ISEKI Report 2021

ISEKI Report

2021

Achieving Harmony between Human Beings and the EarthContact about this ISEKI report

ISEKI & CO., LTD

Public & Investor Relations Section, ISEKI & CO., LTD.
5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPANTEL: +81(0)3 5604-7602 FAX: +81(0)3 5604-7701
E-mail: isk-info@iseki.co.jp
Issued in June 2021

ISEKI Group supports the nationwide action“COOL CHOICE” for global warming
countermeasures.

ISEKI Group strives to contribute to the creation the prosperous
and sustainable society through “providing innovative
products and higher quality of services to the customers.”

contents
Value creation of ISEKI Group

Corporate governance ............................................ 39

Track record of value creation .................................. 3

List of officers ............................................................. 41

ISEKI Group .................................................................... 5

Risk management ..................................................... 43

ISEKI Group's value creation process
by leveraging its strengths .................................... 7
Feature ISEKI Group's strengths ........................... 9

Management Philosophy

Message from our President ................................. 15

and quality assurance .......................................... 47

Risks and opportunities ........................................... 21

Supply chain management .................................... 49

ISEKI Group's SDG objectives ............................... 22

Contribution to local community

ISEKI Group's responses
to the COVID-19 pandemic ............................... 23

Human resource development and utilization 51

Business model transformation throughthe promotion of DX ........................................... 24
Toward the realization of a decarbonized society... 24<Spirit of ISEKI – Passion of founder –>ISEKI Group's materiality ........................................ 25<Company Motto>

Domestic Business Company ................................ 27
Overseas Business Company ................................. 29“I want to free farmers from exhausting labor”

Agriculture was hard work, done by hand andwith the help of animal power. To change this,Kunisaburo Iseki, the founder, realized laborsaving
through mechanization and endeavored to further
develop agriculture. “We produce good machinery,”
Kunisaburo Iseki, the founder, used to say. He
devoted himself to providing products that madecustomers happy. The founder’s passion has been
inherited in an unbroken line to this day as “ISEKI’s
spirit.”Our management philosophy is to provide:

Development and Production Company ........... 31

1. Products that satisfy customers;
2. A stable workplace to theemployees;
3. Appropriate dividend to theshareholders;

Financial and capital strategies ............................. 33

and international cooperation .......................... 50
Enhancement of employee engagement .......... 53
Environment
Environmental management ................................. 55
Response to climate change ................................. 57
Initiatives for environmentally-friendly design . 58
Preservation of biodiversity .................................... 58

Financial and non-financial data
Financial highlights ................................................... 59

Initiatives that support value creation
Sustainability in ISEKI Group ................................. 35
Stakeholder engagement ....................................... 36
Governance
Messages on Governance ...................................... 37

Consolidated Financial Summary ......................... 60
Non-financial highlights .......................................... 61
Corporate information ............................................ 62

and thereby we will fulfil our social mission.

Editing policy

Referenced guidelines

Communication map

About forecasts, plans, and targets

This report presents both financial and non-financial information
to introduce initiatives for improvement of the corporate valueof ISEKI Group to a wide range of stakeholders including
shareholders and investors in an easy-to-understand manner.

● International Integrated Reporting Council (IIRC): “TheISEKI Group uses a variety of tools to communicate with its
stakeholders, sharing a range of information.
We will continue our efforts toward constructive dialogue and active
information disclosure to ensure our stakeholders’ understanding of
ISEKI Group.

Forward-looking statements contained in this reportwere prepared based on information available at thetime of the preparation and involve potential risks
and uncertainties. Actual results may differ fromthose expressed by the statements due to changes in
economic conditions and market trends.

Covered period
From January 2020 through December 2020.
The report also includes some information from and afterJanuary 2021.

Scope
As a general rule, this report covers the activities of ISEKI &Co., Ltd. and ISEKI Group’s associated companies in Japan andoverseas. Notes will be added in this report when the range ofactivities and/or data is limited in certain part hereof.

1

Compliance ................................................................. 45
Society —Social—
Improvement of customer satisfaction

ISEKI Report 2021

International Integrated Reporting Framework”● GRI Standards● ISO26000● Ministry of the Environment, “Environmental Reporting

Handbook –Environmental Reporting Guidelines 2018”

Financial

Non-financial● Ministry of the Environment, “Environmental Reporting

Handbook –Environmental Reporting Guidelines 2018”

ISEKI Report (compilation of key information)● Mid-term Management Plan presentation materials● Corporate Governance Report● Quarterly financial summaries● Sustainability website● Quarterly briefing presentation materials● Securities reports*Amounts and numbers of shares are rounded down tothe unit.

(includes ESG data)● Product information

Corporate website
ISEKI Report 2021

2

Value creation of ISEKI Group

1926
1936

Iseki Farm Implement Trading Co.
was established.
ISEKI & CO., LTD. was established.

1926
Main social issues and needs

ISEKI Group's solutions

1946
1949

Matsuyama Factory
was established.
Kumamoto Factory
was established.

1977

1945 to 1950s
Post-war food production increase
Start of the high economic growth
periodDevelopment and spread of
agricultural machinery, which
supports food production increase

2014
2001

2003
2011

1960 to 1970s

Separated the Production Section fromthe company and established ISEKIMatsuyama MFG, Co., Ltd. and ISEKIKumamoto MFG, Co., Ltd.
Established Iseki-Changzhou Mfg. Co.,
Ltd. in Jiangsu Province, China.
Established Dongfeng Iseki Agricultural Machinery(Hubei) Co., Ltd. in Hubei Province, China.

1980 to 1990s

High economic growth period, decline in agricultural workforce due to concentration of population in urban areas
Modernization of farming
Increase in size and diversificationof agricultural machinery
Establishment of integrated system
for automating rice farming

2015
2016
2017
2020

Established PT. ISEKI INDONESIA.
Established ISEKI Technical Training Center (ITTC).
Established ISEKI SALES (THAILAND) CO., Ltd.
Integrated the businesses of Iseki-Changzhou Mfg. Co., Ltd.
and Dongfeng Iseki Agricultural Machinery (Hubei) Co., Ltd.
and established Dongfeng Iseki Agricultural Machinery Co., Ltd.
Acquired French agents Yvan Beal S.A.S. and YB Holding S.A.S.
(current ISEKI France Holding S.A.S.) and made them subsidiaries.
Established Dream Agricultural Research Institute.
Established ISEKI (THAILAND) Co., Ltd.
Established Iseki Basic Engineering Training Center (IETC).
Established ISEKI Global Training Center (IGTC).
Made Thai distributor IST Farm Machinery a subsidiary.

2000s

2010 to 2020s –Progress of globalization

Increasing interests in security and safety of food

Increase in size of farm business

Decline in agricultural workers,
advancement of aging society

Improvement in food self-sufficiency rate

Decline in agricultural workers, aging population

Continued development in agriculture

Adding high value to farm produce

Development of machinery
contributing to labor saving inand lowering cost of farming

Development of large machinery tocontribute to improvement of productivity

Realization of smart agriculture
utilizing latest technology and data

Strengthening of intangible aspects suchas farm business proposals and support

Promotion of environmentally soundagriculture

Mechanization of vegetable farming

1926

1966

1971

1988

2014

2016

Established with fully-automated rice hullers

Development of world's first autothreshing combine harvesters

Development of two-wheel ricetransplanters equipped withbackward-tilting seedling tanks

Birth of Naueru System for themechanization of vegetable farming

Center collect-type riding mower(lawn mower) for Europe

Development of industry's firstvariable fertilizing rice transplanter

Developed our original “Naueru Pot
Seedling” vegetable seedling thatmainly used paper pots and nurserysoil and the “Naueru PV101” fullyautomated vegetable transplanterfor planting the seedlings.

A high horse power, Japan's first centercollect-type front mower SF4 series withsuperior flexible maneuvering. ISEKI
Group's flagship series of landscaping
machinery for Europe that can respondto the needs of professional users.

Groundbreaking rice transplanter that
adjusts to the appropriate amount of
fertilizer while rice planting.
Contributes to lower
第7回
ロボット大賞
fertilizer costs and reduced
優秀賞
plant lodging“Iseki Farm Implement Trading Co.” wasestablished and a fully-automated ricehuller was produced as the first product.

Enabled the process from reaping to threshing
to finish 16 times faster. Popularity was achieved
due to its high efficiency, small-size and lightweight, and reasonable price, with production
unable to satisfy the high demand.

After much trial and error, succeeded indeveloping two-wheel rice transplanters
equipped with backward-tilting seedling tanks
that used a plastic float.
Birth of Sanae, asynonym for ricetransplanters.

1965

1967

1988

2009

Tractor suitable forJapanese wet paddies

Sales of tillers to Europe

ISEKI's first riding mower(lawn mower)

Development of the industry's fastest
auto-threshing combine harvesters

A full-spec riding mower installedwith a diesel engine. It established
ISEKI brand in the landscaping marketof Europe.

Developed the industry’s fastest combine
harvester capable of six-row reaping
with a maximum working speed of
2.0m/s. Also developed the industry’s
first combine harvester capable of sevenrow reaping.

Developed TB20, a Japanese tractor
with exceptional performance thateven climbed Mt. Fuji.

Began export and sale of tillers, thestart of ISEKI's European business.
Deployment of technology fostered inJapan to overseas.

2015

2018

Development of industry's firstplant growth diagnosis device

Development of manned
monitoring-based robot tractors

Measures the photosynthetic abilities of plants and visualizes
the conditions of plants invisible to the human eye.
Contributes to optimal control and growing by preventing
disease.

Realized significant labor saving in farming.
This type of agricultural machinery was
the first big step toward the future of
agriculture.

manned3

ISEKI Report 2021

Value creation of ISEKI Group

1969
1971
1972

2012
2013

Initiatives that support value creation

1961

Began establishing sales subsidiaries. Subsequently,
sales subsidiaries established around Japan.
Niigata Factory was established.
Listed its shares on the Tokyo Stock Exchange.
Renamed Tokyo Branch as Tokyo Headquarters.
Established N.V. ISEKI Europe S.A. in Brussels.
Expanded Matsuyama
Factory, relocated Head
Office to Matsuyama.
Established Central
Training Center in
Ibaraki Prefecture.

Financial and non-financial data

1958

Corporate information

Track record of value creation

Unmanned

ISEKI Report 2021

4

Value creation of ISEKI Group

services of agricultural machinery for cultivation of rice, vegetables etc. as well as landscaping machinery.

4.2%

Europe6.2 billionyen
13.9 billion yen

9.3%

17.9%

Cultivating andmowing machinery

31.8

47.5 billion yen(As of December 31, 2020)

North America

8.6

%

%

12.8 billion yen

Net sales by productNet sales by region

149.3 billion yen

149.3 billion yen

Planting machinery

30.3%

Japan

7.1%

45.2 billion yen

77.6%

10.5 billion yen

Cultivating andmowing machinery

19.7%

22.8 billion yen

9.6%

Domestic net Planting machinery
7.7%
sales by product8.8 billion yen

115.9 billion yen

ISEKI-Matsuyama MFG. Co., Ltd.
ISEKI-Kumamoto MFG. Co., Ltd.
ISEKI-Niigata MFG. Co., Ltd.
ISEKI-Shigenobu MFG. Co., Ltd.
ISEKI AGRI Co., Ltd.
ISEKI Logistics Co., Ltd.
ISEKI TLS Co., Ltd.
Kita-Nihon Shodo K.K.

4.5%

Harvesting andprocessing machinery

2.3 billion yen
Planting machinery

5.1%

1.7 billion yen

1.5 billion yen

Overseas
net salesby product33.3 billion yen Cultivating andmowing machinery

Harvesting andprocessing machinery

73.9%

14.6%

24.6 billion yen

16.8 billion yen

36.2%

Head Office(Matsuyama Office)Tokyo Headquarters
Tobe Office
Kumamoto OfficeNiigata Office
Tsukubamirai Office
Ibaraki Center
Kansai Office (IMPL)

Other
agriculture-related
business

3.2 billion yen

6.9%

Implements, spare partsand repair fees

ISEKI Hokkaido Co., Ltd.
ISEKI Tohoku Co., Ltd.
ISEKI Kanto Koshinetsu Co., Ltd.
Gunma ISEKI Sales Co., Ltd.
Ishikawa Shokai Co., Ltd.(※1)
ISEKI Kansai Chubu Co., Ltd.
Mie ISEKI Sales Co., Ltd.
Nara Iseki Sales Co., Ltd.(※1)
Nishioka Shokai Co., Ltd.(※1)
ISEKI ChuShikoku Co.,Ltd.
ISEKI Kyushu Co., Ltd.

Our products are used in more than 100 countries and regions around the world.
Implements,
spare partsand repair fees

25.2 billion yen● Associated companies

We leverage group-wide strengths at home and abroad to engage in the business.

12.9%

19.1 billion yen

21.8%● Main offices

115.9 billion yen

Harvesting andprocessing machinery

Other agriculture-related business● Sales subsidiaries

42.0 billion yen

N.V. ISEKI EUROPE S.A. (Belgium) (*1)
ISEKI France S.A.S. (France)
Iseki-Maschinen GmbH Deutschland (Germany) (*1)
PREMIUM TURF-CARE LTD. (U.K.) (*1)
AGCO Group (*3)(Atlanta, U.S.)IST Farm Machinery (Thailand) (*2)
PT. ISEKI INDONESIA (*2) (Indonesia)
Dongfeng ISEKI Agricultural Machinery Co., Ltd. (China) (*1,2) (Xiangyang, Hubei Province and Changzhou, Jiangsu Province)

Financial and non-financial data

26.7 billion yen

Implements,
spare partsand repair feesAsia

0.3 billion yen

Other agriculture-related
business

5,510
Development and manufacturing
department ･･･････････････1,756
Sales department ･････････ 3,384
Other division ･･････････････ 370

Other

0.2%

number of employees (consolidated)
Value creation of ISEKI Group

ISEKI Group engages in business activities centered around the development, production, sales andInitiatives that support value creation

ISEKI Group*1: Non-consolidated subsidiaries *2: Joint ventures*3: OEM customer(Results for fiscal year ended December 31, 2020)

5

Planting machinery

Harvesting and processing machinery

Tractors, tillers, high-clearance multipurpose vehicles and mowers

Rice transplanters and vegetabletransplanters

Combine harvesters, binders, harvesters, rice hullers, dryers, Measuring andsorting machinery rice graders and vegetable harvesting and processing machinery

Implements, spareparts and repair fees

Other agriculture-related business
Agricultural facility construction, Agricultural material,
Coin rice milling business・Rice cooking business, etc.

Tractors (For agricultural use)tillers

High-clearance multipurpose vehicles

Rice transplanters

Auto-threshing combine harvesters

General purpose combine harvesters

Implements

Solution culture facility

Tractor for overseas markets (for light civil engineering)

Tractor for overseas markets (for landscaping)

Riding lawnmowers

vegetable transplanters

Japanese radish harvesting machinery

dryersRepair and maintenance

Coin rice milling machine

ISEKI Report 2021

ISEKI Report 2021

Corporate information

Cultivating and mowing machinery6

Value creation of ISEKI Group

ISEKI Group's value creation process
by leveraging its strengths● Decrease in number and aging of farmers● Increase in size of farm business● Accelerated digitalization● Improved productivity

ISEKI Group's capital

Environmental issues

Value creation of ISEKI Group

Changes and challenges in the world

Other trends● Population growth● Stable production and supply of food● Decline in number of farmers due to economic development● Climate change● Natural disaster● Energy and resource issues● Improved productivity● Reduction of environmental burden

Business activities of ISEKI Group● Rapid technological innovation● Spread of infection● Lifestyle change

Initiatives that support value creation

Changes and challenges in Japan

Socialchangesand issues

The ISEKI Group has been engaging in business activities that are founded on its corporate philosophy andgovernance and that leverage the capital supporting the Group such as human resources and intellectual properties
as well as its unique strengths. In doing so, we have been providing customers with products and services thatmeet a variety of needs, thereby creating social and economic value. By continuing this cycle of value creation, we
strive to contribute to solving social issues in agriculture and other areas, while achieving sustainable growth andenhancing corporate value, and ultimately contributing to the creation of a prosperous and sustainable society.

Value provision

Network
Collaboration with partners,
municipalities, research institutions,and universities in Japan and oversea

Environment
Initiatives aimed at reductionof environmental burden

Disposalofproducts
Domestic
sales

Development
andmanufacturing

Use ofproductsaOverseas sales

Procurement
anddistribution

Development
andproduction

Sales and services

Financial capital
Source of business activities andgrowth investments

7

ISEKI Report 2021

Management Philosophy and Corporate GovernanceSocial value
Value creation with stakeholders● Provision of products and services
contributing to solving social issues● Creation of diverse human resources
and provision of rewarding workplaces● Stable dividend payment● Mutual sustainable growth andimprovement of corporate value
with suppliers● Revitalization and development oflocal communities● Contribution to the formation of circularsociety in the global environment

Creation of
an affluent society

Financial and non-financial data

Production and sales sites in Japan and overseas
Dream Agricultural Research InstituteP. 19−20
Center for Human development (IETC/OTTC/IGTC)ls,”

Raw materials

ased on collab
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Patents held as well as high-leveltechnological capabilities
and intellectual propertiesdge)
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Contribution to SDGs achievement

Economic valueEnterprise value of ISEKI Group● Improvement of corporate value
through sustainable growth● Investment for growth● Accumulation of technology
and expertise● Establishment and reinforcement oftrust with stakeholders● Improvement of corporate brand

Realization of ISEKI Group
long-term vision(2030)
Corporate information

Intellectual property

rce of its competi
ths (sou
g
tive
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stre

al capabilities”,
ogic
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“su
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“T
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Diverse human resources that enable
ISEKI Group growth Experts specializingin the fields of development, production,and sales and services

Provision of products and services in response to diverse needs

Human resources

Solution Provider for
Agriculture and Landscape

ISEKI Report 2021

8

ISEKI Group's strengths Value creation of ISEKI Group

ISEKI Group's strengths are “technological capabilities,” “support capabilities to offer farmbusiness proposals,” and “innovation based on collaboration.” ISEKI Group will continue
to generate economic and social value simultaneously through the business activities thatleverage these strengths cultivated over 96 years as the source of its competitive edge.

Further reinforcement of these three strengths will bring a sustainablegrowth of domestic and overseas businesses.
Intellectual capital Human capital Manufacturing capital

Technological capabilities

Business foothold supporting our strengths

Manufacturing capital

Dream Agricultural Research InstituteResearch & Development center and Production sites

In order to create new agricultural value, the Dream
Agricultural Research Institute is engaged in research,demonstration, and promotion of smart agriculture thatutilizes advanced technologies and advanced farm businesstechnologies while strengthening collaboration with thegovernment, municipalities, research institutions, universities,
private businesses, Japan Agricultural Cooperatives (JA), andfarm producers.
In addition, the Group strives to develop specialists tofurther strengthen its support capabilities to offer farmbusiness proposals.

The research & development center located in Ehime
prefecture plays an important role in developing products tosolve our customer needs and issues and conducting
advanced research on the products required by the next
generations.
With four production sites in Japan and three overseas,
we have built a manufacturing system that enables overseas
production sites to produce the same high quality products
as those in Japan.

The Dream Agricultural Research Institute located in Tsukubamirai City, Ibaraki Prefecture

PT. ISEKI INDONESIA as a global production site

Value creation of ISEKI GroupFeatureTechnological capabilities to develop breakthroughInitiatives that support value creation

agricultural and landscape machinery and create
innovation as a leading company

Technologicalcapabilities

Human capital
Financial and non-financial data

Human resources development to enhance our strengths
Development of experts through professional training

9

Social and relationship capitalIntellectual capital Human capital Manufacturing capital

Innovation basedon collaboration

Support capabilities tooffer farm business proposals

Capabilities to develop and provide groundbreaking

Support capabilities to offer farm business proposals

products and services and pitch new value to theto solve customer's issues from both hard (agricultural

new markets by collaborating with partners in eachmachinery) and soft (production management andfield and region both in Japan and overseas

advanced farm business technologies) aspects

ISEKI Report 2021

We have built a comprehensive human resources development scheme from “development” and “production” to “sales andservices,” to produce reliable products and provide breakthrough products and services. ISEKI holds several technology
contests internally to improve the firm-wide technological capabilities. We also conduct training for employees working
outside Japan actively to leverage our technological capabilities developed in Japan to roll out the global operations.
Since FY2020, we have been developing human resources in various fields by blending online training with classroom training.

Development

Production

Sales and services

IETC

ITTC

IGTC

ISEKI Basic Engineering
Training Center

ISEKI TechnicalTraining Center

ISEKI Global
Training Center

Nurturing young designers

Nurturing leaders of production sites
in Japan and overseas

Nurturing sales and services
staffs in Japan and overseas

Number of trainees:

Number of trainees:

Number of trainees:

Corporate information

Innovation
based oncollaboration

Supportcapabilities
to offer farmbusiness
proposals

455 in 2020

214 in 2020

451 in 2020

ISEKI Report 2021

10

ISEKI Group's strengths Value creation of ISEKI GroupIntellectual property strategies supporting our strengths

Intellectual capital

Proof of ISEKI Group's high technological capabilities
Our proactive efforts to develop, launch and commercialize new technologies are exemplified by the high number of patent application
registrations in Japan per specialty field, high patent allowance rates, and awards received in recognition of the inventions. Taking advantageof the technological capabilities underpinned by the intellectual property, we try to differentiate ourselves from peers.

Number of laid-open application per specialty field/Number of patent application registrations per specialty fieldYear

2000～2006

Field

Agriculture andfishery

Rank

2007～20142016～2017

2018

2019

(The Japan Institute of Invention and Innovation)

Other special machinery
No. 1

No. 2

Number of invention awards received

No. 1

National Awards for Inventions:
Patent allowance rateYear

2004～20102011

2012～2017

2018

2019

Patentallowance rate

83.7〜91.8%

91.8%

94.7〜100%

96.4%

97.7%

Rank

No. 1

No. 2

No. 1

No. 2

No. 1

Regional Awards for Inventions:

19

208

(As of June 2021)

Invention creation and rights acquisition
Given the significance of patent acquisition to achieve a competitive
advantage, the Group engages in intellectual property activities that bringabout innovation. Such activities include the creation of core technologies
and strategic acquisition of rights to, and use of, inventions and creations,which are intellectual outputs derived from the creation of core technologies.
ISEKI Group is driving forward invention proposal activities based oninvention themes considering promising technologies and market trends
and needs. We also bring together engineers in charge of various
products and carry out invention creation activity by systematicallygrasping agriculture as a whole to improve the quality and quantity of
inventions through horizontal deployment of technology. Taking into
account future social environment, technological trends, and feasibility ofthe business, we examine the invention, and then acquire the property
rights only for the highly viable ones to protect our proprietary technology
and enhance the competitiveness of product development.
In preparation for the 100th anniversary in 2025, we have set theinvention proposals related to advanced technologies such as
electrification and smart agriculture (ICT, robots, etc.) as a priority issue.
We will increase the ratio of advanced technologies relating proposals tomore than 60% of all invention proposals, building a solid intellectual
property portfolio of advanced technologies.

Development departments
Promisingtechnologies

Value creation of ISEKI Group

With the philosophy of our founder, “free farmers from exhausting labor,” ISEKI Group has consistently pursued efficiency and laborsaving advancesin agriculture and have developed a significant amount of revolutionary agricultural machinery and facilities with ISEKI’s unique technologies thatmeet the changes and needs of agriculture and society. We are working on the intellectual property strategies to support our strengths.

Sales departments
Market trends
and needs

Gathering
opinions

Invention proposal themes
Invention
proposal
activities

Initiatives that support value creation

FeatureInvention proposal
Feasibility ofthe project

Social environment
Technological trends
Examination

Patent application

Initiatives to leverage our strengths

The vegetable farming market experiencing rapid growth has
recently seen growing needs of mechanization, while requiring
more versatility of machinery which accommodate the different
types of planting depending on the area and crops.
The semi-automated vegetable transplanter PVHR200 series is ariding-type semi-automatic vegetable transplanter adaptable to awide range of crops. In response to the demands from many
vegetable growers, the enhanced adaptability to various planting
enables 27-step adjustment of intrarow spacing (distance between
nursery plants) and seamless adjustment of interrow spacing (between
rows of nursery plants) from 30 to 70cm.
The riding-type two-row semi-automated vegetable transplanter
received “2020 Development Prize” from The Japanese Society ofAgricultural Machinery and Food Engineers, for a contribution totechnological advancement.

>> Comments from a developer
Nobuhiro Yamane
Head of Vegetable Farming
Transplanting Research Team,
Vegetable Farming Machinery
Research Group, Agri Create
Department

11

ISEKI Report 2021

Technological capabilities“2020 Development Prize”
from The Japanese Society ofAgricultural Machineryand Food Engineers

Interrow spacing30-70cm

Semi-automatedvegetable transplanter“PVHR200”

Intrarow spacing
22-60cm

Height of ridge
10-35cm
Tread
95-57cm (L3, L3D type)93-125cm, 127-159cm (WD type)Semi-automated vegetable transplanter “PVHR series” is an unprecedented
type of vegetable transplanter that shares the handiness the light walkingtype machinery have with the functions that allows for planting on board.
Of PVHR series, PVHR 200 which was awarded as “2020 Development
prize” has been highly evaluated in the market for its further
improvement of operator handling, its safety and adaptability to planting.
I continue to work on the development and provision of competitive, innovative
products with a view to expand the sale of vegetable farming machinery.

Case

2.

Development of “PRJ series,” riding rice transplanter
installed with turning assisting function

On the occasion of the 50th anniversary of Sanae, a flagship ricetransplanter, we have launched PR series and PRJ series of riding ricetransplanters. These series are innovative riding rice transplanters
equipped with advanced technologies while inheriting the high-levelbasic performance of the existing models.
In addition to the conventional straight travel function, the newaddition of a turning assisting function (Operesta Turn®) enables the ricetransplanter to assist not only straight-travel operation while planting but
also steering operation while making a turn. This makes it possible foreven inexperienced workers to plant with ease and precision, alleviating
labor shortages, reducing fatigue from long hours of work, andimproving efficiency.
To protect such proprietary inventions, the development, sales, andintellectual property departments work together to strategically acquire
intellectual property rights.

Technological capabilities

Turning assisting function

Financial and non-financial data

1.

Development of the “Semi-automated vegetabletransplanter PVHR200” adaptable to various crops

U-turnTurn-back and making a turn

A ssisting in steering while making a turnIntuitive operation with the main gearshift
A ssisting in row adjustment

Straight travel assisting function
Automatic steering during
straight-line planting
Planting straightly withease

Corporate information

Case

Number of industrial property rights relating to PR/PRJ series (in Japan) (As of March 31, 2021)
Patents

Design rights

Registered

107

49

Pending

21

7

ISEKI Report 2021

12

ISEKI Group's strengths Value creation of ISEKI Group

Innovation based on collaboration

Case

5.

Support capabilities to offer farm business proposals

Innovation based on collaboration

We collaborate with a global major company, AGCO Corporation, to supply our OEM
products to countries around the world. Especially in North America, the compact
tractor market is expanding due to stay-at-home special demands and changing
lifestyle during the pandemic. We further expand sales of our products in North
America by using AGCO’s sales channel.

 esearch collaboration agreement with Ehime
R
University and continuous provision of endowed
coursesTAFE
Leveraging the partnership with Tractors and Farm Equipment Limited (TAFE), thesecond largest agricultural machinery manufacturer in India, we expand the sales
network of our products and to form a technological alliance. The rice transplanters
launched in India since 2019 have been highly acclaimed, resulting in an increase in
the sales in 2020 by approximately ten times from the previous year.
We are working to strengthen the partnership by providing guidance on themachinery maintenance and technical service training to TAFE. Moreover, by providing training on not only machinery but also raising seeding, ISEKI Group spreads farmbusiness and cultivation technologies and knowhow that it has accumulated in Japanto promote synergies with mechanization of agriculture and improve laborsaving andproductivity.

Plant factory and Plant growth diagnosis device

Joint research development projects in
FY2020
Testing research institutions
Universities

10 themes

2 themes
Case

6.

Collaboration with the national andlocal governments

Compact tractors supplied to North America on an OEM basis

Training for TAFE provided by the employee from ISEKI

Support capabilities to offer farm business proposals

Innovation based on collaboration

ISEKI Group carries out demonstration experiments in actual fields utilizing smart technology in collaboration with the govern-

Support for obtaining GAP certification to visualize agriculture

4.

Support capabilities to offer farm business proposals

ment and municipalities to develop and promote technologies for cost reduction and laborsaving.

 artnership agreement regarding smart organic agriculturePsigned with Kisarazu City

ISEKI Group helps farm producers to obtain GAP certification as an initiative to provide comprehensive support of farm manage-

In March 2021, ISEKI and Kisarazu City signed the “Partnership Agreement Regarding Promotion of Agriculture Utilizing Advanced Technology and Organic Agriculture”, to start practical application and verification of smart agriculture and organic
agriculture.
Organic farming requires weeding without using pesticides. Therefore, by utilizing
smart organic technologies including “water management technology” to remotely
control the growth of weeds and “weeding technology” to remove weeds when
they occur, we aim to achieve sustainable agricultural development based on advanced production technology, cost reduction and establishment of cultivation
method for high-quality crops.

ment.

Comments from farm producers

Mr. Kai at Nobeoka Farm of M Trust Co., Ltd. (left) and Mr. Yoshikawa at Sales Promotion Department of ISEKI Kyushu Co., Ltd.

Miyazaki Prefecture is home to a variety of agricultural
products such as green peppers and cucumbers. However, in recent years, abandoned and wasteland areas
have been increasing due to a lack of farmers. I formed
an agricultural corporation in September 2019 by using

About GAPISEKI Report 2021

abandoned land and local employment. To maintain stable agricultural management and establish safe agricultural production system, we started initiatives to obtain
JGAP certification with the aid of a JGAP instructor from
Iseki Kyushu Co., LTD.
To obtain JGAP certification, we need to manualize
the agricultural production process including preparing
a production plan and setting a standard for safer crops,
while keeping the operation under control to ensure
the work safety of employees. Creating an easy-to-understand manual was difficult, as the employees did
not usually pay attention to how to wash their hands
and machines or how to harvest cabbages. However,by solving each issue toward obtaining certification, wewere able to "visualize" the farm management—where
and how the crops were produced—, realizing that itenhanced the safety of crops.
Going forward, thorough familiarity with the manual
among the employee is encouraged so that they canfurther improve their work efficiency and use it to plannext year's crops. In addition to providing safe anddelicious agricultural products, we are committed tocommunity-based sustainable farm management.

GAP stands for "Good Agricultural Practice," a method of farm management used by producers to achieve sustainable agriculture.
JGAP is a Japanese version of agricultural production process management certified by Japan GAP Foundation. The certification is
granted upon the assessment by a third-party organization, whether the agricultural operation including the management of fertilizers andpesticides or labor safety at the site meets the criteria.
Implementing JGAP is expected to help curb food and agricultural accidents, protect the environment, develop human resources, andimprove work efficiency, as well as secure the trust of consumers.

Case

7.

Initiatives to energize
female farmers

Technological capabilities

Financial and non-financial data

Case

13

Technological capabilities

AGCO

ISEKI Group engages in joint research and development ofagricultural machinery with testing research institutions anduniversities to accelerate and improve efficiency of technology
development. Such collaboration facilitates the rapid realizationof future-oriented technologies and commercialization, which
contribute to a sustainable growth of agriculture.

ISEKI and Ehime University entered into a research collaborationagreement on the “Intelligent Food Production System” in 2005 withan aim to enhance academic research on stable food provision andfacilitate the use of the research outcome into the regional communities. Moreover, in 2010, we started another endowed course,“Design Engineering for Horticultural and High-technology Greenhouse” to facilitate research and development and human resource
development to spread the use of the plant factories. As a result,
we commercialized “PD6C,” the first plant growth diagnosis device
in the industry in 2015.
We will continue to strengthen our collaboration with Ehime
University. Through the cutting-edge cultivation technology that
integrates information and communication technology (ICT),
artificial intelligence (AI), and robotization technology, we will
dramatically increase the productivity of crops, including safe andsecure food, while contributing to promotion of smart agriculture
and revitalizing local communities.

Collaboration with global
strategic partners

Initiatives that support value creation

3.

Technological capabilities

Value creation of ISEKI Group

Joint research and development with research
institutions and universities

Case

Signing ceremony with Kisarazu City

Support capabilities to offer farm business proposals

Innovation based on collaboration

About 40% of agricultural workers are women and they play important roles in farming
and community activities. To provide further support to the female farmers’ activities,
ISEKI Group has participated in NOGYOJOSHI (female farmers) project by the Ministryof Agriculture, Forestry and Fishery (MAFF). We held agricultural machinery handlingseminars throughout Japan, created clear manuals for safety use, and worked withfemale farmers to develop “easy-to-handle” agricultural machinery for everyone.
In 2020, given the difficulty in conducting face-to-face initiatives due to the spreadof COVID-19, we began to hold online roundtable discussions on useful topics for
agricultural management including GAP, sixth industrialization and soil cultivation.
⃝Total number of seminars on how to operate agricultural machinery: 35 Comments fromthe participants⃝Total number of participants in the project: over 700

Corporate information

FeatureSeminars on how to operate agricultural machinery“I could learn the key point of soil cultivation,
which is essential to growing crops.”“The online event was easy to attend, which gave mea chance to interact with female farmers nationwide.

ISEKI Report 2021

14

Value creation of ISEKI Group

Message from our President

products and higher quality of services to the customers”“Toward the next 100 years...”Value creation of ISEKI Groupand sustainable society through “providing innovative

Steady progress made in the Plan’s measures, despite sales and profits falling well short of their targets due to the deviation of the assumed environment

To realize its vision “To establish a firm position both in domestic and world market” as an integrated manufacturer
specializing in agricultural machinery for 2025, the 100th
anniversary of its foundation, ISEKI Group in 2016 formulated the Mid-term Management Plan as it positioned
the first five years as an important step and implemented
activities.
However, both the Japan and overseas markets saw dramatic changes in the business environment from what hadoriginally been envisaged at the beginning of the plan. In
Japan’s domestic market, the rush of demand prior to theincrease in the consumption tax and the consequent fall
afterward, along with natural disasters and other factors,
impacted on demand for agricultural machinery. Overseas,
growth in the ASEAN and Chinese markets, which we
had positioned as growth engines, continued to plateau.
Added to these factors was the massive impact of the
COVID-19 pandemic, resulting in our business performancein 2020, the final year of the previous Mid-term Management Plan, falling far short of the plan’s numerical targets.

The global COVID-19 pandemic was something that could
not have been predicted. However, such unpredictability
is always a possibility. ISEKI Group must respond to suchsituations flexibly and grow in a sustainable manner. To
this end, we need to transform into a lean and streamlined business structure that can constantly generate profit
without being affected by the fluctuation in sales. The
improvement of profitability through fixed cost reductions
and other methods is essential.
On the other hand, initiatives undertaken in line withour basic strategies have achieved a certain level of results.
They include increases in maintenance revenue from repairs, parts, and the like at our Japanese sales subsidiaries,
improvements to the profitability of products that target
overseas markets, and the enhancement of the ability of
PT. ISEKI INDONESIA to turn a profit. We have now formulated a new Mid-term Management Plan, covering thefive years from 2021 to 2025, that, as well as continuing togrow the outcomes of the previous Plan, will aim to solve
remaining issues.

Initiatives that support value creation

We strive to contribute to the creation the prosperous

Reflection of previous Mid-term Management Plan (2016–2020)[ Results during previous Mid-term Management Plan ](billion yen)Japan sale

Overseas sales(billion yen)

200

150

153.0

158.3

155.9

149.8

149.3

32.0

35.2

33.1

32.1

33.3

190.0

10

55.0

8■

121.0

123.1

122.8

Our response to COVID-19
Continuing to support essential agriculture and landscaping businesses

I would like to extend my sincerest condolences tothe families of all those who have passed away due to
COVID-19 and my prayers for the recovery of everyone
who has contracted the disease or otherwise suffered
as a result of the pandemic. I would also like to pay myprofound respects to the healthcare workers and others
who have been working strenuously on the frontlines
during this crisis.
In 2020, the COVID-19 pandemic had a major impact
on economic activities both in Japan and overseas. In ISEKI Group’s business environment as well, sales of agricultural machinery products in Japan declined as businesses
exercised restraint in sales and marketing activities suchas trade fairs. Overseas, while there was some special
demand for compact tractors from consumers staying at
home due to the pandemic in North America, shipments
were down in Europe due to the impact of lockdowns
and in Thailand due to falls in farming income caused by
the COVID-19 situation. Although COVID-19 still remains

15

ISEKI Report 2021

in Japan and overseas, the environment surrounding
ISEKI Group in 2021 is gradually starting to settle down
due to vaccine roll-outs, and we have assumed a moderate recovery of social and economic activities in FY2021.
Under those circumstances, we will promote “newnormal” business styles, which will include innovative
sales and marketing activities such as web-based virtual demonstrations and small-scale, long-run sales talkevents, and new ways of working such as work-fromhome and spreading workers out among multiple sites.
There are also growing concerns about food, including the stable supply of foods and the improvement offood self-sufficiency rates during the pandemic. The
importance of agriculture that supports food supply andthe landscaping business that supports people’s daily
lives is being recognized anew as essential businesses
that must not be stopped. In supporting such businesses, ISEKI Group must continue to change and demonstrate its presence into the future.

117.7

115.9

1.6
3.9

4

2.4

Dec.
2016

Dec.
2017

Dec.
2018

Dec.
2019

Dec.
2020

Previous Mid-termManagement Plan targets

0

3.1

2.7

2.0
ｰ8.8

Dec.
2016

Dec.
2017

10.0

■

5.0

■

0

■

ｰ5.0

■

ｰ10.0

1.1

2

0

■

8.0

4.2
1.3

6

135.0

（％）

9.0

100

50

ROE

Operating income

Dec.
2018

Dec.
2019

Dec.
2020

Previous Mid-termManagement Plan targets[ Major achievements of the basic strategies and issues remaining to be addressed ]Major achievements
Strengthen
responsiveness todrastic changes inagriculture in Japan

Expand overseas
businesses

Strengthen profitability
by optimizing
development andproduction

Remaining issues

Establishment of sales and service systems for wider areas
Reorganization of wide-area sales subsidiaries: 10 companies 6 companies

Strengthening of initiatives in large-scale, advanced
technologies, and vegetable farming machinery

Revenue-expenditure structural reform
Increase in maintenance revenue Improvement of sales subsidiary profitability

Further strengthening of sales subsidiaries’
profit structure

Expansion of business through enhanced cooperation with strategic partnerships
U.K. and India

Business expansion through further reinforcement of cooperation

Development and introduction of products that suit market needs
Response to exhaust gas regulations, advanced technologies, compact tractors, etc.
Shift to in-house production of emission regulations-compliant engines
Cost-cutting, strengthening of competitivenessImprovement of profits in Indonesian business
PT. ISEKI INDONESIA achieving consistent profits

Corporate information

Representative Director, President & Executive Officer
ISEKI & CO., LTD.

Operating income and ROE

Financial and non-financial data

Sales trends

Shiro Tomiyasu

Product development in response to changing needs(Europe: electrification; China: high-end
products, etc.)
Improvement of profitability of unprofitableproducts in Japan and overseas, fundamental
review of low-cost design
Optimization of production categories

ISEKI Report 2021

16

Value creation of ISEKI Group

Transformation to a lean and streamlined business structure that can constantly generate profit without being affected by the fluctuation in sales

There is also a wide range of factors that are common toboth Japan and overseas markets, including the impact of
COVID-19, global food issues, and climate change risks.
It is with an awareness of this environment that we
recognize (1) responses to changing demand and needs,(2) the improvement of financial structure and expansionof profits, (3) strengthening of ESG initiatives, and (4)the realization of technological innovations as businessissues, and we will promote a variety of measures that
aim to make our long-term vision a reality.

Diverse environments in each region
Shift to advanced features Shift to lower prices(diverse needs)
Intensification of competition

From “with COVID-19” to “post COVID-19,” global food issues, climate change risks
Change in business model (from products to services)
Growing environmental awareness (exhaust emissions, electric vehicles)
Growing demand for disclosure of non-financial information, SDGs
Responses to changes in laws and regulations, complianceCorporate Philosophy (Purpose)
ISEKI Group has inherited the company’s founding philosophy of “freeing farmers from exhausting labor” inan unbroken line from then until today, and in 2025, we
will mark the 100th anniversary of the company’s founding. To ensure that ISEKI Group remains farmers’ closest
supporter over the next 100 years from 2026, we will lay
firm foundations and make a dramatic leap forward in
the five years of the new Mid-term Management Plan.

To be a solution provider for agriculture and landscape

Farming
Food production

Agricultural machinery

Initiatives that support value creation

Decline in number of farms and increase in large-scale farming
Crop diversification
Transition to smart farming, regulatory reform(WAGRI, open API, DX, etc.)
Lowering of prices

Long-term vision

SDGs to be realized by the ISEKI Group through its business
Environmental
preservation

Toward the realization of a sustainable society
Supporting the enhancement of resilience in agriculture
Landscaping for comfortable villages and towns

Food
Survival

Landscape
Farmers

Environmental preservation for a recycling-oriented society

Foundation forlivingPeople and society

Our corporate philosophy for the next 100 years is tocontribute to the creation the prosperous and sustainable society through “providing innovative products andhigher quality of services to the customers.” As well as
the provision of products, we will also place efforts into
services (information, experiences, features, etc.) andcontinue our activities as the ISEKI that makes customers
happy.

Financial and non-financial data

Overseas

Realization of technological innovationsJapan

is imbued with our intention to continue to be a company
that solves issues related to them.
Amid significant changes in the business environment,
ISEKI Group will solve social issues, with the knowledge
and experience we have cultivated over the years as an integrated manufacturer specializing in agricultural machinery at our core. We will drive forward with our Henkaku(Change), in our aim to be a solution provider that creates
new value, with our seven promises in our hearts.

Supporting a farming industry full of dreams and beautiful landscapes and creating a future of sustainable agriculture and landscapeBusiness issues
Responses to changing demand and needs

Recognition of environment

Strengthening of ESG initiatives

In the business environment surrounding ISEKI Group,
the Japanese agriculture industry is witnessing significant structural changes, such as the decline in thenumber of farms, the increase in large-scale farming,
crop diversification, and transition to smart farming.
Overseas, the environment differs from region to region,
but the business environment is always changing, withdiverse needs and intensifying competition.

Improvement of financial structure and expansion of profits

Business environment and issues

ISEKI Group has set as its long-term vision for 2030 to
be a “solution provider for agriculture and landscape—supporting the farming full of dreams and beautiful landscapes, creating the sustainable future of agriculture andlandscape.”
Farming safeguards food and land and realizes prosperity for people and society. It is us, ISEKI Group, that support such farming and farmers, and this long-term vision

Value creation of ISEKI GroupThe aims of ISEKI GroupNew Mid-term Management Plan (2021–2025)

KeywordHenkaku (Change)“Toward the next 100 years...”Corporate Philosophy

Long-term vision
To be a solution provider for agriculture and landscapeFounding philosophy
To free farmers from exhausting labor

17

ISEKI Report 2021

Seven promises of ISEKI Group (values)

1. Spirit

Inheriting our company’s founding philosophy, we always carefully consider food, agriculture and landscape and move forward with farmers.

2. Front runner

As a front-runner, we produce innovative products and higher quality services.

3. Quality

We will always make premium quality products with passion.

4. Solution

We constantly take action for solutions to customer issues.

5. Innovation

We create innovations with cutting edge technologies and provide new value.

6. Global

With a global perspective, we work toward solutions to the world’s social issues.

7. Future

Paving the way for tomorrow, open up the future of food, agriculture and landscape.

ISEKI Report 2021

Corporate information

We strive to contribute to the creation the prosperous and sustainable society through“providing innovative products and higher quality of services to the customers”

18Value creation of ISEKI Group

Provision of the best solutions
Focus on providing services in addition to products in

Enhancement of corporate value by strengthening profits and reinforcing corporate governanceTransformation to a lean and streamlined business structure that can constantly generate profit without being
affected by the fluctuation in sales

Selection and concentration

Business model transformation

Improvement of profitability

ESG

Resource
concentration

Focus on service
provision

Toward an operating
margin of 5%

Pursuit of value to society
and sustainability

Product development
and sales strategy
integrating domestic,
overseas, anddevelopment andproduction

Promotion centered on
information (DX)

Structural reforms through establishmentof an optimal production system

Responses suited to the
new normal

Improvement of management efficiency fromthe perspective of group-wide optimization

Further expansion ofmaintenance revenue

Financial and capital strategies

Reinforcementof initiatives andcontribution to SDGs
through review of ESG
materiality

Business-specific perspectives
Introduction of an in-house company system

Conclusion

Visualization of unprofitable businesses

This year is the first year of our new Mid-term Management Plan that will take us up to the 100th anniversaryof our foundation. Even as we move toward that milestone, we will continue to hold fast to the founding
spirit of “freeing farmers from exhausting labor” andour DNA as the front-runner in agricultural machinery.
On the other hand, the business environment is changing greatly. To safeguard those things that must not bechanged, it is imperative that we undertake Henkaku(Change) that goes above and beyond that ever-changing business environment. In that respect, it is important

ISEKI Report 2021

Value creation of ISEKI Group[ Basic strategies and directions of initiatives ]a transition from products to services

19

structure that can constantly generate profit without
being affected by the fluctuation in sales.
To strengthen governance, ISEKI Group in 2018 established the Nomination Advisory Committee with Independent Outside Directors as its main members to makethe appointment process of Director candidates transparent. In 2020, this committee was reorganized into theNomination and Compensation Committee to include afunction to deliberate and report on Directors’ remuneration. Other initiatives we have pursued include implementing evaluations of the effectiveness of the Board of
Directors to further improve its functions. Going forward,
we will make efforts toward the further strengthening of
our systems in light of the 2021 revision of the Corporate
Governance Code. Further, in terms of ESG initiatives,
we have reviewed our materiality (priority issues) in linewith the formulation of the new Mid-term Management
Plan. We will endeavor to fulfill our social responsibilities
through initiatives that embody the essence of ISEKI.
By steadily implementing these basic strategies, we will
aim for an operating margin of 5% in 2025 and strive toenhance our corporate value.

Initiatives that support value creation

Provision of the best solutions
To respond to changing demand and needs and totechnological innovations, we will first analyze growth,needs, and other market factors for each of our major
models and, setting medium-term product development
themes based on that analysis, put the provision of
innovative products and higher quality of services to thecustomers into practice through the united efforts ofdevelopment, manufacturing, and sales.
In Japan, we will undertake product development andpursue sales strategies that are in line with the structural changes in agriculture, including the accelerating paceof the introduction of large-scale farming and smart
agriculture and the conversion to crops other than rice.
In particular, the large-scale farming trend is forecast
to progress more and more in coming years, so we will
dedicate development and sales resources to this area.
On the service front, we will continue to step up
our ongoing initiatives in the expansion of large-scaleservicing locations and education that responds to theneeds of large-scale farmers. In addition, we will extend
the concept of service to include information. We are
now witnessing the beginning of a new style of farmingthat incorporates digital technologies. It is ISEKI Group’s

Enhancement of corporate value by strengthening
profits and reinforcing corporate governanceIn the area of profitability, one of ISEKI Group’s major
challenges, we will strive to make improvements throughstructural reforms and management efficiency improvements. In structural reforms, our basic approaches willbe the reorganization of our production system and theselection and concentration of businesses, products,
and resources. In particular, our priority measure will be
the construction of optimal production system at ourJapanese manufacturing locations. Through this, wewill strive to revitalize the Group’s human resources andequipment and enhance productivity. In management
efficiency improvements, in addition to the operational
aspects we have worked on to date, we will strive for“business-creating Henkaku (Change)” that fundamentally re-examines the way we do things at each stageof design, production, sales, and service. This includes
sales that makes use of digital tools, the improvement ofinvestment efficiency through shared design and fewer models, and making full use of personnel across theentire Group. Through these initiatives, we will achieve
our transformation to a lean and streamlined business

Financial and non-financial data

To help us realize our long-term vision, ISEK Group will
follow two basic strategies to solve business issues.

role to expand that style of farming. We will evolve ourbusiness model through total ICT solutions, such as thedevelopment of new sales services and product development that leverages the data obtained from smart
agricultural machinery.
Overseas, we will strengthen our cooperative relationships with our strategic partners in each region, particularly North America, Europe, and Asia, and expand ourbusiness domains. In North America, we are witnessing
a shift from temporary demand prompted by consumers
staying at home to changes in lifestyles, and we believethat this market will be stable over the medium to longterm. As well as strengthening our relationships with
our OEM partner, we will also work to expand our product range and increase sales. In Europe, where our business focuses on the landscaping market, ISEKI Group
has a long history, and recognition of the ISEKI brand ishigh. We will continue to pursue product development
to meet the market needs, while also seeking to elevate
our position in the landscaping market through researchand development of electric products. Asia, where rice
farming is farmers’ main focus, is the region with themost potential for expansion of the agriculture market.
In ASEAN in particular, we will strive to expand sales byrolling out the technology and expertise we have developed in Japan, centered on IST Farm Machinery, whichbecame a consolidated subsidiary at the end of theprevious fiscal year.

⃝ Full use of human resources on a Group-wide basis

Optimal allocation of human resources
Corporate information

Basic strategies

that the entire Group unites as one to engage in the
new Mid-term Management Plan. We will conduct measures to raise awareness of the Plan, including seminars
for employees and training for managers, to ensure that
all employees are conscious of Henkaku (Change) as
they give certainty to the new Mid-term Management
Plan.
ISEKI Group will further advance Henkaku (Change) so
as to continue demonstrating its presence in its 100th
anniversary in 2025 and beyond and increase its corporate value.

ISEKI Report 2021

20

Value creation of ISEKI Group

Risks and opportunities

ISEKI Group’s SDG objectives

The environment surrounding ISEKI Group has entered an era of major transformation. We will
firmly identify the risks and opportunities in the external environment and aim for the “provision of
the best solutions” and “enhancement of corporate value by strengthening profits and reinforcing
corporate governance,” which are the basic strategies of the new Mid-term Management Plan.

ISEKI Group will contribute to solutions to social issues, including the SDGs, through its business

Opportunities

Decline in the number of farms inJapan, advancing age of farmers, andslowdown of demand due to anincrease in contracting of farm work

Larger scale of Japanese producers,
diversification of crops

Lowering of prices, rise of Indian andSouth Korean competitors

Partnerships with entities in otherindustries through DX

Value creation of ISEKI Group

Risk

activities as a solution provider for agriculture and landscape.

Supporting a farming industry full of dreams

Dissemination of smart agriculture(data-using agriculture)

Impact of changes in policies ofindividual governments
Climate change, reduction ofenvironmental burden, natural
disasters, infectious diseases, etc.

New demand for electric/robotic
products, etc.

Initiatives that support value creation

Progress in mechanization ofagriculture in ASEAN, India, and otherregions where rice is the main crop
ISEKI Group contributes to the sustainable development of Japanese agriculture through the dissemination and promotion of smart agriculture that uses smart agricultural machinery and data. In addition, while on the one hand, Asia accounts for approximately 90% of global riceproduction, urbanization in Asia is leading to the problem of farm labor shortages. Leveraging the rice-growing technologies developed inJapan, we are contributing to the improvement of productivity through the mechanization of agriculture in Asia by providing agricultural
machinery to suit individual countries and regions.

Supporting beautiful landscapes

Provision of the best solutions

Enhancement of corporate value by strengthening
profits and reinforcing corporate governance

Focus on providing services in addition to
products in a transition from products to services

Transformation to a lean and streamlined businessstructure that can constantly generate profit without
being affected by the fluctuation in sales

Selection and concentration— resource concentration

Improvement of profitability—toward an operating margin of 5%

Product development and sales strategy integrating

Structural reforms through establish-

domestic, overseas, and development and production

ment of an optimal production system

Financial and non-financial data

Basic strategies

ISEKI’s landscaping machinery is utilized in landscape improvement, particularly in Europe, such as the development of parks and sports fields,road cleaning, snow clearing, and other ways. We are contributing to the development of pleasant communities by safeguarding Europe’s
beautiful landscapes and environments.

Improvement of management efficiency fromthe perspective of group-wide optimization
Financial and capital strategies

Environmental preservation for a recycling-oriented society

Business model transformation—focus on service provision

Responses suited to the new normal
Further expansion of maintenance revenue

ESG—pursuit of value to society and sustainability

Corporate information

Promotion centered on information (DX)

Reinforcement of initiatives and contribution
to SDGs through review of ESG materiality

Our aim is to realize a recycling-oriented society through business activities that take the environment into consideration. We are pursuing thedevelopment and provision of environmentally-friendly design and eco-products with the aim of reducing the environmental burden of our
products in each of the stages of development, manufacture, use by customers, and disposal.

21

ISEKI Report 2021

ISEKI Report 2021

22

Value creation of ISEKI Group

ISEKI Group’s responses to the COVID-19 pandemic

Business model transformation through the promotion of DX

As COVID-19 spread all over the world, it dealt a massive blow to society and the economy. In
ISEKI Group as well, in addition to sales and production, work styles and other aspects havealso been greatly impacted. Since March 2020, we have held regular COVID-19 Response Meetings,
and we have pursued flexible responses to minimize the impact on our business activities, while
maintaining the safety of our customers and employees and the prevention of infections as our
top priorities. With the sense of uncertainty about the future expected to continue, instead of
temporary fixes to this massive social transformation, we will unite as a Group to transform into
a corporate structure that will remain flexible and resilient even after the COVID-19 situation has
abated.

ISEKI Group will strive for the transformation of its business from“products” to “services” by concentrating efforts on the provisionof the best solutions that take advantage not only of products but
also information, know-how, and other digital technologies.
Currently, agricultural businesses using data in their farming
operations account for only about 20% of the total*1. ISEKI Groupis working to solve issues in the agricultural industry through theprovision of smart agricultural machinery that leverages ICT androbotics technologies. Going forward, it will also strive for further
labor-saving and productivity improvements in agriculture byplacing efforts into new services that take advantage of the dataobtained from such smart agricultural machinery, as well as thefarm business technologies and know-how that we have cultivated over many years.
Specifically, we will roll out the provision of data collected bysmart agricultural machinery, based on customers’ needs, including through open APIs*2. On the sales and services front, “i-Magazine,” an IT tool that aids the visibility of information related tosales and marketing activities, including searches for information*1 183,000 agricultural enterprises are using data in their farming
operations in Japan, accounting for 17% of the total number ofagricultural enterprises (source: 2020 Census of Agriculture andForestry).
*2 Open API: Publicly available application programming interface
that provides access to other systems under certain conditions

Contribution to agricultural value chain

Sales and services
Data-driven services
that respondto users’ wishes

Value creation of ISEKI GroupOn the sales and service fronts, in Japan, we wereforced to refrain from sales and marketing activities,
including trade exhibitions. Overseas, while in North
America, changing lifestyles prompted by a growing
preference for the suburbs contributed to an increase in demand for compact tractors, the effect oflockdowns in Europe had a major impact on ISEKI’s
business results.
Under these circumstances, ISEKI Group promoted
the use of IT to communicate product informationand to ensure after-sales support could be provided
even with restrictions on face-to-face communication. Initiatives included posting videos and othermedia on the internet, strengthening communication
capabilities on social media and corporate websites,
and holding online seminars. We are also working to
improve the efficiency of sales and marketing activities, including rolling out new sales support software.

Initiatives that support value creation

On the production front, when infections started toincrease in China’s Wuhan City in late January 2020,
the plant of our local affiliated company, Dongfeng
Iseki Agricultural Machinery Co., Ltd. was forced tosuspend operations, but operations had returned
almost to normal by around mid-March.
At our manufacturing sites in Japan, production
was affected by temporary delays in the supply ofimportant components, but operations had almost
completely recovered to normal levels by around July.
Amid restrictions on movement both in Japan andinternationally, our global production base, PT. ISEKI
INDONESIA had to rely on remote technical guidancefrom Japan when launching new products but wasable to start production on schedule.

such as product inventories, preparation of quotations, viewing ofvideo content, instruction manuals, parts lists, and sales diaries will
be introduced at sales subsidiaries all over Japan. This will enable
us to provide people on the ground with information that meets
customers’ true needs in farm management in real time. It will also
lead to work style reform through more efficient sales and marketing activities. The tool will also be used in product development, design, and production. By contributing to the agriculturalvalue chain, which includes a variety of activities and services
related to agriculture and food, this will lead to Henkaku (Change)in agriculture and society.

Development and production
Data-driven productdevelopment

Data collection fromsmart agricultural machinery

New feature development and quality analysis

Smart agricultural machinery group

Data utilizationi - Magazine
Roll-out of new services

Integrated system of rice cultivation

Shared utilization

production frontand service fronts

Initiatives aimed atensuring safety
In addition to holding regular
COVID-19 Response Meetings toshare the latest information andcountermeasures, we have worked
on business continuity, including inthe supply chain.
Even now, our efforts to prevent the
spread of COVID-19 both in the company andbeyond continue, placing top priority on ensuring
the safety of our customers, supplies, employees, andtheir families, and preventing infections. To prevent
transmission of the virus, in addition to thoroughsanitary measures, we have developed work systems
that allow for flexible work styles, including implementing work-from-home and staggered attendance
and temporarily abolishing core hours in the flextime
system. Other initiatives include reducing density inthe workplace by spreading operational spaces out,
postponing or cancelling group training or switching
to online training, and no longer accepting visitors forfactory tours.
We will continue to strive for a balance between
ensuring safety and security, including through work
styles suited to the new normal, and business continuity.

Establishment of a virtual demonstration event website

Contributions tosociety

In China’s Hubei Province,
disinfection work was undertaken in all cities in response to
the spread of COVID-19 infections. Around 200 high-clearance
multipurpose vehicles manufactured
at Changzhou Factory of Dongfeng Iseki
Agricultural Machinery Co., Ltd. were usedin the citywide disinfection of five cities in theprovince, including Wuhan and Xiangyang, contributing to the prevention of transmission.
The COVID-19 pandemic brought a renewed recognitionof the essential nature of agriculture that underpins
food supply and landscape improvement that safeguards people’s lifestyles, and they have become
more important
than ever. As a company that supports
agriculture and landscape, ISEKI Groupwill aim to realize aprosperous, sustainable society.

Toward the realization of a decarbonized society
ISEKI Group practices environmental management based on thepositioning of environmental preservation as a business priority forthe creation of a sustainable society.
We have long been actively engaged in environmentally-friendly
design, including eco-products, and in reducing CO2 emissions in our
production activities. On May 1, 2021, we established a new Green
Innovation Promotion Office with the aim of accelerating researchand development related to the electrification of our products. In
the European landscaping market, where there is a high degree ofenvironmental awareness, we plan to launch limited sales of a smallsized electric tractor mower in 2022, with a view to mass production

Financial and non-financial data

Initiatives on sales

by 2024. Further, we are currently also considering the use ofhydrogen. In February 2021, we joined Japan Hydrogen Association,
which promotes the formation of global partnerships and a hydrogen supply chain in the hydrogen sector. In addition, throughsolutions that combine our smart agricultural machinery and thefarm business technologies and know-how that we have cultivatedover many years, we are making sales proposals and providing
support for environmentally sound agriculture, including organic
agriculture, for the reduction of CO2 emissions in the agriculturalindustry overall.

Initiatives toward electrification

For the European landscaping market

Corporate information

Remote technical guidance under way

Initiatives on

Electric tractor prototype (2011)

Targeting home vegetable gardens and greenhouses

Disinfection work using ISEKI high-clearance multipurpose vehicles

Electric cultivator Elena (2009)23

ISEKI Report 2021

ISEKI Report 2021

24

Value creation of ISEKI Group

ISEKI Group’s materiality

Provision of the bestsolutions

Enhancement of brandvalue
S(society)
Enhancement of
employee engagement
Factors that support sustainablevalue creation andgrowthE(environment)G(governance)

Environmental
preservation

Enhancement ofcorporate value

Key initiatives

Provision of products and services
that satisfy customers

Research and development, demonstration, and dissemination ofadvanced technologies and advanced farm business technologies

Strengthening of intellectual property activities

Invention creation and rights acquisition

Development of experts

Development of specialized human resources for development, production, sales, and service

Improvement of customer satisfaction and quality assurance

Enhancement of customer satisfaction and implementation of design review

Supply chain management

Promotion of CSR procurement

Social contribution and international cooperation

Implementation of activities to communicate with community

Diversity

Promotion of female advancement

Creation of employee-friendly workplaces

Encouragement of employees to take various forms of leave

Occupational health and safety management

Thorough management of occupational safety and health

Environmentally-friendly design (eco-products)

Expansion of eco-products and their dissemination

Mitigation of environmental burden (reduction of CO2 emissions)

Reduction of five substances of concern (SOC) in production activities

Environmental management

Climate change countermeasures, promotion of zero emissions

Enhancement of governance

Responses based on the evaluation of the effectiveness of the Board of Directors

Risk management

Operation of the Risk Management Control Committee and risk evaluation and handling

Compliance

Responses to Act on the Protection of Personal Information

Information disclosure and constructive dialogues

Enhancement of information disclosure and dialogue opportunities

KPI

Value provided to society

Related SDGs

Provision of products and services that contributeto the improvement of productivity of agriculture
and landscaping, safety, and the reduction ofenvironmental burden

Enhancement of customer anddealer satisfaction

Pages

P. 9 ～14
P.27～32

Promotion of active participation by female
farmers (Project to support female farmers)
Revitalization and development of local
communities

P.47～50

Creation of diverse human resources

Implementation of engagement
surveys and score increases

P.51～54

Provision of safe, rewarding workplaces

26% reduction in CO2 emissions
Ratio of eco-products: 50% or more

Increase in ratio of holdings by
individuals and long-term investors

Initiatives that support value creation

Solutions to social issues throughbusiness(source of value creation and competitive edge)

Key themes

Provision of products that contribute todecabonization

P.55～58

Development of recycling-oriented society

Enhancement of corporate value and stabledividends

Financial and non-financial data

Materiality

Value creation of ISEKI Group

Materiality refers to the important issues that the ISEKI Group will address as a priority for the sustainable growth ofsociety and the company, based on its management philosophy. In the formulation of the Mid-term Management Plan
(2021–2025), we reviewed our materiality to realize our long-term vision of being a “solution provider for agriculture
and landscape,” identifying important issues that will have an impact on our growth strategies from the perspectivesof “solutions to social issues through business” and “factors that support sustainable value creation and growth.”
By strengthening our ESG initiatives, we will pursue the improvement and sustainability of ISEKI Group’s value tosociety.

P.36～46

Materiality identification process
To respond to the diverse needs and demands that are obtained through communication with our stakeholders, we
identified issues to be addressed with reference to ISO26000, the GRI Guidelines, and the United Nations Sustainable
Development Goals (SDGs), etc. The process identified issues to be addressed as a priority for the creation of social andeconomic value through business activities and issues to be addressed from the perspective of opportunities and risks inbusiness activities, such as environmental changes, impediments to business activities, and burden on the global environment.

Rawmaterials

Procurement and Development and Sales anddistribution
production
services

Use of Disposal of
products products

Issues identified from the perspective of opportunities and risks in business activities

25

ISEKI Report 2021

STEP

2

Evaluation of materiality
The identified issues were evaluated in terms of their“impact on society” and “impact on ISEKI Group,” whileconnecting them to our vision and management strategies.

STEP

3

Determination of materiality
The materiality to be addressed by ISEKI
Group were determined throughdeliberation by the Board of Directors.
Corporate information

1

Identification of issues

Maximum
Impact on society

STEP

Great Impact on ISEKI Group

Maximum

ISEKI Report 2021

26

Value creation of ISEKI Group

Message from the General Division Manager of the Business Division

Product strategies

Service strategies

To realize a farming industry full of dreams, we will provide the best solutions andcreate a sustainable future for farming in Japan.

As the structure of the farming industry continues to change,
we have rolled out products that meet a variety of needs, fromsmart agricultural machinery to low-priced models.

In addition to providing agricultural machinery, we will roll out
services to solve farm owners’ problems and support challenges toward new types of agriculture.

Agricultural machinery tailored to large-scale farming

 moni, an agriculture platform co-created by farmers,
A
ISEKI Group, and participating companies

Social changes
and issues

Business environment and social issues
Environment

Agriculture and forestry industry KPIs in Strategy for Sustainable Food Systems, MeaDRI

IssuesDecline in number of farms
Increase in large-scale farming

Targets to 2050
Chemical pesticides 50% reduction in risk-weighted use

Shortage oflabor power

Crop diversification

Amounts invested in machinery

Acceleration of smart agriculture

Insufficient features

Chemical fertilizers 30% reduction in use
Organic farming 25% increase (1 Mha)
Greenhouse gases Zero CO2 emissions from agriculture, forestry, and fisheries
Horticultural facilities Complete transition to facilities that do not use fossil fuels
Agricultural and forestry machinery Establishment of technologies related to electrification, hydrogen use, etc. (by 2040)
Food waste

New trends

50% reduction in commercial food waste compared with FY2000 (by FY2030)

Source: “Strategy for Sustainable Food Systems, MeaDRI” published by Ministry of Agriculture, Forestry and Fisheries

Medium-term basic strategies

Vision and directions
Product strategies
Large-sized products
Smart agricultural machinery
Vegetable farming machinery
Low-cost products

Service strategies
Strengthen service structure for introduction of large-sized machinery
Provide solutions through digital platforms for farmers
Develop human resources who are knowledgeable about smart agricultural machinery and ICT-related products
Improve efficiency of sales activities using digital parts

Provide innovative products and higher quality of services to the customers[Toward 2025]

Value offeredthrough business

27

ISEKI Report 2021

ISEKI, a company with a strong presence through agricultural machinery products and services

Realization of sustainable agriculture
Laborsaving and cost cutting

Improvement of productivity

Introduction of smart control in farming

Promotion of active participation by farmers

Products for vegetable farming market
Despite the recent expansion of Japan’s vegetable farming market,
many of Japan’s vegetable production systems still rely on manuallabor. Needs exist for the commercialization of integrated systems
for automating vegetable farming to make the work easier andpromote laborsaving.
In the area of vegetable harvesting, where mechanization
has been particularly slow, ISEKI has commercialized harvesting
equipment for many different vegetables, starting with the VHC18
carrot harvester in 1998. Our line-up now includes harvesters forginger, cabbage, and Japaneseradish.
By continuing to develop a fullproduct range to meet the diverse
needs of vegetable farming, we
will support expansion of scale andimprovement of efficiency in thevegetable market, where demand is
expected to grow.
VHD102-S Japanese radish harvesting machinery

Initiatives that support value creation

Director & Managing Corporate
Officer, General Division Manager ofthe Business Division
Director & Managing Corporate
Officer,

Amoni, a platform for the exchange of agriculture-related information, was built in a partnership between ISEKI Group, companies
involved in agriculture, andfarm owners. As large-scale
farming increases, the needfor efficiency improvements
and laborsaving in agriculture
has become greater thanever, and the informationthat farm owners require hasgrown increasingly diverseand complex. By sharing
the actual situation on the
ground on farms with videos,demonstration reports, andother means via Amoni, we
will solve the problems thatbeset large-scale farming
together and support theestablishment of a new kindof agricultural management
tailored to the changing
environment.
Amoni, established in July 2021

Strengthening of sales and service systems
To provide efficient, effective farm business services of high quality, ISEKI Group is setting up large-scale maintenance bases in each
district to act as core centers. By developing systems that will also
be able to accommodate large-scale farming, we are working to
expand our sales share and maintenance income.
ISEKI Hokkaido Co., Ltd. The three sales offices were merged
and a large-scale base with adjoining large-scale maintenancecenter was opened to respond to the increasing size of machines
and growing demand accompanying the expansion of scale ofcustomers in the north Hokkaido area.

Financial and non-financial data

Yukio Nawata

As the scale of farm management continues to grow, ISEKI
Group has a product lineup covering from the most advanced
models to simple, low-priced models suitable for different crop
cultivation methods and farm business scales.
In recent years, demand has been growing for smart controlled agricultural machines equipped with automatic steeringfunctions. ISEKI is promoting the commercialization of various
types of advanced agricultural machinery, including tractors
and rice transplanters.
In rice planting operations in particular, which are being
increasingly contracted out, there are great expectations for
efficient eight-row rice transplanters and growing requirements for automatic steering. To meet this need, in 2020, ISEKI
launched rice transplanters
equipped with straighttravel/turning assist
functions, which allow
inexperienced operators
to operate the machine instraight lines and turns aswell as a skilled operator.
Already, over 60% of oureight-row class models
have straight travel/turning
Rice transplanter equipped with straight travel/turning assist functions
assist functions installed.
Sanae JapanPRJ8ISEKI Hokkaido’s Kitasorachi Service Workshop

Human resource development
With the aim of developing human resources who can respondflexibly to structural changes in the agricultural industry, we
are implementing a variety of initiatives aimed at improving ourpeople’s ability to offer proposals and support to customers, aswell as their technical service capabilities.
Key initiatives
Various specialist training programs run by in-housetraining department(ISEKI Global Training Center)Smart Agricultural Machinery Course and Pro Mechanic
Course to strengthen ability to respond to farmers
Pre-exam workshops for agricultural machinery mechanic qualification exam

 ation-wide Service Skills Contest for junior service techN
nicians to test the advancement of their skills (not held in2020 due to COVID-19)
Team TJ Training, a training workshop on large-scale farming and smart agricultureReiwa Sanae Brigade, a team of junior employees sent tofarms to support rice transplanter demonstrations

ISEKI Report 2021

Corporate information

In Japanese farming, support for the agricultural industry is urgently needed to address its
many different issues, including the decline in farmers due to aging and shortages of labor toaccommodate the growing scale of farms. Efforts toward smart agriculture are also
accelerating, prompted by labor shortages caused by the COVID-19 pandemic.
Under these circumstances, ISEKI Group has declared the “provision of best solutions”
tailored to our customers’ farm business styles as a basic strategy. Striving to promote andstrengthen DX through smart agricultural machinery and data connections, we aim to build a
new agricultural value chain, which will include the improvement of yields and quality andthe reduction of costs and labor burdens, and make attractive proposals for “Japanesefarming equals profitable farming.” We will also work actively toward innovations aimed at
expanding environmentally-conscious products for the reduction of greenhouse gas
emissions in the farming sector and the expansion of the area of land used for organic
agriculture.
On the service front, in our shift from “products” to “services,” from fiscal 2021, we willroll out “i-Magazine,” a digital support tool that allows quick access to the information that
customers want, including product inventory and owned machinery searches, i-Next video
content, farm business information, and instruction manual and parts list searches. In thesame timeframe, we will also roll out “Amoni,” an agricultural platform that will enableco-creation and coordination between large-scale agricultural creators and farming-related
manufacturers and start-up companies to address a variety of issues. In such ways, we will
strive for the further expansion of solutions.
As it heads toward the next stage, ISEKI will create a sustainable future for Japanesefarming together with farmers.

Value creation of ISEKI Group

Domestic Business Company

28

Value creation of ISEKI Group

Kazuya Tani
Director & Corporate Officer
General Division Manager, Overseas
Business Division

Social changes
and issues

Forecast for global population and food supply and demand
Population in developing countries
Grain production volume

Population in developed countries
3,009million tons

2,612million tons
2,021million tons

7.59billion people

8.50billion people

6.33

U.S. new housing starts
North American compact tractor market (PTO 0-40HP)(thousand units)

250

7.22

1,300
1,100

100

900

50

Medium-term basic strategies

1.21

1.26

1.28

2005–20072017–20192030

Vision and directions(thousand homes)

1,500

200
150

6.59billion people

5.38

Trends in North American compact tractor market and new housing starts

07002010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

500

Source: A ssociation of Equipment Manufacturers (AEM), United States Census Bureau(USCB)
2,021百万トン

We will pursue manufacturing, sales, and service that meet customer needs in the three key regions, aiming for the expansion of our overseas business.
North America

EuropeAsia

Increase share of compact tractor market
Support expansion of AGCO’s sales network
Introduce lower-cost economy tractors to market

Increase presence in landscaping market
Accelerate response to electrification
Expand product line-up,
including consumer products
Rebuild sales network with aview to consolidation

Roll out rice farming-related machinery developed in Japan
Build foundations for ASEAN business based on the revamped IST
Introduce high-performance, largescale rice-farming machinery to market
Strengthen systems through integrated operations from production to sales and service

In North America, ISEKI supplies major global company, AGCO,
with compact tractors of PTO horsepower less than 40 and utility
tractors of horsepower less than 100 under an OEM contract.
These products are being used by a wide range of users.
In the North American market, as people have been spending more time at their homes in the suburbs during the
COVID-19 pandemic, changes are also being seen in theirlifestyles. With this trend, demand for compact tractors targeting private users has increased, and there is growing demand
for lower prices and greater ease of use. ISEKI helps consumers
to enrich their lives with the kind of quality only we can offer,including human-friendly design based on ergonomics, and wehave increased sales of compact tractors in particular.
Going forward, we will further deepen our partnership with
AGCO to launch onto themarket in a timely manner
new products that meet local needs, in an effort to expand our market share. We
will also strive for further
cost reductions to ensure aproper level of profit amid
intense price competition.
Compact tractor popular with private users,

In the ASEAN region, the ratio of capital contribution in IST Farm Machinery, the company established in Thailand in a joint venture with
Mitsubishi Corporation in 2013, was changed at the end of 2020, andIST became a consolidated subsidiary of ISEKI. In addition, throughstreamlining and function integration efforts with ISEKI (Thailand)Co., Ltd., our controlling base for parts and service in the region, we
will aim to expand our sales and service into countries neighboring
ASEAN, with IST playing a central role. The conditions under which
farming machinery is used in this region are very harsh, requiring
products that are highly durable and low-cost. ISEKI has launchedtractors that are low in cost due to production in Indonesia and that
also offer improved durability and workability, through which we aresupporting mechanization in the region. In India, we have collaborated with our strategic partner, TAFE, to sell rice transplanters, which
are proving popular locally.
Like Japan, the East Asia is beset with social issues such as a shortage of farm workers and aging of the farming population, leading toincreased needs for advanced technologies and large-scale agricultural machinery. ISEKI has introduced the kind of large-sized, high-performance rice-farming equipment that is in active use in Japan mainly
into the Taiwan, South Korea, and China markets, contributing tolabor-saving and higher efficiency in farming operations.

MF1835E(Europe) Create clean, pleasant urban environment(Asia) Reduce burden on farm workers, support food production

29

ISEKI Report 2021

TAFE

Europe strategy

Restrictions on sale of new gasoline- and diesel-powered vehicles in major European nations
2025
NorwayCO2

Vietnam
Cambodia

Philippines

Malaysia

In Europe, ISEKI offers tractors, riding mowers, and other machinery for landscaping, such as mowing lawns in parks, roadcleaning, and snow clearing. Our products are contributing to
the preservation of the beautiful landscape in Europe and to
the prevention of epidemics. In Europe, where environmental
awareness is higher than anywhere else in the world, exhaust
regulations (EU Stage V) that are even stricter than the current
regulations will come into full force from 2022. With ISEKI’s
SF5 series of riding mowers, we have realized a reduction ofenvironmental burden through the installation of EU Stage
V-compliant engines, and we have also taken low-noise operations and ease of use into consideration. These features havemade the series popular among professional customers such as
landscape developers.
In Europe, the European Green Deal, which aims to achievea balance between decarbonization and economic growth by
2050, is being heralded, and the need for more environmentally-friendly products is predicted to expand. Many countries havealso declared that they will prohibit the sale of new gasoline- anddiesel-powered vehicles by 2030, and it is possible that agricultural machinery that travels on public roads will also be subject
to the same level of restrictions. To meet these daily changing
needs, ISEKI is currently progressing research and developmentof small-sized electric tractor mowers with the aim of mass production by 2024.
In addition to the strengthening of service and sales capabilities by rebuilding our existing sales networks, we will continue
to provide products that meet customers’ expectations. In thisway, we will raise the profile of the ISEKI brand in the landscaping market.

Meet regional needs and solve issues in various parts of the world(North America) Support the enrichment of private lives

Laos

ISTE

2020

Value offeredthrough business

MyanmarInitiatives that support value creation

As the COVID-19 pandemic has changed our living environments in direct or indirect ways,
the activities of ISEKI Group continue to contribute strongly in the various regions to thecreation of a sustainable society as an essential business.
The North American small-sized tractor market expanded to its greatest size ever due todemand prompted by the stay-at-home trend during the pandemic. We believe that there
will continue to be more opportunities for ISEKI’s products to help people to improve their
quality of life through the land, such as enjoying gardening and hobby farming at theirhomes in the suburbs.
In the European market, the high quality of ISEKI products and our strong track record
have made ISEKI a widely known brand. In the individual European countries, which are moreadvanced in their environmental responses, a green recovery, that is economic recovery
through the creation of environment-related businesses, is being considered. Going forward,
we will contribute further to environment-related businesses, including with the electrification of our products. Further, amid the various changes in the environment, mechanization ofagriculture to secure food supplies remains a challenge in many countries. In Asia, in particular, there are many regions where rice farming is the predominant crop, and demand for
agricultural machinery, which has evolved in Japan, is rising sharply. ISEKI integrated its Thai
locations last year and now aims to expand our business further.
In the new Mid-term Management Plan, ISEKI declared itself a “solution provider for
agriculture and landscape.” We will further expand our overseas business beyond our past
status as a well-loved Japanese agricultural machinery manufacturer to a corporate groupthat provides solutions needed in various parts of the world.

Asia strategy

2030

2035

2040

Germany, Finland
Belgium, Netherlands
Sweden, U.K.
France(Summary of individual countries’ legislative information)

Indonesia
Expansion of sales and service into the ASEAN region, based in IST

Financial and non-financial data

As a “solution provider for agriculture and landscape,” we will strive to further expand
our overseas business, to help solve global issues.

North America strategy

Use of global human resources
Ms. Vilasinee is the Sales Department General Manager of IST
Farm Machinery, which has become a consolidated subsidiary.
She has worked in sales since first joining the company andwas promoted to General Manager of the Sales Department in2020. The sales division considers measures for expanding salesof ISEKI products through distributors, agents, and direct sales
centers and strives to deepen relationships with distributors.
Ms. Vilasinee is highly regarded for her meticulous support andsharp perspectives and has earned great trust from customers.
ISEKI Group will continue in its efforts to make use of its global
human resources with the aim of expanding its business.

Employees succeeding on the global stage
Corporate information

Message from the General Division Manager, Overseas Business Division

Value creation of ISEKI Group

Overseas Business Company

Vilasinee, General Manager, Sales Department
IST Farm Machinery

ISEKI & Co., Ltd. has insight into theestablishment of the ISEKI brand not
only in Japan but in overseas markets
as well.
Under the new structure, we will incorporate ISEKI’s
know-how into IST Farm Machinery’s strategies and engage
in proactive sales and marketing activities to pursue theexpansion of sales and to bring smiles to farmers.

ISEKI Report 2021

30

Value creation of ISEKI Group

Message from the General Division Manager, Development & Production Division

Product strategies

We will pursue product development strategies that focus on the regions and products where we have strengths and on growth markets.

For product development that focuses on the regions and products
where we have strengths and on growth markets, we are pursuing
product development in which our Japanese and overseas operations
and production and development divisions work as one based onpriority measures. Globally, there are concerns about food shortages
due to population growth, and there are calls for the expansionof production volumes in rice farming, a sector that is one of ISEKI

Medium-term basic strategies● Increase in size of farm business● Increase in size of agricultural machinery● Acceleration of smart agriculture● Crop diversification to field crops and vegetables● Enhancement of farm business technologies ● Mechanization of agriculture in Asia
● Need for high quality, high performance, ● Maintenance and preservation of landscapes, including townscapes
high durability, and low prices● Lifestyle change● Stable food production and supply ● Environmental response and creation of a decarbonized society

Vision and directions
We will pursue product development strategies that focus on the regions and products where we have strengths
and on growth markets, as well as structural reforms through the construction of optimal production systems.

Product development strategies
Japan

ISEKI has built a research and development system that displays
collective power through collaboration among the development,
production, and marketing departments. We determine thedirection for the product strategy and research and development
based on the needs and market trends in each region, and engage
in speedy research and development. We also collaborate withresearch institutions and universities, conducting joint research anddevelopment to improve the speed and efficiency of technology
development. In our frontrunner development, we will pursue
research and development and deliberations in the areas ofelectrification, automation, robotics, data use, and hydrogen use.

Global production system
Domestic production system in JapanAt our Japanese manufacturing bases, to achieve optimal
efficiency as a whole that crosses the boundaries of individual
factories, we will reorganize into component and unit production
bases and product assembly and shipment bases to makeeffective use of the Group’s human resources and equipment.
Further, in addition to reviewing the in-house/external production
categories, we will further strengthen our collaborations
with Japanese and overseas suppliers in an effort to mitigate
procurement risk. Through these kinds of structural reforms, wewill aim for the further enhancement of quality and profitability.

Overseas

Response to large-scale farming●S trengthening of large to medium size, low price, smart agricultural
machinery and products for field crops and vegetable farming●Products and services in response to changes in farming styles

Response to brand expansion●Strengthening of products for European and North American markets, which are our strength●Gaining foothold by strengthening products for ASEAN●Establishment of brand in China and East Asia

In-house production●Production volume at PT. ISEKI INDONESIA (units)

Overseas suppliers

7,300
Further strengthen collaboration

Frontrunner development●Introduction of global strategic machines●Electrification and hydrogen use to address environmental issues●Automation, robotics, data use, etc.

Overseas production system
PT. ISEKI INDONESIA is a production base for strategic machineryfor North America, Europe, and the ASEAN region, and produces
tractors that meet the high quality, low price needs by capitalizing
on expertise it has acquired locally over many years. Its production
volumes are on the rise, and, by building systems for loweringcosts and increasing production through the optimization of its
suppliers, it will strive for the further expansion of its business.
Dongfeng Iseki Agricultural Machinery Co., Ltd. (Xiangyang)produces high-performance large rice transplanters, highhorsepower tractors, and combine harvesters that are suited
to local large-scale rice farming, which it supplies to the local
market in China and exports to the ASEAN region.

12,600Key safety components
core technologies●Measures to prevent farming accidents●Expansion of emission regulations-compliant engines produced in-house●Development of electric products

External production
Japanese suppliers

CommonSafety and environmental responses(1) Electrification
Using technologies cultivated through electric products andresearch, we will pursue the development of electric products for
professionals in the European landscaping market in response toenvironmental issues, home vegetable gardens, and greenhouses.
(2) Automation, robotics, and data use
Targeting expansion of scale, while progressively launchingsmart agricultural machinery for laborsaving and farmingthat uses data, we will pursue development aimed at the fullscale dissemination of completely automated machinery.
(3) Hydrogen use
In response to environmental issues, we will pursue thedevelopment and consideration of agricultural machinerythat uses hydrogen, with zero CO2 emissions.

Initiatives that support value creation

Social changes
and issues

Research and development system

Financial and non-financial data

Director & Managing Corporate Officer,
General Division Manager, Development & Production Division

Group’s strengths. To expand demand for agricultural machinery,
ISEKI Group will develop platforms to ensure the respective basic
performance of tractors, combine harvesters, and rice transplanters
and, on that basis, introduce global strategic machines that complies
with each region’s regulations and has the necessary fixtures added.
This will allow us to meet the diverse needs and regulations of eachregion, as well as help to reduce development costs.

8,400

10,500

9,700

3,900

with Japanese and overseas suppliers
Streamlining of production system⇒ Mitigate procurement risk

2015

2016

2017

2018

2019

2020

Corporate information

Hajime Odagiri

Even as the market environment seems to be changing by the minute, we continue to carryon our founder’s passion of “freeing farmers from exhausting labor.” Our development andproduction divisions are working as one to develop products that respond to social changes.
We are further strengthening our line-up of smart agricultural machinery that address
problems in the agricultural industry, including the shortage of farmers caused by theshrinking and aging of the farming population in Japan and the consequent expansion ofscale of farming, contributing to ultra-laborsaving, high-profit agriculture, as well as lowpriced products for small-scale farms, and products that meet the needs of field crops andvegetable farming markets. Overseas, we will aim to strengthen our competitiveness andexpand our brand through the development of products that meet the respective needs of
the North American, European, and Asian regions.
In our production systems, we will pursue structural reforms through the construction of
optimal production systems that make effective use of the management resources of ourJapanese and overseas production bases. We will also review in-house/external production
categories, in our efforts to further strengthen our business structure for the enhancement of
profitability and quality. Viewing the changes in the environment surrounding society asopportunities, we will continue to place efforts into farm work safety measures, with the safetyof our customers as our top priority. We will also actively engage, from both development andproduction angles, in initiatives such as the development of high-end automated and robotic
products, the roll-out of global strategic machines that meet the diverse needs of individual
regions, electrification of products aimed at the realization of a decarbonized society, which
has become a pressing issue, and the deliberation of use of new energies.

Value creation of ISEKI Group

Development and Production Company

Improvement activities and human resources development in development and manufacturing
Value offeredthrough business

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ISEKI Report 2021

As a frontrunner, provide value through the development and production of products that make customers happy

Each production base has established a system for proposing
improvements that target strengthening of safety, improvementof quality, and reduction of man-hours and costs. These frameworks
are highly active, with approximately 50,000 improvement proposals
made in FY2020, resulting in cost reductions of approximately
300 million yen. Value engineering (VE) activities that allow forcost cutting through improvements in product designing andmanufacturing methods, parts procurement methods, etc., arealso conducted to manufacture products at a lower cost.
In addition to efforts to develop specialist human resources indevelopment and manufacturing, the “technological researchpresentations” is held every year to share outcomes of researchand development and invention information, with the aim ofraising the standard of the Group as a whole.

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Value creation of ISEKI Group

Value creation of ISEKI Group

Financial and capital strategies

Message

We support value creation from financial perspectives
by improving our financial structure and creating cash flows

Initiatives that support value creation

Shuichi Jinno
Director & Corporate Officer

The targets in the previous Mid-term Management Plan were 190
billion yen in net sales, 9 billion yen in operating income, and ROE
of 8% or more in FY2020. However, in addition to significant changes
in the business environment compared with our initialassumptions, impairment losses in non-current assets wererecorded due to a decline in profitability of our manufacturingsubsidiaries, resulting in us falling far short of those targets.
On the financial front, despite the progression of inventory reductions
due to production adjustments made in 2020 and contraction ofproperty, plant and equipment accompanying the recording of
impairment losses in non-current assets, the cash conversion cycle(CCC) and D/E ratio have remained at high levels, and we believethat improvement of the financial structure is needed.

In the new Mid-term Management Plan, whose target year is 2025,
the 100th anniversary of ISEKI’s foundation, we will adopt a financial
strategy that emphasizes improvement of the financial structure. In
addition to our basic strategy of improvement of profitability throughstructural reforms and management efficiency improvements, wewill aim to create operating cash flow of 60 billion yen cumulative
over the next five years by improving asset efficiency. We will also
strive to trim down our property, plant and equipment and reduce
interest-bearing liabilities, with the aim of achieving ROE of 8% by2025, the final year of the new Mid-term Management Plan.

Improvement of operating margin
Operating margin of 5% (2025)

Within range of depreciation● Improvement of gross profit● Improvement of fixed cost ratio● Optimization, and selection and concentration

Thorough implementation of capital cost perspectives

Improvement of asset efficiency

Creation of cash flows
Reduction of interest-bearing liabilities

60 billion yen

D/E ratio 0.8 times (2025)(5-year cumulative)
Improvement of CCC

Shareholder return

Reduction of inventory
Optimization of non-current assets

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ISEKI Report 2021

Aim for ROE of 8%

Creation of operating cash flow

To implement measures aimed at the realization of our long-term
vision for 2030, we believe it is necessary to secure capital for
re-investment through initiatives to improve the financial structurethat underpins our business and maximize operating cash flow.
For the maximization of operating cash flow, we will work on
inventory reduction that will lead to the shortening of the CCC. In
addition to raising inventory operational efficiency throughimprovements to the distribution system for products manufactured
in Japan, we will pursue inventory reductions by optimizing
domestic production systems, to enhance our capacity to makeproduction responses to sales situations that change on a daily
basis, and by optimizing the balance between sales and production.

Selection and concentration in capital investment,
improvement of equipment efficiency

Capital investment

Operating cash flow

Initiatives aimed at improvement of financial structureContinue stable dividend payment

In the new Mid-term Management Plan, in addition to investments
in sales bases and production equipment, we have planned
investments, including into IT, that will lead to greater management
efficiency. However, improvement of the financial structure will
require trimming down property, plant and equipment, and thetotal amount of capital investment has been set to within the range
of depreciation. As well as concentrating on investments in priority
domains with decisions that based thoroughly on capital cost
perspectives, we will make effective use of production equipment
within the Group through the optimization of domestic production
systems, and trim down property, plant and equipment.

Contraction of interest-bearing liabilities
From 2016 to 2020, the period of the previous Mid-termManagement Plan, interest-bearing liabilities trended around 70
billion yen, with a D/E ratio of around 1.0. In the new Mid-termManagement Plan, we will pursue the contraction of interestbearing liabilities with the aim of improving the financial structure.
Free cash flow (FCF) created from the maximization of operating
cash flow and the contraction of property, plant and equipment
will be used to fund the reduction of consolidated interest-bearing
liabilities, and we have set a goal of lowering the D/E ratio to 0.8
in 2025.
To enable the company to respond flexibly to future
uncertainties in the environment, including the COVID-19
pandemic, ISEKI has concluded commitment line contracts totaling
20 billion yen with our major banks of account, thus ensuring
ample fluidity and stability of the funds needed for the operationof our business.

Strengthening of business administration systems
To achieve our management goals while responding to a
management environment that is changing on a daily basis, we
believe that the strengthening of our business administration
systems is needed. We had introduced an in-house company
system which will evaluate businesses such as tractors, combine
harvesters, and rice transplanters by the three functions ofdevelopment and manufacturing, domestic business, and overseas
business. Through this approach, we will pursue the further
visualization of our consolidated business management. Further,
we will work to strengthen our business administration systems by
speeding up business management with the revamping of thefinancial accounting system, which is currently in progress, and theintroduction of a new administrative accounting system.

Financial and non-financial data

Financial strategy directions in the new Mid-term Management Plan

Shareholder return policy
ISEKI considers stable dividend payments to shareholders to be a
key policy of the company. As a premise of ongoing businessactivities, we have adopted a basic policy of continuing stabledividend payments, after taking into comprehensive consideration
factors such as the profit foundations, future businessdevelopments, and changes in the management environment,
while aiming to maintain and improve financial soundness.
Regarding dividends for FY2020, in light of the major impact ofimpairment losses on business performance and the recording ofa net loss for the fiscal year, we considered the strengthening of
the financial structure to be our top priority. As such, we sincerely
regretted to advise that a year-end dividend was not issued for
FY2020. The entire company will engage in the structural reforms
and management efficiency improvements that will enable us toresume stable shareholder returns at an early stage.

Conclusion

Corporate information

Reflections on previous Mid-term Management Plan

To contribute to the realization of a prosperous and sustainable
society by providing innovative products and higher quality of services
to the customers, which is our corporate philosophy, we will improve
the financial structure, build firm financial foundations, and support
sustainable growth and the enhancement of corporate value.

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Initiatives that support value creation

Sustainability in ISEKI Group

Basic Policy Fundamental concept

social responsibility (CSR) to contribute to development of sustainable society.

System for promotion of sustainability
ISEKI Group promotes sustainability activities with the Corporate Social Responsibility Committee put in place for discussing CSR-related
matters. The committee is chaired by the director in charge of the Corporate Planning Department, which promotes CSR activities, andis comprised of the members of the Directors’ Operation Committee for deliberation and the department heads of CSR-promotion
departments for promotion, and the committee meets twice a year.
The Corporate Social Responsibility Committee deliberates matters including the vision and strategy regarding sustainable
management, review of priority issues addressed by ISEKI Group, and initiatives to promote CSR and manages the progress of thesematters, while practicing management activities based on the PDCA cycle. Upon deliberation, the committee submits important mattersto the Directors’ Operation Committee and the Board of Directors for their decision. Departments in charge manage implementationand progress of CSR activities, report them to the management at relevant meetings, and evaluate them.
Major related meeting bodies

Corporate
SocialResponsibility
Committee

Activities in general

Public Relations Liaison Committee

Customers (products)

Product Planning Committee Advanced Technology Strategic Committee Quality Improvement Committee

Employees

Human Resources Committee

Environment

Environmental Planning Group Meeting

ComplianceManagement Supervisory Committee

To spread sustainability
To penetrate sustainability throughout ISEKI Group, the senior managements continue to send messages to employees while awarenessactivities through internal newsletters and study sessions are conducted. We focus on sharing the Group’s vision and philosophy withespecially the young and middle-career employees. We will also strengthen the penetration of the concept to employees at sales andmanufacturing departments so that each employee will be aware of sustainability in their daily work and get to their actions.

accurate information required from inside or outside of the Group in recognition of the importance of social accountability and thereby
endeavor to become a company with transparency.”● To win fair evaluation from all our stakeholders, including shareholders, investors, customers, suppliers, local communities, and employees,
and to ensure management transparency, we strive for fair, equitable, timely, and appropriate disclosure of management-related information
keeping with the purpose and meaning of fair disclosure rules.

Major engagements with stakeholders
The opinions and requests received through the various dialogues are compiled by the respective departments in charge and reported
to the company’s executives at the Public Relations Liaison Committee meetings held every month and are appropriately reflected in thebusiness activities.
Stakeholder

Concept behind the engagement

Customers

To provide high-quality and safe products andservices that satisfy our customers, ISEKI Groupwill extend farm business proposals and support,
including cultivation techniques, as well as support
for the application and safe use of agricultural
machinery. We will also strive to understand thetrue needs of customers through dialogue and use
this dialogue to improve product development.

 irect dialogue with sales and maintenance staff
D
User exchange meetings M
Visit M
Trainings, seminars
Exhibitions and demonstrations M
Proposal and support of farm business technologies
Market research

Shareholders
and investors

We will bolster corporate governance in order tobuild long-term trusting relationships with ourshareholders and investors. We will engage inconstructive dialogue based on fair disclosure policy.

 eneral shareholders’ meeting MGQ uarterly briefing sessions M
I ndividual meetings M
Information meetings for individual investors and shareholders M
Facility tours M

We will cooperate with our suppliers to create
opportunities for mutual improvement so thatthey can lead to mutual business development
including fair and equitable trade towards building
a sustainable supply chain.

IR information meetings for vendors M
Dealer meetings M
Superior company tours M
Inspection and meeting with suppliers M
Business report meeting M
Annual general meeting of Ishokai M
Visits (Japan, overseas) M

We will work on providing a secure and safe
workplace, share company information and support forcareer development towards creating an employeefriendly workplace and nurturing human resources.

Internal IR information meetings M
L abor management council M
Employee meetings M
Various training
Various commendation meets and contests M
Former employees’ meeting M

We will engage in environmental conservation,
activities for community growth and development, andactivities for the nurturing of the next generation soas to enable co-existence with the local communities.

T ours of factories and exhibition halls M
CSR activities such as cleaning activities
Exchange of views with local governments, etc. M
Participation in local events M

Suppliers

Employees

Local
community

Opportunities for dialogue

M denotes involvement of company executives

Case/SDGs study sessions
We held on-line SDGs study sessions and workshops for the wide range of employees including the young and mid-career employees
as well as some managers, to deepen their understandingof how the businesses of ISEKI Group and SDGs are
related to. In addition to learning about the global
landscape and social issues, the participants engaged in
active discussions on "what ISEKI Group can do to achieve
the SDGs" in the group work activities. According to thesurvey conducted after the sessions, 90% of participants
answered that they had a "good understanding or
understanding" of the nature and concept of the SDGs,
and the average level of understanding of the SDGs (ona 10-point scale) increased by 3 points compared to theprior study session.
Comments
from theparticipants

I want to be more aware of the impact of my actions, choices, and work on society and the SDGs.
The backcasting approach made me realize how important it is to spend my days to achieve the goals.
I want to enrich our society and people’s lives through the products and services of ISEKI, and then extend theaffluence through the future.

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ISEKI Report 2021

Value creation of ISEKI Group● The Group identifies and promotes priority issues so as to respond to requests and expectations of the society and fulfill its corporate● ISEKI Group strives to build strong relationships of trust with stakeholders by engaging in responsible dialogue with them including directinteraction by the company’s executives.
● In terms of information disclosure, we are committed to “disclose information properly to fulfill social accountability” and “promptly disclose

Initiatives that support value creationsocial issues through business activities unique to ISEKI and making its presence felt would result in development of the relationshipsof trust with its stakeholders and lead to mitigation and prevention of risks.

Financial and non-financial data

● ISEKI Group believes that, in order to achieve sustained growth and improve corporate value over the medium to long term, solving

Constructive dialogue with shareholders and investors
Initiatives toward fulfilling dialogue
The dialogue with shareholders and investors is supervised by
the officers in charge of the various business administration
departments (Investor Relations Section, Corporate Planning
Department, Financial Department, and General Affairs
Department) and the President, said officers and businessadministration departments strive to actively engage inconstructive dialogue utilizing various opportunities such as
earnings briefings.
In order to improve the dialogue, the person in charge of IR
collaborates with the department in charge of the specifictheme and works on preparation of disclosure materials,
sharing of information, etc. on a company-wide scale, in
addition to collaborating and sharing information with thevarious departments at the Public Relations Liaison Committee
held once every month. ISEKI Group has also set up pages
dedicated to shareholders and investors on its website andprovides disclosure information such as its management policy
and performance in an easy-to-understand manner. The
opinions, etc. obtained through the dialogue are fed back to
the Directors, management executives, and related
departments by way of reporting to meeting bodies, etc. forthe purpose of information sharing.

C onducting shareholder- centered generalshareholders’ meetings
ISEKI Group has built an environment where it is made easierfor shareholders to attend general shareholders’ meetings andconducts the meeting in a shareholder-focused manner.
The convocation notice for the general shareholders’meetings are sent by mail three weeks prior to the meeting
date and the details are posted on the website before theconvocation notices are sent. Moreover, in order to improve theconvenience for voting, electronic exercise of voting rights overthe Internet is made available in addition to voting by mail.
Further, the Group visualizes its business reports, posts
topics, and introduces its initiatives with the aim of deepening
the understanding of ISEKI as much as possible. In addition, by
putting shareholders safety first during the spread of COVID-19,
the 97th Ordinary General Meeting of Shareholders was
streamed via video.

ISEKI Report 2021

Corporate information

Basic Policy Fundamental concept

Stakeholder engagement

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Initiatives that support value creation

Akio Kikuchi
Representative Director, Chairman & Executive Officer

the medium to long term.
Atsushi Iwasaki
Independent Outside Director

do you evaluate the corporate governanceQ1 Howof ISEKI?

do you evaluate the corporate governanceQ1 Howof ISEKI?

To further improve standards of corporate governance, we have launchedvarious initiatives based on our Corporate Governance Code. Regarding
nomination and compensation of officers, we have enforced transparency
and objectivity through the establishment of the Nomination andCompensation Committee chiefly comprising of Independent Outside
Directors. In March this year, we also increased the number of Outside
Directors to three to make the Board of Directors be filled with a keener
sense of tension. We will further review the composition of the Board of
Directors including the promotion of diversity.

ISEKI has implemented evaluation by a third party organization on the

do you think of your role as theQ2 WhatChairperson of the Board of Directors?
With the belief that the role of the Chairperson is to lead discussion for
effective and efficient operation of the Board of Directors, I have taken
measures for well-balanced proceedings, such as allocating time fordiscussion of each proposal in advance, and prompting comments ofparticipants as necessary. Also, I have worked on circulating a list whichsummarizes the content of discussion at the Directors’ Operation
Committee meetings to participants of the Board of Directors meetings.
This enables the discussion process at the execution side to be smoothly
shared with the supervision side.

do you think are the key issues for our
Q3 Whatsustainable growth?
The new Mid-term Management Plan is a foothold for the next
centennial, and the achievement of the plan by any means is theissue toward our sustainable growth. I believe that transformation
to a lean and streamlined business structure which can constantly
generate profit without being affected by the fluctuation in sales ismost important. The attitude to candidly address any challenges is ourstrength, we could not fully manage changes in market environmentand deliver results in the previous Mid-term Management Plan. We will
once again promote Henkaku (Change) in the entire Group.

Initiatives that support value creationand healthy growth.

and improve corporate value overefficiency of the Board of Directors, and I have the same view as theresult of the evaluation which appreciates improvement initiatives suchas discussion on the new Mid-term Management Plan. However, fromthe standpoint of an Outside Director, I recognize lots of areas for
improvement regarding the operation of the Board of Directors and theway it should be. I will continue to express my opinion on these mattersat the Board of Directors meetings and other occasions.

Financial and non-financial data

our corporate governance system toward sustainable

My role is to promote sustainable growth

do you think of your role as the Chairperson
Q2 ofWhat
the Nomination and Compensation Committee?
The Nomination and Compensation Committee was established in March
2020 as an independent consultative body chiefly comprising of Independent
Outside Directors. In order to fulfil the responsibility required as a listedcompany in our Corporate Governance Code, I believe that the role of the
Chairperson is to work on issues with a sense of speed, such as revision of
Directors’ compensation system, formulation of succession planning, andpromotion of active participation of female employees.

do you think are the key issues for our
Q3 Whatsustainable growth?
Corporate information

I will take further steps in improving

Value creation of ISEKI Group

Messages on Governance E S G

I believe that the most important issue for our sustainablegrowth is to establish Henkaku (Change), the keyword of
the new Mid-term Management Plan in the organization.
The environment surrounding the company is drastically changing, andwe cannot materialize sustainable growth without breaking throughthe conventional ways of thinking. Fundamental change in corporate
culture is essential to celebrate the 100th anniversary in 2025 and lay thegroundwork toward the next centennial.

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Initiatives that support value creation

Corporate governance E S G
Toward the improvement of effectiveness of the Board of Directors

environment and maintaining fair management.
● Achieving stable growth and improvement in corporate value over the medium to long term is the top priority of our management.
In order to maintain a positive relationship with our stakeholders such as shareholders; customers; suppliers; local communities; andemployees, we endeavor to expand and improve our corporate governance.
● We acknowledge the importance of establishing an internal control system that provides stakeholders with important information ina timely and appropriate manner and reinforcing corporate governance on a group-wide basis. Based on that recognition, we plan toestablish administrative rules for group companies and a reporting structure to maintain fair business practices and share
information.

General shareholders’ meeting
Board of Auditors

Audit

10 directors(Incl. 3 outside directors)
5 corporate auditors
Appointment/Dismissal/Monitor(Business execution system)

Corporate Auditors

Audit

5 auditors (incl. 4 outside auditors)

Advice/Reporting

Nomination and Compensation Committee
5 members(2 representative directors,
3 outside directors)

Independent Public Accounting firm
Audit

Anonymous survey[ Methodology of Interview ]Individual implementation to target
audience by a third-party organization[ Efforts for analysis of results and solution of issues ]●Analysis of the results of questionnaires and interviews
done through a third-party organization

identified issues toward solution

Audit

IssuesPresident
Directors’ Operation Committee●Members and operation of Board of Directors meetings●Support system for Directors and Corporate Auditors●Training for Directors and Corporate Auditors●Dialogue with shareholders●Directors and Corporate Auditors’ own efforts●D ebriefing sessions organized by a third-party organization●Development and implementation of action plan for(Cooperation)

Directors

Appointment/Dismissal[ Methodology of Questionnaire ][ Main items for appraisal ]Management Supervisory Committee

Internal Audit Department(Directors & appointed Corporate Officers,
General Managers)

Corporate Officers

FY2018Internal Audit

Narrowing down agenda items of the Board of
Directors meetings

Review of criteria for submitting proposals to
the Board of Directors meeting

The way nomination of Corporate Officers throughthe Nomination Advisory Committee should be

Establishment of the Nomination Advisory
Committee (currently the Nomination andCompensation Committee)

Associated companies, divisions & sections

ISEKI has established the Nomination and Compensation
Committee comprised of two Representative Directors and three
Independent Outside Directors as a consultative body of the Boardof Directors regarding compensation of Directors and Corporate
Officers, in addition to nominations such as proposals of agenda
items of general shareholders’ meetings regarding appointment anddismissal of Directors; selection and removal of Corporate Officers;
and appointment and dismissal of Representative Directors.
The Committee was held four times in the Fiscal Year Ended
March 31, 2021. It has mainly discussed the items shown on theright and submitted recommendations to the Board of Directors.

● Criteria for appointment of Directors● Criteria for selection of Representative Directors● Criteria for dismissal of Directors and those for removal ofRepresentative Directors● Criteria for judgement of independence of Outside

Directors● Policy for determining the individual compensation etc. of
Directors● Nomination of candidates for Directors and selection ofRepresentative Directors

Nomination and Compensation Committee
Established

December 1, 2018 (the Nomination Advisory Committee was reorganized into the Nomination and Compensation Committee as of March 25, 2020)

Members

Two Representative Directors, two Independent Outside Directors, one Independent Outside Corporate Auditor

Chairperson

Independent Outside Director

Roles(1) Appointment and dismissal of Directors (general shareholders' meeting proposal)

Establishment of following criteria
Initiatives toward improvement of effectivenessEstablishment of Nomination and Compensation Committee● Criteria for appointment of Directors● C riteria for selection of Representative Directors● Criteria for dismissal of Directors and thosefor removal of Representative Directors

Issues

FY2019(6) Composition and decision process of compensation for Directors and Corporate Officers

Devising ways to have more strategic discussions
at Board of Directors meetings

Holding free discussion on selected themes
after the Board of Directors meetings

Improvement of objectivity and transparency of
the Directors’ compensation system and process

Main themes selected for discussion● Overall framework of the new Mid-term● Aggregate result of the opinions of young

employees, and report of the analysis oftraining sessions for officers and executives

Issues(3) Selection and removal of Representative Directors(5) Amount of compensation for Directors and Corporate Officers

Initiatives toward solution

Management Plan

(2) Appointment and dismissal of Corporate Officers(4) Representative Director successor plan

Initiatives toward solution

Financial and non-financial data

Board of Directors

All Directors and Corporate Auditors

FY2020

Following through the progress of Management Plan

Corporate information

Appointment/Dismissal[ Target audience ]Overview of evaluation

Corporate governance system

Appointment/Dismissal

To further facilitate the roles of the Board of Directors, ISEKI has implemented a self-appraisal and analysis program for individual senior officers
since 2017. The analysis was done through a third-party organization, using methods for canvassing personalized opinions such as individualquestionnaires and individual interviews for all Directors and Corporate Auditors.

Value creation of ISEKI Group● ISEKI Group operates its management system with the purpose of swiftly and accurately responding to changes in management

Initiatives that support value creation

Basic Policy Fundamental concept

Initiatives toward solution
To be implement in FY2021

Formulation and operation of succession planningof the Chief Executive Officer (CEO), etc.

(7) Establishment and change of basic policy and criteria for deliberation of the above.
(8) Other matters recognized by the Board of Directors as necessary in association with each of the above items.

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Initiatives that support value creation

List of officers E S G(As of the end of the general shareholders’ meeting held on March 30, 2021)

Akio Kikuchi

Shiro Tomiyasu

Yukio Nawata

Masayuki Fukami

Hajime Odagiri

Shuichi Jinno

Representative Director,
Chairman & Executive
Officer

Representative Director,
President & Executive
Officer
In charge of Corporate Planning
Department, Investor Relations
Section, Financial Department

Director & Managing
Corporate Officer
General Division Manager,
Business Division, In charge ofBusiness Division,
Dream Agricultural ResearchInstitute, and Tsukubamirai OfficeDirector & Managing
Corporate Officer
In charge of Personnel
Department, deputy incharge of Corporate Planning
Department, Investor Relations
Section, and ComplianceDirector & Managing Corporate Officer
General Division Manager, Development& Production Division
In charge of Cost Control Department
and Purchasing Department deputy incharge of Matsuyama General Affairs
Department

Director & Corporate Officer
In charge of IT Planning
Department, deputy
in charge of Financial
Department (Leader ofoperational efficiency
improvement project)

Having served as General Division Manager of the Business
Division and President at the sales company of domestic
agricultural machinery, he has extensive experienceand achievements in domestic sales and business
management, and currently operates the meetings of theBoard of Directors as a forum for constructive discussions
and exchange of opinions as chairman of the Board. The
Company appointed him as a Director as it expects him
to continue to contribute to business promotion and theenhancement of corporate governance.

●‌ Reason for appointment

With advanced knowledge in the areas ofmanagement planning and accounting andfinance, he has demonstrated great leadershipfrom a company-wide perspective as President& Executive Officer. The Company appointed
him as a Director as it expects him to continue tocontribute to the enhancement of corporate value.

●‌ Reason for appointment

Having been responsible for sales planning ofdomestic agricultural machinery and servingas President at major sales companies, he has
extensive experience and achievements as
General Division Manager of the Business Division.
The Company appointed him as a Director as it
expects him to make further contributions.

●‌ Reason for appointment

Having served as Director and President at majordomestic sales companies, he has extensive
experience and achievements in domestic sales,business management, and personnel management.
The Company appointed him as a Director as it
expects him to make further contributions.

Having been involved in the engineering anddevelopment fields of agricultural machinery
for many years and having served as Presidentof domestic sales company and Chairman &President of Chinese joint venture companies,
he has extensive experience and achievements
related to agricultural machinery in Japan andoverseas. The Company appointed him asa Director as it expects him to make further
contributions.

●‌ Reason for appointment

Having served as General Manager of divisions
relating to information systems, investor
relations, and personnel affairs, he has extensive
experience and achievements in management
areas. The Company appointed him as a Director
as it expects him to make further contributions.

Corporate Auditors

Kazuya Tani
Director & Corporate
Officer
General Division Manager,
Overseas Business Division●‌ Reason for appointment

Outside Independent

Outside Independent

New appointment Outside Independent

OutsideAtsushi Iwasaki

Shoji Tanaka

Kazuo Nakayama

Seigo Kimoto

Masato Machida

Full-time Corporate Auditor

Full-time Corporate Auditor

Director

Director

Director[Significant concurrent positions]Certified public accountant,
Outside Director, NH Foods
Ltd., and Outside Director,
OLYMPUS CORPORATION[Significant concurrent positions]
Attorney[Significant concurrent positions]-●‌ Reason for appointment●‌ Reason for appointment

OutsideNew appointment Outside

Outside Independent

Yasuhide Motokawa

Yukito Shiraishi

Mami Taira

Full-time Corporate Auditor

Full-time Corporate Auditor

Having served as officers and President ofsales companies in Europe, he has extensive
experience and achievements in sales, business
management, and personnel management
related to overseas business. The Company
appointed him as a Director as it expects him to
make further contributions.

With extensive experience and knowledge
as a certified public accountant, he has beenmonitoring the Company’s management from an
objective viewpoint to enhance the supervisory
functions and ensure transparency of the Boardof Directors. The Company appointed him as an
Outside Director as it expects him to continue tosupervise the Company’s management for thesustainable enhancement of corporate value.

With extensive experience and knowledge as an
attorney, he has been monitoring the Company’s
management from an objective viewpoint toenhance the supervisory functions and ensuretransparency of the Board of Directors. The
Company appointed him as an Outside Director
as it expects him to continue to supervise theCompany’s management for the sustainableenhancement of corporate value.

●‌ Reason for appointment

Having been in charge of overseas businessand the food resources business unit as wellas achievements in business management at a
general trading firm, he has extensive knowledge
and experience related to food resources andagriculture in Japan and overseas. The Company
appointed him as an Outside Director as it
expects him to utilize his wealth of knowledge
to monitor from an objective viewpoint, andsupervise the Company’s management for thesustainable enhancement of corporate value.

●‌ Reason for appointment

He is well versed in the Company’s businesses,
having served as Outside Corporate Auditorof the Company for 7 years and 9 months.
In addition, he has advanced knowledge andextensive experience in the area of financing. The
Company appointed him as an Outside Corporate
Auditor as it believes that he will appropriately
audit the performance of duties by Directors.

●‌ Reason for appointment

He has advanced knowledge, having experienced
in various fields of corporate planning, information
systems, development and manufacturing. The
Company appointed him as a Corporate Auditor
as it believes that he will appropriately audit theperformance of duties by Directors.

Financial and non-financial data

Director●‌ Reason for appointment

Initiatives that support value creation●‌ Reason for appointment

Value creation of ISEKI Group

Directors

Corporate Auditors

Corporate Auditor

The Company appointed him as an Outside
Corporate Auditor as it believes that he willappropriately audit the performance of duties
by Directors as he has extensive knowledge andexperience in the finance area.

41

ISEKI Report 2021●
‌ Reason for appointment

He has advanced knowledge and extensive
experience in the areas of agriculture, forestry
and fisheries in general as well as in the areasof audit and internal control. The Company
appointed him as an Outside Corporate Auditor
as it believes that he will appropriately audit theperformance of duties by Directors.

●‌ Reason for appointment

She has specialized knowledge and extensive
experience related to accounting and tax
practices as a certified public accountant
and certified tax accountant. The Company
appointed her as an Outside Corporate Auditor
as it believes that she will appropriately audit theperformance of duties by Directors.

Toward Henkaku (Change)
Corporate information[Significant concurrent positions]Certified public accountant, Certified tax
accountant, and Outside Director & Audit
and Supervisory Committee Member,
Suzuden Corporation, External Directorand Audit & Supervisory Committee
Member, FOOD & LIFE COMPANIES LTD.

●
‌ Reason for appointment●M‌ essage from the newly appointed Outside Director

I have been in charge of the machine and food businesses at a trading firm, and beenin charge of the various businesses including the domestic agricultural business at aleasing company. I will make every possible effort to realize Henkaku (Change), our
key vision, together, by utilizing my experience and knowledge of various businesses.

Kazuo Nakayama, Director

ISEKI Report 2021

42

Initiatives that support value creation

Risk management

E

S

G

Typical risks and mitigation measures

Risk management system

Latent risks and uncertainties which could affect ISEKI Group’s future financial performance are exemplified as below. We recognize thepossibility of the occurrence of such risks and uncertainties, and will strive to avoid their occurrence and take proper measures should they occur.
Risk items

1

Changes in economic
conditions and theenvironment ofagriculture

2

Exchange rate
fluctuations

3

A price hike of raw
materials, difficulty
in procurement, andconfusion in the supply
chain

The Risk Management Control Committee under the Directors’ Operation Committee periodically identifies and evaluates risks, reevaluatesmagnitude of damage and frequency of occurrence, and examines countermeasures, in accordance with the risk management regulations
to minimize the risk of causing damage or disadvantage to ISEKI Group under the supervision of Corporate Planning Department.

Reporton specific
4 Dependency
customers or suppliers

Divisions & sections

Supervision

Secretariat (Corporate Planning Department)

Risk Management Control Committee

Directors' Operation Committee

Identification of risks,
evaluation of responses to risks

with other
5 Competition
companies

defects in
6 Serous
products and services

Content of typical risks● Sluggishness of domestic and/or overseas economic conditions, in addition
to characteristic structure of agricultural machinery market, such as aging
of agricultural workforce; a decreasing number of farm households due
to labor shortage; any change in agricultural policy; and influence of pricevolatility of agricultural products which are easily affected by weather
conditions on purchasing sentiment of farmers, may harm our financial
performance through reduced demand for agricultural machinery.

Risk Mapping

while anticipating changes in market trends● Appreciation of Japanese yen may decrease our price competitiveness.
● Pay in Japanese yen to settle a half of the exporttransactions and in foreign currencies to settle● Preparation of consolidated financial statements based on financial statements ofour foreign subsidiaries which are prepared in local currencies and then converted
to Japanese yen may expose us to a fluctuation risk of foreign exchange.

another half, or buying forward contracts● Increase the ratio of local procurement inoverseas production● As we procure raw materials and parts from numerous suppliers, situations● Procure raw materials and parts from multiple● Any change of business policy, business depression or bankruptcy of our● Sustain sound partnership with customers andsuch as sudden and unexpected increase in prices or a prolonged tighteningof supplies may harm our business performance.

specific customers or suppliers may harm our financial performance.

suppliers

suppliers● Procure raw materials and parts from multiple
suppliers● Competition with other companies associated with “social implementation● Develop products with high functionality and● Serious defects in products and services, or erosion of trust for ISEKI Group● Establish the system of quality control andof smart agriculture” and incompliance with the changes in businessenvironment associated with numerous needs and hike in environmental
awareness in overseas markets may harm our performance.

and its products may harm its financial performance.

in compliance with smart agriculture, andreduce price following the decreased demand
for agricultural materials● Strengthen product competitiveness including
after-sales service.
quality guarantee● Implement product development, manufacturing,
and after-sales service in compliance withdefined internal processes● Impairment loss, loss on valuation or loss on sale associated with significant

7

Major risk mitigation measures● Build sales network and formulate strategies

Stock market fluctuation, decline in stock and land price may adversely affect the businessperformance and financial position.
Price decline in land and ● Decline
in profitability associated with significant deterioration of businessother fixed assets
environment, or impairment loss caused by market price decline may adversely● Carry product liability insurance● Reassess the significance of cross-holding ofshares to consider selling those shares whose
significance is reduced.

affect the business performance and financial position of ISEKI Group.

Government regulations ● Cost burdens in case of escalated public regulations of environmental issues or

ISEKI manages risks by dividing by cause, either external factors or internal factors, and then classifying by the magnitude of damage
when risks become obvious and the potential frequency of occurrence. Note that the risk mapping chart indicates the maximum risks.
Risks caused by external factors

Risks caused by internal factors

Large● When ISEKI Group engages in international business activities, unexpected
derived from
9 Risks
international business

Large

4 12

1

2

3

8

9 11 13

8

7

1

3

8 11

5

6

changes in tax and legal systems, trade policies, or political unrest in any
particular country may harm its financial performance.
● Difficulties in securing human resources, immature level of technologies andunstable labor-management relationships may primarily hinder the businessdevelopment of ISEKI Group mainly in the Asian region.

● Strengthen research capabilities and thesystem of information gathering● If any of executives or employees of ISEKI Group should conduct any acts that ● Establish the ISEKI Group Code of Ethical9

10 Risk of legal violation

10 13

violate laws and regulations, its business activities may be impeded and thefinancial performance may deteriorate.

Behavior based on legal compliance and ethics● Prepare an internal control system● Ensure legal compliance and the code of

ethical behavior in the entire ISEKI Group

Risk of natural disasters,

Damage● Reduce environmental burden in production

activities and entire business activities
on environmental issues, market demand as well as corrective measures undertaken upon the occurrenceof troubles, lawsuits and others may deteriorate the financial performance.
● Take appropriate measures in entire businessetc., and occurrence
activities including the product lineup, sales● Change in supply and demand affected by the reduction in agriculturalof related difficulties,
volume and others of ISEKI Group.
land and change in system of crops associated with the global temperature
Response to climate
increase in the long term may deteriorate the financial performance.
changeaccidents,
11 unexpected
spread of infectious

Damage● Natural disasters such as earthquakes, typhoons, floods, unexpected accidents, ● Carry various insurance against fire, wind andor infectious diseases at major sites at home and abroad may harm thefinancial performance of ISEKI Group.

flood damage● Establish and implement business continuity plans● Restrict business travels and review working styles

Corporate information

Board of Directors

Risk management system diagram

Information sharing,
discussion of countermeasures

Value creation of ISEKI Grouppre-empt risks facing group operations and to minimize losses when a risk event materializes.
● Our risk management regulations define factors potentially leading to physical, economic and reputational losses and disadvantages
as risks. The aim of our risk management is to prevent risks from materializing and minimize losses, and to contribute to smoothbusiness operations, soundness of assets and maintenance of corporate credit.

Initiatives that support value creation● ISEKI Group is committed to putting in place management standards; regulations and monitoring; and response mechanisms to

Financial and non-financial data

Basic Policy Fundamental concept

to stop the spread of novel coronavirus infections

disease, etc.

● Continuously implement various measuresutilizing the Web

Business alliances, joint

6

and strategic
12 ventures
investment with othercompanies

Small

43

ISEKI Report 2021

Frequency

Highalliances or joint ventures due to financial position or other reasons mayhinder the maintenance of the alliances.

● With regard to strategic investment including acquisitions, the expected

Low

FrequencyHigh

13 Debt● Foster mutual trust and ensure mutual benefits● Review contract conditions from a comprehensive
viewpoint

results and/or effects may not be obtained in the integration of business;
technologies; products and human resources, or more-than-expected timeand expenses may be required.

● Should any of covenants of outstanding syndicated loan and commitment

Small
Low

● A conflict of interest to occur between the parties concerned in businessline contracts with financial institutions be triggered, ISEKI Group could
face obligation to pay back some or all of these loans early, which could
adversely impact its financial position.
● A hike in interest rate may harm the financial performance.

● Combine with various loan conditions suchas fixed interest rates● Sustain sound partnership with financial
institutions

ISEKI Report 2021

44

Initiatives that support value creation

Compliance E S G
Basic Policy Fundamental concept

Examples of initiatives undertaken
ISEKI Group is implementing various group-wide education and awareness-raising activities to ensure compliance.

Value creation of ISEKI GroupIn order to raise compliance-focused management to a higher level, ISEKI Group works to make the importance of compliance thoroughly understood and enforced by each and every employee with the aim of raising compliance awareness.

Compliance training for newly-hired employees
ISEKI Group provides compliance training to all newly-hired employees across the Group every year. Although some training

To prevent misconduct and scandals from occurring by ensuring
thorough compliance and raising awareness among each of theGroup members, the Group has built a compliance team structure organized cross-functionally under the leadership of the
Director in charge of compliance. The Personnel Department
handles overall management of compliance activities acrossthe whole ISEKI Group, and the supervising unit of individual
departments handles overall management of compliance education and awareness activities at the departments.
The progress is reported to all Directors and Corporate

Auditors at the Management Supervisory Committee meetings
held every month. Internal Audit Department audits the stateof compliance and reports the results to the Management
Supervisory Committee for discussion. Any material incident
occurred or discovered is reported to the Management Supervisory Committee and Corporate Auditors without delay. To improve the independence of internal audits, the Internal Control& Audit Department was reorganized into the Internal Audit
Department in September 2020, and the Internal Audit Department performs internal audits thereafter.

sessions were provided on a remote basis due to the impact of the novel coronavirus (COVID-19) in 2020, we are working onawareness-building among employees that compliance means not only compliance with laws and regulations but also behaving incompliance with ISEKI Group’s management philosophy.
Harassment training and establishment of consultation system
In response to the enforcement of the so-called Anti-Power Harassment Law in June 2020, we provided harassment training to all
officers and managers across ISEKI Group in June the same year. The Group has also set up a harassment help desk at each groupcompany to put in place a system to provide consultation across the Group.

Establishment of whistle-blower system (Ethical Hotline)

System for promoting compliance (Compliance team)

ISEKI Group has set up a group-wide whistle-blower system

ComplianceDirector in charge anddeputy director in charge

Management Supervisory
Committee
Internal Audit
Department(Ethical Hotline) for the use of all employees, retirees andNumber of whistle-blowing cases(cases)17

suppliers. The aim is to establish an open corporate culture andenable pre-emptive detection of problems within the company.
In the system, telephones, e-mail, and other communication
methods may be used for report or consultation in the event ofSecretariat(Personnel Department)

0
Initiatives that support value creation

Compliance system

8

8
6

5

detection of conduct in violation of laws and regulations, thecompany’s Code of Ethical Behavior or the company regulations
on employment, or other rules. To protect the human rights ofDevelopment &Production Division
Administrative Department

Overseas Business DivisionCorporate BusinessControl Department

Other
Personnel Department andother departments

Manufacturing bases

Overseas offices,
sales companies

In FY2020, the system handled six cases of consultation andwhistle-blower reports.

Initiatives for fair trade

Education and awareness-raising
To raise awareness of each individual employee, ISEKI Group is
implementing various training programs and awareness-raising
activities for employees in a planned way.

Activities for enlightenment<Activities for penetration and education on compliance>E nsuring of thorough understanding of the “ISEKI Group
Code of Ethical Behavior”

45<Training activities>
The company carries out a wide range of education and training
programs concerning compliance themes in the day-to-day
conduct of business affairs, especially on points warranting
special attention.
Incorporation into company-wide events andeducational training programs

The company has distributed the “ISEKI Group Code of EthicalBehavior” to all employees of the Group and works to ensure athorough understanding of this pamphlet, so as to ensure thatbusiness activities meet corporate ethical requirements.

• Sales subsidiary president meetings• manager meetings• executive training• newly-appointed manager training• newly-hired employee training

Awareness-raising by issuing “Compliance News”

Individual training programs

As a means to provide information regarding compliance, thecompany issues the quarterly “Compliance News” bulletin toraise compliance awareness among employees. With a focus onpriority compliance initiatives, it contains information such as
messages from the management team and examples of practical measures undertaken by employees.

• Sales subsidiary employee meetings of sales departments• facility personnel training of facility departments• specialized employee training of development departments

ISEKI Report 2021

2019

2020

the system readily accessible, the Group has set up contact
desks both internally and outside the company.

Sales companies

2018

Initiatives for protecting personal information
The Personal Information Handling Regulations is formulated
and internal systems concerning the management of personal
information are maintained. ISEKI Group works to appropriately

ISEKI Group formulated the “Code of Ethical Behavior” as aprotect personal information by carrying out activities for evenbasic policy to prevent any form of corruption, such as bribery,further awareness and education on such protection forand is ensuring group-wide compliance with the code. In light

employees. Further, we will work to strengthen protection ofof experience of receiving a cease and desist order under the

personal information both in Japan and abroad.

Anti-Monopoly Act in relation to facility construction, theGroup formulated conduct guidelines and compliance manual
focused on the Anti-Monopoly Act in 2015 to inculcate theawareness of compliance across the Group. In addition to theconventional whistle-blower system, we have set up a help
desk for consultation on the Anti-Monopoly Act to enhance
the prevention of legal violation.

Financial and non-financial data

Business Division
Agri-plant
Department

2017

Information security
ISEKI Group has striven for the maintenance and managementof information security by establishing regulations for thehandling of electronic information and setting up the“Electronic Information Security Management Committee” led

Corporate information

Business Division
Sales Planning &Administrative Department

2016

whistle-blowers and keep them anonymous, as well as to makeby an officer in charge of the information system division. The
Group has also worked to improve information literacy among

Initiatives undertaken by overseas group companies

employees by providing training for the handling of internalWith the expansion and diversification of its overseas business,

information as part of education for newly-hired employees.

ISEKI Group has been working to build and improve compliancesystems at overseas group companies. Further, we will strive tostrengthen internal controls of overseas group companies.

ISEKI Report 2021

46

Initiatives that support value creation

Improvement of customer satisfaction and quality assurance E S G
Product development in consideration of the needs of customers and society

ISEKI Group provides products and services that satisfy customers through activities to improve customer satisfaction.

Product quality assuranceStrengthening of quality control

ISEKI Group works to provide consistent product quality
assurance from product planning to sales and after-sales
service while reflecting the opinions from the market inproduct development and improvement so as to offer
products developed from the customers’ perspective in atimely manner.
The Group takes all possible measures for quality control
and makes prompt responses in good faith should any
quality related issues arise.

As part of “Monozukuri (making of things) Innovation” setout in the Mid-term Management Plan to increase the Group’s
competitiveness, ISEKI Group repositioned the “Quality Control
Department,” which controls overall product quality, above the“Development & Production Division” to strengthen the quality
control system in January 2021. The Group holds a CS Enhancement Committee meeting, participated by officers in chargeof product development and sales activities, once a month toensure security and safety in product development.

 roduct development and consistent quality assurP
ance system that reflect the voice of customers

Flow of how voices of customers are reflected in product development

Strong relationship building with customers through sales and services
We believe that increasing the brand value of ISEKI Group andbuilding trust with customers are keys for us to continue tobe chosen by customers. In selling and service activities, ISEKI
Group is striving to build stronger relationships with customers

Manufacturing

Development and optimization of quality at each step
Grasping the required quality

Safe andhigh-quality
product

Incorporating into planning quality
Design quality and development of functions
Sales preparation evaluation
Verification and evaluation of product quality
Evaluation of customer satisfaction
Quality assurance verification and evaluation (design review)

To ensure secure and safe use of purchased products, ISEKI Group provides a
pre-delivery inspection using a checklist and usage instructions on test operations.
The Group is also working to provide after-sales support to ensure safe and efficient
farm work through efforts, such as calling on users to check the operations and perform pre- and post-season inspections. Further, ISEKI Group holds seminars on how
to handle agricultural machinery for female farmers as part of the “NOGYOJOSHI(female farmer) Project” sponsored by the Ministry of Agriculture, Forestry and Fisheries, in addition to providing safety training at sales companies throughout Japan.
The Group is also focusing its efforts on human resource development of service
staff both in Japan and abroad in order to provide high-quality and prompt services.
Major service activities

Safety training
Provide safety training at sales companies throughout Japan

Number of recalls by fiscal year*²
2016

2017

2018

2019

2020

5

6

0

2

0

Number ofrecalls*1. Ministry of Land, Infrastructure, Transport and Tourism, Ministry of Agriculture,
Forestry and Fisheries, Ministry of Economy, Trade and Industry, etc.
*2. N umber of recalls filed with the Ministry of Land, Infrastructure, Transport and Tourism

Please find the link below to access important notifications of recalls:

https://www.iseki.co.jp/news/

Inquiries, opinions, comments and complaints from customers,such as on products, are accepted by phone and on the website, and the department in charge strives to respond to them
promptly in a sincere manner (target of within one day). The
valuable opinions from customers are fed back to the company’s executives and concerned departments and are actively
used for better product development, sales, and service activities to increase customer satisfaction.
Further, for matters that receive a large number of inquiries,
ISEKI Group works to disclose sufficient information on its website so that customers can solve the issues on their own.

47

ISEKI Report 2021

Initiatives that support value creation

Development design

Contents of inquiries regarding products from customers (FY2020)(Total number of inquiries that came through the website: 404)

Instructions on test operations
upon delivery
Provide usage instructions using achecklist upon test operation

After-sales services
Inspections and maintenance
Provide inspections and maintenanceto ensure safe use
Responses to product failures
Provide a prompt repair service torespond to a defect occurredFinancial and non-financial data

Product planning

Before-sales services

 esponses to and utilization of inquiries from cusR
tomersthrough sales activities for the sake of customers, such as byimplementing the “Sales Administrative Rules,” which set out
rules for adequate provision of information on and fair transactions of products and services, at its sales companies in Japan.

Awareness-raising activities for safer use
Sales andservices

Responses to quality defects
When an issue occurs in products requiring improvement measures, ISEKI promptly performs inspections and repairs of the
products giving the utmost priority to customers’ safety.
When we launch a recall, we notify and report to the concerned authorities*¹ and disclose the information on the website of ISEKI & CO., LTD. to draw attention of customers andprovide them information.
We share information on quality deficiencies internally inorder to prevent the recurrence of the same deficiency.

*Models equipped with the alarm device: TQ13/15/17, TM150/170, 16/18, 165/185,
TC11/13

Feedback of voices of customers (opinions, requests, and emerging needs)

Customers

ISEKI Group carries out consistent quality assurance activities byreviewing the design in every step from product planning anddevelopment design to manufacturing, sales, and services withthe aim of providing products that are safe and respond to thetrust placed by the customers.
In product development, ISEKI Group grasps the requirement
details based on the voice of customers (opinions, requests,
and emerging needs) and utilizes that in “planning quality” andelaborates on functions in “design quality,” ultimately reflecting that in “product quality.” In each step, the Group carries
out evaluation and verification of quality optimization fromvarious aspects, including planning, development and manufacturing. ISEKI Group also gathers customer opinions throughservice activities to provide instructions on test operations upondelivery and inquire on the conditions of the delivered products
and has built a mechanism that feeds back those opinions fordevelopment and improvement, reflecting those in developing
safe, high-quality products.

the driver that the brake pedals are not locked together when
he/she operates the accelerator pedal without interlocking theright and left brake pedals. We also ran a campaign to promote
the installation of the alarm device so as to build awarenessamong more customers.

Agricultural machinery mechanics
Approximately

2,200(As of March 2021)

Adequate information provision and enhancement of the content thereof
ISEKI Group is working on marketing activities to increase ISEKI
brand awareness among a wider range of people in society,while continuing to pursue community-based activities. In addition to providing accurate and easy-to-understand information
on products and product labeling and marking in accordancewith laws and regulations in each country and region, theGroup delivers useful farm business information for customers’

farm management through media, such as a farm businessinformation magazine “FARM ISLAND” and Dream Agricultural
Research Institute Bulletin titled “Yumesoken Dayori,” which
communicates cutting edge farm business technologies.

Corporate information

Basic Policy

To ensure customers’ safety in farm work, ISEKI works to develop products with enhanced security and safety features. Oneof the challenges faced to ensure the safety of farm work using
tractors is to prevent accidents caused by erroneous operations
due to single-sided braking. To address this challenge, ISEKI
released a “single-sided braking alarm device” for small-sizedtractors* in June 2020. In order to prevent accidents and ensure
secure and safe use, the device sets off a sound alarm to warn

Value creation of ISEKI Group

Basic Policy

Other: 6%
Opinion and request: 1%
Document request: 6%

Technical details: 27%

Product andparts-related: 60%

Special website to introduce ICT and laborsaving and lower-cost cultivation

Farm business information magazine introducing
farm business technologies and nationwide initiatives

ISEKI Report 2021

48

Initiatives that support value creation

Basic policy (fundamental concept)

Basic Policy Fundamental concept

To achieve its social responsibility, together with its suppliers, across the entire supply chain, ISEKI Group’s basic policy is that “therelationship with suppliers should be fair and equitable and it will not abuse its privileged position in the trade to give unfair anddisadvantageous treatment to suppliers.”

The basic rule of ISEKI Group is “to actively contribute to local communities as a member responsible for society” and “to contributeto local society while affording respect for laws and regulations, practices and culture of the country when doing business overseas.”
ISEKI Group works on contributing to society by leveraging the strengths of its main business aiming for the development of local
communities in the medium- to long-term.

Initiatives for complying with the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors

Key initiatives in FY2020

Checks and supervision have been established in each group company, including checks and balances through periodic reporting to theManagement Supervisory Committee and monitoring through audits. The Group also provides continuous education and training concerning the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors (the “Subcontract Act”) to conduct propertransactions with subcontractors.

ISEKI Group is engaged in social contribution activities centered on fields of “food,” “agriculture” and “landscape.”

Operational manual for compliance with the Subcontract
Act

Compliance education (Code of Ethical Behavior, Casebookof Scandals, etc.)
CSR education (CSR procurement guidelines, etc.)

Provisions of the Subcontract Act(1) Definitions (definitions of main subcontracting entrepreneur and subcontractor)(2) Obligations of a main subcontracting entrepreneur(3) Prohibitions

Manufacturing education

Awarded the Iseki Prize at the 79th Ehime Prefecture Children’s Exhibit of Invention and Devices

Experience and activity
education(Development of diverse
human resources)

Culture, arts, and sports

As a global corporation, conducted remote lectures for high school students as part of
WWL*2
Provided educational programs on smart agriculture for agricultural high schools and universities
Accepted students for internships and hands-on experience
Donated tillers as prizes of excellence in the Fourth National Agricultural High School andUniversity Website Contest
Held the 25th Sanae National Children’s Drawing Contest

CSR procurement policy

Contribution to local community

Participation in a tree-planting activity
Participated in the local traffic safety campaign

ISEKI Group aims to be a company trusted by society by working on CSR procurement together with its suppliers to giveits priority to environmentally- and socially-friendly material
procurement and product and service provisions.

International cooperation

Cooperated in the First Rice Taste Appraisal Contest in China (delivered a lecture on recommendations for rice farming in China; participated as a Rice Taste Appraiser representing Japan)

Contribution to environment

Carried out cleaning and environmental beautification activities
Held activity to turn off the lights at various offices

Assistance for disaster recovery

Provided support for the COVID-19 pandemic (see p. 23 for details)

Promotion of CSR procurement
ISEKI Group has drafted the ISEKI Group CSR Procurement
Guidelines which outline the Group’s CSR concept and procurement policy in order to jointly promote, with its suppliers, procurement activities that take social responsibility into account,
as well as to seek their support and cooperation. ISEKI Group,
along with disseminating the guidelines, carries out periodic
surveys to grasp the status of CSR initiatives at suppliers.

Promotion of green procurement
ISEKI Group has drafted the
ISEKI Group Green Supply
Guidelines to take the environment into account in partsand materials procurement,
and carries out activities togain cooperation of suppliers.
Regular reports regarding thestatus of initiatives at suppliers
are obtained using a self-checksheet, and those suppliers
superior in environmental
activities are designated as
Certified Green Suppliers.

49

Food and agricultural
education

Disseminated information on agriculture and agricultural machinery through factory tours
and ISEKI Dream Gallery*1
Awareness campaign through displays of agricultural machinery and holding workshops at
food and agricultural events
Cultivation of rice with children in the community as part of voluntary activities

ISEKI Report 2021

Ratio of Certified Green Suppliers

76%

2017

81%

82%

84%

Target value
85%

2018

2019

2020

2021

ISEKI Group CSR Procurement Guidelines (excerpts)[1] ISEKI Group’s CSR(Fundamental concept)
Contribute to the creation of a prosperous andsustainable society
Resolve social issues through business and improve
corporate value

Initiatives that support value creation

Explanation on the details of recurrence prevention measures; Ethical Hotline

Participation in an outside seminar on the Subcontract Act

Key initiatives*1. We are temporarily suspending the acceptance from the perspective of preventing the spread of COVID-19.
*2. WWL (Worldwide Learning): An educational program development promoted by the Ministry of Education, Culture, Sports, Science and Technology aimed at nurturing
innovative global human resources capable of demonstrating their abilities internationally.

[2] CSR procurement policy(Fundamental concept)
Policy that the ISEKI Group complies with in procurement
activities and to promote CSR procurement

Sanae National Children’s Drawing Contest

Cooperation in the First Rice Taste Appraisal Contest in China[3] CSR procurement guidelines (basic items)

ISEKI Group holds a children’s drawing contest every yearwith the aim of helping children nationwide familiarize
themselves with agriculture and provide education on
coexistence with nature and environment. The Group has so
far held the contest for 25 times and received a total of
30,500 entries.

ISEKI participated as a jury member in the First Rice Taste
Appraisal Contest held in Guangdong, China with the aimof improving the quality of Chinese rice by adopting theJapanese rice taste appraisal standard. We presented ourriding rice transplanters PZ80 to the top three contestants
who won the Japanese Gold Awards. We also delivered alecture on recommendations for rice farming in China
based on rice farming techniques and knowhow we have cultivated.

1. Customer satisfaction and quality assurance
2. Compliance with laws and ethical business activities
3. Respect for human rights and creation of healthy andsafe workplace
4. Environmental preservation and green procurement
5. Coexistence with local communities and international
cooperation
6. Management transparency and accountability

25th National Best Picture “Rice Transplanting by All
Family Members”

Corporate information

Reaffirmation of what violates the Subcontract Act andcompliance with recurrence prevention measures

Development of the next generation

Educational agenda on the Subcontract Act

Field

Value creation of ISEKI Group

Contribution to local community and international cooperation E S G

Financial and non-financial data

Supply chain management E S G

Lecture delivered by ISEKI’s representative
ISEKI Report 2021

50

Initiatives that support value creation

Human resource development and utilization E S GDiversity –utilization of diverse human resources

Ratio of newly hired female employees
Target (20%)

38%

37%

Action plan (target for 2022)
21%

Achieve 20% or more in the ratio of newly hired
female employees and actively recruit women withengineering background.
Achieve 15% or more in the ratio of female
employees in the superintendent class, who aremanager candidates, to raise the ratio of women in
management.

20%

Masayuki Fukami

16%

2016

2017

2018

2019

2020

Successful female employee
Misato Tokuyasu
ISEKI Group believes that what contributes to the solution ofvarious issues is people and recognizes that the development
and utilization of human resources are essential for the Group.
To achieve the vision set out in the Mid-term Management
Plan, the Group set “Enhance employee engagement” and “HRtransformation” as key initiatives to be undertaken.
Employee engagement is indispensable for ISEKI Group to
grow sustainably and increase its corporate value. To enhance
employee engagement, the Group will strive to strengthen its
bond with employees by working to create employee-friendly
and attractive workplaces, enhance human resource development programs and further promote diversity in the workplaces. We will also assess the status of employee engagement in atimely manner by conducting regular engagement surveys.
To transform human resources, the Group will press forwardwith the transformation of corporate culture by working harderthan ever to shit its human resources to growing fields within

the Group and mobilize its human resources. Previously, theutilization of human resources took place primarily within eachgroup company. However, to execute our business strategies,
we will strive to optimize the allocation of human resources
across the Group beyond the boundaries of companies going
forward. Further, the Group will also direct its efforts toward
the securement and development of human resources to execute its business strategies, such as cutting edge technologies
and global talent.
In order to drive forward with these initiatives, the Group has
decided to introduce the talent management system to effectively assess and manage experience, competence and skills of
employees.
ISEKI Group will develop human resources who will playleadership roles toward its 100th anniversary of foundation in
2025 and the next 100 years through scientific human resource
management.

Agri-Business Solution Department,
ISEKI & CO., LTD.

As a person in charge of, among other things, cultivation demonstration ofcrops, including seedlings, and support for obtaining GAP certification, I am
engaged in disseminating information and teaching at training sessions on
cutting edge farm business technologies for customers and group companies.
While I find the wide scope of my work rewarding, I also enjoy my private
time by actively taking paid leave. I believe, to further empower women,
what is important is to create a workplace where every and each employee
can work with pride regardless of gender. I will continue to work hard so that
I can assist farmers in their farm management and in-field sales activities.

Employment of people with disabilities
Irrespective of having or not having disabilities, ISEKI aims tocreate a workplace where different kinds of people can fulfill theirpotential. The ratio of employees with disabilities in FY2019 was
lower than the statutory employment rate. We are determined towork towards creation of job opportunities for them.

Rate of employees with disabilities
Statutory employment rate

2.0%

2.19%

2.2%

2.0%

2.10%

2.2%

2.2%

2.12%

1.92%

1.92%

2016

2017

2018

2019

2020

Human resource development
ISEKI Group offers diverse human resource development
programs ranging from training programs based on employees’ skills and occupation, foreign language courses, trade skill
tests, correspondence courses, training programs specialized indevelopment, manufacturing, sales and services (see p. 10 for
details), and opportunities to study abroad. It has also introduced

51

ISEKI Report 2021

the Meister system for smoothly passing on accumulated skills
and experience. Going forward, the Group will work to further
enhance specialized human resources in line with its businessstrategies and develop human resources to expand its global
talent pool.

Employment of foreign nationals
ISEKI Group works on continuous employment of foreign
nationals, which is indispensable for its global business expansion.
Employees from various nationalities are working in a wide rangeof fields including development, production, and sales.

Employment of senior citizens
Rate of employees with disabilities

Basic Policy Fundamental concept

ISEKI Group promotes diversity as one of its management strategies by employing diverse human resources. It supports career development of employees through proper treatment of highly motivated employees with various abilities and offering them opportunities toplay active roles to secure outstanding talents.

Initiatives that support value creation24%

Director & Managing
Corporate Officer

Value creation of ISEKI Group

Ratio of newly hired female employees

ISEKI Group works on promotion of active participation by
women as part of utilization of diverse human resources. In
the action plan for development of workplace environmentthat facilitates greater participation by women, ISEKI aims toachieve the ratio of women among the hires to 20% or more.
In addition, the Group continues its efforts toward increasing
the ratio of female employees in the superintendent class, who
are manager candidates.
The Group is also planning to put in place a system to further
promote active participation by women and work to achieve
this objective going forward.

Financial and non-financial data

ISEKI Group will maximize its human resource capability throughthe enhancement of engagement
and human resource transformation.

Initiatives for promotion of active participation by women

ISEKI actively promotes participation by senior citizens. It has
introduced a reemployment system for all employees as a rule
who wish to continue working after their retirement age of 60 till
65 years old in anticipation that it would enable handing over of
their experiences, skills, and knowledge.
The Group is also looking into securing employment
opportunities for employees after age 65, which is required by the
Amended Act on Stabilization of Employment of Elderly Persons.

Mid-career employment
In order for ISEKI Group to grow, it is necessary to have ideas andinnovations generated by having expertise in various fields anddiverse senses of value. To this end, the Group will strive to secure
diverse human resources by promoting mid-career employment ofhighly specialized human resources from outside the Group.

Corporate information

Message

ISEKI Group is working on the promotion of diversity as oneof its management strategies by employing diverse humanresources. To secure outstanding talent, the Group is also
promoting mid-career recruitment of highly specialized human resources, in addition to hiring new graduates. Further,it supports career development of employees through proper
treatment of highly motivated employees with various abilities
and offering them opportunities to play active roles.

Prohibition of discriminatory treatment and respect for human rights
Basic Policy
The policy set out in the ISEKI Group Code of Ethical Behavior
is to “respect basic human rights and not engage in any act of
discrimination or harassment on the grounds of nationality, race,
creed, gender and disabilities.”

The Group educates its employees, through training and othermeasures, to always respect human rights of others and always
pay extra attention to their speech and behavior so as not tocommit acts that ignore others’ human rights, such as harassment.

ISEKI Report 2021

52

Initiatives that support value creation

Enhancement of employee engagement E S G

Toward our “Henkaku (Change)”

Basic policy (fundamental concept)

Utilization of paid leaves
Along with promoting improvement in operational efficiency,
ISEKI Group is encouraging employees to utilize annual paid
leave. As a result, the number of days of paid leave taken by
employees is increasing in recent years.

Keisuke Umemoto
Overseas Administrative Group, ISEKI & CO., LTD.

I am engaged in distribution to sales
agents primarily in the Asian region
at the Overseas Business Division.
I took child care leave upon thebirth of my child last year. I could feel the growth of my childthrough child rearing. After return to work, I have been utilizing the flextime system and other such systems to set aside
time for child rearing and household chores, while increasing
operational efficiency by horning my work-related knowledge
on bookkeeping, accounting terminology and logistics expertise, so as to enhance work-life balance. I am also intending
to take my career to the next level, while taking on a personal
challenge to acquire various qualifications, by making best useof my time so that I can present multifaceted proposals at work.

Number of annual paid leave days per employee (average for union members) non-consolidated
2017

2018

2019

2020

9.6 days10.7 days

12.2 days

12.2 days

Creation and maintenance of a working environment
where work-child care balance can be achieved
Reexamination of work styles
Carrying out of activities to support child rearing
in local communities

Thorough management of occupational safety and health
Setting up “a healthy and safe workplace” as the code of
conduct, ISEKI Group manages occupational safety and healthin a group-wide effort. It carries out safety and health activities
reflecting the actual situations of each company and office andimplements safety checks at manufacturing subsidiaries topromote awareness-raising at the sites, thereby striving to
reduce accident risks to achieve “zero industrial accidents.” The

Policies Concerning Safety“Safety takes precedence over everything”—promoting initiatives to achieve “zero” industrial accidents—
Implementation of risk assessment based on risk-prediction activities

ISEKI Group’s values that we cherish to create a prosperous and sustainable society

Front runner
As a front-runner, we produce innovative products andhigher quality services.

SpiritInheriting our company’s founding philosophy,
we always carefully consider food, agriculture andlandscape and move forward with farmers.

Quality
We will always make premium quality products with
passion.

Innovation

Solution
Act on Advancement of Measures to Support Raising Next-Generation Children (2025 goals)

Group has established safety training hall as a place for experiencing near-accidents and offers employees to have simulated
experience of actual occupational accidents to improve safety
awareness. Further, ISEKI Group also carries out safety audit at
all workplaces and the entire Group works together to ensure
occupational safety.

Value creation of ISEKI Group

Voice of a male employee who took childcare leave

We constantly take action forsolutions to customer issues.

Henkaku (Change)“Toward the next 100 years...”

We create innovations with
cutting edge technologies
and provide new value.

GlobalFutureWith a global perspective, we
work toward solutions to theworld’s social issues.

Paving the way for tomorrow,
open up the future of food,agriculture and landscape.

With these seven promises, we will drive forward with our “Henkaku (Change)”
toward our 100th anniversary of foundation in 2025 and the next 100 years.

Statistics of industrial accidents: severity rate (%)
2016

2017

2018

2019

2020

0.000

1.760

0.001

0.371

0.000

Corporate information

ISEKI Group is striving to create employee-friendly workplaces
through various efforts.
To realize diverse work styles, the Group introduced thegeographically confined employment system in 2020, in
addition to implementing the flextime system, no overtime day
and other such measures. The Group set up the Operational
Efficiency Improvement Project headed by the Chairman of thecompany in 2018 to realize the work style reform, and is
working to improve productivity and reduce working hours by
improving operational efficiency. In response to the recent
COVID-19 pandemic, the Group has actively been utilizing
remote meetings more than ever, and adopting new work
styles, including working from home and split ship at someoffices. On this occasion, we will look into institutionalizing
such ways of working taking into account their effectiveness.
The Group is also working on promoting enhancement of
employees’ work-life balance so that they can spend fulfillingdays not only at work but also in their private lives. As part ofthe effort, the Group is strengthening the systems for balancing work and child rearing and promoting utilization of annual
paid leaves through a planned leave system. In order to encourage male employees to take child care leave, ISEKI attaches adocument encouraging the employee to take child care leave
when it gives congratulatory money upon child birth. In 2020,
six male employees took child care leave.

When announcing the new Mid-term Management Plan in February 2021, the President gave
employees an online briefing on the concept of the Mid-term Management Plan and strategies.
Each and every employee is required to understand the message implied in the keyword “Henkaku(Change) - Toward the next 100 years...” and figure out what they need to change by themselves byinterpreting “...” as “their Henkaku (Change),” thereby working on it on their own initiatives.

Initiatives that support value creation

Creation of employee-friendly workplaces

To realize ISEKI Group’s vision “To be Solution Provide for ‘Agriculture and Landscape’,” it is essential
for each and every employee to demonstrate his/her strength to maximize the Group’s capabilities.
To this end, ISEKI Group is working on various initiatives to instill and share common value andideals that translate into the mindset and behavior of employees.

Financial and non-financial data

ISEKI Group will work to enhance its engagement with employees in order to increase the retention of talented human resources andcreate employees who actively work for the company’s growth.
The Group will place its focus on delivering a secure and safe work environment, providing career support, and developing andutilizing diverse human resources. At the same time, it will conduct regular engagement survey to assess the status of employee
engagement.

*Severity rate: Number of work days lost per 1,000 working hours*Scope: ISEKI & CO., LTD. and its three factories in Japan

Identifying risks and hazards in operations, taking risk reduction
measures and thereby preventing accidents from occurring.

Provision of safety education
Thoroughly entrenching awareness of safety once again
through education provided at the safety training hall so as
to build a framework that prevents any industrial accidents.

53

ISEKI Report 2021

ISEKI Report 2021

54

Initiatives that support value creation

Environmental management E S G
Message from the officer in charge of the environment

Mid- to long-term environmental targets

Corporate Officer
Deputy Chief Operation Officer,
Development & Production Division
Assigned to Environmental Control
SectionBasic Environmental Policy
ISEKI Group is committed to contributing to the realization of a sustainable society through business activities that
aim to achieve harmony among nature, society and corporations.

2030:

Eco-product ratio in domestic sales

26% reduction (compared to FY2013)

Actual reduction rate

Value creation of ISEKI Group

Reduction in CO2 emissions per net sales in production
activities in Japanese manufacturing locations

2030:
ResultTarget reduction rate

50% or more

Target50%

Standard

44%

−11%

38.8%
−16%

−19%

37%

−26%

2013

2020

2025

2030

2020

2025

Initiatives that support value creation

Ruiji Horio

ISEKI Group has designated environmental protection that would enable the creation of asustainable society as one of the business priorities, and practices environmental management by setting the Environmental Policy.
To practice environmental management across the Group, we have introduced the environmental management system (EMS) at our manufacturing bases and non-manufacturingbases, such as sales companies, both in Japan and abroad and built a structure to promoteit, headed by the Directors’ Operation Committee chaired by the President.
ISEKI Group has set mid- to long-term targets to practice activities to reduce environmental burdens and environmental risks of the entire business activities, such as optimizing theuse of resources and energy.
Further, the Group is working on product development that contributes to environmental
protection from various different approaches, such as energy saving, exhaust gas purification feature, and technique to optimize the amount of fertilizer using a cutting edge technology, by promoting environmentally-friendly design and operating the eco-productcertification system.
In order to realize a carbon-free society, we will further energize the initiatives aimed atachieving the mid- to long-term environmental targets and aim to create a sustainable
society.

ISEKI Group has set mid- to long-term environmental targets to promote environmental management. In order to realize acarbon-free society, the Group is looking into setting higher targets.

2030

Major activity results in FY2020 in promoting environmental management
Major activity targets

Major activity results

Management using stricter voluntary standard values than stipulated bylaws and regulations for prevention of air and atmospheric pollution

Cleared the voluntary standards in four manufacturingbases in Japan

Improve environmental awareness of employees

Implementation of environmental education (twice), and participation in environmental beautification and cleaning activities

Development of environmentally-friendly products through implementationof the product assessment system and life-cycle assessment (LCA) evaluation

Added six certified eco-product models through thepromotion of environmentally-friendly design❶ Maintain environmental management system andits functional applications❸ Compliance with environmental laws, regulations,and standards

Prohibition, reduction, and restraint of use of toxic chemical
substances included in procured parts

Improved green procurement ratio through the promotion of
EMS certificate acquisition by suppliers and information provision❷ Reducing elements of our business activities andproducts which may be causing stress on theenvironment❹ Environmental education and information
disclosure

Promotion of green procurement and its parallel implementation across the Group

Conducted a green procurement questionnaire survey
and issued Green Procurement Certificates

Reduction of CO 2 emissions during transportation
Promotion of environmental burden reduction in production activities

Financial and non-financial data

We strive to contribute to the realization of a sustainable society.

See below

System for promoting environmental management

55

ISEKI Report 2021

Information sharing,horizontal implementationof activities

Progress management,
evaluation

ISEKI Group as a whole

ReportEnvironmental Planning Group Meeting

Directors’ Operation Committee

ISEKI Group works on environmental management centered around a Plan-Do-Check-Action (PDCA) cycle by establishing an intragroup system for promoting environmental management.

Supervision
Target setting

TargetResultEvaluation

FY2030reduction
targets

Reduction of CO2 emission(11)%(16.4)%

Good

(26)%

Reduction of CO2 emission duringtransportation(10.5)%

Bad(8.8)%(FY2019 standard)

Reduction of total material input(10.5)%(6.4)%

Average(18)%

Mid-term environmental targets
FY2013 standards

Assign Chief Managers andEnvironment Control Managers who
promote environmental control
activities in each office

Manufacturing bases

5 bases in Japan and 3 bases
overseas
EMS certification acquisition
rate: 100%

Creation ofa low-carbon
society
Manufacturingresources

FY2020 targets and result evaluation

Development ofrecycling-oriented
society

Reduction of volume of water used

(51)%(37.3)%

Average(51)%

Reduction of final volume of waste(14)%(63.6)%

Good

(65)%

Toxic chemical
substances

Reduction of used volume of chemical
substances subject to PRTR law(19.6)%(28.0)%

Good

(37)%

Corporate information

Promotion of environmental burden reduction in production activities*Scope: Three factories in Japan (ISEKI-Matsuyama MFG. Co., Ltd., ISEKI-Kumamoto MFG. Co., Ltd., ISEKI-Niigata MFG. Co., Ltd)
*CO2 emission during transportation is energy-generated CO2 emission volume.
*The historical results of environmental burden reduction by base in Japan and overseas are posted on the company’s website.

Non-manufacturing bases
8 sales subsidiaries in JapanEMS certification acquisition
rate: 100%
9 other bases in Japan andoverseas
EMS certification acquisition
rate: 100%

ISEKI Report 2021

56

Response to climate change E S GInitiatives for environmentally-friendly design E S G

Climate change governance

ISEKI Group promotes environmentally-friendly design in the entire product development process with the aim of reducing theenvironmental burden in each of the stages of development, manufacture, use by customers, and disposal, and strives to offer
environmentally-friendly products.

In order to realize a carbon-free society, ISEKI Group is working
to offer environmentally-conscious products and solutions,while striving to reduce CO2 emissions from business activities
so as to reduce environmental burdens. Meeting bodies that
discuss future directions of product planning, development
themes and other issues, such as the Product Development
Strategy Committee and the Advanced Technology Strategic
Committee, identify and evaluate opportunities for climate
ISEKI’s initiatives
Research on market andregulatory trends
Human resource development
and human asset enhancement
Products

Types

Risk

Transition

Environmentally-conscious
products
Environmentally-conscious
Opp. Transition
products
Gathering of information on
Transition
market impact
Risk
Thorough implementation
Physicalof health damage control

Solutions

Proposal for environmentally sound agriculture
Opp. Transition
Early detection of information on subsidies, etc.
Reduction of environmental
burdenBusiness
activities

BCP and hazard map

Transition
Risk
PhysicalSupplier risk assessment
Capital investment plan

Opp. Transitionchange-related products and solutions and incorporate theirresults in development planning with the approvals of the
Directors’ Operation Committee and the Board of Directors.
The Risk Management Control Committee is responsible for,among other things, identification, assessment and progress
management of risks. We will work on scenario analysis going
forward(see p. 43 for details of the Risk Management Control Committee).

Impact on ISEKI’s business
Risk of low sales caused by a gap in progress between commercialization,such as electrification, and infrastructure improvement
Potential increase in development costs due to compliance with tightened
engine exhaust gas regulations
Risks of market contraction for and low sales of products with lower environmental performance due to market changes brought by climate change, legal
regulations and increasing environmental awareness among users
Contribution to reducing environmental burdens upon customer use by expanding sales of eco-products and environmentally-conscious products
Potential market contraction due to changes in forms of agriculture, such as changes
or reduction in crop producing areas
Risk of constraints in sales activities as it becomes difficult to visit exhibitions
and customers’ homes as before due to health damage or other reasons
Expectation for new market creation stemmed from changes in crop production areas
Expectation for reduction in greenhouse gas emissions through environmentallysound agriculture and reduction in CO2 emissions through carbon storage
Expectation for gaining customer trust by providing information on and an application follow-up for support grants for those engaged in agriculture, forestry
and fisheries to maintain their business, such as support measures for COVID-19
Risk of increases in operating costs and transportation costs due to the tightening of energy-saving regulations, such as a carbon tax
Risk of operation shutdown due to, for instance, damages to a manufacturing basebuilding struck by a disaster, such as flood or heavy rain, caused by abnormal weather
Risk of suspension or delay in the supply of parts due to supply chain disruptions and stoppage caused by natural disasters
Expectation for controlling energy costs by upgrading production and otherfacilities to high-efficiency equipment

Eco-product certification system is an
in-house system that certifies products withhigh environmental conformance that meet
ISEKI-original evaluation criteria. Certified
products are granted environmental labels,
which are conveyed to customers throughproduct catalogs and user manuals in aneasily noticeable format. Further, theenvironmental label conforms to Type II
stipulated under ISO14021 (self-declared
type that does not need third-party
certification).

mental changes on a quarterly basis, while checking the
progress of focused risk follow-up. Further, identified risks arecompiled into database by operating process and utilized forordinary operations (see p. 44 for details of risk screening andassessment processes).

Indicators and targets
ISEKI Group consistently manages and discloses the achievement of greenhousegas emissions by Scope as a climate-related indicator. For Scopes 1 and 2, theGroup has set reduction targets of 26% to be achieved by 2030 based on the
results in 2013, and manages the progress. Meanwhile, for Scope 3, emissions
from customer use of products sold by Category 11 account for 60% or more. In
addition to offering eco-products that meet ISEKI-original evaluation criteria, theGroup will work to upgrade products such as by promoting electrification andhydrogen utilization so as to contribute to realizing a carbon-free society.
*Scopes 1 and 2: Greenhouse gas emissions resulting from production activities within the Group*Scope 3: Greenhouse gas emissions resulting indirectly from supplier/customer use in relation to businessactivities

performance through notablefunctions● Environmental burden reduction ofSuper-eco product

Super-eco
product

XX environmental burden reduced by YY%(compared to ZZZ’s conventional model)

10% or more in usage compared toconventional models
Product that has
cleared in-housestandard

Eco-productEco-product certification trend
In addition to products featuring functions that contribute to energy andlaborsavings at customers, the certification of products installed withengines conforming to the strengthened emission regulations in Japanand abroad has been increasing each passing year. The number of suchproducts accounted for 38.8% of domestic sales in FY2020.

Number of certified eco-products and ratio
Number of certifications (equipment type)
Ratio of eco-products (Net sales in Japan)
36.6%
32.6%
28.7%
35
29
20.1%

17

2016

Examples of certified products
FRONTIER FIGHTER HFR475, 5075 

38.8%
42

21

2017

2018

2019

2020

Energy saving, resource saving Reduction in environmentally hazardous substances

FRONTIER FIGHTER HFR475 and 5075 (four- and five-row reaping), certified as eco-products,
are equipped with an engine that meets exhaust gas regulations as well as an IQ threshing
control feature that automatically controls the engine rotation within the range of working
rotation speed (green zone) according to engine load, vehicle speed and layer thickness ofrocking shelf during operations.
They reduce threshing losses by optimizing the air volume of winnower during low-speed
operations, such as turning and rice plant lodging. During operations, the workload level ofthresher is displayed on the monitor located at the center of the operation seat so that theoperator can carry out reaping with the optimal setting.

Risk management
The Risk Management Control Committee identifies andassesses risks of climate change impacts on business activities
based on two axes, severity of damage and frequency of occurrence, and selects risks that require focused follow-up based on
degree of importance and priority of initiatives. The committee
confirms the existence of emerging risks arising from environ-● Realized outstanding environmental

Example of environmental label

Initiatives that support value creation

Major risks and opportunities brought by climate change

Eco-product certification system

Financial and non-financial data

issues. Meanwhile, important matters are deliberated anddecided by the Board of Directors and the Directors’ Operation
Committee. CSR Corporate Social Responsibility Committee
meets twice a year and makes reports to the Board of Directors
to ensure proper supervision by the Board of Directors(see p. 35 for details of the Corporate Social Responsibility Committee).

Preservation of biodiversity E S G
ISEKI Group’s business activities as well as agriculture, which uses agriculture equipment and services, exist thanks to benefits ofecosystem services.

Emissions from other categories,
excluding categories 8, 9, 10, 13, 14 and 15(Scope 1) Direct emissions by the company

4%(Scope 2) Indirect emissions by the company

2%
4%
Category 1

30%
Category 11

60%

Scope394%

Corporate information

ISEKI Group has designated responses to climate change as oneof its priority issues, and works on environmental management.
Corporate Social Responsibility Committee supervises andmanages climate change-related risks and opportunities. The
committee is comprised of the members of the Directors’ Operation Committee for deliberation and discusses and evaluates

Value creation of ISEKI Group

Initiatives that support value creation

ISEKI Group’s Biodiversity Guidelines
Fundamental concept
ISEKI Group acknowledges the fact that it benefits from the blessings of nature (ecosystem services) that biodiversity produces, andtherefore it has positioned preservation of biodiversity as a priority task of its environmental management. In cooperation with local
communities and various stakeholders, the ISEKI Group will contribute to the realization of a sustainable society that coexists withnature by promoting business activities and offering products and services that are biodiversity-friendly as well as preservation of
biodiversity and continued use of the blessings from biodiversity.
*For details, please visit the company’s website.

*Category 11 includes future emissions based on the assumptions of useful lives of products*Scope: in Japan (Scopes 1 and 2: ISEKI & CO., LTD. and its
manufacturing bases and ISEKI Logistics)

57

ISEKI Report 2021

ISEKI Report 2021

58

Financial and non-financial data

Financial highlights (FY2020)

Consolidated Financial Summary

93rd Fiscal Year 94th Fiscal Year 95th Fiscal Year 96th Fiscal Year 97th Fiscal Year

1,530

1,583

1,559

1,498

352

331

321

1,210

1,231

1,228

1,177

Dec. 2017

Dec. 2018

1,493
333
1,159

Dec. 2019

Dec. 2020

Ordinary income came to 1.7 billion yen, up 0.5 billion yen year on
year due to the reduction of loss of entities using equity method.
Profit (loss) attributable to owners of parent declined 6.3 billion yen
year on year to a loss of 5.6 billion yen due to recording of impairment loss on non-current assets caused by a decrease in profitabilityof manufacturing subsidiaries.
Ordinary income (100 million yen)
Profit attributable to owners of parent (100 million yen)
ROE

1.3%

28
16

1.1%

10

11 7

26

8

39
27

24

20

Dec. 2016

Dec. 2017

Dec. 2018

Dec. 2019

Dec. 2020

Total assets / Net assets / Equity ratio
Total assets fell by 10.0 billion yen year on year to 187.4 billion yen
due to the inventory reduction and recording of impairment loss on
non-current assets. Net assets fell by 6.8 billion yen year on year to62.4 billion yen due to the decreases of retained earnings and revaluation reserve for land.

2,033

2,013

Net assets (100 million yen)

2,011

Equity ratio

1,975

1,874

34.4%

33.4%

34.2%

32.4%

671

709

689

692

624

Dec. 2016

Dec. 2017

Dec. 2018

Dec. 2019

32.2%

17

1.4%

31

Total assets (100 million yen)

4.2%
1.6%

1.8%
1.6%

Ordinary income / Profit attributable to owners of parent / ROE

42

Operating margin

2.5%
2.0%

320

Dec. 2016

Operating income (100 million yen)Overseas sales (100 million yen)

−8.8%
−56
Dec. 2016

Dec. 2017

Dec. 2018

Dec. 2019

Dec. 2020

Cash Flows

Interest-bearing debt / D/E ratio

In the cash flows from operating activities, proceeds decreased by
0.8 billion yen year on year due to the reduction in net sales, while
the inventory reduction was realized. In the cash flows from investing activities, purchase decreased by 1.9 billion yen year on year due
to the reduction in capital investment. As a result, in the free cash
flows, proceeds increased by 1.1 billion yen year on year.

Interest-bearing liabilities came to 69.3 billion yen, the same amountas that of the end of the previous fiscal year. While the interest-bearing liabilities were reduced in sales companies in Japan, it increased
due to the new consolidation of local sales company in Thailand. D/E
ratio, which shows the soundness of finance, was at 1.11 times dueto the decrease in net assets.
Loans (100 million yen)

1.03

105

82

19

−19
−57

−52

45

34

−23
−71

59

ISEKI Report 2021

Dec. 2017

Dec. 2018

694
80

663
67

613

595

Dec. 2016
Dec. 2019

1.00

697
63

693
84

693
77

634

608

615

−51

−99
Dec. 2016

1.01

−21

−23

−42

D/E ratio (times)

0.94

96

76
33

Lease obligations (100 million yen)

1.11

Cash flows from operating activities (100 million yen)
Cash flows from investing activities (100 million yen)
Cash flows from financing activities (100 million yen)Free cash flows (100 million yen)

25 26

Dec. 2020

Dec. 2020

Dec. 2017

Dec. 2018

Dec. 2019

Dec. 2020(December 31, 2018)(December 31, 2019)(December 31, 2020)

121,041
32,055
153,097
44,852
2,469
1,635
858

123,136
35,245
158,382
46,206
3,953
4,250
2,807

122,81233,143
155,955
45,945
3,179
2,629
1,090

117,717
32,181
149,899
44,507
2,745
1,108
723

115,907
33,397
149,304
43,476
2,084
1,702(5,641)

13,936
24,911
49,316
4,769
92,93496,466
1,062
12,893
110,422
203,356
42,421

7,981
25,11353,406
5,249
91,751
95,592
1,025
12,978109,596
201,348
40,673

7,475
23,32753,7197,269
91,791
96,842
1,082
11,440109,365
201,156
39,736

8,404
19,67554,1794,900
87,15998,346
1,288
10,717110,352
197,51137,752

10,787
21,78051,847
5,564
89,97986,2871,967
9,193
97,449187,428
36,872

33,59335,22042,87739,351

37,46013,43389,447
27,788
4,491
5,790
8,687
46,757
136,205
49,842
15,5881,720
67,151
203,356

13,75089,64424,354
3,312
5,780
7,339
40,787130,432
52,33016,833
1,752
70,916201,348

12,97995,593
20,571
4,063
5,780
6,188
36,603
132,197
52,746
14,454
1,759
68,959201,156

12,63089,735
21,525
3,059
5,759
8,180
38,524
128,259
52,84014,641
1,770
69,252
197,511

11,814
86,147
24,114
3,144
4,097
7,504
38,861125,00950,346
10,3101,762
62,419187,428

Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Free cash flows
Cash flows from financing activities
Net increase (decrease) in cash and cash equivalents

8,283(5,736)
2,547
2,621
5,147

3,308
(5,273)(1,965)(4,294)(6,113)

7,616(9,944)(2,327)
1,970
(408)

10,509(7,104)
3,404(2,396)981

9,694(5,167)
4,526(2,179)2,383

Information Per Share (Yen)Net assets
Profit (loss)
Cash dividends

2,896.8
38.0
1.5※

3,061.8
124.3
30.0

2,974.8
48.3
30.0

2,987.2
32.0
30.0

2,683.1(249.6)
—

32.2
1.3
0.4
82.6
1.03

34.4
4.2
1.4
99.3
0.94

33.4
1.6
0.5
101.0
1.01

34.2
1.1
0.4
104.8
1.00

32.4
(8.8)
(3.0)
104.9
1.11

Financial Position (at the end of the fiscal year)
Cash and deposits
Notes and accounts receivable – trade
Inventories
Other
Total current assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total non-current assets
Total assets
Notes and accounts payable – trade
Short-term loans payable(including current portion of long-term loans payable)
Other
Total current liabilities
Long-term loans payable
Net defined benefit liability
Deferred tax liabilities for land revaluation
Other
Total non-current liabilities
Total liabilities
Shareholders’ equity
Accumulated other comprehensive income
Subscription rights to shares and non-controlling interests
Total net assets
Total liabilities and net assets

Management Indicators
Equity ratio (%)
ROE (%)ROA (%)CCC (days)
D/E ratio (times)

Value creation of ISEKI Group

Japan sales (100 million yen)

Operating income came to 2.0 billion yen, down 0.6 billion yen year
on year due to temporary factors such as loss on valuation of parts
inventory and retirement benefit expenses as a result of the mergerof sales companies, despite the offsetting of a decrease in grossprofit caused by revenue falls by reduction of selling, general andadministrative expenses.

(December 31, 2017)

Initiatives that support value creation

Net sales came to 149.3 billion yen, down 0.5 billion yen year on
year. In Japan, overall sales fell due to the impact of the increase in
the consumption tax rate, and the impact of voluntary suspension ofoperating activities because of the COVID-19 pandemic. Overseas
sales increased due to unification of accounting period of a consolidated subsidiary in France (accounting period of 15 months), in
addition to the increase in shipments of products for China, South
Korea, and Taiwan.

(December 31, 2016)

Results of Operations
Domestic sales
Overseas sales
Net sales
Gross profit
Operating income
Ordinary income
Profit (loss) attributable to owners of parent

Financial and non-financial data

Operating income / Operating margin

Corporate information

Net sales(Millions of yen)

Note *Calculations are carried out taking into account the one-for-ten share consolidation of the company’s common stock on July 1, 2017, and on the assumption that suchshare consolidation was implemented at the beginning of the 93rd fiscal year.
1. ROE (Return on equity) = Profit/(Equity at the beginning of the fiscal year + Equity at the end of the fiscal year)/2
2. ROA (Return on assets) = Profit/Total assets
3. CCC (Cash conversion cycle) = Days sales outstanding + Days of inventory outstanding − Days payable outstanding
4. D/E ratio = Interest-bearing liabilities/Net assets
ISEKI Report 2021

60

Financial and non-financial data

Corporate information

Non-financial highlights (FY2020)

Company profile
Number of Directors and Corporate Auditors/Ratio of Outside Directors Governance

We are working to reduce CO2 emission volumes in our production
activities as part of corporate activities to enable a sustainable
society.

In March 2021, we added one more Outside Director to enhance
corporate governance. We are working on further enhancement oftransparency and objectivity of management.

Volume of CO2 emissions in factories in Japan (t-CO2)

Number of Outside Corporate Auditors
Number of Outside Directors
Ratio of Outside Directors

Sales in Japan (t-CO2/100 million yen)Overseas production volume (t-CO2/100 million yen)

Number of Corporate Auditors
Number of Directors

30%

41,70037,50037,800

18%

18%

18%

65

64

9

9

9

9

7

2
1

2
1

2
1

2
1

3
1

62
43

33

24

21

22

2016

2017

2018

2019

2020

4

4

4

4

4

2016

2017

2018

2019

2020

As of December 31, 2020

Company code:
Total number of authorized shares
Shares issued and outstanding
Number of shares per trading unit
Number of shareholders

6310
69,000,000 shares
22,606,820 shares (excluding treasury stock of 378,173 shares)
100 shares
18,471
Share price trends

Major shareholders (top 10)
Name of major shareholder

Patents, utility model rights and design rights held
The company has over approximately 2,300 patents, thanks to its
acquisition and accumulation of validated claims, and it also holds
more than approximately 500 design rights.

Japan

Technological capabilities

We actively submit applications using the intellectual property
regimes of various countries to lead to differentiation of products inthe overseas market. The number of patents held by ISEKI Group isincreasing annually.

Overseas*

Total of patents (cases)

Total of design rights (cases)

Total of patents and utility model rights (cases)

Design rights (cases)

1,000

3,000

Number of shares held (shares) Shareholding ratio (%)

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

1,359,500

6.01

Mizuho Bank, Ltd

1,070,800

4.73

Custody Bank of Japan, Ltd. (Trust Account)

1,024,000

4.52

The Norinchukin Bank

868,785

3.84

Sumitomo Mitsui Trust Bank, Limited

800,000

3.53

Iseki kabushiki hoyukai (Company’s Stockholding Co-op.)

776,809

3.43

The Iyo Bank, Ltd.

580,042

2.56

Iseki eigyo-hansya group syain mochikabukai (Business-selling Group Holdings)

571,500

2.52

Sompo Japan Insurance Inc.

434,500

1.92

The Kyoei Fire and Marine Insurance Company, Limited

352,700

1.56

2,928

3,050

2,160
1,772
1,401

1,686

1,287
855

High Low

High Low

High Low

High Low

2017

2018

2019

2020

Calculations are carried out taking into account the one-for-ten
share consolidation of the company’s common stock on July 1, 2017.

(Note) Shareholding ratios are calculated after the deduction of treasury stock (378,173 shares).
500

Number of shares held by type of shareholder

1,000

Shares issued and outstanding: 22,606,820 shares (excluding treasury stock of 378,173 shares) Foreign companies
Breakdown

0

(yen)

Financial and non-financial data

2,000

Initiatives that support value creation

18%
32,60060

ISEKI & CO., LTD.
700 Umaki-cho, Matsuyama-shi, Ehime-ken, 799-2692 JAPAN
5-3-14, Nishi-Nippori, Arakawa-ku, Tokyo, 116-8541 JAPAN
August 1926
23,344 million yen
Consolidated: 5,510 (Development and Production Section: 1,756; Sales Section: 3,384; and Other Sections: 370)
Non-Consolidated: 738

Status of shares

47,20072Company name:Head office:Tokyo headquarters:
Foundation:
Paid-in capital:
Number of
employees:

ISEKI Report 2021

Volume of energy-generated CO2 emissions in factories Environment

As of December 31, 2020

Mar. 2017

Mar. 2018

Mar. 2019

Mar. 2020

Mar. 2021

0Dec. 2015

Dec. 2016

Dec. 2017

June 2019

Mar. 2020

Rates of return to work following childcare leave non-consolidated Human resources

Retention rate in three years from joining non-consolidated Human resources

As part of measures to create workplace environments easy tobalance work and childcare, we have established various work-lifebalance support mechanisms including childcare leave. One hundred
percent of the employees who took childcare leave returned to work.

The retention rate of college graduates three years from joining is at
a high level of above approximately 90%.
Retention rate (%)

Return rate (%)

100

100

100

100

91.7

Individual shareholders and other7,979,763

35.30

Financial institutions

8,949,012

39.58

Other Japanese companies

3,494,554

15.46

Foreign companies and individuals

2,004,970

8.87

Securities companies

178,521

0.79

Securities
companies
0.79%

and individuals
8.87%
Other Japanesecompanies
15.46%

Shareholding
ratio

Individual
shareholders
and other
35.30%

Financial
institutions
39.58%

Evaluation by third parties
88.5

88.5

92.3

94.1

Corporate information

100

Number of shares held (shares) Shareholding ratio (%)

DBJ Environmental Rating – highest rating 15 times in a row
In April 2021, ISEKI received the highest rating as one of the “Companies doing environment-friendly
business activities progressively,” 15 times in a row, by the Development Bank of Japan Inc., in receiving
loans under the DBJ Environmentally Rated Loan Program.
Points that are highly evaluated in the rating for this year
❶ ISEKI is putting advanced environmental management into practice.

2016

2017

2018

2019

2020

Joined in2014

Joined in
2015

Joined in
2016

Joined in
2017

Joined in
2018❷ ISEKI is steadily working on building of supply chain in consideration for CSR.

2020

❸ ISEKI is contributing to realization of society with low environmental load, through its main business.

Note 1. The value is different from the past report, because of the review of electricity emission factor.
Note 2. The tabulation period for some overseas patents, utility model rights, and design rights is different, and therefore the year and month of results vary.

61

ISEKI Report 2021

ISEKI Report 2021

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