INTEGRATED
統合報告書
REPORT
Integrated Report 2022

2022

1

EXEDY Integrated Report 2022

Index and Logical Structure

On issuance

CONTENTS

EXEDY has decided to publish an Integrated Report to provide investors and otherstakeholders about the value-creation process, including ﬁnancial and non-ﬁnancial
information in a narrative manner. This report contains a long-term vision EXEDY
has formulated as the aspirational ﬁgure for FY2050, as well as the strategies andinitiatives to realize this vision. Our company strives to create economic and social
value through the realization of this long-term vision. We will continue to disclose
information to our stakeholders in a timely and accurate manner. Finally, we hereby
state that the process used to prepare this report is justiﬁed.

This report uses the following logical structure to explains EXEDY's value creation story.
Index

Page

Chapter 1: Message from Top Management 4

Hiroshi Toyohara
Chapter 2: Value Creation Process

Editorial Policy●

Scope of Reporting

In addition to providing ﬁnancial information such as business

Target organization: E X E D Y C o r p o r a t i o n a n d t h e E X E D Y

performance, business results, and management strategies,

Group (Where "EXEDY Corporation" or "this Integrated Report also includes non-ﬁnancial information(non-consolidated)" is indicated, it refers to

on ESG (Environmental, Social, and Governance) initiatives in

EXEDY Corporation on a non-consolidated

support of sustainable growth. Reference was made to thebasis.

"International Integrated Reporting Framework" proposed by

Reporting period: Primary reporting period is FY2021 (April

the International Integrated Reporting Council (IIRC) and the2021 - March 2022), partially includes ac-"Guidance for Integrated Corporate Disclosure andtivities after April 2022.

Company-investor Dialogue for Collaborative Value Creation"issued by the Ministry of Economy, Trade and Industry (METI).

Target readers: all stakeholders of the EXEDY GroupFor more detailed information on our environmental reports,■Summary of Our Value Creation Story
The business environment in which we operate and the value
creation strategies we have formulated based on that environment are presented here in the words of our President.

Representative Director, Senior Executive Managing Ofﬁcer
Executive General Manager of Administrative Headquarters●

Logical Structure

8■Current Value Creation Approach

1. Milestones in Value Creation

10

2. Our Business

12

3. Current Strengths

14

While we touch on our milestones in value creation andthe strengths we have cultivated, we would also like tointroduce how we keep creating value today.

4. Process of Value Creation

16

Chapter 3: Long-term Vision

18■Business Environment and Long-term Vision

1. Recognition of Business Environment20

2. Corporate Philosophy

22

3. Long-term Vision24

4. Key Performance Indicators (KPI)

26

Based on our corporate philosophy, and considering thesigniﬁcant changes in the business environment, we present our Long-term Vision and key performance indicators(KPIs) for the ﬁscal year 2050.

etc., please refer to the "Sustainability" section on our
corporate website.

●

Terms Used in the Integrated Report(names of different types of electric vehicles)

Cautionary Note Regarding Future Outlook

The non-historical facts contained in this report are

BEV: Battery Electric Vehicle

forward-looking statements based on estimates and plans.

HEV: Hybrid Electric Vehicle

These forward-looking statements involve risks, uncertainties,
and other factors that may cause actual results andperformance to be different from those described in this

Chapter 4: Strategies for Value Creation

28

1. Strategies to Strengthen Human Capital30

2. Strategies to Strengthen Intellectual Capital32

3. Strategies to Strengthen Manufacturing Capital 33
4. Strategies to Strengthen Social & Relational Capital 34
5. Strategies to Strengthen Natural Capital

35

6. Strategies to Strengthen Financial Capital

40■Strategies to Strengthen Management Capitalto Achieve the Long-term Vision
EXEDY's six management capitals, which we have accumulated
since our establishment, serve as the foundation for increasing
our corporate value through business activities. We hereby
introduce strategies to strengthen these management capitals
as a path to achieve the above Long-term Vision and KPIs.

report.

●Chapter 5: Foundation for Value Creation 42

Position of the Integrated Report
Non-Financial Information
EXEDY Homepage
Sustainability

Financial Statements
EXEDY Homepage
Investor Relations

https://www.exedy.com/en/stockholder/

https://www.exedy.com/en/csr/

1. Corporate Governance44

2. Directors & Auditors

50

3. Risk Management54

4. Respect for Human Rights

56

Chapter 6: Financial and Corporate Information 58
1. Financial and Non-Financial Highlights

Integrated Report
Financial Results ⁄Notice for Convocation ofAnnual Shareholders
Meeting, etc.

Corporate Governance /Respect for Human Rights/ Our Contributions toSociety, etc.

260

2. Financial and Non-Financial Summary

62

3. Financial Review

64

4. Environmental Reports

71

5. Company / Stock information

74■Various Systems and Initiatives to Support
Value Creation
We will introduce various systems and initiatives related tocorporate governance, etc., to execute the above strategies andenhance sustainable corporate value.

■Key Financial and Non-ﬁnancial Results
We will present key ﬁnancial and non-ﬁnancial performance
results generated through our value-creating business activities.

3

EXEDY Integrated Report 2022

Chapter 1: Message from Top Management

1. Changes in the External Environment Surrounding EXEDY

2. Strategies for Creating New Value

With top-quality manufacturing, technologicalmain product line. However, there are oppor-

1) Formulation of Long-term Vision(GHG) emissions by 46% from FY2019 levels bydevelopment capabilities and customer network

tunities to increase BEV product orders. Similar

Last year, in response to the changes and other

FY2030 and by 100% by FY2050, and we areas our strengths, we hold a top-level global

opportunities exist in Japan and China for HEV

factors occurring in society, EXEDY formulated

promoting energy-saving initiatives and the in-market share for clutches and torque converters.

products, including HEV dampers. Orders forand announced its Sustainability Declaration

troduction of renewable energy. Starting from

However, the environment surrounding the au-

clutches are also expected to increase slightly

and Long-term Vision. The Sustainability Dec-

the Neyagawa Headquarters and the Ueno Di-

tomotive industry has changed rapidly over thein our mid-term forecast (through FY2025-

laration is a declaration of our commitment tovision, many of our group companies have installed solar panels on the roofs of their facto-

past several years.

Not only have countries2027), and we see opportunities to increase

activities (sustainability activities) aimed ataround the world

announced their commit-

sales in the aftermarket in India and the ASEAN

achieving a sustainable society and continu-

ries, and DYNAX has decided to install ament to carbon neutrality, but national regula-

region.

ous growth of the company. The Long-termbiomass boiler as an energy-saving initiative

tions for internal combustion vehicles are be-

Most of our strengths have been cultivated on

Vision is based on our corporate philosophy

and PPA as a renewable energy initiative.

coming increasingly stringent. The 2°
C Invest-

the premise of doing business for internaland clearly states the vision that we aim to

EXEDY Clutch India and EXEDY Fukushima

ment Initiative scenario forecasts a 90% decline

combustion engine vehicles. Since the shift toachieve by FY2050. In this vision, EXEDY aims

have also started to install renewable energy.

in global sales of internal combustion engines,

electric vehicles is accelerating, we do not

EXEDY's main market, by FY2050. The current

believe that all our strengths will last until

global production share of internal combustion

FY2030. In some cases, our current strengths

engine vehicles is 80%, and the share of BEVs

may become a stumbling block for us.

and HEVs is 20%.

However, according to amust take on the challenge of creating new

medium- to long-term forecast by another re-businesses beyond our current ones while de-search firm, this ratio is expected to reverse (bytermining what to inherit and what to change.

FY2033).
This shift to BEVs and HEVs poses the risk of adecline in orders for torque converters, ourWe

to "contribute to minimizing environmental

3) Creating and Delivering New Value toimpact, starting with the creation of a decar-

Our Customers

bonized society" that brings fulfillment tosociety, to "create and deliver new value to

EXEDY believes that the global shift from inter-customers" that brings fulfillment to our cus-

nal combustion engine vehicles to electric ve-

tomers, to "be an attractive company where people

hicles poses a risk of shrinking our current

can feel excitement and passion" that brings fulfill-business, but at the same time, it offers an op-

ment to employees, and to "maintain a stableportunity to start up and expand new business-management structure based on strong

es. To seize this opportunity, we must create

governance" that supports these three goals.

and deliver new value to our customers, andwe will accelerate the new product develop-2) Contributing to the Creation of a Decar-

4

ment in both our existing and new businessbonized Society and Minimization of Our

domains.

Environmental Impact

plan to significantly increase the ratio of R&D

Therefore, we have formulated a

The prevention of global warming is an inter-

expenses for new products from 29% (FY2019

national issue, and the Japanese government

actual) to 70% (FY2030 target). In line with thishas pledged to achieve carbon neutrality byplan, we are strengthening our development

the year 2050. As part of EXEDY's Sustainabili-

structure through open innovation and reorga-ty Declaration, we have also announced our

nization.

goal of achieving carbon neutrality by FY2050,

January 2022, we concluded a capital and busi-

and we are taking on this challenge in bothness alliance with Aster, a company withproduct expansion and production systems. In

strengths in high-output, compact motors. In

terms of product expansion, we have longterms of reorganization, in April this year, webeen committed tomerged the Development Headquarters anddeveloping and deliver-In terms of open innovation, in

ing environmentally friendly products. We will

the Motorcycle Clutch Headquarters, and es-

continue to create products that contribute totablished new departments such as the Busi-decarbonization, including products for BEVs

ness Development Department, Development

and HEVs, by leveraging our expertise in thisPlanning Department and Smart Technology

area. In terms of our production system, we

Department.

have set targets to reduce greenhouse gas

people in charge of electric products from all

5

In addition, we gathered theEXEDY Integrated Report 2022

Chapter 1: Message from Top Management

headquarters (Development, Purchasing, Pro-

that enable diverse employees to work comfort-changing situation as one, it is essential toone and our future. The current environment

duction Engineering, Quality Assurance, andably, we have formulated a plan to increase thecommunicate management's thoughts to em-

surrounding our company is harsh and does not

Manufacturing) in a large room and prepared

proportion of women in management positions

ployees and to listen to their opinions directly.

promise a bright future.

the entire company for mass production.

from 3.4% (FY 2019 results) to 13.9% (FY 2050

By strengthening these development systems,

target).

we will accelerate the technological develop-

Above mentioned target of 13.9% is the samement of motor-centric drive unit products

as the current percentage of women in theThis year marks the 100th anniversary(*) of our

by focusing our accumulated management re-(Wide Range Drive System for BEV, electricCompany’s workforce.

We will continue tocompany's founding. Since our establishment,

sources on new businesses while maintaining

units for motorcycles, etc.) that combine

challenge ourselves to create an environment

we have faced many difficulties. However, we

profitability in our current businesses over the

EXEDY's drive technology and Aster's motor

where women feel comfortable working andhave developed a series of products such as an-

medium term. I want to make sure our company

technology.

to provide training for candidates for manage-

ti-vibration type clutch discs and flat-model

will continue to grow in the next 100 years. It will

rial positions.

torque converters and have brought our clutch

not be easy, but I will lead the way and take on theand torque converter business to a world-classchallenge. Please look forward to the continued

level by refining our expertise and actively in-evolution of the EXEDY Group.

Furthermore, we aim to create

new value by breaking down and combining
elements of our core technologies that we5) Maintain a Stable Management Structure

have cultivated up to now, or by combining

Based on Strong Governancethem with external technologies. We also ac-

However, we have 100 years of accumulated6)Drive Our Future. (Our Will to Move the
Future by Ourselves)

In terms of the management foundation thatgy.

rate venture capital.

supports our business activities, our Long-term

The slogan "Drive our future." which we adopted

Vision is to "maintain a stable management

along with our Long-term Vision in 2021, ex-structure based on strong governance," andpresses "our will to move the future by our-citement and Passion

we aim to improve the fairness of the Board ofselves." It expresses the desire for all employees

We have always held "the happiness of our

Directors and share our values within theto be in the driver's seat, to fulfill our roles, to set

employees" as one of our corporate philoso-

company. In terms of improving the fairness

our direction, and to create fulfillment for every-

phies and have strived to be a company whereof the Board of Directors, we have set targets

people are happy to work. However, with an

for FY2030 of having at least one-third of inde-overall satisfaction rate of 34.9% in the 2019pendent outside directors and one female and

Employee Attitude Survey, it was hard to say

one non-Japanese director.

that the company was a good place to work.

fairness among our Board of Directors by en-

Therefore, we have decided to set "Being an at-

suring diversity. In addition, to share the same

tractive company where people can feel excitement

sense of values, a town hall meeting was

and passion" as our Long-term Vision and aim tostarted by the President and the Senior Execu-

create an environment that fosters employee

tive Managing Officer in September 2021. The

growth and expand systems that allow diverse

meeting was divided into 26 sessions with aemployees to work with confidence.

In thelimited number of participants to allow for aarea of creating an environment conducive to

two-way dialogue rather than a one-way flow

employee growth, we have established a planof information from the President and Senior

to increase the annual training hours per em-

Executive Managing Officer. We are pleased

ployee from 5.4 hours (FY2020 actual) to 48

with the response we have received from thehours (FY2030 target), nearly 10 times more

employees, some of whom commented thatthan the previous plan, to provide learning op-

they had not had the opportunity to talk with

portunities.

We plan to prepare a hands-on

the President and Senior Executive Managing

training menu that meets the needs of our em-

Officer before, and they hope that this will beployees,training,

continued in the future. It does take time to or-coaching training for supervisors on how toganize these meetings because they are open

coach their staff, and training on how toto all employees. However, in order for thecounter unconscious bias. In expanding systems

entire company to overcome this rapidly

includingelectrification

6

resources,

includinghuman

capital. We believe that we can drive our future

corporating outside knowledge and technolo-

tively consider investments in M&A and corpo-

4) An Attractive Company That Inspires Ex-

management*EXEDY Corporation was established in 1950, but
its first President, Kazuma Adachi, founded thecompany as a private enterprise in 1923.

Tetsuya Yoshinaga
President & CEO

We will achieve

7Chapter2

Value Creation Process
Since its establishment in 1950, EXEDY has developed and provided
products that meet the needs of our customers and contribute tosolving social issues. By leveraging the strengths we have developed
over the course of our history and the management capital we haveaccumulated, we aim to contribute to the realization of a sustainable
society and achieve sustainable growth for the EXEDY Group.

1. Milestones in Value Creation	��������������� 10
2. Our Business........................................... 12
3. Current Strengths................................... 14
4. Value Creation Process.......................... 16

8

9

Chapter 2: Value Creation Process

EXEDY Integrated Report 2022

1. Milestones in Value Creation
its establishment in 1950, the EXEDY Group has developed and delivered products to meet various customer
needs (noise and vibration reduction, fuel efficiency improvement, lightweight/compact design). By developing and delivering these products, EXEDY Group has refined its strengths (highest quality manufacturing,

2013"Special Award" from
Daihatsu Motor Co., Ltd.
for 13th consecutive year

technological development capabilities, and customer network) and built a solid position worldwide as amanufacturer of clutches and torque converters.

Major awards（2021）
Daihatsu Grand Award(Received Product Enhancement Award
and Monozukuri Activity Award)

EXEDY Group's Strengths

Top-quality
manufacturing

Technological
Development
Capabilities

Customer
Network

See right forawards received.

See below for
developed products.

Approximately 6,700
customers (covering 200
countries worldwide)

Best Performance Award from
Nissan Motor Corporationfor 12th consecutive year

from Isuzu Motors Ltd.
Five Consecutive Years
Special Award

Certiﬁcations
・ISO9001: 1999
・ISO14001: 2000
・IATF16949: 2004

Revenue in FY2021

261.1 billion JPY

Consolidated sales history and main products developed since establishment











1976
1952

Development ofanti-vibration clutch disc toabsorb drivetrain rattle
noise in commercial
vehicles1963

Development of the Kazmatic, atwo-pedal semi-automatic control
device using a manual clutch.



1992

Production of
powershift transmissions
for construction machineryand industrial vehicles
begins.

Development of Super
Squashed Torque
Converter





1998
Development of clutch discwith wide-angle damper for
excellent noise and vibration
damping performance

Overseas

1991

1975

Development of ﬂywheel
damper with viscousdamping mechanism for
improved noise andvibration reduction

Production of torqueconverters for automatictransmission vehicles
begins.

In-house development of automatictransmissions for medium-sizedcommercial vehicles

1958

1980

Development ofcoil-spring type clutch
cover Sold as a set with
disc

Development of Silent
Disc for sound andvibration isolation of thedrive system

2005
Development of damper for
hybrid vehicles

Japan

1968

2021〜
・Development of Universal e-Drive Unit
・Development of drone motor, propeller, and ESC
・Development of motors for assistive mobility devices
・Development of wide-range drive system for EVs

Development of
diaphragm spring
type clutch cover
Established 1950





Relocated our Headquarters
to Neyagawa City 1963

10


Established Daikin Clutch USA, Inc.
(First overseas sales ofﬁce) 1977







Corporate name change (from Daikin Manufacturing) 1995
Established Daikin Clutch Indonesia(First overseas manufacturing base) 1985

11



Chapter 2: Value Creation Process

EXEDY Integrated Report 2022

2. Our Business

Next-generation Products and Electric Products

EXEDY is a comprehensive manufacturer of drivetrain components for automobiles, motorcycles, construction
To realize a sustainable society, we are developing Next-generation
Products and Electric Products that are carbon neutral and environmentallyfriendly.

machinery, industrial vehicles, agricultural machinery, etc., from development to production, with global
operations comprising 44 companies in 25 countries around the world. In addition, with our new business, weare focusing on the development of Electric Products and Next-generation Products that are environmentallyfriendly.

■ Wide Range Drive System for BEV

Automotive Parts
EXEDY manufactures torque converters, for comfortable driving in automatic transmission vehicles, and clutches
for manual transmission vehicles.
Our products are highly regarded by automobile manufacturers around the world and are widely used as genuine■ Products for Drones

A drive system that ampliﬁes torque, im-Compact, lightweight motors are matchedproving BEV performance during accel-with propellers that have been developed

eration and hill starts and reduces vibra-

utilizing ﬂuid technology for high-perfor-tions.

mance drone applications.

products.

Clutch CoverClutch Disc

TorqueConverter■ Electric Unit for Motorcycles

Parts for Motorcycles

A compact, yet powerful drive unit for

By utilizing the technology cultivated in automotive clutches, we produce clutches for motorcycles inSoutheast Asia and India.

electric motorcycles that combines the
motor and transmission.

■ Universal e-Drive Unit
（ E³-Drive Technology）
This is a versatile electric drive unit thatcan be retroﬁtted to pallet trucks
and other low-speed
mobility devices.

Wet Type Multi-Plate Clutchwith Coil Springs

Wet Type Centrifugal Clutch

Parts for Construction Machinery / Industrial Vehicles / Agricultural MachineryWe strongly support Japanese industry by producing a wide variety of products in small quantities that areequivalent to custom-made items.

■ Robot System
Using AI and automated driving technologies, we are developing robots to assist
people in their daily lives with logistics,
in commercial facilities and public institutions.

Power Shift Transmission

1213

Chapter 2: Value Creation Process

EXEDY Integrated Report 2022

3. Current Strengths

2. Technological Development Capabilities

In the process of value creation, we have built three strengths: " top-quality manufacturing," "technological development capabilities," and "customer network".

The EXEDY Group has developed a wide variety of products by refining its core technologies (friction, vibration,and fluid) and establishing a development system to meet the needs of customers around the world. Also, toincorporate the latest technology, we are conducting research and development in collaboration with academia.

1) Core Technologies (friction, vibration, fluid)

1. Top-quality Manufacturing

The EXEDY Group has applied its friction, vibration, and fluid technologies to develop clutches that absorb noiseand vibration and torque converters with high energy transmission efficiency in response to customer needs.

The EXEDY Group is committed to providing the highest quality products that satisfy customers around theWe have also established a prediction and analysis system for drivetrain products, and feedback test results toworld. To achieve this goal, we are working on Zero Defect activities while challenging ourselves to evolve our

product design and development immediately. DYNAX handles wet friction materials from the raw material

production technology capabilities. In addition, we are developing our overseas production system to achievestage and possesses proprietary technologies in papermaking, impregnation, and evaluation capabilities.

the highest quality on a global scale while focusing on training the human resources that will be responsible for2) Global Development System

this process.

To meet various customer needs in different regions, we have established development sites (7 sites in total) not

1) Company-wide Zero-Defect Activities

only in Japan (2 sites) but also in North America (1 site), China (2 sites), and ASEAN countries (2 sites in Thailand),Since automobile accidents directly affect human lives, defective automobile parts are unacceptable. At EXEDY

and possess resources that enable development and evaluation on par with those at our headquarters.

Group, manufacturing, production engineering, and quality control departments work together to discuss mea-

3) Vertically Integrated Development

sures to prevent the recurrence of defective products in the process under the name of ASA ZERO activities. Thisis conducted every morning at all global locations.

Our integrated approach of planning, development, prototyping, and mass production enables us to provide
high-quality products in mass production and shorten delivery time. It also allows us to pool development ex-2) Production Technology Capabilities that Meet Customer Needs
The EXEDY Group can meet a wide variety of customer needs in terms of design and functionality by designingand manufacturing our equipment, dies, jigs, and tools from prototyping to mass production, and by producing
in-house technologies for casting, forging, pressing, heat treatment, bonding, welding, processing, assembly
and a variety of other processes. We are also improving production efficiency by introducing information technology, starting with a production management system.

pertise within the group, which leads to better solution proposals.

4) Research and Development of the Latest Technology through Industry-academia Collaboration
To proactively incorporate the latest technology, EXEDY conducts research and development in collaboration
with academia, including Kobe University, Hosei University, Kindai University, and Kyushu Institute of Technology. Similarly, DYNAX is conducting R&D with Hokkaido University, Tohoku University, Niigata University, andother universities.

3) Global Production System
EXEDY has manufacturing plants in 11 countries and has established a global supply system with process settings at all plants on the same level as those in Japan. In addition, we have established a mutual backup production system for torque converters in Japan, China, the U.S., and Mexico. Moreover, we utilize our proprietaryproduction management system (EXPRESS) to visualize the status of production, quality, dies, maintenance, andother operations in real-time and on a global scale.
Number of Manufacturing Companies by Region (as of January 2023)

23 Companies
Europe

1

Japan

7

Asia

12

North
CentralAmerica3

3. Customer Network
The EXEDY Group receives a wide range of OEM orders from automobile, motorcycle, and construction equipment manufacturers in Japan, China, Europe, and the United States. We are always aware of our customers'
needs, and when necessary, we conduct joint development with them to create new businesses.

1) Transactions with Automobile, Motorcycle, and Construction Equipment Manufacturers in Japan, China, Europe, and the United States (OEM products)
4) Training of Factory Technicians and Skilled Professionals
The EXEDY Group is focusing on enhancing its skilled worker training system. In 1995, we established a technical school (Current name: GETS: Global EXEDY Technical School) to provide training at different levels, from beginner to advanced, to put EXEDY’s skills and knowledge to practical use. Currently, we also accept and train
overseas-based technicians. In addition, highly skilled technicians* provide on-site guidance in four areas (welding, lathing, plastic forming, and materials technology).
* Technicians who are active on the front lines of manufacturing etc. within the company, have a solid position and skill
level (excellent skills and experience), contribute internally and externally, contribute to the training of future generations, and have a wealth of leadership experience.

14

As an independent manufacturer we are not tied to a specific manufacturer, and we supply clutches and torqueconverters as OEM products to 12 Japanese companies and 50 non-Japanese companies.
For both of these products we have a top-level market share worldwide.

2) Global Sales Network (Aftermarket Parts)
The global sales network was established in 1977 with the establishment of Daikin Clutch U.S.A., Inc. Since then,we have established overseas sales companies, built an order-acceptance system using IT, and streamlined logistics to enhance our immediate delivery system for aftermarket parts, and have built a sales network that now
covers nearly 200 countries around the world, with approximately 6,700 customers.

15

Chapter 2: Value Creation Process

EXEDY Integrated Report 2022

4.Value Creation Process
In consideration of the external environment, the EXEDY Group has established a Long-term Vision and key performance indicators (KPIs) based on its corporate philosophy to promote its business activities.
We will contribute to the realization of a sustainable society and aim for the sustainable growth of the EXEDY group through the efficient application of our six capitals and the utilization of our strengths.

INPUT
¥

BUSINESS ACTIVITIESOUTPUT

Market Share

Financial Capital

Borrowings

Interest-bearing liabilities:

Corporate Philosophy

39.1 billion JPY

Cash and Cash equivalents :55.4 billion JPY

Creation of Fulﬁllment

Manufacturing Capital

Manufacturing Facilities
Production
Management System

Production Sites:

Capital expenditures:Japan: 2
Overseas: 5Long-term Vision&
KPI

R&D expenses: 5.8 billion JPY

Human Capital

Education and
Personnel Systems

Manual clutches:

Torque converters

Torque Converters:

Products for construction and industrial
machinery

Number of patent applications

Motorcycle clutches
and other drivetrain
components

Cash generation
Retained earnings forinvestment in growth
Improvement ofﬁnancial position

Equipment
Development

Production

7% share of global market
23% share of global market

Japan: 55
Overseas: 89

Number of Patents
Japan: 290

Cash ﬂow from operating activities
28.4 billion JPY

Dividend / Dividend Payout Ratio
4.2 billion JPY / 33.8%

Employee Awareness Survey
Overall Satisfaction(non-consolidated)

Employees:

Japan 5,796
Overseas 9,806

Procurement(Ratio of overseas employees: 63%)

・Vision (FY2050)

Social Capital・Strategy &Investment
Allocation

Relationship of trust with customers, cooperating companies, and local communities nformation dissemination anddialogue with shareholders and employees

GovernanceCorporate Governance

Natural Capital
Minerals (iron ore, coal,etc.), water, energy

Customer
Network

Manual clutches

Overseas: 399

Social and Environmental Impact

Technical and skilled
personnel, global
human resources

MethodDevelopment

Financial Impact

Manufacturing process
setup and management

EXEDY's Strengths
Technological
Development
Capabilities

Global R&D System
Core Technologies（Friction, Vibration, Fluid）

Topquality
Manufacturing
Sales
and
Aftermarket

17.6 billion JPY

R&D sites:

Product
DesignCustomers, Society, Employees

Japan: 7
Overseas: 16Intellectual CapitalIntellectual Property Rights

CustomerFeedback

Products & Services

Total capital:

Global Production
SystemResearchandDevelopment

236 billion JPY

Equity (net assets)
Cash reserves

OUTCOME

Risk Management

Energy consumption volume:

2,019,990GJ
Water usage:

External Environment

2,368,000㎥

Reduction of investment
resources due to
production processreviewDiversiﬁcation ofhuman resources
Compliance withvarious regulations(response to TCFD
recommendations,
initiatives forrespecting humanrights, etc.)

47.4%(+12.5 points compared to the previous year)

Training hours per employee(non-consolidated)

16.1 hours / year(+10.7 hours compared to the previous year)

Ratio of womenin management positions(non-consolidated)

3.7%(+0.1 points compared to the previous year)

Greenhouse Gas Emissions
13.3% Reduction(Compared to FY2019)

Progress indecarbonization

16

Shift toelectric vehicles

Low birthrate andlongevity

Increased severityof natural disasters

Human rights
violations, etc.

17

Chapter3

Long-term Vision
In 2021, EXEDY formulated a Long-term Vision of what it aims tobecome in the fiscal year 2050.

It is based on our corporate

philosophy, and it takes into account the significant changes in thebusiness environment in which we operate. To contribute to therealization of a sustainable society and to achieve sustainablegrowth for the EXEDY Group, we have also set key performanceindicators and numerical targets.
1. Recognition of Business Environment..... 20
2. Corporate Philosophy............................. 22
3. Long-term Vision..................................... 24
4. Key Performance Indicators (KPI)	��� 26

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Chapter 3: Long-term Vision

EXEDY Integrated Report 2022

1. Recognition of Business Environment
The world is undergoing rapid changes, including accelerated international cooperation to prevent global warming, the growth of emerging economies, and the reduction of the labor force due to declining birth rate and aging population. The automotive industry is also undergoing a once-in-a-century transformation, driven by advances in CASE as a result of the evolution of IoT and AI.
At EXEDY, we used the PEST analysis method to forecast the prospects, identify risks and opportunities, and derive our priorities and objectives.

Politics

EconomySociety

Technology

FutureOutlook• Acceleration of international cooperationon the prevention of global warming.
• Increased government regulation of greenhouse gas emissions.
• Intensification of U.S.-China trade friction.
• Legislation to strengthen efforts to addresshuman rights and environmental issues inthe supply chain.

• Growth of emerging economies, andfurther global diversification• Changes in car ownership patterns, suchas "car sharing”• Expansion of ESG-conscious investments.

• Reduction of labor force due to worldwide declining birth rate and an aging population• Progress in diversity initiative• The advancement of the replacement of work by
AI, robots, etc., and the transformation of the perspectives on work
• Growing demand for stronger corporate governance• Technological innovation in new technologies (IoT,
AI, etc.) and their implementation in society.
• Acceleration of connected technology.
• Evolution of charging and storage technologies,
including electric vehicles.

Risks• Decrease in sales due to suspension ofinternal combustion engine vehicles.
• Increase in direct costs associated withintroduction of renewable energy.
• Loss of customers and investors due tofailure to address human rights and environmental issues.

• Decline in automobile sales due to shift tosharing economy.
• Divestment due to lack of ESG initiatives.

• Shortage of labor force• Deterioration in turnover due to lack of response
to diversity issues• Deterioration of management due to lack of governance• Decrease in sales due to shift from internal combustion engine vehicles to electric vehicles

Opportunities• Increase in sales due to higher demand for
products for BEVs and HEVs
• Further increase in demand for energy-saving products• Sales increase due to expansion in emerging markets.

• Generation of technological innovation by diversifying human resources.
• Establish a strong management foundation
through enhanced corporate governance

Priority
issues(Materiality)① Prevention of Global Warming② Respect for human rights③ Environmental Compliance④ Sustainable Procurement① Provide new products that transmit
power efficiently② Circular economy① Make a company where employees are fulfilled② Diversity and Inclusion③ Governance④ Compliance⑤ Health / Occupational Health and Safety

What weaim for①③ Contribute to minimization of theenvironmental impact, including thecreation of a decarbonized society②③④ Promote business activities that consider environmental issues, human rights, andother social issues with cooperating companies① E xpand decarbonization-contributing
products and create and deliver newvalue② Contribute to minimizing
environmental impact• Sales increase from new product development
through technological innovation① Provide new value through technological innovation①C reate an environment that encourages employees
to grow and take on new challenges②⑤ Expand systems that allow diverse employees
to work with peace of mind
③④ Maintain strong governance and shared values
between management and employees① Create value in the current and new business areas

Our vision, derived from the above recognition of the business environment, is as follows.
<Our vision>"Contribute to minimization of the environmental impact, including the creation of a decarbonized society ″ "Promote business activities that consider environmental issues, human rights, and other social issues with cooperating companies″ "Maintain strong governance and shared values between management and employees″ "Create new value in current and new business areas″ "Create an environment that encourages employees to growand take on new challenges″ "Expand systems that allow diverse employees to work with peace of mind″ "Expand decarbonization-contributing products″

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Chapter 3: Long-term Vision

EXEDY Integrated Report 2022

2. Corporate Philosophy
EXEDY's corporate philosophy system consists of missions, aims, and values. In 2021, in the company's Sustainability Declaration, we declared that we would carry out activities to create a sustainable society and sustainablegrowth of the company (sustainability activities) and made sustainability a management policy. The Long-term Vision is based on the aforementioned recognition of the business environment, corporate philosophy, andmanagement policy, and clearly states what EXEDY aims to become by FY2050. The Seven Values are the concepts (values) that we will emphasize in our business activities in order to put our corporate philosophy into
practice and achieve our Long-term Vision. By achieving our Long-term Vision and adhering to the 7Values, EXEDY will continue to create joy for society, our customers, and ourselves, and contribute to the realization of asustainable society.

Corporate Philosophy

MissionCreation of Fulﬁllment
Customers

Society

Employees

Creation of Fulﬁllment
Each employee, with a good conscience and hope for the future, will create fulﬁllment for society.
Through advanced technology and scrupulous attention to detail, we will create fulﬁllment forour customers.
With pride and a desire to grow, we will create fulﬁllment for our EXEDY family.

Policy Statement

EXEDY will continue to grow and evolve as a
global company, contributing to the realization ofa sustainable society. (sustainability)

What weaim forLong-term Vision

Making Sustainability* a management policy*Making society and EXEDY sustainable.

The vision we aim to achieve by FY2050
Contribute to minimizing environmental impact, including the creation of a decarbonized society

Midterm Consolidated Management Plan

(fulﬁllment for society)
Create and deliver new value to customers (fulﬁllment for our customers)
Become an attractive company where people feel excitement and passion (fulﬁllment for our

Seven Values
Values①Safety ﬁrst

②Highest quality④Competitive manufacturing⑤Speed⑦Focus on ESG (Environment, Social, Governance)

Code of Conduct

22

Maintain a stable management structure based on strong governance③Strictly adhere to deadlines⑥Creating a company people want to work for.

Ethics of
Conduct
to befollowed

employees)(CSR Policy, Detailed Conduct Regulations, etc.)

An important foundation for implementing our Corporate Philosophy andrealizing our Policy Statement, Long-term Vision, and Midterm Consolidated
Management Plan.

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Chapter 3: Long-term Vision

EXEDY Integrated Report 2022

3. Long-term Vision
EXEDY establishes its "Long-term Vision" and "Slogan" after deliberation by the Board of Directors, based on the priorities and goals derived from the recognition of the business environment and the corporate
philosophy of "fulfillment for our society," " fulfillment for our customers," and "fulfillment for the EXEDY employees."
Also, we have set SDG targets that we will contribute through our business activities to realize this Long-term Vision.

SLOGAN

Drive our future. Let’s create fulfillment for all, and our future.
Drive" means "we are actively involved," and "our" means "all stakeholders including ourselves." It is our wish that "with our will, we can drive our future, including society, our customers, andCorporate Philosophy

our employees."

Creationof
Fulﬁllment

Priority Issues (Materiality)

Prevention of Global Warming
Environmental Compliance
Circular Economy

Creation of
Fulfillment

Creating a Company That Employees Are Happy to Work
Promotion of Diversity and Inclusion
Safety and HealthRespect for Human Rights

Business Environment
Recognition

Priorities&
Goals

Provide New Products That Transmit Power Efficiently
Offer New Value Through Technological Innovation

Long-term Vision (what we aim to achieve by FY2050)
Our Approach and the Way Forward
Contribute to minimizationof the environmental impact,
including the creation of adecarbonized society (fulfillment for society)

Create and deliver new value
to customers(fulfillment for our customers)

Be an attractive company where

Related SDGs

Transform the business portfolio and expand products that contribute to decarbonization
Establish a manufacturing system that is carbon neutral and minimizes environmental impact
Create new products that efficiently transmit power in addition to
those that make the transportation of people and goods more comfortable
Actively enter new business areas to become a unique company withunrivaled capabilities
Develop an environment that actively encourages challenges andproposals that stimulate growth

people can feel excitement andpassion (fulfillment for our

employees)

Expand systems that allow diverse employees to work with comfort(nationality, gender, age, disability status, family structure, etc.)
Comply with the laws and regulations of each country and region
and maintain high ethical standards

Management
Structure

Compliance
Governance
Sustainable Procurement

Maintain a stable management
structure based on strong
governanceImprove fairness and transparency of the Board of Directors
Strive to share values and aim for a bottom-up business foundation
Work with cooperating companies to promote business activities that addressenvironmental issues, human rights, and other social issues into consideration

To achieve the above Long-term Vision, we are working as follows.
We are taking on the challenge of "contributing to minimizing environmental impact, including creating a decarbonized society," by expanding our product lineup and building a production system.
For "creating and delivering new value," we are focusing our management resources on new product development in both existing and new businesses.
Through "Be an attractive company where people can feel excitement and passion," we are developing an environment in which employees can grow. We are also expanding systems that allow employees to work with comfort.
On "maintaining a stable management structure based on strong governance," we are further improving governance and promoting business activities that take into account environmental issues, etc., in cooperation with cooperating companies.

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Chapter 3: Long-term Vision

EXEDY Integrated Report 2022

4. Key Performance Indicators (KPI)
Key performance indicators (KPIs) for the Long-term Vision and targets for FY2030 and FY2050 are set after deliberation by the Executive Committee and the Board of Directors.
In addition, the Sustainability Committee (see page 36) oversees formulating action plans and managing progress to achieve the vision and KPIs.

Priority issues (Materiality)

KPI

Prevention of Global Warming
Environmental Compliance
Circular Economy

TargetFY2020

FY2021

FY2030FY2050

0.2%

0.3%

15%

51%

Net GHG(Greenhouse Gas) Emissions Reduction Rate <scope> 1 + 2

FY2019▲ 13.8%▲ 1 3 .3 %▲46%

▲1 0 0 %-00Ratio of R&d Expenses for New Product Development (*1)
Over Total R&d Expenses

FY2019:29%

23%

28%

Employee Awareness Survey (Overall Satisfaction)

FY2019:34.9%-

4 7 .4 %70%

FY2020:5.4 hours

5 .4 hours

1 6 .1 hours

48 hours

FY2019:5.3%

3 .6 %

3 .7 %

Total Working Hours

FY2019:2,021 hours

1,670 hours

1,898 hours

Less than 1,900 hours

Paid Leave Utilization Rate Figure in ( ) is the Percentage of
Employees Taking Paid Leave

FY2019:77.7%(20%)

75.4%(19.6%)

76.3%(22.0%)

100%(100%)

-

0

0

0

-

-

-

100%

-

0

0

0

FY2020:3 (27%)

3(27%)

4(36%)

More than 1/3

More than 1/2

-

0

0

1

3

-

-

104 times per year
(2 series)

Percentage of Female Managers
Percentage of Female Employees in Management Positions (*2)
(Senior Employees)

Consolidated

Nonconsolidated

Number of Major Accidents
Human Rights Training Attendance Rate

Consolidated

Number of Major Law Violations
Independent Outside Director

Compliance
Governance
Sustainable Procurement

Actual

FY2019:0.2%

Human Resource Development (Training Hours/Person/Year)
Creating a Company That Employees Are Happy to Work
Promotion of Diversity and Inclusion
Safety and HealthRespect for Human Rights

Base point

Percentage of Sales of Products Contributing to Decarbonization (including products for BEVs, HEVs, etc.)

Number of Environmental Incidents
Provide New Products That Transmit Power Efficiently
Offer New Value Through Technological Innovation

Subjects

Female and Foreign Directors
Town Hall Meeting Held

Nonconsolidated
Nonconsolidated

0

70%

90%

7%

13.9%( ※ 3)

52 times in a year
(2 series)*1：Creation of new value for new products, systems, services, and existing products. *2：Management positions are defined as senior employees with subordinates*3：The target for the ratio of female managers in FY2050 is the ratio of female employees at that time (13.9% in FY 2019)

The above targets were established based on the following approaches.

・Percentage of Sales of Products Contributing to Decarbonization: leveraging our expertise in developing energy-saving products, we will shift our main products from those related to internal combustion engine-related products to those related to decarbonization.
・NET GHG Discharge Reduction Rate: We challenge to achieve 46% reduction by FY2030 and 100% reduction (carbon neutral) by FY2050, based on the targets of each country including Japan and customer trends.
・Ratio of R&D Expenses for New Product Development: We will significantly increase the proportion of R&D spending on new products in anticipation of the risk of a decline in demand for current flagship products.
・Overall Employee Satisfaction: In response to the current low level of employee satisfaction, we aim to achieve the industry-leading levels in order to make the company“a place where employees are fulfilled”.
・Human Resource Development: We will increase training hours per employee by approximately ten times (compared to FY2019) to provide learning opportunities as part of our efforts to create an environment that promotes employee growth.
・Percentage of Women in Management Positions: Despite the characteristics of our industry, we aim to increase the proportion of female employees first, as diversified human resources lead to competitiveness.
・Independent Outside, Female and Foreign Directors: We are committed to improving the fairness and diversity of the Board of Directors in light of shareholder demands and societal trends.
・Town Hall Meetings: We will provide regular opportunities for direct dialogue between management and employees to share values.

26

27

Chapter

4

Strategies for Value Creation
The six management capitals that EXEDY has accumulated since
its establishment are the source for achieving a sustainable society through our business activities and enabling EXEDY to growsustainably. To achieve the Long-term Vision and KPIs describedin Chapter 3, EXEDY is implementing a strengthening strategy foreach management capital.

1. Strategies to Strengthen Human Capital ������������������������������ 30
2. Strategies to Strengthen Intellectual Capital ������������������������ 32
3. Strategies to Strengthen Manufacturing Capital ����������������� 33
4. Strategies to Strengthen Social and Relational Capital ������ 34
5. Strategies to Strengthen Natural Capital ������������������������������� 35
6. Strategies to Strengthen Financial Capital ���������������������������� 40

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Chapter 4: Strategies for Value Creation

EXEDY Integrated Report 2022

1. Strategies to Strengthen Human Capital
1. Value-creation ApproachWith our Long-term Vision of "being an attractive company that inspires excitement and passion," we aim to be
a company that fulfills its employees by creating an environment where employees can actively take on challenges and make suggestions that promote their growth and by expanding systems that enable a diverse rangeof employees to work with peace of mind.

2. Targets and Actual(3) Establishment of New Training Programs that Contribute to New Value-creation
To create new value, we have established two new training programs, General Electric System Basic Training and
New Business Creation Training, to enhance expertise in technology and skills. For the General Electric System
Basic Training, we have already started with 154 employees in the manufacturing, development, procurement,
quality control, production engineering, and sales departments, with the goal of early introduction of new electrical products. Also, for the New Business Creation Training, we are preparing to begin this training in the second half of FY2022 as part of our efforts to create an environment where employees can make proposals proactively.

2) Promotion of Diversity and Inclusion (expand systems that allow diverse employees to work with peace ofmind)
Approach/Policy
Target (FY2030)

Actual (FY2021)

Compared to theprevious fiscal year

Employee Awareness Survey(Overall Satisfaction)

70％

47.4％

+12.5 points

Human resource development(training hours/person/year)

48 hours

16.1 hours＋ 10.7 hours

Percentage of female managers

7％

3.7％

＋ 0.1 points

3. Policies
1) Human Resource Development (create an environment that fosters employee growth)Approach/Policy

EXEDY is working to refine our core technologies while creating new products, such as electrified products, and focusing on human resource development to continue to grow as a global company. To provide learning opportunities for employees, we have set annual training hours per employee as a KPI and formulated a plan to significantly
increase these hours by FY2030. To develop human resources that will contribute to the sustainable growth of ourgroup, we have established training and development programs by job level, taking into account each level and its
objectives. In addition, an in-house study program was initiated in FY2022 to encourage employees' growth by providing them with opportunities to experience different divisions.
For more information on stratified education, please visit here.
Global Human Resources Development / EXEDY Corporation (exedy.com)
https://www.exedy.com/en/csr/employees/globalhr/Initiatives(1) Expansion of Training Programs for Managers and Supervisors
With the drastic changes in the internal and external environment, the expectations of managers and supervisors
are increasing, and we are placing a special emphasis on expanding our training programs for this level. We
enhanced the content of leadership training for new senior managers and new section managers and added
harassment prevention (Applied). LeaderSenior
ship training is designed to help participants
Supervisor
Manager
New Hire
Mid-level staff
Management
learn teaching and coaching techniques to
Department
Executive Ofﬁcer
Management
Nextimprove the instruction of their subordinates
Manager Training
Training
Training
generation
Business School
Business School
Business School
and the performance of their teams. In addiNew Senior-level
Employee Training
Group Training
Mid-level staff
New Section
Stratiﬁed
tion, Harassment Prevention (application)
training
Follow-up Training
Training
Manager Training
Training for new
department managers
includes case studies and aims to create a
Global EXEDY Technical School GETS
comfortable work environment.
Equipment /MaintenanceProduction Engineering
Technical(2) Training of Managers at Overseas Offices
Design / Development Quality Manufacturing Common Technology
SkillsGlobal Management Safety / Environment Other
EXEDY is a global company with 44 offices in
25 countries around the world, and the trainTPS training
Guest Engineer Training
ing of managers to support the operation ofSpecialist
Skill Development Center(external organization)
overseas offices is an important task. We invite
local executives and general managers from
Overseas Senior
Overseas A Training Program
Management
Globalizationeach of our overseas offices to Japan for overTraining
OJT for Oversea Trainees
seas management training. In this training, in・ e-learning
Correspondence Education
Personal
addition to discussing the topic of the mid- Development
TOEIC Course
Supportterm plan, we also convey our growth strategy
Compliance training (human rights, harassment, etc.)"EXEDY Way," which consists of our corporate
Company-widetraining
Diversity training
philosophy, Long-term Vision, values, etc.

30

EXEDY is a global company with a diverse workforce. We aim to create new value by utilizing this diversity. In
July 2018, we established our Diversity Policy to make EXEDY a company where each employee, regardless ofdifferences in attributes, values, or experience, can feel happy to work. This policy promotes diversity and inclusion based on: "Respect for each other's differences," "Emphasis on communication," " Appreciate individual
abilities," and "Respect for work-life balance."

Initiatives(1) Work Environment Training
To ensure that our diversity policy is understood and put into practice, we conduct diversity training as part of the
training for new department managers and section managers. This training covers everyday work-related topics
such as how to interact with diverse subordinates and how to talk (listen) in a way that allows employees andmanagers to understand each other.
(2) Female Employees Empowerment
In EXEDY, we have set a KPI to increase the proportion of women in management and a target to increase theproportion of female employees by FY2050. To achieve this goal, we have established a three-level training
course for female employees. This course is tailored to each employee's position and career plan to help themto achieve their career goals. In addition, to create a culture free of unconscious bias, such as "only male employees can achieve management positions," we conduct unconscious bias seminars for managers and supervisors.
In the future, we plan to expand the target group and provide training for all employees.
(3) Work Environment Diversity
EXEDY strives to diversify the working environment so that each individual can maximize his or her abilities. To
support work-life balance, we have set KPIs for total hours worked and paid leave usage, and are reviewing theleave system and making it easier for employees to take time off. In addition, to encourage employees to workfrom anywhere and at any time, we have established systems for remote work, flextime work, limited working
hours, etc. The number of our employees using these systems is growing as well, as shown in the table below.
Number of users of each system (person)

Classification
Place

Time

System NameFY2019FY2020

FY2021Compared to
FY2019Remote working system

26

212

230

885%

Flexible working system

427

591

581

136%

Childcare / limited working
hours system

50

51

77

154%

50

51

54

108%

23

ｰ

Shortened working hours
for childcare
Limited working
hours system(Newly established in FY2021)（4）Expansion of Employment of People with Disabilities

EXEDY established EXEDY Sun, a special subsidiary, in March 2011, and employed 28 people with disabilities (asof March 31, 2022). Employees with intellectual disabilities receive the support they need and perform the tasks
that utilize their attributes and skills, such as blade alignment, assembly, and other precision work encompassed
in torque converters, cleaning product containers, and labeling cosmetic boxes. EXEDY Logistics is working topromote the employment of people with disabilities and to develop a system for accepting them once they are
employed, for example, by providing on-site pre-recruitment training and training for employees to support
them. EXEDY Trading has made proactive efforts to employ people with disabilities by providing specific information about the tasks they are responsible for, and in October 2020, the company received an award from the
Osaka Employment Development Association as an excellent workplace for people with disabilities. In addition,
EXEDY's employment rate of people with disabilities is 2.38% (as of June 2022).

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Chapter 4: Strategies for Value Creation

EXEDY Integrated Report 2022

2. Strategies to Strengthen Intellectual Capital

3. Strategies to Strengthen Manufacturing Capital

1. Value Creation Approach

1. Value Creation Approach

EXEDY's Long-term Vision is to "create and deliver new value" by "creating new value to make the transportation of people andgoods more comfortable" and "Actively enter new business areas to become a unique company with unrivaled capabilities,"
we will realize "fulfillment for our customers" and create long-term value for the company. We see the global shift to electricvehicles as an opportunity for new business expansion and aim to shift development resources to new businesses (newproducts and new business areas) and promote open innovation.

One of EXEDY's strengths is its ability to provide high-quality life-carrying automotive and motorcycle products
worldwide. While leveraging the manufacturing expertise and global production system developed since our
inception, we are pursuing the highest quality manufacturing (see page 14 for details) by promoting humanresource development and production system evolution.

2. Target and Actual

2. Target and Actual
Target(FY2030)

Actual (FY2021)

Total R&D expenditures
Ratio of R&D expenses for new product development *1

70%

28%

+5 points

Number of patent applications *2－

Japan 55 (other than internal combustion engines 34) *3
Overseas 89 (other than internal combustion engines 42)－

3. Policies

Number of patents held *2－

Japan 290 (other than internal combustion engines 23) *3
Overseas 399 (other than internal combustion engines 45)－

1) Developing human resources for manufacturing

Compared to theprevious fiscal year

*1: New products, systems, services and creation of new value for current products *2: EXEDY + DYNAX + EXEDY Globalparts *3: Electrification-related products +HEVs

・EXEDY is increasing the proportion of R&D expenditures related to new products and has applied for patents mainly for elec
trification-related technologies in FY2021(the percentage of applications filed excluding internal combustion engines is 60% in Japan and less than 50% overseas.)

3. Policies

Capital Expenditure
Greenhouse Gas Emissions(Compared to FY2019)

Target (FY2030)

Actual (FY2021)－

17.6 billion JPY▲ 46%▲ 13.3%

EXEDY is committed to enhancing its training system for factory technicians responsible for manufacturing. Traditionally, we have established and provided stratified training programs from the basic to the advanced levels sothat employees can apply their skills and knowledge in practice. However, this training method leaves the training
to the field, and the training status varies. To address this issue, a Skill Map, which lists the skills and knowledge
required for the job, has been prepared for all manufacturing lines. This year, all lines will use this map to formulate skill improvement plans for each employee and conduct systematic guidance and training.

2) Initiatives toward carbon-neutral production systems

1) Shift to new businesses
Approach/Policy

In anticipation of changes in our business portfolio due to the expanding global BEV and HEV markets, we are strengthening our new product development structure by reorganizing our R&D resources.

Initiatives(1) We merged the Development Headquarters and the Motorcycle Clutch Headquarters to consolidate product development
and planning for BEVs. This merger aims to benefit from the synergistic effects of integrating the BEV-related knowledge heldby both headquarters.
(2) We have newly established the Business Development Department, Smart Technology Department, and Development
Planning Department to strengthen our ability to create new value. The Business Development Department will create new
business pillars for EXEDY, the Smart Technology Department will design and manufacture A.I. robots, and the Development
Planning Department will develop new products to make the transportation of people and goods smoother.
(3) To achieve early mass production of electric products, we have newly established the Electric Product Development Center, whichbrings together the people in charge of product design, parts procurement, production technology, and quality assurance.

EXEDY is promoting energy conservation activities at its plants worldwide and considering introducing renewable energy sources to achieve carbon neutrality by FY2050.
(1) Energy-saving activities
We are studying improvement measures centered on processes and operations with high power consumption.
For the casting process, we are taking measures to reduce molten metal holding power. For the heat treatment
process, we are changing from a continuous furnace to high-frequency heating. And for compressors, we aretaking measures to prevent air leaks.
(2) Introduction of renewable energy
Each plant is investigating and implementing the most appropriate scheme. Neyagawa Headquarters and the
Ueno Division and other domestic and overseas group companies have already installed solar panels on the roofsof their plants. DYNAX has decided and is preparing to introduce renewable energy using a biomass boiler andan off-site PPA model with direct supply from self-owned lines. EXEDY Clutch India and EXEDY Fukushima havealso begun installing renewable energy.

2) Open Innovation
Approach/Policy

We aim to create new value by combining EXEDY's accumulated strengths and outside resources from external organizations.

Initiatives(1) We have concluded a capital and business alliance with Aster, a company with strengths in high-output, compact motors. By
combining our drive technology with Aster's motor technology, we intend to develop core devices for next-generation mobility and eco-friendly products, such as drive systems with torque converters for BEVs and BEV drive systems for motorcycles.
For more information, please refer here.
EXEDY announces business alliance with Aster Co., Ltd. for next-generation mobility and environmentally friendly products /EXEDY Corporation
https://www.exedy.com/ja/news/2022/01/14/20220114/ (Japanese only)（2）We invested in Monozukuri Fund 2, a Limited Liability Partnership for Investment led by Monozukuri Ventures. Throughthis investment, we will support and partner with startup companies to accelerate new business creation and expansion.
For more information, please refer here.
Investment in Monozukuri Fund 2 (a Limited Liability Partnership for Investment)
https://www.exedy.com/ja/news/2022/09/09/20220909/ (Japanese only)(3) We will continue to strengthen our partnerships with CVCs and VCs, as well as cooperation between industry and academia(Hokkaido University, Kobe University, etc.)

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Chapter 4: Strategies for Value Creation

EXEDY Integrated Report 2022

4. Strategies to Strengthen Social and Relational Capital

5. Strategies to Strengthen Natural Capital

1. Value Creation Approach

1. Value Creation Approach

EXEDY's business activities consist of relationships with various stakeholders. We aim to further enhance ourcorporate value by building good relationships with our stakeholders and incorporating their opinions and demands into our business activities.

Energy, resources, and water are the shared assets of mankind, and EXEDY's business activities are supported bynatural capital in many ways. In order to minimize environmental impact through the efficient use of natural capital and to create fulfillment for society by providing products that promote the optimal use of energy, we are com-

Stakeholders

Approach

Customers

Based on our customer base, we will identify customer needs and create new businesses. We will
also leverage our worldwide sales network (approximately 6,700 companies) to expand business opportunities by providing products that meet end-user needs at the fastest possible speed.

Shareholders / Investors

We will deepen mutual understanding and create value by disseminating information and promoting dialogue with shareholders and investors.

Employees

We will promote communication with our employees to share our values and reflect
their opinions in our corporate activities.

Partner Companies

By promoting dialogue with cooperating companies, we will work together to promote sustainability activities and resolve social issues.

Local Communities

We will work together with local communities to "realize diversity," " develop communities,"and "nurture the next generation" to achieve sustainable growth for society and our company.

2. Initiatives and Achievements
1) Disclosure and promotion of dialogue with shareholders and investors

In the area of disclosure, in addition to the financial statements, we newly started disclosing financial reporting
documents on our website and disclosed information in compliance with the recommendations of the Task Forceon Climate-related Financial Information (TCFD), which is in line with the Corporate Governance Code. We havebeen striving to enhance the disclosure of both financial and non-financial information. As a result, we are selected
as an FTSE Blossom Japan and FTSE Blossom Japan Sector Relative Index stock. In addition, we held 50 discussions
with shareholders and analysts through one-on-one meetings and conference calls related to the financial statements.

2) Hold town hall meetings and management council meetings with employees

There were a total of 104 town hall meetings held by the President and Senior Executive Managing Director in twoseries for all employees (approx. 2,600). Management and employees engaged in dialogue to share values, suchas Long-term Vision and information about new product development. In addition, four management council
meetings were held between management and employee representatives to discuss various issues in corporate
management.

3) Promote sustainability activities with cooperating companies for sustainable procurement(1) Risk assessment and response to cooperating companies
EXEDY offers a CSR evaluation chart to new and existing suppliers to assess risks related to environmental and social issues (86 questions in 18 categories). Additionally, we convert the monitoring results into 100-point scores,
rank the suppliers, and create a radar chart of the scores for each item. Of the 271 suppliers, 87%, or 236 companies, have been assessed for this evaluation.
(2) Training for cooperating companies
In support of suppliers, we held training sessions on "Human Rights Initiatives Required of Businesses by the UN
Guiding Principles" and "Carbon Neutral Trends in Different Countries and the Automotive Industry" as part of the
procurement policy briefing, which raised awareness of environmental issues and social challenges among partner companies.
Please refer here for more details on collaboration with cooperating companies.
Supply Chain / EXEDY Corporation (exedy.com) https://www.exedy.com/en/csr/supplychain/4) Collaboration with local communities

In terms of achieving diversity, our company, as a member of the Iga City Multiculturalism Promotion Committee,
is studying measures to promote interaction across nationalities and plans to formulate a promotion plan in
FY2022. DYNAX supports the promotion of women's activities in the community by accepting children of non-employees at its on-site childcare facilities. EXEDY Sun and EXEDY Trading are working to employ people with disabilities in the local community. As for community development, we have offered our land adjacent to our headquarters as EXEDY Disaster Prevention Park free of charge to Osaka Prefecture and Neyagawa City. EXEDY Dynax
Shanghai and EXEDY Thailand are working to improve the local environment and have received commendations
from the authorities. In the area of next-generation development, EXEDY supports student automobile races andprovides internship opportunities.
Please refer here for more details on collaboration with cooperating companies.
Our Contributions to Society / EXEDY Corporation (exedy.com) https://www.exedy.com/en/csr/society/34

mitted to creating economic value and protecting the global environment under our Long-term Vision of "contributing to minimizing environmental impact, including creating a decarbonized society."

2. Target and Actual
Greenhouse Gas Emissions(Compared to FY2019)

Target (FY2030)

Actual (FY2021)▲ 46%▲ 13.3%

3. Initiatives
1）Initiatives Regarding Environmental Issues

At EXEDY, each group company operates an environmental management system such as ISO 14001 and promotes daily environmental conservation activities based on group policies and Midterm Consolidated Management Plan. In consideration of laws, regulations, and stakeholder requirements, each division addresses environmental issues specific to its region and business category, such as pollution prevention, legal compliance,
coexistence with local communities, and reduction of environmental impact. We regularly hold issue-specificand region-specific environmental meetings to obtain synergistic effects for the entire EXEDY group throughenvironmental conservation activities that utilize the characteristics and strengths of each subsidiary. We aretaking initiatives to strengthen our environmental management system on a global basis by formulating andimplementing group policies and environmental goals, sharing responsibilities and best practices among our
subsidiaries, and monitoring their progress. For details on our environmental policy, management system, andinitiatives, please refer to the following.
Environment / EXEDY Corporation (exedy.com) https://www.exedy.com/en/csr/environment/
Environmental Management / EXEDY Corporation (exedy.com)
https://www.exedy.com/en/csr/environment/management/
Efforts to Reduce Environmental Impact / EXEDY Corporation (exedy.com)
https://www.exedy.com/en/csr/environment/activities/
In addition, we recognize the reduction of greenhouse gas emissions as one of the most important environmental issues. So we have established long-term targets at the Board of Directors meeting and medium-term targets
at the Sustainability Meeting chaired by the President & CEO to manage progress.

2) Examples of Renewable Energy for Reducing Greenhouse Gas Emissions（1）Power generation by solar panels
EXEDY Group companies have installed solar panels on the roofs of each factory and building to generate ourelectricity. 6,637,419 kWh of electricity was generated by the entire EXEDY Group in FY2021, and the in-house
consumption rate was 0.38%. In addition, Dynax Tomakomai Plant has decided to introduce an off-site PPA(Power Purchase Agreement) model with direct supply by proprietary lines. This will be one of the largest
self-consumption mega solar power plants in Hokkaido. Approximately 7,000 solar panels will be installed on
idle land nearby (63,721 m2), with a panel output of 3.85 MW. This is equivalent to 12% of the plant's electricity
output. Power generation is scheduled to start in November 2023 and is expected to reduce CO2 emissions byapproximately 2,400 t-Co2 per year.
For more information, please refer here.
PressRelease_Dynax Tomato Solar PPA Amendment - 221021 for final HP.pdf (dynax-j.com)
https://www.dynax-j.com/ja/wp-content/uploads/2023/02/PressRelease_20231021.pdf (Japanese only)(2) Purchase of electricity derived from renewable energy sources
EXEDY Clutch India purchased some renewable energy on a trial basis but switched to renewable energy on afull-scale basis in May 2022. EXEDY Fukushima also started purchasing a portion of renewable energy in May
2022, and this purchase is expected to reduce the company's greenhouse gas emissions by -5%.
(3) Introduction of biomass boilers
DYNAX Tomakomai Plant has decided to install a biomass boiler. The steam boiler currently in use uses fossil
fuels, whereas the biomass boiler is fueled by paper sludge, an industrial waste product generated at the plant.
The biomass boiler is scheduled to start operation in January 2024. It is estimated to reduce CO2 emissions by
3,501 tons per year and waste by 333 tons per year.

35Chapter 4: Strategies for Value Creation

EXEDY Integrated Report 2022

3) Information Disclosure Under the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)

The EXEDY Group aims to achieve carbon neutrality (substantially zero greenhouse gas emissions) by 2050 in
P36
response to the international challenge of preventing global warming. We
areガバナンス
working on the introduction anddevelopment of next-generation electrified products and future products. In addition, we have expressed our
support for the Climate-related Financial Disclosure Task Force (TCFD), the TCFD Consortium, and the Japan Climate Initiative (JCI), and are working to strengthen the resilience of our strategies (ability to adapt and survive)by analyzing the impact of climate change on our business and theresulting risks and opportunities based on multiple scenarios andGovernance
Promotionreflecting them in our management strategies and financial plans.
Structure
System(1) Governance
The EXEDY Group recognizes climate change as an important enviBoard of Directors
ronmental issue, and after deliberation by the Management Committee and the Board of Directors, has chosen to contribute to the creation of a decarbonized society as one of its Long-term Visions, andExecutive Meetinghas established climate-related KPIs (key performance indicators). In
addition, to achieve the vision and KPIs, we have established a SusReports andRecommentainability Committee as a meeting body that formulates sustainabilidations
Sustainability
ty action plans and manages progress. This meeting is chaired by theWorking Group
Sustainability Meeting
President & CEO, and attended by all executive officers (including（Chairman:（Chairman: President &those stationed overseas) and the full-time corporate auditors, and isRepresentative Director
CEO)and Senior Managing
held twice a year. The committee deliberates and decides on mediExecutive Ofﬁcer）
Planning and progress
um- to long-term goals and the necessary responses based on laws
management of
Promotion ofand regulations and the needs of interested parties, and discusses
sustainability activities
sustainability activities
matters that are deemed to have a significant impact on the business・Secretariat
Monitoringat the meeting of the Management Committee and the Board of Di(Administration
andHeadquarters)
rectors. In addition, we have formed the Sustainability Working Group
Guidance
・Members are
as a working force to promote sustainability activities. The group isselected from eachchaired by a director and senior managing executive officer, and its
headquarters.
Divisions and Afﬁliates
members are elected from each headquarters, promoting activities
across the company.
(2) Strategy① Scenario Assumption
To understand the potential financial impact of climate change on EXEDY Group's operations and to identify
climate-related risks and opportunities, we referred to external scenarios such as the International Energy Agency's (IEA) World Energy Outlook and the 2°Investing Initiative as benchmarks. We also reviewed the scenario
analysis for the automotive industry, assumed an overall scenario based on the company's perception of its longterm business environment, and identified climate-related risks and opportunities by analyzing the differences
between the scenario and our long-term strategy. The scenario definition was based on the analysis of all projects on a global basis and classified into two categories: 4°
C scenario (case of little progress in addressing global
warming) and below 2°
C scenario (case of accelerated global warming), for the two axes of transition risk andphysical risk.

Transition risk

4°C
scenario*3

Below 2°C
scenario*4

Provenance

Carbon price <devel－－
oped countries>（US$/t-CO2）
Electricity rate
216
FY2050: 184（US$/MWh）
CO2
conversion index FY2019 : 0.46 FY2030: 0.31
（t-CO2/MWh）

FY2030: 100
FY2040: 140
FY2050: 160

IEA "WEO 2021" *5(SDS/Sustainable Development Scenario)

FY2050: 242

IEA "WEO 2018"

FY2030: 0.16

IEA "WEO 2020"

Parameter
Carbon price

Changes in theenergy mix

Raw material priceIron price（US$/t）

Current

350

FY2050: 382

Gasoline diesel ve- Current status 100% in 2050
Changes in custom- hicle sales volume （=100%）
LCT *1er behavior
EV penetration rate

0.3%

FY2030 5%36

FY2050: 506
90% reduction in
2050
ACT *2
FY2030 39%

2DII The Transition
Risk-o-MeterReferenceScenarios forFinancial
Analysis *6
2DII The TransitionRisk-o-MeterReferenceScenarios forFinancial
Analysis
Global Calculator

Physical risk

Average Temperature Rise

Intensification of
extreme weather

Parameter

Current

4°C
scenario*3

Below 2°C
scenario*4

ProvenanceAir conditioning
cost(US$/person/year)

about 19

FY2030 :about30
FY2050 :about60

FY2030 : about30
FY2050 : about35

IEA“The Future of Cooling”

Flood frequency FY2018:(100%)

FY2040 : 400%

FY2040 : 200%

MLIT“Recommendations
for Flood Protection Planning in the Context of
Climate Change”2019

Occurrence of
typhoons andcyclones

Decrease in frequency, potential
increase in intensity

Japan Meteorological
Agency / Environment
Agency26 cases/
year in 2016

*1：Limited Climate Transition, *2：Ambitious Climate Transition, *3: Case where global warming countermeasures do not make much progress*4: Case where global warming countermeasures are accelerated (1.5°
C scenario in some cases), *5：International
Energy Agency "World Energy Outlook"*6：2°Investing Initiative（2DII）② Identifying climate-related risks and opportunities
After analyzing the differences between the above scenarios and our understanding of the business environment, which is the premise for the EXEDY Group's long-term strategy, we have identified the key items that we
believe will have a huge potential financial impact on our business, as follows.
Main risks
Key Items

Potential Financial Impact

Increase in direct costs due to introduction ofrenewable energy
・Greenhouse gas emission reduction target(FY2030) -46% compared to FY2019. MeaTighter Governmentsures: energy conservation activities (annual
Regulations on
reduction of 1%) and introduction of renewGreenhouse Gas
able energy
Emissions・If energy conservation activities are carriedout as planned, the estimated cost of renewable energy in FY2030 is 590 million JPY/
year./ <FY2021: ¥2.93/kWh>
Decrease in sales due to suspension of salesof internal combustion engine vehicles andaccelerated transition to electric vehicles
・In the 2DII scenario, sales of internal combusTighter regulations
tion engine vehicles will decrease by 90%.
on existing products<FY2050>and market changes
・Of the EXEDY Group's sales, 89% is for internal combustion engines, and the impact onsales in FY2050 will be approximately -180
billion JPY.

Increased severity
and frequencyof extreme weather
events such as
cyclones and floods

Decrease in sales due to factory shutdowns
and supply chain disruptions
・According to the MLIT's " Recommendations
for Flood Protection Planning in the Context
of Climate Change ", the frequency of flooding is expected to double (2°C) to quadruple(4°C) by FY2040.
・If operations are suspended (for 5 days) inJapan and Asia (81% of total manufacturing),
where flooding is most likely to occur, theimpact on sales will be -4.6 billion JPY.

Time axis
ImpactCountermeasures

Mediumterm
High・Consideration of the introduction of internal carbon pricing to stimulate theintroduction of energy-saving equipment.
・Gathering and researching information on renewable energy options inJapan and overseas to minimize thecost of introducing renewable energy.

Long-term
High・Collection of information on regulations and customer trends related tointernal combustion engine vehicles
in Japan and overseas
・Development of new products forelectric vehicles with features that
improve efficiency during rotationalenergy transfer (EXEDY's strength)

Mediumterm
High・Implementation of risk assessment
using hazard maps
・Implementation of measures in linewith risk assessment~ Completion of relocation of plants
with the greatest risk in FY2020~ Installation of temporary flood barriers, etc.
・Formulation of business continuity
plan that includes cooperating companies

Regarding the transition risk, we evaluated that the potential financial impact on the EXEDY Group's business is high due to stricter
government regulations on greenhouse gas emissions, stricter regulations on existing products, and market changes. Regarding physical risks, we evaluated the above impact of increasing severity and frequency of extreme weather events to be high.

37Chapter 4: Strategies for Value Creation

EXEDY Integrated Report 2022

Main opportunities

The first is an increase in the R&D expense ratio for new product development. As mentioned earlier, against the

Key Items

Potential Financial Impact

More efficient production and logistics
process utilization

Lower energy costs through more efficient production
・One of the measures of the Long-term Vision/
reduction of greenhouse gas emissions (-46%
in FY2030 compared to FY2019) is -1% annuallyin energy-saving activities (-11% in FY2030).
This action is expected to reduce costs by approximately 600 million JPY.

Increase in sales due to higher demand for
products for HEVs (Japan and China)
・While regulations on internal combustion engine vehicles are becoming stricter in Europe
and the United States, HEVs (hybrid vehicles)
are exempt from regulations in Japan and ChiDevelopment and sales
na.
expansion of low
・Global HEV sales in FY2032 will be six times
emission products
higher than in FY 2019 (35 million units). The
impact on sales in FY2030 is expected to be 37
billion JPY due to the development of technologies such as HEV damper and direct drive iSG
for HEVs, contributing to decarbonization.
Increased sales due to increased demand for
drive unit products centered on motors for BEVs
・The global BEV (electric vehicle) sales share in
FY2032 is expected to be 42% (2% in FY 2019),
Development of new
and the global sales volume to be 43 million
products through R&D
units. We assume that the development ofand technological innoBEV wide-range drive systems and other techvation
nologies will have an impact of 5 billion JPY on
sales in FY2030.
・The market for drive unit products centered on
motors for new fields such as drones is also
expected to grow in the future.

Time axis
impactCountermeasure

Mediumterm
High・Continuation of energy-saving activities
・Promotion of production technology
development that contributes to further production efficiency
・Examination of optimal production system with consideration of sales forecasts for existing flagship products

Mediumterm
High・Set the “sales ratio of products that
contribute to decarbonization” as a
KPI. Set a target of 15% by FY2030 and
51% by FY2050, and focus on creatingand expanding sales of products for
HEVs and BEVs
・Also set the “Ratio of R&D expenses
for new product development” as a
KPI. Set a target of raising this ratio to
70% in FY2030 and 90% in FY2050 andstrengthen the development structure.

Mediumterm
High・In addition to the above, we concluded a capital and business alliance with
Aster, a company with strengths in
high-output,
compact
motors.
(EXEDY/drive technology × Aster/motor technology)
・Accelerate technology developmentof the following motor-centric drive
unit products
~BEV wide-range drive systems, motorcycle electric units, drone propulsion systems, Universal e-Drive Units

As for opportunities, we believe that the utilization of more efficient production and logistics processes, the development and sales expansion of low-emission products, and the development of new products through R&D andtechnological innovation have a high potential financial impact on the EXEDY Group's business.

③Impact on management strategy
In order to strengthen the resilience to the impact of the carbon-neutral movement on the EXEDY Group's productdevelopment and production system, which we have recognized by identifying the risks and opportunities mentioned above, we are implementing the following two points.
The first is the formulation of a Long-term Vision that incorporates climate change countermeasures and the announcement of a sustainability declaration. In our Long-term Vision, we aim to contribute to the creation of a decarbonized society through both product expansion and production systems. In addition, in the sustainability
declaration, we have announced that we will achieve carbon neutrality by 2050.
Secondly, we are strengthening our product development structure through open innovation and organizational
restructuring. As for open innovation, we concluded a capital and business alliance with Aster, a company withstrengths in high-output, compact motors. As part of our organizational restructuring, we have integrated theDevelopment Headquarters and the Motorcycle Clutch Headquarters, and newly established the Development
Planning Department, Smart Technology Department, and other departments. In addition, electric product representatives from the Development, Purchasing, Production Engineering, Quality Assurance, and Manufacturing
Headquarters have been assembled to prepare for the mass production of electric products across the entire company. By strengthening these product development systems, we will accelerate the technological development ofmotor-centered drive unit products, including BEV wide-range drive systems and motorcycle electric units, utilizing
EXEDY's drive technology and Aster's motor technology.
④ Impact on financial planning
There are also two main impacts on financial planning.

38

backdrop of carbon neutrality, it is necessary to expand the number of new products that contribute to decarbonization and strengthen the development system for new products. Accordingly, in our financial plan, weplan to increase the ratio of new product development expenses to R&D expenses from 29% in 2019 to 90% by
FY2050.
The second point is to account for the purchase of renewable energy. As part of our production system for carbon neutrality, we plan to start purchasing renewable energy sources in FY2024 and have incorporated this into
our consolidated medium-term management plan.

(3) Risk Management
The EXEDY Group's risk management action guideline is to prepare in advance to prevent emergencies and minimize damage. To ensure that these measures are implemented, we conduct risk management after evaluating
and identifying risks. We identify major risk items related to safety and health, environmental preservation activities, and business continuity management activities, based on the frequency of occurrence, degree of impact,
and surrounding conditions. We are working to strengthen our management system by clarifying the department responsible for each risk, the degree of impact of each risk, the causes of its occurrence, and proactive
preventive measures.
Regarding climate-related risks, the Sustainability Committee plays a central role in analyzing scenarios, assessing and identifying risks, and managing the progress of response measures. The status of the response to majorrisks is as follows. Regarding the risk of sales decline due to the suspension of sales of internal combustion engine vehicles, etc., the Management Committee and the Board of Directors have discussed the issue, and developed a Long-term Vision, and strengthened the product development system. Regarding the risk of increased
direct costs from the introduction of renewable energy due to stricter government regulations, the Sustainability
Working Group is researching and studying measures to address this issue, including gathering information on
renewable energy options. Regarding the risk of supply chain disruptions due to floods and other disasters, theRisk Management Committee, consisting of the President & CEO, (Senior) Executive Managing Officers, and fulltime Audit and Supervisory Board Members, is discussing and promoting business continuity plans for suppliers
and other parties.

(4) Metrics and Targets
The EXEDY Group is working to achieve carbon neutrality by 2050, and has set the following targets for FY2030
and FY2050 based on the "NET GHG (greenhouse gas) emission reduction rate" as a climate-related KPI, and isconfirming progress at the Sustainability Conference.
Metrics

Targets

Actual(FY2021)

NET GHG Emissions Reduction Rate
Scope 1 (direct emissions) + 2 (indirect emissions: electricity, etc.)
FY2030 -46% <compared to FY2019>
FY2050 -100% <same as above>
Reduction rate 13.3% <Compared to FY2019>
Emissions (1000t-CO2)
Scope 1: 35.0, Scope 2: 184.6, Scope 3: 1,487.4

As described above, the EXEDY Group recognizes climate change as an important environmental issue and has
positioned the Board of Directors and the Sustainability Committee as governance and the Sustainability Working Group as the business promotion organization to establish KPIs and promote sustainability activities. Also,
we have analyzed the circumstances surrounding our company based on multiple scenarios to identify significant risks and opportunities, and have estimated the potential financial and strategic impact of climate change
on our business, and reflected this information in our management strategies and financial plans. In particular,
we have incorporated measures to address major risks and opportunities into our Long-term Vision and consolidated medium-term management plan. By steadily implementing these measures, we will strengthen the
EXEDY Group's resilience against the impact of these risks on product demand and other factors.

39

Chapter 4: Strategies for Value Creation

EXEDY Integrated Report 2022

6. Strategies to Strengthen Financial Capital

future pillars of our Group, we have established a new organization under the direct management of the President.
It will examine the potential and growth of various new products and business ideas and decide whether or not tolaunch them, monitor the progress of those that have been launched, and flexibly allocate the necessary type and1. Value Creation Approachamount of management resources at any given time.

To transform the business portfolio and create new value, we will need resources for R&D for new products,
M&A, and other growth investments. EXEDY aims to increase corporate value by using funds generated throughbusiness activities in growth investment. We will also continue to meet the expectations of our shareholders bymaintaining stable shareholder returns.

2）Stable shareholder returns
Our basic policy on shareholder returns is to pay stable dividends, with a target payout ratio of 30%.

■History of dividend payouts
Dividend per share (JPY)
（JPY）
300

2. Target and Actual■Basic Earnings per Share■Basicdividend
Earnings per Share■Year-end

（JPY）
300

■Year-end
dividend■Interim
dividend■BasicEarnings
per Share■Interim dividend■Year-end dividend

（JPY）
300
250

Target (FY2030)

Actual (FY2021)

Compared to theprevious fiscal year

ROE

More than 10%

5.9％+3.4 points

Stable shareholder
returns

Dividend payout ratio of 30%
or more + Maintenance ofstable dividends

Dividend: ¥90 per share per year
Dividend payout ratio: 33.8%+¥30 pershare per year

■Interim dividend

250
200
200

Share (Forecast)

150

100

After-tax
operating proﬁt
After-tax
operating proﬁt

Current Net Income
Current Net
IncomeShareholders'Equity1)Strengthening
Profitability
ROE =

ROE =

=

×

=

Invested Capital
Shareholders' Equity
After-tax
Invested Capital
operating proﬁt
Current Net Income⇒ROIC

Shareholders' Equity

=

⇒ROIC

Invested Capital
⇒ROIC

×

Non-businessproﬁt and loss
Non-businessproﬁt and loss

Invested Capital
Invested Capital
Shareholders' Equity
Shareholders' Equity
Non-business
Shareholders'EquityShareholders'
Invested
Capital Equity proﬁt
and loss×++⇒Financial balance⇒Financial leverage⇒Financial balance⇒Financial leverage

Shareholders' Equity⇒Financial leverage+

Shareholders' Equity

management initiatives, we are also working to improve our financial leverage through stable shareholder returns and efficient fundraising procurement, and our financial balance through effective hedging of foreign ex-

90
90

100
50

90

90
90

90

Basic Earnings per
AnnualSharedividend(Forecast)
Annual dividend90（Scheduled）

90（Scheduled）
Annualdividend90（Scheduled）

50
50
0
0

⇒Financial balance

To achieve consolidated ROE of 10%, one of the goals of our Long-term Vision, in addition to promoting ROIC

Basic Earnings per
Share (Forecast)
Basic Earnings per

200
150

150
100

3. Policies

ROE =

250

0

FY2019FY2020
FY2021
FY2022（Disclosed）*
FY2019FY2020
FY2021
FY2022*Disclosed values are dated October（Disclosed）
31, 2022 *FY2019*Disclosed values are dated October 31, 2022
FY2020
FY2021
FY2022（Disclosed）**Disclosed values are dated October 31, 2022

change risks and efficient asset management.
(1) Establish a management accounting system using ROIC as an indicator
After-tax operating proﬁt

Operating Proﬁt － Corporate tax
OperatingProﬁt － Corporate
Investment
Capital＋Working
Capital tax
Shareholders' Equity
Investment Capital＋Working Capital
After-tax operating proﬁt
Operating Proﬁt － Corporate tax
ROIC
ROIC
is an index calculatedbyEquity
the above formula,and ROIC
can be improvedby increasing the numerator or
Shareholders'
Investment
Capital＋Working
CapitalROIC ==
After-tax operating proﬁt
ROIC = Shareholders' Equity

=

=

=

decreasing the denominator in this formula.

To increase the numerator, we have been striving to improve profitability by expanding sales of highly profitableproducts and reducing costs. And to reduce the denominator, we have established criteria for determining
whether or not the ROIC of a new investment exceeds a certain rate calculated based on WACC (Weighted Average Cost of Capital), and have created and are operating a system to ensure that efficient investments are made.
As another effort to reduce the denominator, we are studying the establishment and operation of management
indicators that can be incorporated into the daily activities of each department, such as the manufacturing plant,
production management, sales, and procurement, to optimize working capital.
(2) Optimal allocation of management resources
Our Group's existing products are mainly used in internal combustion engine vehicles, and the recent trend toward
BEVs is pushing us to make a major shift in our business portfolio. Under these circumstances, to maintain the
profitability of existing products while at the same time developing high-profit businesses that could become the40

41Chapter

5Foundation for Value Creation
In order to execute the strategies for value creation described in
Chapter 4 and sustainably enhance corporate value, EXEDY hasestablished a system and formulated policies related to corporate
governance, etc., and is promoting various initiatives.

1. Corporate Governance ����������������������������������� 44
2. Directors and Auditors ����������������������������������� 50
3. Risk Management ������������������������������������������� 54
4. Respect for Human Rights����������������������������� 56

42

43

Chapter 5: Foundation for Value Creation

1. Corporate Governance

EXEDY Integrated Report 2022

A schematic of our system of corporate governance
Annual General Shareholders Meeting

Corporate Governance Policy
We at EXEDY recognize that constructing a system of corporate governance and thoroughly carrying out compliance management serves as the basis for management. More specifically, we have established a system thatmonitors and reviews the actions of our directors through our Board of Directors and our Audit and Supervisory
Board, and we will make our management more transparent and strive to strengthen our governance and compliance management system by improving the functionality of our internal controls and building an organization that responds promptly to changes in our management environment.

Basic Policy

Appoint Dismiss
Appoint Dismiss

Audit &
Supervisory
Board

Appoint Dismiss
ReportAuditors:4(External members: 3)

Audit

External
Audit

Initiatives to Enhance Corporate GovernanceTo continue growing as a global company that can contribute to society, we have adopted a Long-term Vision of"maintaining a stable management structure based on strong governance," and are striving to improve the fairness and transparency of the Board of Directors. We have been making various efforts to improve corporate
governance. In June 2009, we introduced an executive officer system and reduced the number of directors to
speed up decision-making and execution. In FY2014, we introduced a stock compensation program for full-time
directors and executive officers, intending to raise awareness of their contribution to improving our businessperformance and increasing our corporate value. In June 2016, we appointed two independent outside directors. Since then, the number of independent outside directors has increased step by step, and as of June 2022,
4 out of 11 directors are independent outside directors, which is more than 1/3 of the total number of directors.
Since FY2021, we have been holding town hall meetings for dialogue between management and employees toreinforce shared values and improve our bottom-up management foundation. In June 2022, we appointed one
female director to ensure diversity in gender and other aspects. We will continue our efforts to enhance corporate governance as the foundation for our sustainable growth.

An Outline of Our System of Corporate Governance
EXEDY is a company with an Audit and Supervisory Board and has established a General Meeting of Shareholders, a Board of Directors, a Board of Auditors, and an Accounting Auditor as corporate bodies. In addition, tocarry out corporate affairs in a manner that responds promptly to any changes in the management l environment, we have set the number of directors at 12 or less as stipulated in our Articles of Incorporation and have asmall Board of Directors, while at the same time establishing an executive officer system and appointing personnel with expertise in business operations as executive officers to ensure more flexible business management.
The term of directors and executive officers is set at one year in order to build a flexible management structurethat can respond to changes in the management environment and to further clarify management responsibility.
The corporate governance structure is explained on the following page "A schematic of our system of corporate
governance."

Whistleblower
Ofﬁce

Submitwhistle-blowing
complaints

Appoint / Dismiss

Submitproposals to

Supervise

Submitproposals to

Directors: 6(External Independent
Director members: 4)

Nomination Committee
Directors: 6(External Independent
Director members: 5)
ReportRepresentative
Directors

ReportManagement
Meeting
Submit proposals(to the BOD)
Submit importantmatters outside of
the agenda

Employees

Top Management
Committee

AssignWork Duties

For a corporate
review

Basic
PolicyAdministrative
Headquarters
Risk
Management
Team

Chairman, President & CEO, (Senior)
Executive Managing Ofﬁcers

All Full-time
Executives

ReportPerform internal audits
Monitor the state ofcompany regulations

Compensation Committee

Directors: 11(External
members:5)

Exchange information

Global Auditing
Department

Board ofdirectors

ReportReport1) We will strive to ensure the equality and rights of our stockholders.
2) We will endeavor to cooperate with all stakeholders outside of our stockholders, including customers,
business counterparts, creditors, the local community, employees, etc.
3) We will strive to ensure both the transparency and proper disclosure of information.
4) W e will endeavor to ensure have our Board of Directors properly carries out its functions and obligations
in a manner that it both makes decisions in a quick responsive and decisive, as well as manner and remains fair and transparent.
5) We will strive to have a constructive dialogue with stockholders so that we can improve our medium tolong-term business value and continue to grow.

Submitproposals to

Promote risk
management
CSR policy

Each Divisional Headquarters
Compensation Committee

Nomination Committee

The Compensation Committee deliberates and decides on the policy
for determining the details of remuneration for each individual
directors, and submits the decision to the Board of Directors.
FY2021：Held one time

The Nominating Committee formulates succession plans and selects
directors or candidates, and submits the nominees to the Board of
Directors.
FY2021：Held three times

Top Management Committee

Management Meeting

The Top Management Committee consists of four members, theChairman, President & CEO, Senior Executive Managing Ofﬁcer, andExecutive Managing Ofﬁcer, and reviews managerial strategies.
FY2021：Held 17 times

The Management Meeting, consisting of all full-time ofﬁcers, reportson the status of business execution and makes speciﬁc businessdecisions within the scope of authority delegated by the Board of
Directors.
FY2021：Held 24 times

Board of Directors
EXEDY’
s board of directors is comprised of 11 individuals, five of whom serve as outside directors. Our Board of
Directors holds regular meetings once a month, and, when deemed necessary, additional meetings are held
under special circumstances, where directors thoroughly discuss the matters at hand and make management
decisions regarding them. In FY2021, 12 meetings were held. By appointing four independent outside directors, more than one-third of the 11 directors, the Company strives to strengthen its monitoring and supervisory
functions and to enhance the Company's sustainable growth and corporate value over the medium to long term.
Moreover, in order to balance the diversity of the Board of Directors and its overall knowledge, experience, andabilities, we aim to appoint executive officers who are familiar with EXEDY's operations and experienced representatives of major subsidiaries as directors, as well as outside directors and corporate auditors with a high levelof expertise.

Our Reasons for Selecting Our Current System of Corporate Governance

Policies and Procedures for the Election and Dismissal of Directors and Executive Officers

We at EXEDY are carrying out efficient work operations and exercising prompt decision-making through the introduction of our executive officer system, where four of our directors concurrently serve as executives managing corporate affairs. At the same time, so that we can ensure transparency in all business operations, we madeour board of directors consist of 11 directors and four auditors, of which eight individuals are outside executives(and of these eight two individuals serve as independent outside directors and two individuals serve as independent outside auditors), and we have deemed that our present structure of a company with an Audit and Supervisory Board is currently the optimum choice.

Nominations of director candidates are determined by the Board of Directors after the Nominating Committee's
selection, with consideration given to the balance between quick decision-making and diverse viewpoints. The
Board of Directors will decide on the election and dismissal of Executive Officers. Proposals for the dismissal will
be submitted to the Annual General Shareholders' Meeting by the following criteria.
(1) In the event of conduct that violates laws and ordinances or public order and morals(2) In the event of omission of duties or acts in violation of company regulations(3) In addition to the above, in the event of significant damage to corporate value.

44

45

Chapter 5: Foundation for Value Creation

EXEDY Integrated Report 2022

Assessment of Board of Directors’EffectivenessInternal Audit Department

Every year, we conduct a questionnaire on the effectiveness of the Board of Directors, and in FY2021, we conducted the same questionnaire. Based on the results, we believe that the effectiveness of the Board of Directors
has been secured. We will continue to make improvements to further enhance the effectiveness of the Board of
Directors.

The Global Auditing Department sets annual audit themes, formulates audit plans and audits the operations ofeach department, and conducts ad hoc audits as needed to ensure internal governance. In addition, the Global
Auditing Department enhances cooperation with full-time auditors and accounting auditors by exchanging information as necessary, including periodic meetings on audit planning, progress and results of audits, and othermatters as required.

Criteria for Independent Outside Directors
In appointing independent outside directors, we emphasize their abundant experience and high-level insight
into their fields of expertise, in addition to the outsider requirements of the Company Law. The criteria for designation as an independent outside director are that he/she meets the qualifications for an independent director
as stipulated by the Financial Instruments Exchange and that there is no risk of a conflict of interest with generalshareholders.

Business Execution Structure
To realize expeditious decision-making, the Board of Directors has established various regulations, such as the"Rules of the Board of Directors" and the "Regulations for Executive Officers," and determined the decision-making authority of the Board of Directors, the Executive Committee, the President, and the Executive General Managers, based on the degree of management importance and influence. In principle, the Management Committee holds a meeting twice a month, which is composed of all full-time executives, including executive officers,
and reports on the status of business execution and makes specific decisions on business execution within thescope of authority delegated by the Board of Directors.
In addition, management strategies are discussed at the Managing Directors' Meeting, consisting of four members, the Chairman, President & CEO, Senior Executive Managing Officer and Executive Managing Officer.

Support System for Outside Directors (Outside Auditors)
When convening a Board of Directors meeting, outside directors and outside auditors are provided with thesame materials as internal directors and auditors in advance to share information on business execution.

Ratio of Outside Board Members
Board of directors

Audit & Supervisory Board

Nomination Committee

Compensation Committee

External Director
and Corporate
Auditor:OutsideCorporate
Auditors:

OutsideCorporate
Auditors:

OutsideCorporate
Auditors:

8

Internal
Directors andCorporate
Auditors:

53%

7

3

Full-time
Corporate
Auditors:

575%Internal
Director:

1

1

83%

The Board of Directors, Audit and Supervisory Board, Nominating Committee,
Compensation Committee's Attending Members

Supervision and Audit of Management
Hidehito Hisakawa

Transactions between Related Parties
Following the Companies Act, EXEDY has established in the Regulations of the Board of Directors that any proprietary or competing transactions with the company's directors are subject to prior approval. In addition, evenin cases where we conduct transactions with major shareholders or others, prices and other terms and conditions of transactions are determined through negotiations, considering the prevailing market conditions, as is
the case with other third parties.

Director

Director and Chairman

The four corporate auditors (one of whom is a certified public accountant and has considerable knowledge offinance and accounting) determine audit policies and plans and other matters related to the execution of theirduties at the Board of Corporate Auditors Meetings (held at least once a month, in principle) following the Boardof Corporate Auditors' Regulations. Auditors and the Board of Auditors receive reports from the accounting auditor on the fiscal year's accounting audit plan and the results of the accounting audit and hold discussions as
appropriate. In addition, the full-time statutory auditor and the Global Auditing Department exchange information on audit planning, progress, and results of audits as appropriate. Full-time auditors exchange information
with each other and work closely with the Global Auditing Department and accounting auditors.

Auditor

Auditors and Board of Auditors

male

○

2

Audit and
CompenNomination
Supervisory
sationCommittee
Board
Committee

President & CEO

Tetsuya Yoshinaga

male

◎

Representative Director

Hiroshi Toyohara

male

○

Director

Yuzuru Hirose

male

○

Director

Junji Yamakawa

male

○

Director

Mitsugu Yamaguchi

male

Director

Moritaka Yoshida

male(Outside)

◎

◎

○

○

○

○

○

○

○

Director

Ichizo Yoshikawa

male(Outside) (Independent)

Director

Toshiki Takano

male(Outside) (Independent)

○

○

○

Director

Takashi Hayashi

male(Outside) (Independent)

○

○

○

Director

Fukuko Inouefemale(Outside) (Independent)

○

○

○

Full-time Corporate Auditor

Keizo Nishigaki

male

Auditor

Shintaro Itomale

Auditor

Tadashi Fukuda

male

Auditor

Satoshi Tsubota

male(Outside)(Outside) (Independent)(Outside) (Independent)

Composition of the Board of Auditors
When nominating the auditor candidates, besides considering their knowledge in various fields such as finance,accounting, taxation, legal, etc., and in our business and corporate management, we also consult with the current auditor individually in advance, and determine a balanced composition of the Board of Auditors as a whole.

46

67%

Internal
Directors:◎ Chairman 〇 Attending Members
Board ofDirectors

By appointing four independent outside directors, more than one-third of the 11 directors, we strive to strengthen the supervision of the Board of Directors and to enhance the company's sustainable growth and corporate
value over the medium to long term. The four auditors, including three outside auditors, attend meetings of theBoard of Directors, provide audit opinions on management decision-making, and audit the execution of duties
by directors.

4

47

○

◎

○

○

○

○

○

○

Chapter 5: Foundation for Value Creation

EXEDY Integrated Report 2022

Remuneration for Board Members

The above maximum amount of remuneration for directors does not include employee salaries and bonuses for

The Board of Directors approved the following resolution on May 27, 2022, regarding the policy for
determining the details of remuneration, etc. for individual directors.

ber of directors was 14 and the number of auditors was four. In addition, the following resolution was passed

directors who also serve as employees. As of the close of this Annual General Shareholders' Meeting, the numregarding stock-based remuneration, which is separate from monetary remuneration. Resolution on sharebased remuneration at the 68th Annual Shareholders' Meeting held on June 26, 2018.

Basic Policy
The Company's basic policy is to link the remuneration of directors to shareholders' profits in order to provide
sufficient incentive for the sustainable enhancement of corporate value. The Company's basic policy is to set the
remuneration of each director at an appropriate level based on their responsibilities. In concrete terms, the remuneration of executive directors shall consist of base remuneration as fixed remuneration, bonuses, and stockbased remuneration, while outside directors, who are responsible for supervisory functions, shall be paid onlybase remuneration in view of their duties.

Policy on determining the amount of monetary remuneration (base remuneration and bonus) paid to individuals(including the policy regarding the determination of the timing or conditions for granting remuneration, etc.)
The basic remuneration of directors in EXEDY shall be a monthly fixed remuneration, and bonuses shall be paid
at a fixed time annually. The amount of bonuses shall be determined by a comprehensive review of position,
responsibility, and years in office, while also taking into consideration standards at other companies, our company's performance, employee salary etc.

Policy for determining the amount of non-monetary remuneration and the method for calculation, etc.

(including the policy regarding the determination of the timing or conditions for granting remuneration, etc.)
The Company's non-monetary remuneration, etc. for directors shall be stock remuneration (restricted stock).
The remuneration shall be determined with comprehensive consideration of the scope of responsibilities, ourmanagement plan and performance, an appropriate ratio of base remuneration and bonuses, remunerationlevel, etc. It shall be determined annually at a meeting of the Board of Directors, which is held within one monthof the date of the Annual General Shareholders' Meeting.

Policy on Determining the Ratio of the Amount of Monetary or Non-monetary Remuneration, etc. of Individual Directors

The ratio of remuneration of executive directors by type will be determined individually, so that, in principle, theweight of stock-based remuneration will increase with higher executive positions, considering the remunerationlevel of other companies in the same business size and related industries and business categories as our company.

Matters Concerning Determination of Remuneration, etc., for Individual Directors

The Compensation Committee shall deliberate and determine the amount of monetary compensation for eachdirector and report to the Board. The Board of Directors shall take into account the report and decide on the remuneration. As for stock-based remuneration, the number of shares to be allocated to each director shall be
resolved by the Board of Directors.

Stock-based compensation: Up to ¥200 million per year
Maximum number of shares: Up to 50,000 shares per year (Outside directors and non-executive directors are noteligible)As of the close of the said Annual General Shareholders' Meeting, the number of directors (excluding outside
directors and part-time directors) was seven.

Cross-shareholdings
Policy on Cross-Shareholdings
In principle, we do not hold listed shares as "cross-shareholdings", except when it is necessary to maintain andstrengthen trust and business relationships with business partners and various stakeholders from the viewpointof improving our group's corporate value in the mid- to long-term.

Verification of Cross-Shareholdings
The Board of Directors evaluates each issue related to cross-shareholdings, including whether the risks and benefits exceed the cost of capital. At present, we assess that all of our cross-shareholdings meet the criteria, andwe will continue to review their appropriateness.
Criteria for Voting Rights Concerning Cross-Shareholdings
In EXEDY, voting rights shall not be exercised on a uniform basis, but shall be exercised after careful consideration and comprehensive judgment from the viewpoint of improving the group's corporate value, especiallywith respect to proposals concerning the following.
(1) Reorganization Proposal(2) Takeover Defense Proposal(3)Appointment of Directors Proposal (in the event of misconduct, in the event of being in the red for a certain
period of time in a row, etc.)

Cross-Shareholdings Status (Year Ended March 31, 2022)

Amount of Remuneration for Directors and Auditors (FY2021)

Category

Total amount of
remuneration, etc.
(Mil. JPY)

Total amount of remuneration, etc. by category (Mil.
JPY)
Basic
Remuneration

Bonus

Non-monetarycompensation,
etc.

Unlisted stock
Number of Board
Members

Director（Outside Director）

276
（23）

235
（23）

23
（－）

18
（－）

12
（4）

Auditor（Outside Auditor）

35
（17）

35
（17）

－
（－）

－
（－）

4
（3）

Total
（Outside Board
Member）

311
（40）

270
（40）

23
（－）

18
（－）

16
（7）

Stock other than unlisted
stock

Number of Issues
Balance Sheet Amount(Mil. JPY)

Issues whose shares
increased in FY2021

Issues whose shares
decreased in FY2021

7

1

1

1,038

1,000

2

11

2

－

2,063

11

－

* The main reason for the growth in the stocks with an increased number of shares in FY2021 mainly resulted
from the necessary acquisition for our group's medium- and long-term business strategy.
* In FY2022, the Company sold three stocks other than unlisted stocks.

1．The amount of remuneration does not include employee salaries and bonuses for directors who also serve as employees.
2．Non-monetary remuneration consists of stock-based compensation (restricted stock), and 11,100 shares were
issued to seven directors based on a resolution of the Board of Directors on June 24, 2021.
3．Limit of monetary remuneration according to the resolution of the 56th Annual General Shareholders' Meeting held on June27, 2006.
Director: ¥300 million per year
Auditor: ¥60 million per year

48

49

Chapter 5: Foundation for Value Creation

EXEDY Integrated Report 2022

2. Directors and Auditors
Hidehito Hisakawa (January 24, 1955)▶Career summary, position and duties at the Company(Important concurrent positions)male▶Career summary, position and duties at the Company(Important concurrent positions)

Ichizo Yoshikawa (May 20, 1946)▶ Career summary, position and duties at the Company(Important concurrent positions)▶ Career summary, position and duties at the Company(Important concurrent positions)Apr. 1978

Joined the Company

Jul. 1988

Joined the Company

Apr. 1980

Joined Toyota Motor Co., Ltd.

Apr. 1970

Joined Suminoe Textile Co., Ltd

Mar. 2009

President of EXEDY America Corporation

Jun. 2009Managing Ofﬁcer of Toyota Motor Corporation

Jun. 2006

Director of the Company incharge of overseas businesses

Aug. 1997

Director of Suminoe Textile Co., Ltd.

Jun. 2009

Executive Ofﬁcer of the Company

Apr. 2014

Senior Managing Ofﬁcer of Toyota Motor Corporation

Apr. 2016

President of EXEDY DYNAX Shanghai Co., Ltd.

Jan. 2018

Executive Vice President of Toyota Motor Corporation

Aug. 2005

Representative Director and President of
Suminoe Textile Co., Ltd.

Apr. 2017

Senior Executive Ofﬁcer of the Company

May. 2016

Outside Director of KINTETSU
Department Store Co., Ltd. (to present)

Apr. 2009

Executive General Manager,
Sales Headquarters of the Company

Jun. 2009

Executive Managing Ofﬁcer of the Company

Director of the company

Jun. 2020

Representative Director & Chairman of
TOYOTA CENTRAL R&D LABS., INC.

Apr. 2011

Senior Executive
Managing Ofﬁcer of the Company

Executive General Manager, AT
Manufacturing Headquarters of the Company

Jun. 2021

President, Member of the Board of
AISIN CORPORATION (to present)

Apr. 2012

Representative Director of the Company

Apr. 2015

President & CEO of the Company

Jun. 2022

Chairman (to present)

male

Jun. 2019

Ueno Division General Manager of the Company

Apr. 2020

Executive Managing Ofﬁcer of the Company

Apr. 2021

Senior Executive Managing Ofﬁcer of the Company

Jun. 2022

President and Representative
Director of the Company (to present)

Reasons for candidacy:

Reasons for candidacy:
Mr. Hidehito Hisakawa has been involved in the management of the Company
for years, including serving as President & CEO, and has abundant experience andversatile perspective on corporate management.

Mr. Tetsuya Yoshinaga has long worked overseas as an expatriate and has beenin charge of China-related business for many years. He has been broadly engaged
in management of the Group's business operations, including serving as Director
and Senior Managing Executive Ofﬁcer of the Company.

Number of Board Meetings attended

Number of Board Meetings attended

12 / 12 (10 0 % )▶ Career summary, position and duties at the Company(Important concurrent positions)Jan. 1995

Joined the Company

Apr.2010

Executive Ofﬁcer of the Company

Apr.2011

Executive General Manager, Financial
Planning Headquarters of the Company

Jun.2012

Director of the Company

Apr.2013

Senior Executive Ofﬁcer of the Company
Executive General Manager, Administrative
Headquarters (to present)

Apr.2016

Executive Managing Ofﬁcer of the Company

Apr. 2020

Senior Executive Managing
Ofﬁcer of the Company (to present)

Jun.2022

Representative Director of
the Company (to present)

12 / 12 (10 0 % )maleJunji Yamakawa (March 16, 1968)▶ Career summary, position and duties at the Company(Important concurrent positions)Executive Ofﬁcer of the Company

Jun. 2015

Retired from the post of director of ROHM Co., Ltd.

Apr. 2018

Senior Executive Ofﬁcer of the Company(to present)

Jun. 2017

Director of the Company (to present)

Apr. 2019

Executive General Manager, Sales
Headquarters of the Company (to present)

Jun. 2019

Director of the Company (to present)

Human Resources Manager of Tiffany & Co.

Sep. 2011

Executive Ofﬁcer of Human Resources, General Manager of Human
Resources Headquarters of SAP Japan Co., Ltd.

Jan. 2013

Section Chief, Human Resources Planning Division at Human
Resources Department of International Atomic Energy Agency

Jul. 2017

Senior Human Resources Ofﬁcer, Management Bureau of the above institution

Apr. 2015

Special Technical Advisor
President of EXEDY America Corporation

Apr. 2018

Executive Ofﬁcer of the Company
Senior Executive Ofﬁcer of the Company(to present)

male
Apr. 2021

Executive General Manager ofMotorcycle Clutch Headquarters

Jun. 2021

Executive General Manager of Development
Headquarters (to present)

female Outside Independent

Director of the Company (to present)

Reasons for candidacy:

Reasons for candidacy:

Mr. Junji Yamakawa has long worked overseas as an expatriate and has extensive
experience and achievements in North Central America-related business operations, etc.,
and has been broadly engaged in management of the Group business serving as Director
and Senior Executive Ofﬁcer of the Company.

Mr. Mitsugu Yamaguchi has long worked overseas as an expatriate and accumulated
experience and achievements in development ﬁeld in general, and has been broadly
engaged in management of the Group business serving as Director and Senior Executive
Ofﬁcer of the Company.

Number of Board Meetings attended▶ Career summary, position and duties at the Company (Important concurrent positions)Jun. 2006

Apr. 2018

Executive General Manager,
Procurement Headquarters of the Company

Fukuko Inoue (October 18, 1963)

Human Resources Development Manager at General Affairs andHuman Resources Headquarters of Vodafone Japan Co., Ltd.

Nov. 2017

Number of Board Meetings attended

12 / 12 (10 0 % )

50

10 / 10 (10 0 %)Director and Executive Vice President of
the above company

Jun. 2011

Representative Director, President andCEO of TOKYO RADIATOR MFG Co., Ltd.

Jun. 2019

Director and Chairman ofTOKYO RADIATOR MFG Co., Ltd.

Jun. 2020

Director of the Company (to present)

Number of Board Meetings attended

12 / 12 (10 0 % )May.2004

Senior Executive Ofﬁcer of the Company(to present)

Jun. 2022

Number of Board Meetings attended

Executive Ofﬁcer of the Company

President of Exedy DYNAX
Mexico, S.A. DE C.V.

Jun. 2008

Mr. Takashi Hayashi has long accumulated abundant expertise as a corporate
manager in automobile component business, by fulﬁlling his responsibilities as adirector of TOKYO RADIATOR MFG Co., Ltd.

Mr. Toshiki Takano has long accumulated abundant expertise as a corporate manager, by fulﬁlling his responsibilities as a director of ROHM Co., Ltd.

Jun. 2009

Jan. 2018

Joined Nihon Radiator Co., Ltd.
(Currently Marelli)Reasons for candidacy:

Reasons for candidacy:

Human Resources Ofﬁcer, Training Ofﬁcer at Budget Personnel
Bureau of Human Resources Department of

Executive Ofﬁcer of the Company

Mar. 1979

Outside Independent

Sep. 1996

Apr. 2015

Executive General Manager, Quality
Assurance Headquarters of the Company

maleOutside Independent

Deputy Executive General Manager ofEngineering & Development Headquarters

Jul. 2006

Director of the Company (to present)(Important concurrent positions)

Joined UCC UESHIMA COFFEE CO., LTD.

President of EXEDY DYNAX
Shanghai Co., Ltd.

12 / 12 (10 0 % )▶ Career summary, position and duties at the Company

Apr. 1987

Apr. 2014

Jun. 2019

male▶ Career summary, position and duties at the Company(Important concurrent positions)
Joined the Company

Director and Chairman of
Suminoe Textile Co., Ltd. (to present)

Takashi Hayashi (April 22, 1956)▶ Career summary, position and duties at the Company(Important concurrent positions)Apr. 2014

Mar. 1985

male

Toshiki Takano (August 31, 1954)

Director of ROHM Co., Ltd.

Joined the Company

Aug. 2021

Number of Board Meetings attended―

Joined ROHM Co., Ltd.

Aug. 2000

Representative Director and Chairman andPresident of Suminoe Textile Co., Ltd.

Number of Board Meetings attended

Jun. 2010

Mitsugu Yamaguchi (August 9, 1962)

Jul. 2016

Mr. Ichizo Yoshikawa has long accumulated abundant expertise as a manager ofa listed company, by fulﬁlling corporate management responsibilities as arepresenta tive director of Suminoe Textile Co., Ltd.

Jan. 1984

12 / 12 (10 0 % )Director of the Company (to present)

Reasons for candidacy:

President of EXEDY Globalparts

Number of Board Meetings attended

Outside Independent

Mr. Moritaka Yoshida has held important positions at Toyota Motor Corporation
and AISIN CORPORATION and accumulated abundant expertise in the automotive industry.

Joined the Company

Reasons for candidacy:

male

Jun. 2016

Reasons for candidacy:

Mar.2011

Mr. Yuzuru Hirose has long worked overseas as an expatriate and has extensive
experience and achievements in all aspects of sales and marketing and has beenbroadly engaged in management of the Group business serving as Director andSenior Executive Ofﬁcer of the Company.

Representative Director and Chairman of
Suminoe Textile Co., Ltd

Director of the Company (to present)

Apr. 2001

Mr. Hiroshi Toyohara has abundant experience and achievements in generaladministrative operations, starting as head of the ﬁnancial and planningdepartment and has been broadly engaged in the execution of the Group businessserving as a Director and Senior Executive Managing Ofﬁcer of the Company.

12 / 12 (10 0 % )Jun. 2022

Outside▶ Career summary, position and duties at the Company(Important concurrent positions)Reasons for candidacy:

Number of Board Meetings attendedmale

Yuzuru Hirose (February 21, 1972)

Hiroshi Toyohara (August 19, 1962)

male

Moritaka Yoshida (July 12, 1957)

Tetsuya Yoshinaga (January 3, 1960)

Apr. 2018

Professor, Doshisha Business School at Doshisha University (to present)

Jun. 2022

Director of the Company (to present)

Reasons for candidacy:
Ms. Fukuko Inoue is serving as a professor at a university after holding important positions of human resources at global
companies and international organizations, and accumulated abundant expertise as an academic expert in organizational
development and human resource management.

Number of Board Meetings attended―

51

12 / 12 (10 0 % )Chapter 5: Foundation for Value Creation

EXEDY Integrated Report 2022

2. Directors and Auditors
Keizo Nishigaki (September 11, 1957)

Shintaro Ito (March 19, 1961)▶ Career summary, position and duties at the Company(Important concurrent positions)

The expertise and experience of each Director is as follows.

▶ Career summary, position and duties at the Company(Important concurrent positions)

Name

Engineering, Manufacturing,
Sales,
Corporate
Purchasing
Quality
Management Development

GlobalJoined the Company

Apr. 1983

Joined AISIN SEIKI CO., LTD.
(current AISIN CORPORATION)

Hidehito Hisakawa

male

●

Apr. 2010

President of EXEDY Friction Material Co., Ltd.
Executive Ofﬁcer, Executive General Manager
of General Affairs Headquarters of the Company

Jun. 2010

Managing Ofﬁcer of AISIN SEIKI CO., LTD.
Senior Managing Ofﬁcer of AISIN SEIKI CO., LTD.

Tetsuya Yoshinaga

male

Apr. 2017●

Jun. 2013

Auditor of the Company (to present)

Apr. 2019

Executive Ofﬁcer of AISIN SEIKI CO., LTD.

Apr. 2021

Executive Vice President of AISIN SEIKI CO., LTD.

Hiroshi Toyohara

male

●

Jun. 2021

Representative Director of
AISIN CORPORATION (to present)

Yuzuru Hirose

male

●

Apr. 2022

Executive Ofﬁcer, Executive Vice President
Chief Administrative Ofﬁcer of AISINCORPORATION (to present)

Junji Yamakawa

male

●

Jun. 2022

Auditor of the Company (to present)

Mitsugu Yamaguchi male

●

●

●

●

●

male

Reasons for candidacy:

OutsideReasons for candidacy:

Directors

Mar. 1981

Mr. Keizo Nishigaki He has long accumulated abundant expertise and insight ingroup management, serving as the General Manager of the General Affairs
Headquarters of the Company and in the management of overseas subsidiaries.

Mr. Shintaro Ito has long been engaged in management of AISIN CORPORATION
and accumulated abundant expertise in the automotive component industry.

Moritaka Yoshidamale Outside●

Number of Board Meetings attended

12 / 12 (10 0 % )Number of Board Meetings attended―

Ichizo Yoshikawa

male Outside Independent●

16 / 16 (10 0 %)Number of Audit & Supervisory
Board Meetings Attended―

Toshiki Takano

male Outside Independent●

Takashi Hayashi

male Outside Independent●

Fukuko Inouefemale Outside Independent

Keizo Nishigaki

male

Shintaro Itomale Outside

Tadashi Fukuda

male Outside Independent

Satoshi Tsubota

male Outside Independent

Number of Audit & Supervisory
Board Meetings Attended

Tadashi Fukuda (March 4, 1953)

Satoshi Tsubota（August 12, 1961）

Apr. 1986
Jun. 2000▶ Career summary, position and duties at the Company(Important concurrent positions)Registered as an attorney-at-law
and joined Daiichi Law Ofﬁce(now Daiichi Legal Professional Corporation)
Outside Auditor of SHINYEI KAISHA
Outside Director of the above company

Oct. 1984

Joined AOYAMA AUDIT CORPORATION/
PricewaterhouseCoopers

Aug. 1988

Registered as a Certiﬁed Public Accountant

Apr. 1999

Registered as a certiﬁed Public Tax Accountant

Jun. 2015

Auditor of the Company (to present)

Jul. 2001

Joined Kaisei Certiﬁed Public Accountants
Joint Ofﬁce (to present)

Mar.2016

Representative Partner of Daiichi Legal
Professional Corporation (to present)

Jun. 2005

Outside Auditor of O-WELL CORPORATION

Jun. 2015

Auditor of the Company (to present)

Jun. 2016

Outside Auditor of
Mitsubishi Tanabe Pharma Corporation

Mar. 2020

Outside Director of
ES-CON JAPAN Ltd. (to present)

Jun. 2020

Outside Director (Audit & Supervisory
Committee Member) of O-WELL
CORPORATION (to present)

male

Reasons for candidacy:

Number of Audit & Supervisory
Board Meetings Attended●

Number of Board Meetings attended

12 / 12 (10 0 % )

16 / 16 (10 0 %)Number of Audit & Supervisory
Board Meetings Attended

16 / 16 (10 0 %)

52

●

●

●

●
●

●

●

●

●

●

●

●

●
●

●
●

●
●

●

●

●
●
●

●

●
●

●
●

●

Mr. Satoshi Tsubota has extensive expertise in accounting and taxation.

12 / 12 (10 0 % )

●

●

●

Reasons for candidacy:

Mr. Tadashi Fukuda has extensive expertise in the legal profession.

Number of Board Meetings attended

Outside Independent

Auditors▶ Career summary, position and duties at the Company(Important concurrent positions)

Outside Independent

Safety,Human Resource
Legal,
Environment,
Development Sustainability Risk Management

Nov. 2000

male

male

Finance,
Accounting

53●

Chapter 5: Foundation for Value Creation

EXEDY Integrated Report 2022

3．Risk Management

2. Initiatives Regarding Information Security

Our Basic Approach to Risk Management

In order to properly protect confidential information and personal information from threats such as cyberattacks,

The EXEDY Group recognizes that risk management is one of the most important management tasks and is working to enhance and strengthen it. With changes in the business environment surrounding the company, the risks
faced by the EXEDY Group are expected to become increasingly diversified in the future. In order to respond tothese circumstances, the EXEDY Group's action guideline for risk management is to prepare for emergencies bytaking preventive measures and preparing in advance to minimize damage and to assess and identify risks toensure their implementation. We identify major risk items related to safety and health, environmental preservation activities, and business continuity management activities, based on the frequency of occurrence, degree of
impact, and surrounding conditions. We are working to strengthen our management system by clarifying thedepartment responsible for each risk, the degree of impact of each risk, the causes of its occurrence, and proactive preventive measures.

ucating employees, we strive to strengthen our information security and prevent information leakage.

Risk Management Committee

Through our business activities in different regions around the world, we have learned that prompt and reliable

Our Basic Approach

Organization of the Risk Management Committee

With the support of external experts with a deep knowledge of cyber security and internal fraud, we establisheda system to respond to information security incidents and warnings. While sharing information with externalorganizations, our company, including its affiliates, we work to make improvements to this environment.
We also conduct regular targeted e-mail training for all employees, provide education regarding personal information protection and security, and promote thorough personal information protection and information security.

3. Initiatives Regarding Compliance Risk

ing the trust of our stakeholders.
Furthermore, it is essential to respect human rights, to consider the health and working environment of employees, to treat employees fairly and appropriately, and to conduct fair and appropriate business transactions with
suppliers to ensure better compliance.
And to prevent compliance violations, it's necessary to raise each employee's awareness of ethics and norms.
To achieve this goal, we continuously conduct various training and educational activities for our employees.

Board of Directors

We also establish a whistle-blowing system and other measures to identify and correct compliance violations.

Risk Management Committee
Chairperson

Initiatives for Information Management

compliance with the laws and regulations of each country and transparent management are essential for earn-

The Risk Management Committee, consisting of the President & CEO, (Senior) Managing Executive Officers, andAudit and Supervisory Board Members, convene as necessary to address group-wide issues and to discuss recurrence prevention measures.

Director in Charge

we have developed and deployed policies and regulations concerning information security. By periodically ed-

Secretariat

Early Detection and Correction of Problems through the Internal Reporting System

The Risk Management Committee Schedule

In the unlikely event of a serious compliance violation, we will report it to the Board of Directors and consider counter-

In FY2021, the Risk Management Committee gathered once to respond to group-wide problems and discuss
recurrence prevention measures. In addition, information on risk issues is shared among group companies toensure appropriate business execution.

measures.
The reporting desk also collects information internally and externally and promptly responds to problems as

Examples of Dealing with Risks

Internal Consultation/Reporting Reception Systemthey arise.

1. Business Continuity Plan (BCP) and Climate-related Risks

In addition to an internal reporting desk, the Company has established a consultation service for the entire GroupIn the Great East Japan Earthquake of March 2011, the Kawagoe Plant suffered no severe damage but a tremor
with a seismic intensity of lower 5 required a temporary evacuation of all employees. Fortunately, no damage
was caused to the plant, and we took the necessary actions in response to the situation, such as shifting to nighttime production in response to production stoppages by automobile manufacturers and planned power outages. Having keenly realized the importance of prompt and efficient business recovery we have since establisheda BCP crisis management program as part of our Midterm Consolidated Management Plan and built an organization capable of responding to contingencies.
In addition to earthquakes, the EXEDY Group also recognizes climate change as an important environmental issue, including the increasing severity and frequency of extreme weather events. Concerning climate-relatedrisks, the Sustainability Committee, a meeting body that formulates the Company's sustainability action plan andmanages the progress and other matters, plays a central role in analyzing scenarios, evaluating and identifying
risks, and managing the progress of response measures. The status of our responses to major risks is as follows.
The risk of sales decline due to the suspension of sales of internal combustion engine vehicles, etc. is discussed
at the Management Committee and Board of Directors meetings, leading to the formulation of a long-term vision and the strengthening of the product development system. Regarding the risk of increased direct costs fromthe introduction of renewable energy due to stricter government regulations, the Sustainability Working Groupis researching and studying measures to address this issue, including gathering information on renewable energy options. Concerning the risk of supply chain disruptions due to floods, etc., the Risk Management Committee
and other committees discussed and promoted business continuity plans that include suppliers.

concerning ethics in business conduct. In addition, the "EXEDY Hotline" has been established to allow employ-

54

55

ees to consult and report directly to outside attorneys for the prevention and early detection of misconduct andother illegal activities. To ensure that all employees are fully aware of the above, the EXEDY Code of Conduct,
which is distributed to all Group employees, clearly specifies the contact point for consultation and raises awareness of compliance issues.

【Internal Consultation Desk】
Handles any matters regarding the Code of Conduct, ethical issues, working environment, etc.
Phone numbers and email addresses can be found in the Code of Conduct.

【Internal Reporting Desk】
Handles violations of laws and company regulations.
Phone and fax number and email address can be found in the Code of Conduct.

【External Consultation and Whistleblowing Contact "EXEDY Hotline"】
An external lawyer's office can be contacted by telephone, email, or letter.
Phone number, address, and email address can be found in the Code of Conduct.

Chapter 5: Foundation for Value Creation

EXEDY Integrated Report 2022

4. Respect for Human Rights

Initiatives

Our Approach

1. Human Rights Due Diligence
In FY2021, we have set the risk of forced labor in "foreign technical training" as the top priority issue, in light ofRespect for human rights is the foundation of our business activities, and we recognize that we are required tohave a deep understanding of and appropriate responses to human rights issues related to the countries andbusinesses in which we operate.

the increasing movement around the world to protect the rights of migrant workers, such as the Modern Slavery
Act, the growing public concern in Japan over foreign technical trainees, and the recognition of the challenge by
our shareholders, customers, etc.
1) Actual conditions of acceptance for foreign technical intern training

EXEDY Group Human Rights PolicyFirst, we conducted a survey of all EXEDY companies in Japan regarding the actual status of acceptance of supervising-organization-type technical intern trainees.

The EXEDY Group Human Rights Policy was formulated in March 2022 after deliberation and approval by the

As of the end of June 2022, a total of 124 students were accepted by three EXEDY companies.

Management Committee.

Breakdown: There were 100 trainees from the Philip-pines (1 company) and 24 from Vietnam (2 companies).

This human rights policy is based on the United Nations Guiding Principles on Business and Human Rights (hereinafter referred to as the UN Guiding Principles) and is established to ensure that the EXEDY Group, as a global
enterprise, respects human rights and complies with relevant laws and regulations in the countries where we
operate, and is positioned as the highest policy in our business activities.
For more information, please refer to this page.

2) Self- and on-site audits regarding technical intern training (supervising-organization-type)
We then conducted self-audits and on-site audits of all three companies that accept supervising-organization-type technical intern trainees. In the self-audits, of the items audited by OTIT, 11 items related to humanrights violations were conducted. In addition, in the on-site audits, interviews with trainees, inspections of workplaces and accommodations, inspections of operations (safety and health considerations), treatment (accom-

Respect for Human Rights / EXEDY Corporation (exedy.com)

modations, etc.), and protective measures (assaults and other illegal acts, etc.) were also conducted. As a result

https://www.exedy.com/ja/csr/rights.html (Japanese only)of both audits, no violations leading to hu-man rights violations were found. However, for the 24 Vietnamese
trainees, it was confirmed that the number of expenses incurred by the trainees before coming to Japan was highPromotion Systemcompared to local prices, although it was within the scope of local regulations (maximum fee of US$3,600 and

In EXEDY, we have assigned oversight responsibility for respect for human rights to our Risk Management Committee.
In the committee, the President & CEO is ultimately responsible for risk management, and the Representative
Director and Senior Executive Managing Officer of the Administrative Headquarters is responsible for overall risk
management, deliberating and deciding on systems and activity plans related to respect for human rights.

maximum advance education fee of 5.9 million Vietnamese dongs).
3) Rectification
Because of the high-cost burden, combined with the recent depreciation of the JPY, there is a risk that it could
cause workers in debt. Therefore, in cooperation with the supervisory organization and our group companies,
we are considering hiring trainees from the Philippines or Indonesia, where the cost burden is lower than in

Also, the Administrative Headquarters serves as the secretariat for these initiatives and promotes them in coop-

Vietnam.

eration with related departments.

2. Education
Since the establishment of the new EXEDY Group Human Rights Policy in March 2022, we have conducted human rights training in October 2022 for all EXEDY's and ten domestic affiliates' employees (including directors,

Board of Directors
Risk Management
Committee

associate employees, contract employees, and technical interns), intending to deepen their understanding of

Ultimate Responsibility for Risk Management: President
Supervisor of Risk Management: Executive General Manager, Administrative Headquarters
Other attendees: (Senior) Executive Managing Ofﬁcers, Corporate Auditors

Secretariat

Inside EXEDY: Human Resources (Due Diligence)
Human Resources Development Department(Human Rights Education)
Afﬁliate Relations: Accounting & Financial Department Consolidated Accouting and Legal Team
Cooperation with Partner Companies: Purchasing Headquarters

Each department, afﬁliated companies, and cooperating companies

respect human rights, risks of harassment and other human rights violations that need to be recognized, andhuman rights due diligence. The training is conducted online so that trainees can take the course at their con-Administration Headquarters

Human Rights Due Diligence Human Rights Education

our efforts to respect human rights. The training will cover topics such as society's and our company's efforts tovenience, and a comprehension test is given afterward to ensure an understanding of the training content.
Information Disclosure
CSR Public Relations Department

3. Consultation Service
We have established a consultation and reporting desk for human rights issues for the entire Group.
In addition, we have established the "EXEDY Hotline," a counter where employees can consult and report directly to outside attorneys, to prevent and detect human rights issuesas well as other issues at an early stage.
To ensure that all employees are aware of this, we specify the Consultation Desk in the EXEDY Code of Conduct,
which is distributed to all group members, to raise awareness of our commitment toward respect for humanrights.
Furthermore, we clearly state that we will protect the privacy of the person consulting or reporting and that wewill not take any disadvantageous action because the person consulted or reported.

56

57

Chapter

6

Financial and Corporate Information
EXEDY creates value in both financial and non-financial aspects
through its business activities.

1. Financial and Non-Financial Highlights����� 60
2. Financial and Non-Financial Summary����� 62
3. Financial Review...................................... 64
4. Environmental Reports.......................... 71
5. Company and Stock Information	����������.74

58

59

Chapter 6: Financial and Corporate Information

EXEDY Integrated Report 2022

1. Financial and Non-Financial Highlights■ Revenue/Operating Proﬁt/Operating Proﬁt Ratio(100 Mil. JPY)

（%）

3,000

9.0

2,833 2,824
8.4

2,639

2,500

2,611
2,274

6.9

■ CO2 emissions/CO2 emissions per unit of net sales■ Employee satisfaction (non-consolidated)(100 Mil. JPY)

（1000t-CO2）

（％）

250

300

225

8.0

158

6.0

1,500

4.2

125
95

100

238

196

168

183

95

FY2017
Revenue

FY2018FY2019Operating Profit

FY2020

50
50

1.0

0

FY20210
FY2017

Operating Profit Ratio(Right axis)

FY2018FY2019Profit before Tax

FY2020

FY2021■ Earnings per share/Dividend per share/Payout ratio(100 Mil. JPY)

(JPY)

350

350

295

328.66

56.5

300

228

213
200

171

179

185

45.4

250

234

265.92

198.34

200

150

150

100

100

33.8

33.4

30

27.4
90

90

106.24
90

90

50

50

0

0
FY2018FY2019

Capital Expenditures

FY2020

FY20210
FY2018

Earnings per share

60

10

FY2019FY2020

Dividend per share

FY2021
Payout ratio(Right axis)

100

90

90

80

80

70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

0

FY2021

47.4
34.9

Unmeasured
FY2019FY2020

FY2021

Employee satisfaction (non-consolidated)■ Training hours per employee (non-consolidated)■ Percentage of female managers (non-consolidated)(hour)

（％）

50

10

45

9

40

8

35

7

30

6

25

5

15

3.6

3.7

FY2020

FY2021

3

10

0

5.3

4

16.1

2

5.4

5

FY2017

Depreciation

20

100

Emissions per sales (Right axis)

20

60

FY2017

50

40

195
186
176

FY2020CO2 emissions

60

269.52250

FY2019Profit Attributable to Owners of Parent■ Capital Expenditures / Depreciation

300

218

91

50

0.0

0

83.6

100

2.0
500

253

150

3.0

1,000

95.4

200

130

4.0

（t-CO2/100 Mil. JPY）

95.7

217

150

150
5.0

250

195

190

200

7.0 7.0

6.3

2,000

■ Proﬁt before Tax/Proﬁt Attributable to Owners of Parent

1

Unmeasured
FY20190
FY2020

FY2021FY2019Percentage of female managers (non-consolidated)

Training hours per employee (non-consolidated)

61

Chapter 6: Financial and Corporate Information

EXEDY Integrated Report 2022

2. Financial and Non-Financial Summary
FY2017

Financial Summary

FY2018FY2019FY2020

FY2021(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)（Unit）

Non-Financial Summary

Mil. JPY

Number of Employees

Revenue(Consolidated)

283,319282,398

263,899

227,420

261,095

Overseas Sales Revenue Ratio(Consolidated)

53.9

53.8

52.7

53.1

54.5

%

Operating Profit(Consolidated)

23,808

19,626

16,751

9,513

18,328Mil. JPY

Profit Before Taxes(Consolidated)

22,49919,03914,964

9,066

19,467

Mil. JPY

Profit attributable to owners of parent(Consolidated)

15,791

12,967

9,492

4,983

12,477

Mil. JPY

Comprehensive income attributable to owners of parent(Consolidated)

15,335

13,113

3,854

10,481

21,074Equity attributable to owners of parent(Consolidated)

191,455

200,153

196,938

203,927

Total Assets(Consolidated)

307,385

311,975

301,019

Total Equity(Consolidated)

203,631

212,026

Capital Investment(Consolidated)

21,261

Amortization Expenses(Consolidated)

R&D Expenditure(Fiscal year ended (Fiscal year ended (Fiscal year ended(Fiscal year ended (Fiscal year ended

FY2020

FY2021March 31, 2018) March 31, 2019)

March 31, 2021)

March 31, 2022)

FY2017FY2019March 31, 2020)（Unit）

18,621

18,116

17,355

16,253

15,740peopleMale employees

13,77513,802

13,236

12,48812,058peopleFemale employees

4,846

4,314

4,119

3,765

3,682

people

26.0

23.8

23.7

23.2

23.4

%

3,874

3,948

3,798

3,657

3,533

peopleMale employees

3,314

3,363

3,262

3,169

3,071

peopleMil. JPY

Female employees

560

585

536

488

462

people221,756

Mil. JPY

Female employees ratio

14.5

14.8

14.1

13.3

13.1

%

312,741

332,785

Mil. JPY

Number of Managers

-

123

132

137

135

people208,709

216,730

236,023

Mil. JPY

Male managers

-

116

125

132

130

people29,477

22,82523,365

17,578Mil. JPY

Female managers

-

7

7

5

5

peopleFemale managers ratio

-

5.7

5.3

3.6

3.7

%

17,104

17,882

18,464

18,563

19,463Mil. JPY(Consolidated)

5,768

5,726

5,862

5,292

5,787

Mil. JPY

R&D to Revenue(Consolidated)

2.0

2.0

2.2

2.3

2.2

%

EPS (Basic Earnings per Share)(Consolidated)

328.66269.52

198.34106.24265.92JPY

BPS (Net Assets per Share)(Consolidated)

3,984.29

4,157.72

422.17

4,347.73

4,725.44

JPY

Dividend(Consolidated)

90

90

90

60

90

JPY

Dividend Payout Ratio(Consolidated)

27.4

33.4

45.4

56.5

33.8

%

Ratio of equity attributable to owners of the parent(Consolidated)

62.3

64.2

65.4

65.2

66.6

%

Return on equity attributable to owners of parent(Consolidated)

8.5

6.6

4.8

2.5

5.9

%

Price–earnings ratio(Consolidated)

10.21

8.90

8.06

15.75

5.92

times

Cash flows from operating activities(Consolidated)

33,006

31,76036,10330,10528,434Mil. JPY

Cash flows from investing activities(Consolidated)△ 22,921△ 27,763△ 26,515△ 16,765△ 15,494

Mil. JPY

Cash flows from financing activities(Consolidated)△ 7,616△ 3,260△ 8,638△ 8,450△ 10,540

Mil. JPY

Free cash flows(Consolidated)

10,085

3,997

9,588

13,34012,940Mil. JPY

Cash and cash equivalents at end of period(Consolidated)

44,69845,41345,416

51,56755,407

Mil. JPY

Operating Profit Ratio(Consolidated)

8.4

6.9

6.9

4.2

7.0

%

ROE (Return on equity attributable to owners of parent)(Consolidated)

8.5

6.6

4.8

2.5

5.9

%

110.81110.69109.10106.17112.86

Exchange Rate

62

(Consolidated)

FY2018

Female employees ratio
Number of Employees(NonConsolidated)(NonConsolidated)

Employee Satisfaction(NonConsolidated)

-

-

34.9

-

47.4

%

Training hours per employee(NonConsolidated)

-

-

-

5.4

16.1

h/yearTotal Working Hours(NonConsolidated)

2,139

2,131

2,021

1,688

1,898

hour

Paid Leave Utilization Rate

(NonConsolidated)

55.7

69.1

77.7

72.9

76.3

%

(Consolidated)

-

14

19

16

10

case

-

0.43

1.12

0.35

0.71

※

-

-

252,658

217,057

218,354

Number of Accidents resulting inwork leave
Accidents resulting in work
leave frequency rate
Total CO2 Emissions(Consolidated)

Emissions per sales index
Waste emissions
Emissions per sales index(Consolidated)

t-CO2

-

-

95.7

95.4

83.6

t-CO2/100 Mil.
JPY

-

-

20,982

16,50918,619

t

-

-

7.95

7.26

7.13

※ Accidents resulting in work leave frequency rate
＝ Number of deaths and injuries due to occupational accidents ÷ total actual working hours × 1 million hours

US dollar

63

t/100 Mil. JPY

Chapter 6: Financial and Corporate Information

EXEDY Integrated Report 2022

3. Financial Review
Overview of Operating Results for the Fiscal Year Ended March 31, 2022
In the fiscal year ended March 31, 2022 (hereinafter

profit, as well as group-wide efforts to improve over-referred to as the current fiscal year), despite lock-all management efficiency, including higher asset

downs and emergency declarations due to the resur-

utilizations and overhead cost reductions.

gence of COVID-19 in some countries and regions,

For the current consolidated fiscal year, we reported

economic activity showed a certain recovery andsales revenue of 261.1 billion JPY (+14.8% y-o-y), oper-

sales revenue increased significantly. Profitability in-ating income of 18.3 billion JPY (+ 92.7% y-o-y), profit

creased despite the effects of the global surge in raw

before tax of 19.5 billion JPY (+ 114.7% y-o-y) and profit

material prices, semiconductor shortages, and sup-attributable to owners of the parent of 12.5 billion JPY

ply chain disruptions, due to higher revenue and(+ 150.4% y-o-y).

Overview by Segment
MT (Manual Transmission Related Business)

AT (Automatic Transmission Related Business)

Revenue was 65.0 billion JPY (+26.6% y-o-y). Seg-

Revenue was 168.5 billion JPY (+9.4% y-o-y). Seg-

ment profit was 7.9 billion JPY (+45.2% y-o-y), mainly

ment profit was 8.6 billion JPY (+211.6% y-o-y), main-

due to the increase in revenue, despite the soaring

ly due to the increase in revenue and the absence of

cost of raw materials and other factors.

impairment losses recorded in the previous year at
the Mexican subsidiary, despite soaring raw material
prices and other factors.

Other
Revenue was 27.6 billion JPY (+25.2% y-o-y). Segment profit was 2.0 billion JPY ( +90.5% y-o-y) due to the increase in revenue, despite the soaring cost of raw materials.

Revenue

261.1
283,319

Operating Profit

billionJPY

14.8％Increase

282,398

227,420

18.3

compared to previous year

263,899

billionJPY

23,808261,095

19,626compared to previous year

92.7％Increase
16,751

9,513

18,328Overview by Region
Japan

North and Central America

Revenue was 118.9 billion JPY (+11.5% y-o-y).

Revenue was 42.3 billion JPY (+16.7% y-o-y). Despite

300,000

25,000Operating profit was 11.2 billion JPY (+98.2% y-o-y)

the increase in sales revenue and the absence of the

250,000

20,000due to the increase in revenue, despite the soaring

above-mentioned impairment loss recorded by the

200,000

15,000cost of raw materials and other factors.

Mexican subsidiary in the previous fiscal year, operat-

150,000

10,000100,000(Mil. JPY)FY ended
March 31,2018

FY ended
March 31,2019

FY ended
March 31,2020

FY ended
March 31,2021

FY ended
March 31,
2022

IFRS

IFRS

IFRS

IFRS

IFRS

5,000
(Mil. JPY)

ing loss amounted to 1.3 billion JPY (4.6 billion JPY
FY ended
March 31,2018

FY ended
March 31,2019

FY ended
March 31,2020

FY ended
March 31,2021

FY ended
March 31,
2022

IFRS

IFRS

IFRS

IFRS

IFRS

operating loss in the same period of the previousyear).

Asia and Oceania
Profit Attributable to Owners of Parent

Profit Before Taxes

19.5

billionJPY

22,49919,03912.5

compared to previous year

114.7％Increase
14,964

9,066

19,467

15,791

25,00020,00020,00015,00015,00010,00010,000

5,000

5,000
(Mil. JPY)FY ended
March 31,2018

FY ended
March 31,2019

FY ended
March 31,2020

FY ended
March 31,2021

FY ended
March 31,
2022

IFRS

IFRS

IFRS

IFRS

IFRS

billion
JPY(Mil. JPY)

12,967compared to previous year

150.4％Increase
9,492

4,983

12,477

Other

Revenue was 92.1 billion JPY (+17.5% y-o-y).

Revenue was 7.8 billion JPY (+26.2% y-o-y), and oper-

Operating profit was 9.1 billion JPY (+22.6% y-o-y)

at-ing profit was 0.6 billion JPY (+ 54.4% y-o-y) due todue to the increase in revenue, despite the soaring

the increase in revenue, despite the soaring cost of

cost of raw materials and other factors.

raw materials and other factors.

Sales Composition Ratio by Business
Segment (Reference)

Sales Composition Ratio by Region(Reference)
Other

Others27.6 billion JPY
11%
FY ended
March 31,2018

FY ended
March 31,2019

FY ended
March 31,2020

FY ended
March 31,2021

FY ended
March 31,
2022

IFRS

IFRS

IFRS

IFRS

IFRS

7.8 billion JPY
3%MT

Asia and Oceania

65 billion JPY
25%

92.1 billion JPY
35%

FY2021

261.1 billion JPY

261.1 billion JPY

AT

North and Central America

168.5 billion JPY
64%

42.3 billion JPY
16%* Revenue refers to sales to external customers.

64

Japan

118.9 billion JPY
46%
FY202165

Chapter 6: Financial and Corporate Information

3. Financial Review

EXEDY Integrated Report 2022

Consolidated Statement of Financial Position(Mil. JPY)

previous fiscal year

Overview of Financial Position as of March 31, 2022

current fiscal year

(March 31, 2021)（March 31, 2022）

AssetsTotal assets at the current fiscal year-end were 332.8 bil-

was 236.0 billion JPY (216.7 billion JPY at the previous

lion JPY (312.7 billion JPY at the previous fiscal year-

fiscal year-end), an increase of 19.3 billion JPY (8.9%)end), an increase of 20 billion JPY (6.4%) year-on-year.

year-on-year. The main components were an increase

The main components were a 7.6 billion JPY increase inin retained earnings of 9.3 billion JPY (an increase of

trade and other receivables, a 7.3 billion JPY increase in

12.5 billion JPY due to profit attributable to owners of

inventories, and a 3.8 billion JPY increase in cash andthe parent and a decrease of 3.3 billion JPY due to appro-

Other current assets

2,702

2,262

cash equivalents. Total liabilities were 96.8 billion JPY

priation of retained earnings (dividends)) and an in-

Total Current Assets

136,695

155,192(96.0 billion JPY at the previous fiscal year-end), an in-crease in other components of equity of 8.5 billion JPY

crease of 0.8 billion JPY (0.8%) year-on-year. The main

due to the depreciation of Japanese yen in exchange

Property, plant and equipment

163,963

162,964

components were a 4.4 billion JPY decrease in bonds

rates. The ratio of equity attributable to owners of the

Goodwill and intangible assets

2,648

2,802

and borrowings due to repayment of debt and a 2.5 bil-parent was 66.6%, up from 65.2% at the previous fiscallion JPY increase in accrued income taxes. Total equity

year-end.

Overview of Cash Flows

Current assets
Cash and cash equivalents

51,56755,407

Trade and other receivables

46,24953,824

Other financial assets

1,777

1,974

Inventories

34,39941,726

Non-current assets

Investments accounted for using equity method
Investments in equity instruments

155

195

2,349

3,305

Other financial assets

116

45

Deferred tax assets

4,677

6,022
1,233

Retirement benefit asset

1,193

Cash flow provided by operating activities in the current

and a 2.7 billion JPY decrease in purchase of tangible

Other non-current assets

945

1,027

consolidated fiscal year was 28.4 billion JPY, a decrease

fixed assets. Cash flow used in financing activities was

Total Non-current Assets

176,046

177,593of 1.7 billion JPY (5.5%) from the previous consolidated

10.5 billion JPY, an increase of 2.1 billion JPY (24.7%)

312,741

332,785

fiscal year (30.1 billion JPY).

from the previous fiscal year (8.5 billion JPY). It was

It was mainly due to a 5.0 billion JPY decrease in inven-mainly due to a 2.5 billion JPY increase in expenditures

tories, a 5.0 billion JPY decrease in impairment losses,

resulting from the balance of borrowings and repay-

and a 3.0 billion JPY decrease in trade and other re-ments. In addition to the above, there was an increaseceiv-ables, despite a 10.4 billion JPY increase in pre-tax

of 1.4 billion JPY (an increase of 1.3 billion JPY in the pre-Bonds and borrowings

18,514

10,381

profit from higher revenue.

vious consolidated fiscal year) due to the effect of ex-

Trade and other payables

35,88636,093

Cash flow used in investing activities was 15.5 billion

change rate changes on cash and cash equivalents. Cash

JPY, a decrease of 1.3 billion JPY (7.6%) from the previ-and cash equivalents were 55.4 billion JPY, up 3.8 billion

ous fiscal year (16.8 billion JPY). It was mainly due to a

JPY (7.4%) from the previous consolidated fiscal year

0.5 billion JPY increase in pur-chase of intangible assets,end (51.6 billion JPY).

Future Outlook

Total Assets
Liabilities and equity
Liabilities
Current liabilities

Other financial liabilities

566

594

Income taxes payable

1,525

4,005

Employee benefits accruals

1,669

1,954

Provisions

2,294

2,240

Other current liabilities

2,334

3,636

Total current liabilities

62,78858,90323,752

27,533

Non-current liabilities
Bonds and borrowings

In the first half of the fiscal year ending March 31, 2023, net sales

though material and subcontracting costs are expected to deteri-increased 12.0% year on year to 138.2 billion JPY due to an in-orate due to further increases in raw material prices, operatingcrease in foreign currency-denominated sales resulting from theincome is projected to increase 51.9% from the first half to 5.4

weaker JPY and the passing on of higher raw material prices tobillion JPY due to the impact of increased orders. Net income at-customers, despite a decrease in orders received due to the lock-

tributable to owners of the parent is projected to decrease 6.1%

down in China and semiconductor shortages.

from the first half to 3.6 billion JPY, as foreign exchange gains re-

Total liabilities

In terms of profit, operating income decreased 58.8% to 3.6 bil-corded in the first half are not expected in the second half.

Equitylion JPY due to a decrease in orders received and an increase in

As a result of the above, for the fiscal year ending March 31, 2023,

raw material prices.

we forecast revenue of 300 billion JPY (up 14.9% from the current

Net income attributable to shareholders of the parent company

fiscal year), operating income of 9 billion JPY (down 50.9%), in-Treasury Shares

was 3.9 billion JPY, down 34.8% from the same period of the pre-come before income taxes of 11 billion JPY (down 43.5%), and net

vious fiscal year. In the second half of the fiscal year ending March

income attributable to shareholders of the parent company of 7.5

31, 2023, we expect net sales to increase 17.1% from the first halfbillion JPY (down 39.9%). The above consolidated earnings fore-

to 161.8 billion JPY due to increased orders in China and Japan,

cast for the fiscal year ending March 31, 2023, which was an-foreign exchange effects, and the passing on of higher raw mate-nounced on October 31, 2022, remains unchanged. We assume

rial prices to customers. On the other hand, in terms of profit, al-an exchange rate of 140 JPY per U.S. dollar.

66

Other financial liabilities

789

879

Retirement benefit liability

6,613

6,724

887

1,245

Deferred tax liabilities
Other non-current liabilities

1,182

1,479

Total non-current liabilities

33,22237,85996,011

96,762

Share Capital

8,284

8,284

Capital Surplus

7,571

7,555

△ 3,822△ 3,768

Other components of equity

△ 984

7,524

Retained Earnings

192,878

202,160

Total equity attributable to owners of parent

203,927

221,756

Non-controlling interests

12,803

14,267

Total Equity

216,730

236,023

Total liabilities and equity

312,741

332,78567

Chapter 6: Financial and Corporate Information

EXEDY Integrated Report 2022

3. Financial Review
Consolidated Profit and Loss Statement(Mil. JPY)

previous fiscal year

Consolidated Statement of Changes in Equity

current fiscal year

(April 1, 2020 to March 31, 2021)(April 1, 2021 to March 31, 2022)

Revenue

227,420

261,095

Cost of sales

187,089

213,151(Mil. JPY)

Equity attributable to owners of parent
Other components of equity
Share
CapitalCapitalSurplusTreasury
Shares

8,284

7,571

△ 3,822

Exchange differences on translation of foreign
operations

Net change in fair value of equity instruments designated asmeasured at fair value through othercomprehensive income

Remeasurementsof defined benefit
plans△ 1,271

287-

Gross profit

40,331

47,944

Selling, general and administrative expenses

27,48030,647

Other income

2,990

2,072

Other expenses

6,328

1,041

Operating Profit

9,513

18,328

Profit

-

-

-

-

-

-

-

Finance income

539

2,080

Other comprehensive income

-

-

-

8,544

△ 37

89

8,597

Finance costs

995

961

Share of profit of investments accounted
for using equity method

820Profit Before Taxes

9,066

19,467

Income tax expense

2,982

5,645

Profit6,084

13,822

Profit attributable to
Owners of parent

4,983

12,477

Non-controlling interests

1,101

1,345

Profit6,084

13,822106.24265.92

Balances as of April 1, 2021

Total

-

-

-

8,544

△ 37

89

8,597

-

-

△1

-

-

-

-

Disposal of treasury shares

-

△ 16

56

-

-

-

-

Dividends of surplus

-

-

-

-

-

-

-

Share-based payment transactions

-

-

-

-

-

-

-

Transfer to retained earnings

-

-

-

-

-

△ 89

△ 89

Total transactions with owners

-

△ 16

55

-

-

△ 89

△ 89

Total changes in equity

-

△ 16

55

8,544

△ 37

-

8,508

8,284

7,555

△ 3,768

7,274

250

-

7,524

Balances as ofMarch 31, 2022

(Mil. JPY)

previous fiscal year

ProfitOther comprehensive income

current fiscal year

(April 1, 2020 to March 31, 2021)(April 1, 2021 to March 31, 2022)

6,084

13,822

ProfitEquity attributable to owners of parent
Retained Earnings
Balances as of April 1, 2021

Consolidated Statement of Changes in Equity

Other comprehensive income

Total
Purchase of treasury shares
Disposal of treasury shares

Items that will not be reclassified to profit or loss

Dividends of surplus

Net change in fair value of equity instruments
designated as measured at fair value throughother comprehensive income

577

△ 37

Remeasurements of defined benefit plans

93

89

Total of items that will not be reclassified
to profit or loss

670

53

5,563

9,473

Share of other comprehensive income ofinvestments accounted for using equity method

5

6

Total of items that may be reclassified to profit or loss

5,568

9,479

6,238

9,532

12,322

23,354

Owners of parent

10,481

21,074Non-controlling interests

1,841

2,279

12,322

23,354

Share-based payment transactions
Transfer to retained earnings
Total transactions with owners
Total changes in equity
Balances as of March 31, 2022

Total

Total other comprehensive income
Comprehensive income

68

Total

203,927

12,803

216,730

12,477

12,477

1,345

13,822

-

8,597

935

9,532

12,47721,074

2,279

23,354

-

△1

-

△1

-

40

-

40

△ 3,284△ 3,284△ 816△ 4,100

-

-

-

-

89

-

-

-

△ 3,195△ 3,245△ 816△ 4,061

9,282

17,8291,464

19,293202,160

221,756

14,267

236,023

Comprehensive income attributable toComprehensive income

Non-controllinginterests

192,878

Items that may be reclassified to profit or loss
Exchange differences on translation offoreign operations△ 984

Purchase of treasury shares

Earnings per share
Basic and diluted earnings (JPY) per share

Total

69

Chapter 6: Financial and Corporate Information

EXEDY Integrated Report 2022

3. Financial Review

4. Environmental Reports (EXEDY)Consolidated Statement of Cash Flows(Mil. JPY)

previous fiscal year

(April 1, 2020 to March 31, 2021)

current fiscal year

(April 1, 2021 to March 31, 2022)

9,066

Investment

Cost

64

83

94

43

50

Sale of valuables

651

796

512

548

1,180

19,467

Recycling Natural
Resources

0106

Waste Disposal, Recycling Processing

Management Activities

011

Environmental month events, ISO periodic audits

FY2017FY2018FY2019Research Activities

0

2,899

Social Activities

0

5

Total

53

3,141

△ 281
776

Total

Greening of business offices, environmental education

Environmental Conservation Cost

△8

△ 20

Foreign exchange loss (gain) (△=profit)

△ 61

△ 15

Decrease (increase) in inventories (△=increase)776△ 4,186

Decrease (increase) in trade and otherreceivables (△=increase)△ 1,640△ 4,676

Increase (decrease) in trade and other payables(△=decrease)

912

△ 165
2,245

35,182

32,710
265

△ 837

△ 804

Income taxes paid

△ 4,508△ 3,737

Cash flows from operating activities

30,10528,434

△ 192

△ 844

Proceeds from withdrawal of time deposits

238

909

Purchase of property, plant and equipment△ 16,665△ 13,653

117

66

△ 335

△ 866

71

△ 1,107

Cash flows from investing activities

Other
Cash flows from investing activities△ 16,765

156

60

47

258

53

3,292

3,146

2,938

3,141

Total

3,142

3,352

3,193

3,196

3,194

6,213

16,837

Repayments in short-term loans payable△ 6,453△ 16,698

Proceeds from long-term loans payable

2,851

10,392

Repayments of long-term loans payable△ 6,148△ 16,548

Dividends paid

△ 3,517△ 3,285

Other△ 1,396△ 1,237

Cash flows from financing activities△ 8,450△ 10,540

Effect of exchange rate changes on cash andcash equivalents

1,261

1,439

Net increase (decrease) in cash and cash
equivalents (△=decrease)

6,151

Cash and cash equivalents at beginning of
period45,416

Cash and cash equivalents at end of period

51,56770

51,56755,407

48,59347,935

Volume of valuables sold33,171

34,59533,52929,49428,916

Reduction
and Recycling

2,950

3,119

2,813

2,081

2,351

Final disposal(landfill)

160

137

128

123

256

* CO2 conversion factor: Based on FY2017-18 Voluntary Action Plan for the Environment, JAPIA (0.453

t-CO2/thousand kWh)
From FY2019 onward, adjusted CO2 conversion factors (residuals) by electricvehicle are used.

Material Balance
Amount used and purchased
Item

Unit

Electricity

thousandkWh

KeroseneKL

FY2017FY2018

146,721

FY2019FY2020139,553

150,999

170

140

120

FY2021

115,363

122,494

112

140

Item

Unit

Steel

t

FY2017
129,345

FY2018
131,677

FY2019127,816

FY2020110,193

FY2021

Castingt

11,804

11,51910,652

8,606

8,636

Forgingt

16,012

16,515

15,134

12,794

14,603112,939

Gasoline

KL

91

85

75

25

36

Diesel

KL

129

165

166

75

127

Friction
Materials

Mil.
Facings

11.8

11

10.1

8.3

7.4

City gas

thousand㎥

53

35

31

23

22

Tap Water

1000 m3

131

134

132

100

110

t

595

552

509

435

461

Industrial
Water

1000 m3

114

104

104

80

75

LPG

Amount Recycled

Unit:tons

Scrap (Recycling)

FY2017

Within EXEDYFY201813,196FY201912,874FY202011,376FY2021

9,900

12,204

Amount of Chemical Substances Discharged and Transferred
PRTR Subject Chemical Substance (FY2021)
Location

Ueno

AmountDischarged

Name

Atmospheric
Emissions80

Xylene

980

0

0

384

1-Bromopropane

2,100

0

0

No.

Headquarters

Emissions to the atmosphere

Unit: kgClass I Designated Chemical Substance

VOCs emissions(unit: kg)

FY2021

Nox emissions

SOx emissions

Industrial

FY202132,287

Headquarters

0.017

No applicablefacilities

Consumed

Waste

20

Ethanolamine

0

0

0

Xylene

14

0

0

151

1,3-Dioxolane

1,000

0

0

296

1,2,4-Trimethylbenzene

8

0

0

384

1-Bromopropane

26,0000

0

Ueno Division
0.224*1
0.062*2
VOCs emissions
Target substances: Substances with a boiling point of less than 150°
C among the substances
reported under the PRTR Law and those with a boiling point of 150°
C or
higher for painting, cleaning, and adhesive purposes.
Target facilities: Facilities notified under the PRTR Law
NOx, SOx emissions
Sulfur Oxide (SOx) emissions (t) = SOx concentration (ppm) x 10-6 x dry gas emissions (Nm3/h)
x facility annual operating hours (h) x 64/22.4 x 10-3
Nitrogen Oxide (NOx) emissions (t) = Amount of NOx per hour (Nm3/h) x facility annual
operating hours (h) x 46/22.4 x 10
*1 Result: Less than 5ppm detection limit → Calculated as 5ppm
*2 Result: Less than 1ppm detection limit → Calculated as 1ppm

*Kawagoe Plant, Hiroshima Plant: not applicable

Legal compliance status and monitoringmeasurement results
Item / Division

Headquarters

Ueno Division

Kawagoe Plant

Hiroshima Plant

Air

OK

OK

-

-

Water

OK

OK

-

-

Noise

-

OK

OK

OK

Vibration

OK

-

-

OK

OK

OK

OK

OK

Waste

Disposal site
Waste residue analysis

Groundwater pumping volume
Freon
Chemical substance usage/transfer (PRTR)

Not checked due to COVID-19---

Reported---

OK: Simple/Periodical measurement leakage less than 1t
Reported

Penalties and fines for exceeding
standards, violating laws, etc.
During the subject period, no penalties were applied or associated costs
paid due to exceeding standards or violations of laws and regulations.

Regarding Environmental Reports
This report covers the domestic production bases: EXEDY Headquarters, Ueno Division, Kawagoe Plant and Hiroshima Plant.

-

OK

Reported

Unit:kgTransferred

80

Manifest Delivery Status

3,840

62,223（https://ghg-santeikohyo.env.go.jp/calc/denki）

Division

Proceeds in short-term loans payable

FY2021

2,986△ 15,494

Cash flows from financing activities

FY202071,164

Water

268

FY2019

Cost

Energy1,910

Investment(Mil. JPY)

FY2018FY2021

69,321

Amount ofIndustrial
Waste
Discharged

3,194

FY2020*CO2 Emissions

Purchased
Materials

Share of loss (profit) of investments accounted
for using equity method (△=profit)(tons of CO2)

Quantity EffectFuel efficient products, development of recycled materials, and weight
reduction

FY2017Purchase of intangible assets(Mil. JPY)

FY2021

Cost of Waste Disposal△ 243

Proceeds from sales of property, plant andequipment

FY2020

Solar panels, LED lighting, air conditioning upgrade

Interest and dividend income

Payments into time deposits

FY2019Wastewater treatment facilities, installation of environmental equipment

103

Interest paid

FY201834

5,090Interest and dividends received

FY2017

87

Impairment losses

Subtotal

Economic Benefits

1

19,463

Other

Economic and material benefits associated with environmental conservation(Mil. JPY)

Details

52

18,563819

Item
Preservation of the Global
Environment

Depreciation and amortization

Interest expenses

Cost of Environmental Conservation for the 2021 Fiscal Year
Anti-pollution Measures

Cash flows from operating activities
Profit Before Taxes

Environment Accounting--*- means that these locations are not obliged to report or measure their operations

71

Preparing this report, we referred to the Environmental Report
Guideline (2018 Edition) issued by the Ministry of the Environment.
The report covers the period from April 1, 2021 to March 31, 2022.
However, matters from other periods that were deemed necessary,
have been included as well.

Chapter 6: Financial and Corporate Information

4. Environmental Reports (Global*)

EXEDY Integrated Report 2022

* The scope of each data is as follows
FY2019: EXEDY and 34 domestic/overseas affiliates
FY2020: EXEDY and 28 domestic/overseas affiliates
FY2021: EXEDY and 37 domestic/overseas affiliates

GHG data

Electric Power Data

(Unit: tons of CO2)
Market-based
CO2 Emissions (by Scope)

FY2019Location-based

FY2020

FY2021FY2019FY2020the Entire Group（Scope1)

36,282.18

31,890.49

33,734.59

36,282.18

31,890.49

33,734.59

the Entire Group（Scope2)

216,375.50

185,166.76

184,619.56

229,850.29

197,207.26

204,426.69

the Entire Group（Scope1+2)

252,657.68

217,057.25

218,354.15

266,132.48

229,097.75

238,161.28

CO2 Emissions (by Country)

FY2019FY2020

FY2021FY2019FY2020

Unit:MWhby country

FY2021

FY2021FY2019FY2020Australia
China

FY2021by country

FY2019FY2020

FY2021--

222.25

Panama

-

-

60.27

68,089.12

71,436.93

72,049.28

Singapore

40.97

-

43.44
44,882.46

Hungary

5,705.74

5,296.47

5,748.96

Thailand

46,132.62

40,077.25

India

26,398.58

22,170.24

24,508.86

United Arab Emirates

49.03

-

58.91

Indonesia

6,467.52

4,070.22

5,129.10

United Kingdom

96.86

-

79.71
44,061.55--

222.46--222.46

Japan

207,428.40

173,785.38

188,175.63

United States of America

51,809.34

45,380.11

China

40,450.68

41,890.48

44,591.34

46,565.49

48,758.66

48,174.19

Malaysia

2,086.42

1,788.58

1,858.87

Vietnam

3,122.00

2,732.00

2,815.00

Hungary

2,997.42

2,770.68

2,759.36

2,641.38

2,368.15

2,814.55

Mexico14,649.19

10,206.33

10,529.86

Total

432,075.79

376,943.50

400,224.13

19,624.96

FY2019FY2020

FY2021

Australia

India

18,077.88

14,063.81

11,453.35

21,919.29

18,286.94

Indonesia

5,664.38

3,600.20

4,533.67

5,000.81

3,178.93

3,978.19

Japan

115,840.04

91,594.61

95,082.48

123,964.81

100,794.75

107,594.13

Malaysia

1,356.18

1,177.96

1,265.52

1,356.18

1,177.96

1,265.52

Mexico7,510.35

5,102.39

4,536.39

7,104.64

4,145.04

4,264.80

Panama

-

-

42.73

-

-

42.73

Singapore

22.54

-

25.01

22.54

-

25.01

Thailand

22,618.90

21,036.99

22,518.32

24,544.23

20,973.68

22,935.83

44.35

0

50.41

46.03

-

52.07

United Arab Emirates

75.82

0

66.92

75.82

-

66.92

United States of America

United Kingdom

36,235.69

34,086.71

29,177.37

31,127.79

27,680.23

25,071.10

Vietnam

1,763.47

1,733.41

2,028.83

1,763.47

1,733.41

2,028.83

Total

252,657.68

217,057.25

218,354.15

266,132.48

229,097.75

238,161.28

Other GHG Emissions(CH4, N2O, CFCs)

FY2019the Entire Group（Scope1)

FY2020745.18FY2021

1,347.54

FY20191,303.41

FY2020745.181,303.41

CO2 conversion factor of electricity (Market-based)
China

FY2019Yuhao Hydropower
Development Co., Ltd.

China

0.328

E.O.N. Észak-dunántúliÁramhálózati Zrt.

Hungary

0.726

BESCOM / IEX

0

HungaryIndia

0

Atrai energy services pvt.ltd

Indonesia

0.870

Purusahaan Listrik Negara

Mexico0.505

CFE (Comision Federal deElectricidad)

0.410
Thailand

United Statesof America

Japan

0.479

India

PROVINCIAL ELECTRICITYAUTHORITY

0.785

Appalacian Power

0.356

KUB Combined Meters/TVA

0.656

China

0.328

E.O.N. Észak-dunántúliÁramhálózati Zrt.

Hungary

0.710

BESCOM
Atrai energy services pvt.ltd

Indonesia

0.870

Purusahaan Listrik Negara

Mexico0.494

CFE (Comision Federal deElectricidad)

0.480
ThailandCountry

Yuhao Hydropower
Development Co., Ltd.

00

AMATA B-Grim Power

0.501

FY20200.478

FY2021
0

India

0.496

PROVINCIAL ELECTRICITYAUTHORITY

1.010

Appalacian Power

0.271

KUB Combined Meters/TVA

Hokkaido Electric Power Co.,Inc.

0.601

0.528

Tohoku Electric Power Co.,Inc.

0.455

Tokyo Electric Power Co.,Inc.

0.452

Chubu Electric Power Co.,Inc.

Yuhao Hydropower
Development Co., Ltd.

0.218

MVM Zrt.

0.850

BESCOM/IEX

0Atrai energy services pvt.ltd

Indonesia

0.870

Purusahaan Listrik Negara

Mexico0.423

CFE (Comision Federal deElectricidad)

0.496

AMATA B-Grim Power

0.413

ThailandFuel Consumption

Unit

PetroleumKL

Kerosene

2,096.68

279.78366.81Natural gas

1000 ｍ3

11,671.10

10,790.48

5,937.74

95.41

71.47

52.79
Unit:TJ

Total Energy Consumption

AMATA B-Grim PowerFY2019FY2020

FY2021

Total Energy Consumption

Petroleum

5.49

2.89

6.13

Electricity

Kerosene

10.08

8.97

9.68

Conversion Factor

FY2019FY20201,555.47

FY2021

1,357.00

1,440.81

Diesel

16.28

10.05

13.17

CDP technical note

Bunker A

3.73

2.79

2.06

●Petroleum

LHV

44.3 TJ/Gg●Diesel

LHV

43TJ/Gg

LPG

129.89103.19106.51●Kerosene

LHV

43.8 TJ/Gg●Natural gas/LNG LHV

48TJ/Gg

City gas

4.16

2.42

242.12Natural gas/LNG

392.15362.56199.51

Total

561.79492.87579.18

Greenhouse Gas Emissions Calculation, Reporting and Publication System
https://ghg-santeikohyo.env.go.jp/●Bunker A 39.1GJ/KL● LPG 50.8GJ/ｔ●City gas 44.8GJ/MNm3

1TJ=277.778MWh

Water
Unit:1000㎥

Type

FY2019FY2020

FY2021

2,357

2,266

2,368

-

1,713

1,776

451

443

503

Breakdown: Secondary treatment

-

203

274

1,218

1,199

1,200

Breakdown: Primary treatment

-

2

14

Breakdown: Water source: Groundwater

233

194

201

Breakdown: No treatment

-

286

239

Breakdown: Water source: City water

907

873

967

60

62

65

Total water withdrawals
Water withdrawal (water-stressed area)
Breakdown: Water source: rivers, lakes and marshes

0.443

Tokyo Electric Power Co.,Inc.

Chubu Electric Power Co.,Inc.

0.379

Chubu Electric Power Co.,Inc.

0.334

The Kansai Electric Power
Company, Inc.

0.318

The Kansai Electric Power
Company, Inc.

Breakdown: Discharges to: soil

0.351

The Kansai Electric Power
Company, Inc.

Breakdown: Discharges to: sewage

0.636

The Chugoku Electric Power
Co.,Inc.

0.585

The Chugoku Electric Power
Co.,Inc.

0.521

The Chugoku Electric Power
Co.,Inc.

Water Quality

0.595

ESS

0.364

CD Energy Direct

Amount Consumed
Amount Recycled
Total Discharged Water Volume
Breakdown: Discharges to: rivers, lakes and marshes

Emissions per treatment level

164

233

315

2,297

2,204

2,303

1,430

1,372

1,377

70

60

65

796

770

854

FY2019FY2020

Breakdown: Tertiary treatment

FY2021

Definition of water-stressed areas: water stress at the time of Aqueduct's reporting"Baseline water stress" is confirmed to be medium or higher in July of the following
year of actual.
Primary treatment: Physical removal of suspended solids by sedimentation, etc.
Secondary treatment: Primary treatment + decomposition of organic matter by
biological treatment, etc.
Tertiary treatment: secondary treatment + many processes such as suspension,
colloidal, dissolved components, etc.
(Unit: cases)

FY2019Emission standards exceeded

FY20200

FY20210

Water Quality
0

FY2019Accidents and serious leaks

FY2020

FY2021

0

0

0

Waste

CO2 conversion factor of electricity(FY2019 ～ common-standard)

t-CO2/kl

FY20212,031.25

453.51

Tokyo Electric Power Co.,Inc.

2.584963

FY20202,556.98

KL

0.426

Diesel

FY2019
3

KL

0.442

t-CO2/kl

Ton

DieselTohoku Electric Power Co.,Inc.

2.489483

Unit

LPG

Bunker A

0.457

Kerosene

Fuel Consumption

187.11

5,404.42

Tohoku Electric Power Co.,Inc.

t-CO2/kl

FY2021
88.3

53.99

0.522

2.321660

6,637.42

92.85

Hokkaido Electric Power Co.,Inc.

Petroleum

6,780.94

1000 ｍKUB Combined Meters/TVA

Unit

5,566.56

City gas

0.550

CO2 conversion
factor

5,090.75

Total

274.5

Hokkaido Electric Power Co.,Inc.

Country

5,134.32

254.45AEP

CO2 conversion factor of electricity(Location-based)
Unit:t-CO2/MWh

4,855.12

285.78

0.278

Japan

Sold

KL

0.774

Japan

1,546.67

FY2020167.54PROVINCIAL ELECTRICITYAUTHORITY

United Statesof America

Amount of solar power
generated

FY2021

1,646.62

FY20190.496

United Statesof America

FY2020711.44

Total Energy Consumption

Unit:t-CO2/MWh

Country

FY2019

Self-consumption

FY2021

1,347.54

CO2 Conversion Factor
Country

Amount of solar power
generated(Unit: 1000 tons)

FY2019FY2020

FY2021

Australia

0.747

0.709

0.685

China

0.631

0.637

0.623

Hungary

0.266

0.252

0.227

India

0.728

0.745

0.722

Indonesia

0.767

0.767

0.762

Japan

0.517

0.496

0.487

Malaysia

0.650

0.659

0.662

Mexico

0.477

0.400

0.397

Panama

0.758

0.663

0.709

Location-based: IEA, Emissions from Fuel Combustion

Singapore

0.395

0.389

0.385

Market Standard: Residual Mix values for each country. Countries that could not be identified

Manufacturing

19

20

Japan

10

11

Southeast Asia

5

8

Thailand

0.484

0.479

0.461

adopted Location-base Value

Sales

2

11

North and Central America

3

8

India

2

2

United Arab Emirates

0.533

0.520

0.505

Ministry of the Environment: List of Calculation Methods and Emission Factors for Calculation,
Reporting, and Publication System

Other

5

9

Europe12

Oceania

0

2

Total

26

40

China

4

5

Other

1

2

Total

26

40

United Kingdom

0.246

0.229

0.208

United States of America

0.421

0.410

0.382

Vietnam

0.474

0.553

0.649

by Fuel TypeLPG

2.998893

t-CO2/t

City gas2.234027

t-CO2/1,000Nm3

Bunker A

2.709630

t-CO2/tNatural gas

2.217050

t-CO2/1,000Nm3

https://ghg-santeikohyo.env.go.jp/

Notes

Type

FY2019Total waste
Source:Ministry of the Environment: List of Calculation
Methods and Emission Factors for Calculation,
Reporting, and Publication System (https://
ghg-santeikohyo.env.go.jp/)

FY202021

FY2021

16.5

Type

18.6

FY2020

FY2021

Breakdown: Recycled amount

15.7

11.9

13.1

Breakdown: Final disposal

5.3

4.6

5.5

Environmental Management System Certification Status (as of January 2021)
by Sector

ISO14001 Certified

Number ofCompanies

By Region

ISO14001 Certified

Manufacturing site ISO14001 certification acquisition rate: 95%

72

FY201973

Number ofCompanies

By Region

ISO14001 Certified

Number ofCompanies

Chapter 6: Financial and Corporate Information

EXEDY Integrated Report 2022

5. Company / Stock information
Company Outline

Major Shareholders (Top 10)(As of March 31, 2022)
Number of sharesheld（1,000 shares）

Shareholding
ratio（％）

AISIN CORPORATION

7,230

15.4%

Aisin Holdings of America, Inc.

4,500

9.6%

Aisin Europe SA

4,500

9.6%

The Master Trust Bank of Japan, Ltd.

4,476

9.5%

The Custody Bank of Japan, Ltd.

1,441

3.1%

Bashokai (Basho Association of Japan)

1,272

2.7%

Daihatsu Motor Co, Ltd.

840

1.8%

EXEDY’s Employee Shareholding Association

588

1.3%

BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC/ACCT BP2S DUBLIN CLIENTS-AIFM

565

1.2%

DFA INTL SMALL CAP VALUE PORTFOLIO

540

1.1%

Shareholder

Company Name

EXEDY Corporation

Established

July 1950

Capital¥8,284 million

President & CEO

Tetsuya Yoshinaga

Headquarters

1-1-1 Kidamotomiya, Neyagawa-shi, Osaka, 572-8570

Number of employees

Consolidated: 15,602
Non-consolidated: 3,533 (as of March 31, 2022)

Number of group companies

Japan 13 (EXEDY Corporation included), overseas 31

Fiscal year

April 1 to March 31 of the following year

Annual General
Shareholders Meeting

June

Share unit value

100 shares

Notes: 1
 . EXEDY holds 1,565,564 shares of treasury stock but is excluded from the above major shareholders.
2. Shareholding ratio is calculated excluding treasury stock.

Shareholder Composition Ratio (For Reference)
Treasury Shares
1,565 thousand
shares3.2%

Financial Instruments Business Operator
862 thousand shares
1.8%

Government &Local Governments

Financial
Institutions

Number of issued shares

48,593,736 shares (as of March 31, 2022)

Number of shareholders

44,252 (as of March 31, 2022)

Securities code

7278

Listed on

Tokyo Stock Exchange

0 thousand shares
0.0%

6,525 thousand
shares13.4%

Foreign corporations, etc.

Other corporations
9,943 thousand
shares20.5%

18,127 thousand shares
37.3%

Individuals and Others
11,569 thousand shares
23.8%■Stock Price Trend (Tokyo Stock Exchange)
Stock price (JPY)4,000

ESG-related external evaluation

3,000

EXEDY has been selected for a leading ESG

2,000(Environmental, Social, and Governance) investment stock index and has received high

1,000

external recognition.

0
January 2018

74

January 2019

January 2020

January 2021

75

January 2022

January 2023

EXEDY Corporation

1-1-1 Kidamotomiya, Neyagawa-shi, Osaka, 572-8570, Japan
Tel: 81-72-822-1152
https://www.exedy.com/en/