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Annual Securities Report
( T he 106 th business term )
From Jan uary 1, 2019 to Dec ember 31, 2019
23 - 1 4 - Chome, Bunkyo, Fukui - City , 910 - 8670 Japan
NICCA CHEMICAL CO .,LTD.
( Translation purposes only )
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1 Non - consolidated Financial statements, other
Non - consolidated Financial statements
1) Balance sheet
(Millions of yen)
As of December 31, 2018 As of December 31, 2019
Assets
Current assets
Cash and deposits 1,147 675
Notes receivable – trade ※ ２ 387 ※ ２ 347
Accounts receivable – trade ※ １ 5,183 ※ １ 5,426
Merchandise and finished goods 2,619 3,145
Work in process 383 297
Raw materials and supplies 1,120 1,157
Prepaid expenses 144 180
Short - term loans receivable from
subsidiaries and associates ※ １ 2,588 ※ １ 3,111
Accounts receivable – other ※ １ 239 ※ １ 460
Other ※ １ 184 ※ １ 161
Allowance for doubtful accounts △ 0 △ 0
Total current assets 13,999 14,963
Non - current assets
Property, plant and equipment
Buildings 6,093 7,330
Structures 604 836
Machinery and equipment 1,235 2,503
Vehicles 6 11
Tools, furniture and fixtures 227 271
Land 3,375 3,375
Leased assets 55 96
Construction in progress 2,134 56
Total property, plant equipment 13,733 14,481
Intangible assets
Software 343 256
Soft ware in progress 13 1
Trademark right 1 1
Telephone subscription right 9 9
Right of using facilities 6 7
Total intangible assets 374 275
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(Millions of yen)
As of December 31, 2018 As of December 31, 2019
Investment and other assets
Investment securities 1,285 1,256
Share s of subsidiaries and associates 6,520 7,388
Investment in capital 2 2
Investments in capital of subsidiaries
and associates 731 681
Long - term loans receivable from
subsidiaries and associates 111 109
Long - term prepaid expenses 74 23
Claims provable in bankruptcy, claims
provable in rehabilitation and other 1 0
Deferred tax assets 1,136 1,108
Corporation insurance 3 －
Guarantee deposits 148 149
Other 8 13
Allowance for doubtful accounts △ 1 △ 0
Allowance for investment loss of
subsidiaries and associates － △ 168
Total investment and other assets 10,022 10,565
Total non - current assets 24,130 25,322
Total assets 38,129 40,285
Liabilities
Current liabilities
Accounts payable – trade ※ １ 2,666 ※ １ 2,483
Short - term loans payable ※ ３ 7,071 ※ ３ 6,802
Current portion of long - term loans payable ※ ４ 2,290 ※ ４ 2,465
Short - term loans payable to subsidiaries
and associates ※ １ 333 ※ １ 328
Lease obligations 10 19
Accounts payable – other ※ １ 1,297 ※ １ 1,112
Income tax payable ※ １ 309 ※ １ 294
A ccrued expenses 35 67
Accrued consumption taxes 136 11
Deposits received 117 130
Provision for bonuses 629 585
Other 49 19
Total current liabilities 14,945 14,319
Non - current liabilities
Long - term loans payable ※ ４ 7,955 ※ ４ 9,215
Long - term loans payable to subsidiaries and
associates 500 500
Lease obligations 42 75
Long - term accounts payable – other 39 39
Provision for retirement benefits 2,453 2,353
Long - term deposits received 804 829
Provision for share - based compensation 69 72
Total non - current liabilities 11,865 13,084
Total liabilities 26,810 27,404
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(Millions of yen)
As of December 31, 2018 As of December 31, 2019
Net assets
Shareholder’s equity
Capital stock 2,898 2,898
Capital surplus
Legal capital surplus 3,039 3,039
Other capital surplus
Gain on disposal of treasury shares 14 40
Total capital surpluses 3,054 3,079
Retained earnings
Legal retained earnings 727 727
Other retained earnings
Reserve for advanced depreciation of
non - current assets 3 2
Retained earnings brought forward 5,695 7,268
Total retained earnings 6,425 7,998
Treasury shares △ 1,476 △ 1,481
Total shareholder’s equity 10,902 12,495
Valuation and translation adjustments
Valuation difference on available - for - sales
securities 417 386
Total valuation and translation adjustment 417 386
Total net assets 11,319 12,881
Total liabilities and net assets 38,129 40,285
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2) Statement of income
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Net sales ※ １ 23,287 ※ １ 23,455
Cost of sales ※ １ , ※ ２ 15,329 ※ １ , ※ ２ 15,328
Gross profit 7,958 8,127
Selling, general and administrative expenses ※ １ , ※ ３ 8,284 ※ １ , ※ ３ 8,381
Operating profit △ 326 △ 254
Non - operating income
Interest income 25 25
Dividend income ※ １ 1,288 ※ １ 2,632
Rental income 124 107
Miscellaneous income 101 111
Total non - operating income 1,539 2,877
Non - operating expenses
Interest expenses 70 75
Sales discounts 85 83
Foreign exchange losses 47 150
Rental expenses 127 104
Miscellaneous loss 13 38
Total non - operating expenses 344 452
Ordinary profit 868 2,171
Extraordinary income
Gain on sales of non - current assets － ※ ４ 0
Gain on sales of investment securities 5 0
Gain on sales of shares of subsidiaries and
associates 135 －
Insurance premiums refunded cancellation － 38
Subsidy income 109 109
The amount of welfare pension funds
dissolution loss reserve fund reversal 32 －
Gain on abolishment of retirement － 135
Total extraordinary income 283 285
Extraordinary losses
Loss on retirement of non - current assets ※ ５ 25 ※ ５ 4
Loss on sales of non - current assets － ※ ６ 1
Loss on sales of investment securities － 0
Loss on valuation of investment securities 0 －
Loss on valuation of investment in capital of
subsidiaries and associates － 49
Provision for loss on share s of subsidiaries and
associates － 168
Impairment loss － ※ ７ 22
Total extraordinary losses 25 247
Profit before income taxes 1,125 2,209
Income taxes – current 178 312
Income taxes – deferred 14 41
Total income taxes 193 354
Profit 932 1,854
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3) Statement of changes in equity
Fiscal year ended December 31, 2018
(Millions of yen)
Shareholder’s equity
Capital
stock
Capital surplus Retained earnings
Legal
capital
surplus
Other
capital
surplus
Total
capital
surplus
Legal
retained
earnings
Other retained
earnings
Total
retained
earnings
Reserve for
advanced
depreciatio
n
of
non - current
assets
Retained
earnings
brought
forward
Balance at beginning
of current period 2,898 3,039 14 3,054 727 4 5,012 5,744
Changes of items during
the period
Provision of reserve
for
advanced depreciation
of
non - current assets
－ △ 1 1 －
Dividends of surplus － △ 251 △ 251
Net income － 932 932
Purchase of treasury
stock － －
Disposal of treasury
stock － －
Net changes of items
other than
shareholder’s equity
－
Purchase of treasury
stock － － － － － △ 1 683 681
Disposal of treasury
stock 2,898 3,039 14 3,054 727 3 5,695 6,425
Shareholder’s equity Valuation and translation adjustments
Total net
assets Treasury
stock
Total
shareholder’s
equity
Valuation
difference on
available - for - sale
securities
Total valuation and
translation
adjustments
Balance at beginning
of current period △ 1,479 10,217 619 619 10,837
Changes of items during
the period
Provision of reserve
for
advanced depreciation
of
non - current assets
－ － －
Dividends of surplus △ 251 － △ 251
Net income 932 － 932
Purchase of treasury
stock △ 0 △ 0 － △ 0
Disposal of treasury
stock 3 3 － 3
Net changes of items
other than
shareholder’s equity
－ △ 202 △ 202 △ 202
Total changes of items
during period 3 684 △ 202 △ 202 482
Balance at end of
current period △ 1,476 10,902 417 417 11,319
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Fiscal year ended December 31, 2019
(Millions of yen)
Shareholder’s equity
Capital
stock
Capital surplus Retained earnings
Legal
capital
surplus
Other
capital
surplus
Total
capital
surplus
Legal
retained
earnings
Other retained
earnings
Total
retained
earnings
Reserve for
advanced
depreciatio
n
of
non - current
assets
Retained
earnings
brought
forward
Balance at beginning
of current period 2,898 3,039 14 3,054 727 3 5,695 6,425
Changes of items during
the period
Provision of reserve
for
advanced depreciation
of
non - current assets
－ △ 1 1 －
Dividends of surplus － △ 282 △ 282
Net income － 1,854 1,854
Purchase of treasury
stock － －
Disposal of treasury
stock 25 25 －
Net changes of items
other than
shareholder’s equity
Total changes of items
during period － － 25 25 － △ 1 1,573 1,572
Balance at end of
current period 2,898 3,039 40 3,079 727 2 7,268 7,998
Share holder’s equity Valuation and translation adjustments
Total net
assets Treasury
stock
Total
shareholder’s
equity
Valuation
difference on
available - for - sale
securities
Total valuation and
translation
adjustments
Balance at beginning
of current period △ 1,476 10,902 417 417 11,319
Changes of items during
the period
Provision of reserve
for
advanced depreciation
of
non - current assets
－ － －
Dividends of surplus △ 282 － △ 282
Net income 1,854 － 1,854
Purchase of treasury
stock △ 131 △ 131 － △ 131
Disposal of treasury
stock 126 151 － 151
Net changes of items
other than
shareholder’s equity
－ △ 30 △ 30 △ 30
Total changes of items
during period △ 4 1,592 △ 30 △ 30 1,562
Balance at end of
current period △ 1,481 12,495 386 386 12,881
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2 Notes to Financial Statements
Significant Accounting P olicies
1. Valuation standards and methods for assets
(1 ） Valuation standards and methods for securities
Held - to - maturity debt securities
Stated at amortized cost (straight - line method).
Stocks of subsid iaries and affiliates
Stated at cost determined mainly by the moving - average method
Other securities
With market value
Stated at fair value based on the market price as of the balance sheet date. (Unrealized gains or losses
are included directly in net assets. Cost of securities sold is determined by the moving - average method.)
Without market value
Stated at cost determine d mainly by the moving - average method
(2 ） Derivatives
Stated at fair value
(3 ） The basis and method of valuation for inventories;
Raw materials
Stated at cost determined by the moving - average method. (The carrying amount on the balance sheet is
written down to reflect the decline in profitability.)
Merchandise and finished goods and work in process
Stated at cost determined by the gross average method. (The carrying amount on the balance sheet is
written down to reflect the decline in profitability.)
Supplies
Stated at cost determined by the last purchase price method. (The balance sheet value is calculated by
writing down the book value based on a decline in profitability.)
2. Depreciation method for fixed assets
(1 ） Property, plant and equipment (excluding l eased assets)
Buildings (excluding facilities attached to buildings) are depreciated using the straight - line method and
other than buildings are depreciated using the declining - balance method.
However, facilities attached to buildings and structures acquired on or after April 1, 2016 are depreciated
using the straight - line method.
Useful life for primary assets is as follows:
Buildings (excluding building fixtures) 7 - 50 years
Other than buildings 2 - 45 years
(2 ） Intangible assets (excluding leased assets)
Software for internal use is amortized by the straight - line method over its estimated useful life (5 years),
and other intangible assets are amortized by the straight - line method.
(3 ） Leased assets
The straight - line method is used with the lease term as th e useful life and the residual value as zero.
3. Accounting standards for allowances
(1 ） Allowance for doubtful accounts
The allowance for doubtful receivables is provided for possible losses on doubtful receivables based on the
historical write - off ratio for general receivables and on an estimate of uncollectible amounts based on the
individual collectability of specific doubtful receivables.
(2 ） Provision for bonuses
Provision for employee bonuses is provided based on the estimated amount to be paid.
( 3 ） Provision for retirement benefits
Provision for retirement benefits for employees is provided based on the estimated retirement benefit
obligation at the end of the fiscal year under review.
In calculating retirement benefit obligations, the benefit formula basis is used to attribute expected
retirement benefits to the period up to the end of the current fiscal year.
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(Additional information)
On June 1, 2019, the Company transitioned a porti on of its defined benefit corporate pension plan to a
defined contribution pension plan.
In conjunction with this transition, we have applied the "accounting for the transition between
retirement benefit plans" (revised on December 16, 2016, Article 1 of t he Guideline for the Application of
Corporate Accounting Standards) and the "Practical Handling of the accounting for the transition
between retirement benefit plans" (revised on February 7, 2007, Article 2 of the Practical Response
Report).
As a result of this transition, extraordinary income of ¥ 135 million was recorded in the current fiscal
year.
(4 ） Provision for share - based compensation
In order to prepare for the issuance of our shares under the performance - based stock compensation
system for directors and executive officers, the estimated amount of shares to be paid in accordance with
the points allocated to directors and other officers is recorded in accordance with the stock issuance rules.
(5 ） Allowance for investment loss of subsidiaries and associates
To prepare for losses on shares of subsidiaries and associates , the necessary amount is provided in
consideration of the financial condition and collectability of the relevant companies.
４． Other important matters forming the basis for the preparation of financial statements
(1) Accounting for retirement benefits
The method of accounting for unrecognized actuarial gains and losses related to retirement benefits
differs from these methods of accounting in the consolidated financial statements.
(2) Accounting method for consumption taxes
All accounting transactions are booked exclusive of any national or local consumption taxes.
(3) Standards for translating assets and liabilities denominated in foreign currencies into Japanese yen
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at
the spot exchange rate prevailing at the end of the fiscal year. Translation differences are accounted for as
gains or losses.
(4) Significant hedge acc ounting methods
① Method of hedge accounting
Deferred hedge accounting is applied. Special accounting is applied when the conditions for special
treatment of interest rate swaps are met.
② Hedging instruments and hedged items
Hedging instruments: Interest rate swaps
Hedged items: Interest on borrowings
③ Hedging policy
For the Reduction of interest rate exposures, only variable interest rates are hedged.
④ Method of assessing the effectiveness of hedging
Effectiveness is assessed for each individual transaction. The evaluation of effectiveness is omitted for
transactions to which the special treatment for interest rate swaps is applied.
(Change of Labeling Methods)
(Changes due to the adoption of "Partial Revision of the Accounting Standard for Tax Effects")
"Partial revision of the "Standard for Tax Effects" has been applied since the beginning of the fiscal
year under review (corporate accounting standard No. 28, F ebruary 16, 2018). Deferred tax assets have
been indicated in the categories of investment and other assets, and deferred tax liability has been
changed to the method of displaying them in the categories of fixed liability, while the notes related to
tax e ffects accounting have been changed.
As a result, "Deferred tax assets" under "Current assets" decreased by ¥ 362 million and "Deferred
tax assets" under "Investments and other assets" increased by ¥ 362 million in the balance sheet for the
previous fiscal y ear.
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(Additional information)
(Introduction of a Stock Delivery Trust for Directors and Executive Officers)
We have introduced a performance - based stock compensation system using a trust for our directors
(including outside directors) and executive officers. For details, please refer to "Notes to Consolidated
Financial Statements (Additional Information)."
(Notes to Balance Sheet)
※ 1 Affiliated company items
Monetary claims and liabilities to affiliated companies
(Millions of yen)
As of December 31, 2018 As of December 31, 2019
Short - term loans receivable 4,327 4,861
Short - term loans payable 866 722
※ 2 Notes due at the end of the period
Accounting for notes maturing at the end of the fiscal year is settled on the date of bill clearing.
As the last day of the fiscal year was a holiday for financial institutions, the following notes due at the end of
the fiscal year are included in the bala nce at the end of the fiscal year.
(Millions of yen)
As of December 31, 2018 As of December 31, 2019
Notes receivable 86 64
※ 3 Overdraft agreements and loan commitments
We enter into overdraft agreements and loan commitment agreements with banks to efficiently procure
working capital.
The balance of undrawn lines of credit related to overdraft agreements and loan commitments at the end of
the fiscal year under these agree ments is as follows:
(Millions of yen)
As of December 31, 2018 As of December 31, 2019
Total overdraft limit and loan
commitments 11,800 13,373
Loan balance 5,771 6,802
Net amount 6,028 6,571
※ 4 Financial covenants
Previous fiscal year ( ended December 31, 2018)
Long - term borrowings amounting to ¥ 1,600 million and ¥ 5,200 million, which are due within one year,
are subject to the following financial restrictions.
(Financial covenants)
① Maintain the amount of net assets in the consolidated balance sheet as of the last day of the
accounting period and the last day of the second quarter of each fiscal year at 75% or more of the
amount of net assets in the c onsolidated balance sheet as of th e last day of the immediately preceding
accounting period from the second quarter of June 2016 onward.
② For the two consecutive fiscal years in which the fiscal year ending after the fiscal year ending
December 31, 2016 is the first fiscal year, ensure that the ordinary profit and loss shown in the
consolidated profit and loss statement for the fiscal year ending in each fiscal year will not result in a
loss for two consecutive fiscal years.
Current fiscal year ( ended December 31, 2019)
Lon g - term borro wings amounting to ¥ 1,600 million and ¥ 3,600 million, which are due within one year,
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are subject to the following financial restrictions.
(Financial covenants)
① Maintain the amount of net assets in the consolidated balance sheet as of the last day of the
a ccounting period and the last day of the second quarter of each fiscal year at 75% or more of the
amount of net assets in the consolidated balance sheet as of the last day of the immediately preceding
accounting period from the second quarter of June 2016 onward.
② For the two consecutive fiscal years in which the fiscal year ending after the fiscal year ending
December 31, 2016 is the first fiscal year, ensure that the ordinary profit and loss shown in the
consolidated profit and loss statement for the fisc al year ending in each fiscal year will not result in a
loss for two consecutive fiscal years.
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(Notes to Statements of Income)
※ 1 Transactions with affiliated companies
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Turnover with business transaction
Net sales 4,498 4,480
Purchases 2,294 2,224
Other operating expenses 223 212
Non - operating transactions
Dividends income 1,264 2,604
※ 2 Year - end inventories are the amounts after writing down the book value due to a decline in profitability, and
the following loss on valuation of inventories is included in cost of sales. The following amounts are net of
reversals.
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
121 175
※ 3 Approximately 47% of the expenses belonging to selling, 50% of the expenses belonging to the current fiscal
year, 53% of the expenses belonging to general and administrative expenses in the previous fiscal year, and
50% of the expenses in the current fi sca l year.
Main selling, general and administrative expense items
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Freight and packing costs 963 1,052
Remuneration and salaries for directors
and corporate auditors 1,843 1,767
Provision for stock - based compensation 28 9
Provision for bonuses 418 336
Retirement benefit expenses 187 171
Depreciation and amortization 273 259
Research and development costs 1,462 1,528
※ 4 Details of gain on sales of non - current assets are as follows.
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Machinery and equipment － 0
Total － 0
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※ 5 Details of loss on retirement of non - current assets are as follows.
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Buildings 18 0
Structures 1 0
Machinery and equipment 4 3
Vehicles － 0
Tools, furniture and fixtures 0 0
Total 25 4
※ 6 Details of loss on sales of non - current assets are as follows.
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Machinery and equipment － 1
Total － 1
※ 7 Impairment loss
Previous fiscal year (from January 1, 2018 to December 31, 2018)
Not applicable.
Current fiscal year (from January 1, 2019 to December 31, 2019)
We recorded impairment losses on the following asset groups.
Location Application Type
Asahi City ,
Chiba Factory
Buildings, structures,
machinery and equipment,
vehicles, tools, furniture and fixtures
In applying impairment accounting, we group our assets based on the reportable segments (Chemicals
and Cosmetics) and determine indicators of impairment for idle assets by individual asset. For buildings,
structures, machinery and equipment, vehicles, tool s, furniture and fixtures related to factory in Asahi City,
Chiba Prefecture, for which demolition was decided in the current fiscal year, the book value of the asset
was reduced to the recoverable amount, and the reduction amount of ¥ 22 million (buildings ¥ 1 million ,
structures ¥ 9 million , machinery and equipment ¥ 10 million , vehicles ¥ 0 million , tools, furniture and
fixtures ¥ 0 million ) was recorded as extraordinary loss.
The recoverable amount of these assets is determined to be zero as there is no possi bility of their
conversion to other companies or sale.
(Notes to Securities)
Share s of subsidiaries and associates (shares of subsidiaries and associates in the fiscal year u nder
review is ¥7.353 m illion for share of subsid iaries and ¥34 million for share of associates , and share of
subsidiaries and associates in the previous fiscal year is ¥6.485 m illion for share of subsid iaries and ¥34
million for share of and associates ) are not presented because they do not have a marke t price and it is
extremely difficult to determine a market value.
－ 14 －
(Deferred Tax Accounting)
１． Breakdown of major causes of deferred tax assets and deferred tax liabilities
(Millions of yen)
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Deferred tax assets
Provis i on for retirement benefits 747 716
Impairment loss 229 233
Provision for bonuses 191 178
Loss on valuation of Inventories 89 135
Foreign tax credit carried forward 158 109
Loss carried forwards 119 106
Accrued expenses 73 68
Loss on val uation of shares of subsidiaries
and associates 63 63
Loss on valuation of investments in capital of
subsidiaries and associates 40 55
Provision for loss on shares of subsidiaries
and associates － 51
Patent rights 29 24
Provision for share - based compensation 21 21
Other 64 81
Subtotal deferred tax assets 1,828 1,846
Valuation allowance △ 508 △ 567
Total deferred tax assets 1,320 1,279
Deferred tax liabilities
Valuation difference on available - for - sale
securities △ 182 △ 169
Enterprise tax receivable － △ 0
Reserve for advanced depreciation of
non - current assets △ 1 △ 0
Total deferred tax liabilities △ 184 △ 170
Net deferred tax assets 1,136 1,108
2. Breakdown of significant differences between the statutory effective tax rate and the effective tax rate after
application of tax effect accounting by major items that caused such differences
Fiscal year ended
December 31, 2018
Fiscal year ended
December 31, 2019
Statutory tax rate 30.69% 30.46%
(Adjustment s )
Expenses not deductible for income tax
purposes 1.95 1.06
Local tax on per capita basis 1.94 0.99
Income not taxable permanently such as
dividend income △ 32.31 △ 34.23
V aluation allowance 0.48 4.87
Foreign Tax Amount, etc. 13.90 12.82
Other 0.53 0.06
Effective tax rate after tax effect accounting is
applied 17.18 16.03
(Business Combinations, etc.)
－ 15 －
(Business Combination through Acquisition)
The same content is stated in the "Notes to Consolidated Financial Statements (Business
Combinations, etc.)"; therefore, the notes are omitted.
(Transactions under Common Control)
The same content is stated in the "Notes to Consolidated Financial Statements (Business
Combinations, etc.)"; therefore, the notes are omitted.
(Significant Subsequent Events)
Not applicable.
－ 16 －
Independent Auditors' Audit Report
March 25, 2020
To the Board of Directors of
Nicca Chemical Co., Ltd.
KPMG AZSA LLC
Designated Limited Liability Partner
Engagement Partner
Certified Public
Accountant
Kentaro Yamamoto
SEAL
Designated Limited Liability Partner
Engagement Partner
Certified Public
Accountant
Yuichi Ishibashi
SEAL
For the purpose of audit certification in compliance with the provision s of Article 193 - 2 (1) of the Financial
Instruments and Exchange Act, we audited the consolidated financial statements of Nicca Chemical Co., Ltd. ,
described in the "Accounting Status" section for the 106th business year from January 1, 2019 , to December 31 , 2019,
namely the balance sheets, income statements, statement s of changes in shareholders' equity, significant accounting
policies, other related notes , and the supplementary schedules of Nicca Chemical Co., Ltd.
Responsibility of Management for Financi al Statements
The Company's management is responsible for preparing and properly presenting financial statements in
accordance with the business accounting standards generally accepted in Japan. This includes the development and
operation of the internal control , which was determined by management to be necessary for preparing and properly
presenting financial statements free of material misstatement by fraud or error.
Responsibility of Auditor
Our responsibility is to express an opinion on these financi al statements from an independent perspective based on
the audit conducted by us. We conducted our audit in accordance with audit standards generally accepted in Japan.
Those audit standards require that we establish an audit plan and perform the audit bas ed on that plan to obtain
reasonable assurance as to whether the financial statements are free from material misstatement.
An audit involves performing the procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The auditing procedures are selected and applied at our discretion based on the assessment of
the risks of material misstatements due to fraud or errors in the financial statements. The purpose of an audit of the
consolidated financial statements is not to express an opinion on the effectiveness of the entity's internal control, but in
conducting these risk assessments , we examine the internal controls relevant to the preparation and fair presentation
of the financial statements in order to design audit pro cedures that are appropriate to the circumstances. An audit also
includes deliberation on the overall presentation of the financial statements , as well as an evaluation of the accounting
policies applied and its method of application, in addition to the re asonableness of accounting estimates made by the
management.
We believe that the audit evidence we obtained is sufficient and appropriate to provide the basis for our audit opinion.
Audit Opinion
We acknowledge that the financial statements above properly present the financial status of Nicca Chemical Co.,
Ltd. , as of December 31, 2019 , in all important respects, as well as the operating results for the fiscal year ending
December 31, 2019, in acco rdance with the business accounting standards generally accepted in Japan.
Conflicts of Interest
There are no interest relationships between the Company and us or our engagement partners that are required to be
reported by the regulation of the Certified Public Accountant Act.
End of document
(Note) 1. The above is the digitized form of the matters described in the original audit report, and the original copy is
separately in the custody of the Company (submitting company of the securities report).
2. XBRL data is excluded from the scope of the audit.