2021

Financial
Statements

INABATA & CO., LTD. ANDCONSOLIDATED SUBSIDIARIES
Consolidated Financial Statements
For the Years ended March 31,
2021 and 2020
Together with Independent
Auditor’s Report

KPMG AZSA LLC
July 2021
This report contains 5 pages
Appendices comprise 42 pages© 2021 KPMG AZSA LLC, a limited liability audit corporation incorporated under the Japanese Certified Public
Accountants Law and a member firm of the KPMG global organization of independent member firms affiliatedwith KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Independent auditor’s report
To the Board of Directors of Inabata & Co., Ltd.:
OpinionWe have audited the accompanying consolidated financial statements of Inabata & Co., Ltd. (“theCompany”) and its consolidated subsidiaries (collectively referred to as “the Group"), which comprisethe consolidated balance sheets as at March 31, 2021 and 2020, the consolidated statements of income
and comprehensive income, changes in net assets and cash flows for the years then ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2021 and 2020, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Valuation of allowance for doubtful accounts for trade receivables
The key audit matter

How the matter was addressed in our audit

Notes and accounts receivable – trade(hereinafter referred to as “trade receivables”) of\162,736 million were recognized in the
consolidated balance sheet of Inabata & Co.,
Ltd. (the “Company”) and its consolidated
subsidiaries (collectively referred to as the“Group”), representing approximately 46% of
total assets. Allowance for doubtful accounts of\613 million included in current assets was
mostly on trade receivables. In addition, otherassets of \6,209 million and allowance for
doubtful accounts of \4,545 million included ininvestments and other assets were mostly
attributed to trade receivables.

The primary procedures we performed to assess
the reasonableness of the valuation of allowance for
doubtful accounts on trade receivables included thefollowing:

As described in Note 2 “Summary ofsignificant accounting policies (c) Allowance for
doubtful accounts” to the consolidated financial
statements, with respect to normal accounts
receivable – trade, the allowance is stated at an
amount based on the actual rate of bad debts inthe past, and for certain doubtful receivables, theuncollectible amount is individually estimated.
As for doubtful receivables of foreign
consolidated subsidiaries, management
determines the estimate of the allowance.
Account receivables of the Group include
receivables of a large number of domestic andoverseas customers. Each group company
performs credit management including theestablishment of credit classifications andpreservation of claims. The Company also
performs credit management for customers withreceivables that are material.

(1) Internal control testing
We tested the design and operating effectivenessof certain of the Company’s internal controls
relevant to the process of recognizing an allowancefor doubtful accounts on trade receivables with amain focus on the following:IT controls related to the preparation of a list of
past due receivables used for accurate andcomplete identification of past due receivables;andControls to obtain necessary information ofcustomers that are delinquent in payments andapprove credit classifications assigned to themas well as the calculated the amount ofallowance for doubtful accounts.

(2) Assessment of the reasonableness of theestimated future uncollectible amounts
In order to assess the reasonableness of theestimated future uncollectible amounts of past due
receivables, we:inquired of the personnel responsible for credit
management about the bases on which credit
classifications are assigned to customers andestimated future uncollectible amounts arecalculated, and obtained related information
including external credit information toevaluate the reasonableness of those bases; andexamined the recent collection status including
status after the end of the period, and when thestatus indicated increased credit risk, assessedIn the valuation of allowance for doubtful
accounts related to trade receivables, each groupcompany and the Company need to identify
defaults on receivables and their subsequent
status in a timely and comprehensive manner,and reasonably estimate future uncollectible
amounts using the debtor's financial evaluation
approach. The estimates involve a certain levelof uncertainty because changes in the economic
environment including the effects of the
COVID-19 pandemic and other factors affectthe credit risk of customers. Accordingly,
management’s judgment thereon may have asignificant effect on the estimates.

whether the increase in the risk wasappropriately reflected in the estimated future
uncollectible amounts.
With respect to the valuation of allowance for
doubtful accounts on trade receivables ofsignificant consolidated subsidiaries, we requested
the component auditors of those subsidiaries toperform part of the above audit procedures, andevaluated the report of the component auditors on
the results of the procedures and concluded as towhether sufficient and appropriate audit evidence
was obtained.

We, therefore, determined that the valuation ofallowance for doubtful accounts on tradereceivables was one most significance in our
audit of the consolidated financial statements forthe current fiscal year, and accordingly, a key
audit matter.

Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors
for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise

professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we
determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2021 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

Koji Yasui
Designated Engagement Partner
Certified Public Accountant

Kazushi Chiba
Designated Other Partner
Certified Public Accountant

KPMG AZSA LLC
Osaka Office, Japan
July 12, 2021

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED BALANCE SHEETSMarch 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2021

2020

2021

ASSETS
Current assets:
Cash and time deposits (Notes 12 and 15)¥

31,462¥29,440$284,192

Notes and accounts receivable - trade (Note 15):

162,736

152,457

1,469,933

Merchandise and finished goods

49,21052,052444,499

597

766

5,397

Raw materials and supplies
Other current assets

4,322
9,266

3,084
8,022

39,046
83,700Allowance for doubtful accounts (Note 15)

(613)

(686)

(5,539)256,983

245,136

2,321,230

Work in Process

Total current assets
Property, plant and equipment:
Land

2,911

2,870

26,295

Buildings and structures

16,03915,509144,881

Machinery and equipment

16,871

16,240152,391

Construction in progress

294

112

2,661

5,224

4,781

47,191

41,341(26,946)

39,512(25,550)

373,421(243,395)

14,395

13,964130,026

71,592
1,212
2,918
3,472
990

54,236
1,392
3,006
2,007
1,024

646,668
10,94826,361
31,366
8,946

Other assets

6,209

9,896

56,084

Allowance for doubtful accounts (Note 15)
Total investments and other assets(4,545)(7,815)(41,061)

81,84963,747739,314

Other property, plant and equipment
Less accumulated depreciation
Property, plant and equipment, net
Investments and other assets:
Investment securities (Notes 4, 7 and 15):
Long-term loans receivable (Note 15):
Intangible assets
Net defined benefit asset (Note 11)
Deferred tax assets (Note 6)¥

Total assets

353,228¥

See accompanying Notes to Consolidated Financial Statements.

- 1 -322,848$

3,190,570

INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (CONTINUED)
March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2021

2020

2021

LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable - trade (Note 15):¥

Short-term loans payable (Notes 10 and 15)
Income taxes payable
Accrued expenses
Provision for bonuses

104,113¥96,761$

940,419

33,731
3,155
1,080
1,279

43,073
1,631
1,021
1,217

304,683
28,501
9,763
11,561

－

240

－

7,229

6,831

65,300150,591

150,776

1,360,229

7,475
14,842
29
131
18

9,775
9,933
30
85
18

67,522
134,069
264
1,187
167

Net defined benefit liability (Note 11)

2,144

2,369

19,374

Other non-current liabilities
Total non-current liabilities

2,190

2,132

19,786

26,83324,344242,372

9,364
7,184
116,794

9,364
7,752
106,197

84,58664,895
1,054,958(4,155)(4,155)(37,531)

129,188

119,159

1,166,908

39,316
187
4,536
576

26,196148
1,436(1,016)355,132
1,689
40,973
5,206

44,616

26,764

403,002

1,999

1,802

18,056

175,803147,726

1,587,967

Provision for loss on business liquidation (Note 9)
Other current liabilities
Total current liabilities
Non-currrent liabilities:
Long-term loans payable (Notes 10 and 15)
Deferred tax liabilities (Note 6)
Provision for directors' retirement benefits
Provision for management board incentive plan trust
Provision for loss on guarantees

Contingent liabilities (Note 19)
Net assets
Shareholders' equity (Note 16)
Common stock:
Authorized - 200,000,000 shares
Issued - 63,499,227 shares in 2021 and 63,499,227 shares in 2020
Capital surplus
Retained earnings (Note 20)
Treasury stock, at cost: (Note 17)
3,302,651 shares in 2021 and 3,302,640 shares in 2020
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets¥

353,228¥

See accompanying Notes to Consolidated Financial Statements.

- 2 -322,848$

3,190,570

INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
Years ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2021
Net sales¥2020

577,583¥2021

600,312$5,217,089

531,543544,053

4,801,225

46,04046,259415,864

31,06633,029280,614

Operating income

14,973

13,229135,249

Other income (expenses):
Interest and dividend income

1,541

2,123

13,921

Interest expenses (Note 10)(698)(1,317)(6,312)Foreign exchange gains (losses)

(151)

(294)

(1,369)

Cost of sales
Gross profit
Selling, general and administrative expenses (Note 8)

Share of profit of entities accounted for using equity method

270

339

2,442

2,984

3,033

26,957

－

(293)

－

Provision for loss on business liquidation (Note 9)

－

(244)

－

Other, net

579

131

5,238

19,49916,707

176,128

Income taxes - current

5,337

4,858

48,214

Income taxes - deferred

(43)

(35)

(388)

14,204411

11,884
469

128,302
3,719

Gain on sales of investment securities
Loss on valuation of investment securities

Income before income taxes
Income taxes (Note 6)

Net income
Net income attributable to non-controlling interests¥

Net income attributable to owners of parent

13,792

Amounts per share:¥

11,415$

U.S. dollars(Note 1)

Yen
2021

Basic net income per share¥

Cash dividends per share applicable to the year

229.13
63.00

2020
¥

See accompanying Notes to Consolidated Financial Statements.

- 3 -124,583

188.82
53.00

2021
$

2.07
0.57

INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2021
Net income

¥

2020

14,204¥2021

11,884$

128,302

Other comprehensive income (Note 13):
Valuation difference on available-for-sale securities

12,968(22,679)

117,135

55

242

496

Foreign currency translation adjustment

3,155(1,875)28,499Remeasurements of defined benefit plans, net of tax

1,593

(739)

14,391

164

(39)

1,484

17,935(25,091)

162,008

Deferred gains (losses) on hedges

Share of other comprehensive income of entities accounted for using
equity method
Total other comprehensive income
Comprehensive income¥

32,140¥(13,207)$

290,310¥31,644¥(13,656)$

285,830

Comprehensive income attributable to:
Owners of parent
Non-controlling interests

496

See accompanying Notes to Consolidated Financial Statements.

- 4 -

449

4,480

INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years ended March 31, 2021 and 2020
Millions of yen
2021
Shareholders' equity
Commonstock
Balance at April 1, 2020¥

Capitalsurplus
9,364

Cumulative effects ofchanges in accounting
policies
Restated balance at April 1,
2020¥

Retainedearnings
7,752

－

¥

9,364

¥

Treasurystock

106,197－¥¥(4,155)

－

7,752

¥

106,197－¥(4,155)

Net income attributable toowners of parent－－

13,792－

Dividends of surplus
Purchase of treasury stock

－
－

－
－

(3,195)－－Purchase of shares of
consolidated subsidiaries

－

(567)

－

－

Net changes in items otherthan shareholders' equity

－

－

－

－

Balance at March 31, 2021

¥

9,364

¥

7,184

¥

116,794(0)¥(4,155)

Millions of yen
2021
Accumulated other comprehensive income

Balance at April 1, 2020

Valuation
Deferred gains
difference on(losses) on
availablehedges
for-sale

Foreigncurrencytranslation
adjustments

Remeasurements Non-controllinginterestsof defined
benefit plans

¥

¥

¥

26,196

¥

148

1,436

(1,016) ¥

1,802

－

－

(1,016) ¥

1,802

Total

¥

147,726

Cumulative effects of－changes in accounting
policies
Restated balance at April 1,
2020¥

Net income attributable toowners of parent
Dividends of surplus
Purchase of treasury stock
Purchase of shares of
consolidated subsidiaries
Net changes in items otherthan shareholders' equity
Balance at March 31, 2021¥

26,196

－

¥

148

－

¥

1,436

¥

－

¥

147,726

－

－

－

－

－

13,792

－

－

－

－

－

(3,195)

－

－

－

－

－

(0)

－

－

－

－

－

(567)

13,119

38

3,100

1,593

196

18,04839,316

¥

187

¥

- 5 -

4,536

¥

576

¥

1,999

¥

175,803

Millions of yen
2020
Shareholders' equity
Commonstock
Balance at April 1, 2019¥

Capitalsurplus
9,364

Cumulative effects ofchanges in accounting¥

Retainedearnings
7,752－

policies
Restated balance at April 1,

¥

2019

9,364

Net income attributable toowners of parent
Dividends of surplus
Purchase of treasury stock
Purchase of shares of
consolidated subsidiaries
Net changes in items otherthan shareholders' equity¥

Balance at March 31, 2020¥

Treasurystock
97,882(3,729)

(191)

－

¥

¥

7,752

¥

97,691－¥(3,729)－－11,415－－－－(2,908)
－

－

－

(425)

－

－

－

－

－

－

－

－

9,364

¥

7,752

¥

106,197¥(4,155)

Millions of yen
2020
Accumulated other comprehensive income
Valuation
Deferred gains
difference on(losses) on
availablehedges
for-sale
Balance at April 1, 2019¥48,827¥

Foreigncurrencytranslation
adjustments(93) ¥

3,247

Remeasurements
Non-controllingof definedinterests
benefit plans¥(277) ¥

1,723

－

－

(277) ¥

1,723

Total
¥

164,697

Cumulative effects of－

129changes in accounting
policies
Restated balance at April 1,
2019¥

48,957¥－(93) ¥

3,247

¥

(61)

¥

164,635

Net income attributable toowners of parent

－

－

－

－

－

11,415

Dividends of surplus
Purchase of treasury stock

－
－

－
－

－
－

－
－

－
－

(2,908)(425)

Purchase of shares of
consolidated subsidiaries

－

－

－

－

－

－

Net changes in items otherthan shareholders' equity(22,760)

241(1,811)(739)

78(24,990)(1,016) ¥1,802

Balance at March 31, 2020¥

26,196

¥

148

¥

1,436

¥

See accompanying Notes to Consolidated Financial Statements.

- 6 -

¥

147,726

Thousands of U.S. dollars (Note 1)
2021
Shareholders' equity
Commonstock
Balance at April 1, 2020$

Capitalsurplus84,586$

Retainedearnings
70,024$

Treasurystock

959,240$(37,531)

Cumulative effects of－changes in accounting
policies
Restated balance at April 1,
2020$

84,586

Net income attributable toowners of parent
Dividends of surplus
Purchase of treasury stock
Purchase of shares of
consolidated subsidiaries
Net changes in items otherthan shareholders' equity$

Balance at March 31, 2021

－

$

－

70,024$

959,240－$(37,531)－－

124,583

－

－
－

－
－

(28,865)－－－(5,129)

－

－

－

－

－

－

84,586$64,895$

1,054,958(0)$(37,531)

Thousands of U.S. dollars (Note 1)
2021
Accumulated other comprehensive income

Balance at April 1, 2020

Valuation
Deferred gains
difference on(losses) on
availablehedges
for-sale

Foreigncurrencytranslation
adjustments

Remeasurements
Non-controllingof definedinterests
benefit plans

$

$

$

Cumulative effects ofchanges in accounting

236,626$－

policies
Restated balance at April 1,$

2020
Net income attributable toowners of parent

236,626

1,341
－

$

1,341

12,972－$

12,972(9,185) $－$(9,185) $Total

16,280$ 1,334,356－－

16,280$ 1,334,356

－

－

－

－

－

124,583

－

－

－

－

－

－

－

－

－

－

(28,865)(0)

Purchase of shares of
consolidated subsidiaries

－

－

－

－

－

(5,129)Net changes in items otherthan shareholders' equity

118,505

348

28,001

14,391

1,776

163,022

18,056$ 1,587,967

Dividends of surplus
Purchase of treasury stock

Balance at March 31, 2021$

355,132

$

1,689

$

40,973

$

5,206

$

See accompanying Notes to Consolidated Financial Statements.

- 7 -INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2021

2020

2021

Cash flows from operating activities:
Income before income taxes¥

19,499¥16,707$

176,128

Adjustments to reconcile income before income taxes to cash provided
by operating activities:
Depreciation and amortization

2,874

2,976

25,963

Increase (decrease) in allowance for doubtful accounts
Interest and dividend income(3,646)(1,541)259(2,123)(32,938)(13,921)

Interest expenses
Share of (profit) loss of entities accounted for using equity method

698
(270)

1,317
(339)

6,312
(2,442)

Increase (decrease) in provision for loss on business liquidation
Loss (gain) on sales of investment securities(246)(2,984)－244(3,033)(2,225)(26,957)－

Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable - trade(5,924)293
8,967

Decrease (increase) in inventories
Decrease (increase) in other current assets

3,127
(884)

371
854

28,249(7,992)

Decrease (increase) in other non-current assets

4,267

277

38,547

Increase (decrease) in notes and accounts payable - trade

38,492(53,514)

4,261(11,334)

Increase (decrease) in other current liabilities

491

(259)

4,443

Other, net

754

26

6,814

Subtotal

20,476
1,733

15,205
2,254

184,958
15,655(705)(1,328)(6,371)

Interest and dividend income received
Interest expenses paid

(3,891)(5,442)(35,147)

17,613

10,690159,096

Payments into time deposits(5,162)(3,907)(46,635)

Proceeds from withdrawal of time deposits

3,992

3,827

36,063Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment(1,864)149(1,354)31(16,841)
1,348

(648)

(844)

(5,855)

Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities:

Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities

(95)

(371)

(862)

3,128

3,134

28,258－－Purchase of shares of subsidiaries
Net decrease (increase) in short-term loans receivable

101

(234)
294

916

Payments of long-term loans receivableCollection of long-term loans receivable

(219)
91

(1,033)44(1,987)
822

104

(111)

947

(423)

(525)

(3,824)

Other, net
Net cash provided by (used in) investing activities

See accompanying Notes to Consolidated Financial Statements.

- 8 -INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years ended March 31, 2021 and 2020
Thousands of
U.S. dollars(Note 1)Millions of yen
2021

2020

2021

Cash flows from financing activities:
Net increase (decrease) in short-term loans payable¥(9,276)

¥

2,996

$

(83,789)

Proceeds from long-term loans payable

729

600

6,589

Repayments of long-term loans payable
Purchase of treasury stock(4,357)(0)(6,649)(425)(39,355)(0)Cash dividends paid

(3,205)(2,917)(28,957)

(312)

(370)

(2,820)(557)－(5,037)

(602)

(506)

(5,439)(17,582)(7,273)(158,811)

Effect of exchange rate change on cash and cash equivalents

894

(421)

8,079

Net increase (decrease) in cash and cash equivalents

502

2,469

4,540

Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Other - net
Net cash provided by (used in) financing activities

Cash and cash equivalents at beginning of year

25,480¥Cash and cash equivalents at end of year (Note 12)25,98323,011¥

See accompanying Notes to Consolidated Financial Statements.

- 9 -25,480230,158$

234,699

INABATA & CO., LTD. AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of INABATA & CO., LTD. (“the Company”) have been prepared inaccordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting
regulations and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements from International Financial Reporting Standards.
The accounts of consolidated foreign subsidiaries are prepared in accordance with mainly either International Financial
Reporting Standards or U.S. generally accepted accounting principles, with adjustments for the specified five items as applicablein compliance with ASBJ Practical Solution No. 18, “Tentative Treatment of Accounting for Foreign Subsidiaries in Preparing
Consolidated Financial Statements.”
The accompanying consolidated financial statements have been reformatted and translated into English (with some expanded
descriptions) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange
Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements is notpresented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at March 31, 2021, which was ¥110.71 to US$1.00. These translations should not be
construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into
U.S. dollars at this or any other rate of exchange.
As permitted, amounts of less than one million Japanese yen are omitted in the presentation for 2020 and 2021. As a result, thetotals shown in the accompanying consolidated financial statements, both in Japanese yen and in U.S. dollars, do not necessarily
agree with the sum of the individual amounts.

- 10 -

2. Summary of significant accounting policies(a) Consolidation
The consolidated financial statements include the accounts of the Company and its 44 (44 in 2020) significant domestic andforeign subsidiaries (together “the Companies”), the management of which is controlled by the Company. Investments inunconsolidated subsidiaries and affiliates are, with minor exceptions, accounted for by the equity method. The Company has 5affiliates (5 in 2020) accounted for by the equity method. Intercompany transactions and accounts are eliminated.
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable tonon-controlling shareholders, are evaluated using the fair value at the time the Company acquired control of the respective
subsidiary.
For 8 consolidated subsidiaries, including SHANGHAI INABATA TRADING CO., LTD., the consolidation method underwhich tentative financial statements as of March 31 (the consolidated balance sheet date) were prepared in the same manner as
the regular year-end financial statements are used for consolidation purposes due to the regulations regarding the accounting
period in the respective countries.
(b) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term highly liquid
investments with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
(c) Allowance for doubtful accounts
An allowance for doubtful accounts is provided to cover possible losses on collection. With respect to normal accounts
receivable - trade, the allowance is stated at an amount based on the actual rate of bad debts in the past. For certain doubtfulreceivables, the uncollectible amount is individually estimated. With respect to doubtful receivables of foreign consolidated
subsidiaries, the allowance is determined by estimates of management.
(d) Securities
Equity securities issued by subsidiaries and affiliates which are not consolidated or accounted for using the equity method arestated at moving average cost.
Available-for-sale equity securities with fair market values are stated at the average fair market value for the last month of theyear. Non-equity available-for-sale securities with fair market values are stated at fair market value on the last day of the year.
Unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of net assets.
Realized gains and losses on the sale of such securities are computed using moving average cost. Other securities with noavailable fair market values are also stated at moving average cost.

- 11 -

(e) Derivative transactions and hedge accounting
Derivative transactions are measured at fair value. Hedging instruments which meet the criteria for hedge accounting are
accounted for using deferral hedge accounting, which requires that the unrealized gain or loss to be deferred as a component of
net assets until the loss or gain on the related hedged item is recognized.
Certain forward foreign exchange contracts, certain currency swap transactions and certain interest rate swap transactions areaccounted for using the allocation method and the special method. The allocation method requires that foreign currency monetary
receivables and payables covered by forward foreign exchange contracts are translated at contract rates. Under the special
method, interest rate swap transactions are accounted for as if the interest rates under those transactions were originally applied tothe underlying loans.
With regard to forward foreign exchange contracts and currency swap transactions, the evaluation of the hedge effectiveness isomitted if the significant terms of the hedging instruments and those of the hedged items are the same and the risk of change in
foreign exchange rates is effectively hedged. With regard to interest rate swap transactions which meet the criteria for the special
method, the evaluation of hedge effectiveness is omitted.
The Companies enter into forward foreign exchange contracts, interest rate swap transactions and currency swap transactions tocontrol risks related to fluctuations in the exchange rates of foreign currencies and interest rates. Forward foreign exchange
contracts and currency swap transactions are used to hedge the risk of fluctuations in foreign currency exchange rates with respect
to monetary receivables, payables and forecasted transactions denominated in foreign currencies. Interest rate swap transactions
are used to hedge the risk of fluctuations in interest rates with respect to long-term loans payable.
The Companies use these derivative transactions in connection with managing their market risk and not for speculation or
dealing purposes. The Companies minimize the credit risk exposure of these derivative transactions by using only highly rated
financial institutions as counterparties. The derivative transactions are entered into in accordance with risk management policies.
(f) Inventories
Inventories are stated mainly at the lower of cost determined by the moving average method or net realizable value.
(g) Property, plant and equipment
Property, plant and equipment are carried at cost and depreciated by the straight-line method.
(h) Leased assets
Property and equipment capitalized under finance leases are depreciated by the straight-line method over the term of therespective lease.
(i) Intangible assets
Intangible assets are depreciated by the straight-line method. Software is depreciated by the straight-line method over its
estimated useful life.
(j) Goodwill
Goodwill is depreciated by the straight-line method over five years.
(k) Income taxes
Income taxes comprise corporation tax, prefectural and municipal inhabitants’ taxes and enterprise tax. The Companies
recognize the tax effects of temporary differences between the carrying amounts of assets and liabilities for tax purposes andfinancial reporting purposes. The asset-liability approach is used to recognize deferred tax assets and liabilities for the expected
future tax consequences of the temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
(l) Translation of foreign currencies
Receivables and payables denominated in foreign currencies are translated into Japanese yen at year-end exchange rates. Assets
and liabilities of foreign subsidiaries are translated into Japanese yen at year-end exchange rates, except for net asset accounts,
which are translated at historical exchange rates. Revenue and expense accounts are translated into Japanese yen at the averageexchange rates during the year. The resulting translation adjustments are presented separately in the consolidated financial
statements as foreign currency translation adjustments and in non-controlling interests.

- 12 -

(m) Retirement benefits
The Companies provide retirement payment plans and funded non-contributory pension plans under which all eligible
employees are entitled to benefits based on the level of wages and salaries at the time of retirement or termination, length ofservice and certain other factors. The Companies sometime make additional payments that are not based on the amounts obtainedby actuarial calculations. The Company has employee retirement benefit trusts for both plans.
The Companies provide for employees’ severance and retirement benefits based on the estimated amounts of projected benefit
obligation and the fair value of plan assets at the end of the year. Actuarial differences and prior service costs are recognized
mainly in expenses using the straight-line method within the average of the estimated remaining service years of employees
commencing with the following period.
The estimated amount of all retirement benefits to be paid at future retirement dates is attributed to each period using a benefit
formula basis.
Actuarial differences are recognized in the income statement using the straight-line method over mainly 13 years.
Prior service cost is recognized in the income statement using the straight-line method over mainly 14 years.
Unrecognized actuarial differences and unrecognized prior service cost are recognized as remeasurements of defined benefit
plans within the net asset section after adjusting for tax effects.
Directors, corporate auditors and executive officers of certain subsidiaries receive retirement payments based on establishedguidelines similar to the employees’ retirement benefit plan, subject to shareholders’ approval. Retirement benefits provided for
directors and corporate auditors are sufficient to cover stipulated benefits arising from services performed as of the balance sheet
date.
Directors’ retirement benefits for officers of the Company’s subsidiaries had been made at an estimated amount based on the
Company’s internal rules for retirement allowances.
(n) Provision for bonuses
The Company and certain subsidiaries accrue amounts for employees’ bonuses based on estimated amounts to be paid in thesubsequent period.
(o) Provision for loss on business liquidation
To cover possible losses on business liquidation of subsidiaries, the Companies record an estimated allowance for such losses.
(p) Provision for management board incentive plan trust
To prepare for the payment of the Company's shares, etc., to the director, allowance for board benefit trust is recorded by theCompany’s executive share benefit provision at the expected amount of obligations on stock-based compensation to Directors.
(q) Provision for loss on guarantees
To cover possible losses associated with guarantees that the Companies provide to third parties, the Companies assess thefinancial condition of each guaranteed party and record an estimated allowance for such losses based on the estimated exposure.
(r) Amounts per share
Computations of net income per share of common stock are based on the weighted average number of shares outstanding during
each period.
Diluted net income per share is omitted because there are no dilutive shares at March 31, 2021 and 2020.
Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective fiscal
years together with the interim cash dividends paid.

- 13 -

3. Accounting changes(Significant accounting estimates)(a) Carrying amounts in the current year’s financial statements
Allowance for doubtful accounts (current assets) : minus ¥613 million (minus $5,539 thousand)Allowance for doubtful accounts (non-current aseets) : minus ¥4,545 million (minus $41,061 thousand)(b) Information on the nature of significant accounting estimates for identified items
In calculating the allowance for doubtful accounts, the Company reasonably estimates the estimated uncollectible amount ofsubject receivables based on credit classifications, etc., established in consideration of past receivables and the actual
conditions of customers’ external credit information, etc., in accordance with the policy stated in “(2. Summary of significant
accounting policies) (c) Allowance for doubtful accounts ” and determines that such amount is appropriated. However,
unforeseeable changes in assumptions, such as changes in the economic environment due to COVID-19 and other factors,
may cause the credit risks of customers to fluctuate from the initial estimates, and lead to loan loss losses and an increase or
decrease in the amount of allowance for loan losses. In addition, there is a possibility that an additional allowance for doubtful
accounts may be provided for general receivables due to an increase in the historical rate of bad debt.
With regard to the outlook for the future, we expect that the global economy and the Japanese economy will gradually
recover, although the outlook remains uncertain with continued presence COVID-19.
(Accounting standards and guidance issued, but not yet adopted)- “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020 (“Statement No. 29”))- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 26, 2021(“Guidance No. 30”))- “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, issued on March
31, 2020)(a) Overview
International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) jointly developed acomprehensive accounting standard concerning revenue recognition and, in May 2014, issued “Revenue from Contracts with
Customers” under IFRS 15 by IASB and Topic 606 by FASB, respectively. As IFRS 15 is applicable for fiscal years
beginning on or after January 1, 2018, while Topic 606 for fiscal years beginning after December 15, 2017, the AccountingStandards Board of Japan (ASBJ) developed its own comprehensive accounting standard concerning revenue recognition,
which was issued along with the corresponding implementation guidance.
In developing ASBJ’s accounting standards concerning revenue recognition, the basic principles of IFRS 15 were adopted toestablish an accounting standard that ensured comparability between financial statements, which is one of the benefits of
pursuing consistency with IFRS 15. However, if there are particular circumstances that ought to be considered, such as the
traditional accounting practice in Japan, alternative treatment may be added to the extent that comparability is notcompromised.
(b) Effective date
Effective from the beginning of the fiscal year ending March 31, 2022.
(c) Effects of the application of the standards
The Company and its consolidated subsidiaries have yet to estimate the effects of these new standards on the consolidated
financial statements.
- “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, July 4, 2019)- “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)- “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, issued on March
31, 2020)- 14 -

(a) Overview
Under the circumstances that IASB and FASB have similar detailed guidance about the measurement of fair value IFRS 13 Fair Value Measurement - in IFRS and Topic 820 in the Accounting Standards Codification - Fair Value Measurement - in
U.S. GAAP, ASBJ has made efforts to make the Japanese standards consistent with international accounting standards mainly
regarding the guidance and disclosure of the fair value of financial instruments and has issued the accounting standards.
Upon developing the accounting standard, ASBJ has basically adopted all the provisions of IFRS 13 from the viewpoint of
improving the comparability of financial statements between domestic and overseas companies by using the uniform
calculation method as a basic policy for the development of accounting standards for fair value measurement, and has
stipulated other treatments for individual items to the extent that comparability between financial statements is not
significantly impaired considering the practices that have been conducted in Japan so far.
(b) Effective date
The fair value accounting standards and guidance will be effective from the beginning of the consolidated fiscal year ending
March 31, 2022.
(c) Effects of the application of the standards
The Company and its consolidated subsidiaries have yet to estimate the effects of these new standards on the consolidated
financial statements.
(Changes in presentation method)- Changes due to adoption of “Accounting Standard for Disclosure of Accounting Estimates”
The Company and its subsidiaries adopted ASBJ Statement No. 31 “Accounting Standard for Disclosure of Accounting
Estimates” (March 31, 2020) to the consolidated financial statements for the current consolidated fiscal year, and therefore
significant accounting estimates are disclosed in the note to the consolidated financial statements.
The note does not include information for the prior consolidated fiscal year in accordance with the transitional provision set out
in paragraph 11 of the Accounting Standard.
(Additional information)- Performance-based Stock Compensation Plan for Directors
The Company has introduced a performance-based stock compensation plan, “Board Benefit Trust,” (the “Plan”) for Directors
with a view to increase their consciousness to contribute to performance improvement and corporate value increase in the mediumand long-term by clarifying the linkage between compensation for Directors and the Company’s financial performance and stock
value and sharing not only benefits of an increase in the Company’s equity value but risks of its decline.
(a) Overview of Transaction
The Plan is a performance-based stock compensation plan where a trust (a trust established under the Plan is referred to as
the “Trust”) acquired the Company’s stock using money contributed by the Company and provides Directors with theCompany’s stock and money equivalent to the amount of the Company’s stock as converted using fair value (the “Company’s
Stock, etc.”) in accordance with the Rules for Stock Compensation Granted to Directors established by the Company. The
timing of Directors receiving the Company’s Stock, etc. is at their retirement from Directors in principle.
(b) Company’s Stock Remaining in Trust
The Company has recorded the Company’s stock remaining in the Trust at carrying value in the Trust (excluding the amountof ancillary expenses) as treasury stock under net assets section. The carrying value of such treasury stock was ¥164 million
and the number of such treasury stock was 100,000 shares at March 31, 2020, while the carrying value of such treasury stockwas ¥164 million ($1,487 thousand) and the number of such treasury stock was 100,000 shares at March 31, 2021.

- 15 -

4. Securities(a) The following summarizes information on securities with fair values at March 31, 2021 and 2020.
(1) Trading securities:
At March 31, 2021 and 2020, there were no trading securities with fair market values.
(2) Available-for-sale securities at March 31, 2021 and 2020:
Securities with book values (fair values) exceeding acquisition costs:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Equity securities:
Acquisition costs

¥

5,685
59,707¥

5,542
42,510$51,354539,309¥54,021¥

36,968$487,955

¥

10
10

¥

10
10

$

90
91

¥

0

¥

0

$

0

Book values
Differences
Bonds:
Acquisition costs
Book values
Differences

Securities with book values (fair values) not exceeding acquisition costs:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Equity securities:
Acquisition costs

¥

850

¥

1,066

694

Book values
Differences

$

7,686

756

6,273

¥

(156)

¥

(309)

$

(1,413)

¥

－
－

¥

10
9

$

－
－

¥

－

¥

(0)

$

－

Bonds:
Acquisition costs
Book values
Differences

Unlisted equity securities in amount of ¥6,450 million ($58,264 thousand) and ¥6,105 million at March 31, 2021 and 2020,
respectively, are excluded from available-for-sale securities in the above table as these fair values are extremely hard todetermine due to the unavailability of market prices and the difficulty in estimating future cash flows.
(b) The following table summarizes information on available-for-sale securities sold in the years ended March 31, 2021 and 2020:
Thousands of
U.S. dollars

Millions of yen
2021
Total sales of available-for-sale securities:¥

Amount of related gains
Amount of related losses

2020

3,118

¥

2021

3,134

2,984
－

$

3,033
4

28,16826,957－(c) The loss on valuation of investment securities at March 31, 2021 and 2020 was as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Loss on valuation of investment securities¥- 16 -

2020
67

¥

2021
293

$

613

The Companies recognize impairment loss when, at the end of the period, the fair value of marketable and investment
securities is reduced to less than 50% of the acquisition cost. A loss may also be recognized when the fair market value declines
less than 50% but more than 30%, if necessary, considering the possibility of market value recovery and other factors.
5. Derivatives(a) Derivative transactions for which hedge accounting is not applied(1) Currency related
Millions of yen
March 31, 2021
Classification

Contracted
amountover 1 year

Contracted
amountType of derivative transaction

Recognized
gains(losses)

Fair
Value

Forward foreign exchange contracts:
Selling:
Non-market
transaction

U.S. dollars
Buying:

¥

22

¥

－

U.S. dollars
Japanese yen

4
158

－
－

S.G. dollars

65

－

Total

¥

250

¥

－

¥

(0)

¥

0
(1)

0
(1)

(0)
¥

(1)

(0)

(0)
¥

(1)

Millions of yen
March 31, 2020
Classification

Contracted
amountover 1 year

Contracted
amountType of derivative transaction

Recognized
gains(losses)

Fair
Value

Forward foreign exchange contracts:
Selling:
Non-market
transaction

U.S. dollars
Buying:¥84

U.S. dollars
¥

720

－

¥

(2)

－

216
419

Japanese yen
Total

¥

2
1

－
¥

－

¥

¥

1

(2)
2
1

¥

1

Thousands of U.S. dollars
March 31, 2021
Classification

Contracted
amountover 1 year

Contracted
amountType of derivative transaction

Recognized
gains(losses)

Fair
Value

Forward foreign exchange contracts:
Selling:
Non-market
transaction

U.S. dollars
Buying:

$

201

$

－

$

(1)

$

(1)

U.S. dollars
Japanese yen

36
1,428

－
－

0
(14)

0
(14)

S.G. dollars

595

－

(1)

(1)

Total

$

- 17 -

2,262

$

－

$

(17)

$

(17)

(2) Interest rate related
Millions of yen
March 31, 2020
Classification
Non-market
transaction

Type of derivative transaction

Contracted
amountContracted
amountover 1 year

¥

326

¥

－

¥

(8)

¥

(8)

¥

326

¥

－

¥

(8)

¥

(8)

Recognized
gains(losses)

Fair
value

Interest rate swaps:(Pay fixed rate, receive floating rate)
Total

There were no interest rate related derivative transactions at March 31, 2021.
(3) Stock related
There were no stock related derivative transactions at March 31, 2021 and 2020.

- 18 -

(b) Derivative transactions for which hedge accounting is applied(1) Currency related
Millions of yen
March 31, 2021
Method for hedge
accounting

Type of derivative transaction

Major
hedged item

Contracted
amountover 1 year

Contracted
amountFair
value

Forward foreign exchange contracts:
Selling:

Deferral hedge
accounting (*1)－－

U.S. dollars
G.B. pound

Accounts

2,284
0

Euro
China yuan

receivable- trade

92
80

－
－

(2)
(0)

82

－

(2)

¥

Thai baht
Buying:

¥

¥

(61)
(0)

U.S. dollars
Euro

Accounts

6,483
625

3,590
－

353
6

China yuan
Thai baht

payable- trade

45
352

－
－

7
4

122

－

(2)

Japanese yen
Forward foreign exchange contracts:
Selling:
U.S. dollars

Allocation method forforward foreignexchange contracts,
etc.

G.B. poundEuro
Swiss franc
China yuan¥
Accounts
receivable- tradeThai baht
Buying:U.S. dollars
G.B. pound

Accounts
payable- tradeEuro
Thai baht

¥

Total

- 19 -

7,780

¥

－

24
301

－
－

2
204

－
－

107

－

3,385
54

－
－

82
91

－
－

22,202

¥

3,590

(*2)

¥

301

Millions of yen
March 31, 2020
Method for hedge
accounting

Type of derivative transaction

Major
hedged item

Contracted
amountover 1 year

Contracted
amountFair
value

Forward foreign exchange contracts:
Selling:
U.S. dollars
G.B. poundEuro
Swiss franc

Deferral hedge
accounting (*1)

China yuan
Thai baht
Buying:U.S. dollars
Euro
China yuan¥
Accounts
receivable- tradeAccounts
payable- tradeThai baht

2,084
3

¥

－

¥

(8)
0

51
0

－
－

0
(0)

33
64

－
－

(0)
3

8,550

4,079
－
－

252

216
186
429

－

(19)

460

－

(32)

(1)
6

Long-term
Currency swaps:

loans payable
due within one
year

Forward foreign exchange contracts:
Selling:
U.S. dollars
G.B. pound
Allocation method forforward foreignexchange contracts,
etc.

Euro
Swiss franc¥
Accounts
receivable－－

China yuan¥

- 20 -－－

28
46

Thai baht
Total

－
－

44
102

payable- trade21,357

(*2)

－

2,891
Accounts

－
－
－

243
48

Buying:U.S. dollars
G.B. pound
Euro

¥

213
20

- tradeChina yuan
Thai baht

5,594
43

－
¥

4,079

¥

201

Thousands of U.S. dollars
March 31, 2021
Method for hedge
accounting

Type of derivative transaction

Major
hedged item

Contracted
amountover 1 year

Contracted
amountFair
value

Forward foreign exchange contracts:
Selling:

Deferral hedge
accounting (*1)－

U.S. dollars
G.B. pound

Accounts

20,6360Euro
China yuan

receivable- trade

832
724

－
－

(22)
(6)

746

－

(25)

58,56032,427

3,192$

Thai baht
Buying:U.S. dollars

$

$

(558)
(0)

Euro

Accounts

5,645

－

59

China yuan
Thai baht

payable- trade

411
3,182

－

67
36

1,106

－

(19)

Japanese yen
Forward foreign exchange contracts:
Selling:
U.S. dollars

Allocation method forforward foreignexchange contracts,
etc.

G.B. poundEuro
Swiss franc
China yuan

$

Euro

$

221
2,726

Accounts
receivable- trade

－
－

974

$

Total

－
－

741
824

- tradeThai baht

200,550(*2)－

30,578492

Accounts
payable

－
－
－
－

20
1,843

Thai baht
Buying:U.S. dollars
G.B. pound

70,280－$32,427$2,722(*1) Fair values are based on year-end forward rates and prices presented by principal financial institutions at March 31, 2021 and2020, respectively.
(*2) Since forward foreign exchange contracts, etc., are accounted for by the allocation method (refer to Note 2(e)), their fair value isincluded in that of the account receivable – trade and account payable - trade disclosed in Note 15, “Financial instruments.”- 21 -

(2) Interest rate related
Millions of yen
March 31, 2021
Method for hedge
accounting

Type of derivative transaction

Major
hedged item

Contracted
amountContracted
amountover 1 year

1,500

1,500

(*2)

1,500

1,500

－

Fair
value

Interest rate swaps:
Special method(Pay fixed rate, receive floating rate)Long-termloans payable
¥

Total

Millions of yen
March 31, 2020
Method for hedge
accounting

Type of derivative transaction

Major
hedged item

Contracted
amountContracted
amountover 1 year

460

－

21

2,370

1,500

(*2)

2,831

1,500

21

Fair
value

Interest rate swaps:
Deferral hedge
accounting (*1)

(Pay fixed rate, receive floating rate)Long-termloans payable
due within
one year¥Interest rate swaps:
Special method(Pay fixed rate, receive floating rate)Long-termloans payable
¥

Total

Thousands of U.S. dollars
March 31, 2021
Method for hedge
accounting

Type of derivative transaction

Major
hedged item

Contracted
amountContracted
amountover 1 year

13,54813,548(*2)

13,54813,548

－

Fair
value

Interest rate swaps:
Special method(Pay fixed rate, receive floating rate)Long-termloans payable
$

Total

(*1) Fair values are based on year-end forward rates and prices presented by principal financial institutions at March 31, 2021 and2020, respectively(*2) Since interest rate swaps are accounted for by the special method (refer to Note 2(e)), the fair value of long-term loans payable
and long-term loans payable due within one year are included in that of the long-term loans payable and short-term loans payable
disclosed in Note 15, “Financial instruments” respectively.

- 22 -

6. Income taxes
The Company and its domestic subsidiaries are subject to a number of taxes based on income, which, in the aggregate, indicate astatutory income tax rate in Japan of approximately 30.6% and 30.6% for the years ended March 31, 2021 and 2020, respectively.
(a) The following table summarizes the significant differences between the statutory tax rate and the effective tax rate for financial
statement purposes:
2021

2020

Statutory tax rate

30.6%

30.6%

Share of (profit) loss of entities accounted for using equity method
Expenses not deductible for income tax purposes

(0.4)
0.7

(0.6)
1.4

Dividends and other income deductible for income tax purposes
Net adjustment resulting from elimination of dividend income

(2.6)
2.5

(3.7)
3.2

Unrealized tax benefits, such as those on prior losses of consolidated subsidiaries
Unrealized tax benefits related to allowance for doubtful accounts

(0.8)
0.0

1.3
0.0

Different tax rates applied at foreign subsidiaries
Income taxes for prior periods

(3.5)
0.2

(3.4)
(0.3)

Foreign source taxes
Decrease in deferred tax assets (liabilities) resulting from changes in statutory tax rates

0.3
0.0

0.3
0.2

Other, net

0.2

(0.1)

Effective tax rate

27.2%

28.9%

(b) Significant components of the Companies’ deferred tax assets and liabilities at March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Deferred tax assets:
Allowance for doubtful accounts
Loss carryforwards

¥

390
3,276

¥

411
3,194

$

3,530
29,597

Net defined benefit liability
Directors’ retirement benefits

888
62

994
48

8,028
565

Unrealized profit on inventories
Unrealized profit on property, plant and equipment

271
377

254
435

2,449
3,411

Depreciation
Write-down of golf club memberships

158
12

173
12

1,431
109

Write-down of investment securities
Write-down of inventories

380
118

497
161

3,436
1,067

Provision for bonuses
Enterprise taxes payable

321
157

318
90

2,905
1,422

Provision for loss on guarantees

5
873

5
990

51
7,891

Valuation allowance

7,295(4,454)

7,586(4,556)65,896(40,231)

Net deferred tax assets

2,841

3,030

25,665

(661)

(661)

(5,976)(521)(15,275)(71)(10,991)(4,712)(137,978)

(234)

(214)

(2,120)(16,693)(11,939)(150,787)

Other
Total deferred tax assets

Deferred tax liabilities:
Gain on securities contributed to employee retirement benefit trust
Net defined benefit asset
Valuation difference on available-for-sale securities
Other
Total deferred tax liabilities¥

Net deferred tax liabilities- 23 -(13,852)¥(8,908)$(125,122)

7. Pledged assets
At March 31, 2021 and 2020, the following assets were pledged as security for trading transactions:Thousands of
U.S. dollars

Millions of yen
2021
Investment securities

¥

2020

12,508

¥

2021

8,909

$

112,986

8. Research and development expenses
Research and development expenses included in selling, general and administrative expenses for the years ended March 31,
2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Research and development expenses

¥

2020
37

¥

2021
52

$

337

9. Provision for loss on business liquidation
The Company and its subsidiaries planned the restructuring of some consolidated subsidiaries, estimated the loss and recognized
it as expense in the previous accounting period.

- 24 -

10. Short-term loans payable and long-term loans payable
Short-term loans payable at March 31, 2021 and 2020 consisted of bank loans bearing interest at average annual rates of 1.11%
and 1.32%, respectively. Long-term loans payable due within one year at March 31, 2021 and 2020 consisted of bank loans
bearing interest at average annual rates of 0.71% and 2.03%, respectively.
(a) Long-term loans payable at March 31, 2021 and 2020 consisted of the follows:
Thousands of
U.S. dollars

Millions of yen
2021
Unsecured loans from banks and insurance companies¥

10,5132020¥(3,037)Less amounts due within one year
¥

Total

7,475

14,2082021$(4,432)¥

9,775

94,960(27,438)$

67,522(b) The aggregate annual maturities of long-term loans payable at March 31, 2021 were as follows:

2023

Millions of yen

Thousands of
U.S. dollars

2021

2021

¥

2,137

$

19,308

2024
2025

2,271
2,023

20,51818,274

2026

1,007
35

9,099
321

2027 and thereafter
¥

Total

7,475

$

67,522(c) In order to achieve more efficient and flexible financing, the Company has concluded multi currency lines of credit agreementswith four banks. The status of these lines of credit at March 31, 2021 and 2020 were as follows:
Thousands ofMillions of yen
U.S. dollars
2021
Multi currency lines of credit¥

Credit utilized- 25 -

22,142－

2020¥

21,766－2021$

200,000－

11. Retirement and pension plans(a) Defined benefit pension plans(1) The change in the retirement benefit obligation for the years ended March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Balance at the beginning of the year

¥

2020

9,369

¥

2021

9,343

$

84,631Service cost
Interest cost

518
64

564
73

4,687
585

Actuarial differences
Retirement benefits paid

(176)
(367)

(114)
(405)

(1,594)(3,321)Others

106

(91)

996

¥

Balance at the end of the year

9,516

¥

9,369

$

85,955(2) The change in plan assets for the years ended March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Balance at the beginning of the year

¥

2020

9,006

¥

2021

10,442$81,355

Expected return on plan assets
Actuarial differences

232
1,750

253
(1,468)2,098
15,814Contributions by the Company and its consolidated subsidiaries
Retirement benefits paid

168
(319)

176
(393)

1,521
(2,882)

4

Others¥Balance at the end of the year

10,843

(2)
¥

9,006

38
$

97,946(3) The following table sets forth the funded status of the plans and the amounts recognized in the Company’s and its consolidated
subsidiaries’ defined benefit plans:
Thousands of
U.S. dollars

Millions of yen
2021
Funded projected benefit obligations¥

Plan assets
Subtotal

8,124(10,843)

2020
¥

2021

8,174
(9,006)$73,388(97,946)

Unfunded projected benefit obligations(2,718)
1,391

(832)
1,195

(24,558)
12,566

Net amount of liability and asset in consolidated balance sheet(1,327)362(11,991)

Liabilities (net defined benefit liability)

2,144(3,472)2,369(2,007)

19,374(31,366)

Assets (net defined benefit asset)
Net amount of liability and asset in consolidated balance sheet- 26 -¥(1,327)¥362$(11,991)

(4) The components of retirement benefit expense for the years ended March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Service cost

¥

2020
518

¥

2021
564

$

4,687

Interest cost
Expected return on plan assets

64
(232)

73
(253)

585
(2,098)

Amortization of actuarial differences

387
(18)

289
(0)

3,497
(168)

Amortization of prior service cost¥

Retirement benefit expense

719

¥

672

$

6,502

Actuarial differences and prior service cost included in other comprehensive income for the years ended March 31, 2021 and2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Prior service cost

2020

¥

(18)

¥

2,295

¥

2,314

Actuarial differences
Total

2021
(0)

$

(168)

(1,064)¥(1,065)20,905$

20,736(5) Unrecognized actuarial differences and unrecognized prior service cost included in accumulated other comprehensive income atMarch 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Unrecognized prior service cost

2021

(6)
(824)

¥

(24)
1,490

$

(56)
(7,445)

¥

(830)

¥

1,465

$

(7,501)

Unrecognized actuarial differences
Total

2020

¥

(6) The allocation of plan assets by major category as a percentage of total plan assets at the fair value at March 31, 2021 and 2020
was as follows:
2021
Bonds
Equity securities
Cash and time deposits
Others
Total

2020

47.1%
49.9

54.9%
41.3

1.5
1.5

3.4
0.4

100.0%

100.0%

Notes: 1. The expected long-term rate of return on plan assets is determined with consideration for both the present and future
portfolio allocation and the expected long-term rate of return on multiple plan assets at present and in the future.
2. Total plan assets include securities contributed to the retirement benefit trust (28.7% at March 31, 2021 and 20.6% at March
31, 2020).
(7) The assumptions used in accounting for the above plans were as follows:
2021
Discount rate (mainly)

0.4%
3.0%

Expected long-term rate of return on plan assets (mainly)- 27 -

2020
0.4%
3.0%

(b) Defined contribution pension plans
The required contribution to the defined contribution pension plans for the years ended March 31, 2021 and 2020 was as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Contribution to defined contribution pension plans by the Company and its
consolidated subsidiaries

¥

2020
79

¥

2021
86

$

721

12. Cash and time deposits
The reconciliation of cash and time deposits in the consolidated balance sheets and cash and cash equivalents in the consolidated
statements of cash flows at March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Cash and time deposits¥

31,462¥

25,9832020¥

29,440¥25,480(5,479)Time deposits with maturities of more three months
Cash and cash equivalents- 28 -

2021$

284,192$

234,699(3,959)(49,493)13. Other comprehensive income
Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in thecurrent or previous periods and the tax effects for each component of other comprehensive income for the years ended March 31,
2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

Valuation difference on available-for-sale securities:
Reclassification adjustments

Increase (decrease) during the year¥

20,242 ¥(2,984)(29,647) $(2,848)

182,839(26,957)

Amount before tax effect

17,257(32,495)

155,882

Tax effect(4,289)9,816(38,747)

Subtotal, net of tax effect

12,968(22,679)

117,135

80
－

348
－

728
－

Deferred gains (losses) on hedges:
Increase (decrease) during the year
Reclassification adjustments
Amount before tax effect

80

348

728

Tax effect

(25)

(106)

(231)

Subtotal, net of tax effect

55

242

496

3,155
－

(1,875)－28,499－Tax effect

3,155
－

(1,875)－28,499－Subtotal, net of tax effect

3,155(1,875)28,499Remeasurements of defined benefit plans, net of tax:
Increase (decrease) during the year

1,911

(1,370)17,266

Foreign currency translation adjustment:
Increase (decrease) during the year
Reclassification adjustments
Amount before tax effect

Reclassification adjustments

384

305

3,470

Amount before tax effectTax effect

2,295
(702)

(1,065)325

20,736(6,345)

Subtotal, net of tax effect

1,593

(739)

14,391

Reclassification adjustments

164
－

(39)
－

1,484
－

Subtotal

164

(39)

1,484

(25,091) $162,008

Share of other comprehensive income of entities accounted
for using equity method:
Increase (decrease) during the year¥

Total other comprehensive income- 29 -

17,935¥

14. Segment information(a) General information about reportable segments
Inabata Group’s reportable segments represent the group’s component divisions for which separate financial information isavailable. This information is regularly evaluated by the Board of Directors in deciding how to allocate management resources
and in assessing performance. Inabata Group is primarily engaged in the trading of merchandise, the manufacture and sale ofvarious products and the provision of services in Japan and abroad and operates its business in line with a comprehensive strategy
regarding merchandise, products and services for domestic and international markets. For effective business management
purposes, Inabata Group has segmented its corporate sales and marketing functions into four divisions (reportable segments)
based on merchandise, products and target markets/industries, namely: IT & Electronics, Chemicals, Life Industry and Plastics.
The major merchandise, products and services covered by each reportable segment are as follows:
IT & Electronics:

Semiconductor manufacturing equipment
Electronic materials, including parts
Dyes for printing

Chemicals:

Raw materials for copying
Motor parts and raw materials
Raw materials for plastic resin
Dyestuffs
LumberComposite materials
Wooden building materials
Residential housing equipment

Lifecycle Industry:

Pharmaceutical and agricultural chemicals and bulk raw materials
Raw materials for insecticides
Raw materials for toiletries
Raw and processed agricultural products

Plastics:

Raw and processed marine products
General purpose plastics
Engineering plastics(b) Information on change in reportable segments
Effective from the fiscal year ended March 31, 2020, the Company reconsidered management’s classification due to theamendment of the Company's organization aiming to promote efficiency of sales of common merchandize and plan to improve
profitability. In accordance with that, the " Housing & Eco Materials " segment has been integrated into the " Chemicals "segment.
(c) Basis of measurement for reportable segment profit and loss, segment assets, segment liabilities and other material items
Accounting methods applied to the reportable business segments are generally the same as those described in Note 2, “Summaryof significant accounting policies.” Segment income derives from operating income. Inter-segment profits and transfers are basedon prevailing market prices.

- 30 -

(d) Information about reportable segment profit and loss, segment assets, segment liabilities and other material items for the years
ended March 31, 2021 and 2020 were as follows:
Millions of yen
Year ended March 31, 2021

Net sales:
Outside customers ¥Intersegment
Total

IT &
Electronics

Chemicals

224,534－

66,626－37,361－

248,888－

66,626
1,320

37,361
1,563

LifeIndustry

Elimination& Corporate

Consolidated

172
－

－
－

577,583－

248,888
5,631

172
130

－
－

577,583
14,973

Plastics

OthersSegment income¥

224,534
6,327

Total assets¥

99,533

46,626

20,498

129,592

433

56,542353,228

Depreciation andamortization

¥

506

299

239

1,828

－

－

2,874

－

－

－

2

－

－

2

2,099

1,410

－

850

－

－

4,360

80

193

227

1,241

－

770

2,512

Elimination& Corporate

Consolidated

Amortization of
goodwill
Investments inequity method
affiliates
Increases intangible andintangible assets¥

Millions of yen
Year ended March 31, 2020
Life
Industry

IT &Electronics

Chemicals

218,690－

74,181－

36,919－270,345
－

175
－

－
－

600,312－

Plastics

Others

Net sales:
Outside customers ¥Intersegment
Total

228,690

74,181

36,919270,345175－

600,312Segment income

¥

4,482

1,208

1,166

6,235

135

－

13,229Total assets¥

92,69343,05518,447

118,666

451

49,533322,848

¥

566

343

269

1,796

－

－

2,976

－

－

－

2

－

－

2

2,137

1,137

－

882

－

－

4,156

101

170

193

1,216

－

517

2,199

Depreciation andamortization
Amortization of
goodwill
Investments inequity method
subsidiary andaffiliates
Increases intangible andintangible assets¥- 31 -

Thousands of U.S. dollars
Year ended March 31, 2021
IT &Electronics

Chemicals

Outside customers $ 2,028,134－
Intersegment

601,812－337,473
－

Total

Life
Industry

OthersElimination& Corporate

Consolidated

2,248,114
－

1,554
－

－
－

5,217,089－

Plastics

Net sales:$

2,028,134
57,153

601,812
11,925

337,473
14,122

2,248,114
50,869

1,554
1,177

－

Segment income－

5,217,089
135,249

Total assets$

899,049

421,160

185,157

1,170,558

3,916

510,727

3,190,570

$

4,578

2,705

2,161

16,517－－25,963

－

－

－

25

－

－

25

18,95912,742

－

7,681

－

－

39,382

725

1,749

2,054

11,209－6,957

22,696

Depreciation andamortization
Amortization of
goodwill
Investments inequity method
affiliates
Increases intangible andintangible assets$

Notes: 1. “Others” includes business, such as real estate rental services, not included in reportable segments.
2. Corporate assets included in the Elimination & Corporate column in the amount of ¥56,542 million ($510,727 thousand) and¥49,533 million for the years ended March 31, 2021 and 2020, respectively, are mainly surplus funds (cash and deposits),
long-term investment funds (investment securities, etc.) and assets pertaining to administrative functions of the Company.
3. Increases in tangible and intangible assets stated in the Elimination & Corporate column in the amount of ¥770 million($6,957 thousand) and ¥517 million for the years ended March 31, 2021 and 2020, respectively, are attributable to theCompany’s administrative functions.
4. Segment income has been adjusted to be consistent with operating income in the consolidated financial statements.

- 32 -

[Related information](a) Geographic information(1) Net sales
Millions of yen
Year ended March 31, 2021
Japan¥

Southeast Asia

221,593¥

126,530

Northeast Asia¥

The Americas

202,631¥

18,505

Europe¥Consolidated

8,323

¥

577,583

Millions of yen
Year ended March 31, 2020
Japan¥

Southeast Asia

237,524¥

140,117

Northeast Asia¥

The Americas

195,537¥

19,569Europe¥Consolidated

7,562

¥

600,312

Thousands of U.S. dollars
Year ended March 31, 2021
Japan$

Southeast Asia

2,001,565$

1,142,898

Northeast Asia$

The Americas

1,830,293$

167,151

Europe$Consolidated

75,180$5,217,089

Note: Sales amounts are based on customer locations and divided into countries and regions.
(2) Property, plant and equipment
Millions of yen
Year ended March 31, 2021
Japan
¥

5,005

Southeast Asia
¥

6,091

Northeast Asia
¥

1,252

The Americas
¥

1,156

Europe¥Consolidated
889

¥

822

¥

8,030

$

14,395

Millions of yen
Year ended March 31, 2020
Japan¥

Southeast Asia
4,910

¥

6,261

Northeast Asia¥

The Americas

1,026

¥

942

Europe¥Consolidated
13,964

Thousands of U.S. dollars
Year ended March 31, 2021
Japan$

45,216Southeast Asia$

55,021

Northeast Asia$

11,312The Americas$

10,445

Europe$(b) Information on the amount of impairment loss on non-current assets by reportable segment
There was no impairment loss on non-current assets for the year ended March 31, 2021 and 2020.

- 33 -

Consolidated
130,026

(c) Information on the amount of amortization and the unamortized balance of goodwill by reportable segment
Millions of yen
Year ended March 31, 2021
IT &Electronics
Amortization¥

Unamortizedbalance－

Life
Industry

Chemicals
¥

－

－

¥

－

Plastics¥－

Others
2

¥

－

2

－

Elimination& Corporate

Consolidated

¥

¥

－

2

－

2

Elimination& Corporate

Consolidated－

Millions of yen
Year ended March 31, 2020
IT &Electronics
Amortization
Unamortized

¥

－

¥

－

balance

Life
Industry

Chemicals
－

¥

－

－

Plastics¥

Others
2

－

－

¥

¥

－

4

－

¥

2

－

4

Elimination& Corporate

Consolidated

Thousands of U.S. dollars
Year ended March 31, 2021
IT &Electronics
Amortization
Unamortizedbalance

$

－
－

Life
Industry

Chemicals
$

－
－

$

－
－

- 34 -

Plastics$

25
18

Others
$

－
－

$

－
－

$

25
18

15. Financial Instruments(Fair values of financial instruments)
Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2021 and 2020 were as
follows:
Millions of yen
March 31, 2021
Book values
Cash and time deposits¥

Notes and accounts receivable – trade

31,462

Fair values¥

31,462Differences¥－

162,736(410)

Allowance for doubtful accounts (*1)

162,326

162,326－

60,411
1,212

60,411
1,207－

Investment securities
Available-for-sale securities
Long-term loans receivable(4)

Total Assets¥

255,412¥

255,408¥(4)

Notes and accounts payable – trade¥104,113¥104,113¥－－

Short-term loans payable (*2)

33,731
7,475

Long-term loans payable
Total Liabilities

33,731
7,475

(50)

¥

145,320¥

145,370

¥

(50)

¥

(1)
301

¥

(1)
301

¥

－
－

¥

299

¥

299

¥

－

Derivative transactions (*3)
Derivative transactions for which hedge accounting is not applied
Derivative transactions for which hedge accounting is applied
Total Derivative Transactions

Millions of yen
March 31, 2020
Book values
Cash and time deposits¥

Notes and accounts receivable – trade29,440152,457

Fair values¥

29,440Differences
¥

－

(401)

Allowance for doubtful accounts (*1)

152,055

152,055－

43,286
1,392

43,286

－

1,326

(0)

Investment securities
Available-for-sale securities
Long-term loans receivable(64)

Allowance for doubtful accounts (*1)

1,327
Total Assets¥

Notes and accounts payable – trade¥

Short-term loans payable (*2)

226,109¥

96,761¥

43,073
9,775

Long-term loans payable
Total Liabilities

226,109¥

96,761¥(0)－－43,073
9,862

(86)

¥

149,610¥

149,696

¥

(86)

¥

(6)
222

¥

(6)
222

¥

－
－

¥

216

¥

216

¥

－

Derivative transactions (*3)
Derivative transactions for which hedge accounting is not applied
Derivative transactions for which hedge accounting is applied
Total Derivative Transactions- 35 -

Thousands of U.S. dollars
March 31, 2021
Book values
Cash and time deposits$

Notes and accounts receivable – trade284,192
1,469,933

Fair values$

284,192

Differences－$(3,705)

Allowance for doubtful accounts (*1)

1,466,228

1,466,228－

545,674
10,948545,674
10,911－

Investment securities
Available-for-sale securities
Long-term loans receivable
Total Assets$

Notes and accounts payable – trade$

Short-term loans payable (*2)

2,307,043$

940,419$

304,683
67,522Long-term loans payable
Total Liabilities(36)

2,307,006$

940,419

$

(36)
－
－

304,683
67,974(452)$

1,312,625$

1,313,078

$

(452)

$

(17)
2,722

$

(17)
2,722

$

－
－

$

2,704

$

2,704

$

－

Derivative transactions (*3)
Derivative transactions for which hedge accounting is not applied
Derivative transactions for which hedge accounting is applied
Total Derivative Transactions(*1) The balance of “Allowance for doubtful accounts” is deducted individually from the balances of “Notes and accounts receivable trade” and “Long-term loans receivable.”(*2) At March 31, 2021 and 2020, short-term loans payables include long-term loans payable due within one year in the amount of¥3,037 million ($27,438 thousand) and ¥4,432 million, respectively.
(*3) Net receivables and payables generated from derivative transactions are shown above. Items that represent net payables areshown in parentheses.
(a) Methods used to calculate fair values of financial instruments and matters related to securities and derivative transactions
Assets(1) Cash and time deposits
Because “Cash and time deposits” are short-term and their book values approximate the fair value, these instruments are stated atbook value.
(2) Notes and accounts receivable - trade
Because “Notes and accounts receivable - trade” are short-term and their book values approximate the fair value, these
instruments are stated at book value. The fair value of doubtful receivables is calculated using the amounts deemed recoverable
because of collateral, guarantees, etc.
(3) Securities and investment securities
The fair value of equity securities is equivalent to the quoted market price, if available. The fair value of bonds is calculated using
the present value as determined by discounting the total amount of principal and interest at a rate determined by taking into
account the current maturity and credit risks. See Note 4, “Securities,” for matters relating to investment securities based onholding purposes.
(4) Long-term loans receivable
For long-term loans receivable at floating interest rates, market interest rates are reflected over a short period. As such, they arestated at book value because the book value approximates fair value unless the borrower’s credit status has become materiallydifferent after such loans were made. The fair value of long-term loans receivable at fixed interest rates is the present value of
future cash flows of the receivables. The receivables are categorized into certain periods and divided into groups according tocredit risk. Future cash flows are calculated for each group and discounted by a rate that is the sum of an appropriate index rate,
such as the long-term prime rate, and the credit spread. The fair value of doubtful receivables is calculated using the amounts
deemed recoverable because of collateral, guarantees, etc.

- 36 -

Liabilities(1) Notes and accounts payable - trade and (2) Short-term loans payable
Because “Notes and accounts payable - trade” and “Short-term loans payable” are short-term and their book values approximate
the fair value, these instruments are stated at book value.
(3) Long-term loans payable
The fair value of long-term loans payable is calculated by discounting the total amount of principal and interest at a rate that isassumed to be applied when a similar loan is newly borrowed. A part of the long-term loans payable is subject to currency swaps.
The fair value of these long-term loans payable is determined by discounting the future cash flows that were accounted for as asingle item with the related currency swaps at the rate that is assumed to apply if a similar new loan was taken out.
Derivative Transactions
See Note 5, “Derivatives.”(b) The following table summarizes book values of financial instruments with no fair values at March 31, 2021 and 2020:
Thousands of
U.S. dollars

Millions of yen
2021
Investments in unconsolidated subsidiaries and affiliates

¥

2020

4,740

¥

2021

4,564

$

42,820Available-for-sale securities
Unlisted equity securities

6,450
0

Others
¥

Total

6,395
0

11,191¥

58,2640

10,959$101,084

The above items are not included in “Investment securities” because the absence of a market value makes it impossible to estimate
future cash flows and extremely difficult to determine the fair value.
(c) Financial instruments with maturities at March 31, 2021 and 2020 were as follows:
Millions of yen
March 31, 2021
Over 1 year but
within 5 years

Within 1 year
Cash and time deposits¥

Notes and accounts receivable - trade
Available-for-sale securities
Bonds

¥

10
－

Others¥

193,731

－

¥

¥

－

Over 10 years
¥

－

477

－

－

－
－

－
－

－
－

814

－

Long-term loans receivable
Total

31,462
162,258

Over 5 years but
within 10 years

1,292

397
¥

397

0
¥

0

Millions of yen
March 31, 2020
Over 1 year but
within 5 years

Within 1 year
Cash and time deposits¥

29,440¥－Over 5 years but
within 10 years¥－

Over 10 years¥－

151,822

634

－

－

Bonds
Others

10
－

9
－

－
－

－
－

Long-term loans receivable

－

871

520

0

Notes and accounts receivable - trade
Available-for-sale securities

Total

¥

181,272¥- 37 -

1,516

¥

520

¥

0

Thousands of U.S. dollars
March 31, 2021
Over 1 year but
within 5 years

Within 1 year
Cash and time deposits$

284,192$－

Over 5 years but
within 10 years$－

Over 10 years－$

1,465,617

4,316

－

－

Bonds
Others

91
－

－
－

－
－

－
－

Long-term loans receivable－

Notes and accounts receivable - trade
Available-for-sale securities

Total

$

1,749,899

7,355$

11,672

3,588
$

3,588

4
$

4

(d) Short-term loans payable and long-term loans payable with maturities at March 31, 2021 and 2020 were as follows:
Millions of yen
March 31, 2021
Over 1 year but
within 5 years

Within 1 year
Short-term loans payable

¥

Total

30,693¥

3,037

Long-term loans payable¥

33,731－

Over 5 years but
within 10 years
¥

7,439
¥

7,439

¥

－

Over 10 years
¥

－

35

－

35

¥

－

Millions of yen
March 31, 2020
Over 1 year but
within 5 years

Within 1 year
Short-term loans payable

¥

Total

38,640¥4,432Long-term loans payable¥

43,073－

Over 5 years but
within 10 years
¥

8,775
¥

8,775

－

Over 10 years
¥

－
－

¥

－

1,000
¥

1,000

Thousands of U.S. dollars
March 31, 2021
Over 1 year but
within 5 years

Within 1 year
Short-term loans payable$

Long-term loans payable
Total

$

277,244
27,438$

304,683$－

Over 5 years but
within 10 years$

67,201- 38 -

67,201－

Over 10 years
$

321
$

321

－
－

$

－

16. Shareholders’ equity
The Japanese Corporate Law (the “Law”) became effective on May 1, 2006, replacing the Japanese Commercial Code (the“Code”). The Law is generally applicable to events and transactions occurring after April 30, 2006 and for fiscal years ending
after that date.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital, which is included in capital surplus.
Under the Law, in cases in which a dividend distribution of surplus is made, the smaller of an amount equal to 10% of thedividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must
be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in theaccompanying consolidated balance sheets.
Under the Law, additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Code,however, on condition that the total amount of legal earnings reserve and additional paid-in capital remained equal to or exceeded
25% of common stock, they were available for distribution by resolution of the shareholders’ meeting. Under the Law, alladditional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial
statements of the Company in accordance with Japanese laws and regulations.
The change in common stock for the years ended March 31, 2021 and 2020 was as follows:
Number of sharesYear ended March 31, 2021
April 1, 2020
Common stock

Increase

Decrease－

63,499,227

March 31, 2021－

63,499,227

Number of sharesYear ended March 31, 2020
April 1, 2019
Common stock

63,499,227- 39 -

Increase

Decrease－

March 31, 2020－

63,499,227

17. Treasury stock
The change in treasury stock for the years ended March 31, 2021 and 2020 was as follows:
Number of sharesYear ended March 31, 2021
April 1, 2020
Treasury stock

Increase

3,302,640

Decrease

March 31, 2021－

11

3,302,651

1. Treasury stock at the end of the current consolidated fiscal year included 100,000 shares of the Company owned by the Board
Benefit Trust (BBT trust account) for the year ended March 31, 2021.
2. The increase in treasury stock is related with the purchase of shares of less than one voting unit for the year ended March 31, 2021.
Number of sharesYear ended March 31, 2020
April 1, 2019
Treasury stock

3,002,502

Increase
300,138

Decrease

March 31, 2020－

3,302,640

1. Treasury stock at the end of the current consolidated fiscal year included 100,000 shares of the Company owned by the Board
Benefit Trust (BBT trust account) for the year ended March 31, 2020.
2. The increase in treasury stock consists of 300,000 shares from the purchase of shares by resolution of the Board of Directors and
138 shares from the purchase of shares of less than one voting unit for the year ended March 31, 2020.

- 40 -

18. Related party disclosures
The Company is an affiliate of SUMITOMO CHEMICAL COMPANY, LIMITED, which owned 22.9% and 22.8% of theCompany’s voting shares at March 31, 2021 and 2020, respectively.
SUMIKA TECHNOLOGY CO., LTD. is the subsidiary of SUMITOMO CHEMICAL COMPANY, LIMITED.
The Company controlled 15% and 15% of the voting shares of SUMIKA TECHNOLOGY CO., LTD. at March 31, 2021 and2020, respectively.
(a) Significant transactions with related parties for the years ended March 31, 2021 and 2020 were as follows:
Thousands of
U.S. dollars

Millions of yen
2021

2020

2021

SUMITOMO CHEMICAL COMPANY, LIMITEDNet sales
Purchases

¥

9,138
9,921

¥

7,837
10,706$82,544
89,614

Notes and accounts receivable - trade
Notes and accounts payable - trade

4,914
2,510

3,635
2,244

44,39522,679Pledges of investment securities
SUMIKA TECHNOLOGY CO., LTD.

10,981

7,871

99,192

Net sales
Notes and accounts receivable - trade¥

15,001
7,604¥

16,7506,375$

135,499
68,687(b) The consolidated subsidiaries’ significant transactions with related parties for the years ended March 31, 2021 and 2020 were as
follows:
TAIWAN INABATA SANGYO CO., LTD.
Thousands of
U.S. dollars

Millions of yen
SUMIKA TECHNOLOGY CO., LTD.

2021

Purchases¥

Notes and accounts payable - trade2020

16,201
3,509

¥

2021

32,556
7,472$

146,343
31,69819. Contingent liabilities
At March 31, 2021 and 2020, the Company and its consolidated subsidiaries were contingently liable as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Discounted notes receivables

¥

2020
343

¥

703

Guarantees for loans of customers and others
¥

Total

- 41 -

1,046

2021
861

$

912
¥

1,773

3,098
6,352

$

9,451

20. Subsequent events(Cash dividends)
At the meeting of the Board of Directors of the Company held on May 11, 2021 and May 22, 2020, an appropriation of
nonconsolidated retained earnings for the years ended March 31, 2021 and 2020 was duly approved as follows:
Thousands of
U.S. dollars

Millions of yen
2021
Cash dividends - ¥43.00 ($0.39) per share

¥

2,601

2020
¥

1,996

2021
$

23,494

Note: Total dividends of ¥2,601 million ($23,494 thousand) and ¥1,996 million for the years ended March 31, 2021 and 2020,
respectively, by the resolution at the Board of Directors include dividends on the Company’s stock held by the Board Benefit Trust(BBT trust account) of ¥4 million ($38 thousand) and ¥3 million.
(Sales of investment securities)
The Company resolved to sell part of the investment securities held by the Company at the Board of Directors' meeting held on May
11, 2021 and June 23, 2021.
(1) Reason for sale of investment securities
In order to pursue greater efficiency of owned assets and strengthen financial position.
(2) Details of sales of investment securities① Investment securities to be sold: Marketable securities of two listed companies owned by the Company② Time of recognition of gain on sales of investment securities: In the Three Months Ending June 30, 2021 and by the Fiscal YearEnding March 31,2022③ Gain on sales of investment securities: Approximately ¥6,400 million ($57,808 thousand) (estimate)- 42 -