These documents have been translated from Japanese originals for reference purposes only.
In the event of any discrepancy between these translated documents and the Japanese originals, theoriginals shall prevail. The Company assumes no responsibility for this translation or for direct,
indirect or any other forms of damages arising from the translations.

(Securities Code: 7012)
June 13, 2023
Dear Shareholders:
Yasuhiko Hashimoto
Representative Director, President
and Chief Executive Officer
Kawasaki Heavy Industries, Ltd.
(Location of Head Office)
1-1 Higashikawasaki-cho 3-chome,
Chuo-ku, Kobe
(Registered Office)
1-3 Higashikawasaki-cho 1-chome,
Chuo-ku, Kobe

NOTICE OF
THE 200th ORDINARY GENERAL MEETING OF SHAREHOLDERS
We would like to inform you that we will hold the 200th Ordinary General Meeting of
Shareholders of Kawasaki Heavy Industries, Ltd. (the “Company” or “KHI”) as described
below. We will provide live streaming, on-demand streaming, and acceptance ofquestions in advance via the Internet, and encourage you to use them.
When convening this general meeting of shareholders, the Company takes measures forproviding information that constitutes the content of reference documents for the general
meeting of shareholders, etc. (items for which measures for providing information inelectronic format are to be taken) in electronic format, and posts this information as“Notice of the 200th Ordinary General Meeting of Shareholders” on each of the websites
shown below. Please access either of the websites using the Internet addresses to review
the information.
The Company’s Website

https://www.khi.co.jp/ir/stocks/shareholders_meeting/(in Japanese)

TSE website

https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show (in Japanese)On the TSE website, enter the issue name (company name), “Kawasaki Heavy
Industries” or securities code “7012,” click “Search,” then click “Basic information”
and select “Documents for public inspection/PR information.” Under “Filed information
available for public inspection,” click “Click here for access” under “[Notice of General
Shareholders Meeting /Informational Materials for a General Shareholders Meeting].”
Website for posted
informational materials
https://d.sokai.jp/7012/teiji/ (in Japanese)other than the above
websites–1–

If you will not be attending in person on the day, we kindly ask you to review the“Reference Documents for the General Meeting of Shareholders” described hereinafter,and exercise your voting rights, by 5:00 p.m. on Tuesday, June 27, 2023 (JST).
For details of the exercise of voting rights via the Internet or in writing (by mail), live
streaming, and the acceptance of questions in advance, please refer to page 5 to page 8.

–2–

1. Date and Time:
2. Place:

Wednesday, June 28, 2023 at 10:00 a.m. (JST) (Dooropens at 9:00 a.m.)
Kokusai Hall at The Kobe International House
1-6 Gokoudori 8-chome, Chuo-ku, Kobe

3. Meeting Agenda:
Matters to be reported:
1. The Business Report, Consolidated Financial Statements for the Company’s 200th
Fiscal Year (from April 1, 2022 to March 31, 2023) and results of audits of theConsolidated Financial Statements by the Accounting Auditor and the Audit andSupervisory Committee
2. Non-consolidated Financial Statements for the Company’s 200th Fiscal Year (from
April 1, 2022 to March 31, 2023)
Matters to be resolved:
Proposal No. 1: Appropriation of Surplus
Proposal No. 2: Election of Eight Directors (except Directors Serving as Audit andSupervisory Committee Members)
Proposal No. 3: Revision of Remuneration Amount for Directors Serving as Audit
and Supervisory Committee Members(Please refer to the “Reference Documents for the General Meeting of Shareholders”
hereinafter for information on each of the proposals.)
4. Settled Matters Regarding Convocation of the General Meeting of
Shareholders:(1) Items excluded in accordance with laws and regulations and the Company’s
Articles of Incorporation from paper-based documents delivered in response to arequest for delivery of documents stating items for which measures for providing
information in electronic format are to be taken
The Company will deliver items for which measures for providing information inelectronic format are to be taken as paper-based documents to shareholders
requesting paper-based documents, but in accordance with laws and regulations andArticle 16, paragraph (ii) of the Company’s Articles of Incorporation, items in thefollowing list will be excluded from delivery as paper-based documents.
· “Company Share Options,” “Accounting Auditor” and “System to ensure that
Directors’ execution of duties complies with laws and regulations and the Articles
of Incorporation, other systems to ensure proper execution of business andoverview of operation status of such systems” in the Business Report· “Consolidated Statement of Changes in Equity” and “Notes to the Consolidated
Financial Statements” in the Consolidated Financial Statements· “Non-consolidated Statement of Changes in Net Assets” and “Notes to the Nonconsolidated Financial Statements” in the Non-consolidated Financial Statements
The above items were audited together with the Business report, Consolidated
Financial Statements and Non-consolidated Financial Statements as part of them,during the preparation of the audit reports by the Audit and Supervisory Committee
and the Accounting Auditor.
(2) Concerning amendments on the web
In the event of any amendments to the Business Report, the Consolidated Financial
Statements, the Non-consolidated Financial Statements and the Reference
Documents for the General Meeting of Shareholders, a notice of the amendments andthe details of the items before and after the amendments will be posted on each of
the websites (on page 1) for posting items for which measures for providing
information in electronic format are to be taken.

–3–5. Other Matters Regarding the General Meeting of Shareholders:(1) Concerning entrance of persons other than shareholders
Please note that persons other than shareholders who are able to exercise voting
rights, including representatives and their companions who are not shareholders, are
not permitted to enter the venue.
(2) Concerning photography, video and audio recording inside the General Meeting of
Shareholders
Photography, video and audio recording inside the General Meeting of Shareholders
is prohibited. We appreciate your cooperation.
(3) Concerning proceedings on the day of the General Meeting of Shareholders
Please note that the proceedings on the day of the General Meeting of Shareholders
will be conducted in the Japanese language. Please kindly accept that we will not be
preparing any interpreters.
(4) Concerning results of resolutions
For the results of resolutions of the General Meeting of Shareholders, please refer tothe Company’s website (please acknowledge that written notice of resolutions will not
be sent by mail).

–4–

Guidance on Exercise of Voting Rights, Etc.
Exercise of Voting Rights in Writing
Please indicate your vote for or against each of the proposals on the Voting Rights
Exercise Form enclosed with this Notice, and return it by post.
Exercise of Voting Rights via the Internet
Please exercise your voting right by logging on to the Internet website(https://www.web54.net) (in Japanese) and entering the voting right exercise codeand password stated on the Voting Rights Exercise Form enclosed with this Notice, andfollow the online instructions to submit your vote.
Notes: 1. When voting rights have been exercised in writing (by mail) using the Voting Rights Exercise
Form, in cases where the vote for or against a proposal is not indicated, it shall be treatedas a vote for the proposal.
2. If you duplicate your vote, i.e., if you exercise your voting rights both via the Internet and inwriting (by mail), we will consider only the vote cast via the Internet to be valid.
3. If you vote a number of times via the Internet, we will consider the final vote to be the valid
one.

–5–

Scanning QR code
“Smart Vote®”

Entering login ID andpassword

You can simply login to the website
for exercising voting rights without
entering your login ID and password.

Voting website:
https://www.web54.net (in Japanese)

1 Please scan the QR code locatedon the right side of the Voting Rights
Exercise Form.

1 Please access the voting website.
2 Enter your “voting right exercisecode” on the Voting Rights Exercise
Form.

* “QR code” is a registeredtrademark
of
DENSO
WAVE
INCORPORATED.

3 Enter your “password” on the
Voting Rights Exercise Form.

2 Indicate your approval ordisapprovalbyfollowingtheinstructions on the screen.
Note that you can exercise yourvote via “Smart Vote®” only once.
If you need to change your vote after

4 Indicate your approval ordisapprovalbyfollowingtheinstructions on the screen.

having exercised your right, please
access the voting website, enter your“votingright

exercise

code”

and

“password” stated on the Voting Rights
Exercise Form to log in, and exercise
your voting right again.
*Please scan the QR code again toaccess the voting website.

–6–

Live Streaming
We will provide a live streaming via the Internet to enable the viewing of the General
Meeting of Shareholders from outside the venue.
Please view by accessing the streaming website from the following URL and entering
your ID and password.
1. Date and time of streaming
From 10:00 a.m. to the end time of the General Meeting of Shareholders on
Wednesday, June 28, 2023
* The streaming page will be available from around 30 minutes before the start time of theGeneral Meeting of Shareholders (9:30 a.m.).

2. How to watch on the day
Prepare your shareholder ID (= shareholder number) and password (= postal code), which are to
be required on the shareholder authentication screen (log-in screen), in advance before accessing
to the following website for live streaming.
*Please make sure to have your shareholder number on hand before sending the Voting Rights
Exercise Form.

Website for live streaming https://7012.ksoukai.jp (in Japanese)
Shareholder“Shareholder number” (nine digits) stated in the Voting Rights▶
Exercise FormID
Password▶

“Postal code” (seven digits, with no hyphen) stated in the Voting
Rights Exercise Form

Instructions for Shareholder Authentication Screen (Log-in Screen)(i) Enter the “shareholder ID (= shareholder number)”(ii) Enter the “password (= postal code)”(iii) Click “Log-in”
3. Points of attention
・ Participation via the live streaming is not deemed as attendance at the General Meeting of

Shareholders under the Companies Act, and you can neither ask questions nor exercise yourvoting rights on the day.
Please exercise your voting rights via the Internet or in writing (by mail) in advance.
・ In consideration of the privacy, etc. of shareholders attending in person, filming of the venue forthe live streaming will be limited to the images on screen and the area around officers’ seats.
However, please note that there may be cases in which shareholders in attendance areunavoidably filmed. We ask for your understanding in advance.
・ Communication charges, etc. for viewing are each shareholder’s responsibility.

–7–

Contact for enquiries concerning live streaming
Please contact the following if you have any concerns.
Shareholder ID (shareholder number) and password (postal code)
Sumitomo Mitsui Trust Bank, Ltd.
Dedicated phone line for Virtual General Meeting of Shareholders
Support0120-782-041 (available only in Japan)
Business hours: 9:00 a.m. to 5:00 p.m. (excluding Saturdays, Sundays
and national holidays) (JST)Live streaming (Viewing issues, etc.)
V-cube, Inc.
03-6833-6859
Date and time for inquiries: June 28 (the day of the General Meeting of
Shareholders) from 9:00 a.m. to the end of the General Meeting of
Shareholders
Acceptance of enquiries in advance・ Please access the dedicated acceptance of questions website from the following
URL and enter your question.
・We will accept up to two questions related to the matters that are the purpose ofthis General Meeting of Shareholders.

・We plan to select matters that are thought to be of a high level of interest to
shareholders from among the questions, but please understand that we will not
be able to answer individual questions. Of the questions received in advance,
those not covered in the General Meeting of Shareholders will be used for futurereference.
Website for enquiries in advancehttps://7012.ksoukai.jp (in Japanese)

Deadline of enquiries in advance▶ 5:00 p.m. on Wednesday, June 21, 2023

Streaming following the conclusion of the General Meeting of Shareholders
The following URL will be available until July 31, 2023 to stream the day of theGeneral Meeting of Shareholders.
The Company’s Website

https://www.khi.co.jp/ir/stocks/shareholders_meeting/(in Japanese)–8–Reference Documents for the General Meeting of Shareholders
Proposals and References

Proposal No. 1: Appropriation of Surplus
The KHI Group considers the improvement of enterprise value, i.e., creating stableprofit that exceeds capital costs over the future, as being a fundamental policy, andreturn of profits to shareholders by enhancing shareholder value over the long term
through continuous, advanced research and development and innovative capital
investment, which is necessary for future growth, as being an importantmanagement issue.
In addition, in order to keep a balance between shareholder value and returning
profits to shareholders through dividends, the Company takes its overall financial
position into consideration, including free cash flow and debt-equity ratio (D/E
ratio) etc., in addition to future earnings trends, and, with stable dividends in mind,
has established 30% as the basis for the medium- to long-term dividend payout
ratio with respect to profit attributable to owners of parent.
The Company’s basic policy is to distribute dividend surplus twice a year as aninterim dividend and a year-end dividend. The Board of Directors determines theamount of the interim dividend and the shareholders determine the year-end
dividend at a General Meeting of Shareholders.
Based on the policy above, the year-end dividend for the 200th term will amount to¥60 per ordinary share of the Company for a total distribution of ¥10,072,808,700.
As a result, annual dividend will be ¥90 per ordinary share of the Company,
including interim dividend (¥30 per ordinary share of the Company).
In addition, the effective date for the dividends from surplus shall be June 29,
2023.
Type of dividend property

Cash

Dividend per share¥60

Total amount of dividend¥10,072,808,700

Effective date of dividends of surplus

June 29, 2023

–9–

Proposal No. 2:

Election of Eight Directors (except Directors Serving as

Audit and Supervisory Committee Members)
The terms of office for all seven Directors (except Directors serving as Audit andSupervisory Committee Members; the same shall apply hereinafter in this proposal) will
expire at the closing of this General Meeting of Shareholders. This fiscal year, to further
enhance corporate governance, we propose to elect eight Directors, increasing thenumber of Outside Directors by one. As a result, a majority of the members of the Boardof Directors will be Outside Directors.
Candidates for Directors were nominated by the Board of Directors in accordance with
“Qualifications Expected of Directors,” which is described on page 27. The Company has
obtained a report to the effect that this nomination is appropriate from the Nomination
Advisory Committee, which consists mainly of independent outside officers.
The candidates for Directors are as follows:
No.

Name

Position, Duties, Significant concurrent
positions etc.

Attendance atmeetings of theBoard of Directors

1

Yoshinori Kanehana

Chairman of the Board

16/16

2

Yasuhiko Hashimoto

President and Chief Executive Officer

16/16

3

Katsuya Yamamoto

4

Hiroshi Nakatani

Outside5

Independent

6

Independent

7

Independent

OutsideOutsideJenifer Rogers

OutsideIndependent

16/16

16/16

16/16

16/16

Hideo Tsujimura
Katsuhiko Yoshida

Outside Director, Citizen Watch Co., Ltd.

12/12

Melanie Brock

CEO, Melanie Brock Advisory Ltd.
Outside Director, SEGA SAMMYHOLDINGS INC.
Outside Director, Mitsubishi Estate Co.,
Ltd.

-/-

New

8

Senior Corporate Executive Officer
Assistant to the President, in charge ofFinance & Accounting, Human
Resources, Legal Affairs, Complianceand Corporate Communication, andGeneral Manager, Human Resources
Division
Senior Corporate Executive Officer
Assistant to the President, in charge ofTechnology, Production, Procurement,
TQM, General Administration, Digital
Transformation (DX) Strategy, and theNorth America Project Management
Task Force, and General Manager,
Corporate Technology Division
General Counsel Asia, Asurion Japan
Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
Outside Director, Nissan Motor Co., Ltd.
Outside Director, Seven & i Holdings
Co., Ltd.

– 10 –

(Notes) 1. There is no special interest relationship between each candidate and the Company.
2. The number of attendances at the Board of Directors meetings for Mr. Katsuhiko Yoshida isbased on his attendance records after he assumed the office of Director on June 24, 2022.
3. The Company has entered into a Directors and Officers Liability Insurance (D&O Insurance)
contract as provided for in Article 430-3, Paragraph 1 of the Companies Act with aninsurance company. The insurance contract covers damages and court costs that may be
incurred by the insured arising from the insured’s act in connection with the execution of
his or her duties. (However, this excludes damages arising from an act undertaken withthe knowledge that such act was in violation of laws and ordinances). If each candidate
assumes the office as Director, the candidate will be included as an insured in the contract.
The Company plans to renew the insurance policy with the same contents at the next
renewal.

[Opinion of the Audit and Supervisory Committee]
The Audit and Supervisory Committee has concluded that the content of the proposal
regarding the election of Directors (except Directors serving as Audit and Supervisory
Committee Members) is appropriate, having examined whether the criteria for election,etc. has been set appropriately by the Board of Directors and whether deliberation in
the Nomination Advisory Committee has been conducted through an appropriate
process.

– 11 –

Name(Date of Birth)No.

1Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Yoshinori
Kanehana(February 19,
1954)
16/16 (100%)

Apr. 1976

Joined Kawasaki Heavy Industries, Ltd.

Jun. 2012

Senior Vice President
General Manager, Marketing DivisionJun. 2013

Senior Vice President (Representative
Director)
President, Rolling Stock Company

Apr. 2016

Senior Executive Vice President(Representative Director)
Assistant to the President

Jun. 2016

President (Representative Director)

Apr. 2018

Representative Director, President and Chief
Executive Officer

Number oftheCompany’s
shares held

44,600 shares(Of which, thenumber ofJun. 2020
Representative Director, Chairman of theshares to be
Board
granted underJun. 2021
Chairman of the Board (present)
the stock
Reasons for nomination as candidate
compensation
Mr. Kanehana has been mainly engaged in business related
plan)
to technology and development of the rolling stock segment(15,000of the Company and its overseas business for many years.
shares)He assumed the office of Senior Vice President of theCompany in 2012, Senior Executive Vice President of theCompany in April 2016, President of the Company in June
2016, and Chairman of the Board of the Company in 2020.
Presently, as Chairman of the Board, he has been
demonstrating outstanding leadership, thereby making asignificant contribution to the Company’s business growthand enhancing its enterprise value. Considering thesepoints, we have determined that he is suitable for a Director
and nominated him as a candidate for Director.

– 12 –

Name(Date of Birth)No.

2Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Yasuhiko
Hashimoto(May 15, 1957)
16/16 (100%)

Apr. 1981

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2016

Managing Executive Officer
In charge of promoting automation, General
Manager, Robot Business Division, Precision
Machinery Company

Apr. 2018

Managing Executive Officer
President, Precision Machinery & Robot
Company, in charge of promoting
automation

Jun. 2018

Director, Managing Executive Officer
President, Precision Machinery & Robot
Company, in charge of promoting
automation

Number oftheCompany’s
shares held

36,200 shares(Of which, thenumber ofshares to be
granted underJun. 2020
Representative Director, President and Chiefthe stock
Executive Officer (present)
compensation
plan)
Reasons for nomination as candidate(17,600
Mr. Hashimoto has been mainly engaged in businesses
shares)related to technology and development of the industrial
robots business unit of the Company for many years. He
was appointed Director, Managing Executive Officer in 2018,
Director, Senior Corporate Executive Officer of the Company
in April 2020 and Director, President and Chief Executive
Officer in June 2020. Presently, as Director, President andChief Executive Officer, he has been demonstrating
outstanding leadership, thereby making a significant
contribution to the Company’s business growth andenhancing its enterprise value. Considering these points,
we have determined that he is suitable for a Director andnominated him as a candidate for Director.
Apr. 2020

Representative Director, Senior Corporate
Executive Officer
Assistant to the President– 13 –

Name(Date of Birth)
No.

3Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Katsuya
Yamamoto(November 21,
1957)

Number oftheCompany’s
shares held

Apr. 1981

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2017Managing Executive Officer
General Manager, Corporate Planning
Division

Jun. 2017

Senior Vice President
General Manager, Corporate Planning
Division

Apr. 2018

Director, Managing Executive Officer
General Manager, Corporate Planning
Division, in charge of Risk Management

Apr. 2019

Director, Managing Executive Officer
In charge of Corporate Planning, Investor
Relations, Corporate Communication andShip & Offshore Structure Company, General
Manager, Corporate Planning Division

Apr. 2020

Representative Director, Senior Corporate
Executive Officer
Assistant to the President, with overall
responsibility for finance and accounting,and human resources, and in charge of
Sustainable Development, Investor Relations 24,600 shares
and Corporate Communication

Apr. 2021

Representative Director, Senior Corporate(Of which, thenumber of
Executive Officer
Assistant to the President, with overall
shares to be
responsibility for finance and accounting,granted underand human resources, and in charge ofthe stock
Sustainable Development, Investor Relations compensation
and Corporate Communication, and Generalplan)Manager, Human Resources Division(11,000
shares)Representative Director, Senior Corporate

16/16 (100%)
Apr. 2022

Executive Officer
Assistant to the President, in charge ofFinance & Accounting, Human Resources,
Legal Affairs, Compliance and Corporate
Communication, and General Manager,
Human Resources Division (present)

Reasons for nomination as candidate
Mr. Yamamoto has been mainly engaged in businesses
related to corporate planning and finance & accounting of
the plant & infrastructure segment and the precision
machinery segment of the Company for many years. He
was appointed Senior Vice President of the Company in2017 and Director, Senior Corporate Executive Officer of theCompany in 2020. Presently, as Director, Senior Corporate
Executive Officer, he has been in charge of Finance &Accounting, Human Resources, Legal Affairs, Complianceand Corporate Communication, thereby making asignificant contribution to the Company’s business growthand enhancing its enterprise value. Considering thesepoints, we have determined that he is suitable for a Director
and nominated him as a candidate for Director.
[Reference]“Sustainability”: This is the sustainability of society and the environment.

– 14 –

Name(Date of Birth)No.

4Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors

Hiroshi Nakatani(August 9, 1960)

Apr. 1984

Joined Kawasaki Heavy Industries, Ltd.

Apr. 2016

Executive Officer
Deputy General Manager, Corporate
Technology Division, and General Manager,
Technical InstituteApr. 2019

Managing Executive Officer
General Manager, Corporate Technology
Division, General Manager, TechnicalInstitute, and Group Manager, Manufacturing
Improvement Center, in charge of IT
Strategy

Apr. 2020

Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, and Ship & Offshore
Structure Company, and General Manager,
Corporate Technology DivisionJun. 2020

Director, Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, and Ship & Offshore
Structure Company, and General Manager,
Corporate Technology DivisionNov. 2020

Director, Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, Cyber Security, and Ship &Offshore Structure Company, and General
Manager, Corporate Technology Division

Apr. 2021

Director, Managing Executive Officer
In charge of Corporate Planning, Digital
Transformation, and Cyber Security, andGeneral Manager, Corporate Technology
Division

Apr. 2022

Representative Director, Senior Corporate
Executive Officer
Assistant to the President, in charge ofTechnology, Production, Procurement, TQM,
General Administration, Digital
Transformation (DX) Strategy, and the North
America Project Management Task Force,and General Manager, Corporate Technology
Division (present)

16/16 (100%)

Reasons for nomination as candidate
Mr. Nakatani has been mainly engaged in businesses related
to technical development and planning for many years. He
was appointed Director, Managing Executive Officer in 2020and Director, Senior Corporate Executive Officer of theCompany in 2022. Presently, as Director, Senior Corporate
Executive Officer, he has an overall responsibility forTechnology, Production, Procurement, TQM, General
Administration, Digital Transformation (DX) Strategy, andthe North America Project Management Task Force, thereby
making a significant contribution to the Company’s businessgrowth and enhancing its enterprise value. Considering
these points, we have determined that he is suitable for a
Director and nominated him as a candidate for Director.

– 15 –

Number oftheCompany’s
shares held

16,300 shares(Of which, thenumber ofshares to be
granted under
the stockcompensation
plan)(9,100shares)[Reference]“Digital Transformation” “DX”: The reformation of products, services and business models based on
the needs of customers and society, which utilizes data and digital technologies to respond to
drastic changes in the business environment, as well as the reformation of business, organization,
processes and corporate culture.
“TQM”: Total Quality Management– 16 –

Name(Date of Birth)No.

5Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors
Sep. 1989

Joined Haight Gardner Poor & Havens (Atpresent: Holland & Knight LLP)

Dec. 1990

Registered as Attorney at Law admitted in
New York

Feb. 1991

Joined Industrial Bank of Japan Limited (Atpresent: Mizuho Bank, Ltd.)

Dec. 1994

Joined Merrill Lynch Japan Securities Co.,
Ltd.

Nov. 2000

Merrill Lynch Europe Plc

Jul. 2006

Bank of America Merrill Lynch (Hong Kong)

Jan. 2012

Bank of America Merrill Lynch (NY)Nov. 2012

General Counsel Asia, Asurion Asia Pacific
Limited (Hong Kong)

Nov. 2014

General Counsel Asia, Asurion Japan
Holdings G.K. (present)

Jun. 2015

Outside Director, Mitsui & Co., Ltd. (present)

Jun. 2018

Outside Director, Kawasaki Heavy Industries,
Ltd. (present)

Jun. 2019

Outside Director, Nissan Motor Co., Ltd.
(present)(Outside Director
Jan. 2021
Candidate)(Independent
Officer)
May 2022
Jenifer Rogers(June 22, 1963)
16/16 (100%)

Number oftheCompany’s
shares held

President, American Chamber of Commercein Japan
Outside Director, Seven & i Holdings Co.,
Ltd. (present)[Significant concurrent positions]
General Counsel Asia, Asurion Japan Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
Outside Director, Nissan Motor Co., Ltd.
Outside Director, Seven & i Holdings Co., Ltd.
Policies regarding independence
Ms. Rogers satisfies the independence standards specified
by the Company, and the Company has submitted
notification to Tokyo Stock Exchange, Inc. that she has
been appointed as Independent Officer as provided for by
the aforementioned exchange.
Reasons for nomination as candidate and outline of
expected role
Ms. Rogers served as an in-house lawyer and counsel atfinancial institutions in Japan and overseas for many years.
Since 2018, as Outside Director of the Company, we havereceived helpful opinions and advice on importantmanagement decisions based on her extensive international
experience and deep insights into legal affairs, compliance,and risk management cultivated in those positions from astandpoint independent from the Company’s execution ofduties. Considering these points, we have expected her tocontinue to provide supervision leveraging her expertiseand knowledge and nominated her as a candidate for
Outside Director.

– 17 –

3,000 shares

(Notes) 1. She is a candidate for Outside Director.
2. Her tenure as Outside Director of the Company will have been five years at the conclusionof this Ordinary General Meeting of Shareholders.
3. She has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with her after her election.

– 18 –

Name(Date of Birth)No.

6Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors
Apr. 1980

Joined Suntory Limited

Mar. 2004

Director, Suntory Limited

Apr. 2009Managing Executive Officer, Suntory
Holdings Limited
General Manager, R&D Planning Division, incharge of Intellectual Property Department

Mar. 2015

Senior Managing Director, Suntory Holdings
LimitedRepresentative Director, President & Chief
Executive Officer, Suntory Business Expert
Limited (At present: Suntory MONOZUKURI
Expert Limited)

Apr. 2015(Outside Director
Candidate)(IndependentMar. 2017
Officer)

Senior Managing Director, in charge ofIntellectual Property Department and R&D
Division, Suntory Holdings Limited

Hideo Tsujimura(June 6, 1954)

Director, Executive Vice President, Suntory
Beverage & Food Limited

Apr. 2017

Director, Executive Vice President, Chief
Operating Officer, MONOZUKURI Division
and Senior General Manager, Research &Development Department, Suntory Beverage& Food Limited

Apr. 2020

Full-time Advisor, Suntory Holdings Limited(present)
Chairman, Suntory Foundation for Life
Sciences (present)

Jun. 2020

Outside Director, Kawasaki Heavy Industries,
Ltd. (present)

16/16 (100%)

Policies regarding independence
Mr. Tsujimura satisfies the independence standards
specified by the Company, and the Company has
submitted notification to Tokyo Stock Exchange, Inc. that
he has been appointed as Independent Officer as provided
for by the aforementioned exchange.

– 19 –

Number oftheCompany’s
shares held

700 shares

Reasons for nomination as candidate and outline of
expected role
Mr. Tsujimura has not only extensive management
experience but also deep insights into product development
and intellectual property, having served as Senior Managing
Director, in charge of Intellectual Property Department andR&D Division of Suntory Holdings Limited, Representative
Director, President & Chief Executive Officer of Suntory
Business Expert Limited, as well as Director, Executive Vice
President, Chief Operating Officer, MONOZUKURI Division
and Senior General Manager, Research & Development
Department of Suntory Beverage & Food Limited and otherimportant positions. Since 2020, as Outside Director of theCompany, we have received helpful opinions and advice on
important management decisions based on such extensive
management experience and deep insights into productdevelopment and intellectual property from a standpoint
independent from the Company’s execution of duties.
Considering these points, we have expected him to continue
to provide supervision leveraging his expertise andknowledge and nominated him as a candidate for Outside
Director.
(Notes) 1. He is a candidate for Outside Director.
2. His tenure as Outside Director of the Company will have been three years at theconclusion of this Ordinary General Meeting of Shareholders.
3. He has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with him after his election.
4. Although Suntory Beverage & Food Limited, where the candidate served as a managing
officer in the past, is not a business partner of the Company, the KHI Group has a trackrecord of transactions with the Group of Suntory Beverage & Food Limited and the KHI
Group. However, the annual average transactions between the Group of Suntory
Beverage & Food Limited and the KHI Group for the most recent five fiscal years accountfor less than 1% of the annual average net sales each for the said Group and the KHI
Group over the corresponding period. Consequently, we have determined that there is
no issue as to the independence of the candidate and he will be able to fulfil his role asan Independent Officer.

– 20 –

Name(Date of Birth)No.

7Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors
Apr. 1979

Joined Kao Soap Co., Ltd. (At present: Kao
Corporation)

Mar. 2014

Representative Director, Managing Executive
Officer, with overall responsibility for
Consumer Products Business Department, incharge of Kao Professional Services
Company, Ltd., Kao Corporation

Mar. 2015

Representative Director, Senior Managing
Executive Officer, with overall responsibility
for Consumer Products Business
Department, in charge of Kao Professional
Services Company, Ltd., Kao Corporation

Jan. 2017

Representative Director, Senior Managing
Executive Officer, with overall responsibility
for Consumer Products Business
Department, in charge of Kao Professional
Services Company, Ltd., with overall
responsibility for Marketing Development
Department, Kao Corporation(Outside Director
Jun. 2022
Candidate)(Independent
Officer)

Outside Director, Citizen Watch Co., Ltd.
(present)
Outside Director, Kawasaki Heavy Industries,
Ltd. (present)

Katsuhiko Yoshida [Significant concurrent positions](April 5, 1954)
Outside Director, Citizen Watch Co., Ltd.
12/12 (100%)

Number oftheCompany’s
shares held

Policies regarding independence
Mr. Yoshida satisfies the independence standards specified
by the Company, and the Company has submitted
notification to Tokyo Stock Exchange, Inc. that he has
been appointed as Independent Officer as provided for by
the aforementioned exchange.
Reasons for nomination as candidate and outline of
expected role
Mr. Yoshida has served in such roles as Representative
Director, Senior Managing Executive Officer, with overall
responsibility for Consumer Products Business Department
at Kao Corporation. Since 2022, as Outside Director of theCompany, he has provided helpful opinions and advice on
important management decisions based on his extensive
management experience, and his deep insights into sales
and marketing, from a standpoint independent of theexecution of business. Considering these points, we haveexpected him to continue to provide supervision leveraging
his expertise and knowledge and nominated him as a
candidate for Outside Director.

– 21 –

1,300 shares

(Notes) 1. He is a candidate for Outside Director.
2. His tenure as Outside Director of the Company will have been one year at the conclusionof this Ordinary General Meeting of Shareholders.
3. He has entered into a limited liability agreement pursuant to the provisions of Article
427, Paragraph 1 of the Companies Act with the Company, and the liability under said
agreement shall be limited to either an amount of ¥10 million, or an amount specified
by laws and regulations, whichever is higher. The Company will extend the above
agreement with him after his election.
4. Although Kao Corporation, where the candidate served as a managing officer in the past,
is not a business partner of the Company, the KHI Group has a track record oftransactions with the Group of Kao Corporation and the KHI Group. However, the annual
average transactions between the Group of Kao Corporation and the KHI Group for themost recent five fiscal years account for less than 1% of the annual average net sales
each for the said Group and the KHI Group over the corresponding period. Consequently,
we have determined that there is no issue as to the independence of the candidate andhe will be able to fulfil his role as an Independent Officer.

– 22 –

Name(Date of Birth)No.

8Career Summary, Positions and Duties[Significant concurrent positions]

Attendance atmeetings of theBoard of Directors(Newlyappointed)(Outside Director
Candidate)(Independent
Officer)
Melanie Brock(April 10, 1964)-/- (-%)

Mar. 2003

CEO, AGENDA Ltd. (At present: Melanie
Brock Advisory Ltd.) (present)

Mar. 2010

Board Member, Australia-Japan Foundation

Apr. 2010

Board Member, Australia-Japan Business Cooperation Committee (present)
Chair, Australian and New Zealand Chamberof Commerce in Japan (ANZCCJ)

Oct. 2010

Regional Manager - Japan, Meat & Livestock
Australia (MLA)

Dec. 2012

Chair, Australian Business Asia (ABA)

Nov. 2016

Chair Emeritus, Australian and New ZealandChamber of Commerce in Japan (ANZCCJ)(present)

Jun. 2019

Outside Director, SEGA SAMMY HOLDINGS
INC. (present)

Jul. 2019

Board Member, Australia-Japan ResearchCentre (AJRC) (present)

Jun. 2022

Outside Director, Mitsubishi Estate Co., Ltd.
(present)[Significant concurrent positions]
CEO, Melanie Brock Advisory Ltd.
Outside Director, SEGA SAMMY HOLDINGS INC.
Outside Director, Mitsubishi Estate Co., Ltd.

Number oftheCompany’s
shares held

- shares

Policies regarding independence
Ms. Brock satisfies the independence standards specified
by the Company, and the Company has submitted
notification to Tokyo Stock Exchange, Inc. that she has
been appointed as Independent Officer as provided for by
the aforementioned exchange.
Reasons for nomination as candidate and outline of
expected role
Ms. Brock has been involved in international businesssupport for many years, and possesses extensive
international experience as well as deep insights intobusiness strategy and marketing from a global perspective,
and accordingly we have determined that she will be able
to fully fulfill the role of supervising business execution andenhancing corporate value as an Outside Director of theCompany. Considering these points, we have expected her
to provide supervision leveraging her expertise andknowledge and newly nominated her as a candidate for
Outside Director.

(Notes) 1. She is a candidate for Outside Director.
2. If the election of the candidate is approved and adopted, the Company will enter into alimited liability agreement pursuant to the provisions of Article 427, Paragraph 1 of theCompanies Act with the candidate. The liability under said agreement shall be limited toeither an amount of ¥10 million, or an amount specified by laws and regulations,whichever is higher.
3. Melanie Brock Advisory Ltd., at which the candidate currently serves as CEO, has no
track record of transactions with KHI or the KHI Group. Consequently, we havedetermined that there is no issue as to the independence of the candidate and she will
be able to fulfil her role as an Independent Officer.

– 23 –

Proposal No. 3:

Revision of Remuneration Amount for Directors Serving as

Audit and Supervisory Committee Members
The remuneration amount for Directors serving as Audit and Supervisory Committee
Members of the Company of ¥120 million or less per year, which is the same
remuneration amount that was previously paid to Audit & Supervisory Board Members,
was approved at the 197th Ordinary General Meeting of Shareholders held on June 25,
2020, since when it has remained in effect. We propose to revise the remuneration
amount to ¥150 million or less per year.
Duties of Directors serving as Audit and Supervisory Committee Members have become
increasingly important in order to maintain sound management and support thesustainable growth of the Company, and it has become an issue to recruit and retain
human resources with abundant experience and knowledge in order to build an
appropriate supervision system in response to changes in the business environment. In
light of the foregoing, the Company judges it to be appropriate in consideration ofvarious factors such as the common level and future developments.
There are currently five Directors serving as Audit and Supervisory Committee Members,
including three Outside Directors.

– 24 –

Reference[Skill Matrix if Proposal No. 2 is approved]
Expected Areas

●

●

●

●

●

●

●

●

●

●

Finance /Research
Institutions

●

●

●

Legal Affairs /Government●●

Global●●Corporate
Management●●

IT / DX /Security●

Sales /
Marketing●

Manufacturing(Technology /Development /Production /Quality)●

Human
Resources /Organizational
Management●

Finance /Accounting

Governance

Chairmanof theBoard

Business
Strategy

Position attheCompany
and Name

Required Experience

Yoshinori
Kanehana
Representat
ive Director,
President
and Chief
Executive
Officer●●

Yasuhiko
Hashimoto
Representat
ive Director,
SeniorCorporate
Executive
Officer●●

Katsuya
Yamamoto
Representat
ive Director,
SeniorCorporate
Executive
Officer

●

●

●

●

HiroshiNakatani
OutsideDirector
Jenifer
Rogers
OutsideDirector
Hideo
TsujimuraOutsideDirector
Katsuhiko
YoshidaOutsideDirector
Melanie
Brock
Director,
Full-time
Audit andSupervisory
Committee
Member

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

– 25 –

●

●

●

●

Akio
Nekoshima●●●

Expected Areas

●

●

●

Nobuhisa
Kato
OutsideDirector,
Audit andSupervisory
Committee
Member●●Atsuko Ishii
OutsideDirector,
Audit andSupervisory
Committee
Member●●●●Ryoichi
Saito
OutsideDirector,
Audit andSupervisory
Committee
Member●SusumuTsukui– 26 –

Finance /Research
Institutions●●

Legal Affairs /Government●

Global●Corporate
Management●

IT / DX /Security●

Sales /
Marketing●

Manufacturing(Technology /Development /Production /Quality)

Finance /Accounting

●

Human
Resources /Organizational
Management

GovernanceDirector,
Full-time
Audit andSupervisory
Committee
MemberBusiness
Strategy

Position attheCompany
and Name

Required Experience

[Qualifications Expected of Directors]
1. Deeply understand and agree to the management philosophy and vision of the KHI
Group
2. Be able to contribute to sustainable growth and enhancement of enterprise value inthe medium- to long-term
3. Hold companywide standpoints and have abundant and broad experience, deep
insight and expertise to do so
4. Be able to supervise the management and execution of business operations from an
independent and objective standpoint as a member of the Board of Directors
5. Be able to exercise one’s authority in an active and positive manner, or properly
express one’s opinions to the Board of Directors or the management* Directors serving as Audit and Supervisory Committee Members must be familiar with
the Company’s business or have deep insight and expertise in corporate management,
legal affairs, finance and accounting, administration and other fields from theperspective of ensuring the effectiveness of audits. At least one Director serving as
Audit and Supervisory Committee Member must have substantial knowledge about
finance and accounting.
[Independence Standards for Officers]
When the Outside Officer does not fall under all the following items, Outside
Officer is deemed to satisfy the independence requirements:
1. The Outside Officer presently serves or previously served in the last ten years as an
executive director, executive officer, operating officer or other important employee ofa company (including major subsidiaries designated by the Company) (hereinafter,
the “Home Company”) that has a business relationship with the KHI Group, where
the average amount of transaction from the said business for the last five fiscal years
exceeds 2% of average net sales of the KHI Group and the Home Company.
2. The Outside Officer serves as a specialist or consultant (corporation if it has judicial
personality) of legal, accounting or tax affairs and the average remuneration directly
received from the KHI Group (excluding remuneration for the Company’s officer) forthe last five fiscal years exceeds ¥10 million.
3. The Outside Officer serves as executive officer of a non-profit organization and theaverage donations from the KHI Group to the organization for the last five fiscal years
exceeds ¥10 million and exceeds 2% of the total revenue or the current balance ofthe organization.
4. Home Company of the Outside Officer is a major shareholder of the Company as it
holds 10% or more of total number of shares issued in KHI.
5. A relative of the Outside Officer within the second degree falls under the preceding
four items or serves as executive director, executive officer, operating officer or otherimportant employee of the KHI Group.
End– 27 –

Business Report(April 1, 2022 - March 31, 2023)
1. Overview concerning the Current Situation of Company Group(1) Business Progress and Results(i) General conditions
The overall orders received by the KHI Group on a consolidated basis for the
fiscal year under review increased as a result of growth in segments such as
the Rolling Stock segment and Powersports & Engine segment. Overall
consolidated revenue increased compared to the previous fiscal year due tosales growth in segments such as the Powersports & Engine segment andAerospace Systems segment.
As for profit, business profit increased compared to the previous fiscal year asa result of increased profits in segments such as Powersports & Engine,
Aerospace Systems and Energy Solution & Marine Engineering, despite adecrease in profits in the Precision Machinery & Robot segment. Profit
attributable to owners of parent increased due to increased business profit
despite deterioration with foreign exchange (gains) losses.
As a result, consolidated orders received increased ¥435.3 billion from theprevious fiscal year to ¥2,037.4 billion, consolidated revenue increased ¥224.7
billion from the previous fiscal year to ¥1,725.6 billion, and business profit
increased ¥51.9 billion from the previous fiscal year to ¥82.3 billion. Profit
attributable to owners of the parent increased ¥40.3 billion from the previous
fiscal year to ¥53.0 billion.
Starting from the current consolidated fiscal year, International Financial
Reporting Standards (IFRS) are being applied instead of Japanese standards.
Therefore, figures for the previous consolidated fiscal year have also beenadjusted based on IFRS for comparative analysis in this page and after.
Also, the name of the business segment that was formerly known as“Motorcycles & Engines” has been changed to “Powersports & Engine.” Thischange to the name of the business segment has no impact on segment
information.
(ii) Operating conditions by business segment
Aerospace Systems segment
In the Aerospace Systems segment, orders received were ¥345.5 billion, adecrease of ¥37.7 billion from the previous fiscal year where there were large
orders received from the Ministry of Defense (MOD) in Japan, while thenumber of parts manufactured for commercial aircraft jet engines increased.
Revenue increased ¥50.6 billion from the previous fiscal year to ¥348.8 billion
due to an increase of component parts manufactured for commercial aircraft
jet engines and parts for commercial aircraft.
– 28 –

Business profit was ¥14.8 billion, an improvement of ¥25.2 billion from theprevious fiscal year due to increased sales of components for commercial
aircraft jet engines and components for commercial aircraft.
Rolling Stock segment
In the Rolling Stock segment, orders received were ¥313.2 billion, which was
an increase of ¥241.7 billion from the previous fiscal year, mainly due to an
option contract with the New York City Transit Authority for a new subway train.
Revenue increased ¥5.2 billion from the previous fiscal year to ¥131.9 billion,
mainly due to an increase in sales of rolling stock for the US and Japanesemarkets.
Business profit was ¥1.3 billion, which is the same level as the previous fiscal
year, as a result of factors such as delays in the rolling stock project for theLong Island Rail Road in the United States, while sales grew.
Energy Solution & Marine Engineering segment
In the Energy Solution & Marine Engineering segment, orders received were¥439.0 billion, which was an increase of ¥95.4 billion from the previous fiscal
year due to an increase in orders for submarines from the MOD, LPG/ammonia
carriers, and power generation equipment.
Revenue increased by ¥17.2 billion from the previous fiscal year to ¥314.5
billion, mainly due to increased construction in the energy business and forsubmarines for the MOD, while construction in waste treatment facility
projects for the Japanese market decreased.
Business profit was ¥3.9 billion, an improvement of ¥14.7 billion from theprevious fiscal year due to sales growth with energy business and submarines
for the MOD, along with improved equity in earnings. However, construction
work for waste treatment facility projects in the Japanese market decreased.

Precision Machinery & Robot segment
In the Precision Machinery & Robot segment, orders received were ¥262.0
billion, a decrease of ¥9.8 billion from the previous fiscal year, due to adecrease in hydraulic components for the Chinese construction machinery
market despite an increase in each series of robots.
Revenue was ¥252.6 billion, the same level as the previous fiscal year, as aresult of sales growth and increased sales of various robots due to the easingof parts supply shortages, while sales of hydraulic equipment for the Chineseconstruction machinery market decreased.
Business profit decreased ¥5.1 billion from the previous fiscal year to ¥8.7
billion as a result of higher costs including soaring costs for electronic
components and materials, a temporary decline in operations caused by the– 29 –

lockdown in China, and a decrease in hydraulic equipment for the Chineseconstruction machinery market.
Powersports & Engine segment
In the Powersports & Engine segment, revenue was ¥591.1 billion, which was
an increase of ¥143.2 billion from the previous fiscal year, due to sales growthof motorcycles in North America and Southeast Asia, automobiles in North
America, general-purpose engines, and the depreciation of the yen.
Business profit increased by ¥34.0 billion from the previous fiscal year to ¥71.5
billion due to various factors including sales growth with motorcycles,
automobiles, and general-purpose engines, and the impact of foreignexchange rates, in addition to the steady progress with price pass-throughdespite soaring costs with raw material and logistics and an increase in fixed
costs.
(Note)

The figure for orders received for Powersports & Engine segment is presented as
the same figure for revenue since the segment mainly engages in make-to-stock
production.

Others segment
In the Others segment, revenue increased ¥8.3 billion from the previous fiscal
year to ¥86.3 billion.
Business loss came to ¥1.8 billion, deteriorating ¥4.9 billion from the previous
fiscal year.

Referencei) Orders received, revenue and business profit/loss by segment(Billions of yen)Orders received
Segment

Revenue

Business profit/loss

AmountYear-on-Year
ChangeAmountYear-on-Year
ChangeAmountYear-on-Year
ChangeAerospace Systems

345.5(37.7)

348.8

50.6

14.8

25.2

Rolling Stock

313.2

241.7

131.9

5.2

1.3

(0.8)

Energy Solution &Marine Engineering

439.0

95.4

314.5

17.2

3.9

14.7

Precision Machinery &
Robot

262.0

(9.8)

252.6

0

8.7

(5.1)

Powersports & Engine

591.1

143.2

591.1

143.2

71.5

34.0

86.4

2.4

86.3

8.3

(1.8)

(4.9)

–

–

–

–

(16.2)(10.9)

224.7

82.3

51.9

OthersAdjustment
Total

2,037.4

435.3

1,725.6(Notes) 1. Revenue recorded is for revenue from external customers.

– 30 –

2. The figure for orders received for Powersports & Engine segment is presented as the same
figure for net sales since the segment mainly engages in make-to-stock production.

ii) ROIC and ROE
FY2021

FY2022[Before-tax ROIC][3.3%][7.7%]

After-tax ROIC

1.6%

5.7%

ROE

2.6%

9.8%

(Notes) 1. Before-tax ROIC (return on invested capital) = (Profit before tax + interest expenses) ÷
Invested capital (Net debt + equity)
2. After-tax ROIC (return on invested capital) = (Profit attributable to owners of parent +Interest expenses × (1 – Tax rate)) ÷ Invested capital
3. ROE (return on equity) = Profit attributable to owners of parent ÷ {(shareholders’ equity
at the end of the previous period + shareholders’ equity at the end of the current period)
÷ 2}
4. After-tax ROIC has been disclosed to foster dialogues with the capital market from theperspective of promoting capital cost-conscious management as the entire Group. The
current capital costs (WACC) are estimated at the 4% range.

iii) Cash flows(Billions of yen)
FY2021

FY2022

Cash flows from operating activities

156.8

23.6

Cash flows from investing activities(58.3)(77.4)Cash flows from financing activities(108.9)85.3– 31 –

(2) Trends in Assets and Income(Billions of yen)
FY2022FY2019FY2020Japanesestandards

Japanesestandards(Consolidated
fiscal year
under
review)

FY2021

Item
Japanesestandards

IFRS

IFRS

Orders received

1,513.5

1,402.4

1,602.1

1,602.1

2,037.4

Net sales / Revenue

1,641.3

1,488.4

1,500.8

1,500.8

1,725.6

Operating profit(loss)

62.0

(5.3)

45.8

-

-

Business profit

-

-

-

30.3

82.3

39.3

(14.6)

30.8

27.6

70.3

18.6

(19.3)

21.8

12.6

53.0

Basic earnings per
share (yen)¥111.72¥(115.73)¥130.26¥75.51¥316.63

Total assets

1,957.8

1,963.2

2,022.7

2,174.6

2,457.7

471.5

482.7

498.5

524.8

596.8

Profit (loss) before
income taxes /Profit before tax
Profit (loss)
attributable to ownersof parent
Earnings per share /Net assets /Total equity(Note) Since FY2022, the Company has prepared consolidated financial statements based on
International Financial Reporting Standards (IFRS). Figures for FY2021 are based on IFRS as areference.

(3) Corporate Management Strategies in the Medium- to Long-Term andIssues to be Addressed
We have been promoting “Group Vision 2030” since November 2020 as the futureideal toward which the Group is aiming. The Group will strengthen existing corebusinesses, cultivate new businesses as future pillars by promoting synergy among
businesses, and reform our business portfolio by choosing specific businesses on
which to focus in order to pursue sustainable growth.
(i) Fields that the KHI Group focuses on
By giving attention to current social issues, the Group is focusing on the following
three fields to provide timely solutions to various social issues, including therealization of a decarbonized society to protect the global environment, measures
to address the aging society and labor shortages mainly in advanced countries,
elimination of various regional disparities in medical care, prevention and fast
recovery from natural disasters, and providing a stable supply of various natural
resources and energy.
“Creating a Safe and Secure Remote Society” - Creating New Value throughRobotics and Network
The KHI Group aims to create a society where people can live safely and securely
in diverse fields, such as medical and healthcare, manufacturing, and industrial– 32 –

infrastructure, using the Group’s remote control technology, remote information
technology, robotics, etc., and proposes new ways of working and living styles thatenable all people to participate in society through the realization of a remote society.
“Mobility in the Near Future” - Responding Quickly to Changing Trends in
Movement of People and Goods
In order to quickly respond to changes and trends in the movement of people andgoods, such as the need for home deliveries and the increasing demand for personal
mobility due to changing lifestyles, the KHI Group will propose new means oftransport and movement, such as helicopters and automated delivery robots that
autonomously transport goods, aiming to create a society where affluent, smart,and seamless movement is possible.
“Energy and Environmental Solutions” – for stable supply of clean energy
The KHI Group is building a world-leading hydrogen supply chain for the quick
realization of a carbon-neutral society. The KHI Group is also advancing standalone
carbon neutrality with the aim of achieving virtually zero CO2 emissions by 2030 at
Company sites in Japan. Expectations for hydrogen that can be produced in various
methods at locations around the world have increased not only for the aim of
becoming carbon neutral but also for energy security aspects, and the KHI Groupwill accelerate initiatives to quickly achieve a hydrogen-based society. As a Group,
we will also spread decarbonization solutions including electrification to cover awide range of society and stakeholders as we aim to be Zero-Carbon Ready by 2040,
and achieve net zero CO2 emissions for the entire Group by 2050.
(ii) Scenario for growth
Mass production related businesses such as the Powersports & Engine segment,
which achieved record high profit in FY2022, is the main profit center for the KHI
Group as a whole. The full-fledged recovery in aviation demand, includinginternational flights, will steadily grow the profit from businesses in which products
are made to order such as Aerospace Systems segment, thereby driving the KHI
Group’s growth. Furthermore, the KHI Group is aiming for other new businesses
including hydrogen, medical robots and Near Future Mobility to become revenue
pillars, leading to a stable growth trajectory. To achieve growth scenarios, we will
review business models such as by shifting from selling products to selling services.
We will also work to create a new society through collaborations with the National
and local governments, other companies and research institutes, and work on
portfolio and organizational reforms to create a highly profitable structure. By
promoting digital transformation (DX) as a system for supporting these, the KHI
Group is implementing initiatives to create new solutions through the utilization ofdata, enhance efficiency and value added in operational processes, and speed up
management decision making. People are the most important asset for supporting
our growth scenario. Therefore, we will implement various measures to secure anddevelop diverse human resources, to create an environment that will allow them todemonstrate their individuality and abilities, and to realize employees and anorganization that will willingly take on challenges. The KHI Group has been fosteringa corporate culture that allows us to constantly advance various innovations suchas the reform of the personnel system including the allocation of human resources
regardless of age to posts where they can demonstrate their potential to the full.
(4) Material Business Reorganization
Not applicable.

– 33 –

(5) Financing
Funds of ¥18.5 billion from long-term debt, and short-term debts and other funds
from various sources were raised in the current consolidated fiscal year. The funds
were allocated to such items as the scheduled payment for long-term debt, capital
investments and working capital.
(6) Principal Lenders(Billions of yen)
Lenders

Balance of borrowings
Long term

Short term

Total

Mizuho Bank, Ltd.

2.0

49.0

51.0

Sumitomo Mitsui Banking Corporation

5.5

25.7

31.2

Sumitomo Mitsui Trust Bank, Ltd.

9.5

10.9

20.4

MUFG Bank, Ltd.

4.5

15.6

20.1

Development Bank of Japan Inc.

17.8

0

17.8

– 34 –

(7) Capital Investments, Etc.
In the KHI Group, investments were mainly made in facilities for increasing
production capability in the Powersports & Engine segment, and in facilities for
streamlining production in the Aerospace Systems and Precision Machinery & Robot
segments. As a result, the KHI Group spent a total of ¥96.3 billion (including
spending on intangible assets) on capital investments in the consolidated fiscal year
under review. The investments were covered by internally generated funds andborrowed money.
Details of major investments in the respective segments are as follows:(Billions of yen)Segment

Aerospace Systems
Rolling Stock

Major investments

Facilities for streamlining production of aircrafts,
commercial aircraft jet engines and other products.
Facilities for streamlining production of rolling stock,etc.

Investment
amounts in the
consolidated
fiscal year
under review
17.0
2.2

Energy Solution &Marine Engineering

Facilities for increasing industrial machinery
production, etc.

7.5

Precision Machinery &Robot

Facilities for streamlining production of hydrauliccomponents and industrial robot production, etc.

25.8Powersports & Engine

Facilities for increasing powersports production, etc.

27.2

OthersInformation equipment, etc.

16.4

Total

96.3

– 35 –

(8) Major Parent Companies and Subsidiaries(i)

Parent companies
Not applicable.

(ii) Major subsidiariesi) JapanCompany name
(Location)
Kawasaki Railcar
Manufacturing Co., Ltd.

CapitalThe
Company’s
percentageof equity
participation

Main business¥9,685 million

100%

Design, development, manufacture,
repair, sale and lease of rolling stock,railroad systems and components¥1,000 million

100%

Manufacture, sale, lease and repairof automobiles, bicycles, industrial
vehicles, other transportation
machinery/equipment, engines andrelated equipment¥600 million

70%

Sale of various types of industrial
machinery, petroleum, steel stock,
and air conditioning equipment, etc.

100%

Sale, repair and after-sales service ofgeneral-purpose gas turbine
generators and other industrial
machinery

Note 3

Sole distributor of motorcycles, PWC(“JET SKI®”), general-purpose
gasoline engines and engine
components in Japan

100%

Manufacture of aircraft components,
targeting systems, rocket
components, aerospace equipment
and marine equipment; repair,maintenance and remodeling ofaircraft

100%

Manufacture, sale, installation andafter-sales service for boilers, airconditioning equipment andabsorption-style heat pumps, etc.

¥1,200 million

100%

Design, manufacture, and sale ofcrushers, grinders, castings, andother equipment; design, execution
and supervision of engineering,
construction, installation ofmachinery and appliances¥120 million

Note 4

Design, manufacture, and sale ofsnow removal machinery, industrial
vehicles, etc.

100%

Information processing systems,
system construction, operation andmaintenance of information
communication networks, softwareand hardware sales, IT solutions(Kobe, Hyogo)
Kawasaki Motors, Ltd.
(Akashi, Hyogo)

Kawasaki Trading Co., Ltd.
(Kobe, Hyogo)
Kawasaki Machine Systems,
Ltd.

¥350 million(Osaka, Osaka)
Kawasaki Motors Corporation
Japan¥100 million(Akashi, Hyogo)

NIPPI Corporation(Yokohama, Kanagawa)Kawasaki ThermalEngineering Co., Ltd.

¥6,048 million¥1,460 million(Kusatsu, Shiga)

EarthTechnica Co., Ltd.
(Chiyoda-ku, Tokyo)

NICHIJO CORPORATION(Sapporo, Hokkaido)

BENIC SOLUTION CORP.
(Akashi, Hyogo)¥50 million(Notes) 1. “PWC” stands for “personal watercraft” and is a water scooter.

– 36 –

2. “JET SKI®” is a registered trademark of Kawasaki Motors, Ltd.
3. A wholly-owned subsidiary of Kawasaki Motors, Ltd.
4. Kawasaki Railcar Manufacturing Co., Ltd. has a 75% stake.

– 37 –

ii) Overseas
Company name
(Location)

Kawasaki Motors Corp.,
U.S.A.
(United States)
Kawasaki Motors
Manufacturing Corp., U.S.A.
(United States)
Kawasaki Motors Enterprise(Thailand) Co., Ltd.
(Thailand)
Kawasaki Motors Europe
N.V.

The
Company’s
percentageof equity
participation

Main business

Note 2

Sale of motorcycles, ATVs, UVs, PWC“JET SKI®” and general-purpose
gasoline engines in the U.S. andSouth and Central America

USD 170
millionNote 2

Manufacture of PWC “JET SKI®,”
UVs, ATVs, rims for ATVs and UVs,
general-purpose engines and rollingstock and aircraft doors

THB 1,900
millionNote 2

Manufacture and sale of motorcycles
in Thailand

EUR 64 million

Note 2

Sale of motorcycles, ATVs, UVs, PWC“JET SKI®” and general-purpose
gasoline engines in Europe

USD 60
millionNote 3

Manufacture, sale, servicing andengineering of rolling stock

PHP 101
millionNote 6

Manufacture and sale of motorcycles
in the Philippines

USD 1 million

Note 4

Sale and servicing of industrial robots
in Americas

USD 80
millionNote 5

Manufacture and sale of motorcycles
in Indonesia

KRW 1,310
million50%

Manufacture, sale and servicing of
hydraulic equipment products forconstruction machinery and marine
hydraulic products in South Korea

RMB 10
millionNote 2

Import and sale of products andrelated business of Kawasaki Motors,
Ltd.

JPY 1,680
million100%

Procurement of parts andcomponents of robots and related
equipment

CAD 2 million

Note 2

Sale of motorcycles, ATVs, UVs and
PWC “JET SKI®” in Canada

JPY 3,000
million100%

Manufacture of hydraulic pumps andhydraulic motors for construction
machinery, marine hydraulic products
and industrial robots

JPY 400
million100%

Sale and servicing of precision
machinery in China

CapitalUSD 165
million(Netherlands)
Kawasaki Rail Car, Inc.
(United States)
Kawasaki Motors (Phils.)
Corporation(Philippines)
Kawasaki Robotics (U.S.A.),
Inc.
(United States)
PT. Kawasaki Motor
Indonesia(Indonesia)
Flutek, Ltd.
(South Korea)
Kawasaki Motors(Shanghai), Ltd.
(China)Kawasaki Robotics(Kunshan) Co., Ltd.
(China)Canadian Kawasaki Motors
Inc.
(Canada)Kawasaki Precision
Machinery (Suzhou) Ltd.
(China)Kawasaki Precision
Machinery Trading(Shanghai) Co., Ltd.
(China)– 38 –

Company name
(Location)
Kawasaki Robotics (Tianjin)
Co., Ltd.
(China)Kawasaki Motors Pty. Ltd.
(Australia)
Kawasaki Precision
Machinery (UK) Ltd.

The
Company’s
percentageof equity
participation

Main business

JPY 200
million100%

Sale and servicing of industrial robots
in China

AUD 2 million

Note 2

Sales of motorcycles, ATVs, RUVs,
UVs, and PWC “Jet Ski®” in Australia£10 million

100%

Production of hydraulic pumps andhydraulic motors, and sales/services
for various hydraulic products in
EuropeBRL 16
millionNote 2

Manufacture and sale of motorcycles,
ATVs, PWC “Jet Ski®,” etc. in Brazil

Capital(England)Kawasaki Motores do Brasil
Ltda.
(Brazil)(Notes) 1. ATV stands for “All Terrain Vehicle,” UV for “Utility Vehicle,” and RUV for “Recreational Utility
Vehicle.” All are types of off-road four-wheel vehicle.
2. A wholly-owned subsidiary of Kawasaki Motors, Ltd.
3. A wholly-owned subsidiary of Kawasaki Motors Manufacturing Corp., U.S.A.
4. A wholly-owned subsidiary of Kawasaki Motors Corp., U.S.A.
5. Kawasaki Motors, Ltd. has a 90% stake.
6. Kawasaki Motors, Ltd. has a 50% stake.
7. There are 104 consolidated subsidiaries, including 28 companies (10 in Japan and 18
overseas) as major subsidiaries, and there are 20 companies which are accounted for using
the equity method.

– 39 –

(9) Company Group’s Main Business and Number of Employees
Segment

Main Business

Number of
Employees

Aerospace Systems

Manufacture and sale of aircraft, aircraft
engines, etc.

8,118

Rolling Stock

Manufacture and sale of rolling stock, snow
removal machinery, etc.

3,483

Energy Solution & Marine
Engineering

Manufacture and sale of energy-related
equipment and systems, marine propulsion
machinery and systems, industrial machinery,
environmental equipment, cryogenic storage
equipment, hydrogen-related facilities,
crushing machines, ships, etc.

8,506

Precision Machinery & Robot

Manufacture and sale of hydrauliccomponents, industrial robots, etc.

4,294Powersports & Engine

Manufacture and sale of motorcycles, off-roadfour-wheel vehicles (SxS, ATV), PWC (“JETSKI®”), general purpose gasoline engines,
etc.

10,159OthersCommerce, brokerage and mediation for saleand order reception and administration of
welfare facilities, etc.

2,318

Companywide common areas(Head Office Administration Department,
Research & Development Department, etc.)

1,376

–

38,254

Total(Notes) 1. Employees total 27,583 people in Japan and 10,671 people overseas.
2. The Company has 13,662 employees (average age: 40.9 years old; average years ofservice: 15.2 years)
3. SxS is an abbreviation for “side by side,” and it is a “type of multipurpose four-wheeledvehicle.”– 40 –

(10) Company Group’s Principal Offices and Plants
Name and location

Principal
officesHead office

Kobe Head Office (Kobe), Tokyo Head Office (Minato-ku, Tokyo): 2 Head
Offices

Branches

Sapporo Office (Sapporo), Sendai Office (Sendai), Nagoya Office(Nagoya), Osaka Office (Osaka), Hiroshima Office (Hiroshima), Fukuoka
Office (Fukuoka), Okinawa Office (Naha, Okinawa): 7 Offices

Plants, etc.

(Note)

Gifu Works (Kakamigahara, Gifu), Nagoya Works 1 (Yatomi, Aichi),
Nagoya Works 2 (Ama-gun, Aichi), Kobe Works, Hyogo Works, Seishin
Works, Nishi-Kobe Works (Kobe), Akashi Works (Akashi, Hyogo),
Kakogawa Works (Kakogawa, Hyogo), Harima Works (Kako-gun,
Hyogo), Sakaide Works (Sakaide, Kagawa), Technical Institute (Akashi,
Hyogo): 12 Works (including a Technical Institute)

Location of principal offices of major subsidiaries are provided in “(8) Major Parent Companies
and Subsidiaries.”(11) Other Important Issues concerning Current Situation of Company Groups
Conduct deemed inappropriate related to the inspection of absorption chillers was
discovered at Kawasaki Thermal Engineering Co., Ltd. (announced on June 7, 2022).
An investigation was later conducted by a special committee composed of outside
lawyers, and the results were disclosed (announced on March 24, 2023). The
Company will implement comprehensive quality control measures and otherinitiatives Group-wide to prevent recurrence.

– 41 –

2. Status of Shares (as of March 31, 2023)(1) Aggregate Number of Issuable Shares

336,000,000 shares(2) Total Number of Shares Issued

167,921,800 shares(including 41,655 treasury shares)(3) Number of Shareholders

129,341 persons(4) Major Shareholders (top 10)
Shareholder name

Number of shares
held

Shareholding ratio(Note)

thousand shares%

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

25,042

14.9

Custody Bank of Japan, Ltd. (Trust Account)

10,542

6.2

Nippon Life Insurance Company

5,751

3.4

Kawasaki Heavy Industries, Ltd. Employees Shareholder
Association

5,223

3.1

STATE STREET BANK AND TRUST COMPANY 505001

4,953

2.9

Kawasaki Heavy Industries, Ltd. Kyoueikai

4,097

2.4

Mizuho Bank, Ltd.

3,135

1.8

THE BANK OF NEW YORK MELLON 140044

2,772

1.6

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,227

1.3

SSBTC CLIENT OMNIBUS ACCOUNT

1,922

1.1

(Note)The shareholding ratio is calculated after subtracting treasury shares (41,655 shares).

(5) Status of shares granted to Company Officers for performance of duties
during the current fiscal year
Number ofsharesItem
Directors (excluding Directors serving as Audit andSupervisory Committee Members and Outside Directors)

4,100

Number ofrecipients1(Notes) 1. Details on the Company’s stock compensation are as provided in “3. (2) 2) (I) (i)Remuneration for Directors (excluding Directors serving as Audit and Supervisory
Committee Members and Outside Directors. Hereinafter referred to as “Subject
Directors.”).”
2. An eligible individual retired from their position as Company Director on June 24, 2022.

– 42 –

3. Company Officers (as of March 31, 2023)(1)

Directors
Position

Name

Areas of Responsibility within the Company andOther Significant Concurrent Positions

Director

Yoshinori Kanehana

Chairman of the Board

Representative
Director

Yasuhiko Hashimoto

President and Chief Executive Officer

Representative
Director

Katsuya Yamamoto

Representative
Director

Hiroshi Nakatani

Outside Director

Jenifer Rogers

Outside Director

Hideo Tsujimura

Outside Director

Katsuhiko Yoshida

Director,
Full-Time Audit andSupervisory
Committee Member

Akio Nekoshima

Director,
Full-Time Audit andSupervisory
Committee Member

Nobuhisa Kato

Outside Director,
Audit andSupervisory
Committee Member

Atsuko Ishii

Outside Director,
Audit andSupervisory
Committee Member

Ryoichi Saito

Outside Director,
Audit andSupervisory
Committee Member

Susumu Tsukui

Senior Corporate Executive Officer
Assistant to the President, in charge of Finance &Accounting, Human Resources, Legal Affairs,
Compliance and Corporate Communication, andGeneral Manager, Human Resources Division
Senior Corporate Executive Officer
Assistant to the President, in charge of Technology,
Production, Procurement, TQM, General
Administration, Digital Transformation (DX)
Strategy, and the North America ProjectManagement Task Force, and General Manager,
Corporate Technology Division
General Counsel Asia, Asurion Japan Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
Outside Director, Nissan Motor Co., Ltd.
Outside Director, Seven & i Holdings Co., Ltd.
Outside Director, Citizen Watch Co., Ltd.

Outside Director, NS Solutions Corporation
Outside Director, Mitsui Sumitomo Insurance
Company, Limited

Managing Partner, Ashiya Nishinomiya Citizen Law
Office(Notes) 1. The Company has registered all Outside Directors as Independent Officers with Tokyo Stock
Exchange, Inc. pursuant to the rules of that stock exchange.
2. Directors Sukeyuki Namiki and Yoshiaki Tamura, and Directors, Audit and Supervisory
Committee Members Katsuyoshi Fukuma and Satoru Kohdera resigned during the fiscal
year under review at the conclusion of the 199th Ordinary General Meeting of Shareholders
held on June 24, 2022.
3. Director, Full-Time Audit and Supervisory Committee Member Akio Nekoshima, who has
many years of experience with finance and accounting at the Company and Mizuho
Corporate Bank, Ltd. (including The Dai-Ichi Kangyo Bank, Limited, a precursor of thebank), has substantial knowledge about finance and accounting.

– 43 –

Director, Full-Time Audit and Supervisory Committee Member Nobuhisa Kato, who has
many years of experience with finance, accounting and administration operations at theCompany, has substantial knowledge about finance and accounting.
Outside Director, Audit and Supervisory Committee Member Ryoichi Saito, who has many
years of experience with finance and accounting at NSK Ltd., has substantial knowledge
about finance and accounting.

(2) Remuneration for Directors(Millions of yen)

Total amount of remuneration, etc. by category
Position and number

Total amountof
remuneration

Directors (excluding
Directors serving as Audit
and Supervisory
Committee Members)
9 persons

392

249

70

72

Directors serving as Audit
and Supervisory
Committee Members 7
persons

117

117

－

－

Total 16 persons(including 8 persons
from Outside Directors)

510
(83)

367
(83)

70
(－)

72
(－)

(Notes)(i)

Monetary reward
PerformanceBasic
based
remuneration
remuneration

Performancelinked stockcompensation

1. Stock remuneration represents the total amount recorded as expenses during the
fiscal year under review based on the performance-linked stock compensation plan
approved at the 198th Ordinary General Meeting of Shareholders held on June 25,
2021.
2. Figures shown in total columns represent the number of persons actually paid.

Matters concerning resolution of a general meeting of shareholders
on remuneration for Directors

Subject
Directors (excluding
those serving as
Audit andSupervisory
Committee
Members)
ExcludingOutsideDirectors
Directors serving as
Audit andSupervisory
Committee
Members

Remuneration
type

Remuneration limit and points

Meeting ofshareholders
resolution

Number of
Directors at
resolution

Cash¥800 million per year

197th
Ordinary
GeneralMeeting of
Shareholders
June 25, 20208(including 3
OutsideDirectors)

Stock· Contribute up to ¥975
million to the trust every
three fiscal years· Maximum number of points(shares) to be granted per
fiscal year: 50,000 points(50,000 shares)

198th
Ordinary
GeneralMeeting of
Shareholders
June 25, 2021

5 persons¥120 million per year

197th
Ordinary
GeneralMeeting of
Shareholders
June 25, 20205(including 3
OutsideDirectors)

Cash– 44 –

(ii) Policy concerning the amount of remuneration and others to officers
or its calculation method(I) Remuneration for Directors (excluding Directors serving as Audit andSupervisory Committee Members)Compensation for Company Officers shall be set to within the compensation
scope approved at the Ordinary General Meeting of Shareholders. The
compensation system is according to the performance-based stockcompensation that was introduced by a resolution at the 198th Ordinary
General Meeting of Shareholders on June 25, 2021. The determined
remuneration amount will be divided proportionally and paid monthly during
the term of office.
(i) Remuneration for Directors (excluding Directors serving as Audit andSupervisory Committee Members and Outside Directors. Hereinafter referred
to as “Subject Directors.”)
Based on the concept of “Pay for Mission (Reward for accomplishing what theCompany needs to accomplish)” toward the realization of “Group Vision 2030”“Trustworthy Solutions for the Future” established in November 2020, theremuneration system is designed according to the responsibilities andperformance of each Director, and rewards contributions to the enhancementof corporate value in the medium and long term as well as in the short term,
while realizing shared value with shareholders and other stakeholders.
It consists of base remuneration, short-term incentive-based remuneration,and long-term incentive-based remuneration.
Base remuneration and short-term incentive-based remuneration are paid in
cash. In addition, long-term incentive-based remuneration is a performancelinked stock compensation, with the aim of sharing profits and risks withshareholders and increasing incentives to contribute to the enhancement ofcorporate value over the medium to long term. The specific structure is asfollows.
・ Basic remuneration
Individual grades are determined based on the mission of each Subject
Director, and remuneration will be set accordingly.
・ Short-term incentive-based remuneration
Performance-linked compensation is based on the achievement level of
performance targets for a single fiscal year, and will be determined basedon the consolidated performance of the Group and the target
achievement level of each Subject Director. The indicator of theconsolidated performance of the Group is Profit attributable to owners ofparent (“Net Profit”), and it is set to encourage the steady achievement of
performance targets for a single fiscal year and the sharing of value
among shareholders. The payment ratio is as follows.

– 45 –

Net Profit

Payment ratio(%)

Under 00 to less than ¥25 billion¥25 billion to less than ¥45
billion¥45 billion to less than ¥70
billion¥70 billion or more

－
0-45
50-95
100-195200～

The achievement level of the goals of each Subject Director is determinedbased on the achievement level of the goals set by each Subject Director
in the previous fiscal year for short-term issues relating with the company
as a whole, those in organizations under management of the Director, as
well as tasks in charge.
・ Long-term incentive-based remuneration
Utilizing the mechanism of a Board Benefit Trust, the Company will, in
principle, deliver shares of the Company stock when a Director retires
based on the points granted according to the tenure of office (fixed
points) and those granted according to the achievement level of goals of
the Subject Director (performance points), and provide cash benefits
equivalent to the amount of the share exchange value of the Company.
Points are divided into two categories: fixed points and performancepoints. For the fixed points, a fixed number of shares is granted based on
the length of tenure to share the value with shareholders.
For the performance points, shares are granted based on the achievementlevel of the goals of each Subject Director to work as an incentive toimprove corporate value over the medium to long term. The achievementlevel of the goals of each Subject Director is determined based on theachievement level of the goals set by each Subject Director in theprevious fiscal year for medium-term issues relating with the company as
a whole, those in organizations under management of the Director, as
well as tasks in charge.

The overall remuneration ratio comprising the base remuneration, short-term
incentive-based remuneration, and long-term incentive-based remunerationis set to be approximately “50%:30%:20%” when the consolidated
performance of the Group for the previous fiscal year achieves the target level
and the individual targets set by each Subject Director for the previous fiscal
year are achieved 100%.
Performance-linked compensation is based on performance for FY2021. Net
Profit related to performance-linked compensation for this term was ¥21.8
billion. (*)– 46 –

(ii) Remuneration for Outside Directors (excluding Directors serving as Audit
and Supervisory Committee Members)
Fixed compensation that is not linked to performance due to the independent
nature of the work involved.
(iii) Method of determining remuneration
Remuneration for Directors (excluding Directors serving as Audit andSupervisory Committee Members) is determined by resolution of the Board of
Directors, within the range of remuneration, etc., in advance, based on the
deliberations of the Compensation Advisory Committee. The majority of themembers and the presiding chairman of the Compensation Advisory
Committee are Outside Directors.
By resolution of the Board of Directors, decision on individual remuneration ofeach Director (excluding Directors serving as Audit and Supervisory
Committee Member) may be left to the Director, President and Chief Executive
Officer. In such cases, in accordance with the policy concerning the amount of
remuneration and others to officers (excluding Directors serving as Audit andSupervisory Committee Member) or its calculation method, the amount of
remuneration, etc. are determined based on deliberations by theCompensation Advisory Committee.
The details of remuneration, etc. for each individual Director (excluding
Directors serving as Audit and Supervisory Committee Members) for the fiscal
year under review are determined by Representative Director, President andChief Executive Officer Yasuhiko Hashimoto, under the delegation of the Boardof Directors, as it is necessary to determine such details based on the Group’s
performance and the responsibilities of each Director (excluding Directors
serving as Audit and Supervisory Committee Members). In delegating, thepolicy concerning the amount of remuneration and others to Directors(excluding Directors serving as Audit and Supervisory Committee Members)
or its calculation method determined at the Board of Directors meetings heldon May 20, 2021 and June 25, 2021 is followed. Together, based on
deliberations by the Compensation Advisory Committee, we have determinedthat the policies are in line. (*)*

As for performance-based compensation starting from FY2022, according
to International Financial Reporting Standards (IFRS), evaluation
indicators for short-term incentive-type compensation will be replaced
according to the following at the meeting held on March 31, 2023 asdetermined by the Board of Directors.

Japanese standards “Net Profit” → International accounting standards “Profit”(II) Remuneration for Directors serving as Audit and Supervisory Committee
Members
Fixed compensation that is not linked to performance due to the independent
nature of the work, and is decided through consultation among the Directors
serving as Audit and Supervisory Committee Members.

– 47 –

(iii) Activities of the Board of Directors and Compensation Advisory
Committee
Policy and systems related to remuneration for Directors (excluding Directors
serving as Audit and Supervisory Committee Members) are decided byresolution of the Board of Directors based on the deliberations of theCompensation Advisory Committee. A majority of the members and thepresiding officer of the Compensation Advisory Committee are Outside
Directors.
The Compensation Advisory Committee met seven times in FY2022. In
addition to the matters described above, the committee discussed the form of
the corporate officer compensation system going forward.

(3) Overview of Limited Liability Agreement
The Company has, pursuant to the provisions of Article 427, Paragraph 1 of theCompanies Act, concluded a limited liability agreement with Outside Directors
Jenifer Rogers, Hideo Tsujimura and Katsuhiko Yoshida, and Directors, Full-Time
Audit and Supervisory Committee Members Akio Nekoshima and Nobuhisa Kato,and Outside Directors, Audit and Supervisory Committee Members Atsuko Ishii,
Ryoichi Saito, and Susumu Tsukui. The liability under said agreement shall belimited to either an amount of ¥10 million, or an amount specified by laws andregulations, whichever is higher.
(4) Overview of Directors and Officers Liability Insurance
The Company has concluded a Directors and Officers Liability Insurance (D&O
Insurance) contract prescribed in Article 430-3, Paragraph 1 of the Companies Act
with an insurance company for the Directors of the Company, Kawasaki Railcar
Manufacturing Co., Ltd. and Kawasaki Motors, Ltd. (excluding Directors serving as
Audit and Supervisory Committee Members), Audit & Supervisory Committee
Members and Executive Officers, etc. The insureds do not bear insurance
premiums. The insurance policy covers damages and court costs that may be
incurred by the insured arising from the insured’s act in connection with theexecution of his or her duties. However, to ensure that the execution of duties by
insured persons is not compromised, no compensation for damages, etc. will bemade if there are actions that the Group recognizes as a violation of laws andregulations.
(5) Appointment of Full-time Audit and Supervisory Committee Members andReasons Therefor
The Company appoints those who are familiar with the Company’s internal affairs
as Full Time Audit and Supervisory Committee Members in order to enhance theeffectiveness of the Audit and Supervisory Committee’s activities by sharing– 48 –

information obtained in the course of performance of their duties with all of the
Audit and Supervisory Committee Members while making efforts to develop
environment of auditing, etc. and collect internal information as well as
supervising and verifying the status of establishment and operation of the internal
control system on a daily basis. To this end, the Company has appointed Mr. Akio
Nekoshima and Mr. Nobuhisa Kato as Full Time Audit and Supervisory Committee
Members.
(6) Outside Officers(i) Concurrent managing officer positions at other companies and therelationship between the Company and said companies
Not applicable.
(ii) Concurrent Outside Officer positions at other companies and therelationship between the Company and said companies
Position

Name

Significant concurrent positions

Relationships with
the Company

General Counsel Asia, Asurion Japan
Holdings G.K.
Outside Director, Mitsui & Co., Ltd.
OutsideDirector

Jenifer Rogers
Outside Director, Nissan Motor Co., Ltd.
Outside Director, Seven & i Holdings Co.,
Ltd.
Katsuhiko
YoshidaOutsideDirector,
Audit andSupervisory
Committee
MemberOutside Director, Citizen Watch Co., Ltd.
Outside Director, NS Solutions Corporation

Atsuko Ishii

The Company does
not have any
important dealing orother special
relationship with thesaid companies.

Outside Director, Mitsui Sumitomo
Insurance Company, Limited(iii) Family relationships with managing officers or officers, of theCompany or of specific related business operators of the Company
Not applicable.
(iv) Main activities during the fiscal year under review
Attendance
Name

Jenifer
RogersBoard ofDirectors
meetings

16/16
meetings

Meetings of the
Audit andSupervisory
Committee–

Provision of opinions and outlines of duties
executed in connection with roles expected of
Outside Directors
She has provided comments that contributeto ensuring the soundness of the Company’s
management and enhancing its enterprisevalue at the Board of Directors meetings
mainly based on her extensive international
experience gained at financial institutions inJapan and overseas and deep insights into
legal affairs, compliance, and risk
management.

– 49 –

Attendance
Name

Board ofDirectors
meetings

Meetings of the
Audit andSupervisory
Committee

Hideo
Tsujimura

16/16
meetings–

Katsuhiko
Yoshida12/12
meetings–

AtsukoIshii

16/16
meetings

14/14
meetings

Provision of opinions and outlines of duties
executed in connection with roles expected of
Outside Directors
He has provided comments that contribute toensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
management experience and deep insight
into product development and intellectual
property. Furthermore, as a member of theNomination Advisory Committee andCompensation Advisory Committee, he fulfills
an important role in deliberating on theappropriateness of the policy regarding
election of officers and proposals for officer
election, as well as the appropriateness ofthe policy on officer remuneration and the
remuneration system for officers, andreporting on each to the Board of Directors.
He has provided comments at Board of
Director Meetings that contribute to ensuring
the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
management experience and deep insight
into sales and marketing.
She has provided comments that contributeto ensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on her abundant
experience in and deep insight into Japan’slabor administration. In addition, she has
made efforts to develop auditing
environment in cooperation with other Audit
and Supervisory Committee Members byactively obtaining information necessary forauditing.
Furthermore, as a member of the Nomination
Advisory Committee and Compensation
Advisory Committee, she fulfills an importantrole in deliberating on the appropriateness ofthe policy regarding election of officers andproposals for officer election, as well as theappropriateness of the policy on officer
remuneration and the remuneration systemfor officers, and reporting on each to theBoard of Directors.

– 50 –

Attendance
Name

Board ofDirectors
meetings

Meetings of the
Audit andSupervisory
Committee

Ryoichi
Saito

16/16
meetings

14/14
meetings

SusumuTsukui

12/12
meetings

9/9 meetings

Provision of opinions and outlines of duties
executed in connection with roles expected of
Outside Directors
He has provided comments that contribute toensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
management experience and deep insights
into business planning, finance andaccounting, and risk management. In
addition, he has made efforts to develop
auditing environment in cooperation withother Audit and Supervisory Committee
Members by actively obtaining informationnecessary for auditing.
Furthermore, as chair of the Nomination
Advisory Committee and Compensation
Advisory Committee, he fulfills an importantrole in deliberating on the appropriateness ofthe policy regarding election of officers andproposals for officer election, as well as theappropriateness of the policy on officer
remuneration and the remuneration systemfor officers, and reporting on each to theBoard of Directors.
He has provided comments that contribute toensuring the soundness of the Company’s
management and enhancing its enterprisevalue mainly based on his abundant
experience as an attorney and deep insight
into legal affairs.
In addition, he has made efforts to develop
auditing environment in cooperation withother Audit and Supervisory Committee
Members by actively obtaining informationnecessary for auditing.

(Notes) 1. The number of attendances at the Board of Directors meetings for Mr. Katsuhiko Yoshida isbased on his attendance records after he assumed the office of Director on June 24, 2022.
2. The number of attendances at the Board of Directors meetings for Director and Audit andSupervisory Committee Member Mr. Susumu Tsukui is based on his attendance records
after he assumed the office of Director and Audit and Supervisory Committee Member onJune 24, 2022.

– 51 –

Message from Outside Director
The last year was another year of change and uncertainty. We are living during
challenging times when adapting to change becomes even more important from abusiness perspective as well as for the betterment of society. During COVID, KHI
adapted to the situation by creating testing capabilities using its strength inrobotics, deployed at various locations, including airports, to assist in fighting
Jenifer Rogers

against the infection. Kawasaki also continued its investment in sustainability
initiatives for less environmental impact by promoting development of technologies
for the hydrogen supply chain and pursuing more green financing. Being responsive
to social issues while developing solutions for our customers that help them adapt
to the changing world is important.
The board is focused on this in line with the spirit of “Changing forward” and I lookforward to working with my other directors on delivering on that towards achieving
the Kawasaki “Group Vision 2030” for all of our stakeholders.
The Kawasaki Heavy Industries Group is taking positive steps toward achieving“Group Vision 2030.” We are breaking ground on many new businesses, and I’m
confident the Group will see significant growth in the future. However, getting a
new business to be able to stand on its own requires time and investment while itis supported by existing businesses. Consistent effort is essential to improve

Hideo Tsujimuraearnings and implement structural reforms.
It is our aim to improve management quality by promoting TQM activities andstrengthening compliance while fostering an organizational culture that is frank,
flat and transparent. It is my sincere hope that, under the slogan “Powering yourpotential” that everyone will continue taking on challenges with ambitious goals
and the strong belief that “If you try, you can do it, someday you will do it, you willdefinitely succeed.”
As indicated in December 2022 at the meeting to give an update on progress with
“Group Vision 2030,” preparations to transform our main businesses to achievesustainable growth and establish new businesses as the next growth engine are
steadily proceeding. People are the key to achieving any great vision, and we arereforming our personnel system to create opportunities and an environment where

Katsuhiko Yoshidaenthusiastic workers will be able to thrive.
I was just appointed as an Outside Director last year, but I feel that the fact thatthese two initiatives are progressing quickly at the same time indicates that “Group
Vision 2030” is already being realized to a high degree.
It is my particular hope that there will be greater progress with hydrogen-related
business, which promotes carbon neutrality, in order to help resolve future energy
problems.

– 52 –

Message from Outside Director, Audit and Supervisory Committee Member
Change takes courage, and we are becoming a company that is not afraid to facechange. This is seen by the fact that the Kawasaki Heavy Industries Group took
the opportunity to formulate “Group Vision 2030” and review its personnel
system amid the challenges posed by the major environmental changes in Japanand other countries, including global warming. Even in these circumstances, myAtsuko Ishii

desire is to pass on and deepen this enthusiasm and actions toward resolvingsocial issues. The key to successfully achieving change and reform is to increase
employee engagement, make sure that we secure and foster human talent with
the necessary knowledge for new businesses. While it is important to enhance
governance and thorough risk management, it is my goal to give ever greaterattention to human resource strategies.
Because of the COVID-19 pandemic, earnings were sluggish in the aircraft
segment and with portions of the mass-production segment. At the same time,
the Powersports & Engine segment performed well, and as a whole, the Group
posted a record profit. I realized once again that a business portfolio capable ofwithstanding long-term environmental changes is the key to sustainable

Ryoichi Saito

management. This year also marks the point where a company-wide approachis being established toward hydrogen business. A Company’s dedication isreflected in its personnel and organization. To succeed in this business, which
has great significance in social contributions but carries risks at the same time,
we must ensure a business foundation that can generate more stable profits andgreater cash flows than ever before. Promotion of business structural reforms isessential. Therefore, I will endeavor to give appropriate advice based on myperspective as an Outside Director.
I have been working with the Kawasaki Heavy Industries Group for one year asan Audit and Supervisory Committee Member. What has impressed me most is
the passion shown for resolving social issues and the sincere attitude toward fairmanagement. Based on the clear perspective of “Group Vision 2030,” the abilities

Susumu Tsukuiof each employee have been united, and efforts have been made to increase thevalue of the Kawasaki brand based on reliable technological capabilities, resulting
in record profits. By continuing on this path, we can expect further global growthwith an ever-higher degree of certainty. It is my desire to support future growththrough the strengthening corporate governance by focusing on meeting current
needs, while providing quick decision-making and persuasive explanations.

– 53 –

Consolidated Statement of Financial Position(As of March 31, 2023)(Unit: Millions of yen)

Description

AmountDescription(Assets)(Liabilities)

Current assets

Current liabilities

Amount138,420

Trade and other payables

452,250

470,398

Bonds, borrowings and otherfinancial liabilities

340,176Contract assets

159,422

Income taxes payable

18,071Inventories

690,431

Contract liabilities

256,247

Provisions

22,897

Cash and cash equivalents
Trade and other receivables

Income taxes receivable

551

Other current liabilities

219,019

Other financial assets

10,741

Total current liabilities

1,308,661

Other current assets

100,385

Total current assets

1,570,350

Non-current assets

Non-current liabilities
Bonds, borrowings and otherfinancial liabilities

445,082Retirement benefit liability

91,552

Provisions

1,942

Deferred tax liabilities

833

Property, plant and equipment

451,010Intangible assets

66,248Right-of-use assets

68,422

Investments accounted for using
equity method

77,440

Other financial assets

70,224

Capital surplus

55,716

Deferred tax assets

110,264Retained earnings

380,255

Other non-current assets

43,763

Treasury shares(1,107)

Total non-current assets

887,374

Other components of equity

36,852

Total equity attributable toowners of parent

576,201

Other non-current liabilities

12,779Total non-current liabilities

552,190

Total liabilities(Equity)
Share capital

Non-controlling interests
Total equity
Total assets

2,457,725

Total liabilities and equity– 54 –

1,860,852
104,484

20,670596,872
2,457,725

Consolidated Statement of Profit or Loss
(April 1, 2022 - March 31, 2023)(Unit: Millions of yen)

Description

AmountRevenue

1,725,609

Cost of sales

1,391,787

Gross profit

333,822

Selling, general and administrative expenses

252,311

Share of profit (loss) of investments
accounted for using equity method

3,314

Other income

4,850

Other expenses

7,320

Business profit

82,355

Finance income

2,291

Finance costs

14,297

Profit before tax

70,349

Income tax expense

15,058

Profit55,290

Profit attributable to
Owners of parent

53,029Non-controlling interests

2,261– 55 –

Non-consolidated Balance Sheet(As of March 31, 2023)(Unit: Millions of yen)

Description

Amount(Assets)
Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Raw materials and supplies
Work in process
Advance payments - trade
Prepaid expenses
Other
Allowance for doubtful accounts

Non-current assets
Property, plant and equipment
Buildings
Structures
Docks and building berths
Machinery and equipment
Vessels
Aircraft
VehiclesCurrent liabilities
Notes payable - trade
Electronically recorded obligations
7,514- operating
178,010
Accounts payable - trade58,316
Short-term borrowings
105,002
Accounts payable - other304,590
Accrued expenses
62,382
Income taxes payable
Contract liabilities
949
Provision for bonuses
109,367
Provision for construction(3,135)
warranties
Provision for loss on construction
contracts
Lease liabilities
Other
Non-current
liabilities
611,574
Bonds
payable284,592
Long-term borrowings
103,961
Lease liabilities
19,281
Provision for retirement benefits
2,208
Provision for the in service issues
86,082of commercial aircraft jet engines
Other
78
911,267

88,269Land

21,346

Leased assets

7,678

Software
Other
Investments and other assets
Investment securities
Shares of subsidiaries andassociates
Investments in capital ofsubsidiaries and associates
Distressed receivables
Deferred tax assets
Other
Allowance for doubtful accounts

Total liabilities

126,355
140,761
147,632
48,67484,3362,480
169,838
23,000
6,570
1,087
662
71,917427,314
149,000
188,251
7,288
60,519837
21,418

Shareholders’ equity
Share capital
17,371
Capital surplus
11,520Legal capital surplus
Other capital surplus
5,851
Retainedearnings
309,610
Otherretainedearnings
12,665Reserve for special depreciation
Reserve for tax purpose
94,045
reduction entry of non-current
assets35,963Retained earnings brought
1,216
forward91,201
Treasury shares
75,871 Valuation and translation(1,352) adjustments
Valuation difference on availablefor-sale securities
Deferred gains or losses on hedges
10,343

1,522,841

1,250,818(Net assets)

Total net assets
Total assets

823,504187

724
32,881Intangible assets

Amount5Tools, furniture and fixtures

Construction in progress

Description(Liabilities)

Total liabilities and net assets– 56 –

270,137
104,484
54,12654,126–112,633
112,633
543

4,765
107,324(1,107)
1,885
1,465
420
272,022
1,522,841

Non-consolidated Statement of Profit and Loss
(April 1, 2022 - March 31, 2023)(Unit: Millions of yen)

Description

AmountNet sales

791,099

Cost of sales

696,849

Gross profit

94,250

Selling, general and administrative
expenses

95,792

Operating loss

(1,542)Non-operating income

18,418Interest income

614

Dividend income

15,576

Other

2,228

Non-operating expenses

13,905Interest expenses

1,657

Foreign exchange losses

4,259

Loss on retirement of non-current assets

1,208

Other

6,780

Ordinary profit

2,970

Extraordinary losses

4,513

Impairment losses

4,513

Loss before income taxes(1,542)

Income taxes - current(1,624)

Income taxes - deferred(11,916)

Profit(13,540)
11,998– 57 –

Audit and Supervisory Committee’s audit report

Audit Report(English Translation)
The Audit and Supervisory Committee has conducted an audit concerning theperformance of duties by the Directors for the 200th fiscal year from April 1, 2022 toMarch 31, 2023, and hereby reports the auditing methods and their results as follows.
1. Auditing Methods and Their Contents(1) The Audit and Supervisory Committee received reports on a regular basis from
Directors, employees and other relevant personnel, sought explanations asnecessary, and provided opinions with respect to the contents of the Board of
Directors’ resolutions pursuant to 399-13, Paragraph 1, Item 1(b) and (c) of theCompanies Act and the status of the development and maintenance of thesystems that are maintained based on such resolutions (internal control systems).
The Committee also received reports from Directors, etc. and KPMG AZUSA LLC
on the status of the evaluation and audit of internal controls over financial
reporting under the Financial Instruments and Exchange Act and sought
explanations as necessary.
(2) In accordance with the auditing policies, audit plans and other relevant mattersestablished by the Audit and Supervisory Committee, the Committee, incoordination with the Auditing Department (Internal Audit Department) andother departments concerned, participated in important meetings, received
reports from the Directors, employees and other relevant personnel regarding
performance of their duties, sought explanations as necessary, examined
important documents and associated information, and studied the operations andfinancial positions at the head office and business offices.
Moreover, as for subsidiaries, the Committee communicated its intentions andexchange information with the Directors and Audit & Supervisory Board Membersof subsidiaries, including via online methods, and received business reports fromthe subsidiaries as necessary.
(3) The Audit and Supervisory Committee monitored and examined whether the
Accounting Auditor maintained their independence and implemented appropriate
audits, as well as received reports from the Accounting Auditor regarding theperformance of their duties and, as necessary, attended its audits and sought
explanations.
Also, the Audit and Supervisory Committee received notice from the Accounting
Auditor that “the system for ensuring that duties are performed properly”(matters set forth in each item of Article 131 of the Ordinance on Company
Accounting) has been prepared in accordance with the “Product Quality
Management Standards Regarding Audits” (issued by the Business Accounting
Deliberation Council (BACD)) and other relevant standards, and sought
explanations as necessary.
Based on the above methods, we examined the Business Report and supplementaryschedules, the consolidated financial statements (consolidated statement of financial
position, consolidated statement of profit or loss, consolidated statement of changes inequity, and notes to the consolidated financial statements), as well as the non–consolidated financial statements (non-consolidated balance sheet, non-consolidated
statement of profit and loss, non-consolidated statement of changes in net assets, and– 58 –

notes to the non-consolidated financial statements) and their supplementary schedules
related to the relevant fiscal year.
2. Results of Audit(1) Results of Audit of Business Report and Other Relevant Documents(i) In our opinion, the business report and the supplementary schedules are inaccordance with the related laws and regulations and the Articles ofIncorporation, and fairly represent the Company’s condition.
(ii) We have found no evidence of wrongful action or material violation of related
laws and regulations, nor of any violation with respect to the Articles ofIncorporation, related to performance of duties by the Directors.
(iii) In our opinion, the contents of the resolutions of the Board of Directors
related to the internal controls system are fair and reasonable. We have foundno matters on which to remark regarding the information contained in thisBusiness Report and the performance of duties by the Directors related tosuch internal controls system, including internal controls on financial reporting.
(2) Results of Audit of Consolidated Financial Statements
In our opinion, the methods and results of audit employed and rendered by KPMG
AZSA LLC are fair and reasonable.
(3) Results of Audit of Non-consolidated Financial Statements and Supplementary
Schedules
In our opinion, the methods and results of audit employed and rendered by KPMG
AZSA LLC are fair and reasonable.
May 25, 2023
Audit and Supervisory Committee, Kawasaki Heavy Industries, Ltd.

(Note)

Full-Time Audit and Supervisory Committee Member

Akio Nekoshima

Full-Time Audit and Supervisory Committee Member

Nobuhisa Kato

Audit and Supervisory Committee Member

Atsuko Ishii

Audit and Supervisory Committee Member

Ryoichi Saito

Audit and Supervisory Committee Member

Susumu Tsukui

Audit and Supervisory Committee Members Atsuko Ishii, Ryoichi Saito and Susumu Tsukui are
Outside Directors as stipulated in Article 2, Item 15 and Article 331, Paragraph 6 of theCompanies Act.

– 59 –