To Our Shareholders
We would like to take this opportunity to express our heartfelt appreciation to you for your continued support
of PACIFIC METALS CO., LTD.
We hereby report the overview of the Group’s business for the 97th fiscal year (from April 1, 2022 to March
31, 2023).
Masayuki Aoyama
President Director & Representative Director

Company Philosophy
Leverage the power of people to deliver the earth’s resources in more useful forms and contribute to thehappiness of humankind
Company Policy
1. Integrate the management strategies of the entire Group to maximize the synergy effects of each Group
company.
2. Focus on the development and quality improvement of world-class smelting technology, and establish theworld-leading platform for management efficiency and competitiveness.
3. Promote compliance.
4. Secure appropriate profits through fair, transparent and free competition.
5. Actively tackle all environmental problems to protect the irreplaceable earth.
6. To develop the individuality of employees and fully demonstrate their creativity, pursue a sense of comfort
and affluence both physically and mentally, and realize a rewarding workplace.
7. Promote wide-ranging exchanges with society and actively disclose fair corporate information.

-1-

Note: This document has been translated from a part of the Japanese original for reference purposes only.
In the event of any discrepancy between this translated document and the Japanese original, the original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translation.
(Securities Code 5541)
June 6, 2023
To Shareholders with Voting Rights:
Masayuki Aoyama
President Director & Representative
Director
PACIFIC METALS CO., LTD.
6-1, Otemachi 1-Chome, Chiyoda-ku,
Tokyo, JapanNOTICE OF CONVOCATION OF
THE 97TH ANNUAL GENERAL SHAREHOLDERS MEETING
We would like to express our appreciation for your continued support and patronage.
Please be informed that the 97th Annual General Shareholders Meeting of PACIFIC METALS CO., LTD.
(the “Company”) will be held for the purposes as described below.
In convening this year’s Annual General Shareholders Meeting, the Company has taken measures forelectronic provision of information contained in the reference documents for the General Shareholders Meetingand posted the information as “Notice of Convocation of the 97th Annual General Shareholders Meeting” on
the Company’s website below. Please access the website below and refer to the notice. In addition to theCompany’s website, the notice is also posted on the website of the Tokyo Stock Exchange (TSE) and the web
portal for shareholders meetings provided by Sumitomo Mitsui Trust Bank.
No.
1

Website and URL
The Company’s website
https://www.pacific-metals.co.jp/en/ir/else.php2

Listed Company Search (Tokyo Stock Exchange)
https://www2.jpx.co.jp/tseHpFront/JJK020010Action.do?Show=Show

3

Shareholders’ Meeting web portal (Sumitomo Mitsui Trust Bank)
https://www.soukai-portal.net(in Japanese)

Access method
Click “Notice of Convocation of the 97th
Annual General Shareholders Meeting”
under the headline “THE 97TH.”
Enter “Pacific Metals” in the “Issue name(company name)” field or the Company’s
securities code “5541” in the “Code” fieldand click “Search,” select “Basic
information,” then “Documents for public
inspection/PR information,” and select the
Notice.
Scan the QR code on the enclosed Voting
Form, or enter your ID and initial password
that are also printed on the enclosed Voting
Form.
.

If you do not attend the meeting, you may exercise your voting rights via the Internet, etc. or in writing. Please
review the Reference Documents for the General Shareholders Meeting and, following the instructions statedin the Guide to Exercising Voting Rights on page 4 (Japanese original), exercise your voting rights by 5:30 p.m.
Japan time on Monday, June 26, 2023.

-2-

1. Date and Time:
2. Place:

Tuesday, June 27, 2023 at 10:00 a.m. Japan time
Iidabashi Rainbow Building (7F) located at
11 Ichigayafunagawaramachi, Shinjuku-ku, Tokyo(For the location of the venue, please refer to the map of the venue of theGeneral Shareholders Meeting at the end of this document.)

3. Meeting Agenda:
Matters to be reported: 1. The Business Report, Consolidated Financial Statements for the Company’s
97th Fiscal Year (April 1, 2022 - March 31, 2023) and results of audits of theConsolidated Financial Statements by the Accounting Auditor and the Board
of Auditors
2. Non-consolidated Financial Statements for the Company’s 97th Fiscal Year
(April 1, 2022 - March 31, 2023)
Proposals to be resolved:
Election of nine (9) Directors
Proposal 1:
Election of three (3) Auditors
Proposal 2:
4. Matters determined for (1) If you exercise your voting rights by proxy, the proxy must submit your
Voting Rights Exercise Form and the letter of attorney. You may appoint
convocation
only one proxy.
(2) If neither a vote for nor against a proposal is indicated on the Voting
Rights Exercise Form, it shall be deemed a vote for.
(3) If you exercise your voting rights in duplicate via the Internet, etc. and inwriting, the vote that arrives at the Company later shall be deemed valid.
However, if both of them arrive on the same day, the voting rights
exercised via the Internet, etc. shall be deemed valid. If you exercise yourvoting rights more than once via the Internet, etc., the last vote exercised
shall be deemed as valid.






The reception desk at the venue is scheduled to open at 9:00 a.m. When attending the meeting, pleasesubmit the enclosed Voting Rights Exercise Form to the reception desk
The documents sent to shareholders who requested the paper copy do not include Consolidated Statementof Changes in Equity, Notes to Consolidated Financial Statements, Non-consolidated Statement of
Changes in Equity and Notes to Non-consolidated Financial Statements in accordance with provisions oflaws and regulations as well as Article 17 of the Company’s Articles of Incorporation. Therefore, the said
documents are part of the documents audited by Auditors and the Accounting Auditor when they prepared
their respective audit reports.
If there are any revisions in the matters provided electronically, the matters before revision and the mattersafter the revision will be posted on the Company’s website, the TSE website, and the Shareholders’Meeting web portal (Japanese only).
Please note that any of these websites may be temporarily inaccessible due to scheduled maintenance orother reasons. If you are unable to access one of the websites indicated, please access a different website
or wait for a while and try again.

-3-

Reference Documents for the General Shareholders Meeting
Proposals and References
Proposal 1:

Election of nine (9) Directors

The terms of office of all nine (9) Directors will expire at the conclusion of this year’s Annual General
Shareholders Meeting. Accordingly, the election of nine (9) Directors is proposed. The candidates are as
follows.
Details about each candidate such as career summary, reason for nomination and other information arestated on pages 6 to 11.
Term
Attendance atBoard ofNo.
Name
Genderof
Position
Responsibilities
Directors meeting
office1

Masayuki
Aoyama2

Yoshiharu
Inomata3

Kenichi Hara

Male

9
years

President Director

Representative Director
Member of Nomination andCompensation Committee

21 out of 21
meetings(100.0%)

Reappointment

Male

6
years

Director & Senior
Managing
Executive Officer

Assistant to the President,
In charge of Corporate
Planning, Recycling Business& Technology Development

21 out of 21
meetings(100.0%)

Reappointment

Male

5
years

Director &Managing
Executive Officer

In charge of Procurement,
General Manager of Sales &Marketing Dept.

21 out of 21
meetings(100.0%)

Reappointment

In charge of Internal Control,
IR, General Administration,
Finance & Accounting, General
Manager of Personnel & Labor
Relation Dept.
In charge of Quality Control &Environmental Management,
General Manager, Resources &Technology Development
Project Dept.
In charge of Safety & HealthManagement, Utility &Maintenance and Production,
General Manager of Business
Process Reengineering Dept.

4

Terunobu
Matsuyama

Reappointment

Male

5
years

Director &Managing
Executive Officer

5

HiroakiIchiyanagi

Reappointment

Male

3
years

Director & Senior
Executive Officer

6

Kazuo Iwadate

Reappointment

Male

3
years

Director & Senior
Executive Officer

7

ShinyaMatsumoto

Reappointment
OutsideIndependent

Male

10
years

Outside Director

Chairperson of Nomination andCompensation Committee

21 out of 21
meetings(100.0%)8

Hikari Imai

Reappointment
OutsideIndependent

Male

7
years

Outside Director

Member of Nomination andCompensation Committee

21 out of 21
meetings(100.0%)

9

Yukari Sakai

Reappointment
OutsideIndependent

Female2
years

Outside Director

Member of Nomination andCompensation Committee

21 out of 21
meetings(100.0%)Note: Term of office, position and responsibilities are as at the time of this Annual General Shareholders Meeting.

Reappointment: Candidate for Director to be reappointed
Outside: Candidate for Outside Director
Independent: Independent Director-4-21 out of 21
meetings(100.0%)21 out of 21
meetings(100.0%)21 out of 21
meetings(100.0%)◎

2

Yoshiharu
Inomata○○3

Kenichi Hara○

4

Terunobu
Matsuyama○

5

HiroakiIchiyanagi○

6

Kazuo Iwadate○

7

ShinyaMatsumoto○8

Hikari Imai

◎

○

○

9

Yukari Sakai

○

◎

○

Note:

◎

◎

○

○

◎

○

◎

○

○

○

○

○

○

◎

○

◎

◎

○

◎

◎

◎

◎

○

○
○

◎

○

○
○

○
◎

○

The skills matrix classifies knowledge and experience considered to be important for the Company and indicates thefields in which the Directors have appropriate expertise ( ○ ) and the fields for which the Company has highexpectations (◎) of the Directors.

-5-⑩ESG andsustainability◎⑨Globalmanagement

Masayuki
Aoyama⑥Law

1⑧Personnel and labor
relations⑦Risk management⑤Research /Development / IT

④Manufacturing

Name②Finance /Accounting

No.

①Corporate
management③Marketing

Board of Directors Skills Matrix

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions

April 1975

Joined the Company

December 2004

May 2010

Deputy General Manager, Utility &Maintenance Dept., Production Div. andManager, Electric Power Sec.
Associate General Manager, Utility &Maintenance Dept., Production Div.
General Manager, Utility & MaintenanceDept., Production Div.
Director, Pacific Energy Center Co., Ltd.

June 2011

Executive Officer

June 2014

Director, Rio Tuba Nickel Mining Corporation

June 2014
June 2014

Director, Taganito Mining Corporation
Director

June 2014

Senior Executive Officer

June 2014

General Manager, Production Div.

December 2008
April 2009

Masayuki Aoyama(December 7, 1954)

1

May 2017

Reason for nomination as
candidate for Director

Number ofshares oftheCompany
held

4,700

President & Representative Director, Pacific
Gas Center Co., Ltd.
June 2018
Managing Executive Officer
July 2019
In charge of Business Process Reengineering,
Production and Recycling Business
June 2020
President Director & Representative Director(to present)
May 2021
Member of Nomination and Compensation
Committee (to present)
The Company nominated Masayuki Aoyama as a candidate for Director because hehas experience in engaging in the creation of new ferronickel manufacturing
technologies/facilities and maintenance of existing ones and dealing in electric
power facilities, etc., and is also involved in the management of affiliates in Japanand overseas, and we determined that he has the experience and abilities suited to achief executive officer of the Company by leveraging such experience and trackrecord.

-6-

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions

April 1975
December 2004

Yoshiharu Inomata(June 6, 1954)

2

Reason for nomination as
candidate for Director

Number ofshares oftheCompany
held

Joined the Company
Deputy General Manager, Quality Control
Dept., Production Div. and Manager, Analysis
Sec.
December 2006
Deputy General Manager, Quality Control
Dept., Production Div., Manager, Quality
Assurance Sec. and Manager, Analysis Sec.
December 2007
Associate General Manager, Quality Control
Dept., Production Div., Manager, Quality
Assurance Sec. and Manager, Analysis Sec.
July 2008
General Manager, Quality Control Dept.,
Production Div., Manager, Quality Assurance
Sec. and Manager, Analysis Sec.
April 2009
General Manager, Quality Control Dept. andManager, Quality Assurance Sec.
June 2012
Executive Officer and General Manager,
Quality Control Dept.
June 2014
Senior Executive Officer
June 2014
General Manager, Quality Control Dept. andGeneral Manager, Environmental
Management Dept.
July 2016
General Manager, Quality Control &Environmental Management Dept.
September 2016
General Manager, Quality Control &Environmental Management Dept., General
Manager, Technical Research & Development
5,527
Dept. and Manager, Pyrometallurgy
Development Sec.
June 2017
Director (to present)
June 2017
In charge of Safety & Health Management,
Quality Control & Environmental
Management
June 2017
General Manager, Technical Research &Development Dept.
July 2019
In charge of Safety & Health Management andResources & Technology Development
Project
July 2019
General Manager, Quality Control &Environmental Management Dept.
June 2020
Managing Executive Officer
June 2020
In charge of Corporate Planning, Safety &Health Management, Quality Control &Environmental Management
June 2021
Senior Managing Executive Officer (topresent)
June 2021
Assistant to President (to present)
June 2021
In charge of Corporate Planning, Recycling
Business
April 2023
In charge of Corporate Planning, Recycling
Business & Technology Development (topresent)
The Company nominated Yoshiharu Inomata as a candidate for Director because
he has extensive experience in quality control, environmental management fields
and technical research & development, and we determined that he has theexperience and abilities suited to a Director who can take charge of the
management of the Company by leveraging such experience and track record.

-7-

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions

April 1988
October 2010

Kenichi Hara
(May 20, 1964)

3

Reason for nomination as
candidate for Director

Terunobu Matsuyama(December 16, 1969)

4

Reason for nomination as
candidate for Director

Number ofshares oftheCompany
held

Joined the Company
Assistant General Manager, Environment &Recycle Business Dept.
December 2011
Assistant General Manager, Ferro Nickel
Sales Dept.
December 2012
Associate General Manager, Ferro Nickel
Sales Dept.
June 2014
Executive Officer
June 2014
General Manager, Ferro Nickel Sales Dept.
3,700
June 2017
Senior Executive Officer
March 2018
Director, Pacific Sowa Corporation (topresent)
June 2018
Director (to present)
June 2018
In charge of Sales
July 2019
General Manager, Sales & Marketing Dept.
(to present)
June 2020
In charge of Procurement (to present)
June 2021
Managing Executive Officer (to present)
The Company nominated Kenichi Hara as a candidate for Director because he has
extensive experience in the sales field, and we determined that he has theexperience and abilities suited to a Director who can take charge of the
management of the Company by leveraging his past experience and track record.
April 1988
Joined the Company
December 2010
Assistant General Manager, Finance &Accounting Dept.
December 2013
Associate General Manager, Finance &Accounting Dept.
May 2014
Auditor, Pacific Gas Center Co., Ltd.
June 2014
General Manager, Finance & Accounting
Dept., the Company
June 2017
Executive Officer
June 2018
Director (to present)
June 2018
Senior Executive Officer
4,343
June 2020
In charge of IR (to present)
May 2021
Director, Taiheiyo Kosan Co., Ltd. (to present)
June 2021
Managing Executive Officer, the Company (topresent)
June 2021
In charge of Internal Control (to present)
June 2021
In charge of General Administration (topresent)
June 2021
In charge of Finance & Accounting (topresent)
June 2021
General Manager of Personnel & Labor
Relation Dept. (to present)
The Company nominated Terunobu Matsuyama as a candidate for Director because
he has a wealth of knowledge in the accounting/financial fields, and we determinedthat he has the experience and abilities suited to a Director who can take charge ofthe management of the Company by leveraging such experience and track record.

-8-

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions

April 2003
December 2009

Hiroaki Ichiyanagi(April 24, 1960)

5

Reason for nomination as
candidate for Director

Kazuo Iwadate(January 14, 1967)

6

Reason for nomination as
candidate for Director

Number ofshares oftheCompany
held

Joined the Company
Deputy General Manager, Ore Purchasing &Mining Engineering Dept.
December 2012
Associate General Manager, Ore Purchasing& Mining Engineering Dept.
June 2014
Executive Officer
June 2014
General Manager, Ore Purchasing & Mining
Engineering Dept.
June 2017
Senior Executive Officer (to present)
1,800
June 2018
Director, Rio Tuba Nickel Mining Corporation(to present)
June 2018
Director, Taganito Mining Corporation (topresent)
July 2019
General Manager, Resources & Technology
Development Project Dept., the Company (topresent)
June 2020
Director (to present)
June 2021
In charge of Quality Control & Environmental
Management (to present)
The Company nominated Hiroaki Ichiyanagi as a candidate for Director because hehas a wealth of knowledge in the ore procurement and overseas resources
development fields, and is also involved in the management of overseas affiliates,
and we determined that he has the experience and abilities suited to a Director who
can take charge of the management of the Company by leveraging such experienceand track record.
April 1985
Joined the Company
December 2009
Deputy General Manager, Production Dept.,
Production Div.
December 2012
General Manager, Production Dept.,
Production Div.
November 2015
General Manager, Production Dept. andGeneral Manager, Environmental Business
Dept., Production Div.
June 2017
Executive Officer
June 2017
Assistant General Manager, Production Div.,
General Manager, Utility & MaintenanceDept. and General Manager, Environmental
1,551
Business Dept.
July 2019
General Manager, Business Process
Reengineering Dept. (to present)
May 2020
President & Representative Director, Pacific
Gas Center Co., Ltd. (to present)
June 2020
Director (to present)
June 2020
Senior Executive Officer (to present)
June 2020
In charge of Utility & Maintenance andProduction (to present)
June 2021
In charge of Safety & Health Management (topresent)
The Company nominated Kazuo Iwadate as a candidate for Director because hehas extensive experience in the production and maintenance fields, and wedetermined that he has the experience and abilities suited to a Director who cantake charge of the management of the Company by leveraging his past experienceand track record.

-9-

No.

Name
(Date of birth)

Career summary, positions, responsibilities
and significant concurrent positions

April 1987

[Candidate for Outside
Director]
Shinya Matsumoto(August 12, 1959)

7

Reason for nomination as
candidate for Outside
Director and expected roles[Candidate for Outside
Director]
Hikari Imai
(July 23, 1949)

8

Reason for nomination as
candidate for Outside
Director and expected roles

Number ofshares oftheCompany
held

Registered as attorney, joined Marunouchi
Sogo Law Office
July 1996
Partner and attorney, Marunouchi Sogo Law
OfficeJune 2001
Outside Corporate Auditor, Impress
Corporation (now Impress Holdings, Inc.)(to present)
June 2006
Member of Special Committee, theCompany0June 2007
Outside Director, The Shibusawa Warehouse
Co., Ltd. (to present)
October 2011
Partner and Representative Attorney,
Marunouchi Sogo Law Office (to present)
June 2013
Outside Director, the Company (to present)
May 2021
Chairperson of Nomination andCompensation Committee, the Company (topresent)
The Company nominated Shinya Matsumoto as a candidate for Outside Director
because we determined that he is capable of properly performing his duties as
Outside Director based on his professional perspective and broad insight as an
attorney. We expect him to promote the enhancement of compliance andimprovement of corporate governance at the Company by leveraging the abovementioned perspective and insight.
April 1974
Joined Yamaichi Securities Co., Ltd.
January 1986
Joined Morgan Stanley Japan Securities Co.,Ltd.
April 1993
Joined Merrill Lynch Japan Incorporated
January 1999
Deputy Chairman, and Chairman, Investment
Banking Division, Merrill Lynch Japan
Securities Co., Ltd
November 2007
Vice-President and Director, RECOF
Corporation
April 2008
President, RECOF Corporation
0
July 2010
Advisor, Ebara Foods Industry, Inc.
April 2012
Outside Director, Olympus Corporation
June 2015
Outside Director, CYBERDYNE Inc. (topresent)
June 2016
Outside Director, the Company (to present)
November 2019
Outside Director, SHIMACHU CO., LTD.
May 2021
Member of Nomination and Compensation
Committee, the Company (to present)
December 2022
Outside Director, FUJI SOFT
INCORPORATED (to present)
The Company nominated Hikari Imai as a candidate for Outside Director because
we determined that he is capable of properly performing his duties as Outside
Director based on his extensive experience as a corporate manager over many
years. We expect him to promote the improvement of corporate governance and theenhancement of the foundation of corporate management at the Company byleveraging the above-mentioned experience.

- 10 -

Name(Date of birth)

No.

Career summary, positions, responsibilities
and significant concurrent positions

Number ofshares oftheCompany
held

Joined Nomura Securities Co., Ltd.
Director of Corporate Tune Co., Ltd.
Standing Outside Audit and Supervisory
Board Member of UNITED ARROWS LTD.
June 2008
Outside Auditor of REPROCELL Inc.
September 2013
Outside Auditor of Beauty Kadan Co., Ltd.
June 2016
Outside Director (Standing Audit andSupervisory Committee Member) of UNITED
ARROWS LTD. (to present)
0
October 2017
Outside Director (Audit and Supervisory
Committee Member) of Tea Life Co., Ltd.
March 2019
External Director (Audit & Supervisory Board
Member) of Uzabase, Inc.
June 2021
Outside Director, the Company (to present)
June 2022
Member of Nomination and Compensation
Committee, the Company (to present)
June 2022
Outside Director, TOYO KANETSU K.K. (topresent)
The Company nominated Yukari Sakai as a candidate for Outside Director because
we determined that she is capable of properly performing her duties as Outside
Director based on her extensive experience as a corporate manager in a wide rangeof business fields. We expect her to promote the enhancement and reinforcement ofcorporate governance at the Company based on a variety of perspectives from theviewpoint of diversity, by leveraging the above-mentioned experience.

April 1991
January 2005
June 2005[Candidate for Outside
Director]
Yukari Sakai(June 23, 1968)

9

Reason for nomination as
candidate for Outside
Director and expected roles

Notes:

1.
2.

3.

4.

There are no special interests between each candidate and the Company.
Contract for limited liability with Directors
The Company has entered into a contract for limited liability with each of the candidates for Directors Mr. Shinya
Matsumoto, Mr. Hikari Imai, and Ms. Yukari Sakai pursuant to the provisions of Article 427, Paragraph 1 of theCompanies Act and Article 30 of the Articles of Incorporation, and plans to continue the said contract subject to theapproval of their reappointment.
The gist of the said contract for limited liability is that the liability referred to in Article 423, Paragraph 1 of theCompanies Act shall be limited to the amount provided for in laws and regulations when the three Directors haveacted in good faith and without gross negligence in performing their duties as Directors.
Directors and officers liability insurance contract with Directors
The Company has entered into a directors and officers liability insurance contract with an insurance company tocover damages and litigation expenses to be borne by the insureds, in the event of a claim for damages arising fromthe insured’s conduct (including omissions) in the course of their duties as directors and officers of the Company.
The candidates for Director will be insured under the relevant insurance contract. The contract is scheduled to be
renewed with the same terms and conditions at the next renewal.
Matters concerning Outside Directors are as follows.
(1) Candidates Mr. Shinya Matsumoto, Mr. Hikari Imai, and Ms. Yukari Sakai are candidates for Outside Directors
provided for in Article 2, Paragraph 3 (vii) of the Ordinance for Enforcement of the Companies Act.
The Company has designated Mr. Shinya Matsumoto, Mr. Hikari Imai, and Ms. Yukari Sakai as Independent
Directors pursuant to the regulations set forth by the Tokyo Stock Exchange and submitted a notification of
their designation to the said exchange.
(2) Number of years served as Outside Directors by candidates for Outside Directors since their appointment(i) Mr. Shinya Matsumoto will have served as Outside Director of the Company for ten years at the conclusionof this Annual General Shareholders Meeting.
(ii) Mr. Hikari Imai will have served as Outside Director of the Company for seven years at the conclusion ofthis Annual General Shareholders Meeting.
(iii) Ms. Yukari Sakai will have served as Outside Director of the Company for two years at the conclusion ofthis Annual General Shareholders Meeting.
(3) Candidates Mr. Shinya Matsumoto, Mr. Hikari Imai, and Ms. Yukari Sakai have never been Executives orOfficers (excluding those who are Executives) of a Specified Associated Service Provider (Article 2, Paragraph
3 (xix) of the Ordinance for Enforcement of the Companies Act) of the Company over the past ten years.
(4) Candidates Mr. Shinya Matsumoto, Mr. Hikari Imai, and Ms. Yukari Sakai each have held office as a directorof other stock companies over the past five years, and there are no circumstances indicating unfair execution ofbusiness during their terms of office at these companies.

- 11 -

Proposal 2:

Election of three (3) Auditors

The terms of office of three (3) Auditors will expire at the conclusion of this year’s Annual General
Shareholders Meeting. Accordingly, the election of three (3) Auditors is proposed. The candidates are as
follows.
This proposal has prior consent of the Board of Auditors.

No.

Name
(Date of birth)

Career summary, positions,and significant concurrent positions

Joined the Company
Assistant General Manager, Administration
Dept., Hachinohe Plant and Manager, Finance& Accounting Dept.
July 1999
Assistant General Manager, Finance &Accounting Dept. and Manager, Finance &10,700Planning Dept.
April 2003
General Manager, Finance & Accounting
Dept.
June 2003
AuditorJune 2005
Permanent Auditor (to present)
The Company nominated Kiichi Tatsunaka as a candidate for Auditor because wedetermined that he is capable of properly performing his duties as Auditor based on
his appropriate knowledge in finance and accounting due to his previous positionsin the Company’s Finance & Accounting Dept.
April 1976
Joined The Kyowa Bank, Ltd.
April 1995
Manager of Kawachi Chiyoda Branch, The
Asahi Bank, Ltd.
April 1997
Manager of Kosaka Branch, The Asahi
Bank, Ltd.
June 1999
Manager of Kudan Branch, The Asahi Bank,
Ltd.
April 2001
Manager of Tokyo Chuo Branch andGeneral Manager of Branch Sales Dept.
No.1, The Asahi Bank, Ltd.
July 2001
General Manager of Tokyo Chuo Region
Sales Dept. and General Manager ofRegional Sales Dept. No.1, The Asahi Bank,
Ltd.
0
January 2003
Manager of Tokyo Chuo Branch, The Asahi
Bank, Ltd.
June 2003
Executive Officer, General Manager ofTokyo Sales Administration Dept. and In
Charge of Tokyo Real Estate Dept., Resona
Bank, Limited
October 2003
Executive Officer and General Manager ofTokyo Sales Dept., Resona Bank, Limited
June 2006
General Manager of General Affairs Dept.,
JCB Co., Ltd.
June 2007
Standing Corporate Auditor, Hibiya
Engineering, Ltd.
June 2016
External Auditor, Nihon Plast Co., Ltd.
June 2018
Auditor, the Company (to present)
The Company nominated Ken Yasuda as a candidate for Auditor because wedetermined that he is capable of properly performing his duties as Auditor based on
his broad insight and wealth of knowledge and experience as auditor at othercompanies.

April 1963
December 1995

Kiichi Tatsunaka(June 26, 1944)

1

Reason for nomination as
candidate for Auditor[Candidate for Outside
Auditor]Ken Yasuda

2(May 24, 1953)

Reason for nomination as
candidate for Outside
AuditorNumber ofshares oftheCompanyheld- 12 -

Name(Date of birth)

No.

Career summary, positions,and significant concurrent positions

Number ofshares oftheCompany
held

April 1985

[New candidate][Candidate for Outside
Auditor]Yutaka Iimura

3(June 26, 1962)

Reason for nomination as
candidate for Outside
Auditor
Notes:

1.
2.
3.

4.

Joined Hokkaido-Tohoku Development
Finance Public Corporation
June 2009
Senior Manager in charge of credit
determination, Credit Analysis Department,
Development Bank of Japan Inc.
June 2010
Representative Director and Senior Managing
Director, Shin-Mutsu-Ogawara Inc.
June 2012
Senior Manager in charge of credit appraisal,
Credit Analysis Department, Development
Bank of Japan Inc.
June 2014
General Manager, Planning & Research Dept.,
Tomakomai Port Development Co, Ltd.
0
June 2015
Director, General Manager, Ferry Terminal
Business; General Manager, Planning &Research Dept.
June 2019
Managing Director, General Manager, Ferry
Terminal Business; General Manager,
Planning & Research Dept.
June 2021
Senior Executive Director, Hokkaido-Tohoku
Regional Economic Research Institute (topresent)
April 2023
Senior Research Director, Japan Economic
Research Institute Inc. (to present)
The Company nominated Yutaka Iimura as a candidate for Outside Auditor because
we determined that he is capable of properly performing his duties as Auditor
based on his broad insight and wealth of knowledge and experience as director atother companies.

Mr. Yutaka Iimura is a new candidate for Auditor.
There are no special interests between each candidate and the Company.
Contract for limited liability with Auditors
The Company has entered into a contract for limited liability with candidate for Auditor Mr. Ken Yasuda pursuant to
the provisions of Article 427, Paragraph 1 of the Companies Act and Article 39 of the Articles of Incorporation, andplans to continue the said contract subject to the approval of his reappointment.
Furthermore, if the candidate for Auditor Mr. Yutaka Iimura is elected at this Annual General Shareholders Meeting,
the Company plans to enter into a contract with him that limits liability for damages under Article 423, Paragraph 1of the Companies Act, in accordance with the provisions of Article 423, Paragraph 1 of the Companies Act andArticle 39 of the Articles of Incorporation, pursuant to the provisions of Article 427, Paragraph 1 of the Companies
Act. The gist of the said contract for limited liability is that the liability referred to in Article 423, Paragraph 1 of theCompanies Act shall be limited to the amount provided for in laws and regulations when they have acted in goodfaith and without gross negligence in performing their duties as Auditors.
Matters concerning Outside Auditors are as follows.
(1) Candidates Mr. Ken Yasuda and Mr. Yutaka Iimura are candidates for Outside Auditors provided for in Article
2, Paragraph 3 (viii) of the Ordinance for Enforcement of the Companies Act.
The Company has designated Mr. Ken Yasuda as Independent Auditor pursuant to the regulations set forth by
the Tokyo Stock Exchange and submitted a notification of his designation to the said exchange.
Furthermore, the Company plans to designate Mr. Yutaka Iimura as Independent Auditor pursuant to theregulations set forth by the Tokyo Stock Exchange and submit a notification of his designation to the saidexchange, if he is elected as Outside Auditor of the Company.
(2) Mr. Ken Yasuda will have served as Outside Auditor of the Company for five years at the conclusion of thisAnnual General Shareholders Meeting.
(3) Candidates Mr. Ken Yasuda and Mr. Yutaka Iimura have never been Executives or Officers (excluding those
who are Executives) of a Specified Associated Service Provider (Article 2, Paragraph 3 (xix) of the Ordinancefor Enforcement of the Companies Act) of the Company over the past ten years.

- 13 -

<Reference>●Criteria for determining independence of independent officers
The Company has established the criteria for determining independence of its independent officers as follows.
1. An independent officer shall be an Outside Director or an Outside Auditor with no risk of conflict of interest
arising with general shareholders.
2. An independent officer shall not be a major business partner (supplier or buyer) of the Company or a director,
executive or auditor thereof.
3. An independent officer shall not be a consultant, attorney, certified public accountant, certified tax accountant,etc. to whom the Company pays annual compensation amounting to one million yen or more other than officer’s
compensation.
4. An independent officer shall not be a shareholder of the Company.
5. An independent officer shall not be a friend of a Director or Auditor of the Company.
6. An independent officer shall not formerly or currently be:(1) A director, executive, auditor or accounting advisor of the Company or the Company’s subsidiaries, etc.;(2) A shareholder who holds 5% or more of the Company’s shares or a director, executive or auditor of an
institutional shareholder who holds 5% or more of the Company’s shares;(3) A director, executive or auditor of the parent company of the shareholder referred to in paragraph (2) above;(4) A member of a corporation organized by a consultant, attorney, certified public accountant, certified tax
accountant, etc. to whom the Company pays annual compensation amounting to one million yen or moreother than officer’s compensation;(5) A major business partner (supplier or buyer) of the Company or a former member of such client other thandirector, executive or auditor thereof;(6) A shareholder who holds 5% or more of the Company’s shares or a former member of an institutional
shareholder who holds 5% or more of the Company’s shares other than director, executive or auditor thereof;(7) A former member of the parent company of the shareholder referred to in paragraph (6) above other thandirector, executive or auditor of such parent company;(8) A member of a company whose relationship with the Company involves having outside officers from bothparties;(9) A recipient of donations from the Company or a former member thereof; or(10) A relative within third degree of kinship to any of the aforementioned persons.
[End of document]- 14 -

(Appendix)

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

1. Overview of the Corporate Group(1)

Business Progress and Results
During the fiscal year ended March 31, 2023, the Japanese economy saw a pickup in corporate earnings,
personal consumption, and other factors, though it was influenced by the trend in COVID-19. There was arecovery trend with weakness seen in the Japanese economy, as the simultaneous occurrence of the highresource prices and the appreciation of the U.S. dollar affected business activities etc.
As for overseas economies, although there was steady performance in the employment and income
environment in general, certain areas of the economic recovery appear to have come to something of astandstill due primarily to the impact of concerns about financial and capital market fluctuations, theprolonged situation in Ukraine, and concerns about economic slowdown driven by accelerating inflation.
Under these circumstances, in the stainless steel industry, the primary source of demand for the nickel
business that accounts for the majority of the Group’s sales and profit and loss, demand trended to recoverin line with trends towards the normalization of economic activities. In China, although there is an
expectation for a recovery in demand for stainless steel, the signs of such a recovery have not yet manifested.
This, along with the impact of China’s COVID policy, the sluggish real estate market in China, concerns
about the prolonged situation in Ukraine, and other factors meant that there was increasing uncertainty inthe market condition, with capacity utilization rates of production facilities starting to vary.
As a result, the demand for ferronickel showed slowdown.
On the procurement front, prices of nickel ore, the primary raw material for ferronickel products, haveremained high against the backdrop primarily of the impact of Indonesia’s unprocessed ore export ban anda robust demand for nickel ore. Moreover, prices of raw materials and fuel as well as of electricity rose
sharply due to the steep rise in resource prices globally, resulting in acceleration of the rate of the increasein production costs.
Nickel prices on the London Metal Exchange (LME) were at a relatively high level. However, in addition
to the impact of financial and capital market fluctuations, complex factors related to the situation in Ukraine,and unstable prices of crude oil and other commodities, there were also concerns about an economic
slowdown due to accelerating inflation, and prices remained directionless.
In this situation, the Company’s ferronickel sales volume was planned modestly due to the impact of
production decrease caused by the electric furnace molten material leakage incident that occurred in one of
the three furnaces in the ferronickel manufacturing facilities just before the end of the previous fiscal year.
In addition, the Company changed its policy with the objective of strategically controlling volume to a certain
level so as not to impair profitability, in view of the easing of the nickel supply-demand balance and because
overseas producers of stainless steel are shifting some of their procurement to nickel pig iron, which has aprice advantage, even including with respect to production costs, and the price of nickel pig iron is also
affecting the selling price of the Company’s products. As a result, the ferronickel sales volume decreased by
54.2% year on year as a whole due to a decrease in both domestic and overseas sales.
The ferronickel production volume decreased year on year due to the impact of the electric furnace moltenmaterial leakage incident. Regarding the affected unit of the production facilities, its restoration and planned
resumption of operations is expected to be in the next fiscal year; however, the Company will resume
operation of the said electric furnace only once the volume control policy is lifted while also keeping a close
eye on the business environment
The selling price of ferronickel products increased compared to the previous fiscal year as the LME nickel
price applicable to the Company increased by 32.2% year on year and the average exchange rate of Japanese
yen against U.S. dollar applicable to the Company was 21.1% weaker year on year. On the other hand, as
mentioned previously, the Company also refers to the price of nickel pig iron in addition to the applicableLME nickel price and the applicable exchange rate when setting the selling price of the Company’s products,- 15 -

and thus the selling environment has rapidly changed into a difficult one with stagnant revenue growth.
Despite the rapidly evolving business environment and expectations that the COVID-19 pandemic andthe situation in Ukraine will continue as mentioned above, the Company continues to implement measuresin response to the highly uncertain business environment. To further strengthen its earnings base, theCompany is striving to thoroughly focus on the profitability of orders, thereby building a flexible production
and sales system. Furthermore, the Company continues its efforts to improve business performance andstabilize earnings through measures such as the early realization of overseas business development and newmine development as well as reinforcement of operational efficiency improvement measures to pursue cost
minimization.
As a result, consolidated net sales for the fiscal year under review decreased by 39.0% year on year to¥34,852 million. On the profit front, the Company posted operating loss of ¥12,588 million (compared with
operating profit of ¥4,806 million for the previous fiscal year), owing to an increase in cost of sales due toan inventory write down following a downturn in profitability, on top of the decrease in net sales, andordinary loss was ¥4,960 million (compared with ordinary profit of ¥12,999 million for the previous fiscal
year), reflecting the recording of ¥7,066 million in share of profit of entities accounted for using equity
method under non-operating income. Loss attributable to owners of parent was ¥5,026 million (comparedwith profit attributable to owners of parent of ¥11,368 million for the previous fiscal year) following therecording of a bonus incentive reward for reducing power consumption through participation in a wintertime power-saving campaign of our power supplier under extraordinary income and the costs for restoration
after the electric furnace molten material leakage incident under extraordinary loss.
Operating results by business segment are as follows.
(Nickel business)
The operating results of the nickel business are as described above.
As a result, net sales in this segment decreased by 34.9% year on year to ¥34,135 million with operating
loss of ¥12,441 million (compared with operating profit of ¥4,950 million for the previous fiscal year).
(Gas business)
In the gas business, despite the recording of costs associated with facility repair, the Company maintained
a stable operation, with this segment recording a profit.
As a result, net sales in this segment increased by 34.4% year on year to ¥774 million with operating
profit of ¥4 million (compared with operating loss of ¥10 million for the previous fiscal year).
(Other)
The segment of other businesses recorded a loss. The real estate business had few sales, and the waste
recycling business’s order-taking was sluggish.
As a result, net sales in this segment decreased by 88.0% year on year to ¥38 million with operating lossof ¥160 million (compared with operating loss of ¥142 million for the previous fiscal year).
Further, we have withdrawn from the waste recycling business as we did not expect that it would become
profitable in future. Moving forward, we will consider a business in which new recycled resources are usedas raw materials through use of the manufacturing equipment from said waste recycling business.

- 16 -

Net sales by business segment

Segment

96th Term
Year ended March 31, 2022
AmountShare

97th Term
Year ended March 31, 2023
AmountShare

ChangeAmountShare(Million yen)%

(Million yen)%

(Million yen)%

56,33898.6

34,13597.9(22,202)(39.4)

576
324

1.0
0.6

774
38

2.2
0.1

198
(285)

34.4
(88.0)(109)
57,129

(0.2)
100.0

(97)
34,852

(0.2)
100.0

12
(22,277)—(39.0)

Nickelbusiness
Gas business
Other
Inter-segment
eliminations
Total

Operating profit (loss) by business segment

Segment

96th Term
Year ended March 31, 2022
AmountShare

97th Term
Year ended March 31, 2023
AmountShare

ChangeAmountShare(Million yen)%

(Million yen)%

(Million yen)

%

4,950

103.0

(12,441)98.8(17,392)

—

(10)
(142)

(0.2)
(3.0)

4
(160)

(0.0)
1.3

14
(17)

—
—

9
4,806

0.2
100.0

9
(12,588)

(0.1)
100.0

0
(17,395)

0.0—

Nickelbusiness
Gas business
Other
Inter-segment
eliminations
Total(2) Issues to Be Addressed
1) Future Outlook

With regard to the consolidated financial forecast, the economic outlook remains highly uncertain as
global inflation, the situation regarding the financial and capital market, COVID-19 and the situation in
Ukraine continue to affect the domestic and overseas economies.
On the volume front, in view of the easing of the nickel supply-demand balance and with producers of
stainless steel shifting some of their procurement to nickel pig iron, which has a price advantage, even
including with respect to production costs, and with the price of nickel pig iron also affecting the selling
price of the Company’s products, our forecast is for a harsh environment. Continuing on from the previous
year, we expect to implement a strategic volume control policy, with which achieving a certain degree of
profitability should not be hampered.
In terms of losses on the selling price front and as described earlier, the Company refers to the price ofnickel pig iron in addition to the applicable LME nickel price and the applicable exchange rate when setting
the selling price of the Company’s products. On the procurement price front, the prices of raw materials andfuel as well as of electricity are at high levels owing to the high price of nickel ore, the primary raw material
for ferronickel products, and the steep rise in resource prices globally. Accordingly, a significant impact on
the price front is expected.
Although the impacts of COVID-19 and the situation in Ukraine are expected to continue in the next
fiscal year, response measures to address such business environment are consistent with activities to beundertaken under the basic policies set forth in the Group’s Medium-term Management Plan, and theCompany will continue to strongly push forward with these measures.
2) New Medium-Term Business Plan “PAMCO-2024”
In order to establish a management platform capable of responding to changes in the businessenvironment and to achieve continuous growth, we established the long-term vision, “Become a world-classferronickel manufacturer with comprehensive power,” and endeavored to achieve this long-term vision.
- 17 -

However, the business environment surrounding the Company has become increasingly severe due to thematerialization of resource nationalism in the nickel ore-producing countries, changes in the market structureof mainstay products, and other factors. The situation is unpredictable due to soaring resource and energy
prices, etc., caused by the tense situation in Ukraine.
In this business environment, having positioned further strengthening of the platform, contributing to theSDGs, and becoming carbon neutral as important issues for the Company, we aim to evolve as a sustainable
company by building and developing a business structure based on problem-solving.
Based on the above, we have set forth a new long-term vision, “A comprehensive materials company thatco-creates a sustainable, recycling-oriented society,” and have formulated a new medium-term business plan
covering the period from FY2022 to FY2024 (hereinafter, PAMCO-2024) to realize this vision.
(1) Long-term vision: “A comprehensive materials company that co-creates a sustainable, recyclingoriented society”(2) Theme of PAMCO-2024: “Further strengthen the platform and promote the sustainability strategy”(3) Materiality and Priority Measures (1) to 9))—Contribute to the achievement of the SDGs through the resolution of material issues—
Restructuring of ferronickel production and sales systems with emphasis on profitability
1) Establishment of optimal production system by reviewing production strategy
2) Strengthening of cost competitiveness by reviewing procurement strategy
Acceleration of consideration of expansion into overseas smelting business3) Promotion of overseas smelting projects and start-up of production
Creation of new businesses that contribute to society4) Promotion of production and sales of raw materials for LIB materials
Diversification of business in Japan to contribute to a recycling-oriented society5) Restructuring of recycling business
Enhancement of corporate value by addressing sustainability issues6) Sustainability Promotion Council—Promotion of medium- and long-term initiatives related to material sustainability issues—7) Reduction of GHG emissions
8) Promotion of symbiosis by contributing to the development of regions and resource-richcountries
9) Promotion of constructive dialogue with stakeholders
For details, please also refer to our website (Medium-term Management Plan).
(https://www.pacific-metals.co.jp/ir/term.php)
We would like to ask for the continued support and encouragement of our shareholders.
(3)

Capital Expenditures, Etc. and Financing
The total amount of capital expenditures conducted in the fiscal year under review was ¥1,202 million.
The Company did not conduct any financing at the end of the fiscal year under review.

(4)

Transfer, Absorption-type Split or Incorporation-type Split of Businesses
Not applicable.

(5)

Acquisition of Business from Other Companies
Not applicable.

(6)

Succession of Rights and Obligations regarding Businesses of Other Corporations via Absorptiontype Merger or Absorption-type Split
Not applicable.

- 18 -

(7)Acquisition or Disposition of Shares and Other Equity or Share Acquisition Rights of Other
Corporations
Not applicable.

(8)

Trends in Assets and Profit (Loss)

Item

Net sales
Ordinary profit (loss)
Profit (loss) attributable toowners of parent
Basic earnings per share(yen)
Total assets
Net assets
Net assets per share (yen)
Note:

(9)

94th Term
Year ended
March 31,2020

95th Term
Year ended
March 31,2021

(Million yen)
97th Term
Year ended
March 31,2023

96th Term
Year ended
March 31,2022

(Fiscal year
under review)

44,133972

32,217
3,344

57,12912,99934,852(4,960)

625

1,162

11,368(5,026)32.06 yen

59.61 yen

582.93 yen(257.75) yen

69,96063,506
3,242.70 yen

75,48467,014
3,421.84 yen

89,85280,153
4,095.12 yen

78,82572,034
3,678.90 yen

Basic earnings (loss) per share is calculated based on the average number of shares issued andoutstanding during the fiscal year, while net assets per share are calculated based on the number ofshares issued and outstanding at the end of the fiscal year. Treasury shares are excluded from the total
number of shares issued and outstanding.

Significant Subsidiaries

Company name

Capital(Thousand yen)

The Company’s
share of voting
rightsMajor business lines%

Taiheiyo Kosan Co., Ltd.

50,000

74.00

Pacific Gas Center Co., Ltd.

100,000

50.00

Transportation andcontracting, realestate-related
business, etc.
Manufacture and saleof gases

Notes: 1. The Company has two (2) consolidated subsidiaries and seven (7) associates accounted for using theequity method.
2. An overview of their business results for the fiscal year under review is stated above in “(1) Business
Progress and Results” (Pages 15-17).

(10) Principal Business (as of March 31, 2023)
Business segment
Major business lines
Nickel business
Manufacture and sale of ferronickel and slag products
Gas business
Manufacture and sale of gases
Other
Waste recycling business, transportation and contracting, real estaterelated business, etc.

- 19 -

(11) Principal Business Locations (as of March 31, 2023)
1) The Company
Business location nameHead Office
Chiyoda-ku, Tokyo
Hachinohe Head Office
Hachinohe City, Aomori2) Significant subsidiaries
Business location nameTaiheiyo Kosan Co., Ltd.
Hachinohe City, Aomori
Pacific Gas Center Co., Ltd. Hachinohe City, Aomori

Location

Location(12) Employees (as of March 31, 2023)
Number of employees
468

Year-on-year increase (decrease)8(13) Major Lenders (as of March 31, 2023)
Not applicable.

- 20 -

2. Shares of the Company (as of March 31, 2023)(1) Total number of shares authorized to be issued

50,000,000 shares(2) Total number of shares issued and outstanding

19,502,036 shares(excluding 75,035 treasury shares)
16,315 persons (up 1,893 from the end of theprevious fiscal year)(3) Number of shareholders(4) Major shareholders (top ten shareholders)Number of shares
held
Thousand shares

Shareholder’s name

Percentage ofshareholding%

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

3,257

16.70

NIPPON STEEL Stainless Steel Corporation

2,049

10.51

Custody Bank of Japan, Ltd. (Trust account)

1,373

7.04

STATE STREET BANK AND TRUST COMPANY
505103

1,240

6.36

BBH FOR FIDELITY PURITAN TR: FIDELITY SR
INTRINSIC OPPORTUNITIES FUND

712

3.65

Tachibana Securities Co., Ltd.

685

3.52

JP MORGAN CHASE BANK 385781

439

2.25

J.P. MORGAN SECURITIES PLC FOR AND ON
BEHALF OF ITS CLIENTS JPMSP RE CLIENTASSETS-SEGR ACCT

430

2.21

GOVERNMENT OF NORWAY

376

1.93

Business Partners’ Shareholding Association, PACIFICMETALS CO., LTD.

217

1.12

Notes: 1. Numbers of shares held have been rounded down to the nearest thousand.
2. Percentage of shareholding has been calculated based on the number of shares (19,502,036
shares) obtained by subtracting treasury shares from the total number of shares issued andoutstanding.

(5) Other important matters concerning shares
Not applicable.

- 21 -

3. Share Acquisition Rights, etc., of the Company (as of March 31, 2023)(1)

Status of share acquisition rights, etc. held by the officers of the Company that are issued asremuneration for the execution of duties
Not applicable.

(2)

Status of share acquisition rights, etc. issued to employees of the Company as remuneration for
the execution of duties during the fiscal year under review
Not applicable.

(3)

Other significant matters concerning share acquisition rights, etc.
Not applicable.

- 22 -

4. Company Officers(1)

Directors and Auditors (as of March 31, 2023)
Position

Name

President Director

Masayuki Aoyama

Director & Senior
Managing Executive
Officer

Yoshiharu Inomata

Director & Managing
Executive Officer

Kenichi Hara

Director & Managing

Terunobu

Executive Officer

Matsuyama

Director & Senior

HiroakiExecutive Officer

Ichiyanagi

Director & Senior
Executive Officer

Director

Kazuo Iwadate

ShinyaMatsumotoResponsibilities and significant concurrent positions
Representative Director, Member of Nomination andCompensation Committee
Assistant to the President,
In charge of Corporate Planning, Recycling BusinessIn charge of Procurement, General Manager of Sales &Marketing Dept.
Director, Pacific Sowa Corporation
In charge of Internal Control, IR, General Administration,
Finance & Accounting, General Manager of Personnel &Labor Relation Dept.
Director, Taiheiyo Kosan Co., Ltd.
In charge of Quality Control & Environmental
Management, General Manager, Resources & Technology
Development Project Dept.
Director, Rio Tuba Nickel Mining Corporation
Director, Taganito Mining Corporation
In charge of Safety & Health Management, Utility &Maintenance and Production; General Manager ofBusiness Process Reengineering Dept.
President & Representative Director, Pacific Gas Center
Co., Ltd.
Chairperson of Nomination and Compensation Committee
Outside Auditor, Impress Holdings, Inc.
Outside Director, The Shibusawa Warehouse Co., Ltd.
Partner and Representative Attorney, Marunouchi Sogo
Law Office

Hikari Imai

Member of Nomination and Compensation Committee
Outside Director, CYBERDYNE Inc.
Outside Director, FUJI SOFT INCORPORATED

Director

Yukari Sakai

Member of Nomination and Compensation Committee
Outside Director (Standing Audit and Supervisory
Committee Member), UNITED ARROWS LTD.
Outside Director, TOYO KANETSU K.K.

Full-time Auditor

Kiichi Tatsunaka

AuditorKen Yasuda

Auditor

Hideki Ogata

AuditorShuzo Ikeda

Director

External Auditor, NIHON PLAST CO., LTD.

Notes: 1. Messrs. Shinya Matsumoto and Hikari Imai and Ms. Yukari Sakai are Outside Directors as set forth in Article 2,
Item 15 of the Companies Act. Furthermore, the Company has designated Messrs. Shinya Matsumoto and Hikari
Imai and Ms. Yukari Sakai as Independent Directors pursuant to the regulations set forth by the Tokyo Stock
Exchange and submitted a notification of their designation to the said exchange.
2. Messrs. Ken Yasuda, Hideki Ogata, and Shuzo Ikeda are Outside Auditors as set forth in Article 2, Paragraph 16
and Article 335, Paragraph 3 of the Companies Act. Furthermore, the Company has designated Auditors Messrs.
Ken Yasuda, Hideki Ogata, and Shuzo Ikeda as Independent Auditors pursuant to the regulations set forth by the- 23 -

Tokyo Stock Exchange and submitted a notification of their designation to the said exchange.
3. Prior to his assumption of office as Auditor, Permanent Auditor Mr. Kiichi Tatsunaka belonged to the Finance &Accounting Department of the Company, and he possesses considerable knowledge in the finance and accounting
fields.
4. Auditors Messrs. Ken Yasuda, Hideki Ogata, and Shuzo Ikeda all hail from financial institutions and possess
considerable knowledge in the finance and accounting fields and also as auditors.

Reference: The other Executive Officers are as follows. (As of March 31, 2023)
Position

Names

Senior Executive Officers

Chitaru Okamura, Satoshi Kawabata

Executive Officers

Tomoyuki Matsumura, Tetsuji Kimura(2)

Summary of Agreement on Limitation of Liability
The Company and three (3) Outside Directors and three (3) Outside Auditors have entered into
contracts to limit liability for damages pursuant to the respective provisions of Article 427, Paragraph
1 of the Companies Act, Article 30 of the Articles of Incorporation, which stipulates the contract tolimit liability of Outside Directors, and Article 39 of the Articles of Incorporation, which stipulates
the contract to limit liability of Outside Auditors. The limit of liability for damages under the said
contracts shall be the amount provided for by laws and regulations.

(3)

Summary of Directors and Officers Liability Insurance Contract
The Company has entered into a directors and officers liability insurance contract stipulated in
Article 430-3, Paragraph 1 of the Companies Act with an insurance company. Directors, Auditors,
Executive Officers, and managerial employees of the Company are within the scope of the insured
under the said insurance contract, and the insured do not bear the premiums. The said insurance
contract covers legal expenses and damages for claims brought against the insured during theinsurance period.
However, in order to ensure that the insured’s execution of their duties is not impaired, there arecertain exemptions, such as coverage not being provided for damages arising from an act committed
by the insured with knowledge that the act was in violation of the law.

(4)

Remuneration, etc. of Directors and Auditors in the Fiscal Year Under Review
1) Matters regarding the policy for determining the content of remuneration for individual
Directors and Auditors
The Company’s Nomination and Compensation Committee has established the policy described
below for determining the content of remuneration for individual Directors. This basic policy has
been decided by the Company’s Board of Directors as the Officers’ Remuneration Rules.
The Company’s policy for determining the content of remuneration for individual Auditors
has also been decided by the Company’s Board of Directors as the Officers’ Remuneration Rules,
and the maximum amount was resolved at the General Shareholders Meeting and the details are
determined through mutual consultation among the Auditors.
2) Summary of the determination policyi) Basic policy
The basic policy for Director’s remuneration is to link the remuneration system with the benefitsof shareholders in order to make the system fully functional, as an incentive to pursue thesustainable improvement of corporate value, and to determine the individual Director’s
remuneration at an appropriate level according to his/her responsibilities.
Specifically, Directors’ remuneration consists of “basic remuneration for officers” as fixed
remuneration and “bonuses for officers (cash and shares)” as performance-linked remuneration.
Regarding Outside Directors who assume the responsibility of oversight, only “basic
remuneration for officers” is paid in light of their duties.
ii) Policy for determining the amounts of basic remuneration (monetary compensation) for individual
Directors (including policy regarding the determination of the timing or conditions of granting
remuneration)
Basic remuneration for Directors of the Company is fixed monthly remuneration and its amountis deliberated and determined by the Nomination and Compensation Committee.
- 24 -

iii) Policy for determining the contents and the amount or quantity of performance-linked remuneration(including policy regarding the determination of the timing or conditions of granting remuneration)
Regarding performance benchmark, performance-linked remuneration is payable when
dividends are paid. Using net income as the source of funds, performance-linked remuneration
is calculated based on the distribution standard according to the level of net income determined
separately. The performance benchmark is selected to raise awareness of the performance
improvement for each fiscal year, contribute to the improvement of corporate value, and sharebenefits with all stakeholders.
The payment is made at a fixed time each year in an amount calculated based on theperformance for each fiscal year as a bonus.
iv) Policy for determining the amount of monetary remuneration and the amount of performance-linked
remuneration as percentages of the amount of remuneration for individual Directors
a. Fixed monthly remuneration◇Basic remuneration for officers
 Fixed remuneration in cash according to the position based on the degree of responsibilities
b. Performance-linked remuneration◇Bonuses for officers (cash) Performance-linked remuneration as a short-term incentive, which fluctuates based on the
Company’s business performance during a fiscal year.
 Up to the amounts of individual monthly fixed remuneration for five months
 The payment of remuneration shall be made annually after the determination of theCompany’s performance and other items for each fiscal year.
◇Bonuses for officers (shares) As performance-linked stock remuneration, points will be granted for delivery of shares
during the term of office in order to promote the sharing of benefits and risks withshareholders from a medium- to long-term perspective.
 Shares, etc. will be issued to Directors at the time of their retirement.
Regarding the ratio by remuneration type, the ratio of fixed remuneration to performance-linked
remuneration is in the range between 10:0 and 7:3.
v) Matters relating to the determination of the content of remuneration for Directors
In determining a draft proposal on monthly individual Directors’ remuneration, the President
Director carefully evaluates the role expected of each Director by the Company, submits thedraft proposal to the Nomination and Compensation Committee, which deliberates anddetermines remuneration for individual Directors, and then the President Director submits the
proposal on the total amount to the Board of Directors, which makes a decision.
The total amount of bonuses for Directors, which are performance-linked remuneration, isdetermined in accordance with the distribution standards, and the President Director submits a
proposal on the total amount to be paid to the Board of Directors, which makes a decision.
Distribution to individuals is done proportionally based on the amount of fixed monthly
remuneration according to position.

3) Matters regarding the resolution of the General Meeting of Shareholders concerning
remuneration of Directors and Auditors
The 80th Annual General Shareholders Meeting on June 29, 2006 passed a resolution to stipulatethat the amount of monetary remuneration for Directors shall be up to 350 million yen per year
(excluding the portion of employee salary of Directors who concurrently serve as employees).
There were ten (10) directors (including one (1) Outside Director) at the time of the conclusionof the said Annual General Shareholders Meeting.
The 80th Annual General Shareholders Meeting on June 29, 2006 passed a resolution to
stipulate that the amount of monetary remuneration for Auditors shall be up to 60 million yen per
year. There were four (4) auditors at the time of the conclusion of the said Annual General
Shareholders Meeting.
4) Matters regarding the entrustment of the determination of remuneration, etc. for individual
Directors
Regarding the amount of each individual Director’s remuneration, the maximum amount
was resolved at the General Shareholders Meeting, and the Nomination and Compensation
Committee, entrusted by the Board of Directors, deliberates on the total amount of
remuneration to be paid to Directors for the applicable period based on the Directors’
Remuneration Policy established separately, and the President submits the proposal
reflecting results of its deliberations to the Board of Directors, which makes a decision.
The reason for delegating authority to the Nomination and Compensation Committee is- 25 -

to ensure the fairness, transparency, and objectivity of the procedures for determining
remuneration since the Nomination and Compensation Committee, of which a majority ofmembers are Outside Directors, is a voluntary advisory body to the Board of Directors of
the Company.
The Board of Directors has taken measures to ensure that such authority is properly
exercised by the Nomination and Compensation Committee, which deliberates on the matter
and, based on its report, the President Director submits the matter to the Board of Directors
for decision. Since the amount of individual Director’s remuneration is determined throughsuch procedures, the Board of Directors believes that the content of such remuneration is inline with the determination policy.
Regarding the details pertaining to the fiscal year under review, the Nomination andCompensation Committee (Chairperson: Outside Director Mr. Shinya Matsumoto;
Members: Outside Director Mr. Hikaru Imai, Outside Director Yukari Sakai, President
Director Mr. Masayuki Aoyama) determined the details of remuneration for individual
Directors. The content of its authority is defined by the Committee’s Regulations and covers
formulation of the basic policy regarding the remuneration system, proposals on the
remuneration framework (including the calculation method), and specific amounts ofremuneration for individual Directors (including the calculation method).
5) Total amount of remuneration, etc. of Directors and Auditors

Officer Category

Total amountof
remuneration,etc.
(million yen)

Total amount by remuneration type (million yen)
PerformanceNon-monetary
Basic (fixed)
linkedremuneration,
remuneration
remuneration,
etc.
etc.

Number of
eligible
officers

Directors (of
177
—
—
9
which, Outside
177
(19)
(—)
(—)
(3)
Directors)
Auditors (of38——4which, Outside
38
(18)
(—)
(—)
(3)
Auditors)
Notes: 1. The indicator for performance-linked remuneration for the fiscal year under review is the payment ofdividends with a consolidated payout ratio of 30%. Since the actual result was a loss attributable to parentof the owners of 5,026 million yen, the Company decided not to pay dividends from surplus. As a result,
the Company decided not to pay bonuses for officers to six Directors (excluding Outside Directors) inaccordance with the Directors’ Remuneration Policy.
2. The Board of Directors’ meeting, held on May 22, 2006, resolved to abolish the retirement benefits systemfor officers, and the 80th Annual General Shareholders Meeting, held on June 29, 2006, resolved to grant
final payments in conjunction with the abolishment of the retirement benefits system. The total amount of
the final payments in the future as of the end of the fiscal year under review is as follows.
A total of 6 million yen for one Auditor
3. Outside Directors and Auditors do not receive officers’ remuneration, etc., from subsidiaries.

- 26 -

(4)Outside Directors and Auditors
1) Status of Activities at the Board of Directors During the Fiscal Year Under Review
Position at theCompanySignificant concurrent
positionsShinya Matsumoto

Director
Independent Officer

Outside Auditor, Impress
Holdings, Inc.
Outside Director, The
Shibusawa Warehouse Co.,Ltd.
Partner and Representative
Attorney, Marunouchi
Sogo Law Office

Hikari Imai

Director
Independent Officer

Outside Director,
CYBERDYNE Inc.
Outside Director, FUJI
SOFT INCORPORATED

Director
Independent Officer

Outside Director (Standing
Audit and Supervisory
Committee Member),
UNITED ARROWS LTD.
Outside Director, TOYOKANETSU K.K.

Name

Yukari Sakai- 27 -

Main activities and summary of duties
performed with respect to the role
expected of Outside Directors
Mr. Matsumoto attended 21 of the 21
Board of Directors meetings held
during the fiscal year under review,expressing opinions from theperspective of compliance with laws
and regulations based on his
professional perspective and broad
insight as an attorney. (Board of
Directors attendance rate: 100.0%)
In addition, by leveraging the abovementioned perspective and insight, heserves as the chairperson of theNomination and Compensation
Committee of the Company and isplaying an appropriate role inenhancing the fairness andtransparency of the Company’s Boardof Directors.
Mr. Imai attended 21 of the 21 Board of
Directors meetings held during the
fiscal year under review, expressing
opinions from the perspective ofenhancing and strengthening corporate
management, based on his extensive
experience as a corporate manager overmany years. (Board of Directors
attendance rate: 100.0%)
In addition, by leveraging the abovementioned experience, he serves as amember of the Nomination andCompensation Committee of theCompany and is playing an appropriaterole in enhancing the fairness andtransparency of the Company’s Boardof Directors.
Ms. Sakai attended 21 of the 21 Boardof Directors meetings held during the
fiscal year under review, expressing
opinions from the perspective ofenhancing and strengthening corporate
management, based on her extensive
experience as a corporate manager overmany years. (Board of Directors
attendance rate: 100.0%)
In addition, by leveraging the abovementioned experience, she is providing
advice, as appropriate, on various
issues related to the Company’s
corporate management based on avariety of perspectives from theviewpoint of diversity and is playing anappropriate role in enhancing theeffectiveness of the Company’s Boardof Directors.

2) Status of Activities at the Board of Auditors During the Fiscal Year Under Review
Name

Position at theCompanySignificant concurrent
positions

Main activities

Mr. Yasuda attended 21 of the 21 Boardof Directors meetings and 16 of the 16
Board of Auditors meetings held during
the fiscal year under review, expressing
Auditoropinions from the perspective of
Ken Yasuda
Independent Officer
appropriate auditing, based on his
operational experience. (Board of
Directors attendance rate: 100.0%;
Board of Auditors attendance rate:
100.0%)Mr. Ogata attended 21 of the 21 Boardof Directors meetings and 16 of the 16
Board of Auditors meetings held during
the fiscal year under review, expressing
Auditoropinions from the perspective of
Hideki Ogata
Independent Officer
appropriate auditing, based on his
operational experience. (Board of
Directors attendance rate: 100.0%;
Board of Auditors attendance rate:
100.0%)
Mr. Ikeda attended 21 of the 21 Boardof Directors meetings and 16 of the 16
Board of Auditors meetings held during
the fiscal year under review, expressing
AuditorExternal Auditor, NIHON
opinions from the perspective of
Shuzo Ikeda
Independent Officer
PLAST CO., LTD.
appropriate auditing, based on his
operational experience. (Board of
Directors attendance rate: 100.0%;
Board of Auditors attendance rate:
100.0%)
Notes: 1. There are no transactional relationship or special interests between Directors Messrs. Shinya Matsumotoand Hikari Imai and Ms. Yukari Sakai and Auditors Messrs. Ken Yasuda, Hideki Ogata, and Shuzo Ikeda
and the Company.
2. There are no special interests between the corporations, etc. where Directors Messrs. Shinya Matsumoto and
Hikari Imai and Ms. Yukari Sakai and Auditor Mr. Shuzo Ikeda serve in concurrent positions and the Company.

- 28 -

5. Accounting Auditor(1)

Accounting Auditor’s Name
KPMG AZSA LLC(2)Amount of accounting auditor’s remuneration, etc. and reasons for the Board of Auditors tohave agreed on accounting auditor’s remuneration, etc. for the fiscal year under review
Category
Remuneration for the year ended March 31, 2023
Total amount of cash and other property interest payable by theCompany or its subsidiaries to Accounting Auditor

Amount paid
(Million yen)
40
40

Notes: 1. The audit agreement between the Company and the accounting auditor does not differentiate the amount ofaccounting auditor’s remuneration, etc. under the Companies Act from the amount of remuneration for the audit
under the Financial Instruments and Exchange Act. And as such differentiation is practically impossible, theamount of remuneration, etc. is presented as the total of these amounts.
2. No certified public accountant or audit firm other than the Company’s accounting auditor conducts audits ofthe financial statements of the Company’s consolidated subsidiaries.
3. Description of non-audit services
The Company has concluded a Procedural Work Contract Pursuant to Article 21, Paragraph 2, Item 3 of the
Enforcement Regulation of the Act on Special Measures Concerning Procurement of Electricity from
Renewable Energy Sources by Electricity Utilities (Ministry of Economy, Trade and Industry Ordinance No.
46) (October 2022), and pays ¥0 million as remuneration for the said contract.
4. Based on the Practical Guidelines for Collaboration with Accounting Auditors published by Japan Audit &Supervisory Board Members Association, the Board of Auditors has given consent to the remuneration, etc. tobe paid to the Accounting Auditor pursuant to Article 399, Paragraph 1 of the Companies Act as a result ofconfirming actual audit hours per audit item and grade in the auditing schedules of past years, trends inremuneration amounts, and the status of the execution of duties by the accounting auditor and examining thevalidity of auditing schedule and the remuneration amount for the fiscal year under review.

(3)

Policy on Determination of Dismissal or Non-reappointment of Accounting Auditor
The Company’s Board of Auditors shall dismiss the Accounting Auditor with the unanimous consent
of all Auditors if it is judged that the Accounting Auditor falls under any of the items set forth in
Article 340, Paragraph 1 of the Companies Act. In such an event, an Auditor selected by the Board
of Auditors shall report the dismissal of the Accounting Auditor and the reasons for that dismissal at
the first General Meeting of Shareholders convened after the dismissal.
The Board of Auditors shall decide on the reappointment or non-reappointment of the Accounting
Auditor taking into account factors such as the number of years of continuous provision of audits by
the Accounting Auditor.

6. Systems to Ensure the Appropriateness of the Company’s Business Operations andthe State of Their Implementation
(1)

(2)

(3)

System of retention and management of information concerning the execution of duties of the
Directors of the Company
1)
Reports related to the execution of duties of Directors are made in writing or in electronic
media.
2)
Information concerning the execution of duties of Directors is retained and managed
according to the document control rules and other internal rules of the Company.
Rules and other systems concerning the management of risk of loss of the Company
1)
In order to cope with major accidents, disasters, and corporate scandals, the Company
has established the Risk Management Committee, which takes measures at normal times,
and the Crisis Management Manual in which basic responses to be taken in emergency
situations are described.
2)
Business management risks are presented to the Board of Directors to determine
countermeasures.
3)
Daily operational risks are handled by documenting management rules and businessexecution manuals, etc.
System to ensure the efficient execution of duties of the Directors of the Company and its
subsidiaries
1)
The Company has introduced an executive officer system to vitalize the Board of
Directors through clarifying that the role of the Board of Directors is to determine the- 29 -

2)

3)
4)

overall corporate management policies and supervise business execution. The Company
works to accelerate decision-making and enhance the business execution function at thepractical level through clarifying the roles and responsibilities of persons responsible forbusiness execution.
In the business operation of the Company, the Management Planning Committee,
consisting of Directors and the General Manager of the department in charge, formulates
operation policy and management plans. The Board of Directors discusses anddetermines the said policy and plans, and systematic and organizational execution ofbusiness is conducted based on the policy and plans. Executive Officers in charge
regularly report the progress of business execution to the Board of Directors forverification.
The Company has set basic rules and other matters concerning IT control in order toensure the efficiency of the business execution of the Company and its subsidiaries.
The Company has formulated rules and introduced a teleconference system between the
Hachinohe Head Office and the Tokyo Head Office in order to enable the participationof Outside Directors in all the Board of Directors’ meetings for decision-making.

(4)

System to ensure the execution of duties of Directors and employees of the Company incompliance with laws and regulations and the Articles of Incorporation of the Company
1)
The Board of Directors has set the Management Policy, the Corporate Code of Ethics,
and the Standard of Corporate Conduct, among others.
2)
The Company works to enhance compliance through establishing the Internal Control
Committee as a structure to ensure the execution of duties of the Directors and employees
in compliance with laws and regulations and the Articles of Incorporation of theCompany.
3)
The Company eliminates any relationship with anti-social forces and other similar groups
that threaten the order and safety of civic society, and resolutely rejects any requests fromthem. The Company has already established a contact point, and centrally manages
information and always collaborates with the police, the Tokyo Metropolitan Police
Department’s Special Violence Prevention Measures Association (Tokubouren), andexternal expert institutions.
4)
The Company has introduced a teleconference system between the Hachinohe Head
Office and the Tokyo Head Office in order to enable the participation of Outside
Directors in all the Board of Directors’ meetings for decision-making.
5)
The Company has established the Internal Audit Dept. under the direct control of theBoard of Directors, and the department implements “organizational and system audits,”“operational audits,” “accounting audits,” and “daily monitoring” in collaboration with
Auditors.
6)
The Company has established a whistle-blowing system (internal and external contact
points) based on the Rules of Whistle-blowing System. Whistle-blowing reports are
submitted to the Board of Auditors, and specific cases are reported to the Board of
Directors.
Disadvantageous treatment of whistle-blowers as a result of whistle-blowing is
prohibited.

(5)

System to ensure the appropriateness of duties at the Group1)
The Company has established a system to ensure the appropriateness of duties ofsubsidiaries through assigning persons in charge of internal control and crisis
management at its subsidiaries under the guidance of the Company and making thepersons attend the Internal Control Committee and the Risk Management Committee(former Crisis Response Committee) at the Company as necessary.
2)
The Internal Audit Dept. of the Company implements audits in order to ensure theappropriateness of duties at consolidated subsidiaries.
3)
Directors of each consolidated subsidiary regularly report the operating conditions of theconsolidated subsidiary to the Board of Directors.
4)
The Company has established a whistle-blowing system (internal and external contact
points) based on the Rules of Whistle-blowing System. Whistle-blowing reports are
submitted to the Board of Auditors, and specific cases are reported to the Board of
Directors.
The whistle-blowing system covers matters concerning subsidiaries, associates, andbusiness partners, and other related entities. The Company ensures that the- 30 -

whistleblowers will not receive disadvantageous treatment in association with suchinternal reporting and prohibits such disadvantageous treatment.
(6)

System of employees to support the duties of Auditors of the Company
At the requests of Auditors, the Company may appoint employees belonging to the Internal
Audit Dept. as persons to support the duties of Auditors, in order to strengthen the collaboration
between Auditors and the Internal Audit Dept., and have the employees support Auditors to theextent that it does not negatively affect their primary duties. The Board of Directors exchanges
opinions with the Board of Auditors as needed.

(7)

System for Directors and employees of the Company to report to Auditors of the Company
1)
Directors of the Company immediately report to Auditors in accordance with laws andregulations, when they identify facts which may potentially cause substantial damage to
the Company.
2)
Directors of the Company allow Auditors to attend the Board of Directors’ meetings andother important meetings. Directors follow the instruction of Auditors with regard to theinspection of Auditors’ important documents and the investigation into the business andassets of the Company.
3)
As regards whistle-blowing reports to Auditors, employees, etc. of the Company,
directors, auditors, and employees, etc. of its subsidiaries, and those who have received
reports from them shall not be treated disadvantageously.
4)
The Company shall promptly process the prepayment and redemption of expenses
incurred in connection with the execution of duties of Auditors, expenses for the
execution of the said duties, and debt disposal.
5)
For the fair execution of duties of Directors of the Company, the Company enables all of
the four Auditors (of which three are Outside Auditors), including part-time Auditors, toattend all Board of Directors’ meetings.

(8)

System to ensure the reliability of financial reports of the Company
In order to ensure the reliability of financial reports of the Company and its subsidiaries, theCompany sets various related rules, identifies and manages the risks of causing fraud or error
in financial reports, designs, operates and evaluates prevention and monitoring functions, andcorrects deficiencies, if any.

(9)

Overview of the status of implementation of systems to ensure the appropriateness of theCompany’s business operations
1)
The Board of Directors met 21 times to decide on matters stipulated by laws andregulations, etc. and important matters concerning management. Communication among
the Directors is encouraged, and the Directors oversee the execution of each other’s
duties.
2)
The Board of Auditors met 16 times to discuss and decide audit policies and schedules
and to audit the Directors’ execution of their duties and the status of compliance withlaws and regulations, the Articles of Incorporation, etc.
3)
The Risk Management Committee (former Crisis Response Committee) met 11 times toconfirm the status of management of risks concerning the Company as a whole andactivity policies for the following year, deal with accidents, and conduct tsunami
evacuation plans and training.
The Committee has also established a Crisis Management Manual for situations that are
anticipated to cause a material impact on management and is making efforts to establish
measures for dealing with such events and preventing them from happening.
4)
The Internal Control Committee met two times to evaluate the establishment of internal
control systems and the status of their implementation. It is also working to strengthen
compliance through regular confirmation of the status of compliance with laws andregulations and through education.
5)
Auditors and the internal audit division held four information exchange meetings andthey exchange information when necessary regarding internal audit results, etc.
Outside Directors also take part in these information exchanges.
6)
Whistle-blowing contact points have been established within and outside the Company
for reporting breaches of laws and regulations and internal rules, etc. They provide
thorough protection of whistleblowers and strive for the early detection and remediationof breaches, etc.
- 31 -

7. Policy Concerning Decisions on Distribution of Surplus, etc.
(1)

Dividend Policy
The Company considers the return of profits to shareholders to be an important management
issue and distributes dividends with the aim of a consolidated payout ratio of 30%, whileworking to enhance and strengthen the corporate structure.
The Company also positions internal reserves as a fund for responding functionally to changes
in the management environment and will use them for various purposes, including securingresources, the development of new technologies, capital expenditure, and the acquisition of treasury
shares as part of the Company’s capital policy.

(2)

Distribution of Surplus
The Company's basic policy is to pay dividends twice a year, an interim dividend and a year-end dividend,
and the Articles of Incorporation stipulate that the Company may pay dividends from surplus by
resolution of the Board of Directors, pursuant to Article 459, Paragraph 1 of the Companies
Act.
With regard to dividends for the fiscal year under review, in accordance with the Company’s
dividend policy, we regret to inform you that we will forego payment of year-end dividends
following interim dividends, as the Company recorded a loss attributable to owners of parent for thefull fiscal year in the extremely severe business environment.

The amounts shown in this Business Report and the figures for the number of shares are rounded to theunit used for presentation.

- 32 -

Consolidated Balance Sheets(Million yen)

Description(Reference)
As of March
31, 2022

As of March
31, 2023

Description(Reference)
As of March
31, 2022

As of March
31, 2023

Liabilities

AssetsCurrent assets

57,882

44,247

Current liabilities

5,508

2,539

Cash and deposits

26,332

16,848Notes and accounts payable trade

1,341

760

13,994

6,593

Accrued expenses

1,761

1,018

Income taxes payable

1,026

7

2,999

1,500

Provision for bonuses

444

95

Other

935

657

5,649

8,204

4,190

4,252

453

361

122

50

2,077

2,087

631

631

5

11

34

–

1,306

1,273

Provision for restoration cost

–

187

Other

11

10

9,699

6,791

75,542

67,491

Share capital

13,922

13,922

Capital surplus

3,481

3,481

Retained earnings

58,59050,540

(450)

(452)

4,323

4,254

4,603

3,831

593

593

(969)

(510)

95

340

287

287

Total net assets

80,15372,034

Total liabilities and net assets

89,85278,825

Notes and accounts receivable- tradeSecurities
Merchandise and finished
goodsWork in process

Non-current liabilities
Retirement benefit liability
Deferred tax liabilities

Raw materials and supplies

5,587

5,836

Other

2,867

4,904

(2)

(1)

31,97034,577

7,734

8,383

2,592

2,424

Allowance for doubtful
accounts
Non-current assets
Property, plant andequipment
Buildings and structures
Machinery, equipment and

Land

4,777

4,777

Other

248

329

1

239

Investments and otherassetsInvestment securities
Retirement benefit asset
Other
Allowance for doubtful
accounts
Total assets

Total liabilities
Net assets

852

Intangible assets

Provision for loss on litigation
Provision for loss contract

115

vehiclesDeferred tax liabilities forland revaluation
Provision for environmental
measuresShareholders’ equity

Treasury shares

24,23425,954

Accumulated othercomprehensive income
Valuation difference on
available-for-sale securities

23,90325,518

Revaluation reserve for land

–

198

336

243

(5)

(5)

89,85278,825

Foreign currency translation
adjustment
Remeasurement of defined
benefit plans
Non-controlling interests- 33 -

Consolidated Statements of Income(Million yen)
(Reference) From April 1, 2021 From April 1, 2022 to March
to March 31, 2022
31, 2023

Description
Net sales

57,12934,852

Cost of sales

48,96245,144Gross profit

8,167(10,292)

Selling, general and administrative expenses

3,360

2,296

Selling expenses

1,665

852

General and administrative expenses

1,694

1,443

Operating profit (loss)

4,806(12,588)

Non-operating income

8,461

7,803

Interest income

813

Dividend income

418

459

Rental income from real estate

103

103

Share of profit of entities accounted for using equity method

6,483

7,066

Foreign exchange gains

1,311

–

135

160

268

175

Interest expenses

00Foreign exchange losses–

4

Rental expenses on facilities

20

18

Commitment fees

27

26

Commission for syndicated loans

904Foreign withholding tax

58

64

Provision for environmental measures

–

34

Other

70

22

Ordinary profit (loss)

12,999(4,960)Extraordinary income

192

1,241

Gain on sale of non-current assets

00Gain on sale of investment securities

192

386

Received incentive–

854

Extraordinary losses

396

567

Impairment losses

317–

Loss on retirement of non-current assets

78

115

Loss on retirement of inventories–

34

Facility restoration expenses–

418

Profit (loss) before income taxes

12,795(4,287)

Income taxes - current

1,462

501

Income taxes - deferred

(46)

237

11,379(5,026)10

0

11,368(5,026)

Other
Non-operating expenses

Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent- 34 -

Non-Consolidated Balance Sheets(Million yen)

Description(Reference)
As of March
31, 2022

Assets

57,41343,733

Cash and deposits

25,75916,315

Accounts receivable - trade13,931

6,528

Securities

2,999

1,500

Merchandise

442

417

Finished goods

5,329

7,883

Raw materials

4,542

4,890

Work in process

462

365

1,045

885

1,914

1,302

986

3,645

(0)

(0)

18,383

17,956

7,547

8,197

Buildings

2,450

2,262

Land

4,777

4,777

Advance payments to
suppliers
Other
Allowance for doubtful
accounts
Non-current assets
Property, plant andequipment

As of March
31, 2023

Current liabilities

5,390

2,458

Accounts payable - trade

1,350

768

Accounts payable - other

487

525

Accrued expenses

1,734

976

Income taxes payable

1,011

–

Provision for bonuses

412

74

Other

395

113

Non-current liabilities

4,080

3,819

Provision for retirement
benefits

180

68

Deferred tax liabilities

1,909

1,637

631

631

5

11

34

–

1,306

1,273

Provision for restoration cost

–

187

Other

11

10

9,471

6,278

61,19051,066

Share capital

13,922

13,922

Capital surplus

3,481

3,481

3,481

3,481

44,237

34,116

Description

Liabilities

Current assets

Supplies(Reference)
As of March
31, 2022

As of March
31, 2023

Deferred tax liabilities forland revaluation
Provision for environmental
measures
Provision for loss on litigation
Provision for loss contract

Total liabilities
Net assets
Shareholders’ equity

Legal capital surplus
Retained earnings

Other
Intangible assets
Investments and otherassetsInvestment securities
Shares of subsidiaries andassociates
Other
Allowance for doubtful
accounts
Total assets

318

1,156

Legal retained earnings

382

382

0

239

Other retained earnings

43,85533,734General reserve

10,30010,300Retained earnings brought
forward33,55523,434

(450)

(452)

5,135

4,344

4,542

3,751

593

593

Total net assets

66,32555,411

Total liabilities and net assets

75,797

61,68910,835

9,519

8,130

6,908

2,378

2,378

332

238

(5)

(5)

75,797

61,689Treasury shares
Valuation and translation
adjustments
Valuation difference on
available-for-sale securities
Revaluation reserve for land

- 35 -

Non-Consolidated Statements of Income(Million yen)
(Reference) From April 1, 2021 From April 1, 2022 to March
to March 31, 2022
31, 2023

Description
Net sales

56,52734,095

Cost of sales

48,41644,427Gross profit

8,110(10,331)

Selling, general and administrative expenses

3,333

2,232

Selling expenses

1,734

882

General and administrative expenses

1,599

1,350

Operating profit (loss)

4,776(12,564)

Non-operating income

8,275

5,470

8

13

6,734

5,214

113

113

1,311

–

106

129

268

167

Interest expenses

00

Rental expenses on facilities

20

18

Commitment fees

27

26

Commission for syndicated loans

904Foreign withholding tax

58

64

Settlement on contract20–

Provision for environmental measures

–

34

Other

50

18

Ordinary profit (loss)

12,783(7,261)

Extraordinary income

192

1,238

Gain on sale of non-current assets

0–Gain on sale of investment securities

192

386

Received incentive–

852

Extraordinary losses

396

567

Impairment losses

317–

Loss on retirement of non-current assets

78

115

Loss on retirement of inventories–

34

Facility restoration expenses–

418

Profit (loss) before income taxes

12,579(6,590)

Income taxes - current

1,442

491

Income taxes - deferred

(22)

17

11,159(7,098)Interest income
Dividend income
Rental income from real estate
Foreign exchange gains
Other
Non-operating expenses

Profit (loss)- 36 -