total property, plant and equipment

126,448

115,382

Intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans
Asset for retirement benefits
Deferred tax assets
Other
Allowance for doubtful accounts

2,668

2,406

22,04464,784
224
3,456
1,621
4,226
(2,420)22,022
69,562
215
3,869
1,663
1,811
(288)

Total investments and other assets

93,937

98,857223,055
363,075

216,647
376,956

Total non-current assets
Total assets-6-

(Million yen)
As of March 31, 2021

As of March 31, 2022

17,571
5,898
22,928–20,000
293
720
1,230
–
2,368
79
305
258
220
142
–
1,449
11,54820,3606,339
40,748
3,000
–
280
4,013
432
507
2,613
65
54
–
123
191
180
1,325
11,55985,016

91,796

10,00059,142
1,626
1,209
805
291
6,940
2,256
367

20,00033,495
1,563
2,909
1,136
340
5,661
2,845
231

82,63968,184

Total liabilities

167,656

159,981

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares

42,02045,341
112,891(9,702)42,02045,341
131,615(9,639)(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans
Commercial papers
Current portion of bonds payable
Lease obligations
Income taxes payable
Accrued consumption taxes
Contract liabilities
Provision for bonuses
Provision for directors’ bonuses
Provision for environmental measures
Provision for business structure improvement
Provision for loss on disaster
Provision for reforestation
Provision for loss related to the Anti-Monopoly Act
Notes payable - facilities
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans
Lease obligations
Deferred tax liabilities
Provision for environmental measures
Provision for reforestation
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities

190,550

209,338

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans

4,343
(18)
(949)
775

3,686
157
1,632
1,437

Total accumulated other comprehensive income

4,151

6,913

102
614

77
644

195,419

216,974

363,075

376,956

Total shareholders’ equity

Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets-7-

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Million yen)
For the year ended
March 31, 2021

For the year ended
March 31, 2022

Net sales
Cost of sales

222,454
183,978

261,616
200,490

Gross profit

38,475

61,125

Selling, general and administrative expenses

36,77340,670Operating profit

1,701

20,455Non-operating income
Interest income
Dividends income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Other
Total non-operating income

26
772
5,587
190
3,176
9,752

27
776
5,861
1,729
1,855
10,250Non-operating expenses
Interest expenses
Leave allowance
Rental expenses
Provision of allowance for doubtful accounts
Other
Total non-operating expenses

437
535
232
–
492
1,697

393
11
244
240
300
1,191

Ordinary profit

9,756

29,514Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on change in equity
Gain on reversal of asset retirement obligations
Insurance claim income
Compensation income
Gain on reversal of retirement benefit obligations
Other
Total extraordinary income

60
5,323
499
327
315
99
–
1
6,626

6,985
20
–
–
34
–
77
–
7,117

Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on disaster
Loss on tax purpose reduction entry of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Business restructuring expenses
Loss related to the Anti-Monopoly Act

1,142
114
308
95
3
588
798
–

873
7,855
130
31
–
22
–
360

3,051

9,273

Profit before income taxes

13,331

27,358

Income taxes - current
Refund of income taxes
Income taxes - deferred

848(1,351)
(435)

4,452
–
1,633

Total extraordinary losses

Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

-8-

(938)

6,085

14,26921,272

97

66

14,172

21,206

Consolidated Statements of Comprehensive Income(Million yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Comprehensive income:Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests-9-

For the year ended
March 31, 2021

For the year ended
March 31, 2022

14,26921,2722,004(42)(1,282)
1,465

(328)
126
2,634
689

360

(307)

2,506

2,815

16,77624,088

16,673
102

23,968119

(4) Consolidated Statement of Cash Flows(Million yen)
For the year ended
March 31, 2021

For the year ended
March 31, 2022

13,331
14,482
114
124
(99)
(315)
443
(798)
437
(5,587)(5,320)
95
1,082
798
–
980
6,516
54
(2,184)471(801)

27,35813,213
7,855
133
–
(34)
(539)
(804)
393
(5,861)(20)
31(6,111)–(77)(11,586)(7,455)(1,034)
2,849
(798)
(339)

Subtotal

23,82917,172

Interest and dividend income received
Interest paid
Income taxes refunded (paid)
Proceeds from compensation
Proceeds from insurance income

1,449
(349)
(1,570)
99
302

1,646
(396)
1,760
–
2

Net cash provided by operating activities

23,76020,186(10,625)
7,478(15,526)
(831)
68
(152)
133
–
(121)

(775)
31
(12,918)(777)
11,291
(110)
177
1,500
(67)

(19,575)(1,648)Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Compensation income
Insurance claim income
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Share of profit of entities accounted for using equity method
Net gain on sale of investment securities
Loss on tax purpose reduction entry of non-current assets
Net loss (gain) on sales and retirement of non-current assets
Business restructuring expenses
Reversal of retirement benefit obligations
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in accrued consumption taxes
Other

Cash flows from investing activities
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchases of property, plant and equipment
Payments for retirement of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments of loans receivableCollection of loans receivable
Proceeds from transfer of businesses
Other
Net cash used in investing activities- 10 -

(Million yen)
For the year ended
March 31, 2021

For the year ended
March 31, 2022

7,060
(7,000)16,000(9,145)––(2,190)(84)(282)(4,133)3,000–(5,372)
10,000(20,000)(2,352)(89)(238)

Net cash provided by (used in) financing activities

4,358(19,187)

Translation (loss) gain on cash and cash equivalents

(80)

1,078

Net increase in cash and cash equivalents

8,463

428

Cash and cash equivalents at beginning of period

21,38329,846

Cash and cash equivalents at end of the year

29,84630,275

Cash flows from financing activities
Net increase (decrease) in short-term loans
Net increase (decrease) in commercial papers
Proceeds from long-term loans
Repayments of long-term loans
Proceeds from issuance of bonds
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
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(5) Notes to Quarterly Consolidated Financial Statements(Notes to Going Concern Assumption)
Not applicable.
(Changes in Accounting Policies)(Application of Accounting Standard for Revenue Recognition)
The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020. (hereinafter referred to as the"Accounting Standard for Revenue Recognition") and related implementation guidance are applied from the beginning of the current
fiscal year, and revenue is recognized at the amount expected to be received in exchange for promised goods or services when thecustomer obtains control of the promised goods or services.
As a result, a portion of revenue related to a transaction was previously recognized on a gross basis, but as a result of determining its role(as principal or agent) in providing the goods to the customer, the Company has changed its method of recognizing revenue on a net basis
for transactions that are determined to be agent transactions.
In addition, a portion of the consideration payable to the customer, which was previously treated as selling, general and administrative
expenses, is now subtracted from the transaction price.
In accordance with the transitional treatment prescribed in the proviso of Paragraph 84 of the Accounting Standard for Revenue
Recognition, the cumulative effect of retrospective application of the new accounting policy prior to the beginning of the current fiscal
year is adjusted to retained earnings at the beginning of the current fiscal year, and the new accounting policy is applied from such
beginning balance. However, the new accounting policy was not applied retrospectively to contracts for which almost all revenue amounts
were recognized in accordance with the previous treatment prior to the beginning of the current fiscal year by applying the method
prescribed in Paragraph 86 of the Accounting Standard for Revenue Recognition. In addition, the Company has applied the method
prescribed in Subparagraph (1), Paragraph 86 of the Accounting Standard for Revenue Recognition and has accounted for contract
modifications made prior to the beginning of the current fiscal year based on the contract terms after reflecting all contract modifications,and has adjusted the cumulative effect of such modifications to retained earnings at the beginning of the current fiscal year.
In addition, "Notes and accounts receivable - trade" presented in current assets in the consolidated balance sheets for the previous fiscal
year is included in "Notes, accounts receivable - trade and contract assets" from this fiscal year, and "Other" presented in current liabilities
for the previous fiscal year is included in "Contract liabilities" and "Other" from this fiscal year. However, in accordance with thetransitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue Recognition, no reclassification has been
made to the comparative information as the previous fiscal year using the new presentation.
As a result, the application of the revenue recognition accounting standard did not have a material impact on the consolidated financial
statements.

(Application of Accounting Standard for Fair Value Measurement)
The Company began applying the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30 issued on July 4, 2019,
hereinafter the “Fair Value Measurement Standard”) and related implementation guidance at the beginning of the current fiscal year. In
accordance with the transitional treatment set forth in Section 19 of the Fair Value Measurement Standard and Section 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10 issued on July 4, 2019), the Company applies new accounting
policies prescribed in the Fair Value Measurement Standard and related implementation guidance prospectively. Their application
produces no impact on the consolidated financial statements.

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