FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Fiscal Year ended March 31, 2020
Tokyo, Japan, May 18, 2020 - Kurita Water Industries Ltd. (TSE Securities Code 6370) announced net
sales of 264,807 million yen and profit attributable to owners of parent of 18,287 million yen, or 162.86
yen per share, for the year ended March 31, 2020 (April 1, 2019 – March 31, 2020).
The Kurita Group (Kurita Water Industries Ltd. and its consolidated subsidiaries and equity method
affiliates) is applying the International Financial Reporting Standards (IFRS) from the first quarter ofthe fiscal year under review. The figures for the previous consolidated fiscal year are also compliant
with IFRS. For information about the difference between financial data under IFRS and those underJapanese GAAP, please refer to Notes to Consolidated Financial Statements (First-time Adoption) on
page 22 of the attached document.
Results of Operations
Total consolidated orders for the Kurita Group (Kurta Water Industries Ltd. and its consolidated
subsidiaries and equity method affiliates) in the fiscal year ended March 31, 2020 increased 0.4% fromthe level of the previous fiscal year, to 259,545 million yen, while net sales rose 2.9%, to 264,807
million yen. Operating profit was up 38.4% from the previous fiscal year, to 27,479 million yen. Profit
before tax was 26,691 million yen, up 31.7%. Profit attributable to owners of parent came to 18,287
million yen, an increase of 51.8%. Operating profit and profit at other levels rose significantly, chiefly
reflecting a gain on the sale of fixed assets of 4,777 million yen in other income and a loss on sale of
fixed assets of 2,305 million yen in other expenses in the fiscal year under review as well as the absenceof temporary losses of 5,136 million yen, including a loss on transfer of business of 2,867 million yen
and an impairment loss on goodwill of 1,171 million yen posted in the same period of the previous
fiscal year.
During the fiscal year ended March 31, 2020, economic growth slowed in China and Europe due tothe protracted trade dispute between the United States and China and the Brexit issue. Toward the endof the fiscal year, the global economy declined sharply, reflecting the spread of novel coronavirus. The
Japanese economy became increasingly stagnant due to the consumption tax hike and stay-at-homerequests to tackle the spread of novel coronavirus.
Looking at the market environment surrounding the Kurita Group, in Japan, production in the
manufacturing sector remained weak as exports continued to struggle. Capital expenditure restraint
was evident. Overseas, both markets and production slowed, for instance, capital expenditures were
postponed primarily in the electronics industry in East Asia.
In this environment, the Group worked to create solution models based on service agreements,
leveraging the Group’s unique technologies and products that contribute to solving customer issues underthe basic policy “Maximize customer intimacy by dismantling preconceived ideas and dramaticallyraising the quality and speed of our work.” To strengthen the sales system for each market and region,
the Company consolidated its two sales divisions into one and established Kurita Kitakantou Co., Ltd.,a new company that provides both water treatment chemicals and maintenance services.
Overseas, U.S. Water Services, Inc., which was acquired by the Company and became a U.S.
subsidiary in the previous fiscal year, was merged with Kurita America, Inc. and Fremont Industries,
LLC, pre-existing U.S. subsidiaries, to generate synergies promptly in production and sales. The Group
thereby has built a business foundation for providing total solutions across the United States. Also, theGroup acquired U.S.-based Avista Technologies, Inc. and U.K.-based Avista Technologies (UK) Ltd. in
the fiscal year under review. From those companies, the Group has acquired reverse osmosis (RO)membrane treatment chemicals technology and business model, which have a competitive edge in the
global market, and is rolling them out.

1

Segment Information
The Group consists of two reportable segments in its segment information: Water Treatment
Chemicals and Water Treatment Facilities.
Water Treatment Chemicals
Total Group orders for the Water Treatment Chemicals segment were 113,777 million yen, up 10.5%
versus the fiscal year ended March 31, 2019, while net sales rose 11.3%, to 113,632 million yen.
Operating profit stood at 10,127 million yen, up 137.8% year on year, chiefly reflecting a decrease inother expenses due to the absence of a loss on transfer of business of 2,867 million yen related to thealuminum compound business in Europe and an impairment loss on goodwill of 1,171 million yen
based on the Group’s decision to transfer a certain water treatment chemical production function in
China (both are temporary losses) posted in the previous fiscal year.
Orders in Japan fell, reflecting one-time orders from the oil refinery and petrochemical industries
recorded in the previous fiscal year, but net sales in Japan, primarily net sales of process treatment
chemicals for iron and steel production, increased due to the Group’s efforts to gain customers byproposing total solutions that contribute to energy saving and increasing productivity at customers’
plants.
Overseas, both orders and net sales rose despite the effect of the transfer of the aluminum compoundbusiness in Europe in the previous fiscal year and a reduction in sales at overseas subsidiaries in yen
equivalent because of a stronger yen, primarily due to the new consolidation of operating results (for 12months) in the water treatment chemicals business at U.S. Water Services, Inc. and operating results (forten months) at U.S.-based Avista Technologies, Inc. and U.K.-based Avista Technologies (UK) Ltd.
Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 145,768 million yen, down 6.3%
versus the previous fiscal year. Net sales declined 2.6%, to 151,174 million yen. Operating profit cameto 17,390 million yen, up 12.1% year on year, chiefly reflecting an improvement in the cost of sales
ratio mainly due to the steps taken to prevent additional costs, incurred in the previous fiscal year, anda gain on the sale of fixed assets of 4,752 million yen posted in other income resulting primarily fromthe sale of certain facility in the ultrapure water supply business.
In Japan, orders and net sales of water treatment facilities for the electronics industry declined fromthe previous fiscal year, during which orders were received and sales were recorded for large projects.
However, net sales rose in maintenance services for the electronics industry due to progress in theconstruction work for expansion and renovation projects for the purpose of increasing production
capacity at customers’ plants. Orders for water treatment facilities for general industries fell, but net
sales rose due to progress in construction work for orders for large projects received in the previous
fiscal year. Orders in maintenance services for general industries decreased slightly and net sales
increased only slightly in reaction to strong orders and net sales in the previous fiscal year. Orders forfacilities for electric power plants declined in reaction to orders for large projects in the same periodof the previous fiscal year, but net sales increased due to progress in construction work for a backlogof orders. Orders and net sales of soil remediation decreased, reflecting a completion of large projects.
Overseas, orders increased, chiefly attributable to the new consolidation of operating results (for 12months) in the water treatment facilities business of U.S. Water Services, Inc. However, net sales
decreased in reaction to sales from large projects posted in the same period of the previous fiscal year
and due to a reduction in sales at overseas subsidiaries in yen equivalent because of a stronger yen.
Total sales in the ultrapure water supply business in Japan and overseas increased chiefly due to thecommencement of a new contract, despite a fall due to the effect of changes in contracts with certain
customers.

2

Financial Condition
1) Total assets: 387,749 million yen (increased 28,249 million yen from the end of the previous fiscal
year)
Current assets totaled 162,847 million yen, an increase of 11,782 million yen from the end of theprevious fiscal year ended March 31,2019. This was mainly attributable to an increase in cash and cash
equivalents of 14,667 million yen, chiefly reflecting the partial execution of the commitment line
contracts, offsetting funds used for business acquisitions and capital expenditures.
Non-current assets totaled 224,902 million yen, an increase of 16,468 million yen from the end of
the previous fiscal year. Right-of-use assets rose 5,510 million yen, chiefly reflecting the acquisitionof the right of use of land. Goodwill climbed 3,275 million yen due to acquisitions in North America
and Europe (Water Treatment Chemicals business). Investments accounted for using equity method
increased 6,513 million yen owing to an increase in equity method affiliates (Water Treatment
Chemicals business and Water Treatment Facilities business).
2) Liabilities: 143,640 million yen (increased 23,325 million yen from the end of the previous fiscal
year)
Current liabilities totaled 94,408 million yen, an increase of 20,887 million yen from the end of theprevious fiscal year. This was mainly due to an increase in borrowings of 34,986 million yen resulting
from the partial execution of the commitment line contracts, offsetting a decrease of 14,297 million
yen in trade and other payables.
Non-current liabilities totaled 49,232 million yen, an increase of 2,439 million yen from the end of
the previous fiscal year. This was primarily attributable to an increase in lease liabilities of 4,073
million yen due to the acquisition of the right of use of land.
3) Equity: 244,108 million yen (increased 4,924 million yen from the end of the previous fiscal year)
This mainly reflected an increase in retained earnings of 11,796 million yen chiefly due to the postingof a profit for the period, which outweighed the posting of year-end dividends and interim dividends
and were partly offset by a decrease in other components of equity of 4,622 million yen mainly due toa decline in exchange differences on translation of foreign operations associated with the stronger yen
against foreign currencies.

3Cash Flows
Consolidated net cash and cash equivalents at the end of the fiscal year ended March 31,2019totaled
50,215 million yen, an increase of 14,667 million yen from the end of the previous fiscal year ended
March 31,2019.
The various cash flows and related factors are outlined below.
1) Cash Flows from Operating Activities
Net cash provided by operating activities during the fiscal year ended March 31, 2020 totaled 37,376
million yen, a decrease of 3,767 million yen from the previous fiscal year. Inflows from profit before
tax of 26,691 million yen and depreciation and amortization of 18,700 million yen were partly offset
by income taxes paid of 10,847 million yen.
2) Cash Flows from Investing Activities
Net cash used in investing activities totaled 43,683 million yen, a decrease of 8,219 million yen fromthe previous fiscal year. Cash was used for purchases of property, plant and equipment of 31,168
million yen, payments for acquisition of business of 8,501 million yen, and purchases of shares andinvestments in capital of subsidiaries and affiliates of 5,915 million yen.
3) Cash Flows from Financing Activities
Net cash provided by financing activities totaled 21,981 million yen, an increase of 35,434 million yen
from the previous fiscal year. Inflows chiefly from a net increase in short-term borrowings of 35,001
million yen were partly offset by dividends paid of 6,539 million yen.
The Group’s basic policy is to constantly secure liquidity necessary for business operations andresource of funds. Short-term working capital is basically supplied by the Group’s own funds. Capital
investment and other investments in growth fields depend chiefly on the Group’s own funds, but theGroup considers financing through bank loans as needed. The Company has concluded commitmentline agreements with four financial institutions. (The executed and unexecuted borrowings within thecommitment line at the end of the fiscal year were 35,000 million yen and 35,600 million yen,respectively.)(Reference) Indicators related to cash flow
Year ended
Year ended
Year ended
Year ended
Year ended
March 31, 2016 March 31, 2017 March 31, 2018 March 31, 2019 March 31, 2020
Ratio of equity attributable to ownersof parent company (%)

76.4

76.1

73.9

66.0

62.5

Ratio of equity attributable to owners ofparent company based on market value (%)

100.1

102.8

117.3

88.3

72.3

Cash flow / interest bearing liabilities
ratio (%)

33.0

28.2

42.6

39.6

148.1

Interest coverage ratio (times)

96.3

104.4

41.6

115.9

126.3

(Notes) Ratio of equity attributable to owners of parent company: Equity attributable to owners of parent company / Total
assetsRatio of equity attributable to owners of parent company based on market value: Market capitalization / Total
assetsCash flow / interest bearing liabilities ratio: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest payments
1. Each indicator is calculated based on consolidated financial figures.
2. Market capitalization is calculated based on the number of shares outstanding excluding treasury stock.
3. Cash flow is net cash provided by operating activities.
4. Interest-bearing debt includes all liabilities requiring the payment of interest under the liabilities section of theconsolidated statement of financial position.
5. The data from the year ended March 31, 2016 to the year ended March 31, 2018 are based on Japan GAAP.

4

Outlook for Overall Business, Including Production, Sales, and Profits and Losses
For the full fiscal year ending March 31, 2021, the Group forecasts 268,000 million yen in net sales(up 1.2% year on year), 23,500 million yen in business profit* (down 11.8%), 22,500 million yen in
operating profit (down 18.1%), 22,600 million yen in profit before taxes (down 15.3%) and 16,000
million yen in profit attributable to owners of parent (down 12.5%). For the first half of the fiscal year,
the Group forecasts 123,000 million yen in net sales (down 6.6% year on year), 8,900 million yen inbusiness profit (down 34.9%), 8,500 million yen in operating profit (down 54.1%), 8,600 million yen
in profit before taxes (down 54.2%), and 6,000 million yen in profit attributable to owners of parent(down 55.5%).
The business forecasts are made by the Company based on information available at the time of
publication of this report and may differ from actual results due to changes in a range of factors.
In the first half of the fiscal year ending March 31, 2021, economic activities will likely be stagnant
globally chiefly due to restrictions on going out and movements in response to the spread of novel
coronavirus, and a contraction of the world economy is likely to be unavoidable. Although companies
will strive to continue business by introducing teleworking and taking other steps, industries other thanthose related to daily necessities and IT are expected to be severely affected by declines in demand.
The future course of the pandemic is unclear. Considering that, in China, where the first coronavirus
outbreak occurred, economic activities have begun to recover, the spread of novel coronavirus may
slow or subside globally by the middle of FY2020. In that case, production and capital investment
demand at companies are expected to recover and economic activities are likely to be normalized in
the second half of the fiscal year. The Company’s forecasts of consolidated results are based on thatassumption.
However, in fact it is very uncertain when the novel coronavirus will subside and it may take a longtime. It is also possible that the infection will lead to a serious economic downturn. Bankruptcies, cash
flow problems and rises in unemployment rate may be caused by falls in earnings as a result of a sharp
contraction of economic activities. It is difficult to forecast how soon the declined demand will recoverand it may take time. If the actually situation becomes very different from our assumption, our businesswill be affected and the forecasts may have to be revised drastically.
The Group is taking steps to prevent the spread of novel coronavirus based on the situation in eachcountry. In areas where stay-at-home orders and requests have been issued, our staff are in principle
working from home. The work out of home are limited to operations that help customers and the Group
continue business or meet social needs, with taking steps to prevent the spread of the infection. In thesecircumstances, the Group will promote digitization in its business processes and business models andwill expand total solutions making full use of its technologies, products and services in water treatment
chemicals, water treatment facilities and maintenance services to provide high value to customers andcontribute to maintaining the functions of industry and society through its business. In the fiscal year
ending March 31, 2021, orders and sales are expected to increase, given that Pentagon Technologies
Group, Inc., a tool cleaning company operating in the United States of which the Group acquired
additional shares on April 1, 2020, will be consolidated.
* The business profit is the Group’s own indicator that measures constant business performance. It is
net sales less cost of sales and selling, general and administrative expenses. Although business profit
is not defined by IFRS, the Group voluntarily discloses it, believing that it is beneficial for users of
its financial statements.

5Outlook by Segment
Water Treatment Chemicals
Both orders and sales are likely to fall due to stagnant production at customers as a result of a decreasein demand caused by the spread of novel coronavirus. In Japan, this segment will seek to improve
profitability by focusing on the service business that will provide customers with value with the bestsolutions while utilizing IT and sensing technology under a system with stronger integration withmaintenance services in the water treatment facilities business.
Water Treatment Facilities
The Group expects orders and sales to increase due to the consolidation of Pentagon Technologies
Group, Inc., which engages in tool cleaning business in the United States, as well as the posting oforders for water treatment facilities projects and steady progress in construction work on the back ofan expected recovery in capital investment in the latter half of the fiscal year ending March 31, 2021.
The segment will aim to improve production quality and efficiency by reviewing production process,while focusing on the provision of solutions that will contribute to solving the water resources problem
and realizing the use of sustainable energy.
Dividend Policy and Dividends for the Fiscal Year ended March 31, 2020 and the Fiscal Yearending March 31, 2021
Kurita Water Industries’ basic policy is to provide shareholders with stable dividends.
Setting a payout ratio of 30 to 50% as our target, we will work to continue to increase dividends,
making decisions based on the payout ratios for the most recent five years to respond flexibly tofluctuations in business performance each year. In using retained earnings, we will maintain capitaldiscipline and will prioritize promising business fields that are expected to grow. If we have decided
that there are excess funds, we will take steps to improve capital efficiency and return profits toshareholders, including the acquisition of treasury stock, taking the share price into consideration. We
intend to pay a year-end dividend of 31 yen per share for the fiscal year ended March 31, 2020, 4 yenmore than the previous year-end dividend. Combined with the interim dividend of 31 yen per share (4yen more than the previous interim dividend), the annual dividend comes to 62 yen per share, 8 yen
higher than the previous fiscal year’s annual dividend. For the fiscal year ending March 31, 2021,
Kurita Water Industries plans to pay an interim dividend of 32 yen per share and a year-end dividendof 32 yen per share, for an annual dividend to be 64 yen per share.
Basic Concept for the Selection of Accounting Standards
The Kurita Group voluntarily applied IFRS from the first quarter of the fiscal year under review for its
consolidated financial statements for the purpose of increasing the international comparability offinancial information and unifying accounting treatment within the Group.

6

Consolidated financial statements(1) Consolidated statement of financial position(Million yen)
Date of transition
to IFRS(April 1, 2018)

As of March 31, 2019

As of March 31, 2020

AssetsCurrent assets
Cash and cash equivalents

60,53135,54750,215Trade and other receivables

89,354100,497

96,974

Other financial assets

2,809

1,709

2,562

Inventories

8,078

9,273

9,247

Other current assets

2,619

4,036

3,847

Total current assets

163,393

151,065

162,847

81,336

103,366

106,358

Non-current assets
Property, plant and equipment
Right-of-use assets

11,331

12,274

17,784

Goodwill

19,96643,75847,033

Intangible assets

10,197

12,355

13,381

Investments accounted for using equity method

1,098

956

7,469

Other financial assets

40,10328,62928,465

Deferred tax assets

4,581

6,877

4,295

Other non-current assets

277

216

113

Total non-current assets

168,893

208,434

224,902332,287359,500

387,749

Total assets

7

(Million yen)
Date of transition
to IFRS(April 1, 2018)

As of March 31, 2019

As of March 31, 2020

Trade and other payables

40,13949,97735,680Borrowings

2,963

385

35,371

Lease liabilities

2,958

3,818

4,234

Liabilities and equity
Current liabilities

Other financial liabilities
Income taxes payable
Provisions

12

1

219

4,737

5,887

1,998

572

1,026

1,111

Other current liabilities

10,72912,424

15,791

Total current liabilities

62,11373,521

94,408Borrowings

2,331

1,717

1,305

Lease liabilities

9,397

9,628

13,701

Non-current liabilities

Other financial liabilities

1,122

1,771

2,562

Retirement benefit liability

16,374

16,58016,913

Provisions

331

491

499

Deferred tax liabilities

547

1,219

1,346

Other non-current liabilities

761

15,385

12,903

Total non-current liabilities

30,86846,79349,232

92,981

120,315

143,640

Share capital

13,45013,45013,450Capital surplus

10,95910,265

8,212

Treasury shares(10,943)(10,932)(10,893)

Other components of equity

16,785

4,838

216

Retained earnings

207,005

219,660

231,456

Total equity attributable to owners of parent

237,257

237,282

242,442

Total liabilities
EquityNon-controlling interests
Total equity
Total liabilities and equity

2,048

1,902

1,666

239,305

239,184

244,108332,287359,500

387,7498

(2) Consolidated statement of profit or loss and comprehensive income
Consolidated statement of profit or loss
(Million yen)
Year ended March 31, 2019Year ended March 31, 2020

257,331

264,807

174,670

172,092

82,661

92,715

Selling, general and administrative expenses

56,994

66,060

Other income

1,024

5,832

Net sales
Cost of sales
Gross profit

Other expenses
Operating profit

6,831

5,006

19,86027,479Finance income

781

569

Finance costs

521

1,417

Share of profit of investments accounted for using equity
method146

60

20,267

26,691

8,279

8,378

11,98718,312

12,05018,287(63)

25

11,98718,312

107.33162.86‒‒

Profit before tax
Income tax expense
Profit for the period
Profit attributable to
Owners of parent
Non-controlling interests
Profit for the period
Earnings per share
Basic earnings per share (yen)Diluted earnings per share (yen)9Consolidated statement of comprehensive income(Million yen)
Profit for the period

Year ended March 31, 2019Year ended March 31, 2020

11,98718,312(1,044)(462)

Other comprehensive income
Items that will not be reclassified to profit or loss
Net change in the fair value of financial assets
measured through other comprehensive income
Remeasurements of defined benefit plans

(72)

62

(1,116)(400)(4,593)(4,316)

Cash flow hedges

308

192

Share of other comprehensive income of investments
accounted for using equity method

(153)

(94)

Total of items that may be reclassified to profit or loss

(4,437)(4,219)Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations

Other comprehensive income, net of tax(5,554)(4,619)6,432

13,693

Owners of parent

6,543

13,717

Non-controlling interests

(110)

(24)

6,432

13,693Comprehensive income for the period
Comprehensive income attributable toComprehensive income10(3) Consolidated statement of changes in equity
Fiscal year ended March 31, 2019 (April 1, 2018 - March 31, 2019)(Million yen)
Equity attributable to owners of parent
Other components of equity

Share capital

Balance as of April 1, 2018

Capital surplus Treasury shares

Exchangedifferences ontranslation offoreign
operations

Financial assets
measured at fairvalue throughothercomprehensive
incomeCash flow
hedges13,45010,959(10,943)‒

2

Profit for the period

‒

‒

‒

‒

‒

‒

Other comprehensive income

‒

‒

‒

(4,699)308(1,046)

Total comprehensive income for the period

16,783‒‒‒(4,699)308(1,046)

Purchase of treasury shares

‒

‒

(2)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

158

‒

‒

‒

‒

Changes in ownership interests in subsidiaries

‒

(294)

‒

28

‒

‒

Transfer from other components of equity toretained earnings

‒

‒

‒

‒

‒

(6,538)

Other

‒

(558)

14

‒

‒

‒

Total transactions with owners

‒

(694)

11

28

‒

(6,538)

Balance as of March 31, 201913,45010,265(10,932)(4,671)

310

9,199

(Million yen)
Equity attributable to owners of parent
Other components of equity
Remeasurementsof defined
benefit plans
Balance as of April 1, 2018
Profit for the period‒

Retainedearnings

Total

Non-controllinginterests

Total

Total

16,785207,005

237,257

2,048

239,305‒‒

12,05012,050(63)

11,987(70)(5,507)－(5,507)(47)(5,554)(70)(5,507)

12,050

6,543

(110)

6,432

Purchase of treasury shares

‒

‒

‒

(2)

‒

(2)

Dividends‒‒(5,968)(5,968)(38)(6,006)

Share-based payment transactions

‒

‒

－

158

1

159

Changes in ownership interests in subsidiaries

‒

28

－

(265)

1

(264)

Transfer from other components of equity toretained earnings

70(6,467)

6,467

‒

‒

‒

Other comprehensive income
Total comprehensive income for the period

‒

‒

104

(439)

‒

(439)

Total transactions with owners

Other

70

(6,439)604(6,518)(35)(6,553)

Balance as of March 31, 2019

‒

4,838

219,660

237,282

1,902

239,18411

Fiscal year ended March 31, 2020 (April 1, 2019 - March 31, 2020)(Million yen)
Equity attributable to owners of parent
Other components of equity

Share capital

Balance as of April 1, 2019

Capital surplus Treasury shares

Exchangedifferences ontranslation offoreign
operations

Cash flow
hedgesFinancial assets
measured at fairvalue throughothercomprehensive
income9,199

13,45010,265(10,932)(4,671)

310

Profit for the period

‒

‒

‒

‒

‒

‒

Other comprehensive income

‒

‒

‒

(4,362)

192

(462)

Total comprehensive income for the period

‒

‒

‒

(4,362)

192

(462)

Purchase of treasury shares

‒

‒

(3)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

103

42

‒

‒

‒

Changes in ownership interests in subsidiaries‒(1,385)

‒

0

‒

‒

Transfer from other components of equity toretained earnings

‒

‒

‒

‒

‒

10

Other

‒

(771)

‒

‒

‒

‒

Total transactions with owners‒(2,053)

38

0

‒

10

Balance as of March 31, 2020

13,4508,212(10,893)(9,033)

503

8,747

(Million yen)
Equity attributable to owners of parent
Other components of equity
Remeasurementsof defined
benefit plans
Balance as of April 1, 2019‒

Retainedearnings

Total

Non-controllinginterests

Total

4,838

219,660

237,282

Total

1,902

239,184
18,312

Profit for the period‒‒

18,28718,28725

Other comprehensive income

63(4,569)‒(4,569)(49)(4,619)63(4,569)18,287

13,717(24)

13,693Purchase of treasury shares

‒

‒

‒

(3)

‒

(3)

Dividends‒‒(6,521)(6,521)(24)(6,546)

Share-based payment transactions

‒

‒

－

145

8

154

Changes in ownership interests in subsidiaries

‒

0

－

(1,385)(196)(1,581)

Transfer from other components of equity toretained earnings

(63)

(52)

52

‒

‒

‒

Total comprehensive income for the period

‒

‒

(21)

(792)

‒

(792)

Total transactions with owners

Other

(63)

(52)

(6,490)(8,557)(211)(8,769)Balance as of March 31, 2020‒

216

231,456

242,442

1,666

244,10812

(4) Consolidated statement of cash flows(Million yen)
Year ended March 31, 2019Year ended March 31, 2020

Profit before tax

20,267

26,691

Depreciation and amortization

17,872

18,700

(146)

(60)

Loss (gain) on sale of fixed assets

559(2,471)

Decrease (increase) in inventories

(259)

(169)

Cash flows from operating activities

Share of loss (profit) of investments accounted for using
equity method

Decrease (increase) in trade and other receivables(9,059)

4,527

Increase (decrease) in trade and other payables

14,504(1,893)

Other

5,815

2,652

49,55347,977

Interest received

165

141

Dividends received

712

410

SubtotalInterest paid

(371)

(305)

Income taxes paid

(8,915)(10,847)

Net cash provided by (used in) operating activities

41,14337,376

Payments into time deposits(19,408)(1,951)

Proceeds from withdrawal of time deposits

19,9991,545

Purchase of property, plant and equipment(28,600)(31,168)

479

5,942

Purchase of intangible assets(1,235)(1,534)

Proceeds from sale of investments

13,335

41

Payments for acquisition of business (after deduction of
cash and cash equivalents included in acquired assets)(33,374)(8,501)‒(5,915)

Cash flows from investing activities

Proceeds from sale of property, plant and equipment

Purchase of shares and investments in capital ofsubsidiaries and affiliates
Other(3,096)(2,140)Net cash provided by (used in) investing activities(51,902)(43,683)(2,417)35,001

(594)

(384)

Repayments of lease liabilities(3,338)(4,514)

Dividends paid

(6,011)(6,539)Purchase of shares of subsidiaries not resulting in change
in scope of consolidation(1,094)(1,588)Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings

Other

3

7

Net cash provided by (used in) financing activities(13,453)

21,981

Effect of exchange rate changes on cash and cash equivalents(771)(1,006)

Net increase (decrease) in cash and cash equivalents(24,984)

14,667

Cash and cash equivalents at beginning of period

60,53135,547

Cash and cash equivalents at end of period

35,54750,21513

Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Not applicable(Segment Information)(1) Overview of reportable segments
The Company’s reportable segments are components of the Group about which separate financial information is available. Thesesegments are subject to periodic review to enable the Company’s board of directors to decide how to allocate resources and assess
performance.
The Group plans comprehensive strategies for the products that it handles in Japan and overseas, and develops a business. The Group’s
operations are therefore classified into two reportable segments, the Water Treatment Chemicals segment and the Water Treatment
Facilities segment.
The Water Treatment Chemicals segment manufactures and sells water treatment chemicals and equipment and provides maintenanceservices. The Water Treatment Facilities segment manufacturers and sells water treatment equipment and facilities, provides ultrapure
water, chemical cleaning, tool cleaning, soil and groundwater remediation services, and provides maintenance services that encompass
operation, maintenance, and management of water treatment facilities.
(2) Information of reportable segments
Fiscal year ended March 31, 2019 (April 1, 2018 - March 31, 2019)(Million yen)
Reportable Segments

Sales
Sales to outside customers
Inter-segment sales and transfers
Total
Segment income

Adjustments(Note)

Amounts
reported on the
consolidated
financialstatements

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

102,126785

155,204
1,526

257,3312,312‒(2,312)

257,331‒102,912

156,731259,643(2,312)

257,331

4,258

15,518

19,77683

19,860Finance income

781

Finance costs

521

Share of profit of investments accounted for using equity method

146

Profit before tax

20,267(Million yen)
Reportable Segments

Segment assets
Other amounts
Depreciation and amortization
Impairment loss
Investment in equity method affiliates
Capital expenditures

Adjustments(Note)

Amounts
reported on the
consolidated
financialstatements

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

115,017200,975

315,993

43,507359,500

4,502
1,171
875
4,182

13,369‒53
37,071

17,872
1,171
929
41,254‒‒26‒

17,872
1,171
956
41,254(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating income level.
3. Segment assets: Amount resulting from eliminations of inter-segment transactions.
4. Capital expenditures include an increase in right-of-use assets.
5. Capital expenditures do not include assets acquired through corporate acquisitions.

14Fiscal year ended March 31, 2020 (April 1, 2019 - March 31, 2020)(Million yen)
Reportable Segments

Sales
Sales to outside customers
Inter-segment sales and transfers
Total
Segment income

Adjustments(Note)

Amounts
reported on the
consolidated
financialstatements

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

113,632681

151,174
1,777

264,8072,458‒(2,458)

264,807‒

114,313

152,952

267,265(2,458)

264,807

10,127

17,39027,518(38)

27,479Finance income

569

Finance costs

1,417

Share of profit of investments accounted for using equity method

60

Profit before tax

26,691(Million yen)
Reportable Segments

Segment assets
Other amounts
Depreciation and amortization
Impairment loss
Investment in equity method affiliates
Capital expenditures

Adjustments(Note)

Amounts
reported on the
consolidated
financialstatements

Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

119,960

209,015

328,975

58,774

387,749

5,496
‒
2,489
6,853

13,20429
4,960
26,42818,70029
7,449
33,281‒‒20‒

18,70029
7,469
33,281(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating income level.
3. Segment assets: Amount resulting from eliminations of inter-segment transactions.
4. Capital expenditures include an increase in right-of-use assets.
5. Capital expenditures do not include assets acquired through corporate acquisitions.

15

(3) Information related to geographic regions
Non-current assets and sales to external customers by geographic region in each fiscal year are as follows.
(i) Non-current assets(Million yen)
Date of transition
to IFRS(April 1, 2018)

As of March 31, 2019

As of March 31, 2020

Japan
Asia
North America

78,360101,896

110,963

21,026

18,833

17,446

4,080

35,18640,161

EMEA

18,876

15,48015,695

Other
Total

711

573

405

123,056

171,970

184,671(Note) Non-current assets are allocated based on the location of assets. Financial instruments, deferred tax assets or assets
related to retirement benefits are not included.
(ii) Net Sales(Million yen)
Year ended March 31, 2019Year ended March 31, 2020

Japan
Asia
North America

161,212

161,699

66,52052,5095,589

28,826

EMEA

21,297

19,132

Other

2,711

2,639

257,331

264,807

Total(Note) Net sales are allocated to a country or areas based on the locations of customers.
(4) Information related to major customers
Because there is no single external customer that accounts for 10% or more of the net sales in the consolidated statement of income, noinformation is stated here.

16

(Business Combination)
Acquisition of shares by consolidated subsidiaries(Acquisition of Avista Technologies, Inc., Avista Technologies (UK) Ltd. and Avista Singapore Pte Ltd.)The Group acquired all shares outstanding of Avista Technologies, Inc., a manufacturing and sales company of water treatment chemicals
in the United States, through Kurita America Holdings Inc., a wholly owned subsidiary of the Company on May 15, 2019. Through theinvestment in Avista Technologies, Inc., the Group acquired also Avista Singapore Pte Ltd., a wholly owned subsidiary of Avista
Technologies, Inc. On the same date, the Group acquired all shares outstanding of Avista Technologies (UK) Ltd., a manufacturing andsales company of water treatment chemicals in the United Kingdom, through Kurita Europe GmbH, a wholly owned subsidiary of theCompany. Avista Technologies, Inc. specializes in reverse osmosis (RO) chemicals that are used for RO membrane, a component ofwater treatment facilities, and manufactures and sells a number of types of RO chemicals. In addition, Avista Technologies, Inc. provides
RO membrane cleaning, among other services. It has many customers in a wide range of industries, including mining, chemicals, oil,offshore oilfields, food, beverages, and local governments, chiefly in the United States. Avista Technologies (UK) Ltd. uses licenses
provided by Avista Technologies, Inc. and develops similar operations in EMEA (Europe, the Middle East and Africa). The Group will
expand sales of RO chemicals by expanding the product lineup of RO chemicals, combining the RO chemicals of Avista Technologies,
Inc. and the distinctive RO chemicals that the Group owns, and offering a wide range of products to all customers. The Group and Avista
Technologies, Inc. will share technologies and expertise and will strengthen RO membrane-related services.
(1) Assets acquired and liabilities assumed
The fair value of identifiable assets acquired and liabilities assumed of Avista Technologies, Inc. and Avista Singapore Pte Ltd. on thedate of acquisition are shown below.
(Million yen)
Fair value of consideration (cash)

7,615

Fair value of assets acquired and liabilities assumed
Cash and cash equivalents

248

Trade receivables

341

Other current assets

142

Non-current assets

3,244

Trade payables and other payables(666)

Non-current liabilities(50)

Fair value of assets acquired and liabilities assumed (net)

3,259

Goodwill

4,355

The amount of goodwill that occurred was 4,355 million yen, which reflects expected excess earning power.
We expect that the recognized goodwill can be deductible expenses from tax perspective.
The fair value of identifiable assets acquired and liabilities assumed of Avista Technologies (UK) Ltd. on the date of acquisition are
shown below.
(Million yen)
Fair value of consideration (cash)

1,889

Fair value of assets acquired and liabilities assumed
Cash and cash equivalents
Other current assets
Non-current assets
Other current liabilities
Non-current liabilities
Fair value of assets acquired and liabilities assumed (net)
Goodwill

957
223
723
(256)
(141)
1,505
383

The amount of goodwill that occurred was 383 million yen, which reflects expected excess earning power.
We do not expect that any amounts related to goodwill can be deductible expenses from tax perspective.
(2) Transactions that are accounted for separately from business combination
Expenses related to the acquisition for the business combination were 325 million yen. The amount is posted in Other expenses in the
consolidated statement of profit or loss.

17

(Acquisition of Global Water Services Holding Company, Inc., U.S. Water Services, Inc. and two other companies)
The Group acquired all shares outstanding of Global Water Services Holding Company, Inc., a holding company of a water treatment
chemicals and facilities manufacturing and sales company in the United States, through Kurita America Holdings Inc., a wholly owned
subsidiary of the Company, on March 25, 2019. Through the investment in Global Water Services Holding Company, Inc., the Groupacquired also U.S. Water Services, Inc., a wholly owned subsidiary of Global Water Services Holding Company, and two other companies.
The Group aims to achieve rapid growth in its overseas business, particularly in four regions: Japan, Asia, Europe, and the Americas.
This investment is for strengthening business in the United States, a strategic market. The Group will combine the strong customer baseand sales network of Global Water Services Holding Company with the Group’s competitive products and unique services, including
pure water supply and wastewater reclamation, and will develop a service agreement-based business model, using IT and sensing
technology to increase closeness with customers and accelerate business in the United States.
(1) Assets acquired and liabilities assumed
The fair value of identifiable assets acquired and liabilities assumed of Global Water Services Holding Company, Inc., U.S. Water
Services, Inc. and two other companies on the date of acquisition are shown below.
(Million yen)
Fair value of consideration (cash)

30,630Fair value of assets acquired and liabilities assumed
Cash and cash equivalents
Trade receivables
Other current assets
Non-current assets
Trade payables and other payables
Non-current liabilities
Fair value of assets acquired and liabilities assumed (net)
Goodwill

429
2,870
1,525
5,085
(1,930)(644)
7,335
23,295The amount of goodwill that occurred was 23,295 million yen, which reflects expected excess earning power.
We do not expect that any amounts related to goodwill can be deductible expenses from tax perspective.
(2) Transactions that are accounted for separately from business combination
Expenses related to the acquisition for the business combination were 958 million yen. The amount is posted in Other expenses in the
consolidated statement of profit or loss.
Transaction under Common Control(1) Outline of the transaction(i) Company names and businesses at the time of integrationi) Surviving company
Name:
U.S. Water Services, Inc.
Business: Manufacture, sale, and export and import of water treatment chemicals, manufacture, sale, design, building, andmaintenance of water treatment equipment, and operation and maintenance of water treatment facilitiesii) Merged companies
Name:
Kurita America, Inc.
Business: Manufacture and sale of water treatment chemicals, manufacture and sale of water treatment equipment, and operation
Name:and maintenance of water treatment facilities
Fremont Industries, LLC

Business: Manufacture and sale of water treatment chemicals
Name:
Global Water Services Holding Company, Inc.
Business: Holding company of U.S. Water Services, Inc.
(ii) Date of business combination
March 31, 202018

(iii) Legal form of business combination
An absorption-type merger. The surviving company is U.S. Water Services, Inc. (a consolidated subsidiary of Kurita America
Holdings Inc., a wholly owned subsidiary of the Company). The merged companies are Kurita America, Inc., Fremont Industries,
LLC, and Global Water Services Holding Company, Inc. (all of them are consolidated subsidiaries of Kurita America Holdings Inc.,a wholly owned subsidiary of the Company). The Company contributed shares in Kurita America, Inc. to Kurita America Holdings
Inc., a wholly owned subsidiary of the Company, in kind.
(iv) Name of the company after business combination
The company name after the business combination became Kurita America Inc. on April 1, 2020.
(v) Main reason of integration
To integrate sales and production systems, business models, products, technologies, and management systems, improve efficiency
in business operation, and provide total solutions to customers(2) Outline of accounting
The business combination under common control is a business combination in which all companies or businesses involved are ultimately
controlled by the same company before and after the business combination. The control is not temporary. The Group continues to perform
accounting treatment for all business combination transactions under common control based on book value.

(Per Share Information)(Million yen)
Year ended March 31, 2019
Net income attributable to common stockholders ofparent company

Year ended March 31, 2020

12,05018,287

Amount not attributed to common stockholders‒‒

Net income that is used for calculating basic net
income per share

12,05018,287

Average number of common shares outstanding

112,278,133

112,291,114(Notes) 1. Because there are no dilutive shares, diluted earnings per share are not stated.
2. The Company’s own shares posted as treasury shares remaining in trust are included in the treasury shares that are deductedin the calculation of the average number of shares outstanding for calculation for basic net income per share. (317,000
shares in the fiscal year ended March 31, 2020, 329,000 shares in the fiscal year ended March 31, 2019)19

(Significant Subsequent Events)
Pentagon Technologies Group, Inc. becoming a consolidated subsidiary of the Group(1) Outline of business combination
Kurita America Holdings Inc. (“Kurita America Holdings”), a wholly owned subsidiary of the Company, concluded an agreement topurchase an additional 26% stake in Pentagon Technologies Group, Inc. (“Pentagon Technologies”) on December 26, 2019. Kurita
America Holdings already had a 25% stock. The purchase of the shares under the agreement was completed on April 1, 2020. As a result,
Kurita America Holdings holds a 51% stake in Pentagon Technologies, which became a consolidated subsidiary of Kurita Water
Industries. An outline of the purchase is described below. IFRS 3 is applied for the business combination. Accounting for the businesscombination is not completed, and detailed information on the business combination is not stated.
Acquired company

Pentagon Technologies Group, Inc.

Business

Tool cleaning business, the development of surface particle detectors of semiconductor
manufacturing equipment and the provision of clean room-related services

Main reason of businesscombination

The Company will make Pentagon Technologies its subsidiary to have a base for overseas service
in the electronics industry, which the Company positions as a key business field, and to further
increase its competitiveness in the market. The Company also aims to accelerate its businessgrowth and offer new value by acquiring the cutting-edge tool cleaning technologies and expertiseof Pentagon Technologies and creating synergies with the tool cleaning business that the Kurita
Group has been developing in Japan.

Date of acquisition

April 1, 2020

Method for acquiring control ofacquired company

Purchase of shares for cash

Shareholding ratio after
acquisition

51.0%(2) Acquisition cost and a breakdown
Consideration for acquisition
Fair value on the date of acquisition of the shares in the acquiredcompany held immediately before the date of acquisition
Fair value of the additional shares in the acquired company acquiredon the date of acquisition

5,380 million yen

Total

10,974 million yen

5,595 million yen(3) Expense related to the acquisition and its account
They are not determined yet.
(4) Goodwill, identifiable assets acquired and liabilities assumed
The fair value of assets acquired and liabilities assumed on the date of acquisition is being calculated and has not been determined.
(5) Gain or loss related to phased acquisition
In the consolidated statement of profit or loss for the fiscal year ending March 31, 2021, gain or loss on step acquisition will be posted.
The amount of the gain or loss has not been determined.
(6) Becoming a wholly owned subsidiary
Under the share acquisition agreement concluded on December 26, 2019, it has been agreed that Pentagon Technologies becomes awholly owned subsidiary of Kurita America Holdings around June 30, 2022.

20

(Additional Information)
At a meeting of the Board of Directors held on January 30, 2020, the Company resolved to establish a new research and developmentbase (new global technology center) in Akishima-shi, Tokyo in April 2022. The existing research and development base, the functionsof Kurita Global Technology Center (Nogi-machi, Shimotsuga-gun, Tochigi), will be transferred to the new global technology center on
March 31, 2022. A purchase agreement for the land and building for the research and development base was concluded on March 16,
2020.
(1) Purpose of the establishment of the new global technology center
The Company will establish the new base in response to the aging of the existing Kurita Global Technology Center. The project is aimed
at building a development environment with state-of-the-art equipment and analytical instruments, so as to accelerate the creation ofleading-edge technologies and total solutions related to “water and the environment.” The Company will position the new global
technology center as the core of its global research and development system, aiming to make a research and development facility that isopen to society, where new innovations are created through interactions with customers and other stakeholders.
(2) Overview of the new global technology center
New Research and Development Facility (tentative name), New Multi-Functional Facility
Name(tentative name)Location

Parts of 3993-1 and 3993-8 Aza Kohake, Haijima-cho, Akishima-shi, Tokyo

Site area

30,381.37 m2

Total floor area

38,075 m2

Construction of the buildings(planned)

New Research and Development Facility: A five-story building and other structures
New Multi-Functional Facility: A three-story building

Construction cost

Approximately 30 billion yen (The Company’s own funds and debt financing)

Commencement of construction

May 2020

Completion of construction

March 2022 (planned)

Opening (commencement ofoperation)

April 2022 (planned)

21

(First-time Adoption)
The Group is disclosing consolidated financial statements complying with IFRS from this fiscal year. The most recent consolidated
financial statements prepared under Japanese GAAP are those for the fiscal year ended March 31, 2019. The date of transition to IFRS
is April 1, 2018.
(1) Exemptions set out in IFRS 1
In principle, an entity that applies IFRS for the first time (hereinafter “First-time Adopter”) is requested to retrospectively apply IFRS.
However, IFRS 1 - First-time Adoption of International Financial Reporting Standards (hereinafter “IFRS 1”) sets out standards to which
exemptions have to be applied mandatorily and standards to which exemptions are applied optionally. The effects of the applied
exemptions are adjusted by retained earnings or other components of equity on the date of transition to IFRS. When the Group moved
from Japanese GAAP to IFRS, it applied the following exemptions:
I. Business Combinations
The First-time Adopter is allowed to choose not to retrospectively apply IFRS 3 Business Combinations (hereinafter “IFRS 3”) tobusiness combinations before the date of transition to IFRS. The Group has applied the exemption and has chosen not to retrospectively
apply IFRS 3 to business combinations before the date of transition. As a result, goodwill that resulted from business combinations
before the date of transition is based on the book value on the date of transition under Japanese GAAP.
The Group conducted an impairment test related to goodwill on the date of transition regardless of the existence of signs of impairment.
II. Deemed Cost
IFRS 1 allows entities to use the fair value of property, plant and equipment, investment property and intangible assets on the date oftransition to IFRS as a deemed cost on the date of transition. The Group uses the fair value of certain property, plant and equipment on
the date of transition as deemed cost on the date of transition under IFRS.
III. Cumulative Translation Differences for Foreign Operations
IFRS 1 allows entities to choose to deem cumulative translation differences for foreign operations as of the date of transition to IFRS
to be zero. The Group has chosen to deem cumulative translation differences for foreign operations to be zero as of the date of transition.
IV. Share-based Payment Transactions
The Group has chosen not to apply IFRS 2 to stock compensation that was vested before the date of transition.
V. Leases
IFRS 1 allows the First-time Adopter to determine whether contracts existing as of the date of transition to IFRS include leases, basedon facts and circumstances existing on the date of transition. It also allows the First-time Adopter to measure lease liabilities at thepresent value of the remaining lease payments, which is calculated by discounting the remaining lease payments using the lessee’s
incremental borrowing rate on the date of transition, and to make the amount of right-of-use assets the same as the amount of leaseliabilities. The First-time Adopter is allowed to recognize as expenses leases whose term expires within 12 months of the date oftransition and leases whose underlying assets are of low value.
The Group applies the exemption to recognize and measure leases.
(2) Mandatory exceptions in retrospective application set out in IFRS 1IFRS 1 prohibits retrospective application of IFRS in relation to estimates, derecognition of financial assets and financial liabilities,
hedge accounting, non-controlling interests, classification and measurement of financial assets, etc. The Group has been applying these
items from the date of transition onwards.
(3) Reconciliation from Japanese GAAP to IFRSThe tables below are reconciliation sheets required in IFRS 1.
The reclassification column is for the figures of items that do not affect retained earnings or comprehensive income. The difference due
to changes in recognition, measurement and accounting period column is for the figures of items that affect retained earnings andcomprehensive income.

22

I. Reconciliation of Assets on Date of Transition to IFRS (April 1, 2018)(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

Assets

Account under IFRS

AssetsCurrent assets

Current assets

Cash and deposits

61,086(1,652)

1,097

60,531(1)

Cash and cash equivalents

Notes and accounts
receivable – trade

86,865

(464)

2,954

89,354(1), (2)Trade and other receivables

–

2,769

40

2,809

(1)

Finished products

3,968(3,968)––Work in process

3,621(3,621)––

Raw materials and supplies

2,800(2,800)–––

10,390(2,312)

8,078(1), (2)

Other

2,531

(1,119)

1,206

2,619

(1)

Allowance for doubtful
accounts

(464)

464

–

–

160,409–

2,984

163,393

Total current assets

Intangible fixed assets

Inventories
Other current assets

Total current assets

Non-current assets
Property, plant andequipment

Other financial assets

Non-current assets
86,028(86,028)–––

81,603(266)

81,336(1), (3)Property, plant and equipment(1), (4)Right-of-use assets
Goodwill

–

4,455

6,875

11,331

31,003(31,003)–––

20,362(396)

19,966(1), (5)–10,610(412)

10,197(1)

Intangible assets

35,683(35,683)

–

–

–

1,147

(48)

1,098

(1)

Investments accounted forusing equity method

Investments and other assets
Investment securities–

38,6301,473

40,103(1), (6)Other financial assets

Deferred tax assets

4,860(1,119)

840

4,581

(1), (7)Deferred tax assets

Other

5,238

(5,238)

–

–

–

967

(690)

277

Allowance for doubtful
accounts

(176)

176

–

–

Total non-current assets

162,637(1,119)7,376

168,893

323,046(1,119)10,360332,287

Total assets(1)

Other non-current assets

Total non-current assets
Total assets

23

(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

Liabilities

Account under IFRS

Liabilities and equity

Current liabilities

Current liabilities

Notes and accounts payable– trade28,875(28,875)––

Accounts payable – other

10,995(10,995)–––

38,575

1,564

40,139(1)

Trade and other payables

–

1,337

1,625

2,963

(1)

Borrowings

–

635

2,322

2,958

(1), (4)

–

–

12

12

(1)

Other financial liabilities(1)

Income taxes payable

Provisions

Income taxes payable

4,806

–

(68)

4,737

Provision for bonuses

2,420(2,420)

–

–

695

(695)

–

–

–

549

23

572

(1)

Other

8,355

1,888

486

10,729(1), (8),(9)

Total current liabilities

56,149–5,964

62,113

Other provision

Other current liabilities
Total current liabilities

Non-current liabilities
Lease obligations

Lease liabilities

Non-current liabilities
4,038(4,038)

–

–

–

2,388

(56)

2,331

(1)

–

4,038

5,359

9,397

(1), (4)

–

1,644

(522)

1,122

(1)

Other financial liabilities

16,610–(235)

16,374(1), (10)Retirement benefit liability

191

(190)

330

331

(1)

1,119

(492)

(79)

547

(1), (7)

Other

4,084

(4,469)

1,146

761

(1)

Total non-current liabilities

26,044(1,119)5,943

30,868

Total non-current liabilities

82,193(1,119)11,907

92,981

Total liabilities

Net defined benefit liability
Provision
Deferred tax liabilities
related to revaluation

Total liabilities
Net assets

Borrowings
Lease liabilities

Provisions
Deferred tax liabilities
Other non-current liabilities

EquityShareholders’ equity
Common stock

13,450––13,450Share capital

Capital surplus

10,959–Treasury stock(10,943)––

10,959

Capital surplus–(10,943)

Accumulated othercomprehensive income

16,187–597

Retained earnings

209,149–

238,803–

Non-controlling interests

Treasury shares

16,785(1), (12),(13)

Other components of equity(2,144)207,005(1), (12),(13)

Retained earnings(1,546)237,257

Total equity attributable toowners of parent

2,049

–

(1)

2,048

Total net assets

240,853–(1,547)239,305(1), (13)Total equity

Non-controlling interests

Total liabilities and net assets

323,046(1,119)10,360332,287

Total liabilities and equity

24II. Reconciliation of Assets at End of Previous Fiscal Year (March 31, 2019)(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

AssetsAssetsCurrent assets

Current assets

Cash and deposits

35,351

196–

35,547

Notes and accounts
receivable – trade99,247113

1,137

100,497

–

1,599

109

1,709

Finished products

5,106(5,106)––Work in process

1,235(1,235)––

Raw materials and supplies

3,059(3,059)

–

–

–

9,400

(126)

9,273

Other

6,150

(2,570)

456

4,036

Allowance for doubtful
accounts

(659)

659

–

–

149,490–

1,575

151,065

Total current assets

Cash and cash equivalents(2)

Intangible fixed assets

Trade and other receivables
Other financial assets(2)

Inventories
Other current assets

Total current assets

Non-current assets
Property, plant andequipment

Account under IFRS

Non-current assets
109,808(109,808)–––

103,369(3)

103,366(3)

Property, plant and equipment(4)

Right-of-use assets(5)

Goodwill

–

6,439

5,835

12,27454,601(54,601)–––

42,105

1,652

43,758–12,496(140)

12,35522,203(22,203)

–

–

–

1,100

(144)

956

Intangible assets

Investments and other assets
Investment securities

Investments accounted forusing equity method–

26,887

1,742

28,629(6)

Other financial assets

Deferred tax assets

8,003(1,119)

(6)

6,877

(7)

Deferred tax assets

Other

6,761

(6,761)

–

–

–

829

(613)

216

Allowance for doubtful
accounts

(149)

149

–

–

Total non-current assets

201,229(1,119)8,324

208,434

350,719(1,119)9,899

359,500

Total assets

Other non-current assets

Total non-current assets
Total assets

25

(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

Liabilities

Liabilities and equity

Current liabilities

Current liabilities

Notes and accounts payable– trade27,145(27,145)––

Accounts payable – other

19,356(19,356)–––

50,536(558)

49,977

–

385

–

385

–

1,176

2,641

3,818

–

–

1

1

Income taxes payable

5,890

–

(3)

5,887

Provision for bonuses

2,520(2,520)–－

Other provision

1,158(1,158)

–

－

–

1,026

–

1,026

Other

12,400(2,942)

2,966

12,424

Total current liabilities

68,471–

5,050

73,521

Trade and other payables
Borrowings(4)

Net defined benefit liability
Provision

Lease liabilities
Other financial liabilities
Income taxes payable

Provisions(8), (9)Other current liabilities
Total current liabilities

Non-current liabilities
Lease obligations

Account under IFRS

Non-current liabilities
5,250(5,250)

–

－

–
–

1,717

–

1,717

5,250

4,377

9,628

Borrowings(4)

Lease liabilities

–

1,663

108

1,771

(11)

Other financial liabilities

16,648–(68)

16,580(10)Retirement benefit liability

359

(358)

490

491

Deferred tax liabilities
related to revaluation

1,119

4

95

1,219

Other

19,326(4,146)205

15,38542,704(1,119)5,208

46,793

Total non-current liabilities

111,176(1,119)10,258120,315

Total liabilities

Total non-current liabilities
Total liabilities

Provisions(7)

Deferred tax liabilities
Other non-current liabilities

Net assets

EquityShareholders’ equity
Common stock

13,450––Capital surplus

10,665–(400)

10,265

Treasury stock(10,932)––(10,932)

4,187

–

651

4,838

(12),
(13)

Other components of equity

220,303–(643)

219,660

(12),
(13)

Retained earnings

237,674–(392)

237,282

1,868

–

33

1,902

Accumulated othercomprehensive income
Retained earnings

Non-controlling interests

13,450Share capital(11)

Capital surplus
Treasury shares

Total equity attributable toowners of parent(13)

Non-controlling interests

Total net assets

239,543–(358)

239,184

Total equity

Total liabilities and net assets

350,719(1,119)9,899

359,500

Total liabilities and equity

26III. Reconciliation of Income in Previous Fiscal Year (from April 1, 2018 to March 31, 2019)(Million yen)Account under Japanese GAAP

Japanese
GAAPNet sales

259,409

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period–(2,078)

IFRS

Notes

257,331(2)

Account under IFRSNet sales

Cost of sales

176,663–(1,993)

174,670(2), (4),Cost of sales(8)

Gross profit

82,746–(84)

82,661Gross profit

Selling, general andadministrative expenses

58,420–(1,425)56,994(4), (5), Selling, general and(8)administrative expenses

–

1,091

(67)

1,024

Other income

–

6,908

(77)

6,831

Other expenses

Operating income

24,326(5,816)1,350

19,860Operating profit

Non-operating income

2,006(2,006)––

Non-operating expenses

2,413(2,162)(251)–

Extraordinary income

8,676

–

(8,676)–Extraordinary losses

5,063(5,063)

–

–

–

776

5

781

–

316

205

521

–

136

10

146

Income before income taxes

27,532–(7,264)

20,267

Income taxes

10,207–(1,927)

8,279(6), (7) Income tax expense

Net income

17,325–(5,337)

11,987

Profit for the period

Profit attributable to owners ofparent17,323–(5,273)

12,050Owners of parent

1

–

(64)

(63)

Profit attributable to noncontrolling interests(6)
Finance income(4)

Finance costs
Share of profit of investments
accounted for using equity
methodProfit before tax

Non-controlling interests

Other comprehensive income

Other comprehensive income

Unrealized gains (losses) on
available-for-sale securities(7,904)

7,904

–

–

Deferred gains (losses) onhedges

315

(315)

–

–

Foreign currency translation
adjustments(2,208)

2,208

–

–

Remeasurements of defined
benefit plans, net of tax

(3)

3

–

–

Share of othercomprehensive income ofassociates accounted forusing equity method

(46)

46

–

–
Items that will not bereclassified to profit or loss–

(7,904)6,860(1,044)(6)

Net change in the fairvalue of financial assets
measured through othercomprehensive income

–

(3)

(69)

(72)

(10)

Remeasurements ofdefined benefit plans
Items that may bereclassified to profit or loss–

(2,208)(2,384)(4,593)

Exchange differences ontranslation of foreign
operations

27

(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

–

315

IFRS

(6)

Notes

Account under IFRS

308

Cash flow hedges

–

(46)

(106)

(153)

Share of othercomprehensive income ofinvestments accounted forusing equity method

Total other comprehensive
income(9,848)–4,293(5,554)

Other comprehensive income,net of tax

Comprehensive income

7,476

–

(1,044)

6,432

Comprehensive income for theperiodIV. Notes on Reconciliation(i) Reclassification
Of the items that were included in Non-operating income, Non-operating expenses, Extraordinary income, and Extraordinary losses
under Japanese GAAP, finance-related items are reclassified as Finance income or Finance costs under IFRS, and the other items arereclassified as Other income, Other expenses or Share of profit of investments accounted for using equity method under IFRS.
(ii) Differences due to changes in recognition, measurement and accounting period(1) Reconciliation related to the unification of reporting periods
Under Japanese GAAP, if the reporting date of a subsidiary and that of the Company are different, consolidated financial statements
were prepared based on the financial statements of the subsidiary on the reporting date of the subsidiary. Under IFRS, the reporting
date of a subsidiary is made the same as that of the Company or a provisional financial closing is conducted on the same reporting
date as that of the Company unless that is impossible practically. This has resulted in a difference in each account.
(2) Reconciliation of revenue recognition
Under Japanese GAAP, if reliable estimates are available for the work completed in construction work, the percentage of completion
method is used, and the completed-contract method is used for other construction work. Under IFRS, under a contract where control
over goods or services is transferred to the customer over a certain period of time, revenue is recognized over the period regardlessof the legal form of the contract.
(3) Reconciliation of property, plant and equipment
For certain property, plant and equipment, the Group applies an optional exemption where the fair value on the date of transition to
IFRS is used as a deemed cost.
(4) Reconciliation of leases
Under Japanese GAAP, an operating lease was expensed. Under IFRS, due to the adoption of IFRS 16, right-of-use assets and leaseliabilities are posted.
(5) Reconciliation of goodwill
Under Japanese GAAP, goodwill was amortized over a certain period of time. Under IFRS, goodwill is not amortized. Goodwill
amortized under Japanese GAAP on or after the date of transition to IFRS is reversed.
(6) Reconciliation of other financial assets (non-current)
Under Japanese GAAP, unlisted shares were posted based on acquisition cost and impairment losses were recorded in accordancewith deterioration in the financial position of the issuing company. Under IFRS, unlisted shares are measured at fair value throughother comprehensive income. Loss (gain) on sale and impairment loss of financial instruments recognizable as capital are recognizedas profit or loss under Japanese GAAP. Under IFRS, changes in fair value are recognized as other comprehensive income, and loss
(gain) on sale and impairment loss are not recognized as profit or loss.
(7) Reconciliation of deferred tax assets and deferred tax liabilities
Under Japanese GAAP, the deferred method was employed for tax effects associated with the elimination of unrealized intercompany
profits. Under IFRS, the asset and liability method is employed. The recoverability of deferred tax assets is examined under IFRS.
Temporary differences have occurred due to adjustments associated to the transition from Japanese GAAP to IFRS, and deferred tax
assets and deferred tax liabilities have been adjusted accordingly.
(8) Reconciliation of unused paid leave
Under Japanese GAAP, no accounting process were required for unused paid leave. Under IFRS, the Group has recorded liabilities
related to unused paid leave.

28

(9) Reconciliation of other current liabilities
Under Japanese GAAP, expenses were recognized throughout a fiscal year when fixed assets tax etc. was paid. Under IFRS, theamount expected to be paid is recognized as liabilities when debts to the government are determined.
(10) Reconciliation of employees’ retirement benefits
Under Japanese GAAP, the Group recorded actuarial differences as expenses in a year or two, on a pro-rata basis, from the fiscal
year when the differences occurred. Under IFRS, actuarial differences are recognized in other comprehensive income when theyoccur and are transferred to retained earnings immediately. Prior service cost is recognized as profit or loss at the time of occurrence.
(11) Liabilities related to put option contracts for non-controlling interests
If the Group is required to buy the non-controlling interests of certain subsidiaries under certain conditions at the request of theshareholders of the non-controlling interests, financial liabilities are recognized and capital surplus is reduced under IFRS.
(12) Reconciliation of other components of equity
The Group has chosen an exemption set out in IFRS 1 and transferred all cumulative translation differences related to foreignsubsidiaries to retained earnings on the date of transition to IFRS, April 1, 2018.
(13) Reconciliation of retained earnings(Million yen)
Date of transition
to IFRS(April 1, 2018)

As of March 31, 2019

Reconciliation due to the unification of reporting periods (Refer to (1))

(123)

―

Reconciliation of property, plant and equipment(Refer to (3))

(380)

(200)

Reconciliation of goodwill(Refer to (5))

―

1,643

Reconciliation of other financial assets(Refer to (6))

(207)

(52)

Reconciliation of unused paid leave(Refer to (8))(1,875)(1,908)Reconciliation of other current liabilities(Refer to (9))

(161)

(154)

Reconciliation of employees’ retirement benefits(Refer to (10))

225

104

Reconciliation of other components of equity(Refer to (12))

(193)

(193)

(6)

(462)

(2,720)(1,222)576

579(2,144)

(643)

Other
Sum of reconciliations
Tax effect related to the adjustments above and increase(decrease) in non-controlling interests
Reconciliation of retained earnings

VII. Reconciliation of Cash Flows
There is no significant difference between the consolidated statement of cash flows under the Japanese GAAP and the consolidated
statement of cash flows under IFRS.

Disclaimer- This document is an English translation of the Earnings Report for the Year Ended March 31, 2020
as reference information primarily for overseas investors. If there are any discrepancies between
the Japanese version and the English version, the Japanese version shall take precedence in all cases.
- This document is not subject to audit.
- The forward-looking statements such as performance forecasts contained in this document are basedon information currently available to the Company and certain assumptions deemed to bereasonable, and are not intended to be a commitment by the Company.
Actual performance, etc. may differ due to a variety of factors.
See “Outlook for Overall Business, Including Production, Sales, and Profits and Losses” on page 5of this document for the conditions assumed in the performance forecasts and the precautions
concerning the use of performance forecasts.
29