2022
TS TECH
Integrated ReportBringing joy to people and society
In the manufacture of its products, TS TECH pursues safety,

TS TECH Philosophy

environmental sustainability, and comfort.

Vision Statement

The pursuit of comfort in particular is multifaceted and deep, and over the course of time

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

this pursuit is subject to an inﬁnite process of evolution.
Whether comfort for people or comfort for society and the global environment, each and every typeof comfort TS TECH provides helps to generate satisfaction, which in turn leads to joy.
These are the principles that guide our unceasing effort to create value that goes beyond the present

Mission Statement

and bring joy to all of our stakeholders.

We shall provide comfortable,
high-quality products at competitive prices
to our customers worldwide,
always pursuing the inﬁnite
possibilities in manufacturing.

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

TS TECH Integrated Report 2022

1

INDEX

1
2

TS TECH Philosophy
Index and Editorial Policy

To Our Stakeholders

Value Creation Story

ESG Management

Enhancing Corporate Value

Corporate Governance

Financial Reporting

8 Value Creation Process
10	Business Foundation That Supports Evolution
12 M aximizing Corporate Value in Harmony

28	
Board of Directors’ Dialogue

53with Society

4	Message from the President

14 Identified Material Issues and 2030 Targets
16 Stakeholder Engagement
18 Financial Strategies	Moving forward to create new value driven
by transformation

Evolution and Challenges Arising from
Governance Reforms

32 Board of Directors
34	Efforts to Improve Corporate Governanceand Compliance

Fact Book
Management’s Discussion and Analysis

54	Consolidated Statement of Financial Position
56

Consolidated Statements of Profit or Loss andComprehensive Income

58	Consolidated Statement of Changes in Equity
59

Consolidated Statement of Cash Flows

61	Notes to Consolidated Financial Statements
110	Independent Auditor’s Report

20 TS TECH’s Value Chain
21 Research and Development
22 Sales24 Purchasing
25 Manufacturing
26 Quality27	14th Medium-Term Management
Plan Overview

Environmental

Financial/Non-Financial Information

39	
Environmental Initiatives

114	Financial Highlights
116	Non-Financial Highlights

Social46
49

Integrated Report2022
TS TECH
Integrated Report

Reference Guidelines• ISO 26000:2010 standard, International Organization for Standardization (ISO)• International Integrated Reporting Framework, IFRS Foundation• Guidance for Collaborative Value Creation, Ministry of Economy, Trade and Industry(METI) of Japan• Global Reporting Initiative (GRI) Sustainability Reporting Standards, etc.

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

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

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

Term Covered
Fiscal 2022 (April 1, 2021–March 31, 2022)
Note: Select activities from before or after this term may be included.

Disclaimer
This report contains forward-looking statements from TS TECH Co., Ltd. pertaining toplans, forecasts, strategies, and results. These forward-looking statements are basedon currently available information.

TS TECH Website
Non-Financial Information
CSR Activities

Provides qualitative and quantitative information on society and theenvironment

Provides consolidated financial summaries, results announcements, etc.
November 2022
Printed in Japan

2

TS TECH Integrated Report 2022

Supply Chain Initiatives

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

About the Report’s Formats

TS TECH Integrated Report 2022

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

Creating Employee-Friendly Workplaces

120	TS TECH’s Products
121	Global Map
122	Corporate Data
123	Integrated Report Review

TS TECH Integrated Report 2022

3

Message from the President

Moving forward to create
new value driven
by transformation

Masanari Yasuda

President and Representative Director

sider it to be our mission to create unprecedented new value by leveraging the technologies that the Group has cultivated over the years in today’s changing businessenvironment and to achieve continuous growth hand-inhand with the broader society.
In the 14th Medium-Term Management Plan1 (fiscal
2021–fiscal 2023), which marks our first steps toward 2030,
under a management policy of “corporate evolution throughESG management,” we are moving forward with seven actions categorized into two priorities from distinct perspectives: “Evolution for business growth” from a proactive perspective and “stronger business operations structure to
support evolution” from a protective perspective.
During fiscal 2022, the second year of the plan, the severe situation remained ever-present, including the impact
of COVID-19 ongoing from the previous year, which caused
turmoil in supply chains that in turn led to reduced production at automobile manufacturers, not to mention further
cost increases for raw materials. It was against this backdropthat we devoted generous amounts of management resources2 to business fields that are essential for future
growth, and accelerated future-oriented initiatives, including
next-generation technology development and the acquisition of new customers and new commercial rights. In addition to proactive measures, we concentrated our efforts on
improving profitability across the Group, including by optimizing business structures through the reorganization of
the trim cover production structure in the Americas and by
pursuing thorough cost reductions in each business domain. Through these and other efforts, we aim to definitively
overcome the current situation and lay the foundation for
future success.

Looking toward further business growth

The TS TECH Group’s principal customer is Honda Motor Co.,
Ltd. The Group has achieved steady growth, serving as a
global partner to Honda. In order to further enhance business growth as we head to 2030, it will be essential to expand our commercial rights and acquire new customers
beyond our business with Honda. In the 14th Medium-Term
Management Plan, we have set new commercial order targets3 worth 63 billion yen from customers other than our
principal clients, and we are accelerating various initiatives
to achieve this goal. We have been actively engaging inefforts, including establishing a new seat manufacturingsubsidiary in Poland, targeting European automobile manufacturers in fiscal 2022, and starting the New Business
Management Division3 to further expand sales functions
and manage and oversee European operations from fiscal
2023. The result of these efforts has been that we have beenable to steadily receive orders for significant commercial
rights in all regions, and we are confident that we will be able
to expand sales further in the future.
However, in order to ensure these efforts become
growth drivers for business expansion, we recognize that wemust work with a greater sense of urgency than ever before.
If we are to grow sales, we cannot avoid competing withmega-suppliers around the world, and to do that it is important to have not only our own resources in place but also toforge strong partnerships with new business partners. To
that end, our policy is to be the first to grasp the realities ofand changes in the business environments in the regions
where we do business, and devote generous amounts of resources where necessary. The TS TECH Group will consider
how we can efficiently bring any missing elements to our

Already more than two years have passed since the
COVID-19 pandemic began. With no signs of it coming to adefinitive end, I would like to express my deepest respect
and appreciation to all the medical professionals who haveworked so hard and for so long fighting COVID-19.

Our vision for where we want to be in 2030

As part of an automotive industry that is in the midst of various transformative upheavals, including technological innovation and the evolution of mobility, the TS TECH Group has
set out its 2030 vision statement: “Innovative quality company—Continued creation of new value.” Right from the outset
we have faced major difficulties due to COVID-19, but evennow our principles and policies remain on course. We con-Innovative quality company
Continued creation of new value

Commercialization of original technologies
Evolution for

FY2021–FY2023

Introduction

2030 Vision Statement

14th Medium-Term Management Plan

Management policy: Corporate evolution through ESG managementbusiness growth

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

Stronger business
operations

structure to

support evolution

Recognition for top quality
Strengthening of continuous earnings structure
Maximization of employee and structural efficiency

1 The 14th Medium-Term Management Plan
2 Management resources

p. 27

p. 10

3	
New commercial order targets / New Business Management Division
p. 23

4

TS TECH Integrated Report 2022

TS TECH Integrated Report 20225

in-house operations, actively using alliances and other partnerships as we move to expand sales.

New value creation driven by transformation

As is well known to everyone, the automotive industry is in
the midst of a major period of transformation. The businessenvironment is continually evolving, including changing userneeds, intense development competition, the emergence of
new competitors, and industry realignments. What is more,
technological innovations that look ahead to next-generation
mobility, such as the shift to electric vehicles (EVs), connected and automated driving, are significantly changing theperceived value of automobiles, transforming their value as
an item that provides private space, enables the utilizationof the vehicle itself and its cabin in various scenarios, andeven enriches the lives of vehicle users. For automobile
manufacturers and interior system suppliers such as the TS
TECH Group, it is of critical importance to consider what wecan provide to help users enjoy the time they spend insidetheir vehicles.
In order to achieve further growth in this environment,
it is imperative for us to question our established practices
and values, and engage not merely in “change” but in “transformation.” To date, the TS TECH Group has focused onseats and doors as our primary business domains, pursuingincreased profits through the efficient development andproduction of safe, reliable, and comfortable products. However, looking to the future, while safety of course remains
paramount, we will simply be left standing by the roadsideunless we are able to propose novel and original functions
and services, such as interior components that function as ahuman-machine interface (HMI) that connects vehicle occupants and the car. In order to come through this period oftransformation successfully, we must change to become acompany capable of coordinating the entire automobile
cabin and providing new value to our customer companies
and end users. We also aim to deliver the value creation that
our customer companies around the world say that theywant by further advancing our proprietary technologies, collaborating with other industries, and pursuing joint development with start-up companies4.
One such activity is the business alliance agreement weconcluded with Alps Alpine Co., Ltd. By combining Alps
Alpine’s software strengths, in areas like systems integration,with the TS TECH Group’s in-seat sensing technologies andthe various technologies and experience that the Group has
amassed in the process of developing and producing seatand door trim, we aim to create the cabin spaces of the future for next-generation vehicles. In addition, looking ahead
to next-generation mobility, we are engaging proactively ininvestments that aim to develop attractive products withnew added value, including a joint development agreement
for interior components for use in flying cars produced byteTra aviation corp.*1

Coordinating entire automobile cabin spaces andproviding them to customers

2030

Evolution of elemental technologies
Sensing

Detection of
biologicalinformation/
Intuitive informationtransmission/input passenger state

HMI

ACT control

Comfortable ACT
control

Proposal of entire automobile
cabin spaces

Commercialization of new value
Lighting/decoration Heating/energy efficiency
Decorative lighting,movement control

2021

High-efficiency heating,comfort/energy
efficiency controls

Increased value for car interiors• Open innovation withstart-up companies• Use of cross-industry
alliances

There are many elements of uncertainty about what the
future holds for the next-generation automobile industry,including the revision of targets in various countries for increasing EV usage and the speed of progress in automateddriving technology. Thus, there is still a good deal of speculation about the ultimate shape the industry will take. However, no matter what the future might bring, it will be important to maintain a firm foundation from which we canconsistently propose products optimized to the needs of ourcustomers, and we will consider all possibilities as weengage in forward-looking research and development thatseeks to realize such possibilities.
*1 A start-up company working on the research, development and sale of a flyingcar. teTra aviation is one of the leading companies developing flying vehicles inJapan, and it possesses many advanced technological skills. It was the only team
to win a prize in the 2020 prize competition GoFly for developers of flying carsaround the world that is sponsored by Boeing of the United States.

Improving corporate value withsustainability-related initiatives

It is precisely at times like these, when the outlook forthe future remains uncertain and opaque, that the most

4 Collaborating with other industries and pursuing joint development with startup companies

p. 12

important thing for us to do is to embody the TS TECH
Philosophy5, the unwavering foundation on which TS TECH isfounded and the definition of the value of our existence.
Forming the basis for the TS TECH Philosophy are our Vision
Statement: “A company dedicated to realizing people’s potential” and “A company sincerely appreciated by all.” These
are deeply connected to the concepts of sustainability and
ESG, and as a group we were already engaged in various
initiatives even before the need for corporate sustainability
efforts came to be so widely voiced. In particular, in the 13th
Medium-Term Management Plan that started from 2017, weclearly set out ESG as part of our management policy andfurther accelerated related measures. In terms of “E” (environment), we have formulated long-term goals to achievecarbon neutrality by 2050 and set out a response to the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD). In the area of “S” (society), we haveworked to strengthen supply chain management and improve employee engagement. In the area of “G” (corporate
governance), we have made changes to our organizational
design, working toward a transition to a “company with an
Audit and Supervisory Committee” structure. These ESG
initiatives have served to strengthen our corporate structure
in various areas.
In fiscal 2022, the Sustainability Committee6 was established as a body with overall oversight of sustainability acrossthe entire Group. In addition, with regard to the key material
issues (materiality)7 that we identified in the previous fiscal
year as issues to be prioritized to help contribute to the creation of a sustainable world, we have formulated KPIs andhave also set specific 2030 targets7 that pinpoint where we
aim to be by 2030. We are accelerating our efforts to achieve
all these KPIs and targets.
These efforts have been recognized and well-received
globally, including by S&P Global, a global socially responsible investment ratings company, which selected TS TECH asa Sustainability Yearbook Member*2 and an Industry Mover*3
in its Sustainability Awards 2022. Looking ahead, by working
with external evaluations and indices8 like these, we aim togain a firmer grasp of social requirements. By doing so, wewill further enhance the effectiveness of our sustainability
initiatives and work to improve corporate value and achievesustainable growth for the TS TECH Group.

Specific material issues and main challenges
Providing attractive, innovative new products andtechnologies that exceed society’s expectations• Developing attractive, innovative technologies• Improving product quality

Society
Reducing impact by practicing environmentallyfriendly manufacturing to build a sustainable world• Responding to climate change• Recycling and effectively using resources• Harmonious co-existing with nature

Environment

Respecting diversity and developing structures tomaximize individual abilities• Respecting human rights• Reforming work styles to make the most of diversity• Strengthening governanceCorporate
foundation

To our stakeholders

In an era when it is difficult to anticipate the future, we believe corporate management must constantly look ahead
and always make the utmost effort to do what is needed at
the time without automatically adhering to precedent. Looking ahead to the 15th Medium-Term Management Plan thatwill begin from April 2023, we are determined not to slacken
the pace of transformation, but rather consider all possiblemeans of driving further transformation and then put thebest ones into action. In addition to efforts to expand thescale of our business, we will work unceasingly to further
enhance our corporate value by bolstering our corporate
foundation to enable sustainable growth, including pursuing the further evolution of our corporate governance structure and reviewing our capital policy9.
It is by leveraging change that we will become a company whose presence is appreciated by even more stakeholders. In that light, I humbly ask for your continued support as
we move forward.

*2 A designation granted to companies with an ESG score as evaluated by S&P
Global in the top 15% of their specific industry.
*3 A commendation given to companies that have most significantly improved their
ESG score in their industry among all Sustainability Yearbook Members.

5 TS TECH Philosophy

p. 1

6 Sustainability Committee

p. 13

7 Key material issues (materiality) / 2030 targets
8 External evaluations and indices
9 Capital policy

6

TS TECH Integrated Report 2022

pp. 14–15

p. 122

pp. 18–19
TS TECH Integrated Report 2022

7

Value Creation Process

At TS TECH, we are committed to providing new value using a value creation process that makes the most of
our strengths and management resources. We believe this is how we can continue to be “a company sincerely
appreciated by all” whose presence is valued. Looking to the future, we will work together with the global
community to achieve sustainable growth by embracing society’s expectations and demands and continuing
to improve our process for delivering value.

BUSINESS MODEL

Core competencies

Outcomes

Value chain

Technological prowess▶ pp. 20–26

Economic value

No. 1 in comprehensive patent strength in Japan in the vehicle seat sector* According to Patent Result Co., Ltd.’s“Patents and Technologies Survey Report” as of December 2021

Step 1

Global business development
Sustainable management base

• Revenue: ¥349.9 billion• Dividends per share: ¥54
Dividends payout ratio: 58.3%• 14,308 people employed in 14 countries

Step 2

Research andDevelopment

Global network comprising 46 companies in 14 countries

Sales

Social value• CO2 emissions reduction rate: 34.0% (compared to fiscal 2018)• Providing nicer cabin spaces with our seats and doors

Capital adequacy ratio: 71.4%
Operating margin: 6.6%

Step 5

Management resources fostered by
implementing the TS TECH Philosophy

Step 3

Quality

Purchasing

Financial Capital

Technology amassed in the
pursuit of better manufacturing

A solid financial foundation to
support business activities

Manufactured CapitalSocial Capital

A product supply structure
spanning 14 countries

Stakeholder engagement

Human Capital

Natural Capital

A corporate culture in which
diverse human resources thrive

Energy management withenvironmental consideration▶ p. 11▶ p. 12• Increasing the expense ratio for R&D of innovative technologies• Improving ratings in product quality surveys

Environment
Reducing impact by practicing environmentallyfriendly manufacturing to build a sustainable world▶ pp. 42–43• CO2 emissions reduction rate

KPI

• Waste reduction rate
• Water intake reduction rate, etc.

Corporate foundation• Engagement rating• Percentage of management positions held by diverse human resources• Rate of compliance with Corporate Governance Code, etc.

Main products
Automobile seats

Interior
components
for automobiles(83.9%)(9.5%)¥293.4 billion¥33.4 billion

Motorcycle seats

Other business(1.6%)(5.0%)¥5.6 billion

Safety¥17.3 billion

Protection of passengers
Sensing technologies, etc.

• Changes in value sought for automobile interiors• Responding to technological innovation (IoT/electrification)• Climate change• Effectively utilizing diverse human resources

2030 Vision
INNOVATIVE QUALITY COMPANY—Continued creation of new value—

A company sincerely
appreciated by all

Social issues

TS TECH Integrated Report 2022

KPI

KPI

Manufacturing

Revenue

8

Providing attractive, innovative new products andtechnologies that exceed society’s expectations

Respecting diversity and developing structures▶ pp. 46–48
to maximize individual abilities

Vision Statement
A company dedicated torealizing people’s potential▶ pp. 14–15

Society

Value createdthrough manufacturing

Step 4▶ p. 10

Intellectual Capital

Materiality¥349.9 billion

Environment

Attractiveness

Next-generation cabin spaces
Reducing CO2 emissions,etc.

Enhanced comfort
Seat arrangements, etc.

VisionBeing a company with the capacity to provide
new value, focusing not simply on seats but on
coordinating entire cabin spaces

TS TECH Integrated Report 2022

9

Business Foundation That Supports Evolution

Since TS TECH was established in 1960, the company has continued to conduct research on seating for people,
particularly automobile seats. The unique technology and expertise we have built up over this period—poweredby our global network extending across 14 countries around the world—serve as our strengths as we continue
to create new value that always goes beyond the present and keep providing safe, comfortable, and appealing
products for people worldwide.

Technology amassed in the pursuit of better
manufacturing

Automobile seats require a balance between safety and comfort as well as appealing added value.
The unique technology and research results that we incorporate to provide products that go beyond
customers’ expectations accumulate in the form of expertise and have become an important form ofcapital for the Group.
Patents are one such type of capital. We practice a proactive patent strategy that effectively
utilizes new technologies we produce around the world. We have been given a high rating incomprehensive patent power, as calculated by Patent Result Co., Ltd.

A product supply structure spanning
14 countries

A solid financial foundation to support
business activities

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

SocialcapitalAutomobile seats are the part that is closest to the occupant, and they
have a major impact on the vehicle’s safety and comfort, so highperformance and quality are always required. We continue to create
unique value by providing high-quality products that are lightweightand deliver diverse functions, at competitive prices.

11.9

billion yen

46

companies in

14

countries• Capital expenditures

14.4

billion yen

Stakeholder engagement
pp. 16–17

NaturalcapitalSafetyEnvironment

AttractivenessPursuit of safety

Reliable comfort based on human engineering

When traffic accidents occur, the seat plays a crucial role inprotecting the car’s occupants. For this reason, various strict
standards are set at the development stage, and a seat cannot
be sold unless these criteria are satisfied.
We were the first in Japan to introduce a dynamic sled
testing facility, which faithfully recreates the impact of acollision. We carry out tests anticipating all possible scenarios,and vehicle safety assessment organizations confirm that thecompleted seats meet the highest level of safety.

In order to ensure the comfort of the seats that support vehicle
occupants’ bodies, we seek to create seating that feels
comfortable as soon as the occupant sits down while also
preventing fatigue when driving for a long time. Judgments
about comfort and fatigue differ depending on the person, so
we translate these subjective judgments into quantifiable
data. These efforts to build up our own theory of comfort by
conducting repeated research based on ergonomics guide TS
TECH in marketing more comfortable seats.

Pursuing structures that protect the human body

Analysis of pressure distribution

A corporate culture in which diverse humanresources thrive

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

Financial
capitalValue created through manufacturing• R&D expenses• Scope of businessStarting with its entry into the U.S. market in 1977, TS TECH has actively pursued a global expansion
strategy and currently has locations in 14 countries around the world, including Europe, China, andother Asian countries. Along with our ability to supply products to customers around the world, we
have strengthened our supplementary production structure globally to ensure business continuity
that will enable us to achieve steady growth even in an increasingly uncertain business environment.
Looking ahead, in addition to investment focused on expanding capabilities and boosting
efficiency, we will contribute to a sustainable society through investment in environmental equipment
and technologies.

Human
capital2,201High pressure

Manufactured
capital• Number of patents held

• Number of Group employees

14,308• Consolidated capital adequacy ratio

71.4

%

• Operating margin

6.6

Low pressureIntellectual
capitalCommitment to light weight

Diverse array of functions to improve convenience

Seats are one of the heavier parts of the car, and reducing theirweight directly improves fuel efficiency. We exhaustively
examine the materials and processing technology starting in
the design stage and pursue improvements so that we cankeep reducing the weight of our older models and help toreduce environmental impact.

A diverse range of seat arrangements to match different
applications is essential in maximizing the use of the limited
space in cars. We sensitively identify the needs of users, which
can change every day, and deliver on our unique ideas withadvanced technical skills, allowing us to continue offering
products that surpass customer expectations.

2010
model

2016
model

Most
recentmodel%

Energy managementwith environmental
consideration

About 35% lighter in 10 years

Seats that can be stored with a pull of a cord

p. 44

10

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11

Maximizing Corporate Value in Harmony with Society
In recent years, a wide range of social issues and environmental problems have emerged. This is constantly
changing the environment in which companies operate as well as market needs.
The TS TECH Group always offers appealing products and strives to create the new transportation value
demanded by the emerging world of next-generation mobility. Meanwhile, by helping to build a sustainable
world, we aim to continue being a company sincerely appreciated by all.

Value generated throughmanufacturing

Contributing toa sustainable society

p. 11

SafetyEnvironment

Creating the newtransportation value

Contributing to a sustainable society
Basic Policy on Sustainability

The Group has consistently worked to raise corporate value sustainably and foster a corporate culture
based on the two elements of our vision statement—being “a company dedicated to realizing people’s
potential,” which expresses our belief that people are the decisive factor in a company, and being “acompany sincerely appreciated by all” stakeholders and society.
•W e will help to resolve social issues by implementing our vision statement, with its twin aims of being “acompany dedicated to realizing people’s potential” and being “a company sincerely appreciated by all.”• We will improve the overall corporate value of the Group.
• We will hold responsible dialogues with all stakeholders and build trusting relationships.

AttractivenessNovember 2021, Resolution of the Board of Directors

Sustainability Promotion Framework

TS TECH established the Sustainability Committee as an advisory body to the Executive Committee in December
2021 to accelerate its sustainability initiatives. In the same year, it also established its Corporate Communication
Department, consolidating the departments responsible for sustainability and public relations to allow for unified
management from planning and promotion to information disclosure. Serving as the secretariat, the Corporate
Communication Department manages the Sustainability Committee, which cuts across the Group laterally, andreports to the Board of Directors as necessary once measures are passed at meetings of the Executive Committee.
We strive to achieve sustainable growth for the Group and resolve social issues by making decisions on sustainability initiatives at the management level.

Creating the new transportation value
Pursuing innovative technology for creating nextgeneration car interiors

Sustainability Committee
INNOVAGE
Reference exhibit for Product at the 46th Tokyo Motor
Show 2019

pp. 40–41

Image of next-generation car interiors developed
jointly with Alps Alpine Co., Ltd.

12TS TECH Integrated Report 2022

- Sharing of social trends and issues related to sustainability- Establishment and operation of system aiming to foster
awareness of sustainability within the company• Composition of the committee
The committee is chaired by the Corporate Administration Division Executive General Manager and made up of representatives from each business division and segment. The Corporate Communication Department serves as the secretariat.

Taking up the challenge of new mobility

We take initiatives in various areas, not limited to our main business,such as our previous collaborations with the University of Tokyo and
the Japan Aerospace Exploration Agency (JAXA) to carry out joint research on safety assessment technology. In February 2022, we invested in teTra aviation corp., which carries out R&D on and manufacturesand sells flying cars, signing an agreement on joint development ofinterior parts for flying cars. Through this joint development, we will
pursue strength, safety, light weight, and comfort for a different kind of
mobility than automobiles. We will then incorporate the knowledge
that we gain in this venture into our main operations. This will lead tothe development of appealing products with new added value.

• RoleAs the advisory body to the Executive Committee, the Sustainability Committee decides on sustainability policies, manages
the progress made in achieving related goals, and discusses
measures.
- Confirmation of progress made on materiality KPIs
- Initiatives to achieve carbon neutrality by 2050
- Identification of risks and opportunities related to sustainability and related scenario analysis (TCFD requirement)

teTra aviation corp.’s flying car, Mk-5

• Activity plans
The committee meets three times a year, in principle, andholds ad hoc meetings also when necessary.
(Notable activities)
December 2021 Sustainability Committee launched
March 2022
Kickoff meeting
May 2022	First meeting (Deliberations on environmental
results, response to TCFD requirements, etc.)

Board of Directors

Executive Committee
Reports

Direction

Sustainability Committee
Chairperson: Corporate Administration Division
Executive General Manager
Members: Representatives from each functional
division*1
Representatives from each segment*2
Secretariat: Corporate Communication Department

Response and reports

As we get closer to next-generation cars due to rapid advancements in
automated driving technology and connected technology, new formsof value are also demanded in car interiors. We engage actively in R&D
to develop new car interior components, such as seats that sense theoccupant’s biometrics to detect the level of fatigue and suggest switching to automated driving mode, and seats that analyze the ideal posture for the occupant and support posture improvements.
We also believe that partnerships that go beyond corporate boundaries and industries are crucial in creating automobile interiors that inspire emotions and go beyond previous automobile conventions. With
this in mind, we formed a business affiliation with Alps Alpine Co., Ltd. inJanuary 2022 to develop a next-generation automobile interior. By combining the two companies’ strengths, we will be able to accelerate thecreation of an automobile interior with high added value that provides
a safe, comfortable, and inspiring transportation experience.

Collaboration
Global Risk Management Committee*1 Corporate Sales and Purchasing Division, New Business Management Division,
Corporate Development and Engineering Division, Corporate Manufacturing
Division, Corporate Quality Assurance Division, Corporate Administration
Division, Corporate Business Administration Division, Corporate Managerial
Planning Department*2 The Americas Segment, China Segment, Asia Segment

TS TECH Integrated Report 2022

13

Identified Material Issues and 2030 Targets

Procedure for Identifying Material issues

TS TECH has established targets for 2030 with indexes indicating the ideal form the company aims to achieveby that year with regard to key material issues (materiality) the Group will prioritize to help contribute to therealization of a sustainable society. To achieve these targets, we will aggressively promote relevant measuresand manage our progress using our Sustainability Promotion Framework, which we revised in fiscal 2022.

TS TECH Materiality Identification Policy• Issues that are material to the vision statement under the TS TECH Philosophy: “A company dedicated to realizing people’s
potential” and “A company sincerely appreciated by all”
• Issues that are highly material to the United Nations Sustainable Development Goals (SDGs)• Issues that are material to contribute to a sustainable world

Category

Related SDGs

Society

Environment

Material issues

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

• Aiming for a decarbonized society, we
will work to contribute to reducing ourenvironmental impact by pursuing energysavings and effective use of resources,
starting with product design and continuing
Reducing impact by practicing
throughout every stage of the product life cycle.
environmentally friendly
manufacturing to build a• We will strive to ensure that all of oursustainable world
employees have a high level of environmental
awareness, while working to protect theenvironment and conserve ecosystems basedon the concept of “giving greenery back to
the earth.”

Corporate
foundation

Respecting diversity anddeveloping structures tomaximize individual abilities• We will respect the human rights of all
stakeholders and offer rewarding working
environments in which each and every employee
makes the most of their diverse talents.
• We will engage in diversity-positive, highly
transparent management to fulfill our
corporate social responsibility (CSR), achievesustainable business growth, and enhance
corporate value.

Materiality

TS TECH Integrated Report 2022

Based on international standards and guidelines such as the GRI Standards and the core subjects of
ISO 26000, we studied identification methods.

Identification and organization of issues

We identified the risks and opportunities based on the Group’s business environment and ultimately
identified and organized the relevant issues.

Prioritizing of issues

Issues were evaluated and prioritized in terms of their importance to stakeholders and their importance to the TS TECH Group.

Consultations with outside experts

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

Selection of materiality

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

Approval by management

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

Materiality KPIs

Developing attractive,
innovative technologies

Innovative technology development
expenses as a percentage of R&D expenses

Improving productquality

Responding toclimate change

Recycling and effectively
using resources

Harmoniously co-existingwith nature

2030 targets

Main measures

Up 10% from fiscal 2021

• Proactively investing in original technologies, including biosensing andenvironmental technologies

Seat supplier IQS rating*1

2.0P (stable at a high level)• Enhancing product quality with higher-precision verification tools• Constructing a framework enabling ongoing cultivation of quality humanresources worldwide

CO₂ emissions reduction rate*2

Down 50% from fiscal 2020

Waste reduction rate*3

Down 50% from fiscal 2020

Water intake reduction rate andenvironmental impact from wastewater*4

Down 50% from fiscal 2020
Environmental impact: 0

Establishment of the TS TECH Fund(matching gift program)

Establishment of a donation
program by the TS TECH Group• Analyzing and responding to risks and opportunities based on thepp. 40–41
recommendations of the TCFD
• Conducting energy management based on ISO 14001/ISO 50001• Installing energy-saving and renewable-energy equipment• Developing and promoting products that use plant-based raw materials, etc.
• Improving development and manufacturing efficiency
pp. 42–43• Researching and establishing a matching gift program

Engagement rating*5

AAA• Analyzing survey findings individually by department and identifying priority
issuesp. 47• Fostering momentum to make organizational improvements

Supplier Sustainability Guidelines
compliance rate*6100%• P reparing to expand surveys to verify circumstances of compliance to locations
outside Japan
p. 49

Reforming work styles
to make the most ofdiversity

Percentage of management positions heldby diverse human resources*735%• Supporting career development with rank-specific training• Helping personnel balance their work and personal lives (childbirth, childcare,nursing care)

Strengthening
governanceCorporate Governance Code compliance
rate

100%

• Pursuing ongoing efforts to prevent corruption

Respecting human rights*1 Rating awarded in the Initial Quality Study (IQS) conducted by J.D. Power Japan, Inc. The study looks at new car buyers and their experiences with any problems and calculates
the number of problems indicated per 100 vehicles. The lower the number, the higher the quality.
*2 CO₂ emissions reduction rate (Scope 1 and 2) resulting from the Group’s business activities.
*3 Rate of reduction of waste (excluding residue, sludge, etc.) resulting from the Group’s manufacturing activities.

14

Surveys*4 Reduction rate in water intake (amount used) at the Group’s production facilities and environmental impact of wastewater resulting from manufacturing activities*5 The engagement targets look at the company’s employees using Link and Motivation Inc.’s Motivation Cloud. The target “AAA” rating is the highest of the 11 ratings.
*6 Rate of compliance with the Supplier Sustainability Guidelines among the Group’s suppliers (including overseas suppliers).
*7 Percentage of women, mid-career hires, non-Japanese citizens, older employees, and persons with disabilities in management positions.

TS TECH Integrated Report 2022

15

Stakeholder Engagement

The TS TECH Philosophy calls for the Group to be a company sincerely appreciated by all of its stakeholders—from
customers and employees to shareholders and investors, business partners, and local communities. To achieve
this goal, we proactively carrying out ongoing dialogue with stakeholders and incorporate the opinions andrequests we receive into our management.

<Specific examples>
Relationship with stakeholders

Dialogue method

Involvement withcustomers
Based on daily dialogue, we build long-term
trusting relationships by identifying customer
needs from the very first stage of productdevelopment and proposing and creatingproducts that exceed expectations. We also
actively seek feedback from end users so that
we can develop even better products.

• Daily sales activities• Collect opinions from end users through thesubsidiary company that sells automobiles• Development and engineering roundtable meetings• Roundtable meetings with business partners
hosted by customers• Exhibits such as the Tokyo Motor Show

The Group aims to be a company where all
employees are motivated and can achieve growth,in line with its twin visions of being “a company
dedicated to realizing people’s potential” and “acompany sincerely appreciated by all.” To achievethis, we are developing our work environment
to create comfortable workplaces and are also
accelerating initiatives designed to improve
employee engagement.
p. 47• Distribution of video of President’s Message(worldwide)• Engagement survey• Various education and training sessions• Internal portal site, in-house newsletter• Whistleblower hotline system, consultation
service• Consultation with the labor union

Shareholders andinvestors

The Group strives to rapidly, accurately, andequitably disclose information, based on its
disclosure policies. In addition, we proactively
engage in dialogue with shareholders andinvestors to improve our medium- andlong-term corporate value.

• General Meeting of Shareholders• Financial results briefings (interim, full year)• Investor relations (IR) meetings every quarter• Websites (IR information for investors)• Briefings for individual investors

Business partners

Strong partnerships with business partners are
essential for the Group to consistently supply
high-quality products. We treat all business
partners fairly and equitably and hold dialogues
in line with the Four Principles of TS Procurement
in order to build trusting relationships on a
global basis.
p. 50• Daily purchasing activities• Annual conference with major business partners• Initiatives to improve quality with business
partners and awards for impressive cases• Supply chain survey• Request to comply with the Supplier Sustainability Guidelines

Customers (automanufacturers,
end users)

Employees

Local communities

16

Our determination to be a company with deeproots in local communities has inspired us to get
involved in various philanthropic programs, suchas support for childrearing and environmental
conservation (155 programs around the world in
fiscal 2022). We will continue to carry out initiatives tailored to the needs of each community, sothat we can achieve sustainable growth together
with the communities where we do business.

TS TECH Integrated Report 2022

• Participation in and cosponsorship of local
events• Offering classes at local schools, donation ofgoods• Environmental conservation activities such astree planting and local cleanups• Donation of goods to public facilities

Product development based on opinions from end users

Accurate predictions of the future based on actual conditions are essential to respond to dramatic changes in theenvironment for the auto industry, and to social trends both within andoutside of the auto industry, and then create new products that have never existed before. We believe that listening directly to the views of the end
users driving cars every day is one important way of doing this.
At some stores of consolidated subsidiary Honda Cars SAITAMAKITA,
the Aisareru Seat is set up to give visitors a simulation of various sports
while sitting down, using sensing technology. Many people have enjoyedusing this seat installation. The feedback received from users and the data
recorded during the simulation are used to develop new products thatmake people happy.
Aisareru Seat set up at dealers

Relationships withshareholders and investors

Opinions received through proactive dialogue are reflected
in management

We proactively carry out IR activities to ensure that all shareholders and investors understand the Group’s
financial results and management approach. We post financial results
and corporate information (material fact) promptly on our website, holdfinancial results briefings every six months, and disclose these materials
on our website. We also provide opportunities for securities analysts
and institutional investors to meet with us every fiscal quarter, and holdover 250 dialogues each year. The valuable opinions we obtain in these
dialogues are reported to the Board of Directors and other meetings
and reflected in management. We believe this will raise corporate value
in a sustainable way.
IR meeting (Web conference)

Relationship with the local
community

Childrearing support for children with deep rootsin the local community

In Tochigi, where we have a research and development base, we work with the Future Creating University forChildren in Tochigi, hosted by the Tochigi Prefectual Board of Education,
to hold experience-based lectures. At the company’s crash-test facility,
children intuitively learn what kind of impact occurs in a car accident, andthis improves their awareness of traffic safety.
In addition, we support childrearing that aids the healthy growth ofchildren by, for example, giving talks on product development at local middle schools and giving classes on health in developing countries overseas.
Experience-based class at the crash-test facility

TS TECH Integrated Report 2022

17

Financial Strategies

Raising corporate value
by generously investingin key areas
Atsushi Igaki

Director, Senior Managing Officer
Corporate Business Administration
Division Executive General Manager

hand to handle growth investments or M&A using its own
funds. We are currently considering strategies for achieving
our targets, and as a financial strategy to support that end
goal, we believe that in order to allocate funds to growth investments more vigorously than ever before, while also
maintaining financial security, it is important to organize
cash inflows and outflows, clarify Return of Investment (ROI)
and related time frames, and engage in strategy design andmanagement decision-making from a financial perspective.
In the midst of a tumultuous market environment, we aim
to leverage our solid financial foundation, which is capableof supporting business growth, to enhance corporate value
by improving the efficiency of capital and asset management.

Policy on shareholder returns

The TS TECH Group considers the return of profits to ourshareholders to be a top priority for management. In fiscal
2022, against the backdrop of the major changes being implemented to our organizational layout, and seeking to return more value than ever before with all shareholders, wesurpassed all previous dividend increases by raising per

ROE / Income attributable to owners of parent
12.8

Aiming for sustainable improvements tocorporate value

The automotive industry is currently facing a once-in-acentury period of transformation. There is fierce competition for orders not only among global manufacturers but
also among local manufacturers in each region. Under thesecircumstances, in order for the TS TECH Group to achieve
continued growth, we must make our capital and assets
more efficient than ever before and leverage them to expand our business and enhance profitability. All this we will
do by leveraging the sound financial foundation we havebuilt with the high profitability we have delivered to date.
Fiscal 2023 is the final year of the 14th Medium-Term
Management Plan. Due to such issues as continued disruption in the supply chain arising from global semiconductor
shortages, the business environment remains uncertain.
However, as set out in the priority measures of the plan, we
improved our production system and revised our organizational structure in order to acquire new customers and commercial rights from customers other than our main customer to achieve the “expansion of strategic commercial rights.”
We have worked on allocation and reorganization by region
from various perspectives, including production, development,
and distribution, as a means of carrying out “optimization ofbusiness operations structure.” In addition, while scrutinizing
each and every capital investment, as a result of having proactively invested in growth through rationalization and othermeans and also focusing on investment in R&D to create newvalue, we anticipate increasing annual capital investment
to approximately 15 billion yen even in the midst of thepandemic. This is approximately double pre-pandemic

18

TS TECH Integrated Report 2022

levels. We are therefore moving forward with many initiatives to expand sales and bolster the earnings structure.
We are also working to return profits to shareholders by
improving capital efficiency and to implement a flexible capital policy through the acquisition of treasury stock. In an
environment in which the improvement of corporate value isconsidered over the medium to long term, in order to respond to the expectations of all stakeholders, we are working to enhance the value of the company from a financial
perspective that will act as a compass for the company, including proposals for capital utilization with ROE in mind.

Looking ahead to the 15 Medium-Term
Management Planth

Looking ahead to the 15th Medium-Term Management Plan
that will begin in fiscal 2024, we are now in the process ofsetting KPIs that will measure not only growth and profitability but also efficiency, and are considering quantitative targets. In specific terms, we plan to prioritize ROE, which has
been depressed in recent times due to the impact of
COVID-19 and the global semiconductor shortage, and raise
it to a level 8–10% or more of pre-pandemic levels. We plan
to break down ROE into three elements: (1) expanded revenue (growth); (2) strengthened earnings structure (profitability); and (3) revised policy on returns to shareholders. In
so doing, we aim to enhance corporate value by setting,
driving synergies among, and achieving various targets inthese three areas.
At the end of fiscal 2022, the Group’s consolidated capital adequacy ratio was 71.4%, ensuring an extremely highlevel of security, and the Group has sufficient liquidity on

10.5

9.6

30.1
22.5

23.5

FY2016

7.8
25.7

20.7

19.6

FY2017FY2018

28

5.9

15.0

FY2015

Annual cash dividends per share /Dividends payout ratio (Consolidated)

13.4

12.1

share dividends by 9 yen to 54 yen per share. In fiscal 2023,
too, notwithstanding the challenging business environment,in order to respond in commensurate fashion to the continued support we receive from our shareholders, we plan toraise the share dividend once again by 9 yen to 63 yen per
share, marking the 11th consecutive year of dividend increases since fiscal 2012. With regard to the abovementioned acquisition of treasury stock, as well, we have been endeavoring to enhance shareholder returns by making decisions
based on comprehensive consideration of growth investments, dividend levels, cash on hand, and stock price levels.
We are working to revise our shareholder returns policy
in time for the start of the 15th Medium-Term Management
Plan that will launch in fiscal 2024. For our dividend policy inparticular, in addition to the current stable and sustainableapproach, we will be taking into account capital efficiency
and cash flow conditions, and giving thought to using DOE
as an indicator, which is based on a longer-term perspective
and shareholders’ equity. The specific quantitative targets
will be announced to our shareholders together with our
growth strategy.

FY2019FY20204.3
12.4

FY2021

FY2022

Income attributable to owners of parent (Billion yen)
ROE (%)

18
30

30
19
33

34
24
35

26

38

18

22

40

42

54
39
43

44
29
45

99
58
28
54

63

FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023(Forecast)

Annual cash dividends per share (Yen)Dividends payout ratio (%)

Transport equipment industry average dividends payout ratio (%)* The company implemented a two-for-one stock split of its common shares, effective April 1, 2021.
Calculations are based on the assumption that the stock split was conducted at the beginning offiscal 2015.

Column: Initiatives to develop globally oriented human resources in financial departments
The TS TECH Group has established a global network in 14
countries around the world, including Japan, with overseas
sales accounting for more than 80% of the total. Against thisbackdrop, aiming to further improve and advance the financial, accounting/taxation, and management accounting affairsof the entire Group, we regularly hold the Global Accounting
Meeting (GAM), a body for heads of financial departments andpersonnel in charge at each Group company.
In addition to disseminating information about policies
among the entire Group, the GAM has been sharing specificaction plans about ways in which financial departments canhelp to improve corporate value, including drawing up actionplans that incorporate a training component and are basedon PEST (political, economic, social, technological) analysis.
Going forward, the GAM and other bodies will work todevelop human resources on a global level, so that the financial departments in all Group companies can play an advisoryrole to management. They will do this by, for example, providing the results of accurate and timely high-quality data analysis, submitting financially oriented recommendations from a
medium- to long-term perspective, or, as and when necessary, highlighting emerging concerns.

TS TECH Integrated Report 2022

19

TS TECH’s Value Chain

The TS TECH Group is committed to achieving value creation by maintaining a value chain cycle that ensures that
manufacturing yields high-quality products and services. We aim to maximize corporate value by leveraging
mutual cooperation and synergies among the functions of each value chain. We do this by making the most of thefull range of management resources we have accumulated over the course of more than 60 years in business withthe support of all of our stakeholders.

Value chain

Basic Policies on Value Creation

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

Creating innovative,
attractive products and technologies• Offer appealing products that exceed customer expectations atcompetitive prices• Permanently secure customers’ unwavering trust• Provide added value to customers in line with the changing times,
working together with other functional and regional departments

Sales
Proposing competitive products
to satisfy customers’ demands

TS TECH’s Value Chain

Research and Development

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

Internal Environment

S trengths

W eaknesses• Wide range of development and technologicalcapabilities for phases from product planning
through development and performance evaluation• Business partnerships with other industries andactive incorporation of wide-ranging open
innovation with start-up companies• Speed of global development aimed atsales expansion

O pportunities

T hreats• Provision of advanced technologies targetingthe accelerating EV market• Provision of new value for car interiors in linewith new visions for automobiles related tothe advent of CASE and MaaS

• Intensifying competition in technologicaldevelopment and changes in productdevelopment styles driven by the entry ofcompanies from other industries into theautomotive industry

Eiji Toba

Director, Managing Officer
Corporate Development andEngineering Division Executive General Manager

Purchasing
Offering stable provision ofcomponents by maintaining
a strong supply chain

Manufacturing
Operating highly efficient mass
production systems in 14 countries

Feedback

External Environment• Mutual trust with business partners through fair andequitable transactions• Work with business partners to strengthen their procurement
structures and create a sustainable supply chain• Joint CSR activities with business partners• Achieve environmentally friendly and highly efficient manufacturing• Pursue automation and high-efficiency lines through the evolutionof molds and equipment• Share sustainable manufacturing technologies throughout
the Group

Fiscal 2022 Initiatives
Acceleration of advanced technology development and provision of products that exceed global expectations
Establishment ofinnovativetechnologicaldevelopment

Further improve
development
efficiency• Establish the development of innovativetechnologies through collaborative ventureswith TS TECH technology seeds* and external
resources, and actively propose them toour customers• Enhance global development structures• Supplement development resources bycollaborating with other industries• Active incorporation of open innovation

Creation of new
appeal and value

Furtherenhancement ofdevelopment quality• Anticipate future changes at all times andcontinue to deploy dedicated projects aiming
to create appeal and value at levels exceeding
customer expectations• Ensure that necessary requirements werereflected from the outset of development
to prevent defects from occurring inmass production* Technology seeds: Proprietary technologies, know-how, humanresources, equipment, etc., required to engage in R&D

Future Initiatives

Provision of new products and technologies as a seat and interior system supplier that is trusted and appreciated worldwide

Quality
Using a quality control system toensure stable supply of safe
and secure products• Provision of safety and security to customers• Stable provision of products with the same high level ofquality worldwide• Earn top quality rating from customers all around the world andestablish TS-Q brandCommercializationof originaltechnologies

Contribution to asustainable society

20

TS TECH Integrated Report 2022

• Advance development systems to respondswiftly to changing customer needs• Accelerate creation of technology seeds
and maximize utilization of internal andexternal resources• Accelerate development of technologies with areduced environmental impact to contributeto the realization of a sustainable society

Creation of new
appeal and value

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

TS TECH Integrated Report 2022

21

TS TECH’s Value Chain

Sales

Basic Policies on
Value Creation• Offer appealing products that exceed customer expectations
at competitive prices• Permanently secure customers’ unwavering trust• Provide added value to customers in line with the changing times,
working together with other functional and regional departments

Establishment of the New Business Management Division

In April 2022, we established the New Business Management Division to accelerate sales promotion through the Group’s further acquisition of new customers
and commercial rights. In the past as well, we have engaged in various sales
promotion-oriented efforts. The division will help us perceive ever-changing
industry trends accurately and respond to new customers’ individual needs witha sense of urgency, thereby driving further business growth. The division will
ensure a more flexible response than before, as it is separated from the main
customer-oriented sales functions and organizations.
In addition to the sales function, the new division also oversees three European subsidiaries that are involved in everything from product development to manufacturing, in order to further improve our ability to make proposals to customers.

Internal Environment

S trengths

W eaknesses• Maintain production bases throughout theworld and offer high-quality products• Sales proposal capabilities based on close
cooperation between global informationgathering systems and QCDDM*related departments• Expand sales channels by leveraging
appropriate investment opportunities, basedon a strong business foundation• A high degree of dependence on a specific businessmodel and insufficient independent growth

O pportunities

T hreats• Expansion of development requests to parts manufacturers
in the midst of the transition to next-generation automobiles• Accelerate new business sales promotion activities using
the newly established New Business Management
Division system• Changes to the profit-sharing structure in theautomotive component industry due to therise of smart mobility

Takahiro Kobori

Business Development
Department

Sales division tosecure new customers* QCDDM: Quality, Cost, Delivery, Development,
and Management

External Environment

Hungary

Germany

Fiscal 2022 Initiatives

PolandConstruct a foundation to ensure success amid intensifying competition, staying abreast of current trends• Construct a foundation to improve
competitiveness and expand sales channels
Maximize investment by establishing new plants and subsidiaries
opportunities

Increase market
share of main
customers’ business• Compile and analyze main customers’
long-term strategies and implement further
specification and cost improvement proposals
to acquire new commercial rights

Identify new userneeds throughcollaborations
Precursor activities
and customer
proposals aimed
at maximizing
added value• Discern new user needs through crossindustry collaborations and create marketanticipating value propositions• Expand orders by grasping customer needs
through precursor activities and proposing
products that incorporate proprietary technologies

Managing Officer
New Business Management Division
Executive General Manager

The New Business Management Division,
which we established in the current fiscal
year, makes new business-related functions
independent. With a stronger structure provided by the integration of processes fromplanning and development through manufacturing, the division aims to accelerate theacquisition of new commercial rights.
The division will endeavor to conduct
ahead-of-schedule development and orderdevelopment activities to grasp customer demands and projected changes in the futurebusiness environment and quickly propose
R&D products that anticipate the future. Under the leadership of the New Business Management Division, we aim to grow orders
worldwide by coordinating these activities
with our overseas business sites and relevant
divisions in Japan.

New Business
Management Division

Director, Managing Officer
Corporate Sales and Purchasing Division
Executive General Manager

Isao Kawashima

Automobile seat developing/manufacturing subsidiaries
with local finished vehicle manufacturers as customers

New Commercial Rights Orders
14th Medium-Term Management Plan
Order Targets for New Commercial Rights by Region from Customers Other than Main Customers

Orders in Fiscal 2022
Target(Unit: Billion yen)

Future Initiatives
Roll out measures to succeed in the new era, with the goal of delivering lasting corporate growth22• Stay caught up on customers, markets, andLeverage initiatives
future trends and communicate direction forin business direction business expansion to lead the whole company
to drive corporate
growthIdentify business
opportunities associatedwith main customers’transformationsof business• Propose new product groups designed to
Propose new product create next-generation cabin spaces throughgroups throughworkshops with collaborators
collaborative
activities• Promotion of acquisition of new commercial
Structural
strengthening aimed rights by integrating all processes from planningand development through manufacturing withat acquiring new
the new establishment of the New Businesscustomers andManagement Division and by further improving
commercial rights
customer proposal abilities

TS TECH Integrated Report 2022

• Promptly grasp the needs arising from main
customers’ new expansions of business toacquire new business

Asia and Europe

China

Japan

The Americas

Seat and component orders

Seat orders

Seat orders

Component orders¥10.0

billion/year¥3.0

billion/year¥10.0

billion/year¥40.0

billion/year

Leverage accumulated sales experience

to define targets and make vigorous expansions
Aim to steadily expand commercial rights through strategic efforts to win orders* Amounts show the target scale of orders. Actual annual revenue will differ due to differences in the timing of the start of mass production.

56.5
32.0

63.0

45.0

25.0
7.0

11.5

FY2022 Q2FY2022 Q4

Confirmed order amountFY2023 Target

In competition

The Group has set a target of 63.0 billion yen in new commercial rights orders from customers other than our main customer (Honda) in the 14th Medium-Term Management Plan. While confirmed orders are still currently at 11.5 billion yen
due in part to finished vehicle manufacturers’ development delays resulting from the COVID-19 pandemic, inquiries are
steadily increasing. We will work aggressively to expand our sales activities under our new organizational structure toachieve our target.

TS TECH Integrated Report 2022

23

TS TECH’s Value Chain

TS TECH’s Value Chain

Purchasing

Basic Policies on
Value Creation

Manufacturing•M utual trust with business partners through fair andequitable transactions• Work with business partners to strengthen their procurement
structures and create a sustainable supply chain• Joint CSR activities with business partners

Basic Policies on
Value Creation• Achieve environmentally friendly and highly efficient manufacturing•P ursue automation and high-efficiency lines through theevolution of molds and equipment•S hare sustainable manufacturing technologies throughout
the Group

Internal Environment

Internal Environment

S trengths

W eaknesses

S trengths

W eaknesses• Development of activities to strengthen
structures together with business partners• Global information gathering and analysis
capabilities that maximize purchasing resources• Inflexibility of an aging purchasing structure• Worldwide supply chain designed for new
business expansion• A dvanced technology development and mass
production verification capabilities throughin-house production of molds and equipment• A structure that ensures an above-average
QCD*1 worldwide• A flexible production system worldwide• S till in the process of building a resilient
manufacturing framework*2 and advancing
environmental initiatives• Shortage of global expert human resources

O pportunities

T hreats

O pportunities

T hreats• Propose and adopt new technology
components that respond to technologicalinnovation, with a view to CASE and therealization of a carbon-neutral society• Changes in the profit distribution structure of
the automobile components industry brought
about by smart mobility• Supply risks for components and raw materials due
to climate change, infectious diseases, conflicts, etc.

• A cquisition of new customers and commercial
rights through effective use of our global
production system• F urther market expansion in emerging countries• F urther intensifying cost competition• C hanges in the production structureassociated with technological progress madein conjunction with the advent of CASE, etc.

Takahiro Kobori
Director, Managing Officer
Corporate Sales and Purchasing Division
Executive General Manager

External Environment

Fiscal 2022 Initiatives

Implement global purchasing measures based on a sound procurement structure tailored to each environment
Strengthen andreorganize
procurement
structures
Strengthen
activities aimed
at thedevelopment of
new models• Build strategic procurement structuresby enhancing partnerships with core
manufacturers• Create maximum added value by
strengthening competitiveness against
other manufacturers

Enhancesuppliers’ risk
management

Strengthen
supply chain
management• Build risk management systems with a view toensuring stable production and supply acrossthe entire supply chain• Overseas implementation of compliance survey
for TS TECH Supplier Sustainability Guidelines

Future Initiatives

Strengthen our
globalprocurement
systemAdvance efforts
for new model
development

Enhancement of the global production system by advancing “global mother plant” functions, including environmental responsiveness
Advancement of
a competitive
production systemand functions
Establishment ofinnovative
production
technologies• A cceleration of plant automation in Japan andexpansion of production control functions andproduction technology functions• Commencement of efforts to create adiversity-positive production line*1

Disseminatedmanufacturing
technology througha “global motherplant” in Japan• Elimination of loss through Japan-based
inspection of models produced overseas• E xpansion of the scope of our system forsharing in-house improvements globally•D evelopment of seat assembly automation
technologies•D evelopment of automated inspection
technologies using AI

Development of
production
technicians capableof competingworldwide• C reation of a program to cultivate production
technicians and implementation in Japan*1 Diversity-positive production line: Production line
where all people can work in comfort, regardless ofage or gender

Future Initiatives

Make purchasing functions more resilient to create maximum added value worldwide• Strengthen our procurement system torespond to changes in the automotive
component industry’s procurement system
and new business expansion• Optimize our procurement system to respondto trends in diversity and multifunctionality inproducts and create maximum added value

Enhancesuppliers’ risk
management
Implement
measures toreduceenvironmental
impact• Minimize risks by jointly developing risk
response measures with suppliers and further
managing credit exposure• Accelerate CO₂ emissions reduction activities
throughout the entire supply chain to help
build carbon-neutral society

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

External Environment

Fiscal 2022 Initiatives

Yasushi Suzaki

Acceleration of the evolution of manufacturing and further enhancement of our global production system
Advancement of
a competitive
production systemand functions
Establishment ofinnovative
production
technologies• I mplement supply chain management reform
for manufacturing processes• Construct sustainable production plants withconsciousness of environmental impacts and diversity

Disseminate
manufacturing
technology througha “global motherplant” in Japan•D
 isseminate automation processes withspecification and build integration• Boost efficiency of production lines throughutilization of DX*2 technologies• F urther enhance automation technology
development in fields where operators learn
through experience•D evelop sustainable production technologies

Development of
production
technicians capableof competingworldwide•D eploy our program to cultivate production
technicians worldwide*2 DX (Digital transformation): Processes that use AI,
the IoT, and other advanced technologies and datato transform services and business processes

24

TS TECH Integrated Report 2022

TS TECH Integrated Report 202225

14th Medium-Term Management Plan Overview

TS TECH’s Value Chain

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

Quality

Basic Policies on
Value Creation•P rovision of safety and security to customers•S table provision of products with the same high level ofquality worldwide•E arn top quality rating from customers all around the worldand establish TS-Q brandManagement
policyPriority
measureInternal Environment

S trengths

W eaknesses• A globally consistent quality control and assurance
system based on international standards• Development of TC Circles (improvement activities
undertaken by small groups) worldwide• High ratings in Initial Quality Survey (IQS)• Inadequate mechanisms to respond tochanges in manufacturing and maintainstable production• Shortage of human resources with expertisein global quality assurance

O pportunities

T hreats• Increasingly sophisticated demands for
quality assurance accompanying a trend
toward multifunctionality in products• Diversification of customer quality
requirements due to expansion of sales
beyond Honda business• Quality control for automation of production
lines• Increased market problems and delivery
defects accompanying globalization• Shrinkage of the workforce due to a declining
birthrate and an aging population

Evolution forbusiness growth

Yoshiaki Kida

Operating Officer
Corporate Quality Assurance Division
Executive General Manager

MeasureNotable initiatives

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

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

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

Recognition for
top quality• Enhanced know-how and support from startup base during global
rollout of new models• Prevention of defects by strengthening verification in the beginningstages of development• Stronger quality control systems at Group and business partner locations

Strengthening ofcontinuous earnings
structure• Establishment of a lowest-cost procurement structure by enhancing
our global procurement system• More efficient administrative and indirect operations through active
use of IT• Strengthening of our consolidated earnings management systemthrough the continued evolution of financial strategy aimed at
medium- to long-term growth• Minimization of global tax risk

Maximization of
employee andstructural efficiency• Establishment of a system to promote advancement of diverse
human resources•E volution of our evaluation system to accommodate various work styles•R eview of our training system for next-generation human resources development

External Environment

Fiscal 2022 Initiatives
Improve quality globally by balancing development quality and manufacturing quality
Operation of an expert
verification system inconjunction with the trend
toward multifunctionality
in products

Strengthening ofprocess control item
verification at
manufacturing sites• Construction of a verification system carriedout from a third-party perspective by experts
from individual divisions and application
starting from the design stage• Reflection of manufacturing requirements
extracted from FTA/FMEA*1 in production sites’and suppliers’ processes

Enhance the global
quality assurance
structure• Verification and improvement of the statusof rule implementation through regular
QAV-1*2 inspections• Cultivation of local expert human resources
through on-the-job training• R eduction of North American quality issues
by strengthening quality management by the
Global elimination of location’s top leadership
quality defects• E nhancement of external appearance quality
levels through regular monitoring of products
from early manufacturing run*1 FTA (Fault Tree Analysis)/FMEA (Failure Mode andEffects Analysis): Analytical tools used to prevent
product defects*2 QAV-1 refers to a Quality Assurance Visit.

Future Initiatives

Construction of a global quality assurance system by maintaining highly stable development quality and manufacturing quality
Strengthening andexpansion of theexpert verification
system• Conduct verifications of a wide variety of
products and enhance development quality
through greater FTA/FMEA accuracy• Expand the reflection of manufacturing
Formulate quality
requirements extracted from FTA/FMEA
requirements toin processes to encompass global models
provide appropriate• Optimize quality assurance items to provide
response to production
appropriate response to automationline automation

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TS TECH Integrated Report 2022

Corporate
evolution
through ESG
management

Make quality
assurance systems
regionallyautonomous
Stabilize andestablish quality athigh levels
worldwide

Stronger business
operations
structure to
support evolution• Enhance production locations’ quality systems byconducting priority audits of areas of weakness• Construct a framework enabling ongoing
cultivation of quality-related humanresources worldwide• F urther enhance locations’ quality andstrengthen improvements of related
subsidiaries’ and suppliers’ quality defects
at the source

TS TECH Integrated Report 2022

27

Aims of Corporate Governance Reforms

Yoshitaka Nakajima

Tatsuya Motoda

Takeshi Ogita

Representative Director, Vice President

Director, Audit and Supervisory Committee Member(Outside Director, Chairperson of Nomination andCompensation Committee)

Director(Outside Director, Chairperson of theBoard of Directors)

Board of Directors’ Dialogue

Evolution and Challenges Arisingfrom Governance Reforms

The TS TECH Group’s stated management policy is “corporate evolution through ESG management.”
Accordingly, we are moving forward with governance reforms from various perspectives, includingorganizational layout and diversification of the Board of Directors. We invited three members of the board
to discuss the outcomes and challenges that have arisen as we implement new systems and structuralchanges relating to corporate governance in recent years, and their aspirations for the future.

Recent governance reforms
Fiscal 2021●

Fiscal 2022●

Fiscal 2023

28

• Appointed an outside director as chairperson of
the Board of Directors• Transitioned from a “Company with a Board of Auditors” to a“Company with an Audit and Supervisory Committee” structure• Established the Nomination and Compensation Committee• Introduced restricted stock compensation scheme• Appointed first woman to the Board of Directors● • Moved to Prime Market of the Tokyo Stock Exchange• Appointed second woman to the Board of Directors

TS TECH Integrated Report 2022

14th Medium-Term
Management Plan

Nakajima: The key to corporate governance is to formulate,manage, and operate internal mechanisms and systems toensure that people and organizations do not contravene
laws and regulations. Such systems would be meaningless if
we implemented them in name only, so we must ensure
their effectiveness, treating them as initiatives that protect
shareholder returns and drive responsible, stakeholderoriented actions.
In addition, making our corporate governance systems
more advanced also serves to promote appropriate risktaking in management. By so doing, we aim to enhance corporate value by creating a self-sustaining cycle of investment
in growth, increased competitiveness, and improved profitability across the Group. We are working to build structuresthat will support the autonomous growth and evolution of
the company. In doing so, we are reviewing past customs
and practices and engaging proactively in good practices or
new initiatives. This is how we are pursuing reforms with aclear vision for where we want to take the company.
Motoda: Yes, I believe that our corporate governance structures are indeed steadily evolving. In terms of organizationallayout, by moving to become a “Company with an Audit andSupervisory Committee” as of fiscal 2022, we have ensured
even more highly objective organizational auditing. Also,with that shift, the Audit and Supervisory Committee now
directly supervises the internal audit department, meaningthat closer cooperation than ever before is now possible.
This enables us to provide detailed responses in cooperation with the internal audit department, on matters ranging
from sudden or unexpected tasks such as additional auditsof specific departments or Group companies, to regulartasks such as checking the information security measures
put in place by the systems department.
In recent years, although we have faced the challengeof not being able to conduct face-to-face audits due to
COVID-19-related constraints, swiftly constructing a remote
auditing structure made it possible to conduct organizational audits more efficiently. Whether in or outside Japan, byleveraging the internet to put in place a rapid information
disclosure system, we have significantly boosted auditing
efficiency.
Ogita: My feeling is that governance reforms have strengthened the separation of supervision and execution. Since
June 2020, the chairperson of the Board of Directors has
been an outside director, and since June 2022, I have been
serving in that position. I believe that this initiative is extremely beneficial and is the right direction for the Board of
Directors, as an organization that specializes in the supervision of management, rather than merely the execution ofbusiness operations. The fact that the proportion of outside
directors has increased is another development that servesto advance the separation of supervision and execution. I
fully concur that this demonstrates an openness to incorporating objective opinions from outside the company.

Yoshitaka Nakajima

Representative Director, Vice President
Apr. 1982
Apr. 2004
Apr. 2010
Apr. 2012
June 2012
Apr. 2015
June 2015
Apr. 2016
June 2018
June 2020
Apr. 2022

Joined the Company
Corporate Administration Division, Administration Department General Manager
Operating Officer, Corporate Administration Division Deputy Executive General Manager
Operating Officer, Corporate Administration Division Executive General Manager
Director, Corporate Administration Division Executive General Manager,
Compliance Officer (current)
Director, Corporate Administration Division Executive General Manager, Corporate
Business Administration Division Executive General Manager
Managing Director, Corporate Administration Division Executive General Manager,
Corporate Business Administration Division Executive General Manager
Managing Director, Corporate Administration Division Executive General Manager
Senior Managing Director, Corporate Administration Division Executive General Manager
Senior Managing Director (Representative Director)
Representative Director, Vice President (current)

The statements made by outside directors in board
meetings are extremely valuable. That being said, the internal directors are the ones who, depending on the situation,
may have detailed knowledge of the agenda prior to theboard meeting, through participation in internal meetings,
or discussions with relevant parties. It is no simple matter topresent opinions that are objective and contribute to better
decision-making because they know the actual situation. On
the other hand, it is precisely because outside directors possess only a certain amount of information with regard toagenda items that they can make unexpected observations,or pose questions that capture the essential nature of anissue. Accordingly, these opinions can inspire the board as awhole to arrive at solutions that internal directors alone
could not achieve. I have had experience working as an outside director at other companies, and I feel that there is really meaningful and vigorous debate among the internaland external members of the Board of Directors of TS TECH.

Aiming for Greater Transparency in the
Nomination and Compensation System
Motoda: One of the important challenges relating to transparency of corporate governance systems is the decisionmaking processes for nomination and compensation of
corporate officers. I head the Nomination and Compensation Committee, which is a voluntary advisory body to theBoard of Directors and works to improve the transparency,
objectivity, and fairness of various processes by taking responsibility for the selection, dismissal, and compensation of
directors and corporate officers. When making nominations,in addition to confirming the career record of each candidate, we also assess their various personal traits by speaking
with various related parties, deliberating whether they
match the criteria to become a director or corporate officerof the company. With regard to compensation, the committee

TS TECH Integrated Report 2022

29

also deliberates the appropriateness of remuneration anddirectors’ bonuses, which are determined by a compensation table based on position and individual performance, as
well as performance-linked compensation, and we report
the results to the Audit and Supervisory Committee and also
report information on the subject to the Board of Directors.
Nakajima: Officer compensation for TS TECH consists of basic fixed compensation, performance-linked remuneration
as a short-term incentive, and non-monetary stock-based
compensation. With regard to stock-based compensation, a
restricted stock compensation scheme has been in placesince 2021 for directors (excluding outside directors and directors who are members of the Audit and Supervisory
Committee) and executive officers who do not concurrently
serve as directors. The purpose of the system is to further
share value with shareholders, and at the same time, by setting incentives for officers, to enhance global competitiveness through management practices that are conscious of
medium- to long-term corporate value enhancement froman investor perspective. We are now in the second year since
the scheme’s implementation and, in that time, discussions
in board meetings and in various other forums have dramatically increased from the perspective of market perceptionsof the company, and whether initiatives will lead to mediumto long-term corporate growth. We will continue to review
executive compensation as appropriate, given that it is an
important means of achieving proactive governance designed to maximize corporate value.

Effectiveness of the Board of Directors
and Challenges for Governance Systems
Nakajima: Currently TS TECH complies with all principles detailed in Japan’s Corporate Governance Code (CG Code).
However, no matter how well formulated the CG Code may
be, it is meaningless unless the Board of Directors and otherorganizations function in accordance with its essential
aspects. In order to enhance the effectiveness of the Board of
Directors, it is essential that our outside directors are encouraged to actively make recommendations from a third-party
perspective. In that sense, through changes to the organizational layout, it is of tremendous significance that the ratio ofoutside directors has increased. Furthermore, in fiscal 2022
we appointed our first woman as director, and now two women are members of the board. We hope to further enhance
the board’s effectiveness by improving its diversity and hearing opinions from various perspectives.
We implement an annual assessment of the effectiveness of the Board of Directors. Already this assessment has
been conducted on four occasions, receiving a relatively
high evaluation from all board members, but my own perception is that there is still leeway for us to improve further.
For example, take more active debate. It is of critical importance for the Board of Directors to engage in vigorous discussions, not only for the purpose of passing resolutions
and making decisions but also for each member to share hisor her own opinions and unique perspectives on how the30

TS TECH Integrated Report 2022

Group should aim to grow. In particular, I believe that giving
the younger board members who represent the future of
the company the freedom to say what they want will breathe
new life into the board and set the foundations for tomorrow for the entire TS TECH Group. Without pandering to position or experience, I believe that it is my role to create aculture and forum where people can air their views freely
and forthrightly.
It is necessary to change the way we operate the Boardof Directors according to the vision of the TS TECH Group.
We must not simply fall into complacency, but instead constantly seek out and evolve toward our vision.
Ogita: Two years have now passed since I was appointed. Inthat time, I have strongly felt the determination to evolve, as
seen in the ambitious strengthening of the corporate governance system. Thanks to these efforts, the format for organizational layout and other structural aspects has been completed. My belief is that the next step is now to further
enhance the effectiveness of the content. The automobile industry is in the midst of a period of transformation, buffeted
by new trends such as CASE and MaaS. The global situation
remains unstable and uncertain, and therefore, in order toovercome this environment of dizzying change and achieve
active and continued growth for the TS TECH Group, we must
engage in multifaceted discussions, taking advantage of thediversity inherent in the board, including each member’s various skills, experiences, and gender perspectives.
Motoda: I too think that it is extremely important for theGroup’s future that we harness our diversity. As you note, we
are making steady progress with initiatives to improve thediversity of the board, including raising the percentage ofoutside directors and appointing women as directors.

Takeshi Ogita

Director(Outside Director, Chairperson of the Board of Directors)
Apr. 1980 Joined Sankyo Co., Ltd.
July 2004 Corporate Officer, Head of New Drug Development Division, Sankyo Co., Ltd.
Apr. 2007 Executive Officer, Head of Pharmaceutical Technology Division, Daiichi SankyoCo., Ltd.
June 2009 Member of the Board, Senior Executive Officer, Daiichi Sankyo Co., Ltd.
Apr. 2014 Member of the Board, Senior Executive Officer, Head of Vaccine BusinessIntelligence Division, Daiichi Sankyo Co., Ltd.
Representative Director and President, Kitasato Daiichi Sankyo Vaccine Co., Ltd.
Apr. 2017 Guest Professor, Graduate School of Creative Science and Engineering, Waseda
University
June 2018 Outside Director, Japan Hades Co., Ltd. (current)
June 2020 Director, TS TECH (current)
June 2022 Chairperson of the Board of Directors, TS TECH (current)

However, in light of the standards required in Europe andthe United States, as well as the diversity concepts found in
the CG Code, we may be required to ensure that more than
one-third of total board membership is comprised of women in the future. In such an event, while it is relatively simple
to invite people to become outside directors, our goal must
be to create a future in which professional women in our
workforce, nurtured by the company’s own succession plan,
will take leading roles in the company. Given that the proportion of women working at manufacturing companies inJapan such as ours is low, we must overcome the difficulties
we face to ensure greater empowerment of women.

Growth Strategy and Corporate
GovernanceTatsuya Motoda

Director, Audit and Supervisory Committee Member (Outside
Director, Chairperson of the Nomination and Compensation
Committee)
May 1993 Joined Anderson Consulting (now Accenture Japan Ltd.)
Sept. 1999 Joined Tsuji CPA Accounting Office (now Hongo Tsuji Taxing &Consulting)Apr. 2007 International Tax Affairs Department General Manager, Tsuji CPA
Accounting Office
Oct. 2008 Registered as a tax accountant
Apr. 2014 Representative tax accountant, Motoda Tax & Accounting Office(current)
June 2014 Auditor, TS TECH
July 2018 Outside Auditor, Global Information, Inc.
June 2021 Director, TS TECH (Audit and Supervisory Committee Member)(current)Mar. 2022 Outside Director, Global Information, Inc. (Audit and Supervisory
Committee Member) (current)
Apr. 2022 Outside Director, Mitsui High-tec, Inc. (Audit and Supervisory
Committee Member) (current)

Nakajima: It is also necessary for the Board of Directors tofurther improve its effectiveness in the future as a forum fordiscussing growth strategy.
We are currently engaging in discussions to formulate
the 15th Medium-Term Management Plan, which will start in
fiscal 2024, but using an approach that differs from what wehave done previously. For previous plans, we identified the
management issues at that specific point in time and formulated priority policies and specific initiatives in order to resolve these issues. For the upcoming plan, while ensuringthat immediate and pressing management issues are definitely dealt with, we also aim to clarify where we would likethe Group to be in five to ten years’ time and devise a planthat focuses on the kinds of strategies we will employ toachieve growth in order to realize that future vision. We will
also establish quantitative KPIs that will act as milestones
along the road to our future vision, delegate authority firmly
to the executive side, and, under a Board of Directors
equipped with enhanced supervisory functions, execute ourplans dynamically to realize our goals.
Ogita: I also believe that the board must play a larger role informulating the Group’s growth strategy and Medium-Term

Management Plan. For the company to achieve sustainablegrowth in a period of historic transformation, it is vital that
we devise strategies that take in the big picture from diverse
perspectives. The board, comprised of diverse members,
each with their own high levels of expertise and insight, is
expected to make a significant contribution. I also think that
it is important to provide forums where every board member can relax and freely discuss the big picture, outside theconfines of formal board meeting discussions. I would like tocreate such opportunities going forward.
Motoda: When you consider the prerequisites for a boardthat supports growth strategy, members must be possessedof adequate experience and competence. However, we facechallenges in terms of the development of our successors,
who will lead the company to the next generation. In my capacity as head of the Nomination and Compensation Committee, I intend to make recommendations about how tofurther improve the level of formulation, operation, andmonitoring of development plans. These improvements, inturn, will help to enhance fairness and transparency andconstruct a system that will drive improvement of corporate
value in the medium to long term.

Aspirations for the Future
Ogita: As chairperson of the Board of Directors, my constanttask is to invigorate discussions among members. By learning about and gaining a deeper understanding of the management situation of the TS TECH Group, I aim to be a chairperson capable of detecting potential issues and guiding
board proceedings with a view to resolving such issues. Also,
as an outside director, by stating opinions and making recommendations based on my own experiences, I hope tocontribute actively to the formulation of the next MediumTerm Management Plan and guide the further growth of the
TS TECH Group.
Motoda: As head of the Nomination and Compensation
Committee, I will continue to strive to carefully deliberate thebackground, expertise, and personal qualities of candidates
for director and corporate officer positions. By operating thecommittee in a highly transparent and objective manner, I
will contribute to the construction of a corporate governance structure that supports sustainable growth.
Nakajima: My position as vice president also requires me tosupport the president, and there are times when I must inevitably say “no.” Always putting the Group’s growth first, I
am committed to continuing to take a free and just approach
to all matters to ensure that top management can make appropriate business decisions.
To ensure that the TS TECH Group can journey confidently into the future, we must continue to improve the effectiveness of the Board of Directors by delegating authorityand passing on positions from current members to the next
generation of management members, and by working toovercome the various challenges we face. Going forward,
both the outside and internal members of the board will
combine their efforts to further advance corporate governance at the TS TECH Group.

TS TECH Integrated Report 2022

31

Board of Directors

Directors, Audit and Supervisory Committee Members

REPRESENTATIVE DIRECTOR, PRESIDENTREPRESENTATIVE DIRECTOR, VICE PRESIDENT

Director in Charge of Overseas Segments,
Quality Assurance, and Development
Number of shares of the company held:
66,688 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

Director in Charge of Administration, Business
Administration, and Corporate Managerial
Planning, Compliance Officer
Number of shares of the company held:
26,836 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

Masanari Yasuda

Yoshitaka Nakajima

REPRESENTATIVE DIRECTOR, SENIORMANAGING DIRECTOR

Kenichi Hasegawa

Director in Charge of New Business, Sales,
Purchasing, and Manufacturing, Risk
Management Officer
Number of shares of the company held:
18,468 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

DIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBERDIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBER (Outside Director)

DIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBER (Outside Director)

DIRECTOR, AUDIT AND SUPERVISORYCOMMITTEE MEMBER (Outside Director)

Number of shares of the company held:
11,034 shares
Meetings of the Board of Directors attended:
100% (13/13 times)
Meetings of the Board of Auditors attended:
100% (3/3 times)
Meetings of the Audit and Supervisory
Committee attended: 100% (11/11 times)

Representative tax accountant, Motoda Tax &Accounting OfficeOutside Director, Audit and Supervisory
Committee Member, Global Information, Inc.,
Outside Director, Audit and Supervisory
Committee Member, Mitsui High-tec, Inc.
Number of shares of the company held:
3,231 shares
Meetings of the Board of Directors attended:
100% (13/13 times)
Meetings of the Board of Auditors attended:
100% (3/3 times)
Meetings of the Audit and Supervisory
Committee attended: 100% (11/11 times)

Representative, Sazanka Law Office
Number of shares of the company held:
242 shares
Meetings of the Board of Directors attended:
100% (13/13 times)
Meetings of the Board of Auditors attended:
100% (3/3 times)
Meetings of the Audit and Supervisory
Committee attended: 100% (11/11 times)

Representative, Tokyo Heritage Law Firm
Number of shares of the company held:
375 shares
Meetings of the Board of Directors attended:
100% (13/13 times)
Meetings of the Audit and Supervisory
Committee attended: 100% (11/11 times)

Tatsuo Sekine

Tatsuya Motoda

Hajime Hayashi

Tomoko Nakada

Selection of Directors
DIRECTOR, SENIOR MANAGING OFFICERDIRECTOR, SENIOR MANAGING OFFICERDIRECTOR, SENIOR MANAGING OFFICERDIRECTOR, MANAGING OFFICER

The Americas Segment Executive General
Manager, President, TS TECH AMERICAS, INC.
Number of shares of the company held:
14,775 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

China Segment Executive General Manager,
Chairman and President, TS TECH (HONG
KONG) CO., LTD.
Number of shares of the company held:
12,333 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

Corporate Business Administration Division
Executive General Manager
Representative Director, Honda Cars
SAITAMAKITA
Number of shares of the company held:
8,539 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

Corporate Development and Engineering
Division Executive General Manager
Number of shares of the company held:
5,673 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

Akihiko Hayashi

Yutaka Arai

Atsushi Igaki

Eiji Toba

The regulations for candidates for director positions stipulate that candidates should have impressive leadership abilities, decision-making skills,
vision and planning abilities, and should also have the personal qualities and insight fitting a director, among other qualities. Additionally, current directors who are up for reelection cannot have an attendance rate at Board of Directors’ meetings below 85% without a legitimate reason.
In addition, when selected as a candidate, a specific skill matrix should be considered for those skills that directors should have, in light of theGroup’s management strategies and business characteristics. The Board of Directors also strives for a balanced structure that reflects gender,
global, cultural, and other types of diversity in order to facilitate appropriate, swift decision-making and promote supervisory functions.
Individuals meeting the requirements who have the skills and who qualify as candidates for director are proposed as official candidates tothe Board of Directors after their eligibility and the overall balance of the Board of Directors, among other factors, have been discussed by the
Nomination and Compensation Committee. The Board of Directors holds discussions on the candidates for director in light of these reports andthe views of the Audit and Supervisory Committee and presents the candidate proposals at the General Meeting of Shareholders.
Experience and expertise
Name

Masanari Yasuda
Yoshitaka Nakajima
Kenichi Hasegawa
Akihiko Hayashi
Yutaka Arai

DIRECTOR, MANAGING OFFICER

Takahiro Kobori

Corporate Sales and Purchasing Division
Executive General Manager
Number of shares of the company held:
7,422 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

DIRECTOR, MANAGING OFFICER

Yasushi Suzaki

Corporate Manufacturing Division Executive
General Manager
Number of shares of the company held:
5,331 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

DIRECTOR (Outside Director)

Takeshi Ogita

Outside Director, Japan Hades Co., Ltd.
Number of shares of the company held:
810 shares
Meetings of the Board of Directors attended:
100% (13/13 times)

DIRECTOR (Outside Director)

Kaori Matsushita

CEO, K&L Consulting LLC, Outside Director and
Audit & Supervisory Committee Member, Taisei
Oncho Co., Ltd., Outside Director, Belc CO., LTD.
Number of shares of the company held:
0 shares
Meetings of the Board of Directors attended:―%

Atsushi Igaki
Eiji Toba
Takahiro Kobori
Yasushi Suzaki
Takeshi Ogita

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TS TECH Integrated Report 2022

Representative Director,
President
Representative Director,
Vice President
Representative Director,
Senior Managing Director
Director, Senior Managing
Officer
Director, Senior Managing
Officer
Director, Senior Managing
Officer
Director, Managing Officer
Director, Managing Officer
Director, Managing Officer
Director

Kaori Matsushita

Director

Tatsuo Sekine

Director, Audit And Supervisory
Committee Member
Director, Audit And Supervisory
Committee Member
Director, Audit And Supervisory
Committee Member
Director, Audit And Supervisory
Committee Member

Tatsuya Motoda
Hajime Hayashi

Note:	Career and positions and number of shares of the company held: As of June 24, 2022
(As of the date of submission of the Annual Securities Report)
Attendance of each meeting: April 1, 2021–March 31, 2022

Position and responsibilities

Tomoko Nakada

Nomination and Compensation Committee

Knowledge about
international
Legal issues
Corporate
Financial
Technology Manufacturing
Sales and HR development
Environmentand riskManagement management business andaccounting development and quality
procurement and diversity
overseasmanagement
strategy
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TS TECH Integrated Report 2022

33

Efforts to Improve Corporate Governance and Compliance

Governance System Diagram

Basic Policies

General Meeting of Shareholders

Basic Policy on Corporate Governance

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

Group Governance Structure

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

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TS TECH Integrated Report 2022

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

Appointments of Outside Directors

The company selects persons with extensive experience incorporate management or expertise in various fields as outside directors in order to provide advice and supervision on
management from an independent standpoint, taking into
account the characteristics of the company’s business.
When selecting outside directors, in addition to satisfying the criteria for independence set forth in the Companies
Act, the Ordinance for Enforcement of the Companies Act,and by Tokyo Stock Exchange, Inc., the company makes its
decisions in accordance with its regulations for candidates
for directors and Independence Standards for Outside Directors it has set forth. The regulations stipulate that directors may concurrently serve as officers for up to three listedcompanies including TS TECH.

Appointment

Global Risk Management
Committee

Risk Management
Oﬃcer

Board of Directors

Segment Management Committees

Segment Executive General Managers, etc.
(Americas/China/Asia)
6
Reports

Executive Committee
Responses
and reports

ComplianceOﬃcer

Responses
and reports

Ethics and Compliance
Committee

Responses and reports
TS Corporate Ethics Compliance
Consultation OfficeConsultations

Corporate ethics hotlines
set up by each company

Consultations

Representative Directors

4

Responses and reports

Executive General Managers Committee
Executive General Managers, etc.

Audit and Supervisory Committee 2

Audit and Supervisory Committee Members

Responses and reports

Reports

Coordination

Reports

Directors 1

Appointment

Audit andsupervision

5

Monitoring

Responses

Audit report

Accounting audit
Internal control audit

Nomination and 3
Compensation Committee

Coordination

Accounting Auditor
Direction

Reports(1) Securing the Rights and Equal Treatment of Shareholders	
We respect the rights of all stockholders, who are important stakeholders, and shall maintain an environment that
ensures that all shareholders, including non-controlling interests, are treated equally and can fully exercise their rights.
(2) Appropriate Cooperation with Stakeholders	
We shall cooperate appropriately with all stakeholders while working to achieve sustainable growth and an increase in
mid- to long-term corporate value.
(3)	Ensuring Appropriate Information Disclosure and Transparency	
We shall actively disclose information in order to be a company sincerely welcomed by all of our stakeholders, and weshall manage our business with transparency and good faith.
(4)	Responsibilities of the Board	
The Board shall take appropriate responsibility for the establishment of mid- to long-term management policies andoversight of directors, and it shall work to build systems to enable transparent, fair, and resolute decision-making.
(5)	Dialogue with Shareholders	
The company shall engage in constructive dialogue with shareholders and investors through the annual General
Meeting of Shareholders and other avenues with respect to management principles and other issues as it works toachieve sustainable growth and an increase in mid- to long-term corporate value.
November 2015, Resolution of the Board of Directors

Corporate Business
Audit Department

Responses and reports
Divisions anddepartments in Japan
Domestic aﬃliates

Business audits

Overseas aﬃliates

1

Board of Directors

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

2

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

3 omination andN
Compensation
Committee

The Nomination and Compensation Committee is composed of two internal directors and three outside directors. It deliberates on mattersrelated to the appointment and dismissal of directors and executive officers and their compensation.

4

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

5 xecutive General
E
Managers Committee

The Executive General Managers Committee is made up of 11 executive general managers and regional general managers. This committee
discusses policies, plans, and governance related to operations in each division to maintain efficient operations.

6 egment Management Segment Management Committees are composed of directors, executive officers, presidents of subsidiaries and affiliated companies, and soS
on from each segment (the three segments of the Americas, China, and Asia). They deliberate on important matters concerning the execution
Committees
of business operations for each segment, as well as promoting self-reliance among the segments and companies and strengthening theirbusiness execution structures.

Reasons for Appointments of Outside Directors
Takeshi Ogita

Kaori Matsushita

Tatsuya Motoda

Hajime Hayashi

Tomoko Nakada

Mr. Ogita has provided valuable opinions and advice related to our management practices as an outside director based on his abundant experience and broad insight as a corporate manager of a pharmaceutical company. We selected him to serve as an outside director with the
expectation that he will continue helping to ensure the soundness of our management by reflecting this abundant experience and insight inour management. As of June 2022, he serves as Chairman of the Board of Directors.
Ms. Matsushita has abundant experience and insight acquired by planning and promoting new businesses and corporate alliance strategies
on a global scale at a comprehensive IT vendor and providing diversity management assistance at a consulting company, and more. We selected her to serve as an outside director with the expectation that she will contribute to enhancing the diversity of our company and help toensure the soundness of management.
Mr. Motoda has specialized knowledge and abundant experience and insight as a tax accountant. As a member of our Audit and Supervisory
Committee, he has provided appropriate auditing, including sound advice regarding our management. We selected him to serve as an outside director (Audit and Supervisory Committee member) with the expectation that he will continue to ensure the soundness of our management and contribute to auditing and supervision.
Mr. Hayashi has broad knowledge and abundant experience as an attorney-at-law, and he has provided appropriate auditing, including
sound advice regarding our management, since his appointment as an outside auditor. We selected him to serve as an outside director (Audit
and Supervisory Committee member) with the expectation that he will continue to ensure the soundness of our management and contributeto auditing and supervision.
Ms. Nakada has extensive experience overseas and broad insight as an attorney-at-law. As a member of our Audit and Supervisory Committee, she
has drawn on the global and diversity-minded perspectives she has cultivated to provide appropriate auditing, including sound advice regarding ourmanagement. We selected her to serve as an outside director (Audit and Supervisory Committee member) in the expectation that she will continue
to enhance the diversity of our Board of Directors, help to ensure the soundness of our management, and contribute to auditing and supervision.
TS TECH Integrated Report 2022

35

Efforts to Improve Corporate Governance and Compliance

Analysis and Evaluation of the Board of Directors’ EffectivenessIn an effort to maintain and improve the Board of Directors’ functions, we evaluate its overall effectiveness yearly. These evaluations of effectiveness have been conducted continuously since fiscal 2019. This is the fourth of these evaluations.

Fiscal 2022 Evaluation Process
Details

1. Each director conducts aquestionnaire-based
self-evaluation(February–March 2022)

Subjects: All directors
Aggregation method: Anonymous questionnaire responses. External organization commissioned to performaggregation.
Evaluation items: (Board of Directors’ composition)
Board of Directors’ composition, level of diversity, number of independent directors, etc.
(Deliberations and resolutions)
Strategy monitoring, business portfolio optimization, appropriate allocation of management
resources, etc.
(Operation of the Board of Directors)
Number of items for deliberation, frequency of meetings, amount of time spent deliberating andtime distribution, the system for providing information necessary for deliberations, etc.
(Individual framework evaluations)Executive compensation scheme, management appointment and dismissal process, structuralprocess construction for the risk assessment system, etc.

2. Board of Directors conducts
discussions and summarization(May 2022)

The overall effectiveness of the Board of Directors is analyzed and evaluated on the basis of the questionnaire results,
as well as comparisons with the previous fiscal year’s evaluation results, and trends seen in responses to each of thequestions. Deliberations are held on policies to be taken to further increase effectiveness.

Compliance Framework

Based on the TS TECH Philosophy, the Group establishedthe TS Standards for Conduct (TS TECH’s norms and ideals
as an organization) and TS Guidelines for Conduct (expectations for day-to-day conduct for individual executives, officers, and employees). Regular education is provided to ensure the entire Group is familiar with these concepts.
A director is appointed as a Compliance Officer in orderto promote compliance initiatives, and steps are continuallytaken to prevent legal violations before they occur throughregular TSCG self-verifications and deliberations of important ethics and compliance issues by the Ethics and Compliance Committee.
We have established a whistleblower hotline called the
TS Corporate Ethics Compliance Consultation Office, whichenables employees to bring issues before compliance officers, who respond with rapid, effective investigations andcorrective guidance in the event of a problem. Including affiliates in and outside of Japan, the Group receives around
100 ethics and compliance inquiries a year, which includes
consultations and other cases handled by the TS Corporate
Ethics Compliance Consultation Office. In fiscal 2022, theGroup had a total of 87 cases. Continuous operation of thisframework promotes internal self-improvement.

Ethics and Compliance Issues
Number of Issues Recorded (Consolidated)

Evaluation Results and Future Initiatives
Overall Evaluation Results

6 cases

9 cases

TS TECH Co., Ltd.

• Our Board of Directors was evaluated as making progress in ensuring diversity in its composition, as holding active discussions in which eachdirector makes use of their respective expertise and experience, and as maintaining its effectiveness.
• In particular, it showed an improved evaluation in the “Operation of the Board of Directors” category, achieved by better organizing the board’s
agenda items based on the previous fiscal year’s effectiveness evaluation.
Future Initiatives• Ongoing consideration of steps to take to address anticipated issues regarding the number of directors and ensuring the board’s diversity• Further discussions by the Board of Directors on embodying the growth strategy and setting relevant KPIs in the formulation of the MediumTerm Management Plan
• Sharing of evaluation results with the Corporate Managerial Planning Department and promotion of improvements to the Medium-Term
Management Plan formulation process

Operation of an Internal Control System

Following the inclusion of regulations on internal controls inJapan’s Companies Act in 2006, TS TECH passed a resolution
on the basic policies of its internal control system at a Boardof Directors’ meeting. Since then, the Board of Directors has
reviewed the implementation of this system each fiscal year
and passed resolutions on changes to these policies as necessary at Board of Directors’ meetings. Additionally, in accordance with Japan’s Financial Instruments and Exchange Act,the TS TECH Group has established an internal control

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TS TECH Integrated Report 2022

system to ensure the reliability of its financial reporting. The
effectiveness of this system is maintained and internal control is enhanced through regular evaluations of improvements and operations and corrective actions as needed.
In line with the transition to a “Company with an Audit
and Supervisory Committee” structure, the basic policy on
the establishment of an internal control system was revisedat the Board of Directors’ meeting held on June 25, 2021.

72 cases

Total: 87 cases

Domestic subsidiaries
and affiliates

FY2022

Overseas subsidiaries
and affiliates* Investigations into each case found no violations of laws or regulations that would have a significant
impact on our business activities.

Remuneration Policy

TS TECH’s basic policy on executive compensation is to ensure that it is transparent and reasonable, with the potential
to further motivate sustained business growth.
We established the Nomination and Compensation
Committee, chaired by an outside director and composed ofthree outside directors and two internal directors, as an advisory body to the Board of Directors. When reviewing thelevel and calculation method of compensation in consideration of the basic policy and social conditions, revising thecompensation structure, or determining the individual compensation for directors for each fiscal year, the Board of Directors makes resolutions based on consultations with theNomination and Compensation Committee and the deliberations of the Audit and Supervisory Committee.

Officer compensation consists of basic fixed compensation, performance-linked remuneration as a short-term incentive, and non-monetary stock-based compensation as a
medium- to long-term incentive to enhance the Group’s corporate value over the medium to long term and further
share value with shareholders. The composition of annualcompensation is approximately 60% base compensation,
25% performance-linked compensation, and 15% stockbased compensation.
Outside directors and directors who are Audit and Supervisory Committee Members are paid basic compensation
only given that their role is to audit and supervise management from an independent perspective.

Risk Management

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

Global Risk Management Committee

This committee was formed in September 2014 as an advisory committee to the Executive Committee to help ensure
appropriate identification and control of the various risks
affecting global business activities and to solidify the sustainability and stability of the business.
The following year, regional risk management committees were formed in each region to manage the risks specific to these geographic segments and promptly advance risk
mitigation measures. TS TECH has also worked to conduct
emergency response training that anticipates a range ofrisks, such as the most frequently occurring natural disasters in each geographic region where the Group does business or the outbreak of an infectious disease.
In fiscal 2022, TS TECH identified four major risks and pursued the appropriate corresponding risk mitigation measures.

Four Major Risks

1. Crisis management in emergencies
2. Stoppage of parts supply
3. IT equipment failure
4. Fires

TS TECH Integrated Report 2022

37

Efforts to Improve Corporate Governance and ComplianceTax Policy

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

TS TECH Group Tax Policy(1) Tax Governance	The Group positions the reinforcement of tax governance as one of the most important management
issues. This policy was approved by TS TECH’s Boardof Directors, and the Board of Directors bears final
responsibility for tax governance.
(2) Compliance	The Group works to promote and instill awareness ofcompliance among its employees. This enables theGroup to comply with and always ensure the correctunderstanding of tax laws and regulations, etc., ineach country and region in which it operates, and tomeet the appropriate tax declaration and tax
payment obligations.
(3) Tax Planning and Tax Havens
	The Group will determine investment and businessactivities according to its business objectives and economic rationality. The Group will avoid tax planningthat is not in line with business purposes or operations, as well as tax activities that use tax havens.
(4) Transfer Pricing
	The Group will abide by international tax frameworks
such as the OECD Transfer Pricing Guidelines and theBase Erosion and Profit Shifting (BEPS) Action Plan,
and will strive to ensure tax transparency. International transactions between Group companies will comply
with the OECD Transfer Pricing Guidelines, and transaction prices will be determined based on the arm’s
length principle.
(5) Minimal Tax Risk
	The Group will conduct the appropriate accounting
and tax measures in accordance with the tax systems
and tax administrations of each specific country andregion. In the event of complicated, unclear tax matters, the Group will consult in advance with external
experts and tax authorities to minimize tax risks.
(6) Relationship with Tax Authorities
	The Group will provide timely, accurate information totax authorities in each country and region in order toreduce tax risks, and will respond in good faith tomaintain trust and good relations.

July 2018, Resolution of the Board of Directors

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TS TECH Integrated Report 2022

Environmental Initiatives

Policy and Action against Antisocial Forces

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

Intellectual Property Management

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

Disclosure Policy

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

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

Environmental Action Plan

(1) Compliance with Legal and Other Requirements	Strive to prevent environmental pollution and protect biodiversity and ecosystems primarily through compliance with requirements, such as environmental laws and regulations and environmental standards, and proper chemical management.

(2) Reduction of Environmental Impact

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

(3) Continuous Improvement of Environmental Management

	Endeavor to continuously improve environmental and energy performance by setting environmental targets based on environmental and energy management systems, and regularly reviewing them. Provide the information and management resources
needed for such improvement and also work toward the utilization of products and equipment that will improve energy efficiency.

October 2018, Resolution of the Board of Directors (Revised)

Initiatives to Strengthen
Environmental Management

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

Internal Environmental Audits

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

Environmental Education

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

each site for the teams in charge of energy conservation andmanagement at each of those sites. Since 2019, we have beendeveloping and providing more in-depth education on how toincrease worksites’ and products’ energy efficiency by introducing and regularly implementing our own energy-saving
diagnosis system, which focuses on improving facility operations in conjunction with providing relevant training.
Learning not only the basic concepts of energy conservation but also specific management methods for facilities
provides an opportunity to shape more effective measures.
Going forward, we will develop human resources who willplay a central role in the promotion of energy conservation
at each of our sites,
and we will continue
to provide education
to improve the environmental
awareness and skills of ouremployees.

Environmental education for facility management

Compliance with Environment-Related Laws
and Regulations

Under our environmental and energy management systems,
TS TECH has prepared a list of legal and other requirements
at each site and reviews the laws and requirements that
we must comply with at the beginning of each fiscal year.
We also evaluate the status of compliance every six months.
Over the period from fiscal 2019 to fiscal 2022, there were noomissions of notifications under relevant laws and regulations, deviations from legal standards, or submissions ofexternal complaints.

TS TECH Integrated Report 2022

39

Environmental Initiatives

Information Disclosure Based on TCFD Recommendations• Risks and Opportunities Related to Climate Change and Related Responses

As a company involved with the manufacture of automobiles that directly emit
CO₂, we recognize our response to climate change as a serious management issue. Accordingly, in August 2021 the Group endorsed the recommendations of
the TCFD. We will analyze the risks and opportunities climate change presents to
the Group’s operations, reflect these in our management strategy and risk management, and appropriately disclose progress in order to contribute to a decarbonized society and aim for further growth.

The risks and opportunities judged as having a large or medium fiscal impact on the Group’s operations using a scenario analysis are as follows.

Physical risks(4°C)

Governance

We have established a Sustainability Committee that deliberates on issues related to all domains of sustainability, including our
response to climate change, and manages sustainability for the Group as a whole.
p. 13

Strategy

Measures to achieve carbon neutrality are essential to the realization of a sustainable society. It is expected that governments
worldwide will implement energy regulations to reduce CO₂ emissions and stronger laws, and it is also anticipated that various
regulations related to automobiles will be strengthened. While tighter regulations could be a risk to the Group, addressing
them by focusing our efforts on products and services with outstanding environmental performance, one of the Group’s
strengths, could be an opportunity to expand business operations.
We believe that moving forward, promotion of Group products and services that comply with changing regulations andlaws is not only an effective measure to help control global greenhouse emissions such as CO₂ but also an opportunity forbusiness growth, and we have incorporated this belief into our business strategies.

Transition risks(1.5°C)• Scenario Analysis

An analysis was conducted using a “4°C scenario” where the physical impact of intensifying extreme weather caused by climatechange is apparent and a “1.5°C scenario” where the effects of a transition to carbon neutrality are evident.
Assumed scenario

Reference scenarios

Assumed state of society

4°C scenario• IEA STEPS (Stated Policies Scenario)• IPCC RCP8.5• Increased risk of flooding due to rising sea levels caused byrising temperatures, stronger hurricanes and typhoons,frequent torrential rains• Increased risk of water shortages due to droughts and the
spread of arid regions and desertification• Harsher work environments due to rising temperatures

1.5°C scenario• IEA NZE(Net Zero Emissions by 2050 Scenario)• IEA SDS
(Sustainable Development Scenario)• IPCC RCP2.6• Stronger measures and regulations aimed at decarbonization(implementation of a carbon tax, energy conservation/saving
measures, ZEV regulations, policies to promote EVs, etc.)• Development of decarbonization technologies and a greater
range of environmentally friendly products

Time frame

Level ofimpactLower revenue due to shutdowns at Group locations caused byextreme weather such as typhoons, torrential rains, or hurricanes

Long term

Large

Higher operating costs on expanded use of carbon pricing

Mediumterm

MediumHigher costs related to the implementation of renewable energy
and capital investment in line with tighter regulations
Higher operating costs accompanying increased energy use due toautomated production processes
Higher costs related to R&D and capital investment aimed at
low-carbon products and products that support electrification

Mediumterm
Mediumterm
Mediumterm

MediumHigher material procurement costs in line with environmentallyfriendly materials and carbon pricing

Mediumterm

Large

Mediumterm

Large

Mediumterm

MediumHigher revenue from seats that support electrification and interior
components that use materials with a low environmental load inline with a greater demand for low-carbon products

Mediumterm

Large

Higher revenue due to coordination of whole automobile cabininteriors that accommodate new potential for automobiles suchas CASE

Mediumterm

Large

Lower revenue in line with lower value-added products and lostorders due to delayed support for low-carbon products andproducts that support electrification
Lower operational costs accompanying reduced energy use from
more efficient production processes
Opportunities(1.5°C)• Analysis of Risks and Opportunities Based on Climate Change Scenarios

A scenario analysis was conducted using the Group’s core automobile business (seats, interior components), and business risks
and opportunities were identified. Matters arising from a transition to a decarbonized society, such as tighter regulations andtechnological developments or market changes, and matters arising from the physical impact of climate change, such as acute
extreme weather and chronic temperature rises, are examples of risks and opportunities related to climate change.
The Group classified the causes for various changes in the external environment arising from climate change as “transition
risks” or “physical risks” and qualitatively assessed the fiscal impacts using the three levels of large, medium, and small to identify major risks and opportunities. The analysis examined the period up to 2050, and, in line with the Group’s long-term environmental targets, set 2030 as the medium term and 2050 as the long term.

Major risks and opportunities

Large

Large

Response• Stronger BCP measures• Swift production responses during disasters through cooperation
with other locations• Promotion of CO₂ reduction measures (energy conservation
and reuse)• More efficient logistics• More efficient energy use• Effective capital investment• Continued promotion of energy-saving measures centered on
production facilities• Increased revenue through stronger sales initiatives• Enhanced development through co-creation with customers• Stronger supply chain management• Greater reduction of Scope 3 emissions• More efficient logistics• Expedited development of low-carbon products that use products that
support electrification and materials with a low environmental load
• Continued promotion of energy-saving measures centered on
production facilities• Development of seats that contribute to improved electric mileage
and support electrification• Promotion of research on products that use plant-based materials• Use of recycled materials, implementation of structures that caneasily be deconstructed• More joint development and proposals through business allianceswith other companies

Risk Management

Risks and opportunities related to climate change and other sustainability issues are reviewed annually and deliberated uponby the Sustainability Committee. Major risks and opportunities are identified by classifying risks and opportunities arising fromclimate change as “transition risks” or “physical risks” and qualitatively assessing their fiscal impacts.
Identified major risks and opportunities that are physical risks (response to natural disasters) are addressed using targeted measures promoted by each functional division and region via the Global Risk Management Committee. Transition riskrelated matters directly linked to business activity will be incorporated into medium-term business plans and business strategies and promoted in accordance with enacted policies. Items related to sustainability (long-term environmental targets,materiality KPIs, etc.) will be promoted by each functional division and region via the Sustainability Committee.
Information
gathering

Identification of major risks andopportunities

Selection of policies andmeasures

Information
gathering regarding
risks andopportunities related
to climate change led
by each functional
division and region

Evaluation and analysis based ongathered information, such as thedegree of impact on operations
and the possibility of occurrence,
to identify the Group’s major risks
and opportunities related toclimate change

Creation of policies andmeasures for risks andopportunities that aredeliberated upon by the
Sustainability Committee andpresented at a Board of
Directors’ meetings as necessary
once measures are passed atmeetings of the Executive
Committee

Incorporation into strategies and implementation
Identified major risks and opportunities will be handled as follows:• Each functional division and region will promote measures to address natural
disaster risks via the Global Risk Management Committee• Business-related matters will be addressed through incorporation into
medium-term management plans and business strategies• Each functional division and region will promote measures to address
sustainability via the Sustainability Committee

Metrics and Targets

In March 2021, the Group identified the eight material issues (materiality) it will prioritize to help contribute to the creation ofa sustainable world, and it set KPIs and targets for 2030 for each material issue. The Group set long-term environmental targets that include a reduction in CO₂ emissions compared to fiscal 2020 by 50% in 2030 and 100% in 2050, and it is working toachieve them through means such as installing energy-conserving equipment and utilizing renewable energy at each location.
pp. 44–45

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TS TECH Integrated Report 2022

41

Environmental Initiatives

Environmental Impact of Business Activities and Environmental Initiatives

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

Environmental Impact

Resource depletion
Ozone depletion
Air pollution
Water pollution
Soil pollution
Waste materials

Efforts to Reduce Our
Environmental Footprint

Reduce global environmental impact
associated with business operations

Global warming

DomainEnvironmental Protection Efforts

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

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

Purchasing
Distribution

Development-Focused Measures
The TS TECH Group understands that reducing the weightof our products is one of the most effective ways in which we
can reduce our impact on the environment. For example, ourseat frames account for a large portion of the weight of our
products, so we strive to apply a variety of weight-reducing
technologies wherever possible, while further improving
safety and comfort in line with evolving specification needs.
The next-generation seat frame installed in the 2020 Honda
Fit is about 28% lighter than our previous core frame. We
accomplished this by using more ultra-high tensile strength
steel and thin-plate welding technology. It is now being usedin many automobile models worldwide. In addition to reviewing the use of aluminum and other materials, we arealso focusing our efforts on technology that fuses different
materials. Using the optimal designs for these materials, wewill cut out even a single extra gram to develop frames thatare the lightest in the world.
In addition to weight-reducing technologies, we are focusing on reducing CO₂ contained in our products throughtechnologies utilizing CNF* and other plant-derived biomass
materials. Compared to conventional door trims made frompetroleum-derived materials, we have succeeded in reducing
the amount of CO₂ contained in these products by 60% by using plant-derived biomass materials (for resin/synthetic leather coverings), and we are continuing our research with thegoal of applying this technology to mass-produced products.

42

TS TECH Integrated Report 2022

• Improve distribution efficiency• Promote green purchasing

Moreover, with the shift to electric vehicles (EVs) in mind,
we are pursuing research and development that will contribute to carbon neutrality from various angles, such as the development of an Electronic Control Unit (ECU) for seat heaters that efficiently heat seats with low power consumption
and an energy-saving air-conditioned seat, thereby contributing to improvements in electricity costs (fuel efficiency).
* CNF: Cellulose nanofiber

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

Production-Focused Measures
With a policy to “build production plants that are sincerely
welcomed by the local community,” our Manufacturing Division, which oversees our production plants, aims to contribute to a recycling-oriented society and promotes efforts tobuild “people-friendly, environment-friendly production
plants.” Through the use of Japan’s traditional karakuri mechanisms, we have been able to simultaneously save energy,
reduce workloads, and improve production efficiency
through the promotion of a plant-wide framework that aims
to automate work without consuming energy.

The karakuri competition we hold annually welcomed
the involvement of domestic affiliates in fiscal 2022, and wewill seek to further invigorate related activities. The top three
entries in the competition are slated for inclusion in the Karakuri Kaizen Exhibition* organized by the Japan Institute of
Plant Maintenance. We are committed to motivating our
employees and incorporating other companies’ ideas for improvement in our work to accelerate the creation of energysaving, low-cost processes.
We also plan to hold a cross-departmental Group-wide
meeting in fiscal 2023 to share successful cases of energysaving efforts made in the manufacturing domain. By encouraging horizontal deployment of such energy-saving examples, as well as working to standardize our production
equipment worldwide, we will undertake the process of creating simple, slim, compact processes with low energy consumption at all our production sites.
* The Karakuri Kaizen Exhibition is held every year in Japan to showcase
improvements using karakuri mechanisms.

Karakuri activities
at the Saitama Plant

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

Installing Environmentally
Friendly Equipment

The TS TECH Group has installed a variety of equipment to
reduce its environmental impact, including energy-saving
equipment and solar power generating equipment that produces renewable energy.
In Japan, following achievement of a Nearly ZEB* (Zero
Energy Building) rating with our new Head Office building,which we completed in conjunction with the previous
Medium-Term Management Plan, we carried out factoryreconstruction work in the Hamamatsu district. We installed
environmentally friendly equipment including a rainwater
recycling system to reduce our groundwater extraction
and CO₂ emissions. In addition, we are actively working tocurb distribution loss by consolidating functions including
external warehousing at the Hamamatsu Plant in order toreorganize production.
Overseas, TS TECH (THAILAND) CO., LTD. completed theGroup’s largest installation of solar panels in fiscal 2021. The
2,600 solar panels made it possible to supply approximately
15% of the electricity consumed at the production site using
solar power, thereby helping to reduce CO₂ emissions. In addition, at TS TECH INDIANA, LLC (U.S.), where an expansion
project was completed in June 2022, a new solar power generation system with over 4,000 solar panels and electricity
storage capabilities has been installed. The company aims
to become the first Group plant to cut its CO₂ emissions
virtually to zero by generating 50% of the electricity it consumes annually through the system while making active useof energy-saving equipment and renewable energy.
* Nearly ZEB: A building that comes as close as possible to ZEB by nearing zeroannual primary energy consumption

Newly installed solar power generation system at TS TECH INDIANA, LLC

TS TECH Integrated Report 2022

43

Environmental Initiatives

Environmental Targets and Results
Main Environmental Targets and Results in Fiscal 2022 and Targets for Fiscal 2023

Under the 14th Medium-Term Management Plan (ﬁscal 2021–ﬁscal 2023), we have set targets for the TS TECH Group forCO₂ emissions, waste, and water, and are implementing initiatives to achieve reductions at each site.
FY2022Item

Targets
CO₂ emissions reduction
1,870 t-CO₂ lower than FY2020
Basic unit per vehicle*1
2% lower than FY2020

CO₂*2

FY2023

Measures

FY2020 performance:
8.3 t-CO₂/thousand vehicles

Results• Shift to energy-saving production
equipment• Switch to LEDs
• Shift to energy-saving air conditioning• Introduction of renewable energy

Waste*2

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

Water*2

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

Targets

CO₂ emissions reduction
10,538 t-CO₂ lower than FY2020

CO₂ emissions reduction
2,805 t-CO₂ lower than FY2020

Basic unit per vehicle
6% higher than FY2020

Basic unit per vehicle
3% lower than FY2020

FY2022 performance:
8.8 t-CO₂/thousand vehicles
Recycling rate
1.5% higher than FY2020

Recycling rate
1.5% higher than FY2020

Water intake
13% lower than FY2020

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

Japan

The Americas

Energy Input (Consolidated)

Total CO₂ Emissions

(TJ)
2,000

(t-CO₂)90,000

1,824

1,813

1,634

1,479

1,500

1,469

60,00030,0000FY2018FY2019FY2020

FY20210

FY2022

Energy input (Consolidated)

14,602
77,20838,35818,738FY20207,089

Water Intake

10,00015,120

1,388
1,257

12,835

15,259

1,668
1,569

10,0315,000
065,1997,930
13,90658,875

13,819FY2021

9,262

480,815400,000

116,461

300,000

119,747

200,000

105,278

100,000

2,760

2,445

2,399
FY2020Term for comparison
Comparison with FY2020

Waste

Waste reduction rate

Comparison with FY2020

-50%

-100%

Comparison with FY2020

Water intake reduction rate
-50%

Wastewater reduction rate
-100%

―

Zero

Zero

Water

*2

Water intake and wastewater
reduction rates*3
Environmental impact fromwastewater*42030 target

2050 target
-50%

-100%

*1 CO₂ emissions reduction rate (Scope 1 and 2) resulting from the Group’s business activities*2 Reduction rate for waste resulting from the Group’s manufacturing activities (excluding residues, sludge, etc.)*3 Reduction rate of water intake (amount used) at the Group’s production facilities and reduction of wastewater resulting from manufacturing activities*4 Environmental impact of wastewater resulting from the Group’s manufacturing activities

Implementing Third-Party Veriﬁcation

The TS TECH Group receives third-party veriﬁcation from SGS Japan Inc. in order to ensure the reliability of environmental data
disclosure. As of ﬁscal 2022, we are working to conduct veriﬁcations of greenhouse gas emissions* at 10 domestic and 28
overseas sites, plus waste output and water intake at 10 domestic sites

6,324

62,20255,93526,993
13,3736,267

FY2022

Scope 1 and 2 breakdown for CO₂ emissions (Right bar)
Scope 1
Scope 2(m3)
500,000

15,0008,382
13,46029,537

Total Waste Generated
1,841
1,348

KPI
CO₂ emissions reduction rate*1

84,297(t)
20,00018,423

Asia and Europe

Item
CO₂

* Scope 1 and 2 (energy-derived CO₂ emissions) and Scope 3, Category 1 (procurement of raw materials and parts) emissions

12,599

1,000
500

China

Long-Term Environmental Targets
In the interest of protecting the global environment, the Group will work to reduce the environmental impact of all aspects of
its corporate activities. Our eﬀorts to build a sustainable world are guided by our vision statement of being “a company dedicated to realizing people’s potential” and “a company sincerely appreciated by all.” We aim to strike a balance between achieving
further business growth and contributing to the resolution of social issues, including the creation of a recycling-oriented society and conservation of water resources, in addition to responding to climate change, which is becoming more serious by the
year. Accordingly, we have set long-term targets for such environmental issues. The whole Group will work to achieve thesegoals by promoting environmental conservation activities.

FY2021

FY2022

0402,436

139,330
FY2020

FY2021

418,42188,81080,406

126,175

141,325

85,49682,165

101,954

114,526
FY2022

Note:
Scope of data: Consolidated sites excluding those listed below
Total CO₂ Emissions: TSML INNOVATIONS, LLC / TS DE SAN PEDRO INDUSTRIES, S. DE R.L. DE C.V. / TS TECH ASIAN CO.,LTD. / TS TECH Poland sp. z o.o.
Total Waste Generated, Water Intake: TSML INNOVATIONS, LLC / TS DE SAN PEDRO INDUSTRIES, S. DE R.L. DE C.V. / TS TECH (HONG KONG) CO.,LTD. / TS TECH ASIAN CO.,LTD. / TS TECH Poland sp. z o.o.

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TS TECH Integrated Report 2022

TS TECH Integrated Report 2022

45

Creating Employee-Friendly Workplaces

A Company Dedicated to Realizing
People’s Potential

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

Fostering a Greater Awareness of
Human Rights

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

The manual distributed to all employees

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

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TS TECH Integrated Report 2022

Work–Life Balance

TS TECH has built a system that enables employees to balance their work and personal lives and take advantage of avariety of work styles to suit their particular stage of life.
With our introductions of a flextime system with no coretime and a work-from-home system, among other approaches, we are working to improve work productivity by ensuring
efficient time allocation and supporting employees as theybalance work with childcare, nursing care, or other personal
obligations. These flexible work styles would also contributeto employee safety and business continuity in the event ofan emergency.
In terms of paid leave, we are working to put in place asystem offering greater convenience for employees, including
allowing paid vacations to be taken in half-day increments. As aresult of this and other efforts, TS TECH has maintained a highrate of paid leave use among employees, as exemplified by ourplacing eighth (with a 98.2% usage rate) among the 1,631 companies surveyed by Toyo Keizai Inc. in its latest ranking of the
200 companies in Japan with the highest rate of paid leave use.
In addition, we are working to diversify work styles andsupport work–life balance by offering reduced working hours
for parents up through their children’s completion of elementary school and other programs.

Diversity Initiatives

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

Simple prayer room in Saitama Plant

Tekuteku Kids Day Care, an on-site day
care center

Efforts to Help Our Diverse Workforce Thrive

The TS TECH retirement age has been extended to 65, allowing employees to choose their own retirement age after theage of 60. We are working to enhance business continuity byproviding an environment in which employees are able tocontinue working and a time frame for veteran employees topass on their skills and knowledge.
Other initiatives included the introduction of maternity
uniforms, the establishment of an on-site day care center,and the creation of a childrearing support handbook after
hearing from a wide range of employees. In recognition ofthese efforts, we were certified in 2015 by the Minister of
Health, Labour and Welfare (Kurumin Certification) as a company that supports childcare based on the Act on Advancement of Measures to Support Raising Next-Generation Children. In addition, we were certified in 2016 by the Minister of
Health, Labour and Welfare (highest-level Eruboshi Certification) as a company with outstanding measures to promoteparticipation by women in the workplace.
In addition to regularly communicating with Hello Work,
employment support centers, and so on, we actively recruit
persons with disabilities by offering work experience, seeking
to match persons with disabilities with our company and further their understanding of work. As part of our employee
retention efforts, we regularly conduct interviews with andsurveys of employees with disabilities. We also strive to create employee-friendly workplaces by acting on feedback
about the issues our employees with disabilities face at work.

Kurumin Certification (May 2015)

Certified as a company that supports childcare
based on the Act on Advancement of Measures to
Support Raising Next-Generation Children

Eruboshi Certification (October 2016)

Certified as a company with the highest rating of
3 stars for outstanding measures to promoteparticipation by women in the workplace

Fair Assessment of Personnel

TS TECH Group personnel assessments do not take factors
such as age, educational background, or gender into account.
In Japan, for example, we have adopted a system forevaluating how well an employee “demonstrates and applies
their abilities compared with what is expected of them.” Witha precise understanding of the skills and accomplishmentsof our individual employees and compensation provided
through salary, rank, and other forms of remuneration, weare able to motivate employees and encourage them to fully

demonstrate their abilities and take on new challenges. We
also incorporate elements of the TS TECH Philosophy into
our assessments in order to encourage the behavior andpractices we expect from our employees. In addition, employees receive feedback from superiors at least twice a year
regarding work performance and the acquisition anddemonstration of skills in order to make them aware of theirperformance and encourage growth.

Communicating with Employees

Conducting Engagement Surveys
As of fiscal 2022, we have begun conducting an engagement survey after reviewing our existing employee satisfaction survey, in the interest of offering rewarding working
environments where employees can make the most of theirdiverse talents. The survey defines engagement as “mutual
understanding between the company and employees” andassesses it by asking employees about their satisfaction leveland expectations regarding the content of their work, theorganizational climate, systems of employee treatment, andso on from a range of different perspectives. Its objectives
are to assess the current situation and identify issues in order to foster better engagement with employees.
Looking forward, we aim to achieve an engagement rating of AAA*, our 2030 target, and will work to further enhance our assessment system, training, and personnel system to encourage the active participation of diverse humanresources. We will also pursue improvement activities appropriate for each of our workplaces and connect these efforts to strengthened and increased work productivity andorganizational capability, as well as employee motivation.
* AAA: The highest of the 11 ratings

Talking with the Union
The company respects basic labor rights and regularly communicates and consults with the TS TECH Workers’ Union ina mutual effort to improve labor conditions and the workplace environment, and to enhance work–life balance.

Educating Employees about the TS TECH Philosophy

We continuously conduct TS TECH Philosophy Education sothat each and every employee understands the concept that“the existential value of TS TECH can only be found by embodying the ‘TS TECH Philosophy’” as a shared value andputs this into practice.
In Japan, while providing education at all training sites,
we are also working to expand efforts to share success stories involving employees who put the TS TECH Philosophy
into practice. At Group companies outside Japan as well,
local employees receive education about the philosophy
from selected promoters or managers who have been
trained by promoters.

TS TECH Integrated Report 2022

47

Creating Employee-Friendly Workplaces

Third-Year Training for New Employees
New Employee Training

Self-Development

Correspondence Courses

Life Plan Seminars

Management
Assessment Training

TS Trainee Program

Mid-Level Training (Sixth Year)

TS Camp

By AgeCareer Design Training

TS Executive Business
Management School—Basic

New Manager Training

Management Preparation Training

Training Prior to Overseas Postings

TS Executive Business
Management School—Advanced

Top Management
Training

Dispatch

Selective

Career Development Training

Non-Managerial

Managerial

Rank-Speciﬁc

Education and training programs

Human Resources Development

In order to foster human resources who can drive sustainable corporate growth for our company, we use three main
approaches to support the growth of employees: On-the-job
training (OJT) provided through the course of daily tasks; offthe-job training (OFF-JT) implemented away from the workplace; and strategically planned job rotations across occupational categories.
For OFF-JT in particular, we conducted a review of our training system in 2020 and put a new framework into operation.
The goals are to develop management candidates and further
increase the motivation and capabilities of all employees.
Under the new training system, basic management related content such as finance/accounting and marketing
was added to each curriculum in rank-specific training, andnew selective training was introduced to gradually develop
the next generation of managers. In addition, we are working to make training more efficient by using online and othermodalities, while expanding educational opportunities for
employees to increase their motivation to learn.
We will continue to strive to develop the capabilities ofour employees through multifaceted growth support thatleverages the advantages of each training method.

Promoting Occupational Safety and Health

Our basic safety and health policy is based on a dedication
to realizing people’s potential and prioritizing safety in ourbusiness activities. Under a management system led bysafety and health officers, TS TECH continually performs a
PDCA cycle in accordance with its occupational safety andhealth management system (OSHMS) to achieve three goals:
Injury prevention, better employee health, and a more comfortable workplace environment.
Specific initiatives include risk assessment, kiken yochi
training (KYT; hazard prediction training), and hiyari-hatto(near-miss reporting) activities*, which we conduct at
all business sites. We take countermeasures like these in
anticipation of potential workplace risks as part of our48

TS TECH Integrated Report 2022

efforts to prevent work-related accidents. We have also held
training sessions led by lecturers from the Japan Industrial
Safety and Health Association regularly, helping to enhance
the skills of risk management advocates (safety officers, production site managers, etc.).
In addition to the stress checks prescribed by Japan’s Industrial Safety and Health Act, we focus on employee healththrough a system that includes affiliations with mental healthspecialists to ensure that employees who are concerned
about mental health issues can work with company staff topromptly receive care from outside specialists. We also regularly conduct internal seminars and other programs to promote a proper understanding of mental health. Since 2019,influenza vaccinations have been provided on-site to interested employees. By subsidizing the cost, we promote individual
risk management and help to prevent the spread of infection
within the company.
* Hiyari-hatto (near-miss reporting) activities: Safety-minded activities regarding
incidents in which no accident actually occurred, but involved parties report thenear-misses; from the Japanese hiyari (feeling a sudden chill) and hatto (having
one’s breath taken away).

Supply Chain Initiatives

Supply Chain Management Policy

TS TECH Philosophy

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

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

Application of TS TECH Supplier
Sustainability Guidelines

We established the TS TECH Supplier Sustainability Guidelines in May 2019 to share and promote our views on sustainability with our business partners. We ask all business
partners to comply with these guidelines in the following fivecategories: (1) Safety and Quality, (2) Human Rights and Labor, (3) The Environment, (4) Compliance, and (5) Information Disclosure.
These guidelines are posted on our website and sharedwith all business partners. We also use a survey to verify
compliance with these guidelines by our business partners
in Japan. We surveyed a total of 109 partners in fiscal 2022.
As a result, we were able to confirm that all partner companies maintain the same understanding of these guidelines
as the TS TECH Group. For particularly important business
partners, we conduct a survey that includes more items onhuman rights in order to raise their awareness of humanrights issues. We will continue to implement this initiative
once a year and work to roll it out to business partners outside Japan to ensure that these guidelines are observed
throughout the Group’s supply chain.

TS TECH
Supplier Sustainability Guidelines

Category

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

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

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

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

5. Information
Disclosure• Disclosure of information to stakeholders

2. TS Tech Philosophy
3. Purpose of These Guidelines

The TS Tech Philosophy was established in order to set down in writing our
founder’s business philosophy and our company’s vision and approach to business.

4. Guidelines by Category

This philosophy is the foundation for all of the TS Tech Group’sbusiness
activities.
These
guidelines
illustrate our belief that profit should not be our only pursuit;
We believe that the spirit it represents should apply not justrather
to membersof theTS to exist in harmony with society and become “a company
we should
striveTech Group but also to the work that we do and to our relationships
with thesincerely appreciatedby all” whose presence is valued by all. These guidelines
people and companies with whom we do business.
contribute to that endeavor by outlining what sustainability means for our supply

Group-Wide OSHMS Diagram(1) Safety and Quality
base and defining key expectations we have for our suppliers.
TS Tech is committed to earning society’s trust and fulfilling our corporate social
responsibilities in accordance with these values.
We ask all of our suppliers to adhere to these standards. We also
ask that products
our1) Provide
and services that meet consumer and customer needs
suppliers share these standards with their supply chains.
Identify consumer and customer needs and develop and supply socially
responsible products*.

Officer in Charge of OSH Corporate Administration Division Executive General Manager
OSH Council
Chair: Corporate Administration
Division Executive General Manager

Division in
Charge of OSH
Administration Dept.

TS Tech’s Fundamental Stance for Each Category* Socially responsible products include products that are easy for anyone to use
regardless of their age, gender, or disability as well as environmentally-friendly
products that save energy and resources or help protect the environment.

(1) Safety and Quality
2) Provide appropriate information about products and services
We strive to make high-quality products in order to provide customers with
Provide appropriate information about your products and services tosafe and reliable products.
consumers and customers.
(2) Human Rights and Labor
3) Guarantee safe products and services
The TS Tech Code of Conduct states that we should act in accordance with theProduce and provide products and services in compliance with the safety
idea that all people are equal and affirmatively accept all people’s individual• A company dedicated to realizing people’s potential
laws and regulations that apply to the country and region in question.
traits and differences. As such, we respect the rights and will of all employees• A company sincerely appreciated by all
and business partners and are committed to treating everyone fairly. In regards4) Guarantee quality products and services
to occupational health and safety, we endeavor to prevent work-related
Implement and maintain company-wide mechanisms and systems for
accidents, monitor employee health, and provide a comfortable work
ensuring quality.
Mission Statement
environment.

Supplier Sustainability Guidelines
Apr 2022

OSH Officer
Council

Vision Statement

We shall provide comfortable, highhigh-quality products
high-quality
at(3) The Environment
competitive prices to our customers worldwide, always
To realize our vision statement of being “a company sincerely appreciated bypursuing the infinite possibilities in manufacturing.
all,” we strive to reduce the burden that all aspects of our business operations
have on the environment.

Operational Directives

Content(4) Compliance
In order to be a company with a strong culture of compliance, we endeavor ingoodfaith to comply with the law as a member of society and to act ethically• We should make our workplace a vibrant one, valuing
consensus
in line with societal norms.
and communication.

• Work should be done in accordance with the circumstances,
withDisclosure(5) Information
importance placed on time and priorities.
We strive for swift, proper disclosure of information and a high degree oftransparency to strengthen society’s trust in and understanding of our• We must always challenge ourselves to create new value bycompany.
leveraging our passion and knowknow-how.

Regional
committees• Each of us should always persevere to make our individual vision a
reality.

Plant managers/Admin.
division managers(General safety and health officers)

General safety andhealth officerdelegation

4
5
6

Safety andhealth departments
Admin. division managers

Safety and
Health Committee
Organizational structure

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

Workflow for Handling Major Business Partners
Designation
as a major
business
partner

Writteninvestigation

Confirmationof facts
throughinterviews

Reforms/
improvements

TS TECH Integrated Report 2022

49

Supply Chain Initiatives

Human Rights Due Diligence

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

Basic Policy on Procurement

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

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

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TS TECH Integrated Report 2022

Other Major Initiatives for Supply Chain
Management

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

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

Slides for an annual conference with major business partners

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

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

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

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

Comment

Compliance education at rank-specific training

Addressing Social Issues Together to Enhance Corporate
Value
Our company has been doing business with TS TECH for over 20 years now in and outside ofJapan, with a focus on bearings and dampers for automobile seats.
As we have worked to fulfill our role in the supply chain in accordance with the TS TECH
Supplier Sustainability Guidelines, we have now been honored with the TS TECH Quality Awardfor three straight years. Going forward, we will work to raise our level of effectiveness evenhigher and ensure our business activities contribute to sustainability.
In March 2022, we marked the 70th anniversary of our company. Guided by our management concept, to “serve society through technology,” we have considered it our mission tocontinuously resolve our customers’ issues with innovative technologies and products. It is myhope that we might join this concept together with TS TECH’s vision statement of being “acompany sincerely appreciated by all” to resolve social issues, and, in so doing, continue togrow together with the aim of enhancing the corporate value of both our companies.

Masami Iida
President
OILES CORPORATIONTS TECH Integrated Report 2022

51

Fact Book

Fact Book

Management’s Discussion and Analysis

Financial Reporting
53

Management’s Discussion and Analysis

54	Consolidated Statement of Financial Position
56

Consolidated Statements of Profit or Loss andComprehensive Income

58	Consolidated Statement of Changes in Equity
59

Consolidated Statement of Cash Flows

61	Notes to Consolidated Financial Statements
110	Independent Auditor’s Report

Financial/Non-Financial
Information
114 Financial Highlights

116 Non-Financial Highlights

1. Analysis of Financial Condition

3. Analysis of Operating Performance

Total assets at the end of ﬁscal 2022 stood at 415,985
million yen, increasing 25,506 million yen from the end ofﬁscal 2021. This change is primarily the result of an increasein other current assets led by a rise in deposits for purchaseof treasury stock, as well as an increase in property, plantand equipment driven by higher capital expenditures andthe impact of foreign currency translation.
Total liabilities at the end of ﬁscal 2022 amounted to90,401 million yen, up 1,374 million yen from the end ofﬁscal 2021. This change resulted mainly from an increase intrade and other payables stemming from the impact offoreign currency translation, oﬀsetting a decrease inprovisions largely comprised of payment of provisions at
our U.K. subsidiary.
Total equity at the end of ﬁscal 2022 was 325,583 million
yen, increasing 24,132 million yen from the end of ﬁscal 2021.
This change is primarily the result of an increase in retained
earnings stemming from the allocation of net income and arise in other components of equity driven by an increase in
diﬀerences on translation from foreign operations.

The operating climate for ﬁscal 2022 was a diﬃcult one inwhich insuﬃcient supplies of semiconductors and raw
materials impacted automobile manufacturers’ production
activities, resulting in lower order volume for the Group.
Moreover, the situation remains uncertain given factors
such as soaring raw materials costs and rising labor costs
in select regions, as well as the recent lockdown in China.
Despite this backdrop, the Group steadily promoted anarray of measures aimed at future growth, such as theestablishment of a new European subsidiary aimed atacquiring new customers and production rights,
aggressive development of sales initiatives designed toincrease shares of major customers’ business, and thedevelopment of next-generation technologies with an eye
to the future as well as the construction of a production
structure with even higher quality and eﬃciency.
Additionally, we are moving ahead with cross-industrial
collaborations and joint research with start-up companies
to transform into a company that can coordinate an entire
automobile cabin and propose new value to customers
and users.
Revenue for the ﬁscal year under review amounted to349,958 million yen on a consolidated basis, up 3,809
million yen (1.1%) from the previous ﬁscal year. This wasdue to an improved model mix and the impact of foreign
currency translation, oﬀsetting lower production bycustomers amid disruptions in the automobile industry
supply chain. Looking at proﬁts, operating income stood at
22,998 million yen, down 3,743 million yen (14.0%) year on
year. This reﬂected the impact of lower production,oﬀsetting cost-cutting measures, including various lower
expenses achieved via thorough streamlining. Additionally,
income attributable to owners of parent totaled 12,416
million yen, a decrease of 8,324 million yen (40.1%) year on
year, on the elimination of negative goodwill incurred in
the previous ﬁscal period.

2. Overview of Cash Flows
Cash and cash equivalents (hereinafter “cash”) at the endof ﬁscal 2022 amounted to 139,585 million yen, down
13,449 million yen from the end of the previous ﬁscal year.
Cash ﬂows from operating activities amounted to 20,018
million yen, showing a year-on-year decrease of 5,133
million yen. This is primarily the result of a decrease of
10,408 million yen in income before income tax, a change
in trade and other payables from an increase of 6,192
million yen in the previous ﬁscal year to a decrease of
3,422 million yen in ﬁscal 2022, and a change ininventories from an increase of 3,262 million yen in theprevious ﬁscal year to an increase of 6,339 million yen inﬁscal 2022. This oﬀset a change in trade and otherreceivables from an increase of 15,863 million yen in theprevious ﬁscal year to a decrease of 4,301 million yen inﬁscal 2022.
Cash ﬂows from investing activities came to 17,196 million
yen, an increase of 5,487 million yen year on year. This
primarily reﬂects an 8,321 million yen increase in purchaseof property, plant and equipment and a total change inpayments into and proceeds from withdrawal of time
deposits from 4,025 million yen in proceeds in the previous
ﬁscal year to 3,053 million yen in payments in ﬁscal 2022.
This oﬀset a 7,199 million yen decrease in purchase ofinvestments accounted for using the equity method.
Cash ﬂows from ﬁnancing activities totaled 23,638
million yen, an increase of 8,990 million yen year on year.
This primarily reﬂects an increase of 7,870 million yen indeposits for purchase of treasury stock.

52

TS TECH Integrated Report 2022

The Group’s consolidated forecasts for ﬁscal 2023 are
as follows:
Revenue
380.0 billion yen(Up 8.6% year on year)
Operating income
17.5 billion yen(Down 23.9% year on year)
Income before income tax 18.8 billion yen(Down 27.2% year on year)
Net income
12.5 billion yen(Down 33.5% year on year)
Income attributable to
8.2 billion yen
owners of parent(Up 34.0% year on year)

TS TECH Integrated Report 202253

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

FY2021(As of March 31, 2021)(Unit: Million yen)

FY2022(As of March 31, 2022)

ASSETSLIABILITIES AND EQUITYCURRENT ASSETSCURRENT LIABILITIESFY2021

FY2022Note(As of March 31, 2021)(As of March 31, 2022)

Cash and cash equivalents

7¥153,034¥139,585

Trade and other payables

13¥ 62,943¥ 67,024

Trade and other receivables

8

62,98465,430

Other financial liabilities

14

1,357

1,718

Other financial assets

9

5,361

9,700

Inventories

10

33,60743,532

Income taxes payable

2,021

1,776

Income taxes receivable

1,719

2,340

2,851

217

Other current assets

6,202

16,448Other current liabilities

7,139

6,830

Total current assets

262,909

277,037

Total current liabilities

76,31377,567

Provisions

16

NON-CURRENT LIABILITIESOther financial liabilities

14

3,952

4,420

Net defined benefit liability

17

1,648

1,466

Provisions

16

85

157

Deferred tax liabilities

15

5,808

5,470

Other non-current liabilities

1,219

1,319

Total non-current liabilities

12,714

12,834

Total liabilities

89,02790,401EQUITYNON-CURRENT ASSETS

Common stock

18

4,700

4,700

Capital surplus

18

4,975

5,150

17,257

Treasury stock18(2,657)(4,737)25,25827,097Retained earnings

18

264,261

270,031

17

3,575

4,311

Other components of equity

18

5,738

21,710

15

1,748

2,454

Total equity attributable to owners of parent

277,017

296,855

Other non-current assets

445

386

24,43328,727

Total non-current assets

127,568

138,947

301,450

325,583¥390,478¥415,985¥390,478¥415,985

Property, plant and equipment

11

69,05376,860Intangible assets

12

10,911

10,580Investments accounted for using the equity method

29

16,575

Other financial assets

9

Net defined benefit asset
Deferred tax assets

TOTAL ASSETS

Non-controlling interests
Total equity
TOTAL LIABILITIES AND EQUITY

29

See notes to consolidated financial statements.

54

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55

Consolidated Statements of Profit or Loss and Comprehensive Income
Consolidated statement of profit or loss

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

Revenue
Cost of sales

FY2021

FY2022

Note(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

5, 19¥ 346,149¥ 349,958

Net income

20(288,671)(295,716)

Other comprehensive income

57,47854,242Gross profit
Selling, general and administrative expenses

20(32,581)(33,896)

Other income

21

3,072

3,240

Other expenses

21(1,227)(587)

26,742

22,998Operating income

5

Finance income

23

1,983

2,367

Finance costs

23

(136)

(117)

Share of profit of investments accounted forusing the equity method

29

7,658

590

36,247

25,839

Income before income tax
Income tax expense

15

Net income(8,164)(7,035)28,08218,803

Note

Owners of parent
29

Net income

20,741

12,416

7,341

6,386

¥ 28,082¥ 18,803

Basic earnings per share (Yen)24¥ 152.89¥   92.56

Diluted earnings per share (Yen)

24

—

—

FY2022(April 1, 2021–March 31, 2022)¥28,082¥18,803

		 Remeasurements of net defined benefit plans

25

1,221

864

		Equity financial assets measured at fair value throughother comprehensive income

25

2,754

564

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

25

323

73

4,299

1,501

		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

25

7,742

16,463		Share of other comprehensive income of affiliates
accounted for using the equity method

25

48

895

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

7,791

17,359Other comprehensive income, net of tax

12,091

18,86040,174

37,664

Owners of parent

30,96828,388Non-controlling interests

9,206

9,275

¥40,174¥37,664

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

Earnings per share:

FY2021(April 1, 2020–March 31, 2021)

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

Comprehensive income for the period

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

See notes to consolidated financial statements.

See notes to consolidated financial statements.

56

TS TECH Integrated Report 2022

TS TECH Integrated Report 202257

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows(Unit: Million yen)

For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(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
Total transactions withowners, etc.
BALANCE AT THE END OF
THE FISCAL YEAR

18

Commonstock

CapitalsurplusRetainedearnings

Other
componentsof equity

Total equity
attributableto ownersof parent¥4,700¥5,171 ¥    (5) ¥249,367¥ (4,487)¥254,745

Treasurystock

20,741———

10,226
10,226

20,741¥19,806¥274,552

7,341
1,864
9,206

28,082
12,09140,174(5,847)(2,943)—(4,463)(10,311)(2,943)
—

(291)

30

34

34

60

60

(115)

—
—

(196)

¥4,700¥4,975(2,652)

Note¥ 5,738¥277,017

12,416
15,971
15,971(6,646)26
18
18(2,152)
73
175

30

—
¥4,700175(2,079)(1,393)Finance costs (income)(1,083)(1,398)

Share of loss (profit) of investments accounted for using
the equity method(7,658)(590)

Decrease (increase) in trade and other receivables(15,863)

4,301

(55)

Increase (decrease) in net defined benefit asset andnet defined benefit liability(1,505)(1,036)—(Unit: Million yen)¥(2,657) ¥264,261

12,416

143

(166)

402

(2,566)

Other

3,117

988

Subtotal

30,002

26,272

Interest income received

892

1,011

Dividend income received

894

1,531

Increase (decrease) in provisions

(133)

(117)

Income taxes paid

(6,503)(8,681)

Net cash provided by operating activities

25,151

20,018¥ (7,495)¥(10,026)

Interest expenses paid

¥4,975—142

Loss (gain) on disposal of non-current assets(3,422)¥301,450¥4,700—

Impairment loss

6,192

¥24,433

Other
componentsof equity

11,033

Increase (decrease) in trade and other payables¥277,017

Retainedearnings

11,44034¥ 5,738

Treasurystock—

Depreciation and amortization712¥(2,657) ¥264,261

Capitalsurplus¥ 25,839(6,339)(13,275)

18

Income before income tax

1,997(4,579)Commonstock¥ 36,247

CASH FLOWS FROM OPERATING ACTIVITIES(3,262)(8,696)

Total equity
attributableto ownersof parent

FY2022(April 1, 2021–March 31, 2022)

Decrease (increase) in inventories—

Equity attributable to owners of parent

FY2021(April 1, 2020–March 31, 2021)

Decrease (increase) in leased receivables and leased
investment property(5,847)For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)

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
Total transactions withowners, etc.
BALANCE AT THE END OF
THE FISCAL YEAR

Total
equity20,741
10,22630,96826
18
18(2,943)291(5,847)

Noncontrollinginterests

Note

Noncontrollinginterests

Total
equity

CASH FLOWS FROM INVESTING ACTIVITIES¥24,433¥301,450

Proceeds from withdrawal of time deposits

11,521

6,972

Purchase of property, plant and equipment(5,455)(13,777)

698

2,736

Purchase of intangible assets(2,206)(1,858)Purchase of equity instruments(56)(1,196)

12,416
15,971
28,388

6,386
2,888
9,275

18,803
18,86037,664(6,646)(2,152)73(6,028)(12,675)(2,152)
73

175

175

—

—

—

1,047

1,047

(6,646)—(8,550)(4,981)(13,531)¥5,150 ¥(4,737) ¥270,031¥21,710¥296,855¥28,727¥325,583

Payments into time deposits

Proceeds from sales of property, plant and equipment

00

Payments of loans receivable

(121)

(747)

Collection of loans receivable

214

710

(1,564)—(7,199)

—

(43)

(9)

(11,709)(17,196)

Proceeds from sales of equity instruments

Purchase of shares of subsidiaries
Purchase of investments accounted for using the equity method
Other
Net cash used in investing activities

6

See notes to consolidated financial statements.

58

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TS TECH Integrated Report 202259

Consolidated Statement of Cash Flows (Continued)

Notes to Consolidated Financial Statements(Unit: Million yen)
FY2021

FY2022

Note(April 1, 2020–March 31, 2021)

Repayments of long-term loans payable27¥     (75)

Repayments of lease liabilities

27(1,754)(1,435)—623(2,597)(2,152)(April 1, 2021–March 31, 2022)

CASH FLOWS FROM FINANCING ACTIVITIESCapital contribution from non-controlling interests
Purchase of treasury stock
Decrease (increase) in deposits for purchase oftreasury stock

¥

—

—

(7,870)Cash dividends paid

26

(5,847)(6,657)

Cash dividends paid to non-controlling interests29(4,316)(6,145)(55)—

Payments for acquisition of interests in subsidiaries from
non-controlling interests(14,647)(23,638)

EFFECTS OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS

4,611

7,367

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

3,406(13,449)

Net cash used in financing activities

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

7

149,628

153,034

CASH AND CASH EQUIVALENTS AT END OF PERIOD

7¥153,034¥139,585

See notes to consolidated financial statements.

1. REPORTING ENTITYTS TECH Co., Ltd. (hereinafter “the Company”) is a company domiciled in Japan.
The consolidated financial statements of the Company as of and for the year ended March 31, 2022 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 24, 2022.
(2) Basis for measurement
The consolidated financial statements, with the exception of the financial instruments, etc., measured at fair value
stated in Note 3 “Important Accounting Policies,” have been prepared on a historical cost basis.
(3) Functional currency and presentation currency
The presentation currency used in the consolidated financial statements is Japanese yen, which is the Company’sfunctional currency. Any fractions below one (1) million yen are omitted.
(4) Important accounting judgments, estimates, and assumptions
In the preparation of the consolidated financial statements, management exercised certain judgments, estimates, andassumptions in the process of applying the accounting policies and in determining the reported amounts of assets,
liabilities, income, and expenses. As such, actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis, and the impact of the review isrecognized in the period in which the review was conducted and in future periods.
Among the items which were subject to estimates and judgments, the following are considered to have significant
impact on the amounts of the consolidated financial statements for the fiscal year under review and the following
fiscal years.
• Scope of consolidation:
Note 3 “Important Accounting Policies (1) Basis of consolidation”• Estimated useful lives of intangible assets:
Note 3 “Important Accounting Policies (8) Intangible assets”• Scope of contracts including leases:
Note 3 “Important Accounting Policies (9) Leases”• Impairment of non-financial assets:
Note 3 “Important Accounting Policies (10) Impairment of nonfinancial assets”• Measurement of defined benefit obligations: Note 3 “Important Accounting Policies (12) Employee benefits”• Recognition and measurement of provisions: Note 3 “Important Accounting Policies (13) Provisions”• Revenue recognition:
Note 3 “Important Accounting Policies (16) Revenues”• Recoverability of deferred tax assets:
Note 3 “Important Accounting Policies (19) Income taxes”
Estimates and assumptions that may have a material impact on the Company’s consolidated financial statements
for the following fiscal years primarily include:(i) Impairment of non-financial assets (Property, plant and equipment, and Intangible assets)
The Group 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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61

(a) Amount recognized in the consolidated financial statements(Unit: Million yen)
FY2022(As of March 31, 2022)

Property, plant and equipment¥76,860

Intangible assets

10,580Total¥87,440

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 temporary expenses incurred in connection with theconstruction of the new plant building, the mix of car models sold, the production status of customers, and so forth,resulting in two consecutive periods of operating loss after allocating of Head Office expenses, etc., and because an
indicator of impairment were recognized, a determination was made as to whether an impairment loss should berecognized or not. Consequently, it was determined that because the recoverable amount of the Hamamatsu Plant
exceeded the carrying amount of property, plant and equipment (¥2,872 million), no impairment loss was required tobe recognized.
(b) Major assumptions used for the estimate
Estimates of future cash flows for the fiscal year under review are based on a gradual recovery, although the future
outlook remains unpredictable due to the renewed spread of COVID-19 infections and supply chain disruptions in theautomobile market, such as semiconductor supply shortages.
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 obtained from outside experts and the like.
(c) Material impact on the following fiscal year
During the fiscal year under review, the Company did not recognize material impairment losses. However, should
demand in the automobile market be less than expected, and the recoverable amount declines as a result, a material
impairment loss may arise in the following fiscal year.
(ii) Recoverability of deferred tax assets
Deferred tax assets are recognized for items that may be deducted from future taxable income, such as deductible
temporary difference and unused tax losses, to the extent that it is probable that taxable income will be available
against which these items can be utilized (hereinafter “recoverability”).
Recoverability will be reviewed each fiscal year. In the event recoverability declines, the amount of deferred tax
assets will be reduced and the reduced amount will be recognized as net profit or loss.
Information regarding the material impact of the recoverability of deferred tax assets on the following fiscal year is
as shown below.
(a) Amount recognized in the consolidated financial statements(Unit: Million yen)
FY2022(As of March 31, 2022)

Deferred tax assets¥8,750Note: The relation between the deferred tax assets recognized in the consolidated statement of financial
position and the amount above is described in Note 15 “Income Taxes.”(b) Major assumptions used for the estimate
Future cash flows that constitute the basis for the recoverability could vary significantly depending on trends in theautomobile market and changes in customers’ production plans.
Estimates of future cash flows for the fiscal year under review are based on a gradual recovery, although the future
outlook remains unpredictable due to the renewed spread of COVID-19 infections and supply chain disruptions in theautomobile market, such as semiconductor supply shortages.

62

TS TECH Integrated Report 2022(c) Material impact on the following fiscal year
During the fiscal year under review, the Company did not recognize a material reduction in deferred tax assets.
However, should demand in the automobile market be less than expected, and the recoverability declines 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)
FY2022(As of March 31, 2022)

Net defined benefit asset¥4,311

Net defined benefit liability

1,466(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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63

(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:64

TS TECH Integrated Report 2022•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 arerecognized in net profit or loss.
(c) Impairment of financial assets
With regard to impairment loss on financial assets, including financial assets measured at amortized cost, the Group
recognizes an allowance for doubtful accounts for the expected credit loss associated with the financial asset.
On each reporting date, the Group assesses whether the credit risk associated with the financial 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:•A n 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:• It is technically feasible to complete their developments to use or sell them;• The Group has the intent to complete their developments and to use or sell them;• The Group is capable of using or selling them;• It is highly probable that they will generate future economic benefits;•T he Group has the adequate technical, financial, and other resources to complete their developments and to use
or sell them; and• The Group is capable of reliably measuring the expenditures associated with the intangible assets during thedevelopment process.
Capitalized development expenses are amortized using the straight-line method over the estimated useful life
(mainly five years) commencing from the time the product subject to development commences mass production.
The estimated useful lives and amortization methods are reviewed each year and revised as necessary.
(9) Leases
The Group determines whether a contract is or contains a lease at the commencement of the contract. If the right tocontrol the use of an asset for a specified period of time is transferred in exchange for consideration, the contract isdeemed to be or contain a lease.
(i) Lease as lessee
At the commencement date, a lessee shall recognize a right-of-use asset and a lease liability. At the commencement
date, the right-of-use asset is recognized at cost. After the commencement date, the right-of-use asset will bemeasured at cost less accumulated depreciation and accumulated impairment losses by applying the cost model.
Right-of-use assets will be depreciated using the straight-line method over either the estimated useful life of 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.

TS TECH Integrated Report 202269

(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 endof the fiscal year.
Deferred taxes are recognized for temporary differences between the carrying amounts of assets and liabilities foraccounting purposes and their tax bases at the end of the fiscal year, unused tax losses, and unused tax credits(hereinafter “temporary differences”).
Deferred tax liabilities are generally recognized for all taxable temporary differences, while deferred tax assets arerecognized for deductible temporary differences, unused tax losses, and unused tax credits only to the extent that itis probable that there will be taxable profits against which the temporary differences may be utilized.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when thetemporary difference is reversed based on the tax rates and tax laws that have been enacted or substantively enacted
by the end of the fiscal year.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same tax authority.
(20) Basic earnings per share
Basic earnings per share is calculated by dividing profit or loss for the year attributable to ordinary shareholders of theparent by the weighted-average number of ordinary shares outstanding during the year adjusted for the weightedaverage number of treasury shares purchased in the year.

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

The Company decides the price of transactions carried out among segments by considering market prices andgross costs, and through price negotiations.
Profits for reportable segments are operating income (loss) figures based on the consolidated statements of profit
or loss and comprehensive income.
(3) Information on revenue, profits or losses, and other items according to reportable segment
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)
Reportable segments
Japan

The Americas

China

Asia
and Europe

Total

Adjustments

Consolidated

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

Inter-segment revenue

20,470

498

3,867

1,478

26,315(26,315)—

Revenue:

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

Finance income andfinance costs

—

—

—

—

—

—

1,846

Share of profit of investments
accounted for using theequity method

—

—

—

—

—

—

7,658

Income before income tax

—

—

—

—

—

—

36,247

Segment profits (losses)

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

Other important items(Unit: Million yen)

5. SEGMENT INFORMATION(1) Overview of reportable segments
The reportable segments are components of the Company for which separate financial information is available. Thesesegments file monthly reports which the Board of Directors uses for deciding the allocation of management recourseand evaluating results.
Positioning Japan as its global base, the Company has a segment-based control and management system for thethree operating regions: The Americas (the United States, Canada, Mexico, and Brazil), China (China and Hong Kong),and Asia and Europe (Thailand, the Philippines, India, Indonesia, the United Kingdom, Hungary, and Poland). The
Company appoints a Segment Executive General Manager who is responsible for control and management in eachregion. Policies and plans for business execution, controls, and other matters concerning general operations are
discussed at regional management meetings attended by directors and the like in these regions for executing
business activities.
Accordingly, the Company positions “Japan,” “The Americas,” “China,” and “Asia and Europe” as its four reportablesegments. In the reportable segments of Japan, The Americas, and Asia and Europe, the Company manufacturesand sells products that mainly consist of automobile seats, automobile interiors, motorcycle seats, and resin-based
products for motorcycles. In the reportable segment of China, the Company engages primarily in the manufactureand sale of automobile seats and automobile interiors.

Reportable segments
Japan

Depreciation and amortization
Impairment loss
Capital expenditures

The Americas¥3,275¥4,407

Asia
and Europe

China¥2,063¥1,702

Total¥11,448

Adjustments

Consolidated¥(8)¥11,440

1

—

57

84

142

—

142

3,211

1,887

922

664

6,686

—

6,686

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

(2) Accounting 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.”

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71

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)(5) Information according to region(i) Revenue(Unit: Million yen)

Reportable segments
Japan

The Americas

Asia
and Europe

China

Total

Adjustments(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

Japan¥ 57,846¥ 60,298

The United States

100,021103,735

114,174

111,600

Consolidated

Revenue:

FY2022

FY2021

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)—

China¥82,698¥144,527¥115,236¥34,202¥376,666¥(26,707)¥349,958

Other

74,10674,324

Total¥346,149¥349,958

Total
Segment profits (losses)¥ 6,261¥    (252)¥ 20,000¥ 1,957¥ 27,966¥ (4,967)¥ 22,998

—

—

—

—

—

—

2,249

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

—

—

—

—

—

—

590

Income before income tax

—

—

—

—

—

—

25,839Note: 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.

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

Depreciation and amortization
Impairment loss
Capital expenditures

The Americas

Asia
and Europe

China

Adjustments

Consolidated¥3,268¥4,252¥2,085¥1,440¥11,046

Total

¥(12)

¥11,033

137

—

6

—

143

—

143

4,528

6,213

1,392

2,332

14,466—

14,466

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

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

FY2021(As of March 31, 2021)(As of March 31, 2022)

Japan¥37,564¥37,614

The United States

16,82318,854

China

10,123

11,190Other

15,453

19,781

Total¥79,965¥87,440(6) Information according to major customers(Unit: Million yen)
FY2022

FY2021

Honda Motor Co., Ltd. Group(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥314,429¥313,659

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

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

72

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

Honda Cars SAITAMAKITABusiness description

New and used car sales; lease; car rental; car safety
inspection, inspection, maintenance, and repair; non-life
insurance agency business; life insurance agency
business; sales of parts and accessories

Acquisition date

May 15, 2020

Percentage of equity interest withvoting rights acquired

100%

Method of acquiring control of theacquired company

Acquisition of shares for cash consideration

TS TECH Integrated Report 202273

(2) Main reasons for business combination
By acquiring Honda Cars SAITAMAKITA, whose business has been stable underpinned by its community-based
business activities, the Company aims to bring the Group and its end users closer together, accelerate the creationof new values, expand the scope of its business, and stabilize revenue in Japan.
(3) Assets acquired and liabilities assumed(Unit: Million yen)
FY2021

Cash and cash equivalents(Unit: Million yen)

Item

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

AmountCurrent assets¥2,103

Non-current assets

3,551

Total assets

5,655

Current liabilities

2,326

Non-current liabilities

1,154

Total liabilities

3,481

Net assets

2,174

Item

AmountConsideration for the acquisition¥2,637

Fair value of the identifiable net assets acquired by the Group

2,174

Goodwill arising from the acquisition

463

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

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

AmountCash consideration for the acquisition¥2,637

Cash and cash equivalents held by the acquired company

1,073

Purchase of shares of subsidiaries

1,564(6) Other
After the acquisition date, the acquired company has recognized ¥8,632 million as revenue and ¥273 million as net
income in the Company’s consolidated statement of profit or loss.
Based on the assumption that the acquisition was made at the beginning of the fiscal year under review, thepresentations of the acquired company’s revenue, net income, and costs related to the business combination are
omitted as their impact was considered immaterial.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
Not applicable74

TS TECH Integrated Report 2022

(As of March 31, 2022)¥153,034¥139,585

8. TRADE AND OTHER RECEIVABLES
The breakdown of trade and other receivables is as follows.
(Unit: Million yen)
FY2021

Trade receivable
Allowance for doubtful accounts(Unit: Million yen)

(As of March 31, 2021)

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.

Others(4) Goodwill arising from the acquisition

FY2022Total

FY2022(As of March 31, 2021)(As of March 31, 2022)¥57,895¥60,222

5,090

5,208

(0)

(1)

¥62,984¥65,430

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

9. OTHER FINANCIAL ASSETS
The breakdown of other financial assets is as follows.
(Unit: Million yen)
FY2021

Deposits with maturities of three months or more
Short-term loans receivable

FY2022(As of March 31, 2021)(As of March 31, 2022)¥ 4,557¥ 8,600

3

2

497

549

Lease receivables

4,288

4,403

Equity instruments

16,441

18,411Long-term loans receivable

Derivative financial assets
Others

0

0

4,860

4,846

(29)

(17)

Total

¥30,619¥36,797

Current assets¥ 5,361¥ 9,700

Non-current assets

25,25827,097

Total¥30,619¥36,797

Allowance for doubtful accounts

Notes: 1. Deposits with maturities of three months or more, short-term loans receivable, and long-term loans receivable, areclassified 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.

TS TECH Integrated Report 2022

75

Major securities and fair values designated as equity instruments measured at fair value through othercomprehensive income are as follows.
(Unit: Million yen)
FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)¥12,790¥13,496

349

482

PIOLAX, Inc.

—480

OILES CORPORATION

—

444

448

376

Other

2,853

3,131

Total

¥16,441¥18,411

Honda Motor Co., Ltd.
Isuzu Motors Ltd.

Suzuki Motor Corporation

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.
Amounts recognized as dividends received from equity instruments measured at fair value through othercomprehensive income are as follows.
(Unit: Million yen)
FY2021(April 1, 2020–March 31, 2021)

Dividends received on investments held at the end of the period¥408

FY2022(April 1, 2021–March 31, 2022)¥532

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

Balance as of April 1, 2020

Tools,
furnitureand fixtures

Land

Constructionin progress

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

Acquisition cost

853

940

348

—

4,377

6,520

Acquisition through business combination

802

371

18

989

134

2,317

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

Reclassification to other accountEffects of foreign currency translation
Other
Balance as of March 31, 2021
Acquisition cost

877

2,037

1,140

—

(4,357)

(300)

1,678

2,151

1,003

299

66

5,199

198

(11)

2

—

251

440

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

2,724

1,752

382

513

8,865

14,238

—

—

—

—

—

—

(2,409)(4,553)(2,146)

(862)

(33)

(10,005)

147

2,822

1,288

12

(5,108)(837)

Effects of foreign currency translation

4,182

5,746

2,377

535

374

13,216

Other

(565)

(50)

(114)

(16)

14

(731)

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

Acquisition through business combination
Sales or disposal
Reclassification to other accountBalance as of March 31, 2022

10. INVENTORIESThe breakdown of inventories is as follows.

Buildings
and structures

Machinery,equipment
and vehicles(Unit: Million yen)
FY2021(As of March 31, 2022)¥ 3,458¥ 4,576

Work in progress

1,812

3,273

Raw materials and supplies

28,33635,681

Total¥33,607¥43,532

Merchandise and finished goods

76

FY2022(As of March 31, 2021)

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77

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

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

Land

Constructionin progress

Total¥30,166¥52,395¥28,782¥332¥—¥111,676

2,803

4,563

1,786

55

—

9,209

Impairment loss

0

115

26

—

—

141

Sales or disposal(251)(1,594)

(951)

(5)

—

(2,803)

Reclassification to other account

163

(10)

17

(0)

—

170

Effects of foreign currency translation

779

1,626

913

35

—

3,355

Other

51

18

(17)

26

—

77

¥33,714¥57,112¥30,556¥444¥—¥121,827

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

Balance as of April 1, 2020
Depreciation

Balance as of March 31, 2021
Depreciation

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

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 32 “Leases.”

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

Balance as of April 1, 2020
Acquisition cost

(Unit: Million yen)

Other

Total

¥16,810¥ —¥  140¥22,725

104

—

—

61

165

Increase due to internal development

—

2,039

—

—

2,039

—

—

463

1,058

1,521

Disposal

(64)

(356)

—

(45)

(466)

Effects of foreign currency translation

91

25

—

14

130

Other

39

—

—

0

39

¥5,943¥18,518¥463¥1,228¥26,154

111

—

—

116

228

—

1,632

—

—

1,632

Balance as of March 31, 2021
Acquisition cost
Increase due to internal development

—

—

—

—

—

(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

Acquisition through business combination
Disposal

Accumulated amortization and impairment loss

Buildings
and structures

Machinery,equipment
and vehicles

Tools,
furnitureand fixtures

Land

Constructionin progress

Total

Balance as of April 1, 2020

¥33,259¥16,722¥4,233¥12,287¥2,027¥68,530

Balance as of March 31, 2021

33,802

15,6973,610

13,445

2,498

69,053

Balance as of April 1, 2020

Balance as of March 31, 2022

35,737

17,1303,898

13,482

6,611

76,860

Amortization

Note: The carrying amounts of right-of-use assets included in property, plant and equipment are outlined in Note 32 “Leases.”

Goodwill¥5,773Acquisition through business combination

Balance as of March 31, 2022

Carrying amounts

SoftwareDevelopment
expenses(Unit: Million yen)
SoftwareDevelopment
expenses

Goodwill¥5,006¥ 8,252¥—¥100¥13,358

339

1,820

—

78

2,239

Other

Total

Impairment loss

—

—

—

1

1

Disposal

(64)

(356)

—

(10)

(431)

Effects of foreign currency translation

79

27

—

12

119

Other

1

0

—

(45)

(43)

¥5,361¥ 9,743¥—¥136¥15,242

307

1,837

—

136

2,281

—

—

—

—

—

Disposal(173)(3,787)——(3,960)Effects of foreign currency translation

104

148

—

8

261

Other

(10)

—

—

(76)

(86)

¥5,589¥ 7,942¥—¥206¥13,738

Balance as of March 31, 2021
Amortization
Impairment loss

Balance as of March 31, 2022

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.

78

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79

Carrying amounts(Unit: Million yen)
SoftwareDevelopment
expenses

Goodwill

Balance as of April 1, 2020

¥767

¥8,558

Balance as of March 31, 2021

581

Balance as of March 31, 2022

536

Other

Total

¥  —

¥    40¥ 9,366

8,774

463

1,092

10,911

8,577

463

1,003

10,580(2) Development expenses
The breakdown of development expenses is as follows.
FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥12,533¥11,930

Reclassification to capitalized development expenses(2,039)(1,632)

Amortization of capitalized development expenses

1,820

1,837

¥12,315¥12,136

Total

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

Recognizedthrough net
profit or loss

Recognizedthrough othercomprehensive
income¥ 2,524¥ (41)¥    —¥   —¥ 2,483

Property, plant and equipment

821

199

—

—

1,021

Intangible assets

Acquisition
through businesscombination

Balance atthe end of
the fiscal year

Deferred tax assets:(Unit: Million yen)

R&D expenditures incurred during the period

15. INCOME TAXES(1) Deferred tax assets and deferred tax liabilities
The breakdown of deferred tax assets and deferred tax liabilities is as follows.

Inventories

117

0

—

—

117

Investments in equity instruments

0

—

(1)

0

—

Accrued expenses and provisions

1,086

403

—

79

1,568

Net defined benefit liability

207

93

(0)

—

301

Unused tax losses

110

(86)

—

—

23

Other

1,016

161

—

7

1,185

¥ 5,884¥730¥     (1)¥ 87

¥ 6,701¥   901¥ 68¥    —¥ 34¥ 1,003

Intangible assets

2,092

45

—

317

2,455

2,502

—

1,238

—

3,740

558

(57)

548

18

1,067

1,529

140

50

—

1,720

843

(71)

—

2

774

Total deferred tax liabilities¥ 8,427¥124¥ 1,836¥ 372¥10,762

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

Total deferred tax assets

13. TRADE AND OTHER PAYABLES
The breakdown of trade and other payables is as follows.
(Unit: Million yen)
FY2021(As of March 31, 2021)

FY2022(As of March 31, 2022)

Deferred tax liabilities:
Property, plant and equipment

Notes and accounts payable – trade¥44,903¥47,588

Investments in equity instruments

Other

18,03919,436

Net defined benefit asset

Total¥62,943¥67,024

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

14. OTHER FINANCIAL LIABILITIESThe breakdown of other financial liabilities is as follows.

Undistributed earnings of foreign subsidiaries
Other

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.
(Unit: Million yen)
FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)¥5,228¥6,030

81

108

Total

¥5,309¥6,138Current liabilities¥1,357¥1,718

Lease obligations
Derivative financial liabilities

Non-current liabilities

3,952

4,420

Total

¥5,309¥6,138

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

80

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TS TECH Integrated Report 2022

81For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)
Balance atthe beginning of
the fiscal year

Recognizedthrough net
profit or loss

Recognizedthrough othercomprehensive
incomeAcquisition
through businesscombination

Balance atthe end of
the fiscal year

Deferred tax assets:
Inventories
Property, plant and equipment
Intangible assets¥ 2,483¥ (250)¥   —¥—¥ 2,232

1,021

106

—

—

1,128

117

(19)

—

—

98

Investments in equity instruments

—

—

—

—

—

Accrued expenses and provisions

1,568

68

—

—

1,636

301

(14)

(19)

—

266

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

23

972

—

—

995

1,185

1,096

110

—

2,392

¥ 6,701¥1,958¥   90¥—¥ 8,750

Deferred tax liabilities:¥ 1,003¥  631¥   —¥—¥ 1,635

Intangible assets

2,455

(226)

—

—

2,229

Investments in equity instruments

3,740

—

207

—

3,947

Net defined benefit asset

1,067

(75)

294

—

1,285

Undistributed earnings of foreign subsidiaries

1,720

(521)

—

—

1,198

774

695

—

—

1,470

Total deferred tax liabilities¥10,762¥  503¥ 501¥—¥11,766

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

Property, plant and equipment

Other

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

Deferred tax assets and deferred tax liabilities in the consolidated statement of financial position are as follows.
(Unit: Million yen)
FY2021

Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities

FY2022(As of March 31, 2021)(As of March 31, 2022)¥ 1,748¥ 2,454

5,808

5,470

¥(4,060)¥(3,016)

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)
FY2021(As of March 31, 2021)(As of March 31, 2022)

Within 1 year¥ —¥  224

Between 1 and 2 years

296

569

Between 2 and 3 years

552

664

Between 3 and 4 years

117

Between 4 and 5 years——

More than 5 years

32

57

¥893

¥1,524

Total

Taxable temporary differences relating to investments in subsidiaries for which deferred tax liabilities have not beenrecognized are as follows.
Deferred tax liabilities were not recognized as the timing of the reversal of the temporary differences could becontrolled by the Group and it was probable that the temporary differences would not reverse in the foreseeable future.
Amounts are presented on an income basis.
(Unit: Million yen)
FY2021

Taxable temporary differences

FY2022(As of March 31, 2021)(As of March 31, 2022)¥116,933¥139,312

FY2021

FY2022(2) Income tax expenses
The breakdown of income tax expenses is as follows.
(Unit: Million yen)
(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥8,844¥ 8,146(203)

60¥8,641¥ 8,207¥ (737)¥(1,525)

49—

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

211

354

Total deferred tax expense¥ (477)¥(1,171)

Total income tax expense¥8,164¥ 7,035

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

FY2022(Unit: Million yen)
FY2021

Deductible temporary differences

82

TS TECH Integrated Report 2022

FY2022(As of March 31, 2021)(As of March 31, 2022)¥1,125¥851

TS TECH Integrated Report 2022

83

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

(Unit: %)FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

29.9%

29.9%

Differences with tax rates applied to foreign subsidiaries

(5.2)

(6.1)

Undistributed earnings of foreign subsidiaries

0.3

(1.9)

Permanent differences including dividend income(12.4)(19.1)

Differences due to factors including elimination of intra-grouptransactions

15.5

24.2

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

(6.3)

(0.7)

Tax credits

(1.2)

(2.1)

Changes in unrecognized deferred taxes

0.6

1.4

Other

1.3

1.6

22.5%

27.2%

Effective statutory tax rate

Average actual tax rate

(Unit: Million yen)

Balance at the beginning of the fiscal year

Asset retirement
obligations

Other

Total

¥156

¥2,290¥85¥   2¥2,534

Increase during the period

14

—

12

382

408

Decrease during the period (provision used)

(87)

(248)

(0)

(2)

(337)

Decrease during the period (reversal)

(5)

—

—

—

(5)

Effects of foreign currency translation

(0)

300

—

36

337

Balance at the end of the fiscal year

¥ 76

¥2,343¥97¥419¥2,936

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

—

—

85

—

85

¥ 76

¥2,343¥97¥419¥2,936

Non-current liabilities
Total

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

Balance at the end of the fiscal year¥   39¥   127

¥ 84

¥ 123

¥   375

Current liabilities¥   39¥   127¥ 12¥   38¥   217

—

—

72

85

157

¥   39¥   127

¥ 84

¥ 123

¥   375

Total

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

Provision forseverance
chargesNon-current liabilities

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

Provision for
product
warranties

Balance at the beginning of the fiscal year

Provision for
product
warranties

17. 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.
(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)
FY2021TS TECH Integrated Report 2022

(As of March 31, 2021)(As of March 31, 2022)

Ending balance of defined benefit obligations¥ 17,370¥ 17,561

Ending balance of plan assets(19,297)(20,406)

Net amount of defined benefit obligations and assets(1,926)(2,845)Net defined benefit liability

1,648

1,466

Net defined benefit asset(3,575)(4,311)¥ (1,926)¥   (2,845)

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

84

FY2022TS TECH Integrated Report 2022

85

(ii) Reconciliation of present value of defined benefit obligations(Unit: Million yen)
FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥16,237¥17,370

Service cost

1,148

1,089

Interest cost

151

162

Prior service cost

—

(218)

Actuarial differences (due to changes in financial assumptions)

(74)

(382)

Actuarial differences (due to adjustments)

(42)

(73)

Benefits paid

(428)

(503)

Effects of foreign currency translation

147

116

Beginning balance of defined benefit obligations

Increase (decrease) by business combination

230—

Ending balance of defined benefit obligations¥17,370¥17,561

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.

(iii) Reconciliation of the fair values of plan assets(Unit: Million yen)
FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥16,744¥19,297

Beginning balance of plan assets

214

142

1,791

751

Contributions from the employer

637

643

Benefits paid

(386)

(430)

3

2

292

—

¥19,297¥20,406

Interest income
Return on plan assets other than interest

Effects of foreign currency translation
Increase (decrease) by business combination
Ending balance of plan assets

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

(iv) Major breakdown of fair values of plan assets(Unit: Million yen)

FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)

0.6%

0.8%

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

FY2021

FY2022

Changes in assumptions(As of March 31, 2021)(As of March 31, 2022)

Rise by 0.5%¥(1,078)¥(1,042)

Fall by 0.5%

1,197

1,154

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 ¥645 million to plan assets in the year ending March 31, 2023 (April 1, 2022 toMarch 31, 2023).
(viii) Maturity analysis of defined benefit plans
Maturity analysis of defined benefit plans is as follows.
(Unit: Years)
FY2021

Weighted-average duration

FY2022(As of March 31, 2021)(As of March 31, 2022)

14.1

13.5

(3) Defined contribution plans
Amounts recognized as expenses of the defined contribution plans are as follows.
(Unit: Million yen)
FY2021

Amounts recognized as expenses

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

¥612

¥626

(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

Assets without quoted
market prices
in active markets

Equity instruments¥8,852¥    —¥9,807¥     —

Debt instruments

—

7,385

—

6,906

General accounts

—

2,321

—

2,401

Other

11

727

2

1,288

Total

¥8,863¥10,433¥9,810¥10,596

TS TECH Integrated Report 2022

(Unit: %)FY2022

FY2021(As of March 31, 2021)

86(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.

TS TECH Integrated Report 202287

18. 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, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)
Financial assets
measured at fairvalue through other Remeasurements
comprehensiveof net definedincomebenefit plans(Unit: Million yen)
FY2021(As of March 31, 2021)

FY2022(As of March 31, 2022)

Beginning balance

Shareholders’ equity:
Total equity attributable to owners of parent¥277,017¥296,855

Total liabilities and equity

390,478

415,985

70.9%

71.4%

Equity ratio (%)

Other comprehensive income
Ending balance(3) Details of retained earnings
Details of retained earnings are as follows.
(i) Legal retained earnings
The Companies Act requires that an amount equivalent to 10% of dividends from retained earnings to be paid be
appropriated and set aside as legal capital surplus and legal retained earnings until the total of legal capital surplus andlegal retained earnings amounts to 25% of common stock. Such legal retained earnings may be used to compensate
for capital deficits. Legal retained earnings may also be reversed by resolution of a shareholders’ meeting.
(ii) Other retained earnings
Other retained earnings represent the cumulative amount of profits earned by the Group.

Total¥6,093¥ (242)¥(10,338)¥(4,487)

2,879

1,426

5,920

10,226¥8,972¥1,184¥ (4,417)¥ 5,738

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

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

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

Differenceson translationfrom foreign
operations

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

Beginning balance
Other comprehensive income
Ending balance¥8,972Differenceson translationfrom foreign
operations

Total¥ (4,417)¥ 5,738¥1,184573

877

14,52015,971¥9,545¥2,061¥10,103¥21,710(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)
FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)

Total number of shares authorized to be issued

272,000,000

272,000,000

Total number of shares issued

68,000,000

136,000,000

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

(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

88

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(7) Treasury stock
The amount of treasury stock is as follows.

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)
(Unit: Number of shares)(April 1, 2021–March 31, 2022)(April 1, 2020–March 31, 2021)

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
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

Reportable segments

FY2022

FY2021

2,434

875,754

Motorcycle business—

875,754

Automobile business

860,000

1,461,100

—

1,809

(95,100)(51,200)

108,420(250)

875,754

3,162,967

Notes: 1. The Company conducted a two-for-one stock split of common shares as of April 1, 2021. For the previous fiscal year,
the total number of shares issued represent the number before the stock split.
2. For details of restricted stock delivered, see Note 30 “Share-Based Remuneration.”

19. 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.

Japan

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.

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)

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

Motorcycle business
Automobile businessJapan

The Americas

China

Asia
and Europe

Total¥ 3,183¥    230¥      —

¥ 1,136¥   4,549

45,837137,071

113,784

31,399328,093(Seats)40,805

115,742

107,067

29,114

292,728(Interior products)

5,032

21,329

6,717

2,285

35,364

9,375

4,123

—

7

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

Other business
Total

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

Receivables from contracts with customers
Contract liabilities

As of April 1, 2020

As of March 31, 2021

As of March 31, 2022

¥37,635¥58,692¥60,635

431

2,053

1,939

Receivables from contracts with customers are notes and accounts receivable – trade, and contract liabilities areprimarily related to advances received from customers. In the consolidated statement of financial position, receivablesfrom contracts with customers are included in “Trade and other receivables” and contract liabilities are included in“Other current liabilities.”
Of the revenues recognized during the previous fiscal year and the fiscal year under review, the amounts included
in contract liabilities at the beginning of the fiscal years were ¥300 million and ¥1,408 million, respectively. In addition,
during the previous fiscal year and the fiscal year under review, the amount of revenue recognized from performanceobligations satisfied in prior periods was not material.
An increase in contract liabilities for the previous fiscal year can be attributed primarily to the conversion of Honda
Cars SAITAMAKITA into a consolidated subsidiary.
(3) Transaction price allocated to remaining performance obligations
As there are no significant transactions with contracts with initial expected terms exceeding one year, the Group has
applied a practical expedient and does not disclose information on remaining performance obligations. Additionally,among the compensation from contracts with customers, there are no significant amounts not included in thetransaction price.
(4) Assets recognized from the costs incurred for obtaining or fulfilling contracts with customers
For the Group, assets recognized from the costs incurred for obtaining or fulfilling contracts with customers were notmaterial. In addition, the Group has applied a practical expedient and recognized assets with amortization periods of
one year or less, which it would have otherwise recognized, as an expense when incurred.

90

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TS TECH Integrated Report 202291

20. 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.

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

(Unit: Million yen)
FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

Depreciation and amortization¥11,440¥11,033

Employee benefit expenses

69,99872,36921. OTHER INCOME AND OTHER EXPENSES
The breakdown of other income is as follows.

FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

Interest income¥  827¥  966

Dividend income

455

626

Foreign exchange gains

698

774

Other

1

—

Total

¥1,983¥2,367

Notes: 1. Interest income is the interest income generated from financial assets measured at amortized cost.
2. Dividend income is the dividend income generated from financial assets measured through other comprehensive income.
(Unit: Million yen)
FY2021

Land and building rent received
Gain on disposal of non-current assets
Gain on government grants
Other
Total

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥  150¥  135The breakdown of finance costs is as follows.
(Unit: Million yen)
FY2021

FY2022

640

1,448

1,645

644

636

1,012

Other

2

—

¥3,240

Total

¥136

¥117

(Unit: Million yen)

24. 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.
FY2021

FY2022¥3,072(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

¥133

¥117

Interest expense

Note: The content of the gain on government grants are stated in Note 22 “Government Grants.”

The breakdown of other expenses is as follows.
FY2021(April 1, 2020–March 31, 2021)

FY2022(April 1, 2021–March 31, 2022)¥  474¥ 55

Impairment loss

142

143

Other

610

388

Total

¥1,227¥587

Loss on disposal of non-current assets

Note: “Other” during the previous fiscal year represents primarily the provision of an allowance to cover losses from the closure of a
subsidiary in the United Kingdom.

(Unit: Million yen)

Income attributable to owners of parent(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥ 20,741¥ 12,416

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

135,666

134,150

Basic earnings per share (Yen)¥ 152.89¥  92.56

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

22. GOVERNMENT GRANTS
The breakdown of government grants is as follows.
(Unit: Million yen)
FY2021(April 1, 2020–March 31, 2021)

FY2022(April 1, 2021–March 31, 2022)

Deferred income relating to government grants¥  120¥219

Gain on government grants

1,645

644

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. F
 or the previous fiscal year and the fiscal year under review, gain on government grants consists primarily of the grants intended
for wage compensation to employees amid the COVID-19 pandemic. There are no unfulfilled conditions or contingencies.

92

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93

25. OTHER COMPREHENSIVE INCOME
The breakdown of each item of other comprehensive income is as follows.
(Unit: Million yen)
FY2021(April 1, 2020–March 31, 2021)

FY2022(April 1, 2021–March 31, 2022)

Resolution

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

¥ 1,751¥ 1,206

Income tax benefit (expense)

(530)

(342)

Subtotal

1,221

864

Equity financial assets measured at fair value through othercomprehensive income:
Gains (losses) during the year

3,931

771

Income tax benefit (expense)(1,177)(206)

Subtotal

2,754

564

323

73

Share of other comprehensive income of affiliates accounted forusing the equity method:
Gains (losses) during the year
Differences on translation from foreign operations:
Income taxes
Subtotal

7,793

16,353

(50)

110

7,742

16,463

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

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

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

CommonsharesTotal amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective date

¥2,923¥43.00March 31, 2020

June 22, 2020

¥2,923¥43.00

September 30, 2020

November 30, 2020(2) Dividends whose record date is in the fiscal year under review but whose effective date is in the following
fiscal year

Resolution

Annual General Meetingof Shareholders heldon June 25, 2021

Class ofshares

Source ofdividends

Common Retained
sharesearnings

Total amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective date

¥3,159¥47.00March 31, 2021

June 28, 2021

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

Components that may be reclassified subsequently to net profit or loss
Gains (losses) during the year

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

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

Resolution

48

895

¥12,091¥18,860

Class ofsharesAnnual General Meetingof Shareholders heldon June 25, 2021

CommonsharesBoard of Directors’ meeting
held on November 4, 2021

CommonsharesTotal amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective 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 deducted from the total amount of dividends, which are
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 the amount before the stock split, and theamount 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 fiscal year under review but whose effective date is in the following
fiscal year

Resolution

Annual General Meetingof Shareholders heldon June 24, 2022

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TS TECH Integrated Report 2022

Class ofshares

Source ofdividends

Common Retained
sharesearnings

Total amountof dividends(Million yen)

Dividend
per share(Yen)

Record date

Effective date

¥3,725¥28.00March 31, 2022

June 27, 2022

TS TECH Integrated Report 2022

95

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

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

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

GUANGZHOU TS AUTOMOTIVE INTERIOR SYSTEMS CO., LTD.
(Unit: Million yen)

(Unit: Million yen)
FY2021

Non-cash transactions
Beginningbalance

Cash
flows

Increase

Foreigncurrencytranslation

Long-term loans¥    75¥    (75)

¥   —

¥—

¥  —

¥   —

Lease liabilities

3,939(1,754)

2,051

94

897

5,228

Total

¥4,014¥(1,829)¥2,051¥94¥897¥5,228

Other

Endingbalance

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

Current assets(As of March 31, 2021)(As of March 31, 2022)¥35,514¥42,014

Non-current assets

7,392

7,896

Current liabilities

19,093

21,24645

146

Non-current liabilities
Equity23,76828,518

Accumulated non-controlling interests¥11,421¥13,791

FY2021

FY2022For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)

(Unit: Million yen)
Non-cash transactions

Increase

Foreigncurrencytranslation

Other

Endingbalance¥(1,435)¥1,943¥293¥—¥6,030¥(1,435)¥1,943¥293¥—¥6,030

Beginningbalance

Cash
flows

Lease liabilities¥5,228

Total¥5,228(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

Revenue¥62,329¥64,683

Net income

8,172

8,320

Other comprehensive income

1,849

3,102

Comprehensive income

10,022

11,423

Income allocated to non-controlling interests¥ 3,612¥ 4,013

FY2021

FY2022

28. NON-CASH TRANSACTIONS
Details of significant non-cash transactions are as follows.

(Unit: Million yen)
(Unit: Million yen)
FY2021

Acquisition of assets through a lease arrangement

FY2022TS TECH Integrated Report 2022

Cash flows from operating activities(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥ 6,427¥ 9,090(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

Cash flows from investing activities

(440)

(413)

¥2,051¥1,943

Cash flows from financing activities(5,496)(6,784)

Effect of exchange rate changes on cash and cash equivalents

1,061

1,932

29. SUBSIDIARIES AND AFFILIATES, ETC.
(1) Composition of the corporate group
The composition of the Group is as stated in “1. Corporate Summary (4) State of Subsidiaries and Affiliates” in the
Company’s annual securities report (in Japanese only).
During the fiscal year under review, TS TECH Poland sp. z o.o. was established in Poland, TSML INNOVATIONS, LLC
was established in the United States through a joint venture with ML Industries, Inc., and TS DE SAN PEDROINDUSTRIES, S. DE R.L. DE C.V. was established in Mexico as a subsidiary of TSML INNOVATIONS, LLC.

96

FY2022

Net increase (decrease) in cash and cash equivalents
Dividends paid to non-controlling interests

1,551

3,825

¥(2,612)¥(3,203)

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97

WUHAN TS-GSK AUTO PARTS CO., LTD.
(Unit: Million yen)
FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)¥25,152¥27,430

Non-current assets

3,354

3,952

Current liabilities

9,736

10,382Current assets

60

140

Equity18,71020,860

Accumulated non-controlling interests¥ 7,616¥ 8,326

Non-current liabilities(Unit: Million yen)
FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

Revenue¥51,778¥46,528

Net income

6,817

5,570

Other comprehensive income

1,458

2,388

Comprehensive income
Income allocated to non-controlling interests

8,276

7,959

¥ 2,965¥ 2,049(Unit: Million yen)

FY2021(April 1, 2021–March 31, 2022)

Cash flows from operating activities¥ 3,156¥ 5,907

Cash flows from investing activities

(314)

(558)

Cash flows from financing activities(2,519)(5,827)

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

98

FY2022(April 1, 2020–March 31, 2021)

TS TECH Integrated Report 2022

806

1,579

1,128

1,101

¥   (969)¥(2,300)(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)
FY2021

Carrying amount of equity interest

FY2022(As of March 31, 2021)(As of March 31, 2022)¥16,575¥17,257

FY2021

FY2022(Unit: Million yen)
(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥  846¥  590

372

968

1,219

1,559

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

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

30. SHARE-BASED REMUNERATION(1) Restricted stock compensation scheme for directors and executive officers(i) Overview of the scheme
Effective from the current fiscal year, 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 theaim of providing incentives to continuously improve the Company’s corporate value and to further share value withshareholders.
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 terms ofoffice, 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 consideration andthe like.

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99

(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.

(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.

FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

Allotment date—July 21, 2021

Number of shares allotted—

51,200Fair value (Yen)¥—¥1,686

Note: The fair value of the shares is measured based on the closing price of the Company’s common stock on the First Section of theTokyo 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)
FY2021Equity settled type

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

¥—

¥74

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 under
this Scheme for a certain period of time (from March 26, 2021 through March 25, 2024) (hereinafter the “Transfer
Restrictions”), 2) where the Eligible Employees have remained members of the Shareholding Association during thetransfer restriction period, the Company shall remove the Transfer Restrictions pertaining to all of the shares allottedto the Eligible Employees, and 3) on the condition of the occurrence of certain events, such as voluntary 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.

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FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

January 29, 2021—

Number of shares allotted

95,100—Fair value (Yen)¥3,060¥—

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

(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)
FY2021Equity settled type

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

¥34

¥174

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.”

31. 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.

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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.
In terms of the financial instruments held by the Group at the end of the previous fiscal year and the fiscal year
under review, 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)
Impact on income before income tax
FY2021(April 1, 2020–March 31, 2021)

FY2022(Derivative financial assets and derivative financial liabilities)
The fair values of the forward exchange contracts are measured based on the prices quoted by the financial institutions.
(Long-term loans receivable)
Long-term loans receivable are measured at the present value of future cash flows discounted by an interest rate thatreflects an appropriate indicator such as the yield on Japanese government bonds to which a credit spread has been added.
(Financial instruments other than those above)
Financial instruments other than those above are measured at amortized cost but statement thereof has been
omitted as their measured carrying amounts approximate their fair values.
(ii) Carrying amounts and fair values of financial instruments(Financial instruments measured at fair value on a recurring basis)
For the year ended March 31, 2021 (As of March 31, 2021)(Unit: Million yen)

(April 1, 2021–March 31, 2022)

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

¥(26)

¥(18)

1% appreciation of Japanese yen against the Chinese yuan

(17)

(15)

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 fiscal year underreview, the impact of a 1% decline in market prices on other comprehensive income is as follows.
(Unit: Million yen)

Fair value

Carrying
amountLevel 1

¥16,441¥15,227

081

Level 2

Level 3

Total¥—

¥1,214¥16,441

—

0

—

0

—

81

—

81

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

Impact on other comprehensive income
FY2021

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)¥(152)¥(168)

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 used in
the measurement is observable and the materiality of said input.
Level 1: Quoted prices of similar assets and liabilities in active markets
Level 2: Input other than quoted prices included in Level 1 that is observable either directly or indirectly
Level 3: Input including that not based on observable market data
No transfers occurred between Levels 1, 2, and 3 during the previous fiscal year.
(i) Method of measuring fair value(Equity instruments)
Equity instruments are mainly stocks of publicly traded companies and are measured based on the prices quoted by
the stock exchanges.

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Fair value

Carrying
amountLevel 1

¥18,441¥16,857

0

108

Level 2

Level 3

Total

¥ —

¥1,554¥18,411

—

0

—

0

—

108

—

108

Financial assets measured at fair value
through other comprehensive income:Equity instruments
Financial assets measured at fair value
through net profit or loss:
Derivative assets
Financial liabilities measured at fair value
through net profit or loss:
Derivative liabilities

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103

(i) Expenses and cash flows associated with lease contracts
Expenses and cash outflows for lease contracts are as follows.

(Financial instruments measured at amortized cost)
For the year ended March 31, 2021 (As of March 31, 2021)(Unit: Million yen)

(Unit: Million yen)
Carrying
amountFY2021

Fair value
Level 1

Level 2

Level 3

Total

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

¥—

¥500

¥—

¥500

For the year ended March 31, 2022 (As of March 31, 2022)(Unit: Million yen)
Carrying
amountFair value
Level 1

Level 2

Level 3

Total

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

¥549

¥—

¥547

¥—

¥547

(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)
FY2021(As of March 31, 2022)¥255,814¥251,781

9,175

9,968

Amount of financial assets presented inconsolidated statement of financial position¥246,638¥241,813

Gross amount of financial liabilities recognized¥ 77,428¥ 83,131

9,175

9,968

¥ 68,252¥ 73,163

Offset amount

Offset amountAmount of financial liabilities presented inconsolidated statement of financial position(April 1, 2021–March 31, 2022)¥  494¥  434

Machinery, equipment and vehicles

2330

Tools, furniture and fixtures

19

12

Land

55

68

Total depreciation¥  593¥  546

Expenses related to short-term leases or leases of low-value assets¥  938¥  897¥2,776¥2,446

Depreciation of right-of-use assets by asset type:

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.

(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.

FY2022(As of March 31, 2021)

Gross amount of financial assets recognized(April 1, 2020–March 31, 2021)

Buildings and structures¥497

FY2022

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

(Unit: Million yen)
Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixtures

FY2021(As of March 31, 2021)¥3,167¥ 26

FY2022(As of March 31, 2022)¥3,368

¥311

Land

Total

¥56

¥2,256¥5,506¥31¥2,575¥6,286

Note: D uring the previous fiscal year and the fiscal year under review, the amount of right-of-use assets increased by ¥335 millionand ¥750 million, respectively.

(iii) Balance of lease liabilities by the period to maturity
Balance of lease liabilities by the period to maturity is as follows.
(Unit: Million yen)
FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)¥1,275¥1,610Between 1 and 2 years

721

1,037

Between 2 and 3 years

522

560

Between 3 and 4 years

423

454

Within 1 year

323

354

More than 5 years

1,961

2,013

Total

¥5,228¥6,030Between 4 and 5 years

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

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(2) Lease transactions as lessor
The Group mainly leases molds under finance lease contracts.

(i) TS TECH USA CORPORATION
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Unit: Million yen)

Balance of lease receivables by the period to maturity
Balance of lease receivables by the period to maturity is as follows.

Type of related party(Unit: Million yen)
FY2021(As of March 31, 2021)(As of March 31, 2022)¥2,312¥2,009Between 1 and 2 years

647

661

Between 2 and 3 years

454

600

Between 3 and 4 years

436

566

Between 4 and 5 years

436

565

—

—

¥4,288¥4,403

Within 1 year

More than 5 years
Total

Subsidiaries of other affiliates

FY2022

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

33. 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.

NameNature of relatedparty transaction

Transaction
amountHonda of
America Mfg.,
Inc.

Sale ofthe Company’s
products¥36,564

Account

Accounts
receivable –trade

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

Nature of relatedparty transaction

Transaction
amountHonda of
America Mfg.,
Inc.

Sale ofthe Company’s
products¥38,459

Account

Accounts
receivable –trade

Other affiliates

Honda MotorCo., Ltd.

Nature of relatedparty transaction

Transaction
amountSale ofthe Company’s
products¥38,877

Account

Outstandingbalance

Accounts
receivable –trade(ii) TS TECH ALABAMA, LLC.
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

Type of related party

Subsidiaries of other affiliates

Nature of relatedparty transaction

Transaction
amount

Honda
Sale of
Manufacturing of the Company’s
Alabama, LLC.
products¥22,796

Name

Account

Accounts
receivable –trade

Other affiliates

Honda MotorCo., Ltd.

Transaction
amountSale ofthe Company’s
products¥38,175¥1,772For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Unit: Million yen)

(Unit: Million yen)
Nature of relatedparty transaction

Outstandingbalance

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

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

Name¥4,342

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.

¥7,592

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
and price negotiations.

Type of related party

Outstandingbalance(Unit: Million yen)
(Unit: Million yen)Name

¥3,531

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, 2021 (April 1, 2020 to March 31, 2021)

Type of related party

Outstandingbalance

Account

Accounts
receivable –trade

Outstandingbalance¥6,084

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

Type of related party

Subsidiaries of other affiliates

Nature of relatedparty transaction

Transaction
amount

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

(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.

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(iii) TS TECH CANADA INC.
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)

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

(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¥30,296

Outstandingbalance

Account

Accounts
receivable –trade¥3,129Note: 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.

Cumulative period

1st quarter2nd quarter3rd quarter

4th quarter

Revenue¥90,464¥171,532¥258,036¥349,958

6,549

12,19017,391

25,839

Income attributable to owners of parent

3,040

5,656

8,119

12,416

Earnings per share (Yen)

22.65

42.13

60.47

92.56

1st quarter2nd quarter3rd quarter

4th quarter¥22.65¥19.48¥18.34¥32.13

Income before income tax

Accounting period
Earnings per share (Yen)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

Outstandingbalance

Account

Accounts
receivable –trade¥2,941

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

(3) Remuneration of key management personnel
Remuneration to the directors and auditors of the Company is as follows.
(Unit: Million yen)
FY2021

Basic remuneration and bonuses
Stock compensation

FY2022(April 1, 2020–March 31, 2021)(April 1, 2021–March 31, 2022)

¥440

¥406

—

35

34. CONTINGENT LIABILITIESThe Company provides guarantees to financial institutions on the borrowings by employees. The guarantee amounts
are as follows.
(Unit: Million yen)
FY2021

Employees (Company housing and mortgage loans)

FY2022(As of March 31, 2021)(As of March 31, 2022)

¥30

¥26

35. SUBSEQUENT EVENTS
Not applicable108

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109Independent Auditor’s Report(TRANSLATION)



Independent Auditor’s Report

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

June 24, 2022

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, 2022, 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, 2022, 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 76,860 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, 2022, accounting for
approximately 18% of total assets in the consolidated
financial statements. Of this amount, property, plant,
and equipment related to Hamamatsu Plant of theCompany accounted for 2,872 million yen as describedin Note 2, “Basis of preparation of the consolidated
financial statements, (4) Important accounting
judgments, estimates and assumptions” to theconsolidated financial statements.
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 is recognized 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 due
to temporary expenses associated with the constructionof a new building, the mix of car models sold, theproduction status of customers, and so forth. Therefore,
the Company assessed whether the recoverable amountof property, plant, and equipment related to Hamamatsu
Plant was less than the carrying amount, anddetermined not to recognize an impairment loss since
the recoverable amount exceeded the carrying amount.

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:(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 considering advice from 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 therecoverable amount. The future cash flows used formeasuring the value in use were estimated based on
the mid-term management plan prepared bymanagement. Therefore, there was a high degree of
estimation uncertainty since the plan included key
assumptions involving management’s judgement, suchas the forecast of incoming orders. In addition, a highdegree of 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.
Other Matter
The consolidated financial statements of the Company as at and for the year ended March 31, 2021 were audited bypredecessor auditor who expressed an unmodified opinion on those statements on June 25, 2021.
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:112

TS TECH Integrated Report 2022

• 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.
TS TECH Integrated Report 2022

113

Financial Highlights

10-Year Financial Summary(Unit: Million yen)Japanese GAAP
Fiscal Year under Review on a Consolidated BasisIFRS

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

Revenue

359,331457,053

422,317458,732

425,794

479,490412,072

359,682

346,149

349,958

Cost of sales

309,929

385,939352,716

381,258

355,176

399,329

338,031300,307288,671295,716

Selling, general and administrative expenses

25,182

31,97933,76839,41435,75537,41836,52133,531

32,58133,896

Operating income

24,21939,13336,04739,27934,55747,346

38,793

26,326

26,742

22,998

Income attributable to owners of parent

15,741

23,90022,58523,528

19,622

30,11525,75015,064

20,741

12,416

Basic earnings per share (Yen)

115.75175.75166.08173.01144.29221.45189.35110.77152.8992.56*

Operating margin (%)

6.7

8.6

8.5

8.6

8.1

9.9

9.4

7.3

7.7

6.6

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

14.1

17.4

12.8

12.1

9.6

13.4

10.5

5.9

7.8

4.3

Return on assets (ROA) (%)

13.3

17.9

14.3

13.6

11.4

14.7

11.7

8.2

9.9

6.4

Effective statutory tax rate (%)

37.2

37.2

34.8

32.3

30.1

30.1

29.9

29.9

29.9

29.9

Average actual tax rate (%)

28.6

28.7

31.2

27.8

29.9

22.7

25.0

29.7

22.5

27.2

Average exchange rate (USD to Yen)

83.1

100.2

109.9

120.1

108.4

110.8

110.9

108.7

106.1

112.4

Average exchange rate (USD to Yuan)
Capital expenditures

12.6

15.9

17.7

18.9

16.1

16.7

16.5

15.6

15.7

17.5

11,377

19,96019,754

17,064

11,199

8,640

7,412

7,619

6,686

14,466

Depreciation

7,332

8,628

7,860

9,314

9,036

9,676

9,778

10,225

9,616

9,204

R&D expenses

11,221

11,635

12,90013,16812,382

11,986

12,70912,374

12,533

11,930Total assets

207,700

264,635

296,858

303,948

322,202351,944358,265

341,820

390,478

415,985

Property, plant and equipment

48,86962,25374,34976,33876,57673,532

71,51568,53069,05376,860Interest-bearing liabilities

4,832

2,106

5,650

4,335

3,506

4,182

1,742

4,014

5,228

6,030

Total equity

137,523

170,714

216,502

219,092

230,989

259,924

277,424

274,552

301,450

325,583

Shareholders’ equity

122,982

143,718

170,545

189,497

204,800

229,866

249,904

259,233

271,278

275,144

Total at End of Fiscal Year

Cash Flows
Cash flows from operating activities

23,77243,60035,05647,531

34,045

48,40643,80644,19325,151

20,018Cash flows from investing activities(10,976)(18,233)(22,771)(25,299)(12,409)(12,742)(18,321)(5,366)(11,709)(17,196)

Cash flows from financing activities(7,304)(8,898)(11,231)(12,319)(14,214)(11,858)(16,390)(12,917)(14,647)(23,638)

Free cash flows

12,79625,367

12,28522,232

21,63635,66425,48538,827

13,442

2,822

Japan

93,862

104,895

85,89992,071

91,83093,552

92,85675,13478,866

82,698The Americas

172,063

214,628

219,534

247,087

213,008

224,867

195,604

176,346

141,924

144,527

China

71,911

104,063

91,05796,513

94,990121,266

89,18782,729117,652

115,236

Revenue per Consolidated Segment

Asia and Europe

50,207

67,81158,72759,257

59,82576,041

66,822

51,96734,021

34,202

Overseas revenue

290,295

379,382

362,463395,571

361,980

412,249

342,496

303,544288,303289,660

80.8

83.0

85.8

86.2

85.0

86.0

83.1

84.4

83.3

82.8

17

27

30

33

35

40

42

43

45

54

Consolidated price to earnings ratio (PER) (Times)

11.6

8.9

9.8

7.6

10.4

9.5

8.4

11.5

10.8

14.9

Consolidated dividends payout ratio (%)

14.7

15.4

18.1

19.1

24.3

18.1

22.2

38.8

29.4

58.3

Overseas revenue ratio (%)
Stock Information
Cash dividends per share*

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

114

TS TECH Integrated Report 2022

*1 T he company implemented a two-for-one stock split of its common shares, effective April 1, 2021.
Calculations are based on the assumption that the stock split was conducted at the
beginning of fiscal 2013.

TS TECH Integrated Report 2022

115

Non-Financial Highlights

Non-Financial Highlights

Environmental

SocialEnvironmental Accounting

Environmental Conservation Cost (Non-consolidated)
FY2018Main Efforts

Businessarea cost(Unit: Million yen)
FY2019FY2020

FY2021

FY2022

Investment

Cost

Investment

Cost

Investment

Cost

Investment

Cost

Investment

Cost

34

14

46

10

6

11

12

10

21

15

Pollution
prevention cost

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

Globalenvironmental
conservation cost*

Prevention of global warming and ozone depletion andother environmental preservation efforts

748

116

615

95

208

62

176

43

561

71

Resource
circulation cost

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

28

97

11

173

7

56

25

71

13

59

Costs generated from purchasing low environmental
impact products and raw materials

26

9

38

13

48

3

5

1

7

3

Upstream/downstream cost

*1

*1

*2

Administration cost

Environmental management system (EMS) development& operation costs, environmental measurement costs,
office interior “greening” and development costs

29

R&D cost

Research and development of new technology with ahigh positive environmental impact, such as reducing
the weight of products, reducing VOCs (not using
paints), and developing recyclable materials— 2,952— 3,630

9 4,184

10 4,000

2 4,447

Social activity cost

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

—

4

4

4

0

2

0

1

1

1

Environmental remediation cost

Remediation of soil pollution, etc.

—

—

—

—

—

—

—

—

—

—

38

865 3,230

Total

24

63

738 3,988

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

6282

339 4,39915

60

243 4,186

48

46(Unit: Thousand yen)

FY2019FY2020

FY2021

FY2022

9

8

8

7

8

Training time per employee (Hours)

9.0

7.6

8.8

11.1

9.8

Training expenditures (Million yen)

76.6

70.0

84.4

21.6*

34.6*

44,45940,81449,252

12,456*

19,634*

Human rights/diversity training (Number of times)

Training expenditures per employee (Yen)* Since fiscal 2021, training expenses have decreased significantly due to postponement and revised modalities for training sessions as part of efforts to prevent the spread of
COVID-19.

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

FY2018FY2019FY2020

FY2021

FY2022

Practical training sessions for risk assessment*1

22

42

28

0*2

0*2

Mental health seminars

78

80

108

70*2

92*2

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

Employment-Related Data (Non-consolidated)
FY2018FY2019FY2020

FY2021

FY2022

Percentage of managers who are women (%)

2.15

1.90

2.30

2.61

2.87

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

2.30

2.37

2.62

2.65

2.68

Percentage of employees who are non-Japanese (%)

0.55

0.66

0.51

0.57

0.55

Number of new graduates hired (Persons)

52

50

54

47

48

FY2018FY2019FY2020

FY2021

FY2022Gain on sale of valuables

9,232

8,143

4,613

5,073

9,654

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

1

0

5

5

2

Cost saved by energy conservation

13,093

26,69016,073

4,169

3,448

Turnover rate within three years of hiring (%)

1.9

0.0

8.9

9.6

4.0

Total

22,32534,833

20,686

9,242

13,102

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

21.2

10.7

18.2

6.0

12.7

Engagement score*2(31.2)(31.7)(29.8)(30.4)

42.1

Material Effects (Non-consolidated)(Unit)

116

FY2018652 4,642*1 Expenses related to construction of the new Head
Office building.
*2 Expenses related to construction of the new building
at the Hamamatsu Plant.

Economic Effects (Non-consolidated)

In-House Training Sessions and Related Data (Non-consolidated)

FY2018FY2019FY2020

FY2021

FY2022

204,701

205,251

166,002

154,488

161,867

87

77

81

62

51

Energy consumption

GJ

Water consumption

1,000 mCO2 emissions

t-CO2

10,341

10,361

8,394

6,671

4,903

CO2 emissions due to transportation t-CO2

1,868

2,108

1,845

1,449

1,467

3

Total waste output

t

1,068

1,075

1,062

1,120

1,384

VOC emissions

t

34

50

28

16

18

PRTR emissions

t

4

0

0

0

0

TS TECH Integrated Report 2022

*1 The percentage of employees hired mid-career among employees hired for regular employment*2 Parenthetical values for fiscal 2018–fiscal 2021 show satisfaction survey-based DI values.
As of fiscal 2022, scores are based on Link and Motivation Inc.’s Motivation Cloud.

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

Number of employees
by gender

Average years of service

FY2018FY2019FY2020

FY2021

FY2022

Male

1,543

1,531

1,524

1,551

1,573

Female

180

185

191

187

190

Total

1,723

1,716

1,715

1,738

1,763

Male

16.0

16.3

16.6

17.2

17.8

Female

15.1

15.1

15.0

15.8

16.2

Overall

15.9

16.2

16.5

17.1

17.6

TS TECH Integrated Report 2022

117

Non-Financial Highlights

Non-Financial Highlights

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

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

FY2018FY2019FY2020

FY2021

FY2022FY2018FY2019FY2020

FY2021

FY2022

Percentage of employees taking paid leave (%)

96.6

98.3

99.6

96.6

99.4

258

277

285

188

155*

Percentage of employees using half-day vacations (%)

64.2

56.7

58.4

58.4

65.7

Number of employees using maternity leave(Persons)

8

8

3

6

11

Male

0

3

4

8

13

Female

15

8

6

6

10

Total

15

11

10

14

23

Male

0

4

5

11

19

Female

100

100

100

100

100

Total

20

14

13

18

29

Male

—

100

100

100

100

Female

100

100

100

100

100

Total

100

100

100

100

100

Male

1

1

2

2

2

Female

12

8

17

15

15

Total

13

9

19

17

17

Number of employees using
childcare leave (Persons)

Percentage of employees using
childcare leave (%)

Rate of return to work afterchildcare leave (%)

Number of employees using
shorter working hours system forchildren (Persons)

Number of employees using
nursing care leave (Persons)

Male

1

0

0

1

1

Female

0

0

0

0

0

Total

1

0

0

1

1

*

* Since fiscal 2021, some social contribution activities have been canceled or postponed as part of efforts to prevent the spread of COVID-19.

Number of Social Contribution Activities Conducted in FY2022(Unit: Activities)

Japan(Non-consolidated)

The Americas

China

Asia and Europe

Total

Economic assistance

12

62

4

0

78

Social contribution activities

39

17

10

11

77

Total

51

79

14

11

155

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

FY2018FY2019FY2020

FY2021

FY2022

46,76850,01941,82417,303*1

32,063*2*1 Since fiscal 2021, some social contribution activities have been canceled or postponed as part of efforts to prevent the spread of COVID-19.
*2 In fiscal 2022, includes facility repair expenses for Konosu Flower Stadium (Saitama Prefecture), the base venue for the activities of the baseball club.

Improvement Initiatives (Consolidated)

Number of participating teams*1

FY2018FY2019FY2020

FY2021

FY2022

466

489

483

—

334*3

*2

*1 Improvement activities undertaken by small groups. Generally referred to as a “QC (Quality Control) Circle,” the activities are aimed at developing human resources who canuse the QC method to solve problems and manage and improve operations.
*2 In fiscal 2021, activities were not implemented to prevent the spread of COVID-19.
*3 In fiscal 2022, the number of participating teams decreased due to activities not being implemented in the Americas alone as part of efforts to prevent the spread of COVID-19.

Dialogue with Stockholders and Investors

Labor Union Data (Non-consolidated)
FY2018FY2019FY2020

FY2021

FY2022

Number of employees affiliated with the labor
union (Persons)

1,483

1,491

1,491

1,504

1,504

Percentage of employees affiliated with the labor
union (%)

98

98

98

98

96

* Calculations exclude managers

Industrial Accident Circumstances (Non-consolidated) [Consolidated]
FY2018FY2019FY2020

FY2021

FY2022

Number of industrial accident deaths (Persons)

0[0]

0[0]

0[0]

0[0]

0[0]

Number of industrial accident injuries(non-lost worktime accidents) (Persons)

10

4

2

4

4

Number of industrial accident injuries(lost worktime accidents) (Persons)

2[-]

1[59]

2[36]

0[36]

1[25]

Frequency rate [Industry average] (%)

0.51[-]

0.25[1.49]

0.52[0.99]

0.00[1.03]

Severity rate [Industry average] (%)

0.00[-]

0.00[0.02]

0.01[0.02]

0.00[0.03]

FY2018FY2019FY2020

FY2021

FY2022

General Meeting of Shareholders:Number of attendees

386

441

12*2

9*2

7*2

Events for individual investors:
Number of attendees

573*1

88

264

0*3

0*3

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

254

229

168

355

266

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

Governance-Related Data

(Unit: Cases)

FY2018FY2019FY2020

FY2021

FY2022Fines and penalties for anti-competitive practices(Consolidated)

0

0

0

0

0

0.27[0.75]

Cases recognized as corruption or bribery(Consolidated)

0

0

0

0

0

0.01[0.01]

Number of political donations (Non-consolidated)

0

0

0

0

0

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

118

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119

TS TECH’s Products

Global Map

Main Products
for Automobiles

Rear seat

Honda
Step WGN seatMid seat46 companies and 76 locations in 14 countries around the world
Front seatJapan

Door trim
Honda
Vezel
seat

Honda Elysion seat

Note: Model for the
Chinese market

Honda (Acura)
NSX seat• TS TECH Co.,Ltd.

• TRI-CON INDUSTRIES, LTD.

• KYUSYU T·S CO.,LTD.

• TS TRIM INDUSTRIES INC.

• SUN CHEMICAL INDUSTRY CO.,LTD.

• TS TECH USA CORPORATION• TS LOGISTICS CO., LTD.

• TS TECH AMERICAS, INC.

• SOWA SANGYO CO., LTD.
• TECH TOEI CO., LTD.
• Honda Cars SAITAMAKITA• TS CORPORATION INC.

• TRIMOLD LLC• TS TECH INDIANA, LLC• TST NA TRIM, LLC.
• TS TECH CANADA INC.

Asia
• TS TECH TRIM PHILIPPINES, INC• TS TECH BUSINESS SERVICES PHILIPPINES, INC

Main Types of
Other Products• TS TECH ALABAMA, LLC.

• TSML INNOVATIONS, LLC• C-PRESTO CO., LTD.

Main Products
for Motorcycles

The Americas• PT. TS TECH INDONESIA• TS TECH (THAILAND) CO.,LTD• TS TECH ASIAN CO.,LTD• TRIMONT MFG. INC.
• INDUSTRIAS TRI-CON DE MEXICO, S.A. DE C.V.
• TST MANUFACTURING DE MEXICO, S. DE R.L. DE C.V.
• TS DE SAN PEDRO INDUSTRIES, S. DE R.L. DE C.V.
• TS TECH DO BRASIL LTDA.
• TS TRIM BRASIL S/A• TS TECH (KABINBURI) CO.,LTD.
Meter panel

Luggage box
Seat• TS TECH SUN INDIA PRIVATE LIMITED

Seats for personal
watercraft

Rear fender
Floor step
Radiator cover• TS TECH SUN RAJASTHAN PRIVATE LIMITED

Chairs for
medical use• TS TECH (MANDAL) PRIVATE LIMITED
Seats formultipurposeoﬀ-roadvehicles• TS TECH BANGLADESH LIMITED

Europe• TS TECH Deutschland GmbHChina
• GUANGZHOU TS AUTOMOTIVE INTERIOR SYSTEMS CO.,LTD.
• GUANGZHOU TECH INTERIOR TRIM MANUFACTURING CO.,LTD.
• GUANGZHOU TS TECH AUTOMOTIVE INTERIOR RESEARCH &DEVELOPMENT CO., LTD.
• GUANGZHOU TSK AUTO PARTS CO., LTD.
• NINGBO TS AUTOMOTIVE INTERIOR INC.
• WUHAN TS-GSK AUTO PARTS CO.,LTD.

• TS TECH Hungary Kft.

• WUHAN SOWA AUTO PARTS CO., LTD.

• TS TECH Poland sp. z o.o.

• TS TECH (HONG KONG) CO.,LTD.

Front fender120

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121

Corporate Data

Integrated Report Review

Corporate Data (As of March 31, 2022)

There have been major international developments in companies’ information
disclosure, even as the environment aﬀecting companies is going through majorchanges. In November 2021, the International Sustainability Standards Board(ISSB), an organization seeking to establish international standards on ESG information disclosure for companies, was established under the IFRS Foundation.
ISSB aims to complete the international disclosure standards for sustainability by
the end of 2022. In this process, the establishment of international standards for
integrated reporting has taken big steps forward as well under ISSB. In particular,
listed companies are being asked to convey to stakeholders an accessible, appealing story about how their ESG activities lead to value creation.
TS TECH’s Integrated Report 2022 conveys the company’s sense that addressing climate change is both inevitable and a matter for passionate concern. This
stems from the company’s own awareness that it is a company involved in the
manufacture of vehicles that directly emit CO2. For example, in the value creation
process, TS TECH is utilizing its technological skills—its carefully chosen core competencies—to lighten the weight of products and reduce CO2 emissions as muchas possible. Meanwhile, the company is also taking unique steps such as using Japan’s traditional karakuri mechanisms to automate work processes and conserve
energy. TS TECH is presenting mechanisms that make it possible to reduce environmental impact sustainably by combining its own unique technology and concepts, so I think that TS TECH has laid the groundwork for meeting global demands
for information disclosure.
In the value creation process, the company adds improvements that ﬁt theﬂow of its own business model, and seems to be moving on from the textbook
template for disclosure to establish its own style. I am impressed that TS TECH has
identiﬁed its material issues to achieve its vision, and I also admire its prioritizationof ease of understanding in narrowing down the information on the compositionof the business model, which is an extremely diﬃcult task.
At the same time, I think there is room for further improvement in the way inwhich information is narrowed down and the balance in the overall story. The pageon the value creation process and value chains presents the important points incharts and tables, and leaves it up to the reader to make connections between theinformation. I think the disclosure would be more helpful if a narrative explanationof the selected information were provided.
As the overall story, it is important to delve down into the company’s vision andshare the Group’s direction with the stakeholders reading the report. Stakeholders
will be able to understand the path (strategy) leading to the goal only once they arereassured with a clear picture of the goal (vision). TS TECH aspires to be a company
that coordinates and proposes new value not only for the seat but for the entire
cabin. To this end, I think that it is essential that the company weave speciﬁc examples into the story given to stakeholders, such as (1) how the company determines
the optimal product demanded by the user, (2) what the new interior car space will
be like, and (3) what it would be like for users to experience emotions that go beyond peace of mind, safety, and comfort.
TS TECH has imagined an exciting future for our stakeholders, and has thepowerful capital in the form of people, technology, and organizations needed tobring it about. I think that the company can reﬁne its unique story even more by
narrowing down and digging deeper into its information and sharing with stakeholders the clear vision it has formulated.

Company Name
Establishment
Head Oﬃce
Common Stock
Corporate Representative
Lines of Business
Number of Employees
Closing of Accounts
Securities Traded
Main Banks
Main Customers
Member Organization

TS TECH Co., Ltd.
December 5, 1960
3-7-27 Sakae-cho, Asaka-shi, Saitama 351-0012, Japan
4,700,000,000 yen
President and Representative Director, Masanari Yasuda
Manufacture and sale of seats for automobiles; interior trim and interior components for automobiles; motorcycle seats; andmotorcycle resin-based parts
14,308 (Consolidated), 1,763 (Non-consolidated)
March 31
Tokyo Stock Exchange (Prime Market)
MUFG Bank, Ltd./Sumitomo Mitsui Banking Corporation/Saitama Resona Bank, Limited
Honda Motor Co., Ltd./Honda Trading Corporation/Honda Access Corp./Suzuki Motor Corporation/Yamaha Motor Co., Ltd./
Kawasaki Heavy Industries, Ltd./Volkswagen AG/SEAT S.A./Harley-Davidson, Inc./PARAMOUNT BED CO., LTD.
Japan Auto Parts Industries Association
Investment in thecompany
Number of
Shareholding
shares held
ratio (%)
(Thousands)

Stock Information (As of March 31, 2022)

Major Shareholders (As of March 31, 2022)

Total Number of Shares Authorized to Be Issued 272,000,000

Honda Motor Co., Ltd.

30,72023.1

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

13,802

10.4

Custody Bank of Japan, Ltd. (Trust account)

5,074

3.8

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

4,398

3.3

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

3,880

2.9

Taiyo Life Insurance Company

2,800

2.1

Okamoto Industries, Inc.

2,752

2.1

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

2,720

2.0

MUFG Bank, Ltd.

2,638

2.0

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

2,580

1.9

Total Number of Shares Issued

136,000,000

Number of Shareholders
Individuals and others

Treasury stock

10.0 %

Foreign corporations
and others

23.6 %

17,066

2.1 %Financial
institutions

Ownership anddistributionof shares (%)

Other corporations
and others

28.4 %

34.3 %

Securities companies

1.6 %Notes: 1. Number of shares held is rounded down to the nearest thousand.
2. The company, which owns 2,946,377 treasury shares, is excluded from the above list of major
shareholders.
Also, treasury stock is excluded in calculating the shareholding ratio.

External Recognition and Selection as a Constituent in Indices As of March 31, 2022 (JPX-Nikkei Index 400 as of August 31, 2022)

The 10th consecutive selection, starting with theinitial announcement of the index in 2014 andincluding the subsequent annual reshuﬄes

CDP Climate Change Report 2021, Japan edition
Selected as a company with a “Managementlevel” score of B

CSR Companies
Rankingby Toyo Keizai Inc.

200

1,631 ﬁrms

Selected as a constituent of the Index, which
was designed to measure the performanceof Japanese companies with high ESG scores

ESG Companies
Ranking by
Toyo Keizai Inc.

166

1,631 ﬁrms

Selected as a Sustainability Yearbook Member*1
and an Industry Mover*2 in the S&P Global
Sustainability Awards 2022

Mariko Mishiro
Representative Director,
RIDEAL Co., Ltd.

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

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

*1 Sustainability Yearbook Member: Recognition awarded to companies whose S&P Global-assessed ESG scores rank within the top 15% of their industry*2 Industry Mover: Award given to companies with the greatest year-over-year score improvements in their industry among Sustainability Yearbook Members

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TS TECH Integrated Report 2022

TS TECH Integrated Report 2022

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November 2022
Printed in Japan