亀田製菓（2220） – Consolidated Financial Results (Japanese Accounting Standards) for the FY2021 (Ended March 31, 2022)

Consolidated Financial Results (Japanese Accounting Standards) for the FY2021 (Ended March 31, 2022) (English Translation) May 9, 2022 KAMEDA SEIKA CO., LTD. Tokyo Stock Exchange 2220 www.kamedaseika.co.jp Company name: Stock exchange: Stock code: URL: Representative: Contact: Tel. +81-25-382-2111 Scheduled date of ordinary shareholder’s meeting: June 14, 2022 Scheduled date of commencement of dividend payment: June 15, 2022 June 14, 2022 Scheduled date for filing of securities report: Supplementary documents for financial results: Yes Financial results briefing: Isamu Sato, President and COO Akira Kobayashi, General Manager Administrative Div. Director & CFO Yes (for analysts and institutional investors) 1. Consolidated Financial Results for the fiscal Year Ended March 31, 2022(April 1, 2021 – March 31, 2022) (1) Consolidated Results of Operations (Percentages show year-on-year changes.) (All amounts are rounded down to the nearest million yen) ¥ million Year ended 85,163 March 31, 2022 March 31, 2021 103,305 (Note) Comprehensive income: Net sales Ordinary income Operating income Net income attributable to owners of the parent % ¥ million % － -6.9 4,428 -0.5 6.6 4,757 ¥ 6,898 million (9.3%) for the fiscal year ended March 31, 2022 ¥ 6,314 million (116.2%) for the fiscal year ended March 31, 2021 ¥ million 6,099 6,889 ¥ million 4,863 5,620 % -13.5 -3.3 % -11.5 -0.3 Net income per share (basic) Net income per share (diluted) Return on equity Ratio of ordinary income to total assets Ratio of operating income to net sales Year ended March 31, 2022 March 31, 2021 (Reference) Equity in earnings of affiliates: (Note) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, ¥ － － ¥ 706 million for the fiscal year ended March 31, 2022 ¥ 926 million for the fiscal year ended March 31, 2021 ¥ 210.05 225.62 % 7.3 8.6 % 6.2 7.7 % 5.7 5.4 March 31, 2020), etc. from the beginning of the first quarter of the current consolidated fiscal year. The figures for the FY2021 ended March 31, 2022 represent figures after the application of the accounting standard, etc. Accordingly, the year-on-year percentage change in net sales is not stated. (2) Consolidated Results of Operations Total assets Net assets Equity ratio Net assets per share ¥ million 102,955 92,888 As of March 31, 2022 As of March 31, 2021 (Reference) Shareholder’s equity: As of March 31, 2022: ¥ 63,424 million As of March 31, 2021: ¥ 58,217 million (Note) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first quarter of the current consolidated fiscal year. The figures for the FY2021 ended March 31, 2022 represent figures after the application of the accounting standard, etc. ¥ million 65,722 59,895 ¥ 3,008.21 2,761.24 % 61.6 62.7 (3) Consolidated Cash Flow Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Year ended March 31, 2022 March 31, 2021 ¥ million 8,305 8,671 ¥ million -9,841 -6,337 Cash and cash equivalents at end of fiscal year ¥ million 5,944 6,505 ¥ million 1,198 -257 2. Dividends Year ended March 31, 2021 Year ended March 31, 2022 Year ending March 31, 2023 (forecasts) End of first quarter ¥ Dividend per share End of third quarter ¥ End of second quarter ¥ － － － 15.00 15.00 15.00 － － － Year-end Annual Total dividends (annual) Payout ratio (consolidated) ¥ ¥ ¥ million 38.00 53.00 1,117 39.00 54.00 1,138 % 23.5 25.7 40.00 55.00 31.3 Ratio of dividends to net assets (consolidated) % 2.0 1.9 3. Forecasts of Consolidated Financial Results for the Fiscal year Ending March 31, 2023 (April 1, 2022 – March 31, 2023) (Percentage figures for the fiscal year represent the changes from the previous year, While percentage figures for the six months’ period represent the changes from the same period of the previous year) Net income attributable to owners of the parent ¥ million Net income per share Net sales Operating income Ordinary income Six months ending September 30, 2022 ¥ million % ¥ million % ¥ million % % ¥ 44,000 11.0 1,400 10.8 1,900 21.8 1,200 -30.4 56.92 92,000 Year ending March 31, 2023 * Notes (1) Changes of important subsidiaries during the period (changes of specific subsidiaries in accordance with changes in 5,000 5,900 3,700 -16.5 -3.3 8.0 2.8 175.49 the scope of consolidation): Yes 1 new company (Company name) THIEN HA KAMEDA, JSC. (Note) For details, please refer to p.15 of the Appendix,“3. Quarterly Consolidated Financial Statements and Major Notes (5) Notes to the Quarterly Consolidated Financial Statements (Important Notes on the Basis of Preparation of the Financial Statements)” (2) Changes in accounting policies and changes or restatement of accounting estimates (i) Changes in accounting policies caused by revision of accounting standards (ii) Changes in accounting policies other than (i) (iii) Changes in accounting estimates (iv) Restatement :Yes :None :None :None (3) Number of shares outstanding (common stock): (i) Number of shares outstanding at end of period (including treasury stock) (ii) Number of treasury stock at end of period As of March 31, 2022: As of March 31, 2021: As of March 31, 2022: As of March 31, 2021: (iii) Average number of shares outstanding during the term 22,318,650 shares 22,318,650 shares 1,234,971 shares 1,234,695 shares 21,083,840 shares 21,084,005 shares Year ended March 31, 2022: Year ended March 31, 2021: (Reference) Summary of Non-Consolidated Financial Results 1. Non-Consolidated Financial Results for the fiscal Year Ended March 31, 2022(April 1, 2021 – March 31, 2022) (1) Non-Consolidated Results of Operations (Percentages show year-on-year changes) Operating income Ordinary income Net income Net sales ¥ million 58,664 % － ¥ million % ¥ million % ¥ million % 3,261 -21.4 5,063 -13.7 3,434 -17.3 78,108 1.2 4,148 -0.9 5,869 37.0 4,153 65.5 Year ended March 31, 2022 Year ended March 31, 2021 Net income Per share (basic) Net income Per share (diluted) ¥ ¥ Year ended March 31, 2022 Year ended March 31, 2021 (Note) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, 162.91 197.01 － － March 31, 2020), etc. from the beginning of the first quarter of the current consolidated fiscal year. The figures for the FY2021 ended March 31, 2022 represent figures after the application of the accounting standard, etc. Accordingly, the year-on-year percentage change in net sales is not stated. (2) Non-Consolidated Financial Position Total assets ¥ million Year ended March 31, 2022 Year ended March 31, 2021 75,901 70,518 Net assets Equity ratio ¥ million 43,406 41,501 Net assets per share ¥ 2,058.77 1,968.41 % 57.2 58.9 (Reference) Shareholder’s equity: Year ended March 31, 2022: ¥ 43,406 million Year ended March 31, 2021: ¥ 41,501 million (Note) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the first quarter of the current consolidated fiscal year. The figures for the FY2021 ended March 31, 2022 represent figures after the application of the accounting standard, etc. * These financial results are not subject to auditing. * Statement regarding the appropriate use of operating forecasts and special notes (Caution concerning statements, etc. regarding the future) The forward-looking statements such as performance forecasts included in this document are based on the information available to the Company at the time of the announcement and on certain assumptions considered reasonable. Actual results may differ significantly from these forecasts due to various factors. See “1. Summary of Consolidated Operating Results etc. (4) Future Prospects” on p.6 of the Appendix for the conditions assumed in consolidated forecasts and notes on the use of consolidated forecasts. (How to obtain supplementary explanatory materials on financial results and details of financial results briefing session) The Company intends to hold a web conference for analysts and institutional investors on Tuesday, May 24, 2022. Any explanatory materials used on that day will be available on the Company’s website before the session starts. Contents of Appendix 2 1. Summary of Consolidated Operating Results etc. ……………………………………………….……………. 2 (1) Summary of Consolidated Operating Results for the Period under Review ………………………………. 5 (2) Summary of Consolidated Financial Position for the Period under Review ……………………………… 5 (3) Summary of Cash Flows for the Period under Review …………………………………………………… 6 (4) Future Prospects……………………………………………………………………………………………. 6 2. Basic View Concerning Choice of Accounting Standards……………………………………………………… 7 3. Consolidated Financial Statements and Major Notes….……………………………………………………….. 7 (1) Consolidated Balance Sheet ……………………………………………………………………………….. 9 (2) Consolidated Income Statement and Consolidated Comprehensive Income Statement…… ………………… Consolidated Income Statement ………………………………………………………………………….. 9 Consolidated Comprehensive Income Statement ………………………………………………………… 10 (3) Consolidated Statement of Changes in Shareholders’ Equity ……………………………………………… 11 (4) Consolidated Cash Flow Statement ………………………………………………………………………… 13 (5) Notes to the Consolidated Financial Statements……………………..……………………………………… 15 (Notes to the Assumption of a Going Concern)……..……………..……………………………………… 15 (Important Notes on the Basis of Preparation of the Financial Statements)….…………………………….. 15 (Changes in Accounting Policies)…………………………………………………………………………. 19 (Application of “Accounting Standard for Fair Value Measurement,” etc.)……………………………….. 19 (Changes in the Method of Presentation) ………………………………………………………………….. 19 (Notes to the Consolidated Balance Sheet) ……………………………………………………………….. 20 (Notes to the Consolidated Income Statement)…………………………………………………………….. 21 (Notes to the Consolidated Comprehensive Income Statement)…………………………………………… 23 (Notes to the Consolidated Statement of Changes in Shareholder Equity)………………………………… 24 (Notes to the Consolidated Cash Flow Statement)………………………………………………………… 26 (Business Combinations)…………………………………..……………………………………………… 27 (Segment Information)……………………………………………………………………………………… 30 (Per Share Information)……………………………………………………………………………………. 32 (Material Subsequent Events)……………………………………………………………………………… 32 4. Others…………………………………………………………………………………………………………… 33 Changes in Officers…………………………………………………………..…………………………………… 33 － 1 － 1. Summary of Consolidated Operating Results etc. The Group has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter, the “Revenue Recognition Accounting Standard”), etc. from the beginning of the current consolidated fiscal year. The change in net sales compared to the previous consolidated fiscal year and the year-on-year percentage change are not stated, because the figures for the current consolidated fiscal year, explained herein as a consolidated operating results represent figures after the application of the accounting standard, etc. For details regarding the application of the “Revenue Recognition Accounting Standard,” etc., please refer to “3. Quarterly Consolidated Financial Statements and Major Notes (5) Notes to the Quarterly Consolidated Financial Statements (Changes in Accounting Policies).” (1) Summary of Consolidated Operating Results for the Period under Review During the fiscal year ended March 31, 2022, the Japanese economy generally remained in a severe situation, as economic activities were repeatedly restricted by the spread of mutant strains of COVID-19, which slowed the pace of consumption recovery, while a series of price hikes for consumer goods cooled consumer sentiment. With regard to the global economy, amidst moves to search for ways to coexist with COVID-19, heightened geopolitical risks stemming from the situation in Ukraine have raised concerns regarding supply systems for energy and food products on a global scale, and the outlook for the global economy is becoming increasingly uncertain. As for the food industry, despite support from firm demand, it has continued to face a challenging business environment due to rising transportation costs caused by soaring crude oil prices and upward pressure on various raw material prices. Under these conditions and changes in the environment surrounding the food industry, the KAMEDA SEIKA Group has determined in the Medium-Term-Business Plan to continue to deliver value to customers from the perspective of “Better For You”; contribution to a healthy lifestyle through the selection, eating and enjoyment of things that are delicious and good for the body. Hence, the KAMEDA SEIKA Group will be enable to achieve sustainable growth and enhance its corporate value by realizing its long-term vision of becoming a “Global Food Company.” By FY2030, we aim to evolve from a “Rice cracker and snack manufacturer” to a “‘Better for You’ food company.” During the period of the medium-term business plan, which continues to FY2023, we are striving to realize our vision as a distinctive global corporation that stands firmly on the foundation provided by the three pillars of our Domestic Rice Cracker Business, Overseas Business, and Food Business. At the same time, we will implement structural reforms from a medium-to-long-term perspective to address changes in the business environment, such as changes in consumer behavior triggered by COVID-19, thereby making efforts to ensure the achievement of sustainable growth and an enhancement of our corporate value. We have positioned FY2021 as a year to solidify the foundation for our next stage of growth, and have implemented various measures centered on structural reforms. In the Domestic Rice Cracker Business, we worked to further strengthen our revenue base in order to solidify our position, which is by far the best in the industry. The Overseas Business worked to achieve further growth in the North American market, and to establish a foundation for further growth through profitable business operations and aggressive investment in Asia. The Food Business worked to expand long-life preserved foods and allergen-free products, and to strengthen our initiatives for plant-based foods. In the Domestic Rice Cracker Business, we worked to expand environmentally friendly products, against a backdrop of growing environmental awareness among customers. In terms of sales, we concentrated management resources on growth channels, and promoted improvements in sales productivity through the digitalization of sales activities such as SFA and MotionBoard. Even though stay-at-home demand resulting from the COVID-19 pandemic is subsiding, many of our products, such as “Tsumami Dane” and “Mugen Ebi,” are highly popular among our customers. We are working to continuously increase our production capacity to meet the strong demand. Meanwhile, the business environment remained generally severe until the third quarter, primarily due to a temporary shortage of supply capacity for our core products as a result of labor shortages, as well as changes in product specifications and price revisions due to soaring raw material prices. However, there were signs of a gradual recovery from the beginning of the year. In addition, the suspension of operations of a company in the same business due to a fire at its plant in the fourth quarter changed the state of the domestic rice cracker market, and demand for alternatives to domestic rice cracker companies, including the Company, is increasing rapidly. As a leading company in the rice cracker industry, the Group has increased production by increasing production personnel, working overtime, and working on holidays, in order to control the risk of market shrinkage due to a shortage of product supply capacity, which would cause customers to leave rice crackers in the short to medium term. The Group has also shifted to a system that prioritizes supply by expanding outsourced production and other measures, and is continuing to take such measures. As a result of these initiatives, excluding the impact of the decline in revenue due to the Revenue Recognition Accounting Standard, net sales of our core brands, “Happy Turn,” “Tsumami Dane,” “Usuyaki,” “Waza-no-KodaWari,” “Potapota Yaki,” and “HaiHain” were up year-on-year. Meanwhile, “KAMEDA Kaki-no-Tane,” “KAMEDA Magari Senbei,” “Soft Salad,” “Teshioya,” “Age-Ichiban,” and “Katabutsu” were down year-on-year. － 2 － In the Overseas Business, Mary’s Gone Crackers, Inc. in North America experienced a rebound from the special demand caused by the spread of COVID-19 in the previous year. Meanwhile, net sales of Singha Kameda (Thailand) Co., Ltd., which became a consolidated subsidiary during the previous fiscal year, contributed to our performance for the full fiscal year, while THIEN HA KAMEDA, JSC., which has the high potential to expand sales channels in Vietnam and become a cross-border production base, has been included in the consolidated income from the third quarter. As a result, net sales excluding the impact of the decline in revenue due to the Revenue Recognition Accounting Standard increased year-on-year. In the Food Business, in addition to stable demand for long-life preserved foods against the backdrop of heightened awareness regarding disaster prevention, demand increased further toward the end of the fiscal year due to the impact of an earthquake that occurred in March 2022 off the coast of Fukushima Prefecture. In addition, inquiries for rice flour bread, which is free of 28 items identified as allergens and is produced by TAINAI Co., Ltd., which became a consolidated subsidiary, have been increasing rapidly, and we are working to increase production capacity, including a relocation and consolidation of our production functions, in order to meet the demand. As a result, net sales excluding the impact of the decline in revenue due to the Revenue Recognition Accounting Standard increased year-on-year. As a result of the above, net sales totaled ¥85,163 million. In terms of operating income, although subsidiaries that deal with products for department stores and sell souvenirs showed only a moderate recovery due to the impact of behavioral restrictions resulting from COVID-19, we broke out of the previous year’s loss, and secured profitability as a result of diversification of our sales channels, establishment of an efficient operational structure, and various cost reduction measures, which we have been working on for some time. In the KAMEDA SEIKA’s Rice Cracker Business, although we implemented a rapid series of measures to cope with changes in the business environment, including changes in raw material formulations, on-site improvements, changes in product specifications, and price revisions, the higher-than-expected raw material prices and energy price hikes offset the effects of the increased profits. As a result, operating income of the Domestic Rice Cracker Business decreased year-on-year. In the Overseas Business, despite the impact of the decline in revenue of Mary’s Gone Crackers, Inc., the operating loss was reduced and is now on an improving trend. This was achieved due to the elimination of double operations following the completion of our reorganization of Thai subsidiaries and stable business operations at Singha Kameda (Thailand) Co., Ltd., and by making the highly profitable THIEN HA KAMEDA, JSC. a consolidated subsidiary. In the Food Business, despite efforts to increase demand for long-life preserved foods and expand sales channels for plant origin lactic acid bacteria products, profits declined due to the acquisition of various seeds for future business growth, and a strengthening of our research and development functions. As a result of these efforts, operating income decreased by 13.5% year-on-year to ¥4,863 million. In addition, as a result of a decrease in equity in earnings of affiliates of TH FOODS, INC., an affiliate accounted for by the equity method, ordinary income decreased by 11.5% year-on-year to ¥6,099 million. As a result of recording a gain on step acquisitions in connection with making THIEN HA KAMEDA, JSC. a consolidated subsidiary, net income attributable to owners of the parent decreased by 6.9% year-on-year to ¥4,428 million. － 3 － Supplementary Information In conjunction with the application of the Revenue Recognition Accounting Standard, figures prior to the application of the accounting standard are presented under the former standard, and figures after the application of the accounting standard are presented under the new standard. Year ended March 31, 2021 Year ended March 31, 2022 Old standard 103,305 81,675 〔Reference〕*4 New standard 83,116 〔Reference〕 Old standard 105,617 62,501 82,435 8,503 6,222 6,903 5,620 5.4% 5,070 (376) 533 391 7,597 6,113 6,903 5,620 6.8% 5,070 (376) 533 391 10,107 6,375 6,699 4,820 4.6% 4,595 (278) 167 335 Net sales Domestic Rice Cracker Business Overseas Business *1 Food Business *2 Other (Freights transport etc.) *3 Operating income Operating income margin Domestic Rice Cracker Business Overseas Business *1 Food Business *2 Other (Freights transport etc.) *3 (Unit: ¥ million) 〔Reference〕*4 YoY New standard Change Change (%) 85,163 62,971 9,183 6,309 6,699 2,047 470 1,585 195 (204) 2.5 0.8 20.9 3.2 (3.0) 4,863 5.7% 4,624 (757) (13.5) (446) (8.8) (278) 181 335 97 (351) (56) － (65.9) (14.4) *1. Overseas business includes domestic import and export transactions in addition to those of overseas subsidiaries. *2. Food business is mainly comprised of long-life preserved foods and plant origin lactic acid bacteria as well as rice flour bread and plant-based food. *4. In accordance with the application of the Revenue Recognition Accounting Standard, the Company analyzes and compares the amount under the *3. “Other” consists mainly of the subsidiary’s logistic business. assumption that the accounting standard has applied retroactively. － 4 － (2) Summary of Consolidated Financial Position for the Period under Review (Assets) Current assets stood at ¥27,383 million at the end of the consolidated fiscal year under review, an increase of ¥1,806 million from the end of the previous fiscal year. This was mainly due to increases of ¥363 million in “Cash and deposits,” ¥1,302 million in “Notes, accounts receivable-trade and contract assets,” ¥201 million in “Raw materials and suppliers” and ¥272 million in “Other” which were partly offset by a ¥288 million decline in “Merchandise and finished goods.” Fixed assets stood at ¥75,572 million, an increase of ¥8,260 million from the end of the previous fiscal year. This was attributable to increases of ¥393 million in “Buildings and structures,” ¥3,450 million in “Construction in progress,” ¥1,689 million in “Goodwill,” ¥386 million in “Investment securities” and ¥2,448 million in “Net defined benefit assets.” As a result, total assets stood at ¥102,955 million, an increase of ¥10,066 million from the end of the previous consolidated fiscal year. (Liabilities) Current liabilities stood at ¥28,102 million at the end of the consolidated fiscal year under review, an increase of ¥5,456 million from the end of the previous fiscal year. This was mainly due to an increase of ¥5,219 million in “Short-term loans payable.” Fixed liabilities stood at ¥9,131 million, a decrease of ¥1,215 million from the end of the previous consolidated fiscal year. This was mainly due to increases of ¥122 million in “Lease obligations” and ¥602 million in “Deferred tax liabilities” which were partly offset by a ¥1,951 million decline in “Long-term loans payable.” Consequently, total liabilities stood at ¥37,233 million, an increase of ¥4,240 million from the end of the previous consolidated fiscal year. (Net assets) Total net assets stood at ¥65,722 million at the end of the consolidated fiscal year under review, an increase of ¥5,826 million from the end of the previous fiscal year. This mainly reflected increases of ¥2,903 million in “Retained earnings” resulting from ¥4,428 million in “Net income attributable to owners of the parent,” ¥1,117 million in “Dividends from surplus” and a cumulative-effect adjustment of ¥407 million due to the application of “Accounting Standard for Revenue Recognition,” etc., ¥1,504 million in “Foreign currency translation adjustments,” ¥814 million in “Remeasurements of defined benefit plans” and ¥619 million in “Non-controlling interests.” As a result, the equity ratio stood at 61.6%, down from 62.7% at the end of the previous fiscal year. (3) Summary of Cash Flows for the Period under Review Cash and cash equivalents (“funds”) at the end of the fiscal year stood at ¥5,944 million, a year-on-year decrease of ¥560 million. Cash flows at the end of the consolidated fiscal year under review and factors relating to these are as follows. (Cash Flows from Operating Activities) Funds from operating activities totaled ¥8,305 million (decrease of ¥365 million from the previous fiscal year). This was mainly attributable to an increase in funds from income before income taxes and depreciation and amortization, despite a decrease in funds due to income taxes paid. (Cash Flows from Investment Activities) Funds used in investment activities totaled ¥9,841 million (increase of ¥3,503 million in spending from the previous fiscal year). This was mainly due to expenditure for the purchase of property, plant and equipment and purchase of shares of subsidiaries resulting in change in scope of consolidation. (Cash Flows from Financing Activities) Funds from financing activities totaled ¥1,198 million (increase of ¥1,455 million in income from the previous fiscal year). This was mainly attributable to expenditure for the repayment of long-term loans payable, net increase(decrease) in short-term loans payable and cash dividends paid. Free cash flow, which is computed by subtracting the net cash used in investing activities from the net cash provided by operating activities, was a negative balance of ¥1,535 million. － 5 － (Reference) Cash Flow Indicators Year ended March 31, 2018 Year ended March 31, 2019 Year ended March 31, 2020 Year ended March 31, 2021 Year ended March 31, 2022 1.9 1.4 61.6 71.8 61.6 62.7 61.3 62.0 109.4 121.5 134.5 140.6 Equity ratio (%) Equity ratio based on market value (%) Interest bearing debt to cash flow (annual) Interest coverage ratio (×) Equity ratio: Equity capital/total assets Equity ratio based on market value: Market capitalization/total assets Interest bearing debt to cash flow: Interest bearing debt/cash flow from operating activities Interest coverage ratio: Cash flow from operating activities/interest payments 1. Each indicator is calculated based on consolidated financial figures. 2. Market capitalization is calculated based on the share closing price at the end of the fiscal year × total number of shares issued at the end of the fiscal year (after deducting treasury stock). 3. Cash flow from operating activities is used as cash flow. Interest bearing debt includes all liabilities for which interest is paid among the liabilities listed on the balance sheet. Also, the interest expenses paid in the consolidated statements of cash flows are used in interest payment. 191.4 81.4 56.2 91.6 59.8 1.8 1.8 2.3 (4) Future Prospects In terms of future outlook, amidst an ongoing search for ways to coexist with COVID-19, inflation is accelerating and remains at a high level worldwide, and there is a growing view that the normalization of monetary policy will proceed more quickly than expected. In addition, we recognize that there are concerns regarding soaring energy and raw material prices on a global scale, due to factors such as heightened geopolitical risks stemming from the situation in Ukraine. Furthermore, in the Domestic Rice Cracker Business, we recognize the need to respond in an agile and flexible manner to demand fluctuations triggered by a fire at a plant of a company in the same business, and to ensure the sustainability of our business operations. In this environment, the Group will work to become a “distinctive global corporation with autonomous business operations, based on the three pillars of our Domestic Rice Cracker Business, Overseas Business, and Food Business,” in order to realize its medium-term business plan. As for FY2022, we will not stop at single-year measures, but will position it as a year to connect to FY2023, the final fiscal year of the medium-term business plan, by embarking on structural issues based on changes in the environment. We will establish a robust management foundation that can respond to changes in the environment and take on the challenge of new growth, by creating new value products and new markets that realize “Better For You” from the customers’ perspective, which will lead to results. ■ ■ ■ Domestic Rice Cracker Business: Overseas Business: Food Business: Expansion of market share and creation of new value and new markets Establishment of a stable supply system through thorough improvement of efficiency and increased production capacity Restoring profitability in the overseas business segment Capturing global demand for rice crackers Promotion of growth strategies to realize “Better For You” food products Enhancement and reorganization of various production capacities The Company projects the following consolidated forecasts for FY2022: net sales of ¥92,000 million (up 8.0% year-on-year); operating income of ¥5,000 million (up 2.8% year-on-year); ordinary income of ¥5,900 million (down 3.3% year-on-year); and, net income attributable to owners of the parent of ¥3,700 million (down 16.5% year-on-year). The assumptions for exchange rates on which the earnings forecasts are based are: 1 USD = 121.0 JPY; 1 CNY = 19.0 JPY; 1 THB = 3.5 JPY. * Notes concerning performance forecasts Statements regarding the future business environment and performance forecasts are based on information available to the Company at the time of their announcement and on assumptions made for planning purposes. Actual results may differ from the forecast values depending on a range of factors. 2. Basic View Concerning Choice of Accounting Standards In its accounting standards, the KAMEDA SEIKA Group takes into consideration the comparability of financial statements among domestic companies in the same industry, and has adopted Japanese Accounting Standards. In the future, however, the Group will consider applying International Financial Reporting Standards, while considering various circumstances such as trends regarding the application of such Standards. － 6 － As of March 31, 2021 As of March 31, 2022 3. Consolidated Financial Statements and Major Notes (1) Consolidated Balance Sheet Assets Current assets Cash and deposits Notes and accounts receivable-trade Notes, accounts receivable-trade and contact assets Merchandise and finished goods Work in process Raw materials and supplies Other Allowance for doubtful accounts Total current assets Fixed assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Land Lease assets Accumulated depreciation Lease assets, net Construction in progress Other Accumulated depreciation Other, net Total property, plant and equipment Intangible assets Goodwill Lease assets Customer assets Trademark assets Technology assets Other Total intangible assets Investments and other assets Investment securities Deferred tax assets Net defined benefit assets Other Allowance for doubtful accounts Total investments and other assets Total noncurrent assets Total assets － 7 － 6,510 11,876 － 2,364 807 3,113 920 (15) 25,577 41,883 (25,788) 16,095 61,357 (43,933) *2 17,424 7,199 2,913 (1,146) 1,767 1,919 4,000 (2,880) 1,119 45,525 844 26 722 587 364 1,003 3,547 *1 12,545 1,040 3,574 *2 1,122 (45) 18,237 67,311 92,888 (¥ million) 6,874 － 13,179 2,076 766 3,314 1,193 (20) 27,383 43,104 (26,615) 16,489 62,891 (45,416) *2 17,475 7,269 3,320 (1,337) 1,983 5,370 4,081 (2,940) 1,140 49,728 2,534 17 661 537 333 1,092 5,175 *1 12,931 571 6,022 *2 1,187 (45) 20,667 75,572 102,955 Liabilities Current liabilities Notes and accounts payable-trade Electronic-recording liabilities Short-term loans payable Lease obligations Income taxes payable Provision for bonuses Provision for directors’ bonuses Provision for sales promotion expenses Provision for loss on closing of plants Asset retirement obligations Other Total current liabilities Long-term liabilities Long-term loans payable Lease obligations Deferred tax liabilities Net defined benefit liabilities Asset retirement obligations Other Total long-term liabilities Total liabilities Net assets Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains (losses) on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets As of March 31, 2021 As of March 31, 2022 3,668 2,499 *2, *3 6,502 312 1,062 1,401 135 833 41 67 6,121 22,646 *2 7,953 904 606 531 262 87 10,346 32,992 1,946 170 55,514 (1,900) 55,730 734 － 1,245 507 2,487 1,678 59,895 92,888 (¥ million) 3,853 2,460 *2, *3 11,721 376 326 1,309 122 － － 67 7,864 28,102 6,001 1,026 1,209 520 271 101 9,131 37,233 1,946 170 58,417 (1,901) 58,632 715 4 2,749 1,321 4,791 2,297 65,722 102,955 － 8 － (2) Consolidated Income Statement and Consolidated Comprehensive Income Statement (Consolidated Income Statement) Year ended March 31, 2021 Year ended March 31, 2022 103,305 58,670 44,634 *1, *3 39,014 5,620 (¥ million) 85,163 61,286 23,876 *1, *3 19,013 4,863 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Non-operating income Interest income Dividend income Share of profit of entities accounted for using equity method Foreign exchange gains Other Total non-operating income Non-operating expenses Interest expenses Commitment fee Depreciation of inactive fixed assets Other Total non-operating expenses Ordinary income Extraordinary income Gain on sales of noncurrent assets Gain on step acquisition Total extraordinary income Extraordinary losses Loss on disposal of noncurrent assets Impairment loss Total extraordinary losses Income before income taxes Income taxes-current Income taxes-deferred Total income taxes Net income Net income (loss) attributable to non-controlling Net income attributable to owners of the parent － 9 － 7 49 926 58 380 1,420 86 15 8 41 151 6,889 *2 46 － 46 *4 220 *5 385 605 6,330 1,720 (84) 1,635 4,694 (62) 4,757 31 50 706 380 186 52 20 20 25 1,355 119 6,099 － 730 730 *4 202 *5 446 648 6,181 799 859 1,658 4,522 93 4,428 (Consolidated Comprehensive Income Statement) Net income Other comprehensive income Valuation difference on available-for-sale securities Deferred gains (losses) on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Share of other comprehensive income of associates accounted for using equity method Other comprehensive income Comprehensive income (Breakdown) Comprehensive income attributable to owners of the parent Comprehensive income attributable to non-controlling interests (¥ million) Year ended March 31, 2021 Year ended March 31, 2022 4,694 116 (4) (336) 1,644 200 *1 1,619 6,314 6,426 (111) 4,522 (19) 4 566 814 1,009 *1 2,376 6,898 6,733 165 － 10 － (3) Consolidated Statement of Changes in Shareholders’ Equity Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021) (¥ million) Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Shareholders’ equity As of April 1, 2020 1,946 170 51,853 (1,899) 52,071 1,946 170 51,853 (1,899) 52,071 (1,096) 4,757 － 1,946 － 170 3,660 55,514 (1,900) Cumulative effect of the changes in accounting policies Opening balances reflected the changes in accounting policies Changes during the period Dividends from surplus Net income attributable to owners of the parent Purchase of treasury stock Change in items other than shareholders’ equity (net) Total changes during the period As of March 31, 2021 Comprehensive income Valuation difference on available-for-sale securities Deferred gains (losses) on hedges Foreign currency translation adjustment Remeasure -ments of defined benefit plans Total comprehensive income Non- controlling interests Total net assets As of April 1, 2020 617 4 1,332 (1,137) 818 1,012 53,902 617 4 1,332 (1,137) 818 1,012 53,902 Cumulative effect of the changes in accounting policies Opening balances reflected the changes in accounting policies Changes during the period Dividends from surplus Net income attributable to owners of the parent Purchase of treasury stock Change in items other than shareholders’ equity (net) Total changes during the period As of March 31, 2021 116 116 734 (4) (4) － (86) (86) 1,245 1,644 1,644 507 1,669 665 2,334 1,669 665 5,993 2,487 1,678 59,895 (1) (1) (1,096) 4,757 (1) － 3,659 55,730 (1,096) 4,757 (1) － 11 － Current consolidated fiscal year (from April 1, 2021 to March 31, 2022) (¥ million) Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Shareholders’ equity As of April 1, 2021 1,946 170 55,514 (1,900) 1,946 170 55,106 (1,900) Cumulative effect of the changes in accounting policies Opening balances reflected the changes in accounting policies Changes during the period Dividends from surplus Net income attributable to owners of the parent Purchase of treasury stock Change in items other than shareholders’ equity (net) Total changes during the period As of March 31, 2022 － 1,946 － 170 (407) (1,117) 4,428 3,311 58,417 (1) (1) (1,901) 55,730 (407) 55,322 (1,117) 4,428 (1) － 3,309 58,632 Comprehensive income Valuation difference on available-for-sale securities Deferred gains (losses) on hedges Foreign currency translation adjustment Remeasure -ments of defined benefit plans Total comprehensive income Non- controlling interests Total net assets As of April 1, 2021 734 1,245 507 2,487 1,678 59,895 734 1,245 507 2,487 1,678 59,488 814 814 (407) (1,117) 4,428 (1) 2,304 619 2,924 2,304 619 6,234 1,321 4,791 2,297 65,722 Cumulative effect of the changes in accounting policies Opening balances reflected the changes in accounting policies Changes during the period Dividends from surplus Net income attributable to owners of the parent Purchase of treasury stock Change in items other than shareholders’ equity (net) Total changes during the period As of March 31, 2022 (19) (19) 715 － － 4 4 4 1,504 1,504 2,749 － 12 － (4) Consolidated Cash Flow Statement Cash flows from operating activities Income before income taxes Depreciation and amortization Impairment loss Amortization of goodwill Net gain (loss) on step acquisition Increase (decrease) in bonus provisions Increase (decrease) in provision for directors’ bonuses Increase (decrease) in provision for directors’ retirement benefits Increase (decrease) in provision for sales promotion expenses Increase (decrease) in provision for loss on closing of plants Increase (decrease) in net defined benefit liability Decrease (increase) in net defined benefit asset Interest and dividend income Interest expenses Equity in losses (earnings) of affiliates Loss (gain) on sales of property, plant and equipment Loss (gain) on disposal of noncurrent assets Decrease (increase) in notes and accounts receivable-trade Decrease (increase) in inventories Increase (decrease) in notes and accounts payable-trade Decrease (increase) in other assets Increase (decrease) in other liabilities Increase (decrease) in accrued consumption taxes Other Subtotal Interest and dividend income received Interest expenses paid Income taxes paid Net cash provided by operating activities (¥ million) Year ended March 31, 2021 Year ended March 31, 2022 6,330 4,612 385 74 － (3) 29 (53) (26) (114) 38 (672) (56) 86 (926) (46) 220 828 (302) (594) 207 (285) (143) (80) 9,506 684 (94) (1,425) 8,671 6,181 5,023 446 130 (730) (109) (13) － － (41) (10) (82) 52 (706) － 202 (1,278) (1,055) 335 6 5 268 140 156 8,923 1,203 (43) (1,778) 8,305 － 13 － Year ended March 31, 2021 Year ended March 31, 2022 (¥ million) Cash flows from investing activities Decrease (increase) in time deposits Decrease (increase) in long-term deposits Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Payments for retirement of property, plant and equipment Purchase of investment securities Proceeds from sales of investment securities Purchase of intangible assets and investments Proceeds from sales of intangible assets and investments, etc. Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation Net cash used in investing activities Cash flows from financing activities Net increase (decrease) in short-term loans payable Proceeds from long-term loans payable Repayment of long-term loans payable Repayments of lease obligations Purchase of treasury stock Cash dividends paid Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of term Cash and cash equivalents, end of term (0) (12) 47 (102) (14) 68 (207) 8 (6,337) (536) 5,000 (3,298) (324) (1) (1,096) (257) (151) 1,924 4,581 (5,778) (8,168) *2 (346) *2 (1,179) (38) － 12 (89) (117) 2 (284) 20 (9,841) 5,120 － (2,445) (359) (1) (1,116) 1,198 (223) (560) 6,505 *1 6,505 *1 5,944 － 14 － (5) Notes to the Consolidated Financial Statements (Notes to the Assumption of a Going Concern) Not applicable. 1. Scope of consolidation Number of consolidated subsidiaries: 18 Names of consolidated subsidiaries: (Important Notes on the Basis of Preparation of the Financial Statements) Ajicul Co., Ltd. Toyosu Co., Ltd. Nisshin Seika Co., Ltd. Mary’s Gone Crackers, Inc. KAMEDA USA, INC. THAI KAMEDA CO., LTD. Singha Kameda (Thailand) Co., Ltd. Singha Kameda Trading (Thailand) Co., Ltd. Qingdao Kameda Foods Co., Ltd. LYLY KAMEDA CO., LTD. THIEN HA KAMEDA, JSC. Onisi Foods Co., Ltd. Maisen Co., Ltd. Maisen Fine Foods Co., Ltd. TAINAI Co., Ltd. Niigata Yuso Co., Ltd. Kameda Transport Co., Ltd. N. A. S. Co., Ltd. During the current consolidated fiscal year, THIEN HA KAMEDA, JSC., which was an equity method affiliated company, has been included in the scope of consolidation as a result of the additional acquisition of shares. In addition, as a result of the acquisition of shares of TAINAI Co., Ltd., it has been included in the scope of consolidation. 2. Scope of the Use of Equity Accounting Number of affiliates accounted for by the equity method: 2 Names of affiliated companies: TH FOODS, INC. Daawat KAMEDA (India) Private Limited During the current consolidated fiscal year, THIEN HA KAMEDA, JSC. has been excluded from the scope of equity method since it has been included in the scope of consolidation through an additional share acquisition. 3. Matters related to the fiscal year, etc. of consolidated subsidiaries Among the consolidated subsidiaries, Mary’s Gone Crackers, Inc., KAMEDA USA, INC., Singha Kameda (Thailand) Co., Ltd., Singha Kameda Trading (Thailand) Co., Ltd., Qingdao Kameda Foods Co., Ltd. and LYLY KAMEDA CO., LTD. have a balance sheet date of December 31. In preparing the consolidated financial statements, financial statements as of that date are used, and adjustments necessary for consolidation are made for any material transactions that occur between that date and the consolidated balance sheet date. The balance sheet dates of the other consolidated subsidiaries are all the last day of the consolidated fiscal year. 4. Accounting Standards and Methods (1) Valuation (i) Securities Available-for-sale securities Other than stocks that do not have fair market values Mark-to-market method (total net unrealized gains or losses after tax effect adjustments are directly recorded in shareholders’ equity, and the cost of securities sold is calculated based on the moving-average method) Stocks that do not have fair market values Moving-average method － 15 － (ii) Inventories (a) Finished goods, raw materials and work-in-process These inventory items are mainly recorded at cost as determined by the periodic average method (values on the balance sheet are subject to the book value reduction method based on decreased profitability). The value of supplies is mainly calculated using the last purchase price method (values on the balance sheet are subject to the book value reduction method based on decreased profitability). (b) Supplies (iii) Derivatives Derivatives are stated using the mark-to-market method (2) Depreciation and amortization of major depreciable assets (i) Property, plant and equipment (excluding lease assets) The straight-line method for depreciation is used. Useful lives used in the computation of depreciations are listed below for the main assets. Buildings and structures Machinery, equipment and vehicles Other (tools, furniture and fixtures) 3 to 60 years 4 to 20 years 3 to 15 years (ii) Intangible fixed assets (excluding lease assets) The straight-line method for depreciation is used. Useful lives used in the computation of depreciations are listed below for the main assets. Period usable within the company (5 years) Software Customer assets Trademark assets Technology assets 20 years 20 years 20 years (iii) Lease assets (3) Basis of material allowances (i) Allowance for doubtful accounts Lease assets related to non-transferrable finance lease transactions are depreciated using a useful life of the lease term by the straight-line method with zero residual value. To prepare for possible losses on uncollectable receivables, for general receivables, an amount is provided according to the historical percentage of uncollectable. For specific receivables for which there is some concern regarding recoverability, an amount is recorded by investigating the recoverability for each individual amount. (ii) Provision for bonuses To prepare for the payment of employees’ bonuses, an amount corresponding to the estimated amount of payments is recorded as the basis. (iii) Provision for directors’ bonuses To prepare for the payment of directors’ bonuses, an amount corresponding to the estimated amount of payments for the current consolidated fiscal year is recorded as the basis. (iv) Provision for sales promotion expenses To prepare for the payment of future sales promotions for products that have been marketed, an amount is recorded based on the historical percentage. (v) Provision for loss on closing of plants To prepare for losses related to the closure of plants, expected losses were recorded. － 16 － (4) Accounting treatment of retirement benefits (i) Service period attribution method for projected amount of retirement benefits In the calculation of retirement benefit liabilities, the projected amount of retirement benefits is attributed to the period until the end of the consolidated fiscal year by the salary calculation formula standard. (ii) Treatment of actuarial gains and losses and prior service costs Prior service costs are amortized by the straight-line method over a fixed period (10 years) that is shorter than the average remaining years of service of employees at the time that they are incurred. Actuarial gains and losses are amortized by the straight-line method over a period (10 years) that is shorter than the average remaining years of service of employees in proportional amounts in the consolidated fiscal year following the year in which the gains or losses are realized. (iii) Accounting treatment of actuarial gains and losses and prior service costs that are yet to be recognized Actuarial gains and losses and prior service costs that are yet to be recognized are recorded as remeasurement of defined benefit plans of accumulated comprehensive income under net assets after adjusting for tax effects. (5) Basis of material revenue and expenses In the Group’s major businesses related to revenue from contracts with customers, the details of major performance obligations, as well as the normal point in time when such performance obligations are satisfied (i.e., the normal point in time when revenue is recognized) are as follows. Sales of merchandise and finished goods The Group’s businesses are primarily engaged in the manufacture and sales of rice crackers, long-life preserved foods, allergen-free food products, and other products. In domestic sales, performance obligations are deemed to have been satisfied at the time of delivery of merchandise or finished goods, when they are inspected by customers, and the legal ownership, physical possession, and significant risks and economic value associated with ownership of the goods are transferred to the customers. Accordingly, the Company recognizes revenue at the time when such goods are delivered to the customers. However, with respect to certain sales transactions in Japan, the Company recognizes revenue at the time of shipment, if the period from the time of shipment to the time when control of the goods is transferred to the customers is a normal period. In export sales, the Company recognizes revenue at the time when significant risks and economic value associated with ownership of the goods are transferred to customers, based on the terms of contracts with the customers, and performance obligations are satisfied. The transaction price is measured as the amount determined by deducting the price, which takes into account discounts, rebates, and returns, etc., from the consideration promised in the contract with the customer. The Company estimates variable consideration, including variable discounts, rebates, and returns based on reasonably available information including past results and forecasts. Regarding transactions involving certain products in the Food Business in which the Group acts as an agent in providing the products to customers, the Company recognizes revenue at the net amount after deducting the amount to be paid to suppliers from the amount to be received from customers. The promised consideration is generally collected within six months from the time performance obligations are satisfied, and the amount of consideration contains no significant financing component. (6) Standard for conversion of main foreign currency-denominated assets and liabilities into Japanese yen Foreign currency-denominated monetary receivables and payables are translated into Japanese yen at the spot exchange rate on the consolidated balance sheet date and treated as translation gains and losses. Assets and liabilities of foreign subsidiaries are translated into Japanese yen at the spot exchange rate on the balance sheet date, while revenue and expenses are translated at the average exchange rate during the reporting period, and translation gains and losses are recorded as foreign currency translation adjustments under net assets and included in non-controlling interests in the equity component. － 17 － (7) Principal accounting methods for hedge transactions (i) Hedge accounting methods The deferred hedge method is used. Forward exchange contracts which meet the criteria of the allocation method are accounted for by the allocation method. (ii) Hedge methods and hedge targets Hedge method Hedge targets (iii) Hedge policy Forward exchange contracts Scheduled transactions denominated in foreign currencies The Company carries out hedge transactions to hedge against the risk of fluctuations in foreign currency, in conformity with its internal rules. (iv) Methods for evaluating the effectiveness of hedges The effectiveness of the hedge is judged by comparing the cumulative total of the market fluctuations or the cash flow fluctuations for the hedge target and that of the market fluctuations or the cash flow fluctuations for the hedge method. (8) Amortization method and period for goodwill Goodwill is amortized over a period of 14 to 20 years by the straight-line method. (9) Scope of cash in consolidated cash flow statement Cash on hand, deposits that can be withdrawn on demand and short-term investments that will mature in three months or less that can be easily converted into cash with little risk of a change in value. (10) Other important items regarding the preparation of consolidated financial statements Not applicable. － 18 － (Changes in Accounting Policies) (Application of “Accounting Standard for Revenue Recognition,” etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter, the “Revenue Recognition Accounting Standard”), etc. from the beginning of the first quarter of the current consolidated fiscal year and recognizes revenue in the amount expected to be received in exchange for promised goods or services at the time when the control of the goods or services is transferred to customers. Major changes as a result of this application are as described below. 1. Variable Consideration and Consideration payable to a customer The Company previously recorded sales promotion expenses, etc. under selling, general and administrative expenses. The Company has now changed to a method to subtract such expenses from net sales. 2. Agent Transactions Regarding transactions involving certain products in the Food Business in which the Group acts as an agent in providing the products to customers, the Company previously recognized the gross amount of consideration to be received from customers as revenue. The Company has now changed to a method to recognize revenue at the net amount after deducting the amount to be paid to suppliers from the amount to be received from customers. The application of the Revenue Recognition Accounting Standard, etc. is based on the transitional treatment provided for in the proviso of Paragraph 84 of the Revenue Recognition Accounting Standard. The cumulative effect of the retroactive application of the new accounting policy, assuming that it has been applied to periods prior to the beginning of the current consolidated fiscal year, is added to or subtracted from retained earnings at the beginning of the current consolidated fiscal year, and the new accounting policy is applied from such beginning balance. Furthermore, “Notes and accounts receivable-trade,” which was presented under “Current assets” in the consolidated balance sheet for the previous fiscal year, is included in “Notes and accounts receivable-trade, and contract assets” from the current consolidated fiscal year. “Provisions for sales promotion expenses,” which was presented under “Current liabilities” in the consolidated balance sheet for the previous fiscal year, is recognized as refund liabilities and included in “Other” under current liabilities. However, in accordance with the transitional treatment provided for in Paragraph 89-2 of the Revenue Recognition Accounting Standard, the Company has not reclassified financial statements for the previous fiscal year based on the new presentation method. As a result, for the fiscal year ended March 31, 2022, net sales decreased by ¥20,454 million, cost of sales decreased by ¥8 million, selling, general and administrative expenses decreased by ¥20,488 million, and operating income, ordinary income, and income before income taxes increased by ¥42 million, respectively. In addition, the beginning balance of retained earnings decreased by ¥407 million. The effect on net assets per share, net income per share and diluted net income per share is immaterial. (Application of “Accounting Standard for Fair Value Measurement,” etc.) The “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) and other standards in Paragraph 19 of the “Accounting Standard for Fair Value Measurement” and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), we have decided to apply the new accounting policies set forth by the “Accounting Standard for Fair Value Measurement” into the future. These changes had no impact on the quarterly consolidated financial statements. (Changes in the Method of Presentation) (Consolidated Income Statement) “Foreign exchange gains,” which was included in “Other” under “Non-operating income” in the previous consolidated fiscal year, are presented separately in the current consolidated fiscal year, since this amount exceeded 10% of total non-operating income. In addition, government subsidies for the employment adjustment, which were presented separately as “Government subsidies for the employment adjustment” in the previous consolidated fiscal year, are included in “Other” under “Non-operating income” in the current consolidated fiscal year, since the net amount as “Government subsidies for the employment adjustment” accounted for less than 10% of total non-operating income. The consolidated financial statements for the previous consolidated fiscal year have been reclassified in order to reflect this change in presentation. As a result, the ¥162 million stated as “Government subsidies for the employment adjustment” and the ¥275 million stated as “Other” under “Non-operating income” in the consolidated income statement for the previous consolidated fiscal year were reclassified for statement as “Foreign exchange gain” of ¥58 million and “Other” of ¥380 million. “Government subsidies for the employment adjustment” included in “Other” under “Non-operating income” for the current consolidated fiscal year amounted to ¥18 million. － 19 － Furthermore, “Depreciation of inactive fixed assets,”