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 157th Ordinary General Meeting of Shareholders

Basic Policy regarding the Control of the Company
Notes to Consolidated Financial Statements
Notes to Non-consolidated Financial Statements(from April 1, 2015 to March 31, 2016)

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

1Basic Policies regarding the Control of the Company
I. Details of the Basic Policies
The Company was established in 1915 for the production of calcium carbide and chemicalfertilizers by utilizing limestone resources and its in-house electric power plants. Since then, we havegrown to become a unique chemicals manufacturer whose business lines include diverse chemical
products ranging from inorganic and organic materials to electronic materials, processed resin products
and pharmaceutical products. These materials are based on our proprietary technologies of electric
furnace controls, high-temperature reaction controls, organic synthesis and others nurtured in the courseof many years of experience in the field of calcium carbide chemicals business.
In view of this history, characteristics of the Company’s businesses are that many of its products
involve very lengthy processes from raw materials to final products or utilize proprietary technologies
in various fields in a complex manner.
These businesses are based on the accumulated efforts over the years, including meticulous R&D
and safety activities, capital investment and human resources development from a long-term perspective,
and building of relationships of trust with suppliers, customers, and the local community. In other words,
diverse technologies and people who have knowledge and experience capable of utilizing suchtechnologies in a complex manner are the sources of the Company’s corporate value, and management
resources and the relationships of trust that have been cultivated underpin the Company’s corporate
value. This is our basic recognition of the Company’s current situation.
As the onward march of globalization rapidly transforms the business environment and theinformation era gains traction, those who fail to notice changes in market needs or economic structures
will jeopardize their business. In Japan, too, merger and acquisitions (M&A) and business tie-ups are
increasingly used as means of pursuing growth strategies. The Company’s Board of Directors also
recognizes that utilization of dynamism based on market principles is important for sustainable growthof a society and companies, including the Company, and for enhancement of corporate value over the
medium to long term.
As a listed company, we recognize the diversity of our shareholders and consider that ourshareholders should make a final decision about the transfer of the control of the Company, including
purchasing of a large amount of the Company’s shares. However, certain large-scale purchases may be
detrimental to corporate value of the company subject to such purchase attempt or the common interestsof the shareholders or sufficient information and time may not be provided for the company to consider
whether it should accept or reject such a purchase attempt. Unconditionally accepting all large-scalepurchase attempts is contrary to fulfilling the responsibility of management entrusted by shareholders.
The Company’s Board of Directors considers that a person that controls the Company’s financial
and business policies should fully understand the source of the Company’s corporate value and be
capable of continuously and sustainably securing and enhancing the Company’s corporate value and thecommon interests of its shareholders and, in principle, raises objection to any attempts to purchase alarge amount of the Company’s shares or similar attempts that come under the items listed below.
If a person attempting a large-scale purchase of the Company’s shares does not provide sufficient
information and time for the Company or its shareholders to consider whether such attempt comesunder the items listed below, the Company’s Board of Directors also raise an objection to such attempt,
in principle.
If there is an attempt to conduct a large-scale purchase of the Company’s shares that comes under
the items listed below, the Company’s Board of Directors considers implementing necessary andconsiderable countermeasures within the scope permitted by laws and regulations, regulations offinancial instruments exchanges etc., and the provisions of the Company’s Articles of Incorporation, inorder to prevent damage to the Company’s corporate value and the common interests of its shareholders,
and to secure an environment where each of our shareholders can make a whole-hearted decision. The
Company’s Board of Directors intends to perform day-to-day monitoring of any attempts of large-scalepurchase of the Company’s shares or similar attempts and take action flexibly to prevent damage to thecommon interests of the shareholders and the Company’s corporate value.
1) Purchases that may cause obvious harm to the Company’s corporate value and the common interestsof its shareholders through actions such as those described below or any similar action:(i) A buyout of share certificates, etc. and demanding the Company or its related parties purchasesuch shares at inflated prices

2

(ii) An attempt to further the interest of the purchaser at the expense of the Company, such as bytemporarily obtaining control of the management of the Company to acquire the Company’s
material assets, etc. at low cost(iii) Making the Company’s assets subject to use as collateral or for repayment of the debts of thepurchaser, etc., its group companies, or other related parties(iv) Temporarily obtaining control of the management of the Company to dispose of high-value
assets that have currently little relevance to the Company’s businesses and declare temporarily
high dividends based on the proceeds from the disposal of such assets, or to sell the shares at ahigh price once the share price rises sharply by virtue of high dividends
2) Purchases that may have the effect of compelling shareholders to sell shares, such as coercive
two-tier tender offers (a takeover bid in which the purchaser, etc. does not propose to purchase all
the shares in the first stage, but sets second-stage purchase terms disadvantageous or unclear to theshareholders)
3) Purchases that do not allow the Company’s Board of Directors to have reasonably necessary time tosubmit an alternative proposal
4) Purchases that do not provide the Company’s shareholders with necessary information andinformation reasonably necessary for evaluating the details of the purchase5) Purchases whose terms (including amount and type of consideration for the purchase, the timing of
the purchase, the legality of the purchase method, the probability of the purchase, management
policies or business plans following the purchase) are inadequate or inappropriate in light of theCompany’s intrinsic value.
6) Purchases that may significantly harm the Company’s corporate value and, in turn, the common
interests of its shareholders, such as by damaging relationships with the Company’s employees,
suppliers, etc. and the Company’s brand power, which are indispensable for creating the Company’s
corporate value.
7) It is inappropriate from the viewpoint of public order that the purchaser, etc. obtains the control of
the Company, such as that management or major shareholders of the purchaser etc. includes
person(s) who have relationships with antisocial forces.
II. Outline of the Special Measures Contributing to Realization of the Basic Policies
1) Special measures contributing to realization of the basic policies
The Company is implementing the Denka100 management plan to achieve sustainable growth andenhancement of corporate value. The strategies of Denka100 were revised in April 2013. Specifying
goals for 2017, we set three new growth strategies to achieve numerical targets and are proactively
implementing many concrete measures.
Three new growth strategies
1. Create the most optimal production system
2. Scrutinize every cost element
3. Focus management resources on new growth drivers and develop next-generation products
Numerical targets Fiscal 2017
Consolidated operating income of ¥60 billion or more
Operating income ratio of 10% or more
Ratio of overseas sales to net sales of 50% or more
In 2014, reflecting our determination to return the profits yielded by these initiatives to ourshareholders, we established the Policy on Shareholder Returns. Concurrently, with the aim ofachieving further corporate growth, we have secured a budget for strategic investments such as M&A.
Furthermore, in order to build a more robust management structure better suited to pursuing the new
growth strategies set forth in the Denka100 management plan and to strengthen corporate governanceand enhance management transparency and soundness, from June 2015, the Company adopted a new
structure, including an increase in the number of Outside Directors (from two to three) and a decreasein the number of Directors on the Board (reduction by two). This change will enable the Company tobolster its management structure for both defensive and offensive purposes and achieve proactive
governance.
Coinciding with the Company’s centenary in 2015, to express our determination to achieve theDenka100 management plan through a concerted effort of all employees, we renewed our corporate
logo and formulated a corporate slogan and action guidelines for employees. The Company changed
its trade name on October 1.
32) Measures to prevent decisions on the Company’s financial and business policies from being controlled
by persons viewed as inappropriate under the basic policy
As measures to prevent decisions on the Company’s financial and business policies from being
controlled by persons viewed as inappropriate under the basic policy, the Company introduced
countermeasures for large-scale purchase of the Company’s shares (so-called poison pill, hereinafterreferred to as the “Plan”) in the past but a resolution was passed not to continue the Plan upon its
expiration.
The Company will continue to strive to enhance corporate value and to secure the common interestsof its shareholders by ensuring compliance with the basic policy.
III. The Decisions of the Company’s Board of Directors and the Reasons Thereof
The Company’s Board of Directors believes the measures described in II-1) above are for the
purpose of enhancing the Company’s corporate value and the common interests of the shareholders
from a medium to long-term perspective and contribute to realization of the Company’s basic policy.
These measures are in accordance with the common interests of the shareholders and are not for the
purpose of maintaining the positions of the Company’s officers.

4Notes to Consolidated Financial Statements
1. Significant Matters, etc. Providing the Basis for Preparation of Consolidated Financial Statements(1) Scope of consolidation
1) Consolidated subsidiaries
Number of consolidated subsidiaries: 38
Names of principal consolidated subsidiaries:
Denka Singapore Pte., Ltd.
Denka Advantech Pte., Ltd.
DENKA SEIKEN Co., Ltd.
DENKA Polymer Co., Ltd.
Hinode Kagaku Kogyo
Akros Trading Co., Ltd.
YK Inoas Co., Ltd.
Denka Performance Elastomer LLC and two other companies, which were non-consolidated
subsidiaries until the previous fiscal year, are included in the scope of consolidation from the fiscal
year under review as their significance has increased.
Additionally, from the fiscal year under review, Icon Genetics GmbH, for which stock was acquired,
POSCO Sdn. Bhd. (changed trade name to Denka Infrastructure Malaysia Sdn. Bhd. on June 9, 2015),
and five consolidated subsidiaries of the said company are included in the scope of consolidation.

2) Principal non-consolidated subsidiaries
Names of principal non-consolidated subsidiaries:
KAMBARA NAMAKON 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 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: 15
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.

5

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 consolidated financial statements isimmaterial.

(3) Accounting periods of consolidated subsidiaries
Among the consolidated subsidiaries, Denka Singapore Pte., Ltd. and 23 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.)6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, 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.
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 are accounted
for by the special method provided by the accounting standards as they satisfy the criteria for
application of the special method. Forward exchange contracts that satisfy the criteria for
application of the appropriation 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.
7

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.

(5) Change in accounting policies
The Accounting Standard for Business Combinations (Accounting Standards Board of Japan(“ASBJ”) Statement No. 21, September 13, 2013; hereinafter the “Business Combinations AccountingStandard”), Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
September 13, 2013; hereinafter the “Consolidated Financial Statements Accounting Standard”), and“Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013;
hereinafter the “Business Divestitures Accounting Standard”) and related standards are madeapplicable to the fiscal year under review onward. Under this new application of these standards,
differences caused by changes in the Company’s equity in the subsidiaries and affiliates with
controlling interests will be adjusted in capital surplus, and acquisition-related expenses shall bereported as expenses accruing during the consolidated fiscal year in which the acquisition takes place.
Additionally, the method has been changed such that for business combinations that occur on or after
the beginning of the fiscal year under review, in cases where revisions to the distribution amount of
the acquisition cost resulting from provisional accounting treatment are conducted during the fiscal
year following the fiscal year during which the business combination takes place, the amount of theeffect will be categorized and displayed in the beginning balance of the fiscal year during which therevision took place, and the beginning balance after application of the amount of the effect will be
displayed. As a result, changes have been made to the display method of net income, etc., andminority interests have been changed to non-controlling interests.
The implementation of Business Combinations Accounting Standard and its related standards issubject to the transitional treatments stipulated in the provisions of Article 58-2 (4) of the Business
Combinations Accounting Standard, Article 44-5 (4) of the Consolidated Financial Statements
Accounting Standard, and Article 57-4 (4) of the Business Divestitures Accounting Standard, and has
been and will be underway since the beginning of the current fiscal year and going forward.
The impact of this change on the Consolidated Financial Statements is immaterial.

82. Notes to the Consolidated Balance Sheet(1) Assets pledged as collateralLand:

89 million yen

Investment securities:

262 million yen

Total:

351 million yen

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

271 million yen
390,233 million yen(3) Guarantee obligations, etc.
Guarantee for loans from financial institutions:592 million yen

93. 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
Total

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

465,954,121
465,954,121

−
−

−
−

465,954,121
465,954,121

8,073,092
8,073,092

10,569,051
10,569,051

1,255
1,255

18,640,888
18,640,888

Note: The increase in the number of shares of common stock of treasury stock was due to the purchase of
10,537,000 shares of treasury stock and the purchase of shares constituting less than one unit inaccordance with the provisions of Article 165, Paragraph 2 of the Companies Act and of the Articles
of Incorporation. The decrease in the number of shares of common stock of treasury stock was dueto the sale of shares constituting less than one unit.

(2) Dividends
1) Payment of dividends• Dividends for common stock
Resolution
Ordinary General
Meeting of
Shareholders held on
June 19, 2015
Meeting of the Boardof Directors held on
November 9, 2015

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

Record date

Effective date

March 31, 2015

June 22, 2015

Common
stock

3,434

7.50

Common
stock

2,705

6.00 September 30, 2015 December 3, 20152) Dividends whose record date falls during fiscal 2015 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
3,131
Shareholders to bestock
earnings
held on June 22, 201610

Dividends per
Record dateshare (yen)Effective
date

March 31,2016

June 23,
2016

7.00

4. Financial Instruments(1) Financial instruments
The Group is not engaged in fund investment. The Group’s policy is to procure funds through bankborrowings 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, managementof 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.
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, 2016 (consolidated balance sheet date of fiscal
2015) 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 paper(7) Long-term loans payable(8) Bonds payable(9) Derivatives(*)

Carrying amount(*)
11,89576,009Market value (*)

25,908(41,811)(42,861)(5,000)(46,735)(30,000)−

Difference

11,89576,009−−25,908(41,811)(42,861)(5,000)(47,180)(30,217)
−

−
−
−
−
445
217
−

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.

11(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 paper
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.
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 23,935 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.
5. 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.
6. Notes to Per Share Information(1) Net assets per share:

473.35 yen(2) Profit attributable to owners of parent per share:

42.94 yen12

7. Other Notes
Not applicable
8. Figures shown in millions of yen have been rounded down to the nearest million.

13

Notes to Non-consolidated Financial Statements
1. 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.

14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) Changes in accounting policies
The Accounting Standard for Business Combinations (Accounting Standards Board of Japan(“ASBJ”) Statement No. 21, September 13, 2013; hereinafter the “Business Combinations AccountingStandard”), Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
September 13, 2013; hereinafter the “Consolidated Financial Statements Accounting Standard”), and“Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013;
hereinafter the “Business Divestitures Accounting Standard”) and related standards are applied fromthe fiscal year under review, and the calculation method was changed to record expenses during the
fiscal year in which acquisition-related expenses are incurred. Additionally, the method has beenchanged such that for business combinations that occur on or after the beginning of the fiscal year
under review, in cases where revisions to the distribution amount of the acquisition cost resulting
from provisional accounting treatment are conducted during the fiscal year following the fiscal year
during which the business combination takes place, the amount of the effect will be categorized anddisplayed in the beginning balance of the fiscal year during which the revision took place, and the
beginning balance after application of the amount of the effect will be displayed.
The implementation of the Business Combinations Accounting Standard and its related standards issubject to the transitional treatments stipulated in the provisions of Article 58-2 (4) of Business
Combinations Accounting Standard, Article 44-5 (4) of the Consolidated Financial Statements
Accounting Standard, and Article 57-4 (4) of the Business Divestitures Accounting Standard, and has
been and will be underway since the beginning of the current fiscal year and going forward.
There is no impact of this change on the Non-consolidated Financial Statements.
(5) Consumption taxes
Consumption taxes are recorded using the tax-excluded method.

15

2. Notes to the Non-consolidated Balance Sheet(1) Assets pledged as collateral:

None(2) Accumulated depreciation of property, plant and equipment:

332,356 million yen(3) Guarantee obligations
Guarantee for loans from financial institutions:

3,433 million yen(4) Monetary receivables from and monetary obligations to subsidiaries and affiliates
Short-term monetary receivables:

29,323 million yen

Short-term monetary obligations:

24,840 million yen

Long-term monetary receivables:

2,410 million yen

3. Notes to the Non-consolidated Statement of Income
Amount of transactions with subsidiaries and affiliates
Sales to subsidiaries and affiliates:

77,072 million yen

Purchase from subsidiaries and affiliates:

29,637 million yen

Transactions with subsidiaries and affiliates other than business transactions
6,917 million yen
4. 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
8,048,092
10,569,051
1,255
18,615,888

Note: The increase in the number of shares of common stock of treasury stock was due to the purchase of
10,537,000 shares of treasury stock and the purchase of shares constituting less than one unit inaccordance with the provisions of Article 165, Paragraph 2 of the Companies Act and of the Articles
of Incorporation. The decrease in the number of shares of common stock of treasury stock was dueto the sale of shares constituting less than one unit.

16

5. Notes to Deferred Tax Accounting
Breakdown of deferred tax assets and deferred tax liabilities by major cause(Millions of yen)
As of March 31, 2016
Deferred tax assets
Allowance for doubtful accounts
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)

4
777
459
45
372
368
849
107
534
3,515
(1,824)
1,691
4,202
1,696
5,898
(4,207)

6. 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 Singapore
Pte., Ltd.

Subsidiary YK Inoas Co., Ltd.

Subsidiary

Affiliate

Singapore

69.41
millionUSdollars

100
Bunkyo-ku,
millionTokyo
yen

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

1,000
millionyen

5,000
TOYO STYRENE Minato-ku,
millionCo., LtdTokyo
yen

Business

Ownership ofvoting rights

Relationship
Concurrent
Business
positions, etc.
relationshipof directors

Transactions

Sales of inorganic/
68.5% directly
The Company sells Sales of theorganic industrial
2 directors on
owned by thesynthetic rubber
Company’s
products, industrial
loan
Company
products etc. to it.
products
resins, etc.
Manufacturing andsales of acetylene 100% indirectlyTechnology
1 director on
black andowned by thelicensing by the Loan guarantee
loanpolystyrene resin,Company
Company
etc.
Sales of raw
materials for
The Company sells
industrial
synthetic resin
100% directly
Sales of theapplications, civil
4 directors on products, civil
owned by theCompany’s
engineering andloan
engineering andCompany
products
construction
construction
materials, andmaterials, etc. to it.
interior materials
2 directors
with aManufacturing and
The Company
100% directly
concurrent
sales of vaccines andconducts joint
owned by the position at theclinical diagnostic
research andCompany
Company
reagents
development
2 directors on
loan
The Company
Sales of the
supplies its
Company’s
Manufacturing,
50% directly
products as raw
1 director on
products andprocessing, and sales owned by thematerials andloanpurchase of raw
of polystyrene resin
Company
purchases certain
materials fromfinished products
the Company
from it.

Transaction
amount(Millions ofyen)Account

Balance at theend of the year
(Millions ofyen)

26,547

Accounts
receivable-trade

7,966

1,231

-

-

13,374

Accounts
receivable-trade

4,348

-

Deposits
received

10,700Accounts
receivable-trade

4,266

Accounts
payable2,122

Deposits
received

4,800

13,156

6,871

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.
3. The Company provides loan guarantee to Denka Singapore Pte., Ltd. for part of its purchaseliabilities.

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

348.17 yen(2) Net income per share:

23.74 yen

8. Other Notes
Not applicable
9. Figures shown in millions of yen have been rounded down to the nearest million.

18