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 otherforms of damages arising from the translation.

Disclosure on the Internet accompanying
the Notice of Convocation of the 160th 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, 2018 to March 31, 2019)

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.
Audit & Supervisory Board Members, in accordance with the audit policy determined by the
Audit & Supervisory Board, audit Directors’ execution of duties by attending the Board of
Directors meetings and other important meetings, receiving briefings from Directors, andreviewing important documents.
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 Auditing 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 Auditing 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,cross-organizational committees are established to comprehensively manage risks. Regarding items
unique to departments, 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. Depending on the agenda, relevant executive officers
also participate in the meeting of the Management Committee to streamline and accelerate deliberation
on important managerial matters.
For such important matters as budget formulation and capital investment, the Company sets up
deliberative councils or special committees by function.
2

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 Auditing 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
non-compliant conduct at subsidiaries.
6) Systems concerning employees who provide assistance to Audit & Supervisory Board Members,
matters concerning securing effectiveness of instructions to the employees and mattersconcerning independence of such staff from Directors
The Company sets up the Audit & Supervisory Board Members Department as an organization thatprovides assistance to the Audit & Supervisory Board and to the Audit & Supervisory Board Members
and assigns at least one exclusively assigned employee to the Audit & Supervisory Board Members
Department based on consultation with the Audit & Supervisory Board Members in advance.
The Audit & Supervisory Board Members Department serves as the secretariat for the Audit &Supervisory Board and is directly commanded by the Audit & Supervisory Board Members.
3

The Audit & Supervisory Board Members are consulted in advance about performance evaluation of
employees who belong to the Audit & Supervisory Board Members Department and determination of
any other personnel matters.
7) Systems concerning reporting to Audit & Supervisory Board Members by the Company’s
Directors and employees and by those of subsidiaries, other systems concerning reporting to
Audit & Supervisory Board Members, and systems to ensure that they do not receive unfavorable
treatment because of their reporting to Audit & Supervisory Board Members
Directors, Executive Officers, and employees of the Company and those of subsidiaries report on
their duties, by organization or by subsidiary, periodically or as necessary, in accordance with the
instructions and/or requests of Audit & Supervisory Board Members.
The Internal Auditing Department reports the results of internal audits of the Company andsubsidiaries periodically to Audit & Supervisory Board Members.
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& Supervisory Board Members Department as one of the contacts of the whistleblower system. If the
Audit & Supervisory Board Members Department, etc. receives a report, the content of the report isreported to Audit & Supervisory Board Members.
It is specified in the Denka Group Ethics Policy that no person who reports on non-compliant
conduct using the whistleblower system receives unfavorable treatment because of his/her reporting.
8) Policy for treatment of expenses, etc. incurred by Audit & Supervisory Board Members’
execution of duties and other systems to ensure that Audit & Supervisory Board Members
effectively perform auditing
Directors secure the necessary budget in order not to impede execution of duties by the Audit &Supervisory Board and Audit & Supervisory Board Members. At the same time, when an Audit &Supervisory Board Member makes a claim in accordance with Article 388 of the Companies Act, theexpenses and liabilities relevant to the claim will be paid without delay, unless it is deemed that they are
unnecessary for execution of duties of the said Audit & Supervisory Board Member.
The Internal Auditing Department and other internal auditing organizations collaborate with Audit& Supervisory Board Members and coordinate with their auditing so that both internal auditingorganizations and Audit & Supervisory Board Members 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 that defines the fundamentals of compliance, theCompany continued to implement awareness activities, including training, during the fiscal year underreview.
2) Business execution of Directors
The Board of Directors of the Company is composed of eight members, including three
Outside Directors, and meetings of the Board of Directors were held 13 times during the fiscal
year under review. Based on laws and regulations, the Articles of Incorporation, and the Board of
Directors Regulations, decision-making was conducted regarding important business execution, reports
were received from Directors and Executive Officers regarding required business execution conditions,and appropriate supervision was provided.
Additionally, with the intent of deliberation and consideration for important management issues, theManagement Committee, composed of Directors, Audit & Supervisory Board Members, and a portionof Executive Officers, was held once a month, with the intent of increasing efficiency of considerationof important management issues and accelerating decision-making.
3) Business execution of Audit & Supervisory Board Members
The Audit & Supervisory Board is composed of four members, including two Outside Audit &Supervisory Board Members, and meetings of the Audit & Supervisory Board were held 15 times
during the fiscal year under review. Additionally, Audit & Supervisory Board Members attended
meetings of the Board of Directors and other important meetings, and while auditing the businessexecution of Directors, they also visited various business sites including those of Group companies, andreported to the Audit & Supervisory Board regarding the contents of audits.

4

Furthermore, to assist the duties of Audit & Supervisory Board Members, the Audit & Supervisory
Board Members Department 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.
Meetings of the Risk Management Committee as defined by the above guidelines and various othermeetings 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 Department implements internal
audits of the Company and Group companies, and while reporting the results to the Board of
Directors and the Audit & Supervisory Board, cooperates as required with audits by the Audit &Supervisory Board Members, 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 theshareholders from a medium- to long-term perspective. Also, under this basic policy, the management
plan “Denka Value up” (five years from fiscal 2018), has been formulated, to strive for the realization ofcontinuous and sound growth.
The Company has not established so-called takeover defense countermeasures, but certain large
scale purchases 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 purchase attempt, within the scope permitted by laws and regulations, regulations offinancial instruments exchanges etc., appropriate interactions are taken in order to prevent damage to
the Company’s corporate value and the common interests of its shareholders.

5Consolidated Statement of Changes in Net Assets(From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning of the fiscal
year
Changes of items during the fiscal
year

Capital surplus

36,99849,391Retained earnings
129,278

Treasury stock

Total
shareholders’equity(3,189)212,479

Dividends from surplus(10,082)(10,082)

Profit attributable to owners ofparent25,04625,046

Change of scope of consolidation

396

396

Change in ownership interest ofparent due to transactions with
non-controlling interests

(43)

(43)

Purchase of treasury stock
Disposal of treasury stock(2,311)(2,311)915

5Net changes of items other thanshareholders’ equity–

Total changes of items during the
fiscal year

–

(37)

15,359(2,302)13,019Balance at end of the fiscal year

36,99849,353

144,638(5,492)

225,498(Millions of yen)

Accumulated other comprehensive income
Valuation
Total
NonTotaldifference Deferred Revaluation Foreign Remeasurements valuation controllinggains
orcurrency
on availablenet
assetsreserveforofdefinedandlosses ontranslation
land
benefit plans translation interests
for-salehedgesadjustment
adjustments
securities

Balance at beginning of the fiscal
year
Changes of items during the fiscal
year

17,448(195)

10,2601,241(2,170)26,584

3,717

242,780

Dividends from surplus–(10,082)

Profit attributable to owners ofparent–25,046

Change of scope of consolidation–

396

Change in ownership interest ofparent due to transactions with
non-controlling interests

–

(43)

Purchase of treasury stock–(2,311)

Disposal of treasury stock–

15

Net changes of items other thanshareholders’ equity(2,265)(149)

Total changes of items during the
fiscal year

(2,265)(149)

Balance at end of the fiscal year

15,182(345)(1,362)(1,443)(5,221)(96)(5,318)–(1,362)(1,443)(5,221)

(96)

7,701

10,260(120)(3,614)

21,362

3,620

250,481(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 Statement)
1. Scope of consolidation(1) Consolidated subsidiaries
Number of consolidated subsidiaries: 48
Names of principal consolidated subsidiaries:
Denka Singapore Pte., Ltd.
Denka Advantech Pte., Ltd.
Denka Performance Elastomer LLC
DENKA SEIKEN Co., Ltd.
DENKA Polymer Co., Ltd.
Hinode Kagaku Kogyo
Akros Trading Co., Ltd.
YK Inoas Co., Ltd.
Denka Corporation, Denka Chemicals G.m.b.H, Akros Trading Shanghai Co. Ltd., Akros
Trading Malaysia Sdn Bhd., and PT Hissan Trading Indonesia which were a non-consolidated
subsidiary until the previous fiscal year, are included in the scope of consolidation during the fiscal
year under review as its significance has increased.
(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.
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.

7

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 32 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.
4. Accounting policies(1) Standards and methods for valuation of principal assets
Securities
Available-for-sale securities
Securities with market value
Stated principally at market value based on the average quoted market price for a period of
one month before the balance sheet date(Valuation difference is reported as a separate component of net assets. The cost of sales iscalculated principally using the moving-average method.)
Securities without market value
Stated 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
8

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, thestraight-line method with no residual value is applied, regarding the lease term as the useful life.
Finance leases commencing on or before March 31, 2008 that do not transfer the ownership of thelease assets to the lessee are accounted for in the same manner as ordinary rental transactions.
(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.
• 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 benefits regulations for
Directors (excluding 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.

9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.
• Consumption taxes
Consumption taxes are recorded using the tax-excluded method.
(Changes in Presentation Methods)
The partial amendment of Accounting Standards for Tax Effect Accounting (Corporate Accounting Standard
No. 28, February 16, 2018) has been applied from the beginning of the fiscal year under review, and deferred
tax assets and deferred tax liabilities are thus presented under the categories of investments and other assets
and noncurrent liabilities, respectively.
(Notes to the Consolidated Balance Sheet)
1. Assets pledged as collateral
Investment securities:

242 million yen

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

197 million yen
432,157 million yen

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

1,584 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 atthe beginning of theyear
Shares issued
Common stock
Total
Treasury stock
Common stock(Notes 1 and 2)
Total

Increase during the Decrease during the Number of shares atthe end of the year
year
year

88,555,840
88,555,840

－
－

－
－

88,555,840
88,555,840

920,625

691,623

5,166

1,607,082

920,625

691,623

5,166

1,607,082

10

Notes: 1. The 691,623 increase in the number of shares of common stock of treasury stock was due to thepurchase of 688,400 shares of treasury stock and the increase by purchase of 3,223 sharesconstituting less than one unit in accordance with the provisions of Article 165, Paragraph 2 of
the Companies Act and of the Articles of Incorporation.
2. The 5,166 decrease in the number of shares of common stock of treasury stock was due to thesale of shares constituting less than one unit of 166 shares and 5,000 shares attributable to theCompany from a decrease caused by disposal of the Company’s shares held by affiliates towhich the equity method is applied.
2. Dividends(1) Payment of dividends• Dividends for common stock
Resolution
Ordinary General
Meeting of
Shareholders held on
June 21, 2018
Meeting of the Boardof Directors held on
November 7, 2018

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

Record date

Effective date

March 31, 2018

June 22, 2018

Common
stock

4,822

55.00

Common
stock

5,260

60.00 September 30, 2018 December 3, 2018

(2) Dividends whose record date falls during fiscal 2018 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
5,219
Shareholders to bestock
earnings
held on June 20, 2019

Dividends per
Record dateshare (yen)Effective
date

March 31,2019

June 21,
2019

60.00

(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 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 on a quarterly
basis.

11

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.
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, 2019 (consolidated balance sheet date of fiscal
2018) are as follows.
(Millions of yen)

(1) Cash and deposits(2) Notes and accounts receivable-trade(3) Investment securities
Available-for-sale securities(4) Notes and accounts payable-trade(5) Short-term loans payable(6) Commercial papers(7) Long-term loans payable(8) Bonds payable(9) Derivatives(*)

Carrying amount(*)
13,902
95,780Market value (*)

32,000(52,924)(43,101)(2,000)(40,032)(27,000)－

Difference

13,902
95,780－－32,000(52,924)(43,101)(2,000)(40,232)(27,122)
－

－
－
－
－
200
122
－

Figures in parentheses are recorded as liabilities on the consolidated balance sheets.
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.

Note 1: Method for calculating fair values of financial instruments and matters concerning investment
securities and derivatives(1) Cash and deposits and (2) Notes and accounts receivable-trade
Because of the short maturities of these instruments, their market values are approximately thesame as the book values, therefore, the book values are stated as the market value.
(3) Investment securities
The market value is estimated based on quoted market prices.
(4) Notes and accounts payable-trade, (5) Short-term loans payable and (6) Commercial papers
Because of the short maturities of these instruments, their market values are approximately thesame as the book values, therefore, the book values are stated as the market value.
(7) Long-term loans payable
The market value is the present value calculated by discounting the total amount of principal andinterest by the interest rate to be applied to new borrowings for the same amount of principal.

12

Long-term loans payable with variable interest rates are qualified for the special method applied
for interest rate swaps (Refer to (9) below.), and the market value of such long-term loans payableis calculated by discounting the total amount of principal and interest, which are accounted fortogether with associated interest rate swaps, by the reasonably estimated rate to be applied tosimilar borrowings.
(8) Bonds payable
The market value is estimated based on quoted market prices.
(9) Derivatives
The market 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 ofhedged long-term payables, and therefore, the market value of such interest rate swaps is includedin the market value of the corresponding long-term payables (Refer to (7) above.). Forward
exchange contracts that qualify for the appropriation method are accounted for as part of hedged
accounts receivable and accounts payable, excluding those associated with forecasted transactions,and therefore, the market value of such forward exchange contracts is included in the market valueof the corresponding accounts receivable and accounts payable (Refer to (2) and (4) above.)
Note 2: Unlisted stocks (amounting to 23,027 million yen on the consolidated balance sheet) are notincluded in “(3) Investment securities, Available-for-sale securities” because it is extremely
difficult to identify their market values as no quoted market price is available and it is impossible
to estimate their future cash flows.
(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 Per Share Information)
1. Net assets per share:

2,839.16 yen

2. Profit attributable to owners of parent per share:

286.18 yen

Note: 1. In the calculation of consolidated net assets per share, shares of the Company owned by theemployee stock ownership plan is 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, the amount of
the calculated average number of shares in the period is included in the deduction of treasury
stock.
(Other Notes)
1. Figures shown in millions of yen have been rounded down to the nearest million.

13

Non-consolidated Statement of Changes in Net Assets(From April 1, 2018 to March 31, 2019)(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
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
Capital surplus
Retained earnings
Other retained
earnings
Reserve
for
Total
Legal
Other
Total
advanced Retained
retained
capitalcapitalcapitaldepreciaearnings
earnings
surplussurplussurplustion ofbrought
noncurforward
rent
assets49,2840Treasury
stock

Total
shareholders’equity(3,180)145,526

49,284

3,823

58,60062,424

-

(18)

18

-

-

(10,082)
19,269(10,082)
19,269(10,082)
19,269

0

0

-

-

-

(2,311)0(2,311)
0
-

-

-

0

0

(18)

9,205

9,186

(2,311)

6,875

36,99849,284049,284

3,804

67,806

71,610(5,492)

152,40214

(Millions of yen)
Valuation and translation adjustments
Valuation
Revaluation
Total valuationdifference on
reserve forand translation
available-forland
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

26,076

171,603––

Dividends from surplus–(10,082)

Net income–

19,269Purchase of treasury stock–(2,311)

Disposal of treasury stock–0(2,181)(2,181)

Net changes of items otherthan shareholders’equityTotal changes of items
during the fiscal year
Balance at end of the fiscal
year

15,816

10,260(2,181)(2,181)–(2,181)

4,694

13,635

10,26023,895

176,297(Note) Amounts are rounded down to the nearest million yen.

15

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 with market value
Stated at market value based on the average quoted market price for a period of one month
before the balance sheet date(Valuation difference is reported as a separate component of net assets. The cost of sales iscalculated using the moving-average method.)
Securities without market value
Stated 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 thestraight-line 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.
Finance leases commencing on or before March 31, 2008 that do not transfer the ownership of thelease assets to the lessee are accounted for in the same manner as ordinary rental transactions.
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
write-off rate for ordinary receivables and based on assessment of recoverability of individual
receivables for specific doubtful accounts.

16

(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.
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 (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 consolidated fiscal year is recorded, based on officer stock benefits regulations for
Directors (excluding Outside Directors).
4. Consumption taxes
Consumption taxes are recorded using the tax-excluded method.
(Changes in Presentation Methods)
The partial amendment of Accounting Standards for Tax Effect Accounting (Corporate Accounting Standard
No. 28, February 16, 2018) has been applied from the beginning of the fiscal year under review, and deferred
tax assets and deferred tax liabilities are thus presented under the categories of investments and other assets
and noncurrent liabilities, respectively.
(Notes to the Non-consolidated Balance Sheet)
1. Assets pledged as collateral:None

2. Accumulated depreciation of property, plant and equipment:

356,605 million yen

3. Guarantee obligations
Guarantee for loans from financial institutions:

5,233 million yen

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

32,244 million yen

Short-term monetary obligations:

30,817 million yen

Long-term monetary receivables:

1,878 million yen

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

86,717 million yen

Purchase from subsidiaries and affiliates:

33,752 million yen

Transactions with subsidiaries and affiliates other than business transactions
8,772 million yen(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
915,625
691,623
166
1,607,082

Notes: 1. The 691,623 increase in the number of shares of common stock of treasury stock was due to thepurchase of 688,400 shares of treasury stock and the increase by purchase of 3,223 sharesconstituting less than one unit in accordance with the provisions of Article 165, Paragraph 2 of
the Companies Act and of the Articles of Incorporation.
2. The 166 decrease in the number of shares of common stock of treasury stock was due to the saleof shares constituting less than one unit.
(Notes to Deferred Tax Accounting)Breakdown of deferred tax assets and deferred tax liabilities by major cause(Millions of yen)
As of March 31, 2019
Deferred tax assets
Provision for retirement benefits
Provision for bonuses
Loss on liquidation of business
Loss on valuation of investment securities
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
Valuation difference on available-for-sale securities
Reserve for advanced depreciation of non-current assets
Total deferred tax liabilities
Net deferred tax assets (liabilities)

18

21
535
481
400
369
849
199
1,032
3,886
(1,867)
2,019
5,699
1,666
7,365
(5,346)

(Notes concerning Related Party Transactions)
Subsidiaries
Type

Company nameLocation

Capital or
equityBusiness

RelationshipOwnership ofConcurrent
Businessvoting rights positions, etc.
relationshipof directors

Sales of inorganic/
68.5% directly
organic industrial
owned by the
products, industrial
Company
resins, etc.
68.70
Regional
Denka Chemicals
100% directly
millionheadquarters for
Subsidiary Holdings Asia
Singaporeowned by the
US
Southeast and South
Pacific Pte., Ltd.
Company
dollars
Asia
Sales of raw
materials forindustrial
100
100% directly
Bunkyo-ku,
applications, civil
Subsidiary YK Inoas Co., Ltd.
millionowned by theTokyoengineering andyenCompany
construction
materials, andinterior materials
Subsidiary

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

DENKA SEIKEN Chuo-ku,
SubsidiaryCo., Ltd.
Tokyo

Affiliate

50% directly
owned by theCompany

Transaction
amount(Millions ofyen)Account

Balance at theend of the year
(Millions ofyen)-

The Company sells
synthetic rubber
products etc. to it.

Sales of theCompany’s
products

30,467

Accounts
receivable-trade

9,752

-

Regional
headquarters of theCompany--

Deposits
received

6,654-

The Company sells
synthetic resin
products, civilengineering andconstruction
materials, etc. to it.

Sales of theCompany’s
products

13,790Accounts
receivable-trade

4,570

The Company
conducts joint
research anddevelopment--

Deposits
received

11,10014,614

Accounts
receivable-trade
Accounts
payable3 directors
Manufacturing and
1,000
100% directlywith asales of vaccines andmillionowned by the
concurrent
clinical diagnostic
position at theyenCompany
reagents
Company

5,000
Manufacturing,
TOYO STYRENE Minato-ku,
million processing, and sales
Co., LtdTokyo
yen
of polystyrene resin

Transactions-

The Company
Sales of the
supplies its
Company’s
products as raw
products andmaterials andpurchase of raw
purchases certain
materials fromfinished products
the Company
from it.

7,359

Deposits
received

5,785
3,041
4,300

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. and purchase of raw materials, etc. are determined in thesame manner as for terms of transactions with unrelated parties.
(Notes to Per Share Information)
1. Net assets per share:

2,027.61 yen

2. Net income per share:

220.16 yen

Note: 1. In the calculation of consolidated net assets per share, shares of the Company owned by theemployee stock ownership plan is included in the deduction of treasury stock from the total
number of shares issued at the end of the fiscal year.
(Other Notes)
1. Figures shown in millions of yen have been rounded down to the nearest million.

19