These documents have been translated from the Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals,
the originals shall prevail. The Company assumes no responsibility for this translation or for direct,
indirect or any other forms of damages arising from the translations.

Dear Shareholders,
I would like to express my appreciation for your continued support and patronage.
I am pleased to present to you this Notice of Convocation of the 28th Annual General Meeting of
Shareholders.

At the EF-ON Group we are developing our business to help achieve a sustainable society through forest
management, forestry, power generation, and materials development, with the aim of making effective useof forestry resources.
In the fiscal year ended June 30, 2024, a combination of various factors, including rising fuel wood
prices and increased distribution of wood with high moisture content, resulted in higher fuel consumption,
which strained profits and created severe circumstances. We will continue to focus on expanding felling
operations in the forestry business and, as per the medium-term management plan released in April 2024,
we are committed to making progress in new businesses in line with the plan.
I would like to conclude this message by asking all shareholders for their further understanding andsupport.
Tomotada Shimazaki
President and Representative Director
EF-ON INC.

1

(Translation)
Securities Code: 9514
September 6, 2024
Tomotada Shimazaki
President and Representative Director
EF-ON INC.
1-9-2, Marunouchi, Chiyoda-ku,
Tokyo, JapanNOTICE OF CONVOCATION OF
THE 28TH ANNUAL GENERAL MEETING OF SHAREHOLDERS
Dear Shareholders:
We are pleased to announce the 28th Annual General Meeting of Shareholders of EF-ON INC. (the“Company”). The meeting will be held for the purposes as described below.
In convening this General Meeting of Shareholders, the Company has taken measures for providing
information that constitutes the content of Reference Documents for the General Meeting of Shareholders, etc.
(items for which measures for providing information in electronic format are to be taken) in electronic format,
and has posted the information on each of the following websites. Please access either of the websites to viewthe information.
The Company’s website:
https://www.ef-on.co.jp/ir/library/meeting/ (in Japanese)(To refer to these materials, access to the above-mentioned website, select “IR information” from the menu,
then “IR library,” then “Materials for the general meeting of shareholders.”)
TSE website (Listed Company Search):https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show (in Japanese)(Access the TSE website by using the internet address shown above, enter “EF-ON” in “Issue name (company
name)” or the Company’s securities code “9514” in “Code,” and click “Search.” Then, click “Basic
information” and select “Documents for public inspection/PR information.” Under “Filed information
available for public inspection,” click “Click here for access” under “[Notice of General Shareholders Meeting/Informational Materials for a General Shareholders Meeting].”)If you are unable to attend the meeting, you can exercise your voting rights via the Internet, etc. or in writing(by mail). Please review the Reference Documents for the General Meeting of Shareholders, and cast yourvote by 5:30 p.m. Japan time on Thursday, September 26, 2024.

2

[Exercising voting rights via the Internet, etc.]
Access the designated website for the exercise of voting rights (https://www.web54.net (in Japanese)), use thevoting rights exercise code and password displayed on the Voting Rights Exercise Form that was sent with thisNotice, then follow the on-screen instructions to indicate your vote for or against the proposal. Please
complete the procedure by the deadline for voting given above.
When exercising voting rights via the Internet, etc., please first refer to the “Guide to Exercise of Voting
Rights Via the Internet, etc.”[Exercising voting rights in writing (by mail)]
Please indicate your vote for or against the proposal on the Voting Rights Exercise Form, and return it so that
we receive it by the deadline for voting given above.
1. Date and Time:

Friday, September 27, 2024 at 10 a.m. Japan time (The venue opens at 9:30 a.m.)

2. Place:

Tokyo Convention Hall in Tokyo Square Garden, 5F,
3-1-1 Kyobashi, Chuo-ku, Tokyo, Japan

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
28th Fiscal Year (July 1, 2023 – June 30, 2024) and results of audits by the
Accounting Auditor and the Audit & Supervisory Board of the Consolidated
Financial Statements
2. Non-Consolidated Financial Statements for the Company’s 28th Fiscal Year
(July 1, 2023 – June 30, 2024)
Proposals to be resolved:
Election of Nine (9) Directors
Proposal
4. Other Matters related to Exercise of Voting Rights
If exercising voting rights by proxy, the proxy must be another shareholder with voting rights.
1. If you attend the meeting in person, please submit the Voting Rights Exercise Form at the reception desk.
2. If revisions to the items subject to measures for electronic provision arise, a notice of the revisions and thedetails of the items before and after the revisions will be posted on the aforementioned websites.
3. For this General Meeting of Shareholders, paper-based documents stating items subject to measures forelectronic provision are sent simultaneously to all shareholders, regardless of whether there was a request
for delivery of paper-based documents or not. However, those documents do not include the following items
in accordance with the provisions of laws and regulations and Article 13 of the Company’s Articles ofIncorporation.
Among the items subject to measures for electronic provision, in accordance with the provisions of laws andregulations and Article 13 of the Articles of Incorporation of the Company, the following items are notprovided in the paper-based documents delivered.
1. “Notes to Consolidated Financial Statements”
2. “Notes to Non-Consolidated Financial Statements”
Accordingly, Consolidated Financial Statements and Non-Consolidated Financial Statements stated in theabove-mentioned documents constitute part of the documents that were audited by the Accounting Auditor
when preparing its accounting audit report and by Audit & Supervisory Board Members when preparing
their audit report.
4. If neither approval nor disapproval of the proposal is indicated on the returned voting form, the Company
will deem that you indicated your approval of the proposal.
5. Except in special circumstances, only shareholders may enter the venue. No waiting room will be set up forthe meeting.
6. If you are a shareholder who requires assistance with a wheelchair or guidance to seats or restrooms whenattending the event, please contact us in advance (03-4500-6450).

3

Guide to Exercise of Voting Rights
Exercise of voting rights at the Company’s General Meeting of Shareholders is shareholders’ important right.
Please review the Reference Documents for the General Meeting of Shareholders, and exercise your voting
rights.
There are three methods to exercise your voting rights as indicated below.
Attending the meeting in person

Exercising voting rights in writing(by mail)If you attend the meeting in person,
please submit the Voting Rights
Exercise Form that was sent with thisNotice at the reception desk.

Please indicate your vote for or against
the proposal on the Voting Rights
Exercise Form that was sent with thisNotice, and return it to us.

Date and time of the General Meetingof Shareholders:

Deadline for voting:Deadline for voting:

No later than 5:30 p.m. on Thursday,
September 26, 2024

No later than 5:30 p.m. on Thursday,
September 26, 2024

Friday, September 27, 2024 at 10 a.m.

Exercising voting rights via theInternet, etc.

If voting rights are exercised both in writing (by mail) and via the Internet, etc., votes arriving later shall beconsidered valid; if both arrive on the same day, voting rights exercised via the Internet, etc. shall be consideredvalid. Additionally, if voting rights are exercised more than once via the Internet, etc., only the most recent voteshall be deemed valid.

For inquiries on how to use the personal computer or
smart phone in relation to the exercise of voting
rights via the Internet, etc., please contact:

Sumitomo Mitsui Trust Bank, Limited, Stock Transfer Agency Web
Support Dedicated Hotline
Telephone: 0120 (652) 031 (toll free, available only in Japan)(Business Hours: 9 a.m. ~ 9 p.m. (Japan time))

Institutional investors may use the electronic voting platform for institutional investors operated by ICJ, Inc.

4

Reference Documents for the General Meeting of Shareholders
Proposal: Election of Nine (9) Directors
The terms of office of all eight (8) Directors will expire at the conclusion of this General Meeting of
Shareholders. Accordingly, the election of nine (9) Directors is proposed.
The candidates for Directors are as follows.
Candidate
No.

Name

1

Tomotada Shimazaki

Reelection

President and Representative Director

2

Makoto Nagasawa

Reelection

Senior Managing Director

3

Hisahito Koike

Reelection

Managing Director

4

Koutaro Fujii

Reelection

Director

5

Hiroshi Suto

Reelection

Director

6

Yasuyuki Matsuo

Reelection

Director

7

Maiko Sako

Reelection Outside Independent

Outside Director

8

Eiko Matsumura

New election Outside Independent—

9

Sou Aoki

New election Outside Independent—

Current position at the Company

5

<Reference> Areas of expertise and experience of candidates for Director (Skill Matrix)* Not every area of expertise and experience possessed by each candidate is presented.
Complianceand riskmanagement

Long-term
outlook &strategic
thinking

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○

5 Hiroshi Suto

○

○

○

○

6 Yasuyuki Matsuo

○

○

○

○

No.

Name

Corporate Finance andmanagement accounting

1 Tomotada Shimazaki○

2 Makoto Nagasawa○

3 Hisahito Koike○

4 Koutaro Fujii

○

○

○

The
Sustainability
Company’s
Personnel
managementbusinessmanagement
thinking
management

7 Maiko Sako

○

○

○

○

8 Eiko Matsumura

○

○

○

○

9 Sou Aoki

○

○

○

○

○

6

○
○
○

○

Candidate
No. 1
Reelection

Tomotada Shimazaki(Date of Birth:
August 27, 1962)

Number of shares of theCompany held:
24,000 shares

CandidateNo. 2
Reelection

Makoto Nagasawa(Date of Birth:January 9, 1969)

Number of shares of theCompany held:
0 shares

Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
September 2002
Deputy General Manager, Mitsubishi Securities
Co., Ltd.
June 2005
Corporate Planning Department, the Company
September 2006
Director
May 2008
President and Representative Director(to present)
Reasons for selection as a candidate
The Company has selected Mr. Tomotada Shimazaki as a candidate
for Director because he has abundant experience and achievementsfrom his duties as Representative Director in overseeing management
as a whole and is well-versed in business management. The Company
has judged that he will be able to continue utilizing his abundant
experience and expertise in the management of the Company.
Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
April 1992
Joined TAISEI SETSUBI CO., LTD.
October 2011
Technology & Development Department, theCompany
May 2013
General Manager, Technology & Development
Department
September 2015
Director and General Manager, Technology &Development Department
October 2016
Director, Head of Business Division, General
Manager, Technology & Development
Department, and General Manager, Energy
Saving Support Department
September 2019
Executive Officer, Head of Business Division,
General Manager, Technology & Development
Department, and General Manager, Energy
Saving Support Department
September 2020
Managing Director, General Manager,
Technology & Development Department, andGeneral Manager, Energy Saving Support
Department
September 2021
Senior Managing Director, General Manager,
Technology & Development Department, andGeneral Manager, Energy Saving Support
Department (to present)
Reasons for selection as a candidate
The Company has selected Mr. Makoto Nagasawa as a candidate for
Director because he has abundant experience and achievements in
power plant development, which is the foundation of the Company’sbusinesses. The Company has judged that he will be able to continue
utilizing his operational experience and expertise in the managementof the Company.

7

Candidate
No. 3
Reelection

Hisahito Koike(Date of Birth:
May 18, 1961)

Number of shares of theCompany held:
51,000 shares

Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
May 2003
Deputy General Manager, Group Management
Department, Administrative Division, andGeneral Manager, KMG Accounting Center,
Kyoritsu Maintenance Co., Ltd.
October 2006
General Manager, Accounting Department, theCompany
September 2009
Director and General Manager, Finance andAccounting Department
March 2011
Director and General Manager, Administrative
Division
September 2011
Managing Director and General Manager,
Administrative Division
October 2013
Managing Director and Head of Administrative
Division(to present)
Reasons for selection as a candidate
The Company has selected Mr. Hisahito Koike as a candidate for
Director because he has abundant experience and achievements in theadministrative division of the Company as a Director. The Company
has judged that he will be able to continue utilizing his operational
experience and expertise in the management of the Company.

8

Candidate
No. 4
Reelection

Koutaro Fujii(Date of Birth:
March 26, 1964)

Number of shares of theCompany held:
4,800 shares

Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
April 1997
South Kanto Manager, Sales Division, Copal
Electronics Co., Ltd.
April 2005
General Manager, Electric Power Business
Department, the Company
April 2007
General Manager, ESCO Business Division
October 2007
Managing Director, VEGLIALaboratories Inc.
September 2013
Director and Vice President
May 2016
Technology & Development Department, theCompany
Seconded to EF-BIOS INC., General Manager,
Bungo-Ono Office
September 2016
Director, the Company
General Manager, Bungo-Ono Office, EF-BIOS
INC.
July 2017
Director, the Company
General Manager, Hita Office, EF-BIOS INC.
September 2019
Director, the Company
Executive Officer and General Manager,
Preparatory Office, Mibu Power Plant, EFBIOS INC.
January 2020
Director, the Company
Executive Officer and General Manager, Mibu
Office, EF-BIOS INC.
June 2020
Director, the Company
General Manager, Electricity Business Planning
Department
July 2020
Director and General Manager, Electric Power
Project Department
June 2022
Director and General Manager, Electric Power
Project Department, and General Manager,
Sustainability Promotion Preparatory Office
December 2022
Director and General Manager, Electric Power
Project Department (to present)
Reasons for selection as a candidate
The Company has selected Mr. Koutaro Fujii as a candidate for
Director because he is well-versed in the energy saving business andthe electric power business, and has abundant experience andachievements in these areas. The Company has judged that he will beable to continue utilizing his operational experience and expertise in
the management of the Company.

9

Candidate
No. 5
Reelection

Hiroshi Suto
(Date of Birth:
August 26, 1974)

Number of shares of theCompany held:
300 shares

CandidateNo. 6
Reelection

Yasuyuki Matsuo(Date of Birth:
October 9, 1975)

Number of shares of theCompany held:
1,500 shares

Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
September 2013
Deputy General Manager, Forestry Department,
Kyowa Mokuzai Co., Ltd.
November 2016
Deputy General Manager, Tokyo Sales Office
September 2017
Joined EF-BIOS INC.
October 2017
Deputy Manager, Forestry Section, Forestry
Department
October 2019
General Manager, Forestry Business
Department
July 2020
Executive Officer and General Manager,
Forestry Business Department
September 2021
Director, the Company
Executive Officer and General Manager,
Forestry Business Department, EF-BIOS INC.
September 2023
Director, the Company
Director and General Manager, Forestry
Business Department, EF-BIOS INC. (topresent)
Reasons for selection as a candidate
The Company has selected Mr. Hiroshi Suto as a candidate for
Director because he is well-versed in forestry business and hasabundant experience and achievements as Executive Officer andGeneral Manager of Forestry Business Department of EF-BIOS
INC., which is the Company’s consolidated subsidiary. The
Company has judged that he will be able to continue utilizing his
operational experience and expertise in the management of theCompany.
Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
April 1994
Joined DAIICHI DENRO KOGYO K.K.
June 2006
Joined EF-BIOS INC.
October 2011
Manager, Facilities Group Section, Hita Office
April 2016
Manager, Facilities Group Section, Bungo-Ono
OfficeSeptember 2019
Acting General Manager, Hita Office
October 2020
General Manager, Hita Office
September 2022
Director, the Company
General Manager, Hita Office, EF-BIOS INC.
February 2023
Director, the Company
Executive Officer and General Manager,
Shingu Office, EF-BIOS INC.
September 2023
Director, the Company
Director and General Manager, Shingu Office,EF-BIOS INC. (to present)
Reasons for selection as a candidate
The Company has selected Mr. Yasuyuki Matsuo as a candidate for
Director because he has abundant experience and achievements as
General Manager of power plant, which is a subsidiary of theCompany. The Company has judged that he will be able to continue
utilizing his operational experience and expertise in the managementof the Company.

10

Candidate
No. 7
Reelection
OutsideIndependent

Maiko Sako
(Date of Birth:
November 21, 1980)

Number of shares of theCompany held:
0 shares

CandidateNo. 8
New election
OutsideIndependent

Eiko Matsumura(Date of Birth:
May 29, 1983)

Number of shares of theCompany held:
0 shares

Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
December 2008
Registered as attorney-at-law
January 2009
Joined Kasumigaseki Law and Accounting
Offices
October 2013
Junior Partner, Kasumigaseki Law andAccounting Offices
March 2015
Junior Partner, SAKURADA DORIPARTNERS
September 2018
Outside Director, the Company (to present)
February 2020
Partner, SAKURADA DORI PARTNERS(to present)
June 2024
Outside Director, TECHNO RYOWA LTD. (topresent)
Reasons for selection as a candidate and outline of roles expected
The Company has selected Ms. Maiko Sako as a candidate for
Outside Director because, although she has never been directly
involved in the management of a company except as an outside
officer, she has experience and specialist knowledge in corporate
legal affairs as an attorney. The Company has judged that she willcontinue to appropriately execute her duties as an Outside Director
from an objective standpoint as a legal specialist.
Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
September 2007
Joined Future Architect, Inc.
May 2011
CEO, heyday, Inc.
April 2014
Representative Director and President, Basket
Inc.
August 2015
Director, CTO/CDO and General Manager of
EC Division, STRIPE INTERNATIONAL INC.
November 2017
Director, Smarby, Inc.
July 2018
Director, JigyokaSozo Inc. (to present)
November 2018
Outside Director, Photream Inc.
October 2020
COO, BRH Inc.
October 2020
Fellow, Chiba Dojo Inc. (to present)
Reasons for selection as a candidate and outline of roles expected
The Company has selected Ms. Eiko Matsumura as a candidate for
Outside Director because of her extensive knowledge of the ecommerce business and experience as an entrepreneur. The Company
has judged that she will be able to appropriately execute her duties as
an Outside Director.

11

Candidate
No. 9
New election
OutsideIndependent

Sou Aoki(Date of Birth:
September 21, 1984)

Number of shares of theCompany held:
0 shares(Notes) 1.
2.
3.

4.
5.

6.

Past experience, positions and responsibilities at the Company, andsignificant concurrent positions
April 2007
Joined Recruit Co., Ltd.
June 2016
Joined The Gibraltar Life Insurance Co., Ltd.
February 2018
Representative Director and President,
Loveable Inc. (to present)
October 2019
Joined Surpass Co., Ltd., Director
May 2024
Outside Director, ARBEIT-TIMES CO., LTD.
(to present)
Reasons for selection as a candidate and outline of roles expected
The Company has selected Ms. Sou Aoki as a candidate for Outside
Director because of her abundant experience and high level of insightin corporate management and financial affairs, having worked incorporate planning and sales at listed companies, and been involvedin supporting various companies as a director of the company she
founded. The Company has judged that she will be able toappropriately execute her duties as an Outside Director.

No particular relationship of interest exists between the Company and any of the candidates for
Directors.
Ms. Maiko Sako, Ms. Eiko Matsumura and Ms. Sou Aoki are candidates for Outside Directors.
The Company has registered Ms. Maiko Sako with the Tokyo Stock Exchange as an independent
officer under the stipulations of the said exchange. If her reelection is approved, the Company
intends to maintain her designation as an independent officer. The Company also intends to register
Ms. Eiko Matsumura and Ms. Sou Aoki with the said exchange as independent officers.
Ms. Maiko Sako currently serves as an Outside Director of the Company and her term of office asan Outside Director will be six years as of the conclusion of this General Meeting of Shareholders.
If the elections of Ms. Maiko Sako, Ms. Eiko Matsumura and Ms. Sou Aoki are approved, in
accordance with the provisions of the Article 427, paragraph (1) of the Companies Act, theCompany plans to continue its agreements with Ms. Maiko Sako to limit her liability for damages
as stipulated in Article 423, paragraph (1) of the same Act, and also plans to enter into a similar
agreement with Ms. Eiko Matsumura and Ms. Sou Aoki. The maximum amount of liability
pursuant to the said agreement is the minimum amount stipulated in Article 425, paragraph (1) of
the Companies Act.
The Company has entered into a directors and officers liability insurance policy as provided for in
Article 430-3, paragraph (1) of the Companies Act with an insurance company, with all of theCompany’s Directors and Audit & Supervisory Board Members as the insureds. This insurance
policy covers the insured’s losses and such costs as related litigation expenses incurred fromclaims for damages arising from acts (including nonfeasance) carried out by the insured as an
officer or a person at a certain position of the Company. If each candidate is elected and assumes
office, the Company plans to include each of them as an insured in the insurance policy. In addition,
when this insurance policy is renewed, the Company plans to renew the policy with the same terms.

12Business Report(July 1, 2023 – June 30, 2024)

1. Overview of the Company Group(1) Business Progress and Results
During the fiscal year ended June 30, 2024, the Japanese economy experienced record heat in thesummer of last year, which corresponds to the Group’s first quarter of the fiscal year, and there wereconcerns about restrictions on the people’s mobility. However, in addition to domestic travel, a recovery
in inbound tourism and foreign visitors to Japan, led to improved business performance, particularly inthe domestic tourism, travel, transportation, and food and beverage industries. On the other hand, the Noto
Peninsula earthquake occurred at the beginning of 2024, damaging a number of manufacturing plants that
produce machinery, semiconductors, and food, thus disrupting supply chains and delaying infrastructure
recovery, which had a significant impact on the recovery of the local economy. In addition, with regard
to people’s lives in general, the yen continued to depreciate, causing ongoing rising prices on all mannerof goods, and there has been vigorous discussion about corporate policies to raise wages as well as efforts
by the national and local governments to support child-rearing.
In our industry, trading unit prices on the Japan Wholesale Electric Power Exchange held steady at
relatively low levels. Major power companies performed extremely well last year due to increases inelectricity rates for general consumers and declines in the price of fuel required for power generation.
Meanwhile, electricity consumers’ standpoint, there have been multiple activations and extensions ofsubsidies under the government’s electricity and gas price drastic change mitigation project as acushioning measure against electricity rate hikes, as well as increases in renewable energy surcharges,changes to the calculation method of wheeling charges, and the launch of the capacity market for buying
and selling future electricity supply capacity. These and other factors make the outlook for electricity rates
uncertain, and the burden on consumers is expected to trend higher.
Against this backdrop, in the Company’s Energy Saving Support Business, while existing projects
continue to generate sales, albeit on a small scale, orders for new projects have been partially postponeddue to the impact of the Noto Peninsula earthquake. In some projects, we continue to make efforts tomaintain operations by implementing maintenance of facilities and repair utilizing knowhow on energy
saving, and other means, which resulted in a decrease in facility maintenance costs and an increase inprofits in the fiscal year under review.
In the power generation business in the Green Energy Business, although there were powertransmission outages due to lightning strikes and unplanned outages due to problems at some power plants,
operations at individual power plants remained solid, and the amount of electricity transmitted in the fiscal
year under review significantly exceeded that of the previous fiscal year. The EF-ON SHIRAKAWA
Power Plant transitioned to the FIP (Feed-in Premium) system* in January 2023, and compared with the
FIT system (Feed-in Tariff) results for the previous fiscal year, its performance for the fiscal year underreview was roughly equivalent to that of the FIT system. The FIP system is designed to make long-term
performance under the system equivalent to that of the FIT, and even if performance exceeds the FIT ina certain period, adjustments will be made to the past excessive portion of performance in some period
thereafter, and some of that performance will be withdrawn. During the fiscal year under review, ourperformance exceeded the FIT system’s metrics in the first half of the year, but fell short in the second
half. In addition, because all electricity under the FIP system is purchased by the Company, internal sales
and transfer amounts in segment information have increased significantly compared to the same periodof the previous year.
As for the performance of other power plants within the Group, although fuel consumption has been
trending lower compared to the previous fiscal year, fuel costs remain high, resulting in a significant dragon performance. As for costs other than fuel, the price of regular maintenance increased significantly
compared to typical years, and ash disposal costs increased, putting pressure on profits.
In our electricity retail business, we are implement initiatives to sell electricity generated by our Grouppower plants to customers as green power in combination with nonfossil certificates with traceability.
During this fiscal year under review, we focused on market-linked electricity sales and made efforts tosecure contracted energy volumes, which enabled us to significantly increase sales and achieve
profitability.
13With regard to the business performance of the Group in the fiscal year under review, net sales
amounted to ¥17,473 million (3.1% increase on a year-on-year basis), operating profit amounted to ¥600
million (57.0% decrease on a year-on-year basis), ordinary profit amounted to ¥346 million (73.1%
decrease on a year-on-year basis), and profit attributable to owners of parent was ¥281 million (65.9%
decrease on a year-on-year basis).
(Energy Saving Support Business)
In the fiscal year under review, net sales related to existing projects under energy saving support
service contracts hovered at roughly the same level as the previous fiscal year. Contracts for project
maintenance in the field of maintenance such as facility maintenance have started to replace energy supply
contracts, and business performance has recovered thanks to a gradual decrease in depreciation expenses,
insurance, and other expenses during the fiscal year under review. Internal sales between segments in theprevious fiscal year were related to the construction of power plants within the Group, and have not beenrecorded in the fiscal year under review as they have been completed.
With regard to the business performance of this segment in the fiscal year under review, net sales were¥213 million (50.3% decrease on a year-on-year basis) and segment profit amounted to ¥51 million (lossof ¥26 million in the previous fiscal year).
(Green Energy Business)
In the Green Energy Business during the fiscal year under review, unplanned shutdowns occurred at
EF-ON HITA Power Plant and EF-ON SHINGU Power Plant due to lightning strikes and the resulting
on-site and boiler auxiliary equipment problems in the first quarter. Meanwhile, planned shutdowns werecarried out for regular inspections at EF-ON SHIRAKAWA Power Plant and EF-ON HITA Power Plant
in the second quarter, at EF-ON SHINGU Power Plant and EF-ON MIBU Power Plant in the third quarter,
and at EF-ON BUNGO-ONO Power Plant in the fourth quarter, but otherwise operations went extremelysmoothly. During the fiscal year under review, with the full-year operation of EF-ON SHINGU Power
Plant, the amount of transmitted electricity and electricity sales reached record highs.
On the other hand, as for costs, the amount of wood chip fuel, such as wood thinnings, in circulation
declined due to soaring prices in the lumber market, which pushed up purchase price, and there weremany fuels having a relatively high moisture content, which continued to contribute to an increase in thefuel consumption of power plants. To this end, we are expanding our forestry business by converting a
portion of the logs harvested in our forestry business into fuel at woodchip centers attached to power
plants, and we are also expanding the amount of land we are acquiring for this business. As a result of
this increase in the volume of operations, outsourcing costs and distribution expenses increased, anddepreciation expenses for large equipment related to forestry business operations became a burden. In
addition, with regard to power plant related expenses, in addition to the usual costs of regular inspection
and maintenance of power generation equipment, regular maintenance costs increased significantly due
to the implementation of focused inspections and repairs of equipment at EF-ON HITA and EF-ON
SHINGU Power Plants that are deemed necessary for the stable operation of those plants in the future. In
addition, the unit price of ash processing costs increased, causing an increase in such expenses. As a resultof these factors, despite an increase in net sales in this segment, profits were down substantially.
With regard to the business performance of this segment in the fiscal year under review, net sales were
¥16,782 million (1.5% increase on a year-on-year basis) and segment profit amounted to ¥627 million(60.9% decrease on a year-on-year basis).
*FIP (Feed-in Premium) system
Because the FIT (Feed-in Tariff) system that came into effect in 2012 to promote the introduction ofelectricity produced using renewable energy was isolated from the wholesale electricity market, the FIP
system was introduced in April 2022 as a means of encouraging power generation that is linked towholesale electricity market prices that are determined by the balance between the supply and demand ofelectric power. Based on certain conditions, power generation business operators using renewable energy
are paid a premium representing the difference between the market price and the FIT price.

14

Business performance in relation to external transactions in each segment is as follows.
(Millions of yen)

Business classification
Energy Saving Support
Business
Green Energy Business
Other BusinessCorporate (common)
Total
(2)

Consolidated net sales

Consolidated operating profit

213

51

15,101
2,158–
17,473

627
6
(85)
600

Capital Investments
In the fiscal year under review, the total amount of capital investments made by companies in theGroup was ¥834 million, and the main components thereof are as follows.
a) Key Facilities Completed in the Fiscal Year Under Review
Green Energy Business
EF-BIOS INC.

Forestry machinery and equipmentb) Ongoing Construction of New Key Facilities and Expansion of Existing Key Facilities in the Fiscal
Year Under Review
There is no relevant information.
c) Sales, Removal, or Loss of Significant Non-current Assets in the Fiscal Year Under Review
There is no relevant information.
(3)

Issues to be Addressed
For the Green Energy Business, the Group’s mainstay business, we recognize that an urgent task is toimprove business earnings by achieving stable, high utilization at wood biomass power plants andworking to reduce fuel procurement costs. Additionally, we recognize that the forestry business faces
challenges including expansion land for forestry operations, increasing the volume of operations, andrationally reducing expenses.
Therefore, we consider that the significant management issues are securing and training the specialist
personnel to undertake these operations and continuing to execute operations.

(4)

Assets and Income(Millions of yen)

PeriodItem
Net sales
Ordinary profit
Profit attributable toowners of parent
Profit per share (Yen)Net assets
Total assets

The 28th fiscal
The 27th fiscal
year
year
(fiscal year under(ended June 30,
review)
2023)(ended June 30,
2024)
16,94917,473
1,286
346

The 25th fiscal
year(ended June 30,
2021)

The 26th fiscal
year(ended June 30,
2022)

13,144
2,397

13,258
1,174

1,673

893

824

281

77.35
16,92445,60341.46
17,53947,241

38.36
18,19045,71813.14
18,23445,262(Notes) 1. The Company introduced a “Stock Benefit Trust” in the 26th term, and when calculating profit per share, the shares
held by the “Stock Benefit Trust” are included in the treasury shares excluded from the calculation of the average
number of shares outstanding during the period.
2. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March
31, 2020) and relevant ASBJ regulations from the beginning of the 26th fiscal year, and each figure for that fiscal
year onward is the figure after applying the accounting standard and relevant ASBJ regulations.

15

■ Net sales■ Ordinary profit(Millions of yen)

(Millions of yen)

■ Profit attributable

Profit per
share

to owners of parent(Yen)(Millions of yen)

16,94913,144

17,473

2,397

13,258
1,673
1,286

1,174

893

281

346
The 25th The 26th The 27th The 28th
fiscal year fiscal year fiscal year fiscal year

The 25th The 26th The 27th The 28th
fiscal year fiscal year fiscal year fiscal year

■ Net assets■ Total assets(Millions of yen)

(Millions of yen)

16,924

17,53918,19045,603

18,23447,241The 25th The 26th The 27th The 28th
fiscal year fiscal year fiscal year fiscal year

45,71845,262The 25th The 26th The 27th The 28th
fiscal year fiscal year fiscal year fiscal year

The 25th The 26th The 27th The 28th
fiscal year fiscal year fiscal year fiscal year

16

824

(5)

Significant Subsidiaries
CapitalRatio of voting
rights held

EF-ON HITA INC.

¥495 million

100.00%EF-ON SHIRAKAWA INC.

¥441 million

100.00%EF-ON BUNGO-ONO INC.

¥450 million

100.00%EF-ON MIBU INC.

¥1 million

100.00%EF-ON SHINGU INC.

¥1 million

100.00%EF-BIOS INC.

¥10 million

100.00%SOLEIL HITA COMPANY,
LIMITED¥10 million

100.00%Company name(6)

Principal business
Wood biomass power generation
business
Wood biomass power generation
business
Wood biomass power generation
business
Wood biomass power generation
business
Wood biomass power generation
business
Sale of biomass fuel, contracted power
plant operation businessSolar power plant operation and siteleasing business

Principal Business (as of June 30, 2024)
1) Energy Saving Support BusinessIn the Energy Saving Support Business, the Company provides services supporting energy saving forthe facilities of corporate clients and other clients, as well as the introduction of renewable energy. In
addition to finding out the energy usage of clients and providing an energy saving diagnosis, the Company
provides a full range of services, from the design and installation of actual energy saving equipment andsystems based on the results of the diagnosis, to subsequent operation. As a form of integrated energy
management, the Company also provides services related to tracking clients’ energy usage, formulatingplans for reducing energy usage, improving operation and facilities, and measurement of the reduction inenergy usage, in addition to services such as support for the introduction of renewable energy, andconsulting regarding the control and reduction of carbon dioxide emissions.
2) Green Energy BusinessIn the Green Energy Business, the Company converts renewable, natural energy into electric power.
In response to social demands to improve the environment such as reducing carbon dioxide emissions,etc., the Company develops, constructs, and operates environmentally friendly power plants, particularly
those using wood biomass (Note) as a source of energy among various forms of renewable energy. At
present, in the Group, FIT-approved wood biomass power plants are operated by EF-ON HITA, EF-ON
BUNGO-ONO, EF-ON MIBU, and EF-ON SHINGU. In January 2023, EF-ON SHIRAKAWA
transitioned to an FIP (Feed in Premium) system. Through the effective utilization of waste woodmaterials and forest resources, EF-BIOS INC. is at the core of the Green Energy Business as a company
specializing in the operation of wood biomass power plants and the supply of wood biomass fuel.
(Note) Wood biomass

Biomass is a concept that expresses a mass of biological resources (bio), and is described as“renewable, organic, biological resources, excluding fossil resources.”
Wood biomass refers to organic matter originating in trees that may be used as an energy source.
The Group engages in the business of generating power from new energy sources, whereby woodchips
are used as fuel for generating power after being selected and crushed from waste materials fromlumbermills and wood processing plants, etc., waste construction materials from construction anddemolition sites, and other sources of wood. Biomass resources are considered “carbon neutral,” as the
carbon dioxide emitted by burning biomass does not harm the balance of carbon dioxide on a global scalebecause plants take carbon dioxide from the air by photosynthesis in order to grow. In addition, biomass
resources have garnered attention as a “renewable resource” which, if properly managed, can be used ona long-term basis without being depleted, unlike fossil fuels such as oil.

17

(7)

Main Business Locations and Plants (as of June 30, 2024)
The Company
Head Office:1-9-2, Marunouchi, Chiyoda-ku, Tokyo, Japan
EF-ON HITA INC.:
Hita City, Oita Prefecture
EF-ON SHIRAKAWA INC.:
Shirakawa City, Fukushima
Prefecture
EF-ON BUNGO-ONO INC.:
Bungo-Ono City, Oita Prefecture
EF-ON MIBU INC.:
Shimotsuga District, Tochigi
Subsidiaries
Prefecture
EF-ON SHINGU INC.:
Shingu City, Wakayama Prefecture
EF-BIOS INC.:
Chiyoda-ku, Tokyo
SOLEIL HITA COMPANY,
Hita City, Oita Prefecture
LIMITED:(8)

Employees (as of June 30, 2024)
Group Employees
Business division

Increase (decrease) from theprevious consolidated fiscal
year-end
(1)
5
1
(1)
4

Number of employees

Energy Saving Support BusinessGreen Energy Business
Other BusinessCorporate (common)
Total

1
247
8
15
271

(Note) The number of employees refers to full-time employees, and does not include temporary employees (employees
working on a part-time, commission, advisory, or dispatch basis).

(9)

Main Lenders (as of June 30, 2024)(Millions of yen)

LenderSumitomo Mitsui Banking Corporation
Japan Finance Corporation
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
The Bank of Yokohama, Ltd.

Outstanding loan amount
6,459
5,171
4,180
2,641
1,941

(10) Other Important Information Concerning the Company Group
There is no relevant information.

18

2. Information on Shares of the Company
Status of Shares (as of June 30, 2024)
1) Total number of shares authorized to be issued

69,840,000 shares2) Total number of shares outstanding

21,635,189 shares

3) Number of shareholders

9,156 persons

4) Major shareholders (top 10 shareholders)Shareholder name

Number of shares

Shareholding ratio

NIHON TECHNO CO., LTD.

7,049,280

32.58%The Master Trust Bank of Japan, Ltd. (Trust Account)

2,190,100

10.12%

Hikari Tsushin K.K.

1,613,700

7.46%

Custody Bank of Japan, Ltd. (Trust Account)755,500

3.49%

SIL, Inc

440,300

2.04%

RBC ISB LUX NON RES/DOM RATE-UCITS
CLIENTS ACCOUNT-MIG

282,300

1.30%

UH Partners 2, Inc.

264,200

1.22%

BNYM AS AGT/CLTS 10 PERCENT

244,900

1.13%

The Nomura Trust and Banking Co., Ltd. (Investment
Trust Account)

153,900

0.71%

Yoshio Sakai

123,300

0.57%(Note) Of the 755,500 shares held by Custody Bank of Japan Ltd. (in a trust account) listed above, 277,900 are shares of
the Company held as the assets in trust of the “Stock Benefit Trust.”

19

3. Company Officers(1)

Company Officers
Directors and Audit & Supervisory Board Members (as of June 30, 2024)

Position at the Company
President andRepresentative Director

Responsibilities and significant concurrent
positions

Name
Tomotada Shimazaki

Senior Managing Director Makoto Nagasawa

General Manager, Technology & Development
Department, and General Manager, Energy
Saving Support Department

Managing Director

Hisahito Koike

Head of Administrative Division

Director

Koutaro Fujii

General Manager, Electric Power Project
Department

Director

Hiroshi Suto

Director and General Manager, Forestry Business
Department, EF-BIOS INC.

Director

Yasuyuki Matsuo

Director and General Manager, Shingu Office,EF-BIOS INC.

Director

Norio Minagawa

Director

Maiko Sako

Full-time Audit &Supervisory Board
MemberShinichi Yada

Audit & Supervisory
Board Member

Hidehito Mochizuki

Audit & Supervisory
Board Member

Shuji Makiura(Notes)(2)Partner, SAKURADA DORI PARTNERS
Outside Director, TECHNO RYOWA LTD.

Director, Mochizuki Certified Public Accountant
OfficeDirector, Mochizuki Tax Accountant Office1.
2.

Directors, Mr. Norio Minagawa and Ms. Maiko Sako, are Outside Directors.
Audit & Supervisory Board Members, Mr. Hidehito Mochizuki and Mr. Shuji Makiura, are Outside Audit& Supervisory Board Members.
3. Full-time Audit & Supervisory Board Member, Mr. Shinichi Yada has experience as an Outside Director, in
addition to specialist knowledge developed through serving at a major financial institution.
Audit & Supervisory Board Member, Mr. Hidehito Mochizuki, is well-versed in corporate management
matters as a certified public accountant and certified public tax accountant, and has a considerable level of
insight in accounting and tax matters, in addition to abundant knowledge and experience as an Audit &Supervisory Board Member.
Audit & Supervisory Board Member, Mr. Shuji Makiura has experience as a business manager and technicalknowledge related to the power generation business, which is the foundation of our business.
4. The Company has registered Directors, Mr. Norio Minagawa and Ms. Maiko Sako, and Audit & Supervisory
Board Members, Mr. Hidehito Mochizuki and Mr. Shuji Makiura, with the Tokyo Stock Exchange as
independent officers under the stipulations of the said exchange.
5. Changes in Directors and Audit & Supervisory Board Members in the fiscal year under review are as follows.
On February 28, 2024, Director, Ms. Yukari Nagata resigned. At the time of her resignation, her significant
concurrent positions were President and Representative Director at DATA VIZ LAB Inc. and External
Director at Adventure Inc.
As of March 31, 2024, Audit & Supervisory Board Member, Mr. Toshio Shimizu resigned. In addition,
Audit & Supervisory Board Member, Mr. Shuji Makiura was appointed as a replacement on April 1, 2024.

Matters related to Agreement on Limitation of Liability
In accordance with the provisions of Article 427, paragraph (1) of the Companies Act, the Company hasentered into an agreement with Outside Directors and Audit & Supervisory Board Members of the20Company and the Company’s subsidiaries to limit their liability for damages, as stipulated in Article
423, paragraph (1) of the same Act.
The maximum amount of liability pursuant to the said agreement is the minimum amount stipulated in
Article 425, paragraph (1) of the Companies Act.
We also entered into similar agreements with Ms. Yukari Nagata, who resigned as an Outside Director
on February 28, 2024, and Mr. Toshio Shimizu, who resigned as an Outside Audit & Supervisory Board
Member on March 31, 2024.
(3)

Overview of Directors and Officers Liability Insurance Policy
The Company has entered into a directors and officers liability insurance policy as provided for in
Article 430-3, paragraph (1) of the Companies Act with an insurance company, with Directors, Audit &Supervisory Board Members and Executive Officers (including persons in office during the fiscal year
under review) of the Company and the Company’s subsidiaries as the insureds. The Company bears thefull amount of the insurance premiums.
With regard to the overview of the details of this insurance policy, eligible officers who are the insureds
are covered under this insurance policy with an insurance company for their liability borne fromperformance of their duties or for their liability arising from claims in pursuit of that liability, and thepolicy will be renewed every year.
In this insurance policy, an event in which the Company pursues liability for damages from the eligible
officers is excluded from the insurance policy, and measures have been put into place to prevent the
impairment of the appropriateness of the execution of duties by the eligible officers by setting a limit
for the amount covered.

(4)Compensations for Directors and Audit & Supervisory Board Members
1) Policy on Decisions on Details of Compensation, etc. for Officers
Compensation for individual Directors of the Company shall be within the range of the amountdetermined by the General Meeting of Shareholders, and the President and Representative Director
shall hold interviews with each individual, calculate an amount of compensation for each individual thatsuitably reflects their role and responsibility expected of them as an officer of the Company, giving
comprehensive consideration to economic circumstances, the Company’s financial results, and theirindividual management capabilities, level of contribution, past compensation, etc., and deliberate anddetermine at a meeting of the Board of Directors. The Board of Directors, then conducts oversight ofthe decision of the amount of remuneration by considering and reviewing the compensation amounts,
placing emphasis on the suitability, fairness and transparency of the amounts of compensation. The
Board of Directors shall determine the timing and conditions of payment of compensation, etc. byresolution.
In addition, the compensation, etc. for Directors is the fixed monthly compensation only and thecompensation plans such as bonus, performance-linked compensation and retirement benefits are not
adopted.
The individual compensation etc. for the Company’s Audit & Supervisory Board Members isdetermined through discussions by the Audit & Supervisory Board within the range of the amount thathas been resolved at the General Meeting of Shareholders.
2) Policy on Non-monetary Compensation, etc.
At the 25th Annual General Meeting of Shareholders held on September 28, 2021, the Company
resolved to introduce the “Stock Benefit Trust,” a stock-based compensation plan for Directors, in orderto further clarify the linkage between Directors’ compensation and stock value, and to raise awarenessamong eligible Directors and Officers of the need to contribute to improving business performance andincreasing corporate value over the medium to long term by sharing profits and risks associated withstock price fluctuations with shareholders.
・The Stock Benefit Trust is a stock-based compensation plan under which the Company’s shares are
acquired through the Trust using money contributed by the Company as the source of funds, and theCompany’s shares and money equivalent to the amount obtained by converting the Company’s shares atfair value are paid to eligible Directors through the Trust in accordance with the stock benefit
regulations established by the Company.
・The maximum number of points is 80,000 (80,000 shares) per fiscal year, and each Director will be
granted a certain number of points per fiscal year in consideration of his or her position, and upon21

retirement, the recipient will receive Company shares in proportion to the number of points
accumulated and a cash payment equivalent to the fair value of the Company’s shares.
3) Total Amount of Compensation in the Fiscal Year Under Review

Classification
Directors(of which,OutsideDirectors)
Audit &
Supervisory
Board
Members(of which,Outside Audit&
Supervisory
Board
Members)
Total(of which,OutsideOfficers)(Notes)Total amount of compensation by type(Millions of yen)
Basic compensation
Non-monetarycompensation, etc.

NumberofpeopleTotal amount ofcompensation(Millions of yen)

9
(3)

169
(7)

143
(7)

26
(–)

4
(3)

20
(5)

20
(5)

–

13
(6)

189
(12)

163
(12)

26
(–)

1. The amount of compensation for Directors includes the amount of compensation paid during the term ofoffice of one Director who resigned on February 28, 2024.
2. The amount of compensation for Audit & Supervisory Board Members includes the amount ofcompensation paid during the term of office of one Audit & Supervisory Board Member who resigned on
March 31, 2024.
3. The non-monetary compensation, etc. is the Company’s shares and the conditions regarding the allotmentof the shares and other matters are as stated in “(4) Compensations for Directors and Audit & Supervisory
Board Members.”
4. The total amount of compensation for Directors does not include the portion of salary as an employee for
Directors concurrently serving as employees.
5. The maximum amount of compensation for Directors was resolved to be within ¥240 million per year(including the amount within ¥40 million for Outside Directors) (however, this does not include the portionof salary for Directors concurrently serving as employees) at the Annual General Meeting of Shareholders
held on September 26, 2018. The number of Directors at the conclusion of the said Annual General Meetingof Shareholders was eight (8) (including three (3) Outside Directors). In addition, it was resolved at theAnnual General Meeting of Shareholders held on September 28, 2021 to introduce a share-based
compensation plan separately from the limit of monetary compensation. The amount of share-based
compensation shall be up to ¥144 million in the applicable fiscal years, and up to 80,000 points (one point= one share) for each fiscal year (Outside Directors are not eligible for the granting). The number of
Directors (excluding Outside Directors) at the conclusion of the said Annual General Meeting of
Shareholders was six (6).
6. The maximum amount of compensation for Audit & Supervisory Board Members was resolved to be within¥40 million per year at the Annual General Meeting of Shareholders held on September 26, 2018. The
number of Audit & Supervisory Board Members at the conclusion of the said Annual General Meeting of
Shareholders was three (3).

4) Officer Retirement Benefits Paid in the Fiscal Year Under Review
There is no relevant information.
5) Total Amount of Officer Compensation Received by Outside Officers from the Parent Company or
Subsidiaries
There is no relevant information.

22

(5)

Outside Officers
1) Relationship of the Company to Other Companies, etc. Where Important Concurrent Positions Are
Held•
Director Ms. Maiko Sako concurrently serves as Outside Director of TECHNO RYOWA LTD.
There is no business relationship between the Company and TECHNO RYOWA LTD.
•
Director Ms. Yukari Nagata concurrently serves as President and Representative Directorof DATA VIZ LAB Inc. and External Director of Adventure Inc. There is no business
relationship between the Company and DATA VIZ LAB Inc. or Adventure Inc.
•
Audit & Supervisory Board Member Mr. Hidehito Mochizuki concurrently serves as
Director of Mochizuki Certified Public Accountant Office and Mochizuki Tax Accountant
Office. There is no business relationship between the Company and Mochizuki Certified
Public Accountant Office or Mochizuki Tax Accountant Office.
2) Main Activities in the Fiscal Year Under Review
Name

Director

Norio Minagawa

Director

Maiko Sako

Director

Yukari Nagata

Audit &
Supervisory
Board Member

Toshio Shimizu

Activities
Mr. Norio Minagawa attended all 12 meetings of the Board of
Directors held in the fiscal year under review, and provided
opinions on deliberation of proposals and business operations.
Regarding the role expected of him as an Outside Director, he
has been using his experience as an Audit & Supervisory Board
Member of the Company and as a director of other companies,
and his high level of insight in the field of finance andaccounting to contribute to improving the appropriateness ofbusiness through offering advice and suggestions regarding new
business. In addition, he is supervising the execution of duties of
Directors from an independent standpoint and contributing tosecuring appropriateness in the decision making of the Board of
Directors.
Ms. Maiko Sako attended all 12 meetings of the Board of
Directors held in the fiscal year under review, and provided
opinions on deliberation of proposals and business operations.
Regarding the role expected of her as Outside Director, she has
been using her expert knowledge and broad insight as an
attorney to offer suggestions on putting in place compliancesystems and other matters and contributing to energizing
discussion in the Board of Directors. In addition, she issupervising the execution of duties of Directors from an
independent standpoint and contributing to securing
appropriateness in the decision making of the Board of
Directors.
During the fiscal year under review, Ms. Yukari Nagata attended
all six (6) meetings of the Board of Directors held until her
resignation on February 28, 2024, and provided opinions on
deliberation of proposals and business operations. She also
provided appropriate advice and recommendations based on her
abundant knowledge and experience in data analysis and datavisualization consulting.
During the fiscal year under review, Mr. Toshio Shimizu
attended seven (7) of the nine (9) Board of Directors meetingsand eight (8) of the ten (10) Audit & Supervisory Board
meetings held until his resignation on March 31, 2024. Mr.
Toshio Shimizu conducted audits from a wide-ranging
perspective based on his abundant experience and profoundunderstanding as a corporate manager, in addition to expressing
his views as necessary at appropriate opportunities at themeetings of both the Board of Directors and the Audit &Supervisory Board.
23

Name

Audit &
Supervisory
Board Member

Audit &
Supervisory
Board Member

Activities
Mr. Hidehito Mochizuki attended all 12 meetings of the Boardof Directors and all 13 meetings of the Audit & Supervisory
Board held in the fiscal year under review, and conducted highlevel audits based on his profound understanding from a
Hidehito Mochizuki
specialist perspective as a certified public accountant, in
addition to expressing his views as necessary at appropriate
opportunities at the meetings of both the Board of Directors andthe Audit & Supervisory Board.
During the fiscal year under review, Mr. Shuji Makiura attended
all three (3) Board of Directors meetings and all three (3) Audit& Supervisory Board meetings held after his appointment on
April 1, 2024. Mr. Shuji Makiura conducts audits from amultifaceted perspective based on his experience and technicalShuji Makiura
knowledge gained as a division manager and business manager
at a major heavy industry manufacturer for many years, andspeaks as necessary at appropriate opportunities, including at
meetings of the Board of Directors and the Audit & Supervisory
Board.

24

4. Accounting Auditor(1)

Accounting Auditor’s Name
Crowe Toyo & Co.

(2)

Accounting Auditor’s Compensation, etc., for the Fiscal Year Ended June 30, 2024
Payment amountAccounting Auditor’s compensation, etc., for the fiscal year ended June 30,¥29 million
2024
Cash and other profits payable by the Company or its subsidiaries to¥29 million
Accounting Auditor(Notes) 1. No companies among the Company’s consolidated subsidiaries have entered into an audit agreement, etc.
with the Accounting Auditor.
2. Under the audit agreement between the Company and its Accounting Auditor, the amount of compensation,etc. for audits pursuant to the Companies Act and audits pursuant to Financial Instruments and Exchange
Act are not distinctly separated, and otherwise cannot be separated. Consequently, the above Accounting
Auditor’s compensation, etc., for the fiscal year under review reflects total compensation.

(3)

Reasons for the Audit & Supervisory Board’s Consent on Accounting Auditor’s Compensation, etc.
The Audit & Supervisory Board of the Company has given its consent to the Accounting Auditor’scompensation, etc. as set forth in Article 399, paragraph (1) of the Companies Act, as a result ofconfirming and considering the validity of the contents of the Accounting Auditor’s audit plan, the
Accounting Auditor’s execution of duties in previous fiscal years, and the basis for the calculation of thecompensation estimate, through obtaining the necessary documents and requesting reports from Directors,
related internal departments, and the Accounting Auditor, based on the “Practical Guidelines Regarding
Coordination with Accounting Auditors” announced by the Japan Audit & Supervisory Board Members
Association.

(4)

Description of Non-Audit Services
There is no relevant information.

(5)

Summary of Agreement on Limitation of Liability
In accordance with the provisions of the Article 427, paragraph (1) of the Companies Act, theCompany has entered into an agreement with Crowe Toyo & Co. to limit the Accounting Auditor’s
liability for damages, as stipulated in Article 423, paragraph (1) of the same Act.
The maximum amount of liability pursuant to the said agreement is the minimum amount stipulated
in Article 425, paragraph (1) of the Companies Act.

(6)

Policy Regarding Determination of Termination or Nonrenewal of Appointment of Accounting
AuditorIn the event that the Accounting Auditor is deemed to have met any of the grounds set forth in each
item of Article 340, paragraph (1) of the Companies Act, the Audit & Supervisory Board shall terminate
the appointment of the Accounting Auditor subject to the unanimous consent of the Audit & Supervisory
Board Members. In the event of such a termination, an Audit & Supervisory Board Member chosen by
the Audit & Supervisory Board shall make a report to the effect that the Accounting Auditor has been
terminated, and the reasons for termination, at the first general meeting of shareholders convened after
the termination.
In addition, the Audit & Supervisory Board may resolve to submit a proposal to the General Meetingof Shareholders to terminate the appointment or forego the reappointment of the Accounting Auditor, incircumstances when the Audit & Supervisory Board judges it necessary, such as cases when the
Accounting Auditor may not execute its duties.

25

5. System to ensure propriety of business activities
Summary of decisions on the system to ensure propriety of business activities
The following is a summary of decisions made regarding systems to ensure that the execution ofduties by Directors complies with laws and regulations and the Articles of Incorporation, as well asother systems to ensure the appropriateness of the company’s operations.
(1)

Overview of the System to Ensure that the Execution of Duties by Directors Complies with Laws
and Ordinances and the Articles of Incorporation, Other Systems to Ensure the Propriety ofBusiness Activities, and the Implementation Status thereof
At the meeting of the Board of Directors held on May 15, 2006, the Company made a resolution
regarding a “Basic Policy,” in order to create a system to ensure the propriety of business activities as
required by the Companies Act and other laws and ordinances. At the meeting of the Board of Directors
held on May 7, 2015, the Company made the following amendments to the “Basic Policy,” in line withthe enforcement of the Act Partially Amending the Companies Act (Act No. 90 of 2014). An overview of
the “Basic Policy” regarding internal control set forth by the Group and the implementation status thereof
are as follows.
I.

Initiatives of the Group Regarding Internal Control
In accordance with the Basic Policy, the Group has created a system to ensure the propriety of its
business activities as a stock company as defined by the Companies Act and the Ordinance for
Enforcement of the Companies Act, a system to ensure the appropriateness of documents and otherinformation related to financial accounting as defined by the Financial Instruments and ExchangeAct, and other systems to maintain and enhance corporate value (hereinafter, collectively referred toas “internal control systems”).
In addition to promoting internal control by its Directors and employees (hereinafter, “Officers
and employees”), with the President and Representative Director at the center of those efforts, theGroup has also established an Internal Control Committee, and endeavors to ensure that the internal
control systems function effectively.

II. Basic Policy Regarding the Creation of Internal Control Systems(i) System to ensure that the execution of duties by Directors and employees complies with laws
and ordinances and the Articles of Incorporation
1) The Group shall strive to create and implement rules and regulations, etc. under the
management of related departments as standards for actions that comply with laws andordinances, the Articles of Incorporation, and social principles (hereinafter, “laws, etc.”).
2) The Group shall strive to ensure thorough implementation of rules and regulations, etc.
relating to matters that pertain to compliance with laws, etc., and shall endeavor to educate
Officers and employees on such matters.
3) The Group shall establish and operate a helpline as a means for employees to directly provide
information about actions that are doubtful in light of laws, etc., and, in addition to promptly
discovering violations of laws and ordinances and other misconduct, shall ensure that
employees reporting such actions shall not receive unfavorable treatment as a result of having
made the report.
4) The Group is sufficiently aware of its corporate social responsibility, and shall take a firm
stance toward antisocial forces as an organization, reject improper demands, and block all
relationships with such forces, including business transactions and the provision of funds.
(ii)

System regarding the storage and management of information pertaining to the execution ofduties1) Directors shall record information pertaining to the execution of their duties, in order to makeclear their respective assessment standards and reasons when executing duties and making
decisions. In accordance with laws, etc. and various related rules, the Group shallappropriately store this information in a designated department, and shall create a system
whereby it may be viewed at any time, to support the timely execution of duties by Directors
and Audit & Supervisory Board Members.
2) In accordance with laws, etc. and various related rules, the Group shall also handle
information pertaining to the execution of duties by employees in a similar manner toinformation pertaining to the execution of duties by Directors.
26

3)
4)

The Group shall determine methods for handling internal information and storing it in
documents and electromagnetic records, and shall take all possible precautions in regard tosecurity, in order to prevent information leaks.
Persons responsible for managing information and related departments shall coordinate andendeavor to disclose information in a timely and appropriate manner.

(iii) Regulations and other systems for management of the risk of loss
1) In accordance with regulations relating to risk, the Internal Control Committee shall manage
risks for the Group as a whole in a comprehensive, all-inclusive manner.
2) Officers and employees shall establish a process for each stage of the acquisition, utilization,and disposal of the Group’s assets, regardless of whether they are tangible or intangible, andshall endeavor to preserve the Group’s assets.
(iv) System to ensure that the execution of duties by Directors, etc. of the Group is efficiently
conducted
1) The Board of Directors shall determine management duties for each Executive Director, inorder to clarify the management responsibilities of Executive Directors.
2) Executive Directors shall regularly hold a Management Meeting as an advisory body to the
President and Representative Director, and shall strive to coordinate business activities andunify opinions on the execution of business activities.
3) In order to make the execution of duties by Officers and employees more efficient, the Groupshall determine their authority and decision-making rules, and shall clarify the division ofduties between departments.
(v)

System to ensure propriety of business activities in the corporate group
The Company shall establish a system for managing subsidiaries, including formulating
regulations for managing subsidiaries and other related rules, etc., and establishing adepartment within the Company that tracks the status of the Group as a whole at all times andreports the status of assets and other important matters to the Board of Directors.
2) The Group shall coordinate to ensure unified systems, including work processes andaccounting systems.
3) The Group shall strive to ensure coordination between Audit & Supervisory Board Members,
engaging in the exchange of information and opinions as necessary.
4) The Internal Audit Office shall regularly conduct audits regarding the status of the executionof business activities by the Group.
1)(vi) Matters regarding employees assisting Audit & Supervisory Board Members in their duties inthe event that Audit & Supervisory Board Members have requested such employees, and mattersregarding ensuring the independence of these employees from Directors and the effectivenessof Audit & Supervisory Board Members’ instructions to these employees
1) In response to requests from the Audit & Supervisory Board to assign employees to assist
with their duties, the Representative Director shall consult with the Audit & Supervisory
Board from the perspective of ensuring the effectiveness of audits, and assign employees.
2) Employees assisting Audit & Supervisory Board Members shall do so on a full-time basis,and shall execute their duties under the direction of Audit & Supervisory Board Members.
3) The prior consent of the Audit & Supervisory Board shall be obtained in regard to theappointment, transfer, evaluation, etc. of employees assisting Audit & Supervisory Board
Members.
(vii) System regarding reports from Officers and employees of the Group to the Audit & Supervisory
Board or Audit & Supervisory Board Members of the Company
1) Officers and employees of the Group shall, without delay, report to Audit & Supervisory
Board Members of the Company the occurrence or possible occurrence of events that willcause significant damage to the Company or consolidated subsidiaries of the Company,
violations of laws and ordinances and other misconduct, and the occurrence or possible
occurrence of any other equivalent events. In addition, persons receiving such a report from
Officers and employees of the Group shall report the content thereof to Audit & Supervisory
Board Members of the Company without delay.
27

2)
3)
4)

Audit & Supervisory Board Members may make requests for information including reports,
explanations, and the submission of documents on the content of the execution of businessactivities to Officers and employees of the Group as necessary.
The Internal Audit Office shall report the results of internal audits to Audit & Supervisory
Board Members of the Company.
Officers and employees who have made a report to Audit & Supervisory Board Members
shall not receive unfavorable treatment as a result of having made the report.

(viii) Matters regarding policy pertaining to expenses arising from Audit & Supervisory Board
Members’ execution of duties and reimbursement
The Company shall promptly pay or reimburse the relevant expenses or debts in cases when
Audit & Supervisory Board Members have made reasonable requests for the advancepayment of expenses or reimbursement, etc. arising from the execution of their duties.
(ix) Other systems to ensure that the audits of Audit & Supervisory Board Members are effectively
conducted
1) Audit & Supervisory Board Members may obtain the latest information concerning the Groupby meetings held regularly to exchange opinions with the President and Representative
Director, tours of facilities held by the Group, and other means.
2) Audit & Supervisory Board Members shall regularly attend internal meetings in order to track
the latest status of the Group, and may also request the exchange of opinions and submissionof information from Officers and employees of the Group as necessary.
3) In cases when it is necessary for the execution of their duties, Audit & Supervisory Board
Members may request the opinion of external experts such as attorneys, certified public
accountants, and certified public tax accountants.
(x)

Systems to ensure the reliability of financial reporting
The Group shall coordinate with experts and truthfully report the financial position of its
companies and management performance, in accordance with various related laws andordinances, related regulations, and generally accepted accounting standards.
2) The Group shall implement the necessary measures to ensure the reliability of financial
reporting, based on the “Standards for Management Assessment and Audit concerning
Internal Control Over Financial Reporting” formulated by the Financial Services Agency, etc.
1)

With regard to the overview of the implementation status of the above systems to ensure the proprietyof business activities, the Company has created various related regulations based on the “Basic Policy on
Internal Control” resolved at the meeting of the Board of Directors of the Company held on May 7, 2015.
In addition, the Internal Control Committee, which is stipulated in the “Basic Policy on Internal
Control,” met three times during the fiscal year under review, with the President and Representative
Director as Chair. It also confirmed at the end of the fiscal year, with the attendance of the Full-time Audit& Supervisory Board Member, that the internal control systems are functioning effectively.
(2)

Basic Policy Regarding the Company’s Control
The Company has not established any particular basic policy regarding persons controlling decisions
on the Company’s financial or business policies.

(3)

Basic Policy Regarding Decisions on the Distribution of Surplus, etc.
The Company recognizes that the return of profits to shareholders is an important issue for company
management. Our basic policy is to distribute profits in accordance with operating performance, while
maintaining the foundation of a stable dividend.
In accordance with this basic policy, the Company decided to pay a year-end dividend of ¥8 per sharefor the fiscal year under review.
Furthermore, the Company intends to use internal reserves as a source for strengthening its
corporate structure and for future business development.
In addition, the Company’s Articles of Incorporation stipulate that matters set forth in each item of
Article 459, paragraph (1) of the Companies Act, including the distribution of surplus, shall be determinedby resolution of the Board of Directors, excluding cases otherwise provided for by laws and ordinances.
The objective of this is to facilitate the flexible return of profits to shareholders by placing the distributionof surplus, etc. under the authority of the Board of Directors.
28

Consolidated Financial Statements
Consolidated Balance Sheet(As of June 30, 2024)(Millions of yen)

Description

AmountAssetsI. Current assets
Cash and deposits
Accounts receivable - trade
Supplies
Consumption taxes refund receivable
Deferred consumption taxes
Other
II. Non-current assets
1. Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Land
Trees
Construction in progress
2. Intangible assets
Right to use electricity supply facilities
Other
3. Investments and other assets
Deferred tax assets
Other
Total assets

8,743
5,574
1,832
767
149
8
410
36,51935,451
10,817
19,342
74
3,975
1,153
87
821
813
7
246
66
180
45,26229

(Millions of yen)

Description

AmountLiabilities
I. Current liabilities
Notes and accounts payable - trade
Current portion of long-term borrowings
Accounts payable - other
Income taxes payable
Provision for bonuses
Provision for maintenance cost
Other

4,802
1,379
2,100
447
113
42
500
217

II. Non-current liabilities
Long-term borrowings
Provision for share awards
Deferred tax liabilities

22,226
21,78285358

Total liabilities
Net assets
I. Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total net assets
Total liabilities and net assets

27,02818,234
2,292
1,292
14,817(168)
18,23445,26230

Consolidated Statement of Income(July 1, 2023 – June 30, 2024)(Millions of yen)

Description

AmountNet sales

17,473

Cost of sales

15,992Gross profit

1,480

Selling, general and administrative expenses

880

Operating profit

600

Non-operating income
Interest income

19

Gain on sale of scraps

5

Subsidy income
Personnel training and employment-related
grant income
Interest on tax refund

52

Gain on sales of non-current assets

2

Other

17

0
1
98

Non-operating expenses
Interest expenses

278

Commission expenses

28

Loss on sale of non-current assets

4

Loss on retirement of non-current assets

0

Other

39

352

Ordinary profit

346

Profit before income taxes

346

Income taxes - current

25

Income taxes for prior periods(80)

Income taxes - deferred

120

65

Profit281

Profit attributable to owners of parent

281

31

Consolidated Statement of Changes in Equity(July 1, 2023 – June 30, 2024)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus Retained earnings

2,292

1,292

14,709Treasury shares

Total
shareholders’equity(104)

18,190Changes during period
Dividends of surplus

(173)

(173)

Profit attributable to owners ofparent281

281

Purchase of treasury shares

(68)

(68)

Disposal of treasury shares

4

4

0

–

Cancellation of treasury shares(0)

Net changes of items other thanshareholder’ equity during the fiscal
year
Total changes during period
Balance at end of period

–
–

–

108

(63)

44

2,292

1,292

14,817(168)

18,234

Total net assets
Balance at beginning of period

18,190Changes during period
Dividends of surplus(173)

Profit attributable to owners ofparent281

Purchase of treasury shares(68)

Disposal of treasury shares

4

Cancellation of treasury shares–

Net changes of items other thanshareholder’ equity during the fiscal
year–

Total changes during period
Balance at end of period

44
18,23432

Non-Consolidated Financial Statements
Non-Consolidated Balance Sheet(As of June 30, 2024)(Millions of yen)

Description

AmountAssetsI. Current assets
Cash and deposits
Accounts receivable - trade
Prepaid expenses
Short-term loan receivable from subsidiaries and associates
Accounts receivable - other
Deferred consumption taxes
Other
II. Non-current assets
1. Property, plant and equipment
Buildings
Machinery and equipment
Tools, furniture and fixtures
Land
Construction in progress
2. Intangible assets
SoftwareOther
3. Investments and other assets
Shares of subsidiaries and associates
Long-term loans receivable from subsidiaries and associates
Long-term accounts receivable from subsidiaries and associates- other
Deferred tax assets
Other
Total assets

33

4,867
2,349
238
35
2,180
44
7
12
8,139
210
66
1
11
56
75
6
5
1
7,922
2,161
3,680
1,880
32
169
13,006

(Millions of yen)

Description

AmountLiabilities
I. Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Accounts payable - other
Advances received
Accrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Provision for maintenance cost
Other

868
532
107
88
0
38
13
5
12
4
66

II. Non-current liabilities
Long-term borrowings
Long-term borrowings from subsidiaries and associates
Provision for share awards

1,135
57
1,000
78

Total liabilities
Net assets
I. Shareholders’ equity
1. Share capital
2. Capital surplus
Legal capital surplus
3. Retained earnings
Other retained earnings
Retained earnings brought forward
4. Treasury shares
Total net assets
Total liabilities and net assets

2,004
11,002
2,292
1,292
1,292
7,586
7,586
7,586
(168)
11,002
13,00634

Non-Consolidated Statement of Income(July 1, 2023 – June 30, 2024)(Millions of yen)

Description

AmountNet sales

2,752

Cost of sales

2,214

Gross profit

538

Selling, general and administrative expenses

341

Operating profit

196

Non-operating income
Interest income

20

Dividend income

396

Other

4

420

Non-operating expenses
Interest expenses

14

Other

19

Ordinary profit

34
582

Profit before income taxes

582

Income taxes - current

3

Income taxes for prior periods(80)

Income taxes - deferred

24

Profit

(53)
636

35

Non-Consolidated Statement of Changes in Equity(July 1, 2023 – June 30, 2024)(Millions of yen)

Share capital

Balance at beginning of period

2,292

Shareholders’ equity
CapitalRetained
surplusearnings
Otherretainedearnings
Legal capital
Retained
surplusearnings
brought
forward
1,292

7,123

Treasuryshares

(104)

Total
shareholders’equityTotal net assets

10,603

10,603

Changes during period
Dividends of surplus

(173)

(173)

(173)

Profit

636

636

636

Purchase of treasury shares

(68)

(68)

(68)

Disposal of treasury shares

4

4

4

0

–

–

–

–

Cancellation of treasury shares(0)

Net changes of items other thanshareholder’ equity during the
fiscal year
Total changes during period
Balance at end of period

–

–

463

(63)

399

399

2,292

1,292

7,586

(168)

11,002

11,00236

Accounting Auditor’s Audit Report on the Consolidated Financial Statements

Independent Auditor’s Report(Translation)
August 16, 2024
To the Board of Directors
EF-ON INC.
Crowe Toyo & Co.
Tokyo Office
Takeshi Kiriyama, CPA
Engagement Partner
Makoto Hayasaki, CPA
Engagement Partner
Auditors’ Opinion
We have audited, pursuant to Article 444, paragraph (4) of the Companies Act, the consolidated financial
statements, which consist of the consolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in equity and the notes to the consolidated financial statements of EF-ON
INC. (hereinafter referred to as the “Company”) for the fiscal year from July 1, 2023 to June 30, 2024.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of the Company and its consolidated subsidiaries as of June 30, 2024 and theconsolidated result of their operations for the year then ended in conformity with the generally accepted
accounting principles in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the “Auditors’ Responsibilities for the Audit of
the Consolidated Financial Statements” section of our report. We are independent of the Company and its
consolidated subsidiaries in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Other Information
Other information includes the business report and supporting schedules. Management is responsible for the
preparation and disclosure of other information. The responsibility Audit & Supervisory Board Members andthe Audit & Supervisory Board is to monitor Directors’ performance of their duties in establishing and operating
the reporting process for other information.
The audit opinion of the independent auditor on the consolidated financial statements does not include otherinformation, and the independent auditor expresses no opinion on other information.
The responsibility of the independent auditor in auditing consolidated financial statements is to read otherinformation carefully and, in the course of that reading, to consider whether there are material differences
between other information and the consolidated financial statements or knowledge acquired in the course of theaudit, and to pay attention to whether there is any indication of material errors in other information other thansuch material differences.
If, based on the work performed, the independent auditor determines that there are material errors in otherinformation, the independent auditor is required to report those facts.
The independent auditor has no matters to report with respect to other information.
37

Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for
the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of consolidated financial statements inaccordance with accounting standards generally accepted in Japan. This responsibility includes designing andoperating internal control, which management considers necessary for the preparation and fair presentation of
consolidated financial statements that are free from material misstatements, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements with the assumption of the Company’s ability tocontinue as a going concern and disclosing, as required by accounting principles generally accepted in Japan,
matters related to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the
Directors’ performance of duties within the maintenance and operation of the financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s reportthat includes our opinion on the consolidated financial statements based on our audit from an independent pointof view. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate they could reasonably be expected to influence the decisions of users taken on the basis of theconsolidated financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Selecting audit
procedures to be applied is at the discretion of the auditor. Obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
 Consider, in making those risk assessments, internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the audit of the consolidated
financial statements is not expressing an opinion on the effectiveness of the internal control.
 Evaluate the appropriateness of accounting policies used by management and their method of application, as
well as the reasonableness of accounting estimates by management and related notes thereto.
 Conclude on the appropriateness of management’s use of the going concern basis for preparing theconsolidated financial statements and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company’s ability to continue asa going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related notes to the consolidated financial statements or, if the notes to the consolidated
financial statements on material uncertainty are inadequate, to express a qualified opinion with exceptions
on the consolidated financial statements. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, future events or conditions may cause the Company to cease tocontinue as a going concern.
 Evaluate whether the presentation of the consolidated financial statements and the notes thereto are inaccordance with accounting standards generally accepted in Japan, as well as evaluate the overall presentation,
structure and content of the consolidated financial statements, including the related notes thereto, and whether
the consolidated financial statements fairly represent the underlying transactions and accounting events.
 Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its
consolidated subsidiaries to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the audit of the consolidated financial statements. We
remain solely responsible for our audit opinion.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board
regarding the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit, and other matters required by auditing standards.
38

We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with astatement that we have complied with the ethical requirements in Japan regarding independence that are relevant
to our audit of the financial statements, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related countermeasures to remove
obstruction factors or safeguards to reduce obstruction factors to an acceptable level.
Relationship of Interest
We have no interests in or relationships with the Company and its consolidated subsidiaries which are required
to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
____________________
Notice to Readers:
The original consolidated financial statements, which consist of the consolidated balance sheet, theconsolidated statement of income, the consolidated statement of changes in equity and the notes to theconsolidated financial statements, are written in Japanese.

39Accounting Auditor’s Audit Report on the Non-consolidated Financial Statements

Independent Auditor’s Report(Translation)
August 16, 2024
To the Board of Directors
EF-ON INC.
Crowe Toyo & Co.
Tokyo Office
Takeshi Kiriyama, CPA
Engagement Partner
Makoto Hayasaki, CPA
Engagement Partner

Auditors’ Opinion
We have audited, pursuant to Article 436, paragraph (2), item (i) of the Companies Act, the non-consolidated
financial statements, which consist of the balance sheet, the statement of income, the statement of changes inequity, the notes to the financial statements and the supplementary schedules thereof (collectively, “nonconsolidated financial statements, etc.”) of EF-ON INC. (hereinafter referred to as the “Company”) for the 28th
fiscal year from July 1, 2023 to June 30, 2024.
In our opinion, the non-consolidated financial statements, etc. referred to above present fairly, in all material
respects, the financial position of the Company as of June 30, 2024 and the result of its operation for the year
then ended in conformity with the generally accepted accounting principles in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the “Auditors’ Responsibilities for the Audit of
the Non-consolidated Financial Statements, Etc.” section of our report. We are independent of the Company inaccordance with the ethical requirements that are relevant to our audit of the non-consolidated financial
statements, etc. in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.
Other Information
Other information includes the business report and supporting schedules. Management is responsible for the
preparation and disclosure of other information. The responsibility Audit & Supervisory Board Members andthe Audit & Supervisory Board is to monitor Directors’ performance of their duties in establishing and operating
the reporting process for other information.
The audit opinion of the independent auditor on the non-consolidated financial statements, etc., does notinclude other information, and the independent auditor expresses no opinion on other information.
The responsibility of the independent auditor in auditing the non-consolidated financial statements, etc., is toread other information carefully and, in the course of that reading, to consider whether there are material
differences between other information and the non-consolidated financial statements, etc., or knowledge
acquired in the course of the audit, and to pay attention to whether there is any indication of material errors inother information other than such material differences.
If, based on the work performed, the independent auditor determines that there are material errors in otherinformation, the independent auditor is required to report those facts.
The independent auditor has no matters to report with respect to other information.
40

Responsibilities of Management, Audit & Supervisory Board Members and the Audit & Supervisory Board for
Non-Consolidated Financial Statements, Etc.
Management is responsible for the preparation and fair presentation of non-consolidated financial statements,
etc. in accordance with accounting standards generally accepted in Japan. This responsibility includes designingand operating internal control, which management considers necessary for the preparation and fair presentationof non-consolidated financial statements, etc. that are free from material misstatements, whether due to fraud or
error.
In preparing the non-consolidated financial statements, etc., management is responsible for assessing whether
it is appropriate to prepare the non-consolidated financial statements, etc. with the assumption of the Company’s
ability to continue as a going concern and disclosing, as required by accounting principles generally acceptedin Japan, matters related to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for overseeing the
Directors’ performance of duties within the maintenance and operation of the financial reporting process.

Auditors’ Responsibilities for the Audit of the Non-consolidated Financial Statements, Etc.
Our responsibilities are to obtain reasonable assurance about whether the non-consolidated financial
statements, etc. as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion on the non-consolidated financial statements, etc. based on our audit
from an independent point of view. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate they could reasonably be expected to influence the decisions of users taken on
the basis of the non-consolidated financial statements, etc.
In accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Selecting audit
procedures to be applied is at the discretion of the auditor. Obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
 Consider, in making those risk assessments, internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, while the purpose of the audit of the non-consolidated
financial statements, etc. is not expressing an opinion on the effectiveness of the internal control.
 Evaluate the appropriateness of accounting policies used by management and their method of application, as
well as the reasonableness of accounting estimates by management and related notes thereto.
 Conclude on the appropriateness of management’s use of the going concern basis for preparing the nonconsolidated financial statements, etc. and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related notes to the non-consolidated financial statements, etc. or, if
the notes to the non-consolidated financial statements, etc. on material uncertainty are inadequate, to express
a qualified opinion with exceptions on the non-consolidated financial statements, etc. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
 Evaluate whether the presentation of the non-consolidated financial statements, etc. and the notes thereto arein accordance with accounting standards generally accepted in Japan, as well as evaluate the overall
presentation, structure and content of the non-consolidated financial statements, etc., including the related
notes thereto, and whether the non-consolidated financial statements, etc. fairly represent the underlying
transactions and accounting events.
We communicate with the Audit & Supervisory Board Members and the Audit & Supervisory Board
regarding the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit, and other matters required by auditing standards.

41

We also provide the Audit & Supervisory Board Members and the Audit & Supervisory Board with astatement that we have complied with the ethical requirements in Japan regarding independence that are relevant
to our audit of the financial statements, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related countermeasures to remove
obstruction factors or safeguards to reduce obstruction factors to an acceptable level.
Relationship of Interest
We have no interests in or relationships with the Company which are required to be disclosed pursuant to theprovisions of the Certified Public Accountants Act of Japan.
____________________
Notice to Readers:
The original non-consolidated financial statements, which consist of the balance sheet, the statement of income,the statement of changes in equity, the notes to the financial statements and the supplementary schedules thereof,
are written in Japanese.

42

Audit & Supervisory Board’s Audit Report

Audit Report(Translation)
The Audit & Supervisory Board hereby reports the results of discussions regarding the performance of
duties by the Directors for the 28th fiscal year from July 1, 2023 to June 30, 2024, based on the audit reports
prepared by each Audit & Supervisory Board Member.
1. Summary of Auditing Methods of the Audit & Supervisory Board Members and the Audit & Supervisory
Board(1) The Audit & Supervisory Board established an audit policy for the fiscal year under review, an audit
plan, division of duties, etc., and received reports from each Audit & Supervisory Board Member on
the status of audits and results, in addition to receiving reports from Directors, etc. and the Accounting
Auditor on the status of the execution of their duties, and requesting explanations as necessary.
(2) While conforming with the standards for audits by Audit & Supervisory Board Members set forth by
the Audit & Supervisory Board, each Audit & Supervisory Board Member followed the audit policy
for the fiscal year under review, audit plan, division of duties, etc., made efforts to facilitate mutual
understanding with Directors, the Internal Audit Office, other employees, etc., and endeavored tocollect information and improve the auditing environment, in addition to conducting their audits withthe following methods.
1)

We participated in the meetings of the Board of Directors and other important meetings, received
reports from the Directors, employees and other relevant personnel regarding performance of theirduties, sought explanations as necessary, examined important authorized documents andassociated information, and studied the operations and financial positions at the head office andprincipal business offices. With respect to subsidiaries, we communicated with, and collected
information from, Directors, Audit & Supervisory Board Members and other relevant personnelof subsidiaries and received reports from subsidiaries as necessary as well as studying operations
and financial positions at the head offices of subsidiaries, and power plants.

2)

We received regular reports from Directors and employees, etc., requested explanations asnecessary, and expressed our opinions regarding the content of resolutions of the Board of
Directors on the creation of a system to ensure that the execution of duties by Directors complies
with laws and ordinances and the Articles of Incorporation, as described in the Business Report,
and other systems set forth in Article 100, paragraphs (1) and (3) of the Ordinance for Enforcementof the Companies Act as necessary to ensure the propriety of business activities of a corporategroup formed by a stock company and its subsidiaries, in addition to the systems created based onthese resolutions (internal control systems), and the status of their creation and implementation.

3)

We monitored and verified whether the Accounting Auditor maintained its independence andimplemented appropriate audits, as well as received reports from the Accounting Auditor regarding
the performance of its duties and sought explanations as necessary. In addition, we received noticefrom the Accounting Auditor that “system to ensure that duties are performed properly” (mattersset forth in each item of Article 131 of the Rules of Corporate Accounting) had been prepared inaccordance with the Product Quality Management Standards Regarding Audits (issued by theBusiness Accounting Deliberation Council) and other relevant standards, and sought explanations
as necessary.

Based on the above methods, we examined the Business Report and the supplementary schedules thereof,
the non-consolidated financial statements (non-consolidated balance sheet, non-consolidated statement ofincome, non-consolidated statement of changes in equity, and non-consolidated notes) and the
supplementary schedules thereof, as well as the consolidated financial statements (consolidated balance
sheet, consolidated statement of income, consolidated statement of changes in equity and consolidated
notes) related to the fiscal year under review.
432. Results of Audit(1) Results of Audit of Business Report and Other Relevant Documents
1)

In our opinion, the Business Report and the supplementary schedules are in accordance with therelated laws and regulations, and Articles of Incorporation, and fairly represent the Company’s
condition.

2) We have found no evidence of wrongful action or material violation of related laws and regulations,nor of any violation with respect to the Articles of Incorporation, with regard to performance of
duties by the Directors.
3)

In our opinion, the contents of resolutions of the Board of Directors related to the internal control
systems are fair and reasonable. In addition, we did not find any matter that needed to be pointed
out regarding the description in the Business Report and the performance of duties by the Directors
related to such internal control system.

(2) Results of Audit of Non-Consolidated Financial Statements and Supplementary Schedules
In our opinion, the methods and results employed and rendered by the accounting auditor Crowe
Toyo & Co. are fair and reasonable.
(3) Results of Audit of Consolidated Financial Statements
In our opinion, the methods and results employed and rendered by the accounting auditor Crowe
Toyo & Co. are fair and reasonable.
August 19, 2024
EF-ON INC. Audit & Supervisory Board
Full-time Audit & Supervisory Board
MemberOutside Audit & Supervisory Board
MemberOutside Audit & Supervisory Board
Member

44

Shinichi Yada
Hidehito Mochizuki
Shuji Makiura