This document has been translated from the Japanese original for the convenience of non-Japanese shareholders. In the event of any
discrepancy between this translation and the Japanese original, the original shall prevail.

Notice of the 109th Annual
Shareholders’ Meeting(Items excluded from the paper-based documents to be delivered toshareholders who requested the delivery of paper-based documents, pursuant tolaws and regulations and the Articles of Incorporation, among items for which
the measures for providing information in electronic format are taken)

Matters relating to share options for the Company’s shares
Independent Auditor
Company systems and policies
Consolidated Statement of Changes in Net Assets
Notes to Consolidated Financial Statements
Non-Consolidated Statement of Changes in Net Assets
Notes to Non-Consolidated Financial Statements(From April 1, 2023 to March 31, 2024)

NAGASE & CO., LTD.
The above items are excluded from the paper-based documents to be delivered toshareholders who requested the delivery of paper-based documents, pursuant tolaws and regulations and the provision of Article 14, paragraph (2) of theCompany’s Articles of Incorporation.

-1-

Matters relating to share options for the Company’s shares
1.

Status of share options issued as consideration for the execution of duties and held by the Company
officers as of the end of the fiscal year
No applicable information.

2.

Status of share options issued to employees and others as consideration for the execution of duties during
the fiscal year
No applicable information.

3.

Other significant matters relating to share options
No applicable information.

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Independent Auditor
1.

Name of Independent Auditor
Ernst & Young ShinNihon LLC

2.

Summary of Limiting liability agreement
The Company has not entered into a liability limiting agreement specified in Article 423, paragraph (1)of the Companies Act with its Independent Auditor.

3.

Amount of compensation paid to Independent Auditor during the current fiscal year
Amount of compensation(Millions of yen)Amount of compensation, etc. paid by the Company to Independent Auditor in
relation to business specified in Article 2, paragraph (1) of the Certified Public
Accountants Act

117

Amount of compensation, etc. paid by the Company to Independent Auditor in
relation to business other than that specified above0

Total compensation, etc. paid by the Company and its consolidated subsidiaries to
Independent Auditor

161

Notes: 1. The audit agreement between the Company and the Independent Auditor does not distinguish between audit
compensation for audits performed pursuant to the Companies Act and audits performed pursuant to the Financial
Instruments and Exchange Act and compensation cannot practically be categorized in this manner, and accordingly,
the total amount is reported as compensation, etc. paid to the Independent Auditor during the current fiscal year.
2. The Audit & Supervisory Board received materials necessary for investigating the amount of the Independent
Auditor’s compensation from relevant internal divisions, Directors, Independent Auditor, and so on, received
explanations from the Independent Auditor of a summary of the audit plan for the current fiscal year, audit times foreach audit item, and so on, and based on the results of its confirmation of the audit plans for prior years andimplementation of those plans determined that the compensation, etc. paid to the Independent Auditor is appropriate
and gave its consent pursuant to Article 399, paragraph (1) of the Companies Act.

4.

Details of duties other than audits
Non-audit services include agreed procedural work associated with tax filing in foreign countries.

5.

Status of audits of financial statements of the Company’s main subsidiaries by Certified Public
Accountants or Audit Firms other than the Company’s Independent Auditor
Of the Company’s main subsidiaries, Prinova Group LLC, Nagase (Hong Kong) Ltd., Nagase(Thailand) Co., Ltd. and three other overseas subsidiaries were audited by certified public accountants
or an audit firm (including persons with corresponding qualifications in a foreign country) other thanthe Company’s Independent Auditor.

6.

Policy on determination to dismiss or not to reappoint Independent Auditor
In addition to dismissal of the Independent Auditor by the Audit & Supervisory Board as specified in
Article 340 of the Companies Act, if the Company determines that it would be difficult for the
Independent Auditor to properly perform its duties because of a violation of laws and regulations by the
Independent Auditor, the occurrence of events that impair the Independent Auditor’s qualifications or
independence, and so on or if the Company determines that changing the Independent Auditor would
be suitable for enhancing the appropriateness of audits, the Company’s policy is to propose at a
Shareholders’ Meeting to dismiss or not to reappoint the Independent Auditor.

-3-

Company systems and policies
1.

Systems for ensuring the proper implementation of business and status of operation of those systems
Summary of resolution on systems for ensuring the proper implementation of business (internal control
systems)
The Company’s Board of Directors adopted a resolution on basic policy for creating internal control
systems entitled “Creation of Systems to Ensure that Directors Execute their Duties in Accordance withLaws and Regulations and the Articles of Incorporation and Other Systems Specified by Ministry ofJustice Ordinance Necessary for Ensuring the Proper Implementation of Business by a Stock
Corporation and the Corporate Group Comprising that Corporation and its Subsidiaries.” Details of thepolicy are set forth below. Based on this basic policy, the Company will ensure the appropriateness of
its business operations and conduct ongoing reviews and continuous improvement in order toappropriately reinforce governance systems even further in light of changes in the Company’s businessenvironment.
The Company has established the Internal Control Committee to build, maintain and improve theinternal control system. The Committee deliberates on basic policies for the internal control systems,
builds systems established under the internal control systems, and monitors the operation of the systems.
(1) Systems to ensure that Directors and employees execute their duties in accordance with laws andregulations and the Articles of Incorporation (Article 362, paragraph (4), item (6) of the Companies
Act and Article 100, paragraph (1), item (4) of the Regulations for Enforcement of the Companies
Act)(i) Based on management philosophy of “recognizing our responsibility to society while maintaining
the highest standards of integrity,” the Company has established the Code of Conduct for Risk
Management & Compliance, and has created systems for ensuring that all officers and employees
including those of Group companies conduct corporate activities in accordance with the Code of
Conduct for Risk Management & Compliance in order to create and maintain compliance systems.
(ii) The Company has established Risk Management & Compliance Committee and the Committee
is made up of Directors and employees. The members make all determinations relating to risk
management and compliance. When necessary, the Committee engages outside experts andworks to prevent violations of laws and regulations and the Articles of Incorporation.
(iii) The Company has formulated internal rules on individual issues, and makes decisions throughmultidirectional examination on compliance and other important points from a professional
perspective.
(iv) Should employees of Nagase or its Group companies become aware of legal or other complianceissue, they immediately report to and consult with their supervisor or the relevant division andthen report to the Risk Management & Compliance Committee, which promptly reports to theBoard of Directors and the Audit & Supervisory Board and its members. In addition, the Risk
Management & Compliance Committee has introduced an internal reporting system wherein
employees and officers including those of Group companies can report or discuss issues directly.
The aim is to prevent violations of laws and regulations and the Articles of Incorporation by
Directors and employees in the performance of their duties, and to prevent such violations frombeing left unattended or unaddressed.
(v) Awareness regarding legal compliance among officers and employees including those of Group
companies is raised by conducting courses taught by outside experts and through other means.
And efforts are made to disseminate information regarding the management philosophy by theCommittee.
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(vi) Our Audit Office conducts internal audits relating to the status of execution of duties by Directors
and employees in accordance with the Internal Audit Rules.
(2) Systems for retaining and managing information relating to the execution of duties by Directors(Article 100, paragraph (1), item (1) of the Regulations for Enforcement of the Companies Act)
Information relating to the execution of duties by Directors is recorded on paper orelectromagnetically in accordance with internal rules and is retained and managed. Directors andAudit & Supervisory Board members can access and view these documents at any time.
(3) Rules relating to management of loss-related risks and other systems (Article 100, paragraph (1),item (2) of the Regulations for Enforcement of the Companies Act)(i) The Company has established the Risk Management & Compliance Committee as theorganization that performs comprehensive management relating to loss-related risks for theCompany and Group companies, determined the committee’s functions and authority, and createda system that clarifies its roles and responsibilities.
(ii) Each responsible division establishes rules and guidelines, conducts training, prepares anddistributes manuals, and takes other measures concerning individual risks relating to the businessactivities of the Company and Group companies.
(iii) When new risks arise, the Risk Management & Compliance Committee promptly designates the
responsible division to address the risks, and also develops a system for prompt and appropriate
communication and emergency procedures in case that an incident occurs within the Group.
(4) Systems for ensuring the efficient execution of duties by Directors (Article 100, paragraph (1), item(3) of the Regulations for Enforcement of the Companies Act)(i) The Board of Directors is clearly positioned as the body in charge of making decisions on
management policies and strategies, and it supervises the execution of operations. The Board of
Directors holds regular monthly meetings as well as extraordinary meetings when necessary.
(ii) The Group Management Committee, consisting of executive officers appointed by the Board of
Directors, has been established to discuss important matters such as management strategies andinvestment projects, as a way to support management decision-making, and holds regularmeetings once a month in principle. Directors and Audit & Supervisory Board Members may
attend the Group Management Committee meetings.
(iii) With regard to the performance of business in accordance with the decisions of the Board of
Directors, organizational operations rules and divisions of work responsibilities established underan executive officer system specify responsible parties, their responsibilities, and procedures forcarrying out those responsibilities.
(5) Systems for ensuring the proper implementation of business by the corporate group comprising a
stock corporation and its subsidiaries (Article 100, paragraph (1), item (5) of the Regulations for
Enforcement of the Companies Act)(i) Systems for reporting to the Company on matters pertaining to the execution of duties bydirectors, etc. of subsidiaries (Article 100, paragraph (1), item (5)(a) of the Regulations for
Enforcement of the Companies Act)
a. The Company has established operational standards and established a system that requires
approval from or reporting to the Company after Group companies make decisions on certain
matters.
-5-b.

In principle, the Company dispatches officers to Group companies and ensures the proper
conduct of business.

(ii) Rules relating to management of loss-related risks of the subsidiaries and other systems (Article
100, paragraph (1), item (5)(b) of the Regulations for Enforcement of the Companies Act)The Company and Group companies perform Group-wide risk management with the Risk
Management & Compliance Committee playing a central role and in coordination with risk
management & compliance committees established at main subsidiaries. Important matters relating
to Group-wide compliance are discussed and decisions are made while tasks and measures topromote the risk management are deliberated and decided on. In order to further enhance thereliability of financial reports, the status of company-wide internal controls as well as the process
for preparing financial statements has been codified in light of the Financial Instruments andExchange Act and evaluation and improvement efforts are made on a consolidated basis.
(iii) Systems for ensuring the efficient execution of duties by directors, etc. of subsidiaries (Article
100, paragraph (1), item (5)(c) of the Regulations for Enforcement of the Companies Act)
Under the Medium-term Management Plan and a system of annual budgets, clear targets are set
and budget and results management is performed for the Company and each Group company.
(iv) Systems to ensure that directors, etc. and employees of subsidiaries execute their duties inaccordance with laws and the Articles of Incorporation (Article 100, paragraph (1), item (5)(d)of the Regulations for Enforcement of the Companies Act)
a. The Code of Conduct for Risk Management & Compliance is disseminated to all officers andemployees of Group companies to ensure that their corporate activities are conducted inaccordance with the Code.
b. The Audit Office of the Company conducts audits of the Company and Group companies inaccordance with the Internal Audit Rules.
c. The Risk Management & Compliance Committee has introduced an internal reporting system
wherein employees and officers including those of Group companies can report or discuss
issues directly. The aim is to prevent violations of laws and regulations and the Articles ofIncorporation by Directors and employees in the performance of their duties, and to prevent
such violations from being left unattended or unaddressed.
(6) Matters pertaining to employees when Audit & Supervisory Board members request theappointment of employees to assist them in the execution of their duties (Article 100, paragraph(3), item (1) of the Regulations for Enforcement of the Companies Act)
Upon request from Audit & Supervisory Board members, in order to ensure their auditing
effectiveness, the Company appoints employees to support the Audit & Supervisory Board members’
work. Such employees are assigned to the Audit Office.
(7) Matters pertaining to ensuring the independence of employees specified in the preceding paragraphfrom Directors and ensuring the effectiveness of instructions from Audit & Supervisory Board
members (Article 100, paragraph (3), item (2) and (3) of the Regulations for Enforcement of theCompanies Act)(i) When such employees are transferred, evaluations are conducted, and so on, prior consultations
are conducted with Audit & Supervisory Board members and their opinions are sought.
(ii) Efforts are made to ensure the effectiveness of instructions to such employees, adequately taking
into consideration the selection of such employees and the period for which they will work
supporting the execution of duties by Audit & Supervisory Board members.
-6-(8) Systems for Directors and employees to report to Audit & Supervisory Board members and othersystems for reporting to Audit & Supervisory Board members (Article 100, paragraph (3), item (4)of the Regulations for Enforcement of the Companies Act)(i) Audit & Supervisory Board members attend the Board of Directors meetings and other important
meetings, exchange opinions with managers, review requests for decisions, reports, and so on sothat they can understand the overall status of operations of the Company and Group companies
at all times.
(ii) The Risk Management & Compliance Committee Rules stipulate that Directors, employees, andso on of the Company and Group companies shall report to Audit & Supervisory Board members
promptly regarding the following matters individually or through the Risk Management &Compliance Committee.
i. Occurrence and reporting of improper implementation, violations of laws and regulations or
the Articles of Incorporation, or other compliance-related issues regarding the performance of
duties by Directors;
ii. Occurrence and reporting of facts that pose a risk of substantial harm to the Company; andiii. Occurrence and reporting of disclosure of material information.
(iii) The result of internal audits of the business execution of the Company and Group companies
conducted by the Audit Office are reported to full-time Audit & Supervisory Board members.
(9) System to ensure that a person who makes a report under the preceding paragraph is not subject toany disadvantageous treatment for making such a report (Article 100, paragraph (3), item (5) of theRegulations for Enforcement of the Companies Act)
Detrimental treatment of persons who make reports is prohibited in cases where a report is made bya Director or employee of the Company or Group companies directly to an Audit & Supervisory Board
member. This information is distributed throughout the Group and is clearly stated within internalreporting system.
(10) Matters concerning procedures for prepayment or reimbursement of expenses incurred in theexecution of duties by Audit & Supervisory Board members and other policies concerning thetreatment of expenses or liabilities incurred in the execution of such duties (Article 100, paragraph(3), item (6) of the Regulations for Enforcement of the Companies Act)
When advice is sought from attorneys, certified public accountants, and other outside professionals
or expenses are requested for outsourcing investigations, appraisals, or other administrative tasks sothat the Audit & Supervisory Board or its members can perform audits, the Company may not refuse
such requests except when the expenses relating to a request are deemed unnecessary for the
performance of duties by the Audit & Supervisory Board or its members.
(11) Other systems to ensure that audits are conducted effectively by Audit & Supervisory Board
members (Article 100, paragraph (3), item (7) of the Regulations for Enforcement of theCompanies Act)(i) The Representative Directors and the outside Directors hold periodic meetings for the exchangeof opinions with Audit & Supervisory Board members.

-7-

(ii) Full-time Audit & Supervisory Board members of the Company concurrently serve as audit &supervisory board members at main subsidiaries in Japan.
Overview of the Status of Implementation of Systems for Ensuring Proper Implementation of Business
The Company has established the Internal Control Committee that consists of Directors and executive
officers, in order to build, maintain and improve the internal control systems. The Committee monitors
the operational status of internal controls.

The Board of Directors is positioned as the decision-making body regarding management policies
and strategies, and it supervises the execution of operations. The Board of Directors met a total of
16 times this fiscal year. With regard to the performance of business in accordance with thedecisions of the Board of Directors, business is efficiently executed in accordance withorganizational operations rules and divisions of work responsibilities established under an
executive officer system.

The Group Management Committee consists of executive officers appointed by the Board of
Directors and discusses important matters such as management strategies and investment projects.
This Committee held 12 meetings this fiscal year.

The Company has adopted the “Code of Conduct for Risk Management & Compliance,” andconducts all business activities in accordance with various internal rules based on said code. The
Risk Management & Compliance Committee shares important risk management and compliancematters of the Group and discusses ways to handle issues. This Committee was held three times
this fiscal year. In addition, the Risk Management & Compliance Committee Secretariat conducts
various activities including the provision of support for establishing the Group’s risk management
system and legal compliance education in accordance with the policy indicated by the Risk
Management & Compliance Committee. This Secretariat held monthly regular meetings.
Furthermore, the Group has been building a structure through an initiative called risk
communication that enables each section and the Risk Management & Compliance Committee
Secretariat, working together, to handle individual risks, and developing a system for prompt andappropriate communication and emergency procedures. Activity plans and activity details arereported to the Board of Directors.

Under its internal reporting system, the Company has set up a desk for handling direct reportingand consultation requests within Group companies in Japan and overseas, aiming to grasp
behaviors in violation of law, etc., and prevent the occurrence of these behaviors. We also adopt
and disseminate within the Group both the NAGASE Group Compliance Consultation andReporting Basic Policy, which provides important and basic matters as a global policy, and theCompliance Hotline Rules, which are applicable to the Group companies in Japan so that those
who report certain behaviors do not suffer detrimental treatment.

The Company and its Group companies have established operational standards to ensure the proper
implementation of business. Under these standards, decisions on certain matters that Group
companies make are required to be approved by or reported to the Company, and the Company
dispatches officers to Group companies in principle. The Audit Office of the Company conducts
audits of the Company and its Group companies in accordance with the Internal Audit Rules.

From the standpoint of reliability of financial reports, the status of company-wide internal controls
and the process for preparing financial statements have been codified in light of the Financial
Instruments and Exchange Act, and evaluation and improvement efforts are made on a consolidated
basis.

-8-



2.

Audit & Supervisory Board members attend the Board of Directors meetings, Group Management
Committee meetings, and other important meetings, and exchange opinions regularly with the
Representative Directors, outside Directors, and management executives. These members also
regularly receive reports from and exchange opinions with Independent Auditors, the Audit Office,and Audit & Supervisory Board members of affiliated companies. The Company has established
an information system enabling Audit & Supervisory Board members to review requests for
decisions, meeting minutes, and reports, etc., regarding the execution of duties by Directors as wellas other information to enable these members to understand the status of operations of the Company
and its Group companies. We also clarify matters to be reported promptly to the Audit &Supervisory Board members, such as events and internal reports that may have a material impact
on management, to ensure timely and appropriate reporting to these members. A budget for the
expenses to be incurred in connection with audits conducted by the Audit & Supervisory Board
members is provided and these expenses are paid based on mutual approval by the Audit &Supervisory Board members, employees who assist the Audit & Supervisory Board members in
the execution of these members’ duties are chosen from the Audit Office staff to ensure
independence and the effectiveness of instructions from these members.

Policy on decisions concerning distribution of surplus
The Company resolved at the Board of Directors meeting held on May 8, 2024 to change its shareholder
returns policy to “total return ratio of 100%” as a tentative measure for two years until fiscal 2025,
which is the final year of ACE 2.0, to achieve ROE of 8.0% or higher, a quantitative target under ACE

2.0.
We will pay dividends based on consolidated cash flow and investment status, with a basic policy of“continuously increasing dividends” in consideration of consolidated performance and financial
structure, while improving profitability and strengthening the corporate structure, as set out previously.
We previously set the amount of strategic cross-shareholdings sold during the period of ACE 2.0 as
the limitation on the amount of repurchases of treasury stock. However, under the policy above, we will
repurchase treasury stock in a flexible manner, while keeping efficiency in mind.

-9-Consolidated Statement of Changes in Net Assets(April 1, 2023 – March 31, 2024)(Amounts of less than one million yen are rounded down.)(Millions of yen)
Shareholders’ equity

Balance at April 1, 2023

Common stock

Capital surplus

Retainedearnings

9,699

10,636290,279

Cumulative effects ofchanges in accounting
policies
Restated balance

Treasury stock,at cost(1,550)

(72)
9,699

10,636290,207

Total
shareholders’equity309,064(72)(1,550)308,992

ChangesCash dividends(9,281)(9,281)

Net income attributable toowners of the parent

22,402

22,402

Purchases of treasury
stock
Disposal of treasury stock
Changes in parent’s
ownership interest due totransactions with noncontrolling interests(8,001)(8,001)7

7(1,287)(1,287)

Other changes
Total changes
Balance at March 31, 2024-

(1,287)

13,121(7,993)

3,840

9,699

9,348

303,328(9,543)

312,832- 10 -

Accumulated other comprehensive income (loss)

Balance at April 1, 2023

Net
unrealized
holding gain
on securities

Deferredgain onhedges28,928(7)

RemeasureTotal
Nonments ofaccumulated controlling
Translation
definedotherinterests
adjustments
benefitcomprehensive
plansincome30,414(726)

58,61010,713Cumulative effects ofchanges in accounting
policies
Restated balance

Total net
assets378,388(72)

28,928(7)30,414(726)

58,61010,713378,315

ChangesCash dividends(9,281)

Net income attributable toowners of the parent

22,402

Purchases of treasury
stock(8,001)

Disposal of treasury stock

7

Changes in parent’s
ownership interest due totransactions with noncontrolling interests(1,287)

Other changes

4,834

126

14,431

3,229

22,622(3,462)

19,159Total changes

4,834

126

14,431

3,229

22,622(3,462)

22,999Balance at March 31, 2024

33,763

119

44,846

2,503

81,232

7,250

401,315- 11 -

Notes to Consolidated Financial Statements
1.

Notes relating to premise of going concern
No applicable information.

2.

Matters relating to the scope of consolidation(1) Number of consolidated subsidiaries: 75
Main subsidiaries: Nagase ChemteX Corporation, Hayashibara Co., Ltd., Prinova Group LLC,
Nagase (Thailand) Co., Ltd., Nagase (Hong Kong) Ltd., and Shanghai Nagase
Trading Co., Ltd.
(2) Changes in the scope of consolidation(Increase) Flavor Tec - Aromas de Frutas Ltda (acquisition of equity interests on June 28, 2023)
 Fruttini Sucos de Frutas Ltda (acquisition of equity interests on June 28, 2023)(Decrease) INFINITE MATERIAL SOLUTIONS, LLC (dissolved in an absorption-type merger, in which
consolidated subsidiary INTERFACIAL CONSULTANTS LLC was the surviving company,on April 1, 2023)
 PRINOVA GERMANY LIMITED (liquidation on April 11, 2023)
 Inkron Technologies GmbH (liquidation on May 17, 2023)
 Lakeshore Technologies, LLC (dissolved in an absorption-type merger, in which consolidated
subsidiary Prinova US LLC was the surviving company, on January 1, 2024)(3) Name, etc. of main non-consolidated subsidiaries
Choko Co., Ltd.
(Reasons for excluding non-consolidated subsidiaries from the scope of consolidation)
Those non-consolidated subsidiaries (seven companies) are small in size and their total assets, net
sales, the profit or loss (based on the equity interest of NAGASE & CO., LTD. (the “Company”)),
and retained earnings (based on the Company’s equity interest) do not have a significant effect on
the consolidated financial statements.

3.

Matters relating to application of the equity method(1) Affiliates subject to application of the equity method: 19
Main affiliates:
Nissei Technology Corporation, Nagase-OG Colors & Chemicals Co., Ltd.,and Nagase Landauer, Ltd.
(2) Changes in the scope of application of the equity method(Decrease) Sun Delta Corporation (liquidation on November 28, 2023)(3) Name, etc. of main non-consolidated subsidiaries and affiliates that are not accounted for by theequity method
Non-consolidated subsidiaries: Choko Co., Ltd.
Affiliates:
ON Colors & Chemicals (Shanghai) Co., Ltd.
(Reason for exclusion from scope of application of the equity method)
The non-consolidated subsidiaries (seven companies) and affiliates (five companies) that are notaccounted for by the equity method are excluded from the scope of the equity method since they
have immaterial effect on any of the Company’s consolidated financial statements in terms of profit
or loss (based on the Company’s equity interest), retained earnings (based on the Company’s equity
interest) and others, and they are not material as a whole.
- 12 -

4.

Matters relating to fiscal years of consolidated subsidiaries, etc.
Among the consolidated subsidiaries, there are 33 companies whose accounting periods differ from theconsolidated accounting period and all those companies’ fiscal year-end date is December 31. For 11 of
those companies, consolidation is performed using the financial statements based on provisional
settlement of accounts as of the consolidated closing date. For 22 of those companies, the financial
statements as of the fiscal year-end date of each company are used, and necessary adjustments are madefor major transactions that occurred between the company’s fiscal year-end date and the consolidated
closing date.

5.

Notes relating to accounting policies(1) Valuation criteria and policies for major assets(i) Securities
Other securities
 Securities other than equity securities with no market price
The market value method is adopted (all valuation gains or losses are treated as acomponent of net assets, with the cost of securities sold calculated based on the movingaverage method).
 Equity securities with no market price
The cost method based on the moving-average method is adopted.
(ii) Derivatives
The market value method is adopted.
(iii) Inventories
Primarily, the cost method based on the moving-average method is adopted (the lower of bookvalue or market value based on declines in profitability).
(2) Depreciation and amortization of significant non-current assets(i) Property, plant and equipment (except for leased assets)
The straight-line method is adopted. The estimated useful lives of major assets are as follows.
Buildings (other than structures attached to the buildings):
15 - 50 years
Machinery and equipment:
2 - 20 years(ii) Intangible fixed assets (except for leased assets)
The straight-line method is adopted. The estimated useful lives of major assets are as follows.
Technology-based assets:
13 - 17 years
Software for internal use:
5 years(iii) Leased assets
Leased assets under finance lease contracts which do not transfer ownership to the lessee aredepreciated to a residual value of zero by the straight-line method over the respective leaseterm.
(3) Accounting for significant allowances(i) Allowance for doubtful accounts
In order to provide for losses arising from uncollectible receivables, the Company provides
an allowance for doubtful accounts based on its historical experience of bad debts on ordinary
receivables plus an additional estimate of probable specific doubtful accounts from customers
experiencing financial difficulties.

- 13 -

(ii) Accrued bonuses for employees
In order to provide for the payment of employee bonuses, the estimated amounts of bonuses
to be paid to employees in the following fiscal year which is attributable to the current fiscal
year is accrued.
(iii) Accrued bonuses for directors and executive officers
In order to provide for the payment of officer bonuses, the estimated amounts of bonuses tobe paid to directors in the following fiscal year which is attributable to the current fiscal year
is accrued.
(iv) Provision for share awards
In order to provide for the payment of shares, etc. of the Company to Directors (excluding
Outside Directors) and executive officers, the estimated amount of stock-based compensation
payable in accordance with the Stock-Grant Rules for Directors (internal rules) is recorded.
(4) Method of accounting for retirement benefits
In order to provide for the payment of employee retirement benefits, the estimated amounts of theretirement benefit obligations less estimated pension plan assets at the end of the current fiscal year
are accrued. The estimated benefit is attributed to the period up to the end of the current fiscal year
based on the plan’s benefit formula.
Prior service cost is charged to income in the fiscal year in which such cost is recognized forfinancial reporting purposes.
Actuarial differences are principally credited or charged to income in the fiscal year following the
fiscal year in which such differences are recognized for financial reporting purposes.
(5) Accounting for significant revenues and expenses
The following is a description of the principal performance obligations in the Company and its
consolidated subsidiaries’ principal businesses relating to revenue from contracts with customers
and the usual time at which such performance obligations are satisfied (the usual time at whichrevenue is recognized).
The Group sells merchandise and products by reportable segment and recognizes revenue primarily
at the time the merchandise and products are delivered to the customer, since the risks andeconomic value of ownership of the products are transferred and the right to receive payment isestablished at that time. In addition, the Company is obligated to act as an agent for certaintransactions. The consideration for the transactions is received primarily within one year ofsatisfying the performance obligation and does not include a significant financial component.
When the Group is acting as a party to a transaction, revenue is presented in a gross amount ofconsideration received from the customer, and when the Group is acting as an agent for a third
party, revenue is presented in a net amount of fees which is the gross amount of consideration
received from the customer minus the amount collected for the third party.
(6) Significant methods for hedge accounting(i) Methods for hedge accounting
a. Foreign currency forward exchange contracts
The deferral hedge accounting method is mainly used.
b. Interest-rate swaps
Special accounting treatment is applied to interest-rate swaps that fulfill the requirementsof special accounting treatment.

- 14 -

(ii) Hedging instruments and hedged items
a. Hedging instruments:
Foreign currency forward exchange contracts, foreign
currency-denominated deposits, and foreign currencydenominated loans
Hedged items:
Foreign currency receivables and payables and forecasted
transactions denominated in foreign currencies
b. Hedging instruments:
Interest-rate swaps
Hedged items:
Interest rates on loans from financial institutions(iii) Hedging policies
a. In order to manage the risks arising from adverse fluctuation in foreign currency
exchange rates relating to import and export transactions, the Company enters into
foreign currency forward exchange contracts primarily for accounts receivable andaccounts payable in foreign currencies. Execution and management of such contracts are
based on internal management rules, and foreign currency forward exchange contracts
are conducted within a range of actual demand (accounts receivable, accounts payable,
and actual transactions in foreign currencies).
b. In order to manage the risks of changes in loan interest rates, the Company engages ininterest-rate swaps. Execution and management of such contracts are performed inaccordance with internal management rules, and targets of interest-rate-swap hedging
are identified individually for each contract.
(iv) Method of evaluating the effectiveness of hedging activities
a. The Company assesses the effectiveness of the hedging activities based on a comparisonof the accumulated fluctuations of the hedged items and those of the hedging instrumentsin the period from the start of the hedging activities to the assessment date.
b. With regard to interest-rate swaps which meet the conditions for the special accounting
treatment, an evaluation of effectiveness as of the end of the fiscal year is omitted.
(7) Goodwill amortization method and amortization period
Goodwill is amortized on a straight-line basis over a period when its effects will be realized within
20 years after recognition. When immaterial, goodwill is charged to income as incurred.

- 15 -

6.

Material changes to matters that serve as the basis for preparation of the consolidated financial
statements(Changes in accounting policies)(Adoption of U.S. FASB Accounting Standards Codification (ASC) No. 326, “Financial
Instruments-Credit Losses”)
Certain foreign consolidated subsidiaries that adopted U.S. GAAP apply ASC No. 326, Financial
Instruments-Credit Losses, at the beginning of the current fiscal year. As a result, the subsidiaries
in question are required to revise the methods used to measure financial instruments and recognize
impairment of financial assets using the expected credit loss model.
In applying this accounting standard, the subsidiary recognized the cumulative effect as of the dateof adoption, which is permitted under the transitional provisions.
The impact of this accounting treatment on the consolidated statements of income is immaterial.
(Changes in Significant Hedge Accounting Methods)
The Company previously used the allocation method for foreign currency receivables and payables
with foreign exchange contracts, if said receivables and payables qualified for the allocation
method. However, from December 2023, the Company switched accounting methods to theprinciple accounting method.
As the Company reforms its enterprise system, the Company reviewed its management of foreignexchange contracts and changed this approach to reflect derivative transactions more appropriately
in Company financial statements.
Note that as impact from this change in accounting methods is minor, the change is not applied
retroactively.

7.

Notes to accounting estimates(Assessment of impairment of property, plant and equipment and intangible fixed assets)(1) Amount recorded in the consolidated financial statements for the current fiscal year
Property, plant and equipment 87,392 million yen
Intangible fixed assets
69,349 million yen
Impairment losses
2,276 million yen(2) Information about significant accounting estimates pertaining to identified items(i) Method of calculating the amountNon-current assets are grouped into the smallest units that generate cash flows, and are measured
for impairment after determining whether there is any indication of impairment and, if so, whether
an impairment loss should be recognized.
For the grouping of non-current assets, idle assets are grouped by individual properties, andbusiness assets are grouped mainly by company or plant. With respect to goodwill, a larger unitthat includes related business-use assets is used principally to group assets.
Undiscounted future cash flows used to determine whether to recognize impairment losses arecalculated in consideration of main assets’ economic useful lives, etc., under future business plans.
Impairment losses are measured by calculating the recoverable amount of the relevant asset or
asset group as the higher of net realizable value or the value in use, and the difference between
the book value and the recoverable amount is recorded as an impairment loss in the current fiscal
year. A discount rate used for the calculation of the value in use is basically set by linking therelevant business risk to the time value of money.
(ii) Key assumptions used for amount calculation
The key assumptions are the projected sales and costs of sales included in future business plans,
and the discount rate used to calculate the value in use.
- 16 -

(iii) Effects on consolidated financial statements for the next fiscal year
If the actual profit or loss of each asset or asset group falls below the business plan, or if there isa significant change in the assumptions on which future business plans are based, the recoverable
amount may fall below the book value and an impairment loss may be recognized in the next
fiscal year.
8.

Notes to consolidated balance sheet(1) Accumulated depreciation of property, plant and equipment
113,840 million yen(2) Guarantee obligations
Guarantees of bank loans, etc. of trading partners
980 million yen* The actual balance of guarantees has been shown previously as the amount of guarantees;
however, the limit amount is shown from this consolidated fiscal year.
(3) Discounted export notes
252 million yen(4) The reduction entry amount from acceptance of government subsidies included in property, plantand equipment is 1,322 million yen, and the reduction entry amount has been deducted from theamount on the consolidated balance sheet.
(5) Notes matured on the last day of a consolidated fiscal year are treated as settled on the clearance
date of notes. The following notes matured on the last day of this consolidated fiscal year are
included in the balance as of the end of the consolidated fiscal year since the last day of theconsolidated fiscal year fell on a bank holiday.
Notes receivable
2,457 million yen
Notes payable
655 million yen

9.

Notes to consolidated statement of income
Research and development expenses

5,987 million yen

10. Notes to consolidated statement of changes in net assets(1) Total number of issued shares as of the end of the current fiscal year
Common shares

117,908,285 shares(2) Distribution of surplus during the current fiscal year
Resolution

Type of shares

Total amount ofdividend(million yen)

Dividend pershare (yen)Record date

Effective date

Annual Shareholders’Meeting held on June 20,
2023

Common shares

4,696

40.0

March 31, 2023

June 21, 2023

Board of Directors’
meeting held on
November 1, 2023

Common shares

4,585

40.0

September 30,
2023

December 4,
2023(Notes) 1. Total amount of dividends for common shares of 4,696 million yen which is resolved at theAnnual Shareholders’ Meeting held on June 20, 2023 includes dividends of 11 million yen
in relation to the Company’s shares held by the “Share Delivery Trust for Officers.”
2. Total amount of dividends for common shares of 4,585 million yen which is resolved at theBoard of Directors’ meeting held on November 1, 2023 includes dividends of 11 million yen
in relation to the Company’s shares held by the “Share Delivery Trust for Officers.”- 17 -

(3) Distribution of surplus after the end of the current fiscal year
Planned Resolution

Type of Source ofsharesfunds

Total amount ofdividend(million yen)

Dividend pershare (yen)Record date

Effective date

Annual Shareholders’Meeting to be held on
June 21, 2024

Common Retained
shares earnings

4,562

40.0

March 31, 2024

June 24, 2024

(Note) Total amount of dividends for common shares of 4,562 million yen which is to be resolved at
the Annual Shareholders’ Meeting to be held on June 21, 2024 includes dividends of 11 million
yen in relation to the Company’s shares held by the “Share Delivery Trust for Officers.”
11. Notes relating to financial instruments(1) Matters concerning the status of financial instruments
With regard to Group’s financing policy, short-term working funds are raised by bank borrowings
and issuance of commercial paper, and long-term funds are raised by bank borrowings and theissuance of bonds. The policy for derivative transactions is that those are utilized to mitigate thefluctuation risk related to foreign currency exchange rates arising from receivables and payables
denominated in foreign currencies, and fluctuation risk related to interest rates with respect to loans
payable, and derivative transactions are not carried out for speculative purposes.
Operating receivables such as notes and accounts receivable are exposed to customers’ credit risks.
With regard to this risk, the Group manages the settlement date and monitors outstanding balancesand establishes sales limit amounts by each customer based on the Group’s internal credit rating
policy. The Group has established a system under which the credit status by each customer isreviewed at least once a year and the sales limit amount updated as necessary.
In the cases of operating receivable or payable denominated in foreign currencies, foreign currency
forward exchange contracts are used to hedge the risk of fluctuation for both receivables andpayables. However, for foreign currency transactions denominated in the same currency involving
either payables or receivables, foreign currency forward exchange contracts are used solely for the
netted position.
Investments in securities are subject to market price fluctuation risk. However, these are mainly
equity securities of other companies with which the Group has business relationships. The Groupregularly monitors both their fair value and the financial condition of the issuers. The Group also
reviews as needed the condition of its holdings with concern to the status of business and financialtransactions.
Short-term loans are raised primarily in connection with business activities. Long-term loans andbonds are taken out principally for the purpose of making capital spending, investments andfinancing. Loans with variable interest rates are subject to the risk of fluctuating interest rates.
However, to reduce such risk, the Group utilizes derivatives (interest-rate swap transactions) as ahedging instrument.
Derivatives include foreign currency forward exchange contracts to manage fluctuation risk inforeign currency exchange rates related to receivables and payables denominated in foreign
currencies and interest-rate swaps to manage fluctuation risk of interest rates related to the interest
payments for bank loans.
In addition, operating payable and bank loans are exposed to liquidity risk. However, the Groupmanages such risk by monitoring the balance of inflow and outflow of cash and establishingliquidity on hand in excess of half of the amount of monthly net sales.
- 18 -

(2) Matters concerning the fair value of financial instruments
The carrying value on the consolidated balance sheet, fair values and the differences as of March
31, 2024 are as shown below.
Cash has been omitted from the notes, and time deposits, short-term loans, current portion of longterm loans, commercial paper, and current portion of bonds also have been omitted from the notes
since they are settled in a short period of time and their fair values approximate their book values.
(Millions of yen)
Carrying value on the
consolidated balance sheet

Fair value

321,126

321,126–

Other securities

61,116

61,116–

Notes and accounts payable

156,352

156,352

–

(4)

Bonds

20,00019,292(708)(5)

Long-term loans

27,533

27,173(359)(6)

Derivatives*

(158)

(158)

–

(1)

Notes and accounts receivable(2)

Investments in securities(3)

Difference* Receivables and payables arising from derivative transactions are presented as a net value with the amount in parentheses representing
a net liability position.
Note:

Equity securities with no market price are not included in “(2) Investments in securities.” The consolidated balance sheet
amounts of such financial instruments are as follows.

Carrying value on the consolidated balance sheet(Millions of yen)

Category
Unlisted equity securities

4,823

Shares of subsidiaries and affiliates

10,286- 19 -

(3) Matters related to the breakdown, etc. of the fair value of financial instruments by level
The fair value of financial instruments is classified into the following three levels based on theobservability and materiality of the inputs on fair value calculation.
Level 1 fair value: Among the inputs on observable fair value calculation, fair value calculated
based on quoted market prices for the assets or liabilities for which such fairvalue is calculated that are formed in active markets
Level 2 fair value: Among the inputs on observable fair value calculation, fair value calculatedusing inputs on fair value calculation other than Level 1 inputs
Level 3 fair value: Fair value calculated using inputs on unobservable fair value calculation
When multiple inputs that have a significant impact on the fair value calculation are used, fair value
is classified to the level with the lowest priority in the fair value calculation among the levels towhich each of those inputs belongs.
(i)

Financial assets and liabilities that are recorded with fair value in the consolidated balance
sheets(Millions of yen)
Category

Fair value
Level 1

Level 2

Level 3

Total

Investments in securities
Other securities
Equity securities

61,116––

61,116

–

(158)

–

(158)

Derivatives
Foreign currency forward exchange
contracts(ii) Financial assets and liabilities that are not recorded with fair value in the consolidated balance
sheets(Millions of yen)
Category

Fair value
Level 1

Level 2

Level 3

Total

Notes and accounts receivable–

321,126–

321,126

Notes and accounts payable–

156,352–

156,352

Bonds–

19,292–

19,292Long-term loans–

27,173–

27,173

Note:
Explanation on valuation method and inputs used for the calculation of fair value
Notes and accounts receivable
The fair value of notes and accounts receivable is based on their present values discounted by the interest rate determined taking into
account the remaining period to maturity for each receivable classified by the settlement date, and is classified as Level 2 fair value.
Investments in securities
Listed equity securities are valued using quoted market prices. Since equity securities are traded in active markets, their fair value isclassified as Level 1.
Derivatives
Fair value is calculated based on prices, etc., provided by counterparty financial institutions, and is classified as Level 2 fair value.
Since interest-rate swap transactions are accounted for as if the interest rates applied to the swaps had originally applied to the underlying
long-term loans, their fair values were included in the fair value of the long-term loans.
Notes and accounts payable
The fair value of notes and accounts payable is based on their present values discounted by the interest rate determined taking into account- 20 -

the remaining period to maturity for each payable classified by the settlement date, and is classified as Level 2 fair value.
Bonds
Fair value of the bonds issued by the Company is calculated based on quoted market prices, and is classified as Level 2 fair value.
Long-term loans
The fair value of long-term loans with fixed interest rates is based on the present value of the total of principal and interest discounted by
the interest rate to be applied assuming new loans under similar conditions to existing loans are made, and is classified as Level 2 fairvalue.

12. Notes relating to revenue recognition(1) Information that disaggregates revenue from contracts with customers
The Group’s net sales in the current fiscal year mainly consist of revenues recognized fromcontracts with customers, and the breakdown of net sales by region for each reportable segment is
as follows.
(Millions of yen)
Reportable segments
Advanced
Functional
Electronics
Materials &Materials& Energy
Processing

MobilityLife &
Healthcare

Others(Note) 3

Total

Component
(%)

Japan

64,933

34,69456,442

42,16370,490146

268,872

29.9

Greater China

17,881

96,35659,80331,724

3,866-

209,632

23.3

ASEAN

34,19860,586

7,403

37,665

6,200-

146,053

16.2

Americas22,847

4,509

8,880

18,716

123,756-

178,71019.9

Europe

5,899

1,133

4,021

1,562

73,068-85,685

9.5

Other

1,044

1,263

8,206

285

396

-

11,196

1.2

Revenue fromcontracts withcustomers

146,804

198,543

144,758

132,117

277,779

146

900,149

100.0

Net sales tocustomers

146,804

198,543

144,758

132,117

277,779

146

900,149

100.0

Notes:
1. Net sales are categorized by country or region, according to the location of the Company andits consolidated subsidiaries.
2. Major countries and regions in each category other than Japan(1) Greater China ..... China, Hong Kong, Taiwan(2) ASEAN .............. Thailand, Vietnam, Indonesia(3) Americas ............ U.S., Mexico(4) Europe................ UK, Germany(5) Other .................. Korea
3. “Others” is a business segment consisting of businesses not included in reportable segments,
and includes information processing services and professional services.
(2) Information for understanding the amount of revenue for the current fiscal year and after thefollowing fiscal year(i) Contract balances
The following is a breakdown of contract balances of the Company and its consolidated
subsidiaries for the current fiscal year. In the consolidated balance sheets, receivables fromcontracts with customers and contract assets are included in “Notes and accounts receivable andcontract assets” and contract liabilities are included in “Other current liabilities.” The beginningbalance of the contract liabilities was transferred to revenue by the end of the period, and there isno materiality for the amount carried forward after the next fiscal year.
- 21 -

Carrying value on the consolidated balance sheet(Millions of yen)

Category
Receivables from contracts with customers

320,347

Contract assets

778

Contract liabilities

4,581(ii) Transaction price allocated to remaining performance obligations
Since there are no transactions with individual expected contract terms exceeding one year, thepractical expedient method is applied and information on remaining performance obligations isomitted. There is no material consideration with respect to contracts with customers that is notincluded in the transaction price.
13. Notes relating to per share information(1) Net assets per share
3,463.84 yen(2) Net income per share
194.96 yen(Note) The Company’s shares held by the share delivery trust for officers are included in Treasury stockin Shareholders’ equity. These are excluded from the calculation of the total number of issued
shares at the end of the period when calculating net assets per share. Also, these are excluded
from the average number of shares during the period when calculating net income per share.
The number of such shares at the end of the period excluded from the calculation of net assets
per share was 288,500, while the average number of shares during the period excluded from thecalculation of net income per share was 289,923.
14. Notes relating to significant subsequent events(Acquisition of treasury stock)
The Company resolved on matters relating to the acquisition of treasury stock at the meeting of its Boardof Directors held on May 8, 2024 as follows, pursuant to the provision of Article 156, as applied pursuant
to Article 165, paragraph (3) of the Companies Act.
(1) Reason for the acquisition of treasury stock
The Company resolved at the Board of Directors meeting held on May 8, 2024 to change its
shareholder returns policy under the Medium-term Management Plan ACE 2.0, to implement
total return ratio of 100% as a tentative measure for two years. The Company will acquire treasury
stock in accordance with this policy.
(2) Details of matters relating to the acquisition(i) Type of shares to be acquired
Common shares of the Company(ii) Total number of shares that can be acquired 5,500,000 shares (maximum) (4.82% of total
number of issued shares (excluding treasury
stock))(iii) Total value of shares that can be acquired
10 billion yen (maximum)(iv) Acquisition period
From May 9, 2024 to October 31, 2024(v) Acquisition method
To be purchased on the market(Cancellation of treasury stock)
The Company resolved on matters relating to the cancellation of treasury stock at the meeting of its
Board of Directors held on May 8, 2024 as follows, pursuant to the provision of Article 178 of theCompanies Act.
- 22 -

(i) Type of shares to be cancelled(ii) Number of shares to be cancelled

Common shares of the Company
3,000,000 shares (2.54% of total number ofissued shares (excluding treasury stock))
May 31, 2024(iii) Date of cancellation* Reference:
Treasury stock held as of April 30, 2024
Total number of issued shares (excluding treasury stock)
114,053,648 shares
Number of treasury stock
3,854,637 shares(*) Treasury stock in the above does not include 288,500 shares of the Company’s shares heldby the share delivery trust for officers.
15. Other notes(Stock-based compensation system)
The Company introduced a stock-based compensation system (the “System” hereinafter) for Directors(excluding Outside Directors; same below) and Executive Officers (the “Persons Eligible for the System”
hereinafter) from the previous fiscal year. The System aims to increase awareness of contributions
toward improving business performance and increasing corporate value over the medium to long term.
The Company expects this can be achieved by making the linkage between the compensation of the
Persons Eligible for the System and the business performance and the value of the Company’s shares
clearer, and by having the Persons Eligible for the System share benefits and risks of fluctuations in theshare price with the shareholders.
(1) Overview of the transaction
The System is a stock-based compensation system through which a trust to be established withmonies contributed by the Company (the “Trust” hereinafter) acquires the shares of the Company,
and the Company grants points to the respective Persons Eligible for the System and delivers theshares of the Company in the number corresponding to that of the points through the Trust to therespective Persons Eligible for the System. The timing of such delivery shall, in principle, be uponretirement of the relevant Person Eligible for the System.
(2) The Company’s shares remaining in the trust
The Company’s shares remaining in the Trust is recorded as Treasury stock in Net assets at thebook value at the Trust (excluding ancillary expenses). The book value of the relevant treasury
stock as at the end of the fiscal year is 612 million yen for 288,500 shares.

- 23 -

Non-Consolidated Statement of Changes in Net Assets(April 1, 2023 – March 31, 2024)(Amounts of less than one million yen are rounded down.)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Commonstock

Legalcapitalsurplus

9,699

9,634

Reserve for
reduction
entry

Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

2,058

95,57955,243

155,305

13-

Cash dividends(9,281)(9,281)

Net income

5,143

5,143

Balance, atApril 1, 2023

Legal
Total capitalretained
surplusearnings

9,634

2,424

Changes
Reversal ofreserve for
reduction entry(13)

Purchases oftreasury stock
Disposal oftreasury stock
Other changes
Total changes
Balance, atMarch 31, 2024

-

-

-

-

(13)

-

(4,124)(4,138)

9,699

9,634

9,634

2,424

2,045

95,57951,118151,167

Shareholders’ equity
Treasurystock, at cost
Balance, atApril 1, 2023

(1,550)

Valuation and translation adjustments

Totalshareholders’equityNet
unrealized
holding gain
on securities

Deferred gain
(loss) on
hedges173,090

28,121(7)

Totalvaluation andtranslation
adjustments

Total net
assets28,114201,204

Changes
Reversal ofreserve for
reduction entry--

Cash dividends(9,281)(9,281)

Net income

5,143

5,143

Purchases oftreasury stock(8,001)(8,001)(8,001)

Disposal oftreasury stock

7

7

7

Other changes

4,749

126

4,876

4,876

Total changes(7,993)(12,131)

4,749

126

4,876

(7,254)

Balance, atMarch 31, 2024

(9,543)160,958

32,871

119

32,991

193,949- 24 -

Notes to Non-consolidated Financial Statements
1.

Notes relating to premise of going concern
No applicable information.

2.

Notes relating to significant accounting policies(1) Valuation criteria and policies for assets(i) Securities
a. Shares of subsidiaries and affiliates
The cost method based on the moving-average method is adopted.
b. Other securities
i. Securities other than equity securities with no market price
The market value method is adopted (all valuation gains or losses are treated as acomponent of net assets, with the cost of securities sold calculated based on themoving-average method).
ii. Equity securities with no market price
The cost method based on the moving-average method is adopted.
(ii) Derivatives
The market value method is adopted.
(iii) Inventories
The cost method based on the moving-average method is adopted (the lower of book value ormarket value based on declines in profitability).
(2) Depreciation and amortization of non-current assets(i) Property, plant and equipment (except for leased assets)
The straight-line method is adopted. The estimated useful lives of major assets are as follows.
Buildings (other than structures attached to the buildings):
23 - 50 years
Machinery and equipment:
2 - 17 years(ii) Intangible assets (except for leased assets)
The straight-line method is adopted. The estimated useful lives of major assets are as follows.
Software for internal use:
5 years(iii) Leased assets
Leased assets under finance lease contracts which do not transfer ownership to the lessee aredepreciated to a residual value of zero by the straight-line method over the respective leaseterm.
(3) Accounting for allowances(i) Allowance for doubtful accounts
In order to provide for losses arising from uncollectible receivables, NAGASE & CO., LTD.
(the “Company”) provides an allowance for doubtful accounts based on its historicalexperience of bad debts on ordinary receivables plus an additional estimate of probablespecific doubtful accounts from customers experiencing financial difficulties.
(ii) Accrued bonuses for employees
In order to provide for the payment of employee bonuses, the estimated amounts of bonuses
to be paid to employees in the following fiscal year which is attributable to the current fiscal
year is accrued.

- 25 -

(iii) Provision for retirement benefits
In order to provide for the payment of employee retirement benefits, the estimated amountsof the retirement benefit obligations less estimated pension plan assets at the end of the fiscal
year are accrued.
Prior service cost is charged to income in the fiscal year in which such cost is recognized forfinancial reporting purposes.
Actuarial differences are credited or charged to income in the fiscal year following the fiscal
year in which such differences are recognized for financial reporting purposes.
Treatment on the non-consolidated balance sheet of unrecognized actuarial differences isdifferent from that on the consolidated balance sheet.
(iv) Provision for loss on guarantees
In order to provide for loss on guarantees to the subsidiaries and affiliates, etc., a reserve for
estimated amount of loss based on the financial conditions, etc. of the guaranteed companies
is accrued.
(v) Provision for share awards
In order to provide for the payment of shares, etc. of the Company to Directors (excluding
Outside Directors) and executive officers, the estimated amount of stock-based compensation
payable in accordance with the Stock-Grant Rules for Directors (internal rules) is recorded.
(vi) Provision for loss on business of subsidiaries and affiliates
An estimated amount of loss is recorded to provide for loss on businesses of our subsidiaries
and affiliates in the consideration of the financial condition of a relevant company.
(4) Accounting for significant revenues and expenses
The following is a description of the principal performance obligations in the Company’s principal
businesses relating to revenue from contracts with customers and the usual time at which such
performance obligations are satisfied (the usual time at which revenue is recognized).
The Company sells merchandise and products by reportable segment and recognizes revenue
primarily at the time the merchandise and products are delivered to the customer, since the risks
and economic value of ownership of the products are transferred and the right to receive payment
is established at that time. In addition, the Company is obligated to act as an agent for certaintransactions. The consideration for the transactions is received primarily within one year ofsatisfying the performance obligation and does not include a significant financial component.
When the Company is acting as a party to a transaction, revenue is presented in a gross amount ofconsideration received from the customer, and when the Company is acting as an agent for a third
party, revenue is presented in a net amount of fees which is the gross amount of consideration
received from the customer minus the amount collected for the third party.
(5) Other material matters that serve as the basis for preparation of the financial statements(i) Method of accounting for deferred assets
Bond issuance costs are fully recognized as expenses when paid.
(ii) Methods for hedge accounting
a. Methods for hedge accounting
i. Foreign currency forward exchange contracts
The deferral hedge accounting method is used.
ii. Interest-rate swaps
Special accounting treatment is applied to interest-rate swaps that fulfill therequirements of special accounting treatment.

- 26 -

b.

c.

d.

3.

Hedging instruments and hedged items
i. Hedging instruments: Foreign currency forward exchange contracts, foreign
currency-denominated deposits, and foreign currencydenominated loans
Hedged items:
Foreign currency receivables and payables and forecasted
transactions denominated in foreign currencies
ii. Hedging instruments: Interest-rate swaps
Hedged items:
Interest rates on loans from financial institutions
Hedging policies
i. In order to manage the risks arising from adverse fluctuation in foreign currency
exchange rates relating to import and export transactions, the Company enters into
foreign currency forward exchange contracts primarily for accounts receivable trade and accounts payable - trade in foreign currencies. Execution andmanagement of such contracts are based on internal management rules, and foreign
currency forward exchange contracts are conducted within a range of actual demand(accounts receivable - trade, accounts payable - trade, and actual transactions inforeign currencies).
ii. In order to manage the risks of changes in loan interest rates, the Company engages
in interest-rate swaps. Execution and management of such contracts are performedin accordance with internal management rules, and targets of interest-rate-swap
hedging are identified individually for each contract.
Method of evaluating the effectiveness of hedging activities
i. The Company assesses the effectiveness of the hedging activities based on acomparison of the accumulated fluctuations of the hedged items and those of thehedging instruments in the period from the start of the hedging activities to theassessment date.
ii. With regard to interest-rate swaps which meet the conditions for the special
accounting treatment, an evaluation of effectiveness as of the end of the fiscal year
is omitted.

Material changes to matters that serve as the basis for preparation of the financial statements(Changes in accounting policies)(Changes in Significant Hedge Accounting Methods)
The Company previously used the allocation method for foreign currency receivables and payables
with foreign exchange contracts, if said receivables and payables qualified for the allocation method.
However, from December 2023, the Company switched accounting methods to the principle
accounting method.
As the Company reforms its enterprise system, the Company reviewed its management of foreignexchange contracts and changed this approach to reflect derivative transactions more appropriately
in Company financial statements.
Note that as impact from this change in accounting methods is minor, the change is not applied
retroactively.

- 27 -

4.

Notes to accounting estimates(Assessment of shares of subsidiaries and affiliates)(1) Amount recorded in the non-consolidated financial statements for the current fiscal year
Shares of subsidiaries and affiliates
101,210 million yen
Loss on valuation of shares of subsidiaries and affiliates- million yen(2) Information about significant accounting estimates pertaining to identified items(i) Method of calculating the amountAs all shares of subsidiaries and affiliates the Company holds are equity securities with no market
price, the acquisition cost thereof is recorded on the balance sheet, and in case the real value ofthese shares decreases significantly due to deterioration of financial conditions of an issuer ofthese shares, an impairment loss is recorded.
The real value is basically calculated based on the amount of net assets of such issuer, but excess
earning power, etc. may be reflected in this value. Excess earning power, etc. are calculated basedon a differential between the said issuer’s net asset value at the time of share acquisition and theactual acquisition cost. However, even if the excess earning power, etc. are considered to be
deteriorating due to a differential, etc. between the initially planned performance and actual
performance, the amount of such deterioration is not included in the calculation of the real value.
In addition, even if the real value declines significantly, an impairment loss may not be recognized
as long as performance recovery can be anticipated in the future under an executable, rational
business plan, etc.
(ii) Key assumptions used for amount calculation
As key assumptions, projected sales and cost of sales included in the business plan of eachsubsidiary or associate were used.
(iii) Effects on non-consolidated financial statements for the next fiscal year
If the actual earnings or losses of each subsidiary or associate are lower than estimated or if there
is a material change in the assumptions underlying future business plans, impairment losses may
be recognized in the following fiscal year.

5.

Notes to non-consolidated balance sheet(1) Accumulated depreciation of property, plant and equipment
16,777 million yen(2) Guarantee obligations
Guarantees of bank loans, etc. of subsidiaries and affiliates
115,303 million yen* The actual balance of guarantees has been shown previously as the amount of guarantees;
however, the limit amount is shown from this consolidated fiscal year.
(3) Discounted export notes
252 million yen(4) Guarantees of monetary claims against and obligations owed to subsidiaries and affiliates (except
for those indicated separately)
Short-term monetary claims
61,422 million yen
Short-term monetary obligations
56,628 million yen(5) The reduction entry amount from acceptance of government subsidies included in property, plantand equipment (buildings, tools, furniture and fixtures) is 70 million yen, and the reduction entry
amount has been deducted from the amount of the non-consolidated balance sheet.

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(6) Notes matured on the last day of a fiscal year are treated as settled on the clearance date of notesor the settlement date. The following notes matured on the last day of this fiscal year are includedin the balance as of the end of the fiscal year since the last day of the fiscal year fell on a bankholiday.
Notes receivable
377 million yen
Electronically recorded monetary claims – operating
1,417 million yen
Electronically recorded obligations – operating
381 million yen

6.

Notes to non-consolidated statements of income
Transactions with subsidiaries and affiliates
Net sales
Net purchases
Selling, general and administrative expenses
Non-operating transactions

106,233 million yen
35,449 million yen
8,367 million yen
14,222 million yen

7.

Notes relating to revenue recognition
Information that forms the basis for understanding revenue from contracts with customers has been
omitted from the notes because the same information is presented in “Notes to Consolidated Financial
Statements, 5. Notes relating to accounting policies, (5) Accounting for significant revenues andexpenses.”

8.

Notes to non-consolidated statement of changes in net assets
Number of shares of treasury stock as of the end of the fiscal year
4,143,115 shares(Note) Treasury stock in the above includes 288,500 shares of the Company’s shares held by the sharedelivery trust for officers.

9.

Notes relating to tax effect accounting(The primary reasons for the occurrence of deferred tax assets and deferred tax liabilities)
The primary reasons for the occurrence of deferred tax assets are provision for retirement benefits
and accrued bonuses for employees less valuation allowances. The primary reason for the occurrenceof deferred tax liabilities is net unrealized holding gain on securities.

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10. Notes relating to related party transactions
Subsidiaries and affiliates
Attribute

Company
nameDescription of
main business

NagaseHoldings
Subsidiary
America
Corporation

Regional
management,
investment andasset management,
and provision of
professional
services

Prinova
SubsidiaryGroup LLC

Sales andprocessing of foodingredients, etc.,
contracted
manufacture offinished products

Development,
manufacture andsale of food raw
materials,
pharmaceutical
Hayashibara raw materials,
SubsidiaryCo., Ltd.
cosmetics raw
materials, healthfoods rawmaterials,
functional dyes,
etc.

NagaseSubsidiary ChemteX
Corporation

Guangzhou
NagaseSubsidiary
Trading Co.,Ltd.

Manufacture andsale of highperformanceresins, such as
formulated epoxy
resins,photolithographymaterials,
epichlorohydrin
derivatives, acrylic
polymer,
electroconductive
paints, andsterilization andantibacterial
agentsImport/export,intermediate trade,marketdevelopment,
informationcollection

ShanghaiSale of plastics
Hua Chang
Subsidiaryand related
Trading Co.,
products
Ltd.

NagaseSubsidiary Plastics Co.,Ltd.

Sale of plastic
products, etc.

NagaseSubsidiary ChemicalCo., Ltd.

Sale of coating
raw materials,
dyestuffs, paper
chemicals,
industrial
chemicals,
plastics, andvarious machinery

Percentage
of votingrights held(%)
Direct:100.0
Indirect:―
Direct:―Indirect:
100.0

Direct:100.0
Indirect:―

Direct:100.0
Indirect:―

Direct:―Indirect:
100.0
Direct:16.2
Indirect:53.8
Direct:100.0
Indirect:―
Direct:100.0
Indirect:―

Details of relationship
Concurrent
service byofficers, etc.

Businessrelationship

One officer
serving
concurrently,
one seconded
officer

Guarantee ofobligations

Two officers
serving
concurrently

Sale of goods,
purchase of
products, loanof funds

Three officers
serving
concurrently

Four officers
serving
concurrently

Sale of goods,
purchase of
products, leaseof building, loanof funds

Details oftransactions

Balance atTransaction
Accounting end of fiscal
amountyear
category(million yen)(million yen)

Deposit of
funds

―

Deposits
received

8,370

Guarantee ofobligations

6,132

―

―

Loan offunds―

Receipt ofinterests

2,080

Purchase of
products

6,050

Loan of
funds

Purchase andsale of goods,
guarantee ofobligations

Three officers
serving
concurrently,
one seconded
officer

Purchase andsale of goods,
guarantee ofobligations- 30 -

Accounts
payabletrade

2,738

Short-term
loans
receivable

8,450

Long-term
loans
receivable

3,800

Sale ofgoods

721

Accounts
receivabletrade

1,623

Purchase of
products

9,125

Accounts
payabletrade5,464

Deposit of
funds

―

Deposits
received

1,409

Sale of
goods

2,820

Accounts
receivabletrade748

Obligations
guaranteed

17,564――

Obligations
guaranteed

12,103

―

―

1,856

Accounts
receivabletrade

6,996

1,020

Accounts
payabletrade

517

Sale of
goods

5,599

Accounts
receivabletrade

13,154

Deposit of
funds

―

Deposits
received

1,840

Sale ofTwo officers
goods
serving
Purchase andconcurrently,
sale of goods,
four transferred lease of building Purchase of
officers
goods

Two officers
serving
Purchase andconcurrently,
sale of goods,
two transferred lease of building
officers

36,746

2,000

Sale of goods,
purchase of
products, leaseof building

One officer
serving
concurrently,
three seconded
officers

Short-term
loans
receivable

Attribute

Company
name

Fukui
YamadaSubsidiary
ChemicalCo., Ltd.

Description of
main business

Manufacture andsale of color
formers

Percentage
of votingrights held(%)

Direct:100.0
Indirect:―

Import/export,
Shanghaiintermediate trade,
NagasemarketSubsidiary
Trading Co., development,Ltd.
informationcollection

Direct:―Import/export,intermediate trade,
NagasemarketSubsidiary Vietnam Co.,development,Ltd.
informationcollection

Direct:100.0

Indirect:
100.0

Indirect:―

Interfacial
Subsidiary Consultants
LLC

Contract products,
manufacturing
processdevelopment,
composite
substrate,
manufacturing ofvariousmasterbatches

P.T. Nagase
ImporSubsidiary
EksporIndonesia

Import/export,intermediate trade,marketdevelopment,
informationcollection

Direct:99.8

Tianjin
NagaseSubsidiary International
Trading Co.,Ltd.

Import/export,intermediate trade,marketdevelopment,
informationcollection

Direct:―Direct:―Indirect:
80.0

Indirect:―

Indirect:
100.0

NagasePhilippines
Domestic sales,
Subsidiary International
import/export
Services
Corp.

Direct:100.0

NWP
International Sale of plastic
Subsidiary Trading
products in South(Shenzhen) China
Co., Ltd.

Direct:―Indirect:―

Indirect:
100.0

Details of relationship
Concurrent
service byofficers, etc.

Businessrelationship

Details oftransactions

Short-term
loans
receivable

1,595Long-term
loans
receivable

2,900

Allowance
2,125 for doubtful
accounts

2,125

22,970

5,023

Purchase and saleof goods,
Purchase ofguarantee of
goods
obligations

Accounts
receivabletrade

6,571

Accounts
payabletrade

1,398

Obligations
guaranteed

9,068

―

―

3,794

Accounts
receivabletrade

1,263

12,099――

Short-term
loans
receivable

3,293

Allowance
1,505 for doubtful
accounts

3,286

2,893

Accounts
receivabletrade

963

7,570

―

―

1,532

Accounts
receivabletrade

345

8,465

―

―

1,361

Accounts
receivabletrade

532

7,721

―

―

5,907

―

―

Loan offunds

Sale of goods,
Three officers purchase ofserving
products, loan of
concurrently
funds, guarantee Provision ofallowanceof obligations
for doubtful
accounts for
subsidiaries
and affiliates

One officer
serving
concurrently,
one seconded
officer

Balance atTransaction
Accounting end of fiscal
amountyear
category(million yen)(million yen)

Sale ofgoods

One officer
Sale of
Purchase and saleserving
goods
of goods,
concurrently,
guarantee ofthree seconded
Obligations
obligations
officers
guaranteed
Loan offunds
Sale of goods,
Provision of
One seconded purchase of
officer
products, loan of allowancefor doubtful
funds
accounts for
subsidiaries
and affiliates
One officer
serving
concurrently,
four seconded
officers

Sale of
Purchase and salegoods
of goods,
guarantee of
Obligations
obligations
guaranteed

One officer
serving
concurrently,
two seconded
officers

Sale of
Purchase and salegoods
of goods,
guarantee of
Obligations
obligations
guaranteedThreeseconded
officers

Sale of
Purchase and salegoods
of goods,
guarantee of
Obligations
obligations
guaranteed

Sale of goods,
Two seconded
guarantee ofofficers
obligations

Obligations
guaranteed――

Notes:
1. Transaction terms relating to purchase and sale of goods and purchase of products, and policies on determination of transaction terms are determinedin the same manner as general transactions.
2. Deposits and loans of funds are governed by the Group cash management system, and reasonable interest rates are applied, taking into accountmarket interest rates. About lending and borrowing of funds among participating companies taking place repeatedly on a daily basis, transaction
amounts are not indicated.

- 31 -

3.
4.

Transaction amounts of obligations guaranteed are balances as of the end of March 2024. The actual balance of guarantees has been shown
previously; however, the limit amount is shown from this fiscal year.
Hayashibara Co., Ltd. changed its trade name to Nagase Viita Co., Ltd. effective April 1, 2024.

11. Notes relating to per share information(1) Net assets per share
1,704.83 yen(2) Net income per share
44.76 yen
(Note) As stated in “Notes to Consolidated Financial Statements, 13. Notes relating to per share
information,” the Company’s shares held by the share delivery trust for officers are excluded
from the calculation for the said notes.
12. Notes relating to significant subsequent events
As the same information is included in “Notes to Consolidated Financial Statements, 14. Notes relating
to significant subsequent events,” this note is omitted.
13. Other notes(Stock-based compensation system)
As the same information of a stock-based compensation system for Directors and Executive Officers is
included in “Notes to Consolidated Financial Statements, 15. Other notes,” this note is omitted.

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