This document has been translated from the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any
other forms of damages arising from the translation.
(Securities code: 4028)
June 7, 2021
To Those Shareholders with Voting Rights
Kenichi Tanaka
Executive Director, President
ISHIHARA SANGYO KAISHA, LTD.
3-15, Edobori 1-chome, Nishi-ku, Osaka

NOTICE OF THE 98th ORDINARY GENERAL MEETING OF SHAREHOLDERSFirstly, we would like to extend our sincere thanks for your ongoing support.
We are pleased to inform you that the 98th Ordinary General Meeting of Shareholders will be held as
follows.
To prevent the spread of the new coronavirus (COVID-19) and ensure the safety of all shareholders, werequest shareholders to exercise their voting rights in advance, in writing or via the Internet, etc., and torefrain, wherever possible, from attending the General Meeting of Shareholders in person.
Please exercise your voting rights in writing or via the Internet, etc. by 5:30 p.m. on Thursday, June 24,
2021, after reading the attached REFERENCE DOCUMENT FOR THE GENERAL MEETING OF
SHAREHOLDERS.
1.
2.

3.

Date and Time: 10:00 a.m., Friday, June 25, 2021 (Reception opens: 9:00 a.m.)
Venue: Hall on the 5th floor of Shin-Ishihara Building, at 3-15, Edobori 1-chome, Nishi-ku,
Osaka(Shin-Ishihara Building: Please use Exit 5-B of Higobashi Station, Osaka Metro
Yotsubashi Line.)
Objectives of the Meeting
Reports:
1. The Business Report, the Consolidated Financial Statements for the 98th Fiscal Term (from
April 1, 2020 to March 31, 2021), and the Audit Reports thereof prepared by the Accounting
Auditor and the Audit & Supervisory Board
2. The Non-consolidated Financial Statements for the 98th Fiscal Term (from April 1, 2020 toMarch 31, 2021)
Matters to Be Resolved
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Nine (9) Directors
Proposal No. 3: Election of One (1) Audit & Supervisory Board Member
Proposal No. 4: Election of One (1) Substitute Audit & Supervisory Board Member-1-4. How to Exercise Your Voting Rights
If you are attending the General Meeting of Shareholders
Please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at themeeting.
Date & Time: 10:00 a.m., Friday, June 25, 2021
(Reception opens: 9:00 a.m.)

If you are exercising your voting rights in writing
Please indicate your approval or disapproval of the matters to be resolved on the Voting Rights
Exercise Form enclosed herewith, and return it to us.
Deadline: The form should arrive by 5:30 p.m., Thursday, June 24, 2021.

If you are exercising your voting rights via the Internet, etc.
Please first read the attached Guidance on the Exercise of Voting Rights via the Internet, etc. (p. 3)
and indicate your approval or disapproval.
Deadline: Entry should be accepted by 5:30 p.m., Thursday, June 24, 2021.
 If you have exercised your voting rights both in writing and via the Internet, etc., the votes cast via the Internet, etc. shallbe deemed valid. If you have exercised your voting rights via the Internet, etc. multiple times, the votes cast last shall bedeemed valid.
 The costs incurred for access to the website for the exercise of voting rights via the Internet (such as Internet connection
fees, phone charges, etc.) shall be borne by the shareholders.
 In some circumstances, you may not be able to use the website to exercise your voting rights via the Internet due to yourInternet environment, ISP service, or device model.

5. Disclosure via the Internet
The items listed below are made available on our website on the Internet (URL below) in accordancewith laws and ordinances, as well as the provisions of Article 19 of our Articles of Incorporation, andare therefore not included in the reference documents attached hereto.
(1) Notes to Consolidated Financial Statements(2) Notes to Non-consolidated Financial Statements
Thus, the reference documents attached hereto constitute part of the subjects audited by the Audit &Supervisory Board Members and the Accounting Auditor in preparing their Audit Reports.
Our website (https://www.iskweb.co.jp/ir/stockholders.html)
If any situation arises that requires amendment to the REFERENCE DOCUMENT FOR THE
GENERAL MEETING OF SHAREHOLDERS, the Business Report, the Consolidated Financial
Statements, or the Non-consolidated Financial Statements, such amendment will be posted on the
Company’s website (https://www.iskweb.co.jp).

-2-

Guidance on the Exercise of Voting Rights via the Internet, etc.
How to scan the QR code
“Smart Voting”
You can log in to the voting rights exercise
website without entering a “voting rights
exercise code” and a “password.”

Please use your smartphone to scan the“voting rights exercise website login QR
code” on the bottom right of the voting
rights exercise form.
Please enter your vote for each proposal
by following the instructions on thescreen.

How to enter a voting rights exercise code and apassword
The voting rights exercise website:

https://www.web54.net
Please access the voting rights exercise
website.



Please enter the “voting rights exercisecode” on the bottom left of the reverse sideof the voting rights exercise form.



Please enter the “password” on the bottom
left of the reverse side of the voting rights
exercise form.



Please enter your vote for each proposal byfollowing the instructions on the screen.

Voting rights can be exercised only once
using “Smart Voting.”
If you want to change your vote after
exercising your voting rights, please enter
the “voting rights exercise code” and“password” on the voting rights exercise
form to log in to the voting rights exercise
website by following the instructions under“How to enter a voting rights exercise code
and a password” on the right hand side, andexercise your voting rights again.
* You can access the voting rights exercise
website on the right hand side by scanning
the QR code again.
* “QR code” is a registered trademark of
DENSO WAVE INCORPORATED.
Please call the number on the righthand side, if you have any questions
relating to the exercise of voting rights
via the Internet.

Transfer Agency Web Support
Hotline, Sumitomo Mitsui Trust Bank

0120-652-031
Business hours: 9:00 a.m. to 9:00 p.m.

To institutional investors
In addition to the exercise of voting rights via the Internet as stated above, you may use the electronic voting
platform operated by ICJ, Inc. only if you apply for its use in advance.

-3-

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposals and References

Proposal No. 1

Appropriation of Surplus

One of the most important management policies of the Company is to enhance corporate value while
returning profits to our shareholders.
Our basic principle for dividends is to continue to implement stable dividend distribution according toour business performance, taking into comprehensive consideration the business trends, financial
condition, and need to enhance our internal reserve for business expansion into the future.
Based on this policy, we have decided to pay a year-end dividend of 18 yen per share, as summarized
below.
1.

Type of dividend property
Cash

2.

Matters concerning the allocation of dividend property to shareholders and the total
amount thereof
18 yen per share of common stock of the Company
Total: 719,218,890 yen

3.

Date on which the dividend of surplus takes effectJune 28, 2021

-4-

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS

Proposal No. 2

Election of Nine (9) Directors

The terms of office of the current nine (9) Directors will expire at the conclusion of this General Meetingof Shareholders.
We therefore propose that nine (9) Directors (three (3) of which are Outside Directors) be elected.
The candidates for Directors are as follows:
Candidate
No.

1

2

3

4

5

6

7
8
9

Full name

Posts and
responsibilities held at
the Company

Executive Director,
President & Chief
Executive Officer
Chief Compliance
Kenichi Tanaka
Reappointment
Officer (CCO), andChairman ofCompliance
Committee
Director, Managing
Executive Officer,
Hideo Takahashi Reappointment
and Director of
Yokkaichi Plant
Director, Managing
Executive Officer,
Kiyomitsu
Reappointment and Director of
YoshidaBiosciences Business
Headquarters
Director, Managing
Executive Officer,
Yasunobu
and Director of
Reappointment
KawazoeFinance &Accounting
Headquarters
Director, Managing
Executive Officer,
Director of Inorganic
Masaki Shimojo
Reappointment Chemicals Sales &Marketing, andDirector of R&D
Strategy Headquarters
Managing Executive
Hisashi
Officer, Deputy
New appointment
Takenaka
Director of Yokkaichi
Plant
Hiroshi
Director [Outside]
Reappointment
Katsumata[Independent]
TatsuoDirector [Outside]
Reappointment
Hanazawa[Independent]
Director [Outside]
Satoshi Ando
Reappointment[Independent]

Reappointment

Candidate for reappointment

Term ofofficeasDirector

Corporate
strategy

7 years

2 years

3 years

Personnel andLegal and
GeneralRiskaffairs
management

Marketing

Production
and R&D















2 years

1 year











2 years

1 year

New appointment

Candidate for new Director

Overseas
workexperience









-

4 years

Financialaccounting















[Outside] Outside Officer[Independent] Independent Officer

Notes:
1. The posts and responsibilities held at the Company of the above candidates for Directors are as of before this General
Meeting of Shareholders.
2. Nomination of the candidates for Directors is decided at the Board of Directors after consulting with the Personnel
Committee, consisting of independent Outside Directors and Outside Audit & Supervisory Board Members. The Board of
Directors nominates the persons who are deemed appropriate as candidates for Directors after comprehensive examinationof their personalities, knowledge, abilities, etc. based on the perspective of prompt and proper decision making.
3. The Company has concluded a directors and officers liability insurance contract with an insurance company, as prescribedin Article 430-3, Paragraph 1 of the Companies Act, with all Directors as the insured. The insurance covers legal damages
and litigation expenses in the event that a claim for damages is made against the insured during the insurance period due toincorrect actions (including errors of omission) committed by the insured in his/her capacity as such. The Company is fully
responsible for paying the insurance premium. The Company intends to include all candidates for Directors, if appointed, in
the insured under this insurance contract. The Company intends to renew this insurance contract under the same terms
when it comes due for renewal.

-5-REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

1

Kenichi Tanaka (Born on January 18, 1954)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
20,400 shares
Term of office as Director
7 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
14 times / 14 meetings (100%)

April 1976
April 2009
June 2011
June 2012
June 2014
June 2015

February 2016

June 2017

Joined the Company
Executive Officer, and Acting Director of
General Affairs Headquarters
Executive Officer, and Director of General
Affairs Headquarters
Managing Executive Officer, and Directorof General Affairs Headquarters
Director, Managing Executive Officer, andDirector of General Affairs Headquarters
Executive Director, President & Chief
Executive Officer, Chief Compliance
Officer (CCO), Chairman of Compliance
Committee, Director of Business Strategy
Office, and Director of General Affairs
Headquarters
Executive Director, President & Chief
Executive Officer, Chief Compliance
Officer (CCO), Chairman of Compliance
Committee, and Director of General Affairs& Human Resources Headquarters
Executive Director, President & Chief
Executive Officer, Chief Compliance
Officer (CCO), and Chairman ofCompliance Committee (to date)

Major other offices concurrently held
Director and Chairman at ISK AMERICAS INCORPORATED

 Reason for nomination as a candidate for Director

Mr. Kenichi Tanaka was appointed President and Chief Executive Officer in June 2015. Sinceassuming office, he has accurately and efficiently engaged in the management and administration of
the entire Group.
He also formulated the Mid-Term Management Plan, indicating the direction of the management
strategy that the Company should pursue, based on the Group’s external environment, and promoted
the reform of corporate governance.
He is also demonstrating strong leadership in taking command of management to achieve the goals of
the Company’s long-term vision for the year 2030, Vision 2030, and the new Mid-Term Management
Plan commencing from fiscal 2021. Expectations of his contribution to sustainably improving thecorporate value of the Company resulted in our decision to re-appoint him as a candidate for our
Director.
Note: No special-interest relationships exist between the Company and Mr. Kenichi Tanaka.

-6-Candidate No.

2

Hideo Takahashi (Born on December 4, 1956)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
9,400 shares
Term of office as Director
2 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
14 times / 14 meetings (100%)

April 1980
June 2013
June 2014
June 2015
October 2015

June 2018
June 2019

Joined the Company
Executive Officer, and Deputy Director of
R&D Strategy Headquarters
Executive Officer, and Acting Director of
R&D Strategy Headquarters
Executive Officer, and Director of R&D
Strategy Headquarters
Executive Officer, Director of R&D
Strategy Headquarters and Battery & Power
Generation Materials Development
Promotion Headquarters
Managing Executive Officer, and Directorof R&D Strategy Headquarters
Director, Managing Executive Officer, andDirector of Yokkaichi Plant (to date) Reason for nomination as a candidate for Director

Mr. Hideo Takahashi has been engaged in research, product development, sales mainly in the
inorganic chemicals department, and has been engaged in plant operations, etc. He has built his careerin many fields including Director of R&D Strategy Headquarters and Factory Director and has
properly made decisions and conducted supervision on important business performance andmanagement based on his abundant experience and achievements.
We expect that Mr. Takahashi will lead management of the entire Group and contribute to sustainably
improving its corporate value of the Group through his leadership, based on his experience andachievements. This resulted in our decision to re-appoint him as a candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Hideo Takahashi.

-7-

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

3

Kiyomitsu Yoshida (Born on May 19, 1958)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
7,900 shares
Term of office as Director
3 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
14 times / 14 meetings (100%)

April 1981
June 2014
May 2016

June 2016

June 2017

June 2018

January 2019

February 2019

June 2019

Joined the Company
Executive Officer, and Acting Director ofCentral Research InstituteExecutive Officer, Acting Director ofCentral Research Institute, and Director of
Animal Health Headquarters
Executive Officer, Director of Central
Research Institute, and Director of Animal
Health Headquarters
Managing Executive Officer, Director ofCentral Research Institute, and Director of
Animal Health Headquarters
Director, Managing Executive Officer,
Deputy Director of Biosciences Sales &Marketing, and Director of Animal Health
Headquarters
Director, Managing Executive Officer,
Director of Biosciences Sales & Marketing,and Director of Animal Health
Headquarters
Director, Managing Executive Officer,
Director of Biosciences Business
Headquarters, and Director of Animal
Health Headquarters
Director, Managing Executive Officer, andDirector of Biosciences Business
Headquarters (to date)

Major other offices concurrently held
Director and Chairman at ISK BIOSCIENCES CORPORATION
Director and Chairman at ISK BIOSCIENCES EUROPE N.V.

 Reason for nomination as a candidate for Director

Mr. Kiyomitsu Yoshida has been engaged in sales, research & development, operation of a research
institute, etc. mainly in the organic chemicals department, and has properly made decisions andconducted supervision on important business performance and management based on his abundant
experience and achievements.
We expect that Mr. Yoshida will contribute to sustainably improving the corporate value of the Groupby utilizing his experience and knowledge for the Board of Directors in planning and examining, or
supervising the execution of, management strategies. This resulted in our decision to re-appoint him asa candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Kiyomitsu Yoshida.

-8-Candidate No.

4

Yasunobu Kawazoe (Born on August 5, 1958) Reappointment
A brief summary of his career, posts and responsibilities held, andother major offices concurrently held

Number of the Company’s shares held
16,200 shares
Term of office as Director
2 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
14 times / 14 meetings (100%)

April 1982

Joined Long-Term Credit Bank of Japan,
Limited (currently Shinsei Bank, Limited)
April 2012
Executive Officer, and General Manager ofInstitutional Credit Management Division,
Shinsei Bank, Limited
April 2015
Managing Executive Officer, Chief Risk
Officer, and Head of Risk Management
Group, Shinsei Bank, Limited
April 2016
Managing Executive Officer, and Head of
Credit Risk Management, Shinsei Bank,
LimitedDecember 2016 Retired from Shinsei Bank, Limited
January 2017
Advisor to Ishihara Sangyo Kaisha, Ltd.
June 2017Managing Executive Officer, and Directorof Finance & Accounting Headquarters
June 2019
Director, Managing Executive Officer, andDirector of Finance & Accounting
Headquarters (to date) Reason for nomination as a candidate for Director

Mr. Yasunobu Kawazoe has properly performed his duties by making effective use of his abundant
experience and expertise related to finance and accounting that he had cultivated at a financial
institution, and has properly made decisions and conducted supervision on important businessperformance and management based on his abundant experience and achievements.
We expect that Mr. Kawazoe will contribute to sustainably improving the corporate value of theGroup by utilizing his experience and knowledge for the Board of Directors in planning andexamining, or supervising the execution of, management strategies. This resulted in our decision to reappoint him as a candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Yasunobu Kawazoe.

-9-

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

5

Masaki Shimojo (Born on April 14, 1960)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
6,200 shares
Term of office as Director
1 year (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
9 times / 9 meetings (100%)

April 1983
October 2016
June 2019

June 2020

Joined the Company
Executive Officer, and Director of
Inorganic Chemicals Sales & Marketing
Managing Executive Officer, Director of
Inorganic Chemicals Sales & Marketing,and Director of R&D Strategy Headquarters
Director, Managing Executive Officer,
Director of Inorganic Chemicals Sales &Marketing, and Director of R&D Strategy
Headquarters (to date)

Major other offices concurrently held
Director and Chairman at ISHIHARA CORPORATION (U.S.A.)
Chairman at ISK TAIWAN CO., LTD.

 Reason for nomination as a candidate for Director

Mr. Masaki Shimojo has been engaged in sales, research, product development, and production, etc.
mainly in the inorganic chemicals department. He has properly performed his duties, made decisions
and conducted supervision on important business performance and management based on his abundant
experience and achievements.
We expect that Mr. Shimojo will contribute to sustainably improving the corporate value of the Groupby utilizing his experience and knowledge for the Board of Directors in planning and examining, or
supervising the execution of, management strategies. This resulted in our decision to re-appoint him asa candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Masaki Shimojo.

- 10 -

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

6

Hisashi Takenaka (Born on November 24, 1956)
New appointment
A brief summary of his career, posts and responsibilities held, andother major offices concurrently held

Number of the Company’s shares held
6,800 shares

April 1981
June 2016

Term of office as Outside Director
Attendance at Board of Directors
meetings-

June 2020

Joined the Company
Executive Officer, Deputy Director of
Yokkaichi Plant, and General Manager ofPlanning & Administration Division at
Yokkaichi Plant
Managing Executive Officer, and Deputy
Director of Yokkaichi Plant (to date) Reason for nomination as a candidate for Director

Mr. Hisashi Takenaka has been engaged in production and engineering, environment, safety andhealth, and management divisions at a plant. He was appointed Executive Office in 2016, and isengaged in plant operations.
His abundant operational knowledge and experience have enabled him to properly execute his duties.
We expect that Mr. Takenaka will contribute to sustainably improving the corporate value of theGroup. This resulted in our decision to appoint him as a new candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Hisashi Takenaka.

- 11 -

Candidate No.

7

Hiroshi Katsumata (Born on April 1, 1952)
Reappointment

Outside Officer

Independent Officer

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
5,600 shares
Term of office as Outside Director
4 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
14 times / 14 meetings (100%)

April 1977

Joined Ministry of International Trade andIndustry (currently Ministry of Economy,
Trade and Industry)
February 1995 General Manager of Natural Resources
Department, Chubu Bureau of Trade andIndustry
June 1997
Deputy Director-General of Planning
Department, New Energy and Industrial
Technology Development Organization
July 1999
Manager of Environmental Research andTechnology Division, Planning and
Coordination Bureau, Environment Agency(currently Ministry of the Environment)
December 2000 Manager of Vienna Center, Japan External
Trade Organization
June 2003
Managing Director, Plastic Waste
Management InstituteJune 2006
Executive Officer, and Deputy General
Manager of Technological Affairs Division,
Taiyo Nippon Sanso Corporation
June 2009
Senior Executive Officer, and Deputy
General Manager of Technological Affairs
Division, Taiyo Nippon Sanso Corporation
June 2011
Senior Executive Officer, and General
Manager of Technological Affairs Division,
Taiyo Nippon Sanso Corporation
June 2012Managing Director, and General Manager
of Technological Affairs Division, Taiyo
Nippon Sanso Corporation
June 2014
Senior Managing Director, and General
Manager of Technological Affairs Division,
Taiyo Nippon Sanso Corporation
June 2015
Director Senior Managing Executive
Officer, and General Manager ofTechnological Affairs Division, Taiyo
Nippon Sanso Corporation
June 2017
Director, TM Air Co., Ltd.
June 2017
Outside Director of the Company (to date)June 2018
Advisor to TM Air Co., Ltd.
June 2019
Part-time Consultant for TM Air Co., Ltd.

- 12 -

 Reason for nomination as a candidate for Outside Director and summary of expected roles

Mr. Hiroshi Katsumata, currently serving as Outside Director of the Company, has diverse experienceand specialized insight in public administration, as well as advanced knowledge of corporate
management as a company manager of an industrial gas business operator. These qualities enable him
to provide appropriate advice and supervision of the Company’s management from an objective
standpoint. In addition, he also serves as Chairman of the Personnel Committee and a member of theCompensation Committee and Evaluation Committee, voluntary advisory committees of theCompany, actively expressing his opinions. For these reasons, he is expected to perform his duties as
Outside Director adequately from an independent standpoint. This resulted in our decision to reappoint him as a candidate for our Outside Director.
Notes:
1. No special-interest relationships exist between the Company and Mr. Hiroshi Katsumata.
2. Mr. Hiroshi Katsumata is a candidate for Outside Director.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Director that sets a limit on the liability for damages
under Article 423, Paragraph 1 of the Companies Act. The Company has entered into an agreement on
limitation of liability (the larger of an amount determined in advance or an amount ordered by decree, either ofwhich shall be equal to or more than 10 million yen) with Mr. Hiroshi Katsumata, and will renew the current
agreement with him upon the approval of his re-election at this General Meeting of Shareholders.
4. Mr. Hiroshi Katsumata meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the Tokyo Stock Exchange (TSE). The
Company has notified the TSE of his election as an Independent Officer as required by the TSE. If his reelection is approved at this General Meeting of Shareholders, the Company will continue to appoint him as an
Independent Officer.

- 13 -

Candidate No.

8

Tatsuo Hanazawa (Born on April 30, 1951)
Reappointment

Outside Officer

Independent Officer

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
1,500 shares

April 1975

Term of office as Outside Director
2 years (at the conclusion of this General
Meeting of Shareholders)August 1990

Attendance at Board of Directors
meetings
14 times / 14 meetings (100%)

May 1992
July 1995
July 1997

July 1999
April 2000

July 2001
July 2002

January 2004

October 2005

April 2006

April 2013
June 2019- 14 -

Joined Ministry of Agriculture and Forestry(currently Ministry of Agriculture, Forestry
and Fisheries)
Research Administrator of Administration
Division, Food and Marketing BureauCounselor, Embassy of Japan in the
People’s Republic of China
Councilor, Cabinet Councilors’ Office inInternal Affairs, Cabinet Secretariat
Manager of Mountainous and Snowy
Regions Development Division, National
Land Agency
Manager of Upland Crop Division,
Agricultural Production Bureau
Deputy Director-General of Hokuriku
Regional Agricultural Administration
OfficeDirector-General of Kinki Chugoku
Regional Forest Office
Assistant Vice-Minister, Minister’s
Secretariat and Land and Water Bureau,
Ministry of Land, Infrastructure, Transport
and Tourism
Director of Selection and Evaluation
Committee, Bio-Oriented Technology
Research Advancement Institution, National
Agriculture and Food Research
Organization
Executive Director of Japan Food Industry
Center (currently Japan Food Industry
Association)
Executive Director of Japan Food Industry
Center and Japan Food Safety Management
System Assessment & Registration Senior
Manager
Executive Director of Japan Food Industry
Association
Outside Director of the Company (to date) Reason for nomination as a candidate for Outside Director and summary of expected roles

Mr. Tatsuo Hanazawa, currently serving as Outside Director of the Company, has diverse experienceand knowledge of public administration, especially of agricultural policies both inside and outside
Japan, and provides appropriate advice and supervision of the management of the Company from an
independent standpoint, using his extensive experience and professional knowledge. In addition, healso serves as Chairman of the Compensation Committee and a member of the Personnel Committee
and Evaluation Committee, voluntary advisory committees of the Company, actively expressing his
opinions. Mr. Hanazawa has never in the past been involved in the management of a company except
as an Outside Director. However, for these reasons, he is expected to perform his duties as Outside
Director adequately from an independent standpoint. This resulted in our decision to re-appoint him asa candidate for our Director.
Notes:
1. No special-interest relationships exist between the Company and Mr. Tatsuo Hanazawa.
2. Mr. Tatsuo Hanazawa is a candidate for Outside Director.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Director that sets a limit on the liability for damages
under Article 423, Paragraph 1 of the Companies Act. The Company has entered into an agreement on
limitation of liability (the larger of an amount determined in advance or an amount ordered by decree, either ofwhich shall be equal to or more than 10 million yen) with Mr. Tatsuo Hanazawa, and will renew the current
agreement with him upon the approval of his re-election at this General Meeting of Shareholders.
4. Mr. Tatsuo Hanazawa meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the TSE. The Company has notified the TSE of
his election as an Independent Officer as required by the TSE. If his re-election is approved at this General
Meeting of Shareholders, the Company will continue to appoint him as an Independent Officer.

- 15 -

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

9

Satoshi Ando (Born on April 27, 1974)
Reappointment

Outside Officer

Independent Officer

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
500 shares

October 2001

Term of office as Outside Director
1 year (at the conclusion of this General
Meeting of Shareholders)

October 2001
May 2015

Attendance at Board of Directors
meetings
9 times / 9 meetings (100%)

May 2016

June 2020

Admitted to the bar (Dai-Ichi Tokyo Bar
Association)
Joined Onishi Shoichiro Law OfficeSenior Partner of Onishi Shoichiro Law
Office (to date)Outside Director (Audit & Supervisory
Committee Member) of TOHO CO., LTD.
(to date)
Outside Director of the Company (to date)

Major other offices concurrently held
Attorney-at-law
Outside Director (Audit & Supervisory Committee Member) of TOHOCO., LTD.

 Reason for nomination as a candidate for Outside Director and summary of expected roles

Mr. Satoshi Ando, currently serving as Outside Director of the Company, has advanced professional
expertise as an attorney-at-law, as well as extensive experience and broad insight in corporate legal
work. He provides appropriate advice and supervision of the management of the Company from an
independent and legal standpoint. In addition, he also serves as a member of the Compensation
Committee, Personnel Committee and Evaluation Committee, voluntary advisory committees of theCompany, actively expressing his opinions. Mr. Ando has never in the past been involved in the
management of a company except as an Outside Director. However, for these reasons, he is expected
to perform his duties as Outside Director adequately from an independent standpoint. This resulted inour decision to re-appoint him as a candidate for our Director.
Notes:
1. No special-interest relationships exist between the Company and Mr. Satoshi Ando.
2. Mr. Satoshi Ando is a candidate for Outside Director.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Director that sets a limit on the liability for damages
under Article 423, Paragraph 1 of the Companies Act. The Company has entered into an agreement on
limitation of liability (the larger of an amount determined in advance or an amount ordered by decree, either ofwhich shall be equal to or more than 10 million yen) with Mr. Satoshi Ando, and will renew the current
agreement with him upon the approval of his re-election at this General Meeting of Shareholders.
4. Mr. Satoshi Ando meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the TSE. The Company has notified the TSE of
his election as an Independent Officer as required by the TSE. If his re-election is approved at this General
Meeting of Shareholders, the Company will continue to appoint him as an Independent Officer.

- 16 -

Proposal No. 3

Election of One (1) Audit & Supervisory Board
MemberAudit & Supervisory Board Member Michiyoshi Arata will retire at the conclusion of this General
Meeting of Shareholders. We propose to appoint one (1) Audit & Supervisory Board Member as a
substitute.
The term of office of the Audit & Supervisory Board Member elected by this General Meeting of
Shareholders will terminate at the conclusion of the retiring Audit & Supervisory Board Member’s
current term of office, in accordance with the provisions of the Company’s Articles of Incorporation.
This proposal has obtained the consent of the Audit & Supervisory Board.
The candidate for Audit & Supervisory Board Member is as follows:

Yoshihito Akiyama (Born on June 15, 1958)
New appointment
A brief summary of his career and posts held, and other major
offices concurrently held
Number of the Company’s shares held
3,682 shares

April 1982
Joined TOHO TITANIUM CO., LTD.
April 1991
Joined KEYENCE CORPORATION
November 2004 Joined the Company
March 2008
Deputy General Manager of Corporate
Planning & Administration Division,
Corporate Administration & Planning
Headquarters, Auditor of ISK KOREACORPORATION, and Auditor of ISK
BIOSCIENCES KOREA LTD.
April 2009
Deputy General Manager of Corporate
Planning & Administration Division,
Corporate Administration & Planning
Headquarters, and Part-time Auditor of
FUJI TITANIUM INDUSTRY CO., LTD.
June 2012
General Manager of Corporate Planning &Administration Division, Corporate
Administration & Planning Headquarters,
and Director (Part-time) of ISHIHARATECHNO CORPORATION
July 2018
Associate Director, General Manager ofThird Party Relations & Sales
Administration Division, Biosciences
Business Headquarters of the Company
December 2018 Associate Director, General Manager ofThird Party Relations & Sales
Administration Division, Biosciences
Business Headquarters (to date), andDirector of ISK BIOSCIENCES
EUROPE N.V. (to date)(retirement planned in June 2021)- 17 -

 Reason for nomination as a candidate for Audit & Supervisory Board Member

Mr. Yoshihito Akiyama has served in the Company’s management and sales divisions, and possesses
achievements including experience as Director and Auditor of affiliates in Japan and overseas. We
have nominated him as a candidate for Audit & Supervisory Board Member in the expectation that hewill utilize this experience and knowledge in the Company’s audit activities.
Notes:
1. No special-interest relationships exist between the Company and Mr. Yoshihito Akiyama.
2. The Company has concluded a directors and officers liability insurance contract with an insurance company, asprescribed in Article 430-3, Paragraph 1 of the Companies Act, with all Audit & Supervisory Board Members
as the insured. The insurance covers legal damages and litigation expenses in the event that a claim for damages
is made against the insured during the insurance period due to incorrect actions (including errors of omission)committed by the insured in his/her capacity as such. The Company is fully responsible for paying the insurance
premium. If the appointment of Mr. Yoshihito Akiyama is approved at this General Meeting of Shareholders,then he will become insured under this insurance contract. The Company intends to renew this insurance
contract under the same terms when it comes due for renewal.

- 18 -

Proposal No. 4

Election of One (1) Substitute Audit &Supervisory Board Member

At the 97th Ordinary General Meeting of Shareholders held on June 25, 2020, Mr. Yasuhiro Koike waselected as a substitute Audit & Supervisory Board Member. His term of office will terminate at the timeof the start of the forthcoming General Meeting of Shareholders. Therefore, one (1) substitute Audit &Supervisory Board Member shall be appointed anew in the case that a vacancy occurs in the statutory
number of auditors.
This proposal has obtained the consent of the Audit & Supervisory Board.
The candidate for substitute Audit & Supervisory Board Member is as follows:

Yasuhiro Koike (Born on July 31, 1962)
Reappointment

Substitute Outside Audit & Supervisory Board

Independent Officer

A brief summary of his career and posts held, and other major
offices concurrently held
Number of the Company’s shares held
0 shares

April 1991
April 1998
April 2004
April 2012
April 2019

Admitted to the bar (Osaka Bar
Association)
Opened Koike Law OfficeOpened Ohara & Koike Law OfficeVice-president of Osaka Bar Association
Executive Governor of Japan Federation of
Bar Associations

Major other offices concurrently held
Attorney-at-law

 Reason for nomination as a candidate for substitute Outside Audit & Supervisory Board Member

Mr. Yasuhiro Koike has professional knowledge and experience of legal practice and sufficient insight
into corporate management, which endorses the view that he has the ability to carry out his
professional duties as a substitute Outside Audit & Supervisory Board Member from an independentand unbiased perspective.
Notes:
1. No special-interest relationships exist between the Company and Mr. Yasuhiro Koike.
2. Mr. Yasuhiro Koike is a candidate for a substitute Outside Audit & Supervisory Board Member.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Audit & Supervisory Board Member that sets a limit on
the liability for damages under Article 423, Paragraph 1 of the Companies Act. The Company will enter into anagreement on limitation of liability (the larger of an amount determined in advance or an amount ordered bydecree, either of which shall be equal to or more than 10 million yen) with Mr. Yasuhiro Koike, if his election isapproved at this General Meeting of Shareholders and he assumes his Audit & Supervisory Board Member role.
4. Mr. Yasuhiro Koike meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the TSE. If his election is approved at this
General Meeting of Shareholders and he assumes his Audit & Supervisory Board Member role, the Company
will notify the TSE of Mr. Yasuhiro Koike’s nomination as an Independent Officer as required by the TSE.
5. The Company has concluded a directors and officers liability insurance contract with an insurance company, asprescribed in Article 430-3, Paragraph 1 of the Companies Act, with all Audit & Supervisory Board Members
as the insured. The insurance covers legal damages and litigation expenses in the event that a claim for damages
is made against the insured during the insurance period due to incorrect actions (including errors of omission)committed by the insured in his/her capacity as such. If the election of Mr. Yasuhiro Koike is approved at this
General Meeting of Shareholders and he assumes his Audit & Supervisory Board Member role, then he will be
included in the insured under this insurance contract. The Company intends to renew this insurance contract
under the same terms when it comes due for renewal.

- 19 -

(Reference)
Criteria for the Independence of Outside Officers at the Company

An Outside Director or Outside Audit & Supervisory Board Member shall be deemed independent if
he/she falls under none of the following criteria:
1. A person who is or was within the past 10 years an executive of business*1 of the corporate groupcomposed of the Company and its subsidiaries (hereinafter, “the Group”)
2. A person who is or was within the past five years a major shareholder (holding 10% or more of total
voting rights) of the Company or an executive of business thereof
3. A person who is a client of the Group and whose transactions with the Group exceeded 2% of theconsolidated annual sales of the Group in one of the recent three business years, or the executive of
business thereof
4. A person for whom the Group is a client and whose transactions with the Group exceeded 2% of its
consolidated annual sales in one of its recent three business years, or the executive of business thereof
5. An accounting professional, legal professional, or other consultant or a member of a group thereof
who receives from the Group a large amount of money or other financial benefit *2 besides the officer’s
remuneration
6. A person who receives or has received within the past three years a large amount of donation or otherassistance*3 from the Group, or the executive of business thereof
7. A spouse or a relative within the second degree of kinship of any person who falls under any of thecriteria 1 through 6 above, or a relative who lives with such a person.
*1: “An executive of business” refers to the person defined in Article 2, Paragraph 3 (6) of theOrdinance for Enforcement of the Companies Act.
*2: “A large amount of money or other financial benefit” refers to over 10 million yen of regularannual compensation on average over the past three years.
*3: “A large amount of donation or other assistance” refers to over 10 million yen of an annual total
amount of donation or assistance.

- 20 -

(Appendix)

Business Report(April 1, 2020 - March 31, 2021)

I. Overview of the Corporate Group
1. Business Progress and Results(1) Business Conditions
The global economy deteriorated rapidly during the fiscal year under review, as a result of
restrictions on economic activity due to the spread of the COVID-19 pandemic. Signs of arecovery in business conditions subsequently appeared however, although to differing degrees ineach region and industry, led by a rapid recovery in the Chinese economy, and the gradualresumption of economic activity in major regions including Europe and the United States. The
Japanese economy also faced adverse conditions, with a slump in personal consumption, but signsof a recovery in production activities strengthened towards the end of the fiscal year. At present
however, the outlook remains uncertain, with a semiconductor shortage affecting the automobile
industry, in addition to the repeated spread of the virus.
Under these conditions, the Group celebrated its 100th anniversary in September 2020. We havedefensively reinforced our existing businesses, while strengthening aggressive initiatives for
growth, aiming to be a strong and trusted chemical company with a powerful brand, our vision for2020. However, the business environment remained adverse due to the impact of COVID-19,
particularly in the inorganic chemicals business. Sales of titanium dioxide fell dramatically in thefirst half of the fiscal year, resulting in a large year-on-year decline, but sales of highly functional,
high value-added products recovered during the second half of the fiscal year to increase year-onyear. In the organic chemicals business, the impact on crop production was only limited, and salesof the main agrochemical products were strong, particularly overseas.
As a result, the Company posted consolidated net sales of ¥101.7 billion (up ¥0.7 billion YoY) andconsolidated operating income of ¥5.1 billion (down ¥1.0 billion YoY) for the fiscal year ended
March 31, 2021 (the “current fiscal year”). In terms of non-operating income, consolidated
ordinary income was ¥5.9 billion (up ¥0.5 billion YoY) due to a foreign exchange gain resulting
from a weaker yen. Net income attributable to owners of parent was ¥3.3 billion (up ¥1.0 billion
YoY).

Results for each business segment were as follows.
[Inorganic Chemicals Business]
Sales of titanium dioxide for use in automotive and construction declined significantly during thefirst half of the fiscal year due to the impact of COVID-19, then gradually began to recover. The
recovery in market conditions for titanium dioxide in Asia became more marked towards the endof the fiscal year, but remained unable to compensate for the previous decline, and net sales for the
fiscal year amounted to ¥37.9 billion (down ¥1.8 billion YoY).
In functional materials, sales of materials for electronics components related to 5G performed strongly,
and automotive demand, which had slumped during the first half of the fiscal year, showed signs of arecovery during the second half. In addition, sales of photocatalytic titanium dioxide grew for
antibacterial and antiviral uses, and net sales amounted to ¥11.9 billion (up ¥0.1 billion YoY).
Both sales and cost weighed on profit, with the decline in sales volumes of titanium dioxide and a
resulting increase in fixed costs from operational adjustments, as well as persistently high prices forore, a raw material.
As a result, net sales for the inorganic chemicals business were ¥49.8 billion (down ¥1.6 billion YoY),
and operating income was ¥0.9 billion (down ¥2.7 billion YoY).
[Organic Chemicals Business]
Domestic sales of agrochemicals increased year over year, as sales of other products compensatedfor a downturn in the main nematicides, despite a patchy performance overall.
Overseas, sales of herbicides for corn were strong in the United States, thanks to booming crop
- 21 -

production, and progress was made in consuming distribution stock, which was at high levels dueto the impact of floods last year. In Europe, sales of nematicides grew strongly, due to the expiry of
the registration for a competing agent. Sales of insecticides grew in Asia, due to a proliferation of
insect pests.
The spread of COVID-19 caused a decline in demand for horticultural insecticides and fungicides,
due to a decrease in fresh vegetable production for the restaurant industry in the United States, but
the impact was limited.
Apart from agrochemicals, net sales of animal health products increased year over year.
As a result, net sales for the organic chemicals business were ¥48.3 billion (up ¥2.1 billion YoY), andoperating income was ¥6.3 billion (up ¥1.9 billion YoY).
[Other Businesses]
Net sales in other businesses were ¥3.5 billion (up ¥0.1 billion YoY), and operating income was ¥0.5
billion (on a par with the previous fiscal year).
(2)

Capital Expenditures
Capital expenditures during the current fiscal year amounted to ¥6.0 billion, comprising ¥5.5
billion in the inorganic chemicals business, and ¥0.6 billion in the organic chemicals business.

(3)

Financing
The global spread of COVID-19 has caused an increasingly severe slowdown in the global
economy, with no prospect of a resolution. Due to the consequent uncertainty regarding the future
outlook, we established a commitment line (¥10.0 billion for a period of two years) with our fivemain banks in July, as an emergency financing measure.
Capital investment increased year over year, while research and development costs decreased due
to our exit from the biopharmaceutical HVJ-E development business.
Funds procurement through bank loans increased year over year, with the impact of a decrease insales due to COVID-19, and interest-bearing debt was ¥60.1 billion (up ¥7.5 billion YoY).

(4)

Issues to Be Addressed
The Group has formulated its long-term vision, “Vision 2030” and the new Mid-Term
Management Plan “Vision 2030 Stage I” (for fiscal 2021-2023), founded on this vision.
1) Long-term vision “Vision 2030”
We took the opportunity of the 100th anniversary of the Group’s founding to visualize our ideal
for the Group in 2030, ten years from now, and establish "Originality. Acceleration. Global Reach.
Transforming Lives Through the Power of Chemistry." as our long-term vision, “Vision 2030.”
This vision was announced in Integrated Report 2020, published in March 2021. We have now
formulated specific management targets and policy approach.
 Purpose
Under our corporate philosophy, we define our raison d’etre (purpose) as "To continue
contributing to better living environments through chemical technologies." Management targets (2030)
Consolidated net sales: over ¥200.0 billion
Consolidated operating income ratio: 15% or greater
ROE: 10% or greater
Shareholder returns: maintain stable shareholder returns
 Basic policy approach
We will strive to achieve Vision 2030, focusing our value creation on three strengths that theGroup has developed over many years, based on its corporate philosophy.
<Three strengths>“Quality” for safety and security, to contribute to social development, protection of life andenvironmental preservation
Leading-edge “technological development” supported by diverse human resources“Management drive” based on a high awareness of compliance- 22 -

In an increasingly uncertain business environment involving COVID-19, carbon neutrality andrapid digitalization, the Group will contribute to realizing a sustainable society while
simultaneously enhancing corporate value through its business activities.
We will continually promote management initiatives incorporating the perspectives of ESG and
the SDGs and further strengthen the business base. On this firm foundation, we will strive
together as a Group to achieve Vision 2030, based on the policies of the inorganic and organic
chemicals businesses.
 Business policies and key measures
1) Inorganic chemicals businessBusiness policy: Create new value based on the technologies developed for titanium
dioxide products, to support the environment and digital society, andcontribute to realizing a sustainable society.
Key measures: - Diversify the optical characteristics of titanium dioxide to achieve newvalue creation- Contribute to resolving social issues including the spread of ICT and theshift to electric vehicles through functional materials- Reform production structures to achieve both a reduction inenvironmental impact and an increase in production efficiency
2) Organic chemicals businessBusiness policy: Supply unique products that directly enhance customer value across theworld, and support people’s nutrition, health and life to contribute torealizing a sustainable society.
Key measures: - Promote development and commercialization with an awareness of theentire value chain- Refine and evolve proprietary technologies to accelerate value creation
and return to a growth trajectory- Achieve global lowest-cost manufacture and stable customer supply ofmain products
2) New Mid-Term Management Plan (for fiscal 2021-2023) “Vision 2030 Stage I”
 Basic policy
This Mid-Term Management Plan, “Vision 2030 Stage I,” is the first of three stages backcast
from the long-term vision, “Vision 2030”. The basic policy of the plan is to aim to create
sustainable corporate value by promoting stronger management initiatives incorporating theperspectives of ESG and the SDGs.
 Management targets, etc. for fiscal 2023
Consolidated net sales: over ¥125.0 billion
Consolidated operating income ratio: 13% or greater
ROE: 10% or greater
Shareholder returns: Continue to pay stable dividends that reflect consolidated financial results
Fiscal 2020 results

Fiscal 2023 plan

¥101.7 billion¥125.0 billion–

Operating income¥5.1 billion¥16.6 billion

2.2 times

Ordinary income¥5.9 billion¥15.8 billion

1.7 times¥3.3 billion¥12.4 billion

2.7 times

5%

13%

–

4%

10% or greater–

Net sales

Net income attributable toowners of parent
Operating income ratio
ROE

ChangeNote: The Company will apply “Accounting Standard for Revenue Recognition,” from the beginning of the
fiscal year ending March 31, 2022, and these forecasts are based on this Standard. For this reason, no
figure is presented for change in net sales from the fiscal 2020 results to the fiscal 2023 plan.
- 23 -

 Key measures
The key measures to be implemented across the Group and within each business are as follows.
We will review the business plan each fiscal year, and strive to achieve performance targets forthe final fiscal year of the plan.
Group Strengthen sustainable management initiatives incorporating the perspectives of ESG and theSDGs Identify material factors and strengthen initiatives related to each material factor
 Drive work style reform through the promotion of DX and greater operational efficiency
 Continue and strengthen compliance management
 Strengthen risk management
 Expand the top line Strengthen the capacity to create new businesses and products
 Continue initiatives to reform internal structures and attitudes to achieve Vision 2030
 Conduct thorough capital cost management, such as improvement along the whole cash
conversion cycle
Inorganic chemicals business Raise the sales proportion of highly functional, high value-added products
 Implement sales expansion strategies for electronic component materials and electroconductive materials
 Accelerate development of new products to drive further growth Achieve more favorable procurement terms for ore, the main raw material
 Promote cost reduction at the Yokkaichi Plant through waste reduction and better
manufacturing and operating processes Launch a master plan to optimize manufacturing bases
 Create a road map towards reducing greenhouse gas emissions
Organic chemicals business Achieve global lowest-cost manufacturing of our main agrochemical agents and ensure stablesupply, to expand our share of the global market
 Reduce manufacturing costs and expand demand for the next main agrochemical products Develop and commercialize biorational products and embed IPM*
 Implement strategic and innovative sales initiatives, such as the use of multiple agrochemicals
sales companies
 Acquire and maintain agrochemicals registration in countries around the world Expand the business scale by promoting corporate acquisitions and corporate alliances Refine our chemosynthesis technologies and strengthen our traditional foundation
 Expand sales of our veterinary pharmaceuticals around the globe*Integrated pest management- 24 -

2.

Trends in Assets and Income

Item

The 95th
fiscal year
ended
March 31,2018

(Millions of yen, unless otherwise specified)
The 98th
The 96th
The 97th
fiscal year
fiscal year
fiscal year
ended
ended
ended
March 31,
March 31,
March 31,
2021
2019
2020
(Current
fiscal year)
106,441
101,066
101,774
11,144
5,345
5,944

Net sales
108,001
Ordinary income
8,414
Net income attributable to
3,442
8,683
2,359
3,373
owners of parent
Net income per share (Yen)
86.12
217.25
59.03
84.41
Total assets
159,767
168,689
172,437
180,021
Total net assets
67,13775,33576,66979,515
Notes: 1. Net income per share is calculated based on the average number of outstanding
shares during the period, after deducting the number of shares of treasury stock.
2. In the 95th fiscal year, the sales environment improved for titanium dioxide, themain product of the inorganic chemicals business, with a continuation of buoyant
markets overseas against the backdrop of an increasingly tight balance of supply
and demand around the world. At the same time however, a rising trend surfacedin the price of various raw materials, including an intensifying upward movementin the price of titanium ore. Demand for agrochemicals, the main product of theorganic chemicals business, was sluggish overall, with significant differences inregional demand. While demand was strong in North America and Asia due to anincrease in land area cultivated for agricultural crops and the effect of weather
conditions, demand was subdued in South America due to a persistently highdistribution inventory levels in Brazil. As a result, net sales, operating income andordinary income both increased. Net income attributable to owners of parent
declined however, partly due to the recognition within extraordinary losses of areserve for implementation of environmental and safety arrangements, forexpenses related to soil and groundwater contamination and buried waste, etc. at
the Yokkaichi Plant.
3. In the 96th fiscal year, demand for titanium dioxide, the main product of the
inorganic chemicals business, was strong within Japan and overseas. From the
middle of the fiscal year onward however, a sense of uncertainty grew concerning
the outlook for demand and market conditions, due to the impact of a slowdown in
the Chinese economy. There were signs of a recovery in the global shipping value
for agrochemicals, the main product of the organic chemicals business, with an
improvement in the previously subdued market environment in South America. As
a result, net sales declined, but operating income and ordinary income increased.
Net income attributable to owners of parent increased, partly due to the absence of
extraordinary losses recorded in the previous fiscal year, related to the recognitionof a reserve for implementation of environmental and safety arrangements.
4. In the 97th fiscal year, domestic demand for titanium dioxide, the main product of
the inorganic chemicals business, was strong during the first half of the fiscal
year, but showed signs of a downturn after the consumption tax hike. Overseas,
demand declined, primarily in Asia, with the impact of a slowdown in the Chinese
economy. Market conditions trended downward. The recovery continued in the
global shipping value for agrochemicals, the main product of the organic
chemicals business, against the backdrop of strong crop production in Brazil, anagricultural superpower. However, the impact of extraordinary weather events wasobserved in Japan and Europe, the Group’s main markets. As a result, net sales,
operating income, ordinary income and net income attributable to owners ofparent for the fiscal year all declined.
5. Please refer to 1. Business Progress and Results above for details on the 98th
fiscal year.
- 25 -

3. Significant Parent Companies and Subsidiaries, etc.
(1) Relationship with Parent
Not applicable.
(2) Significant Subsidiaries, etc.
1) Significant Subsidiaries
Name
ISK BIOSCIENCES K.K.

Ownership
Ratio (%)

CapitalMain Business¥600 million

100

Agrochemical sales
Management andadministration ofsubsidiaries in the
United States
Management of theEuropean agrochemicals
business; manufactureand sale ofagrochemicals

ISK AMERICASINCORPORATED

US$25,986 thousand

100

ISK BIOSCIENCES
EUROPE N.V.

€7,436 thousand

100

ISHIHARA TECHNO
CORPORATION¥100 million

100

Trading

FUJI TITANIUM
INDUSTRY CO., LTD.

¥1,926 million

100

Manufacture and sale oftitanium dioxide,
functional materials, etc.

ISK ENGINEERINGPARTNERSCORPORATION¥100 million

100

Construction2) Significant Affiliates
Name

Ownership
Ratio (%)

CapitalMain Business

BELCHIM CROP
28
Sale of materials related€4,002 thousand
PROTECTION N.V.
[28]
to agrochemicals
Note: The figure shown in square brackets [ ] in the Ownership Ratio column represents theindirect ownership ratio.
4.

Principal Businesses
Business Segment
Inorganic chemicals business
Organic chemicals business

Other businesses

Details of Business
Manufacture and sale of titanium dioxide, functional
materials, electronics materials, plaster, etc.
Manufacture and sale of herbicides, pesticides,
disinfectants, plant growth regulators, organicintermediates and pharmaceuticals; manufacture and saleof veterinary drugs
Construction, trading, etc.

- 26 -

5. Principal Business Locations(1) The Company
Name
Osaka Head Office
Yokkaichi Plant
Central Research InstituteTokyo Branch
Chubu Branch
Singapore Branch
Sapporo Sales OfficeSendai Sales Office
Fukuoka Sales Office

Location
Osaka City, Osaka Prefecture
Yokkaichi City, Mie Prefecture
Kusatsu City, Shiga Prefecture
Chiyoda-ku, Tokyo
Yokkaichi City, Mie Prefecture
Singapore
Sapporo City, Hokkaido
Sendai City, Miyagi Prefecture
Fukuoka City, Fukuoka Prefecture(2) Subsidiaries
Name
ISK BIOSCIENCES K.K.
ISK AMERICAS INCORPORATEDISK BIOSCIENCES EUROPE N.V.
ISHIHARA TECHNO CORPORATION
FUJI TITANIUM INDUSTRY CO., LTD.
ISK ENGINEERING PARTNERSCORPORATION
6.

7.

Location
Chiyoda-ku, Tokyo
Ohio, United States
Belgium
Osaka City, Osaka Prefecture
Kobe City, Hyogo Prefecture
Yokkaichi City, Mie Prefecture

Employees
Business Segment
Number of Employees
YoY Change
Inorganic chemicals business964+ 55
Organic chemicals business571-5
Other businesses
117- 14
Corporate (common)
91
+3
Total
1,743
+ 39
Note: The number of employees represents the number of active personnel employed.
Corporate (common) employees mainly comprise those employed at theadministration department at the head office, who do not belong to any reportablesegment.
Major Lenders
Lender
Shinsei Bank, Limited
Sumitomo Mitsui Banking Corporation
Development Bank of Japan Inc.
The Norinchukin BankJA Mie Shinren

Balance of Loans (in millions of yen)
10,336
7,501
5,417
4,582
3,461

- 27 -

II. Status of the Company
1.

Shares(1) Total Number of Shares Authorized to be Issued

100,000,000 shares(2) Total Number of Shares Outstanding

40,383,943 shares(including 427,338 shares of treasury stock)27,032 persons(3) Number of Shareholders(4) Major Shareholders (Top10)

Investment to the Company
Number of Shares ofShareholding Ratio
the Company Held(Thousand shares)(%)

Name of Shareholder

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

2,513

6.29

Custody Bank of Japan, Ltd. (trust account)

2,094

5.24

MITSUI & CO., LTD.

2,019

5.05

Toagosei Co., Ltd.

1,722

4.31

BNP PARIBAS SECURITIES SERVICESPARIS/JASDEC/FBB SEC/BELCHIMMANAGEMENT

1,450

3.63

UPL Japan GK

1,170

2.93

Ishihara Sangyo Kaisha Client Stock Ownership
Association

955

2.39

Ishihara Sangyo Kaisha Employee Stock Ownership
Association

809

2.03

INTERACTIVE BROKERS LLC

714

1.79

DFA INTL SMALL CAP VALUE PORTFOLIO

615

1.54

Notes: 1. The shareholding ratio is calculated after deducting treasury stock.
2. Shares held by The Master Trust Bank of Japan, Ltd. (trust account) and Custody
Bank of Japan, Ltd. (trust account) are held in connection with their trust operations.
3. The 1,450 thousand shares of the Company held by BNP PARIBAS SECURITIESSERVICES PARIS/JASDEC/FBB SEC/BELCHIM MANAGEMENT are effectively
owned by Belchim Management N.V.
(5) Other Important Matters Concerning Shares
Not applicable.

2. Stock Acquisition Rights
Not applicable.
- 28 -

3. Company Officers (As of March 31, 2021)(1)

Directors and Audit & Supervisory Board Members
Name

Posts

Responsibilities

Major Other Offices
Concurrently Held

Kenichi Tanaka

Executive Director,
President (Chief
Executive Officer)

Chief Compliance
Officer (CCO)
Chairman ofCompliance
Committee

Teruaki Matsue

Director(Managing Executive
Officer)

Director of Corporate
Administration &Planning
Headquarters

Kiyomitsu Yoshida

Director and Chairman at ISK
BIOSCIENCES
Director
Director of(Managing Executive Biosciences Business CORPORATION
Headquarters
Director and Chairman at ISK
Officer)
BIOSCIENCES EUROPE N.V.

Yasunobu Kawazoe

Director
Director of Finance &(Managing Executive Accounting
Headquarters
Officer)

Hideo Takahashi

Director
Director of Yokkaichi(Managing Executive Plant
Officer)

Masaki Shimojo

Director of Inorganic
Chemicals Sales &Director
Marketing, and(Managing Executive Director of R&D
Officer)
Strategy
Headquarters

Hiroshi Katsumata

Director

Tatsuo Hanazawa

Director

Satoshi Ando

Director and Chairman at ISKAMERICASINCORPORATED

Director and Chairman at
ISHIHARA CORPORATION(U.S.A.)
Chairman at ISK TAIWAN
CO., LTD.

Attorney-at-law
Outside Director (Audit &Supervisory Committee
Member) of TOHO CO., LTD.

Director- 29 -Name

Taizo Kato

Michiyoshi Arata

Yoshitaka Akikuni

Masaaki Harima

Notes:

Posts

Responsibilities

Major Other Offices
Concurrently HeldStanding Audit &Supervisory Board
MemberAudit & Supervisory Board
Member at ISHIHARATECHNO CORPORATION
Audit & Supervisory Board
Member at ISK BIOSCIENCES
K.K.
Audit & Supervisory Board
Member at FUJI TITANIUM
INDUSTRY CO., LTD.

Standing Audit &Supervisory Board
MemberAudit & Supervisory Board
Member at ISHIHARATECHNO CORPORATION
Audit & Supervisory Board
Member at ISKENGINEERING PARTNERSCORPORATION

Standing Audit &Supervisory Board
MemberAudit & Supervisory Board
Member at ISK BIOSCIENCES
K.K.
Audit & Supervisory Board
Member at FUJI TITANIUM
INDUSTRY CO., LTD.
Audit & Supervisory Board
Member at ISKENGINEERING PARTNERSCORPORATION

Audit & Supervisory
Board Member

Attorney-at-law
Outside Director, Toyobo Co.,
Ltd.
Member of Osaka Prefectural
Pollution Review Board
Member of Sakai City Audit
Committee

1. Of the Directors, Mr. Hiroshi Katsumata, Mr. Tatsuo Hanazawa and Mr. Satoshi Ando
are Outside Directors.
2. Of the Audit & Supervisory Board Members, Mr. Yoshitaka Akikuni and Mr.
Masaaki Harima are Outside Audit & Supervisory Board Members.
3. No special-interest relationships exist between the Company and TOHO CO.,LTD., at which Outside Director Mr. Satoshi Ando concurrently serves.
ISK BIOSCIENCES K.K., FUJI TITANIUM INDUSTRY CO., LTD. and ISK
ENGINEERING PARTNERS CORPORATION, at which Outside Audit &Supervisory Board Member Mr. Yoshitaka Akikuni concurrently serves, aresubsidiaries of the Company.
No special-interest relationships exist between the Company and Toyobo Co.,
Ltd., at which Outside Audit & Supervisory Board Member Mr. Masaaki Harima
concurrently serves.
4. Changes in Directors and Audit & Supervisory Board Members during thecurrent fiscal year were as follows:- 30 -

1) Mr. Masaki Shimojo and Mr. Satoshi Ando were newly elected and appointed tothe post of Director at the 97th Ordinary General Meeting of Shareholders heldon June 25, 2020.
2) Mr. Yasuhiro Koike was elected as a substitute Audit & Supervisory Board
Member at the 97th Ordinary General Meeting of Shareholders held on June25, 2020.
5. Outside Directors Mr. Hiroshi Katsumata, Mr. Tatsuo Hanazawa and Mr. SatoshiAndo, and Outside Audit & Supervisory Board Members, Mr. Yoshitaka Akikuni
and Mr. Masaaki Harima have been registered with the TSE as Independent
Officers as stipulated by TSE’s regulations.

- 31 -

(2) Compensation, etc. for Directors and Audit & Supervisory Board Members
Total Amount of Compensation, etc.
Total Amount ofby type (million yen)
Post
Compensation,
Basic
Performance-linked
etc. (million yen)Compensation
Compensation
Directors
202
174
27
[of which Outside
[23]
[23]
[0]
Directors]
Audit & Supervisory
Board Members
66
66
0[of which Outside
[30]
[30]
[0]
Audit & Supervisory
Board Members)
Total
269
241
27

Number of
Eligible
Recipients
9
[3]
4
[2]

Note: Decision policy regarding the amount and calculation method of compensation, etc. forindividual Directors
1) Decision policy regarding the amount and calculation method of compensation, etc.
for individual Directors
The standards for basic compensation and performance-linked compensation are
based on rank in accordance with the Officers Compensation Regulations decided by
the Board of Directors. Basic compensation is paid based on the Officers
Compensation Regulations, in amounts corresponding to the roles andresponsibilities of Directors and Executive Officers.
Compensation for Audit & Supervisory Board Members is determined throughdiscussion between Audit & Supervisory Board Members.
The maximum amount of compensation for Directors was determined as 460 million
yen per annum by the 82nd Ordinary General Meeting of Shareholders held on June29, 2005. There were 12 incumbent Directors at the conclusion of that Ordinary
General Meeting of Shareholders. The maximum amount of compensation for Audit& Supervisory Board Members was determined as 90 million yen per annum at the
71st Ordinary General Meeting of Shareholders held on June 29, 1994. There werefour incumbent Audit & Supervisory Board Members at the conclusion of that
Ordinary General Meeting of Shareholders. Only basic compensation is paid to
Outside Directors and Audit & Supervisory Board Members.
2) Details of performance indicators, the decision policy for calculating the amount or
number for performance-linked compensation, etc.
Under the Officers Compensation Regulations decided by the Board of Directors,
performance-linked compensation comprises annual performance-linked
compensation aimed at ensuring objectivity and linkage with the Company’s
financial results, and long-term performance-linked compensation. The amount ofannual performance-linked compensation is calculated and determined upon
comprehensive consideration of factors including the results of corporate activities,
such as net income attributable to owners of parent, and individual performance
evaluation. Long-term performance-linked compensation is calculated based on the
degree to which the net income targets under the Mid-Term Management Plan havebeen achieved.
(Targets and results for indicators associated with performance-linked compensation)
Consolidated operating indicator targets under the Mid-Term Management Plan
[Fiscal 2018]
Net income attributable to owners of parent: 1.8 billion yen (result: 8.6 billion yen)
[Fiscal 2019]
Net income attributable to owners of parent: 4.9 billion yen (result: 2.3 billion yen)
[Fiscal 2020]
Net income attributable to owners of parent: 8.1 billion yen (result: 3.3 billion yen)3) Delegation of authority concerning the determination of compensation, etc. forindividual Directors- 32 -

13

The Company has delegated authority for the determination of compensation, etc.
for individual Directors to Representative Director Mr. Kenichi Tanaka.
The reason for delegating this authority is that the Representative Director is mostaptly suited to evaluating each Director based on his or her rank, and in accordancewith his or her responsibilities and roles, etc., while maintaining a comprehensive
view of the Company as a whole.
The Board of Directors places specific compensation amounts before theCompensation Committee, which is composed of Independent Outside Directors,
Independent Outside Audit & Supervisory Board Members and Audit & Supervisory
Board Members, for consideration. The Compensation Committee provides advice
and recommendations, based on the information from officers’ compensation
surveys carried out by third party firms, and each member’s insight, before thedecision is made, in order to ensure that the Representative Director exercises his
authority appropriately. The Board of Directors deems this method to be inaccordance with the decision policy set forth above.
4) Details of non-monetary compensation, etc., and the decision policy for calculating
the amount or number for non-monetary compensation, etc. or the calculation
method thereof
The Company has not introduced non-monetary compensation, etc.
5) Proportional amounts of compensation, etc. for individual Directors
The proportion of basic compensation and performance-linked compensation, etc. isdeliberated by the Compensation Committee in accordance with the decision policy,
taking into account each year’s financial results, and determined by the Board of
Directors, finalized by the Representative Director.
6) Decision policy on the timing and conditions for paying compensation, etc. to
Directors
Under the Officers Compensation Regulations decided by the Board of Directors,
basic compensation is calculated per calendar month, and the amount for each monthis paid on the same day as salaries for employees. Performance-linked
compensation, etc. is paid on the same day as summer bonuses for employees.
(3)

Summary of Agreement on Limitation of Liability
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulatethat the Company may enter into an agreement with an Outside Director or Outside Audit &Supervisory Board Member that sets a limit on the liability for damages under Article 423,
Paragraph 1 of the Companies Act. The limitation of liability, provided the Outside Director or
Outside Audit & Supervisory Board Member acted in good faith and without gross negligence,shall be the larger of an amount determined in advance or an amount ordered by decree, either ofwhich shall be equal to or more than 10 million yen. Accordingly, the Company has entered into
liability limitation agreements with all Outside Directors and Outside Audit & Supervisory Board
Members.

(4)

Summary of the Directors and Officers Liability Insurance Contract
The Company has concluded a directors and officers liability insurance contract with an insurancecompany, in accordance with the provisions of Article 430-3, Paragraph 1 of the Companies Act.
1) Insured parties
Directors, Audit & Supervisory Board Members and Executive Officers of the Company and its
affiliates, and employees in management positions who may be subject to litigation at affiliates.
2) Summary of the insurance contract
The insurance covers legal damages and litigation expenses in the event that a claim fordamages is made against the insured during the insurance period due to incorrect actions(including errors of omission) committed by the insured in his/her capacity as such. However,individual officers, etc. are not covered by the insurance for damages arising from criminal acts
such as offering or receiving bribes, or intentional unlawful acts, to ensure that the proper
execution of duties by officers, etc. is not affected. The Company is fully responsible for paying
the insurance premium.

- 33 -

(5) Outside Directors and Outside Audit & Supervisory Board Members
1) Main activities of Outside Directors and Outside Audit & Supervisory Board Members
Post

Director

Director

DirectorStanding Audit &Supervisory Board
MemberAudit &
Supervisory Board
MemberName

Hiroshi Katsumata

Main Activities
Mr. Hiroshi Katsumata attended all 14 meetingsof the Board of Directors held during the current
fiscal year. He expressed opinions as necessary,with an external perspective from an objective andneutral standpoint, utilizing his diverse experiencein public administration, as well as extensive
experience and insight as a company manager of
an industrial gas business operator.

Tatsuo Hanazawa

Mr. Tatsuo Hanazawa attended all 14 meetings ofthe Board of Directors held during the current
fiscal year. He expressed opinions as necessary,with an external perspective from an objective andneutral standpoint, utilizing his diverse experienceand knowledge in public administration,
especially of agricultural policies both inside andoutside Japan.

Satoshi Ando

Mr. Satoshi Ando attended all 9 meetings of theBoard of Directors held during the current fiscal
year after he was appointed in June 2020. He
expressed opinions as necessary with an external
perspective from an objective and neutral
standpoint, mainly utilizing professional
knowledge, cultivated as an attorney-at-law andabundant experience related to corporate legal
affairs.

Yoshitaka Akikuni

Mr. Yoshitaka Akikuni attended all 14 meetingsof the Board of Directors and all 13 meetings of
the Audit & Supervisory Board held during thecurrent fiscal year. He expressed opinions asnecessary, with an external perspective from an
objective and neutral standpoint, mainly utilizing
wide-ranging knowledge cultivated during his
service at financial institutions, and experience asa corporate auditor at a chemical businesscompany, etc.

Masaaki Harima

Mr. Masaaki Harima attended all 14 meetings ofthe Board of Directors and all 13 meetings of the
Audit & Supervisory Board held during thecurrent fiscal year. He expressed opinions asnecessary with an external perspective from an
objective and neutral standpoint, utilizing
professional knowledge, cultivated mainly as an
attorney-at-law and abundant experience related
to corporate legal affairs.

2) Details of situations where decisions on the Company’s business policy or other matters werechanged due to the opinions of Outside Directors or Outside Audit & Supervisory Board
Members
Not applicable.
- 34 -

3) Any incident or scandal in business execution at the Company during the fiscal year that
violated laws, regulation, or the Articles of Incorporation, or were otherwise improper
Not applicable.
4) Duties performed in relation to expected roles of Outside Directors during the fiscal year
Outside Directors Mr. Hiroshi Katsumata, Mr. Tatsuo Hanazawa and Mr. Satoshi Ando, in
addition to attending the Board of Directors meetings, attended all 13 meetings of the Executive
Management Committee, a body established under the Board of Directors to enable swifter
decision-making by the Board of Directors and more efficiently supervise and evaluate theexecution status of important items of business, held during the fiscal year (Mr. Satoshi Andoattended all 9 meetings held after his appointment). At these meetings, they expressed theiropinions without reserve on overall important matters concerning management of the Company
and important items of business execution, based on their extensive experience and insight.
5) Any opinions of Outside Directors or Outside Audit & Supervisory Board Members regarding
matters related to Outside Directors or Outside Audit & Supervisory Board Members
Not applicable.

- 35 -

4.

Accounting Auditor(1)

Accounting Auditor’s Name
Ernst & Young ShinNihon LLC(2)Accounting Auditor’s Compensation, etc.
Accounting Auditor’s compensation, etc., for the fiscal year ended March 31, 2021:
70 million yen
Total cash and other proprietary benefits payable by the Company and its subsidiaries
to the Accounting Auditor:
85 million yen
Notes: 1. Under the audit agreement with the Accounting Auditor, audit compensation is notdistinguished between that pertaining to audits based on the Companies Act, andaudits based on the Financial Instruments and Exchange Act, which are effectively
inseparable. The amount shown above therefore represents the total, undivided
amount.
2. ISK BIOSCIENCES EUROPE N.V., a significant subsidiary of the Company, is
audited by Ernst & Young, Reviseurs d’Entreprises.
3. The Audit & Supervisory Board has given its consent to the compensation, etc.
for the Accounting Auditor in accordance with Article 399, Paragraph 1 of theCompanies Act, after confirming the audit plan, status of audit execution, basis
for calculating the expected compensation, etc., based on the Practical
Guidelines for Coordination with Accounting Auditors published by the Japan
Audit & Supervisory Board Members Association.

(3)

Policy on Determination of Dismissal or Non-reappointment of Accounting Auditor
Where deemed necessary, due to the incapacity of the Accounting Auditor to execute its
duties or other reason, the Audit & Supervisory Board shall determine the content of a
proposal on the dismissal or non-reappointment of the Accounting Auditor, to be submitted
to the General Meeting of Shareholders.
Moreover, in cases corresponding to any of the items set forth in Article 340, Paragraph 1 of theCompanies Act, the Audit & Supervisory Board shall dismiss the Accounting Auditor
through the unanimous consent of all its Members. In this event, an Audit & Supervisory
Board Member selected by the Audit & Supervisory Board shall report on the dismissal of
the Accounting Auditor, and the reason for the dismissal, at the first General Meeting of
Shareholders held after the dismissal.

- 36 -

5.

Systems to Ensure the Proper Business Operation of the Corporate Group
Composed of the Company and Its Subsidiaries, Including Systems to Ensurethat Directors Execute Duties in Line with Relevant Laws, Regulations and the
Articles of Incorporation, and Status of Their Operation
The Company’s Board of Directors has resolved on the following basic policy regarding systems toensure proper business operation of the corporate group composed of the Company and its subsidiaries(referred to hereinafter as the Group), including systems to ensure that Directors execute duties in linewith laws, regulations and the Articles of Incorporation.

(1)

Systems to Ensure that the Execution of Duties by Directors and Employees Complies with
Laws, Regulations and the Articles of Incorporation
1) The Company has adopted a management structure that places priority on compliance withlaws, rules and societal norms.
2) The Company has established the ISK Group Code of Conduct, which stresses the importanceof compliance activities, and makes sure that Directors and employees follow them strictly.
3) The Company has established a Compliance Committee, headed by the Director in charge ofCompliance. This committee creates and implements plans to develop and maintain thecompliance structure.
4) Company policy dictates that should it be discovered that any Director or employee of theCompany has acted illegally, transgressed the Company’s Articles of Incorporation, or acted
in a way that raises the risk of a legal transgression, the incident must be reported
immediately. Furthermore, all records of the reports and investigation are to be kept strictly
confidential to ensure that those who report such incidents are not subject to repercussions.
5) The Company has established an Office of Internal Audit to conduct regular audits, andwhich reports directly to the Executive Director, President.

(2)

Recording and Managing Information Regarding the Activities of Directors
The Company maintains written records of the minutes of Board of Directors meetings,
proposals submitted for consideration, and other important documents used in the course of
Directors' duties. These documents are stored and managed in a way that corresponds to thelegal regulations governing official documents, as well as all internal rules and regulations.

(3)

Rules and Structures Intended to Manage Risk of Loss
1) A set of Risk Management Regulations has been established to express the Company's basic
stance on risk management and to help guard against the risk of unexpected losses.
2) The Company seeks to identify the various types of risk that emerge in the course of normal
business activities, taking steps to ensure that each sector of business operations is aware ofrisk factors that may affect them, and takes steps to manage such risks.
3) When events occur that could have an important impact on the Company's management andbusiness activities, the Corporate Risk Management Committee takes action under the Risk
Management Regulations, and assumes control of the operating divisions in order tominimize and address problems.

(4)

Structures to Ensure That the Duties of Directors Are Executed Efficiently
1) The Board of Directors meets regularly, a minimum of once a month, to make decisions onimportant issues that affect the Company, and to oversee the activities of its Directors. In thecase of priority issues that relate to management and business execution, the Executive
Management Committee, made up of Board members who are associated with the issue,
discusses it first, and then reports to the entire Board for a final decision.
2) The Company establishes clear and specific numerical targets for achievement, in an effort toimprove management efficiency.
3) The Board of Directors allocates duties and work responsibilities to individual Direc tors, andeach Director reports back to the Board of Directors regarding progress in completing theallocated business tasks.

- 37 -

(5)Measures to Ensure Proper Business Operation of the Group1) The Company ensures proper group management based on regulations established concerning
the basic policies for the execution of its subsidiaries and affiliates’ business activities, andfor the various work processes concerning management of subsidiaries and affiliates.
2) Subsidiaries report regularly to the Company on important information such as businessperformance and financial condition, based on the aforementioned regulations.
3) Subsidiaries guard against the risk of unexpected losses in accordance with the Risk
Management Regulations established by the Company, and immediately report to theCompany, endeavor to contain and resolve the situation in the case of an emergency.
4) Subsidiaries comply with laws, rules and societal norms, in accordance with the ISK Group
Code of Conduct established by the Company. The Company's internal whistleblower system
is also applicable to subsidiaries.

(6)

Employees Assigned as Requested to Assist the Duties of Audit & Supervisory Board
Members, Measures to Ensure the Independence of These Employees from the Influence of
Directors, and Measures to Ensure the Effectiveness of Directions Given to These Employees
1) Audit & Supervisory Board Members may request that the Company assign personnel toassist them in carrying out their duties. When this need arises, Directors cooperate with Audit& Supervisory Board Members to select individuals who are able to provide assistance.
2) When Audit & Supervisory Board Members ask to have employees assigned to assist with
their activities, the views of the Audit & Supervisory Board are given top priority inselecting, transferring and evaluating such employees. This is intended as a way to ensurethat the employees can act independently, without influence from Directors.
3) Employees who assist Audit & Supervisory Board Members in carrying out their duties do
not work concurrently in any other section, and must only follow the directions and orders of
the Audit & Supervisory Board Members.

(7)

Structure for Reporting Information to Audit & Supervisory Board Members, Including
Reports Provided by Directors and Employees of the Group, and Structures to Ensure That
the Person Reporting Information Is Not Disadvantaged as a Result
1) Audit & Supervisory Board Members of the Company attend meetings of the Board of
Directors and the Executive Management Committee, as well as other important company
meetings. They are also provided with access to documents regarding all important proposals
and resolutions made by management personnel.
2) Directors and employees of the Company are required to provide necessary reports andinformation to Audit & Supervisory Board Members, as stipulated in the Company’s internal
regulations regarding reporting to Audit & Supervisory Board and its members.
3) Directors, Audit & Supervisory Board Members and employees of subsidiaries are required toprovide necessary reports and information to the Company’s Audit & Supervisory Board
Members as stipulated in the Company’s internal regulations regarding reporting to Audit &Supervisory Board and its members.
4) The Company prohibits any disadvantageous treatment of its Directors or employees, orDirectors, Audit & Supervisory Board Members or employees of subsidiaries, as a result ofreporting to the Company’s Audit & Supervisory Board Members. This information is madeknown broadly among the Group’s Directors, Audit & Supervisory Board Members andemployees.

(8)

Policy on the Treatment of Expenses and Liabilities Arising from the Execution of Duties by
Audit & Supervisory Board Members, Including Processes for Prepaying or Reimbursing
Such Expenses
Should the Company receive a prepayment or similar request based on Article 388 of theCompanies Act for expenses incurred by an Audit & Supervisory Board Member in theexecution of his/her duties, the section responsible examines the request and, except where
deemed unnecessary for the execution of duties by the Audit & Supervisory Board Member,promptly processes the relevant expenses or liabilities.

- 38 -

(9)Structures to Ensure That the Duties of Audit & Supervisory Board Members Are Executed
Effectively
1) The Executive Director, President holds regular meetings with Audit & Supervisory Board
Members in order to exchange opinions regarding the improvement of the audit environment
for Audit & Supervisory Board Members, and promote mutual understanding.
2) To ensure the effectiveness of auditing activities, Directors are responsible for ensuring that
there is close cooperation between Audit & Supervisory Board Members and the Office ofInternal Audit.

(10) Structures to Ensure the Reliability of Financial Reporting Activities
In order to ensure the reliability of financial reporting, the Company and its subsidiaries andaffiliates have established a structure to operate appropriately, and to improve and evaluate
internal controls governing the preparation of financial reports, in accordance with the
Financial Instruments and Exchange Act and other relevant laws and regulations.
(11) Basic Stance on Measures to Prevent Interaction with “Antisocial Groups”
1) The Company strictly prohibits any activity or interaction with “antisocial groups” which
may threaten public order or present a danger to the general public. The Company shall be
resolute in avoiding any such contact, and will under no circumstances give in to
unreasonable demands or pressure from any such group.
2) In order to ensure that no such relationships or activities arise, a section of the General
Affairs Division has been assigned specifically to cooperate with police, corporate lawyers
and other outside organizations to combat the influence of corporate racketeers. This division
will collect relevant information on a daily basis and establish a system to deal with
unexpected incidents involving such groups.
[Overview of the Status of Operation of Systems to Ensure Proper Business Operations]
Overview of the status of operation in the current fiscal year is as follows.
(1) Compliance
1) The Company holds biannual meetings of its Compliance Committee, to confirm and discussmatters such as the compliance implementation structure and the status of complianceeducation, in accordance with the Company’s corporate philosophy.
2) The ISK Group Code of Conduct requires that any person who discovers an actual or possible
violation of compliance by an organization member, where resolution or improvement isdifficult through the usual chain of command, must report this through the Company’s
whistleblower system.
(2) Execution of Duties by Directors
1) The Board of Directors meets each month as a rule, and holds extraordinary meetings as
required, based on the Company’s Company Rules and Board of Directors Rules. In addition,
the Board of Directors deliberates and passes resolutions on matters concerning management
policy and important business execution, after these have first been thoroughly considered by
the Executive Management Committee.
2) The Company establishes a group management plan to serve as a goal, clarifies the measuresnecessary to achieve this goal, and monitors their progress through the Board of Directors.
3) Important documents concerning the execution of duties by Directors, such as the minutes ofBoard of Directors meetings, are properly stored and managed in a way that corresponds tolegal regulations and the Company’s internal rules such as the Document Management
Regulations.
(3)

Risk Management Structure1) The Company engages in measures to prevent the manifestation of risk, including receiving
regular reports from the departments responsible for business execution, and the Company’s
subsidiaries and affiliates, regarding risks inherent in carrying out business activities, andcountermeasures taken, based on the Risk Management Regulations.
2) The Company implements regular training sessions in anticipation of disasters that would
materially impact its business activities.
- 39 -

(4)Group Management Structure1) The Company ensures a proper group management structure, including the establishment of asystem to receive advance applications or reports concerning the execution of importantduties from subsidiaries that fulfill certain criteria, based on regulations establishedconcerning the basic policies for the execution of its subsidiaries and affiliates’ businessactivities.
2) The Company implements audits of its subsidiaries and affiliates as necessary, based on theInternal Audit Regulations.

(5)

Execution of Duties by Audit & Supervisory Board Members
1) Audit & Supervisory Board Members attend important meetings, including meetings of theBoard of Directors and the Executive Management Committee, comprehend important
decision-making processes, and the status of the execution of duties, request explanations
from Directors or others as necessary, and express opinions.
2) Audit & Supervisory Board Members hold regular meetings with the Executive Director,
President in order to exchange opinions regarding matters such as issues to be addressed, andpromote mutual understanding. Moreover, in the course of their audit duties, Audit &Supervisory Board Members coordinate with the Office of Internal Audit, including holding
regular meetings, in order to implement organized and effective audits.

- 40 -

6.

Policy Regarding Decisions on Dividends of Surplus, etc.
One of the most important management policies of the Company is to return profits to ourshareholders while improving the Company’s corporate value. The Company’s basic principle fordividends is to continue to implement stable dividend distribution according to our businessperformance, taking into comprehensive consideration the business trends, financial condition, andneed to enhance our internal reserve for business expansion into the future.
Based on the above policy, the Company requests the General Meeting of Shareholders to resolve on a
year-end dividend of 18 yen per share for the current fiscal year.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Reference:
Amounts and numbers of shares presented in this business report have been rounded down to thenearest unit, and percentages have been rounded off to the nearest unit.

- 41 -

Consolidated Balance Sheet(As of March 31, 2021)
Description
ASSETS
Current assets
Cash and deposits
Trade receivables
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful receivables

Amount[180,021]
117,003
25,941
34,23531,1805,040
18,253
3,456(1,104)Non-current assets
Property, plant and equipment
Buildings and structures
Machinery and equipment
Land
Leased assets
Construction in progress
Other
Intangible assets
Leased assets
Other
Investments and other assets
Investments in securities
Deferred tax assets
Asset for retirement benefits
Other
Allowance for doubtful receivables

63,017
47,107
14,67420,099
5,356
820
5,319
837
551
3
547
15,358
6,187
8,547
10
698
(84)

(Millions of yen)AmountLIABILITIES[100,506]
Current liabilities
42,203
Trade payables
14,476
Short-term bank loans
8,100
Current portion of long-term bank loans
8,323
Current portion of bonds
1,118
Lease obligations
403
Accrued income taxes
614
Accrued expenses
4,419
Accrued bonuses for employees
641
Reserve for sales returns
21
Reserve for implementation ofenvironmental and safety82
arrangements
Provision for loss on withdrawal
193
from business
Other
3,807
Description

Long-term liabilities
Bonds
Long-term bank loans
Lease obligations
Reserve for implementation ofenvironmental and safety
arrangements
Provision for maintenance
Provision for loss on withdrawal
from businessLiability for retirement benefits
Asset retirement obligations
Liabilities from application of equity
methodOther

NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive
income (loss)
Net unrealized holding gain (loss)
on securities
Translation adjustments
Retirement benefits liability
adjustments
Total assets
180,021
Total liabilities and net assets
Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 42 -

58,302
5,017
33,130
491
1,741
140
86
12,693
552
451
3,997
[79,515]
81,18943,42010,627
27,872(730)(1,674)(308)(1,286)(78)
180,021

Consolidated Statement of Income(April 1, 2020 - March 31, 2021)(Millions of yen)
Description

AmountNet sales

101,774

Cost of sales

73,151Gross profit

28,622

Selling, general and administrative expenses

23,448Operating income

5,173

Non-operating income
Interest income

26

Dividend income

262

Equity in earnings of affiliates

38

Foreign exchange gains

597

Reversal of allowance for doubtfulreceivables
Gain on sales of raw materials

457
155

Other

263

1,802

Non-operating expenses
Interest expense

537

Financial fee

273

Other

220

Ordinary income

1,032
5,944

Extraordinary losses
Loss on disposal of non-current assets
Loss on impairment
Loss on withdrawal from business
Income before income taxes
Income taxes – current
Income taxes – deferred
Net income
Net income attributable to owners of parent

677
421
907
819
(254)

Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 43 -

2,006
3,938
564
3,373
3,373

Consolidated Statement of Changes in Net Assets(April 1, 2020 - March 31, 2021)(Millions of yen)
Shareholders’ equity

Balance at April 1, 2020

Commonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders'equity43,42010,62725,298(727)

78,618

–

–

(799)

–

(799)

–

–

3,373

–

3,373

–

–

–

(3)

(3)

–

–

–

–

–

–

–

2,573

(3)

2,570

43,42010,627

27,872(730)

81,189Changes of items during
periodDividends of surplus
Net income
attributable to ownersof parent for theperiodAcquisition oftreasury stock
Other changes
Total changes of items
during period
Balance at March 31,
2021- 44 -

Accumulated other comprehensive income (loss)
Net unrealized
holding gain Translation(loss) on
adjustments
securities
Balance at April 1,
2020

Retirement
benefits
liability
adjustments

Total accumulated
Total net assets
othercomprehensive
income (loss)(429)(1,216)(302)(1,948)76,669Dividends of surplus

–

–

–

–

(799)

Net income
attributable to ownersof parent for theperiod

–

–

–

–

3,373

Acquisition oftreasury stock

–

–

–

–

(3)

Other changes

120

(70)

223

274

274

Total changes of items
during period

120

(70)

223

274

2,845

Balance at March 31,
2021

(308)

(1,286)(78)(1,674)79,515

Changes of items
during period

Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 45 -

Non-consolidated Balance Sheet(As of March 31, 2021)
Description
ASSETS
Current assets
Cash and deposits
Notes receivable – trade
Accounts receivable – trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Advance payments to suppliers
Prepaid expenses
Short-term loans receivable
Other
Allowance for doubtful receivables

Amount[155,177]
96,59818,4982,403
35,027
23,134
3,617
12,068
1,025
213
968
899
(1,260)Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress
Intangible assets
SoftwareLeased assets
Other
Investments and other assets
Investments in securities
Shares of subsidiaries and affiliates
Long-term loans receivable from employees
Long-term prepaid expenses
Deferred tax assets
Other
Allowance for doubtful receivables

58,57936,895
6,414
4,311
15,343
32
591
4,265
674
5,262
492
480
3
8
21,1903,476
10,192
73
255
7,019
255
(81)

(Millions of yen)
Description
AmountLIABILITIES[86,475]
Current liabilities
38,515
Notes payable – trade
220
Accounts payable – trade
9,806
Short-term bank loans
7,680
Current portion of long-term bank loans
7,335
Current portion of bonds
1,118
Lease obligations
350
Accrued income taxes
384
Accounts payable - other
4,218
Accrued expenses
2,932
Deposits received
2,552
Accrued bonuses for employees
444
Reserve for implementation ofenvironmental and safety82
arrangements
Provision for loss on withdrawal
193
from business
Other
1,195
Long-term liabilities
Bonds
Long-term bank loans
Lease obligations
Long-term deposits received
Provision for retirement benefits
Reserve for implementation ofenvironmental and safety
arrangements
Provision for maintenance
Provision for loss on withdrawal
from business
Asset retirement obligations
Other

NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forward
Treasury stock
Valuation and translation adjustments
Net unrealized holding gain (loss)
on securities
Total assets
155,177
Total liabilities and net assets
Note: Figures presented in the financial statements are rounded down to the nearest million yen.
- 46 -

47,9595,017
26,665384
710
11,367
1,741
140
86
552
1,292
[68,702]
69,16743,420
9,796
9,155
641
16,184397
15,786
15,786
(234)
(464)
(464)
155,177

Non-consolidated Statement of Income(April 1, 2020 - March 31, 2021)(Millions of yen)
Description

AmountNet sales

83,158

Cost of sales

60,965Gross profit

22,193

Selling, general and administrative expenses

17,865

Operating income

4,327

Non-operating income
Interest income

18

Dividend income

953

Foreign exchange gains

759

Gain on sales of raw materials

155

Other

679

2,567

Non-operating expenses
Interest expenses

487

Financial fee

255

Other

136

Ordinary income
Extraordinary losses
Loss on disposal of non-current assets
Loss on impairment
Loss on withdrawal from business
Income before income taxes
Income taxes – current
Income taxes – deferred
Net income

878
6,016

617
106
907
407
146

Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 47 -

1,631
4,384
553
3,831

Non-consolidated Statement of Changes in Net Assets(April 1, 2020 - March 31, 2021)(Millions of yen)
Shareholders’ equity
Commonstock
Balance at April 1,
2020
Changes of items
during period
Dividends ofsurplus
Provision oflegal retained
earnings due todividends ofsurplusCapital surplus
Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus43,420

9,155

641

9,796

–

–

–

–

–

–

–

–

Net income

–

–

–

–

Acquisition oftreasury stock

–

–

–

–

Other changes

–

–

–

–

Total changes of
items during period
Balance at March
31, 2021

–

–

–

–

43,420

9,155

641

9,796

- 48 -

Shareholders’ equity
Retained earnings
Legalretainedearnings
Balance at April 1,
2020
Changes of items
during period
Dividends ofsurplus
Provision oflegal retained
earnings due todividends ofsurplus

Other retained
earnings
Retained earnings
brought forward

Total
retainedearnings

Treasury
stock

Total
shareholders’equity317

12,834

13,152(231)

66,138

–

(799)

(799)

–

(799)

79

(79)

–

–

–

Net income

–

3,831

3,831

–

3,831

Acquisition oftreasury stock

–

–

–

(3)

(3)

Other changes

–

–

–

–

–

79

2,952

3,032

(3)

3,028

397

15,786

16,184(234)

69,167

Total changes of
items during period
Balance at March
31, 2021- 49 -

Valuation and translation adjustments
Net unrealized Total valuation and Total net assets
holding gain (loss)translation
on securities
adjustments
Balance at April 1,
2020

(491)

(491)

65,647

Dividends ofsurplus

–

–

(799)

Provision of legal
retained earnings
due to dividends ofsurplus–––

Net income

–

–

3,831

Acquisition oftreasury stock

–

–

(3)

Other changes

26

26

26

Total changes of items
during period

26

26

3,055

Balance at March 31,
2021

(464)

(464)

68,702

Changes of items
during period

Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 50 -

Accounting Auditor’s Audit Report on the Consolidated Financial Statements (duplicated copy)

Independent Auditor’s Report(English Translation)
May 14, 2021
To the Board of Directors
ISHIHARA SANGYO KAISHA, LTD.
Ernst & Young ShinNihon LLC
Osaka, Japan
Masahiko Inoue
Designated Engagement Partner
Certified Public Accountant
Daiji Tokuno,
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated
statement of income, the consolidated statement of changes in net assets, and notes to consolidated
financial statements of ISHIHARA SANGYO KAISHA, LTD. and its consolidated subsidiaries (the“Group”) applicable to the fiscal year from April 1, 2020 to March 31, 2021.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position and results of operations of the Group applicable to the fiscal
year ended March 31, 2021, in accordance with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Consolidated Financial Statements section of our report. We are independent of the Group inaccordance with the ethical requirements in Japan that are relevant to our audit of the consolidated
financial statements, 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 toprovide a basis for our opinion.
Responsibilities of Management, the Audit & Supervisory Board and Its Members for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for establishment
and operation of such internal control as management determines is necessary to enable the preparationof consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible to evaluate whether it isappropriate to prepare the consolidated financial statements as a going concern. As required byaccounting principles generally accepted in Japan, if it is necessary for the Group to disclose mattersrelating to a going concern, the management has the responsibility to disclose such information.
The Audit & Supervisory Board and its members are responsible for overseeing performance of directors
in developing and operating the Group’s financial reporting process.

- 51 -

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance, based on the audit we conducted, about whether
the consolidated financial statements as a whole are free from material misstatement, whether due tofraud or error, and to issue an auditor’s report that includes our opinion regarding the consolidated
financial statements from an independent viewpoint. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain 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. Design and perform audit procedures responsive to those risks. The
selection and application of audit procedures are at our discretion. Obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
 Consider internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances for our risk assessments, while the purpose of the audit of the consolidated
financial statements is not expressing an opinion on the effectiveness of the Group’s internal control.
 Evaluate the appropriateness of accounting policies and accounting methods adopted by the
management, the reasonableness of accounting estimates made by the management, and theappropriateness of the related notes to the consolidated financial statements.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty regarding the going concern assumption exists, we are
required to draw attention in our auditor’s report that the related notes to the consolidated financial
statements should be considered. Or, if any note to the consolidated financial statements regarding
significant uncertainty is inadequate, we are required to express opinions with exclusions for 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 Group to cease tocontinue as a going concern.
 Evaluate whether the presentation of the consolidated financial statements and notes comply with thecorporate accounting principles generally accepted in Japan, and whether the overall presentation,
structure and contents of the consolidated financial statements, including the related notes, accurately
represent the underlying transactions and 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 and its members regarding the planned scope andtiming 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 audit standards.
We also report to the Audit & Supervisory Board and its members that we have complied with the ethicalrequirements in Japan regarding independence that are relevant to our audit of the financial statements,
matters that are reasonably considered to affect the independence of us, and where applicable, related
safeguards taken to remove or reduce factors that could hinder our independence.
Interest
Our firm and its designated engagement partners do not have any interest in the Company and its
consolidated subsidiaries which is required to be disclosed pursuant to the provisions of the Certified
Public Accountants Act of Japan.

- 52 -

Accounting Auditor’s Audit Report on the Non-consolidated Financial Statements (duplicated copy)

Independent Auditor’s Report(English Translation)
May 14, 2021
To the Board of Directors
ISHIHARA SANGYO KAISHA, LTD.
Ernst & Young ShinNihon LLC
Osaka, Japan
Masahiko Inoue
Designated Engagement Partner
Certified Public Accountant
Daiji Tokuno,
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement ofchanges in net assets, and notes to financial statements, and the supporting schedules thereto (“financial
statements, etc.") of ISHIHARA SANGYO KAISHA, LTD. (the “Company”) applicable to the 98th
fiscal year from April 1, 2020 to March 31, 2021.
In our opinion, the accompanying financial statements, etc. present fairly, in all material respects, thefinancial position and results of operations of the Company applicable to the fiscal year ended March 31,
2021, in accordance with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Financial Statements, etc. section of our report. We are independent of the Company in accordancewith the ethical requirements in Japan that are relevant to our audit of the financial statements, and wehave fulfilled our other ethical responsibilities in accordance with these requirements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management, the Audit & Supervisory Board and Its Members for the Financial
Statements, etc.
Management is responsible for the preparation and fair presentation of the financial statements, etc. inaccordance with accounting principles generally accepted in Japan, and for establishment and operationof such internal control as management determines is necessary to enable the preparation of financial
statements, etc. that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, etc., management is responsible to evaluate whether it isappropriate to prepare the financial statements, etc. as a going concern. As required by accounting
principles generally accepted in Japan, if it is necessary for the Company to disclose matters relating to agoing concern, the management has the responsibility to disclose such information.
The Audit & Supervisory Board and its members are responsible for overseeing performance of directors
in developing and operating the Company’s financial reporting process.

- 53 -

Auditor’s Responsibilities for the Audit of the Financial Statements, etc.
Our responsibilities are to obtain reasonable assurance, based on the audit we conducted, about whether
the financial statements, etc. as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion regarding the financial statements, etc.
from an independent viewpoint. 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 economic
decisions of users taken on the basis of these financial statements, etc.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, etc., whether due tofraud or error. Design and perform audit procedures responsive to those risks. The selection andapplication of audit procedures are at our discretion. Obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
Consider internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances for our risk assessments, while the purpose of the audit of the financial statements, etc. is not
expressing an opinion on the effectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies and accounting methods adopted by the management,
the reasonableness of accounting estimates made by the management, and the appropriateness of the related
notes to the financial statements, etc.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty regarding the going concern assumption exists, we are
required to draw attention in our auditor’s report that the related notes to the financial statements, etc.
should be considered. Or, if any note to the financial statements, etc. regarding significant uncertainty
is inadequate, we are required to express opinions with exclusions for the financial statements, etc.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going
concern.
 Evaluate whether the presentation of the financial statements, etc. and notes comply with thecorporate accounting principles generally accepted in Japan, and whether the overall presentation,
structure and contents of the financial statements etc., including the related notes, accurately represent
the underlying transactions and events.
We communicate with the Audit & Supervisory Board and its members regarding the planned scope andtiming 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 audit standards.
We also report to the Audit & Supervisory Board and its members with a statement that we havecomplied with the ethical requirements in Japan regarding independence that are relevant to our audit of
the financial statements, matters that are reasonably considered to affect the independence of us, andwhere applicable, related safeguards taken to remove or reduce factors that could hinder our
independence.
Interest
Our firm and its designated engagement partners do not have any interest in the Company which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

- 54 -

Audit & Supervisory Board’s Audit Report (duplicated copy)

Audit Report(English Translation)
The Audit & Supervisory Board prepared this audit report regarding the performance of duties by the
Directors for the 98th fiscal year from April 1, 2020 to March 31, 2021, upon deliberation based on audit
reports from individual Audit & Supervisory Board Members and reports as follows.
1. Methods and Details of Audit by Audit & Supervisory Board and its members(1) The Audit & Supervisory Board established the audit policy, allocation of duties, etc., and received
reports from each Audit & Supervisory Board Member regarding the state of implementation of
his or her audits and results thereof, as well as received reports from the Directors, etc., and theaccounting auditor regarding performance of their duties, and sought explanations as necessary.
(2) Each Audit & Supervisory Board Member complied with the auditing standards established by the
Audit & Supervisory Board, in accordance with the audit policy, allocation of duties, etc.,
communicated with the Directors, the internal audit department, other employees, etc., and madeefforts to collect information and improve the audit environment, and conducted audits in thefollowing methods:
1) We attended the meetings of the Board of Directors, the Executive Management Committee, andother important meetings, received reports from Directors, Executive Officers, employees, etc.,
regarding the state of performance of their duties, sought explanations as necessary, inspected
important approval documents, etc., and investigated the state of activities and property at thehead office and other main business offices of the Company. With respect to subsidiaries, wecommunicated and exchanged information with Directors, Audit & Supervisory Board Members,
employees, etc., of the subsidiaries, and ascertained the status of business, management andadministration.
2) With respect to the systems stipulated in Article 100, Paragraphs 1 and 3 of the Ordinance for
Enforcement of the Companies Act to ensure the proper business operation of a corporate groupcomposed of a parent and its subsidiaries, including systems to ensure compliance of the duties
performed by directors and reported in business reports with relevant laws, regulations and the
Articles of Incorporation of the Company (“internal control system”), the Audit & Supervisory
Board Members regularly received reports from Directors, Executive Officers, employees, etc.,
asked for explanations and expressed opinions as needed, regarding the resolutions adopted by
the Board of Directors on the establishment of such system, the system established in accordancewith the resolutions, and the status of improvement and operation of the system.
3) We monitored and verified whether the accounting auditor maintained independence andimplemented appropriate audits, and we received reports from the accounting auditor regarding
the state of performance of their duties and sought explanations as necessary. In addition, we
received notice from the accounting auditor that systems for ensuring that the correct
performance of duties (matters set forth in each item of Article 131 of the Regulation on
Corporate Accounting) is organized in accordance with the audit quality control standards(Business Accounting Council, October 28, 2005) and other relevant standards, and sought
explanations as necessary.
Based on the above methods, we examined the business report and supporting schedules thereto, nonconsolidated financial statements (non-consolidated balance sheet, non-consolidated statement ofincome, non-consolidated statement of changes in net assets, and related notes) and supporting schedules
thereto, and the consolidated financial statements (consolidated balance sheet, consolidated statement ofincome, consolidated statement of changes in net assets, and related notes) for the fiscal year underreview.

- 55 -

2. Results of Audit(1) Results of audit of the business report and other relevant documents
1) We recognize the business report and supporting schedules thereto represent the situation of theCompany correctly in accordance with laws, regulations, and the Articles of Incorporation.
2) We do not recognize any misconduct related to Directors’ execution of their duties or material
facts that constitute violations of laws, regulations or the Articles of Incorporation.
3) We recognize the contents of the resolutions by the Board of Directors regarding the internal
control system are appropriate. We do not recognize any matters to be noted on the contents ofthe business report regarding the said internal control system or Directors’ execution of duties.
(2) Results of the audit of the non-consolidated financial statements and supporting schedules thereto
We recognize the methods and results of audits by Ernst & Young ShinNihon LLC, theaccounting auditor, are appropriate.
(3) Results of the audit of consolidated financial statements
We recognize the methods and results of audits by Ernst & Young ShinNihon LLC, theaccounting auditor, are appropriate.

May 18, 2021
Audit & Supervisory Board,
ISHIHARA SANGYO KAISHA, LTD.
Standing Audit & Supervisory Board Member
Standing Audit & Supervisory Board Member
Standing Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)
Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)- 56 -

Taizo Kato
Michiyoshi Arata
Yoshitaka Akikuni
Masaaki Harima