Financial Review 2023
For the Year Ended December 31, 2023

CONTENTS
Inside Cover Consolidated Eleven-Year Summary
02 Management’s Discussion and Analysis
16 1 Financial Statements (IFRS)
Consolidated Financial Statements (IFRS)
16 i) Consolidated Statements of Financial Position
18 ii)	Consolidated Statements of Profit or Loss andConsolidated Statements of Comprehensive Income(Consolidated Statements of Profit or Loss)
19		

(Consolidated Statements of Comprehensive Income)

20 iii) Consolidated Statements of Changes in Equity
22 iv) Consolidated Statements of Cash Flows23 2 Notes to Consolidated Financial Statements
72 Independent Auditor’s ReportCONSOLIDATED ELEVEN-YEAR SUMMARY
AGC Inc. and Consolidated Subsidiaries
For the years ended December 31

Note

Operating Results
Net sales ���������������������������������������������������������������������
Operating profit �����������������������������������������������������������
Profit before tax �����������������������������������������������������������
Profit (loss) for the year attributable to owners of
the parent �����������������������������������������������������������������
Segment Information
Sales to external customers
Architectural Glass Operations ���������������������������������
Automotive Operations ���������������������������������������������
Electronics Operations ���������������������������������������������
Chemicals Operations ���������������������������������������������
Life Science Operations �������������������������������������������
Ceramics/Other Operations �������������������������������������

Other Data
Return on equity (ROE) �����������������������������������������������
Interest-bearing debt ���������������������������������������������������
Depreciation and amortization �������������������������������������
Capital expenditures ���������������������������������������������������
Research and development expenses �������������������������
Number of shares issued and outstanding(Thousands of shares) �����������������������������������������������
Number of employees �������������������������������������������������

(Unit: Millions of yen)2022/122021/122020/12¥2,019,254
128,779
122,775¥2,035,874
183,942
58,512¥1,697,383
206,168
210,045¥1,412,306
75,78057,12165,798(3,152)

123,840

32,715¥  474,646
499,392
311,964
569,652
123,933
39,665¥  482,714
417,639304,918
655,013138,146
37,442¥  732,230–
303,049
629,487–
32,615¥  648,394–
283,025
449,739–
31,145¥2,932,991
1,041,878
1,457,950
717,298
1,654,338
207,258¥2,814,029
1,063,009
1,350,769
669,999
1,585,590
195,335¥2,666,031
915,271
1,323,868
599,408
1,481,380
167,219¥2,534,458
860,962
1,246,885
563,898
1,243,039
127,897¥    304.73
304.01210.006,831.89¥   (14.22)(14.22)210.006,271.35¥   559.11
557.10210.005,930.27¥   147.84
147.24120.005,038.52

78

4.6%¥  695,009
175,346
231,715
57,342–0.2%¥  650,242
185,656
236,553
52,252

10.2%¥  603,194
166,756
216,50349,4442.9%¥  787,960
143,716
241,348
46,4449

217,434
56,724

227,441
57,609227,441
55,999227,441
56,1792

Financial Position
Total assets �����������������������������������������������������������������
Total current assets �����������������������������������������������������
Property, plant and equipment �������������������������������������
Total current liabilities ���������������������������������������������������
Total equity/Total net assets �����������������������������������������
Non-controlling interests in consolidated subsidiaries �����Per Share Data (Yen)
Basic—EPS �����������������������������������������������������������������
Diluted—EPS ���������������������������������������������������������������Cash dividends �����������������������������������������������������������
Equity/Net assets ���������������������������������������������������������

2023/123
4
6

Notes: 1. The Company maintains its accounting records in Japanese yen. The U.S. dollar amounts included in this consolidated eleven-year summary represent
the arithmetical results of translating Japanese yen to U.S. dollars on the basis of ¥141.83=US$1.00, the approximate exchange rate as of December
31, 2023. The inclusion of such U.S. dollar amounts is solely for convenience and is not intended to imply that Japanese yen amounts have been or
could be converted, realized or settled in U.S. dollars at ¥141.83=US$1.00 or at any other rate.
2. From the fiscal year ended December 31, 2023, the Company has five reportable segments: Architectural Glass, Automotive, Electronics, Chemicals
and Life Science. Segment information for the previous fiscal year is disclosed based on classification of reportable segments for the fiscal year ended
December 31, 2023.
3. Based on profit for the year attributable to owners of the parent. Effective July 1, 2017, the Company consolidated its common shares at a ratio of five
shares to one share. Basic earnings per share is calculated on the assumption that the consolidation of shares has been conducted at the beginningof the preceding fiscal year.
4. Based on profit for the year attributable to owners of the parent. Effective July 1, 2017, the Company consolidated its common shares at a ratio of five
shares to one share. Diluted earnings per share is calculated on the assumption that the consolidation of shares has been conducted at the beginningof the preceding fiscal year.

Financial Review 2023

2015/12

2014/122013/12(Unit: Thousandsof U.S. dollars)
2023/122019/122018/122017/12(Unit: Millions of yen)
2016/12¥1,518,039
101,624
76,213¥1,522,904
120,555
128,404¥1,463,532
119,646
114,424¥1,282,570
96,292
67,563¥1,326,293
71,172
84,522¥1,348,308
62,131
41,163¥1,320,006
79,89444,381$14,237,143
907,981865,649

44,43489,593

69,22547,43842,906

15,913

16,139463,922¥  740,920–
265,215
474,417–
37,485¥  756,160–
250,285
482,097–
34,361¥  733,953–
260,626
435,145–
33,807¥  679,071–
257,069
314,392–
32,037¥  691,411–
286,858
315,636–
32,388¥  684,607–
317,378
314,694–
31,628¥  664,239–
334,710
287,960–
33,096$ 3,346,584
3,521,060
2,199,563
4,016,442
873,814279,666¥2,335,415
742,612
1,177,691
482,490
1,282,636
125,538¥2,235,776
733,196
1,108,934
463,098
1,253,604
116,399¥2,228,560
722,5221,060,601
455,2881,289,895
105,860¥1,981,451
673,436
937,869
377,490
1,168,743
73,305¥1,991,262
637,546
982,296
346,157
1,163,767
69,594¥2,077,338
627,178
1,066,193
355,999
1,180,490
67,364¥2,120,629
682,179
1,059,946
448,018
1,145,145
57,929$20,679,623
7,345,963
10,279,560
5,057,449
11,664,232
1,461,313¥   200.85
199.95120.005,229.58¥   399.51
397.58115.005,141.43¥   302.12
300.655,239.70¥   205.14
204.2618.00
4,736.59¥    37.12
36.97
18.00
946.48¥    13.77
13.58
18.00
963.04¥    13.97
13.73
18.00
940.69$      2.15
2.14
1.48
48.17

3.9%
¥  602,843
143,361
207,661
47,4507.7%¥  541,780
121,668
230,598
45,7556.1%¥  489,085
128,226
165,095
43,912

4.3%¥  433,968
121,803
126,025
39,212

3.9%¥  468,733
137,381
125,103
38,927

1.4%¥  499,257
137,199
118,169
44,758

1.6%¥  575,014
135,751
138,480
46,882

4.6%$ 4,900,296
1,236,311
1,633,752
404,301

227,441
55,598227,441
54,101

235,177
53,224

1,186,705
50,963

1,186,705
50,852

1,186,705
51,114

1,186,705
51,448217,434
56,724(Note 5)

5. Effective July 1, 2017, the Company consolidated its common shares at a ratio of five shares to one share. For fiscal year 2017, the interim dividends
per share were ¥10.00 which was before taking into account the consolidation of shares, and the scheduled year-end dividends per share were ¥55.00
which was after taking into account the consolidation of shares.
6. Based on equity attributable to owners of the parent. Effective July 1, 2017, the Company consolidated its common shares at a ratio of five shares to
one share. Equity attributable to owners of the parent per share is calculated on the assumption that the consolidation of shares has been conductedat the beginning of the preceding fiscal year.
7. Return on equity attributable to owners of the parent.
8. Interest-bearing debt comprises short-term bank loans, long-term bank loans due within one year, commercial paper, bonds, long-term bank loans,and lease obligations.
9. Effective July 1, 2017, the Company consolidated its common shares at a ratio of five shares to one share. The number of shares issued and outstandingis calculated on the assumption that the consolidation of shares has been conducted at the beginning of the current fiscal year.

AGC Inc.

1

MANAGEMENT’S DISCUSSION AND ANALYSIS

The discussion and analysis herein of sales and operating profit are based on reportable segment
information. Sales for reportable segments include all inter-segment transactions.

Scope of Consolidation
Number of consolidated subsidiaries: 194
Major subsidiaries:
AGC Techno Glass Co., Ltd., Ise Chemicals Corporation, AGC Glass Europe, AGC Flat Glass North
America, Inc.

Currency Fluctuations
The Japanese yen weakened against the U.S. dollar and the euro during fiscal year 2023. The yearend yen-U.S. dollar rate was ¥141.83=US$1.00, compared with ¥132.70=US$1.00 in fiscal year
2022, and the year-end yen-euro rate was ¥157.12=€1.00, compared with ¥141.47=€1.00 in theprevious fiscal year.

Overview of the Period Ended December 31, 2023
■ Overview
During the fiscal year ended December 31, 2023, the global economy surrounding the AGC Group
showed signs of recovery in some regions, including the United States, but overall growth slowed
owing to factors such as economic slowdown in China, the situation in Russia and Ukraine and othergeopolitical risks, and monetary tightening in the United States, Europe and elsewhere.
The AGC Group formulated the long-term management strategy “Vision 2030” in February 2021.
Under the strategy, the Group aims to create sustainable economic and social value by transforming
our “core businesses,” which form a solid and long-term stable earnings base, and “strategic businesses,” which are high-growth fields, to optimal business portfolios playing an integral role. To
ensure the realization of the long-term management strategy Vision 2030, the Group formulated a
medium-term management plan AGC plus-2023 for the period from January 1, 2021 to December
31, 2023. The key strategies under the plan are further pursuit of ambidextrous management todeepen core businesses and explore strategic businesses, promotion of sustainability management,
and gaining competitiveness by accelerating digital transformation.
In accordance with this strategy, during the fiscal year ended December 31, 2023, the AGC Groupdecided to increase the production capacity for fluorine-related products and photomask blanks for
EUV exposure in Japan. At the same time, the Group has been steadily shifting toward an optimalbusiness portfolio. Notably, the Group started considering the transfer of its architectural glass andautomotive businesses in Russia, and ended the production of LCD glass substrate products at theKansai plant, Takasago Factory, in the display business.
In this business environment, business performance during the fiscal year under review was asfollows. In strategic businesses, shipments of optoelectronics materials fell in electronics, but shipments of photomask blanks for EUV exposure and other products were strong. In life sciences,
performance was affected by a decline in contract sales of biopharmaceuticals. In core businesses,
particularly the automotive glass business, automobile production recovered due to the easing of
the impact from the shortage of parts supplies, mainly semiconductors, and AGC Group’s shipments
and sales prices also rose. On the other hand, sales prices fell for essential chemicals such as
polyvinyl chloride.
As a result, net sales for the fiscal year under review amounted to ¥2,019.3 billion, down ¥16.6
billion, or a 0.8% decrease, from the previous fiscal year, despite the increase in sales owing toforeign exchange rates. Operating profit decreased by ¥55.2 billion, or a 30.0% decrease, to ¥128.8
billion, due to higher manufacturing costs and lower sales prices of polyvinyl chloride and certain

2

Financial Review 2023

other products, despite a decline in raw material and fuel prices. Profit before tax increased by ¥64.3
billion, or a 109.8% increase, to ¥122.8 billion, owing to factors such as impairment losses recordedin the previous fiscal year. Profit for the year attributable to owners of the parent increased by ¥69.0
billion to ¥65.8 billion.

■ Consolidated Net Sales
Consolidated net sales were ¥2,019.3 billion in fiscal year 2023.
From the fiscal year ended December 31, 2023, the Company has five reportable segments:
Architectural Glass, Automotive, Electronics, Chemicals and Life Science.
By reportable segment, the Architectural Glass Operations recorded sales of ¥476.3 billion in thefiscal year ended December 31, 2023. In Europe and Americas, sales decreased compared with theprevious fiscal year as a result of a decline in shipments and fall in sales prices in Europe, where
performance was impacted by the economic slowdown. In Asia, sales increased compared with theprevious fiscal year thanks to higher sales prices, despite a decrease in shipments in regions otherthan Japan.
Sales in the Automotive Operations were ¥499.7 billion in the fiscal year ended December 31,
2023. An increase in automobile production led to an increase in AGC Group’s shipments. Higher
sales prices, a better product mix, and foreign exchange rates also contributed to the top line.
Sales in the Electronics Operations were ¥313.2 billion. Display sales increased from the previous
fiscal year thanks partly to an increase in shipments of LCD glass substrates. Sales of electronicmaterials increased from the previous fiscal year due to an increase in shipments of photomask
blanks for EUV exposure and other semiconductor-related products, as well as the impact of foreignexchange rates, despite a fall in shipments of optoelectronics materials owing to the impact of theslowdown in the smartphone market.
Sales in the Chemicals Operations were ¥574.1 billion. Essential chemicals sales fell comparedwith the previous fiscal year owing to lower sales prices for polyvinyl chloride and certain otherproducts. Although shipments of fluorine-related products decreased, net sales from performancechemicals were on par with the previous fiscal year thanks to higher sales prices and the impact offoreign exchange rates.
Sales in the Life Science Operations were ¥126.8 billion, down ¥15.0 billion, from the previous
fiscal year, owing to a decrease in contract sales of biopharmaceuticals caused by factors such as
the loss of special demand for COVID-19-related products, a decrease in inflows of funds to biotech
startups, delays in the launch of new lines in the United States and operational adjustments toimprove facilities.
Sales by Reportable­Segment

Sales by Reportable Segment(Unit: Millions of yen)
FY2022
FY2023(Billions of yen)
2,500
2,035.9

2,019,3

2,000

1,500

Corporate or Elimination �����������������������������������������������������������
Net sales �����������������������������������������������������������������������������������

1,000¥  483,702
417,825
307,212660,380
141,787
86,602(61,636)¥2,035,874¥  476,295
499,708
313,168
574,119
126,815
83,378(54,231)¥2,019,254

Note: From the fiscal year ended December 31, 2023, the Company has five reportable segments: Architectural Glass, Automotive,
Electronics, Chemicals and Life Science. Segment information for the previous fiscal year is disclosed based on classification ofreportable segments for the fiscal year ended December 31, 2023.

500

0Architectural Glass Operations ���������������������������������������������������
Automotive Operations �������������������������������������������������������������
Electronics Operations ���������������������������������������������������������������
Chemicals Operations ���������������������������������������������������������������
Life Science Operations �������������������������������������������������������������
Ceramics/Other Operations �������������������������������������������������������

FY2022

FY2023

Architectural Glass Operations
Automotive Operations
Electronics Operations
Chemicals Operations
Life Science Operations
Ceramics/Other Operations

AGC Inc.

3

■ Profit and Expenses

Operating Profit and­Operating Margin(Billions of yen/%)
200

12

183.9

Cost of sales increased by ¥31.4 billion or 2.1% to ¥1,537.9 billion from the previous fiscal year.
The cost-to-sales ratio stood at 76.2%.
Cost of Sales and SG&A Expenses

9.0(Unit: Millions of yen)
FY2022
FY2023

9

150
128.8
6.4

100

6

50

3

0

FY2022

FY20230Operating Profit (left scale)Operating Margin (right scale)

Total Equity and ROE(Billions of yen/%)
2,000

8

1,585.6

1,654.3

6

1,500
4.6

4

1,000

Cost of sales �����������������������������������������������������������������������������
Cost-to-sales ratio ���������������������������������������������������������������������
Gross profit �������������������������������������������������������������������������������
SG&A expenses �����������������������������������������������������������������������
SG&A expenses as a percentage of net sales ���������������������������

¥1,506,492
74.0%
529,381346,675
17.0%¥1,537,897
76.2%
481,356
354,559
17.6%

Operating profit, the net result of gross profit minus selling, general and administrative (SG&A)
expenses and share of profit of associates and joint ventures accounted for using equity method,was ¥128.8 billion, down ¥55.2 billion or 30.0% year on year. The operating margin decreased from
9.0% to 6.4%.
Other expenses were ¥20.0 billion, compared with ¥153.9 billion in fiscal year 2022. Expenses
for restructuring programs of ¥11.5 billion, losses on disposal of non-current assets of ¥4.7 billion
and impairment losses of ¥0.6 billion were recorded. In addition, the Group recorded a foreignexchange gain, net of ¥8.6 billion, compared to a ¥4.0 billion foreign exchange loss in the previous
fiscal year.
Profit before tax increased by ¥64.3 billion, or a 109.8% increase, to ¥122.8 billion.
Consequently, profit for the year attributable to owners of the parent was ¥65.8 billion, up ¥69.0
billion from a loss of ¥3.2 billion in the previous fiscal year. Basic earnings per share increased froma loss of ¥14.22 to ¥304.73. ROE increased by 4.9 percentage points to 4.6%.
Profit(Unit: Millions of yen)
FY2022
FY2023

2

500

–0.2

0

FY2022

FY20230Total Equity (left scale)ROE (right scale)4

Financial Review 2023

Operating profit �������������������������������������������������������������������������
Operating margin �����������������������������������������������������������������������
Profit before tax �������������������������������������������������������������������������
Profit (loss) for the year attributable to owners of the parent �������
Percentage of net sales �������������������������������������������������������������
Per share data (Yen)—Net income—basic �������������������������������������������������������������
—Net income—diluted �����������������������������������������������������������
Return on equity (ROE) �������������������������������������������������������������

¥183,942
9.0%
58,512(3,152)–0.2%¥128,779
6.4%
122,775
65,7983.3%(14.22)(14.22)–0.2%

304.73304.01
4.6%

Sales and Operating Profit
of Architectural Glass
Operations(Billions of yen)
500

483.7

476.3

32.7

32.8

400

50

40

300

30

200

20

Performance by Reportable Segmenta. Architectural Glass
In Europe and Americas, sales decreased compared with the previous fiscal year as a result of adecline in shipments and fall in sales prices in Europe, where performance was impacted by the
economic slowdown. In Asia, sales increased compared with the previous fiscal year thanks to higher
sales prices, despite a decrease in shipments in regions other than Japan.
As a result, net sales from architectural glass for the fiscal year under review were ¥476.3 billion,
down ¥7.4 billion, or a 1.5% decrease, from the previous fiscal year. Operating profit increased by¥0.05 billion, or a 0.1% increase, to ¥32.8 billion, owing to a fall in raw material and fuel prices, while
there was an impact from higher manufacturing costs and other factors.

b. Automotive
100

0

10

FY2022

FY20230

Sales (left scale)Operating Profit (right scale)

Sales and Operating Profitof Automotive Glass
Operations(Billions of yen)

499.7

500

50
417.8

400

40

300

30
21.8

200

20

100

10

0

0
–9.8

FY2022

FY2023

Sales (left scale)Operating Profit (right scale)–10

In the automotive glass business, an increase in automobile production led to an increase in AGC
Group’s shipments. Higher sales prices, a better product mix, and foreign exchange rates also
contributed to the top line. As a result, automotive net sales for the fiscal year under review were¥499.7 billion, up ¥81.9 billion, or a 19.6% increase, from the previous fiscal year. Operating profit
increased by ¥31.6 billion to ¥21.8 billion owing to the factors described above, despite the impactof higher manufacturing costs and other factors.

c. Electronics
Display sales increased from the previous fiscal year thanks partly to an increase in shipments of
LCD glass substrates. Sales of electronic materials increased from the previous fiscal year due toan increase in shipments of photomask blanks for EUV exposure and other semiconductor-related
products, as well as the impact of foreign exchange rates, despite a fall in shipments of optoelectronics materials owing to the impact of the slowdown in the smartphone market.
As a result, net sales from Electronics Operations for the fiscal year under review were ¥313.2
billion, up ¥6.0 billion, or a 1.9% increase, from the previous fiscal year. Operating profit increasedby ¥3.7 billion, or a 25.0% increase, from the previous fiscal year to ¥18.4 billion.

d. Chemicals
Essential chemicals sales fell compared with the previous fiscal year owing to lower sales prices forpolyvinyl chloride and certain other products. Although shipments of fluorine-related products
decreased, net sales from performance chemicals were on par with the previous fiscal year thanks
to higher sales prices and the impact of foreign exchange rates.
As a result, net sales from Chemical Products for the fiscal year under review were ¥574.1 billion,
down ¥86.3 billion, or a 13.1% decrease, from the previous fiscal year. Operating profit decreasedby ¥61.3 billion, or a 48.6% decrease, from the previous fiscal year, to ¥64.8 billion.

e. Life Science
Despite the impact of foreign exchange rates, net sales from Life Science Operations for the fiscal
year under review amounted to ¥126.8 billion, down ¥15.0 billion, or a 10.6% decrease, from theprevious fiscal year, owing to a decrease in contract sales of biopharmaceuticals caused by factors
such as the loss of special demand for COVID-19-related products, a decrease in inflows of funds
to biotech startups, delays in the launch of new lines in the United States and operational adjustments
to improve facilities. Operating profit decreased by ¥29.2 billion to a loss of ¥12.4 billion, owing to
the aforementioned factors causing a decrease in sales, as well as upfront expenses associated withcapacity expansion in the biopharmaceutical field.

AGC Inc.

5

Sales and Operating Profit
of Electronics Operations

Sales and Operating Profit by Reportable Segment(Unit: Millions of yen)
FY2022
FY2023(Billions of yen)
400

40

307.2

313.2

300

30

18.4

200

20

14.7

100

0

10

FY2022

FY2023 0

Sales (left scale)Operating Profit (right scale)

Sales and Operating Profitof Chemicals Operations(Billions of yen)
800

200

Architectural Glass Operations
Sales �������������������������������������������������������������������������������������
Operating profit ���������������������������������������������������������������������
Operating margin �������������������������������������������������������������������
Automotive Operations
Sales �������������������������������������������������������������������������������������
Operating profit ���������������������������������������������������������������������
Operating margin �������������������������������������������������������������������
Electronics Operations
Sales �������������������������������������������������������������������������������������
Operating profit ���������������������������������������������������������������������
Operating margin �������������������������������������������������������������������
Chemicals Operations
Sales �������������������������������������������������������������������������������������
Operating profit ���������������������������������������������������������������������
Operating margin �������������������������������������������������������������������
Life Science Operations
Sales �������������������������������������������������������������������������������������
Operating profit ���������������������������������������������������������������������
Operating margin �������������������������������������������������������������������

¥483,702
32,7166.8%¥476,295
32,7636.9%

417,825(9,822)–2.4%

499,708
21,786
4.4%

307,212
14,6774.8%

313,168
18,352
5.9%

660,380
126,08519.1%

574,119
64,76911.3%

141,787
16,862
11.9%

126,815(12,378)
–9.8%

660.4
574.1

600

150

126.1

Assets, Liabilities and Equity

400

100

64.8

200

0

50

FY2022

FY20230

Sales (left scale)Operating Profit (right scale)

Sales and Operating Profitof Life Science Operations(Billions of yen)
160

80

141.8
126.8

120

60

80

40

40

16.9

20

0

0
–12.4

FY2022

FY2023–20

Sales (left scale)Operating Profit (right scale)

6

Financial Review 2023

We continue to adhere to a policy of maintaining appropriate liquidity, securing the funds necessary
to conduct our operations and ensuring the soundness of our balance sheet. With the aim of facilitating the stable procurement of long-term funds, we have obtained an A– rating from Standard &Poor’s, an A2 rating from Moody’s Investors Service and an AA rating from Rating and Investment
Information, Inc.
Total assets as of the end of the fiscal year were ¥2,933.0 billion, up ¥119.0 billion from the endof the previous fiscal year. This increase was mainly due to an increase in property, plant andequipment.
Total liabilities as of the end of the fiscal year were ¥1,278.7 billion, up ¥50.2 billion from the endof the previous fiscal year. This increase was mainly due to an increase in interest-bearing debt.
Total equity as of the end of the fiscal year was ¥1,654.3 billion, up ¥68.7 billion from the end of
the previous fiscal year. This increase was mainly due to an increase in exchange differences ontranslation of foreign operations affected by the depreciation of the yen compared to the end of theprevious fiscal year.
As a consequence of the above, the equity attributable to owners of the parent ratio for fiscal year
2023 decreased by 0.1 percentage points from 49.4% to 49.3%. Equity attributable to owners of
the parent per share increased from the previous fiscal year to ¥6,831.89.

Interest-Bearing Debt andDebt-to-Equity Ratio

Summary of Assets, Liabilities and Equity(Unit: Millions of yen)
FY2022
FY2023(Billions of yen/Times)
0.8

800
695.0
650.2

0.6

600

0.41

0.42

400

0.4

200

0.2

0

FY2022

FY2023¥2,814,029
1,063,009
436,516
1,350,769
669,999
650,242
1,585,590
49.4%
6,271.35
0.41¥2,932,991
1,041,878
454,056
1,457,950
717,298
695,009
1,654,338
49.3%
6,831.89
0.42

0Interest-Bearing Debt (left scale)
Debt-to-Equity Ratio (right scale)* Debt-to-Equity Ratio = Interest-Bearing
Debt/Total Equity

Equity Attributable to
Owners of the Parent Ratio(%)

Total assets �������������������������������������������������������������������������������
Total current assets �������������������������������������������������������������������
Inventories ���������������������������������������������������������������������������������
Property, plant and equipment ���������������������������������������������������
Total current liabilities �����������������������������������������������������������������
Interest-bearing debt �����������������������������������������������������������������
Total equity �������������������������������������������������������������������������������
Equity attributable to owners of the parent ratio �������������������������
Equity attributable to owners of the parent per share (Yen) ���������
Debt-to-equity ratio (Times) �������������������������������������������������������Cash FlowsThe free cash flow for the fiscal year, which is the sum of cash flows from operating activities andinvesting activities, was ¥32.8 billion (positive ¥71.8 billion in the previous fiscal year) mainly due toprofit before tax and proceeds from sale of other financial assets. On the other hand, there wereacquisition of treasury shares and payment of dividends in cash flows from financing activities. Cash
& cash equivalents as of the end of the period (net cash) decreased by ¥63.7 billion or 30.4% fromthe end of the previous fiscal year to ¥146.1 billion.

60
49.4

49.3

■ Cash Flows from Operating Activities
Net cash from operating activities for the fiscal year was ¥212.5 billion, down ¥4.6 billion or 2.1%
from the previous fiscal year.

40■ Cash Flows from Investing Activities
Net cash used in investing activities for the fiscal year was ¥179.8 billion, up ¥34.5 billion or
23.7% from the previous fiscal year. This expenditure was mainly due to purchase of property,
plant and equipment.

20■ Cash Flows from Financing Activities
0

FY2022

FY2023

Free Cash Flow

Net cash used in financing activities for the fiscal year was ¥108.0 billion, up ¥29.8 billion or 38.1%
from the previous fiscal year. This expenditure was mainly due to acquisition of treasury shares andpayment of dividends.
Summary of Cash Flow Statements(Billions of yen)

(Unit: Millions of yen)
FY2022
FY2023

80
71.8

60

40

32.8

20

0

FY2022

FY2023

Net cash from operating activities ���������������������������������������������
Profit before tax ���������������������������������������������������������������������
Depreciation and amortization �����������������������������������������������
Net cash from investing activities �����������������������������������������������
Purchase of property, plant and equipment andintangible assets �����������������������������������������������������������������
Free cash flow ���������������������������������������������������������������������������
Net cash from financing activities �����������������������������������������������
Effect of exchange rate changes on cash and cash equivalents �����
Net increase (decrease) in cash and cash equivalents ���������������Cash and cash equivalents at beginning of year �����������������������Cash and cash equivalents at end of year ���������������������������������

¥217,146
58,512
185,656(145,312)¥ 212,546
122,775
175,346(179,790)(223,921)
71,834(78,206)
20,257
13,885
195,830
209,716(213,531)
32,755(108,021)
11,610(63,654)
209,716
146,061

AGC Inc.

7

Business Risks
In 2023, the AGC Group carried out a comprehensive overhaul of the classification of key risks forthe purpose of managing risks in accordance with their characteristics. The Group has grouped its
risks into the following seven categories, as shown in the table below.
Category

Strategy

Examples of risk

Various individual risks related to business management, such aschanges in market environment, competitive advantage, new businessexploration and investment, and geopolitical and country risks
Procurement risks due to supply chain issues

Operation

Business suspension and compensation risks due to violation of environment and safety-related laws and occupational accidents
Risks associated with violations of laws, ordinances and regulations
regarding product quality and customer requirements
Risks of administrative sanctions and business suspension arising fromantitrust law, bribery, and security trade control

Compliance

Risk of loss of trust due to intentional tampering with quality and environmental data
Risk of loss of trust due to improper accounting or window dressing

Sustainability

Risk of erosion of trust and suspension of transactions due to the inability
to deal with requests regarding climate change, respect for human rights,
and related issues

Natural disasters andinfectious diseases

Business interruption risk due to natural disasters such as large-scale
earthquake and storm damage, outbreak of an unknown virus, or
pandemic

Cybersecurity andinformation security

Risk of information leak or business interruption due to cyberattack Riskof information leak due to reasons other than cyberattack

Financial

Risk related to the reliability of financial reporting, as well as financing andfund procurement

In risk management, the Group has identified as key risks those risks that are expected to havea significant impact on the Group when they occur, considering the magnitude of the impact andthe likelihood of occurrence, and is closely monitoring them.
In the Strategy category, in-house companies, SBUs, and corporate divisions analyze risks andexamine countermeasures for each business and project. If necessary, such risks are deliberated onby the Management Committee and the Board of Directors. Key risks are revised every year in orderto respond rapidly to changes in the market environment and the factors that may impact risks.
For risks other than those in the Strategy category, the corporate division in charge of each risk
establishes guidelines and related policies, as well as undertakes related activities such as familiarization, training, and auditing. In addition, the entire AGC Group conducts self-inspections, and theresults are monitored by the Management Committee and the Board of Directors. Key risks areadded when needed. Concurrently, key risks are revised in years when medium-term management
plans are formulated, considering the magnitude of the risks’ impact and likelihood of occurrence.

8

Financial Review 2023

Risk Management Process
To be carried out in years when
medium-term management plans are developed*2

To be carried out on a yearly cycle

Check response status /consider countermeasures

Select key risks

Board of Directors

Supervise risk management activities andconfirm activity results
Report the identified
key risks
Confirm risk
management activity
results

Management
Committee*1

Corporate Planning
General Division

Discuss and identify
the key risks fromthe extracted risks
with top management

Risk survey

Divisions in charge ofindividual risks

Domestic andoverseas subsidiaries

Confirm the response
to key risks

Study theextracted risks
Instruct
to check

In-house companies /SBUs / Corporate
DivisionsMonitor risks

Instruct
to check

Survey and extract
risks in the own
division based on
both the importanceand likelihood of
occurrence*1 Including business strategy meetings and other meetings similar to Management Committee meetings

Report to theBoard of Directors
after reporting toManagement Committee

Improvement
instructions

Confirm and reporton the results ofchecking,
countermeasures,and review

Considerimprovement
instructions / Request
for implementation of
measures to address
key risks

Review the results ofchecking andcountermeasures

Formulate
improvement plans
for the next
fiscal year
RequestCheck the response
to key risks
Considercountermeasures forrisks not adequately
addressed

Implement
countermeasures for
key risks*2 Revisions will be made as needed in accordance with changes in the business environment and other factors.

<Response to risks that have emerged>
In preparation for unforeseen events that could have a significant impact both on the operating results
and financial condition of the AGC Group in accordance with the relevant internal rules, the Grouphas established a crisis management report line to report on critical information speedily and surely
to the CEO, and to further distribute and share the information among officers and employees
concerned under the “Bad News First” concept. In addition, the Group has a system where a Grouptask force can be set up immediately at the discretion of the President & CEO to ensure that a prompt
and appropriate initial response can be taken.
Business risks
Risks associated with the Group’s operations and other risks that may materially influence investors’decisions are stated in this section. However, this section does not include all possible risks relating
to the Group; there may exist additional risks not stated below. Any such risks are also likely to
influence investors’ decisions. Forward-looking statements in this section are based on information
available as of March 28, 2024.

<Strategic risks>(1) Geopolitical risk / country risk
The Group, in addition to its operations in Japan, has overseas operations, including exports andimports of products and manufacturing abroad. As risks associated with these global businessactivities, the Group is considered to face geopolitical and country risks including deteriorating political and economic conditions, the imposition of regulations on exports and imports and foreign
investments, unexpected changes in laws and regulations, the worsening of public security, economic sanctions between countries, and the occurrence of social turmoil or other disruptions due
to terrorist attacks, war, infectious diseases or other factors in the countries and regions where theGroup operates. For its part, the Group carefully monitors factors such as political and economic
conditions and regulatory trends in each country and region and strives to mount effective responses
appropriate to the situation.
However, the occurrence of these events may hinder the Group’s overseas operations and havea serious effect on its performance and financial position.

AGC Inc.

9

(2) Changes in the market environment
Demand for the Group’s products is impacted by market trends in industries such as construction
and building materials, automobiles, electronics and displays, chemicals, and pharmaceuticals andagrochemicals. The Group’s products are supplied throughout the world, for example in Asia, theUnited States and Europe, as well as in Japan, and sales are therefore influenced by local economic
conditions. Although the Group is working hard to build an earnings structure that is resilient tochanges in the business environment by improving productivity and reducing fixed and variable costs,
through falling sales volumes and prices, its performance and financial position are susceptible todeclining demand from the industries as well as economic downturns in the regions where its
products are primarily sold.
1) Architectural Glass
In the Architectural Glass segment, the Group has established development and production basesin Japan/Asia, Europe and the Americas and supplies products throughout the world. Demand
for architectural glass is correlated with construction investment, which varies with economic
conditions in each region and country. Accordingly, earnings in this business could be impacted
by fluctuations in demand for architectural glass.
2) Automotive
In the Automotive segment, demand for automotive glass is influenced by automobile sales
volume, which is correlated with factors such as economic fluctuations in each region andcountry. Accordingly, earnings in this business could be impacted by fluctuations in demand forautomotive glass.
3) Electronics
Products in the display business are used in LCD TVs, smartphones, and tablets, etc. In the LCD
glass substrate business, changes in the market shares of panel manufacturers, which are theGroup’s customers, shifts in market trends, and other developments are expected to occur. The
Group has been working to expand sales based on its customer portfolio. Nonetheless, customer
and market trends could have an impact on the profitability of the display business. In the electronic materials business, the Group’s main customers are companies involved in industries suchas semiconductors and optoelectronics. The performance of these customers depends onmarket trends in areas such as semiconductors, smartphones, communications infrastructure
and industrial equipment. For this reason, earnings in the electronic materials business could be
influenced by the impact of these trends.
4) Chemicals
In chlor-alkali products, the Group has established production bases primarily in Japan andSoutheast Asia, where progress is being made on infrastructure development, and is expanding
its business. Demand for these products is mainly correlated with economic growth rates andcapacity utilization in core industries in each region and country. Accordingly, earnings in thisbusiness could be impacted by fluctuations in demand for chlor-alkali products. In the fluorochemicals & specialty business, the Group’s main customers are companies involved in transportation equipment, semiconductor and construction industries. Accordingly, earnings in the
fluorochemicals & specialty business could be impacted by market trends in these industries.
5) Life Science
In the life science business, the Group is greatly impacted by business conditions and the development status of new products in the pharmaceuticals and agrochemicals industries. Accordingly,
earnings in the life science business could be impacted by these trends.
(3) Risks related to competitive advantage
In every business in which the Group operates, there are competitors supplying products similar to
those of the Group. Accordingly, to maintain its competitive edge relative to those competitors, theGroup is striving to identify the needs of markets and customers, and to meet requests for quality, price,delivery and other factors, as well as develop new technologies and acquire intellectual property.

10 Financial Review 2023

However, should the Group fail to appropriately respond to changes in those customer needs,
develops new technologies too slowly, or intellectual property-related lawsuits and other legal proceedings occur, growth could be hampered and profitability could decline. This may significantly
impact the AGC Group’s performance and financial position.
Currently, the Group is involved in some intellectual property-related lawsuits and other legal
proceedings. If these lawsuits and legal proceedings result in a disadvantageous outcome for theGroup, its performance and financial position may be significantly impacted.
(4) Risks related to new business exploration and investment
The Group strives to explore new businesses, with the aim of ensuring short- and medium-term
growth and enhancing profitability. The Group accomplishes this goal through investment-driven
acquisitions of technologies and businesses. When engaging in new business exploration andinvestment, the Group strives to identify risks by undertaking profitability analysis and due diligence,
considering a range of risks. However, if the environment changes or unforeseen risk factors materialize during the business development phase, the Group’s growth and profitability might be hindered.
This has the potential to significantly affect the Group’s performance and financial position.

<Operation risk>(1) Supply chain
In cases where manufacturing is outsourced to subcontractors, the Group endeavors to secure
multiple subcontractors from the perspective of business continuity.
However, given that some of the Group’s products cannot be replaced by alternatives, should
production cease temporarily or for an extended period because of serious production disruptions
and similar situations at the Group or the Group’s manufacturing subcontractors, the Group’s performance and financial position could be serious affected.
Additionally, as part of the Group’s production activities, the Group uses certain special raw
materials, supplies and other resources for which suppliers are limited. The Group considers alternative materials and strives to promote the purchasing of such raw materials, supplies, and otherresources from multiple suppliers.
However, if the supply of these materials tightens or is delayed, or price fluctuations occur, theGroup’s performance and financial position may be greatly affected.
(2) Environment, safety, and quality
The Group is making every effort to ensure that products are of the highest quality, according to theirindividual characteristics.
Despite these efforts, the possibility remains that quality problems may occur because of unanticipated factors, prompting a major recall, for example. If the Group is pursued for product liability, this
could have a significant impact on its performance and financial position.
Additionally, the Group complies with all applicable laws and regulations related to the environment, while striving to protect the global environment by mitigating environmental impacts associated with business operations through such means as setting and implementing voluntary control
standards that are more stringent than legal and regulatory benchmarks.
Nevertheless, as an environmental regulation risk, the Group could find itself involved in unintended environmental pollution or other such incidents as a result of emissions from the Group’s
manufacturing processes, chemical substances contained in its products, or other such causes.
Such a scenario could result in a deterioration in the Group’s social credibility, restrictions on business activity, incurring expenses, and other consequences, which could affect the Group’s profit
and loss. Moreover, revised or strengthened regulations in each country or region may require theGroup to bear additional costs or capital investment, or such regulations may hinder productdevelopment, production, sales, services and other business activities. In such a scenario, theGroup’s profit and loss could be affected.

AGC Inc. 11

In the Chemicals segment, the Group manufactures and sells various fluorine-related products.
Chemical substances that contain carbon and fluorine atoms (perfluoroalkyl compounds or polyfluoroalkyl compounds) are broadly and collectively referred to as PFAS. Although there are approximately 12,000 types of PFAS, only a few types of PFAS are currently targeted by the Stockholm
Convention due to concerns about their negative impacts on the environment and human health.
Among the three types of PFAS listed [as Persistent Organic Pollutants (POPs)] in the Stockholm
Convention, the Group has never engaged in the production of PFOS and PFHxS and had alreadyceased the production and sale of PFOA in 2015, prior to PFOA having been targeted under the
Stockholm Convention. Although each PFAS substance has distinct characteristics and different
properties, the European Union and some states in the United States are proposing to regulate all
PFAS collectively without distinguishing the various PFAS substances. Considering the significant
role of fluorine-related products in many industries, the Group is making efforts, such as submitting
public comments to the agency of European Union, to ensure that PFAS will be regulated to theappropriate extent by taking into account the properties of each PFAS substance based on sufficientscientific findings, even if certain restrictions are enforced on PFAS. The scope and details of regulations regarding PFAS are not finalized yet; however, the regulations which may be introduced could
affect the Group’s performance.
Furthermore, the Group endeavors to prevent occupational accidents and other accidents involving equipment and facilities such as production machinery, through the establishment and operationof a systematic management system for the environment, industrial safety and security, and occupational safety and health, along with efforts to promote and ensure machinery safety and to manage
inspections, maintenance and repairs.
However, unforeseeable events such as a severe occupational accident, serious fire, explosion
or leakage incident may occur. In such a case, the Group’s profit and loss could be affected.

<Compliance risks>(1) Government regulations
In the countries and regions where it operates, the Group is subject to the local government approval
and authorization of investments, regulations on exports and imports, and laws and regulations
governing commercial transactions, labor, patents, taxation, foreign exchange, and other issues. The
Group closely monitors trends in amendments to relevant laws and regulations and strives to gather
information. Despite these efforts, amendments to relevant laws and regulations may significantly
influence the Group’s performance and financial position.
(2) Litigation and legal procedures
There is always a risk that lawsuits and other legal proceedings may be taken against the Group
with respect to its operations at home and abroad. Currently, the Group is involved in some lawsuits
and other legal proceedings. If these lawsuits and proceedings result in an unfavorable outcome for
the Group, its performance and financial position may be significantly impacted.
In the United States, multiple lawsuits have been filed by individuals, local governments, and others
against fluorine-based fire-fighting foam manufacturers and fluorine chemical manufacturers, including
the Group, alleging environmental and health impacts caused by products, such as fire-fighting foams,
that contain PFAS. Although it is not possible to predict the outcomes of these lawsuits, if the outcomes turn out unfavorable for the Group, its performance and financial position may be affected.
The Group is appropriately addressing these lawsuits with the assistance of outside legal counsel.

<Sustainability risks>
The Group is pushing ahead with sustainability management with the goals of contributing to its
long-term growth and realizing a sustainable society. For long-term social issues (material issues),
which will be crucial to advancing sustainability management, the Group has identified the five key
risks listed below, along with major opportunities. Certain risks that may materialize in the short andmedium term will be managed through integrated risk management. Additionally, the Sustainability
Committee, which was established under the supervision of the Board of Directors, is in charge ofrisk management for the principal key risks. The Sustainability Committee makes decisions on
countermeasures and deliberates on initiatives.

12 Financial Review 2023

(1) Responding to climate change issues
Since the Paris Agreement was reached in 2015, the trend toward decarbonization has been accelerating, and energy-related policies, and laws and regulations are expected to become stricter, whilesocial demands for companies to achieve net zero greenhouse gas emissions are increasing. With
this risk in mind, the Group has set its vision for 2050 to “aim for net zero emissions from our own
business activities (Scope 1, 2).” Concurrently, it has established a goal to “contribute to the realization of net zero carbon worldwide through our products and technologies.” To realize its vision for2050, the Group will strive to implement measures to reduce greenhouse gases according to thesources of emissions, such as the development of manufacturing technologies and facilities with low
greenhouse gas emissions. At the same time, the Group will take this item as a major opportunity
to expand sales of products that save or generate energy throughout their life cycle, and to build
business models that contribute to the spread of renewable energy.
However, if carbon pricing such as a carbon tax which has begun to be implemented in someareas is required to be implemented on a full scale, the cost burden required to comply with theseregulations and other rules may have an impact on the Group’s profit and loss. Additionally, the Groupmay potentially be subject to opportunity loss due to deterioration of its reputation or social credibility
if it is unable to address increasingly stringent regulations in each country and geographical region
for conforming to regulations on greenhouse gas emissions and otherwise addressing climatechange; it is unable to achieve targets for reducing greenhouse gas emissions in alignment with theParis Agreement; or it is unable to address mounting stakeholder demands for the Group to contribute to decarbonization through its business activities.
(2) Effective use of resources
Stricter regulations on the use of depletable resources such as rare earth materials and increased
demand for water resources due to the progress of urbanization are expected to have an impact on
manufacturing activities. At the same time, social demand for waste reduction and recycling isincreasing as the recycling-oriented economy accelerates. The Group is striving to utilize recycled
raw materials and materials, as well as reduce the amount of landfill disposal. It considers this item
as a major opportunity to expand sales of products that contribute to the purification of groundwaterand rainwater in water-scarce areas, develop products and manufacturing processes that use lessdepletable resources, and expand sales of products that are highly recyclable and reusable.
However, if the trend toward developing standards and legislation for recycling-oriented economic
systems advance faster than anticipated, the Group may be unable to adequately meet demand for
waste reduction and recycling. Such a scenario could lead to opportunity losses in the market.
(3) Supply chain considering society and the environment
As supply chains become more globalized and complex, it may be expected that illegal employment
issues, such as forced labor and child labor, will occur at suppliers and subcontractors, as well as
operational stoppages, regulatory violations, and related issues due to stricter environmental regulations. With this risk in mind, the Group has established the AGC Group Human Rights Policy andthe AGC Group Purchasing Policy, which stipulates sustainable procurement and other measures
to reduce environmental impact. Moreover, the Group will work to add value to the entire supply
chain. It announced the Partnership Declaration, which aims to build co-existence and co-prosperity
with suppliers through collaboration that transcends existing business relationships and corporate
scale. The Group will strive to manage suppliers with an emphasis on respect for human rights andenvironmental protection.
(4) Ensuring fair and equal employment and workplace safety
There is a growing need for compliance in employment and respect for workers’ rights, as well asa need for safety measures at manufacturing sites due to the increasing number of inexperienced
and elderly workers. With this risk in mind, the Group will strive to improve employee engagement
and prevent the occurrence of serious and lost-time injuries.
(5) Relationship with local communities and environmental considerations
There is growing interest in the expansion of living areas and the maintenance of the surrounding
biodiversity due to the spread of urbanization around the world, as well as a growing awareness of theneed to improve quality of life (QOL) as living standards improve in emerging countries. With this riskin mind, the Group will strive to reduce water consumption, conserve biodiversity, and eliminate environmental accidents, as well as build good relationships with the areas where its work sites are located.

AGC Inc. 13

<Risk of natural disasters and infectious diseases>
In preparation for the occurrence of natural disasters, infectious diseases or other such events, theGroup has assessed the risks concerning earthquakes, high winds, flooding, infectious diseases,
and other such events at its major bases, and has drawn up business continuity plans for bases thatare exposed to significant hazards.
Despite these efforts, the Group faces the risk of unforeseen events such as the interruption ofbusiness activities, damage to production facilities, suspension of product shipments due to severed
transportation networks, as a result of natural disasters such as major earthquakes, typhoons, andfloods as well as unknown infectious diseases that may exceed what is anticipated by the business
continuity plans. If production is suspended temporarily or for an extended period in the Group or
the Group’s supply chain as a result of the occurrence of such unforeseen events, the supply of
products to customers may be disrupted given that alternative production is not possible for certain
products, and this could have an impact on the Group’s performance and financial position.

<Cybersecurity and information security risk>
Information security threats continue to increase as a result of temporary operational stoppages or
the leakage of information assets caused by cyberattacks, or natural disasters, unauthorized access,and other unforeseen situations. The Group strives to protect its information assets, such as IT
systems, manufacturing systems, and data. Moreover, the Group implements measures to prevent
security incidents and measures to minimize the impact of such incidents when they occur.
However, if important operations are interrupted or confidential data is leaked and so forth due
to a cyberattack, natural disaster, unauthorized access, or other such unforeseen situation, this may
have a significant impact on the Group’s performance and financial position.

<Financial risks>(1) Rising raw material and fuel prices
If there are fluctuations in the prices of electricity, fuel gas, heavy oil or raw materials used in theGroup’s production activities, the Group’s performance and financial position could be affected. The
Group hedges the risk of price fluctuations for certain raw materials and fuel through instruments
such as commodity contracts. Nevertheless, the Group may be unable to completely eliminate theimpact of rising raw material and fuel prices.
(2) Exchange rate fluctuations
The Group manufactures and sells products worldwide, and converts transaction accounts in local
currencies, including sales, costs, and assets, into Japanese yen when preparing its consolidated
financial statements. Even if the values of these items remain unchanged in local currency terms,
they may change when converted into Japanese yen depending on exchange rates.
The Group also manufactures products at its facilities worldwide, including Japan, and exports
the products to a number of countries. The Group generally procures raw materials and sells products in the local currency of each country/region, but there are some product sales and materialpurchases denominated in foreign currencies. Accordingly, fluctuations in exchange rates influence
the prices of materials the Group procures and the pricing for its products. The Group implements
measures such as hedge transactions to address short-term exchange rate fluctuations, along withstriving to reduce risk through steps such as conducting production from production bases locatedglobally. Despite these efforts, the Group’s performance and financial position could be impacted
heavily as a result of large movements in exchange rates.
(3) Retirement benefit obligations
The Group calculates costs for employee retirement benefits and obligations based on actuarial
assumptions of the returns on pension funds and a specific discount rate. If the actuarial assumptions
and results diverge substantially because of deterioration in the market environment for pension fundmanagement, future costs for retirement benefits will increase, and this may seriously impact theGroup’s performance and financial position.

14 Financial Review 2023

(4) Impairment of non-financial assets
Non-financial assets including property, plant and equipment, goodwill and intangible assets reported
on the Group’s consolidated statements of financial position may become subject to impairment loss
if a recoverable amount of any such asset has fallen below the carrying amount due to lower profitability, changes in fair value, or other such circumstances going forward. Such a scenario could
significantly affect the Group’s performance and financial position. In particular, in the display business, which is included in the Electronics segment, the Group has recognized a deterioration in
operating profitability primarily due to the impact of a slow recovery in demand for LCD glass substrates and the increased cost caused by the weaker yen and the soaring raw materials and fuelprices, which resulted in an indication of impairment for the cash-generating unit to which the relevant
non-financial assets belong. In addition, the Group recognized a deterioration in operating profitability
at AGC Biologics, Inc., which is a contract development and manufacturing organization (CDMO),
offering biologically active pharmaceutical ingredient (API) and gene and cell therapy pharmaceuticalmanufacturing services, and is included in the life science segment. The deteriorating operating
profitability was primarily due to a temporary downturn in demand across the market as a whole due
to a decrease in inflows of funds to biotech startups and delays in the launch of new lines, resulting
in an indication of impairment for the cash-generating unit to which the relevant non-financial assets
belong. The Group has performed impairment tests for each cash-generating unit. As a result, since
the recoverable amount calculated based on the value in use was above the carrying amount ofeach cash-generating unit, the Group did not recognize impairment losses. However, it may be
impacted in the future by economic and other conditions in the market.

Fees for Audit and Non-audit Services by the Independent Auditor andOther Its Network Firms
Details of compensation for the Independent Auditor(Unit: Millions of yen)
FY2022
FY2023(as of December 31, 2022)(as of December 31, 2023)
Compensation Compensation
Compensation Compensation
based onbased on audit
based onbased on audit
non-audit
and attestation
non-audit
and attestation
services
services
services
services

The Company �������������������������
Consolidated subsidiaries �������
Total �������������������������������������

¥130
71
¥202

¥1
5
¥7

¥163
80
¥243

¥2
5
¥7

Non-audit services provided to the Company and its consolidated subsidiaries consisted ofagreed upon tasks.
Details of compensation for organizations belonging to the same network as the Independent
Auditor (KPMG)(Unit: Millions of yen)
FY2022
FY2023(as of December 31, 2022)(as of December 31, 2023)
Compensation Compensation
Compensation Compensation
based onbased on audit
based onbased on audit
non-audit
and attestation
non-audit
and attestation
services
services
services
services

The Company �������������������������
Consolidated subsidiaries �������
Total �������������������������������������

¥ —
662
¥662

¥ 21
157
¥178

¥ —
715
¥715

¥ 14
203
¥217

Compensation for non-audit services paid by the Company and its consolidated subsidiaries to
KPMG members firms belonging to the same network as the certified public accountants and otherstaff members performing audit services included services related to foreign tax filings.

AGC Inc. 15

1 FINANCIAL STATEMENTS (IFRS)
Consolidated Financial Statements (IFRS)i) Consolidated Statements of Financial Position

Note

ASSETS
Current assets
Cash and cash equivalents ����������������������������������������������������������������������
Trade receivables ��������������������������������������������������������������������������������������
Inventories ������������������������������������������������������������������������������������������������
Other receivables ��������������������������������������������������������������������������������������
Income taxes receivable ����������������������������������������������������������������������������
Other current assets ��������������������������������������������������������������������������������
Total current assets ������������������������������������������������������������������������������

5, 26
6, 26
7
6, 26
26

Non-current assets
Property, plant and equipment ������������������������������������������������������������������ 8, 10, 11
Goodwill ����������������������������������������������������������������������������������������������������
9,11
Intangible assets ��������������������������������������������������������������������������������������
9,11
Investments accounted for using equity method ��������������������������������������
12
Other financial assets ��������������������������������������������������������������������������������
26
Deferred tax assets ����������������������������������������������������������������������������������
13
Other non-current assets ��������������������������������������������������������������������������
Total non-current assets ������������������������������������������������������������������������
Total assets ������������������������������������������������������������������������������������������������

16 Financial Review 2023

(Unit: Millions of yen)
FY2022
FY2023(as of December 31, (as of December 31,
2022)
2023)

¥  209,716
315,808
436,516
60,614
5,094
35,2601,063,009¥  146,061
338,850454,056
60,53018,09824,2801,041,878

1,350,769
92,76871,29024,60994,07540,77876,728
1,751,019¥2,814,029

1,457,950
101,130
72,093
27,633
83,26939,677
109,357
1,891,112¥2,932,991

Note

LIABILITIES AND EQUITY
LIABILITIESCurrent liabilities
Trade payables ������������������������������������������������������������������������������������������
Short-term interest-bearing debt ��������������������������������������������������������������
Long-term interest-bearing debt due within one year ��������������������������������
Other payables ����������������������������������������������������������������������������������������
Income taxes payable ������������������������������������������������������������������������������
Provisions ������������������������������������������������������������������������������������������������
Other current liabilities ������������������������������������������������������������������������������
Total current liabilities ����������������������������������������������������������������������������
Non-current liabilities
Long-term interest-bearing debt ���������������������������������������������������������������
Deferred tax liabilities ��������������������������������������������������������������������������������
Post-employment benefit liabilities ������������������������������������������������������������
Provisions ������������������������������������������������������������������������������������������������
Other non-current liabilities ������������������������������������������������������������������������
Total non-current liabilities ���������������������������������������������������������������������
Total liabilities ����������������������������������������������������������������������������������������
EQUITY
Share capital ��������������������������������������������������������������������������������������������
Capital surplus ������������������������������������������������������������������������������������������
Retained earnings ������������������������������������������������������������������������������������
Treasury shares ����������������������������������������������������������������������������������������
Other components of equity ����������������������������������������������������������������������
Total equity attributable to owners of the parent ����������������������������������������
Non-controlling interests ��������������������������������������������������������������������������
Total equity ��������������������������������������������������������������������������������������������
Total liabilities and equity ��������������������������������������������������������������������������

14, 2615, 2615, 2614, 26(Unit: Millions of yen)
FY2022
FY2023(as of December 31, (as of December 31,
2022)
2023)

¥  214,332
69,750122,254
211,855
27,283
1,310
23,211
669,999¥  206,566
121,637
127,810
216,240
14,051
1,997
28,994
717,298

15, 2613
17
16
26458,237
28,85145,57817,783
7,989
558,439
1,228,439

445,561
37,86950,026
10,973
16,922561,354
1,278,652

19
19
19
19
19

90,87397,094
889,827(26,586)
339,046
1,390,254
195,335
1,585,590¥2,814,029

90,873
97,056
872,547(27,338)
413,941
1,447,080
207,258
1,654,338¥2,932,991

16
26

AGC Inc. 17ii) Consolidated Statements of Profit or Loss and Consolidated Statements of Comprehensive Income(Consolidated Statements of Profit or Loss)

Note

Net sales ����������������������������������������������������������������������������������������������������
Cost of sales ����������������������������������������������������������������������������������������������
Gross profit ����������������������������������������������������������������������������������������������
Selling, general and administrative expenses ������������������������������������������
Share of profit of associates and joint ventures accounted for using
equity method‌ ������������������������������������������������������������������������������������������
Operating profit ����������������������������������������������������������������������������������������
Other income ����������������������������������������������������������������������������������������������
Other expenses ������������������������������������������������������������������������������������������
Business profit ������������������������������������������������������������������������������������������
Finance income ������������������������������������������������������������������������������������������
Finance costs ��������������������������������������������������������������������������������������������
Net finance income (costs) ������������������������������������������������������������������������
Profit before tax ����������������������������������������������������������������������������������������
Income tax expenses ��������������������������������������������������������������������������������

21
22
22
12
22
22
23
23

24

Profit (loss) for the year ������������������������������������������������������������������������������
Attributable to owners of the parent ������������������������������������������������������
Attributable to non-controlling interests �������������������������������������������������
Earnings per share
Basic earnings (loss) per share (Yen) ��������������������������������������������������������
Diluted earnings (loss) per share (Yen) ������������������������������������������������������

18 Financial Review 2023

25
25

(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)¥ 2,035,874(1,506,492)
529,381(346,675)¥ 2,019,254(1,537,897)
481,386(354,559)

1,236
183,942
27,156(153,892)
57,206
10,603(9,297)
1,306
58,512(36,007)¥     22,505

1,981
128,779
19,535(20,036)
128,277
13,735(19,237)(5,502)
122,775(40,291)¥     82,484¥    (3,152)
25,657¥     65,798
16,685¥    (14.22)(14.22)¥     304.73
304.01

(Consolidated Statements of Comprehensive Income)

NoteProfit for the year ����������������������������������������������������������������������������������������
Other comprehensive income
Components of other comprehensive income that will not be reclassified
to profit or loss, net of tax
Remeasurements of defined benefit plans ��������������������������������������������
Net change in revaluation of financial assets measured
at FVTOCI(Note) ��������������������������������������������������������������������������������������
Share of other comprehensive income of associates andjoint ventures accounted for using equity method ��������������������������������
Total ������������������������������������������������������������������������������������������������������
Components of other comprehensive income that will be reclassified to
profit or loss, net of tax
Cash flow hedges ����������������������������������������������������������������������������������
Exchange differences on translation of foreign operations ����������������������
Total ������������������������������������������������������������������������������������������������������
Other comprehensive income, net of tax ����������������������������������������������
Total comprehensive income for the year ������������������������������������������������
Attributable to owners of the parent ����������������������������������������������������������
Attributable to non-controlling interests ����������������������������������������������������

(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)¥ 22,505¥ 82,484

20

16,59819,979

20

921

9,809

12, 208
17,528(6)
29,78320
20(2,905)
122,753
119,847
137,376¥159,881(8,366)
77,73369,36699,150¥181,634¥116,449
43,431¥152,463
29,170Note: FVTOCI: Fair Value Through Other Comprehensive Income

AGC Inc. 19

iii) Consolidated Statements of Changes in Equity

FY2022 (Jan. 1 through Dec. 31, 2022)

Note

Balance as of January 1, 2022 �����������������������������
Changes in equity
Comprehensive income
Profit (loss) for the year ���������������������������������
Other comprehensive income ����������������������� 20
Total comprehensive income for the year �����
Transactions with owners
Dividends ����������������������������������������������������� 19
Acquisition of treasury shares ����������������������� 19
Disposal of treasury shares ��������������������������� 19
Changes in ownership interests in subsidiaries
that do not result in loss of control ���������������
Transfer from other components of equity
to retained earnings �����������������������������������
Share-based payment transactions ��������������� 18
Others (business combinations and others) �����
Total transactions with owners ���������������������
Balance as of December 31, 2022 �����������������������

Sharecapital(Unit: Millions of yen)
Equity attributable to owners of the parent
Other components of equity
Net change inrevaluation of
Remeasurements financial assets
CapitalRetained
Treasuryof defined benefit measured at
surplusearnings
sharesplans
FVTOCI(Note)¥90,873¥81,621¥927,830¥(26,933)¥ (6,927)¥ 43,896

—
—
—

—
—
—

(3,152)—(3,152)————
16,363
16,363

—
932
932

—
—
—

—
—
—

(52,162)
—
(221)

—
(342)
689

—
—
—

—
—
—

—

(3,110)

—

—

(30)

(0)

—
—
—
—
¥90,873—(22)
18,605
15,472¥97,094

17,534——(34,849)¥889,827———
347¥(26,586)

—
—
—
(30)
¥ 9,405(17,534)——(17,534)¥ 27,294

Note: FVTOCI: Fair Value Through Other Comprehensive Income

FY2022 (Jan. 1 through Dec. 31, 2022)

Note

Balance as of January 1, 2022 �����������������������������
Changes in equity
Comprehensive income
Profit (loss) for the year ���������������������������������
Other comprehensive income ����������������������� 20
Total comprehensive income for the year �����
Transactions with owners
Dividends ����������������������������������������������������� 19
Acquisition of treasury shares ����������������������� 19
Disposal of treasury shares ��������������������������� 19
Changes in ownership interests in subsidiaries
that do not result in loss of control ���������������
Transfer from other components of equity
to retained earnings �����������������������������������
Share-based payment transactions ��������������� 18
Others (business combinations and others) �����
Total transactions with owners ���������������������
Balance as of December 31, 2022 �����������������������

20 Financial Review 2023

(Unit: Millions of yen)
Equity attributable to owners of the parent
Other components of equity
Exchangedifferenceson translation
Cash flowof foreign
hedgesoperations
Total
Total

Non-controllinginterests

Total equity¥ 4,952¥198,847¥240,769¥1,314,161¥167,219¥1,481,380—(3,052)(3,052)—
105,358
105,358—
119,601
119,601(3,152)
119,601
116,449

25,657
17,77443,431

22,505
137,376
159,881

—
—
—

—
—
—

—
—
—

(52,162)(342)
468(12,786)——(64,948)
(342)
468

422

(4,182)(3,790)(6,901)(2,529)(9,431)———422¥ 2,321———(4,182)¥300,024(17,534)——(22)—
18,605(21,325)(40,356)¥339,046 ¥1,390,254———(15,315)¥195,335—(22)
18,605(55,671)¥1,585,590

FY2023 (Jan. 1 through Dec. 31, 2023)

Note

Balance as of January 1, 2023 �����������������������������
Changes in equity
Comprehensive income
Profit for the year �����������������������������������������
Other comprehensive income ����������������������� 20
Total comprehensive income for the year �����
Transactions with owners
Dividends ����������������������������������������������������� 19
Acquisition of treasury shares ����������������������� 19
Disposal of treasury shares ��������������������������� 19
Cancellation of treasury shares ��������������������� 19
Changes in ownership interests in subsidiaries
that do not result in loss of control ���������������
Transfer from other components of equity
to retained earnings �����������������������������������
Share-based payment transactions ��������������� 18
Others (business combinations and others) �����
Total transactions with owners ���������������������
Balance as of December 31, 2023 �����������������������

Sharecapital(Unit: Millions of yen)
Equity attributable to owners of the parent
Other components of equity
Net change inrevaluation of
Remeasurements financial assets
CapitalRetained
Treasuryof defined benefit measured at
surplusearnings
sharesplans
FVTOCI(Note)¥90,873¥97,094¥889,827¥(26,586)¥ 9,405¥ 27,294

—
—
—

—
—
—

65,798—65,798————20,331
20,331

—
9,792
9,792

—
—
—
—

—
—
—
—

(45,982)—(257)(48,608)—(50,021)661
48,608

—
—
—
—

—
—
—
—

—

(108)

—

—

—

—

—
—
—
—
¥90,873

—
82
(12)
(37)
¥97,056

11,769——(83,078)¥872,547

—
—
—
(752)
¥(27,338)————¥29,737(11,769)——(11,769)¥ 25,317

Note: FVTOCI: Fair Value Through Other Comprehensive Income

FY2023 (Jan. 1 through Dec. 31, 2023)

Note

Balance as of January 1, 2023 �����������������������������
Changes in equity
Comprehensive income
Profit for the year �����������������������������������������
Other comprehensive income ����������������������� 20
Total comprehensive income for the year �����
Transactions with owners
Dividends ����������������������������������������������������� 19
Acquisition of treasury shares ����������������������� 19
Disposal of treasury shares ��������������������������� 19
Cancellation of treasury shares ��������������������� 19
Changes in ownership interests in subsidiaries
that do not result in loss of control ���������������
Transfer from other components of equity
to retained earnings �����������������������������������
Share-based payment transactions ��������������� 18
Others (business combinations and others) �����
Total transactions with owners ���������������������
Balance as of December 31, 2023 �����������������������

(Unit: Millions of yen)
Equity attributable to owners of the parent
Other components of equity
Exchangedifferenceson translation
Cash flowof foreign
hedgesoperations
Total
Total

Non-controllinginterests

Total equity¥ 2,321¥300,024¥339,046¥1,390,254¥195,335¥1,585,590—(8,489)(8,489)—65,02965,029—86,664
86,66465,79886,664
152,463

16,685
12,48529,17082,48499,150181,634

—
—
—
—

—
—
—
—

—
—
—
—

(45,982)(50,021)404—(16,097)———(62,080)(50,021)
404
—

—

—

—

(108)

(1,150)(1,258)————¥(6,167)————¥365,053(11,769)
—
—
82
—
(12)
(11,769)(95,638)¥413,941 ¥1,447,080———(17,248)¥207,258—82(12)(112,886)¥1,654,338

AGC Inc. 21iv) Consolidated Statements of Cash Flows

Note

Cash flows from operating activities
Profit before tax ����������������������������������������������������������������������������������������
Depreciation and amortization ������������������������������������������������������������������
Impairment losses ������������������������������������������������������������������������������������
Interest and dividend income ��������������������������������������������������������������������
Interest expenses ��������������������������������������������������������������������������������������
Share of loss (profit)‌of associates and joint ventures accounted forusing equity method ��������������������������������������������������������������������������������
Loss (gain) on sale or disposal of fixed assets ������������������������������������������
Decrease (increase) in trade receivables ����������������������������������������������������
Decrease (increase) in inventories ��������������������������������������������������������������
Increase (decrease) in trade payables ��������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������
Subtotal ������������������������������������������������������������������������������������������������
Interest and dividends received ����������������������������������������������������������������
Interest paid ����������������������������������������������������������������������������������������������
Income taxes refund (paid) ������������������������������������������������������������������������Cash flows from operating activities ������������������������������������������������������

24

Cash flows from investing activities
Purchase of property, plant and equipment, and intangible assets ������������
Proceeds from sale of property, plant and equipment ��������������������������������
Purchase of other financial assets ������������������������������������������������������������
Proceeds from sale and redemption of other financial assets ��������������������
Proceeds from sale of shares of subsidiaries and associates orother businesses ������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������Cash flows from investing activities ��������������������������������������������������������Cash flows from financing activities
Changes in short-term interest-bearing debt����������������������������������������������
Proceeds from borrowing or issuing long-term interest-bearing debt����������
Repayment or redemption of long-term interest-bearing debt��������������������
Payments for acquisition of interests in subsidiaries from
non-controlling interests ��������������������������������������������������������������������������
Proceeds from non-controlling interests ����������������������������������������������������
Acquisition of treasury shares ��������������������������������������������������������������������
Dividends paid ������������������������������������������������������������������������������������������
Dividends paid to non-controlling interests ������������������������������������������������
Others ������������������������������������������������������������������������������������������������������Cash flows from financing activities ������������������������������������������������������
Effect of exchange rate changes on cash and cash equivalents ������������
Net increase (decrease) in cash and cash equivalents ����������������������������Cash and cash equivalents at the beginning of the year ������������������������Cash and cash equivalents at the end of the year ����������������������������������

22 Financial Review 2023

15
15
15

19
19

5
5

(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)¥   58,512
185,656
128,447(8,067)9,040¥ 122,775
175,346605(13,728)
17,842(1,236)(6,151)(4,180)(84,114)2,859
16,032296,798
11,401(8,540)(82,512)217,146(1,981)
4,153(8,708)(88)(19,154)9,594
286,656
14,192(17,726)(70,575)
212,546(223,921)
17,722(20,520)
68,646(213,531)
3,265(2,264)35,026

15,548(2,787)(145,312)

1,786(4,073)(179,790)

29,004
95,576(122,910)

47,307
99,636(137,645)(26,368)
11,317(342)(52,162)(12,950)
630(78,206)
20,257
13,885
195,830¥ 209,716(5,136)518(50,021)(45,982)(16,904)
208(108,021)
11,610(63,654)
209,716¥ 146,061

2 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Reporting entity
AGC Inc. (the “Company”) is a company domiciled in Japan. The consolidated financial statements of the Company as of and for the
fiscal year ended December 31, 2023 comprise the Company and its subsidiaries (the “Group”), and interests in associates and jointly
controlled entities, etc. (the “Group entities”).
The Group is engaged in business activities primarily in the areas of Architectural Glass Operations, Automotive Operations,Electronics Operations, Chemicals Operations, and Life Science Operations. Please see Note 4 “Segment information” for details on
the Group’s businesses.
Note 2: Basis of preparations(1) Statement of compliance with IFRSThe Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards(“IFRS”), based on the stipulations of Article 93 of the Ordinance on Consolidated Financial Statements. The Group’s consolidated
financial statements satisfy all of the requirements for a “Specified Company” prescribed by Article 1-2 of the Ordinance on Consolidated
Financial Statements.
On March 28, 2024, the consolidated financial statements were approved by President & CEO Yoshinori Hirai and Representative
Director & CFO Shinji Miyaji.
(2) Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for the following significant items on the
consolidated statements of financial position:— Derivative financial instruments are measured at fair value.
— Equity instruments are measured at fair value.
— Contingent consideration liabilities are measured at fair value.
— Defined benefit pension plan assets and liabilities are measured at the present value of defined benefit obligations less the fairvalue of the plan assets.
(3) Presentation currency
The consolidated financial statements are presented in Japanese yen, which is also the Company’s functional currency. The currency
unit is millions of yen, with figures less than one million yen rounded down.
(4) Use of estimates and judgments
The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimatesand assumptions that affect the adoption of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results could differ from these estimates.
The estimates and their underlying assumptions are reviewed continuously. Changes in accounting estimates are recognizedprospectively.
The following notes include information about the judgements made in applying accounting policies that have the most significant
effect on the amounts in the financial statements, and uncertainty of assumptions and estimates as of December 31, 2023 that havea significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the fiscal year ending December
31, 2024.
— Estimates of useful lives and residual values of property, plant and equipment and intangible assets (See Note 3 “Material
accounting policies” (6) (7), Note 8 “Property, plant and equipment” and Note 9 “Goodwill and intangible assets”)— Calculation of the value in use and the fair value less costs of disposal in cash-generating units, the smallest unit of measurement for impairment of property, plant and equipment, goodwill and intangible assets (See Note 3 “Material accounting policies”(9) and Note 11 “Impairment of non-financial assets”)‌— The recoverability of deferred tax assets (See Note 3 “Material accounting policies” (16) and Note 13 “Deferred tax assets
and liabilities”)— Actuarial assumptions for defined benefit pension plans (See Note 3 “Material accounting policies” (11) and Note 17“Employee benefits”)

AGC Inc. 23

(5) Changes in accounting policies
The material accounting policies adopted for the Group’s consolidated financial statements are the same as those for the consolidated
financial statements for the fiscal year ended December 31, 2023, with the exception of the items described below.
The following are the accounting standards applied by the Group from the fiscal year 2023, in compliance with each transitional
provision. The effect of the application of the following standards on the Group’s consolidated financial statements is immaterial.
IFRS

Title

Summaries of new IFRS and amendments

IAS 1 (amended in February 2021)
IAS 8 (amended in February 2021)

Disclosure of Accounting Policies
Definition of Accounting Estimates

IAS 12 (amended in May 2021)

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

IAS 12 (amended in May 2023)

Income Taxes

Deferred Tax related to Assets and Liabilities
arising from a Single Transaction
Amendment requiring disclosure of companies’
exposure to corporate income taxes arisingfrom the tax regime established or effectively
established to introduce the Pillar Two Model
Rules announced by the OECD

Note 3: Material accounting policies(1) Basis of consolidationi) Business combinations
Business combinations are accounted for using the acquisition method when control is obtained. The Group recognizes goodwill
as any excess of the aggregate of the consideration transferred, the amount of any non-controlling interest and, in the case of abusiness combination achieved in stages, the acquisition-date fair value of the equity interest of the acquiree previously held by theacquirer, over the net of the acquisition-date amounts of the identifiable assets acquired from the acquiree and the liabilities assumed.
If the consideration transferred is lower than the latter net amount, the Group immediately recognizes the difference as profit
or loss.
Impairment test of goodwill is conducted annually, regardless of any indication of impairment. (See (9) “Impairment of nonfinancial assets”).
Business combinations of entities under common control are accounted for based on carrying amounts. These businesscombinations are those in which all the combining entities or businesses are ultimately controlled by the same party or parties both
before and after the business combination, and that control is not transitory.
ii) Subsidiaries
Subsidiaries are entities controlled by the Group. A subsidiary is controlled when the Group is exposed or has rights to variable
returns from its involvement with the investee, and has the ability to use power over the investee to affect those returns. The
accounting policies of subsidiaries have been adjusted in order to ensure conformity with the accounting policies adopted by theGroup, as necessary.
iii) Non-controlling interests
The components of profit or loss and other comprehensive income are attributed to owners of the parent and non-controllinginterests. Of transactions giving rise to a change in the interest between the Company and the non-controlling interests of a subsidiary,
for transactions that do not result in a loss of control, changes in the non-controlling interests in the subsidiary and the net amountof consideration paid (or received) are recognized directly in equity, and are not recognized as goodwill or as profit or loss.
iv) Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence over its financial and operating policies, but does not
exercise control of it. Significant influence is presumed to exist when the Group holds 20% or more of the voting rights in anotherentity. Considering not only the ratio of the voting rights, but also other elements, such as participation in management, an associate
is included if the Group can exercise significant influence.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assetsof the arrangement.
Investments in associates and joint ventures are recognized at cost initially on acquisition and are subsequently accounted forusing the equity method (hereinafter “Investments accounted for using equity method”). Any differences between the investment
on the investment date and the corresponding equity of the investee are included in the carrying amount of the investment as
goodwill. The consolidated financial statements reflect the investments in associates and joint ventures’ share of profit or loss andother comprehensive income of the investee from the date on which the Group obtains significant influence until the end of thereporting period. In the event that the Group’s burden of loss exceeds the investment in the investee, the carrying amount of theGroup’s share is reduced to zero. Except for when the Group incurs obligations or makes payments on behalf of the equity-accounted
investee, the Group shall recognize no further loss.
Goodwill that forms part of the carrying amount of investments in associates and joint ventures is not separately recognized,
and therefore is not tested for impairment separately. Instead, whenever there is any objective evidence that an investment in an
associate or joint venture may be impaired, the entire carrying amount of the investment is tested for impairment as a single asset.

24 Financial Review 2023

v) Transactions eliminated on consolidation
All intergroup balances, transactions and unrealized gains and losses arising from intragroup transactions are eliminated in preparing
the consolidated financial statements.
Unrealized losses are eliminated only to the extent that there is no evidence of impairment.
(2) Foreign currencyi) Foreign currency transactions
Foreign currency transactions are translated into functional currencies of the individual Group entities by applying the rates of
exchange prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies are translated
into the respective functional currencies at the prevailing exchange rates at the reporting date. Foreign exchange differences ontranslation are recognized as profit or loss. Exchange differences for any gains or losses on the assets and liabilities recognizedin other comprehensive income are recognized in other comprehensive income.
Non-monetary assets and liabilities measured in terms of historical cost in foreign currencies are translated at the exchange
rate at the date of the transaction.
ii) Foreign operations
Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on the acquisition of foreign operations, are translated into functional currency at the exchange rates prevailing at the reporting date. Income and expenses of foreign
operations are translated into functional currency at the average exchange rate for the period.
(3) Financial instruments
The Group recognizes financial instruments on the contract date when the Group becomes a party to the contractual provisions of
the instrument.
The Group derecognizes a financial asset in the following circumstances:— When the contractual rights to receive the cash flows from the financial asset expire; or— When the contractual rights to receive the cash flows from the financial asset in transactions in which substantially all the risks
and rewards of ownership of the financial asset are transferred to another entity.
In regard to transferred financial assets, the Group recognizes any retained interest of the transferred financial asset as a separate
asset or liability.
Financial assets and financial liabilities are offset and presented as a net amount on the consolidated statements of financial
position only when the Group has a legally enforceable right to set off the recognized amounts and intends either to settle on a net
basis or to realize the asset and settle the liability simultaneously.
i) Non-derivative financial assets
The Group holds non-derivative financial assets that are classified into financial assets measured at amortized cost, financial assets
measured at fair value through other comprehensive income and financial assets measured at fair value through profit or loss.
Financial assets measured at amortized cost
Financial assets are classified as financial assets measured at amortized cost if the following two conditions are met:
— The foregoing financial assets are held within a Group business model whose objective is to hold the assets in order to collectcontractual cash flows from the assets; and— The contractual terms of the foregoing financial assets give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.
The foregoing financial assets are initially recognized at fair value plus directly attributable transaction costs except for tradereceivables, etc., that do not contain a significant financing component. The trade receivables, etc., that do not contain a significant
financial component are initially recognized plus transaction cost. After initial recognition, the financial assets are measured atamortized cost using the effective interest method.
Financial assets measured at fair value through other comprehensive income
The Group designates equity instruments as financial assets measured at fair value through other comprehensive income whenan irrevocable election has been made on initial recognition to measure the gains and losses arising from changes in the fair valueof such instruments in other comprehensive income.
When the foregoing financial assets measured at fair value through other comprehensive income are derecognized throughsale, etc., the cumulative gains or losses are reclassified from other components of equity to retained earnings.
Financial assets measured at fair value through profit or loss
The Group measures financial assets at fair value and recognizes any changes in the fair value of such assets as profit or loss,
unless the foregoing financial assets are classified as financial assets measured at amortized cost or financial assets measured atfair value through other comprehensive income.

AGC Inc. 25

Impairment of financial assets
At the end of each reporting period, the Group evaluates whether the credit risk on financial assets has increased significantly
since the initial recognition. If the credit risk of a financial asset has increased significantly, the allowance for such financial assets
is measured at an amount equal to the lifetime expected credit losses. If the credit risk has not increased significantly, the allowance
for such financial assets is measured at an amount equal to the 12-month expected credit losses.
However, with regards to trade receivables and contract asset that do not contain a significant financing component, theallowance is always measured at an amount equal to the lifetime expected credit losses. In estimating the allowance, expectedcredit losses of certain financial assets are measured on a collective basis such as every past due date.
The Group determines if credit risk has increased significantly by evaluating changes in default risk after initial recognition withreference to factors including significant downgrading of ratings, stopping transaction due to delayed receivable, and other indications of insolvency. If it is more than 90 days past due, the Group determines that default is occurred.
In measuring credit losses, the Group uses reasonable and supportable information on the past events, current conditions
and forecasts on future economic conditions, which is available without undue cost or effort at the reporting date.
The Group assesses a credit-impairment based on objective evidence such as a borrower’s significant financial difficulty, etc.
When it is reasonably determined that all or part of the financial assets are not collectable, the carrying amount of financial assets
is directly written off.
ii) Non-derivative financial liabilities
The Group recognizes non-derivative financial liabilities that are classified into financial liabilities measured at amortized cost andcontingent consideration liabilities.
Financial liabilities measured at amortized cost
The Group recognizes the following as financial liabilities measured at amortized cost: trade payables, other payables, and interestbearing debts (borrowings, commercial paper, corporate bonds, and bonds with subscription rights to shares (excluding sharesubscription rights)), among other items.
The foregoing financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, non-derivative financial liabilities are measured at amortized cost using the effective interest method.
The Group derecognizes financial liabilities when the obligation specified in the contract is exempted, cancelled or expired.
Contingent consideration liabilities
The Group recognizes contingent consideration liabilities in business combinations as financial liabilities measured at fair value
through profit or loss. The foregoing financial liabilities are measured at fair value, with changes recognized in profit or loss.
iii) Bonds with subscription rights to shares
The Group classifies proceeds from the issue of bonds with subscription rights to shares into a liability component and an equity
component based on the issuing conditions.
Upon initial recognition, the liability component of bonds with subscription rights to shares is initially recognized at the fair valueof similar liabilities without equity conversion options. The equity component is initially recognized as the total fair value of thebonds with subscription rights to shares less the fair value of the liability component. The transaction cost related to the issue ofthe bonds with subscription rights to shares is prorated according to the ratio of the initial carrying amounts of the liability andequity components on initial recognition, and deducted from the amounts of the liability and equity components.
After initial recognition, the liability component of the bonds with subscription rights to shares is measured at amortized costusing the effective interest method. The equity component of the bonds with subscription rights to shares is not remeasured.
iv) Derivative financial instruments (including hedge accounting)
The Group holds derivative financial instruments to hedge mainly foreign currency exchange risk, interest rate risk, and commodity
price risk.
The Group initially recognizes derivative financial instruments at fair value, with the related transaction costs recognized in profit
or loss when incurred. After initial recognition, derivative financial instruments are measured at fair value, with changes in fair value
accounted for as follows, depending on whether or not derivatives qualify for hedge accounting:(Derivatives not qualifying for hedge accounting)
Changes in the fair value of derivative financial instruments which do not qualify for hedge accounting are recognized in profit or loss.
(Derivatives qualifying for hedge accounting)
When applying hedge accounting, at the inception of hedges, the Group formally designates and documents hedging relationships
to which hedge accounting is applied and the objectives and strategies of risk management for undertaking hedges.
At the inception of hedges, the Group evaluates whether or not the hedging instrument can be predicted to be effective.
Thereafter, the Group continuously evaluates whether the derivative is highly effective in offsetting changes in future cash flows
from the hedged items.
The Group applies cash flow hedges by designating qualified derivative financial instruments as hedging instruments. Cashflow hedges are designed to hedge exposure to variations in cash flows that are attributable to a particular risk associated withrecognized assets or liabilities or highly probable forecast transactions which will affect profit or loss.

26 Financial Review 2023

The effective portion of gains or losses on hedging instruments is recognized in other comprehensive income. The amounts
recognized in other comprehensive income are reclassified to profit or loss in the consolidated reporting periods when the cash
flows of the hedged items affect profit or loss. The ineffective portion of changes in the fair value of hedging instruments is recognizedin profit or loss.
Hedge accounting is discontinued prospectively when: the hedging instrument expires or is sold, terminated, or exercised; thehedge no longer meets the criteria for hedge accounting; a forecast transaction is no longer expected to occur; or the hedging
designation is revoked. A hedge designation may not be voluntarily revoked unless there is a change in the risk management
objective. Therefore, if a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio, but
the risk management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of
the hedging relationship so that it meets the hedge effectiveness requirement again.
v) Equity
Ordinary shares
Ordinary shares are classified as equity. Incremental costs (net of tax) directly attributable to the issue of ordinary shares or stock
options are deducted from equity.
Treasury shares
If the Company purchases treasury shares, the consideration paid, including net of directly attributable transaction costs and tax,
is recognized as a deduction from equity. If the Company disposes of treasury shares, any gains or losses arising from the disposalof treasury shares are recognized in equity.
(4) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, bank deposits available for withdrawal on demand, and short-term investments
due within three months or less, which are readily convertible into cash and subject to insignificant risk of changes in value.
(5) Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is measured based on the moving
average method, and includes costs of purchase and costs of conversion (including fixed and variable manufacturing overheads). Net
realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimatedcosts necessary to make the sale.
(6) Property, plant and equipmenti) Recognition and measurement
Property, plant and equipment is presented at cost less accumulated depreciation and accumulated impairment losses.
Cost of property, plant and equipment includes any costs directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes material costs, direct labor costs, direct costs attributable to bringing the asset to the location andconditions necessary for its intended use, and the cost of dismantling, removing, and restoring the asset, as well as borrowing
costs that satisfy the requirements for being capitalized.
After acquisition of property, plant and equipment, the Group recognizes costs as the carrying amount of an asset only if it isprobable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably.
Differences between the carrying amount and the consideration received for the disposal of property, plant and equipment arerecognized in profit or loss.
ii) Depreciation
Depreciation of property, plant and equipment excluding non-depreciable property, plant and equipment, such as land, is computed
under the straight-line method over the estimated useful lives of each item and the depreciable amount which is the cost of theasset less its residual value.
The estimated useful lives of major property, plant and equipment are as follows:— Buildings and structures: 10 to 50 years— Machinery, equipment and vehicles: 4 to 15 years— Tools, fixtures and fittings: 2 to 15 years
The depreciation methods, estimated useful lives and residual values are reviewed at the end of each reporting period, andchanged when necessary.
Due to changes in the business environment and other factors, it may be necessary to revise useful lives and residual values,
which may have a significant impact on the amounts of property, plant and equipment in the consolidated financial statements inthe fiscal year ending December 31, 2024.

AGC Inc. 27

(7) Goodwill and intangible assetsi) Goodwill
Goodwill may be recognized on the acquisition of a subsidiary. The measurement of goodwill on initial recognition is shown in(1) i) “Business combinations.”
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Measurement of goodwill
impairment is shown in (9) “Impairment of non-financial assets.”ii) Research and development expenses
Expenditure related to research activities to obtain new scientific or technical knowledge and understanding are recognized as an
expense when incurred.
Expenditure on development activities is capitalized as an intangible asset if it is reliably measurable, products or processes
are technically and commercially feasible, it is probable to generate future economic benefits, and the Group has an intention andadequate resources to complete those assets and use or sell them. Other expenditure is recognized as an expense when incurred.
Capitalized development expenditure is presented at cost less any accumulated amortization and accumulated impairment losses.
iii) Intangible assets other than goodwill acquired through business combinations
Intangible assets acquired through business combinations and recognized separately from goodwill are initially measured at fairvalue as of the acquisition date. After initial recognition, the foregoing intangible assets are presented at cost less any accumulated
amortization and accumulated impairment losses.
iv) Other intangible assets
Other intangible assets are initially recognized at cost. After initial recognition, intangible assets with finite useful lives are presented
at cost less any accumulated amortization and accumulated impairment losses. Intangible assets with indefinite useful lives arepresented at cost less any accumulated impairment losses.
v) Amortization
Amortization of intangible assets with finite useful lives is recognized as an expense under the straight-line method over theirestimated useful lives from the date when the assets are available for use. The estimated useful lives of major intangible assets
with finite useful lives are as follows:— Patents and trademarks: 5 to 10 years— Software: 5 years— Customer relationships: 7 to 30 years
The amortization methods and useful lives are reviewed at the end of each reporting period and changed when necessary.
Due to changes in the business environment and other factors, it may be necessary to revise useful lives which may have asignificant impact on the amounts of intangible assets in the consolidated financial statements in the fiscal year ending December
31, 2024.
(8) Leases
The Group, in accordance with IFRS 16, has determined whether a contract is, or contains, a lease, at the inception of the contract.
A contract is determined to be a lease or contain a lease, if the contract conveys the right to control the use of an identified asset fora period of time in exchange for a consideration.
When a contract is determined to be a lease or contain a lease, the Group initially recognizes a right-of-use asset and a lease liability
at the commencement date of the contract. A lease liability is initially measured at the discounted present value of unpaid lease
payments at the commencement date of the contract. The right-of-use asset is initially measured at cost, which comprises the amountof the initial measurement of the lease liability, any initial direct costs incurred and prepaid lease payments, etc. The right-of-use asset
is regularly depreciated over the economic life or the lease term of the underlying asset, whichever is shorter, from the commencement
date of the contract. The Group does not recognize right-of-use assets and lease liabilities for leases with a lease term of 12 months
or less or when the underlying assets are of low value, and recognizes lease payments as an expense on a straight-line basis overthe lease term. In the consolidated statement of financial position, the right-of-use assets are included in Property, plant and equipment, and lease liabilities are included in Long-term debt due within one year or Long-term debt.
(9) Impairment of non-financial assets
At the end of each reporting period, the Group assesses the carrying amounts of non-financial assets, excluding inventories anddeferred tax assets, to determine whether there is any indication of impairment of each asset or the cash-generating unit to which
the asset belongs. If any such indication exists, impairment of each asset or each cash-generating unit is tested. Goodwill is tested
annually, regardless of any indication of impairment.
Assets that are not individually tested are integrated into the smallest identifiable group of assets that generates cash inflows fromcontinuing use that are largely independent of the cash inflows from other assets or groups of assets (cash-generating unit). Whentesting for impairment of goodwill, the goodwill is allocated to a group of cash-generating units which are not larger than an operating
segment and represent the lowest level at which the goodwill is monitored for internal management purposes.

28 Financial Review 2023

The recoverable amount of an asset or a group of cash-generating units is the higher of its fair value less costs of disposal or its
value in use. In calculating an asset’s value in use, estimated future cash flows are discounted to the present value using a pre-tax
discount rate that reflects the time value of money and the risks specific to the asset. The fair value less costs of disposal is calculatedusing techniques such as the market approach and the cost approach.
If the carrying amount of an asset or a cash-generating unit exceeds the recoverable amount, an impairment loss is recognized.
The impairment loss recognized with respect to a cash-generating unit is allocated first to reduce the carrying amount of any goodwill
allocated to the cash-generating unit, and then to the other assets of the unit on a pro-rata basis based on the carrying amount ofeach asset in the unit.
An impairment loss on other non-financial assets recognized in prior periods is reversed if there are indications of the possibilityof reversing such an impairment loss and if the recoverable amount exceeds the carrying amount as a result of an estimation of therecoverable amount. An impairment loss is reversed up to the carrying amount that would have been determined if there had beenno impairment loss recognized for the asset in prior fiscal years and depreciation or amortization had been continuously recognized
up to the reversal. An impairment loss for goodwill is not reversed in subsequent periods.
(10) Non-current assets held for sale
The Group classifies an asset or asset group which is expected to be recovered through a sale transaction rather than throughcontinuous use as a non-current asset or disposal group held for sale when the following conditions are met: it is highly probable thatthe asset or asset group will be sold within one year, the asset or asset group is available for immediate sale in its present condition,and there is assurance of a plan to sell the asset or asset group. In such cases, the non-current asset is not depreciated or amortized
and is measured at the lower of its carrying amount and its fair value less costs to sell.
(11) Employee benefits
Employee benefits include post-employment benefit plans, short-term employee benefits, and share-based payments. Post-employment
benefit plans comprise defined benefit plans and defined contribution plans.
i) Defined benefit plans
Obligations for defined benefit plans are recognized as the present value of defined benefit obligations less the fair value of any
plan assets.
The present value of the defined benefit obligation and service cost, etc. are calculated based on actuarial assumptions.
Actuarial assumptions require estimates and judgments about various variables such as discount rates.
The present value of defined benefit obligations is calculated annually by qualified actuaries using the projected unit credit
method. The discount rates are based on the market yields of high quality corporate bonds at the end of each reporting periodthat have terms consistent with the discount period, which is established as the estimated term of the post-employment benefit
obligations through to the estimated dates for payments of future benefits in every fiscal year.
Actuarial gains and losses are recognized immediately in other comprehensive income when incurred, while past service costs
and gains or losses on settlement are recognized in profit or loss.
Actuarial assumptions may be affected by consequences of uncertain economic conditions changes in the future or by therevision or promulgation of related laws and regulations. If a revision becomes necessary, it may have a significant impact on theamount of defined benefit pension plan assets and liabilities in the consolidated financial statements in the fiscal year ending
December 31, 2024.
ii) Defined contribution plans
Expenses related to post-employment benefits for defined contribution plans are expensed as the related services are provided.
iii) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are recognized as expenses as the related
service is provided.
For bonus payments, a liability is recognized for the amount expected to be paid under short-term cash bonuses if the Group
has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and theobligation can be estimated reliably.
iv) Share-based payments
The Company provided the Group’s directors, executive officers, and other employees with stock options, which grant the holder
the right to purchase the Company’s stock until the fiscal year ended December 31, 2017. The fair value of stock options at the
grant date is recognized in profit or loss over the vesting period from the grant date, with a corresponding increase in equity.
The Group has elected to adopt the exemptions of IFRS 1 First-time Adoption of International Financial Reporting Standards(“IFRS 1”). Accordingly, the Group has elected not to retrospectively apply IFRS 2 Share-based Payment (“IFRS 2”) to stock options
granted after November 7, 2002 that vested before the transition date to IFRS.
The Company has employed a framework referred to as the Board Incentive Plan Trust (hereinafter referred to as the “BIP
Trust”) as equity-settled share-based payment arrangement granted to directors and executive officers (excluding non-residents
of Japan). The shares of the Company held by the BIP Trust are recognized as treasury shares. The Company recognizes theconsideration in profit or loss measured at the grant-date fair value of its shares, with corresponding increase in equity over thevesting period of the awards.

AGC Inc. 29

(12) Provisions
A provision is recognized when the Group has a reasonably estimable legal or constructive obligation as a result of a past event, and
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where the effect of
the time value of money is material, the estimated future cash flows are discounted to the present value using a pre-tax rate thatreflects the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance costs.
The Group has established a provision for restructuring costs arising from restructuring actions to improve the business structure
and the reorganization of certain operations. Such costs are recognized when they can be reasonably estimated and include an
expansion in the severance compensation program.
(13) Revenue
The Group recognizes revenue based on the following five-step model.
Step 1: Identify the contract with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Group sells a range of products including architectural glass, automotive glass, glass substrates for displays, electronicmaterials, chlor-alkali & urethane, fluorochemicals & specialty chemicals, and life science products. For the sales of these products,
revenue is recognized upon delivery of these products as its performance obligation is satisfied when customers obtain control overthese products at the time of delivery. For revenue associated with construction works such as the installation of architectural glass,and contract development and manufacturing services for biological active pharmaceutical ingredient (API), revenue is recognizedaccording to the progress toward completion of the performance obligation. Progress toward completion is measured by the input
method based on the costs incurred, etc. Also, revenue is measured based on the consideration specified in contracts with customers,
less discounts, rebates, returned products, and other items.
(14) Operating profit and business profit“Operating profit” in the Group’s consolidated statements of profit or loss is an indicator that facilitates continuous comparisons andevaluations of the Group’s business performance. Main items of “other income” and “other expenses” are foreign exchange gains andlosses, gains on sale of non-current assets, losses on disposal of non-current assets, impairment losses and expenses for restructuring
programs. “Business profit” includes all income and expenses before finance income, finance costs and income tax expenses.
(15) Finance income and finance costs
Finance income mainly comprises interest income, dividend income and gains on hedging instruments that are not recognized inother comprehensive income. Interest income is recognized as incurred using the effective interest method. Dividend income isrecognized as of the date when the Group’s right to receive payment is established.
Finance costs mainly comprise interest expenses and losses on hedging instruments that are not recognized in other comprehensive income.
(16) Income tax
Income tax comprises current income tax and deferred income tax. These are recognized in profit or loss, except to the extent thatit relates to a business combination, or items recognized directly in equity or in other comprehensive income.
Current income tax is measured at the amount that is expected to be paid to or refunded from the taxation authorities using the
tax rates enacted or substantively enacted at the end of the reporting period.
Deferred income tax is recognized on temporary differences between the carrying amounts of assets and liabilities for accounting
purposes and their tax basis, using the tax rates that are expected to apply to the period when the temporary differences will reverse,
based on tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets arerecognized for all deductible temporary differences, and the carry forward of unused tax losses and unused tax credits to the extent
that it is probable that future taxable profit will be available against which they can be utilized. Deferred tax assets are reviewed at theend of each reporting period and are recognized only to the extent that it is probable that the tax benefits can be realized.
However, deferred tax assets are not recognized if a temporary difference arising from initial recognition of an asset or liability in atransaction that is not a business combination affects neither accounting profit nor taxable profit at the time of the transaction and does
not generate the same amounts of taxable temporary difference and deductible temporary difference at the time of the transaction.
Deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements arerecognized only to the extent of the following circumstances:— The temporary difference will reverse in the foreseeable future; and— Taxable profit will be available against which the temporary difference can be utilized.
Deferred tax liabilities are recognized for all taxable temporary differences, in principle.

30 Financial Review 2023

However, deferred tax liabilities are not recognized in the following circumstances:— On the initial recognition of goodwill.
— It arises from the initial recognition of an asset or liability in a transaction that is not a business combination, affects neither
accounting profit nor taxable profit at the time of the transaction, and does not generate the same amounts of taxable temporary
difference and deductible temporary difference at the time of the transaction.
— There are taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements to the extent that the parent company is able to control the timing of the reversal of the temporary difference and it isprobable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and in either of the following circumstances:— Income taxes are levied by the same taxation authority on the same taxable entity; or— Different taxable entities intend either to settle current tax assets and liabilities on a net basis, or to realize the current tax assets
and settle the current tax liabilities simultaneously.
Estimates of future taxable income may be affected by a decline in profitability and other factors, which may have a significant
impact on the amount of deferred tax assets in the consolidated financial statements in the fiscal year ending December 31, 2024.
(17) Earnings per share
Basic earnings per share is calculated by dividing profit for the year attributable to owners of the parent by the weighted average
number of ordinary shares outstanding during the period, adjusted by the number of treasury shares during the period.
Diluted earnings per share is calculated by adjusting the effects of all dilutive potential ordinary shares.
(18) New standards and interpretations not yet adopted
New standards, interpretations, and amendments to standards and interpretations that have not been adopted in the fiscal year ended
December 31, 2023, and which the Group has yet to apply to the preparation of the consolidated financial statements, are mainly
as follows.
The potential impacts on the consolidated financial statements by the application of standards and interpretations are currently
being evaluated and cannot be estimated as of the date of the report.

IFRS

Title

IFRS 16
Leases(amended in September 2022)
IAS 1
Presentation of Financial(amended in July 2020)
Statements
IAS 1
Presentation of Financial(amended in October 2022)
Statements
IAS 7
Statement of Cash Flows(amended in May 2023)
IFRS 7
Financial Instruments:(amended in May 2023)
Disclosures
IAS 21The Effects of Changes in(amended in August 2023)
Foreign Exchange Rates

Effective date(annual periods
beginning on
or after)January 1, 2024
January 1, 2024
January 1, 2024
January 1, 2024
January 1, 2024
January 1, 2025

Adoption by the Group(annual periods ending)Summaries of new IFRS
and amendments

Fiscal year ending
December 2024
Fiscal year ending
December 2024
Fiscal year ending
December 2024
Fiscal year ending
December 2024
Fiscal year ending
December 2024
Fiscal year ending
December 2025

Lease Liability in a Saleand Leaseback
Classification of Liabilities
as Current or Non-current
Non-current Liabilities with
Covenants
Supplier Finance
Arrangements
Supplier Finance
Arrangements
Lack of Exchangeability

Note 4: Segment information
The Group’s reportable segments are components of the Group for which discrete financial information is available, and whose operating
results are reviewed regularly by the Group’s chief operating decision maker to make decisions about resources to be allocated tothe segment and assess performance.
The Group has six in-house companies by product and service: Architectural Glass Europe & Americas, Architectural Glass Asia
Pacific, Automotive, Electronics, Chemicals, and Life Science. Each in-house company operates worldwide, formulating comprehensive
domestic and overseas strategies for its products and services.

AGC Inc. 31

Until the previous fiscal year, the Group had five in-house companies: Architectural Glass Europe & Americas, Architectural Glass
Asia Pacific, Automotive, Electronics and Chemicals. Among these companies, Architectural Glass Europe & Americas, Architectural
Glass Asia Pacific, and Automotive companies share float glass manufacturing facilities (glass melting furnaces) etc., which are thelargest assets and situated the highest upstream in the supply chain, and therefore the three in-house companies share assets andliabilities, and ratio of utilization is influenced by fluctuations of demand and supply. Considering these situations, the Group had
prepared the financial statements of Architectural Glass Europe & Americas, Architectural Glass Asia Pacific and Automotive as the
Glass segment. In addition, decisions on the assigning management resources are closely tied to the results of each business andwere inseparable from their performance evaluation. Therefore, with the participation of presidents of three in-house companies, theGroup had established a “Glass Segment Council,” which primarily functioned to maintain synergies and maximize overall productionin the Glass segment. Based on these circumstances, the Group had reported on Architectural Glass Europe & Americas, Architectural
Glass Asia Pacific and Automotive companies as the Glass segment.
However, the relative weight of the float strategy in both businesses is declining as the architectural glass business shifts tomidstream and downstream high value-added products and businesses and the automotive glass business focuses its strategy on
expanding into the mobility sector. In addition, the “Glass Segment Council” ended at the end of the previous fiscal year.
On the other hand, Architectural Glass Europe & Americas and Architectural Glass Asia Pacific companies are considered to shareeconomic characteristics, because they are united in their efforts to share information on technological development and production
related to float and architectural processing, to create social value of GHG reduction and product contribution to climate change
issues, and to take a common commitment for long-term profitability indicators and others, and they have similarities in products andsales markets.
As a result of the above, in view of the decrease in the number of common items to be considered in the development of thebusiness and the shift to a business operation that emphasizes the uniqueness of strategy and speed of decision-making in both thearchitectural glass and automotive businesses, from the fiscal year ended December 31, 2023, the Group has decided to reorganize
its reportable segments with Architectural Glass Europe & Americas and Architectural Glass Asia Pacific companies combined as theArchitectural Glass segment and the Automotive company as the Automotive segment.
In addition, effective January 1, 2023, the Chemicals company was split into the Chemicals and Life Science companies. As aresult of this organizational change, the Chemicals segment was reorganized into the Chemicals and Life Science reporting segments
effective from the fiscal year ended December 31, 2023.
Thus, the Group has five reportable segments: Architectural Glass, Automotive, Electronics, Chemicals and Life Science. Segment
information for the previous fiscal year is disclosed based on classification of reportable segments for the fiscal year ended December
31, 2023.
The main products of each reportable segment are as follows.
Reportable segment

Architectural Glass

Automotive
Electronics

ChemicalsLife Science

Main products

Float flat glass, Figured glass, Polished wired glass, Low-E glass, Decorative glass,
Fabricated glass for architectural use (Heat Insulating/shielding glass, Disaster-resistant/Security glass,
Fire-resistant glass, etc.), etc.
Automotive glass, Cover glass for car-mounted displays, etc.
LCD glass substrates, OLED glass substrates, Specialty glass for display applications,
Display related materials, Semiconductor process materials, Optoelectronic materials,
Printed circuit board materials, Laboratory use ware, etc.
Polyvinyl chloride, Vinyl chloride monomer, Caustic soda, Urethane, Fluorinated resins,
Gases, Solvents, Iodine-related products, etc.
Intermediates and active ingredients of synthetic pharmaceutical and agrochemical, Biopharmaceuticals, etc.

32 Financial Review 2023

(1) Reportable segments
FY2022 (Jan. 1 through Dec. 31, 2022)(Unit: Millions of yen)
Reportable segment

Sales to externalcustomers ���������������������
Inter-segment sales ���������
Total sales �������������������
Segment profit (loss)[Operating profit] �����������
Profit for the year �������������
Other items
Depreciation andamortization �������������������
Impairment losses[Non-financial assets] �����
Capital expenditures �������
Investments accounted forusing equity method �����

Ceramics/
OthersAmountreported on
consolidated
financial
Adjustments statements

Architectural
Glass

Automotive

Electronics

ChemicalsLife Science¥482,714
988
483,702¥417,639
186
417,825¥304,918
2,294
307,212¥655,013
5,367
660,380¥138,146
3,640
141,787

32,716—(9,822)—

14,677—126,085—

16,862—

3,678—

184,197—(255)—

183,942
22,50523,91832,54768,361

47,48911,544

1,940

185,802(146)

185,656

11,33917,535

10,81329,805106,085
79,99584
64,886—
43,101

125
1,442

128,447
236,767—(214)

128,447
236,553

12,567

5,567

1,168

3,852

—

1,453

24,609—24,609Total¥37,442 ¥2,035,874
49,15961,636
86,602 2,097,510¥     — ¥2,035,874(61,636)—(61,636) 2,035,874

The amounts of inter-segment sales are primarily based on market prices and manufacturing cost.
“Ceramics/Others” mainly handles ceramics products, logistics and financial services.
Moreover, the above amounts of impairment losses (non-financial assets) include the amounts of impairment losses recorded as
expenses for restructuring programs.
FY2023 (Jan. 1 through Dec. 31, 2023)(Unit: Millions of yen)
Reportable segment

Sales to externalcustomers ���������������������
Inter-segment sales ���������
Total sales �������������������
Segment profit (loss)[Operating profit] �����������
Profit for the year �������������
Other items
Depreciation andamortization �������������������
Impairment losses[Non-financial assets] ����
Capital expenditures �������
Investments accounted forusing equity method �������

Ceramics/
OthersAmountreported on
consolidated
financial
Adjustments statements

Architectural
Glass

Automotive

Electronics

ChemicalsLife Science¥474,646
1,648
476,295¥499,392
316
499,708¥311,964
1,204
313,168¥569,652
4,466
574,119¥123,933
2,882
126,815

32,763—

21,786—

18,352—64,769—(12,378)
—

3,346
—

128,640—

138—

128,779
82,484

24,42331,87553,18250,072

13,852

2,115

175,523(176)

175,346—
24,701

1,895
26,2506,780
51,43834
87,720—39,870

—
1,829

8,709
231,811

—
(95)

8,709
231,715

14,375

5,941

1,421

4,466

—

1,428

27,633—

27,633

Total¥39,665 ¥2,019,254
43,71354,231
83,378 2,073,486¥     — ¥2,019,254(54,231)—(54,231) 2,019,254

The amounts of inter-segment sales are primarily based on market prices and manufacturing cost.
“Ceramics/Others” mainly handles ceramics products, logistics and financial services.
Moreover, the above amounts of impairment losses (non-financial assets) include the amounts of impairment losses recorded as
expenses for restructuring programs.

AGC Inc. 33

(2) Products and services
Disclosure is omitted as the same information is shown in segment information.
(3) Major customers
Disclosure is omitted as sales to external customers did not exceed 10% to any single external customer.
(4) Geographical segments
The analysis of sales by geographical area for the fiscal years ended December 31, 2022 and 2023 is as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Japan ������������������������������������������������������������������������������������������������������������������������������
Asia ����������������������������������������������������������������������������������������������������������������������������������
America ����������������������������������������������������������������������������������������������������������������������������
Europe ����������������������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥  615,189
687,523
207,750
525,412¥2,035,874¥  645,817
627,577
219,118
526,741¥2,019,254

Note: Sales are based on the location of each company, and “Brazil” is included in “America.”

The analysis of non-current assets by geographical area as of December 31, 2022 and 2023 is as follows:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Japan ������������������������������������������������������������������������������������������������������������������������������
Asia ����������������������������������������������������������������������������������������������������������������������������������
America ����������������������������������������������������������������������������������������������������������������������������
Europe ����������������������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥  449,426
630,074
136,740
308,258¥1,524,500¥  436,559
704,203150,528
354,901¥1,646,192

Notes: 1.	Non-current assets do not include “Investments accounted for using equity method,” “other financial assets,” “deferred tax assets” and “Prepaid pension expenses.”
2.	Non-current assets are based on the location of assets, and Brazil is included in “America.”

Note 5: Cash and cash equivalents(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Cash on hand and deposits ��������������������������������������������������������������������������������������������
Negotiable certificates of deposit ��������������������������������������������������������������������������������������
Time deposits due over three months ������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥214,503
6(4,793)¥209,716¥146,346
7(291)¥146,061

The balances of cash and cash equivalents on the consolidated statements of financial position as of December 31, 2022 and2023 agree to the respective balances on the consolidated statements of cash flows.
Note 6: Trade and other receivables
Trade receivables(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Notes receivable ��������������������������������������������������������������������������������������������������������������
Accounts receivable ��������������������������������������������������������������������������������������������������������
Allowance for doubtful accounts ��������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥ 32,689
285,574(2,455)¥315,808¥ 43,780
298,014(2,944)¥338,850

The Group’s exposure to currency risk with respect to trade receivables, and impairment losses, are presented in Note 26“Financial instruments.”

34 Financial Review 2023

Other receivables(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Other accounts receivable ������������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥16,262
44,351¥60,614¥21,041
39,489¥60,530

Note 7: Inventories(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Merchandise and finished goods ��������������������������������������������������������������������������������������
Work in progress ��������������������������������������������������������������������������������������������������������������
Raw materials and supplies ����������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥165,665
85,854
184,997¥436,516¥159,754
94,674
199,627¥454,056

The amount of write-downs of inventories recognized as expenses and the amount of reversal of write-downs are as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Amount of write-downs of inventories recognized as expenses ����������������������������������������
Amount of reversal of write-downs ����������������������������������������������������������������������������������

¥(12,567)
7,650¥(17,491)
12,461

Note 8: Property, plant and equipment
Reconciliation“Construction in progress” includes expenditures on property, plant and equipment under construction.
The amount in “additions” for each property, plant and equipment includes the amount which is transferred from “construction inprogress.”“Depreciation” is recorded in “cost of sales” and “selling, general and administrative expenses” on the consolidated statements
of profit or loss.
FY2022 (Jan. 1 through Dec. 31, 2022)
Cost(Unit: Millions of yen)

Balance as of January 1 ������������������������
Additions ������������������������������������������������
Acquisitions due to businesscombinations �����������������������������������������
Disposals or sales ����������������������������������
Net foreign exchange differences ontranslation ��������������������������������������������
Others ����������������������������������������������������
Balance as of December 31 ������������������

Buildings andstructures

Machinery,equipment andvehiclesTools, fixturesand fittings

Land

Constructionin progress

Total¥854,990
55,127¥2,397,159
88,384¥153,429
12,018¥ 93,587
3,931¥153,121
63,816¥3,652,288
223,277205(15,775)

109(46,686)

17(4,411)

42
(618)

—
(790)

374
(68,281)

45,404(976)¥938,976

147,066
1,197¥2,587,230

7,194—¥168,249

4,551—¥101,493

7,563—¥223,710

211,782
220¥4,019,661

AGC Inc. 35

Accumulated depreciation and impairment losses(Unit: Millions of yen)
Machinery,equipment andvehiclesTools, fixturesand fittings

Land¥(465,431) ¥(1,728,080)(36,510)(125,398)(30,057)(48,492)
13,57437,839¥(128,736)(10,560)
(62)
4,014

¥(5,487)
(861)
—
160

¥   (683) ¥(2,328,419)—(173,331)(15,461)(94,074)20
55,608(22,042)(98,812)(150)(1,177)¥(540,617) ¥(1,964,121)(6,131)(16)¥(141,493)(215)—¥(6,404)(128)(127,330)—(1,343)¥(16,253) ¥(2,668,892)

Buildings andstructures

Balance as of January 1 ������������������������
Depreciation ������������������������������������������
Impairment losses ����������������������������������
Disposals or sales ����������������������������������
Net foreign exchange differences ontranslation ��������������������������������������������
Others ����������������������������������������������������
Balance as of December 31 ������������������

Constructionin progress

Total

Carrying amounts(Unit: Millions of yen)

Balance as of January 1 ������������������������
Balance as of December 31 ������������������

Buildings andstructures

Machinery,equipment andvehiclesTools, fixturesand fittings¥389,559¥398,359¥669,079¥623,108¥24,693¥26,755

Buildings andstructures

Machinery,equipment andvehiclesTools, fixturesand fittings

Land

Constructionin progressTotal¥938,976
47,209¥2,587,230
146,193¥168,249
12,363¥ 101,493
1,042¥223,710
15,933¥4,019,661
222,743

69(5,413)276(66,941)

9(5,410)—(336)—(2,819)355(80,922)40,842(3,421)¥1,018,263

126,257
1,167¥2,794,184

5,787—¥180,999

4,607—¥106,806

11,505—¥248,330

188,999(2,254)¥4,348,583

Constructionin progress

Total

Land

¥88,099¥95,089

Constructionin progressTotal¥152,437¥207,457¥1,323,868¥1,350,769

FY2023 (Jan. 1 through Dec. 31, 2023)
Cost(Unit: Millions of yen)

Balance as of January 1 ������������������������
Additions ������������������������������������������������
Acquisitions due to businesscombinations �����������������������������������������
Disposals or sales ����������������������������������
Net foreign exchange differences ontranslation ��������������������������������������������
Others ����������������������������������������������������
Balance as of December 31 ������������������

Accumulated depreciation and impairment losses(Unit: Millions of yen)
Machinery,equipment andvehiclesTools, fixturesand fittings

Land¥(540,617) ¥(1,964,121)(34,834)(116,890)(5,121)(1,817)3,856
62,438¥(141,493)(12,044)
(35)
4,530

¥(6,404)
(934)
—
423

¥(16,253) ¥(2,668,892)—(164,705)(1,734)(8,707)
1,302
72,551(20,634)(93,062)(1,891)(14,011)¥(599,243) ¥(2,127,466)(4,753)(8)¥(153,805)(274)—¥(7,190)(344)(119,070)
14,102(1,809)¥ (2,927) ¥(2,890,633)

Buildings andstructures

Balance as of January 1 ������������������������
Depreciation ������������������������������������������
Impairment losses ����������������������������������
Disposals or sales ����������������������������������
Net foreign exchange differences ontranslation ��������������������������������������������
Others ����������������������������������������������������
Balance as of December 31 ������������������
Carrying amounts(Unit: Millions of yen)

Balance as of January 1 ������������������������
Balance as of December 31 ������������������

36 Financial Review 2023

Buildings andstructures

Machinery,equipment andvehiclesTools, fixturesand fittings¥398,359¥419,020¥623,108¥666,717¥26,755¥27,193Land¥95,089¥99,616

Constructionin progress

Total¥207,457¥245,403¥1,350,769¥1,457,950

Note 9: Goodwill and intangible assets
Reconciliation
Cost

Goodwill

Balance as of January 1 ��������������������������������������������������������������������������
Additions ����������������������������������������������������������������������������������������������
Additions through business combinations ��������������������������������������������
Disposals or sales ��������������������������������������������������������������������������������
Net foreign exchange differences on translation ����������������������������������
Others ��������������������������������������������������������������������������������������������������
Balance as of December 31 ����������������������������������������������������������������

(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Intangible assets
Customer
relationships
Other¥144,354———
12,420124¥156,899¥54,377
—
—
—
6,220
—
¥60,598¥150,290
13,27616(5,317)
6,927—¥165,193(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Intangible assets
Customer
Goodwill
relationships
Other

Balance as of January 1 ��������������������������������������������������������������������������
Additions ����������������������������������������������������������������������������������������������
Additions through business combinations ��������������������������������������������
Disposals or sales ��������������������������������������������������������������������������������
Net foreign exchange differences on translation ����������������������������������
Others ��������������������������������������������������������������������������������������������������
Balance as of December 31 ����������������������������������������������������������������

¥156,899——(443)
13,161—¥169,617¥60,598
—
—
—
4,846
—
¥65,444¥165,193
8,972
0(12,508)
7,972—¥169,629

Total¥204,668
13,27616(5,317)
13,148—¥225,791

Total¥225,791
8,972
0(12,508)
12,819—¥235,074

Accumulated amortization and impairment losses

Goodwill

Balance as of January 1 ����������������������������������������������������������������������
Amortization ����������������������������������������������������������������������������������������
Impairment losses ��������������������������������������������������������������������������������
Disposals or sales ��������������������������������������������������������������������������������
Net foreign exchange differences on translation ����������������������������������
Others ��������������������������������������������������������������������������������������������������
Balance as of December 31 ����������������������������������������������������������������

(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Intangible assets
Customer
relationships
Other¥(31,438)—(29,143)—(3,549)—¥(64,130)¥(14,387)(3,357)(4,640)—(1,856)—¥(24,241)¥(120,368)(8,966)(589)
5,196(5,518)(14)¥(130,260)(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Intangible assets
Customer
Goodwill
relationships
Other

Balance as of January 1 ����������������������������������������������������������������������
Amortization ����������������������������������������������������������������������������������������
Impairment losses ��������������������������������������������������������������������������������
Disposals or sales ��������������������������������������������������������������������������������
Net foreign exchange differences on translation ����������������������������������
Others ��������������������������������������������������������������������������������������������������
Balance as of December 31 ����������������������������������������������������������������

¥(64,130)——443(4,800)—¥(68,487)¥(24,241)(3,559)——(1,799)—¥(29,600)¥(130,260)(7,082)(1)
9,870(5,906)—¥(133,380)

Total¥(134,755)(12,324)(5,230)5,196(7,374)(14)¥(154,501)

Total¥(154,501)(10,641)(1)
9,870(7,706)—¥(162,980)

AGC Inc. 37

Carrying amounts

Goodwill

Balance as of January 1 ����������������������������������������������������������������������
Balance as of December 31 ����������������������������������������������������������������

Balance as of January 1 ����������������������������������������������������������������������
Balance as of December 31 ����������������������������������������������������������������

(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Intangible assets
Customer
relationships
Other¥112,916¥ 92,768¥39,990¥36,356¥29,922¥34,933

Total¥69,913¥71,290(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Intangible assets
Customer
Goodwill
relationships
Other

Total

¥92,768¥101,130¥71,290¥72,093¥36,356¥35,844¥34,933¥36,248

Amortization is recorded in “cost of sales” and “selling, general and administrative expenses” on the consolidated statements ofprofit or loss.
Note 10: Leases
The Group leases certain buildings, production facilities, etc. and accounts for them based on the terms of contract.
(1) Right-of-use assets

Buildings andstructures

Additions �����������������������������������������������������������������������
Depreciation �����������������������������������������������������������������
Balance as of December 31 �����������������������������������������

¥ 14,756(10,114)¥ 53,275

Buildings andstructures

Additions �����������������������������������������������������������������������
Depreciation �����������������������������������������������������������������
Balance as of December 31 �����������������������������������������

¥   5,399(10,145)¥ 46,773(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Machinery,equipment andTools, fixtures
vehiclesand fittingsLand¥ 1,947(3,090)¥ 7,940

¥ 263
(511)
¥ 561

¥  724(861)¥7,820(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Machinery,equipment andTools, fixtures
vehiclesand fittingsLand¥ 4,728(3,422)¥ 9,725

¥ 336
(365)
¥ 536

¥   50(934)¥7,497

Total¥ 17,692(14,578)¥ 69,597

Total¥ 10,514(14,868)¥ 64,533(2) Lease liabilities
The contractual maturity of the lease liabilities is described in Note 26 “Financial instruments (3) Liquidity risk.”(3) Amounts recognized in profit or loss
(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Interest on lease liabilities ������������������������������������������������������������������������������������������������
Expenses related to short-term leases and leases of low-value assets ����������������������������

¥ (2,332)(12,220)¥ (2,493)(12,203)(4) Amounts recognized in the consolidated cash flow statement
Total cash outflows for leases are ¥28,592 million and ¥30,140 million for the fiscal years ended December 31, 2022 and 2023,
respectively.

38 Financial Review 2023

Note 11: Impairment of non-financial assets(1) Impairment losses
When calculating impairment losses, the Group performs grouping of assets into a cash-generating unit, based on business units.
The cash-generating unit is the smallest identifiable group of assets that generates largely independent cash inflows. The recoverable
amount of a cash-generating unit is recorded as the higher of its value in use or fair value less costs of disposal. Value in use iscalculated based on the major assumptions. On an annual basis, future cash flows for each cash-generating unit are based on themost recent budgets and medium-term business plans, while future cash flows for subsequent periods take into account the growthpotential of businesses. The cash flow projection periods are set appropriately according to the business of each cash-generating
unit. The discount rate applied to each cash-generating unit is calculated mainly based on the pre-tax weighted average cost of capitaland adjusted to properly reflect risks and other factors related to the business using information from external and internal sources.
The fair value less costs of disposal is calculated using techniques such as the market approach and the cost approach.
During the fiscal year ended December 31, 2022, the Group recognized the following impairment losses.

Reportable segment

Architectural Glass

Cash-generating unit

Architectural glass business in Russia ���������������
Others ���������������������������������������������������������������
Subtotal ������������������������������������������������������������
Automotive
Automotive glass business in Europe(Western and Central Europe) �������������������������
Automotive glass business in Russia �����������������
Others ���������������������������������������������������������������
Subtotal ������������������������������������������������������������
Electronics
Display business �����������������������������������������������
Printed circuit board materials business, etc. �����
Others ���������������������������������������������������������������
Subtotal ������������������������������������������������������������
Chemicals
Others ���������������������������������������������������������������
Subtotal�������������������������������������������������������������
Ceramics and others Others ���������������������������������������������������������������
Subtotal�������������������������������������������������������������
Total��������������������������������������������������������������������������������������������������

(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Property, plant
Intangible
and equipment
Goodwill
assetsTotal¥ 9,565
1,416
10,982¥   289—289¥   67—67¥  9,922
1,416
11,339

6,323
3,637
447
10,40869,3562,931
186
72,474
84
84
125
125
¥94,074

—
—
—
—
4,317
24,535—28,853————¥29,143

377
26
0
404
—
4,756
1
4,757
—
—
—
—
¥5,230

6,700
3,664
447
10,81373,67332,223
187
106,085
84
84
125
125
¥128,447

In the display business, which is included in the Electronics segment, the Group has recognized a deteriorated operating result
primarily due to the impact of slow sales of televisions, personal computers and related items, and the increased cost caused by the
weaker yen and the soaring raw materials and fuel prices, which resulted in an indication of impairment for the cash-generating unit
to which its business assets belong. The Group has performed an impairment test. As a result, since the recoverable amount basedon the fair value less costs of disposal was less than the carrying amount of the cash-generating unit, the Group has recognized an
impairment loss of ¥73,673 million. In the valuation of fair value less costs of disposal, the Group selects the evaluation techniques,
the calculation methods and input data used when adopting such as the market approach and the cost approach. Land, buildings,
machinery and equipment and others (excluding precious metals) are mainly measured by the market approach and the cost approach,which include unobservable inputs such as third-party valuations, and are classified as Level 3 in the fair value hierarchy. Precious
metals included in machinery and equipment are measured by the market approach, which is based on quoted prices in active
markets, and are classified as Level 1 in the fair value hierarchy. The property, plant and equipment amounted to ¥306,413 million at
the end of the previous fiscal year.

AGC Inc. 39

Product and other transactions and provision of information technologies and other services between the Group companies inWestern and Central Europe and Russia have been significantly restricted in connection due to the deteriorating situation in Russia
and Ukraine. As a result, the cash-generating units were changed for the previous fiscal year. With this change, the architectural glassbusiness and the automotive glass business in Russia were separated from the architectural glass business and the automotive glassbusiness in Europe, respectively. Furthermore, the automotive glass business in Europe (Western and Central Europe), which isincluded in the Automotive segment, has recognized recurring operating losses since before the previous fiscal year, and the businessenvironment has further deteriorated primarily due to slow automotive demand caused by the situation in Russia and Ukraine, which
resulted in an indication of impairment for the cash-generating unit to which its business assets belong. Due to revisions in the businessplan and the discount rate from the fiscal year before last, the Group has performed an impairment test. As a result, since the recoverable amount calculated based on the value in use was less than the carrying amount of the cash-generating unit, the Group recognized
an impairment loss of ¥6,700 million. In the five-year business plan of the automotive glass business in Europe, which formed thebasis for estimating the value in use, the key assumptions were the prospects for an increase in sales volume on the premise that
automotive production volume would gradually recover, improved productivity, and cost reductions. In addition, the discount rate(pre-tax) used to determine the outcome of the impairment test was 14%. The property, plant and equipment amounted to ¥51,527
million at the end of the previous fiscal year. Moreover, the economic environment of the architectural and automotive glass businesses
in Russia deteriorated due to the prolonged Russian-Ukraine situation. Consequently, the Group has identified indications of impairment
for the cash-generating unit to which its business assets belong, including goodwill. The Group has performed an impairment test.
As a result, since the recoverable amount calculated based on the value in use was less than the carrying amount of the cash-generating
unit, the Group has recognized impairment losses of ¥9,922 million in the architectural glass business and ¥3,664 million in theautomotive glass business. In the five-year business plan of the architectural and automotive glass businesses in Russia, which formed
the basis for estimating the value in use, the key assumptions were forecasts of sales volume in light of the current economic situation.
In addition, the discount rate (pre-tax) used to determine the outcome of the impairment test was 28% for both businesses. The
property, plant and equipment amounted to ¥8,339 million for architectural glass and ¥760 million for automotive glass at the end of
the previous fiscal year.
Moreover, the Group has identified indications of impairment, such as a significant decline in profitability, for business assets
including goodwill in the super high-end CCL business and the industrial films business (printed circuit board materials business, etc.)
included in the Electronics segment, in light of a decline in demand due to the impacts of U.S.-China trade friction and the spread of
COVID-19 in China. As a result of comparing their carrying amounts and recoverable amounts, the Group has recognized impairment
losses of ¥32,223 million. The recoverable amounts are calculated by discounting future cash flows at a discount rate (pre-tax) of
16% based on the value in use.
In addition to the foregoing, the Group has identified indications of impairment including decreases in profitability with respect tocertain assets in various businesses included in each segment. Considering the financial results outlook and prospects for recoverability
going forward, the Group has recognized impairment losses of ¥2,261 million.
During the fiscal year ended December 31, 2023, the Group recognized the following impairment losses.

Reportable segment

Automotive

Cash-generating unit

Others ��������������������������������������������������������������������������������������
Subtotal ����������������������������������������������������������������������������������
Electronics
Display business at the Kansai plant (Takasago Factory) ����������
Subtotal ����������������������������������������������������������������������������������
Chemicals
Others ��������������������������������������������������������������������������������������
Subtotal ����������������������������������������������������������������������������������
Total �������������������������������������������������������������������������������������������������������������������������

(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Property, plant
Intangible
and equipment
assetsTotal¥1,895
1,895
6,778
6,778
34
34
¥8,707

¥—
—
1
1
—
—
¥   1

¥1,895
1,895
6,780
6,780
34
34
¥8,709In the display business, which is included in the Electronics segment, the Group has recognized a deterioration in operating profitability primarily due to the impact of a slow recovery in demand for LCD glass substrates and the increased cost caused by the weaker
yen and the soaring raw materials and fuel prices, which resulted in an indication of impairment for the cash-generating unit to which
the relevant property, plant and equipment belong. The Group has performed an impairment test. As a result, since the recoverable
amount calculated based on the value in use was above the carrying amount of the cash-generating unit, the Group did not recognize
impairment losses. In the five-year business plan of the display business, which formed the basis for estimating value in use, the key
assumptions were an increase in sales volume associated with a recovery in demand, revisions to price policy, an improved cost-of-sales
ratio associated with operational adjustments to facilities, and the optimization of capital expenditures. In addition, the discount rate(pre-tax) used to determine the outcome of the impairment test was 8%. The property, plant and equipment amounted to ¥315,691
million at the end of the fiscal year ended December 31, 2023. Moreover, as part of measures to improve the profitability of the display
business, in the second quarter, the Company decided to discontinue the production of LCD glass substrate products at the Kansai
plant (Takasago Factory), and recognized an impairment loss of ¥6,780 million in connection with this decision.

40 Financial Review 2023

In addition to the foregoing, the Group has identified indications of impairment including decreases in profitability with respect tocertain assets in various businesses included in each segment. Considering the financial results outlook and prospects for recoverability
going forward, the Group has recognized impairment losses of ¥1,929 million.
Impairment losses are included in “other expenses” on the consolidated statements of profit or loss.
Non-financial assets excluding inventories and deferred tax assets reported on the Group’s consolidated statements of financial
position may become subject to impairment loss if a recoverable amount of any such asset has fallen below the carrying amount due
to lower profitability, changes in fair value or other such circumstances going forward. Such a scenario could significantly affect theamount of non-financial assets on the Group’s consolidated financial statements in the fiscal year ending December 31, 2024.
(2) Impairment test of cash-generating units including goodwill
The total carrying amount of goodwill allocated to each cash-generating unit is as follows:

Reportable Segment

Architectural Glass ����������������������������������������������������������������������������������������������������������
Automotive ��������������������������������������������������������������������������������������������������������������������
Electronics ����������������������������������������������������������������������������������������������������������������������
Chemicals ����������������������������������������������������������������������������������������������������������������������
Life science ��������������������������������������������������������������������������������������������������������������������
Total ����������������������������������������������������������������������������������������������������������������������������

(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

¥23,690
1,494
2,736
4,763
60,083¥92,768¥ 25,724
1,494
2,736
4,959
66,215¥101,130

The goodwill arising from the acquisition of AGC Biologics A/S and AGC Biologics S.p.A., which are contract development andmanufacturing organizations (CDMOs) offering biologically active pharmaceutical ingredient (API) and gene and cell therapy pharmaceutical manufacturing services, is included in the corresponding amount for the Life Science segment. The amounts of AGC Biologics
A/S were ¥32,245 million and ¥35,737 million, and the amounts of AGC Biologics S.p.A. were ¥15,581 million and ¥17,304 million
as of December 31, 2022 and 2023, respectively. In testing for the impairment of goodwill from this acquisition, the Group calculated
the value in use by adding the perpetuity value to the future five-year cash flows, which takes into account the average growth rateof the biopharmaceutical market (estimated at 8%), expansion of production capacity through the introduction of a new type of culture
facility for the development and manufacture of gene and cell therapy drugs on contract, and growth due to synergy effects within
the Group. In addition, the discount rates (pre-tax) used to determine the outcome of the impairment test were 15% and 15% in the
goodwill arising from the acquisition of AGC Biologics A/S and 20% and 18% in the goodwill arising from the acquisition of AGC
Biologics S.p.A. for the fiscal years ended December 31, 2022 and 2023, respectively. In the event that the growth rate falls below
the projected rate, or the discount rate increases by over 14 percentage points and over 20 percentage points in the goodwill arisingfrom the acquisition of AGC Biologics A/S and the discount rate increases by over 3 percentage points and over 6 percentage points
in the goodwill arising from the acquisition of AGC Biologics S.p.A. during the fiscal years ended December 31, 2022 and 2023,
respectively, an impairment loss could be incurred.
In the fiscal year ended December 31, 2022, the Group recognized impairment losses in the super high-end Copper Clad Laminate(CCL) business and the industrial films business (printed circuit board materials business, etc.) and in the display business, which areincluded in the Electronics segment, and in the architectural glass business in Russia, which is included in the Architectural Glasssegment, as stated in “(1) Impairment losses.” For goodwill in these businesses, the Group has recorded impairment losses of ¥24,535
million in the super high-end Copper Clad Laminate (CCL) business and the industrial films business (printed circuit board materials
business, etc.), ¥4,317 million in the display business and ¥289 million in the architectural glass business in Russia.
In the fiscal year ended December 31, 2023, the Group recognized a deterioration in operating profitability at AGC Biologics, Inc.,
which is a contract development and manufacturing organization (CDMO), offering biologically active pharmaceutical ingredient (API)and gene and cell therapy pharmaceutical manufacturing services, and is included in the life science segment. The deteriorating operating
profitability was primarily due to a temporary downturn in demand across the market as a whole due to a decrease in inflows of funds
to biotech startups and delays in the launch of new lines, resulting in an indication of impairment for the cash-generating unit (including
related liabilities) to which the relevant property, plant and equipment, intangible assets, and goodwill belong. The Group performed an
impairment test. As a result, since the recoverable amount of ¥112,113 million was above the carrying amount of the cash-generating
unit (including related liabilities), the Group did not recognize impairment losses. In the five-year business plan of AGC Biologics, Inc.,
which formed the basis for estimating the value in use, the key assumption was an increase in net sales due to an increase in contractdevelopment and manufacturing of biologically active pharmaceutical ingredient and gene and cell therapy pharmaceuticals driven bymarket expansion and the launch of new lines. In addition, the discount rate (pre-tax) used to determine the outcome of the impairment
test was 16%. In the event that the growth rate falls below the projected rate, or the discount rate increases by more than 3 percentage
points in the fiscal year ended December 31, 2023, an impairment loss could be incurred. The carrying amount of the cash-generating
unit was ¥90,797 million at the end of the fiscal year ended December 31, 2023, while the property, plant and equipment was ¥65,641
million, intangible assets were ¥18,233 million and goodwill was ¥11,232 million at the end of this reporting period.

AGC Inc. 41

The main discount rates (pre-tax) used for impairment tests for cash-generating units including goodwill, except for the above,ranged from 6 to 9% and 7 to 10% for the fiscal years ended December 31, 2022 and 2023, respectively.
Note 12: Equity method affiliates
The carrying amounts of Investments accounted for using equity method are as follows:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Investments accounted for using equity method ��������������������������������������������������������������

¥24,609¥27,633

Share of profit and other comprehensive income of associates and joint ventures accounted for using the equity method are
as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Share of profit (loss) of associates and joint ventures accounted
for using equity method ������������������������������������������������������������������������������������������������
Share of other comprehensive income of associates and joint ventures accounted
for using equity method ��������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥1,236¥1,9818¥1,244(6)¥1,975

During the fiscal years ended December 31, 2022 and 2023, there was no individually significant associate or joint venture accounted
for using the equity method.
Note 13: Deferred tax assets and liabilities(1) Unrecognized deferred tax assets
The Group recognizes deferred tax assets, taking into account deductible temporary differences, projected future taxable profit andtax planning. However, deferred tax assets have not been recognized for the following items:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Carry-forwards of unused tax losses ��������������������������������������������������������������������������������
Deductible temporary differences ������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥378,306
344,063¥722,369¥471,824
383,411¥855,236

The amounts of carry-forwards of unused tax losses, for which deferred tax assets have not been recognized, and the expiries of
the carry-forwards are as follows:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

1st year ����������������������������������������������������������������������������������������������������������������������������
2nd year ��������������������������������������������������������������������������������������������������������������������������
3rd year ����������������������������������������������������������������������������������������������������������������������������
4th year ����������������������������������������������������������������������������������������������������������������������������
5th year and thereafter ����������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

42 Financial Review 2023¥  2,516
2,026
2,701
12,474
358,588¥378,306¥  2,581
1,308
199
14,031
453,703¥471,824

(2) Unrecognized deferred tax liabilities
In principle, the Group has recognized deferred tax liabilities on taxable temporary differences, arising from undistributed profits andexchange differences on translation of foreign operations, etc., associated with investment in subsidiaries. On the other hand, theGroup has not recognized deferred tax liabilities if it is able to control the timing of the reversal of the temporary difference and it isprobable that the temporary difference will not reverse in the foreseeable future.
As of December 31, 2022 and 2023, the total amounts of taxable temporary differences (including exchange differences ontranslation of foreign operations) for which deferred tax liabilities have not been recognized were ¥383,821 million and ¥414,045
million, respectively.
(3) Recognized deferred tax assets and liabilities
Deferred tax assets and liabilities were attributable to the following items:
Beginning with the fiscal year ended December 31, 2023, the Group has adopted the “International Tax Reform—Pillar Two Model
Rules (Amendments to IAS12)” (hereinafter, “the Amendments”) issued on May 23, 2023. The Group has retrospectively applied the
mandatory temporary exception stipulated by the Amendments. Accordingly, the Group has not recognized or disclosed deferredtaxes related to taxes (hereinafter, the “Pillar Two corporate income taxes”) arising from the tax regime related to the Pillar Two Model
Rules regarding the new global minimum taxation framework (hereinafter, “the global minimum taxation system”), which was announced
by the Organisation for Economic Co-operation and Development (OECD).
(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Deferred tax assets
Post-employment benefit liabilities ��������������������������������������������������������������������������������
Depreciation ����������������������������������������������������������������������������������������������������������������
Impairment losses ��������������������������������������������������������������������������������������������������������
Carry-forwards of unused tax losses ����������������������������������������������������������������������������
Lease liabilities ��������������������������������������������������������������������������������������������������������������
Others ��������������������������������������������������������������������������������������������������������������������������
Total deferred tax assets ������������������������������������������������������������������������������������������
Deferred tax liabilities
Financial assets measured at fair value through other comprehensive income ��������������
Gain on establishment of trust for retirement benefits ��������������������������������������������������
Depreciation ����������������������������������������������������������������������������������������������������������������
Deferred capital gain reserve ����������������������������������������������������������������������������������������
Right-to-use assets ������������������������������������������������������������������������������������������������������
Others ��������������������������������������������������������������������������������������������������������������������������
Total deferred tax liabilities ����������������������������������������������������������������������������������������
Net deferred tax assets ��������������������������������������������������������������������������������������������

¥ 10,123
10,082
18,308
19,83015,30920,437
94,091¥ 15,568
11,39017,85922,176
14,286
5,852
87,134(10,570)(3,544)(19,340)(6,832)(14,980)(26,896)(82,164)¥ 11,926(9,822)(2,899)(21,828)(6,319)(14,141)(30,313)(85,325)¥   1,808(4) Increase and decrease of deferred tax assets and liabilities
Increase and decrease of deferred tax assets and liabilities are as follows:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Balance as of January 1 (net amount) ������������������������������������������������������������������������������
Recognized in profit or loss ����������������������������������������������������������������������������������������������
Recognized in other comprehensive income ��������������������������������������������������������������������
Others (business combinations, currency fluctuation and others) ������������������������������������
Balance as of December 31 (net amount) ������������������������������������������������������������������������

¥   (8,203)
19,103(4,472)
5,499¥11,926¥ 11,926(1,882)(13,231)4,996¥   1,808

AGC Inc. 43

Note 14: Trade and other payables
Trade payables(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Notes payable ������������������������������������������������������������������������������������������������������������������
Trade accounts payable ��������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥ 11,290
203,042¥214,332¥ 11,477
195,089¥206,566

Other payables(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Other accounts payable ��������������������������������������������������������������������������������������������������
Accrued expenses ������������������������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥ 83,061
52,676
76,117¥211,855¥ 86,790
57,863
71,585¥216,240

Note 15: Interest-bearing debt
(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Short-term bank loans ������������������������������������������������������������������������������������������������������
Commercial paper ������������������������������������������������������������������������������������������������������������
Long-term bank loans due within one year ����������������������������������������������������������������������
Corporate bonds due within one year ������������������������������������������������������������������������������
Short-term lease liabilities ������������������������������������������������������������������������������������������������
Total current liabilities ����������������������������������������������������������������������������������������������������
Long-term bank loans ������������������������������������������������������������������������������������������������������
Corporate bonds ��������������������������������������������������������������������������������������������������������������
Long-term lease liabilities ������������������������������������������������������������������������������������������������
Total non-current liabilities ��������������������������������������������������������������������������������������������
Total interest-bearing debt ��������������������������������������������������������������������������������������������

¥ 67,897
1,853
89,20419,994
13,055
192,005
351,098
39,941
67,197458,237¥650,242¥ 78,572
43,064
114,634—
13,176249,447
312,281
69,86963,410445,561¥695,009

Please see Note 26 “Financial instruments” for further information on the Group’s interest rate risk, currency risk, and liquidity risk.
Assets pledged as collateral are presented in Note 29 “Collateral.”(1) Bonds

Company

Name of bondDate of issuance

Asahi Glass Co., Ltd. 14th straight bondJun. 3, 2013

Asahi Glass Co., Ltd.
AGC Inc.
AGC Inc.
Total(Note 1)

May 29, 2017
Oct. 12, 2018
Jun. 8, 2023—

15th straight bond
1st straight bond2nd straight bond—

As ofJanuary 1,
2023(Millions of yen)

As ofDecember 31,
2023(Millions of yen)

¥ 19,994(19,994)
19,96919,972—¥ 59,935(19,994)—
19,974
19,982
29,912¥69,869(—)

Interest rate(% annum)(Note 2)

1.01
0.31
0.23
0.79
—

Collateral

Date of maturity

None
None
None
None
—

Jun. 2, 2023
May 28, 2027
Oct. 10, 2025
Jun. 8, 2033—

Notes: 1.	The component figures disclosed in parentheses in the “As of January 1, 2023” and “As of December 31, 2023” columns represent balances due within one year.
2.	The interest rate column shows the coupon rates applicable to each bond. Accordingly, these rates are different from the effective annual interest rates.

44 Financial Review 2023

(2) Borrowings
As of December 31, 2023, the weighted average effective interest rate for “short-term bank loans,” “long-term bank loans due within
one year” and “long-term bank loans” are 0.9%, 0.6% and 1.8% per annum, respectively.
The maturities of “long-term bank loans” are from 2025 to 2032.
(3) Liabilities arising from financing activities
The changes of liabilities arising from financing activities are as follows:(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)

Balance as of January 1 �����������������������������������������������Cash flows �������������������������������������������������������������������
Non-cash changes
Increase in finance lease liabilities �����������������������������
Foreign exchange differences �����������������������������������
Changes in the scope of consolidation ���������������������
Others �����������������������������������������������������������������������
Balance as of December 31 �����������������������������������������

Borrowings

Commercial
paper

Corporatebonds

Lease liabilities

Total liabilities
arising fromfinancing
activities¥470,662
13,929¥       —1,782

¥59,910—¥ 72,620(14,040)¥603,194
1,671—
23,607——¥508,200—71——¥1,853———25¥59,935

18,143
4,843—(1,314)¥ 80,253

18,14328,521—(1,288)¥650,242(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)

Balance as of January 1 �����������������������������������������������Cash flows �������������������������������������������������������������������
Non-cash changes
Increase in finance lease liabilities �����������������������������
Foreign exchange differences �����������������������������������
Changes in the scope of consolidation ���������������������
Others �����������������������������������������������������������������������
Balance as of December 31 �����������������������������������������

Borrowings

Commercial
paper

Corporatebonds

Lease liabilities

Total liabilities
arising fromfinancing
activities¥508,200(25,302)¥ 1,853
40,136¥59,935
9,907¥ 80,253(15,444)¥650,242
9,297—
26,169(3,516)(62)¥505,488

—
1,074
—
—
¥43,064———
26¥69,869

10,506
4,715—(3,443)¥ 76,586

10,506
31,959(3,516)(3,480)¥695,009

Note 16: Provisions(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Provisions for restructuring costs ��������������������������������������������������������������������������������������
Other provisions ��������������������������������������������������������������������������������������������������������������
Total current liabilities ����������������������������������������������������������������������������������������������������
Provisions for restructuring costs ��������������������������������������������������������������������������������������
Other provisions ��������������������������������������������������������������������������������������������������������������
Total non-current liabilities ��������������������������������������������������������������������������������������������

¥    92
1,217¥ 1,310¥ 8,422
9,360¥17,783¥   670
1,327¥ 1,997¥ 3,7227,251¥10,973“Other provisions” consists of various provisions for undetermined obligation related to identifiable risks, such as asset retirement
obligations and environment-related provisions.
There is no significant balance of asset retirement obligations as of December 31, 2022 and 2023.

AGC Inc. 45

A reconciliation of opening and closing balances for each class of provision is as follows:(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Provisions for
restructuring costs
Other provisions
Total

Balance as of January 1 �������������������������������������������������������������������
Amounts increased during the period �����������������������������������������������
Amounts used during the period �������������������������������������������������������
Unused amounts reversed during the period �������������������������������������
Others �����������������������������������������������������������������������������������������������
Balance as of December 31 �������������������������������������������������������������

¥ 8,515933(5,480)(457)
881¥ 4,392¥10,578
2,675(4,186)(1,139)651¥ 8,578¥19,093
3,608(9,666)(1,597)
1,533¥12,971

During the fiscal year ended December 31, 2023, the Group recognized a provision for restructuring programs measured at
estimated future losses arising from restructuring actions such as an expansion in the additional severance compensation program
to improve the business structure and the reorganization of certain operations. The timing of the payment may be affected by futurebusiness plans.
Note 17: Employee benefits
The Group has the following retirement benefit plans: defined benefit corporate pension plans, employees’ pension fund plans, lumpsum severance payment plans, all which are defined benefit pension plans, and defined contribution pension plan.
The level of defined benefit pension plans is determined based on a certain number of points conferred according to an individual
employee’s contribution during his or her period of service. Asset administration, investment, and benefits are provided mainly bycorporate pension funds. The investment yield of the corporate pension is set in consideration of the sustainability of the plan.
(1) Defined benefit plans
The amounts for defined benefit plans recognized on the consolidated statements of financial position are as follows:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Present value of defined benefit obligations ����������������������������������������������������������������������
Fair value of plan assets ��������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������
Prepaid pension expenses (Note) ������������������������������������������������������������������������������������������
Post-employment benefit liabilities ������������������������������������������������������������������������������������

¥(329,245)
351,846¥   22,601¥   68,179(45,578)¥(303,810)
348,123¥   44,312¥   94,339(50,026)

Note: Prepaid pension expenses are included in “other non-current assets” on the consolidated statements of financial position.

(Corporate pension plan of the Company)
The Company’s pension plan is managed through a legally independent entity AGC Corporate Pension Fund (the “Fund”). The Fundhas a Board of Representatives split evenly between representatives selected by the Company and representatives elected by thepension plan members through mutual vote. The representatives elect directors and a controller through mutual vote. After that, thepresident (the chairman of the Board of Representatives) is selected.
Under the Defined-Benefit Corporate Pension Act, the Company is obligated to make pension contributions to the Fund which
provides pension benefits. The directors of the Fund are responsible for faithfully executing operations related to the administrationand investment of pension reserves for the Fund in compliance with laws and regulations, any orders issued by the Minister of Health,Labour and Welfare, and the director-generals of Regional Bureaus of Health and Welfare based on laws and regulations, as well as
the rules of the Fund and the resolutions of the Board of Representatives. Furthermore, directors are prohibited from engaging in any
actions that could hinder proper administration and investment of the pension reserves for the purpose of furthering their own interestsor the interests of third parties other than the Fund.

46 Financial Review 2023

i)

Changes in the present value of defined benefit obligations(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

As of January 1 ����������������������������������������������������������������������������������������������������������������
Benefits paid by the plan ��������������������������������������������������������������������������������������������������
Current service cost ��������������������������������������������������������������������������������������������������������
Interest cost ��������������������������������������������������������������������������������������������������������������������
Past service cost and settlement ��������������������������������������������������������������������������������������
Actuarial gains and losses ������������������������������������������������������������������������������������������������
Due to changes in demographic assumptions ��������������������������������������������������������������
Due to changes in financial assumptions ����������������������������������������������������������������������
Others ��������������������������������������������������������������������������������������������������������������������������
Foreign exchange differences ������������������������������������������������������������������������������������������
Business combinations and disposals ������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
As of December 31 ����������������������������������������������������������������������������������������������������������

¥(370,030)
16,170(11,728)(3,929)(1,146)43,453(1,163)44,443174(2,411)(145)
521¥(329,245)¥(329,245)
17,979(11,059)(6,683)31,053
(552)
159
137
(849)
(5,690)(28)417¥(303,810)

The weighted average duration of defined benefit obligations was mainly 14 years and 14 years as of December 31, 2022 and2023, respectively.
ii) Changes in the fair value of plan assets(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

As of January 1 ����������������������������������������������������������������������������������������������������������������
Employer contributions ����������������������������������������������������������������������������������������������������
Employee contributions ����������������������������������������������������������������������������������������������������
Benefits paid by the plan ��������������������������������������������������������������������������������������������������
Interest income(Note) ����������������������������������������������������������������������������������������������������������
Settlement ������������������������������������������������������������������������������������������������������������������������
Income related to plan assets (excluding interest income) ������������������������������������������������
Foreign exchange differences ������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
As of December 31 ����������������������������������������������������������������������������������������������������������

¥376,416
3,637
151(13,852)
2,900—(22,113)
5,228
(521)
¥351,846¥351,846
3,623
341(15,309)
6,053(33,146)
30,472
4,658(417)¥348,123

Note: Interest income is measured as the fair value of plan assets multiplied by the discount rate.

The Group plans to contribute ¥3,659 million to retirement benefit plans during the fiscal year ending December 31, 2024.
In accordance with the rules of the Fund, every five years the Company is required to recalculate the amount of pension contributions, with the end of the Fund’s business year set as the record date. This is to maintain the Fund’s financial stability into the future.
In the recalculation process, the Company reviews the base rates related to the pension contributions (assumed interest rate,
assumed mortality rate, assumed withdrawal rate, assumed salary increase rate, assumed number of new pension plan members,etc.) in order to re-examine the appropriateness of the pension contributions.

AGC Inc. 47

iii) Components of plan assets
Plan assets are invested with the aim of ensuring the sustainability of the defined benefit plans. Plan assets are invested mainly inbonds and equities, and are exposed to market risk in each area. The Group has formulated a policy on risk and return targets forthe investment of plan assets. The Group properly monitors investment performance, and regularly reviews this policy, taking into
account the funding status and market developments surrounding investments.
The components of plan assets are as follows:(Unit: Millions of yen)
FY2022 (as of December 31, 2022)
FY2023 (as of December 31, 2023)
Assets without
Assets without
Assets with
Assets withquoted market
quoted market
quoted market
quoted market
prices in an
prices in an
prices in an
prices in an
activeactiveSubtotal
Subtotal
active market
active market
market (Note)market (Note)

Equity securities ���������������������
Bonds �������������������������������������
Others �������������������������������������
Total �������������������������������������

¥ 76,101
75,191
13,474¥164,767¥ 54,752
100,446
31,880¥187,079¥130,853
175,638
45,354¥351,846¥ 74,305
60,753
20,560¥155,619¥ 58,791
99,43834,275¥192,504¥133,096
160,191
54,835¥348,123

Note: Equity securities include privately placed investment trusts that do not have quoted market prices in an active market, and comprise publicly traded shares in Japan and overseas.
Others mainly include cash equivalents and insurance contracts.

iv) Analysis of post-employment benefit expenses
Amounts recognized as expenses related to post-employment benefits are as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Current service cost ��������������������������������������������������������������������������������������������������������
Interest cost ��������������������������������������������������������������������������������������������������������������������
Interest income ����������������������������������������������������������������������������������������������������������������
Past service cost and gains or losses on settlement ��������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥(11,728)(3,929)2,900(1,146)¥(13,904)¥(11,059)(6,683)
6,053(2,092)¥(13,782)

The foregoing expenses are included in “cost of sales,” “selling, general and administrative expenses” and certain other accounts
on the consolidated statements of profit or loss.
v) Actuarial assumptions
Principal actuarial assumptions as of December 31, 2022 and 2023 are as follows:
FY2022(as of December 31,
2022)

Discount rate (%) ��������������������������������������������������������������������������������������������������������������

1.4

FY2023(as of December 31,
2023)

1.4

In addition to the above, actuarial assumptions include future salary increases, the mortality rate and the expected retirement rate.
vi) Sensitivity analysis of actuarial assumptions
The followings are changes in defined benefit obligations that would result from the changes below in the discount rate as of December
31, 2023. This analysis assumes that all other variables are held constant.
(Unit: Millions of yen)
FY2023(as of December 31,
2023)

Discount rate (0.5% increase) �������������������������������������������������������������������������������������������������������������������������
Discount rate (0.5% decrease) �����������������������������������������������������������������������������������������������������������������������

¥ 17,430(19,038)(2) Defined contribution plans
Amounts recognized as expenses related to defined contribution plans are as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Expenses related to defined contribution plans ����������������������������������������������������������������

48 Financial Review 2023¥(2,403)¥(2,556)

The abovementioned expenses are included in “cost of sales” and “selling, general and administrative expenses” on the consolidated
statements of profit or loss.
Note 18: Share-based payments(1) Stock optionsi) Description of stock options
Until the fiscal year ended December 31, 2017, the Company granted the Group’s directors, executive officers and other employeeswith stock options, which confer the right to purchase the Company’s shares. Under the plan, 200 shares of common stock per one
stock acquisition right are granted to the grantees. Stock options that are not exercised during the exercisable period will expire.
The general terms and conditions for stock options are as follows. The presentation is based on the numbers when the shareswere granted.
Grant dateJuly 2, 2007
(Compensation-type)
July 1, 2008
(Compensation-type)
July 1, 2009
(Compensation-type)
July 1, 2010
(Compensation-type)
July 1, 2011
(Compensation-type)
July 2, 2012
(Compensation-type)
March 26, 2013
(Compensation-type)
July 1, 2013
(Compensation-type)
July 1, 2013
(Ordinary-type)
July 1, 2014
(Compensation-type)
July 1, 2014
(Ordinary-type)
January 27, 2015
(Compensation-type)
July 1, 2015
(Compensation-type)
July 1, 2015
(Ordinary-type)February 22, 2016
(Compensation-type)
July 1, 2016
(Compensation-type)
July 1, 2016
(Ordinary-type)
March 24, 2017
(Compensation-type)
July 3, 2017
(Compensation-type)

Number ofshares granted

Vesting conditions

53,200(Note 1)53,000(Note 1)

129,400(Note 1)

86,400(Note 1)86,000(Note 1)

204,000(Note 1)55,600(Note 1)

118,400(Note 1)

66,200 An option holder must remain in continued
service from the grant date (July 1, 2013) to thevesting date (June 30, 2016).
128,800 (Note 1)
66,000 An option holder must remain in continued
service from the grant date (July 1, 2014) to thevesting date (June 30, 2017).
4,800 (Note 1)
90,200(Note 1)75,200 An option holder must remain in continued
service from the grant date (July 1, 2015) to thevesting date (June 30, 2018).
12,200 (Note 1)
139,200(Note 1)

76,000 An option holder must remain in continued
service from the grant date (July 1, 2016) to thevesting date (June 30, 2019).
24,200 (Note 1)
60,200(Note 1)

Exercisable period

From July 3, 2007
to July 2, 2037(Note 1)
From July 2, 2008
to July 1, 2038(Note 1)
From July 2, 2009
to July 1, 2039(Note 1)
From July 2, 2010
to July 1, 2040(Note 1)
From July 2, 2011
to July 1, 2041(Note 1)
From July 3, 2012
to July 2, 2042(Note 1)
From March 27, 2013
to March 26, 2043(Note 1)
From July 2, 2013
to July 1, 2043(Note 1)
From July 1, 2016
to June 30, 2022
From July 2, 2014
to July 1, 2044(Note 1)
From July 1, 2017
to June 30, 2023
From January 28, 2015
to January 27, 2045(Note 1)
From July 2, 2015
to July 1, 2045(Note 1)
From July 1, 2018
to June 30, 2024
From February 23, 2016
to February 22, 2046(Note 1)
From July 2, 2016
to July 1, 2046(Note 1)
From July 1, 2019
to June 30, 2025
From March 25, 2017
to March 24, 2047(Note 1)
From July 4, 2017
to July 3, 2047(Note 1)

Exercise price(Yen)¥    1
1
1
1
1
1
1
1
3,805

1
3,035

1
1
4,000

1
1
3,260

1
1

Notes: 1.	Vesting conditions and exercisable period
		 Within the abovementioned exercisable periods, option holders may exercise their subscription rights within 10 years from the day after they lose their position as a director or an
executive officer of the Company.
2.	Effective from July 1, 2017, the Company consolidated its common shares at a ratio of five shares to one share. The number of shares granted and exercise price are calculatedon the assumption that the consolidation of shares has been conducted on the grant date.

AGC Inc. 49ii) Number and average exercise price of stock options
The number and weighted average exercise prices of stock options granted during the period are as follows. The number of stock
options is shown after conversion into the number of shares.
FY2022 (Jan. 1 through Dec. 31, 2022)
Weighted average
Number (Shares)
exercise price (Yen)

Outstanding as of January 1 �������������������������
Granted during the period �����������������������������
Forfeited during the period ���������������������������
Exercised during the period ���������������������������
Expired during the period �����������������������������
Outstanding as of December 31 �������������������
Exercisable as of December 31 ���������������������

814,000——
137,600
14,000662,400
662,400¥  733
—
—
1,064
3,805
¥  599¥  599FY2023 (Jan. 1 through Dec. 31, 2023)
Weighted average
Number (Shares)
exercise price (Yen)662,400—
2,000
132,000
5,000
523,400
523,400¥  599
—
3,630
961
3,035
¥  473¥  473

The weighted average remaining contractual period was 18.1 years and 18.4 years as of December 31, 2022 and 2023,
respectively.
The weighted average share price on the exercise dates of stock options exercised in the fiscal years ended December 31, 2022
and 2023 were ¥4,875 and ¥4,938, respectively.
iii) Fair value of stock options
There were no stock options granted during the fiscal years ended December 31, 2022 and 2023.
iv) Equity-settled share-based payment transactions for which IFRS 2 is not applied
Out of the description in i) above, due to optional exemptions by IFRS 1, details of stock options for which IFRS 2 has not been
applied are as follows:
Grant dateJuly 2, 2007 (Compensation-type)
July 1, 2008 (Compensation-type)
July 1, 2009 (Compensation-type)
July 1, 2010 (Compensation-type)
July 1, 2011 (Compensation-type)

Number ofshares granted

53,20053,000129,400
86,40086,000

Vesting conditions

Exercisable period(Note 1)

From July 3, 2007 to July 2, 2037(Note 1)
From July 2, 2008 to July 1, 2038(Note 1)
From July 2, 2009 to July 1, 2039(Note 1)
From July 2, 2010 to July 1, 2040(Note 1)
From July 2, 2011 to July 1, 2041(Note 1)(Note 1)
(Note 1)
(Note 1)
(Note 1)

Exercise price
(Yen)

¥1
1
1
1
1

Notes: 1.	Vesting conditions and exercisable period
		 Within the abovementioned exercisable periods, option holders may exercise their subscription rights within 10 years from the day after they lose their position as a director or an
executive officer of the Company.
2.	Effective from July 1, 2017, the Company consolidated its common shares at a ratio of five shares to one share. The number of shares granted is calculated on the assumption thatthe consolidation of shares has been conducted on the grant date.

v) Expenses recorded under stock options
There were no expenses recorded under the plan during the fiscal years ended December 31, 2022 and 2023 because all the stock
options under the plan vested.
(2) Share-based compensation plan that uses a structure called BIP Trusti) Description of share-based compensation plan that uses a structure called BIP Trust
The Company has introduced a plan to its directors and executive officers (excluding non-residents of Japan; hereinafter referred toas “directors, etc.”). The purpose is to further motivate the contributions to the increase of the Group’s corporate value in the medium
to long term, and the achievement of performance targets as set out in the medium-term management plan.
In the plan, the BIP Trust acquires the Company’s shares, and delivers the shares and provides the amount of money equivalent
to the value of the shares to directors, etc., based on their positions and the level of achievement of the performance targets andother factors.

50 Financial Review 2023

ii) Expenses recorded under the share-based compensation plan that uses a structure called BIP TrustExpenses recorded under the plan were ¥287 million and ¥343 million during the fiscal years ended December 31, 2022 and2023, respectively.
These expenses were included in “cost of sales” and “selling, general and administrative expenses” on the consolidated statements
of profit or loss.
iii) Weighted average fair value of the Company’s shares granted during the period
Weighted average fair value of the Company’s shares granted during the period is measured based on observable market prices,
including expected dividends, etc.
Weighted average fair value of the Company’s shares granted was ¥4,296 and ¥4,966 during the fiscal years ended December
31, 2022 and 2023, respectively.
Note 19: Equity(1) Share capital and share premium(Unit: Thousands of shares)
Fully paid issued shares(No par value ordinary shares)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

As of January 1 ����������������������������������������������������������������������������������������������������������������
Decrease due to cancellation of treasury shares ��������������������������������������������������������������
As of December 31 ����������������������������������������������������������������������������������������������������������
Number of authorized shares ������������������������������������������������������������������������������������������

227,441—
227,441
400,000

227,441(10,006)
217,434
400,000

Note: In accordance with the resolutions of the Board of Directors meeting held on October 12, 2023, the Company canceled its treasury shares during the year ended December 31, 2023.

Out of the amount generated from the equity transaction, capital surplus consists of the amount which is not included inshare capital.
Under the Companies Act of Japan, at least 50% of the proceeds of certain issues of ordinary shares shall be credited toshare capital.
(2) Retained earnings
Retained earnings include amounts transferred from accumulated gains or losses recognized in other components of equity upon thesale of financial assets measured at fair value through other comprehensive income.
Furthermore, retained earnings include the amount of accumulated foreign currency translation adjustments that had been recognizedbased on previous standards (JGAAP), and transferred to retained earnings as of the transition date to IFRS.
(3) Treasury shares(Unit: Thousands of shares)
Treasury shares
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

As of January 1 ����������������������������������������������������������������������������������������������������������������
Increase due to acquisition of treasury shares in accordance with the resolution of
the Board of Directors ��������������������������������������������������������������������������������������������������
Decrease due to cancellation of treasury shares �����������������������������������������������������������������������
Decrease due to sales of less-than-one-unit shares ��������������������������������������������������������
Increase due to purchases of less-than-one-unit shares ��������������������������������������������������
Decrease due to exercise of stock options ����������������������������������������������������������������������
Increase due to market purchases of the BIP Trust �������������������������������������������������������������������

Decrease due to delivery to the beneficiaries of the BIP Trust ������������������������������������������
As of December 31 ����������������������������������������������������������������������������������������������������������

5,839

5,757

—
—
(0)
4
(137)
66
(13)
5,757

10,006(10,006)
(0)
4
(132)
—
(7)
5,622

Note: In accordance with the resolutions of the Board of Directors meeting held on October 12, 2023, the Company canceled its treasury shares during the year ended December 31, 2023.

AGC Inc. 51

(4) Other components of equity
The following is a breakdown of other components of equity:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Remeasurements of defined benefit plans ������������������������������������������������������������������������
Net change in revaluation of financial assets measured at FVTOCI ����������������������������������Cash flow hedges ������������������������������������������������������������������������������������������������������������
Exchange differences on translation of foreign operations ������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥  9,405
27,2942,321
300,024¥339,046¥ 29,737
25,317(6,167)365,053¥413,941

Remeasurements of defined benefit plans
Remeasurements of defined benefit plans includes the effects of differences between the actuarial assumptions at the beginning of
the period and the actual numbers at the end of the period, and differences between actual income from plan assets and projectedinterest income from plan assets.
Net change in revaluation of financial assets measured at FVTOCIThis includes the cumulative amount of the net change in revaluation of financial assets measured at FVTOCI.
Cash flow hedges
This is the effective portion of the cumulative amount of the net change in fair value of cash flow hedges relating to hedge transactions
that have not yet been realized.
Exchange differences on translation of foreign operations
These are foreign currency differences arising from the translation of the financial statements of foreign operations.
(5) Dividends
Dividends paid during the fiscal years ended December 31, 2022 and 2023 are as follows:

Date of approval

Shareholders’ meeting
held on March 30, 2022 �������
Board of Directors meeting heldon August 2, 2022 �����������������

(Fiscal year ended December 31, 2022)
Total amountof dividends
Dividends perType of share(Millions of yen)share (Yen)Record date

Effective dateOrdinary shares¥28,850¥130.00

December 31, 2021

March 31, 2022

Ordinary shares

23,312105.00June 30, 2022

September 8, 2022

Notes 1: The year-end dividend based on the resolution of the Shareholders’ meeting held on March 30, 2022, includes dividend payment of ¥41 million paid for the shares held by the BIP Trust.
2: The interim dividend based on the resolution of the Board of Directors meeting held on August 2, 2022, includes dividend payment of ¥39 million paid for the shares held by the BIP Trust.

Date of approval

Shareholders’ meeting
held on March 30, 2023 �������
Board of Directors meeting heldon August 2, 2023 �����������������

(Fiscal year ended December 31, 2023)
Total amountof dividends
Dividends perType of share(Millions of yen)share (Yen)Record date

Effective dateOrdinary shares¥23,316¥105.00

December 31, 2022

March 31, 2023

Ordinary shares

22,666105.00June 30, 2023

September 8, 2023

Notes 1: The year-end dividend based on the resolution of the Shareholders’ meeting held on March 30, 2023, includes dividend payment of ¥39 million paid for the shares held by the BIP Trust.
2: The interim dividend based on the resolution of the Board of Directors meeting held on August 2, 2023, includes dividend payment of ¥38 million paid for the shares held by the BIP Trust.

52 Financial Review 2023

Dividends for which the effective date falls in the period subsequent to the fiscal year are as follows:

Date of approval

Shareholders’ meeting
held on March 30, 2023 ������

(Fiscal year ended December 31, 2022)
Total amountof dividends
Dividends perType of share(Millions of yen)share (Yen)

Ordinary shares¥23,316

Record date

¥105.00

December 31, 2022

Effective date

March 31, 2023

Note: Total amount of dividends includes dividend payment of ¥39 million paid for the shares held by the BIP Trust.

Date of approval

Shareholders’ meeting
held on March 28, 2024 ������

(Fiscal year ended December 31, 2023)
Total amountof dividends
Dividends perType of share(Millions of yen)share (Yen)

Ordinary shares¥22,278¥105.00

Record date

December 31, 2023

Effective date

March 29, 2024

Note: Total amount of dividends includes dividend payment of ¥38 million paid for the shares held by the BIP Trust.

Note 20: Other comprehensive income
Changes in other comprehensive income during the fiscal years ended December 31, 2022 and 2023 are as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through Dec. 31, 2022)(Jan. 1 through Dec. 31, 2023)
BeforeBeforetax effects
Tax effects
Net amounttax effects
Tax effects
Net amountRemeasurements of defined benefit plans ������������
Net change in revaluation of financial assets
measured at FVTOCI (Note) ������������������������������������Cash flow hedges ������������������������������������������������
Exchange differences on translation offoreign operations ����������������������������������������������
Share of other comprehensive income ofassociates and joint ventures accounted
for using equity method ��������������������������������������
Total ������������������������������������������������������������������

¥ 21,339¥(4,741)¥ 16,598¥ 29,920¥ (9,940)¥19,979

1,942(3,903)(1,021)997

921(2,905)

14,236(9,202)(4,426)835

9,809(8,366)

122,460

292

122,753

77,433299

77,7338¥141,848—¥(4,472)8¥137,376(6)¥112,382—¥(13,231)(6)¥99,150

Note: FVTOCI: Fair Value Through Other Comprehensive Income

During the fiscal year ended December 31, 2022, the reclassification adjustments of exchange differences on translation of foreign
operations were ¥(670) million (before tax effects) and ¥251 million (tax effects). During the fiscal year ended December 31, 2023, thereclassification adjustments of exchange differences on translation of foreign operations were ¥(1,919) million (before tax effects) and¥551 million (tax effects).

AGC Inc. 53

Amounts attributable to non-controlling interests are as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through Dec. 31, 2022)(Jan. 1 through Dec. 31, 2023)
Before tax
Beforeeffects
Tax effects
Net amounttax effects
Tax effects
Net amountRemeasurements of defined benefit plans ������������
Net change in revaluation of financial assets
measured at FVTOCI (Note) ������������������������������������Cash flow hedges ������������������������������������������������
Exchange differences on translation offoreign operations ����������������������������������������������
Total ������������������������������������������������������������������

¥   260¥(30)¥   230¥  (415)¥ 64¥  (351)

(3)
226

1
(74)

(2)
152

15
152

(4)
(30)

11
122

17,300¥17,78494¥(10)

17,394¥17,774

12,703¥12,457—¥ 28

12,703¥12,485

Note: FVTOCI: Fair Value Through Other Comprehensive Income

Note 21: Revenue(1) Disaggregation of revenue
As disclosed in Note 4 “Segment information,” the Group has five reportable segments: Architectural Glass, Automotive, Electronics,
Chemicals and Life Science.
Glass was split into Architectural Glass and Automotive, while Chemicals was split into Chemicals and Life Science.
In addition, net sales are broken down by product group and region.
Segment information for the previous fiscal year is disclosed based on classification of reportable segments for the fiscal year
ended December 31, 2023.
The reconciliations of the disaggregated revenue with the Group’s sales components are as follows.
i)

Disaggregation by product groups(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Architectural glass ������������������������������������������������������������������������������������������������������������
Automotive ����������������������������������������������������������������������������������������������������������������������
Electronics
Display ����������������������������������������������������������������������������
Electronics materials ��������������������������������������������������������
Subtotal ���������������������������������������������������������������������������
Chemicals
Essential Chemicals ����������������������������������������������������������
Performance Chemicals ��������������������������������������������������
Subtotal ���������������������������������������������������������������������������
Life science ����������������������������������������������������������������������������������������������������������������������
Ceramics/Others ��������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥  482,714
417,639
155,369
149,548304,918
489,810
165,202655,013138,146
37,442¥2,035,874¥  474,646
499,392
160,680
151,283
311,964
402,796
166,855
569,652
123,933
39,665¥2,019,254

Note: From the fiscal year ended December 31, 2023, the name of the “Chemicals” product group has been changed. “Chlor-alkali & urethane” was changed to “Essential Chemicals,” and“Fluorochemical & specialty” was changed to “Performance Chemicals.”

54 Financial Review 2023

ii) Disaggregation by geographical segments
FY2022 (Jan. 1 through Dec. 31, 2022)(Unit: Millions of yen)Japan/Asia �����������������������

Architectural
Glass

Automotive

Electronics

ChemicalsLife Science¥146,929¥213,151¥277,087¥598,162¥ 29,939

Ceramics/
Others¥37,442

Total¥1,302,712

America �����������������������������

32,686

84,297

26,73030,86633,169—207,750

Europe �����������������������������

303,098

120,190

1,101

25,98475,037—525,412

Total �����������������������������

¥482,714¥417,639¥304,918¥655,013¥138,146¥37,442¥2,035,874

Note: Sales by region are based on the location of each company, and “Brazil” is included in “America.”

FY2023 (Jan. 1 through Dec. 31, 2023)(Unit: Millions of yen)Japan/Asia �����������������������

Architectural
Glass

Automotive

Electronics

ChemicalsLife Science¥158,381¥256,389¥277,026¥511,134¥ 30,796

Ceramics/
Others¥39,665

Total¥1,273,395

America �����������������������������

29,537101,182

33,84931,97822,571—

219,118

Europe �����������������������������

286,727

141,821

1,088

26,53970,565—

526,741

Total �����������������������������

¥474,646¥499,392¥311,964¥569,652¥123,933¥39,665¥2,019,254

Note: Sales by region are based on the location of each company, and “Brazil” is included in “America.”

In the Architectural Glass segment, the Group sells architectural glass, etc., and supplies and installs related products. Main
customers are domestic and overseas residential and office building-related companies.
In the Automotive segment, the Group supplies automotive glass, automotive display cover glass, etc. Main customers are domestic
and overseas automobile manufacturers.
In the Electronics segment, the Group delivers glass for display such as LCD glass, optoelectronics materials, semiconductorrelated products, etc. Main customers are domestic and overseas panel manufactures and electronics companies.
In the Chemicals segment, the Group supplies essential chemicals, performance chemical products, etc., and sells them globally,
mainly through wholesalers such as trading companies, as well as the sales bases of the Group, etc.
In the Life Science segment, the Group performs contract development and manufacturing for synthetic pharmaceutical andagrochemical intermediates and active ingredients, biopharmaceuticals, etc. Main customers are domestic and overseas pharmaceuticaland agrochemical-related companies.
These are accounted for in accordance with the accounting policy described in Note 3 “Material accounting policies.” The consideration for performance obligations is mainly recovered within one year after performance obligations are satisfied. In addition, theconsideration for performance obligations does not include a significant financing component.
(2) Contract balances
Information on contract assets and liabilities arising from contracts with customers is as follows:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Contract Assets ��������������������������������������������������������������������������������������������������������������
Contract Liabilities ������������������������������������������������������������������������������������������������������������

¥ 5,829
53,413¥ 4,718
57,906

Contract assets primarily relate to the Group’s rights to receive consideration for performance obligations that have been completed,but not yet billed for, as of the reporting date. Contract assets are reclassified as receivables when the Group’s right to payment
becomes unconditional.
Contract liabilities mainly relate to consideration received from customers before the Group delivers products to them, basedon receivables management and other considerations. The revenue recognized during the fiscal years ended December 31,
2022 and 2023, included balances of contract liabilities at the beginning of the fiscal years of ¥48,611 million and ¥38,895
million, respectively.

AGC Inc. 55

(3) Transaction price allocated to the remaining performance obligations
The Group applies the practical expedients for exemption on disclosure of information on remaining performance obligations thathave original expected duration of one year or less. The Group has no significant transactions with original expected duration exceeding
one year. In addition, there are no significant amounts in consideration from contracts with customers that are not included in transaction prices.
(4) Assets recognized from the costs of obtaining or fulfilling contracts with customers
There are no assets recognized from the costs of obtaining or fulfilling contracts with customers as of the fiscal year ended December
31, 2023. In addition, if the amortization period of the assets that the Group otherwise would have recognized is one year or less,the Group applies the practical expedient of recognizing the incremental costs of obtaining the contract as an expense when incurred.
Note 22: Classification of expenses by nature
The classification of expenses by nature and reconciliation with business profit are as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Net sales ��������������������������������������������������������������������������������������������������������������������������
Personnel expenses ��������������������������������������������������������������������������������������������������������
Depreciation and amortization ������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Operating profit ����������������������������������������������������������������������������������������������������������������
Foreign exchange gain ����������������������������������������������������������������������������������������������������
Gains on sale of fixed assets ��������������������������������������������������������������������������������������������
Gains on sale of shares of subsidiaries and associates ����������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Other income ������������������������������������������������������������������������������������������������������������������
Foreign exchange loss ������������������������������������������������������������������������������������������������������
Losses on disposal of fixed assets ����������������������������������������������������������������������������������
Impairment losses ������������������������������������������������������������������������������������������������������������
Expenses for restructuring programs ��������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Other expenses ����������������������������������������������������������������������������������������������������������������
Business profit ������������������������������������������������������������������������������������������������������������������

¥ 2,035,874(375,381)(185,656)(1,290,894)
183,942—
14,786
8,556
3,813
27,156(4,025)(8,635)(128,447)(9,641)(3,142)(153,892)¥     57,206¥ 2,019,254(410,275)(175,346)(1,304,852)
128,779
8,583
563
3,333
7,054
19,535—(4,717)(605)(11,490)(3,224)(20,036)¥   128,277

The amounts of research and development expenses were ¥52,252 million and ¥57,342 million during the fiscal years ended
December 31, 2022 and 2023, respectively.
Gains on sale of fixed assets during the fiscal year ended December 31, 2022 includes a gain of ¥14,263 million from the sale ofland the Company owned in Amagasaki City, Hyogo Prefecture.
The total amount of impairment losses included in expenses for restructuring programs was ¥8,104 million during the fiscal
year ended December 31, 2023. Expenses for restructuring programs during the fiscal year ended December 31, 2023 includes¥7,890 million incurred in relation to the termination of the production of LCD glass substrate products at Kansai Plant (Takasago
Factory) in Japan.
The events, circumstances and other factors that led to the recognition of impairment losses are presented in Note 11 “Impairment
of non-financial assets.”

56 Financial Review 2023

Note 23: Finance income and finance costs(1) Finance income(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Interest income ����������������������������������������������������������������������������������������������������������������
Dividend income ��������������������������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥ 5,356
2,711
2,536¥10,603¥11,6672,061
7¥13,735(2) Finance costs(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Interest expense ��������������������������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥(9,040)(256)¥(9,297)¥(17,842)(1,395)¥(19,237)

Interest income and interest expense are generated primarily from financial assets and financial liabilities measured atamortized cost.
Dividend income is generated mainly from financial assets measured at fair value through other comprehensive income.
Note 24: Income tax expenses(1) Composition of income tax expenses(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Current income tax expenses ������������������������������������������������������������������������������������������
Deferred income tax expenses ����������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥(55,110)
19,103¥(36,007)¥(38,408)(1,882)¥(40,291)

Deferred income tax expenses include the amounts of the benefits from previously unrecognized tax losses, tax credits, or
temporary differences of prior periods that were used to reduce deferred income tax expenses. During the fiscal years ended
December 31, 2022 and 2023, the amounts of decrease in deferred income tax expenses due to these benefits were ¥1,989 millionand ¥3,419 million, respectively.
There were no material fluctuations in deferred income tax expenses due to changes in tax rates during the fiscal years ended
December 31, 2022 and 2023.
(2) Income tax recognized in other comprehensive income
Income tax recognized in other comprehensive income is presented in Note 20 “Other comprehensive income.”(3) Reconciliation between effective statutory tax rate and effective income tax rate
Income tax expenses applicable to the Company and its domestic consolidated subsidiaries consist of corporate income tax (national),
enterprise tax (local) and resident income tax (local). The effective statutory tax rates calculated by using these taxes for the fiscal
years ended December 31, 2022 and 2023 are 30.4% and 30.4%, respectively.
Foreign subsidiaries are subject to corporate income tax and other taxes in their respective jurisdiction.

AGC Inc. 57

The following is a reconciliation between the effective statutory tax rates and the effective income tax rates for corporate income
tax expenses appearing on the consolidated statements of profit or loss.
FY2022(Jan. 1 throughDec. 31, 2022)

FY2023(Jan. 1 throughDec. 31, 2023)

30.4%
2.2
(4.8)
(4.3)
23.6
15.2
(0.6)
61.5%

30.4%
1.3
(1.1)
(8.1)
13.1
—
(2.8)
32.8%

Effective statutory tax rate of the Company ����������������������������������������������������������������������
Entertainment expenses, etc., nondeductible ������������������������������������������������������������������
Dividend income, not taxable ������������������������������������������������������������������������������������������
Difference in tax rates applied to foreign subsidiaries �������������������������������������������������������
Changes in unrecognized temporary differences ��������������������������������������������������������������
Impairment of goodwill ����������������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Effective income tax rate after tax effect accounting applied ����������������������������������������

(4) Potential impacts of Pillar Two corporate income taxes
On March 28, 2023, Japan enacted a tax reform bill to implement the global minimum taxation system. The new tax reform statute
will be applied by the Company from its fiscal year beginning on January 1, 2025. Certain countries, where the Group’s overseas
subsidiaries are based, have already established tax regimes that support the global minimum taxation system. As a result, these tax
regimes will be implemented in certain countries from the fiscal year beginning on January 1, 2024.
Pillar Two corporate income taxes may be incurred in Japan and certain other countries where the Group does business as aresult of the implementation of the global minimum taxation system, and the impact of this tax on the Group’s consolidated financial
statements is insignificant.
Note 25: Earnings per share(1) Basic earnings per share
Basic earnings per share and the basis for calculating basic earnings per share are as follows:
FY2022(Jan. 1 throughDec. 31, 2022)

FY2023(Jan. 1 throughDec. 31, 2023)¥  (3,152)
221,647¥  (14.22)¥  65,798
215,922¥  304.73

FY2022(Jan. 1 throughDec. 31, 2022)

FY2023(Jan. 1 throughDec. 31, 2023)¥  (3,152)¥  65,798—¥  (3,152)—¥  65,798

Weighted average number of ordinary shares outstanding (Thousands of shares) ������������
Effects of dilutive potential ordinary shares
Stock options based on subscription rights (Thousands of shares) ������������������������������
Diluted weighted average number of ordinary shares outstanding (Thousands of shares) �� ��

221,647

215,922—
221,647516
216,439

Diluted earnings (loss) per share (Yen) ������������������������������������������������������������������������������

¥  (14.22)¥  304.01

Profit (loss) for the year attributable to owners of the parent (Millions of yen) ��������������������
Weighted average number of ordinary shares outstanding (Thousands of shares) ������������
Basic earnings (loss) per share (Yen) ��������������������������������������������������������������������������������
(2) Diluted earnings per share
Diluted earnings per share and the basis for calculating diluted earnings per share are as follows:

Profit (loss) for the year attributable to owners of the parent (Millions of yen) ��������������������
Adjustments to profit or loss used to calculate diluted earnings per share(Millions of yen) ��������������������������������������������������������������������������������������������������������������
Profit (loss) used to calculate diluted earnings per share (Millions of yen) ��������������������������

In the fiscal year ended December 31, 2022, the exercise of stock options using the stock acquisition rights method reduced net
loss per share, and as a result, potential ordinary shares have no dilution effect.

58 Financial Review 2023

Note 26: Financial instruments(1) Capital management
The Group has adopted return on equity attributable to owners of the parent (ROE) and the debt-to-equity ratio (ratio of interest-bearing
debt to equity) as its financial targets. The Group aims to attain those financial targets by improving not only profits but also the asset
turnover ratio.
(2) Credit risk
Credit risk is the risk of financial losses to the Group if a counterparty to a financial instrument fails to meet its contractual obligations.
Trade and other receivables including notes receivables, accounts receivables, and other financial assets are exposed to customer
credit risks. To manage these risks, each Group company performs due date controls and balance controls for each customer, andidentifies and mitigates risks regarding the collection of receivables caused by factors such as deterioration of financial conditions at
an early stage, in accordance with each Group entity’s credit management rules.
In its derivative transactions, the Group uses only creditworthy financial institutions to reduce its credit risks.
The total carrying amount of financial assets represents the maximum amount of exposure to credit risk.
i) Credit risk exposure
An analysis of the aging of trade receivables, other receivables and other financial assets is as follows:
FY2022 (as of Dec. 31, 2022)(Unit: Millions of yen)
FY2022 (as of Dec. 31, 2022)
Financial assets of which lifetime
expected credit losses are measured
as allowance for doubtful accounts
Financial assets ofFinancial assets ofwhich expected credit
which 12-monthlosses are always
expected credit losses Financial assets whose
measured at theirare measured
credit risk increased
expected lifetimeas allowance forsignificantly since initial
as allowance for
doubtful accounts
recognition
doubtful accounts

Not past due ������������������������������������������������������
Past due not later than 30 days ������������������������
Past due over 30 days but within 90 days ����������
Past due over 90 days ��������������������������������������
Total ����������������������������������������������������������������

¥37,95357——¥38,010¥     —
—
37
945
¥983

¥297,803
15,021
8,535
4,500¥325,859

Total¥335,756
15,0798,572
5,445¥364,854

FY2023 (as of Dec. 31, 2023)(Unit: Millions of yen)
FY2023 (as of Dec. 31, 2023)
Financial assets of which lifetime
expected credit losses are measured
as allowance for doubtful accounts
Financial assets ofFinancial assets ofwhich expected credit
which 12-monthlosses are always
expected credit losses Financial assets whose
measured at theirare measured
credit risk increased
expected lifetimeas allowance forsignificantly since initial
as allowance for
doubtful accounts
recognition
doubtful accounts

Not past due ������������������������������������������������������
Past due not later than 30 days ������������������������
Past due over 30 days but within 90 days ����������
Past due over 90 days ��������������������������������������
Total ����������������������������������������������������������������

¥38,667
146——¥38,814¥       —
—
64
1,230
¥1,294¥314,931
14,884
4,769
8,955¥343,540

Total¥353,598
15,031
4,834
10,185¥383,650

AGC Inc. 59ii) Allowance for doubtful accounts
Changes in the allowance account for credit losses on trade receivables, other receivables and other financial assets are as follows:
There was no significant increase or decrease in gross carrying amount of the financial instruments which contributed to changes
in the allowance account for credit losses during the fiscal year ended December 31, 2023.
FY2022 (Jan. 1 through Dec. 31, 2022)

12-month expectedcredit losses

As of January 1 �����������������������������������������������������
Write-off ���������������������������������������������������������������
Remeasurements �������������������������������������������������
Others �������������������������������������������������������������������
As of December 31 ���������������������������������������������

¥88
—
8
—
¥96

(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Lifetime expected credit losses
Financial assets ofwhich expected credit
losses are always
Financial assets whose
measured at their
credit risk increased
expected lifetime
significantly since initial
as allowance forrecognition
doubtful accounts¥ 3,457(2,267)(1,093)—¥     96

¥4,132(317)
18(2)¥3,831

Total¥ 7,679(2,584)(1,066)(2)¥ 4,025

FY2023 (Jan. 1 through Dec. 31, 2023)

12-month expectedcredit losses

As of January 1 �����������������������������������������������������
Write-off ���������������������������������������������������������������
Remeasurements �������������������������������������������������
Others �������������������������������������������������������������������
As of December 31 ���������������������������������������������

60 Financial Review 2023

¥ 96
—
(13)
—
¥ 83

(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Lifetime expected credit losses
Financial assets ofwhich expected credit
losses are always
Financial assets whose
measured at their
credit risk increased
expected lifetime
significantly since initial
as allowance forrecognition
doubtful accounts

¥96
—
(1)
—
¥95

¥3,831—725(252)¥4,304Total¥4,025—710(252)¥4,483

(3) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in discharging its financial liabilities using cash or other financial assets.
Financial liabilities such as loans and corporate bonds are exposed to liquidity risks. The Group manages these risks by diversifying
fund procurement methods, establishing commitment lines with various financial institutions, and keeping an appropriate balance
between direct and indirect fund procurements and a proper mixture of short-term and long-term loans and bonds.
An analysis of the contractual maturities of financial liabilities is as follows:

Carrying
amountNon-derivative financial liabilities
Loans payable ��������������������
Commercial paper ��������������
Corporate bonds ����������������
Finance lease liabilities ��������
Total interest-bearing debt �� ��
Others(Note) ��������������������������
Total ��������������������������������

Contractual
cash flows(Unit: Millions of yen)
FY2022 (as of December 31, 2022)
Due
Due
Due
betweenbetweenbetweenDue within
one year
two years
three years
one year
and
and
and
or less
two years
three years
four years¥508,200 ¥  528,912 ¥165,256 ¥ 95,044
1,853
1,940
1,940
—
59,93560,50420,20810880,25397,50014,785
13,134650,242
688,858
202,191108,287
348,612348,612346,133
2,479¥998,855 ¥1,037,470 ¥548,324 ¥110,766¥64,925—
20,10011,216
96,242—¥96,242¥64,992—
62
6,905
71,960—¥71,960

Due
betweenfour years
andfive years

Due after
five years¥47,708 ¥ 90,984——
20,025—
5,984
45,47373,719136,458——¥73,719 ¥136,458

Note: Others consist of “trade payables,” “other payables,” and “other non-current liabilities.”

Carrying
amountDerivative financial liabilities
Foreign exchange
contracts ��������������������������
Interest rate contracts ��������
Commodity contracts ��������
Total ��������������������������������

¥3,337
1,147
2,012¥6,496

Contractual
cash flows

Due within
one year

Due after
one year¥3,337
1,122
2,012¥6,471¥3,337269
2,012¥5,618¥     —
853—
¥853

The Group does not expect the cash flows included in the maturity analysis to occur much earlier than anticipated or to differ
significantly from the anticipated monetary amounts.

Carrying
amountContractual
cash flows(Unit: Millions of yen)
FY2023 (as of December 31, 2023)
Due
Due
Due
betweenbetweenbetweenDue within
one year
two years
three years
one year
and
and
and
or less
two years
three years
four years

Non-derivative financial liabilities
Loans payable �������������������� ¥  505,488 ¥  533,319 ¥200,127 ¥ 88,615
Commercial paper ��������������
43,06443,532
43,532—
Corporate bonds ����������������
69,86972,527345
20,337
Finance lease liabilities ��������
76,586
93,197
14,887
12,848
Total interest-bearing debt �� ��
695,009742,577
258,893
121,801
347,685
347,685
344,924
2,761
Others(Note) ��������������������������
Total �������������������������������� ¥1,042,695 ¥1,090,262 ¥603,817 ¥124,562¥89,868—
299
8,285
98,453—¥98,453¥51,245—
20,262
6,494
78,003—¥78,003Due
betweenfour years
andfive years

Due after
five years¥27,893 ¥ 75,567——
237
31,046
5,278
45,40233,409152,016——¥33,409 ¥152,016

Note: Others consist of “trade payables,” “other payables,” and “other non-current liabilities.”

Derivative financial liabilities
Foreign exchange
contracts ��������������������������
Interest rate contracts ��������
Commodity contracts ��������
Total ��������������������������������

Carrying
amountContractual
cash flows

Due within
one year

Due after
one year¥ 3,500
680
6,741¥10,923¥ 3,500
676
6,741¥10,917¥ 3,500
167
6,674¥10,341¥    —
509
66¥576

The Group does not expect the cash flows included in the maturity analysis to occur much earlier than anticipated or to differ
significantly from the anticipated monetary amounts.

AGC Inc. 61

(4) Currency risk
The Group operates businesses globally, and is therefore exposed to currency fluctuation risks associated with transactions undertaken
in currencies other than the functional currency of the individual Group companies. To manage such risks, the Group hedges the risks
with foreign exchange forward contracts, currency swap contracts, and other instruments.
The principal exchange rates are as follows:(Unit: Yen)FY2022
FY2023(Jan. 1 through Dec. 31, 2022)(Jan. 1 through Dec. 31, 2023)
Rate at the end ofRate at the end of
Average rate
the reporting period
Average rate
the reporting period

U.S. dollars ��������������������������������������������������������
Euros ������������������������������������������������������������������

¥131.43138.04¥132.70
141.47¥140.56
152.00¥141.83
157.12i) Currency risk exposure
The Group’s maximum amount of exposure to currency fluctuation risk is as follows.
The exposure excludes amounts for which currency fluctuation risk is hedged using foreign exchange forward contracts, currency
swap contracts, and other instruments.
FY2022(as of December 31, 2022)
Thousands of
U.S. dollars
Thousands of euros

Financial instruments dominated inforeign currency ������������������������������������������������

$(207,385)€135

FY2023(as of December 31, 2023)
Thousands of
U.S. dollars
Thousands of euros$(90,190)€(7,279)ii) Sensitivity analysis of currency fluctuation risk
In the event of a 1% appreciation against the U.S. dollar and euro at the end of the reporting period, the monetary impact of thisexchange rate movement on profit before tax is shown below.
This analysis is performed by multiplying the currency fluctuation risk exposures by 1%, assuming that movements in various
exchange rates have no impact on other variables (other exchange rates, interest rates, etc.). It was conducted on the same basis
as the analysis for the fiscal years ended December 31, 2022 and 2023.
(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

U.S. dollars (1% yen appreciation) ������������������������������������������������������������������������������������
Euros (1% yen appreciation) ��������������������������������������������������������������������������������������������

¥275
(0)

¥127
11

(5) Interest rate risk
Interest-bearing debts with floating rates are exposed to interest rate fluctuation risks. For some long-term floating-rate loans, theGroup uses derivative transactions (interest rate swaps) as hedging instruments to avoid the interest rate fluctuation risks and convert
the floating rates into fixed rates.
i) Exposure to interest rate risk
The Group’s exposure to interest rate fluctuation risk is as follows.
The monetary amount of exposure excludes monetary amounts for which currency fluctuation risk is hedged using interest rate
swap contracts.
(Unit: Millions of yen)
FY2022 (as of December 31, 2022)
FY2023 (as of December 31, 2023)
Due within
Due after
Due within
Due after
one year
one yearTotal
one year
one year
Total

Loans payable ����������������������������������������������������������
Commercial paper ����������������������������������������������������
Current interest-bearing debt ��������������������������������
Loans payable ����������������������������������������������������������
Non-current interest-bearing debt ������������������������

62 Financial Review 2023

¥67,897
1,853¥69,750¥77,899¥77,899¥        —
—¥        —¥68,352¥68,352¥ 67,897
1,853¥ 69,750¥146,252¥146,252¥ 78,572
43,064¥121,637¥ 99,821¥ 99,821¥        —
—¥        —¥27,694¥27,694¥ 78,572
43,064¥121,637¥127,516¥127,516

ii) Sensitivity analysis of interest rate risk
In the event of a 1% interest rate increase, the monetary impact of financial instruments affected by the interest rate movement on
profit before tax is shown below.
This analysis is performed by multiplying the currency fluctuation risk exposures by 1%, assuming that movements in various
exchange rates have no impact on other variables (other exchange rates, etc.). It was conducted on the same basis as the analysis
for the fiscal years ended December 31, 2022 and 2023.
(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Floating interest rate financial instruments ������������������������������������������������������������������������

¥(2,160)¥(2,491)(6) Fair value
The fair value of financial instruments is categorized into three levels based on inputs used to measure fair value, as follows:
Inputs include stock prices, exchange rates, and interest rates as well as indexes related to commodity prices, etc.
Level 1: Quoted prices in active markets
Level 2: Observable prices other than quoted prices included within Level 1
Level 3: Inputs not based on observable market datai) Financial assets and liabilities measured at fair value
The fair value of financial assets and financial liabilities is determined as follows.
(Derivatives)
Foreign exchange contracts are mainly based on forward exchange rates and prices quoted by financial institutions with which
contracts are concluded. Interest rate contracts are mainly based on prices quoted by financial institutions with which contracts
are concluded.
Commodity contracts are mainly based on prices quoted by counterparties with whom contracts are concluded. In each case,the financial instruments are classified as Level 2 in the fair value hierarchy.
(Financial assets measured at fair value through other comprehensive income)
The Group measures financial assets at fair value when market values are available, and classifies such assets as Level 1 in thefair value hierarchy. The Group estimates fair values of financial instruments whose market values are unavailable using either the
discounted future cash flows method, third-party appraisal, or another appropriate measurement technique. Such financial instruments are classified as Level 3 in the fair value hierarchy.
(Financial assets measured at fair value through profit or loss)
The Group measures financial assets at fair value when market values are available, and classifies such assets as Level 1 in thefair value hierarchy. The Group estimates fair values of financial instruments whose market values are unavailable using either the
discounted future cash flows method, third-party appraisal, or another appropriate measurement technique. Such financial instruments are classified as Level 3 in the fair value hierarchy.
ii) Financial assets and liabilities measured at amortized cost
The fair value of financial assets and financial liabilities measured at amortized cost is determined as follows.
(Financial assets measured at amortized cost)
Each receivable is categorized by period, and its fair value is the present value of future cash flows discounted by an interest ratethat reflects time to maturity and credit risk.
(Loans payable)
As short-term loans payable are settled on a short-term basis, their fair values approximate their carrying amounts.
The fair values of long-term loans payable are calculated by the total sum of the principal and interest discounted by the interest
rates that would apply if similar borrowings were conducted anew. For long-term loans payable at floating interest rates, however,the fair values approximate the carrying amounts because the interest rates are adjusted regularly at fixed intervals.

AGC Inc. 63

(Corporate bonds)
Fair values of corporate bonds are calculated based on market prices.
(Financial liabilities measured at amortized cost other than the above)
Each payable is categorized by period, and its fair value is the present value of future cash flows discounted by an interest ratethat reflects time to maturity and credit risk.
Financial assets and financial liabilities measured at amortized cost are classified as Level 2 in the fair value hierarchy.
iii) Fair value of financial assets and liabilities
The carrying amounts and fair values of financial instruments as of December 31, 2022 and 2023 are as follows:(Unit: Millions of yen)
FY2022 (as of December 31, 2022)
FY2023 (as of December 31, 2023)
Carrying amount
Fair value
Carrying amount
Fair value

Financial assets measured at fair value
Other current assets and other financial assets
Derivatives not designated as hedges �����������������
Derivatives designated as hedges �����������������������
Other financial assets
Financial assets measured at FVTOCI (Note) �����������
Financial assets measured at FVTPL (Note) �������������
Financial assets measured at amortized cost
Cash and cash equivalents �������������������������������������
Trade receivables �����������������������������������������������������
Other receivables �����������������������������������������������������
Other financial assets �����������������������������������������������
Financial liabilities measured at fair value
Other current liabilities and other non-current liabilities
Derivatives not designated as hedges �����������������
Derivatives designated as hedges �����������������������
Financial liabilities measured at amortized cost
Trade payables �������������������������������������������������������
Interest-bearing debt (short-term and long-term)
Loans payable �����������������������������������������������������
Commercial paper �����������������������������������������������
Corporate bonds �������������������������������������������������
Other payables �������������������������������������������������������
Other current liabilities ���������������������������������������������
Other non-current liabilities �������������������������������������

¥ 15,749
3,185¥ 15,749
3,185¥ 12,378
573¥ 12,378
573

67,6774,000

67,6774,000

54,3394,000

54,3394,000

209,716
315,808
22,32016,870209,716
315,808
22,32016,870146,061
338,850
23,114
17,202

146,061
338,850
23,114
17,202

6,454
41

6,454
41

4,291
6,631

4,291
6,631

214,332

214,332

206,566

206,566

508,200
1,853
59,935
131,800—
2,479

508,750
1,853
59,848131,800—
2,479

505,488
43,064
69,869138,357
384
2,326

506,184
43,06469,599138,357384
2,326

Note: FVTOCI: Fair Value Through Other Comprehensive Income
FVTPL: Fair Value Through Profit or Lossiv) Fair value hierarchy
The following table is an analysis of financial instruments measured at fair value by valuation methods.

Level 1

Derivative financial assets �������������������������������������������
Derivatives not designated as hedges ���������������������
Derivatives designated as hedges ���������������������������
Equity instruments �������������������������������������������������������
Financial assets measured at FVTOCI (Note) ���������������
Debt instruments ���������������������������������������������������������
Financial assets measured at FVTPL (Note) �����������������
Derivative financial liabilities �����������������������������������������
Derivatives not designated as hedges ���������������������
Derivatives designated as hedges ���������������������������
Note: FVTOCI: Fair Value Through Other Comprehensive Income
FVTPL: Fair Value Through Profit or Loss

64 Financial Review 2023¥        —
——56,85756,857—————(Unit: Millions of yen)
FY2022 (as of December 31, 2022)
Level 2
Level 3¥18,935
15,749
3,185
—
—
—
—
6,496
6,454
41

¥        —
——10,81910,819
4,000
4,000
—
—
—

Total

¥18,935
15,7493,185
67,677
67,677
4,000
4,000
6,496
6,454
41

Level 1

Derivative financial assets �������������������������������������������
Derivatives not designated as hedges ���������������������
Derivatives designated as hedges ���������������������������
Equity instruments �������������������������������������������������������
Financial assets measured at FVTOCI (Note) ���������������
Debt instruments ���������������������������������������������������������
Financial assets measured at FVTPL (Note) �����������������
Derivative financial liabilities �����������������������������������������
Derivatives not designated as hedges ���������������������
Derivatives designated as hedges ���������������������������

¥       ——
—43,171
43,171—————(Unit: Millions of yen)
FY2023 (as of December 31, 2023)
Level 2
Level 3

¥12,952
12,378573————
10,9234,291
6,631¥       ——
—11,168
11,168
4,000
4,000
—
—
—

Total

¥12,952
12,378573
54,33954,3394,000
4,000
10,9234,291
6,631

Note: FVTOCI: Fair Value Through Other Comprehensive Income
FVTPL: Fair Value Through Profit or Loss

The presence of any financial instruments subject to significant transfers between fair value hierarchy levels is determined at theend of every period. There were no financial instruments subject to significant transfers between the fair value hierarchy levels during
the fiscal years ended December 31, 2022 and 2023.
There were no significant changes in “Financial assets measured at fair value through other comprehensive income” classified as
Level 3 during the fiscal year ended December 31, 2023.
Derivative financial assets are included in “Other current assets” and “Other financial assets” in the consolidated statements offinancial position.
Equity instruments and debt instruments are included in “Other financial assets” in the consolidated statements of financial position.
Derivative financial liabilities are included in “Other current liabilities” and “Other non-current liabilities” in the consolidated statementsof financial position.
Changes in financial instruments categorized within Level 3 of the fair value hierarchy during the fiscal year are as follows:(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Balance as of January 1 ��������������������������������������������������������������������������������������������������
Purchases ������������������������������������������������������������������������������������������������������������������������
Sales ��������������������������������������������������������������������������������������������������������������������������������
Other comprehensive income ������������������������������������������������������������������������������������������
Other changes ����������������������������������������������������������������������������������������������������������������
Balance as of December 31 ��������������������������������������������������������������������������������������������

¥12,761
1,316(1,014)
1,871(116)¥14,819¥14,819
1,248(1,158)(235)
493¥15,168v) Equity instruments
Equity instruments such as equity securities are held mainly for the purpose of maintaining and strengthening business relationships
over the medium and long terms, and are designated as financial assets measured at FVTOCI. The following is a breakdown of the
major stocks within equity instruments and their fair values:(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Honda Motor Co., Ltd. ����������������������������������������������������������������������������������������������������
Suzuki Motor Corporation ������������������������������������������������������������������������������������������������
Mitsubishi Gas Chemical Company, Inc. ��������������������������������������������������������������������������
Mitsubishi Logistics Corporation ��������������������������������������������������������������������������������������
Meiwa Corporation ����������������������������������������������������������������������������������������������������������
Mitsubishi Estate Co., Ltd. ����������������������������������������������������������������������������������������������
Others ������������������������������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥10,308
12,684
6,611
3,767
2,588
10,78420,930¥67,677¥12,459
8,959
7,271
2,935
2,526
2,430
17,756¥54,339

AGC Inc. 65

Equity instruments are sold taking into consideration the fair value such as market value of shares and the need to hold sharesfor business purposes. The fair values of and cumulative gains or losses (Before tax effects) recognized in other components of equity
on stocks sold during the fiscal years ended December 31, 2022 and 2023 are shown below. The cumulative gains or losses recognized
are transferred on sale from other components of equity to retained earnings.
(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Cumulative gains or losses
Fair value(Before tax effects)

FY2023 (Jan. 1 through Dec. 31, 2023)
Cumulative gains or losses
Fair value(Before tax effects)¥36,431¥28,057¥24,433¥16,518

The following is a breakdown of dividend income recognized from equity instruments:(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
FY2023 (Jan. 1 through Dec. 31, 2023)
Financial assets derecognized
Financial assets held as ofFinancial assets derecognized
Financial assets held as ofduring the year
the end of the reporting year
during the year
the end of the reporting year¥476

¥2,234¥439¥1,621(7) Derivatives and hedge accounting
The Group uses commodity futures and foreign exchange forward contracts to hedge variations in cash flows associated with forecast
transactions and interest rate swaps and instruments to hedge variations in cash flows associated with loans payable with floatinginterest rates. The Group uses these derivatives only for transactions justified by actual demand, and does not hold these derivatives
for speculative or trading purposes.
When applying hedge accounting, at the inception of hedges, the Group formally designates and documents hedging relationships
to which hedge accounting is applied and the objectives and strategies of risk management for undertaking hedges. Moreover, at
the inception of hedges, the Group evaluates whether or not the hedging instrument can be predicted to be effective. Thereafter, theGroup continuously evaluates whether the derivative is highly effective in offsetting changes in future cash flows from the hedged item.
For the purpose of hedging variations in cash flows associated with raw material and fuel costs, the Group enters into raw material
and fuel swap contracts for natural gas, oil and other commodities to hedge the risk of price fluctuations. The Group has determinedthat there is an economic relationship between the raw materials and fuel it uses, which reflects market prices, and the hedging
instruments that are correlated with market prices for raw materials and fuel. The risk of price fluctuations has an impact on theGroup’s consolidated financial statements through fluctuations in raw material and fuel costs. Therefore, the Group applies hedge
accounting by designating only raw material and fuel costs as risk factors. The designated risk factor accounts for most of the riskof price fluctuations. Moreover, at the inception of hedging relationships, the Group sets an appropriate hedge ratio based on thequantity of the hedged item and the quantity of hedging instruments. In principle, the Group sets the hedge ratio so as to obtain a
one-to-one relationship between those quantities.
The ineffective portion of hedging instruments arises mainly because changes in the fair value of the hedging instruments areunable to fully cover the fluctuations in the hedged item, namely the fluctuations in raw material and fuel costs.
For the purpose of hedging variations in cash flows associated with foreign currency-denominated forecast transactions, the Group
enters into forward exchange contracts to hedge the risk of exchange rate fluctuations. In applying hedge accounting to the abovementioned risk, the Group confirms that an economic relationship exists between the hedged item and the hedging instrument througha qualitative evaluation of whether the critical terms of the hedged item and the hedging instrument are the same or closely match.
This is in order to confirm that the economic relationship is such that the risk of exchange rate fluctuations, which is the hedged item,
is offset by changes in the fair value of the hedging instrument.

66 Financial Review 2023

Details on cash flow hedges for commodity price risk and exchange rate fluctuations risk are as follows:i) Impact of hedge accounting on the consolidated statements of financial position
As of December 31, 2022 and 2023, the carrying amount of hedging instruments on the consolidated statements of financial position
and the changes in the fair value of hedging instruments used as a basis for calculating hedge ineffectiveness are as follows:(Unit: Millions of yen)
FY2022 (as of December 31, 2022)

Type of risk

Hedging instrument

Commodity price risk (Note)

Swap contract �������������������������

Exchange rate fluctuations risk

Forward exchange contract �����

Carrying amount of hedging instrument

Other current assets
Other financial assets
Other current liabilities
Other non-current liabilities
Other current assets
Other financial assets
Other current liabilities
Other non-current liabilities¥3,122—20
15¥   62—
5—

Changes in fairvalue of hedging
instrument¥9,060¥    2

Note: The delivery month of foregoing contracts are expected to mature within three years from December 31, 2022 and most parts of contracts are expected to mature within one year from
December 31, 2022.

(Unit: Millions of yen)
FY2023 (as of December 31, 2023)

Type of risk

Hedging instrument

Commodity price risk (Note)

Swap contract �������������������������

Exchange rate fluctuations risk

Forward exchange contract �����

Carrying amount of hedging instrument

Other current assets
Other financial assets
Other current liabilities
Other non-current liabilities
Other current assets
Other financial assets
Other current liabilities
Other non-current liabilities¥   66
6
3,608
3,023
¥  499———Changes in fairvalue of hedging
instrument¥(5,655)¥   440

Note: The delivery month of foregoing contracts are expected to mature within three years from December 31, 2023 and most parts of contracts are expected to mature within one year from
December 31, 2023.

The notional amount of hedging instruments as of December 31, 2022 and 2023 are as follows:

Type of risk

Commodity price risk
Exchange rate fluctuations risk

Hedging instrument

Swap contract �������������������������������������������������������������
Forward exchange contract �����������������������������������������

(Unit: Millions of yen)
FY2022 (as of
FY2023 (as ofDecember 31, 2022) December 31, 2023)
Notional amount
Notional amount¥9,843¥3,865¥27,194¥11,454

The changes in value of the hedged items used as the basis for calculating hedge ineffectiveness and the balances remaining in
the cash flow hedge reserve as of December 31, 2022 and 2023 are as follows:

Type of risk

Commodity price risk ������������������������������������������������������������������������������������������������������
Exchange rate fluctuations risk ����������������������������������������������������������������������������������������

Type of risk

Commodity price risk ������������������������������������������������������������������������������������������������������
Exchange rate fluctuations risk ����������������������������������������������������������������������������������������

(Unit: Millions of yen)
FY2022 (as of December 31, 2022)
Changes in value ofCash flow hedge
hedged item
reserve¥(9,060)¥    (2)¥3,086¥   57(Unit: Millions of yen)
FY2023 (as of December 31, 2023)
Changes in value ofCash flow hedge
hedged item
reserve¥5,655¥ (440)¥(6,558)¥   499

AGC Inc. 67ii) Impact of hedge accounting on the consolidated statements of profit or loss and consolidated statements of­comprehensive income
Profit or loss items recorded on the consolidated statements of profit or loss and consolidated statements of comprehensive income
during the fiscal years ended December 31, 2022 and 2023 are as follows:(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)

Type of risk

Hedging gains or losses thatwere recognized in othercomprehensive income

Commodity price risk ��������������������

Type of risk

¥9,060Hedging gains or losses thatwere recognized in othercomprehensive income

Exchange rate fluctuations risk ������

¥2

Hedge ineffectivenessrecognized in profit or loss
reclassification adjustment¥—

Amount reclassified from cash flow
hedge reserve into thecost of inventories
as r­eclassification adjustment¥(13,022)(Unit: Millions of yen)
FY2022 (Jan. 1 through Dec. 31, 2022)
Hedge ineffectivenessAmount reclassified from cash flow
recognized in profit or loss
hedge reserve into profit or loss
reclassification adjustment
as reclassification adjustment

¥—

¥56

During the fiscal year ended December 31, 2022, no cash flow hedges were discontinued as a result of not executing forecast
transactions within the initially anticipated time period.

Type of risk

Hedging gains or losses thatwere recognized in othercomprehensive income

Commodity price risk ��������������������

Type of risk¥(5,655)

Hedging gains or losses thatwere recognized in othercomprehensive income

Exchange rate fluctuations risk ������

¥440(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Amount reclassified from cash flow
Hedge ineffectivenesshedge reserve into therecognized in profit or loss
cost of inventories
reclassification adjustment
as ­reclassification adjustment¥—¥(3,989)(Unit: Millions of yen)
FY2023 (Jan. 1 through Dec. 31, 2023)
Hedge ineffectivenessAmount reclassified from cash flow
recognized in profit or loss
hedge reserve into profit or loss
reclassification adjustment
as reclassification adjustment¥—¥2

During the fiscal year ended December 31, 2023, no cash flow hedges were discontinued as a result of not executing forecast
transactions within the initially anticipated time period.
Note 27: Business combinations
FY2022 (Jan. 1 through Dec. 31, 2022)
There are no significant transactions to disclose.
FY2023 (Jan. 1 through Dec. 31, 2023)
There are no significant transactions to disclose.
Note 28: Commitments
As of December 31, 2022 and 2023, significant contractual commitments relating to the acquisition of property, plant and equipment
amounted to ¥9,822 million and ¥16,382 million, respectively.

68 Financial Review 2023

Note 29: Collateral
Assets pledged as collateral and obligation secured by collateral are as follows:
Assets pledged as collateral(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Property, plant and equipment ����������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥203
¥203

¥208
¥208

Obligation secured by collateral(Unit: Millions of yen)
FY2022
FY2023(as of December 31,(as of December 31,
2022)
2023)

Long-term bank loans ������������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥43
¥43

¥40
¥40

Other than the abovementioned, no ownership restrictions or rights of pledge as collateral for obligation have been established.
Note 30: Contingencies
The Group provides guarantees, etc., for borrowings from financial institutions taken out by companies outside the Group amounting
to ¥6 million and ¥1 million as of December 31, 2022 and 2023, respectively. This includes commitments to guarantees, etc., amounting
to ¥2 million as of December 31, 2022. There were no such commitments to guarantees, etc. as of December 31, 2023.
Note 31: Related parties
Related party transactions
Related party transactions were made on terms equivalent to those that prevail in arm’s length transactions.
Breakdown of compensation to directors(Unit: Millions of yen)
FY2022
FY2023(Jan. 1 through(Jan. 1 throughDec. 31, 2022)
Dec. 31, 2023)

Monthly compensation and bonuses ��������������������������������������������������������������������������������
Share-based payment (Note) ������������������������������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������������������������������������

¥443
148
¥591

¥489
177
¥666

AGC Inc. 69

Note 32: Group entities
Major subsidiaries as of December 31, 2023 are as follows:

Subsidiary nameLocation

CapitalMain business

Voting rights
held by theCompany (%)

Consolidated subsidiaries
Architectural GlassAGC Glass Kenzai Co., Ltd. ������������� Japan

AGC Glass Products Co., Ltd. ��������� JapanPT Asahimas Flat Glass Tbk (Note 3) ������� Indonesia

AGC Glass Europe ��������������������������� Belgium
AGC Flat Glass Czech a.s. ��������������� Czech¥470 million

Production and sales of flat glass,fabricated glass for architectural use
and building materials¥1,287 million
Production and sales of fabricated glass
for architectural use, and cutting andsales of flat glass
217 billion rupiah Production and sales of flat glass,automotive glass and fabricated glassfor industrial use€473 million
Production and sales of flat glass

100.0
(0.0)
100.0
(0.0)
44.5
(0.0)
100.0
(0.0)
100.0
(100.0)3,560 million
korunaProduction and sales of flat glass

Automotive
AGC Automotive (Suzhou) Inc. ��������� China

US$236 million

AGC Flat Glass North America, Inc. ��� U.S.A.

US$4 million

AGC Automotive Europe ������������������� Belgium€105 million

Production and sales of automotive
glass
Production and sales of automotive
glass
Production and sales of automotive
glass

100.0
(0.0)
100.0
(100.0)100.0(100.0)Electronics
AGC Electronics Co., Ltd. ����������������� Japan¥300 million

AGC Techno Glass Co., Ltd. ������������� Japan¥300 million

100.0
(0.0)
100.0
(0.0)

AGC Display Glass Taiwan Inc. ��������� Taiwan

NT$3,120 million

AGC Display Glass (Huizhou)
ChinaCo., Ltd. �����������������������������������������
AGC Advanced Electronics Display
China
Glass (Shenzhen) Co., Ltd. �������������
AGC Fine Techno Korea Co., Ltd. ����� South Korea¥45,800 million

Production of semiconductor processmaterials and optoelectronic materials
Production of optoelectronic materials,
and production and sales of products
for Laboratory use wave
Production and sales of glass forelectronics
Production and sales of glass forelectronics
Production and sales of glass forelectronics
Production and sales of glass forelectronics¥33,700 million
227,000 million
won

Chemicals
Ise Chemicals Corporation* ��������������� Japan

¥3,599 million

PT Asahimas Chemical ��������������������� Indonesia

US$84 million

AGC Vinythai Public Company
Thailand
Limited �������������������������������������������

9,435 million
baht

70 Financial Review 2023

Production and sales of iodine-related
products and metallic compounds,
extraction and sales of natural gas
Production and sales of vinyl chloride,
vinyl chloride monomer and caustic soda
Production and sales of vinyl chloride,
vinyl chloride monomer and caustic soda

100.0(100.0)
100.0
(0.0)
63.0
(0.0)
100.0
(33.0)
53.2
(0.0)
52.5
(0.0)
65.0
(0.0)

Subsidiary nameLocationLife Science
AGC Biologics Inc. ��������������������������� U.S.A.
AGC Biologics A/S ��������������������������� Denmark

Capital

US$150 million
42 million Danish
krone

Ceramics/Others
AGC Ceramics Co., Ltd. ������������������� Japan

¥3,500 million

AGC Singapore Services Pte. Ltd. ���� Singapore

US$88 million

AGC America, Inc. ���������������������������� U.S.A.

US$0 million

AGC Capital, Inc. ����������������������������� U.S.A.

US$0 million

Main business

Voting rights
held by theCompany (%)

Development and manufacturingcontract of biopharmaceutical
Development and manufacturingcontract of biopharmaceutical

100.0(100.0)
100.0
(0.0)

Production and sales of various ceramic
products
Procurement of funds and financing
services for affiliates in Asia, andholding of shares in affiliates
Holding of shares in affiliates in North
America, and information collection
Procurement of funds and financing
services for affiliates in North America

100.0
(0.0)
100.0
(0.0)
100.0
(0.0)
100.0
(100.0)

Other consolidated subsidiaries ��������������������������� 171
Total consolidated subsidiaries����������������������������� 194
Equity method affiliates ���������������������������������������    22Notes: 1.	Figures disclosed in parentheses in the “Voting rights held by the Company” column represent voting rights held indirectly by the Company.
2.	Subsidiaries marked with * in the “Subsidiary name” column have filed a marketable securities report.
3.	Although the Group holds less than half of the voting rights, it includes the entity in consolidated subsidiary because it substantially controls the entity.

During the fiscal years ended December 31, 2022 and 2023, there was no individually significant subsidiary having non-controllinginterests.
Information for equity method affiliates is presented in Note 12 “Equity method affiliates.”
Note 33: Significant subsequent events
Completion of transfer of Russian operations
The Group has been considering the transfer of its Russian business since February 2023, and it completed the transfer on February
27, 2024. As a result, the Group is expected to record a loss on sale of shares of subsidiaries and associates of approximately ¥35.0
billion (approximately €220 million) in the fiscal year ending December 31, 2024. The loss is mainly due to the reclassification adjustments on exchange differences on translation of foreign operations.
(1) Names of transferred companies, and description and size of business
Name of company
Description of main businessNet sales (actual results for 2023)

AGC Bor Glassworks JSC
Manufacture and sale of architectural and automotive glass¥14.6 billion

Name of company
Description of main businessNet sales (actual results for 2023)

AGC Flat Glass Klin LLC
Manufacture and sale of architectural glass¥19.5 billion(2) Transferee and transfer priceTransferee
Mr. Igor Mikhailovich Leytis
Transfer price Not disclosed in accordance with the confidentiality agreement with the transferee

AGC Inc. 71

Independent Auditor’s Report

Independent auditor’s report
To the Board of Directors of AGC Inc.:
Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the accompanying consolidated financial statements of AGC Inc. (“the Company”)
and its consolidated subsidiaries (collectively referred to as “the Group”) ,which comprise theconsolidated statement of financial position as at December 31, 2023, and the consolidated statements
of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, andnotes, comprising material 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 December 31, 2023, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with IFRS
Accounting Standards as issued by the International Accounting Standards Board (IFRS AccountingStandards).
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 fiscal year. These matters were addressed in
the context 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.
We selected the key audit matters in our audit of the consolidated financial statements of the current
fiscal year, taking into consideration the changes in the relative risks. The table below shows thechanges from the previous fiscal year.

Item
Impairment testing on plant, property and equipment of the display
business

72 Financial Review 2023

Previous
fiscal year

Current
fiscal year

Selected

SelectedImpairment testing on property, plant and equipment, intangible assets
and goodwill of AGC Biologics, Inc. which is a contract development
and manufacturing organization (CDMO), offering biologically active
pharmaceutical ingredient (API) and gene and cell therapy
pharmaceutical manufacturing services
Impairment testing on property, plant and equipment of the automotive
glass business in Europe (Western and Central Europe)
Impairment testing on property, plant and equipment of thearchitectural and automotive glass businesses in Russia

Not
selected
Selected
Selected

SelectedNot
selectedNot
selected

Reasonableness of the management’s estimate of the value in use for the impairment testing on
property, plant and equipment of the display business
The key audit matter

How the matter was addressed in our audit

As described in Note 11 “Impairment of nonfinancial assets” to the consolidated financial
statements, property, plant and equipment of
JPY1,457,950 million recognized in the
consolidated statement of financial position of
the Group as at December 31, 2023 included
property, plant and equipment of the display
business in the Electronics segment amounting
to JPY315,691 million, which represented
approximately 10.8% of total assets.

The primary procedures we performed to assess
whether the estimate of the value in use used for the
impairment testing on property, plant andequipment of the display business was reasonable
are set forth below.

As described in Note 3 “Material accounting
policies, (9) Impairment of non-financial assets”
to the consolidated financial statements, each
asset of property, plant and equipment, or the
cash-generating unit to which the asset belongs,
is assessed for any indication of impairment at
the end of each reporting period, and tested for
impairment whenever there is such an indication.
If the carrying amount exceeds the recoverable
amount in the impairment testing, the carrying
amount is reduced to the recoverable amount,and the resulting decrease in the carrying amountis recognized as an impairment loss. The
recoverable amount is the higher of either thevalue in use or the fair value less costs ofdisposal.
The display business has recognized adeteriorated operating result primarily due to theimpact of a slow recovery in demand for LCD
glass substrates and the increased cost caused by
the weaker yen and the soaring raw materials
and fuel prices, which resulted in an indicationof impairment for the cash-generating unit towhich the relevant property, plant and equipment
belong. Therefore, an impairment test was(1) Internal control testing We tested the design and operating
effectiveness of certain of the Company’s
internal controls relevant to measuring thevalue in use used for the impairment testing
on property, plant and equipment.
(2) Assessment of the reasonableness of theestimated value in use
 In order to assess whether key assumptions
embedded in the business plan of the display
business, which was used as the basis for
estimating future cash flows, werereasonable, we inquired of management
about the basis on which those assumptions
were developed. In addition, we:・ understood the sales plan for each major
customer in relation to the increase in sales
volume and compared the sales plan withpast sales results and external market data;
・ understood the Company’s response torevisions to price policy, inspected relevant
documents and compared the revisions toprice policy with past trends in unit selling
prices;・ inspected relevant documents on themeasures to improve the cost-of-sales ratio
associated with operational adjustments tofacilities; andAGC Inc. 73

performed at the end of the current fiscal year.
As a result, an impairment loss was notrecognized since the recoverable amount wasabove the carrying amount of the cashgenerating unit. Management used the value in
use as the recoverable amount, which was
calculated by discounting to the present value at
8% the future cash flows that were estimatedbased on the five-year business plan of thedisplay business developed by management,
taking into consideration the future growthpotential of the business thereafter.
The business plan of the display business, which
formed the basis for estimating future cash
flows, was developed on the assumption of anincrease in sales volume associated with arecovery in demand, revisions to price policy, an
improved cost-of-sales ratio associated with
operational adjustments to facilities, and the
optimization of capital expenditures.
Accordingly, these assumptions involved a highdegree of uncertainty, and management’s
judgment thereon had a significant effect on theestimated future cash flows. In addition,
selecting appropriate models and input data for
estimating the discount rate used to calculate thevalue in use requires a high degree of expertisein valuation.

・ understood the capital expenditure plan,compared it with past results, assessed its
consistency with the sales plan andinspected relevant documents.
 We assessed the appropriateness of themodel for estimating the discount rate used
to calculate the value in use and compared
the input data, which served as the basis forcalculating the value in use, with information
published by external organizations, byinvolving valuation specialists within ourdomestic network firms.

We, therefore, determined that our assessment of
the reasonableness of the management’s estimateof the value in use used for the impairment
testing on property, plant and equipment of thedisplay business was one of the most significant
in our audit of the consolidated financial
statements of the current fiscal year, andaccordingly, a key audit matter.
Reasonableness of the management’s estimate of the value in use used for the impairment testing
on property, plant and equipment, intangible assets and goodwill of AGC Biologics, Inc. which isa contract development and manufacturing organization (CDMO), offering biologically active
pharmaceutical ingredient (API) and gene and cell therapy pharmaceutical manufacturingservices
The key audit matter

How the matter was addressed in our audit

As described in Note 11 “Impairment of nonfinancial assets” to the consolidated financial
statements, property, plant and equipment of
JPY1,457,950 million, intangible assets of
JPY72,093 million and goodwill of JPY101,130
million recognized in the consolidated statement of

The primary procedures we performed to assess
whether the estimate of the value in use used for the
impairment testing on property, plant and equipment,
intangible assets and goodwill of AGC Biologics, Inc.
which is a contract development and manufacturingorganization (CDMO), offering biologically active

74 Financial Review 2023

financial position of the Group as at December 31,
2023 included property, plant and equipment of
JPY65,641 million, intangible assets of JPY18,233
million and goodwill of JPY11,232 million of
AGC Biologics, Inc. which is a contractdevelopment and manufacturing organization(CDMO), offering biologically active
pharmaceutical ingredient (API) and gene and celltherapy pharmaceutical manufacturing services in
the life science segment. The carrying amount of
the cash-generating unit to which its property, plantand equipment, intangible assets and goodwill
belong (including related liabilities) amounted to
JPY90,797 million, representing approximately
3.1% of total assets.
As described in Note 3 “Material accounting
policies, (9) Impairment of non-financial assets” tothe consolidated financial statements, each asset ofproperty, plant and equipment, intangible assets
and goodwill, or the cash-generating unit to which
the asset belongs, is assessed for any indication of
impairment at the end of each reporting period, andtested for impairment whenever there is such anindication. If the carrying amount exceeds therecoverable amount in the impairment testing, thecarrying amount is reduced to the recoverable
amount, and the resulting decrease in the carrying
amount is recognized as an impairment loss.
AGC Biologics, Inc. has recognized a deteriorated
operating result primarily due to a temporary
slowdown in demand as a whole due to a decrease
in inflows of funds to biotech startups and delaysin the launch of new lines, resulting in an
indication of impairment for the cash-generating
unit to which relevant property, plant andequipment, intangible assets and goodwill belong.
Therefore, an impairment test was performed at theend of the current fiscal year. As a result, an
impairment loss was not recognized since therecoverable amount of JPY112,113 million
exceeded the carrying amount of the group of cashgenerating units. Management used the value in
use as the recoverable amount, which was
calculated by discounting to the present value at
16% the future cash flows that were estimatedbased on the five-year business plan developed bymanagement, taking into consideration the future
growth potential of the business thereafter.

pharmaceutical ingredient (API) and gene and celltherapy pharmaceutical manufacturing services was
reasonable are set forth below.
(1) Internal control testingWe tested the design and operating
effectiveness of certain of the Company’s
internal controls relevant to measuring thevalue in use used for the impairment testing of
the group of cash-generating units to which
AGC Biologics, Inc.’s property, plant andequipment, intangible assets and goodwill
belong.

(2) Assessment of the reasonableness of theestimated value in use

In order to assess the reasonableness of key
assumptions embedded in the business plan of
AGC Biologics, Inc., which formed the basis
for estimating future cash flows, we inquiredof management about the basis on which thoseassumptions were developed. In addition, we:•assessed the consistency of the growth of
net sales in the future business plan withthe sales plan for each major project andorders received;•

compared the expansion of the market
with external market data on the growthrate and the market size; and•inspected documents relevant to policies
for launching new lines.

We assessed the appropriateness of the model
used to estimate the discount rate andcompared the input data that formed the basis
for estimating the discount rate with theinformation published by externalorganizations, by involving a valuation
specialist within our domestic network firms.

The business plan of AGC Biologics, Inc., which
formed the basis for estimating future cash flows,
was developed on the assumption of an increase in
net sales due to an increase in contractdevelopment and manufacturing of biologically
active pharmaceutical ingredient and gene and cell

AGC Inc. 75

therapy pharmaceuticals driven by market
expansion and the launch of new lines.
Accordingly, these assumptions involved a highdegree of uncertainty, and management’s judgment
thereon had a significant effect on the estimatedfuture cash flows. In addition, selecting appropriate
models and input data for estimating the discountrate used to calculate the value in use requires ahigh degree of expertise in valuation.
We, therefore, determined that our assessment of
the reasonableness of the management’s estimateof the value in use used for the impairment testing
on property, plant and equipment, intangible assets
and goodwill of AGC Biologics, Inc. which is acontract development and manufacturingorganization (CDMO), offering biologically active
pharmaceutical ingredient (API) and gene and celltherapy pharmaceutical manufacturing services
was one of the most significant in our audit of theconsolidated financial statements of the current
fiscal year, and accordingly, a key audit matter.

Other Information
The other information comprises the information included in “Financial Review”, but does not include
the consolidated financial statements and our auditor’s reports thereon. Management is responsible forthe preparation and presentation of the other information. Audit & Supervisory Board and its Members
are responsible for overseeing the directors’ performance of their duties with regard to the design,
implementation and maintenance of the reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Audit & Supervisory Board and its Members for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements thatare 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 in

76 Financial Review 2023

accordance with IFRS Accounting Standards and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Audit & Supervisory Board and its Members are responsible for overseeing the directors’ performanceof 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 IFRS Accounting Standards, the overall presentation, structure and content of theconsolidated financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fairpresentation.

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.

AGC Inc. 77

We communicate with Audit & Supervisory Board and its Members regarding, among other matters,
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 Audit & Supervisory Board and its Members with a statement that we have compliedwith 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, actions taken to eliminate threats or safeguards applied.
From the matters communicated with Audit & Supervisory Board and its Members, we determine thosematters that were of most significance in the audit of the consolidated financial statements of thecurrent 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 report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Fee-related Information
Fees paid or payable to our firm and to other firms within the same network as our firm for audit andnon-audit services provided to the Company and its subsidiaries are described in "Fees for audit andnon-audit services by the Independent Auditor and other its network firms" included in “Management’s
Discussion and Analysis” of the “Financial Review”.
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.
Noriaki Habuto
Designated Engagement Partner
Certified Public Accountant
Tsutomu Ogawa
Designated Engagement Partner
Certified Public Accountant
Takahiro Kajiwara
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
March 28, 2024

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.

78 Financial Review 2023

AGC Inc.
www.agc.com/en
1-5-1, Marunouchi, Chiyoda-ku, Tokyo, 100-8405, JAPANCorporate Communications & Investor Relations Division
Tel: +81-3-3218-5603 Fax: +81-3-3218-5390