TAIHEIYO CEMENT : REPORT 2021

Integrated Report

TAIHEIYO CEMENT

REPORT 2021

Financial Section

02 Consolidated Balance Sheets

04 Consolidated Statements of Income/

Consolidated Statements of Comprehensive Income

1. Consolidated Statements of Changes in Net Assets
2. Consolidated Statements of Cash Flows
3. Notes to the Consolidated Financial Statements

1. Consolidated Segment Information

Consolidated Balance Sheets

					(Millions of yen)
			Fiscal 2020	Fiscal 2021
			(As of March 31, 2020)	(As of March 31, 2021)
	Assets
	Current assets
	Cash and deposits		51,641		73,074
	Notes and accounts receivable - trade		159,048		142,515
	Electronically recorded monetary claims - operating		13,507		19,234
	Merchandise and finished goods		30,897		29,421
	Work in process		2,310		2,079
	Raw materials and supplies		45,075		43,873
	Short-term loans receivable		3,289		2,557
	Other		14,035		15,373
	Allowance for doubtful accounts		(1,302)		(795)
	Total current assets	318,502		327,333
	Non-current assets
	Property, plant and equipment
	Buildings and structures		490,824		491,247
	Accumulated depreciation		(351,877)		(352,836)
	Buildings and structures, net		138,947		138,410
	Machinery, equipment and vehicles		919,556		913,284
	Accumulated depreciation		(756,611)		(759,076)
	Machinery, equipment and vehicles, net		162,944		154,207
	Land		164,869		164,193
	Leased assets		53,175		51,601
	Accumulated depreciation		(31,234)		(31,201)
	Leased assets, net		21,941		20,400
	Construction in progress		30,665		37,186
	Other		66,706		68,239
	Accumulated depreciation		(41,521)		(42,294)
	Other, net		25,184		25,944
	Total property, plant and equipment	544,553		540,342
	Intangible assets
	Goodwill		179		159
	Other		29,634		28,033
	Total intangible assets	29,814		28,192
	Investments and other assets
	Investment securities		82,931		91,926
	Long-term loans receivable		1,880		1,538
	Retirement benefit asset		11,090		23,099
	Deferred tax assets		21,118		9,635
	Other		29,359		28,296
	Allowance for doubtful accounts		(6,327)		(6,137)
	Total investments and other assets		140,053		148,358
	Total non-current assets		714,420		716,893
	Total assets	1,032,923		1,044,227

				(Millions of yen)
		Fiscal 2020	Fiscal 2021
		(As of March 31, 2020)	(As of March 31, 2021)
Liabilities
Current liabilities
Notes and accounts payable - trade		83,430		73,596
Electronically recorded obligations - operating		5,330		7,744
Short-term borrowings		120,783		103,538
Commercial papers		12,000		-
Current portion of bonds		-		10,000
Income taxes payable		6,024		4,590
Provision for bonuses		6,158		6,265
Other provisions		139		404
Other		79,906		98,691
Total current liabilities	313,771		304,831
Non-current liabilities
Bonds payable		30,000		50,000
Long-term borrowings		103,332		84,563
Deferred tax liabilities		7,491		8,130
Retirement benefit liability		24,999		24,703
Provision for retirement benefits for directors		521		503
Provision for special repairs		128		180
Other provisions		828		511
Lease obligations		17,996		14,352
Asset retirement obligations		7,341		7,821
Other		53,270		41,807
Total non-current liabilities		245,910		232,574
Total liabilities	559,682		537,405
Net assets
Shareholders' equity
Share capital		86,174		86,174
Capital surplus		60,233		60,292
Retained earnings		326,086		365,593
Treasury shares		(16,098)		(26,113)
Total shareholders' equity	456,395		485,946
Accumulated other comprehensive income
Valuation difference on available-for-sale securities		6,723		12,429
Deferred gains or losses on hedges		(0)		1
Revaluation reserve for land		4,968		4,898
Foreign currency translation adjustment		(21,413)		(29,917)
Remeasurements of defined benefit plans		(9,995)		(2,438)
Total accumulated other comprehensive income		(19,716)		(15,025)
Non-controlling interests		36,563		35,899
Total net assets		473,241		506,821
Total liabilities and net assets	1,032,923		1,044,227

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TAIHEIYO CEMENT Financial Book 2021

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Consolidated Statements of Income

					(Millions of yen)
			Fiscal 2020	Fiscal 2021
			(April 1, 2019 through	(April 1, 2020 through
			March 31, 2020)	March 31, 2021)
	Net sales		884,350		863,903
	Cost of sales		689,321		672,631
Gross profit		195,029		191,272
Selling, general and administrative expenses
	Amortization of goodwill		89		53
	Other		133,930		127,608
	Total selling, general and administrative expenses		134,020		127,661
	Operating income		61,008		63,610
Non-operating income
	Interest income		540		601
	Dividend income		1,267		1,273
	Rental income from real estate		141		107
	Share of profit of entities accounted for using equity method		2,427		1,879
	Foreign exchange gains		1,035		1,042
	Other		2,661		3,524
	Total non-operating income		8,075		8,428
	Non-operating expenses
	Interest expenses		3,876		3,498
	Other		4,665		2,797
	Total non-operating expenses		8,541		6,295
	Ordinary income		60,541		65,744
Extraordinary income
	Gain on disposal of non-current assets		754		3,247
	Gain on sales of investment securities		205		3,567
	Compensation income		2,730		-
	Other		147		411
	Total extraordinary income		3,838		7,226
	Extraordinary losses
	Loss on disposal of non-current assets		5,580		5,494
	Loss on sales of investment securities		36		61
	Loss on valuation of investment securities		222		47
	Impairment loss		5,451		969
	Loss on temporary suspension of operations		-		547
	Other		1,311		744
	Total extraordinary losses		12,602		7,865
	Profit before income taxes		51,777		65,105
Income taxes - current		11,223		9,170
Income taxes - deferred		(300)		6,285
Total income taxes		10,923		15,455
Profit		40,854		49,649
Profit attributable to non-controlling interests		1,703		2,848
Profit attributable to owners of parent		39,151		46,800

Consolidated Statements of Comprehensive Income

					(Millions of yen)
			Fiscal 2020	Fiscal 2021
			(April 1, 2019 through	(April 1, 2020 through
			March 31, 2020)	March 31, 2021)
	Profit		40,854		49,649
	Other comprehensive income
	Valuation difference on available-for-sale securities	(1,720)		5,516
	Deferred gains or losses on hedges	3		1
	Foreign currency translation adjustment	(1,494)		(9,345)
	Remeasurements of defined benefit plans	(6,193)		7,463
	Share of other comprehensive income of entities accounted for using equity method	(302)		201
	Total other comprehensive income	(9,708)		3,837
	Comprehensive income	31,145		53,487
Comprehensive income attributable to
	Comprehensive income attributable to owners of parent	29,542		51,561
	Comprehensive income attributable to non-controlling interests	1,602		1,925

Consolidated Statements of Changes in Net Assets

																								(Millions of yen)
Fiscal 2020 (April 1, 2019 through March 31, 2020)
		Shareholders' equity								Accumulated other comprehensive income						Non-
												Valuation		Deferred				Foreign		Remeasurements		Total			Total net
		Share		Capital		Retained		Treasury		Total		difference			Revaluation				accumulated		controlling
								gains or			currency		of defined				assets
		capital		surplus		earnings		shares		shareholders'		on available-		losses on		reserve for		translation		benefit		other		interests
										equity		for-sale		hedges		land		adjustment		plans		comprehensive
												securities							income
Balance at beginning		86,174	60,408	294,265	(16,081)	424,767	8,688	(3)	5,019	(20,128)	(3,632)	(10,057)	35,935	450,645
of period
Cumulative effects					(48)			(48)													(57)	(106)
of changes in
accounting policies
Restated balance		86,174		60,408		294,217		(16,081)		424,718		8,688		(3)		5,019		(20,128)		(3,632)		(10,057)		35,878		450,539
Changes in items
during period
Change in
ownership interest
of parent due to		(220)					(220)															(220)
transactions with
non-controlling
interests
Dividends of					(7,350)			(7,350)															(7,350)
surplus
Profit attributable					39,151			39,151															39,151
to owners of parent
Purchase of							(60)	(60)															(60)
treasury shares
Disposal of treasury			35			43	78															78
shares
Increase by merger
of consolidated		10	68			78															78
subsidiary and
non-consolidated
subsidiary
Net changes in
items other than										(1,964)	3	(50)	(1,284)	(6,362)	(9,659)	684	(8,974)
shareholders'
equity
Total changes in		-	(174)	31,868	(17)	31,676	(1,964)	3	(50)	(1,284)	(6,362)	(9,659)	684	22,702
items during period
Balance at end of		86,174	60,233	326,086	(16,098)	456,395	6,723	(0)	4,968	(21,413)	(9,995)	(19,716)	36,563	473,241
period

																								(Millions of yen)
Fiscal 2021 (April 1, 2020 through March 31, 2021)
		Shareholders' equity								Accumulated other comprehensive income						Non-
												Valuation		Deferred				Foreign		Remeasurements		Total			Total net
		Share		Capital		Retained		Treasury		Total		difference			Revaluation				accumulated		controlling
								gains or			currency		of defined				assets
		capital		surplus		earnings		shares		shareholders'		on available-		losses on		reserve for		translation		benefit		other		interests
										equity		for-sale		hedges		land		adjustment		plans		comprehensive
												securities							income
Balance at beginning		86,174	60,233	326,086	(16,098)	456,395	6,723	(0)	4,968	(21,413)	(9,995)	(19,716)	36,563	473,241
of period
Cumulative effects
of changes in
accounting policies
Restated balance		86,174		60,233		326,086		(16,098)		456,395		6,723		(0)		4,968		(21,413)		(9,995)		(19,716)		36,563		473,241
Changes in items
during period
Change in
ownership interest
of parent due to		59					59															59
transactions with
non-controlling
interests
Dividends of					(7,292)			(7,292)															(7,292)
surplus
Profit attributable					46,800			46,800															46,800
to owners of parent
Purchase of							(10,015)	(10,015)															(10,015)
treasury shares
Disposal of treasury			(0)			0	0															0
shares
Increase by merger
of consolidated																								-
subsidiary and
non-consolidated
subsidiary
Net changes in
items other than										5,705	1	(69)	(8,504)	7,556	4,691	(663)	4,028
shareholders'
equity
Total changes in		-	58	39,507	(10,014)	29,551	5,705	1	(69)	(8,504)	7,556	4,691	(663)	33,579
items during period
Balance at end of		86,174	60,292	365,593	(26,113)	485,946	12,429	1	4,898	(29,917)	(2,438)	(15,025)	35,899	506,821
period

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TAIHEIYO CEMENT Financial Book 2021

TAIHEIYO CEMENT Financial Book 2021

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Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

					(Millions of yen)
			Fiscal 2020	Fiscal 2021
			(April 1, 2019 through	(April 1, 2020 through
			March 31, 2020)	March 31, 2021)
	Cash flows from operating activities
	Profit before income taxes		51,777		65,105
	Depreciation		48,863		52,683
	Amortization of goodwill		89		53
	Share of loss (profit) of entities accounted for using equity method		(2,427)		(1,879)
	Loss (gain) on valuation of investment securities		222		47
	Decrease (increase) in net retirement benefit asset and liability		(1,172)		(905)
	Increase (decrease) in provision for retirement benefits for directors		(14)		(17)
	Increase (decrease) in provision for bonuses		109		107
	Increase (decrease) in allowance for doubtful accounts		91		(74)
	Increase (decrease) in other provisions		42		0
	Interest and dividend income		(1,808)		(1,874)
	Interest expenses		3,876		3,498
	Loss (gain) on sales of investment securities		(169)		(3,505)
	Loss (gain) on disposal of non-current assets		4,825		2,246
	Impairment loss		5,451		969
	Decrease (increase) in trade receivables		20,800		8,418
	Decrease (increase) in inventories		(1,661)		(122)
	Increase (decrease) in trade payables		(16,151)		(6,568)
	Other, net		(6,674)		3,866
	Subtotal		106,069		122,048
	Interest and dividends received		2,321		2,455
	Interest paid		(3,890)		(3,521)
	Income taxes paid		(13,597)		(10,579)
	Cash flows from operating activities		90,902		110,403
	Cash flows from investing activities
	Decrease (increase) in time deposits		515		(3,675)
	Purchase of non-current assets		(66,378)		(58,656)
	Proceeds from sales of non-current assets		1,367		4,187
	Purchase of other depreciated assets		(240)		(167)
	Proceeds from sales of other depreciated assets		0		38
	Purchase of investment securities		(539)		(117)
	Proceeds from sales and redemption of investment securities		393		709
	Proceeds from sales of shares of subsidiaries resulting in change in scope of		-		6,318
	consolidation
	Loan advances		(3,240)		(2,723)
	Collection of loans receivable		2,782		3,302
	Other, net		(193)		2,974
	Cash flows from investing activities		(65,534)		(47,809)
	Cash flows from financing activities
	Net increase (decrease) in short-term borrowings		200		(19,596)
	Increase (decrease) in commercial papers		8,000		(12,000)
	Proceeds from long-term borrowings		44,663		21,179
	Repayments of long-term borrowings		(56,077)		(36,573)
	Proceeds from issuance of bonds		-		30,000
	Redemption of bonds		(10,000)		-
	Proceeds from sales of treasury shares		94		0
	Purchase of treasury shares		(22)		(10,064)
	Dividends paid		(7,350)		(7,292)
	Dividends paid to non-controlling interests		(681)		(873)
	Other, net		(8,262)		(8,732)
	Cash flows from financing activities		(29,436)		(43,952)
	Effect of exchange rate change on cash and cash equivalents		(301)		(569)
Net increase (decrease) in cash and cash equivalents		(4,369)		18,071
Cash and cash equivalents at beginning of period		50,084		45,748
Increase in cash and cash equivalents resulting from merger		33		-
Cash and cash equivalents at end of period		45,748		63,819

1. Notes, etc. on Significant Matters serving as the Basis for Preparation of Consolidated Financial Statements

1. Matters concerning Scope of Consolidation
2. 1. Number of consolidated subsidiaries and name of major consolidated subsidiaries

Number of consolidated subsidiaries: 114 Name of major consolidated subsidiaries:

Major consolidated subsidiaries are DC Co., Ltd., Clion Co., Ltd., Myojyo Cement Co., Ltd., Taiheiyo Materials Corporation, CalPortland Company, Jiangnan-Onoda Cement Co., Ltd., Dalian Onoda Cement Co., Ltd., Nghi Son Cement Corporation and Taiheiyo Cement Philippines, Inc.

Of note, Hokkaido TC Namakon Co., Ltd. was excluded from the scope of consolidation as a result of disappearance due to absorption-type merger wherein the Company's consolidated subsidiary Hokkaido Taiheiyo Namakon Co., Ltd. is the surviving company. Ibaraki Taiheiyo Co., Ltd. and one other company completed the liquidation process, and Qinhuangdao Asano Cement Co., Ltd. completed the transfer of equity, so these subsidiaries were excluded from the scope of consolidation.

1. 1. Name, etc. of major unconsolidated subsidiaries Name of major unconsolidated subsidiaries:
      Major unconsolidated subsidiaries are Taiheiyo Singapore Pte., Ltd., and Taiheiyo Services Co., Ltd.

   Reason for excluding from the scope of consolidation:

   All unconsolidated subsidiaries are small companies, and none of them have a material impact on the consolidated financial statements in terms of the amount of equity interest including total assets, net sales, net income and retained earnings as a whole; accordingly, they were excluded from the scope of consolidation.

2. Matters concerning Application of Equity Method
3. 1. Number of unconsolidated subsidiaries and affiliates accounted for by the equity method and name of major companies, etc.

Number of unconsolidated subsidiaries accounted for by the equity method: 6

Name of major companies, etc.:

Major unconsolidated subsidiary accounted for by the equity method is Taiheiyo Singapore Pte., Ltd.

Number of affiliates accounted for by the equity method: 37 Name of major companies, etc.:

Major equity-method affiliates are Okutama Kogyo Co., Ltd., A&A Material Corporation, Fuji P.S Corporation, Yakushima Denko Co., Ltd., Chichibu Railway Co., Ltd. and Azuma Shipping Co., Ltd.

1. Name, etc. of unconsolidated subsidiaries and affiliates not accounted for by the equity method

Name of major companies, etc.: (Unconsolidated subsidiaries)

Unconsolidated subsidiaries not accounted for by the equity method are Taiheiyo Services Co., Ltd. and 61 other companies.

(Affiliates)

Affiliates not accounted for by the equity method are Cement Terminal Corporation and 64 other companies.

Reason for not applying the equity method:

Unconsolidated subsidiaries and affiliates not accounted for by the equity method were excluded from the scope of the equity method because the amount of equity interest including their respective

net income and retained earnings all have minimal impact on the consolidated financial statements.

(iii) Particularly noteworthy matters concerning procedures for application of the equity method

For companies accounted for by the equity method whose fiscal year-end is different from the consolidated fiscal year-end, their respective non-consolidated financial statements for the most recent fiscal year have been used.

(3) Fiscal periods of consolidated subsidiaries

Of the consolidated subsidiaries, Taiheiyo Cement U.S.A., Inc., Jiangnan-Onoda Cement Co., Ltd., Nghi Son Cement Corporation, Dalian Onoda Cement Co., Ltd., GLACIER NORTHWEST, INC., Taiheiyo Cement (China) Investment Co., Ltd., CalPortland Company, Shanghai Sanhang Onoda Cement Co., Ltd., Taiheiyo Cement Philippines, Inc., Coronet Industries Co., Ltd. and nine other companies use December 31 as their closing date. In preparing the consolidated financial statements, the Company used financial statements prepared as of that closing date and made necessary consolidation adjustments for important transactions that occurred in the period through the consolidated closing date.

1. Matters concerning Accounting Policies
2. 1. Standards and methods for valuation of significant assets a. Available-for-sale securities
   2. 1. Securities with market value:

Such securities are marked to market by the Company and some consolidated subsidiaries based on the average market price, etc. in the one-month period before the end of the fiscal year.

(Valuation differences are all charged/credited directly to net assets, and the cost of selling the securities is determined by

the moving-average method.)

1. 1. Securities without market value:
      Such securities are stated at cost, based on the moving-average method.
2. Derivatives

Derivatives are stated at market value. c. Inventories

Inventories are mainly stated at cost, which is determined by the moving average method (subject to write-down due to diminished profitability.)

However, the cost for contract work in process is determined by the specific identification cost method.

Of note, inventories at the consolidated subsidiary in the U.S. are stated at lower of cost or market, based on the gross average method.

1. Depreciation method for significant depreciable assets a. Property, plant and equipment (excluding lease assets)

The declining balance method is adopted by the Company and its domestic consolidated subsidiaries, and the straight-line method by its consolidated overseas subsidiaries.

However, the depreciation of buildings (excluding accompanying facilities) purchased on and after April 1, 1998 and accompanying facilities and structures purchased on and after April 1, 2016 is computed based on the straight-line method by the Company and its domestic consolidated subsidiaries.

The range of useful lives of main property, plant and equipment is as follows:

Buildings and structures:10 - 75 years

Machinery, equipment and vehicles: 4 - 15 years b. Intangible assets (excluding lease assets)

Intangible assets are amortized by the straight-line method. However, mining rights are mainly amortized by the unit of production method and software is amortized by the straight-line method over its useful life assuming in-house use (5 years).

c. Lease assets

Lease assets are depreciated by the straight-line method that assumes their lease periods are useful lives and residual values are zero (or if there is a residual value guarantee, the guaranteed residual value).

1. Accounting standards for significant provisions a. Allowance for doubtful accounts

Allowance for doubtful accounts is provided for by the Company and its domestic consolidated subsidiaries at the estimated uncollectible amount, which is calculated based on the historical credit loss ratio with respect to ordinary receivables, and in consideration of collectibility on a case-by-case basis with respect to specified receivables such as doubtful accounts. Consolidated overseas subsidiaries mainly provide for such allowance at

the estimated uncollectible amount with respect to specified receivables.

b. Provision for bonuses

To prepare for the payment of bonuses payable to employees, the Company and its domestic consolidated subsidiaries record the estimated payable amount to be borne in the consolidated fiscal year under review.

c. Provision for directors' retirement benefits

Certain consolidated subsidiaries provide for retirement allowances for directors and corporate auditors at the necessary payment amount in full at the year-end based on their internal regulations.

d. Provision for special repairs

To prepare for the payment of expenses for special repairs of business-purpose facilities, certain consolidated subsidiaries record the estimated amount for repairs in the future.

1. Accounting standards for revenue recognition of construction Completed construction volume is recorded under the construction progress method (percentage of completion estimates for construction are via the cost to cost method) for construction for which progress results can be determined with certainty by the end of the fiscal year under review, and for others, the completed construction method is applied.
2. Standards for translating significant foreign currency assets and liabilities into Japanese yen
   Monetary claims and obligations denominated in foreign currencies are translated into Japanese yen based on the spot exchange rate as at the consolidated closing date, and translation gains (losses) are recognized in profit (loss). Of note, consolidated overseas subsidiaries' assets and liabilities are translated into Japanese yen based on the spot exchange rate as at the consolidated closing date, revenue and expenses are translated into Japanese yen based on the average exchange rate for the fiscal year, and translation gains (losses) are included in "Foreign currency translation adjustments" and "Non- controlling interests" under Net Assets.
3. Significant hedge accounting methods a. Method of hedge accounting

Gains/losses on hedges are deferred. Allocation treatment is applied when the currency swaps meet the conditions for application of such allocation treatment. Exceptional treatment is applied when the interest rate swaps meet the conditions for application of such exceptional treatment.

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b. Hedging instruments and hedged items Hedging instruments:

Interest rate swaps, currency swaps, raw materials and fuel swaps, interest-rate options, currency options, raw materials and fuel options and forward exchange contracts are employed as hedging instruments.

Hedged items:

Borrowings, accounts payable-trade, raw materials and fuel, etc. c. Hedging policy

Hedging is limited to those aimed at hedging against the risk of interest rate, exchange rate, and raw materials and fuel price fluctuations of the hedged items and those aimed at eliminating hedging.

d. Method of evaluating hedge effectiveness

Hedge effectiveness is verified on a transaction-by-transaction basis at the end of each accounting period with respect to hedging instruments and hedged items; however, if the principal, interest rate, period, and other such significant terms of the hedging instruments and hedged items are the same, such verification is omitted.

(vii) Method and period of amortization of goodwill

Goodwill is amortized over the estimated number of years in cases that the number of years can be estimated based on practical judgment starting from the fiscal year of acquisition while the entire amount of goodwill is amortized in the fiscal year of acquisition without analyzing the causes in cases that the amount of goodwill is insignificant.

(viii) Accounting procedures for liability for retirement benefits

To prepare for the payment of retirement benefits to employees, liability for retirement benefits is recorded in the amount of retirement benefit obligation less plan assets based on the projected amount at the end of the consolidated financial year under review. Actuarial gains and losses and prior service cost are amortized in equal amounts as expenses by the straight-line method over a certain number of years (primarily 10 years) within the average remaining years of service of employees at the time of accrual, commencing in the consolidated fiscal year following the year of accrual for actuarial gains and losses and in the consolidated fiscal year of accrual for prior service cost.

Unrecognized actuarial gains and losses and unrecognized prior service cost are recorded as "Retirement benefits liability adjustments" in "Accumulated other comprehensive income" under Net Assets, after making tax effect adjustments. When the value of plan assets exceeds the amount of the retirement benefit obligation, the amount of such excess is recorded in "Assets for retirement benefits".

1. Accounting treatment of consumption tax, etc. Tax exclusion method is applied.
   Of note, there were no applicable transactions in consolidated overseas subsidiaries.
2. Amounts shown in these consolidated financial statements are rounded down to the nearest million yen.

2. Changes in Accounting Policy

Not applicable.

3. Changes in Presentation

The Company has applied the "Ministerial Ordinance for Partial Revision of the Regulation on Corporate Accounting" (Ministry of Justice Order No. 13; August 12, 2020) in accordance with the "Accounting Standard for Disclosure of Accounting Estimates" (ASBJ Statement No. 31, March 31, 2020) from the consolidated financial statements

for the consolidated fiscal year under review and has provided related disclosures in "4. Notes on Accounting Estimates."

4. Notes on Accounting Estimates

Among the items recorded in the consolidated financial statements for the consolidated fiscal year under review based on accounting estimates, the items that may have a significant impact on the consolidated financial statements for the next consolidated fiscal year are as follows.

Impairment of noncurrent assets

(i) Amount recorded in the consolidated financial statements for the

consolidated fiscal year under review	¥338,738 million
Noncurrent assets for business of subsidiaries

1. Information contributing to the understanding of the contents of accounting estimates
   Regarding noncurrent assets for business, if there are indications of impairment, the necessity of recognizing an impairment loss is determined by comparing the total amount of undiscounted cash flows obtained from the asset group with the carrying amount. If it is determined that the recognition of an impairment loss is necessary, the carrying amount is reduced to its recoverable amount, and such reduction is recorded as an impairment loss.
   Concerning certain subsidiaries operating the ready-mixed concrete business in the Tokyo area (hereinafter "Tokyo area ready- mixed concrete subsidiaries"), although operating loss was recorded

8	TAIHEIYO CEMENT Financial Book 2021

in the previous consolidated fiscal year, operating results stayed slightly positive in the consolidated fiscal year under review, and the Company expects positive operating results in the next consolidated fiscal year, in consideration of business plans of the said subsidiaries. Accordingly, the Company determined that there were no indications of impairment of noncurrent assets for business in the amount of ¥7,979 million at the Tokyo area ready-mixed concreate subsidiaries. The major assumptions used for the business plans of the Tokyo area ready-mixed concrete subsidiaries include demand forecasts for ready-mixed concrete in the Tokyo area, share of sales against competitors, unit sales prices, purchase prices of aggregates, and outsourced transportation costs, and these may be affected by future economic conditions, etc.

5. Notes to the Consolidated Balance Sheets

1. Assets pledged as collateral and secured liabilities
2. 1. Assets pledged as collateral

			(Million of yen)
			Fiscal 2021
			(As of March 31, 2021)
Cash and deposits		653
Property, plant and equipment		35,362
Intangible assets		768
Investment securities		86
Investments and other assets-other		1,751
Total		38,621
(ii) Secured liabilities	(Million of yen)
			Fiscal 2021
			(As of March 31, 2021)
Notes and accounts payable-trade		4,538
Short-term loans payable		5,333
Long-term loans payable		2,121
Total		11,993

1. Accumulated depreciation of property, plant and equipment
   (Million of yen)

Fiscal 2021

(As of March 31, 2021)

		1,185,409
(3) Guarantee obligations		(Million of yen)
			Fiscal 2021
			(As of March 31, 2021)
	Guarantees for loans payable from banks, etc.		1,910
	Guarantees for account payables to Ready-	1,462
	mixed Cooperative Association, etc.
(4) Discounted trade notes receivable		(Million of yen)
			Fiscal 2021
			(As of March 31, 2021)
			2,349
	Trade notes receivable transferred by		930
	endorsement
	Discounts on electronically recorded		6
	monetary claims-operating

1. Revaluation of Land
   A&A Material Corporation and Chichibu Railway Co., Ltd., the Company's affiliates accounted for by the equity method, revalued their business- purpose land in accordance with the Act on Revaluation of Land (Act No. 34, promulgated on March 31, 1998) and the Act on Partial Revision of the Act on Revaluation of Land (revised on March 31, 1999). With respect to the valuation difference, the amount of the Company's share in the valuation difference is recorded in Net Assets as "Revaluation reserve for land."

6. Notes to the Consolidated Statements of Income

Loss on temporary suspension of operations

Fixed costs recognized during the period when operations of plants and commercial facilities were suspended in response to requests from central and local governments for the purpose of preventing the spread of COVID-19 were recorded as extraordinary loss at the Group's consolidated subsidiaries.

7. Notes to the Consolidated Statements of Changes in Net Assets

1. Class and total number of outstanding shares as at the end of the consolidated fiscal year under review:
   Common stock 127,140,278 shares

1. Matters concerning dividends
2. 1. Amount of dividends paid

Resolution	Class of	Total amount of	Amount of	Record	Effective
	shares	dividends	dividend	date	date
		(millions of yen)	per share
Ordinary General	Common	3,681*1	¥30.00	March 31,	June 29,
Meeting of	stock			2020	2020
Stockholders held
on June 26, 2020
Meeting of Board	Common	3,621*2	¥30.00	September	December
of Directors held	stock			30, 2020	2, 2020
on November 10,
2020

*1. Includes dividends of ¥5 million associated with treasury stock held by consolidated subsidiaries.

*2. Includes dividends of ¥5 million associated with treasury stock held by consolidated subsidiaries.

1. Dividends whose record date is at the end of the consolidated fiscal year under review whereas its effective date falls in the next consolidated fiscal year
   The following matters concerning dividends for common stock

are scheduled to be proposed at the Ordinary General Meeting of Stockholders.

Total amount of dividends:	¥3,566 million
Amount of dividend per share:	¥30.00
Record date:	March 31, 2021
Effective date:	June 30, 2021

Of note, the source of funding dividend payments is scheduled to be retained earnings.

Total amount of dividends includes dividends of ¥5 million associated with treasury stock held by consolidated subsidiaries.

1. Class and number of shares to be issued upon exercise of share options at the end of the consolidated fiscal year under review (excluding those for which the first day of the exercise period has not yet arrived)
   Not applicable

8. Notes on Financial Instruments

1. Matters concerning Status of Financial Instruments
   The Taiheiyo Cement Group limits its fund management activities to short-term deposits, etc., and raises funds principally by bank borrowings and corporate bonds. It performs derivative transactions for the purpose of averting risks due to future exchange-rate, interest- rate, and raw materials and fuel price fluctuations and does not perform speculative transactions.
   While notes and accounts receivable-trade and electronically recorded monetary claims-operating, which are operating receivables, are exposed to credit risk in relation to customers, each responsible department periodically identifies the financial position, etc. of the counterparties and manages the due date and outstanding balance with respect to each counterparty, in an effort to identify and reduce collectibility concerns in the early stages. In addition, operating receivables denominated in foreign currencies related to export transactions are exposed to exchange rate fluctuation risks. Investment securities are primarily shares of companies with which the Company has a business relationship, and are exposed to the risk of market price fluctuations.
   Notes and accounts payable-trade and electronically recorded obligations-operating, which are operating payables, have payment due dates within one year. For a portion of raw materials and fuel procurement, derivative transactions (foreign exchange contracts and raw fuel swap transactions) are used as hedging methods to limit risk of exchange and price fluctuations of raw materials and fuel. Among borrowings, short-term loans payable are mainly funds raised in connection with business transactions, and long-term loans payable and bonds payable are principally funds raised for the purpose of making capital investments. Some long-term loans payable have financial covenants and may influence liquidity risks regarding fund raising activities. Borrowings with variable interest rates are exposed to interest rate fluctuation risk; however, to avert the risk of fluctuations of interest payable and fix interest expenses for some long-term loans payable, derivatives (interest rate swap transactions) are used as hedging instruments on a contract-by-contract basis. Additionally, borrowings in foreign currencies are exposed to foreign exchange risk, but of these, for a portion of long-term borrowings, derivative transactions (currency swap transactions) are used as a hedging method to avoid foreign currency fluctuation risk.
2. Matters concerning Market Value, etc. of Financial Instruments
   The consolidated balance sheet amount and market value of financial instruments and the difference between the two at March 31, 2021

(i.e., end of the consolidated fiscal year under review) are shown in the following table.

						(Unit: Millions of yen)
				Consolidated		Market value		Difference
				balance sheet
				amount
		(i) Cash and deposits		73,074		73,074		-
	(ii) Notes and accounts receivable-		142,515		142,515		-
		trade
		(iii) Electronically recorded monetary		19,234		19,234		-
		claims-operating
		(iv) Investment securities		46,689		41,309		(5,380)
		Total assets		281,513		276,132		(5,380)
		(v) Notes and accounts payable-trade		73,596		73,596		-
	(vi) Electronically recorded		7,744		7,744		-
		obligations-operating
		(vii) Short-term loans payable		64,967		64,967		-
	(viii) Bonds payable		60,000		59,679		(320)
	(ix) Long-term loans payable		123,134		123,960		826
		Total liabilities		329,442		329,948		505
	(x) Derivative transactions*		1,270		1,270		-

* Net receivables and payables arising from derivative transactions are shown in net amount.

(Notes) 1. Calculation method of market value of financial instruments and matters related to securities and derivative transactions

1. Cash and deposits, (ii) Notes and accounts receivable- trade and (iii) Electronically recorded monetary claims- operating
   Since these items are settled in a short period of time, their market value is more or less the same as carrying

value; therefore, the carrying value is adopted.

1. Investment securities
   The market value of investment securities is based on quoted market prices.
2. Notes and accounts payable-trade, (vi) Electronically recorded obligations-operating, (vii) Short-term loans payable

Since these items are settled in a short period of time, their market value is more or less the same as carrying value; therefore, the carrying value is adopted.

1. Bonds payable
   The calculation method involves discounting the sum of the principal and interest by an interest rate that takes into account the credit risk. The presentation of market value of bonds payable includes the current portion of bonds.
2. Long-termloans payable
   The calculation method involves discounting the sum of the principal and interest by the interest rate that is expected to be applied if a similar new loan is taken out. The presentation of market value of long-term loans payable includes the current portion of long-term loans payable. A portion of long-term loans payable are subject to appropriated treatment for currency swaps and exceptional treatment for interest rate swaps (see (x) below), and the calculation method involves discounting the sum of the principal, which is an aggregate of the currency swap and interest rate swap, with a reasonably- estimated interest rate that would be applied if a similar loan is taken out.
3. Derivative transactions
   The market value of derivatives is calculated based on prices, etc. presented by financial institutions with which derivative transactions are performed. Of note, those subject to allocation treatment for exchange rate swaps and exceptional treatment for interest rate swaps are processed integrally with the hedged long-term loans payable, so their market value is included in the presentation of such long-term loans payable (see (ix) above).

2. Unlisted stocks and investments in capital, etc. (consolidated balance sheet amount: ¥45,236 million) are not included in "(iv) Investment securities" as it is deemed extremely difficult to determine their market value because there is no quoted market price and it is impossible to estimate future cash flows.

9. Notes on Real Estate for Rent, etc.

1. Matters concerning status of real estate for rent, etc.
   The Company and some of its consolidated subsidiaries have plants, warehouses (including land), etc. for lease purposes in Tokyo and other regions.
2. Matters concerning market value of real estate for rent, etc.

		(Unit: Millions of yen)
Consolidated balance sheet amount		Market value
50,837	114,157

(Notes) 1. Consolidated balance sheet amount equals the acquisition cost minus accumulated depreciation and accumulated

TAIHEIYO CEMENT Financial Book 2021

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