Consolidated Financial Statements

NAGASE & CO., LTD.
Year ended March 31, 2024with Independent Auditor’s ReportFinancial Section

CONTENTS
Consolidated Balance Sheet

2

Consolidated Statement of Income

4

Consolidated Statement of Comprehensive Income

5

Consolidated Statement of Changes in Net Assets

6

Consolidated Statement of Cash Flows8

Notes to Consolidated Financial Statements

9

Independent Auditor’s Report38Consolidated Balance Sheet
As of March 31, 2024

Thousands of
U.S. dollars (Note 1)

Millions of yen

AssetsCurrent assets:
Cash and time deposits (Notes 18 and 24)
Notes and accounts receivable and contract assets (Note 18)
Inventories (Notes 6 and 7)
Other current assets
Less allowance for doubtful accounts
Total current assets

2024

¥

Non-current assets
Property, plant and equipment, at cost (Notes 8 and 9):Land
Buildings and structures
Machinery, equipment and vehicles
Leased assets
Construction in progress
Less accumulated depreciation
Property, plant and equipment, net (Note 25)

Investments and other assets:
Investments in securities (Notes 10 and 18):
Unconsolidated subsidiaries and affiliates
Other
Long-term loans receivable
Goodwill (Note 25)
Technology-based assets
Retirement benefit asset (Note 13)
Deferred tax assets (Note 14)
Other assets (Note 9)Less allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets (Note 25)259,410321,126
147,991
14,881(940)
542,4702023¥

40,897302,105
169,721
18,429(1,021)
530,1322024$

392,378
2,120,904
977,419
98,283(6,208)3,582,788

20,221
63,432
98,976
15,053
3,548
201,233(113,840)
87,392

18,83964,095
93,845
11,4392,135
190,355(108,290)
82,064

133,551
418,942653,695
99,41923,433
1,329,060(751,866)
577,188

10,28665,93976,225326
27,884
2,761
6,217
4,596
44,638(177)
162,473
249,865¥ 792,336

9,341
60,402
69,74317
29,004
4,337
2,645
3,857
41,063(176)
150,491
232,556¥ 762,688

67,935435,500
503,434
2,153
184,162
18,23541,06130,355294,815(1,169)1,073,067
1,650,254$ 5,233,049

Thousands of
U.S. dollars (Note 1)

Millions of yen

Liabilities and Net Assets
Current liabilities:
Notes and accounts payable (Note 18)
Short-term loans (Notes 11 and 18)
Current portion of long-term loans and lease obligations (Notes 11 and 18)
Commercial papers (Notes 11 and 18)
Current portion of bonds payable (Note 11)
Accrued income taxes (Note 14)
Accrued expenses
Accrued bonuses for employees
Accrued bonuses for directors and executive officers
Other current liabilities
Total current liabilities
Long-term liabilities:
Bonds (Notes 11 and 18)
Long-term loans and lease obligations (Notes 11 and 18)
Deferred tax liabilities (Note 14)
Retirement benefit liability (Note 13)
Provision for directors’ stock benefit
Other long-term liabilities
Total long-term liabilities

2024

2023

2024

¥ 156,352
50,731
9,190
37,00010,000
5,195
6,543
7,569
251
19,841
302,675¥ 140,438
66,1173,120
38,000
—
2,913
6,300
6,985
371
21,957286,203$ 1,032,640
335,057
60,696244,370
66,04634,311
43,21449,9901,658
131,042
1,999,042

20,00040,025
13,567
12,34560
2,345
88,34530,00042,46010,36013,19765
2,012
98,097132,092
264,348
89,604
81,534396
15,488583,482

9,699
9,348
303,328

9,699
10,636290,279

64,05861,7402,003,355(9,543)
312,832(1,550)309,064(63,028)
2,066,125

33,763
119
44,846
2,503
81,232

28,928(7)30,414(726)
58,610222,991
786
296,189
16,531
536,504

7,250
401,315¥ 792,336

10,713378,388¥ 762,688

47,8832,650,518$ 5,233,049

Contingent liabilities (Note 22)
Net assets:
Shareholders’ equity (Note 16):
Common stock:
Authorized — 346,980,000 shares
Issued —117,908,285 shares in 2024 and117,908,285 shares in 2023
Capital surplus
Retained earnings (Notes 23 and 27)
Treasury stock, at cost (Note 17) — 4,143,115 shares in 2024 and786,718 shares in 2023
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized holding gain on securities (Note 10)
Deferred gain (loss) on hedges (Note 19)
Translation adjustments
Retirement benefit liability adjustments (Note 13)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets
See notes to consolidated financial statements.

3Consolidated Statement of Income
Year ended March 31, 2024

Thousands of
U.S. dollars (Note 1)

Millions of yen

2024

2023

2024

¥ 900,149
735,430
164,719
134,100
30,618¥ 912,896
757,486
155,410122,038
33,371$ 5,945,109
4,857,209
1,087,900
885,675
202,219

Other income (expenses):
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Gain on sales of shares of subsidiaries and affiliates
Gain on sales of investments in securities (Note 10)
Loss on sales of shares of subsidiaries and affiliates
Gain on sales of investments in capital of subsidiaries and affiliates
Loss on sales of investment securities
Loss on devaluation of investments in securities (Note 10)
Gain on sales of property, plant and equipment
Loss on sales of property, plant and equipment
Loss on disposal of property, plant and equipment
Loss on impairment of fixed assets (Notes 9 and 25)
Gain on change in equity
Subsidy income
Other, net
Profit before income taxes

2,164(3,744)
568
—
5,591
—
—
(21)
(135)
83
(41)
(1,422)(2,276)—512
767
32,665

1,734(3,211)
318
52
6,587
(466)
147
(7)
(2,120)
144
(87)
(998)
(2,838)449
25
3733,137

14,292(24,728)
3,751—
36,926
—
—
(139)
(892)
548
(271)
(9,392)(15,032)
—
3,382
5,066
215,739

Income taxes (Note 14):
Current
DeferredProfit10,627(815)
22,8539,621(694)
24,21070,187(5,383)150,935

Net sales (Note 25)
Cost of sales (Note 7)
Gross profit
Selling, general and administrative expenses (Notes 20 and 21)
Operating income (Note 25)

Profit attributable to:Non-controlling interests
Owners of parent¥

See notes to consolidated financial statements.

4

(450)
22,402¥(584)
23,625$(2,972)
147,956

Consolidated Statement of Comprehensive Income
Year ended March 31, 2024

Thousands of
U.S. dollars (Note 1)

Millions of yen

2024

ProfitOther comprehensive income (Note 12):
Net unrealized holding loss on securities
Deferred gain (loss) on hedges
Translation adjustments
Retirement benefit liability adjustments
Share of other comprehensive income of affiliates accounted for by
the equity method¥

Comprehensive income
Total comprehensive income attributable to:
Owners of parent
Non-controlling interests
See notes to consolidated financial statements.

522,8532023¥

24,2102024$

150,935

4,827
126
14,7383,229(2,794)(186)
16,852(564)

31,880832
97,33821,326¥560
23,482
46,335¥477
13,78437,994$

3,699
155,089
306,023¥¥

45,024
1,310¥¥

36,8381,156$$

297,3658,652

Consolidated Statement of Changes in Net Assets
Year ended March 31, 2024

Millions of yen

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costTotal
shareholders’equityNet
unrealized
holding
gain onsecurities

Deferred
Retirement
Total(loss)
benefitaccumulated
gain
liability
other
Nonon
Translation adjustments comprehensive controlling
hedges adjustments (Note 13)
incomeinterests

Balance at April 1, 2022
¥ 9,699 ¥ 10,639 ¥ 280,015 ¥ (1,534) ¥ 298,820 ¥ 31,732 ¥ 178 ¥ 13,690
Profit attributable to ownersof parent——
23,625—23,625———
Cash dividends——(7,150)—(7,150)———Purchases of treasury stock———(5,662)(5,662)———Retirement of treasury stock——(5,645)
5,645
—
—
—
—
Changes in parent’s
ownership interest due totransactions with
non-controlling interests
—
(0)
—
—
(0)
—
—
—
Decrease in retained
earnings resulting fromchanges in scope of
consolidation
—
(3)
—
—
(3)
—
—
—
Decrease in retained
earnings resulting fromchanges in scope of equity
method
—
—
(330)
—
(330)
—
—
—
Changes in accounting
period of consolidated
subsidiaries
(234)
(234)
—
—
—
Other changes
—
—
—
—
—
(2,804) (186) 16,723
Balance at April 1, 2023
9,699 10,636 290,279(1,550) 309,064 28,928(7) 30,414
Cumulative effects ofchanges in accounting
policies (Note 3)
—
—
(72)
—
(72)
Adjusted balance at April 1,
2023
9,699 10,636 290,207(1,550) 308,992 28,928(7) 30,414
Profit attributable to owners—of parent—
22,402—
22,402———
Cash dividends——(9,281)—(9,281)———
Purchases of treasury stock———(8,001)(8,001)————
Disposal of treasury stock
—
—
7
7
—
—
—
Changes in parent’s
ownership interest due totransactions with— (1,287)
non-controlling interests——(1,287)————
Other changes
—
—
—
—
4,834
126 14,431
Balance at March 31, 2024 ¥ 9,699 ¥ 9,348 ¥ 303,328 ¥ (9,543) ¥ 312,832 ¥ 33,763 ¥ 119 ¥ 44,846
See notes to consolidated financial statements.

6

Total
net assets¥ (161)¥ 45,441¥ 10,830¥ 355,092

—
—
—
—

—
—
—
—

—
—
—
—

23,625(7,150)(5,662)
—

—

—

—

(0)

—

—

—

(3)

—

—

—

(330)

—
(564)
(726)

—
13,16958,610—(117)
10,713(234)
13,051
378,388(726)

58,61010,713378,315

—
—
—
—

—
—
—
—

—
—
—
—

22,402(9,281)(8,001)
7—
3,229¥ 2,503—
22,622¥ 81,232—(1,287)(3,462) 19,159¥ 7,250 ¥ 401,315

Thousands of U.S. dollars (Note 1)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costTotal
shareholders’equityNet
unrealized
holding
gain onsecurities

Balance at April 1, 2023
$64,058 $70,246 $1,917,172 $(10,237) $2,041,239 $191,057
Cumulative effects ofchanges in accounting
policies (Note 3)
—
—
(476)
—
(476)
—
Adjusted balance at April 1,
2023
64,058 70,246 1,916,696 (10,237) 2,040,763 191,057
Profit attributable to ownersof parent—— 147,956—
147,956—
Cash dividends—— (61,297)—(61,297)—
Purchases of treasury stock——— (52,843)(52,843)—
Disposal of treasury stock
—
—
—
46
46
—
Changes in parent’s
ownership interest due totransactions with
non-controlling interests— (8,500)——(8,500)—
Other changes————— 31,927
Balance at March 31, 2023 $64,058 $61,740 $2,003,355 $(63,028) $2,066,125 $222,991
See notes to consolidated financial statements.

7

Deferred
Retirement
Total(loss)
benefitaccumulated
gain
liability
other
Nonon
Translation adjustments comprehensive controlling
hedges adjustments (Note 13)
incomeinterests$(46) $200,872—$(4,795) $387,095

—

—

—

(46) 200,872(4,795)

387,095

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
832 95,311$786 $296,189——
21,326 149,409$16,531 $536,504

Total
net assets$70,755 $2,499,095

—

(476)

70,755 2,498,613————

147,956(61,297)(52,843)
46—(8,500)(22,865) 126,537$47,883 $2,650,518

Consolidated Statement of Cash Flows
Year ended March 31, 2024

Thousands of
U.S. dollars (Note 1)

Millions of yen

Operating activities:
Profit before income taxes
Adjustments to reconcile profit before income taxes to net cash provided byoperating activities:
Depreciation and amortization other than amortization of goodwill
Loss on impairment of fixed assets
Amortization of goodwill
Subsidy income
Share of gain of entities accounted for using equity method
Gain on change in equity
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Interest and dividend income
Interest expense
Exchange gain, net
Gain on sales of investments in securities
Loss on valuation of investment securities
Changes in operating assets and liabilities:
Notes and accounts receivable
Inventories
Notes and accounts payable
Other, net
SubtotalInterest and dividends received
Interest paid
Subsidy income
Income taxes paid
Net cash provided by operating activities
Investing activities:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible fixed assets included in other assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Purchases of investments in capital
Proceeds from sales of investments in capital
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Proceeds from sales of shares of subsidiaries resulting in change in scope of
consolidation
Increase in short-term loans receivable included in other current assets, net
Decrease in time deposits, net
Subsidy income
Other, net
Net cash used in investing activities

2024

¥

¥

See notes to consolidated financial statements.

8

¥

¥

33,137

2024$

215,739

13,998
2,276
2,627
(512)
(568)
—
3,775
495
(2,164)
3,744(1,652)(5,570)135

12,377
2,838
2,545
(25)
(318)
(449)
(609)
(55)
(1,734)
3,211(891)(6,312)
2,120

92,451
15,032
17,350(3,382)(3,751)—
24,932
3,269(14,292)
24,728(10,911)(36,788)892(7,373)31,6268,844
188
82,5372,589(3,865)512(8,814)
72,959(5,171)(1,275)(13,584)(1,462)
24,341
2,418(3,058)—(14,286)
9,414(48,696)
208,877
58,411
1,242
545,123
17,099(25,527)
3,382(58,213)481,864¥ (14,019)
585(3,735)
(623)
7,154
(205)
—
(244)

Financing activities:
Decrease in short-term loans, net(Decrease) increase in commercial papers, net
Proceeds from long-term loans
Repayments of long-term loans
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Purchases of shares of subsidiaries not resulting in change in scope of consolidation
Other, net
Net cash used in financing activities
Effects of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Decrease in cash and cash equivalents resulting from changes in fiscal
year-end of consolidated subsidiaries
Cash and cash equivalents at end of the year (Note 23)

32,6652023¥¥(12,029)
540(4,888)
(437)
7,474
—
178
—

$
$

(92,590)
3,864(24,668)(4,115)47,249(1,354)—(1,612)

—
(316)
378
—
(601)
(11,627)

2,040
(623)
337
25
(650)
(8,031)—(2,087)2,497—(3,969)(76,791)(22,408)(1,000)1,000(1,055)——(8,001)(9,281)(603)(6,025)(670)(48,046)(11,961)
13,0005,000(8,623)
10,000(10,000)(5,662)(7,150)(1,133)—(716)(17,247)(147,996)(6,605)
6,605(6,968)——(52,843)(61,297)(3,983)(39,793)(4,425)(317,324)

5,569
18,85440,331

3,064(12,800)
53,33636,781
124,523
266,369—
59,185¥(204)
40,331$—
390,892

Notes to Consolidated Financial Statements
Year ended March 31, 2024

1. BASIS OF PREPARATION
The accompanying consolidated financial statements of NAGASE& CO., LTD. (the “Company”) and consolidated subsidiaries
are prepared on the basis of accounting principles generally
accepted in Japan, which are different in certain respects as
to the application and disclosure requirements of International
Financial Reporting Standards, and have been compiled fromthe consolidated financial statements prepared by theCompany as required by the Financial Instruments andExchange Act of Japan.
In preparing the accompanying consolidated financial
statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements
issued domestically in order to present them in a format
which is more familiar to readers outside Japan.
Certain amounts in the prior year’s consolidated financial
statements have been reclassified to conform to the current

year’s presentation. Such reclassifications had no effect on
consolidated profit or net assets.
The U.S. dollar amounts in the accompanying consolidated
financial statements have been translated from yen amounts
solely for the convenience of the reader, as a matter ofarithmetic computation only, at ¥151.41 = U.S.$1.00, the rateof exchange prevailing on March 31, 2024. This translation
should not be construed as a representation that the yenamounts have been, could have been, or could in the future
be, converted into U.S. dollars at the above or any other rate.
As permitted by the Financial Instruments and Exchange
Act of Japan, amounts of less than one million yen have been
omitted. Consequently, the totals shown in the accompanying
consolidated financial statements (both in yen and in U.S.
dollars) do not necessarily agree with the sum of theindividual amounts.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and its 75 significant domestic
and foreign subsidiaries, the management of which is controlled
by the Company. The changes in the scope of consolidation
are as follows.
[Increase]• Flavor Tec - Aromas de Frutas Ltda (acquisition of equity
interests on June 28, 2023)• Fruttini Sucos de Frutas Ltda (acquisition of equity interests
on June 28, 2023)[Decrease]• INFINITE MATERIAL SOLUTIONS, LLC (dissolved in anabsorption-type merger, in which consolidated subsidiary
INTERFACIAL CONSULTANTS LLC was the surviving
company, on April 1, 2023)• PRINOVA GERMANY LIMITED (liquidation on April 11, 2023)• Inkron Technologies GmbH (liquidation on May 17, 2023)• Lakeshore Technologies, LLC (dissolved in an absorptiontype merger, in which consolidated subsidiary Prinova US
LLC was the surviving company, on January 1, 2024)
Affiliates over which the Company exercises significant
influence in terms of their operating and financial policies havebeen accounted for by the equity method. The Company has
19 affiliates accounted for by the equity method. The changes
in the scope of application of the equity method are as follows.
[Decrease]• Sun Delta Corporation (liquidation on November 28, 2023)
All significant intercompany balances and transactions havebeen eliminated in consolidation. The 7 subsidiaries were
excluded from the scope of consolidation because the effectof their sales, net profit or loss, total assets and retained
earnings on the accompanying consolidated financial
statements was immaterial. The main unconsolidated
subsidiary is CHOKO CO., LTD. The 7 unconsolidated
subsidiaries and 5 affiliates not accounted for by the entity
method were excluded from the scope of application of theequity method, because their profit or loss and retained
earnings attributable to the Company’s interest were notmaterial to the consolidated financial statements. The main
affiliates is ON Colors & Chemicals (Shanghai) Co., Ltd.
Of the Company’s subsidiaries, 33 have a December 31
year end, which is different from that of the Company. The
financial statements of 11 subsidiaries have been included inconsolidation based on a provisional statement of accounts
for a full fiscal year ending March 31. As for the other 22
subsidiaries, adjustments have been made for any significant
intercompany transactions that took place during the period
between the year end of these subsidiaries and the year endof the Company.
Unrealized intercompany gains among the Company andthe consolidated subsidiaries have been entirely eliminatedand the portion attributable to non-controlling interests has
been charged to non-controlling interests.
(b) Foreign Currency Translation
All monetary assets and liabilities denominated in foreign
currencies are translated into yen at the rates of exchange in
effect at the balance sheet date, except that receivables andpayables hedged by qualified foreign currency forward
exchange contracts are translated at the corresponding
contract rates. All other assets and liabilities denominated inforeign currencies are translated at their historical rates.
9

Gain or loss on each translation is credited or charged to income.
Revenue and expense items arising from transactions
denominated in foreign currencies are generally translated
into yen at the rates in effect at the respective transaction
dates. Foreign exchange gain or loss is credited or charged toincome in the period in which such gain or loss is recognized
for financial reporting purposes.
The balance sheet accounts of the overseas consolidated
subsidiaries are translated into yen at the rates of exchange in
effect at the balance sheet date, except that the components of
net assets excluding non-controlling interests, net unrealized
holding gain on securities, and deferred gain or loss onhedges are translated at their historical exchange rates.
Revenue and expense accounts are translated at the average
rates of exchange in effect during the year. Adjustments
resulting from translating financial statements whose
accounts are denominated in foreign currencies are notincluded in the determination of profit but are reported as“Translation adjustments” as a component of accumulated
other comprehensive income or loss in the accompanying
consolidated balance sheets.
(c) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, demand
deposits, and short-term investments which are readily
convertible to cash and subject to an insignificant risk of any
change in their value, which were purchased with an original
maturity of three months or less.
(d) Inventories
Inventories are stated at the lower of cost or the net
selling value, cost being determined primarily by themoving-average method.
(e) Investments in Securities
Securities are classified into three categories: trading
securities, held-to-maturity debt securities or other securities.
Trading securities, consisting of debt and marketable equity
securities, are stated at fair value. Gain and loss, both
realized and unrealized, are credited or charged to income.
Held-to-maturity debt securities are stated at their amortizedcost. Marketable securities classified as other securities arecarried at fair value with any changes in unrealized holding
gain or loss, net of the applicable income taxes, reported as aseparate component of accumulated other comprehensive
income or loss. Non-marketable securities classified asother securities are carried at cost determined by themoving-average method.
(f) Property, Plant and Equipment and Depreciation (except
for leased assets)
Property, plant and equipment are stated at cost.
Depreciation of property, plant and equipment is calculatedby the straight-line method based on the estimated useful
lives of the respective assets.
The estimated useful lives of the principal assets are as
follows:

Buildings (other than structures attached to the buildings)
15 to 50 years
Machinery and equipment
2 to 20 years(g) Intangible Assets (except for leased assets)
Technology-based assets recognized upon acquisition areamortized on a straight-line basis over 13 to 17 years.
Costs incurred for computer software obtained forinternal use are capitalized and amortized on a straight-line
basis over an estimated useful life of 5 years.
(h) Goodwill
Goodwill is amortized over a period not exceeding 20 years
on a straight-line basis. When immaterial, goodwill is charged
to income as incurred.
(i) Leased Assets
Leased assets under finance lease contracts which do nottransfer ownership to the lessee are depreciated to a residual
value of zero by the straight-line method over the respective
lease terms.
(j) Allowance for Doubtful Accounts
The Company and its consolidated subsidiaries provide
allowances for doubtful accounts based on their historicalexperience of bad debts on ordinary receivables plus anadditional estimate of probable specific doubtful accounts
from customers experiencing financial difficulties.
(k) Income Taxes
Income taxes are calculated based on taxable income andcharged to income on an accrual basis. Deferred tax assets
and liabilities are computed based on the temporary
differences between the financial reporting and the tax basesof the assets and liabilities that will result in taxable ordeductible amounts in the future. Computations of deferred
tax assets and liabilities are based on the tax rates whichhave been enacted as of the balance sheet date. The
Company and certain subsidiaries shifted to the stand-alone
taxation system in the current fiscal year in conjunction withthe abolishment of the consolidated taxation system.
(l) Accrued Bonuses for Employees
Accrued bonuses for employees are provided based on theestimated amount of bonuses to be paid to employees in thefollowing fiscal year which is attributable to the current fiscal year.
(m) Accrued Bonuses for Directors and Executive Officers
Accrued bonuses for directors and executive officers areprovided based on the estimated amount of bonuses to be
paid to directors and executive officers in the following fiscal
year which is attributable to the current fiscal year.
(n) Provision for Directors’ Stock Benefit
In order to provide for the payment of shares, etc. of theCompany to Directors (excluding Outside Directors) and
executive officers, the estimated amount of stock-based
compensation payable in accordance with the Stock-Grant
Rules for Directors (internal rules) is recorded.
(o) Retirement Benefit Liability
Retirement benefit liability is provided based on the amount10

of the retirement benefit obligation less estimated pension plan
assets at the end of the fiscal year. The estimated benefit isattributed to each period based on the plan’s benefit formula.
Prior service cost is charged to income in the fiscal year
in which such cost is recognized for financial reporting
purposes. Actuarial differences are principally credited or
charged to income in the fiscal year following the fiscal year
in which such differences are recognized for financial
reporting purposes.
(p) Accounting for Significant Revenues and Expenses
The following is a description of the principal performanceobligations of the Company and its consolidated subsidiaries’
principal businesses relating to revenue from contracts withcustomers and the usual timing at which point such
performance obligations are satisfied (the usual time at whichrevenue is recognized).
Sales of merchandise and products are classified basedon the reportable segments and revenue is recognizedprimarily at the time the merchandise and products aredelivered to the customer, since the risks and economic valueof ownership of the products are transferred and the right toreceive payment is established at that time. In addition, theGroup may act as an agent in certain transactions. The
consideration from the customer is received primarily within
one year of satisfying the performance obligation and does
not include a significant financing component.
When the Group is acting as a principal in a transaction,
revenue is recognized at the gross amount of consideration
received from the customer, and when the Group is acting asan agent for a third party, revenue is presented in a net
amount of fees received, which is the gross amount ofconsideration received from the customer less the amountcollected for the third party.
(q) Derivatives and Hedging Activities
Derivatives positions are carried at fair value with any
changes in unrealized gain or loss charged or credited toincome, except for those which meet the criteria for deferral
hedge accounting under which unrealized gain or loss isdeferred as a component of net assets. Foreign currency
receivables and payables hedged by qualified foreign
currency forward exchange contracts are translated at thecorresponding foreign exchange contract rates (“allocation

method”). Interest-rate swaps which meet certain conditions
are accounted for as if the interest rates applied to the swaps
had originally applied to the underlying loans.
Derivative financial instruments are utilized principallyin order to manage the risk arising from adverse fluctuation
in foreign currency exchange rates and interest-rate swaps
are also utilized to mitigate the risk of fluctuation in interest
rates on loans. Hedging instruments are foreign currency
forward exchange contracts, foreign currency deposits,
foreign currency loans and interest-rate swaps. Hedged
items are foreign currency receivables and payables,
forecast transactions and interest rates on loans fromfinancial institutions.
The Company and its consolidated subsidiaries(collectively, the “Group”) manage derivative transactions inaccordance with internal management rules. Under theserules, the Group conducts foreign currency forward exchange
contracts within a range of actual demand of accounts
receivable, accounts payable and actual transactions inforeign currencies. Execution and management ofinterest-rate swaps are based on internal management rules
and hedged items of interest-rate swaps are identified byindividual contracts.
The Company and certain consolidated subsidiaries
assess the effectiveness of the hedging activities based on acomparison of the accumulated fluctuations of the hedged
items and those of the hedging instruments in the period
from the start of the hedging activities to the assessment
date. However, with regard to interest-rate swaps which meetcertain conditions, the evaluation of effectiveness is omitted.
(r) Research and Development Costs
Research and development costs are charged to income
when incurred.
(s) Distributions of Retained Earnings
Dividends and other distributions of retained earnings areapproved by the shareholders at a meeting held subsequent
to the end of the fiscal year to which such distributions areapplicable. The accompanying consolidated financial
statements do not, however, reflect the applicabledistributions of retained earnings as approved by theshareholders subsequent to the fiscal year end. (Refer toNote 27(a).)

113. ACCOUNTING CHANGES(a) Adoption of U.S. FASB Accounting Standards Codification(ASC) No. 326, Financial Instruments—Credit Losses
Certain foreign consolidated subsidiaries that adopted U.S.
GAAP apply ASC No. 326, Financial Instruments-Credit Losses,
at the beginning of the current consolidated fiscal year. As aresult, the subsidiaries are required to revise the methods
used to measure financial instruments and recognize
impairment of financial assets using the expected credit loss
model. In applying this accounting standard, the subsidiaries
recognized the cumulative effect as of the date of adoption,
which is permitted under the transitional provisions. The
impact of this accounting treatment on the consolidated
statements is immaterial.

(b) Changes in Significant Hedge Accounting Methods
The Company previously used the allocation method forforeign currency receivables and payables with foreignexchange contracts, if receivables and payables qualified forthe allocation method. However, from the consolidated third
quarter of the current fiscal year, the Company changed its
hedge accounting method from the allocation method to theprinciple accounting method.
As the Company reforms its enterprise system, theCompany reviewed its management of foreign exchange
contracts and changed the method to reflect derivativetransactions more appropriately in Company financial
statements.
Note that as impact from this change in accounting
methods is minor, the change is not applied retrospectively.

4. SIGNIFICANT ACCOUNTING ESTIMATES
Assessment of impairment of property, plant and equipment and intangible fixed assets(a) Amounts recorded in the consolidated financial statements as of March 31, 2024 and 2023, and for the years then ended are
as follows.
Thousands of
U.S. dollars

Millions of yen

2024

¥

Property, plant and equipment
Intangible fixed assets
Impairment losses(b) Information about significant accounting estimates
pertaining to identified items(i) Method of calculation
Non-current assets are grouped into the smallest
units that generate cash flows, and are measured for
impairment if any indication of impairment exists and,if so, whether an impairment loss should berecognized.
For the grouping of non-current assets, idle assets
are grouped individually, and business assets aregrouped mainly by company or plant. Goodwill isprincipally allocated to larger unit that includes
related business-use assets.
Undiscounted future cash flows used todetermine whether impairment losses need to berecognized are calculated in consideration of main
assets’ economic useful lives, etc., based on futurebusiness plans.
Impairment losses are measured by calculating
the recoverable amount of the relevant asset or asset

87,392
69,349
2,276

2023

¥

82,06468,928
2,838

2024

$

577,188
458,021
15,032group as the higher of net selling value or the value
in use, and the difference between the book value andthe recoverable amount is recorded as an impairment
loss for the current fiscal year. The discount rate used
for the calculation of the value in use is basicallydetermined using the time value of money taking into
account the risk related to the business.
(ii) Key assumptions used in the calculation
The key assumptions are the projected sales andcosts of sales included in future business plans, andthe discount rate used to calculate the value in use.
(iii) Effects on consolidated financial statements for the
next fiscal year
If the actual profit or loss of each asset or asset groupfalls below the business plan, or if there is a significant
change in the assumptions on which future businessplans are based, the recoverable amount may fall
below the book value and an impairment loss may berecognized in the next fiscal year.

125. ADDITIONAL INFORMATION
Stock-Based Compensation Plan
Effective as of the previous consolidated fiscal year, theCompany has adopted a stock-based compensation plan (“Plan”)
for directors (excluding outside directors) and executive
officers (collectively, “Eligible Individuals”). The purpose of
the Plan is to establish a clear link between compensation for
Eligible Individuals and Company performance and sharevalue, as well as for Eligible Individuals to share the benefits
and risks associated with fluctuations in NAGASE share pricewith shareholders. In this way, the NAGASE Group intends toraise Eligible Individual’s awareness about contributing to
improved business performance and increased corporate
value over the medium to long term.
(i) Overview
The Plan is a stock-based compensation plan under which

a trust ("Trust") established by monetary contribution
from the Company acquires Company shares. The
Company grants points to each Eligible Individual, andthe Trust delivers the number of Company sharesequivalent to the points earned by each Eligible Individual.
In principle, said delivery is made at the time of theretirement the Eligible Individual.
(ii) Company shares remaining in the Trust
Company shares remaining in the Trust are recorded astreasury stock under net assets in the consolidated balance
sheet based on the carrying value in the Trust (excluding
related expenses). The carrying value and number ofshares of treasury stock is ¥619 million and 292,200 shares,
respectively, as of March 31, 2023, and ¥612 million and
288,500 shares, respectively, as of March 31, 2024.

6. INVENTORIESInventories at March 31, 2024 and 2023 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Merchandise and finished goods
Work in process
Raw materials and supplies
Total

2024

2023

¥ 131,137
2,594
14,259¥ 147,991¥ 152,504
2,446
14,770¥ 169,721

2024

$

$

866,105
17,132
94,175
977,419

7. LOSS ON DEVALUATION OF INVENTORIES INCLUDED IN COST OF SALES
The balance of inventories at the end of the year is the amount after writing down book values due to decline in profitability andfollowing loss on devaluation of inventories is included in cost of sales for the year ended March 31, 2024 and 2023:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Loss on devaluation of inventories included in cost of sales

2023

2,076

¥

2,010

2024

$

13,711

8. REDUCTIONS IN ACQUISITION COSTS DUE TO SUBSIDIESThe amounts of subsidies received from the Japanese national government and deducted from the acquisition costs of property,
plant and equipment at March 31, 2024 and 2023 are as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Buildings and structures
Machinery, equipment and vehicles
Land
Total

¥

13

401
730
190
1,322

2023

¥

¥

403
730
190
1,324

2024

$

$

2,648
4,821
1,255
8,731

9. LOSS ON IMPAIRMENT OF FIXED ASSETS
Loss on impairment of fixed assets for the years ended March 31, 2024 and 2023 was as follows:

Major use

Classification

Area

Business-use assets for
manufacturing and selling of color
formers

Buildings and structures, machinery,equipment and vehicles, and tangible
assets included in other assets, andintangible assets included in otherassetsHokuriku

Major use

Classification

Area

Business-use assets for product andmanufacturing process developmentin the resin field

Machinery, equipment and vehicles,
Leased assets and other assets
included in Investments and otherassets
Machinery, equipment and vehicles
and other assets included in
Investments and other assets
Buildings and structures, and Land

Millions of yen

Thousands of
U.S. dollars

2024

2024

¥
¥

Total

2,276
2,276

$
$

15,032
15,032Millions of yen

Business-use assets for development
and manufacturing of water-soluble
support materials for 3D printing
Idle assets
Total

The Company and its consolidated subsidiaries group fixed
assets for business use principally based on business
management segments. Fixed assets to be disposed of andidle assets are grouped individually as the smallest
cash-generating units.
For the year ended March 31, 2023, the book values ofcertain fixed assets for business-use were reduced to theirrecoverable amounts, because the future cash flows fell below
the book value as a result of reviewing the future businessplans. As for idle assets, due to a declining fair value, thecarrying values were reduced to their recoverable amounts.
The recoverable amounts were measured at the net
selling value or the value in use. Net selling value is based on

2023

Wisconsin,
USA
¥

2,285

¥

539
12
2,838

Wisconsin,
USA
Kanto

the assessed value for property tax purposes or the appraisedvalue of real estate. The recoverable amounts for business-use
assets were measured at the net selling value.
For the year ended March 31, 2024, the book values
were reduced to their recoverable amounts due todeterioration in profitability.
The recoverable amounts were measured at the net
selling value or the value in use. Net selling value is basedon the assessed value for property tax purposes or theappraised value of real estate.
The business-use assets related to the color former
manufacturing business were measured based on the net
selling price.

14

10. INVESTMENTS IN SECURITIES(a) Marketable securities classified as other securities at March 31, 2024 and 2023 are summarized as follows:
Millions of yen

2024
Carrying value

Securities whose carrying
value exceeds theiracquisition costs:
Equity securities
Securities whose carrying
value does not exceed
their acquisition costs:
Equity securities
Total

Acquisition costs

2023
Unrealized gain (loss)

Carrying value

Acquisition costs

Unrealized gain (loss)¥

59,580¥11,829¥47,751¥53,460¥12,004¥

41,456¥

1,535
61,116¥

1,825
13,654¥(290)
47,461¥

2,389
55,849¥3,056
15,061¥(667)
40,788

Thousands of U.S. dollars

2024

Securities whose carrying
value exceeds theiracquisition costs:
Equity securities
Securities whose carrying
value does not exceed
their acquisition costs:
Equity securities
Total

Carrying value

Acquisition costs

Unrealized gain (loss)$

393,501$

78,126$315,375$

10,138403,646$

12,05390,179$(1,915)
313,460“Acquisition costs” in the above table represent the carrying value after recognizing impairment losses.
(b) Securities classified as other securities whose market value is not available and not included in the table (a) at March 31,
2024 and 2023 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Market value not available:
Unlisted equity securities
Total

2024

2023

2024

Carrying value

Carrying value

Carrying value

¥
¥

¥
¥

$
$

4,823
4,823

4,552
4,552

31,85431,854(c) Proceeds from sales of, and gross realized gain and loss on, other securities for the years ended March 31, 2024 and 2023
are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Proceeds from sales
Gain on sales
Loss on sales

15

7,184
5,591
21

2023

¥

7,448
6,584
7

2024

$

47,44736,926139

(d) A breakdown of loss on devaluation of investments in securities for the years ended March 31, 2024 and 2023 issummarized as follows:
Thousands of
U.S. dollars

Millions of yen

2024

Loss on devaluation of investments in securities (*)
Securities classified as other securities
Other investments in capital
Investments in capital of subsidiaries and affiliates
Total loss on devaluation of investments in securities

¥

¥

2023

125
9
—
135

¥

¥

2,028
81
10
2,120

2024

$

826
59
—
885

$

(*) Loss on devaluation of investments in securities is recorded on securities with market value whose market value at the end of the fiscal year has declined by 50%
or more from its acquisition cost, or whose market value has declined by 30% or more but less than 50% based on the amount deemed unrecoverable.

In addition, loss on devaluation of investments in securities is recorded on securities whose market value is not available bywriting down the carrying value to fair value when the decline in fair value is deemed to be unrecoverable considering thefinancial position of the issuers, etc., of the securities.

11. SHORT-TERM LOANS, BONDS, LONG-TERM LOANS, COMMERCIAL PAPERS AND
LEASE OBLIGATIONS
Short-term loans at March 31, 2024 and 2023 principally represented loans and commercial papers in the form of deeds at
weighted-average annual interest rates of 5.35% and 5.06% per annum, respectively.
Long-term loans, bonds and lease obligations at March 31, 2024 and 2023 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2024

Unsecured loans from banks and insurance companies, payable in Yen
and U.S. dollars due through 2032, at rates from 0.20% to 5.50%
Unsecured bonds in Yen, due 2024, at a rate of 0.150%
Unsecured bonds in Yen, due 2029, at a rate of 0.290%
Unsecured bonds in Yen, due 2032, at a rate of 0.640%
Lease obligations
Less current portion
Total

¥

34,47910,00010,00010,00014,736
79,216(19,190)¥ 60,025

2023

¥

¥

33,75410,00010,00010,00011,82675,580(3,120)72,4602024$

227,719
66,046
66,046
66,046
97,325523,189(126,742)$ 396,440

The aggregate annual maturities of bonds, long-term loans and lease obligations subsequent to March 31, 2024 are summarized
as follows:
Years ending March 31,

Millions of yen

2025
2026
2027
2028
2029
2030 and thereafter
Total

¥

¥

16

19,1908,381
17,006
6,684
1,523
26,42979,216

Thousands of
U.S. dollars$$

126,742
55,353112,318
44,145
10,059174,553
523,189

In order to achieve more efficient and flexible financing, the Company has concluded line-of-credit agreements with certain
financial institutions. The status of these lines of credit at March 31, 2024 and 2023 is as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Lines of credit
Credit utilized

2023

20,000—¥20,000—2024$

132,092—

12. OTHER COMPREHENSIVE INCOME
Reclassification adjustments and tax effects allocated to each component of other comprehensive income for the years ended
March 31, 2024 and 2023 were as follows:
Thousands of
U.S. dollars

Millions of yen

2024

Net unrealized holding loss on securities:
Amount arising during the year
Reclassification adjustments for gains and losses realized in the statementof incomeAmount before tax effectTax effectNet unrealized holding loss on securities
Deferred gain (loss) on hedges:
Amount arising during the year
Reclassification adjustments for gains and losses realized in the statementof incomeAmount before tax effectTax effect
Deferred gain (loss) on hedges
Translation adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses realized in the statementof incomeAmount before tax effectTax effectTranslation adjustments
Retirement benefit liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses realized in the statementof incomeAmount before tax effectTax effect
Retirement benefit liability adjustments
Share of other comprehensive income of affiliates accounted for by theequity method:Amount arising during the year
Total other comprehensive income

17

¥

¥

2023

12,344

¥

2,840

2024

$

81,527(5,570)6,774(1,946)
4,827(6,671)(3,830)1,036(2,794)(36,788)
44,739(12,853)
31,880

(7)

(460)

(46)

189
182
(55)
126

192
(268)
82
(186)

1,248
1,202
(363)
832

14,73816,852

97,338—14,738—14,738—16,852—
16,852—
97,338—97,3383,697(1,042)

24,417970
4,668(1,438)
3,229

229
(813)
248
(564)

6,406
30,830(9,497)
21,326560
23,482¥477
13,784$

3,699
155,089

13. RETIREMENT BENEFIT PLANS(a) Outline of retirement benefit plans for employees
The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., defined benefit pension plans andlump-sum payment plans. Certain overseas consolidated subsidiaries also have defined benefit plans. Also, the Company andcertain consolidated subsidiaries have defined contribution pension plans. In addition to the retirement benefit plans describedabove, the Company and its consolidated subsidiaries pay additional retirement benefits under certain conditions.
(b) Defined benefit plans
The changes in the retirement benefit obligation for the years ended March 31, 2024 and 2023 are as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Balance at the beginning of the year
Service cost
Interest cost
Actuarial differences
Retirement benefits paid
Changes in scope of consolidation
Other
Balance at the end of the year

¥

2023

33,7861,294
226(2,915)(1,887)—(209)
30,293¥¥34,2181,272
232
45(1,743)(262)
2333,7862024$$

223,1428,546
1,493(19,252)(12,463)—(1380)
200,073

The changes in plan assets for the years ended March 31, 2024 and 2023 are as follows:
Thousands of
U.S. dollars

Millions of yen

2024

Balance at the beginning of the year
Expected return on plan assets
Actuarial differences
Contributions by the Company and its consolidated subsidiaries
Retirement benefits paid
Other
Balance at the end of the year

¥

¥

2023

23,234
469
778
612
(944)
15
24,165¥¥

24,119
502
(989)
595
(1,001)
8
23,2342024$$

153,451
3,098
5,138
4,042
(6,235)
99
159,600

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as ofMarch 31, 2024 and 2023 for the Company’s and the consolidated subsidiaries’ defined benefit plans:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Unfunded retirement benefit obligation
Net retirement benefit liability in the balance sheet

18,324(24,165)(5,841)
11,969
6,127

Retirement benefit liability
Retirement benefit asset
Net retirement benefit liability in the balance sheet

12,345(6,217)
6,127

Funded retirement benefit obligation
Plan assets at fair value

¥

18

2023

¥

¥

21,168(23,234)(2,065)
12,61810,552
13,197(2,645)
10,5522024$$

121,022(159,600)(38,577)
79,05040,466
81,534(41,061)
40,466

The components of retirement benefit expenses for the years ended March 31, 2024 and 2023 are as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial differences
Retirement benefit expense

¥

2023

1,294
226
(469)
970
2,021

¥

¥

1,272
232
(502)
229
1,232

2024

$

$

8,546
1,493
(3,098)
6,406
13,348Actuarial differences included in other comprehensive income (loss) (before tax effect) for the years ended March 31, 2024 and2023 are as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Actuarial differences

2023

4,668

¥

(813)

2024

$

30,830

Unrecognized actuarial differences included in accumulated other comprehensive income (before tax effect) as of March 31, 2024
and 2023 are as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Unrecognized actuarial differences

2023

3,636

¥

(1,032)2024$

24,014

The allocation of plan assets, by major category, as a percentage of total plan assets at fair value as of March 31, 2024 and 2023
is as follows:
Bonds
Equity securities
Alternative investments (*)
Other
Total

2024

2023

61%
20
16
3
100%

64%
18
17
1
100%

(*) “Alternative investments” consist of insurance-linked securities and private REITs.

The expected long-term rate of return on plan assets is determined as a result of consideration of both the portfolio allocation atpresent and in the future, and expected long-term rate of return from multiple plan assets at present and in the future.
The assumptions used in accounting for the above plans were as follows:

Discount rate
Expected long-term rate of return on plan assets

2024

2023

1.6%
2.0%

0.7%
2.0%

(c) Defined contribution plans
Thousands of
U.S. dollars

Millions of yen

2024

Contributions to defined contribution plans by the Company and its
consolidated subsidiaries

19

¥

779

2023

¥

740

2024

$

5,145

14. INCOME TAXES
Income taxes applicable to the Company and its domestic consolidated subsidiaries consist of corporation, inhabitants’ andenterprise taxes, which, in the aggregate, resulted in statutory tax rates of approximately 30.6% for the years ended March 31,
2024 and 2023.
The effective tax rates reflected in the accompanying consolidated statements of income for the years ended March 31, 2024
and 2023 differ from the statutory tax rates for the following reasons:Statutory tax rates
Adjustments for:Expenses not deductible for income tax purposes
Dividends and other income deductible for income tax purposes
Net adjustment resulting from elimination of dividend income upon consolidation
Different tax rates applied at overseas subsidiaries
Tax credit
Amortization of goodwill
Adjustment of book value of shares of subsidiaries for consolidated taxation system
Equity in losses (gains) of affiliates
Valuation allowance
Decrease in deferred tax assets resulting from change in statutory tax rate
Other, net
Effective tax rates

2024

2023

30.6%

30.6%

1.0
(6.8)
7.4
(4.7)
(1.9)
2.5
—
(0.5)
4.8
(1.5)
(0.8)
30.0%

2.0
(8.4)
9.6
(4.1)
(2.7)
2.4
0.5
(0.3)
(3.2)
(0.6)
1.2
26.9%

The significant components of the Company’s and its consolidated subsidiaries’ deferred tax assets and liabilities at March 31,
2024 and 2023 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2024

Deferred tax assets:
Accrued bonuses for employees
Allowance for doubtful accounts
Unrealized gain on inventories
Accrued enterprise taxes
Tax loss carryforwards
Retirement benefit liability
Investments in securities
Loss on impairment of fixed assets
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets

¥

1,854
249
703
291
2,340
1,792
2,209
1,309
8,426
19,178(6,695)
12,482

¥

(841)
(929)
—
(490)
(294)
(14,121)(4,776)(21,453)¥ (8,971)¥¥

Deferred tax liabilities:
Technology-based assets
Deferred capital gain on property
Reserve for special depreciation
Undistributed earnings of subsidiaries and affiliates
Revaluation of land
Net unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax liabilities

¥

20

2023

¥

¥

2024

1,680
119
717
145
2,441
3,161
3,428
672
6,807
19,174(6,691)
12,482$(1,321)
(936)
(49)
(373)
(292)
(12,214)(3,798)(18,985)(6,503)$$

12,245
1,645
4,643
1,922
15,455
11,835
14,5908,645
55,650126,663(44,218)
82,438(5,554)(6,136)—(3,236)(1,942)(93,263)(31,543)(141,688)$ (59,250)

15. REVENUE RECOGNITION(a) Information on disaggregation of revenue from contracts with customers
Information on disaggregation of revenue from contracts with customers is presented in the Segment Information. (Refer to Note 25.)(b) Information that forms the basis for understanding revenues from contracts with customers
The information that forms the basis for understanding revenues is presented in the Summary of significant accounting policies.
(Refer to Note 2(p).)(c) Information about the relationship between the fulfillment of performance obligations based on the contract with thecustomer and the cash flow generated from the contract, and the amount and recognition timing of revenue from thecontract with the customer existing at the end of the current fiscal year expected to be recognized in the following fiscal year(i) Contract balances
The following is a breakdown of contract balances of the Company and its consolidated subsidiaries for the current fiscal year.
In the consolidated balance sheets, receivables and contract assets based on contracts with customers are included in “Notes
and accounts receivable and contract assets” and contract liabilities are included in “Other current liabilities.” At the end of theprevious fiscal year and the end of the current fiscal year, the beginning balance of contract liabilities were transferred torevenue by the end of the fiscal year, and the amount carried forward from the next fiscal year onward is not significant.
Thousands of
U.S. dollars

Millions of yen

Receivables from contracts with customers
Contract assets
Contract liabilities

2024

2023

2024

¥ 320,347
778
4,581

¥ 302,105—
4,822$ 2,115,759
5,138
30,256

As of March 31, 2024, accounts receivable and notes receivable from contracts with customers included in the table aboveare ¥273,699 million ($1,807,668 thousand) and ¥46,648 million ($308,091 thousand), respectively.
(ii) Transaction price allocated to remaining performance obligations
Since there are no transactions with individual expected contract terms exceeding one year, the practical expedientmethod is applied and information on remaining performance obligations is omitted. There is no material consideration
with respect to contracts with customers that is not included in the transaction price.

16. SHAREHOLDERS’ EQUITYThe Corporation Law of Japan (the “Law”) provides that an
amount equal to 10% of the amount to be disbursed as
distributions of capital surplus (other than the capitalreserve) and retained earnings (other than the legal reserve)
be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and thelegal reserve equals 25% of the capital stock account.
Such distributions can be made at any time by resolutionof the shareholders, or by the Board of Directors if certain
conditions are met.

The Company’s capital reserve included in capital surplus atMarch 31, 2024 amounted to ¥9,634 million ($63,629 thousand). In
addition, the Company’s legal reserve included in retained earnings
at March 31, 2024 amounted to ¥2,424 million ($16,010 thousand).
Under the Law, upon the issuance and sale of new sharesof common stock, the entire amount of the proceeds is required
to be accounted for as common stock, although a company
may, by resolution of the Board of Directors, account for an
amount not exceeding 50% of the proceeds of the sale of newshares as additional paid-in capital.

Movements in common stock during the years ended March 31, 2024 and 2023 are summarized as follows:
Number of shares

2024
April 1, 2023

Common stock

Increase

117,908,285

Decrease—

March 31, 2024—

117,908,285

2023
April 1, 2022

Common stock

120,908,285

21

Increase—

Decrease

March 31, 2023

3,000,000

117,908,285

17. TREASURY STOCK
Movements in treasury stock during the years ended March 31, 2024 and 2023 are summarized as follows:
Number of shares

2024
April 1, 2023

786,718

Treasury stock

Increase

Decrease

3,360,097

3,700

March 31, 2024

4,143,115

2023
April 1, 2022

Treasury stock

881,767

Increase

Decrease

2,904,951

3,000,000

March 31, 2023

786,718(*) Treasury stock at the end of the current fiscal year does include 288,500 shares of the Company’s shares held by the Stock-Granting Trust for Directors.

The increase in treasury stock includes 3,359,600 shares
resulting from the purchases of treasury stock by resolutionof the Board of Directors and 497 shares resulting from thepurchase of shares less than one voting unit for the year
ended March 31, 2024. The decrease in treasury stockincludes 3,700 shares resulting from the grant of treasury
stock by the Stock-Granting Trust for Directors.
The increase in treasury stock includes 2,612,300 shares
resulting from the purchases of treasury stock by resolutionof the Board of Directors, 292,200 shares resulting from thepurchases of treasury stock by the Stock-Granting Trust for
Directors and 451 shares resulting from the purchase ofshares less than one voting unit for the year ended March 31,
2023. The decrease in treasury stock includes 3,000,000
shares resulting from the retirement of treasury stock byresolution of the Board of Directors for the year ended March
31, 2023.

18. FINANCIAL INSTRUMENTS(a) Policy for financial instruments
With regard to the Group’s financing policy, short-termworking funds are raised by bank borrowings or issuance ofcommercial papers and long-term funds are raised by bankborrowings and the issuance of bonds. The policy forderivative transactions is that those are utilized to mitigate
the fluctuation risk related to foreign currency exchange
rates arising from the receivables and payables denominatedin foreign currencies, and fluctuation risk related to interest
rates with respect to loans payable, and derivative transactions
are not carried out for speculative purposes.
(b) Types of financial instruments, related risk and risk
management for financial instruments
Receivables such as trade notes and accounts receivable areexposed to customers’ credit risks. With regard to this risk,
the Group manages the settlement date by each customer,
and establishes credit limits by each customer based on theGroup’s internal credit rating policy and monitors outstandingbalances. The Group establishes system under which thecredit status by each customer is reviewed at least once a
year and the sales limit amount updated as necessary.
In the cases of notes and accounts receivable or payable
denominated in foreign currencies, foreign currency forward
exchange contracts are used to hedge the risk of fluctuation.
However, for foreign currency transactions denominated in
the same currency involving either payables or receivables,

foreign currency forward exchange contracts are used solely
for the netted position.
Investments in securities are subject to market pricefluctuation risk. However, these are mainly equity securitiesof other companies with which the Group has business
relationships. The Group regularly monitors both their fairvalue and the financial condition of the issuer. The Group also
reviews as needed the condition of its holdings with concern
to the status of business and financial transactions.
Short-term loans are raised primarily in connection withbusiness activities. Long-term loans and bonds are takenout principally for the purpose of making capital spending,investments and financing. Loans with variable interest rates
are subject to the risk of fluctuating interest rates. However, toreduce such risk, the Group utilizes derivatives (interest-rate
swap transactions) as a hedging instrument.
Derivatives include foreign currency forward exchange
contracts to manage fluctuation risk in foreign currency
exchange rates and interest-rate swaps to manage fluctuation
risk of interest rates related to the interest payments forbank loans.
In addition, notes and accounts payable and bank loans
are exposed to liquidity risk. However, the Group manages
such risk by monitoring the balance of inflow and outflow ofcash and establishing liquidity on hand in excess of half of
the amount of monthly net sales.

22(c) Fair value of financial instruments
The carrying value of financial instruments on the consolidated balance sheets, fair value and the differences as of March 31,
2024 and 2023, are shown in the following table. Financial instruments for which fair value is deemed extremely difficult todetermine are not included.
Millions of yen

2024

Assets
Notes and accounts receivable
Investments in securities (*2)
Other securities
Total assets
Liabilities
Notes and accounts payable
Bonds
Long-term loans
Total liabilities
Derivatives (*3)
Not subject to hedge accounting
Subject to hedge accounting
Total derivative transactions

Carrying value

Fair value

Difference¥ 320,347¥ 320,347¥—

61,116¥ 381,464

61,116¥ 381,464¥——¥ 156,352
20,00027,533¥ 203,885¥ 156,352
19,292
27,173¥ 202,818

¥

¥

¥

¥

¥

(327)
169
(158)

¥

(327)
169
(158)

¥

—
(708)
(359)
(1,067)———¥

Millions of yen

2023

Assets
Notes and accounts receivable
Investments in securities (*2)
Other securities
Total assets
Liabilities
Notes and accounts payable
Bonds
Long-term loans
Total liabilities
Derivatives (*3)
Not subject to hedge accounting
Subject to hedge accounting
Total derivative transactions

Carrying value

Fair value

Difference¥ 302,105¥ 302,105¥—

55,849¥ 357,955

55,849¥ 357,955¥——¥ 140,438
30,00032,697¥ 203,135¥ 140,438
29,58032,286¥ 202,304

¥

¥

¥

¥

¥

23

(405)
(11)
(416)

¥

(405)
(11)
(416)

¥

¥

—
(420)
(410)
(830)
—
—
—

Thousands of U.S. dollars

2024

Assets
Notes and accounts receivable
Investments in securities (*2)
Other securities
Total assets
Liabilities
Notes and accounts payable
Bonds
Long-term loans
Total liabilities
Derivatives (*3)
Not subject to hedge accounting
Subject to hedge accounting
Total derivative transactions

Carrying value

Fair value$ 2,115,759$ 2,115,759$—

403,646$ 2,519,411

403,646$ 2,519,411$——$ 1,032,640
132,092
181,844$ 1,346,576$ 1,032,640
127,416
179,466$ 1,339,528

$

$

$

$

$

(2,160)
1,116(1,044)(2,160)
1,116(1,044)$

Difference—(4,676)(2,371)(7,047)

$

—
—
—

$

(*1) Cash is omitted from the notes. Time deposits, short-term loans, current portion of long-term loans, commercial papers, and current portion of bonds are omitted
from the notes because their fair values approximate their carrying amounts due to their short maturities.
(*2) Stocks and other securities without market quotations are not included in “Investment securities (*2)”. The carrying amount of such financial instruments on the
consolidated balance sheet is as follows.
Thousands of
U.S. dollars

Millions of yen

2024

¥

Unlisted equity securities
Investments in unconsolidated subsidiaries and affiliates
Total

¥

4,823
10,286
15,109

2023

¥

2024

4,552
9,341
13,893¥$31,85467,93599,789$(*3) Receivables and payables arising from derivative transactions are presented as a net value with the amount in parentheses representing a net liability position.

The redemption schedule for time deposits and notes and accounts receivable with maturity dates at March 31, 2024 issummarized as follows:
Millions of yen
Within 1 year

Over 1 year andless than 5 years¥

59,197
320,347¥ 379,545

Time deposits
Notes and accounts receivable
Total

¥
¥

—
—
—

Thousands of U.S. dollars
Within 1 year$

390,972
2,115,759$ 2,506,737

Time deposits
Notes and accounts receivable
Total

Over 1 year andless than 5 years

$
$

—
—
—

With respect to the redemption schedule of bonds, long-term loans and finance lease obligations, please refer to Note 11.
The fair value of financial instruments is classified into the following three levels based on the observability and materiality of the
inputs used to determine fair value.
Level 1 fair value:
In the inputs related to the calculation of observable fair value, fair value is calculated based on quoted market prices for
assets or liabilities whose fair value are formed in an active market.
Level 2 fair value:
In the inputs related to the calculation of observable fair value, fair value is calculated by using inputs related to thecalculation of fair value other than Level 1 input.
24

Level 3 fair value:
Fair value is calculated using inputs related to the calculation of unobservable fair value.
When multiple inputs that have a significant effect on fair value are used, fair value is classified into the level with the lowest
priority in the fair value calculation among the levels to which those inputs belong.
Financial instruments recorded on the consolidated balance sheet at fair value.
Millions of yen

2024
Level 2

Level 1

Investments in securities
Other securities
SharesDerivatives
Forward exchange contracts
Total assets

Level 3

Total¥

61,116

¥

—

¥

—

¥

61,116¥—
61,116

¥

(158)
(158)

¥

—
—

¥

(158)
60,958Millions of yen

2023
Level 1

Investments in securities
Other securities
SharesDerivatives
Forward exchange contracts
Total assets

Level 2

Level 3

Total¥

55,849

¥

—

¥

—

¥

55,849¥—55,849

¥

(416)
(416)

¥

—
—

¥

(416)
55,432Thousands of U.S. dollars

2024
Level 1

Investments in securities
Other securities
SharesDerivatives
Forward exchange contracts
Total assets

Level 2$

403,646$—
403,646

Level 3$—$

(1,044)(1,044)

Total

$

—

$

—
—

$

403,646$(1,044)
402,602

Financial instruments other than those recorded on the consolidated balance sheets at fair value
Millions of yen

2024
Level 2

Level 1

Notes and accounts receivable
Total assets
Notes and accounts payable
Bonds
Long-term loans
Total liabilities

¥
¥

¥

25

—
—
—
—
—
—

¥ 320,347¥ 320,347
156,352
19,292
27,173¥ 202,818

Level 3

¥
¥

¥

Total

—
—
—
—
—
—

¥ 320,347¥ 320,347
156,352
19,292
27,173¥ 202,818

Millions of yen

2023
Level 1

Notes and accounts receivable
Total assets
Notes and accounts payable
Bonds
Long-term loans
Total liabilities¥¥

Level 2

—
—
—
—
—
—

¥

Level 3¥¥¥ 302,105¥ 302,105
140,438
29,58032,286¥ 202,304

Total

—
—
—
—
—
—

¥

¥ 302,105¥ 302,105
140,438
29,58032,286¥ 202,304

Thousands of U.S. dollars

2024
Level 1

Notes and accounts receivable
Total assets
Notes and accounts payable
Bonds
Long-term loans
Total liabilities$$$

Level 2

—
—
—
—
—
—

$ 2,115,759$ 2,115,759
1,032,640
127,416
179,466$ 1,339,528

Level 3

$
$

$

Total

—
—
—
—
—
—

$ 2,115,759$ 2,115,759
1,032,640
127,416
179,466$ 1,339,528

Explanation of valuation techniques used, and inputs related to the calculation of fair value.
(i) Notes and accounts receivable
The fair value of notes and accounts receivable iscalculated based on the present values classified by
the certain period of times which are discounted
respectively by the interest rate determined taking
into account the remaining period to maturity and isclassified as Level 2.
(ii) Investment securities
Listed stocks are valued by using quoted market
prices. Since listed stocks are traded in active
markets, their fair value is classified as Level 1.
(iii) Derivative
Fair value is calculated based on prices, etc., provided
by counterparty financial institutions and is classified
as Level 2.
The fair value of foreign currency forward
exchange contracts and other derivatives that applied
the allocation method is included in the fair value ofthe underlying accounts receivable and payable.
The fair value of interest rate swaps that applied
the exceptional accounting treatment is included in
the long-term loans because it is accounted for as if
the interest rates applied to the swaps had originallyapplied to the underlying long-term loans.

(iv) Notes and accounts payable
The fair value of notes and accounts payable iscalculated based on the present values classified by
the certain period of times which are discounted
respectively by the interest rate determined taking
into account the remaining period to maturity and isclassified as Level 2.
(v) Bonds
The fair value of bonds issued by the Company iscalculated based on quoted market prices andclassified as Level 2.
(vi) Long-term loans
The fair value of long-term loans payable is calculated
based on the present value of the total of principal
and interest discounted by the incremental borrowing
rate and is classified as Level 2.

2619. DERIVATIVES AND HEDGING ACTIVITIESThe currency-related derivatives positions outstanding for which hedge accounting has not been applied at March 31, 2024 and2023 are as follows:
Millions of yen

2024

Classification

Transaction

Foreign currency forward exchange contracts:
Selling:
U.S. dollars
YenEuro
Over-theRMB
counter
IDR
transactions
Others
Buying:U.S. dollars
YenEuro
Others
Total

Contract value(notional principal
amount)

¥

¥

4,954
146
13,865
457
2,271
571
3,969
3,307
200
237
29,981

Contract value(notional principal
amount over
one year)

¥

¥

—
—
—
—
—
—
—
—
—
—
—

Fair value

Valuation
gain (loss)

¥

¥

¥

(115)
1
(253)
(6)
16
(9)
68
(35)
6
(0)
(327)

¥

(115)
1
(253)
(6)
16
(9)
68
(35)
6
(0)
(327)

Millions of yen

2023

Classification

Transaction

Foreign currency forward exchange contracts:
Selling:
U.S. dollars
YenEuro
Over-theRMB
counter
IDR
transactions
Others
Buying:U.S. dollars
YenEuro
Others
Total

Contract value(notional principal
amount)

¥

¥

27

5,287
226
13,918
311
2,002
152
4,770
3,045
186
165
30,066

Contract value(notional principal
amount over
one year)

¥

¥

—
—
—
—
—
—
—
—
—
—
—

Fair value

¥

¥

(61)
(2)
(283)
0
(37)
(2)
(20)
(2)
5
(0)
(405)

Valuation
gain (loss)

¥

¥

(61)
(2)
(283)
0
(37)
(2)
(20)
(2)
5
(0)
(405)

Thousands of U.S. dollars

2024

Classification

Transaction

Foreign currency forward exchange contracts:
Selling:
U.S. dollars
YenEuro
Over-theRMB
counter
IDR
transactions
Others
Buying:U.S. dollars
YenEuro
Others
Total

Contract value(notional principal
amount)Contract value(notional principal
amount over
one year)$$$

32,719964
91,573
3,018
14,9993,771
26,214
21,841
1,321
1,565
198,012

—
—
—
—
—
—
—
—
—
—
—

$

Valuation
gain (loss)

Fair value

$

(760)
7
(1,671)
(40)
106
(59)
449
(231)
40
(1)
(2,160)

$

$

(760)
7
(1,671)
(40)
106
(59)
449
(231)
40
(1)
(2,160)$The currency-related derivatives positions outstanding for which hedge accounting has been applied at March 31, 2024 and 2023
are as follows:
Millions of yen

2024
Method forhedge accounting

Deferralhedge
accounting

Allocation
method forforeigncurrency
forwardexchange
contracts(Note 2(p))
Total

Major
hedged item

Transaction

Foreign currency forward exchange contracts:
Selling:
U.S. dollars
Euro
RMB
Others
Buying:U.S. dollars
Euro
RMB
OthersForeign currency forward exchange contracts:
Buying:U.S. dollars

Contract value(notional principal
amount)¥Contract value(notional principal
amount over
one year)

¥

—
—
—
—

Fair value

¥

—
(8)
(1)
(1)

Accounts
receivable

—
407
115
104

Accounts
payable

3,522
489
22
18

—
—
—
—

163
17
0
(0)

Accounts
payable

9

—

(*)

¥

28

4,689

¥

—

¥

169

Millions of yen

2023
Method forhedge accounting

Deferralhedge
accounting

Allocation
method forforeigncurrency
forwardexchange
contracts(Note 2(p))
Total

Major
hedged item

Transaction

Foreign currency forward exchange contracts:
Selling:
U.S. dollars
Euro
RMB
Others
Buying:U.S. dollars
Euro
RMB
OthersForeign currency forward exchange contracts:
SellingEuro
Others
Buying:Euro
THB
OthersContract value(notional principal
amount)¥Contract value(notional principal
amount over
one year)¥

Fair value

¥

—
—
—
—

—
(8)
0
(0)

Accounts
receivable

—
335
72
17

Accounts
payable

5,480
359
57
67

—
—
—
—

(13)
11
0
0

Accounts
receivable

110
12

—
—

(*)
(*)

202
122
12
6,850

—
—
—
—

(*)
(*)
(*)
(11)

Accounts
payable¥¥¥Thousands of U.S. dollars

2024
Method forhedge accounting

Deferralhedge
accounting

Allocation
method forforeigncurrency
forwardexchange
contracts(Note 2(p))
Total

Major
hedged item

Transaction

Foreign currency forward exchange contracts:
Selling:
U.S. dollars
Euro
RMB
Others
Buying:U.S. dollars
Euro
RMB
OthersForeign currency forward exchange contracts:
SellingEuro
Others
Buying:U.S. dollars
THB
OthersContract value(notional principal
amount)Contract value(notional principal
amount over
one year)$$Accounts
receivable

—
2,688
760
687

Accounts
payable23,261
3,230
145
119

Accounts
receivable
59

Accounts
payable$30,969$————Fair value

$

—
(53)
(7)
(1)

—
—
—
—

1,077
112
0
0

—
—

(*)
(*)

—
—
—
—

(*)
(*)
(*)
1,116

$

(*): The fair value of foreign currency forward exchange contracts that qualify for the allocation method is included in the fair value of the underlying accounts
receivable and payable.

2920. RESEARCH AND DEVELOPMENT COSTS
Research and development costs included in selling, general and administrative expenses for the years ended March 31, 2024
and 2023 totaled ¥5,987 million ($39,542 thousand) and ¥5,755 million, respectively.

21. OPERATING LEASES
Future minimum lease payments subsequent to March 31, 2024 under noncancelable operating leases are as follows:Year ending March 31,

Millions of yen

2025
2026 and thereafter
Total

¥
¥

321
469
790

Thousands of
U.S. dollars

$
$

2,120
3,098
5,218

22. CONTINGENT LIABILITIESThe Company and its consolidated subsidiaries had contingent liabilities as guarantors of loans of customers and other in theaggregate amount of ¥980 million ($6,472 thousand) and ¥982 million ($7,354 thousand) at March 31, 2024, and 2023, respectively.
The amount of guarantees was previously disclosed based on an actual loan execution amount; however, from the current fiscal
year the maximum limit of the guarantees is disclosed.
In addition, the Company and its consolidated subsidiaries had contingent liabilities arising from notes discounted with banks
in the amounts of ¥252 million ($1,664 thousand) and ¥355 million ($2,659 thousand) at March 31, 2024, and 2023, respectively.

23. AMOUNTS PER SHARE
Amounts per share at March 31, 2024 and 2023 and for the years then ended are as follows:
Yen

U.S. dollars

2024

Profit attributable to owners of parent:
Basic
DilutedNet assets
Cash dividends applicable to the year¥

194.96—
3,463.84
80.00

2023

¥

199.54—
3,139.26
70.00

2024

$

1.29
—
22.88
0.53

Basic profit attributable to owners of parent per share has been computed based on the profit attributable to owners of parent
available for distribution to the shareholders of common stock and the weighted-average number of shares of common stock
outstanding during the year.
Diluted profit attributable to owners of parent per share for the years ended March 31, 2024 and 2023 has not beenpresented because no potentially dilutive shares of common stock were outstanding.
Net assets per share have been computed based on the number of shares of common stock outstanding at the year end.
Cash dividends per share represent the cash dividends proposed by the Board of Directors as applicable to the respective
years together with the interim cash dividends paid.
The Company’s shares held by the Stock-Granting Trust for Directors are included in treasury stock in shareholders’ equity.
These are excluded from the total number of issued shares at the end of the period when calculating net assets per share. Also,these are excluded from the calculation of average number of shares during the period when calculating profit attributable toowners of parent per share.
The number of such shares at the end of the period excluded from the calculation of net assets per share was 288,500
shares, while the average number of shares during the period excluded from the calculation of profit attributable to owners ofparent per share was 289,923 shares.

30

The financial data used in the computation of basic profit attributable to owners of parent per share for the years ended March 31,
2024 and 2023 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2024

Profit attributable to owners of parent
Profit available for distribution to shareholders of common stock
Weighted-average number of shares

2023

¥

22,402
22,402
114,911,971¥

23,62523,625
118,398,261

2024

$

147,956
147,956

24. CASH AND TIME DEPOSITS
A reconciliation of cash and time deposits in the accompanying consolidated balance sheets at March 31, 2024 and 2023 and cash
and cash equivalents in the accompanying consolidated statements of cash flows for the years then ended is as follows:
Thousands of
U.S. dollars

Millions of yen

2024

¥

Cash and time deposits
Time deposits with maturities of more than three months
Cash and cash equivalents¥

59,410(225)
59,1852023¥¥

40,897(565)
40,331

2024$$

392,378(1,486)
390,892

25. SEGMENT INFORMATION(a) Overview of reportable segments(Change in Business Segments)
On October 1, 2023, the Company integrated its original 11
business departments into 7 to streamline business operations
by expanding the scale and functions of each department. The
integration of business departments resulted in the followingchanges to business segments.
The Color & Advanced Processing Department of theAdvanced Materials & Processing segment was abolishedand integrated into the Performance Chemicals Departmentof the Functional Materials segment, and the Polymers Global
Account Department of the Advanced Materials & Processing
segment.
Segment information for the previous fiscal year reflects
this reclassification.
The following describes the major products and services
handled by each reportable segment.
The Functional Materials segment is engaged in the salesof paints/inks, dyestuffs, pigments, additives, processed
pigments, dispersing elements, functional pigments, thermal
paper materials, toner and inkjet materials, materials foradhesives, urethane materials and auxiliary materials, plastic
materials, plastic additives, industrial oil solutions, water
processing raw materials, surfactant raw materials,
fluorochemicals, encapsulant materials, 5G materials, silicone
materials, environmental solutions and environment-relatedcommercial products, sintered metal filters, conductive
coatings, and more for the paints/inks, dye/additive, resins,urethane foam, organic synthesis, surfactants, electronics

chemicals, digital print processing materials, communications
equipment, water processing, metal processing, plastic andfilm processing, stationery, functional film and sheet, hygienematerials, and other industries.
The Advanced Materials & Processing Segment isengaged in the sales of thermoplastic resins, thermosetting
resins, plastics products, resin molding tools/dies, and more
for the plastic compounds, masterbatch, raw resin material,
resin molding, appliance and office automation device,electronics, packaging material, daily commodities, household
goods, construction material, and other industries.
The Electronics & Energy Segment is engaged in thesales of formulated epoxy resins, fluorine products, precisionabrasives, semiconductor assembly materials and devices,adhesives and encapsulant materials, display panel
components and devices, chemical management equipment
for display manufacturing processes, low-temperature/
vacuum equipment, liquid state analysis equipment, LEDs, 3D
printing products, solar panels, and other products for thesemiconductor, electronic component, AR/VR, environmental
energy, 3D printing, heavy electrical and light electrical, HDD,
automotive and aircraft, display, touch panel, housing,lighting, renewable energy, large-scale commercial facility,
and other industries.
The Mobility Segment is engaged in the sales of plastic
products in general, materials for secondary batteries, interior
and exterior materials, materials for functional components,
products for electrification, sensor components, in-vehicle
electronics products, in-vehicle display-related components,31

self-driving-related products, and other products for theoverall mobility industry and related industries.
The Life & Healthcare segment is engaged in the sale ofpharmaceutical/agricultural chemicals and materials, research
products, in vitro diagnostics, enzymes, food additives, foodingredients, sports nutrition products, nutrient premixes,
additives for cosmetics, feeds, surfactants, and medical
appliances for the pharmaceutical, food and beverage,
cosmetics, agricultural, toiletries, and health care, and otherindustries. The segment offers radiation measurement andsleep measurement as one of its main services. In addition,

this segment sells cosmetics, health foods, and beauty foods
directly to consumers.
(b) Calculation methods of net sales, income or loss, assets,
and other items by reportable segments
The accounting policies of reportable segments are generally
identical to those described in Note 2. Reportable segment
income corresponds to operating income in the consolidated
statements of income. Intersegment internal income andtransfers are determined based on the values of transactionsat actual market prices.

(c) Information on net sales, income or loss, assets and other items for each reportable segment
Information by reportable segments for the year ended March 31, 2024 and 2023 are as follows:
Millions of yen

2024
Reportable Segments
Functional
Materials

Sales to customers
Intersegment sales andtransfers
Net sales
Segment income
Segment assets
Other items
Depreciation andamortization other thanamortization of goodwill
Amortization of goodwill
Unamortized balance of
goodwill
Investments in affiliates
accounted for by theequity method
Increase in property, plantand equipment, net andintangible assets

Advanced
Materials &Processing

Electronics&
EnergyLife &
Healthcare

Mobility

Total¥146,804 ¥198,543 ¥144,758 ¥132,117 ¥277,779 ¥900,003

Others¥

Total

Corporate

146 ¥900,149 ¥Adjustments Consolidated— ¥— ¥900,149

1,709
148,513
8,629
131,559792
199,335
6,804
104,394

3,068
147,826
11,32784,087

2,798
134,915
4,933
74,881

471
278,251
10,321
245,132

8,839
908,842
42,016640,056

7,251
7,398
79
3,142

16,090916,240
42,095643,198——(12,007)
203,748(16,090)(16,090)529(54,610)—900,149
30,618792,336

916
143

725
—

1,803
54

388
—

7,291
2,429

11,1262,627

18—

11,145
2,627

2,853
—

—
—

13,998
2,627

1,992

—

444

—

25,44727,884—27,884——27,884

2,649

1,128

2,994

1,332

3,351

11,456111

11,567—(4)

11,563

1,262

1,159

3,189

325

4,367

10,30460

10,364

9,648—

20,01232

Millions of yen

2023
Reportable Segments

Sales to customers
Intersegment sales andtransfers
Net sales
Segment income
Segment assets
Other items
Depreciation andamortization other thanamortization of goodwill
Amortization of goodwill
Unamortized balance of
goodwill
Investments in affiliates
accounted for by theequity method
Increase in property, plantand equipment, net andintangible assets

Functional
Materials

Advanced
Materials &Processing

Electronics&
EnergyMobilityLife &
Healthcare

Total

Others¥156,161¥220,955¥136,975¥125,560¥273,161¥912,815¥

799
156,961
10,486
130,562776
221,731
7,678
113,358

2,580
139,555
9,273
77,666

2,257
127,817
4,794
74,739490
273,651
10,581
240,4426,903
919,718
42,814
636,769

Total

Corporate

81¥912,896

¥

7,439
7,521
108
3,221

14,343927,239
42,922639,990

Adjustments Consolidated—¥912,896——(9,932)
189,535(14,343)(14,343)381(66,836)—
912,896
33,371
762,688

—

¥

1
817
134

1,100
—

1,608
51

468
—

6,536
2,359

0,531
2,545

19
—

10,551
2,545

1,826
—

—
—

12,377
2,545

1,890

—

442

—

26,671

29,004—29,004——29,004

1,957

1,297

2,562

1,259

3,268

10,344104

10,449—(0)

10,448

1,591

1,006

1,908

279

5,737

10,524

7

10,531

6,642—

17,174

Thousands of U.S. dollars

2024
Reportable Segments
Functional
Materials

Advanced
Materials &Processing

Electronics&
EnergyLife &
Healthcare

Mobility

Total

Others

Total

Corporate

Adjustments Consolidated

Sales to customers— $5,945,109— $964 $5,945,109 $$ 969,579 $1,311,294 $ 956,066 $ 872,578 $1,834,615 $5,944,145 $Intersegment sales andtransfers—— (106,268)
47,890 106,268
58,3783,111
18,48020,263
5,231
11,287
Net sales— (106,268) 5,945,109
48,861 6,051,384
980,867 1,316,525 976,329 891,057 1,837,732 6,002,523
Segment income
3,494 202,219
522 278,020 (79,301)
68,166 277,498
32,58074,81044,93856,991
Segment assets
20,752 4,248,055 1,345,671 (360,676) 5,233,049
868,892 689,479 555,360 494,558 1,618,995 4,227,303
Other items
Depreciation andamortization other thanamortization of goodwill
92,451—
18,84373,608
11973,48348,154
2,563
11,908
4,788
6,050
Amortization of goodwill
17,350——17,350—17,35016,043—357—
944
Unamortized balance of
goodwill— 184,162—— 184,162— 168,067 184,162
2,932—
13,156
Investments in affiliates
accounted for by theequity method(26) 76,369—
76,395733
75,662
22,132
8,797
19,7747,450
17,496
Increase in property, plantand equipment, net andintangible assets— 132,171
63,721
68,450396
68,054
28,842
2,146
21,062
7,655
8,335

33

(d) Geographical information
Net sales by country or region for the years ended March 31, 2024 and 2023 are summarized as follows:
Millions of yen

2024
Reportable Segments

Japan
Greater China
ASEAN
Americas
EuropeOther
Revenues from contracts withcustomers
Net sales to customers

Advanced
Materials &Processing

Electronics&
EnergyLife &
Healthcare

Others(Note) 3

Total¥ 64,933 ¥ 34,694 ¥ 56,442 ¥ 42,163 ¥ 70,490
3,866
31,72459,80396,356
17,881
6,200
37,665
7,403
60,58634,19818,716 123,756
8,880
4,509
22,84773,068
1,562
4,021
1,133
5,899
396
285
8,206
1,263
1,044

¥ 146
—
—
—
—
—

¥268,872
209,632
146,053
178,71085,685
11,196

29.9
23.3
16.2
19.9
9.5
1.2

277,779
277,779

146
146

900,149
900,149

100.0
100.0

Functional
Materials

146,804
146,804

198,543
198,543

144,758
144,758

Mobility

132,117
132,117

Composition(%)

1. Net sales are categorized by country or region, according to the location of the Company and the consolidated subsidiaries.
2. Major countries and regions in each category other than Japan(1) Greater China..... China, Hong Kong, Taiwan(2) ASEAN .................. Thailand, Vietnam, Indonesia(3) Americas.............. U.S., Mexico(4) Europe.................. U.K., Germany(5) Other..................... Korea
3. “Others” is a business segment consisting of businesses not included in Reportable Segments, and includes information processing services, and professional service.
Millions of yen

2023
Reportable Segments

Japan
Greater China
ASEAN
Americas
EuropeOther
Revenues from contracts withcustomers
Net sales to customers

Functional
Materials

Advanced
Materials &Processing

Electronics&
EnergyMobilityLife &
Healthcare

Others(Note) 3¥ 67,087
20,50435,91624,2387,172
1,242¥ 39,362
108,088
67,243
3,625
1,094
1,540

¥ 51,955
56,943
7,540
6,929
4,712
8,893

¥ 39,817
33,49936,541
14,0391,321
342¥ 67,103
3,276
5,507
122,538
74,386
349

¥ 81
—
—
—
—
—

¥265,407
222,312
152,750
171,370
88,686
12,368

29.1
24.4
16.7
18.8
9.7
1.3

156,161
156,161

220,955
220,955

136,975
136,975

125,560
125,560

273,161
273,161

81
81

912,896
912,896

100.0
100.0

Total

Composition(%)

1. Net sales are categorized by country or region, according to the location of the Company and the consolidated subsidiaries.
2. Major countries and regions in each category other than Japan(1) Greater China..... China, Hong Kong, Taiwan(2) ASEAN .................. Thailand, Vietnam, Indonesia(3) Americas.............. U.S., Mexico(4) Europe.................. U.K., Germany(5) Other..................... Korea
3. “Others” is a business segment consisting of businesses not included in Reportable Segments, and includes information processing services, and professional service.

34

Thousands of U.S. dollars

2024
Reportable Segments
Advanced
Materials &Processing

Functional
Materials

Electronics&
EnergyLife &
Healthcare

Mobility$ 428,855 $ 229,139 $ 372,776 $ 278,469 $ 465,557
25,533
118,097 636,391 394,974 209,524
40,94848,894 248,762
225,864 400,145
58,649 123,611 817,357
29,780150,895
10,316 482,584
26,557
7,483
38,9602,615
1,882
54,197
8,342
6,895

Japan
Greater China
ASEAN
Americas
EuropeOther
Revenues from contracts withcustomers
Net sales to customers

969,579 1,311,294
969,579 1,311,294

956,066
956,066

872,578 1,834,615
872,578 1,834,615

Others(Note) 3

Composition
(%)

Total

$ 964 $1,775,788— 1,384,532
964,619—— 1,180,305
565,914—73,945
—

29.9
23.3
16.2
19.9
9.5
1.2

5,945,109
5,945,109

100.0
100.0

964
964

1. Net sales are categorized by country or region, according to the location of the Company and the consolidated subsidiaries.
2. Major countries and regions in each category other than Japan(1) Greater China..... China, Hong Kong, Taiwan(2) ASEAN .................. Thailand, Vietnam, Indonesia(3) Americas.............. U.S., Mexico(4) Europe.................. U.K., Germany(5) Other..................... Korea
3. “Others” is a business segment consisting of businesses not included in Reportable Segments, and includes information processing services, and professional service.

Information of major customers not presented here, since no single customer accounts for 10% or more of consolidated net sales.
Property, plant and equipment by country or region as of March 31, 2024 and 2023 are summarized as follows:
Millions of yen

2024
Japan

¥

Americas58,943¥

Other

21,458

¥

Total

6,990

¥

87,392Millions of yen

2023
Japan

¥

Other

59,807¥

Total

22,257¥82,064

Thousands of U.S. dollars

2024
Japan

$

389,294

Americas$141,721

Other

$

Total

46,166$577,188(e) Information on loss on impairment of fixed assets per reportable segments
Loss on impairment of fixed assets for the years ended March 31, 2024 and 2023 is as follows:
Millions of yen

2024
Reportable Segments

Loss on impairment of fixed assets

Functional
Materials

Advanced
Materials &Processing

Electronics&
Energy¥ 2,276¥—¥—

Mobility¥—Life &
Healthcare

¥—

Total

¥ 2,276

Others¥—Eliminations or
corporate

¥—

Total

¥ 2,276

The Functional Materials segment recorded impairment losses of ¥2,276 million for business-use assets etc. related to color
former manufacturing business due to declining profitability. The Company wrote down the book value of these assets to theirrecoverable amounts.

35

Millions of yen

2023
Reportable Segments

Loss on impairment of fixed assets

Functional
Materials

Advanced
Materials &Processing

Electronics&
Energy¥—¥ 2,825¥ 12

Mobility¥—Life &
Healthcare

Total

¥—

¥ 2,838

Eliminations or
corporate

Others

¥—

¥—

Total

¥ 2,838

The Company conducted a review of the future business plans for the business-use assets for the products and manufacturing
process development business related to resins and for the development and manufacturing business in connection withwater-soluble support materials for 3D printing, both in the Advanced Materials & Processing segment. As a result, the Company
determined that future cash flows fell below book value. Therefore, the Company wrote down the book value of these assets totheir recoverable amounts and recorded impairment losses of ¥2,285 million and ¥539 million, respectively.
Thousands of U.S. dollars

2024
Reportable Segments
Functional
Materials

Advanced
Materials &Processing

Electronics

Mobility &EnergyLoss on impairment of fixed assets $ 15,032

$—

$—

$—

Life &
Healthcare

Total$ — $ 15,032

Eliminations or
corporate

Others$—Total$ — $ 15,032

26. RELATED PARTY TRANSACTION
A consolidated subsidiary of the Company recorded the following related-party transactions for the years ended March 31, 2024
and 2023:
Name ofrelated party

Relationship with the related party

315 Fullerton A director of a consolidated
subsidiary of the Company
LLC (*1)
owns a majority of thevoting rights of the entity.
LivPure LLC A close family member of adirector of a consolidated(*3)
subsidiary of the Company
owns a majority of thevoting rights of the entity.
Total

Description of
the transaction

Thousands of
U.S. dollars

Millions of yen
Account

2024

2023

2024

Rental of real Rent payment
for real estate
estate (*2)

¥ 49

¥ 45

$ 324

Sale of sports
Sale ofproducts (*4) nutrition
products
Accounts
receivable

21
(*3)

26

$ 139
(*3)

—
(*5)
¥ 70

21

—
(*5)
$ 462

¥ 92

(*1): Mr. Donald K. Thorp, a director of Prinova Group, LLC, which is a consolidated subsidiary of the Company, owns 77% of the voting rights.
(*2): Rent is determined taking the transactions in the neighboring area into consideration.
(*3): A close family member of Mr. Donald K. Thorp, a director of Prinova Group, LLC, which is a consolidated subsidiary of the Company, owned 67% of the voting
rights. However, due to the sale of the shares as of January 2024, the entity is no longer classified as one in which a close family member of a director of aconsolidated subsidiary of the Company owns a majority of the voting rights. The transaction amounts represent the amounts during the period when the entity
was classified as a related party.
(*4): Transaction terms relating to sale of products, and policies on determination of transaction terms are determined in the same manner as general transactions.
(*5): As of the end of the fiscal year, the entity is not classified as a related party, so the balance of accounts receivable at the end of the period is not shown.

36

27. SUBSEQUENT EVENTS(a) Cash Dividends
The following distribution of retained earnings of the Company, which has not been reflected in the accompanying consolidated
financial statements for the year ended March 31, 2024, was approved at a meeting of the shareholders held on June 21, 2024:
Thousands of
U.S. dollars

Millions of yen¥

Cash dividends (¥40.0 = U.S.$ 0.26 per share)

4,562

$

30,130(*): Total amount of dividends for common stock of 4,562 million yen includes dividends of 11 million yen in relation to the Company’s shares held by the Stock-Granting
Trust for Directors.

(b) Acquisition of treasury stock
The Company resolved matters relating to the acquisition of treasury stock at the meeting of its Board of Directors held on May 8,2024 as follows, pursuant to the provision of Article 156, as applied pursuant to Article 165, paragraph (3) of the Companies Act.
(1) Reason for the acquisition of treasury stock
The Company resolved at the Board of Directors meeting held on May 8, 2024 to change its shareholder returns policy under
the Medium-term Management Plan ACE 2.0, to implement total return ratio of 100% as a tentative measure for two years. The
Company will acquire treasury stock in accordance with this policy.
(2) Details of matters relating to the acquisition(i) Type of shares to be acquired
Common shares of the Company(ii) Total number of shares that can be acquired
5,500,000 shares (maximum) (4.82% of total number of issued shares(excluding treasury stock))(iii) Total value of shares that can be acquired
10 billion yen (maximum)(iv) Acquisition period
From May 9, 2024 to October 31, 2024(v) Acquisition method
To be purchased on the market(c) Cancellation of treasury stock
The Company resolved on matters relating to the cancellation of treasury stock at the meeting of its Board of Directors held on
May 8, 2024 as follows, pursuant to the provision of Article 178 of the Companies Act.
(i) Type of shares to be cancelled
Common shares of the Company(ii) Number of shares to be cancelled
3,000,000 shares (2.54% of total number of issued shares(including treasury stock))(iii) Date of cancellation
May 31, 2024
* Reference: Treasury stock held as of April 30, 2024
Total number of issued shares (excluding treasury stock)
Number of treasury stock

114,053,648 shares
3,854,637 shares(*) Treasury stock in the above table does not include 288,500 shares of the Company’s shares held by the Stock-Granting Trust for Directors.

37

Independent Auditor’s Report

38

39

40

41

42

Osaka Head Office:1-1-17, Shinmachi, Nishi-ku, Osaka City,
Osaka 550-8668, Japan
Tel: (81) 6-6535-2114
Tokyo Head Office:Tokiwabashi Tower, 2-6-4, Otemachi, Chiyoda-ku,
Tokyo 100-8142, Japan
Tel: (81) 3-3665-3021
Nagoya Branch Office:3-28-12, Meieki, Nakamura-ku, Nagoya City,
Aichi, 450-6430, Japan
Tel: (81) 52-414-5056
https://www.nagase.co.jp/english/

Printed in Japan