Notice of the 71st Annual
General Meeting of
Shareholders
Date and time

Proposals

Thursday, June 22, 2023
10 a.m. (reception begins at 9:30 a.m.)

Proposal 1
Proposal 2
Proposal 3

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

Proposal 4

Appropriation of Surplus
Election of Six Directors Who Are Not Audit andSupervisory Committee Members
Election of Three Directors Who Are Audit andSupervisory Committee Members
Election of One Substitute Director Who Is an
Audit and Supervisory Committee Member

Table of Contents
Notice of the 71st Annual General Meeting of Shareholders .... 2
Business Report ........................................................................ 7
Consolidated Financial Statements ......................................... 24
Non-consolidated financial statements ................................... 40
Audit Report ........................................................................... 48
Reference Documents for the General Meeting of Shareholders................................................................................................ 54
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 5.

-1-

Nifco Inc.
Securities Code: 7988

To Shareholders

Securities Code: 7988
June 6, 2023
5-3 Hikarinooka, Yokosuka, Kanagawa

President and Representative Director

Nifco Inc.
Masaharu Shibao

Notice of the 71st Annual General Meeting of Shareholders
We would like to express our gratitude for your continued support.
You are cordially invited to attend the 71st 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/2023shoushuu.html(Please access the above website and select “Notice of the 71st 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://www.jpx.co.jp/english/(In the TSE website, enter “Nifco Inc.” in Issue name (company name)or “7988” in code and press 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 21, 2023.
[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 21, 2023 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/).

-2-

If you exercise your voting rights via the Internet, please refer to “Instructions for Exercising Voting
Rights via the Internet, etc.” on page 6.
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.
Although this General Meeting of Shareholders will be held with appropriate infection-control measures toprevent the spread of COVID-19, shareholders are requested to consider the infection status and otherfactors in deciding whether or not to attend the meeting.

1 Date and time Thursday, June 22, 2023, at 10 a.m. (reception begins at 9:30 a.m.)
2 Venue

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 71st fiscal year (from April 1, 2022, to March 31, 2023)
2. Non-consolidated Financial Statements for the Company’s 71st fiscal year (from April
1, 2022, to March 31, 2023)

Resolutions

Proposal No. 1:
Proposal No. 2:
Proposal No. 3:
Proposal No. 4:4 Guide to Exercising Voting
RightsAppropriation of Surplus
Election of Six Directors Who Are Not Audit and Supervisory Committee
Members
Election of Three Directors Who Are Audit and Supervisory Committee
Members
Election of One Substitute Director Who Is an Audit and Supervisory
Committee Member

Please refer to the “Guide to Exercising Voting Rights” on page 5.

-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 andafter 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.

Request to shareholders- In order to prevent infection, seats will be arranged with greater space between them in the General Meeting of Shareholders. For
this reason, the number of seats will be reduced and we may restrict entry to the venue.
- Alcohol sanitizer will be prepared for shareholders near the reception desk.
- The doors of the venue may be open for ventilation.
- In order to shorten the meeting time, we may reduce the explanation of reports and agenda item details. Shareholders are kindly
requested to read the Notice in advance.
The above measures may be updated depending on the status of infection by the day of the General Meeting of Shareholders andannouncements made by the government and other institutions. In addition, please check the information posted on the Company’s
website (https://www.nifco.com/).

-4-

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 21, 2023

Voting cards must arrive by 5
p.m. on Wednesday, June 21,
2023

Thursday, June 22, 2023
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.

-5-

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 at the address 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.

-6-

Business Report (April 1, 2022, to March 31, 2023)

1. Current Status of the Corporate Group(1) Business in the Current Period<a> Business Progress and Results
In the fiscal year under review (hereinafter referred to as the current period), the Japanese economy was polarized, with retailand other consumption-related business conditions improving in the non-manufacturing sector on the back of a recovery inconsumer spending and inbound demand, while in the manufacturing sector, business conditions in the materials sector wereweak due to higher raw materials prices, and business conditions in the electrical machinery sector deteriorated due to a decline
in global semiconductor demand. Looking overseas, both internal and external demand has been sluggish, with thestrengthening of the zero-COVID policy by the Chinese government in the fall of 2022, the economic slowdown in the UnitedStates and Europe, and exports declining as a result of reduced factory operation due to activity restrictions. In the European
economy, persistent inflationary pressures for both goods and services have weighed on the economy, with wages risingreflecting a tight labor supply-demand balance, and higher production costs resulting from higher resource prices being passed
on to sales prices. In the U.S. economy, the easing of supply constraints through improvements in product lead times and otherfactors has been a supportive factor for business activities. However, goods production sectors such as manufacturing andconstruction have remained sluggish due to declining new orders reflecting reduced demand in response to monetary tightening
and other factors. In this way, prices in the global economy are rising against the backdrop of soaring international commodity
prices and the overall rise of labor costs. The outlook remains uncertain due to the rapid tightening of monetary policy and the
downward political pressure on economic activities for price stabilization.
As for automobile manufacturers, which are major customers of the Group, both production and sales volume increased year
on year in the Japanese market in the current period. Overseas, compared with the same period of the previous fiscal year, bothproduction and sales volumes in the European market declined, while production in the U.S. market increased despite a decline
in sales. In the Chinese and Indian markets, both production and sales volumes significantly increased.
Under these circumstances, consolidated net sales for the current period increased 13.4% from the previous fiscal year to
321,771 million yen. In terms of profits, operating profit increased 12.8% to 34,439 million yen, as the higher gross profit due
to stronger sales outweighed the increase in selling, general and administrative expenses. Ordinary profit increased 12.7% to37,876 million yen due to foreign exchange gains from the depreciation of the yen. In addition, extraordinary losses of 2,378
million yen were recorded due to impairment losses at subsidiaries in the United States and China and business restructuring
expenses of a subsidiary in China. Profit attributable to owners of parent fell 7.8% to 21,170 million yen.
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)Domestic auto production fell significantly below our initial plan, especially in the first quarter, due to reduced production
caused by semiconductor shortages and supply chain stagnation. From the second quarter, production recovered slightly but
fell short of the plan, and in the third quarter, production fell short of the plan again due to the spread of COVID-19 in China.
(For the overseas automobile industry)
In overseas operations, results were largely divided by region and customer. In Europe and North America, with the exceptionof South Korean affiliates, the Group struggled due to a shortage of semiconductors at all of its locations and rising costs of
raw materials, personnel expenses, and logistics, resulting in sales and profits that were significantly below plan. In particular,
the business for German OEMs experienced operational problems that led to increased losses. On the other hand, the ASEAN
region was largely unaffected by these factors and was able to maintain its strong performance, supported by strong demand
from Japanese OEMs. In the China region as well, the Group maintained a solid performance for the full year, despite asignificant decline in performance toward the end of the year due to the impact of the lifting of the zero-COVID policy. South
Korea’s OEM business also continued to perform well globally, with the exception of China, with sales and profits exceedingplans, particularly in Europe, North America, and India. In the current period, with the introduction of the overseas regional
control system, we will improve the performance of our overseas businesses and further improve our profitability, focusing on-7-

rebuilding European and American bases under regional leadership, while promoting the consolidation and elimination of
unprofitable South-Korea-related China bases.
[For other industries]
In the housing and living sector, production was lower than originally planned due to reduced housing-equipment production
caused by the impact of the Chinese lockdown and soaring prices of wood due to COVID-19 (called the “wood shock” inJapan). On the other hand, in the sports and outdoor sector, net sales increased from the previous period due to strong demand
for running shoe and clothing components as a result of growing health consciousness, especially in Europe and the UnitedStates.
As a result of the foregoing, net sales in the industrial plastic parts & components increased 13.7% to 288,734 million yen.
Segment profit rose 12.9% to 34,050 million yen.
(ii) Bed and Furniture BusinessIn the Bed and Furniture business, although sales to dealers grew steadily in Japan, profit fell despite the increased income dueto the inability to absorb higher costs resulting from higher raw material prices and a weaker yen. Overseas, the Group wasable to avoid a significant decline in the challenging environment brought by the zero-COVID policy in China, and sales andprofit increased thanks to steady growth in sales to wholesalers, retailers, and hotels in Taiwan and Singapore, as well as theimpact of the weak yen on foreign exchange rates. As a result, net sales in the bed and furniture business grew 11.1% to 33,037
million yen. Segment profit rose 5.8% to 5,885 million yen.

-8-

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

288,734113.7

204,596110.5

Bed and furniture business

33,037111.1

11,627109.8

321,771113.4

216,224

110.5

Total

<b> Capital Investment
Capital expenditures in the current period totaled 8,872 million yen. These included the acquisition of molds and theconstruction of a new plant for our subsidiary Nifco India Private Ltd.
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
68th Period

69th Period

70th Period(April 1, 2019, to March
31, 2020)(April 1, 2020, to March
31, 2021)(April 1, 2021, to March
31, 2022)

71st Period(Current period)(April 1, 2022, to March
31, 2023)

Net sales(Million yen)

288,012

256,078

283,777

321,771

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

28,76529,53533,60237,876(Million yen)

18,321

18,402

22,95921,170177.87 yen

181.09 yen

227.27 yen

211.28 yen

Total assets(Million yen)

304,184

307,127333,068

359,150

Net assets(Million yen)

168,786

178,649

200,875

226,127

1,630.57 yen

1,737.80 yen

1,978.36 yen

2,237.06 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 Remuneration 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.

-9-(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) Ltd.

HK$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.

Manufacture and sale of beds, import and sale offurniture

100.00 Bed and furniture business(Note) Percentages of voting rights of the Company are rounded down to the indicated decimals.

(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 in addition to theshortage of components such as semiconductors, 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, and constructing information systems for security and IT utilization. At the same time, we are currently working to smoothly
launch projects for global strategic products for vehicles and multilateral projects, and strengthen the quality assurance systems ofoverseas subsidiaries.
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 cases of lawsuit filed by a third party concerning intellectual property rights.

- 10 -

(5) Main Business (as of March 31, 2023)
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, the purchase of accounts
receivable, the consignment of various services, and other businesses.

(6) Major Offices and Plants (as of March 31, 2023)
Nifco Inc.

Headquarters

5-3 Hikarinooka, 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

Nifco Germany GmbH

Headquarters

Bayern, Germany

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

Taipei, 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) Ltd.

Oyamacho, Sunto-gun, Shizuoka

Headquarters- 11 -

Hong Kong(7) Status of Employees (as of March 31, 2023)<a> People working for corporate groups
Business category

Number of employees

Industrial Plastic Parts & Components

Change from the end of the previous fiscal
year
Decreased 50(Increased 80)

9,114(2,841)

Bed and furniture business

914

(259)

Increased 18(Increased 16)

Company-wide (common)

141

(-)

Increased 8

(-)

Total

10,169(3,100)Decreased 24(Increased 96)(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 12 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
1,361 (383)(Notes)1.

2.

Change from the end of theprevious fiscal year
Decreased 14 (decreased 28)

Average age

Average years of service
41.8

16.3

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 12 employees seconded to our affiliates.
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, 2023)
Lenders

Borrowings

Mizuho Bank, Ltd.

9,843 million yen

Sumitomo Mitsui Banking Corporation

8,568 million yen

MUFG Bank, Ltd.

8,056 million yen

The Shizuoka Bank, Ltd.

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

- 12 -

2. Current Status of the Company(1) Stocks (as of March 31, 2023)<a> Total number of shares authorized

233,000,000<b> Total number of shares outstanding

107,508,954<c> Number of shareholders

4,097<d> Major shareholders (top 10)
Shareholder name

Number of shares held

Percentage of shares
held (%)

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

23,665,100

23.57

Toshiaki Ogasawara Memorial Foundation

10,343,665

10.30

Custody Bank of Japan, Ltd. (trust account)

7,693,400

7.66

GOLDMAN, SACHS & CO. REG

6,152,996

6.12

Nippon Life Insurance Company

2,915,390

2.90

THE BANK OF NEW YORK MELLON (INTERNATIONAL) LIMITED 131800

2,625,700

2.61

Dai-ichi Life Insurance Company, Ltd.

2,065,400

2.05

TAIYO FUND, L.P.

1,837,300

1.83

J.P. MORGAN BANK LUXEMBOURG S.A. 381572

1,581,900

1.57Japan Post Insurance Co., Ltd.

1,342,400

1.33(Note)The shareholding ratio is calculated after deducting treasury shares (7,114,953 shares).
The Company shares (413,221 shares) held by the Executive Remuneration BIP Trust account and the Company shares (49,739 shares) held by the Stock Grant
ESOP Trust account are not included in treasury shares.

<e> Status of shares delivered to officers as consideration for their performance during the current period
SharesDirector(excluding Audit and Supervisory
Committee Members)

Director(excluding external directors)
External directors

Directors (Audit and Supervisory Committee Members)(Note)

Number of recipients
-

-

-

-

-

-

Details of the Company’s stock-based remuneration are described in “(4) Remuneration, etc. of Directors” on page 16 of the Business Report.

- 13 -

(2) Share Acquisition Rights, etc.
<a> Share Acquisition Rights Held by Officers as Consideration for Their Performance (as of March 31, 2023)
Not applicable.

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

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

- 14 -

(3) Status of Company Officers<a> Directors (as of March 31, 2023)
Position
Chairperson and
Representative Director
CEO (Chief Executive
Officer)

Name

Responsibilities and significant concurrent positions

Toshiyuki Yamamoto

President and Representative
Director
COO (Chief Operating
Officer)

Masaharu Shibao

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

Toshiki Yauchi

Director

Yoshiko Nonogaki

Outside Director, GS Yuasa Corporation
Outside Director, Sato Holdings Corporation

Director

Brian K. Heywood

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

Director

Masayuki Abe

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

Directors (Audit andSupervisory Committee
Members)

Toshiyuki Arai

Directors (Audit andSupervisory Committee
Members)(Notes)

1.
2.
3.
4.

5.

Mitsuhiro Matsumoto

LawyerOutside Director, Spiber Inc.
Outside Corporate Auditor, Moneytree K.K.
Certified public accountant
Outside Director, Suzuki Co., Ltd. (Member of Audit and Supervisory Committee)
Outside Director, Hoden Seimitsu Kako Kenkyusho Co., Ltd. (Audit and Supervisory
Committee Member)

Directors Yoshiko Nonogaki, Brian K. Heywood and Masayuki Abe, and Directors (Audit and Supervisory Committee Members) Toshiyuki Arai and
Mitsuhiro Matsumoto are external directors.
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.
Director (Audit and Supervisory Committee Member) Mitsuhiro Matsumoto is a certified public accountant and has considerable financial and accounting
knowledge.
The Company has designated directors Yoshiko Nonogaki, Brian K. Heywood and Masayuki Abe, as well as directors (Audit and Supervisory Committee
members) Toshiyuki Arai and Mitsuhiro Matsumoto, as independent officers pursuant to the provisions of the Tokyo Stock Exchange and has notified theTokyo Stock Exchange of their appointment.
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.

<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.

- 15 -

<c> Summary, etc. of Contents of Officers’ Liability Insurance Contract
The Company has entered into liability insurance (Directors and Officers, or D&O) contracts with insurance companies forofficers 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> Remuneration, etc. of Directors
i. Policies, etc. for Determining the Content of Remuneration, etc. for Directors
At a meeting held on May 18, 2023, the Board of Directors of the Company resolved to establish a policy for the appointment
of directors and a policy for remuneration for directors (and other officers) for fiscal 2023 and thereafter. When the Board of
Directors makes a resolution, it consults the Nomination, Compensation and Governance Committee on the matters to beresolved and receives a report in advance.
The policy for remuneration for directors (and other officers) includes:
1. Basic Policy on Remuneration for Directors (and Other Officers)
Based on the basic principles of corporate governance, the remuneration for directors and executive officers (hereafterreferred to as “remuneration for directors (and other officers)”) is based on the following basic policy:(1) Contributes to the Company’s mission of “Nifco generates ideas and cultivates technology to turn your expectations into
excitement.”(2) The remuneration system shall be highly independent, objective, and transparent, and shall be such that the Company isaccountable to its employees, customers, shareholders, and other stakeholders.
(3) The system for remuneration for directors (and other officers) is such that the Company employees find it attractive.
2. Remuneration Level
The levels of remuneration for directors (and other officers) are determined based on the basic policies described above afteran annual survey of peer groups and analysis of the remuneration levels of other companies in the same industry and othermajor companies of the same size based on the Company’s business environment and external databases.
Specifically, we examine JPX 400 companies for appropriate remuneration levels, taking into account the remuneration levelsof companies having commensurate operating profit and total market value as well as companies having stock-based
remuneration systems. We also consider the amount of dividends paid to shareholders, the maximum annual salary of
employees, and the pay ratio (the discrepancy between CEO remuneration and average employee salary).
3. Remuneration Structure(1) Remuneration Composition
The remuneration for the President and Representative Director consists of 47% basic remuneration, 20% executive
bonuses, and 33% stock-based remuneration. Bonuses and stock-based remuneration account for a majority of totalcompensation.
Remuneration for directors who are not Audit and Supervisory Committee members and executive officers consists of“basic remuneration,” “executive bonuses,” and “stock-based remuneration.” Independent external directors and directors
who are members of the Audit and Supervisory Committee (hereinafter referred to as “non-executive directors”) receive
only “basic remuneration.”
The remuneration of the Chairperson of the Board of Directors is given for efforts of responding to important management
issues designated by the President and the Board of Directors and for the results of such efforts.
(2) Summary of Each Remuneration Item<a> Basic Remuneration
The amount of remuneration is determined for each position according to the level of responsibility, and is paid as
fixed monthly salary according to the role played in order to secure excellent personnel.
<b> Executive Bonuses (Annual Incentive)- 16 -

Bonuses are paid on a single-fiscal-year basis to provide an incentive to the Group’s consolidated performance. In
order to strengthen the earning power of our core business, we use consolidated net sales and consolidated operating
profit as evaluation indicators, and also employ qualitative assessment. Payments can vary basically from 40% to150% of the base amount.
<c> Stock-based Remuneration (Medium- to Long-Term Incentive)
To encourage directors and officers to further raise the level of motivation to contribute to medium- to long-termbusiness performance and corporate value, and to further share value with shareholders, the Company shares aredelivered upon retirement. Of stock-based remuneration, 50% is performance-linked and 50% is non-performancelinked. Starting in fiscal 2016, the stock-based remuneration uses a trust structure under which the Company shares,
etc. are delivered to eligible directors and officers. Specifically, points are granted annually to eligible directors andofficers, and upon retirement, Company shares equivalent to the number of points are delivered from the trust.
Management of the Company shares is entrusted to Mitsubishi UFJ Trust and Banking Corporation. In addition, inorder to respond more flexibly to changes in the social environment, the Company establishes a medium-term
management plan every year (rolling medium-term management plan) from fiscal 2021. The Company is now
reviewing the system to further strengthen incentives for medium- and long-term goals from the perspective ofshareholders and investors. The performance-linked portion will be determined based on an evaluation of the levelof achievement of the performance indicators (operating cash flow, return on invested capital (ROIC), total
shareholder return (TSR), etc.) in the medium-term management plan, and will be determined within the range of
0% to 200%. We are also considering incorporating ESG indicators into future rolling medium-term management
plans. The above indicators will be reviewed in a timely and appropriate manner for each rolling medium-term
management plan. The non-performance-linked portion will be paid as stock-based remuneration with a fixed
number of shares to be delivered in order to further encourage linkage with medium- to long-term shareholder value.
(3) Confiscation of Remuneration (Clawback and Malus)
In the event of a resolution by the Board of Directors to make a subsequent adjustment to financial results due to amaterial accounting error or impropriety, or in the event that the Board of Directors determines that there has been material
misconduct during the term of office, the Board of Directors may, following deliberations by the Nomination,
Compensation and Governance Committee, request that the payment of bonuses and stock-based remuneration be
restricted or refunded.
4. Guidelines for Ownership of Company’s Shares
Directors and executive officers will be encouraged to hold the Company’s shares in order to further raise awareness of theneed to improve business performance and increase stock prices from the perspective of shareholders.
5. Decision Process
In order to enhance the independence, objectivity, and transparency of the system of remuneration for directors (and otherofficers), the Company established the Nomination and Remuneration Committee on December 10, 2018, as an advisory
body to the Board of Directors, with the committee chair and the majority of the members being independent external
directors. In addition, the name was changed to the Nomination, Compensation and Governance Committee on October 28,
2020, in order to further strengthen future governance initiatives. In principle, the committee meets at least four times a year,
and deliberates on individual remuneration amounts and qualitative assessments to provide advice and recommendations to
the Board of Directors.
In order to introduce objective perspectives and expert knowledge of the system for remuneration for directors (and otherofficers) from outside the Company, we consider remuneration levels and remuneration systems by taking into accountexternal data, the economic environment, industry trends, and business conditions, with advice from outside consultants
appointed by the Nomination, Compensation and Governance Committee.
6. Engagement Policy
The details of the Company’s system for remuneration for directors (and other officers) will be promptly disclosed to theCompany shareholders in securities reports, business reports, corporate governance reports, and Nifco reports, which arerequired to be prepared and disclosed in accordance with laws and regulations, as well as on the Company’s website. We will
also actively engage with institutional investors.
In determining the amount of remuneration for directors (and other officers), the amount of dividends paid to shareholders
and the level of salaries paid to employees are also taken into account.

- 17 -

ii. Total Amount of Remuneration, etc. for the Current Period
Total amount of remuneration by type (Million yen)

Category

Total amount of
remuneration, etc.
(Million yen)

Basic
Remuneration

Performancelinked
remuneration

Non-monetary
remuneration, etc.

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

278
(28)

176
(28)

58
(-)

45
(-)

5
(2)

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

61
(28)

53
(28)

8
(-)

(-)

3
(2)

Total
(Outside officers)

339
(56)

229
(56)

66
(-)

45
(-)

8
(4)

(Notes)

1.

2.
3.

4.
5.

6.

7.

Number of eligible
officers

At the end of the current period, there were six directors who were not Audit and Supervisory Committee members (including three external directors) andthree directors who were Audit and Supervisory Committee members (including two external directors). The number of directors paid excludes one nonremunerated external director.
In addition to the above, the amount of expenses recorded in the Executive Remuneration BIP Trust for the current period, which was approved at the 69th
Annual General Meeting of Shareholders held on June 24, 2021, was 45 million yen for three directors.
Performance indicators related to performance-linked remuneration 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 the perspective of strengthening the earning power of our core business. For details, please refer to the Company’s website (https://www.nifco.com/).
The non-monetary compensation consists of the Company stock, and the conditions of the allotment are as described in “i. Policies, etc. for Determining theContent of Compensation, etc. for Directors.”
At the 69th Annual General Meeting of Shareholders held on June 24, 2021, it was resolved that the maximum amount of remuneration 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 remuneration 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 remuneration for directors is resolved by the Board of Directors in response to a voluntary report by the Nomination, Compensation
and Governance Committee.

- 18 -

<e> Matters Related to Outside 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., outside director of Roland DG Corporation, and outside
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 (Audit and Supervisory Committee Member) Toshiyuki Arai is an outside director of Spiber Inc. and an outside
corporate auditor of Moneytree K.K. There is no special relationship between the Company and the two 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. and an external director (member of the Audit and Supervisory
Committee) of Hoden Seimitsu Kako Kenkyusho Co., Ltd. There is no special relationship between the Company and thetwo companies.

(ii)

Principal Activities in the Current Period
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 period. At meetings of theBoard of Directors, she has expressed her opinions and asked questions about strategies and othermatters related to the overall business in Japan and overseas, mainly based on her extensive experienceand insight at major companies.
She also attended five of the five committee meetings held during the current period as chairperson of
the voluntary Nomination, Compensation and Governance Committee. In this committee, she offeredadvice on strengthening the structure for our company’s continued growth and enhancement ofcorporate 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 period. 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 five of the five meetings of the voluntary Nomination, Compensation and
Governance Committee. With his extensive experience and insight as a corporate management andinvestment 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 period. At the meetings ofthe 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)
Toshiyuki Arai

Attended 13 of the 14 Board of Directors meetings and 13 of the 14 Audit and Supervisory Committee
meetings held during the current period. He provided advice and recommendations to ensure theappropriateness and validity of the Board of Directors’ decision-making, mainly by expressing his
opinions from his professional perspective as an attorney, and made remarks at the Audit andSupervisory Committee with an emphasis on the internal control system.

Directors (Audit and Supervisory
Committee Members)
Mitsuhiro Matsumoto

Attended 14 of the 14 Board of Directors meetings and 14 of the 14 Audit and Supervisory Committee
meetings held during the current period. Mainly from his professional perspective as a certified public
accountant, he expressed his opinions and asked questions on finance and accounting at meetings ofthe Board of Directors, and expressed his opinion focusing on accounting and financial auditing at
meetings of the Audit and Supervisory Committee.

- 19 -

<f> The Officer Nomination Policies and The Officer Compensation Policies
After deliberations by the Nomination, Compensation and Governance Committee, the Board of Directors resolved at its
meeting held on May 18, 2023, to establish a policy for the appointment of directors and remuneration for directors (and otherofficers) for fiscal 2023 and thereafter. For details, please refer to the Company’s website(https://www.nifco.com/en/news/detail/2023shoushuu.html).

(4) Status of Accounting Auditor<a> Name

KPMG AZSA LLC<b> Amount of Remuneration
Amount paid
Amount of remuneration for the Accounting Auditor for the current period

89 million yen

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

106 million yen(Notes)

1.

2.

3.

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 period is stated.
The Audit and Supervisory Committee of the Company have decided to agree on the amount of remuneration 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 remuneration paidby peer companies to their auditors.
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.

- 20 -

(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 of 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.

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.

- 21 -

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.

- 22 -

(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 period will be 33 yen per share. Together with the interim dividend of 31 yen per share already
distributed, the annual dividend becomes 64 yen per share.

- 23 -

Consolidated Financial Statements
Consolidated Balance Sheet (as of March 31, 2023)
Item
AssetsCurrent assets
Cash and deposits
Notes receivable–trade
Electronically recordedmonetary claims–operating
Accounts receivable–trade
Contract assets
Securities
Merchandise and finished
goodsWork in process
Raw materials and supplies
Other
Allowance for Doubtful
Accounts
Non-current assets

Current
periodPrevious
period (for Difference
reference)

Item

243,668
129,793
1,668

219,556
112,944
2,013

24,112
16,848
(344)

7,771

6,725

1,045

52,262786
691

48,869
626
757

3,393
160
(65)

27,966

26,955

1,011

3,226
10,020
9,742

3,350
9,043
8,535

(124)
976
1,207

(261)

(265)

4

115,482

113,512

1,969

Property, plant and equipment

104,921103,329

1,591

Buildings and structures
Machinery, equipment andvehiclesTools, furniture and fixtures
Mold
Land
Leased Assets
Construction in progress
Other48,11847,976142

19,78020,332

(551)

4,426
4,458
18,502
44
2,913
6,676

4,638
4,340
17,698
47
3,670
4,625

(211)
117
803
(2)
(756)
2,050

1,887
467
1,419
8,673
3,317

2,094
735
1,358
8,088
3,359

(207)
(268)
60
585
(41)

Deferred tax assets

963

1,630

(667)

Retirement benefit asset
Other
Allowance for Doubtful
Accounts
Total assets

1,664
2,728

274
3,276

1,389
(548)

(0)

(452)

451

359,150

333,068

26,082Intangible assets
Goodwill
Other
Investments and other assets
Investment securities(Million yen)

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

- 24 -

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

Current
periodPrevious
period (for Difference
reference)

71,74461,78025,07622,258

2,817

8,903

11,272(2,369)10,209

3,462

6,746

5,190
5,329

6,034
3,761

(843)
1,568

Contract liabilities

4,240
2,517
10,277
61,27835,00010,345
7,175

4,530
2,226
8,233
70,41235,00020,661
6,926

(289)

Provision for Bonuses
Other
Non-current liabilities
Bonds payable
Long-term borrowings
Deferred tax liabilities
Retirement benefit
liability
Other
Total liabilities
Net assets
Shareholders’ equity
Share capital

1,818

2,392

(574)

6,938
133,0235,430
132,193

1,507
830

209,966
7,290

195,946
7,290

14,019-

Capital surplus
Retained earnings
Treasury shares
Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities
Deferred gains or losses onhedges
Revaluation reserve for land
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans
Non-controlling interests
Total net assets
Total liabilities and net assets

9,964

290
2,044
(9,134)(10,316)248

13,90813,86345

208,459(19,691)

193,531(18,737)

14,928(954)

13,5852,228

11,356

737

898

(161)

(63)

(36)

(27)

6

6

-

13,002

2,062

10,940

(96)

(701)

604

2,576
226,127
359,150

2,700
200,875
333,068(124)
25,252
26,082

Consolidated Statement of Income (April 1, 2022, to March 31, 2023)(Million yen)

Current period

Previous period(for reference)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Gain on valuation of derivatives
Gain on valuation of investment securities
Foreign exchange gains
Subsidy income
Other
Non-operating expenses
Interest expenses
Loss on valuation of derivatives
Compensation expenses
Other
Ordinary profit

321,771
235,927
85,84351,40334,439
4,538
527
88
413
2,315
545
647
1,101
520
117
463
37,876

283,777
207,271
76,50545,96530,540
4,345
332
390
2,854
115
652
1,283
430
218
340
293
33,60237,99328,655
9,337
5,438
3,899
193
195
88
22
(538)
430
(5)
(182)
89
(218)
(223)
170
4,274

Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Insurance claim income
Extraordinary losses
Impairment losses
Loss on sale and retirement of non-current
assetsLoss on sale of shares of subsidiaries
Business restructuring expenses
Loss on suspension of operations due to
COVID-19
Profit before income taxes
Income taxes–current
Income taxes–deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

158
42
116
2,378
1,903

497
205
50
240
804
-

(338)
(163)
(50)
(124)
1,573
1,903

128

60

68

317

744
-

(744)
317

28

-

28

35,657
12,670855
22,130960
21,17033,294
8,527
995
23,771812
22,959

2,362
4,142
(139)
(1,640)148(1,788)Item(Note) Differences from the previous fiscal year are presented for reference.

- 25 -

DifferenceConsolidated Statement of Changes in Equity (April 1, 2022, to March 31, 2023)(Million yen)

Shareholders’ equity
Share capital
Balance at beginning of period

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity13,863

193,531(18,737)

195,946

7,290

Changes during the fiscal year
Dividends of surplus(6,241)(6,241)

Profit attributable to owners of parent

21,17021,170Purchase of treasury shares
Disposal of treasury shares
Net changes in items other thanshareholders’ equity during the fiscal
year
Total changes during the fiscal year

45

Balance at end of period(1,328)(1,328)

373

419

-

45

14,928(954)

14,0197,290

13,908208,459(19,691)

209,966

Accumulated other comprehensive income

Balance at beginning of period

Valuationdifference on
available-forsale securities

Deferred
gains orlosses onhedges898(36)

NonTotal
Foreign
Revaluation
Remeasurements accumulated controllingcurrency
reserve forof defined benefit
otherinterests
translation
land
plans
comprehensive
adjustment
income
6

2,062

(701)

2,228

2,700

Total net
assets200,875

Changes during the fiscal year
Dividends of surplus(6,241)

Profit attributable to owners of parent

21,170Purchase of treasury shares(1,328)

Disposal of treasury shares
Net changes in items other thanshareholders’ equity during the fiscal
year
Total changes during the fiscal year

419
(161)

(27)

-

10,940604

11,356(124)

11,232

(161)

(27)

-

10,940604

11,356(124)

25,252

Balance at end of period

737

(63)

6

13,002(96)

13,5852,576

226,127- 26 -

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

52
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 included in the scope of consolidation due to new incorporation during the current period
Nifco Europe GmbH
Nifco Germany doo Subotica<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.
Nifco Germany GmbH

- 27 -

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) Ltd.
29 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, 2023, to the consolidated closing dateof March 31, 2023, 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, work The cost method based on the gross average method is mainly used. (For values inin process, raw materials andthe balance sheet, devaluation based on a decline in profitability is used.)
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
1 to 50 years
Machinery, equipment and vehicles 2 to 20 years
Tools, furniture and fixtures
1 to 20 years
Mold
1 to 11 years
ii. Intangible assets(excluding leased assets)- Software for internal use
The straight-line method based on the internal estimated useful life (5 years) is used.
- Other intangible fixed assets
Depreciation is made based on economic useful lives.
iii. Leased assets
The straight-line method is used, with the lease term as the useful life and zero as
the residual value.

- 28 -

<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.
<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
In the industrial plastic parts & components, the Company mainly manufactures and sells industrial plastics fasteners andprecision 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.

- 29 -

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

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.

ii. Standards for theTranslation of
Significant Foreign
Currency Assets or
Liabilities into Japanese
Currency

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.

iii. Method of Hedge
Accounting<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 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.

iv. Amortization of
Goodwill

Goodwill is amortized on a straight-line basis over the estimated period in which the effectof the investment is realized.

v. Application of Tax
Effect Accounting forTransition from
Consolidated Tax
Payment System to Nonconsolidated Tax
Payment System

Some consolidated subsidiaries previously applied the consolidated tax payment system.
However, in the previous period, the Group submitted to the competent district tax director a
notification saying that the Group will not adopt the Japanese group relief system. Therefore,
from this period, the Group will transfer its tax payment from the consolidated tax payment
system to the non-consolidated tax payment system. Accordingly, in accordance with thetreatment in Section 33 of “Handling of Accounting and Disclosure When Applying theGroup Relief System” (Practical Solutions No. 42, August 12, 2021), the Group applies tax
effect accounting based on the non-consolidated tax payment system from the current period.

- 30 -

2. Notes on Changes in Accounting Policies(Adoption of Accounting Standards Codification (ASC) No. 842, “Leases” of Financial Accounting Standards Board)
Overseas subsidiaries that adopt the U.S. accounting standards are applying ASC No. 842, “Leases,” from the current period. As aresult, the lessee has in principle recorded all leases as assets and liabilities in the balance sheet.
The Group is applying this accounting standard in a transient manner by recognizing the cumulative effects of changes in accounting
policies on the effective date.
As a result of the application of this standard, leased assets (net) decreased 91 million yen and other under property, plant and equipment
increased 709 million yen in the current period Other under current liabilities increased 367 million yen and other under non-current
liabilities grew 426 million yen.
The impact on earnings for the current period is immaterial.
(Application of guidelines of accounting standards for calculation of market value)
The Company adopted the “Guidance on Accounting Standard for the Measurement of Fair Value” (Accounting Standards Board ofJapan (ASBJ) Guidance No. 31, June 17, 2021, hereafter referred to as the “Guidance on Accounting Standard for Market Value”) fromthe beginning of the current period and decided to apply the new accounting policies set forth in the Guidance into the future inaccordance with the transitional treatment set forth in Article 27, Paragraph 2 of the Guidance. The effect of this change on the
consolidated financial statements is immaterial.
3. Notes on Changes in Presentation(Consolidated statement of income)“Subsidy income,” which was included in “Other” under “Non-operating income” in the previous fiscal year, is now separately statedin the current period due to its increased monetary importance.
4. Notes on Accounting Estimates
Recognition of impairment losses on non-current assets held by Nifco KTW America Corporation(1) Amount Recorded in the Consolidated Financial Statements for the Current Period
Non-current assets of Nifco KTW America Corporation: Book value 3,445 million yen, impairment losses 1,065 million yen(2) Information on the Content of Significant Accounting Estimates for Identified Items
Nifco KTW America Corporation (hereafter, “KWA”) adopts U.S. accounting standards. If signs of impairment are identified and thetotal undiscounted future cash flows from an asset group are less than the carrying amount, the difference between the carrying amountand fair value is recognized as impairment losses. KWA’s profitability has deteriorated significantly due to delays in reflecting higher
personnel expenses in product prices and delays in improvement of yields, and non-current assets show signs of impairment. For thisreason, we conducted a collectability test for non-current assets in the current period. As a result, the Group determined that the carrying
amount of non-current assets was not recoverable, and therefore recognized the difference between the carrying amount and fair value(1,065 million yen) as impairment losses.
The Group estimates the fair value based on the appraisal value for the purpose of measuring impairment losses, and employs outside
experts because selecting the valuation techniques and conditions used to calculate such appraisal value requires a high level ofexpertise. In addition, there may be additional impairment losses in the consolidated financial statements for the following fiscal year
and beyond due to changes in the real estate market and other factors.
5. Notes to Consolidated Balance Sheet(1) Assets Pledged as Collateral and Collateralized Debt
<a> Assets Pledged as Collateral
Cash and deposits
48 million yen
Notes receivable–trade
222 million yen<b> Collateralized Debt
Notes payable–trade
268 million yen(2) Accumulated Depreciation of Property, Plant and Equipment 191,938 million yen
Accumulated depreciation of property, plant and equipment includes accumulated impairment losses.

- 31 -

6. Notes to Consolidated Statement of Income
Impairment losses
The Group recorded impairment losses on the following asset groups:
Location

Applications

Type

Impairment losses

Nifco (Chongqing) Limited Liability
Company

Industrial Plastic
Parts &
Components

Buildings and structures, other
under investments and other assets

300 million yen

Nifco Yancheng Co., Ltd.

Industrial Plastic
Parts &
Components

Machinery, equipment and vehicles,
molds, etc.

537 million yen

Nifco KTW America Corporation

Industrial Plastic
Parts &
Components

Machinery, equipment and vehicles,
construction in progress, etc.

1,065 million yen

The Group bundles its internally used business assets by each business establishment or consolidated subsidiary, and its real estate forrent, idle assets, and assets to be sold by individual property.
Due to the sale of the business assets of Nifco (Chongqing) Limited Liability Company as a result of a review of the production in
China for the South Korean automotive industrial plastic parts & components, the book value was reduced to the recoverable amount,and the decrease was recorded as impairment losses (300 million yen) under extraordinary losses. This consisted of 257 million yen
for buildings and structures and 42 million yen for other under investments and other assets.
The recoverable amount is measured at fair value and is calculated based on the amount to be sold under the agreement.
As business assets of Nifco Yancheng Co., Ltd. are underperforming due to the deteriorating business environment, the book value has
been reduced to the recoverable amount, and the decrease is recorded as impairment losses (537 million yen) under extraordinary losses.
This mainly consists of machinery, equipment and vehicles of 296 million yen and molds of 164 million yen.
The recoverable amount is measured at fair value.
The book value of Nifco KTW America Corporation’s business assets has been reduced to the recoverable amount because it was nolonger expected to be profitable from the asset group, and the decrease was recorded as impairment losses (1,065 million yen) in
extraordinary losses. This mainly consists of machinery, equipment and vehicles of 625 million yen and construction in progress of
271 million yen.
The recoverable amount is measured at fair value.

- 32 -

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

107,508 thousand shares(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

7,337 thousand shares

383 thousand shares

143 thousand shares

7,577 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 Remuneration BIP Trustaccount and 41 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 383 thousand consists of an increase of 355 thousand shares through a market purchase oftreasury shares in accordance with a resolution of the Board of Directors, an increase of 27 thousand shares through the acquisition of shares of the Company
by the Stock Grant ESOP Trust account and an increase of 0 thousand shares through the purchase of fractional shares.
The decrease in the number of treasury shares of common stock of 143 thousand shares consisted of a decrease of 27 thousand shares due to the transfer ofshares of the Company to the Stock Grant ESOP Trust account, a decrease of 94 thousand shares due to the disposition of shares of the Company to the
Employee Stock Ownership Plan, a decrease of 19 thousand shares due to share awards from the Stock Grant ESOP Trust account, and a decrease of 1 thousand
shares due to the transfer of treasury shares (shares of the Company) attributable to the Company that was held by Nichiei Seiki Co., Ltd., an equity-method
affiliate.
The number of shares at the end of the current period includes 413 thousand shares of the Company held by the Executive Remuneration 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 23, 2022
Annual General Meeting of
Shareholders
October 28, 2022
Board of Directors(Notes)1.
2.

Class of shares

Total dividends(Million yen)

Dividends per
share (yen)Record date

Effective dateCommon stock

3,119

31

March 31, 2022

June 24, 2022

Common stock

3,122

31

September 30, 2022

November 28, 2022

The total amount of dividends as resolved at the Annual General Meeting of Shareholders on June 23, 2022, includes dividends of 12 million yen to the
Executive Remuneration BIP Trust account and 1 million yen to the Stock Grant ESOP Trust account.
The total amount of dividends as resolved at the Board of Directors on October 28, 2022, includes dividends of 12 million yen to the Executive Remuneration
BIP Trust account and 0 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 22, 2023, the Company proposes the following items
regarding dividends on common stock.
Class of shares

Total dividends(Million yen)

Source ofdividends

Dividends per
share (yen)Record date

Effective dateJune 22, 2023
Annual General Meeting Common stockof Shareholders

3,313

Retainedearnings

33

March 31, 2023

June 23, 2023

(Resolution)(Note)The total amount of dividends includes dividends of 13 million yen to the Executive Remuneration BIP Trust account and 1 million yen to the Stock Grant ESOP
Trust account.

- 33 -

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 6 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 options, 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.

- 34 -

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

52,262Difference (million
yen)52,256(5)(2) Securities and investment securities<a> Held-to-maturity debentures

657

657

(0)

3,236

3,236

-

56,15756,150(6)(1) Bonds payable

35,00034,012(987)(2) Long-term Borrowings (Including Current
Portion)

20,55420,502(51)

Total liabilities

55,55454,515(1,038)

219

219

-

<b> Other securities
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

115

Share capital in investment partnerships(Note 20

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.

- 35 -

(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

2,251

-

-

2,251

Government and local
government bonds

-

-

-

-

Bonds payable

-

-

-

-

Other

-

951

34

985

-

219

-

219

Derivatives
Those related to currencies
Those related to interest rate

-

-

-

-

2,251

1,171

34

3,456

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-

52,256-52,256

-

657

-

657

-

52,913-

52,913

Bonds payable-

34,012-34,012Long-term borrowings (including
current portion)-

20,502-

20,502-54,515-54,515

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

Total liabilities(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.

- 36 -

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.

- 37 -

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
288,734
Other revenue
Net sales to external customers
288,734

Total
Bed and Furniture
Business
33,03733,037321,771
321,771(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)
Claims arising from contracts with customers (ending balance)
Contract assets (beginning balance)
Contract assets (ending balance)
Contract liabilities (beginning balance)
Contract liabilities (ending balance)

57,60861,702
626
786
4,530
4,240

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 3,954 million yen.
The main reason for the increase in contract assets of 160 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 decrease in contract
liabilities of 289 million yen in the current period is the increase in advances received was less than the decrease by revenue
recognition.
2. Transaction Price Allocated to the Remaining Performance Obligation
The outstanding performance obligations amounted to 18,782 million yen as of March 31, 2023. Such performance obligations
relate to the manufacture and sale of products in the industrial plastic parts & components, and approximately 68% of their revenue
is expected to be recognized within one year after the end of the period and almost all of their revenue within three years.
10. Notes on Per Share Information(1) Net assets per share(2) Profit per share(Notes)2,237.06 yen
211.28 yen

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:
454,460
Number of such treasury shares at the end the period, excluded in the calculation of net assets per share:
462,960- 38 -

11. Notes to Significant Subsequent Events
Not applicable.
12. Other Notes(Stock-based remuneration system for officers)
On August 22, 2016, the Company introduced a stock-based remuneration 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 performanceand 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 remuneration amount under the System for directors and executive officers at the time, to newly establish a
remuneration 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 Executive Remuneration (BIP) Trust (hereafter referred to as the “BIP Trust”). The BIP Trustis 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
the Company acquired by the BIP Trust and the cash equivalent of the conversion value of the shares are delivered upon the retirementof 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 1,250 million yen and 413,221 shares forthe current period.
(Stock-based remuneration system for employees)
On August 27, 2018, the Company introduced a stock-based remuneration 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.

- 39 -

Non-consolidated financial statements
Balance Sheet (as of March 31, 2023)
Item(Million yen)

(Reference)Previous Difference
periodCurrent
periodAssetsCurrent assets

108,770

95,702

13,06770,98060,117

10,862

285

315

(29)

Accounts receivable–trade

19,206

18,605600

Electronically recordedmonetary claims–operating

4,584

4,177

407

Merchandise and finished
goods

6,629

5,919

709

Work in process

515

875

(359)

Raw materials and supplies

435

442

(7)

Short-term loans receivablefrom subsidiaries andassociates

2,023

2,030

(6)

Accounts receivable–other

2,889

2,846

43

Other

1,219

371

847

93,713

95,450(1,737)30,89631,303(406)

Buildings

15,780

16,546(766)

Structures

544

602

(58)

3,299

3,073

226

3

3

Tools, furniture andfixtures

883

Mold

Cash and deposits
Notes receivable–tradeNon-current assets
Property, plant andequipment

Item
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 fromsubsidiaries and associates
Deferred tax liabilities

Current
period(Reference)Previous Difference
period28,822
9,463

18,502
10,282

10,320
(819)

1,582

-

1,582

1,853
409
2,186
78
1,518

2,546
398
536
73
1,262

(692)
10
1,649
5
256

134

-

134

334

339

(4)

10,000

3,000

7,000

1,229
31
46,73435,00010,0006257,07535,00020,0001,229(31)(10,341)(10,000)

667

611

55

-

581

(581)

0

Accrued retirement benefits for
directors (and other officers)

6

6

-

988

(104)

Asset retirement obligations
Other

75
985

75
801

184

559

563

(3)

Total liabilities

75,55775,577

(20)

Land

8,737

8,498

238

Construction in progress

1,063

1,016

46

23

9

14

224

297

(72)

Software

199

272

(73)

Other

25

25

0

62,591

63,849(1,257)

Investment securities

2,318

2,541

(223)

Shares of subsidiaries andassociates

Net assets
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings

126,205
7,290
14,204151
14,052
124,402
1,793
122,609

114,687
7,290
14,163
11,651
2,511
111,970
1,793
110,177

11,51740(11,500)
11,54012,432
12,432

52,98752,983

3

2,095

2,166

(70)

Long-term loans receivablefrom subsidiaries andassociates

9,162

7,809

1,353

44,70044,700-Long-term accounts
receivable–other

75,81463,311

12,503

114

153

(38)

(19,691)(18,736)(955)

Deferred tax assets

184

-

184

Other

1,196

643

553

720

887

(167)

Allowance for Doubtful
Accounts(3,372)(282)(3,090)General reserve
Retained earnings brought
forwardTreasury shares
Valuation and translation
adjustments
Valuation difference on
available-for-sale securities

720

887

(167)

Total net assets

126,926

115,575

11,350202,483

191,152

11,330Total liabilities and net assets

202,483

191,152

11,330Machinery and equipment
Vehicles

Other
Intangible assets

Investments and other assets

Total assets

Reserve for special account for
tax purpose reduction entry of
non-current assets(Note) Differences from the previous fiscal year are presented for reference.

- 40 -

Statement of Income (April 1, 2022, to March 31, 2023)(Million yen)

Current period

Previous period (forreference)

Net sales

86,391

83,365

3,026

Cost of sales

62,54960,691

1,858

Gross profit

23,842

22,673

1,168

Selling, general and administrative expenses

16,86915,956912

Operating profit

6,972

6,717

255

Non-operating income

19,186

12,8756,311Interest and dividend income

16,388

10,095

6,293

Foreign exchange gains

2,317

2,321

(4)

Item

Other

Difference

481

458

22

Non-operating expenses

3,770

975

2,794

Interest expenses

161

151

10

Rental costs on real estate
Provision of allowance for doubtful accounts
Other

458

469

(10)

3,090

282

2,808

60

72

(12)

22,38918,617

3,771

-

96

(96)

Gain on sale of investment securities

-

50

(50)

Gain on sale of shares of subsidiaries

-

46

(46)

Extraordinary losses
Loss on sale and retirement of non-current
assets

65

26

38

65

26

38

Profit before income taxes

22,323

18,686

3,637

Income taxes–current

4,341

2,209

2,131

Income taxes–deferred

(691)

(152)

(539)

Profit18,674

16,6292,044

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

- 41 -

Statement of Changes in Equity (April 1, 2022, to March 31, 2023)(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
sharesTransfer from legal
capital surplus to othercapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period

Legalcapitalsurplus

7,290

11,651

Other
capitalsurplusTotal
capitalsurplusLegalretainedearnings

2,511

14,163

1,793

Generalreserve

Retainedearnings
brought
forwardTotal
retainedearnings

2,166

44,70063,311111,970(6,241)
18,674(6,241)
18,674

70

-

(70)

40

40

(11,500)

11,500--(11,500)

11,540

40

-

(70)

-

12,503

12,432

7,290

151

14,052

14,204

1,793

2,095

44,70075,814

124,402

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
sharesTransfer from legal
capital surplus to othercapital surplus
Net changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period

Reserve for
specialaccount for
tax purpose
reduction
entry of noncurrent assets(18,736)

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

114,687887

887

Total net assets

115,575(6,241)
18,674(6,241)
18,674--(1,328)(1,328)(1,328)

372

413

413

-

(167)

(167)

(167)

(955)

11,517

(167)

(167)

11,350(19,691)

126,205

720

720

126,926- 42 -

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 value The cost method based on the moving-average method is used.
<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, The cost method based on the gross average method is used. (For values in the balance
work in process, raw
sheet, devaluation based on a decline in profitability is used.)materials and 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 period.
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
period. Actuarial gains and losses are amortized by the straight-line method over a
period (10 years) not longer than the average remaining service period of employees
at the time they occur.

- 43 -

(4) Basis for Recognition of Revenues and Expenses
The Company mainly manufactures and sells industrial plastics 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 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 is satisfied 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 the contract withthe 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 performance obligations are satisfied and thecustomer’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
period.
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(Statement of income)Subsidy income (50 million yen for the current period), which had been separately presented until the previous fiscal year, is included
in other under non-operating income beginning with the current period due to its decreased monetary significance.

- 44 -

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

801 million yen
4,606 million yen
2,760 million yen(2) Information on the Content of Significant Accounting Estimates for Identified Items
With respect to loans receivable from subsidiaries and associates, the Group determines the collectability of such loans on the basis of
its financial position and operating results, and sets aside the amount deemed uncollectible as allowance for doubtful accounts.
Depending on changes in the financial position or operating results of subsidiaries and associates in the following fiscal year, additional
provisions or reversals may be made against the provision of allowance for doubtful accounts.
4. Notes to Balance Sheet(1) Accumulated Depreciation of Property, Plant and Equipment

88,090 million yen(2) Guaranteed Obligations
Guarantee of obligation is provided mainly for borrowings from financial institutions of affiliated companies.
3,884 million yen(3) Receivables and obligations (excluding those presented separately) for affiliated companies are as follows:<a> Short-term receivables<b> Short-term obligations

2,564 million yen
4,855 million yen

5. Notes to Statement of Income
Trading volume with affiliates<a> Volume of business transactions<b> Volume of non-business transactions

27,165 million yen
16,533 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
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

7,335 thousand shares

383 thousand shares

141 thousand shares

7,577 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 Remuneration BIP Trustaccount and 41 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 383 thousand shares consists of an increase of 355 thousand shares through a market
purchase of treasury shares in accordance with a resolution of the Board of Directors, transfer of 27 thousand shares of the Company to the Stock Grant ESOP
Trust account, and an increase of 0 thousand shares through the purchase of fractional shares.
The decrease in the number of treasury shares of common stock of 141 thousand shares consists of the disposal of 94 thousand shares to the Nifco Employee
Stock Ownership Plan, the transfer of 27 thousand shares to the Stock Grant ESOP Trust account, and the decrease of 19 thousand shares due to the distributionof shares from the Stock Grant ESOP Trust account.
The number of shares at the end of the current period includes 413 thousand shares of the Company held by the Executive Remuneration BIP Trust accountand 49 thousand shares of the Company held by the Stock Grant ESOP Trust account.

- 45 -

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

139 million yen
12 million yen
464 million yen
1,306 million yen
1,031 million yen
931 million yen
3,886 million yen(2,206) million yen
1,679 million yen(232) million yen(923) million yen(317) million yen(22) million yen(1,495) million yen
184 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 of specified foreign subsidiaries, etc.
Per capita resident tax
Special deduction for experimentation and research expenses
Foreign subsidiary dividend withholding tax
Valuation allowance
Other
Income tax burden after application of tax effect accounting

30.6%(21.1)%(0.8)%
0.1%(1.4)%
3.0%
3.9%
0.4%
16.3%

(3) The Group had previously applied a consolidated tax payment system, but due to the submission of a notification saying that “theGroup will not adopt the Japanese group relief system” in the previous fiscal year, the Group decided to shift to a non-consolidated
tax payment system from the current period. The effect of this change on the financial statements is immaterial. Accordingly, in the
tax effect accounting in the financial statements at the end of the current period, the non-consolidated tax payment system isassumed to be applied from the next fiscal year in accordance with the treatment in Section 33 of “Handling of Accounting andDisclosure When Applying the Group Relief System” (Practical Solutions No. 42, August 12, 2021).

- 46 -

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
Business
held byrelationshipofficers

Transactions

Collection of loan
funds
(Note) 1

1 officer

Subsidiaries

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

Nifco
Kumamoto
Inc.

Manufacturing
and sales of
Ownershipindustrial
Directplastic parts & 100.00
components

0 officers

Financial Loan of funds
assistance, (Note) 1
etc.
Interest received(Note) 1
Guarantee ofobligation (Note) 2

Financialassistance,etc.

Collection of loan
funds (Note) 1

Interest received(Note) 1

Amount oftransaction(million
yen)

Item

Short-term loans
receivable from

220 subsidiaries andBalance at
end ofperiod(million yen)801

associates
Long-term loans
receivable from2,111 subsidiaries andassociates

104 Accrued interest
1,937 -

350

4,606
0
-

Short-term loans
receivable fromsubsidiaries andassociates

350

Long-term loans
receivable fromsubsidiaries andassociates

2,450

23 -

-

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. The Company provides the guarantee of obligation for Nifco KTW America’s bank loans, etc.

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

1,270.14 yen
186.37 yen

11. Notes to Significant Subsequent Events(Significant subsequent events)
Not applicable.

12. Other Notes(Stock-based remuneration system for officers)
Notes are omitted here because they are described in “Notes to Consolidated Financial Statements,” in “12. Other Notes (Stock-based
remuneration system for officers).”(Stock-based remuneration system for employees)
Notes are omitted here because they are described in “Notes to Consolidated Financial Statements,” in “12. Other Notes (Stock-based
remuneration system for employees).”- 47 -

Audit Report
Accounting Audit Report on Consolidated Financial Statements
Audit Report from Independent Auditor
May 17, 2023

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

Hiroshi Takasaki

Certified public
Michiko Muramatsu
accountant

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, 2022, to March 31, 2023, 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 theposition of profit and loss of the corporate group consisting of Nifco Inc. and its consolidated subsidiaries for the period covered by suchconsolidated 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 is responsible for creating and disclosing otherstatements. 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 ouropinion 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 theknowledge we have acquired in the course of the audit, and to pay attention to whether, other than such material differences, there are signs ofmaterial 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
the consolidated 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.

- 48 -

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 proceduresfor the situation.
・ Evaluate the appropriateness of the accounting policies adopted by management and the application thereof, as well as the reasonableness of theaccounting 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 raise material
doubts about the going concern assumption. If material uncertainties regarding the going concern assumption are found, the audit report isrequired 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 the Company fromcontinuing as a going concern.
・ Evaluate whether the presentation and notes to the consolidated financial statements comply with accounting principles generally accepted inJapan, as well as whether the presentation, structure and content of the consolidated financial statements, including the related notes, and theconsolidated 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 audit of theconsolidated 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 safeguards, if any, in place to remove or reduce impediments to independence.
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.

- 49 -

Accounting Audit Report on Financial Statements
Audit Report from Independent Auditor
May 17, 2023

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

Hiroshi Takasaki

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 71st period from
April 1, 2022, to March 31, 2023, namely the balance sheet, the statement of income, the statement of changes in equity, the notes to the nonconsolidated 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 is responsible for creating and disclosing otherstatements. 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.

- 50 -

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 addressmaterial misstatement risks. The choice and application of audit procedures shall be at the discretion of the auditor. In addition, the auditor shallobtain 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 procedures for thesituation.
・ Evaluate the appropriateness of the accounting policies adopted by management and the application thereof, as well as the reasonableness of theaccounting 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, based on
the audit evidence available, whether there are material uncertainties regarding events or circumstances that would raise material doubts about thegoing 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 safeguards, if any, in place to remove or reduce impediments to independence.
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.

- 51 -

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 71st fiscal year from April 1, 2022, to March 31,
2023. 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 atimportant meetings, the content of key decision documents and other important documents related to the execution of business, thestatus of the execution of duties 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, wecommunicated and exchanged 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, andreceived 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 ofduties (matters listed in each item of Article 131 of the Corporate Accounting Rules) in accordance with the Quality Control Standards
for Audits (Business Accounting Council, October 28, 2005) 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 period.

- 52 -

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
with the 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 notfind any matters to be pointed out regarding the contents of the business report on the internal control system or the execution ofduties by directors.
(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 17, 2023

Audit and Supervisory Committee, Nifco, Inc.
Full-time Audit andSupervisory
Committee Member
Member of Audit andSupervisory
Committee (External
Director)
Member of Audit andSupervisory
Committee (External
Director)- 53 -

Junji Honda (Seal)
Toshiyuki Arai (Seal)
Mitsuhiro Matsumoto (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 71st 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 33 yen (ordinary dividend: 33
Allotment of dividend property and total
amount thereofyen) per share of common stock.
In this case, the total dividends will be 3,313,002,033 yen.
Including the interim dividend, the annual dividend for the current period
will be 64 yen per share.

Effective date of dividends of surplus

We would like to make it June 23, 2023.

- 54 -

Proposal 2

Election of Six 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 six 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

Number of the Company shares owned ········(of which, shares to be delivered under theMalestock-based remuneration system) ··············
Years in office ······································(Born on October 11, 1949) Attendance at Board of Directors meetings ···Toshiyuki Yamamoto[Brief Personal History, Positions and Responsibilities in the Company]
April 1973
Joined Nifco Inc.
June 2016
January 1995 Head of Sagamihara Plant, Nifco Inc.
June 2002
Executive Officer, Nifco Inc.
April 2008
Executive Officer of Nifco Inc. and President of June 2017
Nifco America Corp.
June 2012
President & Representative Director and Chief
Operating Officer, Nifco Inc.
June 2020
April 2021
[Significant Concurrent Positions]

66,466(53,766)
11 years
14/14

Chairman, President & Representative
Director, Chief Executive Officer andChief Operating Officer, Nifco Inc.
President & Representative Director, Chief
Executive Officer and Chief Operating
Officer, Nifco Inc.
President & Representative Director, Chief
Executive Officer (CEO), Nifco Inc.
Chairman & Representative Director,
CEO, Nifco Inc. (current position)

None

Reasons for Nomination as a Candidate for Director
He served as President and Representative Director of the Company from 2012 to 2021, and his broad knowledge has led us
to nominate him as a candidate for Director.
Candidate Number

2
Reappointment

Masaharu Shibao

Male(Born on December 14, 1961)

Number of the Company shares owned ········(of which, shares to be delivered under thestock-based remuneration 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
April 2010
President of Nifco Deutschland GmbH
June 2015
Executive Officer of Nifco Inc. and President of
Nifco America Corp.
June 2016
Director and Executive Managing Officer,
June 2020
CMO, Head of Sales, Nifco Inc.
April 2021

[Significant Concurrent Positions]

39,530(32,730)
7 years
14/14

Director and Senior Executive Managing
Officer, CMO, Head of Sales, In charge ofTechnology & Platform Business Division,
Nifco Inc.
Vice President & Representative Director,
Head of Sales, Chief Operating Officer(COO), Nifco Inc.
President & Representative Director, Chief
Operating Officer (COO), Nifco Inc.
(current position)

None

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 re-election as a director because of his diverse andglobal experience, knowledge and expertise.
Reappointment

Candidate for reappointment as
director

External

Candidate for external
director- 55 -

Independent Independent officer as required by a stock exchange

Candidate Number

3
Reappointment

Toshiki Yauchi

Male(Born on July 16, 1961)

Number of the Company shares owned ········(of which, shares to be delivered under thestock-based remuneration 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, Nifco Inc.
June 2021
June 2018
Director and Executive Managing Officer,
Divisional General Manager of Corporate
Strategy Division, In charge of Administration& Finance, Nifco Inc.

24,172(22,072)
5 years
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), Nifco Inc.
(current position)[Significant Concurrent Positions]
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 activities of
the Company.
Candidate Number

4
Reappointment
External
Independent

Yoshiko Nonogaki

Female(Born on July 31, 1957)

Number of the Company shares owned ········(of which, shares to be delivered under thestock-based remuneration 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 Group
June 2015
Corporation)
June 2019
September 1992 President and Representative Director, Sony
PolandJune 2020
April 2009Manager of Planning & Marketing
Department, Business & Professional
June 2021
Enterprise HQ of Sony Corporation (current
Sony Group Corporation)
April 2013
Director of Global Diversity, Personnel HQ ofthe company(-)
4 years
14/14

External Director, Jolly-Pasta Co., Ltd.
External Director, Nifco Inc. (current
position)
Outside Director of GS Yuasa
Corporation (current position)
External Director, Sato Holdings
Corporation (current position)[Significant Concurrent Positions]
Outside Director, GS Yuasa Corporation
Outside 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.

- 56 -

Candidate Number

5
Reappointment
External

Male

Brian K. Heywood (Born on January 9, 1967)

Number of the Company shares owned ········(of which, shares to be delivered under thestock-based remuneration system) ··············
Years in office ······································
Attendance at Board of Directors meetings ···[Brief Personal History, Positions and Responsibilities in the Company]
August 1999
Vice President, Citibank N.A.
March 2020
January 2001
Taiyo Pacific Partners L.P.
CEO (current position)
June 2020
November 2014 Outside Director, Roland Corporation

Independent

March 2022(-)
3 years
14/14

Outside Director, Roland DG
Corporation (current position)
External Director, Nifco Inc. (current
position)
Outside Director of Maxell Holdings,
Inc. (current Maxell, Ltd.)
Outside Director, Roland Corporation(current position)[Significant Concurrent Positions]Taiyo Pacific Partners L.P. CEO
Outside Director of Roland D.G. Corporation, Outside Director of Roland Corporation
Reasons for the nomination as a candidate for external director and summary of expected role
He has been selected as a candidate for external director because he has a wealth of experience and insight as a specialist in
corporate management and investment. The Company expects him to use his experience and insight as well as theperspective of shareholders and investors in the management of the Company.
His expected role is to contribute to the improvement of corporate value by incorporating the perspectives of shareholders
and investors into corporate management.

Candidate Number

6
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 remuneration 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
March 2015
Corporation)
April 2018
March 2003
General Manager, Information
Technology Group, Kao Corporation
May 2010
General manager of Strategic Planning
Department, Kao Corporation
December 2013 Head of Information Systems Division,
June 2021
Kao Corporation

200(-)
2 years
14/14

Executive Officer, Kao Corporation
Senior Advisor of General Digital
Business Division (current Information
Systems Headquarters) of Toppan Forms
Co., Ltd. (current TOPPAN Edge Inc.)(to present)
External Director, Nifco Inc. (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 an external director is that he possesses a wealth of experience and insightcultivated in the IT field at major companies, which the Company hopes he will apply to the management of the Company.
His expected role is to drive the Company’s management in areas related to IT and DX.

- 57 -

(Notes)

1.
2.

3.
4.

5.

6.

7.

8.

Mr. Masaharu Shibao, Ms. Yoshiko Nonogaki and Mr. Brian K. Heywood are members of the Nomination, Compensation and Governance Committee. The
Nomination, Compensation and Governance Committee is chaired by Yoshiko Nonogaki.
There are no special interests between the Company and Mr. Toshiyuki Yamamoto, Mr. Masaharu Shibao, Mr. Toshiki Yauchi, Ms. Yoshiko Nonogaki and Mr.
Masayuki Abe. Taiyo Pacific Partners L.P., where Mr. Brian K. Heywood serves as the CEO, 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. The volume of transactions accountfor less than 1% of the net sales of the Company and Taiyo Pacific Partners L.P., and advisory services are provided by different members of Taiyo PacificPartners L.P.
Ms. Yoshiko Nonogaki, Mr. Brian K. Heywood, and Mr. Masayuki Abe are candidates for external directors.
The Company has designated directors Yoshiko Nonogaki, Brian K. Heywood, and Masayuki Abe as independent officers pursuant to the provisions of theTokyo Stock Exchange and has notified the Tokyo Stock Exchange of their appointment. If this proposal is passed and their reappointment is approved, they
will continue to be independent officers.
The Company has entered into agreements with Ms. Yoshiko Nonogaki, Mr. Brian K. Heywood, 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 fordamages 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 the limited liability agreement with them.
The Company has entered into liability insurance (Directors and Officers, or D&O) contracts with insurance companies for officers as provided 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 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 byacts committed while knowing that they are violation of the law, and damages caused when profits or benefits are obtained illegally are not covered. If eachcandidate on this agenda is reappointed and assumes office, he or she will be included as an insured under such insurance policy. In addition, the policy isscheduled to be renewed with the same contents at the next renewal.
The number of shares of the Company owned by each candidate includes the number of shares scheduled to be delivered under the stock-based remuneration
system as of June 1, 2023.
[Explanation of Shares to Be Delivered under the Stock-Based Remuneration System]
In fiscal 2016, the Company introduced a stock-based remuneration 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, 2023, and the points granted for (b)the performance-linked portion on June 1, 2021, 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.
See page 62 for a skill matrix of the candidates.

- 58 -

Proposal 3

Election of Three Directors Who Are Audit and Supervisory
Committee Members

The terms of office of all three Directors who are members of the Audit and Supervisory Committee will expire at the conclusion ofthis General Meeting of Shareholders.
Accordingly, the election of three Directors who are Audit and Supervisory Committee Members is proposed.
This proposal has been approved by the Audit and Supervisory Committee.
The candidates for Directors who are Audit and Supervisory Committee Members are as follows:
Candidate Number

1

Junji Honda

Male(Born on November 10, 1952)

Number of the Company shares owned ········(of which, shares to be delivered under thestock-based remuneration system) ··············
Years in office ······································
Attendance at Board of Directors meetings ···[Brief Personal History, Positions and Responsibilities in the Company]
April 1988 Joined Nifco Inc.
June 2015
June 2002 Divisional General Manager, Accounting
Department, Nifco Inc.
June 2004 Executive Officer, Divisional General
April 2017Manager, Accounting Department, Nifco Inc.
April 2013 Executive Officer, Head of Global
April 2021
Management Control
June 2014 Executive Managing Officer, Deputy Headof Administration Division, Nifco Inc.
June 2021
General Manager, Accounting Department[Significant Concurrent Positions] None

Reappointment

25,889(11,289)
2 years
14/14

Executive Managing Officer & CFO, Deputy
Head of Administration, General Manager of
Accounting Department, Nifco Inc.
Executive Managing Officer, Chief Financial
Officer, and Head of Finance, Nifco Inc.
Executive Managing Officer, Head ofManagement Control, Chief Financial
Officer, Nifco Inc.
Director (Full-time Audit and Supervisory
Committee Member), Nifco Inc.

Reasons for Nomination as a Candidate for Director
The reason for selecting him as a candidate for Director is that he has served in the accounting and business administration
departments and has considerable knowledge of finance and accounting, including overseeing the finance and accounting
departments as Chief Financial Officer.
He is expected to use his knowledge and experience to play an appropriate role in strengthening corporate governance in the
Company, so the Company has selected him as a candidate for Director who is an Audit and Supervisory Committee Member.
Candidate Number

2
Reappointment
External
Independent

Mitsuhiro Matsumoto

Number of the Company shares owned ········(of which, shares to be delivered under thestock-based remuneration system) ··············
Years in office ······································(Born on May 7, 1969) Attendance at Board of Directors meetings ···

1,300
(-)

Male

2 years
14/14[Brief Personal History, Positions and Responsibilities in the Company]
October 1992
Joined Aoyama Audit Corporation
September 2008 Externa Statutory Auditor (current
April 1996
Registered as Certified Public Accountant
Outside Director, Audit & Supervisory
October 1999
Certified Public Accountant, Director ofCommittee Member) of Suzuki Co., Ltd.
Matsumoto Accounting Office(current position)(Currently head of Finport Accounting Group) August 2014
Externa Statutory Auditor (current(Current position)
Outside Director, Audit & Supervisory
Committee Member) of Hoden Seimitsu
Kako Kenkyusho Co., Ltd.
June 2019
External Statutory Auditor, Nifco Inc.
(currently Director (Audit andSupervisory Committee Member))(current position)[Significant Concurrent Positions] Certified Public Accountant and Tax Accountant, Finport Financial Group CEO
Outside Director, Suzuki Co., Ltd. (Member of Audit and Supervisory Committee)

Reasons for the nomination as a candidate for external director and summary of expected role
The Company selected him as a candidate for external director because it believes that he will be able to conduct anappropriate audit of the Company’s management based on his wealth of knowledge and experience in auditing corporate
management as a certified public accountant.
His expected role will also be to improve the quality of corporate governance in the Company by conducting audits with aparticular focus on accounting. He is expected to use his knowledge and experience to play an appropriate role instrengthening corporate governance in the Company, so the Company has selected him as a candidate for Director who is an
Audit and Supervisory Committee Member.
New
appointment

Candidate for
Candidate for
Reappointment reappointment as
new director
director

External

Candidate for external
director- 59 -

Independent

Independent officer as required by a stock
exchangeCandidate Number

3

FemaleIzumi Hayashi (Born on August 20, 1958)

New
appointment
External
Independent

Number of the Company shares owned ········(of which, shares to be delivered under thestock-based remuneration system) ··············
Years in office ······································
Attendance at Board of Directors meetings ···[Brief Personal History, Positions and Responsibilities in the Company]
April 1986
Public Prosecutor, Nagoya District Public
October 2019
Prosecutors’ Office
March 1987
Registered as an attorney (affiliated with theTokyo Bar Association)
April 2020
January 2015 Established Sakurazaka Law Offices as Partner(current position)
June 2020
August 2019 Outside Corporate Auditor, Weathernews Inc.
(current position)(-)- years-

Tokyo District Court mediator (IPmediation)(Current position)
External Board Member, Hitotsubashi
University (current position)
Outside Corporate Auditor, NOF
Corporation(currently Outside Director) (current
position)[Significant Concurrent Positions]
Lawyer, Partner of Sakurazaka Law Offices
Outside Corporate Auditor, Weathernews Inc.
External Board Member, Hitotsubashi University
Outside Director, NOF 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 thorough knowledge of both domestic andforeign laws as a lawyer, and we believe that she will utilize her experience as an External Director to conduct audits with aparticular emphasis on compliance.
Her role will also be to conduct audits with a particular focus on compliance and to improve the quality of corporate
governance in the Company from a global perspective. She is expected to use her expertise and experience to play anappropriate role in strengthening corporate governance in the Company, so the Company has selected her as a candidate for
Director who is an Audit and Supervisory Committee Member.
(Notes)

1.
2.
3.
4.

5.
6.

7.

The name on the family register of candidate Izumi Hayashi is Izumi Sakamoto.
There is no special interest between each candidate and the Company.
Mr. Mitsuhiro Matsumoto and Ms. Izumi Hayashi are candidates for External Director.
The Company has entered into agreements with Mr. Junji Honda and Mr. Mitsuhiro Matsumoto 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 the limited
liability agreement with them. If Ms. Izumi Hayashi is elected, the Company will enter into agreements with her to limit her liability for damages under Article
423, Paragraph 1 of the Companies Act in accordance with the provisions of the Articles of Incorporation.
Mr. Mitsuhiro Matsumoto and Ms. Izumi Hayashi meet the requirements for independent officers as stipulated by the Tokyo Stock Exchange and will be
notified to the Exchange as independent officers.
The Company has entered into liability insurance (Directors and Officers, or D&O) contracts with insurance companies for officers as provided 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 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 byacts committed while knowing that they are violation of the law, and damages caused when profits or benefits are obtained illegally are not covered. If eachcandidate on this agenda is reappointed or selected and assumes office, he or she will be included as an insured under such insurance policy. In addition, thepolicy is scheduled to be renewed with the same contents at the next renewal.
See page 62 for a skill matrix of the candidates.

- 60 -

Proposal 4

Election of One Substitute Director Who Is an Audit andSupervisory Committee Member

We propose the election of one (1) substitute Director who is an Audit and Supervisory Committee Member in case the number of
Directors who are Audit and Supervisory Committee Members falls short of the number required by laws and regulations.
This proposal has been approved by the Audit and Supervisory Committee.
The candidate for substitute Director who is an Audit and Supervisory Committee Member is as follows:

Masakazu Wakabayashi

Male(Born on January 30, 1963)

Number of the Company shares owned ········[Brief Personal History, Positions and Responsibilities in the Company]
October 1988
Joined Century Audit Corporation
May 2008
December 1997 Partner of Century Audit Corporation
April 2007
Joined Yasumori Accounting Firm (current
Yasumori Audit Corporation)-

Representative Partner of Yasumori
Accounting Firm (current Yasumori Audit
Corporation) (scheduled to retire)[Significant Concurrent Positions]
None
Reasons for the nomination as a candidate for substitute external director and summary of the reason
The Company selected him as a candidate for external director because the Company determined that he has sufficientinsight to audit corporate management as a certified public accountant.
His expected role is to apply his knowledge and experience to the Company’s auditing system.
He is expected to use his expertise and experience to play an appropriate role in strengthening corporate governance in the
Company, so the Company has selected him as a candidate for substitute Director who is an Audit and Supervisory
Committee Member.
(Notes)

1.
2.
3.

4.

There is no special interest between Mr. Masakazu Wakabayashi and the Company.
Masakazu Wakabayashi is a candidate for substitute External Director. If he is appointed as an external director, the Company plans to designate him as anindependent officer under the provisions of the Tokyo Stock Exchange, Inc., and notify the Stock Exchange of his appointment.
In accordance with the Articles of Incorporation, the Company has entered into agreements with the external directors 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.
If Masakazu Wakabayashi is appointed as an external director, the Company plans to enter into a limited liability agreement with him as an external director.
The Company has entered into liability insurance (Directors and Officers, or D&O) contracts with insurance companies for officers as provided 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 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 byacts committed while knowing that they are violation of the law, and damages caused when profits or benefits are obtained illegally are not covered. If
Masakazu Wakabayashi becomes an external director, he will be included as an insured under the insurance policy. In addition, the policy is scheduled to be
renewed with the same contents at the next renewal.

- 61 -

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

1
2
3
4
5
6

What the Company expects from directors

NameManagement Financial andstrategy
capital policy

Overseas
operations

Legal affairs,riskmanagement

IT
DX

ESG,
sustainability

Toshiyuki Yamamoto

Reappointment

〇

〇

〇

Masaharu Shibao

Reappointment

〇

〇

〇

Toshiki Yauchi

Reappointment〇

Yoshiko Nonogaki

Reappointment

External

Independent〇

Brian K. Heywood

Reappointment

External

Independent〇

Masayuki Abe

Reappointment

External

Independent

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

The skill matrix of the candidates for directors who are Audit and Supervisory Committee Members is as follows:
Candidate
Number1
2
3

What the Company expects from directors

Name

Junji Honda
Mitsuhiro Matsumoto
Izumi Hayashi

Candidate for new
Newappointment director

Management Financial andstrategy
capital policy

Overseas
operations

Legal affairs,riskmanagement

IT
DX

〇

〇

ESG,
sustainability〇

Reappointment

Reappointment

External

Independent

New

External

Independent

Candidate for
Reappointment reappointment as
director

External

Candidate for external
director- 62 -〇

Independent

Independent officer as required by a stock
exchange

Access to Venue of General Meeting of Shareholders
PMO, Nomura Real
Estate Development

Underground passageway

Shiba Kokusai Jr. & Sr. High School(formerly Tokyo Joshi Gakuen)

Mita NN Hall

SunkenGardenHall
entrance

Shiba
Tax
OfficeNEC Head Office
Building

Venue: Mita NN Hall
1st basement floor (B1F) of Mita NN
Building

Exit A9
Mita Station

Familymart

SubwayExit A9
Shiba 5-chome
Familymart

LawsonMita Station
Morinaga
Plaza
Building

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.

- 63 -