SAKATA INX CORPORATION
Consolidated Financial Statements
As of December 31, 2019 and 2018

SAKATA INX CORPORATIONCONSOLIDATED BALANCE SHEETS
Years ended December 31, 2019 and 2018
Millions of yen
2019
ASSETS
Current assets:
Cash and deposits (Note 8) ··················································
Notes and accounts receivable - trade (Notes 7, 8 and 12):
Unconsolidated subsidiaries and affiliates ·····························
Other ········································································¥

Inventories (Note 10) ·························································
Other ············································································
Allowance for doubtful accounts ···········································
Total current assets ························································

Property, plant and equipment (Notes 6, 12 and 13):
Buildings and structures······················································
Machinery, equipment and vehicles ········································
Land ············································································
Lease assets (Note 3) ·························································
Construction in progress ·····················································
Other (Note 3) ·································································
Accumulated depreciation ···················································Net property, plant and equipment ······································
Investments and other assets:
Investments (Notes 7, 8, 9 and 12):
Unconsolidated subsidiaries and affiliates······························
Other ········································································
Long-term loans receivable ··················································
Deferred tax assets (Notes 5 and 15) ·······································Net defined benefit asset (Note 14) ·········································
Other (Note 3) ·································································
Allowance for doubtful accounts ···········································
Total investments and other assets ······································

Intangible assets:
Goodwill ·······································································
Other ············································································
Total intangible assets·····················································¥

10,122

¥

7,194

1,978
43,85145,82921,683
1,943(513)
79,064

2,876
43,63146,507
20,1592,378(453)
75,78534,39547,387
9,061
3,122
1,684
2,931
98,580(57,406)
41,17432,99045,590
9,005
1,460
913
2,761
92,719(53,787)
38,932

14,28911,022
25,311
58
340
168
1,628
(534)
26,971

16,280
10,22426,504
1,491
273
2,182
(262)
30,188

738
345
1,083
148,292

590
590
145,495

The accompanying notes are an integral part of these statements.

1

2018

¥

Millions of yen
2019
LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable - trade (Notes 7, 8 and 12):
Unconsolidated subsidiaries and affiliates ·························
Electronically recorded obligations - operating ···················
Other ····································································¥

Short-term loans payable (Notes 8, 11 and 12) ··························
Current portion of long-term loans payable (Notes 8, 11 and 12) ····
Lease obligations (Note 3) ·················································
Accrued expenses ···························································
Income taxes payable ·······················································
Provision for bonuses ·······················································
Other (Note 12) ······························································
Total current liabilities ··················································

6
13,00917,62630,641
6,011
2,160
250
3,639
567
527
2,522
46,317

Non-current liabilities:
Long-term loans payable (Notes 8, 11, and 12)··························
Lease obligations (Note 3)··················································
Deferred tax liabilities (Notes 5 and 15) ··································Net defined benefit liability (Note 14) ····································
Asset retirement obligations ················································
Other (Note 12) ······························································
Total non-current liabilities ·············································
Total liabilities ···························································

8,059
505
4,504
4,770
70
2,627
20,53566,852

¥

2018

¥

¥

6
13,815
17,98331,804
9,060
1,358
225
3,182
180
554
2,870
49,233

7,332
349
3,888
4,968
73
2,254
18,86468,097

Contingent liabilities (Note 16)
Net Assets (Note 25):
Shareholders’ equity
Capital stock:
Authorized – 144,000,000 shares
Issued – 62,601,161 shares ·············································
Capital surplus ·······························································
Retained earnings ···························································
Treasury shares, at cost – 4,202,237 shares in December 2019 and
4,201,943 shares in December 2018 ······
Total shareholders’ equity ··············································
Accumulated other comprehensive income
Valuation difference on available-for-sale securities ···················
Deferred gains or losses on hedges ·······································
Foreign currency translation adjustment ·································
Remeasurements of defined benefit plans ·······························
Total accumulated other comprehensive income ····················
Non-controlling interests ···················································
Total net assets ···························································

¥

¥

7,473
5,673
70,397

7,473
5,673
68,430(4,047)79,496(4,047)
77,5293,329
0(5,050)(1,079)(2,800)4,744
81,440148,292

2,714
5(4,550)(1,390)(3,221)
3,090
77,398145,495

The accompanying notes are an integral part of these statements.

2

¥

¥

SAKATA INX CORPORATIONCONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2019 and 2018

Net sales ·····················································································
Cost of sales ················································································
Selling, general and administrative expenses (Note 17) ···························
Operating income··································································

Millions of yen
2019
2018
¥
167,238¥
162,056
131,508
128,824
29,504
28,1206,226
5,112

Other income (expenses):
Interest and dividend income ··························································
Real estate rent ··········································································
Equity in earnings of affiliates ························································
Interest expenses ········································································
Foreign exchange gains and losses ···················································
Gain on sales of investment securities (Notes 8 and 9) ····························
Subsidy income ·········································································
Insurance income ·······································································
Impairment loss (Notes 18) ····························································
Loss on retirement of property, plant and equipment (Note 19) ··················
Loss on valuation of investment securities (Notes 8 and 9) ·······················
Restructuring loss (Notes 20) ·························································
Other, net ················································································
Income before income taxes ·····················································
Income taxes:
Current ···················································································
Deferred (Note 15) ·····································································

408
194
742
(305)
(109)
211
100
(190)
(40)
(2)
(216)
163
7,182

370
204
1,573
(267)
(240)
100
186
(71)
158
7,125

2,040
387
2,427

1,731
424
2,155

¥

4,970
(277)
4,693

¥
¥

80.36
30.00

Net income··················································································Net income attributable to non-controlling interests ······························Net income attributable to owners of parent ···································

¥

4,755
(640)
4,115

Net income per share of capital stock (Note 27) ·······································Cash dividends per share applicable to the year (Note 27)····························

¥
¥

70.46
30.00

Yen

The accompanying notes are an integral part of these statements.

3

SAKATA INX CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended December 31, 2019 and 2018

Net income·····················································································
Other comprehensive income (Note 21):
Valuation difference on available-for-sale securities··································
Deferred gains or losses on hedges ······················································
Foreign currency translation adjustment ················································
Remeasurements of defined benefit plans, net of tax ·································
Share of other comprehensive income of affiliates accounted
for using equity method ·································································
Total other comprehensive income ······················································
Comprehensive income ·····································································
Comprehensive income attributable to:
Owners of parent ···········································································
Non-controlling interests ·································································

Millions of yen
2019
2018
¥
¥
4,755
4,970

647
(308)
288

(2,136)0(1,595)
64

¥

(42)
585
5,340

¥

(546)
(4,213)
757

¥
¥

4,681
659

¥
¥

560
197

The accompanying notes are an integral part of these statements.

4

SAKATA INX CORPORATIONCONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
Year ended December 31, 2019
Millions of yen
Number ofshares ofcommon stock
Balance at the beginning of current period ····················

62,601,161-

Dividends of surplus (¥30.0 per share) ·························Net income attributable to owners of parent ···················
Purchase of treasury shares ······································
Change in scope of consolidation ·······························Net changes in items other thanshareholders’ equity·········································
Total changes in items during the period·······················
Balance at the end of current period ····························

62,601,161

Capital stock

Capital surplus

¥

¥

¥

7,473
7,473

¥

5,673
5,673

Retainedearnings¥¥

68,430(1,752)
4,115
(396)
1,967
70,397

Total
shareholders’equityTreasuryshares¥¥(4,047)(0)(0)(4,047)¥¥

77,529(1,752)
4,115
(0)
(396)
1,967
79,496

Millions of yen
Valuationdifference on
available-forsale securities
Balance at the beginning of current period ···················· ¥Dividends of surplus (¥30.0 per share) ·························Net income attributable to owners of parent ···················
Purchase of treasury shares ······································
Change in scope of consolidation ·······························Net changes in items other thanshareholders’ equity·········································
Total changes in items during the period·······················

2,714
-

Balance at the end of current period ···························· ¥3,329

Foreigncurrencytranslation
adjustment

Deferred
gains or losses
on hedges
¥

615
615

5
-

¥

(5)
(5)
¥

(4,550)
-

¥

(500)
(500)

0

¥

(5,050)¥

The accompanying notes are an integral part of these statements.
5(1,390)-Total
accumulated
othercomprehensive
income¥(3,221)
-

311
311

421
421

Remeasurementsof defined benefit
plans(1,079)¥(2,800)Total
net assets

Non-controllinginterests
¥

3,090
-

¥

1,654
1,654
¥

4,744

77,398(1,752)
4,115
(0)
(396)
2,075
4,042

¥

81,440SAKATA INX CORPORATIONCONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
Year ended December 31, 2018
Millions of yen
Number ofshares ofcommon stock
Balance at the beginning of current period ····················

62,601,161-

Dividends of surplus (¥31.0 per share) ·························Net income attributable to owners of parent ···················
Purchase of treasury shares ······································
Change in scope of consolidation in
affiliates accounted for using equity method ·················Net changes in items other thanshareholders’ equity ·····································
Total changes in items during the period·······················
Balance at the end of current period ····························

Capital stock

Capital surplus

¥

¥

7,473
-

5,673
-

Retainedearnings¥

Total
shareholders’equityTreasuryshares65,638(1,810)
4,693-¥(4,046)(1)¥

74,738(1,810)
4,693
(1)

-

-

-

(91)

-

(91)

62,601,161

7,473

5,673

2,792
68,430(1)(4,047)

2,791
77,529

¥

¥

¥

¥

¥

Millions of yen
Valuationdifference on
available-forsale securities
Balance at the beginning of current period ···················· ¥Dividends of surplus (¥31.0 per share) ·························Net income attributable to owners of parent ···················
Purchase of treasury shares ······································
Change in scope of consolidation in
affiliates accounted for using equity method ·················Net changes in items other thanshareholders’ equity·········································
Total changes in items during the period·······················
Balance at the end of current period ···························· ¥

4,957
-

Foreigncurrencytranslation
adjustment

Deferred
gains or losses
on hedges
¥

2
-

¥

(1,435)-

Total
accumulated
othercomprehensive
income¥912-

Remeasurementsof defined benefit
plans(2,612)-¥Total
net assets

Non-controllinginterests
¥

3,117
-

¥

78,767(1,810)
4,693
(1)

-

-

-

-

-

-

(91)

(2,243)(2,243)3
3(1,938)(1,938)45
45(4,133)(4,133)(27)(27)(4,160)(1,369)

2,714

¥

5

¥

(4,550)¥

The accompanying notes are an integral part of these statements.
6(1,390)¥(3,221)

¥

3,090

¥

77,398SAKATA INX CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2019 and 2018
Millions of yen
2019
Cash flows from operating activities:
Income before income taxes ······························································
Depreciation and amortization ······················································
Amortization of goodwill····························································
Increase (decrease) in allowance for doubtful accounts ·························
Increase (decrease) in net defined benefit liability ·······························
Increase (decrease) in provision for bonuses ·····································
Interest and dividend income ·······················································
Interest expenses······································································
Equity in (earnings) losses of affiliates ············································
Loss on retirement of property, plant and equipment ····························
Loss (gain) on sales of investment securities ·····································
Loss (gain) on valuation of investment securities ································
Subsidy income ·······································································
Insurance income ·····································································
Impairment loss ·······································································
Restructuring loss ····································································
Decrease (increase) in notes and accounts receivable - trade ···················
Decrease (increase) in inventories··················································
Increase (decrease) in notes and accounts payable - trade,including electronically recorded obligations - operating ·······················
Other, net ··············································································
Subtotal ······································································
Interest and dividend income received ············································
Interest expenses paid ································································
Proceeds from insurance income ···················································
Proceeds from subsidy income ·····················································
Income taxes paid ····································································Net cash provided by (used in) operating activities ·······································¥Cash flows from investing activities:
Purchase of property, plant and equipment ·············································
Proceeds from sales of property, plant and equipment ································
Purchase of investment securities························································
Proceeds from sales of investment securities ··········································
Payments of loans receivable·····························································
Collection of loans receivable ····························································
Other, net ···················································································Net cash provided by (used in) investing activities ·······································

The accompanying notes are an integral part of these statements.

7

7,182
4,341
108
268
180
(25)
(408)
305
(742)
40
(211)
2
(100)
190
216
1,611
(469)

2018
¥

7,125
4,037
(115)
202
(89)
(370)
267
(1,573)
71
(100)
(186)
(2,161)(1,940)(1,884)71
10,675
708
(305)
100
(1,358)
9,820

2,794
(738)
7,224
766
(264)
238
100
(2,824)5,240(5,095)
22
(131)
481
(55)
45
(374)
(5,107)(6,267)
57
(190)
1
(602)
57
(335)
(7,279)

Millions of yen
2019
2018
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable ··································
Proceeds from long-term loans payable·················································
Repayments of long-term loans payable ················································
Purchase of treasury shares ·······························································Cash dividends paid ·······································································
Dividends paid to non-controlling interests ············································
Other, net ···················································································Net cash provided by (used in) financing activities ·······································(3,137)
3,098(1,522)(1,752)(168)(340)(3,821)

3,727
2,601
(4,153)(1)(1,810)
(223)
(264)
(123)

Effect of exchange rate change on cash and cash equivalents ·······················

254

(401)

Net increase (decrease) in cash and cash equivalents ·································Cash and cash equivalents at beginning of period ·····································
Increase (decrease) in cash and cash equivalents resulting from change inscope of consolidation ·······································································Cash and cash equivalents at end of period （Note 22） ······························

1,146
6,788

(2,563)
9,351

1,427

-

¥

The accompanying notes are an integral part of these statements.

8

9,361

¥

6,788

SAKATA INX CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of SAKATA INX CORPORATION (the“Company”) and its consolidated subsidiaries have been prepared in accordance with the provisions set forthin the Japanese Financial Instruments and Exchange Law and its related accounting regulations and in
conformity with generally accepted accounting principles in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements from International Financial ReportingStandards (IFRS).
The accounts of the Company’s consolidated foreign subsidiaries are based on IFRS or generally
accepted accounting principles in the United States of America (U.S. GAAP). The accompanying
consolidated financial statements have been restructured and translated into English with some expanded
descriptions and the inclusion of consolidated statements of shareholders’ equity from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments andExchange Law. Some supplementary information included in the statutory Japanese language consolidated
financial statements, but not required for fair presentation, is not presented in the accompanying consolidated
financial statements.
2.

Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of the Company and its twenty-sevensubsidiaries (twenty-three in 2018). The principal subsidiaries of the Company were THE INXGROUP LIMITED, INX International Ink Co., SAKATA INX (INDIA) PRIVATE LIMITED and P.T.
SAKATA INX INDONESIA. Creative Industria e Comercio Ltda. and other two companies that wereunconsolidated subsidiaries in 2018 were included in the scope of consolidation due to an increase inmateriality, and ETERNAL SAKATA INX CO., LTD. to that the equity method was applied in 2018 wasincluded due to the increase in its significance to the company. All significant intercompany transactions andaccounts have been eliminated.
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including
the portion attributable to non-controlling shareholders, are evaluated using the fair value at the time theCompany acquired control of the respective subsidiary. Differences between the cost of investments inconsolidated subsidiaries and the equity in the net assets at the date of acquisition are amortized over a
period that is within twenty years.
The equity method was applied to four affiliates (six in 2018). The principal affiliate of the Company
was SIIX Corporation. ETERNAL SAKATA INX CO., LTD. was excluded from the scope of application of
the equity method due to consolidation and one other company was excluded due to its liquidation.
The consolidated financial statements did not include the accounts of three unconsolidated subsidiaries
in 2018, and the equity method was not applied to these subsidiaries because they were immaterial. The
principal unconsolidated subsidiary was Creative Industria e Comercio Ltda.
Securities
The Company and its consolidated subsidiaries (the “Companies”) classify securities as (a) securities
held for trading purposes (“trading securities”), (b) debt securities intended to be held to maturity(“held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliated companies and(d) all other securities that are not classified in any of the above categories (“available-for-sale securities”).
The Companies do not hold trading securities or held-to-maturity debt securities. Equity securities
issued by subsidiaries and affiliated companies accounted for by the equity method are stated at moving
average cost. Available-for-sale securities with available fair values are stated at fair value. Unrealized gains
and unrealized losses on these securities are reported, net of applicable income taxes, as a separate
component of shareholders’ equity. Realized gains and losses on the sale of such securities are computed
using moving average cost. Other securities with no available fair value are stated at moving average cost.

9Inventories
Inventories of the Company and its consolidated domestic subsidiaries are stated at cost based on themoving average method, in which the amount of inventories shown on the balance sheet are written down
based on any decrease in profitability.
Inventories of the consolidated foreign subsidiaries are stated principally at the lower of cost or
market, cost being determined by the first-in, first-out method.
Property, plant and equipment
Property, plant and equipment are carried at cost. The Company and its consolidated domestic
subsidiaries depreciate property, plant and equipment principally by the straight-line method over theestimated useful life of the asset.
The range of useful lives is summarized as follows:
Buildings and structures
Machinery, equipment and vehicles
Other

3 to 60 years
2 to 17 years
2 to 20 years

Intangible assets
Intangible assets consist of in-house software and other. The straight-line method is used to amortize
intangible assets. The amortization of in-house software is computed using the straight-line method based on
the estimated useful life of mainly five years.
Finance leases
Lease assets under finance lease transactions that do not transfer title of the lease assets are capitalized
and depreciated on a straight-line basis with the lease period used as the useful life and no residual value.

Allowance for doubtful accounts
The Companies have adopted the policy of providing an allowance for doubtful accounts in an amountsufficient to cover possible losses on collection mainly by estimating the uncollectible amounts of certain
receivables and applying a percentage based on collection experience to the remaining receivables.
Bonuses
The Company and certain consolidated subsidiaries provide for employees’ bonuses at the balance
sheet date based on the estimated amounts of projected bonus payments.
Retirement benefits
1. Method used to attribute estimated amounts of retirement benefits to periods
In calculating retirement benefit obligations, the method used to attribute the estimated amount of
retirement benefits to a period until the end of the consolidated fiscal year is mainly based on the benefit
formula basis.
2. Accounting methods for actuarial difference and prior service cost
Prior service cost is recognized mainly as current costs, and actuarial gains and losses are recognizedin expenses using the straight-line method over mainly 15 years, a period which reflects the average of theestimated remaining service years of employees, commencing with the current period.

10Translation of foreign currencies
Receivables and payables denominated in foreign currencies are translated into Japanese yen at
year-end rates. All revenues and expenses in foreign currencies are translated at the exchange rates
prevailing when such transactions are made. The resulting gains and losses are recognized in the statements
of income.
The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at
year-end rates, except for equity, which is translated at historical rates. Differences arising from thetranslations are presented as “Foreign currency translation adjustment” and “Non-controlling interests” in net
assets. Income statement accounts of the consolidated foreign subsidiaries are translated at average annual
rates.
Derivatives and hedge accounting
The Companies state derivative financial instruments at fair value and recognize changes in the fairvalue as gain or loss unless the derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies
defer recognition of gain or loss resulting from changes in the fair value of the derivative financial
instruments until the corresponding loss or gain on the hedged items is recognized. However, if forward
foreign exchange contracts are used as hedges and meet certain hedging criteria, the forward foreignexchange contracts and hedged items are accounted for at the forward foreign exchange contact rate. If
interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or deducted from the interest on the hedged assets
or liabilities for which the interest rate swap contracts were executed.
The following summarizes hedging derivative financial instruments used by the Companies and theitems hedged:
Hedging instruments
Forward foreign exchange contracts
Currency swap contracts
Interest rate swap contracts

Hedged items
Receivables and payables in foreign currency and others
Loans payable in foreign currency
Interest on loans payable in foreign currency and loans payable

The Companies use derivative financial instruments for hedging purposes to mitigate the risk offluctuation in foreign currency exchange rates and interest rates.
The Companies evaluate hedging effectiveness by confirming a correlation between the hedging
instruments and the hedged items. However, interest rate swap contracts that meet the requirements for
special treatment are omitted from an assessment of effectiveness.
Cash and cash equivalents
Cash on hand, readily available deposits and short-term highly liquid investments with maturities notexceeding three months at the time of purchase are considered to be cash and cash equivalents.
Research and development expenses
Research and development expenses are charged to income as incurred. Research and development
expenses for the year ended December 31, 2019 and 2018 were ¥3,475 million and ¥3,311 million,
respectively.
Income taxes
Income taxes comprise corporation tax, prefectural and municipal inhabitants taxes and enterprise tax.
The asset-liability approach is used to recognize deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes and operating loss and tax credit
carryforwards.

11

Consumption taxes
Consumption taxes are excluded from revenue and expense accounts.
Amounts per share(a) Net income per share of common stock
The Companies have adopted ASBJ Statement No. 2, “Accounting Standard for Earnings Per Share,”and Financial Accounting Standards Implementation Guidance No. 4, “Implementation Guidance for
Accounting Standard for Earnings Per Share.”(b) Cash dividends per share
Cash dividends per share presented in the statements of income represent the cash dividends declaredapplicable to the year, including dividends declared and paid after the end of the year.
Net assets
Under the Japanese Corporation Law (the “Law”) and regulations, the entire amount paid for new
shares is required to be designated as common stock. However, a company may, by a resolution of the Boardof Directors, designate an amount not exceeding one half of the price of the new shares as additional paid-in
capital, which is included in capital surplus.
The Law requires that an amount equal to 10% of dividends must be appropriated as additional paid-in
capital or legal earnings reserve until the total aggregate amount of legal reserve and additional paid-in
capital equals 25% of the common stock.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, alladditional paid-in capital and all legal earnings reserve may be transferred to other capital surplus andretained earnings, respectively, which are potentially available for dividends. The maximum amount that theCompany can distribute as dividends is calculated based on the nonconsolidated financial statements of theCompany in accordance with the Law.
Reclassification
Certain reclassifications have been made to the consolidated financial statements for the year ended
December 31, 2018 to conform to the presentation for the year ended December 31, 2019.

12

3.

Changes in Accounting Policies(Application of IFRS 16 (Lease))
Subsidiaries using International Financial Reporting Standards started to apply IFRS No.16 Lease(hereinafter referred to as “IFRS 16”) in the current fiscal year.
In transitioning to IFRS 16, the subsidiaries apply the standard retrospectively with the cumulative
effect of initially applying the standard recognized at the initial date of application.
For the leases previously classified as operating lease applying IAS 17, right-of-use assets and leaseliabilities were recognized at the date of initial application. In addition, a part of “Lease assets” in Property,
plant and equipment and “Other” in Investments and other assets were reclassified to right-of-use assets.
As a result, in the consolidated balance sheet of the current consolidated fiscal year, “Other” in
Property, plant and equipment increased by ¥1,821 million, “Lease obligations” in Current liabilities by ¥40
million, and that in Non-current liabilities by ¥197 million, and “Lease assets” in Property, plant andequipment decreased by ¥180 million, and “Other” in Investments and other assets by ¥816 million
respectively.
The effects on the consolidated statements of income and consolidated statements of cash flows for thecurrent consolidated fiscal year were inconsequential.
4.

Accounting Standards and Guidance not yet Adopted
The following standard and guidance were issued but not yet adopted.
- “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 30, 2018)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance
No.30, March 30, 2018)(1) Overview
The above standard and guidance provide comprehensive principles for revenue recognition. Under
the standard and guidance, revenue is recognized by applying following 5 steps:
Step1: Identify contract(s) with customers.
Step2: Identify the performance obligations in the contract.
Step3: Determine the transaction price.
Step4: Allocate the transaction price to the performance obligation in the contract.
Step5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Effective date
Effective from the beginning of the fiscal year ending December 31, 2022.
(3) Effect of application of the standard
The Company and its consolidated domestic subsidiaries are currently in the process of determining
the effects of these new standards on the consolidated financial statements.

13

5.

Changes in Presentation(Changes due to adoption of “Partial Amendments to Accounting Standard for Tax EffectAccounting”)
Upon application of “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018 (hereinafter, “Statement No. 28”)) from the beginning of the current
fiscal year, the Company and its domestic subsidiaries changed the presentation and related notes of deferred
tax assets and deferred tax liabilities, such that deferred tax assets and deferred tax liabilities are classified aspart of ‘investments and other assets’ and ‘non-current liabilities,’ respectively.
As a result, ¥94 million and ¥362 million of deferred tax assets previously presented as “current
assets” have been included in deferred tax assets (¥273 million) in “investments and other assets” anddeferred tax liabilities (¥3,888 million) in “non-current liabilities,” respectively, in the balance sheet as of theend of the previous fiscal year.
The notes related to tax effect accounting additionally included those described in Note 8 (excluding
total amount of valuation reserves) and Note 9 of “Accounting Standard for Tax Effect Accounting,” which
are required in Paragraphs 3 to 5 of Statement No. 28. However, this additional information corresponding to
the previous fiscal year is not disclosed, in accordance with the transitional treatments prescribed in
Paragraph 7 of Statement No. 28.

6.

Deferred Capital Gains on Tangible Fixed Assets
Under certain conditions, such as the exchange of similar kinds of fixed assets, gains from insurance
claims and sales and purchases resulting from expropriation, Japanese tax laws permit companies to defer
gains arising from such transactions by reducing the cost of the assets acquired. Accordingly, deferred
capital gains from insurance claims were deducted from the cost of replacement properties, which amounted
to ¥41 million as of both December 31, 2019 and 2018.

7.

Effect of Bank Holiday
As financial institutions in Japan were closed on both December 31, 2019 and 2018, amounts thatwould have been settled on December 31 were collected or paid on the first business day in January, 2020
and 2019. The amounts included in the consolidated balance sheet as of December 31, 2019 and 2018 wereas follows:
Millions of yen
2019
Notes and accounts receivable - trade ··································

¥

2018
874

¥

868

Notes and accounts payable - trade ·····································

46

58

Electronically recorded obligations - operating ·······················

1,994

1,893

14

8.

Financial Instruments
1. Qualitative information on financial instruments(1) Policies for using financial instruments
The Companies have policies to limit fund management to the use of highly secure financial assets
such as short-term deposits and financing to the use of bank loans. Derivative transactions are used to
manage the risk of fluctuation in the interest rates of bank loans with variable interest rates. The Companies
do not use derivative transactions for speculation.
(2) Details of risk and risk management for financial instruments
Operating receivables such as “Notes and accounts receivable - trade” are exposed to customer credit
risk. To manage such risk, due dates and the balances of operating receivables by customer are monitored byreviewing overdue receivable reports. In addition, credit research is performed regularly on customers whose
accounts need attention.
Securities such as available-for-sale securities consist mainly of securities of parties with whom theCompanies have business relationships and are exposed to market fluctuations risk. To manage such risk, theCompanies monitor the fair value of the securities and the financial condition of the investees regularly toevaluate investment policy, taking the business relationships with the investees into consideration.
Operating payables such as “Notes and accounts payable - trade” and “Electronically recorded
obligations - operating” are mostly due within one year.
Short-term loans payable are used as financing mainly for operating transactions, and long-term loans
payable and lease obligations on finance leases are used as financing mainly for capital expenditure.
Loans payable at variable interest rates are exposed to the risk of interest rate fluctuation. However,for some long-term loans payable, derivative transactions, namely interest rate swap contracts, are used as
hedging instruments to avoid interest rate risk and stabilize interest expense. Hedge effectiveness testing is
not conducted as the interest rate swap contracts meet certain hedging criteria.
The execution and management of derivative transactions are conducted under the Company’sderivative transaction management rules and regulations, and the counterparties to derivative financial
instruments are limited to high credit rating financial institutions to mitigate credit risk.
Operating payables and bank loans are exposed to liquidity risk, but the Companies manage the riskby preparing and reviewing respective monthly cash management plans.

2. Fair values of financial instruments
Consolidated balance sheet amounts and fair values of financial instruments and any differences as ofDecember 31, 2019 and 2018 are set forth in the tables below.
Note that the following tables do not include fair values for financial instruments for which the fairvalue was extremely difficult to measure.
Year ended December 31, 2019

Millions of yen

Consolidatedbalance sheet
amount(1) Cash and deposits································ ¥ 10,122(2) Notes and accounts receivable - trade·········
45,829(3) Investments:
Securities in affiliates ··························
13,587Available-for-sale securities ··················
10,733
Total assets ············································ ¥ 80,271(1) Notes and accounts payable - trade············ ¥ 17,632(2) Electronically recorded obligations
13,009- operating ···········································(3) Short-term loans payable
6,011(4) Long-term loans payable ·······················
10,219Total liabilities ········································ ¥ 46,871
Derivative transactions (*) ··························(*) Derivative assets and (liabilities) are on a net basis.

15

Fair value

Difference

¥

¥

¥
¥

10,12245,82916,467
10,733
83,151
17,632¥¥

13,009¥6,011
10,21646,868
-

2,880
2,880
-

¥

(3)
(3)
-

Year ended December 31, 2018

Millions of yen

Consolidatedbalance sheet
amount(1) Cash and deposits································ ¥7,194(2) Notes and accounts receivable - trade·········
46,507(3) Investments:
Securities in affiliates ··························
13,187Available-for-sale securities ··················
10,033
Total assets ············································ ¥ 76,921(1) Notes and accounts payable - trade············ ¥ 17,989(2) Electronically recorded obligations
13,815- operating ···········································(3) Short-term loans payable
9,060(4) Long-term loans payable ·······················
8,690
Total liabilities ········································ ¥ 49,554
Derivative transactions (*) ··························(*) Derivative assets and (liabilities) are on a net basis.

Fair value

Difference

¥

¥

¥
¥

7,194
46,507
15,461
10,033
79,195
17,989

¥
¥

2,274
2,274
-

13,815

¥

9,060
8,672
49,536
-

-

¥

(18)
(18)
-

Note 1: Determination of fair value of financial instruments, securities and derivative transactions
Assets(1) Cash and deposits and (2) Notes and accounts receivable - trade
The fair value approximates the carrying amount because of the short maturity of these instruments.
(3) Investments
The fair value of securities is stated at the quoted market price. The fair value of investment trusts
approximates the carrying amount because of the short maturity.
Securities are classified as securities in affiliates or available-for-sale securities.
The consolidated balance sheet amounts, acquisition costs and any differences for securities as ofDecember 31, 2019 and 2018 were as follows:Year ended December 31, 2019

Millions of yen
Consolidatedbalance sheet
amountAcquisition cost(*)

Difference(1) Equity securities withconsolidated balance sheet amountexceeding acquisition cost ············¥ 24,262¥
6,271¥
17,991(2) Other ·····································
Subtotal ··································
24,262
6,271
17,991(1) Equity securities withconsolidated balance sheet amountnot exceeding acquisition cost ········
58
64
(6)
(2) Other ·····································
Subtotal ··································
58
64
(6)
Total ··········································¥ 24,320¥
6,335¥
17,985(*) Acquisition cost is the consolidated balance sheet amount after write-down.
The amount of write-down for the year ended December 31, 2019 was ¥2 million and there was no
amount of write-down for the year ended December 31, 2018, and the amount of sales was ¥481 million
and the amount of gain on sales was ¥211 million for 2019 and there were no sales for 2018.

16

Year ended December 31, 2018

Millions of yen
Consolidatedbalance sheet
amountAcquisition cost(*)

Difference(1) Equity securities withconsolidated balance sheet amountexceeding acquisition cost ············¥ 23,109¥6,456(2) Other ·····································
Subtotal ··································
23,1096,456(1) Equity scurities withconsolidated balance sheet amountnot exceeding acquisition cost ········
111
119(2) Other ·····································
Subtotal ··································
111
119
Total ··········································¥ 23,220¥
6,575(*) Acquisition cost is the consolidated balance sheet amount after write-down.

¥

16,653
16,653(8)(8)
16,645¥

Liabilities(1) Notes and accounts payable - trade, (2) Electronically recorded obligations – operating and (3)Short-term loans payable
The fair value approximates the carrying amount because of the short maturity of these instruments.
(4) Long-term loans payable
The fair value of long-term loans payable is estimated by the present value of the total amount ofprincipal and interest discounted at the interest rate that would apply to similar new borrowings.
Derivative transactions
There were no amounts for derivative transactions as of December 31, 2019 and 2018.
Note 2: Financial instruments for which the fair value is extremely difficult to measure
Non-listed equity securities classified as available-for sale securities or equity securities issued bysubsidiaries and affiliated companies in the consolidated balance sheet amount of ¥991 million as ofDecember 31, 2019 and ¥3,284 million as of December 31, 2018 were not included in “Assets (3)Investments” because they had no quoted market price, future cash flows could not be estimated and thefair values were unavailable.
Note 3: Aggregate annual maturities of money claims and securities with maturities as of December 31, 2019and 2018 were as follows:Year ended
December 31, 2019

Cash and deposits ··············· ¥Notes and accounts
receivable - trade ··············
Total ······························ ¥Millions of yen
20202021-2024

2025-2029

10,122¥-¥-2030 and
thereafter¥-

45,82955,951

¥

-

¥

-

¥

Year ended
December 31, 2018

Millions of yen
2020-2023

2024-2028

7,194

¥

-

¥

-

2029 and
thereafter¥-

46,50753,701

¥

-

¥

-

¥

2019
Cash and deposits ··············· ¥Notes and accounts
receivable - trade ··············
Total ······························ ¥

-

17

-

Note 4: Aggregate annual maturities of long-term loans payable as of December 31, 2019 and 2018 were as
follows:
Year ended
December 31, 2019

Millions of yen
2020

Long-termloans payable ········· ¥

2,160

2021

¥

2022

2,180

¥

Year ended
December 31, 20182025 and
thereafter¥

407¥ 1,153¥2023

2024 and
thereafter-

Millions of yen
2019Long-termloans payable ········· ¥

4,320

2024

2023

1,358

2020

¥

2021

1,733

18

¥

1,674

2022

¥

3,841

¥

83

¥

1

9.

Securities
The following tables summarize the consolidated balance sheet amount, acquisition cost and fair valueof available-for sale securities as of December 31, 2019 and 2018. Available-for-sale securities (non-listed
equity securities) in the consolidated balance sheet amount of ¥289 million as of December 31, 2019 and¥191 million as of December 31, 2018 were not included because they had no quoted market price, thefuture cash flows could not be estimated and the fair values were unavailable. Proceeds from the sale ofavailable-for-sale securities amounted to ¥480 million for the year ended December 31, 2019, and the related
gains amounted to ¥211 million for the year ended December 31, 2019. A description for the year ended
December 31, 2018 was omitted because proceeds from the sale of available-for-sale securities wereimmaterial.
When the fair value of securities at the fiscal year end is lower than the acquisition cost by 50% or
more, the whole amount of such difference is recorded as impairment loss, in principle. When the fair value
at the fiscal year end is lower than the acquisition cost by between 30% and 50%, impairment loss in an
amount deemed necessary is recorded after determining recoverability by considering quoted market pricetransactions during a certain past period, business performance and other factors.
The amount of impairment for available-for-sale securities for the year ended December 31, 2019 was
2 million and there was no amount of impairment for available-for-sale securities for the year ended
December 31, 2018.
Year ended December 31, 2019

Millions of yen
Consolidatedbalance sheet
amount(1) Equity securities withconsolidated balance sheet amountexceeding acquisition cost·············(2) Other ·····································
Subtotal ··································(1) Equity securities withconsolidated balance sheet amountnot exceeding acquisition cost ········(2) Other ·····································
Subtotal ··································
Total ··········································¥¥

10,675
10,67558
58
10,733

Period ended December 31, 2018

¥

¥

5,847
5,847

64
64
5,911

Difference

¥

¥

4,828
4,828

(6)
(6)
4,822

Millions of yen
Consolidatedbalance sheet
amount(1) Equity securities withconsolidated balance sheet amountexceeding acquisition cost·············(2) Other ·····································
Subtotal ··································(1) Equity securities withconsolidated balance sheet amountnot exceeding acquisition cost ········(2) Other ·····································
Subtotal ··································
Total ··········································

Acquisition cost

¥

¥

9,922
9,922

111
111
10,03319

Acquisition cost

¥

¥

6,032
6,032

119
119
6,151

Difference

¥

¥

3,890
3,890

(8)
(8)
3,882

10.

Inventories
Inventories at December 31, 2019 and 2018 consisted of the following:
Millions of yen
2019
Merchandise and finished goods ·········································
Work-in-process ···························································
Raw materials and supplies ···············································

¥

2018

11,4801,178
9,025
21,683

¥

¥

9,759
1,220
9,180
20,159¥11.

Short-term Loans Payable and Long-term Loans Payable
Short-term loans payable at December 31, 2019 and 2018 consisted of short-term notes generally forone year bearing interest ranging from 0.24% to 8.90%.
Long-term loans payable at December 31, 2019 and 2018 consisted of the following:
Millions of yen
2019
Secured:Loans principally from banks at
3.65% - 3.65% maturing through 2023 ··························
Unsecured:
Loans principally from banks at
0.20% - 4.70% maturing through 2024 ··························

2018

¥

211

¥

10,008
10,2192,160
8,059

Less amounts due within one year ·······································

¥

405

¥

8,285
8,690
1,358
7,332

The aggregate annual maturities of long-term loans payable at December 31, 2019 were as follows:Year ending December 31,

Millions of yen

2020············································································
2021············································································
2022············································································
2023············································································
2024 and thereafter ··························································

¥

¥

2,160
2,180
4,320
407
1,152
10,219The Company has specific commitment lines with two banks to finance working capital as follows:
Specific commitment lines ············································ ¥ 3,000 million
Used portion as of December 31, 2019 ······························ ¥-12.

Assets Pledged as Collateral
Assets pledged as collateral as of December 31, 2019 and 2018 were as follows:
Millions of yen
2019
Notes and accounts receivable - trade ··································
Land ········································································
Buildings and structures, net of accumulated depreciation ··········
Machinery, equipment and vehicles,
net of accumulated depreciation ······································
Investments in other ······················································

¥

¥

20

2018
8
129
638
1
50
826

¥

¥

8
168
1,051
3
47
1,277

Liabilities secured by the above assets were as follows:
Millions of yen
2019
Short-term loans payable·················································
Current portion of long-term loans payable ···························
Notes and accounts payable - trade ·····································
Other current liabilities ···················································
Long-term loans payable ·················································
Other non-current liabilities ·············································

¥

¥

13.

2018
8
73
214
1
222
0
518

¥

¥

8
113
228
2
298
1
650

Finance Leases
Capitalized finance leases of the Companies at December 31, 2019 and 2018 were as follows:(As lessee)
Finance leases for which the ownership of the lease assets was not considered to be transferred to thelessee as of and for the year ended December 31, 2019 and 2018 were as follows:(1) Description of lease assets
Tangible fixed assets:
Mainly, the production facilities in the printing ink business (machinery and equipment) for
common purposes or each business.
(2) Depreciation method for lease assets
As described in Note 2, “Significant Accounting Policies - Finance leases”

21

14.

Retirement Benefits
1. Outline of adopted retirement benefit plans
The Company and certain domestic consolidated subsidiaries provide funded non-contributory pension
plans, which include defined benefit pension plans and unfunded lump-sum payment plans. Certain foreign
consolidated subsidiaries provide defined contribution plans as well as defined benefit pension plans.
2. Defined benefit plans, including plans applying the simplified method(1) Movement in retirement benefit obligations
Millions of yen
2018
2019
Balance at the beginning of current period ···················· ¥12,626¥
12,947
Service cost (*) ·················································
522
518
Interest cost ·····················································
86
89
Actuarial loss (gain) ···········································
(38)
(290)
Benefits paid ····················································
(473)
(555)
Past service cost
(52)
Other·····························································
35(83)
Balance at the end of current period ···························· ¥12,706¥
12,626(*) Service cost includes retirement benefit costs of consolidated subsidiaries applying the simplified
method.

(2) Movement in plan assets
Millions of yen
2018

2019
Balance at the beginning of current period ···················· ¥Expected return on plan assets ·······························
Actuarial loss (gain) ···········································
Contributions paid by the employer ·························
Benefits paid ····················································
Other·····························································
Balance at the end of current period ···························· ¥

7,657
162
208
436
(352)
(8)
8,103

¥

7,921
150
(392)
429
(410)
(41)
7,657

¥

(3) Reconciliation from retirement benefit obligations and plan assets to net defined benefit liability (asset)
Millions of yen
2018

2019
Funded retirement benefit obligations ························· ¥Plan assets ·························································
Total ·····························································
Unfunded retirement benefit obligations ······················
Total net liability (asset) for retirement benefits
at the end of current period·································· ¥8,017(8,103)
(86)
4,688

¥

8,057
(7,657)
400
4,568

4,602

¥

4,968

Net defined benefit liability ·····································Net defined benefit asset ·········································
Total net liability (asset) for retirement benefits
at the end of current period ·································· ¥

4,770
(168)

22

4,602

4,968
¥

4,968

(4) Retirement benefit costs
Millions of yen
2018

2019

Service cost (*) ················································· ¥
522
¥
518
Interest cost ·····················································
86
89
Expected return on plan assets ·······························
(162)
(150)
Net actuarial loss amortization ·······························
161
178
Past service cost
(52)
Other·····························································(5)(21)
Total retirement benefit costs
¥
550
¥
614
for defined benefit plans ································(*) Service cost includes retirement benefit costs of consolidated subsidiaries applying simplified
method.

(5) Remeasurements of defined benefit plans
Millions of yen
2018

2019
Actuarial gains and losses ····································
Total ·························································· ¥

421
421

90
90

¥

(6) Accumulated remeasurements of defined benefit plans
Millions of yen
2018

2019
Actuarial gains and losses that are yet to be recognized ··Total ·························································· ¥

1,502
1,502

1,923
1,923

¥

(7) Plan assets
2018

2019

(a) Plan assets comprise:
Bonds ·························································
54.3 %
54.7 %
Equity securities ············································
11.1
9.3
Alternative assets (*) ·······································
22.4
22.2
Other··························································
12.2
13.8
Total ························································
100.0 %
100.0 %(*) Alternative is investment mainly for multi-asset investment fund.
(b) Long-term expected rate of return
Current and expected plan assets portfolio and historical and expected returns on various categoriesof plan assets have been considered in determining the long-term expected rate of return.

(8) Actuarial assumptions
2018

2019
The principal actuarial assumptions were as follows:
Discount rate ················································
Long-term expected rate of return ························
Expected rate of pay raises ································

Mainly 0.30%
Mainly 2.00%
Mainly 2.86%

Mainly 0.30%
Mainly 2.00%
Mainly 2.86%

3. Defined contribution plan
Millions of yen
2019
Accrued contribution by consolidated subsidiaries ··········· ¥

23

2018
470

¥

368

15. Deferred Income Taxes
Significant components of the Companies’ deferred tax assets and liabilities as of December 31, 2019and 2018 were as follows:
Millions of yen
2018

2019
Deferred tax assets:
Allowance for doubtful accounts ······································
Provision for bonuses ···················································Net defined benefit liability ············································
Write-down of inventories ·············································
Intangible assets ·························································Tax loss carryforwards ··················································
Other ······································································
Subtotal ········································································
Valuation allowance for tax loss carryforwards ·····················
Valuation allowance for total of deductive temporary differences
Subtotal ········································································
Total deferred tax assets ·····················································
Deferred tax liabilities:
Valuation difference on available-for-sale securities ···············
Special reserves··························································
Retained earnings of subsidiaries and affiliated companies ·······
Other ······································································
Total deferred tax liabilities·················································Net deferred tax assets (liabilities) ·········································

¥

227
138
1,857
48
298
1,112
721
4,401
(1,042)(435)(1,477)2,924¥(1,470)(955)(3,566)(1,097)(7,088)(4,164)

¥

¥

166
148
1,919
43
76
690
617
3,659
(858)
2,801
(1,178)(931)(3,360)(947)(6,416)(3,615)Note 1: Valuation allowance increased by ¥618 million because some subsidiaries additionally recognized ¥385
million due to an increase in tax loss carryforwards and ¥252 million related to intangible fixed assets.
Note 2: Expiration period of tax loss carryforwards and deferred tax assets.
Year ended
December 31, 2019

Millions of yen
2020

Tax losscarryforwards ······· ¥Valuation
allowance ···········
Deferredtax assets ···········

2021

9

¥

2022

11

¥

2023

-

¥

2025 and
thereafter

2024

21

¥

Total

59

¥ 1,012 ¥

1,112

(9)

(11)

-

(21)

(59)

(942)

(1,042)

-

-

-

-

-

70

70

(*) The amount of tax loss carryforwards in the above table is after multiplying the statutory tax rate.

24

The reconciliation between the effective tax rate reflected in the consolidated financial statements andthe statutory tax rate for the years ended December 31, 2019 and 2018 is summarized as follows:

Statutory tax rate of the Company ·········································(Reconciliation)
Expenses not qualifying for deduction ································
Revenues not in gross revenue ·········································Tax credits ································································
Equity in earnings of affiliates ·········································
Elimination of dividend income ·······································
Valuation allowance ·····················································
Retained earnings of foreign subsidiaries ····························
Difference in the effective tax rates of foreign subsidiaries ········
Other ······································································
Effective tax rate after adoption of tax effect accounting ···············

2019
30.6%

2018
-%

1.6
(3.9)
(2.8)
(3.2)
4.3
8.8
2.9
(2.5)
(2.0)
33.8%

-%

(*) A reconciliation for the year ended December 31, 2018 was omitted because the difference
between the statutory tax rate and the effective tax rate after adoption of tax effect accounting wasless than 5% of the statutory tax rate for the year.
16. Contingent Liabilities
At December 31, 2019 and 2018, the Companies were contingently liable as follows:
Millions of yen
2019
ETERNAL SAKATA INX CO., LTD. ·····TAIWAN SAKATA INX CORP. ···········
Other ············································
Total ·············································

¥

¥

149
11
160

2018
¥
153
148
35
¥
336

The Company provides letters of awareness to banks for bank loans of unconsolidated subsidiaries andaffiliated companies, and the Company also provides guarantees of indebtedness for leases of unconsolidated
subsidiaries and affiliated companies. The guarantee obligations include amounts guaranteed by other parties,
and those amounts are excluded from the amounts stated above.
The amounts guaranteed by other parties were as follows:
Millions of yen
2018
2019
¥
3
¥
8

17.

Selling, General and Administrative Expenses
The main items of selling, general and administrative expenses for the year ended December 31, 2019and 2018 were as follows:
Millions of yen
Freightage and packing expenses ···········································
Salaries and allowances ······················································
Depreciation ···································································
Provision of allowance for doubtful accounts ·····························
Provision for bonuses·························································
Retirement benefit expenses ·················································
Research and development expenses ·······································

25

2019
¥ 5,252
9,642
790
372
276
563
3,475

2018
¥ 5,129
9,423
786
(61)
297
503
3,311

18.

Impairment LossYear ended December 31, 2019
Impairment loss recognized for the year ended December 31, 2019 was as follows:
Location

Purpose of use

Type

Hyogo, Japan

Welfare facility

Land
Buildings and structures

Total

Amount(Millions of yen)
¥
140
50
¥
190

The business assets of the Companies are generally grouped based on business segment, while theassets of a part of consolidated subsidiaries are grouped based on each company.
Welfare facilities were treated as common assets that do not generate independent cash flow. Book
value on the above assets was reduced to recoverable value.
The recoverable value of the assets was calculated based on net sale prices which were measured by
expected sale prices.

Year ended December 31, 2018
Not applicable

19.

Loss on Retirement of Property, Plant and Equipment
The details of loss on retirement of property, plant and equipment for the years ended December 31,
2019 and 2018 were as follows:
Millions of yen
2019
Buildings and structures······················································
Machinery, equipment and vehicles ········································
Other fixed assets ·····························································
Demolition and removal expenses ··········································
Total ···········································································

20.

¥

¥

2018
1
1
0
38
40

¥

¥

23
2
1
45
71

Restructuring loss
Year ended December 31, 2019

Close of a factory of INX International FRANCE SAS was decided to reconstruct a production system
in Europe, and ¥216 million was recognized as restructuring loss.
The details were ¥184 million as early retirement costs and ¥32 million as other restructuring costs.

Year ended December 31, 2018
Not applicable

26

21.

Consolidated Statements of Comprehensive Income
The reclassification adjustment and the tax benefit concerning other comprehensive income for theyears ended December 31, 2019 and 2018 were as follows:
Millions of yen
2018

2019
Valuation difference on available-for-sale securities
Amount arising during the period ······································
Reclassification adjustment included in net income ·················
Pre-tax amount ························································Tax benefit ·····························································
Valuation difference on available-for-sale securities ·············
Deferred gains or losses on hedges
Amount arising during the period ······································
Pre-tax amount ························································Tax benefit ·····························································
Deferred gains or losses on hedges ·································
Foreign currency translation adjustment
Amount arising during the period ···································
Remeasurements of defined benefit plans
Amount arising during the period ·····································
Reclassification adjustment included in net income ··············
Pre-tax amount ························································Tax benefit ·····························································
Remeasurements of defined benefit plans ·························
Share of other comprehensive income of affiliates
accounted for using equity method
Amount arising during the period ······································
Reclassification adjustment included in net income ·················
Share of other comprehensive income of affiliates
accounted for using equity method ···························
Total other comprehensive income ····································

¥

¥

1,150
(211)
939
(292)
647

¥

(3,075)(0)(3,075)939(2,136)

-

0
0
(0)
0

(308)

(1,595)

230
191
421
(133)
288

(85)
175
90
(26)
64

(53)
11

(558)
12

(42)
585

¥

(546)
(4,213)22.

Supplementary Cash Flow Information
The reconciliation of cash and cash equivalents in the consolidated statements of cash flows and cash
and deposits in the consolidated balance sheets as of December 31, 2019 and 2018 were as follows:
Millions of yen
Cash and deposits ·····························································
Time deposits with original maturity of more than three months ·······Cash and cash equivalents ················································

27

2019
¥
10,122
(761)
¥
9,361

2018
¥
7,194
(406)
¥
6,788

23.

Segment Information

1. Overview of reportable segments
The Companies’ reportable segments are components of the Companies for which separate financial
information is obtainable and which the Board of Directors and Management Committee regularly consider
in order to determine the allocation of business resources and evaluate business performance. The
Companies are engaged mainly in the manufacture and sale of printing inks. Multiple divisions of theCompany are engaged in the domestic market, and the foreign subsidiaries are engaged in their own
respective overseas markets, such as markets of Asia, Americas and Europe.
Foreign subsidiaries that have independent management units establish their own comprehensive
strategies and develop business activities in their respective regions and surrounding areas. Besides the saleof printing inks, the Company purchases and sells graphic arts materials in the domestic market. In addition,
the Company purchases and sells printing equipment in the domestic market.
The digital & specialty products business such as inkjet ink, toner, pigment dispersion and others
developed through the basic technology of printing inks like pigment dispersion make up various
independent operational segments. The Companies focus on expanding the revenue base of the digital &specialty products business led by the Company.
Therefore, the Companies’ printing inks business, our core business, comprises the geographic
segments based on the production and sales structure. The Companies’ printing inks business consists of thefour reportable segments of “Printing inks and graphic arts materials (Japan),” “Printing inks (Asia),”“Printing inks (Americas)” and “Printing inks (Europe).” Furthermore, the “Digital & Specialty products”
business, in which the Companies promote business expansion, constitutes another reportable segment for a
total of five reportable segments.

Reportable segment
Printing inks and graphic arts
materials (Japan)
Printing inks (Asia)
Printing inks (Americas)
Printing inks (Europe)
Digital & Specialty products

Main products and merchandise
Packaging ink, Flexible packaging gravure ink, News paper printing ink,
Commercial printing ink, Print and plate making equipment andmaterials, Packaging equipment and supplies
Packaging ink, Flexible packaging gravure ink, Metal decorating ink,
News paper printing ink, Commercial printing ink
Packaging ink, Flexible packaging gravure ink, Metal decorating ink,
Commercial ink
Packaging ink, Flexible packaging gravure ink, Metal decorating ink,
Commercial ink
Inkjet ink, Toner, Pigment dispersion for color filter,
Functional coating

2. Basis of measurement for reported segment sales, income or loss, assets and other items
The accounting policies of the reportable segments are essentially the same as those described in Note
2, “Significant Accounting Policies.”
Segment income or loss is stated on an operating income basis. Intersegment income and transfers are
based on the prevailing markets prices.
3. Change of reportable segments
As Creative Industria e Comercio Ltda. and another subsidiary, which were non-consolidated
subsidiaries as of the end of the previous fiscal year, were included in scope of consolidation in the current
fiscal year, “Printing inks (North America)” was renamed to “Printing inks (Americas)” retrospectively.
Information for the previous fiscal year was disclosed with the same reportable segments.

28

4. Information about reportable segment sales, segment income or loss, segment assets and other items

Year ended
December 31, 2019

Millions of yen
Reportable Segment
Printing inks
andgraphic arts
materials(Japan)Printing
inks(Asia)

Printing
inks(Americas)

Printing
inks(Europe)

Digital &Specialty
products

Otherbusinesses
(*1)

Total

Total

Net sales to outside
customers¥51,858¥35,204¥47,595¥9,481¥12,359¥156,497¥10,741¥167,238

Intersegment sales
and transfers

19

73

1,176

310

94

1,672

6,096

51,87735,277

48,771

9,791

12,453

158,169

Segment income¥822¥2,421¥1,945¥(985)¥926

Segment assets

41,40432,79825,4878,989

Depreciation

1,480,

730

905

-

-

801

1,813

Total

Amortizatioin of
goodwill
Increase in property,
plant and equipment
and intangible assets

Adjustments Consolidated
(*2)
(*3)

¥

-

¥167,238

7,768(7,768)-

16,837

175,006(7,768)167,238¥5,129¥370¥5,499¥727¥6,226

11,037

119,715

5,583

125,298

22,994

148,292

247

907

4,269

72

4,341

-

4,341

108

-

-

108

-

108

-

108

977

354

914

4,859

19

4,878

-

4,878

(*1) The “Other businesses” category includes the chemical products business, color film developing and printing services and equipment for color
matching systems not shown in reportable segments.
(*2) Adjustments are as follows:
1. The adjustment of ¥727 million for segment income includes eliminations for intersegment transactions of ¥929 million and corporate expenses of¥(202) million that have not been allocated to any segment. Corporate expenses are mainly service fees to unconsolidated subsidiaries and affiliates.
2. The adjustment of ¥22,994 million for segment assets includes eliminations for intersegment transactions of ¥(6,274) million and corporate assets of¥29,268 million that have not been allocated to any segment. Corporate assets are mainly investment securities held for a corporate common purpose.
(*3) Segment income is adjusted to be consistent with operating income shown on the consolidated statements of income.

29

Year ended
December 31, 2018

Millions of yen
Reportable Segment
Printing inks
andgraphic arts
materials(Japan)Printing
inks(Asia)

Printing
inks(Americas)

Printing
inks(Europe)

Digital &Specialty
products

Net sales to outside
customers¥54,932¥32,012¥43,440¥9,239Intersegment sales
and transfers

19

145

1,517

Total

54,951

32,157

Segment income¥1,126

Segment assets

Total

Total

Other
businesses(*1)¥12,101¥151,724¥10,332¥162,056

82

84

1,847

6,004

44,957

9,321

12,185

153,571¥1,530¥992¥(792)¥1,22342,69227,80824,703

8,984

Depreciation

1,459

590

875

Increase in property,
plant and equipment
and intangible assets

2,788

969

1,292

Adjustments Consolidated
(*2)
(*3)

¥

-

¥162,056

7,851(7,851)-

16,336

169,907(7,851)

162,056¥4,079¥390¥4,469¥643¥5,112

11,467

115,6545,591

121,245

24,250145,495

261

781

3,966

71

4,037

-

4,037

245

1,067

6,361

29

6,390

-

6,390

(*1) The “Other businesses” category includes the chemical products business, color film developing and printing services and equipment for color
matching systems not shown in reportable segments.
(*2) Adjustments are as follows:
1. The adjustment of ¥643 million for segment income includes eliminations for intersegment transactions of ¥846 million and corporate expenses of¥(203) million that have not been allocated to any segment. Corporate expenses are mainly service fees to unconsolidated subsidiaries and affiliates.
2. The adjustment of ¥24,250 million for segment assets includes eliminations for intersegment transactions of ¥(6,465) million and corporate assets of¥30,715 million that have not been allocated to any segment. Corporate assets are mainly investment securities held for a corporate common purpose.
(*3) Segment income is adjusted to be consistent with operating income shown on the consolidated statements of income.

30

(Related information)
Year ended December 31, 2019
1. Information about each product and service
Year ended
December 31, 2019

Millions of yen
Graphic arts
materials

Printing inks
Net sales to outside
customers¥

130,951 ¥Digital & Specialty
products

13,247 ¥Other

12,359 ¥Total

10,681 ¥

167,238

Other

Total

2. Information about geographic areas
Year ended
December 31, 2019

Millions of yen
Japan

Asia

America

EuropeNet sales¥

65,441 ¥37,439 ¥41,411 ¥

11,411 ¥

11,536 ¥167,238

Property, plant andequipment¥

23,021 ¥7,968 ¥

7,334 ¥

2,574 ¥

277 ¥

41,174

Note: Net sales are classified by country and region based on customer location.

3. Major customers
No information is available as there were no outside customers accounting for 10% or more of theCompanies’ total net sales.
(Impairment loss by reportable segments)
Year ended
December 31, 2019

Millions of yen
Reportable Segment

Impairment loss

Printing inks
andgraphic arts
materials(Japan)Printing
inks(Asia)

Printing
inks(Americas)

Printing
inks(Europe)

Digital &Specialty
products

Total

¥

¥

¥

¥

¥

¥

-

-

-

-

-

-

Other
businesses

Adjustments

Consolidated

¥

¥ 190

¥ 190

-

(Amortization and unamortized balance of goodwill)
Year ended
December 31, 2019

Millions of yen
Reportable Segment
Printing inks
andgraphic arts
materials(Japan)Printing
inks(Asia)

Printing
inks(Americas)

Printing
inks(Europe)

Digital &Specialty
products

Otherbusinesses

Adjustments

Consolidated

Total

Amortization of
goodwill

¥

-

¥ 108

¥

-

¥

-

¥

-

¥ 108

¥

-

¥

-

¥ 108

Balance as ofDecember 31, 2019

¥

-

¥ 739

¥

-

¥

-

¥

-

¥ 739

¥

-

¥

-

¥ 739

(Negative goodwill in other income by reportable segments)
Not applicable31Year ended December 31, 2018
1. Information about each product and service
Year ended
December 31, 2018

Millions of yen
Graphic arts
materials

Printing inks
Net sales to outside
customers¥

124,557 ¥Digital & Specialty
products

15,149 ¥Other

12,101 ¥Total

10,249 ¥162,056

Other

Total

2. Information about geographic areas
Year ended
December 31, 2018

Millions of yen
Japan

Asia

America

EuropeNet sales¥

67,831 ¥34,913 ¥39,602 ¥11,121 ¥8,589 ¥

162,056

Property, plant andequipment¥

23,636 ¥5,329 ¥

7,457 ¥

2,502 ¥

8 ¥

38,932

Note: Net sales are classified by country and region based on customer location.

3. Major customers
No information is available as there were no outside customers accounting for 10% or more of theCompanies’ total net sales.
(Impairment loss by reportable segments)
Not applicable(Amortization and unamortized balance of goodwill)
Not applicable(Negative goodwill in other income by reportable segments)
Not applicable

32

24.

Related Party Transactions
Transactions with related parties for the years ended December 31, 2019 and 2018 were as follows:Year ended December 31, 2019

Attribute

Name

SHENZHEN
Affiliate SAKATA INX
CO., LTD.

Location

Shenzhen,
China

Capitalstock(Millionsof RMB)

2

Operationsoroccupation

Printing ink

Holding
equity(%)

Direct25.0

Relationship

Sales offinished
goods

Transaction
details

Sales offinished
goods

Transaction
amount(Millionsof yen)Account¥ 2,863

Notes andaccounts
receivable- tradeInvestments
and otherassets:Other

Balance atyear end(Millionsof yen)¥ 2,062¥

174

Note 1: The trade terms of the above transactions were determined using the same methods as those for third-party transactions.
Note 2: The amount of ¥174 million was accounted for as allowance for doubtful accounts to cover possible losses on collection fromSHENZHEN SAKATA INX CO., LTD., and the amount of reversal of allowance for doubtful accounts for the year ended
December 31, 2019 was ¥1 million.

Year ended December 31, 2018
Attribute

Name

SHENZHEN
Affiliate SAKATA INX
CO., LTD.

Location

Shenzhen,
China

Capitalstock(Millionsof RMB)

2

Operationsoroccupation

Printing ink

Holding
equity(%)

Direct25.0

Relationship

Sales offinished
goods

Transaction
details

Sales offinished
goods

Transaction
amount(Millionsof yen)Account¥ 2,832

Notes andaccounts
receivable- tradeInvestments
and otherassets:Other

Balance atyear end(Millionsof yen)¥ 2,079¥

181

Note 1: The trade terms of the above transactions were determined using the same methods as those for third-party transactions.
Note 2: The amount of ¥181 million was accounted for as allowance for doubtful accounts to cover possible losses on collection fromSHENZHEN SAKATA INX CO., LTD., and the amount of reversal of allowance for doubtful accounts for the year ended
December 31, 2018 was ¥53 million.

33

25.

Changes in Net Assets
1. Shares issued and treasury sharesYear ended December 31, 2019
Type

Number of shares
as of the beginningof current period

Increase in numberof shares
during the period

Decrease in numberof shares
during the period

62,601,161--

Number of shares
as of the end ofcurrent period

Shares issued:
Common stock

62,601,161

Treasury shares:
Common stock
4,201,943
294
4,202,237
Note: The increase in the number of treasury shares of 294 shares was due to the purchase of fractional shares.

Year ended December 31, 2018
Type

Number of shares
as of the beginningof current period

Increase in numberof shares
during the period

Decrease in numberof shares
during the period

62,601,161--

Number of shares
as of the end ofcurrent period

Shares issued:
Common stock

62,601,161

Treasury shares:
Common stock

4,201,482
461
4,201,943
Note: The increase in the number of treasury shares of 461 shares was due to the purchase of fractional shares.

2. Dividends
Dividends paid in the year ended December 31, 2019
Date of resolution
Annual meeting ofstockholders held on
March 26, 2019
Directors' meeting
held on
August 10, 2019

TypeofsharesAmount ofdividends(Millions of yen)

Cash dividends
per share(Yen)

Record date

Effective dateCommon
stock

¥

876

¥

15

December 31,
2018

March 27,2019Common
stock

¥

876

¥

15

June 30,2019

September 6,
2019

Record date

Effective date

Dividends paid in the year ended December 31, 2018
Date of resolution
Annual meeting ofstockholders held on
March 28, 2018
Directors' meeting
held on
August 10, 2018

TypeofsharesAmount ofdividends(Millions of yen)

Cash dividends
per share(Yen)

Common
stock

¥

934

¥

16

December 31,
2017

March 29,
2018

Common
stock

¥

876

¥

15

June 30,2018

September 7,
2018

34

Dividends with a record date attributable to the year ended December 31, 2019 but an effective dateafter December 31, 2019
Date of resolution

Typeofshares

Sourceofdividends

Annual meetingof stockholders
held onMarch 26, 2020

Commonstock

Retainedearnings

Amount ofCash dividends
dividends
per share(Millions of yen)
(Yen)
¥ 876

¥ 15

Record date

Effective
date

December 31,
2019

March 27,
2020

Dividends with a record date attributable to the year ended December 31, 2018 but an effective dateafter December 31, 201826.

Date of resolution

Typeofshares

Sourceofdividends

Annual meetingof stockholders
held onMarch 26, 2019

Commonstock

Retainedearnings

Amount ofCash dividends
dividends
per share(Millions of yen)
(Yen)
¥ 876

¥ 15

Record date

Effective
date

December 31,
2018

March 27,
2019

Information on Significant Affiliates
A summary of the financial statements of SIIX Corporation, a significant affiliate, is as follows:
Summarized balance sheets as of December 31, 2019 and 2018
Millions of yen
2019

2018

Current assets ··········································· ¥101,991¥

101,940

Non-current assets ····································· ¥41,401¥35,538Current liabilities······································· ¥68,873¥63,596

Non-current liabilities ································· ¥16,269¥17,866

Net assets ··············································· ¥58,250¥56,016

Summarized statements of income for the years ended December 31, 2019 and 2018
Millions of yen
2019

2018

Net sales ················································· ¥223,038¥

242,804

Income before income taxes ·························· ¥

5,635

¥

8,719

Net income attributable to owners of parent········ ¥

3,695

¥

6,415

35

27.

Amounts Per Share
Yen
2019

2018

Net assets per share ····································¥

1,313.31¥

1,272.41

Dividends per share ····································

¥

30.00

¥

30.00

Net income per share ··································

¥

70.46

¥

80.36

Note 1: There were no dilutive securities.
Note 2: The calculation of net income per share was as follows:

2019

2018

Net income attributable to owners of parent(millions of yen) ·······································

¥

4,115

¥

4,693

Net income attributable to owners of parent
related to common stock (millions of yen) ·········

¥

4,115

¥

4,693

Average number of shares of common stockduring the fiscal year (thousands) ····················

36

58,39958,399