FREUND CORPORATIONFREUND Report 2020
To Our Stakeholders

Fiscal Year Ended February 29, 2020
(From March 1, 2019 to February 29, 2020)

Contents
01 Message from the President and CEO

09 From the Frontline of Corporate Governance

05 5-Year Financial Highlights

10 Company and Stock Information

06 Review of Operations
07 Close-Up

Message from the President and CEO

Develop the Future through Creativity ®

In the midst of drastic changes in the business environment surrounding the
FREUND Group, we revised the 7th Medium-Term Management Plan to incorporate
the value of “ONE FREUND” into our business and build a new managementfoundation for sustained growth. And now, we have started the 8th Medium-Term
Management Plan (from the fiscal year ending February 2021 to that ending in February 2023).
Since the fiscal year ended February 2018, we have implemented the five-year 7th Medium-Term Management Plan, whichstates the creation of new businesses and strengthening of existing businesses based on the technologies of our Group.
However, the market environment surrounding the pharmaceutical industry, which is the main user of the Group, deteriorated
more than expected, resulting in a large discrepancy between the plan and actual results. In response to this, we have decided
to develop a new three-year Medium-Term Business Plan, with which all Group employees come together to bring changes.

Creating
special value

NumberONE
Corporate Philosophy
Develop the Future throughCreativity

Management Vision

Iwao Fusejima
President and CEO

FY02/20:
Overview of Business Activities
Fiscal year ending February 2020 (hereinafter “FY
02/20”) is the third fiscal years of the 7th Medium-TermBusiness Plan, in which we were to make a leap fromthe stage of creating a foundation for growth to theinnovation period. However, since the operating
environment on which the plan was based was harsher

01

FREUND REPORT 2020

Contributing to better medicalcare and health for people
worldwide, and creating andfostering technologies forfulfilling lives and food safety.

Values which the
FREUND Group holds
preciousONE

FREUND

than expected. We would like to sincerely apologize toshareholders and investors for causing you so muchworry, as we were forced to make a significant
downward revision to financial forecasts in the fourth
quarter.
For details on the financial results, please refer to “5-Year
Financial Highlights” on page 5 and “Review of Operations”
on page 6.

Only

ONE
Putting clients’views 1st
Aiming to be the Only
ONE for customers andsociety

Aiming to be No. 1
in each business segment

Be

ONE
Networking
Unite to a “Be One” group

Business Activities in Pharmaceutical Product Field
Machinery Business Segment
The macroeconomic environment was most affected by
the slowdown in capital investment demand in theJapanese pharmaceutical industry, where we have ahigh business weight. Due to strengthening medical
cost control measures such as drug price revisions andpromotion of generic drug use, as well as rising R & D
expenses and increasing development risk, themotivation of investment by pharmaceuticalmanufacturers continues to decline, resulting inworsening of business performance than we expected.
Competition in the global market has become harsher
and harsher due to the change in the trend from solid
dosage forms to non-solid dosage forms such as liquid
forms, in addition to the reduction in drug price indeveloped countries overseas. While the European andAmerican markets are significantly affected by thetrend, demand remained strong in China, where quality
needs of pharmaceutical products are increasing, India,
which has become a global pharmaceutical base, andemerging countries as pharmaceutical product markets,
such as Brazil.
In the aforementioned macro environment, thebusiness in Japan, Europe and the U.S. becamesluggish. And sales performance in Japan was poor
due to a delay in the introduction of the improved tablet
printing machine "TABREX Rev." which was positioned
as a strategic product. The quality level of the machineis steadily improving. As a result, we are now ready tomeet the future demand from users.
In the fourth quarter, due to the influence of the
COVID-19, product shipment and inspection overseas
were in delay until the following fiscal year. Sales of
those products will be recorded as the sales in the next
fiscal year.
Chemicals Business Segment
The pharmaceutical excipient business performed wellin Japan. However, overseas sales were slow due to
production adjustments by large-scale users. As forpharmaceutical excipients, several years are requiredfor product development lead-time, from a drug
adoption to its commercialization.
Over the past three fiscal years of the 7th MediumTerm Management Plan, we have been working toestablish a business base in overseas markets throughexploring overseas sales agents. Taking advantage of
those efforts, we would like to improve the financial
performance in the future. In addition, several drugs

become off-patent in the medium run. We will enhance
the marketing efforts in Japan and overseas to create
the business opportunities in which our products are
adopted for such drugs.

full-scale efforts to explore more various applications,develop new products, ensure stable supply, andimprove productivity.

Business Activities in Non-Pharmaceutical Product Field
Machinery Business Segment
While net sales of machinery equipment in the nonpharmaceutical product field tend to increase in the
fourth quarter due to the timing of receiving orders,
performance of microfabrication applications wassteady in the fourth quarter of this fiscal year. And, salesof contract processing businesses such as pulverizing
and granulating had been steady.
In this business segment, the differentiated productportfolio has been enhanced because of our severalyear efforts including development of wet machinery
equipment realizing super pulverizing technologies, inaddition to flagship dry machinery equipment. The sales
fields of the super pulverizing technologies are thegrowing markets such as the multilayer ceramic
capacitor industry and the lithium battery industry.
Due to intensifying US-China trade friction, demand
for lithium-battery-related capital investment in China
has entered a short-term adjustment phase. However,
we expect that the medium- to long-term growth trend
driven by further technological innovation in onboard
storage batteries for motor vehicles remains unchanged,
and consider the onboard storage batteries continue tobe the important target market in the future. We will
strengthen sales of these growth industries.

Outline of the 8th Medium-Term
Management Plan
Considering the various changes in environment in the
global market as business opportunities, in the 8th
Medium-Term Management Plan, we feature thepolicies, such as "promotion of collaboration within theGroup" and "global management", for the measures toincorporate the value of "ONE FREUND" into the actual
business, in order to make most of the management
resources of the Company Group.
Furthermore, the essence of the plan is that each
employee of the Group promotes the necessarychanges as a driving force for achieving the plan. Think,make a commitment, and act to build the foundation forthe sustained growth of the next generation. We areaiming for such a three-year plan.

For the expansion of the non-pharmaceutical machinery
business portfolio, please refer to “Close-Up” on page 8.

Chemicals Business Segment
In the food preservatives business, we have steadily
continued to develop markets in Japan and overseas.
Reducing food loss is a global issue, and our foodpreservatives make contributions in line with the
Sustainable Development Goals (SDGs). We are making

FREUND REPORT 202002

The 8th Mid-Term Management Plan (FY02/21～FY02/23)

Seven Management Goals

Basic Strategy
Respond to clients’ needs withtechnological expertiseand create a management structure
to realize sustained growth in profits

FY02/23

Goal

Net
sales:

¥

20.0
¥1.4

Operatingprofit:1 Group collaboration

5 Execution of growth strategy

2 Putting clients’ views 1st

6 Promotion of business

3 Emphasis on innovation
billion4 Global managementbillionDeepening new needs based on “putting clients’views 1st”
Despite the difficult business environment, a new
movement has started in the investment demands inJapanese pharmaceutical industry. In the industry inwhich stable supply is required while coping with issues
such as medical cost reduction and shortage ofmanpower, demands for saving labor and humanoperations, as well as for automation have become
visible. Even at the conventional analog-dependent
pharmaceutical production sites, digital quality control
based on data and efficiency in manufacturing are
required.
We believe that such changes in the pharmaceuticalequipment market become new business opportunities
for us, which has delivered many formulation machines
to date. Being determined to see things from users’
point of view and aiming for creating the new business
opportunities, we established the Customer Division in
September 2019, and as the Company's first attempt tointegrate the organizations of sales/marketing and

03

FREUND REPORT 2020

process reengineering
and work style reforms
Emphasis on compliance

7 and corporate governanceservice technology, started to strengthen themaintenance and after-sales services of the existingmachines.
Another feature of “putting clients’ views 1st” is therealization of price and speed that are the basis ofcustomer satisfaction. As part of it, we have started thefull-scale efforts to revitalize the production base. To
begin with, we are improving the production site ofchemicals products.
We are revitalizing and strengthening the production
base of pharmaceutical excipients through solutions
including optimal staffing. Over the next several years,
we would like to apply the solutions to production lines
for food preservatives and production lines including
those for partner companies.
Strengthening the complex business model unique
to FreundIn the Customer Division, we try to get rid of a sense
and idea of being obsessed with difference in businessfields, such as machinery and chemical products, or inareas like Japan and overseas countries. In otherwords, we are taking on the challenge of realizing thebusiness model that integrates the core competenciesof the Company, that are, "Pen and Ink" and “Hardware
and Software,” and, from the perspective of “ONEFREUND,” providing the services combining
machinery, excipients, as well as drug formulation
technologies.
We believe that this business model can be a majordifferentiator when our Group enters the globally
expanding pharmaceutical and health food markets.
Therefore, to begin with, we are strengthening ourapproach to the Japanese health food industry.
In addition, we also think that this business model will
be effective in emerging pharmaceutical markets suchas China and India, so we plan to build a new businessfoundation with local sales agents.
The overseas markets are more diverse andcompetitive than the Japanese market in terms of costand after-sales service. We feel that it is necessary for
the Freund Group to put all the efforts into thinking
about how to compete in such a market environment.
Therefore, we will also undertake initiatives with a view
to building a competitive global production system.
For the new efforts of Customer Division, please refer to“Close-Up” on page 7.

Strengthening the Management Base that Supports
the Growth Trajectory of the Next Generation
We strongly feel that the driving force of these newchallenges is the diversification of human resource, thatis, the corporate culture that accepts diversity.
Accepting different ways of thinking brings innovation tocompanies. An organization that can maximize thestrengths and advantages of each employee canachieve high goals. We recognize that, in the FREUND
Group, too, fostering such a corporate culture is
extremely important.
It is true that combining the values of employeesenvironment, assuming the process of achieving
growth into the next generation.

who join the Company from outside with the values of
employees who have worked for the Company forlong is important. However, changing the corporate
culture so that women can play an active role is an
essential issue. We believe we need to cope withthose issues quickly.
On the job site, we aim for creating the pleasant
workplace in which waste and inefficiency are
eliminated and changing into the highly efficient
corporate structure. Business Process Innovation (BPI)
project has started as part of the efforts.
In addition, compliance (legal compliance) andcorporate governance are the foundation of corporate
development and the obligations of corporate citizens
in society. We will examine the way to strengthen theagile and organizational corporate structure thatflexibly responds to changes in the businessFor an outline of the BPI project, please refer to "Topics"
on the back cover.
For the efforts to strengthen corporate governance, pleaserefer to page 9 “From the Frontline of Corporate
Governance”.

To Our Stakeholders
What we focus on in the fiscal year ending in February
2021 is, based on the direction of the 8th MediumTerm Management Plan, the challenges to realize theoverwhelming competitiveness in the market in which
we provide products. That is, the efforts to embody inour business the idea of "ONE FREUND," whichtranscends the boundaries of business segments likesales/marketing, technology, and service, as well as
the border of the countries, such as Japan andoverseas countries.
Through such Group-wide efforts, we would like tospecifically realize the management vision“contributing to better medical care and health forpeople worldwide, and creating and fostering
technologies for fulfilling lives and food safety.”
We appreciate your medium-to-long-term support
the FREUND Group, which ventures into the changes
for realization of management structure seeking
sustained growth of the future.

FY02/21:Overview of Consolidated Financial Forecasts/Forecasts by Business Segment
Consolidated Financial
Forecasts

FY02/20(Actual)

FY02/21(Forecasts)

Financial Forecasts by
Business Segment

YoY Changes¥ million%

17,800+1,027+6.1

Operating profit

558

1,000

+441

+79.1

Ordinary profit

582

1,000

+417

+71.6

Profit attributable to owners ofparent

381

700

+318

+83.5

22.79

41.80

+19.01+83.4

Capital investment

951

—

—

Depreciation

386—

R&D expenses

725—

EPS (¥)

FY02/21(Forecasts)

YoY Changes¥ million

16,772

Net sales

FY02/20(Actual)%16,772

17,800+1,027+6.1

Machinery Business Segment

11,11812,000+881+7.9

Chemicals Business Segment

5,654

5,800

+145

+2.6

558

1,000

+441

+79.1

Machinery Business

311

—

—

—

—

Chemicals Business

781

—

—

—

—

—

Adjustments

(534)

—

—

—

—

—

109.03105.00——Consolidated net sales

Segment profit

Exchange rate (¥/US$)FREUND REPORT 202004

5-YEAR FINANCIAL HIGHLIGHTS

Orders received
Order backlog
Orders received

FREUND CORPORATION and Consolidated Subsidiaries
Ended February 2016 to February 2020

Net sales and operating profit
Operating margin

Order backlog

Net sales

Operating profit

Total assets and equity
Equity ratio
Total assets

Operating margin

Equity¥ million

9.6%

18,40810.0%

16,772

11,006
6.6%

7.1%

7,328
5,555

13,242

12,185

11,529

8,790
5,906

17,448

67.0%

69.2%

63.8%

13,25013,243

75.9%

71.6%
100

4,897
3.3%
1,346

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

Net sales by region
Overseas sales ratioJapan¥ million

18,50519,801

19,027
12,574

19,125

17,20621,164

3,253¥ million

19,101

18,286

12,129

Free cash flows

Equity ratio¥ million

15,109

Free cash flows

FY02/16

2,041
FY02/17

1,971
FY02/18

1,223
FY02/19

FY02/20

Profit attributable to owners of parent

Overseas

Return on assets (ROA)

(130)

(142)

558

Profit attributable to owners of parent
Return on assets (ROA), Return on equity (ROE)

Overseas sales ratio(880)

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

Capital investment
Depreciation
Capital investment

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

R&D expenses
R&D expenses ratio

Depreciation

R&D expenses

R&D expenses ratio

Return on equity (ROE)¥ million¥ million¥ million¥ million

951
21,164

18,408

5,563
6,124

5,480

862

1,477

19,801

19,027

16,772

5,408

4,577

564

28.8%

26.3%

29.4%
27.3%

8.5%

9.0%

11.6%
6.4%

13,547
FY02/1605

15,601

FY02/17

FREUND REPORT 2020

13,676

FY02/18

12,999FY02/19

12,195

FY02/20

5.6%

5.6%

7.7%
4.8%

FY02/16

FY02/17

FY02/18

FY02/19

266

381

321

640

524

843
30.9%

725

687

627

1,064

961

832

338

344

344

386

4.4%

4.5%

3.6%

4.3%

3.0%

2.9%
2.1%
FY02/20

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

FY02/16

FY02/17

FY02/18

FY02/19

FY02/20

REVIEW OF OPERATIONSGroup Companies

Group Company

FREUND CORPORATION FREUND-TURBO CORPORATIONFREUND-VECTOR CORPORATION
Parle Freund Machinery Private Limited

FREUND CORPORATION
Characteristics• ‌Pharmaceutical excipients manufactured at GMP* certified
facilities• ‌Food preservatives used to preserve the quality of various
foods contributing to food safety• ‌Commercialization of dietary supplements and seamlessmini-capsules jointly developed with client companies using
granulating and coating technologies

Characteristics• ‌Granulating/coating equipment boasting the top share of theJapanese market• ‌Accelerated deployment of businesses in Asia, as well as
Europe and North America via a U.S. subsidiary• ‌Development of equipment based on drug formulation
technologies• ‌Integration of granulating/coating and pulverizing/classifying
technologies to expand equipment sales for other industrial
business fields

Machinery Business Segment
Manufacture and sales of granulating
and coating equipment forpharmaceutical, food, cosmetic andother products

Net
Sales

¥11,118

Segment
Profitmillion

Orders received
Order backlog

Industrial
Product Field

15.8 %¥311

Net sales
Segment profit
Segment profit margin(¥ million)

Sales
Breakdown

11,8395,428

10,227
4,695

Pharmaceutical
Product Field

84.2 %

FY02/19

million

FY02/20

Chemicals Business Segment
Manufacture and sale ofpharmaceutical excipients, foodpreservatives and dietary supplements

Net
Sales

¥5,654* GMP: Good Manufacturing Practice

Segment
Profitmillion

Orders received
Order backlog

Other
New Products

12.4 %(¥ million)

12,368

2.8%

737

311

FY02/19

FY02/20

FY02/20 Overview
Net sales and operating profit of Machinery Business Segment, which focuses on granulating/coating equipment and pulverizing equipment, decreased due to impact of reduction in capital
investment caused by slow growth of domestic generic market; impact of rising fixed costs borne by
the subsidiaries in U.S.; and stagnation of battery-related projects for China caused by US-China
trade friction in the industrial machinery field.

735

Sales
Breakdown

Food
Preservatives

36.8 %

millionNet sales
Segment profit
Segment profit margin(¥ million)

11,118

6.0%

¥781

779

(¥ million)

6,040

5,654
13.8%

Pharmaceutical
Excipients

50.8 %

126
FY02/19201

FY02/20

17.0%
1,024
FY02/19781
FY02/20

FY02/20 Overview
Sales of pharmaceutical excipients used for oral pharmaceuticals were steady due to an increase indomestic demand. However, export projects decreased because of production adjustments madeby large-scale overseas users. Regarding the food preservatives, we were engaged in marketing
efforts such as entering overseas markets. However, against the backdrop of intensified competition,
both net sales and operating profit decreased.

FREUND REPORT 202006

Close-Up

To meet the true needs of the clients with technological capabilities
Pharmaceutical
Product Field

Customer Division based on“putting clients’ views 1st” started.

On September 1, 2019, we integrated sales/marketing andengineering services in the pharmaceutical field, and newly
established Customer Division controlling the domestic andAsian markets for which the Company, among the Group
companies, is responsible for. The purpose of having
established an organization that features the "customer-first”
point of view is to realize the vision of "putting clients’ views
1st", one of the management goals of the 8th Medium-Term
Management Plan. Furthermore, we also aim for creating theinnovation through transcending the boundaries of market,
such as machinery and chemical products, and Japan andoverseas, and integrating collaboration within the Group,
global management, and various kinds of expertise.
Japanese pharmaceutical product industry has entered
the phase of achieving the “generic drugs penetration rate of80%” set forth by the government, that is, the phase in whichconventional-type extraordinary demand for the new facilities
decreases. And, the market is about to enter a mature phase
due to macroscopic factors such as decrease in the rate of
new drug development and declining population, etc.
Against this background, pharmaceutical companies must
address issues such as manufacturing cost reduction andlabor saving. We believe that solving the issues thesecustomers face is a new business opportunity for us.

07

FREUND REPORT 2020

Toward Stock Business: Proposing
value of clients’ existing facilities
In light of providing the business solution to resolve the issuesof the customers, Customer Division positions their existingmachinery equipment as the Company’s important stock
asset. We have started the initiatives to promote the proposalbased marketing activities related to saving labor, saving
need for human operation, and stable operation, from theperspective of effective use of the existing facilities.
As an example of the efforts to solve the issues, we arepreparing the maintenance service, in which we share theplan we formulate with the customers with the purpose ofpredictive maintenance of the facilities, and secure the stable
operation of the facilities of the customers. In order to actuallyprovide such a service, we make proposals on stable
operation of the clients’ production facilities and on
optimization of production efficiency through collaboration ofsales staff and engineering service staff, and promote theproposal-based marketing activities to convert thousands ofpieces of equipment we have delivered so far into highly
productive labor-saving ones.
Reflecting the trend in the production of pharmaceuticalproducts, we are engaged in the initiatives for saving laborand saving the need for human operation based on the
keyword “continuous production.” Manufacturing of thepharmaceutical industry is characterized by the quality
management of a wide variety of products in small quantities
in each manufacturing process. Consecutive production ofpharmaceutical products is in the stage of transformationfrom the conventional batch-type production and is about tobe developed. It is the production method that breaks out ofthe paradigm of pharmaceutical product manufacturing
process.
Stable manufacturing and quality management become
possible through adding control technologies accumulated indevelopment of continuous production equipment to theexisting facilities.

Introducing the original businessmodel to other fields such as
supplement field
There is a business segment in Customer Division, which has
been in charge of exploring the supplement business. The
segment has a business model to have a relationship withcustomers from the development stage and be entrusted with
manufacturing when the finish goods go on a market. In themarketing activities, we would like to make proposals on newvalue creation, such as a proposal combining machinery
equipment (hardware) with our original “Pen and Ink”business-model package, and a proposal that also includes
drug formulation technologies (software).
The approach of embodying a business model that
integrates "Pen and Ink" and "Hardware and Software" into theconcept of "ONE FREUND" was cultivated in the stage ofdeveloping the generic drug market in which drug formulation
technologies lead to differentiation.
More oral pharmaceuticals become off-patent from overthe next several years. Focusing on the business segment
covering the fields of machinery equipment andpharmaceutical excipients, we promote the new market
development with our eyes set on the unique approach to thefield of pharmaceutical excipients machinery equipment in
the overseas business.

2018

2017

NonPharmaceutical
Product Field

Promote new-client
development byleveraging ourstrengths andencouraging selection
and concentration

Japanese powder market has already matured, and we haveentered an era in which many of over 200 makers will surely
be weeded out in the medium- to long-term perspective. In
addition, the rise of Chinese makers, for which we are nomatch in price competition, cannot be avoided. Therefore, we
believe, in terms of competition, strategies of Japanesemakers will shift to establishment of technical advantage.
Against this backdrop, the applications of fine powder
processing technologies are increasing, which, for example,
are used for lithium ion batteries, etc. in the information andautomobile industries, for cosmetics, toners, etc. in thecommodity industry, and naturally, for injections, oral
disintegration (OD) tablets, etc. in the pharmaceuticalproduct industry.
FREUND-TURBO CORPORATION, which plays a mainrole in the field of non-pharmaceutical product field in ourGroup, is a maker specialized in the machinery equipment for
powder. Based on pulverizer, classifier, and granulator, thethree businesses the company has since the establishment,
FREUND-TURBO has been engaged in manufacturing andsales businesses. Since a few years ago, it has beenpromoting the expansion of our product lineup based on
existing technologies with a view to medium- to long-term
growth. The heart of the promotion is the wet grinder that canprocess the object into finer powder, granulating/coatingmachine, and coater, which means it is entering the newengineering field.

Products since founding

ULTRA FINE
GRINDING/
EMULSIFYING MILL(High Pressure type)
NANO TURBO

1998

WET GRINDING MILL
for high viscosity slurry
AQU TURBO TZ*

WET GRINDERWET GRINDER

Dry Products
Wet Products

2018

ChemistryFood

Pharmaceutical
Cosmetics

WET GRINDING MILL
for high viscosity
slurryAQUA TURBO OB

2014

WET GRINDER

1982

COATER
FE COATER

Others (COATER)

FINE POWDER
CLASSIFIER
TURBO SCREENER

PULVERIZER
TURBO MILL

1967

DRY CLASSIFIER1971

DRY GRINDER* Obtained a patent in August 2019
based on the technologies of
the technical cooperation product

2018
GRANULATING/
COATING MACHINEMIXING/GRANULATINGMACHINEBALANCE GRAN

Others (MIXER)PULVERIZER RESIN GRINDING
TURBO MILL MACHINETURBO DISKMILLDRY GRANULATORROLLER COMPACTORDRY GRINDERDRY GRANULATORFREUND-TURBO Product Portfolio

Response to finer powder processing
One of the examples is development of “AQUA TURBO TZ”(launched in 2017), which is an advanced version of “AQUA
TURBO OB,” WET GRINDING MILL for high viscosity slurry,which was a technical cooperation product. FREUND-TURBO
obtained a patent in August 2019.
“AQUA TURBO TZ” is called a beads mill. Using ceramic
minute beads and beating them up quickly in the liquid,"AQUA TURBO TZ" pulverizes and disperses the object(particle) into submicron- and nano-level fine size. “AQUA
TURBO TZ” has been well received by clients becauseamount beads, the consumable, to be used is very small,injection and discharge are easy, and its washability is
excellent.
Pulverizing technologies using the bead mill is in demandin multilayer ceramic capacitor industry in Japan, which leads
the global market. Since the “AQUA TURBO TZ” can bedifferentiated from other companies' products, we arestrengthening our approach to the industry, which is
expected to grow in the medium to long term.

Entry into new engineering fields
In 2018, FREUND-TURBO merged and formed a businessalliance to have both "BALANCE GRAN," a granulating/coating machine, and a coater "EF COATER" to its production
lineup. “BALANCE GRAN” is used when mixing and coating
the materials of lithium battery as fluid (slurry). "FE COATER"
is used to apply the slurry made of “BALANCE GRAN” as anelectrode.
In the short term, the lithium battery industry has beensluggish, especially in China. However, we believe that themedium-to-long-term growth trend of the demand remains
unchanged, and therefore, continue to strategically develop
the markets with those products.

FREUND REPORT 2020

08

FROM THE FRONTLINE OF CORPORATE GOVERNANCE"Internal controls are management itself.
And it is people who drive it. ''Since I assumed the office in May 2019, all employees have been working as one under the values of “ONE FREUND”
to foster the corporate culture that considers internal controls, so that we grow further for the next generation.

Sakae Hirano
Audit & Supervisory Board
Member (Full-time)Governance structure of FREUND
We believe that business execution and supervisory
functions were separated due to the full-scale introductionof the executive officer system in September 2019, and, asa result, solid governance structure was established.
Among the Board of Directors, seven out of eight officers,
including Directors and Audit & Supervisory Board
Members, are External Directors. Each officer proactively
expresses opinions and makes proposals in every meeting.
Executive officers, including every president of groupsubsidiaries, are engaged in enhancement of groupmanagement in various scenes such as management
meeting. Going forward, we will enter a phase in which
executive officers deepen cooperation with the Board of
Directors and further demonstrate the comprehensive
strengths of “ONE FREUND.”
In order to further improve the effectiveness of thegovernance structure, I, as an Audit & Supervisory Board
Member, will implement activities and make proposals that
contribute to the sustained growth of the company andimprovement in added value, let alone strengthen risk
management, enhance and strengthen internal controls tofocus on the roles in protecting the company.
To that end, we believe that it is important to enhancecommunication with management and employees,
cooperation with External Directors, and enhancement in

09

FREUND REPORT 2020

ProfileSakae Hirano was engaged in accounting and finance departments in Idemitsu Kosan Co., Ltd. over years.
He is also experienced in and has profound insights in various fields including sales/marketing, sales
management, management of overseas subsidiaries, IR and PR, and auditing.

three-way auditing (coordination of each auditing activity
conducted by the Accounting Auditors, Internal Audit
Department, and Audit & Supervisory Board Members).

“Business Process Innovation (BPI)” started.
In terms of internal controls, which support the governance,
we are not worried because employees’ attitude toward
their work is serious and sincere. However, I believe thatwhat we need are not only the passive way of thinking like“complying with” the regulations, but also proactive way of
thinking that is directly connected to the business, such as“taking advantage of” the regulations so as to “streamline
the work through visualization” and “facilitate team play.”
I have great expectations for the "BPI project" that started
in March 2020. (For the details of the project, please refer to“Topics” on the back cover.) This project was voluntarily
established by the cooperation among members who had
been engaged in the improvement activities in eachdepartment on the occasion of the updating the backbone
system, and is positioned as the company-wide activity
directly managed by the President.
Members from various departments participate in the
project to increase the visibility of operations, analyze theissues, and formulate the reform proposal. The project
embodies the concept of “internal controls are for each oneof the employees responsible for the business and lead tothe transparent and sound management.” I would like tocommunicate well with employees and support theestablishment of advanced BPI based on the proactive
mindset of utilizing internal control.

To realize the further growth for the next
generation
Since its establishment, the Company has been engaged in
the business contributing to the future of medical care andgood health, created the added values with unique
technologies and business model, and continued to respondto the needs of customers.
The current business environment is experiencing theprocess of huge changes that ranges from the change inframework of the global economy to the industrial
infrastructure. The needs of the pharmaceutical industry, ourmain client, are about to change, too. Even in such an
uncertain and difficult business environment, we are working
to dynamically change our corporate structure in order tofulfill our mission and further increase our social significance.
We appreciate your continued support for the Company
Group that realizes “ONE FREUND” consisting of every oneof the employees of the Group, and makes efforts to growfurther for the next generation.

CORPORATE DATA / STOCK INFORMATION

Company Profile

Major Shareholders (Top Ten)

Company NameFREUND CORPORATION

Established

April 22, 1964

Capital Stock¥1,035,600,000

Employees

383 (Consolidated)

Head Office
Location

FREUND Bldg. 6-25-13 Nishishinjuku,
Shinjuku-ku, Tokyo

Websitehttp://www.freund.co.jp/english/

Group Companies

As of February 29, 2020

K. K. Fusejima Yokosha

1,648

9.84

Yasutoyo Fusejima

1,276

7.62

The Bank of Mitsubishi UFJ, Ltd.

836

4.99

Sumitomo Mitsui Banking Corporation

744

4.44

18,400(thousand shares)[ Japan ]FREUND-TURBO CORPORATION

Okawara Mfg. Co., Ltd.

673

4.02

R&D, designing, manufacture and sales ofmachinery for powdered granules

PERSHING-DIV. OF DLJ SECS. CORP.

398

2.38

[ U.S.A. ]FREUND-VECTOR CORPORATION

Freund Employee Shareholding Circle

396

2.37

Manufacture and sales of machinery for powdered
granulesThe Shizuoka Bank, Ltd.

368

2.20

[ India ]Parle Freund Machinery Private Limited

Meiji Yasuda Life Insurance Company

360

2.15

Manufacture and sales of machinery for powdered
granulesIwao Fusejima

284

1.70

Stock Listing

TSE
JASDAQ Standard (Securities Code: 6312)

Total Number ofAuthorized Shares

60,000,000 shares

Total Number of
Shares Issued

18,400,000 shares

Total Number of
Shareholders

14,462

Shareholder Distrubituion by Type of
Shareholders

Shares owned Ownership ratio(Thousand shares)
(%)

Total
Shares Issued:

No. of shares held
(thousand shares)

Percentage

2,841
274
3,077
917
11,291

15.44
1.49
16.71
5.00
61.36

Financial Institutions
Financial Instruments Firms
Other Corporations
Foreign Corporations

The Company has 1,655,000 shares (9.00%) of treasury shares.
Shareholding percentage stakes are calculated after excluding 1,655,000 shares oftreasury shares.

Individuals, Others

Note: Treasury shares are included in the category of “Individuals, Others.”

Dividend/Dividend Payout Ratio Trends* ‌FY02/17 dividend per share includes
commemorative dividend of ¥5.00.

Dividend Per Share (Year-End, ¥)Dividend payout ratio (%)

87.8

Honorary Chairman
Yasutoyo Fusejima

Honorary Chairman

20.00*

20.00

Officers
Iwao Fusejima

Osamu Imada

Masanori Sugawara

External Director

External Audit & Supervisory
Board Member

Tomohiko Manabe

Sakae Hirano

Sayoko Izumoto

Ryuji Nakatake

Mitsuaki Sato

President and CEO

External Director

External Director

Full-Time Audit & Supervisory
Board Member

External Audit & Supervisory
Board Member

20.00

20.00

39.9
32.4

23.3

FY02/21 dividends andconsolidated dividend
payout ratio are to beannounced later.

External Audit & Supervisory
Board Member

FY02/17

FY02/18

FY02/19

FY02/20
FREUND REPORT 202010

Memorandum for Shareholders

TOPICS

Fiscal Year

From March 1 to the last day of February next year

Annual General
Shareholders’ Meeting

Held in May of every year

Let’s create the innovation!

Date of Shareholders’
Right Allotment

Annual General Shareholders’ Meeting/Year-end Dividend
End of February (Date of shareholders’ right allotment to be August 31 when paying interim dividends)

We have launched the BPI project.

Shareholder Registry
Administrator/
Location of operations

Mitsubishi UFJ Trust and Banking Corporation
Marunouchi 1-4-5, Chiyoda-ku, Tokyo, Mitsubishi UFJ Trust and Banking Corporation,
Securities Agency Division

Contact

1-1, Nikko-cho, Fuchu-shi, Tokyo, 183-0044, Tokyo, Mitsubishi UFJ Trust and Banking Corporation,
Securities Agency Division
Phone 0120-232-711 (toll-free in Japan)

Mailing Address

PO Box 29, New Tokyo Post Office, 137-8081, Mitsubishi UFJ Trust and Banking Corporation,
Securities Agency Division

Public Announcements

Notices will be posted in electronic format on our internet web page (http://www.freund.co.jp/english/).
However, notices will be published in the Nihon Keizai Shimbun when an electronic notification is notpossible for unavoidable reasons.

Under the “IR” section on
the front page, we provide
the updated IR information.

IR Tools
Under the “What’s new” section
on FREUND’s homepage, we
provide IR related information
including news releases,summaries of consolidated
financial results (TANSHIN),
integrated reports, financial
results announcement
presentation materials,
factbooks, factsheets andothers.

Front Page

Business Process Innovation (BPI) project was launched in March 2020 as a project
directly managed by the President. It introduces the new means and methods to the work
process of FREUND CORPORATION, which had been cultivated over half a century, andconverts the work process into the smart and effective one. We create the PDCA cycle (Pfor plan, D for do, C for check, and A for action) to establish the mechanism that keeps
innovating works.
In order not to get in the situation in which no one use the mechanism though it was
introduced, we invite the persons in charge of the related works as project members,
thoroughly analyze the works, and introduce the method to reform the process, which
realizes overall optimization of multiple works. What we aim for is the business process
reengineering in which humanware, software, and hardware work closely.

We aim for the businessprocess reengineering inwhich humanware, software,and hardware work closely.

Goals as of March 2022

Improvement in profitability of Machinery and Chemicals
Businesses (operating margin: 10% or more)
Reduce work load by 8%

Plan

IR Information

PDF Format Documents (examples)

PDCA

Act

Financial Results Announcement
Materials (Japanese and English)

Please visit our website to view detailed IR information.

FREUND Report

Corporate operation area
Financial accounting, management accounting,personnel and labor

IR & PR Office, Corporate Planning Division
Phone: +81-3-6890-0767
Fax: +81-3-6890-0870

Creating new businessprocesses by increasing
the visibility of operations
and identifying the issues.

Administrative business field

FREUND CORPORATION
Please contact us with the E-mail address listed in the right column regarding
any questions on this FREUND Report.

CheckConstruction andpractice of PDCA system

Sales/marketing, customers, selling, purchasing,construction and project, manufacturing, inventory andlogistics, costs, and non-current assets

http://www.freund.co.jp/english/ir/

FREUND Bldg. 6-25-13 Nishishinjuku, Shinjuku-ku, Tokyo, 160-0023

Do

E-mail: ir@freund.co.jp
URL: http://www.freund.co.jp/english/