Financial Reporting

Management’s Discussion and Analysis

Fact Book
Financial Reporting
65

Management’s Discussion and Analysis

66	Consolidated Statement of Financial Position
68Consolidated Statements of Profit or Loss andComprehensive Income70	Consolidated Statement of Changes in Equity
71

Consolidated Statement of Cash Flows73	Notes to Consolidated Financial Statements
118	Independent Auditor’s Report

Financial/Non-Financial
Information
122 Financial Highlights

124 Non-Financial Highlights

1. Analysis of Financial Condition
Assets, liabilities, and equity

AssetsTotal assets at the end of fiscal 2023 stood at 416,226
million yen, up 241 million yen from the end of fiscal 2022.
This change resulted primarily from an overall increase in
assets due to the impact of foreign currency translations
and other factors, as well as an increase in trade andother receivables due to increased orders from major
customers. Cash and cash equivalents declined due topayments of dividends and other factors.
Liabilities
Total liabilities at the end of fiscal 2023 amounted to 92,767
million yen, up 2,365 million yen from the end of fiscal
2022. This change resulted primarily from an overall
increase in liabilities attributable to the impact of foreign
currency translations and other factors, as well as anincrease in trade and other payables attributable to various
factors, including increased orders from major customers.
EquityTotal equity at the end of fiscal 2023 totaled 323,458
million yen, down 2,124 million yen from the end of fiscal
2022. This change resulted primarily from reductions inretained earnings and non-controlling interests mainly
due to dividend payments despite increases in othercomponents of equity due to increased differences ontranslation from foreign operations and other factors.

2. Analysis of Cash Flows

Cash and cash equivalents (hereinafter “cash”) at the endof fiscal 2023 amounted to 132,914 million yen, down
6,671 million yen from the end of the previous fiscal year.
Cash flows from operating activities
Net cash provided by operating activities amounted to30,445 million yen, up 10,427 million yen year on year.
Contributing factors included differences in inventory
trends (from an increase of 6,339 million yen in theprevious fiscal year to a decrease of 14,118 million yen in
fiscal 2023) and differences in the performance of tradeand other receivables (from a decrease of 4,301 million
yen in the previous fiscal year to an increase of 6,223
million yen in fiscal 2023).
Cash flows from investing activities
Net cash used in investing activities stood at 20,970
million yen, up 3,773 million yen year on year. This reflects
various factors, including an increase in total change inpayments into and proceeds from withdrawal of time
deposits from payments of 3,053 million yen to paymentsof 5,746 million yen.
Cash flows from financing activities
Net cash used in financing activities totaled 18,860 million
yen, down 4,777 million yen from the previous fiscal year.
This was due to factors including differences in deposits
for purchase of treasury stock from an increase of 7,870

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TS TECH Integrated Report 2023

million yen in the previous fiscal year to a decrease of
7,870 million yen in fiscal 2023, despite increases of 5,694
million yen in expenditures for purchase of treasury stockand 4,959 million yen in cash dividends paid (including to
non-controlling interests).

3. Overview of Financial Results

The TS TECH Group faced challenging business conditions
in fiscal 2023, including reduced production byautomakers due to COVID-19 lockdowns in China andsemiconductor shortages. Manufacturing costs continued
to increase due to the rising cost of labor, energy, andraw materials.
Within this operating climate, we made steady progresson various measures aimed at future growth, including
measures to secure new customers and expand
commercial rights, proactive sales efforts to increase
market share among major customers, efforts to develop
next-generation technologies, looking to the future, andefforts to develop production structures to provide evengreater quality and efficiency. We are also accelerating ourefforts to transform ourselves into a company that cancoordinate the entire cabin and propose new value to ourcustomers and users.
Revenue for the consolidated fiscal year under review
was up 59,241 million yen (16.9%) from the previous
consolidated fiscal year, to 409,200 million yen, thanks
to factors including foreign exchange effects andimprovements across the model range, despite theeffects of decreased production attributable to COVID-19
lockdowns in China. Regarding income, despite efforts tolower costs through thorough streamlining and otheractivities, operating income fell 7,741 million yen (33.7%)
from the previous fiscal year, to 15,257 million yen, due
to factors including lower production, higher expenses,
and temporary costs associated with the liquidation of aconsolidated subsidiary in the United Kingdom. Income
attributable to owners of parent was down 7,073 million yen(57.0%) from the previous fiscal year, to 5,343 million yen.

The Group’s consolidated forecasts for fiscal 2024 are
as follows:
Revenue
410 billion yen(Up 0.2% year on year)
Operating income
20 billion yen(Up 31.1% year on year)
Income before income tax 20.9 billion yen(Up 11.8% year on year)
Net income
13 billion yen(Up 20.0% year on year)
Income attributable to
10 billion yen
owners of parent(Up 87.2% year on year)

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65

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

FY2022(As of March 31, 2022)(Unit: Million yen)

FY2023(As of March 31, 2023)

ASSETSLIABILITIES AND EQUITYCURRENT ASSETSCURRENT LIABILITIESFY2022

FY2023Note(As of March 31, 2022)(As of March 31, 2023)

Cash and cash equivalents

6¥139,585¥132,914

Trade and other payables

12¥ 67,024¥ 69,710

Trade and other receivables

7

65,43074,812Other financial liabilities

13

1,718

1,166

Other financial assets

8

9,700

17,757

Inventories

9

Income taxes payable

1,776

2,318

217

639

Other current liabilities

6,830

6,828

Total current liabilities

77,56780,66343,532

31,939

Income taxes receivable

2,340

2,432

Other current assets

16,448

5,813

Total current assets

277,037

265,670

Provisions

15

NON-CURRENT LIABILITIESOther financial liabilities

13

4,420

3,662

Net defined benefit liability

16

1,466

1,917

Provisions

15

157

150

Deferred tax liabilities

14

5,470

5,081

Other non-current liabilities

1,319

1,292

Total non-current liabilities

12,834

12,104

Total liabilities

90,401

92,767

EQUITYNON-CURRENT ASSETS

Common stock

17

4,700

4,700

Capital surplus

17

5,150

5,392

17,935

Treasury stock

17(4,737)(12,508)

27,097

29,244Retained earnings

17

270,031

268,172

16

4,311

4,941

Other components of equity

17

21,71033,035

14

2,454

3,550

Total equity attributable to owners of parent

296,855

298,791

Other non-current assets

386

321

28,727

24,666

Total non-current assets

138,947

150,556

325,583

323,458¥415,985¥416,226¥415,985¥416,226

Property, plant and equipment

10

76,86083,874

Intangible assets

11

10,58010,688Investments accounted for using the equity method

28

17,257

Other financial assets

8

Net defined benefit asset
Deferred tax assets

TOTAL ASSETS

Non-controlling interests
Total equity
TOTAL LIABILITIES AND EQUITY28

See notes to consolidated financial statements.

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67

Consolidated Statements of Profit or Loss and Comprehensive Income

Consolidated Statements of Profit or Loss and Comprehensive Income(Unit: Million yen)

(Unit: Million yen)

Consolidated statement of profit or loss

Revenue
Cost of sales

FY2022

FY2023

Note(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

5, 18¥ 349,958¥ 409,200

Net income

19(295,716)(355,790)

Other comprehensive income

54,24253,410Gross profit
Selling, general and administrative expenses

19(33,896)(38,471)

Other income

20

3,240

2,212

Other expenses

20

(587)

(1,893)Operating income

522,99815,257

Finance income

22

2,367

3,080

Finance costs

22

(117)

(131)

Share of profit of investments accounted forusing the equity method

28

590

487

25,83918,692(7,035)(7,856)18,803

10,835

Income before income tax
Income tax expense

14

Net income

Note

Owners of parent
28

Net income

12,416

5,343

6,386

5,492

¥ 18,803¥ 10,835

Basic earnings per share (Yen)23¥   92.56¥   41.35

Diluted earnings per share (Yen)

23

—

—

FY2023(April 1, 2022–March 31, 2023)¥18,803¥10,835

Remeasurements of net defined benefit plans

24

864

10

Equity financial assets measured at fair value throughother comprehensive income

24

564

542

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

24

73

37

1,501

590

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

24

16,463

10,494

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

24

895

655

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

17,359

11,149Total other comprehensive income, net of tax

18,86011,74037,664

22,576

Owners of parent

28,388

16,668Non-controlling interests

9,275

5,907

¥37,664¥22,576

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

Earnings per share:

FY2022(April 1, 2021–March 31, 2022)

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

Comprehensive income for the period

Income attributable to:Non-controlling interests

Consolidated statement of comprehensive income

See notes to consolidated financial statements.

See notes to consolidated financial statements.

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69

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows(Unit: Million yen)

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)

Equity attributable to owners of parent
Note

BALANCE AT THE END OF
THE PREVIOUS FISCAL YEAR
Comprehensive income:Net income
Other comprehensive income
Total comprehensive income
Transactions with owners, etc.:
Dividends
Acquisition of treasury stock
Disposal of treasury stock
Share-based remunerationtransactions
Changes in ownership interestsin subsidiaries
Establishment of subsidiaries
with non-controlling interests
Other
Total transactions withowners, etc.
BALANCE AT THE END OF
THE FISCAL YEAR

Commonstock

CapitalsurplusTreasurystock

Retainedearnings

Other
componentsof equity

Total equity
attributableto ownersof parent¥4,700¥4,975¥(2,657) ¥264,261¥ 5,738¥277,017¥24,433¥301,450

15,971
15,971

12,416
15,971
28,388

6,386
2,888
9,275

18,803
18,86037,664

12,416
17
—

—

25
17
17

—

12,416(6,646)(6,646)(2,152)73(2,152)
73

29

175

—

175

¥4,700¥5,150Noncontrollinginterests

Total
equity(6,028)(12,675)(2,152)
73

23

Loss (gain) on disposal of non-current assets(1,393)(1,315)

Finance costs (income)(1,398)(2,381)

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

(590)

(487)

Decrease (increase) in trade and other receivables

4,301(6,223)712(1,492)

Decrease (increase) in lease receivables
Decrease (increase) in inventories(6,339)14,118

Increase (decrease) in trade and other payables(3,422)

(704)

—

—

Increase (decrease) in provisions(2,566)

409

—
—

1,047

1,047
—

Other

988

3,390

Subtotal

26,27235,670Interest income received

1,011

1,796

—

(8,550)(4,981)(13,531)

Dividend income received

1,531

1,200

¥(4,737) ¥270,031¥21,710¥296,855¥28,727¥325,583

Interest expenses paid

(117)

(131)

Income taxes paid

(8,681)(8,090)Net cash provided by operating activities

20,01830,445¥(10,026)¥(17,410)

Proceeds from withdrawal of time deposits

6,972

11,663Purchase of property, plant and equipment(Unit: Million yen)

Retainedearnings

Other
componentsof equity¥4,700¥5,150 ¥ (4,737) ¥270,031¥21,710¥296,855

Treasury
stock

5,343
17
—

5,343

11,325
11,325(7,588)

Noncontrollinginterests

Total
equity¥ 28,727¥325,583

5,343
11,325
16,668

5,492
415
5,907

10,835
11,74022,576(7,588)(7,847)—(10,156)(17,745)(7,847)
—

25
17
17

(7,847)
(83)
83

29

142

142

183

183

¥4,70011,879143(238)

Capitalsurplus

CASH FLOWS FROM INVESTING ACTIVITIESPayments into time deposits(13,777)(13,434)

Proceeds from sales of property, plant and equipment

2,736

639

Purchase of intangible assets(1,858)(2,366)

Purchase of equity instruments(1,196)

(87)

0

9

Proceeds from sales of equity instruments
Payments of loans receivable

(747)

(98)

Collection of loans receivable

710

131

(9)

(17)

(17,196)(20,970)

Other
Net cash used in investing activities

142
187

371

(7)

386

(0)

—
377

(7,771)(7,202)(0)(14,732)(9,968)(24,701)¥5,392 ¥(12,508) ¥268,172¥33,035¥298,791¥ 24,666¥323,458

242

11,033

Depreciation and amortization
Impairment losses(1,036)

Commonstock—¥ 18,692

Income before income tax

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

Total equity
attributableto ownersof parent—¥ 25,839

CASH FLOWS FROM OPERATING ACTIVITIES(6,646)(2,079)Equity attributable to owners of parent—

FY2023(April 1, 2022–March 31, 2023)

175

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)

BALANCE AT THE END OF
THE PREVIOUS FISCAL YEAR
Comprehensive income:Net income
Other comprehensive income
Total comprehensive income
Transactions with owners, etc.:
Dividends
Acquisition of treasury stock
Disposal of treasury stock
Share-based remunerationtransactions
Changes in ownership interestsin subsidiaries
Establishment of subsidiaries
with non-controlling interests
Other
Total transactions withowners, etc.
BALANCE AT THE END OF
THE FISCAL YEAR

FY2022(April 1, 2021–March 31, 2022)

175

See notes to consolidated financial statements.

Note

Note

—
377

See notes to consolidated financial statements.

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71

Consolidated Statement of Cash Flows (Continued)

Notes to Consolidated Financial Statements(Unit: Million yen)
FY2022

FY2023

Note(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

26¥ (1,435)¥ (1,571)

623

—

—

450

Purchase of treasury stock(2,152)(7,847)

Decrease (increase) in deposits for purchase oftreasury stock(7,870)7,870

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of lease liabilities
Capital contribution from non-controlling interests
Proceeds from sale of interest in subsidiaries
to non-controlling interests

Cash dividends paid

25

(6,657)(7,600)Cash dividends paid to non-controlling interests

28(6,145)(10,161)(23,638)(18,860)

7,367

2,492

(13,449)(6,892)

153,034

139,585—220¥139,585¥132,914

Net cash used in financing activities
EFFECTS OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD6NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS RESULTING FROM NEW CONSOLIDATIONCASH AND CASH EQUIVALENTS AT END OF PERIOD
See notes to consolidated financial statements.

6

1. REPORTING ENTITYTS TECH Co., Ltd. (hereinafter “the Company”) is a company domiciled in Japan.
The consolidated financial statements of the Company as of and for the year ended March 31, 2023 comprise theCompany, its subsidiaries (hereinafter “the Group”), and the Group’s interests in its affiliates.

2. BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS(1) Compliance with International Financial Reporting Standards (IFRS)The Company meets the criteria of a “specified company” defined under Article 1-2 of the “Ordinance on Terminology,
Forms and Preparation Methods of Consolidated Financial Statements.” Accordingly, the consolidated financial
statements are prepared according to IFRS pursuant to the provisions of Article 93 of said Ordinance.
The consolidated financial statements were approved by the Board of Directors on June 23, 2023.
(2) Basis for measurement
The consolidated financial statements, with the exception of the financial instruments, etc., measured at fair value
stated in Note 3 “Important Accounting Policies,” have been prepared on a historical cost basis.
(3) Functional currency and presentation currency
The presentation currency used in the consolidated financial statements is Japanese yen, which is the Company’sfunctional currency. Any fractions below one (1) million yen are omitted.
(4) Important accounting judgments, estimates, and assumptions
In the preparation of the consolidated financial statements, management exercised certain judgments, estimates, andassumptions in the process of applying the accounting policies and in determining the reported amounts of assets,
liabilities, income, and expenses. As such, actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis, and the impact of the review isrecognized in the period in which the review was conducted and in future periods.
Among the items which were subject to estimates and judgments, the following are considered to have significant
impact on the amounts of the consolidated financial statements for the current fiscal year and the following
fiscal years.
• Scope of consolidation:
Note 3 “Important Accounting Policies (1) Basis of consolidation”• Estimated useful lives of intangible assets:
Note 3 “Important Accounting Policies (8) Intangible assets”• Scope of contracts including leases:
Note 3 “Important Accounting Policies (9) Leases”• Impairment of non-financial assets:
Note 3 “Important Accounting Policies (10) Impairment of nonfinancial assets”• Measurement of defined benefit obligations: Note 3 “Important Accounting Policies (12) Employee benefits”• Recognition and measurement of provisions: Note 3 “Important Accounting Policies (13) Provisions”• Revenue recognition:
Note 3 “Important Accounting Policies (16) Revenues”• Recoverability of deferred tax assets:
Note 3 “Important Accounting Policies (19) Income taxes”
Estimates and assumptions that may have a material impact on the Company’s consolidated financial statements
for the following fiscal years primarily include:(i) Impairment of non-financial assets (Property, plant and equipment, and Intangible assets)
The Group estimates the recoverable amount if non-financial assets show indicators of impairment. The recoverable
amount is calculated as the higher of fair value less costs of disposal and value in use. In the event the estimatedrecoverable amount falls below the carrying amount, a difference between the carrying amount and the recoverable
amount is recognized in net profit or loss as an impairment loss.
Information regarding the material impact of impairment of non-financial assets on the following fiscal year is as follows.

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(a) Amount recognized in the consolidated financial statements(Unit: Million yen)
FY2023(As of March 31, 2023)

Property, plant and equipment¥83,874

Intangible assets

10,688

Total¥94,562

In principle, the Group considers a company or plant to be the cash-generating unit for its business assets. At theCompany’s Hamamatsu Plant, operating income declined due to the production status of customers, the mix of car
models sold, and other factors, resulting in two consecutive periods of operating loss after allocating of headquarters
expenses, etc., and because an indicator of impairment was recognized, a determination was made as to whether an
impairment loss should be recognized or not. Consequently, it was determined that, because the recoverable amountof the Hamamatsu Plant exceeded the carrying amount of property, plant and equipment (¥3,770 million), no
impairment loss was required to be recognized.
(b) Major assumptions used for the estimate
Estimates of future cash flows in the current fiscal year are expected to recover gradually, although the future outlook
remains unpredictable because of reduced production by automakers due to a shortage of semiconductors or
increasing manufacturing costs caused by further increases in personnel, material, and energy costs.
With respect to the Hamamatsu Plant, the recoverable amount used to determine whether an impairment loss
should be recognized is measured at its value in use. Value in use is calculated by discounting future cash flows
calculated on the basis of the Medium-Term Management Plan using a discount rate based on the weighted-average
cost of capital. Estimates of future cash flows incorporate assumptions such as customer order forecasts.
In addition, the fair value of land at the end of the useful life of machinery and equipment, which constitute major
assets, is based on valuations and the like obtained from outside experts.
(c) Material impact on the following fiscal year
During the current fiscal year, the Company did not recognize material impairment losses. However, should thedecline in production by automakers and increase in manufacturing costs be worse than expected, and should
the recoverable amount decline as a result, a material impairment loss may arise in the following fiscal year.
(ii) Recoverability of deferred tax assets
Deferred tax assets are recognized for items that may be deducted from future taxable income, such as deductible
temporary difference and unused tax losses, to the extent that it is probable that taxable income will be available
against which these items can be utilized (hereinafter “recoverability”).
Recoverability will be reviewed each fiscal year. In the event recoverability declines, the amount of deferred tax
assets will be reduced and the reduced amount will be recognized as net profit or loss.
Information regarding the material impact of the recoverability of deferred tax assets on the following fiscal year is
as shown below.
(a) Amount recognized in the consolidated financial statements(Unit: Million yen)
FY2023(As of March 31, 2023)

Deferred tax assets¥3,550Note: The amount of the deferred tax assets recognized in the consolidated statement of financial position as listed above is offset by
the amount of deferred tax liabilities. The amount before offsetting is described in Note 14 “Income Taxes.”(b) Major assumptions used for the estimate
Future taxable income that constitutes the basis for recoverability could vary significantly depending on trends in theautomobile market and changes in customers’ production plans.
Estimates of future taxable income in the current fiscal year are expected to recover gradually, although the future
outlook remains unpredictable because of reduced production by automakers due to a shortage of semiconductors
or increasing manufacturing costs caused by further increases in personnel, material, and energy costs.

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TS TECH Integrated Report 2023(c) Material impact on the following fiscal year
During the current fiscal year, the Company did not recognize a material reduction in deferred tax assets.
However, should the decline in production by automakers and increase in manufacturing costs be worse than expected,
and should recoverability decline as a result, a material reduction in deferred tax assets may occur in the following
fiscal year.
(iii) Post-employment benefits
To prepare for the payment of retirement benefits to its employees, the Company and certain consolidated subsidiaries
have adopted funded and unfunded defined benefit plans. Defined benefit plan obligations for defined benefit plans
are calculated using the projected unit credit method based on actuarial assumptions such as discount rate.
Information concerning the significant effects on the calculation of defined benefit plan obligations in the following
fiscal year is as follows.
(a) Amount recognized in the consolidated financial statements(Unit: Million yen)
FY2023(As of March 31, 2023)

Net defined benefit asset¥4,941

Net defined benefit liability

1,917(b) Major assumptions used for the estimate
The discount rate, which is the primary actuarial assumption, is calculated using the yield of high-quality corporate
bonds with approximately the same maturity date as the defined benefit obligations.
(c) Material impact on the following fiscal year
Changes in the discount rate and other factors used to calculate the defined benefit obligations may have a significant
impact on the net defined benefit assets, liabilities, and retirement benefit expenses in the consolidated financial
statements for the following fiscal year.

3. IMPORTANT ACCOUNTING POLICIES(1) Basis of consolidation(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that the Group gains control to the date that the Group loses control.
When the accounting policies applied by a subsidiary are different from those applied by the Group, the financial
statements of said subsidiary are revised as necessary.
The balance of accounts receivable and payable and transactions within the Group and the unrealized gain and loss
on transactions within the Group are deducted under the consolidated financial statements.
Any change in the Company’s interest in subsidiaries not involving the loss of control is processed as a capital transaction.
The carrying amounts of the Group’s ownership interest and non-controlling interests are adjusted according to thechanges in the ownership interest, and any difference between the adjustment to the non-controlling interests andthe fair value of the consideration transferred or received is recognized directly in equity and allocated to owners of
the parent.
(ii) Affiliates
Affiliates are entities over which the Group has significant influence but does not have control over the financial andoperating policies of such entities, and they are accounted for using the equity method from the date that significant
influence commences until the date the significant influence ceases.
Under the equity method, investments in affiliates are initially recorded at cost and subsequently increased (ordecreased) to reflect the Group’s post-acquisition changes in ownership interest in the affiliate’s equity. In such cases,
the amount of net profit or loss of the affiliate corresponding to the ownership interest of the Group is recognized in
net profit or loss, while the amount of other comprehensive income of the affiliate corresponding to the ownershipinterest of the Group is recognized in other comprehensive income.
Profits from important internal transactions are eliminated proportionately to the ownership share in the affiliate.

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75

(2) Business combinations
Business combinations are accounted for using the acquisition method.
Consideration for the acquisition is measured as the total fair value of the assets transferred, liabilities assumed,
and equity instruments issued by the Group.
Costs related to the acquisition are recognized in net profit or loss when incurred.
The identifiable assets and liabilities acquired from the merged company are measured at fair values unlessstipulated otherwise by the IFRS.
Goodwill is recognized if the consideration for the acquisition exceeds the fair values of the identifiable assets
and liabilities acquired from the merged company; it is recognized in net profit or loss if the consideration for theacquisition is less.
Goodwill is not amortized but is instead tested for impairment and carried at cost less accumulated impairment losses.
(3) Foreign currency translations
The financial statements of each Group company are prepared in the currency of the primary economic environment
in which each Group company conducts business (hereinafter “functional currency”).
Additionally, the financial statements of foreign operations are translated into Japanese yen, the functional currencyof the Company, when preparing the consolidated financial statements.
(i) Foreign currency transactions
Transactions in currencies other than the functional currency are translated into the functional currency using the
spot exchange rate at the date of the transaction or an exchange rate that approximates the spot exchange rate at
the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the end of the fiscal year are translated using
the spot exchange rate at the end of the fiscal year. Exchange differences arising from translation or settlement offoreign currency-denominated monetary assets and liabilities are recognized in net profit or loss.
(ii) Foreign operations
Assets and liabilities of foreign operations are translated into Japanese yen using the spot exchange rate at the endof the fiscal year, while income and expenses are translated into Japanese yen at the average exchange rates for theperiod, provided, however, that there have been no significant fluctuations in the exchange rates.
Exchange differences arising from translation of financial statements of foreign operations are recognized in othercomprehensive income, and cumulative exchange differences are presented in other components of equity.
When a foreign operation is disposed of and control or significant influence is lost, the cumulative exchange
differences related to the foreign operation are reclassified to net income or loss.
(4) Financial instruments(i) Financial assets(a) Initial recognition and measurement
The Group recognizes trade and other receivables when they occur, and other financial assets on the transaction dateon which the Group becomes a contractual party of the financial asset.
The Group, at initial recognition, measures all financial assets (excluding trade receivables that do not containsignificant financial components) at fair value. However, if an asset is not classified as a financial asset measured at fairvalue through net profit or loss, it is measured at fair value to which the transaction costs directly attributable to theacquisition of the financial asset are added. Trade receivables that do not contain significant financial components aremeasured at the transaction price at initial recognition. Note that transaction costs of financial assets measured at fairvalue through net profit or loss are recognized in net profit or loss.
(b) Classification and subsequent measurement
The Group classifies the financial assets that it holds as (a) financial assets measured at amortized cost, (b) equity
financial assets measured at fair value through other comprehensive income, or (c) financial assets measured at fairvalue through net profit or loss. These classifications are determined at the time of initial recognition, and the financial
assets after initial recognition are measured in the following manner according to each classification.
(A) Financial assets measured at amortized cost
The Group classifies the financial assets that it holds as those measured at amortized cost if it meets both of thefollowing conditions:76

TS TECH Integrated Report 2023

•T
 he financial asset is held within a business model whose objective is to hold financial assets in order to collectcontractual cash flows.
•T he contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.
After initial recognition, financial assets measured at amortized cost are measured using the effective interest
method less any impairment loss, as necessary. Amortization using the effective interest method and any gains orlosses due to derecognition are recognized in net profit or loss for the period.
(B) Equity financial assets measured at fair value through other comprehensive income
For certain equity financial assets, the Group has made the irrevocable election to measure fair value changes after
initial recognition in other comprehensive income and classifies such financial assets as equity financial assets
measured at fair value through other comprehensive income.
After initial recognition, such financial assets are measured at fair value, and fair value changes are recognizedin other comprehensive income. In the event that the investment is disposed, or if the fair value has declined
significantly, the cumulative gains or losses recognized through other comprehensive income are reclassified fromother components of equity to retained earnings.
Dividends from equity financial assets measured at fair value through other comprehensive income are recognized
as financial income in net profit or loss.
(C) Financial assets measured at fair value through net profit or loss
The Group classifies financial assets other than those measured at amortized cost and financial assets other thanequity financial assets measured at fair value through other comprehensive income, described above, as financial
assets measured at fair value through net profit or loss. Derivative assets fall under the Group’s financial assets
measured at fair value through net profit or loss.
After initial recognition, such financial assets are measured at fair value, and fair value changes are recognized in
net profit or loss. Any gains or losses relating to the financial asset measured at fair value through net profit or loss
are recognized in net profit or loss.
(c) Impairment of financial assets
With regard to impairment loss on financial assets, including financial assets measured at amortized cost, the Group
recognizes an allowance for doubtful accounts for the expected credit loss associated with the financial asset.
On each reporting date, the Group assesses whether the credit risk associated with the financial asset has increased
significantly since initial recognition.
If the credit risk associated with a financial asset has not increased significantly since initial recognition, the Group
recognizes an amount equivalent to a 12-month expected credit loss as allowance on the financial asset. If the credit
risk associated with a financial asset has increased significantly since the initial recognition, the Group recognizes anamount equal to the lifetime expected credit loss as allowance on the financial asset.
However, for trade receivables, the Group always recognizes an amount equal to the lifetime expected credit loss
as allowance for doubtful accounts.
The expected credit loss of financial assets is estimated using a method that reflects the following factors:• An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;• The time value of money; and•R easonable and supportable information about past events, current conditions, and forecasts of future economic
conditions that is available without undue cost or effort at the reporting date.
The amounts associated with such measurements are recognized in net profit or loss.
If, after the recognition of an impairment loss, an event occurs which could reduce the amount of the impairment
loss, the decrease in impairment loss is reversed and recognized in net profit or loss.
(d) Derecognition of financial assets
The Group derecognizes financial assets when the contractual rights to cash flows from the financial asset expire,or when the Group transfers the financial asset, or when substantially all the risks and rewards of ownership of thefinancial asset have been transferred in a transaction.

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(ii) Financial liabilities(a) Initial recognition and measurement
The Group initially recognizes financial liabilities on the transaction date.
The Group, at initial recognition, measures all financial assets at fair value. However, financial liabilities measured
at amortized cost are measured at fair value less the transaction costs directly attributable to the financial liability.
Transaction costs of financial liabilities measured at fair value through net profit or loss are recognized in net profit
or loss.
(b) Classification and subsequent measurement
The Group classifies financial liabilities as either financial liabilities measured at fair value through net profit or loss or
financial liabilities measured at amortized cost. These classifications are determined at the time of initial recognition.
Financial liabilities after initial recognition are measured in the following manner according to each classification.
Derivative liabilities fall under the Group’s financial liabilities measured at fair value through net profit or loss. The
Group has not made any irrevocable elections to measure financial liabilities as financial liabilities measured at fairvalue through net profit or loss, at initial recognition. After initial recognition, financial liabilities measured at fair value
through net profit or loss are measured at fair value, and fair value changes are recognized in net profit or loss forthe period.
After initial recognition, financial liabilities measured at amortized cost are measured using the effective interest
method. Amortization using the effective interest method and any gains or losses due to derecognition arerecognized in net profit or loss for the period.
(c) Derecognition of financial liabilities
The Group derecognizes financial liabilities when they are extinguished (i.e., when the contractual obligation is
fulfilled), or when a specific contractual obligation is discharged, canceled, or expires.
(iii) Offsetting a financial asset and a financial liability
Financial assets and financial liabilities are offset and presented in the consolidated statement of financial position as
a net amount, if and only if the Group has a legal right to offset financial assets with financial liabilities and the Groupintends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
(5) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits withdrawable as necessary, and short-term investments which
are easily converted into cash, with original maturities of three months or less and minimal risk of changes in value.
(6) Inventories
Inventories are measured at the lower of cost and net realizable value.
Cost of inventories includes purchase costs, processing costs, and all other costs incurred in bringing inventory to its
existing location and condition.
Cost of inventories is calculated primarily using the first-in, first-out method.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs ofcompletion and selling expenses.
(7) Property, plant and equipment
The cost model has been applied, and all property, plant and equipment are measured at cost less any accumulated
depreciation and accumulated impairment losses.
Cost includes costs directly attributable to the acquisition of the assets, the cost of restoring the site, and other costs.
Depreciation of assets other than land and construction in progress is calculated using the straight-line method
based on the estimated useful life of each asset. The estimated useful lives of major assets are as follows:• Buildings and structures:
2 to 50 years• Machinery, equipment and vehicles: 2 to 20 years• Tools, furniture and fixtures:
2 to 20 years
The estimated useful lives, residual values, and depreciation methods are reviewed each year and revised as necessary.

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(8) Intangible assets
The cost model has been applied, and all intangible assets are measured at cost less any accumulated amortization
and accumulated impairment losses.
Intangible assets comprise mainly development expenses, and expenses incurred in development activities arecapitalized if and only if they meet all of the requirements listed below:• I t is technically feasible to complete their developments to use or sell them;•T he Group has the intent to complete their developments and to use or sell them;•T he Group is capable of using or selling them;• I t is highly probable that they will generate future economic benefits;•T he Group has the adequate technical, financial, and other resources to complete their developments and to use
or sell them; and•T he Group is capable of reliably measuring the expenditures associated with the intangible assets during thedevelopment process.
Capitalized development expenses are amortized using the straight-line method over the estimated useful life
(mainly five years) commencing from the time the product subject to development commences mass production.
The estimated useful lives and amortization methods are reviewed each year and revised as necessary.
(9) Leases
The Group determines whether a contract is or contains a lease at the commencement of the contract. If the right tocontrol the use of an asset for a specified period of time is transferred in exchange for consideration, the contract isdeemed to be or contain a lease.
(i) Lease as lessee
At the commencement date, a lessee shall recognize a right-of-use asset and a lease liability. At the commencement
date, the right-of-use asset is recognized at cost. After the commencement date, the right-of-use asset will bemeasured at cost less accumulated depreciation and accumulated impairment losses by applying the cost model.
Right-of-use assets will be depreciated using the straight-line method over either the estimated useful life of anasset or its lease term, whichever is shorter.
At the commencement date, a lessee shall measure the lease liability at the present value of the lease paymentsthat are not paid at that time. After the commencement date, the carrying amount of a lease liability is increased or
decreased in a manner to reflect the interest rate on the lease liability and the lease payments already paid. If a leaseliability is reassessed or the terms and conditions of a lease contract are modified, the lessee shall remeasure thelease liability and recognize the amount of the remeasurement of the lease liability as an adjustment to the right-ofuse asset.
For leases that expire within 12 months or of which underlying assets are of low value, lease payments arerecognized as net profit or loss primarily on a straight-line basis over the period of the lease.
(ii) Leases as lessor
Each lease is classified as either an operating lease or a finance lease. A lease is classified as a finance lease if ittransfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified
as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of anunderlying asset. Whether a lease is a finance lease or an operating lease depends on the substance of thetransaction rather than the form of the contract.
(a) Finance lease
At the commencement date of a lease, assets held under a finance lease are presented as a receivable at an amountequal to the net investment in the lease.
(b) Operating lease
Lease payments from operating leases are recognized as net profit or loss primarily on a straight-line basis.
(c) Sublease
In classifying a sublease, an intermediate lessor shall classify the sublease as an operating lease if the head lease is a
short-term lease; otherwise, the intermediate lessor shall classify the sublease by reference to the right-of-use asset
arising from the head lease.

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

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(13) Provisions
Provisions are recognized if a present legal or constructive obligation exists as a result of a past event that can be
estimated reliably and if it is probable that an outflow of economic resources will be required to settle the obligation.
When the time value of money is material, a provision is measured at the present value to which estimated cash
flows are discounted using a pre-tax discount rate that reflects the risks specific to the obligation. Increases in theamount of provisions associated with the passage of time are recognized in net profit or loss.
(14) Government-imposed levies
Government-imposed levies are recognized as a liability in the estimated amount to be paid when an event obligating
payment to the government has occurred.
(15) Equity(i) Common shares
The amount of equity instruments issued by the Company is recognized in common stock and capital surplus, anddirect issue costs (after consideration of tax effects) are deducted from capital surplus.
(ii) Treasury stock
When the Company acquires treasury stock, the consideration paid, including direct transaction costs (after
consideration of tax effects), is recognized as a deduction from equity. When the Company disposes of treasury stock,gains or losses on sales of treasury stock are recognized in capital surplus.
(16) Revenues(i) Revenue from contracts with customers
The Group recognizes revenue based on the following five-step approach.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract(s).
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract(s).
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Group’s primary line of business involves the manufacture and sale of seats for automobiles. Revenue
pertaining to the sale of these products will be recognized when a product and control of said product are transferredto the customer and the performance obligation is deemed satisfied according to the contract with the customer.
Revenue will be measured as amounts net of discounts and other deductions from compensation agreed upon in
the contract with the customer.
(ii) Interest income
Interest income is recognized based on the effective interest method.
(iii) Dividend income
Dividend income is recognized when the right to receive payment of the dividend is established.
(17) Government grants
Government grants are recognized at fair value when and only when there is reasonable assurance that the Group willcomply with the conditions attached to the grant and that the grant will be received.
Government grants relating to revenues are recognized in net profit or loss over the period in which the expenses
are compensated by the grants.
Government grants relating to assets are recognized as deferred revenue and reclassified to net profit or loss on asystematic basis over the useful life of the asset.
(18) Share-based remuneration
The Company has adopted a restricted stock compensation scheme, which is accounted for as an equity-settled share-based
remuneration plan. As to the restricted stock compensation, the restricted shares as of the allotment date are measured atfair value and recognized as an expense, along with a corresponding increase in equity, over the vesting period.

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81

(19) Income taxes
Income taxes comprise current taxes and deferred taxes, and they are recognized in net profit or loss, excluding
items related to business combinations, items that are directly recognized in equity, and items recognized in othercomprehensive income.
Current taxes are calculated based on the estimated payment to or refunds from the tax authorities. Current tax
liabilities are calculated based on tax rates and tax laws that have been enacted or substantively enacted by the end of
the fiscal year.
Deferred taxes are recognized for temporary differences between the carrying amounts of assets and liabilities foraccounting purposes and their tax bases at the end of the fiscal year, unused tax losses, and unused tax credits(hereinafter “temporary differences”).
Deferred tax liabilities are generally recognized for all taxable temporary differences, while deferred tax assets arerecognized for deductible temporary differences, unused tax losses, and unused tax credits only to the extent that itis probable that there will be taxable profits against which the temporary differences may be utilized.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when thetemporary difference is reversed based on the tax rates and tax laws that have been enacted or substantively enacted
by the end of the fiscal year.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same tax authority.
The Group has adopted the amendments to IAS 12 Income Taxes issued by the International Accounting Standards
Board (IASB) in May 2023. Also, the Group has adopted a temporary exception exempting from recognition anddisclosure of deferred tax assets and deferred tax liabilities related to corporate taxes under the Pillar Two
Model Rules.
(20) Basic earnings per share
Basic earnings per share is calculated by dividing profit or loss for the year attributable to ordinary shareholders of theparent by the weighted-average number of ordinary shares outstanding during the year adjusted for the weightedaverage number of treasury shares purchased in the year.

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

(2) A ccounting method for revenue, profits or losses, assets, liabilities, and other items according to reportable segment
Accounting methods for reportable business segments are the same as those presented in Note 3 “ImportantAccounting Policies.”
The Company decides the price of transactions carried out among segments by considering market prices andgross costs, and through price negotiations.
(3) Information on revenue, profits or losses, and other items according to reportable segment
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)
Reportable segments
Japan

The Americas

China

Asia
and Europe

Total

Adjustments

Consolidated

External revenue¥61,515¥144,192¥111,177¥33,074¥349,958¥      —

¥349,958

Inter-segment revenue

21,183

335

4,059

1,128

26,707(26,707)—

Revenue:

Total¥82,698¥144,527¥115,236¥34,202¥376,666¥(26,707)¥349,958¥ 6,261¥   (252)¥ 20,000¥ 1,957¥ 27,966¥ (4,967)¥ 22,998

Finance income andfinance costs

—

—

—

—

—

—

2,249

Share of profit of investments
accounted for using theequity method

—

—

—

—

—

—

590

Income before income tax

—

—

—

—

—

—

25,839Segment profits (losses)

Notes: 1. Adjustments of –¥4,967 million for segment profits included an inter-segment elimination of ¥191 million and operating
expenses of –¥5,159 million associated with the administration division of the headquarters of the parent, which could not
be allocated.
2. Profits (losses) of reportable segments are figures based on operating income as reported in the consolidated statement of
profit and loss .

Other important items(Unit: Million yen)
Reportable segments

5. SEGMENT INFORMATION(1) Overview of reportable segments
The reportable segments are components of the Company for which separate financial information is available. Thesesegments file monthly reports which the Board of Directors uses for deciding the allocation of management recourses
and evaluating results.
The Company establishes subsidiaries in Japan and other countries for the execution of its business activities. In thecourse of its business management, the Company categorizes its subsidiaries into reporting segments based on theirlocation and evaluates their business results by each segment.
The categories of reportable segments are as follows.
Reportable segment

Japan

Depreciation and amortization

The Americas

Asia
and Europe

China

Total

Adjustments

Consolidated¥3,268¥4,252¥2,085¥1,440¥11,046¥(12)¥11,033

Impairment losses

137

—

6

—

143

—

143

Capital expenditures

4,528

6,213

1,392

2,332

14,466—

14,466

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

Country or region

Japan

Japan

The Americas

United States, Canada, Mexico, Brazil

China

China and Hong Kong

Asia and Europe

Thailand, Philippines, India, Indonesia, United Kingdom*, Hungary, Poland* With the dissolution of TS TECH UK LTD, a consolidated subsidiary based in the United Kingdom, this company is removed from thescope of consolidation as of the end of the current fiscal year.
In the reportable segments of Japan, The Americas, and Asia and Europe, the Company manufactures and sells products that mainly
consist of automobile seats, automobile interiors, motorcycle seats, and resin-based products for motorcycles. In the reportablesegment of China, the Company engages primarily in the manufacture and sale of automobile seats and automobile interiors.

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83

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)(5) Information according to region(i) Revenue(Unit: Million yen)

Reportable segments
Japan

The Americas

Asia
and Europe

China

Total

Adjustments

Revenue:
External revenue¥61,266¥193,333¥115,985¥38,616¥409,200

Inter-segment revenue

23,677

681

1,814

1,547

27,721¥   —¥409,200(27,721)—

FY2023(April 1, 2022–March 31, 2023)

Japan¥ 60,298¥ 60,346

The United States

103,735

138,645

Canada34,23344,079111,600

116,429¥84,943¥194,015¥117,800¥40,164¥436,922¥(27,721)¥409,200

China¥ 5,151¥ (3,199)¥ 18,227¥ 2,175¥ 22,355¥ (7,098)¥ 15,257

Other

40,09149,700Finance income andfinance costs

—

—

—

—

—

—

2,948

Total

¥349,958¥409,200

Share of profit of investments
accounted for using theequity method

—

—

—

—

—

—

487

Income before income tax

—

—

—

—

—

—

18,692

Total
Segment profits (losses)

Notes: 1. Adjustments of –¥7,098 million for segment profits included an inter-segment elimination of ¥278 million; operating
expenses of –¥6,102 million associated with the administration division of the headquarters of the parent, which could not
be allocated; and loss of –¥1,274 million on reversal of foreign currency translation adjustments arising from the dissolutionof TS TECH UK LTD, a consolidated subsidiary based in the United Kingdom.
2. Profits (losses) of reportable segments are figures based on operating income as reported in the consolidated statement of
profit and loss.

Other important items(Unit: Million yen)
Reportable segments
Japan

Depreciation and amortization
Impairment losses
Capital expenditures

The Americas

Asia
and Europe

China

Adjustments

Consolidated¥3,613¥4,457¥2,296¥1,527¥11,895

Total

¥(16)

¥11,879

—

—

23

—

23

—

23

7,093

3,509

1,125

2,877

14,606—

14,606(4) Information related to products and services
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
Segment information according to products and services is omitted as revenue from external customers in a single
product/service category accounts for the majority of revenue in the consolidated statement of profit or loss.
For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)
Segment information according to products and services is omitted as revenue from external customers in a single
product/service category accounts for the majority of revenue in the consolidated statement of profit or loss.

TS TECH Integrated Report 2023

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

(ii) Non-current assets (excluding financial instruments, deferred tax assets, net defined benefit asset, andrights arising from insurance contracts)(Unit: Million yen)
FY2022

FY2023(As of March 31, 2022)(As of March 31, 2023)

Japan¥37,614¥41,034

The United States

18,854

18,169China

11,19010,465

Other

19,781

24,893

Total¥87,440¥94,562

FY2022

FY2023(6) Information according to major customers

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

84

FY2022(April 1, 2021–March 31, 2022)

Consolidated(Unit: Million yen)

Honda Motor Co., Ltd. Group(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥313,659¥364,274

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

6. CASH AND CASH EQUIVALENTS
The breakdown of cash and cash equivalents is as follows.
(Unit: Million yen)
FY2022

Cash and cash equivalents

FY2023(As of March 31, 2022)(As of March 31, 2023)¥139,585¥132,914

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

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85

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

Amounts recognized as dividends received from equity instruments measured at fair value through othercomprehensive income are as follows.
(Unit: Million yen)
FY2022

Trade receivables
OthersAllowance for doubtful accounts
Total

FY2023(As of March 31, 2022)(As of March 31, 2023)¥60,222¥69,501

5,208

5,312

(1)

(1)

¥65,430¥74,812

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

FY2022

FY2023(As of March 31, 2022)(As of March 31, 2023)¥ 8,600¥15,392

Short-term loans receivable22Long-term loans receivable

549

529

Lease receivables

4,403

8,599

Equity instruments

18,411

19,224

0

27

4,846

3,239

(17)

(14)

¥36,797¥47,002

OthersAllowance for doubtful accounts
Total

FY2023(April 1, 2022–March 31, 2023)

¥532

¥656

FY2022

FY2023

Dividends received on investments held at the end of the period

9. INVENTORIESThe breakdown of inventories is as follows.

(As of March 31, 2022)(As of March 31, 2023)¥ 4,576¥ 3,557

Work in progress

3,273

2,287

Raw materials and supplies

35,681

26,094

Total¥43,532¥31,939

Merchandise and finished goods(Unit: Million yen)

Derivative financial assets

FY2022(April 1, 2021–March 31, 2022)(Unit: Million yen)

8. OTHER FINANCIAL ASSETS
The breakdown of other financial assets is as follows.

Deposits with maturities of three months or more

(Unit: Million yen)

Note: I nventories recognized as expenses during the previous fiscal year and the current fiscal year amount to ¥71 million and¥1,108 million respectively.

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

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

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

8,865

14,238Constructionin progress

Current assets¥ 9,700¥17,757

Non-current assets

27,097

29,244

Balance as of April 1, 2021

Total

¥36,797¥47,002

Acquisition cost

2,724

1,752

382

513

Sales or disposal(2,409)(4,553)(2,146)

(862)

(33)

(10,005)

147

2,822

1,288

12

(5,108)

(837)

4,182

5,746

2,377

535

374

13,216

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

Balance as of March 31, 2022

(Unit: Million yen)
FY2023(As of March 31, 2022)(As of March 31, 2023)¥13,496¥13,653PIOLAX, Inc.

480

596

Isuzu Motors Ltd.

482

501

OILES CORPORATION

444

493

Kurabo Industries Ltd.

305

437

Honda Motor Co., Ltd.

Effects of foreign currency translation
Other

Major securities and fair values designated as equity instruments measured at fair value through othercomprehensive income are as follows.
FY2022

Reclassification to other account

Other

3,204

3,544

Total

¥18,411¥19,224

Total

(565)

(50)

(114)

(16)

14

(731)

¥71,595¥78,528¥35,954¥14,072¥ 6,611¥206,762

Acquisition cost

1,520

1,926

1,379

767

8,557

14,149

Sales or disposal(677)(2,283)(2,896)

(297)

(8)

(6,162)

Reclassification to other account

4,015

5,956

750

9

(11,507)(776)

Effects of foreign currency translation

2,869

3,832

1,431

318

510

8,962

400

265

106

64

92

929

¥79,724¥88,225¥36,725¥14,934¥ 4,255¥223,866

Other
Balance as of March 31, 2023

The Group has elected to present subsequent changes in the fair value of the equity instruments held by the Group
in other comprehensive income, since those equity instruments are held to maintain or strengthen the business
relationship with business partners.

86

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TS TECH Integrated Report 2023

87

Accumulated depreciation and impairment loss
(Unit: Million yen)
Buildings
and structures

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

Land

Constructionin progress

Total¥33,714¥57,112¥30,556¥444¥—¥121,827

2,759

4,202

1,715

74

—

8,751

Impairment loss

—

5

1

137

—

143

Sales or disposal(2,339)(4,261)(2,049)(13)—(8,663)

(53)

(96)

(51)

(5)

—

(207)

1,813

4,440

2,154

45

—

8,455

(35)

(4)

(271)

(93)

—

(405)

¥35,858¥61,397¥32,056¥590¥—¥129,902

3,151

4,466

1,851

86

—

9,555

Impairment loss

—

22

0

—

—

23

Sales or disposal(636)(2,152)(2,878)(86)—(5,753)

—

—

—

—

—

—

1,364

3,126

1,313

9

—

5,814

239

101

71

37

—

450

¥39,977¥66,961¥32,416¥636¥—¥139,992

Balance as of April 1, 2021
Depreciation

Reclassification to other accountEffects of foreign currency translation
Other
Balance as of March 31, 2022
Depreciation

Reclassification to other accountEffects of foreign currency translation
Other
Balance as of March 31, 2023

Notes: 1. Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative
expenses” in the consolidated statement of profit or loss.
2. Depreciation of right-of-use assets included in property, plant and equipment are outlined in Note 31 “Leases.”

11. INTANGIBLE ASSETS(1) Schedule of intangible assets
The following are changes in the cost, accumulated amortization and impairment loss, and carrying amounts ofintangible assets.
Cost(Unit: Million yen)

Balance as of April 1, 2021
Acquisition cost

SoftwareDevelopment
expenses

Goodwill¥5,943¥18,518

Other

Total

¥463

¥1,228¥26,154

111

—

—

116

228

—

1,632

—

—

1,632

(175)

(3,787)——(3,962)

Effects of foreign currency translation

117

156

—

9

283

Other

129

—

—

(145)

(16)

¥6,125¥16,520¥463¥1,209¥24,319

318

—

—

137

456

—

1,910

—

—

1,910

Increase due to internal development
Disposal

Balance as of March 31, 2022
Acquisition cost
Increase due to internal development(143)(2,817)—(0)(2,960)Effects of foreign currency translation

32

157

—

7

197

Other

57

—

—

(39)

18

¥6,392¥15,770¥463¥1,314¥23,941

SoftwareDevelopment
expenses

Goodwill¥5,361¥  9,743¥—¥136

Disposal

Balance as of March 31, 2023
Accumulated amortization and impairment loss

Carrying amounts(Unit: Million yen)

(Unit: Million yen)
Buildings
and structures

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

Land

Constructionin progress

Total

Balance as of April 1, 2021

Other

Total

¥15,242

Balance as of April 1, 2021

¥33,802¥15,697¥3,610¥13,445¥2,498¥69,053

Amortization

307

1,837

—

136

2,281

Balance as of March 31, 2022

35,737

17,1303,898

13,482

6,611

76,860

Disposal(173)(3,787)——(3,960)

Balance as of March 31, 2023

39,746

21,263

4,309

14,2984,255

83,874

Effects of foreign currency translation

104

148

—

8

261

Note: The carrying amounts of right-of-use assets included in property, plant and equipment are outlined in Note 31 “Leases.”

Other
Balance as of March 31, 2022

(10)

—

—

(76)

(86)

¥5,589¥  7,942¥—¥206¥13,738

Amortization

271

1,956

—

95

2,323

Disposal(142)(2,816)—(0)(2,959)

28

149

—

4

182

Effects of foreign currency translation
Other
Balance as of March 31, 2023

1

(0)

—

(32)

(31)

¥5,748¥ 7,232¥—¥272¥13,252

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

Carrying amounts(Unit: Million yen)

Balance as of April 1, 2021

88

TS TECH Integrated Report 2023

SoftwareDevelopment
expenses

Goodwill¥581¥8,774

¥463

Other

Total

¥1,092¥10,911

Balance as of March 31, 2022

536

8,577

463

1,003

10,580

Balance as of March 31, 2023

644

8,538

463

1,042

10,688TS TECH Integrated Report 2023

89

(2) Development expenses
The breakdown of development expenses is as follows.
(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥11,930¥14,344

Reclassification to capitalized development expenses(1,632)(1,910)

Amortization of capitalized development expenses

1,837

1,956

¥12,136¥14,390

R&D expenditures incurred during the period

Total

14. INCOME TAXES(1) Deferred tax assets and deferred tax liabilities
The breakdown of deferred tax assets and deferred tax liabilities is as follows.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)

Property, plant and equipment
Intangible assets(Unit: Million yen)
FY2022

FY2023(As of March 31, 2022)(As of March 31, 2023)

Notes and accounts payable – trade¥47,588¥50,300

Other

19,436

19,409Total¥67,024¥69,710

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

Accrued expenses and provisions

Lease obligations¥   —¥ 2,232

1,021

106

—

1,128

117

(19)

—

98

1,568

68

—

1,636

301

(14)

(19)

266

23

972

—

995

Other
Total deferred tax assets

1,185

1,096

110

2,392

¥ 6,701¥1,958¥  90¥ 8,750¥ 1,003¥  631¥   —¥ 1,635

2,455

(226)

—

2,229

Deferred tax liabilities:

Investments in equity instruments

3,740

—

207

3,947

(Unit: Million yen)

Net defined benefit asset

1,067

(75)

294

1,285

FY2023

Undistributed earnings of foreign subsidiaries

1,720

(521)

—

1,198

(As of March 31, 2022)(As of March 31, 2023)¥6,030¥4,822

108

7

Total

¥6,138¥4,829Current liabilities¥1,718¥1,166

Non-current liabilities

4,420

3,662

Total

¥6,138¥4,829Derivative financial liabilities¥ (250)Net defined benefit liability

Intangible assets

FY2022¥ 2,483

Balance atthe end of
the fiscal year

Unused tax losses

Property, plant and equipment
13. OTHER FINANCIAL LIABILITIESThe breakdown of other financial liabilities is as follows.

Recognizedthrough net
profit or loss

Deferred tax assets:
Inventories

12. TRADE AND OTHER PAYABLES
The breakdown of trade and other payables is as follows.

Balance atthe beginning of
the fiscal year

Recognizedthrough othercomprehensive
income

774

695

—

1,470

Total deferred tax liabilities

Other¥10,762¥  503¥ 501¥11,766

Net deferred tax liabilities¥ (4,060)¥1,455¥(410)¥ (3,016)

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

Note: Derivative financial liabilities are classified as financial liabilities measured at a fair value through net profit or loss.

90

TS TECH Integrated Report 2023

TS TECH Integrated Report 2023

91For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)
Balance atthe beginning of
the fiscal year

Recognizedthrough net
profit or loss

Recognizedthrough othercomprehensive
incomeBalance atthe end of
the fiscal year

Deferred tax assets:
Inventories
Property, plant and equipment
Intangible assets
Accrued expenses and provisions
Net defined benefit liability
Unused tax losses
Other
Total deferred tax assets¥ 2,232

¥

(28)

¥

—

¥ 2,203

1,128

161

—

1,289

98

848

—

947

1,636

122

—

1,759

266

(68)

209

407

995

(82)

—

913

2,392

828

(110)

3,110

¥ 8,750¥1,781¥ 98¥10,630¥ 1,635¥ 583¥¥ 2,219

Deferred tax liabilities:
Property, plant and equipment—

Intangible assets

2,229

115

—

2,344

Investments in equity instruments

3,947

—

190

4,138

Net defined benefit asset

1,285

(72)

232

1,445

Undistributed earnings of foreign subsidiaries

1,198

(55)

—

1,142

Other

1,470

(599)

—

870

Total deferred tax liabilities¥11,766

¥

(27)

¥ 423

¥12,162

Net deferred tax liabilities¥ (3,016)¥1,809¥(324)¥ (1,531)

The breakdown by expiration date of unused tax losses and tax credits for which deferred tax assets have not beenrecognized is as follows. Amounts are presented on a taxable amount basis.
(Unit: Million yen)
FY2022(Unit: Million yen)
FY2022

Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities

FY2023(As of March 31, 2022)(As of March 31, 2023)¥ 2,454¥ 3,550

5,470

5,081

¥(3,016)¥(1,531)¥  224¥  569569

702

Between 2 and 3 years

664

1,527

Between 3 and 4 years

7

22

Between 4 and 5 years—

175

Within 1 year

More than 5 years
Total(Unit: Million yen)
FY2022

Deductible temporary differences

92

TS TECH Integrated Report 2023

57

89

¥1,524¥3,087

Taxable temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not beenrecognized are as follows.
Deferred tax liabilities were not recognized as the timing of the reversal of the temporary differences could becontrolled by the Group and it was probable that the temporary differences would not reverse in the foreseeable future.
Amounts are presented on an income basis.
(Unit: Million yen)
FY2022

Taxable temporary differences

FY2023(As of March 31, 2022)(As of March 31, 2023)¥139,312¥139,930(2) Income tax expenses
The breakdown of income tax expenses is as follows.
(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥ 8,146¥  9,604

Current tax expense:
Taxable amount for the fiscal year
Adjustment for prior years
Total current tax expense6042¥ 8,207¥  9,647¥(1,525)¥(3,009)—

15

Deferred tax expense:
Accrual and reversal of temporary differences
Changes in tax rates

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

(As of March 31, 2023)

Between 1 and 2 years

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

Deferred tax assets and deferred tax liabilities in the consolidated statement of financial position are as follows.

FY2023(As of March 31, 2022)

354

1,203

Total deferred tax expense¥(1,171)¥(1,790)

Total income tax expense¥ 7,035¥  7,856

Changes in unrecognized temporary differences, etc.

FY2023(As of March 31, 2022)(As of March 31, 2023)

¥851

¥498

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93

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

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)

(Unit: %)FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

29.9%

29.9%

Differences with tax rates applied to foreign subsidiaries

(6.1)

(1.2)

Undistributed earnings of foreign subsidiaries

(1.9)

0.3

Permanent differences including dividend income(19.1)(19.1)

Differences due to factors including elimination of intra-grouptransactions

24.2

28.5

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

(0.7)

(0.8)

Tax credits

(2.1)

(4.2)

Changes in unrecognized deferred taxes

1.4

6.4

Effective statutory tax rate

Other
Average actual tax rate

1.6

2.2

27.2%

42.0%

(Unit: Million yen)
Provision for
product
warranties

Provision forseverance
charges

Asset retirement
obligations

Other

Total

¥    76¥  2,343¥  97¥  419¥ 2,936

Increase during the period

163

—

—

80

243

Decrease during the period (provision used)(205)(2,188)

(12)

(195)

(2,602)

Decrease during the period (reversal)

—

(53)

—

(190)

(243)

Effects of foreign currency translation

4

26

—

10

41

¥    39¥    127¥  84¥  123Current liabilities
Non-current liabilities
Total¥    39¥    127¥  12¥    38

—

—

72

85

¥    39¥    127¥  84¥  123

¥
¥

Other

Total

¥   39¥  127¥ 84¥123¥  375

625

—

72

164

862

Decrease during the period (provision used)

(268)

(129)

(27)

(39)

(465)

Decrease during the period (reversal)

—

—

—

—

—

Effects of foreign currency translation

4

1

—

10

17

Balance at the end of the fiscal year¥  400

¥

—

¥129

¥259

¥  789Current liabilities¥  400

¥

—

¥  —

¥239

¥  639—¥  400217
375

TS TECH Integrated Report 2023

—

129

20

150

—

¥129

¥259

¥  789(2) Defined benefit plan(i) Reconciliation of defined benefit obligations (assets) with the net defined benefit liability (asset) recorded in
the consolidated statement of financial position(Unit: Million yen)
FY2022

FY2023(As of March 31, 2022)(As of March 31, 2023)

Ending balance of defined benefit obligations¥ 17,561¥ 16,763

Ending balance of plan assets(20,406)(19,788)

Net amount of defined benefit obligations and assets(2,845)(3,024)

Net defined benefit liability

1,466

1,917

Net defined benefit asset(4,311)(4,941)¥ (2,845)¥ (3,024)

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

94¥

16. POST-EMPLOYMENT BENEFITS(1) Overview of the post-employment benefit plan adopted by the GroupTo prepare for the payment of retirement benefits to its employees, the Company and certain consolidated
subsidiaries have adopted funded and unfunded defined benefit plans and defined contribution plans.
The defined benefit plans consist mainly of a contract-type corporate pension plan which pays out lump-sum
payments and annuities based on a points system.
The contract-type corporate pension plan is managed, pursuant to a defined benefit corporate pension contract
entered into by both labor and management, through the entrustment of the management and administration of plan
assets to an investment institution.
In addition, the contract sets forth mandatory recalculation of premiums every five years, pursuant to the Defined
Benefit Corporate Pension Act, in order to maintain balanced finances into the future.

375

157
¥

Asset retirement
obligations

Non-current liabilities

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)

Balance at the end of the fiscal year

Provision forseverance
charges

Increase during the period

Balance at the beginning of the fiscal year

Total

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

Balance at the beginning of the fiscal year

Provision for
product
warranties

TS TECH Integrated Report 2023

95

(iv) Major breakdown of fair values of plan assets(ii) Reconciliation of present value of defined benefit obligations(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥17,370¥17,561

1,089

999

Interest cost

162

152

Prior service cost

(218)

13

—

105

Actuarial differences (due to changes in financial assumptions)

(382)

(540)

Actuarial differences (due to adjustments)

(73)

455

Benefits paid

(503)

(2,053)

Effects of foreign currency translation

116

70

¥17,561¥16,763

Beginning balance of defined benefit obligations
Service cost

Actuarial differences (due to population statistics)

Ending balance of defined benefit obligations(Unit: Million yen)

Notes: 1. Service cost, interest cost, and prior service cost are included in “Cost of sales” and “Selling, general and administrative
expenses” in the consolidated statement of profit or loss.
2. Actuarial differences are included in “Remeasurements of net defined benefit plans” in the consolidated statement ofcomprehensive income.
3. During the current fiscal year, the Company expanded post-retirement support programs and established supplements forearly retirement. As a result, the number of retirees increased, leading to an increase in benefit payments in comparison
with the previous fiscal year.

FY2023

FY2022(As of March 31, 2023)(As of March 31, 2022)

Assets with quoted
market prices
in active markets

Assets without quoted
market prices
in active markets

Assets with quoted
market prices
in active markets

Equity instruments¥9,807¥    —¥10,266

Debt instruments

—

6,906

—

6,026

General accounts

—

2,401

—

2,372

Other

2

1,288

6

1,116

Total

¥9,810¥10,596¥10,272¥9,515

FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥19,297¥20,406

Interest income

142

126

Return on plan assets other than interest

751

54

Contributions from the employer

643

654

Benefits paid

(430)

(1,457)2

2¥20,406¥19,788

Ending balance of plan assets—(Unit: %)FY2022(Unit: Million yen)

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

(iii) Reconciliation of the fair values of plan assets

Beginning balance of plan assets

Assets without quoted
market prices
in active markets

Notes: 1. Interest income is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated
statement of profit or loss.
2. Return on plan assets other than interest is included in “Remeasurements of net defined benefit plans” in the consolidated
statement of comprehensive income.
3. During the current fiscal year, the Company expanded post-retirement support programs and established supplements forearly retirement. As a result, the number of retirees increased, leading to an increase in benefit payments in comparison
with the previous fiscal year.

FY2023(As of March 31, 2022)(As of March 31, 2023)

0.8%

1.2%

Discount rate

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

Discount rate

FY2022

FY2023

Changes in assumptions(As of March 31, 2022)(As of March 31, 2023)

Rise by 0.5%¥(1,042)¥(1,070)

Fall by 0.5%

1,154

957

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

(vii) Contribution to plan assets in the following fiscal year
The Company plans to contribute ¥679 million to plan assets in the year ending March 31, 2024 (April 1, 2023 toMarch 31, 2024).
(viii) Maturity analysis of defined benefit plans
Maturity analysis of defined benefit plans is as follows.
(Unit: Years)
FY2022

Weighted-average duration

FY2023(As of March 31, 2022)(As of March 31, 2023)

13.5

11.9

(3) Defined contribution plans
Amounts recognized as expenses of the defined contribution plans are as follows.
(Unit: Million yen)
FY2022

Amounts recognized as expenses

96

TS TECH Integrated Report 2023

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

¥626

¥832

TS TECH Integrated Report 2023

97

17. NET ASSETS AND OTHER COMPONENTS OF EQUITY(1) Management of shareholders’ equity
The Group manages its shareholders’ equity in order to ensure the stable, continuous payout of dividends while atthe same time utilizing it in investments for the development of new technology and the expansion of its business.
The Group uses the equity ratio as the primary indicator in the management of shareholders’ equity, which is
calculated by dividing “Total equity attributable to owners of parent” by “Total liabilities and equity.”(5) Changes in other components of equity
Changes in other components of equity are as follows.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)
Financial assets
measured at fairvalue through other Remeasurements
comprehensiveof net definedincomebenefit plans(Unit: Million yen)
FY2022(As of March 31, 2022)

FY2023(As of March 31, 2023)

Beginning balance

Shareholders’ equity:
Total equity attributable to owners of parent¥296,855¥298,791

Total liabilities and equity

415,985

416,226

Equity ratio (%)

71.4%

71.8%

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

(2) Details of capital surplus
Details of capital surplus are as follows.
(i) Legal capital surplus
The Companies Act of Japan (hereinafter “the Companies Act”) requires that in the issue of shares, 50% or more of theamount of payment for shares and assets delivered be incorporated into common stock and the remaining amountbe incorporated into legal capital surplus. The Companies Act also provides that legal capital surplus may beincorporated into common stock by resolution of a shareholders’ meeting.
(ii) Other capital surplus
Increases, etc., in equity corresponding to gains (losses) on disposal of treasury stock and share-based payment transactions(3) Details of retained earnings
Details of retained earnings are as follows.
(i) Legal retained earnings
The Companies Act requires that an amount equivalent to 10% of dividends from retained earnings to be paid be
appropriated and set aside as legal capital surplus and legal retained earnings until the total of legal capital surplus andlegal retained earnings amounts to 25% of common stock. Such legal retained earnings may be used to compensate
for capital deficits. Legal retained earnings may also be reversed by resolution of a shareholders’ meeting.
(ii) Other retained earnings
Other retained earnings represent the cumulative amount of profits earned by the Group.
(4) Details of other components of equity
Details of other components of equity are as follows.
(i) Financial assets measured at fair value through other comprehensive income
The difference between the cost of financial assets measured at fair value through other comprehensive income andthe fair value at the reporting date(ii) Remeasurements of net defined benefit plans
Returns on plan assets other than actuarial differences and interest(iii) Differences on translation from foreign operations
Translation differences arising from the translation of financial statements of subsidiaries prepared in functional
currencies other than Japanese yen into Japanese yen

Total¥8,972¥1,184¥ (4,417)¥ 5,738573

877

14,52015,971Other comprehensive income
Other
Ending balance

Differenceson translationfrom foreign
operations

—

—

—

—

¥9,545¥2,061¥10,103¥21,710For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)
Financial assets
measured at fairvalue through other Remeasurements
comprehensiveof net definedincomebenefit plans

Beginning balance

Total¥ 9,545¥2,061¥10,103¥21,710587(5)10,743

11,325

Other comprehensive income

(0)

—

—

(0)

¥10,132¥2,056¥20,846¥33,035

Other
Ending balance

Differenceson translationfrom foreign
operations(6) Total number of shares authorized to be issued and total number of shares issued
The total number of shares authorized to be issued and total number of shares issued were as follows.
(Unit: Number of shares)
FY2022

FY2023(As of March 31, 2022)(As of March 31, 2023)

Total number of shares authorized to be issued

272,000,000

272,000,000

Total number of shares issued

136,000,000

136,000,000

Note: All shares issued by the Company are common stock with no par value and no restrictions on the shareholders’ rights.

(7) Treasury stock
The amount of treasury stock is as follows.
(Unit: Number of shares)
FY2022

Amount of treasury stock at beginning of the fiscal year
Increase by stock split
Purchase of treasury stock by resolution of the Board of Directors
Purchase of stock less than one unit, etc.
Disposal of treasury stock as restricted stock compensation
Treasury stock held by entities accounted for using the equity
method (the Company’s shares) attributable to the Company
Amount of treasury stock at end of the fiscal year

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

875,754

3,162,967

875,754—

1,461,100

5,383,600

1,809

2,280

(51,200)(58,880)

(250)

5,179

3,162,967

8,495,146

Notes: 1. The Company conducted a two-for-one stock split of common shares as of April 1, 2021. For the previous fiscal year, thenumber of treasury stock at the beginning of the fiscal year represents the number of treasury stock before the stock split.
2. For details on restricted stock delivered, see Note 29 “Share-Based Remuneration.”98

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99

18. REVENUE(1) Disaggregation of revenue
The Company positions “Japan,” “The Americas,” “China,” and “Asia and Europe” geographically as its four reportablesegments and presents revenue from these regions.
Additionally, revenue is further disaggregated into the business segments of its motorcycle business, automobile
business (seats and interior products), and other business. The relationship between disaggregated revenues and therevenues from each reportable segment is as follows.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)
Reportable segments

Motorcycle business
Automobile businessJapan

The Americas

China

Asia
and Europe

Total¥ 4,021¥    481¥     —

¥ 1,165¥  5,669

45,271

138,589

111,177

31,858326,897(Seats)40,852

117,715

105,834

29,079293,481(Interior products)

4,419

20,873

5,343

2,779

33,415

Other business

12,221

5,121

—

49

17,392

Total¥61,515¥144,192¥111,177¥33,074¥349,958

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

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)
Reportable segments
Asia
and Europe

Total

—

¥ 3,033¥  7,786

115,985

35,494

382,656

110,618

32,901

344,835Japan

The Americas

Motorcycle business¥ 4,425¥    328¥

Automobile business

45,025

186,152

41,758

159,556(Seats)

China

3,266

26,595

5,366

2,592

37,820

Other business

11,815

6,852

—

88

18,757

Total¥61,266¥193,333¥115,985¥38,616¥409,200(Interior products)

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

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

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

Receivables from contracts with customers
Contract liabilities

As of April 1, 2021

As of March 31, 2022

As of March 31, 2023

¥58,692¥60,635¥69,954

2,053

1,939

2,434

Receivables from contracts with customers are notes and accounts receivable – trade, and contract liabilities areprimarily related to advances received from customers. In the consolidated statement of financial position, receivablesfrom contracts with customers are included in “Trade and other receivables” and contract liabilities are included in“Other current liabilities.”
Of the revenues recognized during the previous fiscal year and the current fiscal year, the amounts included incontract liabilities at the beginning of the fiscal years were ¥1,408 million and ¥1,368 million, respectively. In addition,
during the previous fiscal year and the current fiscal year, the amount of revenue recognized from performanceobligations satisfied in prior periods was not material.
(3) Transaction price allocated to remaining performance obligations
As there are no significant transactions with contracts with initial expected terms exceeding one year, the Group has
applied a practical expedient and does not disclose information on remaining performance obligations. Additionally,among the compensation from contracts with customers, there are no significant amounts not included in thetransaction price.
(4) Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
For the Group, assets recognized from the costs incurred for obtaining or fulfilling contracts with customers were notmaterial. In addition, the Group has applied a practical expedient and recognized assets with amortization periods of
one year or less, which it would have otherwise recognized, as an expense when incurred.

19. COST OF SALES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Major expense items included in the breakdown of cost of sales and selling, general and administrative expenses
according to the nature of the cost are as follows.
(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

Depreciation and amortization¥11,033¥11,879

Employee benefit expenses

72,36983,316FY2022

FY2023

20. OTHER INCOME AND OTHER EXPENSES
The breakdown of other income is as follows.
(Unit: Million yen)
(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

Land and building rent received¥  135¥  133Gain on disposal of non-current assets

1,448

1,325

644

159

Other

1,012

593

Total

¥3,240¥2,212Gain on government grants

Note: The content of the gain on government grants are stated in Note 21 “Government Grants.”

100

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101

The breakdown of other expenses is as follows.
(Unit: Million yen)
FY2022(April 1, 2021–March 31, 2022)

FY2023

23. EARNINGS PER SHARE
Basic earnings per share and the basis for estimation are outlined below.
Latent common stock that has a dilution effect is not included.

(April 1, 2022–March 31, 2023)

Loss on disposal of non-current assets¥ 55¥   10

Impairment losses

143

23

Other

388

1,860

Total

¥587

¥1,893

Note: “Other” in the current fiscal year represents primarily the loss on reversal of foreign currency translation adjustments arisingfrom the dissolution of a subsidiary in the United Kingdom.

(Unit: Million yen)
FY2022(April 1, 2022–March 31, 2023)

Income attributable to owners of parent¥ 12,416¥  5,343

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

134,150

129,217

Basic earnings per share (Yen)¥  92.56¥  41.35

24. OTHER COMPREHENSIVE INCOME
The breakdown of each item of other comprehensive income is as follows.

21. GOVERNMENT GRANTS
The breakdown of government grants is as follows.

(Unit: Million yen)
(Unit: Million yen)
FY2022(April 1, 2021–March 31, 2022)

FY2023(April 1, 2022–March 31, 2023)

Deferred income relating to government grants

¥219

¥172

Gain on government grants

644

159

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

22. FINANCE INCOME AND FINANCE COSTS
The breakdown of finance income is as follows.
(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

Interest income¥  966¥1,841Dividend income

626

697

Foreign exchange gains

774

541

Other

—

0

Total

¥2,367¥3,080Notes: 1. Interest income is the interest income generated from financial assets measured at amortized cost.
2. Dividend income is the dividend income generated from financial assets measured through other comprehensive income.

The breakdown of finance costs is as follows.
(Unit: Million yen)
FY2022102

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

Interest expense

¥117

¥131

Total

¥117

¥131

TS TECH Integrated Report 2023

FY2023(April 1, 2021–March 31, 2022)

FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

Gains (losses) during the year

¥ 1,206¥    44

Income tax benefit (expense)

(342)

(33)

Subtotal

864

10

Gains (losses) during the year

771

754

Income tax benefit (expense)

(206)

(212)

Subtotal

564

542

73

37

16,3539,329

Components that will not be reclassified subsequently to net profit
or loss
Remeasurements of net defined benefit plans:

Equity financial assets measured at fair value through othercomprehensive income:

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

—

1,274

110

(110)

16,463

10,494

Share of other comprehensive income of affiliates accounted
for using the equity method:
Gains (losses) during the year
Total other comprehensive income (loss), net of tax

895

655

¥18,860¥11,740

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103

26. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIESThe reconciliation of liabilities arising from financing activities is as follows.

25. DIVIDENDS
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(1) Dividends paid

Resolution

Class ofsharesAnnual General Meetingof Shareholders heldon June 25, 2021

CommonsharesBoard of Directors’ meeting
held on November 4, 2021

CommonsharesTotal amountof dividends(Million yen)

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)

Dividend
per share(Yen)

Record date

¥3,159¥47.00March 31, 2021

June 28, 2021

¥3,497¥26.00

September 30, 2021

November 29, 2021

Notes: 1. Dividends in the consolidated statement of changes in equity are equal to the total amount of dividends minus dividends
related to the Company’s shares held by entities accounted for using the equity method.
2. The Company conducted a two-for-one stock split of common shares as of April 1, 2021.
The amount of dividend per share resolved at the Annual General Meeting of Shareholders held on June 25, 2021 is theamount before the stock split, and the amount of dividend per share resolved at the Board of Directors’ meeting held on
November 4, 2021 is the amount after the stock split.

(2) Dividends whose record date is in the current fiscal year but whose effective date is in the following fiscal year

Resolution

Annual General Meetingof Shareholders heldon June 24, 2022

Class ofshares

Source ofdividends

Common Retained
sharesearnings(Unit: Million yen)

Effective date

Total amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective date

¥3,725¥28.00March 31, 2022

June 27, 2022

Non-cash transactions
Beginningbalance

Cash
flows

Resolution

Annual General Meetingof Shareholders heldon June 24, 2022

CommonsharesBoard of Directors’ meeting
held on November 11, 2022

CommonsharesLease liabilities¥5,228¥(1,435)¥1,943¥293¥—¥6,030¥5,228¥(1,435)¥1,943¥293¥—¥6,030For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)
Non-cash transactions
Beginningbalance

Cash
flows

Increase

Foreigncurrencytranslation

Other

Endingbalance

Lease liabilities¥6,030¥(1,571)

¥204

¥324

¥(165)¥4,822

Total¥6,030¥(1,571)

¥204

¥324

¥(165)¥4,822

27. NON-CASH TRANSACTIONS
Details of significant non-cash transactions are as follows.
FY2022Acquisition of assets through a lease arrangement

Total amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective date

¥3,725¥28.00March 31, 2022

June 27, 2022

¥3,875¥30.00

September 30, 2022

November 28, 2022(2) Dividends whose record date is in the current fiscal year but whose effective date is in the following fiscal year

Resolution

Class ofshares

Source ofdividends

Total amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective date

Board of Directors’ meeting
held on May 23, 2023

Common Retained
sharesearnings¥4,214¥33.00March 31, 2023

June 7, 2023

TS TECH Integrated Report 2023

Endingbalance(Unit: Million yen)

Note: Dividends in the consolidated statement of changes in equity are equal to the total amount of dividends minus dividends
related to the Company’s shares held by entities accounted for using the equity method.

104

Other

Total

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(1) Dividends paid
Class ofsharesIncrease

Foreigncurrencytranslation

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥1,943¥204

28. SUBSIDIARIES AND AFFILIATES, ETC.
(1) Composition of the corporate group
The composition of the Group is as stated in “1. Corporate Summary (4) State of Subsidiaries and Affiliates” in the
Company’s annual securities report (in Japanese only).
From the beginning of the current fiscal year, TS TECH (MANDAL) PRIVATE LIMITED, formerly a non-consolidated
subsidiary, was included in the scope of consolidation.
During the current fiscal year, NA SERVICE, S. DE R.L. DE C.V., formerly a consolidated subsidiary, was eliminatedthrough an absorption merger, with TST MANUFACTURING DE MEXICO, S. DE R.L. DE C.V. as the surviving company,
and as such was removed from the scope of consolidation.
From the end of the current fiscal year, TS TECH UK LTD, formerly a consolidated subsidiary, was dissolved, and assuch was removed from the scope of consolidation. As a result, a loss of ¥1,274 million on reversal of foreign currencytranslation adjustments was recorded in the consolidated statement of profit or loss under “Other expenses.”

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105

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

WUHAN TS-GSK AUTO PARTS CO., LTD.
(Unit: Million yen)
FY2022GUANGZHOU TS AUTOMOTIVE INTERIOR SYSTEMS CO., LTD.
FY2022

Non-current assets

3,952

4,053

Current liabilities

10,382

8,598

140

363

Equity20,86019,736

Accumulated non-controlling interests¥ 8,326¥ 7,669¥32,354

Non-current assets

7,896

7,530

Current liabilities

21,24620,014146

105

Equity28,51819,764

Accumulated non-controlling interests¥13,791¥ 9,846(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)(Unit: Million yen)

Revenue¥46,528¥50,802

Net income

5,570

5,155

Other comprehensive income

2,388

108

(April 1, 2022–March 31, 2023)

Revenue¥64,683¥64,175

Net income

8,320

5,566

Other comprehensive income

3,102

6

Comprehensive income

11,423

5,572

Income allocated to non-controlling interests¥ 4,013¥ 2,944

Comprehensive income
Income allocated to non-controlling interests

7,959

5,264

¥ 2,049¥ 1,849(Unit: Million yen)

FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)(Unit: Million yen)

Cash flows from operating activities¥ 5,907¥ 5,473

FY2023

Cash flows from investing activities

(558)

(572)

Cash flows from financing activities(5,827)(6,223)

Effect of exchange rate changes on cash and cash equivalents

1,579

78

Net increase (decrease) in cash and cash equivalents

1,101(1,243)¥(2,300)¥(2,529)(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

Cash flows from operating activities¥ 9,090¥ 6,809

Cash flows from investing activities

(413)

(441)

Cash flows from financing activities(6,784)(14,411)

Effect of exchange rate changes on cash and cash equivalents

1,932

(364)

Net increase (decrease) in cash and cash equivalents

3,825(8,408)¥(3,203)¥ (6,876)

Dividends paid to non-controlling interests

Non-current liabilities

FY2023(April 1, 2021–March 31, 2022)

FY2022¥24,645

FY2023¥42,014

FY2022¥27,430

Current assets(As of March 31, 2023)

Non-current liabilities(As of March 31, 2023)(Unit: Million yen)
(As of March 31, 2022)

Current assets

FY2023(As of March 31, 2022)

Dividends paid to non-controlling interests(3) Matters concerning affiliates
The Group does not have individually significant affiliates. Matters concerning affiliates which are not individuallysignificant are as follows.
(Unit: Million yen)
FY2022Carrying amount of equity interest

FY2023(As of March 31, 2022)(As of March 31, 2023)¥17,257¥17,935

FY2022

FY2023(Unit: Million yen)
(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥  590¥  487

968

693

1,559

1,180

The Group’s equity interest in:
Net income
Other comprehensive income
Comprehensive income

106

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107

29. SHARE-BASED REMUNERATION(1) Restricted stock compensation scheme for directors and executive officers(i) Overview of the scheme
The Company has introduced a restricted stock compensation scheme (hereinafter the “Scheme”) for its directors(excluding outside directors and directors who are members of the Audit and Supervisory Committee) (hereinafter the“Eligible Directors”) and executive officers who do not concurrently serve as directors of the Company (hereinafter,
collectively with the Eligible Directors, the “Eligible Directors, etc.”), with the aim of providing incentives to continuously
improve the Company’s corporate value and to further share value with shareholders.
Under the Scheme, the Eligible Directors, etc., shall pay all of the monetary compensation claims paid by theCompany as assets contributed in kind, and shall receive shares of the Company’s common stock through issuanceor disposal by the Company.
In addition, in the issuing or disposing of shares of common stock (hereinafter “the Stock”) of the Company under
the Scheme, the Company and the Eligible Directors, etc., enter into a restricted stock allotment agreement underwhich 1) the transfer, creation of a security interest on, or any other disposition of the Stock to a third party is
prohibited during the period until the Eligible Directors, etc., retire or resign due to the expiration of their termsof office, mandatory retirement age, or other justifiable reasons (hereinafter the “transfer restriction period”), and2) on the condition of the occurrence of certain events, the Company shall acquire the Stock for no considerationand the like.

Equity settled type(ii) Number and fair value of the shares allotted during the fiscal year
Number and fair value of the shares allotted during the fiscal year are as follows.

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

FY2022(April 1, 2022–March 31, 2023)

June 25, 2021

June 24, 2022

Number of shares allotted

51,20058,880Fair value (Yen)¥1,686¥1,399Note: The fair value of the shares is measured based on the closing price of the Company’s common stock on the Prime Market (inthe previous fiscal year, the First Section) of the Tokyo Stock Exchange on the business day preceding the allotment date.

(iii) T he amount of expenses related to the share-based payment recognized in the consolidated statement of
profit or loss
The amount of expenses related to the share-based payment recognized in the consolidated statement of profit orloss is as follows.
(Unit: Million yen)
FY2022Equity settled type

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

¥74

¥81

Note: Expenses relating to the share-based payment are included in “Cost of sales” and “Selling, general and administrative expenses”
in the consolidated statement of profit or loss. Also, an increase in equity corresponding to the recognized expenses is
included in “Capital surplus.”(2) Restricted stock-based incentive scheme for employee shareholding association(i) Overview of the scheme
The Company has introduced a restricted stock-based incentive scheme (hereinafter the “Scheme”) for the TS TECH
Employee Shareholding Association (hereinafter the “Shareholding Association”), commemorating its 60th anniversary,to enhance the benefit package for its employees.
Under the Scheme, the Company delivers monetary compensation claims, as a special incentive (hereinafter the“Special Incentive”), for the allotment of restricted stock to employees who are eligible to join the Shareholding
Association (hereinafter the “Eligible Employees”). The Shareholding Association shall receive shares of the Company’scommon stock through issuance or disposal by the Company, in return for contribution in kind of the Special Incentive
to the Company, which was contributed by the Eligible Employees.
When the Company issues or disposes of shares of its common stock in this way, the Company enters into a
restricted stock allotment agreement with the Shareholding Association that 1) forbids the transfer to third parties,
creation of a security interest on, or disposal by other means of common shares of the Company delivered under108

TS TECH Integrated Report 2023(ii) Number and fair value of the shares allotted during the fiscal year
No shares were allotted during the previous fiscal year or the current fiscal year.
(iii) The amount of expenses related to the share-based payment recognized in the consolidated statement of
profit or loss
The amount of expenses related to the share-based payment recognized in the consolidated statement of profit orloss is as follows.
(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

¥174

¥61

FY2023(April 1, 2021–March 31, 2022)

Allotment date

this Scheme for a certain period of time (from March 26, 2021 through March 25, 2024) (hereinafter the “Transfer
Restrictions”), 2) where the Eligible Employees have remained members of the Shareholding Association during thetransfer restriction period, the Company shall remove the Transfer Restrictions pertaining to all of the shares allottedto the Eligible Employees, and 3) on the condition of the occurrence of certain events, such as voluntary retirementof the Eligible Employees, the Company shall acquire, for no consideration, part or all of the numbers of sharescorresponding to the stake in the restricted stock held by the Eligible Employees.

30. FINANCIAL INSTRUMENTS(1) Details and the extent of risks arising from financial instruments(i) Policies on the management of financial instruments and risk management
The Group is exposed to various risks arising from financial instruments including credit risk, market risk, and liquidity
risk. To manage the exposures to these risks, the Group conducts risk management according to a certain set of policies.
In terms of investments, the Group primarily uses principal-guaranteed time deposits and similar financial instruments,
while, in terms of funding, the Group raises funds basically with its own financial resources and uses bank loans andsimilar financial instruments as needed.
The Group enters into derivative transactions to minimize the risk of future fluctuations in exchange rates but strictly
adheres to the policy of avoiding such transactions for speculative purposes.
(ii) Credit risk (Risk of a business partner defaulting on its contractual obligations)
Financial assets such as trade and other receivables are exposed to the credit risk of customers, etc.
The Group manages these risks in accordance with its credit management regulations by periodically monitoring
whether any customer has gone over its credit limit, which is set for each customer, while also making efforts to
identify at an early stage concerns for collection due to deterioration of the customer’s financial position and mitigate
said risks.
The majority of the Group’s trade and other receivables, etc., are due from Honda Motor Co., Ltd. and its groupcompanies, whose creditworthiness is high and poses minimal credit risk.
When engaging in derivative transactions, the Group deals exclusively with financial institutions with high credit
ratings in order to mitigate credit risk.
The carrying amounts of financial assets after impairment losses presented in the consolidated statement offinancial position represent the maximum exposure of the Group to credit risk.
(iii) Market risk
(Foreign currency risk)
As the Group conducts its business globally, it engages in foreign currency-denominated transactions and accordingly
its profits and cash flows are exposed to the risk of fluctuating exchange rates.
The Group engages in derivative transactions, namely forward exchange contracts, to mitigate such risks in terms of
its foreign currency-denominated trade receivables and payables.
In the execution and administration of derivative transactions, the funding division obtains the approval of theperson with the decision-making authority in accordance with the internal rules which set forth transaction authority
and other matters.

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109

In terms of the financial instruments held by the Group at the end of the previous fiscal year and the current fiscal
year, the impact of a 1% appreciation of Japanese yen against the U.S. dollar and the Chinese yuan on income before
income tax is as follows.
(Unit: Million yen)(ii) C arrying amounts and fair values of financial instruments(Financial instruments measured at fair value on a recurring basis)
For the year ended March 31, 2022 (As of March 31, 2022)(Unit: Million yen)

Impact on income before income tax
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

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

¥(18)

¥(30)

1% appreciation of Japanese yen against the Chinese yuan

(15)

(4)

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

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

Equity instruments

FY2023(April 1, 2022–March 31, 2023)¥(168)¥(175)

1% decline in market prices
Note: This analysis assumes that all variables other than the market prices remain fixed.

(iv) Liquidity risk (Risk of not being able to execute payment on the payment date)
While the Group basically raises necessary funds with its own financial resources, it is exposed to the risk of not being
able to execute payment on payment dates for reasons such as a deteriorated funding environment.
The Group manages said risk by having the Company’s accounting division prepare and update fund management
plans based on the reports of each division in order to mitigate liquidity risk.
(2) Fair value measurement
Fair values are classified into the following three levels according to the extent to which the input information usedin the measurement is observable and the materiality of said input.
Level 1: Quoted prices of similar assets and liabilities in active markets
Level 2: Input other than quoted prices included in Level 1 that is observable either directly or indirectly
Level 3: Input including that not based on observable market data
No transfers occurred between Levels 1, 2, and 3 during the current fiscal year.
(i) Method of measuring fair value(Equity instruments)
Equity instruments mainly consist of stocks of publicly traded companies and its fair values are measured based on
the prices quoted by the stock exchanges.
(Derivative financial assets and derivative financial liabilities)
The fair values of derivative financial assets and derivative financial liabilities are measured at the valuation of forward
exchange contracts calculated under observable inputs such as currency exchange rates.
(Long-term loans receivable)
The fair values of long-term loans receivable are measured at the present value of future cash flows discounted by aninterest rate that reflects an appropriate indicator such as the yield on Japanese government bonds to which a credit spreadhas been added.
(Financial instruments other than those above)
The fair values of financial instruments other than those above are measured at amortized cost but statement thereof
has been omitted as their measured carrying amounts approximate their fair values.
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Level 1

¥18,411¥16,857

0

108

Level 2

Level 3

Total

¥ —

¥1,554¥18,411

—

0

—

0

—

108

—

108

Financial assets measured at fair value
through net profit or loss:
Derivative assets
Financial liabilities measured at fair value
through net profit or loss:
Derivative liabilities
For the year ended March 31, 2023 (As of March 31, 2023)(Unit: Million yen)
Fair value

Carrying
amountLevel 1

¥19,224¥17,53027

7Impact on other comprehensive income
FY2022Carrying
amountFinancial assets measured at fair value
through other comprehensive income:(Unit: Million yen)

(April 1, 2021–March 31, 2022)

Fair value

Level 2

Level 3

Total¥—

¥1,694¥19,224

—

27

—

27

—

7

—

7

Financial assets measured at fair value
through other comprehensive income:Equity instruments
Financial assets measured at fair value
through net profit or loss:
Derivative assets
Financial liabilities measured at fair value
through net profit or loss:
Derivative liabilities(Financial instruments measured at amortized cost)
For the year ended March 31, 2022 (As of March 31, 2022)(Unit: Million yen)
Fair value

Carrying
amountLevel 1

Level 2

Level 3

Total

¥549

¥—

¥547

¥—

¥547

Financial assets measured at amortized cost:
Long-term loans receivable (including thecurrent portion)

For the year ended March 31, 2023 (As of March 31, 2023)(Unit: Million yen)
Fair value

Carrying
amountLevel 1

Level 2

Level 3

Total

¥529

¥—

¥519

¥—

¥519

Financial assets measured at amortized cost:
Long-term loans receivable (including thecurrent portion)

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(3) Offsetting of financial assets and financial liabilities
Information on the offsetting of financial assets and financial liabilities recognized for a single counterparty is as follows.
(Unit: Million yen)
FY2022(As of March 31, 2023)¥251,781¥264,137

9,968

9,407

Amount of financial assets presented inconsolidated statement of financial position¥241,813¥254,729

Gross amount of financial liabilities recognized¥ 83,131¥ 83,947

9,968

9,407

¥ 73,163¥ 74,539

Offset amount

Offset amountAmount of financial liabilities presented inconsolidated statement of financial position(Unit: Million yen)

FY2023(As of March 31, 2022)

Gross amount of financial assets recognized(ii) Right-of-use assets included in the carrying amount of property, plant and equipment
The carrying amount and the amount of increase in right-of-use assets included in the carrying amount of property,
plant and equipment are as follows.
Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixtures

FY2022(As of March 31, 2022)¥3,368¥311

FY2023(As of March 31, 2023)¥2,931

¥302

Land

Total

¥31

¥2,575¥6,286¥100¥2,545¥5,879Note: D uring the previous fiscal year and the current fiscal year, the amount of right-of-use assets increased by ¥750 million and¥235 million, respectively.

(iii) Balance of lease liabilities by the period to maturity
Balance of lease liabilities by the period to maturity is as follows.
31. LEASES(1) Lease transactions as a lessee
The Group leases real estate properties, such as land and buildings, and molds under lease contracts. Each of theGroup’s companies is responsible for managing and negotiating lease contracts on its own, and thus, the terms andconditions of lease contracts can vary substantially from company to company. An option to extend lease periods isincluded in the leases of real estate properties, especially land and buildings. Many lease contracts for real estate
properties provide an option to extend the lease period by one year or the originally agreed-upon lease period,
and an option to cancel the contract earlier with a six-month prior notice in writing. Contracting parties who leaseproperties for business purposes use these options as needed.
(i) Expenses and cash flows associated with lease contracts
Expenses and cash outflows for lease contracts are as follows.
(Unit: Million yen)
FY2022

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)¥  434¥  432

Machinery, equipment and vehicles

30

60

Tools, furniture and fixtures

12

9

Land

68

54

Total depreciation¥  546¥  555

Expenses related to short-term leases or leases of low-value assets¥  897¥  760¥2,446¥2,458Depreciation of right-of-use assets by asset type:
Buildings and structures

Total cash outflow for leases

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

(Unit: Million yen)
FY2022

FY2023(As of March 31, 2022)(As of March 31, 2023)

Within 1 year

¥1,610¥1,159Between 1 and 2 years

1,037

703

Between 2 and 3 years

560

503

Between 3 and 4 years

454

403

Between 4 and 5 years

354

394

More than 5 years

2,013

1,657

Total

¥6,030¥4,822

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

(2) Lease transactions as lessor
The Group mainly leases molds under finance lease contracts.
(i) Income from lease contracts
Income from lease contracts is as follows.
(Unit: Million yen)
FY2022Finance leases
Income (loss) from sales

FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

175

1,315

FY2022

FY2023(ii) Balance of lease receivables by the period to maturity
Balance of lease receivables by the period to maturity is as follows.
(Unit: Million yen)
(As of March 31, 2022)(As of March 31, 2023)¥2,009¥3,608Between 1 and 2 years

661

1,336

Between 2 and 3 years

600

1,218

Between 3 and 4 years

566

1,217

Between 4 and 5 years

565

1,217

—

—

¥4,403¥8,599Within 1 year

More than 5 years
Total

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

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32. RELATED-PARTY DISCLOSURES(1) Transactions between the submitting company and related parties
The balances of transactions and receivables/payables between the submitting company and related parties are as
follows. Transaction amounts exclude parts and raw materials purchased from customers.

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)Type of related party

Name

Other affiliates

Honda MotorCo., Ltd.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥38,515

Account

Outstandingbalance

Accounts
receivable –trade¥5,742Lease
receivables¥  342

Notes: 1. Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.
2. Lease receivables
For outstanding balances of lease receivables, the prices of molds included in sales of Company products are processed as
finance leases.

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)Type of related party

Name

Other affiliates

Honda MotorCo., Ltd.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥39,351

Account

Outstandingbalance

Accounts
receivable –trade¥7,274Lease
receivables¥1,351

Notes: 1. Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.
2. Lease receivables
For outstanding balances of lease receivables, the prices of molds included in sales of Company products are processed as
finance leases.

(2) Transactions between the consolidated subsidiaries of the submitting company and related parties
The balances of transactions and receivables/payables between the consolidated subsidiaries of the submitting
company and related parties are as follows.
Transaction amounts exclude parts and raw materials purchased from customers.
(i) TS TECH USA CORPORATION
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Nature of relatedparty transaction

Transaction
amount

Honda
Sale ofDevelopment and the Company’s
Manufacturing ofproducts
America, LLC¥38,459

Name

Account

Accounts
receivable –trade

Outstandingbalance¥4,342Nature of relatedparty transaction

Transaction
amount

Honda
Sale ofDevelopment and the Company’s
Manufacturing ofproducts
America, LLC¥41,710

Name

Account

Accounts
receivable –trade

Outstandingbalance¥3,762

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

(ii) TS TECH ALABAMA, LLC.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Nature of relatedparty transaction

Transaction
amount

Honda
Sale ofDevelopment and the Company’s
Manufacturing ofproducts
America, LLC¥22,952

Name

Account

Accounts
receivable –trade

Outstandingbalance¥1,572

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

For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Nature of relatedparty transaction

Transaction
amount

Honda
Sale ofDevelopment and the Company’s
Manufacturing ofproducts
America, LLC¥34,765

Name

Account

Accounts
receivable –trade

Outstandingbalance¥3,163

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

(iii) TS TECH CANADA INC.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Name

Honda Canada
Inc.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥28,007

Account

Accounts
receivable –trade

Outstandingbalance¥2,941

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

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

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For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Name

Honda Canada
Inc.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥37,885

Outstandingbalance

Account

Accounts
receivable –trade(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Name

Honda
Automobile(Thailand)Co., Ltd.

Sale ofthe Company’s
products¥13,575

Outstandingbalance

Account

FY2022

Employees (Company housing and mortgage loans)(iv) TS TECH THAILAND
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
Transaction
amount(Unit: Million yen)

¥4,854

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

Nature of relatedparty transaction

33. CONTINGENT LIABILITIESThe Company provides guarantees to financial institutions on the borrowings by employees. The guarantee amounts
are as follows.

Accounts
receivable –trade¥2,454Lease
receivables¥3,682

Notes: 1. Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.
2. Lease receivables
For outstanding balances of lease receivables, the prices of molds included in sales of Company products are processed as
finance leases.

FY2023(As of March 31, 2022)(As of March 31, 2023)

¥26

¥21

34. SUBSEQUENT EVENTS
Not applicable

OTHER
Quarterly information for the current fiscal year is as follows.
(Unit: Million yen)

Cumulative period

1st quarter2nd quarter3rd quarter

4th quarter

Revenue¥82,045¥196,978¥302,473¥409,200

909

7,460

13,147

18,692

Income (loss) attributable to owners of parent(1,203)

1,364

3,467

5,343

Earnings (loss) per share (Yen)(9.15)

10.45

26.72

41.35

1st quarter2nd quarter3rd quarter

4th quarter¥(9.15)¥19.80¥16.41¥14.71

Income before income tax

Accounting period
Earnings (loss) per share (Yen)For the year ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Unit: Million yen)Type of related party

Subsidiaries of other affiliates

Name

Honda
Automobile(Thailand)Co., Ltd.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥14,259

Outstandingbalance

Account

Accounts
receivable –trade¥3,148

Lease
receivables¥6,994

Notes: 1. Business terms and conditions, and policy for the determination of business terms and conditions
Business terms and conditions for the sale of products are determined upon the submission of individual quotes andprice negotiations.
2. Lease receivables
For outstanding balances of lease receivables, the prices of molds included in sales of Company products are processed as
finance leases.

(3) Remuneration of key management personnel
Remuneration to the directors and Audit and Supervisory Committee members of the Company is as follows.
(Unit: Million yen)
FY2022

Basic remuneration and bonuses
Stock compensation

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FY2023(April 1, 2021–March 31, 2022)(April 1, 2022–March 31, 2023)

¥406

¥488

35

50

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Independent Auditor’s Report(TRANSLATION)



Independent Auditor’s Report

To the Board of Directors of TS TECH Co., Ltd.:

June 23, 2023

KPMG AZSA LLC
Tokyo Office, Japan
Shingo Iwamiya
Designated Engagement Partner
Certified Public Accountant
Yukio Kurihara
Designated Engagement Partner
Certified Public Accountant

OpinionWe have audited the accompanying consolidated financial statements of TS TECH Co., Ltd. (“the Company”) and its
consolidated subsidiaries (collectively referred to as “the Group”) provided in the “Financial Information” section in thecompany’s Annual Report, which comprise the consolidated statement of financial position as at March 31, 2023, andthe consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to theconsolidated financial statements in accordance with Article 193-2(1) of the Financial Instruments and Exchange Act
of Japan.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2023, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards
prescribed in Article 93 of “the Regulation on Terminology, Forms, and Preparation Methods of Consolidated Financial
Statements” (hereinafter referred to as “IFRS”).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with the ethical requirements thatare relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

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Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide aseparate opinion on these matters.
Appropriateness of the Company’s judgment as to whether an impairment loss should be recognized on property,
plant and equipment in Hamamatsu Plant of TS TECH Co., Ltd.
The key audit matter

How the matter was addressed in our audit

Property, plant and equipment of 83,874 million yen
were recognized in the consolidated statement offinancial position of TS TECH Co., Ltd. (hereinafterreferred to as the “Company”) and its consolidated
subsidiaries as of March 31, 2023, accounting for
approximately 20% of total assets in the consolidated
financial statements. Of this amount, property, plant, andequipment related to Hamamatsu Plant of the Company
accounted for 3,770 million yen as described in Note 2,“Basis of preparation of the consolidated financial
statements, (4) Important accounting judgments,
estimates and assumptions” to the consolidated
financial statements.

The primary procedures we performed to assess
whether the Company’s judgment with respect to therecognition of an impairment loss for property, plant andequipment related to Hamamatsu Plant was appropriate,included the following:

As discussed in Note 3, “Important accounting policies,(10) Impairment of non-financial assets” to theconsolidated financial statements, the Company
assesses each asset or cash-generating unit for any
indications of impairment during each reporting period,and if any such indication exists, the Company estimates
the recoverable amount of the asset or cash-generating
unit. The recoverable amount is calculated at the higherof the fair value less costs of disposal and the value in
use of the asset or cash-generating unit. If therecoverable amount of the asset or cash-generating unit
is less than the carrying amount, the difference between
the carrying amount and the recoverable amount isrecognized as an impairment loss.
Regarding Hamamatsu Plant, the Company has
identified an impairment indicator for the property,
plant, and equipment since operating income or loss
after allocating headquarters expenses decreased dueto the production status of customers, the mix of car
models sold, and so forth. Therefore, the Company
assessed whether the recoverable amount of property,
plant, and equipment related to Hamamatsu Plant wasless than the carrying amount, and determined not torecognize an impairment loss since the recoverable
amount exceeded the carrying amount.

(1) Assessment of Internal control
We assessed the design and operating effectiveness ofcertain of the Company’s internal controls relevant todetermining an impairment loss to be recognized.
(2) Assessment of the reasonableness of the estimatedvalue in use• In order to assess whether key assumptions for the
mid-term management plan, which were used as thebasis for the future cash flows, such as the forecast ofincoming orders from customers, were appropriate, we:• inquired of management and compared key
assumptions with the past records;• compared key assumptions with the available external
data such as notification of expected order volume
from customers and forecast of vehicle production
volume from external organizations; and• compared the ratio of raw materials cost to revenue
and the estimated expenses excluding raw materials
cost with the past records.
• We assessed the competence, ability, and objectivity of
external experts used by management for estimating
the fair value of the land at the end of the useful life ofmachinery and equipment which are main assets of theplant. In addition, we inquired of real-estate appraisers
used by the Company and assessed theappropriateness of the assumptions and the valuation
methods applied, involving valuation specialists within
our domestic network firms.
• We involved valuation specialists within our domestic
network firms to assess the appropriateness of themodels and input data for estimating the discount rate.

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The Company used the value in use as the recoverable
amount. The future cash flows used for measuring thevalue in use were estimated based on the mid-term
management plan prepared by management.
Therefore, there was a high degree of estimation
uncertainty since the plan included key assumptions
involving management’s judgement, such as theforecast of incoming orders. In addition, a high degreeof expertise in valuation was required to selectappropriate models and others for estimating the fairvalue of the land at the end of the useful life ofmachinery and equipment which are main assets of theplant, and the discount rate.
We, therefore, determined that our assessment of theappropriateness of the Company’s judgment as towhether an impairment loss should be recognized on
property, plant, and equipment related to Hamamatsu
Plant was of most significance in our audit of theconsolidated financial statements for this fiscal year,
and accordingly, a key audit matter.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with IFRS, and for such internal control as management determines is necessary to enable the preparationof consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance with IFRS andusing the going concern basis of accounting unless management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
The Audit and Supervisory Committee is responsible for overseeing the directors’ performance of their duties withregard to the design, implementation and maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with auditing standards generally accepted in Japan will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, while the objective of the audit is not to express an opinion on the effectiveness of
the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause theGroup to cease to continue as a going concern.
• Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordance with
IFRS, the overall presentation, structure and content of the consolidated financial statements, including thedisclosures, and whether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned scope andtiming of the audit, significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit and Supervisory Committee, we determine those matters that were ofmost significance in the audit of the consolidated financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicatedin our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified
Public Accountants Act of Japan.

Notes to the Reader of Audit Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as required by
the Financial Instruments and Exchange Act of Japan, excluding the part of Report on the Audit of the Internal Control
Report.

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