(Translation)
This document has been extracted and translated from the Japanese original for reference purpose and the translated
document only includes Financial Information chapter. In the event of any discrepancy between the translated document
and Japanese original, the original shall prevail.

Financial Information of Annual Securities Report
From January 1, 2019 to December 31, 2019
(The 101th Business term)Financial Information
1. Preparation of consolidated financial statements and non-consolidated financial statements(1) The consolidated financial statements of Nissha Co., Ltd. (the “Company”) have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) pursuant to Article 93 of the “Ordinance on Terminology, Forms, and Preparation Methodsof Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of 1976; hereinafter referred to as the“Ordinance on Consolidated Financial Statements”).
(2) The non-consolidated financial statements of the Company have been prepared in accordance with the “Ordinance on Terminology,
Forms, and Preparation Methods of Financial Statements, etc.” (Ordinance of the Ministry of Finance No. 59 of 1963; hereinafterreferred to as the “Ordinance on Financial Statements, etc.”).
The Company falls under a company which is permitted to submit non-consolidated financial statements prepared in accordancewith special provisions, and prepares its non-consolidated financial statements pursuant to Article 127 of the Ordinance on Financial
Statements, etc.
2. Audit certificate
The consolidated financial statements and non-consolidated financial statements of the Company for the fiscal year ended
December 31, 2019 (from January 1, 2019 to December 31, 2019) have been audited by Deloitte Touche Tohmatsu LLC in
accordance with Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.
3. Special efforts to ensure fair presentation of consolidated financial statements, etc.
The Company has become a member of the Financial Accounting Standards Foundation and participates in seminars in order todevelop a system capable of appropriately understanding the contents of the accounting standards and other rules.
4. Development of internal system to prepare consolidated financial statements, etc. fairly in accordance with IFRSThe Company obtains as necessary press releases and accounting standards published by the International Accounting Standards
Board to keep up to date with the latest standards. In addition, the Company develops an internal system, including internal rules
and manuals in compliance with IFRS, to prepare consolidated financial statements, etc. fairly in accordance with IFRS.

―1―

1 Consolidated Financial Statements, etc.
(1) Consolidated financial statements
1) Consolidated statements of financial position(Million yen)
Note

As of
January 1, 2018
(Date of transition to
IFRS)

As of
December 31, 2018

As ofDecember 31, 2019

Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets

6,35
7,35
8
16,35
9

29,291
44,67027,588
3,318
5,296

16,63738,97430,287
4,071
5,390

17,49934,177
21,415564
4,713

Subtotal
Assets held for sale

110,165
10－

95,361
293

78,371
4

110,165

95,65478,375

AssetsCurrent assets

Total current assets
Non-current assets
Property, plant and equipment

11,14

58,46258,96745,050Goodwill
Intangible assets

12,14
12,14

19,56914,45919,871
14,55819,58913,343Right-of-use assets
Investments accounted for using
equity method
Other financial assets
Retirement benefit asset

13,14

7,901

9,455

8,041

15

218

0

0

16,35
23

20,694111

15,369221

20,413265

Deferred tax assets
Other non-current assets

17
9

658
199

571
226

879
247

122,275

119,241

107,830

232,440

214,895

186,205

Total non-current assets
Total assets―2―

(Million yen)
Note

As of
January 1, 2018
(Date of transition to
IFRS)

As of
December 31, 2018

As ofDecember 31, 2019

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables

18,35

72,806

62,15844,538Borrowings
Other financial liabilities

19,35
20,35

12,025
1,308

12,574
1,441

22,167
1,073

Lease liabilities
Income taxes payable, etc.

13
17

1,567
1,566

1,614
926

1,562
447

Provisions
Other current liabilities

21
22

25
7,978

300
5,272

53
4,237

97,27884,28874,080－112－

97,27884,401

74,080Subtotal
Liabilities directly associated withassets held for sale
Total current liabilities

10

Non-current liabilities
Bonds and borrowings
Other financial liabilities

19,35
20,35

16,383
1,616

16,3191,695

14,244442

Lease liabilities
Retirement benefit liability

13
23

6,420
4,775

7,990
4,543

7,926
4,913

Provisions
Deferred tax liabilities

21
17

164
9,834

162
7,941

47
9,212

Other non-current liabilities

22

293

293

331

Total non-current liabilities
Total liabilities

39,48838,947

37,118

136,766

123,348

111,198

EquityShare capital
Capital surplus

24
24

12,06915,027

12,11915,071

12,11914,931Retained earnings
Treasury shares

24
24

57,940(239)

60,931(1,900)42,363(1,899)Other components of equity
Total equity attributable to ownersof parent

24

10,638

5,341

7,494

95,43591,56475,010

237

(17)

(3)

Non-controlling interests
Total equity

95,67391,54675,007

Total liabilities and equity

232,440

214,895

186,205―3―2) Consolidated statements of profit or loss and comprehensive income
Consolidated statements of profit or loss
(Million yen)Note
Net sales
Cost of sales

Fiscal Year ended
December 31, 2018

Fiscal Year ended
December 31, 201926
28

204,210(166,337)
37,872

24,137

Selling, general and administrative expenses
Other income

27,28
29

(29,152)
1,404(27,668)
6,200

Other expenses
Share of profit (loss) of investments accounted
for using equity method
Operating profit (loss)

29(2,956)(18,917)

15

(213)

－

6,954

(16,247)

Finance income
Finance costs

30
30

663
(1,249)1,056(1,437)

6,367(16,628)17(2,113)

(590)

4,254

(17,219)

Owners of parent
Non-controlling interests

4,523
(269)

(17,179)(39)

Profit (loss)

4,254(17,219)

32

89.79

(344.19)

32

87.55

(344.19)

Gross profit

Profit (loss) before tax
Income tax expense
Profit (loss)

174,035(149,898)

Profit (loss) attributable to:Earnings (loss) per share attributable to ownersof parent
Basic earnings (loss) per share (Yen)
Diluted earnings (loss) per share (Yen)―4―Consolidated statements of comprehensive income(Million yen)
Note

Fiscal Year ended
December 31, 2018

Profit (loss)
Other comprehensive income
Items that will not be reclassified to profit orloss
Net change in fair value of financial assets
measured through other comprehensive
incomeRemeasurements of defined benefit plans

Fiscal Year ended
December 31, 2019

4,254

(17,219)31(3,689)

3,170

31

(2)

(72)

(3,691)3,098

31(1,615)

(839)

31

(5)

－

(1,620)(839)

Total of items that will not be reclassified to
profit or loss
Items that may be reclassified to profit or loss
Exchange differences on translation offoreign operations
Share of other comprehensive income ofinvestments accounted for using equity
methodTotal of items that may be reclassified to
profit or loss
Total other comprehensive income
Total comprehensive income(5,312)

2,258(1,058)(14,960)

(788)
(269)

(14,923)(37)(1,058)(14,960)

Comprehensive income attributable to:
Owners of parent
Non-controlling interests
Total comprehensive income―5―3) Consolidated statements of changes in equity(Million yen)
Equity attributable to owners of parent
Other components of equity
Net change
in fair
value of
Exchangefinancial Remeasure differences
Total other Total
assets-ments of
Nonequity
Treasury measuredoncompo- attributabledefinedcontrollingsharestranslation
nents
ofthrough
benefit of foreign equity to owners interests
other
plans
of parent
operations
comprehensive
income(239)
10,638
10,63895,435
237
－
－

Share
capitalCapitalsurplusRetainedearnings

12,06915,02757,940

－

－

4,523

－

－

－

－

－

4,523

(269)

4,254

－

－

－

－

(3,689)(3)(1,619)(5,312)(5,312)(0)(5,312)

－

－

4,523

－

(3,689)(3)(1,619)(5,312)

(788)

(269)

(1,058)

24

50

47

－

－

－

－

－

－

97

－

97

24

－

－

－

(1,732)

－

－

－

－

(1,732)－(1,732)

24

－

(22)

－

70

－

－

－

－

48

－

48

25

－

－

(1,516)

－

－

－

－

－

(1,516)－(1,516)

34

－

19

－

－

－

－

－

－

19

－

19

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

Transfer from othercomponents of equity
to retained earnings

－

－

(16)

－

12

3

－

16

－

－

－

Other

－

－

－

－

－

－

－

－

－

14

14

50

44

(1,532)(1,661)

12

3

－

16

(3,082)14(3,068)

Balance at December 31,
201812,11915,07160,931(1,900)6,961－(1,619)5,341

91,564(17)

91,546

Profit (loss)
Other comprehensive
incomeTotal comprehensive
income－－(17,179)

－

－

－

－

－

(17,179)(39)(17,219)

－

－

－

－

3,170

(72)

(841)

2,256

2,256

2

2,258

－

－

(17,179)

－

3,170

(72)

(841)

2,256

(14,923)(37)(14,960)

Note

Balance at January 1,
2018Profit (loss)
Other comprehensive
incomeTotal comprehensive
incomeIssuance of new shares
Purchase of treasury
shares
Disposal of treasury
sharesDividends of surplus
Share-based paymenttransactions
Changes in ownershipinterest in subsidiaries
Loss of control ofsubsidiaries
Put options granted to
non-controllinginterests

Total transactions withowners, etc.

Issuance of new shares
Purchase of treasury
shares
Disposal of treasury
sharesDividends of surplus
Share-based paymenttransactions
Changes in ownershipinterest in subsidiaries
Loss of control ofsubsidiaries
Put options granted to
non-controllinginterests

Total
equity95,673

－

－

－

－

－

－

－

－

－

－

－

24

－

－

－

(0)

－

－

－

－

(0)

－

(0)

24

－

(1)

－

2

－

－

－

－

1

－

1

25

－

－

(1,497)

－

－

－

－

－

(1,497)－(1,497)

34

－

16

－

－

－

－

－

－

16

－

16

24

－

(981)

－

－

－

15

－

15

(965)

16

(949)

－

－

(11)

－

－

－

－

－

(11)

35

24

－

826

－

－

－

－

－

－

826

－

826

Transfer from othercomponents of equity
to retained earnings

－

－

119

－

(176)

56

－

(119)

－

－

－

Other

－

－

－

－

－

－

－

－

－

－

－

－

(139)

(1,389)

1

(176)

72

－

(103)

(1,630)51(1,578)

12,11914,93142,363(1,899)9,955－(2,461)

7,494

75,010(3)75,007

Total transactions withowners, etc.
Balance at December 31,
2019

24

―6―

4) Consolidated statements of cash flows(Million yen)
NoteCash flows from operating activities
Profit (loss) before tax
Depreciation and amortization
Impairment losses
Loss (gain) on sale and retirement of noncurrent assets
Gain on sale of shares of subsidiaries andassociates
Business restructuring expenses
Loss on disaster
Share of loss (profit) of investments
accounted for using equity method
Finance income
Finance costs
Decrease (increase) in trade and otherreceivables
Decrease (increase) in inventories
Increase (decrease) in trade and otherpayablesIncrease (decrease) in provisions
Increase (decrease) in retirement benefit
asset or liability
Other
SubtotalInterest received
Dividends received
Payments for loss on liquidation of business
Interest paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating
activities
Cash flows from investing activities
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Payments for retirement of property, plantand equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Payments for acquisition of subsidiaries orother businesses
Proceeds from sale of subsidiaries
Payments for sale of subsidiaries
Proceeds from sale of shares of subsidiaries
and associates
Other
Net cash provided by (used in) investing
activities

Fiscal Year ended
December 31, 2018

Fiscal Year ended
December 31, 2019

6,367
10,325
246(16,628)
10,067
15,917538(4,267)

(317)

(878)

607
478

47
－

213

－

(663)
1,249

(1,056)
1,437

6,594

4,976

(3,202)

8,604(8,790)(16,362)

263

(369)

(327)

201

(4,792)
8,791
73
285
－
(942)
(2,597)
127

3,784
5,475
47
369
(1,402)(1,094)(1,954)
195

5,737

1,636

477
(11,697)－(7,226)

(238)

(489)

7

6,068

(731)
(26)
7

(730)
(996)
422

5,33

(2,216)(2,434)

5,33
33

－
－

698
(81)

317

－

(125)

(180)

(14,225)(4,948)

30
30

33

―7―

(Million yen)
NoteCash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Repayments of lease liabilities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Payments for acquisition of non-controllinginterests
Purchase of treasury shares
Proceeds from sale of treasury shares
Dividends paid to owners of parent
Other
Net cash provided by (used in) financing
activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Fiscal Year ended
December 31, 2018

33
33
33
33
33

24
24
25

6
6

―8―

Fiscal Year ended
December 31, 2019

21,858(21,630)(1,741)
3,433(2,570)20,484(10,495)(1,766)
1,313(3,403)－(950)(1,732)
3(1,519)(11)(0)
0(1,499)(1)(3,909)

3,680

(136)

373

(12,533)

742

29,291
16,757

16,757
17,499

Notes to Consolidated Financial Statements
1. Reporting entity
Nissha Co., Ltd. (the “Company”) is a corporation domiciled in Japan, and the registered address of its headquarters is Nakagyoku, Kyoto, Japan.
The consolidated financial statements of the Company with the fiscal year-end date of December 31 are prepared by combining thefinancial statements of the Company and its subsidiaries (collectively, the “Group”) and the Group’s interest in its associates. The
Group is engaged in the Industrial Materials business, the Devices business, the Medical Technologies business, the Information andCommunication business, and other businesses incidental thereto. The details of the Group’s business and major activities aredescribed in Note 4 “Operating segments.”
2. Basis of preparation(1) Statement of compliance with IFRS and notes on first-time adoption
The Company meets the requirements for a “specified company complying with designated international accounting standards”
as stipulated in the Ordinance on Consolidated Financial Statements. Therefore, the Group’s consolidated financial statements havebeen prepared in compliance with IFRS pursuant to the provisions set forth in Article 93 of the Ordinance.
The Group has adopted IFRS starting from the fiscal year ended December 31, 2019, with the date of transition to IFRS (the“date of transition”) on January 1, 2018. Upon the transition to IFRS, the Group has applied IFRS 1 “First-time Adoption ofInternational Financial Reporting Standards” (“IFRS 1”). The effects of the transition to IFRS on the financial position, operating
results and cash flows of the Group are provided in Note 41 “First-time adoption.”(2) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for certain items including thefollowing items in the consolidated statements of financial position:
・Derivatives are measured at fair value.
・Financial instruments measured at fair value through profit or loss are measured at fair value.
・Financial instruments measured at fair value through other comprehensive income are measured at fair value.
・The net defined benefit liability (asset) is measured at the present value of defined benefit obligations less the fair value ofplan assets.
(3) Functional currency and presentation currency
The Group’s consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency. Unlessotherwise noted, amounts are rounded down to the nearest million yen.
(4) Significant accounting judgements and estimates
In preparing the consolidated financial statements in compliance with IFRS, management makes judgements, estimates andassumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and their underlying assumptions are reviewed on an ongoing basis. The effects of revisions to accounting estimates
are recognized in the accounting period in which the estimates were revised and in any future accounting periods affected.
Accounting judgements that have significant effects on the consolidated financial statements for the fiscal year ended December
31, 2019 and accounting estimates subject to significant revisions in the consolidated financial statements for the subsequent fiscal
year are as follows:・Scope of consolidation – “(1) Basis of consolidation” in Note 3 “Significant accounting policies”
・Timing of sales recognition – “(17) Sales recognition” in Note 3 “Significant accounting policies”
・Impairment of non-financial assets – “(11) Impairment of non-financial assets” in Note 3 “Significant accounting policies,”
Note 12 “Goodwill and intangible assets” and Note 14 “Impairment of non-financial assets”
・Recoverability of deferred tax assets – “(19) Income taxes” in Note 3 “Significant accounting policies” and Note 17 “Income
taxes”―9―

・Measurement of defined benefit obligations – “(13) Employee benefits” in Note 3 “Significant accounting policies” and Note
23 “Post‑employment benefits”
・Fair value measurement of financial instruments – “(4) Financial instruments” in Note 3 “Significant accounting policies” andNote 35 “Financial instruments”(5) Standards and interpretations issued but not yet applied
Of the standards and interpretations newly established or revised by the approval date of the consolidated financial statements,
those that have been issued but not yet applied as of December 31, 2019 are mainly as follows. The impact of applying these newstandards and revisions on the Group’s financial position and operating results is immaterial.

Title

Mandatory effective
date(Fiscal years
beginning on andafter)

Timing of initial
application by theGroup

Summary of new standards andrevisions

Business Combinations

January 1, 2020

Fiscal year ending
December 31, 2020

Improvement in the definition of a“business”

Presentation of Financial
Statements
Accounting Policies,
Changes in Accounting
Estimates and Errors

January 1, 2020

Fiscal year ending
December 31, 2020

Clarification on the definition of“material”

January 1, 2020

Fiscal year ending
December 31, 2020

Revision to certain requirements forhedge accounting to mitigate thepotential effects of uncertainties
triggered by the IBOR reformIFRS

IFRS 3IAS 1
IAS 8
IFRS 9Financial Instruments
Financial Instruments:
Recognition andMeasurement
Financial Instruments:
Disclosures

IAS 39IFRS 7

A comprehensive standard for
insurance contracts
Clarification on how payables andPresentation of Financial
Fiscal year ending
IAS 1
January 1, 2022
other liabilities are classified asStatements
December 31, 2022
current or non-current(Note) The International Accounting Standards Board (the “IASB”) has tentatively decided to defer the effective date of the standard
by one year to January 1, 2022. The Group will apply the standard for fiscal years on and after the mandatory effective dateaccordingly.
IFRS 17

Insurance Contracts

January 1, 2021 (Note)Fiscal year ending
December 31, 2021

3. Significant accounting policies(1) Basis of consolidation
1) Subsidiaries
A subsidiary is an entity over which the Group has control.
The Group controls an investee entity when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee.
The acquisition date of a subsidiary is the date on which the Group obtains control of the subsidiary, and the subsidiary is
consolidated from the acquisition date until the date on which the Group loses control over the subsidiary. When accounting
policies applied by a subsidiary differ from those applied by the Group, adjustments are made to the financial statements of thesubsidiary.
Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of theconsideration paid or received is recognized directly as equity attributable to owners of parent in equity.
In preparing the consolidated financial statements, intragroup balances of receivables and payables, intragroup transactions,and unrealized gains and losses arising from intragroup transactions are eliminated.
The fiscal year-end of all subsidiaries is the same as that of the Company.

―10―2) Associates
An associate is an entity in which the Group has significant influence, but not control, over financial and operating policies.
Assessing and deciding whether the Group has significant influence over an entity reflects a comprehensive consideration ofvarious elements. Such elements include the holding of voting rights (if the Group holds, directly or indirectly, 20% to 50% of
the voting rights of the investee company, it is presumed that the Group has significant influence over the investee company), theexistence of potential voting rights that are substantively exercisable and the percentage of directors that have been seconded
from the Group.
An associate is accounted for using the equity method from the date on which the Group obtains significant influence until thedate on which the Group loses such influence. When the accounting policies of an associate differ from those of the Group,
adjustments are made to bring them in conformity with the accounting policies of the Group. Under the equity method, theamount of an investment in an associate is initially measured at cost and subsequently increased or decreased in proportion tochanges in the Group’s share of net assets of the associate after the acquisition. The Group’s share of the associate’s profit or loss
is recognized in the Group’s profit or loss, and the Group’s share of the associate’s other comprehensive income is recognized in
the Group’s other comprehensive income. Profits resulting from significant transactions between the Group and the associate are
eliminated to the extent of the Group’s interest in the associate.
The fiscal year-end of all associates is the same as that of the Company.
(2) Business combinations
Business combinations are accounted for using the acquisition method.
The consideration transferred is measured at the sum of the acquisition-date fair values of the assets transferred, liabilities
assumed, and equity interests issued in exchange for control over the acquiree.
The identifiable assets, liabilities and contingent liabilities in the acquiree are measured at their acquisition-date fair values,
except that:
・Deferred tax assets (or deferred tax liabilities) and assets or liabilities related to employee benefit arrangements are recognized
and measured in accordance with IAS 12 “Income Taxes” and IAS 19 “Employee Benefits,” respectively.
・Liabilities or equity instruments that are related to the acquiree’s share-based payment transactions or the replacement of theacquiree’s share-based payment transactions with the acquirer’s share-based payment transactions are recognized and measuredin accordance with IFRS 2 “Share-based Payment.”
・Non-current assets or disposal groups that are classified as held for sale at the acquisition date in accordance with IFRS 5 “Noncurrent Assets Held for Sale and Discontinued Operations” are measured in accordance with that IFRS.
Goodwill is measured as the excess, if any, of the consideration transferred over the net amount of identifiable assets and liabilities
as of the acquisition date. If the difference is negative, it is immediately recognized in profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the items for which the accounting is incomplete are measured at provisional amounts. In case new information obtained
during the measurement period, which shall not exceed one year from the acquisition date, if known, would have affected themeasurement of the amounts recognized as of the acquisition date, the provisional amounts recognized at the acquisition date are
retrospectively adjusted.
Acquisition-related costs incurred to achieve a business combination are expensed as incurred. The acquisition of additional noncontrolling interests is accounted for as an equity transaction without recognition of goodwill.
(3) Foreign currency translation
Transactions in foreign currencies are translated into the functional currency of each Group company using the exchange rate at
the transaction date or a rate that approximates such rate. Monetary assets and liabilities denominated in foreign currencies aretranslated into the functional currency of each Group company using the exchange rate at the fiscal year-end. Exchange differences
arising from the translation and settlement are recognized in profit or loss. However, exchange differences arising from thetranslation of investments in equity instruments measured at fair value through other comprehensive income and cash flow hedges
are recognized in other comprehensive income.

―11―

The assets and liabilities of foreign operations are translated into Japanese yen using the exchange rate at the fiscal year-end, andthe income and expenses of foreign operations are translated into Japanese yen using the average exchange rate for the fiscal year,
except in cases where the exchange rate fluctuates significantly. Exchange differences arising from the translation are recognizedin other comprehensive income. On the disposal of a foreign operation that results in a loss of control or significant influence overthe foreign operation, the cumulative exchange differences relating to the foreign operation are recognized in profit or loss for theperiod of disposal.
(4) Financial instruments
1) Non-derivative financial assets(ⅰ) Initial recognition and measurement
The Group initially recognizes trade and other receivables on the date of occurrence and all the other financial assets on
the transaction date when the Group becomes a party to the contract.
At initial recognition, all financial assets are measured at fair value plus transaction costs that are directly attributable tothe acquisition of the financial assets, except when they are classified as financial assets measured at fair value throughprofit or loss. Transaction costs of financial assets measured at fair value through profit or loss are recognized in profit or
loss.
(ⅱ) Classification and subsequent measurement
The Group classifies its financial assets as (a) financial assets measured at amortized cost, (b) debt instruments measured
at fair value through other comprehensive income, (c) equity instruments measured at fair value through othercomprehensive income or (d) financial assets measured at fair value through profit or loss. The classification is determinedat initial recognition, and the financial assets are subsequently measured based on their classification as follows:(a) Financial assets measured at amortized cost
A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost:・the financial asset is held within a business model whose objective is to hold financial assets in order to collectcontractual cash flows and・the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, financial assets measured at amortized cost are measured at amortized cost using the effective
interest method, less impairment losses. Interest income based on the effective interest method is recognized as financeincome in profit or loss.
(b) Debt instruments measured at fair value through other comprehensive income
A debt instrument that meets both of the following conditions is classified as a financial asset measured at fair value
through other comprehensive income:・the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets and・the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, such debt instruments are measured at fair value. Subsequent changes in the fair value arerecognized in other comprehensive income, except that foreign exchange gains or losses, impairment gains or losses, andinterest income based on the effective interest method are recognized in profit or loss. When these debt instruments are
derecognized, cumulative gains or losses recognized in other comprehensive income are reclassified from othercomponents of equity to profit or loss as reclassification adjustments.
(c) Equity instruments measured at fair value through other comprehensive income
The Group has made an irrevocable election to present in other comprehensive income subsequent changes in the fairvalue of investments in equity instruments, which are classified as financial assets measured at fair value through othercomprehensive income.

―12―

After initial recognition, such equity instruments are measured at fair value. Subsequent changes in the fair value arerecognized in other comprehensive income. When these equity instruments are derecognized, cumulative gains or losses
recognized in other comprehensive income are reclassified from other components of equity to retained earnings.
Dividends from financial assets measured at fair value through other comprehensive income are recognized as financeincome in profit or loss unless the dividend clearly represents a return of the investment.
(d) Financial assets measured at fair value through profit or loss
Financial assets other than financial assets measured at amortized cost or at fair value through other comprehensive
income as mentioned above are classified as financial assets measured at fair value through profit or loss.
There are no financial assets that the Group has elected to irrevocably designate as financial assets measured at fair value
through profit or loss at initial recognition.
Financial assets measured at fair value through profit or loss are recognized at fair value at initial recognition, and thetransaction costs are recognized in profit or loss as incurred.
After initial recognition, such financial assets are measured at fair value. Subsequent changes in the fair value, net of
dividends and interest income, are recognized in profit or loss.
(ⅲ) Impairment of financial assets
An allowance for doubtful accounts is recognized for expected credit losses on financial assets subject to impairment,
including financial assets measured at amortized cost.
The Group assesses at each fiscal year-end whether the credit risk on financial instruments has increased significantly
since initial recognition.
If the credit risk on a financial instrument has not increased significantly since initial recognition, the allowance for
doubtful accounts for the financial instrument is measured at an amount equal to the 12‑month expected credit losses. If thecredit risk on a financial instrument has increased significantly since initial recognition, the allowance for doubtful accounts
for the financial instrument is measured at an amount equal to the lifetime expected credit losses.
When contractual payments are more than 30 days past due, the Group determines in principle that there has been asignificant increase in credit risk. In assessing whether credit risk has increased significantly, the Group considers reasonably
available and supportable information as well as past due information on contractual payments.
For financial assets including trade receivables that do not contain a significant financing component, the allowance for
doubtful accounts is always measured at an amount equal to lifetime expected credit losses irrespective of whether there has
been a significant increase in credit risk since initial recognition.
The expected credit losses of a financial instrument are measured in a way that reflects:
・an unbiased and probability‑weighted amount that is determined by evaluating a range of possible outcomes;
・the time value of money; and・reasonable and supportable information that is available without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic conditions.
A provision of allowance for doubtful accounts for financial assets is recognized in profit or loss. In the event that therecognized allowance for doubtful accounts is reduced, a reversal of allowance for doubtful accounts is recognized in profit
or loss.
(ⅳ) Derecognition of financial assets
The Group derecognizes a financial asset only when:(a) the contractual rights to the cash flows from the financial asset expire, or(b) it transfers the financial asset so that substantially all the risks and rewards of ownership of the financial asset aretransferred.

―13―2) Non-derivative financial liabilities(ⅰ) Initial recognition and measurement
Financial liabilities are classified at initial recognition as (a) financial liabilities measured at amortized cost or (b) financial
liabilities measured at fair value through profit or loss. Financial liabilities are initially recognized on the transaction datewhen the Group becomes a party to the contract. Financial liabilities measured at amortized cost are initially measured atfair value less transaction costs that are directly attributable to the financial liabilities, while financial liabilities measured atfair value through profit or loss are initially measured at fair value.
(ⅱ) Classification and subsequent measurement(a) Financial liabilities measured at amortized cost
After initial recognition, financial liabilities measured at amortized cost are measured at amortized cost using theeffective interest method. Interest expenses based on the effective interest method are recognized as finance costs in profit
or loss.
(b) Financial liabilities measured at fair value through profit or loss
After initial recognition, financial liabilities measured at fair value through profit or loss are measured at fair value.
Subsequent changes in the fair value are recognized in profit or loss.
(ⅲ) Derecognition of financial liabilities
The Group derecognizes a financial liability when it is extinguished, that is, when the obligation specified in the contract
is discharged, cancelled or expires.

3) Presentation of financial assets and financial liabilities
Financial assets and financial liabilities are offset and presented on a net basis in the consolidated statements of financial
position only when the Group has a legally enforceable right to set off the balances and intends either to settle on a net basis or
to realize the asset and settle the liability simultaneously.
4) Derivative financial instruments
The Group utilizes forward exchange contracts and currency swaps to mitigate the risk of fluctuations in foreign exchange
rates and utilizes interest rate swaps to mitigate the risk of fluctuations in interest rates. These derivatives are initially measured
at the time when the contract is entered into, and are subsequently remeasured at fair value. Changes in the fair value of derivatives
are all recognized in profit or loss.
Hedge accounting is not applied to the above derivatives. Accordingly, derivative financial instruments are classified as
financial assets or financial liabilities measured at fair value through profit or loss.
5) Fair value of financial instruments
The fair value of financial instruments is determined using market information, including market prices, and appropriate
valuation techniques.
Inputs used to measure fair value are categorized into the following three levels:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs (i.e., prices themselves) other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: Inputs that are not based on observable market data (i.e., unobservable inputs) for the asset or liability.

―14―(5) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, and short‑term investments with a maturity of three months
or less from the date of acquisition that are readily convertible to cash and subject to an insignificant risk of changes in value.
(6) Inventories
Inventories are measured at the lower of cost and net realizable value.
The cost of inventories includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories totheir present location and condition.
Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and estimated costs necessary to make the sale.
Valuation method for each inventory item is as follows:
1) Finished goods (excluding Decorative Film products, etc. of Industrial Materials) and work in process
Mainly by the specific identification method.
2) Finished goods (Decorative Film products, etc. of Industrial Materials)
By the moving average method.
3) Raw materials and supplies
Mainly by the periodic average method.
(7) Property, plant and equipment
Property, plant and equipment are measured using the cost model and are carried at cost less any accumulated depreciation andany accumulated impairment losses.
Depreciable property, plant and equipment are depreciated using the straight-line method over their useful lives.
The useful lives used in determining depreciation are as follow:
Buildings and structures: 15 to 50 years
Machinery and vehicles: 5 to 10 years
Tools, furniture and fixtures: 2 to 10 years
The cost includes any costs directly attributable to the acquisition of the asset; the initial estimate of the costs of dismantling andremoving the asset and restoring the site on which it is located; and borrowing costs eligible for capitalization.
The costs of the day‑to‑day servicing for the repairs and maintenance of property, plant and equipment are expensed as incurred.
When an item of property, plant and equipment consists of components with different useful lives, each component is recognized
as a separate item of property, plant and equipment.
The gain or loss arising from the derecognition of property, plant and equipment is included in profit or loss when the asset isderecognized.
The depreciation method, useful life and residual value of an asset are reviewed at each fiscal year‑end, and any changes areaccounted for prospectively as changes in accounting estimates.
(8) Intangible assets
Intangible assets are measured using the cost model and are carried at cost less any accumulated amortization and any
accumulated impairment losses.
Intangible assets with finite useful lives are amortized using the straight-line method over their useful lives.
The estimated useful lives of major intangible assets are as follows:
Software: 5 years
Customer-related assets: 8 to 17 years
Technical assets: 15 years
The useful lives and amortization method are reviewed at each fiscal year‑end, and any changes are accounted for prospectively
as changes in accounting estimates.

―15―

Intangible assets with indefinite useful lives and intangible assets not yet available for use are not amortized but tested for
impairment individually or as part of the cash-generating unit to which the asset belongs, annually or whenever there is an indicationthat the asset may be impaired.
The gain or loss arising from the derecognition of intangible assets is included in profit or loss when the asset is derecognized.
(9) Goodwill
The measurement of goodwill at initial recognition is as described in “(2) Business combinations.”
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortized but tested for impairment
annually or whenever there is an indication that the asset may be impaired.
(10) Leases(Lessee)
The Group assesses whether a contract is, or contains, a lease by considering whether the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.
For leases as lessee, in principle, right-of-use assets and the corresponding lease liabilities are recognized. For short-term leases(with a lease term of 12 months or less) and leases for which the underlying asset is of low value, the lease payments arerecognized as expenses on a straight-line basis over the lease term or another systematic basis.
Right-of-use assets are measured at cost at the commencement date, and lease liabilities are measured at the present value ofthe lease payments that are not made as of the commencement date. If the interest rate implicit in the lease cannot be readily
determined, the lease payments are discounted using the lessee’s incremental borrowing rate, which is the rate of interest that thelessee would have to pay to borrow the funds necessary to obtain a similar asset over a similar term.
After the commencement date of the lease, the right-of-use assets are measured at cost less any accumulated depreciation andany accumulated impairment losses, and are depreciated from the commencement date to the earlier of the end of the useful lifeof the right-of-use asset or the end of the lease term. Lease liabilities are measured by increasing the book value to reflect intereston the lease liability based on the effective interest method and reducing the book value to reflect the lease payments made.
In cases such as where there is a change in the lease term or a lease modification is not accounted for as a separate lease, thelease liability is remeasured with a corresponding adjustment to the right-of-use asset.
(11) Impairment of non-financial assets
Non-financial assets other than inventories and deferred tax assets are assessed at the end of each reporting period whether there
is any indication of impairment. If any such indication exists, the recoverable amount of the asset or the cash-generating unit (or agroup of cash-generating units) is estimated. Goodwill and intangible assets with indefinite useful lives or not yet available for use
are tested for impairment at least annually, irrespective of whether there is any indication of impairment.
The recoverable amount of an asset or a cash‑generating unit (or a group of cash-generating units) is the higher of its fair valueless costs of disposal and its value in use. The value in use is determined by discounting the estimated future cash flows of the asset
or the cash-generating unit (or a group of cash-generating units) to the present value at a pre-tax discount rate that reflects the timevalue of money and risks specific to the asset. A cash‑generating unit is the smallest identifiable group of assets that generates cash
inflows that are largely independent of the cash inflows from other assets or groups of assets. If the recoverable amount of an asset
or a cash‑generating unit is less than its book value, an impairment loss is recognized in profit or loss.
At the end of each reporting period, it is assessed whether there is an indication that impairment losses recognized previously for
an asset may no longer exist or may have decreased. If any such indication exists, the recoverable amount of the asset is estimated.
If the estimated recoverable amount exceeds the book value of the asset, impairment losses are reversed. The book value after thereversal is recognized to the extent that it does not exceed the book value (net of accumulated depreciation or amortization) thatwould have been determined had no impairment loss been recognized previously for the asset. The amount of reversal of impairment
losses is recognized in profit or loss.
Impairment losses recognized for goodwill are not reversed.

―16―

(12) Provisions
The Group recognizes a provision when the Group has a present legal or constructive obligation as a result of a past event; it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate
can be made of the amount of the obligation.
A provision is recognized for the best estimate of the expenditure required to settle the present obligation at the fiscal year-end.
Where the effect of the time value of money is material, a provision is measured at the present value of the expenditure discounted
at a discount rate that reflects the risks specific to the liability. Where discounting is applied, an increase in the provision arisingfrom the passage of time is recognized as finance costs.
(13) Employee benefits
1) Post-employment benefits
The Group has adopted defined benefit plans and defined contribution plans as post-employment benefit plans.
(ⅰ) Defined benefit plans
The present value of defined benefit obligations and the related current service cost and past service cost are determinedusing the projected unit credit method for each plan separately.
The discount rate is determined by reference to yields at the fiscal year-end on high quality corporate bonds with a term
to maturity corresponding to the discount period, which is set based on the period until the expected maturity of benefit
payments in each future fiscal year.
The present value of defined benefit obligations less the fair value of plan assets is recognized as a liability or an asset.
Current service cost, past service cost and net interest on the net defined benefit liability (asset) are recognized in profit
or loss. Remeasurements of the net defined benefit liability (asset) are recognized collectively in other comprehensive
income for the period in which they are incurred and immediately reclassified to retained earnings.
(ⅱ) Defined contribution plans
Retirement benefit expenses of the defined contribution plans are recognized as expenses for the period in which
employees render the related services.
2) Short‑term employee benefits
Short‑term employee benefits are not discounted but are expensed at the time when employees render the related services.
When the Group has a present legal or constructive obligation to make payments as a result of past service rendered by
employees, and a reliable estimate can be made of the amount of the obligation, the estimated amount to be paid is recognized as
a liability.
3) Other long‑term employee benefits
Long‑term employee benefits other than post-employment benefits are determined by discounting to the present value thefuture benefits that employees have earned in return for their services rendered in the current and prior fiscal years.
(14) Government grants
Government grants are recognized at fair value when there is reasonable assurance that the Group will comply with the conditions
attaching to the grants and that the grants will be received.
Government grants related to income are recognized as income on a systematic basis over the periods in which the Group
recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants related to assets are presented by deducting the grant from the cost of the asset in arriving at the book valueof the asset.
(15) Equity
1) Share capital and capital surplus
Equity instruments issued by the Company are recognized at issue value in share capital and capital surplus. Transaction costs
directly attributable to the issuance are deducted from capital surplus.

―17―2) Treasury shares
Any treasury shares acquired are recognized at cost and deducted from equity. Transaction costs directly attributable to theacquisition are deducted from equity.
Any treasury shares disposed of are recognized as an increase in equity at the consideration received, and the difference
between the book value and the consideration received is included in capital surplus.
(16) Share-based payment plans
The Group has adopted equity‑settled and cash‑settled share-based payment plans for Directors of the Board (excluding
Independent Outside Directors of the Board), Corporate Officers and employees of the Company and certain directors of the board
and employees of the Company’s subsidiaries.
1) Equity‑settled
For equity‑settled share-based payments, the consideration for the services received is measured at fair value of the equity
instruments at grant date and recognized as an expense, with the corresponding increase in equity.
2) Cash‑settled
For cash‑settled share-based payments, the services received and the liability incurred are measured at the fair value of theliability and recognized as expenses over the vesting period with the corresponding increase recognized as a liability. Until theliability is settled, the fair value of the liability is remeasured at the end of each quarterly period and at the date of settlement withany changes in fair value recognized in profit or loss.
3) Share‑based payment transactions with cash alternatives
A share‑based payment transaction with cash alternatives is accounted for as a cash‑settled payment transaction if, and to theextent that, the Group has incurred a liability to settle in cash or other assets, or as an equity‑settled payment transaction if, andto the extent that, no such liability has been incurred.
(17) Sales recognition
Except for interest and dividend income and other income items under IFRS 9, the Group recognizes sales in an amount thatreflects the consideration to which the Group expects to be entitled in exchange for the transfer of goods or services to customers,
based on the following five-step approach:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to each distinct performance obligation in the contract.
Step 5: Recognize sales when (or as) a performance obligation is satisfied.
For products (see Note 26 “Sales”) that the Group has promised to deliver to a customer, the performance obligation in thecontract is satisfied at a point at which the customer is deemed to have obtained control of the product in light of contractual terms
and conditions, and the Group recognizes sales primarily upon delivery of the product to the customer or the customer’s acceptance,or based on terms and conditions of trade. For performance obligations in service contracts and other contracts that meet the criteria
for determining whether control of goods or services is transferred over time, sales are recognized over time by measuring the
progress based on input methods, such as costs incurred.
Sales are measured at the amount net of returned products, rebates and discounts.
The consideration in the sales contracts on goods is collected mainly within one year from the time when control of the goods
has been transferred to the customer. Those contracts do not contain a significant financing component.
(18) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (an asset thatnecessarily takes a substantial period of time to get ready for its intended use or sale) are included in the cost of the asset. All otherborrowing costs are recognized in profit or loss for the period in which they are incurred.

―18―

(19) Income taxes
Income tax expense is presented as the aggregate amount of current and deferred tax, and recognized in profit or loss, except for
those related to business combinations and items recognized in other comprehensive income or directly in equity.
Current tax is measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates andtax laws that have been enacted or substantively enacted by the fiscal year-end.
Deferred tax is recognized primarily for temporary differences between the tax base and the accounting book value of an asset
and liability at the fiscal year-end. Deferred tax assets are recognized for deductible temporary differences and the carryforward ofunused tax losses and tax credits to the extent that it is probable that taxable profit will be available against which they can beutilized. Deferred tax liabilities are, in principle, recognized for all taxable temporary differences.
Deferred tax assets or liabilities are not recognized for the following temporary differences:
・Taxable temporary differences arising from the initial recognition of goodwill.
・Temporary differences arising from the initial recognition of an asset or liability in a transaction that is not a business combination
and affects neither accounting profit (loss) nor taxable profit (tax loss).
・Deductible temporary differences associated with investments in subsidiaries and associates where it is probable that thetemporary difference will not reverse in the foreseeable future, or taxable profit will not be available against which the temporary
difference can be utilized.
・Taxable temporary differences associated with investments in subsidiaries and associates where it is probable that the Group isable to control the timing of the reversal of the temporary difference, and the temporary difference will not reverse in theforeseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the fiscal year when the asset isrealized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the fiscal yearend.
(20) Earnings per share
Basic earnings per share are calculated by dividing profit or loss attributable to ordinary shareholders of the parent company by
the basic weighted average number of common shares outstanding during the period, adjusted for the number of treasury shares.
Diluted earnings per share are calculated by adjusting for the effects of all dilutive potential common shares.
(21) Segment information
An operating segment is a component of business activities from which the Group earns sales and incurs expenses, includingtransactions with other operating segments. The operating results of all operating segments, for which separate financial information
is available, are regularly reviewed by the Company’s Board of Directors in order to decide the allocation of management resources
to each segment and to assess its performance.
(22) Assets held for sale
A non‑current asset (or a disposal group) is classified as held for sale if its book value will be recovered principally through asale transaction rather than through continuing use.
An asset held for sale is measured at the lower of its “book value” and “fair value less costs to sell.” Property, plant and equipment
and intangible assets are not depreciated or amortized once classified as held for sale.

―19―

4. Operating segments(1) Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by theboard of directors is being performed in order to decide the allocation of management resources and to review business results.
The Group sets up divisions by product or service. Each division draws up a plan for comprehensive strategies in Japan andoverseas for the products and services it handles, and thereupon develops its business activities.
Accordingly, the Group consists of segments by product and service based on divisions, and the reportable segments are theIndustrial Materials segment, Devices segment, Medical Technologies segment, and Information and Communication segment.
The Industrial Materials segment manufactures and sells decorative films, molds, molded plastic products, and metallized papers.
The Devices segment manufactures and sells film-based Touch Sensors and gas sensors and others. The Medical Technologies
segment manufactures and sells consumable medical products such as medical electrodes, medical chart paper and others and also
provides contract manufacturing services for major medical device manufacturers. The Information and Communication segment
manufactures and sells products in the fields of publication printing and art solution, and provides services related to commercial
printing and sales promotion.
(2) Methods of measurement for the amounts of sales, profit (loss), assets and other items for each reportable segment
The accounting method for each reportable segment is the same as that set forth in Note 3 “Significant accounting policies.”
Segment profit is based on operating profit, and inter-segment sales are based on current market prices.
(3) Information about sales, profit (loss), assets, and other items by reportable segment
Date of transition to IFRS (January 1, 2018)(Million yen)
Reportable segment

Segment assets

Industrial
Materials

Information
Medicaland
Devices TechnoloSub-total
Communicagies
tion

54,03573,88529,953

4,729

162,603

Other(Note 1)

812

Total

163,416

Reconciliations
Consolidated(Note 2)

69,024

232,440

Other items
Investments accounted for
218
218
218
218
－
－
－
－
－
using equity method(Notes) 1. The “Other” category consists of an operating segment not included in the reportable segments and includes the landscaping
business, etc.
2. The positive ¥69,024 million of reconciliations consists of the positive ¥69,308 million in total of cash and cash equivalents,
investment securities, corporate (R&D and administrative) property, plant and equipment, etc., not allocated to reportablesegments and the negative ¥284 million of inter-segment elimination of receivables and payables.

―20―

The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)(Million yen)
Reportable segment
Information
MedicalandTechnoloSub-total
Communicagies
tion

Industrial
Materials

Devices

46,952

122,779

22,351

Inter-segment sales

751

627

－

Total

47,704

123,407

Segment profit (loss)(18)

Finance income
Finance costs

Sales from external customers

Profit (loss) before tax
Segment assets

11,674 203,758

Other(Note 1)

Total

ReconciliaConsolidated
tions(Note 3)(Note 2)452

204,210－204,210

1,496

1,837

3,334

(3,334)－22,351

11,791 205,255

2,289

207,544(3,334)204,210

10,631738(1,237) 10,113

104

10,217(3,263)

6,954

－

－

－

－

－

－

－

－

663

－

－

－

－

－

－

－

－

(1,249)

－

－

－

－

－

－

－

－

6,367

54,202

68,40834,166

4,011 160,789

902

161,691

53,203214,895

116

Other items
Depreciation and
3,870
4,417
996
263
9,546
97
9,644
681
10,325amortization
Share of profit (loss) of
(213)
(213)
(213)
(213)
investments accounted for
－
－
－
－
－
using equity method
Impairment losses
32
276
158
466
466
466
－
－
－
(see Note 14)
Increase in property, plantand equipment, intangible
4,510
6,009
1,852
71 12,443
135
12,578
1,993
14,572
assets and right-of-use
assetsInvestments accounted for
0
0
0
0
－
－
－
－
－
using equity method(Notes) 1. The “Other” category consists of an operating segment not included in the reportable segments and includes the landscaping
business, etc.
2. Reconciliations are as follows:(1) The negative ¥3,263 million of reconciliations in segment profit (loss) includes unallocated corporate expenses, etc.
Corporate expenses mainly consist of general and administrative expenses not attributable to any reportable segment.
(2) The positive ¥53,203 million of reconciliations in segment assets consists of the positive ¥53,405 million in total of cash
and cash equivalents, investment securities, corporate (R&D and administrative) property, plant and equipment, etc., notallocated to reportable segments and the negative ¥202 million of inter-segment elimination of receivables and payables.
(3) The positive ¥681 million of reconciliations in depreciation and amortization relates to corporate (R&D andadministrative) property, plant and equipment, etc.
(4) The positive ¥1,993 million of reconciliations in increase in property, plant and equipment, intangible assets and rightof-use assets is the amount of corporate (R&D and administrative) capital investment.
3. Segment profit (loss) is reconciled with operating profit (loss) recorded in the consolidated statements of profit or loss.

―21―

The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)(Million yen)
Reportable segment
Information
MedicalandTechnoloSub-total
Communicagies
tion

Industrial
Materials

Devices

Sales from external customers

46,27996,196

24,077

Inter-segment sales

1,006

130

－

Total

47,28596,327(7,278) (11,769)

Segment profit (loss)

6,950 173,503

Other(Note 1)

Total

Reconciliat
Consolidated
ions(Note 3)(Note 2)532

174,035－

174,035

1,193

1,665

2,858

(2,858)－24,077

7,005 174,696

2,198

176,894(2,858)174,035

918

5,463 (12,665)

23(12,642)(3,605)(16,247)

55

Finance income

－

－

－

－

－

－

－

－

1,056

Finance costs

－

－

－

－

－

－

－

－

(1,437)

－

－

－

－

－

－

－

－

(16,628)

45,16546,04433,614

2,715 127,539

4,795

132,335

53,870186,205

Profit (loss) before tax
Segment assets
Other items

Depreciation and
3,670
4,260
1,169
200
9,300
162
9,463
604
10,067amortization
Share of profit (loss) ofinvestments accounted for
－
－
－
－
－
－
－
－
－
using equity method
Impairment losses
5,246
10,671
15,917
15,917－－ 15,917－－(see Note 14)
Increase in property, plantand equipment, intangible
3,535
2,329
972
626
7,463
60
7,523
1,424
8,948
assets and right-of-use
assetsInvestments accounted for
0
0
0
0
－
－
－
－
－
using equity method(Notes) 1. The “Other” category consists of an operating segment not included in the reportable segments and includes the landscaping
business, etc.
2. Reconciliations are as follows:(1) The negative ¥3,605 million of reconciliations in segment profit (loss) includes unallocated corporate expenses, etc.
Corporate expenses mainly consist of general and administrative expenses not attributable to any reportable segment.
(2) The positive ¥53,870 million of reconciliations in segment assets consists of the positive ¥54,108 million in total of cash
and cash equivalents, investment securities, corporate (R&D and administrative) property, plant and equipment, etc., notallocated to reportable segments and the negative ¥238 million of inter-segment elimination of receivables and payables.
(3) The positive ¥604 million of reconciliations in depreciation and amortization relates to corporate (R&D andadministrative) property, plant and equipment, etc.
(4) The positive ¥1,424 million of reconciliations in increase in property, plant and equipment, intangible assets and rightof-use assets is the amount of corporate (R&D and administrative) capital investment.
3. Segment profit (loss) is reconciled with operating profit (loss) recorded in the consolidated statements of profit or loss.

―22―

(4) Information about products and services
This information is omitted since the same information is disclosed in (3) Information about sales, profit (loss), assets, and otheritems by reportable segment.
(5) Information by region
Date of transition to IFRS (January 1, 2018)
Non-current assets(Million yen)Japan

United States

52,11325,556

Other

Total

23,140100,810(Notes) 1. Financial instruments, deferred tax assets, retirement benefit asset, and rights arising under insurance contracts are notincluded.
2. Non-current assets are categorized by country or region based on the locations of assets.
The fiscal year ended December 31. 2018 (January 1, 2018 to December 31, 2018)
1) Sales from external customers(Million yen)Japan

Ireland

31,05999,550

United States

Other

30,58043,019Total
204,210(Notes) 1. Sales are categorized by country or region based on the locations of customers.
2. Sales from external customers in Ireland consists mainly of that from APPLE OPERATIONS listed in (6) Information bymajor customer.
2) Non-current assets(Million yen)Japan

United States

51,95627,874

Other

Total

23,248103,079(Notes) 1. Financial instruments, deferred tax assets, retirement benefit asset, and rights arising under insurance contracts are notincluded.
2. Non-current assets are categorized by country or region based on the locations of assets.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)1) Sales from external customers(Million yen)Japan

Ireland25,84071,039

United States

Other

32,11545,039Total
174,035(Notes) 1. Sales are categorized by country or region based on the locations of customers.
2. Sales from external customers in Ireland consists mainly of that from APPLE OPERATIONS listed in (6) Information bymajor customer.
2) Non-current assets(Million yen)Japan
37,932

United States
27,492

Other

Total

20,84686,271(Notes) 1. Financial instruments, deferred tax assets, retirement benefit asset, and rights arising under insurance contracts are notincluded.
2. Non-current assets are categorized by country or region based on the locations of assets.

―23―

(6) Information by major customer
Details of sales from a major customer are as follows:
Customer

Fiscal year ended
December 31, 2018

Related Segment(Million yen)
Fiscal year ended
December 31, 2019

Devices, Industrial Materials,
and Information and
100,819
74,200Communication(Note) The sales are reported under Ireland, United States and Japan in 1) Sales from external customers under (5) Information byregion.

APPLE OPERATIONS and
its group companies―24―

5. Business combinations
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
Acquisition of Heart Sync, Inc.
(1) Overview of the business combination
1.

Name of the acquired company and details of the acquired business
Name of the acquired company

Heart Sync, Inc. (hereinafter, “Heart Sync”)

Details of the acquired business

2.

Design and sales of defibrillation electrodes (*)(*) Defibrillation electrodes are conductors that deliver controlled electrical shock fromthe defibrillator to the patient to restore a regular heartbeat. The electrode alsofunction as an ECG electrode to determine whether to deliver an electrical shock.
Major reason for the business combination

In the Sixth Medium-term Business Plan (from the fiscal year ended December 31, 2018 to the fiscal year ending December 31,2020), the Company identifies consumer electronics (IT), automotive, medical devices, and high-function packaging materials as
its four focus markets, and is executing a growth strategy that maximizes its business foundation acquired and established thus far.
The Company seeks to accelerate expansion of its business domain particularly in the promising global growth market of medical
devices.
The Company achieved full-scale entry into the medical devices market in September 2016, with the establishment of theMedical Technologies Business Unit and the acquisition as a subsidiary of U.S.-based medical devices manufacturer, Graphic
Controls Group. Offerings at present focus on medical electrodes, medical surgical devices, and other products for cardiology,
which are highly related to the Company’s core technologies of patterning, coating and molding. These are manufactured oncontract for major medical devices manufacturers across the globe, and produced and distributed as a proprietary brand for medical
institutions. Through these business models, the Medical Technologies Business Unit aims to enhance its product development
and design capabilities, and enrich its lineup of distinctive products toward sustainable growth.
Heart Sync, also a manufacturer of medical electrodes, specializes in the potential high growth market of defibrillation electrodes.
It boasts product development and design capabilities that accurately grasp the needs of health care providers.
With an enhanced lineup of defibrillation electrodes, sales channels, and highly competitive design and development capabilities
resulting from the acquisition of Heart Sync’s tangible and intangible assets, the Company intends to create synergies between
Graphic Controls Group and its Medical Technologies Business Unit.
3.

Acquisition date
May 18, 2018

4.

Method by which the acquiring company obtained control of the acquired company
Transfer of business for cash consideration

5.

Name of the company after the combination
The company name will remain unchanged.

(2) Consideration transferred(Million yen)
Cash (including payables)

1,118

Contingent consideration

168

Total consideration transferred
1,287(Note) Contingent consideration is not finalized at the present time.
(3) Contingent consideration
Contingent consideration is included in the consideration transferred as part of the contract. The contingent consideration is an
obligation to make additional payments of up to US$2 million (undiscounted) in accordance with the sales achievement level of theacquired company over the three years following the business combination.
The contingent consideration was determined using the scenario-based method and categorized within Level 3 of the fair value
hierarchy. The key assumptions considered were the probability of meeting the sales target, the projected future operating results,
and the discount rate.

―25―

The breakdown of changes in the contingent consideration, which is recorded in other financial liabilities (see Note 20), is asfollows:(Million yen)
Balance at January 1, 2018－

Increase resulting from the business combination

168

Change in fair value－

Effect of changes in exchange rates(0)

Balance at December 31, 2018168(4) Acquisition-related costs
Acquisition-related costs of ¥40 million were recorded in selling, general and administrative expenses.
(5) Amount of goodwill incurred and reasons for the goodwill incurred
1.

Amount of goodwill incurred¥460 million
The total amount of goodwill recognized is expected to be deductible for tax purposes.

2.

Reasons for the goodwill incurred
Goodwill was incurred from expected excess earnings power in the future arising from further business development.

(6) Amounts recognized of assets acquired and liabilities assumed(Million yen)
Current assets
Inventories

38

Non-current assets
Property, plant and equipment
Intangible assets (Note 1)

0787

Total assets

826

Current liabilities－

Non-current liabilities－

Total liabilities (Note 2)－(Notes) 1. The major components allocated to intangible assets are customer-related assets of ¥654 million and trademark rightsof ¥88 million.
2. There are no contingent liabilities.
(7) Impact on the consolidated statements of profit or loss
1.

The acquired company’s operating results recognized in the consolidated statements of profit or loss on and after the acquisition
date(Million yen)
Sales

466

Profit (loss) attributable to owners of parent(10)

The above profit attributable to owners of parent includes the impact of amortization of intangible assets recognized at theacquisition date.
2. The amount of the impact on the consolidated statements of profit or loss assuming that the business combination was conductedat the beginning of the fiscal year.
(Million yen)
Sales

339

Profit (loss) attributable to owners of parent

(45)

―26―

(Method of calculating the estimated amounts)
The estimated amounts of the impact are the difference between sales and operating results assuming that the businesscombination has been completed at the beginning of the fiscal year, and sales and operating results on the acquired company’s
consolidated statements of profit or loss. The estimated amounts reflect the amortization of intangible assets assuming that theintangible assets have been incurred at the beginning of the fiscal year.
This note has not been audited.

―27―

Acquisition of Sequel Special Products, LLC and RSS Design, LLC(1) Overview of the business combination
1. Name of the acquired company and details of the acquired business
Name of the acquired company

Sequel Special Products, LLC

RSS Design, LLC
Contract manufacturing of surgical instruments for minimally invasive surgery (*) andDetails of the acquired businessorthopedics.
(*) Medical examination and treatment procedures that minimize the physical risk for thepatient
2. Major reason for the business combination
The Company achieved full-scale entry into the medical devices market in September 2016, with the establishment of theMedical Technologies Business Unit and the acquisition as a subsidiary of U.S.-based medical devices manufacturer, Graphic
Controls Group. Offerings at present focus on medical electrodes, medical surgical devices, and other products for cardiology,
which are highly related to the Company’s core technologies of printing, coating, lamination, molding, and patterning. These are
manufactured on contract for major medical devices manufacturers across the globe, and produced and distributed as a proprietarybrand for medical institutions. Going forward, the Medical Technologies Business Unit aims to enhance its product development
and design capabilities, and enrich its lineup of distinctive products toward sustainable growth.
With major medical device manufacturers increasingly focusing on R&D and marketing activities and preferring to outsource
the manufacturing process, the Medical Technologies Business Unit positions the expansion of contract manufacturing services asa main strategy for growth. The products produced by the Medical Technologies Business Unit include electro-surgical devices,diagnostic sensing devices, in addition to medical devices and surgical instruments for minimally invasive surgery such as cathetersand catheter guide wires. This acquisition will provide the Medical Technologies Business Unit with new sales channels in contract
manufacturing, increased production capacity, and expanded product development and design functions to improve its value chain
from development to production to sales and in turn increase business performance.
3. Acquisition dateJune 25, 2018
4. Method by which the acquiring company obtained control of the acquired company
Equity acquisition for cash consideration
5. Name of the company after the combination
Sequel Special Products, LLC
RSS Design, LLC
6. Ratio of voting equity interests acquired
100%(2) Consideration transferred(Million yen)CashContingent consideration

1,545
449

Total consideration transferred
1,995(Note) Contingent consideration is not finalized at the present time.

―28―

(3) Contingent consideration
Contingent consideration is included in consideration transferred as part of the contract. The contingent consideration is an
obligation to make additional payments of up to US$12 million (undiscounted) in accordance with the sales achievement level ofthe acquired company over the three years following the business combination.
The contingent consideration was determined by the scenario-based method and Monte Carlo simulation model, and wascategorized within Level 3 of the fair value hierarchy. The key assumptions considered were the probability of meeting the sales
target, the projected future operating results, and the discount rate.
The breakdown of changes in the contingent consideration, which is recorded in other financial liabilities (see Note 20), is asfollows:(Million yen)
Balance at January 1, 2018－

Increase resulting from the business combination

449

Change in fair value－

Effect of changes in exchange rates

1

Balance at December 31, 2018451

(4) Acquisition-related costs
Acquisition-related costs of ¥45 million were recorded in selling, general and administrative expenses.
(5) Amount of goodwill incurred and reasons for the goodwill incurred
1. Amount of goodwill incurred¥438 million
The total amount of goodwill recognized is expected to be deductible for tax purposes.
2. Reasons for the goodwill incurred
Goodwill was incurred from expected excess earnings power in the future arising from further business development.
(6) Amounts recognized of assets acquired and liabilities assumed(Million yen)
Current assets
Cash and cash equivalents

26

Trade and other receivables (Note 1)

319

Inventories

385

Other

4

Non-current assets
Property, plant and equipment

492

Intangible assets (Note 2)

523

Total assets

1,752

Current liabilities

195

Total liabilities (Note 3)

195(Notes) 1. For the fair value of ¥319 million of the trade and other receivables acquired in this acquisition, the gross contractual
amount receivable is ¥319 million.
2. The major component allocated to intangible assets is customer-related assets of ¥486 million.
3. There are no contingent liabilities.

―29―

(7) Impact on the consolidated statements of profit or loss
1. The acquired company’s operating results recognized in the consolidated statements of profit or loss on and after the acquisition
date(Million yen)
Sales

1,647

Profit (loss) attributable to owners of parent

173

The above profit attributable to owners of parent includes the impact of amortization of intangible assets recognized at theacquisition date.
2. The amount of the impact on the consolidated statements of profit or loss assuming that the business combination was conductedat the beginning of the fiscal year.
(Million yen)
Sales

1,446

Profit (loss) attributable to owners of parent

171(Method of calculating the estimated amounts)
The estimated amounts of the impact are the difference between sales and operating results assuming that the businesscombination has been completed at the beginning of the fiscal year, and sales and operating results on the acquired company’s
consolidated statements of profit or loss. The estimated amounts reflect the amortization of intangible assets assuming that theintangible assets have been incurred at the beginning of the fiscal year.
This note has not been audited.

―30―

The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
Acquisition of Zonnebodo Pharmaceutical Co., Ltd.
(1) Overview of the business combination
1. Name of the acquired company and details of the acquired business
Name of the acquired company

Zonnebodo Pharmaceutical Co., Ltd. (hereinafter, “Zonnebodo Pharmaceutical”)

Details of the acquired business

Manufacturing and marketing authorization holder of pharmaceuticals and quasi drugs

2. Major reason for the business combination
In the “medical” market*1, the Company has focused on Drug Delivery Systems*2 (DDS), and has been considering an entry
to the pharmaceutical market. Specifically, Nissha has been developing film type of pharmaceuticals by use of our coretechnologies such as printing and coating that the Company has cultivated since it was founded. Film type of pharmaceuticals are
expected to contribute to improvements in dosage compliance and quality of life (QOL) for patients. The market is forecast to
expand as the form of dosage shifts away from traditional pills and injections.
Zonnebodo Pharmaceutical’s history stretches back eighty years, and it is engaged in manufacturing and marketing authorization
holder of in-house developed prescription pharmaceuticals (brand-name drugs) and quasi drugs. It manages long-selling products
such as tablets for mitigating tinnitus and “Renovigo” for the prevention of tooth decay, and these items are sold at pharmacies
and drug stores nationwide. Zonnebodo Pharmaceutical also possesses sophisticated manufacturing technologies and quality
control capabilities in relation to a variety of drug forms, such as tablets, liquids and powders, and is building a robust businessfoundation in the pharmaceutical market.
With this acquisition, the Company obtains the business foundation necessary to put film type of pharmaceuticals on the market,
including business license, GMP compliant manufacturing facilities, quality control systems, and sales channels. By means of thecore technologies it has cultivated since it was founded, as well as other innovations, the Company aims to make a corporate
contribution to the pharmaceutical market, as it has in other markets, in such a way as to enrich people’s lives.
*1 The Company has been currently operating the Sixth Medium-term Business Plan (three-year plan) centering on the growthby reorganizing and optimizing its business portfolio. We have set the markets of mobility (automotive), medical devices
and sustainable packaging materials as our focused markets, in addition to the mainstay consumer electronics (IT), and aim
to develop well-balanced business bases and enhance our corporate value by implementing global based growth strategy.
*2 A dosing system designed to optimize operation so that the required volume of drugs is administered to the required part ofthe body for only the required length of time.
3. Acquisition dateNovember 25, 2019
4. Method by which the acquiring company obtained control of the acquired company
Acquisition of shares for cash consideration
5. Name of the company after the combination
The company name will remain unchanged.
(2) Consideration transferred(Million yen)
Cash

2,500

Total consideration transferred

2,500(3) Acquisition-related costs
Acquisition-related costs of ¥12 million were recorded in selling, general and administrative expenses.

―31―

(4) Amount of goodwill incurred and reasons for the goodwill incurred
1. Amount of goodwill incurred¥1,687 million
As the fair values of assets acquired and liabilities assumed have not been finalized, the amount of goodwill has been determined
provisionally. There is no amount of goodwill expected to be deducted for tax purposes.
2. Reasons for the goodwill incurred
Goodwill was incurred from expected excess earnings power in the future arising from further business development.
(5) Ratio of voting equity interests acquired
100%(6) Amounts recognized of assets acquired and liabilities assumed(Million yen)
Current assets
Cash and cash equivalents

65

Trade and other receivables

505

Inventories

98

Other

124

Non-current assets
Property, plant and equipment
Intangible assets
Other

340
0
116

Total assets (Note 1)

1,252

Current liabilities

262

Non-current liabilities

177

Total liabilities (Notes 1, 2)

439(Notes) 1. As allocation of the cost is not completed in the current fiscal year, the amounts of assets acquired and liabilities
assumed are determined provisionally based on information available at the present time.
2. There are no contingent liabilities.
(7) Impact on the consolidated statements of profit or loss
1. The acquired company’s operating results recognized in the consolidated statements of profit or loss on and after the acquisition
date(Million yen)
Sales

99

Profit (loss) attributable to owners of parent

26

2. The amount of the impact on the consolidated statements of profit or loss assuming that the business combination was conductedat the beginning of the fiscal year.
(Million yen)
Sales

958

Profit (loss) attributable to owners of parent

32(Method of calculating the estimated amounts)
Sales and operating results are determined assuming that the business combination has been completed at the beginning of the
fiscal year.
This note has not been audited.

―32―

Acquisition of non-controlling interests
On June 28, 2019, the Group additionally acquired 2.87% of shares in Graphic Controls Holdings, Inc. held by non‑controllingshareholders to further improve the corporate value of the Group. As a result, the ratio of the Group’s voting rights in Graphic Controls
Holdings, Inc. has increased from 97.13% to 100%.
Consideration for additional acquisition of ¥770 million was paid in cash to non‑controlling shareholders, and the book value of
non-controlling interests decreased by ¥107 million upon the additional acquisition. The difference between the two amounting to¥663 million has been accounted for as a decrease in capital surplus.
Loss of control of a subsidiary
Nissha Printing Communications, Inc., a consolidated subsidiary of the Company in charge of Information and Communications
business, executed an absorption-type split (summary form) of its business in the Tokyo area (market and business foundation, withexceptions, in the Tokyo area) into a newly established subsidiary (Kyodo Nissha Printing Co., Ltd.), and as of January 7, 2019,transferred 90% of the issued shares of such subsidiary to Kyodo Printing Co., Ltd.
(1) Overview of loss of control
1. Outline of the business resulting in loss of control
Information and Communications business operated by Nissha Printing Communications, Inc., a consolidated subsidiary of theCompany, in the Tokyo area (market and business foundation, with exceptions, in the Tokyo area)
2. Main reason for the loss of control
The Japanese general printing market has been shrinking against a backdrop of stagnating demand and other factors triggeredby the diversification of information media. In the light of this market environment, Nissha Printing Communications, Inc. andKyodo Printing Co., Ltd. concluded the business alliance contract and the production consignment contract in March 2016, andhave since worked toward constructing a collaborative relationship for the outsourcing of production from Nissha Printing
Communications, Inc. to Kyodo Printing Co., Ltd., reorganizing their production system, establishing a quality control system,and streamlining and optimizing procurement activities and distribution operations.
The two companies moved to implement the transfer of the business based on their collaborative partnership and relationshipof trust built from 2016 to the present. Nissha Printing Communications, Inc. will reduce its business in the Tokyo area andconsolidate its business foundation in the Kansai area. The transfer seeks to appropriately allocate management resources tomarkets and business domains in which Nissha Printing Communications, Inc. may leverage its assets in the central field where it
can maximize its strength in high-accuracy color reproduction, and thereby improve business sales.
3. Other matters pertaining to outline of transactions, including legal form
Transfer of shares with assets, including cash, as sole consideration(2) Gain on the loss of control of a subsidiary
Gain recognized from the loss of control of a subsidiary was ¥701 million, which is recorded in “Other income” (see Note 29) inthe consolidated statements of profit or loss.
The valuation gain or loss of the residual investment measured at fair value as of the date of loss of control is immaterial.
(3) Assets and liabilities involving loss of control (see Note 33)(Million yen)
Current assets

237

Non-current assets

23

Total assets

261

Current liabilities

17

Non-current liabilities

95

Total liabilities

112

―33―

(4) Cash flows arising from loss of control (see Note 33)(Million yen)
Consideration received

818

Cash and cash equivalents included in
the assets at the time control was lost(120)

Net proceeds from sale of subsidiaries

698

―34―

6. Cash and cash equivalents
The breakdown of cash and cash equivalents is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

(Cash and cash equivalents)
Cash and deposits
Time deposits with maturities of threemonths or less
Cash and cash equivalents in the
consolidated statements of financial
position
Cash and cash equivalents included in
assets held for sale
Cash and cash equivalents in the
consolidated statements of cash flows

25,567

13,662

14,056

3,723

2,975

3,442

29,291

16,637

17,499－120－

29,291

16,757

17,499

7. Trade and other receivables
The breakdown of trade and other receivables is as follows:(Million yen)

Notes and accounts receivable-trade
Accounts receivable-other
Allowance for doubtful accounts
Total

As of
January 1, 2018
(Date of transition to IFRS)
44,357596

As of
December 31, 2018

As ofDecember 31, 201937,73834,200

1,504

339

(282)

(268)

(362)

44,67038,974

34,177(Notes) 1. Trade and other receivables are classified as financial assets measured at amortized cost.
2. Trade and other receivables are stated at net of allowance for doubtful accounts in the consolidated statements of financial
position.
3. Credit risk management is described in Note 35 “Financial instruments.”―35―

8. Inventories
The breakdown of inventories is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

Merchandise and finished goods

11,815

14,091

8,972

Work in process

7,998

8,431

5,853

Raw materials and supplies

7,774

7,765

6,589

27,58830,287

21,415

Total(Notes) 1. Inventories recognized as an expense in cost of sales for the fiscal years ended December 31, 2018 and December 31, 2019were ¥165,230 million and ¥149,158 million, respectively.
2. As a result of valuing inventories at net realizable value, write-downs of ¥955 million and ¥597 million were recognized
for the fiscal years ended December 31, 2018 and December 31, 2019, respectively.
3. There was no material reversal of write-downs recognized for the fiscal years ended December 31, 2018 and December 31,
2019.
9. Other assets
The breakdown of other current assets and other non-current assets is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

(Other current assets)
Advance payments-other and prepaid
expenses

776

1,215

999

Consumption taxes receivable

4,101

3,740

3,019

Income taxes receivable, etc.

298

356

591

Other

119

78

103

5,296

5,390

4,713

Long-term prepaid expenses

118

133

124

Other

81

92

122

199

226

247

Total
(Other non-current assets)

Total

―36―

10．Assets held for sale and liabilities directly associated with assets held for sale
The breakdown of assets held for sale and liabilities directly associated with assets held for sale is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

(Assets held for sale)
Cash and cash equivalents

－

120

－

Inventories

－

52

－

Trade and other receivables

－

51

－

Other current assets

－

13

－

Property, plant and equipment

－

29

4

Intangible assets

－

18

－

Retirement benefit asset

－

6

－

－

293

4

Trade and other payables

－

2

－

Other current liabilities

－

15

－

Retirement benefit liability

－

95

－

－

112

－

Total
(Liabilities directly associated with assets
held for sale)

Total

The Company, Nissha Printing Communications, Inc. (“Nissha Printing Communications”) in charge of the Information andCommunication business, and Kyodo Printing Co., Ltd. (“Kyodo Printing”) concluded a stock purchase agreement on September 4,
2018, for the transfer of Nissha Printing Communications’ business in the Tokyo area (market and business foundation, with exceptions,in the Tokyo area; the “Business”) to Kyodo Printing. Assets held for sale and liabilities directly associated with assets held for saleas of December 31, 2018 consist principally of assets and liabilities related to the Business, which are classified as held for sale. The
stock purchase was completed in January 2019 (see Note 5 “Business combinations”).

―37―

11. Property, plant and equipment
Changes in cost, accumulated depreciation and accumulated impairment losses, and the book value of property, plant and equipment
are as follows:(Million yen)
Cost
As of January 1, 2018
(Date of transition to
IFRS)

Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Construction inprogress

Land

Total

55,56353,093

10,117

7,131

5,909

131,816

1,707

1,254

1,033

9

5,992

9,996

266

52

15

158

－

493

－

－

－

－

(29)

(29)

Disposals(1,693)(2,360)

(362)

－

(954)

(5,371)

Transfers (Note 6)

4,421

3,102

308

90

(8,244)(322)

Foreign currencytranslation differences(186)(1,184)

(72)

(5)

(49)

(1,499)As of December 31, 2018

60,07853,956

11,039

7,385

2,624

135,083

917

1,048

465

2

3,949

6,383

171

78

25

64

0

340

(166)

(449)

(13)

－

－

(629)

Disposals(1,954)(3,022)

(515)

(51)

(284)

(5,827)

Transfers (Note 6)

1,546

3,576

198

－

(5,257)63

Foreign currencytranslation differences

(105)

(517)

(67)

(5)

(10)

(705)

As of December 31, 201960,48654,672

11,132

7,395

1,021

134,707

Acquisitions
Business combinations(Note 3)
Reclassification toassets held for sale(Note 4)

Acquisitions
Business combinations(Note 3)
Reclassification toassets held for sale(Note 4)―38―

(Million yen)
Accumulated depreciation
and accumulated
impairment losses
As of January 1, 2018
(Date of transition to
IFRS)

Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Construction inprogress

Land

Total

(23,871)(41,507)(7,012)(961)－(73,353)(2,808)(3,430)(1,012)－－(7,251)

Impairment losses(Note 5)

(206)

(11)

(2)

－

(246)

(466)

Disposals

1,517

2,275

346

－

－

4,139

Foreign currencytranslation differences

76

691

47

－

－

815

As of December 31, 2018(25,291)(41,982)(7,633)

(961)

(246)

(76,116)

Reclassification toassets held for sale(Note 4)

165

449

8

－

－

623

Depreciation(2,883)(2,841)(1,038)－－(6,763)

Impairment losses(8,375)(2,859)(478)(1,164)(50)(12,927)

Disposals

1,694

2,812

454

－

246

5,208

Transfers (Note 6)

－

(38)

(58)

－

－

(97)

Foreign currencytranslation differences

38

320

55

－

(0)

414

As of December 31, 2019(34,650)(44,139)(8,690)(2,126)(50)(89,657)

Depreciation(Million yen)Book value

Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Land

Construction inprogress

Total

As of January 1, 2018
(Date of transition to
IFRS)

31,692

11,585

3,105

6,169

5,909

58,462As of December 31, 201834,787

11,973

3,406

6,423

2,377

58,967

As of December 31, 201925,835

10,532

2,441

5,268

971

45,050(Notes) 1. Depreciation of property, plant and equipment is included in cost of sales and selling, general and administrative expenses
in the consolidated statements of profit or loss.
2. Expenditures related to property, plant and equipment under construction are presented as construction in progress in theabove tables.
3. Business combinations are described in Note 5 “Business combinations.”
4. Assets held for sale are described in Note 10 “Assets held for sale and liabilities directly associated with assets held forsale.”
5. Impairment losses are described in Note 14 “Impairment of non-financial assets.”
6. Transfers principally represent transfers from construction in progress to the related accounts of property, plant andequipment.

―39―12. Goodwill and intangible assets(1) Reconciliations
Changes in cost, accumulated amortization and accumulated impairment losses, and the book value of goodwill and intangible
assets are as follows:(Million yen)
Goodwill

TrademarkrightsSoftware

23,570

3,860

7,239

2,687

7,676

1,102

46,136

－

－

－

－

－

44

44

－

－

195

－

－

484

680

899

88

－

－

1,140

81

2,211

－

－

(48)

－

－

－

(48)

Transfers (Note 4)

－

12

279

－

－

(313)

(20)

Disposals

－

－

(43)

－

－

(0)

(43)

Foreign currencytranslation differences

(821)

(81)

(34)

(160)

(307)

(16)

(1,422)As of December 31, 2018

23,648

3,880

7,588

2,526

8,509

1,383

47,537

Additions from internal
development

－

－

－

－

－

49

49

Acquisitions

－

0

234

－

－

434

670

1,687

－

0

－

－

0

1,688

－

(0)

－

－

－

－

(0)

Transfers (Note 4)

－

－

272

－

－

(271)

0

Disposals

－

－

(289)

－

－

(13)

(303)

Foreign currencytranslation differences

(479)

(51)

(20)

(87)

(187)

(400)

(1,225)

As of December 31, 201924,855

3,829

7,785

2,439

8,322

1,183

48,416

Cost
As of January 1, 2018
(Date of transition to IFRS)
Additions from internal
development
Acquisitions
Business combinations(Note 2)
Reclassification to assets
held for sale (Note 3)

Business combinations(Note 2)
Reclassification to assets
held for sale (Note 3)―40―

Technical
Customerassets
related assets

Other

Total

(Million yen)
Accumulated amortization
and accumulated impairment
losses
As of January 1, 2018
(Date of transition to IFRS)
Reclassification to assets
held for sale (Note 3)

Goodwill

Trademarkrights(4,001)－(6,295)(418)(1,107)(286)(12,108)

－

－

29

－

－

－

29

Amortization

－

－

(379)

(173)

(596)

(156)

(1,305)

Disposals

－

－

42

－

－

0

42

Foreign currencytranslation differences

224

－

22

29

(35)

(6)

234

As of December 31, 2018

(3,776)－(6,580)(561)(1,738)(449)(13,107)

Transfers (Note 4)

－

－

(26)

－

－

－

(26)

Amortization

－

－

(400)

(162)

(715)

(143)

(1,421)(1,612)

－

(43)

－

(70)

(54)

(1,780)

Disposals

－

－

269

－

－

8

277

Foreign currencytranslation differences

122

－

12

18

27

393

574

As of December 31, 2019(5,266)－(6,769)(704)(2,497)(245)(15,484)

Goodwill

TrademarkrightsSoftware

As of January 1, 2018
(Date of transition to IFRS)

19,569

3,860

944

2,269

6,569

816

34,028

As of December 31, 201819,871

3,880

1,007

1,965

6,770

934

34,429As of December 31, 201919,589

3,829

1,015

1,734

5,825

938

32,932

Impairment losses

SoftwareTechnical
Customerassets
related assets

Other

Total

(Million yen)Book value

Technical
Customerassets
related assets

Other

Total

(Notes) 1. Amortization of intangible assets is included in cost of sales and selling, general and administrative expenses in the
consolidated statements of profit or loss.
2. Business combinations are described in Note 5 “Business combinations.”
3. Assets held for sale are described in Note 10 “Assets held for sale and liabilities directly associated with assets held forsale.”
4. Transfers principally represent transfers from software in progress included in other to the related accounts of intangible
assets.
5. Research and development expenses that do not meet asset recognition criteria are recognized as expenses as incurred andare recorded as selling, general and administrative expenses (see Note 27). Research and development expenses
recognized as expenses for the fiscal years ended December 31, 2018 and December 31, 2019 were ¥3,949 million and¥3,659 million, respectively.

―41―

(2) Impairment test for goodwill and intangible assets with indefinite useful lives
The book values of goodwill and intangible assets with indefinite useful lives allocated to each cash-generating unit are
principally as follows.
Those that were significant as of December 31, 2018 and 2019 are attributable to the acquisitions of AR Metallizing N.V. in
August 2015 and Graphic Controls Holdings, Inc. in September 2016.

Cash-generating unit

Segment

Account(Million yen)
As ofJanuary 1, 2018
As of
As of
(Date of transition to December 31, 2018 December 31, 2019IFRS)
Book value

AR Metallizing N.V.

Industrial
Materials

Graphic Controls
Holdings, Inc.

MedicalTechnologies

Book value

Book value

Goodwill

5,527

5,197

3,406

Goodwill

13,535

14,16813,989Trademark rights
3,700
3,718
3,671
(Note)(Note) Trademark rights are expected to exist as long as the business continues. Therefore, their useful lives are considered
indefinite.
Information including major assumptions used for determining the recoverable amount of each cash-generating unit is as follows:
1. AR Metallizing N.V.
The recoverable amount is determined as the value in use. The value in use is calculated by discounting the estimated future
cash flows to present value. Those cash flows reflect past experience and information from external sources, and are based on
the three-year business plan approved by management.
In estimating the future cash flows, the growth rate is determined by reference to the long-term expected growth rate of themarket which the cash-generating unit belongs to (2% as of January 1, 2018; 2% as of December 31, 2018; 2% as of December
31, 2019).
The discount rate is determined based on the pre-tax weighted average cost of capital (9.0% as of January 1, 2018; 9.3% as ofDecember 31, 2018; 9.4% as of December 31, 2019).
As a result of the impairment test, impairment losses of ¥1,612 million were recognized for the fiscal year ended December
31, 2019 in the Industrial Materials segment.
2. Graphic Controls Holdings, Inc.
The recoverable amount is determined as the value in use. The value in use is calculated by discounting the estimated future
cash flows to present value. Those cash flows reflect past experience and information from external sources, and are based on
the three-year business plan approved by management.
In estimating the future cash flows, the growth rate is determined by reference to the long-term expected growth rate of themarket which the cash-generating unit belongs to (3% as of January 1, 2018; 3% as of December 31, 2018; 3% as of December
31, 2019).
The discount rate is determined based on the pre-tax weighted average cost of capital (9.2% as of January 1, 2018; 9.9% as ofDecember 31, 2018; 8.4% as of December 31, 2019).
The recoverable amount exceeded the book value by ¥9,175 million as of December 31, 2019. It is estimated that a 2.3%
decrease in the growth rate or a 1.7% increase in the discount rate would result in recognizing impairment losses.
The above presumption of thresholds for impairment losses is derived under the assumption that the decrease in the growthrate and the increase in the discount rate occur independently.

―42―

(3) Significant intangible assets
Significant intangible assets recognized in the consolidated statements of financial position are as follows:• “Customer-related assets” and “Technical assets” that were incurred from the acquisition of AR Metallizing N.V. in August 2015
For customer-related assets, the book value was ¥2,665 million as of January 1, 2018, ¥2,335 million as of December 31, 2018and ¥2,089 million as of December 31, 2019, and the remaining amortization period is 12 years.
For technical assets, the book value was ¥2,269 million as of January 1, 2018, ¥1,965 million as of December 31, 2018 and¥1,734 million as of December 31, 2019, and the remaining amortization period is 10 years.
• “Customer-related assets” that were incurred from the acquisition of Graphic Controls Holdings, Inc. in September 2016
The book value was ¥2,777 million as of January 1, 2018, ¥2,435 million as of December 31, 2018 and ¥2,119 million as ofDecember 31, 2019, and the remaining amortization period is 10 years.

―43―13. Leases(1) The balance of right-of-use assets as of each fiscal year-end is as follows:(Million yen)
Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Intangible
assets

Land

Total

As of January 1, 2018
(Date of transition to
IFRS)

6,834

841

103

116

4

7,901

As of December 31, 2018

8,551

651

132

108

11

9,455

As of December 31, 2019

7,199

632

116

87

5

8,041

Additions to right-of-use assets are described in Note 33 “Cash flow information.”
Depreciation and amortization for right-of-use assets are as follows:(Million yen)
Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019

Intangible
assets

Land

Total

1,409

322

31

3

2

1,769

1,502

310

62

3

4

1,883

(2) The maturity analysis of lease liabilities is as follows:(Million yen)Book value

As ofJanuary 1, 2018
(Date of transition to
IFRS)

As of
December 31, 2018

As ofDecember 31, 2019

Lease liabilities (current)

1,567

1,614

1,562

Lease liabilities (noncurrent)

6,420

7,990

7,926

Total lease liabilities

7,988

9,604

9,488

Total

9,092

11,844

10,635

1 year or less

1,757

1,954

1,701

Over 1 year to 5 years

4,422

4,901

4,600

Over 5 years

2,912

4,988

4,333

Contractual cash flows(3) Expenses and cash outflows relating to leases are as follows:(Million yen)
Fiscal year ended
December 31, 2018
Repayments of lease liabilities

Fiscal year ended
December 31, 2019
1,741

1,766

Interest expenses on lease liabilities

155

205

Variable lease payments not included in themeasurement of lease liabilities－－

Expenses relating to short-term leases

601

472

Expenses relating to leases of low-value assets(excluding expenses relating to short-term leases of267
187
low-value assets)
Total cash outflow for leases was ¥2,765 million for the fiscal year ended December 31, 2018 and ¥2,631 million for the fiscal year
ended December 31, 2019.

―44―

14. Impairment of non-financial assets(1) Cash-generating unit
The Group carries out grouping by the smallest cash-generating unit that generates cash inflows that are largely independent of
the cash inflows from other units.
(2) Impairment losses
The Group recognizes impairment losses if the recoverable amount of an asset or a group of assets has fallen below its bookvalue. Impairment losses are included in other expenses in the consolidated statements of profit or loss (see Note 29 “Other income
and other expenses”).
The amount incurred by each reportable segment is as described in Note 4 “Operating segments.”
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
For assets including assets to be disposed of and idle assets not expected to be used in the future, the book value of those assets
was reduced to their recoverable amount, and impairment losses of ¥466 million were recognized. The recoverable amount wasdetermined primarily at fair value (Level 3) less costs of disposal and evaluated based on memorandum value.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)(Long-lived assets for business use)
For the long-lived assets for business use of the cash-generating units that belonged to the Industrial Materials segment andthe Devices segment, as the recovery of investment was considered unlikely due to a decline in profitability resulting from adeteriorated business environment, the book value of those assets was reduced to their recoverable amount, and impairment losses
were recognized.
The recoverable amount was measured at the value in use, and the discount rate was determined based on the after-tax weighted
average cost of capital.
In measuring the recoverable amount of Nissha GSI Technologies, Inc. as a cash-generating unit, given that the future cash
flows were expected to be negative, the value in use was assessed at zero.

―45―

Cash-generating unit

Segment

Discount rate

Type of assets
Buildings andstructures

Industrial Materials(decoration)

Nissha PMX
Technologies, S.A. de
C.V.

Nissha GSI
Technologies, Inc.

Industrial Materials

10.9%

Industrial Materials

12.3%

Industrial Materials

Devices(excluding gas sensors)－

Devices

8.2%

Amount(Million yen)
1,114

Machinery and vehicles

410

Tools, furniture andfixtures

78

Land

420

Right-of-use assets

126

Other

31

Subtotal

2,181

Machinery and vehicles

433

Right-of-use assets

146

Other

94

Subtotal

674

Machinery and vehicles

163

Right-of-use assets

78

Other

42

Subtotal

283

Buildings andstructures

7,056

Machinery and vehicles

1,469

Tools, furniture andfixtures

379

Land

743

Right-of-use assets

845

Other

114

Subtotal

10,608

Total

13,748(Assets to be disposed of)
For assets including assets to be disposed of and idle assets not expected to be used in the future, the book value of those assets
was reduced to their recoverable amount, and impairment losses of ¥556 million were recognized.
The breakdown by major type of assets for which impairment losses were recognized was buildings and structures of ¥157
million, machinery and vehicles of ¥382 million, tools, furniture and fixtures of ¥3 million and right-of-use assets of ¥12 million.
The recoverable amount was determined primarily at fair value (Level 3) less costs of disposal.
(Goodwill)
For goodwill allocated to AR Metallizing N.V. in the Industrial Materials segment as a cash-generating unit, as the goodwill
was not likely to be profitable as initially expected, impairment losses of ¥1,612 million were recognized.
For information including the method and major assumptions used for determining the recoverable amount, see “(2)Impairment test for goodwill and intangible assets with indefinite useful lives” in Note 12 “Goodwill and intangible assets.”―46―15. Investments accounted for using equity method
The book value of investments in associates that are not individually material is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)Book value of investments accounted forusing equity method

As ofDecember 31, 2018

218

As of
December 31, 2019
0

0

Financial information on associates that are not individually material is as follows:(Million yen)
Fiscal year ended
December 31, 2018
Share of profit

Fiscal year ended
December 31, 2019
(213)

－

Share of other comprehensive income(5)－

Share of total comprehensive income

(218)

－

The unrecognized share of loss on associates which the Group has stopped recognizing when applying the equity method is asfollows:(Million yen)
Fiscal year ended
December 31, 2018
Unrecognized share of loss
Unrecognized share of accumulated loss

―47―

Fiscal year ended
December 31, 2019
(562)

(938)

(1,320)(2,258)

16. Other financial assets
The breakdown of other financial assets is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

(Current assets)
Financial assets measured at amortized
costTime deposits with maturities ofmore than three months

499

5

127

2,728

4,011

423

Other

64

63

20

Allowance for doubtful accounts

(9)

(8)

(8)

Derivatives

2

0

0

Debt instruments

33

－

－

Total

3,318

4,071

564

Guarantee deposits

307

398

308

Long-term loans receivable

300

281

265

Other

225

225

236

Allowance for doubtful accounts

(485)

(468)

(457)

1,158

1,007

869

19,187

13,92619,191

20,694

15,36920,413

Advances paid

Financial assets measured at fair value
through profit or loss

(Non-current assets)
Financial assets measured at amortized
cost

Financial assets measured at fair value
through profit or loss
Debt instruments
Financial assets measured at fair value
through other comprehensive income
Equity instruments (Note)
Total(Note) The individual issuer and fair value of equity instruments designated as measured at fair value through other comprehensive
income are as described in Note 35 “Financial instruments.”―48―

17. Income taxes(1) Deferred taxes
The breakdown by major cause and changes in deferred tax assets and deferred tax liabilities are as follows:
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)(Million yen)
As ofAmountJanuary 1, 2018
Amountrecognized in
Business(Date ofrecognized inothercombinationstransition to profit or loss comprehensive
IFRS)
incomeForeigncurrencytranslationdifferences

As ofDecember 31,
2018

Deferred tax assets:
Inventories

445

(103)

－

－

(2)

339

292

220

－

－

(14)

499

14

20

－

－

(0)

34

Accrued bonuses

457

(141)

－

－

(0)

315

Obligation for paid absences

50

7

－

－

(0)

57

Accounts payable-other andaccrued expenses, etc.

235

0

－

－

(1)

234

Retirement benefit liability

21

40

－

－

(0)

61

Unused tax losses

624

(483)

－

－

(3)

137

Other

266

24

(0)

－

(2)

287

Total

2,408

(414)

(0)

－

(27)

1,966

(5,114)

－

1,581

－

－

(3,532)(1,836)

84

－

－

9

(1,742)(4,460)

369

－

－

229

(3,860)

Other

(174)

(28)

－

－

1

(201)

Total

(11,585)

425

1,581

－

240

(9,336)

Net deferred tax assets(liabilities)(9,176)

11

1,580

－

213

(7,370)Property, plant and equipment
and intangible assets
Allowance for doubtful
accounts

Deferred tax liabilities:
Financial assets measured at fairvalue through othercomprehensive income
Property, plant and equipment
and intangible assets
Assets identified in businesscombinations―49―

The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)(Million yen)AmountAmountrecognized in
As ofBusiness
recognized inotherJanuary 1, 2019combinations
profit or loss comprehensive
incomeForeigncurrencytranslationdifferences

As ofDecember 31,
2019

Deferred tax assets:
Inventories

339

(197)

－

11

(1)

151

499

(78)

－

－

(6)

413

34

(12)

－

－

(0)

22

Accrued bonuses

315

(304)

－

12

(0)

22

Obligation for paid absences

57

3

－

9

(0)

68

Accounts payable-other andaccrued expenses, etc.

234

(122)

－

5

(1)

116

Retirement benefit liability

61

(35)

－

21

(0)

47

Unused tax losses

137

90

－

－

(0)

227

Other

287

(123)

(0)

0

(7)

155

Total

1,966

(780)

(0)

60

(20)

1,226

(3,532)－(1,564)－－(5,097)(1,742)

1,189

－

－

7

(544)

(3,860)

292

－

－

96

(3,471)

Other

(201)

(248)

3

(0)

0

(445)

Total

(9,336)

1,233(1,561)(0)

104(9,559)Net deferred tax assets(liabilities)(7,370)453(1,561)60

84(8,333)

Property, plant and equipment
and intangible assets
Allowance for doubtful
accounts

Deferred tax liabilities:
Financial assets measured atfair value through othercomprehensive income
Property, plant and equipment
and intangible assets
Assets identified in businesscombinations―50―

Unused tax losses and deductible temporary differences for which deferred tax assets are not recognized(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

Unused tax losses (Note)

23,42821,95926,087

Deductible temporary differences

10,758

11,88825,303(Note) Amount by expiration period of unused tax losses for which deferred tax assets are not recognized(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

1st year

－

87

2,366

2nd year

135

2,437

1,122

3rd year

4,493

2,863

1,580

4th year

4,019

1,516

751

5th year

1,766

243

637

After 5th year

13,013

14,812

19,629Total

23,42821,95926,087

Taxable temporary differences associated with investments in the Group’s subsidiaries for which deferred tax liabilities were notrecognized were ¥19,364 million as of January 1, 2018, ¥19,754 million as of December 31, 2018 and ¥13,092 million as ofDecember 31, 2019.
This was because the Group was able to control the timing of the reversal of the temporary difference, and it is probable that thetemporary difference would not reverse in the foreseeable future.
(2) Income tax expense
The breakdown of income tax expense is as follows:(Million yen)
Fiscal year ended
December 31, 2018
Current tax expense

Fiscal year ended
December 31, 2019

2,205

1,045

Tax expense for prior periods

(80)

(1)

Deferred tax expense

(11)

(453)

2,113

590

Total

(Notes) 1. The amount of the benefits arising from previously unrecognized tax losses, tax credits or temporary differences of priorperiods that were used to reduce current tax expense for the fiscal years ended December 31, 2018 and December 31,
2019 were ¥1,998 million and ¥403 million, respectively.
2. The amount of the benefits arising from previously unrecognized tax losses, tax credits or temporary differences of priorperiods that were used to reduce deferred tax expense for the fiscal years ended December 31, 2018 and December 31,
2019 were ¥371 million and ¥30 million, respectively.
3. Deferred tax expense includes expenses arising from write‑downs, or reversal of previous write‑downs, of deferred tax
assets. This does not cause any material changes in deferred tax expense for the fiscal years ended December 31, 2018and December 31, 2019.

―51―

The Company is mainly subject to income taxes, inhabitants’ taxes, and tax deductible enterprise taxes, based on which thestatutory effective tax rate is calculated. Following the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 15 of
2016), corporate tax rates were lowered. As a result, the Company’s statutory effective tax rate was lowered to 30.8% and 30.5%
for the fiscal years ended December 31, 2018 and December 31, 2019, respectively.
The foreign subsidiaries are subject to tax rates in the jurisdiction where they operate.
The difference between the statutory effective tax rate and the average actual effective tax rate consists of the following factors:

Fiscal year ended
December 31, 2018
Statutory effective tax rate

Fiscal year ended
December 31, 2019

30.8%

30.5%

(Adjustments)
Difference in tax rate of foreign subsidiaries
Share of profit (loss) of investments accounted for using
equity method
Changes in recoverability of deferred tax assets

1.0%

0.8%

1.0%

－%

2.9%

(35.3)%

Permanent non-deductible expenses

1.0%(1.1)%Tax credits(2.8)%

0.7%

Other

(0.7)%

0.8%

Actual effective tax rate

33.2%

(3.6)%

18. Trade and other payables
The breakdown of trade and other payables is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)
Notes and accounts payable-trade
Electronically recorded obligationsoperating
Accounts payable-other and accrued
expenses
Electronically recorded obligations-nonoperating
Notes payable-facilities and accounts
payable-facilities
Total

As of
December 31, 2018

As ofDecember 31, 201950,17344,00432,413

8,909

6,772

4,548

8,234

8,024

5,017

2,113

2,306

1,640

3,374

1,051

919

72,806

62,15844,538(Note) Trade and other payables are classified as financial liabilities measured at amortized cost.

―52―

19. Bonds and borrowings(1) Bonds

Company
nameBond name

As ofJanuary 1, 2018
As of
As of
Interest
Date of (Date of transition to December 31, 2018 December 31, 2019
rate Collateral Maturity
issuance
date
IFRS)(Million yen)
(Million yen)
(Million yen)(%)

Zero Coupon
Convertible
Bonds due
NisshaMarch
March
2021 (bonds
2,868
2,794
2,817
0.82
None
Co., Ltd.
7, 2016
8, 2021with stockacquisitionrights)(Note) The stock acquisition rights attached to Zero Coupon Convertible Bonds due 2021 (bonds with stock acquisition rights) arerecognized as embedded derivatives. Accordingly, they are separated from the host contract, measured at fair value, andrecorded as capital surplus after tax effects.
(2) Borrowings
As ofJanuary 1, 2018
(Date of transition
to IFRS)(Million yen)
Short-term loans payable
Current portion of long-termloans payable
Long-term loans payable(excluding current portion)
Total

As of
December 31, 2018

As ofDecember 31, 2019

Averageinterest rate
(Note 1)

(Million yen)

(Million yen)(%)

Repayment
date(Note 2)

10,66910,85820,803

0.54

－

1,356

1,716

1,363

3.09

－

13,514

13,525

11,4273.842021 to 2032

25,53926,09933,594－－(Notes) 1. Average interest rate represents the weighted average interest rate on the balance as of December 31, 2019.
2. Repayment date represents the due date for the balance as of December 31, 2019.

―53―

The breakdown of assets pledged as collateral and corresponding liabilities is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

Assets pledged as collateral
Cash and cash equivalents

1,901

809

298

Trade and other receivables

4,353

4,207

2,742

Inventories

4,561

5,746

4,524

Other financial assets (current)

41

38

－

Other current assets

373

241

212

Property, plant and equipment

2,626

2,526

1,531

Intangible assets

3,397

3,790

4,001

Right-of-use assets

－

35

34

Other financial assets (non-current)

9

11

－

Other non-current assets

60

69

66

17,325

17,474

13,411

Borrowings

1,893

2,458

2,139

Bonds and borrowings

13,387

13,348

11,139Total

15,28015,806

13,278

Total
Corresponding liabilities(Note) Other than those listed above, there are assets pledged as collateral that were eliminated in the consolidated financial statements,
including shares of subsidiaries and associates (¥22,540 million as of January 1, 2018; ¥23,940 million as of December 31,
2018; ¥23,992 million as of December 31, 2019) and notes and accounts receivable-trade (¥6,593 million as of January 1,
2018; ¥5,582 million as of December 31, 2018; ¥2,363 million as of December 31, 2019).

―54―

20. Other financial liabilities
The breakdown of other financial liabilities is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

(Current liabilities)
Financial liabilities measured atamortized cost
Deposits received
Accounts payable-other and accrued
expensesFinancial liabilities measured at fairvalue through profit or loss
Contingent consideration (see Note
5)
Total

772

697

704

473

697

65

63

46

303

1,308

1,441

1,073

635

75

22

754

833

－

13

13

9

212

773

410

1,616

1,695

442

(Non-current liabilities)
Financial liabilities measured atamortized costAccounts payable-other and accrued
expenses
Written put options held by noncontrolling shareholders (see Note
24)
Other
Financial liabilities measured at fairvalue through profit or loss
Contingent consideration (see Note
5)
Total

―55―

21. Provisions(1) Breakdown
The breakdown of provisions is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

Asset retirement obligations

29

35

47

Restructuring provisions

－

218

17

Other

160

208

35

189

463

100

Current liabilities

25

300

53

Non-current liabilities

164

162

47

Total

(Note) Other mainly consists of provision for product warranties.
(2) Changes
Details of changes in provisions are as follows:(Million yen)
Asset retirement
obligations

Restructuringprovisions

Other

Total

As of January 1, 2018
(Date of transition to IFRS)

29

－

160

189

Provision

20

217

79

317

Intended use

(13)

－

(19)

(33)

Reversal

－

－

－

－

Foreign currency translation differences

－

0

(11)

(10)

Other

0

－

－

0

As of December 31, 2018

35

218

208

463

Provision

－

17

35

53

Intended use

－

(214)

(78)

(293)

Reversal

－

－

(122)

(122)

Business combinations (see Note 5)

17

－

－

17

Foreign currency translation differences

－

(3)

(7)

(11)

Other

(6)

－

－

(6)

As of December 31, 2019

47

17

35

100

The amount to be incurred for the restoration obligation of operating bases used by the Group are estimated based on historicalexperience and recognized as a provision for asset retirement obligations.
These costs are expected to be incurred principally after one year or more, but will be affected by the development of futurebusiness plans and other factors.
Restructuring provisions are provided for the restructuring of European production bases of the Group’s consolidated subsidiaries
in the Medical Technologies segment. The timing of an outflow of economic benefits is expected to be within one year from theend of the fiscal year, but will be affected by the progress status of restructuring plans.

―56―22. Other liabilities
The breakdown of other current liabilities and other non-current liabilities is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

(Other current liabilities)
Accrued consumption taxes

383

775

109

1,930

1,949

1,895

Accrued directors' bonuses

60

71

63

Cash‑settled share-based payment
expenses for directors (see Note 34)

107

190

266

Obligation for paid absences

862

844

950

4,632

1,442

953

0

0

0

7,978

5,272

4,237

－

5

10

293

288

287

－

－

32

293

293

331

Accrued bonuses

Advances received (see Note 26)
Other
Total
(Other non-current liabilities)
Cash‑settled share-based payment
expenses for directors (see Note 34)
Other long‑term employee benefit
obligations
Other
Total

―57―

23. Post‑employment benefits(1) Outline of post-employment benefit plans
The Company and certain consolidated subsidiaries have adopted funded and unfunded defined benefit plans and defined
contribution plans to provide for retirement benefits to their employees. The funded defined benefit plans are contract-type
corporation pension plans under the Defined Benefit Corporation Pension Act, which provide lump-sum payments or pension
benefits based on a point system. The contract-type corporation pension plans are implemented under the Constitution for Corporate
Pension Plan with Defined Benefits agreed between labor and management by entrusting the administration and management ofplan assets to investment managers.
The contract requires recalculation of contributions at least every five years in accordance with the Defined Benefit Corporation
Pension Act in order to maintain balanced finance into the future.
The unfunded defined benefit plans are retirement lump-sum payment plans, which provide lump-sum payments based on a point
system or based on salary and service period.
The Company and certain consolidated subsidiaries are exposed to actuarial risks, including investment risk, interest rate risk
and longevity risk, through the defined benefit plans.
(2) Defined benefit plans
Amounts related to defined benefit plans in the consolidated statements of financial position are as follows:
1) Amounts related to defined benefit plans in the consolidated statements of financial position(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)
Present value of funded defined benefit
obligations
Fair value of plan assets
SubtotalPresent value of unfunded defined benefit
obligations
Total
Amounts in the consolidated statements offinancial position
Retirement benefit liability
Retirement benefit asset
Net of liability and asset recorded in the
consolidated statements of financial
position

As ofDecember 31, 2018

As ofDecember 31, 2019

2,133

1,982

2,046

(2,222)(2,182)(2,280)

(88)

(199)

(233)

4,751

4,522

4,881

4,663

4,322

4,648

4,775

4,543

4,913

(111)

(221)

(265)

4,663

4,322

4,648

―58―

2) Changes in present value of defined benefit obligations(Million yen)
Fiscal year ended
December 31, 2018
Beginning balance of present value of defined benefit
obligations
Current service cost

Fiscal year ended
December 31, 2019

6,885

6,505

521

524

35

39

(26)

(89)

32

119

Interest expenses
Remeasurements
Actuarial gains and losses arising from changes indemographic assumptions
Actuarial gains and losses arising from changes infinancial assumptions
Other

(148)

69

Benefit payments

(603)

(280)

Foreign currency translation differences
Reclassification to liabilities directly associated with assets
held for sale (see Note 10)
Reclassification to assets held for sale (see Note 10)

(37)

(19)

(95)

－

(58)

－

Obligations assumed in business combinations (see Note 5)

－

61

Other
0
(2)
Ending balance of present value of defined benefit
6,505
6,928
obligations
The weighted average duration of defined benefit obligations as of January 1, 2018, December 31, 2018 and December 31, 2019 was
11.2 years, 10.6 years and 10.5 years, respectively.
3) Changes in fair value of plan assets(Million yen)
Fiscal year ended
December 31, 2018
Beginning balance of fair value of plan assets
Interest income

Fiscal year ended
December 31, 2019

2,222

2,182

13

13

(141)

66

Remeasurements
Return on plan assets, excluding interest income
Contributions by employers

265

131

Benefit payments

(112)

(112)

Reclassification to assets held for sale (see Note 10)

(65)

－

Other

－

(0)

2,182

2,280

Ending balance of fair value of plan assets
The contributions for the following fiscal year are expected to be ¥106 million.
4) Changes in the effect of the asset ceiling
Not applicable―59―5) Fair value of plan assets(Million yen)
As of
As of
As of
January 1, 2018
December 31, 2018
December 31, 2019
(Date of transition to IFRS)With market
No market
With market
No market
With market
No market
prices in active prices in active prices in active prices in active prices in active prices in active
markets
markets
markets
markets
markets
markets
Equity instruments
Foreign equities

79

－

68

－

77

－

Japanese equities

208

－

114

－

204

－

486

－

548

－

511

－

Debt instruments
Japanese bonds
Foreign bonds
General accounts of life
insurance companies(Note)
Other

56

－

51

－

77

－

－

1,381

－

1,385

－

1,397

8

2

7

5

5

5

Total plan assets

838

1,383

791

1,391

876

1,403

(Note) General accounts of life insurance companies represent the investment of plan assets through general accounts for which thelife insurance companies mainly guarantee both principal and interest.
The investment of plan assets is aimed at maximizing total returns in the long-term within acceptable risk levels in order toensure future payments of benefits. To achieve this investment objective, the return is targeted at the expected rate of return fromthe plan assets with the asset allocation (the “policy asset mix”) that should be maintained in the long-term. The policy asset mix
is set from a medium- to long-term perspective of more than three to five years, reviewed annually, and revised as necessary if
there are any changes in the underlying conditions.
The basic policy for risk management of the investment is to diversify the portfolio into asset classes with different risk-return
profile and other characteristics. The status of the investment is monitored, including through the quarterly reports from theinvestment managers on the investment of the plan assets and the quantitative and qualitative assessment of the investment
managers.
6) Significant actuarial assumption
The significant actuarial assumption (weighted average value) used to measure the fair value of defined benefit obligations is
as follows:
As ofJanuary 1, 2018
(Date of transition to IFRS)(%)
Discount rate

0.7

―60―

As of
December 31, 2018

As ofDecember 31, 2019

(%)

(%)
0.6

0.4

7) Sensitivity analysis of the significant actuarial assumptions
The sensitivity analysis of the significant actuarial assumptions is as follows:(Million yen)

0.5% increase

As ofJanuary 1, 2018
(Date of transition to
IFRS)
(340)

0.5% decrease390

Change inunderlying rate
Discount rate

As ofDecember 31, 2018

As ofDecember 31, 2019

(318)

(330)

344

309

This analysis assumes that other variables are constant.
There are correlations between some assumptions, and it is rare for each assumption to change independently. Accordingly,
the sensitivity analysis above may not necessarily show the actual change in defined benefit obligations. In addition, in thesensitivity analysis above, the present value of defined benefit obligations is determined as of the end of the reporting periodusing the projected unit credit method, as is the case with determining retirement benefit liability (asset) recognized in the
consolidated statements of financial position.
(3) Defined contribution plans
For contributions to the defined contribution plans, the Company and certain consolidated subsidiaries recognized expenses of¥2,185 million and ¥2,132 million for the fiscal years ended December 31, 2018 and December 31, 2019, respectively.
The above amounts include contributions to public plans recognized as expenses.

―61―24. Share capital and other equity items(1) Share capital and capital surplus
1) Number of shares authorized
Number of shares authorizedClass(Shares)Common stock
180,000,000(Note) This represents the number of shares authorized as of January 1, 2018, December 31, 2018 and December 31, 2019.
2) Number of shares issued and fully paid
Changes in the number of common shares issued and the balances of share capital and capital surplus are as follows:
Number of
Share capital
Capital surplus
common shares issued(Thousand shares)(Million yen)
(Million yen)
Balance at January 1, 2018
50,81012,06915,027(Date of transition to IFRS)
Changes during the period
45
50
44
Balance at December 31, 2018
Changes during the period
Balance at December 31, 201950,855

12,11915,071

－

－

(139)

50,855

12,11914,931(Notes) 1. The shares issued by the Company are common shares with no par value that have no restrictions on any rights.
2. Changes during the period for the fiscal year ended December 31, 2018 are mainly due to the issuance of new sharesthrough the exercise of share acquisition rights.
3. Changes in capital surplus during the period for the fiscal year ended December 31, 2019 are mainly due to additions to
non-controlling interests (see Note 5) and expiration of written put options held by non-controlling shareholders.
(2) Treasury shares
Changes in the number of treasury shares and balance thereof are as follows:
Number of shares
Amount(Thousand shares)(Million yen)
Balance at January 1, 2018172
239
(Date of transition to IFRS)
Changes during the period
770
1,661
Balance at December 31, 2018

943

1,900

Changes during the period

(0)

(1)

Balance at December 31, 2019

942

1,899

(Note) Changes during the period for the fiscal year ended December 31, 2018 are mainly due to the purchase of treasury shares inaccordance with a resolution of the meeting of the Board of Directors.
(3) Capital surplus
Capital surplus consists of amounts arising from equity transactions that are not included in share capital. Changes in ownershipinterest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
1) Legal capital surplus
Under the Companies Act, more than one-half of the paid-in capital or contributed capital upon issuance of shares shall be credited
to share capital, and the remainder shall be credited to legal capital surplus included in capital surplus. Legal capital surplus may
be transferred to share capital by resolution of the General Meeting of Shareholders.
2) Written put options held by non-controlling shareholders
For written put options on shares of subsidiaries granted by the Group to owners of non-controlling interests, a financial liability(see Note 20 “Other financial liabilities”) is recognized initially at the present value of the redemption amount and is reclassified
from capital surplus, and subsequent changes in fair value are recognized in profit or loss (see Note 30 “Finance income and financecosts”). Since the put options expired in the fiscal year ended December 31, 2019, the book value of the financial liability at
expiration has been reclassified to capital surplus.

―62―

(4) Retained earnings
Retained earnings consist of earnings recognized in profit or loss for the current and prior fiscal years and earnings reclassified
from other comprehensive income.
Under the Companies Act, one-tenth of the amount to be paid as dividends of surplus shall be accumulated as legal capital surplus
or legal retained earnings until the total amount of legal capital surplus and legal retained earnings reaches one-fourth of sharecapital. The accumulated legal retained earnings may be used to eliminate or reduce a deficit, and the legal retained earnings may
also be reversed by resolution of the General Meeting of Shareholders.
(5) Other components of equity
1) Net change in fair value of financial assets measured through other comprehensive income
Net change in fair value of financial assets measured through other comprehensive income represents valuation differences infair value of financial assets measured through other comprehensive income.
2) Remeasurements of defined benefit plans
Remeasurements of defined benefit plans consist mainly of the effect of changes in actuarial assumptions, the effect of adjustment
to the actual results, and return on plan assets (excluding the amount included in net interest expenses). These are recognized inother comprehensive income as incurred, and immediately transferred from other components of equity to retained earnings.
3) Exchange differences on translation of foreign operations
Exchange differences on translation of foreign operations are translation differences arising when consolidating the financial
statements of foreign operations prepared in foreign currencies.

―63―25. Dividends
Dividends paid are as follows:
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
Resolution

Type of stock

Total amount ofdividends(Million yen)

Dividend per share(Yen)

Record date

Effective dateMeeting of the Boardof Directors held on
Common shares760
15.00 December 31, 2017
March 5, 2018
February 14, 2018
Meeting of the Boardof Directors held on
Common shares
756
15.00
June 30, 2018
September 3, 2018
August 7, 2018
(Notes) 1. The total amount of dividends based on a resolution of the meeting of the Board of Directors held on February 14, 2018
includes ¥1 million paid to Trust & Custody Services Bank, Ltd. (Trust E Account) as dividends on Company shares it
holds.
2. The total amount of dividends based on a resolution of the meeting of the Board of Directors held on August 7, 2018
includes ¥0 million paid to Trust & Custody Services Bank, Ltd. (Trust E Account) as dividends on Company shares it
holds.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
Total amount of
Dividend per share
Resolution
Type of stock
dividends
Record date
Effective date
(Yen)(Million yen)
Meeting of the Boardof Directors held on
Common shares749
15.00 December 31, 2018
March 4, 2019
February 14, 2019
Meeting of the Boardof Directors held on
Common shares
749
15.00
June 30, 2019
September 2, 2019
August 6, 2019
(Notes) 1. The total amount of dividends based on a resolution of the meeting of the Board of Directors held on February 14, 2019
includes ¥1 million paid to Trust & Custody Services Bank, Ltd. (Trust E Account) as dividends on Company shares it
holds.
2. The total amount of dividends based on a resolution of the meeting of the Board of Directors held on August 6, 2019
includes ¥1 million paid to Trust & Custody Services Bank, Ltd. (Trust E Account) as dividends on Company shares it
holds.
Dividends that take effect in the following fiscal year are as follows:
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
Total amount of
Dividend per share
Type of
Dividend
dividends
Resolution
Record date
Effective datestock
resource(Million yen)
(Yen)
Meeting of the Board
CommonRetained
December 31,
of Directors held on
749
15.00
March 4, 2019
sharesearnings
2018
February 14, 2019
(Note) The total amount of dividends based on a resolution of the meeting of the Board of Directors held on February 14, 2019
includes ¥1 million paid to Trust & Custody Services Bank, Ltd. (Trust E Account) as dividends on Company shares it holds.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
Total amount of
Dividend per share
Type of
Dividend
dividends
Resolution
Record date
Effective datestock
resource(Million yen)
(Yen)
Meeting of the Board
CommonRetained
December 31,
of Directors held on
1,006
20.00
March 4, 2020
sharesearnings
2019
February 14, 2020
(Notes) 1. The total amount of dividends based on a resolution of the meeting of the Board of Directors held on February 14, 2020
includes ¥8 million paid to Trust & Custody Services Bank, Ltd. (Trust E Account) as dividends on Company shares it
holds.
2. The dividend per share based on a resolution of the meeting of the Board of Directors held on February 14, 2020 includes
commemorative dividend of ¥5 in recognition of the 90th anniversary of the Company’s foundation.

―64―26. Sales(1) Disaggregation of sales
As described in Note 4 “Operating segments,” the Group has four reportable segments, which are the Industrial Materials segment,
Devices segment, Medical Technologies segment, and Information and Communication segment. Sales are disaggregated byproduct group. The following table shows how the disaggregated sales ties in with the sales of each reportable segment.
(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Decoration (mobility (automotive) field)

18,83918,309Decoration (other fields)

12,126

12,375

Sustainable packaging materials

15,986

15,595For smartphones, tablets, etc.
For portable game players, industrial
equipment and mobility (automotive);
gas sensors, etc.
Medical devices (contract manufacturing)

102,759

75,97020,01920,225

10,254

11,842

Medical devices (own brand)

4,785

4,938

Business media

7,312

7,295

Publication field

2,368

1,440

Commercial field

8,927

5,322

378

186

Other

452

532

Total

204,210174,035

Industrial Materials

Devices

Medical Technologies

Information andCommunication

Others1) Industrial Materials
In the Industrial Materials segment, we mainly offer proprietary technologies that enable to create added value on the surfacesof various materials. IMD, IML, and IME, which facilitate simultaneous in-mold decoration, design and function adding of plastic
products, are extensively adopted in mobility (automotive) components, home appliances, and smartphones in global markets.
Also, our metallized paper, which unites the properties of metallic luster and printing friendliness, has the largest market share in
the industry as sustainable packaging materials for beverages and foods on a global basis.
2) Devices
In the Devices segment, we produce devices that pursue precision and functionality. Our main products, film-based Touch
Sensors are widely adopted mainly in smartphones, tablets, portable game players, industrial equipment and mobility(automotive) components in global markets. In addition, we offer gas sensors that can detect gas conditions, along with otherproducts.
3) Medical Technologies
The Medical Technologies segment is an operating segment that offers high-quality and value-added products in medical
devices and other related markets to contribute to healthy and affluent life. The segment provides contract manufacturing services(a business handling a series of processes ranging from product design and development to manufacture) for major medical
device manufacturers on a global basis with products such as surgical instruments for minimal invasive treatments and medical
wearable sensor used for a wide range of conditions, primarily heart disease. In addition to this, the segment currently
manufactures and sells its own brand products to medical institutions.

―65―4) Information and Communication
In the Information and Communication segment, we focus on the fields such as publication printing and art solution, where
we can make the most of our high-definition and high-quality tone reproduction capabilities, and also offer commercial printing
and services related to sales promotion.
These are accounted for in accordance with policies stated in Note 3 “Significant accounting policies.” The consideration for
performance obligations is collected within one year after the performance obligations are satisfied and, therefore, is accounted for
as not having a significant financing component. The amount of assets recognized from the costs to obtain or fulfill contracts withcustomers for the fiscal years ended December 31, 2018 and December 31, 2019 was not material. By applying the practical
expedient, the incremental costs of obtaining contracts are recognized as expenses as incurred if the amortization period of theassets that would otherwise have been recognized is one year or less.
(2) Contract balances
The breakdown of contract balances is as follows. Receivables from contracts with customers are notes and accounts receivabletrade included in trade and other receivables (see Note 7). The amount of contract assets is not material. Contract liabilities areadvances received from customers in sale transactions of the Group’s products before the time when the customers obtain controlof the products, such as upon customer acceptance.
(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

Contract liabilities
Advances received (see Note 22)

4,632

1,442

953

(Notes) 1. Sales recognized for the fiscal year ended December 31, 2018 that was included in the opening balance of contract liability
was ¥4,561 million.
2. Sales recognized for the fiscal year ended December 31, 2019 that was included in the opening balance of contract liability
was ¥1,283 million.
(3) Transaction price allocated to the remaining performance obligations
The Group applies the practical expedient of omitting the disclosure of information on the remaining performance obligations
because it has no significant transaction with individual expected contractual terms exceeding one year. In addition, there is no
significant consideration from contracts with customers that is not included in transaction prices.
27. Selling, general and administrative expenses
The breakdown of selling, general and administrative expenses is as follows:(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Personnel expenses

11,446

11,231

Research and development expenses (see Note 12)

3,949

3,659

Packing and transportation costs

3,285

2,734

Depreciation and amortization

2,585

2,615

Other

7,885

7,426

Total

29,152

27,668―66―

28. Employee benefit expenses
Employee benefit expenses were ¥32,895 million for the fiscal year ended December 31, 2018 and ¥32,811 million for the fiscal
year ended December 31, 2019.
Employee benefit expenses include salaries, bonuses, retirement benefit expenses, legal welfare expenses and non-legal welfare
expenses, and are recorded in cost of sales and selling, general and administrative expenses in the consolidated statements of profit orloss.
The above employee benefit expenses also include remuneration for key management personnel. Remuneration for key management
personnel is described in Note 36 “Related parties.”―67―29. Other income and other expenses
The breakdown of other income and other expenses is as follows:(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

(Other income)Gain on sale of non-current assets (Note 1)

142

5,041

Foreign exchange gain－－

Gain on sale of shares of subsidiaries and associates (Note3)

317

878

Government grants

147

83

Insurance income (Note 4)

644

－

Other

152

196

Total

1,404

6,200

Loss on sale and retirement of non-current assets

680

774

Foreign exchange loss

366

165

Impairment losses (Note 2)

246

15,917

Loss on disaster (Note 4)478－

Loss on closing of plants (Note 5)

351

263

Business restructuring expenses (Note 6)

607

47

Business establishment transfer cost (Note 7)

167

25

Loss on liquidation of business (Note 8)

－

1,402

(Other expenses)

Other

58

322

Total

2,956

18,917(Notes) 1. Gain on sale of non-current assets
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
This is mainly related to sale of land owned by the Company (Yachiyo City, Chiba Pref.).
2. Impairment losses
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
For assets to be disposed of that were not expected to be used in the future, the book value of those assets was written
down to their recoverable amount. The impairment losses incurred of ¥158 million and ¥61 million are included in businessrestructuring expenses and business establishment transfer cost, respectively. See Note 14 “Impairment of non-financial
assets.”
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
See Note 14 “Impairment of non-financial assets.”
3. Gain on sale of shares of subsidiaries and associates
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
This is related to sale of shares in TPK Film Solutions Limited, an associate of the Company.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
This is mainly related to sale of shares in NCI Tokyo, Inc. (newly established subsidiary: Kyodo Nissha Printing Co.,
Ltd.), which was a consolidated subsidiary of the Company. See Note 5 “Business combinations.”―68―

4. Insurance income and loss on disaster
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
Loss on disaster is mainly related to disposal of inventories due to typhoon damage.
Insurance income is mainly related to the typhoon damage mentioned above.
5. Loss on closing of plants
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
This is related to European production base integration of the Company’s consolidated subsidiaries in the Medical
Technologies segment.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
This is related to European production base integration of the Company’s consolidated subsidiaries in the Medical
Technologies segment.
6. Business restructuring expenses
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
These are related to business restructuring of the Company’s consolidated subsidiaries in the Information andCommunication segment. For assets to be disposed of that were not expected to be used in the future, the book value of
those assets was written down to their recoverable amount, and the amounts written down were recognized as impairment
losses of ¥158 million, as well as additional retirement payment and re-employment support program fees for early retireesof ¥449 million.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
These are related to business restructuring of the Company’s consolidated subsidiaries in the Information andCommunication segment.
7. Business establishment transfer cost
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)
This is related to the business establishment transfer of Nissha FIS, Inc. and Nissha Si-Cal Technologies, Inc.,
consolidated subsidiaries of the Company. For assets to be disposed of that were not expected to be used in the future, thebook value of those assets was written down to their recoverable amount, and the amount written down was recognized as
impairment losses of ¥61 million.
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
This is related to the business establishment transfer of Nissha GSI Technologies, Inc. (former trade name: Nissha Si-Cal
Technologies, Inc.), a consolidated subsidiary of the Company.
8. Loss on liquidation of business
The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)
This is related to the termination of a joint venture relationship in Nissha and Lens Technologies (Changsha) Company
Limited, the Company’s associated company accounted for by the equity method, which was a joint venture company with
Lens Technology Co., Ltd., a Chinese glass processing manufacturer, and its subsidiary, Lens International (HK) Limited.

―69―30. Finance income and finance costs
The breakdown of finance income and finance costs is as follows:(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

(Finance income)Interest income
Financial assets measured at amortized cost

98

48

288

370

95

76

180

559

Other

0

－

Total

663

1,056

977

1,173

－

－

168

210

Dividend income
Financial assets measured at fair value through othercomprehensive income
Gain on valuation of financial assets and financial liabilities
measured at fair value through profit or loss
Foreign exchange gain

(Finance costs)
Interest expenses
Financial liabilities measured at amortized cost
Foreign exchange loss
Loss on valuation of financial assets and financial liabilities
measured at fair value through profit or loss
Loss due to changes in liability on written put options heldby non-controlling shareholders (see Note 24)

92

－

Other

Financial liabilities measured at amortized cost

11

52

Total

1,249

1,437

―70―

31. Other comprehensive income
Amounts arising during the year, reclassification adjustments to profit or loss and tax effects (including non-controlling interests)
for each item of other comprehensive income are as follows:
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)(Million yen)AmountReclassificaarising duringtion
the yearadjustment

Before tax
effects

Tax effects

Net of tax
effects(Items that will not be reclassified to profit or loss)
Net change in fair value of financial assets measured
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using equity method
Total of items that will not be reclassified to profit orloss(Items that may be reclassified to profit or loss)
Exchange differences on translation of foreign
operations
Share of other comprehensive income of investments
accounted for using equity method
Total of items that may be reclassified to profit orloss
Total other comprehensive income(5,270)－(5,270)1,580(3,689)

(2)

－

(2)

－

(2)

－

－

－

－

－

(5,272)－(5,272)

1,580(3,691)(1,615)－(1,615)－(1,615)

(5)

－

(5)

－

(5)

(1,620)－(1,620)－(1,620)(6,893)－(6,893)

1,580(5,312)

The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)(Million yen)AmountReclassificaarising duringtion
the yearadjustment

Before tax
effects

Tax effects

Net of tax
effects(Items that will not be reclassified to profit or loss)
Net change in fair value of financial assets measured
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using equity method
Total of items that will not be reclassified to profit orloss(Items that may be reclassified to profit or loss)
Exchange differences on translation of foreign
operations
Share of other comprehensive income of investments
accounted for using equity method
Total of items that may be reclassified to profit orloss
Total other comprehensive income

4,731

－

4,731

(1,561)

3,170

(72)

－

(72)

－

(72)

－

－

－

－

－

4,659

－

4,659

(1,561)

3,098

(818)

(21)

(839)

－

(839)

－

－

－

－

－

(818)

(21)

(839)

－

(839)

3,841

(21)

3,819

(1,561)

2,258

―71―

32. Earnings per share
Basic earnings (loss) per share, diluted earnings (loss) per share and the basis for their calculation are as follows:

Fiscal year ended
December 31, 2018
Profit (loss) attributable to ordinary shareholders of theparent company (Million yen)
Adjustment to profit (loss) used to calculate diluted earnings
per share (Million yen)
Profit (loss) used to calculate diluted earnings per share(Million yen)
Basic weighted average number of common shares
outstanding (Thousand shares)
Adjustment to number of shares due to convertible bonds(bonds with stock acquisition rights) (Thousand shares)
Weighted average number of common shares outstandingused to calculate diluted earnings (loss) per share (Thousand
shares)Basic earnings (loss) per share (Yen)
Diluted earnings (loss) per share (Yen)

Fiscal year ended
December 31, 2019

4,523

(17,179)

－

－

4,523

(17,179)

50,38449,912

1,286－

51,671

49,91289.79(344.19)87.55(344.19)(Note) For diluted loss per share for the fiscal year ended December 31, 2019, as the conversion of convertible bonds (bonds withstock acquisition rights) would reduce the amount of loss per share, the potential shares did not have dilutive effects.
33. Cash flow information(1) Significant non-cash transactions
Significant non-cash transactions (investing and financing transactions that do not require the use of cash or cash equivalents)
are as follows:(Million yen)
Fiscal year ended
December 31, 2018
Acquisition of right-of-use assets by means of a lease (seeNote 13)

Fiscal year ended
December 31, 2019

3,850

1,848

(2) Reconciliation of liabilities arising from financing activities
Changes in main assets and liabilities arising from financing activities are as follows:(Million yen)
Short-termborrowings
As of January 1, 2018
(Date of transition to IFRS)
Changes due to cash flows from financing
activities

Long-term
borrowings (Note)

Bonds

Lease liabilities

10,66914,870

2,868

7,988

228

863

－

(1,741)

Non-cash changes
Acquisition of right-of-use assets

－

－

－

3,845

Foreign currency translation differences

(39)

(461)

－

(237)

Other

－

(30)

(74)

(250)

As of December 31, 2018

10,85815,241

2,794

9,604

Changes due to cash flows from financing
activities

9,988(2,090)－(1,766)

Acquisition of right-of-use assets

－

－

－

1,848

Foreign currency translation differences

(45)

(276)

－

(84)

2

(84)

22

(114)

20,803

12,791

2,817

9,488

Non-cash changes

Other
As of December 31, 2019
(Note) Current portion of long-term borrowings is included.

―72―

(3) Payments for acquisition of subsidiaries or other businesses
The breakdown of main assets and liabilities of acquired subsidiaries through purchase of shares or acquired businesses at thetime control was obtained, as well as the relationship between consideration paid and payments for the acquisition, are as follows(see Note 5 “Business combinations”):(Million yen)
As ofDecember 31, 2018

As ofDecember 31, 2019

Breakdown of assets at the time control was obtained
Current assets
Non-current assets

774

794

1,804

457

195

262

Breakdown of liabilities at the time control was obtained
Current liabilities
Non-current liabilities
Goodwill

－

177

899

1,687
(Million yen)

Fiscal year ended
December 31, 2018
Consideration paid

Fiscal year ended
December 31, 2019

(3,283)(2,500)Contingent consideration included in consideration paid

618－

Amount payable included in consideration paid

421

－

26

65

(2,216)(2,434)

Cash and cash equivalents that were held by acquiredcompanies at the time of acquisition
Net payments for acquisition of subsidiaries or otherbusinesses(4) Proceeds from sale of subsidiaries

The breakdown of main assets and liabilities of subsidiaries for which control was lost through sale of shares, as well as therelationship between consideration received and proceeds from the sale, are as follows (see Note 5 “Business combinations”):(Million yen)
As ofDecember 31, 2018

As ofDecember 31, 2019

Breakdown of assets at the time control was lost
Current assets－

237

Non-current assets－

23

Current liabilities－

17

Non-current liabilities－

95

Breakdown of liabilities at the time control was lost

(Million yen)
Fiscal year ended
December 31, 2018
Consideration received
Cash and cash equivalents included in the assets at the time
control was lost
Net proceeds from sale of subsidiaries―73―

Fiscal year ended
December 31, 2019
－

818

－

(120)

－

698

(5) Payments for sale of subsidiaries
The breakdown of main assets and liabilities of subsidiaries for which control was lost through sale of shares, as well as therelationship between consideration received and payments for the sale, are as follows:(Million yen)
As ofDecember 31, 2018

As ofDecember 31, 2019

Breakdown of assets at the time control was lost
Current assets－

273

Non-current assets－

12

Current liabilities－

191

Non-current liabilities－

198

Breakdown of liabilities at the time control was lost

(Million yen)
Fiscal year ended
December 31, 2018
Consideration received
Cash and cash equivalents included in the assets at the time
control was lost
Net payments for sale of subsidiaries

Fiscal year ended
December 31, 2019
－

20

－

(101)

－

(81)

(6) Payments for loss on liquidation of businessThis is due to a portion of costs (including capital investment) incurred to date related to the launch of a manufacturing facility
upon the termination of a joint venture relationship in Nissha and Lens Technologies (Changsha) Company Limited, the Company’s
associated company accounted for by the equity method, which was a joint venture company with Lens Technology Co., Ltd., aChinese glass processing manufacturer, and its subsidiary, Lens International (HK) Limited.

―74―

34. Share-based payment
The Group has introduced a Stock Benefit Trust (BBT: Board Benefit Trust) Plan, a Stock Benefit Trust (J-ESOP) Plan and a stock
option plan as share-based payment plans.
The share-based payment plans are accounted for as equity‑settled share-based payments or cash‑settled share-based payments.
Amounts recognized for share-based payment expenses and liabilities arising from share-based payments are as follows:
Share-based payment expenses(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Equity‑settled

19

16

Cash‑settled

137

85

(Note) Share-based payment expenses are included in selling, general and administrative expenses.
Liabilities arising from share-based payments(Million yen)Book value of liabilities (see Note 22)

As ofJanuary 1, 2018
(Date of transition to IFRS)
107

Vested portion thereof

As ofDecember 31, 2018

54

As of
December 31, 2019

195

277

184

262

(1) Stock Benefit Trust (BBT) Plan
The Company has adopted a share-based payment plan comprising both an equity‑settled plan and a cash‑settled plan (the “Plan”)
for Directors of the Board (excluding Independent Outside Directors of the Board), Corporate Officers and certain directors of theboard of the Company’s subsidiaries (collectively, the “Directors”).
1) Overview of the Plan
The Plan is a share-based payment plan where shares in the Company and cash equivalents of such shares at their fair value(collectively, “Company Shares”) are paid by the Stock Benefit Trust (BBT) to the Directors pursuant to the policy on directors’
stock benefits established by the Company and its subsidiaries. The shares in the Company are acquired by the trust using funds
contributed by the Company. For each fiscal year, points are determined according to the policy on directors’ stock benefits andawarded to the Directors. The time when the Directors receive Company Shares shall in principle be the date set out in the policy,
that is, on or after the earlier of the date the designated beneficiary confirmation procedures set out in the policy are carried out
within the three fiscal years set out in the policy or the date the Directors retire.
2) The Company’s own shares in the trust
The Company’s own shares in the trust are recorded as treasury shares in equity. The number of such treasury shares was
78,400 shares as of December 31, 2019.
3) Changes in the number of points during the period(Points)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Beginning balance of points

51,45013,421

Increase due to points awarded

13,421

20,500Decrease due to points exercised(51,450)(1,159)－－13,421

32,762－－

Decrease due to points expired
Ending balance of points
Ending balance of exercisable points―75―4) Fair value of points awarded
The weighted average fair value of points awarded for the fiscal years ended December 31, 2018 and December 31, 2019 was¥2,326 and ¥1,162, respectively. The fair value of points awarded is determined using the share price at grant date, whichapproximates the fair value of points granted.
(2) Stock option plan
Certain subsidiaries of the Company have adopted a share-based payment plan for their employees. The plan grants to employees
stock options to purchase common shares in the subsidiaries as well as put options for the subsidiaries to purchase the shares issued
through the exercise of the stock options. Consequently, the difference between the exercise price of the stock options and the shareprice at exercise date is paid in cash to the employees. The plan is to grant rights for 4 years from December 2016. The rights
granted have a vesting period of 3 years and an exercise period of 10 years as of grant date.
1) Changes in number of rights and weighted average exercise priceFiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Beginning balance

5,502

Weighted average
exercise price(Yen)
120,813Granted

2,647

Expired(314)

Number of rights(Shares)

7,835

Weighted average
exercise price(Yen)
122,347

125,286

2,647

116,990

120,233(76)

119,442

Number of rights(Shares)Ending balance
7,835
122,347
10,406
119,876
Ending balance of
2,795
121,0685,226
120,249
exercisable rights(Notes) 1. The weighted average remaining period of the share-based payment plan as of December 31, 2018 and December 31, 2019was 9 years and 8.5 years, respectively.
2. The weighted average share price at exercise date of stock options exercised during the period cannot be identified because
the shares granted were unlisted.
2) Fair value of stock options granted during the period and underlying assumptions
The weighted average fair value at measurement date of stock options granted during the fiscal years ended December 31,
2018 and December 31, 2019 was ¥70,796 and ¥58,298, respectively.
The fair value at measurement date of stock options granted during the period is evaluated using the Black-Scholes model
under the following assumptions:Fiscal year ended
December 31, 2018
Main underlying variables and estimation method thereof:
Valuation of shares at measurement
date
Exercise price
Expected volatility (Note)Fiscal year ended
December 31, 2019125,286 yen

116,990 yen

125,286 yen

116,990 yen

42.55 %

37.37 %

Expected remaining period

10 years

10 years

Expected dividend yield

0 %

0 %

2.69 %

1.88 %

Risk free rate

(Note) The expected volatility is determined based on historical share prices during the period corresponding to the expected
remaining period.

―76―

(3) Stock Benefit Trust (J-ESOP) Plan
The Company has adopted an equity‑settled share-based payment plan (the “Plan”) for employees of the Company and some ofits subsidiaries (“Eligible Employees”) who satisfy the set requirements.
1) Overview of the Plan
The Plan is an incentive plan that grants the Company’s shares to Eligible Employees who satisfy the set requirements pursuant
to the policy on stock benefits prescribed in advance by the Company.
The Company awards points to Eligible Employees principally based on their individual degree of contribution, and grants theCompany’s shares equivalent to the awarded points when set terms and conditions are met and vested rights are granted. The
shares granted to Eligible Employees, including future shares, are acquired using cash funds contributed in advance to the trust
E account established at Trust & Custody Services Bank, Ltd., and are managed separately as trust assets.
2) The Company’s own shares in the trust
The Company’s own shares in the trust are recorded as treasury shares in equity. The number of such treasury shares was
120,700 shares as of December 31, 2019.
3) Changes in the number of points during the period and fair value of points awarded
There were no points awarded during the fiscal years ended December 31, 2018 and December 31, 2019.

―77―

35. Financial instruments(1) Capital management
The Group’s capital management policy is to establish and maintain a stable financial foundation in order to improve corporate
value through sustainable growth.
The Group primarily uses the following indicators for capital management.
The Group is not subject to any significant regulatory capital requirements.
(Million yen)

Total liabilities

As ofJanuary 1, 2018
(Date of transition to IFRS)
136,766

Cash and cash equivalents
Equity (equity attributable to owners ofparent)Equity ratio (%)

As ofDecember 31, 2018

As ofDecember 31, 2019

123,348

111,198

29,291

16,637

17,49995,43591,56475,010

41.1

42.6

40.3

(Note) Equity ratio: Equity (equity attributable to owners of parent)/Total liabilities and equity(2) Financial risk management
Risk management policy
The Group’s business activities are affected by the business and financial market environments. In the course of the businessactivities, financial instruments held by the Group are exposed to specific risks.
Such risks primarily include 1) market risk ((a) foreign exchange risk, (b) price risk, (c) interest rate risk), 2) credit risk and 3)
liquidity risk. In order to mitigate these risks, risk management is conducted.
The Group focuses on highly safe financial assets in its fund management, and procures funds mainly through loans from banks
and issuance of bonds. It carries out optimum fund procurements at each time while giving full consideration to the management
environment. The Group uses derivative transactions to hedge foreign exchange risk, and does not enter into derivative transactions
for speculative purposes. Derivative transactions are executed and managed with approval from the authorized persons inaccordance with the internal rules that stipulate transaction authority, limits, and other matters.
1) Market risk(a) Foreign exchange risk
Trade receivables and payables denominated in foreign currencies, which arise from the Group’s global businessdevelopment, are exposed to the risk of foreign exchange fluctuations. Part of such risk is hedged using forward exchange
contracts. These derivative transactions, for which hedge accounting is not applied, are considered to effectively offset theeffects of foreign exchange fluctuations.
The exposure of trade receivables and payables, excluding the part substantively fixed in Japanese yen by forward exchange
contracts, to the risk of foreign exchange fluctuations in the US dollar was ¥17,200 million as of December 31, 2019 (¥21,495
million as of December 31, 2018). There was no significant exposure to the risk of foreign exchange fluctuations in currencies
other than the US dollar.
Sensitivity analysis of foreign exchange rates
With regard to financial instruments held by the Group, the table below shows the impact on profit before tax in the
consolidated statements of profit or loss that would result from a 1% appreciation of the functional currency (Japanese yen)against the US dollar, assuming that all other variables remain constant. The impact of financial instruments denominated in
the functional currency and the translation of the assets and liabilities of foreign operations into Japanese yen is not includedin this analysis.
(Million yen)
As ofDecember 31, 2018
Profit before tax

As ofDecember 31, 2019
(214)

―78―

(172)

(b) Price risk
As the Group owns listed shares in companies with which the Group has business relationships, it is exposed to the risk ofprice fluctuations in equity instruments. The Group regularly assesses the fair values and financial condition of issuers(business partners) and continually reviews the holding status.
The exposure of listed shares to the risk of price fluctuations was ¥18,476 million as of December 31, 2019 (¥13,544 million
as of December 31, 2018).
Sensitivity analysis of equity instruments
The sensitivity analysis of listed shares held by the Group to the risk of price fluctuations is as follows. This analysis shows
the impact on other comprehensive income (before tax effects) in the consolidated statements of comprehensive income thatwould result from a 10% decline in the price of listed shares, assuming that all other variables remain constant.
(Million yen)
As ofDecember 31, 2018
Other comprehensive income

As ofDecember 31, 2019

(1,354)(1,847)(c) Interest rate risk
Of the Group’s interest-bearing liabilities, those with floating rates are exposed to the risk of interest rate fluctuations.
To mitigate the risk of interest rate fluctuations, the Group continually monitors interest rate fluctuations for interest-bearing
liabilities with floating rates.
The exposure of interest-bearing liabilities to the risk of interest rate fluctuations was ¥33,917 million as of December 31,
2019 (¥29,081 million as of December 31, 2018).
Sensitivity analysis of interest rates
With regard to financial instruments held by the Group, the table below shows the impact on profit before tax in the
consolidated statements of profit or loss that would result from a 1% increase in interest rates.
The scope of the analysis is financial instruments subject to interest rate fluctuations, and other factors including the impactof foreign exchange fluctuations are assumed to remain constant.
(Million yen)
As ofDecember 31, 2018
Profit before tax

As ofDecember 31, 2019
(290)

―79―

(339)

2) Credit risk
The Group’s trade and other receivables and other financial assets are exposed to credit risk. Credit risk is the risk of financial
loss of the Group in the event that a customer or a counterparty (including financial institutions) fails to meet its contractual
obligations.
The Group sets up lines of credit in accordance with Credit Management Regulations by business and country or region. In
addition, the sales division and the finance division regularly monitor the credit status of counterparties of trade receivables, andmanage the due dates and outstanding balances by counterparty to identify at an early stage and mitigate recoverability concerns,
such as due to deterioration of a counterparty’s financial condition. Derivative transactions are entered into only with highly
creditworthy financial institutions in order to mitigate credit risk, and therefore the credit risk is considered to be extremely low.
The allowance for doubtful accounts for trade receivables is always measured at an amount equal to the lifetime expectedcredit losses. For receivables other than trade receivables and other financial assets, the allowance for doubtful accounts ismeasured at an amount equal to the 12‑month expected credit losses if the credit risk has not increased significantly since initialrecognition, and at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initialrecognition, such as upon a past due event.
When measuring the expected credit losses for trade receivables, in principle, the receivables are grouped depending on thelevel of credit risk, provision rates are calculated for each group by reflecting forward-looking information in historical credit
loss experience, and the expected credit losses for trade receivables are determined by multiplying the outstanding balance of theassets by a corresponding provision rate. For receivables other than trade receivables and other financial assets whose credit risk
has not increased significantly since initial recognition, provision rates are calculated for each group of similar assets by reflecting
forward-looking information in historical credit loss experience, and the expected credit losses are determined by multiplying theoutstanding balance of the assets by a corresponding provision rate. For receivables other than trade receivables and otherfinancial assets whose credit risk has increased significantly since initial recognition as well as credit-impaired assets, theexpected credit losses are determined as a difference between the book value and the present value of expected future cash flows
to be received from the assets, discounted using the effective interest rate at initial recognition. If all or a portion of trade andother receivables and other financial assets are considered not to be recovered or extremely difficult to be recovered, they are
determined to be credit-impaired.
The book value after impairment of financial assets stated in the consolidated statements of financial position represents theGroup’s maximum exposure to the credit risk of financial assets. Except for trade receivables of ¥11,637 million as of December
31, 2019 (¥15,624 million as of December 31, 2018) from APPLE OPERATIONS and its group companies, which are the Group’s
major customers, the Group is not exposed to credit risk concentrated excessively in any single counterparty or group to which
the party belongs.
Changes in trade and other receivables (before deducting allowance for doubtful accounts) and allowance for doubtful accounts
are as follows:
The fiscal year ended December 31, 2018 (January 1, 2018 to December 31, 2018)(Million yen)
Financial assets
Financial assets always
Trade and other receivables
measured at an amount measured at an amount(before deducting allowance for
equal to 12‑monthequal to lifetime
doubtful accounts)
expected credit losses expected credit losses

Credit-impaired
financial assets

Total

Balance at January 1, 2018

592

44,148212

44,953

Changes during the period
Reclassification to creditimpaired financial assets
Business combinations (seeNote 5)
Foreign currency translationdifferences
Balance at December 31, 2018

915

(6,572)

8(5,648)

－

(71)

71

－

－

319

－

319

(7)

(365)

(8)

(381)

1,500

37,458284

39,242

Grouping depending on the level of credit risk is almost the same for receivables measured at an amount equal to 12‑month
expected credit losses and receivables always measured at an amount equal to lifetime expected credit losses.

―80―

(Million yen)
Financial assets
Financial assets always
measured at an amount measured at an amount
Allowance for doubtful accounts
equal to 12‑monthequal to lifetime
expected credit losses expected credit losses

Credit-impaired
financial assets

Total

Balance at January 1, 2018

0

71

211

282

Increase

－

10

25

36

Decrease (intended use)

－

(5)

－

(5)

Decrease (reversal)
Reclassification to creditimpaired financial assets
Business combinations (seeNote 5)
Foreign currency translationdifferences
Balance at December 31, 2018

(0)

(38)

(0)

(38)

－

－

－

－

－

－

－

－

(0)

0

(6)

(6)

0

38

230

268

The fiscal year ended December 31, 2019 (January 1, 2019 to December 31, 2019)(Million yen)
Financial assets
Financial assets always
Trade and other receivables
measured at an amount measured at an amount(before deducting allowance for
equal to 12‑monthequal to lifetime
doubtful accounts)
expected credit losses expected credit losses

Credit-impaired
financial assets

Total

Balance at January 1, 2019

1,500

37,458284

39,242

Changes during the period
Reclassification to creditimpaired financial assets
Business combinations (seeNote 5)
Foreign currency translationdifferences
Balance at December 31, 2019(1,236)(3,746)(36)(5,018)

－

(65)

65

－

75

433

－

509

(3)

(202)

12

(193)

336

33,877325

34,540Grouping depending on the level of credit risk is almost the same for receivables measured at an amount equal to 12‑month
expected credit losses and receivables always measured at an amount equal to lifetime expected credit losses.
(Million yen)
Financial assets
Financial assets always
measured at an amount measured at an amount
Allowance for doubtful accounts
equal to 12‑monthequal to lifetime
expected credit losses expected credit losses

Credit-impaired
financial assets

Total

Balance at January 1, 2019

0

38

230

268

Increase

－

17

125

143

Decrease (intended use)

－

－

(35)

(35)

Decrease (reversal)
Reclassification to creditimpaired financial assets
Business combinations (seeNote 5)
Foreign currency translationdifferences
Balance at December 31, 2019

(0)

(7)

－

(7)

－

－

－

－

－

－

－

－

(0)

(0)

(6)

(6)

0

48

314

362

3) Liquidity risk
The Group is exposed to liquidity risk that the Group is unable to fulfill its repayment obligations for financial liabilities.
To manage the liquidity risk, the finance division take measures such as preparing and updating fund management plans in atimely manner, and consolidating fund flows to the Company through the cash management system (CMS) introduced across theGroup companies in Japan.

―81―

The maturity analysis of financial liabilities (including derivative financial instruments) is as follows. The maturity analysis oflease liabilities is provided in Note 13 “Leases.”(Million yen)
As of January 1, 2018 (Date of transition to IFRS)Book value
Non-derivative financial
liabilities
Trade and otherpayablesContractual cashflows

1 year or lessOver 1 year
to 5 years

Over 5 years

72,80672,80672,806

Short-term borrowings

10,66910,677

10,677－－Long-term-borrowings

14,87016,867

1,856

14,689

321

Bonds

2,868

2,940

－

2,940

－

101,214103,290

85,34017,629

321

Total

－

－

(Million yen)
As of December 31, 2018
Book value
Non-derivative financial
liabilities
Trade and otherpayablesContractual cashflows

1 year or lessOver 1 year
to 5 years

Over 5 years

62,15862,15862,158

Short-term borrowings

10,858

10,867

10,867－－Long-term-borrowings

15,241

17,392

2,397

14,643

351

Bonds

2,794

2,840

－

2,840

－

91,052

93,25975,423

17,483

351

Total

－

－

(Million yen)
As of December 31, 2019
Book value
Non-derivative financial
liabilities
Trade and otherpayablesContractual cashflows

1 year or lessOver 1 year
to 5 years

Over 5 years

44,53844,53844,538

Short-term borrowings

20,803

20,817

20,817－－Long-term-borrowings

12,791

14,681

1,852

12,691

137

Bonds

2,817

2,840

－

2,840

－

80,95082,877

67,20815,531

137

Total

―82―

－

－

(3) Fair value of financial instruments
Estimation of fair value
1) Measurement of fair value of financial instruments
The Group determines the fair value of major financial assets and financial liabilities as follows. The fair value of financial
instruments is estimated using available market prices, or is measured by appropriate valuation techniques when market prices
are not available.
(Cash and cash equivalents, trade and other receivables, trade and other payables, short-term borrowings)
Since these are settled within a short period, the fair value approximates the book value. Therefore, the fair value is based on
the relevant book value.
(Other financial assets and other financial liabilities)
The fair value of marketable equity instruments (listed shares) is measured based on market prices at the fiscal year-end. The
fair value of equity instruments (unlisted shares) with no available market prices and debt instruments (preference shares, etc.)classified as financial assets measured at fair value through profit or loss is measured using valuation techniques, primarily basedon discounted future cash flows, market prices of similar companies or net asset values. Since other financial assets and financial
liabilities are settled within a short period, the fair value approximates the book value. One of the main unobservable inputs used
to measure the fair value of these financial instruments with no available market prices was valuation multiple derived from thecomparable peer company analysis. The fair value increases (decreases) as the valuation multiple rises (declines).
(Derivative assets and liabilities)
The fair value of derivative assets and liabilities is measured at the market quotation of derivative transactions under the sameterms and conditions as of the fiscal year-end.
(Contingent consideration)
Contingent consideration in a business combination is measured at fair value as of the acquisition date of the businesscombination. Contingent consideration that meets the definition of a financial liability is remeasured at fair value at eachsubsequent reporting date. The fair value is determined on the basis of the scenario-based method or Monte Carlo simulation
model, where the key assumptions considered are the probability of meeting each performance target, the projected future
operating results, and the discount rate. The fair value decreases (increases) as the discount rate rises (declines).
(Long-term borrowings)
The fair value of long-term borrowings is measured by discounting the principal and interest at an interest rate that would beapplied to a new similar borrowing.
(Bonds)
The fair value of bonds is measured at the present value of the principal discounted at a rate that reflects the remaining term
and credit risk of the bonds.

―83―2) Book value and fair value of financial instruments measured at amortized cost
The book value and fair value of financial instruments measured at amortized cost, which are categorized within Level 2 ofthe fair value hierarchy, are as follows. Financial instruments whose book value approximates the fair value are not disclosed.
(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)Book value
Fair value

As ofDecember 31, 2018
Book value

As ofDecember 31, 2019

Fair value

Book value

Fair value

Financial liabilities
Financial liabilities
measured at amortized cost
Long-term borrowings

14,87014,101

15,241

14,356

12,791

12,404

Bonds

2,868

2,866

2,794

2,790

2,817

2,813

3) Financial instruments measured at fair value and hierarchy thereof
The table below shows an analysis on the hierarchy of financial instruments measured at fair value. Each level of the hierarchy
is described in Note 3 “Significant accounting policies.” Transfers between the levels are recognized on the date of the event orchange in circumstances that caused the transfer.
(Million yen)
As of January 1, 2018
(Date of transition to IFRS)

Level 1

Level 2

Level 3

Total

Financial assets
Financial assets measured at fair value through profit or loss
Derivatives for which hedge accounting is not applied

2

－

2

－

－

1,191

1,191

18,772－414

19,187

18,772

2

1,606

20,381

－

－

－

－

－

－

275

275

－

－

275

275

－

Debt instruments
Financial assets measured at fair value through othercomprehensive income
Equity instruments
Total
Financial liabilities
Financial liabilities measured at fair value through profit orloss
Derivatives for which hedge accounting is not applied
Contingent consideration
Total

The above financial assets and financial liabilities are included in “Other financial assets (current),” “Other financial assets (noncurrent),” “Other financial liabilities (current)” and “Other financial liabilities (non-current)” in the consolidated statements of financial
position.

―84―

(Million yen)
As of December 31, 2018

Level 1

Level 2

Level 3

Total

Financial assets
Financial assets measured at fair value through profit or loss
Derivatives for which hedge accounting is not applied

－

0

－

0

Debt instruments

－

－

1,007

1,007

13,544－382

13,926

13,5440

1,389

14,933

－

－

－

－

－

－

819

819

－

－

819

819

Financial assets measured at fair value through othercomprehensive income
Equity instruments
Total
Financial liabilities
Financial liabilities measured at fair value through profit orloss
Derivatives for which hedge accounting is not applied
Contingent consideration (See Note 5)
Total

The above financial assets and financial liabilities are included in “Other financial assets (current),” “Other financial assets (noncurrent),” “Other financial liabilities (current)” and “Other financial liabilities (non-current)” in the consolidated statements of financial
position.
(Million yen)
As of December 31, 2019

Level 1

Level 2

Level 3

Total

Financial assets
Financial assets measured at fair value through profit or loss
Derivatives for which hedge accounting is not applied

－

0

－

0

Debt instruments

－

－

869

869

Financial assets measured at fair value through othercomprehensive income
Equity instruments
Total
Financial liabilities
Financial liabilities measured at fair value through profit orloss
Derivatives for which hedge accounting is not applied
Contingent consideration
Total

18,476－714

19,191

18,476

0

1,583

20,061

－

－

－

－

－

－

714

714

－

－

714

714

The above financial assets and financial liabilities are included in “Other financial assets (current),” “Other financial assets (noncurrent),” “Other financial liabilities (current)” and “Other financial liabilities (non-current)” in the consolidated statements of financial
position.

―85―4) Reconciliation of financial instruments categorized within Level 3
Financial instruments categorized within Level 3 are evaluated and the evaluation results are analyzed by the Company’s CFO
in accordance with the evaluation policies and procedures established by the Group.
The following table shows a reconciliation of the opening balance to the closing balance of financial assets whose fair value
measurement is categorized within Level 3.
(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Equity instruments
Equity instruments
Financial assets
Financial assets
measured at fair value
measured at fair value
measured at fair value
measured at fair value
through otherthrough otherthrough profit or loss
through profit or loss
comprehensive income
comprehensive income
Beginning balance

414

1,191

382

1,007

－

(64)

－

(163)

(27)

－

(539)

－

－

20

871

121

Sale
Transfer to Level 1 due tolisting
Other (Note 3)

－

(7)

－

－

(4)

－

－

－

－

(132)

－

(95)

Ending balance

382

1,007

714

869

Total gain and loss
Profit or loss (Note 1)
Other comprehensive
income (Note 2)
Purchase(Notes) 1. Profit or loss contained in total gain and loss is included in “Finance income” and “Finance costs.” Of profit or loss contained
in total gain and loss, the amount attributable to changes in unrealized gain or loss related to financial assets measured atfair value through profit or loss held as of the fiscal year-end was ¥(68) million and ¥(163) million for the fiscal years
ended December 31, 2018 and December 31, 2019, respectively.
2. Other comprehensive income contained in total gain and loss is related to financial assets measured at fair value throughother comprehensive income as of the fiscal year-end. These gain and loss, net of tax effects, are included in “Net change
in fair value of financial assets measured through other comprehensive income.”
3. Other consists mainly of redemption and foreign currency translation differences.

―86―

The following table shows a reconciliation of the opening balance to the closing balance of financial liabilities whose fair value
measurement is categorized within Level 3.
(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Financial liabilities
Financial liabilities
measured at fair value measured at fair value
through profit or loss through profit or loss
Beginning balance

275

819

9

(2)

Issuance

618－

Settlement

(71)

(91)

Total gain and loss
Profit or loss (Note 1)

Other (Note 2)

(13)

(11)

Ending balance

819

714

(Notes) 1. Profit or loss contained in total gain and loss is included in finance costs. Of profit or loss contained in total gain and loss,
the amount attributable to changes in unrealized gain or loss related to financial liabilities measured at fair value throughprofit or loss held as of the fiscal year-end was ¥0 million and ¥(5) million for the fiscal years ended December 31, 2018and December 31, 2019, respectively.
2. Other consists mainly of foreign currency translation differences.
(4) Equity instruments measured at fair value through other comprehensive income
The Group designates investments in equity instruments held for the purpose of maintaining and strengthening relationships withbusiness partners as equity instruments measured at fair value through other comprehensive income in light of the holding purpose.
1) Fair value by issuer
The fair value by major issuer of investments in equity instruments designated as financial assets measured at fair value throughother comprehensive income
As of January 1, 2018 (Date of transition to IFRS)(Million yen)
IssuerAmountNintendo Co., Ltd.

11,703NIDEC CORPORATION

1,780

HORIBA, Ltd.

810

Wacoal Holdings Corp.

517

SCREEN Holdings Co., Ltd.

471

HISAMITSU PHARMACEUTICAL CO., INC.

448

Nissin Electric Co., Ltd.

445

The Bank of Kyoto, Ltd.

399

Nippon Shinyaku Co., Ltd.

355

Dainichiseika Color & Chemicals Mfg. Co., Ltd.

278

―87―

As of December 31, 2018
(Million yen)
IssuerAmountNintendo Co., Ltd.

8,320

NIDEC CORPORATION

1,404

HORIBA, Ltd.

535

Wacoal Holdings Corp.

413

HISAMITSU PHARMACEUTICAL CO., INC.

401

The Bank of Kyoto, Ltd.

309

Nippon Shinyaku Co., Ltd.

295

Nissin Electric Co., Ltd.

273

SCREEN Holdings Co., Ltd.

235

Mitsubishi UFJ Financial Group, Inc.

179

As of December 31, 2019
(Million yen)
IssuerAmountNintendo Co., Ltd.

12,493NIDEC CORPORATION

1,689

HORIBA, Ltd.

874

Nissin Electric Co., Ltd.

461

Wacoal Holdings Corp.

427

Nippon Shinyaku Co., Ltd.

400SCREEN Holdings Co., Ltd.

383

SPARSHA PHARMA USA, INC.

325

The Bank of Kyoto, Ltd.

320

HISAMITSU PHARMACEUTICAL CO., INC.

262

2) Dividend income(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Investments derecognized during the period

05Investments held as of the fiscal year-end

288

364

Total

288

370

3) Equity instruments measured at fair value through other comprehensive income that were derecognized during the period(Million yen)
Fiscal year ended
December 31, 2018
Fair value at derecognition
Accumulated gain (loss) at derecognition

Fiscal year ended
December 31, 2019
0

422

(12)

176

(Note) The Group has disposed of, through sale, and derecognized equity instruments measured at fair value through othercomprehensive income mainly for the purpose of reviewing relationships with business partners.

―88―4) Transfer to retained earnings
The Group transfers accumulated gain or loss due to changes in the fair value of equity instruments measured through othercomprehensive income to retained earnings in such cases as when the investment is disposed of.
The accumulated gain or loss (net of tax) of other comprehensive income that was transferred to retained earnings was ¥(12)
million and ¥176 million for the fiscal years ended December 31, 2018 and December 31, 2019, respectively. This was mainly
due to derecognition of securities classified as equity instruments measured at fair value through other comprehensive income
by way of sale for the purpose of reviewing business relationships.
(5) Offsetting of financial assets and financial liabilities
Information on offsetting of financial assets and financial liabilities recognized for the same counterparties is as follows:(Million yen)
As ofJanuary 1, 2018
(Date of transition to IFRS)

As ofDecember 31, 2018

As ofDecember 31, 2019

Financial assets
Trade and other receivables
Amount offset in accordance with therequirements for offsetting financial
assets and financial liabilities
Net amount presented in the consolidated
statements of financial position

20,621

21,41615,024(2,739)(1,351)(1,874)

17,882

20,065

13,149Financial liabilities
Trade and other payables
29,34021,625
15,227
Amount offset in accordance with therequirements for offsetting financial(2,739)(1,351)(1,874)assets and financial liabilities
Net amount presented in the consolidated
26,601
20,273
13,353statements of financial position(Note) There are no material amounts that are not offset even though they are covered by an enforceable master netting arrangement
or similar agreement because they do not meet part or all of the requirements for offsetting financial assets and financial
liabilities.
36. Related parties(1) Related party transactions
Related party transactions are priced, taking into account market prices, on terms and conditions equivalent to those that prevailin arm’s length transactions. There are no significant transactions (excluding transactions eliminated in the consolidated financial
statements).
(2) Remuneration for key management personnel
Remuneration for key management personnel is as follows:(Million yen)
Fiscal year ended
December 31, 2018

Fiscal year ended
December 31, 2019

Base remuneration and bonuses

271

262

Share-based payment expense

23

25

Total

295

288

37. Significant subsidiaries
There are no subsidiaries that have non‑controlling interests that are individually material to the Company.

―89―38. Commitments
Commitments for the acquisition of property, plant and equipment and intangible assets are as follows:
As of
December 31, 2018
Acquisition of property, plant and equipment and intangible
assets(Million yen)
As ofDecember 31, 2019

1,354

588

39. Contingent liabilities
Not applicable
40. Subsequent events
The Company resolved, at its meeting of the Board of Directors held on February 14, 2020, to implement “Measures to Strengthen
Profitability.” With this implementation, the Group will implement a call for voluntary retirement, as follows. The details of the callfor voluntary retirement were resolved at the meeting of the Board of Directors held on February 21, 2020.
(1) Reason for the call for voluntary retirement
The Group has set the markets of mobility (automotive), medical devices and sustainable packaging materials as its focus markets,in addition to the mainstay consumer electronics (IT), and aims at “completion of balanced management” by reorganizing andoptimizing its business portfolio.
Of these focus markets, the Group has achieved significant growth in the markets of mobility (automotive), medical devices andsustainable packaging materials mainly through efforts in the utilization of M&A and also anticipates their sustainable growth in
the future. On the other hand, in the IT market, the Group expects market conditions to become severer primarily because of changes
in technological trends, in addition to decrease in demand due to slowing growth in the smartphone market and seasonal variations
in demand. In anticipation of this harsh market environment, the Group has worked to reduce variable expenses and the burden ofinvestments, and also cut down on fixed expenses. As a result, the Group is now able to control costs flexibly when demand falls,
but the Group needs to make further improvements in profitability in order to enhance corporate value.
Based on this awareness, the Company is working on “Measures to Strengthen Profitability” and as part of this, the Company
has decided to call for voluntary retirement.
(2) Overview of the call for voluntary retirement
1) Number of applicants: Approximately 250 people, mainly full-time employees in the Company and its domestic subsidiaries
2) Application period: From April 28, 2020 to May 15, 2020 (planned)
3) Retirement date: June 30, 2020
4) Preferential treatment: Additional retirement payment will be added to the prescribed retirement allowance and for those who
apply, re-employment support services will be provided through outplacement consulting firms.
(3) Estimated losses due to voluntary retirement
The Group plans to recognize additional retirement payment and re-employment support program fees for voluntary retirementof approximately ¥2.0 billion as losses for the fiscal year ending December 31, 2020.

―90―

41. First-time adoption
The Group has adopted IFRS starting from the fiscal year ended December 31, 2019, with the date of transition to IFRS on January
1, 2018. The latest consolidated financial statements prepared in accordance with Japanese GAAP (previous GAAP) are for the fiscal
year ended December 31, 2018.
(1) Exemptions under IFRS 1IFRS 1 requires that, in principle, an entity adopting IFRS for the first time (“first-time adopter”) retrospectively applies therequirements of IFRS. However, for certain requirements of IFRS, IFRS 1 provides mandatory exceptions which prohibit
retrospective application of IFRS in some areas as well as optional exemptions from retrospective application. Major exemptions
applied by the Group upon its transition from Japanese GAAP to IFRS are as follows:
1) Business combinations
A first-time adopter may elect not to apply IFRS 3 “Business Combinations” (“IFRS 3”) retrospectively to businesscombinations that occurred before the date of transition to IFRS. By using this exemption, the Group has not applied IFRS 3
retrospectively for business combinations that occurred before the date of transition. Accordingly, goodwill arising from businesscombinations before the date of transition is based on the book value determined under Japanese GAAP as of the date of transition.
Such goodwill was tested for impairment as of the date of transition, regardless of whether there was any indication of impairment.
2) Exchange differences on translation of foreign operations
The Group has reclassified all cumulative exchange differences on translation of foreign operations as of the date of transition
to IFRS to retained earnings.
3) Leases
The Group has assessed whether a contract existing at the date of transition to IFRS contains a lease on the basis of facts andcircumstances existing at that date.
Lease liabilities and right-of-use assets have been measured as of the date of transition to IFRS. Right-of-use assets have beenmeasured on a lease-by-lease basis, at either their book value as if IFRS 16 “Leases” had been applied since the commencement
date of the lease, or an amount equal to the lease liability for the lease. The Group has determined whether to apply the recognition
exemption for leases of low-value assets and short-term leases on the basis of circumstances at the date of transition to IFRS.
4) Designation of financial instruments recognized before the date of transition to IFRSThe Group has made the designation of financial instruments recognized before the date of transition to IFRS in accordancewith IFRS 9 “Financial Instruments” on the basis of facts and circumstances existing at the date of transition to IFRS.
5) Share‑based payment
The Group has elected not to apply IFRS 2 “Share‑based Payment” to share‑based payment transactions vested before the dateof transition to IFRS.
IFRS 1 prohibits retrospective application of IFRS to estimates, derecognition of financial assets and financial liabilities,
non‑controlling interests, and classification and measurement of financial assets. The Group has applied IFRS prospectively to these
items from the date of transition to IFRS.
(2) Reconciliations for first-time adoption
The reconciliations required to be disclosed under IFRS 1 are as follows. “Reclassifications” include items that do not affectretained earnings and comprehensive income and “Differences in recognition and measurement” include items that affect retained
earnings and comprehensive income.

―91―1) Reconciliation of equity
Reconciliation of equity as of the date of transition to IFRS (January 1, 2018)(Million yen)Accounts underJapanese GAAP

Japanese
GAAP

Differencesinrecognition
andmeasurement

Reclassifications

IFRS

Accounts
under IFRS

Notes

AssetsAssetsCurrent assets

Current assets

Cash and deposits

29,790(499)

Notes and accounts
receivable-trade

48,140(2,460)33(33)

Merchandise andfinished goods

10,474

16,152Work in process

8,055(8,055)

7,095(7,095)

4,099(4,099)Securities

Raw materials andsupplies
Consumption taxes
receivable

29,291(1,009)44,670A

961

27,588

A

3,318
Other

4,481

708

Allowance for doubtful
accounts

(292)

292

111,877(1,770)Total current assets

Inventories

3,318

Other financial assets

106

5,296

Other current assets

58

110,165

Total current assets

Non-current assets
Property, plant andequipment

Cash and cash
equivalents
Trade and otherreceivables

Non-current assets
52,555

5,907

58,462B

Property, plant andequipment

Goodwill

23,645(4,076)

19,569C

Goodwill

Other

13,981477

14,459

7,901

7,901

Intangible assets

Intangible assets
D

Right-of-use assets

Investments and otherassetsInvestment securities

20,299(20,081)
20,428265

20,694I

Other financial assets

111

111

G

Retirement benefit asset

(726)

658

K

(17)

199

Other non-current assets

Total non-current assets

Deferred tax assets

1,385

Other

1,049

(832)

Allowance for
doubtful accounts

(485)

485

112,432－

9,842

122,275

224,310(1,770)9,901

232,440

Total non-current assets
Total assets―92―

Investments accounted
for using equity method

218

Deferred tax assets

Total assets

Accounts underJapanese GAAP

Japanese
GAAP

Differencesinrecognition
andmeasurement

Reclassifications(Million yen)
IFRS

Notes

Liabilities
Current liabilities
Notes and accounts
payable-trade
Electronically recorded
obligations - operating
Short-term loans payable
Current portion of longterm loans payable

Liabilities and equity
Current liabilities
51,736

20,900169

8,909(8,909)10,669

1,356

1,356

(1,356)
1,314

Lease obligations

268

Accrued expenses

6,918(6,918)

Income taxes payable

1,441

125

72,806

Trade and other payables

12,025

Borrowings

(6)

1,308

Other financial liabilities

1,299

1,567

D

0

1,930

(1,930)

60

(60)

25

Provision for bonuses
Provision for directors’
bonuses
Provision for
management board
benefit trust
Provision for productwarranties
Other

25

(25)

13,735(6,337)

580

7,978

Total current liabilities

97,190(1,816)

1,904

97,278

138

(138)

E

Non-current liabilities

Bonds payable

2,940

13,514Long-term loans payable

13,514(13,514)(71)

16,383F

Bonds and borrowings

876

1,616

L

Other financial liabilities

1,666

4,754

6,420

D

4,373

401

4,775

G

Lease liabilities
Retirement benefit
liability
Provisions

740

164

Other
Total non-current
liabilities
Total liabilities

Other current liabilities
Total current liabilities

Non-current liabilities

Deferred tax liabilities

Lease liabilities
Income taxes payable,
etc.
Provisions

1,566

25

Lease obligations
Net defined benefit
liability

Accounts
under IFRS

164

8,974

860

9,834

912

(858)

239

293

32,38046

7,061

39,488

129,571(1,770)8,966

136,766

K

Net assets

Deferred tax liabilities
Other non-current
liabilities
Total non-current
liabilities
Total liabilities
EquityShareholders’ equity
Capital stock

12,069

Capital surplus

15,460(433)

Retained earnings

51,337

6,602

(327)

88

15,958(5,320)

239

(1)

F,L
A,B,C,
D,E,F,
57,940 G,H,I,
J,K,L,M(239)
G,H,I,
10,638J
237

Treasury shares
Accumulated othercomprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

12,069

Share capital

15,027

Capital surplus

94,738－935

95,673

224,310(1,770)9,901

232,440―93―

Retained earnings

Treasury shares
Other components ofequityNon-controlling interests
Total equity
Total liabilities and equity

Reconciliation of equity as of December 31, 2018
(Million yen)Accounts underJapanese GAAP

Japanese
GAAP

Differencesinrecognition
andmeasurement

Reclassifications

IFRS

Accounts
under IFRS

Notes

AssetsAssetsCurrent assets
Cash and deposits
Notes and accounts
receivable-trade
Merchandise andfinished goods
Work in process
Raw materials andsupplies
Consumption taxes
receivable

Current assets
16,762(5)(120)

16,63740,867(126)(1,766)38,974

A

12,337

16,0591,890

30,287

A

8,101(8,101)

7,144(7,144)

3,739(3,739)7,183(1,838)

4,071
Other
Allowance for doubtful
accounts
Total current assets

(277)

277

95,859(546)

Inventories

4,071

Other financial assets

45

5,390

Other current assets

293

293

Assets held for sale

341

95,654

Total current assets

Non-current assets
Property, plant andequipment

Cash and cash
equivalents
Trade and otherreceivables

Non-current assets
54,225

4,742

58,967B

Goodwill

22,039(2,168)19,871C

Other

14,188369

14,558

9,455

9,455

(14,769)(28)

015,204

Property, plant andequipment

Intangible assets
Goodwill
Intangible assets
D

Right-of-use assets

Investments and other assets
Investment securities

14,797

Investments accounted
for using equity method

165

15,369I

Other financial assets

Net defined benefit asset

227

(6)

221

G

Retirement benefit asset

Deferred tax assets

584

(13)

571

K

Deferred tax assets

(12)

226

Other non-current assets

Total non-current assets

Other

1,142

(903)

Allowance for doubtful
accounts

(468)

468

Total non-current assets

106,737－

12,503

119,241

202,596(546)

12,845

214,895

Total assets―94―

Total assets

(Million yen)Accounts underJapanese GAAP

Japanese
GAAP

Differencesinrecognition
andmeasurement

Reclassifications

IFRS

Notes

Liabilities
Current liabilities
Notes and accounts
payable-trade
Electronically recorded
obligations - operating
Short-term loans payable
Current portion of longterm loans payable

Liabilities and equity
Current liabilities
44,484

17,583

90

6,772(6,772)

10,858

1,716

1,716

(1,716)
1,415

62,158Trade and other payables

12,574

Borrowings

25

1,441

1,407

1,614

Lease obligations

206

Accrued expenses

7,101(7,101)

840

86

926

300

300

Income taxes payable

Provision for bonuses
Provision for directors’
bonuses
Provision for productwarranties
Other

Total current liabilities

1,963(1,963)

71

(71)

74

(74)

8,620

(3,792)82,709

(388)

444

5,272

112

112

2,080

84,401Other financial liabilities
D

E

Other current liabilities
Liabilities directly
associated with assets
held for sale
Total current liabilities
Non-current liabilities

Bonds payable

2,840

13,525Long-term loans payable

13,525(13,525)(45)

16,319F

Bonds and borrowings

636

1,695

L

Other financial liabilities

1,396

6,593

7,990

D

4,305

238

4,543

G

Lease liabilities
Retirement benefit
liability

1,059

46

(46)
162

Deferred tax liabilities

6,287

Other

1,159

Total non-current
liabilities
Total liabilities

Lease liabilities
Income taxes payable,
etc.
Provisions

Non-current liabilities

Lease obligations
Net defined benefit
liability
Provision for
management board
benefit trust

Accounts
under IFRS

162

Provisions

1,654

7,941

K

(1,333)467

293

29,560

(158)

9,544

38,947

Total non-current liabilities

112,270(546)

11,625

123,348

Total liabilities

Net assets

Deferred tax liabilities
Other non-current
liabilities

EquityShareholders’ equity
Capital stock

12,119

Capital surplus

15,514(443)

Retained earnings

54,138

6,793

Treasury shares
Accumulated othercomprehensive income
Non-controlling interests(1,911)

10

10,347(5,005)

118

(135)

F,L
A,B,C,
D,E,F,
60,931 G,H,I,
J,K,L,
M(1,900)G,H,I,
5,341
J
(17)

Total net assets
Total liabilities and net assets

12,119

Share capital

15,071

Capital surplus

90,326－

1,220

91,546

202,596(546)

12,845

214,895―95―

Retained earnings

Treasury shares
Other components ofequityNon-controlling interests
Total equity
Total liabilities and equity

Reconciliation of profit or loss and comprehensive income for the fiscal year ended December 31, 2018
(Million yen)Accounts underJapanese GAAPNet sales

Japanese
GAAP

Differencesinrecognition
andmeasurement

Reclassifications

207,404

IFRS

Accounts
under IFRS

Notes

(3,194)204,210

A,B,D(166,337)
Cost of sales,E,GA

Net sales

Cost of sales(170,113)

1,500

2,275

Gross profit

37,291

1,500

(919)

37,872(1,500)1,558

B,C,D, Selling, general and(29,152)
E,G administrative expenses

Selling, general andadministrative expenses

Operating profit(29,210)Gross profit

1,486

(82)

1,404

Other income(3,010)54(2,956)

Other expenses

(184)

(28)

(213)

8,080

(1,708)

582

6,954

Non-operating income

607

(36)

92

663

Non-operating expenses(1,308)

463

(404)

(1,249)Extraordinary income

1,270(1,270)Extraordinary losses(2,552)

2,552

Profit before income taxes

6,097

－

269

6,367

Total income taxes(1,911)－(201)(2,113)

Profit

4,186

－

67

4,254

Reclassifications

Differencesinrecognition
andmeasurement

Share of profit (loss) ofinvestments accounted forusing equity method
Operating profit
I

Finance income

D,F,I,
Finance costs
L

Profit before tax
K

Income tax expense
Profit(Million yen)Accounts underJapanese GAAP
ProfitJapanese
GAAP
4,186

67

IFRS

4,254

ProfitOther comprehensive income

Other comprehensive income

Valuation difference on
available-for-sale securities(3,659)(30)(3,689)I,J

Remeasurements of defined
benefit plans, net of tax

(57)

55

(2)

G

Foreign currency translation
adjustment(1,853)237(1,615)

(40)

35

(5)

(5,611)298(5,312)366(1,058)

Share of othercomprehensive income ofentities accounted
for using equity method
Total other comprehensive
incomeComprehensive income

Accounts
under IFRS

Notes

(1,424)－―96―

Items that will not bereclassified to profit or loss
Net change in fair valueof financial assets
measured through othercomprehensive income
Remeasurements ofdefined benefit plans
Items that may bereclassified to profit or loss
Exchange differences ontranslation of foreign
operations
Share of othercomprehensive income ofinvestments accounted forusing equity method
Total other comprehensive
incomeTotal comprehensive income

(3) Notes on reconciliation of equity and reconciliation of profit or loss and comprehensive income(Reclassifications)
The following items represent major items that have been reclassified to comply with IFRS.
・Time deposits maturing after three months but within one year, which were included in “Cash and deposits” under Japanese
GAAP, are presented as “Other financial assets (current assets)” under IFRS.
・Consumption taxes receivable, which were presented as a separate account under Japanese GAAP, are presented as “Other
current assets” under IFRS.
・Allowance for doubtful accounts against current assets, which was presented as a separate account under Japanese GAAP, is
included in the associated financial assets, which are “Trade and other receivables” and “Other financial assets (current assets),”
under IFRS.
・Merchandise and finished goods, work in process, and raw materials and supplies, which were presented as separate accounts
under Japanese GAAP, are presented collectively as “Inventories” under IFRS.
・Accounts receivable-other, which were included in “Other (current assets)” under Japanese GAAP, are included in “Trade andother receivables” under IFRS.
・Investments accounted for using equity method, which were included in “Investment securities” under Japanese GAAP, arepresented as “Investments accounted for using equity method” under IFRS.
・Under IFRS, investment securities other than investments accounted for using equity method are included in “Other financial
assets (non-current assets).” Financial assets including guarantee deposits, which were included in “Other (investments andother assets)” under Japanese GAAP, are included in “Other financial assets (non-current assets)” under IFRS.
・Allowance for doubtful accounts against non-current assets, which was presented as a separate account under Japanese GAAP,
is included in the associated financial assets, which are “Other financial assets (non-current assets),” under IFRS.
・Electronically recorded obligations – operating and accrued expenses, which were presented as separate accounts underJapanese GAAP, are included in “Trade and other payables” under IFRS.
・Accounts payable-other, which were included in “Other (current liabilities)” under Japanese GAAP, are included in “Tradeand other payables” under IFRS.
・Financial liabilities, which were included in “Other (current liabilities)” under Japanese GAAP, are included in “Other financial
liabilities (current liabilities)” under IFRS.
・“Provision for bonuses,” which was presented as a separate account under Japanese GAAP, is included in “Other current
liabilities” under IFRS.
・Repurchase agreements including supply-for-a-fee transactions, for which the cancellation of inventories was recognized at
the time of supply under Japanese GAAP, are instead recognized as financial liabilities under IFRS.
・Financial assets and financial liabilities expected to be settled on a net basis, which were presented on a gross basis underJapanese GAAP, are presented on a net basis under IFRS when the Group:(a) has a legally enforceable right to set off the balances; and(b) intends either to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
・Financial liabilities, which were included in “Other (non-current liabilities)” under Japanese GAAP, are included in “Other
financial liabilities (non-current liabilities)” under IFRS.
・For items presented as “Non-operating income,” “Non-operating expenses,” “Extraordinary income” and “Extraordinary losses”
under Japanese GAAP, finance-related items are reclassified to “Finance income” or “Finance costs,” and the other items arereclassified to “Other income,” “Other expenses,” or “Share of profit (loss) of investments accounted for using equity method”
under IFRS.

―97―

(Differences in recognition and measurement)
A. Sales recognition
Under Japanese GAAP, net sales were primarily recognized on a shipping basis. Under IFRS, sales are recognized when aperformance obligation is satisfied at a point in time, such as at the time of customer acceptance, or over time. This results in adecrease in “Trade and other receivables” and an increase in “Inventories.”
Payments to customers relating to goods supplied for a fee, which were included in “Cost of sales” under Japanese GAAP, areoffset against sales as consideration paid to customers under IFRS.
B. Property, plant and equipment
Property, plant and equipment, which were depreciated primarily by using the declining-balance method for some period in thepast under Japanese GAAP, are depreciated by using the straight-line method from initial recognition under IFRS.
C. Goodwill
Goodwill, which was amortized over a set period under Japanese GAAP, is not amortized under IFRS. Impairment of goodwill,
which was assessed only when there was an indication of impairment under Japanese GAAP, is tested in each period under IFRS.
On the basis of the business plan as of the date of transition to IFRS, the Group tested each cash-generating unit (or a group of
cash-generating units) for impairment, and identified that the recoverable amount was below the book value including goodwill. As
a result, impairment losses of ¥3,022 million on goodwill mainly in association with AR Metallizing N.V. have been recognized in
the Industrial Materials segment. The recoverable amount is measured at value in use, which is calculated by discounting future
cash flows at a discount rate of 9.0%.
D. Leases
Under Japanese GAAP, a lessee classified each of its leases as either a finance lease or an operating lease and accounted for
operating leases in a manner similar to accounting for ordinary rental transactions. Under IFRS, a lessee recognizes lease liabilities
and right-of-use assets at the commencement date of the lease. The lease liabilities are measured at the present value of future lease
payments at the commencement date, and the right-of-use assets are measured at the amount of lease liabilities adjusted for prepaid
lease payments made before the commencement date, initial direct costs and an estimate of costs to fulfill the obligation ofrestoration.
E. Obligation for paid absences
Obligation for unused paid absences, which was not recognized under Japanese GAAP, is recognized as a liability under IFRS.
F. Bonds
In accounting for convertible bonds (bonds with stock acquisition rights), consideration of bonds and consideration of stockacquisition rights were recognized collectively rather than separately under Japanese GAAP, while the liability component and theequity component are recognized separately as a compound financial instrument under IFRS.
G. Post-employment benefits
Under Japanese GAAP, actuarial gains and losses and past service cost were recognized in other comprehensive income, andsubsequently expensed over a certain future period. Under IFRS, actuarial gains and losses are recognized in other comprehensive
income (as “Remeasurements of defined benefit plans”) as incurred and immediately reclassified to retained earnings. Past service
cost is recognized in profit or loss as incurred.
H. Exchange differences on translation of foreign operations
By applying an exemption provided in IFRS 1, the cumulative exchange differences on translation of foreign operations havebeen deemed to be zero as of the date of transition to IFRS and all reclassified to retained earnings.

―98―

I. Financial instruments
Under Japanese GAAP, financial instruments such as shares whose fair value was difficult to determine were basically carried atcost, and impairment losses were recognized when the value in substance declined significantly. Under IFRS, such financial
instruments are determined at fair value, and the changes in fair value are basically recognized in profit or loss; provided that theGroup may elect to recognize the changes in fair value in other comprehensive income for those classified as equity instruments
which are not held for sale.
If shares (preference shares, etc.) for which the valuation differences may be recognized in other comprehensive income underJapanese GAAP do not satisfy the definition of an equity instrument under IFRS, the valuation differences are recognized in profit
or loss in accordance with the classification of financial assets required by IFRS 9 “Financial Instruments.”
J. Reclassification of net change in fair value of financial assets measured through other comprehensive income to retained earnings
Under Japanese GAAP, items constituting profit that had been included in other comprehensive in the current or prior periods
were reclassified to valuation difference on available-for-sale securities. Under IFRS, net change in fair value of financial assets
measured through other comprehensive income will not be reclassified subsequently to profit or loss.
K. Tax effect accounting
The recognition of tax effects of changes in temporary differences and reexamination of the recoverability of deferred tax assets
upon the application of IFRS have resulted in changes in deferred tax assets and deferred tax liabilities.
L. Written put options held by non‑controlling interests
Under Japanese GAAP, written put options on shares of subsidiaries granted to owners of non-controlling interests were
accounted for as derivatives. Under IFRS, a financial liability is recognized initially at the present value of the redemption amount,and is reclassified from capital surplus. Subsequently, the changes in fair value are recognized in profit or loss.
M. Retained earnings
Adjustments to retained earnings due to the transition to IFRS are as follows:(Million yen)
As of January 1, 2018
(Date of transition to IFRS)As of December 31, 2018

A. Sales recognition

(53)

(178)

B. Property, plant and equipment

7,656

6,162

C. Goodwill(4,001)(2,393)－(69)

E. Obligation for paid absences

(767)

(795)

F. Bonds

(232)

(255)

G. Post-employment benefits
H. Exchange differences ontranslation of foreign operations
I. Financial instruments
J. Reclassification of net change infair value of financial assets
measured through othercomprehensive income toretained earnings
K. Tax effect accounting

(111)

55

3,687

3,687

244

238

1,335

1,324

(1,677)(1,753)－(92)

D. Leases

L. Written put options held by
non‑controlling interests

Other
522
Total adjustments to retained
6,602
earnings(Note) “Tax effect accounting” includes tax effects recognized in relation to other items.

―99―

863
6,793

(4) Reconciliation of cash flows
The major difference between the consolidated statements of cash flows disclosed under Japanese GAAP and the consolidated
statements of cash flows disclosed under IFRS is that lease payments (excluding the interest component) under operating leases incash flows from operating activities have been reclassified as repayments of lease liabilities in cash flows from financing activities
as a result of applying IFRS 16.
42. Approval of consolidated financial statements
The consolidated financial statements for the fiscal year ended December 31, 2019 were approved on March 24, 2020 by Junya
Suzuki, Chairman of the Board, President and CEO of the Company and Hayato Nishihara, Senior Executive Vice President, CFO,
Director of the Board of the Company.

―100―