A Creator of
Unique Value
KURITA WATER INDUSTRIES LTD.
Integrated Report 2020
Financial Section

For the year ended March 31, 2020

CONTENTSManagement's Discussion and Analysis 

01Business Risks 09

Consolidated Statement of Financial Position 

12Consolidated Statement of Profit or Loss 

14Consolidated Statement of Comprehensive Income 

15Consolidated Statement of Changes in Equity 

16Consolidated Statement of Cash Flows 

18

Notes to Consolidated Financial Statements 

19

Independent Auditor's Report 91

Management’s Discussion and Analysis
Kurita Water Industries Ltd. and Consolidated Subsidiaries

1. Business Results
The global economy took a sharp downturn in the current fiscal year, as slowing economic growth inChina and Europe, due to prolonged US-China trade friction and the Brexit issue, was compounded by
the COVID-19 outbreak at period end. Sluggishness in the Japanese economy was also exacerbated by
the effects of a consumption tax hike in the fall and restricted social movement due to COVID-19.
In the markets in which the Group operates, production activity among Japanese manufacturers remained
weak due to sluggish export demand, while capital investment also continued to be cautious. Overseas,
capital investments, particularly in the East Asian electronics sector, tended to be delayed, and flagging
production activity was accompanied by a greater sense of slowdown.
Under these conditions, the Group entered the second year of its medium-term management plan,
Maximize Value Proposition 2022 (MVP-22). Leveraging the products, technology, and services of theWater Treatment Chemicals, Water Treatment Facilities, and Maintenance Services segments, Kurita
accelerated development of total solutions to address problems facing customers and society. Marketing,sales, technology, and development efforts came together to create horizontally deployable solution
models that combine products, technologies, services, and contract methods. The Group’s efforts yielded
six models, including one that maximizes the effectiveness of water treatment chemicals in the paper
production process by combining equipment and IT/sensing technology to improve plant water quality andproductivity. Domestically, the sales functions of all three segments were integrated into a single office toreinforce the Group’s total solutions sales system by market and region. A new company, Kurita
Kitakantou Co., Ltd., was established to provide water treatment chemicals and maintenance services.
Overseas, to quickly realize production and sales synergies with U.S. Water Service, Inc., which wasconsolidated in the previous fiscal year, that company was merged with existing US-based subsidiaries
Kurita America Inc., and Fremont Industries LLC. The goal was to build a system that can supply totalsolutions throughout the United States. Kurita also acquired US-based Avista Technologies, Inc. and UKbased Avista Technologies (UK) Ltd. (below, Avista Technologies), both of which provide reverse osmosis(RO) chemicals and RO management services, gaining a highly competitive technology and businessmodel to grow in the global RO chemicals market. Kurita also signed an agreement to acquire additional
shares of US-based Pentagon Technologies Group, Inc. (below, Pentagon Technologies), making it asubsidiary, which will help expand the tool cleaning business overseas and strengthen Kurita’s competitiveedge in the electronics industry.
In response to the COVID-19 outbreak, Kurita worked to provide products and services to customers
while ensuring the safety of employees, taking into account the situation of each country in terms of casenumbers, lockdowns, and movement restrictions.
As a result of these factors, orders increased 0.4% year on year to ¥259,545 million, while net sales
increased 2.9% year on year to ¥264,807 million. Profit was up significantly: Operating profit rose 38.4%
over the previous year to ¥27,479 million, while profit before tax rose 31.7% to ¥26,691 million, and profit
attributable to owners of parent increased 51.8% to ¥18,287 million. Although a ¥2,305 million loss on saleof property, plant and equipment was recorded the current fiscal year in line with the decision to relocate a
R&D base, this was offset by a ¥4,777 million gain on sale of property, plant and equipment due to thepartial sale of facilities in the ultrapure water supply business. Rising income also reflected the effect of
one-time losses in the previous fiscal year, including a ¥2,867 million loss on the sale of the aluminumcompound business of Kurita Europe GmbH and a ¥1,171 million impairment loss on goodwill of Kurita
Water Treatment New Materials (Jiangyin) Co., Ltd.
OrdersNet Sales(Millions of Yen)

(Millions of Yen)

300,000

300,000

200,000

200,000

100,000

100,000

0

0
2019

2020

2019

- 1 -

2020

Operating Profit

Return on Equity

Profit Attributable to Ownersof Parent(Millions of Yen)

(Millions of Yen)

30,000(%)
9.0

20,00020,0006.0

15,00010,00010,000

3.0
5,000

0

0
2019

0.0

2020

2019

2020

2019

2020

2. Business Segment Information(1) Water Treatment Chemicals
Under MVP-22, the Water Treatment Chemicals segment aims to improve profitability by transforming its
business model and strengthening its overseas business foundation.
The domestic focus was on developing total solutions based on a thorough understanding of customers
and their needs, in order to win orders for service contract-type businesses that share benefits withcustomers by boosting productivity and reducing environmental burden. Overseas, the US sales network
was expanded as U.S. Water Services, Inc. became a consolidated subsidiary. The acquisition of Avista
Technologies strengthened the RO chemicals and services business and provided a framework for global
expansion. The Group also worked to boost efficiency and profitability in each region by reviewing its
products and services and integrating its US-based subsidiaries.
In terms of products and services, the focus of the segment was on finalizing and proposing solution
models, including a model that maximize the effectiveness of water treatment chemicals in the paper
production process by combining equipment and IT/sensing technology, improving plant water quality andproductivity. Service contract-type businesses also grew with the launch of the S.sensing® CS model,
finalized in the previous fiscal year, which combines IT/sensing technology to enable optimization andautomatic control of chemical amounts added to wastewater treatment. The segment also focused on
creating value for customers by leveraging technologies, such as Dropwise Technology (drop-shaped
condensation) which improves heat transfer efficiency.
Regarding orders and net sales, orders in Japan were down due in part to the effect of one-time
petroleum refining and petrochemicals orders recorded in the previous fiscal year. Sales were up,
however, mainly in process chemicals for steel applications, reflecting efforts to win new customers byproposing total solutions that contribute to energy saving and productivity at customer plants. Bothoverseas orders and sales were also up, as a decline in sales following transfer of the European
aluminum compound business the previous fiscal year and the effect of a strong yen were offset by strong
performance of water treatment chemicals business at newly consolidated U.S. Water Services (12months) and Avista Technologies (10 months). After one-time losses in the previous fiscal year, including
a loss on the sale of the European aluminum compound business and an impairment loss on goodwill tied
to the decision to transfer the water treatment chemicals production functions of a Chinese subsidiary,
operating profit in the fiscal year under review increased significantly.
As a result, year-on-year, overall orders for the segment were up 10.5% to ¥113,777 million, net sales
increased 11.3% to ¥113,632 million, and operating profit increased 137.8% to ¥10,127 million.
OrdersNet Sales

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

150,000

150,000

15,000100,000

100,000

10,00050,00050,000

5,000

0

0
2019

2020

0
2019

2020

- 2 -

2019

2020

(2) Water Treatment Facilities
Under MVP-22, the Water Treatment Facilities segment is aiming to draw on the knowledge and technicalcapabilities it has cultivated in the ultrapure water supply field to win comprehensive maintenance andoperation management contract proposals, starting with large-scale engineering, procurement, andconstruction (EPC) projects, thereby boosting profitability.
In Japan, in addition to rolling out more total solutions, the Group improved the cost of sales ratio of
maintenance projects and boosted efficiency of operation management using AI, IoT, and sensing
technologies. Kurita also made aggressive capital investments targeting future profitability in the ultrapure
water supply and tool cleaning businesses. Overseas, in addition to efforts to develop reclaimed watersupply services mainly in China, Kurita signed an agreement to acquire additional shares in Pentagon
Technologies, making the company a consolidated subsidiary, which strengthens the Group’s
competitiveness in the tool cleaning market.
Regarding products and services, Kurita expanded its service contract-type businesses, building asolution model centering on reclaimed water supply services using the CORRTM (Customized Optimal
Readymade Recycle) standard wastewater recovery system, and increasing market applications byexpanding the KWSS® (Kurita Water Supply Service) lineup. On the production side, Kurita worked to
improve engineering and construction quality by enhancing its plant production-related businessprocesses and introducing and reinforcing operation of risk management systems.
Domestic orders and sales in the electronics industry decreased, following strong orders and sales forlarge-scale water treatment facility projects in the previous fiscal year, but maintenance service orders
and sales were up in line with progress in expansion and renovation construction projects to boost
production capacity at customer plants. In general industry, new orders for water treatment facilities weredown, but sales increased due to progress in large-scale orders received in the previous fiscal year. In
maintenance services, following strong performance in the previous fiscal year, orders decreased slightly
and sales increased only slightly. Orders for water treatment facilities in the electric power field were down
following orders for several large-scale projects received in the previous fiscal year, but sales were up due
to progress in these projects. In soil remediation, both orders and sales declined as several large-scale
projects were completed. Overseas, orders were up, reflecting in part strong full-year performance at
newly consolidated U.S. Water Services, but overall sales were down, reflecting strong sales for several
large-scale projects in the Chinese and South Korean electronics industry in the previous fiscal year andthe impact of the strong yen. Both domestic and overseas ultrapure water supply sales were up along withthe start of contracts for new projects, notwithstanding decreases related to contract changes with somecustomers. The cost of sales ratio improved thanks to efforts to avoid additional production-related costsin the Water Treatment Facilities business. This, together with the gain on sale of property, plant andequipment due to the partial sale of equipment in the ultrapure water supply business, led to higher
operating profit for the segment as a whole.
As a result of these factors, overall orders for the Water Treatment Facilities segment decreased 6.3%
year on year to ¥145,768 million, net sales decreased 2.6% year on year to ¥151,174 million, andoperating profit increased 12.1% year on year to ¥17,390 million.
OrdersNet Sales

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

200,000

200,000

20,000150,000

150,000

15,000100,000

100,000

10,00050,00050,000

5,000

0

0
2019

2020

0
2019

2020

2019

2020

3. Regional Segment Information
Although overseas sales in the Water Treatment Facilities segment decreased, growth in the Water
Treatment Chemicals segment drove a 7.2% year-on-year increase in sales to ¥103,107 million. The ratioof overseas sales to total consolidated sales was also up, from 37.0% in the previous fiscal year to38.9 %.

- 3 -By region, new consolidation of U.S. Water Services and Avista Technologies, Inc. significantly boosted
sales in North America, but sales in Asia declined significantly due to a decrease in sales to China andSouth Korea in both the water treatment chemicals and the water treatment facilities businesses. Lower
sales in Europe mainly reflected the sale of the aluminum compound business of Kurita Europe GmbH in
the previous fiscal year.
Overseas Sales by Region(Millions of Yen)
150,000
100,000
50,000
0
2019
Asia

2020

North America

EMEA

Others

4. Financial Position(1) Assets
Current assets were ¥162,847 million, an increase of ¥11,782 million from the end of the previous
consolidated fiscal year. This mainly reflects a ¥14,667 million increase in cash and cash equivalents dueto the partial execution of commitment lines, although funds were used primarily for business acquisitions
and capital investments.
Non-current assets were ¥224,902 million at the end of the consolidated fiscal year, a year-on-yearincrease of ¥16,468 million. The ¥5,510 million increase in right-of-use assets was mainly due to theacquisition of land use rights. The ¥3,275 million increase in goodwill reflects the newly recorded goodwill
following acquisition of water treatment chemicals operations in North America and Europe. The ¥6,513
million increase in investments accounted for using the equity method is due to the increase in thenumber of equity-method affiliates in the Water Treatment Chemicals and Water Treatment Facilities
segments.
As a result, total assets were ¥387,749 million, an increase of ¥28,249 million from the end of the previous
consolidated fiscal year.
Current Assets(Millions of Yen)

200,000

250,000
200,000

150,000

150,000

100,000

100,000
50,0000

8.0

300,000

6.0

200,000

4.0

100,000

2.0
0.0
2019

2020

Total Assets (Millions of Yen)0
2020

400,000

0

50,0002019

Total Assets andReturn on Assets

Non-current Assets(Millions of Yen)

2019

2020

Return on Assets (%)(2) Liabilities
Current liabilities were ¥94,408 million, an increase of ¥20,887 million from the end of the previous
consolidated fiscal year, primarily as trade and other payables decreased by ¥14,297 million, whileborrowings increased by ¥34,986 million due mainly to partial execution of the commitment line.
Non-current liabilities were ¥49,232 million, an increase of ¥2,439 million from the end of the previous
consolidated fiscal year. This was mainly due to a ¥4,073 million increase in lease obligations related tothe acquisition of land use rights.
As a result, total liabilities were ¥143,640 million, an increase of ¥23,325 million from the end of theprevious consolidated fiscal year.

- 4 -(3) Shareholders’ Equity
Total equity stood at ¥244,108 million, an increase of ¥4,924 million from the end of the previous fiscal
year. This was due mainly to a decrease in foreign currency translation adjustments for overseas
operating entities in line with the yen’s appreciation against foreign currencies. As a result, while othercomponents of equity decreased by ¥4,622 million, retained earnings increased by ¥11,796 million, due tothe recording of profit in excess of year-end and interim dividends.
Equity Attributable to Ownersof Parent and Equity Ratio
300,000

90.0

200,000

60.0

100,000

30.0

0

0.0
2019
2020
Equity Attributable to Owners of Parent(Millions of Yen)
Equity Ratio (%)

5. Cash Flow
Cash and cash equivalents at the end of the fiscal year totaled ¥50,215 million, an increase of ¥14,667
million from the end of the previous fiscal year.
(1) Cash Flows from Operating Activities
Net cash provided by operating activities was ¥37,376 million, a ¥3,767 million year-on-year decrease.
This was mainly due to higher income taxes paid (¥10,847 million) among other factors, despite higher
cash provided from profit before tax (¥26,691 million) and higher depreciation and amortization (¥18,700
million).
(2) Cash Flows from Investing Activities
Net cash used in investing activities was ¥43,683 million, a ¥8,219 million year-on-year decrease. The
total mainly reflects cash used for purchase of property, plant and equipment of ¥31,168 million, cashused for payments for acquisition of businesses of ¥8,501 million, and cash used for the purchase ofinvestments in associates of ¥5,915 million.
(3) Cash Flows from Financing Activities
Net cash provided by financing activities was ¥21,981 million, a net increase of ¥35,434 million from theprevious fiscal year. This mainly reflects a net increase of ¥35,001 million in short-term borrowings, which
offset the ¥6,539 million used for dividend payments.

6. Commitment LineThe Kurita Group’s basic policy is to secure the liquidity needed for business operations and maintain astable financing structure. The Group basically uses its own funds to meet short-term working capitalneeds, and also basically uses its own funds for capital investments and other investments in growthfields, while anticipating procurement through bank loans as required. At the end of the fiscal year underreview, the Group had concluded commitment line agreements with four financial institutions, withexecuted borrowings of ¥35,000 million and an unused available balance of ¥35,600 million.

7. Research and Development
The Kurita Group develops technologies to reinforce its core businesses, such as in the areas of boiler
and cooling water treatment, ultrapure water production, water and wastewater treatment, water
reclamation, and soil and groundwater remediation. The Group is also working to deepen its technologicalbase, developing analytical technology and new materials to support its core technologies. In addition, the- 5 -Group is actively developing the products and technologies needed to provide original solutions thatenhance the corporate value and competitiveness of customers and help address social issues.
Going forward, Kurita will continue to refine the water-related technology it has cultivated over many
years, aiming to realize the corporate vision of being “a creator of unique value to the solution of waterand the environment” contributing to bringing about a sustainable society. The Group’s development
centers in Japan, Germany, and Singapore are working together to proactively develop products andtechnologies that meet the wide-ranging needs of industry and society.
R&D activities are performed mainly by the Research and Development Division of Kurita Water
Industries Ltd. There are approximately 180 R&D staff across the Group, representing 2.7% of all
employees. Total R&D expenses in the fiscal year under review were ¥5,693 million, equivalent to 2.1% of
net sales.
(1) Water Treatment Chemicals
Kurita is working to develop water treatment and environmental technologies that contribute to savingenergy, reducing environmental burden, and enhancing customer productivity, as well as chemical
technologies for production processes, diagnostics, and chemical treatment control. Total R&D expenses
related to this segment were ¥2,002 million for the year.
<Major Accomplishments for the Year> In the wastewater treatment market, Kurita drew on its unique sensing technologies to develop asludge dehydrating system that automatically controls optimal chemical additive amounts to achieve
greater sludge dehydration, reducing sludge waste volume and saving labor.
 To reduce water treatment costs for cooling water systems and blowdown recovery equipment at
plants and in air conditioning equipment, Kurita developed a system that generates biocide on-site.
 Targeting the tissue paper production process particularly in emerging countries where productionlevels are growing rapidly, Kurita developed a chemical that makes it difficult for the paper to tear evenwhen wet, thereby also contributing to lower production costs.
(2) Water Treatment Facilities
Kurita is working to bring about further advances in the quality of ultrapure water to support productivity
improvements in the electronics industry, as well as developing wastewater treatments to stay ahead ofevolving environmental regulations. The Group is also working on technologies that meet the needs ofrecycling-oriented societies, such as for wastewater reclamation and reuse, waste reduction, and creating
renewable energy sources through recycling. Total R&D expenses for the segment for the fiscal year
under review were ¥3,691 million.
<Major Accomplishments for the Year> Kurita developed techniques to speed the start-up time needed to yield standard water quality when awater treatment membrane unit is newly installed or replaced in an ultrapure water production system,
significantly shortening system downtimes.
 Targeting power generation facilities that use biogas recovered through methane fermentation ofresidue food and other waste, Kurita developed an operation control technology that stably generates
methane gas from a variety of waste raw materials.
 Kurita developed a solution for treating the high-concentration soil and groundwater pollution sources
often found under plants and other structures, combining a technique to purify pollutants in a shortperiod of time through heat and other treatments with a simulation technology to predict the timeframefrom pollution to remediation.
R&D Expenses(Millions of Yen)
6,000
4,000
2,000
0
2019
2020
Water Treatment Facilities
Water Treatment Chemicals- 6 -8. Capital Expenditures
The Kurita Group is committed to making the investments needed to pursue technological innovation,
expand production capacity, and contend with intensifying competition. In the fiscal year under review,
capital expenditures totaled ¥31,729 million. This was a decrease of ¥8,274 million compared with theprevious fiscal year, including the right-of-use assets recorded for the year.
The Water Treatment Chemicals segment carried out capital expenditures totaling ¥6,423 million, mainly
to expand and upgrade existing facilities, representing a ¥2,647 million increase compared with theprevious year. In addition, the Water Treatment Facilities segment undertook capital expenditures totaling¥25,306 million, a year-on-year increase of ¥10,921 million. This mainly reflected installation andexpansion of facilities for the ultrapure water supply and tool cleaning businesses.
The Group disposed of the land and facilities of Kurita Development Center in Tochigi Prefecture in thefiscal year under review, and plans to open a new R&D center in Akishima City, Tokyo in April 2022.
In the one-year period following the fiscal year under review, the Group plans to undertake a total of ¥23
billion in capital expenditures for new construction, expansion, and renovation. In terms of equipment for
the ultrapure water supply business in particular, in light of significant fluctuations in the economy and incustomer capital investment trends, the Group had not formulated specific capital expenditure plans forindividual projects as of the end of the fiscal year under review.
Capital Expenditures

Depreciation and Amortization(Millions of Yen)

(Millions of Yen)
20,00060,00015,00040,00010,00020,000

5,000
0

0
2019

2019

2020

2020

Water Treatment Facilities

Water Treatment Facilities

Water Treatment Chemicals

Water Treatment Chemicals

9. Dividend Policy
The Kurita Group’s basic policy is to continue to payout stable dividends to shareholders.
Specifically, Kurita has set a payout ratio target of 30%-50%. The Group will work to continue dividend
increases, making decisions based on payout ratios for the most recent five years to respond flexibly toyearly fluctuations in business performance.
The Group’s basic policy is to pay dividends from capital surplus twice a year, an interim and a year-end
dividend.
The decision-making body for paying dividends from capital surplus is the General Meeting of
Shareholders for year-end dividends and the Board of Directors for interim dividends.
Regarding dividends paid from capital surplus for the fiscal year under review, in consideration of futurebusiness growth and with shareholder support, it was decided to pay a total dividend of ¥62 per share,including an interim dividend of ¥31 per share. As a result, the dividend payout ratio was 46.7% for theyear.
Regarding retained earnings, Kurita will prioritize the use of retained earnings for businesses that promise
growth areas while maintaining rigorous investment discipline. If the Group determines that capital surplus
has accumulated, it will consider the repurchase of shares, taking the share price status into account, as
well as seek to improve capital efficiency and increase returns to shareholders.

- 7 -Basic Earnings per ShareDividends per Share andDividend Payout Ratio

(Yen)
80.0

80.0

60.0

60.0

40.0

40.0

100.00

20.0

20.0

50.00

0.0

200.00150.00

0.0
2019

2020

Dividends per Share (Yen)

0.00
2019

2020

Dividend Payout Ratio (%)- 8 -Business Risks
Kurita Water Industries Ltd. and Consolidated Subsidiaries

The Executive General Manager of the Corporate Planning and Control Division is designated as theofficer in charge of monitoring risks facing the Kurita Group and promoting risk management. The officer
seeks to regularly analyze and assess risks facing Kurita Water Industries and the Kurita Group
companies, and to continue monitoring risks to prevent problems from materializing.
The following are summaries of major foreseeable risks present in the business environments in which the
Kurita Group operates. Forward-looking statements herein are based on judgments made bymanagement as of March 31, 2020.

1. Impact of the COVID-19 pandemic
Countries took measures to contain the spread of COVID-19, such as lockdowns, restrictions on
movement, and calls to stay home, putting a severe constraint on economic activities. The Group
implemented measures to prevent infection based on public directives and requests in each country, andcontinues to conduct operations that contribute to the business continuity of customers and to maintaining
social and industrial infrastructure. However, amid uncertainties regarding the duration of the pandemic
and global economic recovery, it is possible that the Group’s financial results may be affected by factors
such as a decline in customer plant utilization or delays in capital investment.

2. Economic and Market Conditions
The Group’s Water Treatment Chemicals and Water Treatment Facilities businesses are affected byeconomic conditions in Japan and countries and regions outside Japan where the Group operates.
Demand in the Water Treatment Chemicals business fluctuates in response to factory capacity utilization
rates in industries such as steel, petroleum refining and petrochemicals, and pulp and paper—the mainareas of demand for the business. Such demand fluctuations may affect the Group’s financial results.
Demand in the Water Treatment Facilities business fluctuates in response to trends in capital
expenditures in electronics—the main area of demand for the business—and other industries. Such
demand fluctuations may affect the Group’s financial results.
More intense competition with rivals in the Group’s business domains could lead to declines in prices of
products and services, which could lower the Group’s profitability.

3. Overseas Business Development
The Group is striving to expand its business outside Japan. In contrast to the Japanese market, doing
business in overseas markets involves a number of inherent risks, including the risk of changes to local
laws and regulations, the risk of political and economic instability, and the risk of foreign exchange rate
fluctuations. If such risks materialized, the Group’s financial results could be affected.

4. Product and Service Quality
Although the Group has created a quality management system and undertakes continuous improvements
to increase customer satisfaction, it is difficult to completely eliminate the risk of damage compensation
due to defects in products or services.
If liabilities materialize that exceed liability insurance coverage, it could affect the Group’s financial results.

5. Materials and Parts Procurement
The Group procures raw materials and parts from outside the Group for the manufacture of products andfabrication of facilities. The prices of raw materials and parts fluctuate based on changes in market
conditions, and this may affect the Group’s financial results.

- 9 -6. New Product Development
The Group continuously endeavors to develop new technology and appealing new products.
The success of new technology and product development efforts cannot be guaranteed. The Group may
not be able to offer new technologies or superior products, services, or solution models that meet theneeds of its customers in a timely fashion. The Group may also fail to keep pace with rapid technologicalinnovation and changing customer needs. Failure to develop superior new products, services, or solution
models could limit future growth and profitability or otherwise affect the Group's financial results.

7. Dependence on Information Systems
The Group’s use of information systems is increasing, as is the importance of information systems to theGroup’s business. If a computer virus or some other factor were to obstruct the functions of the Group’s
information systems, the Group’s business activities, financial results, and financial condition could be
negatively affected.

8. Intellectual Property
The Group recognizes the importance of intellectual property and continually seeks to register its own
intellectual property while avoiding infringing the intellectual property rights held by third parties, both inJapan and overseas. Given the wide scope of the Group’s business, however, there is potential for theGroup’s intellectual property rights to be infringed and potential for the Group to infringe the rights held by
third parties. Such occurrences may affect the Group’s financial results.

9. Impairment loss on fixed assets(1) Impairment loss on goodwill
The Kurita Group has acquired companies to obtain a foundation for overseas business as well ascompetitive technologies and business models. As a result, the current balance of goodwill exceeds 10%of consolidated total assets. Goodwill is not amortized, and is tested for impairment annually, or whenever
there are signs of possible impairment.
If, because of changes in the business environment, an acquisition does not yield expected benefits, or if
there is a difference between the estimated future cash flows obtained by the impairment test and actual
cash flows, impairment losses on goodwill or other impairment losses may occur, and may affect theGroup’s financial results and financial condition.
(2) Impairment loss on property, plant and equipment
When deciding whether to make investments, such as in ultrapure water supply equipment to be installedat customer plants, the Group carefully considers factors such as the customer’s business conditions,customer contract terms, and return on investment, before proceeding. However, in cases where acustomer withdraws from a business or suspends production, impairment losses on fixed assets may
occur, and may affect the Group’s financial results and financial condition.

10. Exchange rate fluctuations
The ratio of overseas sales to total consolidated sales in the Kurita Group has increased to nearly 40%
due to overseas acquisitions and other factors.
The local currency-denominated financial statements of each overseas subsidiary are reflected in the
consolidated financial statements after conversion to Japanese yen. Therefore, exchange rate fluctuations
may affect the Group’s business results and financial condition.

- 10 -

11. Large-Scale Natural Disasters
The Kurita Group Business Continuity Management (BCM) Policy was established in anticipation of anearthquake, typhoon, or other kind of natural disaster, and the Group conducts disaster response training
for officers and employees. However, any direct or indirect disruption to business execution could
negatively affect the Group’s business activities, financial results, and financial condition.

- 11 -

Consolidated Statement of Financial Position
Kurita Water Industries Ltd. and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen
Notes
AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Investments accounted for using equity method
Other financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets

Transition date
(April 1, 2018)

2019

2020

2020

9
10, 25, 34
11, 34
12¥60,531
89,354
2,809
8,078
2,619
163,393¥35,547
100,497
1,709
9,273
4,036
151,065¥50,215
96,974
2,562
9,247
3,847
162,847$460,688
889,669
23,504
84,83435,293
1,494,009

13
20
14
14
16
11, 3417

81,336
11,331
19,966
10,197
1,098
40,103
4,581
277
168,893

103,366
12,27443,75812,355956
28,6296,877
216
208,434

106,358
17,78447,033
13,381
7,469
28,465
4,295
113
224,902975,761
163,155
431,495
122,761
68,522
261,146
39,403
1,036
2,063,321

7¥332,287¥359,500¥387,749$3,557,330- 12 -

Thousands of
U.S. dollars

Millions of yen
Notes
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Income taxes payable
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Other financial liabilities
Retirement benefit liability
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Treasury shares
Other components of equity
Retained earnings
Equity attributable to owners of parent
Non-controlling interests
Total equity

Transition date
(April 1, 2018)

2019

2020

2020

¥40,139
2,963
2,958
12
4,737
572
10,72962,113¥49,977
385
3,818
1
5,887
1,338
12,11273,521¥35,680
35,371
4,234
219
1,998
1,557
15,345
94,408$327,339
324,504
38,8442,009
18,33014,284
140,779
866,128

19, 3420, 3419, 34
21
22
17

2,331
9,397
1,122
16,374331
547
761
30,86892,981

1,717
9,628
1,771
16,580491
1,219
15,385
46,793
120,315

1,305
13,701
2,562
16,913499
1,346
12,90349,232
143,640

11,972
125,697
23,504
155,165
4,577
12,348118,376
451,669
1,317,798

23
23
23
23
23

13,45010,959(10,943)
16,785207,005
237,257
2,048
239,305

13,45010,265(10,932)
4,838
219,660
237,282
1,902
239,184

13,4508,212(10,893)216
231,456
242,442
1,666
244,108

123,394
75,339(99,935)
1,981
2,123,449
2,224,238
15,284
2,239,522¥332,287¥359,500¥387,749$3,557,330

18, 3419, 3420, 3419, 3422

Total liabilities and equity- 13 -

Consolidated Statement of Profit or Loss
Kurita Water Industries Ltd. and Consolidated Subsidiaries

Notes
7, 25

Net sales
Cost of sales
Gross profit

Millions of yen
2019
2020
¥257,331¥264,807(174,670)(172,092)
82,661
92,715

Thousands of
U.S. dollars
2020$2,429,422(1,578,825)
850,596

Selling, general and administrative expenses
Other income
Other expenses
Operating profit

26
27
28
7

(56,994)
1,024(6,831)
19,860(66,060)
5,832(5,006)27,479(606,055)
53,504(45,926)
252,100

Finance income
Finance costs
Share of profit of investments accounted for using equity method
Profit before tax

29
29
16

781
(521)
146
20,267569(1,417)60
26,691

5,220(13,000)
550
244,871

Income tax expense
Profit17(8,279)11,987(8,378)18,312(76,862)
168,000

12,050(63)¥11,987

18,28725¥18,312167,770229$168,000

Profit attributable to
Owners of parent
Non-controlling interests
ProfitU.S. dollars

Yen
Notes
Earnings per share
Basic earnings per share
Diluted earnings per share31- 14 -

20192020¥107.33—¥162.86
—

2020
$1.49
—

Consolidated Statement of Comprehensive Income
Kurita Water Industries Ltd. and Consolidated Subsidiaries

Notes
ProfitOther comprehensive income
Items that will not be reclassified to profit or loss
Net change in fair value of financial assets measured at fairvalue through other comprehensive income
Remeasurements of defined benefit plans
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
Cash flow hedges
Share of other comprehensive income of investments
accounted for using equity method
Total of items that may be reclassified to profit or loss
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Owners of parent
Non-controlling interests
Comprehensive income- 15 -

Millions of yen
2019
2020
¥11,987¥18,312

Thousands of
U.S. dollars
2020$168,00030(1,044)(462)(4,238)

30
30

(72)
(1,116)

62
(400)

568
(3,669)30
30(4,593)308(4,316)
192(39,596)
1,761

30

(153)

(94)

(862)

30
30

(4,437)(5,554)¥6,432(4,219)(4,619)¥13,693(38,706)(42,376)$125,623¥6,543(110)¥6,432¥13,717(24)¥13,693$125,844(220)$125,623

Consolidated Statement of Changes in Equity
Kurita Water Industries Ltd. and Consolidated Subsidiaries

Notes
Balance as of April 1, 2018
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Dividends
Share-based remuneration transactions
Changes in ownership interest in subsidiaries
Transfer from other components of equity toretained earnings
Other
Total transactions with owners
Balance as of March 31, 2019
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Dividends
Share-based remuneration transactions
Changes in ownership interest in subsidiaries
Transfer from other components of equity toretained earnings
Other
Total transactions with owners
Balance as of March 31, 2020

Share capital¥13,450

Capitalsurplus¥10,959

Treasuryshares¥(10,943)

—

—

—
(2)

23
24
33

158
(294)

(558)
(694)
¥10,265

14
11¥(10,932)

—

—

—
(3)

103
(1,385)42—¥13,450(771)(2,053)¥8,212(4,699)(4,699)308
308(1,046)(1,046)

(70)
(70)

28

—
¥13,450

23
24
33

Millions of yen
Equity attributable to owners of parent
Other components of equity
Financial assets
Exchangemeasured at
differences onfair valuetranslation ofthrough other Remeasurements
foreign
Cash flow
comprehensive of defined benefit
operations
hedgesplans
income¥—¥2¥16,783¥—(6,538)70

28¥(4,671)—¥310(6,538)¥9,19970¥—(4,362)(4,362)

192
192

(462)
(462)

63
63

0

38
¥(10,893)

0¥(9,033)—¥503- 16 -

Total¥16,785—(5,507)(5,507)———28

Retainedearnings¥207,005
12,05012,050(5,968)

Total¥237,257
12,050(5,507)6,543(2)(5,968)158(265)(6,467)

6,467

—

—
(6,439)¥4,838—(4,569)(4,569)
—
—
—
0

104
604
¥219,660
18,287(439)(6,518)¥237,282
18,287(4,569)13,717(3)(6,521)145(1,385)18,287(6,521)

10

(63)

(52)

52

—

10
¥8,747

(63)
¥—

—
(52)
¥216

(21)
(6,490)¥231,456(792)(8,557)¥242,442

Noncontrollinginterests¥2,048
(63)
(47)
(110)
(38)
1
1

Total
¥239,305
11,987(5,554)6,432(2)(6,006)
159
(264)
—

(35)
¥1,902
25
(49)
(24)
(24)
8
(196)

(439)
(6,553)¥239,184
18,312(4,619)13,693(3)(6,546)154(1,581)—(211)¥1,666(792)(8,769)¥244,108

NotesBalance as of March 31, 2019
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Dividends
Share-based remuneration transactions
Changes in ownership interest in subsidiaries
Transfer from other components of equity toretained earnings
Other
Total transactions with owners
Balance as of March 31, 2020

Share capital$123,394

Capitalsurplus$94,174

Treasuryshares$(100,293)

Thousands of U.S. dollars
Equity attributable to owners of parent
Other components of equity
Financial assets
Exchangemeasureddifferencesat fair value
on translation
through other Remeasurementsof foreign
Cash flow
comprehensive of defined benefit
plans
operations
hedgesincome$(42,853)$2,844$84,394$—(40,018)(40,018)

23
24
33

1,761
1,761

(4,238)(4,238)

577
577

(27)
944
(12,706)—$123,394(7,073)(18,834)$75,339385
0

348$(99,935)0$(82,871)—$4,614- 17 -

Total$44,385—(41,917)(41,917)———0

Retainedearnings$2,015,229
167,770
167,770(59,825)

Total$2,176,899
167,770(41,917)
125,844(27)(59,825)
1,330(12,706)

91

(577)

(477)

477

—

91
$80,247

(577)
$—

—
(477)
$1,981(192)(59,541)$2,123,449(7,266)(78,504)$2,224,238

Noncontrollinginterests$17,449
229
(449)
(220)
(220)
73
(1,798)

Total$2,194,348
168,000(42,376)
125,623(27)(60,055)
1,412(14,504)—(1,935)$15,284(7,266)(80,449)$2,239,522

Consolidated Statement of Cash Flows
Kurita Water Industries Ltd. and Consolidated Subsidiaries

Note
Cash flows from operating activities
Profit before tax
Depreciation and amortization
Share of loss (profit) of investments accounted for using
equity method
Loss (gain) on sale of fixed assets
Decrease (increase) in inventories
Decrease (increase) in trade and other receivables
Increase (decrease) in trade and other payables
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Proceeds from sale and redemption of investments
Payments for acquisition of businesses (after deduction of
cash and cash equivalents included in acquired assets)
Purchase of investments in associates
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings
Repayments of lease liabilities
Dividends paid
Purchase of investments in subsidiaries not resulting inchange in scope of consolidation
Other
Net cash provided by (used in) 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 period
Cash and cash equivalents at end of period- 18 -

8, 32

24

9
9

Thousands of
U.S. dollars
2020

Millions of yen
2019
2020
¥20,267
17,872¥26,691
18,700$244,871
171,559

(146)

(60)

(550)

559
(259)
(9,059)14,504
5,815
49,553
165
712
(371)
(8,915)
41,143(2,471)(169)
4,527(1,893)
2,652
47,977
141
410
(305)
(10,847)
37,376(22,669)(1,550)41,532(17,366)
24,330440,155
1,293
3,761(2,798)(99,513)342,899(19,408)
19,999(28,600)
479(1,235)
13,335(1,951)
1,545(31,168)
5,942(1,534)
41(17,899)
14,174(285,944)
54,513(14,073)376(33,374)(8,501)(77,990)—(3,096)(51,902)(5,915)(2,140)(43,683)(54,266)(19,633)(400,761)(2,417)(594)(3,338)(6,011)35,001(384)(4,514)(6,539)321,110(3,522)(41,412)(59,990)(1,094)(1,588)(14,568)3(13,453)

7
21,98164
201,660(771)(24,984)
60,531¥35,547(1,006)
14,66735,547¥50,215(9,229)134,559
326,119$460,688

Notes to Consolidated Financial Statements
Kurita Water Industries Ltd. and Consolidated Subsidiaries

1. Reporting entity
Kurita Water Industries Ltd. (the “Company”) is a stock company located in Japan, which lists its shareson the Tokyo Stock Exchange. The registered addresses of its head office and major offices are disclosed
on its official website (https://www.kurita.co.jp/english/).
The Company’s consolidated financial statements consists of the Company and its consolidated
subsidiaries (together, the “Group”).
The major businesses of the Group are the water treatment chemicals business and the water treatment
facilities business. Details regarding these businesses are provided in Note 7. “Segment information.”

2. Basis of preparation(3) Compliance with IFRS and matters concerning first-time adoption of IFRSThe consolidated financial statements of the Group are prepared in compliance with International
Financial Reporting Standards (IFRS), pursuant to the provisions of Article 93 of the Regulation on
Terminology, Forms, and Preparation Method of Consolidated Financial Statements (Ministry of Finance
Order No. 28 of 1976), as the Group meets the requirements for a “specified company complying withdesignated international accounting standards” set forth in Article 1-2 of the said regulation.
The consolidated financial statements of the Group were approved by Michiya Kadota, President andRepresentative Director, on June 29, 2020.
The Group has adopted IFRS for the first time from the consolidated fiscal year ended March 31, 2020,
and the date of transition to IFRS is April 1, 2018. The impact of the transition to IFRS on the Group’s
financial position, operating results and cash flows on the transition date and in the comparative fiscal
years are stated in Note 39. “First-time adoption.”With the exception of IFRS not adopted early and exemptions allowed pursuant to the provisions of IFRS
1 “First-time Adoption of International Financial Reporting Standards” (hereinafter “IFRS 1”), theaccounting policies of the Group are in compliance with IFRS effective as of March 31, 2020. The
exemptions that have been applied are stated in Note 39. “First-time adoption.”(4) Basis for measurement
As stated in Note 3. “Significant accounting policies,” the consolidated financial statements of the Group
have been prepared based on acquisition cost, with the exception of specified financial instruments, etc.,
measured at fair value.
(5) Functional currency and presentation currency
The consolidated financial statements of the Group are presented in Japanese yen, which is the functional
currency of the Company. Amounts are presented in millions of yen, with fractional amounts less than one
million yen rounded down to the nearest million yen.
The translation of yen amounts as of or for the year ended March 31, 2020 into U.S. dollars is included
solely for the convenience of readers and has been made, as a matter of arithmetical computation only, atthe rate of ¥109 to US$1, the prevailing rate on the Tokyo Foreign Exchange Market on March 31, 2020.
The translation should not be construed as a representation that yen amounts have been, could havebeen or could in the future be converted into U.S. dollars at the above or any other rate.

- 19 -

3. Significant accounting policies
The consolidated financial statements of the Group are prepared based on the financial statements of theCompany, its consolidated subsidiaries and its associates using unified accounting policies.
(1) Basis for consolidation
1) Subsidiaries
A subsidiary is a company that is controlled by the Group. When the Group is exposed, or has rights, tovariable returns from its involvement with the company and has the current ability to affect those returns
through its power over the company, the Group considers that it controls the company.
The financial statements of a subsidiary are included in the consolidated financial statements from thedate the Group gains control until the date when it ceases to control the subsidiary.
If accounting policies adopted by a subsidiary differ from that adopted by the Group, appropriate
adjustments are made to the financial statements of the subsidiary, as necessary.
Intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
entities of the Group and profits or losses resulting from intragroup transactions that are recognized in
assets, are eliminated in full in preparing the consolidated financial statements.
The comprehensive income of subsidiaries is attributed to owners of parent and non-controlling interests,
even if the balance of non-controlling interests is negative.
When the Group has disposed of part of the ownership interests in the subsidiary; and it still continues tocontrol a subsidiary, such transaction is accounted for as an equity transaction.
Differences between the adjustment of non-controlling interests and the fair value of the consideration arerecognized directly in equity as equity attributable to owners of parent.
If the Group loses control of a subsidiary, the gain or loss associated with the loss of control is recognizedin profit or loss.
When the end of the reporting period of a subsidiary is different from that of the Company, the subsidiary’s
additional financial information as of the same date of that of the Company, which is prepared forconsolidation purpose, is used for the consolidation.
2) Associates
An associate is a company over which the Group has significant influence. When the Group has thepower to participate in the financial and operating policy decisions of an investee but it is not control orjoint control of those policies, the Group considers that it has a significant influence over the company.
Investment in an associate is accounted for using the equity method from the date the Group comes tohave significant influence until the date when it loses significant influence.
When applying the equity method, if an associate uses accounting policies other than those adopted in
the consolidated financial statements, appropriate adjustments are made to the associate’s financial
statements in preparing the consolidated financial statements to ensure conformity with the accounting
policies of the Group.
The consolidated financial statements include investments in associates whose end of the reporting
period is different from that of the Company since it is impracticable to unify their reporting periods withthat of the Company due to reasons such as their relationships with other shareholders. Adjustments are
made for the effects of significant transactions or events that occur during the period resulting from thedifference in the reporting period. The date of the end of the reporting period of these associates
accounted for using the equity method is December 31.
Profits resulting from transactions with an associate accounted for using the equity method that arerecognized in assets, are deducted from investment in associates to the extent of the Group's ownershipinterests in the associate. Losses resulting from transactions with an associate that are recognized in
assets are deducted from investment in associates in the same manner unless the losses indicate an
impairment that requires recognition in the consolidated financial statements.

- 20 -

(2) Business combinations
The Group accounts for each business combination by applying the acquisition method.
The consideration transferred in a business combination is measured at fair value, which is calculated as
the sum of the acquisition-date fair values of the assets transferred by the acquirer, the liabilities assumed
and the equity instruments issued by the Group in exchange for control of the acquiree. If theconsideration transferred exceeds the net of the amounts of the identifiable assets acquired and theliabilities assumed measured at their acquisition-date fair values, the Group recognizes the excess as
goodwill in the consolidated statement of financial position. Conversely, if the consideration is less than
the net of the fair values, the difference is immediately recognized as income in the consolidated
statement of profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period inwhich the business combination occurs, provisional amounts are used for the accounting, and theprovisional amounts recognized are adjusted during a measurement period of within one year from theacquisition date.
Acquisition-related costs incurred are recognized as expenses.
The additional acquisition of non-controlling interests after control of an acquiree is obtained is accounted
for as an equity transaction and no goodwill is recognized from such transaction.
The Group has applied the exemptions set out in IFRS 1 and has not retrospectively applied IFRS 3“Business Combinations” to business combinations before the date of transition to IFRS.
Therefore, goodwill that resulted from business combinations before the date of transition to IFRS isrecorded at the carrying amount as of the date of transition to IFRS under Japanese GAAP.
(3) Foreign currency translation
The consolidated financial statements of the Group are presented in Japanese yen, which is the functional
currency of the Company. Each company in the Group determines its own functional currency, and thetransactions of each company are measured in its functional currency.
Foreign currency transactions are translated into the functional currency at the average exchange rateduring the period unless the exchange rate fluctuates significantly during such period. Foreign currency
monetary assets and liabilities are translated using the closing rate as of each reporting period. Exchange
differences arising from such translations and settlements are recognized in profit or loss. However,exchange differences arising from financial assets measured at fair value through other comprehensive
income and cash flow hedges are recognized in other comprehensive income.
For foreign operations, assets and liabilities of are translated into Japanese yen at the closing rate at theend of each reporting period, and income and expenses are translated into Japanese yen at the averageexchange rate during the period unless the exchange rate fluctuates significantly during such period. All
resulting exchange differences are recognized in other comprehensive income. On the disposal of aforeign operation, the cumulative amount of the exchange differences related to such foreign operation
are reclassified from equity to profit or loss in the period of the disposal.
Having applied the exemptions set out in IFRS 1, the Group has deemed the cumulative amount of theexchange differences to be zero at the date of transfer to IFRS and reclassified all such differences toretained earnings.
(4) Financial instruments
1) Financial assets(i) Initial recognition and measurement
The Group classifies financial assets as fair value through profit or loss, fair value through othercomprehensive income, or measured at amortized cost. This classification is determined at initialrecognition of the assets. The Group recognizes a financial asset at the date when the Group becomesparty to the contract of the financial instruments.

- 21 -

A financial asset is classified as financial assets measured at amortized cost if both of the following
conditions are met; otherwise it is classified as financial assets measured at fair value:・ The financial asset is held within a business model whose objective is to hold financial assets in order
to collect contractual cash flows
・ The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
With regard to financial assets measured at fair value, with the exception of equity instruments held for
trading which must be measured at fair value through profit or loss, each equity instrument is designatedto be measured at fair value through profit or loss, or to be measured at fair value through othercomprehensive income, and such designation is applied on a continuous basis.
All financial assets, unless classified as measured at fair value through profit or loss, are measured attheir fair value plus transaction costs that are directly attributable to the financial assets.
(ii) Classification and subsequent measurement
After initial recognition, financial assets are measured based on their classification as follows:(a) Financial assets measured at amortized cost
Financial assets measured at amortized cost are measured at amortized cost using the effective
interest method.
(b) Other financial assets
Financial assets other than those measured at amortized cost are measured at fair value.
Subsequent changes in the fair value of financial assets measured at fair value are recognized as
profit or loss.
However, for investments in equity instruments that are designated to be measured at fair value throughother comprehensive income, subsequent changes in their fair value are recognized in othercomprehensive income, and if they are derecognized or their fair value has declined significantly, theamount previously recognized in other comprehensive income is reclassified to retained earnings.
Dividends from that investment are recognized in profit or loss.
(iii) Derecognition
A financial asset is derecognized when the rights to receive benefits from the financial asset expire or thefinancial asset is transferred or substantially all of the risks and rewards of ownership of the financial asset
are transferred.
2) Impairment of financial assets
Under IFRS 9 “Financial Instruments” (hereinafter “IFRS 9”), the Group estimates expected credit losses
for financial assets that are subject to the impairment requirements of IFRS 9 at each reporting date andrecognizes an allowance for doubtful accounts for such expected credit losses.
After initial recognition, expected credit losses are measured at the reporting date for each category offinancial assets as follows:Stage 1 Financial assets for which credit risk has not increased significantly since initial recognition:
12-month expected credit losses
Stage 2 Financial assets for which credit risk has increased significantly since initial recognition but
no credit impairment has been identified:
Lifetime expected credit losses
Stage 3 Credit-impaired financial assets:
Lifetime expected credit losses
The Group directly reduces the carrying amount of a financial asset when its future recovery cannot berealistically expected and all collateral on the financial asset is enforced or all collateral on thefinancial asset is enforced or transferred to the Group.

- 22 -

The Group determines that the credit risk on a financial asset has increased significantly since initialrecognition if contractual payments are more than 60 days past due, that a financial instrument is indefault if payments are more than one year past due, and that a financial asset is credit-impaired if at
least one of the following events occurs:・ Significant financial difficulty for the issuer or obligor;
・ A breach of contract, such as a default or delinquency in interest or principal payment;
・ The creditor, for economic or legal reasons relating to the debtor’s financial difficulty, granting to thedebtor a concession that the creditor would not otherwise consider;・ It has become probable that the debtor will enter bankruptcy or other financial reorganization;
・ The disappearance of an active market for that financial asset because of financial difficulties; or・ Substantial discounts on a purchased or originated financial asset that reflects the incurred credit
losses.
The Group evaluates stage 1 financial instruments on a collective basis and stage 2 and 3 financial
instruments on an individual basis.
12-month and lifetime expected credit losses are measured using reasonable and supportable information
about past events, current conditions and forecasts of future economic conditions that is available without
undue cost or effort at the end of the reporting period.
When an event that has an adverse impact on the estimated future cash flows of credit-impaired financial
assets that were purchased or originated has occurred, that is, there is evidence that their credit is
impaired, at initial recognition, for such purchased or originated credit-impaired financial assets, thecumulative changes in expected credit losses over their remaining life subsequent to initial recognition arerecognized as an allowance for doubtful accounts at the reporting date.
3) Financial liabilities(i) Initial recognition and measurement
The Group classifies financial liabilities as fair value through profit or loss or measured at amortized cost.
This classification is determined at initial recognition of the financial liabilities.
All financial liabilities are initially measured at fair value, while financial liabilities measured at amortizedcost are measured at their fair vale minus transaction costs that are directly attributable to the financial
liabilities.
(ii) Classification and subsequent measurement
After initial recognition, financial liabilities are measured based on their classification as follows:(a) Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at fair value through profit or loss are subsequently measured at fairvalue after initial recognition, and any gain or loss arising from remeasurements is recognized as
profit or loss.
(b) Financial liabilities measured at amortized cost
Financial liabilities measured at amortized cost are measured at amortized cost using the effective
interest method after initial recognition. Amortization using the effective interest method and any
gain or loss on derecognition are recognized as profit or loss in the consolidated statement of profit
or loss.
(iii) Derecognition
A financial liability is derecognized when the obligation is discharged or cancelled or expires.
4) Offsetting financial instruments
A financial asset and a financial liability are offset and the net amounts are presented in the consolidated
statement of financial position only when the Group currently has a legally enforceable right to set off therecognized amounts and intends either to settle on a net basis, or to realize the asset and settle theliability simultaneously.

- 23 -

5) Derivatives and hedge accounting
The Group uses derivatives, such as foreign exchange contracts and currency swap contracts, to hedge
currency risks and interest rate risks. Derivatives are classified into financial assets measured at fair value
through profit or loss and financial liabilities measured at fair value through profit or loss. Derivatives thatmeet the requirements for hedge accounting are designated as hedging instruments and hedge
accounting is applied.
For the adoption of hedge accounting, the Group formally designates and documents the hedging
relationship and the risk management objectives and strategies at the inception of the hedge. The
documentation includes the details of the hedging instruments, the hedged items, the nature of the risks
being hedged and the method of assessing hedge effectiveness. The Group assesses the hedging
relationship on an ongoing basis with respect to whether the hedging relationship will be effective in the
future.
The Group applies cash flow hedges to interest rate-related derivative transactions that meet therequirements for hedge accounting.
The portion of the changes in fair value of hedging instruments of cash flow hedges that is determined to
be an effective hedge is recognized in other comprehensive income, and is accumulated as othercomponents of equity until the hedged transaction is executed and recognized in profit or loss. The
ineffective portion is recognized as profit or loss.
The amount that has been accumulated in other components of equity related to hedging instruments is
reclassified to profit or loss when a hedged transaction affects profit or loss.
If a hedged transaction results in the recognition of non-financial assets or liabilities, the amounts thathave been accumulated in other components of equity are accounted for as an adjustment to the initialcost of the non-financial assets or liabilities.
When forecast transactions are no longer expected to occur, hedge accounting is discontinued, and any
cumulative gains and losses that have been accumulated in other components of equity are reclassified to
profit or loss. Even if hedge accounting is discontinued, when hedged future cash flows are expected tooccur, the amount that has been accumulated as other components of equity by the time of
discontinuation of hedge accounting continues to be recognized in other components of equity until such
future cash flows occur.
The Group does not apply fair value hedges or hedges of net investments in foreign operations.
6) Fair value of financial instruments
For fair value of financial instruments that are traded in active markets as of each fiscal year-end, quoted
market prices or dealer prices are referred to.
Fair value of financial instruments for which there is no active market is calculated using appropriate
valuation techniques.
(5) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits withdrawable at any time and short-term,
highly liquid investments with a maturity of three months or less from the acquisition date that are readily
convertible to cash and which are subject to an insignificant risk of change in value.
(6) Inventories
The cost of inventories includes all costs of purchase, costs of conversion and all other costs incurred inbringing the inventories to their present location and condition.
Inventories are measured at the lower of cost and net realizable value. The cost is principally assigned byusing the moving average method. Net realizable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and estimated costs necessary to sell.

- 24 -

(7) Property, plant and equipment
The cost model is applied to property, plant and equipment and they are measured at cost lessaccumulated depreciation and accumulated impairment losses.
The cost includes any costs directly attributable to the acquisition of the asset, as well as costs of
dismantling, removal, and restoration.
Except for assets that are not subject to depreciation, such as land, each asset is depreciated over its
estimated useful life using the straight-line method (however, some assets, such as equipment for
research and development, are depreciated using the diminishing balance method).
The estimated useful lives of major asset items are as follows:・ Buildings and structures: 2 – 65 years;
・ Machinery, equipment and vehicles: 4 – 10 years
Estimated useful lives and depreciation methods, etc., are reviewed at each fiscal year-end, and if any
changes occur, they are amended prospectively as changes in accounting estimates.
(8) Goodwill and intangible assets
1) Goodwill
The Group measures goodwill as the amount of the consideration transferred that is measured at theacquisition-date fair value, including the recognized amount of non-controlling interests in an acquiree,less the net of the acquisition-date amounts (usually fair value) of identifiable assets acquired andliabilities assumed.
Goodwill is not amortized. Goodwill is allocated to cash-generating units identified based on the region inwhich the business is conducted and the type of business and is tested for impairment annually or
whenever there is any indication of impairment.
Impairment losses on goodwill are recognized in the consolidated statement of profit or loss, and they are
not reversed in a subsequent period.
Goodwill is presented at the amount of acquisition cost less accumulated impairment losses.
2) Intangible assets
The cost model is applied to intangible assets, and such assets are measured at cost less accumulated
amortization and accumulated impairment losses.
A separately acquired intangible asset is measured initially at cost. The cost of an intangible asset
acquired in a business combination is measured at fair value at the acquisition date.
Expenditure on internally generated intangible assets, with the exception of an intangible asset arisingfrom development that meets the recognition criteria, is recognized as expense when it is incurred.
An intangible asset with finite useful life is amortized over its estimated useful life using the straight-line
method.
Estimated useful lives and amortization methods for intangible assets with finite useful lives are reviewed
at each fiscal year-end, and if any changes occur, they are amended prospectively as changes inaccounting estimates.
The estimated useful lives of major intangible assets with finite useful lives are as follows:
・ Software: 5 years;
・ Customer-related assets: 8 -16 years
An intangible asset with indefinite useful life and an intangible asset not yet available for use are notamortized and are instead tested for impairment annually or whenever there is any indication of
impairment for each individual asset or each cash-generating unit.

- 25 -

(9) Leases
For lease transactions as a lessee, at the commencement date of the lease, the Group measures a rightof-use asset at cost and a lease liability at the present value of the lease payments that are not paid atthat date.
A right-of-use asset is depreciated over the shorter of its useful life or its lease term using the straight-line
method.
Lease payments are apportioned to finance costs and repayments of lease liabilities using the effective
interest method, and finance costs are recognized in the consolidated statement of profit or loss.
However, for short-term leases with a lease term of 12 months or less and leases for which the underlying
assets are of low value, right-of-use assets and lease liabilities are not recognized, and the total lease
payments are recognized as an expense on either a straight-line basis over the lease term or anothersystematic basis.
(10) Impairment of non-financial assets
The Group assesses at the end of each reporting period whether there is any indication of impairment foreach asset. If there is any indication that an asset may be impaired or if the asset is required to test for
impairment at least annually, the Group estimates the recoverable amount of the asset. If it is not possible
to estimate the recoverable amount of the individual asset, the Group estimates the recoverable amountof the cash-generating unit to which the asset belongs.
The recoverable amount of an asset or cash-generating unit is measured at the higher of its fair value lesscosts of disposal or its value in use. When the carrying amount of the asset or cash-generating unit
exceeds its recoverable amount, impairment losses for the asset are recognized and the carrying amountis reduced to its recoverable amount.
Value in use is determined as estimated future cash flows that are discounted to the present value, using
a pre-tax discount rate that reflects the current market assessments of the time value of money, the risks
specific to the asset and other factors. In calculating fair value less costs of disposal, an appropriate
valuation model is used, supported by available indicators of fair value.
For an asset other than goodwill, the Group assesses whether there is any indication that an impairment
loss recognized in the prior periods for the asset may no longer exist or may have decreased, such as any
changes in the assumptions used to calculate the recoverable amount of the asset. If any such indication
exists, the Group estimates the recoverable amount of the asset or cash-generating unit. When therecoverable amount exceeds the carrying amount of the asset or cash-generating unit, impairment losses
are reversed up to the lower of the calculated recoverable amount and the carrying amount lessdepreciation and amortization, in the case where no impairment losses have been recognized in the priorperiods.
(11) Employee benefits
1) Post-employment benefits
The Group implements defined benefit plans and defined contribution plans as its employees’ postemployment benefit program.
The Group determines the present value of its defined benefit obligations and the related current service
cost and prior service cost using the projected unit credit method.
The discount rate is determined by reference to market yields at the end of the reporting period on highquality corporate bonds corresponding to the discount period, which is determined based on the period up
to the expected benefit payment date in each future reporting period.
Remeasurements of defined benefit liability (asset) are recognized collectively as other comprehensive
income in the period of their occurrence, and are immediately reclassified from other components ofequity to retained earnings.

- 26 -

Prior service cost is amortized over the average period until benefits are vested using the straight-line
method, while if the benefit has already been vested immediately after the introduction or change of thedefined benefit plan, the prior service cost is recognized as profit or loss in the period in which it wasincurred.
Contributions for retirement benefits under defined contribution plans are recognized as expenses at thetime of contribution.
2) Short-term employee benefits
The Group recognizes the undiscounted amount of short-term employee benefits as an expense when an
employee has rendered related service.
For bonus plans and paid absences, the Group recognizes the amount estimated to be paid under theapplicable plan as liabilities when the Group has legal or constructive obligations to make such payments
and reliable estimates of the obligations can be made.
(12) Share-based payment
The Group has introduced a performance-linked stock compensation program. The consideration forservices received under the program is measured by reference to the fair value of the Company's shareson the grant date or is measured at the fair value of the incurred liabilities, and is recognized as an
expense over the corresponding period, while the same amount is recognized as an increase in capitalsurplus or liabilities.
The details of the program are provided in “Overview of performance-linked stock compensation program”
in Note 33. “Share-based payment.”(13) Provisions
The Group recognizes a provision when the Group has a present obligation (legal or constructive) as aresult of a past event, it is highly probable that the Group will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Where the effect of the time value of money is material, the provision is measured at the present value ofthe expenditures expected to be required to settle the obligation. For calculation of the present value, apre-tax discount rate that reflects the current market assessment of the time value of money and risks
specific to the liability is used.
(14) Revenue
1) Revenue from contracts with customers
For revenue from contracts with customers, the Group identifies the contract with a customer, identifies
the performance obligations in the contract at contract inception, determines the transaction price,
allocates the transaction price to the performance obligations in the contract, and recognizes the revenue
when the Group satisfies a performance obligation.
A performance obligation is satisfied when control of the goods or services associated with an identified
performance obligation is transferred to the customer.

- 27 -

Revenue from contracts with customers is classified into the following:・ Revenue from sales of products
For product sales contracts with customers, revenue is recognized when the product is delivered tothe customer.
The consideration under the product sales contract is collected within a reasonable period after thetime of delivery of the product to the customer and includes no significant financial component.
Consumption taxes, value-added taxes, etc., are deducted from the transaction price when the Groupis found to act as an agent of the taxation authority in the transaction, taking into comprehensive
consideration the laws and regulations as well as the actual situation regarding transactions in eachcountry. An amount substantially equivalent to the discount from the sales price under the contract witha customer is deducted from transaction price.
The Group has no significant obligations to return goods or to refund.
・ Technology revenue
Technology revenue is recognized on an accrual basis in accordance with the substance of therelevant contractual arrangements. The Group earns revenue under the contracts that allow third
parties to manufacture and sell its products and use its technologies.
2) Interest revenue
Interest revenue is calculated by using the effective interest method.
For the financial assets described in (4) Financial instruments 2) Impairment of financial assets, interest
revenue is recognized by using the effective interest method as follows, for each category of financial
assets:Stage 1 and stage 2 financial assets:
Carrying amount before deducting allowance for doubtful accounts × effective interest rate
Stage 3 financial assets:
Carrying amount after deducting allowance for doubtful accounts × effective interest rate
Purchased or originated credit-impaired financial assets:
Carrying amount after deducting allowance for doubtful accounts × credit-adjusted effective interest
rate3) Dividends
Dividends are recognized when the shareholders' rights to receive payment are established.
(15) Government grants
Government grants are recognized at fair value when there is reasonable assurance that the Group willcomply with the conditions attaching to them and that the grants will be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which theGroup recognizes as expense the related costs for which the grants are intended to compensate.
Government grants related to assets are deducted from the carrying value of the assets.
(16) Income taxes
Income tax expense in the consolidated statement of profit or loss is presented as the aggregate amountof current tax and deferred tax.
Income taxes are recognized as profit or loss, except for the tax arising from items that are recognized inother comprehensive income or directly in equity, and the tax arising from business combinations.

- 28 -

Current taxes are measured at the amount expected to be paid to or recovered from the taxation
authorities.
The amount of these taxes is calculated using the tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting period.
Deferred taxes are recognized related to the temporary differences between the carrying amount of anasset and a liability at the end of the period for accounting purposes and its tax base.
A deferred tax asset is recognized for deductible temporary differences, unused tax credits and unused
tax losses to the extent that it is probable that taxable profits will be available against which they can beutilized. A deferred tax liability is recognized, in principle, for all taxable temporary differences.
However, deferred tax assets or liabilities are not recognized for the following temporary differences
deferred taxes arises from:・ The initial recognition of goodwill;
・ The initial recognition of an asset or a liability in a transaction which is not a business combination
and affects neither accounting profit nor taxable profit (tax loss) at the time of the transaction;
・ For deductible temporary differences arising from investments in subsidiaries and associates andinterests in joint arrangements when it is probable that the temporary differences will not reverse in
the foreseeable future or it is not probable that taxable profits will be available against which thetemporary differences can be utilized; or・ For taxable temporary differences associated with investments in subsidiaries and associates andinterests in joint arrangements when the timing of the reversal of temporary differences can becontrolled and it is probable that the temporary differences will not reverse in the foreseeable future.
At the end of each reporting period, the Group reassesses unrecognized deferred tax assets andrecognizes a previously unrecognized deferred tax asset to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled, based on tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset only if the Group has a legally enforceable right to set off
current tax assets against current tax liabilities and related income taxes are levied by the same taxation
authority on the same taxable entity.
The income tax expense for each quarter is calculated based on an estimated yearly effective tax rate.
(17) Equity
1) Ordinary shares
For ordinary shares issued by the Company, the total issue price of the shares is recorded in share capitaland capital surplus, and transaction costs, net of related tax effects, are deducted from capital surplus.
2) Treasury shares
Treasury shares are measured at cost and deducted from equity. No gain or loss is recognized in profit orloss on the purchase, sale or cancellation of treasury shares. The difference between the carrying amountand the consideration received from the sale is recognized in equity.
3) Put options granted to non-controlling shareholders
The Company has granted, to non-controlling shareholders, put options related to interests in Kurita
Fracta Holdings, Inc., a consolidated subsidiary of the Company. If the contractual conditions are met,
option holders are allowed to sell shares in Kurita Fracta Holdings, Inc. to the Company at the exercise
price determined in accordance with the contractual conditions, and the Company must make payments if
the options are exercised. The present values of such possible payments are initially recognized as
financial liabilities and the same amounts are deducted from capital surplus. Changes in the fair value offinancial liabilities subsequent to initial recognition are recognized as capital surplus. If the options expire
without being exercised, the financial liabilities are derecognized and reclassified to capital surplus.

- 29 -

(18) Earnings per share
Basic earnings per share are calculated by dividing profit or loss attributable to common shareholders of
the parent by the weighted average number of common shares outstanding, after adjusting for treasury
shares, during the period.

4. Significant accounting estimates and judgments
In preparing the consolidated financial statements of the Group, the management is required to makejudgments, estimates and assumptions that affect the application of accounting policies and the disclosureof reported amounts of income, expenses, assets and liabilities. However, actual results may differ fromthese estimates.
The estimates and their underlying assumptions are reviewed on a continuous basis. The impact of thesereviews on estimates and assumptions are recognized in the period in which the estimates orassumptions are reviewed, the reporting period, and subsequent reporting periods.
In the application of the accounting policies, estimates and judgments that may have a significant effecton the amounts recognized in the consolidated financial statements of the Group are as follows:・ Impairment of non-financial assets（Note 3. “Significant accounting policies (10) Impairment of non-financial assets”）
・ Impairment of goodwill and intangible assets（Note 3. “Significant accounting policies (8) Goodwill and intangible assets”）
・ Useful lives of intangible assets（Note 3. “Significant accounting policies (8) Goodwill and intangible assets”）
・ Recoverability of deferred tax assets（Note 3. “Significant accounting policies (16) Income taxes”）
・ Provisions（Note 3. “Significant accounting policies (13) Provisions”）
・ Measurement of defined benefit obligations（Note 3. “Significant accounting policies (11) Employee benefits”）
・ Fair value of financial instruments（Note 3. “Significant accounting policies (4) Financial instruments”）
・ Revenue（Note 3. “Significant accounting policies (14) Revenue”）(Additional information)
The spread of the coronavirus disease 2019 (COVID-19) is an event that has had a wide-reaching effecton the economy and corporate activities, and the Group is also suffering from impacts, including adecrease in net sales. It is difficult to reasonably predict the future spread of the disease, or when the
spread would converge. Therefore, the Group has made accounting estimates, including impairment tests
for goodwill and intangible assets, based on the assumption that, according to information, etc., fromexternal sources, the spread of COVID-19 is likely to begin to subside by the end of September of thisyear, although its remaining impact will continue to affect the economy in the fiscal year ending March 31,
2021.
If a revision should become necessary, it may have a significant impact on the amounts to be recognizedin the consolidated financial statements from the fiscal year ending March 31, 2021 onward.

- 30 -

5. New standards not yet appliedWith respect to the standards or interpretations newly issued or amended by the date of the approval of
the consolidated financial statements, the Group has not applied them early as of March 31, 2020.
The impact of the application is not stated herein, due to its immateriality.

6. Additional information
At a meeting of the Board of Directors held on January 30, 2020, the Company resolved to establish a
new research and development base (new global technology center) in Akishima-shi, Tokyo in April 2022.
The existing research and development base, the functions of Kurita Global Technology Center (Nogimachi, 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 wasconcluded 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 of leading-edge technologies andtotal 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 researchand development facility that is open to society, where new innovations are created through interactions
with customers and other stakeholders.
(2) Overview of the new global technology center
Name
Location

New Research and Development Facility (tentative name), New
Multi-Functional Facility (tentative name)
Parts of 3993-1 and 3993-8 Aza Kohake, Haijima-cho,Akishima-shi, Tokyo

Site area

30,381.37㎡

Total floor area

38,075㎡

Construction of the buildings(planned)
Construction cost

New Research and Development Facility:
A five-story building and other structures
New Multi-Functional Facility:
A three-story building
Approximately ¥30 billion ($275,229 thousand)(The Company’s own funds and debt financing)

Commencement ofconstruction

May 2020

Completion of construction

March 2022 (planned)

Opening (commencement ofoperation)

April 2022 (planned)- 31 -

7. Segment information(1) Overview of reportable segments
The Company’s reportable segments are components of the Group about which separate financial
information is available. These segments 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 and services that it handles in Japan andoverseas and conducts business accordingly. The Group’s operations are therefore classified into tworeportable segments, the Water Treatment Chemicals business and the Water Treatment Facilities
business.
The Water Treatment Chemicals business manufactures and sells water treatment chemicals andequipment and provides maintenance services. The Water Treatment Facilities business manufacturesand sells water treatment equipment and facilities, provides ultrapure water, chemical cleaning, toolcleaning, soil and groundwater remediation services, and provides maintenance services that encompass
operation, maintenance, and management of water treatment facilities.
(2) Information on reportable segments
Fiscal year ended March 31, 2019
Millions of yen

2019
Net sales
Sales to external customers
Intersegment sales
Total
Segment profit
Finance income
Finance costs
Share of profit of investments accounted
for using equity method

Reportable segments
Water
Water
treatment
treatmentchemicals
facilities¥102,126785
102,912
4,258¥155,204
1,526
156,731
15,518

Total¥257,331
2,312
259,643
19,776

Adjustments(Notes)¥—(2,312)(2,312)
83¥257,331—
257,331
19,860
781
(521)
146

Profit before tax
Segment assets

Consolidated¥20,267¥115,017¥200,975¥315,993¥43,507¥359,500

Other items
Depreciation and amortization¥4,502¥13,369¥17,872¥—¥17,872
Impairment losses
1,171
—
1,171
—
1,171
Investments accounted for using equity
method
875
53
929
26
956
Capital expenditures
4,182
37,071
41,254—
41,254
Notes 1. Adjustments to segment profit include the elimination of inter-segment transactions, etc.
2. Segment profit presents the amount of operating profit.
3. Adjustments to segment assets include the elimination of inter-segment transactions, etc., and consist mainlyof corporate assets unallocated to reportable segments.
4. Capital expenditures include an increase in right-of-use assets.
5. Capital expenditures do not include assets acquired through business acquisitions.

- 32 -

Fiscal year ended March 31, 2020
Millions of yen

2020
Net sales
Sales to external customers
Intersegment sales
Total
Segment profit
Finance income
Finance costs
Share of profit of investments accounted
for using equity method

Reportable segments
Water
Water
treatment
treatmentchemicals
facilities¥113,632
681
114,313
10,127¥151,174
1,777
152,952
17,390Total¥264,807
2,458
267,265
27,518Adjustments(Notes)¥—(2,458)(2,458)(38)

Other items
Depreciation and amortization
Impairment losses
Investments accounted for using equity
methodCapital expenditures

2020
Net sales
Sales to external customers
Intersegment sales
Total
Segment profit
Finance income
Finance costs
Share of profit of investments accounted
for using equity method¥26,691¥119,960¥209,015¥328,975¥58,774¥387,749¥5,496—¥13,204
29¥18,700
29¥——¥18,700
29

2,489
6,853

4,960
26,4287,449
33,281

20—

7,469
33,281Thousands of U.S. dollars
Reportable segments
Water
Water
treatment
treatment
Adjustments
chemicals
facilities
Total(Notes)Consolidated$1,042,495
6,247
1,048,743
92,908$1,386,917
16,302
1,403,229
159,541$2,429,422
22,5502,451,972
252,458$—(22,550)(22,550)(348)$2,429,422—
2,429,422
252,100
5,220(13,000)
550

Profit before tax
Segment assets¥264,807—
264,80727,479569(1,417)
60

Profit before tax
Segment assets

Consolidated$244,871$1,100,550$1,917,568$3,018,119$539,211$3,557,330

Other items
Depreciation and amortization$50,422$121,137$171,559$—$171,559
Impairment losses
—
266
266
—
266
Investments accounted for using equity
method22,83445,504
68,339183
68,522
Capital expenditures
62,871
242,458
305,330—
305,330
Notes 1. Adjustments to segment profit include the elimination of inter-segment transactions, etc.
2. Segment profit presents the amount of operating profit.
3. Adjustments to segment assets include the elimination of inter-segment transactions, etc., and consist mainlyof corporate assets unallocated to reportable segments.
4. Capital expenditures include an increase in right-of-use assets.
5. Capital expenditures do not include assets acquired through business acquisitions.

- 33 -

(3) Information about products and services
This information is omitted since the classification of products and services herein follows the sameclassification as used for reportable segments.
(4) Information about geographical areas
Non-current assets and net sales to external customers by geographical areas are as follows:
1) Non-current assets
Millions of yen

Thousands of
U.S. dollars

Transition date
(April 1, 2018)
2019
2020
2020
Japan
¥78,360¥101,896¥110,963$1,018,009
Asia
21,026
18,833
17,446160,055
North America
4,080
35,18640,161
368,449
EMEA
18,876
15,48015,695
143,990
Other
711
573
405
3,715
Total
¥123,056¥171,970¥184,671$1,694,229
Note Non-current assets are allocated based on the location of assets, and financial instruments or deferred tax assets are notincluded. EMEA refers to the European, Middle Eastern and African regions.

2) Net sales
Thousands ofMillions of yen
U.S. dollars
2019
2020
2020
Japan
¥161,212¥161,699$1,483,477
Asia
66,52052,509481,733
North America
5,589
28,826
264,458
EMEA
21,297
19,132
175,522
Other
2,711
2,639
24,211
Total¥257,331¥264,807$2,429,422
Note Net sales are allocated to a country or areas based on the locations of customers. EMEA refers to the European, Middle
Eastern and African regions.

(5) Information about major customers
This information is omitted since there is no single external customer that accounts for 10% or more of the net sales
in the consolidated statement of profit or loss.

- 34 -

8. Business combinations and Acquisition of non-controlling interests
Fiscal year ended March 31, 2019
(Acquisition of Fracta, Inc. and Fracta)
On May 31, 2018, the Group acquired 60.63% (fully diluted basis: 50.1%) of the shares with voting rights
of Fracta, Inc. (currently Kurita Fracta Holdings, Inc.). Through the investment in Fracta, Inc., the Groupalso acquired Fracta, a wholly owned subsidiary of Fracta, Inc. Fracta, Inc. develops software services topredict the deterioration of water pipes utilizing AI and ML at Fracta. The Group will create and expand
new digital businesses utilizing IoT and AI in the fields of water and the environment by acquiring theadvanced technologies and know-how in AI and ML of Fracta, Inc. and applying them to the water
treatment technologies and services of the Company.
(1) Assets acquired and liabilities assumed
The fair value of identifiable assets acquired and liabilities assumed of Fracta, Inc. and Fracta as of theacquisition date are as follows:
2019
Fair value of consideration (cash)
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents
Other current assets
Non-current assets
Other current liabilities
Fair value of assets acquired and liabilities assumed (net)Non-controlling interests
Goodwill

Millions of yen¥3,968
1,778
15
43
(142)
1,694
783
¥3,057

Non-controlling interests are measured at their ownership interests of the fair value of the identifiable net
assets of the acquiree.
The amount of goodwill occurred was ¥3,057 million, which reflects expected excess earning power. For
goodwill, the Group does not expect any amount that can be deductible for tax purposes.
Net sales and profit of Fracta, Inc. and Fracta, which are included in the consolidated statement of profit
or loss for the fiscal year ended March 31, 2019, are immaterial.
Pro forma information, under the assumption that the business combination was conducted at the
beginning of the fiscal year ended March 31, 2019, is not stated here, as its effect on the consolidated
statement of profit or loss is immaterial.
(2) Transactions that are accounted for separately from business combination
Acquisition-related costs were ¥177 million. The amount is recorded in other expenses in the consolidated
statement of profit or loss.

- 35 -

(Acquisition of Global Water Services Holding Company, Inc., U.S. Water Services, Inc. and two othercompanies)
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 UnitedStates, 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 Group also acquired
U.S. Water Services, Inc., a wholly owned subsidiary of Global Water Services Holding Company, and twoother companies.
The Group aims to significantly expand its overseas businesses by establishing platforms in four regions
around the world – Japan, Asia, Europe and the Americas. This investment is made as a part of its
strategy of strengthening business in the United States, a strategic market. The Group will also acceleratebusiness development in the United States by establishing even closer relationships with customers
through the development of the service contract business model making full use of IT and sensing by
combining the Group’s products, with their competitive advantage and highly unique services such as
pure water supply and wastewater reclamation, into the solid customer base and sales channels of U.S.
Water Services, Inc.
(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 as of the acquisition date are as
follows:
2019
Fair value of consideration (cash)
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents
Trade receivables
Other current assets
Trade and other payables
Non-current assets
Other current liabilities
Fair value of assets acquired and liabilities assumed (net)
Goodwill

Millions of yen¥30,630
429
2,870
1,525
5,085
(1,930)(644)
7,335¥23,295

In the fourth quarter of the fiscal year ended March 31, 2020, the amount of goodwill as of the acquisition
date increased by ¥5,613 million, due to finalization of the provisional accounting process. This was
mainly attributable to a decrease of ¥5,160 million in intangible assets.
The amount of goodwill occurred was ¥23,295 million, which reflects expected excess earning power. For
goodwill, the Group does not expect any amounts that can be deductible for tax purposes.
Net sales and profit of Global Water Services Holding Company, Inc., U.S. Water Services, Inc. and twoother companies, which are included in the consolidated statement of profit or loss for the fiscal year
ended March 31, 2019, are immaterial.
Pro forma information, under the assumption that the business combination was conducted at the
beginning of the fiscal year ended March 31, 2019, is not stated here, as its effect on the consolidated
statement of profit or loss is immaterial.
(2) Transactions that are accounted for separately from business combination
Acquisition-related costs were ¥958 million. The amount is recorded in other expenses in the consolidated
statement of profit or loss.

- 36 -

Fiscal year ended March 31, 2020
(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., awholly owned subsidiary of the Company, on May 15, 2019. Through the investment in Avista
Technologies, Inc., the Group also acquired 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 and sales company of water treatment chemicals in the United
Kingdom, through Kurita Europe GmbH, a wholly owned subsidiary of the Company.
Avista Technologies specializes in reverse osmosis (RO) chemicals that are applied to RO membranes,
one of the components of water treatment facilities, among water treatment chemicals. It manufacturesand sells a wide variety of RO chemicals. Avista Technologies also develops services including RO
membrane cleaning and has many customers in a broad range of industrial fields including mining,chemical, oil, marine oilfields, food, beverages and local governments, mainly in the United States. Avista
Technologies (UK) develops similar businesses in EMEA (Europe, the Middle East and Africa) throughlicensing from Avista Technologies. The Group will bolster the product lineup of RO chemicals by
combining RO chemicals of Avista Technologies and distinctive RO chemicals of the Company and willseek to expand sales of RO chemicals by proposing a wider range of products to all customers. The
Group will also strengthen its RO membrane-related services by sharing the technologies and know-how
of the both companies.
(1) Assets acquired and liabilities assumed
The fair value of identifiable assets acquired and liabilities assumed of Avista Technologies, Inc. andAvista Singapore Pte Ltd. as of the acquisition date are as follows:
2020
Fair value of consideration (cash)
Fair value of assets acquired and liabilities assumed
Cash and cash equivalents
Trade receivables
Other current assets
Non-current assets
Trade and other payables
Non-current liabilities
Fair value of assets acquired and liabilities assumed (net)
Goodwill

Millions of yen¥7,615

Thousands of
U.S. dollars$69,862

248
341
142
3,244
(666)
(50)
3,259
¥4,355

2,275
3,128
1,302
29,761(6,110)(458)
29,899$39,954In the fourth quarter of the fiscal year ended March 31, 2020, the amount of goodwill as of the acquisition
date decreased by ¥2,858 million ($26,220 thousand), due to finalization of the provisional accounting
process. This was mainly attributable to an increase of ¥1,764 million ($16,183 thousand) in intangible
assets.
The amount of goodwill that occurred was ¥4,355 million ($39,954 thousand), which reflects expectedexcess earning power. The Group expects that some amount of the recognized goodwill can be
deductible for tax purposes.

- 37 -

The fair value of identifiable assets acquired and liabilities assumed of Avista Technologies (UK) Ltd. as of
the acquisition date are as follows:
2020
Fair value of consideration (cash)
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

Millions ofyen¥1,889Thousands of
U.S. dollars$17,330

957
223
723
(256)
(141)
1,505
¥383

8,779
2,045
6,633
(2,348)(1,293)13,807$3,513In the fourth quarter of the fiscal year ended March 31, 2020, the amount of goodwill as of the acquisition
date decreased by ¥578 million ($5,302 thousand), due to finalization of the provisional accounting
process. This was mainly attributable to an increase of ¥702 million ($6,440 thousand) in intangible
assets.
The amount of goodwill that occurred was ¥383 million ($3,513 thousand), which reflects expected excess
earning power. For goodwill, the Group does not expect any amounts that can be deductible for tax
purposes.
Net sales and profit of Avista Technologies, Inc., Avista Technologies (UK) Ltd., and Avista Singapore PteLtd., which are included in the consolidated statement of profit or loss for the fiscal year ended March 31,
2020, are immaterial.
Pro forma information, under the assumption that the business combination was conducted at the
beginning of the fiscal year ended March 31, 2020, is not stated here, as its effect on the consolidated
statement of profit or loss for the fiscal year ended March 31, 2020, is immaterial.
(2) Transactions that are accounted for separately from business combination
Acquisition-related costs were ¥325 million ($2,981 thousand). The amount is recorded in other expenses
in the consolidated statement of profit or loss.

- 38 -

Business combinations of entities or businesses under common control(1) Outline of the transaction
1) Company names and businesses at the time of business combination(i) Surviving company
Name:
U.S. Water Services, Inc.
Business: Manufacture, sale, and export and import of water treatment chemicals, manufacture, sale,design, building, and maintenance of water treatment equipment, and operation andmaintenance of water treatment facilities(ii) Merged companies
Name:
Kurita America, Inc.
Business: Manufacture and sale of water treatment chemicals, manufacture and sale of water
treatment equipment, and operation and maintenance of water treatment facilities
Name:
Business:

Fremont Industries, LLC
Manufacture and sale of water treatment chemicals

Name:
Business:

Global Water Services Holding Company, Inc.
Holding company of U.S. Water Services, Inc.

2) Date of business combination
March 31, 2020
3) 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.
4) Name of the company after business combination
The company name after the business combination became Kurita America Inc. on April 1, 2020.
5) 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 orbusinesses involved are ultimately controlled by the same company before and after the businesscombination. The control is not temporary. The Group continues to perform accounting treatment basedon carrying the amount for all business combination transactions under common control.

- 39 -

9. Cash and cash equivalents
The breakdown of cash and cash equivalents is as follows:
Thousands of
U.S. dollars

Millions of yen
Transition date
(April 1, 2018)¥60,531—¥60,531

Cash and deposits
Short-term investments
Total

2019
¥34,319
1,228¥35,5472020¥49,140
1,074¥50,215

2020$450,825
9,853$460,688

The balance of cash and cash equivalents in the consolidated statement of financial position matches thatin the consolidated statement of cash flows.

10. Trade and other receivables
The breakdown of trade and other receivables is as follows:
Millions of yen

Thousands of
U.S. dollars

Transition date
(April 1, 2018)
2019
2020
2020
Notes and accounts receivable - trade¥64,499¥69,117¥69,338$636,128
Accounts receivable - other
345
747
2,839
26,045Contract asset
24,12730,15324,218222,183
Lease receivables
872
1,049
1,067
9,788
Allowance for doubtful accounts
(489)
(568)
(489)
(4,486)
Total¥89,354¥100,497¥96,974$889,669
Notes 1. In the consolidated statement of financial position, trade and other receivables are presented in the amountafter deduction of allowance for doubtful accounts.
2. With the exception of lease receivables, trade and other receivables are classified as financial assets
measured at amortized cost.

11. Other financial assets(1) Breakdown of other financial assets
The breakdown of other financial assets is as follows:
Millions of yen

Thousands of
U.S. dollars

Transition date
(April 1, 2018)
2019
2020
2020
Shares¥34,748¥21,960¥21,002$192,678
Insurance funds
1,780
2,779
3,463
31,770
Leasehold deposits
1,288
1,441
1,708
15,669Time deposits
2,413
1,030
2,062
18,917
Other
2,681
3,126
2,791
25,605
Total¥42,912¥30,339¥31,027$284,651
Current assets¥2,809¥1,709¥2,562$23,504
Non-current assets
40,10328,62928,465
261,146
Notes 1. In the consolidated statement of financial position, other financial assets are presented in the amount after
deduction of allowance for doubtful accounts.
2. Insurance funds, shares, and time deposits and leasehold deposits are classified as financial assets measured
at fair value through profit or loss, financial assets measured at fair value through other comprehensive income
and financial assets measured at amortized cost, respectively. Other consists primarily of financial assets measured
at amortized cost.

- 40 -

(2) Financial assets measured at fair value through other comprehensive income
Major equity instruments and their fair values, of financial assets measured at fair value through othercomprehensive income, are as follows:
Thousands of
U.S. dollars

Millions of yen

Transition date
Name of shares(April 1, 2018)
2019
2020
2020
Daikin Industries, Ltd.
¥8,303¥6,425¥6,524$59,853
ONO PHARMACEUTICAL CO., LTD.
9,083
4,485
5,141
47,165Yakult Honsha Co., Ltd.
2,768
2,722
2,248
20,623Shin-Etsu Chemical Co., Ltd.
1,967
1,659
1,918
17,596
Tokio Marine Holdings, Inc.
1,975
1,118
1,032
9,467
Note Shares are held primarily for business relationship purposes, and are therefore designated as financial assets measured
at fair value through other comprehensive income.

The Group sells (derecognizes) financial assets measured at fair value through other comprehensive
income in order to ensure the efficient and effective use of the assets it holds.
Fair values at the time of sales and cumulative gain or loss on disposal recognized as othercomprehensive income in equity are as follows:
Millions of yen
2019
2020
¥22,011¥41

Thousands of
U.S. dollars
2020
$376

Fair value
Cumulative gain or loss on disposal recognized as other comprehensive
income in equity
8,676
28
256
Note Cumulative gain or loss on disposal recognized as other comprehensive income in equity are reclassified to retained
earnings when the assets are sold or when their fair value declines significantly.

12. Inventories
The breakdown of inventories is as follows:
Thousands of
U.S. dollars

Millions of yen

Finished goods
Work in process
Raw materials and supplies
Total

Transition date
(April 1, 2018)¥4,2571,000
2,820¥8,078- 41 -

2019¥5,001
1,092
3,179¥9,2732020¥5,0381,291
2,917¥9,247

2020$46,220
11,844
26,761$84,834

13. Property, plant and equipment
Changes in carrying amount, acquisition cost, accumulated depreciation and impairment losses ofproperty, plant and equipment are as follows:
1) Carrying amountMillions of yen
Buildings
andstructures¥12,000
395

Machineryandvehicles¥42,912531

Land¥15,333
107

Constructionin progress¥8,01534,496

Other¥3,074862

Total¥81,336
36,394438(2,557)
(161)
4,568

1,277
(8,963)
(39)
8,648

22
—
(879)
—

—
—
(21)
(14,354)152(1,162)
(61)
1,042

1,890
(12,683)(1,164)
(93)

(369)
5
¥14,319
321(1,266)(492)¥42,608891(55)—¥14,527—(63)
15¥28,088
18,158(103)
14¥3,822715(1,856)(456)¥103,366
20,08584(1,713)(29)(1,698)8,832

28(9,094)—(163)
28,712———(1,725)—————(38,840)

7(1,399)
—
(23)
1,244

119
(12,207)(29)(3,610)
(50)

(313)
44
¥19,847(737)(14)¥62,231(176)—¥12,624(29)—¥7,376(78)(11)¥4,277(1,333)19¥106,358

Buildings
andstructures$131,366
2,944

Machineryandvehicles$390,899
8,174

Other
Balance as of March 31, 2019$35,064
Individual acquisition
6,559
Acquisition through businesscombination
770
256
—
—
64
Depreciation (Note)(15,715)(83,431)——(12,834)
Impairment loss
(266)
—
—
—
—
Sale or disposal(15,577)(1,495)(15,825)—(211)
Reclassification to other account81,027
263,412—(356,330)
11,412
Exchange differences ontranslation of foreign
operations(2,871)(6,761)(1,614)
(266)
(715)
Other
403
(128)
—
—
(100)
Balance as of March 31, 2020
$182,082$570,926$115,816$67,669$39,238
Note Depreciation of property, plant and equipment is included in cost of sales and selling, general andadministrative expenses in the consolidated statement of profit or loss.

Total$948,311
184,266

Balance as of April 1, 2018
Individual acquisition
Acquisition through businesscombination
Depreciation (Note)
Sale or disposal
Reclassification to other accountExchange differences ontranslation of foreign
operations
Other
Balance as of March 31, 2019
Individual acquisition
Acquisition through businesscombination
Depreciation (Note)
Impairment loss
Sale or disposal
Reclassification to other accountExchange differences ontranslation of foreign
operations
Other
Balance as of March 31, 2020

Thousands of U.S. dollars- 42 -Land$133,275—

Constructionin progress$257,688
166,587

1,091(111,990)(266)(33,119)(458)(12,229)
174$975,761

2) Acquisition cost
Millions of yen

Balance as of April 1, 2018
Balance as of March 31, 2019
Balance as of March 31, 2020

Buildings
andstructures¥64,119¥66,091¥48,956

Machineryandvehicles¥137,498¥144,892¥171,861

Balance as of March 31, 2020

Buildings
andstructures$449,137

Machineryandvehicles$1,576,706

Land¥15,823¥15,018¥13,122

Constructionin progress¥8,015¥28,088¥7,376Other¥15,389¥16,608¥17,509

Total¥240,847¥270,698¥258,826

Other$160,633

Total$2,374,550

Other¥12,314¥12,786¥13,232

Total¥159,510¥167,332¥152,468

Other$121,394

Total$1,398,788

Thousands of U.S. dollars
Land$120,385

Constructionin progress$67,6693) Accumulated depreciation and impairment losses
Millions of yen

Balance as of April 1, 2018
Balance as of March 31, 2019
Balance as of March 31, 2020

Buildings
andstructures¥52,119¥51,771¥29,109

Machineryandvehicles¥94,586¥102,284¥109,630

Balance as of March 31, 2020

Buildings
andstructures$267,055

Machineryandvehicles$1,005,779

Land
¥490
¥490
¥497

Constructionin progress
¥—
¥—
¥—

Thousands of U.S. dollars- 43 -

Land$4,559Constructionin progress$—14. Goodwill and intangible assets(1) Table of changes
Changes in carrying amount, acquisition cost, accumulated amortization and impairment losses of
goodwill and intangible fixed assets are as follows:
1) Carrying amount

Balance as of April 1, 2018
Individual acquisition
Acquisition throughbusiness combination
Amortization (Note)
Impairment loss
Sale or disposal
Exchange differences ontranslation of foreign
operations
Other changes
Balance as of March 31,
2019
Individual acquisition
Acquisition throughbusiness combination
Amortization (Note)
Exchange differences ontranslation of foreign
operations
Other changes
Balance as of March 31,
2020

Goodwill¥19,966—

Millions of yen
Customerrelated
Softwareassets¥2,094¥4,503
1,229
—

Other
¥3,5996

Total¥30,164
1,235

26,352—(1,171)
—

5
(770)
—
(3)

2,873
(610)
—
—

239
(894)
—
(249)

29,471(2,274)(1,171)(252)(1,389)
—

(3)
31

(199)
23

(15)
495

(1,606)517¥43,758—¥2,582
1,515¥6,591—¥3,181
18¥56,113
1,534

4,739
—

—
(886)

2,167
(940)

363
(1,059)7,269(2,882)(1,464)
—

0
96

(228)
65

(20)
(65)

(1,712)
96¥47,033¥3,307¥7,655¥2,418¥60,415

Thousands of U.S. dollars
Customerrelated
SoftwareassetsOther$23,688$60,467$29,183
13,899—165

Goodwill
Total
Balance as of March 31, 2019
$401,449$514,798
Individual acquisition—
14,073Acquisition throughbusiness combination
43,477—
19,8803,330
66,688
Amortization (Note)—(8,128)(8,623)(9,715)(26,440)
Exchange differences ontranslation of foreign
operations(13,431)0(2,091)(183)(15,706)
Other changes
—
880
596
(596)
880
Balance as of March 31, 2020
$431,495$30,339$70,229$22,183$554,266
Note Amortization of intangible assets is included in cost of sales and selling, general and administrative expenses
in the consolidated statement of profit or loss.

- 44 -

2) Acquisition cost

Balance as of April 1, 2018
Balance as of March 31, 2019
Balance as of March 31, 2020

Balance as of March 31, 2020

Millions of yen
Customerrelated
assets¥5,840¥8,425¥10,308

Goodwill¥19,966¥44,929¥48,204

Software¥11,099¥12,337¥13,694

Other¥5,344¥5,236¥4,686

Total¥42,250¥70,929¥76,894

Goodwill$442,238

Thousands of U.S. dollars
Customerrelated
SoftwareassetsOther$125,633$94,568$42,990

Total$705,449

Millions of yen
Customerrelated
assets¥1,337¥1,834¥2,652

3) Accumulated amortization and impairment losses

Balance as of April 1, 2018
Balance as of March 31, 2019
Balance as of March 31, 2020

Balance as of March 31, 2020

Goodwill¥—¥1,171¥1,171

Software¥9,004¥9,755¥10,387

Other¥1,745¥2,054¥2,268Total¥12,086¥14,815¥16,479

Goodwill$10,743

Thousands of U.S. dollars
Customerrelated
SoftwareassetsOther$95,293$24,330$20,807

Total$151,183(2) Impairment tests for goodwill
The carrying amount of the goodwill allocated to each cash-generating unit is as follows:
Thousands of
U.S. dollars

Millions of yen
Reportable segments
Water Treatment Chemicals
Water Treatment Facilities
Total

Transition date
(April 1, 2018)¥19,966—¥19,966

2019¥35,3858,373¥43,758

2020¥38,823
8,210¥47,0332020$356,174
75,321$431,495

Among the aforementioned amounts, significant carrying amounts for the fiscal year ended March 31,
2020 were ¥10,405 million ($95,458 thousand) for Kurita Europe GmbH (Water Treatment Chemicals
business), ¥4,322 million ($39,651 thousand) for Hansu Co., Ltd. (Water Treatment Chemicals business),¥4,324 million ($39,669 thousand) for Avista Technologies, Inc. (Water Treatment Chemicals business),¥19,409 million ($178,064 thousand) for U.S. Water Services, Inc. (Water Treatment Chemicals
business), ¥5,144 million ($47,192 thousand) for U.S. Water Services, Inc. (Water Treatment Facilities
business) and ¥3,066 million ($28,128 thousand) for Kurita Fracta Holdings, Inc. (Water Treatment
Facilities business).

- 45 -

Impairment tests for major goodwill are performed as follows:
1) Kurita Europe GmbH (Water Treatment Chemicals business)
The recoverable amount is measured at value in use, and is calculated by discounting to the present
value the estimated cash flows for five years, based on a business plan that was created reflecting pastexperience and external information and approved by the management. The pre-tax discount rate used in
the calculation is 6.9%, which is based on the weighted average cost of capital for the cash-generating
unit. Cash flows for the period not covered by the business plan are estimated based on the long-term
average growth rate for the market in which the cash-generating unit is operating. The long-term average
growth rate used in the calculation was 1.0%. Since the recoverable amount exceeds the carrying
amount, no impairment loss was recognized for the fiscal year ended March 31, 2020.
2) Hansu Co., Ltd. (Water Treatment Chemicals business)
The recoverable amount is measured at value in use, and is calculated by discounting to the present
value the estimated cash flows for five years, based on a business plan that was created reflecting pastexperience and external information and approved by the management. The pre-tax discount rate used in
the calculation is 14.6%, which is based on the weighted average cost of capital for the cash-generating
unit. Since the recoverable amount exceeds the carrying amount, no impairment loss was recognized forthe fiscal year ended March 31, 2020.
3) Avista Technologies, Inc. (Water Treatment Chemicals business)
The recoverable amount is measured at value in use, and is calculated by discounting to the present
value the estimated cash flows for three years, based on a business plan that was created reflecting pastexperience and external information and approved by the management. The pre-tax discount rate used in
the calculation is 9.8%, which is based on the weighted average cost of capital for the cash-generating
unit. Cash flows for the period not covered by the business plan are estimated based on the long-term
average growth rate for the market in which the cash-generating unit is operating. The long-term average
growth rate used in the calculation was 2.3%. Since the recoverable amount exceeds the carrying
amount, no impairment loss was recognized for the fiscal year ended March 31, 2020.
4) U.S. Water Services, Inc. (Water Treatment Chemicals business and Water Treatment Facilities
business)
The recoverable amount is measured at value in use, and is calculated by discounting to the present
value the estimated cash flows for three years, based on a business plan that was created reflecting pastexperience and external information and approved by the management. The pre-tax discount rate used in
the calculation is 9.7%, which is based on the weighted average cost of capital for the cash-generating
unit. Cash flows for the period not covered by the business plan are estimated based on the long-term
average growth rate for the market in which the cash-generating unit is operating. The long-term average
growth rate used in the calculation was 2.3%. Since the recoverable amount exceeds the carrying
amount, no impairment loss was recognized for the fiscal year ended March 31, 2020.
5) Kurita Fracta Holdings, Inc. (Water Treatment Facilities business)
The recoverable amount is measured at value in use, and is calculated by discounting to the present
value the estimated cash flows for five years, based on a business plan that was created reflecting pastexperience and external information and approved by the management. The pre-tax discount rate used in
the calculation is 17.2%, which is based on the weighted average cost of capital for the cash-generating
unit. Cash flows for the period not covered by the business plan are estimated based on the long-term
average growth rate for the market in which the cash-generating unit is operating. The long-term average
growth rate used in the calculation was 2.5%. Since the recoverable amount exceeds the carrying
amount, no impairment loss was recognized for the fiscal year ended March 31, 2020.

- 46 -

15. Impairment losses for non-financial assets
Business assets are grouped mainly by segment and idle assets are grouped by individual property.
Fiscal year ended March 31, 2019
To reduce constraints on production associated with tighter regulations on companies that produce
hazardous chemicals in densely populated districts in China, the Group has decided to transfer the
production function of water treatment chemicals of Kurita Water Industries (Jiangyin) Co., Ltd. to theplant of Kurita Water Industries (Taixing) Co., Ltd., which is scheduled to be constructed. As a result, theentire amount of the goodwill of ¥1,171 million is recorded in other expenses as an impairment loss
because recoverability is no longer recognized. The impairment loss is recognized in the Water Treatment
Chemicals business.
Fiscal year ended March 31, 2020
This information is omitted due to the absence of material matters.

16. Investments accounted for using equity method(1) Material associates
Not applicable.
(2) Individually immaterial associates(i) The carrying amount of investments in individually immaterial associates is as follows:
Thousands of
U.S. dollars

Millions of yen

Total carrying amountTransition date
(April 1, 2018)¥1,098

2019
¥956

2020
¥7,4692020$68,522(ii) The aggregate amount of the Group’s share of profit and comprehensive income of individually
immaterial associates is as follows:
Millions of yen
2019
2020
Share of:
ProfitOther comprehensive income
Comprehensive income

¥146
(153)
¥(6)

- 47 -

¥60
(94)
¥(34)

Thousands of
U.S. dollars
2020
$550
(862)
$(311)

17. Income taxes(1) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities, classified by primary cause, are as follows:
Fiscal year ended March 31, 2019
Millions of yen

2019

Deferred tax assets
Depreciation
Net defined benefit liability
Accrued bonuses to employees
Accrued paid absences
The carryforward of unused tax losses
Unrealized gain on the sale of fixed assets
Other
Total deferred tax assets
Deferred tax liabilities
Financial assets measured at fair value
through other comprehensive income
Tax effects related to retained earnings offoreign subsidiaries
Other
Total deferred tax liabilities
Net

Recognized inothercomprehensive
incomeApril 1, 2018

Recognizedthrough
profit or loss

¥6,504
4,664
732
598
498
505
1,778
15,282¥(145)
48
(10)
8
(214)
(13)
(671)
(998)

¥—
41
—
—
—
—
(28)
12

¥—
—
—
2
256
—
263
522

¥6,359
4,754
722
609
540
491
1,341
14,8186,593—(2,651)

—

3,941

1,366
3,289
11,248¥4,033

225
(725)
(500)
¥(498)—
250(2,401)¥2,414—813
813¥(291)

1,591
3,627
9,160
¥5,658March 31,
2019

Other

Fiscal year ended March 31, 2020
Millions of yen

2020

Deferred tax assets
Depreciation
Net defined benefit liability
Accrued bonuses to employees
Accrued paid absences
The carryforward of unused tax losses
Unrealized gain on the sale of fixed assets
Other
Total deferred tax assets
Deferred tax liabilities
Financial assets measured at fair value
through other comprehensive income
Tax effects related to retained earnings offoreign subsidiaries
Other
Total deferred tax liabilities
Net

Recognized inothercomprehensive
incomeApril 1, 2019

Recognizedthrough
profit or loss

¥6,359
4,754
722
609
540
491
1,341
14,818¥(3,784)
51
21
46
221
(11)
290
(3,164)

¥—
(53)
—
—
—
—
(14)
(68)

¥—
—
—
—
—
—
1,091
1,091

¥2,575
4,751
743
655
762
479
2,707
12,677

3,941

—

42

—

3,984

1,591
3,627
9,160
¥5,65889343
432¥(3,597)

—
(24)
18
¥(86)

—
116
116
¥974

1,680
4,062
9,728
¥2,949- 48 -March 31,
2020

Other

Thousands of U.S. dollars

2020

Deferred tax assets
Depreciation
Net defined benefit liability
Accrued bonuses to employees
Accrued paid absences
The carryforward of unused tax losses
Unrealized gain on the sale of fixed assets
Other
Total deferred tax assets
Deferred tax liabilities
Financial assets measured at fair value
through other comprehensive income
Tax effects related to retained earnings offoreign subsidiaries
Other
Total deferred tax liabilities
Net

April 1, 2019

Recognizedthrough
profit or loss

$58,339
43,614
6,623
5,587
4,954
4,504
12,302
135,944$(34,715)
467
192
422
2,027
(100)
2,660
(29,027)

36,155
14,59633,27584,036$51,908

Recognized inothercomprehensive
incomeOther

March 31,
2020

$—
(486)
—
—
—
—
(128)
(623)

$—
—
—
—
—
—
10,00910,009$23,623
43,587
6,816
6,009
6,990
4,394
24,834
116,302—385—

36,550

816
3,146
3,963
$(33,000)

—
(220)
165
$(788)

—
1,064
1,064
$8,935

15,41237,26689,247$27,055(2) Unrecognized deferred tax assets
The following are deductible temporary differences, the carryforward of unused tax losses (breakdown by
expiration) and unused tax credits (breakdown by expiration) for which no deferred tax assets arerecognized in the consolidated statement of financial position. Amounts hereunder are presented on a tax
amount basis.
Thousands of
U.S. dollars

Millions of yen

Deductible temporary differences
The carryforward of unused tax losses
Less than 1 year
1 year or more and less than 5 years
5 years or more
Total

Transition date
(April 1, 2018)¥3,4142019¥4,5172020¥5,4662020$50,146

¥—
—
—
¥—

¥—
—
2,141
¥2,141¥3
3
2,028¥2,034$27
27
18,605$18,660

¥—
—
—
¥—

¥—
—
—
¥—

¥—
—
—
¥—

$—
—
—
$—

The carryforward of unused tax credits
Less than 1 year
1 year or more and less than 5 years
5 years or more
Total(3) Unrecognized deferred tax liabilities
The total amount of temporary differences related to investments in subsidiaries, etc., that are notrecognized as deferred tax liabilities as of the date of transition to IFRS, March 31, 2019 and 2020, are¥24,408 million, ¥24,666 million and ¥26,003 million ($238,559 thousand), respectively. When the Group
is capable of controlling the timing of the reversal of temporary differences and the temporary differences
will not reverse within the foreseeable future, no deferred tax liability related to such temporary differences
is recognized.

- 49 -

(4) Income taxes recognized through profit or loss
The breakdown of income taxes recognized through profit or loss is as follows:
Millions of yen
2019
2020
¥7,472¥4,724807
3,654¥8,279¥8,378Current income taxes
Deferred income taxes
Total

Thousands of
U.S. dollars
2020$43,339
33,522$76,862(5) Reconciliation of the effective tax rate
Below is a breakdown of the principal items that caused a difference between the statutory effective tax
rate and the average effective tax rate. The Company is primarily subject to corporate tax, inhabitants’ tax
and enterprise tax. The statutory effective tax rate calculated based on these taxes is 30.6%. Foreignsubsidiaries are subject to income taxes, etc., in their respective countries of domicile.
Domestic statutory effective tax rate
Items permanently not tax deductible, such as entertainment expenses
Items permanently not taxable, such as dividend income
Increase (decrease) in unrecognized deferred tax assets
Tax credits
Difference in tax rates applied to foreign subsidiaries
Other
Average effective tax rate

2019
30.6%
1.0%
(0.1%)
12.8%(1.7%)(2.5%)
0.7%
40.8%

2020
30.6%
0.9%
(0.1%)(0.9%)(0.6%)(1.5%)
3.0%
31.4%

18. Trade and other payables
The breakdown of trade and other payables is as follows:
Millions of yen
Transition date
(April 1, 2018)
2019
2020
Notes and accounts payable - trade¥28,396¥26,784¥24,016
Accounts payable - other
9,136
18,606
5,752
Contract liabilities
2,606
4,586
5,912
Total
¥40,139¥49,977¥35,680
Note Trade and other payables are classified as financial liabilities measured at amortized cost.

- 50 -

Thousands of
U.S. dollars
2020$220,330
52,77054,238$327,339

19. Borrowings and other financial liabilities(1) Breakdown of borrowings
The breakdown of borrowings is as follows:
Millions of yen

Thousands of
U.S. dollars

Average
2019
2020
2020
interest rate
Due date
Short-term borrowings¥2,531¥—¥35,001$321,110
0.3%
Current portion of long-term borrowings
432
385
370
3,394
3.1%
Long-term borrowings
2,331
1,717
1,305
11,972
3.5% 2021-2027
Total¥5,295¥2,103¥36,677$336,486
Current liabilities¥2,963¥385¥35,371$324,504
Non-current liabilities
2,331
1,717
1,305
11,972
Total¥5,295¥2,103¥36,677$336,486
Notes 1. The average interest rate is calculated using interest rates and balances as of March 31, 2020.
2. Borrowings are classified as financial liabilities measured at amortized cost.
3. The borrowings have no financial covenants that have a significant effect on the financial activities of theGroup.
Transition date
(April 1, 2018)(2) Breakdown of other financial liabilities
The breakdown of other financial liabilities is as follows:
Millions of yen
Transition date
(April 1, 2018)

Thousands of
U.S. dollars

2019
2020
2020
Long-term guarantee deposits¥1,122¥1,145¥1,164$10,678
Put options granted to non-controllingshareholders
—
626
1,397
12,816
Other
12
1
219
2,009
Total
¥1,134¥1,773¥2,781$25,513
Current liabilities
¥12
¥1
¥219
$2,009Non-current liabilities
1,122
1,771
2,562
23,504
Total¥1,134¥1,773¥2,781$25,513
Notes 1. Long-term guarantee deposits are classified as financial liabilities measured at amortized cost.
2. Put options granted to non-controlling shareholders are classified as financial liabilities measured at fair value
through profit or loss.

(3) Bonds
Not applicable.

- 51 -

20. Leases
Lease as lessee
The Group mainly leases buildings and structures, machinery, equipment and vehicles and land. Leaseterms mainly range from one year to 30 years, while the average interest rate that is applied to leaseliabilities is 1.3%. There are no significant purchase options, escalation clauses, or restrictions imposed
under lease agreements (including restrictions on dividends, additional borrowings and additional leases).
In domestic businesses in particular, lease agreements for buildings mostly allow the lessee to repeatedly
exercise an extension option and also include an early cancellation option only if cancellation is noticed inwriting to the counterparty no later than six months in advance. Only those lease payments corresponding
to the period during which the exercise of such options was reasonably expected with certainty areincluded in the measurement of lease liabilities.
1) Right-of-use assets
Thousands of
U.S. dollars

Millions of yen

Transition date
(April 1, 2018)
2019
2020
2020
Buildings and structures¥7,519¥8,449¥6,175$56,651
Machinery and vehicles
1,058
1,322
1,584
14,532
Other
2,752
2,502
10,024
91,963
Total¥11,331¥12,274¥17,784$163,155
Note The increases in right-of-use assets for the fiscal years ended March 31, 2019 and 2020 were ¥3,623 million and¥11,660 million ($106,972 thousand), respectively. Other consists primarily of land for a new research and developmentbase (new global technology center) in Akishima-shi, Tokyo, and increased by ¥7,065 million ($64,816 thousand) for the
fiscal year ended March 31, 2020.

2) Expenses from lease
Millions of yen
2019
2020
Depreciation of right-of-use assets
Buildings and structures
Machinery and vehicles
Other
Total depreciation of right-of-use assets
Interest expenses on lease liabilities
Short-term lease expense
Lease expense of low-value assets
Total expenses¥2,058
395
459
2,913
118
1,621
98
¥4,752¥2,287
644
678
3,609
154
1,117
44
¥4,926

Thousands of
U.S. dollars
2020$20,9815,908
6,220
33,110
1,412
10,247403$45,1923) Maturity analysis of lease liabilities
The maturity analysis of lease liabilities is described in Note 34. “Financial instruments (3) Liquidity risk.”
4) Total cash outflow for leases
The total amount of lease-related cash outflows for the fiscal years ended March 31, 2019 and 2020 was¥3,651 million and ¥4,900 million ($44,954 thousand), respectively.

- 52 -

21. Employee benefits(1) Overview of the retirement benefit plan adopted by the GroupThe Company and certain consolidated subsidiaries adopt funded and unfunded defined benefit plans anddefined contribution plans in order to provide retirement benefits to employees. Nearly all employees arecovered by these plans.
While these retirement benefit plans are exposed to risks, including general investment risks, interest raterisks and inflation risks, none are considered to be material.
The funded defined benefit plan is operated by pension funds that are legally separate from the Group.
The board of directors of the pension funds and the organization entrusted with management of thepension funds are required by law to act in the best interests of the plan members, while bearing the
responsibility for managing plan assets in accordance with given policies.
(2) Defined benefit plan
1) Reconciliation of defined benefit obligations and plan assets
The relationship between defined benefit obligations and plan assets and net defined benefit liability(asset) presented in the consolidated statement of financial position is as follows:
Thousands of
U.S. dollars

Millions of yen

Present value of funded defined benefit obligations
Fair value of plan assets
Sub-total
Present value of unfunded defined benefit obligations
Net defined benefit liability (asset)

Transition date
(April 1, 2018)
¥483
(451)
31
16,343¥16,374

2019
¥506
(508)
(2)
16,582¥16,580

2020
¥563
(508)
54
16,859¥16,913

2020$5,165(4,660)495
154,669$155,165

Amount presented in the consolidated statement offinancial position
Retirement benefit liabilities
Net defined benefit liability (asset)¥16,374¥16,374¥16,580¥16,580¥16,913¥16,913$155,165$155,165- 53 -

2) Reconciliation of the present value of defined benefit obligations
Changes in present value of defined benefit obligations are as follows:

Balance as of April 1, 2018
Current service cost
Interest expense
Benefits paid
Remeasurements
Actuarial gains and losses arising from changes indemographic assumptions
Actuarial gains and losses arising from changes infinancial assumptions
Exchange differences on translation of foreign operations
Other changes
Balance as of March 31, 2019
Current service cost
Interest expense
Benefits paid
Remeasurements
Actuarial gains and losses arising from changes indemographic assumptions
Actuarial gains and losses arising from changes infinancial assumptions
Exchange differences on translation of foreign operations
Other changes
Balance as of March 31, 2020

Balance as of March 31, 2019
Current service cost
Interest expense
Benefits paid
Remeasurements
Actuarial gains and losses arising from changes indemographic assumptions
Actuarial gains and losses arising from changes infinancial assumptions
Exchange differences on translation of foreign operations
Other changes
Balance as of March 31, 2020

In Japan¥14,297
790
50
(772)

Millions of yen
Outside Japan¥2,529
198
47
(132)

Total
¥16,826
989
97
(904)

7

15

23

118
—
133
¥14,625
957
38
(552)

(26)
(145)
(22)
¥2,463
222
55
(202)

91
(145)
111
¥17,089
1,180
94
(754)

29

11

40

(172)
—
(81)
¥14,84643(49)
31¥2,575

(128)
(49)
(49)
¥17,421

Thousands of U.S. dollars
In Japan
Outside Japan
Total$134,174$22,596$156,779
8,779
2,036
10,825348
504
862(5,064)(1,853)(6,917)

266

100

366

(1,577)—(743)$136,201

394
(449)
284
$23,623(1,174)(449)(449)$159,825

The weighted average duration of defined benefit obligations of the Company and principal consolidated
subsidiaries was 13 years in Japan and 23 years overseas in the fiscal year ended March 31, 2019, and12 years in Japan and 23 years overseas in the fiscal year ended March 31, 2020.

- 54 -

3) Reconciliation of the fair value of plan assets
Changes in fair value of plan assets are as follows:
Millions of yen
Outside Japan
¥451
12
(19)
96

Balance as of April 1, 2018
Interest income
Benefits paid
Contributions to the plan by the employer
Remeasurements
Return on plan assets
Exchange differences on translation of foreign operations
Balance as of March 31, 2019
Interest income
Benefits paid
Contributions to the plan by the employer
Remeasurements
Return on plan assets
Exchange differences on translation of foreign operations
Other changes
Balance as of March 31, 2020

3
(35)
¥508
10
(16)
61
3
(61)
1
¥508
Thousands of
U.S. dollars
Outside Japan
$4,660
91
(146)
559

Balance as of March 31, 2019
Interest income
Benefits paid
Contributions to the plan by the employer
Remeasurements
Return on plan assets
Exchange differences on translation of foreign operations
Other changes
Balance as of March 31, 2020

27
(559)
9
$4,660Information is omitted, as there is nothing applicable in Japan.
For the defined contribution plans, in the fiscal year ending March 31, 2021, the Group is scheduled tocontribute ¥1,250 million ($11,467 thousand), which is nearly the same amount as contributed in the fiscal
year ended March 31, 2020.
4) Fair values of plan assets by asset category
Fair values of plan assets by principal asset category are as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and cash equivalents
SharesTotal

Transition date
(April 1, 2018)
¥392
58
¥451

- 55 -

2019
¥508
—
¥508

2020
¥508
—
¥508

2020
$4,660—$4,660

5) Actuarial assumptions
The significant actuarial assumptions used to calculate the present value of defined benefit obligations of
the Company and its main domestic consolidated subsidiaries are as follows:

Discount rate

Transition date
(April 1, 2018)
0.40%

2019
0.30%

2020
0.50%

A sensitivity analysis (effects on defined benefit obligations) of significant actuarial assumptions of theCompany and its main domestic consolidated subsidiaries is as follows:
Thousands of
U.S. dollars

Millions of yen
Transition date
(April 1, 2018)
Discount rate
0.5% increase
0.5% decrease¥(765)
837

2019¥(763)
834

2020

2020

¥(725)
790$(6,651)7,247(3) Employee benefits expense
The employee benefits expense included in cost of sales and selling, general and administrative
expenses in the consolidated statement of profit or loss is as follows:
Millions of yen
2019
2020
¥39,716¥46,469
2,250
2,760
7,339
8,820
¥49,307¥58,050

Wages, salaries, bonuses, etc.
Retirement benefit expenses
Other employee benefits expenses
Total

Thousands of
U.S. dollars
2020$426,321
25,32180,917$532,568

The amounts recognized as expense for the defined contribution plan were ¥982 million and ¥1,250
million ($11,467 thousand) in the fiscal years ended March 31, 2019 and 2020, respectively.

22. Provisions
An explanation for each provision is as follows:
1) Provision for loss on construction contracts
The Group recognizes a provision for losses that are expected to occur in or after the following fiscal year,with respect to contracted constructions for which a loss is expected to occur and the amount of such loss
can be reasonably estimated. Related expenses are expected to be incurred prior to completion of theconstruction, and additional expenses may arise in the case of an increase in estimated costs.
2) Provision for product warranties
To provide for warranty expenses that are expected to occur during the Company’s warranty period forsome delivered products or services, the Group recognizes a provision based on the actual amount of
warranty expenses paid in past fiscal years, taking into account the prospect of future warranty expenses.

- 56 -

3) Asset retirement obligations
To provide for the Group’s obligation to restore rental offices, buildings, etc., held by the Group, the Group
recognizes asset retirement obligations. Related expenses are expected to be paid after the usage period
has elapsed, and will be affected by future business plans, etc.
4) Provision for environmental measures
To provide for future losses that are likely to be incurred in association with construction work, etc., for the
purpose of environmental measures, the Group recognizes a provision at the estimated amount of suchlosses. While these expenses are expected to be paid in the fiscal year ending March 31, 2021, additional
expenses may be incurred if there is an increase in the estimated cost.
The breakdown of and changes in the provisions are as follows:
Fiscal year ended March 31, 2020
Millions of yen

Balance as of March 31, 2019
Increase during the period
Decrease during the period(due to intended use)(reversal)
Exchange differences ontranslation of foreign
operations
Balance as of March 31, 2020
Current liabilities
Non-current liabilities

Provision
for loss on
construction
contracts¥240
160

Provisionfor productwarranties
¥785
833

Asset
retirement
obligations
¥491
8

(220)
(1)

(620)
(57)

—
—

(0)
¥179
¥179
—

(9)
¥932
¥932
—

(0)
¥499
¥—
499

Provision forenvironmental
measures
¥—
368

Other
¥312
77

Total
¥1,829
1,448

—
—

(312)
—

(1,152)
(58)

—
¥368
¥368
—

—
¥77
¥77
—

(10)
¥2,055¥1,557499

Other$2,862706

Total$16,779
13,284

Thousands of U.S. dollars

Balance as of March 31, 2019
Increase during the period
Decrease during the period(due to intended use)(reversal)
Exchange differences ontranslation of foreign
operations
Balance as of March 31, 2020
Current liabilities
Non-current liabilities

Provision
for loss on
construction
contracts$2,201
1,467

Provisionfor productwarranties$7,201
7,642

Asset
retirement
obligations$4,50473(2,018)(9)(5,688)
(522)

—
—

—
—

(2,862)—(10,568)(532)(0)$1,642$1,642—(82)$8,550$8,550—(0)$4,577$—
4,577—$3,376$3,376
—

—
$706
$706
—

(91)
$18,853$14,284
4,577- 57 -

Provision forenvironmental
measures
$—3,376

23. Share capital and other equity items(1) Share capital and capital surplus
The Japanese Companies Act (hereinafter the “Companies Act”) provides that 50% or more of theamount paid or granted for share issue can be incorporated into share capital, while the remaining amount
can be incorporated into capital reserves, which is included in capital surplus. The Companies Act also
provides that capital reserves can be incorporated into share capital by a resolution of a general meetingof shareholders.
1) Number of authorized shares
The total number of authorized shares as of the date of transition to IFRS, March 31, 2019 and 2020,
remained at 531,000 thousand shares of common stock.
2) Number of shares outstanding
ThousandsharesNumber ofcommonsharesApril 1, 2018
116,200
Increase (decrease)—
March 31, 2019116,200
Increase (decrease)—
March 31, 2020
116,200
Note All of the shares issued by the Company are no-par common stock without any limitation on the rights of theshares, and the outstanding shares have been paid in full.

(2) Retained earnings
The Companies Act provides that 10% of the amount to be paid as dividends from surplus shall be
accumulated as capital reserves or retained earnings reserves until the total amount of capital reserves
and retained earnings reserves reaches 25% of capital stock. The accumulated retained earnings
reserves can be used to eliminate losses carried forward. In addition, the retained earnings reserves canbe reversed by a resolution of a general meeting of shareholders.
(3) Treasury shares
ThousandsharesNumber ofsharesoutstanding
3,926
(5)
3,921
(16)
3,904

April 1, 2018
Increase (decrease)
March 31, 2019
Increase (decrease)
March 31, 2020

Millions of yen

Thousands of
U.S. dollars

Amount¥10,943(11)
10,932$100,293(38)(348)¥10,893$99,935(4) Put options granted to non-controlling shareholders
The Company has granted to non-controlling shareholders put options related to interests in Kurita Fracta
Holdings, Inc., a consolidated subsidiary of the Company. Liabilities related to these put options are
deducted from capital surplus.
The amount deducted from capital surplus as of March 31, 2019 and 2020 was ¥558 million and ¥1,397
million ($12,816 thousand), respectively.
For further details regarding the put options granted to non-controlling shareholders, please refer to Note
3. “Significant accounting policies (17) Equity.”- 58 -

24. Dividends(1) Amount of dividends paid
Fiscal year ended March 31, 2019
Type ofsharesMillions of yen
Total amountof dividend

Yen
Dividend
per share

Type ofsharesMillions of yen
Total amountof dividend

Yen
Dividend
per share

Resolution
Record date
Effective dateJune 28, 2018
Ordinary General Meeting ofCommonShareholders
share¥2,927¥26
March 31, 2018 June 29, 2018
November 9, 2018
CommonSeptember 30,
November 29,
Board of Directors’ meetingshare¥3,040
¥27
2018
2018
Note The total amount of dividends determined by a resolution of the Ordinary General Meeting of Shareholders
held on June 28, 2018 includes dividends of ¥8 million paid for 333 thousand shares of the Company(entrusted for performance-linked stock compensation for Directors) held by the trust account of Japan Trustee
Services Bank, Ltd.
The total amount of dividends determined by a resolution of the Board of Directors’ meeting held on November
9, 2018 includes dividends of ¥8 million paid for 327 thousand shares of the Company (entrusted for
performance-linked stock compensation for Directors) held by the trust account of Japan Trustee Services
Bank, Ltd.

Fiscal year ended March 31, 2020
Resolution
June 27, 2019
Ordinary General Meeting of
Shareholders
November 11, 2019
Board of Directors’ meeting

Commonshare
Commonshare¥3,040¥27¥3,490¥31Type ofsharesThousands of
U.S. dollars
Total amountof dividend

U.S. dollar
Dividend
per share

Record date

Effective date

March 31, 2019
September 30,
2019

June 28, 2019
November 29,
2019

Resolution
Record date
Effective dateJune 27, 2019
Ordinary General Meeting ofCommonShareholders
share$27,889$0.25 March 31, 2019 June 28, 2019
November 11, 2019
CommonSeptember 30,
November 29,
Board of Directors’ meetingshare$32,018$0.28 20192019
Note The total amount of dividends determined by a resolution of the Ordinary General Meeting of Shareholders
held on June 27, 2019 includes dividends of ¥8 million ($73 thousand) paid for 327 thousand shares of theCompany (entrusted for performance-linked stock compensation for Directors) held by the trust account ofJapan Trustee Services Bank, Ltd.
The total amount of dividends determined by a resolution of the Board of Directors meeting held on November
11, 2019 includes dividends of ¥9 million ($82 thousand) paid for 312 thousand shares of the Company(entrusted for performance-linked stock compensation for Directors) held by the trust account of Japan Trustee
Services Bank, Ltd.

- 59 -

(2) Dividends whose effective date falls in the fiscal year ending March 31, 2021

Resolution
June 29, 2020
Ordinary general meeting of shareholders

Type ofsharesCommonshare

Millions of yen
Total amountof dividend

Yen
Dividend
per share

Record date

Effective date¥31

March 31, 2020

June 30, 2020

¥3,490Thousands of
U.S. dollars
Total amountof dividend

U.S. dollar
Type of
Dividend
Resolution
sharesper share
Record date
Effective dateJune 29, 2020
CommonOrdinary general meeting of shareholders
share$32,018$0.28 March 31, 2020 June 30, 2020
Note The total amount of dividends determined by a resolution of the Ordinary General Meeting of Shareholders
held on June 29, 2020 includes dividends of ¥9 million ($82 thousand) paid for 312,000 shares of the Company(entrusted for performance-linked stock compensation for Directors) held by the trust account of Japan Trustee
Services Bank, Ltd.

25. Net sales(1) Breakdown of net sales recognized from contracts with customers
Fiscal year ended March 31, 2019
Millions of yen
Reportable segments
Water
Water
treatment
treatment
2019
chemicals
chemicals
Consolidated
Japan¥45,515¥115,696¥161,212
Asia
28,13438,38566,520
North America
4,469
1,120
5,589
EMEA
21,294
2
21,297
Other
2,711
—
2,711
Total
¥102,126¥155,204¥257,331
Notes 1. The above amounts are presented after deduction of inter-segment transactions.
2. Net sales are broken down into countries or regions based on customer location. EMEA refers to theEuropean, Middle Eastern and African regions.

Fiscal year ended March 31, 2020
Millions of yen
Reportable segments
Water
Water
treatment
treatmentchemicals
chemicals
Consolidated¥46,024¥115,675¥161,699
26,351
26,15852,50919,492
9,334
28,826
19,125
6
19,132
2,639
—
2,639
¥113,632¥151,174¥264,807

2020
Japan
Asia
North America
EMEA
Other
Total

- 60 -

Thousands of U.S. dollars
Reportable segments
Water
Water
treatment
treatment
2020
chemicals
chemicals
Consolidated
Japan$422,238$1,061,238$1,483,477
Asia
241,752
239,981
481,733
North America
178,825
85,633
264,458
EMEA
175,458
55
175,522
Other
24,211—
24,211
Total$1,042,495$1,386,917$2,429,422
Notes 1. The above amounts are presented after deduction of inter-segment transactions.
2. Net sales are broken down into countries or regions based on customer location. EMEA refers to theEuropean, Middle Eastern and African regions.

(2) Contract balances
Thousands of
U.S. dollars

Millions of yen

Receivables from contracts with customers
Contract assets
Contract liabilities

Transition date
(April 1, 2018)¥64,499
24,1272,606

2019¥69,117
30,153
4,586

2020¥69,338
24,2185,912

2020$636,128
222,183
54,238In the consolidated statement of financial position, receivables from contracts with customers and contract
assets are included in trade and other receivables, while contract liabilities are included in other current
liabilities.
Revenues that were included in the balance of contract liabilities at the beginning of the fiscal years ended
March 31, 2019 and 2020 were ¥2,606 million and ¥4,586 million ($42,073 thousand), respectively.
Among the revenue for the fiscal years ended March 31, 2019 and 2020, the amount of revenue fromperformance obligations satisfied in past fiscal years is immaterial.
(3) Performance obligations
For sales of products, when products have been delivered, the Company determines that performanceobligations have been satisfied and recognizes their sales.
For construction contracting, sales are recognized over the period of the construction contract, as
performance obligations are satisfied according to the construction’s progress. To measure progress, theinput method is applied, using the ratio of the incurred cost against the estimated total cost for eachcontract.
Considerations are received within a reasonable period from the time of satisfaction of performanceobligations. For these contracts, the expedient provided for in IFRS 15 “Revenue from Contracts with
Customers” is applied, and no adjustments related to financing components are performed.
Sales are measured at the consideration promised in the contract.
There are no significant contracts with customers regarding a return of products.
Furthermore, in connection with construction contracts, etc., the Company provides product warranty,
such as the free repair of defects identified within a certain period of time. Such warranty intends toprovide customers with a warranty to ensure that the products, etc., of the Company function as intended,in accordance with the specifications agreed upon with the customers. Future expenditures are estimatedby taking into account actual product warranty expenses in the past, and are recognized as a provision for
product warranties.

- 61 -

Scheduled period for satisfying remaining performance obligations
Millions ofyen
2020¥41,171
25,991¥67,162

Thousands of
U.S. dollars
2020$377,715
238,449$616,165

Millions of yen
2019
2020
¥5,490¥5,69330,15034,787
4,275
5,826
17,07819,752¥56,994¥66,060

Thousands of
U.S. dollars
2020$52,229
319,146
53,449181,211$606,055

Up to 1 year
Over 1 year
Balance at end of period

26. Selling, general and administrative expenses
The breakdown of selling, general and administrative expenses is as follows:

Research and development expenses
Employee benefits expense
Depreciation and amortization
Other
Total

27. Other income
The breakdown of the items and amounts included in other income is as follows:
Thousands ofMillions of yen
U.S. dollars
2019
2020
2020
Gain on sale of fixed assets¥20¥4,777$43,825
Rental income
278
300
2,752
Other
726
755
6,926
Total
¥1,024¥5,832$53,504
Note ¥4,752 million ($43,596 thousand) of Gain on sale of fixed assets for the fiscal year ended March 31, 2020 isdue to the sale of a certain facility in the ultrapure water supply business.

28. Other expenses
The breakdown of the items and amounts included in other expenses is as follows:
Thousands ofMillions of yen
U.S. dollars
2019
2020
2020
Loss on sales and retirement of property, plant and equipment¥729¥2,413$22,137
Impairment losses
1,171
29
266
Loss on transfer of business
2,867
—
—
Acquisition-related costs
1,156
734
6,733
Other
908
1,830
16,788
Total¥6,831¥5,006$45,926
Note Loss on transfer of business for the fiscal year ended March 31, 2019 is the cost associated with the transfer of
the aluminum compound business of Kurita Europe GmbH.

- 62 -

29. Finance income and Finance costs(1) Finance income
The breakdown of finance income is as follows:
Thousands of
U.S. dollars
2020

Millions of yen
2019
2020

Dividend income
Dividend income from financial assets held at end of period
¥395
¥409
$3,752
Dividend income from financial assets derecognized during
the period
17800Interest income
165
156
1,431
Foreign exchange gains
10
—
—
Other
31
2
18
Total
¥781
¥569
$5,220Notes 1. Dividend income relates to financial assets measured at fair value through other comprehensive income.
2. Interest income relates to financial assets measured at amortized cost.

(2) Finance costs
The breakdown of finance costs is as follows:

Interest expense
Loss on valuation and realization of fair value
Foreign exchange loss
Other
Total
Note Interest expense relates to financial liabilities measured at amortized cost.

Millions of yen
2019
2020
¥355
¥296
97
884
—
20
68
217
¥521
¥1,417

Thousands of
U.S. dollars
2020$2,715
8,110
183
1,990
$13,000

30. Other comprehensive income
The amount arising during the period, reclassification adjustments to profit or loss and the impact of tax
effects for each item of other comprehensive income are as follows:
Fiscal year ended March 31, 2019
Millions of yen

2019
Items that will not be reclassified to profit or loss
Net change in fair value of financial assets
measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
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
Cash flow hedges
Share of other comprehensive income ofinvestments accounted for using equity
methodTotal of items that may be reclassified to profit
or loss
Total

Amountarisingduring theperiodReclassification
adjustments

Before tax
effects

Tax effects

Net of tax
effects¥(1,601)
(111)

¥—
—

¥(1,601)
(111)

¥556
39

¥(1,044)(72)(1,713)—(1,713)596(1,116)(4,593)357—
86(4,593)
444

—
(136)

(4,593)
308

(153)

—

(153)

—

(153)

(4,388)¥(6,102)

86¥86(4,301)¥(6,015)

(136)
¥460

(4,437)¥(5,554)- 63 -

Fiscal year ended March 31, 2020
Millions of yen

2020
Items that will not be reclassified to profit or loss
Net change in fair value of financial assets
measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
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
Cash flow hedges
Share of other comprehensive income ofinvestments accounted for using equity
methodTotal of items that may be reclassified to profit
or loss
Total

Amountarisingduring theperiodReclassification
adjustments

Before tax
effects

Tax effects

Net of tax
effects¥(673)
91¥——¥(673)
91

¥210
(28)

¥(462)
62

(581)

—

(581)

181

(400)

(4,316)95—
181(4,316)
277

—
(84)

(4,316)
192

(94)

—

(94)

—

(94)

(4,315)¥(4,897)

181¥181(4,134)¥(4,715)(84)¥96(4,219)¥(4,619)

Before tax
effects

Tax effects

Net of tax
effects

Thousands of U.S. dollars

2020
Items that will not be reclassified to profit or loss
Net change in fair value of financial assets
measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
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
Cash flow hedges
Share of other comprehensive income ofinvestments accounted for using equity
methodTotal of items that may be reclassified to profit
or loss
Total

Amountarisingduring theperiodReclassification
adjustments$(6,174)834$——$(6,174)834$1,926(256)$(4,238)
568(5,330)—(5,330)1,660(3,669)(39,596)
871

—
1,660

(39,596)
2,541

—
(770)

(39,596)
1,761

(862)

—

(862)

—

(862)

(39,587)$(44,926)

1,660$1,660(37,926)$(43,256)

(770)
$880

(38,706)$(42,376)

31. Earnings per share
The calculation bases for basic earnings per share are as follows:
Millions of yen
2019
2020
¥12,050¥18,287——¥12,050¥18,287

Profit attributable to owners of parent
Profit not attributable to ordinary shareholders
Profit used for calculation of basic earnings per share

Thousands of
U.S. dollars
2020$167,770—$167,770

Average number of common shares during the period (shares)
112,278,133
112,291,114
112,291,114
Dilutedearnings
per
share
are
not
statedbecause
there
are
no
dilutive
shares.
Notes 1.
2. The Company’s own shares posted as treasury shares remaining in trust are included in the treasury sharesthat are deducted in the calculation of the average number of shares outstanding for calculation for basic net
income per share. The numbers of average shares of the treasury shares that are deducted for the fiscal year
ended March 31, 2019 and 2020 are 329 thousand shares and 317 thousand shares, respectively.

- 64 -

32. Cash flow information(1) Non-cash transactions
The Group conducts the following non-cash investing and financing transactions that are not reflected in
the consolidated statement of cash flows.
The amounts of right-of-use assets acquired through lease for the fiscal years ended March 31, 2019 and2020 are ¥3,623 million and ¥11,660 million ($106,972 thousand), respectively.
(2) Changes in liabilities arising from financing activities
The changes in liabilities arising from financing activities mainly comprise changes in financing cash flows.
Significant non-cash changes mainly comprise an increase in lease liabilities following the acquisition ofright-of-use assets.
(3) Payments for acquisition of businesses
The relationship between the consideration paid for the acquisition of businesses and the income andexpenditure for it is as follows:

Consideration paid in cash
Cash and cash equivalents included in the assets of the acquireeat the time of acquiring control
Payments for acquisition of businesses

Millions of yen
2019
2020
¥35,609¥9,707(2,235)¥33,374

Thousands of
U.S. dollars
2020$89,055(1,204)¥8,501(11,045)$77,990

33. Share-based payments(Overview of performance-linked stock compensation program)
The Company has introduced a performance-linked stock compensation program (hereinafter the“Program”) that covers Directors (excluding External Directors; hereinafter the same shall apply) and
Executive Officers as well as full-time directors of certain domestic subsidiaries and associates, for the
purpose of further enhancing their motivation to contribute to sustainable growth and an increase in thecorporate value of the Group over the medium to long term.
(1) Overview of the performance-linked stock compensation program for Directors and Executive
Officers and certain full-time directors of domestic subsidiaries and associates
1) For Directors
Under the performance-linked stock compensation program for Directors, points are granted to eligible
individuals based on their position and performance, and upon their retirement from the post of Director,
the Company’s shares are delivered at a number equivalent to their accumulated points granted, andmoney is delivered at an amount equivalent to the conversion amount of the Company's shares into cash.
For the introduction of the Program, a stock delivery trust system for officers has been applied, which isestablished through the monetary contributions of the Company. The Program was resolved at the 80th
Ordinary General Meeting of Shareholders held on June 29, 2016 and was introduced accordingly.

- 65 -

2) For Executive Officers and full-time directors of certain domestic subsidiaries and associates
Under the performance-linked stock compensation program for Executive Officers and full-time directorsof certain domestic subsidiaries and associates, points are granted to eligible individuals based on theirposition and performance, and upon their retirement, the Company’s shares are delivered at a number
equivalent to their accumulated points granted, and money is delivered at an amount equivalent to theconversion amount of the Company's shares into cash, to the Executive Officers and full-time directors ofcertain domestic subsidiaries and associates who will retire (hereinafter collectively the “Retirees”). The
Program employs a system in which the Retirees pay to the Company monetary compensation
receivables (contributed properties in kind related to the payment for the Company’s common shares)
granted by the company from which they retire and the Company delivers the Company’s shares to the
Retirees through a disposal of treasury shares or issuance of new shares. The program for Executive
Officers was resolved at the Board of Directors meeting held on February 27, 2018, and the program forfull-time directors of certain domestic subsidiaries and associates was resolved at the Ordinary General
Meeting of Shareholders of each company held in and after 2018, both of which were introduced
accordingly.
(2) Upper limits of the total number of shares scheduled to be acquired by Directors and the number ofshares scheduled to be acquired by Executive Officers and full-time directors of certain domestic
subsidiaries and associates.
1) For Directors: 339,800 shares
2) For Executive Officers and full-time directors of certain domestic subsidiaries and associates
In principle, points up to the equivalent of 2,215 shares annually are granted to each person.
(3) Scope of persons entitled to acquire beneficiary and other rights under the Program
Directors and Executive Officers and full-time directors of certain domestic subsidiaries and associates(Total amount of expenses under the Program)
The part of the Program involving delivery of shares is accounted for as an equity-settled share-based
payment transaction, while the part involving payment of cash is accounted for as a cash-settled sharebased payment transaction.
For the fiscal years ended March 31, 2019 and 2020, the expenses recorded in connection with thisprogram were ¥211 million and ¥212 million ($1,944 thousand), respectively.
(Liabilities arising from the Program)
Liabilities arising from the part of the Program associated with the cash-settled share-based paymenttransaction are recognized as liabilities arising from stock compensation, under other non-current
liabilities.
The carrying amount of the liabilities arising from this program was ¥259 million and ¥302 million ($2,770
thousand) as of March 31, 2019 and 2020, respectively.
(Fair value of the points granted and the method for estimating such fair value)
As the fair value as of the grant date is deemed to approximate the price of the Company’s shares, it ismeasured using the price of the Company’s shares as of the grant date. No adjustments are made inconsideration of prospective dividends.
The number of points granted and their weighted average fair value in the fiscal years ended March 31,
2019 and 2020 are as follows:Yen
201945,556¥3,260

Number of points granted
Weighted average fair value as of the grant dates- 66 -

2020
78,711¥2,624

U.S. dollars
2020
78,711$24,07334. Financial instruments(1) Capital management
The Group’s basic policy is to constantly secure liquidity necessary for business operations and resourceof funds.
Short-term working capital is basically supplied by the Group’s own funds. Capital investment and otherinvestments in growth fields depend chiefly on the Group’s own funds, but the Group considers financing
through bank loans as needed.
Temporary surplus funds are invested in highly safe financial assets, while derivatives are used only to
avoid the risks described below. In addition, it is our policy not to engage in speculative transactions.
Transition date
(April 1, 2018)
71.4%

Ratio of equity attributable to owners of parent

2019
66.0%

2020
62.5%

(2) Credit risk management
1) Content and management of risk
Notes and accounts receivable-trade, which are trade receivables of the Group, are exposed tocustomer’s credit risk.
Regarding such risk, in accordance with internal regulations, the Group conducts credit investigations of
its principal business partners, and manages the due dates and outstanding balances of each business
partner. In addition, efforts are made to quickly identify and mitigate any concerns regarding collection thatare mainly due to worsening financial positions.
Furthermore, regarding the use of derivatives, the Group deals with only financial institutions with highcredit standing, in order to reduce credit risk.
The carrying amount of financial assets presented in the consolidated statement of financial position is the
maximum exposure to credit risk of the Group’s financial assets.
For trade and other receivables, the Group always measures the allowance for doubtful accounts at thesame amount as the lifetime expected credit losses (simplified approach).
For financial assets measured at amortized cost other than the above, in order to recognize and measure
the allowance for doubtful accounts, financial assets are categorized into the following stages based on
the existence of a significant increase in credit risk and the existence of a credit impairment (generalapproach).
Stage 1: Financial assets for which credit risk has not increased significantly since initial recognition
Stage 2: Financial assets for which credit risk has increased significantly since initial recognition but
no credit impairment has been identified
Stage 3: Credit-impaired financial assets- 67 -

2) Quantitative and qualitative information on allowance for doubtful accounts and financial assets
coveredChanges in the total carrying amount of held financial assets are as follows:

Balance as of April 1, 2018
Balance as of March 31, 2019
Balance as of March 31, 2020

Balance as of March 31, 2020

Financialassets undera simplified
approach¥89,844¥101,066¥97,464

Millions of yen
Financial assets under a general approach
Stage 1
Stage 2
Stage 3Financialassetsrecognized
Financialat the sameassets with aamount as
significant
the 12increase in
Creditmonthcredit risk
impairedsince initialfinancialexpected
credit losses
recognition
assets¥5,171¥45¥126¥4,409¥101¥82¥5,701
¥423
¥89

Total
¥95,186¥105,659¥103,678

Financialassets undera simplified
approach$894,165

Thousands of U.S. dollars
Financial assets under a general approach
Stage 1
Stage 2
Stage 3Financialassetsrecognized
Financialat the sameassets with asignificant
amount as
the 12increase in
Creditmonthcredit risk
impaired
expectedsince initialfinancialcredit losses
recognition
assets$52,302$3,880$816

Total$951,174- 68 -

Changes in the allowance for doubtful accounts are as follows:

Balance as of April 1, 2018
Increase during the period
Decrease during the period
Balance as of March 31, 2019
Increase during the period
Decrease during the period
Balance as of March 31, 2020

Balance as of March 31, 2019
Increase during the period
Decrease during the period
Balance as of March 31, 2020

Financialassets undera simplified
approach
¥519
144
(129)
¥534
378
(388)
¥524

Millions of yen
Financial assets under a general approach
Stage 1
Stage 2
Stage 3Financialassetsrecognized
Financialat the sameassets with aamount as
significant
the 12increase in
Creditmonthcredit risk
impaired
expectedsince initialfinancialcredit losses
recognition
assets
¥1
¥45
¥98
—
65
3
(1)
(8)
(19)
¥—
¥101
¥82
—
286
—
—
(10)
(1)
¥—
¥377
¥80

Total
¥663
212
(159)
¥718
665
(400)
¥982

Financialassets undera simplified
approach$4,8993,467(3,559)$4,807

Thousands of U.S. dollars
Financial assets under a general approach
Stage 1
Stage 2
Stage 3Financialassetsrecognized
Financialat the sameassets with aamount as
significant
the 12increase in
Creditmonthcredit risk
impaired
expectedsince initialfinancialcredit losses
recognition
assets
$—
$926
$752
—
2,623
—
—
(91)
(9)
$—
$3,458$733

Total$6,587
6,100(3,669)$9,009- 69 -

Aging analyses for the financial assets as of the date of transition to IFRS, fiscal years ended March 31,
2019 and 2020, are as follows:
The amounts expected to be recovered by insurance coverage and collateral obtained are included.
Date of transition to IFRS (April 1, 2018)

Transition date
Trade and other receivables
Other financial assets

Total¥89,844
5,342

Millions of yen
Past due amountUp to 2monthsOver 2(including
months andnot past due)up to 1 year
Over 1 year
¥86,025¥2,901
¥918
5,049
106
187

Total
¥101,066
4,592

Millions of yen
Past due amountUp to 2monthsOver 2(including
months andnot past due)up to 1 year
Over 1 year
¥96,297¥2,952¥1,816
4,412
82
97

Total
¥97,464
6,214

Millions of yen
Past due amountUp to 2monthsOver 2(including
months andnot past due)up to 1 year
Over 1 year
¥91,635¥4,207¥1,622
5,619
56
538

Total
$894,165
57,009Thousands of U.S. dollars
Past due amountUp to 2monthsOver 2(including
months andnot past due)up to 1 year
Over 1 year
$840,688$38,596$14,880
51,550513
4,935

Fiscal year ended March 31, 20192019
Trade and other receivables
Other financial assets

Fiscal year ended March 31, 2020

2020
Trade and other receivables
Other financial assets

2020
Trade and other receivables
Other financial assets(3) Liquidity risk
The Group procures necessary funds mainly through bank loans. Financial liabilities, such as borrowing,
are exposed to liquidity risk. Such liquidity risk is primarily managed by having the Finance Division
formulate and update a cash flow management plan in a timely manner, based on reports from eachdepartment, maintaining liquidity on hand above a certain level of consolidated net sales and taking othermeasures.

- 70 -

The balance of financial liabilities by due date is as follows:
Transition date (April 1, 2018)

Transition dateNon-derivative financial
liabilities
Trade and otherpayablesShort-term borrowings
Long-term borrowings
Lease liabilities
Total

Transition date
Derivative liabilities
Currency-related
derivatives
Total

Book
balance

Contractual cashflows

Up to 1year

¥40,1392,531
2,763
12,356¥57,791¥40,1392,531
2,763
12,565¥58,000¥40,139
2,531
432
3,148
¥46,251

Book
balance

Contractual cashflows

Up to 1
year

¥142
¥142

¥142
¥142

¥12
¥12

Millions of yen
Over 1
Over 2
year andyears
up to 2and up toyears
3 years

Over 3years
and up to
4 years

Over 4years
and up to
5 years

Over 5
years

¥—
—
469
348
¥817

¥—
—
226
287
¥513

¥—
—
226
217
¥443

¥—
—
904
845
¥1,749Millions of yen
Over 1
Over 2
year andyears
up to 2and up toyears
3 years

Over 3years
and up to
4 years

Over 4years
and up to
5 years

Over 5
years

¥84
¥84

¥46
¥46

¥—
¥—

¥—
¥—

Millions of yen
Over 1
Over 2
year andyears
up to 2and up toyears
3 years

Over 3years
and up to
4 years

Over 4years
and up to
5 years

Over 5
years

¥—
221
1,545
¥1,767

¥—
221
1,027
¥1,249¥—221
861¥1,083

¥—
665
3,747
¥4,412Millions of yen
Over 1
Over 2
year andyears
up to 2and up toyears
3 years

Over 3years
and up to
4 years

Over 4years
and up to
5 years

Over 5
years

¥—
—
506
7,716
¥8,223¥—¥—Fiscal year ended March 31, 2019

2019

Book
balance

Contractual cashflows

Non-derivative financial
liabilities
Trade and otherpayablesLong-term borrowings
Lease liabilities
Total¥49,977
2,103
13,446¥65,528¥49,977
2,103
13,763¥65,8452019
Derivative liabilities
Currency-related
derivatives
Put options on sharesin foreignsubsidiaries
Total

Up to 1year

¥49,977
385
3,931¥54,293

¥—
385
2,650
¥3,035Bookbalance

Contractual cashflows

Up to 1
year

¥36

¥36

¥0

¥14

¥21

¥—

¥—

¥—

626
¥662

996
¥1,032

155
¥155

99
¥113

742
¥763

—
¥—

—
¥—

—
¥—

- 71 -

Fiscal year ended March 31, 2020

2020
Non-derivative financial
liabilities
Trade and otherpayablesShort-termborrowings
Long-term
borrowings
Lease liabilities
Total

Over 3years
and up to
4 years

Over 4years
and up to
5 years

Over 5
years

¥—

¥—

¥—

¥—

—

—

—

—

—

217
2,500
¥2,717217
1,431¥1,648217
1,077¥1,295217
841¥1,059435
8,428¥8,864

Millions of yen
Over 1
Over 2
year andyears
up to 2and up toyears
3 years

Over 3years
and up to
4 years

Over 4years
and up to
5 years

Over 5
years

¥—
¥—

¥—
¥—

¥—
¥—

Book
balance

Contractual cashflows

Thousands of U.S. dollars
Over 1
Over 2
Over 3
year and
years
years
up to 2and up to and up to
Up to 1years
3 years
4 years
year

Over 4years
and up to
5 years

Over 5years$327,339$327,339$327,339

$—

$—

$—

$—

$—

321,110

321,110

321,110

—

—

—

—

—

15,376
164,550$828,385

15,376
170,706$834,550

3,394
39,706$691,568

1,990
22,935$24,926

1,990
13,128$15,119

1,990
9,880
$11,880

1,990
7,715
$9,715

3,990
77,321$81,321

Thousands of U.S. dollars
Over 1
Over 2
Over 3
year and
years
years
Up to 1
up to 2and up to and up to
year
years
3 years
4 years

Over 4years
and up to
5 years

Over 5years$5,577$5,577

$—
$—

$—
$—

Book
balance

Contractual cashflows

Up to 1year

¥35,680¥35,680¥35,680¥—

35,00135,00135,001

1,676
17,936¥90,294

1,676
18,607¥90,966

370
4,328¥75,3812020

Bookbalance

Contractual cashflows

Derivative liabilities
Put options onshares in foreignsubsidiaries
Total¥1,397¥1,397¥1,845¥1,8452020
Non-derivative financial
liabilities
Trade and otherpayablesShort-termborrowings
Long-term
borrowings
Lease liabilities
Total

Millions of yen
Over 1
Over 2
year andyears
up to 2and up toyears
3 years

2020

Bookbalance

Contractual cashflows

Derivative liabilities
Put options onshares in foreignsubsidiaries
Total$12,816$12,816$16,926$16,926

Up to 1
year

¥608
¥608

¥1,236¥1,236$11,339$11,339

¥—
¥—

$—
$—

$—
$—

The cash flows included in this maturity analysis are not expected to be generated significantly earlier orat significantly different amounts.

- 72 -

The total amount of overdraft and commitment line and the balance of executed loans are as follows:
Thousands of
U.S. dollars

Millions of yen
Transition date
(April 1, 2018)¥83,521531¥82,990

Total amount of overdraft and commitment line
Balance of executed loans
Balance of unexecuted loans

2019¥80,844—¥80,8442020¥78,406
35,000¥43,4062020$719,321
321,100$398,220(4) Market risk
1) Foreign exchange risk
Since the Group operates its business globally, its transactions denominated in currencies other than thefunctional currency are exposed to foreign exchange risks. In principle, the Group uses forward foreignexchange contracts to hedge exchange rate fluctuation risks, which are identified by currency and month.
Sensitivity analysis of exchange rate fluctuation risks
With regard to the financial instruments held by the Group at the end of the fiscal year, the effect of the
U.S. dollar and the renminbi becoming stronger against the yen by 1 yen, on profit before tax in the
consolidated statement of profit or loss is as follows. This analysis assumes that all other variables remain
constant.
Millions of yen
2019
2020
¥(22)
¥(49)
(108)
(63)

U.S. dollar
Renminbi

Thousands of
U.S. dollars
2020$(449)(577)

2) Market price risk
The Group holds equity instruments with quoted market prices for policy investment aims, such as thesmooth implementation of business alliances. With regard to equity instruments with quoted market
prices, since their market prices are determined based on market principles, the value of such financial
instruments may decline depending on trends in the market economy. For such equity instruments withquoted market prices, their quoted market prices, the financial conditions of the issuers (business partnercompanies) and other relevant factors are regularly monitored, and the holding status of those
instruments is also continuously reviewed, taking into account relationships with business partnercompanies.
Sensitivity analysis of quoted market prices
With regard to the equity instruments with quoted market prices held by the Group at the end of the fiscal
year, the effect of a 1% decline in the quoted market prices at the end of the fiscal year on othercomprehensive income (before tax effects) in the consolidated statement of comprehensive income is asfollows. In this analysis, the amount of the effect is calculated by multiplying the values of the equity
instruments at the end of the fiscal year by 1%.
Millions of yen
2019
2020
¥(207)¥(202)

Other comprehensive income (before tax effects)- 73 -

Thousands of
U.S. dollars
2020$(1,853)

(5) Fair value
1) Fair value of financial instruments
The fair values of financial liabilities measured at amortized cost and their carrying amounts in the
consolidated statement of financial position are as follows:
Financial instruments whose carrying amounts are reasonable approximations of fair values andimmaterial financial instruments are not included in the table below.
Thousands of
U.S. dollars

Millions of yen
Transition date
(April 1, 2018)
Carrying
Fair
amountvalue
Financial liabilities
Long-term
borrowings¥2,763¥2,757

2019
Carrying
Fair
amountvalue¥2,103¥2,0932020
Carrying
Fair
amountvalue¥1,676¥1,6642020
Carrying
Fair
amountvalue$15,376$15,266

2) Fair value measurement method
The fair values of financial assets and financial liabilities are calculated as follows:(Derivatives)
Derivatives include foreign exchange contracts, currency swaps and put options on shares in foreignsubsidiaries.
Foreign exchange contracts and currency swaps, whose fair values are calculated based on forward
exchange rate or quoted prices obtained from financial institutions and other available information, arecategorized within Level 2.
Put options on shares in foreign subsidiaries, whose fair values are evaluated based on the present valueof the amount that may be required to be paid to counterparties, are categorized within Level 3. Thisvaluation model uses unobservable inputs, such as discount rates. The fair values are assumed tofluctuate, depending on the business plan, interest rates, etc., at each point in time.
(Shares, etc.)
Shares, etc., include shares for which an active market exists, investment trusts and unlisted shares.
Shares with active markets are evaluated by prices quoted at the stock exchange, and are categorized
within Level 1. Investment trusts are evaluated by prices quoted at the stock exchange or prices provided
by correspondent financial institutions, etc., and are categorized within Level 1. Unlisted shares, whose
fair values are calculated by valuation techniques, such as the comparable peer company multiples
method, using unobservable inputs, such as valuation multiples, are categorized within Level 3.
(Borrowings)
Since short-term borrowings are settled in a short period of time, their fair values approximate theircarrying amounts.
Long-term borrowings, whose fair values are calculated by discounting the sum of the principal andinterest using the interest rate that would be applied if new borrowings were made with similar terms, arecategorized within Level 2.
However, since floating rate long-term borrowings reflect market interest rates in a short period of timeand credit standings after execution do not vary significantly, their fair values approximate their carrying
amounts.
(Financial instruments other than the above mentioned)
Since financial instruments other than above mentioned are mainly settled in a short period of time, theirfair values approximate their carrying amounts.

- 74 -

3) Fair value hierarchy
The following is an analysis of financial instruments recorded at fair value by valuation methods. Based on
the inputs used to measure fair values, the fair value levels are classified as follows:
Level 1: Fair value measured using (unadjusted) quoted market prices in active markets for identicalassets or liabilities.
Level 2: Fair value measured using directly or indirectly observable inputs other than Level 1 inputs.
Level 3: Fair value measured using significant unobservable inputs.
Transfers between levels of the fair value hierarchy are recognized on the date of occurrence of the eventor change in circumstances that causes the transfer. No transfer was made between levels for the fiscal
years ended March 31, 2019 and 2020.
Financial instruments measured at fair value
Transition date (April 1, 2018)
Transition date
Derivative assets
Financial assets measured at fair value throughother comprehensive income:
Shares, etc.
Derivative liabilities

Level 1¥—

34,157—

Millions of yen
Level 2
Level 3
¥236
¥—

—
142

Total
¥236

3,108
—

37,266142

Millions of yen
Level 2
Level 3
¥571
¥—

Total
¥571

Fiscal year ended March 31, 20192019
Derivative assets
Financial assets measured at fair value throughother comprehensive income:
Shares, etc.
Derivative liabilities

Level 1¥—

20,785
—

—
36

4,317
626

25,102
662

Millions of yen
Level 2
Level 3
¥812
¥—

Total
¥812

Fiscal year ended March 31, 2020
2020
Derivative assets
Financial assets measured at fair value throughother comprehensive income:
Shares, etc.
Derivative liabilities

Level 1¥—2020
Derivative assets
Financial assets measured at fair value throughother comprehensive income:
Shares, etc.
Derivative liabilities

Level 1$—

20,263—

185,899
—

—
—

4,745
1,397

25,009
1,397

Thousands of U.S. dollars
Level 2
Level 3
$7,449$—

Total$7,449——43,532
12,816229,440
12,816

For financial instruments categorized within Level 3, external evaluation specialists or appropriate persons
in charge of evaluation conduct an evaluation and analysis of the results in accordance with theevaluation policy and procedures approved by the Manager of the Corporate Planning and Control
Division. The evaluation results have been reviewed and approved by the Manager of the Corporate
Planning and Control Division.

- 75 -

Among derivative assets and liabilities categorized within Level 3, for put options on shares in foreignsubsidiaries, the significant unobservable input for the measurement of their fair value is the discount rate.
As discount rates decline (rise), fair values increase (decrease).
Fair values of unlisted shares categorized within Level 3 are measured by the comparable peer company
multiples method and net asset-based valuation model, etc. Since this valuation model employs
unobservable inputs, such as the price book-value ratio, unlisted shares are categorized within Level 3.
Reconciliation from the beginning balance to the ending balance of financial instruments categorized
within Level 3
Millions of yen
2019
Beginning balance
Total gains and losses
Profit or loss
Other comprehensive income
Purchase
Issuance
Sale
Other
Ending balance
Changes in unrealized gains andlosses for the period recognizedin profit or loss for assets andliabilities held at the end of thereporting period

2020

Financialassets¥3,108
113
(101)
215
1,129
—
(30)
(3)
¥4,317

Financialliabilities
¥—
68
68
—
—
558
—
—
¥626

Financialassets¥4,317(1,320)(1,151)
(169)
756
1,122
(50)
(79)
¥4,745

Financialliabilities
¥626
—
—
—
—
—
—
771
¥1,397

¥(97)

¥68

¥(23)

¥—

Thousands of U.S. dollars
2020
Financial
Financialassetsliabilities$39,605$5,743(12,110)—(10,559)—(1,550)—
6,935—
10,293
—
(458)
—
(724)
7,073
$43,532$12,816$(211)The gains and losses included in profit or loss are for financial assets and financial liabilities measured atfair value through profit or loss as of the fiscal year-end. Such profit or loss is included in finance income
and finance costs in the consolidated statement of profit or loss.
The gains and losses included in other comprehensive income are for financial assets measured at fairvalue through other comprehensive income as of the fiscal year-end. Such gains and losses are included
in net change in the fair value of financial assets measured at fair value through other comprehensive
income in the consolidated statement of comprehensive income.
(6) Derivatives and hedging activities
Derivative transactions consist of forward foreign exchange contracts for the purpose of hedging
exchange rate fluctuation risks related to foreign currency-denominated trade receivables and payables
and currency swap transactions for the purpose of hedging exchange rate fluctuation risks related toforeign currency-denominated loans.
In applying hedge accounting, in order to ensure that there is an economic relationship in which changes
in fair value or cash flows of the hedged item caused by the risk being hedged are offset by changes infair value or cash flows of the hedging instrument, the existence of such economic relationship between
the hedged item and hedging instrument is confirmed. This confirmation is achieved through a qualitative
assessment of whether the significant terms and conditions of the hedged item match or closely conformto those of the hedging instrument and through a quantitative assessment of whether changes in thevalues of the hedged item and hedging instrument offset each other due to the same risk. In addition, an
appropriate hedge ratio has been set in light of the economic relationship between the hedged item andhedging instrument and the risk management strategy.
Any hedge ineffectiveness is recognized in profit or loss. The amount recognized in profit or loss for thehedge ineffectiveness and the portion excluded from the assessment of hedge effectiveness in theprevious and this fiscal year is immaterial. The amount reclassified from other components of equity in the
consolidated statement of financial position to profit or loss in the previous and this fiscal year because
forecasted transactions are no longer expected to occur is also immaterial.

- 76 -$—

The notional principal and average price of main hedging instruments are as follows:
Transition date (April 1, 2018)
Transition dateCash flow hedges
Currency swaps(Receive yen, Pay Euros)
Currency swaps(Receive yen, Pay Korean won)Total

Up to 1 year

Millions of yen
Over 1 year

Notional principal
Forward rate (Yen)¥1,376¥134.29¥8,258¥134.29¥9,635—

Notional principal
Forward rate (Yen)833
0.0969¥2,2091,741
0.0967¥9,9992,574—¥12,209

Up to 1 year

Millions of yen
Over 1 year

Notional principal
Forward rate (Yen)¥1,376¥134.29¥6,882¥134.29¥8,258—

Notional principal
Forward rate (Yen)833
0.0969908
0.0966

1,741—

Notional principal
Forward rate (Yen)309
109.95¥2,519——¥7,790309—¥10,309

Up to 1 year

Millions of yen
Over 1 year

Notional principal
Forward rate (Yen)¥1,376¥134.29¥5,505¥134.29¥6,882—

Notional principal
Forward rate (Yen)833
0.096974
0.0935908—

Notional principal
Forward rate (Yen)1
121.98¥2,211——¥5,5801—¥7,792

Notional principal andaverage price

Total

Fiscal year ended March 31, 20192019
Cash flow hedges
Currency swaps(Receive yen, Pay Euros)
Currency swaps(Receive yen, Pay Korean won)
Forward exchange contract(Buying: U.S. dollars)
Total

Notional principal andaverage price

Total

Fiscal year ended March 31, 2020
2020
Cash flow hedges
Currency swaps(Receive yen, Pay Euros)
Currency swaps(Receive yen, Pay Korean won)
Forward exchange contract(Buying: Euros)
Total

2020
Cash flow hedges
Currency swaps(Receive yen, Pay Euros)
Currency swaps(Receive yen, Pay Korean won)
Forward exchange contract(Buying: Euros)
Total

Notional principal andaverage priceNotional principal andaverage price

Total

Thousands of U.S. dollars
Up to 1 year
Over 1 year
Total

Notional principal
Forward rate (U.S. dollars)$12,623$1.23$50,504$1.23$63,137—

Notional principal
Forward rate (U.S. dollars)

7,642
0.00096780.00098,330—

Notional principal
Forward rate (U.S. dollars)

9
1.12$20,284——$51,1929—$71,486- 77 -

The carrying amounts of hedging instruments to which hedge accounting is applied by type of hedge areas follows:
Thousands of
U.S. dollars

Millions of yen
Transition date
(April 1, 2018)
AssetsLiabilities(negative
amount)

2019

2020

Liabilities(negative
amount)AssetsAssets2020

Liabilities(negative
amount)Liabilities(negative
amount)Assets

Account
inconsolidated
statement offinancial
position

Cash flow hedges
Foreign exchange risk

¥141
¥142
¥488
¥36
¥725
¥—
$6,651$—
Note Other financial assets in current and non-current assets and other financial liabilities in current and non-current
liabilities.

Note

The balance of cash flow hedge reserve related to cash flow hedges is as follows:
Thousands of
U.S. dollars

Millions of yen
Transition date
(April 1, 2018)
Cash flow hedges
Foreign exchange risk

2019

¥2

¥310

2020
¥503

2020
$4,614The contract amount and the carrying amount of derivatives to which hedge accounting is not applied are
as follows:
Transition date (April 1, 2018)
Millions of yen
Liabilities(negative
amount)Account inconsolidated statement of financial
position

Liabilities(negative
amount)Account inconsolidated statement of financial
position

Liabilities(negative
amount)Account inconsolidated statement of financial
positionContract
Transition dateamount, etc.
Over 1 year
AssetsCurrency swaps(to receive yen and pay South Korean won)
¥2,099¥1,339¥94¥—
Note
Note Other financial assets in current and non-current assets and other financial liabilities in current and non-current
liabilities.

Fiscal year ended March 31, 2019
Millions of yen

Contract
2019
amount, etc.
Over 1 year
AssetsCurrency swaps(to receive yen and pay South Korean won)
¥1,339
¥632
¥83
¥—
Note
Note Other financial assets in current and non-current assets and other financial liabilities in current and non-current
liabilities.

Fiscal year ended March 31, 2020
Millions of yen
2020
Currency swaps(to receive yen and pay South Korean won)Contract
amount, etc.

Over 1 year

¥632

¥138

Assets¥86¥—

Thousands of U.S. dollars
Liabilities(negative
amount)Note
Account inconsolidated statement of financial
positionContract
2020
amount, etc.
Over 1 year
AssetsCurrency swaps(to receive yen and pay South Korean won)
$5,798$1,266$788$—
Note
Note Other financial assets in current and non-current assets and other financial liabilities in current and non-current
liabilities.

- 78 -

35. Subsidiaries and associates
The Group’s consolidated subsidiaries as of March 31, 2020, are as follows:
Location
Ludwigshafen am
Rhein, Germany
Kurita Water Industries (Jiangyin) Co., Ltd. Jiangsu, China

Main Business
Water treatment chemicals

Ownership
ratio ofvoting rights
100.0%

Water treatment chemicals

100.0%

Hansu Technical Service Ltd.

Water treatment facilities

100.0%

Hansu Co., Ltd.

Gyeonggi-do,
Korea
Ansan-si, Korea

Water treatment chemicals

100.0%

Kurita Water Industries (Suzhou) Ltd.

Jiangsu, China,

Water treatment facilities

100.0%

U.S. Water Services, Inc.

Minnesota, U.S.A.

Company name
Kurita Europe GmbH

Kuritaz Co., Ltd.

Water treatment chemicals andWater treatment facilities
Toshima-ku, Tokyo Water treatment facilities

100.0%
100.0%

Kurita Engineering Co., Ltd.

Chuo-ku, Osaka

Water treatment facilities

100.0%

Kuritec Service Co., Ltd.

Chuo-ku, Osaka

Water treatment facilities

100.0%

Kurita Chemical Manufacturing Ltd.

Gokamachi,
Sashima-gun,Ibaraki

Water treatment chemicals

100.0%

52 other companies

The Group’s associates accounted for using the equity method as of March 31, 2020, are as follows:
Company namePentagon Technologies Group, Inc.
5 other companies

Location
California, U.S.A.

Main Business
Water treatment facilities

Ownership
ratio ofvoting rights
25.0%

36. Related parties(1) Transactions with related parties
For the fiscal years ended March 31, 2019 and 2020, information on transactions with related parties has
been omitted due to the absence of significant transactions.
(2) Compensation for key management personnel
Thousands ofMillions of yen
U.S. dollars
2019
2020
2020
Short-term employee benefits
¥419
¥402
$3,688
Share-based payment
233
131
1,201
Note Compensation for key management personnel is compensation for Directors of the Company.

37. Commitments
The total contract amount regarding commitments for asset purchases, etc., is as follows:
Thousands ofMillions of yen
U.S. dollars
2019
2020
2020
Acquisition of property, plant and equipment¥8,375¥21,792$199,926
Note Commitments as of March 31, 2020 consist primarily of those associated with the establishment of the new
global technology center.

- 79 -

38. Subsequent events
Pentagon Technologies Group, Inc. becoming a consolidated subsidiary of the Group(1) Outline of business combination
Kurita America Holdings Inc. (hereinafter “Kurita America Holdings”), a wholly owned subsidiary of theCompany, concluded an agreement to purchase an additional 26% of shares of Pentagon Technologies
Group, Inc. (hereinafter “Pentagon Technologies”) on December 26, 2019. Kurita America Holdings
already held 25% of shares of Pentagon Technologies as of March 31, 2020. The purchase of the shares
under the agreement was completed on April 1, 2020. As a result, Kurita America Holdings owns 51% ofshares of Pentagon Technologies, which became a consolidated subsidiary of the Company. An outline ofthe purchase is described below. IFRS 3 is applied for the business combination. Accounting for thebusiness combination is not completed, and detailed information on the business combination is notstated.
Name of the acquiree
Business of the acquiree

Primary reasons for the businesscombination

Pentagon Technologies Group, Inc.
Tool cleaning business, the development of surface
particle detectors of semiconductor manufacturing
equipment and the provision of clean room-related
services
The Company will make Pentagon Technologies its
subsidiary to have a base for overseas service in theelectronics industry, which the Company positions as a key
business field, and to further increase its competitivenessin the market. The Company also aims to accelerate its
business growth and offer new value by acquiring the
cutting-edge tool cleaning technologies and expertise ofPentagon Technologies and creating synergies with thetool cleaning business that the Kurita Group has beendeveloping in Japan.

Acquisition date

April 1, 2020

Description of how the acquirer
obtained control of the acquiree

Purchase of shares for cash

Percentage of voting equity
interests after the businesscombination

51.0％(2) Acquisition cost and breakdown
Consideration for acquisition
Acquisition-date fair value of the shares of the acquiree held by theacquirer immediately before the acquisition date
Fair value of the shares of the acquiree that acquired additionally on theacquisition date
Total

Millions ofyen

Thousands of
U.S. dollars¥5,380$49,357

5,595¥10,974

51,330$100,678(3) Acquisition-related cost and its account
They are yet to be determined.
(4) Goodwill, identifiable assets acquired and liabilities assumed
The fair value of the assets acquired and the liabilities assumed as of the acquisition date is being
calculated and has not been determined.

- 80 -

(5) Gain on remeasurement relating to business combinations
In the consolidated statement of profit or loss for the fiscal year ending March 31, 2021, gain on
remeasurement relating to business combinations will be recorded. 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 will become a wholly owned subsidiary of Kurita America Holdings around June30, 2022.

- 81 -

39. First-time adoption
The Group prepared its consolidated financial statements in accordance with IFRS from the fiscal year
ended March 31, 2020. The most recent consolidated financial statements prepared in accordance withJapanese 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 toretrospectively apply IFRS. However, 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:
1) Business combinations
The First-time Adopter is allowed to choose not to apply IFRS 3 “Business Combinations” (hereinafter“IFRS 3”) retrospectively to business combinations that occurred before the date of transition to IFRS. The
Group has applied the exemption and has chosen not to retrospectively apply IFRS 3 to businesscombinations before the date of transition to IFRS. As a result, goodwill that resulted from businesscombinations before the date of transition to IFRS is based on the carrying amount as of the date oftransition under Japanese GAAP.
The Group tested goodwill for impairment at the date of transition to IFRS irrespective of whether there is
any indication of impairment.
2) Deemed cost
IFRS 1 allows an entity to elect to measure an item of property, plant and equipment, investment property
and intangible assets at the date of transition to IFRS at its fair value and use that fair value as its deemed
cost at that date. The Group uses the fair value of certain property, plant and equipment on the date oftransition as deemed cost at that time in accordance with IFRS.
3) Cumulative translation differences for foreign operations
IFRS 1 allows an entity to choose to deem the cumulative translation differences for all foreign operations
at the date of transition to IFRS to be zero. The Group has chosen to deem the cumulative translationdifferences for all foreign operations to be zero at the date of transition to IFRS.
4) Share-based payment
The Group has chosen not to apply IFRS 2 “Share-based Payment” to stock compensation that wasvested before the date of transition to IFRS.
5) Leases
IFRS 1 allows the First-time Adopter to assess whether a contract existing at the date of transition to IFRS
contains a lease on the basis of facts and circumstances existing at that date.
It also allows the First-time Adopter to measure a lease liability at the present value of the remaining lease
payments, discounted using the lessee’s incremental borrowing rate at the date of transition to IFRS, andto measure a right-of-use asset at an amount equal to the liability.
Additionally, the First-time Adopter is allowed to recognize as expenses leases for which the lease term
ends within 12 months of the date of transition to IFRS and leases for which the underlying asset is of low
value.
The Group applies these exemptions to recognize and measure leases.
(2) Mandatory exceptions to 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 andmeasurement of financial assets, etc. The Group has been applying IFRS for these items on or after thedate of transition to IFRS.

- 82 -

(3) Reconciliation from Japanese GAAP to IFRSThe reconciliations required by IFRS 1 are as follows:“Reclassification” and “Differences in recognition and measurement and adjustments of change inaccounting period” in the table below include items that do not affect retained earnings or comprehensive
income and items that affect retained earnings and comprehensive income, respectively.
1) Reconciliation of equity as of the date of transition to IFRS (April 1, 2018)
Millions of yen
Difference due
to changes inrecognition,measurement andaccounting
period

IFRS

Notes

¥60,531
89,354(1)(1), (2)

2,809

(1)

Other financial assets

8,078
2,619
163,393(1), (2)(1)

Inventories
Other current assets
Total current assets

Account underJapanese GAAP
AssetsCurrent assets
Cash and time deposits
Notes and accounts
receivable, trade
Allowance for doubtful
accounts

Japanese
GAAP

Reclassification¥61,086
86,865¥(1,652)(464)¥1,097
2,954

(464)

464

—

Marketable securities
Inventories
Other current assets
Total current assets

3
10,3902,528
160,409

2,769
(3)
—
(1,116)—40—(2,312)
1,206
2,984

Property, plant andequipment, at cost

86,028(86,028)—

81,603(266)

81,336(1), (3)4,455(31,003)
20,362
10,6106,875

11,331(1), (4)Property, plant andequipment
Right-of-use assets

(396)
(412)

19,966
10,197(1), (5)(1)

Goodwill
Intangible assets(34,535)
—

—
(48)

1,098

(1)

1,473
840
—
(690)
—

40,103
4,581(1), (6)(1), (7)

277

(1)

7,376
¥10,360

168,893¥332,287

Account under IFRS
AssetsCurrent assets
Cash and cash equivalents
Trade and otherreceivables

Non-current assets

Intangible assets
Investments and longterm receivables
Investment securities
Investments inunconsolidated
subsidiaries andaffiliates

31,00334,535
1,147

Deferred tax assets
Other investments

4,860
5,238

Allowance for doubtful
accounts
Total non-current
assetsTotal assets(176)

38,630(1,119)(5,238)967
176

162,637¥323,046(1,119)¥(1,119)- 83 -

Investments accounted forusing equity method
Other financial assets
Deferred tax assets
Other non-current assets
Total non-current
assetsTotal assets

Millions of yen

Account underJapanese GAAP
Liabilities andNet assets
Current liabilities
Short-term borrowingsand current portion of
long-term debt
Notes and accounts
payable, trade
Accounts payable, other

Difference due
to changes inrecognition,measurement andaccounting
periodJapanese
GAAP

Reclassification¥1,973¥(1,973)¥—

28,875(28,875)—

10,995(10,995)
38,575
1,337
635

IFRS

Notes

Current liabilities

Income taxes payable
Advances received
Accrued employees’
bonuses
Provisions

4,806
2,065
2,420

—
(2,065)(2,420)

—
1,564
1,625
2,322
12
(68)
—
—

695

Other current liabilities
Total current liabilities

4,317
56,149

(695)
549
5,926
—

—
23
486
5,964

Long-term liabilities
Lease obligations

4,038

16,610(4,038)
2,388
4,038
1,644
—

—
(56)
5,359
(522)
(235)

2,331
9,397
1,122
16,374(1)(1), (4)(1)(1), (10)

191
1,119

(190)
(492)

330
(79)

331
547

(1)
(1), (7)4,084(4,469)

1,146

761

(1)

26,04482,193(1,119)(1,119)5,943
11,90730,86892,981

Net defined benefit
liability
Provisions
Deferred tax liabilities
on revaluation of land
Other long-term
liabilities
Total long-term
liabilities
Total liabilities
Net Assets
Shareholders’ equity
Common stock
Capital surplus
Treasury stock, at cost
Accumulated othercomprehensive
incomeRetained earnings
Non-controlling interests
Total net assets
Total liabilities andnet assets

Account under IFRS
Liabilities and equity¥40,139
2,963
2,958
12
4,737

(1)
(1)
(1), (4)(1)(1)

Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Income taxes payable572
10,72962,113(1)(1), (8), (9)Provisions
Other current liabilities
Total current liabilities
Non-current assets
Borrowings
Lease liabilities
Other financial liabilities
Retirement benefit
liability
Provisions
Deferred tax liabilities
Other non-current
liabilities
Total non-current
liabilities
Total liabilities
Equity13,45010,959(10,943)
16,187

—
—
—
—

—
—
—
597

13,45010,959(10,943)
16,785

Share capital
Capital surplus
Treasury shares(1), (12), (13) Other components ofequity209,149
238,803——(2,144)(1,546)207,005
237,257

2,049
240,853——(1)(1,547)2,048
239,305¥323,046¥(1,119)¥10,360¥332,287(1), (12), (13) Retained earnings
Equity attributable toowners of parent(1), (13)Non-controlling interests
Total equity
Total liabilities andequity- 84 -

2) Reconciliation of equity as of March 31, 2019
Millions of yen
Difference due
to changes inrecognition,measurement andaccounting
periodAccount underJapanese GAAP
AssetsCurrent assets
Cash and time deposits
Notes and accounts
receivable, trade
Allowance for doubtful
accounts

Japanese
GAAP

Reclassification¥35,351
99,156

¥196
204

¥—
1,137

(568)

568

—

Marketable securities
Inventories
Other current assets
Total current assets

1,235
9,400
4,915
149,490

1,599(1,235)—(1,335)
—

109
—
(126)
456
1,575

Property, plant andequipment, at cost

109,808(109,808)—

103,369(3)

103,366(3)

6,439(54,711)
42,214
12,496

5,835
—
1,544
(140)

12,274(4)

43,75812,355(5)(21,103)
—

—
(144)

956

1,742
(6)
—
(613)
—

28,6296,877

8,215¥9,790208,434¥359,500

IFRS

Notes

¥35,547
100,497

(2)

1,709
9,273
4,036
151,065

Account under IFRS
AssetsCurrent assets
Cash and cash equivalents
Trade and otherreceivables
Other financial assets(2)

Inventories
Other current assets
Total current assets
Non-current assets

Intangible assets
Investments and longterm receivables
Investment securities
Investments inunconsolidated
subsidiaries andaffiliates

54,711

21,103
1,100

Deferred tax assets
Other investments

8,003
6,761

Allowance for doubtful
accounts
Total non-current
assetsTotal assets(149)

26,887(1,119)(6,761)
829
149

201,338¥350,828(1,119)¥(1,119)- 85 -

216

Property, plant andequipment
Right-of-use assets
Goodwill
Intangible assets

Investments accounted
for using equity method(6)(7)

Other financial assets
Deferred tax assets
Other non-current assets
Total non-current
assetsTotal assets

Millions of yen

Account underJapanese GAAP
Liabilities andNet assets
Current liabilities
Short-term borrowingsand current portion of
long-term debt
Notes and accounts
payable, trade
Accounts payable, otherJapanese
GAAP

Reclassification¥1,562¥(1,562)¥—

27,145(27,145)—

19,356(19,356)
50,536
385
1,176
—
—
(4,757)(2,520)

—
(558)
—
2,641
1
(3)
—
—

(1,158)
1,338
3,065
—

—
—
2,966
5,050

16,648(5,250)
1,717
5,250
1,663
—

—
—
4,377
108
(68)

1,717
9,628
1,771
16,580

(4)
(11)
(10)

359
1,119

(358)
4

490
95

491
1,219

(7)

19,326(4,146)205

15,38542,704111,176(1,119)(1,119)5,208
10,25846,793
120,315

5,890
4,757
2,520

Other current liabilities
Total current liabilities

6,081
68,471Long-term liabilities
Lease obligations

5,250

Net Assets
Shareholders’ equity
Common stock
Capital surplus
Treasury stock, at cost
Accumulated othercomprehensive
incomeRetained earnings
Non-controlling interests
Total net assets
Total liabilities andnet assets

IFRS

Notes

Account under IFRS
Liabilities and equity
Current liabilities

Income taxes payable
Advances received
Accrued employees’
bonuses
Provisions

Net defined benefit
liability
Provisions
Deferred tax liabilities
on revaluation of land
Other long-term
liabilities
Total long-term
liabilities
Total liabilities

Difference due
to changes inrecognition,measurement andaccounting
period1,158¥49,977
385
3,818
1
5,887

1,338
12,11273,521(4)(8), (9)Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities
Income taxes payable

Provisions
Other current liabilities
Total current liabilities
Non-current assets
Borrowings
Lease liabilities
Other financial liabilities
Retirement benefit
liability
Provisions
Deferred tax liabilities
Other non-current
liabilities
Total non-current
liabilities
Total liabilities
Equity13,450
10,665(10,932)
4,182

—
—
—
—

—
(400)
—
656

13,45010,265(10,932)
4,838

220,297
237,662

—
—

(637)
(380)

219,660
237,282(12), (13)1,989
239,652

—
—

(88)
(467)

1,902
239,184(13)¥350,828¥(1,119)¥9,790¥359,500- 86 -(11)(12), (13)Share capital
Capital surplus
Treasury stock
Other components ofequityRetained earnings
Equity attributable toowners of parent
Non-controlling interests
Total equity
Total liabilities andequity3) Reconciliation of Income in Previous Fiscal Year (from April 1, 2018 to March 31, 2019)
Millions of yen

Account underJapanese GAAPNet sales
Cost of sales
Gross profit
Selling, general andadministrative
expenses
Operating income
Other income(expenses), net

Income before income
taxes
Income taxes
Net income
Net income attributableto owners of parent
Net income attributable
to non-controllinginterests

Difference due
to changes inrecognition,measurement andaccounting
periodJapanese
GAAP¥259,409
176,663
82,74658,446

Reclassification————

24,300
3,206

1,091
6,908
(5,816)
5,219

(67)
(77)
1,376
(8,425)

1,024
6,831
19,860

776
316
136

5
205
10

781
521
146

27,506
10,207¥17,299——¥—(7,238)(1,927)¥(5,311)

20,267
8,279¥11,987¥17,305¥—¥(5,255)¥12,050

(6)

—

(57)

(63)

¥(2,078)(1,993)(84)(1,451)- 87 -

IFRS¥257,331
174,670
82,661
56,994Notes(2)(2), (4), (8)(4), (5), (8)Account under IFRSNet sales
Cost of sales
Gross profit
Selling, general andadministrative
expenses
Other income
Other expenses
Operating profit

(6)
(4)

(6), (7)Financial income
Financial costs
Share of profit ofinvestments accounted
for using equity method
Profit before tax
Income tax expense
ProfitOwners of parent
Non-controlling interests

Millions of yen

Account underJapanese GAAPNet income

Japanese
GAAP¥17,299

Other comprehensive
incomeUnrealized gains or losses
on available-for-salesecurities
Deferred gains or losses
on hedges
Foreign currencytranslation
adjustments
Remeasurements ofdefined benefit plans
Share of othercomprehensive incomeof entities accounted forusing equity method

Total othercomprehensive income
Comprehensive income

Reclassification¥—

Difference due
to changes inrecognition,measurement andaccounting
period¥(5,311)

IFRS¥11,987

Notes

Account under IFRSProfitOther comprehensive
income(7,904)

7,904

—

315

(315)

—

(2,214)

2,214

—

(3)

3

—

(46)

46

—

(9,853)¥7,445(7,904)6,860(1,044)

(6)

(3)

(69)

(72)

(10)

(2,214)(2,378)(4,593)

315
(46)

(6)
(106)

308
(153)

—
¥—

4,298
¥(1,013)(5,554)¥6,432Items that will not bereclassified to profit
or loss
Net change in the fairvalue of financial assets
measured through othercomprehensive income
Remeasurements ofdefined benefit plans
Items that may bereclassified to profit
or loss
Exchange differences ontranslation of foreign
operations
Cash flow hedges
Share of othercomprehensive incomeof investments
accounted for using
equity method
Other comprehensive
income, net of tax
Comprehensive income

4) Notes on Reconciliation(i) Reclassification
Of the items that were included and presented in Non-operating income, Non-operating expenses,
Extraordinary income, and Extraordinary losses under Japanese GAAP, finance-related items arereclassified as Finance income or Finance costs under IFRS, and the other items are reclassified as Other
income, Other expenses or Share of profit of investments accounted for using the equity method under
IFRS.

- 88 -

(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 end of the reporting date of a subsidiary and that of the Company are
different, the consolidated financial statements were prepared based on the financial statements of thesubsidiary as of the reporting date of the subsidiary.
Under IFRS, the financial statements of subsidiaries are prepared as of the same reporting date asthat of the Company unless it is impracticable to do so. The Company made the reporting date of a
subsidiary the same as that of the Company or prepares a provisional financial closing as of the same
reporting date as that of the Company. This has resulted in a difference in each account.
(2) Reconciliation of revenue recognition
Under Japanese GAAP, if the outcome of the stage of completion of construction work can be
estimated reliably, the Group applied the percentage of completion method for the construction work,and the completed-contract method is applied for other construction work. Under IFRS, fortransactions where control over goods or services is transferred to the customer over a certain periodof time, regardless of the legal form of the contract, revenue is recognized over time.
(3) Reconciliation of property, plant and equipment
For certain property, plant and equipment, the Group applies the optional exemption where the fairvalue at 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 16 “Lease”, the Group
recognizes right-of-use assets and lease liabilities for operating leases.
(5) Reconciliation of goodwill
Under Japanese GAAP, goodwill was amortized over a certain period of time. However, under IFRS,
goodwill is not amortized. The amortization of goodwill under Japanese GAAP on or after the date oftransition to IFRS has been reversed.
(6) Reconciliation of other financial assets (non-current)
Under Japanese GAAP, unlisted shares were measured by the acquisition cost and impairment losses
were recorded in accordance with deterioration in the financial position of the issuing company. Under
IFRS, unlisted shares are measured at fair value through other comprehensive income.
For an investment in an equity instrument, a gain or loss on sale and impairment loss of it wererecognized as profit or loss under Japanese GAAP. Under IFRS, the Group recognizes changes in fairvalue of an investment in an equity instrument in other comprehensive income, and a gain or loss onsale and impairment loss of it are not recognized as profit or loss.
(7) Reconciliation of deferred tax assets and deferred tax liabilities
Under Japanese GAAP, the deferred method was applied for tax effects associated with theelimination of unrealized intercompany profits. Under IFRS, the asset and liability method is applied forthem. The recoverability of deferred tax assets is examined under IFRS. Temporary differences haveoccurred due to adjustments associated to the transition from Japanese GAAP to IFRS, and theamount of deferred tax assets and deferred tax liabilities has been adjusted accordingly.
(8) Reconciliation of unused paid leave
Under Japanese GAAP, no accounting process was required for unused paid leave. Under IFRS, theGroup has recognized unused paid leave as liabilities.

- 89 -

(9) Reconciliation of other current liabilities
Under Japanese GAAP, tax expenses such as fixed assets tax were recognized in a fiscal year when
it was paid. Under IFRS, the amount expected to be paid is recognized as liabilities when debts to thegovernment are determined.
(10) Reconciliation of employees’ retirement benefits
Under Japanese GAAP, the Group recognized 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 they occur 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 the shareholders of the non-controlling interests, financial liabilities arerecognized, 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 translationdifferences related to foreign subsidiaries to retained earnings at the date of transition to IFRS, April 1,
2018.
(13) Reconciliation of retained earnings

Reconciliation due to the unification of reporting periods
Reconciliation of property, plant and equipment
Reconciliation of goodwill
Reconciliation of other financial assets
Reconciliation of unused paid leave
Reconciliation of other current liabilities
Reconciliation of employees’ retirement benefits
Reconciliation of other components of equity
Other
Sum of reconciliations
Tax effect related to the adjustments above and increase(decrease) in non-controlling interests
Reconciliation of retained earnings

Refer to (1)Refer to (3)Refer to (5)Refer to (6)Refer to (8)Refer to (9)Refer to (10)Refer to (12)Millions of yen
Transition date
(April 1, 2018)2019¥(123)
¥—
(380)
(200)
—
1,643
(207)
(52)
(1,875)(1,908)
(161)
(154)
225
104
(193)
(193)
(6)
(462)
(2,720)(1,216)576¥(2,144)579¥(637)

5) Reconciliation of Cash Flows
There are no material differences between the consolidated statement of cash flows under Japanese
GAAP and the consolidated statement of cash flows under IFRS.
********************************************************************************************************************- 90 -

Independent Auditor’s Report- 91 -

- 92 -

- 93 -

- 94 -

- 95 -

Nakano Central Park East, 4-10-1 Nakano
Nakano-ku, Tokyo 164-0001, Japan
Tel: +81-3-6743-5000

https://www.kurita.co.jp/english/