■ Notes for shareholders

BUSINESS REPORT

Securities code

7716

Fiscal year

From January 1 to December 31

Annual general meetingof shareholders

March

Shareholder registration
date

Record date for the exercise of voting rights at the annual general meeting of shareholders
Record date for year-end dividends
Record date for interim dividends

Shareholder registryadministrator and special
account management
institution

Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku,
TokyoContact details

2-8-4 Izumi, Suginami-ku, Tokyo Stock Transfer Agency Business Planning Dept., Sumitomo Mitsui Trust Bank
0120-782-031 (toll-free)

Method of public notice

Public notices are posted on the Company's website. If the Company cannot publish electronic public
notices due to unavoidable circumstances, it will publish public notices in the Nihon Keizai Shimbun.

Share unit

100 shares

Stock exchange listing

Tokyo Stock Exchange Standard

NoticeChange of address, request for purchase of fractional shares

71st Fiscal Year (Interim)
December 31
December 31
June 30

Inquire with a securities company where you have your account. If you do not have an account at any
securities company and have opened a special account, please inquire with Sumitomo Mitsui Trust
Bank, which manages special accounts.
Payment of accrued dividends
Please inquire with Sumitomo Mitsui Trust Bank, the administrator of the shareholder register.

Cover photo: SPIRAL.UQ
A stainless figure placed in front of the main entrance of the headquarters in commemoration of the 90th
anniversary. The figure is the work that sculptor Osamu Kido has created as the culmination of his works
when he was retiring as a professor at the Tokyo University of the Arts. The title of the work, SPIRAL,
connotes ultra-high-speed rotation, the Company's core technology. "UQ" represents our wish foreverlasting (yukyu [ju:kju:]-no) evolution and development.

NAKANISHI INC. 700 Shimohinata, Kanuma, Tochigi 322-8666 TEL +81-289-64-3380 FAX +81-289-62-5636

January 1, 2022 to June 30, 2022

NAKANISHI INC.

MESSAGE[To Our Shareholders]

I would like to take this oppor tunity to express my gratitude to ourshareholders for your continued support.
Both sales and income in the first half of 2022 rose year on year on thestrength of firm demand worldwide and the weaker JPY. Net sales rose inall segments, namely the Dental, Surgical, and Industrial segments.
Operating income, ordinary income, and income attributable to owners ofparent hit record highs.
We fully tapped into increased demand after the COVID-19 pandemic
subsided and the scale of our business expanded significantly. The urgent
issue now is to increase production capacity. To address the issue, westarted the construction of a parts processing factory, A1+, in November
last year. The factory was completed on September 5 and is starting
operation. We have decided to build a new assembly factory, M1, on thesite of the headquarters, and have begun planning construction. We will
implement initiatives to boost production and will establish the foundations
to achieve growth over the medium to long term.
Considering the latest business trends and exchange rates, we have
prepared a mid-term management plan rolling plan, NV2025+ (please refer
to P. 05). While maintaining earnings at high levels and working to increase
them, we will evolve our management and emphasize capital efficiency toenhance corporate value.
Given prolonged supply chain disruptions, production activities remain
unpredictable. Even in this environment, all employees will work as one toprovide products to customers worldwide as soon as possible.
We hope that we can continue to count on your support as we achieve
further growth.

BUSINESS SUMMARY
Operating results in the first half of FY2022
Trends in global demand were firm overall, althoughtrends varied from market to market. Business inquiries
increased in each business—Dental, Surgical, andIndustrial—and sales grew steadily in the first half of2022. Quarterly sales exceeded sales a year earlier,which were high. Quarterly sales were about the samelevel as a year earlier except for the effect of exchange
rates (the positive effect of the weaker JPY on sales).

11.9

12.5

11.3

10.0

2021

12.4

2022

11.3

11.6

10.7

10.4

7.5

7.2

5.0

0

Net sales

1Q(Jan-Mar)Operating income

YoY

8.5

6.3

2Q
(Apr-Jun)

3Q(Jul-Sep)

4Q(Oct-Dec)

Income attributable to owners of parents

YoY

YoY

24.4 B of JPY +6.3％

8.1 B of JPY +6.3％

6.7 B of JPY +25.8％

First halfFirst halfFirst half

Full year

B of JPY
50.0

Forecast

44.8

40.0

President & Group CEO

45.7
457

23.0

24.4

B of JPY
15.0

13.7

12.5

7.5

2.5

0

2021

2022

0

Full year

B of JPY
15.0
Forecast

12.6
126

12.5
10.0

8.5

7.6

8.1

5.0

13.6

2020

Full year

10.0

33.0

20.0
10.0

01 BUSINESS REPORT

2020

B of JPY
15.0

2.5

30.0

Eiichi Nakanishi

Trends in quarterly net sales

7.5
5.0

6.4

5.3

Forecast

9.6
96
6.7

2.5

2.3
2020

10.1

2021

2022

0

1.8
2020

2021

2022

02

BUSINESS SUMMARY

The reporting segments changed at the beginning of FY2022.

Dental Business

Trends in net sales in Dental Business

Engages in the development,
manufacture, and sale of dental
equipment for a range of dental
treatment, including restorative
dentistry, periodontics, mobile
dental care, and oral surgery.

B of JPY

Japan

Sales trend
YoY

OEM sales were firm. However, demand ran its course when
government grants ended in March last year, and sales declined.

40.0

EuropeSales trend
YoY

Sales of dental hand pieces and oral surgery system, our mainstay
products, rose. Sales for the U.K., in particular, were strong.

North
America

Sales trend
YoY

Asia

Sales trend
YoY

Other

Sales trend
YoY

Sales of dental hand pieces and micro motors expanded. Both private
brand and OEM items sold well. Net sales increased significantly.
Sales recovered in Southeast Asia. Sales in South Korea remained flatfrom a year ago. Overall sales decreased due to the significant effectsof lockdowns in China.
Sales were weak in Russia, but rose significantly in South America. Sales
in Australia and the Middle East were firm. Overall, sales increased.

20.0
Oral surgery system
Surgic Pro2

Oral hygiene system
Varios Combi Pro

AutoclaveiClave mini2

10.00

Surgical Business

38.2
28.0
19.8

20.5

2021

2022

11.2
2020

Trends in net sales in Surgical Business

Engages in the development,
manufacture, and sale of drills forbone cutting for surgery that areused in medical fields such asneurosurgery, spine surgery, andorthopedic surgery.

B of JPY

Slim motor
P200-SMH Series

Attachment
P300 Attachment Series

Surgical burs
Attachment Burs

Full year

Japan

Sales trend
YoY

Sales grew due to successful sales activities to spine surgery inaddition to the existing neurosurgery.

3.0

EuropeSales trend
YoY

Sales rose significantly due to replacement demand from existingcustomers and major deals with core hospitals.

North
America

Sales trend
YoY

Asia

Sales trend
YoY

1.0
0

Industrial BusinessFirst half

2.7
2.1
0.9
2020

1.3
2021

1.6

B of JPY

First half

Ultrasonic polisher
Sheenus ZERO

Sales of spindles for deburring, drilling, and substrate dividing rose due
to large capital expenditures at manufacturers.

Japan

Sales trend
YoY

4.0

EuropeSales trend
YoY

North
America

Sales trend
YoY

We resumed holding trade shows, where we received large numbers ofbusiness inquiries. Sales rose, reflecting strong orders resulting fromthose inquiries.
Appetite for capital expenditures was firm in the North American market.
Sales, particularly sales of spindles, were strong and rose significantly.

Asia

Sales trend
YoY

Although demand was strong, we had to reduce production due to parts
shortages. Sales remained flat from a year earlier.

2.0
Micro grinder
EmaxEVOlution

Full year

Business summary in 1st half

5.0

3.8

3.0

Industrial spindles
Air-Speed Series

Sales increased, reflecting the high marks that the Company's products
have received in the North American market and the expansion of sales
channels in cooperation with other companies.
Although sales were strong at the beginning of the fiscal year, sales
declined due to lockdowns in China.

2022

Trends in net sales in Industrial Busines

Industrial spindles
E-4000 Series

Business summary in 1st half

4.0

2.0
Total surgical system
Primado2
Control Unit

1.0
0

03 BUSINESS REPORT

Full year

50.0

30.0

Dental hand piece
Ti-Max Z Series

Engages in the development,
manufacture, and sale of spindles
and hand grinders used in
micromachining and precision
processing in a wide range ofmanufacturing fields such as theautomobile, aircraft, and precisionequipment industries.

First halfBusiness summary in 1st half

2.9
1.4
2020

1.7
2021

2.2

2022

04

TOPICS[Mid-Term Management Plan][Completion of New Factory A1+]

Mid-Term Management Plan Rolling Plan NV2025+

New parts factory A1+ completed on September 5

Amid the COVID-19 pandemic, sterilizing at dental clinics has become commonplace, and demand for dental
equipment rose worldwide. We fully tapped into strong demand worldwide, and the base line for global sales of theCompany's products have risen significantly. The latest operating results have far exceeded the targets set in the
mid-term management plan. Meanwhile, the JPY has weakened, and the assumptions for performance targets havechanged significantly. In this environment, we have prepared a mid-term management plan rolling plan “NV2025+”,
based on the present business plan.

A new factory, A1+, was completed on September 5 in Utsunomiya Nishi Chukaku Indusrial Park (Kanuma, Tochigi), next
to the A1 factory. The total floor space is 5,500 square meters. A total of 1,600 solar panels are installed across the entire
rooftop, which enables the factory to contribute to increasing production capacity and reducing its impact on theenvironment.

A1

Basic policies, priority measures

A1(Note) No changes from the previous plan, NV2025▶ Strategic expansion of the dental business in the global market▶ Development of new businesses to respond to needs in a rapidly aging society▶ Building a management base for speedy development and by far the strongest cost competitiveness

Performance targets, financial targets▶ Evolving management from PL-oriented management to management that also emphasizes capital efficiency▶ Cash allocation in consideration of a balance among growth investment, shareholder return, and risk tolerance

Previous plan

NV2025

Rolling Plan

NV2025+Net sales

Operatingincome50.0 B of JPY 14.0 B of JPY

OperatingincomemarginIncreasing parts processing capacities
We will seek to increase parts (primary) processing capacities, a bottleneck in production activities. We will pursue
automation and streamlining in the production process and build efficient production lines. We will change the existingproduction lines in the same manner.

28%

▼

▼

▼

Net sales

OperatingincomeOperatingincomemargin55.0 B of JPY 16.5 B of JPY

At the new factory A1+, we will take steps to increase the capacities of production lines and human resources.

30%

+

ROE

11%

+

Total
payout ratio

50%+

Cash & marketablesecurities tomonthly sales ratio

12 months

Implementing a human resources cultivation program
We will start a new human resources development program, ASK*, to expedite the cultivation of a homogeneous groupof technicians who handle ultra-precision parts processing. We will cultivate human resources for advanced
manufacturing through a systematic training program.
* Academy of Sessaku (cutting) & Kenma (polishing): Cutting and polishing are basic and the most important techniques in parts processing at the Company.

05 BUSINESS REPORT

06

TOPICS[NSK Teams Expanding into the World]

NSK Dental Nordic
Frankfurt Number of employees: 43 Established: 2003

Gothenburg Number of employees: 12 Established: 2018

Shanghai Number of employees: 32 Established: 2005

Chicago Number of employees: 73 Established: 1984

London Number of employees: 29 Established: 2007

Seoul Number of employees: 10
Established: 2014

Paris Number of employees: 30 Established: 2005

Singapore Number of employees: 3
Established: 2009

NSK RUS
Madrid Number of employees: 19 Established: 2008

07 BUSINESS REPORT

Thiene Number of employees: 61 Established: 2013

Dubai Number of employees: 4 Established: 2000

Moscow Number of employees: 6 Established: 2007

Sydney/Auckland Number of employees: 17
Established: 2007

Joinville Number of employees: 20
Established: 201308

TOPICSSTOCK INFORMATION[Shareholder Returns]

Shareholder returns

Stock information (as of June 30, 2022)■ Shareholder returns policy■Total number of authorized shares.. 375,000,000 shares

We regard returning profits to our shareholders as one of our most important management issues, and set our basic
policy as enhancing the business foundation and promoting investment in growth areas properly and proactively as well
as returning profits to shareholders in a well-balanced manner.
We endeavor to perform the flexible acquisition of treasury stock and make stable and continuous dividend increases,
considering retained earnings required for investment in future growth, and setting the standard for medium-term profit
return as a total payout ratio of 50%.
■ Interim dividends for FY2022■Number of shares issued ................ 94,259,400 shares

9.2%■Shareholder distribution

Nakanishi E&N Inc.

4,530 thousand

5.3%

Custody Bank of Japan, Ltd. (Trust accounts)

4,502 thousand

5.3%

JP MORGAN CHASE BANK 385632

3,881 thousand

4.5%

Office Nakanishi Inc.

3,120 thousand

3.6%

The NSK Nakanishi Foundation

3,021 thousand

3.5%

Eiichi Nakanishi

2,814 thousand

3.3%

Kensuke Nakanishi

2,806 thousand

3.3%

Takasuke Nakanishi

2,781 thousand

3.2%

SSBTC CLIENT OMNIBUS ACCOUNT

2,648 thousand

3.1%

Treasury stock
9.1%

We will pay year-end dividends of JPY22 per share, JPY2 more than the initial forecast, for FY2022, considering resultsin the fiscal year under review. Annual dividends will be JPY44 per share.

Japanese individuals andothers 4,514
17.4%■ Transition of shareholder return(Note) 3-for-1 stock split in April 2018
Total amount of treasury stock acquisition (B of JPY)
Total annual dividends (B of JPY)

30.7%

Total payout ratio

35.4%

36.6%

40.3%
0.0

3.19

2.25

2.68

2.59

2.59

2017 Results

2018 Results

2019 Results

2020 Results

2021 Results

2022 Forecast

Annual dividends(JPY)
Dividend payout ratio (consolidated) （%）

26.00
30.7

31.00
35.4

30.00
36.6

30.00
40.3

37.00
31.7

44.00
39.4

Total payout ratio (consolidated)

30.7

35.4

36.6

40.3

43.5

09 BUSINESS REPORT（%）

Company name
Established
Representative
Capital stock
Number of employees
Headquarters
Domestic offices

Treasury stockacquisition
1.4 B of JPY
Annual dividends
3.7 B of JPY

1.19
0.0

Japanese securities
companies 32
1.5%
Foreign investors
and individuals
250
39.4%

Corporate profile (as of June 30, 2022)

Major subsidiary andassociate

43.5%

Shareholding
ratio

7,846 thousand■ FY2022 year-end dividends forecast

With results in the fiscal year under review exceeding the initial forecast, we will purchase shares of treasury stock, in
addition to increasing interim and year-end dividends, for FY2022 to achieve a total payout ratio of 50% under ourshareholder returns policy. In the fiscal year under review, we purchased 241,600 shares of treasury stock (JPY499
million; purchase completed on March 24), which was announced on February 9, and purchased 407,700 shares oftreasury stock (JPY999 million; purchase completed on August 31), which was announced on May 12.

Number ofshares held

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

Japanese financial
institutions 13
18.6%■ Purchase of treasury shares

Name■Number of shareholders....................................... 4,863

OtherJapanese companies 53
14.0%

We will pay interim dividends of JPY22 per share, JPY2 more than the initial forecast, for FY2022.

■Principal shareholders (top 10)

Main banks

NAKANISHI INC.
February 1951
Eiichi Nakanishi, President & Group CEO
JPY 867,948,542
1,324 (Consolidated)
700 Shimohinata, Kanuma, Tochigi
Headquarters, factoryTokyo OfficeOsaka Office
NSK-America Corp. (USA)NSK Europe GmbH (Germany)
NSK France S.A.S. (France)
NSK United Kingdom Ltd. (United Kingdom)
NSK Nakanishi Dental Spain S.A. (Spain)
NSK Oceania Pty. Ltd. (Australia)
NSK Shanghai Co.,Ltd. (China)
NSK Dental Italy S.r.l. (Italy)
NSK Dental Korea Co.,Ltd. (South Korea)
NSK America Latina Ltda. (Brazil)
NSK Dental Nordic AB (Sweden)
NSK RUS LLC (Russia)
The Ashikaga Bank, Ltd., Mizuho Bank, Ltd.,MUFG Bank, Ltd., Sumitomo Mitsui Banking
Corporation(Notes) 1. NAKANISHI INC. holds 8,573 thousand shares of treasury stock, but we do not include it in the listof principal shareholders.
2. Treasury stock is excluded in the calculation of shareholding ratios.

Board Members

President & Group CEO
Executive Vice President & COO
Executive Vice President
Director
Director
Full-time Corporate Auditor
Corporate Auditor
Corporate Auditor

Eiichi Nakanishi
Kensuke Nakanishi
Masataka Suzuki
Yuji Nonagase
Yukiko Araki
Hideki Toyotama
Yuji Sawada
Yoshihiro Maki

(Notes) 1. Directors Yuji Nonagase and Yukiko Araki are Outside Directors.
2. Corporate Auditors Hideki Toyotama, Yuji Sawada, and Yoshihiro
Maki are Outside Corporate Auditors.

10