日本化薬（4272） – [Delayed]Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022

Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 May 12, 2022 Listed company: Nippon Kayaku Co., Ltd. (URL https://www.nipponkayaku.co.jp/english/) Listed stock exchange: First Section, Tokyo Stock Exchange Code No.: 4272 Representative (name, position): Atsuhiro Wakumoto, President Director in charge of inquiries: Tsutomu Kawamura, Executive Director, General Manager of Finance & Accounting Division, Financial Group Scheduled date of the Annual Shareholders Meeting: June 28, 2022 Scheduled date for start of dividend payments: June 29, 2022 Filing date of securities report: June 28, 2022 Preparation of supplementary materials for financial results: Yes Financial results presentation meeting: Yes (for securities analysts and institutional investors) 1. Consolidated Business Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021–March 31, 2022) (Figures shown are rounded down to the nearest million yen.) (1) Consolidated Operating Results % 6.6 184,805 Fiscal year ended March 31, 2022 Fiscal year ended March 31, 2021 Note: Comprehensive income (Percentages indicate amount of change from the same period of the previous fiscal year.) Net sales Operating income Ordinary income Million yen Million yen % Million yen % Profit attributable to owners of parent Million yen % 21,050 38.5 23,154 40.0 17,181 36.6 173,381 (1.0) 15,194 (13.1) 16,538 (8.3) 12,574 (1.9) Fiscal year ended March 31, 2022: 26,123 million yen (11.8%) Fiscal year ended March 31, 2021: 23,368 million yen (640.1%) Profit attributable to owners of par-ent per share–primary Yen Profit attributable to owners of par-ent per share–diluted Return on equity Ordinary income to total assets ratio Operating income to net sales ratio Yen 101.65 73.61 % 7.3 5.8 % 7.6 5.8 % 11.4 8.8 Fiscal year ended March 31, 2022 Fiscal year ended March 31, 2021 Reference: Equity in earnings of affiliates 101.70 73.62 Fiscal year ended March 31, 2022: 210 million yen Fiscal year ended March 31, 2021: 263 million yen (2) Consolidated Financial Position Million yen As of March 31, 20212 As of March 31, 2021 Reference: Equity As of March 31, 2022: 245,479 million yen As of March 31, 2021: 227,506 million yen 294,535 315,459 Million yen 246,425 228,273 Total assets Net assets Equity ratio Net assets per share % 77.8 77.2 Yen 1,459.06 1,332.06 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 (3) Status of Consolidated Cash Flows Cash flows from oper-ating activities Cash flows from in-vesting activities Cash flows from fi-nancing activities Million yen 23,141 24,408 Million yen (10,641) (17,606) Million yen (11,090) (8,402) Cash and cash equiva-lents at end of year Million yen 52,962 47,483 Fiscal year ended March 31, 2022 Fiscal year ended March 31, 2021 2. Status of Dividends Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Fiscal year ending March 31, 2023 (forecast) March 31, 2023) End of first quarter Dividend amount per share End of End of third second quarter quarter Yen End of year Total dividend payment (year) Dividend payout ratio (consolidated) Year – – – 15.00 15.00 20.00 – – – Million yen 15.00 30.00 25.00 40.00 5,123 6,730 20.00 40.00 % 40.7 39.3 – Dividend payout to net assets ratio (consolidated) % 2.3 2.9 3. Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022– Net sales (Percentages indicate amount of change from the same period of the previous fiscal year.) Profit attributable to owners Operating income Ordinary income Profit attributable to owners of parent Million yen % Million yen % Million yen % Million yen % 9.3 8,700 (20.2) 97,100 First half Full year Notes (1) Significant changes in subsidiaries during the fiscal period (changes in designated subsidiaries that result in 196,800 19,400 14,000 18,400 (12.6) 9,300 6,000 (21.4) (16.2) (34.8) (18.5) 6.5 35.66 83.21 of parent per share Yen changes in scope of consolidation): None (2) Changes to accounting policies and estimates and restatements [1] Changes to accounting policies associated with revision of accounting standards or similar items: Yes [2] Changes other than [1]: None [3] Changes to accounting estimates: None [4] Restatements: None Note: See “3. Consolidated Financial Statements and Notes to Consolidated Financial Statements, (5) Notes to Consolidated Financial Statements (Changes to Accounting Policies)” on page 15 of the Supplementary Infor-mation for further details. (3) Number of shares issued (common stock) [1] Number of shares issued at end of the fiscal period (including treasury stock) As of March 31, 2022: 170,503,570 shares As of March 31, 2021: 177,503,570 shares [2] Number of treasury stock at end of the fiscal period As of March 31, 2022: 2,257,985 shares As of March 31, 2021: 6,710,650 shares [3] Average number of shares during the fiscal period Fiscal year ended March 31, 2022: 168,942,203 shares Fiscal year ended March 31, 2021: 170,793,371 shares This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 Reference: Overview of Non-consolidated Business Results 1. Non-consolidated Business Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021–March 31, 2022) (1) Non-consolidated Operating Results (Percentages indicate amount of change from the same period of the previous fiscal year.) Million yen Million yen % Million yen Operating income Ordinary income 11,593 22.9 16,080 9,436 4.0 13,459 (0.3) Net income Net income per share Diluted net income per share Net sales 124,023 115,618 % 7.3 8.5 Million yen % 12,609 (44.2) 22,610 111.2 % 19.5 Yen – – Yen 74.63 132.38 Fiscal year ended March 31, 2022 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Fiscal year ended March 31, 2021 Total assets Net assets Equity ratio Net assets per share (2) Non-consolidated Financial Position Million yen As of March 31, 2022 As of March 31, 2021 Reference: Equity As of March 31, 2022: 184,800 million yen As of March 31, 2021: 180,428 million yen 236,430 230,810 Million yen 184,800 180,428 % 78.2 78.2 Yen 1,098.36 1,056.38 * Summary financial statements are not subject to audit by a certified public accountant or audit firm. * Analysis related to appropriate use of the business results forecasts, and other notes (Disclaimer concerning forward-looking statements) The information in this report constitutes forward-looking statements regarding future events and performance. This information is based on the beliefs and assumptions of management in light of information currently available to it at the time of announcement and subject to a number of uncertainties that may affect future results. Actual business results may differ substantially from the forecasts herein due to various factors. For matters pertaining to business forecasts, please refer to 1. Overview of Operating Results, Financial Position, and Future Outlook, (4) Future Out-look” on page 5 of the Supplementary Information. (How to obtain the supplementary materials for financial results) We have scheduled a briefing on financial results for securities analysts and institutional investors on Friday, May 13, 2022. The materials for the briefing will be posted on the corporate website. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 Supplementary Information Contents 1. Overview of Operating Results, Financial Position, and Future Outlook (1) Overview of Operating Results for the Fiscal Year Ended March 31, 2022 (2) Overview of Financial Position for the Fiscal Year Ended March 31, 2022 (3) Overview of Cash Flows for the Fiscal Year Ended March 31, 2022 (4) Future Outlook (5) Basic Policy Concerning Profit Distribution and Dividends for the Fiscal Year Ended March 31, 2022 and Fiscal Year Ending March 31, 2023 2. Basic Stance on Selection of Accounting Principles 3. Consolidated Financial Statements and Notes to Consolidated Financial Statements (1) Consolidated Balance Sheets (2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income (3) Consolidated Statements of Changes in Net Assets (4) Consolidated Statements of Cash Flows (5) Notes to Consolidated Financial Statements (Notes Regarding Assumptions for the Going Concern) (Changes to Accounting Policies) (Segment Information) (Significant Subsequent Events) 2 2 3 3 5 5 6 7 7 9 11 13 15 15 15 16 18 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 1 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 1. Overview of Operating Results, Financial Position, and Future Outlook (1) Overview of Operating Results for the Fiscal Year Ended March 31, 2022 In this fiscal year (April 1, 2021 to March 31, 2022), the global economy saw economic activity begin to return to normal and signs of economic recovery, due in part to progress on vaccinations for the novel coronavirus (COVID-19). However, the impacts of the semiconductor shortage and the automobile industry production cuts, caused by difficulty in procuring parts during the COVID-19 pandemic in Southeast Asia, were exacerbated in Japan and overseas. In the functional chemicals business, the need for semiconductor materials is increasing as rapid advances in digital technology lead to higher performance high-speed (5G) communications devices and other digital equipment, and increasingly sophisticated electronic equipment in vehicles. The global trends in energy and resource conserva-tion are also creating demand for development of new environmentally friendly materials and recycling technology. In the pharmaceuticals industry, we contribute to extending the healthy lifespan of people in Japan through in-novative drug development while ensuring a stable supply of high quality pharmaceuticals. We must do this to pass on a society to the next generation where all people in Japan can be assured of receiving quality medical care. Nip-pon Kayaku must swiftly and consistently engage in pharmaceutical research, development, manufacturing, and supply to meet these expectations. The automotive industry saw a rebound from the slump in global demand caused by the global spread of the novel coronavirus, with the exception of a few regions. However, the pace of overall automobile production decel-erated from the second quarter into the third quarter, owing to the impact of the semiconductor shortage. It is still unclear when the pandemic will end and the failure to resolve the global shortage of parts has also slowed the speed of recovery in automobile production subsequently. Amid these conditions, the Nippon Kayaku Group worked to implement the key themes and resolve the mid- and long-term key issues outlined in “KAYAKU Next Stage,” the mid-term business plan launched in the fiscal year ended March 31, 2020, while also making active use of flextime, telecommuting, and other systems to accommodate the restrictions on corporate activity. We took these steps to ensure the safety of employees working in the Company and at Group companies while also promoting efficient workstyles aimed at minimizing the impact on our business. As a result, consolidated net sales for the fiscal year ended March 31, 2022 totaled 184,805 million yen, an increase of 11,423 million yen (6.6%) year-on-year. Sales outperformed the previous fiscal year in all of the businesses. Consolidated operating income totaled 21,050 million yen, an increase of 5,856 million yen (38.5%) year-on-year, outperforming the previous fiscal year in all businesses. Consolidated ordinary income totaled 23,154 million yen, an increase of 6,615 million yen (40.0%) year-on-year, owing to foreign exchange gains. Profit attributable to owners of parent was 17,181 million yen, an increase of 4,607 million yen (36.6%) Regarding changes in accounting policies, the Company implemented the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, revised March 31, 2020) and other guidance from the beginning of this con-solidated fiscal year. We have therefore used numbers based on calculation methods subject to different standards than in the previous fiscal year. See 3. Consolidated Financial Statements and Notes to Consolidated Financial Statements, (5) Notes to Consolidated Financial Statements (Changes to Accounting Policies) for further details. year-on-year. Performance by business segment is as described below. [1] Functional Chemicals Business Sales rose to 77,152 million yen, an increase of 4,687 million yen (6.5%) year-on-year. The functional materials business as a whole outperformed the previous fiscal year. The outperformance re-sulted from strong sales of semiconductor materials such as epoxy resins, MEMS, and other resin composites. The strong performance resulted from an increase in demand for IT equipment for telecommuting from home and other uses, in addition to the proliferation of high-speed (5G) communication devices and IoT, and increasingly sophisti-cated electronic equipment in vehicles. The semiconductor manufacturing equipment added through business acqui-sition also contributed to performance. The color materials business as a whole outperformed the previous fiscal year. This outperformance was re-sulted from strong sales of colorants for inkjet printers for consumer use due to increased demand for printing while telecommuting from home as well as a rebound in demand for colorants for inkjet printers in industrial applications, materials for thermal paper, and dyes for textiles. The catalyst business underperformed the previous fiscal year despite strong orders both in Japan and exports overseas. The underperformance resulted from sales pushed earlier into the previous period and postponements caused by delays in the construction of customers’ plants due to COVID-19. In the Polatechno business, a rebound in demand for polarizing films for LCD projectors and dye-type polariz-This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 2 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 ing films, in addition to strong sales of components for X-ray analysis systems resulted in outperformance of the Polatechno business as a whole, compared with the previous fiscal year. Segment profit totaled 11,501 million yen, an increase of 4,183 million yen (57.2%) year-on-year. This in-crease resulted from growth in sales in the functional materials and Polatechno businesses. [2] Pharmaceuticals Business Sales reached 52,083 million yen, an increase of 1,641 million yen (3.3%) year-on-year. Pharmaceuticals in Japan were impacted by drug price revisions. Despite this, the contribution from the launch of the new generic anti-cancer drug PEMETREXED for I.V. Infusion in July combined with market penetration of the biomedicine PORTRAZZA® for lung cancer and growth in the switch to antibody biosimilars led to sales nearly on par with the previous fiscal year. Nippon Kayaku also concluded a domestic sales agreement for ALAGLIO® divided granules with SBI Pharmaceuticals Co., Ltd., which has approval for manufacture and sale of the photody-namic diagnostic agent. Nippon Kayaku launched sales in November 2021. Sales of active pharmaceutical ingredients for the Japanese domestic market underperformed while sales of contract production outperformed the previous fiscal year. Sales of diagnostic drugs and exports outperformed the previous fiscal year as demand rebounded from the impact of COVID-19. Segment profit totaled 8,645 million yen, an increase of 1,202 million yen (16.2%) year-on-year, owing to growth in sales of newly launched products and other products. [3] Safety Systems Business Sales reached 46,112 million yen, an increase of 4,115 million yen (9.8%) year-on-year. During this consolidated fiscal year, automobile production was firm as vehicle demand rebounded during the first half, with the exception of a few regions. However, the speed of the rebound slowed during the second half due to the emergence of geopolitical risk on top of the global shortage in the supply of automobile parts. Sales of airbag inflators in the domestic business outperformed the previous fiscal year due to strong demand in the first half of the period, while sales of micro gas generators for seatbelt pretensioners underperformed year-on-year. This resulted in year-on-year outperformance for the domestic business as a whole. The overseas business outperformed the previous fiscal year in sales of airbag inflators and micro gas genera-tors for seatbelt pretensioners, while underperforming the previous fiscal year in squib sales. The increase in sales led to segment profit of 6,306 million yen, an increase of 866 million yen (15.9%) from the previous fiscal year. [4] Other Sales rose to 9,456 million yen, an increase of 979 million yen (11.5%) year-on-year. In the agrochemicals business, exports underperformed and domestic sales outperformed the previous fiscal year. The agrochemicals business outperformed the previous fiscal year overall. Sales in the real estate and other business increased compared to the previous fiscal year. Segment profit totaled 1,842 million yen, an increase of 20 million yen (1.1%) year-on-year. (2) Overview of Financial Position for the Fiscal Year Ended March 31, 2022 Total assets were 315,459 million yen, an increase of 20,924 million yen from the end of the previous consolidated fiscal year. The main increases were in merchandise and finished goods, an increase of 7,788 million yen; cash and deposits, an increase of 5,152 million yen; accounts receivable-trade, an increase of 3,486 million yen; and raw materials and stores, an increase of 2,595 million yen. Liabilities were 69,034 million yen, an increase of 2,772 million yen compared to the end of the previous con-solidated fiscal year. The main increases were in income taxes payable, an increase of 2,125 million yen; accounts payable-other, an increase of 1,502 million yen; and deferred tax liabilities, an increase of 1,046 million yen. The main decrease was in long-term loans payable, a decrease of 2,296 million yen. Net assets were 246,425 million yen, an increase of 18,152 million yen compared to the end of the previous consolidated fiscal year. The main increases were in translation adjustments, an increase of 8,936 million yen; treas-ury stock, an increase of 5,248 million yen; and retained earnings, an increase of 3,959 million yen. (3) Overview of Cash Flows for the Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 (April 1, 2020–March 31, 2021) Fiscal year ended March 31, 2022 (April 1, 2021–March 31, 2022) Comparative change This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 3 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of the year Million yen 24,408 (17,606) (8,402) 47,483 23,141 (10,641) (11,090) 52,962 (1,267) 6,965 (2,687) 5,478 Net cash provided by operating activities amounted to 23,141 million yen (versus a cash inflow of 24,408 million yen in the previous fiscal year). The positive cash flow was primarily generated from profit before income taxes of 23,700 million yen and de-preciation and amortization of 13,570 million yen. The above factors more than compensated for an increase in inventories of 8,886 million yen, income tax paid of 4,058 million yen, and an increase in notes and accounts re-ceivable-trade of 1,590 million yen. Net cash used in investing activities totaled 10,641 million yen (versus a cash outflow of 17,606 million yen in the previous fiscal year). The net outflow was mainly due to expenditures of 8,696 million yen for the purchase of property, plant and equipment, 1,628 million yen for the purchase of shares of subsidiaries resulting in change in scope of consolidation, 1,109 million yen in payments for long-term prepaid expenses, and 561 million yen for purchase of shares of sub-sidiaries and associates. Net cash used in financing activities amounted to 11,090 million yen (versus a cash outflow of 8,402 million yen in the previous fiscal year). This was mainly due to expenditures of 5,070 million yen for dividends paid, 3,000 million yen for purchase of treasury stock, and 2,488 million yen for repayment of long-term loans. Reflecting the above cash flow performance, the balance of cash and cash equivalents at the end of the fiscal year ended March 31, 2022 was 52,962 million yen, an increase of 5,478 million yen from the end of the previous fiscal year. Reference: Trends in Cash Flow Indicators Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Equity ratio (%) Market-value-based eq-uity ratio (%) Ratio of cash flow to interest-bearing liabilities (years) 72.9 78.7 0.7 73.6 77. 1 0. 5 75.2 61.0 0.8 77.2 62.0 0.8 77.8 61.9 0.7 Interest coverage ratio 125.7 146.6 152.4 202.1 273.9 Equity ratio: Equity divided by total assets Market-value-based equity ratio: Total market value of shares divided by total assets Ratio of cash flow to interest-bearing liabilities: Interest-bearing debt divided by operating cash flows Interest coverage ratio: Operating cash flows divided by interest payments Notes 1: Each indicator is calculated using consolidated financial figures. 2: The total market value of shares is calculated on the number of total shares outstanding (less treasury 3: Operating cash flows makes use of the cash flows from operating activities. 4: Interest-bearing debt includes all liabilities declared in the Consolidated Balance Sheets on which stock) at end of year. interest is paid. (4) Future Outlook The resumption of economic activities from the COVID-19 pandemic can be expected to spur a rebound in the future business environment surrounding the Nippon Kayaku Group. However, high resource prices stemming from Russia’s invasion of Ukraine and disruption in the supply chain, mainly in marine shipping, are causing concern over a downswing in the economy. The Nippon Kayaku Group launched “KAYAKU Vision 2025 (KV25),” our mid-term business plan which began in the fiscal year ending March 31, 2023, amid these conditions. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 4 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 The Nippon Kayaku Group aims to respond flexibly to changes in the business environment and pursue opti-mal use of operating capital to increase the shareholder value, as well as expand existing businesses in global growth markets, accelerate the development of new businesses and new products, and enhance profits. • We are developing unique products in the functional chemicals business. In the functional materials business, the products being developed include high-performance resins for printed circuit boards used in proliferating high-speed (5G) communications in the information and communications fields and the increasingly sophis-ticated electronic equipment in vehicles, epoxy resins used in carbon fiber-reinforced plastics, and cleaners used for semiconductors. In the color materials business, such products include colorants for inkjet printers in industrial applications, materials for image sensors, and dichromatic colorants for light-controlled glass. In the catalyst business, products under development include high-yield catalysts for the manufacture of acrylic acid and methacrylic acid, which contribute to energy and resource conservation, and catalysts for manufac-turing completely green hydrogen using solar energy to contribute to the realization of a hydrogen-based so-ciety. In the Polatechno business, such products include durable polarizing films for head-up displays re-quired for installation in vehicles and high-powered components for X-ray analysis systems. • In the pharmaceuticals business, we will work to achieve market penetration of PORTRAZZA®, a biomedi-cine for lung cancer; ALAGLIO® divided granules, a photodynamic diagnostic agent; and the antibody bio-similars, INFLIXIMAB BS and TRASTUZUMAB BS. We are also working to expand our product line-up in cancer-related areas as a key initiative. This includes expansion of distinctive generic drugs created through ingenuity in pharmaceutical formulations. • In the safety systems business, we will work to develop new products in airbag inflators, micro gas generators for seatbelt pretensioners, squibs, actuators for vehicle hood-raising devices to protect pedestrians, and other products. We will also focus on developing new automotive safety components for rapidly evolving auto-mated driving technologies. In the fiscal year ending March 31, 2023, Nippon Kayaku forecasts net sales of 196,800 million yen, an in-crease of 6.5% year-on-year; operating income of 18,400 million yen, a decrease of 12.6% year-on-year; ordinary income of 19,400 million yen, a decrease of 16.2% year-on-year; and profit attributable to owners of parent of 14,000 million yen, a decrease of 18.5% year-on-year. The main exchange rate assumption for the business results forecast is JPY110/USD. (5) Basic Policy Concerning Profit Distribution and Dividends for the Fiscal Year Ended March 31, 2022 and Fiscal Year Ending March 31, 2023 [1] Basic Policy Concerning Profit Distribution The Nippon Kayaku Group focuses heavily on returning profits to shareholders. A medium-term payout ratio has been set at roughly 40% of profit attributable to owners of parent. This takes into account stable and consistent profit returns and the level of retained earnings. Retained earnings are to be allocated for capital investment and R&D investment in growing businesses to enhance the value of the Nippon Kayaku Group. We expect to increase the year-end dividend for the fiscal year ended March 31, 2022 to 25 yen per share, an-other 3 yen per share in addition to the 7 yen per share increase to 22 yen per share announced on January 28, 2022. Combined with the dividend paid at the end of the second-quarter, total dividends per share for the full year will be 40 yen. [2] Basic Policy Concerning Profit Distribution and Dividends for the Fiscal Year Ending March 31, 2023 The Nippon Kayaku Group focuses heavily on returning profits to shareholders. We have set the payout ratio at 40% of more of profit attributable to owners of parent during KV25, the mid-term business plan beginning in fiscal year ending March 31, 2023. This takes into account stable and consistent profit returns and the level of retained earnings. The Company will also be flexible in acquiring treasury shares as part of the return to shareholders, while securing sufficient retained earnings. Retained earnings will be used to invest in R&D, capital, and other investment and lending targeting sustained growth aimed at future development. We will target ROE of 8% or higher in the final fiscal year of KV25 and will continue to enhance corporate value. The dividend for next fiscal year is forecast at 40 yen per share. This will consist of a dividend of 20 yen per share at the end of the second quarter and a year-end dividend of 20 yen per share. 2. Basic Stance on Selection of Accounting Principles The Nippon Kayaku Group, for the time being, employs generally accepted accounting principles in Japan to pre-pare its consolidated financial statements. This decision takes into account comparability of different fiscal periods in the consolidated financial statements and with industry peers. It should be noted that the Company plans to adopt the use of the International Financial Reporting Standards (IFRS) in a timely and adequate fashion should certain circumstances in Japan and abroad give rise to this need. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 5 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 3. Consolidated Financial Statements and Notes to Consolidated Financial Statements (1) Consolidated Balance Sheets As of March 31, 2021 As of March 31, 2022 Million yen Assets Current assets Cash and deposits Notes and accounts receivable-trade Notes receivable-trade Accounts receivable-trade Electronically recorded monetary claims-operating Securities Merchandise and finished goods Work in process Raw materials and stores Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Land Construction in progress Other, net Total property, plant and equipment Intangible assets Goodwill Other Total intangible assets Investments and other assets Investment securities Long-term loans receivable Long-term prepaid expenses Net defined benefit asset Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 33,306 56,893 – – 1,930 14,811 28,996 926 15,305 4,748 (66) 156,852 42,925 27,405 9,088 6,057 3,504 88,980 2,543 4,294 6,837 33,651 632 842 4,246 595 1,920 (23) 41,864 137,683 294,535 38,459 – 1,612 59,107 1,868 15,186 36,784 1,149 17,901 3,832 (57) 175,843 43,469 26,923 9,264 6,074 3,329 89,060 3,016 4,569 7,586 33,511 681 1,489 4,572 866 1,911 (63) 42,970 139,616 315,459 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 6 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 As of March 31, 2021 As of March 31, 2022 Million yen 17,631 3,632 – 8,115 5,059 871 17 469 – 206 1,488 37,491 12,000 3,770 8,078 14 53 419 3,747 685 28,769 66,261 14,932 15,754 191,606 (7,872) 214,420 10,096 1,694 1,294 13,085 767 228,273 294,535 18,011 3,176 4,000 9,617 5,953 2,997 – – 490 177 1,335 45,760 8,000 1,474 9,124 21 – 380 3,488 784 23,273 69,034 14,932 15,759 195,566 (2,624) 223,633 9,818 10,630 1,396 21,846 945 246,425 315,459 Liabilities Current liabilities Notes and accounts payable-trade Short-term loans payable Current portion of bonds payable Accounts payable-other Accrued expenses Income taxes payable Provision for sales returns Provision for sales rebates Refund liability Provision for directors’ bonuses Other Total current liabilities Non-current liabilities Bonds payable Long-term loans payable Deferred tax liabilities Provision for directors’ retirement benefits Provision for repairs Net defined benefit liability Long-term deposits received Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Common stock Additional paid-in capital Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Unrealized holding gains on other securities Translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 7 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 (2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income Consolidated Statements of Income Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Million yen Net sales Cost of sales Gross profit on sales Reversal of provision for sales returns Provision for sales returns Net gross profit Selling, general and administrative expenses Selling expenses General and administrative expenses Total selling, general, and administrative expenses Operating income Non-operating income Interest income Dividend income Equity in earnings of affiliates Foreign exchange gains Insurance dividends received Other Total non-operating income Non-operating expenses Interest expense Foreign exchange losses Expenses from under-utilized real estate Other losses Total non-operating expenses Ordinary income Extraordinary income Gain on sale of non-current assets Gain on sales of investment securities Total extraordinary income Extraordinary loss Loss on disposal of non-current assets Impairment loss Loss on liquidation of subsidiaries and associates Loss on valuation of investment securities Total extraordinary loss Profit before income taxes Income taxes-current Income taxes-deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent 173,381 117,067 56,314 20 17 56,318 18,187 22,936 41,124 15,194 169 707 263 – 124 769 2,034 105 248 66 269 689 16,538 84 1,735 1,819 441 – 393 – 835 17,523 3,703 1,229 4,932 12,590 16 12,574 184,805 120,837 63,967 – – 63,967 18,816 24,099 42,916 21,050 178 813 210 596 11 683 2,495 82 – 48 260 391 23,154 1,394 390 1,785 618 91 – 528 1,238 23,700 5,728 727 6,455 17,244 63 17,181 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 8 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 Consolidated Statements of Comprehensive Income Profit Other comprehensive income Unrealized holding gains on other securities Translation adjustments Remeasurements of defined benefit plans Share of other comprehensive income of companies ac-counted for by the equity-method Total other comprehensive income Comprehensive income Comprehensive income attributable to: Owners of parent Non-controlling interests Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Million yen 12,590 17,244 2,241 6,346 2,201 (10) 10,778 23,368 23,290 78 (274) 9,054 106 (7) 8,878 26,123 25,942 180 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 9 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 (3) Consolidated Statements of Changes in Net Assets Fiscal year ended March 31, 2021 (April 1, 2020–March 31, 2021) Shareholders’ equity Common stock Additional Paid-in Capital Retained earnings Treasury stock Total share-holders’ equity 14,932 15,757 184,156 (7,871) 206,975 (0) (5,123) 12,574 (0) (3) Balance at beginning of the fiscal year Changes during the fiscal year Dividends paid Profit attributable to own-ers of parent Purchase of treasury stock Change in treasury stocks of parent arising from transactions with non-controlling sharehold-ers Net change in items other than shareholders’ equity Total changes during the fiscal year Balance at end of the fiscal year Balance at beginning of the fiscal year Changes during the fiscal year Dividends paid Profit attributable to owners of parent Purchase of treasury stock Change in treasury stocks of parent arising from transac-tions with non-controlling shareholders Net change in items other than shareholders’ equity Total changes during the fiscal year Balance at end of the fiscal year 2,240 2,240 10,096 Million yen (5,123) 12,574 2,191 2,191 1,294 (3) 6,283 6,283 1,694 – (3) 7,450 (0) 7,445 14,932 15,754 191,606 (7,872) 214,420 Accumulated other comprehensive income Unrealized holding gains on other securities Translation adjustments Remeasure-ments of defined benefit plans Total accumu-lated other comprehensive income Million yen Non-controlling interests Total net assets 7,856 (4,589) (897) 2,369 675 210,019 – – – – 10,715 10,715 13,085 92 92 767 (5,123) 12,574 (0) (3) 10,808 18,253 228,273 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 10 Balance at beginning of the fiscal year Cumulative effects of changes in accounting policies Restated balance Changes during the fiscal year Dividends paid Profit attributable to own-ers of parent Purchase of treasury stock Cancellation of treasury shares Disposal of treasury shares Transfer-restricted stock remuneration Change in treasury stocks of parent arising from transactions with non-controlling sharehold-ers Net change in items other than shareholders’ equity Total changes during the fiscal year Balance at end of the fiscal year Balance at beginning of the fiscal year Cumulative effects of changes in accounting policies Restated balance Changes during the fiscal year Dividends paid Profit attributable to own-ers of parent Purchase of treasury stock Cancellation of treasury shares Disposal of treasury shares Transfer-restricted stock remuneration Change in treasury stocks of parent arising from transactions with non-controlling sharehold-ers Net change in items other than shareholders’ equity Total changes during the fiscal year Balance at end of the fiscal year Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 (April 1, 2021–March 31, 2022) Common stock Additional Paid-in Capital Retained earnings Treasury stock Total share-holders’ equity 14,932 15,754 191,606 (7,872) 214,420 Shareholders’ equity Million yen 14,932 15,754 191,623 (7,872) 214,437 0 (0) 5 5 17 (5,085) 17,181 (8,147) (5) (3,000) 8,147 0 101 (5,085) 17,181 (3,000) 17 – 0 95 5 – 3,942 5,248 9,195 14,932 15,759 195,566 (2,624) 223,633 Accumulated other comprehensive income Unrealized holding gains on other securities Translation adjustments Remeasure-ments of defined benefit plans Total accumu-lated other comprehensive income Million yen Non-controlling interests Total net assets 10,096 1,694 1,294 13,085 767 228,273 10,096 1,694 1,294 13,085 767 228,290 (5,085) 17,181 (3,000) 17 – 0 95 5 8,936 8,936 102 102 8,760 8,760 9,818 10,630 1,396 21,846 178 178 945 8,939 18,135 246,425 (277) (277) This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 11 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 (4) Consolidated Statements of Cash Flows Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Million yen Cash flows from operating activities Profit before income taxes Depreciation and amortization Impairment loss Loss on liquidation of subsidiaries and associates Amortization of goodwill Increase (decrease) in other provisions Interest and dividend income Interest expense Foreign exchange losses (gains) Equity in (earnings) losses of affiliates Gain on sales of property, plant and equipment Loss (gain) on disposal of property, plant and equipment Loss (gain) on valuation of investment securities Loss (gain) on sales of investment securities (Increase) decrease in notes and accounts receivable-trade (Increase) decrease in inventories (Increase) decrease in prepaid expenses (Increase) decrease in accounts receivable-other (Increase) decrease in advance payments Increase (decrease) in notes and accounts payable-trade Increase (decrease) in notes and accounts payable-other Increase (decrease) in accrued expenses Increase (decrease) in net defined benefit liability (Increase) decrease in net defined benefit asset Other Subtotal Interest and dividends received Interest paid Income tax paid Income tax refund Net cash provided by operating activities Cash flows from investing activities Net decrease (increase) in time deposits Proceeds from withdrawal of time deposits Short-term loan advances Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sales of investment securities Proceeds from redemption of investment securities Purchase of shares of subsidiaries and associates Collection of long-term loans receivable Payments for long-term prepaid expenses Payment for retirement of property, plant and equipment Payments for acquisition of businesses Purchase of shares of subsidiaries resulting in change in scope of consolidation Other Net cash used in investing activities 17,523 12,810 – 366 663 (12) (876) 105 (1,635) (263) (84) 441 – (1,735) (3,734) 3,542 (140) 527 (44) 1,214 (83) 258 42 147 314 29,347 1,043 (120) (5,878) 17 24,408 (124) 248 (226) (12,827) 96 (360) (504) 2,229 167 (146) 0 (351) (336) (5,512) – 40 (17,606) 23,700 13,570 91 – 529 (48) (992) 82 (2,192) (210) (1,394) 618 528 (390) (1,590) (8,886) (76) 602 53 (330) 390 784 48 (299) 872 25,461 1,278 (84) (4,058) 543 23,141 (48) 70 – (8,696) 1,529 (412) (150) 529 199 (561) 5 (1,109) (359) – (1,628) (9) (10,641) This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 12 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Million yen Cash flows from financing activities Net increase (decrease) in short-term loans payable Repayment of long-term loans Purchase of treasury shares of subsidiaries Purchase of treasury stock Dividends paid Dividends paid to non-controlling interests Other Net cash provided by financing activities Effect of exchange rate change on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 267 (3,456) (11) (0) (5,110) (7) (82) (8,402) 2,421 820 46,663 47,483 (397) (2,488) (68) (3,000) (5,070) (26) (39) (11,090) 4,068 5,478 47,483 52,962 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 13 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 (5) Notes to Consolidated Financial Statements (Notes Regarding Assumptions for the Going Concern) No items to report (Changes to Accounting Policies) (Implementation of the Accounting Standard for Revenue Recognition and related guidance) The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, revised March 31, 2020; hereafter, the “Revenue Recognition Accounting Standard”) and related guidance were implemented from the beginning of the first quarter of consolidated fiscal year ended March 31, 2022. Under this standard, the amount the company expects to receive in exchange for goods and services is recognized as revenue when control over the promised goods or services is transferred to the customer. Nippon Kayaku and its domestic consolidated subsidiaries previously recog-nized revenue at the time of shipment, with the exception of consigned goods. Under this revised standard, the ful-fillment obligation will be deemed satisfied and revenue will be recognized when the products are delivered to the customer, for domestic sales, and when the products arrive at the location agreed upon with the customer, for export sales. In some transactions, the full amount the company expected to receive in exchange for goods or services was recognized as revenue. However, the Company has changed this method and now recognizes the net amount after deducting the amount paid to the supplier from the full amount to be received from the customer in transactions where the Nippon Kayaku Group serves as an agent in providing good or services to the customer. The implementation of the Revenue Recognition Accounting Standards and related guidance follows the transi-tional treatment in the exception clause of Paragraph 84 of the Revenue Recognition Accounting Standard. The new accounting standard was applied to the balance of retained earnings from the beginning of the period and retained earnings were adjusted for the cumulative impact assuming application of the new accounting standard retroactively before the beginning of the accounting period for the first quarter of consolidated fiscal year ended March 31, 2022. However, we have applied the method specified in Paragraph 86 of the Revenue Recognition Accounting Standard and have not retroactively applied the new accounting policy to contracts for which nearly all of the revenue recog-nized prior to the beginning of the first quarter of consolidated fiscal year ended March 31, 2022 was handled ac-cording to the previous accounting method. In the Consolidated Balance Sheets for the previous fiscal year, “Notes and accounts receivable-trade” was pre-sented in “Current assets.” This is presented as “Notes receivable-trade” and “Accounts receivable-trade” from the fiscal year ended March 31, 2022. The “Provision for sales rebates” presented in “Current liabilities” in the Consol-idated Balance Sheets for the previous fiscal year, is presented as “Refund liability” from fiscal year ended March 31, 2022. However, the consolidated financial statements of the previous fiscal year have not been restated accord-ing to the new method, as provided by the transitional treatment specified in Paragraph 89-2 of the Revenue Recog-nition Accounting Standard. The impact of these changes on the balance of retained earnings at the beginning of the period, consolidated profit and loss, and per share information for the consolidated fiscal year ended March 31, 2022 is minor. (Implementation of the Accounting Standard for Fair Value Measurement) The Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019; hereafter, “Fair Value Accounting Standard”) and related guidance were implemented from the beginning of the first quarter of consoli-dated fiscal year ended March 31, 2022. In accordance with the transitional treatment specified in Paragraph 19 of the Fair Value Accounting Standard and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the new accounting policy specified in the Fair Value Accounting Standard and related guidance will be applied in the future. The change did not have any impact on the quarterly consolidated financial statements. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 14 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 (Segment Information) [1] Summary of reportable segments The reportable segments of the Nippon Kayaku Group are structural units of the Group for which separate financial information can be acquired. These segments are subject to be examined periodically by the Board of Directors in order to evaluate business results and make decisions on the allocation of business resources. Business groups are established by product and service for each reportable segment within the Nippon Kayaku Group. Each group develops comprehensive domestic and overseas strategies for the products and services it han-dles, and introduces business activities accordingly. In light of this, the Nippon Kayaku Group primarily consists of product- and service-specific segments that are based on business divisions. “Functional chemicals business,” “Pharmaceuticals business,” and “Safety systems business” are three reportable segments. The types of main products and services provided by the reportable segments are shown in the table below. Reportable segment Sales segment Main products and services Functional chemi-cals business Functional materials Color materials Colorants for inkjet printers, dyes for inkjet textile printing, inks for Epoxy resins, maleimide resins, epoxy resin hardeners, reactive flame retardants, acrylic acid esters, UV-curable resins for resist, resist for MEMS (liquid and dry film resist), cleaners for LCDs and semiconduc-tors, liquid crystal sealants, semiconductor manufacturing equipment (laminator, remover, mounter, UV curing equipment) industrial inkjet printers, Image sensor materials, dichotomous colorants for dimmable glass, near infrared absorbers, dyes for textiles and paper, colorants for resins, materials for thermal paper Catalysts for the production of acrylic acid, acrolein and methacrylic acid Components for LCD displays, LCD projector components, compo-nents for X-ray analysis systems Anti-cancer drugs, biological drugs, cardiovascular agents, vitamin compounds and other metabolic agents, diagnostic drugs, embolization materials, pharmaceutical API and intermediates, food and food addi-tives, preservatives for food quality Airbag inflators, micro gas generators for seatbelt pretensioners, squibs Catalysts Polatechno Group Pharmaceuticals business Safety systems business ment [2] Methods for calculating the amounts for sales, profit (loss), assets, liabilities, and other items by reportable seg-The accounting treatment of the reportable segments is generally the same as described in Significant Accounting Policies for Preparing Consolidated Financial Statements. The profit reported in each reportable segment is operat-ing profit. Intersegment sales and transfers are calculated based primarily on market prices and manufacturing costs. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 15 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 [3] Information concerning the amounts for sales, profit (loss), assets, liabilities, and other items by reportable seg- Fiscal year ended March 31, 2021 (April 1, 2020–March 31, 2021) Reportable segments Sales to third parties 72,465 50,441 41,997 164,904 8,477 173,381 173,381 Functional chemicals business Pharma-ceuticals business Safety systems business Other (Note 1) Total Total Adjust-ments (Note 2) Consoli-dated (Note 3) Million yen 137 97 235 50,442 7,443 54,296 41,997 165,041 5,439 20,201 8,575 1,821 173,616 22,023 68,920 217,440 19,705 237,146 137 72,602 7,317 94,223 633 – 0 – – – – – 633 – 30 – 663 – 235) (235) 6,828) (57,389 ( – – – – 173,381 15,194 294,535 663 – 4,849 1,822 4,886 11,557 691 12,249 560 12,810 10,941 1,474 3,186 15,602 611 16,214 426 16,640 ment Sales Intersegment sales and transfers Total Segment profit Segment assets Other items Depreciation and amortization Amortization of goodwill Impairment loss Changes in the amount of property, plant and equipment and intangible assets Note 1: “Other” indicates a business segment that is not included in the reportable segments, including the agro-chemicals business and real estate business. Note 2: The amounts of adjustments are as shown below. (1) The 6,828 million yen downward adjustment to segment profit reflects a negative 6,825 million yen in corporate expense not allocable to the reportable segments and 3 million yen in eliminations for in-tersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments. (2) The 57,389 million yen adjustment to segment assets factors in 57,461 million yen in corporate assets not allocable to reportable segments and a negative 72 million yen in eliminations for intersegment transactions. Corporate assets primarily consist of excess operating funds (cash and securities) and long–term investment funds (investment securities, etc.) belonging to the parent company. (3) The 560 million yen adjustment to depreciation and amortization is related to corporate assets. (4) The 426 million yen increase adjustment to property, plant and equipment and intangible assets is related to the administrative divisions of the parent company head office. Note 3: Segment profit has been adjusted to correspond with the total operating income as shown in the consoli-dated statements of income. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 16 Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] For the Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2022 (April 1, 2021–March 31, 2022) Reportable segments Sales to third parties 77,152 52,083 46,112 175,348 9,456 184,805 184,805 Sales Intersegment sales and transfers Total Segment profit Segment assets Other items Depreciation and amortization Amortization of goodwill Impairment loss Changes in the amount of property, plant and equipment and intangible assets Functional chemicals business Pharma-ceuticals business Safety systems business Other (Note 1) Total Total Adjust-ments (Note 2) Consoli-dated (Note 3) Million yen 144 105 249 (249) 52,083 8,645 58,133 46,112 175,492 6,306 26,453 9,561 1,842 185,054 (249) 184,805 28,296 (7,245) 21,050 61,710 243,950 19,903 263,853 51,606 315,459 143 77,296 11,501 124,105 529 91 0 – – – – – 529 91 – – 529 91 – – – – 529 91 5,031 1,859 5,451 12,342 701 13,043 527 13,570 3,642 1,752 2,485 7,880 851 8,731 356 9,088 Note 1: “Other” indicates a business segment that is not included in the reportable segments, including the agro-chemicals business and real estate business. Note 2: The amounts of adjustments are as shown below. (1) The 7,245 million yen downward adjustment to segment profit reflects a negative 7,234 million yen in corporate expense not allocable to the reportable segments and 11 million yen in eliminations for in-tersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments. (2) The 51,606 million yen adjustment to segment assets factors in 55,828 million yen in corporate assets not allocable to reportable segments and a negative 4,222 million yen in eliminations for intersegment transactions. Corporate assets primarily consist of excess operating funds (cash and securities) and long–term investment funds (investment securities, etc.) belonging to the parent company. (3) The 527 million yen adjustment to depreciation and amortization is related to corporate assets. (4) The 356 million yen increase adjustment to property, plant and equipment and intangible assets is related to the administrative divisions of the parent company head office. Note 3: Segment profit has been adjusted to correspond with the total operating income as shown in the consoli-dated statements of income. (Significant Subsequent Events) No items to report This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. 17