Notice of 72nd Annual
General Meeting of
Shareholders

Date and time

Proposals

Thursday, June 20, 2024
10 a.m. (reception begins at 9:30 a.m.)

Proposal 1
Proposal 2
Proposal 3

Venue
4-1-23 Shiba, Minato-ku, Tokyo
Mita NN Hall, B1F (1st basement floor), Mita NN Building

Appropriation of Surplus
Election of Five Directors Who Are Not Audit
and Supervisory Committee Members
Partial Revision to Stock-Based Compensation
System for Directors, etc. Who Are Not Audit
and Supervisory Committee Members

Table of Contents
Notice of the 72nd Annual General Meeting of Shareholders .. 1
Business Report ........................................................................ 5
Consolidated Financial Statements ......................................... 20
Non-consolidated Financial Statements .................................. 37
Audit Report ........................................................................... 46
Reference Documents for the General Meeting of Shareholders................................................................................................ 52

To Our Shareholders
The right to vote at general meetings of shareholders is an important right of shareholders.
Please review the attached Reference Documents for the General Meeting of Shareholders
before exercising your voting rights.
For details of how to exercise your voting rights, please see page 3.

Nifco Inc.
Securities Code: 7988

To Shareholders

Securities Code: 7988
June 4, 2024
(Start date of electronic provision measures: May 29, 2024)
5-3 Hikari-no-oka, Yokosuka, Kanagawa

President & Representative Director

Nifco Inc.
Masaharu Shibao

Notice of the 72nd Annual General Meeting of Shareholders
We would like to express our gratitude for your continued support.
You are cordially invited to attend the 72nd Annual General Meeting of Shareholders of the Company, which
will be held as described below.
For this General Meeting of Shareholders, we have taken electronic provision measures for the Reference
Documents for the General Meeting of Shareholders, etc. (electronic provision measures). For such documents,
please refer to one of the following websites:[Company website]
https://www.nifco.com/en/news/detail/2024shoushuu.html(Please access the above website and select “Notice of the 72nd Annual General Meeting of Shareholders.”)[Website for the materials for the General Meeting of Shareholders]
https://d.sokai.jp/7988/teiji/[Tokyo Stock Exchange website (TSE-listed company information service)]https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show(In the TSE website, enter “Nifco Inc.” in Issue name (company name) or “7988” in code and click search.
In the page that appears, select [Basic Information] -> [Documents for public inspection / PR information]
to display the list of available documents. From the list, select [Click here for access] under Notice ofGeneral Shareholders Meeting / Information Materials for a General Shareholders Meeting.)
Please review the attached Reference Documents for the General Meeting of Shareholders before
exercising your voting rights.
[Voting in writing (by mail)]
Please indicate your approval or disapproval of the proposals on the agenda on the enclosed Voting Rights
Exercise Form and return it to us to arrive by no later than 5 p.m. on Wednesday, June 19, 2024.
[Voting via the Internet]
To exercise your voting rights via the Internet, please enter your approval or disapproval of the proposals
in accordance with the onscreen instructions by no later than 5 p.m. on Wednesday, June 19, 2024, by (1)scanning the login QR code or (2) accessing the website for exercising voting rights designated by theCompany (https://soukai.mizuho-tb.co.jp/).

-1-

If you exercise your voting rights via the Internet, please refer to “Guide to Exercising Voting Rights
via the Internet, etc.” on page 4.
If you do not indicate your approval or disapproval of a proposal when you exercise your voting
rights by means of the Voting Rights Exercise Form, it will be treated as an approval.

1 Date and timeThursday, June 20, 2024, at 10 a.m. (reception begins at 9:30 a.m.)

2 Location

Mita NN Hall, B1F (1st basement floor), Mita NN Building 4-1-23 Shiba, Minato-ku, Tokyo

3 Objectives

Reports

1. Business Report, Consolidated Financial Statements and Results of Audit ofConsolidated Financial Statements by the Accounting Auditor and the Audit andSupervisory Committee for the 72nd fiscal year (from April 1, 2023, to March 31,2024)
2. Non-consolidated Financial Statements for the Company’s 72nd fiscal year (from
April 1, 2023, to March 31, 2024)

Resolutions

Proposal No. 1:
Proposal No. 2:
Proposal No. 3:

4 Guide to Exercising Voting
RightsAppropriation of Surplus
Election of Five Directors Who Are Not Audit and Supervisory
Committee Members
Partial Revision to Stock-Based Compensation System for Directors,
etc. Who Are Not Audit and Supervisory Committee Members

Please refer to the “Guide to Exercising Voting Rights” on page 3.

• When attending the meeting, please present the enclosed Voting Rights Exercise Form to the receptionist at the meeting.
• If any amendments are made to the Electronic Provision Measures, a notice to that effect along with the matters before and after
amendment will be posted on each website indicated above.

There will be no social gathering or gifts on the day of the General Meeting of Shareholders. We would appreciate yourunderstanding.

-2-

Guide to Exercising Voting Rights
The right to vote at general meetings of shareholders is an important right of shareholders.
Please review the attached Reference Documents for the General Meeting of Shareholders before exercising
your voting rights.
There are three ways to exercise your voting rights:

Voting via the Internet

Voting in writing (by mail)Attending the General
Meeting of Shareholders

Enter your approval or disapproval ofeach proposal according to the
instructions on the next page.

Indicate your approval or disapproval of
the proposals on the enclosed voting
form and return it to us.

Submit the enclosed Voting Rights
Exercise Form to the receptionist at themeeting.

Deadline

Deadline

Date and time

Entries completed by
5 p.m. on Wednesday,June 19, 2024

Voting cards must arrive by
5 p.m. on Wednesday,June 19, 2024

Thursday, June 20, 2024
10 a.m.
(Reception starts at 9:30 a.m.)

Instructions for Filling Out the Voting Rights Exercise Form

If you exercise your voting rights both in writing (by mail) and via the Internet, etc., the exercise of your voting rights via the Internet, etc. will be treated as valid. If you
exercise your voting rights more than once via the Internet, etc., the last vote will be treated as the valid vote.

-3-

Guide to Exercising Voting Rights via the Internet
Scanning login QR code:“Smart Voting”
You can log in to the voting website without entering your voting codeand password.

If you are not sure how to operate your computer,smartphone, or mobile phone when exercising
your voting rights via the Internet, please contact
us with the information on the right.

Entering your voting code andpassword
Voting website

https://soukai.mizuho-tb.co.jp/

Internet Help Dial, Stock Transfer Agency Department,
Mizuho Trust & Banking Co., Ltd.

0120-768-524(Business hours: 9:00 to 21:00)

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

-4-

Business Report (April 1, 2023, to March 31, 2024)
1. Current Status of the Corporate Group(1) Business in the Current Fiscal Year<a> Business Progress and Results
During the fiscal year under review (hereinafter “the period”), the Japanese economy experienced production cuts in theautomobile industry and weak exports of goods in the manufacturing sector due to the suspension of shipments by some
automobile manufacturers and other factors. On the other hand, in the non-manufacturing sector, business confidence improved
significantly due to factors such as a recovery in inbound demand, increased margins from price pass-through, and progress indigitalization. Looking overseas, in the Chinese economy, although business conditions made a rapid recovery going into 2023
on the lifting of the zero-COVID-19 policy, they have slowed since spring because of factors such as the end of stay-at-homedemand, a slowdown in exports of IT-related products, and a stagnant real estate market. The European economy also
experienced a slowdown due to global sluggishness in demand for goods, as well as pent-up demand and inbound demand
running their course post-COVID-19 in the service sector. In the U.S. economy, the manufacturing sector continued to increase
production of automobiles and high-tech-related goods in industrial production, while a trend of a production decline continued
in other manufacturing sectors. Meanwhile, in the non-manufacturing sector, business conditions improved in areas such as
agriculture, forestry, and fisheries, accommodation and food services, and health care, boosting the economy overall. As a result,the global economy was generally on a recovery trend despite some regional weaknesses. However, the outlook remains
uncertain due to factors such as the stagnant real estate market within the Chinese economy, continuing tension in the Middle
East, and anticipated changes in the international political balance as a result of elections in various countries around the world.
With regard to automobile manufacturers, which are the main customers of Nifco Inc. (the “Company”) and its consolidated
subsidiaries (collectively, the “Group”), in the Japanese market, both production volume and sales volume increased year on
year for the period, despite the impact from factors such as suspended shipments by some automobile manufacturers. In
overseas markets as well, due to the easing of semiconductor supply constraints, etc., both production and sales volumes in
China, Europe, the U.S.A., and other markets increased year on year.
As a result, the Group’s consolidated earnings were as follows. Net sales for the period amounted to 371,639 million yen, up
15.5% year on year. In terms of profits, operating profit increased 27.5% year on year to 43,925 million yen, due to controllingincreases in fixed costs such as depreciation and personnel expenses, despite the soaring prices of raw materials and electricity.
Ordinary profit increased 31.1% year on year to 49,665 million yen due to foreign exchange gains resulting from thedepreciating yen. Profit attributable to owners of parent decreased 13.8% year on year to 18,252 million yen, mainly due to theposting of 18,765 million yen in extraordinary losses, including an allowance for losses on business transfer related to thetransfer of the German business and an impairment loss.
The recognition, analysis, and examination of operating results by segment are as follows.
Net sales in each segment are to external customers.
(ⅰ) Industrial Plastic Parts & Components(For the domestic automobile industry)
For automotive production in Japan, sales exceeded the initial plan and the previous year’s results from the first to the third
quarter due to increased production in response to the elimination of the shortage of semiconductors. However, fourth quarter
sales did not exceed the plan due to a series of production cuts in connection with certification test irregularities by a numberof automobile manufacturers since December 2023 and the Noto Peninsula Earthquake. However, the full-year sales total
exceeded the plan due to factors such as contributions from mold sales associated with the launch of new vehicles,
compensation for electric power charges, compensation for production cutbacks, and price revision negotiations.

-5-(For the overseas automobile industry)
Overseas, both net sales and profits exceeded the plan and increased year on year thanks to support from generally strong
automobile demand. In particular, business for Korean OEMs remained strong due to factors such as increased production bycustomers, and both net sales and profits substantially exceeded the plan and increased year on year, especially in South Korea,
North America, and Europe. For Japanese OEMs, net sales and profits grew overall supported by strong sales by customers in
the U.S., where sales and profits increased, and also firm performance mainly in India and Indonesia. However, in China,
Japanese OEMs struggled due to sluggish sales, resulting in an overall decrease in net sales and profit. Furthermore, in Europe,
the German OEM business faced a difficult time in terms of profits. In particular, the U.S. subsidiary that conducts businessfor German customers suffered losses due to operational problems. In the current fiscal year, we aim to further boost
profitability by improving our business portfolio through the sale of the German OEM business to purge loss-making businesses,
while strengthening capital investment in the strong Korean OEM business and the Japanese OEM business in North America
and India.
[For other industries]
In the housing and living sector, the number of new housing starts was sluggish due to soaring construction costs and real estate
prices, leading to a decline in production related to household equipment, where the Group has major customers, and thisresulted in performance falling short of the initial plan. In the sports and outdoor sector, sites in China delivered higher profits
due to aggressive sales activities to brands made in China, but performance fell short of the initial plan due to continued
significant production cutbacks at major customers in Europe and the U.S. caused by a drop in consumption due to global
inflation.
As a result of the above, net sales in the industrial plastic parts & components business increased 15.9% from the previous
fiscal year to 334,729 million yen. Segment profit was up 25.8% year on year to 42,840 million yen.
(ⅱ) Bed and furniture businessIn the bedding & furniture business, both net sales and profits increased due to steady sales to retailers and exports, as well as
strong demand from hotels, partly reflecting inbound demand recovery, although the market in Japan was affected by factors
such as soaring raw material prices and cost increases due to the yen’s depreciation. Meanwhile, demand overseas from hotels
increased at all sites, as it did in Japan, and wholesale and retail sales grew steadily, especially in China, resulting in higher net
sales and profits. As a result, net sales in the bedding & furniture business increased 11.7% year on year to 36,910 million yen.
Segment profit rose 11.2% year on year to 6,544 million yen.

-6-

Net Sales and Production by Business Category
Business category

Net sales

Comparison with theprevious period

Million yen%

OutputComparison with theprevious period

Million yen%

Industrial Plastic Parts &Components

334,729115.9

229,414112.1

Bed and furniture business

36,910111.7

13,193113.5

371,639115.5

242,607

112.2

Total

<b> Capital Investment
Capital expenditures in the current period totaled 10,018 million yen. These included the acquisition of molds and equipment
at Nifco America Corporation, our subsidiary.
In addition, the ongoing construction and expansion of major facilities during the current period is for the acquisition of
production facilities to promote future global expansion and production automation in the industrial plastic parts & components,
our core business.

<c> Funding Status
No noteworthy financing was conducted during the current period.

(2) Assets and Income for the Previous Three Fiscal Years
69th Period

70th Period

71st Period(April 1, 2020,
to March 31, 2021)(April 1, 2021,
to March 31, 2022)(April 1, 2022,
to March 31, 2023)

72nd Period(Current period)(April 1, 2023,
to March 31, 2024)

Net sales(Million yen)

256,078

283,777

321,771371,639

Ordinary profit
Profit attributable toowners of parent
Profit per share(Million yen)

29,53533,60237,876

49,665(Million yen)

18,402

22,95921,17018,252181.09 yen

227.27 yen

211.28 yen

183.26 yen

Total assets(Million yen)

307,127333,068

359,150

380,405

Net assets(Million yen)

178,649

200,875

226,127

247,052

1,737.80 yen

1,978.36 yen

2,237.06 yen

2,455.97 yen

Net assets per share(Notes)1.
2.

Profit per share is calculated based on the average number of shares outstanding during the period and net assets per share is calculated based on the total
number of shares outstanding at the end of the period. The total number of shares outstanding excludes treasury shares.
The Company introduced the Executive Compensation BIP Trust in the 65th fiscal year and the Stock Grant ESOP Trust in the 66th fiscal year, and the sharesof the Company held by these trusts are recorded as treasury shares in the consolidated financial statements. For this reason, in the calculation of profit per
share, these shares are included in treasury shares that are excluded in calculating the average number of shares during the period, and in the calculation of
net assets per share, these shares are included in treasury shares that are excluded in calculating the total number of shares outstanding at the end of the period.

-7-

(3) Statuses of Parent Company and Major Subsidiaries<a> Status of the Parent Company
Not applicable.

<b> Status of Major Subsidiaries
Company name

Voting rights of theCompany (%)

Share capital

DirectMain BusinessIndirect

US$ 3,500 thousand

100.00－

Manufacturing and sales of industrial plastic
parts & components

325,258 thousand Mexican
pesos

47.49

52.51

Manufacturing and sales of industrial plastic
parts & components

14,510 thousand pounds－

100.00

Manufacturing and sales of industrial plastic
parts & components

6,000 thousand zloty－

100.00

Manufacturing and sales of industrial plastic
parts & components

Nifco Germany GmbH

25 thousand euros－※100.00

Manufacturing and sales of industrial plastic
parts & components

Shanghai Nifco Plastic Manufacturer Co.,Ltd.

US$3,000 thousand－

100.00

Manufacturing and sales of industrial plastic
parts & components

Dongguan Nifco Co., Ltd.

HK$75,000 thousand

－

90.00

Manufacturing and sales of industrial plastic
parts & components

Beijing Nifco Co., Ltd.

US$ 14,534 thousand－

100.00

Manufacturing and sales of industrial plastic
parts & components

Nifco Taiwan Corporation

NT$150,000 thousand

92.00

－

Manufacturing and sales of industrial plastic
parts & components

34,400,000 thousand won

100.00－

Manufacturing and sales of industrial plastic
parts & components

Nifco (Thailand) Co., Ltd.

320,000 thousand baht

100.00－

Manufacturing and sales of industrial plastic
parts & components

Union Nifco Co., Ltd.

100,000 thousand baht

50.00

－

Manufacturing and sales of industrial plastic
parts & components

Nifco Poland Sp. z o.o.

9,000 thousand zloty－

100.00

Manufacturing and sales of industrial plastic
parts & components

Simmons Co., Ltd.

259,150 thousand yen

99.96

－

Simmons Bedding & Furniture (HK)
LimitedHK$10,000 thousand－

Nifco America Corporation
Nifco Central Mexico S. de R. L. de C. V.
Nifco UK Ltd.
Nifco Korea Poland Sp. z o.o.

Nifco Korea Inc.

(Notes)Manufacture and sale of beds, import and sale offurniture

100.00 Bed and furniture business

1.

Percentages of voting rights of the Company are rounded down to the indicated decimals.

2.

On April 15, 2024, the Company transferred all shares of Nifco Germany GmbH.

(4) Challenges to Be Addressed
The automotive industry, which is a major market in the Group, is expected to continue to grow on a global basis, but various changes
such as geopolitics are taking place, and demands from customers are becoming more diverse and complex.
Therefore, in order for the Group to make further advancement and growth, it is important to respond appropriately to these issues andneeds and to improve customer satisfaction on a global basis.
To achieve this goal, we are focusing on developing products and production process technologies that accurately and quickly respondto the needs of each user, the improvement of working styles, the development of human resources and Nifco’s job-type personnel
system (a method of clearly defining jobs, and then hiring people with the appropriate skills and work experience to perform thosejobs), and constructing information systems for security and IT utilization. At the same time, we are currently working to further
strengthen the budget control of global group companies, build a cooperative framework among regional bases through the introductionof an overseas regional control system, and promote rapid decision-making in the field.

-8-

The Company respects the intellectual property rights of other companies. We strive to avoid infringing the intellectual property rights
of other companies by conducting patent research and other activities from the development stage to ensure that the Company’s products
do not infringe their intellectual property rights, thereby reducing the risk of litigation related to intellectual property. During the current
period, there were no lawsuits filed by a third party concerning intellectual property rights.

(5) Main Business (as of March 31, 2024)
Th Group is primarily engaged in the industrial plastic parts & components, including industrial plastics and fasteners and plastic
functional precision components. The Group’s subsidiaries also engage in the bed and furniture business.

(6) Major Offices and Plants (as of March 31, 2024)
Nifco Inc.

Headquarters

5-3 Hikari-no-oka, Yokosuka, Kanagawa

Branch office

Minato-ku, Tokyo

Plant

Nagoya, Sagamihara

Business office

Utsunomiya, Saitama, Asaka, Ota, Suzuka, Hamamatsu, Osaka,
Hiroshima

Research instituteYokosuka

Nifco America Corporation

Headquarters

Ohio, U.S.A.

Nifco Central Mexico S. de R. L. de C. V.

Headquarters

Guanajuato, Mexico

Nifco UK Ltd.

Headquarters

Stockton-on-Tees, United Kingdom

Nifco Korea Poland Sp. z o.o.

Headquarters

Zory, Poland

Shanghai Nifco Plastic Manufacturer Co., Ltd.

Headquarters

Shanghai, China

Dongguan Nifco Co., Ltd.

Headquarters

Guangdong Province, China

Beijing Nifco Co., Ltd.

Headquarters

Beijing, China

Nifco Taiwan Corporation

Headquarters

Taoyuan, Taiwan

Nifco Korea Inc.

Headquarters

Asan-si, South Korea

Nifco (Thailand) Co., Ltd.

Headquarters

Chonburi, Thailand

Union Nifco Co., Ltd.

Headquarters

Bangpakong, Thailand

Nifco Poland Sp. z o.o.

Headquarters

Swidnica, Poland

Simmons Co., Ltd.

Headquarters

Minato-ku, Tokyo

Plant
Simmons Bedding & Furniture（HK）Limited

Oyamacho, Sunto-gun, Shizuoka

Headquarters-9-

Hong Kong(7) Status of Employees (as of March 31, 2024)<a> People Working for Corporate Groups
Business category

Number of employees

Industrial Plastic Parts & Components

Change from the end of the previous fiscal
year
Increased 24(Increased 163)

9,138

(3,004)

932

(255)

Increased 18

Bed and furniture business(Decreased 4)

Company-wide (common)

156

(-)

Increased 15

(-)

Total

10,226(3,259)

Increased 57(Increased 159)

(Notes)1.

2.
3.

The numbers indicated under “Number of employees” are the number of people working (excluding employees seconded from the Group to outside the Group,
and including employees seconded from outside the Group to the Group and regular part-timers). Among them, the numbers indicated in parentheses are theaverage numbers of temporary employees per year (part-timers, temporary employees from temporary employment agencies, and temporary workers,
excluding part-timers who work regularly), and are not included in the numbers on the left.
Other than these, there are 14 employees seconded to our affiliates.
The number of employees indicated as under “Company-wide (common)” is the number of people who belong to administrative departments not belonging
to a specific segment.
The number of employees at the end of the previous fiscal year, which is the basis for “change from the end of the previous fiscal year,” is calculated under
the conditions described in Note 1.

<b> Employees for the Company
Number of employees
1,363 (354)(Notes)1.

Change from the end of theprevious fiscal year
Increased 2 (decreased 29)

Average age

Average years of service
42.3

16.6

The numbers indicated under “Number of employees” are the number of people working (excluding employees seconded from the Company to outside theCompany, and including employees seconded from outside the Company to the Company and regular part-timers). Among them, the numbers indicated inparentheses are the average numbers of temporary employees per year (part-timers, temporary employees from temporary employment agencies, andtemporary workers, excluding part-timers who work regularly), and are not included in the numbers on the left.
Other than these, there are 14 employees seconded to our affiliates.

2.

The number of employees at the end of the previous fiscal year, which is the basis for “change from the end of the previous fiscal year,” is calculated under
the conditions described in Note 1.

(8) Status of Major Lenders (as of March 31, 2024)
Lenders

Borrowings

MUFG Bank, Ltd.

6,977 million yen

Mizuho Bank, Ltd.

3,285 million yen

Sumitomo Mitsui Banking Corporation

3,000 million yen

The Shizuoka Bank, Ltd.

2,000 million yen(9) Other Important Matters Concerning the Current Status of the Corporate GroupNot applicable.

- 10 -

2. Current Status of the Company(1) Stocks (as of March 31, 2024)<a> Total Number of Shares Authorized

233,000,000<b> Total Number of Shares Outstanding

100,257,053(Note) As a result of the cancellation of treasury shares on September 29, 2023, the total number of shares outstanding decreased by 7,251,901 shares from theend of the previous fiscal year.

<c> Number of Shareholders

4,261<d> Major Shareholders (top 10)
Shareholder name

Number of shares held

Percentage of shares
held (%)

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

17,881,700

17.94

Toshiaki Ogasawara Memorial Foundation

10,343,665

10.37

Custody Bank of Japan, Ltd. (trust account)

7,140,400

7.16

GOLDMAN, SACHS & CO. REG

6,093,278

6.11

Nippon Life Insurance Company

2,915,390

2.92

SSBTC CLIENT OMNIBUS ACCOUNT

2,795,837

2.80

Dai-ichi Life Insurance Company, Ltd.

2,065,400

2.07

TAIYO FUND, L.P.

1,837,300

1.84

THE BANK OF NEW YORK MELLON (INTERNATIONAL) LIMITED 131800

1,685,800

1.69

GOVERNMENT OF NORWAY

1,660,699

1.66

The shareholding ratio is calculated after deducting treasury shares (603,468 shares).
The Company shares (377,810 shares) held by the Executive Compensation BIP Trust account and the Company shares (49,739 shares) held by the Stock Grant ESOP Trustaccount are not included in treasury shares.

<e> Status of Shares Delivered to Officers as Consideration for Their Performance During the Current Fiscal
Year
SharesDirectors (excluding Audit andSupervisory Committee Members)

Directors(excluding external directors)
External directors

Directors (Audit and Supervisory Committee Members)(Notes)Number of recipients
23,752

1

-

-

-

-

For details of the Company’s stock-based compensation system, please refer to the “Notice Concerning The Officer Nomination Policies and The Officer
Compensation Policies” (https://www.nifco.com/en/csr/governance/pdf/2023OfficerNominationPoliciesAndOfficerCompensationPolicies.pdf) on the Company’s
website in fiscal 2023.

- 11 -

(2) Share Acquisition Rights, etc.
<a> Share Acquisition Rights Held by Officers as Consideration for Their Performance (as of March 31, 2024)
Not applicable.

<b> Status of Share Acquisition Rights Delivered to Employees, etc. as Consideration for the Performance ofDuties during the Current Fiscal Year
Not applicable.

<c> Other Important Matters Related to Share Acquisition Rights
Not applicable.

(3) Status of Company Officers<a> Directors (as of March 31, 2024)
Position

Name

Responsibilities and significant concurrent positions

President & Representative
Director
Masaharu Shibao
CEO (Chief Executive Officer)
Director, Chairman

Toshiyuki Yamamoto

Director, Senior Executive
Managing Officer
CFO (Chief Financial Officer)
CSO (Chief Strategy Officer)

Toshiki Yauchi

Director

Yoshiko Nonogaki

External Director, GS Yuasa Corporation
External Director, Sato Holdings Corporation

Director

Brian K. Heywood

Taiyo Pacific Partners L.P. CEO
Exteranl Director, Roland DG Corporation
External Director, Roland Corporation

Director

Masayuki Abe

Director (Full-time Audit andSupervisory Committee
Member)Junji Honda

Directors (Audit andSupervisory Committee
Members)

Mitsuhiro Matsumoto

Certified public accountant
External Director, Suzuki Co., Ltd. (Audit and Supervisory Committee Member)

Directors (Audit andSupervisory Committee
Members)

Izumi Hayashi

LawyerExternal Director, Weathernews Inc.
External Director, NOF Corporation(Notes) 1. Directors Yoshiko Nonogaki, Brian K. Heywood and Masayuki Abe, and Directors (Audit and Supervisory Committee Members) Mitsuhiro Matsumoto and Izumi
Hayashi are external directors.
2. Director (Full-time Audit and Supervisory Committee Member) Junji Honda has worked in the Accounting Division of the Company for many years and has
considerable financial and accounting knowledge.
3. Director (Audit and Supervisory Committee Member) Mitsuhiro Matsumoto is a certified public accountant and has considerable financial and accounting
knowledge.
4. The Company has designated directors Yoshiko Nonogaki, Brian K. Heywood and Masayuki Abe, as well as directors (Audit and Supervisory Committee
Members) Mitsuhiro Matsumoto and Izumi Hayashi, as independent officers pursuant to the provisions of the Tokyo Stock Exchange and has notified theTokyo Stock Exchange of their appointment.
5. Junji Honda has been selected as a full-time member of the Audit and Supervisory Committee in order to enhance information-gathering, enhance theeffectiveness of audits through adequate collaboration with the Internal Audit Department, etc., and strengthen the audit and supervisory functions.

- 12 -

<b> Summary of the Contents of the Liability Limitation Agreement
In accordance with the Articles of Incorporation, the Company has entered into agreements with the directors (excluding those
who are executive directors, etc.) to limit their liability for damages under Article 423, Paragraph 1 of the Companies Act. The
maximum amount of liability for damages under such agreements is 20 million yen or the minimum liability amount stipulated
by laws and regulations, whichever is higher.

<c> Summary, etc. of Contents of Officers’ Liability Insurance Contract
The Company has entered into a liability insurance (Directors and Officers insurance, or D&O insurance) contract with aninsurance company for officers as provided in Article 430, Paragraph 3-1 of the Companies Act.
The scope of insured persons under this insurance policy includes the Company directors, executive officers and management
employees, etc., as well as officers of the Company subsidiaries, and insured persons do not pay any insurance premiums. The
insurance policy provides that the insured is liable for the performance of its duties or is compensated for any damage that may
result from receiving a claim related to the pursuit of such liability.
However, there are certain disclaimers; for example, damages caused by acts committed while knowing that they are violationof the law, and damages caused when profits or benefits are obtained illegally are not covered.

<d> Compensation, etc. of Directors
i. Policies, etc. for Determining the Content of Compensation, etc. for Directors
At a meeting held on May 17, 2024, the Board of Directors of the Company resolved to establish Officer Nomination Policies
and Officers Compensation Policy for fiscal 2024 and thereafter. When the Board of Directors makes a resolution, it consults
the Nomination, Compensation and Governance Committee on the matters to be resolved and receives a report in advance.
The Officers Compensation Policy includes:
1. Basic Policy on for Officer Compensation
The Company shall set the following basic policy for compensation for Directors and Executive Officers (hereinafter, referred
to as “Officers’ compensation”) based on the basic philosophy regarding Corporate Governance.
(1) Officers’ compensation shall be designed to contribute to the realization of our Purpose: “Sparking Innovation by
fastening small insights with Technology for a better world.”(2) Officers’ compensation shall be designed as an independent, objective, and transparent compensation plan that is held
accountable to our stakeholders, including employees, customers, and shareholders.
(3) Officers’ compensation shall be designed to be attractive to our employees.
2. Compensation level
The Company determines the level of Officers’ compensation based on the abovementioned basic policy, taking into accountthe Company’s management environment and after examining and analyzing periodically the compensation levels of major
companies of the same and of the same size using an external database, etc.
3. Structure of compensation(1) Compensation composition ratio
The compensation composition ratio of the Representative Director, President & CEO consists of 47% base salary, 20%
bonus, and 33% stock compensation. It is designed so that a bonus and stock compensation accounts for more than halfof the total compensation.
Compensation for Directors who are not Audit & Supervisory Committee Members, and Executive Officers consists of"Base Salary,” "Bonus" and "Stock compensation.” As for Independent External Directors and Directors who are Audit& Supervisory Committee Members, their compensation is “Base Salary” only.
The compensation of the Chairman and Director shall be based on the response to important management issues
designated by CEO and the Board of Directors and the results thereof.

- 13 -

(2) Overview of each compensation item<a> Base Salary
Base salary is determined based on positions according to the job responsibility involved and is paid as a monthly
fixed compensation to secure excellent human resources.
<b> Bonus (annual incentive)
Bonus is paid to provide an incentive for the contribution to improve company performance for each single fiscal
year, as an incentive for the Group’s consolidated business performance.
Consolidated sales and operating profit are used as KPI for bonus assessment to strengthen the earnings capabilities,
and qualitative evaluation is also incorporated. The amount of bonus shall vary in principle from 0% to 200% of
the base amount.
<c> Stock compensation (mid-to-long term incentive)
The Company’s shares will be granted to the officers with the aim of further enhancing their motivation tocontribute to improve the Company’s business performance and corporate value from a mid-to-long term viewpoint
and increase value-sharing with shareholders. The Stock compensation consists of performance-linked
compensation (PS 50%) and non-performance-linked compensation (RS 50%).
Since 2016, the stock compensation system has been adopted in which company shares are delivered to each eligible
person using a trust mechanism. Until now, points were awarded during the term of office, and the company’s
stock equivalent to the number of cumulative points were awarded upon retirement. From 2024, the system ischanged to a method of granting restricted shares through a trust mechanism during each officer's term of office(the "RS Trust System"), creating a system that allows its officers to share value with our shareholders even morethan before. In addition, in order to respond more flexibly to changes in the social environment, the Company has
implemented a rolling Mid-Term Management Plan, in which the Plan is reviewed every year to further strengthen
incentives for mid-to-long term goals in light of the perspective of shareholders and investors.
The performance-linked portion, which accounts for 50% of stock compensation, is determined based on theevaluation of the achievement of targets for performance indicators (Cumulative OP, ROIC, TSR) in the mid-term
management plan, and is determined within the range of 0% to 200%. The above indicators will be reviewed in atimely and appropriate manner each time the rolling mid-term plan is set. The non-performance-linked portion,
which accounts for 50% of stock compensation, shall be paid as stock compensation to grant a fixed number ofshares in order to further enhance the link with shareholder value for a mid to long term.
(3) Forfeiture of compensation (Malus and clawback provision)
In the event that the Board of Directors resolves to implement a correction of financial results due to a serious accounting
error or misconduct or determines that there were serious, inappropriate acts during their terms of office, the Board of
Directors may restrict the payment or claim the return of bonuses and Stock compensation after going throughdeliberation by the Nomination, Compensation, and Governance Committee.
4. Guidelines for holding own shares
The Company will promote holding of its own shares by Directors and Executive Officers in order to further raise theirmotivation to improve the Company’s business performance and increase its share price from the viewpoint of shareholders.
5. Decision-making process
In order to enhance the independence, objectivity, and transparency of the details of the appointment and dismissal criteria
for Directors and decision-making process for nominations, the Company established the Nomination and Compensation
Committee on December 10, 2018 as an advisory body of the Board of Directors, and it is chaired by and a majority of its
members are Independent External Directors. The Committee was then renamed the Nomination, Compensation, andGovernance Committee on October 28, 2020, in order to further strengthen the Company’s efforts on governance going
forward. The Nomination, Compensation, and Governance Committee, in principle, convenes no fewer than four (4) times a
year, and deliberates on individual compensation amounts and qualitative assessments to provide advice andrecommendations to the Board of Directors.
In order to adopt an objective viewpoint and specialized knowledge from outside the Company, the Nomination,
Compensation, and Governance Committee may seek advice from an external consultant or other experts on the details ofcompensation levels and systems, taking into consideration factors such as external data, the economic environment, industry
trends, and management conditions.
6. Engagement Policy
The Company shall promptly disclose the details of the Officers’ compensation plan to its shareholders through the Annual
Securities Report, Business Report, Corporate Governance Report or the corporate website, etc. that will be prepared anddisclosed in accordance with various laws and regulations. In addition, the Company will actively promote engagement withinstitutional investors.

- 14 -

ii. Total Amount of Compensation, etc. for the Current Fiscal Year
Total amount of compensation by type (Million yen)

Category

Total amount ofcompensation,
etc.
(Million yen)

Basic
Compensation

Performancelinked
compensation

Non-monetarycompensation,etc.

Number of eligible
officers

Directors (excluding Audit andSupervisory Committee Members)(External directors)

271
(28)

166
(28)

61
(-)

44
(-)

5
(2)

Directors (Audit and Supervisory
Committee Members)(External directors)

60
(28)

52
(28)

8
(-)

(-)

4
(3)

Total
(External officers)

331
(56)

218
(56)

69
(-)

44
(-)

9
(5)

(Notes)

1.

2.

3.
4.

5.

6.
7.

At the end of the current fiscal year, there were six Directors who were not Audit and Supervisory Committee Members (including three external directors)
and three Directors who were Audit and Supervisory Committee Members (including two external directors). The number of directors paid excludes one nonremunerated external director.
Performance indicators related to performance-linked compensation are consolidated net sales and consolidated operating profit, and the results are shown in“1. Current Status of the Corporate Group” in “(2) Assets and Income for the Previous Three Fiscal Years.” The reason for selecting these indexes is from theperspective of strengthening the earning power of our core business. For details, please refer to the “Notice Concerning The Officer Nomination Policies and
The Officer Compensation Policies” on the Company’s website for fiscal 2023.
(https://www.nifco.com/en/csr/governance/pdf/2023OfficerNominationPoliciesAndOfficerCompensationPolicies.pdf)
The non-monetary compensation consists of the Company shares. For the conditions of the allotment, please refer to the Company’s website above.
At the 69th Annual General Meeting of Shareholders held on June 24, 2021, it was resolved that the maximum amount of compensation for directors who are
not members of the Audit and Supervisory Committee would be 460 million yen per year (60 million yen for external directors). The number of directors who
are not Audit and Supervisory Committee Members at the conclusion of this General Meeting of Shareholders is six. (Three of them are external directors.)
In addition to monetary compensation, the 69th Annual General Meeting of Shareholders held on June 24, 2021, resolved that a performance-linked stockbased compensation system using a trust for directors and executive officers (excluding external directors and overseas residents) should not exceed 400
million yen per fiscal year, with three directors and nine executive officers subject to the plan immediately after the conclusion of the meeting.
At the 69th Annual General Meeting of Shareholders held on June 24, 2021, it was resolved that the maximum amount of compensation for directors who aremembers of the Audit and Supervisory Committee would not exceed 90 million yen per year. The number of directors who are Audit and Supervisory
Committee Members at the conclusion of this General Meeting of Shareholders is three.
The amount of individual compensation for directors is resolved by the Board of Directors in response to a voluntary report by the Nomination, Compensation
and Governance Committee.
The Board of Directors has confirmed that the policy for determining the content of compensation, etc. and the content of compensation, etc. determined areconsistent with the decision policy resolved by the Board of Directors and that the reports from the Nomination, Compensation and Governance Committee
are respected. Accordingly, the Board of Directors has determined that compensation, etc. for individual directors for the current fiscal year is in line with thesaid decision policy.

- 15 -

<e> Matters Related to External Officers(ⅰ)

Significant Concurrent Positions Held in Other Corporations, etc., and the Relationship between the Company andSuch Other Corporations, etc.
Director Yoshiko Nonogaki is an external director of GS Yuasa Corporation and an external director of Sato Holdings
Corporation. There is no special relationship between the Company and the two companies.
Director Brian K. Heywood is CEO of Taiyo Pacific Partners L.P., external director of Roland DG Corporation, and external
director of Roland Corporation. Taiyo Pacific Partners L.P. holds shares in the Company and has entered into an advisory
agreement with the Company for the purpose of providing advice and proposals on management and business strategies, but
the services of the advisory agreement are provided by different members of Taiyo Pacific Partners L.P. There is no special
relationship between the Company and the two other companies.
Director (member of the Audit and Supervisory Committee) Mitsuhiro Matsumoto is an external director (member of the
Audit and Supervisory Committee) of Suzuki Co., Ltd. There is no special relationship between the Company and Suzuki
Co., Ltd.
Director (member of the Audit and Supervisory Committee) Izumi Hayashi is an external director of Weathernews Inc. andan external director of NOF Corporation. There is no special relationship between the Company and the two companies.

(ⅱ)

Principal Activities in the Current Fiscal Year
Summary of duties performed in terms of attendance, opinions expressed, and roles expected ofexternal directors

Yoshiko Nonogaki, Director

Attended 14 of the 14 Board of Directors meetings held during the current fiscal year. At meetingsof the Board of Directors, she has expressed her opinions and asked questions about strategies andother matters related to the overall business in Japan and overseas, mainly based on her extensive
experience and insight at major companies.
She also attended eight of the eight committee meetings held during the current period as chairpersonof the voluntary Nomination, Compensation and Governance Committee. In this committee, sheoffered advice on strengthening the structure for our company’s continued growth and enhancementof corporate value, drawing on her extensive experience and insight at major companies.

Brian K. Heywood, Director

Attended 14 of the 14 Board of Directors meetings held during the current fiscal year. Based on his
extensive experience and insight as a specialist in corporate management and investment, he has
expressed his opinions and asked questions at the Board of Directors meetings regarding theCompany’s management strategy and overseas business, particularly from the perspective ofshareholders and investors.
He also attended eight of the eight meetings of the voluntary Nomination, Compensation and
Governance Committee held during the current fiscal year. With his extensive experience and insight
as a corporate management and investment specialist, he expresses his opinions in meetings on what
the Company should be like.

Masayuki Abe, Director

Attended 14 of the 14 Board of Directors meetings held during the current fiscal year. At the meetingsof the Board of Directors, he has expressed his opinions and asked questions about DX and IT andsystems based on his extensive experience and insight cultivated in the IT field, mainly at major
companies.

Directors (Audit and Supervisory
Committee Members)
Mitsuhiro Matsumoto

Attended 14 of the 14 Board of Directors meetings and 17 of the 17 Audit and Supervisory
Committee Meetings held during the current fiscal year. Mainly from his professional perspective asa certified public accountant, he expressed his opinions and asked questions on finance andaccounting at meetings of the Board of Directors, and expressed his opinion focusing on accounting
and financial auditing at meetings of the Audit and Supervisory Committee.

Directors (Audit and Supervisory
Committee Members)
Izumi Hayashi

Attended 11 of the 11 Board of Directors meetings and 9 of the 9 Audit and Supervisory Committee
Meetings held during the current fiscal year. She provided advice and recommendations to ensure
the appropriateness and validity of the Board of Directors’ decision-making, mainly by expressing
her opinions from her professional perspective as an attorney and an intellectual property expert, andmade remarks at the Audit and Supervisory Committee with an emphasis on the internal control
system.

- 16 -

<f> Officer Nomination Policies and Officer Compensation Policies
After deliberations by the Nomination, Compensation and Governance Committee, the Board of Directors resolved at its
meeting held on May 17, 2024, to establish policies on the appointment of directors and the officers’ compensation for fiscal
2024 and thereafter. For details, please refer to the Company’s website(https://www.nifco.com/en/csr/governance/pdf/2024NominationPolicies.pdf).

(4) Status of Accounting Auditor<a> Name

KPMG AZSA LLC<b> Amount of Compensation
Amount paid
Amount of compensation for the Accounting Auditor for the current fiscal year

100 million yen

Total amount of money and other property benefits owed by the Company andits subsidiaries to the Accounting Auditor

119 million yen(Notes) 1. In the auditing contract between the Company and the Accounting Auditor, the amount of audit fees, etc. for audits conducted under the Companies Act andthose conducted under the Financial Instruments and Exchange Act is not clearly differentiated, and therefore the total amount of these fees, etc. for the
Accounting Auditor for the current fiscal year is stated.
2. The Audit and Supervisory Committee of the Company have decided to agree on the amount of compensation paid to the Accounting Auditor after conducting
necessary verification of the appropriateness of the amount by comparing the performance of the Accounting Auditor and the amount of compensation paidby peer companies to their auditors.
3. Fourteen of the Company’s significant subsidiaries, including Nifco America Corporation and Nifco South Korea Inc., are audited by certified public
accountants or auditing firms (including those with equivalent qualifications in foreign countries) other than the Accounting Auditor of the Company.

<c> Details of Non-audit Services
Not applicable.

<d> Policy on Decisions of Dismissal or Non-Reappointment of Accounting Auditor
If the Accounting Auditor is deemed to deserve dismissal by the Audit and Supervisory Committee as stipulated in each itemof Article 340, Paragraph 1 of the Companies Act, or if it is deemed difficult for the Accounting Auditor to perform its duties
properly, the Company will propose the dismissal or non-reappointment of the Accounting Auditor to the General Meeting of
Shareholders as determined by the Audit and Supervisory Committee.

<e> Summary of the Contents of the Liability Limitation Agreement
Not applicable.

- 17 -

(5) System to Ensure the Appropriateness of Business Operations
The Board of Directors has resolved on a system to ensure that the execution of duties by directors complies with laws, regulations andthe Articles of Incorporation, and to ensure the appropriateness of the business operations of the Company as follows:1.

System to ensure that the performance of duties by directors and employees complies with laws, regulations and the
Articles of Incorporation
Under the Nifco Group Charter of Corporate Behavior and under the leadership of the Compliance Committee establishedbased on the Company Compliance Regulations, the Group shall establish an internal system in which directors and employees
carry out their duties with a high sense of ethics, not to mention compliance with laws and regulations.
Under the supervision of the Compliance Committee, when an approach is taken by antisocial forces, the Group shall blockand eliminate them without ever responding to unreasonable demands.

2.

System for the preservation and management of information related to the execution of duties by directors
Based on the Document Management Rules, the Company shall establish a system that ensures the preservation andmanagement of such information so that the decision-making process of directors concerning the execution of duties and details
and the execution status of duties can be reviewed at any time.

3.

Regulations and systems for the management of risk of loss
Led by the Risk Management Committee established based on the Risk Management Basic Regulations, the Group shallidentify and analyze its major risks, consider and implement preventive measures for each risk, and establish a reactive system
to minimize losses in the unlikely event that a risk materializes.
In addition, the Information Security System based on the Information Security Policy shall be promoted primarily by the
Information Security Committee.

4.

System to ensure efficient execution of duties by directors
The directors shall efficiently execute important management matters through thorough discussion in the Board of Directors
and monthly management committee meetings.
In addition, directors shall ensure the efficient execution of their duties by having the executive officers and department heads
in charge attend management committee meetings as necessary in order to receive reports on the status of execution andmanagement of pending issues and give appropriate instructions.
The Group shall establish a system that ensures that decisions, policies and instructions by directors will be communicated to
all corners of the organization through such communication, and the execution of duties by executive officers and other senior
employees will be conducted in an integrated and efficient manner.

5.

System to ensure the appropriateness of business operations in the corporate group
In accordance with the Regulations on the Authority of Affiliates in Japan and abroad, the directors shall accurately ascertain
the status of subsidiaries belonging to the corporate group and manage them appropriately.
Also, each month, directors shall receive not only a qualitative report on performance but also a qualitative report on customers,
products, etc. Furthermore, when necessary, directors and senior employees shall visit subsidiaries, including those overseas,
to identify and resolve problems.

6.

Matters relating to the system for directors and employees who assist with the duties of the Audit and Supervisory
Committee, the independence of such employees from the directors, and the effectiveness of instructions to such
employees
When the Audit and Supervisory Committee requests staff, the Board shall coordinate their execution of duties with utmost
respect to such request. The employees designated as staff members shall preferentially perform the services directed by the
Audit and Supervisory Committee, and shall not be subject to the direction of a director (excluding directors who are Audit andSupervisory Committee Members) in connection with the services so directed.
In addition, prior consent from the Audit and Supervisory Committee shall be obtained for personnel changes and personnel
evaluations of employees designated as staff members.

- 18 -

7.

System for directors (excluding directors who are Audit and Supervisory Committee Members) and employees toreport to the Audit and Supervisory Committee
The Board of Directors shall ensure that directors and employees are fully aware of their obligations to report important mattersto the Audit and Supervisory Committee. In addition, in accordance with the Nifco Group Internal Reporting Regulations, theBoard of Directors shall set up internal and external whistleblowing contact point to collect information widely on complianceviolations.
Information received by the whistleblower contact point shall be reported to the Audit and Supervisory Committee. The Groupshall ensure that the whistleblower will not be subjected to adverse dispositions or unfair treatment on the basis of the report.
Full-time members of the Audit and Supervisory Committee shall attend management committee meetings of operating
departments as well as the Board of Directors to receive reports on the execution status of duties conducted by directors andexecutive employees. The full-time member of the Audit and Supervisory Committee shall inspect all the documents forapproval in advance and shall ask questions and receive reports from directors or employees in charge regarding the contentsof the documents for the approval.

8.

System to ensure that audits by the Audit and Supervisory Committee are conducted effectively
The Representative Director and other directors shall regularly exchange views with the Audit and Supervisory Committee,
which in turn shall regularly discuss with the Internal Audit Department. In addition, the Audit and Supervisory Committee
and the Internal Audit Department shall consult and review with the Accounting Auditor and, as necessary, discuss andexchange views with the audit departments of domestic and foreign subsidiaries.
Expenses, etc. incurred in the execution of duties by members of the Audit and Supervisory Committee shall be dealt withappropriately and promptly.

(6) Overview of the Operational Status of the System for Ensuring the Appropriateness of Business
Operations
The Company has developed the internal control system described above, and based on the basic policy, the following specificinitiatives are being implemented.

<a> Efforts to Ensure Proper and Efficient Execution of Duties
In principle, the Board of Directors meets once a month, and the management committee bodies, composed of full-time officers
and others, deliberate on each proposal, supervise the status of business execution, and exchange opinions, thus ensuring theeffectiveness of decision-making and supervision.

<b> Efforts to Ensure the Effectiveness of Audits Conducted by the Audit and Supervisory Committee
The Audit and Supervisory Committee conducts audits in accordance with its audit plan established by the Audit andSupervisory Committee, and by attending meetings of the Board of Directors and regularly exchanging information with the
Accounting Auditor and the Internal Audit Department, it audits the execution of duties by directors, develops the system forinternal control, and monitors the operation of the system.

<c> Initiatives for Internal Control over Financial ReportingIn accordance with the audit plan for internal controls, the Internal Audit Department conducts internal control assessments toensure the reliability and appropriateness of financial reporting across the Group, and reports the assessment results to theBoard of Directors.

(7) Basic Policy on Control of the Company
Not applicable.

(8) Basic Policy on Determination of Dividends of Surplus
The Company has adopted a dividend policy of targeting approximately 30% of consolidated profit. The reason for adopting this policy
is that the contribution of overseas subsidiaries to the consolidated profit has increased due to the progress of globalization of the Group,
so that a payout ratio based on consolidated profit rather than non-consolidated profit of the Company contributes to shareholder returns.
The year-end dividend for the current fiscal year will be 32 yen per share. Together with the interim dividend of 32 yen per sharealready distributed, the annual dividend becomes 64 yen per share.

- 19 -

Consolidated Financial Statements
Consolidated Balance Sheet (as of March 31, 2024)
Item

Current
period(Reference)Previous Difference
periodAssetsCurrent assets(Million yen)

Item

(Reference)Previous Difference
periodCurrent
periodLiabilities
269,806

243,668

26,137

149,784

129,793

19,991

1,750

1,668

82

Electronically recordedmonetary claims–operating
Accounts receivable–trade

8,114

7,771

343

57,41052,262

5,148

Current liabilities
Notes and accounts
payable–trade
Short-term borrowings
Current portion of longterm borrowings
Accounts payable–other

6,543

5,190

1,353

Contract assets

1,171

786

384

Income taxes payable

5,523

5,329

193

Securities

1,144

691

452

Contract liabilities

4,899

4,240

658

Provision for bonuses
Allowance for losses on
business transfer
Other

2,924

2,517

407

10,068－10,068

11,924

10,277

1,647

Non-current liabilities

49,262

61,278(12,015)

Bonds payable

35,00035,000－Cash and deposits
Notes receivable–trade

Merchandise and finishedgoods

27,41427,966(552)

Work in process

3,173

3,226

(52)

84,091

71,744

12,346

26,601

25,076

1,525

5,529

8,903

(3,374)

10,075

10,209(134)

Raw materials and supplies

10,28910,020

269

Other

9,844

9,742

102

Allowance for doubtful
accounts

(292)

(261)

(31)

Long-term borrowings

285

10,345(10,060)

Deferred tax liabilities

6,344

7,175

(830)

Retirement benefit liability

1,886

1,818

67

Other

5,746

6,938

(1,192)

Total liabilities

133,353

133,023330
9,017

Non-current assets

110,599

115,482(4,882)

Property, plant and equipment

96,953104,921(7,967)

Buildings and structures

45,618

48,118(2,500)Machinery, equipment andvehicles

17,675

19,780(2,105)Tools, furniture and fixtures

3,966

4,426

(460)

Shareholders’ equity

218,983

209,966

155

Share capital

7,290

7,290

－

－

13,908(13,908)

Mold

4,614

4,458

Net assets

18,97318,502

470

Capital surplus

46

44

2

Retained earnings

215,302

208,459

6,842

Construction in progress

2,851

2,913

(62)

(3,608)(19,691)

16,083

Other

3,207

6,676

(3,468)24,712

13,585

11,127

Intangible assets

1,407

1,887

(480)

Goodwill

－

467

(467)

Treasury shares
Accumulated othercomprehensive income
Valuation difference on
available-for-salesecurities
Deferred gains or losses onhedges
Revaluation reserve forland
Foreign currencytranslation adjustment
Remeasurements ofdefined benefit plans
Non-controlling interests

2,028

737

1,291

(21)

(63)

42

6

6

－

23,01913,002

10,017

(320)

(96)

(223)

3,356

2,576

780

Total net assets

247,052

226,127

20,924

Total liabilities and net assets

380,405

359,150

21,255Land
Leased assets

Other
Investments and other assets

Investment securities
Deferred tax assets
Retirement benefit assets
Other
Allowance for doubtful
accounts
Total assets

1,407

1,419

(12)

12,238

8,673

3,564

4,764

3,317

1,446

1,847

963

884

2,829

1,664

1,164

2,797

2,728

69

(0)

(0)

0

380,405

359,150

21,255(Note) Differences from the previous fiscal year are presented for reference.

- 20 -

Consolidated Statement of Income (April 1, 2023, to March 31, 2024)
Item(Million yen)Previous period(for reference)

Current period

Difference

Net sales

371,639

321,771

49,868

Cost of sales

269,936

235,927

34,008Gross profit

101,70385,843

15,860

Selling, general and administrative expenses

57,77751,403

6,373

Operating profit

43,92534,4399,486

Non-operating income

6,838

4,538

2,300

Interest income

1,369

527

841

61

413

(351)

Foreign exchange gains

4,383

2,315

2,068

Other

1,023

647

375

Non-operating expenses

1,098

1,101

(2)

Interest expenses

720

520

200

Gain on valuation of investment securities

Other
Ordinary profit

378

580

(202)

49,66537,876

11,788(82)

Extraordinary income

76

158

Gain on sale of non-current assets

76

42

33

Insurance claim income

-

116

(116)

Extraordinary losses

18,765

2,378

16,387

Impairment losses

8,531

1,903

6,628

165

128

36

Business restructuring expenses

-

317

(317)

Loss on suspension of operations due to COVID19

-

28

(28)

Loss on sale and retirement of non-current assets

Allowance for losses on business transfer

10,068-10,06830,97535,657(4,681)

Income taxes–current

13,901

12,6701,231

Income taxes–deferred(2,212)855(3,068)

Profit19,286

22,130(2,844)

Profit attributable to non-controlling interests

1,033

960

73

Profit attributable to owners of parent

18,252

21,170(2,917)

Profit before income taxes(Note) Differences from the previous fiscal year are presented for reference.

- 21 -

Consolidated Statement of Changes in Equity (April 1, 2023, to March 31, 2024)(Million yen)

Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity13,908208,459(19,691)

209,966

7,290

Changes during the fiscal year
Dividends of surplus(6,520)(6,520)

Profit attributable to owners of parent

18,252

18,252

Purchase of treasury shares(3,037)(3,037)

67

256

323

(18,864)

18,864-

Disposal of treasury shares
Cancellation of treasury shares
Transfer from retained earnings tocapital surplus
Net changes in items other thanshareholders’ equity during the fiscal
year
Total changes during the fiscal year

4,889

Balance at end of period(4,889)--(13,908)

6,842

16,083

9,017

7,290

-

215,302(3,608)218,983

Accumulated other comprehensive income
Valuation
Deferred
Revaluationdifference on
gains or losses reserve foravailable-foron hedges
landsale securities

Balance at beginning of period

737

(63)

6

NonTotal
Total net
Foreign
Remeasureme accumulated controlling
assetscurrency
nts of defined
otherinterests
translation
benefit plans comprehensiv
adjustmente income
13,002(96)

13,5852,576

226,127

Changes during the fiscal year
Dividends of surplus(6,520)

Profit attributable to owners of parent

18,252

Purchase of treasury shares(3,037)

Disposal of treasury shares

323

Cancellation of treasury shares
Transfer from retained earnings tocapital surplus
Net changes in items other thanshareholders’ equity during the fiscal
year
Total changes during the fiscal year
Balance at end of period

1,291

42

-

10,017(223)

11,127780

11,907

1,291

42

-

10,017(223)

11,127780

20,924

2,028

(21)

6

23,019(320)

24,712

3,356

247,052- 22 -

Notes to Consolidated Financial Statements
1. Notes on Important Matters That Serve As the Basis for Preparation of Consolidated Financial Statements(1) Scope of Consolidation<a> Consolidated Subsidiaries
i. Number of Subsidiaries
ii. Names of Major Consolidated Subsidiaries

50
Nifco America Corporation
Nifco Korea Inc.
Simmons Co., Ltd.

<b> Non-consolidated Subsidiaries
i. Name of Non-consolidated Subsidiary
Breezeway Capital Inc.
ii. Reasons for Exclusion from the Scope of Consolidation
The non-consolidated subsidiary is excluded from the scope of consolidation
because it is small in size and its total assets, net sales, profit and loss (amountcommensurate with equity) and retained earnings (amount commensuratewith equity) have little impact on the consolidated financial statements andare immaterial as a whole.
<c> Status of Companies, etc., Which Have Not Become Subsidiaries Although the Company Owns the Majority of the
Voting Rights
There are no such companies.
(2) Application of the Equity Method<a> Companies, etc. to Which the Equity Method Is Applied
i. Number of Companies or Affiliates to Which the Equity Method Is Applied
1
ii. Names of Major Companies, etc.
Nichiei Seiki Co., Ltd.
<b> Non-consolidated Subsidiary or Affiliate to Which the Equity Method Is Not Appliedi. Name of Non-consolidated Subsidiary
Breezeway Capital Inc.
ii. Reasons for Not Applying the Equity Method The equity method is not applied to the company because excluding it fromthe application of the equity method has little impact on the consolidated
financial statements and is immaterial as a whole, in view of its profit andloss (amount commensurate with equity) and retained earnings (amountcommensurate with equity).
<c> Status of Companies Where the Company Owns No Less than 20/100 and No More than 50/100 of Voting Rights but
That Are Not Affiliated
There are no such companies.
<d> Special Notes on Equity Method Application Procedures
For equity method affiliates with a different closing date from theconsolidated closing date, the financial statements for the most recent fiscal
year of each company are used.
(3) Changes in Scope of Consolidation and Scope of Application of the Equity Method<a> Change in Scope of Consolidation
Companies excluded from the scope of consolidation due to liquidation during the current period
Nifco Trading Ltd.
Nifco (Chongqing) Limited Liability Company<b> Change in Scope of Equity Method There are no such companies.
(4) Business Year of Consolidated Subsidiaries
The following consolidated subsidiaries have different closing dates:
Companies that close accounts on December 31
Nifco America Corporation
Nifco Korea USA Inc.
Nifco UK Ltd.
Nifco Poland Sp. z o.o.

- 23 -

Nifco Germany GmbH
Shanghai Nifco Plastic Manufacturer Co., Ltd.
Dongguan Nifco Co., Ltd.
Tifco (Dongguan) Co., Ltd.
Beijing Nifco Co., Ltd.
Nifco (HK) Ltd.
Nifco Taiwan Corporation
Nifco Korea Inc.
Nifco (Thailand) Co., Ltd.
Union Nifco Co., Ltd.
Nifco Manufacturing (Malaysia) Sdn. Bhd.
Nifco Vietnam Ltd
Simmons Bedding & Furniture （HK） Limited
27 other companies
For these companies, the most recent financial statements available at the closing date are used in preparing the consolidated financial
statements. However, for significant transactions that occurred during the period from January 1, 2024, to the consolidated closing dateof March 31, 2024, adjustments necessary for consolidation have been made.
(5) Matters Related to Accounting Policies<a> Valuation Standards and Methods for Significant Assets
i. Valuation Standards and Methods for Securities- Held-to-maturity debentures
The amortized cost method (straight-line method) is used.
- Other securities
Securities other than stocks, etc. The market value method is used (all valuation differences are reported directly towith no market value
net assets, and the cost of sale is determined primarily by the moving-averagemethod).
Stocks, etc. without market value The cost method based on the moving-average method is mainly used.
ii. Valuation Standards and Methods for Derivatives- Derivatives The market value method is used.
iii. Valuation Standards and Methods for Inventories- Merchandise, finished goods,
The cost method based on the gross average method is mainly used. (For values inwork in process, raw materials the balance sheet, devaluation based on a decline in profitability is used.)and supplies (excluding
inventories related to molds)- Inventories related to molds
The cost method based on the individual method is used. (For values in the balance
sheet, devaluation based on a decline in profitability is used.)<b> Depreciation Method for Significant Depreciable Assets
i. Property, plant and equipment
The straight-line method is used for the Company and subsidiaries in Japan, and the(excluding leased assets)straight-line method is mainly used for overseas subsidiaries.
Principal useful lives are as follows:
Buildings and structures
Machinery, equipment and vehicles

1 to 50 years
2 to 20 years

Tools, furniture and fixtures
Mold

1 to 20 years
1 to 11 years- 24 -

ii. Intangible assets(excluding leased assets)- Software for internal use- Other intangible fixed assets
iii. Leased assets

The straight-line method based on the internal estimated useful life (5 years) is used.
Depreciation is made based on economic useful lives.
The straight-line method is used, with the lease term as the useful life and zero as
the residual value.

<c> Basis for Recognition of Significant Provisions
i. Allowance for doubtful accounts In order to prepare for possible loss from bad debts including loans receivable,
uncollectible amounts are estimated for general receivables based on the historical loan
loss ratio, and for specific receivables such as doubtful receivables based on individual
estimates of collectability.
ii. Provision for bonuses
For the Company and certain consolidated subsidiaries, the amount is recorded based on
the estimated amount to be paid to cover the payment of bonuses to employees.
iii. Allowance for losses on business transfer
In order to prepare for expected losses arising from the transfer of the business, theCompany has recorded an amount expected to be incurred in the future.
<d> Basis for Recognition of Significant Revenues and Expenses
The details of the principal performance obligations of the Company and its consolidated subsidiaries in relation to revenue
from contracts with customers and the ordinary point in time at which such performance obligations are satisfied (the ordinary
point in time at which revenue is recognized) are as follows:<a> Industrial Plastic Parts & Components BusinessIn the industrial plastic parts & components business, the Company mainly manufactures and sells industrial plastic fasteners
and precision plastic molded parts, and provides customers with components used in the automotive and home applianceindustries.
For the sale of these products, we consider that the performance obligation is delivering the products to the customer basedon the sales contract with the customer. We recognize revenue at the time of delivery of the products because, in principle,
the customer acquires control over the products at the time of delivery and we determine that the performance obligation issatisfied at this point in time. Performance obligations over which a transaction price is distributed are sold independently.
In the calculation of transaction prices, revenue is recognized on the basis of the amount of consideration promised in thecontract with the customer from which the amount of discount is deducted.
These amounts of promised consideration are not adjusted because they do not include significant financial factors.
Consideration for performance obligations is generally received within one year, depending on when the performanceobligations are satisfied and the customer’s payment terms.
For transactions of paid supply goods subject to repurchase agreements, inventories are recognized for goods remaining at
supplied parties as financial transactions, and “other current liabilities” are recognized for inventories of paid supply goods
remaining at the end of period at supplied parties. For transactions of paid supply goods, only the processing cost is recognized
as revenue on a net basis.
<b> Bed and Furniture BusinessIn the bed and furniture business, we manufacture and sell beds and purchase and sell bedding and furniture, and supply themto mass merchandisers, specialty stores, department stores, hotels, etc.
For the sale of these products or merchandise, we consider that the performance obligation is delivering the products ormerchandise to the customer based on the sales contract with the customer. We recognize revenue at the time of delivery of
the products or merchandise because, in principle, the customer acquires control over the products or merchandise at the timeof delivery and we determine that the performance obligation is satisfied at this point in time. Performance obligations tofulfill transaction prices are usually sold independently.
In the calculation of transaction prices, revenue is recognized on the basis of the amount of consideration promised in thecontract with some customer from which the amount of sales promotion expenses is deducted.
These amounts of promised consideration are not adjusted because they do not include significant financial factors.
Consideration for performance obligations is generally received within one year, depending on when the performanceobligations are satisfied and the customer’s payment terms.
For some transactions of paid supply goods, inventories are continued to be recognized for goods remaining at supplied
parties as financial transactions, and “other current liabilities” are recognized for inventories of paid supply goods remaining
at the end of period at supplied parties.

- 25 -

<e> Other Significant Matters for Preparation of Consolidated Financial Statements
i. Accounting for
Retirement Benefits

ii. Standards for theTranslation of
Significant Foreign
Currency Assets or
Liabilities into
Japanese Currency
iii. Method of Hedge
Accounting

iv. Amortization of
Goodwill

In calculating retirement benefit obligations, the benefit calculation formula is mainly used
to attribute estimated retirement benefits to the period up to the end of the current period.
The cost of past service is expensed from the fiscal year using the straight-line method overa fixed number of years within the average remaining service years at the time of expensing,but some consolidated subsidiaries expense immediately in the fiscal year.
Actuarial gains and losses are expensed from the fiscal year using the straight-line method
over a fixed number of years (10 years) within the average remaining service years at thetime of expensing, but some consolidated subsidiaries expense immediately in the fiscal
year or use the straight-line method over 5 to 10 years starting from the next fiscal year.
Unrecognized actuarial gains and losses and unrecognized past service cost are recognized
in remeasurements of defined benefit plans in accumulated other comprehensive income in
net assets, with tax effect adjustment.
Some consolidated subsidiaries use the simplified method.
Foreign currency receivables and payables are translated into Japanese yen at the spot
exchange rate on the balance sheet date, and translation differences are recognized in profit
or loss.
Assets and liabilities of foreign subsidiaries are translated into Japanese yen at the year-end
spot exchange rates. Revenues and expenses are translated at the average exchange rates
during the period, and translation differences are included in foreign currency translation
adjustments in non-controlling interests and net assets.
<a> Method of Hedge Accounting
The Company employs deferred hedge accounting. In addition, when hedging of foreignexchange fluctuation risks satisfies the requirements for designation, we apply designation,
and when interest rate swaps satisfy the conditions for exceptional accounting, we apply
exceptional accounting.
<b> Hedging Instruments and Hedged Items
The hedging instruments and hedged items for which hedge accounting was applied during
the current period are as follows:
Hedging instruments: Currency swaps, interest rate swaps
Hedged item: Loans receivable<c> Hedging Policy
The Company primarily hedges foreign exchange risks and interest rate risks in accordancewith its internal rule, Derivative Handling Regulations. Consolidated subsidiaries areauthorized by the Company in accordance with the Regulations on the Authority to Operate
Domestic Subsidiaries and Affiliates and the Regulations on the Authority to Operate
Overseas Subsidiaries and Affiliates.
<d> Method of Evaluating Hedge EffectivenessValidity is assessed in accordance with the Practical Guidelines for Accounting Standardsof Financial Instruments (Japanese Institute of Certified Public Accountants).
However, evaluating hedge effectiveness is omitted for transactions for which exceptional
accounting or designation as defined in the Financial Instruments Accounting Standards,
etc. is applied as hedge accounting.
Goodwill is amortized on a straight-line basis over the estimated period in which the effectof the investment is realized.

- 26 -

2. Notes on Changes in Accounting Policies
Not applicable.
3. Notes on Changes in Presentation(Consolidated statement of income)“Gain on valuation of derivatives” and “Subsidy income” under “Non-operating income” and “Compensation expenses” under “Nonoperating expenses,” which were presented independently in the previous fiscal year, are included in “Other” under “Nonoperating
income” and “Other” under “Non-operating expenses,” respectively, from the current fiscal year due to monetary insignificance.
4. Notes on Accounting Estimates
Recognition of impairment losses on non-current assets held by Nifco Germany GmbH and Nifco KTW America Corporation(1) Amount Recorded in the Consolidated Financial Statements for the Current Period
Nifco Germany GmbH
Nifco KTW America Corporation

Book value
Book value

32 million yen
10 million yen

Impairment losses 5,368 million yen
Impairment losses 3,162 million yen(2) Information on the Content of Significant Accounting Estimates for Identified Items
As described in “6. Notes to Consolidated Statements of Income, Impairment Loss,” due to the conclusion of a business transfer
agreement on Nifco Germany GmbH and Nifco KTW America Corporation, in the event of sale, the business subject to sale is grouped
as a single cash-generating unit.
The assets related to the business subject to this sale were classified and measured as held for sale in accordance with IFRS 5 “Noncurrent Assets Held for Sale and Discontinued Operations.” If a fair value less costs to sell falls below the carrying amount, any
difference between the carrying amount and the fair value less costs to sell is recognized as an impairment loss. As a result of themeasurement, it was found the fair value less costs to sell was less than the carrying amount. Consequently, the carrying amount was
reduced to the fair value less costs to sell and the reduction was recognized as an impairment loss (8,531 million yen).
The estimated fair value less costs to sell for the measurement of impairment loss is calculated based on the business transfer agreement,
etc. Any development in the status of future business transfers may incur additional impairment losses in the consolidated financial
statements for the following fiscal year and beyond.
5. Notes to Consolidated Balance Sheet(1) Assets Pledged as Collateral and Collateralized Debt
<a> Assets Pledged as Collateral
Cash and deposits
56 million yen
Notes receivable–trade
175 million yen<b> Collateralized Debt
Notes payable–trade
185 million yen(2) Accumulated Depreciation of Property, Plant and Equipment 212,299 million yen
Accumulated depreciation of property, plant and equipment includes accumulated impairment losses.
(3) Contingent liability
On-site investigation by Korea Fair Trade Commission
Our Korean consolidated subsidiary was subject to an on-site investigation by the Korea Fair Trade Commission (South Korea) on July
5, 2023 (local time), on suspicion of violating the Monopoly Regulation and Fair Trade Act in relation to trade in industrial plastic parts& components products.
Although the investigation is still ongoing, the results may have an impact on the Group’s business results and financial position.

- 27 -

6. Notes to Consolidated Statement of Income
Impairment losses
Location

Applications

Type

Impairment losses

Nifco Germany GmbH

Industrial Plastic
Parts &
Components

Machinery, equipment and vehicles,
tools, furniture and fixtures, othertangible fixed assets, etc.

5,368 million yen

Nifco KTW America Corporation

Industrial Plastic
Parts &
Components

Buildings and structures, machinery,equipment and vehicles, etc.

3,162 million yen

On March 12, 2024, the Company concluded an agreement with AEQUITA SE & Co. KGaA, headquartered in Munich, Germany, totransfer Nifco Germany GmbH, a consolidated subsidiary, and its subsidiary Nifco KTW America Corporation.
In the event of sale, the business subject to sale is grouped as a single cash-generating unit.
The assets related to the business subject to this sale were classified and measured as held for sale in accordance with IFRS 5 “Noncurrent Assets Held for Sale and Discontinued Operations.” As a result, the fair value less costs to sell was less than the carrying amount.
Consequently, the carrying amount was reduced to the fair value less costs to sell and the reduction was recognized as an impairment
loss (8,531 million yen).
The main items in the breakdown of these are as follows: Nifco Germany GmbH (machinery, equipment and vehicles, 1,552 million
yen; tools, furniture and fixtures, 517 million yen, other tangible fixed assets, 2,048 million yen) and Nifco KTW America Corporation(buildings and structures, 1,896 million yen; machinery, equipment and vehicles, 1,173 million yen).
Allowance for losses on business transfer
The agreement on the transfer of Nifco Germany GmbH, our consolidated subsidiary, and its subsidiary Nifco KTW America
Corporation contractually stipulates that the Company shall waive all loans to both companies upon the completion of the transfer
agreement.
Accordingly, the amount of loss expected to be incurred due to the forgiveness of claims on loans to Nifco KTW America Corporation
at the completion of the transfer agreement is recorded as allowance for losses on business transfer (10,068 million yen).

- 28 -

7. Notes to Consolidated Statement of Changes in Equity(1) Total Number of Shares Issued(Note)Class of shares

Number of shares at the
beginning of the current
periodIncrease in number ofshares during the current
periodDecrease in number ofshares during the current
periodNumber of shares at theend of the current period

Common stock

107,508 thousand shares-

7,251 thousand shares

100,257 thousand shares

The decrease in the number of shares issued of common stock of 7,251 thousand shares was a decrease of 7,251 thousand shares due to the cancellation of treasury
shares in accordance with a resolution of the Board of Directors.

(2) Number of treasury shares(Notes)Class of shares

Number of shares at the
beginning of the current
periodIncrease in number ofshares during the current
periodDecrease in number ofshares during the current
periodNumber of shares at theend of the current period

Common stock

7,577 thousand shares

797 thousand shares

7,344 thousand shares

1,031 thousand shares

1.
2.

3.

4.

The number of shares at the beginning of the current period includes 413 thousand shares of the Company held by the Executive Compensation BIP Trustaccount and 49 thousand shares of the Company held by the Stock Grant ESOP Trust account.
The increase in the number of treasury shares of common stock of 797 thousand shares consists of an increase of 797 thousand shares through a market
purchase of the Company’s own shares in accordance with a resolution of the Board of Directors, and an increase of 0 thousand shares through the purchaseof fractional shares.
The decrease in the number of treasury shares of common stock of 7,344 thousand shares consists of a decrease of 7,251 thousand shares due to the cancellationof treasury shares in accordance with a resolution of the Board of Directors, a decrease of 57 thousand shares associated with sale of the Company shares tothe Employee Stock Ownership Plan, and a decrease of 35 thousand shares as a result of share awards from the Executive Compensation BIP Trust account.
The number of shares at the end of the current period includes 377 thousand shares of the Company held by the Executive Compensation BIP Trust accountand 49 thousand shares of the Company held by the Stock Grant ESOP Trust account.

(3) Dividends of Surplus<a> Dividends Paid
(Resolution)
June 22, 2023
Annual General Meeting of
Shareholders
October 31, 2023
Board of Directors

Class of shares

Total dividends(Million yen)

Common stock

3,313

Common stock

3,207

Dividends per
share (yen)Record date

Effective date

33

March 31, 2023

June 23, 2023

32

September 30, 2023

November 27, 2023

(Notes) 1. The total amount of dividends as resolved at the Annual General Meeting of Shareholders held on June 22, 2023, includes dividends of 13 million yen to the
Executive Compensation BIP Trust account and 1 million yen to the Stock Grant ESOP Trust account.
2. The total amount of dividends as resolved at the Board of Directors meeting held on October 31, 2023, includes dividends of 12 million yen to the Executive
Compensation BIP Trust account and 1 million yen to the Stock Grant ESOP Trust account.

<b> Dividends with a Record Date in the Current Period That Become Effective in the Following Fiscal YearAt the Annual General Meeting of Shareholders to be held on June 20, 2024, the Company proposes the following items
regarding dividends on common stock.
(Resolution)

Class of shares

June 20, 2024
Annual General Meeting Common stockof Shareholders(Note)

Total dividends(Million yen)

Source ofdividends

3,188 Retained earnings

Dividends per
share (yen)Record date

Effective date

32

March 31, 2024

June 21, 2024

The total amount of dividends includes dividends of 12 million yen to the Executive Compensation BIP Trust account and 1 million yen to the Stock Grant ESOP
Trust account.

- 29 -

8. Notes on Financial Instruments
1. Status of Financial Instruments(1) Policy on Measures for Financial Instruments
The Group raises part of its capital expenditures mainly through bank loans and issuing bonds payable. As for fund management, funds
requiring liquidity are invested mainly in checkable deposits, and funds that can be invested over medium- or long-term periods areinvested in debentures and time deposits. We use derivatives to avoid the risks described below, and our policy is not to engage in
speculative transactions.
(2) Details of Financial Instruments and Their Risks
Operating receivables such as notes receivable–trade, electronically recorded monetary claims–operating, and accounts receivable–
trade are exposed to customer credit risk. In addition, operating receivables denominated in foreign currencies arising from overseas
operations are exposed to the risk of foreign exchange fluctuations.
Securities and investment securities are mainly held-to-maturity debentures, government bonds, shares of companies with which wehave business relationships, and investments in investment partnerships. Debentures and listed stocks are exposed to the risk offluctuations in market prices.
Most notes and accounts payable–trade, as well as money unpaid, which are operating payables, are due within one year. Certain
foreign-currency-denominated items are also exposed to foreign exchange fluctuation risk.
Borrowings and bonds payable are principally for the purpose of financing capital expenditures and are redeemed at most five years
after the closing date. A portion of this is exposed to the risk of interest rate fluctuations, which are hedged using derivatives (currency
swaps and interest rate swaps).
Derivatives are mainly currency options, currency swaps, and forward exchange contracts for hedging against foreign exchange
fluctuation risks in foreign-currency-denominated bonds payable, and interest rate swaps for hedging against the risk of fluctuations ininterest rates payable on borrowings. The accounting methods for hedging are described in “1. Notes on Important Matters That ServeAs the Basis for Preparation of Consolidated Financial Statements,” in “(5) Matters Related to Accounting Policies,” under “<e> Other
Significant Matters for Preparation of Consolidated Financial Statements,” in “iii. Method of Hedge Accounting.”(3) Risk Management System for Financial Instruments<a> Management of Credit Risks (Risks Related to Non-performance of Contracts by Business Partners)
With respect to operating receivables, sales managers in each business unit regularly monitor the status of major business
partners, manage due dates and balances for each partner, and promptly identify and mitigate collection concerns arising fromdeteriorating financial conditions. Consolidated subsidiaries are conducting management in the same manner as the Company.
The Company conducts derivative transactions only with highly rated financial institutions in order to mitigate credit risk.
<b> Management of Market Risks (Risks of Fluctuations in Foreign Exchange Rates, Interest Rates, Etc.)
Against the risk of future exchange rate fluctuations principally with respect to foreign currency receivables and payables, theCompany uses currency swaps, and forward exchange contracts within the scope of the outstanding foreign currency
receivables and payables. The Company uses interest rate swaps to reduce the risk of fluctuations in interest rates payable on
borrowings.
With regard to securities and investment securities, we regularly check the market values and the financial conditions of theissuers (partner companies). With regard to securities other than held-to-maturity debentures, we continuously review the status
of holdings in consideration of market conditions and the relationship with partner companies.
Derivatives are executed and managed by the division in charge of funds with the approval of the person with authority inaccordance with the Derivative Handling Regulations.
Consolidated subsidiaries are conducting management in the same manner as the Company.
<c> Management of Liquidity Risks in Funding (Risks of Not Being Able to Make Payments When Due)The department responsible for funding prepares and updates funding plans in a timely manner based on reports from different
departments, and manages liquidity risks by maintaining liquidity on hand, etc. Consolidated subsidiaries are conducting
management in the same manner as the Company.
(4) Supplementary Explanation on Matters Related to Market Values, etc. of Financial Instruments
The market values of financial instruments include values based on market prices and, in the absence of market prices, reasonably
estimated values. Because variable factors are used in the calculation of values, values may change due to the adoption of different
assumptions. Also, the contract amount, etc. for derivatives indicated in “2. Matters Related to Market Values, etc. of Financial
Instruments” does not indicate market risks involved in the derivatives.

- 30 -

2. Matters Related to Market Values, etc. of Financial Instruments
Amount recorded inconsolidated balance sheet(million yen)
(1) Accounts receivable–tradeMarket price (million yen)

Difference (million
yen)

57,41057,399

(10)

1,124

1,124

(0)

(2) Securities and investment securities<a> Held-to-maturity Debentures- Other securities

4,658

4,658

-

63,19363,182(11)(1) Bonds payable

35,00034,091(908)(2) Long-term borrowings(including current portion)

10,36010,353(6)

Total liabilities

45,36044,444

(915)

99

99

-

Total assets

Derivatives(Note 1) Stocks without market value are not included in “(2) Securities and Investment Securities.” The amounts of the financial instruments recorded on the consolidatedbalance sheet are as follows:

Category

Amount recorded in consolidated balance
sheet (million yen)

Unlisted stock

124

Share capital in investment partnerships0(Note 2) Net receivables and payables arising from derivatives are presented on a net basis.

3. Breakdown of Market Values of Financial Instruments by Appropriate Category
The market values of financial instruments are classified into the following three levels according to the observability and importanceof the inputs involved in the calculation of market values.
Level 1 market value: Market value for which the market price, formed in an active market, of the assets or liabilities relevant to thecalculation of the market value is used as the input for the calculation of the market value, amongst theobservable inputs related to the calculation of the market value
Level 2 market value: Market value for which an input, other than that of level 1, relevant to the calculation of the market value isused for the calculation of the market value, amongst the observable inputs related to the calculation of themarket value
Level 3 market value: Market value calculated using an unobservable input relevant to the calculation of the market value
For a market value for which multiple inputs are used that have a significant impact on the calculation of the market value, the market
value is classified based on the input that classifies the market value as the lowest level.

- 31 -

(1) Financial assets and financial liabilities recorded on the consolidated balance sheet at market value(Million yen)
Category

Market value
Level 1

Level 2

Level 3

Total

Securities and investment securities
Other securities
Stocks

4,135

-

-

4,135

Government and local
government bonds

-

-

-

-

Bonds payable

-

-

-

-

Other

-

499

24

523

-

99

-

99

Derivatives
Those related to currencies
Those related to interest rate

-

-

-

-

4,135

598

24

4,757

Those related to currencies

-

-

-

-

Those related to interest rate

-

-

-

-

Total liabilities

-

-

-

-

Total assets
Derivatives(2) Financial assets and financial liabilities recorded on the consolidated balance sheet not at market value(Million yen)
Category
Accounts receivable–tradeMarket value
Level 1

Level 2

Level 3

Total-

57,399-57,399

-

1,124

-

1,124

-

58,524-58,524

Bonds payable-

34,091-

34,091Long-term borrowings(including current portion)-

10,353-

10,353

Total liabilities-

44,444-44,444

Securities and investment securities
Held-to-maturity debentures
Government and local
government bonds
Total assets(Note)

Explanation of valuation techniques used in the calculation of market value and inputs relating to the calculation of market value

Accounts receivable–trade
The market value of accounts receivable–trade is calculated for each fixed period by the present value based on the amount ofreceivables and a discount at an interest rate that takes into account the time to maturity and credit risk, and is classified as Level 2
market value.

- 32 -

Securities and investment securities
Other securities
Listed shares are valued using quoted market prices and, because they are traded in an active market, their market values are classified
as Level 1 market value. On the other hand, the market values of “Other” classified as Level 2 are so classified because they are notconsidered quoted market prices in active markets due to inactive market trade.
Held-to-maturity debentures
Government bonds and local government bonds held by the Company are classified as level 2 market value because they are notconsidered quoted market prices in active markets due to inactive market trade.
Derivatives
The market values of currency swaps are calculated using the discounted present value method using observable inputs such as
interest rates and exchange rates, and are classified as Level 2 market values.
Bonds payable
The market value of bonds payable issued by the Company is calculated by discounting the sum of the principal and interest at aninterest rate that takes into account the time to maturity of the bonds payable and the credit risk, and is classified as Level 2 market
value.
Long-term borrowings
The market value of long-term borrowings is calculated by discounting the sum of the principal and interest at an interest rate thattakes into account the time to maturity of the borrowings and credit risk, and is classified as Level 2 market value.

- 33 -

9. Notes on Revenue Recognition(1) Breakdown of Revenue from Contracts with Customers(Million yen)
Reported segments
Industrial Plastic Parts& Components
Revenue from contracts with customers

334,729

36,910371,639---

334,729

36,910371,639

Other revenue
Net sales to external customers

Total

Bed and Furniture
Business(2) Basics for Understanding Revenue
1. As stated in “Matters Related to Accounting Policies,” in “<d> Basis for Recognition of Significant Revenues and Expenses.”(3) Information for Understanding the Amounts of Revenue for the Current and Subsequent Period
1. Balance of Contract Assets and Contract Liabilities(Million yen)
Current period
Claims arising from contracts with customers (beginning balance)

61,702Claims arising from contracts with customers (ending balance)

67,275Contract assets (beginning balance)

786

Contract assets (ending balance)

1,171

Contract liabilities (beginning balance)

4,240

Contract liabilities (ending balance)

4,899

Contract assets are the rights of the Company and its consolidated subsidiaries to receive payment for the delivery of products andmerchandise to customers whose sales contracts have been completed as of the end of the period but have not been billed. Contract
assets are transferred to receivables arising from contracts with customers when the rights of the Company and its consolidated
subsidiaries become unconditional. Contract liabilities are advances received from customers in sales contracts. Contract liabilities
are reversed primarily at the recognition of revenue.
The amount of revenue recognized during the current period included in the balance of contract liabilities at the beginning of theperiod is 2,866 million yen.
The main reason for the increase in contract assets of 384 million yen in the current period is that the increase by new contracts
exceeded the decrease by transfer to receivables arising from contracts with customers. The main reason for the increase in contract
liabilities of 658 million yen in the current period is the increase in advances received exceeded the decrease by revenue recognition.
2. Transaction Price Allocated to the Remaining Performance Obligation
The outstanding performance obligations amounted to 11,991 million yen as of March 31, 2024. Such performance obligations
relate to the manufacture and sale of products in the industrial plastic parts & components, and approximately 81% of their revenue
is expected to be recognized within one year after the end of the period and almost all of their revenue within two years.
10. Notes on Per Share Information(1) Net assets per share(2) Profit per share

2,455.97 yen
183.26 yen(Note)

Among shareholders’ equity, the Company shares held in trust are recorded as treasury shares, and in the calculation of profit per share, such treasury shares are
excluded in calculating the average number of shares during the period, and in the calculation of net assets per share, such treasury shares are excluded in calculating
the total number of shares outstanding at the end of the period.
Average number of such treasury shares during the period, excluded in the calculation of profit per share:
437,621 shares
Number of such treasury shares at the end the period, excluded in the calculation of net assets per share:
427,549 shares- 34 -

11. Notes to Significant Subsequent Events(Purchase of treasury shares)
The Company purchased treasury shares in accordance with the resolution of the meeting of the Board of Directors held on March 12,2024. The treasury shares purchased after the balance sheet date are as follows.
1. Reason for treasury share acquisition
To enhance capital funds efficiency and enable a flexible financial policy in response to changes in the business environment.
2. Status of treasury share purchase
(1)
(2)
(3)
(4)
(5)

Class of shares for purchaseTotal number of shares purchased
Total share acquisition price
Acquisition period
Acquisition method

Common shares of the Company
399,400 shares
1,520,961,200 yen
April 1, 2024 to April 25, 2024
Market purchase on the Tokyo Stock Exchange(Reference)
1. Contents of the resolution by the meeting of the Board of Directors held March 12, 2024
(1)
(2)
(3)
(4)
(5)

Class of shares for purchase
Common shares of the Company
Total number of shares authorized for purchase550,000 shares (maximum)(Share of total number of issued shares [excluding treasury shares]: 0.55%)
Total share acquisition price
2,000,000,000 yen (maximum)
Acquisition period
March 14, 2024 to April 30, 2024
Acquisition method
Market purchase on the Tokyo Stock Exchange

2. Cumulative total of treasury shares acquired based on the above resolution at the Board of Directors Meeting (as of April
26, 2024)(1)(2)

Total number of shares purchased
Total share acquisition price522,800 shares
1,999,829,300 yen(Transfer of important business)
The Company, at the Board of Directors meeting held on March 12, 2024, resolved to transfer our consolidated subsidiary Nifco
Germany GmbH, and its subsidiary Nifco KTW America Corporation,etc. to AEQUITA SE & Co. KGaA, headquartered in Munich,Germany, and completed the business transfer on April 15, 2024.
(1) Reasons for Business Transfer
The Company had worked on improving earnings of the business for German customers to respond to changes in the market
environment and customer needs of the automotive industry in Europe, but we are not able to get expected results and the businessenvironment has become increasingly severe. Under these circumstances, the Company has determined that the transfer of thebusiness to AEQUITA SE & Co. KGaA will contribute to the enhancement of the Group’s shareholder value by taking into accountthe sustainable growth of the business and employees of the subsidiary subject to transfer.
(2) Name of a transferee company
AEQUITA SE & Co. KGaA
(3) Business of the company to be transferred
Manufacturing and sales of industrial plastic parts & components(4) Timing of the transfer
April 15, 2024
(5) Impact on earnings
During the current period, the Company recognized impairment losses of 8,531 million yen and allowance for losses on business
transfer of 10,068 million yen as extraordinary losses.

- 35 -

12. Other Notes(Stock-based compensation system for officers)
On August 22, 2016, the Company introduced a stock-based compensation system (hereafter referred to as “the System”) for its
directors and other officers to enhance their motivation to contribute to the improvement of the Company’s medium- and long-term
performance and the increase of corporate value. Because the System was to become ineffective after August 31, 2019, the Board of
Directors at its meeting held on May 20, 2019, resolved to propose the continuation and partial amendment of the System to the 67th
Annual General Meeting of Shareholders held on June 21, 2019, and the proposal was approved at the meeting.
Because of transition to a company with an Audit and Supervisory Committee, the Board of Directors meeting held on May 20, 2021,
resolved to abolish the compensation amount under the System for directors and executive officers at the time, to newly establish acompensation amount under the System for directors who are not members of the Audit and Supervisory Committee and executive
officers (excluding external directors and overseas residents), and to submit a proposal for continuation of the System after partial
amendments at the 69th Annual General Meeting of Shareholders held on June 24, 2021, and the proposal was approved at the meeting.
1

Transaction Overview

The system adopts a structure known as Board Incentive Plan (BIP) Trust (hereafter referred to as the “BIP Trust”). The BIP Trust is
an incentive plan for officers and it is based on the U.S. Performance Share and Restricted Stock plans. In the BIP Trust, shares of theCompany acquired by the BIP Trust and the cash equivalent of the conversion value of the shares are delivered upon the retirement of
directors and other officers, in principle, according to their rank and the achievement of their performance goals.
For the Company shares held in the trust, the voting rights are not exercised during the trust period to ensure the neutrality of the
management.
2Company Shares Held in the Trust

The Company shares held in the trust are recorded as treasury shares in net assets at the carrying amount under the trust (excluding theamount of incidental expenses). The carrying amount and number of such treasury shares are 1,143 million yen and 377,810 shares forthe current period.
(Stock-based compensation system for employees)
On August 27, 2018, the Company introduced a stock-based compensation system (hereafter referred to as “the System”) for its
employees to enhance their motivation to contribute to the improvement of the Company’s medium- and long-term performance andthe increase of corporate value.
1

Transaction Overview

The System adopts a structure called Employee Stock Ownership Plan (ESOP) Trust (hereafter referred to as the “ESOP Trust”). The
ESOP Trust is an employee incentive plan, and it is based on the U.S. ESOP system. The System delivers Company shares acquired by
the ESOP Trust to executive employees who satisfy certain requirements and employees with high performance contributions, inaccordance with share delivery rules that are prescribed in advance.
Because the Company will fully fund the acquisition of Company shares by the trust, there will be no payment by employees.
With the introduction of the ESOP Trust, employees receive the economic benefits from the rise in Company stock prices, which is
expected to encourage employees to carry out their work with an awareness of the stock price and to increase their work motivation.
In addition, the intention of employees, who are potential beneficiaries, is reflected in the exercise of voting rights on Company sharesbelonging to the trust assets of the ESOP Trust, which is effective as a corporate value enhancement plan that encourages employees
to participate in management.
2Company Shares Held in the Trust

The Company shares held in the trust are recorded as treasury shares in net assets at the carrying amount under the trust (excluding theamount of incidental expenses). The carrying amount and number of such treasury shares are 161 million yen and 49,739 shares forthe current period.

- 36 -

Non-consolidated Financial Statements
Balance Sheet (as of March 31, 2024)
Item
AssetsCurrent assets
Cash and deposits
Notes receivable–trade
Accounts receivable–trade
Electronically recordedmonetary claims–operating
Merchandise and finished
goodsWork in process
Raw materials and supplies
Short-term loans receivablefrom subsidiaries andassociates
Accounts receivable–other
Other
Allowance for doubtful
accounts
Non-current assets
Property, plant andequipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture andfixtures
Mold
Land
Construction in progress
Other
Intangible assets
Software
Other
Investments and other assets
Investment securities
Shares of subsidiaries andassociates
Long-term loans receivablefrom subsidiaries andassociates
Long-term accounts
receivable–other
Deferred tax assets
Other
Allowance for doubtful
accounts
Total assets

Current
period(Million yen)

(Reference)Previous Difference
periodItem106,273
69,407
243
20,093

108,770
70,980285
19,206(2,497)(1,572)
(42)
887

5,085

4,584

500

4,804

6,629

(1,824)

438
440

515
435

(77)
5

11,037

2,023

9,013

2,716
2,075

2,889
1,219

(173)
856

(10,068)-(10,068)

81,332

93,713(12,380)

29,50530,896(1,390)14,945495
3,003
4

15,780
544
3,299
3

(835)
(48)
(295)
0

636

883

(246)

513
8,718
1,169
18
381
168
213
51,445
4,193

559
8,737
1,063
23
224
199
25
62,591
2,318

(46)
(18)
105
(5)
156
(31)
187
(11,146)
1,875

39,58952,987(13,398)

4,014

9,162

(5,147)

96

114

(18)

2,467
1,594

184
1,196

2,283
397

(510)

(3,372)

2,862

187,605

202,483(14,877)

Liabilities
Current liabilities
Accounts payable–trade
Electronically recorded
obligations–operating
Accounts payable–otherAccrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Electronically recorded
equipment obligations
Accounts payable–facilities
Current portion of longterm borrowings
Refund liabilities
Other
Non-current liabilities
Bonds payable
Long-term borrowings
Long-term borrowings
from subsidiaries andassociates
Accrued retirement benefits
for directors (and otherofficers)
Asset retirement obligations
Provision for share awards
Provision for share awards
for directors (and otherofficers)
Other
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for special accountfor tax purpose reduction
entry of non-current assets

General reserve
Retained earnings
brought forward
Treasury shares
Valuation and translation
adjustments
Valuation difference on
available-for-sale securities
Total net assets
Total liabilities and net assets(Note) Differences from the previous fiscal year are presented for reference.

- 37 -(Reference)Previous Difference
periodCurrent
period29,181
6,275

28,822
9,463

358(3,187)

3,845

1,582

2,263

2,785
422
2,926
143
1,852

1,853
409
2,186
78
1,518

931
13
740
64
333

156

134

22

745

334

410

10,00010,000-26
36,81135,000-1,229
3146,73435,00010,000(1,229)(4)(9,922)(10,000)

757

667

89

6

6

-

75
68

75
34

(34)

768

831

(63)

136
65,992

11975,55717(9,564)

119,603
7,290
151
151
115,770
1,793
113,977

126,205
7,290
14,204151
14,052
124,402
1,793
122,609(6,601)(14,052)(14,052)(8,632)(8,632)

2,025

2,095

(70)

44,70044,700-67,25275,814(8,562)(3,608)(19,691)

16,083

2,009

720

1,288

2,009

720

1,288

121,612
187,605

126,926
202,483(5,313)(14,877)

Statement of Income (April 1, 2023, to March 31, 2024)
Item(Million yen)Previous period(for reference)

Current period

Difference

Net sales

98,691

86,391

12,299

Cost of sales

69,32262,5496,772

Gross profit

29,36923,842

5,527

Selling, general and administrative expenses

17,504

16,869635

Operating profit

11,864

6,972

4,892

Non-operating income

19,82819,186641

Interest and dividend income

14,582

16,388(1,805)

Foreign exchange gains

4,696

2,317

2,379

Reversal of allowance for doubtful accounts

102

-

102

Other

446

481

(34)

Non-operating expenses

679

3,770

(3,090)Interest expenses

161

161

0

Rental costs on real estate

459

458

0

Provision of allowance for doubtful accounts

-

3,090

(3,090)

Other

58

60

(1)

31,01322,3898,624

Extraordinary income

371

-

371

Gain on sale of non-current assets
Gain on liquidation of subsidiaries andassociates
Extraordinary losses
Loss on sale and retirement of non-current
assetsLoss on valuation of shares of subsidiaries andassociates
Provision of allowance for doubtful accounts

46

-

46

325

-

325

26,442

65

26,37794

65

29

19,039-19,039

7,308

-

7,308

Profit before income taxes

4,942

22,323(17,380)

Income taxes–current

5,160

4,341

819

Income taxes–deferred(2,850)(691)(2,159)Profit2,633

18,674(16,040)

Ordinary profit(Note) Differences from the previous fiscal year are presented for reference.

- 38 -

Statement of Changes in Equity (April 1, 2023, to March 31, 2024)(Million yen)

Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

SharecapitalBalance at beginning of
periodChanges during period
Dividends of surplus
ProfitReversal of reserve for
special account for tax
purpose reduction
entry of non-current
assetsPurchase of treasury
shares
Disposal of treasury
sharesCancellation oftreasury shares
Transfer from retained
earnings brought forward
to other capital surplus
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period

Legalcapitalsurplus

7,290

151

Other
capitalsurplusTotal
capitalsurplusLegalretainedearnings

14,052

14,204

1,793

Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

2,095

44,70075,814

124,402(6,520)2,633(6,520)
2,633

70

-

(4,745)(4,745)

(70)

67

67

(18,864)(18,864)

4,745

4,745

-

-

(14,052)(14,052)

-

(70)

-

(8,562)(8,632)

7,290

151

-

151

1,793

2,025

44,70067,252

115,770

Shareholders’ equity
Treasury shares
Balance at beginning of
periodChanges during period
Dividends of surplus
ProfitReversal of reserve for
special account for tax
purpose reduction
entry of non-current
assetsPurchase of treasury
shares
Disposal of treasury
sharesCancellation oftreasury shares
Transfer from retained
earnings brought forward
to other capital surplus
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period

Reserve for
specialaccount for
tax purpose
reduction
entry of noncurrent assets(19,691)

Total shareholders’equityValuation and translation adjustments
Valuation difference Total valuation andon available-for-saletranslation
securities
adjustments

126,205

720

720

Total net assets

126,926(6,520)2,633(6,520)
2,633

-

-

(3,037)(3,037)(3,037)

256

323

323

18,864

-

-

-

1,288

1,288

1,288

16,083(6,601)

1,288

1,288

(5,313)(3,608)

119,603

2,009

2,009

121,612- 39 -

Notes to Non-Consolidated Financial Statements
1. Significant Matters of Accounting Policies(1) Valuation Standards and Methods for Assets<a> Valuation Standards and Methods for Securities
i. Held-to-maturity debentures
The amortized cost method (straight-line method) is used.
ii. Shares of subsidiaries and affiliates
The cost method based on the moving-average method is used.
iii. Other securities- Securities other than stocks, The market value method is used (all valuation differences are reported directly to net
etc. with no market value
assets, and the cost of sale is determined by the moving-average method).
- Stocks, etc. without market
The cost method based on the moving-average method is used.
value<b> Valuation Standards and Methods for Derivatives
Derivatives
The market value method is used.
<c> Valuation Standards and Methods for Inventories
i. Merchandise, finished goods, work The cost method based on the gross average method is used. (For values in thein process, raw materials andbalance sheet, devaluation based on a decline in profitability is used.)
supplies (excluding inventories
related to molds)
ii. Inventories related to molds
The cost method based on the individual method is used. (For values in the balance
sheet, devaluation based on a decline in profitability is used.)(2) Depreciation Method for Non-current Assets<a> Property, Plant and Equipment (excluding leased assets)
The straight-line method is used.
Principal useful lives are as follows:
Buildings
38 to 50 years
Machinery and equipment
5 to 10 years
Tools, furniture and fixtures 2 to 15 years
Mold
2 years<b> Intangible Assets
i. Software for internal use
The straight-line method based on the internal estimated useful life (5 years) is used.
ii. Other intangible fixed assets
The straight-line method is used.
<c> Leased Assets
The straight-line method is used, with the lease term as the useful life and zero as
the residual value.
(3) Basis for Recognition of Provisions<a> Allowance for Doubtful Accounts<b> Provision for Bonuses<c> Provision for Retirement Benefits

In order to prepare for possible loss from bad debts including loans receivable,
uncollectible amounts are estimated for general receivables based on the historicalloan loss ratio, and for specific receivables such as doubtful receivables based on
individual estimates of collectability.
The amount is recorded based on the estimated amount to be paid to cover thepayment of bonuses to employees.
To prepare for employees’ retirement benefits, the amount is recorded based on theestimated retirement benefit obligations and estimated annuity payment assets as ofthe end of the current fiscal year.
In calculating retirement benefit obligations, the benefit calculation formula is used
to attribute estimated retirement benefits to the period up to the end of the current
fiscal year. Actuarial gains and losses are amortized by the straight-line method overa period (10 years) not longer than the average remaining service period of
employees at the time they occur.

- 40 -

<d> Provision for Share Awards

To prepare for granting the Company’s shares to employees, the estimated amountrequired for at the end of the current fiscal year is recorded.
<e> Provision for Share Awards for Directors (and other officers)
To prepare for the payment of stock-based compensation to officers, the estimatedamount required for payment at the end of the current fiscal year is recorded inaccordance with the internal rules.
(4) Basis for Recognition of Revenues and Expenses
The Company mainly manufactures and sells industrial plastic fasteners and precision plastic molded parts, and provides customers with components
used in the automotive and home appliance industries.
For the sale of these products, we consider that the performance obligation is delivering the products to the customer based on the sales contract withthe customer. We recognize revenue at the time of delivery of the products because, in principle, the customer acquires control over the products atthe time of delivery and we determine that the performance obligation is satisfied at this point in time. Performance obligations over which atransaction price is distributed are sold independently.
In the calculation of transaction prices, revenue is recognized on the basis of the amount of consideration promised in the contract with the customer
from which the amount of discount is deducted.
These amounts of promised consideration are not adjusted because they do not include significant financial factors. Consideration for performanceobligations is generally received within one year, depending on when the performance obligations are satisfied and the customer’s payment terms.

(5) Other Significant Basic Matters for Preparation of Financial Statements<a> Method of Hedge
Accounting

i. Method of Hedge Accounting
The Company employs deferred hedge accounting. In addition, when hedging of foreignexchange fluctuation risks satisfies the requirements for designation, we apply designation,
and when interest rate swaps satisfy the conditions for exceptional accounting, we apply
exceptional accounting.
ii. Hedging Instruments and Hedged Items
There were no hedged items for which hedge accounting was applied during the current fiscal
year.
iii. Hedging Policy
The Company primarily hedges foreign exchange risks and interest rate risks in accordancewith its internal rule, Derivative Handling Regulations.
iv. Method of Evaluating Hedge EffectivenessValidity is assessed in accordance with the Practical Guidelines for Accounting Standards ofFinancial Instruments (Japanese Institute of Certified Public Accountants).
However, evaluating hedge effectiveness is omitted for transactions for which exceptional
accounting or designation as defined in the Financial Instruments Accounting Standards, etc.
is applied as hedge accounting.

<b> Accounting for
Retirement Benefits

In the non-consolidated financial statements, the balance sheet treatment of unrecognizedactuarial gains and losses differs from the consolidated financial statements. On the nonconsolidated balance sheet, the provision for retirement benefits is calculated by subtracting
annuity payment assets from retirement benefit obligations that have been adjusted byunrecognized actuarial gains or losses.

2. Notes on Changes in Presentation(Balance Sheet)“Provision for share awards,” which was included in “Other” under “Non-current liabilities” in the previous fiscal year, is now
separately stated in the current fiscal year due to its increased monetary importance. Financial statements for the previous fiscal year
have been restated to reflect this change in presentation method.
“Provision for share awards for directors (and other officers),” which was included in “Other” under “Non-current liabilities” in theprevious fiscal year, is now separately stated in the current fiscal year due to its increased monetary importance as the Company
considered to change its stock-based compensation system to the “RS Trust System” from the “BIP Trust System.” Financial statements
for the previous fiscal year have been restated to reflect this change in presentation method.
As a result, 985 million yen shown in “Other” under “Non-current liabilities” in the balance sheet for the previous fiscal year has been
reclassified into “Provision for share awards” of 34 million yen, “Provision for share awards for directors (and other officers)” of 831
million yen, and “Other” of 119 million yen, respectively.

- 41 -

3. Notes on Accounting Estimates
1. Allowance for doubtful accounts concerning loans receivable from Nifco KTW America Corporation(1) Amount Recorded in the Financial Statements for the Current Fiscal Year
Short-term loans receivable from subsidiaries and associates
Allowance for doubtful accounts

10,068 million yen
10,068 million yen(2) Information on the Content of Significant Accounting Estimates for Identified Items
The Company entered into a transfer agreement on Nifco KTW America Corporation, which contractually stipulates that the Company
shall waive all loans to Nifco KTW America at the completion of the transfer. It is highly likely the Company will waive such loans so
it recognized all relevant loans receivable from subsidiaries and associates as an allowance for doubtful accounts.
At the end of the previous fiscal year, the Company recognized 2,760 million yen related to loans to Nifco KTW America as anallowance for doubtful accounts and the remaining amount of 7,308 million yen as a provision of allowance for doubtful accounts.
2. Valuation of shares of subsidiaries and associates(1) Amount Recorded in the Financial Statements for the Current Fiscal Year
Shares of subsidiaries and associates
Loss on valuation of shares of subsidiaries and associates

39,589 million yen
19,039 million yen(2) Information on the Content of Significant Accounting Estimates for Identified Items
The Company recognizes acquisition costs of shares of subsidiaries and associates as their carrying values in the balance sheet forvaluation. If these values drop significantly compared with the valuations of net assets, etc. of subsidiaries and associates, the Company
will write them down to their assessed values.
Of shares of subsidiaries and associates, as for shares of our subsidiary Nifco Europe GmbH, the conclusion of an agreement to transfer
its subsidiary Nifco Germany GmbH caused a decline in the fair value of shares of Nifco Germany held by Nifco Europe, resulting inworsening financial conditions of Nifco Europe. As a result, upon comparing the Company’s acquisition cost of shares of Nifco EuropeGmbH with the valuation of its net assets, etc., it was found the valuation was significantly lower than the acquisition cost. Accordingly,
the Company recognized 19,039 million yen as a loss on valuation of shares of subsidiaries and associates.
4. Notes to Balance Sheet(1) Accumulated Depreciation of Property, Plant and Equipment 88,039 million yen(2) Receivables and obligations (excluding those presented separately) for affiliated companies are as follows:<a> Short-term Receivables<b> Short-term Obligations

3,879 million yen
1,125 million yen

5. Notes to Statement of Income(1) Trading volume with affiliates<a> Volume of Business Transactions<b> Volume of Non-Business Transactions

32,005 million yen
14,273 million yen(2) Loss on valuation of shares of subsidiaries and associates
The Company, at the Board of Directors meeting held on March 12, 2024, resolved to enter into an agreement with AEQUITA SE &Co. KGaA, headquartered in Munich, Germany, to transfer our consolidated subsidiary Nifco Germany GmbH that is engaged inbusiness for German customers, and its subsidiary Nifco KTW America Corporation. A formal agreement was entered into on March
22, 2024, and the transfer was completed on April 15, 2024. The conclusion of the transfer agreement on its subsidiary Nifco Germany
GmbH caused a decline in the fair value of shares of Nifco Germany held by Nifco Europe, a parent company of Nifco Germany,
resulting in worsening financial conditions of Nifco Europe. Also, the fair value of shares of Nifco Europe GmbH held by the Company
decreased significantly. As a result, the Company adequately wrote down its holding shares of Nifco Europe GmbH and recognized avaluation loss of 19,039 million yen.

- 42 -

(3) Provision of allowance for doubtful accounts
The Company entered into a transfer agreement on its consolidated subsidiary, KTW America Corporation, which contractually
stipulates that the Company shall waive all loans to Nifco KTW America at the completion of the transfer. It is highly likely theCompany will waive these loans so it recognized a provision of allowance for doubtful accounts of 7,308 million yen.
6. Notes to Statement of Changes in Equity
Number of treasury shares(Notes)Class of shares

Number of shares at the
beginning of the current
fiscal year

Increase in number ofshares during the current
fiscal year

Decrease in number ofshares during the current
fiscal year

Number of shares at theend of the current fiscal
year

Common stock

7,577 thousand shares

797 thousand shares

7,344 thousand shares

1,031 thousand shares

1.
2.

3.

4.

The number of shares at the beginning of the current fiscal year includes 413 thousand shares of the Company held by the Executive Compensation BIP Trustaccount and 49 thousand shares of the Company held by the Stock Grant ESOP Trust account.
The increase in the number of treasury shares of common stock of 797 thousand shares consists of an increase of 797 thousand shares through a market
purchase of the Company’s own shares in accordance with a resolution of the Board of Directors, and an increase of 0 thousand shares through the purchaseof fractional shares.
The decrease in the number of treasury shares of common stock of 7,344 thousand shares consists of a decrease of 7,251 thousand shares due to the cancellationof treasury shares in accordance with a resolution of the Board of Directors, a decrease of 57 thousand shares associated with sale of the Company shares tothe Employee Stock Ownership Plan in accordance with a resolution of the Board of Directors, and a decrease of 35 thousand shares as a result of share awards
from the Executive Compensation BIP Trust account.
The number of shares at the end of the current fiscal year includes 377 thousand shares of the Company held by the Executive Compensation BIP Trust accountand 49 thousand shares of the Company held by the Stock Grant ESOP Trust account.

- 43 -

7. Notes on Tax Effect Accounting(1) Major Causes of Accrual of Deferred Tax Assets and Deferred Tax Liabilities(Deferred tax assets)
Accrued enterprise tax
Loss on valuation of molds
Provision for bonuses
Loss on valuation of shares of subsidiaries and associates
Allowance for doubtful accounts
Other
Subtotal of deferred tax assets
Total deductible temporary differences
Valuation allowance
Total of deferred tax assets(Deferred tax liabilities)
Retirement benefit trust securities
Reserve for special account for tax purpose reduction entry of
non-current assets
Valuation difference on available-for-sale securities
Other
Total of deferred tax liabilities
Net value of deferred tax assets

182 million yen
3 million yen
566 million yen
7,129 million yen
3,234 million yen
556 million yen
11,673 million yen(7,173) million yen
4,499 million yen
232 million yen
892 million yen
885 million yen
22 million yen
2,032 million yen
2,467 million yen(2) Breakdown by Major Item That Caused Material Differences Between the Statutory Effective Tax Rate and the Effective
Income Tax Rate after the Application of Tax Effect Accounting
Effective statutory tax rate
(Adjustment)
Items that are permanently excluded from gross income, such as
dividend income
Taxable amount under controlled foreign company rules, etc.
Per capita resident tax
Special deduction for experimentation and research expenses
Foreign subsidiary dividend withholding tax
Valuation allowance
Deductible foreign corporation tax amount deemed to have been
paid
Loss carryforward of liquidated subsidiaries
Other
Income tax burden after application of tax effect accounting- 44 -

30.6%(82.6%)
0.2%
0.5%(3.2%)
10.9%
100.5%(1.81%)(0.3%)(8.1%)
46.7%

Attributes

8. Notes on Transactions with Related Parties
Name ofcompany,etc.

Business
content or
occupation

Ownership (%) of
voting rights, etc.
(or percentage ofthem being
owned)

Relationship
Concurrent
positions heldby officers

BusinessrelationshipTransaction

Collection of loan
funds (Note) 1

Subsidiary

Manufacturin
Nifco KTW g and sales of Ownership
Americaindustrial
Indirect
Corporation plastic parts & 100.00
components

Nifco
Kumamoto
Inc.

Nifco
EuropeGmbH

Manufacturin
g and sales of Ownership
industrial
Directplastic parts & 100.00
components

Manufacturin
g and sales of Ownership
industrial
Directplastic parts & 100.00
components

1 officer

0 officers

1 officer

Financialassistance,
etc.

Financialassistance,etc.

Amount oftransaction(Million
yen)

Item

Short-term loans
receivable from278 subsidiaries andBalance at
end ofperiod(Millionyen)
10,068

associates
Allowance for
doubtful accounts(Note) 2
Long-term loans
receivable from

10,068

Loan of funds(Note) 1

4,209 subsidiaries andInterest received(Note) 1

318 Accrued interest-

Short-term loans
receivable fromsubsidiaries andassociates

350

Long-term loans
receivable fromsubsidiaries andassociates

2,100

Collection of loan
funds (Note) 1-

associates

350

Interest received(Note) 1

20 --Financial
Underwriting ofassistance,
capital increaseetc.

5,650 --

Transaction conditions and policies for determining transaction conditions(Notes) 1. Interest rates on loans receivable are rationally determined by taking into account market interest rates.
2. Provision of allowance for doubtful accounts is described in “3. Notes on Accounting Estimates.”

9. Notes on Revenue Recognition(Information that serves as a basis for understanding revenue from contracts with customers)
Information that serves as a basis for understanding revenue from contracts with customers is described in “Notes to Consolidated
Financial Statements,” in “9. Notes on Revenue Recognition,” and therefore notes are omitted here.
10. Notes on Per Share Information(1) Net assets per share(2) Profit per share

1,225.62 yen
26.44 yen

11. Notes to Significant Subsequent Events(Significant subsequent events)
Notes are omitted here because they are described in “Notes to Consolidated Financial Statements,” in “11. Notes to Significant
Subsequent Events.”
12. Other Notes(Stock-based compensation system for officers)
Notes are omitted here because they are described in “Notes to Consolidated Financial Statements,” in “12. Other Notes (Stock-based
compensation system for officers).”(Stock-based compensation system for employees)
Notes are omitted here because they are described in “Notes to Consolidated Financial Statements,” in “12. Other Notes (Stock-based
compensation system for employees).”- 45 -

Audit Report
Accounting Audit Report on Consolidated Financial Statements
Audit Report from Independent Auditor
May 16, 2024

Nifco Inc.
Dear Board of Directors,
KPMG AZSA LLC
Tokyo Office
Designated limited
liability partner
Executive member
Designated limited
liability partner
Executive member

Certified public
accountant

Tomoyasu Sugisaki

Certified public
accountant

Michiko Muramatsu

Audit opinion
In accordance with Article 444, Paragraph 4 of the Companies Act, we audited the consolidated financial statements of Nifco Inc. for the fiscal
year from April 1, 2023, to March 31, 2024, namely, the consolidated balance sheet, the consolidated statement of income, the consolidated
statement of changes in equity, and the notes to the consolidated financial statements.
In our opinion, the consolidated financial statements referred to above fairly present, in all material respects, the position of assets and the positionof profit and loss of the corporate group consisting of Nifco Inc. and its consolidated subsidiaries for the period covered by such consolidated
financial statements, in accordance with accounting principles generally accepted in Japan.
Basis for audit opinion
We conducted our audits in accordance with auditing standards generally accepted in Japan. Our responsibilities in the context of the auditing
standards are set out in “Auditors’ Responsibilities in Auditing Consolidated Financial Statements.” In accordance with the Code of Professional
Ethics in Japan, we are independent of the Company and its consolidated subsidiaries and perform our other ethical responsibilities as an auditor.
We believe that we have obtained sufficient and appropriate audit evidence on which to base our opinion.
Other statements“Other statements” refer to business reports and annexed detailed statements. Management's responsibility is to prepare and disclose otherinformation. The Audit and Supervisory Committee is responsible for monitoring the performance of directors’ duties in the development andoperation of the reporting process for other statements.
The subject of our audit opinion on the consolidated financial statements does not include any other statements, and we do not express our opinion
on any other statements.
Our responsibility in the audit of the consolidated financial statements is to read through the other statements and, in the course of reading through,to consider whether there are any material differences between the other statements and the consolidated financial statements or the knowledge
we have acquired in the course of the audit, and to pay attention to whether, other than such material differences, there are signs of material errors
in the other statements.
If we determine, based on the work we have done, that there are material errors in other statements, we are required to report them.
There are no matters that we should report on the contents of the other statements.
Responsibilities of Management and Audit and Supervisory Committee for Consolidated Financial Statements
Management is responsible for preparing and presenting the consolidated financial statements in conformity with accounting principles generally
accepted in Japan. This includes developing and operating internal controls that management deems necessary to prepare and properly present theconsolidated financial statements free of material misstatement due to fraud or error.
In preparing the consolidated financial statements, management is responsible for evaluating the appropriateness of basing the preparation of theconsolidated financial statements on the going concern assumption and for disclosing matters relating to the going concern if necessary inaccordance with accounting standards generally accepted in Japan as fair and appropriate.
The Audit and Supervisory Committee is responsible for monitoring the performance of directors’ duties in the development and operation of thefinancial reporting process.

- 46 -

Auditor’s Responsibilities in Auditing Consolidated Financial Statements
The auditor’s responsibility is to express an independent opinion on the consolidated financial statements in the audit report, based on the audit
conducted by the auditor, and with reasonable assurance as to whether the consolidated financial statements as a whole are free from material
misstatement due to fraud or error. A misstatement could arise due to fraud or error, and is judged to be material if it could reasonably be expected,
individually or when aggregated, to influence the decision-making of users of the consolidated financial statements.
Throughout the audit process, in accordance with auditing standards generally accepted in Japan, the auditor shall exercise professional judgment
and, with professional skepticism, shall:-

Identify and assess material misrepresentation risks due to fraud or error. The auditor shall also plan and implement audit procedures that
address material misstatement risks. The choice and application of audit procedures shall be at the discretion of the auditor. In addition, theauditor shall obtain sufficient and appropriate audit evidence on which to base opinions.

-

Although the purpose of an audit of the consolidated financial statements is not to express an opinion on the effectiveness of internal controls,
when conducting a risk assessment, the auditor will consider internal controls related to the audit in order to design appropriate audit
procedures for the situation.

-

Evaluate the appropriateness of the accounting policies adopted by management and the application thereof, as well as the reasonableness of-

the accounting estimates made by management and the appropriateness of the related notes.
Conclude whether it is appropriate for management to prepare the consolidated financial statements on the assumption of a going concern
and, based on the audit evidence available, whether there are material uncertainties regarding events or circumstances that would raisematerial doubts about the going concern assumption. If material uncertainties regarding the going concern assumption are found, the audit
report is required to call attention to the notes to the consolidated financial statements or, if the notes to the consolidated financial statements
regarding material uncertainties are not appropriate, to express an opinion with exclusions on the consolidated financial statements. While
the auditor’s conclusions are based on audit evidence received up to the audit report date, future events or circumstances may prevent theCompany from continuing as a going concern.

--

Evaluate whether the presentation and notes to the consolidated financial statements comply with accounting principles generally acceptedin Japan, as well as whether the presentation, structure and content of the consolidated financial statements, including the related notes, andthe consolidated financial statements themselves fairly present the underlying transactions and accounting events.
Obtain sufficient and appropriate audit evidence of the financial information of the Company and its consolidated subsidiaries to express
opinions on the consolidated financial statements. The auditor is responsible for the direction, supervision and implementation of the auditof the consolidated financial statements. The auditor is solely responsible for the audit opinion.

The auditor will report to the Audit and Supervisory Committee on the scope and execution dates of the planned audit, important audit findings
identified during the audit process, including significant deficiencies in internal controls, and other matters required by the audit standards.
The auditor reports to the Audit and Supervisory Committee on its compliance with professional ethics rules in Japan regarding independence, on
matters reasonably believed to affect the independence, and the contents of any measures taken to eliminate or reduce disincentives or safeguards
applied to reduce disincentives to an acceptable level.
Interests
There is no conflict of interest between the Company and its consolidated subsidiaries and the auditing company or its executive members thatshould be disclosed pursuant to the provisions of the Certified Public Accountants Act.

- 47 -

Accounting Audit Report on Financial Statements
Audit Report from Independent Auditor
May 16, 2024

Nifco Inc.
Dear Board of Directors,
KPMG AZSA LLC
Tokyo Office
Designated limited
liability partner
Executive member
Designated limited
liability partner
Executive member

Certified public
accountant

Tomoyasu Sugisaki

Certified public
Michiko Muramatsu
accountant

Audit opinion
In accordance with Article 436, Paragraph 2, item 1 of the Companies Act, we audited the financial statements of Nifco Inc. for the 72nd fiscal
year from April 1, 2023, to March 31, 2024, namely the balance sheet, the statement of income, the statement of changes in equity, the notes tothe non-consolidated financial statements, and their annexed detailed statements (hereafter referred to as “Financial Statements, etc.”).
In our opinion, the Financial Statements, etc. referred to above fairly present, in all material respects, the position of assets and the position of
profit and loss for the period covered by such Financial Statements, etc., in accordance with accounting principles generally accepted in Japan.
Basis for audit opinion
We conducted our audits in accordance with auditing standards generally accepted in Japan. Our responsibilities in the context of the auditing
standards are set out in “Auditors’ Responsibilities in Auditing Financial Statements, etc.” In accordance with the Code of Professional Ethics inJapan, we are independent of the Company and perform our other ethical responsibilities as an auditor. We believe that we have obtained sufficientand appropriate audit evidence on which to base our opinion.
Other statements“Other statements” refer to business reports and annexed detailed statements. Management's responsibility is to prepare and disclose otherinformation. The Audit and Supervisory Committee is responsible for monitoring the performance of directors’ duties in the development andoperation of the reporting process for other statements.
The subject of our audit opinion on the Financial Statements, etc. does not include any other statements, and we do not express our opinion on
any other statements.
Our responsibility in the audit of the Financial Statements, etc. is to read through the other statements and, in the course of reading through, toconsider whether there are any material differences between the other statements and the Financial Statements, etc. or the knowledge we haveacquired in the course of the audit, and to pay attention to whether, other than such material differences, there are signs of material errors in theother statements.
If we determine, based on the work we have done, that there are material errors in other statements, we are required to report them.
There are no matters that we should report on the contents of the other statements.
Responsibilities of Management and Audit and Supervisory Committee for Financial Statements, Etc.
Management is responsible for preparing and properly presenting the Financial Statements, etc. in conformity with accounting principles generally
accepted in Japan. This includes developing and operating internal controls that management deems necessary to prepare and properly present the
Financial Statements, etc. free of material misstatement due to fraud or error.
In preparing the Financial Statements, etc., management is responsible for evaluating the appropriateness of basing the preparation of the Financial
Statements, etc. on the going concern assumption and for disclosing matters relating to the going concern if necessary in accordance withaccounting standards generally accepted in Japan as fair and appropriate.
The Audit and Supervisory Committee is responsible for monitoring the performance of directors’ duties in the development and operation of thefinancial reporting process.

- 48 -

Auditor’s Responsibilities in Auditing Financial Statements, Etc.
The auditor’s responsibility is to express an independent opinion on the Financial Statements, etc. in the audit report, based on the audit conductedby the auditor, and with reasonable assurance as to whether the Financial Statements, etc. as a whole are free from material misstatement due tofraud or error. A misstatement could arise due to fraud or error, and is judged to be material if it could reasonably be expected, individually or
when aggregated, to influence the decision-making of users of the Financial Statements, etc.
Throughout the audit process, in accordance with auditing standards generally accepted in Japan, the auditor shall exercise professional judgment
and, with professional skepticism, shall:-

Identify and assess material misrepresentation risks due to fraud or error. The auditor shall also plan and implement audit procedures that
address material misstatement risks. The choice and application of audit procedures shall be at the discretion of the auditor. In addition, theauditor shall obtain sufficient and appropriate audit evidence on which to base opinions.

-

Although the purpose of an audit of the Financial Statements, etc. is not to express an opinion on the effectiveness of internal controls, when
conducting a risk assessment, the auditor will consider internal controls related to the audit in order to design appropriate audit proceduresfor the situation.

-

Evaluate the appropriateness of the accounting policies adopted by management and the application thereof, as well as the reasonableness of-

the accounting estimates made by management and the appropriateness of the related notes.
Conclude whether it is appropriate for management to prepare the Financial Statements, etc. on the assumption of a going concern and, basedon the audit evidence available, whether there are material uncertainties regarding events or circumstances that would raise material doubts
about the going concern assumption. If material uncertainties regarding the going concern assumption are found, the audit report is required
to call attention to the notes to the Financial Statements, etc. or, if the notes to the Financial Statements, etc. regarding material uncertainties
are not appropriate, to express an opinion with exclusions on the Financial Statements, etc. While the auditor’s conclusions are based on audit-

evidence received up to the audit report date, future events or circumstances may prevent the Company from continuing as a going concern.
Evaluate whether the presentation and notes to the Financial Statements, etc. comply with accounting principles generally accepted in Japan,
as well as whether the presentation, structure and content of the Financial Statements, etc., including the related notes, and the Financial
Statements, etc. themselves fairly present the underlying transactions and accounting events.

The auditor will report to the Audit and Supervisory Committee on the scope and execution dates of the planned audit, important audit findings
identified during the audit process, including significant deficiencies in internal controls, and other matters required by the audit standards.
The auditor reports to the Audit and Supervisory Committee on its compliance with professional ethics rules in Japan regarding independence, on
matters reasonably believed to affect the independence, and the contents of any measures taken to eliminate disincentives or safeguards applied
to reduce disincentives to an acceptable level.
Interests
There is no conflict of interest between the Company and the auditing company or its executive members that should be disclosed pursuant to theprovisions of the Certified Public Accountants Act.

- 49 -

Audit Report of the Audit and Supervisory Committee
Audit Report
The Audit and Supervisory Committee has audited the execution of duties by directors during the 72nd fiscal year from April 1, 2023, to March 31,
2024. We report the methods and results below.
1. Method and Content of Audit
The Audit and Supervisory Committee has been working to ensure the sound and sustainable growth of the Company and the Group and toestablish a good corporate governance system that responds to social trust. In such effort, the Audit and Supervisory Committee has received
regular reports from directors and employees on the status of the construction and operation of the system (internal control system) establishedbased on the Board of Directors’ resolutions and their contents regarding the matters listed in Article 399, 13, Paragraph 1, Item 1 (b) and (c)of the Companies Act, and has requested explanations and expressed opinions as necessary, and has conducted audits in the following manner.
<a> In accordance with the Auditing Standards of the Audit and Supervisory Committee established by the Audit and Supervisory Committee,
and in accordance with the auditing policy and the division of duties, we investigated the decision-making process at important meetings,
the content of key decision documents and other important documents related to the execution of business, the status of the execution ofduties by directors and key employees, and the status of the business and assets of the Company in cooperation with the internal audit
department and other departments responsible for internal control. In addition, with respect to subsidiaries, we communicated andexchanged information with the directors and auditors of subsidiaries, and received business reports from subsidiaries as necessary.
<b> We monitored and verified whether the Accounting Auditor maintained an independent position and conducted proper audits, and received
reports from the Accounting Auditor on the status of the execution of its duties and requested explanations as necessary. In addition, we
received a report from the Accounting Auditor saying that it has put in place a system to ensure the proper execution of duties (matterslisted in each item of Article 131 of the Corporate Accounting Rules) in accordance with the Quality Control Standards for Audits (BusinessAccounting Council) and other standards, and requested explanations as necessary.
Based on the methods described above, we reviewed the business report and its annexed detailed statements, the financial statements (balance
sheet, statement of income, statement of changes in equity, and notes to non-consolidated financial statements) and their annexed detailed
statements, and the consolidated financial statements (consolidated balance sheet, consolidated statements of income, consolidated statementsof changes in equity, and notes to consolidated financial statements) for the current fiscal year.

- 50 -

2. Results of Audit(1) Results of Audit of Business Reports, Etc.
<a> In accordance with laws, regulations and the Articles of Incorporation, we acknowledge that the business report and its annexed detailed
statements accurately describe the status of the Company.
<b> We do not find any misconduct or material facts in violation of laws and regulations or the Articles of Incorporation in connection withthe execution of duties by directors.
<c> We believe that the content of the Board of Directors’ resolution on the internal control system is reasonable. In addition, we do not findany matters to be pointed out regarding the contents of the business report on the internal control system or the execution of duties bydirectors.
(2) Results of Audit of Financial Statements and Annexed Detailed Statements
We acknowledge that the methods and results of the audit conducted by the Accounting Auditor, KPMG AZSA LLC, are reasonable.
(3) Results of Audit of Consolidated Financial Statements
We acknowledge that the methods and results of the audit conducted by the Accounting Auditor, KPMG AZSA LLC, are reasonable.

May 16, 2024

Audit and Supervisory Committee, Nifco, Inc.
Full-time Audit andSupervisory
Committee Member
Member of Audit
and Supervisory
Committee (External
Director)
Member of Audit
and Supervisory
Committee (External
Director)- 51 -

Junji Honda (Seal)
Mitsuhiro Matsumoto (Seal)
Izumi Hayashi (Seal)Reference Documents for the General Meeting of Shareholders
Proposal 1

Appropriation of Surplus

The appropriation of surplus is proposed as follows:

Year-end dividend
The Company proposes to pay a year-end dividend for the 72nd fiscal year as follows, taking into account the results of the current
period and future business development.

Type of dividend property

Money

The Company proposes to pay 32 yen (ordinary dividend:
Allotment of dividend property and total
amount thereof

32 yen) per share of common stock.
In this case, the total dividends will be 3,188,914,720 yen.
Including the interim dividend, the annual dividend for the current
fiscal year will be 64 yen per share.

Effective date of dividends of surplus

We would like to make it June 21, 2024.

- 52 -

Proposal 2

Election of Five Directors Who Are Not Audit and Supervisory
Committee Members

The terms of office of all six Directors (Directors who are Audit and Supervisory Committee Members are excluded; the same shallapply hereinafter in this proposal) will expire at the conclusion of this General Meeting of Shareholders.
Accordingly, the election of five Directors is proposed.
The Audit and Supervisory Committee confirmed the policy, approach and deliberation process for each candidate submitted to theBoard by the Nomination, Compensation and Governance Committee, an advisory body to the Board of Directors. As a result, theAudit and Supervisory Committee has determined that each candidate is qualified to serve as a director who is not an Audit andSupervisory Committee Member.
The candidates for Director are as follows:
Candidate Number

1
Reappointment

Male

Masaharu Shibao (Born on December 14, 1961)

Number of the Company shares owned ·····(of which, shares to be delivered under thestock-based compensation system) ··········
Years in office ···································
Attendance at Board of Directors meetings[Brief Personal History, Positions and Responsibilities in the Company]
April 1985
Joined Nifco Inc.
June 2020
April 2010
President of Nifco Deutschland GmbH
June 2015
Executive Officer of Nifco Inc. and President of
Nifco America Corp.
April 2021
June 2016
Director and Executive Managing Officer,
CMO, Head of Sales, Nifco Inc.
June 2019
Director and Senior Executive Managing
June 2023
Officer, CMO, Head of Sales, In charge ofTechnology & Platform Business Division,
Nifco Inc.
[Significant Concurrent Positions] None

50,119(43,119)8
14/14

Vice President & Representative
Director, Head of Sales, Chief Operating
Officer (COO), Nifco Inc.
President & Representative Director,
Chief Operating Officer (COO), Nifco
Inc.
President & Representative Director,
Chief Executive Officer (CEO), NifcoInc. (current position)

Reasons for Nomination as a Candidate for Director
He has been primarily in charge of product development and the Sales Division and served as President of European and
U.S. subsidiaries. The Company has nominated him as a candidate for reappointment as a director because of his diverseand global experience, knowledge and expertise.
Candidate Number

2
Reappointment

Toshiki Yauchi

Male(Born on July 16, 1961)

Number of the Company shares owned ·····(of which, shares to be delivered under thestock-based compensation system) ··········
Years in office ···································
Attendance at Board of Directors meetings[Brief Personal History, Positions and Responsibilities in the Company]
April 1985
Joined Nifco Inc.
June 2019
July 2007
Divisional General Manager of Corporate
Strategy Division, Nifco Inc.
June 2015
Executive Officer, Divisional General
Manager of Corporate Strategy Division,
June 2021
Nifco Inc.
June 2018
Director and Executive Managing Officer,
Divisional General Manager of Corporate
Strategy Division, In charge of
Administration & Finance, Nifco Inc.
[Significant Concurrent Positions]

29,836(27,736)6
14/14

Director and Senior Executive Managing
Officer, Divisional General Manager ofCorporate Strategy Division, In charge of
Administration & Finance, Nifco Inc.
Director, Senior Executive Managing
Officer, Chief Financial Officer (CFO)
and Chief Strategy Officer (CSO), NifcoInc. (current position)

None

Reasons for Nomination as a Candidate for Director
The Company has nominated him as a candidate for director based on his diverse experience, knowledge and expertise,
which he has gained through his involvement primarily in the Corporate Strategy Division and his role as General Manager
of Corporate Strategy Division, where he formulates corporate strategies and oversees overall investor relations activitiesof the Company.

New
Candidate for new director
appointment

Reappointme Candidate for reappointmentnt
as director

External- 53 -

Candidate for external
director

Independent officer as
Independent required by a stock

exchangeCandidate Number

3
Reappointment
External
Independent

FemaleYoshiko Nonogaki (Born on July 31, 1957)

Number of the Company shares owned ·····(of which, shares to be delivered under thestock-based compensation system) ··········
Years in office ···································
Attendance at Board of Directors meetings[Brief Personal History, Positions and Responsibilities in the Company]
April 1980
Joined Sony Corporation (now Sony
June 2015
Group Corporation)
June 2019
September 1992 President and Representative Director,
Sony Poland
June 2020
April 2009Manager of Planning & Marketing
Department, Business & Professional
June 2021
Enterprise HQ, Sony Corporation (current
Sony Group Corporation)
April 2013
Director of Global Diversity, Personnel
HQ, Sony Corporation

(-)
5
14/14

External Director, Jolly-Pasta Co., Ltd.
External Director, Nifco Inc. (current
position)
External Director, GS Yuasa Corporation(current position)
External Director, Sato Holdings
Corporation (current position)[Significant Concurrent Positions]
External Director, GS Yuasa Corporation
External Director, Sato Holdings Corporation
Reasons for the nomination as a candidate for external director and summary of expected role
The reason for selecting her as a candidate for external director is that she has broad insight to supervise overallmanagement based on her business experience in the business divisions of a major company, management experience ofoverseas subsidiaries, and experience as an external director of listed companies.
Her expected role is to use her wealth of experience and insight to improve the quality of corporate governance in the
Company.
Candidate Number

4
Reappointment
External
Independent

Masayuki Abe

Male(Born on October 5, 1956)

Number of the Company shares owned ·····(of which, shares to be delivered under thestock-based compensation system) ··········
Years in office ···································
Attendance at Board of Directors meetings[Brief Personal History, Positions and Responsibilities in the Company]
April 1980
Joined Kao Soap Co., Ltd. (now Kao
April 2018
Corporation)
March 2003
General Manager, Information Technology
Group, Kao Corporation
June 2021
May 2010
General manager of Strategic Planning
Department, Kao Corporation
December 2013 Head of Information Systems Division,
Kao Corporation
March 2015
Executive Officer, Kao Corporation[Significant Concurrent Positions]

400
(-)
3
14/14

Senior Advisor of General Digital
Business Division (current Information
Systems Headquarters) of Toppan Forms
Co., Ltd. (current TOPPAN Edge Inc.)
External Director, Nifco Inc. (current
position)

None

Reasons for the nomination as a candidate for external director and summary of expected role
The reason for selecting him as a candidate for an external director is that he possesses a wealth of experience andinsight cultivated in the IT field at major companies, which the Company hopes he will apply to the management of theCompany.
His expected role is to drive the Company’s management in areas related to IT and DX.

- 54 -

Candidate Number

5
New
appointment
External
Independent

Male

Yoshio Kometani (Born on April 11, 1962)

Number of the Company shares owned ·····(of which, shares to be delivered under thestock-based compensation system) ··········
Years in office ···································
Attendance at Board of Directors meetings[Brief Personal History, Positions and Responsibilities in the Company]
April 1985
Joined Mitsui & Co., Ltd.
April 2020
March 2010
General Manager of Project Operations,
Mitsui
April 2015
Executive Officer,
April 2022
Deputy COO (Chief Operating Officer),
Asia Pacific Business Unit
April 2023
June 2019
Representative Director, Executive
June 2023
Managing Officer, Mitsui(-)-

Representative Director, Senior Executive
Managing Officer, CDIO (Chief Digital
Information Officer), Mitsui
Representative Director, Executive Vice
President, CDIO, Mitsui
Director, Mitsui
Corporate Advisor, Mitsui(current position)[Significant Concurrent Positions]
None
Reasons for the nomination as a candidate for external director and summary of expected role
The reason for selecting him as a candidate for external director is that he has broad insight to supervise overallmanagement from a long-term perspective, based on his experience in domestic and overseas operations, management
and incubation in a leading trading company.
His expected role is to use his wealth of experience and insight to contribute to the sustainable growth and enhancementof corporate value of the Company.
(Notes) 1. Mr. Masaharu Shibao and Ms. Yoshiko Nonogaki are members of the Nomination, Compensation and Governance Committee. The Nomination, Compensation
and Governance Committee is chaired by Yoshiko Nonogaki. If this proposal is passed and the reappointment of Yoshio Kometani is approved, he will becomea member of the Nomination, Compensation and Governance Committee.
2. There are no special interests between the Company and Mr. Masaharu Shibao, Mr. Toshiki Yauchi, Ms. Yoshiko Nonogaki, Mr. Masayuki Abe, and Mr.
Yoshio Kometani.
3. Ms. Yoshiko Nonogaki, Mr. Masayuki Abe, and Mr. Yoshio Kometani are candidates for external directors.
4. The Company has designated directors Yoshiko Nonogaki, and Masayuki Abe as independent officers pursuant to the provisions of the Tokyo Stock Exchange
and has notified the Tokyo Stock Exchange of their appointment. Mr. Yoshio Kometani meets the requirements for independent officers as stipulated by the
Tokyo Stock Exchange and will be notified to the Exchange as an independent officer. If this proposal is passed and their appointment is approved, they will
become independent officers.
5. The Company has entered into an agreement with Ms. Yoshiko Nonogaki and Mr. Masayuki Abe to limit their liability for damages under Article 423,
Paragraph 1 of the Companies Act in accordance with the provisions of the Articles of Incorporation. The maximum amount of liability for damages under
the contract is 20 million yen or the minimum liability amount stipulated by law, whichever is higher. If they are reappointed, the Company will continue thelimited liability agreement with them. If Mr. Yoshio Kometani is elected, the Company will enter into an agreement with him to limit his liability for damages
under Article 423, Paragraph 1 of the Companies Act in accordance with the provisions of the Articles of Incorporation.
6. The Company has entered into a liability insurance (Directors and Officers insurance, or D&O insurance) contract with an insurance company for officers asprovided in Article 430, Paragraph 3-1 of the Companies Act. The insurance policy provides that the insured is liable for the performance of its duties or iscompensated for any damage that may result from receiving a claim related to the pursuit of such liability. However, there are certain disclaimers; for example,
damages caused by acts committed while knowing that they are violation of the law, and damages caused when profits or benefits are obtained illegally are
not covered. If each candidate on this Proposal is appointed and assumes office, he or she will be included as an insured under such insurance policy. In
addition, the policy is scheduled to be renewed with the same contents at the next renewal.
7. The number of shares of the Company owned by each candidate includes the number of shares scheduled to be delivered under the stock-based compensation
system as of June 1, 2024.
[Explanation of Shares to Be Delivered under the Stock-Based Compensation System]
In fiscal 2016, the Company introduced a stock-based compensation system (hereafter referred to as “the System”) for the Company’s directors (excluding
external directors and overseas residents; the same applies hereafter). The number of shares to be delivered under the System to each candidate includes (a)the non-performance-linked portion, and (b) the performance-linked portion, which is linked to performance after a certain period of time. The number ofshares delivered to each candidate based on the System is presented based on the points of performance that has been determined at this point in time.
Specifically, the sum of the cumulative total of points granted for (a) the non-performance-linked portion up to June 1, 2024, and the points granted for (b)the performance-linked portion on June 1, 2024, are listed. The voting rights associated with the shares to be delivered under the System will not be exercised
until the shares are delivered to each candidate in the future. In addition, 30% of the shares to be delivered will be sold in the market to secure funds for tax
payments, and the proceeds from the sale will be distributed.
8. See page 61 for a skill matrix of the candidates.

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Proposal 3

Partial Revision to Stock-Based Compensation System for
Directors, etc. Who Are Not Audit and Supervisory Committee
Members

1. Reasons for the Proposal and reasons why the compensation is appropriate
The Company received an approval from shareholders for the introduction of the stock-based compensation system at the 64th Annual
General Meeting of Shareholders held on June 24, 2016. And by the resolution at the 69th Annual General Meeting of Shareholders
held on June 24, 2021, we revised the system to a stock-based compensation system (hereinafter referred to as the “System”) thattargets the Company’s directors (excluding directors who are not Audit and Supervisory Committee Members, external directors andthose living overseas; the same shall apply hereinafter in this Proposal) and executive officers (excluding those living overseas;
hereinafter they are collectively referred to as the “Directors, etc.”), and has maintained the System to this day. This time, we will ask
your approval to partially revise the System.
As with the current limit on compensation under the System, the System will provide stock-based compensation to the Directors, etc.
as a separate limit from the limit on cash compensation for directors who are not Audit and Supervisory Committee Members (no morethan 460 million yen per year, of which, no more than 60 million yen for external directors; excluding the salary as an employee fordirectors concurrently serving as employees), and this was approved at the 69th Annual General Meeting of Shareholders held on June24, 2021.
The Company has recently revised its policy on determining the content of the compensation, etc. for the Company’s directors at theBoard of Directors meeting held in May 2024 (see pages 13 to 14), with the aim of clarifying the linkage between the compensation of
the Directors, etc. and the value of the Company’s shares, enhancing the motivation of the Directors, etc. to contribute to theimprovement of the Company’s business performance and corporate value from a mid- to long-term viewpoint, and promoting further
value-sharing with shareholders. The partial revision of the System is in line with the above policy and is designed to be necessary andreasonable to grant individual compensation for directors. Accordingly, we believe the System is appropriate.
If Proposal No. 2 “Election of Five (5) Directors who are not Audit and Supervisory Committee Members” is approved and passed as
proposed, the number of Directors who are eligible under the Plan will be two (2). In addition, as described above, the System also
covers executive officers (the number of executive officers who will not serve as directors covered by the System will be ten at theclosing of this General Meeting of Shareholders), and the compensation under the System includes compensation for executive officers.
In the Proposal, we will request the amount and content of the total compensation under the System as compensation for the Directors,
etc., taking into account the possibility that such executive officers may newly assume office as directors during the target period.
In order to ensure transparency and objectivity in the compensation determination process for Directors, etc., the Company has
established the Nomination, Compensation and Governance Committee, which is chaired by an Independent External Director andconsists of a majority of Independent External Directors. Partial revision to the Plan has been deliberated by the Nomination,
Compensation and Governance Committee.
In addition, the Audit and Supervisory Committee judges that the procedures for determining this Proposal are appropriate because theNomination, Compensation and Governance Committee, an advisory body to the Board of Directors, deliberated on the partial revisionof the System to the Directors, etc., and based on the report, the Board of Directors deliberated and determined on this Proposal. The
Audit and Supervisory Committee received an explanation on the content of the deliberations in the Nomination, Compensation and
Governance Committee, and as a result of its deliberations, the Audit and Supervisory Committee concluded that the Proposal wasappropriate as an incentive for the Directors, etc. to increase corporate value over the medium to long term, and that it has the advantage
of contributing to value-sharing between the Directors, etc. and shareholders.

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2. Amount of compensation and details of the revised System(1) Overview of the System
The System is a stock-based compensation plan, under which a trust purchases the Company’s shares using compensation to the
Directors, etc. to be contributed by the Company as resources and then delivers the Company’s shares to the Directors, etc. (Details aredescribed in (2) below.)
The Company will deliver its shares as officers’ compensation to the Directors, etc. for the same number of fiscal years as a mediumterm management plan (hereinafter referred to as the “Target Period”), in accordance with their positions and the degree of achievement
relative to the targets of performance indicators set forth in the medium-term management plan. The initial target period after approvalof the revision of the System will be three fiscal years from the fiscal year ending March 2025 to the fiscal year ending March 2027.

<a> Persons eligible for delivery of
the Company’s shares subject tothis Proposal*Major revisions are underlined• Directors who are not Audit and Supervisory Committee Members (excluding
External Directors and those who live abroad)• Executive Officers (excluding those who live abroad)<b> Potential impact of the Company’s shares subject to this Proposal on the total number of outstanding shares of the Company
Upper limit of cash to becontributed by the Company (asstated in (2) below)• The amount obtained by multiplying 400 million yen by the number of years of thetarget period• The upper limit for the three fiscal years starting from this fiscal year, which is theinitial target period after the revision, shall be 1,200 million yen in total

Upper limit of the total numberof the Company’s shares to beacquired by the Directors, etc.,
and method of acquiring theCompany’s shares (as stated in(3) below)• The upper limit of points to be granted to the Directors, etc., for each fiscal year shallbe 160,000 points• The maximum total number of shares obtained by converting at the rate of 1 point = 1
share is approximately 0.16% of the total shares outstanding (as of March 31, 2024, netof treasury shares)• The upper limit for the three fiscal years starting from this fiscal year, which is theinitial target period after the revision, shall be 480,000 points (equivalent to 480,000
shares)• The Company’s shares will be acquired from the stock market or the Company (sale oftreasury shares)<c> Details of criteria for achieving
performance (as stated in (3)below)• It shall be changed within 0% to 200%, according to the achievement of theperformance indicators (operating profit, ROIC, TSR, etc.) set forth in the mediumterm management plan<d> The timing of delivery of theCompany’s shares to the
Directors, etc. (as stated in (4)below)• Performance-linked (performance-based points) portion: After the end of the mediumterm management plan period in principle• Non-performance-linked (fixed point) portion: After the end of each fiscal year inprinciple• In principle, restrictions on the transfer of both the performance-linked portion and thenon-performance-linked portion are imposed after the delivery of the Company’s sharesand until the retirement of Directors, etc.

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(Reference) Conceptual image of the System after revision
Target year of duties subject to compensation
Target year for performance evaluation of
performance-based points
FY2024FY2025

FY2026

Delivery of shares

FY2027

FY2028FY2029Restriction on transfer until retirement (the same shall apply hereinafter)

Fixed points
For FY2024
Delivery of shares

Performance-based points
Delivery of shares

Fixed points
For FY2025
Delivery of shares

Performance-based points
Delivery of shares

Fixed points
For FY2026
Delivery of shares

Performance-based points(2) Upper limit of cash to be contributed by the Company
The Company will contribute money up to an amount equivalent to the upper limit of trust money per fiscal year (400 million yen)multiplied by the number of years corresponding to the medium-term management plan at that time as compensation to the Directors,
etc. for each target period, and establish a trust whose beneficiaries are the Directors, etc. who satisfy the beneficiary requirements(hereinafter referred to as the “Trust”) or extend the trust period of the existing Trust. The said upper limit of trust funds shall be thetotal of the funds to purchase the Company’s shares through the Trust, and trust fees and expenses during the trust period. For the initial
target period after approval of the revision of the System, the Company will contribute money with the upper limit of 1,200 million
yen as compensation to the Directors, etc. for the three fiscal years.
The Trust shall, according to the custodian’s instructions, purchase the Company’s shares from the stock market or the Company (saleof treasury share) using trust funds as resources. During the trust period, the Company shall grant points to the Directors, etc. (as statedin (3) below), and the Trust shall deliver the Company’s shares when the Directors, etc. satisfy the beneficiary requirements.
Upon the close of the trust period, the Trust may be continued by changing the trust agreement and implementing an additional trust.
In such a case, a new target period of the Trust shall be the same period corresponding to the Company’s medium-term management
plan at that time and the trust period of the Trust will be extended by the same number of years. The Company shall provide an
additional contribution within the range approved by the General Meeting of Shareholders for each extended trust period, and during
the extended trust period, it shall continue to grant points to the Directors, etc., and the Trust shall continue to deliver the Company’s
shares during the extended trust period. If there are the Company’s shares (excluding the Company’s shares equivalent to points granted
to the Directors, etc., for which the delivery of the Company’s shares has not been completed) and cash as of the end of the trust period
before extension (hereinafter, referred to as “Remaining Shares, etc.”) in the case of an additional contribution, the total of Remaining
Shares, etc. and trust funds to be additionally contributed shall be up to the amount obtained by multiplying the upper limit of trust
money per fiscal year by the number of years of the said target period.
If the trust contract is not changed or additional trust is not executed at the expiration of the trust period, points will not be awarded
thereafter. However, if a Director, etc. who has not yet received the Company’s shares at that time is in office, the trust period of theTrust may be extended up to approximately two years until the delivery of the Company’s shares is completed.

- 58 -

(3) Method of calculating the number of Company’s shares to be acquired by the Directors, etc., and upper limit
The number of the Company’s shares to be delivered to the Directors, etc. shall be determined according to the number of points granted
to the Directors, etc. each year.
In principle, in June of each year during the trust period, the Directors, etc. are granted “fixed points” according to their positions and“performance-based points” that vary according to their performance.
For “performance-based points,” in principle, in June immediately after the end of a medium-term management plan when the said
points are granted, “performance-linked points” are calculated by multiplying the performance-linked coefficient according to theachievement of performance targets set forth in the said medium-term management plan. The performance-linked coefficient shall be
determined according to the degree of achievement of the performance indicators (operating profit, ROIC, TSR, etc.) set forth in themedium-term management plan and vary from 0% to 200%.
One point shall equal one Company share. In case of a share split or consolidation or other event that is deemed fair to adjust the pointsof the Company’s shares during the trust period, the Company shall adjust the number of Company’s shares per point according to theratio of the share split or consolidation or other event.
The upper limit of points to be granted to the Directors, etc., for each fiscal year shall be 160,000 points. The upper limit of points has
been set based on historical stock prices, etc., in light of the upper limit of trust money mentioned above. The number of the Company’s
shares to be acquired by the Trust (hereinafter referred to as the “Number of Shares to Be Acquired”) for each target period shall belimited to the number of shares equivalent to the upper limit of the total number of points per fiscal year multiplied by the number ofyears of the said target period. The Number of Shares to Be Acquired during the initial target period after the revision of the Systemshall be up to 480,000 shares.
(4) Method and timing of delivery of the Company’s shares to Directors, etc.
<a> Fixed-point portion
The Directors, etc., who meet beneficiary criteria, shall be eligible for the delivery of the Company’s shares corresponding to
the fixed points at a certain time after the fixed points are granted in principle, by taking specified procedures to determine thebeneficiary.
<b> Performance-based point portion
The Directors, etc., who meet the beneficiary criteria, shall be eligible for the delivery of the Company’s shares corresponding
to the performance-linked points at a certain time after the completion of the medium-term management plan at the time of
granting the performance-linked points and the calculation of the performance-linked points in principle, by taking specified
procedures to determine the beneficiary.
<c> Conclusion of transfer restriction agreement
In principle, upon the delivery of the Company’s shares as described in 1) and 2) above, the Company shall enter into a transfer
restriction agreement with the Directors, etc. by setting a transfer restriction period until the retirement of the Directors, etc.,
including the following:(a) The Directors, etc. shall not transfer, create a security interest or otherwise dispose of the Company’s shares during theperiod from the day on which they receive the delivery of the Company’s shares until the day on which they retire;(b) Transfer restrictions shall be lifted when the Directors, etc. retire; and(c) In case of a serious violation of duties and internal rules or certain illegal acts such as voluntary resignation against the willof the Company during the period of restriction on transfer, the Company shall not lift the restriction on transfer of theCompany’s shares delivered to such Directors, etc. and shall acquire them free of charge.

- 59 -

The Company’s shares subject to the transfer restriction will be managed in a dedicated account opened at a securities company by
the Directors, etc. during the transfer restriction period so that they cannot transfer, create a security interest or otherwise disposeof them during the transfer restriction period.
<d> Transition measures for the System before the revision
As a transition measure for the System before the revision, with regard to points already granted to the Directors, etc. under the
System before the revision (points scheduled to be granted to provide the Company’s shares and cash corresponding to realization
value of the Company’s shares to the Directors, etc. upon their retirement), the Company’s shares corresponding to fixed points
and performance-linked points shall be delivered at a certain time after the end of this General Meeting of Shareholders, andperformance-linked points shall be promptly converted into performance-linked points to deliver corresponding the Company’s
shares. After that, by applying the details described in 3), the Company shall enter into a transfer restriction agreement with the
Directors, etc., with a transfer restriction period until their retirement, subject to approval at this General Meeting of Shareholders.
(5) Voting rights of the Company’s shares held in the Trust
For the Company’s shares held in the Trust, the voting rights are not exercised during the trust period to ensure the neutrality of the
management.
(6) Treatment of dividend of retained earnings of the Company’s shares held in the Trust
Dividend of retained earnings of the Company’s shares held in the Trust shall be received by the Trust to be appropriated for its trust
fees and expenses. If there is any dividend remaining at the close of the Trust after using dividends for trust fees and expenses, such
dividend shall be paid to the Directors, etc. who meet given beneficiary criteria and become beneficiaries of the Trust based on the trust
agreement at the close of the Trust.
(7) Other details of the System
Other details of the System shall be determined by the Board of Directors each time the Trust is set up, a trust agreement is changed,
and an additional contribution is made to the Trust.
(Reference)
Subject to the approval of this Proposal as proposed, the Company plans to cover directors of certain subsidiaries of the Company as
the subject of the System under the same trust. The compensation for directors of certain subsidiaries of the Company shall beestablished separately from the compensation subject to this Proposal and is scheduled to be submitted to the shareholders’ meeting ofthese subsidiaries.

- 60 -

Reference
The skill matrix of the candidates for directors who are not Audit and Supervisory Committee Members is as follows:
Candidate
Number1
2

Masaharu Shibao✓

Reappointment

Toshiki Yauchi✓✓

Reappointment

3 Yoshiko Nonogaki
4 Masayuki Abe
5 Yoshio KometaniNewappoint
ment

Nomination,
Compensati Audit &on andSupervisory
Financial
Governance Committee Management and capital
strategy
Committee
policyName✓
Reappointment

External

Chairperson

Reappointment

External

Independent

Reappointment

External

Independent

Overseas
operations

Legal affairs,riskmanagement

ESG,
sustainability

Formercompany/
Qualification

✓

-

✓

-

✓

Manufacturing✓✓

Manufacturing

✓

✓

IT
DX

✓

✓

✓

Independent

Experience and expertise✓✓

General✓✓✓tradingcompany

Candidate for
Candidate for new Reappoi
reappointment as
director
ntmentdirector

External

Candidate forexternal director

Indepen Independent officer as required by a stock
dent exchange

The skill matrix of present directors who are Audit and Supervisory Committee Members is as follows:
Number1
2
3

Nomination,
Compensati Audit &on andSupervisory
Financial
Governance Committee Management and capital
strategy
Committee
policyName✓

Junji Honda
Mitsuhiro
Matsumoto
Izumi Hayashi

External External directors

Chairperson

Experience and expertise
Overseas
operations

Legal affairs,riskmanagement

IT
DX

✓

ESG,
sustainability

Formercompany/
QualificationーCertified
External✓

Independent✓

publicaccountant

External✓

Independent

Independ Independent officer as required by a stockent
exchange- 61 -✓✓

LawyerAccess to Venue of General Meeting of Shareholders
Shiba Kokusai Jr. & Sr. High School
Tokyo Joshi Gakuen Jr. & Sr. High School
Laurus International School of Science

PMO, Nomura Real
Estate Development

Underground passageway

Mita NN Hall

SunkenGardenShiba
Tax
OfficeVenue: Mita NN Hall
1st basement floor (B1F) of Mita NN
Building

NEC Head Office
BuildingHall
entrance

Exit A9
Mita Station

Familymart

SubwayExit A9
Shiba 5-chome
LawsonFamilymart

Mita Station
TamachiTower
Roundabout infront of station

Mita Exit(West Exit)

JR Tamachi
Station*JR Yamanote Line/Keihin-Tohoku Line
*Asakusa Line and Mita Line of Toei Subway

Tamachi Station (about a five-minute walk from Mita Exit)
Mita Station (about a two-minute walk from Exit A9)(Request) We do not have a parking lot, so please do not come by car.