TS TECH
Integrated Report

2030 Vision

Innovative quality
company

Continued creation of new value

TS TECH Philosophy

Vision Statement

A company dedicated to realizing people’s potential
A company sincerely appreciated by all
Mission Statement

In a society where mobility is ever-changing,

We shall provide comfortable,

we continuously pursue the creation of safe,

high-quality products at competitive prices

comfortable cabin spaces to provide innovative,

to our customers worldwide,

attractive products.

always pursuing the infinite
possibilities in manufacturing.

Operational Directives• We should make our workplace a vibrant one, valuing consensus
and communication.
• Work should be done in accordance with the circumstances,with importance placed on time and priorities.
• We must always challenge ourselves to create new value by leveraging
our passion and know-how.
• Each of us should always persevere to make our individual vision a reality.

TS TECH Integrated Report 2021

1

INDEX1

TS TECH Philosophy

2

Index and Editorial Policy

ESG Management

Value Creation Story
TS TECH’s Strengths
Accumulated from the Past

Our Value Creation Process andthe Evolution of Each Domain

4

The History of TS TECH

12 TS TECH’s Value Creation Model

6

TS TECH’s Products andAccumulated Capital

14 The TS TECH Group’s Materiality
16 14th Medium-Term Management
Plan Overview

TS TECH’s Value Chain
17
18
20
21

Fact Book

26 ESG Management Index

52 Fact Book Index

Corporate Governance

Financial Reporting

27 Changes to the Organizational Layout
28 Audit and Supervisory Committee

53 Management’s Discussion and Analysis

Roundtable Discussion

32 Board of Directors
34 Efforts to Improve Corporate
Governancevernance and Compliance

Development and Engineering
Corporate Sales and Purchasing
Manufacturing
Quality Control

54 Consolidated Statement of Financial Position
56 Consolidated Statements of Profit or Loss andComprehensive Income

58 Consolidated Statement of Changes in Equity
59 Consolidated Statement of Cash Flows
61 Notes to Consolidated Financial Statements
106 Independent Auditor’s Report

22 Financial Strategies
24 Financial Highlights
25 Non-Financial Highlights

To Our Stakeholders

Environmental

Financial/Non-Financial Information

8

39 Environmental Initiatives

110 Financial Information

Top Message

111 Non-Financial Information

Unafraid of change in
an increasingly uncertain
business environment,
we will make capital
investments to create
new value.

Social
44 Creating Employee-Friendly Workplaces
47 Supply Chain Initiatives
50 Philanthropy

About the Report’s Formats
Integrated Report
TS TECH Integrated Report 2021

Editorial Policy
The TS TECH Group has been issuing the “TS TECH Report,” an integrated report that
includes both financial and non-financial information, since 2012, and changed its
name to the “TS TECH Integrated Report” in fiscal 2021. In this report, we will continue to introduce the Group’s stance as an enterprise and the efforts it is making tocontribute to sustainability in the course of its business in order to be a company
sincerely appreciated by all and whose presence is valued by all of its stakeholders.

TS TECH
Integrated Report

TS TECH Website
Non-Financial Information
CSR Activities

Provides qualitative and quantitative information on society and theenvironment

https://www.tstech.co.jp/english/csr/
Financial Information
IR Information

About the Report’s Designations“TS TECH Group” (the Group) signifies the consolidated group, while “TS TECH” (thecompany) signifies the non-consolidated company in Japan.

https://www.tstech.co.jp/english/ir/

Term Covered
Fiscal 2021 (April 1, 2020–March 31, 2021)
Note: Select activities from before or after this term may be included.

Provides consolidated financial summaries, results announcements, etc.
November 2021
Printed in Japan

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TS TECH Integrated Report 2021

Scope of the Report
While the report is based on the consolidated group (TS TECH Co., Ltd. and its domestic and overseas subsidiaries and affiliates), some data regarding environmental
and social initiatives, etc., may pertain to aggregate results for the non-consolidated
company in Japan. Cases in which the scope of aggregation differs will be specified
in the text.

115 Corporate Data
116 Year in Review
117 Integrated Report Review

Reference Guidelines• ISO 26000:2010 standard, International Organization for Standardization (ISO)• International Integrated Reporting Framework, International Integrated Reporting
Council (IIRC)• Guidance for Collaborative Value Creation, Ministry of Economy, Trade and Industry(METI) of Japan• Global Reporting Initiative (GRI) Sustainability Reporting Standards, etc.
Disclaimer
This report contains forward-looking statements from TS TECH Co., Ltd. pertaining toplans, forecasts, strategies, and results. These forward-looking statements are basedon currently available information.

TS TECH Integrated Report 2021

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Value Creation Story

The History of TS TECH

From Producing
Work Uniforms to
Manufacturing Seatsfor Motorcycles
and Automobiles

TS TECH’s predecessor, Teito
Fuhaku Kogyo Corporation,
manufactured work uniforms
for Honda, who recognized
the quality of our sewing
technology and asked us to begin manufacturing
motorcycle seats. Honda’s Super Cub scooter became a runaway hit and our
production system expanded. We then began to manufacture lightweight seats
for racing motorcycles, developing technologies early on to make seats lighter.
We later made seats for the Honda T360 pickup truck, which marked thestart of TS TECH’s full-fledged manufacture of seats for automobiles. From thenon, the scale of our operations grew steadily.

Aiming forIncomparable
Quality andAchieving
World-Class Quality

1996 Honda Step WGN swivel seats in face-to-face mode

Seat Arrangements
Created Using
Structural
Design Technology

The 1990s saw a minivan boom. The interior was seen asa space to enjoy spending one’s time, generating
demand for more comfortable seats. We then began amulti-pronged pursuit of comfort. One result of thispursuit was seat arrangement technology. We employed
structural design technologies and a wealth of expertise
to develop arrangements with various kinds of usability. TS TECH’s designs
have earned a solid reputation among European automakers, who havelong been leaders in the industry.

Seat for the original
Honda Super Cub

Honda T360
seat

The Relentless Quest
for Weight Reduction:
The Honda (Acura)
NSX Aluminum
Seat Frame

Early Establishmentof a Manufacturing
Base in
North America

TS TECH first expanded its businessoutside of Japan in 1977, setting up a
production subsidiary in Nebraska,
U.S.A. to manufacture motorcycle
seats locally for Kawasaki.
We later began production for
Honda. A series of orders for automobile seats and leisurevehicle seats came in from American automakers, and thescale of local production was expanded. Today, the Grouphas production centers in Japan, the Americas, Europe,
China, and other parts of Asia.

1960

EstablishedTokyo Seat Co., Ltd.

Took over the motorcycle seatbusiness from predecessor
Teito Fuhaku Kogyo Corporation

1963

1960

Began producing
automobile seats

1970

Assuring Quality

The seats for the original Honda Civic could
be considered the starting point for TS
TECH’s manufacture of automobile seats.
When the model was launched, however,there were frequent issues involving seamtears in the covering and bent seat frames
when used by people with larger bodytypes. The system we established at thattime to facilitate the immediate sharing of
quality issues among departments andquick improvements is still in place today.
We have turned this rough start into alegacy of a strong commitment to theperfection of quality.

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TS TECH Integrated Report 2021

Honda’s top-of-the-line sports car, the (Acura)
NSX, debuted in 1990. Making the car lighter wasessential to achieving its phenomenal
performance. We worked to develop a seat framethat only used aluminum instead of steel, theconventional material used for seats. We
experimented with processing methods,
rustproofing technologies, and more. Our wealth of technical expertise
resulted in seats that greatly reduced
the weight of the vehicle. The same
Honda (Acura) NSX seattechnology was utilized for thenewest NSX seats to develop aframe that blends aluminum with
cutting-edge materials.

1980

Safety Evaluation
Technology
Obtained throughHigh-Performance
Dynamic Sled Testing

In 2004, TS TECH introduced a new cutting-edge
dynamic sled testing facility to reliably reproduce
car crash impacts. The facility was the first of its kindin Japan. Over 1,000 tests are conducted annually,
and the safety assessment technologies have led to
TS TECH’s seats receiving top-class safetyassessments from vehicle safety assessment
organizations around the world.

Electrical devices(Shown in blue)

Creating New
Value for Seating
by Fusing the IoTwith Sensing
Technology

Sensing technology, which uses sensors attached
to seating to obtain a range of biometric data, has
evolved significantly in recent years. TS TECH isworking on the development of seat systems thatare not bound by conventional thinking, includinga system that automatically adjusts the seatposition and firmness according to thepassenger’s physique to provide comfortable seating, and a systemthat senses passenger movements to enable anyone to enjoy sports
while seated.

1996

Expanded operations
to South America
Changed company nameto TS TECH Co., Ltd.

Original model

1999

1994
94

Expanded
operations to Asia

1990

Pursuing Comfort

TS TECH continues to pursue comfortableseats that prevent fatigue by translating
subjective judgments of comfort andfatigue, which vary by person, intoquantifiable figures and conducting
repeated research based on ergonomics.
This approach is reflected in our uniquetheory of a comfortable posture.
Honda Odyssey Seat
Launched 2013

Seat forthe original Honda Civic
Launched 1972

In order to compete alongside the world’s
mega-suppliers, in the early 2000s, TS TECH first
set its goal of achieving world-class quality. Under
the slogan at the time, “Incomparable Quality,” weset out to not only improve production efficiency
and quality through the installation of facilities
such as jig lines but also to change people’s way of thinking about
manufacturing. More recently, TS TECH has been a highly ranked
supplier by vehicle size class in a seat quality and satisfaction survey
conducted by an American research firm.

Seats used to be simple, consisting mainly of aframe and cushion with leather covering. They
have since evolved, and today many electricaldevices are built into seats to add greater safety,
comfort, and appeal. TS TECH has a department
dedicated to the research and developmentof electrical devices. The department is a self-contained entity,
handling everything from proposals of new features to control
settings and system verification.

1997

1977

Expanded operations
to North America

MoreElectrical Devices
for More
Comfortable,
Safer Seats

The seat bottom tilts upward as the backrest
is lowered to close in on the perfectposture for maximum comfort.

New model

Honda Civic Seat
Launched 1995
The first use of a mechanism
to adjust seat height. Thisseat made it possible forsmaller drivers to adjust to amore comfortable
driving position.

Expanded
operations toEurope2001

Expanded operations
to China

2000

2007

Stock listed on theFirst Section of theTokyo Stock Exchange

Establishing a Strong
Profit Structure

As business has expanded, we have been
severely impacted by changes in theexternal environment, including a global
financial crisis and natural disasters in
different countries.
TS TECH has streamlined development
and manufacturing through production line
automation and other technologies. This
has enabled our company to withstandexternal changes, laying the foundation forthe current highly profitable structure of the
TS TECH Group.

2010

TS TECH’s 50th anniversary

2020

2010

Creating New ValueAs the automotive industry enters a periodof major transformation, the functions andvalue demanded of automobiles are also
undergoing great change. Against thisbackdrop, TS TECH will not simply focus ondeveloping seats and doors as single
components but also aim to become aninterior system supplier that can coordinate
an entire automobile cabin space. We will
work to create new value by leveraging
corporate
partnerships
and
joint
development projects.
Automated welding
equipment

Next-generation touch switch
jointly developed with Canatu
Oy, which has technology for
touch sensor films

TS TECH Integrated Report 2021

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Value Creation Story

TS TECH’s Products and Accumulated Capital

For nearly 60 years, the TS TECH Group has been involved with the development and manufacture of seats andinterior components for automobiles, seats, and resin-based parts for motorcycles. We offer a wide range of
products related to seating that makes the most of our strength, which is a global network that spans 14
countries around the world.

A wealth of technological capabilities that aim for better manufacturing
Main Products
for Automobiles

Intellectual
CapitalRear seat

Automobile seats are products that are required to combine both safety and comfort, as well as to provide
attractive “added value.” We provide products that exceed our customers’ expectations, and the proprietary
technologies and research outcomes with which these products are imbued represent important capital for
TS TECH in the form of accumulated knowledge and experience.
One element of said capital is patents, and we have been engaging in a proactive patent strategy tomanage and effectively utilize new technologies created around the world. Our patents have been highly
evaluated in terms of comprehensive patent strength as calculated by Patent Result Co., Ltd.

Number of patents held

1,964

Honda Civic
Type R seat

Honda (Acura)
NSX seatNo. 2
in the U.S.

(Vehicle seat-related technologies sector, as of February 2021)

A product supply structure spanning 14 countries

Mid seat

Front seat

No. 1
in Japan

Honda
Step WGN seat

Door trim

Comprehensive patent strength

Manufactured
CapitalStarting with its entry into the U.S. market in 1977, TS TECH has actively pursued a global expansion strategy
and currently has locations in 14 countries around the world, including Europe, China, and other Asian
countries. Along with our ability to supply products to customers around the world, we have strengthened
our supplementary parts production structure globally to ensure business continuity that will enable us toachieve steady growth even in an increasingly uncertain business environment.
Looking ahead, in addition to investment focused on expanding capabilities and boosting efficiency, we
will further enhance sustainability through investment in environmental equipment and technologies.

Scope of business

Honda Elysion seat46

Note: Model for the
Chinese market

companies in

14

Capital expenditures

6,686

countries

million yen

A corporate culture in which diverse human resources thrive

Human
CapitalMain Products
for Motorcycles

Meter panel

Main Types of
Other Products

Luggage box
Seat

Rear fender
Floor step
Radiator cover
Front fender

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TS TECH Integrated Report 2021

Number of Group employees

15,444A solid financial foundation to support business activities

Seats formultipurpose
off-road vehicles

Seats for personal
watercraft

Based on our Vision Statement of being “a company dedicated to realizing people’s potential” and the belief
that people are the decisive factor in a company, TS TECH is working to foster a corporate culture that
respects diversity, thereby empowering each and every employee to make the most of their abilities
regardless of gender, age, or nationality, etc.
As part of this initiative, TS TECH is promoting work-style reforms tailored to the specific characteristics
of each location, including those overseas. In addition to allowing for a variety of work styles, we provide
self-improvement tools and various training programs through which we encourage employees to learn andgrow according to their individual backgrounds and abilities. By doing so we strengthen our humanresources, which represent our human capital.

Chairs for
medical use

Financial
CapitalThe TS TECH Group is proud of the fact that in the course of realizing steady business growth we maintain an
operating margin that outperforms industry standards, thanks to thorough efficiency improvements in allareas, and a careful selection of and focus on various investments. Even in a business environment where
halting plant operations is unavoidable, such as at the time of the Great East Japan Earthquake or during the
COVID-19 pandemic, the financial base we have built up means that we are able to maintain continuous
employment and restart operations smoothly.
The capital we have accumulated to date will be used to invest in growth through M&A and othermeans, as well as to return profits to our shareholders, so that we can continue to further increase ourcorporate value.

Consolidated capital adequacy ratio

70.9

%

ROE

7.8

%

TS TECH Integrated Report 2021

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Value Creation Story

Top Message

Introduction

Unafraid of change in an
increasingly uncertain businessenvironment, we will makecapital investments to create
new value

Masanari Yasuda

President and Representative Director

I would like to extend my deepest sympathy to all those whohave been affected by COVID-19. I would also like to offer myheartfelt respect and gratitude to the medical personnel
and essential workers who are giving their all to treat thosewith the virus and to all workers who help support us in our
everyday lives. It is my hope that this situation will be brought
under control and tranquility will return as soon as possible.

Fighting COVID-19

The impact of COVID-19 created a very challenging businessenvironment at the beginning of fiscal 2021, with a succession of plant shutdowns in the Americas and the Asia andEurope regions. Nevertheless, profit steadily reboundedwith the resumption of production in China, which recovered
quickly, and the restoration of plant operations in other regions between May and July as the spread of infection
slowed. Although production volume fell, impacted by thesemiconductor shortages that occurred at the end of 2020,
we enacted thorough cost containment measures and reviewed the timing of non-urgent capital investment. As a result, profit increased year on year in fiscal 2021, and we secured a solid profit even amid the difficult circumstances.
The response to COVID-19 inevitably changed conventional ways of working and thinking, but not all changes
were negative. Even in departments where it was deemed
difficult to implement a work-from-home system, the percentage of employees working on-site has been reduced
thanks to creative ideas, and there has been dramatic progress in digitalizing operational workflows and in moving
meetings and training online. These steps have contributed
to improved labor productivity in many areas.
We expect the situation will continue to be unstable going forward. However, we will build systems for the postCOVID-19 era to ensure that our response is not merely an
emergency measure but one that facilitates work-style reforms and even greater efficiency.

Shift to online training

Partitions to prevent the spread of infection

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TS TECH Integrated Report 2021

Practicing ESG Management

Under the 13th Medium-Term Management Plan (fiscal
2018–fiscal 2020), we promoted the “Creation of a foundation for ESG management” as our management policy. In
the 14th Medium-Term Management Plan (fiscal 2021–fiscal
2023), which commenced in fiscal 2021, we will accelerate
the implementation of various measures under our management policy of “Corporate evolution through ESG management” without shifting the axis from the previous
Medium-Term Management Plan.
In fiscal 2022, the most important topic is the implementation of corporate governance reforms, which had
been under consideration for some time. TS TECH’s Board of
Directors has been chaired by an outside director since fiscal
2020 in order to ensure transparency and eliminate arbitrariness. In addition, following its approval at the 75th Annual General Meeting of Shareholders held on June 25, 2021,
the company transitioned to a “company with an Audit andSupervisory Committee” structure, and now has directors
who are Audit and Supervisory Committee members withvoting rights on the Board of Directors in order to further
enhance the supervisory function of the Board of Directors
and the corporate governance structure. As a result, the ratio of independent outside directors on the Board of Directors has increased to one-third. At the same time, the Nomination and Compensation Committee, with a majority of
independent outside directors, was also newly established
as an advisory body to the Board of Directors to reflect theobjective views of outside directors in management morethan in the past and to improve the transparency and fairness of management. In addition to the executive officer
system that was implemented previously, the Board of Directors will delegate decision-making on important matters ofbusiness execution to the directors to the extent legally permitted to ensure swift decision-making in the face of a rapidly changing business environment.
Under this new management structure, which includes
greater diversity with the addition of a newly appointed female director, we will accelerate our efforts to achieve higher
quality management that is not constrained by the past, increase corporate value over the medium to long term, andfurther enhance diversity.
Moreover, in March 2021 the TS TECH Group identified
the key material issues (materiality) we will prioritize in orderto achieve sustainable growth, and both internally and externally announced our main issues and goals from the threeperspectives of society, environment, and corporate foundation. We also declared our support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)* in August 2021. Going forward, we will keep

TS TECH Integrated Report 2021

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Top Message

14th Medium-Term Management Plan
Order Targets for New Commercial Rights by Region from Customers Other than Main Customers
working hard to reduce CO2 emissions and actively disclose
information based on the TCFD recommendations in orderto help achieve carbon neutrality by 2050. Our disclosure of
information is currently limited to the identification of material issues. However, we are working diligently to formulate
key performance indicators (KPIs) for each issue in line with
the TCFD and other factors.
In order to further accelerate these initiatives, we plan
to establish a new Sustainability Committee. As an advisory
body to the Executive Committee, it will serve as the basis forconsidering, implementing, and leading the measures the
TS TECH Group should work on with respect to sustainabilityrelated issues. Going forward, the entire TS TECH Group willcontinue working to help achieve a decarbonized society
and resolve social issues related to sustainability.

Driving Further Corporate Growth

Although our 2030 Vision faced major challenges from theoutset in the form of COVID-19, we have made no changes
to the approach and policies at this time.
As “Innovative quality company―Continued creation of
new value” stipulates, our mission is to create unprecedented new value by leveraging the technologies that the Grouphas cultivated over many years in a changing business* Task Force on Climate-related Financial Disclosures
A task force on climate-related financial disclosures established by the Financial
Stability Board (FSB) at the request of the G20. The task force recommends
assessment of the financial impact of climate change risks and opportunities on
management and presents a framework for climate change-related disclosure
structured around the areas of governance, strategy, risk management, andmetrics and targets.

environment, and to achieve continuous growth together
with society.
However, over the past few years, technological innovation in the automobile industry geared toward new forms ofmobility in society has advanced at a remarkable place. Thishas had a significant impact not only on automobile manufacturers but also on the automobile component industry.
Manufacturers of components related to engine drivetrains
are developing their businesses using technological andcapital alliances to survive this era of upheaval.
The automotive interior component domain to which
the TS TECH Group belongs is no exception. To date, wehave been creating new value by seeking to improve thesafety and comfort of individual seats and add greater appeal to door components. In the future, however, automotive interior components will play a more important role
than ever before as the human–machine interface (HMI) thatconnects the occupants with a vehicle. Looking ahead to theadvent of automated driving, there will soon be a time whenthe entire cabin space will be considered a single module,
rather than separate components, such as seats and doors.
In order to achieve sustainable growth in such a changing business environment, we believe that we must transform our company into a “car interior manufacturer” thatcan coordinate and propose an automobile cabin space as awhole. In order to achieve this, we will identify our strengths
and weaknesses, and then expand our business domains byconsidering what can evolve within the Group using existing
resources and how to efficiently bring the missing parts inhouse, acting swiftly to make adjustments as necessary. The
TS TECH Group has pursued safety and comfort in automotive interior components for more than 60 years. Our greatest assets are the technical capabilities and know-how wehave cultivated over the years as well as the source of these

Innovative quality company
Continued creation of new value

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TS TECH Integrated Report 2021

Commercialization of original technologies
Evolution for
FY2021–FY2023

2030 Vision Statement

14th Medium-Term Management Plan

Management policy: Corporate evolution through ESG managementbusiness growth

Expansion of strategic commercial rights
Optimization of business operations structure
Contribution to a sustainable society

Stronger business
operations
structure to
support evolution

Recognition for top quality

Asia and Europe

China

Japan

Americas

Seat and component orders

Seat orders

Seat orders

Component orders¥10.0

billion/year¥3.0

billion/year¥10.0

billion/year¥40.0

billion/year

Take advantage of accumulated sales experience

to define targets and expand vigorously

Aim to steadily expand commercial rights through strategic efforts to win orders
Note: Amounts show the target scale of orders. Actual annual revenue will differ due to differences in the timing of the start of mass production.

capabilities, the skills of our employees, and our solid financial base. In addition to this, we aim to realize our vision
through a generous commitment of managerial resources,
including alliances with other companies and active utilization of venture companies.
Moreover, as the result of some 10 years of proactive
efforts to expand sales beyond our main customers in orderto grow our business, we have begun to gain greater trustfrom European and American automakers. The number ofinquiries we receive has increased significantly, and we are
gradually starting to win substantial orders. As a result, thescale of our business in Europe and the Americas has beensteadily expanding. However, in drawing up our growthstrategy, we believe we need to move swiftly to grow sales
even further.
In the face of unavoidable competition with the global
mega-suppliers in each region, we believe we must not only
expand using the Group’s resources alone but also form
strong alliances with new business partners to grow sales.
To this end, we will quickly ascertain the business environment and any changes in each region around the world andmake the most of our strong financial base to carry out thenecessary investment for business expansion. One way weintend to achieve this is by actively pursuing friendly M&As
and alliances.

To Our Stakeholders

The environment surrounding the TS TECH Group is constantly changing, illustrated by the demands of society, thestructure of the automotive industry, and new risks such as
COVID-19. Considering the speed of these and other changes, the Group has now started to review the specific strategies and the KPIs at each stage from the management vision
to the Medium-Term Management Plan and single-yearbusiness plans of each department, as well how we should
address non-financial areas.
In an era when it is rather difficult to anticipate the future, we believe corporate management must constantly
look ahead and always make the utmost effort to do what isneeded at the time without closely following precedents.
One of my favorite words is yuzumuge, which means being able to respond flexibly to a situation based on various
perspectives without being bound by a single viewpoint orapproach. We do not fear change; it is by leveraging changethat we will become a company whose presence is appreciated by even more stakeholders.

Strengthening of continuous earnings structure
Maximization of employee and structural efficiency

TS TECH Integrated Report 2021

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Value Creation Story

Exchange rate
fluctuations

External factors

TS TECH’s Value Creation Model

Material pricefluctuations

Vision Statement

Our goal is to become a seat and interior system supplier that is trusted and appreciated worldwide. To achieve
this goal, we will work to build a value creation model that will enable us to continue to provide value to society
by taking advantage of our strengths and to adapt that model in response to the changing expectations anddemands of society.

BUSINESSINPUT

BUSINESS ACTIVITIESStrengths

Value chain

1,260
Number of patents held outside of Japan: 704

Sales

Resin-based products

Number of patents held in Japan:

12.5 billion yen (3.6% of revenue)

Global business development• A system arranged into the four regionsof Japan, the Americas, China, and Asia
and Europe

14 countries
46
Number of sites: 77

Manufactured
capitalResearchanddevelopment

Operations in

Number of companies:• Global promotion of TS TECH Philosophy
education

HumancapitalQuality control• Research and development expenses

301.4 billion yen
Revenue: 346.1 billion yen
Operating margin: 7.7 %Consolidated equity:

Seats
Resin-based products

Purchasing

Other products

Sustainable management base
• A philosophy for debt-free management
since our establishment• A sound financial baseProducts formotorcycles

Seats for multipurpose
off-road vehicles
Financial
capitalManufacturing

Seats forpersonal watercraft
Chairs for medical use(Transport equipment industry average: 4.4%)

MISSION

Social responsibility* QCDDM: Quality, Cost, Delivery, Development, and Management

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TS TECH Integrated Report 2021

Corporate evolution throughESG management

Social issues

Changes in comfort sought
for automobile interiors

Beyond Comfort

Car safety

Changes in the structureof the industry

To become a seat andinterior system supplierthat is trusted worldwide— Continued creation of new value —MODEL

OUTPUT

Door trim

Technologicalinnovation

INNOVATIVE QUALITY COMPANY

VALUEMain products

SeatsIntellectual
capitalCompetitiveenvironment

A company dedicated to realizing people’s potential
A company sincerely appreciated by all

2030 Vision

FOR STAKEHOLDERS

Products forautomobiles

Technological prowess• Creation of expertise related to “thephilosophy and science of seating”• High degree of stability in all QCDDM*
domains• Competitive patents

Economic andbusiness trends

Social value

Customers

SafetyA high level of safety achieved with data
gathered from a variety of collision tests,
highly accurate simulation analysis andexpertise, and cutting-edge technology
developed over many years

AttractivenessComfort and convenience born of ourunique theory on ideal posture toprevent fatigue even over long periods,
as well as a wide range of proprietaryseat arrangement technology that is
versatile, functional, and easy to use

Environment
Lower environmental impact over the entire
process from development throughproduction, thanks to research anddevelopment of new materials that are both
high quality and eco-friendly, lighter- weight
products that help improve the fuelefficiency of automobiles, and energysaving equipment to reduce CO2 emissions

FOR
TS TECH

Value provided(Customer companies andend users)

Shareholders andinvestors

Intellectual
capitalBusiness partners

Manufactured
capital

Employees

HumancapitalSociety andlocal communities

Financial
capitalThe environment

Contribution to the creation of a sustainable society

The creation of workplaces that
promote diversity

Response to climate change

TS TECH Integrated Report 2021

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Value Creation Story

The TS TECH Group’s Materiality

In March 2021, TS TECH identified the key material issues (materiality) it will prioritize as sustainability-related
matters to help contribute to the creation of a sustainable world.
By accelerating our initiatives to address materiality, including the formulation of KPIs, we aim to continuously
improve corporate value.

The TS TECH Group has consistently worked to grow our business and nurture a corporate culture based on our two-pronged visionstatement of being “a company dedicated to realizing people’s potential,” which expresses our belief that people are the decisive factor
in a company, and “a company sincerely appreciated by all” stakeholders and society. We identified and established our materiality
policy based on this vision and a sustainability perspective that promotes our management policy of “corporate evolution through ESG
management.”
Under our materiality policy, we have identified material issues by organizing and reflecting on social challenges, the businessenvironment, and the opinions and expectations of stakeholders.
• Issues that are material to the vision statement under the TS TECH Philosophy: “A company
dedicated to realizing people’s potential” and “A company sincerely appreciated by all”
• Issues that are highly material to the United Nations Sustainable Development Goals (SDGs)• Issues that are material to contributing to a sustainable world

Identification andorganization of issues

Based on international standards and guidelines
such as the GRI Standards, the core subjects of
ISO 26000, and the SDGs, we identified social
issues, formulated a materiality identification
policy, and studied identification methods.
We identified the risks and opportunities based on the Group’s business environment in andoutside of Japan, surveyed all functional divisions, and ultimately identified and organized
the relevant issues.

High

Consultations withoutside experts

We exchanged opinions with outside experts on
the issues identified to verify their scope and validity.

importanceImportance to stakeholders

Prioritizing of issues

Issues were evaluated and prioritized in termsof their importance to stakeholders and theirimportance to the TS TECH Group.

Low

importanceImportance to the TS TECH Group

14

Selection ofmateriality

Out of 24 items, eight material issues were selected to be addressed by the TS TECH Group.

Approval bymanagement

Following approval by the Executive Committee, the eight material issues were submitted to
the Board of Directors for discussion and approved.

TS TECH Integrated Report 2021

Material issues and main challenges

VisionProviding attractive, innovative
new products and technologies
that exceed society’s expectations• We will create new value that exceeds
the expectations of customers and help
to build safe, secure, and prosperous
societies by providing attractive,
high-quality automobile interiors.

• Developing attractive, innovativetechnologies• Improving product quality

Environment

Procedure for Identifying Material issues
SurveysWith the goal of achieving ESG management, we organized the identified material issues into three categories: society, environment,
and corporate foundation.

Corporate
foundation

TS TECH Materiality
Identification Policy

Identified materiality

Society

Policy for Identifying Materiality

Reducing impact by practicing
environmentally friendly
manufacturing to build asustainable world• Responding to climate change• Recycling and effectively using
resources• Harmoniously co-existing with nature

Respecting diversity anddeveloping structures to maximize
individual abilities• Respecting human rights• Reforming work styles to make themost of diversity• Strengthening governance

Related SDGs

• Aiming for a decarbonized society, we will work
to contribute to reducing our environmental
impact by pursuing energy-savings and effective
use of resources, starting with product designand continuing throughout every stage of the
product life cycle.
• We will strive to ensure that all of our employees
have a high level of environmental awareness,while working to protect the environment andconserve ecosystems based on the concept of“giving greenery back to the earth.”• We will respect the human rights ofall stakeholders and offer rewarding
working environments in which eachand every employee makes the mostof their diverse talents.
• We will engage in diversity-positive,
highly transparent management tofulfill our corporate social responsibility(CSR), achieve sustainable businessgrowth, and enhance corporate value.

Having identified eight material issues in the three categories of society, environment, and corporate foundation, we are currently formulating KPIs. Through initiatives to tackle these material issues, we aim to enhance medium- to long-term corporate value andbe a company whose presence is appreciated by stakeholders.
Going forward, we will constantly review these material issues through a plan–do–check–act (PDCA) cycle, while also taking into
account the opinions of internal and external stakeholders and a fast-changing external environment, and in so doing further enhance
our measures.

Materiality(material issues)

Designation
of KPIs

Business
activities

Impact on
stakeholders

Social change

TS TECH Integrated Report 2021

15

Value Creation Story

14th Medium-Term Management Plan Overview

In the 14th Medium-Term Management Plan (fiscal 2021–fiscal 2023), under the management policy of “Corporate
evolution through ESG management,” the issues that remained outstanding from the 13th Medium-Term
Management Plan have been reflected in measures and broken down by organization. We will advance sevenmeasures under two priority measures from two distinct angles: “Evolution for business growth” from a proactive
angle and “stronger business operations structure to support evolution” from a protective angle.
Management
policyPriority
measureEvolution forbusiness growth

MeasureNotable initiatives

Commercialization oforiginal technologies• Acceleration of development of sensing and other technologies thatlead to attractive products• Active incorporation of joint development and other types of open
innovation• Application of advanced processing technology, such as production
line automation projects, in mass production• Steady receipt of orders from major customers for target commercial
rights through spec proposals that leverage our strengths andExpansion of strategic enhanced development collaborationcommercial rights• Strategic order development through precise selection of target
models for new customers and establishment of a large project
leader (LPL) system for key commercial rights

Optimization ofbusiness operations
structure• Streamlining and increased efficiency through allocation reviews andrestructuring of business operations both in Japan and overseas
based on reorganization of production

TS TECH’s Value Chain

Development and Engineering

Basic Policies on
Value Creation• Create and provide products that exceed global expectations• Accelerate development of advanced technologies that cannot be
imitated by competitors• Create original technologies that contribute to a sustainable society• Ensure reliable quality assurance from the outset of development

Internal Environment

S trengths

W eaknesses• Development and technological capabilities
that support a wide range of products fromproduct planning through development andperformance evaluation• Active incorporation of wide-ranging open
innovation• Development framework aimed at global
expansion of sales

O pportunities

T hreats• Provision of new value for car interiors in linewith new visions for automobiles related tothe advent of CASE and MaaS

• Intensifying competition in technologicaldevelopment and changes in product development
styles driven by the entry of companies from otherindustries into the automotive industry

External Environment

Contribution to asustainable society

Corporate
evolution
through ESG
management• Stronger global CO2 emission reduction activities and related
management to help achieve a low-carbon society• Maintenance of recycling-oriented operations through risk analysis
of water resources• Implementation of social contribution activities in line with local
needs

Fiscal 2021–
fiscal 2023

Recognition for
top quality

Stronger business
operations
structure to
support evolution

Strengthening ofcontinuous earnings
structure

Maximization of
employee andstructural efficiency

16

TS TECH Integrated Report 2021

• Enhanced know-how and support from startup base during global
rollout of new models• Prevention of defects by strengthening verification in the beginningstages of development• Stronger quality control systems at Group and business partner
locations• Establishment of a lowest-cost procurement structure by enhancing
our global procurement system• More efficient administrative and indirect operations through active
use of IT• Strengthening of our consolidated earnings management systemthrough the continued evolution of financial strategy aimed at
medium- to long-term growth• Minimization of global tax risk

• Establishment of a system to promote advancement of diverse
human resources• Evolution of our evaluation system to accommodate various work
styles• Review of our training system for next-generation human resources
development

Takahiro Kobori

Director, Corporate Development and Engineering Division
Executive General Manager

Fiscal 2021 Initiatives
Accelerated advanced technology development and provided products that exceeded global expectations
Accelerated
advanced technology
development• Accelerated the development of advanced
technologies through collaborative ventureswith TS TECH technology seeds* and external
resources

Further improved
development
efficiency• Enhanced global development structures(Strengthened the supplementary development
resource structure in each global region)• Active incorporation of open innovation

Creation of new
appeal and value

Furtherenhancement ofdevelopment quality• Deployment of dedicated projects that aim tocreate appeal and value that exceed customer
expectations• Through the construction of mechanisms andsystems, ensured that necessary requirements
were reflected from the outset of development
to prevent defects from occurring in mass
production* Technology seeds: Proprietary technologies, know-how, humanresources, equipment, etc., required to engage in R&D

Future Initiatives

Develop new products and technologies to realize by 2030 the goal of becoming a seat and interior system supplier that istrusted worldwide
Further accelerationof advanced
technology
development• Accelerate creation of technology seeds andmaximize utilization of internal and external
resources• Advancement of development systems to
respond swiftly to customer needs andCreation of products
changing values
that exceed global• Accelerated development of technologies withexpectations
a reduced environmental impact to contributeto the realization of a sustainable society

Creation of new
appeal and value

Development qualitythat is trusted
worldwide• Always anticipate future changes, continuing
to engage in activities that constantly create
the required appeal and value• Build technology that wins trust so that
customers can use diversified productfunctions with peace of mind

TS TECH Integrated Report 2021

17

TS TECH’s Value Chain

Corporate Sales and Purchasing
Sales
Basic Policies on
Value Creation

Purchasing• Offer appealing products that exceed customer expectations
at competitive prices• Permanently secure customers’ unwavering trust• Provide added value to customers in line with the changing
times by integrating regional and functional departments

Basic Policies on
Value Creation• Mutual trust with business partners through fair andequitable transactions based on the Four Principles of
TS Procurement• Work with business partners to strengthen their procurement
structures and create a sustainable supply chain• Joint CSR activities with business partners

Internal Environment

S trengths

W eaknesses

S trengths

W eaknesses• Maintain production bases throughout the world and offer
high-quality products• Sales proposal capabilities based on close cooperation
between global information gathering systems and
QCDDM-related departments• Expand sales channels by leveraging appropriate investment
opportunities, based on a strong business foundation• A high degree of dependence on a specificbusiness model and insufficient independent
growth• Development of activities to strengthen
structures together with business partners• Global information gathering capabilities thatmaximize purchasing resources• Inflexibility of an aging purchasing structure• Slow conformity with rapidly changing
customer needs and social trends

O pportunities

T hreats

O pportunities

T hreats• Expansion of development requests to parts
manufacturers in the midst of the transition to
next-generation automobiles• Changes to the profit-sharing structure in theautomotive component industry due to therise of smart mobility• Propose and adopt new technology
components that respond to technologicalinnovation, with a view to CASE and therealization of a carbon-neutral society• Changes in the profit distribution structure of
the automobile components industry brought
about by smart mobility

Fiscal 2021 Initiatives

External Environment

Development of a solid foundation for sales expansion• Surveyed the needs of main customers froman early stage in model development andimplemented proposals in line with customers’
long-term policies

Acquired newcustomers and newcommercial rights• Eliminated organizational boundaries to create
Generateda speedy cycle that covers everything fromcompetitivenessidentification of through response to customer
through consolidationof sales and purchasing needs
divisions

Acquisition of newcommercial rights
through collaborations
with suppliers

Increased share of
main customers’
business• Identified target commercial rights bycollecting and analyzing marketing
information, understanding customer needs,
and proposing product specifications• Launched joint order development activities
to create synergies with Imasen ElectricIndustrial Co., Ltd. and build a more in-depth
cooperative system• Aim to steadily acquire new commercial rights,
utilizing investment opportunities such as theestablishment of new plants, expansion ofexisting plants, and collaborations with suppliers• Expand sales by enhancing front-loading* andproposing products that feature proprietary
technologies

Managing Officer, Corporate Sales and Purchasing Division
Executive General Manager

External Environment

Strengthening andreorganization of
procurement
structures

Improved supplierrisk management
systems• Strengthened alliances with suppliers to jointly
implement cost improvement activities• Swift initial response and implementation of
production maintenance activities in the eventof natural disasters or other emergency
situations

Enhance marketingfor next-generation
vehicles• Enhance research on market trends andcustomer demands, and take the lead ininnovative product planning geared toward
a new phase

Further strengthen
development of newcommercial rights• Aim to acquire commercial rights bystrengthening activities for advance orders
and creating a sales environment
advantageous to the TS TECH Group

Evolution ofactivities aimed at
the development of
new models

Stronger supply
chain management• Identification of areas of weakness inside thecompany through analysis of competitor
procurement sources• Expanded the scope of the compliance survey
for the TS TECH Supplier Sustainability
Guidelines* for domestic suppliers andenhanced the survey content on human rights* TS TECH Supplier Sustainability Guidelines: Guidelines that compile
basic items that should be promoted together with suppliers toachieve a sustainable world. All suppliers are asked to comply.

Future Initiatives

Deploy measures to expand strategic sales, with the aim of realizing further corporate growth

Efforts to maximize
added value

Fiscal 2021 Initiatives

Yuji Otani

Construction of procurement structures to gain a global advantage

Future Initiatives

Maximum utilizationof investment
opportunities

Internal Environment

Implement global purchasing measures based on a sound procurement structure tailored to each environment
Strengthen andreorganize
procurement
structures

Enhance suppliers’risk management• Build strategic procurement structuresby enhancing partnerships with core
manufacturers• Build risk management systems with a view toensuring stable production and supply acrossthe entire supply chain

Strengthen activities
aimed at thedevelopment of
new models

Strengthen supply
chain management• Create resources for maximum added value by
strengthening competitiveness against othermanufacturers• Overseas implementation of compliancesurvey for TS TECH Supplier Sustainability
Guidelines* Front-loading: The moving up of scheduled development and ordering activities

18

TS TECH Integrated Report 2021

TS TECH Integrated Report 2021

19

TS TECH’s Value Chain

TS TECH’s Value Chain

Manufacturing

Basic Policies on
Value Creation

Quality Control• Achieve environmentally friendly manufacturing• Pursue automation and high-efficiency lines through the evolution ofmolds and equipment• Disseminate manufacturing technology through a “global mother plant”
in Japan• Develop production technicians capable of competing worldwide

Basic Policies on
Value Creation• Provision of safety and security to customers• Earn top quality rating from customers all around the worldand establish TS-Q brand• Stable provision of products with the same high level ofquality worldwide

Internal Environment

Internal Environment

S trengths

W eaknesses

S trengths

W eaknesses• Advanced technology development and mass
production verification capabilities throughin-house production of molds and equipment• A QCD*1 structure that ensures a minimum ofabove-average QCD at all locations worldwide• Still in the process of building a resilient
manufacturing framework*2 and advancing
environmental initiatives• Defective output from manufacturing
processes due to weak points in the system
to assure defect-free processes• A globally consistent quality control and assurance
system based on international standards• Development of TC Circles (improvement activities
undertaken by small groups) worldwide• High ratings in initial quality surveys (IQS)• Inadequate mechanisms to respond tochanges in manufacturing and maintainstable production• Shortage of human resources with expertisein global quality assurance

O pportunities

T hreats

O pportunities

T hreats• Greater market expansion in emerging
countries• Maintain and expand production volume
by acquiring commercial rights from newcustomers in Japan and overseas• Response to changes in demand due toshrinkage and diversification of Japan’s market• Intensifying cost competition with competitors• Increasingly sophisticated demands for quality
assurance accompanying a trend toward
multifunctionality in products• Diversification of customer quality requirements due
to expansion of sales beyond Honda business• Quality control for changes in manufacturingsystems as typified by Industry 4.0*1• Increased market problems and delivery
defects accompanying globalization• Shrinkage of the workforce due to a declining
birthrate and an aging population

Yasushi Suzaki
Director,
Corporate Manufacturing Division
Executive General Manager*1 QCD: Quality, Cost, and Delivery*2 Resilient manufacturing framework: Framework tocreate a financial structure that generates a certain
amount of profit even when earnings drop

External Environment• Reorganized domestic production plants(Resilience measures/consolidation),
expanded production control functions• Further improvements in capabilities to assure
defect-free processes

Evolution ofequipment andtechnologies tofurther improve
efficiency• Standardized the build requirements for 2021
models to achieve uniform quality worldwide• Advanced the system for sharing in-house
improvements globally

Development of
production
technicians capableof competingworldwide

Future Initiatives

Created an expert
verification system
to address themultifunctionalityof products• Organized training programs aimed at
producing production technicians• Regular QAV-1*3 inspections and expert
training
Enhanced the global
quality assurance
structure

Accelerate the evolution of environmentally friendly manufacturing and improve global production structures

Disseminate
manufacturing
technology througha “global motherplant” in Japan• Boost automation and efficiency of productionlines through utilization of DX*5 technologies• Greater in-house production of mold
Advanced equipment
technologies
and technologies to• Accelerate installation of automation
further improve
technology for tasks that rely on intuition or
efficiency
specific know-how

Develop production
technicians globally

Strengthened the chain from development to the workplace to create a foundation for inherent quality• Further improved the mass production efficiency ofresin molds• In-house production of high tensile strength steel*3 molds• Installed a next-generation, high-efficiency automatedassembly line for door linings*3 High tensile strength steel: Steel that is harder andstronger than standard steel• Development of environmentally friendly
Create production
production facilities
structures and• Measures for a diversity-positive production
functions with theline*4
environment in mind

*1 Industry 4.0: A term referring to a technologicalstrategy that the German government came up within 2012. In Japan it is also called “The 4th Industrial
Revolution.”

Fiscal 2021 Initiatives

Strengthened competitive global production structure by advancing the “global mother plant” functions

Disseminatedmanufacturing
technology througha “global motherplant” in Japan

Operating Officer,
Corporate Quality Assurance Division
Executive General Manager

External Environment

Fiscal 2021 Initiatives

Rebuilt competitive
production
structures andfunctions

Yoshiaki Kida

• Deploy global training structure for production
technicians• Verification by experts from a third-party
perspective to evaluate specification feasibility

Enhancement ofcontrol items in
response to changes
in manufacturing• Extracted manufacturing requirement items
without omissions from FTA/FMEA*2• Ensured control of requirements at production
sites• Strengthened quality control at suppliers offunctional components

Global eliminationof quality defects*2 FTA (Fault Tree Analysis)/FMEA (Failure Mode and Effects
Analysis): Analytical tools used to prevent product defects*3 QAV-1 refers to a Quality Assurance Visit.

Future Initiatives

Improve quality globally by balancing development quality and manufacturing quality
Operation of anexpert verification
systemEnhance the global
quality assurance
structure• Improve development quality by constructing
a verification process from a third-party
perspective• Verify quality assurance systems throughcontinuous QAV-1 inspections

Strengthenverification ofprocess control
items atmanufacturing sites

Global eliminationof quality defects• Reliable verification that manufacturing
requirements extracted from FTA/FMEA are
being reflected in processes• Strengthen monitoring and correction offunctional component defects*4 Diversity-positive production line: Production line where all people can work in comfort, regardless of age or gender*5 DX (Digital transformation): Processes that use AI, the IoT, and other advanced technologies and data to transform services and business processes

20

TS TECH Integrated Report 2021

TS TECH Integrated Report 2021

21

Value Creation Story

Financial Strategies

Under our management policy of “Corporate evolution through ESG management,” we aim to achieve further
business growth and enhance corporate value through proactive growth-oriented investment and by improving
the efficiency of Group capital and asset management.

the technologies, know-how, and collaborative relationships necessary for future business growth.

3.9 %Motorcycles1.3 %Other businesses

Automobiles (other)
Automobiles (doors)

Going forward, as we look ahead to the achievement of theAtsushi Igaki

Director, Managing Officer
Corporate Business Administration
Division Executive General Manager

Automobiles (seats)

84.6 %

Asia and Europe

9.1 %

Japan

21.2 %

Americas38.1 %

10.2 %

Medium-Term Management Plan and further business growth be-

Revenueby Business(%)

yond, we will effectively and strategically utilize the funds of the entire
TS TECH Group in regions and fields where growth is anticipated.

China

31.6 %

Revenueby Region(%)

A Solid Financial Foundation Supporting
Business Activities

At the end of fiscal 2021, the Group’s consolidated capital adequacy
ratio was 70.9%, ensuring an extremely high level of safety, and theGroup has sufficient liquidity on hand to handle growth investments

Results by Segment for FY2021

or M&A using its own funds.
The TS TECH Group operates in 14 countries around the world,and by formulating “safe funding guidelines” that take into accountrisks in each region, country, and location, we have developed a cash
management system that ensures reserve capital is retained at all
times and facilitates flexible procurement of funds in an emergency.
At the end of fiscal 2021, the Group as a whole held 153.0 bil-

Aiming for Sustainable Improvements to
Corporate Valueible cash management system and respond to any measures andgrowth investments with a sense of speed by appropriately con-

Aiming to be a value-creating company that contributes to the reali-

trolling the cash that is dispersed around the world, while also taking

zation of a sustainable society, under the 14th Medium-Term Man-

into account various financial conditions, remittance regulations, in-agement Plan management policy of “Corporate evolution throughterest and exchange rate standards, and other factors.

ESG management,” the TS TECH Group is advancing two priority
measures from two distinct angles: “Evolution for business growth”
from a proactive angle, and a “Stronger business operations structure to support evolution” from a protective angle. We recognize thatManagement with a Focus on Capital
Efficiency and Shareholder Returns

Historically, the TS TECH Group has earned a return on equity attrib-

the mission of the Corporate Business Administration Division is toutable to owners of parent (ROE) in excess of 10%. However, in themake medium- to long-term proposals from a financial perspective

midst of the prolonged severe business environment, which includ-that take into account such proactive and protective angles, and to

ed a series of plant stoppages at various sites due to the COVID-19

sound the alarm if necessary.

pandemic, the ROE for fiscal 2021 dropped to 7.8% (5.3% excluding

The automotive industry is currently facing a once-in-a-century

gain on negative goodwill*1). In fiscal 2022, we are forecasting an

period of transformation, and the market environment is also expe-

8.3% ROE, as we anticipate being able to link the increase in orders

riencing major upheavals. The TS TECH Group has built a sound fi-

from our customers to earnings through the optimization of fixednancial foundation to date, supported by high profitability. Even incosts and other efforts, based on the same standards applied

the midst of such a fast-changing market environment, we aim tothroughout the TS TECH Group. In the future, we will not only maxi-enhance our corporate value by making our capital and asset man-mize profits but also improve corporate value while emphasizing ef-

agement more efficient than ever before.

ficiency indicators for capital and asset management and promote

Toward Further Growth

the goal of achieving a 10% ROE.
Moreover, the Group considers the return of profits to ourDuring fiscal 2021, the automobile industry faced an extremely

shareholders to be a top priority for management, and our basic

harsh operating environment, with the impact of the COVID-19 pan-policy is to maintain stable dividends by comprehensively taking into

demic compounded by supply chain disruptions due to semiconduc-account consolidated business performance and the dividends pay-

tor supply shortages. The TS TECH Group had no choice but to dras-out ratio. The dividend forecast for fiscal 2022 is a 9 yen increase intically curtail production, resulting in a substantial decrease inreal terms*2 over the previous period to 54 yen per share (108 yen

revenues and profits compared to the initial medium- to long-term

pre-stock split), which will be the 10th consecutive year of dividend

business outlook. However, while scrutinizing each and every capitalincreases since fiscal 2012.

investment and expenditure item, we have proactively invested inMoving forward, we will continue to strive to enhance our cor-growth through rationalization and other means and also focused

porate value by providing stable, continuous dividends and actively

on investment in R&D to create new value.

utilizing internal reserves for further business growth.

Utilizing M&A, for example, to make Honda Cars SAITAMAKITA
a consolidated subsidiary and Imasen Electric Industrial Co., Ltd. an
equity method affiliate, we are allocating funds to build and develop

22

lion yen in cash and cash equivalents. We will work to develop a flex-

TS TECH Integrated Report 2021

*1 Arising from the addition of Imasen Electric Industrial Co., Ltd. an equity-method
affiliate*2 On April 1, 2021, the company enacted a 2-for-1 stock split of ordinary shares.
The actual dividend for fiscal 2021 before the stock split was 90 yen per share,
and after the stock split it was 45 yen per share, so the new dividend is anincrease of 9 yen per share in real terms.

Japan
In the fiscal year under review, the Group worked to build a highly
efficient production system by constructing a production line to enable production of new models and beginning work on a new plantas part of the consolidation of production in the Hamamatsu District.
While production did not stop due to the COVID-19 pandemic,
select locations made adjustments to production volume.

Honda Legend
seat

Revenue (Million yen)
75,134 78,866

FY2021

FY2020Operating Income(Million yen)

6,049

FY20207,140

FY2021

Americas
In the fiscal year under review, the Group launched production ofseats for the new Acura TLX.
The Group worked to build a highly profitable structure throughenhanced quality assurance capabilities in each process.
Production stoppages caused by the COVID-19 pandemic began in late March 2020, but production largely resumed by mid-May.

Acura TLX seat

Revenue (Million yen)
176,346

141,924

Operating Income(Million yen)

8,054

3,368
FY2021

FY2020

FY2020

FY2021China
In the fiscal year under review, the Group launched production ofseats for the new Honda Fit (Guangzhou) and the new Life (Wuhan),the sister model to the Fit.
In addition to increasing our market share of Honda business,
we aggressively deployed sales activities aimed at acquiring newcustomers.
Production in fiscal 2021 was unaffected by the COVID-19 pandemic. Production in fiscal 2020 was stopped from early February
through early March 2020.

Honda Fit seat

Revenue (Million yen)
117,652
82,729FY2020Operating Income(Million yen)

23,19915,542

FY2021

FY2020

FY2021

Asia and Europe
In the fiscal year under review, the Group began production of seats
for the new Honda City in India, Thailand, and Indonesia.
We worked to improve our business structure by consolidatingbases, including the reorganization of our automobile business inIndia, and engaging in thorough streamlining efforts, all of which are
anticipated to lead to earnings in fiscal 2022.
Production stoppages caused by the COVID-19 pandemic began in late March 2020. Segment production resumed in early May,
with the timing of the restart of operations varying by country.

Honda City seat

Revenue (Million yen)
51,967 34,021

Operating Income (Loss)(Million yen)

2,109

-2,344FY2020

FY2021

FY2020

FY2021TS TECH Integrated Report 2021

23

Value Creation Story

Financial Highlights

Non-Financial Highlights

Revenue/Overseas Revenue Ratio (Consolidated)

Operating Income/Operating Margin (Consolidated)

Energy Input (Consolidated)

We operate in 14 countries around the world, and more than 80% of ourrevenue is from outside Japan.

We have worked to thoroughly enhance our revenue structure, and we
maintain a higher operating margin than our competitors.

We are actively working to conserve energy in our global operations throughmeans such as ISO 50001 certification for energy management systems.

(Million yen)(%)

(Million yen)

600,000

100

60,000400,000

85.0

86.0

83.1

425,794

479,490412,072

84.4
359,682

83.3

9.9
8.1

75

346,149

40,0009.4

47,34634,557025

FY2017
Revenue

FY2018FY2019FY20200

FY2021

26,742

26,32620,000(TJ)(t-CO2)10

20,000150,000

Overseas revenue ratio (right scale)

FY2017FY2018FY2019FY2021

FY2020

1,634

1,479

(t-CO2/vehicle)

9.8

100,000

90,502

8.5

8.4

94,25093,631

8.3

10,0004

08
665,1994

50,0005,000
084,297108.72FY2017FY2018FY2019FY20200

FY2021FY2017FY2018CO2 emissions volume

Energy input volume

FY2019FY20200

FY2021CO2 emissions per unit of production (right scale)

R&D Expenses/R&D Expenses to Revenue Ratio (Consolidated)

Capital Expenditures and Amortization Expenses (Consolidated)

Training-Related Expenses (Non-consolidated)

Percentage of Employees Taking Paid Leave (Non-consolidated)

Even when revenue declines, we devote generous amounts of management
resources to research and development that will lead to the creation of newvalue, including the development of next-generation technologies.

We are proactively making investments that contribute to enhancing ourcorporate value, which include measures related to new customers,
automating production, and installing environmentally friendly facilities.

Under our vision Statement of being “a company dedicated to realizing
people’s potential,” we are actively working to create opportunities andenvironments that encourage employee growth and development.

For many years, labor and management have worked together to promote
the use of paid leave, and we have maintained a high rate of paid leave
utilization.

(Million yen)

(Million yen)

15,000100(Million yen)(%)

15,00012,382
10,0002.9

11,986

12,7093.1

12,374
3.4

2.5

12,533
3.6

5
4
3
2

5,000

11,19910,0009,036 8,640

10,225

9,778

9,676

7,619

7,412

0

FY2017
R&D expenses

FY2018FY2019FY2020

FY2021

0

60

6,686

0

R&D expenses to revenue ratio (right scale)

FY2017FY2018

Capital expenditures

FY2019FY2020

Amortization expenses

(Yen)

20

100

13.4

10

10.5

9.6
5
0

9.9

8.2

7.8

5.9
FY2017FY2018FY2019Return on equity attributable to owners of parent (ROE)TS TECH Integrated Report 2021

FY2020

FY2021Return on assets (ROA)

84.4

40,00080

30,00060

20,00040

10,00020

70.0

12,45660

FY2018FY2019FY2020

70.00

80.00

38.8

24.3
18.1

22.2

90.00

In addition to creating more of the technology that is the source of ourcompetitiveness, we are working to maximize the value of our intellectual
property and minimize losses through appropriate management.

50
40

29.4 3010FY2018Annual cash dividends per share

2,000

FY2019FY2020

FY2021Dividends payout ratio (right scale)

0

1,511

1,500

1,268

1,211
1,000

441

500
0

1,964

1,824

20

20

FY2017

FY2021

Number of Patents Held (Consolidated)

86.00

84.00

21.6 0Training expenditures per employee (right scale)

(%)

40

0

FY2017

Training expenditures

(%)

11.7

100

Note: In fiscal 2021, training expenses decreased significantly since many training sessions werecanceled or postponed and the methods of holding training were reviewed to prevent the spreadof COVID-19.

As we strive to increase corporate value, we continue to pay out stabledividends, taking into account a comprehensive range of factors, including
consolidated performance and the dividends payout ratio.

80

0FY2021

We will strive for efficient management of invested capital to further
improve profitability.

14.7

(%)

50,00020

Annual Cash Dividends per Share/
Dividends Payout Ratio (Consolidated)

11.4

40,814

76.6
61.4

(Yen)
49,25240

5,000Return on Equity Attributable to Owners of Parent (ROE)/
Return on Assets (ROA) (Consolidated)

15

44,45935,958

80

9,616

1

24

1,813

15,000Operating margin (right scale)Operating income

1,824

1,761

6

2
0

We are working to further reduce and appropriately manage CO2 emissions
in all processes, from product development to production.

(%)

8

38,79350
200,000

7.7

7.3

CO2 Emissions per Unit of Production/
CO2 Emissions Volume (Consolidated)

770
FY2017
In Japan481

787
FY2018543

FY201954.9

FY201764.2

FY2018

98.3

99.6

96.6

56.7

58.4

58.5

FY2019FY2020

FY2021

Percentage of annual paid vacation taken
Percentage of employees using half-day vacations

Ethics and Compliance Issues
Number of Issues Recorded (Consolidated)
In fiscal 2021, there were a total of 109 ethics and compliance issues recorded by
the TS TECH Group, including those brought for consultation to the TS Corporate
Ethics Compliance Consultation Office. Investigations into each case found no
violations of laws or regulations that would have a significant impact on ourbusiness activities.

16 cases

TS TECH Co., Ltd.

87 cases
1,180

FY2020

96.6

704

644

968

0

99.4

1,260

Overseas subsidiaries
and affiliates

Total

109 cases

6 cases
Domestic subsidiaries
and affiliates

FY2021

FY2021

Outside of JapanTS TECH Integrated Report 2021

25

ESG Management

ESG Management

Corporate Governance

Changes to the Organizational Layout

Corporate Governance

27 Changes to the Organizational Layout

Transition to a “Company with an Audit and Supervisory Committee” Structure
Establishment of the Nomination and Compensation Committee

28 Audit and Supervisory Committee Roundtable Discussion
32 Board of Directors
Efforts to Improve Corporate Governance andCompliance
34

35
36

37
38

Basic Policy on Corporate GovernanceGroup Governance Structure
Appointments of Outside Directors
Governance System Diagram
Reasons for Appointments of Outside Directors
Operation of an Internal Control System
Compliance Framework
Remuneration Policy
Strengthening the Sustainability Promotion Framework
Risk Management
Global Risk Management Committee
Response to the COVID-19 Pandemic
Tax Policy
Policy and Action against Antisocial ForcesIntellectual Property Management
Disclosure Policy

Transition to a “Company with an Audit andSupervisory Committee” Structure

Following its approval at the 75th Annual General Meeting of
Shareholders held on June 25, 2021, TS TECH transitioned toa “company with an Audit and Supervisory Committee” structure in order to further enhance the supervisory function of
the Board of Directors and the corporate governance system itself by appointing directors who are Audit and Supervisory Committee members with voting rights to the Boardof Directors.
The newly established Audit and Supervisory Committee directly supervises the internal audit department in its
auditing operations. This creates a system that enables efficient organizational auditing of the state of business execution for the entire Group. In addition to the executive officer
system that was implemented previously, the Board of Directors will delegate decision-making on important matters ofbusiness execution to the directors to the extent legally permitted to ensure swift decision-making in the face of a rapidly changing business environment.

With this change in the organizational layout, the ratioof outside directors on the Board of Directors has been increased to one-third, which is expected to further improve
the transparency and objectivity of decision-making.

Establishment of the Nomination andCompensation Committee

In conjunction with the transition to a “company with an Audit and Supervisory Committee” structure, we establishedthe Nomination and Compensation Committee as an advisory body to the Board of Directors. Outside directors accountfor a majority of the members of this committee, which ischaired by an outside director. The Nomination and Compensation Committee will be involved in decisions on nomination of and compensation for directors and executive officers to enhance the objectivity, transparency, and fairness of
the relevant processes.

Environmental

Environmental Initiatives
39

40

41
42
43

Endorsement of Recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD)
Response to the TCFD
Initiatives to Strengthen Environmental Management
Internal Environmental Audits
Environmental Education
Compliance with Environment-Related Laws and Regulations
Environmental Impact of Business Activities and Environmental Initiatives
Main Environmental Targets and Results in Fiscal 2021 and Targets for Fiscal 2022
Efforts to Reduce Our Environmental Footprint
Installing Environmentally Friendly Equipment
Implementing Third-Party Verification
Green Ecosystem Conservation Activities

Company with an Audit and Supervisory Committee

Company with a Board of Auditors(as of June 2021)

General Meeting of Shareholders
Appointments
and dismissals

Appointments
and dismissals

Board of Directors

Board of Auditors

General Meeting of Shareholders
Appointments
and dismissals

Appointments
and dismissals

Board of Directors
Audit andSupervisory Committee

SocialCreating Employee-Friendly Workplaces

45

46

A Company Dedicated to Realizing People’s Potential
Fostering A Greater Awareness of Human Rights
Work–Life Balance
Work-Style Reforms That Promote Diversity
Diversity Initiatives
Initiatives for Hiring Persons with Disabilities
Educating Employees about the TS TECH Philosophy
Human Resources Development
Workplaces Where Women Can Thrive
Fair Assessment of Personnel
Communicating with Employees
Promoting Occupational Safety and Health

Audit
Supervision
Audit

44

Outside Directors
Two out of 11 (18%)

Outside Directors
Five out of 15 (33%)

Supply Chain Initiatives
47

48

Supply Chain Management Policy
Application of TS TECH Supplier Sustainability Guidelines
Human Rights Due Diligence
Basic Policy on Procurement
Other Major Initiatives for Supply Chain Management

Internal Directors

Outside Directors

Philanthropy
50
51

26

TS TECH Integrated Report 2021

Japan
Americas
China
Asia and Europe
TS TECH Integrated Report 2021

27

ESG Management

Corporate Governance

Audit and Supervisory Committee Roundtable Discussion

Tatsuo Sekine

Director, Audit andSupervisory Committee Member

Tatsuya Motoda (Outside Director)
Director, Audit andSupervisory Committee Member

Hajime Hayashi (Outside Director)
Director, Audit andSupervisory Committee Member

Tomoko Nakada (Outside Director)
Director, Audit andSupervisory Committee Member

Driving Corporate Evolution through ESG Management
That Draws Upon a Diverse Array of Knowledge

Along with the transition to a “company with an Audit and Supervisory Committee” corporate governance structure inJune 2021, TS TECH also established the voluntary Nomination and Compensation Committee, thereby forming a systemthat ensures that the objective opinions of outside directors are more readily reflected in corporate management than
before. We invited the four members of the new Audit and Supervisory Committee to a roundtable discussion to discuss
the new corporate governance system, which is designed to achieve more transparent, impartial corporate management,
and to share their aspirations for the future.

Assessing the Board of Directors

Tatsuo Sekine
Director, Audit and Supervisory Committee Member
Apr. 1982 Joined TS TECH
Apr. 2004 Accounting Department, Administration Division, General Manager,
TS TECH
Apr. 2010 Operating Officer, Business Supervision Division Deputy Executive
General Manager, TS TECH
Apr. 2011 Operating Officer, Corporate Business Administrative Division Deputy
Executive General Manager, TS TECH
Apr. 2017 Managing Officer, Corporate Managerial Planning Office General
Manager, TS TECH
Apr. 2020 Managing Officer, TS TECH
June 2020 Auditor, TS TECH
June 2021 Director, TS TECH (Audit and Supervisory Committee Member) (current)

28

TS TECH Integrated Report 2021

Sekine: The TS TECH Board of Directors is currently in theprocess of becoming a more effective body. Since fiscal
2021, the meetings have been chaired by an outside director,
and this has led to more objective proceedings and more
active discussions than in the past.
The content of the meeting reports and discussions is
also starting to involve higher-level management decisions.
With the transition to a “company with an Audit and Supervisory Committee” structure, the Board of Directors has delegated an increasing number of business decisions to directors, which I feel has improved the quality of the institution.
Motoda: Adopting a “company with an Audit and Supervisory Committee” structure has not only increased the percentage and number of outside directors at TS TECH, I believe it
has also made it easier for each of the outside directors toparticipate in Board proceedings. Directors receive detailed
materials on matters to be reported or resolved at the Boardof Directors’ meetings, and detailed supplementary explanations are also provided for technical terms that are difficult
for those outside the company to understand.
Hayashi: I agree with Mr. Motoda. I very much appreciate
the thorough briefings on agenda items that we receive
before these meetings. We are briefed in detail on agenda
items for the Audit and Supervisory Committee meetings,
which are held in advance of the Board of Directors’ meetings, so this allows us to be fully prepared when the Board
meets.
I am also very impressed with the Board meetings. Thatis, each agenda item is well focused on the salient points.
Looking at any of the items, it is clear that each has been
fully discussed before being brought to the Board of Directors. This approach means we waste no time, and the Board
meetings are, I believe, conducted in an efficient, productive
manner.
Nakada: Having only recently been appointed, I have only
attended a few meetings, but I was initially surprised to see
how everyone, both internal and outside directors alike, actively participated. I feel that discussions at every meetingare very lively.
Employees waste no time giving their reports, speaking
in a well-organized manner and presenting carefully prepared materials. Seeing this, my impression is that TS TECH
operations are firmly underpinned by a group of talented
people.

A New Corporate Governance Structure
Sekine: In addition to the Audit and Supervisory Committee,
the company also established the voluntary Nomination andCompensation Committee in June 2021 to increase transparency and fairness by incorporating the independent perspectives of outside directors in management decisions. The
primary purpose of transitioning from a “company with a
Board of Auditors” structure to a “company with an Audit andSupervisory Committee” structure was to further strengthen
its supervisory function. Although we will largely performthe same duties as the auditors from the previous structure,such as reviewing the execution of duties by directors andpreparing audit reports, the auditing methods will change
significantly. The previous structure was based on individual
auditing, in which each member has the right to examinecompany business reports and review operations and assets
as a single-person entity. The Audit and Supervisory Committee, on the other hand, is based on organizational auditing, which involves cooperation between the internal audit
departments and departments in charge of internal control.
TS TECH will place the Corporate Business Audit Department
under the direct control of the Audit and Supervisory Com-

Tatsuya Motoda (Outside Director)
Director, Audit and Supervisory Committee Member
May 1993 Joined Anderson Consulting (now Accenture Japan Ltd.)
Sept. 1999 Joined Tsuji CPA Accounting Office (now Hongo Tsuji Tax & Consulting)Apr. 2007 International Tax Affairs Department General Manager, Tsuji CPA
Accounting Office
Oct. 2008 Registered as a tax accountant
Apr. 2014 Representative tax accountant, Motoda Tax & Accounting Office(current)
June 2014 Auditor, TS TECH
July 2018 Outside Auditor, Global Information, Inc. (current)
June 2021 Director, TS TECH (Audit and Supervisory Committee Member) (current)

mittee and take other measures to strengthen lines of reporting in order to ensure that organizational auditing isboth efficient and effective.
Motoda: As an advisory body to the Board of Directors, theNomination and Compensation Committee, which I chair,consults with the Board of Directors and reports to theBoard on matters related to the appointment and dismissalof directors and executive officers, as well as compensationand other issues. There were, of course, criteria in place before for selecting director and executive officer candidates,
as well as for determining compensation. However, thesematters were decided based on deliberations among top
management, which made it difficult, I think, for those on
the outside to understand the process. Under the new
structure, the committee, made up of a majority of outside
directors, operates under the kind of objective, transparent,
and fair system required of a global company. This, I believe,
will further enhance TS TECH’s corporate governance structure.
Sekine: The Audit and Supervisory Committee and the Nomination and Compensation Committee are both new to TS
TECH, so for these committees to fulfill their auditing andmonitoring functions as expected, we must resolve a number of issues as we move forward.
With regard to the Audit and Supervisory Committee, I
am the only full-time member, so in order to effectively conduct direct audits (involving visits to subsidiaries), we must
work with the Corporate Business Audit Department, which
is now under the committee’s control as a result of organizational layout changes, and overseas corporate business audit departments to establish auditing procedures. It is the
responsibility of the Nomination and Compensation Committee to establish the most appropriate procedures for therecommendation of appointments and remuneration for
directors as well as for the expression of those recommendations.

TS TECH Integrated Report 2021

29

Audit and Supervisory Committee Roundtable Discussion

Diversity on the Board of Directors
Sekine: One advantage of a diverse Board of Directors is theability to make decisions not bound by convention. Internal
directors who have built their careers entirely inside thecompany tend to have trouble looking critically at proposals
presented at Board meetings because of their familiarity
with the trajectory of previous operations as well as the corporate culture. I believe that the presence of outside directors who are able to speak from an independent perspective
increases the Board’s diversity, which leads to more objective and creative discussions when making decisions.
Motoda: I agree. The Group is making great strides towardachieving its 2030 vision goal of becoming “a seat and interior
system supplier that is trusted worldwide.” To achieve this,new values need to be the driving force. If you look at TS TECH
Group companies outside Japan, however, most of the management positions are still filled by employees posted fromJapan. The goal for the future should be to have director andexecutive officer positions held by people from the countries
in which these Group companies operate. The entire Group,
not just TS TECH, needs to be involved with this matter.
At TS TECH, Ms. Nakada became the first woman appointed to the Board of Directors in June 2021, further increasing the Board’s diversity. Going forward, I hope that
more women who are building careers inside the company
will help lead the Group to growth by serving in executive
positions.
Nakada: For many women, there are phases in their careerswhen childbirth and child-rearing inevitably take time fromwork. It is therefore vital to create an environment that supports women who are raising children. I respect the top
management’s commitment to actively work to create anenvironment that makes it easy for anyone, regardless ofgender, to work by expanding internal systems such as
childcare leave and reduced working hours. I am very muchin favor of this corporate policy.
Hayashi: It would be great if the efforts to promote women’s
careers led to more women appointed as directors, following
in Ms. Nakada’s footsteps. However, diversity is not simply amatter of gender, nationality, or age. Diversity in management experience will be especially important for the Board of
Directors moving forward. Japan’s Corporate Governance
Code, which was revised in June 2021, also calls for appointing independent outside directors with management experience at other companies in its “Preconditions for Board andKansayaku Board Effectiveness ” principle. There are currently outside directors with management experience in otherareas of the manufacturing industry on the Board, but adding directors with management experience in a wider range
of industries should be considered in the future.

30

TS TECH Integrated Report 2021

Hajime Hayashi (Outside Director)
Director, Audit and Supervisory Committee Member
Apr. 1983 Joined Mie Labor Management Center
Apr. 1986 Registered as an attorney
Joined Owaki & Sumi Law Office
Apr. 1989 Joined Meiwa Law Office
May 1996 Representative, Sazanka Law Office (current)
June 2020 Auditor, TS TECH
June 2021 Director, TS TECH (Audit and Supervisory Committee Member) (current)

Further Enhancing Corporate Value
Sekine: The TS TECH Group has focused on a number of
initiatives in line with the management policy articulated in
the 13th Medium-Term Management Plan (fiscal 2018–fiscal
2020), the “Creation of a foundation for ESG management,”
as well as the policy in its 14th Medium-Term Management
Plan (fiscal 2021–fiscal 2023), “Corporate evolution throughESG management.” Over this period, the Group has worked
to strengthen ESG management using the Dow Jones Sustainability Indices (DJSI), international standards for measuring corporate sustainability, as its benchmark. There havenot, however, been any significant changes to the organizational layout which supports the “G” for “governance” in ESG.
However, as the revisions to the Corporate Governance
Code and the restructuring of the Tokyo Stock Exchange
stock market (to a prime market) demonstrate, demand is
now strong for highly transparent, impartial corporate governance systems.
With the transition to a “company with an Audit and Supervisory Committee” structure and the establishment of
the voluntary Nomination and Compensation Committee,
the time has come to test the true value of TS TECH’s corporate evolution through ESG management. It is crucial that
we not be satisfied with merely changing the organizationallayout but that we continue to promote efforts centering on
the social and environmental domains in order to enhance
corporate value through ESG management.
Motoda: Indeed. ESG management leads to higher stock
values and otherwise enhances corporate value. Of thethree ESG components, the “E” for “environmental” looks to
become increasingly important. The number of natural disasters caused by global warming-driven climate change isincreasing, and governments are now imposing stricter industrial regulations to protect the environment. As a global
company and manufacturer involved in the automotive industry, the Group must further accelerate its efforts to protect the environment. Proactive investment is required toensure that business activities have less impact on the global

environment, utilizing means such as the use of raw materials with a low environmental impact, the establishment of
manufacturing methods with lower CO2 emissions, and an
expanded use of renewable energy.
Hayashi: I am also keenly aware of how important the environment is. However, as someone who specializes in legal
affairs and compliance, I strongly believe that we must takecare of people, as well as the environment and natural world.
The first goal of the SDGs is to end poverty. This is a focus
that goes hand in hand with valuing people. As a group that
operates in many different countries, TS TECH should bekeenly aware of issues that affect people worldwide, themost symbolic being poverty, as it conducts its business activities. I believe that increased corporate value comes fromthinking not only of the Group but of the entire supply chain,
and addressing the Group’s responsibilities at each stepalong the way.

Aspirations as Audit and Supervisory
Committee Members
Hayashi: Having been promoted from auditor to director, it
is both an honor and a privilege to have become a memberof the “management team” with voting rights on the Boardof Directors.
Under the management policy of “Corporate evolution
through ESG management,” the Group has established priority measures from both proactive and protective angles.
“Evolution for business growth” is the proactive angle, and“stronger business operations structure to support evolution”

Tomoko Nakada (Outside Director)
Director, Audit and Supervisory Committee Member
Apr. 1997
June 2000
Aug. 2002
Mar. 2015

Appointed as an Assistant Judge (Tokyo District Court)
Registered as an attorney (affiliated with Dai-ni Tokyo Bar Association)
Admitted to the New York State Bar Association
Elected as an International Fellow of the American College of Trust andEstate Counsel (current)
Apr. 2017 Elected as an Academician of the International Academy of Estate andTrust Law (current)
Dec. 2020 Representative, Tokyo Heritage Law Firm (current)
June 2021 Director, TS TECH (Audit and Supervisory Committee Member) (current)is the protective angle. As a specialist in the legal field, I willtake responsibility for “protection” by scrutinizing each aspect of Group growth and exercising my voting rights at theBoard of Directors meetings from a “protective” viewpoint.
Nakada: This is my first experience serving as an outside director. I have heard that simply having a woman on the top
management team of the company is very encouraging for thefemale employees, so I will do my best to inspire everyone.
I also recognize that my role is to offer suggestions
from a legal perspective as an attorney, as well as opinionsfrom both a global perspective that incorporates my experience outside Japan and a woman’s perspective. I will contribute to the company’s development by offering ideas that
other directors may not have considered.
Motoda: As chair of the Nomination and Compensation
Committee, my goal is to run the newly established committee as a highly effective organization to ensure that is it
more than a mere formality.
I recognize that it is very difficult for outside directors
such as ourselves who are not full-time members to properly evaluate candidates for director or executive officer positions based only on a limited amount of data and interviews.
This is why I will work closely with our full-time director andthe executive officers to ensure that we are able to identify
the personal qualities and qualifications of the talent who
will become the next generation of leadership at TS TECH.
Sekine: Now that I am a member of the Audit and Supervisory Committee, I am responsible for carrying out more indepth auditing duties.
Previously, I mainly performed audits from a legality
standpoint to determine whether directors were in compliance with laws, regulations, and the Articles of Incorporationin the execution of their duties. Now, however, I will also be
responsible for audits from a validity standpoint to determine the rationality of the decision-making process and thebusiness activities being executed.
In addition, as a director with voting rights at Board of
Directors’ meetings, I will be involved in the process of making
decisions regarding the execution of business matters, and I
am looking forward to assuming these new responsibilities.
As a full-time Audit and Supervisory Committee member, I will also play a role in making sure the other outside
directors on the committee have sufficient information,
working with them and playing a supervisory role to support
sustainable growth at TS TECH.

TS TECH Integrated Report 2021

31

ESG Management

Corporate Governance

Board of Directors

REPRESENTATIVE DIRECTOR,PRESIDENT

Masanari Yasuda

REPRESENTATIVE DIRECTOR, SENIORMANAGING DIRECTOR

Yoshitaka Nakajima

Joined TS TECH Co., Ltd. in 1982
Representative Director, President,
TS TECH Co., Ltd.
Director in Charge of Overseas Segments,
Quality Assurance, and Development
Number of shares of the company held:
58,813 shares
Meetings of the Board of Directors attended:
100% (15/15 times)

Joined TS TECH Co., Ltd. in 1982
Representative Director, Senior Managing
Director, TS TECH Co., Ltd.
Director in Charge of Corporate Managerial
Planning, Administration, and Business
Administration, Compliance Officer
Number of shares of the company held:
19,932 shares
Meetings of the Board of Directors attended:
100% (15/15 times)

REPRESENTATIVE DIRECTOR, SENIORMANAGING DIRECTOR

DIRECTOR, SENIOR MANAGING
OFFICER

Joined TS TECH Co., Ltd. in 1982
Representative Director, Senior Managing
Director, TS TECH Co., Ltd.
Director in Charge of Sales, Purchasing, andManufacturing, Risk Management Office
Number of shares of the company held:
11,004 shares
Meetings of the Board of Directors attended:
100% (15/15 times)

Joined TS TECH Co., Ltd. in 1978
Director, Senior Managing Officer,
TS TECH Co., Ltd.
Americas Segment Executive General Manager,
President of TS TECH AMERICAS, INC.
Number of shares of the company held:
14,199 shares
Meetings of the Board of Directors attended:
100% (15/15 times)

Kenichi Hasegawa

Akihiko Hayashi

DIRECTOR, OPERATING OFFICERDIRECTOR (Outside Director)

Joined TS TECH Co., Ltd. in 1990
Director, Operating Officer, TS TECH Co., Ltd
Corporate Manufacturing Division Executive
General Manager
Number of shares of the company held:
1,258 shares
Meetings of the Board of Directors attended:
100% (12/12 times)

Joined TS TECH Co., Ltd. as an Outside Director
in 2016Chairperson of the Board of Directors,
TS TECH Co., Ltd.
Number of shares of the company held:
600 shares
Meetings of the Board of Directors attended:
100% (15/15 times)

Yasushi Suzaki

Teruyasu Mutaguchi

DIRECTOR (Outside Director)

Takeshi Ogita

Guest Professor, Graduate School of Creative
Science and Engineering, Waseda University(current)
Outside Director, Japan Hades Co., Ltd. (current)
Joined TS TECH Co., Ltd. as an Outside Director
in 2020
Number of shares of the company held:
0 shares
Meetings of the Board of Directors attended:
100% (12/12 times)

Directors, Audit and Supervisory Committee Members
DIRECTOR, SENIOR MANAGING
OFFICER

Yutaka Arai

Joined TS TECH Co., Ltd. in 1982
Director, Senior Managing Officer,
TS TECH Co., Ltd.
China Segment Executive General Manager,
Chairman and President, TS TECH (HONG
KONG) CO., LTD.
Number of shares of the company held:
10,679 shares
Meetings of the Board of Directors attended:
100% (15/15 times)

DIRECTOR, MANAGING OFFICER

Atsushi Igaki

Joined TS TECH Co., Ltd. in 2016
Director, Managing Officer, TS TECH Co., Ltd.
Corporate Business Administration Division
Executive General Manager
Number of shares of the company held:
4,586 shares
Meetings of the Board of Directors attended:
100% (15/15 times)

DIRECTOR, MANAGING OFFICERDIRECTOR, OPERATING OFFICER

Joined TS TECH Co., Ltd. in 1994
Director, Managing Officer, TS TECH Co., Ltd
Asia and Europe Segment Executive General
Manager, President of TS TECH ASIAN CO., LTD.,
Chairman of TS TECH BANGLADESH LIMITEDand TS TECH UK LTD
Number of shares of the company held:
3,981 shares
Meetings of the Board of Directors attended:
100% (12/12 times)

Joined TS TECH Co., Ltd. in 1994
Director, Operating Officer, TS TECH Co., Ltd
Corporate Development and Engineering
Division Executive General Manager
Number of shares of the company held:
3,308 shares
Meetings of the Board of Directors attended:
100% (12/12 times)

Eiji Toba

Takahiro Kobori

DIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBER (Full-Time)

DIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBER (Outside Director)

Joined TS TECH Co., Ltd. in 1982
Director, Audit and Supervisory Committee
Member, TS TECH Co., Ltd.
Number of shares of the company held:
9,411 shares
Meetings of the Board of Directors attended:
100% (12/12 times)
Meetings of the Board of Auditors attended:
100% (11/11 times)

President of Motoda Tax & Accounting Office
Joined TS TECH Co., Ltd. as an Auditor in 2014
Director, Audit and Supervisory Committee Member(Outside Director) (2021), TS TECH Co., Ltd.
Number of shares of the company held:
2,755 shares
Meetings of the Board of Directors attended:
93% (14/15 times)
Meetings of the Board of Auditors attended:
100% (13/13 times)

DIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBER (Outside Director)

DIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBER (Outside Director)

Sazanka Law Office
Joined TS TECH Co., Ltd. as an Auditor in 2020
Director, Audit and Supervisory Committee Member(Outside Director) (2021), TS TECH Co., Ltd.
Number of shares of the company held:
0 shares
Meetings of the Board of Directors attended:
100% (12/12 times)
Meetings of the Board of Auditors attended:
100% (11/11 times)

Representative, Tokyo Heritage Law Firm
Joined TS TECH Co., Ltd. as a Director, Audit andSupervisory Committee Member (Outside
Director) in 2021
Number of shares of the company held:
0 shares
Meetings of the Board of Directors attended:—%
Meetings of the Board of Auditors attended:—%

Tatsuo Sekine

Hajime Hayashi

Tatsuya Motoda

Tomoko Nakada

Note Career and positions: As of June 30, 2021
Number of shares of the Company held: As of the date of submission of the Annual
Securities Report (June 28, 2021)
Attendance at meetings of the Board of Directors and Board of Auditors: April 1,2020 to March 31, 2021

32

TS TECH Integrated Report 2021

TS TECH Integrated Report 2021

33

ESG Management

Corporate GovernanceEfforts to Improve Corporate Governance and Compliance

Governance System Diagram

Basic Policies

General Meeting of Shareholders
Appointment

Basic Policy on Corporate Governance

The TS TECH Philosophy calls for us to be a company sincerely appreciated by all of our stakeholders—from shareholders and investors to customers, suppliers, employees,
and local communities. We are working hard to enhance
corporate governance as an important step toward fulfilling
our social responsibility and achieving sustainable businessgrowth and increasing corporate value over the medium tolong term.
TS TECH endorses the Tokyo Stock Exchange’s Corporate Governance Code and has set the above basic policies
accordingly.
We will continue to work to strengthen our governancesystem in line with the intent and spirit of the Code.

Group Governance Structure

The TS TECH Group has established a sound corporate governance system. It includes a Group-wide commitment to
the Vision Statement and Mission Statement that comprise
the TS TECH Philosophy, a basic policy on corporate governance, and a three-year medium-term management plan.
Affiliated companies also have their own effective, efficient
corporate governance systems that are based on the laws of
their respective countries and their respective businesses.
Important management issues at affiliated companies
must be reported to and approved by TS TECH in advancebased on the standards stipulated by TS TECH. Affiliatedcompanies must also report business plans, sales results,
and financial status as well.

34

TS TECH Integrated Report 2021

Furthermore, affiliated companies participate in routine
compliance and risk verification measures known as the TS
TECH Corporate Governance (TSCG) self-verification system.
This ensures that the entire TS TECH Group acts as one inpromoting compliance and reducing risk.
TS TECH’s internal audit department conducts audits ofaffiliated companies and works with internal audit departments set up at the head offices in each region to enhance
the internal audit structure of the entire TS TECH Group.

Appointments of Outside Directors

The Company selects persons with extensive experience incorporate management or expertise in various fields as outside directors in order to provide advice and supervision on
management from an independent standpoint, taking into
account the characteristics of the company’s business.
When selecting outside directors, in addition to satisfying the criteria for independence set forth in the Companies
Act, the Ordinance for Enforcement of the Companies Act,and by Tokyo Stock Exchange, Inc., the company makes its
decisions in accordance with internal regulations, taking into
consideration factors such as candidates’ independence
from the company and their past performance and insight intheir particular areas of expertise.
Outside directors are also expected to help ensure thesoundness of the Group and strengthen the audit system.

Risk Management
OfficerCompliance
Officer

Segment Management Committees

Segment Executive General Managers, etc.
(Americas/China/Asia and Europe)
Reports

Executive Committee

Responses and reports
TS Corporate Ethics Compliance
Consultation OfficeConsultations

Corporate ethics hotlines
set up by each company

Consultations

Representative Directors

4

Responses and reports

Executive General Managers Committee
Executive General Managers, etc.

Audit and Supervisory Committee 2

Audit and Supervisory Committee Members

Responses and reports

Responses
and reports

Ethics and Compliance
Committee

Reports

Directors 1

Reports

Coordination

Audit andsupervision

5

Audit report

Coordination

Accounting Auditor
Direction

Reports

Global Risk Management
Committee

Board of Directors

Appointment

Monitoring

Responses

Accounting audit
Internal control audit

Nomination and 3
Compensation Committee

Responses
and reports(1) Securing the Rights and Equal Treatment of Shareholders
We respect the rights of all stockholders, who are important shareholders, and shall maintain an environment that
ensures that all shareholders, including non-controlling interests, are treated equally and can fully exercise their rights.
(2) Appropriate Cooperation with Shareholders
We shall cooperate appropriately with all shareholders while working to achieve sustainable growth and an increase in
mid- to long-term corporate value.
(3) Ensuring Appropriate Information Disclosure and Transparency
We shall actively disclose information in order to be a company sincerely welcomed by all of our shareholders, and weshall manage our business with transparency and good faith.
(4) Responsibilities of the Board
The Board shall take appropriate responsibility for the establishment of mid- to long-term management policies andoversight of directors, and it shall work to build systems to enable transparent, fair, and resolute decision-making.
(5) Dialogue with Shareholders
The company shall engage in constructive dialogue with shareholders and investors through the annual General
Meeting of Shareholders and other avenues with respect to management principles and other issues as it works toachieve sustainable growth and an increase in mid- to long-term corporate value.

Corporate Business
Audit Department

Responses and reports
Divisions anddepartments in Japan
Domestic affiliates

Business audits

Overseas affiliates

1

Board of Directors

The Board of Directors is composed of 11 directors (excluding directors who are Audit and Supervisory Committee members) and four directors who are Audit and Supervisory Committee members. The Board of Directors makes decisions regarding management policies, importantmanagement issues, and matters mandated by laws and regulations. It also supervises the execution of business operations.

2

Audit and Supervisory
Committee

The Audit and Supervisory Committee is composed of four Audit and Supervisory Committee members (three of whom are outside directors).
Based on the audit policy established by the Audit and Supervisory Committee, it audits the execution of duties by the directors.

3

Nomination andCompensation
Committee

The Nomination and Compensation Committee is composed of two directors (excluding directors who are Audit and Supervisory Committee
members) and three outside directors. It deliberates on matters related to the appointment and dismissal of directors and executive officers
and their compensation.

4

Executive Committee

The Executive Committee comprises the company’s three representative directors. It conducts preliminary deliberations on such matters as
resolutions to be put to the Board of Directors, and, within the scope of the authority assigned to it by the Board of Directors, discusses important matters relating to the execution of the duties of the directors.

5

Executive General
Managers Committee

The Executive General Managers Committee is made up of 10 executive general managers and regional general managers. This committee
discusses policies, plans, and governance related to operations in each division to maintain efficient operations.

Reasons for Appointments of Outside Directors
Teruyasu Mutaguchi

Mr. Mutaguchi has provided valuable opinions and advice related to our management practices as an outside director based on his abundant
experience and broad insight as a corporate manager at a manufacturing company and at research and educational institutions. He has also
served as the Chairman of the Board of Directors of the company since fiscal 2021, and we selected him to serve as an outside director in the
expectation that he will continue helping to ensure the soundness of our management.

Takeshi Ogita

Mr. Ogita has provided valuable opinions and advice related to our management practices as an outside director based on his abundant experience and broad insight as a corporate manager of a pharmaceutical company. We selected him to serve as an outside director in the expectation that he will continue helping to ensure the soundness of our management by reflecting this abundant experience and insight in ourmanagement.

Tatsuya Motoda

Mr. Motoda has specialized knowledge and abundant experience and insight as a tax accountant, and he has provided appropriate auditing,including sound advice regarding our management, since his appointment as an outside auditor. We selected him to serve as an outside director (Audit and Supervisory Committee member) in the expectation that he will continue to ensure the soundness of our management andcontribute to auditing and supervision.

Hajime Hayashi

Mr. Hayashi has broad knowledge and abundant experience as an attorney-at-law, and he has provided appropriate auditing, including
sound advice regarding our management, since his appointment as an outside auditor. We selected him to serve as an outside director (Audit
and Supervisory Committee member) in the expectation that he will continue to ensure the soundness of our management and contribute toauditing and supervision.

Tomoko Nakada

We selected Ms. Nakada to serve as an outside director (Audit and Supervisory Committee member) in the expectation that her extensive
experience overseas and broad insight as a lawyer, as well as her global and female perspectives, will enhance the diversity of our Board of
Directors, help to ensure the soundness of our management, and contribute to auditing and supervision.
TS TECH Integrated Report 2021

35

Efforts to Improve Corporate Governance and Compliance

Operation of an Internal Control System

Following the inclusion of regulations on internal controls inJapan’s Companies Act in 2006, TS TECH passed a resolution
on the basic policies of its internal control system at a Boardof Directors’ meeting. Since then, the Board of Directors has
reviewed the implementation of this system each fiscal year
and passed resolutions on changes to these policies as necessary at Board of Directors’ meetings. Additionally, in accordance with Japan’s Financial Instruments and Exchange Act,the TS TECH Group has established an internal control system to ensure the reliability of its financial reporting. The
effectiveness of this system is maintained and internal control is enhanced through regular evaluations of improvements and operations and corrective actions as needed.
In line with the transition to a “company with an Audit
and Supervisory Committee” structure, the basic policy on
the establishment of an internal control system was revisedat the Board of Directors’ meeting held on June 25, 2021.

Compliance Framework

Based on the TS TECH Philosophy, the Group establishedthe TS Standards for Conduct (TS TECH’s norms and ideals
as an organization) and TS Guidelines for Conduct (expectations for day-to-day conduct for individual executives, officers, and employees). Regular education is provided to ensure the entire Group is familiar with these concepts.
A director is appointed as a Compliance Officer in orderto promote compliance initiatives, and steps are continuallytaken to prevent legal violations before they occur throughregular TSCG self-verifications and deliberations of important ethics and compliance issues by the Ethics and Compliance Committee.
We have established a whistleblower hotline called the
TS Corporate Ethics Compliance Consultation Office, whichenables employees to bring issues before compliance officers, who respond with rapid, effective investigations andcorrective guidance in the event of a problem. Including affiliates in and outside of Japan, the Group receives approximately 100 ethics and compliance inquiries a year, which includes consultations and other cases handled by the TS
Corporate Ethics Compliance Consultation Office. In fiscal
2021, the Group had a total of 109 cases. Continuous operation of this framework promotes internal self-improvement.

Remuneration Policy

TS TECH’s basic policy on executive compensation is to ensure that it is transparent and reasonable, with the potential
to further motivate sustained business growth.
We established the Nomination and Compensation
Committee, chaired by an outside director and composed ofthree outside directors and two internal directors, as an

36

TS TECH Integrated Report 2021

advisory body to the Board of Directors. When reviewing thelevel and calculation method of compensation in consideration of the basic policy and social conditions, revising thecompensation structure, or determining the individual compensation for directors for each fiscal year, the Board of Directors makes resolutions based on consultations with theNomination and Compensation Committee and the deliberations of the Audit and Supervisory Committee.
Officer compensation consists of basic fixed compensation, performance-linked remuneration as a short-term incentive, and non-monetary stock-based compensation as a
medium- to long-term incentive to enhance the Group’s corporate value over the medium to long term and further
share value with shareholders. The composition of annualcompensation is approximately 60% base compensation,
25% performance-linked compensation, and 15% stockbased compensation.

Strengthening the Sustainability
Promotion Framework

The Group plans to establish a Sustainability Committee as
an advisory body to the Executive Committee in order to further accelerate its efforts to address social issues related tosustainability. Three subcommittees will be established under the Sustainability Committee, covering social, environmental, and corporate foundation aspects, and they will
work closely with related departments to ensure flexible
management. At the same time, by newly establishing the
Sustainability Section of the Corporate Communications Department as a dedicated organization, we will further
strengthen the Group’s sustainability promotion frameworkand contribute to the long-term enhancement of corporate
value and the resolution of social issues, including efforts tobuild a decarbonized society.

In fiscal 2021, TS TECH identified four major risks andpursued the appropriate corresponding risk mitigation
measures.

Response to the COVID-19 Pandemic
Emergency response training

Global Risk Management Committee

This committee was formed in September 2014 as an advisory committee to the Executive Committee to help ensure
appropriate identification and control of the various risks
affecting global business activities and to solidify the sustainability and stability of the business.
The following year, regional risk management committees were formed in each region to manage the risks specific to these geographic segments and promptly advance risk
mitigation measures. TS TECH has also worked to conduct
emergency response training that anticipates a range ofrisks, such as the most frequently occurring natural disasters in each geographic region where the Group does business or the outbreak of an infectious disease.

Four Major Risks

1. Stoppage of parts supply
2. Crisis management
3. IT equipment failure
4. Welding fire

The company’s Risk Management Officer spearheaded theGroup-wide emergency response to the COVID-19 pandemic.
A Group-wide COVID-19 emergency response committee was established in Japan to quickly collect informationfrom all Group companies. For parts where the supply chain
was considered vulnerable to the impact of COVID-19, various efforts to maintain production, including alternate production of parts and intra-Group supply, were implemented
from an early stage, and these efforts helped to prevent
shortages and other issues.
Although fixed costs continued to be incurred at sitesthat had to suspend operations due to the impact of
COVID-19, the Group was able to respond to the situation
using funds in hand in accordance with Group-wide safe
funding guidelines, and, as a result, no production sites experienced major cash flow issues.
As it strives for continued business growth, not only will
TS TECH continue to monitor the situation closely and review
capital investment and cost-containment measures, it will
also implement thorough measures to prevent the spread of
infection in line with guidance from national and local governments.

Emergency Response System for COVID-19
Board of Directors

Risk Management

Important management issues are carefully deliberated
upon by TS TECH’s Executive Committee as well as various
advisory committees. Through these discussions, TS TECH
makes every effort to avoid and mitigate business risks.
In addition, a Risk Management Officer is appointed
from among the representative directors and placed incharge of risk management. The Global Risk Management
Committee, comprising directors and other officers, hasbeen set up to deliberate regularly on the results of TSCG
self-verifications and discuss responses to serious risks affecting management, ensuring that efforts are continually
made to mitigate potential risks.
Findings obtained through TSCG self-verifications areshared with internal audit departments so that they can beapplied in risk approach auditing.

Executive Committee

Global Risk Management
Committee• Direction on how to prevent the spread of
infection and control the supply chain• Reports on Group-wide status

Group-Wide COVID-19 Emergency Response Committee(Established January 2020, General manager: Risk Management Officer)• Sharing of information on parts
supply risks• Control of inter-region parts supply• Sharing of measures to prevent the
spread of infection• Reports on affected employees• Reports on supply chain impacts• Reports on the status of measures toprevent the spread of infection
Japan

Americas

China

Asia and Europe

Regional emergency
response headquarters

Regional emergency
response headquarters

Regional emergency
response headquarters

Regional emergency
response headquarters

TS TECH Integrated Report 2021

37

ESG Management
Efforts to Improve Corporate Governance and ComplianceTax Policy

The TS TECH Group’s tax policy aims to fulfill the appropriate
tax obligations and social responsibilities, minimize tax risks
while maintaining transparency, and contribute to the development of the communities in which the Group operates.
In order to achieve these objectives, the Group has established the TS TECH Group Tax Policy based on the TS
TECH Philosophy.

TS TECH Group Tax Policy(1) Tax Governance
The Group positions the reinforcement of tax governance as one of the most important management
issues. This policy was approved by TS TECH’s Boardof Directors, and the Board of Directors bears final
responsibility for tax governance.
(2) Compliance
The Group works to promote and instill awareness ofcompliance among its employees. This enables theGroup to comply with and always ensure the correctunderstanding of tax laws and regulations, etc., ineach country and region in which it operates, and tomeet the appropriate tax declaration and tax payment obligations.
(3) Tax Planning and Tax Havens
The Group will determine investment and businessactivities according to its business objectives and economic rationality. The Group will avoid tax planningthat is not in line with business purposes or operations, as well as tax activities that use tax havens.
(4) Transfer Pricing
The Group will abide by international tax frameworks
such as the OECD Transfer Pricing Guidelines and theBase Erosion and Profit Shifting (BEPS) Action Plan,
and will strive to ensure tax transparency. International transactions between Group companies will comply
with the OECD Transfer Pricing Guidelines, and transaction prices will be determined based on the arm’s
length principle.
(5) Minimal Tax Risk
The Group will conduct the appropriate accounting
and tax measures in accordance with the tax systems
and tax administrations of each specific country andregion. In the event of complicated, unclear tax matters, the Group will consult in advance with external
experts and tax authorities to minimize tax risks.
(6) Relationship with Tax Authorities
The Group will provide timely, accurate information totax authorities in each country and region in order toreduce tax risks, and will respond in good faith tomaintain trust and good relations.

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TS TECH Integrated Report 2021

Policy and Action against Antisocial Forces

The TS TECH Group’s basic policy for internal control requires individual officers and employees to diligently avoid
any type of relationship with antisocial groups that canthreaten a safe, orderly, and civil society, and to work together as an entire group to demonstrate uncompromising attitudes against such forces. Specific measures include making
assessments in advance of the start of new transactions andincorporating provisions for excluding the influence of antisocial forces in preparing agreements.

Intellectual Property Management

The TS TECH Group respects intellectual property rights. In
developing products and technologies, we take the utmost
care to ensure that the Group does not infringe on the intellectual property rights of others. At the same time, theGroup asks others to respect its intellectual property rights.
In cases where an infringement is identified, the Grouptakes all necessary measures, including demanding that infringing parties immediately discontinue any offending activities and offering such parties an opportunity to negotiate
in the signing of license agreements. Through actions suchas these, the Group works to maximize intellectual property
value and minimize loss.

Disclosure Policy

The TS TECH Group promptly and fairly discloses accurate
corporate information to its stakeholders, individual investors including shareholders, institutional investors, and analysts. In addition to disclosing information in accordancewith the Financial Instruments and Exchange Act and theTimely Disclosure Rules, even when these provisions do not
apply, we adopt a proactive approach to the disclosure of
information deemed useful and appropriate to our stakeholders.
Our primary means of disclosing information include
press releases and the Timely Disclosure Network (TDnet)
provided by the Tokyo Stock Exchange. This information is
also posted on TS TECH’s website.
To protect the company and its employees from legal
liability under the Financial Instruments and Exchange Act
and other legislation, the Corporate Communication Department responds to all inquiries from stakeholders. In addition, this Disclosure Policy is shared and fully enforced
throughout the TS TECH Group.

Environmental

Environmental Initiatives

Endorsement of Recommendations of the
Task Force on Climate-related Financial
Disclosures (TCFD)

The Group has designated “Corporate evolution throughESG management” as its management policy. Under thispolicy, we have accelerated our initiatives related to materiality (material issues) to help build a sustainable society. With
respect to the environment, we recognize climate change

action as a pressing issue and take our responsibility as acompany in the automotive industry seriously. In August
2021, we announced our endorsement of the TCFD recommendations.

Response to the TCFD

At present, we are formulating our long-term vision (KPIs) based on our material issues with the aim of achieving carbon neutrality. In the future, we will provide appropriate disclosure related to governance, strategy, risk management, and metrics andtargets, the four areas recommended for disclosure by the TCFD, and will continue to communicate the Group’s initiatives
internally and externally.

GovernanceRisk management• System of monitoring by the Board of Directors• Identification and assessment processes• Role of management in assessment and administration• Management processes• Integration into overall risk management

Strategy

Metrics and targets• Short-term, medium-term, and long-term risks and opportunities• Risk assessment and establishment of metrics• Impact on business, strategy, and financial plans• Greenhouse gas emissions and related risks• Scenario analysis• Targets and KPI results

In terms of “strategy,” we will assess and analyze business risks and opportunities, financial impact, and business continuity
based on specific scenarios set in a future in which climate change is more pronounced to ensure the Group’s sustained business growth.
Transition risks
Impact of policychanges andtighter
regulations
Physical risks
Risks from risingtemperatures

Policy and legal

Resource efficiency

Technology

Energy source

MarketRisks

Reputation

Opportunities

Products/services
Markets

Acute

Resilience

Chronic

Strategic planning
Risk management

Financial impact

Revenues
Expenditures

Incomestatement

Cash flow
statement

Balance sheet

Assets and liabilities
Capital and financing

Source: Final Report, Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017)

TS TECH Integrated Report 2021

39

Environmental Initiatives

Basic Environmental Policy

Environmental Impact of Business Activities and Environmental Initiatives

TS TECH identifies and strives to reduce the environmental impact of its business activities in each region of the globe.

PolicyIn the interest of protecting the global environment, the TS TECH Group will work to reduce the environmental impact of all aspectsof its corporate activities, especially the production of interior components for automobiles, and help create a sustainable society,aiming to be “a company sincerely appreciated by all,” which is one of the beliefs enshrined in the Group’s philosophy.

Reduce global environmental impact
associated with business operations

Environmental Impact
Global warming

Environmental Action Plan

Resource depletion(1) Compliance with Legal and Other Requirements

Ozone depletion

Strive to prevent environmental pollution and protect biodiversity and ecosystems primarily through compliance with requirements, such as environmental laws and regulations and environmental standards, and proper chemical management.

Air pollution(2) Reduction of Environmental Impact

Water pollution

Aim to mitigate the impacts of climate change and realize a sustainable recycling-based society by striving to save energy andresources through collaboration across the supply chain, based on life cycle assessments that cover all stages in the productlife cycle, from development through sourcing, production, logistics, marketing, disposal, and reuse.

Soil pollution
Waste materials

DomainEnvironmental Protection Efforts

Product
Development
Technology• Design products with a lighter weight and improved recyclability• Do not use materials containing regulated chemicals• Employ energy-saving and resource-saving equipment andprocess design

Manufacturing
Management• Employ energy-saving and resource-saving manufacturing• Control and reduce the amount of volatile organic compound(VOC) emissions into the atmosphere• Promote proper disposal and recycling of industrial waste

Purchasing
Distribution(3) Continuous Improvement of Environmental Management

Endeavor to continuously improve environmental and energy performance by setting environmental targets based on environmental and energy management systems, and regularly reviewing them. Provide the information and management resources
needed for such improvement and also work toward the utilization of products and equipment that will improve energy efficiency.

Initiatives to Strengthen
Environmental Management

Our Group is promoting environmental management system
ISO 14001 certification not just in Japan but at all of our facilities around the world. We are united in our efforts to continuously reduce the burden on the environment. Seeking additional measures to efficiently reduce CO2 emissions, TS TECH
adopted the ISO 50001 energy management system at all of
its sites in Japan in fiscal 2019 and obtained certification in
March 2019. Going forward, we will continue with efforts tobolster our environmental and energy management not only
to reduce the burden on the environment but also to decrease costs by using resources more efficiently.

Internal Environmental Audits

TS TECH has established an environmental and energy audit
program that consists of annual audits of each site. The audits take into account the environmental and energy impactof the sites and the results of past audits. These internal audits examine measures to reduce environmental impact andenergy consumption, the effect of these measures, compliance with regulations, and the status of the administrationof ISO international standards, among other items. We promote swift, proper correction of deficiencies and noncompliance items detected in audits, aiming to improve ourenvironmental management.

Environmental Education

TS TECH provides employees with a wide array of environmentrelated education under its ISO management system. Under
the ISO 14001 standard, we conduct environmental education with the objectives of reducing environmental impact
and preventing pollution. As part of ISO 50001 initiatives,
since 2017, we have had The Energy Conservation Center, Japan conduct energy-saving classes tailored to the production

40

TS TECH Integrated Report 2021

• Improve distribution efficiency• Promote green purchasing

Main Environmental Targets and Results in Fiscal 2021 and Targets for Fiscal 2022

Under the 14th Medium-Term Management Plan (fiscal 2021–fiscal 2023), we have set targets for the TS TECH Group forCO2 emissions, waste, and water, and we are implementing initiatives to achieve reductions at each site.

facilities at each site for the teams in charge of energyconservation and management at each of those sites. Since
2019, we have been developing and providing education on
how to make worksites and products more energy efficient byintroducing our own energy-saving diagnosis system that focuses on improving facility operations.
Learning not only the basic concepts of energy conservation but also specific management methods for facilities
provides an opportunity to shape more effective measures.
Going forward, we will develop human resources who willplay a central role in the promotion of energy conservation
at each of our sites, and we will continue to provide education to improve the environmental awareness and skills of
our employees.

FY2021

Item

Targets

Measures

CO2 emissions reduction
935 t-CO2 lower thanFY2020CO2*2

FY2022
Results• Shift to energy-saving production
equipment• Promote a shift to LEDs
• Shift to energy-saving air
conditioning• Introduction of renewable energy

Basic unit per vehicle*1
1% lower than FY2020
FY2020 performance:
8.3 t-CO2/thousand
vehiclesCO2 emissions reduction
10,786 t-CO2 lower thanFY2020
Basic unit per vehicle
5% higher than FY2020

Targets

Measures

CO2 emissions reductions
1,870 t-CO2 lower thanFY2020• Shift to energy-saving production
equipment• Promote a shift to LEDs
• Shift to energy-saving air
conditioning• Introduction of renewable energy

Basic unit per vehicle
2% lower than FY2020

FY2021 performance:
8.7 t-CO2/thousand
vehiclesWaste*2

Recycling rate
0.5% higher than FY2020• Promote recycling• Reduce product defect rate
• Reduce packaging materials

Recycling rate
1.2% lower than FY2020

Recycling rate
1% higher than FY2020• Promote recycling• Reduce product defect rate
• Reduce packaging materials

Water

FY2020
Maintain water intake
level• Conserve water at all worksites• Inspect and repair water supply
equipment for leakage• Updating of equipment suchas coolers

Water intake
29% lower than FY2020

FY2020
Maintain water intake
level• Conserve water at all worksites• Inspect water supply equipment
for leakage*2*1 “Per unit” figures are calculations performed according to TS TECH’s standards and indicate CO2 emissions, volume of waste generated, and water intake relative to production
volume during business activities.
*2 We have deployed initiatives to achieve reductions at sites agreed upon under the Group’s own criteria. [Target sites] CO2: 38 sites/waste and water: 37 sites

ISO 50001 seminar

Total CO2 Emissions

Total Waste Generated

Water Intake(t-CO2)100,000(t)
30,000(m3)
600,000

93,631
15,44980,000Compliance with Environment-Related Laws
and Regulations

Under our environmental and energy management systems,
TS TECH has prepared a list of legal and other requirements
at each site and reviews the laws and requirements that wemust comply with at the beginning of each fiscal year. We
also evaluate the status of compliance every six months. In
fiscal 2021, there were no omissions of notifications underrelevant laws and regulations, deviations from mandatory
standards, or submissions of external complaints.

84,297

14,74560,00041,65540,00020,00021,7810
FY201912,599 65,199
14,602
8,382

20,00038,35810,00013,46029,537

18,738FY202013,819

Scope of data: Consolidated sites excluding TS TECH ASIAN CO., LTD.

Americas

China

2,453
1,420
13,7732,774

FY2019Total CO2 Emissions from Reporting Sites

Japan

0

FY2021

20,42018,423

1,841
1,348
12,8352,399

FY202015,1201,388
1,257
10,031
2,445

FY2021

Total Waste Generated from Reporting Sites

Scope of data: Consolidated sites excluding TS TECH ASIAN CO., LTD.
and TS TECH (HONG KONG) CO., LTD.

400,000

200,000

0529,535

480,815

120,731
115,885

116,461
119,747

159,078

105,278

133,841

139,330

FY2019FY2020402,436
88,810126,175
85,496
101,954
FY2021

Total Water Intake from Reporting Sites

Scope of data: Consolidated sites excluding TS TECH ASIAN CO., LTD.
and TS TECH (HONG KONG) CO., LTD.

Asia and Europe

TS TECH Integrated Report 2021

41

Environmental Initiatives

Efforts to Reduce Our
Environmental Footprint

Development-Focused Measures
The TS TECH Group understands that reducing the weight ofour products is one of the most effective ways in which we
can reduce our impact on the environment. For example,
our seat frames account for a large portion of the weight ofour products, so we strive to apply a variety of weight-reducing
technologies wherever possible, while further improving
safety and comfort in line with evolving specification needs.
The next-generation seat frame installed in the 2020 Honda
Fit has reduced weight by about 28% compared to our existing core frame through increased use of ultra-high tensile
strength steel and thin-plate welding technology. In addition
to reviewing the use of aluminum and other materials, weare also focusing our efforts on technology that fuses different materials. Using the optimal designs for these materials,
we will cut out even a single extra gram to develop framesthat are the lightest in the world.
In addition to weight-reducing technologies, we are focusing on reducing CO2 contained in our products throughtechnologies utilizing CNF*1 and other naturally derived biomass materials*2. Compared to conventional door trims
made from petroleum-derived materials, we have succeeded in reducing the amount of CO2 contained in these products by 60% by using biomass synthetic leather and CNF,
and we are continuing our research with the goal of applying this technology to mass-produced products.
Moreover, with the shift to electric vehicles (EVs) in mind,
we are pursuing research and development that will contribute to carbon neutrality from various angles, such as the development of an ECU for seat heaters that efficiently heatseats with low power consumption, thereby contributing to
improvements in electricity costs (fuel efficiency).
*1 CNF: Cellulose nanofiber*2 Materials made from renewable biological resources

Evolution of parts using ultra-high tensile strength steel (shown in blue)

Production-Focused Measures
With a policy to “build production plants that are sincerely
welcomed by the local community,” our Manufacturing Division, which oversees our production plants, aims to contribute to a recycling-oriented society and promotes efforts to

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TS TECH Integrated Report 2021

build “people-friendly, environment-friendly production
plants.” Through the use of Japan’s traditional karakuri
mechanisms, we have been able to simultaneously save energy, reduce workloads, and improve production efficiency
through the promotion of a plant-wide framework that aims
to automate work without consuming energy.
In fiscal 2020, we exhibited for the first time at Japan’s
Karakuri Kaizen Exhibition* and showcased examples of our
in-house improvements to scores of visitors. In addition to
the Karakuri Presentation Conference we hold at the Saitama Plant, our “mother plant,” we are aiming to encourage
improvement activities and the implementation of successful improvements at other sites by holding a domestic competition for multiple sites starting in fiscal 2021.
* The Karakuri Kaizen Exhibition is held every year in Japan to showcase
improvements using karakuri mechanisms.

Karakuri activities
at the Saitama Plant

Purchasing-Focused Measures
Considering the impact of energy consumption throughout
the supply chain on the global environment, we are working
to reduce our environmental footprint, not only within theGroup but throughout the supply chain, with cooperation
with from our suppliers. In particular, to help build a decarbonized society, it is essential that we know not just thegreenhouse gas (GHG) emissions from the Group’s own
business activities but also the emissions across the entire
supply chain (Scope 3), and work to reduce them.
The TS TECH Group has formulated the TS TECH Supplier
Sustainability Guidelines to share its approach to sustainability with its suppliers and promote it together. We ask our
suppliers, including overseas suppliers, to comply with theguidelines and work with us to reduce our environmental
impact.
Going forward, we will continue working to take stockof our GHG emissions throughout the supply chain and to
reduce these emissions from a variety of angles.

Installing Environmentally
Friendly Equipment

The TS TECH Group has installed a variety of equipment to
reduce its environmental impact, including energy-saving
equipment and solar power generating equipment that produces renewable energy.
For example, at the new Head Office building completed in March 2018, we reduced the amount of electricity purchased by approximately 40% compared with the previous
building and achieved a Nearly ZEB*1 rating under the BuildingHousing Energy-efficiency Labeling System (BELS*2). We did
this by installing a range of energy-saving equipment, suchas LEDs and systems to automatically control the operationof air conditioning and lighting using various sensors. In recognition of the building’s outstanding energy-saving performance, it received the METI Minister’s Award in the 2019
Energy Conservation Grand Prize project. In December
2020, TS TECH (THAILAND) CO., LTD. completed the Group’s
largest installation of solar panels. The 2,600 solar panels
will make it possible to supply approximately 15% of theelectricity consumed at the production site using solar power, thereby helping to reduce CO2 emissions.
Furthermore, TS TECH INDIANA, LLC, where an expansion project will be completed in June 2022, is aiming to cut
its CO2 emissions virtually to zero by actively incorporatingenergy-saving equipment and renewable energy.
*1 Certification rank
ZEB: A building with zero or negative net annual primary energy consumption
Nearly ZEB: A building that comes as close as possible to ZEB by nearing zeroannual primary energy consumption*2 Building-Housing Energy-efficiency Labeling System (BELS): A system in which athird party evaluates and certifies the energy-saving performance of new andexisting buildings based on the Ministry of Land, Infrastructure, Transport andTourism’s guidelines for indicating the energy consumption performance ofbuildings

the 13th Medium-Term Management Plan (fiscal 2018–fiscal
2020). On a non-consolidated basis, TS TECH has completely
removed mercury lamps, switched to LEDs, and replaced air
conditioners that use R-22 CFCs.

Implementing Third-Party Verification

TS TECH Group receives third-party verification from SGS
Japan Inc. in order to ensure the reliability of environmental
data disclosure.
In fiscal 2021, we started verifying waste output and water intake on a non-consolidated basis at TS TECH sites. Thisbuilt upon our existing efforts to verify GHG emissions—actual GHG emissions in fiscal 2021 at 10 domestic and 28
overseas sites, including Scope 1 and Scope 2 (energy-derived
CO2 emissions), and Scope 3, Category 1 (procurement of
raw materials and parts) emissions.

Green Ecosystem Conservation Activities

The TS TECH Group conducts forest and biodiversity preservation activities in regions around its business facilities inJapan and overseas. These efforts are driven by the conceptof creating new green spaces from company grounds borrowed from the earth for the TS TECH Group to conduct its
business activities around the world and give greenery backto the earth through environmental preservation activities.
As of the end of fiscal 2020, TS TECH had exceeded its target
to conduct forest and biodiversity preservation activities onan area of land worldwide equivalent to two million m2 by
18%, but the Group will continue with these activities in andoutside of Japan.

Solar panels at TS TECH (THAILAND) CO., LTD.

In addition to these efforts, in line with international efforts to reduce the impact on the global environment, suchas the regulations of the Minamata Convention on Mercury
and the CFC emission controls set forth in the Montreal Protocol, we are moving forward with efforts to remove mercury
lamps, switch from fluorescent bulbs to LEDs, and replaceequipment that uses R-22 CFCs. The Group as a whole has
been continually pursuing removal of mercury lamps since

TS TECH Afforestation Program event

TS TECH Integrated Report 2021

43

ESG Management

SocialCreating Employee-Friendly Workplaces

44

TS TECH Integrated Report 2021

Rank-SpecificSelective training for management using the work-from-homesystem and online tools

Selective
TS Executive Business
Management School—Advanced
TS Executive Business
Management School—Basic

New Manager Training

Management Preparation Training
Mid-Level Training (Sixth Year)
Third-Year Training for New Employees
New Employee Training

TS Camp

Management
Assessment Training

Dispatch

By AgeSelf-Development

Correspondence Courses* An employment service operated by the Japanese government that has offices
nationwide

Life Plan Seminars

1. Providing safe, comfortable, and high-quality
products and services
2. Human rights and work environment
3. Protection of the environment
4. Relationship with society
5. Compliance
6. Protection of company assets and information
7. Fair and clean business practices
8. Proper disclosure of information

In 2020, we restructured our training system with the aim ofdeveloping management candidates and further improving
the motivation and capabilities of all employees.
Under the new training system, basic managementrelated content such as finance/accounting and marketing
was added to each curriculum in rank-specific training, anda new selective training for management-level employees
was introduced to gradually develop the next generationof managers.
In addition, we are actively working to make training
more efficient through online training and other means, andto expand educational opportunities for employees whowant to learn more.

In addition to regularly communicating with Hello Work*,
employment support centers, and special needs schools, we
actively recruit persons with disabilities by offering work
experience with the aim of matching persons with disabilities
with our company and furthering their understanding of work.
As part of our employee retention efforts, we regularly
conduct interviews with and surveys of employees with disabilities. We also strive to create employee-friendly workplaces by acting on feedback about the issues our employees
face at work.

Non-Managerial

TS TECH’s Code of Conduct

Human Resources Development

Initiatives for Hiring Persons
with Disabilities

Career Design Training

The TS TECH retirement age was extended to 65 in 2019,
allowing employees to choose their own retirement age after the age of 60. We are providing employees with opportunities to continue working as the population ages and thebirthrate falls, as well as providing a time frame for veteranemployees to pass on their skills and knowledge, thereby enhancing business continuity.
In addition, we introduced a work-from-home system in2020 as a means to help our diverse workforce thrive. By combining this system with the existing flextime system, we aim to
improve labor productivity while ensuring employee safety
and business continuity during the COVID-19 pandemic.
We are also making maximum use of online communication tools to strengthen communication among employees.
We will continue to build systems to facilitate more active participation by a diverse workforce in a diverse environment.

We continuously conduct TS TECH Philosophy Education sothat each and every employee understands the concept that“the existential value of TS TECH can only be found by embodying the ‘TS TECH Philosophy’” as a shared value andputs this into practice.
We began TS TECH Philosophy Education at Group companies outside Japan in 2015. In order to ensure that employees of diverse backgrounds as well as nationalities havea deeper understanding of the TS TECH Philosophy, promoters selected from Group companies outside Japan or managers who have been trained by promoters take the lead in
educating local employees about the philosophy.
Also, in Japan, to foster a sense of solidarity with the TS
TECH Philosophy and encourage employees to put it into
practice, we have begun to send out company messages to
employees and share episodes related to employees’ practice of the TS TECH Philosophy. Based on the new initiatives
in Japan, we will work with Group companies outside Japanto promote education that leads to the understanding andpractice of the essence of the TS TECH Philosophy.

Top Management
Training

The manual distributed to all employees

Work-Style Reforms That Promote Diversity

Educating Employees about
the TS TECH Philosophy

The TS TECH Group recognizes the importance of diversity
and promotes various initiatives in accordance with TS
TECH’s Code of Conduct as a means to share this concept
with employees. In order to empower our diverse humanresources to play an even more active role, we implement
medium- to long-term measures to improve hiring and thework environment to ensure that gender, nationality, andother factors are no impediment to advancement. Our longterm goal is to expand these efforts to regions outside Japan
as well, tailoring them to suit each specific country.
As part of our efforts to promote diversity among our
employees, we have incorporated content designed todeepen understanding of diversity into each training program. In particular, the training for managers includes a fullday diversity lecture by an outside expert so that they canlearn in detail how to work with diverse human resources. In
addition, we collect opinions through various methods, suchas the annual employee satisfaction survey and interviews
with young employees, and we reflect them in our management in order to create an environment where all employees
can use their respective knowledge, experience, and abilities
to the fullest to play active roles.

Training Prior to Overseas Postings

Based on international standards such as the Universal Declaration of Human Rights, the TS TECH Group has incorporated human rights and work environment standards into its
Code of Conduct, which is defined based on the TS TECH
Philosophy. The Group respects human rights, does notpractice discrimination, strives for equal opportunities in
employment, and does not accept any form of child labor orforced labor. We always use fair selection processes whenhiring employees.
To foster a greater awareness of human rights, all employees receive educational training and a copy of the Corporate Principles Manual, which includes TS TECH’s Code of
Conduct. Our Group companies in and outside of Japanbase their own manuals on our Corporate Principles Manual, tailoring them to reflect local culture, customs, and lawsin each region. All Group employees also receive training tofoster a deeper understanding of human rights.

Diversity Initiatives

TS Trainee Program

Fostering a Greater Awareness of
Human Rights

TS TECH has established a system that enables employees
to balance work and family life and adopt a variety of work
styles to suit their particular stage of life.
In addition to allowing employees to take up to six daysof paid leave in half-day increments, we introduced a flextime system with no core time in 2018. Promoting flexible,
varied work styles makes it possible to improve work productivity through efficient time allocation and helps support
employees balancing work with childcare, nursing care, orother personal obligations. In addition, in 2019 we extended
our system for shortened working hours for parents to cover children until they graduate elementary school.
As a result of these and other efforts, TS TECH placed
fifth (seventh in the previous year) in a 2021 ranking by Toyo
Keizai Inc. of the 800 companies in Japan with the highest
rate of paid leave use.
In addition to the measures above, we are working todiversify work styles and support work–life balance by enhancing our childcare and nursing care leave system and by
establishing a new system of up to five days of refreshment
leave for every 10 years of service.

Career Development Training

As part of the corporate philosophy in which its business activities are rooted, the TS TECH Group is dedicated to realizing people’s potential, believing that “people are the decisive
factor in a company.” This conviction underpins our stanceon a diverse range of issues, including human rights, humanresources development, evaluation and treatment of personnel, benefits, and the workplace environment. Under our
corporate philosophy, we strive to create safe, comfortableenvironments where every employee can thrive.

Work–Life BalanceManagerial

A Company Dedicated to Realizing
People’s Potential

Education and training programs

TS TECH Integrated Report 2021

45

ESG Management
Creating Employee-Friendly Workplaces

Workplaces Where Women Can Thrive

After hearing from a wide range of female employees, we
introduced maternity uniforms and established an on-site
day care center. We have also created a child-rearing support handbook and are working hard to ensure that TS TECH
is a company where everyone can thrive.
In recognition of these efforts, we were certified in 2015
by the Minister of Health, Labour and Welfare (Kurumin Certification) as a company that supports childcare based on
the Act on Advancement of Measures to Support Raising
Next-Generation Children. In addition, we were certified in2016 by the Minister of Health, Labour and Welfare (highest
level Eruboshi Certification) as a company with outstanding
measures to promote participation by women in the workplace based on the Act on Promotion of Women’s Participation and Advancement in the Workplace.

Fair Assessment of Personnel

TS TECH Group personnel assessments do not take factors
such as age, educational background, or gender into account.
In Japan, for example, we have adopted a system forevaluating how well an employee “demonstrates and applies
their abilities compared with what is expected of them.” Witha precise understanding of the skills and accomplishmentsof our individual employees and compensation provided
through salary, rank, and other forms of remuneration, weare able to motivate employees and encourage them to fully
demonstrate their abilities and take on new challenges. We
also incorporate elements of the TS TECH Philosophy into
our assessments in order to encourage the behavior andpractices we expect from our employees. In addition, employees receive feedback from superiors at least twice a year
regarding work performance and the acquisition anddemonstration of skills in order to make them aware of theirperformance and encourage growth.

Communicating with Employees

Conducting Employee Satisfaction Surveys
We conduct an employee satisfaction survey annually at TS
TECH. The survey assesses job satisfaction, workplace atmosphere, the depth of education provided, and more. Throughthese surveys, we gauge levels of satisfaction with the company from a broad, diverse range of perspectives.
We believe that continuing to survey employees, identify issues, and make improvements helps to bolster employee motivation and organizational strength.
Talking with the Union
The company respects basic labor rights and regularly communicates and consults with the TS TECH Workers’ Union in amutual effort to improve labor conditions and the workplaceenvironment, and to promote a better work–life balance.

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TS TECH Integrated Report 2021

Promoting Occupational Safety and Health

Our basic safety and health policy is based on a dedication
to realizing people’s potential and prioritizing safety in ourbusiness activities. Under a management system led bysafety and health officers, TS TECH continually performs a
PDCA cycle in accordance with its occupational safety andhealth management system (OSHMS) to achieve three goals:
injury prevention, better employee health, and a more comfortable workplace environment.
Specific initiatives include risk assessment, kiken yochi
training (KYT; hazard prediction training), and hiyari-hatto(near-miss reporting) activities*, which we conduct at all
business sites. We take countermeasures like these in anticipation of potential workplace risks as part of our efforts toprevent work-related accidents. We have also held training
sessions led by lecturers from the Japan Industrial Safety
and Health Association annually since 2007, helping to enhance the skills of risk management advocates (safety officers, production site managers, etc.).
In addition to the stress checks prescribed by Japan’s
Industrial Safety and Health Act, we focus on employee
health through a system that includes affiliations with mental health specialists to ensure that employees who are concerned about mental health issues can work with company
staff to promptly receive care from outside specialists. We
also regularly conduct internal seminars and other programs to promote a proper understanding of mental health.
Since 2019, influenza vaccinations have been provided onsite to interested employees. By subsidizing the cost, we
promote individual risk management and help to preventthe spread of infection within the company.
* Hiyari-hatto (near-miss reporting) activities: Safety-minded activities regarding
incidents in which no accident actually occurred, but involved parties report thenear-misses; from the Japanese hiyari (feeling a sudden chill) and hatto (having
one’s breath taken away).

SocialSupply Chain Initiatives

Supply Chain Management Policy

TS TECH Philosophy

In order to coexist harmoniously with society and be a company sincerely appreciated by all and whose presence is valued by all of its stakeholders, management focused on ESGrelated issues, not just the pursuit of profit, is necessary.
Based on the TS TECH Philosophy, the TS TECH Groupaims to realize a sustainable society by promoting initiatives
that consider the environment, safety, human rights, compliance, and social responsibility not only independently but
throughout its supply chain.

Vision Statement
Mission Statement
Operational Directives
TS Standards for Conduct—TS TECH’s
norms and ideals
TS Guidelines for Conduct—Expectations forday-to-day conduct

Application of TS TECH Supplier
Sustainability Guidelines

We established the TS TECH Supplier Sustainability Guidelines in May 2019 to share and promote our views on sustainability with our business partners. We ask all business
partners to comply with these guidelines in the following fivecategories: (1) Safety and Quality, (2) Human Rights and Labor, (3) The Environment, (4) Compliance, and (5) Information Disclosure.
These guidelines are posted on our website and sharedwith all business partners. We also use a survey to verify
compliance with these guidelines by our business partners
in Japan. We surveyed a total of 40 partners in fiscal 2020
and 112 partners in fiscal 2021. As a result, we were able toconfirm that all partner companies maintain the same understanding of these guidelines as the TS TECH Group. For
particularly important business partners, we conduct a surveythat includes more items on human rights in order to raise
their awareness of human rights issues. We will continue to
implement this initiative once a year and prepare to expand it
to business partners outside Japan to ensure that theseguidelines are observed throughout the Group’s supply chain.

TS TECH
Supplier Sustainability Guidelines
Category

Content

1. Safety and Quality• Supply of products and services that satisfy
consumer and customer needs• Provision of appropriate information concerning
products and services• Guarantee of safe products and services• Guarantee of quality products and services

2. Human Rights
and Labor• Elimination of discrimination• Respect for human rights• Prohibition of child labor• Prohibition of forced labor• Wages• Labor hours• Communication and negotiation with employees• Safe, healthy work environments• Handling of conflict minerals

3. The Environment• Environmental management• Reduction of greenhouse gas emissions• Prevention of air, water, soil, and other formsof environmental pollution• Resource conservation and waste reduction• Management of chemical substances• Protection of ecosystems

4. Compliance• Compliance with laws and regulations• Compliance with competition laws
• Prevention of corruption• Management and protection of confidential
information• Management of export transactions• Protection of intellectual property• Rejection of antisocial forces

5. Information
Disclosure• Disclosure of information to stakeholders

Group-Wide OSHMS Diagram
Officer in Charge of OSH Corporate Administration Division Executive
OSH Council
Chair: Corporate
Administration Division Executive
Regional
committees

Division in
Charge of OSH
Administration Dept.

Plant managers/Admin.
division managers(General safety andhealth officers)

OSH Officer
Council

General safety andhealth officerdelegation
Safety andhealth departments
Admin. division managers

Safety and
Health Committee
Organizational structure

Safety officers
Health officers
Occupational physicians
Fire safety officers
Safe driving officers

Workflow for handling major business partners
Designation
as a major
business
partner

Writteninvestigation

Confirmationof facts
throughinterviews

Reforms/
improvements

TS TECH Integrated Report 2021

47

Supply Chain Initiatives

Human Rights Due Diligence

In accordance with the UN Guiding Principles on Businessand Human Rights, the TS TECH Group has established a risk
verification framework in addition to the requests to ourbusiness partners based on the TS TECH Supplier Sustainability Guidelines in order to prevent or mitigate negativesocial impacts on human rights. All affiliates participate inroutine compliance and risk verification measures conducted by TS TECH (the TSCG self-verification system). The Groupis also involved with initiatives to reduce human rights risks.

Basic Policy on Procurement

The TS TECH Group’s products are made from a wide variety
of materials and components provided by its suppliers. In
order to reliably offer quality products at competitive prices
to our customers, solid partnerships with our suppliers areindispensable.
The Group has established the Four Principles of TS Procurement, explained below, to ensure fair, just transactions
as well as to construct and maintain win–win relationships
with suppliers globally. By following these principles, we
strive to build a supply chain that can be relied upon by all
stakeholders.

Four Principles of TS Procurement(1) Fair Trade
When selecting a supplier, we offer our business to several candidates irrespective of their nationality, size, or
past transactions and finalize our choice in a fair manner by comprehensively evaluating their ability to offer
superior quality, expertise, price, delivery, and other elements, as well as competitiveness, rationality, efforts
for business security and other relevant matters.
(2) Mutually Beneficial Transactions
We share with our trade partners business challenges
such as development and competitive pricing, set goals
from a common perspective, and conduct joint efforts
to achieve targets. We afford the highest priority to mutually beneficial transactions in terms of results thus
obtained and make continuous efforts to strengthen
trust as the basis of mutually beneficial relationships.
(3) Environmental Responsibility
In our corporate activities, we attach the greatest importance to global environmental preservation under
all circumstances. Accordingly, we practice “green purchasing,” granting preference to environmentally responsible products, services, companies, etc.
(4) Legal Compliance and Confidentiality
We respect the principle of legal compliance and thoroughly observe relevant laws and regulations and generally accepted norms. We handle with the greatest
care all kinds of information obtained from our customers and trade partners and make the utmost effort toprevent the loss or misuse of such information.

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TS TECH Integrated Report 2021

Other Major Initiatives for Supply Chain
Management

Annual Conference with Major Business Partners
The TS TECH Group facilitates communication with business
partners by providing opportunities to share information regarding purchasing strategies and policies. We hold an annual conference with major business partners to explain thepurchasing policies for the period and to exchange information. Since the COVID-19 pandemic began, we have suspended the annual conference with major business partners
and explained our policy via online video.

Survey on Conflict Minerals
The Group’s procurement activities are founded on a basic
policy of not using conflict minerals* in order to prevent theflow of funds to armed forces and situations that violate human rights. As part of this process, the Group checks whether conflict minerals originating in or near the Democratic
Republic of the Congo, as designated by the Dodd–Frank
Wall Street Reform and Consumer Protection Act of the United States, are used in our products.
In addition, we have conducted a survey on the origins
of conflict minerals annually since 2013 to fulfill our social
responsibility in procurement. Through the survey, we implement the appropriate measures with a business partner
if a questionable mineral is found during an investigation.
* Conflict minerals: Tin, tantalum, tungsten, and gold are defined as conflictminerals, and they are collectively abbreviated as “3TG.”

Content used for the annual conference

Supply Chain Surveys
To address procurement risks, the TS TECH Group works toprevent all “events that impact production,” including natural
disasters, fires, and financial challenges affecting its business partners. The company considers procured components, etc., for which production is concentrated at a single
supplier to be “high-risk components” and is working withbusiness partners to prepare for emergencies (natural disasters, etc.) and secure alternate suppliers.
For business partners who are especially important tous from a production reliability standpoint, we confirm information on risk countermeasures both in writing and throughinterviews, and we work with partners who are experiencing
challenges to implement improvement activities. These
steps are effective in strengthening our risk management
structure and enhancing business continuity.
Business Partner Assessments
In order to continuously supply high-quality products to ourcustomers, we evaluate business partners once a year. We
assess each business partner in terms of Quality, Cost, Delivery, Development, and Management (QCDDM) and ESG toevaluate overall capabilities. For business partners that need
improvement, we work to improve their overall capabilities
with the cooperation of each department.

Promotion of Environmental Initiatives
TS TECH presents its business partners with targets for lowering CO2 emissions to reduce environmental impact andworks with these partners to achieve them.
We are also working with business partners to comply
with all laws and regulations concerning all materials andcomponents that comprise products, and to manage chemical substances to reduce impact on the global environment
and ecosystems.

forth the approach and considerations related to Japan’s Act
on Prohibition of Private Monopolization and Maintenanceof Fair Trade (“Antimonopoly Act”) and the Act against Delayin Payment of Subcontract Proceeds, etc., to Subcontractors(“Subcontract Act”). The relevant departments utilize themanual in day-to-day operations in conjunction with an accurate understanding of the two laws and a thorough, close
examination into the legality of individual events.
TS TECH has created mechanisms that allow relevant
departments to liaise with the department responsible forlegal affairs and consult as needed with attorneys on events
that cannot be definitively decided based solely on the manual. Moreover, TS TECH provides training on the Antimonopoly Act and the Subcontract Act in accordance with its stratified training programs to foster awareness of complianceamong employees.
In March 2016, the Group issued new anti-corruption
guidelines and anti-cartel guidelines as part of its continuing
effort to build a solid framework for ensuring fair, honest
business operations across all Group operations.

Compliance with the Antimonopoly Act and Prohibitionof Corruption
TS TECH has prepared and put into use its own Antimonopoly Act and Subcontract Act Compliance Manual, which sets

Comment

Compliance education at rank-specific training

Further Strengthening Relationships as a Trusted Partner
For half a century, we have been supplying steel materials used in various parts of the seats manufactured by TS TECH. The automotive industry is currently experiencing a once-in-a-century transformation. Guided by the TS TECH Supplier Sustainability Guidelines, we have been striving constantly
to help build a sustainable world. Our initiatives include strengthening compliance, and accordingly
we have set up a dedicated committee and hotline within the company. We are also continuing topromote thorough awareness of the matters to be observed, as set out in the compliance program,by offering training for all of our employees and sharing content via the company intranet.
In recent years, the challenge of achieving carbon neutrality has been positioned as a key
part of the fight against climate change. In light of this, the very manufacturing process for automotive components and steel materials will need to be reconsidered in the future. However, as acompany that plays a part in its supply chain, we hope to continue growing together with TS TECH
in the future through flexible ideas and agility.

Shigehito Ito
President and CEO
Benichu Steel Inc.

TS TECH Integrated Report 2021

49

ESG Management

SocialPhilanthropy

Based on our vision statement of being a company“dedicated to realizing people’s potential” and “sincerely appreciated by all,” the TS TECH Group strives
to be a community-based company. It engages inphilanthropic activities tailored to regional characteristics around the world through means such asproviding support for children’s education, teachingtraffic safety, performing relief work, and protecting
the environment.
The implementation of these activities is sharedwith and documented by the Head Office in Japan,
and this information is used to coordinate and collaborate among our locations around the world.
We will continue to strive to implement uniqueactivities that make the most of the Group’s resources.
Note: Activities reported here generally took place between April 1,2020 and March 31, 2021. However, some activities wereconducted after this time frame.

Stakeholders

Customers

Stockholders/investors

Business
partners

Employees

Society/
Naturalcommunities environment

Activities to Provide Support for Local Children

Joint promotion of activities

Departments
conducting social
contribution activities

Japan

Americas

China

Asia and Europe

Sharing of info/collaboration

Department
in charge ofoversight

China
GUANGZHOU TECH INTERIOR TRIM MANUFACTURING CO., LTD. donated daily necessities to local children. School supplies, such as book bags and stationery, and hygienic
supplies, including face masks and soap, were given to local children from low-income
families.

Corporate Communication Department, Corporate Administration Division, Head OfficeSection in charge ofoversight of Group
company activities

Sustainability
SectionSection in charge
Public Relationsof releasing
SectionCollaboration activity reports

Number of Fiscal 2021 Philanthropic Activities
Japan

Americas

China

Asia and Europe

Consolidated

66

82

16

24

188

Book Donation to Provide Support for People with Disabilities

TS TECH (HONG KONG) CO., LTD. held a book drive in conjunction with a support groupfor people with disabilities. The company collected books and other materials that employees had finished reading and donated them to a library established by the group to
support children with hearing impairments.

Japan

Asia and Europe

Social Welfare Activities

Activities to Provide Support for Local Children

In the Asaka and Suzuka districts, TS TECH donated wheelchairs to the respective local city
halls. The donated wheelchairs will be delivered to public facilities in each city and used tohelp residents, including those who have difficulty walking independently.
In addition, with the aim of helping to build a society where people with disabilities
can thrive at work, we are putting efforts into ongoing welfare activities, such as operating
in-house cafes in the Asaka and Tochigi districts in cooperation with local facilities thatprovide employment for people with disabilities.

Efforts to Address Food Loss

In the Tochigi district, we held a food drive and donated the collected items to the Takanezawa Council of Social Welfare. A food drive is an activity in which households bring insurplus food, such as items they cannot eat, for donation rather than throwing it away. In
addition to food, our in-house volunteers also collected daily necessities and monetary
donations and presented them to the council.

Americas
Activities to Provide Support for Local Children

TS TECH AMERICAS, INC. donated toys to local children. A portion of the toys
were brought in by employees, and money collected through fundraising activities was used to buy more. All toys were given to local children from low-income
households.

TS TECH (THAILAND) CO., LTD. provided scholarships that do not need to be repaid tochildren attending local schools. Many children in the local community have difficulty receiving an education due to financial reasons, so the company routinely offers financial
support in order to provide them with better learning opportunities.

Donating Food for the Needy

TS TECH Hungary Kft. took part in a food donation project organized by a local social welfare group. To help meet a growing need for aid in the community caused by the COVID-19
pandemic, the company held an in-house food drive and donated the collected food tothe social welfare group.

Preventing the Spread of COVID-19
In fiscal 2021, amid the rampant spread of COVID-19, we conducted a variety of initiatives tailored to the needs of each
community to help everyone in each region feel a little safer in their daily lives.

Fundraising Activities for Animal Welfare

TS TECH CANADA INC. participated in the National Cupcake Day initiative organized by alocal humane society. This event is an activity to raise funds for animal welfare through thesale of cupcakes and other baked goods. Proceeds from the cupcakes and other sweet
treats that were sold at the company were donated to the humane society.

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TS TECH Integrated Report 2021

Face mask donation to a local
elementary school(Hamamatsu district)Fundraising for a nursing home
(TST MANUFACTURING DE MEXICO, S.
DE R.L. DE C.V.)

Food donation to healthcare workers(NINGBO TS AUTOMOTIVE INTERIOR INC.)

Face mask donation to a local city municipality(TS TECH BANGLADESH LIMITED)TS TECH Integrated Report 2021

51

Management’s Discussion and Analysis

Fact Book

Financial Reporting
53

Management’s Discussion and Analysis

54

Consolidated Statement of Financial Position

56

Consolidated Statements of Profit or Loss andComprehensive Income

58

Consolidated Statement of Changes in Equity

59

Consolidated Statement of Cash Flows

61

Notes to Consolidated Financial Statements

106 Independent Auditor’s Report

Financial/Non-Financial
Information
110 Financial Information
111 Non-Financial Information

1. Analysis of Financial Condition

3. Analysis of Operating Performance

Assets at the end of ﬁscal 2021 stood at 390,478 million yen,increasing 48,657 million yen from the end of ﬁscal 2020.
This change is primarily the result of an increase in tradeand other receivables driven by higher order volume frommajor customers and an increase in investments accounted
for using the equity method resulting from the acquisitionof shares of Imasen Electric Industrial Co., Ltd.
Total liabilities at the end of ﬁscal 2021 amounted to
89,027 million yen, up 21,759 million yen from the end ofﬁscal 2020. This change resulted mainly from an increasein trade and other payables stemming from higher ordervolume from major customers and an increase in othercurrent liabilities due primarily to the addition of Honda
Cars SAITAMAKITA as a subsidiary.
Equity at the end of ﬁscal 2021 totaled 301,450 million
yen, increasing 26,898 million yen from the end of ﬁscal
2020. This change is primarily the result of an increase inretained earnings stemming from the allocation of net
income and an increase in other components of equity
driven by an increase in diﬀerences on translation fromforeign operations.

The global economic environment proved very diﬃcult
during the period under review due to the COVID-19
pandemic. Although each country showed signs ofrecovery during the period under review, with China
being the ﬁrst to recover, given concerns over anotherwidespread outbreak, a global shipping container
shortage coupled with port congestion, and supply chain
disruptions, including a semiconductor shortage at theend of the ﬁscal year, the outlook for the operating
environment remains uncertain.
At the start of the period, the Group was forced tomake drastic production cuts through measures such as
production stoppages in all regions except China. Whilesubsequent rapid economic recovery in China and arebound in production in other regions were indicativeof a steady recovery, the impact of the semiconductor
shortage at the end of the period resulted in sharp
production decreases in each segment. Amid thisbackdrop, the Group promoted various measures todeliver future growth, such as aggressive sales initiatives
aimed at securing a larger share of a major customer’sbusiness as well as business with new customers, thedevelopment of next-generation technologies that look to
the future, and the creation of production structures thattake our existing high quality and eﬃciency to new levels.
Revenue for the ﬁscal year under review amounted to346,149 million yen on a consolidated basis, down 13,532
million yen (3.8%) from the preceding ﬁscal year. Looking
at proﬁts, operating income stood at 26,742 million yen,up 416 million yen (1.6%) year on year. This reﬂected
cost-cutting measures, including various lower expenses
achieved via thorough streamlining. Additionally, income
attributable to owners of parent totaled 20,741 million yen,
an increase of 5,677 million yen (37.7%) year on year, on
the recognition of negative goodwill stemming from theaddition of Imasen Electric Industrial Co., Ltd. as anaﬃliated company accounted for by the equity method as“share of proﬁt of investments accounted for using theequity method.”

2. Overview of Cash Flows
Cash and cash equivalents (hereinafter “cash”) at the endof ﬁscal 2021 amounted to 153,034 million yen, up 3,406
million yen from the end of the previous ﬁscal year.
Cash ﬂows from operating activities amounted to 25,151
million yen, showing a year-on-year decrease of 19,041
million yen. This is primarily the result of a change in tradeand other receivables from a decrease of 23,721 million
yen in the previous ﬁscal year to an increase of 15,863
million yen in ﬁscal 2021. This oﬀset a change in trade andother payables from a decrease of 10,532 million yen in
the previous ﬁscal year to an increase of 6,192 million yen
in ﬁscal 2021.
Cash ﬂows from investing activities came to 11,709
million yen, an increase of 6,343 million yen year on year.
This primarily reﬂects a 7,199 million yen increase inpurchase of investments accounted for using the equity
method.
Cash ﬂows from ﬁnancing activities totaled 14,647
million yen, an increase of 1,729 million yen year on year.
This primarily reﬂects an increase of 2,596 million yen inpurchase of treasury stock, oﬀsetting a decrease of 1,070
million yen in dividend payments (including payments tonon-controlling interests).

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The Group’s consolidated forecasts for ﬁscal 2022 are
as follows:
Revenue
403.0 billion yen(Up 16.4% year on year)
Operating income
40.0 billion yen(Up 49.6% year on year)
Income before income tax 41.0 billion yen(Down 13.1% year on year)
Net income
30.3 billion yen(Up 7.9% year on year)
Income attributable to23.0 billion yen
owners of parent(Up 10.9% year on year)

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53

Consolidated Statement of Financial Position(Unit: Million yen)Note

FY2020(As of March 31, 2020)(Unit: Million yen)

FY2021

FY2020

FY2021Note(As of March 31, 2020)(As of March 31, 2021)

Trade and other payables

14¥ 51,084¥ 62,943(As of March 31, 2021)

ASSETSLIABILITIES AND EQUITYCURRENT ASSETSCURRENT LIABILITIESCash and cash equivalents

7¥149,628¥153,034

Trade and other receivables

8

41,50062,984Current borrowings

15

75

—

Other financial assets

9

11,5405,361

Other financial liabilities

16

1,109

1,357

Inventories

10

28,23333,607

Income taxes payable

575

2,021

Income taxes receivable

2,281

1,719

Provisions

156

2,851

Other current assets

4,667

6,202

Other current liabilities

2,965

7,139

Total current assets

237,852

262,909

Total current liabilities

55,96576,31318

NON-CURRENT LIABILITIESNON-CURRENT ASSETS

Other financial liabilities

16

2,841

3,952

Net defined benefit liability

19

1,372

1,648

Provisions

18

2,378

85

Deferred tax liabilities

17

3,598

5,808

Other non-current liabilities

1,111

1,219

Total non-current liabilities

11,302

12,714

Total liabilities

67,26889,027

EQUITY

Property, plant and equipment

11

68,53069,053

Common stock

20

4,700

4,700

Intangible assets

12

9,366

10,911

Capital surplus

20

5,171

4,975

Investments accounted for using the equity method

31

1,596

16,575

Treasury stock

20

(5)

(2,657)

Other financial assets

920,30725,258Retained earnings

20

249,367

264,261

Net defined benefit asset

19

1,879

3,575

Other components of equity

20(4,487)

5,738

Deferred tax assets

17

1,055

1,748

Total equity attributable to owners of parent

254,745

277,017

Other non-current assets

1,231

445

19,80624,433

Total non-current assets

103,967

127,568

274,552

301,450¥341,820¥390,478¥341,820¥390,478

TOTAL ASSETS

Non-controlling interests
Total equity
TOTAL LIABILITIES AND EQUITY

31

See notes to consolidated financial statements.

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55

Consolidated Statements of Profit or Loss and Comprehensive Income

Consolidated Statements of Profit or Loss and Comprehensive Income

Consolidated statement of profit or loss

Consolidated statement of comprehensive income(Unit: Million yen)

Revenue
Cost of sales

FY2020Note(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

5, 21¥ 359,682¥ 346,149

Net income

22(300,307)(288,671)

Other comprehensive income

59,37457,478Gross profit
Selling, general and administrative expenses

22(33,531)(32,581)

Other income

23

1,537

3,072

Other expenses

23(1,053)(1,227)

Operating income

526,326

26,742Finance income

25

2,218

1,983

Finance costs

25

(275)

(136)

Share of profit of investments accounted forusing the equity method

31

481

7,658

28,751

36,247(8,548)(8,164)20,202

28,082

Income before income tax
Income tax expense

17

Net income

Note

Owners of parent
31

Net income

15,064

20,741

5,137

7,341

¥ 20,202¥  28,082

Basic earnings per share (Yen)26¥110.77¥152.89

Diluted earnings per share (Yen)

26

—

—

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥ 20,202¥28,082		 Remeasurements of net defined benefit plans

27

(421)

1,221

		Equity financial assets measured at fair value throughother comprehensive income

27(1,971)2,754

		Share of other comprehensive income of affiliates
accounted for using the equity method

27

—

323

(2,393)4,299

		Total components that will not be reclassified
subsequently to net profit or loss	Components that may be reclassified subsequently
to net profit or loss:
		 Differences on translation from foreign operations

27(9,015)7,742

		Share of other comprehensive income of affiliates
accounted for using the equity method

27

(32)

48

		Total components that may be reclassified
subsequently to net profit or loss

(9,048)

7,791

Other comprehensive income, net of tax(11,441)

12,091

8,761

40,174

Owners of parent

4,864

30,968Non-controlling interests

3,896

9,206

¥ 8,761¥40,174

Comprehensive income for the period attributable to:Total comprehensive income for the period

Earnings per share:

FY2020	Components that will not be reclassified subsequently
to net profit or loss:

Comprehensive income for the period

Income attributable to:Non-controlling interests(Unit: Million yen)

FY2021

See notes to consolidated financial statements.

See notes to consolidated financial statements.

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57

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows(Unit: Million yen)

For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)

Equity attributable to owners of parent
Note

BALANCE AT THE END OF
THE PREVIOUS FISCAL YEAR

Commonstock

CapitalsurplusTreasurystock

Retainedearnings

Other
componentsof equity¥4,700¥5,171¥(5)¥240,038¥   5,712

Cumulative effect of accountingchange44

Restated balance

4,700

5,171

(5)

Total equity
attributableto ownersof parent

Noncontrollinginterests

Total
equity¥255,617¥21,807¥277,42444

240,0835,712

44255,662

21,807

277,469

15,064

5,137

20,202(10,200)(10,200)(1,240)(11,441)(10,200)

4,864

3,896

8,761

(5,779)(5,898)(11,677)

Comprehensive income:Net income
Other comprehensive income

15,06420

Total comprehensive income

—

—

—

15,064

Transactions with owners, etc.:
Dividends

28

Acquisition of treasury stock

20

Disposal of treasury stock
Share-based remunerationtransactions(5,779)
(0)

(0)

(0)

20

—

—

32

—

—

Changes in ownership interestsin subsidiaries—

Total transactions withowners, etc.

—

BALANCE AT THE END OF
THE FISCAL YEAR

¥4,700—(0)¥5,171¥(5)(5,779)—¥249,367¥ (4,487)(5,780)¥254,745

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

Note

BALANCE AT THE END OF
THE PREVIOUS FISCAL YEAR

Capitalsurplus¥4,700¥5,171 ¥Retainedearnings

Other
componentsof equity

Total equity
attributableto ownersof parent(5) ¥249,367¥ (4,487)¥254,745

Treasurystock(5,898)¥19,806

Cumulative effect of accountingchange¥274,552

Noncontrollinginterests

Total
equity¥19,806¥274,552—
4,700

Restated balance

5,171

(5)

249,367(11,678)(Unit: Million yen)

Equity attributable to owners of parent
Commonstock—(4,487)—

254,745

19,806

274,552

20,741

7,341

28,082

10,226

10,226

1,864

12,091

10,22630,9689,206

40,174Comprehensive income:
20,741

Net income
Other comprehensive income

20—

Total comprehensive income——

20,741

Transactions with owners, etc.:(5,847)

Dividends

28

Acquisition of treasury stock

20

Disposal of treasury stock

20

(291)

Share-based remunerationtransactions

32

Changes in ownership interestsin subsidiaries
Total transactions withowners, etc.
BALANCE AT THE END OF
THE FISCAL YEAR—
¥4,700(5,847)(4,463)(10,311)(2,943)(2,943)(2,943)

291

—

—

34

34

34

60

60

(115)

(55)

(196) (2,652)(5,847)—(8,696)(4,579)(13,275)¥4,975 ¥(2,657) ¥264,261¥ 5,738¥277,017¥24,433¥301,450Note

FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥ 28,751¥ 36,247

12,311

11,440666

142

CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax
Depreciation and amortization
Impairment loss

(495)

(166)

(1,976)(1,083)(481)(7,658)Decrease (increase) in trade and other receivables

23,721(15,863)

Decrease (increase) in leased receivables and leased
investment property

1,363

1,997

Decrease (increase) in inventories(3,299)(3,262)

Increase (decrease) in trade and other payables(10,532)

6,192

803

(1,505)

2,171

402

Loss (gain) on disposal of non-current assets
Finance costs (income)
Share of loss (profit) of investments accounted for using
the equity method

Increase (decrease) in net defined benefit asset andnet defined benefit liability
Increase (decrease) in provisions
Other

(698)

3,117

Subtotal

52,30530,002

Interest income received

1,515

892

Dividend income received

940

894

Interest expenses paid

(116)

(133)

Income taxes paid

(10,452)(6,503)

Net cash provided by operating activities

44,19325,151

Payments into time deposits(17,382)(7,495)

Proceeds from withdrawal of time deposits

23,182

11,521

Purchase of property, plant and equipment(7,623)(5,455)218

698

Purchase of intangible assets(3,311)(2,206)

Purchase of equity instruments

(445)

(56)

2

0

Payments of loans receivable

(241)

(121)

Collection of loans receivable

179

214

—

(1,564)Purchase of investments accounted for using the equity method—(7,199)

Other

53

(43)

¥ (5,366)¥(11,709)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sales of property, plant and equipment

Proceeds from sales of equity instruments

Purchase of shares of subsidiaries

Net cash used in investing activities

6

See notes to consolidated financial statements.

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TS TECH Integrated Report 202159

Consolidated Statement of Cash Flows (Continued)

Notes to Consolidated Financial Statements(Unit: Million yen)
FY2020

FY2021Note(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Net increase (decrease) in short-term loans payable29¥      (0)¥       —Repayments of long-term loans payable

29

(150)

(75)

Repayments of lease liabilities

29(1,532)(1,754)(0)(2,597)

Cash dividends paid

28

(5,779)(5,847)

Cash dividends paid to non-controlling interests

31(5,455)(4,316)—(55)(12,917)(14,647)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS(4,928)4,611

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

20,981

3,406

CASH FLOWS FROM FINANCING ACTIVITIES

Purchase of treasury stock

Payments for acquisition of interests in subsidiaries from
non-controlling interests
Net cash used in financing activities

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

7

128,647

149,628

CASH AND CASH EQUIVALENTS AT END OF PERIOD

7¥149,628¥153,034

See notes to consolidated financial statements.

1. REPORTING ENTITYTS TECH Co., Ltd. (hereinafter “the Company”) is a company domiciled in Japan.
The consolidated financial statements of the Company as of and for the year ended March 31, 2021 comprise theCompany, its subsidiaries (hereinafter “the Group”), and the Group’s interests in its affiliates.

2. BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS(1) Compliance with International Financial Reporting Standards (IFRS)The Company meets the criteria of a “specified company” defined under Article 1-2 of the “Ordinance on Terminology,
Forms and Preparation Methods of Consolidated Financial Statements.” Accordingly, the consolidated financial
statements are prepared according to IFRS pursuant to the provisions of Article 93 of said Ordinance.
The consolidated financial statements were approved by the Board of Directors on June 25, 2021.
(2) Basis for measurement
The consolidated financial statements, with the exception of the financial instruments, etc., measured at fair value
stated in Note 3 “Important Accounting Policies,” have been prepared on a historical cost basis.
(3) Functional currency and presentation currency
The presentation currency used in the consolidated financial statements is Japanese yen, which is the Company’sfunctional currency. Any fractions below one (1) million yen are omitted.
(4) Important accounting judgments, estimates, and assumptions
In the preparation of the consolidated financial statements, management exercised certain judgments, estimates, andassumptions in the process of applying the accounting policies and in determining the reported amounts of assets,
liabilities, income, and expenses. As such, actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis, and the impact of the review isrecognized in the period in which the review was conducted and in future periods.
Among the items which were subject to estimates and judgments, the following are considered to have significant
impact on the amounts of the consolidated financial statements for the fiscal year under review and the following
fiscal years.
• Scope of consolidation:
Note 3 “Important Accounting Policies (1) Basis of consolidation”• Estimated useful lives of intangible assets:
Note 3 “Important Accounting Policies (8) Intangible assets”• Scope of contracts including leases:
Note 3 “Important Accounting Policies (9) Leases”• Impairment of non-financial assets:
Note 3 “Important Accounting Policies (10) Impairment of nonfinancial assets”• Measurement of defined benefit obligations: Note 3 “Important Accounting Policies (12) Employee benefits”• Recognition and measurement of provisions: Note 3 “Important Accounting Policies (13) Provisions”• Revenue recognition:
Note 3 “Important Accounting Policies (16) Revenues”• Recoverability of deferred tax assets:
Note 3 “Important Accounting Policies (19) Income taxes”
Estimates and assumptions that may have a material impact on the Company’s consolidated financial statements
for the following fiscal years primarily include:(i) Impairment of non-financial assets (Property, plant and equipment, and Intangible assets)
The Group estimate the recoverable amount if non-financial assets show signs of impairment. In the event theestimated recoverable amount falls below the carrying amount, a difference between the carrying amount and therecoverable amount is recognized in net profit or loss as an impairment loss.
Information regarding the material impact of impairment of non-financial assets on the following fiscal year is as follows.

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(a) Amount recognized in the consolidated financial statements(Unit: Million yen)
FY2021(As of March 31 2021)

Property, plant and equipment¥69,053

Intangible assets

10,911

Total¥79,965(b) Major assumptions used for the estimate
Future cash flows that constitute the basis for the recoverable amount could vary significantly depending on trends
in the automobile market and changes in customers’ production plans.
During the fiscal year under review, the amount of future cash flows was estimated based on the assumption thatdemand would gradually recover, despite the future outlook being uncertain given the resurgence of COVID-19 andthe turmoil and discruption in the automobile supply chain for reasons such as the short supply of semiconductors.
(c) Material impact on the following fiscal year
During the fiscal year under review, the Company did not recognize material impairment losses. However, should
demand in the automobile market be less than expected, and the recoverable amount declines as a result, a material
impairment loss may arise in the following fiscal year.
(ii) Recoverability of deferred tax assets
Deferred tax assets are recognized for items that may be deducted from future taxable income, such as deductible
temporary difference and unused tax losses, to the extent that it is probable that taxable income will be available
against which these items can be utilized (hereinafter “recoverability”).
Recoverability will be reviewed each fiscal year; in the event recoverability declines, the amount of deferred tax
assets will be reduced and the reduced amount will be recognized as net profit or loss.
Information regarding the material impact of the recoverability of deferred tax assets on the following fiscal year is
as shown below.
(a) Amount recognized in the consolidated financial statements(Unit: Million yen)
FY2021(As of March 31 2021)

Deferred tax assets¥6,701

Note: The relation between the deferred tax assets recognized in the consolidated statement of financial
position and the amount above is described in Note 17 “Income Taxes.”(b) Major assumptions used for the estimate
Future cash flows that constitute the basis for the recoverable amount could vary significantly depending on trends inthe automobile market and changes in customers’ production plans.
During the fiscal year under review, the amount of future cash flows was estimated based on the assumption thatdemand would gradually recover, although the future outlook was still uncertain given the resurgence of COVID-19
and the turmoil and confusion in the automobile supply chain for reasons such as the short supply of semiconductors.
(c) Material impact on the following fiscal year
During the fiscal year under review, the Company did not recognize a material reduction in deferred tax assets.
However, should demand in the automobile market be less than expected, and the recoverable amount decreases
as a result, a material reduction in deferred tax assets may occur in the following fiscal year.

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3. IMPORTANT ACCOUNTING POLICIES(1) Basis of consolidation(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that the Group gains control to the date that the Group loses control.
When the accounting policies applied by a subsidiary are different from those applied by the Group, the financial
statements of said subsidiary are revised as necessary.
The balance of accounts receivable and payable and transactions within the Group and the unrealized gain and loss
on transactions within the Group are deducted under the consolidated financial statements.
Any change in the Company’s interest in subsidiaries not involving the loss of control is processed as a capital transaction.
The carrying amounts of the Group’s ownership interest and non-controlling interests are adjusted according to thechanges in the ownership interest, and any difference between the adjustment to the non-controlling interests andthe fair value of the consideration transferred or received is recognized directly in equity and allocated to owners of
the parent.
(ii) Affiliates
Affiliates are entities over which the Group has significant influence but does not have control over the financial andoperating policies of such entities, and they are accounted for using the equity method from the date that significant
influence commences until the date the significant influence ceases.
Under the equity method, investments in affiliates are initially recorded at cost and subsequently increased (ordecreased) to reflect the Group’s post-acquisition changes in ownership interest in the affiliate’s equity. In such cases,
the amount of net profit or loss of the affiliate corresponding to the ownership interest of the Group is recognized in
net profit or loss, while the amount of other comprehensive income of the affiliate corresponding to the ownershipinterest of the Group is recognized in other comprehensive income.
Profits from important internal transactions are eliminated proportionately to the ownership share in the affiliate.
(2) Business combinations
Business combinations are accounted for using the acquisition method.
Consideration for the acquisition is measured as the total fair value of the assets transferred, liabilities assumed,
and equity instruments issued by the Group.
Costs related to the acquisition are recognized in net profit or loss when incurred.
The identifiable assets and liabilities acquired from the merged company are measured at fair values unlessstipulated otherwise by the IFRS.
Goodwill is recognized if the consideration for the acquisition exceeds the fair values of the identifiable assets
and liabilities acquired from the merged company; it is recognized in net profit or loss if the consideration for theacquisition is less.
(3) Foreign currency translations
The financial statements of each Group company are prepared in the currency of the primary economic environment
in which each Group company conducts business (hereinafter “functional currency”).
Additionally, the financial statements of foreign operations are translated into Japanese yen, the functional currencyof the Company, when preparing the consolidated financial statements.
(i) Foreign currency transactions
Transactions in currencies other than the functional currency are translated into the functional currency using the spot
exchange rate at the date of the transaction or an exchange rate that approximates the spot exchange rate at thedate of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the end of the fiscal year are translated using
the spot exchange rate at the end of the fiscal year. Exchange differences arising from translation or settlement offoreign currency-denominated monetary assets and liabilities are recognized in net profit or loss.
(ii) Foreign operations
Assets and liabilities of foreign operations are translated into Japanese yen using the spot exchange rate at the endof the fiscal year, while income and expenses are translated into Japanese yen at the average exchange rates for theperiod, provided, however, that there have been no significant fluctuations in the exchange rates.
Exchange differences arising from translation of financial statements of foreign operations are recognized in othercomprehensive income, and cumulative exchange differences are presented in other components of equity.

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(4) Financial instruments(i) Financial assets(a) Initial recognition and measurement
The Group recognizes trade and other receivables when they occur, and other financial assets on the transaction dateon which the Group becomes a contractual party of the financial asset.
The Group, at initial recognition, measures all financial assets at fair value. However, if an asset is not classified as afinancial asset measured at fair value through net profit or loss, it is measured at fair value to which the transaction
costs directly attributable to the acquisition of the financial asset are added. Transaction costs of financial assets
measured at fair value through net profit or loss are recognized in net profit or loss.
(b) Classification and subsequent measurement
The Group classifies the financial assets that it holds as (a) financial assets measured at amortized cost, (b) equity
financial assets measured at fair value through other comprehensive income, or (c) financial assets measured at fairvalue through net profit or loss. These classifications are determined at the time of initial recognition, and the financial
assets after initial recognition are measured in the following manner according to each classification.
(A) Financial assets measured at amortized cost
The Group classifies the financial assets that it holds as those measured at amortized cost if it meets both of thefollowing conditions:• The financial asset is held within a business model whose objective is to hold financial assets in order to collectcontractual cash flows.
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.
After initial recognition, financial assets measured at amortized cost are measured using the effective interest
method less any impairment loss, as necessary. Amortization using the effective interest method and any gains orlosses due to derecognition are recognized in net profit or loss for the period.
(B) Equity financial assets measured at fair value through other comprehensive income
For certain equity financial assets, the Group has made the irrevocable election to measure fair value changes after
initial recognition in other comprehensive income and classifies such financial assets as equity financial assets
measured at fair value through other comprehensive income.
After initial recognition, such financial assets are measured at fair value, and fair value changes are recognizedin other comprehensive income. In the event that the investment is disposed, or if the fair value has declined
significantly, the cumulative gains or losses recognized through other comprehensive income are reclassified fromother components of equity to retained earnings.
Dividends from equity financial assets measured at fair value through other comprehensive income are recognized
as financial income in net profit or loss.
(C) Financial assets measured at fair value through net profit or loss
The Group classifies financial assets other than those measured at amortized cost and financial assets other thanequity financial assets measured at fair value through other comprehensive income, described above, as financial
assets measured at fair value through net profit or loss. Derivative assets fall under the Group’s financial assets
measured at fair value through net profit or loss.
After initial recognition, such financial assets are measured at fair value, and fair value changes are recognized in net
profit or loss. Any gains or losses relating to the financial asset measured at fair value through net profit or loss arerecognized in net profit or loss.
(c) Impairment of financial assets
With regard to impairment loss on financial assets, including financial assets measured at amortized cost, the Group
recognizes an allowance for doubtful accounts for the expected credit loss associated with the financial asset.
On each reporting date, the Group assesses whether the credit risk associated with the financial instrument has
increased significantly since initial recognition.
If the credit risk has not increased significantly since initial recognition, the Group recognizes an amount equivalent
to a 12-month expected credit loss as allowance for doubtful accounts. If the credit risk has increased significantly
since the initial recognition, the Group recognizes an amount equal to the lifetime expected credit loss as allowancefor doubtful accounts. However, for trade receivables, the Group always recognizes an amount equal to the lifetime
expected credit loss as allowance for doubtful accounts.

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The expected credit loss of financial instruments is estimated using a method that reflects the following factors:•A n unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;•T he time value of money; and•R easonable and supportable information about past events, current conditions, and forecasts of future economic
conditions that is available without undue cost or effort at the reporting date.
The amounts associated with such measurements are recognized in net profit or loss.
If, after the recognition of an impairment loss, an event occurs which could reduce the amount of the impairment
loss, the decrease in impairment loss is reversed and recognized in net profit or loss.
(d) Derecognition of financial assets
The Group derecognizes financial assets when the contractual rights to cash flows from the financial asset expire,or when the Group transfers the financial asset, or when substantially all the risks and rewards of ownership of thefinancial asset have been transferred in a transaction.
(ii) Financial liabilities(a) Initial recognition and measurement
The Group initially recognizes financial liabilities on the transaction date.
The Group, at initial recognition, measures all financial assets at fair value. However, financial liabilities measured
at amortized cost are measured at fair value less the transaction costs directly attributable to the financial liability.
Transaction costs of financial liabilities measured at fair value through net profit or loss are recognized in net profit
or loss.
(b) Classification and subsequent measurement
The Group classifies financial liabilities as either financial liabilities measured at fair value through net profit or loss or
financial liabilities measured at amortized cost. These classifications are determined at the time of initial recognition.
Financial liabilities after initial recognition are measured in the following manner according to each classification.
Derivative liabilities fall under the Group’s financial liabilities measured at fair value through net profit or loss. The
Group has not made any irrevocable elections to measure financial liabilities as financial liabilities measured at fairvalue through net profit or loss, at initial recognition. After initial recognition, financial liabilities measured at fairvalue through net profit or loss are measured at fair value, and fair value changes are recognized in net profit or loss
for the period.
After initial recognition, financial liabilities measured at amortized cost are measured using the effective interest
method. Amortization using the effective interest method and any gains or losses due to derecognition arerecognized in net profit or loss for the period.
(c) Derecognition of financial liabilities
The Group derecognizes financial liabilities when they are extinguished (i.e., when the contractual obligation is
fulfilled), or when a specific contractual obligation is discharged, canceled, or expires.
(iii) Offsetting a financial asset and a financial liability
Financial assets and financial liabilities are offset and presented in the consolidated statement of financial position as
a net amount, if and only if the Group has a legal right to offset financial assets with financial liabilities and the Groupintends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
(5) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits withdrawable as necessary, and short-term investments which
are easily converted into cash, with original maturities of three months or less and minimal risk of changes in value.
(6) Inventories
Inventories are measured at the lower of cost and net realizable value.
Cost of inventories includes purchase costs, processing costs, and all other costs incurred in bringing inventory to
its existing location and condition.
Cost of inventories is calculated primarily using the first-in, first-out method.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs ofcompletion and selling expenses.
(7) Property, plant and equipment
The cost model has been applied, and all property, plant and equipment are measured at cost less any accumulated
depreciation and accumulated impairment losses.
Cost includes costs directly attributable to the acquisition of the assets, the cost of restoring the site, and other costs.
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Depreciation of assets other than land and construction in progress is calculated using the straight-line method
based on the estimated useful life of each asset. The estimated useful lives of major assets are as follows:• Buildings and structures:
2 to 50 years• Machinery, equipment and vehicles: 2 to 20 years• Tools, furniture and fixtures:
2 to 20 years
The estimated useful lives, residual values, and depreciation methods are reviewed each year and revised as necessary.
(8) Intangible assets
The cost model has been applied, and all intangible assets are measured at cost less any accumulated amortization
and accumulated impairment losses.
Intangible assets comprise mainly development expenses, and expenses incurred in development activities arecapitalized if and only if they meet all of the requirements listed below.
• It is technically feasible to complete their developments to use or sell them;• The Group has the intent to complete their developments and to use or sell them;• The Group is capable of using or selling them;• It is highly probable that they will generate future economic benefits;• The Group has the adequate technical, financial, and other resources to complete their developments and to use
or sell them; and• The Group is capable of reliably measuring the expenditures associated with the intangible assets during thedevelopment process.
Capitalized development expenses are amortized using the straight-line method over the estimated useful life
(mainly five years) commencing from the time the product subject to development commences mass production.
The estimated useful lives and amortization methods are reviewed each year and revised as necessary.
(9) Leases
The Group determines whether a contract is or contains a lease at the commencement of the contract. If the right tocontrol the use of an asset for a specified period of time is transferred in exchange for consideration, the contract isdeemed to be or contain a lease.
(i) Lease as lessee
At the commencement date, a lessee shall recognize a right-of-use asset and a lease liability. At the commencement
date, the right-of-use asset is recognized at cost. After the commencement date, the right-of-use asset will bemeasured at cost less accumulated depreciation and accumulated impairment losses by applying the cost model.
Right-of-use assets will be depreciated using the straight-line method over either the estimated useful life of an asset
or its lease term, whichever is shorter.
At the commencement date, a lessee shall measure the lease liability at the present value of the lease paymentsthat are not paid at that time. After the commencement date, the carrying amount of a lease liability is increased or
decreased in a manner to reflect the interest rate on the lease liability and the lease payments already paid. If a leaseliability is reassessed or the terms and conditions of a lease contract are modified, the lessee shall remeasure thelease liability and recognize the amount of the remeasurement of the lease liability as an adjustment to the right-ofuse asset.
For leases that expire within 12 months or of which underlying assets are of low value, lease payments arerecognized as net profit or loss primarily on a straight-line basis over the period of the lease.
(ii) Leases as lessor
Each lease is classified as either an operating lease or a finance lease. A lease is classified as a finance lease if ittransfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified
as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of anunderlying asset. Whether a lease is a finance lease or an operating lease depends on the substance of thetransaction rather than the form of the contract.
(a) Finance lease
At the commencement date of a lease, assets held under a finance lease are presented as a receivable at an amountequal to the net investment in the lease.
(b) Operating lease
Lease payments from operating leases are recognized as net profit or loss primarily on a straight-line basis.

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(c) Sublease
In classifying a sublease, an intermediate lessor shall classify the sublease as an operating lease if the head lease is a
short-term lease; otherwise, the intermediate lessor shall classify the sublease by reference to the right-of-use asset
arising from the head lease.
(10) Impairment of non-financial assets
During each reporting period, the Group assesses each asset or cash-generating unit for any indications of
impairment, and if any such indication exists, the Group estimates the recoverable amount of the asset.
The recoverable amount is calculated at the higher of the fair value of the asset or cash-generating unit less costs tosell and the value in use.
Value in use is calculated by discounting the estimated future cash flows to the present value using the pre-tax
discount rate that reflects the current market assessments of the time value of money.
If the recoverable amount is less than the carrying amount of the asset or cash-generating unit, the difference
between the carrying amount and the recoverable amount is recognized as impairment loss in net profit or loss.
In terms of impairment losses recognized in the past, assessment is conducted for any indications of the possibilityof decrease in impairment, including cases in which the assumptions used to determine the recoverable amount havechanged. If any such indication exists, the recoverable amount of the asset or cash-generating unit is estimated, and if
the recoverable amount exceeds the carrying amount of the asset or cash-generating unit, impairment loss isreversed up to the lower of the recoverable amount determined and the carrying amount net of depreciation thatwould have been determined if no impairment loss had been recognized in prior years.
(11) Non-current assets held for saleAmong assets or asset groups whose carrying amounts are expected to be recovered through a sale transaction
rather than continuing use, assets for which sale within one year is highly probable, assets which are available for
immediate sale in their present condition, and assets for which the Group’s management is committed to a plan tosell, the assets are classified as non-current assets held for sale.
Non-current assets held for sale are not depreciated or amortized and are measured at the lower of the carrying
amount and fair value less costs to sell.
(12) Employee benefits(i) Post-employment benefits
The Group has adopted defined benefit plans and defined contribution plans.
Defined benefit plans are recognized in the consolidated statement of financial position in the amount of defined
benefit plan obligations, which has been calculated at the discounted present value of the amount of estimated future
benefits earned by the employee as consideration for services rendered in the past and in the current period undereach plan, less the fair value of the plan assets.
The present value of defined benefit plan obligations and related service costs is calculated using the projected unit
credit method. The discount rate is determined by reference to market yields on high-quality corporate bonds withsimilar maturities to the obligations under the plans.
Increases/decreases through remeasurements of defined benefit plan obligations and plan assets are recognized inother comprehensive income.
Prior service costs resulting from plan amendments or curtailment are recognized in net profit or loss at the earlierof the time of amendment or the time at which the related restructuring costs or severance benefits are recognized.
The obligation to make contributions under the defined contribution plans is recognized in net profit or loss in the
period in which the employee renders the related service.
(ii) Short-term employee benefits
Short-term employee benefits including wages are recognized in net profit or loss in the period in which the employee
renders the related service.
Bonus payments are recognized as liabilities if the Group has a legal or constructive obligation to pay and theobligation can be estimated reliably.
The cost of paid leave is recognized as a liability in the period in which the employee renders the service which will
increase the employee’s entitlement to future paid leave.

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(iii) Other long-term employee benefits
Other long-term employee benefits, including a long-service award system, are recognized as liabilities by estimating
the amount of future benefit that employees have earned in consideration for services rendered in the current andprior periods and discounting that amount to the present value.
(13) Provisions
Provisions are recognized if a present legal or constructive obligation exists as a result of a past event that can be
estimated reliably and if it is probable that an outflow of economic resources will be required to settle the obligation.
When the time value of money is material, a provision is measured at the present value to which estimated cash
flows are discounted using a pre-tax discount rate that reflects the risks specific to the obligation. Increases in theamount of provisions associated with the passage of time are recognized in net profit or loss.
(14) Government-imposed levies
Government-imposed levies are recognized as a liability in the estimated amount to be paid when an event obligating
payment to the government has occurred.
(15) Equity(i) Common shares
The amount of equity instruments issued by the Company is recognized in common stock and capital surplus, anddirect issue costs (after consideration of tax effects) are deducted from capital surplus.
(ii) Treasury stock
When the Company acquires treasury stock, the consideration paid, including direct transaction costs (after
consideration of tax effects), is recognized as a deduction from equity. When the Company disposes of treasury stock,gains or losses on sales of treasury stock are recognized in capital surplus.
(16) Revenues(i) Revenue from contracts with customers
The Group recognizes revenue based on the following five-step approach.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract(s).
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract(s).
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Group’s primary line of business involves the manufacture and sale of seats for automobiles. Revenue
pertaining to the sale of these products will be recognized when a product and control of said product are transferredto the customer and the performance obligation is deemed satisfied according to the contract with the customer.
Revenue will be measured as amounts net of discounts and other deductions from compensation agreed upon in
the contract with the customer.
(ii) Interest income
Interest income is recognized based on the effective interest method.
(iii) Dividend income
Dividend income is recognized when the right to receive payment of the dividend is established.
(17) Government grants
Government grants are recognized at fair value when and only when there is reasonable assurance that the Group willcomply with the conditions attached to the grant and that the grant will be received.
Government grants relating to revenues are recognized in net profit or loss over the period of the expenses, which
the grant is intended to compensate, are recognized.
Government grants relating to assets are recognized as deferred revenue and reclassified to net profit or loss on asystematic basis over the useful life of the asset.
(18) Share-based remuneration
The Company has adopted a restricted stock compensation scheme, which is accounted for as an equity-settled share-based
remuneration plan. As to the restricted stock compensation, the restricted shares as of the allotment date are measured atfair value and recognized as an expense, along with a corresponding increase in equity, over the vesting period.
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(19) Income taxes
Income taxes comprise current taxes and deferred taxes, and they are recognized in net profit or loss, excluding items
related to business combinations, items that are directly recognized in equity, and items recognized in othercomprehensive income.
Current taxes are calculated based on the estimated payment to or refunds from the tax authorities. Current tax
liabilities are calculated based on tax rates and tax laws that have been enacted or substantively enacted by the end of
the fiscal year.
Deferred taxes are recognized for temporary differences between the carrying amounts of assets and liabilities foraccounting purposes and their tax bases at the end of the fiscal year, unused tax losses, and unused tax credits(hereinafter “temporary differences”).
Deferred tax liabilities are generally recognized for all taxable temporary differences, while deferred tax assets arerecognized for deductible temporary differences, unused tax losses, and unused tax credits only to the extent that itis probable that there will be taxable profits against which the temporary differences may be utilized.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when thetemporary difference is reversed based on the tax rates and tax laws that have been enacted or substantively enacted
by the end of the fiscal year.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same tax authority.
(20) Basic earnings per share
Basic earnings per share is calculated by dividing profit or loss for the year attributable to ordinary shareholders of theparent by the weighted-average number of ordinary shares outstanding during the year adjusted for the weightedaverage number of treasury shares purchased in the year.

4. NEW STANDARDS NOT YET ADOPTED BY THE GROUP
None of the new or revised standards and interpretations that were issued by the date of approval of the consolidated
financial statements have a material impact on the Group.

5. SEGMENT INFORMATION(1) Overview of reportable segments
The reportable segments are components of the Company for which separate financial information is available. Thesesegments file monthly reports which the Board of Directors uses for deciding the allocation of management recourseand evaluating results.
Positioning Japan as its global base, the Company has a control and management system for the three operating
regions: The Americas (the U.S., Canada, Mexico, and Brazil), China (China and Hong Kong), and Asia and Europe(Thailand, the Philippines, India, Indonesia, the U.K., and Hungary). The Company appoints an officer responsible forcontrol and management in each region. Policies, plans, controls, and other matters concerning general operations
are discussed at regional management meetings attended by directors and the like in these regions for executing
business activities.
Accordingly, the Company positions “Japan,” “The Americas,” “China,” and “Asia and Europe” as its four reportablesegments. In the reportable segments of Japan, The Americas, and Asia and Europe, the Company manufacturesand sells products that mainly consist of automobile seats, automobile interiors, motorcycle seats, and resin-based
products for motorcycles. In the reportable segment of China, the Company engages primarily in the manufactureand sale of automobile seats and automobile interiors.
(2) A ccounting method for revenue, profits or losses, assets, liabilities, and other items according to reportable segment
Accounting methods for reportable business segments are the same as those presented in Note 3 “ImportantAccounting Policies.”
The Company decides the price of transactions carried out among segments by considering market prices andgross costs, and through price negotiations.
Profits for reportable segments are operating income figures based on the consolidated statements of profit or loss
and comprehensive income.

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(3) Information on revenue, profits or losses, assets, liabilities and other items according to reportable segment
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)

Other important items(Unit: Million yen)

(Unit: Million yen)

Reportable segments

Reportable segments
Japan

The Americas

China

Asia
and Europe¥56,691¥175,300¥77,636¥50,052

Total

Adjustments

Consolidated¥359,682¥      —

¥359,682

Revenue:
External revenue
Inter-segment revenue
Total
Segment profits

18,442

1,045

5,093

1,914

26,495(26,495)—¥75,134¥176,346¥82,729¥51,967¥386,178¥(26,495)¥359,682¥ 6,049¥   8,054¥15,542¥ 2,109¥ 31,756¥ (5,430)¥ 26,326

—

—

—

—

—

—

1,943

Finance income andfinance costs
Share of profit of investments
accounted for using theequity method

—

—

—

—

—

—

481

Income before income tax

—

—

—

—

—

—

28,751

Note: Adjustments of -¥5,430 million for segment profits included an inter-segment elimination of -¥647 million and operating
expenses of -¥4,782 million associated with the administration division of the headquarters of the parent, which could not
be allocated.

Japan

Depreciation and amortization¥3,275¥4,407

Depreciation and amortization

Total

Adjustments

Consolidated¥3,161¥5,167¥2,132¥1,863¥12,325¥(13)¥12,311

—

5

1

659

666

—

666

3,662

2,417

954

584

7,619

—

7,619

Impairment loss
Capital expenditures

Asiaand Europe

Note: The adjustment for depreciation and amortization is an inter-segment elimination.

(Unit: Million yen)
Reportable segments
The Americas

Asia
and Europe

China

Total

Adjustments

External revenue¥58,396¥141,425¥113,784¥32,543¥346,149¥     —

¥346,149

20,470

498

3,867

1,478

26,315(26,315)—¥78,866¥141,924¥117,652¥34,021¥372,465¥(26,315)¥346,149¥ 7,140¥  3,368¥ 23,199¥ (2,344)¥ 31,362¥ (4,620)¥ 26,742

Finance income andfinance costs

—

—

—

—

—

—

1,846

Share of profit of investments
accounted for using theequity method

—

—

—

—

—

—

7,658

Income before income tax

—

—

—

—

—

—

36,247

Note: Adjustments of -¥4,620 million for segment profits included an inter-segment elimination of ¥68 million and operating
expenses of -¥4,688 million associated with the administration division of the headquarters of the parent, which could not
be allocated.

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TS TECH Integrated Report 2021

¥11,440

57

84

142

—

142

922

664

6,686

—

6,686

Note: The adjustment for depreciation and amortization is an inter-segment elimination.

(4) Information related to products and services
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Segment information according to products and services is omitted as revenue from external customers in a single
product/service category accounts for the majority of revenue in the consolidated statement of profit or loss.
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
Segment information according to products and services is omitted as revenue from external customers in a single
product/service category accounts for the majority of revenue in the consolidated statement of profit or loss.

(Unit: Million yen)
FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Japan¥ 56,137¥ 57,846

U.S.

124,906

100,021

Canada42,281

36,597

China

77,735

114,174

Other

58,62037,509

Total¥359,682¥346,149(ii) Non-current assets (excluding financial instruments, deferred tax assets, net defined benefit asset, andrights arising from insurance contracts)(Unit: Million yen)

Consolidated

Inter-segment revenue
Segment profits (losses)

Consolidated

¥(8)

—

FY2020

Revenue:

Total

Adjustments

Note: Revenue is based on customers’ locations and is categorized into countries and regions.

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

Japan¥11,448

1,887

Reportable segments
China

Total

¥1,702

1(Unit: Million yen)

The Americas¥2,063(5) Information according to region(i) Revenue

Other important items

Japan

Asia
and Europe

China

3,211

Impairment loss
Capital expenditures

The Americas

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Japan¥33,724¥37,564

U.S.

18,10916,823

China

10,05010,123

Other

16,012

15,453

Total¥77,897¥79,965(6) Information according to major customers(Unit: Million yen)
FY2020Honda Motor Co., Ltd. GroupFY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥329,913¥314,429

Note: Revenue is recorded for the Japan, The Americas, China, and Asia and Europe segments.

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71

6. BUSINESS COMBINATION
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
No business combination during the fiscal year(6) Other
After the acquisition date, the acquired company has recognized ¥8,632 million as revenue and ¥273 million as net
income in the Company’s consolidated statement of profit or loss.
Based on the assumption that the acquisition was made at the beginning of the fiscal year under review, thepresentations of the acquired company’s revenue, net income, and costs related to the business combination are
omitted as their impact was considered immaterial.

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(1) Outline of business combination
Name of the acquired company

Honda Cars SAITAMAKITABusiness description

New and used car sales; lease; car rental; car safety
inspection, inspection, maintenance, and repair; non-life
insurance agency business; life insurance agency
business; sales of parts and accessories(Unit: Million yen)
FY2020

FY2021

Acquisition date

May 15, 2020

Percentage of equity interest withvoting rights acquired

100%

Cash and cash equivalents

Method of acquiring control of theacquired company

Acquisition of shares for cash consideration

Note: T he balance of “Cash and cash equivalents” in the consolidated statement of financial position and the balance of “Cash andcash equivalents at end of period” in the consolidated statement of cash flows coincide.

(2) Main reasons for business combination
By acquiring Honda Cars SAITAMAKITA, whose business has been stable underpinned by its community-based
business activities, the Company aims to bring the Group and its end users closer together, accelerate the creationof new values, expand the scope of its business, and stabilize revenue in Japan.

8. TRADE AND OTHER RECEIVABLES
The breakdown of trade and other receivables is as follows.

(3) Assets acquired and liabilities assumed

Notes and accounts receivable – trade

Item

OthersAllowance for doubtful accounts

Non-current assets

3,551

Total assets

5,655

Current liabilities

2,326

Non-current liabilities

1,154

Total liabilities

3,481

Net assets

2,174

Item

(Unit: Million yen)AmountConsideration for the acquisition¥2,637

Fair value of the identifiable net assets acquired by the Group

2,174

Goodwill arising from the acquisition

463

Notes: 1. Goodwill arising from the excess earnings power which is expected from business developmentin the future.
2. None of the goodwill is deductible for tax purposes.

(5) Cash flow information(Unit: Million yen)
Item

AmountCash consideration for the acquisition¥2,637

Cash and cash equivalents held by the acquired company

1,073

Purchase of shares of subsidiaries

1,564

TS TECH Integrated Report 2021

(As of March 31, 2021)¥149,628¥153,034(Unit: Million yen)

(Unit: Million yen)

¥2,103(As of March 31, 2020)

FY2020

AmountCurrent assets(4) Goodwill arising from the acquisition72

7. CASH AND CASH EQUIVALENTS
The breakdown of cash and cash equivalents is as follows.

Total

FY2021(As of March 31, 2020)(As of March 31, 2021)¥37,635¥58,692

3,901

4,293

(36)

(0)

¥41,500¥62,984

Note: Financial assets among “Trade and other receivables” are classified as financial assets measured at amortized cost.

9. OTHER FINANCIAL ASSETS
The breakdown of other financial assets is as follows.
(Unit: Million yen)
FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)¥ 8,692¥ 4,557

Short-term loans receivable

68

3

Long-term loans receivable

515

497

Deposits with maturities of three months or more

Lease receivables

4,848

4,288

Equity instruments

12,897

16,441

9

0

4,821

4,860

(4)

(29)

Total

¥31,848¥30,619

Current assets¥11,540¥ 5,361

Derivative financial assets
OthersAllowance for doubtful accounts

Non-current assets

20,30725,258

Total¥31,848¥30,619

Notes: 1. Deposits with maturities of three months or more, short-term loans receivable, long-term loans receivable, and leasereceivables are classified as financial assets measured at amortized cost.
2. Equity instruments are classified as financial assets measured at fair value through other comprehensive income.
3. Derivative financial assets are classified as financial assets measured at fair value through net profit or loss.

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73

10. INVENTORIESThe breakdown of inventories is as follows.

Accumulated depreciation and impairment loss
(Unit: Million yen)
(Unit: Million yen)
FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)¥ 2,824¥ 3,458

Work in progress

1,394

1,812

Raw materials and supplies

24,01428,336

Total¥28,233¥33,607

Merchandise and finished goods

Depreciation

11. PROPERTY, PLANT AND EQUIPMENT
The following are the changes in the cost, accumulated depreciation and impairment loss, and carrying amounts ofproperty, plant and equipment.
Cost(Unit: Million yen)
Buildings
and structures

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

Land

Constructionin progress

Total¥62,307¥71,579¥33,629¥11,107¥ 1,122¥179,746

Acquisition cost

1,169

938

20

78

5,217

7,424

Sales or disposal(500)(2,937)(1,400)—(45)(4,883)

Balance as of April 1, 2019

Reclassification to other account

1,758

1,753

1,187

(11)

(4,491)

197

Effects of foreign currency translation(1,839)(2,216)

(965)

(225)

(34)

(5,281)

Other
Balance as of March 31, 2020
Acquisition cost

Balance as of April 1, 2019

530

—

543

1,670

257

3,002

¥63,426¥69,117¥33,015¥12,619¥ 2,027¥180,206

853

940

348

—

4,377

6,520

Buildings
and structures

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

Land

Constructionin progress

Total¥27,713¥51,933¥28,585¥  —¥—¥108,231

2,684

4,867

2,156

11

—

9,719

Impairment loss

652

0

0

7

—

661

Sales or disposal(444)(2,830)(1,360)——(4,635)

Reclassification to other account

163

(140)

(137)

148

—

34

Effects of foreign currency translation(603)(1,434)

(798)

(23)

—

(2,859)

Other
Balance as of March 31, 2020
Depreciation

0

(1)

336

188

—

524

¥30,166¥52,395¥28,782¥332¥—¥111,676

2,803

4,563

1,786

55

—

9,209

Impairment loss

0

115

26

—

—

141

Sales or disposal(251)(1,594)

(951)

(5)

—

(2,803)

Reclassification to other account

163

(10)

17

(0)

—

170

Effects of foreign currency translation

779

1,626

913

35

—

3,355

Other

51

18

(17)

26

—

77

¥33,714¥57,112¥30,556¥444¥—¥121,827

Balance as of March 31, 2021

Notes: 1. Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative
expenses” in the consolidated statement of profit or loss.
2. Depreciation of right-of-use assets included in property, plant and equipment are outlined in Note 34 “Leases.”
3. “Other” for the previous fiscal year represents the amount additionally recognized at the beginning of the fiscal year in
conjunction with the application of IFRS 16 “Leases.”

Carrying amounts(Unit: Million yen)
Buildings
and structures

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

Land

Constructionin progress

Total¥34,594¥19,646¥5,044¥11,107¥1,122¥71,515

Acquisition through business combination

802

371

18

989

134

2,317

Sales or disposal(321)(1,797)(1,361)(18)(2)(3,501)

Reclassification to other account

877

2,037

1,140

—

(4,357)

(300)

1,678

2,151

1,003

299

66

5,199

Balance as of March 31, 2020

33,25916,722

4,233

12,2872,027

68,530

198

(11)

2

—

251

440

Balance as of March 31, 2021

33,802

15,6973,610

13,445

2,498

69,053¥67,516¥72,809¥34,167¥13,889¥ 2,498¥190,881

Effects of foreign currency translation
Other
Balance as of March 31, 2021

Balance as of April 1, 2019

Note: The carrying amounts of right-of-use assets included in property, plant and equipment are outlined in Note 34 “Leases.”

Note: “Other” for the previous fiscal year represents the amount additionally recognized at the beginning of the fiscal year in
conjunction with the application of IFRS 16 “Leases.”74

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12. INTANGIBLE ASSETS(1) Schedule of intangible assets
The following are changes in the cost, accumulated amortization and impairment loss, and carrying amounts ofintangible assets.

(2) Development expenses
The breakdown of development expenses is as follows.

Cost

R&D expenditures incurred during the period(Unit: Million yen)

(Unit: Million yen)
SoftwareDevelopment
expenses

Goodwill¥5,642¥14,659

152

Increase due to internal development

Other

Total

¥  —

¥1,903¥22,205

—

—

68

221

—

3,079

—

—

3,079

Disposal

(18)

(899)

—

(0)

(917)

Effects of foreign currency translation

(80)

(28)

—

(221)

(330)

Balance as of April 1, 2019
Acquisition cost

Other

76

0

—

(1,610)(1,533)¥5,773¥16,810¥  —¥  140¥22,725

104

—

—

61

165

Increase due to internal development

—

2,039

—

—

2,039

Acquisition through business combination

—

—

463

1,058

1,521

Disposal

(64)

(356)

—

(45)

(466)

Effects of foreign currency translation

91

25

—

14

130

Other

39

—

—

0

39

¥5,943¥18,518¥463¥1,228¥26,154

SoftwareDevelopment
expenses

Goodwill¥4,683¥7,077¥—¥364¥12,125

Balance as of March 31, 2020
Acquisition cost

Balance as of March 31, 2021
Accumulated amortization and impairment loss

(Unit: Million yen)

Balance as of April 1, 2019

Other

Total

Amortization

404

2,086

—

34

2,524

Disposal

(18)

(899)

—

(0)

(917)

Effects of foreign currency translation

(64)

(11)

—

(92)

(168)

Other

0

0

—

(206)

(205)

¥5,006¥8,252¥—¥100¥13,358

339

1,820

—

78

2,239

Impairment loss

—

—

—

1

1

Disposal

(64)

(356)

—

(10)

(431)

Effects of foreign currency translation

79

27

—

12

119

Other

1

0

—

(45)

(43)

¥5,361¥9,743¥—¥136¥15,242

Balance as of March 31, 2020
Amortization

Balance as of March 31, 2021

FY2021

FY2020Note: Amortization of intangible assets is included in “Cost of sales” and “Selling, general and administrative expenses” in the
consolidated statement of profit or loss.

(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥12,374¥12,533

Reclassification to capitalized development expenses(3,079)(2,039)Amortization of capitalized development expenses

2,086

1,820

¥11,380¥12,315Total

13. IMPAIRMENT LOSSESThe Group defines the smallest group of assets that generates identifiable independent cash flows as a cashgenerating unit. Also, each idle asset is tested for impairment.
Impairment loss is included in “Other expenses” in the consolidated statement of profit or loss.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)
Location

Reportable segment

Category

AmountWiltshire, U.K.

Asia and Europe

Buildings and structures

¥652

Other

14

Total

¥666

With regard to impairment loss for the fiscal year under review, the Group examined the recoverability of a noncurrent asset following the notice from Honda of the UK Manufacturing Ltd, a major customer for Asia and Europe
segment subsidiary TS TECH UK LTD, that it will stop production in 2021. As a result, the Group reduced the carrying
amount of the related non-current asset to the recoverable amount, and thus, recognized ¥652 million in
impairment loss.
The recoverable amount is the fair value less costs to dispose of the asset. The fair value above was derived by a realestate appraiser based on the transaction prices of comparable assets, etc. The fair value here corresponds to Level 2of the fair value hierarchy.
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
The presentation of impairment losses is omitted as they are not important.

14. TRADE AND OTHER PAYABLES
The breakdown of trade and other payables is as follows.
(Unit: Million yen)
FY2020Notes and accounts payable – trade

FY2021(As of March 31, 2020)(As of March 31, 2021)¥35,222¥44,903

Other

15,861

18,039Total¥51,084¥62,943

Note: Financial liabilities related to “Trade and other payables” are classified as financial liabilities measured at amortized cost.

Carrying amounts(Unit: Million yen)

Balance as of April 1, 201976

SoftwareDevelopment
expenses

Goodwill¥959¥7,582

¥—

Other

Total

¥1,538¥10,080

Balance as of March 31, 2020

767

8,558

—

40

9,366

Balance as of March 31, 2021

581

8,774

463

1,092

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15. BORROWINGS
The breakdown of borrowings is as follows.
(Unit: Million yen)
FY2020(As of March 31, 2020)

FY2021(As of March 31, 2021)

Current portion of non-current borrowings

¥75

¥—

Total

¥75

¥—

Current liabilities

¥75

¥—

Total

¥75

¥—

Note: Borrowings are classified as financial liabilities measured at amortized cost.

16. OTHER FINANCIAL LIABILITIESThe breakdown of other financial liabilities is as follows.
(Unit: Million yen)
FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)¥3,939¥5,228

11

81

Total

¥3,951¥5,309Current liabilities¥1,109¥1,357

Non-current liabilities

2,841

3,952

Total

¥3,951¥5,309Lease obligations
Derivative financial liabilities

Notes: 1. Lease obligations are classified as financial liabilities measured at amortized cost.
2. Derivative financial liabilities are classified as financial liabilities measured at a fair value through net profit or loss.

17. INCOME TAXES(1) Deferred tax assets and deferred tax liabilities
The breakdown of deferred tax assets and deferred tax liabilities is as follows.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)
Balance atthe beginning of
the fiscal year

Recognizedthrough net
profit or loss

Recognizedthrough othercomprehensive
incomeAcquisition
through businesscombination

Balance atthe end of
the fiscal year

Deferred tax assets:¥ 1,756¥768¥    —¥—¥ 2,524

Property, plant and equipment

Inventories

692

128

—

—

821

Intangible assets

182

(64)

—

—

117

Investments in equity instruments

—

—

0

—

0

Accrued expenses and provisions

1,322

(236)

—

—

1,086

Net defined benefit liability
Unused tax losses
Other
Total deferred tax assets

271

(64)

0

—

207

—

110

—

—

110

924

92

—

—

1,016

¥ 5,150¥733¥      0¥—

¥ 5,884

Deferred tax liabilities:¥   982¥ (81)¥    —¥—¥   901

Intangible assets

Property, plant and equipment

1,548

544

—

—

2,092

Investments in equity instruments

3,368

—

(866)

—

2,502

751

33

(226)

—

558

1,036

492

—

—

1,529

Net defined benefit asset
Undistributed earnings of foreign subsidiaries

1,011

(168)

—

—

843

Total deferred tax liabilities

Other¥ 8,698¥821¥(1,092)¥—¥ 8,427

Net deferred tax liabilities¥(3,547)¥ (88)¥ 1,093¥—¥(2,542)

Note: T he difference between the total amount recognized through net profit or loss and total deferred tax expenses is due tofluctuations in foreign exchange rates.

78

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For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)
Balance atthe beginning of
the fiscal year

Recognizedthrough net
profit or loss

Recognizedthrough othercomprehensive
income¥ 2,524¥ (41)¥     —

¥    —¥ 2,483

Property, plant and equipment

821

199

—

—

1,021

Intangible assets

117

0

—

—

117

Investments in equity instruments

0

—

(1)

0

—

Accrued expenses and provisions

Acquisition
through businesscombination

Balance atthe end of
the fiscal year

Deferred tax assets:
Inventories

1,086

403

—

79

1,568

Net defined benefit liability

207

93

(0)

—

301

Unused tax losses

110

(86)

—

—

23

1,016

161

—

7

1,185

¥ 5,884¥730¥    (1)¥ 87¥ 6,701¥   901¥ 68¥     —

¥ 34

¥ 1,003

Intangible assets

2,092

45

—

317

2,455

Investments in equity instruments

2,502

—

1,238

—

3,740

558

(57)

548

18

1,067

1,529

140

50

—

1,720

843

(71)

—

2

774

Other
Total deferred tax assets
Deferred tax liabilities:
Property, plant and equipment

Net defined benefit asset
Undistributed earnings of foreign subsidiaries
Other
Total deferred tax liabilities¥ 8,427¥124¥ 1,836¥ 372¥10,762

Net deferred tax liabilities¥(2,542)¥605¥(1,838)¥(285)¥ (4,060)

Note: The difference between the total amount recognized through net profit or loss and total deferred tax expenses is due tofluctuations in foreign exchange rates.

Deferred tax assets and deferred tax liabilities in the consolidated statement of financial position are as follows.
(Unit: Million yen)
FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)

Deferred tax assets¥ 1,055¥ 1,748

Deferred tax liabilities

3,598

5,808

¥(2,542)¥(4,060)

Net deferred tax liabilities

The breakdown by expiration date of unused tax losses and tax credits for which deferred tax assets have not beenrecognized is as follows. Amounts are presented on a taxable amount basis.
(Unit: Million yen)
FY2020(As of March 31, 2020)(As of March 31, 2021)

¥155

¥   —

Between 1 and 2 years—

296

Between 2 and 3 years

428

552

Between 3 and 4 years

41

11

Between 4 and 5 years

22—

More than 5 years

3

32

¥650

¥893

Within 1 year

Total

Taxable temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not beenrecognized are as follows.
Deferred tax liabilities were not recognized as the timing of the reversal of the temporary differences could becontrolled by the Group and it was probable that the temporary differences would not reverse in the foreseeable future.
Amounts are presented on an income basis.
(Unit: Million yen)
FY2020

Taxable temporary differences

FY2021(As of March 31, 2020)(As of March 31, 2021)¥109,915¥116,933

FY2020

FY2021(2) Income tax expenses
The breakdown of income tax expenses is as follows.
(Unit: Million yen)
(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥8,557¥8,844(5)(203)¥8,551¥8,641¥ (803)¥ (737)

Current tax expense:
Taxable amount for the fiscal year
Adjustment for prior years
Total current tax expense
Deferred tax expense:
Accrual and reversal of temporary differences
Changes in tax rates
Changes in unrecognized temporary differences, etc.

Deductible temporary differences for which deferred tax assets have not been recognized are as follows. Amounts
are presented on a taxable amount basis.

FY2021

—

49

800

211

Total deferred tax expense¥(2)¥ (477)

Total income tax expense¥8,548¥8,164(Unit: Million yen)
FY2020

Deductible temporary differences80

TS TECH Integrated Report 2021

FY2021(As of March 31, 2020)(As of March 31, 2021)¥1,131¥1,125TS TECH Integrated Report 2021

81

Reconciliation of the effective statutory tax rates with the average actual tax rates in the consolidated statement of
profit or loss is as follows.

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)

(Unit: %)FY2020(April 1, 2020–March 31, 2021)

29.9%

29.9%

Differences with tax rates applied to foreign subsidiaries

(6.4)

(5.2)

Undistributed earnings of foreign subsidiaries

1.7

0.3

Permanent differences including dividend income(14.4)(12.4)

Differences due to factors including elimination of intra-grouptransactions

18.0

15.5

Share of loss (profit) of entities accounted for using the equity
method

(0.5)

(6.3)

Tax credits

(1.3)

(1.2)

Changes in unrecognized deferred taxes

2.8

0.6

Other

(0.1)

1.3

29.7%

22.5%

Average actual tax rate

Provision for
product
warranties

Provision forseverance
charges¥271¥      —

¥ 85

¥14

¥  371

Increase during the period

162

2,374

—

—

2,536

Decrease during the period (provision used)

(271)

—

(0)

(9)

(282)

Other

Total

Decrease during the period (reversal)

—

—

—

—

—

Effects of foreign currency translation

(5)

(83)

—

(1)

(90)

Balance at the end of the fiscal year¥156

¥2,290¥ 85¥ 2¥2,534Current liabilities¥156¥      —¥—¥—¥  156

—

2,290

85

2

2,378

¥156

¥2,290¥ 85¥ 2¥2,534

Total

¥85

¥  2

¥2,534

Increase during the period

14

—

12

382

408

Decrease during the period (provision used)

(87)

(248)

(0)

(2)

(337)

Decrease during the period (reversal)

(5)

—

—

—

(5)

(0)

300

—

36

337

¥ 76

¥2,343¥97¥419¥2,936

Current liabilities¥ 76¥2,343¥12¥419¥2,851

—

—

85

—

85

¥ 76

¥2,343¥97¥419¥2,936

19. POST-EMPLOYMENT BENEFITS(1) Overview of the post-employment benefit plan adopted by the GroupTo prepare for the payment of retirement benefits to its employees, the Company and certain consolidated
subsidiaries have adopted funded and unfunded defined benefit plans and defined contribution plans.
The defined benefit plans consist mainly of a contract-type corporate pension plan which pays out lump-sum
payments and annuities based on a points system.
The contract-type corporate pension plan is managed, pursuant to a defined benefit corporate pension contract
entered into by both labor and management, through the entrustment of the management and administration of plan
assets to an investment institution.
In addition, the contract sets forth mandatory recalculation of premiums every five years, pursuant to the Defined
Benefit Corporate Pension Act, in order to maintain balanced finances into the future.
During the previous fiscal year, the Group revised its retirement allowance regulations following the introduction ofa system to grant its employees an option to extend their retirement age. As a result, the Group accrued prior service
cost (decrease in defined benefit obligations).
(2) Defined benefit plan(i) Reconciliation of defined benefit obligations (assets) with the net defined benefit liability (asset) recorded in
the consolidated statement of financial position(Unit: Million yen)
FY2020TS TECH Integrated Report 2021

FY2021(As of March 31, 2020)(As of March 31, 2021)

Ending balance of defined benefit obligations¥ 16,237¥ 17,370

Ending balance of plan assets(16,744)(19,297)

Net amount of defined benefit obligations and assets(506)(1,926)

Net defined benefit liability

1,372

1,648

Net defined benefit asset(1,879)(3,575)¥     (506)¥ (1,926)

Net amount of liabilities and assets recorded in the consolidated
statement of financial position

82

Asset retirement
obligations

Balance at the end of the fiscal year

Total

(Unit: Million yen)

Non-current liabilities

Total¥2,290Non-current liabilities

For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)

Balance at the beginning of the fiscal year

Other

¥156

Balance at the beginning of the fiscal year

Effects of foreign currency translation

18. PROVISIONS
Changes in the amounts of provisions are as follows.

Asset retirement
obligations

Provision forseverance
charges

FY2021(April 1, 2019–March 31, 2020)

Effective statutory tax rate

Provision for
product
warranties

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83

(ii) Reconciliation of present value of defined benefit obligations(Unit: Million yen)
FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥16,758¥16,237

Service cost

1,027

1,148

Interest cost

134

151

Prior service cost

(340)

—

Actuarial differences (due to changes in demographic assumptions)

(10)

—

Actuarial differences (due to changes in financial assumptions)

(297)

(74)

Beginning balance of defined benefit obligations

Actuarial differences (due to adjustments)

(11)

(42)

Benefits paid

(869)

(428)

Effects of foreign currency translation

(152)

147

Increase (decrease) by business combination—

230

Ending balance of defined benefit obligations¥16,237¥17,370

Notes: 1. Service cost, interest cost, and prior service cost are included in “Cost of sales” and “Selling, general and administrative
expenses” in the consolidated statement of profit or loss.
2. Actuarial differences are included in “Remeasurements of net defined benefit plans” in the consolidated statement ofcomprehensive income.

(v) Investment policy of plan assets
With respect to its plan assets, the Group upholds the investment policy of maintaining a well-balanced, diversified
portfolio comprised mainly of conventional assets within the acceptable boundaries of risk and of aiming for longterm, stable revenue levels that will ensure the performance of its payment obligations.
The Group reviews its investment policy as necessary depending on the financial conditions and the investment
environment of the defined benefit plans.
(vi) Significant actuarial assumptions and analysis of sensitivity thereto
Significant actuarial assumptions are as follows.
(Unit: %)FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)

0.6%

0.6%

Discount rate

The estimated effects of changes in actuarial assumptions on defined benefit obligations are as follows.
(Unit: Million yen)
Effects on defined benefit obligations

Discount rate

FY2020

FY2021

Changes in assumptions(As of March 31, 2020)(As of March 31, 2021)

Rise by 0.5%¥(1,061)¥(1,078)

Fall by 0.5%

1,178

1,197

Note: This analysis assumes that all variables other than the discount rate remain fixed.

(iii) Reconciliation of the fair values of plan assets(Unit: Million yen)
FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥17,928¥16,744

Beginning balance of plan assets
Interest income

(65)

214

Return on plan assets other than interest

(943)

1,791

Contributions from the employer

687

637

Benefits paid

(851)

(386)

Effects of foreign currency translation

(11)

3

Increase (decrease) by business combination—

292¥16,744¥19,297

Ending balance of plan assets

Notes: 1. Interest income is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated
statement of profit or loss.
2. Return on plan assets other than interest is included in “Remeasurements of net defined benefit plans” in the consolidated
statement of comprehensive income.

(vii) Contribution to plan assets in the following fiscal year
The Company plans to contribute ¥640 million to plan assets in the year ending March 31, 2022 (April 1, 2021 toMarch 31, 2022).
(viii) Maturity analysis of defined benefit plans
Maturity analysis of defined benefit plans is as follows.
(Unit: Years)
FY2020Weighted-average duration(As of March 31, 2020)(As of March 31, 2021)

14.7

14.1

(3) Defined contribution plans
Amounts recognized as expenses of the defined contribution plans are as follows.
(Unit: Million yen)
FY2020

Amounts recognized as expenses(iv) Major breakdown of fair values of plan assets

FY2021

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

¥657

¥612

(Unit: Million yen)
FY2021

FY2020(As of March 31, 2021)(As of March 31, 2020)

84

Assets with quoted
market prices
in active markets

Assets without quoted
market prices
in active markets

Assets with quoted
market prices
in active markets

Assets without quoted
market prices
in active markets

Equity instruments¥ 7,174¥     —

¥ 8,852¥    —

Debt instruments

6,998

—

7,385

—

General accounts

—

1,442

—

2,321

Other

99

1,030

11

727

Total

¥14,272¥2,472¥16,248¥3,048TS TECH Integrated Report 2021

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20. NET ASSETS AND OTHER COMPONENTS OF EQUITY(1) Management of shareholders’ equity
The Group manages its shareholders’ equity in order to ensure the stable, continuous payout of dividends while atthe same time utilizing it in investments for the development of new technology and the expansion of its business.
The Group uses the equity ratio as the primary indicator in the management of shareholders’ equity, which is
calculated by dividing “Total equity attributable to owners of parent” by “Total liabilities and equity.”(5) Changes in other components of equity
Changes in other components of equity are as follows.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)
Financial assets
measured at fairvalue through other Remeasurements
comprehensiveof net definedincomebenefit plans(Unit: Million yen)
FY2020(As of March 31, 2020)

FY2021(As of March 31, 2021)

Beginning balance

Shareholders’ equity:
Total equity attributable to owners of parent
Total liabilities and equity
Equity ratio (%)¥254,745¥277,017

341,820

390,478

74.5%

70.9%

Other comprehensive income
Ending balance(3) Details of retained earnings
Details of retained earnings are as follows.
(i) Legal retained earnings
The Companies Act requires that an amount equivalent to 10% of dividends from retained earnings to be paid be
appropriated and set aside as legal capital surplus and legal retained earnings until the total of legal capital surplus andlegal retained earnings amounts to 25% of common stock. Such legal retained earnings may be used to compensate
for capital deficits. Legal retained earnings may also be reversed by resolution of a shareholders’ meeting.
(ii) Other retained earnings
Other retained earnings represent the cumulative amount of profits earned by the Group.
(4) Details of other components of equity
Details of other components of equity are as follows.
(i) Financial assets measured at fair value through other comprehensive income
The difference between the cost of financial assets measured at fair value through other comprehensive income
and the fair value at the reporting date(ii) Remeasurements of net defined benefit plans
Returns on plan assets other than actuarial differences and interest(iii) Differences on translation from foreign operations
Translation differences arising from the translation of financial statements of subsidiaries prepared in functional
currencies other than Japanese yen into Japanese yen

¥ 195

Total

¥ (2,568)¥ 5,712(1,992)(437)(7,769)(10,200)¥ 6,093¥(242)¥(10,338)¥ (4,487)

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)

Note: The Group is not subject to any material restrictions from third parties regarding its shareholders’ equity.

(2) Details of capital surplus
Details of capital surplus are as follows.
(i) Legal capital surplus
The Companies Act of Japan (hereinafter “the Companies Act”) requires that in the issue of shares, 50% or more of theamount of payment for shares and assets delivered be incorporated into common stock and the remaining amountbe incorporated into legal capital surplus. The Companies Act also provides that legal capital surplus may beincorporated into common stock by resolution of a shareholders’ meeting.
(ii) Other capital surplus
Increases, etc., in equity corresponding to gains (losses) on disposal of treasury stock and share-based paymenttransactions¥ 8,085

Differenceson translationfrom foreign
operations

Financial assets
measured at fairvalue through other Remeasurements
comprehensiveof net definedincomebenefit plans

Beginning balance
Other comprehensive income
Ending balance

Differenceson translationfrom foreign
operations

Total¥6,093¥ (242)¥(10,338)¥(4,487)

2,879

1,426

5,920

10,226¥8,972¥1,184¥ (4,417)¥ 5,738(6) Total number of shares authorized to be issued and total number of shares issued
The total number of shares authorized to be issued and total number of shares issued were as follows.
(Unit: Number of shares)
FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)

Total number of shares authorized to be issued

272,000,000

272,000,000

Total number of shares issued

68,000,000

68,000,000

Note: A ll shares issued by the Company are common stock with no par value and no restrictions on the shareholders’ rights.
The Company conducted a two-for-one stock split of common shares as of April 1, 2021.
For the fiscal year under review, the total number of shares issued represents the number before the stock split.

(7) Treasury stock
The amount of treasury stock is as follows.
(Unit: Number of shares)
FY2020(As of March 31, 2020)

Amount of treasury stock at beginning of the fiscal year
Purchase of treasury stock by resolution of the Board of Directors

FY2021(As of March 31, 2021)

2,275

2,434

—

860,000

159—

Disposal of treasury stock as restricted stock compensation—(95,100)

Treasury stock held by entities accounted for using the equity method(the Company’s shares) attributable to the Company—

108,4202,434

875,754

Purchase of stock less than one unit

Amount of treasury stock at end of the fiscal year

Notes: 1. The Company conducted a two-for-one stock split of common shares as of April 1, 2021.
For the fiscal year under review, the total number of shares issued represent the number before the stock split.
2. For details of restricted stock delivered, see Note 32 “Share-Based Remuneration.”86

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21. REVENUE(1) Disaggregation of revenue
The Company positions “Japan,” “The Americas,” “China,” and “Asia and Europe” geographically as its four reportablesegments and presents revenue from these regions.
Additionally, revenue is further disaggregated into the business segments of its motorcycle business, automobile
business (seats and interior products), and other business. The relationship between disaggregated revenues and therevenues from each reportable segment is as follows.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)
Reportable segments
Japan

The Americas

China

Asia
and Europe

Total

Motorcycle business¥ 3,299¥    319¥     —

¥ 1,378¥   4,996

Automobile business

52,444

170,231

77,636

48,624

348,937(Seats)45,888145,639

72,33044,721

308,580(Interior products)

6,556

24,591

5,306

3,902

40,356

947

4,750

—

50

5,748

¥56,691¥175,300¥77,636¥50,052¥359,682

Other business
Total

Note: Inter-segment transactions are eliminated by offsetting and only external revenue is presented.

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)
Reportable segments
Japan

The Americas

China

Asia
and Europe

Motorcycle business¥ 3,183¥    230¥      —

¥ 1,136¥  4,549

Automobile business

45,837137,071

113,784

31,399328,093(Seats)40,805

115,742

107,067

29,114

292,728(Interior products)

5,032

21,329

6,717

2,285

35,364

9,375

4,123

—

7

13,506¥58,396¥141,425¥113,784¥32,543¥346,149

Other business
Total

Total

(2) Contract balances
Contract balances are as follows.
(Unit: Million yen)

Receivables from contracts with customers
Contract liabilities

As of March 31, 2020

As of March 31, 2021

¥61,359¥37,635¥58,692

187

431

2,053

Receivables from contracts with customers are notes and accounts receivable – trade, and contract liabilities areprimarily related to advances received from customers. In the consolidated statement of financial position, receivablesfrom contracts with customers are included in “Trade and other receivables,” and contract liabilities are included in“Other current liabilities.”
Of the revenues recognized during the previous fiscal year and the fiscal year under review, the amounts included incontract liabilities at the beginning of the fiscal years were ¥21 million and ¥300 million, respectively. In addition,
during the previous fiscal year and the fiscal year under review, the amount of revenue recognized from performanceobligations satisfied in prior periods was not material.
An increase in contract liabilities for the fiscal year under review can be attributed primarily to the conversion of
Honda Cars SAITAMAKITA into a consolidated subsidiary.
(3) Transaction price allocated to remaining performance obligations
As there are no significant transactions with contracts with initial expected terms exceeding one year, the Group has
applied a practical expedient and does not disclose information on remaining performance obligations. Additionally,among the compensation from contracts with customers, there are no significant amounts not included in thetransaction price.
(4) Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
For the Group, assets recognized from the costs incurred for obtaining or fulfilling contracts with customers were notmaterial. In addition, the Group has applied a practical expedient and recognized assets with amortization periods of
one year or less, which it would have otherwise recognized, as an expense when incurred.

22. COST OF SALES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Major expense items included in the breakdown of cost of sales and selling, general and administrative expenses
according to the nature of the cost are as follows.
(Unit: Million yen)

Note: Inter-segment transactions are eliminated by offsetting and only external revenue is presented.

The Group is engaged in manufacturing through its motorcycle business, automobile business (seats and interior
products), and other business.
The performance obligation of revenue from the manufacturers of finished automobiles, who are the major
customers of the Group, is satisfied when the Group delivers the product to the customer, and revenue is recognizedat that point in time.
Revenue is measured as amounts net of discounts and other deductions from compensation agreed upon in thecontract with the customer.
Compensation for the transactions is received mostly within one year from the fulfillment of the performanceobligation and does not include a significant financing component.

As of April 1, 2019

FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Depreciation and amortization¥12,311¥11,440

Employee benefit expenses

72,45669,998FY2020

FY2021

23. OTHER INCOME AND OTHER EXPENSES
The breakdown of other income is as follows.
(Unit: Million yen)

Land and building rent received(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥  152¥  150Gain on disposal of non-current assets

650

640

Gain on government grants

118

1,645

Other

615

636

Total

¥1,537¥3,072

Note: The content of the gain on government grants are stated in Note 24 “Government Grants.”

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The breakdown of other expenses is as follows.
(Unit: Million yen)
FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥  154¥  474

Impairment loss

666

142

Other

232

610

Total

¥1,053¥1,227

Loss on disposal of non-current assets

Notes: 1. The content of impairment loss during the previous fiscal year is stated in Note 13 “Impairment Losses.”
2. “Other” during the fiscal year under review represents primarily the provision of an allowance to cover losses from theclosure of a subsidiary in the U.K.

24 GOVERNMENT GRANTS
The breakdown of government grants is as follows.
(Unit: Million yen)
FY2020(April 1, 2019–March 31, 2020)

26. EARNINGS PER SHARE
Basic earnings per share and the basis for estimation are outlined below.
Latent common stock that has a dilution effect is not included.
(Unit: Million yen)
FY2020(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Income attributable to owners of parent¥ 15,064¥ 20,741

Average number of common shares for the period (Thousand shares)

135,995

135,666

Basic earnings per share (Yen)¥110.77¥152.89

Notes: 1. The Company conducted a two-for-one stock split of common shares as of April 1, 2021.
2. Per share information is estimated based on the assumption that the stock split was conducted at the beginning of theyear ended March 31, 2020.

27. OTHER COMPREHENSIVE INCOME
The breakdown of each item of other comprehensive income is as follows.
(Unit: Million yen)

FY2021(April 1, 2020–March 31, 2021)

Deferred income relating to government grants¥132¥  120Gain on government grants

118

1,645

Notes: 1. Deferred income relating to government grants is recognized in “Other current liabilities” and “Other non-current liabilities”
in the consolidated statement of financial position.
2. Gain on government grants is recognized in “Other income” in the consolidated statement of profit or loss.
3. For the fiscal year under review, gain on government grants consists primarily of the grants intended for wage
compensation to employees amid the COVID-19 pandemic. There are no unfulfilled conditions or contingencies.

FY2021

FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥   (618)¥ 1,751

Components that will not be reclassified subsequently to net profit
or loss
Remeasurements of net defined benefit plans:
Gains (losses) during the year
Income tax benefit (expense)

197

(530)

Subtotal

(421)

1,221

(2,837)3,931

Equity financial assets measured at fair value through othercomprehensive income:25. FINANCE INCOME AND FINANCE COSTS
The breakdown of finance income is as follows.

Gains (losses) during the year
(Unit: Million yen)
FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Interest income¥1,614¥  827

Dividend income

604

455

Foreign exchange gains

—

698

Other

0

1

Total

¥2,218¥1,983

Notes: 1. Interest income is the interest income generated from financial assets measured at amortized cost.
2. Dividend income is the dividend income generated from financial assets measured through other comprehensive income.

Income tax benefit (expense)
Subtotal

866(1,177)(1,971)

2,754

—

323

(9,015)

7,793

—

(50)

(9,015)

7,742

Share of other comprehensive income of affiliates accounted forusing the equity method
Gains (losses) during the year
Components that may be reclassified subsequently to net profit or loss
Differences on translation from foreign operations:
Gains (losses) during the year
Income taxes
Subtotal
Share of other comprehensive income of affiliates accounted
for using the equity method:

The breakdown of finance costs is as follows.
(Unit: Million yen)
FY2020

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Interest expense

¥101

¥133

Foreign exchange losses

167

—

Other

5

2

Total

¥275

¥136

Gains (losses) during the year
Total other comprehensive income (loss), net of tax

(32)

48

¥(11,441)¥12,091

Note: Interest expense is incurred from financial liabilities measured at amortized cost.

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28. DIVIDENDS
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(1) Dividends paid

Resolution

Class ofsharesAnnual General Meetingof Shareholders heldon June 21, 2019

CommonsharesBoard of Directors’ meeting
held on October 31, 2019

CommonsharesTotal amountof dividends(Million yen)

29. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIESThe reconciliation of liabilities arising from financing activities is as follows.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)

Dividend
per share(Yen)

Record date

¥2,855¥42.00March 31, 2019

June 24, 2019

¥2,923¥43.00

September 30, 2019

December 2, 2019(2) D ividends whose record date is in the fiscal year under review but whose effective date is in the following
fiscal year

Resolution

Annual General Meetingof Shareholders heldon June 19, 2020

Class ofshares

Source ofdividends

Common Retained
sharesearnings

Total amountof dividends(Million yen)

Dividend
per share(Yen)(Unit: Million yen)

Effective date

Record date

Effective dateNon-cash transactions

Short-term loans

Class ofsharesAnnual General Meetingof Shareholders heldon June 19, 2020

CommonsharesBoard of Directors’ meeting
held on October 30, 2020

Commonshares¥2,923¥43.00March 31, 2020

Resolution

Annual General Meetingof Shareholders heldon June 25, 2021

Dividend
per share(Yen)

Record date

Effective date

¥2,923¥43.00March 31, 2020

June 22, 2020

¥2,923¥43.00

September 30, 2020

November 30, 2020

Common Retained
sharesearnings

TS TECH Integrated Report 2021

Endingbalance

¥   —

¥ —

¥    (7)¥   —Long-term loans

225

(150)

—

—

—

75

1,510

(1,532)

1,942

(42)

2,062

3,939

Total

¥1,742¥(1,682)¥1,942¥(42)¥2,055¥4,014

Notes: 1. Long-term loans include the current portion of long-term loans.
2. “Other” for lease liabilities represents the amount additionally recognized at the beginning of the fiscal year in conjunction
with the application of IFRS 16 “Leases.”(Unit: Million yen)
Non-cash transactions

Increase

Foreigncurrencytranslation

Other

Endingbalance¥   (75)

¥   —

¥—

¥  —

¥    —

3,939(1,754)

2,051

94

897

5,228

¥4,014¥(1,829)¥2,051¥ 94¥897¥5,228

Beginningbalance

Cash
flows

Long-term loans¥   75

Lease liabilities
Total

Notes: 1. Long-term loans include the current portion of long-term loans.
2. “Other” for lease liabilities is recognized due to conversion of Honda Cars SAITAMAKITA into a consolidated subsidiary.

30. NON-CASH TRANSACTIONS
Details of significant non-cash transactions are as follows.
(Unit: Million yen)
FY2020Total amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective date

¥3,159¥47.00March 31, 2021

June 28, 2021

Note: The Company conducted a two-for-one stock split of common shares as of April 1, 2021.
The dividend per share represents the actual amount of dividend before the stock split.

92¥     (0)Other

June 22, 2020

Total amountof dividends(Million yen)

Source ofdividends¥     7

Increase

Foreigncurrencytranslation

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(2) D ividends whose record date is in the fiscal year under review but whose effective date is in the following
fiscal year
Class ofsharesCashflows

Lease liabilities

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(1) Dividends paid

Resolution

BeginningbalanceAcquisition of assets through a lease arrangement

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥1,942¥2,051

31. SUBSIDIARIES AND AFFILIATES, ETC.
(1) Composition of the corporate group
The composition of the Group is as stated in “1. Corporate Summary (4) State of Subsidiaries and Affiliates” in the
Company’s annual securities report (in Japanese only).
During the fiscal year under review, NINGBO EPZ TS TRIMONT AUTOMOTIVE INTERIOR INC. in Ningbo Export
Processing Zone merged NINGBO FTZ TS TRIMONT AUTOMOTIVE INTERIOR INC. in Ningbo Free Trade Zone. As
a result, the Company has excluded NINGBO FTZ TS TRIMONT AUTOMOTIVE INTERIOR INC. from the scope of its
consolidation. Note that NINGBO EPZ TS TRIMONT AUTOMOTIVE INTERIOR INC. has been renamed to NINGBO TS
AUTOMOTIVE INTERIOR INC.
During the fiscal year under review, the Company acquired shares in and has converted Honda Cars SAITAMAKITA
into a consolidated subsidiary.
In addition, during the fiscal year under review, the Company acquired additional shares in Imasen Electric IndustrialCo., Ltd. As a result, Imasen Electric, falling under an affiliate, has become an affiliate accounted for using theequity method.

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(2) Matters concerning subsidiaries
Information regarding the subsidiaries in which the Company holds significant non-controlling interests is as follows.

WUHAN TS-GSK AUTO PARTS CO., LTD.
(Unit: Million yen)
FY2020

GUANGZHOU TS AUTOMOTIVE INTERIOR SYSTEMS CO., LTD.
FY2020

3,258

3,354

Current liabilities

4,739

9,736

—

60

Non-current assets

7,375

7,392

Current liabilities

9,001

19,093252

45Equity19,18923,768

Accumulated non-controlling interests¥ 9,491¥11,421

12,907

18,710

Accumulated non-controlling interests¥ 5,032¥ 7,616

FY2020

FY2021(Unit: Million yen)
(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥33,351¥51,778

FY2021

Net income

4,280

6,817

Other comprehensive income(1,044)

1,458

Comprehensive income

3,236

8,276

¥ 1,715¥ 2,965

FY2020

FY2021

Revenue¥44,288¥62,329

Net income

5,186

8,172

Other comprehensive income(1,186)

1,849

3,999

10,022¥ 2,558¥ 3,612

Income allocated to non-controlling interests(Unit: Million yen)
(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥ 8,319¥ 3,156(Unit: Million yen)

Cash flows from operating activities

FY2021

Cash flows from investing activities

(325)

(314)

Cash flows from financing activities(4,554)(2,519)

(858)

806

(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

Cash flows from operating activities¥ 5,071¥ 6,427

Cash flows from investing activities

(446)

(440)

Cash flows from financing activities(4,908)(5,496)

(837)

1,061

Net increase (decrease) in cash and cash equivalents(1,121)

1,551

Dividends paid to non-controlling interests¥(2,845)¥(2,612)

Effect of exchange rate changes on cash and cash equivalents

EquityRevenue(April 1, 2020–March 31, 2021)

FY2020Non-current liabilities(Unit: Million yen)
(April 1, 2019–March 31, 2020)

Income allocated to non-controlling interests¥25,152

Non-current assets¥35,514Comprehensive income¥14,389

FY2021¥21,067

FY2020(As of March 31, 2021)

Current assets(As of March 31, 2021)

Non-current liabilities(As of March 31, 2020)(Unit: Million yen)
(As of March 31, 2020)

Current assets

FY2021

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Dividends paid to non-controlling interests

2,580

1,128

¥(2,058)¥   (969)(3) Matters concerning affiliates
The Group does not have individually significant affiliates. Matters concerning affiliates which are not individuallysignificant are as follows.
(Unit: Million yen)
FY2020Carrying amount of equity interest

FY2021(As of March 31, 2020)(As of March 31, 2021)¥1,596¥16,575(Unit: Million yen)

FY2020(April 1, 2019–March 31, 2020)

FY2021(April 1, 2020–March 31, 2021)

The Group’s equity interest in:
¥481

¥846

Other comprehensive income

(32)

372

Comprehensive income

448

1,219

Net income

Note: F or the fiscal year under review, “Share of profit of investments accounted for using the equity method” in the consolidated
statement of profit or loss includes a gain on bargain purchase of ¥6,811 million.
This is because the Company has made Imasen Electric Industrial Co., Ltd. an affiliate accounted for using the equity method.
During the fourth quarter of the fiscal year under review, the Company has finalized the provisional accounting treatment
associated with the application of equity method to Imasen Electric Industrial Co., Ltd.

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32. SHARE-BASED REMUNERATION(1) Overview of the Scheme
The Company has introduced a restricted stock based incentive scheme (hereinafter the “Scheme”) for TS Tech
Employee Shareholding Association (hereinafter the “Shareholding Association”), commemorating its 60th anniversary,to enhance the benefit package for its employees.
Under the Scheme, the Company delivers monetary compensation claims, as a special incentive (hereinafter the“Special Incentive”), for the allotment of restricted stock to employees who are eligible to join the Shareholding
Association (hereinafter the “Eligible Employees”). The Shareholding Association shall receive shares of the Company’scommon stock through issuance or disposal by the Company, in return for contribution in kind of the Special Incentive
to the Company, which was contributed by the Eligible Employees.
When the Company issues or disposes of shares of its common stock in this way, the Company enters into a
restricted stock allotment agreement with the Shareholding Association that 1) forbids the transfer to third parties,
creation of a security interest on, or disposal by other means of common shares of the Company delivered under
this Scheme for a certain period of time (from March 26, 2021 through March 25, 2024) (hereinafter the “Transfer
Restrictions”), 2) where the Eligible Employees have remained members of the Shareholding Association during thetransfer restriction period, the Company shall remove the Transfer Restrictions pertaining to all of the shares allottedto the Eligible Employees, and 3) on the condition of the occurrence of certain events, such as voluntary retirement of
the Eligible Employees, the Company shall acquire, for no consideration, part or all of the numbers of sharescorresponding to their stake in the restricted stock.
(2) Number and fair value of the shares allotted during the fiscal year
Number and fair value of the shares allotted during the fiscal year are as follows.
(Unit: Million yen)
FY2020(April 1, 2020–March 31, 2021)

Allotment date—

January 29, 2021

Number of shares allotted—

95,100Fair value (Yen)

—

3,060

Notes: 1. The fair value of the shares is measured based on the closing price of the Company’s common stock on the First Sectionof the Tokyo Stock Exchange on the business day preceding the allotment date.
2. The Company conducted a two-for-one stock split of its common stock as of April 1, 2021. The number and fair value ofshares allotted above represent the actual number and fair value of the shares allotted before the stock split.

(3) T he amount of expenses related to the share-based payment recognized in the consolidated statement of
profit or loss
The amount of expenses related to the share-based payment recognized in the consolidated statement of profit orloss is as follows.
(Unit: Million yen)

Equity settled type

In terms of the financial instruments held by the Group at the end of FY2020 and FY2021, the impact of a 1%
appreciation of Japanese yen against the U.S. dollar and the Chinese yuan on income before income tax is as follows.

FY2021(April 1, 2019–March 31, 2020)

FY2020(ii) Credit risk (Risk of a business partner defaulting on its contractual obligations)
Trade and other receivables are exposed to the credit risk of customers.
The Group manages these risks in accordance with its credit management regulations by periodically monitoring
whether any customer has gone over its credit limit, which is set for each customer, while also making efforts to
identify at an early stage concerns for collection due to deterioration of the customer’s financial position and mitigate
said risks.
The majority of the Group’s trade and other receivables are due from Honda Motor Co., Ltd. and its groupcompanies, whose creditworthiness is high and poses minimal credit risk.
When engaging in derivative transactions, the Group deals exclusively with financial institutions with high credit
ratings in order to mitigate credit risk.
The carrying amounts of financial assets after impairment losses presented in the consolidated statement offinancial position represent the maximum exposure of the Group to credit risk.
(iii) Market risk (Foreign currency risk)
As the Group conducts its business globally, it engages in foreign currency-denominated transactions and accordingly
its profits and cash flows are exposed to the risk of fluctuating exchange rates.
The Group engages in derivative transactions, namely forward exchange contracts, to mitigate such risks in terms of
its foreign currency-denominated trade receivables and payables.
In the execution and administration of derivative transactions, the funding division obtains the approval of theperson with the decision-making authority in accordance with the internal rules which set forth transaction authority
and other matters.

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)—

34(Unit: Million yen)
Impact on income before income tax
FY2020(April 1, 2020–March 31, 2021)

1% appreciation of Japanese yen against the U.S. dollar

¥(30)

¥(26)

1% appreciation of Japanese yen against the Chinese yuan

(14)

(17)

Note: This analysis assumes that all variables other than the Japanese yen–U.S. dollar/Chinese yuan exchange rates remain fixed.

(Price fluctuation risks of equity instruments)
The Group holds equity instruments that include the stocks of publicly traded companies with which it maintains
business relationships and is thus exposed to the risk of fluctuating market prices of these instruments.
The Group manages such risks by periodically monitoring the fair value of said instruments and the financial
condition of its investment targets as well as conducting ongoing reviews of its status of holdings.
In terms of the equity instruments held by the Group at the end of FY2020 and FY2021, the impact of a 1% decline
in market prices on other comprehensive income is as follows.
(Unit: Million yen)
Impact on other comprehensive income

Note: Expenses relating to the share-based payment are included in “Cost of sales” and “Selling, general and administrative expenses”
in the consolidated statement of profit or loss. Also, an increase in equity corresponding to the recognized expenses is
included in “Capital surplus.”

FY202096

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FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)¥(116)¥(152)

1% decline in market prices
33. FINANCIAL INSTRUMENTS(1) Details and the extent of risks arising from financial instruments(i) Policies on the management of financial instruments and risk management
The Group is exposed to various risks arising from financial instruments including credit risk, market risk, and liquidity
risk. To manage the exposures to these risks, the Group conducts risk management according to a certain set of policies.
In terms of investments, the Group primarily uses principal-guaranteed time deposits and similar financial
instruments, while, in terms of funding, the Group raises funds basically with its own financial resources and uses bankloans and similar financial instruments as needed.
The Group enters into derivative transactions to minimize the risk of future fluctuations in exchange rates but strictly
adheres to the policy of avoiding such transactions for speculative purposes.

FY2021(April 1, 2019–March 31, 2020)

Note: This analysis assumes that all variables other than the market prices remain fixed.

(iv) Liquidity risk (Risk of not being able to execute payment on the payment date)
While the Group basically raises necessary funds with its own financial resources, it is exposed to the risk of not being
able to execute payment on payment dates for reasons such as deteriorated funding environment.
The Group manages said risk by having the Company’s accounting division prepare and update fund management
plans based on the reports of each division in order to mitigate liquidity risk.

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(2) Fair value measurement
Fair values are classified into the following three levels according to the extent to which the input information used in
the measurement is observable and the materiality of said input.
Level 1: Quoted prices of similar assets and liabilities in active markets
Level 2: Input other than quoted prices included in Level 1 that is observable either directly or indirectly
Level 3: Input including that not based on observable market data
No transfers occurred between Levels 1, 2, and 3 during FY2021.
(i) Method of measuring fair value(Equity instruments)
Equity instruments are mainly stocks of publicly traded companies and are measured based on the prices quoted by
the stock exchanges.
(Derivative financial assets and derivative financial liabilities)
The fair values of the forward exchange contracts are measured based on the prices quoted by the financial institutions.
(Long-term loans receivable)
Long-term loans receivable are measured at the present value of future cash flows discounted by an interest rate thatreflects an appropriate indicator such as the yield on Japanese government bonds to which a credit spread has been added.
(Long-term borrowings)
Long-term borrowings are measured at the present value of the total of principal and interest discounted by aninterest rate that would be used for a similar loan.
(Financial instruments other than those above)
Financial instruments other than those above are measured at amortized cost but statement thereof has been
omitted as their measured carrying amounts approximate their fair values.
(ii) Carrying amounts and fair values of financial instruments(Financial instruments measured at fair value on a recurring basis)
For the year ended March 31, 2020 (As of March 31, 2020)(Unit: Million yen)
Fair value

Carrying
amountLevel 1

¥12,897¥11,674

911

Level 2For the year ended March 31, 2021 (As of March 31, 2021)(Unit: Million yen)Total

¥16,441¥15,227

081

Level 2

Level 3Total

Equity instruments¥—¥1,214¥16,441

—

0

—

0

—

81

—

81

Financial assets measured at fair value
through net profit or loss:
Derivative assets
Financial liabilities measured at fair value
through net profit or loss:
Derivative liabilities(Financial instruments measured at amortized cost)
For the year ended March 31, 2020 (As of March 31, 2020)(Unit: Million yen)
Fair value

Carrying
amountLevel 1

Level 2

Level 3

Total

¥515

¥—

¥518

¥—

¥518

75

—

74

—

74

Financial assets measured at amortized cost:Long-term loans receivable (including thecurrent portion)
Financial liabilities measured at amortized cost:Long-term borrowings (including thecurrent portion)¥—¥1,223¥12,897

—

9

—

9

—

11

—

11

(Unit: Million yen)Financial liabilities measured at fair value
through net profit or loss:
Derivative liabilities

Level 1For the year ended March 31, 2021 (As of March 31, 2021)

Level 3Financial assets measured at fair value
through net profit or loss:
Derivative assets

Carrying
amountFinancial assets measured at fair value
through other comprehensive income:Financial assets measured at fair value
through other comprehensive income:Equity instruments

Fair value

Fair value

Carrying
amountLevel 1

Level 2

Level 3

Total

¥497

¥—

¥500

¥—

¥500

Financial assets measured at amortized cost:
Long-term loans receivable (including thecurrent portion)(3) Offsetting of financial assets and financial liabilities
Information on the offsetting of financial assets and financial liabilities recognized for a single counterparty is as follows.
(Unit: Million yen)
FY2020(As of March 31, 2020)(As of March 31, 2021)¥227,328¥255,814

4,350

9,175

Amount of financial assets presented inconsolidated statement of financial position¥222,977¥246,638

Gross amount of financial liabilities recognized¥ 59,461¥ 77,428

4,350

9,175

¥ 55,110¥ 68,252

Gross amount of financial assets recognized
Offset amount

Offset amountAmount of financial liabilities presented inconsolidated statement of financial position

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99

34. LEASES(1) Lease transactions as a lessee
The Group leases real estate properties, such as land and buildings, and molds under lease contracts. Each of theGroup’s companies is responsible for managing and negotiating lease contracts on its own, and thus, the terms andconditions of lease contracts can vary substantially from company to company. An option to extend lease periods isincluded in the leases of real estate properties, especially land and buildings. Many lease contracts for real estate
properties provide an option to extend the lease period by one year or the originally agreed-upon lease period,
and an option to cancel the contract earlier with a six-month prior notice in writing. Contracting parties who leaseproperties for business purposes may use these options as needed.
(i) Expenses and cash flows associated with lease contracts
Expenses and cash outflows for lease contracts are as follows.
(Unit: Million yen)
FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)¥  445¥  494

Machinery, equipment and vehicles

32

23

Tools, furniture and fixtures76

19

Depreciation of right-of-use assets by asset type
Buildings and structures

11

55

Total depreciation¥  566¥  593

Expenses related to short-term leases or leases of low-value assets¥  819¥  938¥2,466¥2,776Land

Total cash outflow for leases

FY2020(As of March 31, 2020)¥2,819¥36

FY2021(As of March 31, 2021)¥3,167¥26

TS TECH Integrated Report 2021

(As of March 31, 2021)¥1,098¥1,275

Between 1 and 2 years

603

721

Between 2 and 3 years

358

522

Between 3 and 4 years

296

423

198

323

More than 5 years

1,384

1,961

Total

¥3,939¥5,228Between 4 and 5 years

Note: The balance of lease liabilities is included in “Other financial liabilities” in the consolidated statement of financial position.

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

¥688

¥198

Finance lease
Selling profit or loss(ii) Balance of lease receivables by the period to maturity
Balance of lease receivables by the period to maturity is as follows.
(Unit: Million yen)
FY2020

FY2021(As of March 31, 2020)(As of March 31, 2021)

Within 1 year

¥2,643¥2,312

Between 1 and 2 years

1,024

647

Land

Total

Between 2 and 3 years

590

454

¥71

¥1,463¥4,391

Between 3 and 4 years

590

436

Between 4 and 5 years

—

436

¥56

¥2,256¥5,506

Note: During FY2020 and FY2021, the amount of right-of-use assets increased by ¥648 million and ¥335 million, respectively.

100(As of March 31, 2020)

Within 1 year

FY2020(Unit: Million yen)Tools,
furniture andfixtures

FY2021(Unit: Million yen)(ii) Right-of-use assets included in the carrying amount of property, plant and equipment
The carrying amount and the amount of increase in right-of-use assets included in the carrying amount of property,
plant and equipment are as follows.
Machinery,equipment
and vehicles(Unit: Million yen)
FY2020(2) Lease transactions as lessor
The Group mainly leases molds under finance lease contracts.
(i) Revenues associated with lease contracts
Revenues associated with lease contracts are as follows.

Notes: 1. Depreciation of right-of-use assets is included in “Cost of sales” and “Selling, general and administrative expenses” in the
consolidated statement of profit or loss.
2. Expenses related to short-term leases or leases of low-value assets are included in “Cost of sales” and “Selling, general andadministrative expenses” in the consolidated statement of profit or loss.

Buildings
andstructures(iii) Balance of lease liabilities by the period to maturity
Balance of lease liabilities by the period to maturity is as follows.

More than 5 years
Total

—

—

¥4,848¥4,288

Note: The balance of lease receivables is included in “Other financial assets” in the consolidated statement of financial position.

TS TECH Integrated Report 2021101

35. RELATED-PARTY DISCLOSURES(1) Transactions between the submitting company and related parties
The balances of transactions and receivables/payables between the submitting company and related parties are as follows.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)

Name

Other affiliates

Honda MotorCo., Ltd.

(Unit: Million yen)Type of related party(Unit: Million yen)Type of related party(ii) TS TECH ALABAMA, LLC.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥48,379

Account

Accounts
receivable –trade

Subsidiaries of other affiliates

Outstandingbalance¥7,654Nature of relatedparty transaction

Transaction
amount

Honda
Sale of
Manufacturing of the Company’s
Alabama, LLC.
products¥39,518

Name

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

Type of related party(Unit: Million yen)Type of related party

Name

Other affiliates

Honda MotorCo., Ltd.

Transaction
amountSale ofthe Company’s
products¥44,577

Account

Accounts
receivable –trade

Note: Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

(2) Transactions between the consolidated subsidiaries of the submitting company and related parties
The balances of transactions and receivables/payables between the consolidated subsidiaries of the submitting
company and related parties are as follows.
(i) TS TECH USA CORPORATION
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Name

Nature of relatedparty transaction

Transaction
amountHonda of
America Mfg.,
Inc.

Sale ofthe Company’s
products¥52,366

Account

Accounts
receivable –trade

Outstandingbalance¥3,191For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)

Subsidiaries of other affiliates

Name

Nature of relatedparty transaction

Transaction
amountHonda of
America Mfg.,
Inc.

Sale ofthe Company’s
products¥44,730

Account

Accounts
receivable –trade

Subsidiaries of other affiliates

Nature of relatedparty transaction

Transaction
amount

Honda
Sale of
Manufacturing of the Company’s
Alabama, LLC.
products¥26,547

Name

Account

Accounts
receivable –trade

Outstandingbalance¥1,772

Note: B usiness terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

(iii) TS TECH CANADA INC.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Name

Honda Canada,
Inc.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥45,643

Account

Accounts
receivable –trade

Outstandingbalance¥2,960Note: B usiness terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)

Note: Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

Type of related party¥2,334(Unit: Million yen)

Outstandingbalance¥7,592

Accounts
receivable –trade

Outstandingbalance

Note: B usiness terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

Note: Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

Nature of relatedparty transaction

Account

Outstandingbalance

Type of related party

Subsidiaries of other affiliates

Name

Honda Canada,
Inc.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥39,403

Account

Accounts
receivable –trade

Outstandingbalance¥3,720Note: B usiness terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

¥3,531

Note: Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

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103

OTHER
Quarterly information for the fiscal year under review is as follows.

(iv) TS TECH (THAILAND) CO., LTD.
For the year ended March 31, 2020 (April 1, 2019 to March 31, 2020)(Unit: Million yen)
Nature of relatedparty transaction

Transaction
amountSubsidiaries of other affiliates Honda Automobile
Sale of(Thailand) Co., Ltd. the Company’s
products¥22,425

Type of related party

Name

Account

Accounts
receivable –trade

Outstandingbalance

1st quarter2nd quarter3rd quarter

4th quarter¥3,855

Revenue¥54,739¥156,457¥258,085¥346,149

Income before income tax(1,221)

11,21929,52336,247

Income attributable to owners of parent(3,757)

4,162

17,734

20,741

Earnings per share (Yen)(27.63)30.61

130.40152.89

1st quarter2nd quarter3rd quarter

4th quarter¥(27.63)¥58.24¥99.80¥22.33

Note: Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

(Unit: Million yen)
Nature of relatedparty transaction

Transaction
amountSubsidiaries of other affiliates Honda Automobile
Sale of(Thailand) Co., Ltd. the Company’s
products¥14,083

Name

Accounting period
Earnings per share (Yen)For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

Type of related party(Unit: Million yen)

Cumulative period

Outstandingbalance

Account

Accounts
receivable –trade¥2,828Notes: 1. The Company conducted a two-for-one stock split of common stocks as of April 1, 2021. Per share information is estimatedbased on the assumption that the stock split was conducted at the beginning of the first quarter.
2. During the fourth quarter of the fiscal year under review, the Company has finalized the provisional accounting treatment
as to the application of equity method to Imasen Electric Industrial Co., Ltd. that occurred during the previous quarter toreflect the finalization of the provisional accounting treatment of the items made during the third quarter.

Note: Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.

(3) Remuneration of key management personnel
Remuneration to the directors and auditors of the Company is as follows.
(Unit: Million yen)
FY2020

Basic remuneration and bonuses

FY2021(April 1, 2019–March 31, 2020)(April 1, 2020–March 31, 2021)

¥535

¥440

36. CONTINGENT LIABILITIESThe Company provides guarantees to financial institutions on the borrowings by employees. The guarantee amounts
are as follows.
(Unit: Million yen)
FY2020

Employees (Company housing and mortgage loans)

FY2021(As of March 31, 2020)(As of March 31, 2021)

¥34

¥30

37. SUBSEQUENT EVENTS
Not applicable104

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105

Independent Auditor’s Report(TRANSLATION)INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of TS TECH Co., Ltd.:

June 25, 2021

Deloitte Touche Tohmatsu LLC
Tokyo office
Designated Engagement Partner,
Certified Public Accountant:

Jun Kagawa

Designated Engagement Partner,
Certified Public Accountant:

Hiroyuki Fukushima

OpinionPursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements included in the Financial Section, namely, the consolidated statement of financial
position, and the consolidated statement of profit or loss, consolidated statement of comprehensive income,consolidated statement of changes in equity and consolidated statement of cash flows of TS TECH Co., Ltd. and its
consolidated subsidiaries (the “Group”) for the fiscal year from April 1, 2020 to March 31, 2021, and notes to theconsolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as of March 31, 2021, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards
pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms and Preparation Methods ofConsolidated Financial Statements.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the provisions of the Code ofProfessional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

106

TS TECH Integrated Report 2021

Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of theconsolidated financial statements of the current period. That matter was addressed in the context of our audit of theconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on that matter.
Key Audit Matter Description

How the Key Audit Matter Was Addressed in the Audit

The Group’s share of the profit of investments
accounted for using the equity method recognized
upon Imasen Electric Industrial Co., Ltd.’s change toan equity-method affiliate
The Group acquired shares of Imasen Electric IndustrialCo., Ltd. (the “Affiliate”) through a take-over bid andacceptance of third-party allotment. As a result, theAffiliate was 34.75% owned by the Group and became
an affiliate accounted for using the equity method
effective December 15, 2020.
The Group’s share of the profit of investments in the
Affiliate accounted for using the equity method
amounted to 7,658 million yen in the consolidated
statement of profit or loss, which accounted for 27.3%
of consolidated net income, for the year and wasconsidered material to the consolidated financial
statements.
The Group obtained the financial information of theAffiliate prepared in accordance with International
Financial Reporting Standards as of the commencement
date of the equity-method application. The Group thenmeasured its identifiable assets and liabilities at fairvalue and determined whether any intangible assets
needed to be identified with the assistance of external
experts. The Group’s share of the net fair value of theAffiliate’s identifiable assets and liabilities exceeded thepurchase price of the shares by 6,811 million yen, which
was recorded as a share of profit of investments
accounted for using the equity method in the
consolidated statement of profit and loss.
The Group’s share of the profit of investments in the
Affiliate accounted for using the equity method which
was recognized on the commencement date of equitymethod application was quantitatively material and theprocesses of measuring the identifiable assets andliabilities at fair value and determining the identifiableintangible assets were complex. Given the complexity
involved in the accounting estimates and the specialized
expertise required in performing audit procedures, we
identified the appropriateness of the Group’s share of
the profit of investments accounted for using the equity
method recognized upon the Affiliate’s change to an
equity-method affiliate as a key audit matter.

Our audit procedures to assess the Group’s share of the
profit of investments in the Affiliate accounted for using
the equity method included the following, among others:• We obtained an understanding of the processes forthe allocation of purchase prices of equity-method
investments to their assets and liabilities and therelevant controls, and tested the design and operating
effectiveness of these controls by making inquiries ofthe department personnel in charge of the purchaseprice allocation, including the identification of
intangible assets and the fair value measurements, aswell as the key personnel performing these controls,
and inspecting minutes of the Board of Directors’
meetings and the attachments to them.
• We evaluated the competency, capability andobjectivity of external experts used by management
for the purpose of measuring the fair value andidentifying the intangible assets.
• With the assistance of our valuation specialists, weevaluated the appropriateness of the fair value
measurements and the identification of intangible
assets made by management.
• With the assistance of the Affiliate’s auditors, weevaluated the reliability of the financial information of
the Affiliate as of the commencement date of equitymethod application. We also evaluated the sufficiency
of audit procedures by inspecting the audit
documentation of the Affiliate’s auditors and making
inquiries.

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107

Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance with
International Financial Reporting Standards.
The Audit and Supervisory Committee is responsible for overseeing the Directors’ execution of duties relating to thedesign and operating effectiveness of the controls over the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.

We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with it all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with Audit & Supervisory Board members and the Audit and Supervisory Committee,
we determine those matters that were of most significance in the audit of the consolidated financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Notes to the Readers of Independent Auditor’s Report
This is an English translation of the independent auditor’s report as required by the Financial Instruments andExchange Act of Japan for the conveniences of the reader.

As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks. The procedures selected depend on theauditor’s judgment. In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause theGroup to cease to continue as a going concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordancewith International Financial Reporting Standards, as well as the overall presentation, structure and content of theconsolidated financial statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
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109

Financial Information

Non-Financial Information

Five-Year Financial Summary

Environmental(Unit: Million yen)

Fiscal Year under Review on a Consolidated Basis

FY2017FY2018FY2019FY2020

FY2021

Revenue

425,794

479,490412,072

359,682

346,149

Cost of sales

355,176

399,329

338,031300,307288,671

Selling, general and administrative expenses

35,75537,41836,52133,531

32,581

Operating income

34,55747,346

38,793

26,326

26,742

Income attributable to owners of parent

19,622

30,11525,75015,064

Basic earnings per share (Yen)*1

144.29221.45189.35

Operating margin (%)

8.1

9.9

Return on equity attributable to owners of parent(ROE) (%)

9.6

Return on assets (ROA) (%)
Effective statutory tax rate (%)
Average actual tax rate (%)

Environmental Conservation Cost (Non-consolidated)
FY2017Main Efforts

FY2018FY2019FY2020

FY2021

Investment

Cost

Investment

Cost

Investment

Cost

Investment

Cost

Investment

Cost

14

46

10

6

11

12

10

Prevention of air, water, and soil pollution, etc.

12

11

34

Globalenvironmental
conservation cost*

Prevention of global warming and ozone depletion andother environmental preservation efforts

187

38

748

116

615

95

208

62

176

43

20,741

Resource
circulation cost

Recycling, waste treatment and disposal,
and water-saving efforts

31

53

28

97

11

173

7

56

25

71

110.77152.89

Upstream/downstream cost

Costs generated from purchasing low environmental
impact products and raw materials

26

—

26

9

38

13

48

3

5

1

9.4

7.3

7.7

Administration cost

49

54

29

38

24

63

62

82

15

60

13.4

10.5

5.9

7.8

EMS development & operation costs, environmental
measurement costs, office interior “greening” anddevelopment costs

11.4

14.7

11.7

8.2

9.9

R&D cost— 3,859— 2,952— 3,630

9 4,184

10 4,000

30.1

30.1

29.9

29.9

29.9

Research and development of new technology with ahigh positive environmental impact, such as reducing
the weight of products, reducing VOCs (not using
paints), and developing recyclable materials

Social activity cost

Environmental measures such as nature protection,“greening,” and scenery preservation

—

4

—

4

4

4

0

2

0

1

Environmental remediation cost

Remediation of soil pollution, etc.

—

—

—

—

—

—

—

—

—

—

29.9

22.7

25.0

29.7

22.5

Businessarea cost

322,202351,944358,265

341,820

390,478

Property, plant and equipment

76,57673,532

71,51568,53069,053

Interest-bearing liabilities

3,506

4,182

1,742

4,014

5,228

Total equity

230,989

259,924

277,424

274,552

301,450

Shareholders’ equity

204,800

229,866

249,904

259,233

271,278

Revenue per Consolidated Segment*

865 3,230

Notes
1. The above figures include portions ascertained by estimation, such as apportionment.
2. Materials related to environmental accounting, such as guidelines and guidebooks published by the Ministry of theEnvironment of Japan, were referenced when preparing the spreadsheet.
3. Costs do not include depreciation costs.

738 3,988

339 4,399

243 4,186* Global environmental conservation cost includes
expenses related to the construction of the new
Head Office building.

Economic Effects (Non-consolidated)(Unit: Thousand yen)

FY2017FY2018FY2019FY2020

FY2021Gain on sale of valuables

6,587

9,232

8,143

4,613

5,073

Cost saved by energy conservation

8,950

13,093

26,69016,073

4,169

Total

15,53722,32534,833

20,6869,242

FY2017FY2018FY2019FY2020

FY2021

195,808

204,701

205,251

166,002

154,488

78

87

77

81

62

Japan

91,83093,552

92,85675,13478,866

Americas213,008

224,867

195,604

176,346

141,924

China

94,990121,266

89,18782,729117,652

Material Effects (Non-consolidated)

Asia and Europe

59,82576,041

66,822

51,96734,021(Unit)

Overseas revenue

361,980

412,249

342,496

303,544288,303

85.0

86.0

83.1

84.4

83.3

Stock Information*

305 4,019

Total

Total assets

Overseas revenue ratio (%)(Unit: Million yen)

Pollution
prevention cost

Total at End of Fiscal Year

Energy consumption

GJ

Water consumption

1,000 m3

CO2 emissions

t-CO2

9,945

10,341

10,361

8,394

6,671

CO2 emissions due to transportation t-CO2

1,611

1,868

2,108

1,845

1,449

Cash dividends per share*2

70.00

80.00

84.00

86.00

90.00

Consolidated price to earnings ratio (PER) (Times)

10.4

9.5

8.4

11.5

10.8

Total waste output

t

1,174

1,068

1,075

1,062

1,120

Consolidated dividends payout ratio (%)

24.3

18.1

22.2

38.8

29.4

VOC emissions

t

31

34

50

28

16

Total shareholder return (%)*3

116.2

165.7

129.8

109.3

140.8

PRTR emissions

t

49

4

0

0

0

ROE: Net income/Total equity attributable to owners of parent (Average)
ROA: Income before income tax/Total assets (Average)

110

Environmental Accounting

TS TECH Integrated Report 2021

*1 The company implemented a 2-for-1 stock split of its common shares effective April 1, 2021.
Calculations are based on the assumption that the stock split was conducted at the
beginning of fiscal 2017.
*2 For fiscal 2021, the actual dividend amount prior to the stock split is shown.
*3 Calculations are based on the share price taking into account the stock split.

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111

Non-Financial Information

Non-Financial Information

Maternity, Childcare, and Nursing Care Leave Data (Non-consolidated)

SocialIn-House Training Sessions and Related Data (Non-consolidated)
FY2017FY2018FY2019FY2020

FY2021

Human rights/diversity training (Number of times)

8

9

8

8

7

Training time per employee (Hours)

—

9.0

7.6

8.8

11.1

In-House Training Sessions: Number of Attendees (Non-consolidated)

FY2018FY2019FY2020

FY2021

18

8

8

3

6

Male

1

0

3

4

8

Female

17

15

8

6

6

Total

18

15

11

10

14

Male

100

—

100

100

100

Female

94

100

100

100

100

Total

94

100

100

100

100

Male

2

1

1

2

2

Female

6

12

8

17

15

Total

8

13

9

19

17

Male

0

1

0

0

1

Female

0

0

0

0

0

Total

0

1

0

0

1

Number of employees using maternity leave(Persons)

Number of employees using
childcare leave (Persons)(Unit: Persons)

FY2017FY2018FY2019FY2020

FY2021

Practical training sessions for risk assessment

36

22

42

28

0

Mental health seminars

52

78

80

108

70

*1

FY2017*2*2

Rate of return to work afterchildcare leave (%)*1 Seminars held for company employees. We have held “Risk Assessment Training Regarding Specified Chemical Substances” since fiscal 2017 as well.
*2 In fiscal 2021, practical training sessions for risk assessment were canceled in order to prevent the spread of COVID-19.
For the same reason, mental health seminars were held less often, canceled, or held using a different method, depending on the risk of infection in each workplace.

Employment-related (Non-consolidated)
FY2017FY2018FY2019FY2020

FY2021

Percentage of managers who are women (%)

2.05

2.15

1.90

2.30

2.61

Percentage of employees with a disability (%)
Note: Designated employment rate: 2.3%

2.27

2.30

2.37

2.62

2.65

Percentage of employees who are non-Japanese (%)

0.66

0.55

0.66

0.51

0.57

Number of new graduates hired (Persons)

56

52

50

54

47

Number of employees who leave within three
years of hiring (Persons)

5

1

0

5

5

Turnover rate within three years of hiring (%)

8.9

1.9

0.0

8.9

9.6

Percentage of employees hired mid-career*1 (%)

16.4

21.2

10.7

18.2

6.0

Employee satisfaction data (DI*2)

29.8

31.2

31.7

29.8

30.4

*1 The percentage of employees hired mid-career among employees hired for regular employment*2 A subtraction of the percentage of respondents who answered negatively from the percentage of those who answered positively

Average years of service

Number of employees using nursing
care leave (Persons)

Labor Union Data (Non-consolidated)
FY2017FY2018FY2019FY2020

FY2021

Number of employees affiliated with thelabor union (Persons)

1,466

1,483

1,491

1,491

1,504

Percentage of employees affiliated with thelabor union (%)

97

98

98

98

98

* Calculations exclude managers

Industrial Accident Circumstances (Non-consolidated) [Industry average]

Major Personnel Data (As of March 31; Full-time employees only) (Non-consolidated)

Number of employees
by gender

Number of employees using shorter
working hours system for children(Persons)

FY2017FY2018FY2019FY2020

FY2021

Male

1,529

1,543

1,531

1,524

1,551

Female

181

180

185

191

187

Total

1,710

1,723

1,716

1,715

1,738

Male

15.9

16.0

16.3

16.6

17.2

Female

14.4

15.1

15.1

15.0

15.8

Overall

15.7

15.9

16.2

16.5

17.1

FY2017FY2018FY2019FY2020

FY2021

Number of industrial accident deaths (Persons)

0

0

0

0

0

Number of industrial accident injuries (non-lostworktime accidents) (Persons)

5

10

4

2

4

Number of industrial accident injuries (lostworktime accidents) (Persons)

1

2

1

2

0

Frequency rate [Industry average] (%)

0.00 [1.15]

0.51 [1.02]

0.25 [1.20]

0.25 [1.20]

0.00 [1.21]

Severity rate [Industry average] (%)

0.00 [0.07]

0.00 [0.08]

0.00 [0.10]

0.01 [0.10]

0.00 [0.07]

Frequency rate: Expresses the frequency of accident occurrences as the number of deaths and injuries due to industrial accidents per million hours worked
Severity rate: Expresses the degree of severity of an accident as the number of working days lost per thousand hours worked. However, this is limited to industrial accidents causing
one or more days of lost working days.

112

TS TECH Integrated Report 2021

TS TECH Integrated Report 2021

113

Non-Financial Information

Corporate Data

Number of Social Contribution Activities Conducted (Consolidated)(Unit: Activities)

FY2017FY2018FY2019FY2020

FY2021

—

258

277

285

188*

Corporate Data (As of March 31, 2021)* In ﬁscal 2021, social contribution activities were canceled or postponed to prevent the spread of COVID-19.

Number of Social Contribution Activities Conducted in FY2021(Unit: Activities)

Japan(Non-consolidated)
10 locations

Americas
14 locations

China
5 locations

Asia and Europe
9 locations

Total
38 locations

Economic assistance

21

73

9

10

113

Social contribution activities

45

9

7

14

75

Total

66

82

16

24

188

Social Contribution Activity Expenditures (Non-consolidated)(Unit: Thousand yen)

FY2017FY2018FY2019FY2020

FY202150,29046,76850,01941,82417,303*Company NameTS TECH Co., Ltd.

Establishment

December 5, 1960

Head Office

3-7-27 Sakae-cho, Asaka-shi, Saitama 351-0012, Japan

Common Stock

4,700,000,000 yen

Corporate Representative

President and Representative Director, Masanari Yasuda

Lines of Business

Manufacture and sale of seats for automobiles; interior trim and interior components for automobiles; motorcycle seats; andmotorcycle resin-based parts

Number of Employees

15,444 (Consolidated), 1,738 (Non-consolidated)

Closing of Accounts

March 31

Securities Traded

Tokyo Stock Exchange (First Section)

Main BanksMUFG Bank, Ltd./Sumitomo Mitsui Banking Corporation/Saitama Resona Bank, Limited

Main Customers

Honda Motor Co., Ltd./Honda R&D Co., Ltd./Honda Trading Corporation/Honda Access Corp./Suzuki Motor Corporation/
Yamaha Motor Co., Ltd./Kawasaki Heavy Industries, Ltd./Harley-Davidson, Inc./PARAMOUNT BED CO., LTD.

Member Organization

Japan Auto Parts Industries Association* In ﬁscal 2021, social contribution activities were canceled or postponed to prevent the spread of COVID-19.

Stock Information (As of March 31, 2021)

Improvement Initiatives (Consolidated)

Number of participating teams*1

FY2017FY2018FY2019FY2020

594

466

489

483

FY2021—*2*1 Improvement activities undertaken by small groups. Generally referred to as a “QC (Quality Control) Circle,” the activities are aimed at developing human resources who canuse the QC method to solve problems and manage and improve operations.
*2 In ﬁscal 2021, activities were not implemented to prevent the spread of COVID-19.

Total Number of Shares Authorized to Be Issued

272,000,000

Total Number of Shares Issued

68,000,000

Number of Shareholders

9,817

Investment in the Company

FY2017FY2018FY2019General Meeting of Shareholders:Number of attendees

405

386

Events for individual investors:
Number of attendees

487*1

IR/SR interviews: Number of companies(Including small meetings and conference calls)

239

Number ofshares held(Thousands)

Investment
ratio (%)

15,36022.8

FY2020

FY2021

441

12*2

9*2

Honda Motor Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust account)

4,112

6.1

573*1

88

264

0*3

Custody Bank of Japan, Ltd. (Trust account)

2,338

3.5

254

229

168

355

SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking
Corporation Pension Trust Account)

2,199

3.3

Sumitomo Life Insurance Company(Standing proxy: Custody Bank of Japan, Ltd.)

1,940

2.9

Taiyo Life Insurance Company

1,400

2.1

*1 Exhibited at the Nikkei IR/Individual Investor Fair
*2 To prevent the spread of COVID-19, shareholders were asked to refrain from attending the venue.
*3 Events for individual investors were canceled to prevent the spread of COVID-19.

Governance-Related Data

(Unit: Cases)

FY2017FY2018FY2019FY2020

FY2021

Fines and penalties for anti-competitive practices(Consolidated)

0

0

0

0

0

Cases recognized as corruption or bribery(Consolidated)

0

0

0

0

0

Number of political donations (Non-consolidated)

0

0

0

0

0

Major Shareholders (As of March 31, 2021)

Okamoto Industries, Inc.

1,376

2.0

Mitsubishi UFJ Trust and Banking Corporation(Standing proxy: The Master Trust Bank of Japan, Ltd.)

1,360

2.0

MUFG Bank, Ltd.

1,319

2.0

Nippon Life Insurance Company(Standing proxy: The Master Trust Bank of Japan, Ltd.)

1,290

1.9

The 9th consecutive selection, starting with the initial
announcement of the index in 2014 and including
the subsequent annual reshuffles

DISCLOSURE INSIGHT ACTIONCDP Climate Change Report 2020, Japan edition
Selected as a “Leadership” level company witha score of A-

CSR Companies
Rankingby Toyo Keizai Inc.

182

1,614 firms

Notes: 1. Number of shares held is rounded down to the nearest thousand.
2. Investment ratio is calculated after deducting treasury stock (767,334 shares).

Individuals and others

Treasury stock

8.5 %Foreign corporations
and others

26.4 %

Other corporations
and others

27.8 %TS TECH Integrated Report 2021

As of March 31, 2021
(JPX-Nikkei Index 400 as of August 31, 2021)

Note: The Company conducted a 2-for-1 stock split of its common shares effective April 1, 2021.

Dialogue with Stockholders and Investors

114

External Recognition and Selection
as a Constituent in Indices

1.1 %Ownership anddistributionof shares (%)

Financial institutions

34.7%

ESG Companies
Ranking by
Toyo Keizai Inc.

166

1,614 firms

Securities companies

1.5 %TS TECH Integrated Report 2021

115

Year in Review

Integrated Report Review(April 2020–March 2021)

May 15

Financial results announcement for
fiscal 2020

May 15

Honda Cars SAITAMAKITA becomesa wholly owned subsidiary
TS TECH acquired all shares of Honda
Cars SAITAMAKITA with the aim ofreflecting feedback from end users indevelopment to create new value.

2020

4

5

6

July 31

Financial results announcement andresults briefing for the first quarter offiscal 2021

7

74th Annual General Meeting of
Shareholders

September 25

Reorganization of the trim coverproduction structure in China
announced
We merged two companies that
produced trim cover in China. By
establishing the new Trim CoverDevelopment Department andcombining the technology andexperience of the two companies, weestablished a system that supplies highquality, cost competitive components.

8

9

10

11

October 30

Financial results announcement andresults briefing for the second
quarter of fiscal 2021
Next-generation touch switch jointly
developed with Canatu Oy
We jointly developed a touch switch asa new HMI for next-generation vehicles
with Canatu Oy, a cross-industry partner.

December 24

Restricted stock compensation
system for directors and executive
officers introduced

Reorganization of the automobile
seat production structure in India
announced
The move was designed to improve
profitability in India through a reviewof the structure for automobile seatproduction, which had been conducted
at multiple sites, and consolidation of
products produced at each site.

2021

12

1

2

3

January 29

Financial results announcement for
the third quarter of fiscal 2021

February 19

Transition to a “company with an
Audit and Supervisory Committee”
structure announced

March 5Won Sustainability Award, an Award
for Excellence, for the second straightyear at a Honda supplier conference

July 1TS TECH Integrated Report 2021

60th anniversary of TS TECH’s
establishment

Changes to shareholder benefit
program announced
TS TECH changed to a shareholder
benefit program that takes into accountthe consecutive number of years ofshareholding in addition to the numberof shares held in order to make investingin the company even more appealing.

June 19116

December 5

In fiscal 2022, the Tokyo Stock Exchange released revisions to Japan’s Corporate
Governance Code. As a result, it has become increasingly important for companies
to reinforce systems and disclose information about them, such as efforts to combat climate change, respect human rights, ensure diversity, or contribute to sustainability. In the area of disclosure of corporate information, the role of integrated
reports in bridging the information gap with shareholders, investors, and otherimportant stakeholders has also grown with the establishment of the Value Reporting Foundation*, an international organization that provides leadership on integrated reporting, and the revision of the International Integrated Reporting Framework.
In light of these domestic and international trends in information disclosure,qualitative and quantitative enhancements can be seen in the information disclosed in the TS TECH Integrated Report 2021 as a whole.
First of all, as suggested by the title “Integrated Report,” the “connections”
between information are important. In this year’s report, the flow from past to future at the beginning has been strengthened to show the overall picture of TS
TECH’s value creation story. The information is then expanded to provide detailed
information on ESG management, as set out in the Medium-Term Management
Plan. The structure of the information has been improved so that it is easy to understand and balanced, taking into account the connections between the different
pieces of information.
In addition, the types of capital accumulated over the 60 years of the company’s history are disclosed, with a focus on the particularly important areas of intellectual capital, manufactured capital, human capital, and financial capital. It is clearthat the distinct strengths TS TECH has built are the drivers of value creation for
the future the company envisions.
In order to bridge the information gap with shareholders, investors, and otherimportant stakeholders in the future, it will be important to increase the level ofinvolvement of the Board of Directors in the integrated reporting process and toenhance the content disclosed in line with actual circumstances.
For example, it would be effective to add a statement by the Board of Directors, since the Board is responsible for the integrated report according to the revised International Integrated Reporting Framework. In addition, it is necessary todescribe how management is involved at the beginning of the materiality
decision-making process, not simply state that the directors have given theirapproval at the end of the process.
The involvement of management in materiality has an effect on strategic planning as the management team identifies and refines the key issues for value creation, which leads to the optimal allocation of capital. Such information could also
be used by shareholders, investors, and other stakeholders to evaluate the level of“certainty” that value creation will be achieved.

Mariko Mishiro
Representative Director,
RIDEAL Co., Ltd.

Expert on integrated reporting and Californialicensed Certified Public Accountant (CPA)

Ms. Mishiro worked at a major auditing corporation before starting her own firm in
2011. From 2011 to 2013, Ms. Mishiro
served on the International Integrated Reporting Council (IIRC), where she worked asa technical manager on developing an international disclosure framework for corporate reporting. To date, she has consulted
on integrated reporting for listed companies in a range of industries including machinery, electric appliances, pharmaceuticals, nonferrous metals, retail, housing
equipment, transportation equipment, andchemicals. She majored in accounting at
the University of Texas at San Antonio andreceived her MBA from the Graduate Schoolof Commerce at Waseda University. Since
January 2019, she has served as an external
Audit & Supervisory Board Member for
DRAFT Inc. She is also a lecturer in businessfinances at Saitama University (fiscal 2021).

* The Value Reporting Foundation (VRF) was established in June 2021 through the merger of the International
Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB).

November 9

Capital and business alliance with
Imasen Electric Industrial Co., Ltd.
announced
Imasen Electric Industrial Co., Ltd.
became an equity-method affiliate in amove designed to generate synergies
by forging a deeper collaborative
relationship.

March 26

Key material issues identified
TS TECH Integrated Report 2021

117

November 2021
Printed in Japan