FINANCIAL REPORT(Report under Article 24, paragraph 1 of the Financial Instruments and Exchange Act)
Business Year from April 1, 2023 to March 31, 2024
(The 76th Term)(TRANSLATION)

ARISAWA MFG. CO., LTD.
E01152TABLE OF CONTENTS
Page Number
Cover Page
PART I. INFORMATION ON THE BUSINESS ................................................................... 1
I. General Conditions of Business .............................................................................................. 1
1. Changes in Principal Management Indicators, etc. ........................................................ 1
2. History ............................................................................................................................ 3
3. Description of Business .................................................................................................. 5
4. Status of Subsidiaries and Affiliated Companies ........................................................... 7
5. Status of Employees ....................................................................................................... 9
II. Status of Business ................................................................................................................ 11
1. Management Policy, Management Environment and Tasks to be Addressed .............. 11
2. Views and Initiatives on Sustainability ........................................................................ 13
3. Business Risks, etc. ...................................................................................................... 17
4. Analyses of Consolidated Financial Position, Business Resultsand Cash Flows by the Corporate Managers ................................................................ 18
5. Agreements with Managerial Implications, etc. ........................................................... 23
6. Research and Development Activities.......................................................................... 23
III. Status of Facilities .............................................................................................................. 25
1. Outline of Capital Investment ...................................................................................... 25
2. Status of Major Facilities.............................................................................................. 25
3. Plans for Installation and Retirement, etc. of Facilities ................................................ 27
IV. Status of the Submitting Company .................................................................................... 28
1. Status of Shares, etc...................................................................................................... 28(1) Total Number of Shares, etc. ................................................................................. 28(2) Status of Stock Acquisition Rights, etc. ................................................................ 29(3) Status of Exercise of Moving Strike Convertible Bonds, etc. ............................... 30(4) Changes in the Number of Shares Issued and Outstanding, Share Capital, etc. .... 31(5) Status of Shareholder Categories........................................................................... 32(6) Status of Major Shareholders ................................................................................ 33(7) Status of Voting Rights ......................................................................................... 35(8) Director and Employee Stock Ownership Plan ..................................................... 35
2. Status of Acquisition of Treasury Shares, etc............................................................... 37
3. Dividend Policy ............................................................................................................ 38
4. Status of Corporate Governance, etc. ........................................................................... 39(1) Outline of Corporate Governance.......................................................................... 39(2) Status of Directors and Officers ............................................................................ 46(3) Status of Audit ....................................................................................................... 51(4) Remuneration, etc. of Directors and Corporate Auditors ...................................... 53(5) Status of Shareholding ........................................................................................... 55
V. Status of Accounting ........................................................................................................... 60
1. Consolidated Financial Statements, etc. ....................................................................... 61(1) Consolidated Financial Statements........................................................................ 61(2) Other .................................................................................................................... 108
2. Financial Statements, etc. ........................................................................................... 109(1) Financial Statements ............................................................................................ 109(2) Details of Major Assets and Liabilities ............................................................... 123(3) Other .................................................................................................................... 123
VI. Outline of Share Handling of the Submitting Company .................................................. 123
VII. Reference Information on the Submitting Company ...................................................... 124
1. Information on Parent Company, etc. of Submitting Company ............................ 124
2. Other Reference Information ................................................................................ 124
PART II. INFORMATION ON GUARANTY COMPANIES, ETC.
OF THE SUBMITTING COMPANY ................................................................................... 125[Independent Auditors’ Report]

Cover Page
Document to be filed:

Financial Report

Statutory basis:

Article 24, paragraph 1 of the Financial Instruments and Exchange Act

Filing to:

Director-General of the Kanto Local Finance Bureau

Date of filing:

June 28, 2024

Business year:

The 76th Term (From April 1, 2023 to March 31, 2024)

Company name (Japanese):

Kabushiki-Kaisha Arisawa Seisakusho

Company name (English):Arisawa Mfg. Co., Ltd.

Name and title of representative:

Yuta Arisawa, President and Representative Director

Location of head office:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, Operating Officer supervising Corporate Strategy

Place of contact:5-5, Minami-honcho 1-chome, Joetsu-shi, Niigata

Telephone number:(025) 524-5126

Contact person:

Shuichi Kubota, Operating Officer supervising Corporate Strategy

Department

Department
Places where copies of this Financial Report

Arisawa Mfg. Co., Ltd., Tokyo Head Office

are made available for public inspection:(12-5, Yanagibashi 2-chome, Taito-ku, Tokyo)
Tokyo Stock Exchange, Inc.
(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)

PART I.

INFORMATION ON THE BUSINESS

I. General Conditions of Business1. Changes in Principal Management Indicators, etc.
(1) Consolidated Management Indicators, etc.
Term

72nd term

73rd term

74th term

75th term

76th term

Closing month

March 2020

March 2021

March 2022

March 2023

March 2024

45,97046,43943,08942,722

42,114

2,783

3,578

4,204

2,717

1,488

212

2,160

3,911

2,856

1,639

△117

3,808

4,530

2,578

2,761

49,01847,44447,965

47,107

46,246

71,70967,257

68,68967,65968,816

1,387.76

1,388.50

1,434.46

1,422.43

1,394.08

6.14

64.94

117.40

86.46

49.51

6.12

64.84

117.32

86.24

49.46

Net sales (Millions of yen)
Ordinary profit(Millions of yen)
Profit attributable to ownersof parent(Millions of yen)Comprehensive income(Millions of yen)
Net assets (Millions of yen)
Total assets(Millions of yen)
Net assets per share (Yen)
Basic earnings per share(Yen)
Diluted earnings per share(Yen)
Equity ratio

(%)

64.3

68.8

69.6

69.5

67.2

Return on equity

(%)

0.4

4.7

8.3

6.0

3.5

Price earnings ratio (Times)

130.7

15.4

8.2

14.5

23.0

4,837

610

5,901

3,471

3,219

6,580

1,567

2,869

508

△1,061△4,431△5,703△4,042△2,572△3,415

14,725

11,48816,893

18,53517,700Cash flows from operating
activities (Millions of yen)
Cash flows from investing
activities (Millions of yen)
Cash flows from financing
activities (Millions of yen)
Cash and cash equivalents at
the end of period(Millions of yen)

Number of employees(Parenthesized figures
1,454
1,433
1,425
1,458
1,468
indicate the average number
(294)
(290)
(316)
(282)
(254)
of temporary employees notincluded in the total)
Note: “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No.29, March 31, 2020), etc.
have been applied from the beginning of the 74th term. Principal Management Indicators, etc. from the 74th term onward areshown after application of the said Accounting Standard, etc.

- 1 -(2) Management Indicators, etc. of the Submitting Company
Term

72nd term

73rd term

74th term

75th term

76th term

Closing month

March 2020

March 2021

March 2022

March 2023

March 2024

31,63531,66826,64825,752

26,560

2,365

1,932

2,852

2,365

1,382

(Millions of yen)

6,792

1,396

2,348

2,673

1,494

Share capital (Millions of yen)

7,594

7,623

7,643

7,847

7,862

36,381

34,47033,61433,541

33,566

Net sales(Millions of yen)

Ordinary profit(Millions of yen)
ProfitNumber of shares issued andoutstanding(Thousands of shares)
Net assets(Millions of yen)

38,931

40,48441,016

39,57337,492

Total assets(Millions of yen)

51,53549,85950,22549,36548,837

1,166.03

1,208.98

1,226.75

1,194.67

1,130.03

30.00
(－)

39.00
(－)

95.00
(5.00)

90.00
(－)

60.00
(20.00)

Basic earnings per share (Yen)

195.86

41.98

70.49

80.94

45.11

Diluted earnings per share (Yen)

195.28

41.91

70.44

80.73

45.07

Net assets per share(Yen)

Dividend per share(Yen)(Parenthesized figures indicate
the amount of interim dividend
per share included in the total)

Equity ratio

(%)

75.2

80.8

81.4

80.1

76.7

Return on equity

(%)

18.1

3.5

5.8

6.7

3.9

(Times)

4.1

23.8

13.6

15.5

25.2

(%)

15.3

92.9

134.8

111.2

133.0

614
(134)

606
(99)

599
(90)

599
(104)

607
(89)

Price earnings ratio
Dividend payout ratio

Number of employees(Parenthesized figures indicate
the average number of temporary
employees not included in the
total)
Shareholders' gross yield(%)(Comparative Indicator:

104.9

134.8

141.4

190.2

183.0

dividend-included TOPIX(90.5)(128.6)(131.2)(138.8)(196.2)

1,148

1,118

1,072

1,438

1,289

(Tokyo Stock Price Index))Highest share price(Yen)

Lowest share price
(Yen)
680
738
844
885
995
Note: 1. “Highest share price” and “Lowest share price” are recorded in Tokyo Stock Exchange First section.
2. “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan Statement No.29, March 31, 2020),
etc. have been applied from the beginning of the 74th term. Principal Management Indicators, etc. from the 74th term
onward are shown after application of the said Accounting Standard, etc.

- 2 -

2. History
July 1949▪ Incorporation of Arisawa Mfg. Co., Ltd. (hereinafter referred to as either the “Company” or the“Submitting Company”, as the case may be), succeeding the businesses of “Arisawa Manufacturing”,
which was founded in 1909 and manufactured Battenburg lace, narrow woven fabrics, electricalinsulating tapes and glass fiber fabrics, etc.

April 1954

▪ Established a resin processing division.

June 1954▪ Relocated the Head Office from Ohmachi, Takada-shi (currently Joetsu-shi), Niigata to Minamihoncho, Takada-shi.

May 1959▪ Opened Tokyo Sales Office and Osaka Sales Office.

September 1960

▪ OTC trading of the Company’s stock started at Tokyo Securities Dealers Association.

October 1961

▪ The Company’s stock was listed on the Second Section of Tokyo Stock Exchange.

December 1966

▪ Incorporated Arisawa Jushi Kogyo Co., Ltd. (currently a consolidated subsidiary), which conducts
molding and processing of resin products related to industrial application structural materials.

June 1968▪ Opened a factory in Oaza-Nakadahara, Takada-shi (currently Joetsu-shi), Niigata, establishing new
resin processing facilities.

August 1973

▪ Incorporated Eagle Co., Ltd., which operates a driving range.

March 1974

▪ Incorporated Myoko Shinko Co., Ltd., which conducts processing of resin products related to electricalinsulating materials.

June 1974▪ Absorbed Arisawa Shoji Co., Ltd. and reorganized the sales division into Tokyo Branch Office(currently Tokyo Head Office) and Osaka Branch Office (Osaka Branch Office was closed down in
September 2015).

April 1976

▪ Incorporated Yuai Sangyo, Ltd., which manufactures glass fiber fabrics and special fiber fabrics related
to electrical insulating materials.

May 1987▪ Incorporated Arisawa Logistics, Ltd., which conducts warehouse management and logistics operations.

July 1991▪ Incorporated Polatechno Co., Ltd. (which manufactures polarizing plates for use in liquid crystal
displays) through joint capital investment with Nippon Kayaku Co., Ltd.

December 1994

▪ Opened Technological Development Center on the premises of Nakadahara Factory.

October 1996

▪ Acquired Arisawa Polywork Co., Ltd. (which conducts molding and processing of resin products
related to industrial application structural materials) with capital contribution of Arisawa Logistics, Ltd.

July 1999▪ Opened a factory in Oaza-Nakadahara (on the west side of the current Nakadahara Factory), Joetsu-shi,
Niigata, establishing new resin processing facilities.

April 2000

▪ Incorporated ColorLink Japan, Ltd., which conducts manufacturing and sales of precision optics
components (currently a consolidated subsidiary).

July 2000▪ Incorporated Arisawa Fiber Glass Co., Ltd. (currently a consolidated subsidiary), spinning off the glass
cloth manufacturing division of the Submitting Company (related to electronic materials and electricalinsulating materials) and consigning manufacture of glass cloth to Arisawa Fiber Glass Co., Ltd.

September 2002

▪ The Company’s stock was listed on the First Section of Tokyo Stock Exchange.

April 2003

▪ Myoko Shinko Co., Ltd. absorbed Arisawa Polywork Co., Ltd., Yuai Sangyo, Ltd. and Arisawa
Logistics, Ltd. and changed its corporate name to Arisawa Sogyo Co., Ltd. (currently a consolidated
subsidiary).

March 2006

▪ Stock of Polatechno Co., Ltd. was listed on the JASDAQ Securities Exchange.

October 2009

▪ Acquired shares of ThinFlex Corporation (currently a consolidated subsidiary).

December 2010

▪ Howa Sangyo Ltd., a subsidiary, changed its corporate name to Protec International Holdings Co., Ltd.
(currently a consolidated subsidiary) and acquired shares of Protec Arisawa Europe, S.A. and Protec
Arisawa America, Inc. (both currently consolidated subsidiaries).

July 2011▪ Arisawa Sogyo Co., Ltd. absorbed Eagle Co., Ltd.

October 2015

▪ Opened Kansai Sales Office in Kyoto-shi, Kyoto (relocated to Osaka-shi, Osaka in March 2018).

November 2017

▪ Acquired all shares of Satosen Co., Ltd., which conducts manufacturing and sales of electronicmaterials (currently a consolidated subsidiary).

October 2019

▪ Sold all shares of Polatechno Co., Ltd. excluding it from the affiliate companies accounted for underequity method.

- 3 -December 2021

▪ Made ThinFlex Corporation a wholly owned subsidiary (currently a consolidated subsidiary).

April 2022

▪ Moved from the 1st Section to the Prime Market along with the market restructuring of the Tokyo
Stock Exchange.

July 2023▪ Changed Tokyo Branch Office to Tokyo Head Office and reorganized to a dual head-office structure.

- 4 -3. Description of BusinessOur corporate group (hereinafter referred to as either “our Group” or the “Group”, as the case may be) is comprisedof the Company, thirteen (13) subsidiaries and one (1) affiliated company, and is engaged in

manufacturing andsales of electronic materials, industrial application structural materials, electrical insulating materials and display
materials. It also develops business activities such as sales of goods related to each business segment as well as
logistics and other services.
Description of business of our Group and the capacities of the Company and its associated companies with respect toeach business segment are as follows.
The business segments shown below are categorized in the same manner as those shown in V. Status of Accounting –1. Consolidated Financial Statements, etc. – (1) Consolidated Financial Statements – [Notes].
(1) Electronic Materials
The Company manufactures and sells materials for flexible and rigid printed circuit boards, etc. that are used
as electronic materials, while Arisawa Fiber Glass Co., Ltd., a subsidiary, manufactures glass cloth for printed
circuit boards. ThinFlex Corporation, a subsidiary, also manufactures and sells materials for flexible printed
circuit boards, etc., while Satosen Co., Ltd., a subsidiary, manufactures and sells rigid printed circuit boards.
(2) Industrial Application Structural Materials
The Company and its subsidiaries, Protec Arisawa Europe, S.A. and Protec Arisawa America, Inc. manufactureand sell water treatment FRP pressure vessels for use as industrial application structural materials. The
Company manufactures and sells honeycomb panels and prepregs, etc. for aircraft. Arisawa Sogyo Co., Ltd., asubsidiary, manufactures and sells pultrusion molded products and FRP ski sheets, etc.
Protec International Holdings Co., Ltd. conducts business management of the aforesaid Protec Arisawa
companies as the holding company of these subsidiaries engaged in the water treatment business with theirwater treatment FRP pressure vessels.
(3) Electrical Insulating Materials
Arisawa Fiber Glass Co., Ltd., a subsidiary, manufactures glass cloth and glass tapes for use as electricalinsulating materials, and the Company sells such glass cloth and glass tapes. The Company manufactures andsells prepregs, etc. for electrical insulation, while Arisawa Sogyo Co., Ltd., a subsidiary, and Arisawa Jushi
Kogyo Co., Ltd., another subsidiary, manufacture these products.
(4) Display Materials
The Company manufactures and sells 3D display filters, etc. for use as display materials. ColorLink Japan, Ltd.,a subsidiary, manufactures and sells polarization control optical components.
(5) Other Businesses
The Company conducts sales of the related goods mentioned above in (2) and (3). In addition, Arisawa Sogyo
Co., Ltd., a subsidiary, conducts logistics operations and also operates a driving range.
The above matters are abstracted in the following Business Activities Diagram.

- 5 -(Business Activities Diagram)

Corporation

SatosenCo.,

Arisawa Jushi Kogyo Co., Ltd.

Protec International Holdings Co., Ltd.

Protec Arisawa Europe, S.A.

Protec Arisawa America, Inc.

Ar i sa w a S o g y o C o . , L t d .

Industrial application structural materials

Ltd.

Arisawa Fiber Glass Co., Ltd.

Electrical insulating materials

ColorLink Japan, Ltd.

Di s p l a y ma t e r i a l s

TopFlexArisawa Mfg. Co., Ltd. (Manufacture and sales)

El ec t r oni c mat er i al s

ThinFlex Corporation

Consolidated subsidiary

Transactions of products, etc.

Other transactions(Note)

Arisawa Sogyo Co., Ltd. is engaged in other businesses in addition to the manufacture of electrical insulating
materials and the manufacture and sales of industrial application structural materials.

- 6 -4. Status of Subsidiaries and Affiliated Companies

Name

Location

Share capital(Thousands of Description of core
yen except asbusinessotherwise noted)

Votinginterest
held by theCompany

Relevant descriptions(%)(Consolidated
subsidiaries)
ThinFlex
Corporation(See Note 2)
ThinFlex
Technology
Corporation(B.V.I.)(See Note 2)
TopFlex
Corporation(See Note 2
and Note 4)
Satosen Co.,Ltd.

1,576,377
Kaohsiung(Thousands ofCounty, Taiwan
Taiwan dollar)

Electronic materials

100.0

Supply of raw materials as well as
sales of products related toelectronic materials,
Concurrent directorship

British Virgin
Islands

37,062(Thousands of
US dollar)

Electronic materials

100.0(100.0)---

Kunshan City,
P.R. China

304,740(Thousands ofRenminbi)

Electronic materials

100.0(100.0)

Sales of electronic material
products

99,540Electronic materials

100.0

Leasing of land,
Financial support,
Concurrent directorship

100.0

Consignment manufacture of glass
fiber fabrics related to electronicmaterials and electrical insulating
materials,
Leasing of buildings andmanufacturing equipment,
Financial support,
Concurrent directorship

Osaka-shi,
Osaka

Arisawa Fiber
Glass Co., Ltd.
(See Note 2)

Joetsu-shi,
Niigata

100,000

Electronicmaterials,
Electrical insulating
materials

ProtecInternational
Holdings Co.,
Ltd.

Joetsu-shi,
Niigata

101,830

Industrial
application
structural materials

100.0

Financial support,
Concurrent directorship

Protec Arisawa
Europe, S.A.

Munguia, Spain

1,670(Thousands of
euro)

Industrial
application
structural materials

100.0(100.0)Concurrent directorship

Protec Arisawa
America, Inc.

Vista, CA,
U.S.A.

3,200(Thousands of
US dollar)

Industrial
application
structural materials

100.0(100.0)Concurrent directorship,
Technical support

30,950Electrical insulating
materials,
Industrial
application
structural materials,
Other businesses

100.0

Consignment manufacture as wellas consignment of warehousing
and logistics operations of resin
products related to electricalinsulating materials and industrial
application structural materials,
Leasing of buildings, machineryand equipment

100.0

Consignment manufacture of resin
products related to electricalinsulating materials,
Leasing of land and buildings,
Concurrent directorship

100.0

Leasing of buildings, machineryand equipment,
Supply of raw materials,
Concurrent directorship

Arisawa Sogyo
Co., Ltd.

Joetsu-shi,
Niigata

Arisawa Jushi
Kogyo Co.,
Ltd.

Joetsu-shi,
Niigata

ColorLink
Japan, Ltd.

Joetsu-shi,
Niigata

Note:

1.
2.
3.

10,000198,201

Electrical insulating
materials

Display materials

Segment names are stated in the column “Description of core business”.
The company falls under the category of specified subsidiary.
Parenthesized figures in the column “Voting interest held by the Company” indicate the ratio of indirect ownership to thepertinent total.

- 7 -

4.

Net sales (excluding inter-company sales between the consolidated companies) of TopFlex Corporation account for morethan ten hundredths (10/100) of the Group’s consolidated net sales.
Key income and loss indices, etc. of TopFlex Corporation(1) Net sales(2) Ordinary profit(3) Profit(4) Net assets(5) Total assets(Thousands of yen)
5,265,520△238,552△194,021
6,126,618
11,236,475- 8 -5. Status of Employees(1) Status of Consolidated Group(As of March 31, 2024)
Segment name

Number of employees

Electronic materials

864

（139）

Industrial application structural materials

280

（34）

Electrical insulating materials

103

（16）

Display materials

143

（25）

1,390

（214）

Other

34

（24）

Unallocated (Common)

44

（16）

1,468

（254）

Total of reportable segments

Total
Note: 1.

2.

The column “Number of employees” indicates the number of full-time employees (excluding persons on loan to companies
outside our Group from those within our Group and including persons on loan to companies within our Group from thoseoutside our Group), while the annual average number of temporary employees (including part-timers, employees
dispatched from staffing agencies and seasonal workers) is stated in the parentheses.
The number of employees stated as that of “Unallocated (Common)” is the number of those who belong to theadministrative departments of the Company.

(2) Status of Submitting Company
Number of employees

Average age (Years old)

Average length of service (Years)

44.9

20.9

607（89）Segment name(As of March 31, 2024)
Average annual salary(Thousands of yen)
5,664

Number of employees

Electronic materials

383

（56）

Industrial application structural materials

83

（6）

Electrical insulating materials

39

（1）

Display materials

58

（10）

563

（73）

Unallocated (Common)

44

（16）

Total

607

（89）

Total of reportable segments

Note: 1.

2.
3.

The column “Number of employees” indicates the number of full-time employees (excluding persons on loan to othercompanies from the Company and including persons on loan to the Company from other companies), while the annual
average number of temporary employees (including part-timers, employees dispatched from staffing agencies and seasonal
workers) is stated in the parentheses.
“Average annual salary” includes bonuses and extra wages.
The number of employees stated as that of “Unallocated (Common)” is the number of those who belong to theadministrative departments of the Company.

(3) Status of Labor Union
The labor union of the Submitting Company belongs to the local division of the Japanese Federation of Textile,
Chemical, Food, Commercial, Service and General Workers’ Unions and has made sound development since its
formation in 1946. The labor-management relations are harmonious, and efforts are made to develop theCompany’s business through mutual cooperation. The union membership as of March 31, 2024 stands at 455
members.

- 9 -(4) Ratio of female employees in managerial positions, ratio of male employees taking childcare leave, andwage differences between male and female employeesi) Submitting Company
Current business year
Wage differences between male and female employees (%)(See Note 1)

Ratio of female
Ratio of male
employees in managerial employees taking
positions (%)
childcare leave (%)(See Note 1)(See Note 2)
12.5
Note:

1.
2.

3.

4.

All employees

23.1

Regular employees

75.2Part-time and fixed-term
employees

75.5

71.4

The figures are calculated in accordance with the provisions of “Act on the Promotion of Women's Active Engagementin Professional Life” (Act No. 64 of 2015).
The ratio of childcare leave, etc. taken in Article 71-4, item (i) of “Ordinance for Enforcement of the Act on Childcare
Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members”(Ordinance of the Ministry of Labor No. 25 of 1991) is calculated in accordance with the provisions of “Act on Childcare
Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members”(Act No. 76 of 1991).
The ratio as of March 31, 2024 is 77.5% (male) and 22.5% (female) of all employees. The ratio of female employees
which include mid-career employees and new graduates as of their recruitment is 38.4% in FY2022 and 41.9% in FY2023
as we promote recruitment of women. We are proceeding with the promotion of employees with confidence and ability
through leadership training for females, promotion of training for candidates in managerial positions without regard togender, and personnel distribution that contributes to utilizing employees’ ability and characteristic without regard togender.
Female employees also work late-night shifts with three-shift system at Manufacturing Department, and only male
employees work 4 team fixed 8 hours shifts. We are promoting healthy and safe working environments and expanding
work fields.

ii) Consolidated Subsidiaries
Statement is omitted with regard to the consolidated subsidiaries because they do not disclose data in accordance withthe provisions of “Act on Promotion of Women's Participation and Advancement in the Workplace” (Act No. 64 of
2015) and “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring forChildren or Other Family Members” (Act No. 76 of 1991).
iii) Consolidated Group
Current consolidated fiscal year
Ratio of female
employees inmanagerial positions(%)

Ratio of male
employees taking
childcare leave (%)(See Note 4)

14.4

38.1

Note:

1.
2.

3.
4.

Wage differences between male and female employees (%)(See Note 2 and Note 3)
All employees
85.9

Regular employees
87.0Part-time and fixed-term
employees
74.8

The Consolidated Group is a consolidated company as stipulated in Article 2(v) of “Regulation on Terminology, Forms
and Preparation Methods of Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of 1976).
The above figures include those of overseas subsidiaries, and a definition and calculating method of figures of overseas
subsidiaries are treated the same as those of “Act on the Promotion of Women's Active Engagement in Professional Life”(Act No. 64 of 2015) and “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers
Caring for Children or Other Family Members” (Act No. 76 of 1991).
In calculating the figures, the amount of overseas companies is calculated by converting it into Japanese yen based on
average exchange rates.
Childcare leave includes not only the childcare leave as stipulated in laws and regulations, but also a temporary leavesystem, etc. for purposes of bearing and raising of children at overseas companies. Childcare leave programs are notestablished at Protec Arisawa America, Inc., so it is not included in the calculation of “Ratio of male employees taking
childcare leave”.

- 10 -

II. Status of Business
1. Management Policy, Management Environment and Tasks to be Addressed
Management policy, management environment and tasks to be addressed of our corporate Group are as
follows.
Note that matters stated concerning the future in the text are based on judgments made by our Group as ofthe end of the current consolidated fiscal year.
Our corporate Group, ever since its initiation, have been working on technological innovations and productdevelopment to build up unique technologies that integrate the “weaving, coating and molding” elementsof its expertise while consistently fulfilling users’ needs, thereby increasing its corporate value. Along withthe globalization of markets and the rapid diversification of needs, we will strive to further differentiatetechnologies as well as improve quality and productivity, thereby creating corporate value.
(1) Basic Policies of Corporate Management
Grounded in the motto “Create, Innovate and Challenge”, our Group makes it its management policy to:(i) create new values and enhance customer satisfaction;(ii) discover customer demands and create new businesses with our creative technologies;(iii) strengthen corporate structure by improving our quality and productivity; and(iv) contribute to solving the social and environmental issues, and realize the sustainable growth.
Under such management policy, we aim to create corporate value and, along with the improvement of capitalefficiency and contribution to society, enhance shareholder value of the Company by means of enhancing customer
satisfaction, developing differentiated products with our unique technology and improving profitability throughthorough cost reduction.
In our financial strategy, we aim to improve capital efficiency by actively returning surplus to shareholders whileconverting non-business assets to business assets.

(2) Mid- to Long-Term Management Strategies
Our corporate group aims to work on technological innovation and product development while consistently
fulfilling users’ needs and realize its sound survival and sustainable growth, thereby increasing its mid- to longterm corporate value. Specifically, to maintain and expand the revenue base of existing businesses, we implement
strategic investments in a new business that maximizes the synergy effect with existing businesses and has a highprofitability of capital besides improving and expanding productivity and investing in the development of new
products that anticipate user’s needs. We also select themes that have impacts on society and environment and aim
to address issues of the themes through business. Specifically, we place the following as important issues and areworking on them, i.e. (i) contribution to a decarbonized society (achieving carbon neutrality, promoting energy
and resource saving, replacing with renewable energy and offering low environmental load materials), (ii)development of diversified human resources and improvement in job satisfaction (developing next-generation
human resources and being a company where all employees can work lively), (iii) promotion of circular economy(reducing emissions and establishing a sustainable supply chain), and (iv) enhancement of governance (being anorganization with a strong sense of ethics and building an organizational structure with an open-door policy).
Particularly, we publicized “Initiatives on Climate Change (Disclosure in accordance with the framework of TCFD
recommendations)” on our website because we especially recognize climate change as a pressing issue.
- In the electronic materials segment, we aim at the development of new products and the expansion ofbusinesses, centering on mobile devices, semiconductors and in-vehicle devices. We also deepen partnerships
with our group companies and work to strengthen our base of operations in China and Asian market.
- In the industrial application structural materials segment and electrical insulating materials segment, wedevelop unique products focusing on transportation infrastructure, water treatment and new energy fields, witha view to further growth.
- In the display materials segment, we work to further expand sales of new products utilizing our unique
technology primarily in the fields of high-definition displays for medical use.
- We work to transform our business structure into the one with a good capital efficiency by making effective
use of cash-flow, promoting change from non-business assets to business assets, controlling invested capitalnecessary for growth, implementing aggressive shareholder return upon ensuring capital composition that
includes the use of leverage conscious of capital efficiency (the equity ratio of approximately 50% in themedium term) and decreasing the weighted average cost of capital.

- 11 -

The Group formulated the medium-term management plan that incorporates the above-mentioned contents. We
aim to achieve ROIC of 6% or more.

(3) Business and Financial Tasks to be Preferentially Addressed
Our Group promotes the following as the tasks to be addressed in order to ensure accelerated and thoroughimplementation of the aforesaid management strategies.
- Development of differentiated products with unique technology, improvement of profitability in existing
businesses, creation of new demands and entry into fields where growth is expected- Enhancement of competitiveness in quality and costs by improving our original management techniques andproprietary technologies- Promotion of enhanced cooperation among the manufacturing, sales and technical divisions in pursuit of more
efficient business operations- Development of new use and fields by strengthening cooperation with our group companies(4) Objective Indicators, etc. for Judgement on the Status of Achievement of Managerial Goals
The Group sets ROIC as a target management indicator and aims at ROIC of 6% or more for the fiscal year endingon March 31, 2027 in the medium-term management plan revised in May 2024. The results for the fiscal year
ending on March 31, 2024 were 1.9%.

(5) Climate Change Initiatives
Effects from climate change such as recent increase and increased severity of extreme weather events are becoming
serious globally. The Group as a manufacturer that produces products from chemicals recognizes a climate change
issue facing us as one of important business challenges.
The Group has been so far actively involved in environmental protection activities and consistently improved themby promoting the reduction, etc. of electricity and gas consumption, hazardous chemical substance, and industrial
waste in accordance with our Environmental Policy, as the Environmental Protection and Management Committee
deliberates on the activities. We have posted “Carbon Neutral Initiatives” on our website since June 2021 with theaim to continuously contribute to a decarbonized society through business as mentioned in “(2) Mid- to LongTerm Management Strategies” above. As part of our initiatives on environmental issues, we proceeded withanalysis and examination targeting at our main businesses in accordance with the framework of TCFD (Task Forceon Climate-related Financial Disclosures) recommendations and disclosed the result on our website, based on ourbelief that the recommendations will contribute to the development of a decarbonized and sustainable society.

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2. Views and Initiatives on Sustainability
Our views and initiatives on sustainability are as follows.
Note that matters stated concerning the future in the text are based on judgments made by our Group as of the end of
the current consolidated fiscal year.
Under the management policy to “contribute to solving the social and environmental issues and realize the sustainablegrowth”, we understand that engaging proactively with the social and environmental issues is an essential condition
for the existence and activities of companies. We also recognize that (i) Contribution to a decarbonized society, (ii)Development of diversified human resources and improvement in job satisfaction, (iii) Promotion of circular
economy, and (iv) Enhancement of governance are key issues (materiality). We have set KGI goals, such as achieving
our goals (Scope 1 and 2) of carbon neutrality by 2030, and by specifying them in our mid-term management plan,
we are working on solving climate change issues, promoting human capital management, and reducing emissions.
As part of this effort, we expressed our support to “Task Force on Climate-related Financial Disclosures (TCFD)” in
June 2022.
Materiality

KGI (Key Goal Indicator)
Achieve carbon neutrality by 2030

Contribution to a decarbonized society

Promote energy and resource saving
Replace with renewable energy
Offer low environmental load materials

Development of diversified human resources

Develop next-generation human resources/ Improvement in job satisfaction

Be a company where all employees can work lively

Promotion of circular economy

Reduce emissions
Establish a sustainable supply chain

Enhancement of governanceBe an organization with a strong sense of ethics
Build an organizational structure with an open-door policy(1) GovernanceWe established the ESG Committee in December 2021 in order to take the lead in addressing climate change issues.
At the committee, a director and senior managing operating officer serves as a chairperson, and operating officers
and general managers of each division serve as members, promoting the organized activities.
The ESG Committee deliberates four times a year on themes such as responding to climate change, realizing adecarbonized society, respecting for human rights, considering for working environment, and having fair andappropriate transactions with business partners, in addition to enlightening and promoting sustainability-conscious
management. Each committee periodically reports important agenda items and activity status to the Board of
Operating Officers, the Management Conference, and the Board of Directors, and the Board of Directors makes
final decisions. Regarding environmental conservation activities, the Environmental Protection and Management
Committee, which works with the ESG Committee, supervises the progress of activities conducted by the Carbon
Neutrality Project and the Emission Subcommittee and continuously improves them.
The Board of Directors checks the progress of the mid-term management plan, discusses measures for issues, andreflects the results in the management strategy and risk management and assessment based on the periodic reports.
The Board of Directors is responsible for debating ESG-related agendas and supervising the goal-setting and theprogress of initiatives. In addition, we instituted “Human rights policy of Arisawa Group” in May 2024 anddisclosed it on our website.

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(2) Strategy
We have set the key issues (materiality) in the medium-term management plan. To achieve those, we establishedthe ESG Committee and the Environmental Protection and Management Committee and the Subcommittees andproject team as their subordinate organizations, and those groups develop activity goals with each department foreach fiscal year and are promoting the efforts.
With regard to a strategy on climate-related risks and opportunities, upon scenario analysis, the ESG Committee
identifies significant risks and opportunities related to climate change and assesses financial impacts that thosewould have.
The scenario analysis we conducted analyzed and examined the effects as of 2030 by using two scenarios, the 4°C
scenario and the 1.5°C scenario, targeting at our whole supply chain from purchase, development, production tosales of products and services.
i) The risks and opportunities presented by climate change
We believe that it is important to contribute to movements for limiting temperature increase because climatechange due to global warming has a huge impact on society.
We also believe that climate change is likely to cause risks such as damage to us and our supply chain due toflood damage of typhoon, heavy rain, etc. and the increase of expenses such as the introduction of carbon taxes,
credit purchase, the replacement of facilities, the purchase of renewable energy, etc. associated with thetightening of regulations.
On the other hand, we see the provision of products accommodating the increased environmental awareness ofcustomers as an opportunity for our business. In particular, not only do we respond to climate change by
supplying materials for FCV and EV, solar power generation, seawater desalination treatment, aircraft (weight
reduction), and a decarbonized new energy development project, but we also contribute to the improvement ofliving environment by supplying materials for automated driving assist, medical devices, etc.
(Risks)- 14 -

(Opportunities)ii) Initiatives on human capital management

With regard to the human resources development, our basic policy is to realize diversity and ensure equal
opportunity. We adhere to meritocracy regardless of age, gender, or career in recruiting and promoting, and haveintroduced a system to encourage the growth of employees through multidimensional evaluation and feedback.
We also aim to enhance job satisfaction for each and every employees and improve organizational power by
striving to provide stratified education, self-development, and opportunities for a variety of experiences througha wide range of education and training inside and outside of the Company. Specifically, we are working on thedevelopment of human resources that think and act by themselves through communication, thoroughimplementation of meritocracy, development of future leader candidates, and promotion of active participationof women and increase of male employees taking childcare leave. We also evaluate and treat our employees inaccordance with their ability and achievement in order to ensure diversity and promote the active participationof women and foreigners. As a result, 69.4% of managerial positions of our Group are occupied by mid-career
employees (40.6% for the Company). In addition, we promote the balance between work and personal life, andthere is no difference in the average length of service between male and female employees.

(3) Risk Management
We recognize that climate change-related risks are important management issues. Therefore, the ESG Committee
identifies and assesses the climate change-related risks, and reports to the Board of Operating Officers, theManagement Conference and the Board of Directors, thereby defining key issues. We improve our risk
management system by managing these risks.
As for assessing the climate change-related risks, upon identifying climate change factors in businesses, we assume
the changes of future regulations, and societal, technological and climate conditions for each 1.5°C and 4°C
scenario.
Also, we discussed how to respond to changes in external environments due to environmental issues and how tocontribute to international Sustainable Development Goals (SDGs) at the ESG Committee meetings. Consequently,
we designated the following four items as materiality to be tackled in our mid-term management plan:“contribution to a decarbonized society”, “development of diversified human resources and improvement in job
satisfaction”, “promotion of circular economy”, and “enhancement of governance”. To solve these issues, we makecompany-wide efforts.
In the process of identifying materiality, we had the ESG Committee narrow the items down to four based on theseverity for a sustainable society and the severity for our business.

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(4) Metrics and Goalsi) Climate change
We have implemented various measures to improve energy use efficiency. From now on, we will not only expand
the deployment of the measures, but also aim to achieve carbon neutrality in FY2030 in terms of direct emissions(Scope1) and indirect emissions (Scope2) by using renewable energy and purchasing carbon neutral gas as well as
promoting the development of low-carbon products.
(Plan for achieving carbon neutrality)ii) Human capitalWith respect to the ratio of female employees in managerial positions, we will actively recruit and nurture
candidates for the positions to increase the ratio from 12.5% at the end of March 2022 to around 20% at the endof March 2025. The first female director was appointed in June 2022, and one more person joined it in June 2023,
for a total of two female directors. In addition, the first female operating officer was appointed in June 2022
through internal promotion, and one more person joined it in June 2024, for a total of two female operating officers.
We will continue to work on a variety of initiatives, such as providing opportunities for development andrealization of ability, which respect employees’ personality, and to recruit and appoint diverse employees.

Note:

1.

2.
3.

The above figures include those of our overseas subsidiaries, and a definition and calculating method of figures of ouroverseas subsidiaries are treated the same as those of “Act on the Promotion of Women's Active Engagement inProfessional Life” (Act No. 64 of 2015) and “Act on Childcare Leave, Caregiver Leave, and Other Measures for the
Welfare of Workers Caring for Children or Other Family Members” (Act No. 76 of 1991).
In calculating the figures, the amount of our overseas companies is calculated by converting it into Japanese yen basedon average exchange rates.
Childcare leave includes not only the childcare leave as stipulated in laws and regulations, but also a temporary leavesystem, etc. for purposes of bearing and raising of children at overseas companies. Childcare leave programs are notestablished at Protec Arisawa America, Inc., so it is not included in the calculation of “Ratio of male employees taking
childcare leave”.

- 16 -

3. Business Risks, etc.
Among the matters related to the status of business and the status of accounting, etc., which are stated in the Financial
Report, the major risks that the corporate managers recognize may have a significant impact on the consolidated
financial position, business results and cash flows of the consolidated companies are as follows.
The matters stated concerning the future in the text are based on judgments made by our Group as of the end of thecurrent consolidated fiscal year.

(1) Fluctuations in Demand for Products
Major users of the products manufactured and sold by our Group are information equipment manufacturers,
electronic component manufacturers, industrial electronic device manufacturers, etc., and fluctuations in demand
for these electronic devices affect the results of operations of our Group.

(2) Dependence on Particular Products
Net sales of our Group depend largely on the electronic materials segment. A sales decline in this segment may
affect the results of operations of our Group.

(3) Development of New Businesses
Our Group is making efforts to launch several new businesses, and the status of progress in such efforts may
affect the results of operations of our Group.

(4) Procurement of Raw Materials
If purchase prices of the raw materials purchased by our Group rise sharply due to escalating price of crude oiland copper, such rise may affect the results of operations of our Group.

(5) Impact of Disasters
The vast majority of our Group’s production bases are located in Joetsu-shi, Niigata, Japan. In the event of anearthquake or other disaster, the resultant disruption or interruption of production activities, etc. may affect theresults of operations of our Group.

(6) Environmental Regulations
Businesses of our Group are subject to various legal regulations, including, but not limited to, those applicable toenvironmental protection. If any significant liability or obligation accrues to our Group in connection withcompliance with any such environmental or other kind of regulation, such liability or obligation may affect theresults of operations of our Group.

(7) Risks Related to Information Security
Our Group holds confidential information that includes technical and personal information for performing
business, and various kinds of information system are used for business activities, such as production, sales,
accounting, etc. If the information is leaked, unexpected failure happens to the information system, and businesses
are suspended due to disasters, cyber attacks, unauthorized access, etc., the business activities and results of ourGroup may be affected.

(8) Risks Related to Novel Infectious Disease
If the coronavirus disease (COVID-19) resurgence or new infectious disease occur, the disruption of supply chain
and production activities and the negative impact on the domestic economy and markets, etc. may affect the resultsof operation of our Group.
Our Group gives first priority to the safety and health of all the stakeholders and implements the infection
prevention measures thoroughly, depending on the situation. We also continue to implement measures, such as
an effective utilization of teleconference system, implementation of telework (working from home), use of asatellite office, etc.

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4. Analyses of Consolidated Financial Position, Business Results and Cash Flows by the Corporate
Managers(1) Overview of Operating Results, etc.
Overview of financial conditions, results of operations and status of cash flows (hereinafter referred to as operating
results, etc.) of the Group (the Company and its consolidated subsidiary) in the consolidated fiscal year is as follows.
i) Financial Position and Operating Results
During the current consolidated fiscal year, the Japanese economy showed a moderate recovery trend due to thelifting of restrictions on economic activities from COVID-19 infections. Meanwhile, there is still an uncertain
outlook for the economy due to the depreciation of yen caused by the widening interest rate differential between
Japan and the U.S., the continued price increases, the geopolitical risks in Ukraine and the Middle East, and thestagnant economy in China, etc. Under such circumstances, the results of operations of our Group (the Company
and its consolidated) for the current consolidated fiscal year showed net sales of 42,114 million yen (a decreaseof 1.4% year-on-year) due to a decrease in net sales of display materials and electronic materials which are oneof our group’s main business fields, despite an increase in net sales of industrial application structural materials.
The results in terms of profit and loss are as follows: operating profit was 1,483 million yen (a decrease of 33.4%
year-on year); ordinary profit was 1,488 million yen (a decrease of 45.2% year-on year); and profit attributable toowners of parent was 1,639 million yen (a decrease of 42.6% year-on year).
Operating results with respect to each segment are as follows.
Electronic materials
In the electronic materials segment, net sales were 25,105 million yen (a decrease of 5.4% year-on-year) due toa decrease in sales of flexible printed circuit board materials (the amount of orders received decreased by 4.0%
to 16,646 million yen, and the production output decreased by 8.2% year-on-year on a non-consolidated basisof the Submitting Company) and glass cloth for printed circuit board, while the segment profit was 260 million
yen (a decrease of 78.7% year-on-year) caused by the impact from decrease in production in response to adecrease in demand in addition to a decrease in net sales.
Industrial application structural materials
In the industrial application structural materials segment, net sales were 10,601 million yen (an increase of
16.1% year-on-year) due to an increase in sales of FRP vessels for water purification and honey-comb panel for
aircraft, while the segment profit was 1,476 million yen (an increase of 12.2% year-on-year).
Electrical insulating materials
In the electrical insulating materials segment, net sales were 2,532 million yen (a decrease of 1.9% year-onyear) due to a decrease in infrastructure-related net sales, while the segment profit was 314 million yen (anincrease of 70.4% year-on-year).
Display materials
In the display materials segment, net sales were 3,535 million yen (a decrease of 15.1% year-on-year) due to adecrease in net sales of 3D-related materials and polarization control optical components, while the segment
profit was 940 million yen (a decrease of 8.2% year-on-year).
Other (other businesses)
In other businesses, net sales were 338 million yen (an increase of 11.1% year-on-year), while the segment profit
was 199 million yen (an increase of 34.4% year-on-year).
ii) Cash Flows
Cash and cash equivalents (hereinafter referred to as the “Funds”) as of the end of the current consolidated fiscal
year were 17,700 million yen, representing a year-on-year decrease of 835 million yen, or 4.5%.
The status of each cash flow for the current consolidated fiscal year and the major factors are as follows.
(Cash flows from operating activities)
Funds earned from operating activities were 3,219 million yen (a decrease of 7.2% year-on-year). This waslargely due to an increase in the Funds comprising 2,072 million yen in profit before income taxes and 2,206
million yen in depreciation, etc. as well as a decrease in the Funds comprising 2,875 million yen in increase intrade receivables, etc.
(Cash flows from investing activities)
Funds disbursed from investing activities were 1,061 million yen (508 million yen was earned in the previous
consolidated fiscal year). This was largely due to an increase of 1,757 million yen, etc. in proceeds fromwithdrawal of time deposits, etc. as well as a decrease in the Funds comprising the expenditure of 3,544 million- 18 -

yen for purchases of property, plant and equipment, etc.
(Cash flows from financing activities)
Funds disbursed from financing activities were 3,415 million yen (an increase of 32.8% year-on-year). This
was largely due to a decrease of 3,641 million yen for dividends paid, etc.
iii) Results of Production, Receipt of Orders and Sales
1) Results of Production and Receipt of Orders
Our Group (the Company and its consolidated subsidiaries; the same shall apply hereinafter) manufactures andsells such an extensive and varied range of products that even the products of the same type are not necessarily
uniform in capacity, construction, form or other respects. Also, quite a few of our products are not manufactured
on a made-to-order basis. Such being the case, we do not indicate any segmentalized production volume andorder volume in monetary amounts or quantities.
For this reason, we indicate the status of production, receipt of orders and sales in a correlation with the businessresults with respect to each of the segments shown in “(1) Overview of Operating Results, etc. - i) Financial
Position and Operating Results”.
2) Sales Results
Net sales for the current consolidated fiscal year with respect to each reportable segment are as follows.

Segment nameCurrent consolidated fiscal year
(From April 1, 2023 to March 31,2024)(Millions of yen)Comparison with the previous
consolidated fiscal year (%)

Electronic materials

25,105△5.4

Industrial application structural
materials

10,601

16.1

Electrical insulating materials

2,532

△1.9

Display materials

3,535

△15.1

41,775

△1.5

Other

338

11.1

Total

42,114△1.4

Total of reportable segments

Note: 1. Inter-segment transactions are eliminated by setoff.
2. Sales results with respect to each major customer and their respective ratios to the total sales amount for the last two
consolidated fiscal years are as follows.

Customer name

Previous consolidated fiscal year
(From April 1, 2022 to March 31,
2023)
Amount(Millions of yen)

Ajinomoto Fine-Techno Co., Inc.

Ratio (%)

4,327

10.1

Current consolidated fiscal year
(From April 1, 2023 to March 31, 2024)
Amount(Millions of yen)－

Ratio (%)－

(Statement is omitted as there is no customer who accounts for 10/100 or more of sales results in the current consolidated
fiscal year.)(2) Details of analysis and study regarding the conditions of operating results etc. from the viewpoint ofcorporate managers
Details of perception, analysis and study regarding the conditions of operating results etc. of our Group from theviewpoint of corporate managers are as followings.
The matters regarding future in the following sentences were judged as of end of the current consolidated fiscal year.
i) Details of Perception, Analysis and Study regarding Financial Position and Conditions of Operating Results
In the current consolidated fiscal year, we worked for the continuous growth of existing businesses by making
the capital expenditures for improvement and expansion of production capacity mainly related to our mainstay
electronic materials. At the same time, we continued an aggressive effort for the market expansion and the- 19 -

growth of our Group by developing new products that anticipated changes in markets in each segment.
Electronic materials, the core products of our Group, resulted in orders lower than the previous year due toinventory adjustment despite our effort (including our subsidiary, “ThinFlex Corporation”) to increase them for
multifunctional mobile devices. Regarding industrial application structural materials, electrical insulating
materials, and display materials, we look forward to further growth and we will continue to develop new
products and to increase profitability.
Analysis of financial position and operating results in the current consolidated fiscal year of our Group is asfollows.
1) Analysis of Financial Conditions(Assets)
Total assets as of the end of the current consolidated fiscal year were 68,816 million yen (67,659 million yen
as of the end of the previous consolidated fiscal year), representing a year-on-year increase of 1,156 million
yen, or 1.7%.
This was largely due to an increase of 3,333 million yen in notes and accounts receivable-trade, and contract
assets, an increase of 1,515 million yen in property, plant and equipment, a decrease of 2,382 million yen in
cash and deposits, a decrease of 937 million yen in merchandise and finished goods, respectively.
(Liabilities)
Total liabilities as of the end of the current consolidated fiscal year were 22,570 million yen (20,552 million
yen as of the end of the previous consolidated fiscal year), representing a year-on-year increase of 2,018 million
yen, or 9.8%.
This was largely due to an increase of 1,800 million yen in notes and accounts payable-trade, and an increaseof 1,277 million yen in current portion of long-term borrowings, and a decrease of 752 million yen in long-termborrowings, respectively.
(Net assets)
Total net assets as of the end of the current consolidated fiscal year were 46,246 million yen (47,107 million
yen as of the end of the previous consolidated fiscal year), representing a year-on-year decrease of 861 million
yen, or 1.8%.
This was largely due to an increase of 966 million yen in foreign currency translation adjustment and a decreaseof 2,040 million yen in retained earnings, respectively.
2) Analysis of Results of Operations(Net sales)
Net sales for the current consolidated fiscal year were 42,114 million yen (42,722 million yen for the previous
consolidated fiscal year), representing a year-on-year decrease of 607 million yen, or 1.4%. Cost of sales was
34,759 million yen (34,913 million yen for the previous consolidated fiscal year) through our thorough costcutting efforts, representing a year-on-year decrease of 153 million yen and signifying a 0.8 percentage point
increase in the ratio of cost of sales to 82.5%.
As a result, gross profit was 7,354 million yen (7,809 million yen for the previous consolidated fiscal year),representing a year-on-year decrease of 454 million yen and signifying a 0.8 percentage point decrease in theratio of gross profit to 17.5%.
(Operating profit or loss)
Total selling, general and administrative expenses for the current consolidated fiscal year were 5,871 million
yen (5,581 million yen for the previous consolidated fiscal year) despite our thorough cost-cutting efforts,
representing a year-on-year increase of 290 million yen and signifying a 0.8 percentage point increase in theratio of selling, general and administrative expenses to 13.9%.
As a result, operating profit was 1,483 million yen (2,228 million yen for the previous consolidated fiscal year),representing a year-on-year decrease of 744 million yen and signifying a 1.7 percentage point decrease in theratio of operating profit to 3.5%.
(Ordinary profit or loss)
Non-operating income and expenses for the current consolidated fiscal was an income of 4 million yen (anincome of 489 million yen for the previous consolidated fiscal year), representing a decrease of 484 million
yen. A main factor for this is a decrease of 166 million yen in foreign exchange gains.
As a result, ordinary profit was 1,488 million yen (2,717 million yen for the previous consolidated fiscal year),representing a year-on-year decrease of 1,228 million yen and signifying a 2.9 percentage point decrease in theratio of ordinary profit to 3.5%.

- 20 -

(Profit or loss before income taxes)
Extraordinary income or loss for the current consolidated fiscal year recorded an income of 583 million yen (anincome of 1,185 million yen for the previous consolidated fiscal year), representing a decrease of 601 million
yen. The main factor for this was a decrease of 626 million yen in gain or loss on sale of investment securities.
As a result, profit before income taxes was 2,072 million yen (3,902 million yen for the previous consolidated
fiscal year), representing a year-on-year decrease of 1,830 million yen and signifying a 4.2 percentage point
decrease in the ratio of profit before income taxes to 4.9%.
(Profit or loss attributable to owners of the parent)
Total income taxes for the current consolidated fiscal year were 432 million yen (1,043 million yen for theprevious consolidated fiscal year), representing a year-on-year decrease of 610 million yen. As the bottom line,
profit attributable to owners of parent for the current consolidated fiscal year was 1,639 million yen (2,856
million yen for the previous consolidated fiscal year), representing a year-on-year decrease of 1,216 million
yen and signifying a 2.8 percentage point decrease in the ratio of profit attributable to owners of parent to 3.9%.
ii) Details of Analyses and Study Regarding Cash Flows and Information on Financial Resources for Capital and
Liquidity of Funds
Status of each cash flow category during the current consolidated fiscal year and the factors behind such status
are stated in II. Status of Business - 3. Analyses of Consolidated Financial Position, Business Results and Cash
Flows by the Corporate Managers - (1) Overview of Operating Results, etc. - ii) Cash Flows.
(Cash flow indicators)
Previous consolidated fiscal year
(As of March 31, 2023)

Current consolidated fiscal year
(As of March 31, 2024)

Equity ratio (%)

69.5

67.2

Equity ratio on a mark-to-market basis (%)

61.3

54.8

Ratio of interest-bearing liabilities to cash flows(Years)3.0

3.4

Interest coverage ratio (Times)

23.2

15.6

Note: Equity ratio: Total shareholders’ equity / Total assets
Equity ratio on a mark-to-market basis: Total market capitalization / Total assets
Ratio of interest-bearing liabilities to cash flows: Interest-bearing liabilities / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest paid
1. All indicators above are calculated on the basis of the consolidated financial results.
2. Total market capitalization is calculated by multiplying the number of shares issued and outstanding at the end of theperiod (excluding treasury shares) by the closing price per share at the end of the period.
3. Interest-bearing liabilities represent all those liabilities (stated in the consolidated balance sheets) on which interest ispaid.
4. For operating cash flows, the amount of “Net cash provided by (used in) operating activities” stated in the consolidated
statements of cash flows is used. For the interest paid, the amount of “Interest expenses paid” stated in the consolidated
statements of cash flows is used.
1) Financial resources for capital and liquidity of funds

Our Group makes it our basic policy to stably secure the liquidity of funds and the resources of capital required forbusiness operations. Though we basically use our own capital for short-term working capital, we hold a contract for
overdraft agreements with main financing banks so as to procure temporary working capital efficiently in time ofinsufficiency. Regarding the capital relating to capital formation such as business investments, we basically procure
our own capital and long-term borrowings from financial institutions in view of financing cost and risk
diversification. Additionally, for the purpose of efficient fund management, reducing of financial risk and saving ofinterest expenses, our Group started “Group Finance”.
2) Objective Indicators etc. for Judgement on the Status of Achievement of Management Policy, Management
Strategies and Managerial goals
Our Group’s managerial and financial goals are described in II. Status of Business 1. Management Policy,
Management Environment and Tasks to be Addressed.

- 21 -

iii) Significant Accounting Estimates and Assumptions Used in Making Such Estimates
The consolidated financial statements of our Group are made based upon the corporate accounting standards
which are generally accepted in Japan. In preparing these consolidated financial statements, the management
are required to estimate for accounting. With respect to such estimates, the management comprehensively
considers and reasonably judges past results, present circumstances, etc.; nevertheless, actual results may
become different from the said estimates due to uncertainty peculiar to estimating.
The critical accounting policies adopted for the preparation of financial statements are described in “Important
Matters Underlying Preparation of Consolidated Financial Statements” of “V. Status of Accounting: 1.
Consolidated Financial Statements, etc. (1) Consolidated Financial Statements Notes”, among which thefollowing critical accounting policies are considered to have a profound effect on the important judging andestimating in course of preparing consolidated financial statements.
1) Allowance for doubtful accounts
In our Group, as a reserve for potential loan losses, an estimated uncollectible amount is recorded based on
the historical loan-loss ratio in the case of general accounts receivable, and in light of the collectability ineach instance in the case of some specific accounts receivable, e.g. doubtful receivables. When a financial
condition of customers gets worse and their solvency declines, an additional allowance may need recording.
2) Assessment of recoverability of deferred tax assets
When applying tax effect accounting, our Group reasonably estimates recoverability of deferred tax assets
and records such assets after deduction of valuation allowance. Recoverability of deferred tax assets depends
on the possibility of future untaxable depreciation of taxable items and on the future taxable income estimatedon the basis of future profitability; therefore, if such estimated amount varies, a profit may fluctuate due toreversal or additional recording of the deferred tax assets.
3) Impairment of securities and investment securities
Our Group holds securities and investment securities; we use, as valuation methods, the market method on
securities other than stocks and others without a quoted market price and use the cost method on securities
without a quoted market price. We conduct treatments for impairment on our owned securities according toreasonable standards, because we bear the risk of price fluctuation in the stock market (if such securities havea quoted market price) and investees' business results etc. may worsen (if such securities have no quoted
market price).
Our Group has conducted necessary treatments for impairment on securities and investment securities.
Additionally, if any loss which is not reflected on the current book value occurs or any book value becomes
uncollectible due to deteriorating market conditions, worsening business results of investees, etc. in the future,
further treatments for impairment may be required according to the said standards.
4) Impairment of non-current assets
Our Group applies Accounting Standard for Impairment of Fixed Assets, and is grouping non-current assets
on the basis of business unit which generates cash flow independently. When the recoverable amount of anasset group falls below book amount, such different amount is perceived as impairment losses. When therecoverable amount of an asset group further goes down in the future, further recording of impairment losses
may be required.
This application shows impairment losses of 15,524 thousand yen as extraordinary losses in manufacturing
facilities of the submitting company in the current consolidated fiscal year.
5) Valuation of inventories
Our Group reduces the book value of inventories when their net selling price falls below its book value. In
addition, when inventories are recognized to be slow-moving more than a certain period of time, we assume
that their realizability of sales is declining and promptly amortize them with a book value reduction method
on a regular basis, depending on the elapse of the time. Furthermore, we individually reduce their book value
when sales are recognized to be difficult. The net selling price may have a serious impact on loss on valuationof inventories depending on future changes of market environment and differences in sales forecasts because
it is evaluated based on sales results, etc.

- 22 -

5. Agreements with Managerial Implications, etc.
No applicable matter.

6. Research and Development Activities
Major research and development activities of our Group are conducted by the Submitting Company as well as
ThinFlex Corporation, Satosen Co., Ltd. Protec Arisawa Europe, S.A., Protec Arisawa America, Inc. and ColorLink
Japan, Ltd., consolidated subsidiaries of the Submitting Company, and these companies are also disseminating
technologies to other consolidated subsidiaries.
As a technology-oriented corporate group, we adopt a flexible organization as a basis for our research anddevelopment activities in order to match the increasingly diversified and sophisticated needs of the users. Centeringon our core business fields, i.e. the electronic materials field, the industrial structural materials field, the electricalinsulating material field and the display materials field, we vigorously pursue research and development of newtechnologies and new products, aiming at launching new products to the market, nurturing of next generation products,
forward-looking promotion of technologies and expansion of fundamental technologies.
Examples of electronic materials include materials for FPCs (flexible printed circuit boards), glass cloth for printed
circuit boards and prepregs for special printed circuit boards, etc. Examples of industrial structural materials include
in-car materials, materials for use in water treatment equipment, materials for aircraft interiors. Examples of electricalinsulating materials include prepregs for use in electrical insulating and various molded products, etc. Examples ofdisplay materials include 3D-filters, optical molded products, etc.
As of the end of the current consolidated fiscal year, we had 172 employees involved in research and development
activities, and our total research and development expenses incurred in the current consolidated fiscal year amounted
to 2,033 million yen.
Research and development achievements and the amount of research and development expenses incurred with respect
to each field during the current consolidated fiscal year are as follows.
(1) Electronic Materials Field- Materials for mobile phones
Smartphones that can be compactly folded, or foldable smartphones, are increasingly growing in popularity. FPCs areused for circuit boards of foldable parts and they require bending resistance that does not cause disconnection even if
they are repeatedly folded hundreds of thousands times. For this requirement, we have developed adhesives withexcellent bending resistance by using our own compounding technique and completed materials with excellent bending
resistance for FPCs by combining the adhesives with most suitable film and copper foil. They have passed reliability
test by our customers and been adopted for the latest model of foldable smartphones, and are expected for future
expansion of sales. In addition, we are conducting diligent research to further improve bending resistance.
- Materials for automobiles
Also in automobiles that are heading in the direction of EV, the adoption of FPC materials is also being considered forthe purpose of weight reduction and downsizing of electronic materials. FPCs for automobiles require materials withexcellent heat resistance whose property does not deteriorate even when exposed to high temperatures for a long time.
For this requirement, we have developed polymer resin with high heat resistance by using our polymerization techniqueand realized 200°C resistance, which is an industry-leading heat resisting temperature. Its evaluation by our customers
is underway.
- Operation of an experimental small coating machine started
An experimental small coating machine started operating from August 2023. We are utilizing it effectively for thedevelopment of our products and reducing development time. Moreover, we have promoted the machine to many of ourcustomers in order to make effective use of it as a way to promote open innovation. This has resulted in starting joint
development projects with multiple customers.
Research and development expenses incurred with respect to electronic materials amounted to 1,212 million yen.

- 23 -

(2) Industrial Application Structural Materials Field and Electrical Insulating Materials Field- Water treatment FRP pressure vessels
Our FRP pressure vessels have advantages such as corrosion resistance, pressure resistance and lightness, and are widelyused for water treatment to desalinize seawater. In addition, we are continuing the development of them for Zero Liquid
Discharge (ZLD) system that minimizes general waste water and industrial liquid waste for environmental protection.
The Company and our consolidated subsidiaries, Protec Arisawa Europe, S.A. and Protec Arisawa America, Inc., havejointly completed 1,800psi high pressure vessels, which are industry-leading level, by using our own winding technology.
We have obtained the certification for the vessels of the American Society of Mechanical Engineers (ASME), and havestarted to provide the samples to our customers for ZLD. We are also promoting efforts so that they are adopted in asystem producing ultrapure water essential in the field of semiconductor production for which demands are growing asa digital society develops rapidly.
- Materials for Water Electrolysis Hydrogen Generator
As hydrogen is increasingly gaining attention as a next-generation energy in recent years, components called subgaskets
are required, which can be applied to water electrolysis hydrogen generators that electrolyze water to generate hydrogen.
The subgaskets needs to be precisely laminated to catalyst coated membrane (CCM) in order to prevent the leakage ofhydrogen and oxygen gas that are generated from the electrolysis of water. Accordingly, we have developed perfectmaterials for subgaskets by using our own compounding technique and precision lamination technology. The quality ofthe product, which does not peel off or leak gas even when exposed to water for a long period of time, has beenrecognized, and it has been adopted by our customers for verification test equipments for large-scale plants. We willcontinue to develop materials for clean energy by utilizing our core technologies.
Research and development expenses incurred with respect to composite materials amounted to 543 million yen.
(3) Display Materials Field- Medical 3D display materials
The 3D displays incorporating the Company’s “Xpol®” have achieved high image quality with 4K resolution throughoptimum design and high-precision processing technology corresponding to customer's use environment, and have been
increasingly adopted in the medical field. In addition to the 32-inch displays which are the mainstream for endoscopic
surgery, we have developed and started mass production of over 40-inch class displays that meet the demands for larger
sizes. Furthermore, we have begun designing 3D displays for robotic surgery, which is expected to become the next
generation medical treatment, in anticipation of diversification of surgical methods that accompany the spread of highspeed communication networks.
We are also considering the development of 3D remote control monitors for construction sites and aerial photography,
aiming at expanding applications beyond the medical field.
Research and development expenses incurred with respect to display materials amounted to 228 million yen.

- 24 -

III. Status of Facilities
1. Outline of Capital Investment
Our Group concentrates its capital investment in the expansive and growing fields in order to keep pace with therapid technological innovation and the tough sales competition and made capital expenditures totaling 3,449 million
yen in the current consolidated fiscal year.
The principal component of our capital investment in the current consolidated fiscal year was 2,567 million yen for
production equipment related to electronic materials centering on materials for flexible printed circuit boards.
In this regard, no retirement or sale, etc. of facilities or equipment that may significantly affect our Group’s production
capacity was conducted in the current consolidated fiscal year.

2. Status of Major Facilities(1) Submitting Company
As of March 31, 2024
Book value
Name ofbusiness place(Location)

Segment nameNature of facilities

Electronic materials
manufacturing facilities,
Electronic materials,
Industrial application
Minami-honcho Industrial application
structural materials
Factory
structural materials,
manufacturing facilities,(Joetsu-shi,
Electrical insulating
Electrical insulating
Niigata)materials,
materials manufacturing
facilities,

Nakadahara
Factory(Joetsu-shi,
Niigata)NakadaharaNishi Factory(Joetsu-shi,
Niigata)Electronic materials
manufacturing facilities,
Electronic materials, Industrial application
Industrial application structural materials
structural materials,
manufacturing facilities,
Electrical insulating Electrical insulating
materials,
materials manufacturing
Display materials
facilities,
Display materials
manufacturing facilities
Electronic materials
Electronic materials, manufacturing facilities,
Industrial application Industrial application
structural materials, structural materials,
Display materials
Display materials
manufacturing facilities

Buildings Machinery,Land
LeasedNumber ofandequipment
Other
Total
(Thousands assets
structures and vehicles(Thousands (Thousands employeesof yen) (Thousands(Thousands (Thousandsof yen)of yen)(Area m2)of yen)of yen)of yen)381,132

91,93755,095(18,204)

12,2649,711

550,14259(2)2,162,057

1,040,908

290,654(114,051)

190,839

1,481,666

5,166,126

397
(56)

193,109400,178

427,404(41,348)9,484

10,313

1,040,491

72(13)

Joetsu Head
Office(Joetsu-shi,
Niigata)

Head office(Common)

Other facilities

580,854

10,621

103,107(22,373)－

47,356

741,939

39(16)

Tokyo Head
Office(Taito-ku,
Tokyo)

Electronic materials,
Industrial application
structural materials,
Electrical insulating
materials,
Other facilities
Display materials,
Other,
Head office(Common)

127,096

3,123

335,039(616)－

19,027484,28839(2)- 25 -

(2) Domestic Subsidiaries
As of March 31, 2024
Book value
Company
nameName ofbusiness
place(Location)

Segment nameNature of facilities

SatosenCo., Ltd.

--(Osaka-shi,
Osaka)

Electronicmaterials,

Electronicmaterials
manufacturing--(Joetsu-shi,
Niigata)Electronicmaterials,
Electricalinsulating
materials

Arisawa
Sogyo Co.,
Ltd.

--(Joetsu-shi,
Niigata)

Industrial
application
structural
materials,
Electricalinsulating
materials,
Other

Arisawa
Jushi
Kogyo
Co., Ltd.

--(Kawaguchi-shi,
Saitama)Electricalinsulating
materials

ColorLink
Japan, Ltd.

--(Joetsu-shi,
Niigata)

Arisawa
Fiber
Glass Co.,Ltd.

Displaymaterials

Electronicmaterials
manufacturing
facilities,
Electricalinsulating
materials
manufacturing
facilities
Industrial
application
structural
materials
manufacturing
facilities,
Electricalinsulating
materials
manufacturing
facilities
Electricalinsulating
materials
manufacturing
facilities
Display materials
manufacturing
facilities

Machinery,
Buildings
equipment
Land
LeasedNumber of
and
Other
Total
and
(Thousands
assetsstructures(Thousands (Thousands employees
vehiclesof yen) (Thousands(Thousandsof yen)of yen)(Thousands (Area m2)of yen)of yen)of yen)120,951

64,472291,900(4,373)－

4,639

481,96296(71)

388,814515,419

126,741(37,612)28,982

15,782

1,075,740

88(12)

526,496

118,872

264,286(49,779)－

10,887920,54398(41)

44,132

25,682

31,561(2,407)－

3,897

105,27414(1)

80,96873,09972,193(6,984)－

58,143

284,40585(15)(3) Overseas Subsidiaries
As of March 31, 2024
Book value
Company
nameName ofbusiness
place(Location)

Segment nameThinFlex
Corporation--(KaohsiungCounty,Taiwan)Electronicmaterials

Electronicmaterials
manufacturing
facilities

1,214,984

1,247,299－

401,912(See Note
4)314,997

3,179,193

200(－)

TopFlex
Corporation--(Kunshan
City,
P.R. China)

Electronicmaterials

Electronicmaterials
manufacturing
facilities

268,359

485,744－

46,182(See Note
4)2,269,840

3,070,127131(－)

ProtecArisawa
Europe,S.A.

--(Munguia,
Spain)

Industrial
application
structural
materials

266,580426,275

37,393(8,891)－

12,906743,155

89(21)

ProtecArisawa
America,
Inc.

--(Vista, CA,
U.S.A.)

Industrial
application
structural
materials

16,95986,013－－

15,581

118,553

61
(4)

Note:

1.

Buildings Machinery,Land
LeasedNumber ofandequipment
Other
Total
Nature of facilities(Thousands
assetsstructures and vehicles(Thousands (Thousands employeesof yen) (Thousands(Thousands (Thousandsof yen)of yen)2(Area m )of yen)of yen)of yen)Industrial
application
structural
materials
manufacturing
facilities
Industrial
application
structural
materials
manufacturing
facilities

Among the columns under “Book value”, “Other” indicates the total of tools, furniture and fixtures and construction in progress.

- 26 -

2.
3.
4.
5.

Major facilities leased out by the Submitting Company to its domestic subsidiaries are included in the facilities of the pertinentsubsidiaries respectively.
Facilities and employees in Kansai office are included in Satosen Co., Ltd.
The land-use rights, 303,704 thousand yen (39,265m²) and 46,182 thousand yen (30,136m²), are included in the leased assets of ThinFlex
Corporation and TopFlex Corporation.
The parenthesized figures in the column “Number of employees” indicate the number of temporary employees not included in thepertinent total.

3. Plans for Installation and Retirement, etc. of Facilities(1) Installation, etc. of Material Facilities
There is no plan for installation, etc. of material facilities.

(2) Retirement, etc. of Material Facilities
There is no plan for retirement, etc. of material facilities.

- 27 -

IV. Status of the Submitting Company
1. Status of Shares, etc.
(1) Total Number of Shares, etc.
1) Total number of shares
Class

Total number of shares authorized to be issued

Common stock

130,000,000

Total

130,000,000

2) Shares issued and outstandingClass

Number of shares issued andoutstanding as of the end of
the business year
(As of March 31, 2024)

Number of shares issued andoutstanding as of the filingdate of the Financial Report(As of June 28, 2024)

Name of financial instruments
exchange where the shares arelisted or authorized financial
instruments firms association
where the shares are registered

Remarks

Common stock

33,566,924

33,577,924

Tokyo Stock Exchange
Prime Market

Number ofsharesconstituting
one full unit:
100

Total

33,566,924

33,577,924

---

---

Note:

1.

The number of shares issued through the exercise of stock acquisition rights in the period from June 1, 2024 to the filingdate of this Financial Report is not included in the column “Number of shares issued and outstanding as of the filing dateof the Financial Report”.
2. The Company disposed of 41,477 shares of treasury shares for restricted stock compensation as of July 28, 2023 upon aresolution by the Board of Directors on June 29, 2023.
3. 105,967 shares out of shares issued and outstanding as of the filing date of this Quarterly Report are by contribution inkind (108,995 thousand yen of monetary compensation claims) when treasury shares were disposed of for restricted stockcompensation.

- 28 -

(2) Status of Stock Acquisition Rights, etc.
1) Details of Stock Option Scheme
Stock acquisition rights issued under the Companies Act were as follows.
Date of resolution

June 27, 20194 directors of the Company,
4 directors of the Company,
208 employees of the Company, 147 employees of the Company,
and 14 directors and employees and 13 directors and employeesof subsidiaries of the Companyof subsidiaries of the Company

Category and number of persons to whom stockacquisition rights shall be granted
Number of stock acquisition rights (Units)

1,056〔876〕

566〔496〕

Common stock 105,600〔87,600〕

Common stock 56,600〔49,600〕*

Class, contents and number of shares subject to stockacquisition rights
Amount to be paid per share at the time of exercising eachstock acquisition right (Yen) *Exercise period for stock acquisition rights

June 25, 2020

922

890 (See Note 1)(See Note 1)

July 1, 2021 throughJune 30, 2024*

Issuance price and amount credited to equity capital in theevent of share issuance through the exercise of stockacquisition rights (Yen) *Issuance price

Conditions for the exercise of stock acquisition rights(See Note 2)*2

July 1, 2022 throughJune 30, 2025

1,090 Issuance price

1,061

Amount credited to equity capital Amount credited to equity capital

545

530.5

Matters concerning the transfer of stock acquisition rights

Any transfer of stock acquisition rights shall be subject to theapproval of the Board of Directors.

Matters concerning the grant of stock acquisition rights inconnection with acts of reorganization(See Note 3)* The contents are described as of the end of the current business year (March 31, 2024). With respect to the items whichchanged during the period from the end of the current business year to the end of the month previous to the filing (May 31,2024), the contents thereof are described in [ ] as of the end of the month previous to the filing. No other contents changed
from the end of the current business year.
Note 1. If the Company conducts a stock split or a reverse stock split after the issuance of stock acquisition rights, the paid-in amountshall be adjusted in accordance with the following calculation formula, and any fraction less than 1 yen arising from suchadjustment shall be rounded up to the nearest integer value.
Paid-in amount after adjustment= Paid-in amount before adjustment ×

1
Ratio of stock split and reverse stock split

If the Company issues new shares (except in the case of the issuance of new shares through the exercise of stock options) or
disposes of shares of treasury shares at a price less than the current market price of the Company’s common stock, the paid-in
amount shall be adjusted in accordance with the following calculation formula, and any fraction less than 1 yen arising fromsuch adjustment shall be rounded up to the nearest integer value.
Number of shares issued &outstanding

Paid-in amount after adjustment = Paid-in amount before adjustment ×+

Number of new shares being issued × Paid-in
amount per share
Current market price per share

Number of shares issued & outstanding + Number of new shares being issued

If the Company disposes of shares of treasury shares, the “Number of new shares being issued” shall instead be read as the“Number of shares of treasury shares being disposed of”.
2.Being a director, an advisor or an employee of the Company or a director, an advisor or an employee of a subsidiary of theCompany at the time of exercising the rights. But as for the resolution of June 25, 2020, being a director or an employee of
the Company or a director or an employee of a subsidiary of the Company.
3. In the event that a merger agreement in which the Company becomes a defunct company has been approved, or that a proposal
for approval of a stock swap agreement (or for a transfer of shares) in which the Company becomes a wholly owned subsidiaryhas been approved at a general meeting of shareholders, except where the surviving company or the Company’s wholly owningparent company succeeds to the obligation to grant stock acquisition rights, the Company shall be able to acquire the stockacquisition rights without consideration.

- 29 -

2) Details of Rights Plan
No applicable matter.
3) Status of Other Stock Acquisition Right
No applicable matter.

(3) Status of Exercise of Moving Strike Convertible Bonds, etc.
No applicable matter.

- 30 -

(4) Changes in the Number of Shares Issued and Outstanding, Share Capital, etc.
PeriodNumber of shares issued andoutstanding
ChangeBalance

Share capital(Thousands of yen)
ChangeBalance

Legal capital surplus(Thousands of yen)
ChangeBalance

From April 1, 2019
to March 31, 2020
(See Note 1)

155,300

36,381,524

52,3337,594,026

52,402

6,706,017

From April 1, 2020
to November 30, 2020
(See Note 1)

24,90036,406,424

8,595

7,602,621

8,595

6,714,612

November 30, 2020
(See Note 2)△2,000,000

34,406,424－

7,602,621－

6,714,612

From December 1,
2020
to March 31, 2021
(See Note 1)

64,10034,470,524

21,017

7,623,638

21,017

6,735,630

From April 1, 2021
to August 31, 2021
(See Note 1)

19,80034,490,324

6,276

7,629,915

6,276

6,741,906

August 31, 2021
(See Note 2)△900,000

33,590,324－

7,629,915－

6,741,906

From September 1,
2021
to March 31, 2022
(See Note 1)

24,50033,614,824

13,862

7,643,777

13,862

6,755,769

From April 1, 2022
to January 31, 2023
(See Note 1)

207,600

33,822,424

120,124

7,763,902

120,124

6,875,894

January 31, 2023
(See Note 2)△424,400

33,398,024－

7,763,902－

6,875,894

143,100

33,541,124

83,9707,847,873

83,9706,959,865

From January 1, 2023
to March 31, 2023
(See Note 1)

From April 1, 2023
to March 31, 2024
25,80033,566,924
14,162
7,862,036
14,162
6,974,027(See Note 1)
Note 1. The increases are due to the exercise of stock acquisition rights.
2. This is due to the retirement of treasury shares.
3. In the period from April 1, 2024 to May 31, 2024, the number of shares issued and outstanding increased by 11,000 shares,
and the amount of share capital and that of legal capital surplus increased by 5,995 thousand yen respectively, all throughthe exercise of stock acquisition rights.

- 31 -

(5) Status of Shareholder Categories
Status of Shares (Number of shares constituting one full unit: 100)
Category

Number ofshareholders

Governments
Financialand local
institutions
governments－

19

Financial
Foreign corporations, etc.
instruments
Otherbusiness corporations Other than
Individuals
operators
individuals

30

143

90

61

Individuals
and others

18,206

As of March 31, 2024
Status ofsharesconstituting
less thanTotal
one full
unit
18,549－Number ofshares held
(Units－89,196
6,676
24,49871,277309
142,812 334,768
90,124
except asotherwise
noted)
Ratio of thenumber of
－
－
26.65
1.99
7.32
21.29
0.09
42.66
100.00shares held
(%)
Note:
1. Out of 330,933 shares of treasury shares, 3,309 units are included in the column “Individuals and others”, and 33 sharesare included in the column “Status of shares constituting less than one full unit”. 82,300 shares of the Company which atrust account for employee stock ownership plan holds are not included in the treasury shares.
2. In the columns “Other corporations” and “Status of shares constituting less than one full unit”, shares held in the name ofJapan Securities Depository Center, Inc. are included by 5 units and 19 shares, respectively.

- 32 -

(6) Status of Major Shareholders

Full name or
corporate name

The Master Trust Bank of Japan,
Ltd. (Trust account)

Address

8-1, Akasaka 1-chome,
Minato-ku, Tokyo

Number ofshares held

As of March 31, 2024
Ratio of the numberof shares held to thenumber of sharesissued andoutstanding(excluding treasury
shares) (%)

4,324,500

13.01

INTERTRUST
TRUSTEES(CAYMAN)LIMITEDONE NEXUS WAY, CAMANA BAY GRAND
SOLELY IN ITS CAPACITY AS
CAYMAN KY1-9005, CAYMAN ISLANDS
TRUSTEE OF JAPAN-UP(15-1, Konan 2-chome,(Standing Proxy: Mizuho Bank, Ltd.
Minato-ku, Tokyo)
Settlement & Clearing Services
Department)

3,884,700

11.68

Mitsubishi Gas Chemical Company, 5-2, Marunouchi 2-chome,Inc. (See Note 3)
Chiyoda-ku, Tokyo

1,472,166

4.42

Custody Bank of Japan, Ltd. (Trustaccount)

8-12, Harumi 1-chome,
Chuo-ku, Tokyo

1,353,100

4.07

Daishi Hokuetsu Bank, Ltd.
(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)1071-1, Higashiborimae-dori 7-bancho,
Chuo-ku, Niigata-shi, Niigata(8-1, Akasaka 1-chome,
Minato-ku, Tokyo)

743,903

2.23

The Master Trust Bank of Japan,
Ltd. (Retirement benefit trust
account and Mitsubishi Electric
Corporation account)

8-1, Akasaka 1-chome,
Minato--ku, Tokyo

530,536

1.59

Arisawa Kenko Ltd.

11-44, Nishishiro-cho 3-chome,
Joetsu-shi, Niigata

504,338

1.51

Sanji Arisawa

Shinjuku-ku, Tokyo

451,069

1.35

Nippon Life Insurance Company(Standing Proxy: The Master Trust
Bank of Japan, Ltd.)

6-6, Marunouchi 1-chome,
Chiyoda-ku, Tokyo(8-1, Akasaka 1-chome,
Minato-ku, Tokyo)

388,822

1.16

Yoko Mori

Setagaya-ku, Tokyo

376,024

1.13

14,029,158

42.21

Total

---

Note: 1. The ratio of the number of shares held to the total number of shares issued (except for treasury shares) is displayed with thenumbers truncating the numbers beyond the third decimal point. 82,300 shares of the Company which a trust account for
employee stock ownership plan holds are not included in the treasury shares excluded from the total number of shares issued
and outstanding.
2. The Company holds 330,933 shares of treasury shares, but it is excluded from the above major shareholders.
3. The number of shares held by Mitsubishi Gas Chemical Company, Inc. includes 966,306 shares that have been contributed by
Mitsubishi Gas Chemical Company, Inc. as the trust property of retirement benefit trust. The pertinent name in the Company’s
register of shareholders is “The Master Trust Bank of Japan, Ltd. (Retirement benefit trust account and Mitsubishi Gas
Chemical Company, Inc. account).”- 33 -

4. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of October 2, 2020
that Nippon Value Investors KK holds the shares described below as of September 30, 2020, the Company has confirmed nobeneficial ownerships of the number of shares as of March 31, 2024. Therefore, such number of shares is not included in abovementioned Status of Major Shareholders. Details of the Change Report of the Report on Bulk Holding are as follows:
Bulk Holders
Address: Nippon Value Investors KK: 1-8-1 Marunouchi, Chiyoda-ku, Tokyo

Number of shareholdings etc.
: 1,421,500
Holding ratio of share certificates etc. : 3.91
5. Though it is described in the Change Report of the Report on Bulk Holding available for public inspection as of February 13,2024 that Strategic Capital, Inc. holds the shares described below as of February 5, 2024, the Company has confirmed nobeneficial ownerships of the number of shares as of March 31, 2024. Therefore, such number of shares is not included in abovementioned Status of Major Shareholders. Details of the Change Report of the Report on Bulk Holding are as follows:
Bulk Holders
Address: Strategic Capital, Inc.
: 3-14-15, Higashi, Shibuya-ku, Tokyo

Number of shareholdings etc.
: 4,220,800
Holding ratio of share certificates etc. : 12.58
The Company has confirmed the change of major shareholders in the Change Report of the Report on Bulk Holding as of October
4, 2023, so we submitted the Extraordinary Report (change of major shareholders) as of October 10, 2023.

- 34 -

(7) Status of Voting Rights
1) Shares issued and outstanding
As of March 31, 2024
Number of shares

Number of voting rights(Units)Remarks

Shares without voting rights

---

---

---

Shares with restricted voting rights(Treasury shares, etc.)

---

---

---

Shares with restricted voting rights(Other)

---

---

---

---

---

Category

Shares with full voting rights (Treasury
shares, etc.)

Common stock

Shares with full voting rights (Other)(See Note 1 and Note 2)

Common stock 33,145,900

331,459---

Shares constituting less than one full unit
(See Note 3)

Common stock

90,124------33,566,924

---

---

331,459---

Number of shares issued and outstanding
Total number of voting rights held byshareholders

330,900---

Note: 1. 500 shares held in the name of Japan Securities Depository Center, Inc. are included in the row “Shares with full voting rights(Other)”. 5 units of voting rights pertaining to shares with full voting rights held in the name of Japan Securities Depository
Center, Inc. are included in the column “Number of voting rights”.
2. 82,300 shares of the Company which a trust account for employee stock ownership plan holds are included in the row “Shareswith full voting rights (Other)”. 823 units of voting rights for shares with full voting rights of such trust account are includedin the column “Number of voting rights”.
3. 33 shares of treasury shares are included in the row "Shares constituting less than one full unit".

2) Treasury shares, etc.
As of March 31, 2024
Name and address of shareholder

Number of shares held
Under thenames ofothersRatio of the number ofshares held to thenumber of sharesissued and outstanding(%)

Full name or
corporate name

Address

Arisawa Mfg. Co., Ltd.

5-5, Minami-honcho 1chome, Joetsu-shi,
Niigata

330,900---

330,900

0.98---

330,900---

330,900

0.98

Total

Under own
name

Total

Note: 82,300 shares of the Company which a trust account for employee stock ownership plan holds are not included in thecolumn “Under own name”.

(8) Director and Employee Stock Ownership Plan
(Remuneration plan for granting restricted stock to Directors)
1) Outline of the system
At the Board of Directors’ Meeting held on May 27, 2021, the Company revised the remuneration system for theCompany’s Directors except Outside Directors (hereinafter referred to as “eligible Directors”), passed a resolution
to introduce the restricted stock compensation system (hereinafter referred to as “this system”), which was approved
and passed at the 73rd Ordinary General Meeting of Shareholders held on June 25, 2021. The purpose of the system
is to provide incentive to eligible Directors to sustainably increase corporate value of the Company and promotefurther sharing of value with its shareholders.
2) Total number of restricted stock, etc. issued or disposed of to eligible Directors
Given the above purpose, the aggregate amount of remuneration provided to eligible Directors to grant restricted
stock shall be no more than 50 million per year as an amount considered to be reasonable. The total number ofcommon shares that the Company issues or disposes of shall be no more than 50,000 shares per year (however, if a

- 35 -

share split (including gratis allotment of the Company’s common shares) or share consolidation of the Company’scommon shares is performed effective on any date after the date of a resolution at the 73rd Ordinary General Meetingof Shareholders held on June 25, 2021, the total number shall be adjusted within a reasonable range as necessary
depending on a ratio of split and consolidation after such effective date).
Eligible Directors shall pay all monetary claims provided from the Company based on this system as contributed
properties in kind and receive issuance or disposal of the Company’s common shares.
The payment amount per share shall be determined by the Board of Directors based on the closing price of theCompany’s common shares on the Tokyo Stock Exchange on the business day preceding to the day of eachresolution of the Board of Directors (if no transaction is made on that day, the closing price on the trading day
immediately before that day) within the scope that is not particularly favorable to an eligible Director who receives
the common shares. The specific timing of provision and allocation to each eligible Director shall be determined by
the Board of Directors following consultations with the Assignment and Remuneration Advisory Committee.
3) Scope of persons eligible for beneficiary and other rights in this system
Directors of the Company (excluding Outside Directors)(Employee Stock Ownership Plan)
1) Outline of the system
At the Board of Directors’ Meeting held on July 29, 2021, it was resolved to introduce an employee incentive plan
(Employee Stock Ownership Plan) with the aim to increase corporate value of the Company in the mid- to longterm by expanding benefits to the employees of the Company (“employees”), developing their sense of belonging,
giving a sense of participation in management to them, and raising awareness of the business results and rising sharevalue of the Company.
The plan is an incentive plan which, with funds the Company contributes, sets up a trust (“Trust”) that acquires theCompany’s common stock (“the Company’s Stock”) and which issues the Company’s Stock based on points
awarded to employees who satisfy certain requirements. Such points are awarded in accordance with employees’
positions, etc. under the stock benefit regulations set forth by the Board of Directors, and the number of theCompany’s stock issued to each employee is determined depending on the number of the points awarded.
There is no employees' burden because the Company contributes all the funds to acquire the Company’s Stock under
the Trust.
The introduction of the plan can be expected to encourage the job performance of employees who are aware of sharevalue and increase their will to work because it allows employees to enjoy the economic benefits from the rising
share value of the Company’s Stock.
2) Shares of the Company remaining in the Trust
The shares of the Company remaining in the Trust are shown at their book value in the Trust as treasury stock in
the “Net Assets” section of the consolidated balance sheets, and the book value and number of such shares are as
follows.
Book value
Previous consolidated fiscal year 81,016 thousand yen
Current consolidated fiscal year 76,551 thousand yen
Number of shares Previous consolidated fiscal year 87,100 shares
Current consolidated fiscal year 82,300 shares
3) Scope of persons eligible for beneficial interests and other rights under the system
The Company’s employees who satisfy requirements as beneficiaries- 36 -

2. Status of Acquisition of Treasury Shares, etc.
[Classes of Stock, etc.]
Acquisition of common stock under the provisions of Article 155, item 7 of the Companies Act.

(1) Status of Acquisition by Resolution of a General Meeting of Shareholders
No applicable matter.

(2) Status of Acquisition by Resolution of the Board of Directors
No applicable matter.

(3) Details of Acquisition not Authorized by Resolution of a General Meeting of Shareholders or Resolutionof the Board of Directors
Acquisition under the provisions of Article 155, item 7 of the Companies Act
Category

Number of shares

Total amount (Yen)Treasury shares acquired during the current business year231

269,378

Treasury shares acquired during the current period

88

125,970

Note: The row “Treasury shares acquired during the current period” does not include the shares acquired through the purchase ofshares constituting less than one full unit in the period from June 1, 2024 to the filing date of this Financial Report.

(4) Status of Disposal and Holding of Acquired Treasury Shares
Current Business Year
Category

Numberof shares

Current Period

Total disposal amount(Yen)

Numberof shares

Total disposal
amount (Yen)

Acquired treasury shares offered for subscription

---

---

---

---

Acquired treasury shares disposed of throughretirement

---

---

---

---

---

---

---

---

41,47745,997,993

---

---

330,933---

331,021---

Acquired treasury shares transferred in relation tomerger, share exchange and company split
Other (Disposal of treasury shares by restricted
stock-based compensation)
Number of shares of treasury shares held
Note:

1. The “Number of shares of treasury shares held” in the “Current Period” does not include the shares acquired through thepurchase of shares constituting less than one full unit in the period from June 1, 2024 to the filing date of this Financial
Report.
2. Shares which a trust account for employee stock ownership plan holds are not included in the number of disposed treasury
shares and the row “Number of shares of treasury shares held”.

- 37 -

3. Dividend Policy
The Company will proactively return its funds earned during the period to shareholders as well as invest them inthe maintenance and expansion of its revenue base for existing businesses and the development of new use
applications. Specifically, the Company makes it a basic policy a total return ratio of 80% or more for performancelinked dividend in the medium term business plan (FY2020-FY2024) and will respond flexibly to an acquisition oftreasury shares in total consideration of demand of funds, financial conditions, etc.
In addition, the Company has a basic policy of distributing dividends from surplus semiannually, i.e. through interim
and year-end dividend payments.
Decisions with respect to dividends from surplus are made at a general meeting of shareholders for the year-end
dividend and by the Board of Directors for the interim dividend.
As for the annual dividend for the current business year, the Company decided to pay 60 yen per share (including ainterim dividend of 20 yen) based on the said policy. As a result, the dividend payout ratio for the current
consolidated fiscal year was 121.2%.
The Company has decided, at a meeting of the Board of Directors held on April 10, 2024, to change our basic policy
on shareholder return policy, in which the greater of either “dividend on equity (DOE) ratio of 6%”, which is astability-oriented dividend, or “total return ratio 80% or more”, which is a profit distribution-oriented dividend, will
be returned to shareholders. The Company will introduce the dividend policy from the next business year, which isthe fiscal year ending March 31, 2025.
The dividend policy will be applied when an equity ratio of around 50% is achieved.
The distribution of dividends from surplus for the current business year is as follows.

Date of resolution

Total amount of dividends(Thousands of yen)

Dividend per share(Yen)

Resolution of the Board of Directors ofAugust 3, 2023

664,390

20.00

Resolution at the Ordinary General Meetingof Shareholders of June 27, 2024

1,329,439

40.00- 38 -

4. Status of Corporate Governance, etc.
(1) Outline of Corporate Governance1) Basic Concept of Corporate Governance
The Company has a corporate governance system in place to increase corporate value through sustainablegrowth and to maintain social credibility and is also making efforts to secure efficient and equitable
management and to enhance management transparency through proactive disclosure.
In terms of management efficiency, to ensure collection of highly accurate information and expeditious
decision making and executions, we aim at management by a selected few and restrict the number of Directors
to the requisite minimum. In this context, we employ the Operating Officer system to ensure speedy executionof operations under the decisions of the Board of Directors, where the Outside Directors and Outside
Corporate Auditors also attend.
In terms of equitable management, in line with the basic policy concerning improvement of the internal
control system, we improve organizations and systems for the purpose of ensuring legal compliance. In orderto enhance transparency, we promote communication with our shareholders and general investors through IR
activities, etc. and conduct disclosure practices in as active and timely a manner as possible.
2) Outline of Corporate Governance System

As for execution of operations, to ensure speedy execution and control of the management policy andmanagement plans determined at the regular or extraordinary meetings of the Board of Directors, an eleven(11)-member Board of Operating Officers (comprising one (1) Chief Executive Officer and ten (10)Operating Officers) is in place in pursuit of management proactively and accurately.
Each Operating Officer plans and promotes operations under his or her supervision upon approval at theBoard of Directors or extraordinary meetings of the Board of Directors as well as the regular meeting ofManagement Conference or the Board of Operating Officers and strives for efficient and speedy executionof their duties pursuant to the Regulations for the Segregation of Duties and Official Authority, etc.
3) Reasons for Adopting Corporate Governance System

As a company employing the Board of Corporate Auditors system, we hold the meeting of the Board of
Corporate Auditors regular pursuant to the Regulations for the Board of Corporate Auditors. The Corporate
Auditors attend meetings of the Board of Directors, and the Full-time Corporate Auditor attends meetings ofthe Board of Operating Officers, etc. The Corporate Auditors also offer appropriate proposals and advice as
to execution of Directors’ duties and the status of improvement and operation of the internal control system,
etc., thereby exercising strict oversight over the management.
We also appoint, in order to exercise external oversight, two (2) Outside Corporate Auditors and five (5)Outside Directors, each of whom bears a part in management oversight in terms of laws and regulations,finance, accounting and corporate governance respectively from a neutral and objective viewpoint,
contributing to what we believe is a fully functioning corporate governance system.
4) Status of Improvement of Internal Control System and Risk Management System

The Company adopted, by resolution of the Board of Directors, the “Systems to Ensure Proper Operations”
as shown below.
a. System to ensure that execution by Directors and employees of the Company and its subsidiaries of theirrespective duties complies with the applicable laws and regulations and the Articles of Incorporation
The Company and its subsidiaries shall lay down the “Arisawa Group Corporate Action Guidelines”
applicable throughout the Group, set specific internal regulations in line with the said guidelines, andthen observe the said internal regulations, thereby establishing a system which ensures that execution by
Directors and employees of their respective duties complies with the applicable laws and regulations andthe Articles of Incorporation.
b. System concerning storage and management of information on execution of duties of Directors of theCompany
As for the storage and management of information on execution of duties of Directors, internal
regulations for document management shall be set in line with the provisions of the applicable laws andregulations and the Articles of Incorporation to construct a system which ensures proper storage andmanagement of the relevant information.

- 39 -

c. System concerning reporting to the Company of the matters relating to execution of duties of Directors,
etc. of subsidiaries of the Company
Supervision over execution of duties of Directors, etc. of subsidiaries of the Company shall be exercisedthrough having Directors of the Company concurrently serve as Directors of subsidiaries of the Company.
Also, internal regulations for management of associated companies shall be set, establishing a system
which makes it mandatory for subsidiaries of the Company to submit their respective board minutes to
the Company and also to report the relevant material facts to the Company, both along the lines of theprovisions of the said regulations.
d. Regulations and other systems concerning management of risk of loss for the Company and its
subsidiaries
In order to comprehend and manage various risks surrounding the Group and its operations, internal
regulations managing and coping with each risk category shall be set. Observing the said regulations
establishes a system that helps reduce and mitigate business risks.
e. System to ensure efficient execution of duties of Directors of the Company and its subsidiaries
The Group shall improve internal regulations governing the segregation of duties and the scope of job
authorities to definitize each department’s duty assignment and job authorities and shall also introduce
a common accounting management system for the entire Group, etc., thereby establishing a system which
ensures efficient execution of duties of Directors of the Company and its subsidiaries.
f. Matters concerning employees assigned, upon request of Corporate Auditors of the Company, to assist
with duties of Corporate Auditors of the Company, the matters concerning independence of such
employees from Directors of the Company and the system to ensure effectiveness of instructions from
Corporate Auditors of the Company to such employees
Employees to assist with duties of a Corporate Auditor shall be appointed upon request of the Corporate
Auditor and in view of the expertise and experience, etc. required for the audit work. The employees so
appointed as assistant shall execute the relevant duties under the direction of the Corporate Auditor andalso be free from the dictates of any Director of the Company so as to ensure the independence of such
employees from Directors and the effectiveness of instructions from the Corporate Auditor to such
employees.
g. System to mandate reporting to Corporate Auditors of the Company by Directors and employees, etc. of
the Company as well as Directors, Corporate Auditors and employees, etc. of subsidiaries of the Company
and the system to ensure prevention of unfavorable treatment of those who have made such reporting on
account of the pertinent report having been madeInternal regulations stipulating the matters to be reported by Directors and employees, etc. of theCompany to Corporate Auditors shall be set so as to establish a system which mandates immediate
reporting to Corporate Auditors of all material facts with implications on the Group’s management andbusiness results. Also, the internal hotline system prohibiting unfavorable treatment of the whistleblower shall be maintained so that Corporate Auditors can directly receive the relevant reports from
employees, etc.
h. Matters concerning policies on the processing of costs incurred from execution of duties of Corporate
Auditors of the Company
Promptly upon receipt of a request, made by a Corporate Auditor under the provisions of Article 388 of
the Companies Act, for an advance payment, etc. of expenses to be incurred from execution of his or her
duties, the Company shall settle the pertinent expenses or liabilities. Also, if a Corporate Auditor deems
consultations, etc. with lawyers, chartered accountants and other specialists to be necessary for executionof his or her duties, the Company shall bear the amount disbursed for enlisting such consultations, etc.
i. Other systems to ensure execution of effective audits by Corporate Auditors of the Company
Corporate Auditors of the Company shall collect periodic reports from Directors of subsidiaries of theCompany, collect reports from Corporate Auditors of subsidiaries of the Company and also engage inother coordinated actions, as needed, so as to execute proper audits of the Group.

- 40 -

j. System to ensure credibility of financial reporting
To ensure credibility of financial reporting, the Group shall make continuous evaluation of the status of
improvement and operation of the internal control system for financial reporting and also remedy any
defect or flaw found in such system, thereby improving a system which allows the Group’s internal
control to function effectively and properly. In addition, the Group shall enhance a system which allows
the Group’s governance and internal control to function effectively and properly in accounting of our
subsidiaries.
k. System to exclude anti-social forces
The Company and its subsidiaries shall expressly state in the “Arisawa Group Corporate Action
Guidelines” a policy to prevent and preclude any relationship with anti-social forces that pose a threat tothe order and safety of civil society. The Group shall also adopt and maintain a resolute attitude towardanti-social forces in cooperation with law enforcement and other external specialized agencies.
The Group sets forth the guidelines and code of conduct in the Compliance Manual that we shall be resolute inits stance against and sever any relations with anti-social forces which pose a threat to civil society and disturb
economic activities in accordance with the provision of the system to secure proper operation as well as
precludes anti-social forces by preparing an internal reporting system and strengthening its internal audit system
to prevent violation of the provisions in accordance with the internal control system.
The Company’s corporate governance system is abstracted in the following diagram.

General Meeting of Shareholders- 41 -

Board of Directors

Advisory

9 Directors(incl. 5 Outside Directors)

Return

Audit
ReportInternal Audit Department

Board of Corporate Auditors

Appointment, Dismissal,
Directions & Supervision
ReportDirections

ReportPresident andRepresentative Director

Management Conference

Appointment& Dismissal

Board of Operating Officers*
Compliance Committee
ESG Committee, etc.
Operating Officers
Directions &Supervision
Each division, department,
subsidiary, etc.

Accounting
Audit

Accounting Auditors (Ernst & Young ShinNihon LLC)

Appointment& Dismissal

Appointment& Dismissal

Assignment ・ Remuneration
Advisory Committee

Appointment& Dismissal

Internal Audit(Collaboration)*Note:The Board of Operating Officers consists of a total of thirteen (13) Operating Officers(including, but not limited to, the Chief Executive Officer), four (4) of which areconcurrently assumed by the relevant Directors.

5) Maximum Number of Directors
The Company’s Articles of Incorporation stipulate that the number of Directors of the Company shall not be
more than fifteen (15).
6) Requirements for Appointment of Directors
The Company’s Articles of Incorporation stipulate that a resolution on appointing Directors shall be adopted
by a majority vote of the voting rights of the shareholders who are present and also hold at least one-third (1/3)
of all voting rights of the shareholders entitled to exercise voting rights.
It is also stipulated in the said Articles of Incorporation that no cumulative voting shall be allowed for a
resolution on appointing Directors.
7) Summary of the Terms of Contracts for Limitation of Liability
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article 427,
paragraph 1 of the Companies Act, enter into contracts for limitation of liability with its Outside Directors andOutside Corporate Auditors so that the Company can recruit competent persons as Outside Directors andOutside Corporate Auditors and also that the recruited Outside Directors and Outside Corporate Auditors cansoundly fulfill their expected roles. The main purport of such contracts for limitation of liability (entered into
between the Company and the Outside Directors as well as Outside Corporate Auditors under the said
stipulation) is as follows.
The Outside Directors and Outside Corporate Auditors shall, with respect to the liability for damages under- 42 -

Article 423, paragraph 1 of the Companies Act, assume such liability for damages to the extent of the statutory
minimum liability amount as long as they perform their respective duties in good faith without being grossly
negligent.
8) Summary of Contents of Directors and Officers Liability Insurance Policy
The Company has entered into directors and officers liability insurance policy with an insurance company as
set forth in Article 430-3, paragraph (1) of the Companies Act, under which officers (directors and auditors),
operating officers, officers on dispatched outside the Company, and retired officers of the Company anddomestic subsidiaries are all insureds, to prevent Directors, etc. from feeling intimidated in management
decision by being excessively liable. Damage, etc. will be compensated when a Director is held liable due toits performance of duties, but claim for damage arising out of willful misconduct or gross negligence will not
be covered by the insurance policy. In addition, the Company bears the full cost of the premiums.
9) Matters Typically Requiring a Resolution of a General Meeting of Shareholders which may be Resolved by
the Board of Directors
The Company’s Articles of Incorporation stipulate that the Company may resolve on the following matters byvoting at a meeting of the Board of Directors instead of voting at a general meeting of shareholders.
a. Organ to determine acquisition of treasury shares
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
165, paragraph 2 of the Companies Act, acquire shares of treasury shares through market transactions, etc.
upon a resolution of the Board of Directors instead of that of a general meeting of shareholders. This
stipulation aims to enable an agile capital policy by authorizing the Board of Directors to resolve on theacquisition of the Company’s treasury shares.
b. Organ to determine distribution of interim dividends from surplus
The Company’s Articles of Incorporation stipulate that the Company may, under the provisions of Article
454, paragraph 5 of the Companies Act, distribute interim dividends with the record date of September 30 ofevery year upon a resolution of the Board of Directors instead of that of a general meeting of shareholders.
This stipulation aims to expeditiously return profits to the Company’s shareholders by authorizing the Boardof Directors to resolve on the distribution of interim dividends from surplus.
10) Requirements for Special Resolutions of a General Meeting of Shareholders
The Company’s Articles of Incorporation stipulate that, with respect to the requirements for special resolutionsof a general meeting of shareholders provided for in Article 309, paragraph 2 of the Companies Act, a special
resolution shall be adopted by a two-thirds (2/3) majority vote of the voting rights of the shareholders who arepresent and also hold at least one-third (1/3) of all voting rights of the shareholders entitled to exercise voting
rights. This stipulation aims to ensure smooth operation of general meetings of shareholders by relaxing thequorum requirement for special resolutions of a general meeting of shareholders.
11) Activity Status of the Board of Directors and the Assignment and Remuneration Advisory Committeea. Activity status of the Board of Directors
The meetings of the Board of Directors were held eleven times for the current business year, and the attendance
records of each director are as follows.
Name

The Number of Meetings

The Number of Attendances

Yuta Arisawa

Eleven (11) times

Eleven (11) times

DirectorTakeshi Masuda

Eleven (11) times

Eleven (11) times

Director

Yoshihiko Toda

Three (3) times

Three (3) times

Director

Osamu Nakajima

Eleven (11) times

Eleven (11) times

Director

Makoto Tai

Eight (8) times

Eight (8) times

Outside Director

Yutaka Tsukahara

Three (3) times

Three (3) times

Outside Director

Koji Nakamura

Eleven (11) times

Eleven (11) times

Title
Representative
Director- 43 -

Outside Director

Kazuo Abiko

Eleven (11) times

Eleven (11) times

Outside Director

Hirotoshi Takada

Eleven (11) times

Eleven (11) times

Outside Director

Miho Numata

Eleven (11) times

Eleven (11) times

Outside Director

Makiko Horie

Eight (8) times

Eight (8) times

Full-time Corporate
Hisashi Masumura
Eleven (11) times
Ten (10) times
AuditorOutside Corporate
Koichiro Tanaka
Eleven (11) times
Ten (10) times
AuditorOutside Corporate
Koichi Yokota
Eleven (11) times
Eleven (11) times
Auditor
Note: The attendance records of Yoshihiko Toda, a Director, and Yutaka Tsukahara, an Outside Director, cover the Boardof Directors held before his retirement on June 29, 2023. The attendance records of Makoto Tai, a Director, andMakiko Horie, an Outside Director, cover the Board of Directors held after his appointment on June 29, 2023.

Specific considerations by the Board of Directors are as follows.
・Financial results including subsidiary companies, forecast of financial results, and medium term business plan・Appointment of a representative director, appointment of directors and operating officers, and effectivenessassessment of the Board of Directors
・ Dividends, basic guidelines of capital policies and shareholder return policies, and sale of investment
securities
・Sustainability and ESG
・Internal control and compliance
The activities of each committee and internal projects were also reported at the Board of Directors. Besides that,the execution of duties and the Management Conference’s deliberation items were reported by operating officers.

- 44 -

b. Activity status of Assignment and Remuneration Advisory Committee
The meetings of the Assignment and Remuneration Advisory Committee were held three times for the current
business year, and the attendance records of each committee members are as follows.
PeriodTo the Ordinary
General Meeting of
Shareholders on
June, 2023

From the Ordinary
General Meeting of
Shareholders on
June, 2023 to theOrdinary General
Meeting of
Shareholders on
June, 2024

Title

Name

The Number of
Meetings

The Number ofAttendances

Outside Director

Kazuo Abiko(Chairperson)

One (1) time

One (1) time

Outside Director

Yutaka Tsukahara

One (1) time

One (1) time

Outside Director

Koji Nakamura

One (1) time

One (1) time

Outside Director

Hirotoshi Takada

One (1) time

One (1) time

Outside Director

Miho Numata

One (1) time

One (1) time

Representative Director

Yuta Arisawa

One (1) time

One (1) time

Outside Director

Hirotoshi Takada(Chairperson)

Two (2) times

Two (2) times

Outside Director

Koji Nakamura

Two (2) times

Two (2) times

Outside Director

Kazuo AbikoTwo (2) times

Two (2) times

Outside Director

Miho Numata

Two (2) times

Two (2) times

Outside Director

Makiko Horie

Two (2) times

Two (2) times

Representative Director

Yuta Arisawa

Two (2) times

Two (2) times

Specific considerations by the Assignment and Remuneration Advisory Committee are as follows.
・Proposals of appointment of directors
・Review of the results and contents of the Key Performance Indicators (KPI) for performance-based remuneration,and the amount of the remuneration for directors and corporate auditors- 45 -

(2) Status of Directors and Officers

1)

Directors and Officers(Number of female directors and officers: 2)(Percentage of female directors and officers: 17.0%)
Title

President
andRepresentative
Director

Name

Yuta
ArisawaCEO

Director
Senior Managing
Operating Officer
supervising
Manufacturing
Dept.
and
Administration
Dept.

Takeshi
MasudaDirector
Senior Operating
OfficerDiv.
Chief,
Business
Promotion Div.;
DeputyDiv.
Chief, Innovation
Promotion Div.

Osamu
Nakajima

Director
Senior Operating
Officersupervising
Development
Support Dept. andInnovation Center
Preparatory
Office;Div.
Chief,
Innovation
Promotion Div.;
DeputyDiv.
Chief, Business
Promotion Div.
supervising
Analysis Center

MakotoTai

Date of birth

Career summary
April 1992
February 2002
August 2003
April 2007
April 2009
June 2010

Joined Mitsubishi Electric Corporation
Joined JPMorgan Securities Japan Co., Ltd.
Joined the Company
Assistant General Manager, Manufacturing Dept.
Operating Officer of the Company
Director and Senior Operating Officer of theJuly 25,Company
1969
June 2011
Director and Senior Managing Operating Officerof the Company
June 2014
President, Representative Director of the Company
June 2015
Chief Operating Officer (COO) of the Company
June 2017
Chief Executive Officer (CEO) of the Company(current)
April 1986
Joined Alps Electric Co., Ltd. (currently ALPS
ALPINE CO., LTD.)
October 1990
Joined the Company
November 2003 Group Leader, Administration Planning Group
July 2008
Assistant General Manager, Manufacturing Dept.
October 2010
General Manager, Corporate Planning Dept.
April 3,June 2011
Operating Officer of the Company supervising
1963
Corporate Planning Dept.
June 2015
Operating Officer
June 2021
Director and Senior Operating Officer of theCompany
June 2023
Director and Senior Managing Operating Officerof the Company (current)
April 1989
Joined Mitsui & Co., Ltd.
May 2011
Department Manager, Solar Business Div.,
Functional Chemicals Business Unit of Mitsui &Co., Ltd.
April 2013
Department Manager, Advanced Materials Div.,
Functional Chemicals Business Unit of Mitsui &Co., Ltd.
June 5, 1965 July 2014
Department Manager, Business Development Div.,
Basic Chemicals Business Unit of Mitsui & Co.,
Ltd.
October 2015
Joined the Company as Operating Officer of theCompany supervising Electronic Materials Sales &Marketing Dept.
June 2016
Director and Senior Operating Officer of theCompany (current)
April 1988
Joined Daiichi Denko Co., Ltd. (currently
Sumitomo Electric Wintec, Inc.)
March 2002
Joined the Company
July 2006
Group Leader, Electronic Materials Group,
Research & Development Dept.
April 2010
Assistant General Manager, Electronic Materials
Research & Development Dept.
April
2012
GeneralManager, Research & Development Dept.
SeptemberJune 2015
Operating Officer of the Company supervising21, 1964
Electronic Materials Research & Development
Dept.
June 2019
Operating Officer
June 2023
Director and Senior Operating Officer of theCompany (current)- 46 -

Term

Number ofshares of theCompany held

See
Note 4

131,948

See
Note 435,627

See
Note 440,793See
Note 4

10,943

TitleName

Date of birth

Career summary

Number ofshares of theCompany held

See
Note 4---See
Note 4---See
Note 4---See
Note 4---See
Note 4---See
Note 5

1,100

April 1973
April 2004

Director

Koji
Nakamura

August 15,
1948

Director

Kazuo
Abiko

January 22,
1947

Director

Hirotoshi
TakadaAugust 10,
1953

Director

Miho
NumataApril 18,
1975

Director

MakikoHorie

May 12,1967

Full-time
Corporate
AuditorHisashi
Masumura

February 5,
1963

Joined Mitsui & Co., Ltd.
Managing Officer; Chief Operating Officer ofSynthetic Resins and Inorganic Chemicals
Business Unit
April 2006
Executive Managing Officer; Chief Operating
Officer of Chemicals Business Unit II
April 2009
Senior Executive Managing Officer; Chief
Operating Officer of EMEA (Europe, the Middle
East and Africa) Business Unit
March 2011Retired as Senior Executive Managing Officer
August 2011
Audit & Supervisory Board Member, SANKO
Co., Ltd. (current)
August 2016
Outside Director, Sanko Gosei Ltd. (current)
June 2020
Director of the Company (current)
November 1978 Joined Associated Press
May 1985
Deputy General Manager of Tokyo Studio
July 2001
President, Foreign Correspondents' Club of Japan
April 2004
General Manager of Tokyo Bureau, Associated
Press
July 2004
General Manager for Northeast Asia
February 2010 Advisor
September 2010 Part-time lecturer at Tokyo University of Foreign
Studies
September 2011 Part-time lecturer at Sophia University
April 2015
Visiting Professor at Kanda University ofInternational Studies
July 2018
Auditor, Foreign Correspondents’ Club of Japan
June 2020
Director of the Company (current)
March 1977
Joined NIPPON SEIKI CO., LTD.
April 2003
Director and President, UK-NSI Co., Ltd.
June 2005
Director, NIPPON SEIKI CO., LTD.
June 2008
Managing Director
April 2011
Representative Senior Managing Director
April 2011
General Manager, Sales Division
June 2011
Chairman, Wuhan Nissei Display System Co., Ltd.
March 2012
Chairman, Nissei Display Sales and Development
Co., Ltd. (Shanghai)
June 2013
President and Representative Director, NIPPONSEIKI CO., LTD.
March 2014
Chairman, Dongguan Nissei Electronics Co., Ltd.
April 2014
Chairman, Hong Kong Nippon Seiki Co., Ltd.
June 2015
President and Representative Director, Executive
Officer, NIPPON SEIKI CO., LTD.
July 2015
Chairman, Hong Kong Ek Chor Nissei Co., Ltd.
July 2015
Chairman, Shanghai Nissei Display System Co.,Ltd.
March 2016
Chairman and Director, Thai Nippon Seiki Co.,Ltd.
June 2017
Vice Chairman and Director, Executive Officer,
NIPPON SEIKI CO., LTD.
June 2021
Director of the Company (current)
December 2009 Registered as an attorney at law and joined
NUMATA LAW OFFICE
January 2016
Representative (current position)
April 2018
Civil Conciliation Commissioner, Tokyo Summary
Court (current position)
June 2020
Outside Corporate Auditor, Tokyo Boeki Holdings
Corporation (current position)
June 2021
Director of the Company (current)
April 1990
Joined Nomura Securities Co., Ltd.
May 1995
Joined Merrill Lynch Investment Managers Ltd.
(currently BlackRock Japan Company, Ltd.)May 2016
Joined Value Create Inc.; Partner
October 2021
Joined SDG Impact Japan Inc.; Partner (current)
June 2023
Director of the Company (current)
April 1985
Joined TANABE ENGINEERINGCORPORATION
November 1987 Joined the Company
July 2005
Group Leader, Human Resources Group, Human
Resources Dept.
July 2008
Group Leader, Administration Planning Group,
Corporate Planning Dept.
October 2010
Assistant General Manager, Manufacturing Dept.
April 2012
General Manager of Human Resources Dept.
April 2018
General Manager of Human Resources Dept. andGeneral Affairs Dept.
October 2020
General Manager, General Affairs Dept.
June 2022
Full-time Corporate Auditor of the Company(current)Term- 47 -

TitleName

Date of birth

Career summary

Term

October 1987

Corporate
AuditorKoichiro
TanakaJuly 6,
1965

Corporate
AuditorKoichiYokotaMarch 3,1970

Joined Tohmatsu Aoki & Sanwa (currently
Deloitte Touche Tohmatsu LLC)
March 1991
Registered as Certified Public Accountant
August 1998
Resident and Resident Representative of Dalian
Office, U.S. Deloitte Touche Tohmatsu (Office
Head)
September 2002 Resident and Managing Director of the JapaneseOperations Department in South China ofShenzhen Office in China, Deloitte Touche
Tohmatsu Limited
June 2003
Parter of Deloitte Touche Tohmatsu LLC
September 2003 Returned to Auditing Department of Tokyo Office,Deloitte Touche Tohmatsu LLC
December 2003 Director and Executive Officer; Partner
See
supervising China Business and in charge ofNote 5
Public Communication, Corporate Finance
Department of Deloitte Touche Tohmatsu(currently Deloitte Tohmatsu Financial Advisory
LLC)
May 2005
Registered as Certified Public Tax Accountant
July 2014
Established Tanaka Sogo Accountant Office,Representative Director (current)
March 2017
Outside Corporate Auditor, ODAWARAENGINEERING CO., LTD. (current)
June 2018
Auditor, Japan Automobile Research Institute(current)
June 2020
Corporate Auditor of the Company (current)
March 2023
Outside Corporate Auditor, TEN ALLIED CO.,LTD. (current)
November 1996 Registered as Certified Public Tax Accountant
April 2003
Director, Takada Branch of Kanto-Shinetsu
Certified Public Tax Accountant’s Association
January 2004
Head, Yokota Accountant Office (current)
April 2019
General Manager, Takada Branch of KantoShinetsu Certified Public Tax Accountant’s
Association
See
June 2020
Corporate Auditor of the Company (current)
Note 5
April 2021
Managing Director, Niigata Prefecture BranchFederation of Kanto-Shinetsu Certified Public Tax
Accountant’s Association
April 2023
Vice Chairperson, Niigata Prefecture BranchFederation of Kanto-Shinetsu Certified Public Tax
Accountant’s Association (current)

Number ofshares of theCompany held

1,000

---

Total:
221,411

Note:

1.

2.

3.

4.
5.
6.

Figures stated in the column “Number of shares of the Company held” represent the number of shares beneficially owned
by each of the persons listed above, including their respective ownership interests under the Company’s stock ownershipplan for its directors and officers. Since the number of shares acquired in June 2024 through the said stock ownership planis yet to be confirmed as of the filing date of this Financial Report (June 30, 2024), the number of shares beneficiallyowned by each of the persons listed above as of May 31, 2024 is stated.
Among the Directors, Koji Nakamura, Kazuo Abiko, Hirotoshi Takada, Miho Numata and Makiko Horie are Outside
Directors (set forth in Article 2, item 15 of the Companies Act) falling under the outside officers (set forth in Article 2,paragraph 3, item 5 of the Ordinance for Enforcement of the Companies Act).
Among the Corporate Auditors, Koichiro Tanaka and Koichi Yokota are Outside Corporate Auditors (set forth in Article
2, item 16 of the Companies Act) falling under the outside officers (set forth in Article 2, paragraph 3, item 5 of theOrdinance for Enforcement of the Companies Act).
From the closing of the Ordinary General Meeting of Shareholders held on June 27, 2024 until the closing of the Ordinary
General Meeting of Shareholders for the fiscal year ending on March 31, 2025.
From the closing of the Ordinary General Meeting of Shareholders held on June 27, 2024 until the closing of theOrdinary General Meeting of Shareholders for the fiscal year ending on March 31, 2028.
The Company employs the Operating Officer system to ensure expeditious execution of the operations determined by the
Board of Directors and formulation of highly transparent management strategies. The Company has a total of thirteen (13)Operating Officers consisting of one (1) Chief Executive Officer, one (1) Senior Managing Operating Officer, two (2)Senior Operating Officers and the following nine (9) Operating Officers.
Yoshifumi Ara
Takeshi Aizawa

Senior Operating Officer supervising Performance Materials Sales & Marketing Dept.;
Deputy Division Chief, Business Promotion Div.
Operating Officer supervising Procurement Dept. and Quality Assurance Dept.; Deputy
Division Chief, Administration Div.

- 48 -

Shuichi Fujita

Takao Motizuki
Shuichi Kubota
Takahito Tanabe
Kazumi Ikeda
Kenji Tada
Kiyoko Akutagawa

Operating Officer supervising Functional Films Development Dept., Laminate Materials
Development Dept., Molding Materials Development Dept. and Process Technology Dept.;
Deputy Division Chief, Innovation Promotion Div.
Operating Officer supervising Manufacturing Dept. (principal) and Innovation Center
Preparatory Office (sub); Deputy Division Chief, Manufacturing Div.
Operating Officer supervising Corporate Strategy Dept.; Deputy Division Chief,
Administration Div.
Operating Officer supervising Manufacturing Engineering Dept. and Manufacturing Dept.
(sub); Deputy Division Chief, Manufacturing Div.
Operating Officer supervising General Affairs Dept.; Deputy Division Chief, Administration
Div.
Operating Officer supervising Electronic Materials Sales & Marketing Dept.; Deputy
Division Chief, Business Promotion Div.
Operating Officer supervising Human Resources Dept.; Deputy Division Chief,
Administration Div.

7. The Company appointed the substitute corporate auditors under the provisions of Article 329, paragraph 3 of the Companies
Act as a precaution against shortage in the number of corporate auditors required by the applicable laws and regulations
as follows: Kazuhide Kita as a substitute for Hisashi Masumura, Full-time Corporate Auditor, and Takehumi Isida as a
substitute for the Outside Corporate Auditors, i.e. Koichiro Tanaka and Koichi Yokota. The career summary of each of
the said substitute corporate auditors is shown below.
Name

Date of birthKazuhide Kita

March 31, 1963

Takehumi Ishida

September 15,
1976

Career summary

Term

April 1986
Joined the Company
November 2004 Group Leader, Electronic Materials Group 2,
Research & Development Dept.
April 2012
Group Leader, Administration Group, Technical
Administration Dept.
1 yearDecember 2013 Group Leader, Intellectual Property Group,Technical Administration Dept.
April 2014
General Manager, Technical Administration Dept.
October 2015
General Manager, Corporate Planning Dept.
April 2023
Part-time (current)
November 2007 Registered as Certified Public Tax Accountant
April 2011
Director, Takada Branch of Kanto-Shinetsu
Certified Public Tax Accountant’s Association
July 2012
Representative Member, Ishida Tax Accountant
1 yearCorporation (current)
April 2021
Deputy Branch Manager, Takada Branch of KantoShinetsu Certified Public Tax Accountant’s
Association (current)- 49 -

Numberof sharesof theCompany
held

3,000

---

2) Status of Outside Directors and Officers
The Company has five (5) Outside Directors and two (2) Outside Corporate Auditors. There is no special
interest between any of the outside officers and the Company except for the Company's shares described in“1) Directors and Officers.” In addition, they meet the requirements of an independent officer as provided forby Tokyo Stock Exchange, Inc. and are filed as the independent officers of the Company because there is no
possibility of conflict of interest between the said officers and the general shareholders of the Company.
Koji Nakamura, an Outside Director, has been involved in corporate management in Japan and overseas formany years, having served as Senior Executive Managing Officer of Mitsui & Co., Ltd. and as Director at
Sanko Gosei Ltd. The Company has appointed him because we deem that he has extensive insight andknowledge regarding global management from his experience as a managing officer at a global company andthat he will deliver opinions from an outside perspective with regard to the overall management of theCompany, particularly in the area of business strategy, and increase the rationality and transparency of theCompany’s management.
After graduating from Graduate School of The California State University, Kazuo Abiko, an Outside Director,
was appointed the General Manager of Tokyo Studio and General Manager for Northeast Asia at AssociatedPress while also working as the President of Foreign Correspondents’ Club of Japan. The Company has
appointed him because we deem that he will deliver opinions from an outside perspective and increase therationality and transparency of the Company’s management by leveraging his knowledge in international
communication and standards and ethics of journalism, including his work as a part-time lecturer at Tokyo
University of Foreign Studies and Sophia University thereafter.
Hirotoshi Takada, an Outside Director, has served the Representative Director of NIPPON SEIKI CO., LTD.
and as Chairman, etc. of overseas subsidiaries, has been engaged over many years in sales and product planning,
etc. in the automobile industry; has a deep knowledge of that industry. The Company has appointed him
because we deem that he will deliver opinions from an outside perspective and increase the rationality andtransparency of the Company’s management by leveraging his abundant experience and broad knowledge asa manager of a company in the manufacturing industry with a global business.
Miho Numata, an Outside Director, is Representative of NUMATA LAW OFFICE, and by serving as Civil
Conciliation Commissioner of Tokyo Summary Court and as Outside Corporate Auditor of Tokyo Boeki
Holdings Corporation, while managing the law office, she has a well-balanced career. The Company has
appointed her because we deem that she will deliver opinions from an outside perspective and increase therationality and transparency of the Company’s management by using her in-depth knowledge and experience
as a legal expert who has worked as an attorney at law for many years, and her sophisticated knowledge
relating to governance and compliance, etc.
Makiko Horie, an Outside Director, was engaged in sales to institutional investors, company surveys, andoperation related to the Japanese stock market at a global financial institution, and also involved inmanagement consultation and launching of start-ups. The Company has appointed her because we deem that
she can reflect on management strategies the status of the Company that investors expect by leveraging her
experience and increase the rationality and transparency of the Company’s management.
The Company has appointed Koichiro Tanaka, an Outside Corporate Auditor, because we deem that he willappropriately utilize his suitable level of insight relating to finance and accounting as a certified public
accountant and certified tax accountant, his abundant practical experience at a major accounting firm, and his
experience working overseas in his duties as an outside Corporate Auditor from an independent and neutral
standpoint.
Koichi Yokota, an Outside Corporate Auditor, expanded activities rooted in his hometown of Joetsu-shi as the
Head of Yokota Accountant Office. The Company has appointed him because we deem that he willappropriately fulfill his duties as an outside Corporate Auditor from a neutral standpoint based on his extensive
experience and expert knowledge as a certified public tax accountant.
The Company has filed five (5) Outside Directors and two (2) Outside Corporate Auditor as independent- 50 -

officers as provided for by Tokyo Stock Exchange, Inc. because the Company deems that there is no possibilityof conflict of interest between the said officers and the general shareholders of the Company. Although theCompany has no specific standards or policy in force as to independence from the Submitting Company
applicable to appointment of Outside Directors or Outside Corporate Auditors, we judge, in making any suchappointment, the independence of each candidate in terms of his or her personal, capital and business
relationships and any other interests with the Company and also comprehensively judge each candidate’s
experience and knowledge of corporate governance, internal control and financial reporting, etc.
3) Mutual Collaboration between supervision or auditing by Outside Directors or Outside Corporate Auditors
and internal audit, accounting audit and auditing by Corporate Auditors, as well as Relationship between
supervision or auditing by Outside Directors or Outside Corporate Auditors and Internal Control Division.
The Outside Corporate Auditors, tapping into their wealth of experience and insight, audit the legality ofbusiness operations by the Board of Directors and the effectiveness of corporate governance, etc. throughattendance at meetings of the Board of Directors and of the Board of Corporate Auditors and also review ofvarious reports on the status of internal audit and accounting audit, etc. obtained directly or via the Full-time
Corporate Auditor.
The Outside Directors receive, at the Board of Directors’ meetings, etc., reports, etc. on the internal audits
conducted upon request of the Board of Corporate Auditors and the audits by the Corporate Auditors or theaccounting auditors and maintain mutual collaboration including, but not limited to, opinion exchanges asappropriate.

(3) Status of Audit
1) Status of Auditing by Corporate Auditors
The Board of Corporate Auditors of the Company is composed of three (3) members (one [1] full-time
Corporate Auditor and two [2] Outside Corporate Auditors). The Corporate Auditors conduct periodic audits,
attend the meeting of the Board of Corporate Auditors (held regular in principle pursuant to the Regulations
for the Board of Corporate Auditors) and also raise issues, where appropriate, as to execution of Directors’
duties and the status of improvement and operation of the internal control system, etc.
Hisashi Masumura, a full-time Corporate Auditor, held positions in manufacturing, management planning,
human resources, and general affairs of the Company and has abundant experience and knowledge of finance,
legal affairs, compliance, risk management, etc. In addition, Koichiro Tanaka, an Outside Corporate Auditor,
is a certified public accountant and certified tax accountant, and Koichi Yokota, an Outside Corporate Auditor,
is a certified tax accountant and has suitable level of insight relating to finance and accounting.
The meetings of the Board of Corporate Auditors were held ten (10) times for the current business year, andthe attendance records of each auditor is as follows.
Title
Full-time Corporate
AuditorOutside Corporate
AuditorOutside Corporate
AuditorName

The Number of Meetings

The Number ofAttendances

Hisashi Masumura

Ten (10) times

Ten (10) times

Koichi Sakai

Ten (10) times

Ten (10) times

Shinjiro Kawai

Ten (10) times

Ten (10) times

The main issues for consideration by the Board of Corporate Auditors are an audit plan, an audit approach andassignment, important matters regarding the audit during the period, other matters regarding an execution of
the Auditors, etc.
Note that activities of the Full-time Corporate Auditor are to understand and report to the Board of Corporate
Auditors the status of the Company and the content of audit by attending at the meetings of the Board of
Directors and other important meetings and exchanging information with the internal audit division, theaccounting auditors, etc.
2) Status of Internal Audit
As the internal audit division, three (3) full-time employees are assigned to the Internal Audit Dept., which isunder the direct control of the President and Representative Director and independent of other organizationsof the Company, and it conducts scheduled audits and unscheduled audits as appropriate. As for scheduled- 51 -

audits, an audit plan is made for each term pursuant to the relevant internal regulations, and audits are
conducted after the final decision by the President and Representative Director.
Audit results are reported to the President and Representative Director, correction instructions of whom aregathered and notified to departments subject to audits, while the remediation status is checked and reporting
to, and opinion exchanges with, the Corporate Auditors are made.
The results of auditing by the Internal Audit Dept. are not reported to the Board of Directors, but are reported
to the Board of Corporate Auditors, and the Corporate Auditors share in the recognition of such results in thecourse of their auditing to enhance their collective audit function.
3)

Status of Accounting Audit
a. Name of Audit Corporation
Ernst & Young ShinNihon LLC
b. Continuous Audit Period
From 1985 on
This is as far as the Company could find with its investigation, and it might be before the above.
c. CPA who executed the audit work
Yosiyuki Sakuma
Ken Takahashi
d. Composition of assistants involved in the audit work.
The composition of assistants involved in the accounting audit work of the Company is determined inaccordance with the criteria for selection of audit corporations and includes eight (8) certified public
accountants and ten (10) others.
e. Policy and reason for the selection of Audit Corporation
The Board of Corporate Auditors examines whether Accounting Auditors maintain an independent standpointand conduct an appropriate audit and decides on the suitability of reappointment to ensure appropriateness andcredibility of financial reporting based on the evaluation in accordance with the following “Policy on Decisions
on Dismissal or Non-reappointment of the Accounting Auditors” and the evaluative standard established by
the Board of Corporate Auditors. As a result of that, it decided that it was unnecessary not to reappoint theabove Audit Corporation.
(Policy on Decisions on Dismissal or Non-reappointment of the Accounting Auditor)
If the accounting auditors is found to fall under each item of Article 340, paragraph 1 of the Companies Act,
our Board of Corporate Auditors dismisses the accounting auditors based on the unanimous approval from theBoard of Corporate Auditors.
Besides that, if it deems it necessary because there is difficulty to conduct an appropriate audit due to an
occurrence of causes, etc. to impair an independence and appropriateness of Audit Corporation, the Board of
Corporate Auditors decides on and suggests at the General Meeting of Shareholders details of a resolution
regarding dismissal or non-reappointment of the accounting auditors.
f. Evaluation of Audit Corporation by Corporate Auditors and Board of Corporate Auditors
Corporate Auditors and Board of Corporate Auditors of the Company evaluate the audit corporations inaccordance with “Practical Guidelines for Corporate Auditors, etc. regarding Evaluation of Accounting
Auditors and Setting of Selection Standards” (Japan Audit & Supervisory Board Members Association,
November 10, 2015). Board of Corporate Auditors checks on Audit Corporation with respect to the problemof quality control system, independence and expertise of the audit team, validity and efficiency of auditing,etc. by means of regular exchanging of opinions with the audit corporation, hearing of matters to be checked,
and report on the implementation of audit, etc., so we believe there is no problem.

- 52 -

4) Details, etc. of Remuneration of Accounting Auditors
a. Remuneration of Auditing Certified Public Accountants, etc.

(Thousands of yen)Previous consolidated fiscal year
Category

Submitting Company
Consolidated subsidiaries
Total

Remuneration foraudit andattestation services

Remuneration for
non-audit services

Current consolidated fiscal year
Remuneration foraudit andattestation services

Remuneration for
non-audit services

34,000－38,000

－

－

－

－

－

34,000－38,000－b. Remuneration of the same network (Ernst & Young) as Auditing Certified Public Accountants (except for a.)
Previous consolidated fiscal year
Category

Remuneration foraudit andattestation services

Remuneration for
non-audit services

Current consolidated fiscal year
Remuneration foraudit andattestation services

Remuneration for
non-audit services

－

－

－

－

Consolidated subsidiaries

15,097

4,332

20,411

4,492

Total

15,097

4,332

20,411

4,492

Submitting Company

Non-audit services of consolidated subsidiaries are composed of closing review audit and tax return.
c. Details of other significant remuneration for audit and attestation services
No applicable matterd. Policy for Determination of Remuneration of Accounting Auditors
Remuneration of Auditing Certified Public Accountants, etc. of the Company is determined by considerationof scale and characteristics of the Company as well as the number of auditing days, etc., by consultation withthe audit corporation and by getting consent of Board of Corporate Auditors.
e. Reason for the consent of Board of Corporate Auditors to remuneration of accounting auditors
Board of Corporate Auditors decided to provide consent to the amount of remuneration of accounting auditors,
etc., after carefully examining the adequacy of performance of accounting auditors and such decision-making,
etc.

(4)

Remuneration, etc. of Directors and Corporate Auditors

1) Policy of Determination on Amount of Remuneration, etc. of Directors and Corporate Auditors
The Company has established the Assignment and Remuneration Advisory Committee where an independent
Outside Director is a chairperson and the majority of the committee members are independent Outside Directors
as an advisory body to the Board of Directors in order to improve the independence, objectivity and transparencyof the procedures for determining the nomination and remuneration of Directors and to enhance corporate
governance. The policy for determining the details of individual remuneration for Directors is determined at theBoard of Directors based on deliberations and reports by the Assignment and Remuneration Advisory
Committee.
Summary of the Policy of Determination on Amount of Remuneration, etc. is as follows.
a. Basic Guidelines for Remuneration System for Directors
・ The system should encourage the management to improve their performance through associating theperformance with remuneration and to exercise their solid entrepreneurship for sustainable development of
the Company.
・The system should reflect not only financial performance but also appreciation for proactive initiative basedon the management philosophy of “CIC Better today than yesterday, better tomorrow than today” with thebasic spirit of “Creation, Innovation and Challenge”.
・The system should attract excellent human resources for management who can contribute to sustainable
development and enhancement of corporate value of the Company.
- 53 -

b. Remuneration Structure
Under the policy above, the remuneration structure for Executive Directors is constituted of basic remuneration
as fixed remuneration, performance-based remuneration linked to the previous year’s performance, etc., andstock-based compensation for the purpose of sharing interests with shareholders (restricted stock-based
compensation). The remuneration ratio by type of Executive Directors is as follows; basic remuneration:
performance-based remuneration: stock-based compensation = 5 : 3 : 2 (in the case of 100% achievement of
KPI). Outside Directors who assume a role of supervisory function are paid only basic remuneration inconsideration of their duty. Basic remuneration and performance-based remuneration reflecting the previous
year’s performance is divided and paid equally during the period of execution of duties and restricted stockbased compensation is paid yearly at fixed time.
2) Details, Reasons for Selection, and Performance and Calculation Method of Indicators (KPI) for PerformanceBased Remuneration
The Key Performance Indicators (KPI) for performance-based remuneration are consolidated operating profit
for the previous single fiscal year and such remuneration is divided and paid according to the degree ofachievement of target values. The reasons for selecting such Indicators are that they are a financial indicatorwhich represents the result of primary business activities of companies, use net operating profit less adjusted
taxes (NOPLAT) to calculate ROIC which is a target figure to be achieved of the medium-term business plan,
and are used in the bonus system for employees and important to keep consistency between the two systems.
The actual result for that was 2,228 million yen.
Out of amount of carbon dioxide emission reduction held up in our Carbon Neutral Project, the Company adds
goal attainment levels with respect to reduced usage resulted from improving energy use efficiency to the
Performance Indicators. The results were 2,541t-CO2 (the goal was 2,441t-CO2 and the achievement level was
104.10%).
3) Details of Stock-Based Compensation (Non-Monetary Remuneration)
Stock-based compensation (non-monetary remuneration) shall be restricted stock-based compensation, and is
programmed to lift restrictions of transfer upon retirement for the purpose of building awareness of contribution
to sustainably increasing corporate value of the Company by clarifying the linkage between the Company’s
stock value and compensation and sharing returns and risks due to fluctuations in the value of stocks withshareholders. Furthermore, the Company issues to Executive Directors monetary compensation claim to grant
restricted stocks each year and each Executive Director pays all of such monetary claims as contributed
properties in kind and receives issuance or disposal of the Company’s common shares. The number of shares tobe allocated to each Executive Director corresponding to individually determined base amount is determined by
the Board of Directors based on the report of the Assignment and Remuneration Advisory Committee. The
payment amount per share shall be an amount not particularly favorable to the Eligible Directors based on theclosing price on the Tokyo Stock Exchange on the business day immediately preceding the date of the resolution
by the Board of Directors (if no transaction is made on that day, the closing price on the trading date immediately
before that day).
4) Matters Relating to Determining Details of Individual Remuneration, etc. for Directors
With respect to the details of individual remuneration for the Company’s Directors, etc., following consultations
with the Board of Directors, the Assignment and Remuneration Advisory Committee recommends the amountof basic remuneration for each Director and the evaluation allocation based on the performance of a division ofwhich each Director is in charge in the performance-based remuneration. The Board of Directors determines
individual remuneration for the Company’s Directors, etc. pursuant to the report of the Assignment andRemuneration Advisory Committee.
With regard to stock-based compensation, the Board of Directors determines the details of individual
remuneration such as the number of shares to be allocated, etc. based on the report of the Assignment andRemuneration Advisory Committee.
5) Reasons for the Board of Directors’ Judgement that the Details of Individual Remuneration, etc. for theCompany’s Directors Comply with the Policy for Determination
The Board of Directors has judged that the details of individual remuneration, etc. for the Company’s Directors
comply with the policy for determination, because the Assignment and Remuneration Advisory Committee
considers multilaterally the consistency between the details of the remuneration system for the Company’s
Directors and the policy for determination.
The Assignment and Remuneration Advisory Committee verifies the validity thereof through an objective andmultifaceted benchmark analysis of remuneration based on “Management Remuneration Database” run by anoutside remuneration consultant (WTW; Willis Towers Watson).

- 54 -

6) Remuneration of Corporate Auditors, etc.
a. Basic Policy
The Company's basic policy is to pay an appropriate level of remuneration to each Corporate Auditor for the
performance of his or her duties.
b. Method of Determining Remuneration
The remuneration for Corporate Auditors is determined through discussions among the corporate auditors,
taking into consideration whether they work full-time or part-time and the division of audit work.
c. Details of Remuneration for Corporate Auditors
The remuneration for Corporate Auditors is fixed remuneration only, which is paid on a monthly basis, with anemphasis on strengthening their independence from management.
7) The aggregate amount of remuneration, etc. of each category of Directors and Corporate Auditors, the breakdownof such aggregate amount by the type of remuneration, etc. and the number of Directors and Corporate Auditors
coveredCategory of Directors andCorporate Auditors

Aggregate amountof remuneration,
etc.
(Thousands ofyen)

Breakdown by the type of remuneration, etc.
(Thousands of yen)
NonPerformanceFixed
Monetary
Based
Remuneration
Remuneration,
Remunerationetc.

Number of
Directors
orCorporate
Auditors
coveredDirectors
199,265
107,000
47,26644,9985(excluding Outside Directors)
Corporate Auditors(excluding Outside Corporate－－
13,011
13,011
1
Auditors)
Outside Directors and Outside－－
31,00231,0028
Corporate Auditors
Note: 1. The above table includes two Directors (including one Outside Director) who retired at the conclusionof the 74th Ordinary General Meeting of Shareholders held on June 29, 2023.
2. The details of non-monetary remuneration, etc. are restricted stock-based compensation and the amountrecorded as expenses in the current business year is shown.
8) Date and Content of Resolution of a General Meeting of Shareholders regarding Remuneration of Directors andCorporate Auditors
It was resolved at the 56th Ordinary General Meeting of Shareholders held on June 29, 2004 that the total amountof remuneration for Directors should be no more than 30 million yen per month and the total amount of
remuneration for Corporate Auditors should be no more than 3 million yen per month. The number of Directors
or Corporate Auditors at the conclusion of this Ordinary General Meeting of Shareholders is nine Directors(including five Outside Directors) and three Corporate Auditors (one full-time Corporate Auditor and two
Outside Corporate Auditors).
It was resolved at the 73rd Ordinary General Meeting of Shareholders held on June 25, 2021 that remuneration
provided to grant restricted stocks shall be not more than ¥50 million per year and the number of common sharesof the Company shall be not more than 50,000 shares and that a transfer restriction period shall be from thepayment due date of the Company’s common shares allotted under the restricted stock allotment agreement to
the point of time immediately after the time of retirement from the position predetermined by the Company’s
Board of Directors among the positions of officers and employees of the Company or its subsidiaries. The
number of Directors or Corporate Auditors at the conclusion of this Ordinary General Meeting of Shareholders
is nine Directors (inside Directors only).

(5) Status of Shareholding
1) Criterion and attitude for segmentation of investment stock
Regarding segmentation of investment stock held for purposes of pure investment and held for purposes other thanpure investment, we separate purposes of making a profit through value change of stock or dividends on stock as“purposes of pure investment” from the other purposes as “purposes other than pure investment”.
2) Investment stock held for purposes other than pure investment
a. Policy on holding, method of verifying the reasonableness of holding, and verified matters by the Board of
Directors, etc., regarding appropriateness of holding individual stock names- 55 -

(1) Policy on holding
Regarding investment stock held by the Company for purposes other than pure investment (hereinafter referred to as“Cross-shareholdings”), shares, etc. of business partners, etc. may be acquired and held if it is judged that suchacquisition will contribute to the enhancement of corporate value of the Company over the mid-and-long-term interms of facilitation and reinforcement, etc. of building stable and long-term business relations, business collaborationor cooperative business activities with the said business partners. We will verify effectiveness of holding, etc. interms of mid-and-long-term economic rationality as well as maintenance and strengthening of comprehensive
relationship. And such validation will be reported to the Board of Directors. If any stock names are judged, throughthe verification, to have no reasonableness of holding, we will sell off such stocks and reduce the shareholdings.
(2) Method of verifying the reasonableness of shareholding
Regarding all Cross-shareholdings held, the Board of Directors yearly gives comprehensive consideration toquantitative analysis of transaction performances and returns, etc., qualitative analysis of status of business, strategic
background of acquisition, etc., as well as risk of shareholding, etc., and then verifies and evaluates the propriety ofsuch shareholding.
Following items are verified through the quantitative analysis:
1) Balance of dividend earning rate and capital cost2) Annual amount of transaction and amount of profits
3) Profit or loss from valuation of stock(3) Verified matters by the Board of Directors, etc. regarding the propriety of holding individual stock names
At the Board of Directors held in May 2024, the Company verified status of shareholding, risk returns, importanceof business and comprehensive meaning of shareholding, with respect to all shares (11 stock names) held as Crossshareholdings, and all of these holdings have been confirmed to be appropriate.
b. Number of stock names and amount shown on balance sheets
Number ofstock names（Stocknames）
Unlisted stock
Stock other than unlisted
stock

Aggregate amount of theamount shown on balance
sheets(Thousands of yen)

9

16,182

2

991,537（Stock names whose number of shares increased in the current business year)

Unlisted stock
Stock other than unlisted
stock

Number ofstock names（Stocknames）

Aggregate amount ofacquisition price associatedwith increase in number ofshares (Thousands of yen)

－

－

1

93,068

Reason for increase in number of shares－
Transfer from shares of subsidiaries andassociates by partial sale of shares（Stock names whose number of shares decreased in the current business year)
Number ofstock names（Stocknames）

Aggregate amount ofacquisition price associatedwith decrease in number ofshares (Thousands of yen)

Unlisted stock1

46,200Stock other than unlisted
stock

6

531,962- 56 -

c. Information regarding the number of shares for each stock name of specified investment stock and deemedshareholding, as well as the amount shown on balance sheets, etc.
Specified Investment Stock

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

299,700

299,700

Mitsubishi Gas Chemical
Company, Inc.

776,223

588,3113,950,000－

Innovision FlexTech Corporation

215,314－－110,000

Mitsubishi Electric Corporation－- 57 -

173,635

Purpose of shareholding,overview of business alliances,
etc., quantitative effect ofshareholding, and reason forincrease in number of shares

Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, the Company decided tocontinue to hold the shares ofsuch company.
Purpose of shareholding: As thesaid corporation manufactures andsells the products of displayrelated materials, it is for the
maintenance and strengthening ofcooperative relationship intechnology and research anddevelopment and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, the Company decided tocontinue to hold the shares ofsuch company.
Reason for increase in number ofshares: As the equity method is
not applied in the current
consolidated fiscal year, it is
newly shown as specified
investment stock.
Purpose of shareholding: As thesaid company’s group is a main
customer of electronic materials
products, it is for the maintenanceand strengthening of stablebusiness relations and theimprovement of future corporate
value through mutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, we sold all the shares in
the current business year.

Holding
shares oftheCompany

Yes

No

Yes

Stock nameCurrent

Previous businessbusiness year

year

Number of shares

Number of shares

held
Amount shown onbalance sheets

held
Amount shown onbalance sheets(Thousands of(Thousands of

yen)

yen)

－

232,513

The Hachijuni Bank, Ltd.

－－

133,694

19,962

Daishi Hokuetsu Financial
Group, Inc.
－

57,690－12,000

Kaneka Corporation－

41,400－25,020Mitsubishi UFJ Financial Group,Inc.
－- 58 -

21,214

Purpose of shareholding,overview of business alliances,
etc., quantitative effect ofshareholding, and reason forincrease in number of shares

Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, we sold all the shares in
the current business year.
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, we sold all the shares in
the current business year.
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, we sold all the shares in
the current business year.
Purpose of shareholding: As thesaid bank is a source of fund andprovider of financial services, it isfor the maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, we sold all the shares in
the current business year.

Holding
shares oftheCompany

Yes

No(Note)1.

No

No(Note)2

Stock nameCurrent business
year

Previous business
year

Number of shares
held

Number of shares
held

Amount shown onbalance sheets(Thousands ofyen)

Amount shown onbalance sheets(Thousands of yen)

－

2,655

Sumitomo Corporation

－

6,215

Purpose of shareholding,quantitative effect ofshareholding, and reason forincrease in number of shares

Holding
shares oftheCompany

Purpose of shareholding: As thesaid group is a main customer ofelectronic materials products anda vender of raw materials, it is forthe maintenance andstrengthening of stable business
relations and the improvement of
future corporate value throughmutual efforts.
Quantitative effect ofshareholding: As a result of
verifying the reasonableness ofholding, we sold all the shares in
the current business year.

No(Note)3（Note）1. Daishi Hokuetsu Financial Group, Inc. holds no shares of the Company, while The Daishi Hokuetsu Bank, Ltd.,a group company of the said Group, holds shares of the Company.
2. Mitsubishi UFJ Financial Group, Inc. holds no shares of the Company, while MUFG Bank, Ltd., a groupcompany of the said Group, holds shares of the Company.
3. Sumitomo Corporation holds no shares of the Company, while Sumitomo Shoji Chemicals Co., Ltd., a groupcompany of the said Corporation, holds shares of the Company.

Deemed Shareholding
No applicable matter.
3) Investment stock held for purposes of pure investment
No applicable matter.

- 59 -

V. Status of Accounting
1.

Method of Preparation of Consolidated Financial Statements and Financial Statements(1) The consolidated financial statements of the Company are prepared in compliance with the “Regulations for
Terminology, Forms and Preparation Methods of Consolidated Financial Statements” (Ministerial OrdinanceNo. 28 of the Ministry of Finance, 1976).
(2) The financial statements of the Company are prepared in compliance with the “Regulations for Terminology,
Forms and Preparation Methods of Financial Statements, etc.” (Ministerial Ordinance No. 59 of the Ministry of
Finance, 1963; hereinafter referred to as the “Regulations for Financial Statements”).
The Company falls under the Special Financial Statement-Submitting Companies and prepares its financial
statements pursuant to the provisions of Article 127 of the Regulations for Financial Statements.

2.

Certification of Audit
The Company received a review of its consolidated financial statements for the current consolidated fiscal year (from
April 1, 2023 to March 31, 2024) and its financial statements for the current business year (from April 1, 2023 toMarch 31, 2024) conducted by Ernst & Young ShinNihon LLC under the provisions of Article 193-2, paragraph 1 of
the Financial Instruments and Exchange Act.

3.

Special Efforts to Secure Appropriateness of Consolidated Financial Statements, etc.
The Company makes special efforts to secure appropriateness of its consolidated financial statements, etc. Specifically,
we make efforts to improve our systems by subscription to professional journals aiming to gain correct understandingof the changes, etc. in the accounting standards and also affiliation with the Financial Accounting Standards
Foundation aiming to ensure precise understanding of and appropriate responses to the contents of the accounting
standards, etc.

- 60 -

1. Consolidated Financial Statements, etc.
(1) Consolidated Financial Statements
1) Consolidated Balance Sheets(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2023)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable trade, and contract assets
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment andvehiclesAccumulated depreciation
Machinery, equipment andvehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant andequipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and otherassetsTotal non-current assets
Total assets*2*2

Current consolidated fiscal year
(As of March 31, 2024)

20,545,580*2

18,163,338

13,182,106*4

16,515,625

100,150
5,525,035
2,373,079
4,263,762
1,441,020△10,786
47,419,946－
4,587,271
2,515,667
4,359,283
983,820△27,285
47,097,722

21,934,719△15,857,218
6,077,500

22,845,428△16,472,928
6,372,500*2

31,821,077

33,785,241△28,134,902△29,195,592*2

3,686,175*2

4,589,649*2

1,993,700
3,534,967
3,730,038△2,576,201
1,153,836*2

2,035,377
3,877,197
3,911,513△2,824,293
1,087,219*2*1

16,446,181

17,961,943

244,197382,749

2,545,474
41,434
678,791
329,670△45,969- 61 -*2*1

2,327,455
41,302
750,560
300,411△45,4633,549,401

3,374,267

20,239,780
67,659,726

21,718,961
68,816,683

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2023)
Liabilities
Current liabilities
Notes and accounts payable-trade
Current portion of bonds payable
Short-term borrowings
Current portion of long-termborrowings
Lease liabilities
Income taxes payable
Provision for product warranties
Provision for bonuses
Provision for bonuses for directors(and other officers)
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Provision for share awards
Lease liabilities
Deferred tax liabilities
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive
incomeValuation difference on available-forsale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Total accumulated othercomprehensive income
Share acquisition rights
Total net assets
Total liabilities and net assets

Current consolidated fiscal year
(As of March 31, 2024)*4*35,213,263
16,8005,056,253*3

7,014,220
10,8005,301,635*2

1,843,441*2

3,120,516

129,172
658,615
42,184
526,795

130,047
269,618
28,739589,881

2,162

3,618

2,788,015
16,276,705- 62 -*42,953,727
19,422,805

10,8002,723,471
50,449460,601
137,916
700,883
97,11994,066
4,275,306
20,552,012－
1,970,976
68,536354,223
82,298
485,167
99,58386,894
3,147,680
22,570,486

7,847,873
3,198,618
34,293,471△512,975
44,826,987

7,862,036
3,212,781
32,253,196△460,640
42,867,374

466,417515,045△13,657△1,706

1,904,093

2,870,994△127,370△32,930

2,229,483

3,351,402

51,243
47,107,714
67,659,726

27,41946,246,196
68,816,683

2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income[Consolidated Statements of Income](Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freight and packing costs
Salaries and allowances
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Retirement benefit expenses
Provision of allowance for doubtful accounts
Other
Total selling, general and administrative
expenses
Operating profit
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Rental income
Share of profit of entities accounted for using
equity method
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Compensation expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Other
Total extraordinary income
Extraordinary losses
Impairment losses
Loss on disaster
Loss on retirement of non-current assets
Other
Total extraordinary losses
Profit before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)*1
42,722,145*2, *334,913,005
7,809,139

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)*1
42,114,483*2, *334,759,486
7,354,996

758,204
1,862,094
119,060

859,077
1,894,731
136,684

2,162

3,618

66,6091,135
2,771,767

74,082
19,5212,883,503*2

5,581,034*2

5,871,219

2,228,105

1,483,777

141,797
58,572
215,42162,147

116,832
31,80848,485
51,113

19,839－76,585
146,849
721,21459,27758,877366,395

155,066

202,432－

47,175－76,762
231,828
2,717,491

57,08454,925
361,617
1,488,556

*4
*6

4,104
1,305,245
41,1401,350,490

*4
*6

2,121
679,044
19,454
700,620*7

19,332－90,26355,871
165,467
3,902,515
1,098,866△55,298
1,043,567
2,858,947
2,465
2,856,481*7

15,52457,443
43,625
96
116,689
2,072,487
606,733△174,019
432,714
1,639,772－
1,639,772*5- 63 -*5

[Consolidated Statements of Comprehensive Income](Thousands of yen)

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, netof taxShare of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests

Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023
2,858,947

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)
1,639,772△762,700

48,62736,488556,682

11,951
944,542△118,635

94,4397,824

22,358*- 64 -△280,340
2,578,607*

1,121,919
2,761,692

2,597,749

2,761,692△19,142－

3) Consolidated Statements of Changes in Shareholders’ Equity and Other Net Assets
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

7,643,777

3,017,461

204,095

204,095

Retained earnings

Treasury shares

34,936,822

Total shareholders’equity45,298,357△299,704

Changes during period
Issuance of new shares
Dividends of surplus
Profit attributable to ownersof parent

408,191△3,006,166△3,006,166

2,856,481

2,856,481

Purchase of treasury shares△750,332△750,332△1,10644,501

43,394△492,559

492,559－

Disposal of treasury shares
Cancellation of treasury
sharesPurchase of shares of
consolidated subsidiaries△22,938△22,938

Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

204,095

181,157△643,351△213,271△471,369

7,847,873

3,198,618

34,293,471△512,975

44,826,987

Accumulated other comprehensive income
Valuation
Total
Share
difference
Foreignaccumulated
Deferred gains
Remeasuremeacquisitiononcurrency
otheror losses on
nts of definedrightsavailabletranslation
comprehensive
hedgesbenefit plansfor-saleadjustment
incomesecurities
Balance at beginning of period

1,229,118△50,146

1,317,978△8,7342,488,215

149,131

Noncontrollinginterests

Total net
assets29,99847,965,702

Changes during period
Issuance of new shares

408,191

Dividend of surplus△3,006,166

Profit attributable to ownersof parent

2,856,481

Purchase of treasury shares△750,332

Disposal of treasury shares

43,394

Cancellation of treasury
sharesPurchase of shares of
consolidated subsidiaries
Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period－△22,938△762,700

36,488586,115△118,635△258,731△97,887△29,998△386,618△762,700

36,488586,115△118,635△258,731△97,887△29,998△857,988

466,417△13,657

1,904,093△127,370

2,229,483

51,243－

47,107,714- 65 -

Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

7,847,873

3,198,618

14,162

14,162Retained earnings

Treasury shares

34,293,471

Total shareholders’equity44,826,987△512,975

Changes during period
Issuance of new shares
Dividends of surplus
Profit attributable to ownersof parent

28,325△3,649,595△3,649,595

1,639,772

1,639,772

Purchase of treasury shares
Disposal of treasury shares△2,142

Change in scope of equity
method△28,310

△269

△269

52,60550,462△28,310

Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

14,162

14,162△2,040,274

52,335△1,959,613

7,862,036

3,212,781

32,253,196△460,640

42,867,374

Accumulated other comprehensive income
Valuationdifferenceonavailablefor-salesecurities
Balance at beginning of period

466,417

Deferred
gains orlosses onhedges△13,657

Foreigncurrencytranslation
adjustment
1,904,093

Total
Share
accumulated
Remeasuremeacquisitionothernts of definedrightscomprehensive
benefit plansincome△127,370

2,229,483

51,243

Total net
assets47,107,714

Changes during period
Issuance of new shares

28,325

Dividends of surplus△3,649,595

Profit attributable to ownersof parent

1,639,772

Purchase of treasury shares△269

Disposal of treasury shares

50,462

Change in scope of equity
method△28,310

Net changes in items otherthan shareholders' equity

48,627

11,951

966,900

94,4391,121,919△23,824

1,098,095

Total changes during period

48,627

11,951

966,900

94,4391,121,919△23,824△861,518

Balance at end of period

515,045△1,7062,870,994△32,930

3,351,402

27,41946,246,196- 66 -

4) Consolidated Statements of Cash Flows(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Loss on disaster
Share-based payment expenses
Increase (decrease) in provision for productwarranties
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses
for directors (and other officers)
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for shareawardsIncrease (decrease) in retirement benefit
liability
Interest and dividend income
Subsidy income
Interest expenses
Foreign exchange losses (gains)Share of loss (profit) loss of entities
accounted for using equity method
Loss (gain) on sale of investment securities
Loss (gain) on redemption of investment
securities
Loss (gain) on sale of non-current assets
Loss on retirement of property, plant andequipment
Loss on valuation of golf club membership
Gain on reversal of share acquisition rights
Other extraordinary loss (income)Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption
taxes
Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividends received
Interest paid
Payments associated with disaster loss
Income taxes refund (paid)
Subsidies received
Net cash provided by (used in) operating
activities- 67 -

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

3,902,515
2,290,388
19,332－
39,5772,072,487
2,206,551
15,52457,44344,998△35,179△16,150

19,262

63,085△2,341

1,456△10,710

52,133△32,358

22,551△53,180△79,831△200,370△76,585
155,066△104,182△148,640△59,277
202,432△79,672△19,839

47,175△1,249,374△678,948△40,063－△4,104△2,121

732

6,639

－
△40,970△169
3,363,943△1,328,338△544,516

175△19,454－△2,875,018
955,835
1,676,428△439,241

318,211△303,405△412,756
4,893,129
238,848△149,538－△1,588,013
76,585

191,995
280,943
4,256,954
148,810△205,746△23,376△1,016,101
59,277

3,471,010

3,219,818

(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time
deposits
Purchase of property, plant andequipment
Proceeds from sale of property, plantand equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment
securities
Proceeds from sale of shares ofsubsidiaries and associates
Loan advances
Proceeds from collection of loans
receivable
Decrease (increase) in investments andother assets
Net cash provided by (used in)investing activities
Cash flows from financing activities
Net increase (decrease) in short-termborrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease liabilities
Repayments of long-term accounts
payable - other
Redemption of bonds
Proceeds from issuance of shares
Purchase of treasury shares
Dividends paid
Dividends paid to non-controllinginterests
Payments of shares of subsidiaries not
resulting in change in scope of
consolidation
Net cash provided by (used in)financing activities
Effect of exchange rate change on cash
and cash equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
periodCash and cash equivalents at end of
period*1△1,619,726△138,737

132,389

1,757,058△4,324,762△3,544,286

5,509

2,420

△50,511△341,769△235,300△3,942

6,783,255

826,011－245,244△31,097－

22,672

26,399△67,333

3,675

508,625△1,061,455

1,403,950

111,639

1,183,299△1,552,282△118,379

3,221,122△2,988,557△125,349△5,179－△26,800
348,446△748,937△3,000,754△16,800
23,956△269△3,641,317△9,589－△45,813－△2,572,040△3,415,575

235,149

421,390

1,642,744△835,822

16,893,109

18,535,854

18,535,854- 68 -

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)*1

17,700,031

[Notes](Important Matters Underlying Preparation of Consolidated Financial Statements)
1. Matters concerning scope of consolidation(1) Number of consolidated subsidiaries: eleven (11)Names of major consolidated subsidiaries:
ThinFlex Corporation, ThinFlex Technology Corporation (B.V.I.), TopFlex Corporation, Satosen Co., Ltd.,
Arisawa Fiber Glass Co., Ltd., Protec International Holdings Co., Ltd., Protec Arisawa Europe, S.A., Protec
Arisawa America, Inc., Arisawa Sogyo Co., Ltd., Arisawa Jushi Kogyo Co., Ltd., ColorLink Japan, Ltd.,(2) Names, etc. of major non-consolidated subsidiaries
Major non-consolidated subsidiaries:
Kashiwa Seiki Co., Ltd.
(Reasons for excluding the above-mentioned non-consolidated subsidiaries from the scope of consolidation)
The non-consolidated subsidiary is small in size, and its aggregate total assets, net sales, profit or loss (Amountcorresponding to the Company’s equity interest) and retained earnings (Amount corresponding to the Company’s
equity interest), etc. does not materially affect the consolidated financial statements.
2. Matters concerning application of equity method(1) Number of affiliated companies accounted for under the equity method: －Some shares of Innovision FlexTech Corporation were sold in the consolidated fourth quarter and it is nolonger an affiliated company, and so it has been excluded from the scope of application of equity method.
(2) As the non-consolidated subsidiaries (Kashiwa Seiki Co., Ltd.) and the affiliated companies (Ryoyu Industrial
Corporation) to which the equity method is not applied have only slight effects on the consolidated financial
statements in terms of profit or loss (Amount corresponding to the Company’s equity interest) and retained
earnings (Amount corresponding to the Company’s equity interest), etc. (even if they are excluded from thescope of application of the equity method) and also bear no significance as a whole, these companies have been
excluded from the scope of application of the equity method.
3. Matters concerning business year, etc. of consolidated subsidiaries
The closing date of ThinFlex Corporation, TopFlex Corporation, ThinFlex Technology Corporation (B.V.I.), Protec
Arisawa Europe, S.A. and Protec Arisawa America, Inc., all of which are consolidated subsidiaries, is December 31
of each year.
In preparation of consolidated financial statements, financial statements as of the said closing date are used;provided, however, that for the important transactions conducted in the period from January 1 to March 31 (i.e. theconsolidated closing date), the adjustments necessary for consolidation purposes have been made.
4. Matters concerning accounting policies(1) Valuation standards and valuation methods for important assets
1) Securities
Available-for-sale securities
Securities other than stocks and others without a quoted market price:
Stated at fair market value. (Valuation differences are reported as a component of net assets, and the costof securities sold is calculated using the average cost method.)
Stocks and others without a quoted market price:
Stated at average cost.
2) Derivative financial instruments
Stated at fair market value.
3) Inventories
Merchandise, finished goods, semi-finished goods and work in process:
The Company and its domestic consolidated subsidiaries primarily adopt the cost method on a first-in,
first-out basis (The amount shown on the balance sheets is calculated by writing inventories down due toa decline in profitability.), and the overseas subsidiaries primarily adopt the lower-of-cost-or-market
method based on the moving average method.
Raw materials and supplies:
The Company and its domestic consolidated subsidiaries primarily adopt the cost method based on the
periodic average method (The amount shown on the balance sheets is calculated by writing inventories- 69 -

down due to a decline in profitability.), and the overseas subsidiaries primarily adopt the lower-of-costor-market method based on the moving average method.
(2) Methods of depreciation and amortization of important depreciable assets
1) Property, plant and equipment (excluding leased assets)
The Company and its domestic consolidated subsidiaries adopt the declining-balance method, except for thebuildings (excluding accompanying facilities) acquired on or after April 1, 1998, and accompanying facilities
and structures acquired on or after April 1, 2016, which are depreciated using the straight-line method. The
overseas consolidated subsidiaries adopt the straight-line method.
The useful life mostly falls within the ranges shown below:
Buildings and structures: ten (10) years to thirty-one (31) years
Machinery, equipment and vehicles: four (4) years to ten (10) years
2) Intangible assets (excluding leased assets)
The straight-line method is adopted. Software used by the Company is amortized over an estimated in-houseusable period. (currently five (5) years)
In addition, technology-related assets are amortized over the economic useful life (8 years).
3) Leased assets
Leased assets related to finance lease transactions that entail transfer of title
Depreciation and amortization is based on the same method as applied to self-owned non-current assets.
Leased assets related to finance lease transactions that do not entail transfer of title
Depreciation and amortization is based on the straight-line method that takes the lease period as the usefullife and sets the residual value at zero (0).
(3) Standards for recording important allowances and provisions
1) Allowance for doubtful accounts
As a reserve for potential loan losses, an estimated uncollectible amount is allocated based on the historicalloan-loss ratio in the case of general accounts receivable, and in light of the collectibility in each instance in thecase of some specific accounts receivable, e.g. doubtful receivables.
2) Provision for bonuses
The Company and some of its consolidated subsidiaries, in preparation for the payment of bonuses to theirrespective employees, allocate such portion of the expected aggregate bonus amount that is recognizable in thecurrent consolidated fiscal year.
3) Provision for bonuses for directors (and other officers)
Some of the Company’s consolidated subsidiaries, in preparation for the payment of bonuses to their respective
directors and officers, make a relevant allocation based on the expected aggregate amount of such bonus
payment for the current consolidated fiscal year.
4) Provision for share awards
As a reserve for the Company’s stock benefit to employees under the stock benefit regulations, it is allocatedbased on the expected aggregate amount of share benefit obligation as of the end of the current consolidated
fiscal year.
5) Provision for product warranties
As a reserve for warranty expenses potentially incurred with respect to the products delivered to customers, anamount reasonably expected to accrue in such expenses is estimated and appropriated.
(4) Accounting methods concerning retirement benefits
1) Method of inter-period attribution of expected retirement benefits
In calculating retirement benefit obligations, the benefit formula is employed as the method of attributing theestimated amount of each employee’s retirement benefits to his or her service period up to the end of the current
consolidated fiscal year.
2) Method of recognizing actuarial differences as expenses
Actuarial differences are recognized as expenses, effective from the consolidated fiscal year immediately
following the year of occurrence of each such difference, in an amount prorated using the straight-line method
over a certain number of years (currently five (5) years) within the average remaining service period of theemployees at the time of occurrence of the said difference in each consolidated fiscal year.
3) Adoption of simplified method by small-scale businesses, etc.
Some of the Company’s consolidated subsidiaries employ, in calculating their respective net defined benefit- 70 -

liabilities and retirement benefit expenses, a simplified method which deems the size of retirement benefit
obligations to be equal to the aggregate amount of retirement benefits payable assuming the voluntary
retirement of all employees at the end of the current period.
(5) Standards for recording important revenues and expenses
Notes on the standards for recording important revenues and expenses are omitted as the same details areshown in “Notes (For Revenue Recognition) 2. Basic Information for understanding revenue from contracts
with customers” of Consolidated Financial Statements.
(6) Standards for translating important foreign currency assets and liabilities into Japanese currency
Foreign currency monetary assets and liabilities are translated into Japanese yen at the spot exchange rate asof the consolidated closing date, and the resulting translation differences are entered as profit or loss, as thecase may be. Assets and liabilities of overseas subsidiaries, etc. are translated into Japanese yen at the spot
exchange rate as of the consolidated closing date, and their respective incomes and expenses are translated into
Japanese yen at the average exchange rate during the period, with the resulting translation differences being
recorded as part of “Foreign currency translation adjustment” and “Non-controlling interests” in the “Netassets” section.
(7) Accounting method of significant hedge transactions
1) Method of hedge accounting
The Company adopts the deferred hedge accounting. With respect to the forward exchange contracts that meetthe requirements of hedge accounting, we adopt the designated hedge accounting.
2) Hedging instruments and hedged items
Hedging instruments: Forward exchange contracts
Hedged items: Monetary claims denominated in foreign currencies, Anticipated transactions in foreign
currencies
3) Hedging policy
Forward foreign exchange transactions are conducted within the scope of actual demand for the purpose ofdeterring risks involved in transactions denominated in foreign currencies from the fluctuations in the foreignexchange market. These transactions will never be entered for speculative purpose.
4) Method of assessing hedge effectiveness
The Company assesses the effectiveness of hedging based on the ratio of changes that is calculated bycomparing the cumulative total of the market fluctuations of hedged items with that of hedging instruments.
However, when the forward foreign exchange transactions are by designated hedge accounting, suchassessment of effectiveness is omitted.
(8) Scope of funds in the consolidated statements of cash flows
The funds consist of cash on hand, demand deposits that are immediately withdrawable and short-term
investments with a maturity of three (3) months or less from the date of acquisition which are readily
convertible to cash and carry only a negligible risk of value fluctuations.
(9) Other important matters concerning preparation of consolidated financial statements
Accounting methods concerning deferred assets
Stock delivery expenses are fully charged to expenses when they are paid.

- 71 -

(Significant Accounting Estimates)
Impairment of property, plant and equipment which consolidated subsidiaries (ThinFlex Corporation and TopFlex
Corporation) hold
(1) Amount recorded in the consolidated financial statements for the current consolidated fiscal year
(Thousands of yen)Previous consolidated fiscal year
Impairment losses
Property, plant and equipment

Current consolidated fiscal year－－

5,162,648

6,250,485(2) Information regarding the significant accounting estimates of the identified items
1) Calculation method
With regard to an asset group that indicates impairment, if the Company determines that impairment losses should beshown after the recoverability test of impairment losses to evaluate whether a carrying amount exceeds its recoverable
amount, the carrying amount is reduced to its recoverable amount. The recoverable amount is assessed based on value
in use. The Company has determined in the consolidated fiscal year that there is an indication of impairment in theproperty, plant and equipment which ThinFlex Corporation and TopFlex Corporation hold due to a decrease indemands for electronic materials in the Chinese market and a decline in profitability associated with stagnation of theChinese economy. However, the impairment losses are not recognized because the value in use from such asset groupexceeds the carrying amount in the recoverability test of the impairment losses.
2) Major assumptions
The major assumptions of future cash flow estimates are sales growth rates and gross profit margins.
3) Effect on the consolidated financial statements for the next consolidated fiscal year
The major assumptions of future cash flow estimates are highly uncertain and may have a significant impact on the
consolidated financial statements for the next consolidated fiscal year due to changes in sales growth rates and grossprofit margins.
(Changes in Accounting Policies)
No applicable matter.
(Accounting Standards etc. not yet applied)
Accounting standard, etc. for calculating fair value- “Accounting Standard for Current Income Taxes” (Accounting Standards Board of Japan Statement No.27, October28, 2022)- “Accounting Standard for Presentation of Comprehensive Income” (Accounting Standards Board of Japan Statement
No.25, October 28, 2022)- “Implementation Guidance on Tax Effect Accounting” (Accounting Standards Board of Japan Guidance No.28,
October 28, 2022)(1) Overview
Accounting Standards Board of Japan Guidance No.28, “Partial Amendments to Accounting Standard for Tax EffectAccounting”, etc. (“ASBJ Guidance No.28, etc.”), were issued on February 2022, and the transfer of the operationalguidelines concerning the tax effect accounting from the Japanese Institute of Certified Public Accountants(“JICPA”) to the ASBJ was completed. During the deliberation, the following two issues, which were to be studied
after the issuance of the ASBJ Guidance No.28, etc., were deliberated and issued.
・Accounting for tax expenses (taxation on other comprehensive income)・Tax effects of the sales of the shares, etc. of subsidiaries (shares of subsidiaries or affiliates) when the group
taxation regime is applied(2) Scheduled date of application
The Accounting Standard and the Implementation Guidance mentioned above will be applied at the start of the
fiscal year beginning on April 1, 2025.
- 72 -

(3) Effect of application of the accounting standard, etc.
The effect of the application of the “Accounting Standard for Current Income Taxes”, etc. on the consolidated
financial statements is currently under evaluation.
(Changes in Presentation)<Consolidated Statements of Income>1. “Rental income”, which was presented as part of “Other” in “Non-operating income” in the previous consolidated
fiscal year, is separately stated effective from the current consolidated fiscal year due to a rise in percentage ofthe pertinent amount to more than ten hundredths (10/100) of the aggregate amount of non-operating income. In
order to reflect such change in presentation, a reclassification has been made in the consolidated financial
statements for the previous consolidated fiscal year.
As a result, 208,996 thousand yen of “Other”, listed within “Non-operating income” in the consolidated
statements of income for the previous consolidated fiscal year, has been reclassified into the combination of
62,147 thousand yen of “Rental income” and 146,849 thousand yen of “Other”.
2. “Rental expenses”, which was separately stated within “Non-operating expenses” in the previous consolidated
fiscal year, is presented as part of “Other” effective from the current consolidated fiscal year due to a fall inquantitative materiality. In order to reflect such change in presentation, a reclassification has been made in the
consolidated financial statements for the previous consolidated fiscal year.
As a result, 46,499 thousand yen of “Rental expenses”, listed within “Non-operating expenses” in the
consolidated statements of income for the previous consolidated fiscal year, has been reclassified as part of“Other”.
3. “Loss on sale of investment securities”, which was separately stated within “Extraordinary losses” in the previous
consolidated fiscal year, is presented as part of “Other” effective from the current consolidated fiscal year due toa fall in quantitative materiality. In order to reflect such change in presentation, a reclassification has been madein the consolidated financial statements for the previous consolidated fiscal year.
As a result, 55,871 thousand yen of “Loss on sale of investment securities”, listed within “Extraordinary losses”
in the consolidated statements of income for the previous consolidated fiscal year, has been reclassified as part of“Other”.
(Changes in accounting estimates)
The Company has extended the useful lives of major buildings and machinery and equipment at our subsidiary,
ThinFlex Corporation, from five years to ten years, effective from the fourth quarter of the current fiscal year,
because we investigated the actual utilization and operating status of the facilities and confirmed that they wereoperating more stable than before, according to a review of the production system and policies in response tochanges in the external business environment, as well as to an investigation of the large-scale facility expansion.
With this change, operating profit, ordinary profit, and profit before income taxes for the fiscal year increased by
83,701 thousand yen.

- 73 -

(Notes Related to Consolidated Balance Sheets)*1 Items related to non-consolidated subsidiaries and affiliated companies are as follows.
(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2023)

Current consolidated fiscal year
(As of March 31, 2024)

385,230

144,570

Investment securities (Stock)*2 Assets subject to a security interest and secured liabilities
Assets subject to a security interest are as follows.

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2023)
Cash and deposits

Current consolidated fiscal year
(As of March 31, 2024)

29,011(－ )69,906(－ )Buildings and structures
Machinery, equipment and vehicles

3,278,555
610,808((

2,695,800)
610,808)

3,380,096
1,230,656((

2,874,669)
1,230,656)

Property, plant and equipment (Other)Land

48,430500,923((

48,430)199,190)

95,590500,923((

95,590)199,190)

4,467,729(

3,554,230)

5,277,174(

4,400,107)

Total

Secured liabilities are as follows.

(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2023)

Current portion of long-term borrowings

Current consolidated fiscal year
(As of March 31, 2024)(－)(
439,304
462,000
The parenthesized figures represent factory foundation mortgages and the liabilities secured by such mortgages.

－)*3 The Submitting Company has an overdraft agreement in effect with each of its six (6) partner banks to ensure efficient
procurement of operating funds. The following is the balance of unexecuted loans under such overdraft agreements
as of the end of the current and previous consolidated fiscal years.
(Thousands of yen)Previous consolidated fiscal year
(As of March 31, 2023)

Current consolidated fiscal year
(As of March 31, 2024)

9,500,000

9,500,000

Aggregate overdraft limit
Drawdowns

2,000,000

2,000,000

Balance of unexecuted loans

7,500,000

7,500,000*4 Notes, etc. maturing at the end of the consolidated fiscal year
For accounting treatment of notes, electronically recorded monetary claims and electronically recorded obligations
maturing at the end of the consolidated fiscal year, settlement is made as of the clearing date of each note or as of thesettlement date of each electronically recorded monetary claim and electronically recorded obligation, as the casemay be. As the end of the current consolidated fiscal year falls on a bank holiday, the following notes, electronicallyrecorded monetary claims and electronically recorded obligations maturing at the end of the consolidated fiscal year
are included in their respective balances as of the end of the consolidated fiscal year.

Previous consolidated fiscal year
(As of March 31, 2023)(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2024)

Notes and accounts receivable - trade, and contract assets
Notes and accounts payable-trade－－51,722
98,419Current liabilities and others (Non-operating notes
payable, Electronically recorded obligations-non-－

21,536

operating)- 74 -

(Notes Related to Consolidated Statements of Income)*1 Revenue from contracts with customers
With regard to net sales, revenue from contracts with customers and other revenues are not separately stated. The
amount of the revenue from contracts with customers is stated in “Notes (For Revenue Recognition) 1. Informationon the breakdown of revenue from contracts with customers” of Consolidated Financial Statements.
*2 Total amount of research and development expenses included in manufacturing costs for the current period andgeneral and administrative expenses(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)
1,991,915

2,033,696*3 Closing inventories are stated in the amount after writing inventories down due to a decline in profitability, andthe following loss on valuation of inventories or gain on reversal of loss on valuation of inventories () are includedin the cost of sales.
(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)

Current consolidated fiscal year
(From April 1, 20232
to March 31, 2024)
205,700

46,674*4 Details of gain on sale of non-current assets are as follows.
(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Machinery, equipment and vehicles
Tools, furniture and fixtures

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)
1,902

2,121

9

－

Land

2,192

－

Total

4,104

2,121

*5 The loss on retirement of non-current assets is due mainly to the retirement of buildings.
*6 The gain on sale of investment securities is due mainly to the sale of cross-shareholdings.

- 75 -

*7 Impairment losses
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
Our Group recorded impairment losses with respect to the following asset group(s) in the previous consolidated
fiscal year.
Impairment
LocationUsage
Type
losses(Thousands of yen)
Arisawa Mfg. Co., Ltd.
(Joetsu-shi, Niigata)

Industrial Application Structural materials
manufacturing facilities

Machinery, equipment
and vehicles; etc.

19,332

Our Group conducts asset grouping grounded in its business segments and based primarily on product lines (eachline representing a family of products), while each asset becomes the subject of asset grouping in the cases ofassets for rent and idle assets, etc.
Of the Group’s business assets, those asset groups whose profitability significantly declined due largely to a fallin the market price of the relevant products, etc. have been written down to the recoverable amount, and theaggregate amount of such write-downs, 19,332 thousand yen, was recorded as impairment losses in extraordinary
losses. The said aggregate amount consists of 19,064 thousand yen of machinery, equipment and vehicles, and
268 thousand yen of others. Note that a carrying amount is measured according to value in use, but it is assessed
according to memorandum value because future cash flow is negative.
Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)
Our Group recorded impairment losses with respect to the following asset group(s) in the current consolidated
fiscal year.
Impairment
LocationUsage
Type
losses(Thousands of yen)
Arisawa Mfg. Co., Ltd.
(Joetsu-shi, Niigata)

Industrial Application Structural materials
manufacturing facilities

Machinery, equipment
and vehicles; etc.

15,524

Our Group conducts asset grouping grounded in its business segments and based primarily on product lines (eachline representing a family of products), while each asset becomes the subject of asset grouping in the cases ofassets for rent and idle assets, etc.
Of the Group’s business assets, those asset groups whose profitability significantly declined due largely to a fallin the market price of the relevant products, etc. have been written down to the recoverable amount, and theaggregate amount of such write-downs, 15,524 thousand yen, was recorded as impairment losses in extraordinary
losses. The said aggregate amount consists of 11,379 thousand yen of machinery, equipment and vehicles, and4,145 thousand yen of others.
Note that a carrying amount is measured according to value in use, but it is assessed according to memorandum
value because future cash flow is negative.

- 76 -

(Notes Related to Consolidated Statements of Comprehensive Income)*Reclassification adjustment and tax effects relating to other comprehensive income(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Valuation difference on available-for-sale securities:
Amount arising in the current fiscal year
Reclassification adjustment
Before tax effects
Tax effects

195,589△1,289,437

446,615△379,333△1,093,848

67,282△18,654331,148△762,700

Valuation difference on available-for-sale securities

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

48,627

Deferred gains or losses on hedges:
Amount arising in the current fiscal year
Reclassification adjustment
Before tax effects
Tax effects
Deferred gains or losses on hedges△20,565△2,56975,51020,56554,944△18,455

17,996△6,04536,488

11,951

556,682

944,542△179,001

116,344

Foreign currency translation adjustment:
Amount arising in the current fiscal year
Remeasurements of defined benefit plans, net of tax:
Amount arising in the current fiscal year
Reclassification adjustment

8,302△170,698

Before tax effects
Tax effects

52,063△118,635

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method:Amount arising in the current fiscal year
Reclassification adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income- 77 -

19,540135,884△41,444
94,439－7,824－

22,358

7,824

22,358△280,340

1,121,919

(Notes Related to Consolidated Statements of Changes in Shareholders’ Equity and Other Net Assets)
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
1. Matters concerning class and number of shares issued and outstanding and of shares of treasury shares
Number of shares at the
beginning of theconsolidated fiscal year

Increase in the numberof shares during theconsolidated fiscal year

Decrease in the numberof shares during theconsolidated fiscal year

Number of shares at theend of the consolidated
fiscal year

33,614,824

350,700

424,400

33,541,124

33,614,824

350,700

424,400

33,541,124

301,575

624,659

466,955459,279

Shares issued and outstanding
Common stock (See Note
1,2)
Total
Treasury shares
Common stock (See Note
3,4)
Total
Note: 1.
2.
3.
4.

5.

301,575
624,659
466,955459,279
The increase of 350,700 shares in the number of shares issued and outstanding (common stock) is due to an issuance of newshares through the exercise of stock acquisition rights.
The decrease of 424,400 shares in the number of shares issued and outstanding (common stock) is due to the retirement oftreasury shares.
The increase of 624,659 shares in the number of shares of treasury shares (common stock) is due to an increase of 624,400
shares resulting from the acquisition of treasury stocks by a resolution of the Board of Directors and an increase of 259
shares resulting from the purchase of shares constituting less than one full unit.
The decrease of 466,955 shares in the number of shares of treasury shares (common stock) is due to a decrease of 424,400
shares resulting from the retirement of treasury shares, a decrease of 41,055 shares resulting from the disposal of treasury
shares as restricted stock-based compensation, and a decrease of 1,500 shares resulting from granting to eligible persons bya trust account for employee stock ownership plan.
87,100 shares of the Company which a trust account for employee stock ownership plan holds are included in the row“Number of shares at the end of the current consolidated fiscal year” of treasury shares.

2. Matters concerning stock acquisition rights and treasury shares acquisition rights

Category

Submitting
Company(Parent
company)
Total

Number of shares subject to stock acquisition
Balance at therightsend of the
At theIncrease
DecreaseAt the end of consolidated
beginning offiscal year
during theduring thethethe
consolidated consolidated consolidated (Thousands ofconsolidatedyen)fiscal year
fiscal year
fiscal year
fiscal year

Details of stockacquisition rights

Class ofshares subject
to stockacquisitionrightsStock acquisition rights
issued as stock options

---

---

---

---

---

51,243

---

---

---

---

---

51,2433. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)Record date

Effective dateOrdinary General
Meeting ofCommon stock
3,006,166
90.00 March 31, 2022
June 29, 2022
Shareholders ofJune 28, 2022
Note: “Total amount of dividends” under a resolution at the Ordinary General Meeting of Shareholders of June 28, 2022 includes
the dividends of 7,974 thousand yen on the Company’s shares which a trust account for employee stock ownership plan holds.

- 78 -

(2) Dividends whose record date belongs to the current consolidated fiscal year but whose effective date belongs to
the next consolidated fiscal year
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Source ofdividends

Dividend pershare (Yen)Record date

Effective dateOrdinary General
Meeting ofRetained
Common stock
2,985,205
90.00 March 31, 2023 June 30, 2023
Shareholders ofearnings
June 29, 2023
Note: “Total amount of dividends” includes the dividends of 7,839 thousand yen on the Company’s shares which a trust account for
employee stock ownership plan holds.

Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)
1. Matters concerning class and number of shares issued and outstanding and of shares of treasury shares
Number of shares at the
beginning of theconsolidated fiscal year

Increase in the numberof shares during theconsolidated fiscal year

Decrease in the numberof shares during theconsolidated fiscal year

Number of shares at theend of the consolidated
fiscal year

Common stock (See Note 1)

33,541,124

25,800－33,566,924

Total

33,541,124

25,800－33,566,924

459,279

231

46,277413,233

Shares issued and outstanding

Treasury shares
Common stock (See Note 2,3)
Total
Note: 1.

459,279
231
46,277413,233
The increase of 25,800 shares in the number of shares issued and outstanding (common stock) is due to an issuance of newshares through the exercise of stock acquisition rights.

2.

The increase of 231 shares in the number of shares of treasury shares (common stock) is due to an increase resulting fromthe purchase of shares constituting less than one full unit.
The decrease of 46,277 shares in the number of shares of treasury shares (common stock) is due to a decrease of 41,477
shares resulting from the disposal of treasury shares as restricted stock-based compensation, and a decrease of 4,800 shares
resulting from granting to eligible persons by a trust account for employee stock ownership plan.
82,300 shares of the Company which a trust account for employee stock ownership plan holds are included in the row“Number of shares at the end of the current consolidated fiscal year” of treasury shares.

3.
4.

2. Matters concerning stock acquisition rights and treasury shares acquisition rights

Category

Submitting
Company(Parent
company)
Total

Number of shares subject to stock acquisition
Balance at therightsend of the
At theIncrease
DecreaseAt the end of consolidated
beginning offiscal year
during theduring thethethe
consolidated consolidated consolidated (Thousands ofconsolidatedyen)fiscal year
fiscal year
fiscal year
fiscal year

Details of stockacquisition rights

Class ofshares subject
to stockacquisitionrightsStock acquisition rights
issued as stock options

---

---

---

---

---

27,419

---

---

---

---

---

27,419- 79 -

3. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount of dividends(Thousands of yen)

Dividend pershare (Yen)

Ordinary General
Meeting of
Shareholders of June29, 2023

Common stock

2,985,205

Board of Directors ofAugust 3, 2023

Common stock

664,390

Record date

Effective date

90.00

March 31, 2023

June 30, 2023

20.00

September 30,
2023

December 4,2023

Note: 1. “Total amount of dividends” under a resolution at the Ordinary General Meeting of Shareholders of June 29, 2023 includes
the dividends of 7,839 thousand yen on the Company’s shares which a trust account for employee stock ownership plan
holds.
2. “Total amount of dividends” under a resolution at the Board of Directors’ Meeting of August 3, 2023 includes the dividends
of 1,654 thousand yen on the Company’s shares which a trust account for employee stock ownership plan holds.

(2) Dividends whose record date belongs to the current consolidated fiscal year but whose effective date belongs to
the next consolidated fiscal year
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Source ofdividends

Dividend pershare (Yen)Record date

Effective dateOrdinary General
Meeting ofRetained
Common stock
1,329,439
40.00 March 31, 2024 June 28, 2024
Shareholders ofearnings
June 27, 2024
Note: “Total amount of dividends” includes the dividends of 3,292 thousand yen on the Company’s shares which a trust account for
employee stock ownership plan holds.

(Notes Related to Consolidated Statements of Cash Flows)*1 The correlation between the balance of cash and cash equivalents at the end of the current and previous consolidated
fiscal years and the amounts shown for the corresponding items on the relevant consolidated balance sheets(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Cash and deposits

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

Time deposits with a deposit term of more than three months

20,545,580△2,009,726

18,163,338△463,306

Cash and cash equivalents

18,535,854

17,700,031

2

The details of material non-cash transactions
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
No applicable matter.
Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)
No applicable matter.

(Notes Related to Lease Transactions)(As lessee)
Finance lease transactions
1. Finance lease transactions that entail transfer of title
1) Details of leased assets
Property, plant and equipment
Boiler-related facilities mainly. (falling under “Machinery, equipment and vehicles” respectively)
2) Methods of depreciation and amortization of leased assets
As is stated in (Important Matters Underlying Preparation of Consolidated Financial Statements) - 4. Mattersconcerning accounting policies - (2) Methods of depreciation and amortization of important depreciable assets.

- 80 -

2. Finance lease transactions that do not entail transfer of title and the right-of-use assets at the IFRS 16-applied
subsidiaries of our Group1) Details of leased assets
Property, plant and equipment
Land and photovoltaic facility, mainly. (falling under “Machinery, equipment and vehicles” respectively)
2) Methods of depreciation and amortization of leased assets
As is stated in (Important Matters Underlying Preparation of Consolidated Financial Statements) - 4. Mattersconcerning accounting policies - (2) Methods of depreciation and amortization of important depreciable assets.
(Notes Related to Financial Instruments)
1. Matters concerning the status of financial instruments(1) Policies for financial instruments
Our Group obtains funds required in light of its financing plan and business plan (mainly through bank loans),and invest any temporary surplus funds in highly liquid financial instruments, and also obtains short-term
operating funds through bank loans. Our Group makes use of derivative transactions in order to avoid the risks
mentioned below and maintains a policy of eschewing speculative transactions.
(2) Description of financial instruments and risks associated with such financial instruments
Notes and accounts receivable, a type of operating receivables, are exposed to customer credit risk, and foreign
currency operating receivables are also exposed to exchange rate fluctuation risk.
Securities and investment securities consist of those held primarily as pure investments and equity shares in
the Company’s business partners and are exposed to market price fluctuation risk.
Notes and accounts payable, a type of operating payables, are mostly due in approximately four (4) months.
The notes and accounts payable denominated in foreign currencies are exposed to exchange rate fluctuation
risk.
Loans payable are primarily aimed at obtaining funds required for capital investment. They are fixed rate loans
and liabilities and therefore are not exposed to interest rate fluctuation risk.
Derivative transactions conducted by our Group are restricted to forward exchange contracts with the purpose
to hedge exchange fluctuation risk in respect of operating receivables denominated in foreign currency. To
learn about hedging instruments and hedged items with respect to hedge accounting, hedging policy andmethod of assessing hedge effectiveness, etc., refer to “4. Matters concerning accounting policies (6)Accounting method of significant hedge transactions” in [Notes] (Important Matters Underlying Preparationof Consolidated Financial Statements) described above.
(3) Risk management system for financial instruments
1) Management of credit risk (Risks associated with default of contract by business partners, etc.)
As for notes and accounts receivable, the sales departments set a credit limit for each of the Company’s
regular customers, monitoring such customers’ respective payment schedules, remaining credit lines andoverall business conditions in an attempt to promptly recognize and reduce doubtful accounts.
As for securities and investment securities held for the purpose of fund management, higher-rated bonds
are selected to minimize credit risk.
As for derivative transactions, the clients are limited to financial institutions with high credit ratings, so we
believe there is almost no risk of credit risk.
2) Management of market risk (Risks associated with fluctuations in foreign exchange rates and interest rates,
etc.)
As for some foreign currency operating receivables and payables, forward exchange contracts may be
employed to avoid exchange rate fluctuation risk.
As for securities and investment securities, the Company continually reviews the holding status in light of
the relevant market conditions and business relations.
The execution and management of derivative transactions are conducted, pursuant to the management rulesthat specify transaction authority and transaction amount limits, by the department in charge with theapproval of the person in charge of settlement.
3) Management of liquidity risk (Risk that payment cannot be made as and when due under contract) in financing
activities
The Company has entered into an overdraft agreement with its partner banks to ensure expeditious financing
and to minimize liquidity risk.

- 81 -

In financing activities, the Company prepares and updates a financial plan under its business plan and capital
investment plan and maintains liquidity on hand, etc. in an attempt to minimize liquidity risk.
(4) Supplementary explanations on matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is based on either the quoted market price, if available, or a reasonably
estimated price where no market price is available. As variable factors are incorporated in the determination of
the said reasonably estimated price, such price may vary depending on the choice among different assumptions,etc.

- 82 -

2.

Matters concerning fair value, etc. of financial instruments
The amount shown on the consolidated balance sheets, the fair value and the difference between the former and thelatter are as follows.
Previous consolidated fiscal year (As of March 31, 2023)
Amount shown on
consolidated balance
sheetsSecurities and investment securities(*3)
Total assets
Long-term borrowings (*2)
Total liabilities(Thousands of yen)
Fair value

Difference

2,200,411

2,200,411－

2,200,411

2,200,411－

4,566,913

4,578,405

11,4924,566,913

4,578,405

11,492(*1) With regard to “Cash and deposits”, “Notes and accounts receivable - trade, and contract assets”, “Notes andaccounts payable-trade”, and “Short-term borrowings”, statement is omitted as they are cash and the fair value ofthese items approximates their respective book values due to their short maturities.
(*2) The current portion of long-term borrowings is included.
(*3) Stocks and others without a quoted market price are not included in “Securities and investment securities”.
The amount of such financial instruments shown on the consolidated balance sheets is as follows.
(Thousands of yen)
Category

Previous consolidated fiscal year

Unlisted stock, etc.

445,212Current consolidated fiscal year (As of March 31, 2024)
Amount shown on
consolidated balance sheets
Securities and investment securities (*3)
Total assets
Long-term borrowings (*2)
Total liabilities(Thousands of yen)
Fair value

Difference

2,166,703

2,166,703－

2,166,703

2,166,703－

5,091,492

5,071,683△19,809

5,091,492

5,071,683△19,809(*1) With regard to “Cash and deposits”, “Notes and accounts receivable - trade, and contract assets”, “Notes andaccounts payable-trade”, and “Short-term borrowings”, statement is omitted as they are cash and the fair value ofthese items approximates their respective book values due to their short maturities.
(*2) The current portion of long-term borrowings is included.
(*3) Stocks and others without a quoted market price are not included in “Securities and investment securities”.
The amount of such financial instruments shown on the consolidated balance sheets is as follows.
(Thousands of yen)
Category

Current consolidated fiscal year

Unlisted stock, etc.

160,752- 83 -

Note: 1. Scheduled amount of redemption after the consolidated closing date of monetary receivables and securities witha maturity datePrevious consolidated fiscal year (As of March 31, 2023)(Thousands of yen)
Due within one year
Deposits
Notes and accounts
receivable–trade
Securities andinvestment
securities
Available-forsale securities
with a maturity
date(1) Government
bonds, local
government
bonds, etc.
(2) Corporatebonds(3) Other
Total

Due after one year
and within five years

Due after five years
and within ten years

20,545,580

－

－

－

12,967,312

－

－

－

－

－

－

100,000

100,000

100,000－－－

384,944－

33,612,892

100,000

484,944－－

Current consolidated fiscal year (As of March 31, 2024)

Notes and accounts
receivable–trade
Securities andinvestment
securities
Available-forsale securities
with a maturity
date(1) Government
bonds, local
government
bonds, etc.
(2) Corporatebonds(3) Other
Total(Thousands of yen)

Due after one year
and within five years

Due after five years
and within ten years

18,163,338

－

－

－

16,243,075

－

－

－

－

－

－

－

－

100,000

100,000－－－

382,971－

34,406,414

100,000

482,971－

Due within one year
Deposits

Due after ten years- 84 -

Due after ten years

2. Scheduled amount of repayment after the consolidated closing date of short-term borrowings and long-termborrowings
Previous consolidated fiscal year (As of March 31, 2023)(Thousands of yen)
Due after one
Due after two Due after three Due after four
Due within one
Due after five
year and within years and within years and within years and within
year
years
two years
three years
four years
five years
Short-term borrowings

5,056,253

－

－

－

－

－

Long-term borrowings

1,843,441

1,046,694

840,276

708,310

48,48079,710Total

6,899,695

1,046,694

840,276

708,310

48,48079,710Current consolidated fiscal year (As of March 31, 2024)(Thousands of yen)

Due after one
Due after two Due after three Due after four
Due within one
Due after five
year and within years and within years and within years and within
year
years
two years
three years
four years
five years
Short-term borrowings

5,301,635

－

－

－

－

－

Long-term borrowings

3,120,516

915,076

899,584

76,60535,60044,110Total

8,422,151

915,076

899,584

76,60535,60044,1103. Matters concerning breakdown, etc. by level of fair values of financial instruments
The fair values of financial instruments are classified into the following three levels in accordance with the observability
and significance of inputs used in the fair value measurement.
Level 1 fair value: Fair values measured by quoted prices of the assets or liabilities being measured which are formedin active markets among inputs for observable fair value measurement.
Level 2 fair value: Fair values measured by inputs for fair value measurement other than those for Level 1 among inputs
for observable fair value measurement.
Level 3 fair value: Fair values measured by inputs for unobservable fair value measurement.
When multiple inputs which significantly affect fair value measurement are used, the fair values are classified into thelowest level of priority in fair value measurement, choosing from among the respective levels those inputs belong to.
(1) Financial instruments shown at fair value on the consolidated balance sheets

Previous consolidated fiscal year (As of March 31, 2023)
Category(Thousands of yen)
Fair value

Level 1

Level 2

Level 3

Total

Securities and investment securities
Available-for-sale securities
Equity Shares

1,022,161－－

1,022,161

Corporate bonds－

296,285－

296,285

Other－

881,965－

881,965

1,022,161

1,178,250－

2,200,411

Total assets- 85 -

Current consolidated fiscal year (As of March 31, 2024)
Category(Thousands of yen)
Fair value

Level 1

Level 2

Level 3

Total

Securities and investment securities
Available-for-sale securities
Equity Shares

991,537－－

991,537

Corporate bonds－

197,344－

197,344

Other－

977,821－977,821991,537

1,175,165－

2,166,703

Total assets(2) Financial instruments other than those shown at fair value on the consolidated balance sheets

Previous consolidated fiscal year (As of March 31, 2023)
Category(Thousands of yen)
Fair value

Level 1Long-term borrowings
Total liabilities

Level 2

Level 3

Total－

4,578,405－

4,578,405－

4,578,405－

4,578,405

Current consolidated fiscal year (As of March 31, 2024)
Category
Long-term borrowings
Total liabilities(Thousands of yen)
Fair value

Level 1

Level 2

Level 3

Total－

5,071,683－

5,071,683－

5,071,683－

5,071,683(Notes) Description of the valuation techniques used in the fair value measurement and the inputs for the fair value
measurement
Securities and investment securities
Listed stocks, bonds and others are evaluated with quoted market prices. As the listed stocks are traded on active markets,their fair value is classified into the level 1 fair value. On the other hand, as the bonds and others that the Company holds aretraded less frequently and not regarded as quoted market prices in active markets, their fair value is classified into the level 2
fair value.
Long-term borrowings
As the fair value of these loans is measured with the discounted present value method based on the sum of the principal andthe interest rate with the residual period of the liabilities and credit risk added, it is classified into the level 2 fair value.

- 86 -

(Notes Related to Securities)
1. Available-for-sale securities
Previous consolidated fiscal year (As of March 31, 2023)(Thousands of yen)Type

Amount shown on
consolidated balance
sheetsAcquisition cost

(1) Equity Shares

1,022,161

307,628

714,532－－－

100,150

100,000

150

－

－

－

(3) Other－－－

Subtotal

1,122,311

407,628

714,682

－

－

－

－

－

－

196,135

203,525△7,390－－－(3) Other881,965

922,585△40,619

Subtotal

1,078,100

1,126,110△48,0102,200,411

1,533,739

666,672

Difference(2) Bonds
Those whose amountshown on consolidatedbalance sheets exceeds theacquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other(1) Equity Shares(2) Bonds
Those whose amountshown on consolidatedbalance sheets does notexceed the acquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) Other

Total

Current consolidated fiscal year (As of March 31, 2024)(Thousands of yen)Type

Amount shown on
consolidated balance
sheetsAcquisition cost

(1) Equity Shares

991,537

241,427

750,1101) Government bonds, local
government bonds, etc.

－

－

－

2) Corporate bonds

－

－

－

3) Other－－－(3) Other

187,669

180,688

6,981

Subtotal

1,179,207

422,115757,091

－

－

－

－

－

－

197,344

202,719△5,375－－－(3) Other

790,152

800,713△10,561

Subtotal

987,496

1,003,433△15,937

2,166,703

1,425,548

741,154

Difference(2) Bonds
Those whose amountshown on consolidatedbalance sheets exceeds theacquisition cost

(1) Equity Shares(2) Bonds
Those whose amountshown on consolidatedbalance sheets does notexceed the acquisition cost1) Government bonds, local
government bonds, etc.
2) Corporate bonds3) OtherTotal- 87 -

2. Available-for-sale securities sold
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
Type

Amount sold(1) Equity Shares(Thousands of yen)

Total gain on sale

Total loss on sale880,482444,558

27,160－－－5,413,846

835,378

23,918130,848

21,851－

358,077

43,518

4,791

6,783,255

1,345,308

55,871(2) Bonds
1) Government bonds,
local government
bonds, etc.
2) Corporate bonds3) Other(3) Other
Total

Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)
Type

Amount sold(1) Equity Shares(Thousands of yen)

Total gain on sale

Total loss on sale724,135

528,265

－

－

－

－

100,000

－

－

－

－

－

1,876

－

96

826,011528,265

96(2) Bonds
1) Government bonds,
local government
bonds, etc.
2) Corporate bonds3) Other(3) OtherTotal

3. Securities subject to impairment
No applicable matter.

- 88 -

(Notes Related to Derivative Transactions)
1. Derivative transaction not subject to hedge accounting
Previous consolidated fiscal year (As of March 31, 2023)
Statement is omitted as it is not material.
Current consolidated fiscal year (As of March 31, 2024)
Statement is omitted as it is not material.
2. Derivatives transactions subject to hedge accounting
Currency-related transactions
Previous consolidated fiscal year (As of March 31, 2023)
Hedge accounting
methodType of transactions

Major hedged items

Contract amount(Thousands ofyen)Contract
amount due
after 1 yearperiod(Thousands ofyen)

Anticipatedtransactions in foreign
currencies

96,463－△20,565

96,463－△20,565

Fair value(Thousands ofyen)

Forward foreign exchangetransactions
Deferral hedge
accounting

Short open position
U.S. dollar
Total

Note:

The method of calculating the fair market value is based on the price presented by the counterparty financial institution.

Current consolidated fiscal year (As of March 31, 2024)
Hedge accounting
methodType of transactions

Major hedged items

Contract amount(Thousands ofyen)Contract
amount due
after 1 yearperiod(Thousands ofyen)

Anticipatedtransactions in foreign
currencies

70,462－△2,56970,462－△2,569Fair value(Thousands ofyen)

Forward foreign exchangetransactions
Deferral hedge
accounting

Short open position
U.S. dollar
Total

Note:

The method of calculating the fair market value is based on the price presented by the counterparty financial institution.

- 89 -

(Notes Related to Retirement Benefits)
1. Outline of retirement benefit plans adopted by the GroupThe Company and some of its consolidated subsidiaries adopt, as a defined benefit scheme, the defined benefit
corporate pension plan and the retirement lump-sum distribution plan. The Submitting Company shifted to thedefined benefit corporate pension plan from the qualifying retirement pension plan as of April 1, 2007. Someof the Company’s domestic consolidated subsidiaries participate in the Smaller Enterprise Retirement
Allowance Mutual Aid System as a defined contribution scheme. Some of the Company’s overseas
consolidated subsidiaries adopt the defined contribution retirement allowance plan.
2.

Defined benefit scheme (including plans employing the simplified method)(1) Reconciliation between the beginning and ending balances of retirement benefit obligations
Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Balance of retirement benefit obligations
at the beginning of year
Service cost
Interest cost
Actuarial differences generated
Retirement benefits paid
Balance of retirement benefit obligations
at the end of year

(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

4,860,759

5,047,195

260,471
14,452

257,653
14,736

179,803△268,292

18,194△272,635

5,047,195

5,065,144(2) Reconciliation between the beginning and ending balances of plan assets
Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Balance of plan assets at the beginning ofyear(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

4,277,395

4,346,313

42,773－

43,698
134,538

Employer contributions
Retirement benefits paid

293,983△267,839

317,898△262,471

Balance of plan assets at the end of year

4,346,313

4,579,978

Expected return on plan assets
Actuarial differences generated(3) Reconciliation between the ending balance of retirement benefit obligations and plan assets combined
and the retirement benefit liability and net defined benefit asset shown on consolidated balance sheets
Previous consolidated fiscal year
(As of March 31, 2023)
5,001,621
Retirement benefit obligations under the funded plans△4,346,313
Plan assets(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2024)
5,027,147△4,579,978

655,308

447,169

45,57337,997

Net amount of liability and asset shown on
consolidated balance sheets

700,883

485,167

Retirement benefit liability

700,883

485,167

700,883

485,167

Retirement benefit obligations under the unfundedplans

Net amount of liability and asset shown on
consolidated balance sheets- 90 -

(4) Amount of retirement benefit expenses and components thereofService cost
Interest cost
Expected return on plan assets

Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
260,471
14,452△42,773

Recognized actuarial loss
Retirement benefit expenses incurred under
defined benefit scheme(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)
257,653
14,736△43,698

8,302

19,540240,452

248,231(5) Remeasurements of defined benefit plans, net of tax
Remeasurements of defined benefit plans, net of tax (before tax effects), consist of the following.

Actuarial differences

Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)△170,698(Thousands of yen)
Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)
135,884(6) Remeasurements of defined benefit plans
Remeasurements of defined benefit plans (before tax effects) consist of the following.

Unrecognized actuarial differences

Previous consolidated fiscal year
(As of March 31, 2023)△183,266(Thousands of yen)
Current consolidated fiscal year
(As of March 31, 2024)△47,382(7) Matters concerning plan assets
1) Rough breakdown of plan assets
The categorical distribution of the total plan assets held is as follows.
Previous consolidated fiscal year Current consolidated fiscal year
(As of March 31, 2023)(As of March 31, 2024)
Life insurance company general accounts
52%
51%
Trust bank special accounts
25%
25%Life insurance company special accounts
23%
24%
Total
100%
100%
Note: Each account comprises a diverse range of investment asset classes centering on domestic bonds, in a reflectionof the basic policy of securing stable returns.

2) Method of determining the expected long-term rate of return on plan assets
The current and expected future allocations of the plan assets as well as the current and anticipatedlong-term rates of return on the diverse range of asset classes comprising the plan assets are taken into
account in determining the expected long-term rate of return on plan assets.
(8) Matters concerning actuarial assumptions
Major actuarial assumptions
Previous consolidated fiscal year Current consolidated fiscal year
(As of March 31, 2023)(As of March 31, 2024)
Discount rate
0.3%
0.3%
Expected long-term rate of return on plan assets
1.0%
1.0%
1.1～2.8%
1.2～2.8%
Expected rates of salary increase3.

Defined contribution scheme
The total amount required for contributions to the defined contribution plans of some of the Company’s
domestic consolidated subsidiaries and overseas consolidated subsidiaries was 92,463 thousand yen for theprevious consolidated fiscal year (From April 1, 2022 to March 31, 2023) and 92,792 thousand yen for thecurrent consolidated fiscal year (From April 1, 2023 to March 31, 2024).

- 91 -

(Notes Related to Stock Options, etc.)
1. Amount recorded as expenses and item of expenses associated with stock options(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

2,828

－

Share-based compensation expenses in cost of sales
and selling, general and administrative expenses

2. Amount recorded as income due to forfeiture by non-exercise of rights(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

40,97019,454Gain on reversal of share acquisition rights

3. Outline and scale of stock options and changes(1) Submitting Company
1) Outline of stock options
Directors’ remuneration
stock option in 2018

Employees, etc.
stock option in 2018

Employees, etc.
stock option in 2019
208 employees and advisors of theCompany, and 14 directors andemployees of subsidiaries of theCompany

Category and number ofgrantees

5 directors of the Company

211 employees and advisors of theCompany, and 11 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

75,000 shares of common stock

257,300 shares of common stock

271,000 shares of common stock

Grant dateAugust 16, 2018

August 16, 2018

August 16, 2019

Conditions for vesting

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company (including an advisor
and a counselor) or a director or an
employee of a subsidiary of theCompany (including an advisor) at
the time of exercising the rights.

Requisite service period

1 year and 11 months(August 16 2018 through June30, 2020)

1 year and 11 months(August 16, 2018 through June30, 2020)

1 year and 11 months(August 16, 2019 through June 30,
2021)

Exercise period

July 1, 2020 through June 30, 2023

July 1, 2020 through June 30, 2023

July 1, 2021 through June 30, 2024

- 92 -

Directors’ remuneration
stock option in 2020

Employees, etc.
stock option in 2020

Category and number ofgrantees

4 directors of the Company

147 employees and advisors of theCompany, and 13 directors andemployees of subsidiaries of theCompany

Number of stock options(See Note)

55,000 shares of common stock

271,800 shares of common stock

Grant dateAugust 17, 2020

August 17, 2020

Conditions for vesting

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company or a director or an
employee of a subsidiary of theCompany at the time of exercising
the rights.

No condition for vesting is set, but
the condition for exercising therights is as follows:- Being a director or an employee of
the Company or a director or an
employee of a subsidiary of theCompany at the time of exercising
the rights.

Requisite service period

1 year and 11 months(August 17, 2020 through June 30,
2022)

1 year and 11 months(August 17, 2020 through June 30,
2022)

Exercise period

July 1, 2022 through June 30, 2025

July 1, 2022 through June 30, 2025

Note:

Stated in terms of shares of stock.

- 93 -

2) Scale of stock options granted and changes
Stock options that existed during the current consolidated fiscal year (fiscal year ended March 31, 2024) arecovered, with the number of stock options stated in terms of shares of stock.
(a) Number of stock options
Directors’ remuneration
stock option in 2018

Employees, etc. stock
option in 2018

Employees, etc. stock
option in 2019

At the end of the previous
consolidated fiscal year

－

－

－

Granted－－－Forfeited－－－

Vested－－－Outstanding

－

－

－

20,00098,700116,700

Vested－－－Exercised

－

3,000

11,000Forfeited

20,00095,700100－－

105,600

Directors’ remuneration
stock option in 2020

Employees, etc. stock
option in 2020

At the end of the previous
consolidated fiscal year－－

Granted－－Forfeited－－

Vested－－Outstanding－－

10,00058,400－－Exercised

10,0001,800

Forfeited－－

Exercisable－

56,600

Before vested

After vested(Shares)(Shares)At the end of the previous
consolidated fiscal year

Exercisable

Before vested

After vested
At the end of the previous
consolidated fiscal year

(Shares)(Shares)

Vested- 94 -

(b) Unit price information
Directors’ remuneration
stock option in 2018

Employees, etc. stock
option in 2018

Employees, etc. stock
option in 2019

Exercise price

(Yen)

1,104

1,104

922

Average stock price at the timeof exercise

(Yen)

－

1,271

1,158

Fair value at the grant date

(Yen)

168

168

168

Directors’ remuneration
stock option in 2020

Employees, etc.
stock option in 2020

Exercise price

(Yen)

890

890

Average stock price at the timeof exercise

(Yen)

1,142

1,284

Fair value at the grant date

(Yen)

171

171

4. Method of estimating the number of stock options vested
Only the actual number of forfeited stock options is reflected because it is basically difficult to reasonably
estimate the number of stock options that will be forfeited in the future.

- 95 -

(Notes Related to Tax Effect Accounting)
1. Breakdown by major occurrence factor of deferred tax assets and deferred tax liabilities(Thousands of yen)Previous consolidated
fiscal year
(As of March 31, 2023)
Deferred tax assets
Tax loss carry-forward (See Note)

Current consolidated
fiscal year
(As of March 31, 2024)

357,306

414,947

Loss on valuation of investment securities
Loss on valuation of inventories

395,154
277,997

329,587
297,993

Impairment losses
Tax deductions carried forward

321,027－

293,428
224,811

Allowance for doubtful accounts
Provision for bonuses

185,723
162,583

202,862
182,732

Retirement allowance
Other

161,800
483,378

140,134
296,3312,344,971

2,382,828△353,951△414,947△1,052,646△962,169△1,406,597△1,377,116

938,373

1,005,712△220,174△126,323△228,783△75,315

Deferred tax assets subtotal
Valuation allowance related to Tax loss carry-forward(See Note)
Valuation allowance related to the total of deductible
temporary differences etc.
Valuation allowance subtotal
Deferred tax assets total
Deferred tax liabilities
Valuation difference on available-for-sale securities
Retained earnings of subsidiaries and associates
Other
Deferred tax liabilities total
Net amount of deferred tax assets (liabilities)- 96 -△50,999△33,351△397,497△337,450

540,875

668,261

Note: Amount of Tax loss carry-forward and deferred tax assets thereof by maturity date of carryforward
Previous consolidated fiscal year (As of March 31, 2023)(Thousands of yen)
Due after
Due after
Due after
Due after
Due within
one year
Due after five
two years
three year
four year
Total
one year
and within
years
and within
and within
and within
two years
three years
four years
five years
Tax loss carryforward (*)
Valuation
allowance－

60,451

14,23576,50090,086116,031357,306－△57,096△14,235△76,500△90,086△116,031△353,951

Deferred tax
－
－
－
－
3,354
assets(*) “Tax loss carry-forward” indicates the amount multiplied by Normal effective statutory tax rate.
Current consolidated fiscal year (As of March 31, 2024)
Due after
Due after
Due within
one year
two years
one year
and within
and within
two years
three years
Tax loss carryforward (*)
Valuation
allowance

－

3,354

(Thousands of yen)
Due after
three year
and withinfour years

Due after
four year
and within
five years

Due after five
years

Total

56,607

14,23576,500－－267,603

414,947△56,607△14,235△76,500－－△267,603△414,947

Deferred tax
－
－
－
－
－
assets(*) “Tax loss carry-forward” indicates the amount multiplied by Normal effective statutory tax rate.

－

2. Breakdown by item of major causes of any significant difference between the normal effective statutory tax rate
and the effective income tax rate after tax effect accounting
Previous consolidated
fiscal year
(As of March 31, 2023)
Normal effective statutory tax rate
(Adjustments)
Items permanently excluded from taxable income
Special tax deductions
Increase (decrease) in valuation allowance
Retained earnings of subsidiaries and associates
Dividends income eliminated in consolidation
Items permanently excluded from tax-deductible
expenses
Other
Effective income tax rate after tax effect accounting- 97 -

Current consolidated
fiscal year
(As of March 31, 2024)

30.5%

30.5%

△8.1%
△2.3%
0.3%
△0.6%
8.3%

△8.6%
△6.6%
△4.3%
△2.5%
8.8%

△1.2%

1.9%

△0.2%
26.7%

1.7%
20.9%

－

(Notes Related to Asset Retirement Obligations)
Asset retirement obligations that are recorded in the consolidated balance sheets(1) Outline of asset retirement obligations
These are restoration obligations, etc. in connection with real estate rental agreements for certain factories
and offices.
(2) Method of calculating the amount of asset retirement obligations
An estimated useful life of thirty-one (31) years and a discount rate at 1.9% are used in calculating theamount of asset retirement obligations.
(3) Changes in the aggregate amount of asset retirement obligations(Thousands of yen)Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Balance at the beginning of year
Adjustment due to lapse of time

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

92,521

97,119Other increase or decrease (: decrease)

178
4,420

181
2,282

Balance at the end of year

97,11999,583(Notes Related to Real Properties for Rent, etc.)
Statement is omitted as the aggregate value of the real properties for rent, etc. is not material.
(For Revenue Recognition)
1. Information on the breakdown of revenue from contracts with customers
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Reportable segment

Goods transferred
at a point in time
Goods transferredover time
Revenue fromcontracts withcustomers
Other revenue
Net sales toexternalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

Other(See Note)

Total

26,543,787

5,403,439

2,582,435

2,955,149

37,484,811

305,087

37,789,898－

3,724,563－

1,207,683

4,932,246－

4,932,246

26,543,787

9,128,002

2,582,435

4,162,832

42,417,058

305,087

42,722,145

－

－

－

－

－

－

－

26,543,787

9,128,002

2,582,435

4,162,832

42,417,058

305,087

42,722,145

Note: The column “Other” represents business operations that do not fall under any of the reportable segments andincludes the related goods sales, the logistics-related operations and other businesses, etc.

- 98 -

Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Reportable segment

Goods transferred
at a point in time
Goods transferredover time
Revenue fromcontracts withcustomers
Other revenue
Net sales toexternalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

Other(See Note)

Total

25,105,697

5,523,782

2,532,845

2,210,935

35,373,261

338,81335,712,075－

5,077,915－

1,324,492

6,402,408－

6,402,408

25,105,697－

10,601,698－

2,532,845－

3,535,427－

41,775,670－

338,813－

42,114,483－

25,105,697

10,601,698

2,532,845

3,535,427

41,775,670

338,813

42,114,483

Note: The column “Other” represents business operations that do not fall under any of the reportable segments andincludes the related goods sales, the logistics-related operations and other businesses, etc.
2.

Basic information for understanding revenue from contracts with customers
Our Group recognizes revenue based on the following five-step approach.
Step 1: Identify the contracts with customers
Step 2: Identify the performance obligations
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
Our Group manufactures and sells products such as electronic materials, industrial application structural
materials, electrical insulating materials, display materials, etc. to electronic parts manufacturers, informationequipment manufacturers, industrial electronics manufacturers, etc. as our main customers. As our Group
determines that control of the products is transferred to customers and their performance obligations are satisfied
upon delivery for many of the products, revenue is recognized at that time. In domestic sales, revenue isrecognized at the time of shipment if a period of time from shipment to the moment of control of the products
being transferred to customers is a regular term. Moreover, our Group recognizes revenue pertaining to some ofindustrial application structural materials and display materials over a period of time according to the progressof performance obligations, because control of assets is transferred to customers as obligations under contracts
with customers are satisfied.
With regard to determining the transaction price, our Group determines an amount by deducting price reduction,
product returns, etc. from promised considerations in contracts with customers. The considerations toperformance obligations are received within one year after performance obligations are satisfied and does notinclude significant financing components.
With regard to buy-sell transactions which correspond to repurchase agreements and in which the Company
provides parts to suppliers with compensation and bears a repurchase obligation, as financial transactions, theprovided parts retained by suppliers are recognized as inventories, and the amount equivalent to the ending
inventory of the provided parts retained by suppliers are recognized as “liabilities pertaining to buy-selltransactions.” With regard to buy-sell transactions in which the Company purchases parts from suppliers andbears a sell-back obligation, only the net amount equivalent to processing cost is recognized as revenue. As fortransactions where the role of the Company falls under an agent of sales of products to customers, revenue isrecognized at the net amount, subtracting the amount paid to third parties from the total amount of considerations.

- 99 -

3．Information on the relationship between the satisfaction of performance obligations based on contracts withcustomers and the cash flow from such contracts and on the amount and time of revenue expected to berecognized after the next consolidated fiscal year from contracts with customers existing as of the end of thecurrent consolidated fiscal year
1) Balance, etc. of contract assets and contract liabilities(Thousands of yen)
Beginning of theconsolidated fiscal year

End of the consolidated
fiscal year

15,971,983

12,967,312

Notes and accounts receivable - trade12,967,312

16,243,075

Contract assets (balance at beginning of period)

101,852

214,793

Contract assets (balance at end of period)

214,793272,549

Contract liabilities (balance at beginning of period)

21,162311,076Contract liabilities (balance at end of period)

311,076

437,136

Receivables from contracts with customers(balance at beginning of period)
Notes and accounts receivable - trade
Receivables from contracts with customers(balance at end of period)

Contract assets are related to considerations with revenue recognized but unclaimed in contracts where performanceobligations are satisfied for a specific period. Contract assets are reclassified into receivables from contracts with customers
at the time when rights to payment become unconditional. This is usually the time when an invoice is issued to customers.
Contract liabilities are mainly related to advances received from customers. Contract liabilities are to be reversed with therecognition of revenue.
The amounts of revenue recognized in the previous consolidated fiscal year that were included in the contract liability
balances at the beginning of the year are 21,162 thousand yen. In addition, the amounts of revenue recognized in the current
consolidated fiscal year that were included in the contract liability balances at the beginning of the year are 195,013 thousandyen.

2) Transaction prices allocated to remaining performance obligations
As there are no significant contracts whose originally expected contract period lasts more than one year, our Group applies apractical expedient and omits statement with regard to transaction prices allocated to remaining performance obligations. There isalso no significant amount not included in transaction prices in considerations from contracts with customers.

(Segment Information, etc.)[Segment Information]
1. Outline of reportable segments
Reportable segments of the Company are those constituent units of the Company who make available separate
financial information and also are subject to periodic review by the board of directors aimed at determining the
distribution of management resources and evaluating business results.
The Company has manufacturing and sales systems in place for each category of product and service at its head
office, etc. and conducts business activities based on the comprehensive strategies that the Company develops
for the domestic and overseas markets as to its products and services.
The Company’s business, therefore, consists of several segments that represent each category of product andservice and are based on the said manufacturing and sales systems. Such segments are the four (4) reportablesegments of the Company, i.e. “Electronic materials business”, “Industrial application structural materials
business”, “Electrical insulating materials business” and “Display materials business”.
“Electronic materials business” produces materials for flexible and rigid printed circuit boards, etc. “Industrial
application structural materials business” produces water treatment FRP pressure vessels, honeycomb panels
and prepregs for aircraft, pultrusion molded products and FRP ski sheets, etc. “Electrical insulating materials
business” produces glass cloth, glass tapes and prepregs for electrical insulation, etc. “Display materials
business” produces 3D display filters and polarization control optical components, etc.

- 100 -

2.

3.

Method of calculating the amount of net sales, profit or loss, assets, liabilities and other items with respect toeach reportable segment
The accounting methods applied to the reported business segments are basically the same as those stated inthe (Important Matters Underlying Preparation of Consolidated Financial Statements).
The amount of profit or loss recorded for each reportable segment is based on the operating profit or loss (before
amortization of goodwill).
Inter-segment revenues and transfers are based on the prevailing market price.
Information on the amount of net sales, profit or loss, assets, liabilities and other items with respect to eachreportable segment
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Reportable segment

Sales
Sales to externalcustomers
Inter-segment sales
or transfers
Net sales

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Subtotal

26,543,787

9,128,002

2,582,435

4,162,832

42,417,058

305,087

42,722,145

－

－

－

－

－

838,889

838,889

Other(See Note)

Total

26,543,787

9,128,002

2,582,435

4,162,832

42,417,058

1,143,977

43,561,035

Segment profit

1,223,631

1,315,614

184,705

1,024,005

3,747,957

148,085

3,896,042

Segment assets

33,759,023

10,358,447

3,404,018

3,779,705

51,301,195

1,198,161

52,499,356

1,683,250

187,682

136,616

91,6112,099,161

21,5652,120,726－－－

240,660

240,660－

240,660

3,145,938

627,528

401,486

176,033

4,350,987

21,307

4,372,295

Other
Depreciation
Investment incompanies
accounted forunder the equity
methodIncrease inproperty, plant andequipment andintangible assets

Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes therelated goods sales, the logistics-related operations and other businesses, etc.

Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Reportable segment

Sales
Sales to externalcustomers
Inter-segment sales
or transfers
Net sales
Segment profit
Segment assets

Industrial
application
structural
materials

Other(See Note)

Total

Electricalinsulating
materials

Displaymaterials

Subtotal

2,532,845

3,535,427

41,775,670

338,813

42,114,483

－

－

－

－

907,946

907,946

25,105,697 10,601,698

2,532,845

3,535,427

41,775,670

1,246,759

43,022,429

1,476,470

314,815940,287

2,991,706

199,020

3,190,726

35,947,462 11,028,442

2,743,730

3,620,968

53,340,604

1,707,779

55,048,383

Electronicmaterials

25,105,697 10,601,698－

260,132

Other
Depreciation
Increase inproperty, plant andequipment andintangible assets

1,613,468

205,173

115,239

96,9512,030,831

22,751

2,053,583

2,567,110

517,741

52,721

134,168

3,271,742

11,7483,283,491

Note: The column “Other” represents business operations that do not fall under any of the reportable segments and includes therelated goods sales, the logistics-related operations and other businesses, etc.

- 101 -

4.

Difference between the total amount of reportable segments and the pertinent amount shown on the
consolidated financial statements as well as the key components of such difference (Matters concerning
difference adjustment)(Thousands of yen)
Net sales

Previous consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

42,417,058

41,775,670

Net sales in the category “Other”

1,143,977

1,246,759

Elimination of inter-segment transactions△838,889△907,946

Net sales shown on the consolidated financial
statements

42,722,145

42,114,483(Thousands of yen)

ProfitPrevious consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

3,747,957

2,991,706

Profit in the category “Other”

148,085

199,020

Elimination of inter-segment transactions

4,297

6,265

Unallocated corporate expenses (See Note)△1,640,820△1,683,849△31,414△29,365

Adjustment of inventories

Operating profit shown on the consolidated financial
2,228,105
1,483,777
statements
Note: “Unallocated corporate expenses” are mostly general and administrative expenses that are not attributable to any of thereportable segments.
(Thousands of yen)
AssetsPrevious consolidated fiscal year

Current consolidated fiscal year

Total of reportable segments

51,301,195

53,340,604

Assets in the category “Other”
Elimination of claims to administrative departmentsof the head office
Unallocated corporate assets (See Note)

1,198,161

1,707,779△348,554△601,907

15,540,339

14,399,572△31,414△29,365

Adjustment of inventories

Total assets shown on the consolidated financial
67,659,726
68,816,683
statements
Note: “Unallocated corporate assets” are mostly investment securities, etc. that are not attributable to any of the reportablesegments.
(Thousands of yen)Amount shown on the
Total of reportable
Other
Adjustment
consolidated financial
segments
statements
Other item

Depreciation

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

Previous
consolidated
fiscal year

Current
consolidated
fiscal year

2,099,161

2,030,831

21,56522,751

169,662

152,968

2,290,388

2,206,551

Increase in property, plantand equipment and
4,350,987 3,271,742
21,307
11,748165,160
165,563 4,537,455 3,449,055
intangible assets
Note: The adjustment to “Increase in property, plant and equipment and intangible assets” represents capital investment in theassets used for the common corporate purpose.

- 102 -

[Related Information]
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
1. Information by product and service(Thousands of yen)

Net sales to externalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Other

Total

26,543,787

9,128,002

2,582,435

4,162,832

305,087

42,722,145

2. Information by region(1) Net sales(Thousands of yen)Japan

P.R. China

18,604,068

11,099,226

Other country or
regionTotal

13,018,850

42,722,145

Note: Net sales are categorized by country or region on the basis of customer locations.

(2) Property, plant and equipment
Japan

Taiwan10,645,611

3,509,912

P.R. China(Thousands of yen)
Other country or
region1,650,680

Total

639,975

16,446,181

3. Information by major customer(Thousands of yen)
Customer name

Net sales

Relevant segment

Ajinomoto Fine-Techno Co., Inc.

4,327,570

Electronic materials businessCurrent consolidated fiscal year (From April 1, 2023 to March 31, 2024)
1. Information by product and service(Thousands of yen)

Net sales to externalcustomers

Electronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials

Displaymaterials

Other

Total

25,105,697

10,601,698

2,532,845

3,535,427

338,813

42,114,483

2. Information by region(1) Net sales(Thousands of yen)Japan
18,378,391

P.R. China
12,490,626

Other country or
region11,245,465

Total
42,114,483

Note: Net sales are categorized by country or region on the basis of customer locations.

(2) Property, plant and equipment
Japan
10,850,913

Taiwan3,179,193

P.R. China
3,070,127- 103 -

(Thousands of yen)
Other country or
region861,709

Total
17,961,943

3. Information by major customer
Out of net sales to external customers, as there is no customer who accounts for 10% or more of the net sales
in the consolidated statements of income, statement is omitted.
[Information on impairment losses on non-current assets with respect to each reportable segment]
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)

Impairment
lossesElectronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials－

19,332－

Displaymaterials

Unallocated/
Eliminated

Other

－

－

Total

－

19,332Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)

Impairment
lossesElectronicmaterials

Industrial
application
structural
materials

Electricalinsulating
materials－

15,524－

Displaymaterials

Unallocated/
Eliminated

Other

－

－

Total

－

[Information on amortization of goodwill and unamortized balance with respect to each reportable segment]
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
No applicable matter.
Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)
No applicable matter.
[Information on gain on bargain purchase with respect to each reportable segment]
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
No applicable matter.
Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)
No applicable matter- 104 -

15,524

(Information on Related Parties)
1. Transactions with related parties
Transactions between the company submitting the consolidated financial statements and related parties
Directors and major shareholders (individuals only), etc. of the company submitting the consolidated financial
statements
Previous consolidated fiscal year (From April 1, 2022 to March 31, 2023)
Share capital
Full name orType

corporate nameor investment
Locationin capital(Thousands ofRatio ofBusiness outline voting rightor occupation

holding

Relationship

Description

transactionof transaction (Thousands of(held), etc.

yen)

Balance at

Amount of

the end of
Item

year
(Thousands

yen)of yen)Directorof animportant

Hidetaka

subsidiary

Nonami

Director of－－ Arisawa Fiber

0.09%
directly
held

Exercise of－

Glass Co., Ltd.

of thethe right ofstock option

11,040－－Company

Terms of transactions and the policy for determining the terms of transactions, etc.
The table above covers the exercises in the current consolidated fiscal year of the rights of share acquisition rights granted
under a resolution at the Board of Directors’ Meeting of the Company of June 28, 2018.
The column “Amount of transaction” indicates the amount obtained by multiplying the number of shares of stock granted
through the exercise in the current consolidated fiscal year of the pertinent right of share acquisition rights by the paid-in
amount per share.

Current consolidated fiscal year (From April 1, 2023 to March 31, 2024)
Share capital
Full name orType

corporate nameor investment
Locationin capital(Thousands ofyen)

Ratio ofBusiness outline voting rightor occupation

holding

Balance at

Amount ofRelationship

Description

transactionof transaction (Thousands of(held), etc.

the end of
Item

year
(Thousands

yen)of yen)Directorof animportantsubsidiary

Yuta Arisawa－of thePresident and 0.39%
Representative directly－
heldDirector of theCompany－

Granting
restricted

19,999－stock

Company

Terms of transactions and the policy for determining the terms of transactions, etc.
It is restricted stocks allotted by the resolution of the Board of Directors’ Meeting held on June 29, 2023 under the “restricted
stock compensation system” that the 73rd Ordinary General Meeting of Shareholders held on June 25, 2021 passed a resolution
to introduce. The amount of transaction is measured based on the closing price of the Company’s common shares on theTokyo Stock Exchange on the business day preceding to the day of each resolution of the Board of Directors.

2.

Notes with respect to parent or important affiliated companies(1) Information on parent
No applicable matter.
(2) Condensed financial information on important affiliated companies
No applicable matter.

- 105 -－

(Per Share Information)
Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)
Net assets per share
Basic earnings per share

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

1,422.43 yen

1,394.08 yen

86.46 yen

49.51 yen

Diluted earnings per share
86.24 yen
Note: The bases of calculation of basic earnings per share and diluted earnings per share are as follows.
Previous consolidated fiscal year
(From April 1, 2022
to March 31, 2023)

49.46 yen

Current consolidated fiscal year
(From April 1, 2023
to March 31, 2024)

Basic earnings per share
Profit attributable to owners of parent(Thousands of yen)Amount not attributable to common
stockholders (Thousands of yen)
Profit attributable to owners of parent
pertaining to common stock (Thousands ofyen)
Average number of shares of common stockduring the year

2,856,481

1,639,772－－

2,856,481

1,639,772

33,036,799

33,121,675

Diluted earnings per share
Adjustment of profit attributable to owners－－of parent (Thousands of yen)
Increase in the number of shares of common
85,74132,644stock(Number of shares subject to stockacquisition rights included in the figure(85,741)(32,644)
above)
Outline of dilutive shares that were not－－included in the calculation of diluted earnings
per share due to a lack of dilutive effectNote:
The Company’s shares which are shown as treasury shares in shareholders’ equity and which a trust account for employee
stock ownership plan holds are included in the number of treasury shares excluded in the calculation of the average
number of shares of common stock during the period when basic earnings (or loss) per share is calculated (88,066 sharesfor the previous consolidated fiscal year and 83,536 shares for the current consolidated fiscal year).

(Significant Subsequent Events)
No applicable matter.

- 106 -

(Consolidated Supplementary Schedules)[Schedule of corporate bonds]
Balance atBalance at end
beginning ofof current
current period
period(Thousands of (Thousands of
yen)
yen)

Company

Issue

Issue date

Satosen Co.,
Ltd.

Second series
unsecuredbond (Private
placementbond)April 28,2017

27,600(16,800)

10,800(10,800)

Total

－

－

27,600(16,800)

10,800(10,800)

Interest rate(%)

Collateral

Maturity date

0.25

None

May 24, 2024

－

－

－

Note: 1. The parenthesized figures represent the outstanding balance of redemptions due within one year.
2. Redemption amounts within five years of the consolidated closing date are shown below.
Within one year
(Thousands of yen)

1-2years(Thousands of yen)

2-3years(Thousands of yen)－

10,8003-4years(Thousands of yen)－

4-5years(Thousands of yen)－－

[Schedule of loans payable, etc.]
Balance atBalance at end of
Average
beginning of current
current periodinterest rate Repayment period
period(Thousands of yen)(%)(Thousands of yen)

Category
Short-term borrowings

5,056,253

5,301,635

1.39

---

Current portion of long-term borrowings

1,843,441

3,120,516

1.49

---

129,172130,047

6.02---

2,723,471

1,970,976

1.132025 to 2030

460,601

354,2232.922025 to 2038

10,212,940

10,877,399－---

Current portion of lease liabilities
Long-term borrowings (excluding the current portion)
Lease liabilities (excluding the current portion)
Total
Note:

1. The column “Average interest rate” indicates the weighted average interest rate to the balance of loans payable, etc. at
the end of the current period.
2. The scheduled amount of repayment of long-term borrowings (excluding the current portion) and lease liabilities(excluding the current portion) over the five (5) years after the consolidated closing date is as follows.
(Thousands of yen)
Due after four years
Due after one year andDue after two years
Due after three years
and within five
within two years
and within three years
and within four years
years

Long-term borrowings

915,076

899,584

76,60535,600

Lease liabilities

100,358

61,59525,534

14,556[Schedule of asset retirement obligations]
As the amount of asset retirement obligations as of the beginning of the current consolidated fiscal year and as of theend of the current consolidated fiscal year is not more than one hundredth (1/100) of the aggregate amount ofliabilities and net assets as of the beginning of the current consolidated fiscal year and as of the end of the current
consolidated fiscal year respectively, statement has been omitted under the provisions of Article 92-2 of theRegulations for Terminology, Forms and Preparation Methods of Consolidated Financial Statements.

- 107 -

(2) Other
Quarterly Information, etc. in the Current Consolidated Fiscal Year
(Cumulative period)
Net sales(Thousands of yen)
Profit (loss) before
income taxes(Thousands of yen)
Profit (loss)
attributable to ownersof parent (Thousandsof yen)Earnings (loss) per
share (Yen)(Accounting period)
Earnings (loss) per
share (Yen)First quarter

Second quarter

Third quarter

Current consolidated
fiscal year

9,494,400

19,895,480

30,859,791

42,114,483△171,798

855,120

1,348,694

2,072,487△201,807

563,444

981,699

1,639,772

△6.10

17.02

29.64

49.51

First quarter

Second quarter

△6.10

23.10

- 108 -

Third quarter
12.62

Fourth quarter
19.86

2. Financial Statements, etc.
(1) Financial Statements
1) Balance Sheets(Thousands of yen)Previous business year
(As of March 31, 2023)

Current business year
(As of March 31, 2024)

AssetsCurrent assets
Cash and deposits

12,111,983

Notes receivable-trade*2

Accounts receivable-trade*2

Contract assets
Electronically recorded monetary claimsoperating
Merchandise and finished goods

9,995,167

171,507*5

162,2216,724,426*2

9,202,923

214,793102,212284,903405,716

3,080,050

2,296,520

Work in process

1,127,966

1,308,257

Raw materials and supplies

1,748,133

1,769,205

Prepaid expenses

85,300*2

Accrued revenue
Short-term loans receivable from subsidiaries
and associates
Other

5,547

58,780*2

1,580,249*2

501,701

1,300
1,318,243*2

704,740

Allowance for doubtful accounts△556,764△606,764

Total current assets

27,079,799

26,718,525

Non-current assets
Property, plant and equipment
Buildings*1

3,569,788*1

Structures
Machinery and equipment*1

420,802*1

441,712*1

1,907,932*1

2,046,433

Tools, furniture and fixtures*1

223,657*1

202,043Land*11,477,753*1

1,515,389

Vehicles

22,616

Leased assets

3,493,523

20,385

287,895

241,570

Construction in progress

1,435,163

1,381,061

Total property, plant and equipment

9,345,610

9,342,120- 109 -

(Thousands of yen)Previous business year
(As of March 31, 2023)

Current business year
(As of March 31, 2024)

Intangible assets
Software103,329

251,274

Other

11,063

10,844

Total intangible assets

114,392

262,118

Investments and other assets
Investment securities

1,082,143

1,007,719

Shares of subsidiaries and associates

11,396,735

11,176,354

Long-term prepaid expenses

42,78323,884

Deferred tax assets

185,473

169,830

Other

123,617

141,088

Allowance for doubtful accounts△4,669△4,157

Total investments and other assets

12,826,083

12,514,719

22,286,086

22,118,958

49,365,886

48,837,484

Total non-current assets
Total assets
Liabilities
Current liabilities
Notes payable-trade*2

41,989*5

31,767

Accounts payable-trade*2

2,520,256*2

4,121,981

Electronically recorded obligations-operating*2

1,364,483*2,*5

1,670,543

Short-term borrowings*42,940,000*43,040,000

Accounts payable-other*2686,010*2

752,163

Accrued expenses

98,337

106,404

Income taxes payable

399,971

59,107

Unearned revenue

2,699

2,696

Lease liabilities

88,40986,554

Deposits received

28,20428,354

Provision for bonuses

340,021405,425

Other

442,344※５ 400,741

8,952,728

10,705,740

Total current liabilities- 110 -

(Thousands of yen)Previous business year
(As of March 31, 2023)

Current business year
(As of March 31, 2024)

Non-current liabilities
Provision for share awards

50,44968,536

Provision for retirement benefits

472,042

Provision for loss on guarantees

47,737399,788－

Lease liabilities

171,346

84,792

Asset retirement obligations

29,34429,526

Other

69,01156,930Total non-current liabilities

839,932

639,572

9,792,660

11,345,313

7,847,873

7,862,036

Legal capital surplus

6,959,865

6,974,027

Total capital surplus

6,959,865

6,974,027

Legal retained earnings

748,262748,262

Other retained earnings
Reserve for tax purpose reduction entry of
non-current assets
General reserve

14,145

13,34818,020,000

18,020,000

5,943,206

3,786,390

24,725,614

22,568,000

Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus

Retained earnings

Retained earnings brought forward
Total retained earnings
Treasury shares△512,975△460,640

Total shareholders’ equity

39,020,377

36,943,425

501,604

521,326

501,604

521,326

Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Share acquisition rights
Total net assets
Total liabilities and net assets- 111 -

51,243

27,41939,573,225

37,492,171

49,365,886

48,837,484

2) Statements of Income(Thousands of yen)Previous business year
(From April 1, 2022
to March 31, 2023)

Current business year
(From April 1, 2023
to March 31, 2024)

Net sales*125,752,751*1

26,560,532

Cost of sales*1

21,872,826*1

22,636,060

Gross profit

3,879,924

Selling, general and administrative expenses*1,*2

Operating profit

2,781,469

3,924,472*1,*2

1,098,455

3,018,587
905,884

Non-operating income
Interest and dividend income*1

988,367*1

298,628

Rental income*1

333,615*1

308,183

Foreign exchange gains

184,546

Other*1

Total non-operating income

333,609

116,595*1

1,840,138

102,490825,898

Non-operating expenses
Interest expenses*1

Rental expenses

29,477*1

285,201

Provision of allowance for doubtful accounts

*1

Other
Total non-operating expenses
Ordinary profit

249,616

25,385
260,844*1

49,488

8,511

13,429572,807349,148

2,365,786

1,382,634

1,304,728

497,362

Extraordinary income
Gain on sale of investment securities
Other

45,036

19,464

1,349,765

516,826

Loss on retirement of non-current assets

91,435

Loss on sale of investment securities

51,07943,298－

Impairment losses

19,332

15,524－

7,686

161,847

66,5093,553,704

1,832,951

Income taxes-current

837,469

331,839

Income taxes-deferred

42,386

6,987

Total income taxes

879,855

338,827

2,673,848

1,494,123

Total extraordinary income
Extraordinary losses

Loss on disaster
Total extraordinary losses
Profit before income taxes

Profit- 112 -

3) Statements of Changes in Shareholders’ Equity and Other Net Assets
Previous business year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Balance at beginning of period

Reserve forLegal capital Total capital Legal retained
tax purpose
surplussurplusearnings
reduction
entry of noncurrent assets

7,643,777

6,755,769

6,755,769

204,095

204,095

204,095

748,262

14,982

Total
retainedearnings

Generalreserve

Retainedearnings
brought
forward

21,020,000

3,768,354

25,551,599

836－

3,000,000－△3,006,166△3,006,166

2,673,848

2,673,848△1,106△1,106△492,559△492,559

Changes during period
Issuance of new shares
Reversal of reserve for tax purpose
reduction entry of non-current assets△836

Reversal of general reserve△3,000,000

Dividends of surplus
ProfitPurchase of treasury shares
Disposal of treasury shares
Cancellation of treasury shares
Net changes in items other thanshareholders' equity
Total changes during period
Balance at end of period

Balance at beginning of period

204,095

204,095

204,095－△836△3,000,000

2,174,852△825,984

7,847,873

6,959,865

6,959,865

748,262

14,14518,020,000

5,943,206

24,725,614

Valuation and translation adjustments
Shareholders’ equity
Share
acquisition
Treasury
Total shareholders’ Valuation difference on
Total valuation andrightsavailable-for-sale securities translation adjustments
sharesequityTotal net
assets△299,704

39,651,442

1,215,457

1,215,457

149,13141,016,030

Changes during period
Issuance of new shares

408,191

408,191

Reversal of reserve for tax purpose
reduction entry of non-current assets－－

Reversal of general reserve－－△3,006,166△3,006,166

2,673,848

2,673,848

Dividends of surplus
ProfitPurchase of treasury shares△750,332△750,332△750,332

Disposal of treasury shares

44,501

43,394

43,394

Cancellation of treasury shares

492,559－－

Net changes in items other thanshareholders' equity△713,853△713,853△97,887△97,887 △1,442,805

Total changes during period△213,271△631,064△713,853△713,853

Balance at end of period△512,975

39,020,377

501,604

501,604- 113 -

51,243△811,740

39,573,225

Current business year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Balance at beginning of period

Reserve forLegal capital Total capital Legal retained
tax purpose
surplussurplusearnings
reduction
entry of noncurrent assets

7,847,873

6,959,865

6,959,865

14,162

14,162

14,162

748,262

14,145

Total
retainedearnings

Generalreserve

Retainedearnings
brought
forward

18,020,000

5,943,206

24,725,614

797－△3,649,595△3,649,595

1,494,123

1,494,123△2,142△2,142△2,156,816△2,157,613

3,786,390

22,568,000

Changes during period
Issuance of new shares
Reversal of reserve for tax
purpose reduction entry of noncurrent assets△797

Dividends of surplus
ProfitPurchase of treasury shares
Disposal of treasury shares
Net changes in items other thanshareholders' equity
Total changes during period
Balance at end of period

14,162

14,162

14,162

7,862,036

6,974,027

6,974,027

Shareholders’ equity

Balance at beginning of period△797
748,262

13,34818,020,000

Total
valuationandtranslation
adjustments

ShareacquisitionrightsTotal net
assets

501,604

51,24339,573,225

Valuation and translation
adjustments
Valuation

TreasurysharesTotal
difference onshareholder
available-fors’ equity sale securities△512,975

39,020,377

501,604

Changes during period
Issuance of new shares
Reversal of reserve for tax
purpose reduction entry of noncurrent assets
Dividends of surplus
Profit28,32528,325－－△3,649,595△3,649,595

1,494,123

1,494,123

Purchase of treasury shares

△269

△269

△269

Disposal of treasury shares

52,60550,46250,462

Net changes in items other thanshareholders' equity
Total changes during period
Balance at end of period

19,722

19,722△23,824△4,101

52,335△2,076,952

19,722

19,722△23,824△2,081,054△460,640

36,943,425

521,326

521,326

27,41937,492,171- 114 -

[Notes](Important Accounting Policies)
1. Valuation standards and valuation methods for assets(1) Valuation standards and valuation methods for securities
1) Equity stakes in subsidiaries and affiliated companies
Stated at average cost.
2) Available-for-sale securities
Securities other than stocks and others without a quoted market price:
Stated at fair market value (Valuation differences are reported as a component of net assets, and the costof securities sold is calculated using the average cost method.)
Stocks and others without a quoted market price:
Stated at average cost.
(2) Derivative financial instruments
Stated at fair market value.
(3) Valuation standards and valuation methods for inventories
1) Merchandise, finished goods, semi-finished goods and work in process
The cost method on a first-in, first-out basis is adopted. (The amount shown on the balance sheets is
calculated by writing inventories down due to a decline in profitability.)
2) Raw materials and supplies
The cost method based on the periodic average method is adopted. (The amount shown on the balance sheetsis calculated by writing inventories down due to a decline in profitability.)
2. Methods of depreciation and amortization of non-current assets(1) Property, plant and equipment (excluding leased assets)
The declining-balance method is adopted, except for the buildings (excluding accompanying facilities)
acquired on or after April 1, 1998 and accompanying facilities and structures acquired on or after April 1,
2016, which are depreciated using the straight-line method.
The useful life mostly falls within the ranges shown below:
Buildings: fifteen (15) years to thirty-one (31) years
Machinery and equipment: eight (8) years to nine (9) years(2) Intangible assets (excluding leased assets)
The straight-line method is adopted. Software used by the Company is amortized over an estimated in-houseusable period. (currently five (5) years)(3) Leased assets
Leased assets related to finance lease transactions that entail transfer of title
Depreciation and amortization is based on the same method as applied to self-owned non-current assets.
Leased assets related to finance lease transactions that do not entail transfer of title
Depreciation and amortization is based on the straight-line method that takes the lease period as the usefullife and sets the residual value at zero (0).
3. Standards for translating foreign currency assets and liabilities into Japanese currency
Foreign currency monetary assets and liabilities are translated into Japanese yen at the spot exchange rate as of
the closing date, and the resulting translation differences are entered as profit or loss, as the case may be.
4. Standards for recording allowances and provisions(1) Allowance for doubtful accounts
As a reserve for potential loan losses, an estimated uncollectible amount is allocated based on the historicalloan-loss ratio in the case of general accounts receivable, and in light of the collectability in each instancein the case of some specific accounts receivable, e.g. doubtful receivables.
(2) Provision for bonuses
In preparation for the payment of bonuses to its employees, the Company allocates an expected aggregate
amount of such payment.
(3) Provision for share awards- 115 -

As a reserve for the payment of retirement benefits to employees, an amount is appropriated on the basisof the estimated amounts of retirement benefit obligations and plan assets as of the end of the current
business year.
1) Method of inter-period attribution of expected retirement benefits
In calculating retirement benefit obligations, the benefit formula is employed as the method of
attributing the estimated amount of each employee’s retirement benefits to his or her service period up
to the end of the current business year.
2) Method of recognizing actuarial differences as expenses
Actuarial differences are recognized as expenses, effective from the business year immediately
following the year of occurrence of each such difference, in an amount prorated using the straight-line
method over a certain number of years (currently five (5) years) within the average remaining service
period of the employees at the time of occurrence of the said difference in each business year.
(4) Provision for loss on guarantees
In order to prepare for loss on guarantees, etc., the estimated amount of losses is shown, taking into
account the financial conditions, etc. of guaranteed parties.
(5) Provision for share awards
As a reserve for the Company’s share-based remuneration to employees under the share delivery
regulations, it is allocated based on the expected aggregate amount of share benefit obligation as of theend of the current business year.
5. Standards for recording important revenues and expenses
Notes on the standards for recording important revenues and expenses are omitted as the same details are shownin “Notes (For Revenue Recognition) 2. Basic information for understanding revenue from contracts withcustomers” of Consolidated Financial Statements.
6. Accounting method of significant hedge transactions(1) Method of hedge accounting
The Company adopts the deferred hedge accounting. With respect to the forward exchange contracts thatmeet the requirements of hedge accounting, we adopt the designated hedge accounting.
(2) Hedging instruments and hedged items
Hedging instruments : Forward exchange contracts
Hedged items: Monetary claims denominated in foreign currencies, Anticipated transactions inforeign currencies(3) Hedging policy
Forward foreign exchange transactions are conducted within the scope of actual demand for the purposeof deterring risks involved in transactions denominated in foreign currencies from the fluctuations in theforeign exchange market. These transactions will never be entered for speculative purpose.
(4) Method of assessing hedge effectiveness
The Company assesses the effectiveness of hedging based on the ratio of changes that is calculated bycomparing the cumulative total of the market fluctuations of hedged items with that of hedging
instruments. However, when the forward foreign exchange transactions are by designated hedge
accounting, such assessment of effectiveness is omitted.
7. Other important matters underlying preparation of financial statements(1) Accounting methods concerning retirement benefits
The method of accounting for an unappropriated portion of unrecognized actuarial differences concerning
retirement benefits is different from the method of accounting applied to the same in the case of theconsolidated financial statements.
(2) Accounting methods concerning deferred assets
Stock delivery expenses are fully charged to expenses when they are paid.

- 116 -

(Significant Accounting Estimates)
1. Valuation of Inventories(1) Amount recorded in the financial statements for the current business year
(Thousands of yen)Previous business year
Loss on valuation of shares ofsubsidiaries and associates
Shares of subsidiaries and associates(ThinFlex Corporation)

Current business year－－

10,440,772

10,440,772(2) Information regarding the significant accounting estimates of the identified items
1) Calculation method
The shares of subsidiaries and associates are shown on the balance sheets at the acquisition cost. The net asset
value of the shares is measured based on the financial figures of ThinFlex Corporation, the Company’s
subsidiary, which are prepared in accordance with the corporate accounting standards generally accepted. If
the net asset value declines significantly due to deterioration of financial positions, it is appropriately reduced.
2) Major assumptions
The net asset value of the shares is measured based on financial figures which are prepared in accordancewith the corporate accounting standards generally accepted. The net asset value is significantly influenced by
the necessity of impairment in the property, plant and equipment which ThinFlex Corporation and its
subsidiary, TopFlex Corporation, hold. Major assumptions in assessing impairment in the property, plant andequipment which ThinFlex Corporation and TopFlex Corporation hold are stated in the “Notes (Significant
Accounting Estimates)” of the consolidated financial statements.
3) Effect on the financial statements for the next business year
If the net asset value measured based on the financial figures of ThinFlex Corporation declines significantly,
there is a possibility of loss on valuation of shares of subsidiaries and associates occurring on consolidated
financial statements for the next consolidated fiscal year.
(Changes in Accounting Policies)
No applicable matter.
(Changes in Presentation)<Statements of Income>1. “Reversal of provision for loss on guarantees”, which was separately stated within “Non-operating income” inthe previous business year, is presented as part of “Other” effective from the current business year due to a fallin quantitative materiality. In order to reflect such change in presentation, a reclassification has been made in
the financial statements for the previous business year. As a result, 198,905 thousand yen of “Reversal ofprovision for loss on guarantees”, listed within “Non-operating income” in the statements of income for theprevious business year, has been reclassified as part of “Other”.
2. “Reversal of provision for loss on guarantees”, which was presented as part of “Other” in “Non-operating
income” in the previous business year, is separately stated effective from the current business year due to a risein percentage of the pertinent amount to more than ten hundredths (10/100) of the aggregate amount of Nonoperating income. In order to reflect such change in presentation, a reclassification has been made in thefinancial statements for the previous business year. As a result, 115,902 thousand yen of “Other”, listed within“Non-operating income” in the statements of income for the previous business year, has been reclassified into
the combination of 48,815 thousand yen of “Reversal of provision for loss on guarantees” and 280,277
thousand yen of “Other” (including a reclassification of 213,189 thousand yen from Gain on redemption of
investment securities in 1).
3. “Gain on sale of non-current assets”, which was separately stated within “Extraordinary income” in theprevious business year, is presented as part of “Other” effective from the current business year due to a fall in- 117 -

quantitative materiality. In order to reflect such change in presentation, a reclassification has been made in thefinancial statements for the previous business year. As a result, 3,896 thousand yen of “Gain on sale of noncurrent assets”, listed within “Extraordinary income” in the statements of income for the previous business
year, has been reclassified as part of “Other”.
(Notes Related to Balance Sheets)*1 Assets subject to a security interest and secured liabilities corresponding thereto
Assets subject to a security interest
Previous business year
(As of March 31, 2023)
Buildings(Thousands of yen)

Current business year
(As of March 31, 2024)

2,527,162(2,527,162)

2,545,965(2,545,965)

Structures
Machinery and equipment

168,637
610,808(168,637)(610,808)

328,7031,230,656(328,703)(1,230,656)

Tools, furniture andfixtures48,430(48,430)

95,590(95,590)Land

266,508(199,190)

266,508(199,190)

Total

3,621,547(3,554,230)

4,467,424(4,400,107)

The parenthesized figures represent factory foundation mortgages, and there are no liabilities corresponding to the above
assets subject to a security interest.

- 118 -

*2 Monetary receivables and payables outstanding with associated companies (excluding those separately
stated)(Thousands of yen)Previous business year
(As of March 31, 2023)
Short-term monetary receivables
Short-term monetary payables*3

Current business year
(As of March 31, 2024)

421,611
1,314,942

785,360
1,801,128

Guarantee liabilities
Accounts borrowed from financial institutions of associated companies and Guarantee liabilities for
performance guarantee(Thousands of yen)
Current business year
(As of March 31, 2024)

Previous business year
(As of March 31, 2023)
Satosen Co., Ltd.

1,057,664(Loan guarantee)*41,100,000

The Company has an overdraft agreement in effect with each of its six (6) partner banks to ensure efficient
procurement of operating funds. The following is the balance of unexecuted loans under such overdraft
agreements as of the end of the current and previous business years.
(Thousands of yen)Previous business year
(As of March 31, 2023)

Current business year
(As of March 31, 2024)

Aggregate overdraft limit
Drawdowns

9,500,000
2,000,000

9,500,000
2,000,000

Balance of unexecuted loans

7,500,000

7,500,000*5 Notes, etc. maturing at the end of the business year
For accounting treatment of notes, electronically recorded monetary claims and electronically recorded
obligations maturing at the end of the business year, settlement is made as of the clearing date of each note oras of the settlement date of each electronically recorded monetary claim and electronically recorded obligation,
as the case may be. As the end of the current business year falls on a bank holiday, the following notes,
electronically recorded monetary claims and electronically recorded obligations maturing at the end of thebusiness year are included in their respective balances as of the end of the business year.

Previous business year
(As of March 31, 2023)
Notes and accounts receivable - trade, and contract
assets
Notes and accounts payable-trade
Current liabilities and others (Non-operating notes
payable, Electronically recorded obligations-non-(Thousands of yen)
Current business year
(As of March 31, 2024)－

26,679－91,474－

21,536

operating)(Notes Related to Statements of Income)*1 Volume of transactions with associated companies
Previous business year
(From April 1, 2022
to March 31, 2023)(Thousands of yen)
Current business year
(From April 1, 2023
to March 31, 2024)

Gross operating transaction volume
Net sales
Value of goods laid in
Gross non-operating transaction volume- 119 -

1,508,516

2,033,719

3,885,411
1,619,301

4,329,740
659,389

*2 Approximately 46% of the amount of selling, general and administrative expenses recorded for the previous
business year falls under selling expenses, while the remaining 54% falls under general and administrative
expenses. Approximately 47% of the amount of selling, general and administrative expenses recorded for thecurrent business year falls under selling expenses, while the remaining 53% falls under general andadministrative expenses. The major items of selling, general and administrative expenses and their respective
amounts are as follows.
Previous business year
(From April 1, 2022
to March 31, 2023)(Thousands of yen)
Current business year
(From April 1, 2023
to March 31, 2024)

Salaries and allowances
Provision for bonuses

640,556
73,478658,363
90,693Retirement benefit expenses
Freightage and packing expenses

50,558739,325

56,290852,563

86,421
1,191,129

80,6081,280,067

Depreciation
Other(Notes Related to Securities)
Equity stakes in subsidiaries and affiliated companies
Previous business year (As of March 31, 2023)
Amount shown on the balance sheets for stocks and others without a quoted market price (Thousands of yen)
Category

Previous business year

Equity stakes in subsidiaries

11,176,354

Equity stakes in affiliatedcompanies

220,380

Current business year (As of March 31, 2024)
Amount shown on the balance sheets for stocks and others without a quoted market price (Thousands of yen)
Category

Current business year

Equity stakes in subsidiaries

11,176,354

Equity stakes in affiliatedcompanies

0- 120 -

(Notes Related to Tax Effect Accounting)
1. Breakdown by major occurrence factor of deferred tax assets and deferred tax liabilities(Thousands of yen)Previous business year
(As of March 31, 2023)

Current business year
(As of March 31, 2024)

Deferred tax assets
Loss on valuation of investment securities
Impairment losses

396,165
258,181

330,598
241,555

Allowance for doubtful accounts
Provision for bonuses

171,237
103,706

186,331
123,654

Provision for retirement benefits
Loss on valuation of inventories

143,973
102,305

121,935
110,395

Other
Deferred tax assets subtotal
Valuation allowance
Deferred tax assets total
Deferred tax liabilities
Valuation difference on available-for-sale securities
Other
Deferred tax liabilities total
Net amount of deferred tax assets (liabilities)

2.

190,146

149,978

1,365,714△950,526

1,264,448△859,196

415,188405,251△220,128△9,586△228,783△6,638△229,714△235,421

185,473

169,830

Breakdown by item of major causes of any difference between the normal effective statutory tax rate and theeffective income tax rate after tax effect accounting
Previous business year
(As of March 31, 2023)

Current business year
(As of March 31, 2024)

30.5%

30.5%

0.1%

△5.0%

Special tax deductions

△1.0%

△5.0%

Items permanently excluded from taxable income

△7.1%

△4.0%

1.3%

1.0%

1.0%

1.0%

24.8%

18.5%

Normal effective statutory tax rate
(Adjustments)
Increase (decrease) in valuation allowance

Items permanently excluded from tax-deductible
expenses
Other
Effective income tax rate after tax effect accounting(For Revenue Recognition)

Notes on the basic information for understanding revenue from contracts with customers are omitted as the samedetails are shown in “Notes (For Revenue Recognition)” of the Consolidated Financial Statement.
(Significant Subsequent Events)
No applicable matter.

- 121 -(Supplementary Schedules)[Schedule of property, plant and equipment, etc.](Thousands of yen)

Category

Property,plant andequipment

Intangible
assetsType of assets

Balance at
beginning of
periodAmount ofincrease incurrent period

Amount ofdecrease incurrent
periodAmount ofdepreciation oramortization incurrent period

Balance at endof period

Accumulated
depreciation or
accumulated
amortization

Buildings

3,569,788

203,860

3,549

276,574

3,493,523

11,696,605

Structures

420,80268,450354

47,185

441,712

1,311,723

Machineryandequipment

1,907,932

802,099

11,850(11,379 )

651,748

2,046,433

21,869,423

Vehicles

22,6168,042

010,273

20,385211,105

Tools,
furnitureand fixtures

223,657

77,184

4,494(4,145)94,304

202,0431,584,289

Land

1,477,753

37,635－－

1,515,389－

Leasedassets287,895△1,322－45,002

241,570

193,161

Constructionin progress

1,435,163

1,523,516

1,577,617－

1,381,061－

Total property,
plant andequipment

9,345,610

2,719,466

1,597,867(15,524 )

1,125,089

9,342,120

36,866,308

Software103,329

195,830－

47,885251,274－

Other

11,063－－218

10,844－

Total
intangible－
114,392
195,830
48,104
262,118
assetsNote: 1. Key components of the increase in the current period are as follows.
(Thousands of yen)
Machinery andElectronic materials manufacturing facilities
709,336
equipment
Display materials manufacturing facilities
28,894
Industrial application structural materials manufacturing facilities
27,899Construction in progress
Electronic materials manufacturing facilities
1,093,401
Industrial application structural materials manufacturing facilities
97,105
Electrical insulating materials manufacturing facilities
57,643
2. Key components of the decrease in the current period are as follows.
Construction in progressTransfer to the main account(Thousands of yen)
1,195,950

3. The amount in parentheses in the “Amount of decrease in current period” column is the amount of impairment losses.

[Schedule of allowances and provisions](Thousands of yen)
Item

Balance at beginning Amount of increaseof periodin current period

Amount of decreasein current period

Balance at end of
periodAllowance for doubtful accounts

561,433

609,969

560,481

610,921

Provision for bonuses

340,021405,425

340,021405,425

Provision for loss on guarantees

47,737－47,737－

Provision for share awards

50,44922,311

4,224

68,536- 122 -－

(2) Details of Major Assets and Liabilities
Statement is omitted as the relevant information is stated in the consolidated financial statements.

(3) Other
No applicable matter.

VI. Outline of Share Handling of the Submitting Company

Business year

From April 1 to March 31

Ordinary General Meeting of
Shareholders

To be held in June

Record date

March 31

Record dates of distribution ofdividends from surplus

September 30 and March 31

Number of shares per unit

100 shares

Purchase of shares constituting
less than one full unit

Handling place(Special account)
Stock Transfer Agency Dept.,
Mitsubishi UFJ Trust and Banking Corporation
1-4-5, Marunouchi, Chiyoda-ku, Tokyo

Transfer agent

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo

Forwarding office
Purchase fees

Method of giving public notice

Privileges of shareholders
Note:--The amount obtained by prorating the consignment fee per unit (prescribed by
Tokyo Stock Exchange) according to the number of shares constituting lessthan one full unit purchased
Public notices of the Company shall be given by electronic means; provided,
however, that if an electronic public notice cannot be provided due to an
accident or any other unavoidable reason, the Company shall publish its public
notice in the Nikkei newspaper.
Electronic public notices URL:
https://www.arisawa.co.jp/japanese/koukoku.html
None

Pursuant to the provisions of the Articles of Incorporation of the Company, the shareholders of the Company’s sharesconstituting less than one full unit may not exercise any rights other than: (i) the rights set forth in each item of Article 189,
paragraph 2 of the Companies Act; (ii) the right to make requests under the provisions of Article 166, paragraph 1 of theCompanies Act; and (iii) the right to receive allotment of the shares offered and allotment of the stock acquisition rights
offered in proportion to the number of shares held by each such shareholder.

- 123 -

VII. Reference Information on the Submitting Company
1. Information on Parent Company, etc. of Submitting Company
The Company has no parent company, etc. provided for in Article 24-7, paragraph 1 of the Financial
Instruments and Exchange Act.

2. Other Reference Information
The Company submitted the following documents between the commencement date of the current businessyear and the date of submission of the Financial Report.
(1) Financial Report, documents attached thereto and Confirmation Letter
Business year from April 1, 2022 to March 31, 2023 (The 75th Term)
Submitted to the Director-General of the Kanto Local Finance Bureau on June 30, 2023.
(2) Internal Control Report and documents attached thereto
Submitted to the Director-General of the Kanto Local Finance Bureau on June 30, 2023.
(3) Quarterly Report and Confirmation Letter(The First Quarter of the 76th Term) (From April 1, 2023 to June 30, 2023)
Submitted to the Director-General of the Kanto Local Finance Bureau on August 10, 2023.
(The Second Quarter of the 76th Term) (From July 1, 2023 to September 30, 2023)
Submitted to the Director-General of the Kanto Local Finance Bureau on November 14, 2023.
(The Third Quarter of the 76th Term) (From October 1, 2023 to December 31, 2023)
Submitted to the Director-General of the Kanto Local Finance Bureau on February 14, 2024.
(4) Extraordinary Report
Submitted to the Director-General of the Kanto Local Finance Bureau on July 4, 2023.
This is an Extraordinary Report under the provisions of Article 19, paragraph 2, item 9-2 of the Cabinet
Office Ordinance on Disclosure of Corporate Affairs, etc. (Results of exercise of voting rights at thegeneral meeting of shareholders).
Submitted to the Director-General of the Kanto Local Finance Bureau on October 10, 2023.
This is an Extraordinary Report under the provisions of Article 19, paragraph 2, item 4 of the Cabinet
Office Ordinance on Disclosure of Corporate Affairs, etc. (Change of major shareholders).
Submitted to the Director-General of the Kanto Local Finance Bureau on June 28, 2024.
This is an Extraordinary Report under the provisions of Article 19, paragraph 2, item 4 of the Cabinet
Office Ordinance on Disclosure of Corporate Affairs, etc. (Change of major shareholders).

- 124 -

PART II. INFORMATION ON GUARANTY COMPANIES, ETC. OF THE
SUBMITTING COMPANY
No applicable matter.

- 125 -

Independent Auditors’ Reportconcerning consolidated financial statements and internal control report
June 27, 2024
To the Board of Directors of Arisawa Mfg. Co., Ltd.
Ernst & Young ShinNihon LLC
Niigata office
Yoshiyuki Sakuma
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Ken Takahashi
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant<Audit of Consolidated Financial Statements>
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 1 of the Financial Instruments andExchange Act, we have audited the consolidated financial statements of Arisawa Mfg. Co., Ltd. listed in the “Status of Accounting”
for the consolidated fiscal year from April 1, 2023 to March 31, 2024, consisting of the consolidated balance sheets, consolidated
statements of income, consolidated statements of comprehensive income, consolidated statements of changes in shareholders’ equity
and other net assets, consolidated statements of cash flows, important matters underlying preparation of the consolidated financial
statements, other notes and consolidated supplementary schedules.
In our opinion, the above consolidated financial statements fairly present, in all material respects, the financial conditions of Arisawa
Mfg. Co., Ltd. and its consolidated subsidiaries as of March 31, 2024 as well as the results of their operations and their status of cash
flows for the consolidated fiscal year ended March 31, 2023 in accordance with the corporate accounting standards generally acceptedin Japan.
Basis for the Audit Opinion
We conducted our audit in accordance with the auditing standards generally accepted in Japan. Our responsibility in the auditing
standards is stated in “The Responsibility of Auditors in the Consolidated Financial Statements Audit.” We are independent of theCompany and its consolidated subsidiaries and fulfill other ethical responsibilities as an auditor in accordance with the code ofprofessional ethics in Japan. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
Key Audit Matters
Key audit matters are those matters that the auditor, as a professional expert, considers to be particularly important in the audit of theconsolidated financial statements for the current consolidated fiscal year. Those are matters that were addressed in the course of
performing the audit of the consolidated financial statements as a whole and in forming the audit opinion thereon, and we do not
express specific opinions on these matters.

Impairment of Non-current Assets of Consolidated Subsidiaries
Details of Key Audit Matters and Reasons for Decisions

Audit Response

As stated in the Notes (Significant Accounting Estimates), theCompany has determined in the consolidated fiscal year that
there is an indication of impairment in the property, plant andequipment of 6,250,485 thousand yen of ThinFlex Corporation
and TopFlex Corporation of our Group due to a decrease indemands for electronic materials and a decline in profitability
along with the stagnation of Chinese economy. However, theimpairment losses are not recognized because the value in use,which is a recoverable amount that can be gained from such
subsidiaries as a cash-generating unit, exceeds the carrying
amount. The property, plant and equipment of 6,250,485
thousand yen of ThinFlex Corporation and TopFlex
Corporation of our Group accounts for 9.1% in the
consolidated assets.
The value in use is measured with the discounted present valueof future cash flow for the next five years based on a businessplan approved by management. The major assumptions of such
future cash flow estimates are sales growth rates and grossprofit margins as stated in the “Notes (Significant Accounting
Estimates)”.
The above major assumptions of future cash flow estimatesentail uncertainty and require management's judgment.
Therefore, we have determined that these matters constitutekey audit matters.

We principally performed the following audit procedures by
involving auditors of the constituent units in considering theimpairment of non-current assets of the consolidated
subsidiaries.

・We examined the consistency of future cash flows with theunderlying business plan and the business plan approved bymanagement.
・We compared the prior business plans with their subsequentactual results to assess the effectiveness of process for
estimates in formulating the business plans by management.
・We discussed with management on the sales growth rates
and gross profit margins of the major assumptions, andconducted trend analyses in the past results. In addition, we
conducted sensitivity analyses taking into account futurefluctuation risks.
・ We compared the sales growth rates with external data
including information, etc. released by external agencies, andexamined the assessment of future uncertainty by management.

Other Information
The other information comprises the information included in the financial report, but does not include the consolidated financial
statement, the consolidated financial results, and our auditor’s reports thereon. Management is responsible for the preparationand disclosure of the other information. The Corporate Auditors and the Board of Corporate Auditors are responsible foroverseeing the Directors' execution of duties relating to the improvement and operation of the reporting process for the otherinformation.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withthe corporate accounting standards generally accepted in Japan. This includes improvement and operation of such internal control
as the management deems necessary for the preparation and fair presentation of consolidated financial statements free frommaterial misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare
the consolidated financial statements based on the going concern assumption and disclosing the items regarding the going
concern assumption in accordance with the corporate accounting standards generally accepted in Japan if such items are required
to be disclosed.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor the execution of Directors’ duties in the
improvement and operation of the financial reporting process.

Responsibility of Auditors in the Consolidated Financial Statements Audit
Responsibility of auditors is to express an opinion on the consolidated financial statements from an independent standpoint in
the auditors’ report based on our audit by obtaining reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement due to fraud or error. Material misstatement is judged to be material if it is likely tooccur due to fraud or error and, individually or in aggregation, is reasonably expected to have an impact on decisions made byusers of the consolidated financial statements.
Auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards generally accepted in Japan.
・We identify and assess a risk of material misstatement due to fraud or error. We also design and conduct the audit proceduresthat address the risk of material misstatement. The selection and application of the audit procedures depend on the auditor's
judgment. In addition, we obtain sufficient and appropriate audit evidence to provide a basis for our audit opinion.
・In making such risk assessments, the auditors review internal controls relevant to the audits in order to design audit proceduresthat are appropriate under the circumstances, while it is not the objective of an audit of the consolidated financial statements
to express an opinion on the effectiveness of the entity’s internal control.
・We evaluate the accounting policies adopted by the management and appropriateness of their methods of application as well
as reasonableness of the accounting estimates made by the management and validity of related notes.
・We conclude whether it is appropriate for the management to prepare the consolidated financial statements with the going
concern assumption and, based on the obtained audit evidence, whether a material uncertainty regarding events or conditions
that may cast significant doubt on the going concern assumption exists. If a material uncertainty regarding the going concern
assumption exists, it is required to promote awareness to the notes in the consolidated financial statements in the auditors’
report, or if the notes regarding a material uncertainty in the consolidated financial statements are inappropriate, it is required
to express an opinion with exceptive items to the consolidated financial statements. Conclusion by the auditors is based on
the audit evidence obtained by the day of the audit report, but a company may not be able to exist as the going concern
depending on future events or conditions.
・We evaluate not only whether the presentation and notes of the consolidated financial statements are in accordance withgenerally accepted accounting principles but also whether the presentation, structure, and contents of the consolidated financial
statements including related notes as well as the consolidated financial statements properly present underlying transactions
and accounting events.
・We obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its consolidated
subsidiaries to express an opinion about the consolidated financial statements. The auditors are responsible for instruction,
supervision, and execution of audits regarding the consolidated financial statements. The auditors assume responsibility for
an audit opinion all by themselves.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned audit and its timingof conduct, material audit findings including material weaknesses of internal control identified in the audit process, and othermatters required by the auditing standards.
The auditors also provide the Corporate Auditors and the Board of Corporate Auditors with a statement that we complied withthe code of professional ethics on independence in Japan, and communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where countermeasures to eliminate obstacles or safeguards toreduce obstacles to an acceptable level are applicable, related countermeasures and safeguards.
Among the matters discussed with Corporate Auditors and Board of Corporate Auditors, Corporate Auditors shall determine
matters that are considered to be particularly significant in the audit of the consolidated financial statements for the current
consolidated fiscal year as key audit matters and state them in the auditor's report. However, if publication of such matters is
prohibited by laws and regulations, or if the auditor judges that such matters should not be reported because the disadvantagesof reporting such matters in the auditor's report are reasonably expected to outweigh the public interest, albeit in an extremely
limited manner, such matters shall not be included in the auditor's report.
<Audit of Internal Control>
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 2 of the Financial Instruments
and Exchange Act, we have audited the internal control report as of March 31, 2024 of Arisawa Mfg. Co., Ltd.
In our opinion, the above internal control report, in which Arisawa Mfg. Co., Ltd. represents that its internal control over financial
reporting is effective as of March 31, 2024, fairly presents, in all material respects, the evaluation results of its internal control

over financial reporting in accordance with the evaluation standards for internal control over financial reporting generally
accepted in Japan.
Basis for the Audit Opinion
We conducted an internal control audit in accordance with the auditing standards for internal control over financial reporting
generally accepted in Japan. Our responsibility in the auditing standards for internal control over financial reporting is stated in“Responsibility of the Auditors in Internal Control.” We are independent of the Company and its consolidated subsidiaries andfulfill other ethical responsibilities as an auditor in accordance with the code of professional ethics in Japan. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Internal Control ReportManagement is responsible for the improvement and operation of internal control over financial reporting as well as the
preparation and fair presentation of the internal control report in accordance with the evaluation standards for internal control
over financial reporting generally accepted in Japan.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor and verify the status of improvement andoperation of the internal control system for financial reporting.
In this regard, there is a possibility that internal control over financial reporting cannot completely prevent or detect false
statements in financial reporting.
Responsibility of Auditors in Internal Control Audit
Our responsibility is to express an opinion on the internal control report from an independent standpoint by obtaining reasonableassurance about material misstatement in the internal control report based on our internal control audit.
The auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards for internal control over financial reporting generally accepted inJapan.
・We conduct audit procedures to obtain audit evidence about the results of evaluating internal control over financial reportingstated in the internal control report. Audit procedures for an internal control audit are selected and applied at our own judgment,
based on the gravity of the impact on the credibility of financial reporting.
・We evaluate the overall presentation of the internal control report, including a review of the statements made by the
management with respect to the scope, procedures, and results of the assessment of internal control over financial reporting.
・We obtain sufficient and appropriate audit evidence about the results of evaluating internal control over financial reportingstated in the internal control report. The auditors are responsible for instruction, supervision, and execution of audits regarding
the internal control report. The auditors assume responsibility for an audit opinion all by themselves.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned internal control
audit and its timing of conduct, the results of exercising the internal control audit, material weaknesses identified in internal
control to be disclosed, the results of their correction, and other matters required by the auditing standards of internal control.
The auditors also provide the Corporate Auditors and the Board of Corporate Auditors with a statement that we complied withthe code of professional ethics on independence in Japan, and communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where countermeasures to eliminate obstacles or safeguards toreduce obstacles to an acceptable level are applicable, related countermeasures and safeguards.
<Information Related to Remuneration>
The amount of remuneration for audit and attestation services and non-audit services of the Company and the subsidiaries to ourcompany and those who belong to the same network as us is stated in “4. Status of Corporate Governance, etc., (3) Status ofAudit” under “IV. Status of the Submitting Company”.
Interest
There exists no special interest between the Company and its consolidated subsidiaries and this audit corporation or its
engagement partners which is required to be stated pursuant to the provisions of the Certified Public Accountants Act.
Note:

1. An original of the above quarterly review report is separately archived by the Company (the company submitting the Quarterly
Report).
2. XBRL data are not included in the subject of the audit.

Independent Auditors’ Report
June 27, 2024
To the Board of Directors of Arisawa Mfg. Co., Ltd.
Ernst & Young ShinNihon LLC
Niigata office
Yoshiyuki Sakuma
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant
Ken Takahashi
Designated Limited Liability Partner and Engagement Partner,

Certified Public Accountant<Audit of Financial Statements>
Audit Opinion
For the purpose of granting audit certification under the provisions of Article 193-2, paragraph 1 of the Financial Instruments
and Exchange Act, we have audited the financial statements of Arisawa Mfg. Co., Ltd. listed in the “Status of Accounting” forthe 76th business year from April 1, 2023 to March 31, 2024, consisting of the balance sheets, statements of income, statementsof changes in shareholders’ equity and other net assets, important accounting policies, other notes and supplementary schedules.
In our opinion, the above financial statements fairly present, in all material respects, the financial conditions of Arisawa Mfg.
Co., Ltd. as of March 31, 2024 and the results of its operations for the business year ended March 31, 2024 in accordance withthe corporate accounting standards generally accepted in Japan.
Basis for the Audit Opinion
We conducted our audit in accordance with the auditing standards generally accepted in Japan. Our responsibility in the auditing
standards is stated in “Responsibility of the Auditors in Financial Statements Audit.” We are independent of the Company andits consolidated subsidiaries and fulfill other ethical responsibilities as an auditor in accordance with the code of professional
ethics in Japan. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Key Audit Matters
Key audit matters are those matters that the auditor, as a professional expert, considers to be particularly important in the auditof the financial statements for the current business year. Those are matters that were addressed in the course of performing theaudit of the financial statements as a whole and in forming the audit opinion thereon, and we do not express specific opinions
on these matters.

Valuation of Shares of Subsidiaries
Details of Key Audit Matters and Reasons for Decisions

Audit Response

As stated in the Notes (Significant Accounting Estimates),
the Company has recorded the shares of subsidiaries andassociates of 11,176,354 thousand yen on the balance sheets asof the end of the current business year, which include the sharesof ThinFlex Corporation of 10,440,772 thousand yen. Suchshares of 10,440,772 thousand yen account for 21.3% in the
total assets.
The shares of subsidiaries and associates are shown on thebalance sheets at the acquisition cost. If the net asset value
declines significantly due to deterioration of financial
positions, it is appropriately reduced, except the case thatrecoverability is supported by sufficient evidence.
If, in measuring the net asset value of the shares of ThinFlex
Corporation, the results of valuation of impairment in theproperty, plant and equipment which ThinFlex Corporation andits subsidiary, TopFlex Corporation, hold have a significant
impact and the impairment losses are shown, the net asset valueof such subsidiary may decline significantly.
The major assumptions in assessing the impairment in theproperty, plant and equipment which ThinFlex Corporation and
TopFlex Corporation hold are as stated in the key audit mattersdescribed in the auditors’ report of the consolidated financial
statements and have a significant impact on the evaluation of
the shares of subsidiaries and associates. Therefore, we havedetermined that these matters constitute key audit matters.

We principally performed the following audit procedures by
involving auditors of the constituent units in considering thevaluation of the shares of ThinFlex Corporation.

・ With respect to the financial information of ThinFlex
Corporation and TopFlex Corporation, we verified the reliabilityof the financial figures. In examining such financial figures, thenecessity of impairment in the property, plant and equipment is
especially important, and we performed the procedures stated in
the key audit matters “Impairment of Non-current Assets ofConsolidated Subsidiaries” in the auditors’ report of theconsolidated financial statements.
・We recalculated whether the net asset value was calculated
based on the financial figures of the subsidiaries.

Other Information
The other information comprises the information included in the financial report, but does not include the consolidated financial
statement, the consolidated financial results, and our auditor’s reports thereon. Management is responsible for the preparationand disclosure of the other information. The Corporate Auditors and the Board of Corporate Auditors are responsible foroverseeing the Directors' execution of duties relating to the improvement and operation of the reporting process for the otherinformation.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in theaudit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibility of Management and Corporate Auditors and Board of Corporate Auditors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the corporate
accounting standards generally accepted in Japan. This includes improvement and operation of such internal control as the
management deems necessary for the preparation and fair presentation of financial statements free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing whether it is appropriate to prepare the financial
statements based on the going concern assumption and disclosing the items regarding the going concern assumption inaccordance with the corporate accounting standards generally accepted in Japan if such items are required to be disclosed.
Responsibility of Corporate Auditors and Board of Corporate Auditors is to monitor the execution of Directors’ duties in the
improvement and operation of the financial reporting process.

Responsibility of Auditors in Financial Statements Audit
Responsibility of auditors is to express an opinion on the financial statements from an independent standpoint in the auditors’
report based on our audit by obtaining reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement due to fraud or error. Material misstatement is judged to be material if it is likely to occur due to fraud or
error and, individually or in aggregation, is reasonably expected to have an impact on decisions made by users of the consolidated
financial statements.
The auditors make professional judgements and conduct the followings with an attitude of professional skepticism through an
auditing process in accordance with the auditing standards generally accepted in Japan.
・We identify and assess a risk of material misstatement due to fraud or error. We also design and conduct the audit proceduresthat address the risk of material misstatement. The selection and application of the audit procedures depend on the auditor's
judgment. In addition, we obtain sufficient and appropriate audit evidence to provide a basis for our audit opinion.
・In making such risk assessments, the auditors review internal controls relevant to the audits in order to design audit proceduresthat are appropriate under the circumstances, while it is not the objective of an audit of the financial statements to express an
opinion on the effectiveness of the entity’s internal control.
・We evaluate the accounting policies adopted by the management and appropriateness of their methods of application as well
as reasonableness of the accounting estimates made by the management and validity of related notes.
・We conclude whether it is appropriate for the management to prepare the financial statements with the going concern
assumption and whether a material uncertainty regarding events or conditions that may cast significant doubt on the going
concern assumption exists based on the obtained audit evidence. If a material uncertainty regarding the going concern
assumption exists, it is required to promote awareness to the notes in the financial statements in the auditors’ report, or if thenotes regarding a material uncertainty in the financial statements are inappropriate, it is required to express an opinion withexceptive items to the financial statements. Conclusion by the auditors is based on the audit evidence obtained by the day of
the audit report, but a company may not be able to exist as a going concern depending on future events or conditions.
・We evaluate not only whether the presentation and notes of the financial statements are in accordance with generally accepted
accounting principles in Japan but also whether the presentation, structure, and contents of the financial statements including
related notes as well as the financial statements properly present underlying transactions and accounting events.
The auditors make reports to Corporate Auditors and Board of Corporate Auditors on the scope of a planned audit and its timingof conduct, material audit findings including material weaknesses of internal control identified in the audit process, and othermatters required by the auditing standards.
The auditors also provide the Corporate Auditors and the Board of Corporate Auditors with a statement that we complied withthe code of professional ethics on independence in Japan, and communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where countermeasures to eliminate obstacles or safeguards toreduce obstacles to an acceptable level are applicable, related countermeasures and safeguards.
Among the matters discussed with Corporate Auditors and Board of Corporate Auditors, Corporate Auditors shall determine
matters that are considered to be particularly significant in the audit of the financial statements for the current business year as
key audit matters and state them in the auditor's report. However, if publication of such matters is prohibited by laws andregulations, or if the auditor judges that such matters should not be reported because the disadvantages of reporting such mattersin the auditor's report are reasonably expected to outweigh the public interest, albeit in an extremely limited manner, such mattersshall not be included in the auditor's report.
<Information Related to Remuneration>
Information related to remuneration is stated in the auditors’ report of the consolidated financial statements.
Interest
There exists no special interest between the Company and this audit corporation or its engagement partners which is required to
be stated pursuant to the provisions of the Certified Public Accountants Act.

Note:

1. An original of the above quarterly review report is separately archived by the Company (the company submitting the Quarterly
Report).
2. XBRL data are not included in the subject of the audit.