This document has been translated from the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original, the original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any
other forms of damages arising from the translation.

Disclosure on the Internet accompanying
the Notice of Convocation of the 163rd Ordinary General Meeting of Shareholders
Company’s Systems and Policies
Consolidated Statement of Changes in Net Assets
Notes to Consolidated Financial Statements
Non-consolidated Statement of Changes in Net Assets
Notes to Non-consolidated Financial Statements(from April 1, 2021 to March 31, 2022)

Denka Co., Ltd.
(Securities Code: 4061)
The content of this document is posted on the website of Denka Co., Ltd. (“the Company”)(https://www.denka.co.jp/eng/), pursuant to laws and regulations and Article 16 of the Articles ofIncorporation of the Company.

1Company’s Systems and Policies(1) Systems to Ensure the Appropriateness of Operations
The Company is enacting the (Denka Mission) which represents our uppermost mission statement, andaction guidelines (Denka Principles) which make the corporate philosophy “The Denka Value.” Under thiscorporate philosophy, the Company has determined the following by the resolution of the Board of Directors
as a system to ensure the appropriate execution of duties.
1) Systems to ensure that Directors’ and employees’ execution of duties complies with laws andregulations and the Articles of Incorporation
The Board of Directors of the Company performs important decision-making concerning businessexecution in accordance with laws and regulations, the Articles of Incorporation, and the Board of
Directors Regulations and oversees Directors’ and Executive Officers’ execution of duties.
Executive Directors and Executive Officers execute their duties under supervision by the President
and oversee employees’ execution of duties at divisions for which they are responsible.
The Audit & Supervisory Committee performs investigations of matters including thedevelopment and implementation status of internal control systems by attending corporate andother important meetings, receiving briefings from Directors, reviewing important documents, andother means, and audits the execution of duties by Directors from an independent standpoint.
The Company establishes the Denka Group Ethics Policy as a set of action guidelines for all theofficers and employees of the Company and its subsidiaries concerning compliance, and corporate rules
and regulations are established to ensure compliance with specific laws and regulations and the Articles
of Incorporation.
In accordance with the provisions of the Denka Group Ethics Policy, the Company maintains a
resolute attitude against antisocial forces and does not provide any payoff. Based on this policy, theCompany establishes an internal system.
Regarding internal audits, the Company establishes the Internal Control Department as a dedicateddepartment that conducts comprehensive internal auditing. In addition, regarding specialized or specificfields, business units and various committees provide education on compliance with rules andregulations and audit compliance statuses according to functions and report to the responsible officers,
as necessary.
The Internal Control Department also performs assessment of statuses of design and operation ofinternal controls for the purpose of preparing a “report of internal control over financial reporting”
specified by the Financial Instruments and Exchange Act and reports the result to the responsible
officer.
The Company establishes the Compliance Hotline System to supplement internal audits by thedepartments described above to swiftly identify and address any violations.
2) Systems for storage and management of information related to Directors’ execution of duties
The Company records information related to Directors’ execution of duties in accordance with theBoard of Directors Regulations, job descriptions, and other internal rules and regulations, and stores andmanages such information based on the document retention regulations.
3) Rules and other systems for management of risk of loss
The Company formulates the Risk Management Guidelines to provide policies for responding toincidents that may greatly affect corporate activities.
Regarding such items as the environment, health and safety, and quality control, crossorganizational committees are established to comprehensively manage risks. Regarding items unique todepartments, the relevant departments are responsible for managing associated risks.
4) Systems to ensure that Directors’ execution of duties is efficient
The Company adopts the executive officer system to optimize the management decision-making
function of the Board of Directors and to strengthen each function of business execution and oversightby separating them.
Apart from the Board of Directors as the decision-making body, the Company establishes theManagement Committee consisting of Directors (including Directors who are Audit & Supervisory
Committee Members) and some Executive Officers. Depending on the agenda, relevant executive
officers also participate in the meeting of the Management Committee to streamline and acceleratedeliberation on important managerial matters.
2For such important matters as budget formulation and capital investment, the Company sets up
deliberative councils or special committees by function.
The job descriptions specify basic duties and decision-making authority of Directors, Executive
Officers, and employees to enhance efficiency of execution of duties.
5) Systems to ensure the appropriateness of operations of the GroupRegarding management of subsidiaries, the Company specifies organizations responsible for eachsubsidiary. These supervisory organizations take responsibility for supervising. In addition, they provide
guidance, administration, and oversight in accordance with the situation of each subsidiary.
Regarding ordinary operations of subsidiaries, the Company respects the autonomy andindependence of each affiliated company. Regarding compliance with laws and regulations and social
norms, the Company applies the Denka Group Ethics Policy and other relevant rules and regulations toaffiliated companies and provides education and oversight.
i) Systems for reporting of matters relating to execution of duties by subsidiaries’ directors etc. tothe parent company
The Company dispatches directors, etc. to subsidiaries from the organization that is responsible forthe subsidiaries and information about important matters for the subsidiaries is exchanged and discussed
at meetings of the Company’s Board of Directors, etc.
Regarding execution of duties, taking into account the degree of impact on the Group as a whole,subsidiaries report matters of greater importance to the parent company, that is the Company, via theirsupervisory organizations, in accordance with the Job Descriptions for Management of AffiliatedCompanies.
ii) Subsidiaries’ rules and other systems for management of risk of loss
The Company responds to incidents that may greatly affect subsidiaries’ corporate activities inaccordance with the Risk Management Guidelines.
Regarding such items as the environment, health and safety, and quality control at a subsidiary,
directors, etc. dispatched to the subsidiary from the supervisory organization responsible for thesubsidiary provide advice and guidance through discussion with specific organizations responsible foreach such item.
iii) Systems to ensure that execution of duties by subsidiaries’ directors, etc. is efficient
The Company dispatches directors, etc. to subsidiaries from the supervisory organizations
responsible for the subsidiaries to facilitate information sharing between the Company and subsidiaries
and to execute business systematically and efficiently by the Group as a whole.
Depending on the degree of importance of subsidiaries, the Company has subsidiaries introduce theshared accounting system and provides resources of administrative organizations to enhance efficiencyof execution of duties of subsidiaries.
iv) Systems to ensure that execution of duties by subsidiaries’ directors, etc. and employees
complies with laws and regulations and the Articles of Incorporation
The Company establishes the Denka Group Ethics Policy applicable to the Group, including to
subsidiaries, and encourages all the officers and employees of subsidiaries to ensure compliance withlaws and regulations. At the same time, the Company manages subsidiaries in accordance with the Job
Descriptions for Management of Affiliated Companies.
The Company’s Internal Control Department is principally responsible for internal audits ofsubsidiaries and conducts internal auditing, in a timely manner, receiving support of the Company’s
Legal Department, as necessary.
The Company establishes a whistleblower system for early detection and correction of noncompliant conduct at subsidiaries.
6) Systems concerning employees who provide assistance to the Audit & Supervisory Committee,
matters concerning securing effectiveness of instructions to the employees and mattersconcerning independence of such staff from Directors (excluding Directors who are Audit &Supervisory Committee Members)
The Company sets up the Audit Committee Office as an organization that provides assistance to the
Audit & Supervisory Committee and assigns at least one exclusively assigned employee to the Audit
Committee Office based on consultation with the Audit & Supervisory Committee in advance. The
3

Audit Committee Office serves as the secretariat for the Audit & Supervisory Committee and is directly
commanded by the Audit & Supervisory Committee.
The Audit & Supervisory Committee are consulted in advance about performance evaluation of
employees who belong to the Audit Committee Office and determination of any other personnel
matters.
7) Systems concerning reporting to the Audit & Supervisory Committee by the Company’s
Directors (excluding Directors who are Audit & Supervisory Committee Members of theCompany) and employees and by those of subsidiaries, other systems concerning reporting to the
Audit & Supervisory Committee, and systems to ensure that they do not receive unfavorable
treatment because of their reporting to the Audit & Supervisory Committee
Directors (excluding Directors who are Audit & Supervisory Committee Members of the Company),
Executive Officers, and employees of the Company and those of subsidiaries report on their duties, byorganization or by subsidiary, periodically or as necessary, in accordance with the instructions and/or
requests of the Audit & Supervisory Committee. In addition, if they discover matters that will or may
cause significant harm to the Group, they will immediately report them to the Audit & Supervisory
Committee either directly or indirectly via the appropriate lines of command or Compliance Hotline
System.
The Internal Control Department reports the results of internal audits of the Company andsubsidiaries periodically to the Audit & Supervisory Committee.
The Company establishes a whistleblower system as a system available for all the officers andemployees of the Company and subsidiaries for reporting non-compliant conduct, designating the Audit
Committee Office as one of the contacts of the whistleblower system. If the Audit Committee Office,etc. receives a report, the content of the report is reported to the Audit & Supervisory Committee.
It is specified in the Denka Group Ethics Policy that no person who reports on non-compliant
conduct using the whistleblower system, etc. receives unfavorable treatment because of his/herreporting.
8) Policy for treatment of expenses, etc. incurred by Audit & Supervisory Committee Members’
execution of duties and other systems to ensure that the Audit & Supervisory Committee
effectively perform auditing
Directors secure the necessary budget in order not to impede execution of duties by Audit &Supervisory Committee Members. At the same time, when an Audit & Supervisory Committee Member
makes a claim in accordance with Article 399-2, Paragraph 4 of the Companies Act, the expenses andliabilities relevant to the claim will be paid without delay, unless it is deemed that they are unnecessaryfor execution of duties of the said Audit & Supervisory Committee Member.
The Internal Control Department and other internal auditing organizations collaborate with the
Audit & Supervisory Committee and coordinate with its auditing so that both internal auditingorganizations and the Audit & Supervisory Committee can perform their duties efficiently.
(2) Operational Status of Systems to Ensure the Appropriateness of Operations
1) Compliance structure
Based on the Denka Group Ethics Policy, which defines the fundamentals of compliance, and theWhistleblowing Policy, the Company continued to implement awareness activities, including training,
during the fiscal year under review.
2) Business execution of Directors
The Board of Directors of the Company is composed of nine members, including four Outside
Directors, and meetings of the Board of Directors were held 13 times during the fiscal year underreview. Based on laws and regulations, the Articles of Incorporation, and the Board of Directors
Regulations, decision-making was conducted regarding important business execution, reports werereceived from Directors and Executive Officers regarding required business execution conditions, andappropriate supervision was provided.
Additionally, with the intent of deliberation and consideration for important management issues, theManagement Committee, composed of Directors (including Directors who are Audit & Supervisory
Committee Members), and a portion of Executive Officers, was held once a month, with the intent of
increasing efficiency of consideration of important management issues and accelerating decisionmaking.

43) Business execution of the Audit & Supervisory Committee
The Audit & Supervisory Committee of the Company is composed of four members, including
three Outside Directors, and meetings of the Audit & Supervisory Committee were held 14 times
during the fiscal year under review. Additionally, the Audit & Supervisory Committee worked closelywith the Internal Control Department and other departments to perform efficient and effective audits of
the Company’s divisions and departments, business sites, and subsidiaries, in addition to receiving
briefings on the status of business execution, etc. at periodic divisional report meetings. They heldnecessary discussions concerning these and other activities at meetings of the Audit & Supervisory
Committee.
Furthermore, to assist the duties of the Audit & Supervisory Committee, the Audit Committee
Office was established and exclusive employees were assigned.
4) Risk management structure
To respond appropriately to events that may greatly affect the corporate activities of theCompany, the Risk Management Guidelines were defined, containing categories of specific types ofrisk that may occur, and a controlling division and emergency contact structure are maintained. During
the fiscal year under review, the Risk Management Guidelines were revised in order to speed up the
response in the event of a crisis and to strengthen supervisory functions. Meetings of the Risk
Management Committee as defined by the above guidelines and various other meetings related to risks
are held periodically and as required, and report to the Board of Directors.
5) Implementation of internal audits
Based on the internal auditing plan, the internal auditing organizations of the Company
implement internal audits of the Company and Group companies, and while reporting the results
to the Board of Directors and the Audit & Supervisory Committee, cooperate closely with the
Audit & Supervisory Committee, working together to conduct operations that are mutually
efficient.
(3) Basic Policies regarding the Control of the Company
The following matters were decided at a meeting of the Board of Directors of the Company
Under the Company’s corporate philosophy, the Denka Value, the Company strives to strengthen its
business foundation by improving its earning power and expanding the scope of operations, while making
every effort to continue being a company that can win the trust and sympathy of society, and in so doing
working to improve the Company’s corporate value and the common interests of the shareholders from a
medium- to long-term perspective.
Also, under this basic policy, the management plan “Denka Value up” (five years from fiscal 2018), hasbeen formulated, to strive for the realization of continuous and sound growth.
The Company has not established so-called takeover defense countermeasures, but for certain large scalepurchases that may damage corporate value and large scale purchases where sufficient information or time
may not be provided to shareholders in order to consider whether it should accept or reject such a purchaseattempt, within the scope permitted by laws and regulations, regulations of financial instruments exchanges
etc., appropriate interactions are taken in order to prevent damage to the Company’s corporate value and thecommon interests of its shareholders.

5Consolidated Statement of Changes in Net Assets(From April 1, 2021 to March 31, 2022)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning of the fiscal
year
Cumulative effects of changes inaccounting policies

36,998

Restated balance

36,998

Capital surplus
49,397Retained earnings
168,878

Treasury stock

Total
shareholders’equity(7,677)

247,59622
49,39722

168,900(7,677)

247,618

Changes of items during the fiscal
year
Dividends from surplus(11,647)(11,647)

Profit attributable to owners of parent

26,01226,012

Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve forland
Net changes of items other thanshareholders’ equity

0

(9)

(9)

41

41

(136)

(136)
–

Total changes of items during the
fiscal year–

0

14,22832

14,260

Balance at end of the fiscal year

36,99849,397

183,128(7,645)

261,879(Millions of yen)

Accumulated other comprehensive income
Valuation
Total
NonTotaldifference Deferred Revaluation Foreign Remeasurements valuation controllingcurrency
gains
or
on availablenet assets
reserve forandof definedtranslation
losses onlandbenefit plans translation interests
for-saleadjustment
hedgesadjustments
securities

Balance at beginning of the fiscal
year
Cumulative effects of changes inaccounting policies

16,143

Restated balance

16,143(442)

10,245(3,004)(3,090)19,852

2,588

–
(442)

10,245(3,004)(3,090)19,852270,03622

2,588

270,059

Changes of items during the fiscal
year
Dividends from surplus–(11,647)

Profit attributable to owners of parent–

26,012

Purchase of treasury stock

–

(9)

–

41

–

(136)

Disposal of treasury stockReversal of revaluation reserve forland
Net changes of items other thanshareholders’ equity
Total changes of items during the
fiscal year
Balance at end of the fiscal year

740

93

132

5,415

358

6,740

1,033

7,774

740

93

132

5,415

358

6,740

1,033

22,034

16,883(348)

10,3772,410(2,731)

26,592

3,621

292,094(Note) Amounts are rounded down to the nearest million yen.

6

Notes to Consolidated Financial Statements(Significant Matters, etc. Providing the Basis for Preparation of Consolidated Financial Statements)
1. Scope of consolidation(1) Consolidated subsidiaries
Number of consolidated subsidiaries: 47
Names of principal consolidated subsidiaries:
Denka Singapore Pte., Ltd.
Denka Advantech Pte., Ltd.
Denka Performance Elastomer LLC
DENKA Polymer Co., Ltd.
Hinode Kagaku Kogyo
Akros Trading Co., Ltd.
(2) Principal non-consolidated subsidiaries
Names of principal non-consolidated subsidiaries:
KAMBARA NAMAKON K.K.
SANSHIN BUSSAN K.K.
DS POVAL K.K.
Reason for exclusion from the scope of consolidation:
The non-consolidated subsidiaries are excluded from the scope of consolidation because they are both
small in scale and the aggregate amounts of their total assets, net sales, net income or loss (amountprorated to the ownership), and retained earnings (amount prorated to the ownership), etc. have nomaterial impact on the consolidated financial statements.

7

2. Application of the equity method(1) Non-consolidated subsidiaries and affiliates to which the equity method is applied
Number of non-consolidated subsidiaries and affiliates to which the equity method is applied: 14
Names of principal non-consolidated subsidiaries to which the equity method is applied:
KAMBARA NAMAKON K.K.
SANSHIN BUSSAN K.K.
Names of principal affiliates to which the equity method is applied:
TOYO STYRENE Co., Ltd.
JUZEN Chemical Corporation
Denak Co., Ltd.,
Kurobegawa Electric Power Company(2) Non-consolidated subsidiaries and affiliates to which the equity method is not applied
Name of the principal non-consolidated subsidiary to which the equity method is not applied:
DS POVAL K.K.
Name of the principal affiliate to which the equity method is not applied:
Shogawa Nama Concrete Kogyo K.K.
Reason for not applying the equity method:
The non-consolidated subsidiary and affiliate not subject to the equity method are excluded fromapplication of the equity method because their individual impacts on consolidated net income or loss,
retained earnings, etc., are negligible, and their overall impact on the consolidated financial statements isimmaterial.
3. Accounting periods of consolidated subsidiaries
Among the consolidated subsidiaries, Denka Singapore Pte., Ltd. and 33 other subsidiaries have ayear-end balance sheet date of December 31.
Necessary adjustments are made in preparing the consolidated financial statements to reflect any
significant transactions that took place between that date and the consolidated balance sheet date.

84. Accounting policies(1) Standards and methods for valuation of principal assets
Securities
Available-for-sale securities
Securities other than shares, etc. that do not have a market priceStated at market value(Valuation difference is reported as a separate component of net assets. The cost of sales iscalculated principally using the moving-average method.)
Shares, etc. that do not have a market priceStated principally at cost using the moving-average method
Derivatives
Stated at market value
Inventories
Stated principally at cost using the weighted-average method(Balance sheet amounts are calculated by writing down their net realizable value when there isevidence of deterioration in value.)(2) Depreciation method for principal depreciable assets
Property, plant and equipment
Principally, the straight-line method is applied.
Intangible assets
Principally, the straight-line method is applied. (However, software for internal use is amortized by
the straight-line method over the estimated internal useful life (principally five years).)
Lease assets
For finance leases that do not transfer the ownership of the lease assets to the lessee, the straightline method with no residual value is applied, regarding the lease term as the useful life.
Furthermore, for consolidated subsidiaries overseas preparing their financial statements inaccordance with International Financial Reporting Standards, International Financial ReportingStandard 16 Leases (“IFRS 16”) is applied. Under IFRS 16, lessees record all leases as assets andliabilities on the balance sheet, in principle, and the straight-line method is used as the depreciation
method for right-of-use assets recorded as assets.
(3) Standards of accounting for principal allowances and provisions• Allowance for doubtful accounts
Allowance for doubtful accounts is provided to cover possible losses on receivables. The
Company records an estimated irrecoverable amount based on the historical write-off rate forordinary receivables and based on assessment of recoverability of individual receivables for
specific doubtful accounts.

9• Provision for bonuses
The Company provides reserve for payment of bonuses to employees based on the amount of
estimated employees’ bonuses.
• Provision for stock benefits
In order to provide benefit from the Company’s shares, the amount of projected equity benefit at
the end of the consolidated fiscal year is recorded, based on officer stock delivery regulations for
Directors (excluding Directors who are Audit & Supervisory Committee Members and Outside
Directors).
(4) Other significant matters providing the basis for preparation of consolidated financial statements• Method of amortization of goodwill and amortization period
Goodwill is amortized within twenty years over a reasonable period, and amortized using thestraight-line method.
• Method of hedge accounting
The Company adopts the deferral method of hedge accounting. Interest rate swaps that satisfy thecriteria for application of the special method are accounted for by the special method provided by
the accounting standards. Forward exchange contracts that satisfy the criteria for application of theappropriation method are accounted for by the appropriation method.
• Method of accounting for retirement benefits
In order to prepare for payment of employees’ retirement benefits, based on the projected amounts
at the fiscal year-end, the amount of retirement benefit obligation from which the amount of plan
assets is deducted is recorded as net defined liability.
In calculating retirement benefit obligations, the benefit formula basis is adopted for attributing
expected benefits to periods.
Prior service cost is principally recorded by the straight-line method over certain periods(principally 10 years) within the average remaining service period of employees expected to receive
benefits.
Actuarial gains and losses are principally recorded by the straight-line method over certain periods(principally 10 years) within the average remaining service period of employees expected to receive
benefits, commencing with the following fiscal year.
Unrecognized actuarial gains and losses and unrecognized prior service cost are recorded, after
adjustment for tax effects, as remeasurements of defined benefit plans in accumulated othercomprehensive income in the net assets section.
• Revenue and expense recognition standards
The details of the main performance obligations in the major businesses related to revenue fromcontracts with the Group’s customers and the timing at which the Group typically satisfies these
performance obligations (when it typically recognizes revenue) are as follows.
(1) Revenue recognition related to product sales
Revenue is recognized when control of a product is transferred to a customer.

10(2) Revenue recognition related to transactions that include variable consideration
Regarding the consideration paid to customers, such as some sales rebates in product sales,
revenue is recognized by deducting from the transaction price.
(3) Revenue recognition related to agent transactions
Regarding purchase and sale transactions of goods and services mainly in the trading company
business, as a result of determining the role (principal or agent) in providing goods and services
to customers, the Group recognizes revenue as a net amount for agent transactions.
(4) Revenue recognition related to construction contracts
Regarding construction contracts, revenue is recognized over time as performance obligations are
satisfied. Progress toward satisfaction of performance obligations is measured based on
construction costs incurred by the end of each reporting period relative to the ratio of total
forecasted construction costs. For construction contracts with a very short period from thetransaction start date to the time when it is expected that the performance obligations will be fully
satisfied, and for small construction contracts, revenue is not recognized over time, but
recognized when performance obligations are fully satisfied.
(Notes to Changes in Accounting Policies)(Application of the Accounting Standard for Revenue Recognition)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020; hereinafter “Revenue Recognition Standard”) and other standards from the beginning of the
fiscal year under review. The Company recognizes revenue when control of a promised good or service istransferred to a customer in an amount that reflects the consideration to which the Company expects to beentitled in exchange for those goods and services.
The main changes due to application of the Revenue Recognition Standard and other standards are as
follows.
(1) Revenue recognition related to product sales
Regarding product sales at the Company and domestic subsidiaries, revenue was recognized at thetime of product shipment in the past, however the Company changed to a method of recognizing
revenue when control of the product is transferred to the customer.
(2) Revenue recognition related to transactions that include variable consideration
Consideration paid to customers, such as some sales rebates in product sales, was treated as selling,
general and administrative expenses in the past, however the Company changed to a method ofrecognizing revenue by deducting from the transaction price.
(3) Revenue recognition related to agent transactions
Regarding purchase and sale transactions of goods and services mainly in the trading company
business, revenue was recognized as a total amount in the past, however the Company changed to amethod of recognizing revenue as a net amount as a result of determining the role (principal or agent)in providing goods and services to customers.

11

(4) Revenue recognition related to construction contracts
Regarding construction contracts, in the past, when the certainty of results was recognized for the
progress part of construction, the construction progress standard was applied, and for other construction
work, the construction completion standard was applied. However, the Company changed to a methodof recognizing revenue over time as performance obligations are satisfied. Progress toward satisfactionof performance obligations is measured based on construction costs incurred by the end of eachreporting period relative to the ratio of total forecasted construction costs. For construction contracts
with a very short period from the transaction start date to the time when it is expected that theperformance obligations will be fully satisfied, and for small construction contracts, revenue is notrecognized over time, but recognized when performance obligations are fully satisfied.
The Company applies the Revenue Recognition Standard, etc. in accordance with the transitional
treatment provided for in the proviso to Paragraph 84 of the Revenue Recognition Standard. The
cumulative impact of retrospectively applying the new accounting policies to prior periods is adjusted
to retained earnings at the beginning of the fiscal year under review, with the new accounting policies
applied from the beginning balance. However, the Company applies the method provided for in
Paragraph 86 of the Revenue Recognition Standard, and does not apply the new accounting policies
retrospectively to contracts for which substantially all revenue amounts had been recognized prior to
the beginning of the fiscal year under review in accordance with the previous treatment.
As a result, balance at the beginning of the fiscal year for retained earnings in the consolidated
statement of changes in net assets increased by 22 million yen. In addition, for the fiscal year underreview, net sales decreased by 31,278 million yen, and operating income, ordinary income and income
before income taxes decreased by 285 million yen, respectively.
Due to the Company’s application of the Revenue Recognition Standard, “notes and accounts
receivable-trade,” which was presented under “current assets” in the consolidated balance sheet of theprevious fiscal year, has been included under “notes and accounts receivable-trade, and contract assets”
for the fiscal year under review.
(Application of the Accounting Standard for Fair Value Measurement)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No.
30, July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the beginning of
the fiscal year under review, and will prospectively apply the new accounting policies stipulated by the Fair
Value Measurement Standard, etc. in accordance with the transitional treatment provided in Paragraph 19 of
the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019). There is no impact on gains or losses for the fiscal year
under review.

12

(Notes to Accounting Estimates)
Valuation of goodwill(1) Stated amount on the consolidated financial statements for the fiscal year under review
Goodwill
Impairment loss

5,989 million yen
968 million yen(2) Other information to help understanding the details of estimates
1) Calculation method
When there is an indication of impairment in any of the asset groups including goodwill, theGroup estimates the undiscounted future cash flows to be generated from such asset group. If thecarrying amount of the asset group exceeds the total amount of undiscounted future cash flows, animpairment loss will be recognized, the carrying amount being written down to the recoverable
amount.
Additionally, when the annual impairment test is needed, the Group measures the fair value ofeach asset group including goodwill. If the carrying amount of the asset group exceeds its fairvalue, the carrying amount will be written down to the fair value and treated as loss for the fiscal
year under review.
Goodwill of the Group is principally related to Life Innovation business.
In the fiscal year under review, for goodwill related to Life Innovation business, no impairment
loss has been recognized as the total amount of undiscounted future cash flows to be generated
from the asset group including the goodwill exceeded the carrying amount of the asset group.
2) Principal assumptions
Undiscounted future cash flows to be generated from the asset group including goodwill related
to Life Innovation business are calculated on the basis of the business plans that are prepared,reflecting past experiences and external and internal information, and approved by the Board of
Directors. Principal assumptions are the time of completion of developing new products, etc. andthe sales forecasts after their launch.
3) Impacts on the consolidated financial statements for the next fiscal year
All the principal assumptions included in the business plans are based on information available
to the Group as of the balance sheet date and certain premises deemed to be reasonable. Whendrastic changes in business environment occur or due to other factors, impairment loss may berecognized in the next fiscal year.

13

(Notes to the Consolidated Balance Sheet)
1. Assets pledged as collateral
Investment securities:

226 million yen

Liabilities corresponding to pledged assets
Notes and accounts payable-trade and other liabilities:
2. Accumulated depreciation of property, plant and equipment:

174 million yen
476,094 million yen

3. Guarantee obligations, etc.
Guarantee for loans from financial institutions:

9,439 million yen(Notes to the Consolidated Statement of Changes in Net Assets)
1. Type and total number of shares issued and type and number of shares of treasury stock
Number of shares at
Increase during the Decrease during the Number of shares atthe beginning of thethe end of the year
year
year
year
Shares issued
Common stock
88,555,840－－
88,555,840
Total
88,555,840－－
88,555,840
Treasury stock
Common stock
2,335,451
2,443
13,2052,324,689(Notes 1 and 2)
2,335,451
2,443
13,2052,324,689
Total
Notes: 1. The 2,443 increase in the number of shares of common stock of treasury stock was due to thepurchase of shares constituting less than one unit.
2. The 13,205 decrease in the number of shares of common stock of treasury stock was due to thedecrease by sale of 305 shares constituting less than one unit and the distribution of 12,900
shares of the Company under the employee stock ownership plan.
2.

Dividends(1) Payment of dividends• Dividends for common stock
Resolution
Ordinary General
Meeting of
Shareholders held on
June 22, 2021
Meeting of the Boardof Directors held on
November 8, 2021

Types ofsharesDividends paid Dividends(millions ofper share
yen)
(yen)

Record date

Effective date

March 31, 2021

June 23, 2021

Common
stock

5,608

65.00

Common
stock

6,039

70.00 September 30, 2021 December 2, 202114

(2) Dividends whose record date falls during fiscal 2021 but whose effective date is in the next fiscal
year• Dividends for common stock
The following resolutions are expected to be made.
Dividends paid
Types of
Source of
Resolution(millions ofsharesdividends
yen)
Ordinary General
Meeting ofCommonRetained
6,470
Shareholders to bestock
earnings
held on June 22, 2022

Dividends per
Record dateshare (yen)Effective
date

March 31,2022

June 23,
2022

75.00

(Financial Instruments)
1. Financial instruments
The Group is not engaged in fund investment. The Group’s policy is to procure funds throughbank borrowings and issuance of bonds and/or commercial paper in combination, as necessary.
Notes and accounts receivable-trade, and contract assets are exposed to customer credit risk. For
such risk, management of due dates is implemented in accordance with the credit management rules.
Investment securities mainly consist of stocks, and the market values of listed stocks are determined ona quarterly basis.
Loans payable, bonds payable, and commercial paper are used for working capital (mainly shortterm) and for capital investment. Certain long-term loans payable are exposed to the risk of interest
rate fluctuations. For such risk, interest rate swaps are employed to fix the amount of interest expenses.
Certain business transactions denominated in foreign currencies are exposed to the risk of foreignexchange fluctuations, and for such risk, forward exchange contracts are employed.
Derivative transactions are entered into only in the scope of practical purposes in accordance with theinternal control rules and not for speculative purposes.

152. Fair values of financial instruments
Carrying amounts and market values of the financial instruments and the differences between
carrying amounts and market values as of March 31, 2022 (consolidated balance sheet date of fiscal
2021) are as follows. Shares, etc. that do not have a market price (carrying amount of 23,462 million
yen) are not included in available-for-sale securities. In addition, the note for cash is omitted and thenote for deposits is omitted because deposits comprise short-term instruments whose carrying amountapproximates their fair value.
(Millions of yen)
Carrying amount(*)(1) Notes and accounts receivable-trade,and contract assets(2) Investment securities
Available-for-sale securities
Stocks of subsidiaries and affiliates
Total assets(3) Notes and accounts payable-trade(4) Short-term loans payable(5) Commercial paper(6) Long-term loans payable (*1)(7) Bonds payable
Total liabilities(8) Derivatives (*2)

Market value (*)

Difference

101,026

101,026－

34,204
2,885
138,11750,03240,5458,000
51,48737,000187,065－

34,2042,207
137,438
50,03240,5458,000
51,60836,817
187,003
－

－
(678)
(678)
－
－
－
120
(183)
(62)
－

(*1)

Long-term loans payable includes loans to be repaid within one year.

(*2)

The amount represents a net amount of credits and debts arising from derivative transactions and thefigures in parentheses are recorded as liabilities on the consolidated balance sheet.

3. Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according tothe observability and materiality of inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e. quoted prices in active
markets for assets or liabilities that are the consideration for the measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
(1) Financial assets and financial liabilities measured at fair value(Millions of yen)
SectionFair value
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities

34,20416－－

34,204

(2) Financial assets and financial liabilities not measured at fair value(Millions of yen)
Fair value
SectionLevel 1

Level 2

Level 3

Total

Notes and accounts receivabletrade, and contract assets－

101,026－

101,026

Investment securities
Stocks of subsidiaries andaffiliates
Notes and accounts payabletrade

2,207

－

－

2,207

－

50,032－50,032

Short-term loans payable－

40,545－40,545

Commercial paper

－

8,000

－

8,000

Long-term loans payable－

51,608－51,608

Bonds payable－

36,817－36,817

Note: A description of the valuation technique and inputs used in the fair value measurements
Investment securities
Listed shares are valued using quoted prices. As listed shares are traded in active markets, theirfair value is classified as Level 1.
Derivatives
The fair value is calculated based on the prices provided by the financial institutions. However,interest rate swaps that qualify for the special method are accounted for as part of hedged longterm loans payables, and therefore, the fair value of such interest rate swaps is included in the fairvalue of the corresponding long-term loans payables (Refer to “long-term loans payable” below.).
Forward exchange contracts that qualify for the appropriation method are accounted for as part ofhedged accounts receivable and accounts payable, excluding those associated with forecasted
transactions, and therefore, the fair value of such forward exchange contracts is included in themark (Refer to “accounts receivable-trade” and “accounts payable-trade” below).
Notes and accounts receivable-trade, and contract assets
The fair value of these items is measured using the discounted cash flow method based on theamount of receivables, period to maturity and an interest rate reflecting credit risk, for each
receivable categorized by a specified period, and is classified as Level 2.
Notes and accounts payable-trade, short-term loans payable and commercial paper
The fair value of these items is measured using the discounted cash flow method based on future
cash flows, period to repayment and an interest rate reflecting credit risk, for each liability
categorized by a specified period, and is classified as Level 2.
Long-term loans payable
The fair value of these items is measured using the discounted cash flow method based on thesum of principal and interest, remaining maturities and an interest rate reflecting credit risk, and isclassified as Level 2.

17Bonds payable
The fair value of these items is measured based on market prices. While market prices areavailable, their fair value is classified as Level 2 because they are not traded in an active market.
(Real Estate for Rent)
Disclosure is omitted because the Group does not own real estate for the purpose of gaining rental
revenues or capital gains and the total amount of real estate for rent is immaterial.
(Notes to Revenue Recognition)(1) Disaggregation of revenue from contracts with customers
The relationship between disaggregated revenue and the Group’s reportable segments is as follows.
(Millions of yen)
Electronics&
Innovative
Products

Reportable segment
Elastomers
Life&
PolymerInnovation Infrastructure Solutions
Solutions

Total

Other
businesses(Note 1)

Total

Japan

39,35934,66655,11078,931

208,068

11,935220,003

China
Other
countries
in Asia
Othercountries
Revenuefromcontractswithcustomers
Otherrevenue
Sales toexternalcustomers

19,222

2,745

3,133

24,677

49,778

1,363

51,141

15,123504

20,356

13,42049,405

1,051

50,456

16,446

8,060

28,2799,548

62,335790

63,12690,15245,976

106,879

126,578

369,587

15,140384,728

－

121

－

－

121

－

121

90,15246,098106,879

126,578369,709

15,140384,849

Notes 1. The “other businesses” category is a business segment that is not included in the reportable segments,
and it includes the plant engineering business, trading company business, etc.
2. The Group’s revenue is categorized by country or region based on the location of customers.
(2) Useful information in understanding revenue
Useful information in understanding revenue is as presented in “(Significant Matters, etc. Providing
the Basis for Preparation of Consolidated Financial Statements), 4. Accounting Policies, Revenue andexpense recognition standards.”(3) Information in understanding the amount of revenue for the current period and following periods• Balances of contract assets and contract liabilities

18

The balances at the end of the period for trade receivables, contract assets and contract liabilities
recorded from contracts with customers of the Company and its consolidated subsidiaries during the
fiscal year under review are as follows. On the consolidated balance sheet, trade receivables andcontract assets are included in “notes and accounts receivable-trade, and contract assets,” and contract
liabilities is included in “other current liabilities.”(Millions of yen)
Balance at end of the fiscal
year

Balance at beginning of the
fiscal year
Trade receivables

92,335100,566

Contract assets

480

460

Contract liabilities

331

103

• Transaction price allocated to the remaining performance obligations
The total transaction price allocated to the remaining performance obligations and the time frame
the Company expects to recognize the amount of revenue are as follows.
(Millions of yen)
Fiscal year under review
Within one year

432

Over one year

1,607

Total

2,039

(Notes to Per Share Information)
1. Net assets per share:

3,345.34 yen

2. Profit attributable to owners of parent per share:

301.67 yen

Note:

In the calculation of consolidated net assets per share, shares of the Company owned by theemployee stock ownership plan are included in the deduction of treasury stock from the total
number of shares issued at the end of the fiscal year.
In addition, in the calculation of profit attributable to owners of parent per share, those shares areincluded in the deduction of treasury stock for calculating the average number of shares in the
period.

(Other Notes)
1. Accounting estimates with the spread of the COVID-19 coronavirus infections
It is difficult to accurately predict when the impact of the spread of the COVID-19 coronavirus
infections will be contained, etc. However, the Group has made accounting estimates based on theassumption that certain effects will continue in the next fiscal year, reflecting such estimates in thevaluation of noncurrent assets, the recoverability of deferred tax assets, etc.
2. Other
Figures shown in millions of yen have been rounded down to the nearest million.
19

Non-consolidated Statement of Changes in Net Assets(From April 1, 2021 to March 31, 2022)(Millions of yen)

Capitalstock

Balance at beginning of
the fiscal year
Changes of items during
the fiscal year
Reversal of reserve foradvanced depreciationof noncurrent assets
Dividends from surplus
Net income
Purchase of treasury stock
Disposal of treasury stock
Decrease by corporate
division
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityTotal changes of items
during the fiscal year
Balance at end of the fiscal
year

36,998

Shareholders’ equity
Retained earnings
Capital surplus
Other retained
earnings
Reserve
for
Total
Legal
Other
Total
advanced Retained
retained
capitalcapitalcapitaldepreciaearnings
earnings
surplussurplussurplustion ofbrought
noncurforward
rent
assets49,2840Treasury
stock

Total
shareholders’equity(7,677)

197,880

49,284

3,767

115,506

119,274

–

(18)

18

–

–

(11,647)
15,953(11,647)
15,953(11,647)
15,953

–
–
–
0

–
–

0

(9)
41

(9)
41

–

(1,767)(1,767)(1,767)

–

(136)

(136)

(136)

–

–

–
–

–

0

0

(18)

2,420

2,402

32

2,434

36,99849,284049,284

3,749

117,927

121,676(7,645)200,31420

(Millions of yen)
Valuation and translation adjustments
Valuation difference on Revaluation reserve for
Total valuation andavailable-forlandtranslation adjustments
sale securities
Balance at beginning of the
fiscal year
Changes of items during
the fiscal year
Reversal of reserve foradvanced depreciationof noncurrent assets

Total net assets

24,730222,610––

Dividends from surplus–(11,647)

Net income–

15,953Purchase of treasury stock–(9)

Disposal of treasury stock

–

41

–

(1,767)–(136)

Decrease by corporate
division
Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’equityTotal changes of items
during the fiscal year
Balance at end of the fiscal
year

14,485

10,245

614

132

747

747

614

132

747

3,181

15,09910,37725,477

225,792(Note) Amounts are rounded down to the nearest million yen.

21

Notes to Non-consolidated Financial Statements(Matters Related to Significant Accounting Policies)
1. Standards and methods for valuation of assets(1) Securities
Stocks of subsidiaries and affiliates
Stated at cost using the moving-average method
Available-for-sale securities
Securities other than shares, etc. that do not have a market priceStated at market value(Valuation difference is reported as a separate component of net assets. The cost of sales iscalculated using the moving-average method.)
Shares, etc. that do not have a market priceStated at cost using the moving-average method(2) Inventories
Stated at cost using the weighted-average method(Balance sheet amounts are calculated by writing down their net realizable value when there isevidence of deterioration in value.)
2. Depreciation method for noncurrent assets
Property, plant and equipment
The straight-line method is applied.
Intangible assets
The straight-line method is applied. However, software for internal use is amortized by the straightline method over the estimated internal useful life (five years).
Lease assets
Finance leases that do not transfer the ownership of the lease assets to the lessee
The straight-line method with no residual value is applied, regarding the lease term as the usefullife.
3. Standards of accounting for allowances and provisions(1) Allowance for doubtful accounts
Allowance for doubtful accounts is provided to cover possible losses on notes and accounts
receivable. The Company records an estimated irrecoverable amount based on the historical writeoff rate for ordinary receivables and based on assessment of recoverability of individual receivables
for specific doubtful accounts.

22

(2) Provision for bonuses
The Company provides reserve for payment of bonuses to employees based on the amount of
estimated employees’ bonuses at the fiscal year-end.
(3) Provision for retirement benefits
The Company provides reserve for employees’ retirement benefits based on the projected benefit
obligation and plan assets at fair value at the fiscal year-end. Furthermore, if plan assets to berecognized at the end of the fiscal year under review exceed the amount of retirement benefit
obligations minus unrecognized actuarial gains and losses, etc., the excess is recorded as prepaid
pension cost under investments and other assets.
In calculating retirement benefit obligations, the benefit formula basis is adopted for attributing
expected benefits to periods.
Prior service cost is recorded by the straight-line method over certain periods (10 years) within the
average remaining service period of employees expected to receive benefits, commencing with thefollowing fiscal year.
Actuarial gains and losses are recorded by the straight-line method over certain periods(principally 10 years) within the average remaining service period of employees expected to receive
benefits, commencing with the following fiscal year.
(4) Provision for stock benefits
In order to provide benefit from the Company’s shares, the amount of projected equity benefit at
the end of the fiscal year is recorded, based on officer stock delivery regulations for Directors(excluding Directors who are Audit & Supervisory Committee Members and Outside Directors).
4. Revenue and expense recognition standards
The details of the main performance obligations in the major businesses related to revenue from contracts
with customers and the timing at which the Group typically satisfies these performance obligations(when it typically recognizes revenue) are as follows.
(1) Revenue recognition related to product sales
Revenue is recognized when control of a product is transferred to a customer.
(2) Revenue recognition related to transactions that include variable consideration
Regarding the consideration paid to customers, such as some sales rebates in product sales,
revenue is recognized by deducting from the transaction price.
(Notes to Changes in Accounting Policies)
1. Application of the Accounting Standard for Revenue Recognition
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 31, 2020; hereinafter “Revenue Recognition Standard”) and other standards from the beginningof the fiscal year under review. The Company recognizes revenue when control of a promised good orservice is transferred to a customer in an amount that reflects the consideration to which the Company
expects to be entitled in exchange for those goods and services.
The main changes due to the application of the Revenue Recognition Standard and other standards are
as follows.
23

(1) Revenue recognition related to product sales
Regarding product sales, revenue was recognized at the time of product shipment in the past,
however the Company changed to a method of recognizing revenue when control of the product istransferred to the customer.
(2) Revenue recognition related to transactions that include variable consideration
Consideration paid to customers, such as some sales rebates in product sales, was treated as selling,
general and administrative expenses in the past, however the Company changed to a method ofrecognizing revenue by deducting from the transaction price.
The Company applies the Revenue Recognition Standard, etc. in accordance with the transitional
treatment provided for in the proviso to Paragraph 84 of the Revenue Recognition Standard. The
cumulative impact of retrospectively applying the new accounting policies to prior periods is adjusted
to retained earnings at the beginning of the fiscal year under review, with the new accounting policies
applied from the beginning balance. However, the Company applies the method provided for in
Paragraph 86 of the Revenue Recognition Standard, and does not apply the new accounting policies
retrospectively to contracts for which substantially all revenue amounts had been recognized prior to
the beginning of the fiscal year under review in accordance with the previous treatment.
As a result, there was no change in the balance at beginning of the fiscal year for retained earnings
brought forward on the non-consolidated statement of changes in net assets. During the fiscal year
under review, net sales decreased by 5,206 million yen, and operating income, ordinary income andincome before income taxes decreased by 508 million yen, respectively.
2. Application of the Accounting Standard for Fair Value Measurement)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement
No. 30, July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the
beginning of the fiscal year under review, and will prospectively apply the new accounting policies
stipulated by the Fair Value Measurement Standard, etc. in accordance with the transitional treatment
provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “AccountingStandard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). There is no impact on gains orlosses for the fiscal year under review.
(Notes to Accounting Estimates)
Valuation of stocks of subsidiaries and affiliates(1) Stated amount on the non-consolidated financial statements for the fiscal year under review
Stocks of subsidiaries and affiliates

34,807 million yen

Loss on valuation of shares of subsidiaries and affiliates

5,165 million yen(2) Other information to help understanding the details of estimates
1) Calculation method
Stocks of subsidiaries and affiliates are stated at the acquisition cost on the balance sheet. In caseof a significant decline in the real value of any of those stocks, the carrying amount of the stock is24

written down by the equivalent amount and the valuation difference is treated as a loss for the
fiscal year under review.
For some of the stocks of subsidiaries and affiliates, which were acquired with an expectation of
the excess earning power, etc., no impairment loss has been recognized in the fiscal year underreview as the real value including the excess earning power, etc. exceeded the acquisition cost.
2) Principal assumptions
Some of the stocks of subsidiaries and affiliates, which were acquired with an expectation of theexcess earning power, etc. are valued based on the business plans that are prepared, reflecting pastexperiences and external and internal information, and approved by the Board of Directors.
Principal assumptions are the time of completion of developing new products, etc. and the sales
forecasts after their launch.
3) Impacts on the non-consolidated financial statements for the next fiscal year
All the principal assumptions included in the business plans are based on information available
to the Company as of the balance sheet date and certain premises deemed to be reasonable. Whendrastic changes in business environment occur or due to other factors, the recognition of
impairment loss may be necessary in the next fiscal year.
(Notes to the Non-consolidated Balance Sheet)
1. Assets pledged as collateral:None

2. Accumulated depreciation of property, plant and equipment:

408,992 million yen

3. Guarantee obligations
Guarantee for loans from financial institutions:

19,624 million yen

4. Monetary receivables from and monetary obligations to subsidiaries and affiliates
Short-term monetary receivables:

36,122 million yen

Short-term monetary obligations:

26,384 million yen

Long-term monetary receivables:

129 million yen(Notes to the Non-consolidated Statement of Income)Amount of transactions with subsidiaries and affiliates
Sales to subsidiaries and affiliates:

90,517 million yen

Purchase from subsidiaries and affiliates:

29,757 million yen

Transactions with subsidiaries and affiliates other than business transactions:
3,787 million yen

25

(Notes to the Non-consolidated Statement of Changes in Net Assets)
Type and number of shares of treasury stock

Common stock

Number of shares at
Increase during the Decrease during the Number of shares atthe beginning of the
year
year
the end of the year
year
2,335,451
2,443
13,2052,324,689

Notes: 1. The 2,443 increase in the number of shares of common stock of treasury stock was due to thepurchase of shares constituting less than one unit.
2. The 13,205 decrease in the number of shares of common stock of treasury stock was due to thedecrease by sale of 305 shares constituting less than one unit and the distribution of 12,900
shares of the Company under the employee stock ownership plan.
(Notes to Deferred Tax Accounting)Breakdown of deferred tax assets and deferred tax liabilities by major cause(Millions of yen)
As of March 31, 2022
Deferred tax assets
Provision for bonuses
Loss on liquidation of business
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and affiliates
Loss on valuation of golf club membership
Impairment loss
Enterprise tax payable
Other
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Prepaid pension cost
Valuation difference on available-for-sale securities
Reserve for advanced depreciation of non-current assets
Total deferred tax liabilities
Net deferred tax assets (liabilities)

26

695
313
454
1,819
393
849
314
1,486
6,323
(3,591)
2,732
328
6,419
1,642
8,389
(5,657)

(Notes concerning Related Party Transactions)
Subsidiaries
Type

Company nameLocation

Capital or
equitySubsidiary

1,200
Akros Trading Co., Minato-ku,
million
Ltd.
Tokyo
yen

Subsidiary

Denka Chemicals
Holdings Asia
Singapore
Pacific Pte., Ltd.

Affiliate

5,000
TOYO STYRENE Minato-ku,
millionCo., Ltd
Tokyo
yen

68.70
millionUSdollars

RelationshipOwnership ofConcurrent
Transactions
Businessvoting rights positions, etc.
relationshipof directors
The Company sells
synthetic rubber
1 director
Sales of pulp, paper,
76.8% directlywith aproducts, synthetic Sales of theorganic/inorganic
owned by the
concurrent
resin products,
Company’s
industrial products,
Company
position at the civil engineering
products
etc.
Company
and construction
materials, etc. to it.
1 director
Regional
Holding of
100% directlywith aRegional
headquarters for
funds
owned by the
concurrent headquarters of theSoutheast and South
Payment ofCompany
position at theCompany
Asiainterest
Company
The Company
supplies its
Manufacturing,
50% directly
products as raw
Sales of theprocessing, and sales owned by thematerials andCompany’sof polystyrene resin
Company
purchases certain
products
finished products
from it.
Business

Transaction
amount(Millions ofyen)Account

Balance at theend of the year
(Millions ofyen)

42,122

Accounts
receivabletrade

14,427

14,62088

Deposits
received

12,368

16,843

Accounts
receivabletrade6,416

Notes: 1. Transaction amounts do not include consumption taxes, etc. Balance at the end of the year
includes consumption taxes, etc.
2. Sales of the Company’s products, etc. are determined in the same manner as for terms oftransactions with unrelated parties.
3. Terms for the lending of funds to subsidiaries and the holding of funds from subsidiaries are
determined taking market interest rates into account.
4. The average balance during the period is shown for deposits received.
(Notes to Revenue Recognition)
Useful information in understanding revenue is as presented in “(Matters Related to Significant
Accounting Policies) 4. Accounting policies, Revenue and expense recognition standards.”(Notes to Per Share Information)
1. Net assets per share:

2,618.45 yen

2. Net income per share:

185.2 yenNote:

In the calculation of net assets per share, shares of the Company owned by the employee stock
ownership plan are included in the deduction of treasury stock from the total number of sharesissued at the end of the fiscal year.
In addition, in the calculation of net income per share, those shares are included in the deductionof treasury stock for calculating the average number of shares in the period.

27

(Other Notes)
1. Notes to business combination
Company split
Effective April 1, 2021, the Company conducted a company split (simplified absorption-type split), in
which Nakagawa Techno Industrial Co., Ltd., a wholly owned subsidiary of the Company, succeeded the
housing equipment-related business of the Company.
(1) Overview of the transaction1) Details of the business succeeded
Housing equipment-related business of the Company, including plastic rain gutters
2) Date of the company split
April 1, 2021
3) Legal format of the company split
Absorption-type split (simplified absorption-type split) with the Company as the splitting company
and Nakagawa Techno Industrial Co., Ltd. as the succeeding company
4) Name of company after the company split
As of April 1, 2021, Nakagawa Techno Industrial Co., Ltd. changed its trade name to Denka Astec Co.,
Ltd. as a result of succeeding the housing equipment business of the Company.
5) Other matters related to the overview of the transaction
In the “Denka Value-Up” management plan, which was started in April 2018, specialization of corebusinesses has been set as one of the growth strategies, and we have been advancing the expansion of
the ratio of the specialty grade that is less susceptible to the external environment, as well as a shift tothe solution business.
In this company split as part of our initiatives to achieve such specialization, we merge the housing
equipment-related business of the Company, including plastic rain gutters, with Nakagawa Techno
Industrial Co., Ltd., a wholly owned subsidiary that manufactures and sells metal rain gutters.
a. Objective of the company split•

Reinforce marketing capabilities through fusion of human resources in the housing equipmentrelated business•

Launch new businesses and develop new products by utilizing various materials in the housing
equipment-related market

b. Details of allocation related to the company split
As this company split is conducted between a parent company and its wholly owned
subsidiary, there will be neither the share allocation nor the delivery of other consideration in thiscompany split.
(2) Overview of accounting treatment
The Company treats the transaction as a transaction between entities under common control,
pursuant to “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, January 16,2019) and “Implementation Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures” (ASBJ Guidance No. 10, January 16, 2019).

28

2. Accounting estimates with the spread of the COVID-19 coronavirus infections
It is difficult to accurately predict when the impact of the spread of the COVID-19 coronavirus
infections will be contained, etc. However, the Company has made accounting estimates based on theassumption that certain effects will continue in the next fiscal year, reflecting such estimates in thevaluation of noncurrent assets, etc.
3. Other
Figures shown in millions of yen have been rounded down to the nearest million.

29