(Translation)
This document has been extracted and translated from the Japanese original for reference purpose and the translated
document only includes Financial Information chapter and Sustainability Approach and Initiatives. In the event of any
discrepancy between the translated document and Japanese original, the original shall prevail.

Financial Information and Sustainability Approach andInitiatives of Annual Securities Report
From January 1, 2023 to December 31, 2023
(The 105th Business term)

Contents
Financial Information ........................................................................................................................... 1
Sustainability Approach and Initiatives ............................................................................................... 78

Financial Information
1. Preparation of consolidated financial statements and non-consolidated financial statements(1) The consolidated financial statements of Nissha Co., Ltd. (the “Company”) have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) pursuant to Article 93 of the “Ordinance on Terminology, Forms, and Preparation Methodsof Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of 1976; hereinafter referred to as the“Ordinance on Consolidated Financial Statements”).
(2) The non-consolidated financial statements of the Company have been prepared in accordance with the “Ordinance on Terminology,
Forms, and Preparation Methods of Financial Statements, etc.” (Ordinance of the Ministry of Finance No. 59 of 1963; hereinafterreferred to as the “Ordinance on Financial Statements, etc.”).
The Company falls under a company which is permitted to submit non-consolidated financial statements prepared in accordancewith special provisions, and prepares its non-consolidated financial statements pursuant to Article 127 of the Ordinance on
Financial Statements, etc.
2. Audit certificate
The consolidated financial statements and non-consolidated financial statements of the Company for the fiscal year ended
December 31, 2023 (from January 1, 2023 to December 31, 2023) have been audited by Deloitte Touche Tohmatsu LLC in
accordance with Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.
3. Special efforts to ensure fair presentation of consolidated financial statements, etc.
The Company has become a member of the Financial Accounting Standards Foundation and participates in seminars in order todevelop a system for appropriately understanding the contents of the accounting standards and other rules and accurately reflectingchanges to them in consolidated financial statements, etc.
4. Development of internal system to prepare consolidated financial statements, etc. fairly in accordance with IFRSThe Company obtains as necessary press releases and accounting standards published by the International Accounting Standards
Board to keep up to date with the latest standards. In addition, the Company develops an internal system, including internal rules
and manuals in compliance with IFRS, to prepare consolidated financial statements, etc. fairly in accordance with IFRS.

―1―

1 Consolidated Financial Statements, etc.
(1) Consolidated financial statements
1) Consolidated statements of financial position(Million yen)
Note
AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets

As ofDecember 31, 2022

6,34
7,34
8
15,34
9

54,32533,22532,739381
4,731

37,85431,26731,260868
6,149

125,403

107,401

10
11,13
11,13
12

43,72021,41014,252
8,840

43,16920,238
14,644
9,693

14

763

4,539

15,34
22
16
9

13,662
367
1,515
276

16,313
371
1,211
270

104,809110,451

230,212217,853

Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Right-of-use assets
Investments accounted for using equity
methodOther financial assets
Retirement benefit asset
Deferred tax assets
Other non-current assets

As ofDecember 31, 2023

Total non-current assets
Total assets

―2―

Note
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Lease liabilities
Income taxes payable, etc.
Provisions
Other current liabilities

As ofDecember 31, 2022

17,34
18,34
19,34
12
16
20
21

Total current liabilities
Non-current liabilities
Bonds and borrowings
Other financial liabilities
Lease liabilities
Retirement benefit liability
Provisions
Deferred tax liabilities
Other non-current liabilities

18,34
19,34
12
22
20
16
21

Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Retained earnings
Treasury shares
Other components of equity(Million yen)
As ofDecember 31, 2023

23
23
23
23
23

Total equity attributable to owners of parent
Non-controlling interests

39,419
9,450
1,198
1,740
1,173
95
4,552

28,609
7,823
1,535
1,857
636
74
6,055

57,631

46,59238,158
690
8,206
6,290
62
7,216
436

37,225
23
8,862
6,395
52
7,576
271

61,06160,407

118,693

107,000

12,11914,84175,658(2,632)
11,565

12,11914,86569,934(4,019)18,013

111,553

110,913

(34)

(60)

Total equity

111,518

110,852

Total liabilities and equity

230,212217,853―3―2) Consolidated statements of profit or loss and comprehensive income
Consolidated statements of profit or loss
(Million yen)Note
Net sales
Cost of sales

Fiscal Year Ended
December 31, 2022

Fiscal Year Ended
December 31, 2023

25
27

193,963(151,540)

167,726(135,103)

26,27
28
27,28

42,422(31,147)949(2,646)32,622(33,000)
698(3,894)

14

(57)

(243)

9,520

(3,817)

3,768
(916)

2,897
(1,842)

12,373(2,762)(2,253)(252)

Profit (loss)

10,119(3,014)

Profit (loss) attributable to:
Owners of parent
Non-controlling interests

10,140(21)(2,988)(25)

10,119(3,014)31203.65(61.13)31－－

Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Share of profit (loss) of investments accounted
for using equity method
Operating profit (loss)
Finance income
Finance costs

29
29

Profit (loss) before tax
Income tax expense

16

Profit (loss)
Earnings (loss) per share attributable to ownersof parent
Basic earnings (loss) per share (Yen)
Diluted earnings (loss) per share (Yen)―4―Consolidated statements of comprehensive income(Million yen)
Note

Fiscal Year Ended
December 31, 2022

Profit (loss)

Fiscal Year Ended
December 31, 2023

10,119(3,014)

Other comprehensive income
Items that will not be reclassified to profit orloss
Net change in fair value of financial assets
measured through other comprehensive
income30(1,075)

2,539

Remeasurements of defined benefit plans

30

633

(27)

(441)

2,511

30

6,114

3,883

30

136

267

6,250

4,151

5,809

6,662

Total comprehensive income

15,9283,647

Comprehensive income attributable to:
Owners of parent
Non-controlling interests

15,949
(21)

3,673
(25)

15,928

3,647

Total of items that will not be reclassified to
profit or loss
Items that may be reclassified to profit or loss
Exchange differences on translation offoreign operations
Share of other comprehensive income ofinvestments accounted for using equity
methodTotal of items that may be reclassified to
profit or loss
Total other comprehensive income

Total comprehensive income―5―3) Consolidated statements of changes in equity(Million yen)
Equity attributable to owners of parent
Other components of equity
Net change
in fair
value of
Exchangefinancial Remeasure- differences
Total other Total
assetsments of
Nonequity
Treasury measuredoncompodefined
controllingsharesnents of attributablethrough
benefit translationtoownersinterestsof foreign equity
other
plans
of parent
operations
comprehensive
income(1,929)
7,903
(73)
7,830
98,278
(13)
－

Share
capitalCapitalsurplusRetainedearnings

12,11914,81065,445－－

10,140

－

－

－

－

－

－

(1,075)

633

6,250

5,809

5,809

－

5,809

－

－

10,140－(1,075)

633

6,250

5,809

15,949(21)

15,928

23

－

－

－

(837)

－

－

－

－

(837)

－

(837)

23

－

(28)

－

133

－

－

－

－

105

－

105

24

－

－

(1,993)

－

－

－

－

－

(1,993)－(1,993)

23,33

－

59

－

－

－

－

－

－

59

－

59

－

－

(8)

－

－

－

－

－

(8)

－

(8)

－

－

2,073

－

(1,440)(633)－(2,073)

－

－

－

－

30

71

(703)

(1,440)(633)－(2,073)(2,674)－(2,674)

Balance at December 31,
2022

12,11914,84175,658(2,632)

5,388

－

6,177

11,565111,553(34)

111,518

Profit (loss)
Other comprehensive
incomeTotal comprehensive
income－－(2,988)

－

－

－

－

－

(2,988)(25)(3,014)

－

－

－

－

2,539

(27)

4,151

6,662

6,662

－

6,662

－

－

(2,988)

－

2,539

(27)

4,151

6,662

3,673

(25)

3,647

23

－

－

－

(1,539)

－

－

－

－

(1,539)－(1,539)

23

－

(24)

－

151

－

－

－

－

127

－

127

24

－

－

(2,950)

－

－

－

－

－

(2,950)－(2,950)

23,33

－

47

－

－

－

－

－

－

47

－

47

－

－

－

－

－

－

－

－

－

－

－

－

－

214

－

(242)

27

－

(214)

－

－

－

－

23

(2,735)(1,387)

(242)

27

－

(214)

(4,314)－(4,314)

12,11914,86569,934(4,019)7,684－

10,32918,013110,913(60)

110,852

Note

Balance at January 1,
2022
Profit (loss)
Other comprehensive
incomeTotal comprehensive
incomePurchase of treasury
shares
Disposal of treasury
sharesDividends of surplus
Share-based paymenttransactions
Loss of control ofsubsidiaries
Transfer from othercomponents of equity
to retained earnings
Total transactions withowners, etc.

Purchase of treasury
shares
Disposal of treasury
sharesDividends of surplus
Share-based paymenttransactions
Loss of control ofsubsidiaries
Transfer from othercomponents of equity
to retained earnings
Total transactions withowners, etc.
Balance at December 31,
2023

―6―

－

－

－

10,140(21)

Totalequity98,264
10,1194) Consolidated statements of cash flows(Million yen)
NoteCash flows from operating activities
Profit (loss) before tax
Depreciation and amortization
Impairment losses
Loss (gain) on subsidiaries liquidation
Loss (gain) on sale and retirement of fixed
assetsShare of loss (profit) of investments
accounted for using equity method
Finance income
Finance costs
Decrease (increase) in trade and otherreceivables
Decrease (increase) in inventories
Increase (decrease) in trade and otherpayablesIncrease (decrease) in provisions
Increase (decrease) in retirement benefit
asset or liability
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating
activities

Fiscal Year Ended
December 31, 2022

29
29

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Payments for retirement of property, plantand equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Purchase of shares of subsidiaries andaffiliates
Other
Net cash provided by (used in) investing
activities―7―

Fiscal Year Ended
December 31, 2023

12,373
9,487
1,461
385

(2,762)
9,137
2,722
－

102

8

57

243

(3,768)916(2,897)
1,842

(819)

3,925

(3,775)

3,146

1,274

(11,405)

34

(39)

198

239

(562)
17,36669
409(899)(5,001)
95

618
4,780
455
352
(1,512)(2,979)390

12,039

1,486

(136)
－
(5,454)(0)130(4,430)

(53)

(10)

46

102

(558)
(17)
2,160

(1,037)
(12)
891

(151)

(3,752)(219)

97(4,385)(8,019)(Million yen)
NoteCash flows from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Repayments of lease liabilities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Proceeds from sale of treasury shares
Decrease (increase) in deposit paid for
repurchase of treasury stock
Dividends paid to owners of parent
Other
Net cash provided by (used in) financing
activities
Effect of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Fiscal Year Ended
December 31, 2022

32
32
32
32
32
23
23

24

6
6

―8―

Fiscal Year Ended
December 31, 2023

3,030
(1,056)(1,915)5,000(1,252)
(837)
106

5,453
(8,939)(2,006)306(2,012)(1,539)
126

－

(639)

(1,992)(0)(2,948)
(428)

1,082

(12,629)

3,257

2,690

11,995(16,471)

42,33054,32554,32537,854

Notes to Consolidated Financial Statements
1. Reporting entity
Nissha Co., Ltd. (the “Company”) is a corporation domiciled in Japan, and the registered address of its headquarters is Nakagyoku, Kyoto, Japan.
The consolidated financial statements of the Company with the fiscal year-end date of December 31 are prepared by combining thefinancial statements of the Company and its subsidiaries (collectively, the “Group”) and the Group’s interest in its associates. The
Group is engaged in the Industrial Materials business, the Devices business, the Medical Technologies business, and other businesses
incidental thereto. The details of the Group’s business and major activities are described in Note 4 “Operating segments.”
2. Basis of preparation(1) Statement of compliance with IFRSThe Company meets the requirements for a “specified company complying with designated international accounting standards”
as stipulated in the Ordinance on Consolidated Financial Statements. Therefore, the Group’s consolidated financial statements havebeen prepared in compliance with IFRS pursuant to the provisions set forth in Article 93 of the Ordinance.
(2) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for certain items including thefollowing items in the consolidated statements of financial position:
・Derivatives are measured at fair value.
・Financial instruments measured at fair value through profit or loss are measured at fair value.
・Financial instruments measured at fair value through other comprehensive income are measured at fair value.
・The net defined benefit liability (asset) is measured at the present value of defined benefit obligations less the fair value ofplan assets.
(3) Functional currency and presentation currency
The Group’s consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency. Unlessotherwise noted, amounts are rounded down to the nearest million yen.
(4) Significant accounting estimates and judgements with estimates
In preparing the consolidated financial statements in compliance with IFRS, management makes judgements, estimates andassumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and their underlying assumptions are reviewed on an ongoing basis. The effects of revisions to accounting estimates
are recognized in the accounting period in which the estimates were revised and in any future accounting periods affected.
Accounting judgements that have significant effects on the consolidated financial statements for the fiscal year ended December
31, 2023 and accounting estimates subject to significant revisions in the consolidated financial statements for the subsequent fiscal
year are as follows:・Scope of consolidation – “(1) Basis of consolidation” in Note 3 “Material accounting policy information”
・Timing of sales recognition – “(17) Sales recognition” in Note 3 “Material accounting policy information”
・Impairment of non-financial assets – “(11) Impairment of non-financial assets” in Note 3 “Material accounting policy
information,” Note 11 “Goodwill and intangible assets” and Note 13 “Impairment of non-financial assets”
・Recoverability of deferred tax assets – “(19) Income taxes” in Note 3 “Material accounting policy information” and Note 16“Income taxes”
・Measurement of defined benefit obligations – “(13) Employee benefits” in Note 3 “Material accounting policy information”
and Note 22 “Post‑employment benefits”
・ Fair value measurement of financial instruments – “(4) Financial instruments” in Note 3 “Material accounting policy
information” and Note 34 “Financial instruments”―9―(5) Standards and interpretations issued but not yet applied
Of the standards and interpretations newly established or revised by the approval date of the consolidated financial statements,
those that have been issued but not yet applied as of December 31, 2023 are mainly as follows. The impact of applying these newstandards and revisions on the Group’s financial position and operating results is under evaluation and cannot be estimated at thispoint in time.

IFRS

Title

Mandatory effective
date(Fiscal years
beginning on andafter)

Timing of initial
application by the
Group

IAS 1

Presentation of Financial
Statements

January 1, 2024

Fiscal year ending
December 31, 2024

IAS 7
IFRS 7

Statement of Cash Flows
Financial Instruments:
Disclosures

January 1, 2024

Fiscal year ending
December 31, 2024

IFRS 16

LeasesJanuary 1, 2024

Fiscal year ending
December 31, 2024

IAS 21The Effects of Changes
in Foreign Exchange
Rates

January 1, 2025

Fiscal year ending
December 31, 2025

―10―

Summary of new standards andrevisions• Clarification on how payables andother liabilities are classified as
current or non-current• Improvement of corporate
disclosure on long-term liabilities
with covenants
Disclosure requirements to enhance
the transparency of supplier financearrangements
Additional requirements to explain
post-transaction accounting for saleand leaseback transactions
Clarification of a consistent
approach in assessing whether acurrency can be exchanged intoanother currency and, when it
cannot, in determining the exchange
rate to use and the disclosures toprovide.

3. Material accounting policy information(1) Basis of consolidation
1) Subsidiaries
A subsidiary is an entity over which the Group has control.
The Group controls an investee entity when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee.
The acquisition date of a subsidiary is the date on which the Group obtains control of the subsidiary, and the subsidiary is
consolidated from the acquisition date until the date on which the Group loses control over the subsidiary. When accounting
policies applied by a subsidiary differ from those applied by the Group, adjustments are made to the financial statements of thesubsidiary.
Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of theconsideration paid or received is recognized directly as equity attributable to owners of parent in equity.
In preparing the consolidated financial statements, intragroup balances of receivables and payables, intragroup transactions,and unrealized gains and losses arising from intragroup transactions are eliminated.
The fiscal year-end of all subsidiaries is the same as that of the Company.
2) Associates
An associate is an entity in which the Group has significant influence, but not control, over financial and operating policies.
Assessing and deciding whether the Group has significant influence over an entity reflects a comprehensive consideration ofvarious elements. Such elements include the holding of voting rights (if the Group holds, directly or indirectly, 20% to 50% of
the voting rights of the investee company, it is presumed that the Group has significant influence over the investee company), theexistence of potential voting rights that are substantively exercisable and the percentage of directors that have been seconded
from the Group.
An associate is accounted for using the equity method from the date on which the Group obtains significant influence until thedate on which the Group loses such influence. When the accounting policies of an associate differ from those of the Group,
adjustments are made to bring them in conformity with the accounting policies of the Group. Under the equity method, theamount of an investment in an associate is initially measured at cost and subsequently increased or decreased in proportion tochanges in the Group’s share of net assets of the associate after the acquisition. The Group’s share of the associate’s profit or loss
is recognized in the Group’s profit or loss, and the Group’s share of the associate’s other comprehensive income is recognized in
the Group’s other comprehensive income. Profits resulting from significant transactions between the Group and the associate are
eliminated to the extent of the Group’s interest in the associate.
The fiscal year-end of all associates is the same as that of the Company.

―11―

(2) Business combinations
Business combinations are accounted for using the acquisition method.
The consideration transferred is measured at the sum of the acquisition-date fair values of the assets transferred, liabilities
assumed, and equity interests issued in exchange for control over the acquiree.
The identifiable assets, liabilities and contingent liabilities in the acquiree are measured at their acquisition-date fair values,
except that:
・Deferred tax assets (or deferred tax liabilities) and assets or liabilities related to employee benefit arrangements are recognized
and measured in accordance with IAS 12 “Income Taxes” and IAS 19 “Employee Benefits,” respectively.
・Liabilities or equity instruments that are related to the acquiree’s share-based payment transactions or the replacement of theacquiree’s share-based payment transactions with the acquirer’s share-based payment transactions are recognized and measuredin accordance with IFRS 2 “Share-based Payment.”
・Non-current assets or disposal groups that are classified as held for sale at the acquisition date in accordance with IFRS 5 “Noncurrent Assets Held for Sale and Discontinued Operations” are measured in accordance with that IFRS.
Goodwill is measured as the excess, if any, of the consideration transferred over the net amount of identifiable assets and liabilities
as of the acquisition date. If the difference is negative, it is immediately recognized in profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the items for which the accounting is incomplete are measured at provisional amounts. In case new information obtained
during the measurement period, which shall not exceed one year from the acquisition date, if known, would have affected themeasurement of the amounts recognized as of the acquisition date, the provisional amounts recognized at the acquisition date are
retrospectively adjusted.
Acquisition-related costs incurred to achieve a business combination are expensed as incurred. The acquisition of additional noncontrolling interests is accounted for as an equity transaction without recognition of goodwill.
(3) Foreign currency translation
Transactions in foreign currencies are translated into the functional currency of each Group company using the exchange rate at
the transaction date or a rate that approximates such rate. Monetary assets and liabilities denominated in foreign currencies aretranslated into the functional currency of each Group company using the exchange rate at the fiscal year-end. Exchange differences
arising from the translation and settlement are recognized in profit or loss. However, exchange differences arising from thetranslation of investments in equity instruments measured at fair value through other comprehensive income and cash flow hedges
are recognized in other comprehensive income.
The assets and liabilities of foreign operations are translated into Japanese yen using the exchange rate at the fiscal year-end, andthe income and expenses of foreign operations are translated into Japanese yen using the average exchange rate for the fiscal year,
except in cases where the exchange rate fluctuates significantly. Exchange differences arising from the translation are recognizedin other comprehensive income. On the disposal of a foreign operation that results in a loss of control or significant influence overthe foreign operation, the cumulative exchange differences relating to the foreign operation are recognized in profit or loss for theperiod of disposal.
(4) Financial instruments
1) Non-derivative financial assets(i) Initial recognition and measurement
The Group initially recognizes trade and other receivables on the date of occurrence and all the other financial assets on
the transaction date when the Group becomes a party to the contract.
At initial recognition, all financial assets are measured at fair value plus transaction costs that are directly attributable tothe acquisition of the financial assets, except when they are classified as financial assets measured at fair value throughprofit or loss. Transaction costs of financial assets measured at fair value through profit or loss are recognized in profit or
loss.

―12―

(ii) Classification and subsequent measurement
The Group classifies its financial assets as (a) financial assets measured at amortized cost, (b) debt instruments measured
at fair value through other comprehensive income, (c) equity instruments measured at fair value through othercomprehensive income or (d) financial assets measured at fair value through profit or loss. The classification is determinedat initial recognition, and the financial assets are subsequently measured based on their classification as follows:(a) Financial assets measured at amortized cost
A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost:・the financial asset is held within a business model whose objective is to hold financial assets in order to collectcontractual cash flows and・the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, financial assets measured at amortized cost are measured at amortized cost using the effective
interest method, less impairment losses. Interest income based on the effective interest method is recognized as financeincome in profit or loss.
(b) Debt instruments measured at fair value through other comprehensive income
A debt instrument that meets both of the following conditions is classified as a financial asset measured at fair value
through other comprehensive income:・the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets and・the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, such debt instruments are measured at fair value. Subsequent changes in the fair value arerecognized in other comprehensive income, except that foreign exchange gains or losses, impairment gains or losses, andinterest income based on the effective interest method are recognized in profit or loss. When these debt instruments are
derecognized, cumulative gains or losses recognized in other comprehensive income are reclassified from othercomponents of equity to profit or loss as reclassification adjustments.
(c) Equity instruments measured at fair value through other comprehensive income
The Group has made an irrevocable election to present in other comprehensive income subsequent changes in the fairvalue of investments in equity instruments, which are classified as financial assets measured at fair value through othercomprehensive income.
After initial recognition, such equity instruments are measured at fair value. Subsequent changes in the fair value arerecognized in other comprehensive income. When these equity instruments are derecognized, cumulative gains or losses
recognized in other comprehensive income are reclassified from other components of equity to retained earnings.
Dividends from financial assets measured at fair value through other comprehensive income are recognized as financeincome in profit or loss unless the dividend clearly represents a return of the investment.
(d) Financial assets measured at fair value through profit or loss
Financial assets other than financial assets measured at amortized cost or at fair value through other comprehensive
income as mentioned above are classified as financial assets measured at fair value through profit or loss.
There are no financial assets that the Group has elected to irrevocably designate as financial assets measured at fair value
through profit or loss at initial recognition.
Financial assets measured at fair value through profit or loss are recognized at fair value at initial recognition, and thetransaction costs are recognized in profit or loss as incurred.
After initial recognition, such financial assets are measured at fair value. Subsequent changes in the fair value, net of
dividends and interest income, are recognized in profit or loss.

―13―

(iii) Impairment of financial assets
An allowance for doubtful accounts is recognized for expected credit losses on financial assets subject to impairment,
including financial assets measured at amortized cost.
The Group assesses at each fiscal year-end whether the credit risk on financial instruments has increased significantly
since initial recognition.
If the credit risk on a financial instrument has not increased significantly since initial recognition, the allowance for
doubtful accounts for the financial instrument is measured at an amount equal to the 12‑month expected credit losses. If thecredit risk on a financial instrument has increased significantly since initial recognition, the allowance for doubtful accounts
for the financial instrument is measured at an amount equal to the lifetime expected credit losses.
When contractual payments are more than 30 days past due, the Group determines in principle that there has been asignificant increase in credit risk. In assessing whether credit risk has increased significantly, the Group considers reasonably
available and supportable information as well as past due information on contractual payments.
For financial assets including trade receivables that do not contain a significant financing component, the allowance for
doubtful accounts is always measured at an amount equal to lifetime expected credit losses irrespective of whether there has
been a significant increase in credit risk since initial recognition.
The expected credit losses of a financial instrument are measured in a way that reflects:
・an unbiased and probability‑weighted amount that is determined by evaluating a range of possible outcomes;
・the time value of money; and・reasonable and supportable information that is available without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic conditions.
A provision of allowance for doubtful accounts for financial assets is recognized in profit or loss. In the event that therecognized allowance for doubtful accounts is reduced, a reversal of allowance for doubtful accounts is recognized in profit
or loss.
(iv) Derecognition of financial assets
The Group derecognizes a financial asset only when:(a) the contractual rights to the cash flows from the financial asset expire, or(b) it transfers the financial asset so that substantially all the risks and rewards of ownership of the financial asset aretransferred.
2) Non-derivative financial liabilities(i) Initial recognition and measurement
Financial liabilities are classified at initial recognition as (a) financial liabilities measured at amortized cost or (b) financial
liabilities measured at fair value through profit or loss. Financial liabilities are initially recognized on the transaction datewhen the Group becomes a party to the contract. Financial liabilities measured at amortized cost are initially measured atfair value less transaction costs that are directly attributable to the financial liabilities, while financial liabilities measured atfair value through profit or loss are initially measured at fair value.
(ii) Classification and subsequent measurement(a) Financial liabilities measured at amortized cost
After initial recognition, financial liabilities measured at amortized cost are measured at amortized cost using theeffective interest method. Interest expenses based on the effective interest method are recognized as finance costs in profit
or loss.
(b) Financial liabilities measured at fair value through profit or loss
After initial recognition, financial liabilities measured at fair value through profit or loss are measured at fair value.
Subsequent changes in the fair value are recognized in profit or loss.

―14―

(iii) Derecognition of financial liabilities
The Group derecognizes a financial liability when it is extinguished, that is, when the obligation specified in the contract
is discharged, cancelled or expires.

3) Presentation of financial assets and financial liabilities
Financial assets and financial liabilities are offset and presented on a net basis in the consolidated statements of financial
position only when the Group has a legally enforceable right to set off the balances and intends either to settle on a net basis or
to realize the asset and settle the liability simultaneously.
4) Derivative financial instruments
The Group utilizes forward exchange contracts and currency swaps to mitigate the risk of fluctuations in foreign exchange
rates and utilizes interest rate swaps to mitigate the risk of fluctuations in interest rates. These derivatives are initially measured
at the time when the contract is entered into, and are subsequently remeasured at fair value. Changes in the fair value of derivatives
are all recognized in profit or loss.
Hedge accounting is not applied to the above derivatives. Accordingly, derivative financial instruments are classified as
financial assets or financial liabilities measured at fair value through profit or loss.
5) Fair value of financial instruments
The fair value of financial instruments is determined using market information, including market prices, and appropriate
valuation techniques.
Inputs used to measure fair value are categorized into the following three levels:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs (i.e., prices themselves) other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: Inputs that are not based on observable market data (i.e., unobservable inputs) for the asset or liability.
(5) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, and short‑term investments with a maturity of three months
or less from the date of acquisition that are readily convertible to cash and subject to an insignificant risk of changes in value.
(6) Inventories
Inventories are measured at the lower of cost and net realizable value.
The cost of inventories includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories totheir present location and condition.
Net realizable value is determined as the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and estimated costs necessary to make the sale.
Valuation method for each inventory item is as follows:
1) Finished goods (excluding Decorative Film products, etc. of Industrial Materials) and work in process
Mainly by the specific identification method.
2) Finished goods (Decorative Film products, etc. of Industrial Materials)
By the moving average method.
3) Raw materials and supplies
Mainly by the periodic average method.

―15―

(7) Property, plant and equipment
Property, plant and equipment are measured using the cost model and are carried at cost less any accumulated depreciation andany accumulated impairment losses.
Depreciable property, plant and equipment are depreciated using the straight-line method over their useful lives.
The useful lives used in determining depreciation are as follow:
Buildings and structures: 15 to 50 years
Machinery and vehicles: 5 to 10 years
Tools, furniture and fixtures: 2 to 10 years
The cost includes any costs directly attributable to the acquisition of the asset; the initial estimate of the costs of dismantling andremoving the asset and restoring the site on which it is located; and borrowing costs eligible for capitalization.
The costs of the day‑to‑day servicing for the repairs and maintenance of property, plant and equipment are expensed as incurred.
When an item of property, plant and equipment consists of components with different useful lives, each component is recognized
as a separate item of property, plant and equipment.
The gain or loss arising from the derecognition of property, plant and equipment is included in profit or loss when the asset isderecognized.
The depreciation method, useful life and residual value of an asset are reviewed at each fiscal year‑end, and any changes areaccounted for prospectively as changes in accounting estimates.
(8) Intangible assets
Intangible assets are measured using the cost model and are carried at cost less any accumulated amortization and any
accumulated impairment losses.
Intangible assets with finite useful lives are amortized using the straight-line method over their useful lives.
The useful lives of major intangible assets are as follows:
Software: 5 years
Customer-related assets: 8 to 17 years
Technical assets: 15 years
The useful lives and amortization method are reviewed at each fiscal year‑end, and any changes are accounted for prospectively
as changes in accounting estimates.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are not amortized but tested for
impairment individually or as part of the cash-generating unit to which the asset belongs, at least once a year or whenever there isan indication that the asset may be impaired.
The gain or loss arising from the derecognition of intangible assets is included in profit or loss when the asset is derecognized.
(9) Goodwill
The measurement of goodwill at initial recognition is as described in “(2) Business combinations.”
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortized but tested for impairment atleast once a year or whenever there is an indication that the asset may be impaired.

―16―

(10) Leases
The Group assesses whether a contract is, or contains, a lease by considering whether the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.
1) Lessee
For leases as lessee, in principle, right-of-use assets and the corresponding lease liabilities are recognized. For short-term leases(with a lease term of 12 months or less) and leases for which the underlying asset is of low value, the lease payments arerecognized as expenses on a straight-line basis over the lease term or another systematic basis.
Right-of-use assets are measured at cost at the commencement date, and lease liabilities are measured at the present value ofthe lease payments that are not made as of the commencement date. If the interest rate implicit in the lease cannot be readily
determined, the lease payments are discounted using the lessee’s incremental borrowing rate, which is the rate of interest that thelessee would have to pay to borrow the funds necessary to obtain a similar asset over a similar term.
After the commencement date of the lease, the right-of-use assets are measured at cost less any accumulated depreciation andany accumulated impairment losses, and are depreciated from the commencement date to the earlier of the end of the useful lifeof the right-of-use asset or the end of the lease term. Lease liabilities are measured by increasing the book value to reflect intereston the lease liability based on the effective interest method and reducing the book value to reflect the lease payments made.
In cases such as where there is a change in the lease term or a lease modification is not accounted for as a separate lease, thelease liability is remeasured with a corresponding adjustment to the right-of-use asset.
2) Lessor
For leases as lessor, leases are classified as operating leases or finance leases. Leases are classified as finance leases if theytransfer substantially all the risks and rewards incidental to ownership of underlying assets. Leases are classified as operatingleases if they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets. Whether leases
are finance leases or operating leases depends on the substance of the transactions rather than the form of the contracts.
(i) Finance leases
At the commencement date, assets held under finance leases are presented as receivables at amounts equal to the net
investments in the leases. The recognition method of revenue from finance leases is described in “(17) Sales recognition, 2)
Revenue from finance leases (lessor).”(ii) Operating leases
The recognition method of revenue from operating leases is described in “(17) Sales recognition, 3) Revenue from operatingleases (lessor).”(11) Impairment of non-financial assets
Non-financial assets other than inventories and deferred tax assets are assessed at the end of each reporting period whether there
is any indication of impairment. If any such indication exists, the recoverable amount of the asset or the cash-generating unit (or agroup of cash-generating units) is estimated. Goodwill and intangible assets with indefinite useful lives or not yet available for use
are tested for impairment at least annually, irrespective of whether there is any indication of impairment.
The recoverable amount of an asset or a cash‑generating unit (or a group of cash-generating units) is the higher of its fair valueless costs of disposal and its value in use. The value in use is determined by discounting the estimated future cash flows of the asset
or the cash-generating unit (or a group of cash-generating units) to the present value at an after-tax discount rate that reflects thetime value of money and risks specific to the asset. A cash‑generating unit is the smallest identifiable group of assets that generates
cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Goodwill acquired in a businesscombination is allocated to the cash-generating unit expected to benefit from the synergies of the business combination, and the
cash-generating unit is then tested for impairment. If the recoverable amount of an asset or a cash‑generating unit is less than its
book value, an impairment loss is recognized in profit or loss.
At the end of each reporting period, it is assessed whether there is an indication that impairment losses recognized previously for
an asset may no longer exist or may have decreased. If any such indication exists, the recoverable amount of the asset is estimated.
If the estimated recoverable amount exceeds the book value of the asset, impairment losses are reversed. The book value after thereversal is recognized to the extent that it does not exceed the book value (net of accumulated depreciation or amortization) thatwould have been determined had no impairment loss been recognized previously for the asset. The amount of reversal of impairment―17―

losses is recognized in profit or loss.
Impairment losses recognized for goodwill are not reversed.
(12) Provisions
The Group recognizes a provision when the Group has a present legal or constructive obligation as a result of a past event; it isprobable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate
can be made of the amount of the obligation.
A provision is recognized for the best estimate of the expenditure required to settle the present obligation at the fiscal year-end.
Where the effect of the time value of money is material, a provision is measured at the present value of the expenditure discounted
at a discount rate that reflects the risks specific to the liability. Where discounting is applied, an increase in the provision arisingfrom the passage of time is recognized as finance costs.
(13) Employee benefits
1) Post-employment benefits
The Group has adopted defined benefit plans and defined contribution plans as post-employment benefit plans.
(i) Defined benefit plans
The present value of defined benefit obligations and the related current service cost and past service cost are determinedusing the projected unit credit method for each plan separately.
The discount rate is determined by reference to yields at the fiscal year-end on high quality corporate bonds with a term
to maturity corresponding to the discount period, which is set based on the period until the expected maturity of benefit
payments in each future fiscal year.
The present value of defined benefit obligations less the fair value of plan assets is recognized as a liability or an asset.
When a defined benefit plan has a surplus, the net defined benefit asset is limited to the asset ceiling, which is the present
value of future economic benefits available in the form of a reduction in future contributions to the plan.
Current service cost, past service cost and net interest on the net defined benefit liability (asset) are recognized in profit
or loss. Remeasurements of the net defined benefit liability (asset) are recognized collectively in other comprehensive
income for the period in which they are incurred and immediately reclassified to retained earnings.
(ii) Defined contribution plans
Retirement benefit expenses of the defined contribution plans are recognized as expenses for the period in which
employees render the related services.
2) Short‑term employee benefits
Short‑term employee benefits are not discounted but are expensed at the time when employees render the related services.
When the Group has a present legal or constructive obligation to make payments as a result of past service rendered by
employees, and a reliable estimate can be made of the amount of the obligation, the estimated amount to be paid is recognized as
a liability.
3) Other long‑term employee benefits
Long‑term employee benefits other than post-employment benefits are determined by discounting to the present value thefuture benefits that employees have earned in return for their services rendered in the current and prior fiscal years.
(14) Government grants
Government grants are recognized at fair value when there is reasonable assurance that the Group will comply with the conditions
attaching to the grants and that the grants will be received.
Government grants related to income are recognized as income on a systematic basis over the periods in which the Group
recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants related to assets are presented by deducting the grant from the cost of the asset in arriving at the book valueof the asset.

―18―

(15) Equity
1) Share capital and capital surplus
Equity instruments issued by the Company are recognized at issue value in share capital and capital surplus. Transaction costs
directly attributable to the issuance are deducted from capital surplus.
2) Treasury shares
Any treasury shares acquired are recognized at cost and deducted from equity. Transaction costs directly attributable to theacquisition are deducted from equity.
Any treasury shares disposed of are recognized as an increase in equity at the consideration received, and the difference
between the book value and the consideration received is included in capital surplus.
(16) Share-based payment plans
The Group has adopted equity‑settled and cash‑settled share-based payment plans for Directors of the Board (excluding
Independent Outside Directors of the Board), Corporate Officers and employees of the Company and certain directors of the board
and employees of the Company’s subsidiaries.
1) Equity‑settled
For equity‑settled share-based payments, the consideration for the services received is measured at fair value of the equity
instruments at grant date and recognized as an expense, with the corresponding increase in equity.
2) Cash‑settled
For cash‑settled share-based payments, the services received and the liability incurred are measured at the fair value of theliability and recognized as expenses over the vesting period with the corresponding increase recognized as a liability. Until theliability is settled, the fair value of the liability is remeasured at the end of each quarterly period and at the date of settlement withany changes in fair value recognized in profit or loss.
3) Share‑based payment transactions with cash alternatives
A share‑based payment transaction with cash alternatives is accounted for as a cash‑settled payment transaction if, and to theextent that, the Group has incurred a liability to settle in cash or other assets, or as an equity‑settled payment transaction if, andto the extent that, no such liability has been incurred.
(17) Sales recognition
1) Revenue from contracts with customers
Except for interest and dividend income and other income items under IFRS 9, the Group recognizes sales in an amount thatreflects the consideration to which the Group expects to be entitled in exchange for the transfer of goods or services to customers,
based on the following five-step approach:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to each distinct performance obligation in the contract.
Step 5: Recognize sales when (or as) a performance obligation is satisfied.
For products (see Note 25 “Net sales”) that the Group has promised to deliver to a customer, the performance obligation in thecontract is satisfied at a point at which the customer is deemed to have obtained control of the product in light of contractual terms
and conditions, and the Group recognizes net sales primarily upon delivery of the product to the customer or the customer’s
acceptance, or based on terms and conditions of trade. For performance obligations in service contracts and other contracts thatmeet the criteria for determining whether control of goods or services is transferred over time, net sales are recognized over timeby measuring the progress based on input methods, such as costs incurred.
Sales are measured at the amount net of returned products, rebates and discounts.
The consideration in the sales contracts on goods is collected mainly within one year from the time when control of the goods
has been transferred to the customer. Those contracts do not contain a significant financing component.

―19―2) Revenue from finance leases (lessor)
Revenue from finance leases is recognized based on a way reflecting constant periodic rates of return on the net investments inthe leases.
3) Revenue from operating leases (lessor)
Revenue from operating leases is recognized on a straight-line basis over the lease term.
(18) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (an asset thatnecessarily takes a substantial period of time to get ready for its intended use or sale) are included in the cost of the asset. All otherborrowing costs are recognized in profit or loss for the period in which they are incurred.
(19) Income taxes
Income tax expense is presented as the aggregate amount of current and deferred tax, and recognized in profit or loss, except for
those related to business combinations and items recognized in other comprehensive income or directly in equity.
Current tax is measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates andtax laws that have been enacted or substantively enacted by the fiscal year-end.
Deferred tax is recognized primarily for temporary differences between the tax base and the accounting book value of an asset
and liability at the fiscal year-end. Deferred tax assets are recognized for deductible temporary differences and the carryforward ofunused tax losses and tax credits to the extent that it is probable that taxable profit will be available against which they can beutilized. Deferred tax liabilities are, in principle, recognized for all taxable temporary differences.
Deferred tax assets or liabilities are not recognized for the following temporary differences:
・Taxable temporary differences arising from the initial recognition of goodwill.
・ Temporary differences arising from the initial recognition of an asset or liability in a transaction (other than a businesscombination) that, at the time of the transaction, affects neither accounting profit nor taxable profit, and does not give rise toequal taxable and deductible temporary differences.
・Deductible temporary differences associated with investments in subsidiaries and affiliates where it is probable that the temporary
difference will not reverse in the foreseeable future, or taxable profit will not be available against which the temporary difference
can be utilized.
・Taxable temporary differences associated with investments in subsidiaries and affiliates where it is probable that the Group isable to control the timing of the reversal of the temporary difference, and the temporary difference will not reverse in theforeseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the fiscal year when the asset isrealized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the fiscal yearend.
The Company and some of its domestic consolidated subsidiaries apply the group tax sharing system.
(20) Earnings per share
Basic earnings per share are calculated by dividing profit or loss attributable to ordinary shareholders of the parent company by
the basic weighted average number of common shares outstanding during the period, adjusted for the number of treasury shares.
Diluted earnings per share are calculated by adjusting for the effects of all dilutive potential common shares.
(21) Segment information
An operating segment is a component of business activities from which the Group earns sales and incurs expenses, includingtransactions with other operating segments. The operating results of all operating segments, for which separate financial information
is available, are regularly reviewed by the Company’s Board of Directors in order to decide the allocation of management resources
to each segment and to assess its performance.

―20―(22) Assets held for sale
A non‑current asset (or a disposal group) is classified as held for sale if its book value will be recovered principally through asale transaction rather than through continuing use.
An asset held for sale is measured at the lower of its “book value” and “fair value less costs to sell.” Property, plant and equipment
and intangible assets are not depreciated or amortized once classified as held for sale.
(Changes in accounting policies)
Clarification of the accounting for deferred tax related to assets and liabilities arising from a single transaction
The Group had not recognized deferred tax liabilities and deferred tax assets for temporary differences arising from the initialrecognition of an asset or liability in a transaction that is not a business combination and affects neither accounting profit (loss) nor
taxable profit (tax loss), but the application of IAS 12 Income Taxes (amended in May 2021) clarifies the accounting treatment
upon initial recognition for transactions that result in taxable temporary differences and deductible temporary differences of thesame amount at the time of the transaction, which resulted in a change in the method of accounting treatment to the one by which
taxable temporary differences and deductible temporary differences are recognized as deferred tax liabilities and deferred tax assets,
respectively, in the Company’s consolidated statements of financial position.
The application of the guideline did not have a significant impact on the consolidated financial statements.
A temporary exception to the recognition and disclosure of deferred tax assets and liabilities related to the International Tax
Reform—Pillar Two Model Rules
The Group has applied the International Tax Reform—Pillar Two Model Rules (amendments to IAS 12 Income Taxes) from thefiscal year ended December 31, 2023. The amendments have clarified that IAS 12 applies to income taxes arising from tax law
enacted or substantially enacted to implement the BEPS Pillar Two Model Rules (the global minimum taxation rules) published by
the OECD. On the other hand, the amendments provide a mandatory temporary exception from recognizing and disclosing deferred
tax assets and liabilities related to income taxes arising from the global minimum taxation rules.
The Group has adopted the exceptional measure as provided in IAS 12 and thus does not recognize and disclose deferred tax
assets and liabilities related to income taxes arising from the global minimum taxation rules.
4. Operating segments(1) Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by theboard of directors is being performed in order to decide the allocation of management resources and to review business results.
The Group sets up divisions by product or service. Each division draws up a plan for comprehensive strategies in Japan andoverseas for the products and services it handles, and thereupon develops its business activities.
Accordingly, the Group consists of segments by product and service based on divisions. The three reportable segments are theIndustrial Materials segment, Devices segment, and Medical Technologies segment.
The Industrial Materials segment manufactures and sells decorative films, decorative molded parts, metallized papers, sustainable
molded products and others. The Devices segment manufactures and sells film-based Touch Sensors, gas sensors and others. The
Medical Technologies segment provides contract design/development and manufacturing services for major medical device
manufacturers especially for those in North America and Europe, along with products such as surgical instruments for minimallyinvasive treatments, medical wearable sensors and disposable electrocardiogram (ECG) electrodes. In addition to these, the segment
manufactures and sells its own brand products to medical institutions.
(Note with regard to changes to reportable segment)
From the fiscal year ended December 31, 2023, in line with the partial revision of performance management structure within theGroup, segment categories for certain consolidated subsidiaries previously recorded in the Other category were changed to theDevices category.
Therefore, segment information for the previous fiscal year is stated according to the category following the change.

―21―

(2) Methods of measurement for the amounts of sales, profit (loss), assets, and other items for each reportable segment
The accounting methods for the reportable segments are generally the same as that set forth in Note 3 “Material accounting policy
information.” Segment profit is based on operating profit, and inter-segment sales is based on current market prices.

―22―

(3) Information about sales, profit (loss), assets, and other items by reportable segment
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)(Million yen)
Reportable segment
Other(Note 1)

Total

ReconciliaConsolidated
tions(Note 3)(Note 2)

Industrial
Materials

Devices

MedicalTechnologies

73,55879,96832,457

185,984

7,978

193,963－

193,963Inter-segment sales

237

9

0

248

1,061

1,309

(1,309)－Total

73,796

79,97832,457

186,233

9,040

195,273(1,309)193,963

Segment profit (loss)

3,390

8,286

490

12,167(759)

11,407(1,886)

9,520

Finance income

－

－

－

－

－

－

－

3,768

Finance costs

－

－

－

－

－

－

－

(916)

－

－

－

－

－

－

－

12,37356,77935,87047,166

139,817

10,334150,151

80,060230,212

Sales from external customers

Profit (loss) before tax
Segment assets

Sub-total

Other
Depreciation and
4,088
2,686
1,587
8,362
751
9,114
373
9,487
amortization
Share of profit (loss) ofinvestments accounted for
(57)
(57)
(57)
－
－
－
－
－
using equity method
Impairment losses
1,461
1,461
1,461
1,461
－
－
－
－
(see Note 13)
Increase in property, plantand equipment, intangible
4,437
604
1,097
6,138
785
6,923
435
7,359
assets and right-of-use
assetsInvestments accounted for
763
763
763
－
－
－
－
－
using equity method(Notes) 1. The “Other” category consists of a business segment not included in the reportable segments and includes the Information
and Communication, the prescription pharmaceutical manufacturing business, etc.
2. Reconciliations are as follows:(1) The negative ¥1,886 million of reconciliations in segment profit (loss) includes unallocated corporate expenses, etc.
Corporate expenses mainly consist of general and administrative expenses and foreign exchange loss or gain not
attributable to any reportable segment.
(2) The positive ¥80,060 million of reconciliations in segment assets consists of the positive ¥80,253 million in total of cash
and cash equivalents, investment securities, and corporate (R&D and administrative) property, plant and equipment, etc.
not allocated to reportable segments and the negative ¥193 million of inter-segment elimination of receivables andpayables.
(3) The positive ¥373 million of reconciliations in depreciation and amortization relates to corporate (R&D andadministrative) property, plant and equipment, etc.
(4) The positive ¥435 million of reconciliations in increase in property, plant and equipment, intangible assets and right-ofuse assets is the amount of corporate (R&D and administrative) capital investment.
3. Segment profit (loss) is reconciled with operating profit (loss) recorded in the consolidated statements of profit or loss.

―23―

The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)(Million yen)
Reportable segment
Other(Note 1)

Total

ReconciliaConsolidated
tions(Note 3)(Note 2)

Industrial
Materials

Devices

MedicalTechnologies

68,762

54,86236,011

159,637

8,088

167,726－

167,726

Inter-segment sales

196

8

－

205

1,001

1,206

(1,206)－

Total

68,95954,87136,011

159,8429,090

168,933(1,206)

167,726

Segment profit (loss)

93(1,580)

1,493

6

(860)

(853)

(2,963)(3,817)

Finance income

－

－

－

－

－

－

－

2,897

Finance costs

－

－

－

－

－

－

－

(1,842)

－

－

－

－

－

－

－

(2,762)54,72534,36950,341

139,437

10,633150,071

67,782

217,853

Sales from external customers

Profit (loss) before tax
Segment assets

Sub-total

Other
Depreciation and
4,023
2,325
1,651
8,000
758
8,758
378
9,137
amortization
Share of profit (loss) of
(139)
(0)
(140)
(103)
(243)
(243)
investments accounted for－－using equity method
Impairment losses
2,722
2,722
2,722
2,722
－
－
－
－
(see Note 13)
Increase in property, plantand equipment, intangible
3,217
2,132
1,487
6,837
419
7,256
303
7,559
assets and right-of-use
assetsInvestments accounted for
2,334
697
3,032
1,507
4,539
4,539
－
－
using equity method(Notes) 1. The “Other” category consists of a business segment not included in the reportable segments and includes the Information
and Communication, the prescription pharmaceutical manufacturing business, etc.
2. Reconciliations are as follows:(1) The negative ¥2,963 million of reconciliations in segment profit (loss) includes unallocated corporate expenses, etc.
Corporate expenses mainly consist of general and administrative expenses and foreign exchange loss or gain not
attributable to any reportable segment.
(2) The positive ¥67,782 million of reconciliations in segment assets consists of the positive ¥67,889 million in total of cash
and cash equivalents, investment securities, and corporate (R&D and administrative) property, plant and equipment, etc.
not allocated to reportable segments and the negative ¥107 million of inter-segment elimination of receivables andpayables.
(3) The positive ¥378 million of reconciliations in depreciation and amortization relates to corporate (R&D andadministrative) property, plant and equipment, etc.
(4) The positive ¥303 million of reconciliations in increase in property, plant and equipment, intangible assets and right-ofuse assets is the amount of corporate (R&D and administrative) capital investment.
3. Segment profit (loss) is reconciled with operating profit (loss) recorded in the consolidated statements of profit or loss.

―24―

(4) Information about products and services
This information is omitted since the same information is disclosed in (3) Information about sales, profit (loss), assets, and otheritems by reportable segment.
(5) Information by region
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
1) Sales from external customers(Million yen)Japan

Ireland
22,683

United States

53,338

Other

39,654

Total
78,287

193,963(Notes) 1. Sales are categorized by country or region based on the locations of customers.
2. Sales from external customers in Ireland consists mainly of that from APPLE OPERATIONS LIMITED listed in (6)Information by major customer.
2) Non-current assets(Million yen)Japan

United States
37,121

Other

32,233

Total
19,90989,264(Notes) 1. Financial instruments, deferred tax assets, retirement benefit asset, and rights arising under insurance contracts are notincluded.
2. Non-current assets are categorized by country or region based on the locations of assets.
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
1) Sales from external customers(Million yen)Japan

Ireland
22,534

United States

33,839Other

40,576

Total
70,776

167,726(Notes) 1. Sales are categorized by country or region based on the locations of customers.
2. Sales from external customers in Ireland consists mainly of that from APPLE OPERATIONS LIMITED listed in (6)Information by major customer.
2) Non-current assets(Million yen)Japan

United States
41,16734,009

Other

Total
17,37892,555(Notes) 1. Financial instruments, deferred tax assets, retirement benefit asset, and rights arising under insurance contracts are notincluded.
2. Non-current assets are categorized by country or region based on the locations of assets.
(6) Information by major customer
Details of sales from a major customer are as follows:
Customer

Fiscal year ended
December 31, 2022

Related Segment(Million yen)
Fiscal year ended
December 31, 2023

APPLE OPERATIONS LIMITED
Devices, Industrial
53,83235,173and its group companies
Materials, and Other(Note) The sales are reported under Ireland, United States and Japan in 1) Sales from external customers under (5) Information byregion.

―25―

5. Business combinations
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
Not applicable.
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
Not applicable.
6. Cash and cash equivalents
The breakdown of cash and cash equivalents is as follows. The balance of cash and cash equivalents in the consolidated statementsof financial position matches the balance of cash and cash equivalents at end of period in the consolidated statements of cash flows.
(Million yen)
As ofDecember 31, 2022

As ofDecember 31, 2023

(Cash and cash equivalents)
Cash and deposits
Time deposits with maturities of threemonths or less
Cash and cash equivalents in the
consolidated statements of financial
position

49,45032,863

4,875

4,991

54,32537,854

7. Trade and other receivables
The breakdown of trade and other receivables is as follows:(Million yen)
As ofDecember 31, 2022
Notes and accounts receivable-trade32,754

As ofDecember 31, 2023
30,824

Accounts receivable-other

703

712

Allowance for doubtful accounts

(232)

(268)

33,22531,267

Total(Notes) 1. Trade and other receivables are classified as financial assets measured at amortized cost.
2. Trade and other receivables are stated at net of allowance for doubtful accounts in the consolidated statements of financial
position.
3. Credit risk management is described in Note 34 “Financial instruments.”
8. Inventories
The breakdown of inventories is as follows:
As of
December 31, 2022

(Million yen)
As ofDecember 31, 2023

Merchandise and finished goods

13,16911,678Work in process

5,828

6,330

Raw materials and supplies

13,741

13,252

32,73931,260Total(Notes) 1. Inventories recognized as an expense in cost of sales for the fiscal years ended December 31, 2022 and December 31, 2023
were ¥150,593 million and ¥134,154 million, respectively.
2. As a result of valuing inventories at net realizable value, write-downs of ¥854 million and ¥847 million were recognized
for the fiscal years ended December 31, 2022 and December 31, 2023, respectively.
3. There was no material reversal of write-downs recognized for the fiscal years ended December 31, 2022 and December 31,
2023.
4. Inventories pledged as collateral of liabilities are described in Note 18 “Bonds and borrowings.”―26―

9. Other assets
The breakdown of other current assets and other non-current assets is as follows:(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
(Other current assets)
Advance payments-other and prepaid
expenses

1,613

2,071

Consumption taxes receivable

2,527

2,539

Income taxes receivable, etc.

540

1,401

Other

49

137

4,731

6,149

Long-term prepaid expenses

136

112

Other

140

157

276

270

Total
(Other non-current assets)

Total

10. Property, plant and equipment
Changes in cost, accumulated depreciation and accumulated impairment losses, and the book value of property, plant and equipment
are as follows:(Million yen)
Cost
As of January 1, 2022

Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Construction inprogress

Land

Total

61,64559,085

12,061

7,976

1,830

142,599

Acquisitions

828

1,389

837

0

2,585

5,642

Disposals(361)(4,911)

(648)

(0)

(16)

(5,937)

Transfers (Note 3)

451

1,690

272

－

(2,193)

222

Foreign currencytranslation differences

583

3,245

205

61

218

4,314

As of December 31, 2022

63,14860,49912,728

8,038

2,425

146,841

Acquisitions

247

584

521

－

2,893

4,246

Disposals

(40)

(681)

(120)

－

(4)

(847)

1,595

1,240

48

－

(3,294)(409)

Foreign currencytranslation differences

505

2,512

196

64

165

3,443

As of December 31, 2023

65,45564,155

13,374

8,103

2,185

153,275

Transfers (Note 3)―27―

(Million yen)
Accumulated depreciation
and accumulated
impairment losses
As of January 1, 2022

Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Construction inprogress

Land

Total

(38,902)(48,906)(9,846)(2,126)(19)(99,800)

Depreciation(2,155)(3,173)

(876)

－

－

(6,205)

Disposals

325

4,869

644

－

1

5,841

Transfers (Note 3)

(6)

(200)

(12)

－

0

(218)

Foreign currencytranslation differences(237)(2,345)

(153)

(0)

(0)

(2,737)

As of December 31, 2022

(40,976)(49,755)(10,244)(2,126)(17)(103,120)

Depreciation(2,049)(2,776)

(861)

－

－

(5,687)

Disposals

38

576

114

－

－

729

Transfers (Note 3)

0

11

53

－

－

65

Foreign currencytranslation differences(170)(1,769)

(153)

(0)

(0)

(2,093)As of December 31, 2023

(43,157)(53,714)(11,091)(2,126)(17)(110,106)(Million yen)Book value

Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Land

Construction inprogress

Total

As of January 1, 2022

22,743

10,179

2,214

5,850

1,811

42,799As of December 31, 2022

22,172

10,744

2,484

5,912

2,407

43,720

As of December 31, 2023

22,29810,441

2,283

5,977

2,167

43,169(Notes) 1. Depreciation of property, plant and equipment is included in cost of sales, selling, general and administrative expenses, andother expenses in the consolidated statements of profit or loss.
2. Expenditures related to property, plant and equipment under construction are presented as construction in progress in theabove tables.
3. Transfers principally represent transfers from construction in progress to the related accounts of property, plant andequipment.
4. Property, plant and equipment pledged as collateral of liabilities are described in Note 18 “Bonds and borrowings.”―28―

11. Goodwill and intangible assets(1) Reconciliations
Changes in cost, accumulated amortization and accumulated impairment losses, and the book value of goodwill and intangible
assets are as follows:(Million yen)
Goodwill

TrademarkrightsSoftware25,792

4,041

9,120

2,932

10,133945

52,965Additions from internal
development

－

－

－

－

－

11

11

Acquisitions

－

6

44

－

－

400

451

Disposals－－(1,216)

－

(637)

(11)

(1,866)

Transfers (Note 3)

－

－

128

－

－

(121)

6

(89)

－

－

－

－

－

(89)

3,177

602

211

268

1,105

36

5,401

As of December 31, 2022

28,880

4,650

8,287

3,201

10,6001,260

56,880Additions from internal
development

－

－

－

－

－

－

－

Acquisitions

－

－

56

－

643

311

1,011

Disposals

－

(9)

(155)

－

－

(7)

(173)

Transfers (Note 3)

－

－

140

－

－

(77)

63

－

－

－

－

－

－

－

2,332

325

123

338

790

64

3,973

31,212

4,966

8,452

3,539

12,0341,550

61,755

Cost
As of January 1, 2022

Exclusion fromconsolidation
Foreign currencytranslation differences

Exclusion fromconsolidation
Foreign currencytranslation differences
As of December 31, 2023

―29―

Technical
Customerassets
related assets

Other

Total

(Million yen)
Accumulated amortization
and accumulated impairment
lossesGoodwill

TrademarkrightsSoftware(5,605)－(7,413)(1,136)(4,372)(365)(18,893)

－

－

(439)

(221)

(792)

(70)

(1,523)(1,461)

－

－

－

－

－

(1,461)

Disposals

－

－

1,194

－

637

－

1,831

Transfers

－

－

－

－

－

－

－

89

－

－

－

－

－

89

(493)

－

(61)

(102)

(586)

(16)

(1,260)(7,469)－(6,720)(1,460)(5,114)(452)(21,217)

－

－

(421)

(242)

(803)

(79)

(1,547)(2,692)

－

－

(12)

(16)

－

(2,722)

Disposals

－

－

149

－

－

－

149

Transfers (Note 3)

－

－

(40)

－

－

0

(40)

－

－

－

－

－

－

－

(812)

－

(61)

(165)

(443)

(13)

(1,496)(10,974)－(7,093)(1,881)(6,378)(545)(26,873)

Goodwill

TrademarkrightsSoftware

As of January 1, 2022

20,186

4,041

1,706

1,796

5,760

579

34,071

As of December 31, 2022

21,410

4,650

1,567

1,741

5,486

807

35,662As of December 31, 2023

20,238

4,966

1,358

1,658

5,655

1,004

34,882As of January 1, 2022
Amortization
Impairment losses (Note 2)

Exclusion fromconsolidation
Foreign currencytranslation differences
As of December 31, 2022
Amortization
Impairment losses (Note 2)

Exclusion fromconsolidation
Foreign currencytranslation differences
As of December 31, 2023

Technical
Customerassets
related assets

Other

Total

(Million yen)Book value

Technical
Customerassets
related assets

Other

Total

(Notes) 1. Amortization of intangible assets is included in cost of sales and selling, general and administrative expenses in the
consolidated statements of profit or loss.
2. Impairment losses are described in Note 13 “Impairment of non-financial assets.”
3. Transfers principally represent transfers from software in progress included in other to the related accounts of intangible
assets.
4. Research and development expenses that do not meet asset recognition criteria are recognized as expenses as incurred andare recorded as selling, general and administrative expenses (see Note 26). Research and development expenses recognized
as expenses for the fiscal years ended December 31, 2022 and December 31, 2023 were ¥3,973 million and ¥4,656 million,
respectively.
5. Intangible assets pledged as collateral of liabilities are described in Note 18 “Bonds and borrowings.”―30―

(2) Impairment test for goodwill and intangible assets with indefinite useful lives
Periodic impairment tests are performed at least once a year, regardless of whether there is any indication of impairment.
The book values of goodwill and intangible assets with indefinite useful lives allocated to each cash-generating unit are
principally as follows.
Those that were significant as of December 31, 2022 and 2023 are attributable to the acquisitions of Nissha Metallizing Solutions
N.V. and its subsidiaries in August 2015 and Graphic Controls Holdings, Inc. and its subsidiaries in September 2016.

Cash-generating unit

Segment

Account(Million yen)
As of
As of
December 31, 2022 December 31, 2023
Book value

Nissha Metallizing
Solutions N.V. andits subsidiaries

Industrial
Materials

Graphic Controls
Holdings, Inc. and its
subsidiaries

MedicalTechnologies

Book value

Goodwill

2,414－

Goodwill

17,891

19,134

Trademark rights
4,443
4,750
(Note)(Note) Trademark rights are expected to exist as long as the business continues. Therefore, their useful lives are considered indefinite.
Information including major assumptions used for determining the recoverable amount of each cash-generating unit is as follows:
1) Nissha Metallizing Solutions N.V. and its subsidiaries
The recoverable amount is determined based on the value in use and compared with the book value of the cash-generating unit.
The value in use of the cash-generating unit, including goodwill, is calculated by discounting the estimated future cash flows topresent value. Those cash flows are based on the five-year business plan approved by management, and for subsequent fiscal
years, they are calculated by using growth rates of country of sale. For the calculation of the value in use, the Company relies on
a report prepared by an external evaluation expert.
The above-mentioned business plan contains elements with uncertainties such as sales forecasts by region and product lineups
based on demand trends and the status of product development as well as changes in the price of a base material (paper), which
is a primary raw material. In addition, a growth rate and a discount rate used in determining value in use are highly uncertain andmay fluctuate as they are affected by changes in the external environment such as economic conditions and interest-ratefluctuations. Therefore, when the business plan needs to be reviewed due to significant changes in the management environmentand other factors or when the growth rate and the discount rate fluctuate significantly due to changes in the external environment
such as economic conditions and interest-rate fluctuations, it may significantly affect the Consolidated Financial Statements inand after the next fiscal year.
The growth rate used in estimating the future cash flows is 3.4% as of December 31, 2022 and 4.4% as of December 31, 2023.
The discount rate, which is determined based on the after-tax weighted average cost of capital, is 13.1% as of December 31,
2022 and 15.6% as of December 31, 2023.
In the fiscal year ended December 31, 2022, the book value was reduced to the recoverable amount, and an impairment lossof ¥1,461 million was recognized. This was due to a decrease in the recoverable amount resulting from an increase in the discountrate affected by interest rate fluctuations.
In the fiscal year ended December 31, 2023, the amount equivalent to the entire book value of goodwill of ¥2,692 million wasrecognized as an impairment loss since the recoverable amount decreased as a result of a rise in the discount rate attributable
mainly to the inflation rates in countries in which our products are sold.
2) Graphic Controls Holdings, Inc. and its subsidiaries
The recoverable amount is determined as the value in use and compared with the book value of the cash-generating unit. The
value in use of the cash-generating unit, including goodwill and trademark rights, is calculated by discounting the estimatedfuture cash flows to present value. Those cash flows are based on the five-year business plan approved by management, and for
subsequent fiscal years, they are calculated by using growth rates determined by reference to the long-term expected growth rateof the market which the cash-generating unit belongs to. For the calculation of the value in use, the Company relies on a report
prepared by an external evaluation expert.

―31―

The above-mentioned business plan contains elements with uncertainties such as sales forecasts by region and product lineups
based on demand trends as well as changes in manufacturing costs. In addition, a growth rate and a discount rate used indetermining value in use are highly uncertain and may fluctuate as they are affected by changes in the external environment suchas economic conditions and interest-rate fluctuations. Therefore, when the business plan needs to be reviewed due to significant
changes in the management environment and other factors or when the growth rate and the discount rate fluctuate significantly
due to changes in the external environment such as economic conditions and interest-rate fluctuations, it may significantly affect
the Consolidated Financial Statements in and after the next fiscal year.
The growth rate used in estimating the future cash flows is 4.0% as of December 31, 2022 and 4.0% as of December 31, 2023.
The discount rate, which is determined based on the after-tax weighted average cost of capital, is 10.6% as of December 31,
2022 and 11.2% as of December 31, 2023.
The recoverable amount exceeded the book value by ¥6,685 million as of December 31, 2023. It is estimated that a 1.9%
decrease in the growth rate or a 1.1% increase in the discount rate would result in recognizing impairment losses.
The above presumption of thresholds for impairment losses is derived under the assumption that the decrease in the growthrate and the increase in the discount rate occur independently.
(3) Significant intangible assets
Significant intangible assets recognized in the consolidated statements of financial position are as follows:• “Customer-related assets” and “Technical assets” that were incurred from the acquisition of Nissha Metallizing Solutions N.V.
and its subsidiaries in August 2015
For customer-related assets, the book value was ¥1,841 million as of December 31, 2022 and ¥1,816 million as of December 31,
2023, and the remaining amortization period is 8 years. For technical assets, the book value was ¥1,439 million as of December 31,
2022 and ¥1,377 million as of December 31, 2023, and the remaining amortization period is 6 years.
• “Customer-related assets” that were incurred from the acquisition of Graphic Controls Holdings, Inc. and its subsidiaries in
September 2016
The book value was ¥1,643 million as of December 31, 2022 and ¥1,439 million as of December 31, 2023, and the remaining
amortization period is 8 years.
• “Customer-related assets” that were incurred from the acquisition of Zonnebodo Pharmaceutical Co., Ltd. in November 2019
The book value was ¥1,224 million as of December 31, 2022 and ¥1,175 million as of December 31, 2023, and the remaining
amortization period is 24 years.

―32―12. Leases(1) Lessee1) The balance of right-of-use assets as of each fiscal year-end is as follows:(Million yen)
Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures

Intangible
assets

Land

Total

As of December 31, 2022

7,671

917

115

134

0

8,840

As of December 31, 2023

8,478

958

122

132

0

9,693

Additions to right-of-use assets are described in Note 32 “Cash flow information.”
Depreciation and amortization for right-of-use assets are as follows:(Million yen)
Buildings and Machinery and Tools, furniture
structures
vehiclesand fixtures
Fiscal year ended
December 31, 2022
Fiscal year ended
December 31, 2023

Intangible
assets

Land

Total

1,396

304

46

8

1

1,758

1,461

385

45

9

0

1,903

2) The maturity analysis of lease liabilities is as follows:Book value

As ofDecember 31, 2022

(Million yen)
As ofDecember 31, 2023

Lease liabilities (current)

1,740

1,857

Lease liabilities (noncurrent)

8,206

8,862

Total lease liabilities

9,947

10,720Total

11,867

12,431

1 year or less

2,055

2,127

Over 1 year to 5 years

5,165

5,717

Over 5 years

4,646

4,586

Contractual cash flows

3) Expenses and cash outflows relating to leases are as follows:(Million yen)
Fiscal year ended
December 31, 2022
Repayments of lease liabilities

Fiscal year ended
December 31, 2023
1,915

2,006

Interest expenses on lease liabilities

288

295

Variable lease payments not included in themeasurement of lease liabilities－

39

Expenses relating to short-term leases

328

381

Expenses relating to leases of low-value assets(excluding expenses relating to short-term leases of
low-value assets)

230

269

2,762

2,992

Total cash outflow for leases―33―

(2) Lessor
1) Finance leases
The Group leases buildings that are not used by the Group as a lessor of finance leases. For the purpose of risk managementof underlying assets, the Group monitors credit risks on a periodical basis.
2) Revenue from leases based on finance lease contracts is as follows:(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Finance income on the net investments in the leases

21203) The maturity analysis of lease receivables (before discount) based on finance lease contracts is as follows:(Million yen)
As of December 31, 2022

As of December 31, 2023

1 year or less47

47

Over 1 year to 2 years

47

47

Over 2 years to 3 years

47

47

Over 3 years to 4 years

47

47

Over 4 years to 5 years

47

47

Over 5 years

398

351

635

587

Unearned finance income

(155)

(134)

Net investments in the leases

480

453

Total

―34―

13. Impairment of non-financial assets(1) Cash-generating unit
The Group carries out grouping by the smallest cash-generating unit that generates cash inflows that are largely independent of
the cash inflows from other units. Assets to be disposed of (assets to be disposed of by disposal or sale, etc.) and idle assets aregrouped on an individual basis.
Goodwill acquired in a business combination is allocated to the cash-generating unit that is expected to benefit from the synergiesof the combination, and the cash-generating unit is tested for impairment.
(2) Impairment losses
The Group recognizes impairment losses if the recoverable amount of an asset or a group of assets has fallen below its bookvalue. Impairment losses are included in other expenses in the consolidated statements of profit or loss (see Note 28 “Other income
and other expenses”).
The amount incurred by each reportable segment is as described in Note 4 “Operating segments.”
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)(Goodwill)In the fiscal year ended December 31, 2022, for goodwill allocated to Nissha Metallizing Solutions N.V. and its subsidiaries
in the Industrial Materials segment as a cash-generating unit, the book value was written down to recoverable amount, and an
impairment loss of ¥1,461 million was recognized since the recoverable amount decreased as a result of a rise in the discountrate driven by interest-rate fluctuations.
For information on the method of evaluating recoverable amounts and key assumptions used for the evaluation, refer to “(2)Impairment test for goodwill and intangible assets with indefinite useful lives” in Note 11. “Goodwill and intangible assets.”
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)(Goodwill and intangible assets)
For goodwill, technical assets, and customer-related assets allocated to Nissha Metallizing Solutions N.V. and its subsidiaries
in the Industrial Materials segment as a cash-generating unit, the Group wrote down its book value to recoverable amount andrecognized impairment losses of ¥2,692 million, ¥12 million, and ¥16 million, respectively, since the recoverable amountdecreased as a result of a rise in the discount rate attributable mainly to the inflation rates in countries in which our products are
sold.
For information on the method of evaluating recoverable amounts and key assumptions used for the evaluation in the goodwill
impairment test, refer to “(2) Impairment test for goodwill and intangible assets with indefinite useful lives” in Note 11. “Goodwill
and intangible assets.”
Information on the method of evaluating recoverable amounts and key assumptions used for the evaluation in the impairment
test for technical assets and customer-related assets is the same as that used in the goodwill impairment test.

―35―

14. Investments accounted for using equity method
The book value of investments in associates that are not individually material is as follows:Book value of investments accounted forusing equity method

As ofDecember 31, 2022

(Million yen)
As ofDecember 31, 2023

763

4,539

Financial information on associates that are not individually material is as follows:(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Share of profit

(57)

(243)

Share of other comprehensive income

136

267

Share of total comprehensive income

78

23

―36―

15. Other financial assets
The breakdown of other financial assets is as follows:(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
(Current assets)
Financial assets measured at amortized
costTime deposits with maturities ofmore than three months

136

6

Advances paid

45

49

Lease receivables (see Note 12)26

28

Deposits paid

47

693

Other

12

18

Allowance for doubtful accounts

(0)

(0)

Derivatives

72

72

Debt instruments

39

－

Total

381

868

281

298

2

6

Lease receivables (see Note 12)

453

425

Other

226

226

Allowance for doubtful accounts

(226)

(226)

47

27

1,205

1,058

11,671

14,49813,662

16,313Financial assets measured at fair value
through profit or loss

(Non-current assets)
Financial assets measured at amortized
cost
Guarantee deposits
Long-term loans receivable

Financial assets measured at fair value
through profit or loss
Derivatives
Debt instruments
Financial assets measured at fair value
through other comprehensive income
Equity instruments (Note)
Total(Note) The individual issuer and fair value of equity instruments designated as measured at fair value through other comprehensive
income are as described in Note 34 “Financial instruments.”―37―

16. Income taxes(1) Deferred taxes
The breakdown by major cause and changes in deferred tax assets and deferred tax liabilities are as follows.
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)(Million yen)AmountAmountrecognized in
As ofrecognized inotherJanuary 1, 2022
profit or loss comprehensive
incomeForeigncurrencytranslationdifferences

As ofDecember 31,
2022

Deferred tax assets:
Inventories

308

157

－

20

486

293

3

－

27

325

37

26

－

3

68

Accrued bonuses

189

312

－

1

504

Obligation for paid absences

87

(4)

－

11

94

Accounts payable-other andaccrued expenses, etc.

91

1

－

17

110

Retirement benefit liability

41

22

－

2

65

Unused tax losses

457

205

－

25

688

Lease liabilities

2,266

356

－

13

2,635

367

(61)

－

33

339

4,142

1,020

－

156

5,318

(4,078)

－

1,113

－

(2,965)

(847)

(151)

－

(103)

(1,103)(3,639)

462

－

(412)

(3,590)(2,025)

(328)

－

(0)

(2,354)

(665)

(320)

(9)

(11)

(1,006)(11,256)

(338)

1,104

(528)

(11,019)(7,114)

682

1,104

(372)

(5,701)

Property, plant and equipment
and intangible assets
Allowance for doubtful
accounts

Other
Total
Deferred tax liabilities:
Financial assets measured at fairvalue through othercomprehensive income
Property, plant and equipment
and intangible assets
Assets identified in businesscombinations
Right-of-use assets
Other
Total
Net deferred tax assets(liabilities)―38―

The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)(Million yen)AmountAmountrecognized in
As ofrecognized inotherJanuary 1, 2023
profit or loss comprehensive
incomeForeigncurrencytranslationdifferences

As ofDecember 31,
2023

Deferred tax assets:
Inventories

486

(38)

－

15

462

325

165

－

22

512

68

(18)

－

3

53

Accrued bonuses

504

1

－

1

507

Obligation for paid absences

94

13

－

4

112

Accounts payable-other andaccrued expenses, etc.

110

131

－

(1)

240

Retirement benefit liability

65

272

－

(0)

336

Unused tax losses

688

104

－

43

836

Lease liabilities

2,635

174

－

(40)

2,770

339

139

－

6

485

5,318

944

－

54

6,318

(2,965)

－

(983)

－

(3,948)(1,103)

(301)

－

(53)

(1,459)(3,590)

180

－

(262)

(3,672)Right-of-use assets(2,354)

(10)

－

49

(2,315)

Other(1,006)

48

(231)

(98)

(1,287)(11,019)(83)(1,214)(365)(12,682)

Property, plant and equipment
and intangible assets
Allowance for doubtful
accounts

Other
Total
Deferred tax liabilities:
Financial assets measured at fairvalue through othercomprehensive income
Property, plant and equipment
and intangible assets
Assets identified in businesscombinations

Total

Net deferred tax assets(5,701)861(1,214)(310)(6,364)(liabilities)(Note) The figures have been retrospectively adjusted in line with the application of IAS 12 Income Taxes (amended in May 2021),
which has resulted in a change in the method of accounting treatment to the one by which taxable temporary differences anddeductible temporary differences arising from transactions that give rise to equal taxable and deductible temporary differencesat the time of the transaction are recognized as deferred tax liabilities and deferred tax assets, respectively, in the Company’s
consolidated statements of financial position.

―39―

Unused tax losses and deductible temporary differences for which deferred tax assets are not recognized(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
Unused tax losses (Note)

8,722

10,046

Deductible temporary differences

19,116

17,761(Note) Amount by expiration period of unused tax losses for which deferred tax assets are not recognized(Million yen)
As of
As of
December 31, 2022
December 31, 2023
1st year109

156

2nd year156

462

3rd year462

733

4th year

696

1,288

5th year

1,292

384

After 5th year

6,005

7,020

8,722

10,046Total

The above figures do not include the amount of unused tax losses for which deferred tax assets are not recognized related to local
taxes (inhabitants’ tax and enterprise tax), which are not subject to the group tax sharing system. As of December 31, 2023, theamount of unused tax losses for which deferred tax assets were not recognized related to local taxes (inhabitants’ tax and enterprisetax) was ¥3,954 million for inhabitants’ tax and ¥4,008 million for enterprise tax.
Taxable temporary differences associated with investments in the Group’s subsidiaries for which deferred tax liabilities were notrecognized were ¥30,618 million as of December 31, 2022 and ¥32,165 million as of December 31, 2023.
This was because the Group was able to control the timing of the reversal of the temporary difference, and it is probable that thetemporary difference would not reverse in the foreseeable future.
The Group has adopted the temporary exception to the requirements in IAS 12 regarding deferred tax accounting published by
IASB in May 2023, and thus does not recognize and disclose deferred tax assets and liabilities related to Pillar Two income taxes.
(2) Income tax expense
The breakdown of income tax expense is as follows.
(Million yen)
Fiscal year ended
December 31, 2022
Current tax expense

Fiscal year ended
December 31, 2023

2,984

1,278

Tax expense for prior periods

(49)

(164)

Deferred tax expense

(682)

(861)

2,253

252

Total

(Notes) 1. The amount of the benefits arising from previously unrecognized tax losses, tax credits or temporary differences of priorperiods that were used to reduce current tax expense for the fiscal years ended December 31, 2022 and December 31, 2023
were ¥2,288 million and ¥632 million, respectively.
2. The amount of the benefits arising from previously unrecognized tax losses, tax credits or temporary differences of priorperiods that were used to reduce deferred tax expense for the fiscal years ended December 31, 2022 and December 31,
2023 were ¥498 million and ¥384 million, respectively.
3. Deferred tax expense includes expenses arising from write‑downs, or reversal of previous write‑downs, of deferred tax
assets. This does not cause any material changes in deferred tax expense for the fiscal years ended December 31, 2022 andDecember 31, 2023.

―40―

The Company is mainly subject to income taxes, inhabitants’ taxes, and tax deductible enterprise taxes, based on which thestatutory effective tax rate is calculated. The Company’s statutory effective tax rate was 30.5% for the fiscal years ended December
31, 2022 and December 31, 2023.
The foreign subsidiaries are subject to tax rates in the jurisdiction where they operate.
The difference between the statutory effective tax rate and the average actual effective tax rate consists of the following factors:

Fiscal year ended
December 31, 2022
Statutory effective tax rate

Fiscal year ended
December 31, 2023

30.5 %

30.5 %(0.7)%

7.2 %

0.1 %

(2.7)%(14.3)%(38.1)%

Permanent non-deductible expenses

1.8 %(8.7)%Tax credits(1.4)%

2.6 %

Other

2.2 %

0.1 %

Actual effective tax rate

18.2 %(9.1)%(Adjustments)
Difference in tax rate of foreign subsidiaries
Share of profit (loss) of investments accounted for using
equity method
Changes in recoverability of deferred tax assets

On March 28, 2023, Japan, where the Company is incorporated, enacted the Pillar Two legislation effective April 1, 2024. Under
this legislation, a parent company is subject to a top-up tax in Japan on the profits of its subsidiaries that are taxed at an effective
tax rate of less than 15%. The Group is currently working to assess the impact of the Pillar Two legislation on its future financial
performance. As of December 31, 2023, the impact on the Group’s performance is expected to be negligible.
17. Trade and other payables
The breakdown of trade and other payables is as follows:
As of
December 31, 2022
Notes and accounts payable-trade
Electronically recorded obligationsoperating
Accounts payable-other and accrued
expenses
Electronically recorded obligations-nonoperating
Notes payable-facilities and accounts
payable-facilities
Total(Million yen)
As ofDecember 31, 2023

28,04519,897

4,660

2,277

5,990

6,041

292

260

431

133

39,41928,609(Note) Trade and other payables are classified as financial liabilities measured at amortized cost.

―41―

18. Bonds and borrowings(1) Bonds

Company
nameNisshaCo., Ltd.

Date ofissuance

Bond name

The First Series
Unsecured Bonds

As of
As of
December 31, December 31,
2022
2023
(Million yen) (Million yen)

April 20,
2021

9,973

As of
December 31, 2022

As ofDecember 31, 2023

(Million yen)

(Million yen)

9,984Interest rate

Collateral

Maturity date

None

April 20,
2026

(%)

0.56

(2) Borrowings

Short-term loans payable
Current portion of long-termloans payable
Long-term loans payable(excluding current portion)
Total

Averageinterest rate
(Note 1)(%)

Repayment
date(Note 2)

7,642

5,524

0.77

－

1,808

2,298

4.83

－

28,18527,241

2.482025 to 2032

37,63635,064－－(Notes) 1. Average interest rate represents the weighted average interest rate on the balance as of December 31, 2023.
2. Repayment date represents the due date for the balance as of December 31, 2023.
The breakdown of assets pledged as collateral and corresponding liabilities is as follows:(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
Assets pledged as collateral
Cash and cash equivalents

492

401

Trade and other receivables

5,150

5,928

Inventories

8,983

8,425

47

46

1,814

2,283

63

49

16,551

17,135

Borrowings (current)

2,929

326

Bonds and borrowings (non-current)

1,255

1,040

Total

4,184

1,366

Other current assets
Property, plant and equipment
Intangible assets
Total
Corresponding liabilities(Notes) 1. Of the above assets pledged as collateral, ¥12,360 million was an asset pledged as collateral by a U.S. consolidated
subsidiary of the Company for a commitment line agreement (in a foreign currency) of USD 10 million with a financial
institution.
2. Other than those listed above, there are assets pledged as collateral that were eliminated in the consolidated financial
statements, including shares of subsidiaries and affiliates (¥5,981 million as of December 31, 2022; ¥5,978 million as ofDecember 31, 2023) and trade and other receivables (¥6,303 million as of December 31, 2022; ¥9,358 million as ofDecember 31, 2023).
3. Assets pledged as collateral are for a part of consolidated subsidiaries’ borrowings from financial institutions. In the eventof default of the principal and interest of borrowings that are due and payable, the financial institution has the right to―42―

dispose of the collateral and apply it to the repayment amount of the borrowings under the contracts.
19. Other financial liabilities
The breakdown of other financial liabilities is as follows:
As of
December 31, 2022

(Million yen)
As ofDecember 31, 2023

693

719

429

815

Derivatives liabilities

5－

Contingent consideration

70

－

1,198

1,535

682

18

4

4

3

－

690

23

(Current liabilities)
Financial liabilities measured atamortized cost
Deposits received
Accounts payable-other and accrued
expensesFinancial liabilities measured at fairvalue through profit or loss

Total
(Non-current liabilities)
Financial liabilities measured atamortized costAccounts payable-other and accrued
expenses
Other
Financial liabilities measured at fairvalue through profit or loss
Derivatives liabilities
Total

―43―

20. Provisions(1) Breakdown
The breakdown of provisions is as follows:(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
Asset retirement obligations

50

52

Restructuring provisions

26

－

Other

80

74

157

127

Current liabilities

95

74

Non-current liabilities

62

52

Total

(Note) Other mainly consists of provision for product warranties.
(2) Changes
Details of changes in provisions are as follows:(Million yen)
Asset retirement
obligations

Restructuringprovisions

As of January 1, 2022

46

6

63

116

Provision

3

27

26

57

Intended use

－

(6)

(10)

(16)

Reversal

－

－

(4)

(4)

Foreign currency translation differences

－

(0)

4

4

Other

0

－

－

0

As of December 31, 2022

50

26

80

157

Provision

5

－

25

30

Intended use

(2)

(29)

(29)

(61)

Reversal

－

－

(3)

(3)

Foreign currency translation differences

－

2

5

8

Other

0

－

(5)

(5)

As of December 31, 2023

52

－

74

127

Other

Total

1) Asset retirement obligations
The amount to be incurred for the restoration obligation of operating bases used by the Group are estimated based on historicalexperience and recognized as a provision for asset retirement obligations.
These costs are expected to be incurred principally after one year or more, but will be affected by the development of futurebusiness plans and other factors.
2) Restructuring provisions
Restructuring provisions as of December 31, 2022 are provided for the restructuring expenses expected to be incurred at theGroup’s consolidated subsidiaries in Industrial Materials segment in Europe.

―44―21. Other liabilities
The breakdown of other current liabilities and other non-current liabilities is as follows:(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
(Other current liabilities)
Accrued consumption taxes

284

214

2,033

2,312

Accrued directors’ bonuses

89

52

Cash‑settled share-based payment
expenses for directors (see Note 33)

424

1,098

1,010

1,200

709

1,176

0

0

4,552

6,055

1

0

114

－

202

201

118

69

436

271

Accrued bonuses

Obligation for paid absences
Advances received and unearned
revenue (see Note 25)
Other
Total
(Other non-current liabilities)
Cash‑settled share-based payment
expenses (see Note 33)
Cash‑settled share-based payment
expenses for directors (see Note 33)
Other long‑term employee benefit
obligations
Other
Total

―45―

22. Post‑employment benefits(1) Outline of post-employment benefit plans
The Company and certain consolidated subsidiaries have adopted funded and unfunded defined benefit plans and defined
contribution plans to provide for retirement benefits to their employees. The funded defined benefit plans are contract-type
corporation pension plans under the Defined Benefit Corporation Pension Act, which provide lump-sum payments or pension
benefits based on a point system. The contract-type corporation pension plans are implemented under the Constitution for Corporate
Pension Plan with Defined Benefits agreed between labor and management by entrusting the administration and management ofplan assets to investment managers.
The contract requires recalculation of contributions at least every five years in accordance with the Defined Benefit Corporation
Pension Act in order to maintain balanced finance into the future.
The unfunded defined benefit plans are retirement lump-sum payment plans, which provide lump-sum payments based on a point
system or based on salary and service period.
The Company and certain consolidated subsidiaries are exposed to actuarial risks, including investment risk, interest rate risk
and longevity risk, through the defined benefit plans.
(2) Defined benefit plans
Amounts related to defined benefit plans in the consolidated statements of financial position are as follows:
1) Amounts related to defined benefit plans in the consolidated statements of financial position(Million yen)
As of
As of
December 31, 2022
December 31, 2023
Present value of funded defined benefit
2,575
2,764
obligations
Fair value of plan assets(2,380)(2,478)Subtotal

194

286

Present value of unfunded defined benefit
obligations

5,728

5,715

Changes in the effect of the asset ceiling

－

22

Total
Amounts in the consolidated statements offinancial position
Retirement benefit liability

5,923

6,024

6,290

6,395

(367)

(371)

5,923

6,024

Retirement benefit asset
Net of liability and asset recorded in the
consolidated statements of financial
position―46―2) Changes in present value of defined benefit obligations(Million yen)
Fiscal year ended
December 31, 2022
Beginning balance of present value of defined benefit
obligations
Current service cost

Fiscal year ended
December 31, 2023

8,630

8,303

665

647

54

140

175

(214)

(1,097)55

Interest expenses
Remeasurements
Actuarial gains and losses arising from changes indemographic assumptions
Actuarial gains and losses arising from changes infinancial assumptions
Other

50

(41)

Benefit payments

(573)

(534)

Foreign currency translation differences

123

89

Past service cost

32

28

Other
241
4
Ending balance of present value of defined benefit
8,303
8,479
obligations
The weighted average duration of defined benefit obligations as of December 31, 2022 and December 31, 2023 was 10.4 years and10.3 years, respectively.
3) Changes in fair value of plan assets(Million yen)
Fiscal year ended
December 31, 2022
Beginning balance of fair value of plan assets

Fiscal year ended
December 31, 2023

2,337

2,380

15

40

(196)

65

Contributions by employers

128

135

Benefit payments

Interest income
Remeasurements
Return on plan assets, excluding interest income

(174)

(130)

Foreign currency translation differences

25

40

Other

244

(52)

2,380

2,478

Ending balance of fair value of plan assets
The contributions for the following fiscal year are expected to be ¥29 million.
4) Changes in the effect of the asset ceiling(Million yen)
Fiscal year ended
December 31, 2022
Beginning balance of the effect of the asset ceilingFiscal year ended
December 31, 2023－－

Changes in the effect of the asset ceiling－

22

Ending balance of the effect of the asset ceiling－

22

Remeasurements―47―5) Fair value of plan assets(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022

With market
No market
With market
No market
prices in active prices in active prices in active prices in active
markets
markets
markets
markets
Equity instruments
Foreign equities

72

－

－

－

Japanese equities

140

－

－

－

459

－

－

－

Foreign bonds
General accounts of life
insurance companies (Note 1)
Other (Note 2)

244

－

215

－

－

1,254

－

2,028

16

193

－

234

Total plan assets

933

1,447

215

2,263

Debt instruments
Japanese bonds(Notes) 1. General accounts of life insurance companies represent the investment of plan assets through general accounts for which
the life insurance companies mainly guarantee both principal and interest.
2. The major item is plan assets in Germany and consists of insurance contracts, etc.
The investment of plan assets is aimed at maximizing total returns in the long-term within acceptable risk levels in order toensure future payments of benefits. To achieve this investment objective, the return is targeted at the expected rate of return fromthe plan assets with the asset allocation (the “policy asset mix”) that should be maintained in the long-term. The policy asset mix
is set from a medium- to long-term perspective of more than three to five years, reviewed annually, and revised as necessary if
there are any changes in the underlying conditions.
The basic policy for risk management of the investment is to diversify the portfolio into asset classes with different risk-return
profile and other characteristics. The status of the investment is monitored, including through the quarterly reports from theinvestment managers on the investment of the plan assets and the quantitative and qualitative assessment of the investment
managers.
6) Significant actuarial assumption
The significant actuarial assumption (weighted average value) used to measure the fair value of defined benefit obligations is
as follows:
As of
December 31, 2022(%)
Discount rate

As ofDecember 31, 2023
(%)

1.7

1.7

7) Sensitivity analysis of the significant actuarial assumptions
The sensitivity analysis of the significant actuarial assumptions is as follows:

Discount rate

Change inunderlying rate

As ofDecember 31, 2022

(Million yen)
As ofDecember 31, 2023

0.5% increase

(387)

(384)

0.5% decrease

413

424

This analysis assumes that other variables are constant.
There are correlations between some assumptions, and it is rare for each assumption to change independently. Accordingly,
the sensitivity analysis above may not necessarily show the actual change in defined benefit obligations. In addition, in thesensitivity analysis above, the present value of defined benefit obligations is determined as of the end of the reporting periodusing the projected unit credit method, as is the case with determining retirement benefit liability (asset) recognized in the
consolidated statements of financial position.

―48―

(3) Defined contribution plans
For contributions to the defined contribution plans, the Company and certain consolidated subsidiaries recognized expenses of¥2,462 million and ¥3,271 million for the fiscal years ended December 31, 2022 and December 31, 2023, respectively.
The above amounts include contributions to public plans recognized as expenses.
23. Share capital and other equity items(1) Share capital and capital surplus
1) Number of shares authorized
Number of shares authorizedClass(Shares)Common stock
180,000,000(Note) This represents the number of shares authorized as of December 31, 2022 and December 31, 2023.
2) Number of shares issued and fully paid
Changes in the number of common shares issued and the balances of share capital and capital surplus are as follows:
Number of
Share capital
Capital surplus
common shares issued(Thousand shares)(Million yen)
(Million yen)
Balance at January 1, 2022
Changes during the period
Balance at December 31, 2022
Changes during the period
Balance at December 31, 2023

50,855

12,11914,810－－30

50,855

12,11914,841－－

23

50,855

12,11914,865(Notes) 1. The shares issued by the Company are common shares with no par value that have no restrictions on any rights.
2. Changes in capital surplus during the period for the fiscal year ended December 31, 2022 are mainly due to sales of treasury
shares to the shareholding association and share-based payment transactions (see Note 33).
3. Changes in capital surplus during the period for the fiscal year ended December 31, 2023 are mainly due to sales of treasury
shares to the shareholding association and share-based payment transactions (see Note 33).
(2) Treasury shares
Changes in the number of treasury shares and balance thereof are as follows:
Number of shares
Amount(Thousand shares)(Million yen)
Balance at January 1, 2022

1,041

1,929

Changes during the period

398

703

Balance at December 31, 2022

1,440

2,632

Changes during the period

804

1,387

Balance at December 31, 2023

2,244

4,019

(Notes) 1. Changes during the period for the fiscal year ended December 31, 2022 are mainly due to acquisition based on a resolutionof the Meeting of the Board of Directors and sales to the shareholding association.
2. Changes during the period for the fiscal year ended December 31, 2023 are mainly due to acquisition based on a resolutionof the Meeting of the Board of Directors and delivery to the beneficiaries of the Stock Benefit Trust (BBT).
(3) Capital surplus
Capital surplus consists of amounts arising from equity transactions that are not included in share capital. Changes in ownershipinterest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
Under the Companies Act, more than one-half of the paid-in capital or contributed capital upon issuance of shares shall be credited
to share capital, and the remainder shall be credited to legal capital surplus included in capital surplus. Legal capital surplus may
be transferred to share capital by resolution of the General Meeting of Shareholders.

―49―(4) Retained earnings
Retained earnings consist of earnings recognized in profit or loss for the fiscal year ended December 31, 2023 and prior fiscal
years and earnings reclassified from other comprehensive income.
Under the Companies Act, one-tenth of the amount to be paid as dividends of surplus shall be accumulated as legal capital surplus
or legal retained earnings until the total amount of legal capital surplus and legal retained earnings reaches one-fourth of sharecapital. The accumulated legal retained earnings may be used to eliminate or reduce a deficit, and the legal retained earnings may
also be reversed by resolution of the General Meeting of Shareholders.
(5) Other components of equity
1) Net change in fair value of financial assets measured through other comprehensive income
Net change in fair value of financial assets measured through other comprehensive income represents valuation differences infair value of financial assets measured through other comprehensive income.
2) Remeasurements of defined benefit plans
Remeasurements of defined benefit plans consist mainly of the effect of changes in actuarial assumptions, the effect of adjustment
to the actual results, and return on plan assets (excluding the amount included in net interest expenses). These are recognized inother comprehensive income as incurred, and immediately transferred from other components of equity to retained earnings.
3) Exchange differences on translation of foreign operations
Exchange differences on translation of foreign operations are translation differences arising when consolidating the financial
statements of foreign operations prepared in foreign currencies.

―50―

24. Dividends
Dividends paid are as follows:
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
Total amount of
Dividend per share
Resolution
Type of stock
dividends
Record date
Effective date
(Yen)(Million yen)
Meeting of the Boardof Directors held on
Common shares
1,256
25.00 December 31, 2021
March 3, 2022
February 14, 2022
Meeting of the Boardof Directors held on
Common shares
754
15.00
June 30, 2022
September 1, 2022
August 8, 2022
(Notes) 1. The total amount of dividends based on a resolution of the Meeting of the Board of Directors held on February 14, 2022
includes ¥11 million paid to Custody Bank of Japan, Ltd. (Trust E Account) as dividends on Company shares it holds.
2. The dividend per share based on a resolution of the Meeting of the Board of Directors held on February 14, 2022 includes
the special dividend of ¥10.
3. The total amount of dividends based on a resolution of the Meeting of the Board of Directors held on August 8, 2022
includes ¥6 million paid to Custody Bank of Japan, Ltd. (Trust E Account) as dividends on Company shares it holds.
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
Total amount of
Dividend per share
Resolution
Type of stock
dividends
Record date
Effective date
(Yen)(Million yen)
Meeting of the Boardof Directors held on
Common shares
1,743
35.00 December 31, 2022
March 3, 2023
February 14, 2023
Meeting of the Boardof Directors held on
Common shares
1,233
25.00
June 30, 2023
September 1, 2023
August 8, 2023
(Notes) 1. The total amount of dividends based on a resolution of the Meeting of the Board of Directors held on February 14, 2023
includes ¥13 million paid to Custody Bank of Japan, Ltd. (Trust E Account) as dividends on Company shares it holds.
2. The total amount of dividends based on a resolution of the Meeting of the Board of Directors held on August 8, 2023
includes ¥12 million paid to Custody Bank of Japan, Ltd. (Trust E Account) as dividends on Company shares it holds.
Dividends that take effect in the following fiscal year are as follows:
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
Total amount of
Dividend per share
Type of
Dividend
dividends
Record date
Effective date
Resolution
stock
resource(Million yen)
(Yen)
Meeting of the Board
CommonRetained
December 31,
of Directors held on
1,743
35.00
March 3, 2023
sharesearnings
2022
February 14, 2023
(Note) The total amount of dividends based on a resolution of the Meeting of the Board of Directors held on February 14, 2023
includes ¥13 million paid to Custody Bank of Japan, Ltd. (Trust E Account) as dividends on Company shares it holds.
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
Total amount of
Dividend per share
Type of
Dividend
dividends
Record date
Effective date
Resolution
stock
resource(Million yen)
(Yen)
Meeting of the Board
CommonRetained
December 31,
of Directors held on
1,226
25.00
March 4, 2024
sharesearnings
2023
February 14, 2024
(Note) The total amount of dividends based on a resolution of the Meeting of the Board of Directors held on February 14, 2024
includes ¥11 million paid to Custody Bank of Japan, Ltd. (Trust E Account) as dividends on Company shares it holds.

―51―25. Net sales(1) Revenue from contracts with customers“Net sales” recorded in the consolidated statements of profit or loss for the fiscal years ended December 31, 2022 and December
31, 2023, in the amount of ¥193,963 million and ¥167,726 million, respectively, mainly consist of “revenue from contracts withcustomers.” Revenue from other sources, which is earned from leases as a lessor (operating leases and financial leases), is includedin (2) Disaggregation of revenue because the balance became immaterial.
(2) Disaggregation of revenue
As described in Note 4 “Operating segments,” the Group has three reportable segments, which are the Industrial Materials
segment, Devices segment, and Medical Technologies segment. Net sales are disaggregated by product lineups. The following tableshows how the disaggregated net sales tie in with the net sales of each reportable segment.
In the fiscal year ended December 31, 2023, the Group has partially changed the classification of reportable segments and thefigures for the fiscal year ended December 31, 2022 are based on the new classification. Please see “Note with regard to changes toreportable segment” in Note 4 “Operating segments.”(Million yen)Segment

Industrial Materials

Devices

Medical Technologies

Fiscal year ended
December 31, 2022

Product lineups

Fiscal year ended
December 31, 2023

Decoration (Mobility)
Decoration (Home appliances andothers)Sustainable materials (Metallized paperand others)
Subtotal

20,27922,40919,523

17,68833,756

28,66573,55868,762

Tablet devices

44,38630,986

Smartphones devices
Gaming devices, Handheld terminals(logistics related), Mobility, Gassensors and others
Subtotal
Medical devices (contract
design/development and manufacturingservices)
Medical devices (Own brand)

10,3495,10625,232

18,76979,96854,862

16,33019,058

7,013

7,477

Business media

9,113

9,475

32,45736,011

Subtotal
Other
Total

7,978

8,088

193,963

167,726

1) Industrial Materials
In the Industrial Materials segment, the Company mainly offers proprietary technologies that enable to create added value on
the surfaces of various materials. IMD, IML, and IME, which facilitate simultaneous in-mold decoration, design and function
adding of plastic products, are extensively used in mobility components and home appliances in global markets. Also, themetallized paper, which unites the properties of metallic luster and printing friendliness, has the largest market share in theindustry as sustainable materials for beverages and foods on a global basis.
2) Devices
In the Devices segment, the Company produces components and module products that pursue precision and functionality. The
main products, film-based Touch Sensors are widely adopted mainly in tablets, handheld terminals (logistics related), mobility
components, and gaming devices in global markets. In addition, the Company offers gas sensors that can detect gas conditions,along with other products.

―52―3) Medical Technologies
The Medical Technologies segment is a business segment that offers high-quality and value-added products in medical devices
and other related markets to contribute to healthy and affluent life. The segment currently provides contract design/development
and manufacturing services for major medical device manufacturers, especially for those in North America and Europe, withproducts such as surgical instruments for minimal invasive medical treatments and medical wearable sensors used for a wide
range of therapeutic areas. In addition to these, the segment manufactures and sells its own brand products to medical institutions.
These are accounted for in accordance with policies stated in Note 3 “Material accounting policy information.” The consideration
for performance obligations is collected within one year after the performance obligations are satisfied and, therefore, is accounted
for as not having a significant financing component. The amount of assets recognized from the costs to obtain or fulfill contracts
with customers for the fiscal years ended December 31, 2022 and December 31, 2023 was not material. By applying the practical
expedient, the incremental costs of obtaining contracts are recognized as expenses as incurred if the amortization period of theassets that would otherwise have been recognized is one year or less.
(3) Contract balances
The breakdown of contract balances is as follows. Receivables from contracts with customers are notes and accounts receivabletrade included in trade and other receivables (see Note 7). The amount of contract assets is not material. Contract liabilities areadvances received from customers in sale transactions of the Group’s products before the time when the customers obtain controlof the products, such as upon customer acceptance.
(Million yen)
As ofDecember 31, 2022

As ofDecember 31, 2023

Contract liabilities
Advances received (see Note 21)

709

1,176

(Notes) 1. Revenue recognized for the previous fiscal year that was included in the beginning balance of contract liabilities was ¥616
million.
2. Revenue recognized for the current fiscal year that was included in the beginning balance of contract liabilities was ¥391
million.
(4) Transaction price allocated to the remaining performance obligations
The Group applies the practical expedient of omitting the disclosure of information on the remaining performance obligations
because it has no significant transaction with individual expected contractual terms exceeding one year. In addition, there is no
significant consideration from contracts with customers that is not included in transaction prices.
26. Selling, general and administrative expenses
The breakdown of selling, general and administrative expenses is as follows:(Million yen)
Fiscal year ended
December 31, 2022
Personnel expenses

12,725

Fiscal year ended
December 31, 2023
14,352

Research and development expenses (see Note 11)

3,973

4,656

Packing and transportation costs

3,876

2,852

Depreciation and amortization

2,443

2,628

Other

8,128

8,510

31,14733,000

Total

―53―

27. Employee benefit expenses
Employee benefit expenses were ¥37,893 million for the fiscal year ended December 31, 2022 and ¥39,363 million for the fiscal
year ended December 31, 2023.
Employee benefit expenses include salaries, bonuses, retirement benefit expenses, legal welfare expenses and non-legal welfare
expenses, and are recorded in cost of sales, selling, general and administrative expenses and other expenses in the consolidated
statements of profit or loss.
The above employee benefit expenses also include remuneration for key management personnel. Remuneration for key management
personnel is described in Note 35 “Related parties.”
28. Other income and other expenses
The breakdown of other income and other expenses is as follows:(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

(Other income)Gain on sale of non-current assets

20

Foreign exchange gains

554－

Government grants (Note 1)

173

306

Gain on forgiveness of debts (Note 2)－

137

Change in fair value of contingent considerations (Note 3)

18

－

Other

74

183

179

949

698

Foreign exchange loss－

414

Loss on sale and retirement of non-current assets

122

83

Total
(Other expenses)

Impairment losses (Note 4)

1,461

2,722

Restructuring expenses (Note 5)－

166

Loss on subsidiaries liquidation (Note 6)385－

Loss on closing of plants (Note 7)

24－

Expenses related to idle assets (Note 8)

402

371

Product compensation expenses

107

－

Other

144

136

2,646

3,894

Total
(Notes) 1. Government grants

The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
These mainly consist of government support for energy prices hike at Nissha Metallizing Solutions S.r.l., a consolidated
subsidiary in the Industrial Materials segment.
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
These mainly consist of government support for energy prices hike at Nissha Metallizing Solutions S.r.l., a consolidated
subsidiary in the Industrial Materials segment.
2. Gain on forgiveness of debts
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
Gain on forgiveness of debts is attributable to a reduction in the consideration for businesses acquired (accounts payable)
by a consolidated subsidiary in the Medical Technologies segment in the past fiscal year.

―54―

3. Change in fair value of contingent considerations
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
This is mainly related to the acquisition of Nissha Metallizing Solutions GmbH.
4. Impairment losses
See Note 13 “Impairment of non-financial assets.”
5. Restructuring expenses
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
Restructuring expenses are mainly related to a structural reform of Nissha Precision Technologies Malaysia Sdn. Bhd., aconsolidated subsidiary in the Industrial Materials segment.
6. Loss on subsidiaries liquidation
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
This is a loss arising from the liquidation of the Company’s consolidated subsidiary Nissha GSI Technologies, Inc. in the
Industrial Materials segment.
7. Loss on closing of plants
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
This is related to European production base integration of the Company’s consolidated subsidiaries in the Medical
Technologies segment.
8. Expenses related to idle assets
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)
This consists of depreciation of the relevant equipment in line with suspension of operations of domestic production basesof Devices segment whose operation rate is low.
The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)
This consists of depreciation of the relevant equipment in line with suspension of operations of domestic production basesof Devices segment whose operation rate is low.

―55―

29. Finance income and finance costs
The breakdown of finance income and finance costs is as follows:(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

(Finance income)Interest income
Financial assets measured at amortized cost

52

480

409

352

100

99

3,195

1,966

10

－

Total

3,768

2,897

Financial liabilities measured at amortized cost
Loss on valuation of financial assets and financial liabilities
measured at fair value through profit or loss

900

1,579

8

254

7

8

916

1,842

Dividend income
Financial assets measured at fair value through othercomprehensive income
Gain on valuation of financial assets and financial liabilities
measured at fair value through profit or loss
Foreign exchange gains
Other(Finance costs)
Interest expenses

Other
Total

―56―

30. Other comprehensive income
Amounts arising during the year, reclassification adjustments to profit or loss and tax effects (including non-controlling interests)
for each item of other comprehensive income are as follows:
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)(Million yen)
ReclassificaAmounttion
arising during
adjustment
the year

Before tax
effects

Tax effects

Net of tax
effects(Items that will not be reclassified to profit or loss)
Net change in fair value of financial assets measured
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using equity method
Total of items that will not be reclassified to profit orloss(Items that may be reclassified to profit or loss)
Exchange differences on translation of foreign
operations
Share of other comprehensive income of investments
accounted for using equity method
Total of items that may be reclassified to profit orloss
Total other comprehensive income(1,554)－(1,554)478(1,075)

643

－

643

(9)

633

－

－

－

－

－

(911)

－

(911)

469

(441)

6,503

(389)

6,114

－

6,114

136

－

136

－

136

6,639

(389)

6,250

－

6,250

5,728

(389)

5,339

469

5,809

The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)(Million yen)
ReclassificaAmounttion
arising during
adjustment
the year

Before tax
effects

Tax effects

Net of tax
effects(Items that will not be reclassified to profit or loss)
Net change in fair value of financial assets measured
through other comprehensive income
Remeasurements of defined benefit plans
Share of other comprehensive income of investments
accounted for using equity method
Total of items that will not be reclassified to profit orloss(Items that may be reclassified to profit or loss)
Exchange differences on translation of foreign
operations
Share of other comprehensive income of investments
accounted for using equity method
Total of items that may be reclassified to profit orloss
Total other comprehensive income

3,680

－

3,680

(1,141)

2,539

282

－

282

(309)

(27)

－

－

－

－

－

3,963

－

3,963

(1,451)

2,511

3,883

－

3,883

－

3,883

267

－

267

－

267

4,151

－

4,151

－

4,151

8,114

－

8,114

(1,451)

6,662

―57―

31. Earnings per share
Basic earnings (loss) per share, diluted earnings (loss) per share and the basis for their calculation are as follows:

Fiscal year ended
December 31, 2022
Profit (loss) attributable to ordinary shareholders of theparent company (Million yen)
Adjustment to profit (loss) used to calculate diluted earnings
per share (Million yen)
Profit (loss) used to calculate diluted earnings per share(Million yen)
Basic weighted average number of common shares
outstanding (Thousand shares)
Adjustment to number of shares due to convertible bonds(bonds with stock acquisition rights) (Thousand shares)
Weighted average number of common shares outstandingused to calculate diluted earnings (loss) per share (Thousand
shares)Basic earnings (loss) per share (Yen)
Diluted earnings (loss) per share (Yen)

Fiscal year ended
December 31, 2023

10,140(2,988)

－

－

－

－

49,794

48,891－－－－203.65(61.13)－－(Note) Diluted earnings (loss) per share is not stated because there were no potential shares.

―58―32. Cash flow information(1) Significant non-cash transactions
Significant non-cash transactions (investing and financing transactions that do not require the use of cash or cash equivalents)
are as follows:(Million yen)
Fiscal year ended
December 31, 2022
Acquisition of right-of-use assets by means of a lease (seeNote 12)

Fiscal year ended
December 31, 2023

1,254

988

(2) Reconciliation of liabilities arising from financing activities
Changes in main liabilities arising from financing activities are as follows:(Million yen)

As of January 1, 2022

Long-term
Short-termborrowings
borrowings (Note)
5,538
24,384

Changes due to cash flows from financing
activities

Bonds

Lease liabilities

9,962

10,065

1,974

3,747

－

(1,915)Acquisition of right-of-use assets

－

－

－

1,254

Remeasurements of lease liabilities

－

－

－

－

Foreign currency translation differences

129

1,837

－

795

Other

－

23

10

(252)

As of December 31, 2022

7,642

29,993

9,973

9,947

Changes due to cash flows from financing
activities(3,485)(1,706)－(2,006)

－

－

－

984

Non-cash changes

Non-cash changes
Acquisition of right-of-use assets
Remeasurements of lease liabilities

－

－

－

1,312

Foreign currency translation differences

295

1,228

－

690

1,072

24

10

(208)

5,524

29,539

9,984

10,720Other
As of December 31, 2023
(Note) Current portion of long-term borrowings is included.

―59―33. Share-based payment
The Group has introduced a Stock Benefit Trust (BBT: Board Benefit Trust) Plan, a Stock Benefit Trust (J-ESOP) Plan, a Stock
Benefit Trust (Employee Shareholding Association Purchase-type) Plan, and a stock option plan as share-based payment plans.
The share-based payment plans are accounted for as equity-settled share-based payments or cash‑settled share-based payments.
Amounts recognized for share-based payment expenses and liabilities arising from share-based payments are as follows:
Share-based payment expenses(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Equity-settled

55

37

Cash‑settled

244

600

(Note) Share-based payment expenses are included in cost of sales and selling, general and administrative expenses.
Liabilities arising from share-based payments(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
Book value of liabilities (see Note 21)

540

1,099

Vested portion thereof

421

981

(1) Stock Benefit Trust (BBT) Plan
The Company has adopted a share-based payment plan comprising both an equity‑settled plan and a cash‑settled plan (the “Plan”)
for Directors of the Board (excluding Independent Outside Directors of the Board), Corporate Officers and certain directors of theboard of the Company’s subsidiaries (collectively, the “Directors”).
1) Overview of the Plan
The Plan is a share-based payment plan where shares in the Company and cash equivalents of such shares at their fair value(collectively, “Company Shares”) are paid by the Stock Benefit Trust (BBT) to the Directors pursuant to the policy on directors’
stock benefits established by the Company and its subsidiaries. The shares in the Company are acquired by the trust using funds
contributed by the Company. For each fiscal year, points are determined according to the policy on directors’ stock benefits andawarded to the Directors. The time when the Directors receive Company Shares shall in principle be the date set out in the policy,
that is, on or after the earlier of the date the designated beneficiary confirmation procedures set out in the policy are carried out
within the three fiscal years set out in the policy or the date the Directors retire.
2) The Company’s own shares in the trust
The Company’s own shares in the trust are recorded as treasury shares in equity. The number of such treasury shares was
253,800 shares and 248,304 shares as of December 31, 2022 and December 31, 2023, respectively.
3) Changes in the number of points during the period(Points)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Beginning balance of points

59,350125,104

Increase due to points awarded

65,754

61,232

Decrease due to points exercised－(7,392)

Decrease due to points expired－－

125,104

178,944－－

Ending balance of points
Ending balance of exercisable points―60―4) Fair value of points awarded
The weighted average fair value of points awarded for the fiscal years ended December 31, 2022 and December 31, 2023 was¥1,582 and ¥1,698, respectively. The fair value of points awarded is determined using the share price at grant date, whichapproximates the fair value of points granted.
(2) Stock option plan
Certain subsidiaries of the Company have adopted a share-based payment plan for their employees. The plan grants to employees
stock options to purchase common shares in the subsidiaries as well as put options for the subsidiaries to purchase the shares issued
through the exercise of the stock options. Consequently, the difference between the exercise price of the stock options and the shareprice at exercise date is paid in cash to the employees. Under the share-based payment plan, one plan granted rights for 4 years from
December 2016 and another granted rights in December 2020. The rights granted have a vesting period of 3 years as of grant date.
While the exercise period was set at 10 years as of grant date for the fiscal year ended December 31, 2022, it was reviewed andchanged to 7 years as of grant date for the fiscal year ended December 31, 2023.
1) Changes in number of rights and weighted average exercise priceFiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

(Shares)
15,521

Weighted average
exercise price(Yen)
113,263(Shares)
18,124Weighted average
exercise price(Yen)
125,681Granted

2,732

96,495－－

Exercised

－

－

－

－

Expired(129)

108,756(47)

103,499

Number of rights
Beginning balance

Number of rights

Ending balance
18,124
125,681
18,077
134,669
Ending balance of
12,812
133,249
14,501
134,977
exercisable rights(Notes) 1. The weighted average remaining period of the share-based payment plan as of December 31, 2022 and December 31, 2023
was 7 years and 2 years, respectively.
2. The weighted average share price at exercise date of stock options exercised during the period cannot be identified because
the shares granted were unlisted.
2) Fair value of stock options granted during the period and underlying assumptions
The weighted average fair value at measurement date of stock options granted during the fiscal years ended December 31,
2022 and December 31, 2023 was ¥55,309 and ¥67,962, respectively.
The fair value at measurement date of stock options granted during the period is evaluated using the Black-Scholes model
under the following assumptions:Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Main underlying variables and estimation method thereof:
Valuation of shares at measurement
date
Exercise price

96,495 yen

177,583 yen

96,495 yen

103,127 yen

Expected volatility (Note)

40.06 %

36.77 %

Expected remaining period

10 years

3 years

Expected dividend yield

0 %

0 %

3.88 %

4.23 %

Risk free rate

(Note) The expected volatility is determined based on historical share prices during the period corresponding to the expected remaining
period.

―61―

(3) Stock Benefit Trust (J-ESOP) Plan
The Company has adopted an equity‑settled share-based payment plan (the “Plan”) for employees of the Company and some ofits subsidiaries (“Eligible Employees”) who satisfy the set requirements.
1) Overview of the Plan
The Plan is an incentive plan that grants the Company’s shares to Eligible Employees who satisfy the set requirements pursuant
to the policy on stock benefits prescribed in advance by the Company.
The Company awards points to Eligible Employees principally based on their individual degree of contribution, and grants theCompany’s shares equivalent to the awarded points when set terms and conditions are met and vested rights are granted. The
shares granted to Eligible Employees, including future shares, are acquired using cash funds contributed in advance to the trust
E account established at Custody Bank of Japan, Ltd., and are managed separately as trust assets.
2) The Company’s own shares in the trust
The Company’s own shares in the trust are recorded as treasury shares in equity. The number of such treasury shares was
120,364 shares and 119,764 shares as of December 31, 2022 and December 31, 2023, respectively.
3) Changes in the number of points during the period(Points)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Beginning balance of points

18,30024,988

Increase due to points awarded

7,714

13,170Decrease due to points exercised(973)(1,567)

Decrease due to points expired

(53)

(87)

Ending balance of points

24,98836,504Ending balance of exercisable points

17,47327,4554) Fair value of points awarded
The weighted average fair value of points awarded for the fiscal years ended December 31, 2022 and December 31, 2023 was¥1,215 and ¥1,267, respectively. The fair value of points awarded is determined using the share price at the date on which theeligible employee becomes a planned recipient, which approximates the fair value of points granted.
(4) Stock Benefit Trust (Employee Shareholding Association Purchase-type) Plan
The Company has adopted a Stock Benefit Trust (Employee Shareholding Association Purchase-type) (the “Plan”) as an incentive
plan for employees.
1) Overview of the Plan
The Plan is an incentive plan that returns the merits from price increases in the Company’s shares to all employees enrolled in
the NISSHA Employees Shareholding Association (the “Shareholding Association”).
Custody Bank of Japan, Ltd. will be entitled to collectively acquire to the Trust E Account in advance the number of theCompany’s shares equivalent to the number of shares anticipated to be purchased by the Shareholding Association in the future,and then sell the Company’s shares when the shares are purchased by the Shareholding Association. If proceeds from the sale ofshares are accumulated in the trust assets up through the time of the ending of the trust through the sale of the Company’s sharesfrom Trust E Account to the Shareholding Association, this cash shall be distributed as residual assets to the members of the
Shareholding Association who satisfy the beneficiary eligibility requirements.
Such cash distribution is accounted for as a cash-settled transaction. The fair value of the liability is measured at the end ofeach period by discounting the estimated cash flows at the conclusion of the trust term to the present value after considering theterms of the trust agreement.

―62―2) The Company’s own shares in the trust
The Company’s own shares in the trust are recorded as treasury shares in equity. The number of such treasury shares was
19,100 shares and 95,500 shares as of December 31, 2022 and December 31, 2023, respectively.
3) Amount of liabilities
The amount of the liabilities related to the Plan was ¥1 million and ¥2 million as of December 31, 2022 and December 31,
2023, respectively. The fair value of the liabilities is estimated using the Monte Carlo simulation under the following assumptions:Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Main underlying variables and estimation method thereof:
Valuation of shares at measurement date

1,670 yen

1,473 yen

Expected volatility (Note)

35.0 %

22.0 %

Expected remaining period

0 years

Expected dividend yield

2.0 %2 years
3.0 %(Note) The expected volatility is determined based on historical share prices during the period corresponding to the expected remaining
period.

―63―

34. Financial instruments(1) Capital management
The Group’s capital management policy is to establish and maintain a stable financial foundation in order to improve corporate
value through sustainable growth.
The Group primarily uses the following indicators for capital management.
The Group is not subject to any significant regulatory capital requirements.
(Million yen)
As ofDecember 31, 2022
Total liabilities

As ofDecember 31, 2023

118,693

107,000

Cash and cash equivalents
54,32537,854Equity (equity attributable to owners of
111,553
110,913parent)Ratio of equity attributable to owners of
48.5
50.9
parent to total assets (%)(Note) Ratio of equity attributable to owners of parent to total assets: Equity (equity attributable to owners of parent)/Total liabilities
and equity(2) Financial risk management
Risk management policy
The Group’s business activities are affected by the business and financial market environments. In the course of the businessactivities, financial instruments held by the Group are exposed to specific risks.
Such risks primarily include 1) market risk ((a) foreign exchange risk, (b) price risk, (c) interest rate risk), 2) credit risk and 3)
liquidity risk. In order to mitigate these risks, risk management is conducted.
The Group focuses on highly safe financial assets in its fund management, and procures funds mainly through loans from banks
and issuance of bonds. It carries out optimum fund procurements at each time while giving full consideration to the management
environment. The Group uses derivative transactions to hedge foreign exchange risk, and does not enter into derivative transactions
for speculative purposes. Derivative transactions are executed and managed with approval from the authorized persons inaccordance with the internal rules that stipulate transaction authority, limits, and other matters.
1) Market risk(a) Foreign exchange risk
Trade receivables and payables denominated in foreign currencies, which arise from the Group’s global businessdevelopment, are exposed to the risk of foreign exchange fluctuations. Part of such risk is hedged using forward exchange
contracts. These derivative transactions, for which hedge accounting is not applied, are considered to effectively offset theeffects of foreign exchange fluctuations.
The exposure of trade receivables and payables, excluding the part substantively fixed in Japanese yen by forward exchange
contracts, to the risk of foreign exchange fluctuations in the US dollar was ¥14,209 million as of December 31, 2023 (¥22,247
million as of December 31, 2022). There was no material exposure to the risk of foreign exchange fluctuations in currencies
other than the US dollar.

―64―Sensitivity analysis of foreign exchange rates
With regard to financial instruments held by the Group, the table below shows the impact on profit before tax in the
consolidated statements of profit or loss that would result from a 1% appreciation of the functional currency (Japanese yen)against the US dollar, assuming that all other variables remain constant. The impact of financial instruments denominated in
the functional currency and the translation of the assets and liabilities of foreign operations into Japanese yen is not includedin this analysis.
(Million yen)
As ofDecember 31, 2022
Profit before tax

As ofDecember 31, 2023
(222)

(142)

(b) Price risk
As the Group owns listed shares in companies with which the Group has business relationships, it is exposed to the risk ofprice fluctuations in equity instruments. The Group regularly assesses the fair values and financial condition of issuers(business partners) and continually reviews the holding status.
The exposure of listed shares to the risk of price fluctuations was ¥13,809 million as of December 31, 2023 (¥11,022 million
as of December 31, 2022).
Sensitivity analysis of equity instruments
The sensitivity analysis of listed shares held by the Group to the risk of price fluctuations is as follows. This analysis shows
the impact on other comprehensive income (before tax effects) in the consolidated statements of comprehensive income thatwould result from a 10% decline in the price of listed shares, assuming that all other variables remain constant.
(Million yen)
As ofDecember 31, 2022
Other comprehensive income

As ofDecember 31, 2023

(1,102)(1,381)(c) Interest rate risk
Of the Group’s interest-bearing liabilities, those with floating rates are exposed to the risk of interest rate fluctuations.
To mitigate the risk of interest rate fluctuations, the Group continually monitors interest rate fluctuations for interest-bearing
liabilities with floating rates.
The exposure of interest-bearing liabilities to the risk of interest rate fluctuations was ¥22,404 million as of December 31,
2023 (¥24,570 million as of December 31, 2022).
Sensitivity analysis of interest rates
With regard to financial instruments held by the Group, the table below shows the impact on profit before tax in the
consolidated statements of profit or loss that would result from a 1% increase in interest rates.
The scope of the analysis is financial instruments subject to interest rate fluctuations, and other factors including the impactof foreign exchange fluctuations are assumed to remain constant.
(Million yen)
As ofDecember 31, 2022
Profit before tax

As ofDecember 31, 2023
(245)

―65―

(224)

2) Credit risk
The Group’s trade and other receivables and other financial assets are exposed to credit risk. Credit risk is the risk of financial
loss of the Group in the event that a customer or a counterparty (including financial institutions) fails to meet its contractual
obligations.
The Group sets up lines of credit in accordance with Credit Management Regulations by business and country or region. In
addition, the sales division and the finance division regularly monitor the credit status of counterparties of trade receivables, andmanage the due dates and outstanding balances by counterparty to identify at an early stage and mitigate recoverability concerns,
such as due to deterioration of a counterparty’s financial condition. Derivative transactions are entered into only with highly
creditworthy financial institutions in order to mitigate credit risk, and therefore the credit risk is considered to be extremely low.
The allowance for doubtful accounts for trade receivables is always measured at an amount equal to the lifetime expectedcredit losses. For receivables other than trade receivables and other financial assets, the allowance for doubtful accounts ismeasured at an amount equal to the 12‑month expected credit losses if the credit risk has not increased significantly since initialrecognition, and at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initialrecognition, such as upon a past due event.
When measuring the expected credit losses for trade receivables, in principle, the receivables are grouped depending on thelevel of credit risk, provision rates are calculated for each group by reflecting forward-looking information in historical credit
loss experience, and the expected credit losses for trade receivables are determined by multiplying the outstanding balance of theassets by a corresponding provision rate. For receivables other than trade receivables and other financial assets whose credit risk
has not increased significantly since initial recognition, provision rates are calculated for each group of similar assets by reflecting
forward-looking information in historical credit loss experience, and the expected credit losses are determined by multiplying theoutstanding balance of the assets by a corresponding provision rate. For receivables other than trade receivables and otherfinancial assets whose credit risk has increased significantly since initial recognition as well as credit-impaired assets, theexpected credit losses are determined as a difference between the book value and the present value of expected future cash flows
to be received from the assets, discounted using the effective interest rate at initial recognition. If all or a portion of trade andother receivables and other financial assets are considered not to be recovered or extremely difficult to be recovered, they are
determined to be credit-impaired.
The book value after impairment of financial assets stated in the consolidated statements of financial position represents theGroup’s maximum exposure to the credit risk of financial assets. Except for trade receivables of ¥3,868 million as of December
31, 2023 (¥4,857 million as of December 31, 2022) from APPLE OPERATIONS LIMITED and its group companies, which are
the Group’s major customers, the Group is not exposed to credit risk concentrated excessively in any single counterparty or groupto which the party belongs.

―66―

Changes in trade and other receivables (before deducting allowance for doubtful accounts) and allowance for doubtful accounts
are as follows:
The fiscal year ended December 31, 2022 (January 1, 2022 to December 31, 2022)(Million yen)
Financial assets
Financial assets always
Trade and other receivables
measured at an amount measured at an amount(before deducting allowance for
equal to 12-monthequal to lifetime
doubtful accounts)
expected credit losses expected credit losses

Credit-impaired
financial assets

Total

Balance at January 1, 2022

366

29,971

230

30,568Changes during the period
Reclassification to creditimpaired financial assets
Foreign currency translationdifferences
Balance at December 31, 2022

281

619

(106)

794

－

(58)

58

－

55

2,017

21

2,094

703

32,550203

33,457

Grouping depending on the level of credit risk is almost the same for receivables measured at an amount equal to 12‑month
expected credit losses and receivables always measured at an amount equal to lifetime expected credit losses.
(Million yen)
Financial assets
Financial assets always
measured at an amount measured at an amount
Allowance for doubtful accounts
equal to 12‑monthequal to lifetime
expected credit losses expected credit losses

Credit-impaired
financial assets

Total

Balance at January 1, 2022

0

104

230

335

Increase

0

92

8

101

Decrease (intended use)

－

(10)

(102)

(112)

Decrease (reversal)
Reclassification to creditimpaired financial assets
Foreign currency translationdifferences
Balance at December 31, 2022

(0)

(51)

(70)

(122)

－

(51)

51

－

0

10

20

30

0

94

137

232

―67―

The fiscal year ended December 31, 2023 (January 1, 2023 to December 31, 2023)(Million yen)
Financial assets
Financial assets always
Trade and other receivables
measured at an amount measured at an amount(before deducting allowance for
equal to 12‑monthequal to lifetime
doubtful accounts)
expected credit losses expected credit losses

Credit-impaired
financial assets

Total

Balance at January 1, 2023

703

32,550203

33,457

Changes during the period
Reclassification to creditimpaired financial assets
Foreign currency translationdifferences
Balance at December 31, 2023

(42)

(3,518)54(3,506)

－

－

－

－

50

1,511

22

1,584

711

30,544280

31,536

Grouping depending on the level of credit risk is almost the same for receivables measured at an amount equal to 12‑month
expected credit losses and receivables always measured at an amount equal to lifetime expected credit losses.
(Million yen)
Allowance for doubtful accounts

Financial assets
Financial assets always
measured at an amount measured at an amountequal to 12-monthequal to lifetime
expected credit losses expected credit losses

Balance at January 1, 2023

094

Increase

Credit-impaired
financial assets

Total

137

232

0

69

58

128

Decrease (intended use)

－

(6)

(11)

(18)

Decrease (reversal)
Reclassification to creditimpaired financial assets
Foreign currency translationdifferences
Balance at December 31, 2023

(0)

(74)

(20)

(95)

－

－

－

－

0

7

14

21

0

89

178

268

―68―

3) Liquidity risk
The Group is exposed to liquidity risk that the Group is unable to fulfill its repayment obligations for financial liabilities.
To manage the liquidity risk, the finance division take measures such as preparing and updating fund management plans in atimely manner, and consolidating fund flows to the Company through the cash management system (CMS) introduced across theGroup companies in Japan.
The maturity analysis of financial liabilities (including derivative financial instruments) is as follows. The maturity analysis oflease liabilities is provided in Note 12 “Leases.”(Million yen)
As of December 31, 2022
Book value
Non-derivative financial
liabilities
Trade and otherpayablesContractual cashflows

1 year or lessOver 1 year
to 5 years

Over 5 years

39,41939,41939,419－－

Short-term borrowings

7,642

7,809

7,809

－

－

Long-term-borrowings

29,99327,962

2,388

19,948

5,625

Bonds

9,973

10,15745

10,112－87,02985,34849,66130,060

5,625

Total

(Million yen)
As of December 31, 2023
Book value
Non-derivative financial
liabilities
Trade and otherpayablesContractual cashflows

1 year or lessOver 1 year
to 5 years

Over 5 years

28,60928,60928,609

Short-term borrowings

5,524

5,533

5,533

－

－

Long-term-borrowings

29,53932,4003,043

25,159

4,197

Bonds

9,984

10,15745

10,112－73,65876,701

37,23235,272

4,197

Total

－

－

(3) Fair value of financial instruments
Estimation of fair value
1) Measurement of fair value of financial instruments
The Group determines the fair value of major financial assets and financial liabilities as follows. The fair value of financial
instruments is estimated using available market prices, or is measured by appropriate valuation techniques when market prices
are not available.
(Cash and cash equivalents, trade and other receivables, trade and other payables, short-term borrowings)
Since these are settled within a short period, the fair value approximates the book value. Therefore, the fair value is based on
the relevant book value.
(Other financial assets and other financial liabilities)
The fair value of marketable equity instruments (listed shares) is measured based on market prices at the fiscal year-end. The
fair value of equity instruments with no available market prices (shares that do not have a market price) and debt instruments(preference shares, etc.) classified as financial assets measured at fair value through profit or loss is measured using valuation
techniques, primarily based on discounted future cash flows, market prices of similar companies or net asset values. Since otherfinancial assets and financial liabilities are settled within a short period, the fair value approximates the book value. One of the―69―

main unobservable inputs used to measure the fair value of these financial instruments with no available market prices was
valuation multiple derived from the comparable peer company analysis. The fair value increases (decreases) as the valuation
multiple rises (declines).
(Derivative assets and liabilities)
The fair value of derivative assets and liabilities is measured at the market quotation of derivative transactions under the sameterms and conditions as of the fiscal year-end.
(Contingent consideration)
Contingent consideration in a business combination is measured at fair value as of the acquisition date of the businesscombination. Contingent consideration that meets the definition of a financial liability is remeasured at fair value at eachsubsequent reporting date. The fair value is determined on the basis of the scenario-based method or Monte Carlo simulation
model, where the key assumptions considered are the probability of meeting each performance target, the projected future
operating results, and the discount rate. The fair value decreases (increases) as the discount rate rises (declines).
(Long-term borrowings)
The fair value of long-term borrowings is measured by discounting the principal and interest at an interest rate that would beapplied to a new similar borrowing.
(Bonds)
The fair value of bonds is measured at market prices as of the fiscal year-end.
2) Book value and fair value of financial instruments measured at amortized cost
The book value and fair value of financial instruments measured at amortized cost, which are categorized within Level 2 ofthe fair value hierarchy, are as follows. Financial instruments whose book value approximates the fair value are not disclosed.
(Million yen)
As ofDecember 31, 2022
Book value

Fair value

As ofDecember 31, 2023
Book value

Fair value

Financial liabilities
Financial liabilities
measured at amortized cost
Long-term borrowings

29,99327,04629,53927,196

Bonds payables

9,973

9,967

9,984

9,977

―70―

3) Financial instruments measured at fair value and hierarchy thereof
The table below shows an analysis on the hierarchy of financial instruments measured at fair value. Each level of the hierarchy isdescribed in Note 3 “Material accounting policy information.” Transfers between the levels are recognized on the date of the event orchange in circumstances that caused the transfer.
(Million yen)
As of December 31, 2022

Level 1

Level 2

Level 3

Total

Financial assets
Financial assets measured at fair value through profit or loss
Derivatives for which hedge accounting is not applied

119

－

119

－

－

1,245

1,245

11,022－649

11,671

11,022

119

1,894

13,037

－

8

－

8

－

－

70

70

－

8

70

79

－

Debt instruments
Financial assets measured at fair value through othercomprehensive income
Equity instruments
Total
Financial liabilities
Financial liabilities measured at fair value through profit orloss
Derivatives for which hedge accounting is not applied
Contingent consideration
Total

The above financial assets and financial liabilities are included in “Other financial assets (current),” “Other financial assets (noncurrent),” “Other financial liabilities (current)” and “Other financial liabilities (non-current)” in the consolidated statements of financial
position.
(Million yen)
As of December 31, 2023

Level 1

Level 2

Level 3

Total

Financial assets
Financial assets measured at fair value through profit or loss
Derivatives for which hedge accounting is not applied

－

99

－

99

Debt instruments

－

－

1,058

1,058

13,809－689

14,49813,80999

1,747

15,656

－

－

－

－

－

－

－

－

－

－

－

－

Financial assets measured at fair value through othercomprehensive income
Equity instruments
Total
Financial liabilities
Financial liabilities measured at fair value through profit orloss
Derivatives for which hedge accounting is not applied
Contingent consideration
Total

The above financial assets and financial liabilities are included in “Other financial assets (current),” “Other financial assets (noncurrent),” “Other financial liabilities (current)” and “Other financial liabilities (non-current)” in the consolidated statements of financial
position.

―71―4) Reconciliation of financial instruments categorized within Level 3
Financial instruments categorized within Level 3 are evaluated and the evaluation results are analyzed by the Company’s CFO
in accordance with the evaluation policies and procedures established by the Group.
The following table shows a reconciliation of the opening balance to the closing balance of financial assets whose fair value
measurement is categorized within Level 3.
(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Equity instruments
Equity instruments
Financial assets
Financial assets
measured at fair value
measured at fair value
measured at fair value
measured at fair value
through otherthrough otherthrough profit or loss
through profit or loss
comprehensive income
comprehensive income
Beginning balance

622

1,253

649

1,245

Profit or loss (Note 1)
Other comprehensive
income (Note 2)
Purchase

－

39

－

(133)

26

－

4

－

－

85

－

141

Sale

－

(84)

－

－

Other (Note 3)

－

(48)

36

(196)

Ending balance

649

1,245

689

1,058

Total gain and loss

(Notes) 1. Profit or loss contained in total gain and loss is included in “Finance income” and “Finance costs” on the consolidated
statements of profit or loss. Of profit or loss contained in total gain and loss, the amount attributable to changes in unrealized
gain or loss related to financial assets measured at fair value through profit or loss held as of the fiscal year-end was ¥45
million and ¥(133) million for the fiscal years ended December 31, 2022 and December 31, 2023, respectively.
2. Other comprehensive income contained in total gain and loss is related to financial assets measured at fair value throughother comprehensive income as of the fiscal year-end. These gain and loss, net of tax effects, are included in “Net change
in fair value of financial assets measured through other comprehensive income.”
3. Other consists mainly of redemption and foreign currency translation differences.

―72―

The following table shows a reconciliation of the opening balance to the closing balance of financial liabilities whose fair value
measurement is categorized within Level 3.
(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Financial liabilities
Financial liabilities
measured at fair value measured at fair value
through profit or loss through profit or loss
Beginning balance

80

70

(16)

0

Issuance－－

Settlement

－

(78)

Other (Note 2)

7

7

Ending balance70－

Total gain and loss
Profit or loss (Note 1)(Notes) 1. Of profit or loss contained in total gain and loss, the portion based on changes in time value is recorded in “Finance costs”
on consolidated statement of profit or loss while the portion based on changes in items other than time value is recorded in“Other income” or “Other expenses.” Of profit or loss contained in total gain and loss, the amount attributable to changes
in unrealized gain or loss related to financial liabilities measured at fair value through profit or loss held as of the fiscal
year-end was loss of ¥16 million and ¥0 million for the fiscal years ended December 31, 2022 and December 31, 2023,
respectively.
2. Other consists mainly of foreign currency translation differences.
(4) Equity instruments measured at fair value through other comprehensive income
The Group designates investments in equity instruments held for the purpose of maintaining and strengthening relationships withbusiness partners as equity instruments measured at fair value through other comprehensive income in light of the holding purpose.
1) Fair value by issuer
The fair value by major issuer of investments in equity instruments designated as financial assets measured at fair value throughother comprehensive income
As of December 31, 2022
(Million yen)
IssuerAmountNintendo Co., Ltd.

5,870

NIDEC CORPORATION

1,540

HORIBA, Ltd.

683

SCREEN Holdings Co., Ltd.

432

Nissin Electric Co., Ltd.

428

Kyoto Financial Group, Inc.

399

Nippon Shinyaku Co., Ltd.

315

Mitsubishi UFJ Financial Group, Inc.

297

Shimadzu Corporation

235

RIVERFIELD Inc.

208

―73―

As of December 31, 2023
(Million yen)
IssuerAmountNintendo Co., Ltd.

7,809

HORIBA, Ltd.

1,315

NIDEC CORPORATION

1,282

SCREEN Holdings Co., Ltd.

1,221

Kyoto Financial Group, Inc.

598

Mitsubishi UFJ Financial Group, Inc.

405

Shimadzu Corporation

247

Mizuho Financial Group, Inc.

247

RIVERFIELD Inc.

223

Nippon Shinyaku Co., Ltd.

211

2) Dividend income(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Investments derecognized during the period

73

7

Investments held as of the fiscal year-end

336

344

409

352

Total

3) Equity instruments measured at fair value through other comprehensive income that were derecognized during the period(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Fair value at derecognition

2,079

891

Accumulated gain (loss) at derecognition

1,440

363

(Note) The Group has disposed of, through sale, and derecognized equity instruments measured at fair value through othercomprehensive income mainly for the purpose of reviewing relationships with business partners.
4) Transfer to retained earnings
The Group transfers accumulated gain or loss due to changes in the fair value of equity instruments measured through othercomprehensive income to retained earnings in such cases as when the investment is disposed of.
The accumulated gain or loss (net of tax) of other comprehensive income that was transferred to retained earnings was gain of¥1,440 million and gain of ¥242 million for the fiscal years ended December 31, 2022 and December 31, 2023, respectively. Thiswas mainly due to derecognition of securities classified as equity instruments measured at fair value through other comprehensive
income by way of sale for the purpose of reviewing business relationships.

―74―

(5) Offsetting of financial assets and financial liabilities
Information on offsetting of financial assets and financial liabilities recognized for the same counterparties is as follows:(Million yen)
As ofDecember 31, 2022

As ofDecember 31, 2023

Financial assets
Trade and other receivables
Amount offset in accordance with therequirements for offsetting financial
assets and financial liabilities
Net amount presented in the consolidated
statements of financial position

9,482

4,413

(1,749)(1,305)

7,733

3,107

Financial liabilities
Trade and other payables
10,493
7,698
Amount offset in accordance with therequirements for offsetting financial(1,749)(1,305)assets and financial liabilities
Net amount presented in the consolidated
8,744
6,392
statements of financial position(Note) There are no material amounts that are not offset even though they are covered by an enforceable master netting arrangement
or similar agreement because they do not meet part or all of the requirements for offsetting financial assets and financial
liabilities.
35. Related parties(1) Related party transactions
Related party transactions are priced, taking into account market prices, on terms and conditions equivalent to those that prevailin arm’s length transactions. There are no significant transactions (excluding transactions eliminated in the consolidated financial
statements).
(2) Remuneration for key management personnel
Remuneration for key management personnel is as follows:(Million yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

Base remuneration and bonuses

296

253

Share-based payment expense

65

29

362

282

Total
36. Significant subsidiaries

There are no subsidiaries that have non‑controlling interests that are individually material to the Company.
37. Commitments
Commitments for the acquisition of property, plant and equipment and intangible assets are as follows:(Million yen)
As ofDecember 31, 2023

As ofDecember 31, 2022
Acquisition of property, plant and equipment and intangible
assets953

38. Contingent liabilities
Not applicable

―75―

1,475

39. Subsequent events
Issuance of bonds
At the Meeting of the Board of Directors held on January 19, 2024, the Company passed a comprehensive resolution to issue
unsecured domestic straight bonds as follows:(1) Maximum total amount of issue:¥10 billion (bonds can be issued multiple times within this limit)(2) Redemption period:

10 years or less(3) Maximum interest rate:

2.0% per annum(4) Issue price:¥100 per par value of ¥100(5) Issue period:

January 19, 2024 to January 19, 2025

Business combination by acquisition
The Company, pursuant to a resolution of the Meeting of the Board of Directors held on December 4, 2023, has decided to acquire
an equity interest in Isometric Intermediate LLC (DBA Isometric Micro Molding) through its consolidated subsidiaries Graphic
Controls Acquisition Corp. and Nissha Medical Technologies (Wisconsin), LLC (hereinafter, “NMT LLC”) in the Medical
Technologies segment. Following the acquisition, Isometric Intermediate LLC and its affiliated group companies (hereinafter,“Isometric”) will become subsidiaries of the Company. On March 1, 2024, the Company completed the acquisition of the equity
interest.
(1) Outline of the business combination
1) Name of the acquired company and the outline of business to be acquired
Name of the acquired company

Isometric Intermediate LLC

Outline of business to be acquired

Manufacturing and sales of micro and precision components for medical devices

2) Major reason for the business combination
In the Company’s Medical Technologies segment, we offer high-quality and value-added products in medical devices and otherrelated markets on a global scale. The business’ mainstay contract design/development and manufacturing services employ acomprehensive business model that encompasses from OEMs of major medical devices to the design, development, andmanufacturing, especially surgical instruments for minimal invasive medical treatments and medical wearable sensors.
We recognize the immense growth potential within the contract design/development and manufacturing organization (CDMO)
market for medical devices and have focused our efforts on such services as a key area for driving growth of the business. Our
goal is to secure and expand our pipeline by fortifying and broadening our capabilities to respond to the ever-evolving landscapeof medical device innovation, particularly in the existing realm of minimal invasive surgical instruments, and explore exciting
new business opportunities in areas like surgical robotics.
Isometric utilizes its proprietary tooling and process technologies related to micro injection molding to achieve single micron
tolerances of micro and precision components (micro molded products) for medical devices and pharmaceutical markets. For
over 30 years, Isometric has operated as a trusted solution provider engaged in the design and development, as well as the
manufacturing and assemblies of micro molded products. Isometric is uniquely positioned in the micro molding industry with its
in-house technologies and expertise, such as those in best-in-class tool making and molding process to control part-to-part andlot-to-lot variation, advanced measurement technology including CT scanning, development support for micro 3D printing, andmicro assembly automation platforms. The Company offers its micro molded products for a wide range of uses, including
endoscopic and other surgical instruments for minimal invasive medical treatments, diagnostic devices, microfluidic devices,
medical wearables, ophthalmological implants, and patient monitoring equipment, contributing to the miniaturization of these
medical devices. Miniaturization of medical devices is not only sought after in our existing field of minimal invasive surgicaldevices but also in new areas such as surgical robotics. Through this equity partnership, we will offer significant innovation
opportunities for medical devices by acquiring Isometric’s design for excellence (DfX) and development capabilities forcomponent miniaturization, as well as processing technologies for micro molding such as silicone and micro two-shot molding.
3) Date of acquisition
March 1, 2024

―76―

4) Legal form of the business combination
Acquisition of equity with cash as consideration
5) Name of the company after the combination
The company name will not change.
6) Ratio of voting rights to be acquired
75.53%
7) Grounds for determining an acquiring company
The Company will acquire 75.53% of the voting rights through acquisition of equity with cash as consideration.
(2) Calculation of acquisition cost, etc.
1) Breakdown of acquisition cost and consideration for the acquired company by type
Consideration for the acquisition of equity

USD 70,192,000 (including up to USD 6,500,000 in earn-outs)2) Details and amount of major acquisition-related expenses
Advisory fee, etc. (estimate)

USD 1,500,000(3) Allocation of acquisition cost
1) Amount of goodwill to be incurred, reasons for the goodwill to be incurred, and the method and period of amortization
Not yet to be finalized at the present time.
2) Breakdown of assets to be acquired and liabilities to be assumed on the business combination date, and the breakdown thereofNot yet to be finalized at the present time.
40. Approval of consolidated financial statements
The consolidated financial statements for the fiscal year ended December 31, 2023 were approved on March 21, 2024 by Junya
Suzuki, Chairman of the Board, President and CEO of the Company and Hitoshi Koya, Executive Vice President, CFO of the Company.

―77―

Sustainability Approach and Initiatives
Our views and initiatives on sustainability are as follows. Forward-looking statements in this document represent the judgement of
the Nissha Group as of the filing date of the Annual Securities Report.
The Nissha Group views sustainability as “initiatives for sustainable growth and development for both the company and society.”
Based on this view, we consider social issues to be business opportunities. We strive not only to leverage our strengths to provide
products and services that help solve these issues on an ongoing basis, but also to strengthen the management foundation underpinningour business activities, reduce risks that could hamper business continuance, and promote governance to ensure these are all carriedout appropriately. These activities will create the economic and social values stated in our Mission, allowing us to enrich people’s
lives.
The Nissha Group has set out where we want to be by the year 2030 in the form of our Sustainability Vision (long-term vision).
With the integration and orchestration of the diverse capabilities of our people and our technologies, we are aiming to create socialand economic value by contributing to solving global social issues related to medical, mobility, and the environment , and to achieve
a 30% reduction in total CO2 emissions in 2030 (versus 2020) with a view to becoming carbon-neutral by 2050
(1) GovernanceNissha has established a Sustainability Committee, chaired by the President and CEO with the Senior Executive Vice President,(ESG Promotion) as the Vice-Chair. The Committee is composed of and works in collaboration with business divisions, leaddepartments, and the ESG Task Force on materialities related to the themes of Creating business opportunities, Risk reduction,
Strengthening management foundation, and Corporate governance.
The ESG Task Force has been established to address materialities that are considered particularly important from an ESG
perspective, and is responsible for promoting activities for each of these issues.
The Sustainability Committee regularly receives and confirms progress reports on strategic items and targets (KPIs and action
items) for each materiality from business divisions, lead departments, and the ESG Task Force. These activities are reported to theBoard of Directors once per year.
The Board of Directors oversees the activities of the Sustainability Committee, discusses reports from the Sustainability
Committee, and gives improvement instructions as necessary.

(2) Risk Management
To realize our Sustainability Vision (long-term vision), the Nissha Group have identified items of particular importance asmaterialities, which we are working on by setting specific strategic items, key performance indicators, and action items backcastingfrom 2030 as a starting point. Materialities are evaluated from the perspectives of creating business opportunities, risk reduction,
strengthening management foundations, and corporate governance using the two axes of “importance to society and stakeholders”,
and “importance to Nissha”. The identified issues and their position within the Group are prioritized by the Sustainability Committee,
and identified through deliberations and resolutions by the Board of Directors.
The Sustainability Committee holds a general assembly once per year, in which it authorizes the strategic items and targets (KPIs―78―

and action items) set by the business divisions, lead departments, and the ESG Task Force that have primary responsibility for thematerialities determined through resolutions at the Board of Directors.
Activities related to Creating business opportunities are handled by the business divisions. They report to the Chairman of theBoard, President and CEO at monthly meetings (business reviews), at which the Chairman of the Board, President and CEO
confirms the progress of business strategies based on KPIs and gives instructions on necessary action.
Activities related to Risk reduction, Strengthening management foundations, and Corporate governance are handled by leaddepartments and the ESG Task Force. They work based on the targets (KPIs and action items) approved by the Sustainability
Committee and report the state of their activities to the Sustainability Committee on a quarterly basis.
(3) Strategy, organizational goals
1) Responding to Climate Change(ⅰ) Strategy
The Nissha Group use the framework recommendations made by the Task Force on Climate-related Financial Disclosures(TCFD) to analyze the financial impact on our business from climate change-related risks and opportunities.
Among our three main businesses, we analyzed scenarios by adding the Industrial Materials business to the Devices
business, which was analyzed last year. We identified risks and opportunities on short-, medium-, and long-term time horizons,and analyzed their financial impact on our business as of 2030. We then analyzed the 1.5°C scenario, in which more progress
is made in decarbonization, and the 3°C scenario, in which no progress is made in addressing climate change.
In both scenarios, although no current major risks associated with the effects of climate change were found, we will continue
to implement appropriate measures to address each of these risks. As for opportunities created by the effects of climate change,
we identified a growing demand that could lead to business opportunities for our company.
We will continue to monitor trends in the business environment under both the 1.5°C and 3°C scenarios and develop ourbusiness strategically.

―79―

Risk Analysis Results
Risk magnitude
Target businessIndustrial Materials
Introduction of a carbon tax business
Devices businessChanges in national carbon
emission targets andpolicies

Industrial Materials
business
Devices business

Timeline

Medium- tolong-term

Medium- tolong-term

Devices business

Introduction of plastic tax

Industrial Materials
business

Introduction of CFC
regulations

Devices business

Fluctuations in raw material Industrial Materials
pricesbusiness

Medium- tolong-term
Medium- tolong-term
Medium- tolong-term
Short- tolong-term

Changes in customer
behavior (increase inrequests from customers to
reduce CO2 emissions)

Devices business

Short- tomediumterm

Devices business

Short- tomediumterm

Technologies

Increase in EV sales

Industrial Materials
business

Reputation

Transition risk

Changes in the external
environment

Transition to materials andtechnologies with lower
environmental impact
Growing importance of
ESG assessment incustomers’ supplierselection

Acute

Physical risks *3

Industries and Markets

Policies/laws and regulations

Type

Intensification of extreme
weather

Devices businessIndustrial Materials
business
Devices business*1, 2Risks to Nissha
3℃

1.5℃

―

Medium―Medium

Small

Small

―

Small

―

Small

Small

MediumMedium

―

―

Small

Small

―

Sales decline due to lost business opportunities caused byinsufficient responses to customer requests

Small

MediumCosts increase due to replacing product packaging materials

―

Small

MediumMediumMediumMediumIncrease in production and countermeasure costs due to carbon
taxation on CO2 emissions
Increase in the cost of procuring raw materials needed to produce
products due to the carbon taxes
Increase in electricity procurement costs due to switch torenewable energy sources for electricity and soaring levies, etc.
Increase in the cost of reducing CO2 emissions in logistics(procurement and shipping) increases
Increase in the cost of procuring raw materials needed to produce
products due to the progression of plastics-related regulations
Restrictions on use of specified CFCs and their substitutes used at
production bases increase capital investment costs
Increase in petrochemical material costs due to changes in crude
oil demand
Increase in raw material costs due to increased use of reprocessed
plastic
Decrease in sales opportunities for EV-related products due tochanges in market structure

Sales decline due to substituting our products for low-carbon
products made by other companies
Sales decline due to lost business opportunities resulting fromdelays in the development of low-carbon technologies

Short- tomediumterm

ESG assessment declines due to delays in addressing climaterelated issues, and we are not chosen as a supplier resulting in a
decline in sales

―

Small

Short- tolong-term• Sales decline due to production delays or suspensions resulting
from damage to production bases, and incidence of repair costs
due to damage to company assets such as buildings, facilities,
and inventory• Sales decline due to the impact of the suspension of the supplyof raw materials and parts due to disasters at suppliers

Small

Small

*1. Risk magnitude evaluation horizon: Annual decrease in net sales large: 20 billion yen or more, medium: 5 to 20 billion yen, small: less than 5 billion yen, annual decrease in profit: large: 3 billion yen
or more, medium: 1 to 3 billion yen, small: less than 1 billion yen*2. Scenarios in which no risks are incurred are indicated with a “—”*3. Physical risks are evaluated by considering the degree of financial impact and frequency of occurrence

Opportunity Analysis Results

Policies/laws
and regulations

Type

Changes in the external
environment

Carbon price changes innational carbon emission
targets and policies

Industries andMarkets

Increase in EV sales

Opportunity
magnitude

Target business

Timeline

Opportunities to Nissha

3℃

1.5℃

Industrial Materials
business
Devices businessMedium- tolong-term

Expansion of demand for products that contribute to GHG
emission reductions (highly recyclable decorative film moldings,
gas sensor modules for refrigerant detection, etc.)

MediumMediumIndustrial Materials
business

Medium- tolong-term

Increase in sales opportunities for plant-based sustainable molded
products due to the progression of plastic-related regulations

―

Small

Industrial Materials
business
Devices business

Short- tolong-term

Small

Small

―

Small

Small

Small

Fluctuations in raw material Industrial Materials
pricesbusiness

Medium- tolong-term

Arrival of a hydrogen-based
Devices businesssocietyMediumterm

Increase in sales opportunities for EV-related products due tochanges in market structure (decorative film molded products andfunctional products for exteriors, touch sensors, etc.)
Increase in sales opportunities due to increased demand forsustainable molded products as a result of the lower costs of plantbased plastics
Demand for fuel cell vehicles (FCVs) expands (such as hydrogendetectors)*1, 2*1. Opportunity magnitude evaluation horizon: Annual increase in net sales large: 20 billion yen or more, medium: 5 to 20 billion yen, small: less than 5 billion yen, annual increase in profit: large: 3 billion
yen or more, medium: 1 to 3 billion yen, small: less than 1 billion yen*2. Scenarios in which no opportunities are incurred are indicated with a “—”―80―

(ⅱ) Matrics and Targets
Nissha uses total CO2 emissions as an indicator for assessing and managing risks related to climate change. In our
Sustainability Vision, our goal is to reduce total CO2 emissions by 30% by 2030 (compared to 2020), with a broader aim tobecome carbonneutral by 2050.

2) Human capital and diversity(ⅰ) Strategy《Human Resources Policy》
The Human Resources Policy upon which we base our human resources strategy is taken directly from our Mission, whichreflects growth both for the company and employees through diverse capabilities and passion. Nissha continues to grow by
seeing changes in the market environment as business opportunities and by improving our value proposition to customers,
driven by the diversification of our human resource capabilities and core technologies. Since growth through such change isat the core of the Nissha management strategy, our Human Resources Policy states clearly that management strategy andhuman resource strategy should be in lock-step.

《Overall Human Resources Strategy (Strategy Map)》
The goal of our human resources strategy is to develop human resource capabilities that improve our value propositions tocustomers, as shown in the strategy map accompanying this section. Nissha's customers come from a wide range of industries,
including mobility, medical devices, IT devices, and home appliances. Many of our customers are global companies and leadersin their industries for whom we customize important components. Servicing these customers requires human resources andteamwork to identify customer issues accurately, to combine our processing technologies, to maintain stable product quality,
to make proposals, and to offer problem-solving skills that result in value to the customer. Our work is made possible by thecollaboration of the Nissha group companies across countries and regions, with the cooperation of our diverse human resource
capabilities.
To improve the value propositions we offer customers, we must bring together a diverse group of people with different
specialties and fields of expertise to work as a team. At the same time, it is important that each individual maintains a highlevel of motivation. Accordingly, our human resources strategy begins with three factors: (1) improving the value propositions
we offer; (2) utilizing diverse human resources; and (3) improving employee engagement. We then break down achieving thesemeasures into factors of how to evolve our internal processes, how to change our human resources systems, how to foster anorganizational culture, and other cause-and-effect relationships. Each of these measures involves KPIs and specific actions tovisualize progress.

―81―

(ⅱ) Indicators and Targets《Utilizing Diverse Human Resources》
The Nissha Group encourages all employees to express their talents fully, regardless of nationality, gender, or age. One of
our Shared Values, which are principles for employee behavior, is Diversity and Inclusion. This declaration is our belief thathuman resources with diverse talents interact on an equal footing to enhance our organization's ability to perform. The Nissha
Group identifies the ratio of female managers as one of our KPIs and a symbol of diversity. We pursue a number of initiatives
to bring this ratio closer to the ratio of overall female employees in our workforce. Although the ratio of female managers inJapan remains at a relatively low level compared to overseas group companies, the percentage of female employees at the twolevels immediately prior to promotion to management positions is increasing steadily. We strive to retain and develop diverse
human resources through systems that encourage diverse work styles, creating comfortable workplaces and providing
extensive training opportunities and practical experiences.
Target

KPI
Female manager ratio(consolidated global)

Results

2023

2030

2022

2023

21%

25%

21.5%

22.7%

(Reference) Female
employee ratio

Breakdown
by Region

Results

2023

2022

2023

38.5%

21.5%

22.7%

Japan (Nissha non-consolidated)

28.6%

5.9%

7.1%

North America

45.1%

32.0%

32.1%

Central & South America

68.5%

44.2%

46.5%

Europe

32.7%

19.4%

23.7%

China, Taiwan, Korea

53.2%

40.2%

42.9%

Southeast Asia

49.0%

36.4%

42.9%

Consolidated global《Improving Employee Engagement》
For employees to work passionately and for the company and employees to grow together, the Nissha Group believe it isimportant to improve employee engagement by putting in place a system that encourages this and fostering an organizational
culture that is easy to work in. As one measure, we launched our first engagement survey in 2022. In the first half of 2023, thesurvey was expanded to include contract employees in addition to all regular employees working for the Nissha Group in Japan.
In the second half of the year, we conducted a survey of overseas employees, excluding workers at factories, etc., with a total―82―

of 3,100 employees surveyed throughout the year.
The purpose of these surveys was to identify issues and improve the diverse capabilities and passions of Nissha employees,
the true source of our growth. Our objective here is to move toward an ideal situation, and we intend to conduct this survey onan annual basis.
Compared to last year, there was an overall improvement in our focus indicators, indicating that the actions taken in theworkplace over the past year are bearing fruit. The response rate has also improved significantly due to increased interest from
employees. For further improvement, we analyze the results at the company, business, and workplace levels, linking them tospecific actions. We will continue to implement initiatives to foster a corporate culture in which all employees work with
passion.

KPI

TargetResponse rate (consolidated global)

80% or higher

Results
2022

2023

83.0%

94.2%

Percentage of Positive Responses (consolidated global)

2022

2023

Will to contribute to the organization
I want to contribute to Nissha

95.6%

95.5%

Organizational Commitment
I am proud to work for Nissha

87.8%

89.0%

Rewarding
I find my work rewarding

82.3%

83.4%

Feeling of contributing to society
I feel I contribute to society through my work

78.8%

80.6%

《Enhancing Opportunities for Learning and Growth》
The Nissha Group identified developing global employees and management human resources as one of our materialities tostrengthen our management foundation. Here, we continue to improve education and training, as well as provide practical
opportunities for trainees. Nissha Academy, the Nissha Group in-house university, offers an extensive training program. The
Business School is a selective training program within the in-house university. This is an original Nissha program that focuseson providing knowledge and skills in the proposal and execution of management strategies, with three courses available:
beginner (workplace leaders), intermediate (preparation for management), and advanced (senior management). In particular,
we provide opportunities for graduates of our beginner and intermediate courses to put what they have learned into practice.
These opportunities include participation in important projects and the formulation of medium-term business plans. We defined
the selection rate of leader candidates as a KPI to measure these efforts. Our aim is to have half of the general employees ofNissha (non-consolidated) participate in Business School (beginner and intermediate level) by the year 2030 (selection rate of50%). In 2023, we conducted the beginnercourse for workplace leaders in two sessions, one in the first half of the year and theother in the second half. As a result, the selection rate in 2023 exceeded our target of 36%. In addition, we are expanding the
Nissha Academy to overseas group companies. Nissha entities in Europe and the United States are considering their own
programs. During the first half of 2023, three employees from Nissha Korea attended the beginner-level of the Business School
held at the Global Headquarters in Kyoto.
The Nissha Group has various award programs for employees who have made the most of their learning, leading to theachievement of concrete results. In addition to companywide awards such as the President’s Award, which recognizes
outstanding contributions to consolidated performance, we also give out the Group Company Representative Award, which
honors employees who have demonstrated outstanding performance at the group companies. The global tagline, PerformanceChampion, honors employees who have achieved notable results, and all awards within the group use this line and iconography.
We encourage employee growth, labeling employees who receive education and training through the Nissha Academy as
Performance Champions who put their learning into practice in the workplace and achieve outstanding results. In this way, we―83―aim for a future where both the company and employees grow together.

KPI
Selection rate of leader candidates(Nissha non-consolidated)

TargetResults

2023

2030

2022

2023

36%

50%

31.2%

43.7%

―84―