The 57th Annual Shareholders’ Meeting
For January 1, 2019 to December 31, 2019

Convocation Notice■ Date and time

Friday, March 13, 2020 10 a.m. (Doors open at 9 a.m.)■ Venue (For details, please refer to the back cover.)attended by the chairman

Tokyo: Hotel New Otani
Osaka: Swissotel Nankai Osaka

Planet South Kanto, a distribution center in Isehara City, Kanagawa,scheduled to be launched in August 2020

1st Section, TSE

CodeConvocation Notice

Notice ofConvocation of
the 57th Annual
Shareholders’Meeting

Business Report

P2

Reference Materials for
Shareholders’ Meeting

P10

Reference Data

P32

“Chimeric”“Chimeric” ideas evolve the world and companies.
Ideas that cannot be generated by artificial intelligence comprise the greatest intelligence given only to mankind.
Small ideas in everyday life lead to “chimeric” ideas.
This year’s key word2

Notice of Convocation of the 57th Annual Shareholders’ MeetingTo our shareholders(Securities code: 9830)
February 25, 2020

Trusco Nakayama Corporation
4-28-1 Shimbashi, Minato-ku, Tokyo
Tetsuya Nakayama, President

Keep It Up, Japanese “Monozukuri”®!!

I would first like to express my gratitude for your warm support.
Trusco Nakayama has made efforts to improve the convenience of customers by continuing its
aggressive capital investment in distribution facilities and equipment as well as its information
system, and strategically strengthening its expansion of its product lineup and inventories in order toaccurately meet the needs of monozukuri sites for a wide variety of items in small lots.
This year’s key word is “chimeric.” All through the ages, “chimeric” ideas have evolved the world aswell as companies. I believe “chimeric” ideas demonstrate the high point of mankind’s abilities. If you
aim to achieve “work that can only be done by man,” then you should conceive ideas that cannot be
generated by artificial intelligence. Ideas are the greatest intelligence given only to mankind. Somesay, “Man’s abilities are more important than the system,” but I think, “No man grows where there isno system.” No matter how hard you try, if there were no system, you would be like a bicycle that fell
unless you constantly pushed the pedals.
A small idea in everyday life may lead to a “chimeric” idea. I hope that every one of you will become
a generator of ideas.
“Businesses and companies are only worthwhile if they are of use to people and society.” With thisthought always in mind, we will continue to strive to become a company that meets the needs of ourcustomers and markets into the future.

Decided Matters upon the Convocation
Notice is hereby given that the 57th Annual Shareholders’ Meeting of Trusco Nakayama (the “Company”)
will be held as described below, and that you are invited to attend the Meeting. If you do not expect toattend the Meeting, please review the following “Reference Materials for Shareholders' Meeting” and returnthe enclosed voting form indicating your vote “for” or “against” each of the proposals, or access theCompany’s website for voting, which is indicated on the voting form, and exercise your voting rights via theInternet by 5:30 p.m., Thursday, March 12, 2020.

At Planet Saitama's employee
cafeteria "Cherry Blossom"

Date and Time March 13 (Friday), 2020 at 10:00 a.m. (Doors open at 9:00 a.m.)
Place:
Tokyo (venue where the chairperson will attend) Fuyo Room, Banquet Floor,
the Main Building, Hotel New Otani, 4-1 Kioi-cho, Chiyoda-ku, Tokyo
Osaka Naniwa Room, 8th Floor, Swissotel Nankai Osaka, 5-1-60 Namba,
Chuo-ku, Osaka*You may ask questions or exercise your voting rights at either venue.
Matters Constituting the Purpose of the Meeting
Matter to Be Reported
Reports on the Business Report, Consolidated Financial Statements,
Financial Statements, and the results of the audit of the Consolidated
Financial Statements by the accounting auditor and the Board of Auditors
for the 57th Period (from January 1, 2019 to December 31, 2019)
Matters to Be Resolved Proposal No. 1: Election of Nine (9) Directors
Proposal No. 2: Election of One (1) Corporate Auditor
Guide to the Exercising of Voting Rights
Please refer to “Guide to the Exercise of Voting Rights” on ▶
P8–9.

(Note) 1. Please bring this Notice of Convocation as a material for proceedings and present the enclosed Voting Form to the receptionist at the venue of the Meeting.
2. Of the documents to be provided, the Company has posted the [Matters concerning the Current Situation of the Corporate Group (Major Lenders)], the [Matters concerning Company
Executives (Major Activities and Matters concerning the Independence of Outside Officers)], the [Situation of Accounting Auditors], the [Systems and Policies of the Company (System
to Ensure the Propriety of the Company’s Operations and the Operation Thereof, Basic Policy concerning the Control of the Company, and Policy concerning the Decision of
Dividends from Surplus)] of the Business Report, the [Consolidated Statements of Changes in Shareholders’ Equity] and [Notes to Consolidated Financial Statements] of the Consolidated Financial Statements, and the [Statements of Changes in Shareholders’ Equity] and [Notes to Non-consolidated Financial Statements] of the Financial Statements on the
Company’s website (http://www.trusco.co.jp/ “Finance” → “IR Library” →“Shareholders Communication”), pursuant to the provisions of the law and Article 15 of the Articles ofIncorporation. Therefore, they are not stated in this Notice of Convocation. For reference, the Business Report, Consolidated Financial Statements, and Financial Statements attachedto this Notice of Convocation are part of the documents that were audited by the corporate auditor and the accounting auditor upon preparing the audit report.
3. In the event that an item in the reference materials for the Meeting, the Business Report or Financial Statements must be corrected by the day before the Meeting, the correction will
be notified by posting the corrected item on the Company’s website (http://www.trusco.co.jp/ “Finance” →”IR Library” →”Shareholders Communication”).

Notice of Convocation of the 57th Annual Shareholders’ Meeting3Organizational Chart
As of January 1, 2020
Tokyo
venue

Outside director
Board Brain (BB)

Born November 15, 1949
70 years old[No. of shares held] 2,500
Career summary
1975: Joined McKinsey & Company
1996: Founded ForeSight & Company
President (present)
2016: Outside Director of the Company (present)
2017: Founded the Society for Problem Solving
Proficiency
Representative Director of the Society (present)

Kenichi Saito

Osaka
venue

Outside director
Board Brain (BB)

Born August 19, 1953
66 years old[No. of shares held] 2,800
Career summary
1976: Joined Hagihara Industries Inc.
1984: President of Hagihara IndustriesInc.
2010: President & CEO
2016: Chairman (present)
2016: Outside Director of the Company(present)
2018: President of Toyo Heisei Polymer
Co., Ltd. (present)

Kuniaki Hagihara

President of
ForeSight & Company

Chairman of
Hagihara Industries Inc.

Tokyo
venue

What is Board Brain (BB)?

At Trusco Nakayama, we call outside
directors “Board Brains.” This term alludes toour hope that they will provide advice andsupport based on their abundant experienceand knowledge, and contribute to theCompany’s development.
Director
Head of Corporate
Management Division

Kazuo Nakai
Corporate Management DivisionCorporate Planning Dept.
New
appointment

Accounting Dept.

Born July 7, 1969
50 years old; 26 years 9 months at Trusco[No. of shares held] 3,000
Career summary
1993: Joined the Company
2002: Head of HC Niigata Sales Office
2004: HC Osaka Branch Manager
2008: Head of Human Resources
Section & Head of Healthcare Section
2013: Head of Corporate Planning Dept.
2017: Executive Officer & Head ofCorporate Planning Dept.
2019: Executive Officer & Head ofCorporate Management Division
2019: Director & Head ofCorporate Management Division (present)(89 employees in total)※１

Administration Dept.

Tokyo
venue

Osaka
venue

Director
Head of Information Systems
Division

Atsushi Kazumi

Information Systems Division (37 employees in total)
Information Systems Dept.

Tokyo
venue

Osaka
venue

Concurrent

Head of Corporate Planning Dept.
& Head of Accounting Dept.

Tatsuya Nakayama

Head of Administration Dept.

Mikio Adachi

Head of Information Systems Dept.

Takayuki Kimura

Born August 4, 1985
34 years old; 6 years 9 months at Trusco[No. of shares held] 200
Career summary
2013: Joined the Company
2018: Branch Manager of Mail Order
Tokyo No. 1
2019: Head of Corporate Planning Dept.
& Head of Accounting Dept. (present)

Born September 20, 1969
50 years old; 25 years and 9 months at Trusco[No. of shares held] 2,600
Career summary
1994: Joined the Company
2002: Head of HC Nagoya Sales Office
2011: Center Manager, Planet South Kanto
2016: Head of Factory Sales Dept. (Chubu)
2018: Head of Shinshu/Hokuriku/Tokai
Factory Sales Dept.
2019: Head of Administration Dept.
(present)

Born June 26, 1973
46 years old; 21 years 9 months at Trusco[No. of shares held] 4,100
Career summary
1998: Joined the Company
2011: Yamaguchi Branch Manager
2013: Head of Human Resources
Development Section
2019: Head of Information Systems
Dept. (present)

Corporate Planning, IR Section Accounting Section
Secretarial Section
Finance Section
Human Resources Development (19 employees)
SectionRecruitment Section
CSR Section(18 employees)

Tokyo Administration Section
Osaka Administration Section
Personnel Section
Healthcare Section
Property Section
Trusco Resort & Spa Hakone
Kyoto Kaguraoka Rengetsu-so
Trusco Resort & Spa Karuizawa
Scheduled to be completed in January 2021
(37 employees and 13 part-time staff)

IT Planning Section
System Management Section
Data Management Section(36 employees)

Secretariat, Trusco
Nakayama Health Insurance
Association Establishment
Preparation Office

Tomoya Tamai(2 staff on loan)※The numbers of shares held by each director and managerial persons shown in the organizational chart are figures as of the date when this convocation notice was sent to shareholders. ※１※２ The number of staff in each division includes employees on loan.

4

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Tokyo
venue

Tokyo
venue

Senior Managing Director
Assistant to President

Takashi Nakai

Born January 16, 1955
64 years old; 41 years 9 months at Trusco[No. of shares held] 32,000
Career summary
1978: Joined the Company
1996: Tokyo Branch Manager
1998: Head of Corporate Planning Division
1999: Executive Officer & Head of Corporate
Planning Division
2004: Director & Head of Distribution Division
2007: Managing Director & Head of Product Division
2017: Senior Managing Director & Head ofCorporate Management Division
2019: Senior Managing Director & Assistantto President (present)

Tokyo
venue

Born September 10, 1970
49 years old; 26 years 9 months at Trusco[No. of shares held] 3,000

Career summary
1993: Joined the Company
2001: Head of Tsuchiura Sales Office
2006: Osaka Branch Manager
2010: Head of Catalog Media Section & Head of Dotto Kuru Section
2013: Head of e-Commerce Sales Dept.
2014: Head of e-Business Sales Dept.
2017: Executive Officer & Head of Mail Order, e-Business Sales Dept.
2017: Executive Officer & Head of Information Systems Dept.
2019: Executive Officer & Head of Information Systems Division
2019: Director & Head of Information Systems Division (present)

Director
Head of Product Division

Shinsaku Miyata

Osaka Product Dept.

Tokyo
venue

Head of Tokyo Product Dept.
Tokyo Product Dept.

Yutaka Yoneda

Osaka
venue

Head of Osaka Product Dept.

な か い

た かし

中井
Tetsuya孝
Nakayama(98 employees in total)
Catalogue Media Dept.

Executive Officer
Head of Catalog Media Dept.

Kenichi Ogasawara

Kiyoharu Kawai

Born January 13, 1970
49 years old; 25 years 9 months at Trusco[No. of shares held] 1,200
Career summary
1994: Joined the Company
2003: Head of HC Maebashi Sales Office
2014: Osaka Branch Manager
2019: Head of Osaka Product Dept.
(present)

Born January 27, 1958
61 years old; 43 years 9 months at Trusco[No. of shares held] 6,900
Career summary
1976: Joined the Company
1995: Head of Kanazawa Sales Office
2007: Head of NB Product Dept.
2013: Executive Officer & Head of Factory
Sales Dept. (West)
2016: Executive Officer & Head of Catalog
Media Dept. (present)

Tokyo NB Product Section
Tokyo PB Product Section
Supplier Development Section
PB Product Design Section
PB Quality Assurance Section
Overseas Purchase Section
Germany Representative Office(35 employees)
Manager, Germany(Düsseldorf)
Representative OfficeOsaka NB Product Section
Osaka PB Product Section
Supplier Management Section
Customer Service Office(22 employees)

Trusco Orange Book Section
Trusco Orange Book.Com Section(38 employees)

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Tokyo
venue

Osaka
venue

Born November 6, 1975
44 years old; 20 years 9 months at Trusco[No. of shares held] 2,500
Career summary
1999: Joined the Company
2005: Head of Shiga Sales Office
2009: Head of Recruitment Section
2013: Head of Corporate Planning Section
2017: Head of Tokyo Product Dept.
(present)

Norihiro Higashi5代表取締役会長
President

Born June 9, 1964
55 years old; 30 years 9 months[No. of shares held] 5,000
Career summary
1989: Joined the Company
1997: Head of Overseas Sales Office
1999: Nagoya Branch Manager
2001: Head of Kobe Sales Office
2008: Center Manager, Planet South Kanto
2011: Head of Product Dept.
2015: Executive Officer & Head of Product Dept.
2016: Executive Officer & Head of Tokyo Head Office
Product Dept.
2017: Executive Officer & Head of Product Division
2019: Director & Head of Product Division (present)

Product DivisionTokyo Product Dept.

Born December 24, 1958
61 years old; 38 years 9 months at Trusco[No. of shares held] 1,875,100
Career summary
1981: Joined the Company
1984: Director
1987: Managing Director
1991: Representative Director & Senior
Managing Director
1994: President (present)

Head of Factory Sales Dept.
& Distribution Dept. (East)

Kiyonori Unto
Born February 9, 1962
57 years old; 33 years 1 month at Trusco[No. of shares held] 5,100
Career summary
1986: Joined the Company
1996: Head of Fukui Sales Office
2011: Head of Factory Sales Dept. (East)
2013: Head of Overseas Dept.
2019: Head of Factory Sales Dept. &Distribution Dept. (East) (present)

12 branches & 3 distribution centers
East block
SapporoUtsunomiya
Hachinohe
IsezakiSendai
Niigata
Akita
Niigata-North
Koriyama
Okaya
Mito
Ueda
(149 employees and 25 part-time staff)
P Hokkaido
P Tohoku
P North Kanto(74 employees and 125 part-time staff)

Shareholders’ Meeting
Board of Auditors
Osaka
venue

Board of Directors

President

Audit Supervision Office

Tokyo
venue

Born March 30, 1956
63 years old[No. of shares held] 15,900
Career summary
1978: Joined the Kyowa Bank, Ltd.
(currently Resona Bank, Ltd.)
2003: Chief Credit Officer of the OsakaNo. 3 Loan Dept., Resona Bank, Ltd.
2007: Full-time Corporate Auditor of
the Company (present)

Full-time Corporate Auditor

Full-time Corporate Auditor

Masaki Matsuda

Akira Takada

Tokyo
venue

Director
Head of Distribution Division

Hideki Naoyoshi

Born December 7, 1971
48 years old; 25 years 9 months at Trusco[No. of shares held] 3,600
Career summary
1994: Joined the Company
2003: Head of Amagasaki Sales Office
2007: Head of Kokura Sales Office
2010: Head of Corporate Auditor’s Office
2011: Head of Corporate Planning Section
2013: Head of Information Systems Dept.
2017: Executive Officer & Head of Information
Systems Dept.
2017: Executive Officer & Head of Distribution
Division
2019: Director & Head of Distribution Division(present)

Osaka
venue

Managing Director
Head of Sales Division

Tadahisa Yabuno

Born January 3, 1958
61 years old[No. of shares held] 500
Career summary
1981: Joined Nomura Securities Co., Ltd.
2001: Head of IB Consulting Office
2009: Managing Director of IB Business
Development Dept.
2012: Director of Nomura Investor Relations
Co., Ltd.
2015: Advisor of Nomura Investor Relations
Co., Ltd.
2018: Full-time Corporate Auditor of theCompany (present)

Born March 13, 1962
57 years old; 35 years 9 months at Trusco[No. of shares held] 31,100
Career summary
1984: Joined the Company
1998: Head of Fujisawa Sales Office
2000: Kanagawa Branch Manager
2003: Executive Officer & Jonan Branch Manager
2007: Director & Head of Corporate Management
Division
2014: Managing Director & Head of Corporate
Management Division
2016: Officer in charge of Trusco NakayamaIndonesia (present)
2017: Managing Director & Head of Sales
Division (present)
Officer in charge of Trusco Nakayama
Thailand (present)

Sales Division / Distribution Division
Factory Sales Dept. & Distribution Dept.

Tokyo
venue

Osaka
venue

Executive Officer
Head of Factory Sales Dept. &Tokyo Metropolitan Area
Distribution Dept.

Head of Factory Sales Dept. &Chubu Area Distribution Dept.

Hiroaki Imagawa

Toshihiko Maeda

Born January 22, 1963
56 years old; 33 years 9 months at Trusco[No. of shares held] 20,000
Career summary
1986: Joined the Company
2007: Director & Head of Sales Division
2013: Executive Officer & Head of Factory
Sales Dept. (East)
2016: Executive Officer & Head of Accounting
Dept.
2019: Executive Officer & Head of Corporate
Planning Dept. & Head of Accounting Dept.
Executive Officer, Head of Factory
Sales Dept. & Tokyo Metropolitan Area
Distribution Dept. (present)

Born August 3, 1968
51 years old; 28 years 9 months at Trusco[No. of shares held] 2,900
Career summary
1991: Joined the Company
2006: Head of Numazu Sales Office
2010: Osaka Branch Manager
2014: Head of Administration Dept.
2019: Head of Factory Sales Dept. &Chubu Area Distribution Dept.
(present)

2 sections, 12 branches, and 6 distribution centersHome Center Sales Dept. & Distribution Dept.

10 branches and 3 distribution centers
Chubu block

ToyamaYokkaichi
Distribution Planning Section
Fukui
Hamamatsu
Delivery Management Section (7 employees) Kanazawa
NagoyaTokyo metropolitan area block
OkazakiKomaki
KariyaMeijo
KashimaHachioji(130
employees
and35 part-time staff)
Satte
JyonanOmiya
AtsugiP Tokai
Toyohashi SC
Chiba
Kawasaki
P NagoyaMatsudoFuji(57 employees and 137 part-time staff)
Tokyo
Shizuoka(177 employees and 33 part-time staff)
P Saitama
P South Kanto
P East Kanto
Utsunomiya SC
P Tokyo
Koyama SC(166 employees and 239 part-time staff)

Osaka
venue

Head of Factory Sales Dept. &Kinki Area Distribution Dept.

Osaka
venue

Head of Factory Sales Dept. &West Area Distribution Dept.

Masato Otani
Born October 24, 1967
52 years old; 28 years 9 months at Trusco[No. of shares held] 1,400
Career summary
1991: Joined the Company
2008: Head of Kagoshima Sales Office
2014: Head of Human Resources Section
2018: Head of Kinki Area Factory Sales
Dept.
2019: Head of Factory Sales Dept. & Kinki
Area Distribution Dept. (present)
9 branches and 5 distribution centers

Head of Home Center Sales Dept. &Distribution Dept.

Yoshihiro Fujimoto

Hiroyuki Hoshino

Born September 10, 1971
48 years old; 24 years 9 months at Trusco[No. of shares held] 1,000
Career summary
1995: Joined the Company
2012: Kagoshima Branch Manager
2015: Fukuoka Branch Manager
2018: Head of Chugoku/Shikoku/Kyushu
Factory Sales Dept.
2019: Head of Factory Sales Dept. &West Area Distribution Dept. (present)

Born March 14, 1971
48 years old; 27 years 5 months at Trusco[No. of shares held] 2,800
Career summary
1991: Joined the Company
2007: Center Manager, Planet Nagoya
2012: Okazaki Branch Manager
2016: Head of Home Center Sales Dept.
2019: Head of Home Center Sales Dept.
& Distribution Dept. (present)

17 branches and 6 distribution centers

Kinki blockWest block

Ryuo
Kita-Osaka
Kyoto
HimejiOsaka
Kobe
Minami-Osaka
Akashi
Higashi-Osaka(140 employees and 10 part-time staff)

YonagoFukuokaOkayamaKokuraHiroshima
Tosu
Fukuyama
NagasakiUbe
Kumamoto
ShunanOita
Takamatsu
Kagoshima
Tokushima
Okinawa
Matsuyama(161 employees and 33 part-time staff)
P SanyoTakamatsu SC
P Kyushu
Hakata SC
Okayama SC
Kurume SC(42 employees and 78 part-time staff)

P Shiga
Higashi Osaka SC
P Osaka
Nara SCP Kobe(138 employees and 220 part-time staff)

Tokyo
venue

6 branches and 3 distribution centers
HC Tokyo No.1 Okazaki
HC Tokyo No.2 Fukuoka
HC Osaka
Okinawa*Includes 1 branches that also serve asbranches of the Factory Sales Dept.
(39 employees and 4 part-time staff)
HC East Japan Distribution Center
HC West Japan Distribution Center
HC Kyushu Distribution Center(35 employees and 161 part-time staff)※P (Planet) and SC (Stock Center) are theabbreviated names of the Company’s
distribution centers.

Notice of Convocation of the 57th Annual Shareholders’ Meeting6

Osakavenue

Part-time Corporate Auditor

Hiroho Kamakura

Born January 27, 1947
72 years old[No. of shares held] 3,300
Career summary
1971: Joined Tohmatsu Aoki & Co.
(currently Deloitte Touche Tohmatsu LLC)
1973: Registered as a certified public accountant
2012: Part-time Corporate Auditor of the Company(present)
Part-time corporate auditor of Yushin Precision
Equipment Co., Ltd. (present)
2013: Part-time corporate auditor of Fujio Food
System Co., Ltd. (present)
2018: Part-time corporate auditor of SymEnergy
Inc. (present)

57th October Management Committee (55th Anniversary Hall, 3F, Tokyo Head Office)The meetings are held in a round-table layout so that everyone can see each other’s faces.
The seating is changed each time so that the members can participate with a fresh feeling
each time.

Sales Division(2,481 employees in total)
e-Business Sales Dept.

Overseas Dept.

Tokyo
venue

Tokyo
venue

Concurrent

Head of e-Business Sales Dept.

Head of Overseas Dept. &Head of Marketing Dept.

Tsuyoshi Tsuchiya

Masashi Yamamoto

Born February 19, 1978
41 years old; 19 years 9 months at Trusco[No. of shares held] 3,300
Career summary
2000: Joined the Company
2010: Head of PR Section & Head of Corporate
Design Section & IR Section
2012: Yokkaichi Branch Manager
2016: Head of MRO Supply, e-Business
Sales Dept.
2019: Head of Marketing Dept. & Head of
MRO Supply, e-Business Sales Dept.
2019: Head of e-Business Sales Dept.
(present)

Overseas Sales Section※Overseas subsidiary service center(15 employees)

Overseas subsidiaries(68 employees in total)※２Marketing Dept.

Born May 27, 1973
46 years old; 23 years 9 months at Trusco[No. of shares held] 2,700
Career summary
1996: Joined the Company
2004: Head of Hamamatsu Sales Office
2010: Head of Auditor Office
2010: Head of Administration Section
2014: Center Manager, Planet Tohoku
2018: Head of Tokyo Metropolitan Area
Distribution Dept.
2019: Head of Overseas Dept. & Head ofMarketing Dept. (present)

Sales Planning Section(10 employees)

Officer in charge at Trusco Nakayama Corporation: Tadahisa Yabuno

5 branches
Mail Order Tokyo No. 1
Mail Order Tokyo No .2
Mail Order Osaka(39 employees and 4 part-time staff)
MRO Supply TokyoMRO Supply Kobe
(16 employees and 1 part-time staff member)

TRUSCO NAKAYAMACORPORATION(THAILAND)LIMITED.
Capital: 390 mn. baht
(approx. 1.3 bn. yen)
Director: Masashi Yamamoto(3 staff on loan, 20 local staff)

Noboru Yasui
President(42 employees in total)

PT.TRUSCO NAKAYAMAINDONESIA
Capital: 378.8 bn. rupiah(approx. 3.2 bn. yen)
Auditor: Masashi Yamamoto(3 staff on loan, 16 local staff)

Mitsugu Okumura
Representative
Director & President

Notice of Convocation of the 57th Annual Shareholders’ Meeting7

Guide to the Exerciseof Voting Rights

Voting Right Exercise Methods

Procedures of the
Shareholders’ Meeting- P8 -

Business Report- P10 -

Voting Right Exercise Methods
Please exercise your voting rights referring to ▶
three methods to exercise your voting rights.

Attendingthe Meeting*P32–38 of the Shareholders’ Meeting Reference Documents. There are

Via the Internet

By postPlease access the website specified by theCompany and exercise your rights following
the instructions on the screen.

Please indicate your vote “For” or “Against”
for each proposal on the Voting Form, tearoff the right section along the perforation,
hide your personal information using the
sticker, and post the Form.

Date and time of the Meeting

Time limit for the exercise
of voting rights

Time limit for the exercise
of voting rights

March 13 (Friday), 2020

March 12 (Thursday), 2020

March 12 (Thursday), 2020

10:00 a.m. (reception starts at 9:00 a.m.)(5:30 p.m.)

5:30 p.m. (latest arrival time)

Please present the enclosed Voting Form to
the reception. Please bring the Notice ofConvocation of the 57th Annual Shareholders’ Meeting (this document).

Guide to Exercising Voting Rights via the Internet
1. Access the website for exercising
voting rights. https://www.web54.net

Website forexercising
voting rights

When using a smartphone, the site can also beaccessed from the QR Code on the right.

Click*QR Code is a registered trademark of Denso Wave Incorporated.

2. Log in.

Voting Form

Please enter the “Code for the Exerciseof Voting Rights” and the “Password”
indicated on the enclosed Voting Form.

3. Enter "For" of "Against."
Enter a new password on the next screen and enter “For”
or “Against” according to the instructions on the screen.
Please contact below for inquiries on how to operate a PC, smartphone,or mobile phone when exercising voting rights via the Internet.
Dedicated phone number for stock transfer agency web support of
Sumitomo Mitsui Trust Bank

0120-652-031(9:00 a.m. to 9:00 p.m., excluding year-end and New Year’s holidays)

Click

Notes
1. If you exercise your voting rights twice, via the Internet and by post (in writing),
we will treat the exercise of your voting rights via the Internet as effective.
2. If you exercise your voting rights more than once via the Internet, we willtreat the last exercise of your voting rights as effective.
3. Exercising voting rights with a PC or smartphone, etc., may not be
possible depending on your Internet environment. In addition, exercising
voting rights may not be possible with some mobile phones.

*Those attending the Meeting as a proxy shareholder (only one other shareholder holding voting rights of the Company) are requested to submit a written proof of their rightof proxy at the Meeting reception desk.

8

Notice of Convocation of the 57th Annual Shareholders’ MeetingOutside Officer’s Report- P21 -

Auditor’s Report- P22 -

Proposal Details- P32 -

Q&A Page- P40 Convocation Notice

Initiatives in the 58th Period- P15 -How to Fill in the Voting Form
Please enter your vote for each proposal by referring to ▶

P32–38 for the details of the proposals.

Business Report

P2

Attention

P10
Reference Materials for
Shareholders’ Meeting

Circle “賛(For)” if you agree.
Circle “否(Against)” if you disagree.

● If you do not indicate your vote for each
proposal, your votes will be treated asaffirmative votes.
(Correct) (Incorrect)● Your vote will be
invalid if you circle
both “賛(For)” and “否(Against).”P32

1. If voting early via the Internet (refer to B on ▶

Reference Data

Relationship between Prior Voting and Voting on the Day
P8) and attending the Meeting(Example)
Voted “Against”
a proposal inearly voting

Voted “For” theproposal using thevoting form at
the Meeting

The vote will bechanged andcounted as “For.”

For・ Against

For ・ Against

For ・ Against

2. If attending the Meeting without voting early(Example)If you vote on a Voting
Form you have brought
to the venue, it will bedeemed invalid.

Voted “for” aproposal using
the voting form
at the Meeting

The vote result
will be aggregatedas “for.”For ・ Against

For ・ Against

Voting on the Day

At the Meeting, you will be
asked to place your voting
form in the ballot box.

Open Judge System (OJS) on the President

Based on the idea that it is important tojudge “For” or “Against” after seeing thepresentations, discussions, persons, etc.
on the day of the Meeting, we hand voting
forms to the shareholders. We aggregate
the results of the votes by our shareholders
on the day of the Meeting and disclose
them in the notice of resolution or
extraordinary reports.

Voting form at the Meeting

We consider the results of the votes on the day of the Meeting
concerning the President by shareholders who have heard thebusiness report and Q&As to be important evaluation
indicators of the President as the “OJS on the President.”
Concerning the results, a notice of resolution will be postedon the Company’s website on March 16 (Monday), 2020 after
the closing of the Meeting. The results of the “OJS on the
President” for the previous period (56th Period) are presented
on ▶
P33.

Notice of Convocation of the 57th Annual Shareholders’ Meeting9Convocation NoticeBusiness Report fortheBusiness Report

P2

Reference Materials for
Shareholders’ Meeting

P10

57

- P10 -

We will continue to improve clients’ convenience.

th Period

We increased the number of items handled and continued active capital investment
toward the goal of enhancing the number of inventory items to 500,000 by the endof December 2023. Furthermore, we upgraded the immediate delivery system byexpanding the inventory of frequently ordered items and reviewing our delivery
network with an aim to enhance clients’ convenience.

(January 1, 2019 to December 31, 2019)(Attachment)

Business Development and Results
Results for the 57th period (Year ended December 31, 2019)

Sales

Consolidated

220,674

Non-consolidated

million yen

165

220,357 million yen +2.8%+8.6

Year on year

Non-consolidated

Grossprofit margin

Consolidated

SG&A
expenses ratio

Consolidated

183

15.1

OperatingincomeConsolidated％

Non-consolidated

14.9% +0.4pt

13,797

Ordinary
incomeConsolidated

million yen

million yen

Profit attributableto owners of parent

14,302 million yen - 2.3%

Net income
Non-consolidated

Consolidated

9,613

+2.2

+0.4

3.4%

9,715 million yen - 0.1%
Production processing tools

8.2%

-1.2

-3.8 -4.2

57th period (the fiscal year under review)
56th period (previous fiscal year)984

918 908

907 924 899

845

841

819

892 878853 891

916

890

928
922

883

944

Net income
per share

Consolidated

Non-consolidated

Annual dividend
per share

Construction goods 11.3%

Work supply

145.78Year on year

147.32 yen - 0.12 yen

36.50

Year on year

yen - 0.50 yen

indicate the percentage of total sales.)18.1%

Hand tools

24,903 million yen

39,837 million yen

36,853 million yen（ - 3.6% ）（ +0.2% ）（ +4.7% ）（ +3.6% ）（ +2.4% ）Environmental safety equipment 16.5%

Distribution and storage equipment 11.9%

Research management equipment

26,192 million yen（ - 1.1% ）57th period(the fiscal year
under review)yen

17,950 million yen

36,285 million yen

Year-on-yearchange(%)+1

7,588 million yen（ +7.6% ）Sales(100 million yen)

56th period(previous fiscal year)

969 983

Sales and composition ratio by product category (Figures in brackets indicate year-on-year changes;

Cutting tools

186 186 185 188+13.3

Average sales per day (million yen)million yen
Year on year

Non-consolidated

164

Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
★ 18days 19days 20 days 20 days 19 days 20 days 22 days 17 days 19 days 21 days 20 days 20 days(±0) (±0) (−1) (±0) (−2) (− 1) (＋1) (−2) (＋1) (−1) (−1) (＋1)★No. of operating days in the 57th period (year-on-year change)

Year on year

Non-consolidated

196

+4.9

963 973

13,921 million yen - 3.1%

14,197

+7.9

1,042

Year on year

Non-consolidated

181 175 179

Sales (100 million yen)
Year-on-year change (%)

Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.
★ 18days 19days 20 days 20 days 19 days 20 days 22 days 17 days 19 days 21 days 20 days 20 days(±0) (±0) (−1) (±0) (−2) (− 1) (＋1) (−2) (＋1) (−1) (−1) (＋1)★No. of operating days in the 57th period (year-on-year change)

Year on year

Non-consolidated

208

+1.9

％

21.3% +0.1pt

Monthly sales

+6

21.3

Year on year

Non-consolidated

P32

Reference Data

Business Report

Voting Right Exercise Methods- P8 -

Procedures of the
Shareholders’ Meeting

4.3%

Office furniture and equipment

8.9%

Other

9,510 million yen

19,684 million yen

1,551 million yen（ +0.5% ）（ +3.0% ）（ +2.5% ）

16.7%

0.7%

(Note) 1. Regarding figures in the Business Report for the 57th period, any fraction less than one million yen is rounded down to the nearest million yen.
2. The Company has prepared consolidated financial statements from the 57th period. Regarding Results for the 57th period (January 1, 2019 to December 31, 2019), Progress
and plan of the Company’s important indices, Performance indicators, Trend of cash flows, and Sales, ordinary income and inventory value, comparison between the 57th
period on a consolidated basis and the 56th period on a non-consolidated basis is provided as far as it is possible.

10

Notice of Convocation of the 57th Annual Shareholders’ MeetingOutside Officer’s Report- P21 -

Auditor’s Report- P22 -

Proposal Details- P32 -

Q&A Page- P40 -

Customers

Users

Convocation Notice

Initiatives in the 58th Period- P15 -

Business Model (Figures in parentheses indicate a year-on-year change)(100 million yen)

1,700

1,761

109

100

Sales

Domestic manufacturers

Ordinary
income2,332

companies（+52）

The 57th period The 58th period
Fiscal year
Plan
under review

e-Business RouteConsolidated

Sales
Ordinary income

34,4923,155(100 million yen)344

million yen
million yen

385

Sales

The 57th period The 58th period
Fiscal year
Plan
under review

Home Center Route
Sales
Ordinary income

14,70364(100 million yen)

147

153

0.64

0.77

34,492 million yen（ +12.2% ）We accelerated coordination between our
product databases, which encompass around2.27 million items, and our clients’ systems.
We strengthened our unique distribution
service that caters to each client’s
packaging format so that we can deliver
goods for which our clients received orders
from their users on the day of the orders.

Share of consolidated net sales

million yen
million yen
Sales

14,702 million yen（ +9.2% ）We proposed the improvement of sales
floors and reinforced the development of
store brand products mainly at
professional shops targeting users atconstruction sites, etc. by making use ofour 390,000 inventory items.

Overseas
manufacturers

The 57th period The 58th period
Fiscal year
Plan
under review

205

companies（+8）

Overseas Route

1,437
- 234

Sales
Ordinary loss

(100 million yen)

14
-

2

Share of consolidated net sales

0.6%

Non-consolidated

million yen
million yen

16

Sales

2

Ordinary
income(or loss)-

6.7%

Non-consolidated

Ordinary
incomeConsolidated

15.6%

Non-consolidated

Ordinary
incomeConsolidated

We expanded inventory that fits market
needs and kept the inventory of frequently
ordered items at the right level at our
distribution centers and 30 branches
carrying inventory nationwide.
We held distribution center tours for ourclients and promoted products ofmanufacturers with brand power.

Share of consolidated net sales

33

31（ +0.5% ）

1,137 million yen（ +18.0% ）We expanded inventory that fits market
needs toward the goal of enhancing thenumber of inventory items to 100,000.
We held distribution center tours for ourusers and promoted products ofmanufacturers with brand power.

Business Reportmillion yen

170,025 million yen

P2

P10
Reference Materials for
Shareholders’ Meeting

Ordinary income

million yen

Manufacturers,
construction-related businesses, etc.

170,041
10,932

Sales

77.1%

Non-consolidated

Manufacturers,
general consumers, etc.

Consolidated

Share of consolidated net sales∞(Infinity)

Outdoor work-related businesses,
general consumers, etc.

Factory Route

%）

5,592

companies（+269）

Overseas
manufacturers, etc.

（

million yen

Machinery tool dealers,
welding material dealers, etc.

220,674 million yen 220,357+2.8

Online shopping firms, etc.

Non-consolidated net sales

Home centers,
electronics retail stores, etc.

2,537

companies（+60）

Consolidated net sales(Retail)

P32

Reference Data

(Wholesale)

Overseas dealers,
overseas subsidiaries, etc.

Supplier(Manufacturer)

The 57th period The 58th period
Fiscal year
Plan
under review

Notice of Convocation of the 57th Annual Shareholders’ Meeting11

Convocation NoticeBusiness Report for
the 57th PeriodBusiness Report- P10 -

Business Development and Results
Progress and plan of the Company’s important indices

Important indices

Product

No. of items handled

Distribution
Sales

Previous fiscal year

Fiscal year under review

Plan1,863,100 items (+200,700) 2,270,300 items (+407,200) 2,400,000 items (+129,700)
67,000 items (+7,500)

Total number of suppliers

2,477 companies (+138)

2,537 companies (+60)

2,637 companies (+100)

Of which, No. of domestic suppliers

2,280 companies (+95)
197 companies (+43)

2,332 companies (+52)
205 companies (+8)

2,392 companies (+60)
245 companies (+40)

374,600 items (+37,800)

392,100 items (+17,500)

410,000 items (+17,900)

Inventory hit rate

(Percentage of deliveries shipped frominventory out of total order intake)

89.9％(+0.4)

90.5％(+0.6)

91.0％(+0.5)

No. of chartered trucks(delivery outsourced)

204 (- 10)

175 (- 29)

153 (- 22)

No. of own delivery trucks

89 (+15)

98 (+9)119 (+21)

Percentage of use of own
delivery trucks

30.4％(+6.1)

35.9％(+5.5)

43.8％(+7.9)

5,323 companies (- 10)

5,592 companies (+269)

5,700 companies (+108)

26,168 (- 972)

26,881 (+713)

27,800 (+919)

No. of customer firms
No. of customer accounts

No. of factories connectedto Orange Commerce
Online order intake ratio

351 companies (+39)

312 companies (+10)

390 companies (+39)

1,057 (+65)

1,235 (+178)

1,400 (+165)(Percentage of orders processed in thesystem out of total order intake)

81.7％(- 0.3)

83.1％(+1.4)

85.0％(+1.9)

Average age(Regular employees)

38.2

38.2

37.5

Average annual income(Regular employees)

7.01〈7.39〉million yen (- 0.14) 6.55〈6.92〉million yen (- 0.46) 6.55〈6.92〉million yen (±0)

Career jobs
(fast-track careers)

8.04〈8.50〉million yen (- 0.02) 7.58〈8.04〉million yen (- 0.46) 7.58〈8.04〉million yen (±0)

Area jobs(non-career staff)

6.80〈7.17〉million yen (- 0.16) 6.42〈6.80〉million yen (- 0.38) 6.42〈6.80〉million yen (±0)

Logistics(distribution specialist staff)

5.20〈5.39〉million yen (- 0.21) 4.92〈5.12〉million yen (- 0.28) 4.92〈5.12〉million yen (±0)

Responsible persons, such as heads ofAnnual income branches, centers, and Head Officeof managers Division heads, department heads(including executive officers)

11.50〈12.27〉million yen (- 0.03)

11.36〈12.20〉million yen (- 0.14)

11.36〈12.20〉million yen (±0)

17.33〈18.76〉million yen (- 0.01)

14.98〈16.21〉million yen (- 2.35)

14.98〈16.21〉million yen (±0)

Total no. of employees(incl. part-time staff)

2,751 (+155)

2,784 (+33)

2,843 (+59)

No. of manufacturers listed

1,719 companies (+147)

1,776 companies (+57)

1,840 companies (+64)

401,000 items (+42,000)

440,000 items (+39,000)

480,000 items (+40,000)

No. of items listed(Note) 1. Figures in brackets indicate year-on-year changes.
2. Average annual income (full-time employees) includes executive officers.
3. Figures in parentheses indicate annual income, including financial bonds.
4. Average annual income for the 56th period includes average performance-linked bonus payment (230,000 yen).

12

58th Period

Year ending December 2020

59,500 items (+3,000)

No. of companies connectedto Orange CommerceIT

57th Period

Year ended December 201956,500 items (+6,300)

No. of inventory items

Personnel

56th Period

Year ended December 2018

No. of private brand (PB)
product items

Of which, No. of overseas suppliers

Trusco Orange Book

Business Report
Reference Materials for
Shareholders’ Meeting
Reference Data

P32

Voting Right Exercise Methods- P8 -

January 1, 2019 to December 31, 2019

P2

P10

Procedures of the
Shareholders’ Meeting

Notice of Convocation of the 57th Annual Shareholders’ MeetingQ&A Page- P40 -

Assets and Profits of the Past 10 Years
Performance indicators
49th Period

50th Period

51th Period

53th Period

54th Period

55th Period

57th Period

Year ended Mar.
2011

Year ended Mar.
2012

Year ended Mar.
2013

Year ended Mar.
2014

Year ended Dec.
2014
(nine-month results)

Year ended Dec.
2015

Year ended Dec.
2016

Year ended Dec.
2017

56th Period

Category

Year ended Dec.
2018

Year ended Dec.
2019
Fiscal year under review(consolidated)

Period48th Period(million yen)
52th Period

Sales

115,477

129,912132,295

145,882

114,473

166,565

177,053

195,096214,297

220,674

Gross profit
margin

20.4%

20.4%

20.3%

20.4%

20.9%

21.5%

21.7%

21.2%

21.2%

21.3%

SG&A

18,075

18,134

18,451

19,58815,50422,78824,198

27,114

31,12733,237

Operatingincome

5,479

8,369

8,356

10,133

8,477

12,976

14,163

14,276

14,364

13,797

Ordinary
income

5,378

8,315

8,311

10,078

8,494

13,211

14,433

14,581

14,642

14,197

2,874

3,933

4,818

5,954

5,474

8,242

9,963

10,173

9,722

9,613

Net income
per share

43.57 yen

59.64 yen

73.05 yen

90.28 yen

83.01 yen

124.98 yen

151.08 yen

154.28 yen

147.44 yen

145.78 yen

Net assets

75,72378,541

82,28387,03990,917

97,777

105,836

113,680

120,648

127,478

Return on
equity (ROE)

3.9%

5.1%

6.0%

7.0%

6.2%

8.7%

9.8%

9.3%

8.3%

7.5%

Total assets

92,85797,459100,032

109,738

109,917

120,141

128,044

147,363

170,216

196,094

Net assets
per share

1,147.99 yen

1,190.73 yen

1,247.49 yen

1,319.67 yen

1,378.52 yen

1,482.65 yen

1,604.89 yen

1,723.87 yen

1,829.54 yen

1,933.13 yen

Return on
assets (ROA)

5.9%

8.7%

8.4%

9.6%

7.7%

11.5%

11.6%

10.6%

9.2%

7.2%

Capitaladequacy ratio

81.5%

80.6%

82.3%

79.3%

82.7%

81.4%

82.7%

77.1%

70.9%

65.0%

(Note) 4

Net income(Note) 1, 3

(Note) 2, 3(Note) 1. Net income per share is based on the total number of shares outstanding during the period minus the average number of treasury shares during the period.
2. Net assets per share are based on the number of outstanding shares at the end of period minus the number of treasury shares.
3. The Company carried out a stock split of two common shares to one as of January 1, 2017. Therefore, the “Net income per share” and “Net assets per share” are computed
based on the assumption that the stock split took place at the beginning of the 48th period.
4. The Company has prepared consolidated financial statements from the year ended December 31, 2019. Therefore, net income for the year ended December 2019 is indicatedas profit attributable to owners of parent.

Trend of cash flows
PeriodCategory(million yen)

48th Period

Year ended Mar.
2011

49th Period 50th Period

Year ended Mar. Year ended Mar.
2012
2013

51th Period

Year ended Mar.
2014

52th Period

53th Period

Year ended Dec. Year ended Dec.
2014
2015
(nine-month results)

54th Period

Year ended Dec.
2016

55th Period 56th Period

Year ended Dec. Year ended Dec.
2017
2018

57th Period

Year ended Dec.
2019
Fiscal year under review(consolidated)

Cash flows from operating
activities

5,937

3,567

4,486

9,368

3,263

9,336

6,459

8,932

6,928

10,998Cash flows from investing
activities- 8,674- 3,195- 5,293- 5,502- 4,385- 5,083- 7,806- 16,628- 18,144- 19,707

Cash flows from financing
activities

- 662

- 892

- 1,187- 1,288- 1,735- 1,575- 2,262

7,424

12,492

14,558

Balance of cash and cash
equivalents at end of period

14,413

13,893

11,89914,476

11,61814,296

10,682

10,412

11,685

18,330

Sales, ordinary income and inventory value●● ●●Sales (million yen)
Inventory value (million yen)
Ordinary income (million yen)

115,477
16,0585,378
2011

129,912 132,295
18,35920,224

166,565

20,310

8,311

2012

2013

10,0782014 Year
ended Mar.

177,053
29,055

145,882
114,473
21,759

8,315

Sales
214,297 220,674 (million yen)

195,096

43,653Inventoryvalue(million yen)

14,197

Ordinary
income(million yen)

37,004
31,84125,017

13,211

14,433

14,581

14,642

2016

2017

2018

8,494

2014 Year
ended Dec.
(nine-month results)

2015

2019

Year ended Dec.31, 2019
Fiscal year under review

Consolidated

Notice of Convocation of the 57th Annual Shareholders’ Meeting

13

Convocation Notice

Proposal Details- P32 -

P2
Business Report

Auditor’s Report- P22 -

P10
Reference Materials for
Shareholders’ Meeting

Outside Officer’s Report- P21 -

P32

Reference Data

Initiatives in the 58th Period- P15 -

Convocation NoticeBusiness Report for
the 57th PeriodBusiness Report

P2

January 1, 2019 to December 31, 2019

Major Capital Investments during the Fiscal Year under Review
Launch of Butler® and Auto Store at Planet Saitama

Renewal of core system Paradise
Paradise is the core system that accumulates a wide range of data fromorder placement and receipt operations to accounting management. We
plan to implement a total investment of roughly ¥4.31 billion related toautomation, chiefly for the core system. We aim to fortify IT collaborations
with customers and suppliers, and pursue usability with both to
implement smoother transactions. We aim to continue to enhance ourcompetitiveness by radically improving our operation efficiency, mainly
the automation of estimates and inventory control, focusing on our goalof sales of ¥300 billion and inventory items of 500,000.

On October 1, 2019, we embarked on full-fledged operations.
We aim to possess an inventory of 500,000 items by the end of
December 2023 to achieve high density storage and highefficiency shipments.

Reference Materials for
Shareholders’ Meeting

P10

Reference Data

P32

Butler®
<Capacity>
No. of robots: 73 units
Dedicated shelves: 1,380 units
Warehousing capacity: 70 cases/hour(1 station), roughly 2.5 people’s worth

Auto Store<Capacity>
No. of robots: 16 units
Dedicated shelves: 7,930 units
Warehousing capacity: 120 cases/hour(1 station), roughly 3 people’s worth

Automate anything that can be automated!
Sales operations·Automate creation of estimates·Special price optimization·Operations collaboration site POLARIO

Communications·MRO stocker·Communication app T-Rate

Distributionfunctions·Optimal allocation for direct shipment to users·Automated inventory for popular products·Automated inventory control, etc.

Management
operations·Management of budget versus actual
sales management cost
·Improve analysis report functions·Digitalization of audit reports, etc.

Planet North Kanto Expansion
In July 2019, we completed construction of an automated warehousebuilding, with automated palette automated warehouse, and hazardous
substances warehouse
Isezaki, Gunma Prefecture
Site area: 10,000 tsubo
Floor area: 7,695 tsubo after
expansion
Introduce facilities:
Palette automated warehouse
Hazardous substance warehouse
Total investment: about ¥1.31 billion
Completed in July 2019

Automated warehouse

Hazardous substance warehouse

Introduction of distribution equipment at Planet East Kanto,
Tokai, Shiga and Kobe

Planet Tohoku Expansion
We plan to introduction cutting-edge distribution equipment in the newbuilding, including a bucket automated warehouse, Butler® and Auto Store.
Sendai, Miyagi Prefecture
Site area: 3,905 tsubo
Floor area: 8,586 tsubo after expansion
Introduce facilities:
Bucket automated warehouse
Auto Store
ButlerSAS
GAS, etc.
Total investment: about ¥7.2 billion
Completion set for January 2020

We are fortifying the distribution and center storage capabilities and shipment
capabilities by successively introducing cutting-edge distribution equipment
at distribution centers nationwide.

Portion to be expanded

Planet Tokai
Planet Shiga
Planet Kobe
Bucket automated warehouse Bucket automated warehouse GAS (Gate Assort System)(200,000 item storage capacity) (100,000 item storage capacity)

Financing
We are procuring capital through long-term loans from financial
institutions to continue investing in distribution facilities and information
systems with the goal of fortifying functions that will enhance
convenience for our customers. In the consolidated fiscal year underreview, we also procured capital through short-term borrowings withthe goal of securing working capital for related to sales transactions.

※Major lenders ▶ Disclosed on our Internet website

14

Financing trends
Period55th period

56th period

57th period

Category

December 2017

December 2018

December 2019

Cumulative
total

Long-term borrowings¥10.0 billion¥15.0 billion−¥25.0 billion

Short-term borrowings−−¥17.0 billion¥17.0 billion¥10.0 billion¥15.0 billion¥17.0 billion¥42.0 billion

Total
Internet disclosures

Notice of Convocation of the 57th Annual Shareholders’ MeetingForecast for the 58th period (year ending December 2020) and subsequent years

Sales
Gross profit margin
SG&A
Operating income
Ordinary income
Net profit attributable to owners of the parent
Net income per share
Annual dividend per share

57th Period
December 2019
Fiscal year under review

58th Period
December 2020
Plan

Consolidated

Consolidated

220,674 million yen
21.3 %
33,237 million yen
13,797 million yen
14,197 million yen
9,613 million yen
145.78 yen
36.50 yen

231,619 million yen (+5.0 %)21.3 % (±0pt)
36,345 million yen (+9.4 %)13,007 million yen (-5.7 %)13,257 million yen (-6.6 %)9,012 million yen (-6.3 %)13,666 yen (-9.12 yen)
3,450 yen (-2.00 yen)

P10

P32

*Figures in brackets indicate year-on-year change.

Strategies for sustainable development
In this era of intense change, including the
emergence of e-commerce companies, AI, IoT
and other IT-related developments, to accurately
address the need for a wide variety of items insmall lots with a high level of order frequency, anecessity for monozukuri sites, it is essential that
we continue to fortify investments in branches,
distribution centers and the field of IT. Goingforward, we aim to steadily implement our fivecorporate strategies, which are our core pillar, as
we believe this is the most important element to
the expansion of our corporate value.

Product Strategy

Logistics Strategy

We look to enhance our product supply
capabilities by further expanding our inventory(about 390,000 items) to the highest level in theindustry and also by increasing our overseas
brand products.

Based on the belief that those who control
distribution, control sales channels, we aim toincrease the number of items we have in inventory
to 500,000 items by the end of December 2023
and further enhance our delivery speed.

Sales Strategy

IT Strategy

Human Resources Strategy

We plan to contribute to an expansion ofbusiness opportunities for our customers byusing the Trusco Orange Book, a paper catalog,
and Trusco Orange Book.Com, a digital catalog.

We will continue to make aggressive investments
to reinforce our IT capability, including introducing
AI, to offer the greatest convenience in the industry.

We will carry out thorough job rotation to nurture
versatile employees can adapt to any kind of job,
and improve the quality of individual work as wellas create an environment where employees canwork for many years.

Notice of Convocation of the 57th Annual Shareholders’ Meeting

P2

Reference Materials for
Shareholders’ Meeting

Consolidated business performancean increase in wage and packaging costs owing to an increase indepreciation due to capital investments and an expansion in sales.
In the next consolidated fiscal year, we estimate sales of ¥231,619
million, ordinary income of ¥13,257 million, net profit attributable toowners of the parent of ¥9,012 million and net income per share of¥136.66. We plan to pay an annual dividend of ¥34.50. That said,
our sales forecast was created based on declarations from branchmanagers.

15

Reference Data

Overall corporate manufacturing activities are expected to be
weak due to impact mainly from sluggish export-related andautomotive-related demand in tandem with the ongoing slowdownin overseas economies, chiefly the economy in China.
Regardless of deteriorating business sentiment, we anticipate further
sales growth owing to continuing active investments, including forthe introduction of distribution facilities, system development andinventory expansion. In addition, regarding SG&A costs, we forecast

Business Report

Issues Facing the Company

Convocation Notice

Initiatives in the 58th Period

Convocation Notice

Initiatives in the 58th PeriodBusiness Report
Reference Materials for
Shareholders’ Meeting

Business Report- P10 -

This year’s resolution:「楽苦美」

Enhance customer convenience
by realizing one-stop purchasing

Rugby

We plan to achieve one-stop purchasing for sales stores to users
by increasing the number of manufacturer brands we handle andthe number of items in inventory, and also by improving thefunctions of our distribution services and information system.

This is a play on words using Chinesecharacters to mean enjoyable, difficult andbeautiful. People suffer but the serious efforts
they make are precious and beautiful.

Exert a strong will to develop the market

P10

Reference Data

Voting Right Exercise Methods- P8 -

Managing Director
Head of Sales Division Tadahisa Yabuno

P2

P32

Procedures of the
Shareholders’ Meeting(1) Factory Sales Dept.
i. Aim to expand share by building a system that supplies a diverse
lineup of product to a wide range of industries in one stopii. Simplify the operations of sales stores, including automating
estimates using Trusco Orange Book.Com and a productsearch function that uses AI
iii. Fortify cooperation system between each supplier and region(2) e-Business sales Dept.
Mail order
Make system proposals that suit the customer and aim tobuild a supply chain that provides high precision distribution
services. Expand sales by undertaking measures between
companies that are not influenced by price.
MRO Supply
Shore up sales to existing customers and increase newpartnerships by renewing Orange Commerce, an electronic
procurement system.
(3) Home Center Sales Dept.
i. Address demand from professional by creating a sales floor thatspecializes in pro tools and by offering abundant product proposals.
ii. Expand support to omni-channels that are linked to storesand home center original mail order sites.
(4) Overseas Dept.
Trusco Nakayama Thailand, Trusco Nakayama Indonesia
Published a Thai and Indonesian language version of thecatalog. Both companies are expanding inventory at theirrespective companies to 100,000 items to further improve
convenience for local companies.
Overseas Sales Section
We will create one-stop purchasing for users though directtransactions with local sales agents in those countries where
we do not have a local subsidiary. By conducting transactions
with Japanese sales agents that have overseas sites, we will beable to address sales growth and alleviate exports from Japan.

Published a Thai and Indonesian language
version of Trusco Orange Book Junior to service
users at our local units

16

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Sales comparison by factory route industry
880(100 million yen)
2015
2019

Broad sales tovarious industries

741

233

1. Machinery tool dealers299

2. Hardware, tubing material,
electronic material dealers,
etc.

221

274

198

3. Conduction machine,
packaging material,chemical dealers, etc.

245

4. Welding material dealers

Sales trends by e-Business routes (mail order) (100 million yen)
Average growth ofaround 24%

234

264

299

181
137

2016

2017

2018

2019

2020

Fiscal year
under review

Forecast

Orange commerce (electronics purchasing)
1,057
Number of partnerships

1,235

No. of Orange Commerceconnected factories(plants)351

No. of Orange Commerceconnected customers(companies)

992

776
656

272

302

312

230

2015

2016

2017

2018

2019

Fiscal year
under review

Sales trends by home center routes
Sales at pro shops
continue to grow

134
19

120
14

123
16

106

107

115

2016

2017

2018

147
21

153
23

126

130

2019

Fiscal year
under review

2020

Forecast

Pro shops(100 million yen)Home centers(100 million yen)

Director
Head of Product Division Shinsaku Miyata

Q&A Page- P40 Convocation Notice

Proposal Details- P32 -

This year’s resolution:「禍福無門」

Year to create all-weather productlineup and fortify supplier cooperation

P2

There is no high road to happinessor misfortune

Our wide and diverse product lineup, a strength of Trusco, can address awide range of demand regardless of whether economic sentiment is positiveor negative. In the current fiscal year, we aim to firmly secure demand byincreasing the depth of our product lineup, mainly in overseas brands.

Whether you decide to do or not to do something depends on you.
My goal is to contribute as best as possible to the development of
the company and the happiness of all employees by never cutting
corners, carrying out optimal decision-making and execution, andabove all, immersing myself in problem-solving.

1. Aim to expand inventory of private brand (PB) products
We plan to steadily carry out our five-year expansion plan to fortify our lineup of private brandproducts, which is an earnings pillar. Through this plan we also aim to contribute to society
by cooperating with our suppliers and having facilities for the disabled nationwide partake inour manufacturing processes, including finishing and packaging.
(1) Improve functions and carry out eco-friendly operations, including using the newest
materials and using biodegradable materials(2) Develop highly innovative functional products, mainly seasonal products
2019

2020

2021

2022

2023

2024

No. of listed inventory items

365,000

383,000

410,000

440,000

480,000

520,000

(YoY)

12.7

14.0

15.5

16.5

17.4

Inject 40,000
PB items

Ratio of PB items
in inventory (%)

PB products

PB products
NB products

90,600
items

P32
520,000

Year of Orange Book listing

No. of PB inventory items

P10

Comparison of NB and PB products in inventory
13.0

47,60049,60057,60068,60079,60090,600（+5,600） （+2,000） （+8,000）（+11,000）（+11,000）（+11,000）

NB products

items

429,400
items

2019

2020

2021

2022

2023

2024
(Year of Orange Book listing)

2. Capture a wide range of demand by strengthening lineup in product portfolio
We aim to provide new value to users by injecting top Japanese andforeign brands into fields where our product lineup has been weak,
including conduction machines and control machinery.
In addition, we aim to promote the full-fledged use of products with
auxiliary functions for demand we expect to see further out. We alsoplan to play a role in the improvement of the labor environment.
(1) Expand inventory and handling of linear-related devices*(2) Strengthen procurement of control machinery, including sensors
and switches(3) Fortify procurement of excellent products with an assist-function
from Japan and abroad*Machinery element parts that realize linear motion

Business Report

Auditor’s Report- P22 -

Reference Materials for
Shareholders’ Meeting

Outside Officer’s Report- P21 -- P15 -

Powerful arm (CKD brand)

EXOSKELETON (COMAU, Italy)

Upper: LM guide (linear motion), THK brand
Lower: Photoelectric sensor, Automics brand

3. Strengthen business alliances with suppliers via introduction of POLARIO
We aim to simply our flow of operations by developing a network for Automate and speed up responses on orders, estimates and delivery dates
the complex operations carried out between us and our suppliers. To ①POLARIO will automatically convert estimate a request received via Orange Book.Com and send it to a supplieraccomplish this, we are pouring energies into the early deployment of ②Automatically process an estimate from a supplier and automatically send them to a sales agent via Orange Book.Com
POLARIO, a proprietary operations support system which we●①
developed.
●②(1) Achieve centralized management using a dedicated monitor to
Sales agent
Supplier
reference orders and estimates(2) Make operations possible with a mobile environment(3) Improve overall market response capabilities by speeding up our
response to our customers
System link

Notice of Convocation of the 57th Annual Shareholders’ Meeting

17

Reference Data

Initiatives in the 58th Period

Convocation Notice

Initiatives in the 58th Period

Procedures of the
Shareholders’ Meeting

Voting Right Exercise Methods- P8 -

Director
Head of Corporate Management Division Kazuo Nakai

This year’s resolution:「支」

Aim to become a company that continues
to win trust by enhancing safety

SupportOur goal is to further enhance corporate value by strategicallydeveloping workstyles and HR policies, including thefortification of governance, so that employees can continue towork feeling safe and secure.

P10

1. Enhance ESG management based on our corporation philosophy

Reference Materials for
Shareholders’ Meeting

Business Report

P2

Business Report- P10 -

Reference Data

P32

We aim to provide accurate logistical support as amanagement department by extract issues based on fact.
This will facilitate the ability to carry out efficient measures sothat each department can achieve their management goals.

Our mission is to contribute to society through our corporate activities. Based on ourphilosophy for existence—realizing happiness for related people—we look to continue tosupport people and society, which are the source of corporate value.
(1) Eco-conscious measures (▶
refer to P27)
Activities that focus on achieving a sustainable society, including energy-saving.
refer to P29)
(2) Social contribution activities (▶
Measures being carried out by the Nakayama Foundation for the Visually Disabled
Co-sponsor the Skill Olympics, a competition for technicians 23 and under, who will be
responsible for the future(3) Enhance risk management system (▶
Governance system: refer to P30)
Establish whistle-blowing system
Supporting activities that promote participation in society by lending out
Employee-use: Internal hotline, lawyer hotline and other consultation windows
seeing-eye dogs to individuals that are visually disabled
Supplier-use: Partner optimal choice hotline

2. Fortify ability to respond to changes in society
We aim to contribute to corporate growth by carrying out necessary actions, without fail,including gender equivalence, and not just creative HR policies.
(1) Workstyle reform
HR system, including Lovebird Transfer Program and Happy Sunday Program
Measures that take into account the health of employees
Recognized as a Health and Production Management Organization in 2019 (White
500). This was the third straight year we were certified.
Establish an equal training system that is not age or gender biased
Eliminate work history qualification restrictions for management position candidates of
9 or more years
In the medium/long term HR training plan, incorporate hierarchical and selection-based training(2) Position personnel based on selection of the right person for the right position
Environment conducive for working up to retirement age and for utilizing skills (jobrotations)
Launch job challenge program where employees can opt to be transferred to thedepartment of their choice

Example of a creative HR system: Internal side-job system (hybrid work)
L o c a t i o nWorkplace other than the department assigned toPotential workdays

Saturday, Sunday and holidays only (two times a month or less)Eligible employees

Full-time employees that have worked for the company
for 2 or more years
Overtime is less than 30 hours for the said month,or less than 45 hours per month in the past six months

Haruka Itoya, Satte branch
Promoting the hiring of female sales staff

3. Measures to further enhance corporate value(1) Broadcast TV program: TRUSCO Shirarezaru Gulliver(Airs Saturdays from 18:00 on TV Tokyo affiliate stations)
Expand business circle by introducing world-renown companies(2) Hold distribution center tours six times a year at each location
Continuing to carry out in-depth exchanges with shareholders since 201118

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Yuri Tabe, Planet Saitama
New employees all experience working in
distribution for 14 months

Outside Officer’s Report- P21 -

Auditor’s Report- P22 -

Proposal Details- P32 -

Director
Head of Information Systems Division Atsushi Kazumi

Q&A Page- P40 Convocation Notice- P15 -

This year’s resolution:「IT × アイデア

Drive corporate strategies
using cutting-edge IT

飛躍的な
利便性づくり」

P2

IT × Ideas

Rapid development of convenience

We aim to boost the efficiency of our business partners
overall via the companywide utilization of our new coresystem, which was launched in January 2020.

2020 is the year we plan to execute operational reforms.
The combining of IT with ideas will bring about growth
opportunities through the pursuit of convenience.

1. New system launched in January 2020

(1) Automated estimates(2) Automated optimization of inventories(3) Automated use of products(4) POLARIO (linked to supplier online operations)

Reference Materials for
Shareholders’ Meeting

Example of new functions using data

P10

User data
External data
(weather etc.)

Transport data

Collecting data
Orders, estimates andother business data

Gather data from businessactivities that were not previously
collected with new service.

P32
Digitalize conversations

Use of data

Analysis of data

Convert analysis results into a
service using our creativity.

Make new discoveries and gain
insights from results of analysis
using AI or statistical technology

Reference Data

We updated our core system, PARADISE, for the first time in around 7
years. In addition to improving the efficiency of internal operations andautomation, we released several services that will improve convenience forsuppliers, sales agents and users. We plan to speed up management andfortify services by using data that has been digitalized and accumulated.

Cycle of data use going forward

2. Accelerate speed of business with IT
In the rapidly changing business environment, services that use IT need to
be flexibly and speedily developed. We aim to quickly respond to the
expectations of our customers by learning agile system development
methods.

Idea

Development
High speed×
optimization(1) MRO Stocker
Achieve extremely short-term deliver with required tools
Develop smartphone app to simply ordering(2) T-Rate
Use smartphone app to talk with people in charge of operations at Trusco
Easily make inquiries at anytime and from anywhere

Improveevaluations

Provideservices

Development framework

3. Undertaking a safe and secure system
Anti-virus software

Defense against a targeted cyber attack

Our system is constantly monitored by security experts in case an
unexpected event should occur.

Defense against illegal intrusion

System measures using multiple safeguards

AttackFirewall

We want our suppers to feel safe using our system. To this end, we areoperating a system that places emphasis on disaster-prevention
measures and security.

Business Report

Initiatives in the 58th Period

Security level
Security measures using multiple defenses

Notice of Convocation of the 57th Annual Shareholders’ Meeting19

Convocation Notice

Initiatives in the 58th Period
Director
Head of Distribution Division Hideki Naoyoshi

Business Report
Reference Materials for
Shareholders’ Meeting
Reference Data

P32

「回天自在」

Aim for distribution services thatare highly convenient and creative

P2

P10

This year’s resolution:

Universal

We believe our mission is to respond with immediate delivery for allorders from our customers. We are embarking on the fortificationof distribution functions so our customers can experience a levelof convenience that they cannot receive anywhere else.

1. Full-fledged fortification of operations

To survive this current turbulent era, we need to evolveso that we are always a half-step ahead of ourcustomers’ desires. We aim to change as we wish bychanging the situation. We look to make this a year
marked by a churning of logic and passion.

No. of inventory items and sales trends

to the instant delivery level

We plan to optimize our inventory volume to around 390,000

1,458

992

items depending on market needs and sales trends.

Nine-monthfiscal period

Sales(100 million yen)

2,206
90.5

3,000

Inventory hit rate (%)※2

52.0

83.1
78.7

We will use our proprietary system to support the idea that

39.2

“Whatever it is, Trusco will have it.”
(1) Optimize inventory with ZAICON 3※1

26.5(2) Expand inventory storage capacity with high density storage

19.2(3) Establish stocking functions

11.7※1: ZAICON 3:
An inventory management system that makes proposals of necessary
product inventory by making estimates based on actual sales.

2009

14.1
No. of inventory items(10,000)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Fiscal year
under review

2020

2021

2022

2023

※2: Inventory hit rate: Percentage of product shipped from inventory versus total orders

2. Enhance functions for direct shipment to users

3. Pursuing automation and labor-savings

We aim to improve convenience by reduce shipment lead time up to the

We plan to pursue automation and the reduction of labor for warehouse operations

product delivery using a system that automatically selects and ships

by making maximum use of cutting-edge technologies.

product from the distribution center nearest the user’s location.

(1) PoC for introducing picking robot(1) Shipment system that places top priority on delivery time taking into account the user’s location(2) Maximize use of distribution devices, including Butler®

(2) Fortify high-quality shipping capacity

Delivery for direct shipment to user ※Number of deliveries for one month
Next-daydelivery possible

Planet Hokkaido
Two-day or
longer delivery

23,000deliveries（12.5%）

Hokkaido
area

Next-day delivery

Planet Kyushu

Kyushuarea

Picking robot

160,000deliveries（87.5%）
Tohokuarea
Kinki,
Chugoku,
Shikoku
area

Chubu
and
Tokyo Metropolitan
andHokuriku
North Kanto area
area

Planet Tohoku

Planet Saitama
Planet Osaka
Planet Tokai

20

Achieve direct shipment to userfrom nearest planet (distribution center)

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Butler®

57th Period Activities Report from Outside Officers

What does the Management
Committee look like?

Introduction of comments made at Management Committee (excerpt)

P2

Measures to motivate employees (February 2019)

Attendance at Board of
Directors’ meetingsarise. The higher the precision of the proposal, the better the results. With
results comes confidence. This confidence will produce motivation. We need tothink about the fundamental reason why we are unable to grow just by learningfrom each work site or from customers and propose solutions.

100% (11/11meetings)

Business performance report (September 2019)

Shareholdings

We should refrain from investing in areas with low future growth potential.

2,500 shares

Investments prompt growth but at the same time, it is a reality that they can be thetrigger for bankruptcy. In addition, it is important to have doubts about whether thecurrent business model can support continued growth. We need to grasp trends in

Summary of career, positions, responsibilities andkey dual-hat positions

the overseas market, and research and analyze markets with a high success rate.

Please tell us where energies were focused in the 57th period.

Business Report

Kenichi Saito

Executives and employees alike should propose solutions when problems

P10
Reference Materials for
Shareholders’ Meeting

Outside Director

Convocation Notice

Outside Officer’s Report

P32

1975: Joined McKinsey & Company
1996: Founded ForeSight & Company

Management Committee participants and to all our employees. In specific, every month

2016: Outside Director of the Company (present)
2017: Founded the Society for Problem Solving Proficiency
Representative Director of the Society (present)a summary was compiled on one sheet of paper describing the basic ideas necessary
for problem-solving, and this was announced at the Management Committee meeting.
After the meeting was over, this was distributed to all employees.

Introduction of comments made at Management Committee (excerpt)
Shifting from debt-free management to aggressive management (February 2019)

Outside Director

Kuniaki Hagihara
Attendance at Board of
Directors’ meetings

In 2017, we began making investments for the future, including an investmentof around ¥20 billion in Planet Saitama, moving away from debt-freemanagement. Going forward, we plan to implement management whileshouldeting debt, as we need to further boost our management efficiency.

Tool market going forward (August 2019)90.9% (10/11meetings) As suppliers look to improve the functions of products and differentiate them from those of

Shareholdings

2,800 sharesrivals, we considered methods to create a market with no competition, from the current
market that is plagued with intense competition. We believe we need to increase thenumber of products we carry that offer a high added value. Selling price is important but by
improving convenience and making customers happy by handling impressive products, we

Summary of career, positions, responsibilities andkey dual-hat positions

believe we can continue to achieve growth in the tool market moving forward.

Please tell us where energies were focused in the 57th period.
1976: Joined Hagihara Industries Inc.
1984: President of Hagihara Industries Inc.
2010: President & CEO
2016: Chairman (present)
2016: Outside Director of the Company (present)
2018: President of Toyo Heisei Polymer Co., Ltd. (present)

Given my perspective on management in the manufacturing industry, which I havefostered over many years, I am able to objectively assess the value provided by the
new products and services supplied by Trusco Nakayama, the support received from
customers, and the help provided. Although minimal, I also assisted in management
unexpected business risk brought about by the supply of new products.

Notice of Convocation of the 57th Annual Shareholders’ Meeting

21

Reference Data

We conveyed a necessary and important idea for enhancing corporate performance toPresident (present)

Convocation NoticeBusiness Report

P2

Report on Corporate Auditor Activities in the 57th Period
System for executing auditing duties
・There are three outside auditors, including two full-time auditors
・One full-time corporate auditor is positioned at the Osaka head office andthe other at the Tokyo head office
・The head of the corporate auditor guidance office was assigned toassistant the corporate auditors

Summary of auditing activities

Corporate auditors (from left: full-time corporate auditor Takada, part-time
corporate auditor Kamakura, and full-time corporate auditor Matsuda)

Directors

P32

Reference Data

Key implementation items

・Hold audits
・Strengthen information sharing with・Attend key meetingsoutside officers
・Confirm important documents
・Visit departments at head office and・Visits sites nationwide
overseas subsidiaries
・Further strengthen ties with accounting ・Visit affiliates and suppliers
auditor and auditor guidance office

Reference Materials for
Shareholders’ Meeting

P10

Corporate Auditor’sReportMatters related to Directors
Director/Councilors Roster (current as of December 31, 2019)
Post

Name

Responsibilities and key dual-hat positions

Term

President

Tetsuya Nakayama Company operations overall

Senior Managing Director

Takashi Nakai

Managing Director

Tadahisa Yabuno

Head of Sales Division
Director of Trusco Nakayama Thailand
Director of Trusco Nakayama Indonesia

Ends at close of 57th shareholders’ meeting

Director

Shinsaku Miyata

Head of Products DivisionEnds at close of 57th shareholders’ meeting

Director

Kazuo Nakai

Head of Corporate Management

Ends at close of 57th shareholders’ meeting

Director

Atsushi Kazumi

Head of Information Systems DivisionEnds at close of 57th shareholders’ meeting

Director

Hideki Naoyoshi

Head of Distribution DivisionEnds at close of 57th shareholders’ meeting

Outside officer

Kenichi Saito

Outside officer

Kuniaki Hagihara

Full-time corporate auditor

Masaki Matsuda

Ends at close of 60th shareholders’ meeting

Full-time corporate auditor

Akira Takada

Ends at close of 59th shareholders’ meeting

Part-time corporate auditor Hiroho Kamakura

Assistant to President* Scheduled to resign at the end of the 57th shareholders’ meeting to be held March 13, 2020

ForeSight & Company, President
Society for Problem Solving Proficiency, Representative Director
Hagihara Industries Inc., Chairman
Toyo Heisei Polymer Co., Ltd., President

Part-time auditor, Yushin Precision Equipment Co., Ltd.
Part-time auditor, Fujio Food System Co., Ltd.
Part-time auditor, SymEnergy Inc.

Ends at close of 57th shareholders’ meetingEnds at close of 57th shareholders’ meetingEnds at close of 57th shareholders’ meetingEnds at close of 57th shareholders’ meetingEnds at close of 57th shareholders’ meeting(Note) 1. In accordance with Article 19 of the Articles of Incorporation, the term of a director is set at one (1) year.
2. Kenichi Saito and Kuniaki Hagihara are outside directors as stipulated by the provisions in Article 2-15 of the Companies Act.
3. Masaki Matsuda, Akira Takada and Hiroho Kamakura are outside auditors as stipulated by the provisions in Article 2-16 and Article 335-3 of the Companies Act.
4. The considerable knowledge related to finance and accounting possessed by the corporate auditors is as follows:(1) Masaki Matsuda possesses knowledge related to finance owing to his many years of experience working at financial institutions.
(2) Akira Takada possesses knowledge related to corporate management and accounting owing to his experience working at a securities company and an
IR consulting company.
(3) Hiroho Kamakura possesses a wide range of knowledge related to corporate management and specialized knowledge in accounting owing to his many
nternetyears of experience as a certified public account.▶
Internet disclosures
disclosures
5. See Internet disclosures for matters related to the main activities and independence of outside officers in [Matters related to company directors]
6. Summary of details on limited liability agreement
Trusco Nakayama has entered a limited liability agreement with outside officers and part-time auditors. This is in accordance with Articles 22 and 31 of the Articles ofIncorporation and as stipulated in provision in Article 427-1 of the Companies Act. The amount of limited liability damage due to the failure of an outside officer or part-time
auditor to perform their duties is set forth in Article 425-1 of the Companies Act.
7. Outside officers Kenichi Saito and Kuniaki Hagihara and outside auditors Masaki Matsuda, Akira Takada and Hiroho Kamakura are set to be appointed as independent officers
in accordance with the provision set by the Tokyo Stock Exchange and as such the company will give notice to said exchange.

22

Notice of Convocation of the 57th Annual Shareholders’ MeetingRemuneration system for directors and auditors
Fixed remuneration
Monthly set remuneration
Paid out based on director’s post and evaluation

Director’s bonus (performance-linked), auditor’s bonus
Within 3% of the amount of net profit attributable to owner’s of
the parent, calculated at the time of earnings results

Maximum director’s remuneration
Category

Maximum remuneration

Director

Within ¥600 million annually*1

AuditorWithin ¥80 million annually*2(Note) 1. Decided at the 56th shareholders meeting held on March 8, 2019.
2. Decided at the 50th shareholders meeting held on June 7, 2013.
3. The director’s retirement benefits system was transferred to a financial bondin 2004, and is paid out by dividing 10% of the director’s remuneration intomonthly installments.

Total director and auditor remunerationsin the fiscal year under review
Number of persons paid Total remuneration

Directors(Outside officer portion)

9 people(2 people)¥367 million(¥13 million)

Auditors(Outside auditor portion)

3 people(3 people)¥60 million(¥60 million)

Total(Outside officer portion)

12 people(5 people)¥427 million(¥73 million)(Note) 1. Director bonuses paid in the fiscal year under review were based on 1.3% of
net profit attributable to owners of the parent.
2. The figures shown are rounded off.

Method for determining director remuneration and payment ratio
Director remuneration consists of a fixed monthly remuneration and the
director bonus. This method for determinig remuneration takes intoacount the responsibiltiies and impact on management of each individual
director. The scope of renumeration is set forth below. Factors, including
market environment, performance, achievements, management
capabilities and degree of contribution are factored in and remuneration
is determined for each director.
Note that the determination of specific amounts for director remuneration
are delegated to the president by resolution by the Board of Directors.

Scope of remuneration (excerpt)(Million yen)

①Fixedremuneration②Director’s
bonus

Scope of remuneration（①＋②）

President

60 〜 120

0 〜 8060 〜 200

Senior Managing Director

27 〜 36

0 〜 2427 〜 60

Management Director

21 〜 30

0 〜 2021 〜 50

Director (division head)

18 〜 210 〜 1418 〜 35

Outside director

4 〜 6

0 〜 1

4 〜 7

Full-time corporate auditor

15 〜 210 〜 9

15 〜 30

Part-time corporate auditor

2 〜 4

0 〜 ３

2 〜 7

①Fixed remuneration
This amount is determined at the start of the fiscal year. The
director’s responsibilities, including representation rights andtitle and degree of impact to management are taken into
account. Then earnings performance, management skills,
achievements, and degree of contribution are factored into
the scope of remuneration.
②Director’s bonus
As an incentive linked to the basic policy for shareholder
returns and profit indicators, when the net profit attributableto owners of the parent is calculated at book-closing, 3% of
this amount is set as the maximum limit and paid out in theform of bonuses to directors. Decisions on the total amountare stipulated in internal regulations and based on title. The
net profit attributable to owners of the parent is multiplied by
the bonus rate to attain a reference amount for bonus
payments.
For individual director bonuses, bonuses are decided foreach director within the scope of remuneration taking into
account factors including the degree of contribution toearnings during the respective fiscal year.
* Based on the perspective that corporate auditors andoutside officers are responsible for improving the corporate
value of the company and its consolidated subsidiaries, theremuneraton system for both corporate auditors and outside
officers are the same as for directors. The final decision for
individual payments for the fixed remuneration for corporate
auditors and bonuses for directors is determined based
discussions by the Board of Auditors.

Notice of Convocation of the 57th Annual Shareholders’ Meeting

23

P2
Business Report

The director remuneration paid to directors and auditors isdetermined based on the following policy.
(1) Maintains motivation to improve earnings and also able tosecure highly-skilled talent from inside and outside thecompany.
(2) Takes into account changes in the business environment
and external, objective data, and maintains balance
between global levels, business operations and employee
salaries.
(3) Remuneration is paid within the scope of the annual
remuneration limit, which includes director bonuses.

The following method will be employed from the 58th period
to determine remuneration for directors and auditors. The goal
is to secure a simple and highly transparent decision process.
That said, no changes have been made to the basic policy for
determining director and auditor remuneration.

P10
Reference Materials for
Shareholders’ Meeting

Basic policy for determining remuneration,etc. for directors and auditors

Method for determining director and auditor
remuneration from the 58th period

P32

Reference Data

Remuneration for Directors and Auditors

Convocation Notice

Directors

Map of businesslocations
Map of domestic sales and distribution locations(current as of January 1, 2020)

Number of domestic sites

96 2

Head offices

Domestic sales sites

68

No. of inventory items

Domestic distribution centers

26(of which 9 are stocking centers)

Total inventory value

390,000 42.7 billion yen
Kinki blockWest block

Current status of subsidiaries
Trusco Nakayama Thailand
Since its founding in 2010, this subsidiary has continued to expand
its sales to Japanese dealers and to major local dealers.We aim to
make this subsidiary a company that is an essential monozukuri sitein Thailand by instilling the Thai and English versions of the Trusco
Orange Book Junior and expanding the number of inventory items.

Company overview
Trade name: TRUSCO NAKAYAMA CORPORATION (THAILAND) LIMITED
President: Noboru Yasui
Executive in charge at Trusco Nakayama Corporation: Tadahisa Yabuno
Business description: Wholesale of pro tools (industrial auxiliary materials)
Director: Masashi Yamamoto
Capital: 390 mn. baht (approx. 1.3 bn. yen)
Established: February 2010
Ownership ratio: 99.9%
Capital investment amount:
Land 250 mn. yen / building 210 mn. yen, etc.
Location:
Bangplee, Samutprakam(13km from Suvarnabhumi Airport)
TIP7 789/8 Moo9,Bangpla Bangplee Samutprakarn 10540 THAILAND

24

1 Site area: 3,310 tsubo ●2 Floor area: 1,431 tsubo ●3 Number of employees: 23*●

4 Number of inventory items: 67,004 ●5 Inventory value: ¥595 million●*3 employees on loan, 20 local staff

Notice of Convocation of the 57th Annual Shareholders’ MeetingRepresentative office

Representative officein Germany

East block

Chubu block（Dusseldorf）

Overseas local units (subsidiaries)

Bangkok

THAILANDINDONESIATokyo metropolitan area block
Jakarta

Trusco Nakayama Indonesia
Our inventory, which can be delivered accurately, and distribution
infrastructure are a major benefit to Japanese companies that have
set up shop locally given that importing goods to Indonesia takes
time and effort. Owing to the domestic demand backed by apopulation of 270 million people, we aim to contribute tomonozukuri in Indonesia, which is expected to grow further out.

Company overview
Trade name: PT.TRUSCO NAKAYAMA INDONESIA
President: Mitsugu Okumura
Executive in charge at Trusco Nakayama Corporation: Tadahisa Yabuno
Business description: Wholesale of pro tools (industrial auxiliary materials)
Director: Masashi Yamamoto
Capital and capital surplus: 378.8 bn. rupiah (approx. 3.2 bn. yen)
Established: December 2014
Ownership ratio: 99.9%
Capital investment amount:
Land 1130 mn. yen / building 640 mn. yen, etc.
Location:
Lippo-Cikarang, Bekasi, West Java(around 40km from the capital Jakarta)
Jalan Kenari Raya Nomor 36, Desa Jayamukti, Kecamatan Cikarang Pusat
Kabupaten Bekasi 17530 INDONESIA

1 Site area: 4,894 tsubo ●2 Floor area: 3,155 tsubo ●3 Number of employees: 19*●

4 Number of inventory items: 59,653 ●5 Inventory value: ¥401 million●*3 employees on loan, 16 local staff

Notice of Convocation of the 57th Annual Shareholders’ Meeting25Company trends &corporate policy
Distribution of surplus capital and calculation standards

Matters related to company’s shares

Dividend calculation standards

Current status of shares

Net income per share in fiscal year
under review (quarterly)

Annual (interim) dividend per share
Net income per share in fiscal year
under review (quarterly) ×25%
10 (5) yen

Above 40 (20) yen
Under 40 (20) yen(Notes) 1. Figures in parentheses are the calculation for the first half.
2. Figures are in increments of 50 sen for calculation purposes(1 sen to 49 sen→50 sen; 51 sen to 99 sen→1 yen)

Annual dividend per share and Net income per share●●

Annual dividend per share
Net income per share

151.0876.00

154.28147.44(yen)(1)Total number of authorized shares:110,000,000 shares(2)Total number of shares outstanding:
66,008,744 shares (including 64,844 shares of treasury stock)
65,943,900 shares (excluding 64,844 shares of treasury stock)(3)Trading lot:100 shares(4)Number of shareholders:40,106 shareholders (up 10,109 shareholders YoY)
Number of shareholders with voting rights:
39,494 shareholders (up 10,086 shareholders YoY)
The number of total shareholders rose 10,109 shareholders year-on-year.

Breakdown of shareholdings by shareholder and shareholder distribution
145.7866,008,744 shares

136.66
Stock split
2-for-1(Note 1)

Net income
per share

Shift to consolidated
accounting(Note 2)

39.00

37.00

36.50

Treasury stock

0.10%

2018

2019
Fiscal year underreview

2020
Plan(Notes) 1. On January 1, 2017, we implemented a two-for-one stock split of commonshares. In light of this, the net income per share for the fiscal year ended
December 2016 was calculated based on the assumption that the stock split
was conducted at the start of the fiscal year ended December 2016.
2. In the fiscal year ended December 2019, we switched to the consolidated
accounting method. Reflecting this, annual dividend per share and net
income per share was calculated based on the net profit attributable toowners of the parent.

33.11%

22.46%

27.72%

14,825,150

18,296,651

10,963,306

1shareholders

690shareholders

61shareholders

39,102shareholder

252shareholders

sharessharesshares40,106 shareholders

Top 10 major shareholders

2019
No. of employees(Note 1)
Consolidated

Averageage(Note 2)Average yearsof service(Note 2)

Female employees

557

585

31.3

7.7

Male employees

1,051

1,071

42.0

16.8

Part-time employees

1,111

1,128

51.7

5.6

Total and average

2,719

2,784

38.2

13.6

(Note) 1. No. of employees includes employees on loan.
2. The average age and average years of service is the average for employees.
3. The fiscal year under review is the first year of consolidated accounts
therefore there is not comparison with the number of employees in theprevious fiscal year.

No. of disabled employees(people/%)

2015

2016

2017

2018

2019

No. of disabled employees

54

61

67

67

66

Employee ratio(Statutory employment quota: 2.2%)

3.2

3.2

3.1

2.9

2.9

(Note) The employment rate is calculated as the total for regular employees.

No. ofOwnership
shares held
ratio
(1,000 shares)(%)

1 NS Holdings Co., Ltd.

(people, age and year)

2018
No. of employees(Note 1)
Non-consolidated

shares+33-2+ 10,054+24（ FlatYoY ） （ YoY ） （ YoY ）（ YoY ）（ YoY ）Shareholders

Category

16.61%

21,858,793

Employee trends
No. of employees

Foreign companies, etc.

64,844

shares2017

Individuals, others

34.50
Annual dividend
per share

2016

Financial institutions/securities companies

Domestic companies

7,303

11.08

2

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

4,206

6.38

3

Nakayama Visually Impaired
Welfare Foundation

4,000

6.07

4

Japan Trustee Services Bank, Ltd.
(Trust account)

3,623

5.49

5 Daido Shoji Co., Ltd.

3,450

5.23

6 NR Holdings Co., Ltd.

2,358

3.58

7 Tetsuya Nakayama

1,875

2.84

8 Tsutomu Otsu

1,765

2.68

9 Misaki Engagement Master Fund

1,727

2.62

Japan Trustee Services Bank, Ltd.
(Trust account 9)

1,655

2.51

10

(Note) Shareholding ratio is the percentage of total shares outstanding on the final
business day of the fiscal year (excluding 64,844 shares of treasury stock).

(Note) The business report items below, in accordance with laws and ordinances, and the provisions stipulated in Article 15 of the Articles of Incorporation, are disclosed
on our corporate website ( http://www.trusco/co.jp/ ) (Japanese only)
Matters related to the Current Status of the Company (Major lenders), Matters related to the Current Status of the Company (Matters related to the Major Activities
of Outside Officers and their Independence), Current Status of Accounting Auditors, Company Systems & Policies (System to Rectify Operations and its Operations,
Basic Policy on Company Control, and Policies for Determining Distribution of Surplus Reserves, etc.)

26

Notice of Convocation of the 57th Annual Shareholders’ Meeting

InternetdisclosuresEnvironment Environmental activities through businesses

Environment

As a pro tool supplier, we strive to accurately identify and reduce the environmental impact of our business activities. The Company is
reducing its environmental impact through the installation of solar panels and other environmental equipment and through its businessactivities. Some of these activities are introduced below.

Our one-stop service, which provides all of the necessary goods in one bulk amount, helps to alleviate environmental load
By providing a wide variety of professional tools, customers will
be able to procure all the pro tools they need at their
monozukuri sites. As a result, they can reduce the consumptionof energy and resources required for procurement rather thanpurchasing from multiple suppliers.

CompanyA
Company
B
CompanyC

Environmentally conscious initiatives

Procurementfrom multiple
suppliers

Collective
procurementfrom Trusco

Reduces energy and work related to the placement of orders as well as
consumption of resources, such as packaging materials

SDGs initiatives

We are actively introducing solar panels and LED lighting that
consumes less power and lasts longer. At the distribution
centers, we have installed "LED rack lighting" equipped with ahuman presence sensor for each lighting unit. The lighting isturned on not for the entire line but for each place where aperson enters, thereby saving energy.

Trusco Nakayama fulfills its corporate social responsibility
by making such various efforts as the development ofprivate brand products and the implementation ofenvironmental activities from the viewpoint of the SDGs
and making further contributions to society in order torealize a sustainable society.
Examples of systems and initiatives related to SDGs
Goal 3 Good health and well-being

・Nakayama Visually Impaired Welfare Foundation (support ofvisually impaired persons)・Establishment of Trusco Nakayama Health Insurance Association
Goal 5 Gender equality

Solar panels installed on the roof of Planet Saitama

LED rack lighting withhuman presence sensor

We continue to develop
environmentally friendly
products, such as 100%
natural oil cleaners, tapes
made from recycled materials,
and non-gas sprays. Non-gas
sprays do not use aerosol
propellant (LPG) because it
sprays liquid by using an
accumulator sprayer.

・All employees are hired as regular employees
・Introduction of programs, including the Employment Extension
Program and the Lovebird Transfer Program
Goal 7 Affordable and clean energy

・In-house power generation systems using solar and wind power(Annual power generation: 1,397,000 kWh, self-sufficiency rate:
11.3%)
Goal 11 Sustainable cities and communities

・Resilient office building (vibration isolation structure, flood
prevention measures, etc.)
・Stocks of disaster relief supplies
Goal 12 Responsible consumption and production

TRUSCO α Cleaner
Non-gas spray with anozzle350 mlECO-CL-S・Expansion of products using recycled materials
・Development of new environmentally friendly products
Product details

Notice of Convocation of the 57th Annual Shareholders’ Meeting27

Convocation Notice
P2
Business Report

The basis of Trusco Nakayama’s philosophy is that helping people and society is
the starting point of a company’s raison d’etre. Based on this belief, we not only
pursue profits but also strive to realize the happiness of local communities,business partners, shareholders, and other people with close ties to us.

P10
Reference Materials for
Shareholders’ Meeting“Businesses and companies are only worthwhile
if they are of use to people and society.”

P32
Reference Data

ESG
Activity
ReportConvocation Notice
P2

SocialCreating an employee-friendly environment

Based on the idea that companies have a responsibility to provide an environment where employees can work with peace of mind and asense of stability, Trusco Nakayama believes that the Company is responsible for supporting diverse working styles, and it has endeavoredto create an environment where female employees can play an active role and where all employees can easily use various systems.

Indicators related to ease of work

Principal programs to ensure that employees can work with peace of mind

Business Report

2018

Reference Materials for
Shareholders’ Meeting

P10

Reference Data

P32

SocialChildcare Leave Program

2019

Ratio of female
34.6% (employees)
employees to75.1% (part-timers)
total employees
Ratio of female managers
with the position of senior
17.1% (39 people)
supervisor or above

Commenced in 1992

34.9% (employees)
74.9% (part-timers)
18.6% (45 people)*Excluding employees in managerial posts

Ratio of female employees
in managerial posts

5.1% (8 people)

4.4% (6 people)

Percentage of paid
annual leave taken

67.0% (employees)

69.2% (employees)

Percentage of childcare
leave taken

Male 5.0%(employees)
Male 10.0%(employees)
Female 100%(employees) Female 100%(employees)

Average overtime hours
per month for employees

25.4hours
26.1hours(including scheduled overtime) (including scheduled overtime)

Legally, employees are allowed totake childcare leave until the day
before their child turns one, but
at Trusco Nakayama, employees
can take childcare leave until theend of the month in which theirchild reaches the age of three.
(88 employees, including 3 male
employees)*

Manami Komatsubara, Supervisor, Corp. Planning, PR/IR Section

Relaxed Work Hour
Reduction Program
Commenced in 1996

*The above figures are for the parent company only.

Happy Sunday Program

Environment where it is easy to take paid holidays

Commenced in 2002

Trusco Nakayama encourages all employees to take at least six
days of paid holidays per year in advance so that they can takeplanned paid holidays. There are also many programs thatmake it easier for employees to take paid holidays, such as
birthday holidays and hourly paid holidays.
Masatoshi Kawashima
Manager, Trusco Resort & Spa Karuizawa

Toward a company where women can play an active role

Lovebird Transfer Program

Changes in the number of female employees(employees)
Number of female
employees(Ratio of female
employees)
585（35.3%）

Commenced in 2005

Number of female
Changes in the number of female
managers
employees in managerial posts(with the position of senior
supervisor or above)*Excluding employees inmanagerial posts

45

404

6

（29.9%）

7

8

8

Maternity Bonus Program

6

Commenced in 2005

23

Childcare Support Allowance
2015

2019

2015

2019

2015 2016 2017 2018 2019

Commenced in 2014

*Excluding employees on overseas assignment and local employees

Our idea of developing female employees
We adhere to the principleof ability, without making
decisions on employees’
work and allocation acrossdivisions on the basis ofgender. We also create anenvironment where female
employees can raise theirhands and their wishes
are respected even afterchildbirth.

28Internal Sideline(Hybrid Work) Program
Commenced in September 2019

Female employee with a managerial post andnew employees working at a distribution center
From left: Yamada, Yoshino, Deputy Center
Manager Takada and Takeshita at Planet
Higashi-Kanto（）

Megumi Ando, Kita Osaka Branch

In the case of pregnancy or childcare, theprogram allows work hours of employees tobe reduced up to three hours per day until
March 31 of their child’s sixth year ofelementary school. The program can also be
used for nursing care of family members.
(88 employees)*
The program allows employees
posted away from their families
to delay coming to work on
Mondays so that they can staywith their families during dinneron Sundays. Employees posted
away from their families are also
provided with expenses for travelto their family’s home twice amonth, as well as corporate
housing and allowances for
single employees.
The programs allows employees toapply for a job relocation to theirpreferred area when a spouse(even when he/she works for adifferent company) is relocated.
(Twenty-one employees used theprogram during the period between
2017 and December 31, 2019.)
While no salary is paid during special
maternity leave (14 weeks), the period
is counted as part of the calculation
period subject to a bonus, and abonus is paid accordingly.
Under this program, employeeswith children aged less than 10
years old are paid 10,000 yen
per child per month.
(370 employees)*
The program allows full-time employees
who have been with the Company for atleast two years to work on the sidelines
only on Saturdays, Sundays and public
holidays. The program allows employees
to gain additional income by performinga side job at a different workplace within
the Company that can be performed
easily by anyone, while experiencing
work at a different workplace and gaining
awareness.
(Twenty-eight employees have used theprogram since September 2019.)*The number of persons who have used each program is the number of users (excluding part-timers) in 2019.

Notice of Convocation of the 57th Annual Shareholders’ MeetingSocialOutline of the foundation
The Nakayama Visually Impaired Welfare Foundation was establishedin 1997 in response to the will of “wanting to serve visually impaired
people” by Seiko, the mother of Tetsuya Nakayama (chairman of thefoundation), who was born with damaged optic nerves due to aforceps delivery.
The purpose of the Foundation is to contribute to the welfare of thevisually impaired in Hyogo Prefecture through activities to support thevisually impaired and groups for the visually impaired.
Over the 22 years from its establishment to FY2018, the Foundation
provided a total of 742.6 million yen in grants and other assistance.

Address
Nakayama Memorial Hall 4F 3-26, 5-chome, Kamiwaka-dori,Chuo-ku, Kobe, Hyogo 651-0067
Working capital
The Foundation was established with the Nakayama family,
including the chairman, contributing 4 million Trusco Nakayama
Corporation shares and 500 million yen in cash. The
Foundation operates its projects with dividends from theshares.

Convocation Notice

Public interest incorporated foundation: Nakayama Visually Impaired Welfare Foundation

P2
Business ReportSocialGuide dog, Utena

Director/Councilors Roster

Nakayama Memorial Hall

New Nakayama Memorial Hall to becompleted in 2021

Chairman
Tetsuya Nakayama

Trusco Nakayama Corporation, President

Senior Managing Director
Saori Nakayama

NR Holdings Co., Ltd., Representative Director,
Certified Public Accountant

Managing Director
Atsushi Matsumae

Executive Director

Director
Takuji Iuchi
Tatsuya Otsuka
Teruo Hashimoto
Kenji Furuhashi
Masahiko Mori
Naoyuki Yamamoto
Makoto Yukawa

AS ONE Corporation, President
Earth Corporation, Chairman
Nippon Lighthouse Welfare Center for the Blind, Chairman
Hosiden Corporation, President & CEO
DMG MORI Co., Ltd., President
Yamamoto Kogaku Co., Ltd., COO & Chairman
Full-time Director

Nakayama Memorial Hall facilities lending business

Public interest project 2
Grant project for support groups of visually impaired
persons and individual visually impaired persons

Public interest project 3
Support for social participation activities of visually
impaired persons
1. Hyogo Prefecture Visually Impaired People Music Festival
Project“Nakayama/KLC concert”

2. Guide dog lending business
3. Personal computer course project

AuditorKohei Nomura
Yoritomo Wada

Public interest project 1

Nomura & Partners, Attorney
Wada & Co. Certified Public Accountant, Certified Public Accountant

Councilor
Yusuke Saraya
Saraya Co., Ltd., President & Representative Director
Shoichi Suganumata Trusco Nakayama Corporation, Osaka Administration Section
Tomihiro Takamatsu DyDo Group Holdings, Inc., Chairman & Director
Yuko Nakayama
NS Holdings Co., Ltd., Representative Director
Rie Nakayama
Ear, nose and throat (ENT) doctor, Keiyu Hospital,
Kanagawa Prefecture Keiyu-kaiMotonobu Nishimura Mandom Corporation, President, Executive Officer & Director
Junji Hada
ELECOM Co., Ltd., President
Kunio Yamada
Rohto Pharmaceutical Co., Ltd., Chairman & CEO
Yoshiaki Yamamoto Kobe Senior Manpower Center,
Director of Western Center
Teiji Wakita
Wakita & Co., Ltd., President & Representative Director
As of December 31, 2019 (In Japanese alphabetical order)

4. Music performance project“Nakayama Wonderful Festa”
5. Accompanying aid workers training project
6. Barrier-free movie screening project“Nakayama UD Film Festival” (UD: universal design)

Nakayama Wonderful Festa vol. 22
Conductor: Tomomi Nishimoto
Tomomi Nishimoto & IlluminArt Philharmonic Orchestra
Narrator: Yoshiko Sakuma

Notice of Convocation of the 57th Annual Shareholders’ Meeting

29

P32
Reference Data

Guide dog, Jelda

Reference Materials for
Shareholders’ Meeting

P10

Convocation NoticeBusiness Report

P2

Governance

Governance

Toward embodying the “TRUST COMPANY”
Our company name and corporate logo are a direct
expression of a “trust company,” which is trusted by all
stakeholders. We intend to fulfil our social mission by basing
our everyday corporate activities on and embodying thepractice of.

Idea

Existence philosophy

Reference Materials for
Shareholders’ Meeting

P10
Existencephilosophy

VisionManagement
philosophy

Based on our mission to contributeto society through corporate
activities, we will realize thehappiness of those involved.

Management philosophy- Make bold and solid steps

To ensure that each and every employee
has a high standard of ethics, Trusco
Nakayama upholds the guiding principle
of “Shushazentaku” and has maintained
its corporate attitude that “The criterion
to make decisions is not profit and loss
but good and bad.” By distributing thecompliance manual “TRUSCO Zentaku
Book” to all employees, including
part-timers, it strives to enhance its
compliance system.

- Respect people- Foster entrepreneurship

P32

Reference Data

Education on “Shushazentaku”

Trusco Nakayama’s corporate philosophy

Compliance manual“TRUSCO Zentaku Book”- Address the market with trust
Actionphilosophy
Involved persons

Behavior

Action philosophy- Creative ideas and meticulous
planning

We have adopted an original system for the evaluation of
executives and department heads. Every year, executives anddepartment heads are evaluated by around 150 managers, withthe results used as criteria for promotion/demotion.

- Dynamic actions with conviction

Method of operating the executive evaluation system- Value sincerity and propriety

MarketSociety
All stakeholders, including
employees and their families,
clients, and shareholders

Director / Auditor / Executive Officer / Department Head OJS- Communication based on smiles
and trust

Top-Level Parties Conference (Board Meeting)Consisting of executives (excluding outside directors), theBoard Meeting ensures objectivity and rational judgment anddiscusses and shares the Company’s direction, upon which theBoard of Directors’ meeting (Management Committee) is held.

Boss Conference(Nationwide Managers’ Conference) Held once a year in principle
This conference brings together Management Committee
members and nationwide managers to discuss management
issues. (The conference was not held during the fiscal year
under review as in the 56th period for cost reduction in view ofour forecast of an increase in sales and a drop in profit.)(1) Individual information of the voters is undisclosed.
(2) Each of the six evaluation items is rated on a 4-point scale.
(3) Based on the scores of the ballots, promotion to director candidate
or demotion from director or full-time corporate auditor is determined.
(4) Evaluation is also performed for outside directors and part-time
corporate auditors as reference data.

In addition to evaluation by points, evaluation through comments
is also conducted, with the results fed back to the evaluation
targets for their reference.

Board of Directors (Management Committee)
Decisions are made at the Board of Directors’ meetings that are
generally held once a month. The Management Committee
seeks the opinions of the participants, including executive
officers and department heads, in order to ensure a broader
perspective and transparency.
Characteristics of the Management Committee(1) Seats are laid out in a round table style so that everyone can see
each other’s face (refer to the figure below).
(2) Seating is changed every time, with no top or lower seats.
(3) The Management Committee minutes, which not only include
matters that were resolved but also each individual’s comments, aredisclosed to all employees within a week.

Appointment of outside directors (Board Brain)

Boss Conference (Nationwide Managers’ Conference) held in November 201730

Trusco Nakayama appoints outside directors not only for theprevention of improprieties but for their broad knowledge andabundant experience concerning company management andfor their ability to make contributions to sustainable growth andthe improvement of company value.

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Tours for shareholders

Features of the Shareholders’ Meeting

Top-Level Parties Conference (Board Meeting)Composition Held once a monthRepresentative director:
Executive directors:
Full-time corporate auditors*:
Part-time corporate auditor*:

１
６
２
１

Total:

10

Board of Directors (Management Committee)

Management Committee

Composition

Composition

Representative director:
1
Executive directors:
6
Outside directors:
2
Full-time corporate auditors*: 2Part-time corporate auditor*: 1

Members of the Boardof Directors:
Executive officers:
Department heads:

12
2
12

Total:

26

12

Composition Held once a month
Full-time corporate auditors*: 2Part-time corporate auditor*: 1

Coordination
ReportHeld once a month

Board of Directors

Total:

Board of Corporate Auditors

Coordination
Audit

ReportAccounting auditor

ReportDeloitte Touche Tohmatsu LLC

Whistleblowing desk

Direct contact from
employees (including
overseas subsidiaries)(hotline)

Legal advisor
Execution of duties

Compliance Committee
ReportCSR Section

Direct contact from
employees (including
overseas subsidiaries)(hotline)

Compliance Officer

President

ReportTetsuya Nakayama

Audit Supervision Office
Audits conducted through the“Fire Lookout Tower”
electronic auditing system
Audit / supervision

Regular personnel transfers across divisions(1) Personnel, including manager positions, are transferred across divisions, generally every five years on average(2) Creates a company climate enabling multi-faceted staff training without factionalism (3) Prevents fraud through fresh monitoring

Corporate
Management Division

Information
Systems Division

Product
Division

Distribution
Division

Sales
Division

Director,
Head of Corporate
Management Div.

Director,
Head of Information
Systems Div.

Director,
Head of Product Div.

Director,
Head of Distribution Div.

Managing Director,
Head of Sales Div.

Kazuo Nakai

Atsushi Kazumi

Shinsaku Miyata

Hideki Naoyoshi

Tadahisa Yabuno*Full-time corporate auditors and the part-time corporate auditor are outside corporate auditors.
Kawai, Exec. Officer, Head of Catalog Media Dept.
Unto, Head of Factory Sales Dept. &Distribution Dept. (East)
Takada, Full-time Corporate Auditor
Yoneda, Head of Tokyo Product Dept.
Saito, Outside Director
Kimura, Head of Information Systems Dept.
Hagihara, Outside Director
Maeda, Head of Factory Sales Dept. &Distribution Dept. (Chubu)
Nakai, Senior Managing Director
Adachi, Head of Administration Dept.
Naoyoshi, Head of Distribution Div.
Imagawa, Executive Officer, Head of Factory Sales Dept. &Distribution Dept. (Tokyo Metropolitan Area)

Yabuno, Managing Director, Head of Sales Div.
Ogasawara, Head of Osaka Product Dept.
Tsuchiya, Head of e-Business Sales Dept.
Kamakura, Part-time Corporate Auditor
Otani, Head of Factory Sales Dept. &Distribution Dept. (Osaka)
Kazumi, Director, Head of Information Systems Div.
Hoshino, Head of Home Center Sales Dept. &Distribution Dept.
Seating Chart
Miyata, Director, Head of Product Div.
of Management
Fujimoto, Head of Factory Sales Dept. &Committee inDistribution Dept. (West)
December 2019
Nakayama, President(57th Period)

Nakai, Director, Head of Corporate Management Div.
Yamamoto, Head of Overseas Dept. & Head of Marketing Dept.
Nakayama, Head of Corporate Planning Dept. &Head of Accounting Dept.
Katagiri (staff member), Head of Corporate Planning, PR/IR Section
Male staff member, Corporate Planning, PR/IR Section
Male staff member, Corporate Planning, PR/IR Section

Matsuda, Full-time Corporate Auditor
Male general employee
Female general employee
Male general employee
Female general employee
Female staff member, Secretarial Section
Female staff member, Corporate Planning,
PR/IR Section

Members of the Board of Directors’ Meeting (Reception Room, 10F, Tokyo Head Office)Notice of Convocation of the 57th Annual Shareholders’ Meeting

P2

P10

P32
Reference Data

(1) President OJS (Open Judging System)(2) Held on an early date, avoiding days on
which general meetings are concentrated(3) Held simultaneously at two main venues ofTokyo and Osaka(4) The results of the resolutions, a portion of the
Q&A session, and the results ofquestionnaires are released on the website
three days later.

(1) Executives also participate to engage indialog with shareholders.
(2) Held at head offices and distribution
centers

Convocation Notice

Annual Shareholders’ Meeting

Business Report

Governance Structure (As of December 31, 2019)

Reference Materials for
Shareholders’ Meeting

Governance31

Convocation Notice

Reference
Materials for
Shareholders’Meeting
Proposal Details

Business Report

P2

Promotion

Reference Materials for
Shareholders’ Meeting

Reflecting the voices of employees through theOpen Judge System (OJS; 360 degrees evaluation)
The Company has introduced an evaluation system that evaluates staff withexecutive posts of department head or higher from multiple aspects. Voters votefor each executive member based on the member’s daily attitude toward work.
Promotion or demotion of the executive staff member is decided based on the
results of the votes as well as the member’s daily actions and remarks, judgment,
responsiveness, problem-solving skills, and ingenuity.
Targets

Candidate for
executive
director

P10

Demotion

Executive
officer

Promotion

Demotion

Department head

: Directors, corporate auditors, executive officers,
general managers (24 in total)
Voters: Directors, corporate auditors, executive officers,
general managers, managers (148 in total)
Aggregation method : Evaluation by score (1 to 4) on six items (full score: 24)
Results: (Promotion criteria) 18 points or more for two
consecutive years(Demotion criteria) Less than 16 points for two
consecutive years
Notes: 1. The assessment items for the OJS on corporate auditors differ.
P33.
2. The results of the OJS on the President are presented on ▶

Assessment items for the OJS on Directors, Executive Officers and Department Heads

P32

Reference Data

Executive Evaluation System

Assessment items

1
2
3
4
5
6

Score

Sense of management, foresightHas vision and can talk about the company’s future within and outside the company

Full score: 4 points

Leadership

Has a belief and a will to carry through even against great opposition and leads the organization with enthusiasm

Full score: 4 points

Communication ability

Has the ability to listen to the voices of employees and convey them in an understandable way

Full score: 4 points

Fairness

Has high ethical standards, is strict with him/herself, is popular, and dislikes flattery and factions

Full score: 4 points

Originality

Constantly has new ideas and sends fresh wind to management

Full score: 4 points

Problem solving ability

Is reliable when needed and confronts problems with a sense of ownership

Full score: 4 points

Total full score: 24 points

List of candidates of election proposals (Proposals 1 and 2)
Proposal Candidateno.
no.

Current position andresponsibilities at theCompany

Name (age)Attendance atAttendance at
No. of Company
Board of Directors’ Board of Corporateshares held
Auditors’ meetings
meetings

1

1

Tetsuya Nakayama (61)Re-appointment

Internal

Representative Director &President

100％(11 out of 11)−

1,875,100 ▶

P33

1

2

Tadahisa Yabuno (58)

Re-appointment

Internal

Managing Director &Head of Sales Division100％(11 out of 11)−

31,100 ▶

P33

1

3

Shinsaku Miyata (55)

Re-appointment

Internal

Director & Head of
Product Division100％(9 out of 9)−

5,000 ▶

P34

1

4

Kazuo Nakai (50)Re-appointment

Internal

Director & Head of Corporate
Management Division100％(9 out of 9)−

3,000 ▶

P34

1

5

Atsushi Kazumi (49)

Re-appointment

Internal

Director & Head ofInformation Systems Division100％(9 out of 9)−

3,000 ▶

P35

1

6

Hideki Naoyoshi (48)

Re-appointment

Internal

Director & Head ofDistribution Division100％(9 out of 9)−

3,600 ▶

P35

1

7

Kenichi Saito (70)Re-appointment

OutsideOutside Director

100％(11 out of 11)−

2,500 ▶

P36

1

8

Kuniaki Hagihara (66)

Re-appointment

OutsideOutside Director

90.9％(10 out of 11)−

2,800 ▶

P36

1

9

Takako Suzuki (58)

New appointment

Outside

−

−

−

0 ▶

P37

2

-

Hiroho Kamakura (73)Re-appointment

OutsidePart-time Corporate Auditor

81.8％(9 out of 11)100％(13 out of 13)

3,300 ▶

P38

Notes: 1. The age of the candidates is as of the closing of the Meeting.
2. The number of Company shares held stated in the Shareholders’ Meeting Reference Documents starting on ▶
P32 is as of the date when this Notice was sent.
3. The candidates have no special interest in the Company.
4. The number of Board of Directors’ meetings for Directors Shinsaku Miyata, Kazuo Nakai, Atsushi Kazumi, and Hideki Naoyoshi differs from that of other directors
since they were elected at the 56th Annual Shareholders’ Meeting held on March 8, 2019.

32

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Candidate no.

1

The terms of office of all nine (9) directors will expire at the closing of the Meeting; among these, Takashi Nakai will retire
as of the closing of the Meeting (▶
P). Therefore, we would like to ask our shareholders to appoint nine (9) directors,
including a new appointment.
Candidate no.

Re-appointment

Re-appointment

2

Internal

Internal

Convocation NoticeElection of nine (9) directors

Proposal
No. 1

P2
やま

てつ

や

やぶ

の

ただ ひさ

Business ReportなかDecember 24, 1958 (61 years old)With the Company

38 years and 11 months

My strength

Always smiling

My weakness

My smile can give way to anger.

No. of Company shares held

1,875,100 shares

Date of birth

March 13, 1962 (58 years old)With the Company
My strength
My weakness

35 years and 11 months

Have a strong sense of justice. Sometimes it backfires.
Tend to be misunderstood due to lack of words

No. of Company shares held

31,100 shares

Attendance at Board of Directors’ meetings 100%（11/11 meetings）

Attendance at Board of Directors’ meetings 100%（11/11 meetings）

Aim for evolution with chimeric ideas

Insist on contact

Keeping in mind that there is no success in doing what anyone
can think of and anyone can do, I hope to contribute more to
Japan’s manufacturing industry by employing chimeric ideas toimprove the efficiency and speed of supplying products to themonozukuri (manufacturing) sites. I will strive hard to achieve
our “capacity targets” of carrying 500,000 items in inventory,
shortening the delivery time by strengthening direct delivery tousers, and developing the ability to receive orders and ship
products 365 days a year.

Reason for nomination as a director candidate
Mr. Nakayama has been nominated as a director candidate, taking
into consideration the results of the OJS on the President, which isa vote by shareholders who attended the previous (56th) Annual
Shareholders’ Meeting, as an important benchmark.
No. of attendees

Approval rate

No. ofvalid votes *1

Affirmative votes

2,233

99.9％

2,048

2,045

Notes: 1. The number of valid votes does not include shareholders who did not
vote on the day of the Meeting (abstention) or those the content of
whose votes could not be determined (invalid).
2. The OJS on the President is presented on ▶
P9.

Brief biography, status, business in charge of and important concurrent posts
March 1981
October 1984
December 1987
December 1991

Joined the Company
Director
Managing Director
Representative Director and Senior Managing
Director
December 1994 Representative Director and President (present)

My initiative as the head of the Sales Division has been to createa strong “front line.” I have built strong connections by visiting
customers and increasing contact with manufacturers.
This period I intend to cross boundaries further between eachsales department including those abroad, and establish asystem that can exercise Trusco’s comprehensive strengths
catering to each customer, thereby earning greater trust in the
Company.

Reason for nomination as a director candidate
Mr. Yabuno has abundant business experience through his
involvement in the Sales Division and the Corporate Management Division, and has long been active as a director. He has
been nominated as a director candidate for his expected
continued contribution to swift and bold decision-making
toward continuous improvement of the Company’s corporate
value, based on his initiatives in the Sales Division in the 58th
period as well as the OJS results.
Initiatives in the 58th Period ▶
P16.

Brief biography, status, business in charge of and important concurrent posts
March 1984
April 1998
October 2003
April 2004
June 2007
April 2014
January 2016
January 2017

Joined the Company
Head of Fujisawa Sales Office
Executive Officer & Jonan Branch Manager
Executive Officer & Head of Corporate Planning Division
Director & Head of Corporate Management Division
Managing Director & Head of Corporate
Management Division
Officer in charge of Trusco Nakayama Indonesia(present)
Managing Director & Head of Sales Division (present)
Officer in charge of Trusco Nakayama Thailand(present)

Notice of Convocation of the 57th Annual Shareholders’ Meeting

33

Reference Materials for
Shareholders’ Meeting

Date of birth

P10

Candidate’s profile

P32

Reference Data

Candidate’s profile

Convocation Notice

Proposal
No. 1
Candidate no.

4

Internal
た

しん

さく

なか

Re-appointment
Internal

い

かず

お

P10

Candidate’s profile

Reference Materials for
Shareholders’ Meeting

Business Report

みやCandidate no.

Re-appointment

3

P2

Election of nine (9) directors

Date of birth

Reference Data

P32

June 9, 1964 (55 years old)With the Company
My strength

Candidate’s profile
Date of birth

30 years and 11 months

July 7, 1969 (50 years old)With the Company

Not turning a blind eye to anything, regardless of importance

My strength

26 years and 11 months
Always cheerful and do not look down

My weakness Somewhat lacking in good deeds, virtuous acts, and charity to others

My weakness

No. of Company shares held

No. of Company shares held

Attendance at Board of Directors’ meetings

5,000 shares
100%（9/9 meetings）

Attendance at Board of Directors’ meetings

3,000 shares
100%（9/9 meetings）

Aim to improve corporate value
through greater competitivenessContinuously develop by providing new value“Those who support monozukuri are the people involved in it.”
The various tools and consumables essential to manufacturing
sites may have been made far away, such as in Europe. I hope
to deliver the best tools gathered from across the world to every
corner of the manufacturing industry that supports Japan. I will
aim to achieve a product line-up that will help customers do agood job.

Over-superstitious

We have continuously been taking on the challenge of achieving ourmanagement targets by improving our competitiveness withinvestments that capture environmental changes in the online
market and the IT and distribution fields. In addition to establishing
an appropriate structure, we will focus on creating a system whereby
employees can work with peace of mind and concentration. We will
also aim to become a company trusted by all stakeholders bysolving customers’ and internal issues.

Reason for nomination as a director candidate

Reason for nomination as a director candidate

Mr. Miyata has abundant business experience through his involvement in the Distribution Division and the Product Division. He has
been nominated as a director candidate for his expected continued
contribution to swift and bold decision-making toward continuous
improvement of the Company’s corporate value, based on his
initiatives in the Product Division in the 58th period as well as the
OJS results.
Initiatives in the 58th Period ▶
P17.

Mr. Nakai has abundant business experience through his involvement in the Sales Division and the Corporate Management
Division. He has been nominated as a director candidate for his
expected continued contribution to swift and bold decision-making
toward continuous improvement of the Company’s corporate
value, based on his initiatives in the Corporate Management
Division in the 58th period as well as the OJS results.
Initiatives in the 58th Period ▶
P18.

Brief biography, status, business in charge of and important concurrent posts

Brief biography, status, business in charge of and important concurrent posts

March 1989
April 1997
April 1999
October 2001
October 2008
April 2011
January 2015
January 2016

April 1993
April 2002
April 2004
April 2008
October 2008

January 2017
March 201934

Joined the Company
Head of Overseas Sales Office
Nagoya Branch Manager
Head of Kobe Sales Office
Head of Planet South Kanto Center
Head of Product Department
Executive Officer & Head of Product Department
Executive Officer & Head of Tokyo Head Office
Product Department
Executive Officer & Head of Product Division
Director & Head of Product Division (present)

Notice of Convocation of the 57th Annual Shareholders’ Meeting

April 2013
January 2017
January 2019
March 2019

Joined the Company
Head of HC Niigata Sales Office
HC Osaka Branch Manager
Head of Human Resources Section
Head of Human Resources Section & Head ofHealthcare Section
Head of Corporate Planning Department
Executive Officer & Head of Corporate Planning
Department
Executive Officer & Head of Corporate
Management Division
Director & Head of Corporate Management
Division (present)Candidate no.

5

Candidate no.

Re-appointment

6

Internal

Convocation NoticeElection of nine (9) directors

Re-appointment
Internal

P2
み

あつし

なお

よし

ひで

き

Business Report

かず

September 10, 1970 (49 years old)

Date of birth

December 7, 1971 (48 years old)With the Company

26 years and 11 months

With the Company

My strength

Excited at anything new

My strength Tenacity and energy to follow things through to the end

My weakness

Often fail to stick to things

No. of Company shares held
Attendance at Board of Directors’ meetings

3,000 shares
100%（9/9 meetings）

Achieve growth on the back ofdigital transformation
There is no stopping the evolution of AI and robotics, which has
been changing not only the structure of business but also ourworkstyles and society. Viewing these changes as anopportunity, I will take on the challenge with passion andpersistence to create a company that is continuously in demand
from society as a Trust Company by improving customers’
convenience and achieving vibrant workstyles for all employees.

Reason for nomination as a director candidate

My weakness

25 years and 11 months
Lack passion unless interested

No. of Company shares held
Attendance at Board of Directors’ meetings

3,600 shares
100%（9/9 meetings）

Develop a foundation on which
companies and people can growIn order to respond to all professionals involved in monozukuri, it isnecessary to study the market, prepare inventory, and thoroughly
step up all functions of distribution. “Trusco is sure to have the tool.”
I believe that the accumulation of creative services that cannot begained elsewhere will not only satisfy customers but also move themon an emotional level. We will make Company-wide efforts to ensure
Trusco Nakayama is a company that offers the best convenienceand serves as a place where companies and people can shine.

Reason for nomination as a director candidate

Mr. Kazumi has abundant business experience through his involvement in the Sales Division and the Information Systems Division.
He has been nominated as a director candidate for his expected
continued contribution to swift and bold decision-making toward
continuous improvement of the Company’s corporate value, basedon his initiatives in the Information Systems Division in the 58th
period as well as the OJS results.
Initiatives in the 58th Period ▶
P19.

Mr. Naoyoshi has abundant business experience through his
involvement in the Corporate Management Division and theDistribution Division. He has been nominated as a director candidate for his expected continued contribution to swift and bolddecision-making toward continuous improvement of the Company’s corporate value, based on his initiatives in the Distribution
Division in the 58th period as well as the OJS results.
Initiatives in the 58th Period ▶
P20.

Brief biography, status, business in charge of and important concurrent posts

Brief biography, status, business in charge of and important concurrent posts

April 1993
April 2001
November 2002
April 2006
October 2010

April 1994
October 2003
April 2007
October 2010
October 2011
February 2013
January 2017

October 2013
April 2014
January 2017
July 2017
January 2019
March 2019

Joined the Company
Head of Tsuchiura Sales Office
Head of Kanazawa Sales OfficeOsaka Branch Manager
Head of Catalog/Media Section & Head of
Dottokuru Section
Head of e-Commerce Sales Department
Head of e-Business Sales Department
Executive Officer & Head of e-Business Sales
Department in charge of Mail Order
Executive Officer & Head of Information Systems Department
Executive Officer & Head of Information Systems Division
Director & Head of Information Systems Division (present)

July 2017
March 2019

Joined the Company
Head of Amagasaki Sales Office
Head of Kokura Sales Office
Head of Corporate Auditor’s Office
Head of Corporate Planning Section
Head of Information Systems Department
Executive Officer & Head of Information Systems
Department
Executive Officer & Head of Distribution Division
Director & Head of Distribution Division (present)

Notice of Convocation of the 57th Annual Shareholders’ Meeting

35

Reference Materials for
Shareholders’ Meeting

Date of birth

P10

Candidate’s profile

P32

Reference Data

Candidate’s profile

Convocation Notice

Proposal
No. 1
Candidate no.

7

P2

Candidate no.

Re-appointment

8

Outside
とう

けん

はぎ

いち

Re-appointment
Outside

はら

くに

あき

P10

Candidate’s profile

Reference Materials for
Shareholders’ Meeting

Business Report

さいElection of nine (9) directors

Date of birth

November 15, 1949 (70 years old)

Date of birthAugust 19, 1953 (66 years old)

My strength

Can delight others through cooking

My strength

Always view things positively

Reference Data

P32

My weakness

Candidate’s profile

Eating too much without taking exercise

No. of Company shares held

My weakness

2,500 shares

Careless and hasty

No. of Company shares held

2,800 shares

Attendance at Board of Directors’ meetings 100%（11/11 meetings）

Attendance at Board of Directors’ meetings 90.9%（10/11 meetings）

Years of service (at the closing of Meeting)Years of service (at the closing of Meeting)

4 years

Continue to learn and convey waysof thinking

4 years

Continue discontinuous changes

Problem solving is a way of thinking on how to improve
corporate performance and how to use “brain power.” Problem
solving is not academic knowledge but practical learning, andmay seem difficult since it is not something we studied atschool. What is important is to continue asking the correctquestions to customers and people at the actual sites and to
discover important issues logically from factual data. I intend tocontinue to learn, try, convey, and learn again.

Daily discontinuous changes herald an organization’s growthand development. To ensure that Trusco Nakayama continues tobe the top runner in the industry, I will continue to strive withcourage to change from within the organization by casting away
self-conceit and self-protection. To gain overwhelming support
from our customers with their nice comments like "Howconvenient Trusco Nakayama is!", we will strive to change
ourselves, aiming at further growth and development.

Reason for nomination as an outside director candidate

Reason for nomination as an outside director candidate

Mr. Kenichi Saito has experience in a company that conducts
business globally, and has founded a management consulting firm.
He has been nominated as a candidate for outside director for fairand objective guidance toward continuous improvement of theCompany’s corporate value, as expected of him, based on his
experience and knowledge as a management professional.

Mr. Kuniaki Hagihara has been nominated as a candidate foroutside director for his abundant experience and broad knowledge
as a manager in manufacturing, as well as his expected contribution to swift and bold decision-making by the management, in
addition to supervisory functions, and advice from a shareholder’s/investor’s perspective toward continuous improvement of theCompany’s corporate value.

Brief biography, status, business in charge of and important concurrent posts

Brief biography, status, business in charge of and important concurrent posts

April 1975
January 1996

March 1976
December 1984
January 2010
January 2016
March 2016
June 2018

March 2016
October 2017

Joined McKinsey & Company
Founded ForeSight & Company President(present)
Outside director of the Company (present)
Founded the Society for Problem Solving
Proficiency Representative Director of the Society
for Problem Solving Proficiency (present)

Criteria for appointment of outside directors ▶
Criteria for independence of outside officers ▶

36

P37
P38

Notice of Convocation of the 57th Annual Shareholders’ Meeting

Joined Hagihara Industries Inc.
President of Hagihara Industries Inc.
President & CEO
Chairman (present)
Outside director of the Company (present)
President of Toyo Heisei Polymer Co., Ltd.
(present)

Criteria for appointment of outside directors ▶
Criteria for independence of outside officers ▶

P37
P38

き

たか

こ

Candidate’s profile
Date of birth

March 5, 1962 (58 years old)

My strength I can change the atmosphere with a straightball approach.
My weakness I am not good at a breaking-ball approach that senses the atmosphere.
No. of Company shares held

0 shares

Bringing a different perspective todecision-making
I have always had sympathy for the Company’s unique management strategy and sincere attitude toward all of its stakeholders.
As a “female manager of a daily commodities manufacturer,” I
intend to provide candid opinions so that the Company canachieve a higher quality of decision-making by bringing a
different background and perspective to management fromother officers.

Reason for nomination as an outside director candidate
Ms. Takako Suzuki has been nominated as a candidate for outside
director for her abundant experience and broad knowledge ofcorporate management, as well as her expected contribution to
swift and bold decision-making by the management, in addition tosupervisory functions and advice from a shareholder’s/investor’s
perspective toward continuous growth and improvement of theCompany’s corporate value.

Brief biography, status, business in charge of and important concurrent posts
April 1984
August 2001
April 2009
January 2010
April 2013
May 2013

Joined Nissan Motor Co., Ltd.
Joined LVJ Group Co., Ltd. (currently Louis
Vuitton Japan Co., Ltd.)
Representative Director, Chardin Co., Ltd.
Joined S.T. Corporation
President and Chief Operating Officer of S.T.
Corporation (present)
Director, Chardin Co., Ltd. (present)

Criteria for appointment of outside directors ▶
Criteria for independence of outside officers ▶

P37
P38

Standards for Appointment of Outside Officers
For the appointment of outside directors and outside corporate auditors,
Trusco Nakayama Corporation (hereinafter referred to as the “Company”) sets
out the following criteria.
1. Criteria for the Appointment of Outside Directors
The Company appoints outside directors from among those fulfilling theconditions set out below.
(1) Candidates shall be able to contribute to the continuous growth andimprovement of the corporate value of the Company, and shall haveextensive knowledge and sufficient experience of business management.
(2) Candidates shall be subject to none of the grounds for disqualification asa director set out in the items of Paragraph 1, Article 331 of the Companies Act.
(3) Candidates shall fulfill the requirements for an outside director set out in
Item 15, Article 2 of the Companies Act.
2. Criteria for the Appointment of Outside Corporate Auditors
The Company appoints outside corporate auditors from among thosefulfilling the conditions set out below.
(1) Candidates shall have knowledge in fields such as law, finance, accounting, corporate governance and the like, and shall be able to contribute to
the improvement of corporate value from a neutral and fair standpoint.
(2) Candidates shall be subject to none of the grounds for disqualification asa corporate auditor set out in Item 1, Article 335 of the Companies Act.
(3) Candidates shall fulfill the requirements for an outside corporate auditor
set out in Item 16, Article 2 of the Companies Act.
Notice of Convocation of the 57th Annual Shareholders’ Meeting

37

P2
Business Report

Outside(1) On independence
Mr. Kenichi Saito, Mr. Kuniaki Hagihara, and Ms. Takako Suzuki are outside
director candidates as set forth in Item 7, Paragraph 3, Article 2 of theOrdinance for Enforcement of the Companies Act, and fulfill the Company’s
outside director appointment criteria. They also fulfill the requirements forindependence stipulated by the Tokyo Stock Exchange as well as theindependence criteria for outside officers stipulated by the Company(▶
P38). We have filed Mr. Saito and Mr. Hagihara as independent
officers with the Tokyo Stock Exchange, and if their reappointment isapproved, we plan to maintain their positions as independent officers. If Ms.
Suzuki’s appointment is approved, we plan to file her as an independent
officer with the Tokyo Stock Exchange.
(2) On the contract for limitation of liability
In order to acquire personnel who would become outside officers and tosecure their effectiveness, we have concluded a contract for limitation of
liability with Mr. Saito and Mr. Hagihara, with the amount of limited liability
being the minimum total liability amount as prescribed in Paragraph 1, Article
425 of the Companies Act. If their Re-appointments are approved, we plan
to continue the above contract for limitation of liability. If Ms. Suzuki’s appointment is approved, we plan to conclude a contract for limitation of liability
under the same conditions.
(3) On special interest in the Company
Mr. Kenichi Saito is the Representative Director of ForeSight & Company,
whose business with the Company accounts for less than 1% of theCompany’s consolidated net sales. Therefore, there is no important businessor other relationship between the two companies. Mr. Saito also serves as
Representative Director of the Society for Problem Solving Proficiency, withwhom the Company has no business or other relationship, and there is no
special interest that will hinder or pose a problem in Mr. Saito’s execution of
his duties as an outside director.
Hagihara Industries Inc., of which Mr. Hagihara is Chairman, and the Company have a 25-year business relationship; however, our procurement from
Hagihara Industries accounts for less than 1% of our total procurement byamount (less than 3% of the consolidated net sales of said company). In
addition, there is no business relationship between Toyo Heisei Polymer Co.,
Ltd., of which Mr. Hagihara is President, and the Company, and no special
interest that will hinder or pose a problem in Mr. Hagihara’s execution of his
duties as an outside director.
S.T. Corporation, of which Ms. Takako Suzuki is President & Chief Operating
Officer, has no direct business relationship with the Company but has an
approximately 13-year business relationship with the Company through its
subsidiary S.T. Trading Co., Ltd. Our procurement from said subsidiaryaccounts for less than 1% of our total procurement by amount (less than
1% of the consolidated net sales of said company). In addition, there is nobusiness relationship between Chardin Co., Ltd., of which Ms. Suzuki is
Director, and the Company, and no special interest that will hinder or pose a
problem in Ms. Suzuki’s execution of her duties as an outside director.

P10
Reference Materials for
Shareholders’ Meeting

9
すず

Notes concerning outside director candidates

New appointment

P32

Reference Data

Candidate no.

Convocation NoticeElection of nine (9) directors

Convocation NoticeElection of One (1) Corporate Auditor

Proposal
No. 2

The term of office of Corporate Auditor Hiroho Kamakura will expire at the closing of the Meeting. Therefore, we would
like to ask our shareholders to appoint one corporate auditor. The consent of the Board of Auditors has been obtained
for this Proposal. The corporate auditor candidate is as follows.

Notes concerning the outside corporate
auditor candidate

Re-appointment
OutsideCandidatePart-time

P2
くら

ひろ

ほ

P10

Candidate’s profile

Reference Materials for
Shareholders’ Meeting

Business ReportかまDate of birthJanuary 27, 1947 (73 years old)

My strength

Respond briskly

Reference Data

P32

My weakness

ImpatientNo. of Company shares held

3,300 shares

Attendance at Board of Directors’ meetings 81.8%（9/11 meetings）
Attendance at Board of Auditors’ meetings 100%（13/13 meetings）
Years of service (at the closing of Meeting)

7 years and 8 months

Contribute to healthy andcontinuous growth
A corporate auditor is an independent institution entrusted byshareholders. Its role is to conduct audits from a neutral andobjective standpoint to ensure the company’s healthy andcontinuous growth. As an outside corporate auditor with many
years of experience as a certified public accountant, I intend toactively contribute to the Company’s continuous growth.

Reason for nomination as an outside corporate auditor candidate
Mr. Hiroho Kamakura has been nominated as a candidate foroutside corporate auditor, since he is deemed to be able to appropriately execute duties as outside corporate auditor based on his
broad knowledge and deep insight in corporate management
gained through his long experience as a certified public accountant
as well as his professional knowledge of accounting, in addition to
his neutral and fair opinions on the Company’s corporate management, as are expected of him, from an objective standpoint as an
outside corporate auditor.

Brief biography, status, business in charge of and important concurrent posts
November 1971 Joined Tohmatsu Aoki & Co.
(currently Deloitte Touche Tohmatsu LLC)
May 1973
Registered as a certified public accountant
July 2012
Part-time Corporate Auditor of the Company(present)
Part-time Corporate Auditor of Yushin
Precision Equipment Co., Ltd. (present)
March 2013
Part-time Corporate Auditor of Fujio Food
System Co., Ltd. (present)
February 2018 Part-time corporate auditor, SymEnergy Inc.
(present)
Criteria for appointment of outside directors ▶
Criteria for independence of outside officers ▶

38(1) On his independence
Mr. Hiroho Kamakura is an outside corporate auditor candidate as
set forth in Item 8, Paragraph 3, Article 2 of the Ordinance for
Enforcement of the Companies Act, and fulfills the Company’s
outside corporate auditor appointment criteria (▶
P37). We
have filed him as an independent officer with the Tokyo Stock
Exchange, as he also fulfills the requirements for independence
stipulated by the Tokyo Stock Exchange and the independence
criteria for outside officers stipulated by the Company (see below).
If his reappointment is approved, we plan to maintain his position as
an independent officer.
(2) On the contract for limitation of liability
In order to acquire personnel who would become outside officers
and to secure their effectiveness, we have concluded a contract forlimitation of liability with Mr. Kamakura, with the amount of limited
liability being the minimum total liability amount as prescribed in
Paragraph 1, Article 425 of the Companies Act. If his reappointment
is approved, we plan to continue the above contract for limitation of
liability.
(3) On special interest in the Company
Mr. Hiroho Kamakura has worked at Deloitte Touche Tohmatsu
LLC, the Company’s accounting auditor, but retired seven years
and nine months ago. There are no business or other relationships
between the Company and Yushin Precision Equipment Co., Ltd.,
Fujio Food System Co., Ltd., and SymEnergy Inc., which he serves
as a part-time corporate auditor.

Criteria for the Independence of Outside Officers
The Company has set out the criteria for independence as below, anddeems that an outside officer is independent if none of the criteria apply
thereto.
(1) A major shareholder of the Company (holding 10% or more of thetotal voting rights in the Company at the end of the most recent
fiscal year) or an individual who serves as a key employee such as adirector, corporate auditor, executive officer, manager, or any otherpost higher than department head (hereinafter referred to as“Director, etc.”) in an entity that is a major shareholder of theCompany(2) A director, etc. of a corporation or the like of which the Company isa major business partner (with annual business exceeding 5% ofconsolidated net sales)(3) A director, etc. of a corporation or the like that is a major business
partner of the Company (with annual business exceeding 5% ofconsolidated net sales)(4) A director, etc. of a corporation or the like that is a major lender tothe Company (the Company borrows more than 2% of its total
assets from the lender)(5) An accounting auditor of the Company or its subsidiary, or anindividual who is responsible for auditing the Company or its
subsidiary as an employee at the accounting auditor(6) A relative within the third degree of kinship or closer of an individual
described in any of the items numbered 1 to 5 above(7) A relative within the third degree of kinship or closer of an officer,
executive officer, or key employee in a post higher than department
head of the Company or its subsidiary(8) An individual to whom any of the items numbered 1 to 7 above hasapplied within the last three years

P37
P38

Notice of Convocation of the 57th Annual Shareholders’ MeetingConvocation Notice

Introduction of Two(2) Corporate Auditors
Introduction of Corporate Auditors in OfficeOutsideFull-time

Full-time

まつ

だ

まさ

たか

き

P2
だ

あきら

Business Report

OutsideProfileDate of birth

March 30, 1956 (63 years old)

My strength

Prudent, exercise restraint, patient

My strength

Have strong curiosity and act without hesitation

My weakness Tend to create frameworks for all matters

My weakness

Not good at continuing with things tenaciously

No. of Company shares held

No. of Company shares held

15,900 shares

Date of birthJanuary 3, 1958 (62 years old)

500 shares

Attendance at Board of Directors’ meetings 100%（11/11 meetings）

Attendance at Board of Directors’ meetings 100%（11/11 meetings）

Attendance at Board of Auditors’ meetings 100%（13/13 meetings）

Attendance at Board of Auditors’ meetings 100%（13/13 meetings）

Years of service (at the closing of Meeting) 12 years and 9 months

Years of service (at the closing of Meeting)Through audit activities with many
involvements

Contribute to continuous improvementof corporate value

As a corporate auditor who plays a role in corporate governance, I hope to be actively involved in various situations byclosely cooperating with the audit firm and the internal audit
division, without limiting my activities to compliance auditing,which limits the roles and authorities of the corporate auditor toa narrower range than necessary, and enhance my involvement
toward the continuous development of the Trust Company.

Initiatives in the 57th period

2 years

As a full-time corporate auditor, I will objectively and accurately
grasp the Company’s decision-making process and exercise ofbusiness, and prevent the rise of risk if I recognize signs of risk.
In addition, as an independent officer, I will contribute to thecontinuous improvement of Trusco Nakayama’s corporate value
by being appropriately involved in the Company from a different
perspective from internal members.

Initiatives in the 57th period
Mr. Takada provided opinions on the overall management policy,
etc. at Board of Directors’ and Board of Corporate Auditors’
meetings, as well as advice and recommendations to ensure theadequacy and appropriateness of decision-making of the Board of
Directors based on his experience at a securities firm and an IR
consulting firm. As a full-time corporate auditor, he also carried out
activities such as visiting branches, witnessing inventory clearance,
and witnessing site investigation by the audit firm, in accordancewith the policy on audit, etc.

Brief biography, status, business in charge of and important concurrent posts

Brief biography, status, business in charge of and important concurrent posts

April 1978

April 1981
Joined Nomura Securities Co., Ltd.
December 2001 Head of IB Consulting Office
March 2009Managing Director of IB Business
Development Department
April 2012
Director of Nomura Investor Relations Co.,Ltd.
April 2015
Advisor of Nomura Investor Relations Co., Ltd.
March 2018
Full-time Corporate Auditor of the Company(present)

March 2003
June 2007

Notice of Convocation of the 57th Annual Shareholders’ Meeting

39

参考資料

Mr. Matsuda provided opinions on the overall management policy,
etc. at Board of Directors’ and Board of Corporate Auditors’
meetings, as well as advice and recommendations to ensure theadequacy and appropriateness of decision-making of the Board of
Directors based on his long experience at a financial institution andknowledge in finance, etc. As a full-time corporate auditor, he also
carried out activities such as visiting branches, witnessing inventory clearance, and witnessing site investigation by the audit firm, in
accordance with the policy on audit, etc.

Joined the Kyowa Bank, Ltd.
(currently Resona Bank, Ltd.)
Chief Credit Officer of the Osaka No. 3 Loan
Department, Resona Bank, Ltd.
Full-time corporate auditor of the Company(present)

P32
Reference Data

ProfileReference Materials for
Shareholders’ Meeting

P10

Convocation NoticeBusiness Report

P2

Reference Materials for
Shareholders’ Meeting

P10

Frequently Asked
Questions

Procedures of the
Shareholders’ Meeting

Voting Right Exercise Methods- P8 -

Business Report- P10 -

Frequently Asked Questions to Trusco Answers to questions frequently asked by our shareholders

Q1■ Countermeasures

How do you view yourcurrent payout ratio?

We regarded a delay in management reform as one of thereasons behind the downward revision of the earnings
forecast and dividend forecast for the 57th period, which
was disclosed on August 1, 2019, and reduced officers’
remuneration* for the September-December period.

We maintain a consolidated dividend
payout ratio of 25%.
We believe we can maximize returns to shareholders byachieving continuous growth. Based on the policy that
continued capital investment is essential for improving
corporate value, we have focused our investments on
distribution centers, IT infrastructure, and the personnel that
support them, and we achieved solid growth as a result.
Currently, we intend to maintain a consolidated dividend
payout ratio of 25% based on business performance as aresult of considering the balance between returns bycorporate value improvement through capital investment
and returns by dividends, and we provide returns toshareholders with a comprehensive dividend amount.
Annual dividend and net income per share
P26.

*A 10% reduction in fixed remuneration (monthly fixed remuneration)
for the President, Senior Managing Directors and Managing Directors

As a countermeasure to the decline in profit, we continued
to implement company-wide cost-cutting measures fromthe previous fiscal year. We continued to allocate
appropriate personnel, review delivery routes, reduce
overtime and introduce RPA. As for capital expenditures, weprioritized the investments necessary to boost earnings,
and the Board of Directors reexamined whether they werenecessary investments and decided to temporarily suspendsome investments.

Reference Data

P32

Q2

Are there any plans for ashare buyback in the future?

At the moment, we have no plans forshare buybacks.

Q4

Our ROE at the end of the fiscal year ended December 31,
2019 was 7.5% (consolidated basis). We believe it isimportant to improve sales and profits by effectively using
funds to strengthen functions (investing in the reinforcementof distribution and growth areas, such as IT), improving
customers’ convenience, and contributing to monozukuri,
instead of aiming to improve corporate value withshort-term methods. We hope to return our profits to ourshareholders through corporate value improvement anddividends.

Q3

What are the reasons behind andcountermeasures against theincrease in sales and adrop in profit?

We reduced costs and reviewed areasof capital inrestment.

■ Reasons

Major reasons for increases in SG&A for the 57th period
1. Increase in depreciation due to the operations of
distribution centers and aggressive capital investment,
including the installment of distribution equipment
2. Increase in freight and packaging costs owning to anincrease in shipments and a rise in delivery prices

40

Notice of Convocation of the 57th Annual Shareholders’ Meeting

What is the future ofoverseas business?

We respond to the needs of overseas
companies through stable supply of
products by our consolidated subsidiaries.
Our overseas business is based on two strategies. The firstone is the business development in Trusco Nakayama
Thailand and Trusco Nakayama Indonesia, both of whichhave local inventories. The second one is the expansion ofa one-stop service to sales agents in each country by theOverseas Sales Section and sale activities centered on thecultivation of new sales agents.
In March 2019, Trusco Nakayama Indonesia was relocatedto a new office building. In both Thailand and Indonesia, wewill enhance our prompt delivery system while enhancing
our inventory lineup.
The Overseas Sales Section conducts direct trade with oursales agents in various countries around the world, mainly inEurope, the U.S. and ASEAN countries. As of the end of
December 31, 2019, our products were exported to 19
countries. We will continue to aim to be a company that isneeded by monozukuri sites around the world.
P24-25.
Current situations of subsidiaries▶

The Corporate Auditors and the Audit
Supervision Office work together toincrease effectiveness.
The status of the two consolidated subsidiaries (Trusco
Nakayama Indonesia and Trusco Nakayama Thailand) is
reported by the Head of Overseas Department to themonthly Management Committee, and the Full-time
Corporate Auditors of the parent company and the internal
audit division (Audit Supervision Office) regularly conduct
on-site audits.

Q6

Proposal Details- P32 -

Q&A Page- P40 Convocation Notice

What is the governancestructure ofoverseas consolidated
subsidiaries?

Auditor’s Report- P22 -

What are yourP2

ESG and SDG-

related initiatives?

Trusco Nakayama’s conviction“Businesses and companies are only
worthwhile if they are of use to people
and society.”
Based on this conviction, we engage in initiatives not only inpursuit of profit but also in order to realize the happiness of
those involved, including local communities, business
partners and shareholders.

■ Major ESG initiatives▶

P27-P31.

・Contribute to society through business・Providing a workplace environment where employees
can work with peace of mind

Reference Data

・Highly transparent corporate management
・Provision of safe and secure products

・Unique environmental management system■ SDG-related initiatives▶

P27.

Trusco Nakayama has always implemented various
initiatives and systems on a voluntary basis. We willconcretize these from the viewpoint of the SDGs and fulfill
our corporate social responsibility to realize a sustainable
society.

Notice of Convocation of the 57th Annual Shareholders’ Meeting

P10

P32

・Environmental activities through business activities

Audit of Trusco Nakayama Thailand(From left: Yasui, President of Trusco Nakayama Thailand, Takada,
Full-time Corporate Auditor)

Business Report

Q5

Outside Officer’s Report- P21 -

Reference Materials for
Shareholders’ Meeting

Initiatives in the 58th Period- P15 -

41