SAKATA INX CORPORATION
Consolidated Financial Statements
As of December 31, 2021 and 2020SAKATA INX CORPORATIONCONSOLIDATED BALANCE SHEETS
Years ended December 31, 2021 and 2020
Millions of yen
2021
ASSETS
Current assets:
Cash and deposits (Note 10) ····························································¥
Notes and accounts receivable - trade (Notes 9, 10 and 14):
Unconsolidated subsidiaries and affiliates ·······································
Other ····················································································

12,6852020¥

12,427

2,661
46,70249,36328,5932,786(566)
92,861

1,969
41,11443,083
21,184
1,543(597)
77,64041,04353,569
9,690
941
3,055
5,678
113,976
Accumulated depreciation ······························································ (68,656)
Net property, plant and equipment ················································· 45,320

33,68546,937
9,087
1,092
3,514
4,995
99,310(58,972)
40,338Inventories (Note 12) ····································································
Other ························································································
Allowance for doubtful accounts ······················································
Total current assets····································································

Property, plant and equipment (Notes 8, 14 and 15):
Buildings and structures·································································
Machinery, equipment and vehicles···················································
Land ·························································································
Lease assets ················································································
Construction in progress·································································
Other ························································································

Investments and other assets:
Investments (Notes 10, 11 and 14):
Unconsolidated subsidiaries and affiliates········································
Other·····················································································

16,3709,328
25,698
46
259
804
2,065
(982)
27,89016,357
8,819
25,176
47
348
221
1,209
(415)
26,586

Intangible assets:
Goodwill (Note 27)·······································································
454
Other ························································································
374
Total intangible assets································································
828¥
166,899

501
207
708
145,272

Long-term loans receivable ·····························································
Deferred tax assets (Note 18)···························································Net defined benefit asset (Note 17)····················································
Other ························································································
Allowance for doubtful accounts ······················································
Total investments and other assets·················································

The accompanying notes are an integral part of these statements.

1¥

Millions of yen
2021
LIABILITIES AND NET ASSETS
Current liabilities:
Notes and accounts payable - trade (Notes 9, 10 and 14):
Unconsolidated subsidiaries and affiliates···································¥
Electronically recorded obligations - operating·····························
Other ················································································
Short-term loans payable (Notes 10, 13 and 14) ··································
Current portion of long-term loans payable (Notes 10, 13 and 14)············
Lease obligations········································································
Accrued expenses·······································································
Income taxes payable···································································
Provision for bonuses ··································································
Other·······················································································
Total current liabilities ·····························································

1
13,23523,00936,245
5,133
5,335
193
4,156
792
613
2,791
55,258Non-current liabilities:
Bonds payable (Note 10)·······························································
Long-term loans payable (Notes 10, 13, and 14) ··································
Lease obligations ········································································
Deferred tax liabilities (Note 18) ·····················································Net defined benefit liability (Note 17)···············································
Asset retirement obligations···························································
Other ························································································
Total non-current liabilities························································
Total liabilities ·······································································
¥

1,000
5,558
562
4,065
4,982
73
2,936
19,17674,434

2020

¥

¥

4
11,30916,372
27,685
4,534
2,772
216
3,563
614
556
2,375
42,315

9,755
456
3,316
4,940
72
2,996
21,53563,850Contingent liabilities (Note 19)
Net Assets (Note 29):
Shareholders’ equity
Capital stock:
Authorized – 144,000,000 shares
Issued – 62,601,161 shares ························································¥
7,473
Capital surplus···········································································
5,675
Retained earnings ·······································································
76,967
Treasury shares, at cost – 4,164,408 shares in December 2021 and
4,182,625 shares in December 2020 ···············(4,010)Total shareholders’ equity·························································· 86,105
Accumulated other comprehensive income
Valuation difference on available-for-sale securities·····························
2,106
Deferred gains or losses on hedges ··················································(3)
Foreign currency translation adjustment············································(1,606)
Remeasurements of defined benefit plans··········································(222)
Total accumulated other comprehensive income ······························
275
Non-controlling interests ······························································
6,085
Total net assets ······································································· 92,465¥
166,899

The accompanying notes are an integral part of these statements.

2

¥

7,473
5,673
73,918(4,028)83,036

¥

1,652
(0)
(7,282)(1,045)(6,675)
5,061
81,422
145,272

SAKATA INX CORPORATIONCONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2021 and 2020

Net sales ·························································································
Cost of sales·····················································································
Selling, general and administrative expenses (Note 20) ·····························
Operating income ·····································································

Millions of yen
2021
2020
¥ 181,488¥ 161,507
143,803
126,049
30,27028,245
7,415
7,213

Other income (expenses):
Interest and dividend income ·····························································
Real estate rent ··············································································
Equity in earnings of affiliates ···························································
Interest expenses············································································
Commission expenses······································································
Foreign exchange gains and losses ······················································
Gain on sales of investment securities (Notes 11) ····································
Gain on sales of non-current assets (Notes 21)········································
Loss on sales of non-current assets······················································
Subsidy income ·············································································
Loss on retirement of non-current assets (Note 22) ··································
Loss on valuation of investment securities (Notes 11)·······························
Restructuring loss (Notes 24)·····························································
Provision of allowance for doubtful accounts (Notes 23) ···························
Other, net ·····················································································
Income before income taxes ························································
Income taxes:
Current ························································································
Deferred (Note 18) ·········································································

401
181
993
(238)
(84)
(295)
76
115
(22)
100
(425)
(566)
134
7,785

427
189
314
(267)
(87)
(158)
3
84
100
(3)
(218)
158
7,755

1,796
358
2,154

2,245
(396)
1,849

¥

5,906
(630)
5,276

¥
¥

90.32
30.00

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

¥

5,631
(697)
4,934

Net income per share of capital stock (Note 31)··········································Cash dividends per share applicable to the year (Note 31) ·····························

¥
¥

84.43
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, 2021 and 2020

Net income ·························································································
Other comprehensive income (Note 25):
Valuation difference on available-for-sale securities ···································
Foreign currency translation adjustment ··················································
Deferred gains or losses on hedges·························································
Remeasurements of defined benefit plans·················································
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
2021
2020
¥
5,631
¥
5,906
354
4,415
(2)
831

(1,713)(1,894)
33

¥

1,601
7,199
12,830¥(492)(4,066)
1,840¥¥

11,654
1,176

¥
¥

1,400
440

The accompanying notes are an integral part of these statements.

4

SAKATA INX CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Year ended December 31, 2021
Millions of yen
Number ofshares ofcommon stock
Balance at the beginning of current period ······················ 62,601,161

Capital stock

Capital surplus¥¥

Dividends of surplus (Notes 29 and 31) ·························Net income attributable to owners of parent ·····················
Purchase of treasury shares ·······································

-

7,473
-

Disposal of treasury shares ·······································
Change in scope of consolidation ································
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 ······························ 62,601,161

5,673
-

¥

Total
shareholders’equityTreasuryshares73,918(1,753)
4,934-(4,028)
(0)

2
-

(120)

18
-

20
(120)

-

-

(12)

-

(12)

-

-

-

-

-

¥

Retainedearnings

2

7,473

¥

5,675

¥

3,049
¥

76,967¥18¥(4,010)83,036(1,753)
4,934
(0)

3,069
¥

86,105

Millions of yen
Valuationdifference on
available-forsale securities
Balance at the beginning of current period ······················¥
Dividends of surplus (Notes 29 and 31) ·························

1,652
-

¥

Net income attributable to owners of parent ·····················
Purchase of treasury shares ·······································
Disposal of treasury shares ·······································
Change in scope of consolidation ································--(1,045)-

Total
accumulated
othercomprehensive
income¥(6,675)
-

-

-

-

-

4,934
(0)
20
(120)

Foreigncurrencytranslation
adjustment

Deferred
gains or losses
on hedges(0)-¥Remeasurementsof defined benefit
plans(7,282)-¥

Non-controllinginterests
¥

5,061
-

Total
net assets¥

81,422(1,753)

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·························

-

-

-

-

-

-

(12)

454
454

(3)
(3)

5,676
5,676

823
823

6,950
6,950

1,024
1,024

7,974
11,043

Balance at the end of current period ······························
¥

2,106

¥

(3)

¥

(1,606)¥

The accompanying notes are an integral part of these statements.
5

(222)

¥

275

¥

6,085

¥

92,465

SAKATA INX CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Year ended December 31, 2020
Millions of yen
Number ofshares ofcommon stock
Balance at the beginning of current period ······················ 62,601,161

Capital stock

Capital surplus

¥

¥

-

7,473
-

Purchase of treasury shares ·······································
Disposal of treasury shares ·······································Net changes in items other thanshareholders’ equity ·········································

-

-

(2)

-

-

-

-

-

-

Total changes in items during the period·························
Balance at the end of current period ······························ 62,601,161

7,473

5,673

3,521
73,91819(4,028)3,540
83,036¥¥

Total
shareholders’equityTreasurysharesDividends of surplus (Notes 29 and 31) ·························Net income attributable to owners of parent ·····················
Transfer from retained earnings to capital surplus ··············

¥

5,673
2

Retainedearnings
70,397(1,753)
5,276
(2)

¥

-

¥

(4,047)
-

¥

(0)
19

¥

79,496(1,753)
5,276
(0)
17

¥

Millions of yen
Valuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustment

Deferred
gains or losses
on hedges¥¥

Non-controllinginterests¥¥¥

Purchase of treasury shares ·······································
Disposal of treasury shares ·······································Net changes in items other thanshareholders’ equity ·········································
Total changes in items during the period·························

-

-

-

-

-

-

(0)
17

(1,677)(1,677)(0)(0)(2,232)(2,232)34
34(3,875)(3,875)317
317(3,558)(18)

Balance at the end of current period ······························
¥

1,652

¥

(7,282)¥(1,079)-(1,045)The accompanying notes are an integral part of these statements.
6¥(2,800)-(6,675)

¥

4,744
-

Total
net assets

3,329
-

(0)

(5,050)-Total
accumulated
othercomprehensive
incomeBalance at the beginning of current period ······················¥
Dividends of surplus (Notes 29 and 31) ·························Net income attributable to owners of parent ·····················
Transfer from retained earnings to capital surplus ··············¥

0-Remeasurementsof defined benefit
plans

5,061

¥

¥

81,440(1,753)
5,276-

81,422

SAKATA INX CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2021 and 2020
Millions of yen
2021
2020
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 ··············································
Gain on sales of non-current assets···················································
Loss on retirement of non-current assets ············································
Loss (gain) on sales of investment securities ·······································
Loss (gain) on valuation of investment securities··································
Subsidy income···········································································
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 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

¥

7,785
4,306
86
452
97
48
(401)
238
(993)
(93)
425
(76)
(100)
(3,629)(4,809)

¥

7,755
4,350
83
(19)
180
29
(427)
267
(314)
(84)
(3)
3
(100)
218
1,792
(343)

7,184
(1,335)
9,185
747
(233)
100
(2,243)7,556(2,396)
1,224
12,215
739
(264)
100
(2,190)10,600(5,276)
300
(99)
160
(50)
50
(438)
(5,353)(4,318)293(2,888)
15
(39)
48
(122)
(7,011)Millions of yen
2021
2020
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···················································
Proceeds from bonds payable ·······························································Cash dividends paid ···········································································
Dividends paid to non-controlling interests···············································
Proceeds from share issuance to non-controlling shareholders·······························
Other, net ························································································Net cash provided by (used in) financing activities ·········································

226
1,045
(3,003)1,000(1,753)
(279)
127
(238)
(2,875)(1,282)
4,907(2,474)(1,752)
(240)
117
(256)
(980)

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

680

(292)

8
11,678

2,317
9,361

429

-

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 26） ································ ¥The accompanying notes are an integral part of these statements.

8

12,115¥

11,678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 Act 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 the 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 the consolidated statements of shareholders’ equity with 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 Act. 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-six
subsidiaries (twenty-five in 2020). 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. A.M.Ramp & Co.GmbH was consolidated due to its increase in materiality.
All significant intercompany transactions and accounts 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.
The equity method was applied to four affiliates (four in 2020). The principal affiliate of the Company
was SIIX Corporation.
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 affiliates and (d) all othersecurities 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 affiliates 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 andunrealized losses on these securities are reported, net of applicable income taxes, as a separate component ofshareholders’ 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. Investments ininvestment limited partnerships and similar partnerships (deemed to be securities in Article 2-2 of theJapanese Financial Instruments and Exchange Act) are recorded at the net amounts of the Company’s shareof the partnerships’ value based on available financial statements following the reporting date described in
the partnership agreement.

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 5 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 14 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
Commodity 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
Raw materials

The Companies use derivative financial instruments for hedging purposes to mitigate the risk offluctuation in foreign currency exchange rates, interest rates, and purchase price of raw materials.
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.
Goodwill
Goodwill is amortized by the straight-line method over certain period within 20 years.
Research and development expenses
Research and development expenses are charged to income as incurred. Research and development
expenses for the year ended December 31, 2021 and 2020 were ¥3,823 million and ¥3,478 million,
respectively.

11

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.
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 Accounting Standard Board of Japan (“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 Companies Act (the “Act”) and regulations, the entire amount paid for new sharesis required to be designated as common stock. However, a company may, by a resolution of the Board of
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 Act 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 Act.

12

3.

Significant Accounting Estimates
Allowance for doubtful accounts(1) Carrying amounts on the consolidated financial statements in December, 2021
MAOMING SAKATA INX CO., LTD.
Millions of yen
Notes and accounts receivable – trade (Total of current and non-current asset)
2,876
Allowance for doubtful accounts (Non-current asset)(174)(2) Information on the nature of significant accounting estimates for identified items
To provide for possible losses from uncollectible receivables, the allowance for doubtful accounts is
recognized as estimated uncollectible amounts based on historical default rates for general receivables andthe assessment of individual collectability for specific receivables such as highly doubtful receivables.
MAOMING SAKATA INX CO., LTD. engages in the sale of printing inks mainly to customers in
China and recognizes an allowance for doubtful accounts for highly doubtful receivables by estimating thecollectible amount for each group of receivables classified based on the overdue period. In calculating thisallowance for doubtful accounts, we estimate the amount of uncollectible receivables based on the length oftime the receivables have been in arrears, past bad debt experience, and other factors that involve uncertainty,
so this may have a significant effect on the consolidated financial statements.

4.

Accounting Standards and Guidance not yet Adopted
The following standards and guidance were issued but not yet adopted.
- “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance
No.30, March 26, 2021)- “Implementation Guidance on Disclosure of Fair Value on Financial Instruments” (ASBJ Guidance
No.19, March 31, 2020)(1) Overview
The above standard and guidance provide comprehensive principles for revenue recognition. Under
the standard and guidance, revenue is recognized by applying the 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 and guidance
The Company and its consolidated domestic subsidiaries are currently in the process of determining
the effects of these new standards and guidance on the consolidated financial statements.
-“Accounting Standard for Fair Value Measurement” (ASBJ Statement No.30, July 4, 2019)“Accounting Standard for Measurement of Inventories” (ASBJ Statement No.9, July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No.10, July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance
No.31, June 17, 2021)- “Implementation Guidance on Disclosure of Fair Value on Financial Instruments” (ASBJ Guidance
No.19, March 31, 2020)13

(1) Overview
Under the situation that almost the same detailed guidance for fair value measurement established by
the International Accounting Standards Board（“IASB”） and the Financial Accounting Standards Board(“FASB”) (IFRS 13 “Fair Value Measurement” and Topic 820 “Fair Value Measurement”), the ASBJ
promoted an initiative on alignment of Japanese GAAP with the international accounting standards, mainlyin the area of the guidance on fair value of financial instruments and its disclosures, and developed andissued the “Accounting Standard for Measurement of Fair Value” and other standards and guidances.
The ASBJ’s basic policies in developing the accounting standard for fair value measurement were toestablish accounting standards which adopt all princip les of IFRS 13 from the view of comparability offinancial statements between the domestic and foreign companies, by prescribing a unified measurement
method and also to prescribe exceptional treatments for individual matters by taking into account theaccounting practices that have conventionally been adopted in Japan to the extent that do not impair thecomparability of financial statements.
(2) Effective date
Effective from the beginning of the fiscal year ending December 31, 2022.
(3) Effect of application of the standard and guidance
The Company and its consolidated subsidiaries are currently in the process of determining the effectsof these new standards and guidance on the consolidated financial statements.

5.

Changes in Presentation

6.

Changes in Accounting Estimate

7.

Additional Information(Changes due to adoption of “Accounting Standard for Disclosure on Accounting Estimates”)
Upon application of “Accounting Standard for Disclosure on Accounting Estimates” (ASBJ Statement
No. 31, March 31, 2020) to the consolidated financial statements of the current fiscal year, significant
accounting estimates are disclosed in the notes to the consolidated financial statements.
The notes do not include information for the prior consolidated fiscal year in accordance with thetransitional provision set out in paragraph 11 of the Accounting Standard.

(Changes of the period used for amortization of actuarial gain or loss in retirement benefits)
The Company and some of the domestic subsidiaries used the straight-line method over mainly 15
years, a period which reflects the average of the estimated remaining service years of employees,commencing with the current period. However, we changed the period to 14 years from the year ended
December 2021 because our estimated remaining service years of employees was less than the period.
As a result, operating income and income before income taxes decreased by ¥127 million compared towhen actuarial gain or loss in retirement benefits was amortized over 15 years.

(Accounting estimates along with the spread of COVID-19)
The spread of COVID-19 has had comprehensive impacts on the economy and business activities andit also affects the Companies.
Although it was difficult to reasonably estimate the timing of the infection convergence and the extent
of its impact, the Company made accounting estimates such as the impairment of fixed assets and therecoverability of deferred tax assets on the assumption that the impact on our financial statements would be
limited.

14

(Loss on improper transactions by a subsidiary company)
In November 2021, overdue uncollectible receivables from a customer arose in SAKATA SANGYO,
LIMITED (hereinafter referred to as “SAKATA SANGYO”), a consolidated subsidiary of the Company
operating in the Other segment, as a result of suspending transactions with the customer in August 2021 afternegotiations failed to improve terms and conditions. At the same time, the existence of the transactions weredeemed doubtful as it turned out that SAKATA SANGYO conducted the transactions procuring from parties
related to the customer.
Accordingly, the Company set up an investigation committee including external experts on December
28, 2021 to investigate the relevant facts, internal controls and action plans from a professional and objective
perspective. The investigation concluded that most of SAKATA SANGYO’s past businesses with thecustomer and its related parties were fictious round transactions with no substance. In relation to thesetransactions, a provision for allowance for doubtful accounts of ¥566 million (equivalent to the total amountof receivables) for the relevant uncollected receivables was recognized.

8.

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 acts 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, 2021 and 2020.

9.

Effect of Bank Holiday

As financial institutions in Japan were closed on both December 31, 2021 and 2020, amounts thatwould have been settled on December 31 were collected or paid on the first business day in January 2022
and 2021. The amounts included in the consolidated balance sheet as of December 31, 2021 and 2020 wereas follows:

2021
Notes and accounts receivable - trade···································¥

Millions of yen

927

2020

¥

799

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

33

25

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

1,917

1,692

15

10.

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 and 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 fluctuation 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.
For currency, the Company enters into forward foreign exchange contracts and currency swap
contracts to mitigate market fluctuation risk and currency swap contracts to mitigate interest rate risk. With
regard to commodities, commodity swap contracts are entered into to mitigate the risk of fluctuations in thepurchase price of raw materials.
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.
(3) Supplementary explanation on fair value of financial instruments
Contract amounts in Note 16, “Derivative Transactions do not mean the market risk related to derivativetransactions.
2. Fair values of financial instruments
Consolidated balance sheet amounts and fair values of financial instruments and any differences as ofDecember 31, 2021 and 2020 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.

16

Year ended December 31, 2021

Consolidatedbalance sheet
amount(1) Cash and deposits································· ¥ 12,685(2) Notes and accounts receivable - trade ········
49,363(3) Investments:
Securities in affiliates ··························
15,208Available-for-sale securities ··················
8,726
Total assets ············································· ¥ 85,982(1) Notes and accounts payable - trade············ ¥ 23,010(2) Electronically recorded obligations
13,235- operating·············································(3) Short-term loans payable
5,133(4) Bonds payable·····································
1,000(5) Long-term loans payable ························
10,893
Total liabilities ········································· ¥ 53,271
Derivative transactions (*) ···························(*) Derivative assets and (liabilities) are on a net basis.
Year ended December 31, 2020

Consolidatedbalance sheet
amount(1) Cash and deposits································· ¥ 12,427(2) Notes and accounts receivable - trade ········
43,083(3) Investments:
Securities in affiliates ··························
13,072Available-for-sale securities ··················
8,283
Total assets ············································· ¥ 76,865(1) Notes and accounts payable - trade············ ¥ 16,376(2) Electronically recorded obligations
11,309- operating·············································(3) Short-term loans payable
4,534(4) Long-term loans payable ························
12,527
Total liabilities ········································· ¥ 44,746
Derivative transactions (*) ···························(*) Derivative assets and (liabilities) are on a net basis.

Millions of yen
Fair value

Difference

¥

¥

¥
¥

¥

12,68549,363
15,3108,726
86,08423,010

¥
¥

102
102
-

13,235

-

5,133
999
10,86553,242
-

(1)
(28)
(29)
-

¥

Millions of yen
Fair value

Difference

¥

¥

¥
¥

¥

12,42743,083
16,6838,283
80,476
16,376

¥
¥

3,611
3,611
-

11,309-4,534
12,552
44,771
-

25
25
-

¥

Note 1: Determination of fair value of financial instruments, securities and derivative transactions

17-

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, 2021 and 2020 were as follows:Year ended December 31, 2021

Consolidatedbalance sheet
amountMillions of yen
Acquisition cost(*)

(1) Equity securities withconsolidated balance sheet amountexceeding acquisition cost ············ ¥ 23,707¥ 6,016(2) Other ·······································
Subtotal ···································
23,7076,016(1) Equity securities withconsolidated balance sheet amountnot exceeding acquisition cost········
227
270(2) Other ·······································
Subtotal ···································
227
270
Total············································ ¥ 23,934¥ 6,286(*) Acquisition cost is the consolidated balance sheet amount after write-down.
Year ended December 31, 2020

Consolidatedbalance sheet
amountDifference¥

17,691
17,691(43)(43)
17,648¥Millions of yen
Acquisition cost(*)

(1) Equity securities withconsolidated balance sheet amountexceeding acquisition cost ············ ¥ 20,374¥ 5,144(2) Other ·······································
Subtotal ···································
20,3745,144(1) Equity securities withconsolidated balance sheet amountnot exceeding acquisition cost········
981
1,203
(2) Other ·······································
Subtotal ···································
981
1,203
Total············································ ¥ 21,355¥ 6,347(*) Acquisition cost is the consolidated balance sheet amount after write-down.
The amount of write-down was ¥0 million.

Difference¥¥

15,23015,230(222)(222)
15,008

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) Bonds payable
The fair value of bonds payable is estimated by discounting the total amount of principal and interest at theinterest rate that would be applied to similar newly issued bonds

18

(5) 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
Refer to the Note 16, “Derivative Transactions.”
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 affiliates in the consolidated balance sheet amounted to ¥1,764 million as of December
31, 2021 and ¥3,821 million as of December 31, 2020 were not included in “Assets (3) Investments”
because they had no quoted market price, future cash flows could not be estimated and the fair values
were unavailable.
Note 3: Aggregate annual maturities of money claims and securities with maturities as of December 31, 2021
and 2020 were as follows:Year ended
December 31, 2021

Millions of yen

Cash and deposits ··············· ¥Notes and accounts
receivable - trade···············
Total ······························· ¥2022

2023-2026

2027-2031

12,685¥-¥-2032 and
thereafter¥-

49,36362,048

¥

-

¥

-

¥

Year ended
December 31, 2020

Millions of yen

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

-

2021

2022-2025

2026-2030

12,427¥-¥-2031 and
thereafter¥-

43,08355,510

¥

-

¥

-

¥

-

Note 4: Aggregate annual maturities of long-term loans payable as of December 31, 2021 and 2020 were as
follows:
Year ended

Millions of yen

December 31, 2021
2022

2023

2024

Bonds payable········· ¥

-

¥

-

¥

-

¥

-

Long-termloans payable ·········· ¥

5,335

¥

1,452

¥

2,014

¥

2,092

Year ended
December 31, 20202027 and
thereafter¥ 1,000

¥

-

¥

¥

-

-

Millions of yen
2021

Long-termloans payable ········ ¥

2026

2025

2,772

2022
¥

2023

5,013

19

¥

1,135

2024
¥

1,704

2025

2026 and
thereafter¥ 1,903

¥

-

11.

Securities

The following tables summarize the consolidated balance sheet amount, acquisition cost and fair valueof available-for sale securities as of December 31, 2021 and 2020. Available-for-sale securities (non-listed
equity securities) in the consolidated balance sheet amounted to ¥603 million as of December 31, 2021 and¥536 million as of December 31, 2020 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 ¥160 million for the year ended December 31, 2021 and ¥15
million for the year ended December 31, 2020, and the related gains amounted to ¥76 million for the year
ended December 31, 2021 and ¥3 million for the year ended December 31, 2020.
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 princip le. When the fair value
at the fiscal year end is lower than the acquisition cost by between 30% and 50%, an 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.
There was no amount of impairment for available-for-sale securities for the year ended December 31,
2021 and ¥3 million for the year ended December 31, 2020.
Year ended December 31, 2021

(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 ············································

Period ended December 31, 2020

(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············································

Consolidatedbalance sheet
amount
¥

¥

8,499
8,499
227
227
8,726

Consolidatedbalance sheet
amount
¥

¥

7,302
7,302
981
981
8,283

20

Millions of yen
Acquisition cost

¥

¥

5,592
5,592
270
270
5,862

Difference

¥

2,907
2,907
(43)
(43)
2,864

¥

Millions of yen
Acquisition cost

¥

¥

4,720
4,720
1,203
1,203
5,923

Difference

¥

¥

2,582
2,582
(222)
(222)
2,360

12.

Inventories

Inventories at December 31, 2021 and 2020 consisted of the following:
2021
Merchandise and finished goods ··········································
Work-in-process ·····························································
Raw materials and supplies ················································¥

Millions of yen

12,803
1,228
14,562
28,593¥2020¥

10,462
1,119
9,603
21,184¥

13. Short-term Loans Payable and Long-term Loans Payable
Short-term loans payable at December 31, 2021 and 2020 consisted of short-term notes generally forone year bearing interest ranging from 0.38% to 8.57%.
Long-term loans payable at December 31, 2021 and 2020 consisted of the following:

Secured:Loans principally from banks at
3.65% maturing through 2024 ·····································
Unsecured:
Loans principally from banks at
0.19% - 4.60% maturing through 2026 ··························
Less amounts due within one year ········································

2021

Millions of yen

¥

79

¥

10,814
10,893
5,335
5,558

2020

¥

209

¥

12,31812,5272,772
9,755

The aggregate annual maturities of long-term loans payable at December 31, 2021 were as follows:Year ending December 31,

Millions of yen

2022 ···············································································
2023 ···············································································
2024 ···············································································
2025 ···············································································
2026 and thereafter ·····························································

¥

¥

5,335
1,452
2,014
2,092
10,893

The 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, 2021 ······························· ¥-14. Assets Pledged as Collateral
Assets pledged as collateral as of December 31, 2021 and 2020 were as follows:

2021
Notes and accounts receivable - trade···································
Buildings and structures, net of accumulated depreciation ·········
Machinery, equipment and vehicles,
net of accumulated depreciation·······································
Land ···········································································
Investments in other ························································

21

¥

¥

Millions of yen
8
604
136
47
795

2020
¥

¥

8
573
0
122
43
746

Liabilities secured by the above assets were as follows:
2021
Notes and accounts payable - trade······································
Short-term loans payable ··················································
Current portion of long-term loans payable····························
Other current liabilities ····················································
Long-term loans payable ··················································¥¥

Millions of yen
187
8
77
79
351

2020
¥

¥

195
8
69
0
140
412

15. Finance Leases

Capitalized finance leases of the Companies at December 31, 2021 and 2020 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, 2021 and 2020 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.”

16. Derivative Transactions

1. Derivative transactions to which hedge accounting has not been applied
Not applicable
2. Derivative transactions to which hedge accounting has been applied
A description is omitted because it is immaterial.

2217. 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
2021
2020
Balance at the beginning of current period ····················· ¥12,860¥12,706
Service cost (*) ···················································
517
511
Interest cost ·······················································
104
86
Actuarial loss (gain) ·············································
(709)
179
Benefits paid ······················································
(727)
(558)
Past service cost(0)
Other································································
389(64)
Balance at the end of current period ····························· ¥12,434¥
12,860(*1) Service cost includes retirement benefit costs of consolidated subsidiaries applying the simplified
method.
(*2) In addition to the costs above, there was ¥113 million for early retirement costs for the year ended
December 31, 2020.
(2) Movement in plan assets
Millions of yen
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 ····························· ¥

2021

8,141
185
89
248
(453)
46
8,256

¥

2020

¥

8,103
161
(21)
321
(395)
(28)
8,141

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

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

23

2021

Millions of yen

7,790(8,256)
(466)
4,644

¥

4,178

¥

4,982
(804)
4,178

2020

8,063
(8,141)
(78)
4,797
4,719
4,940
(221)

¥

4,719

(4) Retirement benefit costs
2021

Millions of yen

2020

Service cost (*) ··················································· ¥
517
¥
511
Interest cost ·······················································
104
86
Expected return on plan assets·································
(186)
(161)
Net actuarial loss amortization ································
349
241
Past service cost(0)
Other································································
6(13)
Total retirement benefit costs
¥
790
¥
664
for defined benefit plans··································(*) Service cost includes retirement benefit costs of consolidated subsidiaries applying the simplified
method.
(5) Remeasurements of defined benefit plans
Millions of yen
Actuarial gains and losses ······································
Total····························································· ¥

2021

1,155
1,155

2020

¥

50
50

(6) Accumulated remeasurements of defined benefit plans
Millions of yen
Actuarial gains and losses that are yet to be recognized ··Total····························································· ¥(7) Plan assets

2021

298
298

2020

¥

2021

1,453
1,453

2020

(a) Plan assets comprise:
Bonds····························································
56.1 %
59.7 %
Equity securities···············································
11.8
11.5
Alternative assets (*) ·········································
21.2
17.9
Other·····························································
10.9
10.9
Total···························································
100.0 %
100.0 %(*) Alternative is investments mainly for multi-asset investment funds.
(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

2020

2021

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 2.63%

Mainly 0.30%
Mainly 2.00%
Mainly 2.86%

3. Defined contribution plan

Accrued contribution by consolidated subsidiaries ·········· ¥

24

2021

Millions of yen
539

¥

2020

893

18. Deferred Income Taxes

Significant components of the Companies’ deferred tax assets and liabilities as of December 31, 2021
and 2020 were as follows:

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 deductible temporary differences
Subtotal············································································
Total deferred tax assets ························································
Deferred tax liabilities:
Valuation difference on available-for-sale securities·················
Special reserves ·····························································
Retained earnings of subsidiaries and affiliates ·······················
Other···········································································
Total deferred tax liabilities ····················································Net deferred tax assets (liabilities)············································

2021¥

Millions of yen

208
155
1,913
91
513
1,377
911
5,168
(1,371)(521)(1,892)
3,276

¥

(871)
(887)
(3,715)(1,609)(7,082)(3,806)

¥

2020
199
144
1,935
108
360
1,207
637
4,590
(1,153)(520)(1,673)
2,917
(722)
(860)
(3,378)(925)(5,885)(2,968)¥Note 1: Expiration periods for tax loss carryforwards and deferred tax assets as of December 31, 2021 and 2020
were as follows:Year ended

Millions of yen

December 31, 2021
2022

2023

2024

2025

2027 and
thereafter

2026

Total

Tax losscarryforwards······ ¥Valuation
allowance ···········
Deferred

-

¥

26

¥

53

-

(26)

(53)

tax assets ···········

-

-

-

¥

-

¥

15

¥ 1,284 ¥

1,378

-

(15)

(1,277)(1,371)

-

-

7

7

(*) The amount of tax loss carryforwards in the above table is after multiplying the statutory tax rate.
Year ended
December 31, 2020

Millions of yen
2021

2022

2023

2024

Tax losscarryforwards······ ¥Valuation
allowance ···········

(10)

-

(20)

Deferredtax assets ···········

-

-

-

10

¥

-

¥

20

¥

2026 and
thereafter

2025
16

¥

49

¥ 1,112 ¥

1,207

(16)

(49)

(1,058)(1,153)

-

-

54

54

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

25

Total

The reconciliation between the effective tax rate reflected in the consolidated financial statements andthe statutory tax rate for the years ended December 31, 2021 and 2020 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·················

2021
30.6%

2020
30.6%

3.4
(4.9)
(4.1)
(3.9)
5.5
0.7
4.3
(4.3)
0.4
27.7%

1.2
(4.7)
(2.6)
(1.2)
3.8
3.6
(2.4)
(5.3)
0.8
23.8%

19. Contingent Liabilities
At December 31, 2021 and 2020, the Companies were contingently liable as follows:

TAIWAN SAKATA INX CORP ············
Total ··············································

Millions of yen
2021
2020
¥
170
¥
151
¥
170
¥
151

The Company provides letters of awareness to banks for bank loans of unconsolidated subsidiaries andaffiliates, and the Company also provides guarantees of indebtedness for leases of unconsolidated
subsidiaries and affiliates. The guarantee obligations include amounts guaranteed by other parties, and thoseamounts are excluded from the amounts stated above.

20. Selling, General and Administrative Expenses
The main items of selling, general and administrative expenses for the years ended December 31, 2021
and 2020 were as follows:
Millions of yen
2021
2020
Freightage and packing expenses ············································ ¥5,984¥ 4,929
Salaries and allowances························································
10,266
9,594
Depreciation ·····································································
701
758
Provision of allowance for doubtful accounts ·····························(75)
180
Provision for bonuses ··························································
311
288
Retirement benefit expenses ··················································
727
909
Research and development expenses ········································
3,823
3,478

26

21. Gain on Sales of Non-Current Assets

The details of gain on sales of property, plant and equipment for the years ended December 31, 2021
and 2020 were as follows:
Millions of yen
2021
2020
Buildings and structures, and Land (*)······································¥¥
80
Building ···········································································
6
Land ···············································································
109
4
Total··············································································
¥
115
¥
84

(*) Total gains on sale was described because the contract was to sell buildings and structures, and land together and it wasdifficult to measure gains on each asset separately.

22. Loss on Retirement of Non-Current Assets

The details of loss on retirement of property, plant and equipment for the years ended December 31,
2021 and 2020 were as follows:
Millions of yen
2021
2020
Buildings and structures ·······················································¥
3¥
Machinery, equipment and vehicles ·········································
1
Other fixed assets ·······························································
0
Demolition and removal expenses ···········································
27
Software in progress ····························································
394
Total··············································································
¥
425
¥
-

23. Provision of allowance for doubtful accounts

SAKATA SANGYO calculated a provision of allowance for doubtful accounts of ¥566 million foruncollected receivables relevant to insubstantial transactions.

24. Restructuring loss
Year ended December 31, 2021
Not applicable.
Year ended December 31, 2020¥113 million as early retirement costs and ¥105 million as other restructuring costs were recognized.
They were related to close of a factory of INX International FRANCE SAS and dissolution of Sakata Inx
Engineering Co.,Ltd.

27

25. Consolidated Statements of Comprehensive Income

The reclassification adjustment and the tax benefit concerning other comprehensive income for theyears ended December 31, 2021 and 2020 were as follows:
Millions of yen
2021
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 ·············
Foreign currency translation adjustment
Amount arising during the period ····································
Deferred gains or losses on hedges
Amount arising during the period········································
Reclassification adjustment included in net income·················
Pre-tax amount ··························································Tax benefit ·······························································
Deferred gains or losses on hedges ··································
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 ·····································

¥

¥

580
(76)
504
(150)
354

¥

2020
(2,459)(3)(2,462)749(1,713)

4,415(1,894)

(4)
1
(3)
1
(2)

-

753
402
1,155
(324)
831

(184)
234
50
(17)
33

1,601
0

(501)
9

1,601
7,199

(492)
(4,066)¥

26. 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, 2021 and 2020 were as follows:
Millions of yen
Cash and deposits ·······························································
Time deposits with original maturity of more than three months ······Cash and cash equivalents ·················································

28

2021
12,685(570)¥ 12,115¥

2020
12,427(749)¥ 11,678¥27. 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 manufacturing 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 the markets of Asia, Americas and Europe.
Foreign subsid iaries 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 are focused 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, Newspaper printing ink,
Commercial printing ink, Print and plate making equipment andmaterials, Packaging equipment and supplies
Packaging ink, Flexible packaging gravure ink, Metal decorating ink,
Newspaper 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.
The Company has reviewed the criteria for allocating corporate expenses and assets in order to reflect
the performance of each reportable segment more appropriately from the current consolidated fiscal year.
The segment information for the previous consolidated fiscal year is stated based on the allocation
method of expenses and assets after the change.

29

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

Year ended
December 31, 2021

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

50,43438,312

54,114

15,127

14,272

172,259

9,229

181,488-

181,488

Intersegment sales
and transfers

10

263

816

803

57

1,949

8,001

9,950

(9,950)-Total

50,444

38,57554,93015,93014,329174,208

17,230191,438(9,950)181,488

Segment income

1,366

2,244

1,465

(188)

1,901

6,788

351

7,139

276

7,415

Segment assets

40,251

41,541

31,623

12,628

10,243

136,286

6,447

142,733

24,166

166,899

Depreciation
Amortization of
goodwill

1,343

800

954

392

738

4,227

57

4,284

22

4,306

-

-

84

2

-

86

-

86

-

86

1,888

2,510

1,434

220

694

6,746

28

6,774

7

6,781

Increase in property,
plant and equipment
and intangible assets

Otherbusinesses
(*1)

Total

Adjustments Consolidated
(*2)
(*3)

Total

(*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 ¥276 million for segment income includes eliminations for intersegment transactions of ¥977 million and corporate expenses of¥(701) million that have not been allocated to any segment. Corporate expenses are mainly service fees to unconsolidated subsidiaries and affiliates.
2. The adjustment of ¥24,166 million for segment assets includes eliminations for intersegment transactions of ¥(6,619) million and corporate assets of¥30,785 million that have not been allocated to any segment. Corporate assets are mainly investment securities held for a common corporate purpose.
3. The adjustment of ¥22 million for depreciation are mainly related to Corporate assets that have not been allocated to any segment.
4. The adjustment of ¥7 million for increase in property, plants and equipment, and intangible assets are mainly related to Corporate assets that have notbeen allocated to any segment.
(*3) Segment income is adjusted to be consistent with operating income shown on the consolidated statements of income.

30

Year ended
December 31, 2020

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

48,05632,49048,7709,672Intersegment sales
and transfers

15

107

740

Total

48,071

32,597

Segment income

1,252

Segment assets
Depreciation
Amortization of
goodwill
Increase in property,
plant and equipment
and intangible assets

Total

Other
businesses
(*1)

Total

11,785

150,773

10,734

161,507-

161,507

492

60

1,414

6,250

7,664

(7,664)-49,51010,164

11,845

152,187

16,984

169,171(7,664)

161,507

2,451

2,953

(432)

550

6,774

157

6,931

282

7,213

37,143

34,69625,773

10,704

9,863

118,179

6,452

124,631

20,641

145,272

1,428

747

905

267

925

4,272

38

4,310

40

4,350

-

-

83

-

-

83

-

83

-

83

875

1,364

1,600

476

171

4,486

-

4,486

23

4,509

Adjustments Consolidated
(*2)
(*3)

(*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 ¥282 million for segment income includes eliminations for intersegment transactions of ¥817 million and corporate expenses of¥(535) million that have not been allocated to any segment. Corporate expenses are mainly service fees to unconsolidated subsidiaries and affiliates.
2. The adjustment of ¥20,641 million for segment assets includes eliminations for intersegment transactions of ¥(6,343) million and corporate assets of¥26,984 million that have not been allocated to any segment. Corporate assets are mainly investment securities held for a common corporate purpose.
3. The adjustment of ¥40 million for depreciation are mainly related to Corporate assets that have not been allocated to any segment.
4. The adjustment of ¥23 million for increase in property, plants and equipment, and intangible assets are mainly related to Corporate assets that havenot been allocated to any segment.
(*3) Segment income is adjusted to be consistent with operating income shown on the consolidated statements of income.

31

(Related information)
Year ended December 31, 2021
1. Information about each product and service
Year ended
December 31, 2021

Millions of yen
Printing inks

Net sales to outside
customers¥

Graphic arts
materials

144,821 ¥Digital & Specialty
products

13,198 ¥Other

14,272 ¥

Total

9,197

¥

181,488

2. Information about geographic areas
Year ended
December 31, 2021

Millions of yen
Japan

Asia

America

Europe

Other

Total

Net sales¥

63,237 ¥41,138 ¥47,354 ¥15,765 ¥13,994 ¥

181,488

Property, plant andequipment¥

21,247 ¥11,300 ¥8,513 ¥

3,783 ¥

477

45,320¥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.
Year ended December 31, 2020
1. Information about each product and service
Year ended
December 31, 2020

Millions of yen
Printing inks

Net sales to outside
customers¥

Graphic arts
materials

126,818 ¥Digital & Specialty
products

12,227 ¥Other

11,785 ¥Total

10,677 ¥161,507

Europe

Other

Total

2. Information about geographic areas
Year ended
December 31, 2020

Millions of yen
Japan

Asia

America

Net sales¥

61,666 ¥35,109 ¥42,239 ¥10,877 ¥

11,616 ¥161,507

Property, plant andequipment¥

21,714 ¥8,314 ¥

7,309 ¥

2,618 ¥

383

40,338¥

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.

32

(Impairment loss by reportable segments)
Year ended December 31, 2021
Not applicable.
Year ended December 31, 2020
Not applicable.
(Amortization and unamortized balance of goodwill)
Year ended December 31, 2021
Year ended
December 31, 2021

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

Printing
inks(Americas)

Amortization of
goodwill

¥

-

¥

-

¥ 84

¥

Balance as ofDecember 31, 2021

¥

-

¥

-

¥ 437

¥

Digital &Specialty
products

Total

Other
businesses

Adjustments

Consolidated

2

¥

-

¥ 86

¥

-

¥

-

¥ 86

17

¥

-

¥ 454

¥

-

¥

-

¥ 454

Printing
inks(Europe)Year ended December 31, 2020
Year ended
December 31, 2020

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

Printing
inks(Americas)

Printing
inks(Europe)

Digital &Specialty
products

Total

Other
businesses

Adjustments

Consolidated

Amortization of
goodwill

¥

-

¥

-

¥ 83

¥

-

¥

-

¥ 83

¥

-

¥

-

¥ 83

Balance as ofDecember 31, 2020

¥

-

¥

-

¥ 501

¥

-

¥

-

¥ 501

¥

-

¥

-

¥ 501

(Negative goodwill in other income by reportable segments)
Year ended December 31, 2021
Not applicable.
Year ended December 31, 2020
Not applicable.

3328. Related Party Transactions

Transactions with related parties for the years ended December 31, 2021 and 2020 were as follows:Year ended December 31, 2021

Attribute

Name

Location

SHENZHEN Shenzhen,
Affiliate SAKATA INX
ChinaCO., LTD.

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¥ 3,395

Notes andaccounts
receivable- tradeInvestments
and otherassets:Other

Balance atyear end(Millionsof yen)¥ 2,576¥

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 the reversal of allowance for doubtful accounts for the year
ended December 31, 2021 was ¥21 million.

Year ended December 31, 2020
Attribute

Name

Location

SHENZHEN Shenzhen,
Affiliate SAKATA INX
ChinaCO., LTD.

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¥ 2,541

Notes andaccounts
receivable- tradeInvestments
and otherassets:Other

Balance atyear end(Millionsof yen)¥ 1,925¥

171

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 ¥171 million was accounted for as allowance for doubtful accounts to cover possible losses on collection fromSHENZHEN SAKATA INX CO., LTD., and the amount of the reversal of allowance for doubtful accounts for the year
ended December 31, 2020 was ¥7 million.

3429. Changes in Net Assets
1. Shares issued and treasury sharesYear ended December 31, 2021
Type

Number of shares
as of the beginningof current period

Increase in numberof shares
during the period

Decrease in numberof shares
during the period

Number of shares
as of the end ofcurrent period

62,601,161--

62,601,161

Shares issued:
Common stock
Treasury shares:
Common stock

4,182,625
200
18,417
4,164,408
Note : The increase of 200 shares in the number of treasury shares was due to the purchase of fractional shares.
The decrease of 18,417 in the number of treasury shares was due to disposal of treasury shares as restricted stock
based compensation.

Year ended December 31, 2020
Type

Number of shares
as of the beginningof current period

Increase in numberof shares
during the period

Decrease in numberof shares
during the period

Number of shares
as of the end ofcurrent period

62,601,161--

62,601,161

Shares issued:
Common stock
Treasury shares:
Common stock

4,202,237
719
20,331
4,182,625
Note: The increase of 210 shares in the number of treasury shares was due to the purchase of fractional shares, and theincrease of 509 shares was due to the acquisition of restricted stock without compensation.
The decrease of 20,331 in the number of treasury shares was due to disposal of treasury shares as restricted stock
based compensation.

2. Dividends
Dividends paid in the year ended December 31, 2021
Date of resolution
Annual meeting ofstockholders held on
March 26, 2021
Directors' meeting
held on
August 11, 2021

TypeofsharesAmount ofdividends(Millions of yen)

Cash dividends
per share(Yen)

Record date

Effective dateCommon
stock

¥

876

¥

15

December 31,
2020

March 29,2021

Common
stock

¥

876

¥

15

June 30,
2021

September 3,
2021

Record date

Effective date

Dividends paid in the year ended December 31, 2020
Date of resolution
Annual meeting ofstockholders held on
March 26, 2020
Directors' meeting
held on
August 7, 2020

TypeofsharesAmount ofdividends(Millions of yen)

Cash dividends
per share(Yen)

Common
stock

¥

876

¥

15

December 31,
2019

March 27,
2020

Common
stock

¥

876

¥

15

June 30,
2020

September 4,
2020

35

Dividends with a record date attributable to the year ended December 31, 2021 but an effective dateafter December 31, 2021
Date of resolution

Typeofshares

Sourceofdividends

Annual meetingof stockholders
held onMarch 29, 2022

Commonstock

Retainedearnings

Amount ofCash dividends
dividends
per share(Millions of yen)
(Yen)
¥ 877

¥ 15

Record date

Effective
date

December 31,
2021

March 30,
2022

Dividends with a record date attributable to the year ended December 31, 2020 but an effective dateafter December 31, 2020
Date of resolution

Typeofshares

Sourceofdividends

Annual meetingof stockholders
held onMarch 26, 2021

Commonstock

Retainedearnings

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

¥ 15

Record date

Effective
date

December 31,
2020

March 29,2021

30. 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, 2021 and 2020
Millions of yen
2021

2020

Current assets ············································· ¥122,797¥104,255

Non-current assets········································ ¥47,124¥40,182Current liabilities ········································· ¥79,833¥59,855

Non-current liabilities ··································· ¥23,719¥28,083

Net assets ·················································· ¥66,369¥56,499

Summarized statements of income for the years ended December 31, 2021 and 2020
Millions of yen
2021

2020

Net sales···················································· ¥226,834¥

181,599

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

5,935

¥

2,764

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

4,562

¥

1,724

36

31. Amounts Per Share
Yen
2021

2020

Net assets per share······································ ¥1,478.18¥

1,307.13

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

30.00

¥

30.00

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

84.43

¥

90.32

Note 1: There were no dilutive securities.
Note 2: The calculation of net income per share was as follows:
2021

2020

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

¥

4,934

¥

5,276

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

¥

4,934

¥

5,276

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

37

58,431

58,413