This document has been translated from the Japanese original for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail. The
Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages
arising from the translation.

To Those Shareholders with Voting Rights:

INFORMATION DISCLOSURE ON THE INTERNETREGARDING THE NOTICE OF
THE 98th ORDINARY GENERAL MEETING OF SHAREHOLDERS

Notes to the Consolidated Financial Statements
Notes to the Non-consolidated Financial Statements(April 1, 2020 to March 31, 2021)

The Notes to the Consolidated Financial Statements and Notes to the Non-consolidated Financial
Statements are made available to the shareholders on our website(https://www.iskweb.co.jp/ir/stockholders.html) in accordance with laws and ordinances, as well as theprovisions of Article 19 of our Articles of Incorporation.

ISHIHARA SANGYO KAISHA, LTD.

1

Notes to the Consolidated Financial Statements
1. Notes on Going Concern Assumption
Not applicable.
2. Notes on the Significant Items that constitute the Basis of Preparation of Consolidated Financial
Statements(1) Scope of Consolidation
1) Number of Consolidated Subsidiaries and Names of Major Consolidated Subsidiaries
The Company has 12 consolidated subsidiaries.
Japan
ISK Bioscience K.K.
Ishihara Techno Corporation
Fuji Titanium Industry Co., Ltd.
ISK Engineering Partners Corporation
Overseas
ISK AMERICAS INCORPORATEDISK BIOSCIENCES EUROPE N.V.
ISK TAIWAN CO., LTD.
2) Name of Major Non-consolidated Subsidiaries
ISK BIOSCIENCES KOREA LTD.
The Company’s 13 non-consolidated subsidiaries are all small companies, and have been excluded
from the scope of consolidation as they do not have a material impact on the Company’s
consolidated financial statements individually or in aggregate.
(2) Application of the Equity Method
1) Number and Names of Affiliates Accounted for Under the Equity Method
3 companies BELCHIM CROP PROTECTION N.V.
HOKUSAN CO., LTD.
SUMMIT AGRO USA, LLC
2) Names of Major Non-consolidated Subsidiaries and Affiliates Not Accounted for Under the
Equity Method
ISK BIOSCIENCES KOREA LTD.
The Company’s 13 non-consolidated subsidiaries and two affiliates have been excluded from thescope of application of the equity method, as their impact on the Company’s net income andretained earnings for the current fiscal year are immaterial, and are also immaterial in aggregate.
(3) Fiscal Year of the Consolidated Subsidiaries
The fiscal closing date for all consolidated subsidiaries in Japan is March 31. The fiscal closing
date for all consolidated subsidiaries overseas is December 31. Their financial statements as of thatdate are used to prepare the consolidated financial statements, and necessary adjustments are madeto reflect significant transactions that occurred between that date and the consolidated fiscal
closing date.

2

(4)

Accounting Policies
1) Standards and Methods for Valuation of Assets
Securities
Held-to-maturity debt securities:
Marketable securities:

Carried at amortized cost

Carried at fair value based on market price on the fiscal closing
date (any changes in unrealized holding gain or loss are reported
as a separate component of net assets; cost of sales is calculatedusing the moving average method.)

Non-marketable securities: Carried at cost using the moving average method
Investments in investment business limited liability partnerships(deemed to be securities under Article 2, Paragraph 2 of the
Financial Instruments and Exchange Act of Japan) are valued at
the net amount of the underlying equity in them based on the latest
financial statements available as of the closing date stipulated in
the partnership agreement.
Derivatives:

Carried at fair value

Inventories:

Inventories held for regular sales purposes
Principally stated at cost, determined by the gross average method(carrying amounts on the balance sheet are subject to the bookvalue reduction method based on decreased profitability).
At other overseas consolidated subsidiaries, inventories are mainly
stated at lower of cost or net selling value, cost being determinedby the gross average method.

2) Depreciation or Amortization Method for Non-current Assets
Property, plant and equipment (except for leased assets):
Primarily the straight-line method
Intangible assets (except for leased assets):
Straight-line method
Computer software for internal use is amortized by the straight-line
method over their estimated useful lives of 5 years.
Leased assets:

Leased assets under finance lease contracts that transfer ownershipto the lessee are depreciated by using the same method as for selfheld non-current assets.
Leased assets under finance lease contracts that do not transfer
ownership to the lessee are depreciated to a residual value of zeroby the straight-line method over the lease term as the useful life.

3) Standards for Recording Allowances and Provisions
Allowance for doubtful receivables:
An estimated amount of uncollectible receivables is recorded basedon the historical experience of bad debts on ordinary receivables
plus an additional estimate of probable specific doubtful accounts
3receivables from customers experiencing financial difficulties.
Accrued bonuses for employees:
Accrued employees’ bonuses are accounted for at an estimated amountof the bonuses to be paid.
Reserve for implementation of environmental and safety arrangements:
The Company has provided the reserve for estimated expenditures toimplement environmental and safety arrangements.
In addition, the Company has also provided the reserve for the
expenses related to the remediation of soil and groundwatercontamination and measures for buried waste at the Yokkaichi Plant.
Reserve for sales returns: Reserve for sales returns is provided for estimated losses incurring due
to the return of finished goods and merchandise sold during theconsolidated fiscal year subsequent to the consolidated balance sheet
date, using the historical rate of such returns in prior years.
Provision for maintenance: Provision for maintenance is provided in an amount estimated to benecessary for the maintenance for certain machinery and equipment
attributable to the current consolidated fiscal year.
Provision for loss on withdrawal from business:
Provision for loss on withdrawal from business is provided in theestimated necessary amount payable for the withdrawal from thebiopharmaceutical HVJ-E development business in the organic
chemicals business (healthcare).
4) Standards for Translating the Value of Important Foreign Currency-denominated Assets andLiabilities into Japanese Yen
The amounts of monetary receivables and payables denominated in foreign currencies aretranslated into yen amounts at the spot rates of exchange in effect at the balance sheet date, andforeign exchange gain or loss is credited or charged to income. The assets and liabilities ofoverseas subsidiaries, etc. are translated into yen at the spot rates of exchange in effect at thebalance sheet date, revenue and expense accounts are translated at the average rates of exchange in
effect during the year, and differences resulting from translation are reported as translation
adjustments which is a component of net assets.
5) Method of Hedge Accounting
Hedging transactions are mainly accounted for using the deferral method. Forward exchange
contracts which meet certain conditions are accounted for at their contracted rates (the “allocation
method”), and interest-rate swaps which meet certain conditions are accounted for as if the interest
rates which apply to the swaps had originally applied to the underlying debt (the “special
method”).
6) Method of Accounting for Consumption Taxes, etc.
Consumption taxes, etc. are excluded from the reported amounts.
7) Method of Accounting for Retirement Benefitsa)Attribution of estimated retirement benefit payments to each period
The retirement benefit obligation for employees is attributed to each period mainly by thestraight-line method over the estimated years of service of the eligible employees.
4b)

Accounting for actuarial gain and loss and prior service cost
Actuarial gain or loss is amortized from the following consolidated fiscal year in which suchgain or loss is recognized, by the straight-line method, over the estimated average remaining
years of service of the employees at the time of occurrence of such gain or loss.
Prior service cost is amortized as incurred by the straight-line method over the estimatedaverage remaining years of service of the employees at the time of such occurrence.

8) Application of Consolidated Taxation System
The Company and its consolidated subsidiaries in Japan applied for approval for a consolidated
taxation system during the current consolidated fiscal year. Because the consolidated taxation
system will be applied from the following consolidated fiscal year. In this relation, accounting
treatment and presentation for the consolidated fiscal year under review is premised on theapplication of a consolidated taxation system, based on “Revised Practical Solution on Tentative
Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 1)” (AccountingStandards Board of Japan PITF No.5, January 16, 2015) and “Revised Practical Solution on
Tentative Treatment of Tax Effect Accounting Under Consolidated Taxation System (Part 2)”(Accounting Standards Board of Japan PITF No.7, January 16, 2015).
9) Application of Tax Effect Accounting Associated with the Transition from a Consolidated Taxation
System to a Group Tax Sharing System
Regarding the transition to a group tax sharing system established under the Act to Partially
Amend the Income Tax Act (Act No.8 of 2020) and items in the non-consolidated taxation systemreviewed pursuant to this transition, the Company has not applied the provisions set forth inParagraph 44 of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018), in accordance with the treatment set forth in Paragraph 3 of“Practical Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (Accounting Standards Board ofJapan PITF No.39, March 31, 2020). As such, the amounts of deferred tax assets and deferred tax
liabilities are based on the tax law prior to amendment.
3. Notes on Changes in Presentation Method(1) Consolidated Statement of Income
Reversal of allowance for doubtful accounts within non-operating income, included in “other” in theprevious fiscal year (26 million yen in the previous consolidated fiscal year), is presented as a separate
item in the current consolidated fiscal year, due to increased materiality.
(2) Change Pursuant to the Application of “Accounting Standard for Disclosure of Accounting Estimates”
Notes on Accounting Estimates are presented pursuant to the application of “Accounting Standard forDisclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020) from the current
consolidated fiscal year.
4. Notes on Accounting Estimates(1) Recoverability of Deferred Tax Assets
Amount recorded on the consolidated financial statements for the fiscal year under review:
Deferred tax assets 8,547 million yen

5Other information to useful for the understanding of estimates:
1) Calculation Method
Recoverability of deferred tax assets is judged through estimated taxable income based on future
earning capacity, set against future deductible temporary differences and a loss carry-forward intax accounting. The estimate of taxable income is based on future business plans at the time of theestimate.
2) Main Assumptions
Estimated taxable income based on future earning capacity is based on future business plans. Mainassumptions include estimated future sales volumes, and the trends in selling prices and raw
materials prices.
3) Impact on the Consolidated Financial Statements for the Following Fiscal Year
Estimated sales volume, one of the main assumptions, is highly uncertain, and there is a risk thatchanges in forecast taxable income due to fluctuations in sales volume may have a significant
impact on the judgement regarding the recoverability of deferred tax assets. It is considereddifficult at present to forecast the impact that the COVID-19 pandemic will have on the Company
in the future. A decrease in future forecast sales volume, on which the future business plans are
premised, may lead to a reversal of deferred tax assets.
(2) Loss on Valuation of Investment Securities
Amounts recorded on the consolidated financial statements for the consolidated fiscal year underreview:
Loss on valuation of investment securities: - million yen
Investment securities: 1,992 million yen(Although no loss on valuation of investment securities has been recorded in the consolidated fiscal
year under review, this item is identified as required presentation due to the risk that it may exert amaterial impact on the consolidated financial statements for the next consolidated fiscal year)
Other information useful for the understanding of estimates:
1) Calculation Method
A non-listed company in Brazil (investment securities) is carried at a value based on the businessplans that formed the basis for the determination of the acquisition cost.
2) Main Assumptions
The main assumption contained in the business plans that formed the basis for the determination of
the acquisition cost for these shares is the growth rate.
3) Impact on the Consolidated Financial Statements for the Following Consolidated Fiscal YearThe growth rate which is a main assumption contains an element of uncertainty, and there is thepossibility that a loss on valuation of investments in securities may arise if it is judged that thegrowth rate has declined and excess earning capacity is impaired.
5. Notes to the Consolidated Balance Sheet(1) Accumulated Depreciation on Property, Plant and Equipment 125,545 million yen
Accumulated depreciation includes accumulated impairment loss.

6

(2) Assets Pledged as Collateral, and Related Obligations
Assets pledged as collateral
Investment securities

28 million yen

Buildings and structures

8,284 million yen

Machinery and vehicles

14,519 million yen

Land

868 million yen

Other fixed assets

379 million yen

Total

24,079 million yen

Among the above assets, the total value of property, plant and equipment pledged as a floating
mortgage is 23,511 million yen, covering all classifications of assets.
Obligations related to the collateral
Short-term bank loans

6,020 million yen

Current portion of long-term bank loans

3,535 million yen

Long-term bank loans

10,499 million yen

Total

20,054 million yen(3) Trade Notes Receivable Discounted with Banks

47 million yen(4) Guarantee Obligations
Liabilities, such as loans from financial institutions that the Group guarantees under joint signature
for companies outside its scope of consolidation are as follows:
ISK (SHANGHAI) CHEMICAL CO., LTD.

155 million yen

6. Notes to the Consolidated Statement of Changes in Net Assets(1) Class and Total Number of Shares Outstanding at the Consolidated Fiscal Year-end
Common stock 40,383,943 shares(2) Class and Total Number of Shares of Treasury Stock at the Consolidated Fiscal Year-end
Common stock 427,338 shares(3) Dividends of Surplus
1) Dividend Amounts
Resolution

Class ofshares

Source ofdividend

Total amountof dividend

Dividend
per share

Recorddate

Effective dateOrdinary General
Meeting of
Shareholders on
June 25, 2020

Commonstock

Retainedearnings

799
million yen

20.00 yenMarch 31,2020

June 26,202072) Dividend for which the Record Date is During the Current Consolidated Fiscal Year, but Whose
Effective Date is after the End of the Current Consolidated Fiscal Year
Anticipated
Resolution

Class ofshares

Source ofdividend

Total amountof dividend

Dividend
per share

Recorddate

Effective dateOrdinary General
Meeting of
Shareholders on
June 25, 2021

Commonstock

Retainedearnings

719
million yen

18.00 yenMarch 31,2021

June 28,2021

7. Notes on Financial Instruments(1) Status of Financial Instruments
In consideration of plans for capital expenditures, etc., the Company and its consolidated
subsidiaries (collectively, the “Group”) raise required funds through loans from financial
institutions such as banks, or issuing bonds, for its domestic and overseas business. The Groupmanages temporary cash surpluses through only low-risk short-term deposits and the like. The useof derivatives is limited within the extent of risk arising at the actual demand and the Group does
not enter into derivative contracts for speculative or trading purposes.
Trade receivables – trade notes and accounts receivable – are exposed to credit risk in relation tocustomers. The risk is mitigated in accordance with the Credit Control Rules. The Group manages
market price fluctuation risk associated with investment securities by regularly monitoring market
prices and the financial condition of the securities issuer.
Bank loans are used for working capital and capital expenditure purposes, and the Group enters
into interest rate swap transactions for some bank loans to reduce the risk of interest rate
fluctuations.
(2) Fair Value, etc. of Financial Instruments
The value recorded on the consolidated balance sheet, fair value, and difference between them asof the end of the current consolidated fiscal year, are as follows:(Millions of yen)
Consolidated balance
Fair value
Difference
sheet amount(1) Cash and deposits
25,941
25,941(2) Accounts Receivable and Notes
34,23534,235receivable(3) Investment securities
Held-to-maturity debt securities
9100
Available-for-sale securities
1,556
1,556
(4) Accounts Payable and Notes Payable
14,476
14,476(5) Short-term bank loans
8,100
8,100
(6) Long-term bank loans, including
41,45341,640187
current portion(7) Derivatives*(2)(2)*The value of derivative transactions is presented net of claims and obligations. Net obligations areshown in parentheses.
Notes: 1.

Methods used to determine the fair value of financial instruments, and matters concerning
securities and derivative transactions(1) Cash and deposits and (2) Accounts Receivable and Notes receivable
Since these items are settled in a short time period, their carrying value approximates fairvalue, and carrying value has been used.
8

(3) Investment securities
The fair value of equity and debt securities is based on quoted market prices.
(4) Accounts Payable and Notes Payable and (5) Short-term bank loans
Since these items are settled in a short time period, their carrying value approximates fairvalue, and carrying value is used.
(6) Long-term bank loans, including current portion
For long-term bank loans with floating interest rates, their carrying value approximatesfair value because their interest rate reflects the short-term market interest rate.
Therefore, carrying values are used.
The estimated fair value of long-term bank loans with fixed interest rates is based on thepresent value of the total of principal and interest of the long-term bank loans classified
into certain periods, discounted by the interest rate to be applied assuming new loans
under the similar conditions.
(7) Derivatives
The fair value of forward exchange contracts that meet certain conditions for the
allocation method is included in the fair value of accounts receivable or accounts payable
to which they are allocated. The fair value of interest-rate swaps that meet certain
conditions for the special method are included in the fair value of the long-term bankloans that they hedge.
2.

Financial instruments that have no quoted market price available, and deemed extremely
difficult to determine fair value, are as described below. They are not included in “(3)Investment securities, Available-for-sale securities” in the preceding table.
Consolidated balance sheet
TypeamountUnlisted equity securities
4,619 million yen
Investments in investment business1 million yen
limited liability partnerships

8. Notes on Leased Real Estate, etc.
Notes omitted due to lack of materiality.
9. Notes on Per Share Information
Net assets per share
1,990.03 yen
Net income per share
84.41 yen
*The basis for calculating net assets per share is as follows:
Total net assets
Amount deducted from total net assets
Total net assets attributable to common stock at the end of theconsolidated fiscal year
Number of shares of common stock used to calculate net assets per
share

9

79,515 million yen―
79,515 million yen
39,956 thousand shares

*The basis for calculating net income per share is as follows:
Net income attributable to the owners of the parent company recordedon the consolidated statement of income
Amount not attributable to common shareholders
Net income attributable to the owners of the parent company
attributable to common stock
Average number of shares of common stockduring the period

3,373 million yen―
3,373 million yen
39,959 thousand shares

10. Significant Subsequent Events
Not applicable.
11. Other Notes(1) Impairment Loss
The Group has recorded impairment loss on the following asset groups.
Location
Use
Classification
ISHIHARA SANGYO
Research andMachinery, equipment, and
KAISHA, LTD.
development
vehicles(Ikeda City, etc.,
equipment
Other
Osaka Prefecture)
ISHIHARA SANGYO
Machinery, equipment and
KAISHA, LTD.
Production equipment vehicles(Hiratsuka City,
Construction in progress
Kanagawa Prefecture)
Fuji Titanium Industry
Buildings and structures
Co., Ltd.
Machinery, equipment, andProduction equipment(Hiratsuka City,
vehiclesKanagawa Prefecture)
Other

Impairment loss
54 million yen

106 million yen

314 million yen

1) Method of asset grouping
The Company and its consolidated subsidiaries group their assets based on relation in the businesssegment and production process for assessment of impairment loss. Leased real estate and idle
assets which are not anticipated to be utilized in the future are classified as individual asset group if
they are deemed to generate cash flow independently. Assets not definitely linked to a specificbusiness, such as the head-office building, the facilities for research and development and thefacilities for welfare, are classified as corporate assets.
2) Reason for the recognition of a loss on impairment
As a part of production equipment located at the plants in the above table is not anticipated to be
utilized in the future, the Company and its consolidated subsidiary Fuji Titanium Industry Co., Ltd.
classified the production equipment as idle assets and recorded an impairment loss. Furthermore,pursuant to the Company’s decision to withdraw from the HVJ-E development business, theequipment used for this business was recognized as idle assets, and this is included in loss on
withdrawal from business.

103) Method for determining the recoverable amountAs the equipment at the plant in the above table is not anticipated to be utilized in the future, thenet book value of these assets was reduced to memorandum value.
4) Impairment loss by fixed asset classification
ISHIHARA SANGYOClassification
Fuji Titanium Industry Co., Ltd.
KAISHA, LTD.
Buildings and structures- million yen
94 million yen
Machinery, equipment, and54 million yen
209 million yen
vehiclesConstruction in progress
62 million yen- million yen
Other
43 million yen
10 million yen(2) Loss on Withdrawal from Business
Loss on withdrawal from business was recorded associated with the withdrawal from thebiopharmaceutical HVJ-E development business, in the organic chemicals business (healthcare). It
comprises impairment loss on property, tangible fixed assets of 54 million yen, recording ofallowance for doubtful accounts of 482 million yen, and provision for loss on withdrawal frombusiness of 371 million yen, representing expected costs in the future.
(3) Amounts presented are rounded down to the nearest million yen.

11

Notes to the Non-consolidated Financial Statements
1. Notes on Going Concern Assumption
Not applicable.
2. Notes on Significant Accounting Policies(1) Standards and Methods for Valuation of Assets
Securities
Held-to-maturity debt securities:

Carried at amortized cost

Shares of subsidiaries and affiliates: Carried at cost using the moving average method
Available-for-sale securities
Marketable securities:

Carried at fair value based on market price on the fiscal closing
date (any changes in unrealized holding gain or loss are reported
as a separate component of net assets; cost of sales is calculatedusing the moving average method)

Non-marketable securities: Carried at cost using the moving average method
Investments in investment business limited liability partnerships(deemed to be securities under Article 2, Paragraph 2 of the
Financial Instruments and Exchange Act of Japan) are valued at
the net amount of the underlying equity in them based on the latest
financial statements available as of the closing date stipulated in
the partnership agreement.
Derivatives:

Carried at fair value

Inventories:

Inventories held for ordinarysales purposesStated at cost, determined by the gross average method (carrying
amounts on the balance sheet are subject to the book value
reduction method based on decreased profitability).

(2) Depreciation or Amortization Method for Non-current Assets
Property, plant and equipment (except for leased assets):
Straight-line method
Intangible assets (except for leased assets):
Straight-line method
Computer software for internal use is amortized by the straight-line
method over their estimated useful lives of 5 years.
Leased assets:

Leased assets under finance lease contracts that transfer ownershipto the lessee are depreciated by using the same method as for selfheld non-current assets.
Leased assets under finance lease contracts that do not transfer
ownership to the lessee are depreciated to a residual value of zeroby the straight-line method over the lease term as the useful life.

12(3) Standards for Recording Allowances and Provisions
Allowance for doubtful receivables:
An estimated amount of uncollectible receivables is recorded basedon the aggregate historical experience of bad debts for ordinary
receivables. For specific probable doubtful accounts from
customers experiencing financial difficulties and those inbankruptcy, bad debts amounts are estimated individually based on
their specific collectibility.
Accrued bonuses for employees:
Accrued employees’ bonuses are accounted for at an estimated amountof the bonuses to be paid.
Provision for retirement benefits
Provision for retirement benefits is provided at an amount calculated
based on the retirement benefit obligation at the end of the current
fiscal year, to prepare for the payment of retirement benefits toemployees.
1) Attribution of estimated retirement benefit payments to each period
The retirement benefit obligation for employees is attributed to eachperiod mainly by the straight-line method over the estimated years ofservice of the eligible employees.
2) Accounting for actuarial gain and loss and prior service cost
Actuarial gain or loss is amortized from the following year in whichsuch gain or loss is recognized, by the straight-line method, over theestimated average remaining years of service of the employees at thetime of occurrence of such gain or loss. Prior service cost isamortized as incurred by the straight-line method over the estimatedaverage remaining years of service of the employees at the time ofsuch occurrence.
Unrecognized actuarial differences and unrecognized prior service
cost are carried on the non-consolidated balance sheet in a different
manner compared to that on the consolidated basis.
Reserve for implementation of environmental and safety arrangements:
The Company has provided the reserve for estimated expenditures toimplement environmental and safety arrangements.
In addition, the Company has also provided the reserve for the
expenses related to the remediation of soil and groundwatercontamination and measures for buried waste at the Yokkaichi Plant.
Provision for maintenance: Provision for maintenance is provided in an amount estimated to benecessary for the maintenance for certain machinery and equipment
attributable for the current fiscal year.
Provision for loss on withdrawal from business:
Provision for loss on withdrawal from business is provided in theestimated necessary amount payable for the withdrawal from thebiopharmaceutical HVJ-E development business, in the organic
chemicals business (healthcare).
13

(4) Method of Hedge Accounting
Hedging transactions are mainly accounted for using the deferral method. Forward exchange
contracts which meet certain conditions are accounted for using the allocation method, andinterest-rate swaps which meet certain conditions are accounted for using the special method.
(5) Method of Accounting for Consumption Taxes, etc.
Consumption taxes, etc. are excluded from the reported amounts.
(6) Application of Consolidated Taxation System
The Company applied for approval for a consolidated taxation system during the current fiscal year
and the consolidated taxation system will be applied from the following fiscal year. In this relation,accounting treatment and presentation for the current fiscal year is premised on the application of aconsolidated taxation system, based on “Revised Practical Solution on Tentative Treatment of Tax
Effect Accounting Under Consolidated Taxation System (Part 1)” (Accounting Standards Board ofJapan PITF No.5, January 16, 2015) and “Revised Practical Solution on Tentative Treatment of
Tax Effect Accounting Under Consolidated Taxation System (Part 2)” (Accounting Standards
Board of Japan PITF No.7, January 16, 2015).
(7) Application of Tax Effect Accounting Associated with the Transition from a Consolidated Taxation
System to a Group Tax Sharing System
Regarding the transition to a group tax sharing system established under the Act to Partially
Amend the Income Tax Act (Act No.8 of 2020) and items in the non-consolidated taxation systemreviewed pursuant to this transition, the Company has not applied the provisions set forth inParagraph 44 of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018), in accordance with the treatment set forth in Paragraph 3 of“Practical Solution on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (Accounting Standards Board ofJapan PITF No.39, March 31, 2020). As such, the amounts of deferred tax assets and deferred tax
liabilities are based on the tax law prior to amendment.
2. Notes on Changes in Presentation Method
Change Pursuant to the Application of “Accounting Standard for Disclosure of Accounting Estimates”
Notes on Accounting Estimates are presented pursuant to the application of “Accounting Standard forDisclosure of Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020) from the current fiscal
year.
3. Notes on Accounting Estimates(1) Recoverability of Deferred Tax Assets
Amount recorded on the non-consolidated financial statements for the current fiscal year:
Deferred tax assets 7,019 million yen
Other information useful for the understanding of estimates:
Identical to the information provided in the Notes to Consolidated Financial Statements “Recoverabilityof Deferred Tax Assets”(2) Loss on Valuation of Investment Securities
Amounts recorded on the financial statements for the current fiscal year:
Loss on valuation of investment securities: - million yen
14

Investment securities: 1,992 million yen(Although no loss on valuation of investment securities has been recorded in the current fiscal year, thisitem is identified as required presentation due to the risk that it may exert a material impact on thefinancial statements for the next fiscal year)
Other information useful for the understanding of estimates:
Identical to the information provided in the Notes to Consolidated Financial Statements “Loss on
Valuation of Investment Securities”
4. Notes to the Non-consolidated Balance Sheet(1) Monetary Claims and Obligations to Subsidiaries and Affiliates
Short-term monetary claims
25,337 million yen
Long-term monetary claims

2 million yen

Short-term monetary obligations

6,958 million yen

Long-term monetary obligations

68 million yen(2) Accumulated Depreciation on Property, Plant and Equipment 108,954 million yen
Accumulated depreciation includes accumulated impairment loss.
(3) Assets Pledged as Collateral, and Related Obligations
Assets pledged as collateral
Buildings

4,424 million yen

Structures

4,139 million yen

Machinery and equipment

15,209 million yen

Tools, furniture and fixtures

379 million yen

Land

868 million yen

Total

25,020 million yen

Among the above assets, the total value of property, plant and equipment pledged as a floating
mortgage is 24,481 million yen, covering all classifications of assets.
Obligations related to the collateral
Short-term bank loans

6,020 million yen

Current portion of long-term bank loans

3,535 million yen

Long-term bank loans

10,499 million yen

Total

20,054 million yen

15

(4) Guarantee Obligations
Liabilities, such as loans from financial institutions that the Group guarantees under joint signaturefor subsidiaries and affiliates are as follows:
ISK (SHANGHAI) CHEMICAL CO., LTD.

155 million yen

5. Notes to the Non-consolidated Statement of Income
Transactions with Subsidiaries and Affiliates
Sales

40,219 million yen

Purchases, etc.

12,145 million yen

Transactions other than trade

1,011 million yen

6. Notes to the Non-consolidated Statement of Changes in Net Assets
Class and Total Number of Shares of Treasury Stock at the Fiscal Year-end
Common stock 427,338 shares
7. Notes on Tax Effect Accounting
Breakdown of deferred tax assets and deferred tax liabilities by major causes[Deferred tax assets]
Tax loss carryforwards

4,508 million yen

Loss on valuation of shares of subsidiaries and affiliates

1,891 million yen

Provision for retirement benefits

3,432 million yen

Allowance for doubtful receivables

405 million yen

Accrued expenses, etc

113 million yen

Accrued bonuses for employees

134 million yen

Reserve for implementation of environmental and safety arrangements
550 million yen
Asset retirement obligations

166 million yen

Other1,231 million yen

Gross deferred tax assets

12,434 million yen

Valuation allowance(5,415) million yen

Total deferred tax assets

7,019 million yen[Deferred tax liabilities]
Asset retirement expenses

0 million yen

Total deferred tax liabilities

0 million yen

Net deferred tax assets

7,019 million yen

16

8. Notes on Transactions with Related Parties
Subsidiaries and Affiliates
Name of
Voting right
Relationship withcompany
holdings
the related party(Subsidiaries)(held)

Details oftransactions

Transaction
amount(Millions of
yen)

Item

Year-endbalance(Millions ofyen)Sale ofagrochemicals
12,058 Accounts(Note1)
receivable –Sale of the
trade
Payment of sales
ISK
Company’s
2,718
Directrebates(Note2)
Bioscience
products
100%
K.K.
Concurrent service Deposit of surplus―
by directors, etc.
funds (Note 3)
Deposits
received
Payment of interest
7(Note 4)
ISK
Sale of the
BIOSCIENC
Company’s
Sale of
Accounts
DirectES
products
agrochemicals
12,332 receivable –100%
EUROPE
Concurrent service(Note 1)
trade
N.V.
by directors, etc.
Purchase of raw
Accounts
Purchase of raw
materials, fuel,5,030 payable –materials
packaging materials,
tradeIshihara
Sale of theetc. (Note 1)
DirectTechnoCompany’s
100%
Sale of titanium
Corporation
products
Accounts
dioxide andConcurrent service
4,514 receivable –agrochemicals
by directors, etc.
trade
(Note 1)
Supply of raw
Accounts
materials, etc.
854 receivable –Supply of raw(Note 1)
trade
Fuji Titanium
Directmaterials, etc.
Industry Co.,
Deposit of surplus
100%
Concurrent service―Ltd.
funds (Note 3)
Depositsby directors, etc.
received
Payment of interest
6(Note 4)Contracted
ISK
construction andConstruction of
Accounts
Engineering
Directmaintenance of
production equipment
3,383 payable Partners
100%
equipment(Note 5)other
Corporation
Concurrent service
by directors, etc.
Sale of the
ISK BIOCompany’s
Sale ofIndirect
Trade
SCIENCES
products
agrochemicals
5,085
100%
receivables
CORP.
Concurrent service(Note 1)by directors, etc.
Transaction terms and method of determining transaction terms, etc.
Notes: 1. Transaction terms for the sale of products and the purchase of raw materials are
determined based on market prices, etc.
17

8,082

1,019

7,106

1,466

2,023

294

1,450

1,961

3,976

2. Sales rebates are paid in accordance with sales, based on the relevant contract.
3. Deposit of surplus funds is carried out based on a loan agreement. It is not recorded in
the Transaction amount column, since the amount is moving daily.
4. Interest rates for interest payment are determined in view of prevailing market values.
5. Terms for the construction of production equipment are determined in view ofprevailing market values, etc.
Transaction amounts are presented exclusive of consumption taxes, etc. whereas the year-end
balances presented are inclusive of consumption taxes, etc.
9. Notes on Per Share Information
Net assets per share

1,719.42 yen

Net income per share

95.88 yen

*The basis for calculating net assets per share is as follows:
Total net assets
Amount deducted from total net assets
Total net assets attributable to common stock at the end of the fiscal
year
Number of shares of common stock used to calculate net assets per
share

68,702 million yen―
68,702 million yen
39,956 thousand shares*The basis for calculating net income per share is as follows:
Net income recorded on the non-consolidated statement of income
Amount not attributable to common shareholders
Net income attributable to common stock
Average number of shares of common stock during the period

3,831 million yen―
3,831 million yen
39,959 thousand shares

10. Notes on Significant Subsequent Events
Not applicable.
11. Other Notes(1) Impairment Loss
Identical to the information provided in the Notes to Consolidated Financial Statements “Impairment
Loss”(2) Loss on Withdrawal from Business
Identical to the information provided in the Notes to Consolidated Financial Statements “Loss on
Withdrawal from Business”(3) Amounts presented are rounded down to the nearest million yen.

18