The Gas
Professionals
Integrated Report 2020
Year Ended March 31, 2020

1-3-26 Koyama, Shinagawa-ku, Tokyo 142-0062, Japan
Tel: +81-3-5788-8512
https://www.nipponsanso-hd.co.jp/en/

Printed in JapanWe aim to contribute to
the development ofJapan and the world.
The first unit for separating oxygen from air was made inEurope in 1902. Oxygen has supported the advance ofindustries such as steelmaking and chemicals throughvarious uses including the welding and cutting of steel.
In 1910, just eight years after oxygen production started
in Europe, the Group’s predecessor, Nippon Sanso Ltd.,was founded. It was the birth of Japan’s first industrial
gases company, which has now been operating continu-

Ambition.
NIPPON SANSO HOLDINGS CORPORATION

ously for over a century.
At the time, Japanese industry was focused mainly onlight industries such as spinning textiles. The Company’s
founder was one of the first to focus on the importanceof industrial gases and held a strong ambition tocontribute to the development of Japanese industry.
As times changed, the Group’s industrial gases
business expanded operations into 29 countries andregions around the world. We continue the Group’s
activities with the great ambition of contributing to
the development of global industry.

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INTEGRATED REPORT 2020

Supporting industries
and peoples’ lives as“The Gas Professionals.”
Oxygen, nitrogen, and argon are manufactured
by separating air.
These well-known industrial gases are essential
to industrial manufacturing such as steelmaking,shipbuilding, and chemicals. Oxygen is also used in
the field of medicine, while nitrogen is used to prevent
food from oxidizing. In these and other ways,
industrial gases play important roles in peoples’
lives as well.
For many people, the industrial gases business may

Pride.

seem unfamiliar. However, industrial gases themselves
are essential to industrial activity, and to daily life.
They are a social infrastructure on a par with electricity
and water supply.
We will continue to operate our business as“The Gas Professionals” with pride, ensuring
a stable supply of industrial gases that can be usedsafety and securely.

NIPPON SANSO HOLDINGS CORPORATION

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NIPPON SANSO HOLDINGS CORPORATION03

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Embarking
on a New Stage.

Embarking on a
New Stage with a
New Business Structure—Making life better
through gas technology.
On October 1, 2020, the holding company
Nippon Sanso Holdings Corporation was launched.
Today, the world faces the challenges of abnormal
weather conditions due to global warming andthe COVID-19 pandemic. Meanwhile, artificial intelligence(AI) and other advanced technologies are evolving at
a faster pace than expected. This will bring significant
changes not only to our lifestyles, but to the structureof industry as well.
To respond properly to the rapid changes taking placein our world, we have transitioned to a holding
company structure.
We aim to create social value through innovative
gas solutions that increase industrial productivity,
enhance human well-being and contribute to a moresustainable future.

NIPPON SANSO HOLDINGS CORPORATION04

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION05

INTEGRATED REPORT 2020

Contents

Proactive. Innovative.
Collaborative.

08

A Message to Stakeholders

14

Progress under Ortus Stage 2

15

A Message from the CFO

WHO WE ARE
About the Nippon Sanso Holdings Group18 The Story of the Nippon Sanso Holdings Group
20 The Journey of the Nippon Sanso Holdings Group
22 The Nippon Sanso Holdings Group around the World
24 What Are Industrial Gases?
28 Dialogue 1 The Limitless Latent Potential of Industrial Gases

OUR BUSINESS
34 The Nippon Sanso Holdings Group’s Value Creation Process
36 Overview of the Nippon Sanso Holdings Group’s Business
38 Business Domains
		 Industrial gases business, Electronics business,

Group Philosophy

		 and Thermos business
42 Business Segments

The Gas Professionals

		 Gas Business in Japan, Gas Business in the United States,
		 Gas Business in Europe, Gas Business in Asia and Oceania,		 and Thermos Business

Proactive. Innovative. Collaborative.
Making life better through gas technology.

OUR SUSTAINABILITY
52 Sustainable Business Model
56 Dialogue 2
		 Welcome NGE! Promoting Global Sustainability
60 Human Resources to Support the Nippon Sanso
		 Holdings Group
68 Roundtable Discussion

Group Vision

		 Human Resources to Carry the Nippon Sanso Holdings
		 Group into the Future

We aim to create social value through innovative
gas solutions that increase industrial productivity,
enhance human well-being and contribute toa more sustainable future.

OUR MANAGEMENT
74 Corporate Governance
78 ESG Materiality
81 Risk Management
84 Dialogue 3
		 Strengthening Governance through a Global
		 Framework of Four Geographic Hubs
88 Members of the Board of Directors and		 Audit & Supervisory Board Members

CORPORATE PROFILE
92 Corporate Data
94 Consolidated Financial Statements
148 11-Year Financial and Non-Financial Summary
150 Non-Financial Highlights
152 Independent Assurance Report
153 Awards
154 Editorial Policy
155 Editorial NoteNIPPON SANSO HOLDINGS CORPORATION

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A Message to Stakeholders

The Nippon Sanso Holdings Group
Aims to Realize an Affluent,Sustainable Future throughInnovative Gas Solutions.
Yujiro Ichihara
Representative Director, President CEONIPPON SANSO HOLDINGS CORPORATION08INTEGRATED REPORT 2020

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A Message to Stakeholders

Introduction
I would like to start by expressing my sorrow for those whohave lost their lives to COVID-19, and offering my condolences to all those who have been affected by the pandemic. Furthermore, I would like to express my deepest
respect for the many people, such as medical professionals,
who are battling to bring the pandemic to an end.
With the launch of Nippon Sanso Holdings Corporation
on October 1, 2020, we formulated a new Group Vision,“We aim to create social value through innovative gas
solutions that increase industrial productivity, enhance
human well-being and contribute to a more sustainable
future.” We seek to be a company that constantly explores
the potential of industrial gases and contributes to thedevelopment of every industry and provides solutions forsocial issues through new technologies and services.

From Taiyo Nippon Sanso toManagement Plan

Nippon Sanso Holdings:

Under the medium-term management plan that started in
FYE2018, we established four key strategies—“structuralreform,” “innovation,” “globalization,” and “M&A”—andhave been working on various measures. The major resultsof these efforts have been the acquisition of the main
European business of Praxair, Inc. and the U.S. HyCO
business* of Linde Gas North America LLC. With this, wehave suddenly achieved entry into the European market,
which we had not previously, thereby expanding the Group’sbusiness scale. We believe that this offers significant potential
for strengthening the Group’s comprehensive capabilities
going forward. Furthermore, the acquisition of the HyCO
business adds a new product lineup to the Group, which
realizes tremendous open innovation and increases ouropportunity for new business development.
Consolidated earnings results for FYE2020 grew steadily
overall up to the third quarter, bolstered by these acquisitions as well as a solid U.S. economy. However, in the fourth
quarter the spread of COVID-19 negatively impacted the Gas
Business in Europe as well as the Thermos Business. While thefull-year consolidated earnings show higher sales and profits
year on year, they have been lower than initially forecast.
FYE2021 is the final year of the medium-term management
plan. While the electronics business has performed solidly
in Japan and overseas, the industrial gases business and the
Thermos business have been impacted by the economic
slump due to the pandemic, with resulting forecasts forconsolidated earnings being lower year on year. Therefore,
while it will be difficult to achieve the targets provided in
the plan, we will focus on that which is controllable, suchas lifting productivity and marketing newly developed products so that we can return to a growth trajectory once theglobal economy normalizes.

Response to COVID-19
In spring 2020, as the COVID-19 pandemic began tospread globally, the Group moved quickly to establish a
Global Crisis Headquarters. We set up implementation rulesin each area for promoting telework and so forth, andworked to ensure the health and safety of employees alongwith a stable supply system for industrial gases in Japanand overseas.
What we have reconfirmed through our response to
COVID-19 is that industrial gases are an important part ofsocial infrastructure, and that our mission is to uphold our
responsibility to ensure their supply even in emergencies.
Industrial gases such as oxygen and nitrogen are essential
not only to the production of industrial products but also to
the medical front lines, such as hospitals. Considering thethreat of viruses as well as the frequent occurrence of natural disasters such as torrential rains, we will strive to build asafer, more secure production and supply system for ourcustomers, and for our employees.

NIPPON SANSO HOLDINGS CORPORATION

Progress on the Medium-Term

Nippon Sanso Corporation), where they are taking a leading role in formulating the policy for the Group overall. As
the heads of operating companies, they will accurately exercise even greater authority than before, aiming to grow theirrespective businesses even further by responding to rapidlychanging markets and customer needs. In addition, theholding company will act as a driver to share the strengths
and points of excellence in each region to enhance thecomprehensive capabilities of the Group.
There are five businesses under the holding company:
the Gas Business in Japan, the Gas Business in the UnitedStates, the Gas Business in Europe, the Gas Business in Asiaand Oceania, and the Thermos Business. The business operation structure under the holding company is composed offour groups: the Taiyo Nippon Sanso Corporation Group in
Japan, the Matheson Tri-Gas, Inc. Group in the United States,
the Nippon Gases Euro-Holding S.L.U. Group in Europe,and the Thermos K.K. Group for the Thermos business.
The companies in Asia and Oceania are all under directcontrol of the holding company.

The Transition to a Holding
Company Structure
I had been thinking about our transition to a holding
company structure since the formulation stage of thecurrent medium-term management plan. As our overseas
business scale expanded, through M&As and so forth, andthe majority of investment proposals presented to the Boardof Directors and the Management Committee came tooriginate from overseas Group companies, I felt that wewould reach the limits of effective management decisionmaking under a structure focused on the domestic business.
With a view to this change in structure, from FYE2020 we
had two top managers from our Gas Business in the UnitedStates and Gas Business in Europe join the Board of
Directors of Taiyo Nippon Sanso Corporation. This additionof a more global perspective helped to deepen discussions
at the Board of Directors’ meetings regarding matters suchas allocation of management resources and strengtheningof governance. Moreover, I think there was a significant
benefit in enabling the two new Board members to promote
their own businesses with a clear understanding of the Group’s
overall direction. Nippon Sanso Holdings also includes these
top managers from Europe and the United States in its Boardof Directors, along with the top manager of the Japanese
operating company (Member of the Board and General
Manager of the Gases Business Division of the former Taiyo

Outlook for Each Business
I will now talk about the outlook for each business under
the Nippon Sanso Holdings umbrella.
In the Gas Business in Japan, we manufacture and sellindustrial gases such as air separation gases and carbon
dioxide gas, and gases used in the electronics industry.
We also manufacture and sell air separation units (ASUs)
and various gas supply equipment and installation services.

* The HyCO business separates hydrogen (H2) and carbon monoxide (CO) from feedstock
such as natural gas and supplies it to the petroleum refining and petrochemicalindustries on a large scale through pipelines.

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INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION11INTEGRATED REPORT 2020

A Message to Stakeholders

These comprehensive capabilities are supported by two R&D
facilities (Yamanashi and Tsukuba). While the outlook forJapan’s domestic economy is unclear, many companies areworking to increase their productivity to achieve sustainablegrowth. We aim to increase our earnings capability in Japanby providing products and services with high value added
based on our technological capabilities, with a view tosolving customers’ issues.
Turning to the Gas Business in the United States, since
the U.S. industrial gases market is the world’s largest, wehave positioned this as a key growth area for the Group
going forward. While there are concerns regarding theresurgence of the COVID-19 pandemic and a worsening of
U.S.–China trade relations, we will continue to pursue ourexisting growth strategies, such as expanding the on-sitebusiness, including HyCO.
In the Gas Business in Europe, the pandemic has hada significant impact on business performance in our main
earnings base, namely Iberia (Spain and Portugal), Italy, andIn the Gas Business in Asia and Oceania, the local
companies are directly controlled by the holding company,
with the regional management team for the area providing
backup. The companies are smaller in scale than their counterparts in Japan, the United States, and Europe, but they
are expected to grow significantly over the medium to longterm in this emerging region. Under our new structure, wewill strengthen links within the region and incorporate
technologies and expertise from Japan, the United States andEurope to strengthen business growth and governance.
Finally, we come to the Thermos Business. In Japan,
inbound tourism demand evaporated as a result of COVID-19,
while sales of mainstay portable vacuum-insulated mugs also
decreased, partly due to the state of emergency declaration.
On the other hand, the impact of demand from people staying
home helped to drive brisk sales of frying pans and tumblers.
Looking ahead, we do not expect inbound tourism demand
to recover quickly; however, we will make effective use of
the Thermos brand, which has strong recognition among
consumers, to develop new products that accurately capture
consumer needs as we aim to recover our earnings.

Germany. Since June 2020, the area has been gradually
recovering, but there are concerns that the pandemic may be
prolonged, and we must therefore be prepared to accept
that the adverse situation could continue. Nevertheless,
Nippon Gases Euro-Holding Group companies are striving
to continue stable supply of industrial gases under theseharsh conditions and to recover earnings through a variety
of measures. Moreover, the Group companies have built
strong relationships with their customer base and I am
therefore confident that they will have a strong earning
recovery once the pandemic has been brought under control.

NIPPON SANSO HOLDINGS CORPORATION

Sustainability
The Group has many outstanding basic technologies froman Environment, Social, and Governance (ESG) standpoint.
For example, we have developed oxygen enrichment combustion technology, which contributes to energy saving andthe control of emissions of environmental pollutants. This
technology increases combustion efficiency by increasing theconcentration of oxygen in air, achieving flame temperaturesthat are higher than normal air combustions, which reduces
environmental impact. We are now looking at various types ofcombustion application. In addition, in the Thermos Business,
we manufacture and sell stainless steel vacuum-insulatedbottles, which are also related to the environmental field. Thesebottles are based on vacuum-insulated technology that wedeveloped in the industrial gases field by Nippon Sanso, theCompany’s predecessor, and which we were the first tocommercialize globally in 1978. The products are environmentally friendly since they can retain heat or coldness without
requiring use of electricity, gas, or any other form of energy.
Thermos brand vacuum-insulated bottles have therefore earned
the Eco Mark accreditation, and the Eco Mark is displayedon the product packaging, which encourages consumers tochoose products that are environmentally considerate.

12

INTEGRATED REPORT 2020

These are merely two examples, and in our business,the creation of economic value is inextricably linked tothe creation of social value (ESG and the Sustainable
Development Goals (SDGs)). However, the current mediumterm management plan does not show the relationshipbetween the two and our specific goals. Under our new
medium-term management plan, I would like to clearlyshow how they are organically linked, and describe ourpathway to truly sustainable growth. The Group confirmed
its support for the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations in 2019, and we areworking toward disclosing non-financial information in linewith the recommendations starting in FYE2022.

During my time stationed in Singapore

meetings held with many participants at our operatingcompanies in Europe and the United States. On these occasions, I speak openly about the status of the overall Group,
the positioning of the operating companies, and my expectations and so forth, and I listen intently to their feedback
as well. Through this interaction, we develop trust in one
another and I feel this enables us to speak more openly.

In Closing
What I ValueThe Group is still a growing company as it marks its 110th
anniversary. Our human resources capabilities are a major
driving force behind this growth. The Group has approximately 20,000 employees working at its sites in Japan,
the United States, Europe, and Asia and Oceania. These
diverse human resources support the Group. Moreover, in
Europe and at other overseas Group companies, there aremany female executives, and we are also seeing an increasein the hiring of women here in Japan recently. This kind ofdiversity is expected to drive a beneficial transformation of
our organization. We will continue striving to create environments that enable diverse human resources to eachdemonstrate their full potential.
I see the launch of Nippon Sanso Holdings as a second
founding of the Company. We will refocus on our original
concept for the industrial gases business of deliveringgases safely and securely to customers, and in the Thermos
Business, realizing comfortable lifestyles for people. At thesame time, we will aim to realize a sustainable future withgreater consideration for the environment. I ask ourshareholders and investors for your continued support
as we go forward.

I have always communicated to our members that wemust widen our view, take a higher perspective, and valuecommunication. Trust is of great importance both in our
personal lives and in business. I believe that by implementing
the three points that I mentioned, we will earn the trust of
our supervisors and junior colleagues, as well as our peers,and continue to contribute to society.
I would like to relate my own experience at this point.
In 1981, just after the Company’s predecessor, Nippon Sanso,
had started expanding overseas, I was posted as a representative in Singapore. There, I was in charge of developing
business with industrial gas customers in the then six
ASEAN countries. The people that I had business talks with
were from companies that varied in scale, but all of themwere business managers. I was just one employee in my
20s, but in our business talks I always had a strong awareness of my role as a representative of Nippon Sanso theJapanese industrial gas company, and I was thinking about
things from that perspective. I had a hard job developing
customers as the Company was not well known overseas atthat time. However, one of my big successes was in setting
up business talks with a Singapore government-affiliatedsteel company by proposing an on-site joint business. The
opening ceremony was attended by the Singapore government chief cabinet secretary, the Japanese ambassador toSingapore, and the president of the Company at that time.
I still remember the sense of achievement that I had.
Speaking of valuing communication, another key aspect of
global management is the importance of person-to-person
communication. I am sometimes invited to large internal

NIPPON SANSO HOLDINGS CORPORATION

Yujiro Ichihara
Representative Director, President CEO

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INTEGRATED REPORT 2020

Progress under Ortus Stage 2

A Message from the CFO

The medium-term management plan Ortus Stage 2 commenced in FYE2018 and covers
the four years until the end of FYE2021. Under the theme of promoting growth, we have beenpromoting a range of measures for the following key strategies carried over from the previous
medium-term management plan: structural reform, innovation, globalization, and M&A. Below,
we present the main results of our key strategies through to the end of FYE2020, including ourprincipal achievements: the acquisition of the main European business of Praxair and the U.S.
HyCO business of Linde.

On October 1, 2020, Alan David Draper was appointed
Chief Financial Officer (CFO) of Nippon Sanso Holdings.
He is an expert in finance and accounting, and has experienceand insight into the industrial gases business in Europe andthe United States. In this section, he talks about current financial
issues and matters to be taken up going forward.

Alan David Draper
Executive Officer,
Group Finance and Accounting Office, and CFO

Status of Progress through to the End of FYE2020
Key strategies
Structural
ReformInnovation

Globalization

M&A

Issues of Ortus Stage 2

Main results• Strengthen collaboration in sales and marketing functions• Integration of engineering functions• Integration of production and logistics• Promotion of shared services• Innovation in R&D• Innovation in engineering• Innovation in sales approaches• Innovation in production and logistics• Consolidated sales bases and shared sales support tools• Promoted streamlining and optimization throughintegration of industrial gases operations• Launched high-performance fluorinated resin using
oxygen burner and carbon nanotube, etc.
• Increased profitability and reduced environmental impact
through energy efficiency improvement (SAITEKI activities)• Strengthen the functions of global operations• Strengthen the functions of regional holding companies• Expand business areas• “Total Electronics”• Expand business territory and reinforce operational density• Acquire new products, technologies, and supply chains• Expand medical business• Appointed regional Chief Compliance Officers (CCOs)
and set up a global compliance structure• Acquired on-site projects in Southeast Asia
• Established centralized response structure for strategic
semiconductor customers and strengthened electronicmaterials gases production capacity• Acquired the main European business of Praxair• Acquired the U.S. HyCO business of Linde• Acquired IMI Co., Ltd. (domestic medical equipment
sales company)

Indicator

Unit

FYE2018
results

FYE2019
results

FYE2020
results

One of the Group’s most important priorities is to reduce the level2020. Before assuming this role, I worked for the former Praxair

of interest-bearing debt, which increased with the large-scale

Europe industrial gases business, which was acquired by thenacquisitions conducted in FYE2019, and systematically improve

Taiyo Nippon Sanso in December 2018. At the time of acquisition,

the Company’s financial position. To this end, the adjusted net

I served as European CFO based in Madrid, Spain, and with thedebt-to-equity (D/E) ratio was added as a KPI for the medium-term

acquisition I shifted to the Taiyo Nippon Sanso Group as CFO of

management plan from FYE2019 to manage the Group’s progress

Nippon Gases Euro-Holding S.L.U. For the first three years of mytoward financial soundness. The indicator has moved from 1.54

27-year career, I worked as a certified public accountant (CPA). In

times at the end of FYE2019 to 1.45 times at the end of FYE2020.

1996, I joined Praxair in the United States, where I was responsible

We have set a target of bringing the adjusted net D/E ratio below

for management operations centered on finance and accounting

1.0 times by the end of FYE2023. Due to the impact of COVID-19,

for the industrial gases business. Although my field of specializa-

our operating results for FYE2021 are forecast to be lower than thetion is finance and accounting, I have 24 years of experience inmedium-term management plan targets. Moreover, we cannot

the industrial gases business in both the United States and Europe.

predict with confidence when we may return to the growth

I am very excited about the prospect of using my experience andtrajectory of the initial plan. Nevertheless, despite the temporary

insight of both the European and U.S. industrial gases business as

delay in improvement on this metric from the initial plan, the

CFO of Nippon Sanso Holdings and to contribute in advancing theindustrial gases business is generating stable operating cash flows,

Group’s globalization efforts and its financial performance.

and with strict investment standards and more disciplined manage-

Response to COVID-19

our targeted financial position an achievable goal.

With no end in sight to the COVID-19 pandemic, there is a

Current medium-term management plan, Ortus Stage 2

FYE2017
results

Status of Financial Health

I was appointed CFO of Nippon Sanso Holdings on October 1,

ment of operating capital and so forth this will make returning to

Progress on Key Performance Indicators (KPIs)
Final fiscal year of theprevious medium-term
management plan

Background

FYE2021(forecast)*2

possibility that restrictions could be reimposed by countries andPurpose of Transition to a Holding Company Structure

regions in the event of a resurgence of the virus, casting a shadow

One of the most important roles of the holding company,of uncertainty over the future of the global economy that makes it

Nippon Sanso Holdings, is to promote the globalization of the

difficult to clearly predict a recovery of business conditions. In thisNippon Sanso Holdings Group. Our new holding company struc-situation, we have secured adequate operating capital and there

ture enables appropriate allocation of management resources

are currently no significant credit concerns among our customers.

globally and builds a management structure that clarifies responsi-

For the time being, our efforts are focused on maintaining andbility for business execution and regional performance. Furthermore,

Revenue(Billions of yen)

581.5

646.2

740.3

850.2

910.0

reinforcing the soundness of our management structure, to ensure

through sharing of best practices between regions, we will

Core operating profit(Billions of yen)

54.7

60.0

65.8

90.3

100.0

that we operate regardless of the external environment. For example,

strengthen the comprehensive capabilities of the Group. In ourCore operating profit margin

(%)

9.4

9.3

8.9

10.6

11.0

from the perspective of production efficiency, we will optimize ourGroup Finance and Accounting Office, which I oversee as the CFO,

Overseas revenue ratio

(%)

40.8

43.3

47.9

55.5

55.0

production and logistics to suit our customers’ usage of gas, focusing

we will focus on maintaining and strengthening financial health

ROCE*1

(%)

8.4

8.4

6.2

6.4

7.1

on economic trends. In addition, we need to concentrate on

on a consolidated basis and conduct a range of initiatives that

1.27

productivity improvements, cost reductions, strict investment

contribute to increasing shareholder value. We will improve cash

standards, and strengthening management of operating capital.

flow through strict investment standards and rigorous project

By securing plenty of free cash flow through these measures, wemanagement, and work to improve profitability by improving

will be ready to return to a positive growth trajectory with the

productivity, efficiency, and strengthening cost management.

Adjusted net D/E ratio*

1(Times)

—

—

1.54

1.45

*1 For definitions of return on capital employed (ROCE) and adjusted net debt-to-equity (D/E) ratio, please refer to the notes to 11-Year Financial and Non-Financial Summary ( P. 94).
The adjusted net D/E ratio has been calculated as a KPI since FYE2019.
*2 In FYE2021, the mainstay industrial gases business and the Thermos business have been impacted by the economic downturn caused by COVID-19, and consolidated sales and profits are
expected to be lower year on year. In this situation, it will be difficult to achieve the abovementioned targets in the medium-term management plan. The consolidated earnings forecast for
FYE2021 presented on July 30, 2020 is for revenue of ¥830.0 billion and core operating profit of ¥82.0 billion. Moreover, the other KPIs for FYE2021 calculated on the basis of this forecast
are for a core operating profit margin of 9.9%, ROCE of 5.8%, and an adjusted net D/E ratio of 1.34 times.

NIPPON SANSO HOLDINGS CORPORATION14INTEGRATED REPORT 2020

normalization of the global economy after the pandemic subsides.

NIPPON SANSO HOLDINGS CORPORATION

15INTEGRATED REPORT 2020

WHO
WE ARE
About the Nippon Sanso Holdings GroupNIPPON SANSO HOLDINGS CORPORATION16

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION

17

INTEGRATED REPORT 2020

WHO WE ARE

The Story of the Nippon Sanso Holdings Group

Inheriting the Genes of a 100-Year-Old Company with a Passion for Challenges
Foundation Period
The first unit for separating oxygen fromair was made in Europe in 1902, starting off
the industrialization of oxygen production.
In 1910, just eight years later, the predecessor

Development of the Electronics
Industry from the Post-War
Recovery Period to Japan’sHigh Economic Growth Period(now Shunan Sanso Co., Ltd.). The on-siteplant method is a method for production
and supply for customers that consume

New Technologies Developingin Multiple Directions

Meanwhile, in the United States, theworld’s largest industrial gases market, we
conducted an aggressive series of M&As

large quantities of air separation gases, inVacuum, high pressure, low temperature,through our U.S. subsidiary, Matheson

which an ASU is installed on the customers’

and gas control are our core technologies

Tri-Gas, Inc., which now operates businesses

site or an adjacent site, to facilitate theas an industrial gases manufacturer. To

nationwide as a national supplier for theof Nippon Sanso Holdings, Nippon Sanso Ltd.,As the Japanese economy entered apiped supply of gas to production lines andprovide customers with safe, secure use ofUnited States. In 2018, the Company

was founded by Takehiko Yamaguchi andperiod of expansion driven by the Firstso forth. In the steelmaking and petro-high-quality gases, we have accumulated

others. In his work for a machine tool trading

World War (1914–1918), the development

chemical industries, as new plants werethese core technologies and applied themcompany, Yamaguchi imported oxygenof the heavy and chemical industries createdbeing built in succession, driven by highover a wide range of fields.

welding and cutting equipment from Europe,a surge in demand for oxygen. Following

economic growth, the Company was able to

The Group’s Thermos business has aalong with tanks of oxygen. Japanese

expansion of its business, in 1918 theacquire a large number of projects by pro-

totally different business model from industrial

emission tomography (PET) tests that help

we have developed our business overseas,industry at the time was focused mainly on

Company dissolved its limited partnershipposing the on-site plant method at thegases, but it began with the application ofwith early detection of cancer. Water-18O is

expanding the area of the Group’s operations

light industries, but the shift to heavy andstructure and transitioned to a joint stock

construction planning stage for new plants.

industrial gases technologies. The maina stable isotope of oxygen manufactured

to 29 countries and regions around thechemical industries was already under way,company. Then, in 1935, we succeeded in

These plants are still important production

products in the Thermos business are stainlessusing engineering technology for air sepa-

world, with revenue from overseas markets

and Yamaguchi perceived the social impor-making the first ASU to be produced in Japan.

and supply bases for air separation gases insteel vacuum-insulated bottles. We were theration that has been accumulated by the

now accounting for more than 50%.

Japan today.

first to commercialize these in 1978, using

Company. The Company’s advanced tech-vacuum technology and special welding tech-

nologies have also made inroads into newtransitioned to a holding company structure.

tance and future economic potential ofJapan’s economy contracted sharply due

acquired part of the European business of
U.S. company Praxair, Inc., making our first

Water-18O stable isotope

full-scale business expansion into Europe.
In this way, over the 40 years since 1980,

In October 2020, the Company

producing and supplying oxygen in Japan.

to the Second World War, but the country

Korekiyo Takahashi, then deputy governor ofpulled itself out of this slump, partly due tosemiconductor manufacturers and othernology for manufacturing low-temperaturefields, such as development of the Hydro

We will continue taking up challenges toward

the Bank of Japan (and later prime minister),business based on munitions demand formembers of the electronics industry

liquid gas storage tanks. We also conducted

Shuttle mobile hydrogen station based on

further growth and evolution by advancing

agreed with Yamaguchi’s ideas, and joined

the Korean War that broke out in 1950.

emerged as a new major presence among

a food business centered on manufacture andgas control technologies.

our business through our global network of

him as a co-founder of Japan’s first indus-

Around this time, the Company’s mainusers of industrial gases. The Company

sales of frozen foods, which was inspired byfour geographic hubs in Japan, the United

customers were in the steel industry, where

supplied nitrogen gas, used in large quanti-

the development of freezing equipment

States, Europe, and Asia and Oceania,

the basic oxygen process of blowing inties as an atmospheric gas in semiconductor

capable of snap freezing rice and other foods

oxygen during the steelmaking process wasproduction lines, through the on-site plant

to preserve their quality using super low-

becoming popular, driving further increases

method. We also supplied electronic

temperature liquid nitrogen and so forth.

in demand for oxygen.

materials gases used in semiconductor

trial gases company.

From the mid-1950s to the 1960s,

Takehiko Yamaguchi

Korekiyo Takahashi

After the high economic growth period,

The Company’s technologies are also

manufacturing processes such as deposition

expanding in advanced fields. Having suc-Seeking Further Growth
by Expansion into Overseas
Markets to a Global
Network Spanning Four
Geographic Hubs

Japan experienced a period of high economicand etching, along with supply equipment

ceeded in developing original ultra-high-purity

growth. As the country’s top industrial gases

based on sophisticated gas handling tech-oxygen cryogenic separation technology, in

manufacturer, in1964 we became first in the

nologies. In this way, we have supported

2004 we started manufacturing the Water-18O

world to implement the on-site plant method,

the development of Japan’s semiconductor

stable isotope, which is used as a material

The Company started expanding intowith our first installation at the Shunan Plant

and electronics industries.

for testing reagents used in positron

overseas markets in 1980. We had progressed

centered on the holding company.

as the top manufacturer in Japan, andseeking to expand our business even further
in overseas markets, took our first steps
into Singapore and the United States. Afterestablishing a joint on-site business witha state-owned steelmaker, in Singapore,in the 1990s we proceeded to develop our

Global business bases

business in China, Thailand, the Philippines,
Taiwan, and Vietnam, and in the 2000s
we entered India, Indonesia, Australia,

Sales office for inhalation oxygen (Nagoya)
Shunan Plant (now Shunan Sanso Co., Ltd.)NIPPON SANSO HOLDINGS CORPORATION

18

Total gas center for electronics industry

INTEGRATED REPORT 2020

The world’s first stainless steel vacuum-insulated bottle,“Act Stainless Pot”

and Myanmar.

NIPPON SANSO HOLDINGS CORPORATION19

INTEGRATED REPORT 2020

2020

WHO WE ARE

Transitions to a holding company
and changes the company name to
Nippon Sanso Holdings Corporation

The Journey of the Nippon Sanso Holdings Group
Nippon Sanso Holdings’ predecessor, Nippon Sanso Ltd., was born at the time when Japan’s main industries
were changing from light industries to heavy and chemical industries. Since then, the Group has expanded
its industrial gases production and supply structure in step with the development of core industries suchas steelmaking and chemicals, and used its accumulated basic technologies to expand its business fields.
The Group started expanding into overseas markets in 1980, and over 40 years has rapidly expanded thescale of its overseas business.

10.6%
9.4%

8.9%

8.0%

Nippon Sanso is established under the name Nippon Sanso Ltd.

1935

Completes the first ASU to be produced in Japan

8.0%
7.3%

6.7%

Consolidated
revenue

6.5%

6.4%

6.0%

5.9%

1954	Starts mass production of liquid oxygen and manufacture ofhigh-purity argon gas
507.7

495.7

483.6

458.5

1971	Completes the world’s first air separation equipment to use
the cooling effect of LNG

477.4

468.3
90.3

Net salesCore
operatingprofit300.0

1983	Acquires U.S. company Matheson Gas Products, Inc.

(Billions of yen)

1992	Acquires U.S. industrial gases manufacturer Tri-Gas, Inc.

Taiyo Nippon
Sanso

1999	Merges the U.S. businesses to establish Matheson Tri-Gas, Inc.
2004	Starts production of PET diagnostic reagent material Water-18O
stable isotope

Matheson Tri-Gas, Inc. (Irving Plant)

2004	
Taiyo Nippon Sanso Corporation is

Toyo Sanso

Taiyo Toyo Sanso

Establishes low-temperature research laboratory andequipment plant in Kawasaki

1954

Enters the LP gas field

Operatingprofit(Billions of yen)

36.4

38.7

26.7

35.4
29.1

27.5

2009

2010

31.4

31.0

2000	
Makes carbon dioxide gas operating company Nippon Tansan Co.,
Ltd. a wholly owned subsidiary
2001
Electronic materials gases manufac-

1962	Starts liquid oxygen manufacturing in Sakai
Rinkai industrial areaturing company Japan Fine Products
Co., Ltd. is established as a joint

1968	Establishes Kashima Sanso Co., Ltd. (now TM Air
Co., Ltd.) as a joint company for on-site supply
with Mitsubishi Petrochemical Co., Ltd. (nowMitsubishi Chemical Corporation)

launched through the merger of
Nippon Sanso Ltd. and Taiyo Toyo
2005

2006

2007

2008

2011

2012

2013

company with Nippon Sanso Ltd.

2014

2015

Japanese GAAP2006
Acquires Linweld Inc., an industrial
gases production and marketingcompany in the western and central
United States
Purchases helium source contracts
and other related assets of the former
BOC Group plc (now Linde plc) in
the United States and Europe
2007
Merges carbon dioxide businesses
in Japan to establish Nippon Ekitan
Corporation

2016

20

INTEGRATED REPORT 2020

2018

2019

2020

Years ended
March 31

2016
Acquires a portion of the U.S. gas
business of Air Liquide S.A.,
together with related assets

2014
2010
Acquires Western International Gas
and Cylinders, Inc., a leading U.S.
wholesale supplier of acetylene
2012
Acquires Singapore-based industrial
gases and welding equipment
manufacturer Leeden Limited

Acquires U.S. carbon dioxide gas
manufacturer Continental Carbonic
Products, Inc.

2018
Acquires a portion of the European
business of Praxair, Inc.

Becomes a wholly owned subsidiaryof Mitsubishi Chemical Holdings
Corporation

2019
Acquires the U.S. HyCO business ofLinde Gas North America LLC

2015
Acquires Australian LP gas andindustrial gases distributor
Renegade Gas Pty Ltd

Passing on
the Passion and Accumulated Knowledge of Our Predecessors

NIPPON SANSO HOLDINGS CORPORATION

2017

IFRS

2013
Launches Hydro Shuttle packagetype hydrogen refueling station

2009
Acquires Valley National Gases LLC,
the largest independent industrial
gases distributor in the United States

2008
Establishes Dalian Changxing Island
Taiyo Nippon Sanso Gas Co., Ltd., in
China and installs ASU

Kashima Sanso Co., Ltd. (now TM Air Co., Ltd.)

35.2

24.8

20.7

Toyo Sanso K.K. merge to launch

Taiyo Sanso Co., Ltd. is established.
Starts dissolved acetylene business

54.7

47.4

Taiyo Sanso Co., Ltd. andTaiyo Sanso
1953

65.8
60.0

Sanso Co., Ltd.
1995	

Taiyo Toyo Sanso Co., Ltd.

1946

581.5

522.7

(Billions of yen)

Establishes National Oxygen Private Ltd. in Singapore

1986

594.4

397.3

First ASU to be produced in Japan

1981	Establishes Iwate Gas Center, the first total gas center fora semiconductor manufacturing plant

Toyo Sanso K.K. is established.

6.3%

433.3

1978	Commercializes stainless steel vacuum-insulated bottles

1918

646.2

(Billions of yen)

559.3
5.3%

1964	Establishes Shunan Plant (now Shunan Sanso Co., Ltd.)as the first on-site plant

1982

740.3

7.6%

6.9%
1910

850.2

Core operating
profit margin
OperatingprofitmarginNippon Sanso

9.3%

NIPPON SANSO HOLDINGS CORPORATION21

INTEGRATED REPORT 2020

WHO WE ARE

The Nippon Sanso Holdings Group around the World

Business Scale (As of March 31, 2020)

With the acquisition of part of Praxair’s European business in December 2018, the Group’s
industrial gases business achieved a global network spanning four geographic hubs in Japan,
the United States, Europe, and Asia and Oceania. In the Thermos business, the Group ships Thermos
brand products to over 120 countries globally through Thermos Group production and sales bases inJapan and overseas. Nippon Sanso Holdings promotes the businesses, and will strengthen andexpand the Group’s global network into new, untapped regions.

Share of the global industrial
gases market

Number of countries andregions where we operate

4th

29

RevenueCore operating profit¥850.2billion(up 14.8% year on year)¥90.3

Number of employees

19,719Overseas revenue ratio

billion(up 37.2% year on year)

55.5%

Creating a Global Network
Affiliated companies
in Japan

Europe56

144

North America

12companies

companies

China

22

Affiliated companies
overseas

168

Japan

companies

144
companies3%
Gas Business in Japan
5,957

17%

Gas Business in Japan

¥356.1 billion

Gas Business in the United States
4,745

Gas Business in the United States¥198.8 billion

Gas Business in Europe
2,870

Industrial gases

Gas Business in Europe

Electronics¥165.5 billion

Gas Business in Asia and Oceania
4,365

Thermos

Gas Business in Asia and Oceania

Thermos Business
1,451¥104.5 billion
Thermos Business

Other
331

Asia and Oceania¥25.1 billion

78

companies

Number of Employees
by Segment
NIPPON SANSO HOLDINGS CORPORATION

22

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Revenue by Segment

NIPPON SANSO HOLDINGS CORPORATION

Percentage of Revenue
by Business
23

INTEGRATED REPORT 2020

80%

WHO WE ARE

What Are Industrial Gases?
Industrial gases is the collective term for gases used in industry. Well-known examples include oxygen,nitrogen, and argon. These are referred to as air separation gases, as they are separated and refined fromthe air that surrounds us by ASUs. We supply these gases to a wide range of industries, including steelmaking, chemicals, automotive, construction, shipbuilding, and food. In this section, we will explain how air
separation gases are manufactured and the situations in which different industrial gases are used.

Other Industrial Gases

How Air Separation Gases Are Manufactured 

Carbondioxide gas(CO2)

Hydrogen(H2)

Helium(He)

LP gasElectronicmaterials
gases

Acetylene(C2H2)

Cryogenic separation is a typical method for manufacturing air separation gases. Air is taken into an ASU from the atmosphere,
then compressed. Water and impurities such as CO2 are removed, and the air is cooled to boiling point to liquefy it. Boiling pointis the temperature at which a liquid boils and becomes a gas. Conversely, if a gas is cooled down to boiling point,
it becomes a liquid. Different elements have different boiling points, and this characteristic is used to separate oxygen, nitrogen,and argon out of the air and refine them.

Air

Gas Filling Plant

Air Separation Process inside the Unit
Room temperature

Argon (Ar)Low temperature
Compresses it to about 1/6 of its volume

0.9%(compression differs depending on the specification)

Rectifying
columnProducts
Air

Air

Heat
exchanger

Oxygen (O2)

20.9%

Nitrogen (N2)
Oxygen (O2)
Argon (Ar)

Nitrogen (N2)

78.0%

1

Filter2

Removes particulates
that are in the air

Compressor

Takes in atmosphereand compresses

3

Water-cooling column

4

Cool water is sprayedfrom the top of the column
to wash and cool the air.

Removes waterand CO 2

Adsorber

5

Separator

Exchanges heat between the air and low-temperature
product gases, cooling the air and using thedifferences in boiling points to separate the gases

The boiling points of the gases
are as follows:
Oxygen –183˚C
Nitrogen –196˚C
Argon–186˚C

Supplying Separated and Refined Gases as Products to a Wide Range of Customers

Main types of gases used

Related industry, etc.

Oxygen (O2)

Nitrogen (N2)

Oxygen (O2)

Nitrogen (N2)

Steelmaking

Chemicals

Supply of large volumes of oxygen andnitrogen through on-site plants

Stable supply of nitrogen and othergases used for safety applications tomultiple plants within chemical industrial complexes via pipeline networks
set up inside the complexes using theon-site plant method

NIPPON SANSO HOLDINGS CORPORATION24

INTEGRATED REPORT 2020

Oxygen (O2)

Argon (Ar) Acetylene (C2H2)

Automotive, Shipbuilding,
Machinery, etc.
Supply of gases for cutting andwelding, as well as of related equipment and materials, to various manufacturing industries

Nitrogen (N2)

Carbon dioxide gas (CO2)

Oxygen (O2)

Nitrogen (N2)

Nitrogen (N2)

Argon (Ar) Electronic materials gases

Food

Medical/Life Sciences

Electronics

Supply of Bistranza® brand products,
which represent applications for food,such as nitrogen-filled packaging andfreezing ( P. 55)

Supply of oxygen and other gases for
medical use. Supply of products to
cutting-edge medical fields such as
Water-18O used for PET diagnosis

Supply of high-quality nitrogen gas
and electronic materials gases for theelectronics industry, such as semiconductor and liquid-crystal display (LCD)
manufacturers

NIPPON SANSO HOLDINGS CORPORATION

25

INTEGRATED REPORT 2020

LP gasHouseholdand Commercial Use
Supply of environment-friendly, safeliquefied petroleum gas (LP gas) for
use in homes, as well as in commercial
and other premises

WHO WE ARE

What Are Industrial Gases?

Nippon Sanso Holdings Group—Supporting Industry and Daily Life Industrial gases are used in the production activities of all manner of industries, and they also support our daily lives. For example,
smartphones incorporate semiconductors manufactured using the latest technologies, and electronic materials gases supplied by
Nippon Sanso Holdings play an important role in the manufacturing process for these semiconductors. Industrial gases also support the advancement of items that enrich our daily lives. The potential of industrial gases has yet to be fully exploited. We will
pursue the full potential of industrial gases to contribute to the realization of an affluent society.

Contribution to Industry
Automobiles

Large LED Displays

Contribution to Daily Life
Superconducting Maglev Trains

Food

Smartphones

Lighting Equipment

Automobile components

Hydrogen, argon, and helium gases are

Superconducting technology reduces

Food packaging

Various electronic materials gases are

In lighting equipment, argon, nitrogen,

The manufacturing processes for automo-

used when manufacturing LEDs, whichelectrical resistance to zero by supercooling

Nitrogen gas is injected into packaging

used in the production of semiconductors

krypton, xenon, and neon are used in mostbiles and their components make use ofplay a familiar role in our everyday lives,a substance, and is used in nuclear fusion,

to prevent food from losing flavor by

used in smartphones. These gases also

forms of illumination, from incandescentvarious industrial gases. They are used inincluding large LED displays, traffic lights,

superconducting electricity transmission,oxidation and inhibit the growth of moldsupport numerous other electronics fields

bulbs to fluorescent tubes. Some of thewelding engines and bodies, and manufac-

and street lights.

electricity storage, and maglev trains, amongand so forth.

such as solar cells and LEDs.

gases, such as krypton, are known as rareturing glass, tires, and light-emitting

others. To create super cool conditions,

diodes (LEDs). Mixed gas is also usedhelium is used, because it has a boilingfor injecting into air bags.

point of near absolute zero (–273˚C).

gases as only very small quantities are

Beverages

found in air.

Nitrogen is used to bolster internal pressure in aluminum cans for non-carbonatedbeverages, move beer concentrate andAutomobile fuels

other concentrates under pressure, andHydrogen is used as a fuel for fuel cellprevent oxidization of wine and fruit juice.

vehicles (FCVs), which are drawing atten-

Easily dissolved in water, carbon dioxidetion as a clean energy automobile that can

gas is used to add sparkle to carbonatedreplace diesel and gasoline.

drinks, beer, and other beverages.

Metal 3D Printers
Marine Exploration
3D printers are able to create physical
Deep sea exploration makes use of mixed

objects based on a 3D digital model.

gases based on oxygen combined with

They use atmospheric gases in their print-

nitrogen, helium, or hydrogen, depending

ing processes. The Nippon Sanso Holdingson the depth.

Group has been working on R&D in theindustrial gas field related to metal 3D
printing as part of efforts to promote
open innovation.

Dry Ice

LCD and OLED Displays

Dry ice is the solid form of carbon dioxide

Many types of gas are used in the manu-

that has been condensed and cooled.

facturing processes for LCD and organic

Since carbon dioxide has cooling power

light-emitting diode (OLED) displays.

down to –78.5˚C, dry ice is used not onlyin the food sector but also for industrial andPortable Gas Stovesmedical applications, and for visual effects.

LP gas is noted as a clean and environmentally safe source of energy. It is widely used:in household and commercial applications,as a fuel for commercial vehicles, in air
conditioners at offices and so forth, forhome electricity generation, and for hot
water supply using waste heat.

NIPPON SANSO HOLDINGS CORPORATION

26

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION

27

INTEGRATED REPORT 2020

WHO WE ARE

Dialogue 1

The Limitless Latent
Potential of Industrial Gases
Industrial gases make a huge contribution to the development ofindustry around the world. In this section, Professor Takeo Kikkawa,
who has a deep knowledge of the industrial gases business,talks with director Kenji Nagata of the Group about how todraw out the latent potential of the industrial gases businessgoing forward.

The Essential Role of Industrial Gases in Economic Development
Kikkawa: I have authored company histories for roughly
30 companies in my capacity as an expert on the history ofentrepreneurship. From 2013 to 2019, I served as an outside
director for Mitsubishi Chemical Holdings Corporation.
Industrial gases is something of an invisible industry—not
only because the products are invisible, but because there are
only a very limited number of companies that sell industrial
gases themselves, despite their being indispensable to chemical and steel companies. Nevertheless, these companies play
an essential role. This is just one of the things I find interesting about industrial gases, and I believe that the adoptionof gases among industries throughout the world will be an
important theme going forward.
Nagata: Industrial gases will always be needed for the development of industries. They are basically produced at the siteof consumption. For example, steel and automobiles can be
manufactured in advanced countries and then shipped, buttransportation of large volumes of industrial gases requires
them to be liquefied, which creates difficulties in terms ofcontrol and long-distance transportation. The industrial gases
business needs to contribute to the economic activity of aregion by developing strong roots there, which I think iswhere industrial gases manufacturers find their social purpose. I feel they have an extremely important role and function not only for business but for economic development at
the national level.

Kikkawa: I think this is one of the background reasons why
the industrial gases business is particularly stable from abusiness perspective.
Nagata: In connection with this, I think that originality has
been extremely important in the successful industrializationof oxygen. For example, even if an automaker manufacturesmass-market vehicles, the mass production or design may bechanged afterward; but industrial gases themselves do notchange, which is one of their strengths, and the industry has
grown and expanded by changing the application to suit theneeds of the age. This is the potential of industrial gases, andI think it also relates to the stability that you mentioned.
There are differences in products according to the industry
structure of each country, but whether we are talking about
Japan, Singapore, or Thailand, the global supply format ismore or less the same. While there are differences in language and business customs, the industry is surprisingly
suited to globalization.
Kikkawa: I hear that a team from your Group company
Matheson Tri-Gas, Inc. in the United States played a role in
the acquisition of Praxair Inc.’s European business in 2018.
While the industry may be suited for globalization, I thinkthat it is because of the success of your progressive expansion into the United States since the 1980s, and that you
were chosen to make the acquisition because you have theability to compete with global super majors.

The HyCO Business as a Powerful Tool for Achieving Goal 13 of the SDGs
Kikkawa: I think the way that gases can be used to combat
global warming will be an important point, and I suspect theindustrial gases industry will garner more attention going
forward. I have the highest hopes for the HyCO business*.
Goal 13 of the SDGs is a goal for specific countermeasuresagainst climate change. One of the powerful tools in thiseffort that has been touted by the Ministry of Economy,
Trade and Industry (METI) is carbon dioxide capture,
Takeo Kikkawa

Kenji Nagata

Professor of the Graduate School ofInternational Management,International University of JapanNIPPON SANSO HOLDINGS CORPORATION

utilization, and storage (CCUS), which involves the separation, storage, and use of CO2 emitted from power stations
and chemical plants. In the HyCO business, carbon is recovered in the form of hydrogen and carbon monoxide, whichmeans that like CCUS it converts carbon into a resource. The
HyCO business, which recovers carbon in the form of hydrogen and carbon monoxide rather than CO2, has great potential to be a technology that can help save the human race.

Member of the Board,
Nippon Sanso Holdings Corporation
Representative Director and President,
Taiyo Nippon Sanso Corporation

28

INTEGRATED REPORT 2020

* “HyCO” stands for hydrogen (H2) and carbon monoxide (CO), which are separated from natural and other gases through a technology called Steam Methane Reforming (SMR). The HyCO
business provides large-scale supply of H2 and CO to oil refining and petrochemical industries by way of a pipeline.

NIPPON SANSO HOLDINGS CORPORATION

29

INTEGRATED REPORT 2020

WHO WE ARE

Dialogue 1 The Limitless Latent Potential of Industrial Gases

but then by adding the product created by the HyCO business, the environmental impact at the consumption stage isreduced. Furthermore, among the process options for HyCO,
there are some that enable the recovery of high-pressure CO2
for separation or CCUS. This makes it possible to generate
electricity with reduced CO2 emissions, as you have pointed
out. Setting HyCO aside, I think that we can talk about
reducing environmental impact in relation to all products,
such as oxygen and nitrogen. I mean, by applying oxygen to
combustion technology we can reduce energy consumption
by improving combustion efficiency. In the case of nitrogen,we can improve quality and productivity by preventing its
oxidization. So, we can talk about the connection to reducing waste products and improving energy efficiency. We do
not sell oxygen and nitrogen, but rather the effects andfunctions of oxygen and nitrogen. To sell these functions weare also promoting technology developments, such as gas
hybrid technology and devices that use it. This is what I consider to be the industrial gases business.
Kikkawa: Looking further ahead, it seems likely that hydrogen
will need to be used for electricity generation if we are toachieve a hydrogen society. If demand for hydrogen-powered
electricity generation is established, the HyCO business will
have even further potential for development. I think it is very
possible that this could be realized by 2050.
Nagata: While we are not yet ready to start operatinghydrogen stations, we are now working on the development
and installation of stationary and mobile equipment. We
would like to focus on hydrogen in terms of using it as acarrier in combustion technologies for ammonia and the like.
Kikkawa: Japanese power companies have chosen to use
ammonia rather than hydrogen-based electricity generation,
but this process requires nitrogen, which should offer opportunities for Nippon Sanso Holdings. After all, your strength isin your ability to meet all needs related to gases.
Nagata: Given the extremely matured state of the Japanese
economy, I don’t expect to see much growth in demand foroxygen, hydrogen, argon, and so forth. For this reason, I
think it is most important to promote businesses that arefocused on the SDGs and sustainability, which are key trends
in the world today.

Takeo Kikkawa
Born in 1951 in Hajikamimura (now Arita City) in Wakayama Prefecture.
Graduated from the Faculty of Economics, The University of Tokyo, andobtained a PhD in Economics from the Graduate School of Economics,
The University of Tokyo. Served on an expert panel for METI discussing
the composition of electric power sources for 2030. Professor, Graduate
School of International Management, International University of Japan.
Professor Emeritus, The University of Tokyo. Professor Emeritus,
Hitotsubashi University.

Nagata: That’s right. HyCO changes hydrocarbon resources,
separating them into hydrogen and carbon monoxide, which
can then be used. Hydrogen is used for converting heavy oil
into light oil, removing impurities, and other purposes. By
adding hydrogen when these petroleum products are consumed, the sulfur content can be reduced to zero or heavily
reduced. This reduces the environmental impact when the
products are consumed as fuel. Therefore, in the HyCO business, in the process of separating natural gas and so forth
into hydrogen and carbon monoxide, some CO2 is emitted,

NIPPON SANSO HOLDINGS CORPORATION30INTEGRATED REPORT 2020

Industrial Gases Have Potential in Numerous Scenarios
Nagata: Members of the public may not feel that they haveany points of contact with industrial gases. However, atmosphere control, which is a gas control technology, is playing
an extremely important role in the field of 3D printing, whichis capturing the public eye in numerous applications. We do notmake 3D printers but we aim to contribute to widespread
uptake of 3D printers in Japan through atmosphere control,
working in partnership with 3D printer manufacturers. Moreover,recently industrial gases are being used in a growing range
of applications in fields related to aquaculture. By dissolving
high-pressure oxygen in water, rather than air, we expect toimprove the cultivation environment. We supply a considerable volume of oxygen to the Norwegian salmon farming
industry and the Japanese eel farming industry. Anotherapplication that has been prominent lately in the area offood and water issues is modified atmosphere packaging(MAP). By injecting a mixed gas of nitrogen and CO2, thistechnology slows down the oxidization of food and helps toprolong the expiry dates of ready-made salads and similar
products sold at convenience stores.
Kikkawa: This is a safe way to extend the expiry date rather
than using a hypochlorite additive, isn’t it?
Nagata: It’s safe because it is nitrogen and carbon gases thatare present in the air. By extending the expiry date, we aim
to reduce food loss as much as possible. What’s more, as theweather was particularly bad this year, driving up the priceof leafy vegetables, there were a growing number of cases
where vegetables were frozen at the production site to preserve them before shipping. Since the Group has a long trackrecord in refrigeration technology, we were able to use ourtechnologies to reduce food loss at production areas as well.
Going forward, I think that industrial gases will be able tocontribute even more in the area of food.
Kikkawa: How about the medical field?
Nagata: In the medical business, we are focusing on Water-18O,
a stable isotope used as a diagnostic reagent for cancer.
It can now be used to diagnose Alzheimer’s disease as well.
In our medical business, we also use a lot of CO2. For example, in endoscopic surgery, CO2 gas is injected to expand theintestine. Medical CO2 makes laparoscopic surgery mucheasier to perform. So various kinds of gases are used in the
medical field—not only the oxygen used for ventilators thatNIPPON SANSO HOLDINGS CORPORATION

people would generally think of. In the case of a disaster,for example, we continue to supply these gases stably without stopping. In this way, we also aim to contribute to the
medical field.
Kikkawa: So, the trend toward adopting gases has reached
the agriculture, aquaculture, and medical fields. That’s very
interesting. I expect that the industrial gases industry will
surprise us with even more unexpected ways for using gases
going forward. It truly is an invisible industry, or rather, it
has a lot of invisible latent potential. I think that Japan isextremely fortunate to have a global gas major such as
Nippon Sanso Holdings.
Nagata: If we can fully realize the potential of the industrial
gases business and continue contributing to the development of industries and the solution of social issues, then weare sure to achieve sustainable growth. I want to apply thepower of industrial gases across a wider range going forward, including social issues and new fields following thedevelopment of industries. Pursuing this goal is our direction
as an industrial gases manufacturer.

31

INTEGRATED REPORT 2020

OUR
BUSINESSOver its 110-year journey since its founding, Nippon Sanso Holdings
has developed together with industry.
We will concentrate our accumulated technological capabilities,
customer base, and expertise in an effort to expand our business evenfurther, seeking to continue playing an essential role in the development of industry and society over the next 100 years.

NIPPON SANSO HOLDINGS CORPORATION32

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NIPPON SANSO HOLDINGS CORPORATION

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INTEGRATED REPORT 2020

OUR BUSINESSThe Nippon Sanso Holdings Group’s Value Creation Process
The Nippon Sanso Holdings Group contributes to the development of basic industries such as
steelmaking and chemicals with its air separation gases made from the unlimited resource of air,as well as other industrial gases. We also supply cutting-edge industries such as electronics.
Moreover, we supply industrial gases and related equipment in the medical field and support better
lifestyles for people by supplying household goods in the Thermos business. We will continue to provide
new value to society through innovative gas solutions and high-quality, highly functional Thermos brandproducts, and contribute to solutions to social issues.

Group Vision

Group Philosophy

We aim to create social value
through innovative gas solutions
that increase industrial productivity,
enhance human well-being
and contribute to a moresustainable future.

Proactive. Innovative. Collaborative.
Making life better through gas
technology.

Medium-Term Management Plan
Ortus Stage 2 ( P. 14)
Contribution to the Sustainable Development
Goals (SDGs) through business

Key Social Issues for
Nippon Sanso Holdings

Nippon Sanso Holdings’ Business Activities
Our concept in businessClimate change

The Gas Professionals

Outputs

Value Created

Provision of solutions
centered on products

Fields where the Company cancontribute by creating value

The concept represents our strong passion to handle all aspects ofResource shortages

customers’ gas-related needs as a professional group.

Earth
Business processes

Food and
agriculture( P. 36)

Technologicalcapabilities

Maintenance of
health

Production
capabilities

Technologicaldevelopment

Group Philosophy

Medical care

Industrial gases
business• Reduced environmental impact
through efficient use of resourcesand energy• Provision of products that reduce
environmental impact• Climate change mitigation andadaptation

Electronics
business

Proactive. Innovative.
Collaborative.
Making life better throughRespect for humanrightsSociety

Production

gas technology.

Human
resources
capabilities

Supplycapabilities

Occupational
health and safety

Supply and sales

Human resources
development

Proposing better
lifestyles with
Thermos brandproducts• Development and evolutionof industries• Stable supply of industrial gases• Realization of social infrastructure

Financial foundation
Promotion ofdiversity

Governance
Global network spanning
four geographic hubs

* ESG materiality
identification process ( P. 80)

Investments ingrowthThermosbusiness

Economy• Development and evolution of
economic activity

Supporting foundation for business activities

NIPPON SANSO HOLDINGS CORPORATION

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NIPPON SANSO HOLDINGS CORPORATION

35

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OUR BUSINESS

Overview of the Nippon Sanso Holdings Group’s Business

Three Business Domains and Five Business Segments

Industrial
gases business

The Group’s three business domains are the industrial gases business, the electronics business, and the
Thermos business. Their business activities and growth are supported by fundamental technologies. The
Group’s five business segments are the Gas Business in Japan, the Gas Business in the United States, theGas Business in Europe, the Gas Business in Asia and Oceania, and the Thermos Business.

Electronics
business

Thermosbusiness

Plant and engineering technologies
Business

Main products and services

Main users

Industrial gases
business

Air separation gases, carbon dioxide gas, helium, liquefied petroleum gas (LP gas), cutting and welding equipment and materials,
plants and machinery, medical gases and equipment, other

Steelmaking, chemicals, automotive,
shipbuilding, machinery, food, medicine,etc.

Electronics businessAir separation gases, electronic materials gases, electronics-relatedElectronics (semiconductors, LCDs, etc.)
equipment and installation, etc.

Thermos businessHousehold goods

Fundamental
technologies

General consumers

Business
Segments

Vacuum-insulation

Gas handling technologies

technology

Gas application technologies

Gas
Business
in JapanGas Businessin the UnitedStatesGas Business
in Europe

Gas Businessin Asia andOceania

Thermos
Business

Industrial Gases Business Process Centered on Air Separation Gases

Cash

Investments in growthTechnological development

Production

SupplySales

Develop products that cancontribute to the solution ofcustomers’ issues through gas
technologies cultivatedover many years

Produce high-quality industrial gases needed by customers withhigh-efficiency (energy-saving) manufacturing equipment

Supply high-quality industrial gases required by customers in an
appropriate specification to meet their unique needs

We create new value by extending
proposals for gas types, flow
rates, pressures, supply formats,and backup systems that respondto their unique needs.

Gas production technologies
accumulated over many years

Safety, quality, andtechnologicalrisk management

Air separation gases

Plant and engineering
technologies

On-site supply
We install gas production facilities on sites
adjacent to the customer’s site and connect
them via a pipeline to supply gases directly on
a continuous basis.

Sales activities

Oxygen (O2)

エアセパレートガス

Air

ASUs

Gas handling technologies

Bulk supply
Nitrogen (N2)
Argon (Ar)Other industrial gases

Quality assurance

Gas engineering

Packaged supply

Carbon dioxide gas(CO2)

Hydrogen (H2)

Helium (He)LP gasElectronic materials
gases

Acetylene (C2H2)

Gas application technologies

Gases manufactured at our production facility
are liquefied and transported by tanker truck
to fill liquid gas storage tanks installed on
customers’ sites.

We package just the amount of gas requiredby customers into cylinders at a filling station
then deliver them in individual cylinders to
the customer.

Safety training

Development and sale of new products (reflect customer feedback and create new value)

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OUR BUSINESSBusiness Domains

Industrial Gases BusinessElectronics BusinessIn the industrial gases business, we supply various industries, such as steelmaking,chemicals, and automotive, primarily with our mainstay air separation gases. We
also provide oxygen and other products for medical use. The Company started operations with the on-site plant method in 1964, the first in Japan. The business is able toprovide air separation gases stably and in large volumes. We have also deployed ouradvanced technological capabilities cultivated in Japan to the global market, and are
expanding operations using the on-site plant method, primarily in the Gas Business in
the United States.
The industrial gases business is established on the site of consumption, andoperating companies in each region cultivate and expand their business in accordancewith the local characteristics and customers. Looking forward, the holding company
will act as a driver to jointly develop advanced technologies and expertise in eachregion, aiming to grow the industrial gases business locally.

In the electronics business, we supply electronic materials gases of various kinds, usedin the manufacturing processes of semiconductors, LCD screens, and so forth in theelectronics industry. The Group has electronic materials gases production facilities inJapan, the United States, South Korea, and China, and has built a supply chain centeredon east Asia, which is a hub for manufacturing sites of major semiconductor manufacturers. In Japan, we offer on-site supply of nitrogen, and our Total Gas Centers in eacharea provide electronic materials gases and other gases along with services in a total
package. We also provide supply equipment and facilities based on advanced gas
handling technology to enable customers to use gases such as electronic materials
gases safely and securely in a high-quality condition.
We will continue to provide solutions based on advanced technologies in responseto the cutting-edge needs of the electronics industry.

Main Initiatives Based on Key Strategies in Ortus Stage 2

Main Initiatives Based on Key Strategies in Ortus Stage 2

Optimizing Production and Logistics
Industrial gases are high-pressure gases, and their production
and transport is subject to different regulations in each country
and region. Accordingly, while a simple comparison is notpossible, the production and logistics functions of the Gas
Business in Japan faced more hurdles to optimization throughInformation and Communication Technology (ICT) and othertechnologies than the Gas Business in the United States. In
conjunction with the start of Ortus Stage 2, the Gas Businessin Japan revised its organization to integrate the managementof production and logistics functions. We also worked to increase
the operational efficiency of ASUs through data analysis and to
optimize deliveries by using ICT to monitor customers’ inventories, which resulted in cost reductions and so forth. Looking
ahead, the industrial gases business in Japan and overseas
will utilize advanced digital technology as part of efforts tooptimize and streamline production and logistics functions.

Total Electronics
Total Electronics is one of our initiatives under the key“Globalization” strategy of Ortus Stage 2. The initiative aims
to expand earnings from electronic materials gases by
responding flexibly to globalization by semiconductor manufacturers overseas, and to changes in technologies and markets.

Expanding Business Areas and Domains through M&A
During the period of Ortus Stage 2, we dramatically
expanded our business area by acquiring the main European
business of Praxair, Inc. We also acquired the U.S. HyCO
business from Linde Gas North America LLC, adding a new
business domain to the Group’s industrial gases business.
In Japan, we have made aggressive use of M&A to expand
the medical business. In 2018, we acquired the medical
equipment sales company IMI Co., Ltd. The company is thelargest ventilator sales company in Japan, and we have utilized its product development capabilities to establish arobust business base with the medical institutions that use its
products, making the domestic medical business into a major
business for the Group.

1. Strategic AccountManagement (SAM)

2. ProductManagement

Strengthen internallinks in the Group forstrategic accounts

Promote stable supplies
to strategic accounts
through capital
investment

Share information
about strategic
accounts and promotea unified strategy for
procurement, production, and R&D

Strengthen productlineup (quality andcost)

Total Electronics was being promoted as a virtual organization centered on the Group’s Chinese subsidiary in Shanghai.
However, with the launch of Nippon Sanso Holdings, theholding company assumed an oversight role. Under the Total
Electronics initiative, we will expand the following five functions and meet rising demand for electronic materials gases,
primarily in east Asia.

3. Supply Chain
Build efficient supply
systems
Implement global
sourcing to achieve astable supply of a wide
range of products(optimize purchasing)

4. Development
Planning (R&D)
Develop productsthat meet customers’
needs
Enhance links with
R&D bases to respondto customers’ process
requirements

5. Operations
Strengthen global
supply systems(enhance production
functions at existing
plants, build newplants)Gas and Related Devices Supporting Cutting-Edge Medical Fields
The Group supplies frontline medical facilities and research institutions withindustrial gases such as oxygen, nitrogen, and helium. Oxygen is used forventilation of patients with decreased cardiopulmonary function, while nitrogen is used in dermatology for freezing treatment and so forth. Helium isused to cool superconductor coils in MRI equipment.
In addition, the Group conducts technology development related to theregenerative medicine and biomedicine fields. The regenerative medicine
Liquid nitrogen cryopreservation systemfield uses cultured cells, which are stored at ultra-low temperatures in liquid
nitrogen cryopreservation containers. The Group has a 50% share of the domestic market for these containers by revenue,
and we also sell a fully automated cell cryopreservation system, the CryoLibrary®, that enables proper management of alarger quantity of cultured cells.

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MOCVD Equipment Using Gas Control Technologies
The Group has developed composite semiconductor manufacturing
equipment using metal organic chemical vapor deposition (MOCVD),
based on gas control and vacuum technologies. We provide total packages of products and services, including equipment fabrication, supplyof electronic materials gases used in the semiconductor manufacturing
process, and exhaust gas processing.
Large-diameter gallium nitride (GaN) mass-production model
MOCVD unit, UR26K

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OUR BUSINESSBusiness Domains

Thermos BusinessIn 1978, Nippon Sanso Holdings’ predecessor developed the world’s first stainless steel
vacuum-insulated bottle using vacuum-insulation technology cultivated in the industrial
gases business, then began manufacturing and sales operations. In 1989, Nippon Sanso
acquired the Thermos business (manufacture and sales of Thermos brand glass vacuuminsulated bottles and so forth) from U.S. company Household International Inc., thereby
starting the history of the Thermos brand in the Company. Then, in 2001, Nippon Sanso’s
household goods business was split off to establish Thermos K.K. The company continues
to create new value using vacuum-insulation technologies carefully nurtured as a pioneerin the field of vacuum-insulated bottles, with the brand concept of “Thermos Magic.”
In the Thermos business, we provide a product lineup to offer people delicious taste
and convenience in various situations that includes sports bottles and portable mugs.
In addition, through these products we propose environment-friendly lifestyles bysaving energy, helping to realize a sustainable society.

Main Initiatives Based on Key Strategies in Ortus Stage 2
1. Strengthen Proposal Capabilities• Expand the lineup of portable mugs for each target anddevelop and expand sales of products to meet in-homedemand, such as tumblers and frying pans
• Bolster communication capability using the Company’s
website and pursue synergies through coordination with
e-commerce

3. Increase Brand Value• Promote effective advertising activities via multiple typesof media and strengthen development of the Company’s
direct-sales outlets• Start a café business proposing environment-friendly
lifestyles

Fundamental Technologies
Nippon Sanso Holdings’ basic technologies support its business domains. These include plant and engineering, which involves
operations from design through to the maintenance of ASUs that produce air separation gases; gas handling, which involves thecontinuous stable and efficient production and supply of air separation gases; and gas application technologies, which involves
using the characteristics of gases in various fields such as food freezing and metal processing. Using these technologies, we willcontinue uncompromising R&D to provide optimal solutions that meet customers’ demands.

Plant and Engineering Technologies
Since achieving the first domestic production of ASUs in 1935, theCompany has built over 100 plants around the world as a leading manufacturer of ASUs. We provide comprehensive services from basic design todetailed design, manufacture, procurement, construction, commissioning,and maintenance.
The stable, efficient, and safe production and supply of gases depends on
improving the skill levels of plant operators, as well as on ensuring careful
everyday operational and equipment management at our factories. We provide
extensive practical education, including training for emergency situations,using a proprietary ASU simulator developed for this purpose.

Gas Handling Technologies
4. Strengthen Production Capability• Achieve stable supply by establishing a three-facility
structure overseas

2. Increase Customer Satisfaction• Reduce claim rate through rigorous quality control• Increase customer support response using website

The Thermos Brand Aligned with Customers’ Lifestyles
Starting from stainless steel vacuum-insulated bottles that utilize vacuuminsulation technology, Thermos has developed a range of essential lifestyle products such as portable mugs and soup containers. Up until now,
our lineup has been centered primarily on outdoor products, but recently
we have also been focusing on products for indoor use in cooking and at
mealtimes, such as frying pans and tumblers. We will continue to expand
the diverse product lineup of Thermos, going beyond vacuum-insulatedbottles to support customers lifestyles in a wider range of situations.

In gas handling technologies, we deal with different conditions of gas
supply, including requirements for the amount and pressure, depending on
the customer’s usage environment. Accordingly, we select the most appropriate mode of supply for each customer, including through pipelines fromon-site plants or bulk supply by tanker truck for storage in tanks located at
the customer’s site.
Furthermore, different methods of handling gas present different risks.
In addition to ensuring strict adherence to safe driving rules by companies
responsible for conveying and supplying gases by tanker truck, we promote
initiatives to improve the awareness and skills of employees involved insupply operations who handle high-pressure gas.

40

We use the most suitable method of gas supply for each customer.

Gas Application Technologies
Gas application technologies unlock the many potentials of gases.
Depending on the application, we apply expertise for using gas more safely
and efficiently. Through R&D of technologies related to welding, food processing, heat treatment, combustion, and refrigeration, we provide a host oftechnical support and solutions that contribute to solving customers’ issues.

An appealing variety of Thermos frying pans to suit a range ofcustomer needs

NIPPON SANSO HOLDINGS CORPORATION

Plant designers strive to achieve customers’ required specifications
as well as operationality and efficiency.

INTEGRATED REPORT 2020

At the Yamanashi Laboratory, we conduct R&D on themes such as
oxygen-enriched combustion, welding and cutting, and heat treatment.

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OUR BUSINESSBusiness Segments

Gas Business in Europe
The Gas Business in Europe is operated by the European
regional holding company Nippon Gases Euro-Holding

The Group operates is businesses in five reportable segments: the Gas Business in Japan,
the Gas Business in the United States, the Gas Business in Europe, the Gas Business in Asia and Oceania,
and the Thermos business.

S.L.U., headquartered in Madrid, Spain, and its Group
companies. In this segment, we operate businesses in
12 European countries, primarily Spain, Portugal, Italy,
and Germany, and we have built up a stable businessfoundation through piped supply in the region’s main

For an organizational chart of Group companies, please see page 93.

industrial areas. We are also expanding our business intoa wide range of business areas, including healthcare,

Nippon Gases Espana S.L.U.
gas production facility

primarily in Spain, and refrigerants in Italy.

Sales composition
by region

Gas Business in Japan(FYE2020)

29%
Spain and Portugal

Bulk gas supply facility for an aquaculture facility

24%
Italy

Germany

Benelux

22%

Northern Europe (Norway and others)

11%

11%

3%

United Kingdom, France, and others

The Gas Business in Japan is operated by Taiyo Nippon
Sanso Corporation and its Group companies. It has the
top share of the domestic market for industrial gases—around 40%—and we provide products and services

Gas Business in Asia and Oceania

that are widely used in all manner of industries, including
steelmaking, chemicals, and automotive. In electronics,

In the Gas Business in Asia and Oceania, our operations

we have a major share of the market in sales of air

center on the supply of industrial gases to customers

separation gases, electronic materials gases, and also
related equipment. Moreover, in the medical field, wesell medical gases as well as medical equipment such as

Nippon Ekitan Corporation carbon dioxide
gas terminal

View of the entire facility of Iwate Kurosawajiri
Gas Center Corporation

in Southeast Asia, China, India, and Australia, and toelectronics-related products to customers in China, Taiwan,
and South Korea. In terms of the business operation

ventilators. Group companies in this segment include thestructure, Nippon Sanso Holdings directly oversees the

carbon dioxide gas and dry ice manufacturer Nippon

operating companies in the region, with the assigned

Ekitan Corporation and cutting equipment manufacturer

regional management team within the holding company

Nissan Tanaka Corporation.

providing backup for business operations. Recently, we haveacquired new on-site projects for metal manufacturers in

Vietnam Japan Gas Joint Stock Company
production facility

View of an electronic materials gases production
facility in China

Vietnam and the Philippines. Meanwhile, in the electronics business, the East Asia region is serving as the central
site for the Group’s global Total Electronics strategy.

Gas Business in the United States

Sales composition
by region(FYE2020)

The Gas Business in the United States is operated by

20%
Singapore and Malaysia

20%Australia

China

16%
TaiwanSouth Korea

15%
ThailandPhilippines

8%
Vietnam8%
India and others

Matheson Tri-Gas, Inc., headquartered in Dallas, Texas,
and its Group companies. Matheson Tri-Gas has a robust
operating foundation that includes California, which

Thermos Businessboasts the largest state economy, as well as Texas andLouisiana, leaders in the petroleum industry. In 2016, weconducted business acquisitions, starting with Air Liquide

The Thermos Business is operated by Thermos K.K.

S.A., which helped to expand the industrial gas supply
network along both the eastern and western Unitedin Japan and its Group companies. Thermos K.K. has
HyCO production facility

Westlake on-site piped gas facility

production subsidiaries in Malaysia and the Philippines,

States, establishing our position as a major national

and a sales subsidiary in South Korea. Furthermore, we

supplier. Thereafter, backed by this production network,

have affiliated companies in China, the United States,

we continued to acquire on-site users. In 2019, we

and Germany, among others, and through our regional

acquired the U.S. HyCO business from Linde Gas Northbases we ship Thermos brand products to over 120

America, thereby further expanding our business domain.

countries around with world. In Japan, we have
expanded our product lineup with the new categories

Stainless steel vacuum-insulated bottles

of tumblers and cooking utensils.

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Vacuum-insulated tumblers

5%

4%

3%

OUR BUSINESSBusiness Segments
Member of the Board,
Nippon Sanso Holdings Corporation
Representative Director and President,
Taiyo Nippon Sanso Corporation

Overview of Performance by Segment for FYE2020 

Gas Business in Japan

Overview of Performance

Kenji Nagata(Billions of yen)

Revenue

FYE2020

FYE2019

Year-on-year change

Gas Business in Japan

363.9

356.1

(7.8)

Gas Business in the United States

187.3

198.8

11.5

Gas Business in Europe

55.1

165.5

110.4

Gas Business in Asia and Oceania

106.1

104.5

(1.6)

Thermos Business

27.8

25.1

(2.7)

Total

740.3

850.2

109.9
(Billions of yen)Core operating profit

FYE2020

FYE2019

Year-on-year change

Gas Business in Japan

29.8

28.7

(1.1)

Gas Business in the United States

15.6

22.2

6.6

Gas Business in Europe

6.5

24.8

18.3

Gas Business in Asia and Oceania

9.1

9.9

0.8

Thermos Business

9.1

7.2

(1.9)

Adjustment*

(4.5)

(2.6)

1.9

Total

65.8

90.3

24.5

* The adjustment to segment profit includes company-wide expenses that are not allocated to segments, such as intersegment eliminations and basic research expenses. The adjustments in
FYE2019 include expenses of -¥2.7 billion to acquire the European business.

We will pursue the potential of gases to the limit.
The COVID-19 pandemic is having an impact on the Gas Business in Japan by reducing the capacity utilization of the nation’s core industries. However, a fall-off in growth of gas demand following the maturation of Japan’s core industries had been apparent before thepandemic. Therefore, we recognize that the pandemic does not change the strategies we have been engaged in for continuous growth
in a mature market; rather, it requires us to accelerate our initiatives.
We have two broad strategies for the Gas Business in Japan. The first is to strengthen our fundamental businesses, such as industrial
gases. Customers use industrial gases because their use increases the customer’s own product quality and productivity. We need to recognize anew that we are providing customers with the power of industrial gases. In addition, by providing gases and related equipment
as a solution, we aim to strengthen our fundamental businesses and increase our earning capability. Our other strategy is to open up
new business domains originating from gas technology. We are working currently on technology and product development to expand
our business in metal 3D printing and so forth, but we will now accelerate our efforts through internal and external collaboration. The
shift to a holding company structure has advanced the delegation of authority, allowing each operating company to respond more swiftly
and accurately to the changes in the regional industrial structure and environment. Taiyo Nippon Sanso Corporation will also seek toincrease management speed and flexibility, and to pursue the potential of gas to the limit.

Revenue and Segment Profit

Percentage of Revenue by Business(Billions of yen)

Main Reasons for Changes(Billions of yen)

400

Year-on-year change

341.8

Main reasons for changes

344.6

328.0

321.4

342.4

300

Revenue–2.1%

Gas Businessin JapanCore operating profit(segment profit)

RevenueGas Businessin the UnitedStatesCore operating profit(segment profit)

Gas Business
in Europe–3.6%● Lower profit from lower sales of air separation gases● Increase in profit from acquisition of IMI Co., Ltd., a medical equipment sales company+6.2%● Favorable shipments of air separation gases, mainly bulk gas. Increase in shipments ofcarbon dioxide gas due to the start of operations at a new plant● Start of operation of new on-site projects. Contribution from acquisition of HyCO business.

+42.4%● Increase in profit from higher sales of industrial gases, centered on air separation gases. Contribution
from acquisition of HyCO business.
● Increase in production and logistics costs for carbon dioxide gas, etc.

200

23.3

25.0

27.2

29.4

30.7

22%

29.8

FYE2020

28.7
20

Japan

¥356.1 billion

10

2014
2015
Japanese
GAAP

Revenue (Left axis)

2016

2017

2018
IFRS

9%

30

100

0

8%

40

356.1

2019

2020

0
(Years ended
March 31)78%

Segment profit (Right axis)
Industrial gases (Medical-related productsElectronics-related products

Energy: LP gas)

The Gas Business in Europe has been included in the consolidated financial results since December 2018, and includes only four months’
performance for FYE2019. Year-on-year changes and analysis have therefore been omitted.

RevenueGas Businessin Asia andOceania
Core operating profit(segment profit)

Revenue

Thermos
Business● Air separation gases saw a decline in sales of both bulk and on-site gases to key industries.
● Increase in sales due acquisition of IMI Co., Ltd., a medical equipment sales company

363.9

Core operating profit(segment profit)–1.5%● Decrease in sales of air separation gas (mainly bulk gas), mainly in China● Favorable sales of LP gas in Australia● Decrease in sales of electronic materials gases, mainly due to deterioration of market conditions+8.8%● Improved profitability in the LP gas business in Australia● Decreased profit due to lower sales of electronic materials gases● Recording of impairment loss of ¥1.3 billion on property, plant and equipment in FYE2019–9.6%● Unseasonable weather in the holiday season. Decrease in domestic sales, partly reflecting theelimination of inbound tourism demand due to COVID-19, starting in 2020.

–21.4%● In Japan, lower profit due to lower sales● Overseas, lower profit due to lower operation rate at production subsidiaries. Low earnings of Group
companies accounted for by the equity method due to slump in sales to Europe and the United States.

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Development of the Intelligent Gas Supplying System (IGSS)
IGSS is a new gas supplying system that is driving digital innovation of the gas industry tomeet new customer needs for converting to smart factories, and cope with issues such as staff
shortages and reduced working hours. Container transportation, container management, daily
inspections, and gas monitoring systems are all integrated into the user interface on a tablet.
Stable gas supply and monitoring and daily container exchange operations play an importantrole in ensuring the production, quality, and safety of customers’ products.

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INTEGRATED REPORT 2020

Gas cylinders weighing over 50 kg each areautomatically delivered by a robot.

OUR BUSINESSBusiness Segments
Member of the Board,

Member of the Board,

Nippon Sanso Holdings Corporation

Nippon Sanso Holdings Corporation

Gas Business in the United States

Chairman and CEO,

Chairman and President,

Matheson Tri-Gas, Inc.

Nippon Gases Euro-Holding S.L.U.

Gas Business in Europe

Thomas Scott Kallman

Pursuing business expansion based on Safety, Quality, and Profitable Growth

Eduardo Gil Elejoste

The COVID-19 pandemic in the United States is still at an unpredictable stage, and it is difficult to forecast when the economy will makePost-merger integration has been completed smoothly. We now aim to growthe business using our excellent management resources.

a full-scale recovery. However, disciplined price and cost management has been key to our performance during this time. Under these

Nippon Gases Euro-Holding has a large operation in Italy, which was the location of the first COVID-19 pandemic in Europe, andconditions, we will continue to drive our business forward focused on our core strategies in the areas of Safety, Quality, and Profitable

it was one of the first European companies to take measures to ensure the safety of customers and employees. As a result, we wereGrowth. We are executing our vertical integration strategy adding bulk liquid capacity with new ASUs to complement our packaged gas

able to ensure the safety of employees and their families without any significant issues for business continuity. In the production anddistribution networks. We also seek to further develop these packaged gas distribution networks with strategic acquisitions of indepen-

supply of industrial gases during the pandemic, we have focused on securing the maximum capacity possible for medical institutions

dent industrial gases distributors. We are reinforcing our liquid carbon dioxide (LCO2) and dry ice capacity with existing plant expansions

in particular.

and construction of new plants while actively pursuing new on-site and HyCO project opportunities. Centralized, remote operations of

In December 2018, we moved out from the U.S. Praxair Group and joined what was then the Taiyo Nippon Sanso Group.

key production facilities combined with centralized distribution planning and dispatch allow for a very competitive cost position. These

Subsequently, we rapidly and efficiently carried out post-merger integration (PMI), and this has enabled us to continue working also on

considerations along with effective cross-selling efforts have allowed Matheson Tri-Gas to provide for the total gas and related equipment

strengthening safety, compliance, and human resources, which have been our most important business management priorities sinceneeds across our customer base and position Matheson Tri-Gas to exceed our customer expectations and enhance Nippon Sanso

before the merger. We have an extremely well-balanced business portfolio in terms of products and services that we supply and markets

Holdings shareholder value.

that we serve in the regions where we are operating. Looking ahead, we will seek to maintain this excellent portfolio while increasing
the density of our business in areas where we have strengths while at the same time exploring growth opportunities in new areas.

Revenue and Segment Profit

Percentage of Revenue by Business(Billions of yen)

(Billions of yen)

200

172.6
149.8

150

147.2

12.0

24

22.2

13.5

15.6

12

Revenue (Left axis)

2016

2018

200
400

3%

13%

40

2019

2020

IFRS

0
0

0
(Years ended
March 31)92%

Segment profit (Right axis)
Industrial gases (Medical-related productsElectronics-related products

30

24.8

FYE2020
20

Energy: LP gas)

Expansion of the on-site plant gas supply system

Europe

55.1

50
100

¥198.8 billion

6

2017

(Billions of yen)

100
200

United States

5.7

2014
2015
Japanese
GAAP(Billions of yen)

150
300

18

9.2
4.7

6%
2%

FYE2020

100

50

8%

Percentage of Revenue by Business

165.5

130.9
107.5

0

187.3

198.8

Revenue and Segment Profit¥165.5 billion

10

6.5
2014
2015
Japanese
GAAP

2016

2017

2018
IFRS

2019

2020

0
(Years ended
March 31)

97%

Revenue (Left axis)
Segment profit (Right axis)* Financial results for FYE2019 are for the four months from December 2018 to March 2019.

Industrial gases ( Medical-related products)
Electronics-related products

Decision to build a new ASU for the aquaculture industry in Norway

Including units that are scheduled to begin operations in the future, Matheson Tri-Gas has over

Increasing the oxygen level in the rearing environment for farmed fish promotes their growth

30 ASUs throughout the United States. Over the past few years, we have started operations at

and activity. In Norway, where aquaculture such as salmon farming is widespread, demand for

four on-site projects that were ordered in Texas and Louisiana. Matheson Tri-Gas plans to installindustrial gases for use in fish farming and aquaculture is increasing. Nippon Gases Euro-Holding

an additional unit in 2021.

has captured this opportunity by building an ASU on the northwest coast of Norway, where fish
farming and aquaculture-related demand in particular is expected to grow.
On-site plant method ASU in operation atWestlake Chemical (Texas)

NIPPON SANSO HOLDINGS CORPORATION46

INTEGRATED REPORT 2020

Norwegian marine aquaculture facility

NIPPON SANSO HOLDINGS CORPORATION47

INTEGRATED REPORT 2020

OUR BUSINESSBusiness Segments

Gas Business in Asia and Oceania

Executive Officer,

President,Group Planning Office*Thermos K.K.

Thermos Business

Tsutomu Moroishi* The Oceania and Asia Management Division has been
established within the Corporate Planning Office to oversee
business promotion for companies in Asia and Oceania.

Keiichiro Chujo

We aim to leverage the results of enhancing the Group’s
comprehensive capabilities to expand business scale and increase earning capability.

Even amid the COVID-19 pandemic, we will steadily advance our initiatives
under the medium-term management plan.

The status of the COVID-19 pandemic is different in each country where we have operations in the region. Compared to Europe and

The COVID-19 pandemic is having a significant impact on the earnings of the Thermos Business through the decrease of consumption

the United States, the impact on business activities and earnings has generally been smaller. In China, Taiwan, and South Korea especially,

resulting from factors such as elimination of inbound tourism demand and movement restrictions. However, we will not be dissuaded by

the electronics business has performed solidly, assisted by an increase in our production capacity for electronic materials gases in China

the impact of the pandemic, and will continue to focus on the initiatives of the action plan, laid out in our medium-term management plan:and other areas.

“Strengthen proposal capabilities,” “Increase customer satisfaction,” “Increase brand value,” and “Strengthen production capacity.”

Within the Group’s global framework for four geographic hubs, the Asia and Oceania region differs from the other three hubs in thatIn the Thermos Business, we are promoting sales strategies for each area, strongly grounded in the national character and lifestyle

the companies within the region are directly controlled by Nippon Sanso Holdings. In addition, our regional management team supports

habits of each region. In Japan, we have adopted the theme of “creating new demand from households,” and expanded our producteach company in strengthening its management foundation and advancing its business. So far, we have had support from Japan in safety

categories to include frying pans and tumblers. Sales of these categories targeting households during FYE2020 have trended briskly,

and technology aspects, while promoting the sharing of information inside the region. Now, we will accelerate these kinds of initiatives.

driven in part by stay-at-home demand due to the pandemic. Thermos brand products are manufactured by overseas Group companies

In addition, we will aggressively promote horizontal development of first-class technologies and expertise not only from Japan but also fromin Malaysia, China, and the Philippines. One of our top priorities is to build a production framework that can respond swiftly and accu-

Europe and the United States. We already have examples of activities to increase productivity in the Production Division, and teams fromrately to demand in Japan and areas around the world, and provide a stable supply of products. During the pandemic, national andEurope and the United States are guiding the deployment of activities that have been successful in their regions in Southeast Asia. The­regional-level restrictions obliged us to halt operations at our production sites, initially in China and then in Malaysia and the Philippines.

business scales of the companies in the region are smaller than in Japan, the United States, and Europe, but the region is expected to see

Going forward, we will build a stable supply framework with a supply chain and production system that is designed to cope with thissignificant economic growth going forward. Therefore, the holding company will drive efforts to enhance the comprehensive capabilities

kind of scenario.

of the Group, and we will aim to leverage the results of these efforts to expand business scale and increase earning capability.

Revenue and Segment Profit

Percentage of Revenue by Business(Billions of yen)

(Billions of yen)

120

89.1

90

60

54.3

103.1

106.1

9.2

9.1

85.8

61.9

9.9

13%

9

41%

5.1

30

¥104.5 billion

3

1.9
2014

9.0

30

27.5

10

19.0

3.0

10.0
8.3
27.0

27.9

9.1
27.8

13%

10

7.2

21.7

7.5

FYE2020

25.1
5

3.4

Thermos¥25.1 billion

2.5

2.4
2015

2016

2017

Japanese
GAAP

Revenue (Left axis)(Billions of yen)

40

20

Asia and Oceania

Percentage of Revenue by Area

(Billions of yen)

FYE2020
6

5.0

0

3%

12

104.5

Revenue and Segment Profit

2018
IFRS

2019

2020

0
(Years ended
March 31)

0

2014

59%

Revenue (Left axis)

Segment profit (Right axis)

Industrial gases (Medical-related productsElectronics-related products

2015

2016

2017

Japanese
GAAP

2018
IFRS

2019

2020

0
(Years ended
March 31)87%

Segment profit (Right axis)

Energy: LP gas)

Plans to start operations at a fourth ASU in Vietnam in 2021

Japan

Launch of popular new Thermos durable series of frying pans

In May 2020, our local subsidiary in Vietnam, Vietnam Japan Gas Joint Stock Company, completed

In September 2020, we launched the new Thermos durable series of frying pans using wear-

installation of three ASUs in the southern province of Bà Rja-Vung Tàu. The units supply an

resistant durable coating. These products stand out for their high level of wear resistance andunderground pipe network totaling 20 km in length and provide piped gas supply to seven com-

non-stick performance and a distinctive deep design. The range has eight items, including apanies at an adjacent industrial park, mainly related to the steelmaking and chemicals industries.

frying pan as well as a deep-frying pot with a super-deep design and a rectangular fry pan for

To keep pace with the remarkable economic growth of Vietnam, we will start operations at an

making Japanese-style omelets. The design has been changed to make products lighter thanadditional fourth ASU in 2021, and build a robust backup system.

Vietnam Japan Gas Joint Stock Company

conventional frying pans, with handles that are slimmer, making them easy to grasp and lessconductive of heat.

NIPPON SANSO HOLDINGS CORPORATION

48

Overseas

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION49

INTEGRATED REPORT 2020

Thermos durable series

OUR
SUSTAINABILITY
The sustainability of the global environment is an important issue
for the Nippon Sanso Holdings Group. By contributing to solutions
to environmental and social issues and the SDGs through our businessactivities, we aim to increase our corporate value and realize
a sustainable, affluent society.

NIPPON SANSO HOLDINGS CORPORATION

50INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION51

INTEGRATED REPORT 2020

OUR SUSTAINABILITY

Sustainable Business Model

Realizing a Sustainable Society and Global
Environment through Industrial Gases

Reducing the Environmental Impact of Our Business Processes
The process for manufacturing air separation gases uses a large
mental impact of its business activities with a view to mitigating climate

Electricity Consumption at Gas Production Facilities*
in Japan / Electricity per Unit of Production Indexchange risk. These efforts include reducing energy consumption per

Million kWh

unit of production at its gas production facilities, promoting energy

10,000quantity of electricity. The Group is taking steps to reduce the environ-

Nippon Sanso Holdings aims to realize a sustainable society and global environment throughthe industrial gases business. The Nippon Sanso Holdings Group considers air to be a precious natural
resource, and the global environment to be irreplaceable. We naturally consider it our mission to maintainthe global environment in a sustainable condition for the future. In addition to the global environment,
the Group will also address various social issues by proposing solution strategies through products andservices that utilize its technological capabilities. In this way, we will contribute to the realization of asustainable society and global environment.

100

savings at business sites, enhancing the efficiency of transportation

70.5

7,500

by tanker trucks, and expanding the use of renewable energy.
We are also working to increase our disclosure of non-financial

5,045

5,000

75

50

information and to expand the range of data collection. In FYE2020,
2,500

we calculated and disclosed our contribution to reducing greenhousegas emissions through environmental products, declared support0

the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD), and made proactive information disclosures. In

25

1991
(Base year)

2015

2016

2017

2018

2019

0
2020 (Years ended
March 31)

Electricity consumption (Left axis)
Electricity per unit of production index (Right axis)

FYE2021, we will collect and disclose even more non-financial information and conduct aggregation and disclosure of non-financial* Gas production facilities of Taiyo Nippon Sanso Corporation and its consolidated
subsidiaries, and of certain affiliated companies

data, respond to the CDP (formerly the Carbon Disclosure Project)regarding climate change and water, among other activities.

Among Typical Industrial Gases, Air Separation Gases, which Use Air as a Resource, Comprise a Circular Business Model

Electricity 12 GWh

The Group’s core products are oxygen,nitrogen, and argon. These gases are madeusing air as a raw material, and most ofthem return to the atmosphere after use.

Electricity 10,001 GWh

Heat 651 TJ

Fuels 10,314 TJ

Water 30.02 million m

Moreover, the raw material and the prod-

Diesel oil/gasoline 28,000 kL

Diesel oil/gasoline 0.3 kL

IN

IN

IN

Development and production

SupplySales

ucts are both gases, so there is little waste
product, and since the raw material is air,Fuels 13 TJ
3

Notes:	
Reporting boundary for environmental inputs and outputs
Development and production: Taiyo Nippon Sanso Corporationand domestic consolidated subsidiaries and principal consolidated
overseas subsidiaries
Supply: Truck fuel for Taiyo Nippon Sanso Corporation, domestictransportation subsidiaries, and the Nippon Gases Euro-Holding
Group (not including contracted transportation providers)
Sales: Taiyo Nippon Sanso Corporation and domestic consolidated
subsidiaries
(For information on principal consolidated overseas subsidiaries,
please see the Sustainability Data Book (FYE2020).)

Use

there is no need to procure other raw
materials. The business model for industrial

Supplied bygases is effectively to separate and sell air,pipeline

which means there is neither raw material
nor waste to be considered. It is truly a

Customers
OxygenNitrogen

Argon

O2

N2

Ar

Hydrogen

H2

Carbonmonoxide• Steel/nonferrous metals• Electronics

CO• Petroleum/chemicals

Gas production facilities

sustainable, circular business model thatrecycles resources.

Supplied bytanker trucks

Total Greenhouse Gas Emissions

OxygenNitrogen

Argon

O2

N2

Ar

• Automobiles/machinery• Glass/papermaking• Healthcare

Sites

Liquefied gases are transported from production facilities
by tanker truck to filling stations, where vaporized gases

5,808 kilotonnes CO2e

• Food• Others

are compressed into cylinders.

Industrial gases are used inGreenhouse Gas Emission
Reduction Contribution

Gas filling stations

2,373 kilotonnes CO2e* Calculated on a stock basis for the following services andproducts supplied or sold by Taiyo Nippon Sanso Corporation
or its domestic consolidated subsidiaries. The calculation
method is presented in the Sustainability Data Book
(FYE2020).
SF6 Recovery Service, combustion-type exhaust gas
abatement systems, SCOPE-Jet®, MG Shield®, nitrogen
supply systems for laser processing (PSA), Thermos
Shuttle Chef®, and hydrogen stations

Supplied incylindersOUT
CO2 5,730 thousand
tonnes CO2e

NIPPON SANSO HOLDINGS CORPORATION

52

Carbondioxide gas

CO2

Hydrogen

H2

OxygenNitrogen

Argon

O2

N2

Ar

LP gasElectronicmaterials
gases

HeliumHea broad range of industries,
from healthcare and food toService vehicles

OUT
Water 15.79 million m3

INTEGRATED REPORT 2020

CO2 71 kilotonnes CO2e

NIPPON SANSO HOLDINGS CORPORATION

OUT
CO2 7 kilotonnes CO2e53

INTEGRATED REPORT 2020

petroleum/chemicals andelectronics.

OUR SUSTAINABILITY

Sustainable Business Model

Environment-Friendly Products That Apply Gas Control Technologies

Propagating Value over Wide-Ranging Fields through Industrial Gases

Aiming to help realize a sustainable global environment through business, we are developing environmental products that contribute to the reduction of environmental impact and preservation of the global environment based on gas control technologies
refined over many years. When customers use the Group’s products and services, we contribute together with them to reducing
environmental impact.

Society is facing a wide range of issues, such as improving productivity, safety, and stability in industry, the global-scale issue offood waste, and upgrading medical front lines in a super-aged society. When customers use products and services that utilize theGroup’s technological capabilities, we also contribute to resolving these issues. Taking a “market-driven” approach, we aim tostay highly attuned to social changes, helping resolve social issues through our business activities and generating economic value.

SF6 Gas Recovery Service Realized Using Proprietary Technologies

Contribution to Industry

SF6 gas is a type of greenhouse gas known as sulfur hexafluoride. Used involtage transformers and high voltage electrical equipment, it has a global
warming potential (GWP) around 20,000 times that of CO2. In addition,
on sites where SF6 gas is used, the purity decreases after recovery, making
it unsuitable for reuse. We have addressed this issue using proprietary
technologies developed in-house to provide a comprehensive service forrecovering SF6 gas, processing it for reuse, and detoxifying and recycling

The Group developed Innova-Jet® technology, which significantly reduces
nitrogen oxides (NOx) generated in oxygen-enriched combustion, while alsosaving energy. Oxygen-enriched combustion produces less exhaust gas
compared with combustion in air, reducing exhaust gas heat loss, whichhelps to save energy. On the other hand, hotter flame temperatures generated a larger amount of NOx, and when oxygen-enriched combustion isused in high-temperature furnaces and smelters it is essential to control
NOx generation. Innova-Jet® not only reduces fuel consumption by 50% or

it. By achieving zero emissions, we aim to contribute to preservation of
the global environment and the building of a recycling society.

We supply all equipment and services related to SF6 recovery.

Oxygen-enriched combustion by Innova-Jet®

more but also helps to improve the working environment by curbing thegeneration of black smoke.

MG Shield® for Reducing Customers’ CO2 Emissions
MG Shield® is a gas used as a combustion prevention gas when welding
magnesium alloy in manufacturing.
Magnesium alloy is used to make cases for mobile phones, laptop PCs,
and other home electronics. In the manufacturing process, the magnesium
alloy is welded at high temperatures. This makes it necessary to preventthe alloy from reacting with the oxygen in the air and combusting.
Compared with SF6 gas that is generally used for this purpose, MG Shield®
has a much lower GWP, helping to reduce the volume of CO2 emissions.

Contribution to Food Issues

Left: MG Shield® in tank, right: supply equipment

The Group has a long track record in food technologies, starting in 1962
with research into rapid freezing by a continuous freezer unit. This technology
has been refined over many years and commercialized under the Bistranza®
brand. In addition, the past few years have seen a rapid uptake of modified
atmosphere packaging (MAP) in major convenience stores and supermarkets.
By injecting gases such as nitrogen into food packaging, food can be kept
fresh for longer without the use of chemical preservatives. Expiry dates canbe extended by 1.5 to 3 times, reducing food waste due to expiration as
well as energy used in waste processing, ultimately reducing CO2 emissions.

Thermos Proposes New Environment-Friendly Lifestyles

Contribution to Medical CareIn June 2020, we opened THERMOS COFFEE TO GO, a coffee shop specializing in take-out coffee where customers can buy coffee or tea by volume,using their own bottles. For those who bring their own bottles, the shop
sells beverages in as many units of 100 ml as the customer wants. The basic
premise is to encourage people to bring their own bottles, offering them achance to experience environment-friendly purchasing. Take-out cups are alsoavailable, made from certified forest protection materials. For every cup sold,¥20 is donated for use in nature protection activities through World Wildlife
Fund Japan (WWF Japan). Through our first Thermos café business, we willpropose environment-friendly lifestyles.

The Group provides a stable supply of high-quality medical gases to medical
facilities and research institutions. We also develop and manufacture a rangeof equipment for home medical use. In addition, we were the first in the world
to manufacture Water-18O, a pharmaceutical ingredient for reagents used in
PET diagnostics, using oxygen distillation based on air separation technology.
PET scans are widely used for early detection and diagnosis of cancer.
Currently, we have three oxygen isotope separation plants in Japan, with anannual production capacity of 600 kg. The advanced gas technologies that
we have developed in-house are supporting the medical field and contributing
to advances in medical technology.

NIPPON SANSO HOLDINGS CORPORATION

54

THERMOS COFFEE TO GO in Nishi-Shimbashi Square (Tokyo, Japan)

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION

55

Liquid nitrogen tunnel freezer, “Bistranza-FZT”

Water-18O, a pharmaceutical ingredient for reagentsused in PET diagnostics

INTEGRATED REPORT 2020

OUR SUSTAINABILITY

Dialogue 2

Pursuing Global Synergies

Inaki Uriarte
Operations & Safety Director,
Nippon Gases Euro-Holding S.L.U.

Takeshi (Ken) Miki
Executive Officer,
Group Technological Affairs & Environment Office,and Chief Sustainability Officer (CSO),
Nippon Sanso Holdings Corporation(Additionally appointed as Executive Officer,
Executive General Manager, Technological Affairs Division,
Taiyo Nippon Sanso Corporation)

Welcome NGE!
Promoting Global Sustainability
Nippon Gases Euro-Holding S.L.U. (“NGE”) joined the Group in December 2018.
NGE’s Operations & Safety Director, Inaki Uriarte, recently had a discussion with executive officer
and Chief Sustainability Officer (CSO) of Nippon Sanso Holdings, Takeshi (Ken) Miki, regarding thesustainability issues that should be addressed in a coordinated effort by the newly launched
Nippon Sanso Holdings Group going forward.

NIPPON SANSO HOLDINGS CORPORATION56

INTEGRATED REPORT 2020

Miki: As a company that handles industrial gases, our firstpriority is ensuring safety. Also, there are many aspects of theoperation not limited to safety that are handled differently
between Japan and Europe, so we have a lot to learn. It is
important that we share each other’s best practices to create
better systems for one another. I would also like to receive
active advice from you, Inaki.
Uriarte: We also have a lot to learn from Japan. The first area
is in insight about the handling of specialty gases, which is anarea where we have received thorough support from Japan.
The second is insight about HyCO, which is an area where
MTG has brought synergies. Meanwhile, the area where NGE
can contribute to the Group is by providing knowledge ofvarious standards. As our knowledge of aspects such as
operations, security, health and safety, and quality grows
deeper, I would like to coordinate with Nippon Sanso
Holdings to standardize them. Knowledge is a universal asset
that can be applied in any situation. Therefore, it would be goodto accumulate knowledge about specialty gases in Japan, andabout HyCO in the United States, and then bring them
together and share the knowledge. Conversely, if we were toattempt to build up all of the knowledge and functions independently in each area, it would be extremely inefficient.
Miki: Thank you for that valuable proposal. NGE’s participation in the Group is a huge benefit not only to Japan but also
to MTG in the United States and our companies in Asia.
I would like us to continue to pursue synergies throughintegration as we go forward.

Miki: The Group has been holding an annual Safety Meeting
since 2015. The idea is that persons in charge of health andsafety from each of the overseas companies gather together
in one room to exchange information and opinions about
safety measures. Inaki, you attended the meeting for the firsttime last year; what was your impression?
Uriarte: My colleagues and I were quite inspired by themeeting. People from Japan, Matheson Tri-Gas, Inc. (“MTG”)
in the United States, and Group companies in Asia really did
have a lively exchange of opinions. I think it is tremendousthat the entire Group has such a shared interest in learningfrom each other's experiences.
Miki: The meeting was held in Japan last year, so you werealso able to observe the Technical Academy at the KawasakiMizue site. How was that?
Uriarte: I had heard a lot about the Technical Academy
from both the NGE President and the CFO who visited theAcademy before, and was myself deeply impressed by theexperiments and demonstrations involving the knowledge ofso many professionals that I saw there. A particularly memorable item was the hazard experience with experiments thatenvisage various accidents or faults that can occur on a site
such as using high-pressure gas, over and sub oxygen atmosphere hazards, the electric shocks live experiment, andcombustion caused by adiabatic compression. All the devices
produced an excellent simulation of risks that we could haveon a site with the support of using virtual reality (VR). I would
really like to create this kind of experience and learning spaceat NGE as well.

Vision for Sustainability Disclosure
Miki: In response to changes in social awareness, companies
now face the important task of enhancing their non-financial
disclosures and initiatives, such as responding to ESG and the
SDGs. In Europe there is a considerably high level of interestin sustainability, and NGE has recently issued its sustainability
report for FYE2020. Could you explain your initiatives in Europe?
Uriarte: The sustainability report is a mandatory disclosure forlarge corporations in Europe, just like a financial report. The
minimum content for disclosure is set by the authorities. Oursustainability report is published on each of the company

NIPPON SANSO HOLDINGS CORPORATION

websites so that all stakeholders can access it. This isextremely important for gaining the understanding of our
stakeholders regarding our activities. We have promoted thecreation of a system that starts by first formulating a framework, then identifying where stakeholders’ interests lie.
Basically, we decided to use this report as a marketing tool.
The main point for creating the framework was to establish
an internal Sustainability Committee. The committee has 13
members, including the president, CFO, CCO*1, CHRO*2, andthe directors in charge of procurement, quality, marketing, safety,

57

INTEGRATED REPORT 2020

OUR SUSTAINABILITY

Dialogue 2
Welcome NGE!
Promoting Global
Sustainability

now is threefold. First, we are enhancing our disclosure of
non-financial data, which we have tried to do in this integrated
report. Second, we will systematically organize and disclose
our various policies. We also plan to review and add to ourcurrent materiality matrix. And third, we will set KPIs. It is
important to set targets and work through a plan-do-checkact cycle (PDCA) cycle. We are thinking to take specific action
on these in our next medium-term management plan.
Uriarte: I think a good way to set KPIs is to start by first getting an overall image, and then narrowing down the areasthat are to be evaluated. For example, NGE has 106 facilities
in all, but over 95% of our energy consumption occurs at just
27 of these. I think it is important to get an accurate overall
image like this, then properly discern which facilities andprocesses to pursue data on.

and Group integration. The committee had weekly meetings
over a 10-week period. Each member establishes their own
team, which examines issues brought back from the meetings.
Roughly 50 people were involved in operations lasting a totalof about 70 days. We received over 150 questions from Audit& Supervisory Board members and consultants, and revised
the draft for the report six times. However, having issued thesustainability report for the year, our task is not finished. This
activity continues indefinitely, as we strive to make further
improvements. NGE has committed itself to eight of the SDGs
and has defined 17 targets within those. Seven of these SDGs
are also shared with Nippon Sanso Holdings. I would like us
to focus particularly on energy efficiency, community engagement, compliance, and safety, while constantly improving ourbusiness and communicating this to stakeholders.
Miki: I read the FYE2020 report, and found the content to bewell-organized and thought out. I would really like to draw
inspiration from your initiatives. We are still just developing
our activities in this field, but with our recent conversion intoa holding company, we will radically strengthen our initiatives.
Last year, we expressed our support for the TCFD*3 recommendations, and this year we also responded individually to
the CDP*4 survey. In this integrated report, we have alreadyenhanced our reporting regarding sustainability. Our task

*1 Chief Compliance Officer*2 Chief Human Resources Officer*3 Task Force on Climate-related Financial Disclosures. A task force established by the
Financial Stability Board, the TCFD recommended that companies disclose the financial
impacts (risks and opportunities) of climate change.
*4 A U.K.-based NPO (formerly called the Carbon Disclosure Project). The CDP cooperates
with institutional investors and others to require companies and government agencies todisclose information about their countermeasures for environmental issues, and conducts
surveys and analyses.

Industrial Gases as a Sustainable Business
Miki: The air separation process is important in the manufactureof industrial gases. This process separates air, the raw material,
to produce oxygen, nitrogen, and argon. These products are
finally returned to the natural environment, and the process
generates almost no waste at all. Furthermore, the distillation
process used for air separation is conducted at extremely low
temperatures, and although it uses electricity it does not
involve combustion of fossil fuels. Since air is the raw material,
there is no supply chain risk. In addition to reducing the

NIPPON SANSO HOLDINGS CORPORATION

environmental impact of this kind of manufacturing process,another important point is the contribution of the products
themselves. Gas helps to reduce the environmental impacts ofvarious industrial processes. In addition, the injection of gas toextend best-before and use-by dates for food helps to reducefood losses. This shows that industrial gases are actuallya substantially environment-friendly business. In addition,
Thermos brand products, which keep foods hot or cold, help
to reduce energy losses. However, outside of the Thermos

58

INTEGRATED REPORT 2020

Business that I’ve just mentioned, our main business is in
the B2B field, which makes it difficult for general investors tounderstand. I think we need to communicate more about it.
Uriarte: I feel exactly the same way. Through gas
applications, we can make a significant contribution to
helping customers reduce their environmental impacts. We
can contribute to promoting sustainability not only by safely
supplying gas but also through our customers using our gas
and improve their processes.
Miki: I believe that under its new framework, the Group
now needs to pursue “collective strengths” and “autonomous
strengths.” I want to respect the autonomy of Group

companies, and while putting our so-called centrifugal force towork, simultaneously develop collective strengths that generatesynergies within the Group. The field of sustainability should
also present significant potential for creating such synergies.
Uriarte: By promoting the sharing of gas application
technologies, we can both make further progress in developing environment-friendly businesses and products. We may
also be able to cooperate in the manufacturing process to
reduce CO2 emissions and water usage. I hope that we canfurther strengthen this kind of technology sharing between
Japan and Europe.

A Member of the Nippon Sanso Holdings Group
Miki: We started working with Inaki at the preparation
stage before the management integration. At that time, whatkind of image did you have of the integration?
Uriarte: I had a positive impression of Taiyo Nippon Sanso,
as it was named at the time, before it was decided that theGroup would buy us. I thought that Taiyo Nippon Sanso hadbusinesses in Asia, North America, and Europe that matchedus perfectly, so I was rather delighted with this outcome.
Miki: Having NGE join our Group has been hugely stimulating
for us in many ways other than earnings. In the integration,
we respect NGE’s autonomy as much as possible, and I thinkthat NGE has joined our Group in a form that enables everyone to continue working as they had before.
Uriarte: We haven’t experienced any particular difficulties
with the transition. If I had to point to something, I would saythat we did not know each other as individuals, but the Japanside often attends our meetings, and we have also visited
Japan several times, so this issue resolved itself quickly. Now
that we have become familiar faces to one another, the integration has really moved ahead.
Miki: The so-called PMI*5 process has really gone smoothly,
and we have built trust naturally through our visits with one
another. The difficult part was really at the stage before theintegration. At that time, we were both separate companies
with confidentiality obligations, and most of our consultations
were by telephone, so we didn’t have a chance to properly
meet. In this business dealing with high-pressure gas, themost important part is safety and security. From the date of
the management integration, we would become an entitywith a shared destiny, and we needed to finish smoothing out

NIPPON SANSO HOLDINGS CORPORATION

various wrinkles by then. I was looking forward to completing
the integration and building relationships of trust as soon
as possible.
Uriarte: I felt the same way. Ken, please do come and visit us
again once the COVID-19 pandemic has passed. It will be an
excellent opportunity to develop a deeper mutual understanding. And let’s continue to cooperate closely going forward.
Miki: Thank you for your invitation. I have complete trust inyou, Inaki, and in everyone at NGE. With work styles andlifestyles now changing around the world due to COVID-19,
we must make our business more sustainable and contributeto the realization of more sustainable societies. With ourrecent transition to a holding company, I aim to further
develop our cooperation framework with a view to promoting
global sustainability.
*5 Post-Merger Integration. The integration process that occurs after an M&A.

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OUR SUSTAINABILITY

Human Resources to Support the Nippon Sanso Holdings Group

Human Resources to Support
the Nippon Sanso Holdings Group

Basic Themes of Human Resources Development

The proper development of human resources is essential for the sustainable growth of a company.
It is individual employees who support our social mission of stably supplying industrial gases.
Having changed its structure on October 1, 2020, Nippon Sanso Holdings is now expanding its fields ofactivity even further on a global scale. Right now, nearly 70% of the Group’s consolidated employees are
non-Japanese, and we are continuing to become a multinational organization. We will strive to createa structure were employees can actively play their roles as “The Gas Professionals” while respecting
the values and cultures of different regions.

Number of Employees

Number ofConsolidated Group Companies

19,719312

As of March 31, 2020

As of March 31, 2020

(consolidated)

Overseas

Overseas

66.8%
13,169 employees

53.8%
168 companies

Japan

Japan

33.2%
6,550 employees

46.2%
144 companies

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Nippon Sanso Holdings is ranked No. 1 in Japan and No. 4 in the world in the industrial gases market. In Japan, we have alreadyestablished a solid position as the market leader, and now our aim is to become a global player. Developing human resources
who are capable of conducting business globally is an important pillar of the Group’s strategy. Looking forward, we aim to implement our “Basic Themes of Human Resources Development” and “Key Employee Qualities and Conduct,” which underpin ourhuman resources development, for our employees not only in Japan but globally.

Human resources
development that
accommodates further
globalization

Human resources
training that
addresses
customers’ andsociety’s needs

Human resources
development thattrains “The Gas
Professionals”

Human resources
trainingthat emphasizes
strengthening
integrity

Key Employee Qualities and Conduct

HealthIntegrity

1. Understands the Importance ofOccupational Health and Safety
Looks after their own health andhelps create positive working
environments

1. Earns Customer Trust
Exhibits a dedication to stablesupply and quality assurance andresponds with sincerity

2. Displays a Positive Attitude
Has a positive attitude andsee things through3. Demonstrates ­Organizational
Capabilities
Uses communication to overcome
limited personnel levels andmaximize teamwork

2. Exhibits a Well-Formed
Character
Maintains an agreeable
temperament and promotes
mutual trust and respect
3. Endeavors to Fulfill
Responsibility to Society
Works to comply with safety,
security, and environmental­standards, as well as withsocial norms

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Resourcefulness
1. Knows the Customer
Responds to customers’­expectations and interests
2. Knows Himself/Herself
Works to realize personal goals andacquire knowledge and skills crucial
to a professional and strives to act
independently
3. Knows Society
Strives to be open, grasp changes,
and looks to the future

OUR SUSTAINABILITY

Human Resources to Support the Nippon Sanso Holdings Group
Human Resources Development at Taiyo Nippon Sanso

The Group’s operating company, Taiyo Nippon Sanso Corporation, emphasizes human resources
development in order to realize the safe, secure, and stable supply of industrial gases as “The Gas Professionals.”
We have prepared education and training programs for the growth of employees, starting with training
over a five-year period after joining the Company, and aim to develop employees who can embody
the ideals of health, integrity, and resourcefulness. In addition, with our recent transition to a holding
company structure, we now face the urgent task of creating systems and structures that enable a moreglobally diverse team of human resources to participate.

Efforts to Develop More Globally Competent Human Resources 
The Company has always placed emphasis on initiatives todevelop professional human resources that are able to work witha global perspective, whether in Japan or overseas. Following
this transition, it is now necessary for us to focus even more onthese efforts. Currently, we have stationed or assigned overseas
a wide range of employees of all ages, ranks, and job types,
mainly in Southeast Asia, China, and North America. However,for a company seeking to increase the ratio of overseas sales,
the number of our people overseas is still small. We therefore
need to have each employee come to see their workplace as
being not only Japan but the whole world. To help cultivate
this awareness, the Company has implemented training for
global human resources and the Overseas Trainee Program.

improving language capabilities, the training seeks to cultivate
the confidence and presentation skills necessary to express
one’s own opinions clearly and effectively whenever andwherever necessary.

Education and Training for Developing “The Gas Professionals” I believe that what a company can do to develop humanresources is provide a place to accumulate experience, conduct
education and training covering the required knowledge andskills, and establish a chain of experience. With this in mind,
we have been building an education system since FYE2008
and introduced a wide range of focused training programs,
including hierarchical, selective, optional, theme-specific, anddivision-specific education.
In training for new recruits, participants experience a wide
range of operations from production to sales, regardless of thejob for which they were hired, in order to build a foundation for
acquiring the knowledge and skills required by the Company. In
our hierarchical training, we provide a program for acquiring theknowledge and skills required to be a working professional,

which is arranged so that people can complete the course by
their fifth year. ( P. 64). Also, even after the five years ofbasic training after joining the Company, there are training
programs for supervisors, managers, and executive officers.
In 2017, we established training for line managers, aimed
at strengthening line management and developing teammembers. Furthermore, we encourage employees to actively
participate in external training and selective training run by
the Mitsubishi Chemical Holdings Group. For employees who
aim to acquire national qualifications, we provide support suchas a qualification acquisition incentive scheme and correspondence education course materials. By providing an environmentand systems that allow individual employees to grow, we willcontinue to develop “The Gas Professionals,” that are
equipped with health, integrity, and resourcefulness.

Taiyo Nippon Sanso Employee Training Framework

Fourth year of
employment

Finance training

Third year of
employment

Training in logical thinking

Second year of
employment

Followership training

New recruit

Training for new recruits

Comment from the Manager of the HR Division’s HR Development Team
Taiyo Nippon Sanso has continued to grow steadily, backed by a stable business model.
However, it would be a mistake to assume that this business model is permanent. We must
constantly think about the next business model to suit the changes in the times. The same
principle applies with human resources development. The industrial gases sector is undergoing
rapid globalization, and I believe that we need to develop human resources in connection with
regions and operating companies all over the world, not only in Japan. The Company has
always emphasized training, but now our vision is to widen the selection pool to a global scale

Tomoyasu Azuma

and expand opportunities for personnel exchange training with operating companies andManager
HR Development TeamHR Divisionexchange meetings between different industries.

Training Example

Training for Line Managers

Managers and line managers are required to increase the motivation of their subordinatesand create an environment for them to utilize their abilities. This program offers management
lectures given by external speakers on such topics as the achievement of goals and fostering
subordinates, as well as training in performance evaluation, i.e., how to evaluate employees,
provide feedback, and conduct performance reviews; labor management; and compliancetraining, including responding to harassment, among others. Through the training, participants
increase their ability to communicate logically with subordinates and help to boost their motivation. The training has been held twice a year for the past three years for managers and line
managers who are newly appointed or have only a few years’ experience in their positions.
We will continue to conduct the training going forward.

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Life planning seminars

Divisional training

Strategy and marketing
training

TNSC Technical Seminars(organized by the Technological Education Team)

Fifth year of
employment

Theme-specific

Mentorship training

Training for new seniorstaff leaders

Training for line managers

Correspondence courses(50% of fees are paid by the Company)

Middlemanagement

Training for new middle
management

Seminars conducted by third parties(full fees for the seminars are paid by the Company)

Overseas Trainee ProgramThis program was introduced in 2016 with the goal ofdeveloping human resources that are able to quickly produce
results when posted overseas. Selected young employees
between their fifth and tenth year in the Company are given
extensive on-the-job training at one of the Company’s overseas subsidiaries. Participants need to apply for the program,and those who wish to are given an opportunity to workoverseas. One of the characteristics of Taiyo Nippon Sanso
Corporation is that an encouraging environment is provided
for those who are motivated to acquire experience.

Training for Global Human Resources
We introduced this program in 2007 to enable employees whoare capable of functioning in a global business environment
to learn the necessary skills for playing an active role both inJapan and overseas. The training is conducted entirely in English
by instructors who are foreign nationals and encompasses
seven sessions, including final presentations, held overapproximately six months. It covers such topics as mindset,
logical presentation skills, business model generation, case studies,
negotiating proficiency, and leadership skills. In addition to

Training for new
corporate officers

Optional

Overseas
Trainee Program

Senior middle
management

Selective

Training for
global humanresources

HierarchicalOUR SUSTAINABILITY

Human Resources to Support the Nippon Sanso Holdings Group
Human Resources Development at Taiyo Nippon Sanso* Assignment and position are as of July 16, 2020, when the interview was conducted.

Cultivating a Sense of Mission as a Provider of Social Infrastructure
over a Five-Year Training System Gradually Building Up Foundational Capabilities Enables Employees
to Get a True Sense of Their Mission as “The Gas Professionals”

The Company has a distinctive training system that provides basic training to young employees over a five-year period after
recruitment. The basic training starts with a three-month training for new recruits, followed by annual group training with other
employees from the same recruitment intake once a year until the fifth year. The program is for all employees, regardless of their
type of work, whether it is in business administration or engineering. By building up cross-organizational basic training outside oftechnical aspects, we aim to have all employees develop a full awareness and deep understanding of the characteristics of theindustrial gases business and the importance of our mission of maintaining supply at all costs. Through the five years of basic
training, all employees will become more conscious of their roles as “The Gas Professionals” as they work in various fields.

The training that left the strongest impression on me was the logical presentation training*that we had in the third year. I was aware that I was not good at speaking in front ofpeople. Therefore, during the training period I practiced harder than ever before, videoing
myself giving a presentation so that I could review my appearance. The result was that
I overcame my reluctance in my own way and discovered my confidence in my ability to
do it if I tried. It was a very positive experience.
I think one of the best things about the five-year training period is that one graduallybuilds up basic skills. In the logical communication training* in the second year, we studied

Hierarchical Training (First Year to Fifth Year in the Company) Basic Training

the basics on how to communicate clearly to people. In the third year, we had a more

Basic training increases employees’ skills and raises their perspective incrementally and continuously over five years. In their feedback,practical presentation training. This was followed by management training. Doing so in this

employees that have participated in the training indicate that they can observe its benefits and effects. Young employees aremanner allowed us to step up gradually and acquire the foundation skills for a working

assigned to various departments after joining the Company, and enjoy being reunited with others from the same recruitment year
where they share their trials and observations. The growth of their same-year colleagues stimulates and motivates them to growthemselves. By conducting the training over five years, the young employees advance through friendly competition and grow,developing a spirit of cooperation that builds better teamwork.

professional. I also think that bringing colleagues from the same recruitment year

Syuta Higa

together regularly is extremely beneficial because it provides additional motivation.

Business Planning & Administration

Building up years of experience in this way cultivates the employee’s self-awareness of

Global Operations

their role as one of “The Gas Professionals.” In daily work as well, by accumulating practical

Taiyo Nippon Sanso Corporation

First
year ofemployment

experience, we become able to take on more difficult work with a greater sense of
responsibility. By watching how our supervisors and colleagues work and seeing up close

Training for new recruits

how they have a sense of mission, we can develop the sense of responsibility that is

In a three-month group training, employees tour research laboratories and production facilities to learn about
the work places.

required of the Company’s employees ourselves.
* At the time when the training was conducted. The current training curriculum has changed.

Secondyear ofemployment

Third
year ofemployment

Followership training
Employees learn the skill of expressing information clearly as a follower and develop communication skills.

Every Employee Can Develop a Mindset Attuned to the Corporate
Philosophy, Regardless of Their Type of Work

Training in logical thinking
Employees acquire logical thinking and presentation skills.

I majored in biological engineering at university, and initially I hoped to join the R&D

Fourthyear ofemployment

Finance training

Division. However, my first assignment was to a department in quality control. Here, I was

Employees learn how to read essential financial figures for business and acquire basic financial knowledge, andunderstand the correlation between their work and figures.

instructed thoroughly about basic gas handling, such as gas pipe assembly. After that,
I was put in charge of engineering gas supply equipment, and in dealing directly withcustomers I was able to sense their needs in person. After that, I was assigned to theFifthyear ofemployment

development department, which I had originally wanted to join. Having been able toStrategy and marketing training

fully experience the gas business like this has been a real strength for me in my current

At the culmination of five years, employees form teams to propose management strategies and present them.

position in charge of development. I often reflect that the Company really thought about
where to assign me while looking ahead to my future.
Right after I joined the Company, I don’t think I had such a strong awareness of supplying
gas safely and securely. But as I received training at the Company every year and carriedon with my work, I naturally developed a mindset attuned to the corporate philosophy.
Hayato Sakurai

Over five years, my colleagues from the same recruitment year came together for training,

Stable Isotope project

regardless of whether they were in business administration or engineering positions, andProject Administration Section

I felt that all of us developed an increased awareness of supplying gas safely and securely.

Research & Development Division
Taiyo Nippon Sanso Corporation
First year of employment – Training for new recruits

Third year of employment – Training in logical thinking

NIPPON SANSO HOLDINGS CORPORATION

64

I think that is what enables the Company to realize a stable supply of gas.

Fifth year of employment – Strategy and marketing training

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION

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OUR SUSTAINABILITY

Human Resources to Support the Nippon Sanso Holdings Group
Health Management and Work-Style Reforms of Employees and Work Places

Over the past few years, long working hours and overtime work have become social issues. Nippon Sanso
Holdings believes that consideration for employees’ work styles and health is part of a management
strategy for enhancing individual capabilities, increasing productivity, and raising corporate value. We
have therefore been promoting health management, which realizes mental and physical health with aview to being a company where employees can work with enthusiasm, and work-style reforms, aimed
a realizing working environments that are comfortable to all of our diverse employees.

Health Management for Creating a Corporate Culture That Prioritizes Health 
The Company aims to foster a culture that puts health first, following the idea thatthe health of its employees is the driving force behind everything it does. To promote
We also subsidize the use of health facilities and participation in health promotion
programs, and provide consultations with a physician to workers who are working longhours. In addition, we are cooperating with industrial physicians and the health insurance societies to assign industrial physicians to each branch office. This will enable
us to respond to health issues related to extreme overwork and expedite support forwork. We have also revised items covered in annual health checks to facilitate the earlyWith the aim of creating positive work environments for all of

Other moves designed to realize more flexible work styles include

our employees, we have developed a variety of leave systems to

the adoption in FYE2018 of a leave system that allows employees

accommodate individual needs.

to accompany spouses on overseas assignments and a rehiring

Eligibility for reduced working hours following childcare leave

scheme for employees that have resigned because of pregnancy,

has been set at children up to the third year of elementary school,

childcare, or nursing care. From FYE2019, we introduced a systemhigher than the legal standard of three years of age. Furthermore,that allows employees to take annual leave in hourly units, andin FYE2018 the possible reduction in working hours, previously

from October 2019 a flextime system was launched on a restricted

set at 2.0 hours, was lowered to 1.0 hour, making the system

basis at certain business sites, aiming to promote measures toeasier to use.

enable flexible working hours and realize work-style reforms.

We have also made it possible for employees to use their expired

employee health, we conduct health examinations for all employees as a matter of course.

employees who have taken leave for the treatment of mental health issues returning toWork-Style Reforms Designed to Create Positive Work Environments for All Employees 

As of October 1, 2020, to prevent the spread of COVID-19 weannual vacation days to take special childcare leave to nurse

have been promoting staggered starting times using the flextime

children of elementary school age or younger in the event of illness,

system to reduce the risk of infection on crowded public transport

assist with childcare, or attend school functions, or to provide

during peak commuter times. Flextime is ordinarily only available

nursing care for family members. There is also a system that enables

at certain workplaces, but for the time being it has been allowed

them to take nursing care leave of up to 365 days in total.

for all employees.

Participants engage in stretching at FYE2019 Seminar for Healthy
Working Women

detection of cancer, and introduced subsidies for employees obtaining influenza vac-

Measures Such as Reduced Working Hours within the Childcare Leave System

cinations and treatment to quit smoking.

Reduced working hours

Wearable Devices for Visualizing HealthIn FYE2018, we began distributing wristband-type wearable devices that increase thevisibility of individual health-related data. These devices are designed to make employees
more health conscious by enabling them to understand their own health status from day

Eligibility

Employees with children up to the third year ofelementary school

Employees with children up to three years of age

Duration

Up to the end of the child’s third year ofelementary school

Up until the month the child turns three years ofage (i.e., until the day before the child’s birthday)

Terms

Start and/or end of working day can be adjusted ineither direction in 30-minute intervals (maximum
permitted reduction per day: 1 hour or 2 hours)

Flextime (Core time: 10:30–15:00)

to day, providing such information as step count, heart rate, sleep time, and calorie
burn. As of March 31, 2020, approximately 1,300 employees are wearing these devices.
From July 2018, we introduced a walking point system where users can convert their
daily step count into points redeemable for various services, or donatable to theJapanese Red Cross Society and others. We will continue to devise creative ways to further

distributed to Taiyo Nippon Sanso Wearable devices

increase health management in an enjoyable way, and plan to expand the walking point

Number of Employees Making Use of Childcare Leave Systems

system to include affiliated companies and employees’ dependents going forward.
Special maternity leave
before/after birthComment from the Health Insurance Society Executive Director

Childcare leave

The Taiyo Nippon Sanso Health Insurance Society conducts activities that contribute to promoting
and maintaining the health of employees and their families through health operations basedon data. In 2018, we concluded a memorandum for promoting collaborative health with theCompany, and are now making a full-scale collaborative effort with the Company on activities
to promote and maintain employee health.

tions such as consulting physicians or public health nurses. For example, we would like to actively

Executive Director
Taiyo Nippon Sanso
Health Insurance Society

encourage employees to seek further consultation based on their health examination results, but
this is difficult under the current system from a perspective of privacy protection. Therefore, we
think it would be better to create a structure that enables direct access to collaboration with medical professionals. As a Health Insurance Society, I think an important task going forward will be tofind ways to encourage individual employees while cooperating with the Company.

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INTEGRATED REPORT 2020

FYE2018

FYE2019

FYE2020

6

2

4

4

7

7

7

7

(Female employees: 7)(Female employees: 7)(Female employees: 5)(Female employees: 7)

11

11

13

(Female employees: 11)(Female employees: 11)(Female employees: 13)

9

Flextime

00

Cumulative
number ofindividuals

39

75

119

42

(Female employees: 25;
male employees: 14)(Female employees: 46;
male employees: 29)(Female employees: 70;
male employees: 49)

Cumulative
numberof days

52.0

52.5

100

37.0

(Female employees: 34.0;
male employees: 18.0)(Female employees: 33.0;
male employees: 19.5)(Female employees: 59.5;
male employees: 40.5)

Meanwhile, from the Health Insurance Society side, we face challenges from the perspective

Akira Sakai

FYE2017

Reduced working hours

of encouraging employees. The Company’s Health Insurance Society does not have specialist posi-

NIPPON SANSO HOLDINGS CORPORATION

Flextime

Specialchildcare
leave

1

2*

(Female employees: 1)(Female employees: 1)* Flextime indicates the number of users of childcare flextime. Separately, there was 1 person (male) who used nursing care flextime (not included in the above count). Furthermore, from October
2019, flextime has been introduced at each business site, such as the Head Office, and due to the nature of the system the numbers of people using it have not been included.

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OUR SUSTAINABILITY

Roundtable Discussion

Human Resources to Carrythe Nippon Sanso Holdings Group
into the Future

Satoshi Wataru

Akari Ikeda

Mitsuhiro Saida

Shinya Fujita

Executive Officer

Development Section

General Manager on Assignment

Process Design Section

Executive General Manager

SI Innovation Center

Shanghai Taiyo Nippon Sanso Gas

PEC Engineering Department

HR Division

SI Business Department

Co., Ltd.

Taiyo Nippon Sanso Corporation

Medical Division

Engineering Division
Taiyo Nippon Sanso Corporation

Taiyo Nippon Sanso Corporation* Assignment and position are as of July 16, 2020, when the interview was conducted.

On October 1, 2020, we made a fresh start as “Nippon Sanso Holdings,” having changed our structure
and our company name. At this turning point, Executive Officer Satoshi Wataru, Executive General
Manager of the HR Division, and three employees working on the front lines had a discussion about
the quality of human resources that the Nippon Sanso Holdings Group needs going forward.

Deciding Factors for
Joining Nippon Sanso Holdings

Ikeda: Although Taiyo Nippon Sanso Corporation is mainly anindustrial gases company, I work in the SI* Business Departmentof the Medical Division, which handles stable isotopes. I am
responsible for developing applications for stable isotopes—inother words, finding out how customers can use them totheir benefit. It may seem strange to say that I handle stable
isotopes at an industrial gases company, but the principle ofseparating oxygen, nitrogen, and argon out from air can also
be used to separate the stable isotopes of oxygen 16, 17, and
18. In fact, the core technologies are shared with industrial
gases. The SI Business Department has a lot of customers withhigh levels of expertise, such as universities, hospitals, government agency research laboratories, and pharmaceutical companies. I value communication and dialogue with customers,
based on accurately picking up their various needs, getting afeel for them, and uncovering them. I am sometimes asked topresent lectures at academic conferences and symposiums,
and so forth, and I actively make an effort to maintain a lot ofcontact points with customers. At seminars and symposiums,
where there are opportunities for direct dialogue in an open
atmosphere, in many cases I have found that customers have

Wataru: To begin, I would like to ask each of you to introduce
yourselves and briefly tell us about your career up to now.
Fujita: I joined the Company in 2009, so this is now my 12th
year. Originally, I joined because I wanted to be involved inbuilding ASUs. However, before I could do that I felt I needed
to learn more about ASUs, and so I wanted my first assignment to be at an ASU. My wish was granted, and I worked
for three years at the Nagoya Sanso Center. The opportunity
to see actual ASUs in operation was an extremely valuable
experience. I currently work in the Process Design Section of
the PEC Engineering Department in the Engineering Division.
My current department is involved in ASU design, so there are
few opportunities to visit on-site. My three years working at
an ASU enables me to understand how a new ASU will
operate after it has been installed. Being able to use thatexperience in the design process is a powerful tool for me in
my present role, so I am glad that I agreed to do that when
I joined the Company.

* Stable Isotope

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Wataru: Within the Group, most of the assignments aspresidents of subsidiaries or affiliated companies are usually
given to people who have a long history in the Company. Mr.
Saida, you have become a company president at a young age.
I think it is a tremendous example in terms of succession
planning, and I would really like to see more people likeyourself. While I don’t think young people necessarily need
to be at the very top, I do think it is a good idea for them toexperience serving in a role at around the level of No. 2 sothat they can get an overall view of the company.

hidden latent needs that they themselves are unaware of.
When I talk with customers, I try to identify their fundamental
issues, not just what they present on the surface, and thenpropose solutions, asking their opinion about a certain
approach to solving it or suggesting alternatives. Sometimes
the issue can be solved using an approach that does not use
my goods or services, but even in these cases, the mostimportant thing is that the customer trusted me andconsulted with me.
Saida: I am the oldest in this group. Currently, I am working
as the General Manager for our local subsidiary in China,
Shanghai Taiyo Nippon Sanso Gas Co., Ltd. The company has
a large plant for making gases, an ASU. The gas is transported
by our Transport Division and sold by our Sales Division. For
the equipment needed for gas supply installed on customers’sites, the Engineering Division handles everything from installation to after-sales service. The company is like a miniatureversion of Taiyo Nippon Sanso Corporation, undertaking
everything from making gases to serving the customers who
use them. I joined the Company in 1997, and this year is my
24th. At first, I worked in the Gas Sales Division of the Tokyo
Branch, selling general gases such as oxygen, nitrogen, andargon. After that, in 2004 I started working on new sales
channels for gases at the Head Office. At the time, we wereseeing an increase in Japanese customers expanding theiroperations overseas in China, Thailand, and so forth. We
thought we would like to supply these customers overseas in
China, Thailand, and even India as well, so from 2004 onward
we started providing support for them through our overseas
subsidiaries. In 2011, I was assigned to Shanghai Taiyo
Nippon Sanso Gas. I was initially responsible for sales as thevice president. Since 2015, I have been responsible for overallmanagement as General Manager.

Trust Relationships with Customers Are
a Differentiation Factor
Wataru: Could you tell me what is important to you in carrying
out your work?
Saida: When I was responsible for sales, I found the mostimportant things to be an attitude of sincerity and seriousness.
Since gas itself cannot be differentiated, our nitrogen cannot
be differentiated from that of our competitors because it iscolorless and odorless. To have customers choose our products,
I felt it was of paramount importance for the sales personnel
to provide something extra in terms of their passion, theirearnestness, and so forth.
Ikeda: On the topic of something extra, our most important
product in the SI Business Department is Water-18O, which isan essential material for PET diagnosis used for early detectionof cancer. However, it can also be used for other applications.
For example, we propose Water-18O as part of a package withthe peripheral technologies we have developed so we can
add value through something extra.
Saida: The same applies with gas sales. It is extremely important
to start by getting an understanding of what is troubling thecustomer, or what the customer is seeking, and then propose
a solution. This is a key approach for gaining customers’ trust.
Possibly because I am living overseas, in my work I am strongly
conscious that I should avoid shutting myself inside my own
shell and that I should always think about things from a higher
perspective. China is developing rapidly, and we must change
also if we want to keep up. Moreover, I think we must alsochange if we are to compete with major global industrial gases
companies. Since my coworkers are not Japanese, I try toincorporate the good aspects of how Chinese people thinkand break down my preconceived ideas and attitudes. I havea strong intuition that hanging on to the notion that “Japanesepeople are like this” will not help me perform well.

Wataru: What has been your most difficult experience?
Saida: In 2015, when I was appointed General Manager, thecompany recorded a loss. At the time, I wondered how tomake the company profitable and generate a profit. As you
might expect, our employees are Chinese, and while commonly accepted ideas for Japan are not completely strange to
non-Japanese, they do have a really different way of thinking
about things. On the other hand, since there are limits towhat Japanese people can do at an overseas local subsidiary,
we have to rely on the national staff to take care of all thedetailed aspects of operations. I was certainly struggling at
first to see how I could convey our passion to them and lift
their motivation, and how we might work together toincrease the company’s earnings.

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OUR SUSTAINABILITY

Roundtable Discussion: Human Resources to Carry the Nippon Sanso Holdings Group
into the Future

Fujita: I am also constantly aware of this. I am an engineer,
but when customers tell me that they want to buy an ASU,
I think together with the sales personnel about what kind ofunit would be suitable. As an engineer, it is important simply
to make something good, however, the definition of “something good” is different for each customer. When I make aproposal, I really try to incorporate the demands that thecustomer does not articulate. Another thing I do when making
a proposal is to try and predict what kind of impact I want tohave on the customer and relevant parties. In some cases,
I may prepare a separate response, anticipating what one
person is likely to do and what another person is likely to doafter that. In this way, I try to act with the idea of looking
ahead at what will happen next.
Ikeda: As I listen to Mr. Fujita, I feel that our approach isbroadly similar, although we have different jobs and handle
different products and services. He and I joined the Company
in the same year, so we both received the same training since
our new recruit days, and I am impressed that 10 years later
we have the arrived at the same kind of thinking. I pay attention to “ensuring the reliability of stable performance.” Safety
and reliability are extremely important factors for industrial
gases and stable isotopic labeling reagents, and for Water-18O,
which I mentioned before. In the SI Business Department,
where I work, I often have contact with customers as the
person responsible for engineering, and I try to give them asense of peace of mind and confidence through a combination of not only my performance as the person in charge ofengineering but also multifaceted proposals delivered with
passion, and a strong grasp of data to back them up.

granted in the same way as water coming out when you turnon a tap—when they open the valve, nitrogen comes out.
That’s how if feels for them. Our mission as an infrastructureservice, our job as a group of professionals, is one of sincerity
and honesty, providing gas reliably and safely. Listening sincerely to customers’ concerns and being ready to work withthem to find solutions—this is what “The Gas Professionals”
means in my opinion.
Fujita: Since we present ourselves as “The Gas Professionals,”
we are telling customers to trust us with their gas-related
issues. In the Engineering Division, where I work, I suppose
we are telling people to trust us with engineering-related
issues. While that would be fine if I were able to resolve
everything myself, that tends not to be possible. Therefore,
I aim to use the specialization of each member of the team,asking various people to help me and giving them help in
return in order to create better proposals for the customer.
Our ultimate goal is to propose the optimal solution for thecustomer. In our approach to this goal, various people cooperate with one another to achieve it. I think this is what
“The Gas Professionals” as a team is all about. Recently, ourEuropean business is increasing and I too was involved inconsultations with European engineers; however, since
Praxair, Inc. itself is a large company, as one would expect,
it has strong technological capabilities and there is much for
us to learn from them. As we have brought them into ourGroup, we will absorb their technological knowledge as wellas their management style and other aspects in order to further
develop our own style. I believe this will increase the level ofour professionalism even more.
Ikeda: The Company’s internal resources are limited, so
naturally there are limits to our ability to solve customers’ issues
or develop new products through our own efforts alone. I
think it is necessary to grow our community, for example, bycollaborating with customers to solve issues and develop new
products. As we stand now, we have a network with external
entities such as universities and research laboratories, and weare currently using this to create new value. I think the philosophy refers to using our external network to enhance ourcapabilities by taking a “market-driven” approach for grasping
latent needs when conceptualizing new products, then“collaborating” to give concrete form to the products.
Fujita: I am not only given directions by a boss, but am
also given quite a lot of freedom to follow my own ideas.
I interact directly with our sales team and find that if I churnout proposals they are adopted surprisingly often. I haveexperienced this several times, and find it rather fulfilling.

The Real Meaning of “The Gas Professionals”
Wataru: Even after becoming Nippon Sanso Holdings,
the philosophies of “Market-driven collaborative innovation:
Improving the future through gases” and “The Gas
Professionals” have not changed. “The Gas Professionals”
cannot be changed; or rather, I think it does not need to bechanged. What do each of you think about this?
Saida: Personally, I interpret the “The Gas Professionals” asmeaning “sincerity” and “honesty.” If gas supplies are cut,then plants such as steelworks have to stop operations. They
would become unable to make steel. We provide gas tocustomers like this as part of their infrastructure, so I thinkthat our responsibility as a supplier is extremely important.
However, from the customer’s point of view, it is taken for

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I think the entire Group has this way of allowing people todo things their own way if they actively ask to be allowed to,provided that they have been in the job long enough to havesufficient experience. That has been my actual experience.
Ikeda: In my department, we are also allowed to follow ourown lead (laughs). When I express an interest in doing something, nobody ever tries to put me off or stop me. If we canbring together a reasonable amount of information or supporting data to suggest that a project will work, the department will encourage us to go for it. This kind of atmosphereand culture is really good.

accept diversity and are willing to change themselves andcreate something new.
Ikeda: I think that’s right. To overlap with what Mr. Saida justsaid, the SI Business Department where I work now has a very
high number of mid-career hires, and we have new people
joining such as researchers and people who have foundedstart-up companies. I think my department takes in more
mid-career hires than others in the Company, but when I
work with them I can feel they have a different perspective.
If you are alone, your field of view tends to become narrower,
but I have really noticed that the difference in the perspectives of people with different career backgrounds helps tostimulate opinions and leads to more flexible business planning. If specialists with various viewpoints join the Company,
or not only specialists but also generalists and management
personnel, as mid-career hires, I am excited to see what kindof synergies will be created.
Wataru: Actually, I think that employees have been held backa little in some ways by the values that we have had up to
now. Our business model to date has been stable, and I thinkthat we need to break up the parts that have become stultified with innovation driven by diversity. Ideally, we shouldhave high-quality human resources in every area, including
Japan, the United States, Europe, Asia and Oceania, and the
Thermos Business, and I think this will be necessary. We needto enable further stimulation of employees’ desire to grow,including by preparing systems, and increase their motivation.
Having just heard all of your honest thoughts, I feel a great
sense of promise. Let us share our philosophy not only inJapan but across the globe, as we pave the way for the
future. Thank you again for giving your valuable time andsharing your opinions.

The Human Resources Needed for
Nippon Sanso Holdings Group Going Forward
Wataru: Nippon Sanso Holdings will advance even further inbecoming a global company going forward. When we havereached that stage, what kind of human resources would you
like to be in charge of the Group’s future?
Fujita: I joined the Company 10 years ago, and at the time I
would never have imagined that the Company would grow tothis size. The markets in the United States, Asia, and Europe
have already become large, and I never thought that I would
be going to Europe for a business trip, so I feel that the situation has been changing progressively. Therefore, I think thequestion to ask is how flexible these human resources can bein responding to the situation. As “The Gas Professionals,”
we take pride in holding steadfastly to our course, while also
being flexible. I think that human resources who can find thisbalance will be extremely valuable, and I am also trying todevelop this ability.
Saida: Reflecting on my current responsibility for Shanghai
Taiyo Nippon Sanso Gas, I think the most important thing is
the strong determination of the leader. It is essential first to
have a strong determination to achieve goals, and to geteveryone involved. The other factor is how well this determination can be shared by others in the company. There arevarious ways of achieving that I think, but I feel that it isimportant to be able to discuss issues together honestly froman equal position, and to find ways to deal with them.
In particular, people overseas have different values, and I thinkthat bringing in the opinions of diverse people enables thecreation of something new. As Mr. Fujita said, we may holdtightly to our creed, but if we hold on too tightly and don’t
admit diversity, nothing new can be created. Going forward,
I think that the Company needs flexible human resources who

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OUR
MANAGEMENT
Nippon Sanso Holdings will continue to build strong bonds
with all of our stakeholders, including shareholders,customers, employees, and local communities, while working
to strengthen our highly efficient management structure.

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OUR MANAGEMENT

Corporate GovernanceManagement Organization 
Relationship with Parent Company
On May 13, 2014, Taiyo Nippon Sanso and parent company
Mitsubishi Chemical Holdings Corporation established a capital alliance.
Under the terms of the alliance, agreed to respect our independence
and fully support and cooperate with us in accordance with its GroupManagement Regulations. We maintain our status as an independentcompany with autonomous management, financial, sales, R&D, andother corporate functions.

Management Organization through Transition toa Holding Company
In October 2020, we made a fresh start as Nippon Sanso Holdings
Corporation, a holding company for industrial gases companies inJapan, the United States, Europe, and Asia and Oceania, as well as
Thermos K.K.
Through the transition to a holding company, we aim to promote
the following:• Increased decision-making speed and clarification of businessexecution responsibility through delegation of authority• Appropriate allocation of management resources based on thecharacteristics of each region• Strengthening of the Group’s comprehensive capabilities by deploying
the strengths of each region globally• Strengthening of the global risk management system, advancementof safety, and increased complianceIn this way, we aim to achieve further growth in an era marked by
rapidly changing political and economic environments.

In addition, if a conflict of interest occurs between the parent
company and other shareholders, Nippon Sanso Holdings’ directors
take action so as not to harm the interests of the other shareholders.
We appoint two independent outside directors and two full-time
independent outside Audit & Supervisory Board members. They
supervise to ensure that any conflict of interest between the parent
company and other shareholders does not happen. In addition, we
have an Advisory Committee on Appointments and Remunerationthat is established voluntarily for the Board of Directors to consult
with regarding the selection of candidates for directors and Audit &Supervisory Board members, as well as the appointment and dismissalof the President CEO and other executive officers. The committee
consists of the President CEO and two independent outside directors,
one of them serving as the chairperson. With this structure, we
ensure independence from the parent company of the appointment
of senior executives. In addition, parent company Mitsubishi Chemical
Holdings is a pure holding company, and its main operating company,
Mitsubishi Chemical Corporation, and the Company had transactions
totaling ¥1,964 million in FYE2020.

Management Policy
With the launch of a holding company, the Group has redefinedits previous management philosophy, “Market-driven collaborative
innovation: Improving the future through gases,” as its vision,
redefining it more clearly as follows.
Group Philosophy
The Gas Professionals

Background to Adoption of the Current Structure forManagement Execution and Supervision
We provide air separation gases (oxygen, nitrogen, and argon) andother industrial gases to customers in diverse industries around theworld and carry out a wide range of activities in diverse businessareas. For this reason, business judgments, decision-making, andoversight must be based on expert knowledge derived from experience in or close to the industry to facilitate the effective assessmentof a wide range of risks from multiple perspectives. Our current
management structure centers on the Board of Directors, which is
responsible for making decisions related to business execution above
a certain scale, including those regarding M&As and investments. We
have also adopted the Company with an Audit & Supervisory Board
corporate governance model, whereby Audit & Supervisory Board
members themselves audit business activities.
The Board of Directors is organized such that directors familiar
with the business of the Group supervise operations and conduct
decision-making from various perspectives. To reinforce our global
management framework, in June 2019 Matheson Tri-Gas Chairman
and CEO Thomas Scott Kallman and Nippon Gases Euro-Holding
Chairman and President Eduardo Gil Elejoste were newly appointed
to the position of director. Since the transition to a holding company
in October 2020, the director who was previously responsible for theindustrial gases business division in Japan has become a member ofthe Board as the president of the Japanese operating company, creating a more global management structure.

Proactive. Innovative. Collaborative.
Making life better through gas technology.
Group Vision
We aim to create social value through innovative gas solutions
that increase industrial productivity, enhance human well-being
and contribute to a more sustainable future.
To share and inculcate this philosophy and vision throughout
the Group, we have formulated codes of conduct for each of theGroup’s operating companies. These are based on the philosophy andvision and are aligned to the characteristics of each operating company’s region and business activities to make them easier for employees to understand. Through these codes, we aim to promotesustainable growth and increase corporate value.
From the perspective of fulfilling our responsibility as a corporate
citizen, all Group officers and employees act in compliance with laws
and regulations as well as corporate ethics. Going forward, we will also
work to raise their awareness of the SDGs, which are common goals
for the international community regarding such issues as the global
environment and human rights. In this way, we will respond to the
expectations of all our stakeholders.

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In addition, two outside directors have also been appointed tofacilitate supervision from a broader perspective—thereby further
enhancing management transparency and fairness, as well as reinforcing compliance, which is particularly crucial to business continuity—and advise management from a medium- to long-term
perspective. Both individuals satisfy the criteria for the independenceof directors set by the Tokyo Stock Exchange (TSE).
We have also established the Advisory Committee on
Appointments and Remuneration, a voluntary advisory body, as aninternal committee of the Board of Directors. The Board of Directors
consults this committee regarding the selection of candidates forthe position of director and Audit & Supervisory Board member, theappointment and dismissal of the President CEO and other executive
officers, and revisions to the rules governing compensation for directors and executive officers, and seeks advice from the independent
outside directors to ensure the transparency and objectivity ofdecision-making. The Advisory Committee on Appointments andRemuneration consists of the President CEO and the outside directors
and is headed by an independent outside director.
Furthermore, to ensure the objectivity, transparency, and fairnessof the management monitoring function, as well as to strengthen the

supervisory function, the Audit & Supervisory Board is fully independent of the Board of Directors. In addition to an understanding of thebusiness, the Audit & Supervisory Board boasts specialized expertisein such areas as law, finance, and accounting, enabling it to effectively monitor the execution of duties by directors. The Audit &Supervisory Board comprises four full-time members, who conduct
audits by leveraging their extensive experience, knowledge, andability to exercise authority. Three of the four are outside, with
two satisfying the TSE’s criteria for the independence of Audit &Supervisory Board members. To ensure the effectiveness of audits
conducted by the Audit & Supervisory Board, we have also established the Office of Corporate Auditors, which comprises dedicatedstaff who are charged with supporting Board members’ efforts.
As this shows, our corporate governance system is actuallya hybrid, combining the Company with an Audit & Supervisory
Board model with an outstanding feature of the Company with Three
Designated Committees (Nomination, Audit, and Remuneration)model in the form of the Advisory Committee on Appointments
and Remuneration.

Boards and Committees 
Board of Directors
The Board of Directors is responsible for making decisions regarding
basic management policies and key matters related to business execution, which includes formulating key management indicators andmedium- to long-term strategies, as well as for supervising the execution of business activities.

Global Strategy Review Committee(Chairperson: President CEO)To realize the Group’s comprehensive capabilities, the Global Strategy
Review Committee meets regularly once a year, or as necessary, todeliberate the following matters regarding promotion of businessstrategies by Group companies.
• Examination and adjustment of overall strategy related to Groupwide themes

Advisory Committee on Appointments and Remuneration(Chairperson: Independent Outside Director)
The Advisory Committee on Appointments and Remuneration advises
the Board of Directors on the selection of candidates for the positionof director and Audit & Supervisory Board member, the appointment
and dismissal of the President CEO and other executive officers, andrevisions to the plans for developing the next generation of management personnel and the rules governing compensation for directors
and executive officers.

such as global products and services and technology development• Examination of appropriate resource allocation over the entire Group andbudget formulation• Formulation of the Group management plan and progress management• Confirmation of the status for the entire Group regarding sustainability andthe environment, and formulation of policy• Confirmation of the status for the entire Group regarding safety and quality
management, and formulation of policy

Global Risk Management Committee(Chairperson: President CEO)To achieve and improve risk management for the Group, the Global
Risk Management Committee meets once a year, or as necessary, todeliberate the following matters.

Audit & Supervisory Board
The Audit & Supervisory Board is tasked with monitoring theframework and status of internal control and auditing the daily execution of management duties, including by directors, by conducting
business and accounting audits.

• Examination and adjustment of Groupwide risk management policy• Formulation of risk management plan for the entire Group and progress
management

Management Committee
In accordance with the basic management policy of the Group, established by the Board of Directors, the Management Committee deliberates and approves important management matters pertaining to
the execution of duties by the President CEO.

• Examination of appropriate resource allocation concerning risk management
over the entire Group and budget formulation• Reporting on planned initiatives for promoting compliance and the status ofcompliance at Group companies and confirming the progress of remedial
measures and of related legal actions• Management of cybersecurity, business continuity plans (BCPs), and important
information at Group companies, and examination of operation structure

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Corporate GovernanceCorporate Governance Framework 

Performance-Linked Bonus Indicator Targets and Results for Directors (Excluding Outside Directors) in FYE2020

We have established corporate governance principles to serve as guidelines for corporate governance across the Nippon Sanso Holdings Group. With
the aim of ensuring sustainable growth and increasing corporate value over the long term, and taking into account the positions of stakeholders,
we strive to guarantee the transparency and fairness of decision-making. This reflects our belief that the key to effective corporate governance is
to bolster the strength of management by ensuring the effective use of available management resources and making swift, resolute decisions.
Auditing Structure and Risk Management Structure
General Meeting of Shareholders

Appointment/
dismissal

Appointment/
dismissal

Appointment/dismissal
Consultation

Advisory Committee on
Appointments and Remuneration
Response

Board of Directors
Nine members,
two of whom are outside

Audit of operations
Audit of accounts
Coordination

Evaluation weightFYE2019 results

FYE2020 results

Consolidated revenue

16.6%¥740,341 million¥850,239 million

Consolidated core operating profit

16.6%¥65,819 million¥90,337 million

Profit attributable to owners of parent

16.6%¥41,291 million¥53,340 million

Outlook for Achievement of Medium-Term Management Plan Targets
Evaluation indicator

Evaluation weight

Consolidated revenue

25%

Consolidated core operating profit margin25%

FYE2020 targets

FYE2020 results¥890,000 million¥850,239 million

10.7%

10.6%

Supervision

Representative Director, President CEO

Four members,
three of whom are outside

Evaluation indicator

ReportingAppointment/dismissal

Audit & Supervisory Board

Year-on-Year Earnings GrowthManagement
Committee

Global Strategy Review Committee

Corporate
Audit Office

Global Risk Management Committee

Independent auditor

Audit of accounts

Internal audit

Holding Company Divisions and Affiliated Business Companies

Coordination

Policies for Determining Remuneration for Directors and Audit & Supervisory Board Members
Remuneration for directors and Audit & Supervisory Board members is determined by resolution at the annual General Meeting of Shareholders
in line with the total compensation limits for directors and Audit & Supervisory Board members. We have established the Advisory Committee on
Appointments and Remuneration, which comprises multiple independent outside directors and the President CEO. The Advisory Committee on
Appointments and Remuneration deliberates the appropriateness of remuneration proposed after being consulted by the Board of Directors andAudit & Supervisory Board and reports the results of its deliberations to the Board of Directors and Audit & Supervisory Board.

Directors
Remuneration for directors consists of basic monthly remuneration (base salary) + bonuses (performance linked) (generally at a ratio of 6:4).
Outside directors receive basic monthly remuneration only.
Basic monthly remuneration

Directors are paid rank-specific base salary.

Performance-linked bonuses

Directors are paid rank-specific bonuses tied to year-on-year improvements in consolidated operating results(short term)(revenue, core operating profit, and profit attributable to owners of parent).

Performance-linked bonuses

Directors are paid rank-specific bonuses tied to the degree of achievement of medium-term management plan

(medium and long term)

targets (revenue and core operating profit margin).

Evaluation of the Board of Directors’ Effectiveness Outline of Results(1) Overall summary
As a result, it was confirmed that the Board had been performing
its functions as required. In addition, the directors provide many
opinions about what the Board of Directors and the next medium-term
management plan should be like after the transition to the holding
company structure. Therefore, based on a proposal from the chairperson, the Board of Directors continued to discuss these two themes.
(2) Initiatives to further improve the Board’s performance• Discussed the transition to the holding company structure, decided
on January 22, 2020 to transition to a holding company structure,
and announced the decision.
• Reported on dialogues with shareholders to the Board of Directors.
• Detailed reports on quarterly earnings were made to the Board of
Directors by presidents of local subsidiaries appointed from among
the Company’s directors for the Gas Business in the United States
and the Gas Business in Europe and by the general manager of thesupervising division for the Gas Business in Asia and Oceania.
• The Board of Directors received reports on the details of majorinternal communications.

Our Principles of Corporate Governance stipulate that the Board of
Directors carry out an annual analysis and evaluation of its overall
effectiveness and make a summary of the results public in a timely
and appropriate manner. The following is an outline of this process
and the results thereof in FYE2020.
Process for Analysis and Evaluation
We evaluate the Board of Directors using a questionnaire forthe directors. To explain the process more specifically, a questionnaire
was distributed to the directors after explaining its content at January’s
Board meeting. Each director answered the questionnaire and submitted
it to the chairperson. In the Board meeting in January, the directors
evaluated the effectiveness of the Board based on the answers submitted while discussing problems and proposals for improvement.
The questionnaire included questions about the Board’s
responsibilities as provided in the Company’s Principles of Corporate
Governance, which are: (1) the supervision of overall operation; (2)the establishment of an internal control structure; (3) the selection,
appointment, dismissal, and evaluation of the President CEO as
well as other senior executives, and the determination of theircompensation; (4) the formulation of management strategy anddecisions on the execution of important operations; and (5) communication with shareholders.
As for the Company’s planned transition to a holding company
structure in October 2020, the questionnaire also asked opinions
about what the Board of Directors should be like under a holding
company structure.

Audit & Supervisory Board Members
Remuneration for Audit & Supervisory Board members, including outside members, consists of base salary.
Basic monthly remuneration

On October 1, 2020, the inaugural meeting of the Board of Directors of
Nippon Sanso Holdings was held. Directors Thomas Scott Kallman and Eduardo Gil Elejoste
attended the Board of Directors’ meeting via a web conferencing system.

Audit & Supervisory Board members are paid a rank-specific base salary.

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OUR MANAGEMENT

ESG Materiality

With the aim of contributing to the realization of a sustainable society, Nippon Sanso Holdings works toensure a solid grasp of its impact on the global environment, society, and people (the Company and its
organizational structure) through all of its business processes, that is, across the entire value chain. To
this end, we have defined the roles we are expected to play in addressing issues we have identified as
being of material importance, which are grouped under four themes, including management issues.

External Environment

Low-carbon society

Theme

Management
issuesGlobalenvironment

Society

People(the Company
and itsorganizational
structure)

Climate change

Technologicalinnovation

Materiality (Material Issues)

Falling birthrate andaging population

International situationRole of the Nippon Sanso Holdings Group

Principal Initiatives• Compliance• Corporate governance• Process safety• In adherence to high ethical standards, strive to conduct corporate activities in a fair, impartial,
and sincere manner by promoting and maintaining compliance with relevant laws, regulations,international norms, and internal rules.
• Reinforce corporate governance by improving management transparency and fairness, as well as
by increasing management agility through efforts to enhance management oversight functions andaccelerate decision-making.
• Strengthen independent systems for ensuring process safety in line with our belief that selling gases
is commensurate with selling safety.
• Realize stable supply of industrial gases, thereby ensuring our ability to provide the gases ourcustomers need when they are needed.

• Reinforcement of systems based on Japan’s Corporate Governance Code
• Initiatives to ensure safe and stable supply• Continuous implementation of compliance training• Efficient use of resourcesand energy• Climate change• Securing of cleanwater resources• Preservation of biodiversity• Introduce effective ASUs that help reduce electric power consumption and CO2 emissions.
• Lower fuel consumption by tanker trucks to reduce related CO2 emissions.
• Fortify framework for mitigating climate change through the reduction of greenhouse gas emissions
and other efforts.
• Promote the reduction of greenhouse gas emissions and the creation of opportunities to mitigate/adapt toclimate change and expansion of business through the sale of vacuum-insulated bottles and cookware.

• Promotion of environmental management• Initiatives to protect the global environment• Contribution to maintenanceof physical health• Contribution to medical care
• Response to food- andagriculture-related issues• Increase in consumer
satisfaction• Contribution to upgradingand expanding social
infrastructure• Response to smart societies• Contribute to health and medical care through the provision of products for the medical field.
• Provide industrial gases and related equipment that contribute to the resolution of key issues
by helping protect food resources and improve agricultural productivity.
• Leverage the advantages of LP gas, including its low carbon footprint and disaster-resistant nature ofits distribution system, to create business opportunities and expand business.
• Contribute to the realization of comfortable and environment-friendly lifestyles through the sale ofThermos brand products.
• Ensure that customers can use products and services with peace of mind by strengthening systems toensure quality and safety across the entire product life cycle.

• Development of products that contribute to solutions for environmental
and social issues• Reinforcement of quality assurance and management systems• Respect for human rights• Occupational health andsafety• Human resources
development and training• Diversity and inclusion• Product and service reliability• Promotion of measures toimprove information security
and privacy• Stakeholder engagement• Contribution to communities• Promotion of sophisticated
ICT use• Participation in initiatives anddemonstration of leadership• Promotion of sustainability inthe supply chain• Respect human rights in corporate activities and require that business partners do not violate human rights
or engage in any form of discriminatory behavior (through such measures as the promotion of anti-harassment
initiatives and the establishment of hotlines).
• Promote health management in accordance with relevant national and regional laws and regulations,create a safe work environment, while at the same time maintaining and advancing the physical andmental health of employees.
• Offer equal opportunities in hiring, placement, advancement, and skill development as well as seek tofoster and develop human resources from a medium- and long-term perspective.
• Actively seek to secure diverse human resources with diverse values without regard to considerations suchas nationality, age, or religion and promote diversity and inclusion in corporate activities (e.g., promotion ofactive roles for women, hiring of non-Japanese, employment of people with disabilities, etc.).
• Recognize the importance of and responsibilities associated with protecting information assets in corporate
activities and ensure appropriate information management to prevent leaks of confidential information
pertaining to customers, business partners, Nippon Sanso Holdings, and other parties.
• Step up efforts to contribute to society through business activities and deepen understanding of communities while at the same time working continuously to respond to communities’ requests and expectations.
• Earn stakeholders’ trust through respect and close dialogue and by reflecting their views in corporate
activities, and work with stakeholders to realize a better society.

• Thorough internal promotion of the “Policy on the Prevention and
Eradication of Harassment in the Workplace”• Employee education and training• Maintenance and improvement of information security systems• Promotion of sophisticated ICT use• Dialogue with shareholders and investment analysts• Initiatives to ensure safe and stable supply• Creation of environments to promote innovation and diversity• Social contribution activities• Health management initiatives• Enhancement of information disclosure

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Relevant SDGs

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Risk Management

ESG Materiality

Comprehensive Risk Management Supporting Global Business Activities

ESG Materiality Identification Process Basic Approach 

Based on the materiality matrix set out by the parent company, Mitsubishi Chemical Holdings Corporation, we have formulated
the Nippon Sanso Holdings Group’s version, deciding on the importance of management issues based on their materiality. In theidentification process, the suitability of the themes was discussed by the KAITEKI Promotion Committee,* which is an ancillary
body of the Management Committee that promotes Mitsubishi Chemical Holdings’ vision, “Realizing KAITEKI.” Moreover, in
accordance with the identification process detailed below, we are examining the revision of ESG materiality and KPIs for the next
medium-term management plan.

The Group must deal appropriately with various risks as it
operates its businesses globally. We therefore strive to identify
general risks that could impact the continuity of business andtake steps to reduce them.
We aim to achieve a structure in which the holding
company’s identification of important risks is linked to appropriate risk reduction activities undertaken by its affiliatedoperating companies. The holding company also provides
support and monitoring for risk management implemented
autonomously at the operating company level.

* The discussion will be conducted within the sustainability strategy of the Global Strategy Review Committee, which was newly established on October 1, 2020 as part of a reorganization thatwas conducted on the same day in conjunction with the transition to a holding company structure. The following identification process is presented based on the results of initiatives taken
under the corporate structure prior to September 2020.

As the KAITEKI Promotion
Committee secretariat,

Examination, discussion,

Report to the Management

the KAITEKI promotion projectand decision by the KAITEKI

Committee (in effect, decisions

prepares materials related toPromotion Committee

made by execution function)

ESG materiality.

Very highHigh

Importance to stakeholders

Extremely highMatrix of Key Initiatives● Efficient use of resources and energy● Climate change● Product and service reliability● Human resources development
and training● Occupational health and safety● Diversity and inclusion● Response to food- andagriculture-related issues● Securing clean water resources● Promotion of sustainability inthe supply chain● Contribution to communities● Contribution to maintenance ofphysical health● Contribution to medical care

● Contribution to upgrading andexpanding social infrastructure● Preservation of biodiversity● Response to smart societies● Stakeholder engagement● Promotion of sophisticated ICT use● Participation in initiatives and demonstration of leadership● Increase in consumer satisfaction

Very highExtremely highHigh

● Respect for human rights● Promotion of measures to improveinformation security and privacy

Risk Management Structure
Board of Directors
Confirmation and instruction

Global Risk Management Committee(deliberation, examination, decision-making)Presentation of policy
for initiatives

Change in Management Structure with Transition to Holding Company Structure 
On October 1, 2020, the Company transitioned to a holding company structure, and the Global Risk Management Committee(chairperson: President CEO) was established to manage risk for the Group overall. In this committee, we comprehensively
manage risks related to the management and business activities of each operating company by providing a forum for reporting,examination, and deliberation of the following matters. The ordinary meeting is held once per year, with extraordinary meetings
held as needed. The details of the meetings are reported to the Board of Directors.
Main Matters for Discussion• Determination of important policies regarding risk management of Nippon Sanso Holdings• Important risks at each operating company, reports on the status of response to those risks, and report on the next response plan
• Identification of important risks for Nippon Sanso Holdings, deliberation on response measures, and formulation of the next response plan

Results of Initiatives in FYE2020 
The Nippon Sanso Holdings Group’s important matters related to business continuity are establishing a compliance structure andresponding to technical risks such as safety and quality in accordance with the nature of its businesses whose core products arevarious high-pressure gases. We have implemented the following management system.
Risk Assessment Committee
The Risk Assessment Committee manages risk for the entire Group, identifying and assessing risks unique to the Group andclarifying the departments responsible for each individual risk. The committee regularly reviews the suitability of the risk management system by verifying risks and conducting risk reduction activities.

● Key issues related to the global environment ● Key issues related to social systems● Key issues related to the Company and its organizational structure80

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Submission of issues
for discussion

Affiliated operating companies

Importance to Nippon Sanso Holdings

NIPPON SANSO HOLDINGS CORPORATION

Reporting

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Risk Management

Technological Risk Management Committee
In accordance with technology-related Group standards of conduct and the Presidential Policy Directive on Technology Risk
Management, the Technological Risk Management Committee responds appropriately to technological risks faced by the Nippon
Sanso Holdings Group as the organization for managing technological risks (security, safety, quality, environment, intellectual
property, etc.) for the entire Group, with the aim of reducing these risks and preventing them from manifesting as actual issues.

Business Risks Among various matters relating to the statuses of our business, management, and so forth, the following could have a material
impact on investment decisions. Forward-looking statements in the following section are based on the Group’s judgment as ofMarch 31, 2020.
Business Risks and Responses

TNSC Technical Academy—An Educational Facility for Improving
Group Technological and Safety Capabilities
Under the medium-term management plan, Ortus Stage 2, one of the basic
policies is to step up safety, quality, and compliance initiatives and the entire
Group is working to strengthen its technological risk management. Winning
the trust of the market takes a long time, but that trust can be lost in a
moment. To ensure we do not cause accidents it is important as a company
to establish operational procedures and rules to preserve quality. Having
employees understand properly the reasons that the rules must be observed,
rather than simple blind obedience, helps to reduce risk. In June 2019, weestablished the TNSC Technical Academy educational and training facility as
one of our basic initiatives to increase individual safety awareness and fostera safety culture.

Risk

Main measures

Management Policy- and Business-Related Risks(1) About capital investment• All or part of the Company’s production facilities could become obsolete due to factors
such as elimination and consolidation of manufacturing bases, and overseas relocation.
• If the burden cannot be covered by contractual compensation, the Group may incur losses
due to retirement of equipment.

• Before making a decision on capital investment, give full consideration to expected
profitability of the business and changes in the business environment• If environmental changes mean that the initial investment recovery can no longer be
expected, apply appropriate accounting treatment(2) About manufacturing cost

• A sharp increase in the price of crude oil or LNG, or a change in the exchange rate, could
cause a substantial rise in the cost of electricity, which is the major component of the costof manufacturing core products.

• Factor the cost into the price, giving consideration to the relationship with the customer, toprevent the Group from suffering difficulties with business continuity due to manufacturing
cost fluctuations(3) About overseas expansion• Factors such as market trends, politics, economy, customs, religion, terrorism, andlarge-scale disasters in countries and regions where the Group has operations may
affect its business activities, performance, and financial status.

• Before deciding to execute capital investment and M&A overseas, carefully examinechanges in the market environment of the target country or region and expected
profitability of the project(4) About laws and regulations• Unexpected changes in laws and regulations and the establishment of new laws andadministrative guidance in countries and regions where the Group has operations may
result in costs that may affect the Group’s business performance.

• Implement countermeasures such as employee education to prevent legal and regulatory
violations in advance, in order to observe laws and regulations in countries and regions
where the Group has operations• Gather information to ensure that the Group does not encounter disadvantages in
conducting business in Japan or overseas(5) About securing humanresources• If the Group cannot secure the necessary human resources as planned due tochanges in the employment situation and labor supply–demand conditions, its
business activities and performance may be affected.

• Build systems that can secure the necessary human resources for maintaining anddeveloping business activities• Appropriately plan and implement human resource-related systems concerning hiring,education, remuneration, etc.

• The Group’s products may become less competitive due to new technologies and products
or alternative products produced by other companies.
• In industry–academia–government collaborations and joint development with othercompanies, cooperation may not progress well.

• Manage R&D using the Stage-Gate method* to promote commercialization andprofitability on the relevant theme• Focus on strengthening cooperation in industry–academia–government collaborations andjoint development with other companies

Exterior view of the TNSC Technical Academy

Technology and Security
Risk experience equipment that uses VR technology(1) About technologicaldevelopment* A methodology for efficiently narrowing down a large number of products or technology development themes

The Presidential Policy Directive on Technology Risk Management
The Group’s response to safety, quality, and so forth is central to maintaining society’s trust and to the stable supply of products.
As such, it is the most important priority in the industrial gases business. Moreover, since this issue requires a company-wide,organization-level response, including Group companies in Japan and overseas, the entire Group is addressing this issue under
the following policy.
The Presidential Policy Directive on Technology Risk Management
The President CEO of Nippon Sanso Holdings requests all the Group members to comply thoroughly with the applicable laws, regulations, andrules as “The Gas Professionals,” and herewith has established the following policy on the risk management of public safety and security,
quality, product safety, environmental sustainability, and intellectual property, that are essential to running our business.
All the Group members are expected to:• The Group may not have sufficient intellectual property rights to protect its technologies
and products.
• A third party may infringe on the Group’s intellectual property rights and use them illegally.

• Build a system capable of protecting intellectual property needed for maintaining anddeveloping business activities• Survey and monitor intellectual property rights of third parties• Customer trust may be lost due to product defects, quality control problems, or failures.
• Business performance and financial status may be affected due to the burden of damage
compensation.

• A ppropriately manage risks arising from products, such as the safety and quality
management of the Group’s products• Implement technical education for employees involved in product manufacture andsupply to enable them to manage the processes appropriately• If the Group is unable to cope with sudden exchange rate fluctuations, its businessperformance may be affected.
• If the exchange rate fluctuates more than expected, the Group’s business performance andfinancial status may be affected.

• Focus on avoiding exchange rate fluctuation risk in foreign currency-denominatedtransactions with measures including exchange contracts• Interest rate fluctuations may affect the Group’s business performance and financial status.

• Considering future interest rate fluctuation risk before procuring funds by externalborrowings for capital investments and M&A• In the event of natural disasters such as earthquakes, the Group’s business sites may beseriously damaged.
• In the event of a serious accident or large-scale infectious disease caused by unforeseen
circumstances, including human factors, the Group’s business activities and performance
may be affected.

• In preparation for such emergencies, establish an information gathering system andpromote initiatives for continuation of the core business and early recovery of businessbased on the BCP• The targets of the medium-term management plan may not be achieved due to changes inthe business environment and various other factors.

• Promote business activities adaptively to changes in the business environment• For earnings forecasts, revise plans and forecasts in line with the immediate businessenvironment and provide timely disclosure• The Group’s business management, performance, and financial status may be significantly
affected if the capital relationship with Mitsubishi Chemical Holdings Corporation changes
in the future.

• The Group recognizes that there is currently no policy to increase or decrease theshareholding ratio.

• In the event that recoverable amounts decrease significantly, causing impairment losses,
the Group’s business performance and financial status may be affected.

• Conduct impairment testing each period to measure goodwill and intangible assets withindefinite useful lives• If environmental changes mean that the initial investment recovery can no longer be
expected, apply appropriate accounting treatment as necessary(7) About information
management• In the event of information leakage due to an unforeseen situation, the Group may suffer
damage to corporate value and loss of social credibility.
• The Group may have to pay compensation to customers and other parties affected by theleak, leading to deterioration of market competitiveness.

• Build suitable information management systems to protect business information including
important and personal information• Implement continuous education for employees regarding information security and so forth(8) About environmental issues
such as climate change• The introduction of greenhouse gas emission regulations in countries and regions where
the Group has operations may affect the business performance of the industrial gases
business, which has a large amount of indirect greenhouse gas emissions.
• An increase in natural disasters due to climate change and a shortage of water resources
due to droughts may affect the Group’s manufacturing bases.
• If the global average temperature rises, the power of the raw air compressor in the air
separation unit may increase, causing the amount of electricity used to increase.

• Promote overall environmental management and declare to support the recommendationsof the Task Force on Climate-related Financial Disclosures (TCFD)• Survey trends in the introduction of greenhouse gas emission regulations in countries
and regions where the Group has operations and examine and implement appropriate
response measures• Decrease in shipments of industrial gases due to lower operating rates at customer factories• Take initiatives to prevent infection spreading among employees involved with
manufacturing, supply, and sales• Gather information about customers’ production plans and demand trends(2) About intellectual property(3) About safety and securityof products

Finance and Others(1) About exchange rate
fluctuations(2) About changes in interest rates(3) About natural disasters,
unexpected accidents, andinfectious diseases(4) About the medium-term
management plan

• thoroughly comprehend this policy and put it into practice,• minimize the risk of loss by planning, doing and continuously improving the corporate risk management system and business continuity plan (BCP) tocope with disasters, e.g., large-scale earthquakes,• make sincere efforts to raise customers’ satisfaction over our business activities,• obtain and maintain social credibility by achieving public safety and security, and contribution to environmental sustainability of the earth, and• pursue a sound prosperity of our business and an enhancement of our corporate value.
Public safety and security: 	We, Nippon Sanso Holdings, implement voluntary activities for safety assurance based on our motto of“Selling gas is selling safety.”(5) About capital relationship with
Mitsubishi Chemical Holdings
Corporation(6) About goodwill andintangible assets

Quality: 		We, Nippon Sanso Holdings, accurately identify the sophisticated and diversifying needs of customers and society,and offer the services and products of the best suited quality in response.
Product safety: 	We, Nippon Sanso Holdings, offer safer and more reliable products by minimizing dangers inherent over the life of
the products.
Environmental sustainability: We, Nippon Sanso Holdings, drive action to reduce the impact on the global environment and prevent pollution.
Intellectual property: 	We, Nippon Sanso Holdings, by obtaining the exclusive right of intellectual properties and exploiting them, protect ourbusiness from patent litigation that might be imposed by other parties.

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(9) About the impact of COVID-19

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OUR MANAGEMENT

Dialogue 3

Akio Yamada

Mitsuhiro Katsumaru

Outside Director,
Nippon Sanso Holdings Corporation

Outside Director,
Nippon Sanso Holdings Corporation

Strengthening Governance througha Global Framework of Four Geographic Hubs
Outside directors Akio Yamada and Mitsuhiro Katsumaru have provided leadership in the Company’s
governance reforms. Here, they have an open discussion on various issues, including a review of the five
years since their appointments, the effectiveness of the Board of Directors, the significance of the transition
to a holding company structure, challenges for the future, and response to the COVID-19 pandemic.

during FYE2020, so it is rather active. The most important
theme for the committee recently has been selection ofa future successor candidate for the President CEO. Referring
to best practices at other companies and so forth, we interviewed multiple candidates in the selection process and proceeded to select personnel based on evaluation and screening
criteria. Our next task is how to approach the development of
future management executive candidates.
Katsumaru: I think this is a good point to mention the issue
that arises when both parent and subsidiary are listed companies.
The Company is a consolidated subsidiary of Mitsubishi
Chemical Holdings Corporation, which is the parent companyof the Nippon Sanso Holdings Group as it is the controllingshareholder. In this case, the protection of minority shareholders’interests is a focus, and there are two important points to beconsidered in this regard.
First, the Company’s governance is systemically guaranteed
to a certain extent by the independence of the outside directors.
We are both in an independent position with no relationshipto the parent company, and we both strive to speak out witha constant awareness of the issue of protecting minority
shareholders’ interests in the Board of Directors and other places.
Second, parent company Mitsubishi Chemical Holdings’
stance is to place an extremely strong emphasis on the auton-

its initiatives. Furthermore, with the participation of the headsof our U.S. and European operating companies, just mentioned,
and the selection of Vice President Hamada, who has experience on assignment at Matheson Tri-Gas, discussions in the
Board of Directors’ meetings have a more global perspective
than ever before. In every theme that we discuss, including
response to the COVID-19 pandemic, which will be mentioned
later, we are now able to keep an eye on the status of the restof the world, including Europe and the United States, at all time.
Furthermore, since October 2015, we have conductedevaluations of the effectiveness of the Board of Directors. Thishas been the most trying part of complying with the Code,but setting up a system for collecting the opinions of eachdirector using the questionnaire, having a careful discussion
based on the results, and implementing steps to solve issues
has been an extremely important result.
Furthermore, a distinctive feature of the Company’s governance is the presence of a powerful Audit & Supervisory Board.
The Board also provides tremendous support for us as outside
directors when we are giving our opinions. Diversity has been
secured for both the Board of Directors and the Audit &Supervisory Board, and the two meeting bodies are both
functioning properly.
Yamada: Three of the four full-time Audit & Supervisory
Board members are outside members and all have affluent
corporate management experience and accounting knowledge.
They make insightful observations and actively share opinions
in the Board of Directors’ meetings. This is quite different
from the scenario in other companies, I believe.
They say that all companies find it difficult to carry out anevaluation of the Board of Directors. The Company conducts
a questionnaire survey and based on the results the execution
site provides specific proposals, which are discussed again inturn by the Board of Directors. This approach has produced
results such as narrowing down the matters for discussion,
simplifying operating reports, and strengthening investment
monitoring. In addition, the Audit & Supervisory Board is also
active in presenting opinions and proposals.
Katsumaru: The organization is extremely good at selftransformation. There have been a large number of changes
over these past five years compared with before the introduction of the Code. Many people are now interested in ESG and
the SDGs as well.
Going forward, companies will be required to have diversity
in management leadership and to have the power to transformthemselves in step with the times. I believe that Nippon Sanso
Holdings has the ability to meet these requirements.

omy of the Company’s governance. As such, we recognizethat the risk of minority shareholders’ interests being harmed
by the controlling shareholder will remain extremely low.
Yamada: Since 2018, the issue of protecting minority shareholders’ interests in listed subsidiaries has been much discussed.
As Mr. Katsumaru has pointed out, we have an important roleto play as independent outside directors in this regard.

Diversity of the Board of Directors
Looking Back on Five Years Since the Introductionof Japan’s Corporate Governance Codeviewpoint. Outside directors in general have also become
more active in the contributions than before.
Second, the responsibility of the Board of Directors has beenclarified. The Board makes decisions on important management
issues centrally, and governance has now become transparent.
Third, I must mention the establishment of the Advisory
Committee on Appointments and Remuneration. This was
an excellent decision by President Ichihara as the committee
ensures accountability on important internal personnel matterswith plenty of discussion to decide on matters. Mr. Yamada
plays an especially important role in leading the committee
as its chairperson.
Yamada: The Advisory Committee on Appointments andRemuneration is composed of three members, including
President Ichihara and ourselves. The committee met 11 times

Katsumaru: Mr. Yamada and I were appointed as outside
directors in 2015, the year that Japan’s Corporate Governance
Code (the “Code”) was formulated. The management of
Taiyo Nippon Sanso Corporation at the time took the philosophy of the Code seriously and it was a time when they started
specific initiatives. One of the major themes of the Code wasenhancing and strengthening the Board of Directors, and infact the Group’s Board of Directors has changed in several
ways since that time.
First, discussions in the Board of Directors’ meetings havebecome more active. Perhaps this was set in motion by our
free questioning and expression of opinions from an outside

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Yamada: Another important theme is ensuring diversity
in the composition of the Board of Directors; for example,
appointing female directors. President Ichihara and ourselves
have taken this issue very seriously; however, we have not yet
managed to appoint a female director at this stage. We willcontinue making a sincere effort on this issue.
Next, at the General Meeting of Shareholders in 2019,
Chairman and CEO Thomas Kallman of Matheson Tri-Gas,
Inc. was appointed as a director along with Chairman andPresident Eduardo Gil Elejoste of Nippon Gases Euro-Holding
S.L.U., which joined the Group at the end of 2018. Their
inclusion has greatly changed the composition of the Boardof Directors.
Katsumaru: The management team has been working proactively on this theme and intends to continue strengthening

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Dialogue 3
Strengthening Governance through a Global Framework of Four Geographic Hubs

The other point was the Company’s supply of industrial
gases amid the pandemic in Europe and other countries. The
Board of Directors received an explanation from Chairman
and President Elejoste of Nippon Gases Euro-Holding about
its response to the pandemic in Italy. We were presented withthe visual image of employees of Nippon Gases Euro-Holding
risking infection to deliver oxygen to local hospitals, giving us
a good understanding of the situation on the ground.
Through the recent series of situations, many companies
have probably had to review the purpose of their existence
and their role in society. The Nippon Sanso Holdings Grouphas performed its role tremendously, and I think it has reaffirmed its own purpose for existing.
Yamada: I feel that the Group philosophy of “Proactive.
Innovative. Collaborative.” has truly been put into practice.

Insights Achieved through Response to
the COVID-19 Pandemic
Yamada: The Company rapidly implemented a series of
responses to the COVID-19 pandemic. The Board of Directors
has constantly had the latest situational reports since February,
and in April a policy on preventing infection was formulated.
Also, as Mr. Katsumaru just mentioned, Chairman and CEO
Kallman and Chairman and President Elejoste have been
appointed to the Board of Directors, providing direct access to
wide-ranging information from outside of Japan as well, suchas the overall status of infection in the United States andEurope, the economic impacts, and the impacts on the Group’sbusinesses and customer relationships. Without a clear outlook
on when the pandemic may subside, we will make a unitedeffort in Japan, the United States, Europe, and Asia andOceania to recover earnings within the fiscal year, based on
various information such as trends in demand industries.
Another important point is a company’s response to its
social responsibilities. Amid concerns over the securing ofadequate ventilators in medical institutions, the Company’s
wholly owned subsidiary IMI Co., Ltd. was right at the frontof the supply line as a medical equipment sales company.
Many Group companies also supply medical oxygen. The
employees of each company face the risk of infection in thesame way as medical professionals, and continue to strive,
putting their own health at risk.
Katsumaru: Everyone has performed admirably during the
pandemic. I found two points particularly impressive.
The first was the supply of masks in and outside theCompany. In May, the Company donated a total of 1.5 million
medical masks to medical institutions and others. The Company
took this action right when the world was in an uproar due toan acute shortage of masks, and its effort was recognized witha letter of thanks from the Governor of Tokyo. The Company
also distributed 100 masks to every employee and madeefforts to prevent infection. Both of these actions were
extremely proactive and effective.

NIPPON SANSO HOLDINGS CORPORATION

Objectively Clear ESG Disclosure
Yamada: Recently, there has been a surge of public interest
around corporate ESG initiatives. The capital markets have also
been emphasizing ESG investment and socially responsible
investment (SRI). In light of the situation, I think the Group needs
to apply more innovative thinking about the status of its ESG
disclosure. The Group provides many gas applications that
contribute to increasing operational and combustion efficiency
and to reducing the environmental impact of metal cutting
and welding, and smelting in blast furnaces. It is importantto provide more intuitive and clear explanations focused onthese initiatives in order to gain stakeholders’ understanding.
Katsumaru: It is somewhat difficult to achieve both objectivity
and intuitiveness in ESG disclosures.
However, the focus here should be on the extremely sustainable nature of the Group’s business model itself. The industrial
gases business takes in oxygen and nitrogen from the atmosphere and converts them into energy before releasing themback into the atmosphere. It is a wonderful circular process.
This oxygen and nitrogen cycle supports various aspects ofindustry throughout the world. I think it is necessary to pursue
a clearer explanation of how gas plays this social role andcreates unique value.
Yamada: For example, just as the technology for the maglev
train is supported by superconduction provided by liquid
helium, the progress of humankind and the development of
the economy rely on industrial gases.
The impact of having the heads of our U.S. and European
operating companies on the Board of Directors is apparent in
the change of focus on ESG. For example, in 2019 the Groupannounced its support for the TCFD recommendations. In
discussions about this in the Board of Directors’ meetings,

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they drew out examples of other major companies that compete with the Group and stated their views that the Groupshould also promote its initiatives with greater urgency.

Acquisition of European Business andCreation of Synergies
Katsumaru: The acquisition of the European business (nowNippon Gases Euro-Holding) at the end of 2018 involved a majordecision to invest acquisition funds comparable to the Company’s
annual sales. We actively expressed our encouragement for theacquisition up to the decision. The reason was that while theJapanese economy had continued to stagnate since the 1990s,
the U.S. and European economies had grown steadily. Operating
only in Japan limited the Group’s aspirations for growth andtransformation. Given the backdrop to this deal, as an outside
director unfettered by any need to continue the previous
trajectory or preserve continuity, my thinking was that wemight not see such an opportunity again. There is still a lot ofwork to do, but thus far things have progressed nicely.
Yamada: Another important role that we have is to support
appropriate decision-making by top management and tobuild a foundation for setting the Company on its course.
President Ichihara made a huge decision, and I believe he hascreated a way forward for the Group’s continuous growth.
Furthermore, Nippon Gases Euro-Holding’s management
executive team have been actively working to assist in theprocess of its integration. Moreover, the executive teams of
Nippon Gases Euro-Holding and Matheson Tri-Gas have been
involved in discussions about generating synergies after the
integration. Chairman and President Elejoste made specificproposals such as deepening relationships with global customers
in the electronic materials gases business, creating business
opportunities through cooperation between engineering divisions,and mutual use of gas application technologies. These formed
the basis for deeper discussion in the Global Operations Division(at the time) and subsequently in the Global committees.
In this way, the PMI is proceeding smoothly, and we havetransitioned to a holding company structure to fully maximize
management efficiency for the global framework of our four
geographic hubs and the Thermos business. With this, theNippon Sanso Holdings Group made a fresh start under a
new structure on October 1, 2020.
Katsumaru: The Group management philosophy and policies
are created by the Company. However, each operating company
has a considerable level of discretion and responsibility, andwill promote its business autonomously. Generally, a holding
company structure can be seen in various ways, but I believe it is
one of the ultimate structures for promoting efficient, rational group

NIPPON SANSO HOLDINGS CORPORATION

management while utilizing the characteristics and strengths ofeach region of the world. Moreover, in our discussion on thisissue, my contribution was regarding the change of company
name. I thought it would be an appropriate time for a name thatclearly reflected the new holding company structure. Moreover,Taiyo Nippon Sanso Corporation is a fine company name thatcarries the Company’s history, so it has remained in use for thedomestic operating company. In addition, in terms of having an
executive function that specializes in business management, theappointment of Director Nagata as president of the Taiyo Nippon
Sanso Corporation as the domestic operating company isappropriate for the holding company structure since he has awealth of experience in the industrial gases business in Japan.
Yamada: Even in an ordinary operating company, if it has a
lot of subsidiaries then strengthening governance as a groupis a major challenge. In this regard, as a holding company,
Nippon Sanso Holdings is truly an organization for Group
governance, and will efficiently perform the functions ofbusiness strategy, management functions, risk management,
and synergy creation for the entire Group.
Generally speaking, information sharing using IT and financial management are essential for creating Group synergies.
In regard to this, CFO Draper, who is in charge of finance,accounting, and IT at Nippon Gases Euro-Holding, has been
made executive officer of the Group Finance and Accounting
Office and CFO of Nippon Sanso Holdings. I expect this will
not only contribute to diversity and globalization within theexecution structure but also generate wide-ranging ripple
effects in all directions within the Company.
Katsumaru: I think this kind of diversity will create even more
big changes in the newly launched Nippon Sanso HoldingsGroup. Nippon Gases Euro-Holding, which operates businessesin every country in Europe, has a great deal of knowledge
regarding Group management. It is also well developed in termsof its relationships with employees and its stance on ESG. Having
gained Nippon Gases Euro-Holding as a member on the heelsof Matheson Tri-Gas, the Nippon Sanso Holdings Group can be
expected to continue changing and growing going forward.

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Members of the Board of Directors
and Audit & Supervisory Board Members (As of October 1, 2020)

Members of the Board of Directors
April
June

Yujiro Ichihara
Representative Director, President CEO
Member of the Advisory Committee on Appointments and Remuneration

1974 Joined the Company
2005	Executive officer, deputy general manager of Business Planning Division and General
Affairs Division, and manager of Secretary’s Office and Corporate Audit OfficeJune2008	Senior executive officer and general manager of General Affairs Division, withresponsibility for company-wide internal control
June2010	Managing director and general manager of General Affairs Division, with responsibility for company-wide internal control
June2012	Senior managing director and general manager of Corporate Administration Division,
with responsibility for company-wide internal controlJune2013	Executive vice president, director, and general manager of Corporate Administration
Division, with responsibility for company-wide internal control
April
2014	Executive vice president and director, with responsibility for Corporate Administration
Division and Corporate Planning & Global Operations DivisionJune
2014	Representative Director, President CEO
February 2015 Director, KAITEKI Institute, Inc. (current)June2015 Representative Director, President CEO		
Director, Mitsubishi Chemical Holdings Corporation
June
2018 Representative Director, President CEO (current)

April
July
October
April
January
June
June
June
June

April
June
April

Kenji Nagata
Member of the Board,
Representative Director and President of Taiyo Nippon Sanso Corporation

Thomas Scott Kallman

Member of the Board,
Executive Vice President (Aide to the President)

Member of the Board,
Chairman and CEO, Matheson Tri-Gas, Inc.

April
April

April
January
June

Kazuyuki Futamata
Member of the Board,
Managing Executive Officer,
Chief Compliance Officer (CCO),(Taiyo Nippon Sanso Corporation Group CCO),
with responsibility for groupwide internal control

NIPPON SANSO HOLDINGS CORPORATION

1981 Joined BOC Group, plc
2000 Vice president, general manager responsible for Eastern Region, BOC Group, plc
2005 Executive vice president responsible for Industrial Gas Group, Matheson Tri-Gas, Inc.
2008 Senior executive vice president and COO, Matheson Tri-Gas, Inc.
2009 President and COO, Matheson Tri-Gas, Inc.
2013 President and CEO, Matheson Tri-Gas, Inc2017 Chairman, President, and CEO, Matheson Tri-Gas, Inc.
2019 Chairman and CEO, Matheson Tri-Gas, Inc. (current)
2019 Director of the Company (current)

April
June

1981 Joined the Company
2002	Executive vice president responsible for Specialty Gas Technology, Matheson Tri-Gas, Inc.
2005	Deputy general manager of Semiconductor Gas Section of Electronics Division,
the Company
2006	General manager of Semiconductor Gas Section of Electronics Division, the Company
2010	Subordinate directly to general manager of Electronics Division and general manager
of Business Strategy Promotion Section, the Company
2014 Managing director, Nissan TANAKA Corporation
2016 Senior managing director, Nissan TANAKA Corporation2017 President and representative director, Nissan TANAKA Corporation
2020	Director, executive vice president of the Company (Aide to the President) (current)

1980	Joined Mitsubishi Chemical Industries Limited (now Mitsubishi Chemical Corporation)2011	Executive officer, general manager of Human Resources Division, Mitsubishi Chemical
Corporation; Executive officer, general manager of CEO’s office, Mitsubishi Chemical
Holdings Corporation2013	Executive officer, Mitsubishi Rayon Co., Ltd. (responsible for Internal Control Division)2015	Executive officer, Mitsubishi Rayon Co., Ltd. (responsible for Human Resources,
General Affairs, Information Systems, and Internal Control divisions); Executive
officer, general manager of Human Resources Office, Mitsubishi Chemical Holdings
Corporation2017	Director and managing executive officer, CCO (responsible for Human Resources,
General Affairs, and Internal Control divisions), Mitsubishi Chemical Corporation
2019	Managing executive officer, CCO (Taiyo Nippon Sanso Corporation Group CCO),
with responsibility for groupwide internal control
2019	Director and managing executive officer, CCO of the Company (Taiyo Nippon Sanso
Corporation Group CCO), with responsibility for groupwide internal control (current)

July
January
January
January
June
January
June
April
June

June

Toshihiko Hamada

April
June

October

1981 Joined the Company
2013 Executive officer, general manager of North Kanto Branch2016	Executive officer, deputy general manager of Industrial Gases Division, generalmanager of Gases Business Unit, general manager of Product Management Unit2016	Senior executive officer, deputy general manager of Industrial Gases Division, generalmanager of Gases Business Unit, general manager of Product Management Unit2017 Senior executive officer, general manager of Industrial Gases Division2018	Senior managing executive officer, director, general manager of Industrial Gases
Division2020	Director of the Company, president of Taiyo Nippon Sanso Corporation (current)

April
1981 Joined Argon S.A.
January
1992 Director of Marketing, responsible for Spain and Portugal, Argon S.A.
September 1996 Director of Business Development, responsible for Europe, Praxair España, S.L.
January
2000 Director of Marketing, responsible for Europe, Praxair Euroholding S.L.
October
2004 CEO, Germany, Praxair Euroholding S.L.
January
2006 CEO, Germany and Benelux, Praxair Euroholding S.L.
April
2008	CEO, Praxair España S.L. (now Nippon Gases Espana S.L.U.);
CEO, Praxair Portugal S.A.
December 2016 President, Praxair Euroholding S.L.
December 2018	Chairman and President, TNSC Euro-Holding S.L.U.
(now Nippon Gases Euro-Holding S.L.U.) (current)June2019 Director of the Company (current)

Eduardo Gil Elejoste
Member of the Board,
Chairman and President, Nippon Gases Euro-Holding S.L.U.

88

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION89

INTEGRATED REPORT 2020

OUR MANAGEMENT

Members of the Board of Directors
and Audit & Supervisory Board Members (As of October 1, 2020)

Members of the Board of Directors

Audit & Supervisory Board Members
April
June

1967 Joined General Secretariat of Japan Fair Trade Commission
1996	Director general of Trade Practices Department, General Secretariat of Japan Fair
Trade Commission
June1997	Director general of Investigation Bureau, General Secretariat of Japan Fair Trade
Commission
June1998	Director general of Economic Affairs Bureau, General Secretariat of Japan Fair Trade
Commission
June2000	Secretary general, Japan Fair Trade Commission
December 2003	Commissioner, Japan Fair Trade Commission
April2009 Senior advisor to Jones Day
June2010 Audit & Supervisory Board member, Daiichi Sankyo Co., Ltd.
March2014 Audit & Supervisory Board member, Yokohama Rubber Co., Ltd.
June
2014 Director, Watahan & Co., Ltd.
June
2015 Outside director of the Company (current)
March2018 Chairman, Fair Trade Institute (current)

Akio Yamada
Member of the Board (Outside Director)
Independent outside director
Chairman of the Advisory Committee on Appointments and Remuneration

April
June
June
January
March
April
March

April
1978 Appointed as a public prosecutor assigned to Tokyo District Public Prosecutors OfficeJuly1989 First secretary of Embassy of Japan in Germany
June2000 Director of Criminal Affairs Division, Criminal Affairs Bureau, Ministry of JusticeJune
2001 Director of General Affairs Division, Criminal Affairs Bureau, Ministry of Justice
January
2003 Director of Finance Division, Minister’s Secretariat, Ministry of JusticeApril
2005 Assistant vice minister, Ministry of Justice (responsible for general policy integration)
December 2005 Chief prosecutor, Fukui District Public Prosecutors OfficeJune2007 Chief prosecutor, Mito District Public Prosecutors Office
October
2008 Chief prosecutor, Saitama District Public Prosecutors Office
January
2010 Director, Public Security Department, Supreme Public Prosecutors Office
December 2010 Superintending prosecutor, Takamatsu High Public Prosecutors OfficeJune2012 Superintending prosecutor, Hiroshima High Public Prosecutors OfficeJuly2014 Resigned from superintending prosecutor position
October
2014 Registered as an attorneyJune2015 Outside director of the Company (current)March2017 Director of Shimano Inc. (current)

Member of the Board (Outside Director)

July

April
April
April
June

Hidefumi Date

April

Member of the Board,
Director, Managing Corporate Executive Officer, and Chief Financial Officer,
Mitsubishi Chemical Holdings Corporation

NIPPON SANSO HOLDINGS CORPORATION90

INTEGRATED REPORT 2020

April
April

April

Audit & Supervisory Board Member(Outside Auditor)

Audit & Supervisory Board member(Outside Auditor)
Concurrently part-time Audit &Supervisory Board member,
Taiyo Nippon Sanso Corporation

Independent outside director

Independent outside auditor

Akihiro Hashimoto

April

March

June

1981	Joined Mitsubishi Chemical Industries Limited (now Mitsubishi Chemical
Corporation)2012	Executive officer and general manager of Corporate Management Office,Mitsubishi Chemical Holdings Corporation
2015	Executive officer, general manager of Finance & Accounting Department,
Mitsubishi Chemical Corporation2017	Managing executive officer (in charge of Corporate Management
Department and Finance & Accounting Department), Mitsubishi Chemical
Corporation
2019 	Director and managing executive officer (in charge of Corporate
Management Department and Finance & Accounting Department),
Mitsubishi Chemical Corporation
2020	Resigned from director and managing executive officer position at
Mitsubishi Chemical Corporation
2020	Advisor to the Company
2020	Outside auditor (current)

Kazuya Kobayashi

April

1982 Joined Mitsubishi Chemical Industries Limited (now Mitsubishi Chemical Corporation)2013	Executive officer, general manager of Consolidated Management Department,
Mitsubishi Chemical Corporation2014	Executive officer, general manager of Consolidated Management Department and
Finance & Accounting Department, Mitsubishi Chemical Corporation2014	Executive officer, general manager of Finance & Accounting Department, Mitsubishi
Chemical Corporation
2015	Executive officer and general manager of Corporate Management Office, Mitsubishi
Chemical Holdings Corporation2018	Managing corporate executive officer and chief financial officer, Mitsubishi Chemical
Holdings Corporation
2019	Director, managing corporate executive officer, and chief financial officer of
Mitsubishi Chemical Holdings Corporation
Director of the Company (current)
2020	Representative Director and President of Mitsubishi Chemical Holdings Corporate
Staff, Inc. (current)

April

April
June

April
April

April
April

1979 Joined the Company
2013 Manager of Corporate Audit Office2014 Executive officer and manager of Corporate Audit Office2015 Executive officer assigned to Mitsubishi Chemical Holdings Corporation2017 Resigned from executive officer position2017	Executive officer, manager of Industrial Gases Strategy Office in Corporate
Strategy Division, Mitsubishi Chemical Holdings Corporation2018	Resigned from executive officer position at Mitsubishi Chemical Holdings
Corporation2018 General manager of the Corporate Planning Office of the Company
2018 Audit & Supervisory Board member (current)

March

Independent outside director
Member of the Advisory Committee on Appointments and Remuneration

Audit & Supervisory Board member(Outside Auditor)

Audit & Supervisory Board member

April
June

Mitsuhiro Katsumaru

Masahiro Osada

Junzo Tai

April
April
May
June
June
June
June
June

1983 Joined The Fuji Bank, Limited (now Mizuho Bank, Ltd.)2010	Executive officer and general manager of Americas Financial Products
Division of Mizuho Corporate Bank, Ltd. (now Mizuho Bank, Ltd.)2012	Managing executive officer in charge of branches, Mizuho Bank, Ltd.
(to July 2013)2013	Managing executive officer in charge of corporate banking, Mizuho
Corporate Bank, Ltd.
2013	Managing executive officer in charge of corporate banking, Mizuho Bank,
Ltd. (Mizuho Bank, Ltd. and Mizuho Corporate Bank, Ltd. merged to form
the current Mizuho Bank, Ltd.)2014	Senior general manager, Mizuho Bank, Ltd.
2014	Resigned from Mizuho Bank, Ltd2014	Senior general manager, Sharp Corporation2014	Director and executive managing officer, Sharp Corporation
2016	Resigned from Sharp Corporation
2016	Senior general manager, Mizuho Bank, Ltd.
2017	Resigned from senior general manager position at Mizuho Bank, Ltd.
2017	Outside auditor of the Company (current)

April
April

1985 Joined The Fuji Bank, Limited (now Mizuho Bank, Ltd)2012	Executive officer, general manager of Corporate Banking Division No. 13,
Mizuho Corporate Bank, Ltd (now Mizuho Bank, Ltd).
April
2014	Managing executive officer, head of Investment Banking Unit,
Mizuho Financial Group, Inc.
		Managing executive officer, head of Investment Banking Unit,
Mizuho Bank, Ltd.
2016	Managing executive officer in charge of Specific Business of Global
April
Corporate Company, Mizuho Financial Group, Inc.
		Managing executive officer, head of Global Corporate Division,
April
March
April
March
April
June
June
October

NIPPON SANSO HOLDINGS CORPORATION

91

Mizuho Bank., Ltd2017 Senior general manager, Mizuho Financial Group, Inc.
2019	Resigned from senior general manager position at Mizuho Financial
Group, Inc.
2019	Audit & Supervisory Board member (full-time),
Mizuho Human Service Co., Ltd.
2020	Resigned from Audit & Supervisory Board member (full-time) position at
Mizuho Human Service Co., Ltd
2020 Senior general manager, Mizuho Financial Group, Inc. (current)
2020 Resigned from senior general manager at Mizuho Financial Group, Inc.
2020 Outside auditor of the Company (full-time)2020	Audit & Supervisory Board member of Taiyo Nippon Sanso Corporation(current)

INTEGRATED REPORT 2020

CORPORATE PROFILE

Corporate Data

Company Overview (As of October 1, 2020)

Group Organization (As of October 1, 2020)

Company name:
Nippon Sanso Holdings Corporation

Independent public accountants:
Ernst & Young ShinNihon LLC

Date founded:
October 30, 1910

Stock exchange listing:Tokyo

Paid-in capital:¥37,344 million

Transfer agent:Mizuho Trust & Banking Co., Ltd.
2-8-4 Izumi, Suginami-ku, Tokyo 168-8507, Japan
Tel (toll free in Japan): 0120-288-324

Head office:1-3-26 Koyama, Shinagawa-ku, Tokyo 142-0062, Japan

Gas Business in Japan: Taiyo Nippon Sanso Corporation GroupGas Business in the United States: Matheson Tri-Gas, Inc. Group

Nippon Sanso Holdings
Corporation

Contact:
Investor Relations, Group Finance and Accounting Office,Nippon Sanso Holdings Corporation
Tel: +81-3-5788-8512

Number of employees:
19,719Gas Business in Europe: Nippon Gases Euro-Holding S.L.U. GroupGas Business in Asia and Oceania: Asia and Oceania regional Group companies

Thermos Business: Thermos K.K. Group

Share and Shareholder Information (As of March 31, 2020)
Status of Shares
Number of shares authorized: 1,600,000,000
Number of shares issued: 433,092,837
Number of shareholders: 15,216

Major Shareholders(10 Largest Shareholders, Shares Held Rounded Down to the Nearest Thousand)Individuals andother investors
10.26%
Overseas
investors

Distribution of

13.06%

Other
domestic
companies

Shares by
Shareholder Type59.15%

Financial
institutions
and securities
companies

Thousands ofshares owned

Percentage of
total (%)

Mitsubishi Chemical Holdings Corporation

218,996

50.57

Taiyo Nippon Sanso Client Shareholding Society

18,125

4.19

The Master Trust Bank of Japan, Ltd. (Trust Account)

12,302

2.84

Japan Trustee Services Bank, Ltd. (Trust Account)

11,188

2.58

JFE Steel Corporation

11,127

2.57

Meiji Yasuda Life Insurance Company

10,0072.31

Mizuho Bank, Ltd.

8,182

1.89

JP MORGAN CHASE BANK 380055

7,976

1.84

The Norinchukin Bank

7,000

1.62

Japan Trustee Services Bank, Ltd. (Trust Account 5)

3,834

0.89

* The Company holds 179,000 treasury shares.
Percentage of total is calculated excluding treasury shares.

Main Affiliated Companies (Company Names as of October 1, 2020)
Taiyo Nippon Sanso Corporation
1-3-26 Koyama, Shinagawa-ku,
Tokyo 142-8558, Japan
Tel: +81-3-5788-8000

Ingasco, Inc.
One Corporate Center, 23rd Floor,
Dona Julia Vargas Avenue, Corner Meralco Avenue Ortigas
Center, Pasig City 1605, Philippines
Tel: +63-2-8626-1500

Matheson Tri-Gas, Inc.
909 Lake Carolyn Parkway, Suite 1300,
Irving, TX 75039, U.S.A.
Tel: +1-972-560-5700

Vietnam Japan Gas Joint Stock Company
No. 33, Road 3A Bien Hoa Industrial Zone II,
Bien Hoa City, Dong Nai Province, Vietnam
Tel: +84-251-3836706–09
Tel: +84-251-3992418–21

Nippon Gases Euro-Holding S.L.U.
Calle Orense, 11, 9th Floor, 28020 Madrid, Spain
Tel: +34-91-453-72-00

Supagas Pty Ltd
5 Benson Road, Ingleburn,
NSW 2565, Australia
Tel: +61-2-8788-4444

17.53%

Common Stock Price Range and Trading Volume

Trading volume (Right scale)

30,000

Taiyo Nippon Sanso (China) Investment Co., Ltd.
No.137 Bacha Road,
Changxing Island Harbor Industrial Zone,
Dalian, China
Tel: +86-411-6528-4066

20,000Leeden National Oxygen Ltd.
1 Shipyard Road, Singapore, 628128
Tel: +65-6266-4868

Stock price (Left scale)(Yen)

(Thousands of shares)

3,000

2,000

1,000

0

10,0002016

2017

NIPPON SANSO HOLDINGS CORPORATION

2018

92

INTEGRATED REPORT 2020

2019

2020

Thermos K.K.
Mita NN Bldg., 4-1-23 Shiba, Minato-ku,
Tokyo 108-8450, Japan
Tel: +81-3-5730-0130

Nippon Sanso (Thailand) Co., Ltd.
282 Bangbon 3 Road, Kwaeng Nongkhaem,
Khet Nongkhaem, Bangkok 10160, Thailand
Tel: +66-2-445-5010

0NIPPON SANSO HOLDINGS CORPORATION93

INTEGRATED REPORT 2020

CORPORATE PROFILE

Consolidated Financial Statements
Taiyo Nippon Sanso Corporation and Consolidated Subsidiaries* As these financial statements are translated into English based on the annual securities report issued on June 22, 2020, the former company name,Taiyo Nippon Sanso Corporation, is used to denote the Company.

Consolidated Statement of Financial Position(Millions of yen)

Notes

FYE2020(March 31, 2020)

AssetsCurrent assets
Cash and cash equivalents6¥   100,005¥   59,620

Trade receivables

7

179,243

197,952

Inventories

865,886

66,288Other financial assets

13

7,147

10,051Other current assets

14

Total current assets

Consolidated Statement of Profit or Loss

(Millions of yen)

FYE2019(March 31, 2019)15,02013,231

367,302347,143

Non-current assets
Property, plant and equipment

9655,195

639,332

Goodwill

10419,290437,722
253,897

Intangible assets

10232,077

Investments accounted for using the equity method

12

32,06534,434

Other financial assets

13

38,83451,314Retirement benefit asset

19

1,358

1,773

Other non-current assets

14

971

720

Deferred tax assets

29

4,637

4,676

Total non-current assets

1,384,430

1,423,871

Total assets¥1,751,732¥1,771,015

Liabilities and equity

Notes

Revenue
Cost of sales
Gross profit

4, 26

Selling, general and administrative expenses
Other operating income
Other operating expenses
Share of profit of investments accounted for using the equity method
Operating profit

27
27
12

Current liabilities
Trade payables

15¥   93,885¥   105,966

Bonds and borrowings

16

154,980

533,925

Income taxes payable
Other financial liabilities

17

8,331

10,704

51,52541,818¥ 850,239(522,680)
327,559¥ 740,341(473,332)
267,008(242,129)
10,623(5,665)
3,533
93,921(204,789)
4,748(3,940)3,836
66,863

28
28

1,150
(15,938)
79,133

2,294(7,074)62,083

Income taxes
Profit29(24,095)¥   55,038(18,373)¥   43,709¥   53,340
1,697¥   41,291
2,417

30

¥   123.26¥   95.42

Notes

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Profit attributable to:
Owners of parent
Non-controlling interests

See notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income

Provisions

20

375

352

Other current liabilities

21

22,805

26,410331,903

719,177

Profit807,611466,206

Other comprehensive income
Items that will not be reclassified to profit or loss

Total current liabilities

FYE2019(From April 1, 2018
to March 31, 2019)

Finance income
Finance costs
Profit before income taxes

Earnings per share
Basic earnings per share (Yen)Liabilities

FYE2020(From April 1, 2019
to March 31, 2020)(Millions of yen)

¥ 55,038¥ 43,70924
24(4,061)(698)(2,485)
(623)

24

33
(4,727)

1(3,107)24
24(36,897)
59(7,955)(2,944)24(1,446)(38,284)(43,012)¥ 12,025

43(10,856)(13,963)¥ 29,745¥ 10,996
1,029¥ 27,532
2,212

Non-current liabilities
Bonds and borrowings

16

Other financial liabilities

17

29,171

4,054

Retirement benefit liability

19

12,952

12,377

Provisions

20

3,281

7,603

Other non-current liabilities

21

20,282

20,336

Deferred tax liabilities

29

105,835

105,403

979,135

615,983

1,311,038

1,335,160

22

37,34437,344

Capital surplus

22

56,387

53,116

Treasury shares

22

(268)

(261)

Retained earnings

22

379,322339,393

Other components of equity

22(63,441)(22,991)

409,344406,602

Total non-current liabilities
Total liabilities
EquityShare capital

Total equity attributable to owners of parent
Non-controlling interests

31,34929,251

Total equity

440,693435,854¥1,751,732¥1,771,015

Total liabilities and equity

Share of other comprehensive income of investments
accounted for using the equity method
Total of items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
Effective portion of net change in fair value of cash flow hedges
Share of other comprehensive income of investments
accounted for using the equity method
Total of items that may be reclassified subsequently to profit or loss
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests
See notes to consolidated financial statements.

See notes to consolidated financial statements.

NIPPON SANSO HOLDINGS CORPORATION

Financial assets measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans

94

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION95

INTEGRATED REPORT 2020

CORPORATE PROFILE

Consolidated Financial Statements
Taiyo Nippon Sanso Corporation and Consolidated Subsidiaries

Consolidated Statement of Changes in Equity(Millions of yen)
Notes

Balance at April 1, 2019
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity to retained earnings
Transfer from other components of equity to non-financial assets
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2020

24
22
22
23

FYE2020 (From April 1, 2019 to March 31, 2020)
Share capital

Capital surplus

Treasury shares

Retained earnings¥37,344
—
—
—
—
—
—
—
—
—
—
—
—
—
¥37,344¥53,116
—
—
—
—
0
—
(264)
3,535
—
—
—
—
3,270
¥56,387¥(261)
—
—
—
(7)
0
—
—
—
—
—
—
—
(7)
¥(268)¥339,393
53,340—53,340——(11,688)——(1,893)—171(1)(13,411)¥379,322

Total equity
attributable toowners of parent

Non-controllinginterests

Other components of equity
Notes

Balance at April 1, 2019
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity
to retained earnings
Transfer from other components of equity
to non-financial assets
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2020

Financial assets
Exchange
Effective portion of
measured at fair Remeasurements ofdifferences on
net change in fairvalue through other defined benefit
translation ofvalue of cash flow
comprehensive
plans
foreign operations
hedgesincome

24
22
22
23

Total

Total equity¥(33,440)—(37,730)(37,730)
—
—
—
—
—

¥(39)
—
59
59
—
—
—
—
—

¥10,488—(3,983)(3,983)
—
—
—
—
—

¥  —
—
(689)
(689)
—
—
—
—
—

¥(22,991)—(42,343)(42,343)—————¥406,602
53,340(42,343)
10,996(7)
0(11,688)
(264)
3,535

¥29,251
1,697
(668)
1,029
—
—
(742)
318
1,950

¥435,854
55,038(43,012)
12,025(7)
0(12,431)
54
5,485

—

—

1,203

689

1,893

—

—

—

—
—
—
—
¥(71,170)

—
—
—
—
¥ 19

—
—
—
1,203
¥ 7,709

—
—
—
689
¥  —

—
—
—
1,893
¥(63,441)

—
171
(1)
(8,255)¥409,344

—
5
(464)
1,068
¥31,349

—
177
(465)
(7,186)¥440,693(Millions of yen)
Notes

Balance at April 1, 2018
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity to retained earnings
Transfer from other components of equity to non-financial assets
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2019

24
22
22
23

FYE2019 (From April 1, 2018 to March 31, 2019)
Share capital

Capital surplus

Treasury shares

Retained earnings¥37,344
—
—
—
—
—
—
—
—
—
—
—
—
—
¥37,344¥53,072
—
—
—
—
0
—
43
—
—
—
—
—
43
¥53,116¥(256)
—
—
—
(5)
0
—
—
—
—
—
—
—
(5)
¥(261)¥305,400
41,291—
41,291——(10,389)
—
—
3,070
—
20
—
(7,298)¥339,393

Total equity
attributable toowners of parent

Non-controllinginterests

Other components of equity
Notes

Balance at April 1, 2018
ProfitOther comprehensive income
Comprehensive income
Purchase of treasury shares
Disposal of treasury shares
Dividends
Changes in ownership interest in subsidiaries
Business combinations or business divestitures
Transfer from other components of equity
to retained earnings
Transfer from other components of equity
to non-financial assets
Change in scope of consolidation
Other changes
Total transactions with owners
Balance at March 31, 2019

24
22
22
23

Financial assets
Exchange
Effective portion of
measured at fair Remeasurements ofdifferences on
net change in fairvalue through other defined benefit
translation ofvalue of cash flow
comprehensive
plans
foreign operations
hedgesincomeTotal

Total equity¥(25,699)—(7,740)(7,740)—————¥   (38)—(2,944)(2,944)—————¥16,632—(2,470)(2,470)
—
—
—
—
—

¥   —
—
(602)
(602)
—
—
—
—
—

¥ (9,105)—(13,759)(13,759)—————¥386,457
41,291(13,759)
27,532(5)
0(10,389)43—¥25,614
2,417
(204)
2,212
—
—
(852)
42
2,265

¥412,072
43,709(13,963)
29,745(5)
0(11,242)
86
2,265

—

—

(3,673)602(3,070)

—

—

—

—
—
—
—
¥(33,440)

2,943
—
—
2,943
¥   (39)———(3,673)¥10,488

—
—
—
602
¥   —

2,943
—
—
(127)
¥(22,991)

2,943
20
—
(7,387)¥406,602

—
49
(80)
1,424
¥29,251

2,943
69
(80)
(5,963)¥435,854

Consolidated Statement of Cash Flows(Millions of yen)

Notes

FYE2020(From April 1, 2019
to March 31, 2020)

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization
Impairment losses
Interest and dividend income
Interest expenses
Share of (profit) loss of investments accounted for using
the equity method
Loss (gain) on sales and retirement of property, plant and equipment,
and intangible assets(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables(Increase) decrease in retirement benefit asset
Increase (decrease) in retirement benefit liability
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes refund (paid)
Net cash provided by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investments
Proceeds from sales and redemption of investments
Payments for acquisition of subsidiaries
Proceeds from sales of subsidiaries
Payments for acquisition of businesses
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial papers
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Repayments of lease liabilities
Purchase of investments in subsidiaries not resulting in change
in scope of consolidation
Dividends paid
Dividends paid to non-controlling interests
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Balance of cash and cash equivalents at beginning of the fiscal year

23

Increase (decrease) in cash and cash equivalents resulting from change
in scope of consolidation
Balance of cash and cash equivalents at end of the fiscal year
See notes to consolidated financial statements.

See notes to consolidated financial statements.

NIPPON SANSO HOLDINGS CORPORATION96

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION97

INTEGRATED REPORT 2020

FYE2019(From April 1, 2018
to March 31, 2019)¥   79,133
83,798
1,948(1,150)13,895¥   62,083
56,111
1,459(1,402)
7,072(3,533)(3,836)(6,479)14,209(844)(10,195)
(416)
689
7,019
178,073
244
4,912(11,738)(21,407)150,084(582)(20)(4,883)
2,469
(470)
588
(2,376)116,214250
4,718(6,445)(16,052)
98,685(72,810)
8,409
(535)
3,023
(15)
1,586
(182)
(2,105)(62,629)(74,152)
2,649(1,494)
8,740(638,731)—(50,899)(1,080)(754,969)(414,640)
8,000
393,994(62,148)
49,736—(8,646)433,773
12,000179,028(37,720)
107,035(15,000)(2,214)(55)(11,688)(742)(51)(46,242)(1,096)
40,116
59,620(169)(10,389)
(852)
(565)
664,925
3,128
11,77047,809268¥ 100,005

40¥  59,620

CORPORATE PROFILE

Notes to Consolidated Financial Statements

1.

Reporting Entity

Taiyo Nippon Sanso Corporation (the “Company”) is a company

fiscal year. The TNSC Group conducts gas businesses in Japan andlocated in Japan and is listed on the First Section of the Tokyo Stockoverseas, mainly for customers in the steel, chemical, and electronics

Exchange. The registered address of the Company’s head office isindustries. In addition, the TNSC Group manufactures and sells house-

disclosed on its website (https://www.tn-sanso.co.jp/en). The consoli-

wares such as stainless steel vacuum bottles. Details are described in

dated financial statements of the Company and its subsidiaries (collec-

Note “4. Segment Information.”

tively, the “TNSC Group”) comprise interests in the TNSC Group, its

The Company’s parent is Mitsubishi Chemical Holdings Corporation.

associates, and joint arrangements, with March 31 as the end of the2.

Basis of Preparation

adjusted for any initial direct costs and other costs such as prepaid

the TNSC Group recognizes a right-of-use asset and a lease liability forlease payments as well as estimated costs such as restoration obliga-

a lease based on the substance of the contract, rather than classifying

tions as required by the lease contract.

them as finance and operating leases.

The lease payments are allocated between repayments of the lease

For leases classified as finance leases under IAS 17, the carrying

liability and finance charges to achieve a constant rate of interest on

amount of the right-of-use asset and the lease liability at the date of

the outstanding balance of the lease liability, and the finance charges

initial application are determined based on the carrying amount of theare recognized in profit or loss.

respective leased asset and lease liability in accordance with IAS 17

A right-of-use asset is depreciated over its useful life on a system-

as of the day immediately before the date of initial application.

atic basis if ownership of the underlying asset is transferred to the

For leases classified as operating leases under IAS 17, the leaselessee by the end of the lease term or if the cost of the right-of-use

liability as of the date of initial application is measured at the present

asset reflects the exercise of a purchase option, otherwise it is depreci-

value of the total remaining lease payments discounted using anated over the shorter of its useful life or the term of the lease.

incremental borrowing rate of the TNSC Group’s lessee at the date of

In addition, for leases with a lease term of 12 months or less andinitial application. The right-of-use asset is measured at the amountof the lease liability, adjusted for prepaid or accrued lease payments.

(1) Conformity with IFRS

(5) Use of judgments, estimates, and assumptions

leases for which the underlying asset is of low value, lease payments

The consolidated financial statements of the TNSC Group have been

In preparing the TNSC Group’s consolidated financial statements inassociated with such leases are recognized as an expense on a system-

prepared in compliance with International Financial Reporting

accordance with IFRS, management is required to make judgments,

atic basis over the lease term.

Standards (IFRS) published by the International Accounting Standards

estimates, and assumptions that affect the application of accounting

In applying IFRS 16, the TNSC Group applies the following practical
expedients, as permitted as a transitional measure, to leases previously

As a result of the application of IFRS 16, the carrying amount of theclassified as operating leases under IAS 17:

Board. Since the Company meets the requirements of a “Specified

policies and reported amounts of assets, liabilities, income, and

TNSC Group’s lease-related assets increased by ¥34.1 billion and theCompany Applying Designated IFRS” prescribed under Article 1-2

expenses. Actual results may differ from these estimates.

balance of lease liabilities increased by ¥34.6 billion as of the date ofprovision for onerous contracts under IAS 37 “Provisions, Contingent

initial application of this standard. The right-of-use assets are included

Liabilities and Contingent Assets” immediately before the date of initialof the Japanese Ordinance on Terminology, Forms, and Preparation

Estimates and underlying assumptions are reviewed on an ongoing

Methods of Consolidated Financial Statements, the Company has

basis. The impacts of changes in accounting estimates are recognizedin property, plant and equipment, and lease liabilities are included inin the accounting period in which the estimates are changed and inother financial liabilities under current or non-current liabilities.

adopted the provisions of Article 93 of said ordinance.

future accounting periods affected.
(2) Approval of financial statements

Although the global economic outlook is unclear due to the impact

application, as an alternative to performing an impairment review• To elect not to apply the requirements to recognize a right-of-use

In applying IFRS 16, the TNSC Group has taken the transitional

asset and a lease liability to leases whose remaining lease terms

approach of recognizing the cumulative effect of the application of

The TNSC Group’s consolidated financial statements were approved byof the COVID-19 pandemic, the TNSC Group assumes that it will

this standard at the date of initial application, but there is no cumula-

Yujiro Ichihara, President CEO of the Company, on June 19, 2020.

continue in the following fiscal year based on the information avail-tive effect at the date of initial application of this standard.

able at the end of the fiscal year ended March 31, 2020. The amounts• To adjust the amount of the right-of-use asset by the amount ofare within 12 months• To exclude initial direct costs from the measurement of theright-of-use asset at the date of initial application

Further, in applying IFRS 16, instead of reviewing whether the(3) Basis of measurement

determined based on accounting judgments and estimates may becontract is, or contains, a lease as of the date of initial application,

The TNSC Group’s consolidated financial statements were prepared on

subject to change if these assumptions and conditions change.

the TNSC Group has adopted a method permitted as a transitionala historical cost basis, except for certain assets and liabilities including

Major information on accounting judgments, estimates, andfinancial instruments measured at fair value as described in Note “3.

assumptions that may have significant impacts on the TNSC Group’s

Significant Accounting Policies.”

consolidated financial statements is as follows:• To use hindsight, such as in determining the lease term if thecontract contains options to extend or terminate the lease
For the measurement of a lease liability, the TNSC Group discounts

measure based on IAS 17 “Leases” and IFRIC 4 “Determining whether

the lease payments using its weighted average incremental borrowing

an Arrangement Contains a Lease.”

rate of the lessees as of the date of initial application. The weighted

The TNSC Group used to classify a lease contract as a finance lease

average incremental borrowing rate used is 2.5%.

• Impairment of non-financial assets (“11. Impairment Losses”)

if substantially all of the risks and economic value of ownership of the(4) Presentation currency• Recoverability of deferred tax assets (“29. Income Taxes”)

leased asset were transferred to the TNSC Group, otherwise it was

non-cancelable operating leases at March 31, 2019 and lease liabilities

The TNSC Group’s consolidated financial statements are presented in• Measurement of defined benefit obligationsclassified as an operating lease, in accordance with IAS 17. Under IFRS 16,

at the date of initial application is as follows:

Japanese yen, which is the functional currency of the Company, andThe difference between future minimum lease payments under(“19. Post-employment Benefits”)

amounts are rounded down to the nearest million yen.

• Fair value of financial instruments (“32. Financial Instruments”)(Millions of Yen)

Total future minimum lease payments under non-cancelable operating leases at March 31, 2019¥23,029

Total future minimum lease payments under non-cancelable operating leases at March 31, 2019 (after discounting using

20,875(6) New accounting standard applied

the weighted average incremental borrowing rate at April 1, 2019)

The major accounting standard applied by the TNSC Group from the fiscal year ended March 31, 2020 is as follows:

Finance lease liabilities at March 31, 2019

5,269

Accounting standard or interpretation

Outline of newly established/revised standard

Short-term lease or leases for low-value assets for which lease liabilities are not recognized(1,804)IFRS 16This revised standard applies to accounting treatments and disclosure requirements on leases.

Extension options which are reasonably certain to be exercised and termination options which are reasonably certain not

15,585

LeasesPrimarily, the standard introduces a single model, and for all leases with a term of more than
12 months, the standard, in principle, requires a lessee to recognize right-of-use assets andobligations to make lease payments on its financial statements.

to be exercised
Lease liabilities at April 1, 2019¥39,927(7) New accounting standards and interpretations that are not yet applied

A contract is, or contains, a lease when the right to control the use of

the substance of the contract, even if the contract does not take theRegarding major accounting standards and interpretations issued prior to the approval date of the consolidated financial statements as of and for

an identified asset is transferred for a period of time in the exchange

legal form of a lease.

the fiscal year ended March 31, 2020, the TNSC Group has applied all those accounting standards and interpretations, including early application,

for consideration, and the lessee recognizes a right-of-use asset and

The lease liability is measured at the present value of the total leasea lease liability at the commencement date of the lease. The TNSC

payments payable at the commencement date of the lease. The right-

Group determines whether a contract is, or contains, a lease based on

of-use asset is initially measured at the amount of the lease liability,

NIPPON SANSO HOLDINGS CORPORATION98

INTEGRATED REPORT 2020

that would have potential significant impacts on the consolidated financial statements.

NIPPON SANSO HOLDINGS CORPORATION99

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

3.

Significant Accounting Policies(1) Basis of consolidation

associates, the TNSC Group’s interests in such change are recognized1) Subsidiaries

in other comprehensive income.

Subsidiaries refer to companies controlled by the TNSC Group. The

Adjustments are made to consolidated financial statements in order

TNSC Group judges that it controls a company if the TNSC Group has

to eliminate the TNSC Group’s interests in unrealized gains and losses

the exposure or rights to variable returns arising from its involvement

arising from transactions between the TNSC Group and associates.

in the investee and has the ability to influence such returns due toFinancial statements of associates are prepared for the same

power over the investee.

reporting period as the TNSC Group. Adjustments are made to makeIn preparing the consolidated financial statements, the financial

accounting policies of the associates consistent with the TNSC Group’s

statements of each Group company prepared at the same closing dateaccounting policies.

based on the unified accounting policies of the TNSC Group are used.

In the event of loss of significant influence over associates, theIf accounting policies applied by a subsidiary are different from the

TNSC Group measures and recognizes the remaining investment

accounting policies applied by the TNSC Group, adjustments are madeat fair value on the date when significant influence is lost. Gains andto the financial statements of such subsidiary as necessary.

losses arising from the loss of significant influence are recognized in

Consolidation of subsidiaries begins on the date when the TNSC

profit or loss.

Group acquires control over the subsidiaries until the date when the3) Joint arrangements

control over the subsidiaries is lost.
Transactions between consolidated companies, as well as the

Joint arrangements refer to arrangements that require the unanimous

balance of receivables and payables and unrealized gains and losses

consent of the parties sharing control over decision making on

arising from such transactions, are eliminated in preparing the consoli-

relevant activities.
A joint venture (jointly controlled entity) refers to a joint agreement

dated financial statements.
If there is a change in interests in consolidated subsidiaries without

where parties with joint control over the arrangement have the right

involving a loss of control, it is accounted for as an equity transaction.

to the net assets of such arrangement.
If the TNSC Group has a share in a joint venture, the TNSC GroupThe difference between the adjustment amount of the non-controllinginterests and the fair value of the consideration is recognized directly

accounts for such share using the equity method.
A joint operation (jointly controlled business) refers to a business inin equity as equity attributable to owners of parent.
In the event of a loss of control, the TNSC Group measures andwhich parties with joint control substantially have the right to assets
and the obligation to liabilities related to joint arrangements.

recognizes the remaining investment at fair value on the date when
the control has been lost. Gains and losses arising from the loss of

If the TNSC Group has a share in a joint operation, the TNSC Group

control are recognized in profit or loss.

recognizes the investment concerning such joint operation only at theNon-controlling interests in consolidated subsidiaries’ net assets areequivalent amount of the TNSC Group’s interests in the assets, liabilities,

identified separately from the TNSC Group’s interests. Comprehensive

income, and expenses arising from jointly controlled operating activities.

income of consolidated subsidiaries is attributable to owners of parent

Transactions between the TNSC Group companies, as well as theand non-controlling interests, even if this results in the non-controllingbalance of receivables and payables and unrealized gains and losses

interests having a deficit balance.

arising from such transactions, are eliminated.
The TNSC Group has more than 50% of the voting rights of Sakai

2) Associates

Gas Center, Inc. The TNSC Group judges that said company qualifies

Associates refer to companies over which the TNSC Group has a

as a joint operation.

significant influence on their financial and operating policies but does(2) Business combinations

not have control or joint control.
The TNSC Group accounts for investments in associates using theBusiness combinations are accounted for using the acquisition

equity method.

method.

Investments in associates under the equity method are recognized

If the initial accounting for business combinations has not been

at cost at the time of acquisition and recorded in the consolidated

completed by the end of the period in which the business combina-

statement of financial position after adjusting the TNSC Group’s

tions occurred, they are accounted for at a provisional amount for theinterests in changes in net assets of the associates after acquisition.

items for which the accounting is incomplete. The provisional amountThe consolidated statement of profit or loss reflects the TNSC

is adjusted during the measurement period, which is within one year

Group’s interests in the performance of associates. If there is a change

from the acquisition date.

in the amount recognized in other comprehensive income of

NIPPON SANSO HOLDINGS CORPORATIONThe consideration transferred in a business combination is calcu-

net investments in foreign operations, financial assets measured throughlated as the sum of acquisition-date fair values of assets transferred byother comprehensive income, and translation differences arising fromthe acquirer, liabilities incurred by the acquirer to former owners of the

cash flow hedges are recognized in other comprehensive income.
The assets and liabilities of foreign operations are translated intoacquiree, and equity interests issued by the acquirer.
Non-controlling interests in the acquiree are measured for each

Japanese yen at the spot exchange rate at the end of the reporting

business combination either at fair value or at the amount equivalent

period, and the income and expenses of foreign operations are trans-

to the non-controlling interests in proportion to the fair value oflated into Japanese yen at the spot exchange rate at the transaction

identifiable net assets of the acquiree.

date or at a rate similar thereto. The translation differences are recog-

Acquisition-related costs incurred in connection with businessnized in other comprehensive income.
If a foreign operation is disposed of, the cumulative translation

combinations are recognized as expenses for the period in which suchcosts were incurred.

differences related to such operation are recognized in profit or loss

When the TNSC Group acquires a business, it classifies and designates

for the period in which the disposal occurs.

assets to be acquired and liabilities to be assumed based on contract
terms, economic conditions, and related conditions at the acquisition(4) Financial instruments

date. In addition, identifiable assets acquired and liabilities assumed

1) Financial assets (excluding derivatives)

are in principle measured at fair value on the acquisition date.

(i) Initial recognition and measurement

If a business combination is achieved in stages, the interest held

The TNSC Group initially recognizes trade receivables on the date of

before acquiring the control of the acquiree is revalued at fair value atoccurrence. All other financial assets are initially recognized at thethe acquisit­ion date, and the difference is recognized in profit or loss.

transaction date when the TNSC Group becomes a contractual party

The amount of the interest in the acquiree that was recorded in otherto such financial assets.
The TNSC Group classifies its financial assets into (a) financial assets

comprehensive income before the acquisition date is accounted forin the same manner as in the case where the acquirer disposed

measured at amortized cost and (b) financial assets measured at fairof its interests.

value through other comprehensive income. The classification is

Goodwill is measured as the amount of the aggregate amountdetermined at the time of initial recognition of the financial assets.

of the consideration transferred and the amount recognized as(a) Financial assets measured at amortized cost

non-controlling interests exceeding the net of identifiable assets

		Debt financial assets are classified as financial assets measured

acquired and liabilities assumed.

at amortized cost if both of the following criteria are met:

If the aggregate amount recognized as the consideration trans-		• Financial assets are held based on a business model with anferred and non-controlling interests is less than the net of identifiableobjective of holding financial assets to recover contractual

assets acquired and liabilities assumed, the difference is recognized in

cash flows.

profit or loss.

		After initial recognition, goodwill acquired through a business• Contractual terms of financial assets give rise to cash flowsthat are solely payments of principal and interest on the

combination is not amortized but is recorded at the amount initiallyprincipal amount outstanding on a specified date.

recognized less the accumulated impairment loss. In addition, impair-			 Financial assets measured at amortized cost are measured

ment tests are performed each year and whenever there is an indica-at fair value plus transaction costs directly attributable to thetion of impairment.

acquisition of such financial assets.
(b)	Financial assets measured at fair value through other compre-(3) Foreign currency translation

hensive income

The consolidated financial statements of the TNSC Group are		Debt financial assets are classified as financial assets measured

presented in Japanese yen, the functional currency of the Company.

at fair value through other comprehensive income if both of the

In addition, each company within the TNSC Group designates its own

following criteria are met:functional currency, and transactions of each company are measured		in its functional currency.

• Financial assets are held based on a business model withan objective of collecting contractual cash flows and selling
financial assets.

Transactions denominated in a foreign currency are translated intofunctional currencies at the spot exchange rate at the transaction date		or at a rate similar thereto.

• Contractual terms of financial assets give rise to cash flowsthat are solely payments of principal and interest on the

Monetary assets and liabilities denominated in a foreign currency

principal amount outstanding on a specified date.

are translated into functional currencies at the spot exchange rate at			 Equity financial assets are designated as financial assets

the end of the reporting period. Translation differences arising frommeasured at fair value through other comprehensive income,such translation and settlement are recognized in profit or loss.

and such designation is applied on an ongoing basis.

However, financial instruments designated as hedging instruments of100

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION101

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

2) Financial liabilities (excluding derivatives)

undertaking the hedge. Such documentation includes specific hedging

5) Fair value of financial instruments

hensive income are measured at fair value plus transaction costs(i) Initial recognition and measurement

instruments, hedged items or transactions, the nature of the risk being

The fair value of financial instruments traded in active financial

directly attributable to the acquisition of such financial assets.

The TNSC Group classifies its financial liabilities into (a) financial liabili-

hedged, and how the TNSC Group will assess effectiveness of themarkets as of the end of the reporting period refers to quoted prices

ties measured at amortized cost and (b) financial liabilities measured

hedging instruments in fair value changes when offsetting thein markets or dealer prices.

(ii) Subsequent measurement

at fair value through profit or loss. The classification is determined at

exposure to changes in fair value or cash flows of the hedged items

The fair value of financial instruments for which active markets do

After initial recognition, financial assets are measured according toinitial recognition of the financial liabilities. All financial liabilities are

attributable to the hedged risks. The TNSC Group evaluates whether

not exist is calculated by referring to appropriate valuation techniques

their classification as follows:

initially measured at fair value. However, financial liabilities measured

or not derivatives used for hedging transactions are effective foror prices provided by counterparty financial institutions.

at amortized cost are measured at fair value less transaction costs

offsetting changes in fair value or cash flows of the hedged items

directly attributable to such financial liabilities.

at inception of the hedge and on an ongoing basis. Specifically, the(5) Cash and cash equivalents

TNSC Group determined that a hedge is effective in the case where

Cash and cash equivalents consist of cash on hand, deposits that can be(ii) Subsequent measurement

the economic relationship between the hedged item and the hedging

withdrawn at any time, and short-term investments with a maturity of

After initial recognition, financial liabilities are measured according

instruments results in an offset.

three months or less from the acquisition date that are readily convert-			 Financial assets measured at fair value through other compre-(a) Financial assets measured at amortized cost		Financial assets measured at amortized cost are measured atamortized cost using the effective interest method.
(b)	Financial assets measured at fair value through other comprehensive income

to their classification as follows:		Financial assets other than financial assets measured atamortized cost are measured at fair value.

(a) Financial liabilities measured at amortized cost			 For financial assets measured at fair value through other com­pre­Hedges that meet strict criteria for hedge accounting are classified

ible into cash and subject to an insignificant risk of changes in value.

and accounted for under IFRS 9 as follows.
(6) Inventories

		Financial liabilities measured at amortized cost are measured athensive income, changes in fair value are recognized in otheramortized cost using the effective interest method after initial(i) Fair value hedges

The cost of inventories includes costs of purchase, costs of conversion,

comprehensive income. If they are derecognized or their fair value

recognition. Amortization by the effective interest method andFair value changes in derivatives are recognized in profit or loss. For

and all other costs incurred in bringing the inventories to their present

significantly declines, they are transferred to retained earnings.

gains and losses from derecognition are recognized in profit or loss.

fair value changes in the hedged items attributable to the risks to belocation and condition.

(b) Financial liabilities measured at fair value through profit or loss(iii) Derecognition		For financial liabilities measured at fair value through profit orhedged, the carrying amount of the hedged items is adjusted andInventories are measured at the lower of cost and net realizable

recognized as profit or loss.

value. The weighted average method is principally used to calculate

The TNSC Group derecognizes financial assets only if contractual

loss, the portion related to changes in the TNSC Group’s credit

rights to cash flows arising from the financial assets cease to exist, or

risk from changes in fair value is recognized in other compre-(ii) Cash flow hedges

estimated selling price in the ordinary course of business less theif the financial assets are transferred and substantially all the risks andhensive income after initial recognition, and the remaining

The effective portion of gain or loss on the hedging instruments is

estimated costs of completion and the estimated costs necessary

rewards have been transferred.

amount is recognized in profit or loss.

recognized as other comprehensive income, and the ineffective

to make the sale.

If the TNSC Group does not transfer or retain substantially all thethe cost. In addition, the net realizable value is calculated at the

portion is immediately recognized in profit or loss.

risks or rewards but continues to control the financial assets trans-(iii) Derecognition

ferred, recognition of such financial assets is continued to the extent

The TNSC Group derecognizes financial liabilities in cases of thecomprehensive income is transferred to profit or loss when hedged

The TNSC Group adopts the cost model for measurement of property,

to which the TNSC Group has a continuing involvement, and in that

performance, exemption, or expiration of the obligation of financialtransactions affect profit or loss. If the hedged item results in theplant and equipment.

case, related liabilities are also recognized.

liabilities, the exchange occurs under substantially different terms,

recognition of non-financial assets or non-financial liabilities, theor when there has been a substantial modification of the terms.

amount recognized in other comprehensive income is treated as an(iv) Impairment(7) Property, plant and equipment

The amount related to the hedging instruments recorded in other

Property, plant and equipment are presented at cost less accumulated depreciation and accumulated impairment losses.

adjustment of the initial carrying amount of the non-financial assets

The TNSC Group recognizes impairment of financial assets based on3) Offset of financial instruments

whether there is a significant increase in credit risk from the time of

Financial assets and financial liabilities are offset only if there is ainitial recognition in financial assets or financial asset groups measured

current enforceable legal right to offset the recognized amounts, andcumulative gain or loss previously recognized as equity through otherat amortized cost at the end of each reporting period.

if there is an intention to settle at a net amount or realize the assets

comprehensive income is transferred to profit or loss.

For financial assets or financial asset groups measured at amortizedand settle the liabilities simultaneously. They are then recorded at acost, expected credit losses for 12 months are recognized as allowance

net amount in the consolidated statement of financial position.

for doubtful accounts, if credit risk has not significantly increased fromThe cost includes the costs directly attributable to the acquisitionof the assets, the costs of their dismantlement, removal or restoration,or non-financial liabilities.
If forecasted transactions are no longer expected to occur, theand the borrowing costs that meet the recognition criteria.
All property, plant and equipment other than land are depreciated
so that the depreciable amount, which is cost less the residual value atIf the hedging instrument is terminated or exercised without expira-the end of the fiscal year, is allocated on a systematic basis using thetion, sale, or exchange or renewal to another hedging instrument, or

straight-line method.

if it no longer qualifies for hedge accounting due to events such as a

Estimated useful lives of major property, plant and equipment are

the time of initial recognition. However, for trade receivables, expected

4) Derivatives and hedge accountingchange in risk management objective, the cumulative gain or loss

credit losses over the remaining period are recognized.

The TNSC Group uses derivatives such as forward exchange contracts,

previously recognized in equity through other comprehensive income

Buildings and structures:

3 to 50 years

interest rate swap contracts, and currency swap contracts to hedge

is continuously recorded in equity until the forecasted transaction

Machinery and vehicles:

3 to 20 years

recognition, expected credit losses over the remaining period are

currency risks and interest rate risks. These derivatives are initiallyoccurs, or is no longer expected to occur.

Tools, furniture and fixtures:

2 to 25 years

recognized as allowance for doubtful accounts.

measured at fair value at the time when the contracts were entered

If there is a significant increase in credit risk from the time of initial

Whether or not the credit risk has significantly increased is judged

and remeasured at fair value thereafter.

based on a change in the default risk. In judging whether there is any

Fair value changes of derivatives are recognized in profit or loss.

(iii) Hedges of net investments in foreign operations(8) Intangible assets

As to hedges of net investments in foreign operations, the TNSCThe TNSC Group adopts the cost model for measurement ofintangible assets.

change in the default risk, overdue (past-due information) is mostly

However, the effective portion of cash flow hedges and hedges ofGroup applies the same accounting treatment as to cash flow hedges.

considered.

net investments in foreign operations is recognized in other compre-

The effective portion of gain or loss on the hedging instruments is

hensive income.

recognized as other comprehensive income, and the ineffective portion

In addition, expected credit losses are measured based on the
discounted present value of the difference between the amountas follows:

Intangible assets are presented at cost less accumulated amortization and accumulated impairment losses.

At inception of the hedge, the TNSC Group formally designates

is immediately recognized in profit or loss. When a foreign operation

Intangible assets acquired separately are initially measured at cost.

receivable on a contract basis and the amount expected to be received

and documents the hedging relationships to which hedge accounting

is disposed, cumulative gain or loss previously recognized as equity

The cost of intangible assets acquired through business combinations

based on past credit losses, etc.

is applied and the risk management objective and strategy forthrough other comprehensive income are reclassified to profit or loss.

is measured at fair value as of the acquisition date. For internally

NIPPON SANSO HOLDINGS CORPORATION102

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CORPORATE PROFILE

Notes to Consolidated Financial Statements

generated intangible assets, except for development costs that qualify

recorded in the consolidated statement of financial position at theextinguishment of loss, due to factors such as a change in the assump-for capitalization, all expenditures are recognized as expenses for the

lower of the fair value of the leased property and the present value oftion used in calculating the recoverable amount. If such indication

periods when they are incurred.

Expenses related to defined contribution plans are recognized as
expenses for the period when they are incurred.

the minimum lease payment calculated at the inception date of theexists, the recoverable amount of such assets, cash-generating units,

Intangible assets with finite useful lives are amortized over theirlease. In addition, lease payments are allocated to financial expenses

or groups of cash-generating units is estimated. If such recoverable(14) Provisions

estimated useful lives using the straight-line method. Impairment tests

and repayment of lease liabilities under the interest method, and suchamount exceeds the carrying amount of such assets, cash-generating

A provision is recognized when the TNSC Group has a present obliga-

are performed whenever there is an indication of impairment.

financial expenses are recognized in profit or loss. Lease assets areunits, or groups of cash-generating units, the impairment loss istion (legal or constructive) as a result of a past event, when it is

Estimated useful lives and method of amortization of intangible assets

depreciated using the straight-line method over the shorter of theirreversed up to the lower of the recoverable amount calculated andprobable that an outflow of resources embodying economic benefits

with finite useful lives are reviewed at the end of each reporting

estimated useful lives or the lease term.

the carrying amount less the accumulated depreciation if the impair-

will be required to settle the obligation, and when a reliable estimate

ment loss was not recognized in previous fiscal years. The reversal of

can be made of the amount of the obligation.

period, and if there is any change, it is applied prospectively as a

For operating lease transactions, lease payments are recognizedchange in accounting estimates.

as expenses using the straight-line method over the lease term. In

Estimated useful lives of major intangible assets are as follows:

addition, variable lease payments are recognized as expenses for the

Customer-related intangible assets: 5 to 30 years

period when they are incurred.

impairment loss is recognized in profit or loss.

The TNSC Group measures the provisions at the present value of

For goodwill, impairment loss is not reversed.

expenditures expected to be required to settle the obligation, whenthe effect of the time value of money is material. In calculating the(11) Assets held for sale and discontinued operations

present value, the TNSC Group uses a pre-tax discount rate that

contains a lease based on the substance of the contract, even if theNon-current assets (or disposal groups) are classified as “assets heldreflects current market assessments of the time value of money andcontract is not legally in the form of a lease.

for sale” if their carrying amount is expected to be recovered princi-

those risks specific to the liability.

Intangible assets with indefinite useful lives and intangible assets not

The TNSC Group determines whether a contract is a lease or it

available for use are not amortized. Impairment tests are performed
separately or by a cash-generating unit whenever there is an indication of impairment.

pally through a sale transaction rather than through continuing use.
(10) Impairment of assets

The above requirements only apply if the sale is highly probable(15) Equity(9) Leases

1) Impairment of non-financial assets

within one year and such assets (or disposal groups) are available for1) Ordinary shares

FYE2020 (From April 1, 2019 to March 31, 2020)

The TNSC Group assesses at the end of each reporting period whether

immediate sale in their present condition. Non-current assets (orThe issue price of ordinary shares is recorded in share capital andA contract is, or contains, a lease when the right to control the use of

there is any indication that an asset may be impaired. If any suchdisposal groups) classified as assets held for sale are measured at thecapital surplus.

an identified asset is transferred for a period of time in the exchange

indication exists, and if assets need to be annually tested for impairment,

lower of their carrying amount and fair value less costs to sell.

for consideration, and the TNSC Group recognizes a right-of-use asset

the TNSC Group estimates the recoverable amount of the asset. The

and a lease liability at the commencement date of the lease. The TNSC

recoverable amount of the asset is the higher of an asset’s fair value

Group determines whether a contract is, or contains, a lease based onless costs of disposal and its value in use. If the recoverable amount of

the substance of the contract, even if the contract does not take theeach asset cannot be estimated, the recoverable amount of a cash-

already been disposed of or classified as assets held for sale, and theylegal form of a lease.

generating unit or a group of cash-generating units to which the asset

are recognized if they constitute one operation of the TNSC Groupbetween the carrying amount and the consideration at the time ofand if there is a plan to dispose of one of the operations.

disposal is recognized in capital surplus.

2) Treasury shares

Property, plant and equipment and intangible assets classified as

When the TNSC Group purchases treasury shares, the consideration

assets held for sale are not depreciated or amortized.

paid is recognized as a deduction from equity.

Discontinued operations include a component of an entity that has

When the TNSC Group disposes of treasury shares, the difference

The lease liability is measured at the present value of the total leasebelongs is estimated. If the carrying amount of a cash-generating unit

payments payable at the commencement date of the lease. The right-

or a group of cash-generating units exceeds the recoverable amount,of-use asset is initially measured at the amount of the lease liability,

impairment loss of the asset is recognized and write-downs of the(12) Borrowing costs(16) Revenue

adjusted for any initial direct costs and other costs such as prepaid

asset are recorded up to the recoverable amount. In measuring the

For assets that necessarily take a substantial period of time to prepare

The TNSC Group recognizes revenue in an amount that reflects thelease payments as well as costs such as restoration obligations asvalue in use, the discounted present value of expected future cash

for intended use or sale, borrowing costs directly attributable to acqui-compensation to which the entities expect to be entitled in exchange

required by the lease contract.

flows is calculated using the pre-tax discount rate that reflects current

sition, construction, or production of such assets are capitalized as

for goods and services transferred to customers based on the

The lease payments are allocated between repayments of the leasemarket assessments of the time value of money and the risks specificpart of the cost of such assets. Other borrowing costs are recognizedfollowing five-step model.

liability and finance charges so as to achieve a constant rate of interest

to the asset. The business plan used to estimate future cash flows is in

as an expense for the period when they are incurred.

on the outstanding balance of the lease liability, and the financeprinciple limited to five years. Future cash flows beyond the projectedcharges are recognized in profit or loss.

period of the business plan are calculated based on the long-term(13) Retirement benefits

Step 3: Determine the transaction priceaverage growth rate according to individual circumstances.

The TNSC Group provides defined benefit plans and defined contribu-

Step 4: Allocate the transaction price to the performance

A right-of-use asset is depreciated over its useful life on a systematic basis if ownership of the underlying asset is transferred to the

In calculating fair value less costs of disposal, the TNSC Group uses

lessee by the end of the lease term or if the cost of the right-of-use

an appropriate valuation model that is supported by indices of fairasset reflects the exercise of a purchase option, otherwise it is depreci-

value available.

ated over the shorter of its useful life or the term of the lease.

Goodwill is allocated to individual cash-generating units, or groupsof cash-generating units, that are expected to benefit from the syner-

In addition, for leases with a lease term of 12 months or less andgies of a business combination after the acquisition date.

leases for which the underlying asset is of low value, lease payments

Step 1: Identify the contract with the customer
Step 2: Identify performance obligations in the contracttion plans as retirement benefit plans for employees.

obligations in the contract

The TNSC Group separately calculates the present value of theStep 5: Recognize revenue when (or as) the performance

defined benefit obligations, related current service costs, and pastobligations are satisfied

service costs for each plan using the projected unit credit method.
The discount rate is calculated based on market yields at the end

The TNSC Group conducts gas businesses in Japan and overseas,
mainly for customers in the steel, chemical, and electronics industries,of the reporting period on high-quality corporate bonds.
Liabilities or assets related to the defined benefit plans are calcu-

and has built production and sales structures for its main products ingible assets not available for use, are tested for impairment annually

lated by deducting the fair value of plan assets from the present value

Japan, the United States, Europe, and Asia and Oceania. In addition,or whenever there is an indication of impairment.

of defined benefit obligations.

the TNSC Group manufactures and sells housewares such as stainless

Lease contracts are classified as finance leases if the risks and rewards

2) Reversal of an impairment loss

benefit plans are all recognized in other comprehensive income for the

Regarding product sales in these businesses, because a customer

incidental to ownership of the lease assets are substantially transferred

For assets other than goodwill, impairment losses recognized in the

period when they are incurred, and immediately reflected in retained

acquires control over a product at the time the product is delivered,to the TNSC Group. Otherwise, they are classified as operating leases.

previous fiscal years are assessed at the end of the reporting period as

earnings. In addition, past service costs are expensed for the period

the TNSC Group judges that its performance obligations have been

For finance lease transactions, lease assets and lease liabilities areto whether or not there is any indication of possibility of a decrease orwhen they are incurred.

satisfied and recognizes revenue at the time the product is delivered.

associated with such leases are recognized as an expense on a regular

Goodwill or intangible assets with indefinite useful lives, and intan-

basis over the lease term.
FYE2019 (From April 1, 2018 to March 31, 2019)NIPPON SANSO HOLDINGS CORPORATION

steel vacuum bottles.

Remeasurements of liabilities or assets relating to the defined104

INTEGRATED REPORT 2020

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CORPORATE PROFILE

Notes to Consolidated Financial Statements

Revenue is measured at the price promised in the contract with

However, there are exceptions in which deferred tax assets andthe customer, after deducting such amounts as discounts, rebates,

liabilities are not recorded for the following temporary differences:

The principal products and services included in the five segments are shown in the table below.
Reportable segments

Major products and services• Arising from initial recognition of goodwill

Gas Business in Japan

Oxygen, nitrogen, argon, carbon dioxide, helium, hydrogen, acetylene, gas-related equipment,

The amount of the price in the sales contract of a product is generally• Arising from initial recognition of an asset or liability in a transac-

Gas Business in the United States

specialty gases (electronic materials gases, pure gases, etc.), electronics-related equipment andcollected within one year from the time when control over the producttion other than a business combination which does not affect

Gas Business in Europe

installation, semiconductor manufacturing equipment, cutting and welding equipment, welding

is transferred to a customer, and does not include a significant

either the accounting income or the taxable profit (or loss) at theGas Business in Asia and Oceania

materials, plants and machinery, liquefied petroleum gas (LPG) and related equipment, medical-use

financing component.

time of the transaction

and returns.

• For deductible temporary differences associated with investments(17) Government grants

in subsidiaries and associates, and interests in joint arrangements,

A government grant is recognized at fair value when there is reasonable

when it is probable that the reversal will not occur in the foresee-

assurance that the TNSC Group will comply with any conditions

able future, or it is less probable that taxable profit will be available

attached to the grant and the grant will be received.

against which the deductible temporary differences can be utilized

Government grants are recognized in profit or loss on a systematic• For taxable temporary differences associated with investments inbasis over the periods in which the TNSC Group recognizes expenses

subsidiaries and associates, and interests in joint arrangements,

for the related costs for which the grants are intended to compensate.

when the TNSC Group is able to control the timing of the reversal

Government grants related to assets are recorded by deducting theof the temporary differences and it is probable that the reversal

amount of such grants from the cost of the assets.

gases (oxygen, nitrous oxide, etc.), medical equipment, stable isotopes
Thermos BusinessHousewares

The accounting methods adopted for the reported operating segments are the same as the TNSC Group’s accounting policies described in Note
“3. Significant Accounting Policies.”
Revenue from intersegment transactions and transfers is based primarily on prevailing market prices.
(2) Revenue and profit (loss) amounts by reportable segment
FYE2020 (From April 1, 2019 to March 31, 2020)(Millions of yen)will not occur in the foreseeable future
The carrying amount of deferred tax assets and liabilities (including(18) Income taxes

unrecognized deferred tax assets) is reviewed at the end of eachCurrent taxes for the current and prior periods are calculated at thereporting period. Deferred tax assets and liabilities are calculated at

amount expected to be paid to (or recovered) from taxation authori-

the tax rates that are expected to apply to the period when the assets

ties. The rates and laws used to calculate the tax amount are thoseare realized or liabilities are settled, based on tax rates and laws thatthat have been enacted or substantively enacted at the end of thehave been enacted or substantively enacted at the end of thereporting period.

reporting period.

Deferred taxes are recorded as the difference between the tax
bases and the carrying amounts of assets and liabilities at the end(19) Earnings per shareof the reporting period (temporary difference) using the asset and

The amount of basic earnings per share is calculated by dividing profit

liability method.

attributable to ordinary shareholders of the Company by the weighted

Deferred tax liabilities are in principle recognized for all taxable

average number of ordinary shares outstanding after adjusting for

temporary differences. Deferred tax assets are recognized for deduct-

treasury shares during the period. The amount of diluted earnings perible temporary differences, unused tax losses, and unused tax credits

share is calculated by adjusting the effects of all dilutive potential

to the extent that it is probable that taxable profit will be available

ordinary shares with dilutive effects.

against which the deductible temporary differences can be utilized.

Revenue
Revenues from external customers
Intersegment revenues andtransfers
Total
Segment profit (Note 2)
Other items
Depreciation and amortization
Impairment losses
Share of profit (loss) ofinvestments accounted forusing the equity method

Gas Businessin JapanGas Businessin theUnited States

Gas Business
in Europe

Gas Businessin Asia andOceania

Thermos
Business

Total

Reconcil-ing
items(Note 1)

Amounts on the
consolidated
statement of
profit or loss

¥356,145¥198,869¥165,564¥104,541¥25,118¥850,239¥     —

¥850,239

10,272366,418
28,737

17,480216,350
22,263

166
165,73124,854

3,088
107,629
9,952

24
25,143
7,224

31,032881,272
93,032(31,032)(31,032)(2,695)—850,239
90,33718,92438

28,749—27,732
—

6,732
—

1,226
—

83,36538

433—

83,798
38

280

(123)

(23)

63

3,372

3,569

(0)

3,569

Notes: 1.	The negative ¥2,695 million reconciling item for segment profit is comprised of ¥853 million of intersegment eliminations and companywide expenses of ¥1,841 million that were notallocated to any particular reportable segment. These companywide expenses related principally to basic research expenses that were not allocated to a particular reportable segment.
2.	Segment profit represents core operating profit, which is calculated as operating profit excluding certain gains or losses attributable to non-recurring factors (losses incurred by businesswithdrawals, streamlining, and others).

FYE2019 (From April 1, 2018 to March 31, 2019)4.

(Millions of yen)Segment Information(1) Overview of reportable segments

and has built production and sales structures for its main products in

The reportable segments of the TNSC Group are those for which

Japan, the United States, Europe, and Asia and Oceania. In addition,

discrete financial information is available and whose operating results

the TNSC Group manufactures and sells housewares such as stainlessare regularly reviewed by the Board of Directors to make decisions

steel vacuum bottles. Therefore, the Company has established theabout resource allocation and to assess performance.

following five reportable segments: Gas Business in Japan, Gas

The TNSC Group conducts gas businesses in Japan and overseas,

Business in the United States, Gas Business in Europe, Gas Businessmainly for customers in the steel, chemical, and electronics industries,

in Asia and Oceania, and Thermos Business.

Revenue
Revenues from external customers
Intersegment revenues andtransfers
Total
Segment profit (Note 2)
Other items
Depreciation and amortization
Impairment losses
Share of profit (loss) ofinvestments accounted forusing the equity method

Total

Reconciling
items(Note 1)

Amounts on the
consolidated
statement of
profit or loss

¥27,800¥740,341¥     —

¥740,341

3,813
109,977
9,149

37
27,8379,189

26,454
766,795
70,350(26,454)(26,454)(4,531)—
740,341
65,819

8,855
—

6,257
1,340

1,090
—

55,992
1,438

118
—

56,111
1,438

(6)

(10)

3,923

3,835

0

3,836

Gas Business
in Europe

Gas Businessin Asia andOceania

Thermos
Business¥187,323¥55,101¥106,164

8,177
372,129
29,80814,426
201,749
15,634—
55,101
6,567

18,077
97

21,710
—

52

(121)

Gas Businessin JapanGas Businessin theUnited States¥363,951

Notes: 1.	The negative ¥4,531 million reconciling item for segment profit is comprised of ¥237 million of intersegment eliminations, companywide expenses of ¥1,598 million that were notallocated to any particular reportable segment, and acquisition-related costs of ¥2,695 million to acquire the European business. These companywide expenses related principally tobasic research expenses that were not allocated to a particular reportable segment.
2.	Segment profit represents core operating profit, which is calculated as operating profit excluding certain gains or losses attributable to non-recurring factors (losses incurred by businesswithdrawals, streamlining, and others).

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CORPORATE PROFILE

Notes to Consolidated Financial Statements

Reconciliation of segment profit with profit before income taxes is as follows:(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)¥ 90,337¥65,819

6,490

1,336

(35)

—

(1,910)(20)

Segment profit
Gain on sales of fixed assets
Share of profit (loss) of investments accounted for using the equity method
Impairment losses

5.

Business Combinations

FYE2020 (From April 1, 2019 to March 31, 2020)

Cash¥635,847

Acquisition (100% Ownership) of Praxair, Inc. (“Praxair”)’s European

Total of consideration transferred¥635,847

Businesses (Praxair is headquartered in the United States.)

(960)

(272)
66,863Finance income

1,150

2,294

(1) Overview of business combination

Finance costs(15,938)(7,074)

1) Name and business description of acquired companies¥ 79,133¥62,083

Profit before income taxes(Millions of yen)

Acquisition date
(December 3, 2018)

FYE2019 (From April 1, 2018 to March 31, 2019)93,921

Other
Operating profit(2) Fair value of consideration transferred

There were no significant business combinations.

(3) Goodwill, assets acquired, liabilities assumed,
and non-controlling interests(Millions of yen)

Names of acquired companies:

Acquisition date
(December 3, 2018)

Praxair España S.L. and 36 other companies

Current assets

Business description:(3) Information about geographical areas

The industrial gas business of Praxair’s European territories in Germany,

A breakdown of revenues from external customers and non-current assets by geographical area are as follows:

Spain, Portugal, Italy, Norway, Denmark, Sweden, the Netherlands,
and Belgium; the carbon dioxide gas business in the United Kingdom,

Revenues from external customers(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)Japan¥368,216¥376,536

The United States

189,992

177,940

Europe170,307

Ireland, the Netherlands, and France; and helium-related businesses.

¥  4,354
32,664Inventories

8,368

Other

3,681

Non-current assets
Property, plant and equipment (Note 1)

190,5612) Acquisition date

Intangible assets (Note 1)

208,301

December 3, 2018

Investments accounted for using theequity method

59,3243) Main reason for business combination

Other
Assets acquired
Current liabilities

Asia, Oceania and others

121,723

126,540

The Company upholds a long-term vision with the aim of achieving

Total¥850,239¥740,341

consolidated revenue of ¥1 trillion, an operating profit margin of
10%, a return on capital employed (ROCE) of 10% or above, and an

Note: Revenue is classified by country or region based on the customers’ location.

overseas revenue ratio of 50% or above, with a view toward sharpening its global competitive edge and securing its position as a major

Non-current assets(Millions of yen)

FYE2020(March 31, 2020)

Cash and cash equivalents
Trade receivables (Note 2)

FYE2019(March 31, 2019)

5,998
4,196
458,123

Trade payables

23,882Other financial liabilities

13,593

Other

12,254Non-current liabilities

player, amid a realignment of the industry. The Company regards thisacquisition as a means to make a large advancement toward realizing
such vision and an attractive investment opportunity with strategic

Retirement benefit liability

6,942

Deferred tax liabilities

72,444

Other

1,297

¥   175,547¥   170,094

The United States

371,186

367,101

Europe650,627

682,686

The industrial gas market in Europe is the second largest behind

Asia, Oceania and others

110,172

111,789

the North American market, and its competition environment is stable.

Non-controlling interests (Note 3)¥1,307,534¥1,331,673

This acquisition will accelerate the TNSC Group’s global expansion by

Goodwill (Notes 4, 5)

obtaining businesses with a certain share in the market where it has

Notes: 1. Details of property, plant and equipment and intangible assets
		Property, plant and equipment are mainly machinery and vehicles of ¥136,460 million.
Intangible assets are mainly customer-related intangible assets of ¥203,900 million.
2.	Fair value of acquired receivables, contractual amounts receivable, and estimateduncollectible amount		The fair value of acquired receivables and contractual amounts receivable areapproximately equal. None of the contractual amounts receivable are estimated to
be uncollectible.
3. Non-controlling interests
		Non-controlling interests are measured at the amount of the non-controlling interests
in proportion to the fair value of identifiable net assets of the acquired company.
4. Goodwill
		Goodwill mainly comprises anticipated synergies and excess earnings capabilities
arising from the acquisition that do not match specific recognition criteria. Goodwill
is not tax deductible.
5. Basis adjustment
		In order to hedge the currency risks involved in investment in the acquired company,
a forward exchange contract was executed. For such forecasted transactions, hedge
accounting was applied for the purpose of a cash flow hedge, with the fair value ofthe hedging instruments on the acquisition date of negative ¥3,791 million applied
as a basis adjustment to goodwill derived from this business combination, resulting
in an increase in the amount of goodwill initially recognized by the same amount.

Japan

Total

Note: Non-current assets are classified by their location, and they do not include financial assets, deferred tax assets, or retirement benefit asset.

significance at the same time.

not had previous participation. Furthermore, the TNSC Group will be(4) Information about major customers

able to acquire profitable businesses with a certain scale and network

Information about major customers is not disclosed since there is no single external customer that accounts for 10% or more of revenue.

(e.g., manufacturing base) as well as talented personnel including thecurrent top management and business platform. Based on such abusiness foundation, the TNSC Group is planning to provide its products,
such as environmentally responsive products, and to reinforce its group­
wide functions, such as enhancement of marketing to global firms.
4) Percentage of voting rights acquired
Essentially 100.0%
5) Method for gaining control of acquired companies
Consolidated subsidiary Nippon Gases Euro-Holding S.L.U. and otherLiabilities assumed

130,412

Net assets acquired and liabilities assumed

327,711companies acquired the shares of the acquired companies bypurchasing shares for cash.

NIPPON SANSO HOLDINGS CORPORATION108

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NIPPON SANSO HOLDINGS CORPORATION109

INTEGRATED REPORT 2020

2,265
¥310,401

CORPORATE PROFILE

Notes to Consolidated Financial Statements(4) Acquisition-related costs(iii) Strengthening of the ability to offer proposals that will capture

Acquisition-related costs were ¥6,722 million. Of these, “Selling,

demand for new on-site projects in the United States (petroleum

general and administrative expenses” and “Finance costs” wererefining and petrochemicals, etc.)

6.

Cash and Cash Equivalents

A breakdown of cash and cash equivalents is as follows:

recorded at ¥2,695 million and ¥548 million, respectively, in the(Millions of yen)consolidated statement of profit or loss. “Bonds and borrowings” in4) Method for gaining control of acquired company“Current liabilities” and “Bonds and borrowings” in “Non-current

Consolidated subsidiary Matheson Tri-Gas, Inc. acquired part of theliabilities” were recorded at negative ¥771 million and negative

HyCO business conducted in the United States by Linde America andCash and deposits¥100,005¥59,620¥2,708 million, respectively, in the consolidated statement of financial

related business assets thereto through purchases for cash.

Total¥100,005¥59,620

position. Acquisition-related costs recorded in the consolidated state-(2) Fair value of consideration transferred

ment of financial position represent the unexpired balance yet to be(Millions of yen)recorded as finance costs, as of March 31, 2019, of the fair value atAcquisition date(February 27, 2019)

the initial recognition of such bonds and borrowings for financing theacquisition, less related bond issuance costs and organization fees.

Cash¥46,133

Total of consideration transferred¥46,133

FYE2020(March 31, 2020)

7.

Trade Receivables

A breakdown of trade receivables is as follows:(Millions of yen)

FYE2020(March 31, 2020)(5) Impact on the TNSC Group’s results
The TNSC Group’s consolidated statement of profit or loss includes(Millions of yen)revenue and profit generated by the acquired companies subsequent

Acquisition date(February 27, 2019)

to the acquisition date of ¥55,101 million and ¥6,167 million, respectively.
The TNSC Group’s revenue and profit (pro forma information)

Current assets

assuming that the business combination was undertaken on April 1,¥185,784

Notes and accounts receivable–trade(3) Goodwill, assets acquired, and liabilities assumed¥   215

FYE2019(March 31, 2019)

Allowance for doubtful accounts
Total

FYE2019(March 31, 2019)¥204,418(6,540)(6,466)¥179,243¥197,952

Trade receivables are classified as financial assets measured at amortized cost.

Non-current assets

2018, the beginning of the fiscal year ended March 31, 2019, were

Property, plant and equipment (Note 1)¥857,543 million and ¥53,761 million, respectively. The pro forma

Intangible assets (Note 1)

31,387
7,852

Assets acquired

information has not been audited.
Acquisition of the HyCO Business and Related Assets in the
United States

39,454Non-current liabilities

498

Liabilities assumed

498

Net assets acquired and liabilities assumed

38,956

Goodwill (Notes 2, 3)¥ 7,177

8.

Inventories

A breakdown of inventories is as follows:(Millions of yen)

FYE2020(March 31, 2020)

FYE2019(March 31, 2019)

Merchandise and finished goods¥43,331¥43,815

1) Name and business description of counterpart

The provisional accounting treatment was applied at March 31, 2019

Work in process

10,517

10,728Name of counterpart:since the fair value measurement of assets acquired, liabilities

Raw materials and supplies

12,037

11,744

Total¥65,886¥66,288(1) Overview of business combination

Linde Gas North America LLC (“Linde America”)

assumed, and goodwill was not completed. The measurement has

Business description:

been completed in the second quarter of FYE2020.

A portion of the HyCO business* operated in the United States byNotes: 1. Details of property, plant and equipment and intangible assets
		Property, plant and equipment are mainly machinery and vehicles of ¥31,361 million.
Intangible assets are customer-related intangible assets of ¥7,852 million.
2. Goodwill
		Goodwill mainly comprises anticipated synergies and excess earnings capabilities
arising from acquisition that do not match specific recognition criteria. Goodwill isdeductible for a certain period under full taxation.
3. Basis adjustment
		In order to hedge the currency risks involved in investment in the acquired company, aforward exchange contract was executed. For such forecasted transactions, hedge
accounting was applied for the purpose of a cash flow hedge, with the fair value ofthe hedging instruments on the acquisition date of negative ¥452 million applied
as a basis adjustment to the goodwill derived from this business combination, resulting
in an increase in the amount of goodwill initially recognized by the same amount.

Linde America* “HyCO” stands for hydrogen (H2) and carbon monoxide (CO), which are separated fromnatural gas and other gases through a technology called Steam Methane Reforming andother equipment. The HyCO business provides large-scale supply of H2 and CO to customers
in the oil refining and petrochemical industries by way of a pipeline.

2) Acquisition dateFebruary 27, 2019

Amounts of inventories measured based on net realizable value at March 31, 2020 and 2019 were ¥3,554 million and ¥3,064 million,
respectively.
Amounts of write-downs of inventories recognized as expenses for FYE2020 and FYE2019 were ¥179 million and ¥165 million, respectively.

3) Main reason for business combination
The Company is aiming to expand in the gas technology field by(4) Acquisition-related costs

utilizing M&As as a strategy for its medium-term management plan

Acquisition-related costs were ¥149 million, and are included inentitled “Ortus Stage 2.” The Company decided on full-scale entry“Selling, general and administrative expenses” in the consolidated

into the HyCO business from the perspective of strengthening its

statement of profit or loss.

proposal capabilities with enhancements to its product lineup. The
acquisition further realizes this endeavor, and the following can be(5) Impact on the TNSC Group’s results

expected as a result of the agreement:

The TNSC Group’s revenue and profit (pro forma information)(i) Steady generation of earnings over the medium to long term fromassuming that the business combination was undertaken on April 1,
2018, the beginning of the fiscal year ended March 31, 2019, wereon-site supply of H2 and CO¥749,999 million and ¥46,026 million, respectively. The pro forma(ii) Acquisition of resources (people / technology) further facilitating

information has not been audited.

efficient operation of the HyCO business
NIPPON SANSO HOLDINGS CORPORATION110INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION111

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

9.

FYE2019 (From April 1, 2018 to March 31, 2019)

Property, Plant and Equipment

Costs(Millions of yen)

(1) Table of changes
Changes in costs, accumulated depreciation and accumulated impairment losses, and carrying amounts of property, plant and equipment are
as follows:
FYE2020 (From April 1, 2019 to March 31, 2020)
Costs(Millions of yen)

Balance at April 1, 2019
Adjustment due to application of IFRS 16
Restated balance at April 1, 2019 (After adjustment)
Individual acquisition (Note)
Impairment losses
Business combination, business divestitures, etc.
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2020

Machinery andvehiclesBuildings andstructures

Land¥827,191
8,095
835,287
70,828—812(6,785)(4,359)(18,155)¥877,627¥152,983
23,879176,863
11,553—211(4,544)402(1,163)¥183,322¥55,757
2,099
57,856
744
—
99
(390)
(18)
(878)
¥57,413

Construction inprogress¥ 61,153—
61,153(14,225)
—
6
(111)
(441)
(1,186)¥ 45,196

Tools, furnitureand fixtures

Total¥153,137 ¥1,250,224
120
34,195
153,258 1,284,419
11,25980,161
—
—
181
1,312
(3,565)(15,397)(1,762)(6,180)(5,483)(26,867)¥153,887 ¥1,317,447

Note: Individual acquisition in the construction in progress column represents net amount of an increase due to new acquisitions after reclassifying to respective accounts of property,
plant and equipment.

Accumulated depreciation and accumulated impairment losses

Balance at April 1, 2018
Individual acquisition (Note)
Impairment losses
Business combination, business divestitures, etc.
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2020

Construction inprogress

Machinery andvehiclesBuildings andstructures

Land¥626,736
46,357—
167,690(15,297)
(584)
2,288
¥827,191¥137,356
5,330—
11,624(2,112)
1,179(395)¥152,983¥47,361
155
—
9,526
(288)
(1,449)451¥55,757¥41,297
12,748(1,340)
6,798
(284)
389
1,544
¥61,153

Tools, furnitureand fixtures

Total¥116,308 ¥   969,061
11,20375,796—(1,340)28,446224,087(3,944)(21,927)
(177)
(641)
1,300
5,188
¥153,137 ¥1,250,224

Note: Individual acquisition in the construction in progress column represents net amount of an increase due to new acquisitions after reclassifying to respective accounts of property,
plant and equipment.

Accumulated depreciation and accumulated impairment losses(Millions of yen)

Balance at April 1, 2018
Depreciation
Impairment losses
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2019

Machinery andvehiclesBuildings andstructures¥(419,810)(35,937)—
14,276624(4,385)¥(445,232)¥(81,850)(4,751)
(13)
1,855
29
(233)
¥(84,963)

Machinery andvehiclesBuildings andstructures¥206,925¥381,959¥55,506¥68,020Land¥(2,822)
—
(84)
48
—
(68)
¥(2,927)

Construction inprogress

Tools, furnitureand fixtures

¥—
—
—
—
—
—
¥—

¥(72,647)(7,566)—
3,743
48(1,347)¥(77,768)

Construction inprogress

Tools, furnitureand fixtures¥41,297¥61,153¥43,661¥75,369

Total¥(577,130)(48,255)(97)
19,924702(6,034)¥(610,891)(Millions of yen)
Machinery andvehiclesBalance at April 1, 2019
Depreciation
Impairment losses
Business divestitures, etc.
Sale and disposal
Transfer
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2020¥(445,232)(51,860)(1,271)
12
6,019
1,990
5,368
¥(484,973)

Buildings andstructures

Land¥(84,963)(8,814)
(358)
—
2,588
(124)
2
¥(91,670)¥(2,927)
(221)
—
—
125
(70)
0
¥(3,093)

Construction inprogress

¥—
—
—
—
—
—
—
¥—

Tools, furnitureand fixtures

Total¥(77,768) ¥(610,891)(9,036)(69,933)(2)(1,632)2
15
2,716
11,450
(71)
1,723
1,644
7,015
¥(82,515) ¥(662,252)

Carrying amounts(Millions of yen)

Balance at April 1, 2018
Balance at March 31, 2019Land

¥44,538¥52,829

Total¥391,930¥639,332

The right-of-use assets (capital expenditure amount) increased by ¥5,508 million for FYE2020.
Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated
statement of profit or loss.

Carrying amounts(Millions of yen)

Restated balance at April 1, 2019 (After adjustment)
Balance at March 31, 2020

Machinery andvehiclesBuildings andstructures¥390,054¥392,653¥91,899¥91,652

Land¥54,929¥54,320

Construction inprogress

Tools, furnitureand fixtures¥61,153¥45,196¥75,489¥71,372

Total¥673,528¥655,195(2) Right-of-use assets
Carrying amounts of right-of-use assets (leased assets under finance leases in FYE2019) included in property, plant and equipment are as follows:(Millions of yen)

FYE2020(March 31, 2020)

FYE2019(March 31, 2019)

Machinery and vehicles¥10,143

The right-of-use assets (capital expenditure amount) increased by ¥5,508 million for FYE2020.

Buildings and structures

20,3710

Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated

Land

1,932

—

statement of profit or loss.

Tools, furniture and fixtures
Total

NIPPON SANSO HOLDINGS CORPORATION112

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION113

INTEGRATED REPORT 2020

¥2,050

2,075

1,717

¥34,521¥3,768CORPORATE PROFILE

Notes to Consolidated Financial Statements

10.

FYE2019 (From April 1, 2018 to March 31, 2019)

Goodwill and Intangible Assets

Costs(Millions of yen)

(1) Table of changes

Intangible assets

Changes in costs, accumulated amortization and accumulated impairment losses, and the carrying amounts of goodwill and intangible assets are
as follows:
FYE2020 (From April 1, 2019 to March 31, 2020)
Costs(Millions of yen)
Intangible assets
Goodwill

Balance at April 1, 2019
Individual acquisition
Business combination, business divestitures, etc.
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2020

¥439,361
355
2,493
—
(21,328)¥420,881

Customer-related
intangible assets¥268,910—
2,603—(11,970)¥259,543

Other

Total

¥21,259
1,181(280)(2,046)(793)¥19,321¥290,170
1,181
2,322
(2,046)(12,764)¥278,864

Accumulated amortization and accumulated impairment losses(Millions of yen)
Intangible assets
Goodwill¥(1,638)————47¥(1,591)

Balance at April 1, 2019
Amortization
Impairment losses
Business divestitures, etc.
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2020

Customer-related
intangible assets¥(24,085)(12,458)
—
—
—
1,068
¥(35,476)

Other

Total

¥(12,186)(1,406)
(5)
86
1,984
218
¥(11,310)¥(36,272)(13,865)
(5)
86
1,984
1,287
¥(46,786)

Goodwill

Balance at April 1, 2018
Individual acquisition
Business combination, business divestitures, etc.
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2019

¥120,773
223
324,284(13)(5,907)¥439,361

Intangible assets
Goodwill¥437,722¥419,290

Balance at April 1, 2019
Balance at March 31, 2020

Customer-related
intangible assets¥244,824¥224,067

Other¥9,073¥8,010Total¥253,897¥232,077

Total¥16,059
646
4,600
(156)
110
¥21,259¥ 72,549
646
221,500(156)(4,369)¥290,170(Millions of yen)
Intangible assets
Goodwill

Balance at April 1, 2018
Amortization
Impairment losses
Sale and disposal
Exchange differences on translation of foreign operations, etc.
Balance at March 31, 2019

Customer-related
intangible assets¥(1,551)
—
(20)
—
(66)
¥(1,638)¥(16,778)(6,635)——(671)¥(24,085)

Other

Total

¥(10,838)(1,221)—152(279)¥(12,186)¥(27,617)(7,856)—152(951)¥(36,272)

Carrying amounts(Millions of yen)
Intangible assets
Goodwill

Balance at April 1, 2018
Balance at March 31, 2019

Customer-related
intangible assets¥119,221¥437,722¥ 39,711¥244,824

Other

Total

¥5,220¥9,073¥ 44,932¥253,897

The carrying amount of assets with indefinite useful lives in the

FYE2020 or FYE2019.
(Millions of yen)

¥ 56,490—
216,899—(4,479)¥268,910

Other

Accumulated amortization and accumulated impairment losses

There were no significant internally generated intangible assets for
Carrying amounts

Customer-related
intangible assets

intangible assets above was ¥898 million at March 31, 2020 and

Amortization of intangible assets is included in “Cost of sales” and¥1,069 million at March 31, 2019. Principally, the assets were trade-“Selling, general and administrative expenses” in the consolidated

marks acquired at the time of a business combination, and the TNSC

statement of profit or loss.

Group determined that their useful lives cannot be estimated because

Research and development costs recognized as expenses for FYE2020

the assets will exist for as long as the business continues.

and FYE2019 were ¥3,389 million and ¥3,494 million, respectively.
(2) Significant intangible assets
Significant intangible assets recorded in the consolidated statement of financial position are customer-related intangible assets held by Nippon
Gases Euro-Holding S.L.U. and Matheson Tri-Gas, Inc., which are consolidated subsidiaries. Their carrying amounts and the remaining period ofamortization are as follows:(Millions of yen)

FYE2020(March 31, 2020)

NIPPON SANSO HOLDINGS CORPORATION114

INTEGRATED REPORT 2020

FYE2019(March 31, 2019)

Remaining period ofamortization

Nippon Gases Euro-Holding S.L.U.

¥179,372¥194,267

Mainly 28 years

Matheson Tri-Gas, Inc.

¥39,057¥43,966

Mainly 16 years

NIPPON SANSO HOLDINGS CORPORATION115

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

11.

Impairment Losses

The TNSC Group groups assets into the smallest cash-generating units that generate cash flows largely independently. For idle assets, recognitionof impairment loss is determined by individual assets.
Impairment losses for FYE2020 and FYE2019 were ¥1,948 million and ¥1,459 million, respectively. Impairment losses were included in “Other
operating expenses” in the consolidated statement of profit or loss.
Major assets for which impairment losses were recognized are as follows:(Millions of yen)
Usage

Location

Type

Carbon dioxide
production facilities

Kurashiki, Okayama
Kitakyushu, Fukuoka

Machinery and vehicles,
and other

Reportable segment

Impairment losses

Gas Business in Japan¥1,598used for impairment tests of goodwill. The business plan may be

As to goodwill and intangible assets with indefinite useful lives, theaffected mainly by revenue expansion, and these major assumptions

TNSC Group performs impairment tests every year and each time when

may be affected by the results of changes in future uncertain condi-

there is an indicator of impairment. The recoverable amount of a cash-

tions of the economy. Thus, when the circumstances under which thegenerating unit (a group of cash-generating units) is measured as theassumptions were changed, the result of calculation of the recoverable

higher of an asset’s fair value less costs of disposal and its value in use.

amount may differ.
In addition, although the world economic outlook is uncertain due

calculated by discounting estimated future cash flows projected based

to the COVID-19 pandemic, the TNSC Group estimates future cashon the business plan, which is prepared by reflecting past experiencesflows for the purpose of impairment tests based on the available

and external information and approved by the management. The

information at March 31, 2020, by assuming the impact would

estimated period of future cash flows is approximately 10 years for faircontinue in the following fiscal year.
The fair value is categorized as Level 3 of the fair value hierarchy
based on inputs used to develop those measurements.

mined by referring to the long-term average growth rate of a market
or a country that a cash-generating unit (a group of cash-generating¥1,598 million (Machinery and vehicles: ¥1,271 million, and other: ¥327 million)
The carrying amount of the carbon dioxide production facilities located in Okayama and Fukuoka was reduced to the recoverable amount, sincethese facilities are scheduled to be disposed of due to changes in the business environment. The recoverable amount is measured at value in use,which is estimated at zero, and reduced to the memorandum value.
FYE2019 (From April 1, 2018 to March 31, 2019)(Millions of yen)

Indonesia

respectively, and were included in TNSC (Australia) Pty Ltd.

value in use. Cash flows exceeding the business plan period is deter-• Carbon dioxide production facilities

Natural gas liquefier

the growth rates, and the discount rates are the major assumptions

value less costs of disposal and generally limited to five years for the

Breakdown of impairment losses

Location

The business plan prepared and approved by the management,

at March 31, 2020 and 2019 were ¥898 million and ¥1,069 million,

An asset’s fair value less costs of disposal and its value in use are

FYE2020 (From April 1, 2019 to March 31, 2020)

Usage

The carrying amounts of intangible assets with indefinite useful lives

Type

Reportable segment

Construction in progress

Gas Business in Asia and Oceania

units) belongs to.
Growth rates and discount rates used in the measurement of the recoverable amount are as follows:
FYE2020(March 31, 2020)

Cash-generating unit
(a group of cash-generating units)

Growth rate

FYE2019(March 31, 2019)

Discount rate

Growth rate

Discount rate

Impairment losses

Nippon Gases Euro-Holding S.L.U.

1.8%

7.3%

1.7%

6.9%

¥1,340Matheson Tri-Gas, Inc.

3.5%

9.6%

3.9%

9.6%

TNSC (Australia) Pty Ltd

3.0%

9.3%

3.0%

8.5%

Breakdown of impairment losses

The recoverable amount measured by value in use of Nippon Gases Euro-Holding S.L.U. as of March 31, 2020 exceeded its carrying amount by• Natural gas liquefier¥37,276 million; it is estimated that if the discount rate rises by 0.4% these amounts would be approximately the same.

¥1,340 million
The carrying amount of the natural gas liquefaction business in progress in Indonesia was reduced to the recoverable amount, since its profitability
was expected to decline due to drastic changes in the market environment surrounding the raw fuel. The recoverable amount is measured at value
in use, and calculated by discounting the future cash flows at 11.0%.

12.

Investments Accounted for Using the Equity Method

The carrying amount of investments in joint ventures accounted for using the equity method that are individually insignificant is as follows:
Carrying amounts of goodwill and intangible assets with indefinite useful lives allocated to a cash-generating unit (a group of cash-generating(Millions of yen)

FYE2020(March 31, 2020)

units) are as follows:(Millions of yen)

FYE2020(March 31, 2020)

Cash-generating unit
(a group of cash-generating units)

FYE2019(March 31, 2019)¥287,310¥300,702

Matheson Tri-Gas, Inc.

98,523

100,343TNSC (Australia) Pty Ltd

19,87823,550

Nippon Gases Euro-Holding S.L.U.

Other

14,476

14,195

Total¥420,188¥438,792¥6,148¥6,256FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Carrying amount of investments in joint ventures

Share of comprehensive income of joint ventures accounted for using the equity method is as follows:(Millions of yen)¥(60)¥(205)

Share of other comprehensive income(1)

1

Total share of comprehensive income¥(62)¥(203)

Share of profit

NIPPON SANSO HOLDINGS CORPORATION116

INTEGRATED REPORT 2020

FYE2019(March 31, 2019)NIPPON SANSO HOLDINGS CORPORATION117

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

In order to improve the efficiency and effective utilization of assets held, the TNSC Group conducts sales (derecognition) of equity financial

The carrying amount of investments in associates accounted for using the equity method that are insignificant is as follows:(Millions of yen)

FYE2020(March 31, 2020)¥25,916

Carrying amount of investments in associates

FYE2019(March 31, 2019)¥28,177

assets measured at fair value through other comprehensive income. The fair value at the time of sales and cumulative gains or losses on sales are
as follows. Cumulative gains or losses (after tax) recognized in other comprehensive income in equity were transferred to retained earnings at thetime of sales.
(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Fair value¥2,862¥8,740

Cumulative gains or losses

1,518

4,428

Share of comprehensive income of associates accounted for using the equity method is as follows:(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Share of profit¥ 3,593¥4,042

Share of other comprehensive income(1,410)43

Total share of comprehensive income¥ 2,182¥4,085

13.

Other Financial Assets

For equity financial assets measured at fair value through other comprehensive income, dividends received were recognized as follows:(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Financial assets that were derecognized¥ 84¥   149

Financial assets held at end of the fiscal year

815

1,006

A breakdown of other financial assets is as follows:(Millions of yen)

FYE2020(March 31, 2020)

FYE2019(March 31, 2019)14.

Other Assets

Equity securities and investments in capital¥28,999¥38,676

Other

18,13323,331

Allowance for doubtful accounts(1,151)

(642)

Total

¥45,981¥61,365

Current assets¥ 7,147¥10,051

Prepaid expenses

Non-current assets

38,83451,314

Other

9,153

8,451

Total

¥45,981¥61,365

Total¥15,991¥13,951

Current assets¥15,020¥13,231

Equity securities and investments in capital are classified as equity financial assets measured at fair value through other comprehensive income.
Other is classified mainly as financial assets measured at amortized cost.

A breakdown of other assets is as follows:(Millions of yen)

FYE2020(March 31, 2020)¥ 6,838

Non-current assets
Total

FYE2019(March 31, 2019)¥ 5,500

971

720¥15,991¥13,951

Equity securities are designated as equity financial assets measured at fair value through other comprehensive income because they are held
mainly for the purpose of maintaining and strengthening business and collaborative relationships and financial transaction relationships, etc.
Names of issuers and fair value of principal equity financial assets measured at fair value through other comprehensive income are as follows:

15.

Trade Payables

A breakdown of trade payables is as follows:
FYE2020 (March 31, 2020)(Millions of yen)

Name

IBIDEN CO., LTD.

(Millions of yen)

FYE2019 (March 31, 2019)
AmountName¥3,139JFE Holdings, Inc.

AmountNotes and accounts payable–trade¥93,885¥105,966

Total¥93,885¥105,966

2,742

Tosoh Corporation

3,834

Koatsu Gas Kogyo Co., Ltd.

2,427

Koatsu Gas Kogyo Co., Ltd.

2,862

JFE Holdings, Inc.

1,808

IBIDEN CO., LTD.

2,227

Tokyo Tatemono Co., Ltd.

1,723

842

NIPPON SANSO HOLDINGS CORPORATION118

INTEGRATED REPORT 2020

FYE2019(March 31, 2019)¥4,833Tosoh Corporation

Toho Acetylene Co., Ltd.

FYE2020(March 31, 2020)(Millions of yen)

Trade payables are classified as financial liabilities measured at amortized cost.

NIPPON SANSO HOLDINGS CORPORATION119

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

16.

Assets pledged as collateral and secured obligations are as follows:

Bonds and Borrowings

Assets pledged as collateral

A breakdown of bonds and borrowings is as follows:(Millions of yen)

(Millions of yen)

FYE2020(March 31, 2020)

FYE2019(March 31, 2019)¥ 38,777¥   461,510

Current portion of long-term borrowings

86,20260,415

Commercial papers

20,00012,000Current portion of bonds

10,000—Long-term borrowings

620,613319,141

Bonds

186,997

147,065

Total¥962,592¥1,000,132

Current liabilities¥154,980¥   533,925

Non-current liabilities

807,611466,206

Total¥962,592¥1,000,132

Short-term borrowings

FYE2020(March 31, 2020)

FYE2019(March 31, 2019)

Property, plant and equipment¥1,071¥1,463

Total¥1,071¥1,463

Secured obligations(Millions of yen)

FYE2020(March 31, 2020)¥538

Bonds and borrowings
Other financial liabilities (current)
Total

FYE2019(March 31, 2019)

¥716

19

126

¥558

¥843

Bonds and borrowings are classified as financial liabilities measured at amortized cost.
Average interest rates applicable to short-term borrowings and long-term borrowings at March 31, 2020 were 1.96% and 1.27%, respectively.
Average interest rates applicable to short-term borrowings and long-term borrowings at March 31, 2019 were 0.67% and 1.84%, respectively.
The repayment term of long-term borrowings at March 31, 2020 is from 2020 to 2059.

17.

Other Financial Liabilities

A breakdown of other financial liabilities is as follows:(Millions of yen)

A breakdown of bonds is as follows:

FYE2020(March 31, 2020)(Millions of yen)Company
name

Name

Issuance date

FYE2020
FYE2019(March 31, 2020) (March 31, 2019)

Interest rate(%)

FYE2019(March 31, 2019)

Collateral

Maturity date

Lease liabilities under finance leases¥    —

Lease liabilities

35,797—None

February 26,
2021

Accrued expenses

34,01730,589Accounts payable—other

9,498

8,064

Other

1,383

1,949

Total

¥80,696¥45,873¥41,818¥ 5,269*1

The 12th Domestic Unsecured Straight
Corporate Bonds

February 27,
2014

*1

The 13th Domestic Unsecured Straight
Corporate Bonds

December 15,
2016

15,00015,0000.14

None

December 15,
2021

The 14th Domestic Unsecured Straight
Corporate Bonds

December 15,
2016

15,00015,0000.39

None

December 15,
2026

Current liabilities¥51,525

January 29,
2019

4,054

99,32399,153

1.41 (*2)

NoneJanuary 29,
2054

29,171*1

The 1st Series Deferrable Interest andCallable Unsecured Subordinated Bonds

Non-current liabilities
Total¥80,696¥45,873*1

The 2nd Series Deferrable Interest andCallable Unsecured Subordinated Bonds

January 29,
2019

7,920

7,911

1.87 (*3)

NoneJanuary 29,
2059

*1

The 15th Domestic Unsecured Straight
Corporate Bonds

October 16,
2019

19,907

—

0.13

None

October 16,
2024

*1

The 16th Domestic Unsecured Straight
Corporate Bonds

October 16,
2019

9,947

—

0.19

None

October 16,
2026

*1

The 17th Domestic Unsecured Straight
Corporate Bonds

October 16,
2019

19,899

—

0.30

None

October 16,
2029¥196,997¥147,065*1¥ 10,000

Total¥ 10,000

0.56

Other financial liabilities are mainly classified as financial liabilities measured at amortized cost.

*1 The bonds were issued by the Company.
*2 A fixed interest rate is applied to the period between the day following January 29, 2019 and January 29, 2024, while a variable interest rate is to be applied from the day following January
29, 2024 (step-up in interest rate occurring on January 30, 2024).
*3 A fixed interest rate is applied to the period between the day following January 29, 2019 and January 29, 2029, while a variable interest rate is to be applied from the day following January
29, 2029 (step-up in interest rate occurring on January 30, 2029).

NIPPON SANSO HOLDINGS CORPORATION

120

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CORPORATE PROFILE

Notes to Consolidated Financial Statements

18.

19.

Lease Transactions

Post-employment Benefits(1) Finance leases under IAS 17(3) Gain or loss and cash outflows related to lease transactions

The Company and certain consolidated subsidiaries have funded and

The investment yield is determined taking into consideration the yield

Total future minimum lease payments and their present value are as

Gain or loss and cash outflows related to lease transactions are as follows:

unfunded retirement defined benefit plans and defined contribution

on government bonds.

follows:(Millions of yen)
(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(March 31, 2019)

One year or lessMore than one year but
within five years

Total minimum
lease payments

Future financecharges

Present value¥2,227¥(25)¥2,201

Land, buildings and structures as
underlying assets
Tools, furniture and fixtures as
underlying assets

2,627

(39)

2,587

503

(22)

480

¥5,358¥(88)¥5,269More than five years
Total

Depreciation charges for right-of-use assets

Machinery and vehicles as
underlying assets
Total depreciation charges¥ 3,768
929
3,576
8,273

Future minimum lease payments under non-cancelable operating lease

Expenses relating to leases of
low-value assets

1,720

contracts are as follows:

Total cash outflows for leases¥10,367(2) Operating leases under IAS 17(Millions of yen)

Lease payments recognized as expenses for FYE2019 wereFYE2019(March 31, 2019)

One year or less

¥ 5,709

More than one year but within five years

12,108More than five years

5,210

Total

¥7,388 million.

plans for employees’ retirement benefits, and the plans cover substan-In accordance with laws and regulations, the pension plans aretially all the employees.

managed by the Company’s consolidated subsidiaries or a pension
fund that is legally separate from the Company’s consolidated subsid-(1) Defined benefit plans

iaries. The Company’s consolidated subsidiaries, or the Board ofMajor defined benefit plans of the Company’s consolidated subsid-

Directors of the pension fund and the trustees of pension fundiaries are cash balance plans. Amounts of benefits under the cash

management, are required by laws and regulations to act in the bestbalance plans are set based on various conditions such as years ofinterest of policyholders, and are responsible for operating plan assets

service, points based on achievements during the service period, etc.

based on the prescribed policies.

Amounts of defined benefit plans in the consolidated statement of financial position are as follows:(Millions of yen)

FYE2020(March 31, 2020)

Present value of defined benefit obligations¥ 43,192

Fair value of plan assets(31,598)(35,317)¥ 11,594¥ 10,603¥ 12,952¥ 12,377

Net amount of defined benefit obligations and assets
Retirement benefit liability
Retirement benefit asset

Please see Note “9. Property, Plant and Equipment” for information

FYE2019(March 31, 2019)

Net amount of defined benefit obligations and assets¥ 45,920(1,358)(1,773)¥ 11,594¥ 10,603

on increases in right-of-use assets.

¥23,029

Please see Note “32. Financial Instruments” for information onbalances of lease liabilities by due date.

Lease payments recognized as expenses for FYE2019 were

For defined benefit plans, amounts recognized as expenses in the consolidated statement of profit or loss are as follows:(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Current service cost

¥1,810¥1,872

Interest expenses

326

269

Some of these leases are covered by options to extend or terminate

Interest income

(178)

(444)

the leases to ensure business flexibility. The TNSC Group determines

Other

(28)

—

the term of the leases after evaluating whether it is reasonably certain

Total¥1,929¥1,696FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)¥7,388 million.
(4) Additional information related to lease transactions
The majority of the TNSC Group’s lease transactions involve property
leases, primarily leasing land and buildings as office and factory sites.

that the TNSC Group will exercise the options to extend the leases orwill not exercise the options to terminate the leases.
The TNSC Group’s leasing activities do not include significant

Changes related to the present value of defined benefit obligations are as follows:(Millions of yen)sales and lease-back transactions and restrictions or covenants
imposed by leases.

¥45,920¥32,929

Current service cost

1,810

1,872

Interest expenses

326

269

Balance at beginning of the fiscal year

Remeasurements
Actuarial gains and losses arising from changes in demographic assumptions

(59)

—

Actuarial gains and losses arising from changes in financial assumptions

907

922

Retirement benefits paid

(2,265)(2,349)14

12,816

Changes from business combinations
Other (Note)
Balance at end of the fiscal year

(3,462)(540)¥43,192¥45,920

Note: Defined benefit obligations decreased by ¥2,672 million since certain consolidated subsidiaries terminated their defined benefit plans in FYE2020.

NIPPON SANSO HOLDINGS CORPORATION122

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Notes to Consolidated Financial Statements

Fair values of plan assets at March 31, 2019 are as follows:

Changes related to the fair value of plan assets are as follows:(Millions of yen)

(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)¥35,317¥30,756

Cash and cash equivalents

178

444

Equity financial instruments

(154)

(47)

Balance at beginning of the fiscal year
Interest income
Remeasurements

Plan assets for which there Plan assets for which there
are quoted market prices are no quoted market prices
in an active market
in an active market¥1,967

Jointly managed trusts

Return on plan assets

—

2,444

2,444

2,444

2,444

—

15,812

15,812—

15,812

15,812

Life insurance general accounts—

15,051

15,051

Other

—

40

40

Total

¥1,967¥33,349¥35,317

1,151

972

Debt financial instruments

Retirement benefits paid

(1,914)(1,925)

Jointly managed trusts

—

5,275

(2,981)(157)¥31,598¥35,317

Other (Note)
Balance at end of the fiscal year
Note: Plan assets decreased by ¥2,643 million since certain consolidated subsidiaries terminated their defined benefit plans in FYE2020.

Major actuarial assumptions used to calculate the present value of defined benefit obligations are as follows:
FYE2020(March 31, 2020)

FYE2019(March 31, 2019)

0.50%

Discount rate

0.45%

¥ 1,967—

Total equity financial instruments

Contributions from companies
Changes from business combinations¥    —

Total

Total debt financial instruments

Under the TNSC Group’s plan asset management policy, theterm and actual management results of each asset. The TNSC Grouppurpose of management is to secure the required combined returns

reviews asset allocation according to the situation as necessary, suchover the medium and long term to the extent of allowable risks inas when there is a significant change in the market environment.

order to ensure payments of the benefits of the defined benefit

Contributions to the defined benefit plans are readjusted based on

obligations in the future.

periodic actuarial reviews, in order to ensure balanced pension financeIf discount rates, which are the major actuarial assumptions, fluctuate, the present values of defined benefit obligations at March 31, 2020 and

For plan assets, the TNSC Group seeks to reduce risks by diversi-in the future. In such actuarial reviews, the adequacy of contribution

2019 change as follows. This sensitivity analysis is based on the assumption that all actuarial assumptions other than actuarial assumptions subject

fying investments widely in domestic and foreign equity securities,

is verified by reviewing the basic rates for determining contributions

to analysis remain constant.

debt securities, and life insurance general accounts based on asset(such as expected rate of interest, expected mortality, and expected

allocation objectives of a policy asset mix formulated to achieverate of withdrawal).

(Millions of yen)

FYE2020(March 31, 2020)

FYE2019(March 31, 2019)

management objectives.

For FYE2021, the TNSC Group plans to contribute ¥1,335 million

Increase by 0.5%¥(2,549)¥(2,818)

For asset allocation, the TNSC Group sets the allocation to be

Decrease by 0.5%

2,443

2,700

maintained for the medium and long term, based on the correlation

The weighted average durations of the defined benefit obligation

between expectations of risks and returns for the medium and longat March 31, 2020 and 2019 were 12.0 years and 11.9 years, respectively.

to plan assets.

Fair values of plan assets at March 31, 2020 are as follows:(Millions of yen)

Plan assets for which there
are quoted
market prices inan active market

Plan assets for which
there are no quoted
market prices inan active market

Amounts recognized as expenses under defined contribution plans and public pension systems are as follows:(Millions of yen)Total

¥2,994¥    —¥ 2,994

—

1,253

1,253

—

1,253

1,253

—

15,234

15,234—

15,234

15,234

Life insurance general accounts—

11,85911,859

Other

—

255

255

Total

¥2,994¥28,603¥31,598

Cash and cash equivalents
Equity financial instruments
Jointly managed trusts
Total equity financial instruments(2) Defined contribution plans and public pension systems

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Expenses under defined contribution plans¥2,297¥2,174

Expenses under public pension systems

4,330

4,261

Debt financial instruments
Jointly managed trusts
Total debt financial instruments

NIPPON SANSO HOLDINGS CORPORATION124

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Notes to Consolidated Financial Statements

20.

21.

Provisions

A breakdown of changes in provisions is as follows:

Other Liabilities

A breakdown of other liabilities is as follows:(Millions of yen)

FYE2020(March 31, 2020)

FYE2020 (From April 1, 2019 to March 31, 2020)(Millions of yen)

Provision for
construction warranties¥310

Balance at April 1, 2019108

Increase during the fiscal year

Asset retirement
obligations

Other provisions¥ 7,603

Total

¥ 42

1,158

¥ 7,956—

1,267

FYE2019(March 31, 2019)

Advances received¥ 3,856¥ 3,924Deferred income

5,983

6,290

Employees’ bonuses

4,909

4,545

Employees’ paid absence

3,712

3,709

24,62628,277

Decrease during the fiscal year (Intended use)

(33)

—

(42)

(75)

Other

Decrease during the fiscal year (Reversal)(10)(5,381)—(5,392)

Total¥43,088¥46,747

Current liabilities¥22,805¥26,410¥ 3,656

Non-current liabilities

20,282

20,336¥   375

Total¥43,088¥46,747

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)1,600,000

1,600,000

433,092

433,092

0

Other

¥375

Balance at March 31, 2020
Current liabilities—¥ 3,281

(99)

¥  —

¥375

¥     —

¥  —

—

3,281

—

3,281

¥375

¥ 3,281¥  —¥ 3,656

Non-current liabilities
Total

(99)

FYE2019 (From April 1, 2018 to March 31, 2019)(Millions of yen)

Provision for
construction warranties

Balance at April 1, 2018

Asset retirement
obligations

Other provisions

Total¥5,742¥ 80¥6,496

24

1,261

12

1,298

Decrease during the fiscal year (Intended use)

(373)

(32)

(50)

(456)

Decrease during the fiscal year (Reversal)

(14)

—

—

(14)

Other

0

633

—

633

Balance at March 31, 2019

¥ 310

¥7,603¥ 42¥7,956

Current liabilities¥ 310¥    —¥ 42¥   352

Non-current liabilities
Total

—

7,603

—

7,603

¥ 310

¥7,603¥ 42¥7,956

Provision for construction warranties

Asset retirement obligations

In order to prepare for construction-related compensation expenses forIf the TNSC Group has legal obligations required by laws and regulations

machinery and device products, provision for construction warranties isor contracts concerning retirement of fixed assets that are used for therecorded based on the latest estimated amount of compensation based on

ordinary course of business, such as obligations to restore the original

shipment amounts of machinery and device products in the previous fiscal

condition accompanying lease contracts of factory facilities and properties

year. Of these, amounts expected to be paid within one year are recorded.

used by the TNSC Group, asset retirement obligations are recognizedHowever, there is uncertainty in the occurrence of construction-relatedcompensation expenses.

Numbers of shares authorized and shares issued are as follows:

Number of shares authorized
Number of shares issued
Beginning of the fiscal year——

433,092

433,092

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

335

332

Changes during the fiscal year
End of the fiscal year
All shares are ordinary shares with no par value. Shares issued are fully paid.
Changes in the number of treasury shares during the fiscal year are as follows:(Thousands of shares)

Beginning of the fiscal year3

3

based on the estimated amount of future expenditures calculated based

Decrease(0)(0)

on historical results, etc.

End of the fiscal year

339

335

or more, they will be affected by future business plans, etc.

126(1) Share capital and treasury shares

Increase

Although these expenses are expected to be paid mainly after one year

NIPPON SANSO HOLDINGS CORPORATION

Equity(Thousands of shares)¥ 674

Increase during the fiscal year

22.

INTEGRATED REPORT 2020

Major factors of changes during the fiscal year were due to the purchase or requests for sales of shares less than one unit.

NIPPON SANSO HOLDINGS CORPORATION127

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CORPORATE PROFILE

Notes to Consolidated Financial Statements(2) Capital surplus and retained earnings(Effective portion of net change in fair value of cash flow hedges)

Capital surplus consists of amounts not included in share capital as

The effective portion of net change in fair value of cash flow hedges ispart of the amounts arising from capital transactions, and the main

the cumulative amount of the effective portion of hedges as part ofcomponent is capital reserve. Retained earnings consist of legal

gains or losses arising from changes in fair value of the hedging instru-

retained earnings and other reserves.

Dividends whose effective date falls in the following fiscal year are as follows:
FYE2020 (From April 1, 2019 to March 31, 2020)(Millions of yen)Type of stock

ment related to cash flow hedges.

Resolution

one-half of payments or delivery in relation to the issuance of shares(Financial assets measured at fair value through other

Ordinary General Meeting of Shareholders
held on June 19, 2020

shall be included in share capital, and the remaining shall be included

comprehensive income)in capital reserve. Capital reserve may be incorporated into share

Other components of equity include valuation differences in fair value

capital by resolutions of the shareholders’ meeting.

of financial assets measured at fair value through other comprehensive

The Companies Act of Japan (the “Act”) stipulates that more thanIn addition, the Act stipulates that one-tenth of the amount to be

Ordinaryshares(Remeasurements of defined benefit plans)

reserve and legal retained earnings equals one-fourth of share capital.

Remeasurements of defined benefit plans are the effect of differences

The accumulated legal retained earnings may be used to eliminate

between actuarial assumptions at the beginning of the fiscal year andor reduce a deficit, and the legal retained earnings may be reversed by

the actual results and the effect of changes in actuarial assumptions.

resolution of the shareholders’ meeting.

These are recognized in other comprehensive income when incurredand immediately transferred from other components of equity to(3) Other components of equity

retained earnings.

¥6,060¥14

Ordinary General Meeting of Shareholders
held on June 20, 201924.

Total cash dividends(Millions of Yen)

Ordinary shares

Dividends per share(Yen)¥5,627

March 31, 2020

Effective dateJune 22, 2020

¥13

Record date

March 31, 2019

Effective dateJune 21, 2019

Other Comprehensive Income

Changes in each item in other comprehensive income during the fiscal year are as follows:(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

Other components of equity are as follows:(Exchange differences on translation of foreign operations)

FYE2019(From April 1, 2018
to March 31, 2019)

Financial assets measured at fair value through other comprehensive income

Exchange differences on translation of foreign operations are transla-

Amount arising during the fiscal year

tion differences arising when consolidating the financial statements

Tax effects

of foreign operations prepared in foreign currencies and cumulative¥ (5,695)

Net amount¥ (3,247)

1,633

761

(4,061)(2,485)(1,002)(970)

Remeasurements of defined benefit plansamounts of effective portion of gain or loss on hedging instruments

Amount arising during the fiscal year

designated as hedges of net investments in foreign operations.

303

346

(698)

(623)

(36,897)(7,955)(36,897)(7,955)

Amount arising during the fiscal year39

(4,148)

Reclassification adjustments

45

(95)

Tax effects

(25)

1,299

59

(2,944)(1,412)45

Tax effects
Net amount23.

Record date(Millions of yen)Type of stock

Resolution

reserve or legal retained earnings until the total amount of capital

Dividends per share(Yen)

FYE2019 (From April 1, 2018 to March 31, 2019)

income.

paid as cash dividends from surplus shall be appropriated as capital

Total cash dividends(Millions of Yen)

Exchange differences on translation of foreign operations

Dividends

Amount arising during the fiscal year
Net amountPayments of dividends are as follows:

Effective portion of net change in fair value of cash flow hedges

FYE2020 (From April 1, 2019 to March 31, 2020)(Millions of yen)Type of stock

Resolution

Ordinary General Meeting of Shareholders
held on June 20, 2019
Board of Directors’ meeting
held on October 31, 2019

Total cash dividends(Millions of Yen)

OrdinarysharesOrdinaryshares¥5,627
6,060

Dividends per share
(Yen)

¥13
14

Record date

March 31, 2019
September 30,
2019

Effective dateJune 21, 2019
December 2,
2019

FYE2019 (From April 1, 2018 to March 31, 2019)(Millions of yen)Type of stock

Resolution

Ordinary General Meeting of Shareholders
held on June 20, 2018
Board of Directors’ meeting
held on October 31, 2018

Total cash dividends(Millions of Yen)

OrdinarysharesOrdinarysharesNIPPON SANSO HOLDINGS CORPORATION

128

Dividends per share(Yen)¥5,194

¥12

5,194

12

INTEGRATED REPORT 2020

Record date

Net amount
Share of other comprehensive income of investments accounted for using the equity method
Amount arising during the fiscal year
Net amount
Total other comprehensive income

25.

(1,412)45¥(43,012)¥(13,963)

Employee Benefit Expenses

Effective date

Employee benefit expenses other than post-employment benefits are as follows:
March 31, 2018
September 30,
2018(Millions of yen)

June 21, 2018
December 3,
2018

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Wages and salaries¥124,686¥102,985

Total¥124,686¥102,985

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CORPORATE PROFILE

Notes to Consolidated Financial Statements

26.

27.

Revenue(1) Revenue by source and by reportable segment

Other Operating Income and Other Operating Expenses

A breakdown of other operating income is as follows:(Millions of yen)

FYE2020 (From April 1, 2019 to March 31, 2020)(Millions of yen)
Reportable segment
Gas Businessin Japan

Revenue
Gas
Equipment and otherHousewares
Total¥234,211
121,934—¥356,145

Gas Business in the
United States

Gas Business in Europe¥159,751
39,118—¥198,869

Gas Business in Asiaand Oceania¥151,167
14,397—¥165,564

Total

Thermos Business¥ 75,084
29,457—¥104,541¥    ——
25,118¥25,118¥620,213
204,907
25,118¥850,239(Millions of yen)

Gas Businessin Japan

Revenue
Gas
Equipment and otherHousewares
Total¥243,038
120,913—¥363,951

Gas Business in the
United States

Gas Business in Europe¥146,136
41,186—¥187,323

Gas Business in Asiaand Oceania¥50,347
4,753—¥55,101

Total

Thermos Business¥78,565
27,599—¥106,164¥    ——
27,800¥27,800¥518,088
194,453
27,800¥740,341

FYE2019(From April 1, 2018
to March 31, 2019)¥   351¥   61Gain on sales of property, plant and equipment

6,882

1,479

Other

3,389

3,208

Total

¥10,623¥4,748FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Grant income

A breakdown of other operating expenses is as follows:(Millions of yen)

FYE2019 (From April 1, 2018 to March 31, 2019)
Reportable segment

FYE2020(From April 1, 2019
to March 31, 2020)¥1,948¥1,459Loss on sales and retirement of property, plant and equipment

402

897

Loss on reduction of property, plant and equipment

348

57

Other

2,965

1,526

Total

¥5,665¥3,940FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)¥   250¥  246

Impairment losses

28.

Finance Income and Finance Costs

Determination of the timing of the fulfillment of performance obligations in contracts with customers, and the method for calculating thetransaction price and its allocation to performance obligations, are as described in Note “3. Significant Accounting Policies.” The amount of

A breakdown of finance income is as follows:(Millions of yen)revenue recognized arising from other revenue sources is insignificant.
(2) Outstanding contract amountInterest income

Contract assets mainly comprise consideration for construction in progress. Contract liabilities mainly comprise consideration received from
customers prior to the delivery of products. Receivables, contract assets, and contract liabilities derived from contracts with customers are as follows:(Millions of yen)

At the beginning of
FYE2019(April 1, 2018)

Receivables arising from contracts with customers

FYE2019(March 31, 2019)¥165,626¥202,568

FYE2020(March 31, 2020)¥185,784

Contract assets

951

1,850

1,515

Contract liabilities

7,402

11,316

10,741Of the outstanding amounts of contract liabilities, as of the beginning of the fiscal years ended March 31, 2020 and 2019, the amounts recog-

Financial assets measured at amortized cost
Dividend income

900

1,156

Foreign exchange gains

—

881

Other

—

9

Total

¥1,150¥2,294FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)¥13,895¥7,072

1,953—

Financial assets measured at fair value through other comprehensive income

A breakdown of finance costs is as follows:(Millions of yen)

nized as revenue for the fiscal years are insignificant. For FYE2020 and FYE2019, the amounts of revenue recognized based on the performanceobligations that were fulfilled in prior periods are also insignificant. Outstanding amounts of contract assets and contract liabilities have not undergone any significant changes.

Interest expenses
Financial liabilities measured at amortized cost(3) Transaction price allocated to remaining performance obligations

Foreign exchange losses

At March 31, 2020, the total transaction price allocated to remaining performance obligations is ¥16,460 million. The TNSC Group estimates to

Other

90

1

recognize revenues in the amount of ¥10,426 million for the fiscal year ending March 31, 2021 and ¥6,034 million for the remaining fiscal periods.

Total¥15,938¥7,074

These amounts do not include any transaction whose expected contractual term is within one year. Meanwhile, all significant considerations areincluded in the transaction price arising from contracts with customers.

NIPPON SANSO HOLDINGS CORPORATION

130

INTEGRATED REPORT 2020

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CORPORATE PROFILE

Notes to Consolidated Financial Statements

29.

Income Taxes(1) Deferred tax assets and deferred tax liabilities

For recognition of deferred tax assets, the TNSC Group considers thebelieves that it is probable the tax benefits will be realized based on

possibility that some or all deductible temporary differences will behistorical taxable income levels and the projection of future taxableavailable for future taxable income. For the assessment of the recover-income during periods when deferred tax assets may be deducted.

ability of deferred tax assets, the TNSC Group considers the planned

Major factors giving rise to deferred tax assets and deferred tax liabilities and their changes are as follows:
FYE2020 (From April 1, 2019 to March 31, 2020)

Deductible temporary differences for which deferred tax assets

reversal of deferred tax liabilities, projected future taxable income, andhave not been recognized at March 31, 2020 and 2019 weretax planning. For deferred tax assets recognized, the TNSC Group

¥19,421 million and ¥18,385 million, respectively.

(Millions of yen)
April 1, 2019

Deferred tax assets
Employees’ bonuses
Accrued expenses
Property, plant and equipment andintangible assets
Retirement benefit liability
Unused tax losses
Unrealized gains (inventories and property,
plant and equipment)
Other
Total
Deferred tax liabilities
Securities and other investments
Property, plant and equipment andintangible assets
Undistributed earnings of overseas
consolidated subsidiaries, etc.
Other
Total
Net deferred tax liabilities

Recognized in
profit or loss

Recognized in othercomprehensive income

Other (Note)

March 31, 2020

A breakdown of income taxes is as follows:¥   2,332
3,521¥   (56)
(768)

¥   —
—

¥   —
(51)

¥   2,275
2,701

4,166
3,835
7,661

(498)
(1,064)
1,996

—
298
—

(19)
(65)
(150)

3,648
3,005
9,507

2,179
5,404
29,101

167
355
131

—
1,106
1,404

—
63
(223)

2,346
6,931
30,415(4,944)

—

509

670

(3,764)(118,186)(3,435)—

3,169(118,452)(5,381)(1,317)(129,829)¥(100,727)(1,690)(1,019)(6,145)¥(6,013)—(3)506¥1,911—
15
3,855¥3,632(7,071)(2,324)(131,613)¥(101,198)

FYE2019 (From April 1, 2018 to March 31, 2019)(Millions of yen)
April 1, 2018

Deferred tax assets
Employees’ bonuses
Accrued expenses
Property, plant and equipment andintangible assets
Retirement benefit liability
Unused tax losses
Unrealized gains (inventories and property,
plant and equipment)
Other
Total
Deferred tax liabilities
Securities and other investments
Property, plant and equipment andintangible assets
Undistributed earnings of overseas
consolidated subsidiaries, etc.
Other
Total
Net deferred tax liabilities

Recognized in
profit or loss

Recognized in othercomprehensive income(2) Income taxes

Other (Note)

March 31, 2019

(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Current income taxes¥18,081¥13,331

Deferred income taxes

6,013

5,042

¥24,095¥18,373

Total(3) Table of reconciliation of effective tax rates
The Company is mainly subject to corporate income tax, inhabitant tax, and enterprise tax. The statutory tax rate based on these taxes for FYE2020
and FYE2019 was 30.62%. Overseas subsidiaries are subject to the corporate income tax, etc., of their location.
A breakdown of major items that caused differences between the statutory tax rate and the effective tax rate is as follows:
FYE2020(From April 1, 2019
to March 31, 2020)

30.62%

30.62%

Permanently non-deductible or non-taxable items

0.63

0.86

Unrecognized deferred tax assets

0.43

1.33

Differences in tax rates for overseas consolidated subsidiaries(3.32)(2.46)

Statutory tax rate

Tax effects on undistributed earnings

2.14

1.68

Share of profit of investments accounted for using the equity method(1.37)(1.89)

Other
Effective tax rate¥  2,400
3,172¥   (127)
241

¥   —
—

¥     59107¥   2,332
3,521

4,022
1,232
—

142
539
7,666

—
209
—

2
1,855
(5)

4,166
3,835
7,661

Basic earnings per share and the basis of calculation are as follows:

1,931
2,589
15,347248
1,860
10,570

—
1,462
1,671

—
(507)
1,511

2,179
5,404
29,101(7,938)

—

1,039

1,954

(4,944)(31,825)(15,525)—(70,835)(118,186)(4,341)(687)(44,793)¥(29,445)(1,039)952(15,613)¥ (5,042)

—
(302)
736
¥2,408—(1,278)(70,159)¥(68,648)(5,381)(1,317)(129,829)¥(100,727)

30.

132

INTEGRATED REPORT 2020

1.32

(0.54)

30.45%

29.60%

Earnings per ShareFYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Profit attributable to owners of parent (Millions of Yen)

¥53,340¥41,291

Average number of shares during the fiscal year (Thousands of shares)

432,755

432,758

Basic earnings per share (Yen)¥123.26¥95.42

Note: Diluted earnings per share are not presented as there are no dilutive potential shares.

Note: Other includes exchange differences on translation of foreign operations and changes from business combinations, etc.

NIPPON SANSO HOLDINGS CORPORATIONFYE2019(From April 1, 2018
to March 31, 2019)NIPPON SANSO HOLDINGS CORPORATION133

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

31.

32.

Cash Flow Information

Financial Instruments

Changes in liabilities arising from financing activities(1) Equity management

Changes in liabilities arising from financing activities are as follows:

The TNSC Group manages equity aiming at maximizing corporate value through sustainable growth. The major indices used by the Company inequity management are return on capital employed (ROCE) and adjusted net debt-to-equity (D/E) ratio.

FYE2020 (From April 1, 2019 to March 31, 2020)

FYE2020(March 31, 2020)(Millions of yen)
Non-cash changes
Balanceat April 1, 2019

¥461,510
12,000379,556
147,065
5,269

Short-term borrowings
Commercial papers
Long-term borrowings (Note)
Bonds (Note)
Lease liabilities (Note)

Adjustment due Restated balance
at April 1, 2019
to application(After adjustment)of IFRS 16¥    ————
34,657¥461,510
12,000379,556
147,065
39,926

Changes fromcash flows¥(414,640)
8,000
331,845
49,736(8,646)

New lease
Changes fromtransactions andbusinesschanges in leasecombinations, etc.
contract, etc.

¥220
—
140
—
—

¥   —
—
—
—
5,657

Exchangedifferences ontranslationof foreign
operations, etc.

Balance
at March 31,
2020¥(8,312)—(4,726)
195(1,140)¥38,777
20,000706,816
196,997
35,797

Note: Balances include the current portion.

FYE2019 (From April 1, 2018 to March 31, 2019)(Millions of yen)
Non-cash changes
Balanceat April 1, 2018

Short-term borrowings
Commercial papers
Long-term borrowings (Note)
Bonds (Note)
Lease liabilities under finance leases (Note)¥ 35,403—
230,664
55,0005,892

Changes fromcash flows¥433,773
12,000141,307
92,035(2,214)

New lease
Changes fromtransactions andbusinesschanges in leasecombinations, etc.
contract, etc.

¥   87—2,026——

Note: Balances include the current portion.

¥   —
—
—
—
1,612

FYE2019(March 31, 2019)

Return on capital employed (ROCE) (Note 1)

6.4%

6.2%

Adjusted net D/E ratio (Note 2)

1.45

1.54

Note 1:	Core operating profit / invested capital (average of the beginning and the end of the fiscal year)
Invested capital refers to the total of interest-bearing liabilities and equity attributable to owners of parent.
Note 2:	(Net interest-bearing liabilities – equity-type liabilities) / (equity attributable to owners of parent + equity-type liabilities)
Net interest-bearing liabilities refer to interest-bearing liabilities less cash and cash equivalents.
Equity-type liabilities refer to liabilities created through financing activities that are certified as equity-type by credit rating agencies.

(2) Matters related to risk management

In accordance with internal policies of each Group company, such

The TNSC Group is exposed to financial risks in the course ofas credit management regulations, the TNSC Group monitors due

conducting business activities in various countries and regions

dates and outstanding balances of individual customers and estab-throughout a wide range of fields. In order to reduce or avoid such

lishes a system to periodically assess credit status. The TNSC Grouprisks, the TNSC Group manages risks based on certain policies, etc.

thereby aims to identify and alleviate collection concerns due to

In addition, derivative transactions are used to hedge currency

a deteriorating financial situation at an early stage. In addition,

fluctuation risk or interest rate fluctuation risk. In principle, derivative

derivative transactions are limited to financial institutions with highExchangedifferences ontranslationof foreign
operations, etc.

Balance
at March 31,
2019transactions are only conducted based on actual demand and notcreditworthiness in order to minimize counterparties’ credit risk related

used for speculative purposes.

to contract default.

¥(7,754)
—
5,559
29
(20)

¥461,510
12,000379,556
147,065
5,269(3) Credit risk

unrecoverable amount for individually significant financial assets, andTrade receivables, etc., which are receivables arising from the TNSC

at an amount based on historical experience, etc., for individuallyGroup’s business activities, are exposed to the credit risk of customers.

insignificant financial assets, at the end of each fiscal year. Allowance

In addition, derivative transactions that the TNSC Group uses to hedge

for doubtful accounts related to such financial assets is included infinancial risks are exposed to the credit risk of financial institutions“Trade receivables” and “Other financial assets” in the consolidated

that are counterparties to the transactions.

statement of financial position.

The TNSC Group records allowance for doubtful accounts at an

Allowance for doubtful accounts is as follows. Since the amount of expected credit losses for 12 months is not material, it is included in theamount of the expected credit losses for the entire period.
(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)¥ 7,108¥3,180

Increase during the fiscal year

2,286

4,871

Decrease during the fiscal year (Intended use)

(1,156)(605)

Decrease during the fiscal year (Reversal)

(232)

(364)

Other

(313)

26

¥ 7,692¥7,108

Balance at beginning of the fiscal year

Balance at end of the fiscal year

The maximum exposure to credit risk of financial assets is the carrying amount after impairment that is presented in the consolidated
financial statements.

NIPPON SANSO HOLDINGS CORPORATION134

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION135

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements(4) Liquidity risk

(5) Currency risk

The TNSC Group’s trade payables and borrowings, etc., are exposed to liquidity risk. The TNSC Group manages the risk by preparing cash manage-

Receivables and payables denominated in foreign currencies arising from the TNSC Group’s global business development are exposed to the risk

ment plans and secures liquidity by establishing commitment lines with several financial institutions.

of exchange rate fluctuations. The TNSC Group hedges trade receivables and payables denominated in foreign currencies, borrowings, and loans
by using forward exchange contracts and currency swaps as necessary.

Balances of financial liabilities (including derivative instruments) by due date are as follows:

The TNSC Group’s net investments in foreign operations are exposed to the risk of exchange rate fluctuations. The TNSC Group hedges therisk by using borrowings denominated in foreign currencies as necessary.

FYE2020 (March 31, 2020)

Non-derivative financial liabilities
Trade payables
Accounts payable—other
Short-term borrowings
Long-term borrowings
Commercial papers
Bonds
Lease liabilities
Accrued expenses
Other
Derivative liabilities
Forward exchange contracts
Currency swaps
Interest rate swaps(Millions of yen)
Undiscounted
contractual
cash flows

One yearor lessMore than one
year but within
two years

More than two
years but within
three years

More than three
years but withinfour years

More than four
years but within
five years

Currency sensitivity analysis

Carrying
amountMore than
five years

The following is the impact on profit before income taxes on the consolidated statement of profit or loss from the foreign currency financial¥ 93,885
9,498
38,777
706,816
20,000196,997
35,79734,017
1,304¥ 93,885
9,498
38,777711,146
20,000198,000
38,93534,017
1,304¥93,885
9,498
38,777
86,20220,00010,0007,814
34,017704¥     ———
74,370—15,0006,942—
4¥     ———
63,345
—
—
5,438
—
1

¥     ———
61,663
—
—
4,353
—
1

¥     ———
67,592—20,0003,188—1¥     ———
357,971—
153,000
11,197
—
590

10
—
67

10
—
67

10
—
16

—
—
11

—
—
11

—
—
11

—
—
11

—
—
5

FYE2019 (March 31, 2019)(Millions of yen)
Carrying
amountNon-derivative financial liabilities
Trade payables
Accounts payable—other
Short-term borrowings
Long-term borrowings
Commercial papers
Bonds
Lease liabilities
Accrued expenses
Other
Derivative liabilities
Forward exchange contracts
Currency swaps
Interest rate swaps¥105,966
8,064
461,510379,556
12,000147,065
5,269
30,589
1,881
22
3
41

Undiscounted
contractual
cash flows¥105,966
8,064
461,510
381,603
12,000148,000
5,358
30,5891,881

More than one
year but within
two years

One yearor less¥105,966
8,064
461,51060,41512,000—2,226
30,589
904

22
3
41

22
0
33

¥    ———
58,474—10,000
1,152
—
3
—
0
8

More than two
years but within
three years¥    ———
45,781—
15,000
805
—
1
—
0
—

More than three
years but withinfour years¥    ———
23,564
—
—
460
—
1
—
0
—

More than four
years but within
five years¥    ———
31,275
—
—
209
—
1
—
0
—

More than
five years

instruments held by the TNSC Group at the end of the fiscal year, if the yen appreciates by 1% against the U.S. dollar and euro, respectively,
at the end of the fiscal year.
This analysis is calculated by multiplying each exposure of currency risk by 1%. It is assumed that there is no impact of the fluctuation of eachexchange rate on other variables (foreign exchange rates of other currencies, interest rates, etc.).
(Millions of yen)

FYE2020(March 31, 2020)

U.S. dollar (1% appreciation of the yen)

FYE2019(March 31, 2019)

¥(41)

¥(40)

1

125

Euro (1% appreciation of the yen)(6) Interest rate risk
The TNSC Group’s interest rate risk arises from interest-bearing liabilities, net of cash equivalents, etc. Borrowings and corporate bonds that are
based on floating interest rates are exposed to interest rate fluctuation risk.
The TNSC Group hedges such risks by using derivative transactions (interest rate swaps) as necessary.
Interest rate sensitivity analysis
The following is the impact on profit before income taxes on the consolidated statement of profit or loss if the interest rate rises by 1% for financial
instruments held by the TNSC Group at the end of the fiscal year.
This analysis is intended for financial instruments impacted by fluctuations in interest rates, and it is assumed that other factors, such as the¥     ———
162,092—
123,000
503
—
968
—
1
—

impact of exchange rate fluctuations, remain constant.
(Millions of yen)

FYE2020(March 31, 2020)

FYE2019(March 31, 2019)¥(2,988)

Profit before income taxes¥(2,522)(7) Risk of market price fluctuations
Securities, etc., held by the TNSC Group are exposed to the risk of market price fluctuations.
The TNSC Group periodically evaluates the fair value and the financial status of issuers (business partners) for securities, etc., and each supervising
department reviews the holding status taking into consideration the relationship with the business partners on an ongoing basis.
(8) Fair value of financial instruments
For fair value hierarchy of financial instruments, Level 1 to Level 3 is categorized as follows:
Level 1: Fair value measured by the unadjusted quoted prices in active markets of identical assets or liabilities
Level 2: Fair value calculated using observable prices directly or indirectly, other than Level 1
Level 3: Fair value calculated by valuation techniques including inputs not based on significant observable market data
Transfers between levels of financial instruments are determined at the end of each reporting period. There were no financial instruments withsignificant transfers between levels for FYE2020 or FYE2019.

NIPPON SANSO HOLDINGS CORPORATION136

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION137

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

1) Financial instruments measured at fair value on a recurring basis

2) Financial instruments measured at amortized cost

Financial instruments measured at fair value are as follows:

The carrying amount and fair value of financial instruments measured at amortized cost are as follows:

FYE2020 (March 31, 2020)

FYE2020 (March 31, 2020)(Millions of yen)

Level 1

Level 2

Level 3

(Millions of yen)

Total

Carrying amount

AssetsEquity securities and investments in capital¥20,797¥8,202¥28,999

—

71

—

71

¥20,797¥71¥8,202¥29,071

Derivative assets
Total

¥—

Liabilities
Derivative liabilities¥     
—

¥78

¥    
—

¥    78¥     
—

¥78

¥    
—

¥    78

Level 1

Level 2

Level 3

Total

Liabilities
Long-term borrowings¥706,816¥—¥723,575

¥—

Bonds

196,997—

198,961—

198,961¥903,814¥—¥922,536¥—¥922,536

Total

Total

Fair value¥723,575

FYE2019 (March 31, 2019)(Millions of yen)

FYE2019 (March 31, 2019)

Carrying amount(Millions of yen)

Level 1

Level 2

Level 3

Total

¥29,050¥—¥9,625¥38,676

—

65

—

65

¥29,050¥65¥9,625¥38,741—¥     

¥67

¥    
—

¥    67¥     
—

¥67

¥    
—

¥    67

Derivative assets
Total
Liabilities
Derivative liabilities
Total

Level 1

Level 2

Level 3

Total

Liabilities

AssetsEquity securities and investments in capital

Fair value

Long-term borrowings¥379,556¥—¥392,708

¥—

Bonds

147,065—

148,830—

148,830¥526,622¥—¥541,538¥—¥541,538

Total¥392,708

For financial instruments measured at amortized cost other than long-term borrowings and bonds, their fair value reasonably approximates the
carrying amount.
Long-term borrowings
The fair value of long-term borrowings is calculated based on the present value calculated by discounting the total amount of principal and interest

Equity securities and investments in capitalby the interest rate assumed when similar borrowings are newly made.

The fair value of marketable equity securities categorized as Level 1 is based on unadjusted quoted prices in active markets of identical assets
or liabilities.
The fair value of unlisted stocks categorized as Level 3, for which quoted prices are not available in active markets, is calculated using the similar
company comparison method or other appropriate valuation techniques based on reasonably available inputs. In addition, certain illiquidity
discounts, etc., are added as necessary.

Bonds
The fair value of bonds is calculated based on market price.
(9) Transfer of financial assets
At March 31, 2020 and 2019, for trade receivables transferred without meeting the requirements for derecognition of financial assets, ¥1,811

Derivative assets and liabilities
The fair value of derivative assets and derivative liabilities categorized as Level 2 is calculated based on observable inputs such as prices provided bycounterparty financial institutions or exchange rates and interest rates.

million and ¥2,057 million were included in “Trade receivables,” respectively, and the amounts received due to the transfer of ¥1,346 million and¥1,446 million were included in “Bonds and borrowings,” respectively. Of these trade receivables, it is determined that the TNSC Group holds
almost all of the risks and rewards related to ownership of the transferred assets, because it will assume the payment obligations if the issuer of the

For financial instruments categorized as Level 3, the evaluator determines the valuation techniques to measure each financial instrument
covered in accordance with valuation policies and procedures including valuation techniques to measure fair value approved by the appropriate

notes or the debtor fails to make payment.

authorized person, and the fair value is calculated. The results are reviewed and approved by the appropriate authorized person.
Changes in financial instruments classified as Level 3 are as follows:(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)¥9,625¥10,403

Other comprehensive income (Note)

(31)

1,394

Purchase

479

1,119

Sale

(45)

(3,137)

Change in scope of consolidation

(973)

(104)

Other changes

(852)

(49)

¥8,202¥ 9,625

Balance at beginning of the fiscal year

Balance at end of the fiscal year

Note: This is included in “Financial assets measured at fair value through other comprehensive income” in the consolidated statement of comprehensive income.

NIPPON SANSO HOLDINGS CORPORATION138

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION139

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements(10) Derivative transactions

Amounts related to items designated as hedging instruments are as follows:

1) Derivative transactions for which hedge accounting is applied
FYE2020 (March 31, 2020)

Analysis of contract amounts, etc., of the hedging instruments by due date is as follows:(Millions of yen)

Carrying amountFYE2020 (March 31, 2020)

Contract
amounts, etc.

(Millions of yen)Contract
amounts, etc.

Cash flow hedges
Currency risk
Forward exchange contracts
Interest rate risk
Interest rate swaps
Hedges of net investments
Currency risk
Borrowings denominated inforeign currencies

More than one
year but within
two years

One yearor lessMore than two
years but within
three years

More than three
years but withinfour years

More than four
years but within
five years

More than
five years

Liabilities

Cash flow hedges
Currency risk

¥ 2,951¥2,951

¥   —

¥   —

¥   —

¥   —

¥     —

Forward exchange contracts¥ 2,951¥37¥    10

Other financial assets
Other financial liabilities

¥ 49

2,638

—

67

Other financial liabilities(48)

74,718—74,718

Bonds and borrowings

937

Interest rate risk
2,639

1,297

¥297

297

297

297

148

Interest rate swaps
Hedges of net investments
Currency risk

74,718

—

—

—

—

—

74,718FYE2019 (March 31, 2019)(Millions of yen)Contract
amounts, etc.

Cash flow hedges
Currency risk
Forward exchange contracts
Interest rate risk
Interest rate swaps

AssetsChanges in fair value
Items on the consolidated
used to calculatestatement of financial position
ineffective portion ofhedges for the fiscal year

More than one
year but within
two years

One yearor lessMore than two
years but within
three years

More than three
years but withinfour years

More than four
years but within
five years

Borrowings denominated in foreign
currencies

FYE2019 (March 31, 2019)(Millions of yen)

Carrying amountMore than
five years¥ 2,294¥ 1,624¥  670

¥ —

¥ —

¥ —

¥ —

18,844

16,284

1,283

283

283

283

425

Contract
amounts, etc.

AssetsLiabilities

Changes in fair value
Items on the consolidated
used to calculatestatement of financial position
ineffective portion ofhedges for the fiscal year

Cash flow hedges
Currency risk
Forward exchange contracts¥ 2,294¥ 0¥22

Other financial assets
Other financial liabilities¥ 40

18,844

22

41

Other financial liabilities(24)

Interest rate risk
Interest rate swaps

Major forward rates of foreign exchange contracts and major interest rates of interest rate swaps are as follows:
FYE2020(March 31, 2020)

FYE2019(March 31, 2019)

Cash flow hedges

Amounts related to items designated as hedged items are as follows:(Millions of yen)

Currency risk

FYE2020(March 31, 2020)

Forward exchange contracts
U.S. dollar¥103.93–¥111.68¥107.13–¥111.68

Euro¥118.23–¥122.43¥124.43–¥131.48

0.70%

0.34%–0.70%

Interest rate risk
Interest rate swaps
Fixed payables and floating receivables

FYE2019(March 31, 2019)

Changes in fairvalue used to
calculate ineffective
portion of hedges
for the fiscal year

Cash flow hedge
reserves

Foreign currencytranslation
reserve

Changes in fairvalue used to
calculate ineffective
portion of hedges
for the fiscal year

Cash flow hedge
reserves

Foreign currencytranslation
reserve

¥ 49

¥22

¥—

¥(40)

¥(12)

¥—

(48)

(3)

—

24

(27)

—

937

—

937

—

—

—

Cash flow hedges
Currency risk
Planned purchase
Interest rate risk
Interest on borrowings
Hedges of net investments
Currency risk
Effect of exchange ratechanges on net investments

NIPPON SANSO HOLDINGS CORPORATION140

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION141

INTEGRATED REPORT 2020

CORPORATE PROFILE

Notes to Consolidated Financial Statements

Details of cash flow hedges are as follows:

34.

FYE2020 (From April 1, 2019 to March 31, 2020)(Millions of yen)

Changes in fair value
Items on theof hedging
consolidated
Ineffective portion of
instruments
statement of profit orhedges recognized inrecognized in otherloss that include
profit or loss
comprehensive
ineffective portion ofincomegain or loss on hedges

Reclassification
adjustments fromcash flow hedge
reserves to profit
or loss

Items on the
consolidated
statement of profit orloss that include gainor loss due toreclassification
adjustments

Cash flow hedges

Related Parties

Remuneration for major executives
Remuneration for the TNSC Group’s major executives is as follows:(Millions of yen)

FYE2020(From April 1, 2019
to March 31, 2020)

FYE2019(From April 1, 2018
to March 31, 2019)

Remuneration and bonuses

¥383

¥377

Total

¥383

¥377

Currency risk
Forward exchange contracts

¥ 49

¥—

¥—

¥18

Finance costs

(48)

—

—

12

Finance costs

Interest rate risk
Interest rate swaps

35.

Commitments

Commitments on acquisition of property, plant and equipment and intangible assets are as follows:

Hedges of net investments(Millions of yen)

Currency risk
Borrowings denominated in foreign
currencies

937

—

—

—

—

FYE2019 (From April 1, 2018 to March 31, 2019)(Millions of yen)

Changes in fair value
Items on theof hedging
consolidated
Ineffective portion of
instruments
statement of profit orhedges recognized inrecognized in otherloss that include
profit or loss
comprehensive
ineffective portion ofincomegain or loss on hedges

Reclassification
adjustments fromcash flow hedge
reserves to profit
or loss

Items on the
consolidated
statement of profit orloss that include gainor loss due toreclassification
adjustments

Cash flow hedges

FYE2020(March 31, 2020)¥3,128Acquisition of property, plant and equipment and intangible assets

36.

Forward exchange contracts¥(2,973)¥—¥—¥(115)

Finance costs

29

—

—

48

Finance costs

Interest rate risk
Interest rate swaps2) Derivative transactions for which hedge accounting is not applied

Guaranteed obligations
Guarantees and quasi-guarantees for borrowings from financial institutions are as follows:(Millions of yen)

FYE2020(March 31, 2020)(Millions of yen)

FYE2020(March 31, 2020)
Contract amount, etc.

¥338

Currency swaps

More than one year

FYE2019(March 31, 2019)
Fair value¥268

Contract amount, etc.

¥33

¥627

More than one year

¥168

Fair value¥38

FYE2019(March 31, 2019)¥   32¥   55

Associates

246

372

Other (Note)

1,067

1,002

Total

¥1,346¥1,430Note: Other mainly consists of guarantees for employees’ bank loans based on the employees’ house ownership support system.

37.

Amounts related to items not designated as hedging instruments are as follows:¥3,952

Contingent Liabilities

Joint ventures

Currency risk

FYE2019(March 31, 2019)

Subsequent Events(1) Not applicable.
(2) Other
Quarterly information for FYE2020 (From April 1, 2019 to March 31, 2020)(Millions of yen)

33.

First quarter of
FYE2020(Cumulative period)

Subsidiaries¥422,881¥633,435

18,26440,83160,915

79,133

Profit attributable to owners of parent (Millions of yen)

12,221

27,74041,35853,340

Basic earnings per share (Yen)

28.24

64.10

95.57

123.26First quarter

28.24

Basic earnings per share (Yen)142

INTEGRATED REPORT 2020

FYE2020¥210,329(Quarterly period)

NIPPON SANSO HOLDINGS CORPORATIONFirst three quarters of
FYE2020

Profit before income taxes (Millions of yen)

Revenue (Millions of Yen)

For FYE2020 or FYE2019, there were no individually significant subsidiaries with non-controlling interests.

First half of
FYE2020NIPPON SANSO HOLDINGS CORPORATION

143

Second quarter

35.86

INTEGRATED REPORT 2020

Third quarter

31.47¥850,239

Fourth quarter

27.69

CORPORATE PROFILE

Independent Auditor’s Report

NIPPON SANSO HOLDINGS CORPORATION

144

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION145

INTEGRATED REPORT 2020

CORPORATE PROFILE

Independent Auditor’s Report

NIPPON SANSO HOLDINGS CORPORATION146

INTEGRATED REPORT 2020

NIPPON SANSO HOLDINGS CORPORATION147

INTEGRATED REPORT 2020

CORPORATE PROFILE

11-Year Financial and Non-Financial Summary(Millions of yen)Japanese GAAP2010.3

IFRS
2011.32012.32013.32014.32015.32016.32020.32016.32017.32018.32019.3

Revenue

—

—

—

—

—

—

—

594,421581,586

646,218

740,341

Net sales

433,390

483,620

477,451

468,387

522,746559,373641,516

—

—

—

—

—

Selling, general and administrative expenses

119,305

126,265

125,526

125,503

138,052

149,151

182,051

161,169

165,071

178,690

204,789

242,129
90,337850,239

—

—

—

—

—

—

—

47,45654,73660,03365,81927,55635,46831,067

24,884

31,48935,29743,362

48,92553,664

59,862

66,86393,921

—

—

—

—

—

—

—

29,03034,74048,91941,291

53,34015,74812,736

21,200(2,071)

20,194

20,76425,845

—

—

—

—

—

—

—

—

—

—

—

—

320,457

351,576

386,457

406,602409,344

Total equity

212,396

207,416

219,611224,253

298,475

341,207337,974

—

—

—

—

—

Total assets

—

—

—

—

—

—

—

787,505

924,281

931,047

1,771,015

1,751,732

Total assets

617,215

617,676

607,024

615,820731,677

782,357

783,248

—

—

—

—

—

Interest-bearing liabilities

259,111

256,358

241,121

253,424

278,063266,276

274,424

266,215

359,528

326,959

1,005,402

998,389

Net interest-bearing liabilities*2

235,082

211,808

206,524

228,681219,727

212,855

223,638

215,492

304,308

274,968

945,782

898,384

Cash flows from operating activities

40,73065,89745,98633,96456,716

58,61581,55573,34774,596

83,19998,685150,084

Cash flows from investing activities(103,697)(44,834)(32,748)(37,225)(55,295)(30,583)(82,130)(74,252)(147,082)(52,088)(754,969)(62,629)

Cash flows from financing activities

56,048(3,343)(23,536)(8,181)

27,884(33,866)(1,825)(2,385)80,777(39,859)

664,925(46,242)

Free cash flow

(62,967)

21,063

13,238(3,261)

1,421

28,032

(575)

(905)

(72,486)

31,111(656,284)

87,455

Cash and cash equivalents

24,02944,54934,596

24,74358,33653,42050,78550,72355,22051,991

59,620100,005

Capital expenditures*3

38,36631,991

31,452

31,71532,53235,201

53,611

52,657

43,79662,56976,65781,017

Investment and loans receivable*2

63,40815,171

8,035

5,672

35,7495,710

32,94125,507102,034

4,556

691,126

733

Depreciation and amortization

30,14332,16730,471

29,40033,50735,56844,864

39,69640,04843,266

56,111

83,798

Amortization of goodwill

3,153

3,635

2,472

2,719

3,668

4,959

7,352

—

—

—

—

—

Research and development costs

4,137

3,924

3,458

3,177

3,170

3,430

3,348

3,238

3,323

3,255

3,494

3,389

Profit (EPS) (Yen)

39.39

31.86

53.33

(5.25)

49.42

47.98

59.72

67.08

80.28

113.0495.42

123.26

Annual dividends per share (Yen)

12.0

12.0

12.0

12.0

12.0

13.0

16.0

16.0

20.0

23.0

25.0

28.0

Dividend payout ratio (%)

30.5

37.7

22.5

—

24.3

27.1

26.8

23.9

24.9

20.3

26.2

22.7
10.6

Core operating profit*1
Operating profit
Profit attributable to owners of parent
Profit (loss)
Total equity attributable to owners of parent

Core operating profit margin (%)

—

—

—

—

—

—

—

8.0

9.4

9.3

8.9

Operating profit margin (%)

6.4

7.3

6.5

5.3

6.0

6.3

6.8

—

—

—

—

—

Overseas revenue ratio (%)

22.8

23.6

24.3

27.6

31.4

35.0

44.4

40.7

40.8

43.3

47.9

55.5

Selling, general and administrative expenses / revenue (%)

27.5

26.1

26.3

26.8

26.4

26.7

28.4

27.1

28.4

27.7

27.7

28.5

Return on equity (ROE) (%)*4

8.3

6.5

10.8

(1.0)

8.4

7.0

8.2

9.1

10.3

13.3

10.4

13.1
6.4

Return on capital employed (ROCE) (%)*5

6.6

7.8

7.0

5.5

6.2

6.2

7.4

8.1

8.4

8.4

6.2

Net debt-to-equity (D/E) ratio (Times)

1.11

1.10

1.03

1.12

0.80

0.67

0.71

0.67

0.87

0.71

—

—

—

—

—

—

—

—

—

—

—

—

1.54

1.45
1,601

Adjusted net D/E ratio (Times)*6

914

693

584

638

812

1,639

1,068

1,068

1,302

1,611

1,686

Price earnings ratio (PER) (Times)

23.20

21.75

10.95

—

16.43

34.16

17.88

15.92

16.22

14.25

17.67

12.99

Number of employees (Consolidated)

9,631

10,26911,588

11,468

12,955

13,142

14,127

14,107

15,86016,746

19,22919,719Number of employees in Japan

—

—

—

—

—

5,747

5,795

5,775

5,827

6,172

6,461

6,550

Number of employees overseas

—

—

—

—

—

7,395

8,332

8,332

10,033

10,574

12,768

13,169Overseas employees as a percentage of total labor force (%)

—

—

—

—

—

56.3

59.0

59.1

63.3

63.1

66.4

66.8

Female employees as a percentage of total labor force (Taiyo Nippon Sanso) (%)

—

—

—

—

—

7.6

7.9

7.9

9.2

10.0

11.3

12.3

Number of employees leaving the Company (Taiyo Nippon Sanso,
including mandatory retirees; excluding transfers to Group companies)

—

—

—

—

—

—

—

—

42

44

55

63

Energy consumption (TJ)*7

—

—

—

—

—

44,62047,59947,59962,516

67,61372,014

109,512Waste generated (including valuable materials) (Tonnes)

—

—

—

—

—

—

—

2,834

2,917

2,910

3,023

3,762

Fresh water withdrawn (Millions of m3)

—

—

—

—

—

7.91

8.16

8.16

10.14

10.92

13.62

30.02

Greenhouse gas emissions (Scope 1) (Thousand tonnes CO2e)*8

—

—

—

—

—

—

—

—

9

19

14

1,061

Greenhouse gas emissions (Scope 2) (Thousand tonnes CO2e)*8

—

—

—

—

—

—

—

—

3,363

3,838

4,056

4,747

Greenhouse gas emissions (Scope 3) (Thousand tonnes CO2e)*8

—

—

—

—

—

—

—

—

—

3,671

3,634

3,662

Share price (March 31) (Yen)*1 Core operating profit is calculated by subtracting losses (non-operating items) produced by non-recurring factors from operating profit. Non-recurring factors include structuralreform charges, including costs associated with business downsizing or withdrawal; special severance payments; losses due to disasters or major accidents; and other factors such as
the disposal of idle assets. *2 The standard changed in FYE2019 compared to previous fiscal years. *3 The figures are based on construction, in accordance with the presentation in
the annual securities report. *4 Return on equity (ROE) is calculated as profit attributable to owners of parent divided by average shareholders’ equity. Average shareholders’ equity
is the average of shareholders’ equity at beginning of period and shareholders’ equity at end of period; where shareholders’ equity is calculated as net assets – non-controlling interests. *5 Return on capital employed (ROCE) = Core operating profit / (outstanding interest-bearing debt + equity attributable to owners of parent) *6 Adjusted D/E ratio = (Netinterest-bearing debt – equity-type debt) / (equity attributable to owners of the parent + equity-type debt). Equity-type debt is debt procured through hybrid financing that has beenrecognized as equity credit by ratings agencies (50% of the procured amount); hybrid financing is a form of debt financing that has features resembling equity, including voluntarydeferral of interest, extremely long-term redemption periods, and subordination during liquidation or bankruptcy procedures. This kind of financing does not cause stock dilution, anda certain ratio of the funds procured in this way can be recognized as equity credit by rating agencies provided that certain conditions are met.

NIPPON SANSO HOLDINGS CORPORATION148

INTEGRATED REPORT 2020

*7 The energy of the consumed fuels are calculated based on the gross calorific values specified in Japan’s Act on the Rational Use of Energy. Purchased electricity and purchased steam areconverted into primary energy amounts. *8 Greenhouse gas emissions in Japan are calculated using emission factors specified in Japan’s Act on Promotion of Global Warming Countermeasures.
For electricity, basic emission factors for each electricity provider are used. For greenhouse gas emissions overseas, Scope 1 emissions are calculated using emission factors set forth in Japan’s Act
on Promotion of Global Warming Countermeasures, while Scope 2 emissions are calculated using country-specific emission factors published by the International Energy Agency (IEA).
For information about the reporting boundaries for environmental data please refer to Non-Financial Highlights ( P. 96).

NIPPON SANSO HOLDINGS CORPORATION149

INTEGRATED REPORT 2020

CORPORATE PROFILE

Non-Financial Highlights

Indicators with

Greenhouse Gas Emissions

Energy Consumption

Number of Employees (Consolidated)Thousand tonnes CO2e

Terajoules (TJ)

Number of individuals

5,808

6,000

120,000

5,000
4,000
3,000
2,000
1,000
0

3,856

3,372
2,733
948

1,525

1,503

4,070

15,00080,0003,534

62,516

1,575

60,00040,000

1,785

1,869

2,331

2,495

2,274

2016

2017

2018

2019

2020

20,000(Yearsended
March 31)47,59932,181

18,911

67,61332,47072,014

14,107

15,86063.3

8,332

19,71928,68830,33535,143

2016

2017

2018

2019

2020

(Yearsended
March 31)

0

100

63.1

66.4

66.8

10,033

10,574

12,768

13,169

20

5,775

5,827

6,172

2016

2017

2018

2019

6,550
2020

7.9

0

1.2

1.5

1.4

1.5

2016

2017

2018

2019

2020

Greenhouse gas emissions (Scope 1 + Scope 2) in Japan in FYE2020 decreased to 2,274 thousand
tonnes CO2e, mainly due to the effect of upgrading to energy-efficient ASUs. Greenhouse gas
emissions overseas increased to 3,534 thousand tonnes CO2e, mainly as a result of proactive M&A
activities overseas, such as the acquisition of the European business and the HyCO business in the
United States.

Energy consumption in Japan in FYE2020 decreased to 37,061 TJ, mainly due to the effect of
upgrading to energy-efficient ASUs. Energy consumption overseas increased to 72,451 TJ year on
year, mainly as a result of proactive M&A activity overseas, such as the acquisition of the European
business and the HyCO business in the United States.

Electric Power Consumption

Fresh Water Withdrawn

Frequency Rate* of Occupational Accidents Resulting in Lost Workdays (Consolidated)

Employee Turnover Rate (Taiyo Nippon Sanso)

Gigawatt hours (GWh)

Millions of m3* The frequency rate expresses the frequency of accidents resulting in lost workdays in a fiscal year,
calculated as the number of injuries/deaths due to occupational accidents per million work hours%

12,000

30

6,000

6,389
4,860

3,297

6,874

7,290

3,304

3,423

6,270

4,000

1,938

2,000

2,923

3,092

3,570

3,867

2016

2017

2018

2019

0

20

13.62
10

3,743
2020

(Yearsended
March 31)0Japan
Overseas
Reporting boundary: Taiyo Nippon Sanso Corporation and its consolidated subsidiaries in Japan andprincipal consolidated subsidiaries overseas*

10.14

10.92

3.43

5.39

5.64

4.74

4.76

5.29

2016

2017

2018

8.16

Research and Development Costs

TonnesMillions of yen
3,762

3,000

2,834
290

2,917
385

2,910
379

3,023

7.32

2019

2020

(Yearsended
March 31)

The production of industrial gases uses a water cooler to cool atmospheric air, the principal raw
material. Replenishing the water for this purpose uses the bulk of our fresh water withdrawn. Freshwater withdrawn in FYE2020 was 7.32 millions of m3 in Japan and 22.70 millions of m3 overseas,owing to the expansion of operations as a result of proactive M&As. From FYE2021, we havedisclosed a breakdown of fresh water withdrawn in our Sustainability Data Book.

Waste Generated (Including Valuable Materials)
4,000

1.00

6.83

Japan
Overseas
Reporting boundary: Gas production facilities of Taiyo Nippon Sanso Corporation and its consolidated
subsidiaries in Japan, and principal consolidated subsidiaries overseas*
In FYE2020, consolidated subsidiaries in Japan with facilities specified under the Water Pollution
Prevention Act were added to the reporting boundary.

Production processes for industrial gases use a significant amount of electric power. The bulk of ourelectric power consumption goes to the operation of ASUs. Electric power consumption in Japandecreased year on year to 3,743 GWh, mainly due to the the effect of upgrading energy-efficient
ASUs. Electric power consumption overseas increased year on year to 6,270 GWh, mainly as a resultof proactive M&A activity overseas, such as the acquisition of the European business and the HyCO
business in the United States.

3,323
3,000

362

2,000

4.00

3.20

3.00

2.16

0

600

62

0.45

2016

0.71

2017

0.45

2018

0.71

2019

0.70

2020

1.00
(Yearsended
March 31)

0

2017

2016

2017

2018

2019

2020

Amount of waste recycled or reduced
Final disposal amount (including residues after
intermediary processing outside the Company)
Reporting boundary: Taiyo Nippon Sanso Corporation and its consolidated subsidiaries in Japan

3,255
593

3,494
48

614

34

658

39

%

2,612

2,846

15

100

4.00

2,691

80
10

2.09

2.04

2.00

2.22

2

2.31

64

2.00

2017

2018

2019

2020

(Yearsended
March 31)

Research and development costs in FYE2020 were level year on year at ¥3,389 million. In researchand development, we work on the development of new products and technologies for various
fields, based on our proprietary gas technology, which will contribute to earnings growth.

0

2

50
50

5

2016

2017

2018

2019

2020

(Yearsended
March 31)0

In FYE2020, employees with disabilities accounted for 2.31% of our labor force, slightly higher thanthe legally mandated rate for private-sector companies in Japan of 2.2%. We endeavor to provide
working environments in which individuals with disabilities can reach their full potential and tosupport the realization of a society that enables individuals with disabilities to play an active rolethat leverages their abilities.

8

9
18

20

2016

2017

INTEGRATED REPORT 2020

5

29
29

2018

60

2

40

44

2
33
7

4
2019

20

22
2020

0
(Years ended
March 31)In FYE2020, the Board of Directors comprised seven inside and two independent outside directors,
with directors serving concurrently as executive officers accounting for 44% of the Board as a wholeand independent outside directors accounting for 22%. The Advisory Committee on Appointments
and Remuneration, which is chaired by an independent outside director and comprises the President
CEO and independent outside directors, was established to improve the transparency and objectivityof procedures for appointing and determining remuneration for directors.

* For information on principal overseas subsidiaries, please see the Sustainability Data Book for FYE2020.

150

2

Inside directors (Left scale)
Independent outside directors (Left scale)
Percentage of directors serving concurrently as executive officers (Right scale)
Independent outside directors (Right scale)* Regarding the number of directors and outside directors, the President CEO is counted as an
executive officer.

Greenhouse gas emissions in Japan are calculated using emission factors specified in Japan’s Act on Promotion of Global Warming Countermeasures. For electricity, basic emission factors for each electricity
provider are used. For greenhouse gas emissions overseas, Scope 1 emissions are calculated using emission factors set forth in Japan’s Act on Promotion of Global Warming Countermeasures, while Scope 2
emissions are calculated using country-specific emission factors published by the IEA.
Energy consumption: The energy of the consumed fuels are calculated based on the gross calorific values specified in Japan’s Act on the Rational Use of Energy. Purchased electricity and purchased steam areconverted into primary energy amounts.

NIPPON SANSO HOLDINGS CORPORATION(Yearsended
March 31)

Number of individuals

5.00

3,389

Gas Business in Japan
Gas Business in the United States
Thermos Business
Reporting boundary: Taiyo Nippon Sanso Corporation and its consolidated subsidiaries

Waste generated in FYE2020 increased year on year to 3,762 tonnes, reflecting bulk recycling of
high-pressure gas containers that had passed their expiry dates.

2020

Directors and Outside Directors

1.00
0

2019

In FYE2020, the frequency rate of occupational accidents resulting in lost workdays was 0.70
in Japan and 2.16 overseas. We continue to promote efforts to prevent occupational accidents,
including analyzing the causes of occupational accidents and proposing countermeasures, improving
employees’ ability to recognize danger, and fostering a safety-oriented corporate culture.

1,000(Yearsended
March 31)2018

The employee turnover rate in FYE2020 was 3.11%, an increase of 0.34 percentage point year on
year. Going forward, we will continue taking steps to retain human resources by executing measures
to enable employees to feel a sense of worth and achievement in their work.

Japan
Overseas
Reporting boundary: Taiyo Nippon Sanso Corporation, its principal consolidated subsidiaries in Japanthat have production divisions, and its principal production subsidiaries overseas (excluding overseas
Thermos Group)
Overseas performance in FYE2019 includes data for Europe for the three months ended March 31, 2019.

3.00

2,660

0

3.11

2.77

2.27

2.22

2.00

Employment Rate of Persons with Disabilities(Taiyo Nippon Sanso; as of June 1 each year)

2,000

1,000

3.49

%

4,000

284

In FYE2020, Taiyo Nippon Sanso Corporation’s labor force comprised 1,775 male employees and249 female employees. While female employees as a percentage of total labor force rose 1.0
percentage point, female managers as a percentage of total managerial positions remained level.
Going forward, we will continue working to expand career opportunities for female employees
by improving working environments and establishing pertinent systems.

2.00

6.80

0
(Years ended
March 31)

4.15

3.00

22.70

10

5.00

4.09
4.00

8,000

Male (Left scale)
Female (Left scale)
Female employees as a percentage of total labor force (Right scale)
Female managers as a percentage of total managerial positions (Right scale)

5.00

10,013

10,000

12.3

1.2

Japan
Overseas
Reporting boundary: Taiyo Nippon Sanso Corporation and its consolidated subsidiaries in Japan andprincipal consolidated subsidiaries overseas*

In FYE2020, the number of individuals employed by the consolidated Nippon Sanso Holdings Groupwas 6,550 in Japan and 13,169 overseas. Owing to the expansion of operations as a result ofproactive M&A activity overseas, employees as a percentage of total labor force was also up fromFYE2019.

15

5

500

0
(Years ended
March 31)

249
1,775

11.3

10.0

9.2

Japan
Overseas
Reporting boundary: Taiyo Nippon Sanso Corporation and its consolidated subsidiaries in Japan andprincipal consolidated subsidiaries overseas*

30.02

Japan (Left scale)
Overseas (Left scale)
Overseas employees as a percentage of total labor force (Right scale)

1,746

50
1,000

2,024

1,983
225
1,758

1,940
194

1,890
174
1,716

1,881
149
1,732

2,000

75

25

6,461

%

2,500

16,7465,000

37,061

Number of individuals

1,500

10,00033,681

38,3330

19,22959.1

72,451

Number of Employees (Taiyo Nippon Sanso)%

20,000109,512

100,000

mark have been assured by KPMG AZSA Sustainability Co., Ltd.

NIPPON SANSO HOLDINGS CORPORATION151

INTEGRATED REPORT 2020

CORPORATE PROFILE

Independent Assurance ReportAwardsJapan

Overseas“Oita Petroleum Combinate Firefighting Competition Award”
Top Prize
The manufacturing division of Tsurusaki Sanso Center Co., Ltd. won
top prize in a competition held in the Oita Combinate site for improving
firefighting skills and disaster prevention awareness.

Received the “Award for Companies Promoting Safe Production”
Shanghai Taiyo Nippon Sanso Gas Co., Ltd. received the “Award for
Companies Promoting Safe Production” in recognition of its record ofbeneficial activities from the Shanghai Industrial Park Safety Production
Committee. One of the company’s employees received an award as a
“Person Who Has Contributed to Safe Transport.”

Award for Services to Safety
Taiyo Nippon Sanso Corporation received an award in recognition of its
track record in the Tokyo Metropolitan High Pressure Gas Safety Competition
held by the Tokyoto Koatsu Gasu Hoan Kyokai (the High Pressure Gas
Safety Institute in Tokyo). The competition is held to promote autonomous
safety activities by all companies and industries.

Award for “Company Practicing Excellent Safety Management”
Shanghai Taiyo Nippon Sanso Gas Co., Ltd. received an award as a“Company Practicing Excellent Safety Management” in recognition of
its excellent record of activities from the Shanghai Municipal Transport
Bureau. One of the company’s employees also received an honorary award
as a “Driver with Excellent Manners.”

Award Received at the “Chiba Labor Bureau Chief’s
Commendation Awards”
Chiba Sanso Center Co., Ltd. received an award from the Ministry of
Health, Labour and Welfare in recognition of its efforts in an award programfor companies in a region that are recognized as having excellent standardsof health and safety and improvement initiatives that are a model for others.

Received “AAA Rating (Highest Rating) for Liaoning Road
Transport Management”
Dalian Taiyo Nippon Sanso Gas Co., Ltd. received an award from the
Dalian provincial government in recognition of its record in raising awareness of safe driving over many years.
* Dalian Taiyo Nippon Sanso Gas is the only company to receive consecutive AAA ratingsfrom the Dalian provincial government.

Award Received at the “IOMA International Harmonization Award”
An employee of Taiyo Nippon Sanso Corporation received this award fromthe Japan Industrial and Medical Gases Association (JIMGA) for successfully
serving as task team leaders for the drafting of safe handling guidelines
for arsine phosphine.

Received “Regional Supplier Recognition Award for Asia”
Ingasco, Inc. received an award from Texas Instruments Incorporated inrecognition of its performance in meeting customer expectations for
quality and stable supply.

Top prize in the “Trailhead Contest”
Taiyo Nippon Sanso System Solutions Corporation and the Information
Systems Department of Taiyo Nippon Sanso Corporation won top prize inthe corporate division of a contest for completing the highest number ofunits in a free online learning service for Salesforce, called “Trailhead.”

Received “Supplier Excellence Award”
Taiyo Nippon Sanso Taiwan, Inc. received an award from Epistar Corp.
in recognition of its performance in meeting customer expectations for
quality and stable supply.
Received “Best Supplier Award”
Ingasco, Inc. received an award from IBIDEN Philippines, Inc. in recognitionof its performance in meeting customer expectations for quality andstable supply.

Letter of Appreciation Received Regarding Surgical Masks
Taiyo Nippon Sanso Corporation
received a letter of appreciationfrom the Governor of Tokyo for
donating surgical masks to medical institutions and others in
response to a severe shortage ofmasks in medical institutions
following the spread of COVID-19.

Received “Green Industry Award”
Air Products Industry Co., Ltd. received an award as an environmentallyconsiderate, clean factory from the Thai government in recognition of its
various environmental activities, such as reducing environmental impact
and energy consumption.

Received “Packaging Technology Award” and“Appropriate Packaging Award”
Taiyo Nippon Sanso Corporation employees received an award from theJapan Packaging Institute for developing a gas canister cap that complies
with the sealing function stipulated in relevant laws and does not return
easily to its current status.

Received “EIGA Annual Safety Award” (8th consecutive time)
Nippon Gases Euro-Holding S.L.U. received an award from the European
Industrial Gases Association in recognition of the Nippon Gases EuroHolding Group’s safety initiatives. This is the 8th consecutive time toreceive the award, and the 15th time in total.

Letter of Appreciation Received for Explanation ofHigh-Pressure Gas Combustion Characteristics
Taiyo Nippon Sanso Corporation received a letter of appreciationfrom the Kanagawa Ken Koatsu Gasu Hoan Kyokai (the High Pressure
Gas Safety Institute in Kanagawa Prefecture) for its track record incontributing to an explanation of high-pressure gas combustion characteristics in an earthquake preparedness drill that has been held by the
association for many years.
* Company names are the current name at the time of receiving the reward.

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CORPORATE PROFILE

Editorial Policy

Publication Process of This Report

We strive to guarantee management transparency and believe in the importance of building relationships of trust with stakeholders through dialogue. Accordingly, in this report we place a priority on
ensuring that stakeholders understand our overall value creation process.
Since FYE2017, we have published an annual integrated report. The purpose of this report is to provide financial information, including that related to corporate strategies and operating conditions, andnon-financial information, such as that related to environmental protection and social contribution initiatives
and to corporate governance. Information has been selected with consideration to relevance to give shareholders, investors, and other stakeholders an accurate overall understanding of the Nippon Sanso HoldingsGroup, its operating activities, and its approach to value creation. In editing the report, we have referred to the International Integrated
Reporting Council (IIRC)’s International IR Framework, and the Guidance for Integrated Corporate Disclosure and Company–
Investor Dialogue for Collaborative Value Creation, published by the Ministry of Economy, Trade and Industry.

In publishing “Nippon Sanso Holdings Integrated Report 2020,” we held 12 planning meetings based on the results of investor
survey questionnaires and feedback and requests received from stakeholders.
Overview of the 12 Planning Meetings
Main participants at the meetings

Main Discussion Themes(Rank, position, and organization as of October 1, 2020)• Evaluation and review of Integrated Report 2019

• Nippon Sanso Holdings Corporation• Why make an integrated report? Frameworks followed byRepresentative director, President CEO Yujiro Ichihara;

investors and corporations in Japan and overseas

Executive officers Satoshi Wataru, Tsutomu Moroishi, Takeshi Miki;• ESG-related information for priority disclosureGroup Planning Office, Corporate & Business Planning Division,• Nippon Sanso Holdings’ strengths in governanceCorporate Planning Division, Group Human Resources & Corporate
Secretariat, Public Relations Division, Group Finance and Accounting Office,Investor Relations Division

Reporting boundary
This report covers the activities of Nippon Sanso Holdings
Corporation and the companies of the Nippon Sanso
Holdings Group. In principle, non-financial information is for
Nippon Sanso Holdings Group companies in Japan and overseas, although in some cases the scope varies.

Period Covered
Data in this report is for FYE2020, ended March 31, 2020,
although some FYE2021 activities and future issues andtargets are also featured.

• Nippon Sanso Holdings’ human resources• Direction and overall composition of Integrated Report 2020

• Taiyo Nippon Sanso Corporation
Representative director, president Kenji Nagata
Director and senior managing executive officer Masahiro Uehara
Senior executive officer Nobuaki Kobayashi
Executive officer Yoshifumi Koide
Legal Affairs Department, Human Resource Department, Corporate
Planning Office, Corporate Planning Department, Corporate
Administration Division, Corporate Communications Department,
Technological Affairs Division, Research & Development Division,
and KAITEKI Promotion Project

Disclosure System• Edge International, Inc.

This report contains important basic information that Nippon Sanso Holdings Corporation particularly wishes to communicate tostakeholders. For more detailed non-financial information, please visit the Sustainability section of the Company’s corporate website.

Editorial Note

ImportantFinancial information

Non-financial information

Thank you for taking the time to read Integrated Report 2020 in its entirety.
The Company transitioned to a holding company structure on October 1,

Printedreport2020. The report presents the background to this transition as the Group’s

Integrated Report 2020
Basic information on the Company’s overall operating activities

business continues to globalize, and the Group’s aims for the future. We
also kept two key points in mind, based on the feedback and requests
received through dialogue with stakeholders. The first is the social value ofthe existence of the industrial gases business, which is the Group’s originalindustry. The second is the relationship between the Group’s business of
producing and supplying industrial gases, ESG, and sustainability. We havestrived to communicate these two key points in a way that any stakeholder
can clearly understand, thereby making the purpose for the Company’s

Websiteexistence clear. However, to really enable people to understand the Group,(Updated)

there is still much information that has yet to be communicated. Under the
IR information

Sustainability information

Detailed financial and share and shareholder

Detailed information on the Company’s sustainability

information for investors

initiatives for all stakeholders

https://www.nipponsanso-hd.co.jp/en/ir/

https://www.nipponsanso-hd.co.jp/en/sustainability/

new structure with Nippon Sanso Holdings, we aim to make our integrated
reports even better, from a more global perspective; and I believe that thesource of this enhancement will be our dialogue with stakeholders. I thankyou for your continued support of the Nippon Sanso Holdings Group.
Takayoshi Umehara

Detailed

General Manager
Investor Relations, Group Finance and Accounting Office,Nippon Sanso Holdings Corporation

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