Detailed Consolidated Financial Statements
Years ended March 31, 2022 and 2021

Contents
Consolidated Balance Sheets .............................................................................................................................2
Consolidated Statements of Income ..................................................................................................................4
Consolidated Statements of Comprehensive Income......................................................................................5
Consolidated Statements of Changes in Net Assets .......................................................................................6
Consolidated Statements of Cash Flows ..........................................................................................................9
Notes to Consolidated Financial Statements .................................................................................................. 11
1. Major policies for preparing the consolidated financial statements ....................................................... 11
2. Significant accounting policies.................................................................................................................... 11
3. Significant Accounting Estimates................................................................................................................14
4. Changes in significant accounting policies ...............................................................................................14
5. Notes to Consolidated Balance Sheets.......................................................................................................16
6. Notes to Consolidated Statements of Income ............................................................................................17
7. Notes to Consolidated Statements of Comprehensive Income ...............................................................21
8. Notes to Consolidated Statements of Changes in Net Assets .................................................................22
9. Notes to Consolidated Statements of Cash Flows ....................................................................................24
10. Leases ...........................................................................................................................................................26
11. Financial instruments ..................................................................................................................................26
12. Marketable securities and investment securities ....................................................................................32
13. Derivative financial instruments ................................................................................................................34
14. Provision for retirement benefits ...............................................................................................................38
15. Taxes .............................................................................................................................................................41
16. Business combinations ..............................................................................................................................43
17.Revenue recognition ....................................................................................................................................48
18. Business segment information ..................................................................................................................49
19. Information on related parties ....................................................................................................................56
20. Per share information..................................................................................................................................56
21. Subsequent events ......................................................................................................................................56
22. Borrowings ...................................................................................................................................................59
23. Supplementary schedule of asset retirement obligations ......................................................................61
24. Others............................................................................................................................................................61
Independent Auditor’s Report1Consolidated Balance Sheets
Asahi Kasei Corporation and Consolidated Subsidiaries
March 31, 2022 and 2021
Millions of yen
ASSETS:
Current assets:
Cash and deposits (Notes 9 and 11)
Notes and accounts receivable–trade (Note 11)
Notes, accounts receivable – trade, and contract assets (Note 5(c))
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets:
Property, plant and equipment
Buildings and structures (Note 5(e))
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles (Note 5(e))
Accumulated depreciation
Machinery, equipment and vehicles, net
Land (Note 5(e))
Lease assets (Note 10)
Accumulated depreciation
Lease assets, net
Construction in progress
Other (Note 5(e))
Accumulated depreciation
Other, net
Subtotal
Intangible assets
Goodwill
Other
Subtotal
Investments and other assets
Investment securities (Notes 5(a), (b), 11 and 12)Long-term loans receivable (Note 11)Long-term advance payments-trade (Note 5(f))
Net defined benefit asset
Deferred tax assets (Note 15)
Other
Allowance for doubtful accounts
Subtotal
Total noncurrent assets
Total assets

Thousands of
U.S. dollars(Note 1)

2022

2021

2022

¥244,641－
434,595
252,521
146,120
141,608
117,195(2,471)
1,334,209¥221,779
338,640－
203,159
166,494
111,798
97,131(2,225)
1,136,776$1,998,538－
3,550,323
2,062,912
1,193,693
1,156,834
957,397(20,186)
10,899,510

646,311(333,966)
312,344
1,569,782(1,288,462)
281,320
69,567
8,679(6,814)
1,865
102,284
159,312(121,477)
37,834805,215

598,675(319,144)
279,531
1,535,326(1,286,057)
249,269
70,577
8,615(7,687)928
84,463
182,414(149,920)
32,495717,2625,279,887(2,728,257)
2,551,622
12,823,969(10,525,790)
2,298,178
568,31170,901(55,665)
15,236
835,585
1,301,462(992,378)
309,076
6,578,017

431,335
405,508
836,843

351,921342,454694,374

3,523,691
3,312,703
6,836,394

246,701
6,227
30,432
1,193
54,276
34,404(426)
372,808
2,014,866¥3,349,075

286,517
1,241
29,390－21,11632,709(445)
370,529
1,782,165¥2,918,941

2,015,366
50,870248,6079,746
443,395
281,055(3,480)3,045,568
16,459,979$27,359,489

The accompanying notes are an integral part of these statements.

2

Thousands of
U.S. dollars(Note 1)Millions of yen
LIABILITIES AND NET ASSETS

2022

2021

2022

Notes and accounts payable–trade (Note 11)¥178,092¥142,087$1,454,881

Short-term loans payable (Notes 11 and 22)
Commercial paper (Notes 11 and 22)

239,491
113,000

144,571
84,0001,956,466
923,127

Liabilities:
Current liabilities:

Lease obligations (Notes 10, 11 and 22)

2,224

880

18,168

Accrued expenses

146,275

126,705

1,194,960

Income taxes payable (Note 11)
Advances received

58,11562,476

21,26878,601

474,757
510,383

Provision for grant of shares

208

124

1,699

Provision for periodic repairs

4,738

7,222

38,706

Provision for product warranties
Provision for removal cost of property, plant and equipment

4,007
4,445

3,522
5,651

32,73436,312

Other

110,778

88,533904,975

Total current liabilities

923,850

703,1637,547,178

Bonds payable (Notes 11 and 22)

160,000

110,000

1,307,083

Long-term loans payable (Notes 11 and 22)
Lease obligations (Notes 10, 11 and 22)

253,785
8,715

320,404
3,921

2,073,237
71,195

Deferred tax liabilities (Note 15)
Provision for grant of shares
Provision for periodic repairs

52,017490
5,396

58,669513
3,415

424,941
4,003
44,081

Provision for removal cost of property, plant and equipment

12,29812,652

100,466

Net defined benefit liability (Note 14)

152,081

158,832

1,242,390

Long-term guarantee deposits (Note 11)
Other22,49039,13921,93930,899183,727
319,737

Noncurrent liabilities:

Total noncurrent liabilities

706,410721,243

5,770,852

1,630,260

1,424,406

13,318,030

103,389

103,389

844,61279,887

79,641

652,618

1,282,325

1,158,792

10,475,656(6,219)(5,932)(50,805)

Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gain on other securities

1,459,381

1,335,890

11,922,073

66,28791,887

541,516

Deferred gains or losses on hedges
Foreign currency translation adjustment(341)
167,225(347)
50,462(2,786)
1,366,106

Remeasurements of defined benefit plans(5,142)(10,416)(42,006)

228,029

131,586

1,862,830

Total liabilities
Net assets:
Shareholders’ equity
Capital stock
Authorized―4,000,000,000 shares
Issued and outstanding―1,393,932,032 shares
Capital surplus
Retained earnings (Note 8(b) (ii))
Treasury stock(2022―6,640,935 shares, 2021―6,396,867 shares)

Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Commitments and contingent liabilities (Notes 5(d) and 10)
Total liabilities and net assets

31,40527,058

256,556

1,718,815

1,494,535

14,041,459¥3,349,075¥2,918,941$27,359,489

The accompanying notes are an integral part of these statements.

3Consolidated Statements of Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2022 and 2021
Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

2022

Net sales (Notes 17 and 18)¥2,461,317¥2,106,051$20,107,156

Cost of sales (Note 6(c))

1,691,549

1,425,342

13,818,716

769,769
567,122680,709508,901

6,288,449
4,632,971

202,647

171,808

1,655,477

Interest income

1,364

1,895

11,143

Dividends income
Equity in earnings of affiliates

4,332
8,878

4,308
3,451

35,38972,527

Other

7,088

7,677

57,904

Total non-operating income

21,663

17,331

176,971

Interest expense
Other

3,643
8,614

3,209
7,893

29,761
70,370Total non-operating expenses

12,257

11,102

100,131

212,052

178,036

1,732,309

Gain on sales of investment securities
Gain on sales of noncurrent assets (Note 6(d))

26,545912

17,312353

216,853
7,450

Insurance income

3,777

－

30,855Gain on step acquisitions

1,700

－

13,888

Total extraordinary income

32,934

17,665

269,047

Gross profit
Selling, general and administrative expenses (Note 6(b))
Operating income (Note 18)
Non-operating income:Non-operating expenses:

Ordinary income
Extraordinary income:Extraordinary loss:
Loss on valuation of investment securities

511

66

4,174

Loss on disposal of noncurrent assets (Note 6(e))

7,526

10,63761,482

Impairment loss (Note 6(f))

6,811

1,937

55,641－－

22,2872,118－－

Loss on fire at plant facilities (Note 6(g))
Loss on product compensation (Note 6(h))
Business structure improvement expenses (Notes 6(i))

15,017

7,750

122,678

Total extraordinary loss

29,86644,795

243,983

Income before income taxes

215,121150,906

1,757,381

Income taxes (Note 15) — current— deferred

93,046(41,759)

73,273(4,465)760,118(341,140)

Total income taxes

51,28768,808418,977

Net income

163,834

82,098

1,338,404

Net income attributable to non-controlling interests

1,954

2,330

15,963

Net income attributable to owners of the parent¥161,880¥79,768$1,322,441

The accompanying notes are an integral part of these statements.

4Consolidated Statements of Comprehensive Income
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2022 and 2021
Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

¥163,834¥82,098$1,338,404

Net increase (decrease) in unrealized gain on other securities
Deferred gains or losses on hedges(25,746)5

24,806(106)(210,326)
41

Foreign currency translation adjustment
Remeasurements of defined benefit plans

114,406

35,491

934,613

5,403

12,631

44,139

Share of other comprehensive income of affiliates accounted forusing equity method

3,599

3,020

29,401

Total other comprehensive income (Note 7)

97,66875,842

797,876

Comprehensive income¥261,502¥157,941$2,136,280

Comprehensive income attributable to:
Owners of the parent¥258,322¥154,817$2,110,301

3,180

3,124

25,978Net income

2022

Other comprehensive income

Non-controlling interests
The accompanying notes are an integral part of these statements.

5Consolidated Statements of Changes in Net Assets
Asahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2022 and 2021
Millions of yen
Shareholders' equity

Balance at March 31, 2021
Cumulative effects ofchanges in accounting
policies
Restated balance
Changesduring the fiscal year
Dividends from surplus
Net income attributableto owners of the parent
Purchase of treasury stock

Capitalstock

CapitalsurplusRetainedearnings(Note 8(b))¥103,389¥79,641¥1,158,792

103,389

79,641

1,168,004

Net
unrealized
gain onothersecurities

Deferred
gains(losses)onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests¥(5,932)¥1,335,890¥91,887¥(347)¥50,462¥(10,416)¥131,586¥27,058

9,212(5,932)

1,345,102

Total net
assets¥1,494,535
9,212

91,887(347)

50,462(10,416)

131,586

27,0581,503,747(47,187)(47,187)(47,187)

161,880

161,880

161,880

(412)

(412)

(412)

125

125

125

－

－

(371)

(371)

245

245

0

Transfer from retained
earnings to capital surplus
Change of scope of
consolidation
Capital increase of
consolidated subsidiaries
Net changes of items otherthan shareholders' equity

Balance at March 31, 2022

Treasury
stock

Total
shareholders’equity9,212

Disposal of treasury stock

Total changes of items during
the period

Accumulated other comprehensive income

(371)
245

(25,600)

5

116,7635,274

96,443

4,347

100,789－245

114,321(287)

114,279(25,600)

5

116,7635,274

96,4434,347

215,069¥103,389¥79,887¥1,282,325¥(6,219)¥1,459,381¥66,287¥(341)¥167,225¥(5,142)¥228,029¥31,405¥1,718,815

6

Millions of yen
Shareholders’ equity

Balance at March 31, 2020

Accumulated other comprehensive income

Capitalstock

CapitalsurplusRetainedearnings(Note 8(b))

Treasury
stock

Total
shareholders’equityNet
unrealized
gain onothersecurities

Deferred
gains(losses)onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests¥103,389¥79,641¥1,125,738¥(5,990)¥1,302,777¥67,027¥(241)¥13,027¥(23,275)¥56,538¥24,145

Total net
assets¥1,383,460

Changesduring the fiscal year
Dividends from surplus
Net income attributableto owners of the parent
Purchase of treasury stock
Disposal of treasury stock(0)

Transfer from retained
earnings to capital surplus

0

Change of scope of
consolidation
Capital increase of consolidated
subsidiaries
Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at March 31, 2021

(45,800)(45,800)(45,800)

79,76879,76879,768

(10)

(10)

(10)

69

69

69

(0)

－

－

(914)

(914)

(914)

0

0

0

24,860(106)

37,434

12,85975,0492,913

77,962－0

33,054

59

33,11324,860(106)

37,434

12,85975,0492,913

111,075¥103,389¥79,641¥1,158,792¥(5,932)¥1,335,890¥91,887¥(347)¥50,462¥(10,416)¥131,586¥27,058¥1,494,535

7

Thousands of U.S. dollars (Note 1)
Shareholders' equity

Capitalstock

Balance at March 31, 2021

Capitalsurplus$844,612 $650,609

Cumulative effects of changes inaccounting policies
Restated balance

Retainedearnings(Note 8(b))

Treasury
stock

Total
shareholders’equityNet
unrealized
gain onothersecurities

Deferred
gains(losses)onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Total net
assets$9,466,481$(48,460)$10,913,242$750,649$(2,835)$412,238$(85,091)$1,074,961$221,044$12,209,256$75,255
844,612650,609

Accumulated other comprehensive income

9,541,737

75,255(48,460)

10,988,498

75,255
750,649(2,835)412,238(85,091)

1,074,961

221,044

12,284,511

Changesduring the fiscal year
Dividends from surplus(385,483)(385,483)(385,483)

Net income attributableto owners of the parent

1,322,441

1,322,441

1,322,441(3,366)(3,366)(3,366)

1,021

1,021

1,021

－

－

(3,031)(3,031)

2,001

2,001

Purchase of treasury stock
Disposal of treasury stock0

Transfer from retained
earnings to capital surplus
Change of scope of
consolidation
Capital increase of
consolidated subsidiaries
Net changes of items otherthan shareholders' equity
Total changes of items during
the period
Balance at March 31, 2022

(3,031)
2,001

－

2,001

933,919(209,133)

41

953,868

43,085787,869

35,512

823,372(2,345)933,576(209,133)

41

953,868

43,085787,869

35,512

1,756,956$844,612 $652,618 $10,475,656 $(50,805)$11,922,073$541,516$(2,786)$1,366,106$(42,006)$1,862,830$256,556$14,041,459

The accompanying notes are an integral part of these statements.

8

Consolidated Statements of Cash FlowsAsahi Kasei Corporation and Consolidated Subsidiaries
Years Ended March 31, 2022 and 2021
Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

¥215,121
119,738
6,811¥150,906
108,369
1,937$1,757,381
978,172
55,641

28,391

24,903

231,934

60

148

490

(Decrease) increase in provision for periodic repairs

(502)

2,033

(4,101)

Increase (decrease) in provision for product warranties(Decrease) increase in provision for removal cost of property, plant andequipment
Decrease in net defined benefit liability

233

(221)

1,903

(1,562)

9,891(12,760)(2,939)(4,303)(24,009)

Interest and dividend income(5,696)(6,202)(46,532)

Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase in provision for grant of shares

2022

Interest expense

3,643

3,209

29,761Equity in earnings of affiliates(8,878)(3,451)(72,527)

Gain on sales of investment securities(26,545)(17,312)(216,853)

511

66

4,174

Loss on valuation of investment securities
Gain on sale of property, plant and equipment

(912)

(353)

(7,450)Loss on disposal of noncurrent assets

7,526

10,63761,482

Decrease in notes and accounts receivable–trade

－

5,214

－

Increase in notes and accounts receivable-trade, and contract assets(45,911)－(375,059)(Increase) decrease in inventories(73,257)

6,110(598,456)

Increase in notes and accounts payable–trade21,392

1,706

174,757

Increase in accrued expenses

10,184

1,371

83,196

Increase in advances received

10,546

8,190

86,153

Other, net(19,112)238,843
7,212

15,896
318,7448,690(156,131)
1,951,172
58,917(3,647)(3,086)(29,793)(59,137)
183,271(70,672)
253,676(483,106)
1,497,190

SubtotalInterest and dividend income, received
Interest expense paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits(3,267)(6,262)(26,689)

Proceeds from withdrawal of time deposits

7,224

4,333

59,015Purchase of property, plant and equipment(142,256)(133,347)(1,162,127)

1,280

656

10,457Purchase of intangible assets(27,452)(16,945)(224,263)

Purchase of investment securities(5,805)(8,061)(47,423)

Proceeds from sales of investment securities
Purchase of shares in subsidiaries resulting in change in scope of
consolidation
Payments for transfer of business

33,437

20,264273,156(80,912)(4,811)(660,992)－(17,566)－

Payments of loans receivableCollection of loans receivable
Other, net(6,102)
2,782
52(6,144)
10,428(297)(49,849)
22,727425¥(221,019)¥(157,751)$(1,805,563)

Proceeds from sales of property, plant and equipment

Net cash used in investing activities

9Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

2022

Net increase (decrease) in short-term loans payable

65,632(168,641)

536,165

Increase (decrease) in commercial paper

29,000(55,000)

236,909

Proceeds from long-term loans payable

896

143,467

7,320

Repayment of long-term loans payable(51,094)(16,936)(417,401)

Proceeds from issuance of bonds payable

50,00050,000408,463

Repayments of lease obligations(2,298)(1,226)(18,773)

Purchase of treasury stock

(412)

(10)

(3,366)

Proceeds from disposal of treasury stock

125

69

1,021

Cash dividends paid

(47,187)(45,800)(385,483)

Cash dividends paid to non-controlling interests(2,190)(1,198)(17,891)

－

(307)

－

(152)

(287)

(1,242)

Cash flows from financing activities:

Payments from changes in ownership interests in subsidiaries that do
not result in change in scope of consolidation
Other, net

42,321(95,869)

345,732

Effect of exchange rate change on cash and cash equivalents

Net cash provided by (used in) financing activities

21,027

9,639

171,775

Net increase in cash and cash equivalents

25,600

9,695

209,133

Cash and cash equivalents at beginning of year

216,235

204,771

1,766,481

1,112

1,769

9,084

¥242,948¥216,235$1,984,707

Increase in cash and cash equivalents resulting from changes in scopeof consolidation
Cash and cash equivalents at end of year (Note 9)
The accompanying notes are an integral part of these statements.

10Notes to Consolidated Financial Statements
Asahi Kasei Corporation and Consolidated Subsidiaries

1. Major policies for preparing the consolidated financial statements
The consolidated financial statements, which are filed with the prime minister of Japan as required by the Financial Instruments and Exchange Act inJapan, are prepared in accordance with accounting principles generally accepted in Japan, which are different in certain respects from the applicationand disclosure requirements of International Financial Reporting Standards. The accompanying consolidated financial statements are a translation of
those filed with the prime minister of Japan and incorporate certain modifications to enhance foreign readers’ understanding of the consolidated
financial statements. In addition, the notes to the consolidated financial statements include certain financial information which is not required under
the disclosure regulations in Japan, but is presented herein as additional information.
The U.S. dollar amounts presented in the consolidated financial statements are included solely for the convenience of readers. These translations
should not be construed as representations that the Japanese yen amounts actually represent, have been, or could be converted into U.S. dollars.
As the amounts shown in U.S. dollars are for convenience only, and are not intended to be computed in accordance with generally accepted translation
procedures, the approximate current exchange rate of ¥122.41=US$1 prevailing on March 31, 2022, has been used.

Consolidation and investments in affiliated companies
The consolidated financial statements consist of the accounts of the parent company and 273 subsidiaries (228 subsidiaries at March 31, 2021,
hereinafter collectively referred to as the “Company”) which, with minor exceptions due to immateriality, represent all of the parent company's majority
or wholly owned companies, including 7 core operating companies (Asahi Kasei Homes Corp., Asahi Kasei Construction Materials Corp., Asahi Kasei
Microdevices Corp., Asahi Kasei Pharma Corp., Asahi Kasei Medical Co., Ltd., ZOLL Medical Corporation, and Veloxis Pharmaceuticals, Inc.). Materialinter-company transactions and accounts have been eliminated.
Investments in unconsolidated subsidiaries and 20% to 50% owned companies in which the Company exercises significant influence are accounted
for, with minor exceptions due to immateriality, using the equity method of accounting. There were 45 such unconsolidated subsidiaries and 20% to
50% owned companies to which the equity method is applied at March 31, 2022 (62 at March 31, 2021), including Asahi Kasei Networks Corporation
and Asahi Yukizai Corporation.
The financial results of certain subsidiaries with fiscal year ending December 31 are included in the consolidated financial statements.

Material

differences in inter-company transactions and accounts through to March 31 are appropriately adjusted for as part of the consolidation process.
All assets and liabilities of acquired companies are measured at their fair values and any difference between the net assets and the cost of investment
is recognized as goodwill. Goodwill is amortized using the straight-line method over a reasonable period during which its effects would last, with the
exception of minor amounts which are charged to income as incurred.

2. Significant accounting policies(a) Cash and cash equivalents
For cash flow statement purposes, cash and cash equivalents include all highly liquid investments, generally with original maturities of three months
or less, which are readily convertible to known amounts of cash, and therefore present an insignificant risk of changes in value.

(b) Inventories
Inventories held for sale in the ordinary course of business are stated at the lower of cost or net realizable value. Residential lots and dwellings forsale are stated at specifically identified costs.

(c) Noncurrent assets and depreciation/amortization
Property, plant and equipment (except for lease assets) are stated at cost. Significant renewals and improvements are capitalized at cost, while
maintenance and repairs are charged to income as incurred. Depreciation is provided for under the straight-line method, at rates based on estimateduseful lives of the assets, principally ranging from 7 to 60 years for buildings and from 2 to 22 years for machinery and equipment and vehicles.
Intangible fixed assets (except for lease assets), including software for internal use, are mainly amortized using the straight-line method over the11estimated useful lives of the assets. The estimated useful life of software for internal use is mainly 5 years.
Lease assets (financing lease transactions without title transfer) are depreciated/amortized on a straight-line basis over the period of the lease withno residual value.

(d) Significant allowancesi) Allowance for doubtful accounts
Estimates of the unrecoverable portion of receivables, generally based on historical rates and for specific receivables of particular concern basedon individual estimates of recoverability, are recognized as allowance for doubtful accounts.
ii) Provision for grant of shares
To record the grant of shares to Directors, etc., in accordance with Share Grant Regulations, the provision for grant of shares is recorded basedon an estimate of grant of shares liabilities as of the closing date of the fiscal year.
iii) Provision for periodic repairs
The portion of foreseeable periodic repair expenses deemed to correspond to normal wear and tear of plant and equipment as of the closing dateof the fiscal year is recognized as provision for periodic repairs.
iv) Provision for product warranties
Estimates of product warranty expenses based on historical rates are recognized as provision for product warranties.
v) Provision for removal cost of property, plant and equipment
Provision for removal cost of property, plant and equipment is recorded based on estimated future removal cost of property, plant and equipment
at the end of each fiscal year.

(e) Accounting for retirement benefitsi) Method of attributing expected retirement benefits to each period
In calculating retirement benefit obligations, the Company applies a method of attributing expected retirement benefits to each period based on abenefit formula basis.
ii) Accounting for actuarial gains/losses and prior service costs
Actuarial gains/losses are amortized using the straight-line method from the fiscal year following their accrual over a certain period (mainly 10
years) within the average remaining service period of employees at the time of accrual. Prior service costs are amortized using the straight-line
method over a certain period (mainly 10 years) within the average remaining service period of employees at the time of accrual.
iii) Adoption of the simplified method
In calculating expected defined benefit liability and periodic retirement benefit expenses, certain consolidated subsidiaries have adopted thesimplified method. Under this method, the expected defined benefit liability is recorded at the severance payment amount to be required should
all employees retire voluntarily at fiscal year end.

(f) Significant revenue and expense recognition
The company’s main operations are the sale of products, undertaking of construction, and provision of services, etc., in the Material, Homes, andHealth Care segments. Regarding the sale of products, performance obligations are satisfied when the customer gains control of the product at
the time the product is transferred to the customer, so revenue is recognized at such time. However, in the case of domestic sale when there is anormal period between the time of shipment and the time of transfer of control of the product to the customer, revenue is recognized at the timeof shipment. Regarding the undertaking of construction and the provision of services, in the case of performance obligations being satisfied bymeeting conditions over a certain period of time, revenue is recognized over such period of time. Measurement of the progress toward satisfactionof performance obligations of contracted construction is based on the proportion of the total foreseen construction cost which is incurred by theclosing date of each financial period. Revenue is determined as the amount within the scope where there is a high probability that there will be
no significant decrease from the consideration promised in a contract with the customer due to deduction by product return, discount, rebate, etc.
As consideration for transactions are mainly collected within 1 year from fulfillment of performance obligations, no significant financing components
are included.

12

(g) Financial instrumentsi) Securities
Securities are classified into four categories: trading securities, held-to-maturity debt securities, equity securities of unconsolidated subsidiaries
and affiliates, and other securities. At March 31, 2022 and 2021, the Company did not have trading securities or held-to-maturity debt securities.
Equity securities of unconsolidated subsidiaries and affiliates are accounted for, with minor exceptions due to immateriality, using the equity
method of accounting.
Other securities which do not have market price in active market are stated at cost. In cases where any significant decline in the realizable value
is assessed to be other than temporary, the cost of other securities is devalued by the impaired amount and is charged to income. Realized gains
and losses are determined using the average cost method and are reflected in the consolidated income statements. Other securities other thanabove are carried at fair value with net unrealized gains or losses, net of income taxes, being included as a component of net assets.
ii) Derivative financial instruments
All derivatives are stated at fair value. Gains or losses arising from changes in fair value are recognized in the period in which they arise, except
for derivatives that are designated as hedging instruments. Gains or losses arising from changes in fair value of these qualifying hedges aredeferred as “Deferred gains or losses on hedges” until being offset against gains or losses of the underlying hedged assets and liabilities.

(h) Taxes
Accrued income taxes are stated at the estimated amount of payables for corporation, enterprise, and inhabitant taxes. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities.
The Company has elected to file its return under the consolidated tax filing system in Japan. Transactions subject to consumption taxes arerecorded at amounts net of consumption taxes.
Application of Tax Effect Accounting for Transition from the Consolidated Taxation System to the Group Tax Sharing System
The Company and certain domestic consolidated subsidiaries will transfer from the consolidated taxation system to the group tax sharing systemfrom the fiscal year ending March 31, 2023. However, with regard to the items for which a review of the non-consolidated taxation system wasmade in accordance with the transition to the group tax sharing system established under the “Act for Partial Amendment of the Income Tax Act,etc.” (Act No. 8 of 2020) and the transition to the group tax sharing system, pursuant to the treatment of paragraph 3 of “Practical Solution on theTreatment of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing System” (PITF No. 39), theprovisions of paragraph 44 of “Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28) do not apply to the Company andcertain domestic consolidated subsidiaries, and the amounts of deferred tax assets and deferred tax liabilities are based on the provisions of the
tax law before amendment. From the beginning of the fiscal year ending March 31, 2023, the Company and certain domestic consolidated
subsidiaries will apply the “Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System” (PITF No. 42), which provides
for accounting treatment and disclosure of corporate and local income taxes and tax effect accounting in the case of applying the group tax sharing
system.

(i) Translation of foreign currencies
Foreign currency receivables and payables are translated into Japanese yen at the exchange rates prevailing at the balance sheet date. Resulting
gains and losses are charged to income for the period.
Assets and liabilities of foreign subsidiaries are translated into Japanese yen at fiscal year-end exchange rates, and income and expenses of same
are translated into Japanese yen at the average exchange rate for the fiscal year. Shareholders’ equity of foreign subsidiaries is translated into
Japanese yen at the historical exchange rates. The translation differences in Japanese yen amounts arising from the use of different rates arerecognized as foreign currency translation adjustments in the consolidated balance sheets. A portion of the foreign currency translation adjustment
is allocated to non-controlling interests and the Company’s portion is presented as a separate component of net assets in the consolidated balance
sheets.

13

3. Significant Accounting Estimates(a) Assessment of whether impairment indicators exist for goodwill as it relates to the acquisition of Polypore
International, LPi) Amount recorded in the consolidated financial statements for the fiscal year ended March 31, 2022 and 2021

Goodwill recognized from acquisition of
Polypore International, LP

Millions of yen

Millions of yen

Thousands of
U.S. dollars

2022

2021

2022

¥125,533¥121,996$1,025,513

ii) Information on the nature of significant accounting estimates for identified items
The Company assesses the impairment indicators, recognition and measurement of impairment loss on goodwill based on a larger unit that consistsof an asset group related to the business together with goodwill. The Company assessed whether impairment indicators exist in the asset group of
the Separator business under the Material segment (refer to Note 18) to which Polypore International, LP’s goodwill belongs, based on the following
facts and circumstances.
・Whether or not the asset group’s performance falls into the category of “consistent negative operating results”, specified in the accounting
standards as an impairment indicator.
・Whether or not there are significant differences between assumptions for the size and timing of expansion of the market growth for eco-friendly
cars on which the latest business plan is based, compared to that used at the time of the acquisition.
The Company supplies both wet-process and dry-process separators for lithium-ion batteries, including the product line of Polypore International,
LP, and expects to create synergies especially in the area of lithium-ion battery applications for eco-friendly cars such as hybrid vehicles and electricvehicles, for which continued demand growth is forecast. The business plan for the Separator business, to which the goodwill of Polypore
International, LP belongs, assumes rapid expansion of the market for eco-friendly cars through 2025, and the sales and operating income of the
Separator business will increase accordingly. In addition, the goodwill balance recognized from the acquisition of Polypore International, LP, whichis recorded in the Separator business, is the most monetarily significant of the total goodwill balance of ¥431,335 million (US$3,523,691 thousand)recorded in the consolidated balance sheets for the current fiscal year.
The Company has concluded that no impairment indicators existed for the goodwill balance as it relates to the acquisition of Polypore International,
LP, as the performance of the Separator business has not fallen into the category of “consistent negative operating results” during the current fiscal
year, and also assumptions regarding the scale and timing of the expansion of the eco-friendly car market, which form the basis of the latest
business plan, have not significantly diverged from those at the time of the acquisition.
Since the eco-friendly car market is a growing market with rapidly evolving technology and intensifying competition, sales and operating income
projections in the business plan may not be achieved if management is not able to respond to unexpected changes in the business environment
appropriately. If there is a change in the assumed situation, an impairment indicator may be identified.

4. Changes in significant accounting policies(a)Changes in accounting policies
i. Application of Accounting Standard for Revenue Recognition, etc.
Accounting Standards Board of Japan (ASBJ) Statement No. 29 “Accounting Standard for Revenue Recognition” and other standards are applied
from the beginning of the fiscal year ended March 31, 2022, whereby revenue is recognized in the amount foreseeable to be received in exchange
for goods or services at the time control of promised goods or services is transferred to the customer.
Accordingly, the method of revenue recognition for contracted construction is changed, mainly in the Homes segment.

Whereas previously thecompleted-contract method was applied to works whose outcome lacked certainty, this is changed to recognizing revenue over a certain period
when conditions of performance obligations are fulfilled over a certain period. Measurement of progress related to fulfilment of performanceobligations is based on the proportion of the total foreseen construction cost which is incurred by the closing date of each financial period.
For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional measures in the proviso to paragraph
84 of this standard, the cumulative effect of the retrospective application of the new accounting standard, if it is applied prior to the first quarter of

14the current fiscal year, is added to or subtracted from retained earnings at the beginning of the fiscal year ended March 31, 2022. The new standard
is then applied beginning with this amount of retained earnings.
As a result, net sales, cost of sales, and selling, general and administrative expenses each decreased, by ¥48,666 million (US$397,566 thousand),¥49,860 million (US$407,320 thousand), and ¥34 million(US$278 thousand), respectively, and operating income, ordinary income, and income
before income taxes each increased by ¥1,227 million (US$10,024 thousand) during the fiscal year ended March 31, 2022. Retained earnings at
the beginning of the period increased by ¥9,212 million (US$75,255 thousand).
Due to the application of the Accounting Standard for Revenue Recognition, “notes and accounts receivable–trade” as reported in the previous
fiscal year as part of current assets in the consolidated balance sheets are now included in “notes, accounts receivable–trade, and contract assets”
from the beginning of the fiscal year ended March 31, 2022, while “decrease in notes and accounts receivable–trade” as reported in the previous
fiscal year under cash flows from operating activities in the consolidated statements of cash flows is included in “increase in notes, accounts
receivable–trade, and contract assets” from the beginning of the fiscal year ended March 31, 2022.

In accordance with paragraph 89-2 of the

Accounting Standard for Revenue Recognition regarding transitional treatment, results for the previous fiscal year are not remeasured using the
new method.
In accordance with the transitional treatment set forth in paragraph 89-3 of the Accounting Standard for Revenue Recognition, information relating
to the previous consolidated fiscal year is not stated in the note of “Revenue recognition”.
ii. Application of Accounting Standard for Fair Values Measurement, etc.
ASBJ Statement No. 30 “Accounting Standard for Fair Values Measurement” and other standards are applied from the beginning of the fiscal year
ended March 31, 2022.

In accordance with paragraph 19 of the Accounting Standard for Fair Values Measurement and paragraph 44-2 of ASBJ

Statement No. 10 “Accounting Standard for Financial Instruments” regarding transitional treatment, the new accounting policy is to be applied
prospectively. Whereas certain equity securities and certain long-term loans receivable, which were deemed to be financial instruments whose
fair values were extremely difficult to determine, had been reflected on the consolidated balance sheets at their acquisition cost, they are now
reflected on the consolidated balance sheets at their fair values measured by significant unobservable inputs based on the best information
available, even when observable inputs are unavailable.

The effect on the consolidated financial statements is immaterial.

In addition, notes including matters related to the breakdown of the financial instruments by level are made in notes of “Financial instruments”.
In accordance with the transitional treatment stipulated in paragraph 7-4 of the Implementation Guidance on Disclosures about Fair Values ofFinancial Instruments (ASBJ Guidance No. 19), the notes relating to the previous consolidated fiscal year are not stated.

(b) Accounting Standards issued but not yet applied
1 For the Company and domestic consolidated subsidiaries:
Accounting Standard for Fair Value Measurement and Implementation Guidance on Accounting Standard for Fair Value Measurement,
etc.
The ASBJ issued ASBJ Guidance No. 31 “Implementation Guidance on Accounting Standard for Fair Value Measurement.” The method of
measurement of the fair value of mutual funds and the handling of the notes thereto, and the handling of notes on the fair value of investments inpartnerships, etc., reported in the net amount equivalent to equity in the balance sheets, have been determined. The Company will apply thestandard and guidance from the beginning of the fiscal year ending March 31, 2023. The application of this standard has no effect on the
consolidated financial statements.
2 For subsidiaries that apply US GAAP:
Leases (Topic 842, ASU No. 2016-02)
The Financial Accounting Standards Board (FASB) issued “Accounting Standards Update No. 2016-02, Leases (Topic 842).” This accounting
standard requires a lessee to recognize all leases as assets and liabilities on the balance sheet. The Company will apply the standard andguidance from the beginning of the fiscal year ending March 31, 2023. At the time of the preparation of the consolidated financial statements, theeffects of adoption are being assessed.

(c) Changes in presentationi) Consolidated Statements of Income
In the fiscal year ended March 31, 2022, insurance income had previously been reported separately, became 10% or less of total non-operating
income, and is included in others under non-operating income. The consolidated statements of income for the fiscal year ended March 31, 2021,
have been reclassified accordingly, resulting in insurance income of ¥2,618 million being included in others under non-operating expenses.

15

(d) Additional Information
Assumptions regarding effect of COVID-19 on accounting estimates
Although it is difficult to predict when the impact of COVID-19 will subside, the Company assumes that the global economic activity will generally
recover toward the second half of the fiscal year ending March 31, 2023, and has made accounting estimates accordingly regarding impairment of
noncurrent assets, recoverability of deferred tax assets, etc. It is based on the assumption that the with-corona policy, which aims to be compatible
with economic activity, becomes more widespread against the backdrop of the global spread of vaccination and the evolution of treatment methods,
and that the supply chain disruption caused by the lockdown of the zero-corona policy in China will begin to improve in the second half of theperiod.
There are many uncertainties regarding the impact of COVID-19, and if changes occur in the aforementioned assumptions, the financial positionand operating results may be affected from the next consolidated fiscal year onwards.

5. Notes to Consolidated Balance Sheets(a) Investment securities
Among investment securities, shares of unconsolidated subsidiaries and affiliates as of March 31, 2022 and 2021, amounted to ¥107,794 million(US$880,598 thousand) and ¥112,102 million, respectively. Included in those amounts are investments in joint ventures of ¥66,452 million(US$542,864 thousand) and ¥61,567 million, respectively.

(b) Pledged assets and secured debt
Cash and deposits pledged as collateral for bank guarantees at March 31, 2022 and 2021, were ¥390 million (US$3,186 thousand) and ¥353
million, respectively. Investment securities pledged to suppliers as transaction guarantees at March 31, 2022 and 2021, were ¥55 million (US$499
thousand) and ¥55 million, respectively. ¥5,210 million (US$42,562 thousand) of Buildings and structures, and ¥2,502 million (US$20,440
thousand) of Merchandise and finished goods were pledged as collateral for bank guarantees at March 31, 2022, these collaterals were releasedon April 6, 2022 and on April 8, 2022, respectively.

(c) Notes, accounts receivable–trade, and contract assets
Amounts of receivables and contract assets arising from contracts with customers included in Notes, accounts receivable–trade, and contract
assets at March 31, 2022, were as follows:
Millions of yen

Thousands of
U.S. dollars

2022

2022

Notes receivable－trade¥20,851$170,337

Accounts receivable－trade

373,013

3,047,243

Contract assets

35,840292,787(d) Contingent liabilities
Contingent liabilities at March 31, 2022 and 2021, arising in the ordinary course of business were as follows:
Thousands of
U.S. dollars

Millions of yen
2022
Loans guaranteed
Total

2021

2022

¥38,110¥35,669$311,331¥38,110¥35,669$311,331

16

(e) Deferred gain on property, plant and equipment deducted for tax purposes
The accumulated reduced-value entries, which are directly deducted from property, plant and equipment, as of March 31, 2022 and 2021, were ,¥18,769 million (US$153,329 thousand) and ¥12,494 million, respectively.
The breakdown of reduced-value entries as of March 31, 2022 and 2021, was as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Buildings and structures¥3,809¥3,916$31,117

Machinery, equipment and vehicles

14,683

8,262

119,949

167

167

1,364

Land
Other
Total

110

149

899

¥18,769¥12,494$153,329(f) Long-term advance payments–trade
The Company has concluded long-term purchase contracts with raw materials manufacturers, to ensure the stable procurement of nylon raw
materials. Advance payments have been made for a part of it in accordance with the contracts.

6. Notes to Consolidated Statements of Income(a) Revenue from contracts with customer
Net sales are not broken down into revenue from contracts with customers and other revenue. Amounts of revenue from contracts with customers
are shown in the note of “Revenue recognition”.

(b) Selling, general and administrative expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2022 and 2021, were as follows:
Thousands of
U.S. dollars

Millions of yen

Salaries and benefits
Research and development*

2022

2021

2022

¥228,416¥205,671$1,865,991

71,496

61,527584,070* The aggregate amounts of research and development expenses included in manufacturing costs and selling, generaland administrative expenses for the years ended March 31, 2022 and 2021, were ¥98,693 million (US$806,249
thousand) and ¥89,745 million, respectively.

(c) Gain or loss on valuation of inventories
Inventories held for sale in the ordinary course of business are stated at the lower of cost or net realizable value. (Gain) loss on valuation of inventories
for the years ended March 31, 2022 and 2021, were as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021
¥474

¥(689)

2022$3,87217

(d) Gain on sales of noncurrent assets
Major components of gain on sales of noncurrent assets for the years ended March 31, 2022 and 2021, were as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Land

¥239

¥234

$1,952

Machinery

590

91

4,820

Other

83

28

678

(e) Loss on disposal of noncurrent assets
Loss on disposal of noncurrent assets for the years ended March 31, 2022 and 2021, was primarily loss on abandonment and sale of machinery andequipment. The abandonment and sale of machinery and equipment were performed under a single, all-inclusive contract for each facility.

18

(f) Impairment loss
Major components of impairment losses for the years ended March 31, 2022 and 2021, were as follows:

Use

Asset class

Location

Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Item on theConsolidated
Statements of Income

Machinery andequipment, etc.

Indiana, U.S.A.

¥－¥2,128$－Business structure
improvement
expenses

Machinery andequipment, etc.

Gobo, Wakayama

－

1,008

－

Business structure
improvement
expenses

Machinery andequipment, etc.

Jurong Island,
Singapore

－

665

－

Impairment loss

Buildings, etc.

Nobeoka, Miyazaki

－

477

－

Business structure
improvement
expenses

Goodwill, etc.

－

－

406

－

Impairment loss

Buildings, etc.

Nobeoka, Miyazaki

－

236

－

Impairment loss

Office assets

Buildings, etc.

Naka-ku, Nagoya,
Aichi, etc.

－

209

－

Impairment loss

Production facility
for textile products

Machinery andequipment, etc.

San Luis Potosí,
Mexico－178－

Production facility
for pharmaceuticalproducts

Business structure
improvement
expenses

Machinery andequipment, etc.

Fuji, Shizuoka

－

130

－

Impairment loss

Others

Machinery andequipment, etc.

Kawasaki-ku,
Kawasaki,Kanagawa, etc.

Technology-related
assets related to
new electronics
component
business

Impairment loss andbusiness structure
improvement
expenses

Other intangible
assets, etc.

Production facility
for synthetic fibers

Production facility
for battery materials
Production facility
for synthetic resin
coatings raw
materials
Production facility
for plastic raw
materials
Production facility
for nonwoven
fabrics
Goodwill related tolining processing
business
Production facility
for nonwoven
fabrics－

377－

Fuji, Shizuoka, etc.

2,773

－

22,653

Impairment loss

Machinery andequipment, etc.

Moriyama, Shiga, etc.

2,264

－

18,495

Impairment loss

Employee dormitory

Buildings, etc.

Nobeoka, Miyazaki,
etc.

370

－

3,023

Impairment loss

Processing facility
for fiber products

Buildings, etc.

Fujiyoshida,
Yamanashi

299

－

2,443

Impairment loss

R&D facility

Buildings, etc.

Kawasaki-ku,
Kawasaki, Kanagawa

294

－

2,402

Impairment loss

Office assets

Buildings, etc.

Chiyoda-ku, Tokyo,
etc.

282

－

2,304

Impairment loss

Machinery andequipment, etc.

Nobeoka, Miyazaki

260

－

2,124

Impairment loss

Machinery andequipment, etc.

Osaka, Osaka, etc.

195

－

1,593

Business structure
improvement
expenses

Structures, etc.

Hyuga, Miyazaki, etc.

176

－

1,438

Impairment loss

Processing test
facility for fiber
products
Production facility
for functional
chemicals
Underground waste
storage facility

Impairment loss andbusiness structure
Others362－
2,957
improvement
expensesGrouping of operating assets is based on managerial accounting categories, with consideration given to production process, geographic location,
Machinery andequipment, etc.

Nobeoka, Miyazaki,
etc.

19

and domain of authority for making investment decisions. Idle assets are recorded separately in each fixed assets class.
The book value of technology assets related to new electronic component business, production facility for synthetic fibers, processing facility forfiber products, and underground waste storage facility was reduced to the recoverable amount due to diminished profitability. The recoverable
amount of these assets was measured by value in use, which was measured by discounting future cash flows at a discount rate of 6.0%, otherthan for those assets whose cash flows are estimated to be negative, for which have a recoverable amount of zero has been used.
The book value of employee dormitory, R&D facility, office assets, processing test facility for fiber products, and production facility for specialty
chemicals was reduced to zero due to the lack of prospects for future use. Among the extraordinary losses under Others, ¥270 million (US$2,206
thousand) and ¥85 million were recorded under business structure improvement expenses for the years ended March 2022 and 2021, respectively.

(g) Loss on fire at plant facilities
Breakdown of the loss due to a fire that occurred on October 20, 2020, at the semiconductor manufacturing plant of Asahi Kasei Microdevices Corp.,
a consolidated subsidiary of the Company, is as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Loss on destruction of noncurrent assets andinventories, etc.

¥－

¥12,634$－

Expenses to dispose noncurrent assets, etc.

－

7,017

－

Other related expenses

－

4,569

－

Insurance income－(1,933)－(h) Loss on product compensation
Loss on product compensation was recorded due to the occurrence of quality defects in some of the customers’ final products which incorporated
electronic components that were manufactured and sold by the Company in the past.

(i) Business structure improvement expenses
Major components of business structure improvement expenses for the years ended March 31, 2022 and 2021, were as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Impairment of fixed assets¥465¥3,877$3,799Additional payment of retirement benefits due
to application of early retirement, etc.

3,015

711

24,630Loss on disposal and devaluation of inventory
and others

11,538

3,162

94,25720

7. Notes to Consolidated Statements of Comprehensive Income
Recycling adjustment and tax effects on other comprehensive income for the years ended March 31, 2022 and 2021, were as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Net unrealized gain on other securities
Changes during the fiscal year¥(10,897)¥52,903$(89,021)

Recycling adjustment(26,145)(17,230)(213,585)

Pre-tax effect(37,042)

35,674(302,606)

Tax effect

11,296(10,868)

92,280Net unrealized gain on other securities(25,746)

24,806(210,326)

1,029

(220)

8,406

427

29

3,488

(1,499)－(12,246)

Pre-tax effect

(43)

(191)

(351)

Tax effect

48

85

392

Deferred gains or losses on hedges

5

(106)

41

114,406

35,467

934,613

Deferred gains or losses on hedges
Changes during the fiscal year
Recycling adjustment
Adjustment on the acquisition cost of assets

Foreign currency translation adjustment
Changes during the fiscal year
Recycling adjustment

－

24

－

114,406

35,491

934,613

Changes during the fiscal year

4,169

11,05834,058Recycling adjustment

3,565

7,048

29,123Pre-tax effect

7,733

18,106

63,173Tax effect(2,330)(5,476)(19,034)

Remeasurements of defined benefit plans

5,403

12,631

44,139Foreign currency translation adjustment
Remeasurements of defined benefit plans

Share of other comprehensive income of affiliates accounted for using equity method
Changes during the fiscal year

3,707

3,120

30,283

Recycling adjustment

(107)

(100)

(874)

3,599

3,020

29,401¥97,668¥75,842$797,876

Share of other comprehensive income ofaffiliates accounted for using equity method
Total other comprehensive income218. Notes to Consolidated Statements of Changes in Net Assets
For the year ended March 31, 2022
(a) Class and total number of issued and outstanding shares and treasury stockThousands of shares
Number ofshares as ofMarch 31, 2021

Increase in numberof shares during the
fiscal year

Decrease in
number of shares
during the fiscal
year

Number ofshares as ofMarch 31, 2022

Common stock

1,393,932－－

1,393,932

Total

1,393,932－－

1,393,932

Common stock(*1,2,3)

6,397

341

97

6,641

Total

6,397

341

97

6,641

Issued and outstanding shares

Treasury stock(*1)The increase of 341 thousand shares in common stock of treasury stock was primarily attributable to the purchase of 330 thousand shares by thetrust for granting shares to Directors, etc., and the purchase of 11 thousand shares in quantities of less than one share unit.
(*2)The decrease of 97 thousand shares in common stock of treasury stock was primarily attributable to the disposal of 96 thousand shares by thetrust for granting shares to Directors, etc., and the sale of 1 thousand shares in quantities of less than one share unit.
(*3)The number of shares of treasury stock as of March 31, 2022, includes 561 thousand shares held by the trust for granting shares to Directors, etc.

(b) Dividendsi) Cash dividends paid
1) The following was resolved by the Board of Directors on May 13, 2021.
Dividends for common stock
Total dividends¥23,594 million (US$192,746 thousand)

Dividend per share¥17.00 (US$0.14)

Date of record

March 31, 2021

Payment dateJune 3, 2021

Note: Total dividends includes ¥6 million (US$49 thousand) for shares held by the trust for granting shares to Directors, etc.
2) The following was resolved by the Board of Directors on Nov 5, 2021.
Dividends for common stock
Total dividends¥23,594 million (US$192,746 thousand)

Dividend per share¥17.00 (US$0.14)

Date of record

September 30, 2021

Payment date

December 2, 2021

Note: Total dividends includes ¥7 million (US$57 thousand) for shares held by the trust for granting shares to Directors, etc.

ii) Dividends for which the date of record falls within the fiscal year under review but the payment date occurs in the following fiscal
year
The following was resolved by the Board of Directors on May 13, 2022.

22

Dividends for common stock
Total dividends¥23,593 million (US$192,738 thousand)Source of dividends

Retained earnings

Dividend per share¥17.00 (US$0.14)

Date of record

March 31, 2022

Payment dateJune 2, 2022

Note: Total dividends includes ¥10 million (US$82 thousand) for shares held by the trust for granting shares to Directors, etc.

For the year ended March 31, 2021
(a) Class and total number of issued and outstanding shares and treasury stockThousands of shares
Number ofshares as ofMarch 31, 2020

Increase in numberof shares during the
fiscal year

Decrease in
number of shares
during the fiscal
year

Number ofshares as ofMarch 31, 2021

Common stock

1,393,932－－

1,393,932

Total

1,393,932－－

1,393,932

Common stock(*1,2,3)

6,440

10

53

6,397

Total

6,440

10

53

6,397

Issued and outstanding shares

Treasury stock(*1) The increase of 10 thousand shares in common stock of treasury stock was primarily attributable to the purchase of 10 thousand shares inquantities of less than one share unit.
(*2) The decrease of 53 thousand shares in common stock of treasury stock was primarily attributable to the disposal of 53 thousand shares by
the trust for granting shares to Directors, etc., and the sale of 1 thousand shares in quantities of less than one share unit.
(*3) The number of shares of treasury stock as of March 31, 2021, includes 327 thousand shares held by the trust for granting shares to Directors,
etc.

(b) Dividendsi) Cash dividends paid
1) The following was resolved by the Board of Directors on May 22, 2020.
Dividends for common stock
Total dividends¥22,206 million

Dividend per share¥16.00Date of record

March 31, 2020

Payment dateJune 10, 2020

Note: Total dividends includes ¥6 million for shares held by the trust for granting shares to Directors, etc.
2) The following was resolved by the Board of Directors on Nov 6, 2020.
Dividends for common stock
Total dividends¥23,594 million

Dividend per share¥17.00Date of record

September 30, 2020

Payment date

December 1, 202023

Note: Total dividends includes ¥6 million for shares held by the trust for granting shares to Directors, etc.

ii) Dividends for which the date of record falls within the fiscal year under review but the payment date occurs in the following fiscal
year
The following was resolved by the Board of Directors on May 13, 2021.
Dividends for common stock
Total dividends¥23,594 million

Source of dividends

Retained earnings

Dividend per share¥17.00Date of record

March 31, 2021

Payment dateJune 2, 2022

Note: Total dividends includes ¥6 million for shares held by the trust for granting shares to Directors, etc.

9. Notes to Consolidated Statements of Cash Flows(a) Cash and cash equivalents
Reconciliation of cash and cash equivalents on the consolidated statements of cash flows to the amounts disclosed on the consolidated balance
sheets at March 31, 2022 and 2021, was as follows:
Thousands ofMillions of yen

Cash and deposits
Time deposits with deposit term of over 3 months
Cash and cash equivalents

U.S. dollars

2022

2021

2022

¥244,641¥221,779$1,998,538(1,694)(5,543)(13,839)¥242,948¥216,235$1,984,707(b) Assets and liabilities of newly acquired business For the year ended March 31, 2021
Assets and liabilities of acquired business (Adient plc’s automotive fabric business) and net cash outflow for such acquisition is as follows:
Millions of yen
Current assets¥6,012

Noncurrent assets

11,956

Goodwill

4,799

Current liabilities(4,291)

Noncurrent liabilities(451)

Acquisition cost of business

18,025

Cash and cash equivalents(460)

Net cash used for acquisition

17,56624

(c) Assets and liabilities of newly consolidated subsidiaries through acquisition of shares
For the year ended March 31, 2022
Assets and liabilities of acquired company (Respicardia, Inc.) and net cash outflow for such acquisition is as follows:
Thousands of U.S. dollars

Millions of yen¥408$3,333

Noncurrent assets

16,185132,220Goodwill

14,362

117,327

Current liabilities(278)(2,271)

Noncurrent liabilities

(24)

(196)

Acquisition cost of shares

30,653

250,413

Unpaid conditional consideration included inacquisition cost

(5,640)(46,075)

Loans and accrued interest(11,775)(96,193)

Net cash used for acquisition

13,238108,145

Current assets

Assets and liabilities of acquired companies (McDonald Jones Homes Pty Ltd and 18 consolidated subsidiaries) and net cash outflow for suchacquisition is as follows:
Millions of yen

Thousands of U.S. dollars

Current assets¥24,301$198,521

Noncurrent assets

19,877

162,381Goodwill

5,454

44,555Current liabilities(23,084)(188,579)

Noncurrent liabilities(4,172)(34,082)

(52)

(425)

(3,384)(27,645)(7,748)(63,295)

64

523

Gain on step acquisitions(1,700)(13,888)

Acquisition cost of shares

9,555

78,057

Cash and cash equivalents(2,931)(23,944)

Net cash used for acquisition

6,624

54,113Foreign currency translation adjustment
Non-controlling interests
Appraisal value of equity by the time ofacquisition
Reversal of valuation difference by the time ofacquisition

25

Assets and liabilities of acquired companies (Itamar Medical Ltd. and 5 consolidated subsidiaries) and net cash outflow for such acquisition is asfollows:
Millions of yen

Thousands of U.S. dollars

Current assets¥9,896$80,843

Noncurrent assets

17,839150,233

Goodwill

37,776308,602

Current liabilities(4,398)(35,928)(258)(2,108)Acquisition cost of shares

60,855(497,140)

Cash and cash equivalents(7,064)(57,708)

Net cash used for acquisition

53,791

439,433

Noncurrent liabilities

10. Leases(a) Financing lease transactions
Financing lease transactions without title transfer and right-of-use assets of overseas subsidiaries under IFRS 16(Lessee)i) Components of lease assets are as follows:
1) Building, property, plant and equipment: Mainly the right to use buildings, land and production facilities.
The right-of-use assets are included in "Other" in the consolidated balance sheets for the fiscal year under review.
2) Intangible assets: Softwareii) Depreciation of lease assets:
As stated in Note 2 “Significant accounting policies (c) Noncurrent assets and depreciation/amortization.”(b) Operating lease transactions(Lessee)
Future lease payments for the non-cancelable portion of the Company’s operating leases at March 31, 2022 and 2021, were as follows:
Thousands ofMillions of yen
2022

U.S. dollars

2021

2022

Due within one year

¥9,759¥9,294$79,724

Due after one year

20,57523,688168,083

Total¥30,333¥32,982$247,798

11. Financial instruments(a) Overview of financial instrumentsi) Policy related to financial instruments
The Company raises long-term funds as required mainly for its planned capital expenditures by borrowing from banks, borrowing from life
insurance companies, issuing bonds, etc. A portion of the surplus funds is invested only in highly stable financial assets. Short-term working funds
are raised by bank borrowings, issuance of commercial paper, etc. Derivative financial instruments are mainly entered into for the purpose of
reducing risks related to assets and liabilities which are exposed to risks of fluctuations of exchange rate and interest rate. Derivatives are nottraded for speculative purposes.

26ii) Components of financial instruments, their risks and risk management structure
As operating receivables, notes and accounts receivable–trade are exposed to credit risk of customers. As the business of the Company spansa wide range of fields, operating receivables are not excessively concentrated on specific customers, but the parent company and eachconsolidated subsidiary monitor and manage the credit condition of each customer.
Investment securities are exposed to the risk of fluctuations in market price, but they are mainly equity securities of companies with which theCompany has business relationships. These securities are held for the purpose of maintaining the business relationships. Fair value is periodicallyevaluated, and the financial condition of the issuing company is monitored.
As operating liabilities, notes and accounts payable–trade generally have a payment term of 1 year or less.
Variable interest-rate borrowings are exposed to the risk of interest-rate fluctuations, but derivatives (interest-rate and currency swaps, interestrate swaps) are used as hedges to fix interest expenses for a portion of long-term variable interest-rate borrowings.
Operating receivables and operating liabilities include those denominated in currencies other than Japanese yen, and are thus exposed to therisk of exchange-rate fluctuations. In order to reduce the effects of short-term exchange-rate fluctuations, the Company hedges with derivative
financial instruments (forward exchange contracts), in principle, within the range of the actual demand.
Derivative financial instruments are exposed to the credit risk of transacting financial institutions, but the credit condition of those financial
institutions is reviewed through periodical monitoring. Such transactions are performed and managed in accordance with the Company’s internal
regulations which stipulate the related authority, procedures, limits, etc.
Borrowings are exposed to liquidity risk, but the parent company specifies standards for required on-hand funds based on the Company’s fundingplans, prepares and revises plans for cash receipts and disbursements as appropriate, and enters into commitment-line agreements withtransacting financial institutions to manage such risk.
iii) Supplementary explanation of fair value of financial instruments
As variable factors are incorporated in its estimation, fair value may change due to the adoption of different assumptions, conditions, etc. The
stated amount of contracts regarding derivative financial instruments included in Note 13 “Derivative financial instruments” is not itself an indicationof the market risk of the derivative financial instruments.

(b) Fair value of financial instruments
Amounts carried on the consolidated balance sheets, their fair values, and the differences between them as of March 31, 2022 and 2021, were as
follows:
Millions of yen
2022
Carrying amount*1

Fair value

Difference

Investment securities*2
Investments in affiliates¥16,947¥16,128¥ (820)

Other securities

125,475

125,475

－

7,112

7,107

(5)

149,535

148,710(824)

Bonds payable

160,000

159,021979

Long-term loans payable

326,970

324,238

2,732

Long-term loans receivable
Total assets

Lease obligations

10,939

11,215(277)

Long-term guarantee deposits

22,49022,500(11)

520,398

516,975

3,424¥(3,072)¥(3,072)¥－

Total liabilities
Derivative financial instruments*

327Millions of yen
2021
Carrying amount(*1)

Fair value

Difference

Investment securities(*2)
Investments in affiliates¥16,816¥13,490¥ (3,326)

Other securities

164,018

164,018

－

9,584

9,589

5

Total assets

190,418

187,096(3,321)

Bonds payable

110,000

109,743257

Long-term loans payable

375,697376,201(504)

Lease obligations

4,801

5,103

(302)

Long-term guarantee deposits

10,23010,274(44)

Total liabilities

500,727

501,320(593)

Derivative financial instruments(*3)¥(1,680)¥(1,680)¥－

Long-term loans receivableThousands of U.S. dollars
2022
Carrying amount(*1)

Fair value

Difference

Investment securities(*2)
Investment in affiliates$138,445$131,754$(6,691)

Other securities

1,025,039

1,025,039－

58,10058,05941

Total assets

1,221,591

1,214,852(6,740)Bonds payable

1,307,083

1,299,085(7,998)Long-term loans payable

2,671,105

2,648,787(22,318)

Lease obligations

89,364

91,6182,255

Long-term guarantee deposits

183,727

183,80982

Total liabilities

4,251,270

4,223,307(27,963)

Derivative financial instruments(*3)$(25,096)$(25,096)$－

Long-term loans receivable(*1) As their fair value approximates book value due to their short maturity, Cash and deposits, notes and accounts receivable–trade, notes andaccounts payable–trade, short-term loans payable, commercial paper, and income taxes payable are not included.
(*2) Other securities which do not have market price in active market are not included in the above table. The amount on consolidated balance
sheets of the financial instruments:
Millions of yen

Thousands of U.S. dollars
2022

Equity investments
in nonpublic companies
Equity securities¥104,167$850,968¥111$9,068(*3) The amounts represent the net of assets and liabilities resulting from derivative financial instruments. In the case of a net liability, the amountis shown in parentheses.

28Note 1) For monetary credits and securities with maturity, the amounts scheduled for redemption subsequent to the closing date are as follows:
Millions of yen
2022
Due within

Due after one

Due after fiveDue after

one year

year, within five

years, within ten

more than ten

years

years

years

Cash and deposits¥244,641

¥－

¥－

¥－

Notes receivable–trade20,851－－－

Accounts receivable-trade377,905－－－

Long-term loans receivable

885

5,690

538

－

¥644,282¥5,690

¥538

¥－

Total

Millions of yen
2021
Due within

Due after one

Due after fiveDue after more

one year

year, within five

years, within ten

than ten years

years

years

Cash and deposits¥221,779

¥－

¥－

¥－

Notes and accounts

338,640

－

－

－

8,343

873

369

－

¥568,761

¥873

¥369

¥－

receivable–tradeLong-term loans receivable
Total

Thousands of U.S. dollars
2022

Cash and deposits

Due within

Due after one

Due after fiveDue after

one year

year, within five

years, within ten

more than ten

years

years

years

$1,998,538

$－

$－

$－

Notes receivable–trade170,337－－－

Accounts receivable-trade

3,087,207－－－

Long-term loans receivable

7,230

46,483

4,395－$5,263,312$46,483$4,395$－

Total(C)Fair value of financial instruments by level
Fair value of financial instruments is classified into the following three levels according to the observability and materiality of the inputs related to thefair value measurement.
Level 1:
Fair value is measured by quoted based on the market price (unadjusted) in active markets for identical assets or liabilities.
Level 2:
Fair value is measured by using direct or indirect observable inputs other than those of level 1.

29

Level 3:
Fair value is measured by using significant unobservable inputs.
When using multiple inputs that have a significant impact on fair value measurement, among the classifications of such inputs, priority is given to thelowest level in fair value measurement.
Cash is omitted from notes, and deposits, notes and accounts receivable–trade, notes and accounts payable–trade, short-term loans payable,commercial paper, and income taxes payable are not included in the categories below as they are settled in a short period of time and their fair values
are similar to their book values.
Fair value of financial assets and liabilities recorded on the consolidated balance sheets at March 31, 2022, were as follows:

Millions of yen
2022
Level 1

Level 2

Level 3

Total

Investment securities
Equity securities¥125,057¥－¥418¥125,475

－

－

2,683

2,683

¥125,057¥－¥3,101¥128,158

Long-term loans receivable
Total assets
Derivative financial
instruments
Currency-related
Total liabilities

－

3,072

－

3,072

¥－

¥3,072¥－¥3,072Thousands of U.S. dollars
2022
Level 1

Level 2

Level 3

Total

Investment securities
Equity securities
Long-term loans receivable
Total assets
Derivative financial
instruments
Currency-related
Total liabilities$1,021,624$－$3,415$1,025,039－－

21,91821,918$1,021,624$－$25,333$1,046,957－

25,096－25,096$－$25,096$－$25,09630

Fair value of financial assets and liabilities not recorded on the consolidated balance sheets at March 31, 2022, were as follows:
Millions of yen
2022
Level 1

Level 2

Level 3

Total

Investment securities
Investments in affiliates¥16,128¥－¥－¥16,128

Long-term loans
receivable

－

－

4,425

4,425

Total assets¥16,128¥－¥4,425¥20,552

Bonds payable－

159,021－

159,021Long-term loans payable－－

324,238

324,238

Lease obligations
Long-term guarantee
deposits
Total liabilities－－

11,215

11,215－－22,50022,500¥－¥159,021¥357,954¥516,975

Thousands of U.S. dollars
2022
Level 1

Level 2

Level 3

Total

Investment securities
Investments in affiliates$131,754$－$－$131,754

Long-term loans
receivable－－

36,14936,149Total assets$131,754$－$36,149$167,895

Bonds payable－

1,299,085－

1,299,085

Long-term loans payable－－

2,646,787

2,646,787

Lease obligations
Long-term guarantee
deposits
Total liabilities－－

91,61891,618－－183,809

183,809$－$1,299,085$2,924,222$4,223,307

Explanation of the valuation techniques and inputs used to calculate fair value:
Investment securities
Equity investments in listed public companies are evaluated using the market price. As equity investments in public companies are traded in active
markets, the fair value is classified as Level 1. When liquidity is low or significant unobservable inputs are used, fair value is classified as Level 3.
Derivative financial instruments
Fair value of interest-rate swaps and forward exchange contracts are measured by observable inputs such as interest rates and foreign exchange
rates, and classified as Level 2.

31

Long-term loans receivable
Fair value is measured based on the amount of the total of the principal and interest, discounted at the rate that would apply in the case of making
a new loan with the same terms. As discount measurement is considered a significant unobservable input, it is classified as Level 3. Fair value ofloans with conversion rights are estimated considering both the case of the option being exercised as well as not being exercised, and adjustment
being made accordingly. As significant unobservable inputs such as future earnings estimates are used, it is classified as Level 3.
Bonds payable
Fair value of bonds issued by the Company is measured based on market prices (reference trading statistics) and classified as Level 2.
Long-term loans payable
Fair value is measured based on the amount of the total of the principal and interest, discounted at the rate that would apply in the case of making
a new borrowing with the same terms. The fair value is classified as Level 3.
Lease obligations
Fair value is measured based on the amount of the total of the principal and interest, discounted at the rate that would apply in the case of making
a new lease obligation. As discount measurement is considered a significant unobservable input, it is classified as Level 3.
Long-term guarantee deposits
When the period of deposit is estimatable, fair value is measured by discounting over that period. As discount measurement is considered asignificant unobservable input, it is classified as Level 3.

12. Marketable securities and investment securities(a) Other securities with available fair value
The aggregate cost, carrying amount which was identical to fair value, and gross unrealized gains and losses of debt and equity securities classified
as other securities for which fair values were available at March 31, 2022 and 2021, were as follows:
Millions of yen
2022
Carrying amount

Unrealized gains

Cost(losses)

Securities with unrealized gains:
Equity securities¥122,737¥23,097¥99,641

Subtotal

122,737

23,097

99,641Equity securities

2,738

3,577

(839)

Subtotal

2,738

3,577

(839)

¥125,475¥26,673¥98,802

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and equity securities, with a carrying amount of ¥104,167 million and ¥111 million, respectively,
as of March 31, 2022, fair value is not included in the above table as no quoted market price is available.

32

Millions of yen
2021
Carrying amount

Unrealized gains

Cost(losses)

Securities with unrealized gains:
Equity securities¥161,391¥28,675¥132,716

Subtotal

161,391

28,675

132,716

Equity securities

2,627

3,444

(817)

Subtotal

2,627

3,444

(817)

¥164,018¥32,119¥131,899

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and investment securities, with a carrying amount of ¥105,225 million and ¥458 million, respectively, as of March 31, 2021, fair value is not included in the above table as no quoted market price is available.

Thousands of U.S. dollars
2022
Carrying amount

Unrealized gains

Cost(losses)

Securities with unrealized gains:
Equity securities$1,002,671$188,686$813,994

Subtotal

1,002,671

188,686

813,994

Equity securities

22,36729,221(6,854)

Subtotal

22,36729,221(6,854)$1,025,039$217,899$807,140

Securities with unrealized losses:

Total

For equity investments in nonpublic companies and equity securities, with a carrying amount of $850,968 thousand and $907 thousand, respectively, as of March 31, 2022, fair value is not included in the above table as no quoted market price is available.

(b) Realized gains and losses on the sale of other securities
The realized gains and losses on the sale of other securities during the years ended March 31, 2022 and 2021, were as follows:
Thousands ofMillions of yen
2022

U.S. dollars
2021

2022

Selling amount¥31,991¥20,060$261,343

Gain on sales of securities

26,545

17,312

216,853

Loss on sales of securities

－

－

－

33

(c) Loss on other devaluation of investment securities whose fair values are readily determinable
Loss on other devaluation of investment securities whose fair values are readily determinable for the year ended March 31, 2022, was ¥511 million(US$4,174 thousand), which is the sum of ¥12 million (US$98 thousand) for equity securities of unconsolidated subsidiaries and affiliates and ¥499
million (US$4,076 thousand) for other securities, and for the year ended March 31, 2021, ¥66 million, which was for other securities.

13. Derivative financial instruments(a) Derivative financial instruments for which hedge accounting is not appliedi) Forward exchange contracts
Millions of yen
2022
Classification

Items

Amount ofcontract over
1 yearAmount ofcontract

Profit (loss)
fromvaluation

Fair value

Forward exchange
contracts
Selling

Off-market
transactions

U.S. dollar¥42,590¥－¥(1,605)¥(1,605)

Euro

15,154

－

(694)

(694)

Thai baht

1,868

－

(92)

(92)

British pound

46

－

(1)

(1)

Chinese yuan

4,466

－

(260)

(260)

－

－

－

－

4,320

－

225

225

Euro

53

－

2

2

Chinese yuan

8

－

0

0

Japanese yen

22

－

(1)

(1)

¥68,527¥－¥(2,425)¥(2,425)

Australian dollar
BuyingU.S. dollar

Total

34

Millions of yen
2021
Classification

Items

Amount ofcontract over
1 yearAmount ofcontract

Profit (loss)
fromvaluation

Fair value

Forward exchange
contracts
Selling

Off-market
transactions

U.S. dollar¥30,420¥－¥(1,169)¥(1,169)Euro

13,305

－

(316)

(316)

Thai baht

1,564

－

(23)

(23)

British pound

16

－

(0)

(0)

Chinese yuan

2,508

－

(80)

(80)

11

－

0

0

15,223

－

311

311

Euro

132

－

1

1

Chinese yuan

－

－

－

－

Japanese yen

－

－

－

－

¥63,179¥－¥(1,276)¥(1,276)

Australian dollar
BuyingU.S. dollar

Total

Thousands of U.S. dollars
2022
Classification

Items

Amount ofcontract over
1 yearAmount ofcontract

Profit (loss)
fromvaluation

Fair value

Forward exchange
contracts
Selling

Off-market
transactions

U.S. dollar$347,929$－$(13,112)$(13,112)

Euro

123,797－(5,669)(5,669)Thai baht

15,260

－

(752)

(752)

British pound

376

－

(8)

(8)

Chinese yuan

36,484－(2,124)(2,124)

－

－

－

－

35,291

－

1,838

1,838

Euro

433

－

16

16

Chinese yuan

65

－

0

0

Japanese yen

180

－

(8)

(8)

$559,815$－$(19,810)$(19,810)

Australian dollar
BuyingU.S. dollar

Total

35

(b) Derivative financial instruments for which hedge accounting is appliedi) Forward exchange contracts
Millions of yen
2022
Classification

Items

Hedged assets/liabilities

Amount ofcontract over
1 yearAmount ofcontract

Forward exchange
contracts

Fair
value(*)

Selling

Principle-based
accounting

U.S. dollar

Accounts receivable–trade¥5,646¥－¥(583)

Euro

Accounts receivable–trade

1,208

－

(66)

British pound

Accounts receivable–trade

2

－

0

Chinese yuan

Accounts receivable–trade

103

－

(3)

U.S. dollar

Accounts payable–trade

18

－

7

Euro

Accounts payable–trade

0

－

0

Japanese yen

Accounts payable–trade

5

－

(0)

¥6,983¥－¥(646)

Buying

Total

Millions of yen
2021
Classification

Items

Hedged assets/liabilities

Amount ofcontract over
1 yearAmount ofcontract

Forward exchange
contracts

Fair
value(*)

Selling

Principle-based
accounting

U.S. dollar

Accounts receivable–trade¥8,096¥413¥(398)

Euro

Accounts receivable–trade

458

－

(15)

British pound

Accounts receivable–trade

2

－

(0)

Chinese yuan

Accounts receivable–trade

－

－

－

U.S. dollar

Accounts payable–trade

192

－

10

Euro

Accounts payable–trade

7

－

0

Japanese yen

Accounts payable–trade

－

－

－

¥8,755¥413¥(404)

BuyingTotal

36

Thousands of U.S. dollars

Classification

Items

Hedged assets/liabilities

2022
Amount ofcontract over
1 yearAmount ofcontract

Forward exchange
contracts

Fair
value(*)

Selling

Principle-based
accounting

U.S. dollar

Accounts receivable–trade$46,124$－$(4,763)

Euro

Accounts receivable–trade

9,868

－

(539)

British pound

Accounts receivable–trade

16

－

0

Chinese yuan

Accounts receivable–trade

841

－

(25)

U.S. dollar

Accounts payable–trade

147

－

57

Euro

Accounts payable–trade

0

－

0

Japanese yen

Accounts payable–trade

41

－

(0)

$57,046$－$(5,277)

BuyingTotal(*) The fair value is provided by counterparty financial institutions.

ii) Interest-rate swaps, and interest-rate and currency swaps
Millions of yen
2022

Classification

Special treatment forinterest-rate swaps

Items

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract

Fair value

over 1 year

Interest-rate swaps
Pay fixed/receive
floating

Long-term loans payable

Total¥68,373¥48,495(*)¥68,373¥48,495¥－

Millions of yen
2021
Classification

Special treatment forinterest-rate swaps

Items

Hedged assets/liabilities

Amount ofcontract
over 1 year

Fair value¥71,597¥58,143(*)¥71,597¥58,143¥－

Amount ofcontract

Interest-rate swaps
Pay fixed/receive
floating
Total

Long-term loans payable37

Thousands of U.S. dollars
2022
Classification

Special treatment for

Items

Hedged assets/liabilities

Amount ofcontract

Amount ofcontract
over 1 year

Fair value

Long-term loans payable$558,557$396,169(*)$558,557$396,169$－

Interest-rate swaps
Pay fixed/receive

interest-rate swaps

floating
Total(*) Fair value of interest-rate swaps for which special treatment is applied, is included in fair value of the corresponding long-term loans
payable for which hedge accounting is applied.

14. Provision for retirement benefits
Upon terminating employment, employees of the parent company and its subsidiaries are entitled, under most circumstances, to lump-sum severance
indemnities and/or pension payments determined by reference mainly to their current basic rate of pay and length of service and/or defined contributionplans. Additional benefits may be granted to employees depending on the conditions under which termination of employment occurs. Certain
consolidated subsidiaries adopt the simplified method in calculating expected defined benefit liability.
Reconciliations of beginning and ending balances of projected benefit obligations for the fiscal years ended March 31, 2022 and 2021, were as follows:
Thousands ofMillions of yen
2022
Beginning balance of the projected benefit obligations

U.S. dollars
2021

2022

¥410,947¥401,975$3,357,136

Service cost

15,145

14,657

123,724

Interest cost

724

685

5,915

8

11,18665(18,667)(18,007)(152,496)

1,268

451

10,359¥409,425¥410,947$3,344,702

Actuarial gains/losses
Payment of retirement benefits
Other
Ending balance of the projected benefit obligations

Reconciliations of beginning and ending balances of plan assets for the fiscal years ended March 31, 2022 and 2021, were as follows:
Thousands ofMillions of yen
2022

U.S. dollars
2021

2022

¥252,115¥227,609$2,059,595

Expected return

6,255

5,640

51,099Actuarial gains/losses

4,177

22,27034,123Contributions

5,875

5,632

47,994

Payment of retirement benefits(9,743)(9,294)(79,593)

(142)

258

(1,160)¥258,537¥252,115$2,112,058

Beginning balance of plan assets

Other
Ending balance of plan assets

38

Reconciliations of ending balance of projected benefit obligations and the plan assets, and of net defined benefit liability and net defined benefit
asset, as recorded in the consolidated balance sheet at March 31, 2022 and 2021, were as follows:
Thousands ofMillions of yen
2022

U.S. dollars
2021

2022

Projected benefit obligations of funded plans¥263,033¥265,651$2,148,787

Plan assets(258,537)(252,115)(2,112,058)

4,496

13,53636,729Projected benefit obligations of unfunded plans

146,392

145,296

1,195,915

Net of liability and asset that have been recorded in the
consolidated balance sheets¥150,888¥158,832$1,232,644

Net defined benefit liability¥152,081¥158,832$1,242,390

Net defined benefit assets¥ (1,193)¥－$ (9,746)

Net of liability and asset that have been recorded in the
consolidated balance sheets¥150,888¥158,832$1,232,644

Subtotal

Periodic retirement benefit expenses for employees and the breakdown of items for the years ended March 31, 2022 and 2021, were as follows:
Thousands ofMillions of yen
2022
Service cost (net of employee contributions)

U.S. dollars
2021

2022

¥14,922¥14,386$121,902

724

685

5,915

Expected return on plan assets(6,255)(5,640)(51,099)

Amortization of actuarial gains/losses

3,724

7,375

30,422

Amortization of prior service costs

(159)

(297)

(1,299)Additional retirement benefits and other

3,522

1,444

28,772¥16,478¥17,954$134,613

Interest cost

Retirement benefit expenses of defined benefit plans

The components of other comprehensive income on defined benefit plans for the fiscal years ended March 31, 2022 and 2021, were as follows:
Thousands ofMillions of yen
2022

U.S. dollars
2021

2022

Prior service costs¥ (159)¥ (297)$ (1,299)

Actuarial gains/losses

7,893

18,40364,480Total¥7,733¥18,106$63,17339

Accumulated other comprehensive income on defined benefit plans at March 31, 2022 and 2021, was as follows:
Thousands ofMillions of yen
2022
Unrecognized prior service costs

U.S. dollars
2021

2022

¥ (1,154)¥ (1,314)$ (9,427)

Unrecognized actuarial gains/losses

8,355

16,24868,254

Total¥7,201¥14,934$58,827

Share by major classifications for plan assets at March 31, 2022 and 2021, was as follows:
2022

2021

Bonds

37%

37%

Alternative investments

25%

15%

Stock

22%

29%

Life insurance

11%

12%

Cash and deposits

4%

6%

Other

1%

1%

Total

100%

100%

Note: Alternative investments include mainly investments in real estate, private equity and hedge funds.

The current and future allocation of plan assets, and the current and future long-term rate of expected return from the variety of assets that make up
the plan assets, are considered in determining the long-term rate of expected return on plan assets.

Major actuarial assumptions at March 31, 2022 and 2021, were as follows:
2022

2021

Discount rate

Mainly 0.1%

Mainly 0.1%

The long-term rate of expected return on plan assets

Mainly 2.5%

Mainly 2.5%

Expected rate of increase in salary

2.0–6.5%

2.0–6.5%

Required payments to defined contribution plans at March 31, 2022, amounted to ¥6,921 million (US$56,539 thousand), and at March 31, 2021,
amounted to ¥6,920 million.

40

15. Taxes
Income taxes applicable to the parent company and subsidiaries in Japan include (1) corporation tax, (2) enterprise tax, and (3) inhabitants tax.

Significant components of deferred tax assets and liabilities at March 31, 2022 and 2021, were as follows:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Deferred tax assets:
Net defined benefit liability¥45,648¥48,449$372,911

Unrealized loss on share of subsidiaries and associates

31,447－

256,899

Tax loss carry forwards(*2)

26,355

15,568215,301

Foreign tax credit carry forwards

8,173

7,202

66,767

Accrued bonuses

7,747

7,426

63,287

Loss on disposal of noncurrent assets

5,982

6,498

48,869Unrealized gain on noncurrent assets and others

4,991

4,325

40,773

Impairment losses

4,984

7,014

40,716

Other

41,82533,553

341,680

Subtotal deferred tax assets

177,151

130,037

1,447,194

Valuation allowance for tax loss carryforwards(*2)(16,821)(13,801)(137,415)

Valuation allowance for deductible temporary difference(39,183)(13,061)(320,096)

Less: Valuation allowance (*1)(56,004)(26,862)(457,512)

Total deferred tax assets

121,147

103,175

989,682

Identified intangible assets during business combination(54,491)(44,027)(445,152)

Unrealized gain on other securities(28,694)(39,795)(234,409)

Foreign subsidiary's unitary tax－(24,946)－

Depreciation―overseas subsidiaries(9,887)(9,617)(80,770)(8,706)(8,736)(71,122)

Other(17,109)(13,857)(139,768)

Total deferred tax liabilities(118,887)(140,728)(971,220)¥2,260¥(37,553)$18,463

Deferred tax liabilities:

Deferred gain on property, plant and equipment

Net deferred tax assets (liabilities)(*1) Valuation allowance increased mainly due to reconfiguration of Veloxis.
(*2) Tax loss carryforwards and related deferred tax assets by period of expiration at March 31, 2022 and 2021, were as follows:

Millions of yen
2022
Up to
1year
Tax losscarryforwards(*1)
Valuation
allowance
Deferred tax
assets

Over
1year
up to
2yearsOver
2yearsup to
3yearsOver
3yearsup to
4yearsOver
4yearsup to
5yearsOver
5years

Total

¥337

¥4,986¥547¥1,488¥810¥18,189¥26,355(333)(4,984)(541)(1,330)(526)(9,107)(16,821)

¥4

¥1

¥6

¥158

¥284

¥9,082¥9,534(*2)(*1) Tax loss carryforwards are measured by multiplying the loss amounts by the statutory income tax rate.

41

(*2) Regarding tax loss carryforwards of ¥26,355 million (US$215,301 thousand), ¥9,534 million (US$77,886
thousand) is recorded as deferred tax assets. This is the amount judged to be recoverable based on future
expected taxable income.

Millions of yen
2021
Up to
1year
Tax losscarryforwards(*3)
Valuation
allowance
Deferred tax
assets

Over
1year
up to
2yearsOver
2yearsup to
3yearsOver
3yearsup to
4yearsOver
4yearsup to
5yearsOver
5years

Total

¥119

¥4,063¥950¥611¥1,008¥8,818¥15,568(108)(4,062)

(945)

(468)

(828)

(7,392)¥ (13,801)

¥11

¥1

¥5

¥143

¥180

¥1,426¥1,767(*4)(*3) Tax loss carryforwards are measured by multiplying the loss amounts by the statutory income tax rate.
(*4) Regarding tax loss carryforwards of ¥15,568 million, ¥1,767 million is recorded as deferred tax assets. This is
the amount judged to be recoverable based on future expected taxable income.

Thousand of U.S. dollars
2022
Up to
1year

Over
1year
up to
2yearsOver
2yearsup to
3yearsOver
3yearsup to
4yearsOver
4yearsup to
5yearsOver
5yearsTotal$2,753$40,732$4,469$12,156$6,617$148,591$215,301(2,720)(40,716)(4,420)(10,865)(4,297)(74,398)(137,415)

$33

$8

$49

$1,291$2,320$74,193$77,886

Tax losscarryforwards
Valuation
allowance
Deferred tax
assetsReconciliation of the differences between the statutory tax rate and the effective income tax rate for the years ended March 31, 2022 and 2021, was
as follows:
2022

2021

30.6%

30.6%

Non-deductible expenses and non-taxable income

0.4

0.2

R&D expenses deductible from income taxes

(2.2)

(2.7)

Statutory tax rate
Increase (reduction) in taxes resulting from:Amortization of goodwill and negative goodwill

4.0

5.1

Equity in (losses) earnings of unconsolidated subsidiaries and affiliates

(1.3)

(0.7)

Undistributed earnings (losses) of foreign subsidiaries

1.1

0.5

Difference of tax rates for foreign subsidiaries

(3.4)

(4.5)

Foreign subsidiary's unitary tax

(3.8)

15.9

Other

(1.6)

1.2

23.8%

45.6%

Effective income tax rate42

16. Business combinations
Business combinations accounted for by the purchase method were as follows:(a) Acquisition of Respicardia, Inc.
ZOLL Medical Corporation (“ZOLL”), a consolidated subsidiary of the Company, has acquired Respicardia, Inc. (“Respicardia”, Headquarters:
Minnesota*, USA; CEO: Peter Sommerness), a U.S. medical equipment company which develops, manufactures, and sells the remedē® System,
an implantable neurostimulator device for the treatment of central sleep apnea (CSA). The acquisition process was completed on April 9, 2021
(U.S. Eastern time).
* Registered in Delaware with head office functions in Minnesota.
1. Outline of business combination(1) Name and nature of the businesses of counterparty
Name of counterparty: Respicardia, Inc.
Nature of the businesses: Development, manufacture, and sale of implantable neurostimulator device(2) Main reason for the acquisition
With established businesses centered on cardiopulmonary resuscitation, notably defibrillators for medical professionals, automatedexternal defibrillators (AEDs), and LifeVest® wearable defibrillators, ZOLL has sought to further expand in the field of acute critical careincluding peripheral areas such as heart failure and respiratory dysfunction. Respicardia develops innovative therapies for conditions withlarge unmet clinical needs. With this acquisition, ZOLL will combine its expertise in cardiac and respiratory care with Respicardia’s novel
remedē® System to make a meaningful difference in the health and quality of life for many patients.
(3) The acquisition date
April 9, 2021
(4) Statutory form of business combination
Stock purchase for mainly cash as consideration(5) Name of company after transaction
ZOLL Respicardia, Inc.
(6) Acquired voting right
Voting right before the acquisition:

0%

Voting right after the acquisition: 100%(7) Grounds for determining acquiring company
Stock purchase for mainly cash as consideration by a consolidated subsidiary
2.The period of acquired company’s results included in the consolidated financial statements
From April 9 2021, to March 31, 2022

3. Cost of acquisition and details

Purchase consideration*

Millions of yen

Thousands of U.S. dollars

cash¥18,878$154,219

loans and accrued¥11,775$96,193¥30,653$250,413

Purchase price* Purchase consideration includes conditional consideration of ¥5,640 million (US$46,075 thousand). (fair value)
4. Major acquisition related costs
Advisory fees and others: ¥17 million (US$139 thousand)
5. Substance of conditional consideration specified in the stock purchase agreement and policy for accounting treatment(1) Substance of conditional consideration
The agreement provides for additional payment based on the acquired company’s achievement of certain performance targets(2) Policy for accounting treatment
Variable portion of conditional consideration will be treated in accordance with Generally Accepted Accounting Principles of the UnitedStates43

6. Amount of goodwill, measurement principle, amortization method, and useful life
(1)Amount of goodwill:¥14,362 million (US$117,327 thousand)(2) Measurement principle:
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed(3) Amortization method and useful life:
Straight-line method over 20 years
7. Details of assets acquired and liabilities assumed as of the acquisition dateMillions of yen

Thousands of U.S. dollars¥408$3,333

Noncurrent assets

16,185132,220

Total assets¥16,593$135,553¥278$2,271

24

196

¥301

$2,459Current assets

Current liabilities
Noncurrent liabilities
Total liabilities

8. Amount of identifiable intangible assets other than goodwill, its details and major weighted average useful life
(1) Purchase price allocated to intangible assets and its major items
Millions of yen

Thousands of U.S. dollars¥14,243$116,355

Customer relationships¥721$5,890Trademarks¥623$5,089Technology assets(2) Major weighted average useful life
Technology assets

13 years

Customer relationships 12 years
Trademarks

10 years

Total 13 years
9. Pro forma effects on the consolidated statements of income assuming the business combination had been completed at the
beginning of fiscal year, and method of its measurement
Information is omitted due to immateriality. This note is not audited.

(b) Acquisition of additional shares in McDonald Jones Homes Pty Ltd
Asahi Kasei Homes Australia Pty Ltd, a consolidated subsidiary of the Company, concluded an agreement on April 16, 2021, to purchase additional
shares in McDonald Jones Homes Pty Ltd (“McDonald Jones”), an equity-method affiliate of the Company. The transaction was completed onJune 11, 2021, and McDonald Jones became a consolidated subsidiary of the Company.
1. Outline of business combination(1) Name and nature of business of counterparty
Name of counterparty: McDonald Jones Homes Pty Ltd
Nature of business:

Construction of custom-built homes and sale of pre-built homes(2) Main reasons for the acquisition
In July 2017, the Company acquired a 40% interest in McDonald Jones, a detached housing company in Australia. Expertise of theCompany, a consolidated subsidiary of the Company, regarding industrialized housing provided valuable support for sales and marketing,and helped to reduce costs by shortening the construction period. The acquisition of additional shares will accelerate such measuresand enable further market expansion and growth in the Australian housing market, contributing to sustainable growth in corporate value
for the Company.

44

(3) The acquisition dateJune 11, 2021
(4) Statutory form of business combination
Stock purchase for cash as consideration(5) Name of company after transaction
McDonald Jones Homes Pty Ltd(6) Acquired voting right
Voting right before the acquisition:

40%

Additionally voting right acquired of the acquisition date:Voting right after the acquisition:

40%

80%

(7) Grounds for determining acquiring company
Stock purchase for cash as consideration by a consolidated subsidiary
2. The period of acquired business’s results included in the consolidated financial statements
From April 1, 2021, to March 31, 2022
3. Cost of acquisition and details
Millions of yen

Thousands of U.S. dollars¥9,555$78,057¥9,555$78,057¥19,110$156,115

Market value of stock held before acquisition
as of the acquisition date
Additional purchase consideration

cash

Purchase price

4. Difference between cost of acquisition and total of individual transactions leading to the acquisition
Gain on step acquisitions:¥1,700 million (US$13,888 thousand)

5. Major acquisition related costs
Advisory fees and others:¥117 million (US$956 thousand)6. Amount of goodwill, measurement principle, amortization method, and useful life
(1) Amount of goodwill:¥5,454 million (US$ 44,555 thousand)(2) Measurement principle:
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed(3) Amortization method and useful life:
Straight-line method over 20 years
7. Details of assets acquired and liabilities assumed as of the acquisition dateMillions of yen

Thousands of U.S. dollars

Current assets¥24,301$198,521

Noncurrent assets

19,877

162,381

Total assets¥44,178$369,902

Current liabilities¥23,084$188,579

4,172

34,082¥27,256$222,662

Noncurrent liabilities
Total liabilities

458. Amount of identifiable intangible assets other than goodwill, its details and major weighted average useful life
(1) Purchase price allocated to intangible assets and its major items

Trademarks
Customer relationships

Millions of yen

Thousands of U.S. dollars¥8,736$71,367¥422$3,447(2) Major weighted average useful life
Trademarks

20 years

Customer relationships 5 years
Total 19 years(c) Acquisition of Itamar Medical Ltd.
ZOLL Medical Corporation (“ZOLL”), a consolidated subsidiary of the Company, concluded an agreement on September 13, 2021, to acquire all
outstanding ordinary shares of Itamar Medical Ltd. (“Itamar”, Headquarters: Caesarea, Israel; CEO: Gilad Glick), an Israeli medical device anddigital health company focused on the integration of sleep apnea diagnosis into the cardiac patient care pathway. The acquisition process wascompleted on December 16, 2021 (U.S. Eastern time).
1. Outline of business combination(1) Name and nature of business of counterparty
Name of counterparty: Itamar Medical Ltd.
Nature of business:

Development, manufacture, and sale of diagnostic devices for sleep apnea(2) Main reasons for the acquisition
With established businesses centered on cardiopulmonary resuscitation, notably defibrillators for medical professionals, automatedexternal defibrillators (AEDs), and LifeVest® wearable defibrillators, ZOLL has sought to further expand in the field of acute critical careincluding peripheral areas such as heart failure and respiratory dysfunction.
There are two primary classifications of sleep apnea: obstructive sleep apnea (OSA) and central sleep apnea (CSA). While OSA resultsfrom a blockage of the upper airway, CSA occurs when the brain fails to send appropriate signals to the breathing muscles that stimulatea regular breathing pattern.

Research has shown complex interrelationships between cardiovascular disease and both OSA and CSA.

OSA is associated with increases in the incidence and progression of coronary heart disease, heart failure, stroke, and atrial fibrillation,
while CSA associated with Cheyne-Stokes respiration predicts incident heart failure and atrial fibrillation, and strongly predicts mortality
among patients with heart failure.
In April 2021, ZOLL acquired Respicardia, Inc., a U.S. medical equipment company which manufactures and sells the remedē® System,
an implantable neurostimulator device for the treatment of CSA. The acquisition of Itamar allows ZOLL to extend its business in thisfield.
(3) The acquisition date
December 16, 2021
(4) Statutory form of business combination
Stock purchase for cash as consideration(5) Name of company after transaction
Itamar Medical Ltd.
(6) Acquired voting right
Voting right before the acquisition:
Voting right after the acquisition:

0%100(7) Grounds for determining acquiring company
Stock purchase for cash as consideration by a consolidated subsidiary
2. The period of acquired company’s results included in the consolidated financial statements
From December 16, 2021, to March 31, 2022

46

3. Cost of acquisition and details
Purchase consideration

Millions of yen

Thousands of U.S. dollars¥60,855$497,141¥60,855$497,141

cash

Purchase price
4. Major acquisition related costs
Advisory fees and others:¥844 million (US$6,895 thousand)

5. Amount of goodwill, measurement principle, amortization method, and useful life
(1) Amount of goodwill:¥37,776 million* (US$ 308,602 thousand)* Based on provisional measurement as purchase price allocation is incomplete due to the short time between closing of the transaction
and fiscal year end preventing completion of identification and estimation of the value of identifiable assets and liabilities.
(2) Measurement principle:
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed.
(3) Amortization method and useful life:
Not determined at present
6. Details of assets acquired and liabilities assumed as of the acquisition dateMillions of yen

Thousands of U.S. dollars

Current assets¥9,896$80,843

Noncurrent assets

17,839145,732

Total assets¥27,735$226,575

Current liabilities¥4,398$35,928

258

2,108

¥4,656$38,036

Noncurrent liabilities
Total liabilities

7. Amount of identifiable intangible assets other than goodwill, its details and major weighted average useful life
(1) Purchase price allocated to intangible assets and its major items
Millions of yen

Thousands of U.S. dollars

Technology assets¥12,563$102,631

Trademarks¥3,084$25,194

Customer relationships¥1,656$13,528(2) Major weighted average useful life
Technology assets
Trademarks

9 years

14 years

Customer relationships 13 years
Total 10 years
8. Purchase price allocation
Purchase price allocation is incomplete because fair value measurement of assets and liabilities has not been completed as of the end of
the consolidated fiscal year. Provisional treatment is based on rational information available at that time.
9. Pro forma effects on the consolidated statements of income assuming the business combination had been completed at the
beginning of fiscal year, and method of measurement thereofInformation is omitted due to immateriality. This note is not subject to audit.

47

17.Revenue recognition(a) Revenue from contracts with customers
Millions of yen
2022
Material
Japan

Homes

Health Care

Subtotal

Others (*1)

Total¥475,776¥687,084¥101,765¥1,264,624¥12,254¥1,276,878

United States

90,38854,970211,128

356,485987

357,472

China

220,523－

17,974

238,497

184

238,681

Others411,559

91,29785,016

587,873413

588,286¥1,198,246¥833,351¥415,883¥2,447,479¥13,838¥2,461,317¥1,198,246¥833,351¥415,883¥2,447,479¥13,838¥2,461,317

Revenue from contracts withcustomers (*2)
Sales to external customers(*1) The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing
operations.
(*2) Including revenue from leases.
Thousands of U.S. dollars
2022
Homes

$3,886,741$5,612,973$831,345$10,331,051$100,106$10,431,158

738,404

449,065

1,724,761

2,912,221

8,063

2,920,284

China

1,801,511－

146,834

1,948,346

1,503

1,949,849

Others3,362,135

745,830

694,518

4,802,492

3,374

4,805,866$9,788,792$6,807,867$3,397,459$19,994,110$113,046$20,107,156$9,788,792$6,807,867$3,397,459$19,994,110$113,046$20,107,156

Japan
United States

Revenue from contracts withcustomers
Sales to external customers

Health Care

Subtotal

Total

Material

Others(b) Basis for revenue recognition
Please refer to Note 2. Significant accounting policies (f) Significant revenue and expense recognition.
(c) Relationship between the fulfillment of performance obligations based on contracts with customers and the cash flow generated fromthe contracts, the amount of revenue expected to be recognized in subsequent fiscal years from contracts with customers and the timing,
existing at March 31, 202248

(1) Balances of contract assets and contract liabilities, etc.
Thousands ofMillions of yen

U.S. dollars
2022

Liabilities from contracts with customers (beginning¥335,013$2,736,811

393,864

3,217,580

Contract assets (beginning balance)

25,731

210,203

Contract assets (ending balance)

35,840292,287

Contract liabilities (beginning balance)

47,544388,400

Contract liabilities (ending balance)

62,476510,383balance)
Receivables from contracts with customers (endingbalance)

The company mainly records consideration for construction in progress as contract assets, and advances received from customers as contract
liabilities. Among revenue recognized in the consolidated fiscal year ended March 31, 2022, the amount included in the beginning balance ofcontract liabilities was ¥47,544 million (US$388,400 thousand).
There is no significant change in the balance of contract assets and contract liabilities(2) Transaction prices allocated to outstanding performance obligations
Among transaction prices allocated to outstanding performance obligations, those whose contract term exceeds one year are mainly related to theHomes segment, and their recognition as revenue is as shown below. Applying the practical expedient regarding notes on transaction prices
allocated to outstanding performance obligations, there are some contracts whose period was initially expected to be within one year which are
not included in the scope of the note below.
Thousands ofMillions of yen

U.S. dollars
2022

Within 1 year

¥210,546$1,720,007

Over 1 year

132,509

1,082,501

Total

343,056

2,802,516

18. Business segment information(a) Overview of reportable segments
The Company’s business segments are based on organizational units for which separate financial information is available, and the Board of Directors
carries out periodic review to allocate management resources and evaluate business performance.
The Company is organized under an operating holding company configuration with the operating holding company and core operating companies
performing operations in three business sectors. The operating holding company and each core operating company lays out strategy and develops
business activities in Japan and abroad.
Main businesses and main products of the three reportable segments are as follows:

Material segment
Basic Materials business
The Company manufactures, processes, and sells petrochemical products such as styrene, acrylonitrile, polyethylene, and polystyrene.
Performance Products business
The Company manufactures, processes, and sells fiber products such as cupro fiber, elastic polyurethane filament, nonwoven fabrics, and nylon
66 filament, performance polymer products such as synthetic rubber and engineering plastics, and consumable products such as food wrapping49

film, and plastic films and sheets.
Specialty Solutions business
The Company manufactures, processes, and sells performance material products such as coating materials, microcrystalline cellulose, explosives,
explosion-bonded metal clad, hollow-fiber filtration membranes, ion-exchange membranes, and electronic materials, battery separator products
such as lithium-ion battery separator and lead-acid battery separator, and electronic devices such as mixed-signal LSIs and Hall elements.

Homes segment
Homes business
The Company constructs unit homes and apartment buildings, and operates real estate businesses, remodeling businesses, and financial andother services.
Construction Materials business
The Company manufactures and sells autoclaved aerated concrete (AAC) panels, insulation panels, foundation systems, and structuralcomponents.

Health Care segment
Pharmaceuticals business
The Company manufactures and sells pharmaceuticals and diagnostic reagents.
Medical Care business
The Company manufactures and sells artificial kidneys, therapeutic apheresis devices, and virus removal filters.
Critical Care business
The Company manufactures and sells products centered on cardiopulmonary resuscitation; notably defibrillators for medical professionals,
automated external defibrillators (AEDs), and wearable defibrillators.

OthersThe Company performs plant and environmental engineering, research and analysis, employment agency/staffing operations, etc.

(b) Methods to determine net sales, income or loss, assets, and other items by reportable business segment
Profit by reportable business segment is stated on an operating income basis. Intersegment net sales and transfers are based on the values oftransactions undertaken between third parties.
Methods of revenue recognition by reportable business segment is changed, as Accounting Standards Board of Japan (ASBJ) Statement No. 29“Accounting Standard for Revenue Recognition” and other standards are applied from the beginning of the fiscal year ended March 31, 2022, as
described in the note of “Changes in significant accounting policies”.
As a result, in Material segment, net sales and operating income, each decreased by ¥49,219 million (US$402,083 thousand) and ¥120 million(US$980 thousand), respectively, during the fiscal year ended March 31, 2022. In Homes segment, net sales and operating income, each increasedby ¥784 million (US$6,405 thousand) and ¥1,290 million (US$10,538 thousand), respectively, during the fiscal year ended March 31, 2022. And in
Healthcare segment, net sales decreased by ¥233 million (US$1,903 thousand) and operating income increased ¥55 million (US$449 thousand)during the fiscal year ended March 31, 2022.

50

(c) Information concerning net sales, income or loss, assets, and other items by reportable segment
Millions of yen
2022
Material

Homes

HealthCare

Subtotal

Total

Others (*1)

Sales:
External customers
Intersegment
Total
Operating income
Assets¥1,198,246¥833,351¥415,883¥2,447,479¥13,838¥2,461,317

6,705

66

20

6,791

41,78948,5801,204,951

833,417415,9032,454,270

55,6272,509,898

110,274

73,15952,159235,591

3,247

238,838

1,781,037

639,253

861,139

3,281,429

101,665

3,383,094

63,675

13,84734,504

112,026

1,562

113,588

12,775556

15,05928,391－

28,391

70,336

8,342

2,314

80,992

20,504

101,496

120,751

18,60024,882

164,233

3,533

167,766

Other items:
Depreciation andamortization (*2)

Amortization of
goodwill
Investments inaffiliates accounted forusing equity method
Increase in property,
plant and equipment,
and intangible assets(*1) The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing
operations.
(*2) Amortization of goodwill is not included.
Millions of yen
2021
Material

Homes

Health Care

Subtotal

Others (*1)

Total

Sales:
External customers
Intersegment
Total
Operating income
Assets¥991,227¥692,639¥407,904¥2,091,770¥14,281¥2,106,051

5,515

22

24

5,561

41,01046,572996,743

692,661

407,928

2,097,331

55,292

2,152,623

66,46163,54867,603

197,6123,800

201,413

1,567,831

568,563734,658

2,871,052

92,8782,963,930

59,01911,18031,106

101,305

1,538

102,843

11,93491

12,87824,903－24,90362,204

14,121

2,192

78,517

19,08597,602

100,458

18,65815,934135,050809

135,859

Other items:
Depreciation andamortization (*2)

Amortization of
goodwill
Investments inaffiliates accounted forusing equity method
Increase in property,
plant and equipment,

and intangible assets(*1) The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing
operations.
(*2)Amortization of goodwill is not included.

51

Thousands of U.S. dollars
2022
Material

Homes

Health Care

Subtotal

Total$9,788,792$6,807,867$3,397,459$19,994,110$113,046$20,107,156

54,775539

163

55,477341,386

396,863

9,843,567

6,808,406

3,397,623

20,049,587

454,432

20,504,027

Others (*1)

Sales:
External customers
Intersegment
Total
Operating income
Assets

900,858

597,655

426,101

1,924,606

26,526

1,951,131

14,549,767

5,222,229

7,034,875

26,806,870

830,529

27,637,399

520,178

113,120

281,872

915,170

12,760927,931

104,362

4,542

123,021

231,934－

231,934

574,594

68,14818,904

661,645

167,503829,148

986,447

151,948203,268

1,341,663

28,862

1,370,525

Other items:
Depreciation andamortization (*2)

Amortization of
goodwill
Investments inaffiliates accounted
for using equity
methodIncrease in property,
plant and equipment,
and intangible
assets(*1)The “Others” category includes plant engineering and environmental engineering, research and analysis, and employment agency/staffing
operations.
(*2) Amortization of goodwill is not included.

(d) Reconciliation of differences between total amounts of reportable segments and amounts appearing in the
consolidated financial statements (adjustment of difference)
Sales

Thousands of U.S.

Millions of yen

2022

dollars
2021

2022¥2,454,270¥2,097,331$20,049,587

Net sales in “Others” category

55,62755,292454,432

Elimination of intersegment transactions(48,580)(46,572)(396,863)¥2,461,317¥2,106,051$20,107,156

Total of reporting segments

Net sales on consolidated statements of income

52

Operating income

Thousands of U.S.

Millions of yen
2022

dollars
2021

2022¥235,591¥197,612$1,924,606

Operating income in “Others” category

3,247

3,800

26,526

Elimination of intersegment transactions

189

551

1,544

(36,380)(30,156)(297,198)¥202,647¥171,808$1,655,477

Total of reporting segments

Corporate expenses, etc.(*)
Operating income on consolidated statements ofincome(*) Corporate expenses, etc. include corporate revenue, basic research expense, and group management expense, etc. which are notallocated to reporting segments.

AssetsThousands of U.S.

Millions of yen
2022

dollars2021

2022

Total of reporting segments¥3,281,429¥2,871,052$26,806,870

Assets in “Others” category

101,665

92,878

830,529

Elimination of intersegment transactions(532,202)(602,842)(4,347,700)

Corporate assets(*)

498,183

557,853

4,069,790¥3,349,075¥2,918,941$27,359,489

Total assets on consolidated balance sheets(*) Corporate assets include assets of the parent company—surplus operating funds (cash and deposits), long-term investment capital(investment securities, etc.), and land, etc.

53

Other items

Total of reportable segments

Millions of yen

Depreciation andamortization(*2)

Amortization of
goodwill
Investments inaffiliates accounted
for using equity
methodIncrease inproperty, plant andequipment, andintangible assets

Thousands

OthersMillions of yen

Adjustments (*1)

Thousands

Millions of yen

Amounts from consolidated financial
statements
Thousands

Millions of yen

Thousandsof U.S.

of U.S.

of U.S.

of U.S.

dollars

dollars

dollars

dollars

2022

2021

2022

2022

2021

2022

2022

2021

2022

2022

2021

2022

¥112,026¥101,305$915,170¥1,562¥1,538$12,760¥6,150¥5,527$50,241¥119,738¥108,369$978,172

28,391

24,903

231,934

－

－

－

－

－

－

28,391

24,903

231,934

80,99278,517

661,645

20,50419,085167,503－－－

101,496

97,602

829,148

164,233

135,050

1,341,663

3,533

809

28,862

18,878

17,797

154,219

186,644

153,656

1,524,745(*1) Adjustments include elimination of intersegment transactions and corporate expenses, etc.
(*2) Amortization of goodwill is not included.

(e) Related Informationi) Information on products and services
Please refer to (c) Information concerning net sales, income or loss, assets, and other items for each reportable segment.

ii) Geographic information
1) Net sales

54Millions of yen

Thousands of U.S. dollars

2022

2022

Japan

United States

China

Others

Total

Japan

United States

China

OthersTotal¥1,276,878¥357,472¥238,681¥588,286¥2,461,317$10,431,158$2,920,284$1,949,849$4,805,866$20,107,156

Millions of yen
2021
Japan

United States

China

OthersTotal¥1,204,218¥309,723¥198,903¥393,206¥2,106,051

2) Property, plant and equipment
Millions of yen

Thousands of U.S. dollars

2022
Japan

¥569,214

UnitedStates¥119,423

2021
Others

Total

Japan

¥116,578¥805,215¥518,408

UnitedStates¥107,365

2022
Others

Total

Japan

¥91,489¥717,262$4,650,061

UnitedStates$975,598

OthersTotal$952,357$6,578,017

3) Information by major customer
Information by major customer is not shown because no customer accounts for 10% or more of net sales on the consolidated statements of income.

55

19. Information on related parties
For the year ended March 31, 2022: None
For the year ended March 31, 2021: None

20. Per share information
Basic and diluted net assets per share and net income per share for the years ended March 31, 2022 and 2021, were as follows:

Yen

U.S. dollars

2022

2021

2022

Basic net assets per share¥1,216.33¥1,057.61$9.94

Basic net income per share

116.68

57.49

0.95

Note: As the Company had no dilutive securities at March 31, 2022 and 2021, the Company does not disclose diluted net income
per share for the years ended March 31, 2022 and 2021.

(a) Basis for measurement of net assets per share
Millions of yen

Total net assets
Amount deducted from total net assetsof which, non-controlling interests
Net assets allocated to capital stock

U.S. dollars

2022

2021

2022

¥1,718,815¥1,494,535$14,041,459

31,40527,058

256,556(31,405)(27,058)(256,556)¥1,687,410¥1,467,476$13,784,903

1,387,291

1,387,535

1,387,291

Number of shares of capital stock outstanding at
fiscal year end used in measurement of net assets
per share (thousand)Note: Shares held by the trust for granting shares to Directors, etc., numbering 561 thousand at March 31, 2022, and 327 thousandat March 31, 2021, are excluded from the number of shares of capital stock outstanding at fiscal year end used in measurementof net assets per share.

(b) Basis for measurement of net income per share
Thousands ofMillions of yen
2022
Net income attributable to owners of the parent
Amount not attributable to common stock shareholders
Net income attributable to common stock owners of theparentWeighted-average number of shares of capital stock(thousand)

U.S. dollars
2021

2022

¥161,880¥79,768$1,322,441

－

－

－

¥161,880¥79,768$1,322,441

1,387,432

1,387,526

1,387,432

Note: Shares held by the trust for granting shares to Directors, etc., numbering 425 thousand during the year ended March 31, 2022,
and 342 thousand during the year ended March 31, 2021, are excluded from the weighted-average number of shares of capitalstock used in measurement of net income per share.

21. Subsequent events(a) Fire at Bemberg Plant

On April 9, 2022, a fire occurred at the Bemberg Plant of the Company (Nobeoka, Miyazaki, Japan). While the fire was extinguished the following
day, the state of damage, prospects for recovery, and the forthcoming effect on business activity are currently being investigated, making it difficult
to rationally estimate the amount of loss incurred due to the fire.

56

(b) Acquisition of Bionova Holdings, Inc. in the U.S.
Asahi Kasei Medical Co., Ltd. (“Asahi Kasei Medical”), a consolidated subsidiary of the Company, concluded an agreement through Asahi Kasei
Bioprocess Holdings, Inc., a U.S. subsidiary of Asahi Kasei Medical, to acquire Bionova Holdings, Inc. (Registered in Delaware, U.S.A; CEO:
Darren Head), the 100% parent company of Bionova Scientific, LLC, a provider of contract process development services and GMP (GoodManufacturing Practice) compliant contract manufacturing services to biopharmaceutical companies, especially those developing next-generation
antibody based drugs. The acquisition process was completed on May 31, 2022 (JST).
1. Outline of business combination(1) Name and nature of the businesses of counterparty
Name of counterparty: Bionova Holdings, Inc.
Nature of the businesses: Biopharmaceutical manufacturing process development, GMP-compliant contract manufacturing of current
and next-generation antibody drugs (all via its 100% owned operating subsidiary, Bionova Scientific, LLC(2) Main reason for the acquisition
This acquisition will enable Asahi Kasei Medical to add a biopharmaceutical CDMO (contract development and manufacturingorganization) to its bioprocess business. As process development and GMP manufacturing operations are key to the overall success ofbiopharmaceutical customers’ businesses and the launch of new drugs, being able to offer a broader range of critical know-how driven
services to biopharmaceutical customers will allow Asahi Kasei Medical to grow its bioprocess business more rapidly by better serving
the industry and by reaching a broader range of customers, including those at the cutting edge of next generation biopharmaceuticals.
(3) The acquisition date
May 31, 2022
(4) Statutory form of business combination
Stock purchase for cash as consideration(5) Name of company after transaction
Bionova Holdings, Inc.
(6) Acquired voting right
Voting right before the acquisition: 0%
Voting right after the acquisition: 100%(7) Grounds for determining acquiring company
Stock purchase for cash as consideration by a consolidated subsidiary
2.Cost of acquisition and details

Purchase consideration*

cash

Purchase priceMillions of yen

Thousands of U.S. dollars¥42,578$347,831¥42,578$347,831* The price adjustment after the stock purchase has not been completed and the cost of acquisition has not determined.
3.Amount of goodwill, measurement principle, amortization method, and useful life
(1) Amount of goodwill:¥39,788 million (US$325,039 thousand)
The amount of goodwill is provisional measurement.
(2) Measurement principle:
Goodwill is measured as the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed.
(3) Amortization method and useful life:
Not determined at present(c) Transfer of photomask pellicles business to Mitsui Chemicals, Inc., by corporate separation (simplified absorptiontype separation)
The company has executed a final agreement (Final Agreement) with Mitsui Chemicals, Inc., regarding the transfer to Mitsui Chemicals of the57Company’s operations for the manufacture, development, and sale of photomask pellicles in Japan, Korea, Taiwan, North America, and China,
and all shares of Asahi Kasei EMS Co., Ltd., a consolidated subsidiary of the Company which performs consigned manufacture of photomask
pellicles (The Business) with an effective date of July 1, 2023 (scheduled), by absorption-type separation (The Separation).
1.Overview of the separation(1) Name of succeeding company
Mitsui chemicals, Inc.
(2) Content of separating business
Operations related to manufacture, development, and sale of pellicles(3) Main reason for the separation
As a result of successive discussions between the company and Mitsui Chemicals on the future prospects for both companies’ pellicles
business, from the perspectives of swift decision-making and business strengthening, the conclusion was reached that it would be best
to transfer The Business to Mitsui Chemicals and operate the FPD pellicles and LSI pellicles business as part of the robust structure of
Mitsui Chemicals.
(4) Effective date of the separation
July 1, 2023(scheduled)(5) Overview of transaction including legal form
Absorption-type separation with the Company as the separating company and Mitsui Chemicals as the succeeding company.
Through The Separation, Mitsui Chemicals will succeed, among the assets, liabilities, and other rights and obligations of The Business,those which are stipulated in The Separation Agreement. Apart from The Separation, as operations related to The Business, operationsof Asahi Kasei EMD Taiwan Corp. and Asahi Kasei E-materials Korea Inc. will, by the Effective Date of the Separation, be succeeded to
Mitsui Chemicals and its affiliates through business transfer, etc. (The Business Transfer).
The company is scheduled to receive ¥7,400 million (US$60,453 thousand) from Mitsui Chemicals as consideration for the rights andobligations succeeding with The Separation. This amount includes consideration for The Business Transfer. The final amount is scheduled
to be fixed upon adjustment based on the Final Agreement.
2. Reportable segment which includes the separating business
Material segment5822. Borrowings(a) Bonds payable at March 31, 2022 and 2021, comprised the following:Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Unsecured 0.10% yen bonds due in 2023

¥20,000¥20,000$163,385

Unsecured 0.07% yen bonds due in 2024

20,00020,000163,385

Unsecured 0.21% yen bonds due in 2029

20,00020,000163,385

Unsecured 0.12% yen bonds(Green Bond) due in 2025

10,00010,00081,693

Unsecured 0.01% yen bonds due in 2023

20,00020,000163,385

Unsecured 0.28% yen bonds due in 2030

20,00020,000163,385

Unsecured 0.00% yen bonds due in 2024

10,00081,693

Unsecured 0.09% yen bonds due in 2026

20,000163,385

Unsecured 0.24% yen bonds due in 2031

20,000163,385

Total¥160,000¥110,000$1,307,083

Notes: 1. The current portion of bonds payable is recorded under current liabilities on the consolidated balance sheets.
2. The aggregate annual maturities of long-term debt after March 31, 2022, are as follows:Year ending March 31

Millions of yen

Thousands of U.S. dollars

2023

¥－

$－

2024

40,000326,7712025

30,000245,0782026

10,00081,6932027

20,000163,3852028 and thereafter

60,000490,156¥160,000$1,307,083

Total

59

(b) Loans payable at March 31, 2022 and 2021, comprised the following:Thousands ofMillions of yen

2022
Short-term loans payable
with an interest rate of 0.29%

U.S. dollars
2021

2022

¥166,306¥89,278$1,358,598

73,18655,293597,876

2,224

880

18,168

253,785

320,404

2,073,237

8,715

3,921

71,195

113,000

84,000923,127¥617,215¥553,776$5,042,194

Current portion of long-term loans payable
with an interest rate of 0.82%
Current portion of lease obligations
with an interest rate of 3.27%
Long-term loans payable(except portion due within one year)with an interest rate of 0.38%
Lease obligations(except portion due within one year)with an interest rate of 4.06%
Commercial paper(portion due within one year)with an interest rate of (0.04)%
Total

Notes: 1. Interest rates shown are weighted average interest rates for the balance outstanding at March 31, 2022.
2. The aggregate annual maturities of long-term loans payable and lease obligations (except portion due within one year)
after March 31, 2022, are as follows:Year ending March 31

Long-term loans payable

Millions of yen

Lease obligations

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

2024¥51,778$422,988¥1,560$12,7442025

53,240434,932

1,353

11,0532026

62,570511,151

1,153

9,419

2027

60,948497,900

887

7,246

2028 and thereafter

25,248206,258

3,763

30,74160

23. Supplementary schedule of asset retirement obligations
Because the amounts of asset retirement obligations on April 1, 2021, and March 31, 2022, were not more than 1% of the combined totals of
liabilities and net assets on the respective dates, preparation of a supplementary schedule of asset retirement obligations is omitted in accordancewith paragraph 92-2 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.

24. Others
Litigation
Litigation related to pile installation
On November 28, 2017, Mitsui Fudosan Residential Co., Ltd. filed suit (hereinafter “First Lawsuit”) in the Tokyo District Court against the threecompanies of Sumitomo Mitsui Construction Co., Ltd., Hitachi High-Tech Corporation (company name changed from Hitachi High-Technologies
Corporation on February 12, 2020), and Asahi Kasei Construction Materials Corporation, a subsidiary of the Company, seeking compensation fordamages of approximately ¥45.9 billion (subsequently changed to approximately ¥51.0 billion) related to the cost of rebuilding a condominium
complex in Yokohama City due to concerns of unsound installation of a portion of foundation piles; Sumitomo Mitsui Construction being the prime
contractor for construction of said condominium complex, Hitachi High-Tech the primary subcontractor for pile installation, and Asahi Kasei
Construction Materials the secondary subcontractor for pile installation. Asahi Kasei Construction Materials holds that there is no basis for Mitsui
Fudosan Residential’s claim, and will make this argument during the proceedings of the First Lawsuit.
Related to the First Lawsuit, on April 27, 2018, Sumitomo Mitsui Construction filed suit (hereinafter “Second Lawsuit”) against Hitachi High-Techand Asahi Kasei Construction Materials seeking compensation for any damages it may incur in the First Lawsuit. Regarding this Second Lawsuit,the date of service of complaint to Asahi Kasei Construction Materials was May 14, 2018. Asahi Kasei Construction Materials holds that there isno basis for Sumitomo Mitsui Construction’s claim, and will make this argument during the proceedings of the Second Lawsuit.
Related to the First Lawsuit and Second Lawsuit, on May 25, 2018, Hitachi High-Tech filed suit (hereinafter “Third Lawsuit”) against Asahi Kasei
Construction Materials seeking compensation for any damages it may incur in the First Lawsuit or Second Lawsuit. Asahi Kasei Construction
Materials holds that there is no basis for Hitachi High-Tech’s claim, and will make this argument during the proceedings of the Third Lawsuit.

61