DISCLAIMER: This translation may be used for reference purposes only. This English version is not an
official translation of the original Japanese document. In cases where any differences occur between the
English version and the original Japanese version, the Japanese version shall prevail. This translation is
subject to change without notice.

Notice of Convocation
the 74th Ordinary General Meeting of Shareholders

ORGANO CORPORATIONTo Shareholders
I would like to express our cordial appreciation for your continuous support and patronage.
You are cordially invited to attend the 74th Ordinary General Meeting of Shareholders of ORGANOCORPORATION to be held on Thursday, June 27, 2019.
Please confirm proposals of General Meeting of Shareholders and business outline of the fiscal year 2018presented in the documents.
June 2019
Representative Director and President
Yasuyuki Koie
Management Philosophy
Organo serves as a valuable partner company by leveraging its leading-edge technologies cultivatedthrough long experience with water treatment, by contributing to the industries that create the future, andby playing a key role in the development of societal infrastructure.
Long-term Management Vision

At Organo, we seek to expand our business through high value-added separation and purification as
well as analysis and manufacturing technologies, and by providing products and services that promote
the creation of value and which resolve the challenges that confront industry and society.
We proactively contribute to a better tomorrow by cultivating people today who will improve upon theway things were done yesterday, as a company where all employees are energetic and passionate about
their work.

-1-(Securities Code: 6368)
June 6, 2019
To our shareholders:
Yasuyuki Koie
Representative Director and President

ORGANO CORPORATION
1-2-8, Shinsuna, Koto-ku, Tokyo

Notice of the 74th Ordinary General Meeting of Shareholders
You are cordially invited to attend the 74th Ordinary General Meeting of Shareholders of ORGANOCORPORATION (the “Company”), which will be held as indicated below.
If you are unable to attend the meeting in person, you may exercise your voting rights in writing or
via the Internet, etc. Please review the attached Reference Documents for General Meeting of
Shareholders, and exercise your voting rights by 5:00 p.m. on Wednesday, June 26, 2019 (JST).
1. Date and Time:Thursday, June 27, 2019 at 10:00 a.m. (JST) (Reception is scheduled to beopen at 9:00 a.m.)

2. Venue:

Conference Room, 2nd floor, Head office building of the Company,
1-2-8, Shinsuna, Koto-ku, Tokyo

3. Purpose of the Meeting
Matters to be reported:
1. The Business Report and the Consolidated Financial Statements for the 74th
fiscal year (from April 1, 2018 to March 31, 2019), and the results of audits of
the Consolidated Financial Statements by the Independent Auditor and the
Audit and Supervisory Board
2. The Non-consolidated Financial Statements for the 74th fiscal year (from April
1, 2018 to March 31, 2019)
Matters to be resolved:
Proposal No. 1 Appropriation of Surplus
Proposal No. 2 Partial Amendments to the Articles of Incorporation
Proposal No. 3 Election of Ten Directors
Proposal No. 4 Election of Two Audit and Supervisory Board Members
Proposal No. 5 Election of Two Substitute Audit and Supervisory Board Members
Proposal No. 6 Election of the Independent Auditor
4. Other Matters relating to General Meetings of Shareholders
In the case of duplicate voting done both in writing and via the Internet, etc., the vote placed via theInternet, etc. will be considered valid. Additionally, in the case of voting twice or more times via theInternet, etc., the last vote will be considered valid.

-2-Guide to Exercising Voting Rights
Attending the General Meeting of Shareholders
Please submit the enclosed voting form to the receptionist at the meeting.
Date and time of the Meeting: Thursday, June 27, 2019, at 10:00 a.m. (Reception starts at 9:00
a.m.)
Not Attending the General Meeting of Shareholders
Exercising Voting Rights by Mail (in Writing)
Please indicate your approval or disapproval of the proposals in the enclosed voting form, and thenreturn the form by postal mail so that your vote is received by the deadline.
Deadline: To arrive by no later than 5:00 p.m. Wednesday, June 26, 2019
Exercising Voting Rights via the Internet, etc.
Please access the designated website for exercise of voting rights, and enter your approval ordisapproval by the deadline.
Deadline: Exercised by no later than 5:00 p.m. Wednesday, June 26, 2019
Refer to the page 4 for details.
In the case of duplicate voting done both in writing (by mail) and via the Internet, etc., the vote placed via
the Internet, etc. will be considered valid. Additionally, in the case of voting twice or more times via theInternet, etc., the last vote will be considered valid.

Disclosure on the Internet
“Notes to Consolidated Financial Statements” in the Consolidated Financial Statements and “Notes to
Non-consolidated Financial Statements” in the Non-consolidated Financial Statements that are madeavailable on the Company’s website under laws and regulations and the Company’s Articles ofIncorporation; are not available in this notice. The Notes to the Consolidated Financial Statements andthe Notes to Non-consolidated Financial Statements posted on the Company’s website are subject toaudit by the Independent Auditor and the Audit and Supervisory Board Members and the Audit andSupervisory Board.

Any corrections in the Reference Documents for General Meeting of Shareholders, Business Report,
Consolidated Financial Statements, or Non-consolidated Financial Statements will be posted on the
Company’s website.
The Company’s website (https://www.organo.co.jp/)-3-Guide to Exercising Voting Rights via the Internet, etc.
By scanning the QR code (“Smart Exercise”)
You can log-in to the website for exercise of voting rights without entering the voting rights exercise codeand password.
1. Please scan the QR code printed on the voting form at the bottom right.
*QR code is a registered trademark of DENSO WAVE INCORPORATED.
2. Then please follow the instructions on the screen and indicate your approval or disapproval.
The exercise of voting right by “Smart Exercise” is available only once.
In case if you want to change your vote after exercising your voting right please access the website for PC
and log-in by entering the “voting rights exercise code” and “password” indicated in the voting form, to
exercise your voting right again.
*You will be transferred to the website for PC by scanning the QR code again.
By entering the voting rights exercise code and password
Website for exercise of voting rights: https://www.web54.net
1. Please access the website for exercise of voting rights.
2. Please enter the “voting rights exercise code” indicated in the voting form.
3. Please enter the “password” indicated in the voting form.
4. Then please follow the instructions on the screen and indicate your approval or disapproval.
If you have any questions on how to exercise your voting rights via the Internet using a personal computer,smartphone, or mobile phone, please contact the department below.
Sumitomo Mitsui Trust Bank, Limited,
Stock Transfer Agency Web Support, Dedicated line
0120-652-031 (toll free)(Business hours: 9:00 a.m. - 9:00 p.m. toll free)
Institutional investors can exercise their voting rights via the “Electronic Voting Rights Exercise Platform”
for institutional investors operated by ICJ, Inc.

-4-

Reference Documents for General Meeting of Shareholders
Proposal No. 1

Appropriation of Surplus

The Company proposes the appropriation of surplus as follows:
1. Year-end dividends
The Company treats the return of profits to shareholders as one of the Company’s importantmanagement agendas, and it strives to provide distribution of profits in a way that considers theCompany’s revenue status, while adhering to a basic policy of providing stable and continuous
dividends.
In accordance with the above policy, the Company proposes to pay year-end dividends for the 74th
fiscal year as follows.
As a result, the annual dividend for the fiscal year under review including the interim dividend of ¥29
will amount to ¥73 per share.
(1) Type of dividend property
Cash(2) Allotment of dividend property and their aggregate amount¥44 per common share of the Company
Total dividend amount is ¥506,380,028(3) Effective date of dividends of surplus
June 28, 2019
2. Other appropriation of surplus
As for internal reserves, the Company proposes the following to strengthen the management foundation.
(1) Item of surplus to be decreased and amount of decrease
Retained earnings brought forward:¥2,000,000,000(2) Item of surplus to be increased and amount of increase
General reserve:¥2,000,000,000-5-Proposal No. 2

Partial Amendments to the Articles of Incorporation

1. Reasons for the proposal(1) In order to enable flexible operation of the General Meeting of Shareholders, the Chairman of theGeneral Meeting of Shareholders, as provided for in Articles 15. (Convener and Chairmanship) of
the current Articles of Incorporation, shall be changed from the Chairman of the Board of
Directors to a Director determined in advance by the Board of Directors.
(2) In order to enable flexible operation of the Board of Directors, the Convener and Chairman of
Meeting of the Board of Directors, as provided for in Articles 24. (Convener and Chairmanship ofMeeting of the Board of Directors) of the current Articles of Incorporation, shall be changed fromthe Director and President to a Director determined in advance by the Board of Directors.
2. Details of Amendments
The details of the amendments are as follows.
(Underlines indicate amended sections)
Proposed Amendments

Current Articles of Incorporation
Article 15. (Convener and Chairmanship)

Article 15. (Convener and Chairmanship)

The Director and President shall convene General
Meeting of Shareholders. The Chairman of theBoard of Directors shall act as the chairman of theGeneral Meeting of Shareholders, or otherwise the
Director and President shall perform such duties if
the position of Chairman of the Board of Directors
is vacant or if the Chairman of the Board of
Directors is unable to attend to such duties. If the
Director and President is unable to attend to suchduties, they shall be performed by another Director
who is designated in accordance with an order ofpriority determined in advance by the Board of
Directors.

1. The Director and President shall convene General
Meeting of Shareholders. If the Director andPresident is unable to attend to such duties, another
Director who is designated in accordance with anorder of priority determined in advance by the
Board of Directors shall convene General Meetingof Shareholders.

(Newly established)

2. A Director determined in advance by the Board of
Directors shall act as the chairman of the General
Meeting of Shareholders. If such Director is unable
to attend to such duties, another Director who isdesignated in accordance with an order of priority
determined in advance by the Board of Directors
shall act as the chairman of the General Meeting of
Shareholders.

Article 24. (Convener and Chairmanship of Meeting Article 24. (Convener and Chairmanship of Meetingof the Board of Directors)of the Board of Directors)
Unless otherwise provided for by laws andregulations, the Director and President shallconvene meetings of the Board of Directors andchair the meetings. If the Director and President isunable to attend to such duties, another Director
who is designated in accordance with an order ofpriority determined in advance by the Board of
Directors shall convene the meeting of the Board of
Directors and act as its chairman.

Unless otherwise provided for by laws andregulations, a Director determined in advance by the
Board of Directors shall convene meetings of theBoard of Directors and chair the meetings. If such
Director is unable to attend to such duties, another
Director who is designated in accordance with anorder of priority determined in advance by the
Board of Directors shall convene the meeting of theBoard of Directors and act as its chairman.

-6-

Proposal No. 3

Election of Ten Directors

The terms of office of all nine Directors will expire at the conclusion of this Ordinary General Meeting of
Shareholders. Therefore, the Company proposes the election of ten Directors including three Outside
Directors, increasing the number of Outside Directors by one, for the purpose of further strengthening
corporate governance.
The candidates for Director are as follows:
Candidate
No.
1

Name
Yasuyuki Koie

Position in the Company
Director and President(Representative Director)

Reelection

Senior Managing Directorand Executive Officer
General Manager of
Performance Products
Business
Managing Director andExecutive Officer, General
Manager of Corporate
Management and PlanningManaging Director andExecutive Officer
General Manager of R & D
and Engineering
Director and Executive
Officer
Deputy General Manager ofIndustrial Plant Business andGeneral Manager of Plant
Division
Executive Officer
General Manager ofCorporate Strategy andPlanning Dept., Corporate
Management and Planning

Attendance at Boardof Directors meetings
100%(15/15)100%(15/15)

2

Masaki Uchikura

Reelection

3

Hitoshi Hori

Reelection

4

Haruki Myouga

Reelection

5

Yasutoshi Nakayama

Reelection

6

Nobuyoshi Suda

New election

7

Masayuki Yamada

New election–

8

Motoo Nagai

Reelection
OutsideOutside Director

100%(15/15)

9

Keikou Terui

Reelection
OutsideOutside Director

87%(13/15)10

Kenji Hirai

New election
Outside

–

Note:

100%
(15/15)100%(15/15)100%(13/13)–––

Yasutoshi Nakayama was elected at the 73rd Ordinary General Meeting of Shareholders, which was held on June 28,
2018, and he assumed office on that day. Accordingly, the attendance figure stated above for the Director indicates
his attendance to the meetings of the Board of Directors that were held on and after June 28, 2018.

-7-

Candidate
No.

Name (Date of birth)

Reelection
Yasuyuki Koie
(July 19, 1953)
Tenure as Director
4 years

1

Career summary, and position and responsibility in the
Company
Apr. 1981

Joined Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation)

June 2005

Associate Director, General Manager ofFunctional Materials Division, General
Manager of Tokyo R&D Center, and General
Manager of Tokyo Research Center

June 2008

Director, General Manager of Functional
Materials Division

June 2011

Managing Director, President of Specialty
Group and President of Engineering Group

Jan. 2015

Managing Director, President of Specialty
Group and Senior General Manager ofAdvanced Materials Division (retired in June
2015)

June 2015

Director and President (Representative
Director) of the Company

Number of theCompany’s
shares owned

11,300Current position[Significant concurrent positions outside the Company]
None[Reasons for nomination as candidate for Director]
Yasuyuki Koie led the expansion of the Specialty Group business as a Director at Tosoh Corporation, utilizing
his expert knowledge and experience related to organic synthetic chemistry. After being appointed as the
Director and President of the Company, he has been demonstrating his leadership in realm of formulating themanagement vision and proposing and executing business strategies.
The Company believes that he is able to contribute to sustainable growth and improvement of corporate valueof the Group, through supervisory practice as a Director, with his experience and insight as well as high ethicalstandards and abilities to accurately make decisions and understand issues, which are essential for a Director.
Therefore, the Company nominates him as a candidate for Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

-8-

Candidate
No.

Career summary, and position and responsibility in the
Company

Name (Date of birth)

Apr. 1982

Joined Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation)

June 2010

Associate Director, General Manager ofLegal & Patents

June 2011

Director, General Manager of Legal &Patents

June 2015

President (Representative Director) of Tosoh
Specialty Materials Corporation (retired inJune 2017)

Number of theCompany’s
shares owned

Chairman of the Board of Tosoh SMD, Inc.
(retired in June 2017)Managing Director, President of Specialty
Group and Senior General Manager ofAdvanced Materials Division of Tosoh
Corporation

Reelection
Masaki Uchikura(August 6, 1954)
Tenure as Director
2 yearsMar. 2016

Chairman of the Board of Tosoh America,
Inc. (retired in June 2017)

June 2016

Director, Executive Vice President, Presidentof Specialty Group and Senior General
Manager of Advanced Materials Division of
Tosoh Corporation (retired in June 2017)

June 2017

Senior Managing Director and Executive
Officer, President of Performance Products
Business of the Company

2

4,100

Chairman of the Board (Representative
Director) of ORGANO FOOD TECHCORPORATION
Chairman of the Board (Representative
Director) of HOSTEC
Current position[Significant concurrent positions]
None[Reasons for nomination as candidate for Director]
Masaki Uchikura had been engaged in legal and patent fields for many years at Tosoh Corporation. He
contributed to enhancement of corporate governance and expanded advanced material business as a Director of
Tosoh Corporation, utilizing his expertise in functional material. After being appointed as a Director of theCompany, as President of Performance Products Business, he has been demonstrating his skills on management
and operation of an organization, and established business growth strategy,
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, the Company nominates him as a
candidate for Director.
[Special interest between candidate and the Company]
Masaki Uchikura is the Chairman of the Board (Representative Director) of HOSTEC, and the Company has
business relationships with the aforesaid company including those relating to the procurement and sale ofproducts and loans of funds.

-9-

Candidate
No.

Career summary, and position and responsibility in the
Company

Name (Date of birth)

Apr. 1984

Joined Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation)

Apr. 1996

Corporate Strategy and Development
Division

Number of theCompany’s
shares owned

Director of Eco-Techno Corporation

Reelection
Hitoshi Hori
(November 19, 1957)
Tenure as Director
5 years3

June 2006

Manager of Planning and Development,
Electronic Materials Division andCorporate Planning Division of Tosoh
Corporation

June 2011

Manager of Planning and Development,
Advanced Materials Division and Corporate
Production Technology Division

Mar. 2012

President (Representative Director), EcoTechno Corporation (retired in October
2015)

June 2012

Associate Director of Tosoh Corporation(retired in June 2014)

June 2014

Managing Director and Executive Officer of
the Company

June 2015

Managing Director and Executive Officer,
General Manager of Trade Control Office

June 2016

Managing Director and Executive Officer,
President of Corporate Management andPlanning, and General Manager of Trade
Control Office

June 2017Managing Director and Executive Officer,
President of Corporate Management andPlanning

2,400

Current position(Responsibilities)
In charge of Internal Auditing Office, Secretary Office,Global Management and Planning, Legal and Patent Dept.,
Trade Control Office, Environment, Safety and Quality
Assurance Dept., Purchasing and Logistics Dept. and
Branches.
[Significant concurrent positions]
None[Reasons for nomination as candidate for Director]
Hitoshi Hori had been engaged in company management at the Company’s affiliated company. After being
appointed as a Director of the Company, he has promoted development of advanced technologies as a Director
in charge of Development Division, utilizing his knowledge and experience relating to life science. After that,
he has a track record in establishment of company-wide management strategy and management and operation
plan as a Director in charge of Corporate Strategy, Planning and Management Division.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, the Company nominates him as a
candidate for Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 10 -

Candidate
No.

Name (Date of birth)

Career summary, and position and responsibility in the
Company
Apr. 1978

Joined the Company

June 2011

Executive Officer, Senior General Manager
of R&D Center and General Manager ofPlanning and Administration Dept., R&D
CenterApr. 2012

Executive Officer, Senior General Manager
of R&D Center and General Manager ofDevelopment Dept. I, R&D Center

Apr. 2013

Executive Officer, Senior General Manager
of R&D Center

Apr. 2015

Managing Executive Officer, Senior General
Manager of R&D Center

June 2016

Managing Director and Executive Officer,
Senior General Manager of R&D Center

June 2017Managing Director and Executive Officer

June 2018

Managing Director and Executive Officer,
President of R & D and Engineering

Reelection
Haruki Myouga(February 21, 1956)
Tenure as Director
3 years4

Number of theCompany’s
shares owned

3,300

Current position[Significant concurrent positions outside the Company]
None[Reasons for nomination as candidate for Director]
Haruki Myouga has been engaged in technology development, especially wastewater treatment, for many
years, and led research and development as a Senior General Manager of R&D Center, utilizing his advanced
expertise and experience relating to biotechnology. After being appointed as a Director of the Company, he has
been in charge of Engineering Technology Division and promoted improvement of technological capabilities
and creation of new technology and products.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, the Company nominates him as a
candidate for Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 11 -

Candidate
No.

Name (Date of birth)

Reelection

5

Career summary, and position and responsibility in the
Company
Apr. 1984

Joined the Company

June 2010

General Manager of Electronics Industry
Sales Dept., Plant Division, Industrial Plant
Business

Apr. 2012

Director of Organo Kansai Co., Ltd. (retiredin December 2013)

Jan. 2014

Managing Director of Organo (Asia) Sdn.
Bhd.

June 2016

Executive Officer of the Company

May 2017

Director of Organo (Asia) Sdn. Bhd.

Yasutoshi Nakayama(July 30, 1961)

June 2017

Tenure as Director
1 yearExecutive Officer, Senior General Manager
of Plant Division, Industrial Plant Businessof the Company

Jan. 2018

Executive Officer, Senior General Manager
of Plant Division, Industrial Plant Business,
and General Manager of Electronics Industry
Sales Dept.

Apr. 2018

Executive Officer, Senior General Manager
of Plant Division, Industrial Plant Business

June 2018

Director and Executive Officer, Deputy
President of Industrial Plant Business, andSenior General Manager of Plant Division

Number of theCompany’s
shares owned

2,000

Current position[Significant concurrent positions outside the Company]
None[Reasons for nomination as candidate for Director]
Yasutoshi Nakayama, as a top of the Plant Division, one of the Company’s core businesses, has been putting
effort in business growth and improvement of revenue, after being engaged in company management as thepresident of the Company’s overseas subsidiary. After being appointed as a Director of the Company, as theGeneral Manager of Plant Division and Deputy President of Industrial Plant Business, he has been in charge ofwhole Water Treatment Engineering Business Unit, and working for expansion of the businesses and stableearnings.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, the Company nominates him as a
candidate for Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 12 -

Candidate
No.

Name (Date of birth)

New election
Nobuyoshi Suda
(November 19, 1963)

6

Career summary, and position and responsibility in the
Company
Apr. 1984

Joined the Company

June 2010

Deputy General Manager of Plan Design
Dept., Technology & Production Center

Apr. 2012

General Manager of Electronics Industry
Sales Dept., Plant Division, Industrial Plant
Business and Project Management Officeand Engineering Dept., Engineering

Jan. 2013

Representative Director and General
Manager of Organo (Suzhou) Water
Treatment Co., Ltd. (retired in April 2016)

Apr. 2016

General Manager of Corporate Strategy andPlanning Dept., Corporate Management andPlanning of the Company

June 2017

Executive Officer, General Manager ofCorporate Strategy and Planning Dept.,
Corporate Management and Planning

Number of theCompany’s
shares owned

600

Chairman of Organo (Vietnam) Co., Ltd.
(retired in June 2018)
Current position[Significant concurrent positions outside the Company]
None[Reasons for nomination as candidate for Director]
Nobuyoshi Suda has been engaged in Plant Technology Division, especially electronics industry, for many
years and has been responsible for businesses in electronics industry field. In addition, he has been engaged incompany management as the Representative Director and General Manager (President) of the Company’s
overseas subsidiary. After being appointed as an Executive Officer, he has also been promoting preparation andimplementation of company-wide growth strategy as General Manager of Corporate Strategy and Planning
Department.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, the Company nominates him as a new
candidate for Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 13 -

Candidate
No.

Name (Date of birth)

Career summary, and position and responsibility in the
Company
Apr. 1985

Joined Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation)

June 2007

President of Tosoh Bioscience, Inc.

Number of theCompany’s
shares owned

President of Tosoh Bioscience LLC
June 2011

Associate Director, Deputy Senior General
Manager of Bioscience Division of Tosoh
Corporation

June 2012

Associate Director, Senior General Manager
of Bioscience Division and Manager ofPlanning and Development
Chairman of the Board of Tosoh Europe,
N.V.

New election
Masayuki Yamada(January 7, 1959)

June 2013

June 2015

Director, Senior General Manager of
Bioscience Division and Manager ofPlanning and Development of Bioscience
Division of Tosoh Corporation

1,000

President (Representative Director) of Tosoh
Techno-System, Inc.
Director of Tosoh Bioscience, Inc.
Director of Tosoh Bioscience LLC

7June 2016

Senior Vice President, Senior General
Manager of Bioscience Division of Tosoh
Corporation

June 2017

Director, Executive Vice President, Presidentof Specialty Group and Senior General
Manager of Bioscience Division
Chairman of the Board of Tosoh America,
Inc.
Current position[Significant concurrent positions outside the Company]
Director, Executive Vice President of Tosoh Corporation
Chairman of the Board of Tosoh America, Inc.
[Reasons for nomination as candidate for Director]
Masayuki Yamada has been engaged in bioscience field at Tosoh Corporation for many years. After being
appointed as a Director, Executive Vice President, he has been leading management and operation of Specialty
Group, and contributed to creation and expansion of businesses of the aforesaid company.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, the Company nominates him as a new
candidate for Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 14 -

Candidate
No.

Name (Date of birth)

Reelection
OutsideIndependent
Motoo Nagai(March 4, 1954)
Tenure as Outside Director
4 years

Career summary, and position and responsibility in the
Company
Apr. 1977

Joined The Industrial Bank of Japan, Limited

Apr. 2005

Executive Officer of Mizuho Corporate
Bank, Ltd. (currently Mizuho Bank, Ltd.)

Apr. 2007

Managing Executive Officer (retired in April
2011)

Apr. 2011

Deputy President and Executive Officer ofMizuho Trust & Banking Co., Ltd.

June 2011

Director and Deputy President(Representative Director), Deputy President
and Executive Officer

Apr. 2014

Administrative Officer (retired in June 2014)

June 2014

Outside Statutory Auditor (Full-time) of
Nissan Motor Co., Ltd.

1,900

Outside Audit and Supervisory Board
Member of the Company
June 2015

8

Number of theCompany’s
shares owned

Outside Audit & Supervisory Board Memberof Nisshin Seifun Group Inc.
Outside Director of the Company
Current position[Significant concurrent positions outside the Company]
Outside Statutory Auditor (Full-time) of Nissan Motor Co., Ltd.
Outside Audit & Supervisory Board Member of Nisshin Seifun Group Inc.
[Reasons for nomination as candidate for Outside Director]
Motoo Nagai had worked for financial institutions for many years and had been engaged in company
management as a Director and Deputy President of Mizuho Trust & Banking Co., Ltd. In addition, he hasserved as an outside auditor of other listed companies, deepening his knowledge on multidimensional corporate
management. After being appointed as an Outside Audit and Supervisory Board Member and Outside Directorof the Company, he has been giving us useful opinions and advices on the management of the Company,
especially enhancement of governance, utilizing his abundant and various knowledge.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, judging him as being capable ofappropriately performing his duties as an Outside Director, the Company nominates him as a candidate for
Outside Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 15 -

Candidate
No.

Name (Date of birth)

Career summary, and position and responsibility in the
Company
Apr. 1979

Joined Ministry of International Trade andIndustry (currently Ministry of Economy,
Trade and Industry)

July 2008

Deputy Minister of Technical Affairs,
Minister's Secretariat

Jan. 2011

Director-General of Kanto Bureau of
Economy, Trade and Industry

Reelection
OutsideIndependent

Apr. 2012

Director-General of Regional Economic andIndustrial Policy (retired in June 2013)

Aug. 2013

President of Nonprofit Organization Japan
Utility Telemetering Association

Keikou Terui(July 27, 1953)

Oct. 2013

Tenure as Outside Director
3 years

Senior Fellow of Chemicals Evaluation andResearch Institute, Japan (retired in
September 2016)

June 2014

Director of Union of Japanese Scientists andEngineers

Number of theCompany’s
shares owned

2,700

Outside Director of Ube Industries, Ltd.

9Mar. 2016

Outside Director of Bridgestone Corporation

June 2016

Director of Chemicals Evaluation andResearch Institute, Japan
Outside Director of the Company
Current position[Significant concurrent positions outside the Company]
President of Nonprofit Organization Japan Utility Telemetering Association
Outside Director of Ube Industries, Ltd.
Outside Director of Bridgestone Corporation[Reasons for nomination as candidate for Outside Director]
Keikou Terui had held a number of management positions at Ministry of Economy, Trade and Industry. At
those positions, he had promoted preparation and implementation of industrial policy and demonstrated hisleadership at important positions in management of organization. In addition, he has highly academic
knowledge on risk evaluation and management of chemicals, and has served as an outside director of otherlisted companies, deepening his knowledge on multidimensional corporate management. After being appointed
as an Outside Director of the Company, he has been giving us useful opinions and advices on the managementof the Company, utilizing his abundant and various piece of knowledge.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, judging him as being capable ofappropriately performing his duties as an Outside Director, the Company nominates him as a candidate for
Outside Director.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 16 -

Candidate
No.

Name (Date of birth)

Career summary, and position and responsibility in the
Company
Apr. 1981

New election
OutsideIndependent
Kenji Hirai(March 20, 1953)

Number of theCompany’s
shares owned

Joined Sagami Chemical Research Center(currently Sagami Chemical ResearchInstitute)Apr. 1990

Senior Research Fellow

Apr. 1998

Senior Fellow

Jan. 2002

Vice President

Apr. 2004

Vice Chairman of the Board, President

Dec. 2018

Vice Chairman of the Board (Representative
Director), President

Apr. 2019

Vice Chairman of the Board (Representative
Director), Research Advisor

1,100

Current position
10[Significant concurrent positions outside the Company]
Vice Chairman of the Board (Representative Director) of Sagami Chemical Research Institute[Reasons for nomination as candidate for Outside Director]
Kenji Hirai, while making distinguished achievements in research of cutting-edge functional substances, highperformance agrochemicals and environmental preservation substances, and development of biotechnology, hasdemonstrated his skills on management and operation of an organization, as Vice Chairman of the Board,
President of Sagami Chemical Research Institute.
In addition to high ethical standards, and abilities to accurately make decisions and understand issues, which
are essential for a Director, he also possesses the necessary experience and insight to promote sustainablegrowth and improvement of corporate value of the Group. Therefore, judging him as being capable ofappropriately performing his duties as an Outside Director, the Company nominates him as a new candidate for
Outside Director.
[Special interest between candidate and the Company]
Kenji Hirai is the Vice Chairman of the Board (Representative Director) of Sagami Chemical ResearchInstitute, and the Company and the aforesaid institute are implementing joint research. The amount ofexpenditure paid by the Company to the aforesaid institute in the 74th fiscal year is ¥8 million, which isinsignificant.

Notes:

1. The positions and responsibilities held by Yasuyuki Koie in the past five years at the Company’s parent company
Tosoh Corporation are presented in the above "Career summary, and position and responsibility in the Company". His positions and responsibilities held by him in the past five years at the Company's subsidiaries are as
follows.
June 2005
President (Representative Director) of Tosoh Ceramics Co., Ltd. (retired in June 2014)
President (Representative Director) of Tosoh Zeolum, Inc. (retired in June 2014)
President (Representative Director) of Tosoh Hyuga Corporation (retired in June 2014)
June 2010
President (Representative Director) of Tosoh Speciality Materials Corporation (retired in June2015)
Chairman of the Board of Tosoh SMD, Inc. (retired in June 2015)
2. The positions and responsibilities held by Masaki Uchikura in the past five years at the Company’s parent
company Tosoh Corporation and its subsidiaries (Tosoh Speciality Materials Corporation, Tosoh SMD, Inc., andTosoh America, Inc.) are presented in the above "Career summary, and position and responsibility in the
Company". He is scheduled to retire as a Director of ORGANO FOOD TECH CORPORATION and HOSTEC
in June 2019.
3. The positions and responsibilities held by Hitoshi Hori presently or in the past five years at the Company’s
parent company Tosoh Corporation and its subsidiaries (Eco-Techno Corporation) are presented in the above"Career summary, and position and responsibility in the Company".
4. The positions and responsibilities held by Masayuki Yamada presently or in the past five years at the Company’s
parent company Tosoh Corporation and its subsidiaries (Tosoh Bioscience, Inc., Tosoh Bioscience LLC, Tosoh
Techno-System, Inc., Tosoh Europe, N.V., and Tosoh America, Inc.) are presented in the above "Career summary,and position and responsibility in the Company". He is scheduled to retire as a Director of Tosoh Techno-System,
Inc. and Tosoh Europe, N.V. in June 2019.
5. Motoo Nagai, Keikou Terui and Kenji Hirai are candidates for Outside Director.
6. Motoo Nagai assumed office as an Audit and Supervisory Board Member for a year before assuming office as
Outside Director of the Company.

- 17 -

7. In June 2019, upon the conclusion of the ordinary general meeting of shareholders of Nissan Motor Co., Ltd.,
Motoo Nagai will end his tenure as Outside Statutory Auditor (Fulltime) at the said company, and it is planned
that he will begin a new tenure as Outside Director at the said company. Additionally, in June 2019, upon the
conclusion of the ordinary general meeting of shareholders of Nisshin Seifun Group Inc., Motoo Nagai will end
his tenure as Outside Audit & Supervisory Board Member at the said company and it is planned that he will
begin a new tenure as Outside Director at the said company.
8. Currently, the Company has entered into respective agreements with Motoo Nagai and Keikou Terui to set theminimum amount of liability provided by laws and regulations as the amount for liability for damages under
Article 423, paragraph 1 of the Companies Act in cases where there is good faith and no gross negligence, in
accordance with Article 427, paragraph 1 of the same Act and the Articles of Incorporation of the Company. Ifthey are elected as Directors, the Company plans to enter into the same agreement with each of them. In addition,
if Yasuyuki Koie, Masayuki Yamada and Kenji Hirai are elected as Directors, the Company plans to enter into
the same agreement with each of them.
9. Nissan Motor Co., Ltd. at which Motoo Nagai currently serves as an Outside Statutory Auditor (Full-time),announced the issue of serious misconduct by management including the chairman of the said company inNovember 2018. Motoo Nagai had been unaware of the said issue before such issue is discovered, but he had
been providing recommendations from a legal compliance perspective at the said company’s board of directors
meetings before this issue. In addition, since he has become aware of the issue, Motoo Nagai has appropriately
fulfilled his responsibilities by giving directions regarding comprehensive investigations, recurrence prevention
measures, etc.
10. Nissan Motor Co., Ltd. at which Motoo Nagai currently serves as an Outside Statutory Auditor (Full-time),
received process improvement orders from the Ministry of Land, Infrastructure, Transport and Tourism in March2018 related to the said company’s non-conformities in the final vehicle inspection processes at plants in Japan.
Also, in December 2018, the said company received process improvement directives from the said Ministry
related to the same non-conformities discovered by the said company’s self-inspection. Motoo Nagai had been
unaware of the said issue before the facts that were the cause of the said process improvement orders anddirectives came to light, but he had been providing recommendations from a legal compliance perspective at thesaid company’s board of directors meetings before this issue. In addition, since he has become aware of the issue,
Motoo Nagai has appropriately fulfilled his responsibilities by giving directions regarding comprehensive
investigations, recurrence prevention measures, etc.
11. Ube Industries, Ltd., at which Keikou Terui currently serves as Outside Director, announced in February 2018that it had not carried out product tests in certain low-density polyethylene products that were meant to be
carried out as part of an agreement with customers. In addition, the said company announced non-conformity for
JIS certification of limestone aggregate for ready-mix concrete in May 2018, and fourteen new cases ofimproprieties in quality in June 2018. Further the said company announced, in October 2018, two cases ofimproprieties in quality including an overseas subsidiary, as the result of supplementary investigation. Keikou
Terui had been unaware of the said issue before the facts that led to the said company’s announcement came tolight, but he had been providing recommendations from a legal compliance perspective at the said company’sboard of directors meetings before this issue. In addition, since he has become aware of the issue, Keikou Terui
has appropriately fulfilled his responsibilities by requesting an investigation of the cause of the improprieties andthorough enforcement of compliance structure, etc.
12. The Company has submitted notification to the Tokyo Stock Exchange that Motoo Nagai and Keikou Terui havebeen designated as independent officers as provided for by the aforementioned exchange. In addition, theCompany has submitted notification to the said exchange that Kenji Hirai shall be designated as an independent
officer. For the Company’s “Criteria for Independence of Outside Officers”, please refer to page 23.

- 18 -

Proposal No. 4

Election of Two Audit and Supervisory Board Members

The terms of office of both of the Audit and Supervisory Board Members, Masahiko Toyoda and Osamu
Hamada, will expire at the conclusion of this Ordinary General Meeting of Shareholders. Therefore, theCompany proposes the election of two Audit and Supervisory Board Members. In addition, the consent of
the Audit and Supervisory Board has been obtained for the submission of this proposal.
The candidates for Audit and Supervisory Board Members are as follows:
Candidate
No.

Name (Date of birth)

Career summary and position in the Company
Apr. 1978

Joined Toyo Soda Manufacturing Co., Ltd.
(currently Tosoh Corporation)

May 2005

Chairman and Managing Director of Tosoh
Hellas A.I.C. (retired in June 2010)

June 2010

General Manager of Functional Polymers ,Polymers Division of Tosoh Corporation

May 2012

Masahiko Toyoda(August 23, 1955)

Associate Director, General Manager ofFunctional Polymers , Polymers Division(retired in June 2012)

June 2012

Tenure as Audit andSupervisory Board Member
4 years

Managing Director and Executive Officer,
General Manager of Performance Products
Business of the Company

Nov. 2013

Chairman of the Board (Representative
Director) of HOSTEC (retired in June 2015)

June 2015

Outside Auditor of PLAS-TECH
CORPORATION

Reelection

Number of theCompany’s
shares owned

6,900

Audit and Supervisory Board Member (Fulltime) of the Company

1

June 2016

Outside Auditor of Taihei Chemicals Limited
Current position[Significant concurrent positions outside the Company]
None[Reasons for nomination as candidate for Audit and Supervisory Board Member]
Masahiko Toyoda has contributed to growth of revenue, managing Performance Products Business Unit as a
Director of the Company. After being appointed as an Audit and Supervisory Board Member of the Company,
he has conducted appropriate audits from fair and objective standpoint. He also serves as an outside auditor ofother companies, deepening his knowledge on multidimensional corporate management, and furthermore, hadbeen responsible for accounting at an overseas subsidiary of Tosoh Corporation. Thus, he has advanced
expertise and experience regarding finance and accounting.
In addition to high ethical standards and ability to make decisions fairly and impartially, which are essential for
an Audit and Supervisory Board Member, he also possesses the necessary experience and insight to conduct anappropriate audit to the management of the Company. Therefore, the Company nominates him as a candidate
for Audit and Supervisory Board Member.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 19 -

Candidate
No.

Name (Date of birth)

New election
OutsideIndependent
Wataru Higuchi(October 30, 1970)

Career summary and position in the Company
Oct. 1993

Joined Deloitte Touche Tohmatsu (currently
Deloitte Touche Tohmatsu LLC) (left in
August 1998)

Apr. 1997

Registered as Certified Public Accountant(excluding the period of legal training)

Oct. 2002

Registered as Lawyer (Dai-Ichi Tokyo Bar
Association)
Joined SEIWA KYODO LAW OFFICE(SEIWA MEITETSU LAW OFFICE)

Oct. 2007

Partner (left in September 2018)

June 2016

Outside Director (Serving as Audit andSupervisory Committee Member) of
Marubeni Construction Material Lease Co.,
Ltd.

Oct. 2018

Representative Partner of OOTEMON LAW
AND ACCOUNTING

Number of theCompany’s
shares owned0

Current position
2[Significant concurrent positions]
LawyerCertified Public Accountant
Representative Partner of OOTEMON LAW AND ACCOUNTING
Outside Director (Serving as Audit and Supervisory Committee Member) of Marubeni Construction Material
Lease Co., Ltd.
[Reasons for nomination as candidate for Outside Audit and Supervisory Board Member]
Wataru Higuchi, as a lawyer and certified public accountant, has highly professional knowledge and experience
relating to legal, finance and accounting. In addition, he has served as an outside director who is an audit andsupervisory committee member of another listed company, deepening his knowledge on multidimensional
corporate management.
In addition to high ethical standards and ability to make decisions fairly and impartially, which are essential for
an Audit and Supervisory Board Member, he also possesses the necessary experience and insight to conduct anappropriate audit to the management of the Company. Therefore, judging him as being capable of appropriately
performing his duties as an Outside Audit and Supervisory Board Member, the Company nominates him as a
new candidate for Outside Audit and Supervisory Board Member.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company. The Company consult legal issues, etc. to
Wataru Higuchi, but the compensation payment from the Company to him in the 74th fiscal year is less than¥100,000, which is insignificant.

Notes:

1. Wataru Higuchi is a candidate for Outside Audit and Supervisory Board Member.
2. Currently, the Company has entered into respective agreements with Masahiko Toyoda to set the minimum
amount of liability provided by laws and regulations as the amount for liability for damages under Article 423,
paragraph 1 of the Companies Act in cases where there is good faith and no gross negligence, in accordance with
Article 427, paragraph 1 of the same Act and the Articles of Incorporation of the Company. If Masahiko Toyoda
is elected as an Audit and Supervisory Board Member, the Company plans to enter into the same agreement withhim. In addition, if Wataru Higuchi is elected as an Audit and Supervisory Board Member, the Company plans toenter into the same agreement with him.
3. The Company has submitted notification to the Tokyo Stock Exchange that Wataru Higuchi shall be designatedas independent officers as provided for by the aforementioned exchange. For the Company’s “Criteria for
Independence of Outside Officers”, please refer to page 23.

- 20 -

Proposal No. 5

Election of Two Substitute Audit and Supervisory Board Members

To prepare for a situation where the number of Audit and Supervisory Board Member does not satisfy the
number prescribed by laws and regulations, the Company proposes the election of two Substitute Audit andSupervisory Board Members.
The candidate for Substitute Audit and Supervisory Board Member is as follows. If the proposal 4 isapproved as proposed, Tomoaki Itou will be a substitute for the Audit and Supervisory Board Member,
Masahiko Toyoda, and Kimio Watabe will be a substitute for an Outside Audit and Supervisory Board
Member.
The appointment of the Substitute Audit and Supervisory Board Member shall be subject to the number ofAudit and Supervisory Board Member not satisfying the number prescribed by laws and regulations, andthe term of office thereof shall be the remaining term of office of a predecessor.
In addition, the consent of the Audit and Supervisory Board has been obtained for the submission of this
proposal.
Candidate
No.

Name (Date of birth)Tomoaki Itou
(March 30, 1953)

Career summary and position in the Company
Apr. 1976

Joined the Company

June 2005

General Manager of Power Plant Division

Apr. 2008

Executive Officer, General Manager ofPower Plant Division

June 2011

Director and Executive Officer

June 2012Managing Director and Executive Officer

Apr. 2015

Managing Director and Executive Officer,
General Manager of Water Infrastructure andEnergyJune 2017

Advisor of the Company (retired in June
2018)

Number of theCompany’s
shares owned

956[Significant concurrent positions outside the Company]
1

None[Reasons for nomination as candidate for Substitute Audit and Supervisory Board Member]
Tomoaki Itou has contributed to the promotion and development of technology in Power Plant Division, one of
the core businesses of the Company. After being appointed as a Director of the Company, he has managed
Public Water Treatment Division, and contributed to expansion of the business and stable earnings by preparing
and implementing appropriate and well-balanced management measures with his broad perspective andexperience.
In addition to high ethical standards and ability to make decisions fairly and impartially, which are essential for
an Audit and Supervisory Board Member, he also possesses the necessary experience and insight to conduct anappropriate audit to the management of the Company. Therefore, the Company nominates him as a candidate
for Substitute Audit and Supervisory Board Member.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.

- 21 -

Candidate
No.

Name (Date of birth)

Career summary and position in the Company
Apr. 1976

Joined Nisso Petrochemical Industries Co.,
Ltd. (currently Maruzen Petrochemical Co.,Ltd.)

July 1997

General Manager of Production, Yokkaichi
Plant

June 2006

General Manager of Yokkaichi Plant

June 2007

Executive Officer, General Manager of
Yokkaichi Plant

June 2010

Executive Officer

Number of theCompany’s
shares owned

Director and Vice President of KEIYOPOLYETHYLENE CO.,LTD.

Kimio Watabe(September 5, 1953)
June 2011

President (Representative Director) (retired
in June 2014)

June 2014

Advisor of Maruzen Petrochemical Co., Ltd.
(retired in July 2014)

Aug. 2014

General Manager of Production, MORIN
Chemical Industries Co., Ltd.

2
Dec. 2014

Director, General Manager of Production

Dec. 2018

Advisor0

Current position[Significant concurrent positions]
None[Reasons for nomination as candidate for Substitute Outside Audit and Supervisory Board Member]
Kimio Watabe has led plant operation as a general manager of the plant of major petrochemical company andbeen engaged in company management as a president of an associated company of the aforesaid company.
In addition to high ethical standards and ability to make decisions fairly and impartially, which are essential for
an Audit and Supervisory Board Member, he also possesses the necessary experience and insight to conduct anappropriate audit to the management of the Company. Therefore, judging him as being capable of appropriately
performing his duties as an Outside Audit and Supervisory Board Member, the Company nominates him as a
new candidate for Substitute Outside Audit and Supervisory Board Member.
[Special interest between candidate and the Company]
There is no special interest between the candidate and the Company.
Notes:

1. Kimio Watabe is a candidate for Substitute Outside Audit and Supervisory Board Member.
2. If the number of Audit and Supervisory Board Member does not satisfy the number prescribed by laws andregulations and Tomoaki Itou is appointed, the Company plans to enter into an agreement to set the minimum
amount of liability provided by laws and regulations as the amount for liability for damages under Article 423,
paragraph 1 of the Companies Act in cases where there is good faith and no gross negligence, in accordance with
Article 427, paragraph 1 of the same Act and the Articles of Incorporation of the Company. If the number of
Outside Audit and Supervisory Board Member does not satisfy the number prescribed by laws and regulations
and Kimio Watabe is appointed, the Company plans to enter into the same agreement with him.

- 22 -

(Reference)
Criteria for Independence of Outside Officers
An outside officer of the Company will be deemed as not satisfying the requirements for independence if
any of the following statuses is attributable to him/her.
(i)A person who is currently, or who has been during the past ten years, an executive of the Company ora subsidiary of the Company.
(ii) A person who is currently, or who has been during the past ten years, a non-executive director or an
accounting advisor of the Company or a subsidiary of the Company (applicable only in the case of
Outside Audit and Supervisory Board Members).
(iii) A person who is currently, or who has been during the past one year, an executive or a non-executive
director of the Company’s parent company.
(iv) A person who is currently, or who has been during the past one year, an Audit and Supervisory Board
Member of the Company’s parent company (applicable only in the case of Outside Audit andSupervisory Board Members).
(v) A person who is currently, or who has been during the past one year, an executive at a sister companyof the Company.
(vi) A person who is currently, or who has been during the past one year, either a person who has theCompany as a major trading counterparty, or an executive of such an entity.
(vii) A person who is currently, or who has been during the past one year, either a person who is a major
trading counterparty of the Company or an executive of such an entity.
(viii) A person who is currently, or who has been during the past one year receiving a large amount ofmoney or other assets from the Company other than remuneration for directors (and other officers)
either as a consultant, an accounting professional, or a legal professional.
(ix) A person who is currently a major shareholder of the Company (or an executive of the said major
shareholder if the shareholder is a corporation).
(x) A person who is currently an executive at an entity under circumstances where outside officers aremutually appointed between said entity and the Company.
(xi) A person who is an executive at an entity that is receiving significant amount of donations from theCompany.
(xii) A person who is a spouse or a relative within second degree of separation with any persons (i) to (viii)
above (limited to material persons)- 23 -

Proposal No. 6

Election of the Independent Auditor

The term of office of ARK MEIJI AUDIT & Co., the Company’s Independent Auditor, will expire at theconclusion of this Ordinary General Meeting of Shareholders. Accordingly, in line with the decision of the
Audit and Supervisory Board, the Company requests approval to appoint KPMG AZSA LLC as the new
Independent Auditor.
1. Reason for the Audit and Supervisory Board to nominate KPMG AZSA LLC as a candidate for the
Independent Auditor
The Audit and Supervisory Board nominated KPMG AZSA LLC as a candidate for the Independent
Auditor because it possesses expertise, independence and appropriateness, which are necessary for an
Independent Auditor, and also has a system that can audit the Group’s global business activities. In
addition, the Audit and Supervisory Board judged that consistency and efficiency, etc. of auditing areexpected to be improved by unifying an Independent Auditor with the Company’s parent company,
Tosoh Corporation.
2. Candidate for Independent Auditor
A candidate for Independent Auditor is as follows:(As of March 31, 2019)
Name
Location of
Principal Office

KPMG AZSA LLC
1-2 Tsukudo-cho, Shinjuku-ku, Tokyo
July 1969
July 1985

History

Oct. 1993
Jan. 2004
July 2010
Capital
Number of
Employees

Corporate Profile

Asahi & Co. was established.
Merged with Shinwa & Co. (established in December 1974)
and changed name to Asahi Shinwa & Co.
Merged with Inoue Saito Eiwa Audit Corporation(established in April 1978) and changed name to Asahi
Audit Corporation.
Merged with KPMG AZSA & Co. (established in February2003) and changed name to KPMG AZSA & Co.
Changed name to KPMG AZSA LLC, following
the shift to a limited liability company.
¥3,000 million
Certified Public
3,236
Accountants
Others engaging in
2,116
audit
Administration
726
Total
6,078

Audit
Engagements
Note:

3,640 companies

The candidate for Independent Auditor has received payment from the Company for the assessment service
relating to introduction of a new core system, and payment from a subsidiary of Tosoh Corporation, theCompany’s parent company, for the confirmation procedures needed to apply for the certification regarding Act
on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity
Utilities, in the past two years.

- 24 -

(Attached Documents)

Business Report(From April 1, 2018 to March 31, 2019)

1. Status of the corporate group(1) Business progress and results
During the fiscal year under review (ended March 31, 2019), the Japanese economy maintained a
trajectory of moderate growth through the first half of the fiscal year, but the outlook became
increasingly uncertain from the second half of the fiscal year, owing to the slowdown of theChinese and European economies, the risk of underperformance by the US economy, which had
led growth to that point, and other factors, and going into the end of the fiscal year, there weresigns that growth was becoming more sluggish, such as the government revising its assessment of
the current state of the Japanese economy downward for the first time in three years in theMonthly Economic Report for March 2019.
The business environment surrounding the Organo Group remained favorable through the firsthalf of the fiscal year, with ongoing active capital investment in the electronics field in the key
markets of Japan, China, and Taiwan, and firm capacity increases and capital investment in laborsavings in general industrial fields in Japan. From the second half of the fiscal year, however,there were signs of a decline in corporate capital investment and production, including a
slowdown in the Chinese and European economies, deteriorating conditions in the semiconductor
memory market, and the impact of trade policies from trade friction between the US and China,
and the outlook for the electronics field in particular became increasingly uncertain, with anincreasing trend of delays in large capital investments.
Under these circumstances, the Organo Group engaged in efforts aimed at increasing costcompetitiveness and productivity in existing businesses. At the same time, we increased our
allocation of resources to R&D aimed at creating products and technologies differentiated fromcompetitors to propel us forward with initiatives focused on “strengthening the performance
products business” by developing new products and shifting sales channels to overseas,“expanding the electronics field” by reforming cost structures and enhancing the service solutions
and aiming to increase our share of the Chinese market, and “cultivating new businesses” bydeveloping advanced separation and purification processes fostered in our water treatment
technologies into such fields as lithium-ion batteries, electronic materials, gases andbiopharmaceuticals.
Consequently, the financial results for the fiscal year under review are as follows. Orders received
increased by 17.9% year on year to ¥103,838 million, net sales increased by 16.5% to ¥92,273
million, operating profit increased by 71.6% to ¥6,558 million, ordinary profit increased by 66.2%
to ¥6,538 million, and profit attributable to owners of the parent increased by 60.2% to ¥4,452
million. In addition, return on equity (ROE) was 8.4% in comparison with 5.5% in the previous
fiscal year, and the operating profit ratio was 7.1% in comparison with 4.8% in the previous fiscal
year.
Results by segment are as follows.
<Water Treatment Engineering Business Unit>
The Water Treatment Engineering Business Unit achieved a significant increase in orders received
and net sales at Plant Divisions in Japan, China, and Taiwan, where there was active large capital
investment related to semiconductors through the first half of the fiscal year in the electronics
field, and the Service Solutions Divisions also performed favorably, particularly involving
maintenance and consumable item replacements, as customers’ plants maintained high operating
rates, despite performance in the electric power field / water supply and sewage field fallingsomewhat below the previous year. In addition, firm capital investment and production also
- 25 -

continued in the general industrial field, mainly in Japan, and orders received and net sales
increased in the Plant and Service Solutions Divisions.
Consequently, orders received increased by 21.2% year on year to ¥85,943 million and net sales
increased 20.1% to ¥74,653 million. On the profit side, in addition to the effect of increased sales,
the profitability of Plant Divisions also improved as a result of a better environment for receiving
orders, various cost-cutting measures with respect to large projects in Japan and overseas, andother factors, and as a result, operating profit increased by 121.2% to ¥5,316 million.
<Performance Products Business Unit>
The Performance Products Business Unit achieved growth in Japan owing to the introduction of
new products in the Standard Water Treatment Equipment Division, increased sales of various
types of water treatment chemicals for the electronics industry in the Water Treatment Chemicals
Division, and other factors, and we also strengthened sales activities in regard to standard water
treatment equipment and water treatment chemicals in China, Taiwan, Southeast Asia, andelsewhere overseas, leading to increases in orders received and net sales, with orders received
increasing by 4.3% year on year to ¥17,894 million and net sales increasing by 3.3% to ¥17,620
million.
Meanwhile on the profit side, net sales increased, but development investment in new products
and technologies increased and expenses, etc. also increased in line with the strengthening ofproduction and sales systems, and as a result operating profit decreased by 12.4% to ¥1,242
million.
Item

Orders received
Amount(millions ofyen)

Percentage of
total
(%)

Water Treatment Engineering
Business Unit

85,943

Performance Products
Business Unit

Segment

Total

Net sales
YoY

Amount(millions ofyen)

Percentage of
total
(%)

YoY

82.8

+21.2%

74,65380.9+20.1%

17,894

17.2

+4.3%

17,620

19.1

+3.3%

103,838100.0+17.9%

92,273100.0+16.5%(2) Capital investment
The Organo Group’s total outlays for capital investment amounted to ¥635 million during the
fiscal year under review.
(3) Financing
No items to report.
(4) Issues to be addressed
During the fiscal year under review, we focused on our key business fields of the “electronics
industry,” “performance products,” and “new businesses,” and also declared an active increase ininvestment in technology and R&D and promoted various initiatives, and as a result, we achieved
operating results significantly exceeding our initial plans, including achieving our highest everorders received and net sales. In particular, in the electronics field, we succeeded in receiving
orders for large semiconductor projects in each of Japan, China, and Taiwan, and there were also
signs of an improvement in profitability as we implemented various cost-cutting measures inprojects and expanded our service solutions, etc., leading to a significant contribution to improved
operating results together with the development and introduction of new products in the
Performance Products Business Unit, sales development in China, Taiwan, Southeast Asia, andelsewhere overseas, and other factors. Nevertheless, in the field of new businesses, issues remain
as we look to create new businesses, such as the creation of viable businesses taking longer than
expected, despite achieving a particular level of success in terms of technological development,such as purifying and recovering facilities for lithium-ion batteries and continuous
chromatographic systems for use in biopharmaceuticals.

- 26 -

Under these circumstances, the Organo Group has set forth its Medium-term Management Vision
to be “a profitable engineering company that can deliver the optimal quality of water at the most
reasonable cost in the most timely manner to the electronics industry and other industries, in key
economic areas in Asia,” “a company that creates businesses supporting the creation of value innext-generation industries through proprietary separation and purification processes,” and “acompany operating on a global scale, continuously creating high value-added performance
products,” and we shall focus on building business foundations and structures, and various typesof systems as we look to achieve further growth.
More specifically, we shall continue to focus on the key business fields of the “electronics
industry,” “performance products,” and “new businesses,” as in the fiscal year under review, as
we work to further expand the electronics field by strengthening our solutions systems in China
and elsewhere in Japan and overseas; strengthen the Performance Products Business Unit bydeveloping new products and establishing production and sales systems in China, Taiwan,
Southeast Asia, and other overseas markets; and create new businesses by developing separationand purification processes into lithium-ion batteries, electronic materials, and biopharmaceuticals,
etc. In addition, as measures to strengthen systems for executing this Medium-term Management
Plan and personnel and technological development, etc., we shall also take steps to strengthen our
foundations in overseas businesses, such as utilizing overseas personnel and enhancing businesssystems at overseas subsidiaries , and establishing a Global Engineering Center, while also
promoting initiatives aimed at technological advancement and enhancing productivity, including
enhancing core technologies in existing businesses and creating innovative technologies for new
businesses.
Furthermore, in order to evaluate the status of progress on sustainably enhancing corporate value
and improving profitability, the Organo Group positions consolidated return on equity (ROE) andconsolidated operating profit ratio as key indicators. Management targets for fiscal 2021, the final
fiscal year of the Medium-term Management Plan, are net sales of at least ¥100.0 billion,
operating profit of at least ¥7.0 billion, and an operating profit ratio of at least 7.0%, and theOrgano Group aims to build a profit structure that can record ROE of at least 8.0% continuously
and consistently.
An overview of the Medium-term Management Plan is provided on the next page.

- 27 -

Medium-term Management Plan 2019-2021
What We Aim For (Mid-term Management Vision)

A profitable engineering company that can deliver the optimal quality of water at the most reasonable
cost in the most timely manner to the electronics industry and other industries, in key economic areasin Asia.



Creating and developing new business by our original Separation and Purification technology forcreating new values of future industry.

Providing high value added new Performance Products for global market.

Management Target
Net sales¥100.0 billion or more

Operating profit¥7.0 billion or more

Profit margin

7.0% or more

We will achieve the above index and aim for establishment of earnings structure that can record ROE
8.0% or more continuously and consistently.
Core Measures
1. Expansion of Electronics Field- Enhancement of operation, technology, manufacturing and service solution systems in Japan,
China and Taiwan.
- Entering cutting-edge Semiconductor wet production process field including the U.S. market.
2. Development of Performance Products Business Unit
- Developing new products and refining existing products.
- Establishment of manufacturing and sales systems in China, Taiwan and Southeast Asia.
3. Development of New Businesses- Expansion of separation and purification technology to the markets of lithium-ion batteries,
electronic materials and biopharmaceuticals
4. Enhancement of Overseas Business Foundations- Establishment of Global Engineering Center outside Japan, and diversification of technologicalexpertise- Enhancement of business cooperation among overseas subsidiaries in Southeast Asia area, andenhancement of management and technology systems in India
5. Technological Evolution and Productivity Improvement- Evolution of core technologies in existing businesses, searching for innovative technology thatenables creation of new businesses- Increasing productivity and improving working styles by utilizing engineering systems RPA, etc.
Note: RPA (Robotics Process Automation): Automation of work by robots- 28 -

(5) Changes in assets and profit and loss
71st term
Fiscal year ended
March 31, 2016

72nd term
Fiscal year ended
March 31, 2017

73rd term
Fiscal year ended
March 31, 2018

74th term(Fiscal year underreview)
Fiscal year ended
March 31, 2019

Orders received (Millions ofyen)

76,48574,041

88,049103,838

Net sales (Millions of yen)

78,71981,114

79,226

92,273Operating profit (Millions of
yen)

3,947

4,114

3,821

6,558

Operating profit ratio (%)

5.0

5.1

4.8

7.1

Ordinary profit (Millions of
yen)

3,871

4,162

3,933

6,538

Profit attributable to ownersof parent (Millions of yen)

2,485

2,731

2,780

4,452

Basic earnings per share (yen)43.17

237.18241.50388.48Return on equity (ROE) (%)

5.4

5.7

5.5

8.4

Total assets (Millions of yen)

94,79595,40596,036

101,257

Net assets (Millions of yen)

46,56749,034

51,68154,795

Net assets per share (yen)806.894,247.27

4,477.64

4,784.81

Category

Notes:

1. The Company implemented share consolidation on October 1, 2017, consolidating five common shares into one.
Basic earnings per share and net assets per share have been calculated as if the aforementioned shareconsolidation had been carried out at the beginning of the 72nd fiscal year.
2. The Company has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28; February 16, 2018) from the beginning of the fiscal year under review, and this accounting
standard, etc. has been retrospectively applied to the amount of total assets for the previous fiscal year.
3. As for calculation of basic earnings per share, common shares of the Company held by the Officer Share
Delivery Trust have been included in treasury shares excluded from the calculation of the average number ofshares during the period for the fiscal year under review (47 thousand shares in the fiscal year under review).
4. As for calculation of net assets per share, common shares of the Company held by the Officer Share Delivery
Trust have been included in treasury shares excluded from the total number of issued shares at the end of theperiod for the fiscal year under review (85 thousand shares at the end of the fiscal year under review).

- 29 -

Orders received / Net sales
Orders received (Millions of yen)

Operating profit / Operating profit ratio
Operating profit (Millions of yen)

Net sales (Millions of yen)

Operating profit ratio (%)
6,558

103,838
76,485 78,719

71st term

81,11474,041

72nd term

92,27388,04979,22673rd term

74th term(Fiscal year underreview)

Profit attributable to owners of parent / Basic earnings per
share

3,947

4,114

5.0

5.1

71st term

72nd term

3,821

7.1

4.8

73rd term

74th term(Fiscal year underreview)

ROE

Profit attributable to owners of parent (Millions of yen)
Basic earnings per share (Yen)

(%)
8.4

4,452
388.48
5.4
2,485

2,731

2,780

237.18241.5072nd term

73rd term

5.7

5.5

72nd term

73rd term

43.17

71st term

Total assets

74th term(Fiscal year underreview)

Net assets / Net assets per share(Millions of yen)

94,79571st term

74th term(Fiscal year underreview)

95,405

Net assets (Millions of yen)

101,257

96,036

46,56749,034
4,247.27

Net assets per share (Yen)
51,681
4,477.64

54,795
4,784.81

806.8971st term

72nd term

73rd term

71st term

74th term(Fiscal year underreview)- 30 -

72nd term

73rd term

74th term(Fiscal year underreview)

(6) Parent company and major subsidiaries(i)Relationship with parent company
The Company’s parent company is Tosoh Corporation, and it holds 4,865 thousand shares(equity ownership 42.0% includes the portion of indirect ownership) of the Company.
The Company purchases items such as some raw materials for water treatment chemicals
from Tosoh Corporation and it also carries out other transactions with Tosoh Corporationsuch as selling various types of water treatment systems and related chemicals to the said
company.

(ii) Major subsidiaries
Company name

Major businesses

100.0

Installation and supervision ofvarious types of water treatment
systems50

100.0

Sales and manufacture of foodingredients and food processing
agents50

100.0

Sales and related construction ofwastewater treatment systems andrelated chemicals

100.0

Printing business, agency businessinvolving various forms of
insurance and management
outsourcing business

ORGANO PLANT SERVICECORPORATION93

ORGANO FOOD TECHCORPORATIONORGANO ECO TECHCORPORATIONORGANO ACTY CORPORATION

Ownership of theCompany (%)

Share capital(Millionsof yen)20

Organo (Asia) Sdn. Bhd.

7,000

(Thousandsof MYR)

100.0

Sales and related construction ofvarious types of water treatment
systems and related chemicals

Organo (Suzhou) Water Treatment
Co., Ltd.

5,000(Thousandsof USD)

100.0

Sales and related construction ofvarious types of water treatment
systems and related chemicals

Organo Technology Co., Ltd.

30,000(Thousandsof NTD)

100.0

Sales and related construction ofvarious types of water treatment
systems and related chemicals

Organo (Thailand) Co., Ltd.

120,100(Thousandsof THB)*100.0

Sales and related construction ofvarious types of water treatment
systems and related chemicals

PT Lautan Organo Water

18,000(Millionsof IDR)

51.0

Sales and related construction ofvarious types of water treatment
systems and related chemicals

Notes:

1. Equity ownership with (*) mark includes the portion of indirect ownership held by the Company’s subsidiaries.
2. There is no subsidiary that falls under the category of specified wholly-owned subsidiary.
3. The nine major subsidiaries above are consolidated subsidiaries of the Company, and one affiliated company was
accounted for by the equity method.

- 31 -

(7) Major businesses (As of March 31, 2019)
Business Segment

Water Treatment
Engineering Business
Unit

Performance Products
Business Unit

Major Products and Business
Plant Division

Ultrapure water production facilities, Pure water production facilities,
Industrial process water treatment facilities, Wastewater treatment
facilities, Wastewater recovery facilities, Valuable material recovery
facilities, Production processing-related facilities

Service Solutions
Division

Replacement of expendable items, Maintenance, Operational Support
Services, Renovation/Reconditioning, Build-Own-Operate(BOO),
Comprehensive maintenance service

Standard water
treatment equipment

Ultrapure water production systems, Pure water production systems,
Filters, Multi-functional water

Water treatment
chemicals

RO membrane protection chemicals, Wastewater treatment chemicals,
Cooling water treatment chemicals, Cleaning chemicals, Boiler water
treatment chemicals

Food processing
materials

Food ingredients, Food processing agents(8) Major business offices and factories (As of March 31, 2019)
Head Office
Factories

Head officeKoto-ku, Tokyo

Tsukuba Factory

Tsukuba City, Ibaraki

Iwaki Factory

Iwaki City, Fukushima

Research andDevelopment Facility

R&D Center

Sagamihara City, Kanagawa

Branches

Hokkaido Branch

Sapporo City, Hokkaido

The Company

In JapanTohoku Branch

Sendai City, Miyagi

Kanto Branch

Koto-ku, Tokyo

Chubu Branch

Nagoya City, Aichi

Kansai Branch

Suita City, Osaka

Chugoku Branch

Hiroshima City, Hiroshima

Kyushu Branch

Fukuoka City, Fukuoka

Taiwan Branch

Hsinchu City, Taiwan R.O.C.

ORGANO PLANT SERVICECORPORATION

Bunkyo-ku, TokyoORGANO FOOD TECHCORPORATION

Satte City, Saitama

ORGANO ECO TECHCORPORATION

Koto-ku, TokyoORGANO ACTY CORPORATION Koto-ku, Tokyo

Subsidiaries
Oversea

Organo (Asia) Sdn. Bhd.

Selangor, Malaysia

Organo (Suzhou) Water Treatment
Co., Ltd.

Jiangsu, China

Organo Technology Co., Ltd.

Hsinchu City, Taiwan, R.O.C.

Organo (Thailand) Co., Ltd.

Bangkok, Thailand

PT Lautan Organo Water

Jakarta, Indonesia- 32 -

(9) Employees (As of March 31, 2019)(i)

Employees of the Organo Group

Business Segment

Number of employees

Change from previous fiscal year-end

Water Treatment Engineering Business
Unit

1,734

Increase by 11

Performance Products Business Unit

313

Decrease by 1

139

Decrease by 3

2,186

Increase by 7

Company-wide (common)
Total(ii) Employees of the Company
Number of employees

Change from previous fiscal
year-end

1,023

Increase by 5

Average age

Average years of service

43.6 years old

16.1 years(10) Major lenders (As of March 31, 2019)
Amount of Borrowings(Millions of yen)

Lenders
Mizuho Bank, Ltd.

4,400

Sumitomo Mitsui Banking Corporation

1,820

MUFG Bank, Ltd.

1,800

Sumitomo Mitsui Trust Bank, Limited

1,581

The Hachijuni Bank, Ltd.
1,100
Note: The Bank of Tokyo-Mitsubishi UFJ, Ltd. has changed its name to MUFG Bank, Ltd. as of April 1, 2018.

- 33 -

2. Shares of the Company (As of March 31, 2019)(1) Total number of authorized shares: 25,392,000 shares(2) Total number of issued shares: 11,589,925 shares (including treasury shares of 81,288 shares)(3) Number of shareholders:

5,165 shareholders(4) Major shareholders
Number of shares held(Thousands of shares)

Name of shareholder
Tosoh Corporation

4,852

Holding ratio
(%)
42.17

Japan Trustee Services Bank, Ltd. (Trust account)

408

3.55

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

365

3.17

BBH The Advisors’ Inner Circle Fund II Kopernik Global All-Cap
Fund

361

3.14

GOVERNMENT OF NORWAY

213

1.86

Mizuho Bank, Ltd.

200

1.74

Mizuho Trust & Banking Co., Ltd.

155

1.35

Japan Trustee Services Bank, Ltd. (Trust account 5)

140

1.22

BBH BOSTON CUSTODIAN FOR BBHTSIA HEPTAGONFUND PLC COPEL 620357

137

1.19

SSBTC CLIENT OMNIBUS ACCOUNT

135

1.18

Notes:

1. The treasury shares (81,288 shares) are excluded in the calculation of the holding ratio shown above.
2. 85,500 shares of the Company held by Japan Trustee Services Bank, Ltd. (Trust account) (shares in the Officer
Share Delivery Trust) are not included in treasury shares.

(5) Other significant matters relating to shares
Pursuant to a resolution at the 73rd Ordinary General Meeting of Shareholders held on June 28,
2018, the Company introduced a performance-linked share-based remuneration plan using a trust
for Directors (excluding Non-Executive Directors) and Executive Officers (excluding nonresidents) of the Company, in order to heighten awareness of contributing to enhancing theOrgano Group’s medium- to long-term operating results and increasing corporate value. As of
March 31, 2019, the trust established by the Company held 85,500 shares of the Company.

- 34 -

3. Officers(1) Names etc. of Directors and Audit and Supervisory Board Members (As of March 31, 2019)
Position
Director and President(Representative Director)

Senior Managing Directorand Executive Officer

Name

Responsibility

Significant concurrent
positions outside theCompany

Yasuyuki Koie
Chairman of the Board(Representative Director) of
ORGANO FOOD TECHCORPORATION
Chairman of the Board(Representative Director) of
HOSTEC

Masaki Uchikura

President of Performance
Products Business

Managing Director andExecutive Officer

Hitoshi Hori

President of Corporate
Management and Planning
In charge of Internal Auditing
Office, Secretary Office,Global Management andPlanning, Legal and PatentDept., Trade Control Office,Environment, Safety andQuality Assurance Dept.,
Purchasing and Logistics
Dept., and Branches

Managing Director andExecutive Officer

Haruki Myouga

President of R & D andEngineering

Managing Director andExecutive Officer

Masaki Shiomi

President of Industrial Plant
Business

Director and Executive
Officer

Yasutoshi Nakayama

Deputy President ofIndustrial Plant Business
Senior General Manager ofPlant Division

Director

Keiichiro Nishizawa

Director, Executive Vice
President of Tosoh
Corporation

Motoo Nagai

Outside Statutory Auditor(Full time) of Nissan MotorCo., Ltd.
Outside Audit & Supervisory
Board Member of Nisshin
Seifun Group Inc.

Keikou Terui

President of Nonprofit
Organization Japan Utility
Telemetering Association
Outside Director of Ube
Industries, Ltd.
Outside Director of
Bridgestone Corporation

Director

Director

Audit and Supervisory Board
Masahiko Toyoda
Member (Full-time)
Audit and Supervisory Board
Osamu Hamada
MemberCertified Public Accountant
Representative of Wada
Certified Public Accountant
OfficeOutside Corporate Auditor of
Nissin Sugar Co., Ltd.

Audit and Supervisory Board
Masao Wada
Member- 35 -

Notes:

1. Directors Motoo Nagai and Keikou Terui are Outside Directors.
2. Audit and Supervisory Board Members Osamu Hamada and Masao Wada are Outside Audit and Supervisory
Board Members.
3. Changes in Directors during the fiscal year under review are as follows:(i) Director Chikara Furuuchi retired from his office due to expiration of his term of office at the conclusion of
the 73rd Ordinary General Meeting of Shareholders held on June 28, 2018.
(ii) Yasutoshi Nakayama was elected as Director at the 73rd Ordinary General Meeting of Shareholders held on
June 28, 2018, and assumed his office.
4. Audit and Supervisory Board Member Masahiko Toyoda, who has past experience of supervising finance andaccounting divisions at other companies, possesses extensive financial and accounting knowledge.
5. Audit and Supervisory Board Member Masao Wada is qualified as a Certified Public Accountant and possesses
extensive financial and accounting knowledge.
6. The Company has submitted notification to the Tokyo Stock Exchange that Outside Directors Motoo Nagai and
Keikou Terui, and Outside Audit and Supervisory Board Member Masao Wada have been designated as
independent officers as provided for by the aforementioned exchange.

(2) Overview of limited liability agreements
Pursuant to the provisions of Article 427, paragraph 1 of the Companies Act and the Company’s
Articles of Incorporation, the Company has entered into limited liability agreements with
Directors Keiichiro Nishizawa, Motoo Nagai and Keikou Terui, and Audit and Supervisory Board
Members Masahiko Toyoda, Osamu Hamada and Masao Wada, which limit the amount ofliability for damages as defined under Article 423, paragraph 1 of the Companies Act to theminimum liability amount as stipulated in laws and regulations, presuming they perform theirrespective duties in good faith and without gross negligence.
(3) Remuneration, etc. to Directors and Audit and Supervisory Board Members(i)

Policies and procedure of determining remuneration to Directors and Audit and Supervisory
Board Members

・ Basic policy on remuneration
The remuneration system for Executive Directors encourages business execution in line withmanagement policies and management targets and establishes a remuneration framework andremuneration standards which provide strong incentive for the achievement of short-term andmid- to long-term management targets in order to achieve sustainable growth and improve thecorporate value of the Group.
・ Remuneration framework
Remuneration to Executive Directors consists of fixed remuneration and performance-linked
remuneration, and performance-linked remuneration consists of short-term performance-linked
remuneration (cash) and mid- and long-term performance-linked remuneration (stock). Short-term
performance-linked remuneration is decided based on the consolidated operating profit for eachfiscal year. Mid- and long-term performance-linked remuneration is decided according toconsolidated ROE (Return On Equity), and shares of the Company are issued on a fixed dateevery year. The ratio of the total amount of performance-linked remuneration is intended to beapproximately 50% to 60% when the standard performance target set in advance is achieved, andthis ratio is higher for Directors of higher ranks.
Remuneration to Non-Executive Directors and Audit and Supervisory Board Members is a fixedamount according to their respective positions in the Company.
・ Process of determining remuneration
The Company has established the Remuneration Advisory Committee as a non-statutory advisory
body to the Board of Directors in order to ensure objectivity and transparency in the process ofdetermining remuneration to Directors and provide an appropriate amount of remuneration. The
amount of remuneration to each Director is determined by resolution of the Board of Directors- 36 -

based on the opinion of the Remuneration Advisory Committee and within the scope of the
remuneration limit determined by resolution of the General Meeting of Shareholders. The amountof remuneration to each Audit and Supervisory Board Member is determined through discussion
by the Audit and Supervisory Board Members within the scope of the remuneration limit
determined by resolution of the General Meeting of Shareholders.
(ii) Total amount of remuneration, etc. to Directors and Audit and Supervisory Board Members
for the fiscal year under review
Total amountof
remuneration,
etc.
(Millions ofyen)

Category

Total amount of remuneration, etc. and Number of persons covered classified by type
Performance-linked remuneration
Fixed remuneration

Short-term(Cash)

Mid- and long-term(Stocks)

Total amount(Millions of yen)

Number of
persons covered

Total amount(Millions of yen)

Total amount(Millions of yen)

Number of
persons covered

Directors (excluding
Outside Directors)

234

97

8

86

50

7

Audit and Supervisory
Board Members(excluding Outside
Audit and Supervisory
Board Members)

17

17

1

-

-

-

Outside Directors

21

21

2

-

-

-

Outside Audit andSupervisory Board
Members

19

19

2

-

-

-

Total

293

155

13

86

50

7

Notes:

1. The above figures include one Director who retired upon the conclusion of the 73rd Ordinary General Meetingof Shareholders held on June 28, 2018.
2. Remuneration of Directors does not include salaries as employees paid to directors who are also employees.
3. The amount of remuneration for Directors was set at not more than ¥340 million per year (of which not morethan ¥40 million is for Outside Directors) by resolution of the 69th Ordinary General Meeting of Shareholders
held on June 27, 2014. In addition to this limited amount of remuneration, the Company introduced aperformance-linked share-based remuneration plan for Directors (excluding Non-Executive Directors) byresolution of the 73rd Ordinary General Meeting of Shareholders held on June 28, 2018 in which the amount ofcash the Company may contribute shall be limited to ¥300 million for the three fiscal years in the initial
applicable period, and the total number of Company’s shares that may be issued for Directors (excluding NonExecutive Directors) shall be limited to 54,000 shares per fiscal year (162,000 shares for the three fiscal years in
the initial application period).
4. The amount of remuneration for Audit and Supervisory Board Members was set at not more than ¥60 million peryear by resolution of the 61st Ordinary General Meeting of Shareholders held on June 29, 2006.
5. One Non-Executive Director who is not eligible for performance-linked remuneration has been included underDirectors (excluding Outside Directors). As such, the number of persons covered for mid- and long-term
performance-linked remuneration (stock) is six, and the one Director who retired as of the conclusion of the 73rd
Ordinary General Meeting of Shareholders held June 28, 2018 is not included.
6. The amount of mid- and long-term performance-linked remuneration (stock) is recorded as provision for sharebased remuneration for directors (and other officers) in the fiscal year under review.

(4) Outside Directors and Outside Audit and Supervisory Board Members(i)

Significant concurrent positions outside the Company and relation between the Company
and such other corporations
 Director Motoo Nagai is an Outside Statutory Auditor (Full time) of Nissan Motor Co.,
Ltd. and an Outside Audit & Supervisory Board Member of Nisshin Seifun Group Inc.
The Company does not have any important dealing or other special relationship with thesaid organizations where Motoo Nagai holds significant concurrent positions.
 Director Keikou Terui is President of Nonprofit Organization Japan Utility Telemetering
Association, an Outside Director of Ube Industries, Ltd. and an Outside Director of- 37 -

Bridgestone Corporation. The Company does not have any important dealing or otherspecial relationship with the said organizations where Keikou Terui holds significant
concurrent positions.
 Audit and Supervisory Board Member Masao Wada is Representative of Wada Certified
Public Accountant Office and an Outside Corporate Auditor of Nissin Sugar Co., Ltd. The
Company does not have any important dealing or other special relationship with the saidorganizations where Masao Wada holds significant concurrent positions.
(ii) Principal activities during the fiscal year under review

Motoo Nagai

Board ofDirectors
meetings

Audit andSupervisory
Board meetings

Status ofattendance

Status ofattendance

15/15(100%)–

He mainly provided opinions as he saw fit
concerning such issues as management planning,business strategies, research and development,
business investments, dividend policy, corporate
governance, the rules for submit proposals to theBoard of Directors, cross-shareholdings, and labor
management of employees, based on his extensive
knowledge and experience relating to company
management as a top-level manager of a financial
institution.

–

He mainly provided opinions as he saw fit
concerning such issues as management planning,
research and development, business investments,
dividend policy, corporate governance, decisionmaking process, labor management of employees,
and personnel policy, based on his extensive
knowledge relating to industrial policy andindustrial technology as well as his experience
gained from holding key positions in the Ministryof Economy, Trade and Industry.

14/14(100%)

He mainly provided opinions as he saw fit
concerning such issues as foreign exchange risk,
evaluation of investment plan, credit management,
inventory control, corporate governance,
independent auditor evaluation, and transparency of
remuneration for directors (and other officers)
based on his extensive knowledge and experience
related to company management that he gained as a
top-level manager of a business-operatingcompany.

14/14(100%)

He mainly provided opinions as he saw fit
concerning such issues as accounting policy, credit
management, inventory control, development ofcore systems, independent auditor evaluation, andtransparency of remuneration for directors (andother officers) based on his extensive knowledge
and experience related to accounting and auditing
operations as a certified public accountant.

Director

Keikou Terui

Osamu Hamada

13/15
(87%)

15/15
(100%)

Audit andSupervisory
Board
Member

Masao Wada

15/15
(100%)

Status of Expression of Opinions- 38 -

4. Independent Auditor(1) Name of Independent Auditor
ARK MEIJI AUDIT & Co.
(2) Amount of remuneration, etc. for Independent Auditor for the fiscal year under review(i)Amount of remuneration, etc. for Independent Auditor for the fiscal year under review¥45 million(ii) Total amount of money and other financial profits to be paid by the Company and its
subsidiaries¥45 million
Notes: 1. The audit agreement between the Company and its Independent Auditor does not clearly distinguishremuneration, etc. paid for audit work performed in conformity with the Companies Act andremuneration, etc. paid for audit work performed in conformity with the Financial Instruments andExchange Act, and it is effectively impossible to do so. Therefore, the figure presented in the amountof remuneration, etc. for the fiscal year under review above shows the total amount.
2. The Audit and Supervisory Board has checked and comprehensively reviewed the content of audit
plan, the status of the performance of duties of the Independent Auditor and the grounds forcalculation of remuneration estimates. As a result of this review, the Audit and Supervisory Board
consents to the remuneration, etc. for the Independent Auditor in accordance with Article 399,
paragraph 1 of the Companies Act.

(3) Audit of consolidated subsidiaries
Among the Company’s consolidated subsidiaries, overseas subsidiaries are audited by othercertified public accountants or audit firms (including those who have equivalent certificates inforeign countries) other than the Company’s Independent Auditor.
(4) Description of non-auditing services
The Company assigns “Income attestation duties for the tax returns of employees seconded tooverseas,” which are not statutory auditing duties as stipulated in Article 2, paragraph 1 of theCertified Public Accountants Act (non-auditing services), to the Independent Auditor.
(5) Policy for decisions on dismissal or non-reappointment of the Independent Auditor
When the matters prescribed in the items in Article 340, paragraph 1 of the Companies Act are
applicable to the Independent Auditor, the Audit and Supervisory Board of the Company will
dismiss the Independent Auditor by the unanimous consent of the Audit and Supervisory Board
Members. In such case, an Audit and Supervisory Board Member appointed by the Audit andSupervisory Board will report on the decision of dismissal and its reasons at the first General
Meeting of Shareholders convened after the dismissal.
Furthermore, the Audit and Supervisory Board shall determine the details of a proposal withregards to dismissal or non-reappointment of the Independent Auditor if such a proposal isdeemed necessary to be submitted to General Meeting of Shareholders, such as in cases where theIndependent Auditor falls under any of items described in Article 340, paragraph 1 of theCompanies Act or where the Independent Auditor has difficulty in performing audit operation
properly.

- 39 -

5. Company systems and policies(1) Corporate governance(i)

Basic views on corporate governance
The Company has been engaging in efforts to enhance corporate governance that conforms
to the following basic views in order to realize fair and trustworthy management andimprove management efficiency.
a. The Company shall respect the rights of shareholders and ensure equality.
b. The Company shall take into account the benefits for a wide range of stakeholders
including shareholders/investors, consumers/customers, business partners, employees
and local communities, and cooperate with these stakeholders appropriately.
c. The Company shall disclose the Company’s information timely and properly, and ensuretransparency.
d. The Directors, Audit and Supervisory Board Members, and Executive Officers recognize
their fiduciary responsibilities, and will effectively fulfill their expected roles and duties.
e. The Company shall hold constructive dialogue with shareholders.
The Company’s basic views and basic policy on corporate governance are provided in the“Organo Corporate Governance Guidelines” available on the Company’s website (inJapanese only).
(https://www.organo.co.jp/company/governance/guidance/)(ii) Schematic view of corporate governance structure- 40 -

(iii) Organization Structure
a. Board of Directors
The Board of Directors consists of nine Directors (including two Independent Outside
Directors), and provides decision-making for the execution of important business andsupervises the status of business execution.
b. Audit and Supervisory Board
Audit and Supervisory Board consists of three Audit and Supervisory Board Members(including two Outside Audit and Supervisory Board Members), two of whom haveappropriate knowledge relating to finance and accounting.
c. Executive Officer System
The Company has introduced an Executive Officers system and appointed 16 members(including five members who serve concurrently as Directors) in order to differentiate
the “management decision-making and supervision function” of Directors and the“business execution function” for Executive Officers, thereby clarifying responsibilities
and accelerating decision-making.
d. Management Meeting
The Management Meeting consists of Executive Directors and Executive Officers withtitles, and proposes medium- and long-term strategies, etc., and discusses importantmanagement agendas.
Non-Executive Directors and Audit and Supervisory Board Members are able toparticipate in the Management Meeting and express opinions, etc., as necessary, and in
this way the Company strives to ensure the effectiveness of supervision by Directors andaudits by the Audit and Supervisory Board Members.
e. Monthly Business Conference
The Monthly Business Conference consists of Executive Directors, Executive Officers,
General Managers, etc., and they inform matters already approved at the Management
Meeting, and confirm the progress made on each business, the Medium-termManagement Plan, and the profit plan for each fiscal year.
In addition, once every quarter the Monthly Business Conference is held as the Group
Liaison Conference, which includes Presidents of group companies, General Managersof overseas divisions, General Managers of administrative divisions, and Branch
General Managers, and the same progress confirmation, etc., is made for the overall
Group including the group companies.
Non-Executive Directors and Audit and Supervisory Board Members are able toparticipate in the Monthly Business Conference and express opinions, etc., as necessary,and in this way the Company strives to ensure the effectiveness of supervision by
Directors and audits by the Audit and Supervisory Board Members.
f.

Compliance Committee
The Compliance Committee consists of eight Internal Officers (including six Directors),
and engages in efforts to formulate compliance education plans and further establish thecompliance system.

g. Remuneration Advisory Committee
The Company has established the Remuneration Advisory Committee as a non-statutory
advisory body to the Board of Directors. The Remuneration Advisory Committee
consists of four Directors (of which two are Independent Outside Directors), andprovides opinion on remuneration, etc. for Directors and Executive Officers to the Boardof Directors.

- 41 -

(iv) Assessment of the overall effectiveness of the Board of Directors
Every year, an analysis/assessment is performed on the overall effectiveness of the Board of
Directors, and a summary of the results is released. In the fiscal year under review, a signed
questionnaire for all Directors and Audit and Supervisory Board Members (target period:
April 2017 to March 2018) was conducted in April 2018, and in June 2018, based on the
results of that questionnaire, the Board of Directors performed an analysis/assessment anddiscussed future efforts in which to engage.
As a result of this assessment, the Company confirmed that the overall effectiveness of theBoard of Directors was being ensured in terms of the Directors demonstrating the necessarycompetencies, and that the scale, frequency, agenda items presented, discussion lengths,
document distribution dates, etc., were all appropriate. Furthermore, the Board of Directors
is clarifying the corporate philosophy and management vision and dictating the direction
toward achieving goals and designating subjects to be addressed, the chairman has createdan atmosphere where active discussions can take place while still maintaining an appropriate
amount of control, the Independent Outside Directors are fulfilling their expected roles
appropriately, and explanations of the content of business, etc., to outside parties are suitablein allowing them participate in meetings. In addition, it was determined that progress has
been made from the previous year in improving the function of the Director remuneration
system. At the same time, the Company recognizes that there are still topics to consider suchas the further promotion of dialogue with investors and shareholders, substantial disputes
pertaining the election of Directors and the role/function, etc., of the Board of Directors, andthe Company has confirmed that the Board of Directors is engaging in efforts to focus on
improvement in these areas.
Regarding efforts for the current fiscal year, the Board of Directors has enhanced discussions
on the Company’s direction. In addition, the Company currently holds shareholder briefing
sessions to explain the business outline and future business developments to shareholders
after the General Meeting of Shareholders in order to provide dialogue with investors andshareholders, but also recognizes that there is room for improvement.

Evaluation of Effectiveness of Board of Directors
Questionnaire Survey Results
Overall

4.0
Dialogue withshareholders and3.4
investors

3.5

3.0
3.8

Effectiveness of Board of
Directors

4.0

3.7

Support system for
Outside Parties

4.5
4.1

3.7

Composition of Board of
Directors
4.0

4.2
Operation of Board of
Directors

FY2017
Notes:FY2018FY2017 (Evaluation period of questionnaire: April 2016 to March 2017)
FY2018 (Evaluation period of questionnaire: April 2017 to March 2018)- 42 -

(2) Development of systems to ensure the appropriateness of business operations
The Company, in its Board of Directors meetings, made a resolution regarding the basic policy on
systems to ensure the appropriateness of business operations (internal control system) as follows:(i)

System to ensure that Directors and employees perform their duties in compliance with
relevant laws and regulations and the Articles of Incorporation
 The Company has established the Compliance Committee to enact company-wide
initiatives such as the Organo Group Company Code of Conduct and spreading awarenessof declarations on compliance.
 The Company has established the Whistleblowing Regulations in order to ensure theeffectiveness of compliance, and the system allows the Company’s officers andemployees to directly report to or consult with the Company’s Legal Division, the Audit
and Supervisory Board Members, or external lawyers about systematic or personal legal
violations, etc.
 The Company shall seek to raise awareness of compliance by providing compliancetraining to the Company’s officers and employees as necessary.
 The Internal Auditing Dept. shall perform periodic audits concerning the performance of
duties and compliance practices.
 In order to carry out appropriate financial reporting for the Group, the Internal Control
Division, the division which establishes control systems, serves as a center in promoting
maintenance activities, and the Internal Auditing Dept., the assessment division, performs
independent assessments in accordance with “Internal Controls over Financial Reports”
stipulated in the Financial Instruments and Exchange Act.

(ii) System for retaining and managing information pertaining to the performance of duties byDirectors
 The Company will appropriately retain and manage documents and other information
concerning the performance of duties by Directors in accordance with internal rules suchas the Documents and Information Management Regulations, the Corporate Information
Basic Management Regulations, etc.
 The Directors and the Audit and Supervisory Board Members shall be able to inspect such
documents and other information as necessary.
(iii) Rules and other systems for management of risk of loss The Company shall establish various rules, including the Crisis Management Basic
Regulations, and establish and operate a risk management system in order to respond tothe various risks in business activities.
 Each division will independently manage the risks of daily business activities, such as
economic risks and financial risks related to regular transactions, under the guidance ofthe supervising Director.
(iv) Systems to ensure efficiency of the performance of duties by Directors
 The Company’s systems for appropriate and efficient performance of duties include
meetings of the Board of Directors (in principle, held once or more per month), at which
the Company makes decisions regarding important business execution and supervises thestatus of business execution, and Management Meetings (in principle, held twice permonth), consisting of Executive Directors and Executive Officers with titles, at which theCompany drafts medium- and long-term strategies, etc., and discusses importantmanagement issues.
- 43 -

 The Company has introduced an Executive Officers system in seeking to differentiate the“management decision-making and supervision function” of Directors and the “businessexecution function” for Executive Officers, thereby clarifying responsibilities andaccelerating decision-making.
 In business management, the Company sets company-wide goals based on the Mediumterm Management Plan approved by the Board of Directors and the profit plan for eachfiscal year, and at the Monthly Business Conference (in principle, held once per month,and once per quarter as the Group Liaison Conference including Presidents of groupcompanies, etc.) consisting of Executive Directors, Executive Officers, and General
Managers, etc., ensures the appropriate execution of all projects through evaluating
progress reports by the General Managers on the business of each division.
(v) System to ensure properness of operations of the corporate group consisting of the Company,
its parent company and subsidiaries
a. Systems for the reporting of items related to the performance of the duties of directors,
etc. of subsidiaries to the Company
The Company shall provide Group Companies Management Regulations, and require
reports from the group companies on management policies/management plans, humanresources/organization, accounting/financial affairs, audits, disasters/accidents, and otherimportant matters. These reports shall be made at the Group Liaison Conference (inprinciple, held once per quarter).
b. Rules and other systems for management of risk of loss at subsidiaries
At the Company, each supervising Director and the Corporate Strategy and Planning
Dept. provide comprehensive advice and guidance on business management and risk
management systems for group companies.
c. System to ensure efficiency of the performance of duties by directors, etc. of subsidiaries
 The Company sets company-wide goals based on the Organo Group’s Medium-termManagement Plan approved by the Board of Directors and the profit plan for eachfiscal year, and at the Group Liaison Conference ensures the appropriate execution of
all projects through evaluating business progress reports by the Presidents of eachgroup company.
 The Company shall establish a system to make the business operations of groupcompanies more efficient by providing and sharing indirect business operations andoptimizing funding and management.
d. System to ensure that directors, etc. and employees of subsidiaries perform their duties
in compliance with relevant laws and regulations and the Articles of Incorporation
 The Company shall prescribe the Organo Group Company Code of Conduct as abasic code of conduct with which all officers and employees of group companies
must comply, and seek to spread awareness.
 The Company shall provide compliance training to the group companies’ officers andemployees as necessary.
 The Company’s Internal Auditing Dept. shall perform audits concerning theperformance of duties and compliance practices of group companies.
 The officers and employees of group companies are also able to use the Company’s
whistleblowing system.

- 44 -

e. Other system to ensure properness of operations of the corporate group consisting of theCompany, its parent company and subsidiaries
 From the perspective of internal controls pertaining to consolidated financial
statements, the Company’s Internal Control Division and Accounting Division shallcooperate in the development and operation of the accounting and financial reporting
processes of the group companies.
 The Company ensures a certain degree of independence in business activities andmanagement decisions from the Company’s parent company, Tosoh Corporation, andpromotes appropriate coordination of activities through regular meetings, etc., withthe company.
(vi) Matters relating to employees that assist the Audit and Supervisory Board Members upon therequest of such Audit and Supervisory Board Members for assistance, matters relating to
independence of the relevant employees from Directors and matters relating to effectivenessof directions given to such employees to be ensured
 The Company shall establish employees in Internal Auditing Dept. that assist in the dutiesof the Audit and Supervisory Board Members upon consulting with the Audit andSupervisory Board.
 The Company shall determine proper procedures for handling matters related to humanresources for employees that assist in the duties of the Audit and Supervisory Board
Members upon consulting with the Audit and Supervisory Board.
 Employees that assist in the duties of the Audit and Supervisory Board Members shall notreceive instructions or orders from executives regarding directions given to them by Audit
and Supervisory Board Members, and shall be independent in their assistance in the dutiesof the Audit and Supervisory Board Members.
(vii) System for directors, etc., and employees of the Company and its subsidiaries to report to
Audit and Supervisory Board Members of the Company, and system for ensuring that theseparties will not be treated adversely due to making reports
 If Audit and Supervisory Board Members of the Company request reports from Directors
and employees of the Company and group companies or audit and supervisory board
members of group companies, they shall provide an appropriate report without delay.
 Directors and employees of the Company and group companies or audit and supervisoryboard members of group companies shall immediately report to the Audit and Supervisory
Board Members of the Company if they discover facts that could cause significant
damage on the Company or the group companies.
 Audit and Supervisory Board Members participate in important meetings such as theBoard of Directors, the Group Liaison Conference, etc., and request explanations from the
Directors and employees of the Company and group companies as necessary.
 The Legal Division and external lawyers who serve as contact points for thewhistleblowing system shall report to the Audit and Supervisory Board Members of theCompany on the whistleblowing information received from the Directors and employeesof the Company and group companies in accordance with the Whistleblowing Regulations.
 The Company’s Audit and Supervisory Board Members shall also serve as a contact point
for the whistleblowing system.
 The Company shall ensure that Directors and employees of the Company and groupcompanies who make reports to the Audit and Supervisory Board Members, or otherwise
make a report in accordance with the Whistleblowing Regulations, will not be treatedadversely due to the report or the act of making the report.

- 45 -

(viii) Other systems to ensure that Audit and Supervisory Board Members perform audits
effectively
 The Representative Director shall regularly exchange opinions with the Audit andSupervisory Board Members on matters related to overall management.
 The Audit and Supervisory Board Members shall receive reports from the Independent
Auditor, Internal Auditing Dept., and Audit and Supervisory Board Members of groupcompanies, seeking mutual cooperation and consulting with lawyers as necessary.
 The Company shall bear any expenses incurred by Audit and Supervisory Board Membersin the performance of duties, provided that these expenses have not been deemed
unnecessary in the performance of duties by Audit and Supervisory Board Members.
(3) Overview of operational status of system for ensuring properness of operations
The Company has established the internal control systems listed above, and engaged in thefollowing specific initiatives based on that basic policy.
The Company seeks to raise awareness of compliance, and as efforts to spread legal compliance,
conducted compliance education for new employees in April 2018, and conducted a course on
work style reform-related laws for all employees in August 2018.
In addition, the Company arranged for external organizations to provide training to Directors andAudit and Supervisory Board Members, and the Directors and Audit and Supervisory Board
Members attended as appropriate.
In June 2018, the Company enacted and operated rules on the handling of competitive researchfunding, etc., in order to appropriately handle competitive research funding and appropriately
prevent fraudulent activities.
The Company has established a BCP (Business Continuity Plan) to minimize loss or disadvantage
suffered by the Company and group companies. As part of that, in November 2018, the Company
conducted evacuation drills and crisis response training based on the premise of an earthquake at
the head office.
In addition, the Company developed a BCP at the ORGANO FOOD TECH Main Factory andstrengthened the business continuation system in the event of an earthquake.
In the fiscal year under review, the Company held 15 meetings of the Board of Directors, 26Management Meetings to discuss important management agendas, and continued to strive toensure the appropriateness and efficiency of business execution by Directors. In addition, theMonthly Business Conference was held 12 times (including four Group Liaison Conferences), andprogress on goal developed based on the Medium-term Management Plan and the profit plan for
the fiscal year under review was confirmed through the reception of status reports on business by
the General Managers of each division, etc.
The Company’s Audit and Supervisory Board Members participated in meetings of the Board of
Directors, the Management Meeting, the Monthly Business Conference and other important
meetings, established internal controls for the Company, and confirmed the status of operations
through regular reports from the Legal and Patent Dept., Corporate Strategy and Planning Dept.,
Accounting Dept., Internal Auditing Office and other departments pertaining to internal control,
and provided advice on sound management and efficient operations. In addition, in April 2018
and November 2018, the Representative Director and the Audit and Supervisory Board Members
held opinion exchanges on overall management and endeavored to ensure the effectiveness ofaudits.
(4) Basic policy on control of the Company
We currently have no plans to introduce anti-takeover measures.
- 46 -

(5) Policy on determination of dividends of surplus and others
The Company treats the return of profits to shareholders as one of the Company’s most importantmanagement agendas, and it strives to provide distribution of profits taking into account theCompany’s revenue status while adhering to a basic policy of providing stable and continuous
dividends.
The Company will utilize internal reserve funds in business investments and R&D investments,
etc., to achieve sustainable growth.
The Company has included provisions in the Articles of Incorporation on the payment ofdividends, etc., of surplus by resolution of the Board of Directors. Dividend payments are madetwice a year in interim dividends and year-end dividends, and year-end dividends are in principle
a matter for resolution of the Ordinary General Meeting of Shareholders.

Monetary amounts in this Business Report are rounded down to the nearest unit.

- 47 -

Consolidated Balance Sheet(As of March 31, 2019)
Item

AmountAssetsCurrent assets
Cash and deposits

Liabilities
76,037
11,276

Notes and accounts receivable trade
Investments in leases
Merchandise and finished goods
Work in process
Raw materials and supplies

13,574
4,717
2,717
1,426

Other

2,206

Allowance for doubtful accounts(139)

Non-current assets
Property, plant and equipment
Buildings and structures
Machinery, equipment andvehiclesLand
Construction in progress

25,22019,272
5,511

Other

(Millions of yen)AmountItem
Current liabilities
Notes and accounts payable trade40,256

Short-term borrowings
Income taxes payable
Advances received
Provision for bonuses
Provision for product warranties
Provision for loss on construction
contracts
Provision for share-based
remuneration for directors (andother officers)
Other
Non-current liabilities
Long-term borrowings

696

Deferred tax liabilities

12,288
45
731

1,546
1,499
1,165
321
84
95
3,242
6,531
200
8

Total liabilities

46,462
Net assets

Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts

4,739
1,621
2,628
767
(278)

Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Accumulated other comprehensive
incomeValuation difference on availablefor-sale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Non-controlling interests- 48 -

13,458

6,209
111

1,209

101,257

18,516Retirement benefit liability
Other

Intangible assets

Total assets

39,93055,071
8,225
7,508
39,967
(629)
(414)
273
(0)
(193)
(494)
138

Total net assets

54,795

Total liabilities and net assets

101,257

Consolidated Statement of Income(From April 1, 2018 to March 31, 2019)(Millions of yen)
Item

AmountNet sales
Cost of sales

92,27369,353Gross profit
Selling, general and administrative expenses

22,91916,361

Operating profit
Non-operating income
Interest and dividend income
Share of profit of entities accounted for using equity
method
Other

6,558
45
138
74

Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Other

85
60
101
32

259

279

Ordinary profit
Extraordinary income
Gain on sales of non-current assets

6,538
39

39

Extraordinary losses
Loss on sales of non-current assets
Loss on abandonment of non-current assets
Loss on valuation of investment securities

0
12
172

185

Profit before income taxes
Income taxes - current
Income taxes - deferred

6,392
2,045
(123)

1,921

ProfitProfit attributable to non-controlling interests

4,470
17

Profit attributable to owners of parent

4,452- 49 -

Consolidated Statement of Changes in Equity(From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Share capital

Capital surplus

Retained earnings

Treasury shares

Total
shareholders’equity

8,225

7,508

36,170(355)

51,548

-

-

(656)

-

(656)

-

-

4,452

-

4,452

Purchase of treasury
shares

-

-

-

(273)

(273)

Net changes in items
other thanshareholders’ equity

-

-

-

-

-

Total changes in items
during period

-

-

3,796

(273)

3,522

8,225

7,508

39,967(629)

55,071

Balance at beginning of
periodChanges in items during
periodDividends of surplus
Profit attributable toowners of parent

Balance at end of period

Accumulated other comprehensive income
Valuationdifferenceonavailablefor-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

312

(0)

59

(381)

-

-

-

-

-

Purchase of treasury
shares-Net changes in items
other thanshareholders’ equity

RemeasureTotalments ofaccumulate
definedd otherbenefitcomprehens
plans
ive income

Noncontrollinginterests

Total net
assets(10)

142

51,681

-

-

-

(656)

-

-

-

-

4,452

-

-

-

-

-

(273)

(38)

0

(253)

(112)

(403)

(4)

(407)

Total changes in items
during period

(38)

0

(253)

(112)

(403)

(4)

3,114

Balance at end of period

273

(0)

(193)

(494)

(414)

138

54,795

Balance at beginning of
periodChanges in items during
periodDividends of surplus
Profit attributable toowners of parent- 50 -

Balance Sheet(As of March 31, 2019)
Item

AmountAssetsLiabilities

Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade58,5585,356
3,411
26,394

Investments in leases

13,517

Merchandise and finished goods
Work in process
Raw materials and supplies
Advance payments - trade
Prepaid expenses
Short-term loans receivable

4,072
1,691
1,066
520
186
1,592

Other

889

Allowance for doubtful accounts(139)

Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment

25,485
18,676
5,112
130
537

Vehicles(Millions of yen)AmountItem
Current liabilities
Notes payable - trade
Accounts payable - trade
Short-term borrowings
Current portion of long-termborrowings
Accounts payable - other
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Provision for product warranties
Provision for loss on construction
contracts
Provision for share-based
remuneration for directors (andother officers)
Other
Non-current liabilities
Long-term borrowings
Provision for retirement benefits
Other

5

Total liabilities

31,7996,215
6,867
10,400
1,200
1,241
1,065
898
2,002
781
256
181
95
593
5,599
200
5,354
44
37,398Tools, furniture and fixtures

648

Land
Construction in progress
Intangible assets
Software
Other
Investments and other assets
Investment securities
Shares of subsidiaries andassociates

12,196
45
1,121
245
876
5,687
661

Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Retained earnings
Legal retained earnings
Other retained earnings

46,413
8,225
7,508
7,508
31,309832
30,477

2,370

Reserve for dividends

140Long-term loans receivable

301

Guarantee deposits

83

Deferred tax assets

2,243

Other

232

Allowance for doubtful accounts(205)

Total assets

Net assets

Reserve for research anddevelopment
Reserve for tax purpose
reduction entry of non-current
assetsGeneral reserve
Retained earnings brought
forwardTreasury shares
Valuation and translation
adjustments
Valuation difference on availablefor-sale securities
Deferred gains or losses onhedges

84,044- 51 -

9034
25,065
5,146
(629)
232
232
(0)

Total net assets

46,646

Total liabilities and net assets

84,044

Statement of Income(From April 1, 2018 to March 31, 2019)(Millions of yen)
Item

AmountNet sales
Cost of sales

65,61748,443Gross profit
Selling, general and administrative expenses

17,173
13,676

Operating profit
Non-operating income
Interest and dividend income
Rental income from non-current assets
Other

3,497
931
336
51

Non-operating expenses
Interest expenses
Provision of allowance for doubtful accounts
Depreciation
Property tax
Other

60
11
118
36
3

Ordinary profit
Extraordinary income
Gain on sales of non-current assets

1,318

230
4,586

33

Extraordinary losses
Loss on abandonment of non-current assets
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries andassociates

33

7
1
395

Profit before income taxes
Income taxes - current
Income taxes - deferred

404
4,215

1,231
(197)

Profit

1,034
3,181

- 52 -

Statement of Changes in Equity(From April 1, 2018 to March 31, 2019)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCapitalsurplusRetained earnings

Legal capitalsurplus

Legal retained Other retained
earnings
earnings

Total
shareholders’equityTreasuryshares

8,225

7,508

832

27,951(355)

44,162

Dividends of surplus

-

-

-

(656)

-

(656)

Profit

-

-

-

3,181

-

3,181

Reversal of reserve
for tax purpose
reduction entry of
non-current assets

-

-

-

-

-

-

Provision of generalreserve

-

-

-

-

-

-

Purchase of treasury
shares

-

-

-

-

(273)

(273)

Net changes in items
other thanshareholders’ equity

-

-

-

-

-

-

Total changes in items
during period

-

-

-

2,525

(273)

2,251

8,225

7,508

832

30,477(629)

46,413

Changes in items during
periodBalance at end of period

Valuation and translation adjustments
Valuation difference
on available-for-salesecurities
Balance at beginning of
periodTotal valuation andtranslation
adjustments

Deferred gains orlosses on hedges

Total net assets

276

(0)

275

44,437

Dividends of surplus

-

-

-

(656)

Profit

-

-

-

3,181

Reversal of reserve
for tax purpose
reduction entry of
non-current assets

-

-

-

-

Provision of generalreserve

-

-

-

-

Purchase of treasury
shares

-

-

-

(273)

Net changes in items
other thanshareholders’ equity

(43)

0

(43)

(43)

Total changes in items
during period

(43)

0

(43)

2,208

Balance at end of period

232

(0)

232

46,646

Changes in items during
period- 53 -

(Components of other retained earnings)(Millions of yen)
Reserve fordividends

Reserve forresearch anddevelopment

Reserve fortax purpose
reduction
entry of noncurrent assets

140

90

37

23,065

4,619

27,951Dividends of surplus

-

-

-

-

(656)

(656)

Profit

-

-

-

-

3,181

3,181

Reversal of reserve
for tax purpose
reduction entry of
non-current assets

-

-

(2)

-

2

-

Provision of generalreserve

-

-

-

2,000

(2,000)-Purchase of treasury
shares

-

-

-

-

-

-

Net changes in items
other thanshareholders’ equity

-

-

-

-

-

-

Total changes in items
during period

-

-

(2)

2,000

527

2,525

Balance at end of period

140

90

34

25,0655,146

30,477

Balance at beginning of
periodRetainedearnings
brought
forwardGeneralreserve

Total

Changes in items during
periodAmounts in this Business Report are rounded down to the nearest unit.

- 54 -

(English translation)

Certified copy of Independent Auditor’s audit report on the Consolidated Financial
Statements
Independent Auditor’s Report
May 7, 2019
The Board of Directors
ORGANO CORPORATIONARK MEIJI AUDIT & Co.
DesignatedCertifiedPartner
PublicEngagement
Accountant
Partner

Masaki Ueda

[Seal]

DesignatedCertifiedPartner
PublicEngagement
Accountant
Partner

TsuyoshiTokunaga[Seal]

Pursuant to Article 444, paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated
statement of income, the consolidated statement of changes in equity and the notes to consolidated financial
statements of ORGANO CORPORATION applicable to the fiscal year from April 1, 2018 through March
31, 2019.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan. This responsibility
includes the establishment and operation of internal controls deemed necessary by management for the
preparation of consolidated financial statements, free of material misstatement due to fraud or error and thepresentation of appropriate accounting information.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit as
independent auditor. We conducted our audit in accordance with auditing standards generally accepted inJapan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected and applied in accordance with our judgment,
based on the risk assessment of material misstatement in the consolidated financial statements, due to fraud
or error. The purpose of an audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments the auditor considers
internal controls relevant to the entity’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Audit Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position and results of operations of the corporate group, which consisted of ORGANO- 55 -

CORPORATION and consolidated subsidiaries, applicable to the fiscal year ended March 31, 2019, in
conformity with accounting principles generally accepted in Japan.
Conflicts of Interest
Our firm and engagement partners have no interest in the Company which shall be disclosed pursuant to theprovisions of the Certified Public Accountants Act.

- 56 -

(English translation)

Certified copy of Independent Auditor’s audit report
Independent Auditor’s Report
May 7, 2019
The Board of Directors
ORGANO CORPORATIONARK MEIJI AUDIT & Co.
DesignatedCertifiedPartner
PublicEngagement
Accountant
Partner
DesignatedCertifiedPartner
PublicEngagement
Accountant
Partner

Masaki Ueda

[Seal]

TsuyoshiTokunaga[Seal]

Pursuant to Article 436, paragraph 2, item 1 of the Companies Act, we have audited the accompanying nonconsolidated financial statements, which comprise the non-consolidated balance sheet, the nonconsolidated statement of income, the non-consolidated statement of changes in equity and the notes tonon-consolidated financial statements, and the supplementary schedules of ORGANO CORPORATION
applicable to the 74th fiscal year from April 1, 2018 through March 31, 2019.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of these non-consolidated financial
statements and supplementary schedules in accordance with accounting principles generally accepted inJapan. This responsibility includes the establishment and operation of internal controls deemed necessary
by management for the preparation of non-consolidated financial statements and supplementary schedules,
free of material misstatement due to fraud or error and the presentation of appropriate accounting
information.
Auditors’ Responsibility
Our responsibility is to express an opinion on these non-consolidated financial statements andsupplementary schedules based on our audit as independent auditor. We conducted our audit in accordancewith auditing standards generally accepted in Japan. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the non-consolidated financial statements and the
supplementary schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
non-consolidated financial statements and the supplementary schedules. The procedures selected andapplied in accordance with our judgment, based on the risk assessment of material misstatement in the nonconsolidated financial statements and the supplementary schedules, due to fraud or error. The purpose of anaudit of the consolidated financial statements is not to express an opinion on the effectiveness of theentity’s internal control, but in making these risk assessments the auditor considers internal controls
relevant to the entity’s preparation and fair presentation of the non-consolidated financial statements andthe supplementary schedules in order to design audit procedures that are appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the nonconsolidated financial statements and the supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Audit Opinion
In our opinion, the non-consolidated financial statements and the supplementary schedules referred toabove present fairly, in all material respects, the financial position and results of operations of ORGANO- 57 -

CORPORATION for the relevant term of the non-consolidated financial statements and the supplementaryschedules in conformity with accounting principles generally accepted in Japan.
Interest
Our firm and engagement partners have no interest in the Company which shall be disclosed pursuant to theprovisions of the Certified Public Accountants Act.

- 58 -

(English translation)

Certifies Copy of Audit Report by Audit and Supervisory Board Member
Audit Report
With respect to the Directors’ performance of their duties during the 74th fiscal year from April 1, 2018 toMarch 31, 2019, the Audit and Supervisory Board has prepared this Audit Report after deliberations basedon the audit reports prepared by each Audit and Supervisory Board Member. We hereby report as follows:
1. Method and Content of Audits by Audit and Supervisory Board Members and the Audit andSupervisory Board(1) The Audit and Supervisory Board specified audit policies, assigned duties to each Audit andSupervisory Board Member and received reports from each Audit and Supervisory Board Member
on the status of implementation and results of audit, and received reports from Directors, etc. andIndependent Auditor on the status of the performance of their duties and asked them for
explanations as necessary.
(2) In conformity with the auditing standards stipulated by the Audit and Supervisory Board, and inaccordance with auditing policies and the assignment of duties, all Audit and Supervisory Board
Members strived to achieve effective communication with Directors, the Internal Auditing Dept.
and other employees, collected information and improved the audit environment. In addition, all
Audit & Supervisory Board Members conducted an audit in the following methods.
(i) Audit and Supervisory Board Members attended the Board of Directors meetings and otherimportant meetings, received reports from Directors and employees about the status of theperformance of their duties, obtained explanations as necessary, reviewed important
approval documents, and conducted investigations on the status of the business operations
and assets of the Company at its head office and other major offices. Furthermore, Audit andSupervisory Board Members also worked to facilitate communication and informationexchange with the Directors, Audit and Supervisory Board Members and others of thesubsidiaries of the Company, and received reports on the business conditions of subsidiaries
as necessary.
(ii) Audit and Supervisory Board Members received reports periodically from Directors andemployees on the content of the resolution made by the Board of Directors concerning thedevelopment of a system for ensuring that the performance of duties by Directors conforms
with laws and regulations and the Company’s Articles of Incorporation, as described in the
Company’s business report, and other systems prescribed in Article 100, paragraphs 1 and 3of the Regulation for Enforcement of the Companies Act as systems necessary for ensuring
proper business conduct by a corporate group formed by a stock company and its
subsidiaries (internal control system), as well as the construction and status of operation of
the internal control system developed based on said resolution. As necessary, Audit andSupervisory Board Members also asked for explanations from Directors and employees andexpressed opinions.
(iii) Audit and Supervisory Board Members monitored and verified whether the Independent
Auditor maintained its independence and properly conducted its audit, received a reportfrom the Independent Auditor on the status of their performance of duties, and asked for
explanations as necessary. The Independent Auditor reported to us that the “Systems for
Ensuring Proper Performance of Duties” (listed in each item of Article 131 of Regulation on
Corporate Accounting) have been developed in accordance with the “Quality Control
Standards concerning Audit” (Business Accounting Council, October 28, 2005) and otherapplicable regulations, and we asked the Independent Auditor for explanations as necessary.
Based on the methods mentioned above, we have reviewed the business report, and their supplementaryschedule, non-consolidated financial statements (balance sheet, statement of income, statement ofchanges in equity, and notes to non-consolidated financial statements), and their supplementaryschedules, and consolidated financial statements (consolidated balance sheet, consolidated statement ofincome, consolidated statement of changes in equity, and notes to consolidated financial statements) for
the fiscal year under review.

- 59 -

2. Result of Audit(1) Results of Audit of Business Report, etc.
(i) We confirm that the business report and its supplementary schedules present fairly thesituation of the Company in accordance with relevant laws and regulations and theCompany’s Articles of Incorporation.
(ii) With respect to the Directors’ performance of their duties, we confirm that there has been no
improper act committed or important violation of applicable laws and regulations or of the
Articles of Incorporation.
(iii) The resolution of the Board of Directors regarding the internal control system is fair andreasonable. There are no matters requiring additional comment regarding the contents of thebusiness report on such internal control system and the performance of duties by Directors.
(2) Result of Audit of non-consolidated financial statements and supplementary schedules thereof
We confirm that the auditing methods and results of ARK MEIJI AUDIT & Co., the Independent
Auditor, are proper.
(3) Results of audit of consolidated financial statements
We confirm that the auditing methods and results of ARK MEIJI AUDIT & Co., the Independent
Auditor, are proper.
May 7, 2019
Audit and Supervisory Board of ORGANOCORPORATION
Audit and Supervisory Board Member (Full-time)Masahiko Toyoda [Seal]
Outside Audit and Supervisory Board Member
Osamu Hamada[Seal]
Outside Audit and Supervisory Board Member
Masao Wada
[Seal]- 60 -

Items Disclosed on the Internet Concerning Notice of the 74th
Ordinary General Meeting of Shareholders

74th fiscal year
(From April 1, 2018 to March 31, 2019)(i) Notes to Consolidated Financial Statements(ii) Notes to Non-consolidated Financial Statements

ORGANO CORPORATION
Notes to Consolidated Financial Statements in the Consolidated Financial Statements and Notes to Nonconsolidated Financial Statements in the Non-consolidated Financial Statements are provided toshareholders by posting them on the Company’s website (https://www.organo.co.jp/) pursuant to theprovisions of laws and regulations and Article 16 of the Company’s Articles of Incorporation.

Notes to Consolidated Financial Statements
1. Notes on significant matters for the basis of the preparation of consolidated financial statements(1) Scope of consolidation(i) Status of consolidated subsidiaries
 Number of consolidated subsidiaries:
9 companies
 Names of principal consolidated subsidiaries:
ORGANO PLANT SERVICE CORPORATIONORGANO FOOD TECH CORPORATION
Organo Technology Co., Ltd.
(ii) Status of non-consolidated subsidiaries
 Number of non-consolidated subsidiaries:
3 companies
 Names of principal non-consolidated subsidiaries:
Organo (Vietnam) Co., Ltd.
 Reason for exclusion from scope of consolidation:
The three non-consolidated subsidiaries are small in size and the aggregate total assets,
net sales, profit or loss (based on the Company’s ownership percentage), retained earnings(based on the Company’s ownership percentage) and other indicators do not have amaterial effect on the consolidated financial statements and have therefore been excluded
from the scope of consolidation.
(2) Application of the equity method(i) Status of affiliates accounted for by the equity method
 Number of affiliates accounted for by the equity method:
1 company
 Name of the affiliate accounted for by the equity method:
TOHOKU DENKI TEKKO Co., Ltd.
(ii) Status of non-consolidated subsidiaries and affiliates not accounted for by the equity method
 Number of non-consolidated subsidiaries and affiliates not accounted for by the equity
method4 companies
 Names of principal non-consolidated subsidiaries or affiliates not accounted for by theequity method:
Organo (Vietnam) Co., Ltd.
 Reason for not applying equity method:
Since the three non-consolidated subsidiaries and one affiliate to which the equity method
was not applied would give only a minimal impact on the consolidated financial
statements when removed, judging from profit or loss (amount corresponding to theCompany’s equity), retained earnings (amount corresponding to the Company’s equity)and the like, and they are not material as a whole, they are removed from the scope towhich the equity method is applied.
(3) Fiscal year-end of consolidated subsidiaries
The following consolidated subsidiaries have their fiscal year-end on December 31: Organo(Asia) Sdn. Bhd., Organo (Suzhou) Water Treatment Co., Ltd., Organo Technology Co., Ltd.,
Organo (Thailand) Co., Ltd., and PT Lautan Organo Water.
In the preparation of the consolidated financial statements, their financial statements as of thisdate has been used, with adjustments made as necessary upon consolidation for materialtransactions that occur between their fiscal year-end and that of the Company.

-1-(4) Accounting policies(i) Valuation standards and methods for significant assets
a. Securities
Other securities
Securities with fair value
Stated at fair value based on the market price or the like on the fiscal year-end(valuation difference are included in a separate component of net assets, and cost of
sales is determined by the moving-average method)
Securities without fair value
Stated at cost using the moving-average methodb. Derivatives
Stated at fair valuec. Inventories
Inventories held for sale in the ordinary course of businessStated at cost (based on the method of writing down the book value in accordance withthe declining in profitability).
Merchandise, finished goods and raw materials
Stated using the moving-average method principally
Work in process
Stated using the identified cost method(ii) Depreciation and amortization method for significant depreciable assets
a. Property, plant and equipment (excluding leased assets)
Depreciated mainly using the declining balance method.
Buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998 andfacilities attached to buildings and structures acquired on or after April 1, 2016 aredepreciated using the straight-line method.
The estimated useful lives of major items are as follows.
Buildings and structures: 3 to 50 years
Machinery, equipment and vehicles: 4 to 17 years
b. Intangible assets (excluding leased assets)
Depreciated using the straight-line method.
Software for internal use is amortized using the straight-line method over the internally
expected useful life (mainly five years).
c. Leased assets:
Leased assets under finance lease transactions that do not transfer ownership
Depreciated by the straight-line method assuming the lease periods as useful lives
without residual value.
(iii) Standards for recognition of principal allowances and provisions
a. Allowance for doubtful accounts
To prepare for losses from bad debt, an estimated uncollectible amount is recorded at theamount estimated by using the historical rate of credit loss for ordinary receivables, andbased on individual consideration of collectability for specific receivables such as highly
doubtful receivables.
b. Provision for bonuses
To prepare for payment of employee bonuses, of the estimated future bonus payment, anamount to be borne during the fiscal year under review is recorded.
c. Provision for product warranties
To provide for warranties against defects in completed construction contracts stipulated ininternal regulations, an amount is recorded based on the past two years’ performance and-2-giving consideration to the expected amount of future guarantees. For items that can be
estimated individually, the estimated amount is recorded.
d. Provision for loss on construction contracts
To prepare for any losses on undelivered construction projects, the estimated amount oflosses in or after the following fiscal years are recorded for some of the construction
projects as of the end of the fiscal year under review, which are highly probable to incur alarge amount of losses and for which the amounts thereof can be reasonably estimated.
e. Provision for share-based remuneration for directors (and other officers)
To prepare for the delivery of the Company’s shares, etc. to Directors and Executive
Officers, pursuant to the Share Delivery Regulations, the Company recorded a provision
for share-based remuneration for directors (and other officers) based on estimated sharebenefit obligations at the end of the fiscal year under review.
(iv) Standards for recognition of revenues and expenses
a. Standard for recognition of completed construction contracts and cost of sales of completed
construction contracts
Construction activities whose outcome from the completed portion as of the fiscal yearend are deemed to be definite
Percentage-of-completion method (the cost-to-cost method is used to estimate thepercentage of completion)
Other construction activities
Completed-contract methodb. Standard for recognition of revenue related to finance lease transactions
Revenue related to finance lease transactions mainly follows a method of accounting net
sales and cost of sales at the time of receiving lease fees.
(v) Method of significant hedge accounting
a. Method of hedge accounting
Principally, accounted for with deferred hedge accounting. Furiate-shori is applied toforward exchange contracts that satisfy requirements for furiate-shori, and exceptional
treatment is applied to interest rate swaps that satisfy the requirements for exceptional
treatment.
b. Hedging instruments and hedged items
Hedging instruments: Forward foreign exchange contracts and interest rate swaps
Hedged items: Foreign currency-denominated monetary claims and obligations,borrowingsc. Hedging policy
Foreign exchange rate fluctuation risk and market interest rate fluctuation risk are hedged
within a certain range based on transaction management regulations that stipulate
authorization relating to derivatives and other matters.
d. Method of assessing hedge effectiveness
The Company assesses hedge effectiveness by comparing cumulative cash flow or fairvalue fluctuations of hedged items with those of hedging instruments quarterly and basedon those fluctuation amounts.
However, assessment of effectiveness is omitted for interest rate swaps which areaccounted for applying the exceptional treatment.
(vi) Method and period for amortization of goodwill
Goodwill is amortized by the straight-line method over five years.
(vii) Other significant matters for the basis of the preparation of consolidated financial statements
a. Standard for recognition of retirement benefit liability
To prepare for the payment of employees’ retirement benefits, the amount of retirement
benefit obligations minus plan assets is recorded as retirement benefit liability, based on theestimated amount at the end of the fiscal year under review.
-3-Past service costs are recognized as expenses at the time they are incurred.
Actuarial gains and losses are amortized in the year following the year in which the gains
or losses are recognized by the straight-line method in equally allocated amounts over acertain number of years (principally ten years) which are within the average remaining
years of service of the eligible employees at the time of occurrence.
Unrecognized actuarial gains and losses are recorded in the remeasurements of defined
benefit plans in the accumulated other comprehensive income of the net assets after
adjusting for tax effects. In the calculation of retirement benefit obligations, the method
used to attribute expected retirement benefits to periods up to the fiscal year under review
is benefit formula basis.
b. Accounting treatment of consumption taxes
Accounting treatment of consumption tax and local consumption tax is based on the taxexcluded method. Non-deductible consumption tax and local consumption tax arerecognized as an expense for the fiscal year under review.
2. Notes to changes in the manner of presentation(Consolidated balance sheet)
The Company has applied the “Ministerial Order on Partial Revisions to the Regulation for Enforcement of
the Companies Act and the Regulation on Corporate Accounting” (Order of the Ministry of Justice No. 5;
March 26, 2018) accompanying the “Partial Amendments to Accounting Standard for Tax EffectAccounting” (ASBJ Statement No. 28; February 16, 2018) from the fiscal year under review, and thepresentation of deferred tax assets and deferred tax liabilities has changed to the categories of investments
and other assets and non-current liabilities, respectively.
(Consolidated statement of income)“Compensation for damage” (¥15 million in the fiscal year under review) was presented separately until theprevious fiscal year, but it is included in “Other” under non-operating expenses from the fiscal year underreview, as it has become insignificant in terms of quantitative materiality.
3. Additional Information(Performance-linked share-based remuneration plan for Directors and Executive Officers)
Upon receiving approval at the 73rd Ordinary General Meeting of Shareholders held on June 28, 2018, theCompany introduced a performance-linked share-based remuneration plan (the “Plan”) using a trust for
Directors (excluding Non-Executive Directors; hereinafter, the same applies) and Executive Officers(excluding non-residents; hereinafter, the same applies) of the Company.
The objective of the Plan is to heighten the Company’s Directors and Executive Officers’ awareness ofcontributing to enhancing the Organo Group’s medium- to long-term operating results and increasing
corporate value, by linking part of their remuneration to the Organo Group’s operating results and sharevalue.
(1) Overview of transactions
The Plan is a shared-based remuneration plan under which a trust (the “Trust”) established with money
contributed by the Company shall acquire shares of the Company, and a number of the Company’s shares
and an amount of cash equivalent to the conversion value of the Company’s shares together equivalent to
the number of points granted to Directors and Executive Officers shall be delivered and paid to each
Director and Executive Officer through the Trust at a certain time each year.
(2) Shares of the Company remaining in the Trust
Shares of the Company remaining in the Trust shall be recorded as treasury shares under net assets at theirbook value in the Trust (minus the amount of any incidental expenses). The book value and number of suchtreasury shares at the end of the fiscal year under review were ¥269 million and 85 thousand shares,
respectively.

-4-4. Notes to the consolidated balance sheet(1) Accumulated depreciation for property, plant and equipment(2) Contingent liabilities¥21,456 million

Guarantee obligation for bank loans of employees
Performance bonds
Organo (Vietnam) Co., Ltd.

¥4 million¥89 million(3) Notes matured at the end of the fiscal year shall be settled as of their clearing date.
However, since the last day of the fiscal year under review was a holiday for financial institutions,the following notes maturing on the last day of the fiscal year are included in the balance at theend of the fiscal year under review.
Notes receivable - trade¥218 million
Notes payable - trade¥1,431 million
Notes payable - facilities (current liabilities “Other”)¥12 million
5. Notes to the consolidated statement of changes in equity(1) Total number of shares issued
Class of shares
Common shares

Number of shares as ofApril 1, 2018
(Thousands of shares)

Increase in number ofshares during theperiod(Thousands of shares)

11,589–Decrease in number ofshares during theperiod(Thousands of shares)–

Number of shares at
end of period(Thousands of shares)
11,589(2) Number of treasury sharesClass of shares
Common shares
Note:

Number of shares as ofApril 1, 2018
(Thousands of shares)

Increase in number ofshares during theperiod(Thousands of shares)

79

87

Decrease in number ofshares during theperiod(Thousands of shares)–

Number of shares at
end of period(Thousands of shares)
166

The increase of 87 thousand shares in the number of treasury shares reflects the acquisition of 85 thousand sharesby the Officer Share Delivery Trust and the increase of 1 thousand shares due to the purchase of shares less than
one unit. Furthermore, the number of treasury shares at the end of the fiscal year under review includes 85 thousand
shares of the Company held by the Officer Share Delivery Trust.

(3) Dividends of surplus(i) Dividends paid, etc.
a. Dividends resolved at the 73rd Ordinary General Meeting of Shareholders held on June 28,2018 Total dividends:¥322 million
 Dividend per share:¥28
 Record date:
March 31, 2018
 Effective date:June 29, 2018b. Dividends resolved at the meeting of the Board of Directors held on November 2, 2018
 Total dividends:¥333 million
 Dividend per share:¥29
 Record date:
September 30, 2018
 Effective date:
December 10, 2018
Note:

Total dividends resolved at the meeting of the Board of Directors held on November 2, 2018 include¥2 million in dividends for shares of the Company held by the Officer Share Delivery Trust.

-5-

(ii) Dividends whose record date falls in the fiscal year under review and which have aneffective date in the next fiscal year
The following dividends are proposed for the 74th Ordinary General Meeting of
Shareholders, scheduled for June 27, 2019 Total dividends:¥506 million
 Source of dividends:
Retained earnings
 Dividend per share:¥44
 Record date:
March 31, 2019 Effective date:June 28, 2019
Note:

Total dividends include ¥3 million in dividends for shares of the Company held by the Officer Share
Delivery Trust.

6. Notes to financial instruments(1) Status of financial instruments(i) Policy for handling financial instruments
The Organo Group procures long-term capital and short-term operating capital from banks inaccordance with its capital investment plan, etc.
Derivatives are used to hedge the various risks as described in detail below, and theCompany does not enter into derivatives for trading or speculative purposes.
(ii) Details of financial instruments and associated risks
Notes and accounts receivable - trade and investments in leases which are trade receivables,
are exposed to credit risks of customers. Although foreign currency-denominated tradereceivables that arise in conducting business in overseas are exposed to foreign exchange
rate fluctuation risk, the Company hedges the risk with the use of forward exchange
contracts as necessary.
Investment securities are mainly shares held to strengthen relationships with business
partners or purely for investment. These are exposed to market price fluctuation risk.
Notes and accounts payable - trade that are trade payables are mainly due within one year.
Furthermore, these include foreign currency-denominated payables associated with imports,
which are exposed to foreign exchange fluctuation risk. However, these are hedged asnecessary using forward exchange contracts.
Borrowings are mainly for the purpose of procuring capital needed for capital investment
and short-term operating capital. Although some of them have floating rates and are exposed
to interest rate risks, they are hedged through derivatives (interest rate swaps).
Derivatives are forward exchange contracts executed for the purpose of hedging foreignexchange rate fluctuation risk associated with foreign currency-dominated trade receivables
and payables, interest rate swaps executed for the purpose of hedging interest rate
fluctuation risk associated with borrowings. With respect to hedging instruments and hedged
items, hedging policy and method of assessing hedge effectiveness; please refer to “1. Notes
on significant matters for the basis of the preparation of consolidated financial statements (4)Accounting policies (v) Method of significant hedge accounting” previously described.
(iii) Management system for risks associated with financial instruments
a. Management of credit risks (risks of contractual defaults by business partners)
For trade receivables, the sales division within each business segment conduct regularmonitoring of the status of business partners, and manage maturity dates and balances bycounterparty in accordance with the internal rules. In addition, they endeavor to quickly
identify and mitigate any concerns regarding the collection of receivables due todeteriorated financial conditions of business partners. The consolidated subsidiaries
exercise similar management based on the regulations of the Company.
In utilizing derivatives, the Organo Group has transactions only with high-rated financial
institutions to mitigate credit risks.

-6-

b. Management of market risks (risks of fluctuations in foreign exchange rates and interest
rates)The Organo Group, with respect to foreign currency-denominated trade receivables andpayables, hedges foreign exchange fluctuation risk identified by each transaction with theuse of forward exchange contracts as necessary.
The Organo Group also utilizes interest rate swaps to limit the risks of fluctuations ininterest rates on borrowings.
In terms of investment securities, the Organo Group assesses the market values andfinancial positions of issuers (business partners) on a regular basis. As for those excluding
held-to-maturity debt securities, the Organo Group continuously reviews positions in
consideration of the market conditions and relationships with business partners.
Execution and management of derivatives is conducted with the approval of the decisionmaking person in the responsible department in accordance with transaction management
regulations that stipulate authorization relating to derivatives and other matters.
c. Management of liquidity risk associated with procurement of funds (risk of becoming
unable to repay on payment date)
The Organo Group in a timely way develops and updates the financing plans throughdivisions in charge of accounting based on reports from each division, and manages
liquidity risks by maintaining cash balances.
(iv) Supplemental remarks on fair values of financial instruments
The fair values of financial instruments are based on market prices or reasonably calculated
value if it has no market price. As changeable factors are included in calculating these values,
if different assumptions, etc. are used, these values could vary.
(2) Fair value of financial instruments
Amount on the consolidated balance sheet as of March 31, 2019, fair value and the difference areas follows. Financial instruments whose fair values are deemed to be extremely difficult todetermine are not included in the following table. (Please refer to item 2. of Notes.)(Millions of yen)Amounts on consolidatedbalance sheet
(i)
(ii)
(iii)
(iv)

Cash and deposits
Notes and accounts receivable trade
Investments in leases
Investment securities

(ii)
(iii)

Differences

11,276

11,276-40,25640,256-

13,574716

13,574716-

65,82465,824-

18,516

18,516-

13,458200

13,461200

2(0)Total liabilities

32,17632,1782

Derivatives [*]

[1]

[1]

-

Total assets(i)

Fair value

Notes and accounts payable trade
Short-term borrowings
Long-term borrowings[*]

Net claims/obligations that arise from derivatives are indicated as net amounts, and the amounts of items for which
net obligations are recognized in total are indicated in parentheses.
Notes: 1. Methods of fair value measurement of financial instruments and matters relating to securities and derivatives
Assets(i) Cash and deposits, (ii) Notes and accounts receivable - trade
The book values are used as the fair values of these assets, given that the fair values are almost the same as thebook values since they are mainly settled in a short period of time.
(iii) Investments in leases
The fair value of investments in leases is calculated based on the present value which is obtained bydiscounting the total of the principal and interest by the interest rate assumed in a case where the sametransactions are newly made. Moreover, since the fair value approximates the book value, the book value ispresented.

-7-

(iv) Investment securities
The fair values of investment securities are based on the prices of shares, etc. traded at the stock exchange.
Liabilities(i) Notes and accounts payable - trade
The book values are used as the fair values of these liabilities, given that the fair values are almost the same as
the book values since they are settled in a short period of time.
(ii) Short-term borrowings, (iii) Long-term borrowings
Fair values of short-term borrowings and long-term borrowings are calculated based on the present value
which is obtained by discounting the total of the principal and interest by the interest rate assumed in a casewhere the same borrowings are newly made. The fair value of short-term borrowings and long-termborrowings with floating rates to which exceptional treatment of interest rate swaps is applied is calculated bydiscounting the sum of principal and interest, which is treated in combination with the said interest rate swap,
at a reasonably estimated rate applied to a similar new borrowing.
Derivatives(1) Forward exchange contracts
Fair values are measured based on prices presented by financial institutions with which the Company
does business.
(2) Interest rate swaps
Fair values are measured based on prices presented by financial institutions with which the Company
does business.
Because interest rate swaps, which are accounted for applying the exceptional treatment, are treated inconjunction with short-term borrowings and long-term borrowings that are deemed as hedged items, fairvalues of the interest rate swaps are included in the fair values of the short-term borrowings and longterm borrowings.
2. Financial instruments whose fair values are deemed to be extremely difficult to determine(Millions of yen)
Category
Amounts on consolidated balance sheet
Unlisted shares

905

The Company does not include unlisted shares in “(iv) Investment securities” because they have no market prices
and their fair values are deemed to be extremely difficult to determine.

7. Notes to per share information
Net assets per share
Basic earnings per share¥4,784.81¥388.48

Notes: 1.When calculating net assets per share, common shares of the Company held by the Officer Share Delivery
Trust have been included in treasury shares excluded from the total number of issued shares at the end of theperiod (85 thousand shares at the end of the fiscal year under review).
2.When calculating basic earnings per share, common shares of the Company held by the Officer Share
Delivery Trust have been included in treasury shares excluded from the calculation of the average number ofshares during the period (47 thousand shares in the fiscal year under review).

8. Significant subsequent events
Not applicable.

-8-Notes to Non-consolidated Financial Statements
1. Significant Accounting Policies(1) Valuation standards and methods for assets(i) Securities
Shares of subsidiaries and associates
Stated at cost using the moving-average method
Other securities
Securities with fair value
Stated at fair value based on the market price or the like on the fiscal year-end(valuation difference are included in a separate component of net assets, and cost of
sales is determined by the moving-average method)
Securities without fair value
Stated at cost using the moving-average method(ii) Derivatives
Stated at fair value(iii) Inventories
Inventories held for sale in the ordinary course of businessStated at cost (based on the method of writing down the book value in accordance withthe declining in profitability).
Merchandise, finished goods and raw materials
Stated using the moving-average method
Work in process
Stated using the identified cost method
Supplies
Stated using the last purchase cost method(2) Depreciation and amortization of non-current assets(i) Property, plant and equipment
Depreciated using the declining balance method.
Buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998 andfacilities attached to buildings and structures acquired on or after April 1, 2016 aredepreciated using the straight-line method.
The estimated useful lives of major items are as follows.
Buildings and structures: 3 to 50 years
Machinery, equipment and vehicles: 4 to 17 years(ii) Intangible assets
Depreciated using the straight-line method.
Software for internal use is amortized using the straight-line method over the internally
expected useful life (five years).
(3) Standards for recognition of allowances and provisions(i) Allowance for doubtful accounts
To prepare for losses from bad debt, an estimated uncollectible amount is recorded at theamount estimated by using the historical rate of credit loss for ordinary receivables, andbased on individual consideration of collectability for specific receivables such as highly
doubtful receivables.
(ii) Provision for bonuses
To prepare for payment of employee bonuses, of the estimated future bonus payment, anamount to be borne during the fiscal year under review is recorded.

-9-

(iii) Provision for product warranties
To provide for warranties against defects in completed construction contracts stipulated ininternal regulations, an amount is recorded based on the past two years’ performance andgiving consideration to the expected amount of future guarantees. For items that can be
estimated individually, the estimated amount is recorded.
(iv) Provision for loss on construction contracts
To prepare for any losses on undelivered construction projects, the estimated amount oflosses in or after the following fiscal years are recorded for some of the construction projects
as of the end of the fiscal year under review, which are highly probable to incur a large
amount of losses and for which the amounts thereof can be reasonably estimated.
(v) Provision for share-based remuneration for directors (and other officers)
To prepare for the delivery of the Company’s shares, etc. to Directors and Executive Officers,
pursuant to the Share Delivery Regulations, the Company recorded a provision for sharebased remuneration for directors (and other officers) based on estimated share benefit
obligations at the end of the fiscal year under review.
(vi) Provision for retirement benefits
To prepare for the payment of employees’ retirement benefits, the Company recorded a
provision for retirement benefits based on estimated retirement benefit obligations and plan
assets at the end of the fiscal year under review.
Past service costs are recognized as expenses at the time they are incurred.
Actuarial gains and losses are amortized in the year following the year in which the gains orlosses are recognized by the straight-line method over a certain number of years (ten years)
which are within the average remaining years of service of the eligible employees.
(4) Standards for recognition of revenues and expenses(i) Standard for recognition of completed construction contracts and cost of sales of completed
construction contracts
Construction activities whose outcome from the completed portion as of the fiscal year-end
are deemed to be definite
Percentage-of-completion method (the cost-to-cost method is used to estimate thepercentage of completion)
Other construction activities
Completed-contract method(ii) Standard for recognition of revenue related to finance lease transactions
Revenue related to finance lease transactions follows a method of accounting net sales andcost of sales at the time of receiving lease fees.
(5) Method of significant hedge accounting(i) Method of hedge accounting
Principally, accounted for with deferred hedge accounting. Furiate-shori is applied toforward exchange contracts that satisfy requirements for furiate-shori, and exceptional
treatment is applied to interest rate swaps that satisfy the requirements for exceptional
treatment.
(ii) Hedging instruments and hedged items
Hedging instruments: Forward foreign exchange contracts and interest rate swaps
Hedged items: Foreign currency-denominated monetary claims and obligations, borrowings(iii) Hedging policy
Foreign exchange rate fluctuation risk and market interest rate fluctuation risk are hedged
within a certain range based on transaction management regulations that stipulate
authorization relating to derivatives and other matters.

- 10 -

(iv) Method of assessing hedge effectiveness
The Company assesses hedge effectiveness by comparing cumulative cash flow or fair value
fluctuations of hedged items with those of hedging instruments quarterly and based on thosefluctuation amounts.
However, assessment of effectiveness is omitted for interest rate swaps which are accounted
for applying the exceptional treatment.
(6) Other significant matters for the basis of the preparation of non-consolidated financial statements(i) Accounting treatment of retirement benefits
The accounting treatment method for actuarial gains or losses related to retirement benefits
is different from the treatment for the item in the consolidated financial statements.
(ii) Accounting treatment of consumption taxes
Accounting treatment of consumption tax and local consumption tax is based on the taxexcluded method. Non-deductible consumption tax and local consumption tax arerecognized as an expense for the fiscal year under review.
2. Notes to changes in the manner of presentation(Balance sheet)
The Company has applied the “Ministerial Order on Partial Revisions to the Regulation for
Enforcement of the Companies Act and the Regulation on Corporate Accounting” (Order of the
Ministry of Justice No. 5; March 26, 2018) accompanying the “Partial Amendments to AccountingStandard for Tax Effect Accounting” (ASBJ Statement No. 28; February 16, 2018) from the fiscal year
under review, and the presentation of deferred tax assets and deferred tax liabilities has changed to thecategories of investments and other assets and non-current liabilities, respectively.
3. Additional Information(Performance-linked share-based remuneration plan for Directors and Executive Officers)
Upon receiving approval at the 73rd Ordinary General Meeting of Shareholders held on June 28, 2018,
the Company introduced a performance-linked share-based remuneration plan (the “Plan”) using a trust
for Directors (excluding Non-Executive Directors; hereinafter, the same applies) and Executive
Officers (excluding non-residents; hereinafter, the same applies) of the Company.
The objective of the Plan is to heighten the Company’s Directors and Executive Officers’ awareness ofcontributing to enhancing the Organo Group’s medium- to long-term operating results and increasing
corporate value, by linking part of their remuneration to the Organo Group’s operating results and sharevalue.
(1) Overview of transactions
The Plan is a shared-based remuneration plan under which a trust (the “Trust”) established withmoney contributed by the Company shall acquire shares of the Company, and a number of theCompany’s shares and an amount of cash equivalent to the conversion value of the Company’s
shares together equivalent to the number of points granted to Directors and Executive Officers
shall be delivered and paid to each Director and Executive Officer through the Trust at a certain
time each year.
(2) Shares of the Company remaining in the Trust
Shares of the Company remaining in the Trust shall be recorded as treasury shares under net
assets at their book value in the Trust (minus the amount of any incidental expenses). The bookvalue and number of such treasury shares at the end of the fiscal year under review were ¥269
million and 85 thousand shares, respectively.

- 11 -

4. Notes to the non-consolidated balance sheet(1) Accumulated depreciation for property, plant and equipment(2) Contingent liabilities
Guarantee obligation for bank loans of employees
Joint and several suretyship for bank loans
Organo (Suzhou) Water Treatment Co., Ltd.
Organo Technology Co., Ltd.
Performance bonds
Organo (Asia) Sdn. Bhd.
Organo (Suzhou) Water Treatment Co., Ltd.
Organo (Vietnam) Co., Ltd.

¥20,599 million¥4 million¥1,882 million¥108 million¥93 million¥148 million¥89 million(3) Monetary claims and obligations to subsidiaries and associates
Short-term monetary claims¥3,656 million
Long-term monetary claims¥300 million
Short-term monetary obligations¥5,067 million(4) Notes matured at the end of the fiscal year shall be settled as of their clearing date.
However, since the last day of the fiscal year under review was a holiday for financial institutions,the following notes maturing on the last day of the fiscal year are included in the balance at theend of the fiscal year under review.
Notes receivable - trade¥202 million
Notes payable - trade¥1,000 million
Notes payable - trade for plant and equipment (current liabilities “other”)¥12 million
5. Notes to the non-consolidated statement of income
Total transactions with subsidiaries and associates
Net sales
Purchase of goods
Transactions other than operating transactions:- 12 -¥3,550 million¥16,241 million¥1,261 million

6. Notes to the non-consolidated statement of changes in equity
Number of treasury sharesClass of shares

Number of shares at
beginning of period(Thousands of shares)

Common shares
Note:

Increase in number ofshares during theperiod(Thousands of shares)

79

Decrease in number ofshares during theperiod(Thousands of shares)

87

Number of shares at
end of period(Thousands of shares)-

166

The increase of 87 thousand shares in the number of treasury shares reflects the acquisition of 85 thousand sharesby the Officer Share Delivery Trust and the increase of 1 thousand shares due to the purchase of shares less than
one unit. Furthermore, the number of treasury shares at the end of the fiscal year under review includes 85 thousand
shares of the Company held by the Officer Share Delivery Trust.

7. Note to tax-effect accounting
Breakdown of deferred tax assets and liabilities by main cause(Millions of yen)
Deferred tax assets
Provision for bonuses
Enterprise tax payable
Provision for retirement benefits
Provision for product warranties
Provision for loss on construction contracts
Provision for share-based remuneration for directors (and other officers)
Testing and research facilities
Allowance for doubtful accounts
Loss on valuation of right to use facilities
Loss on valuation of shares of subsidiaries and associates
Other
Subtotal deferred tax assets
Valuation allowance

239
79
1,638
78
55
29
50
105
79
237
212
2,806
(444)

Total deferred tax assets

2,361

Deferred tax liabilities
Valuation difference on available-for-sale securities
Reserve for tax purpose reduction entry of non-current assets

(102)
(15)

Total deferred tax liabilities(117)

Net deferred tax assets

2,243- 13 -

8. Note to transactions with related parties
Subsidiaries
Name of thecompany

Location

ORGANO
PLANT
Bunkyo-ku,
SERVICETokyo
CORPORATIONORGANOFOOD TECH Satte City,CORPORATI SaitamaON

ORGANOECO TECH Koto-ku,
CORPORATI Tokyo
ON

Organo(Suzhou)
Water
Treatment
Co., Ltd.

OrganoTechnology
Co., Ltd.

Jiangsu,
China

Hsinchu,
TaiwanShare capital¥93 million¥50 million¥50 million

US$5,000thousand

NT$30,000
thousand

Details oftransaction

Transaction
amount(Millions of
yen)

Item

Balance at
end of period(Millions ofyen)

Installationof various
types ofwater
treatment
systems andordering ofsupervision
services

6,885

Accounts
payable trade

1,344

Deposits of
funds

1,192

Deposits
received

1,300

Dividends
received

582

–

–

Directownership
100.0％

Ordering offood
ingredientsand food
processing
agents
Dispatchingof officers

Loans of
funds

1,038

Short-term
loans
receivable

900

Directownership
100.0％

Ordering ofwastewater
treatment
systems andrelatedconstruction
Dispatchingof officers

Ordering ofwastewater
treatment
systems
and related
construction

4,193

Accounts
payable trade

1,203

Directownership
100.0％

Sales ofvarious types
of watertreatment
Debt
systems andguarantees
relatedchemicals
Dispatchingof officers

2,030

–

Directownership
100.0％

Sales ofvarious types
of watertreatment
systems andrelatedchemicals
Dispatchingof officers

1,751

Accounts
receivable trade

Voting rights
ownership
ratio

Relationshipwith relatedparties

Directownership
100.0％

Installationof various
types ofwater
treatment
systems andordering ofsupervision
services
Dispatchingof officers

Sales ofvarious types
of watertreatment
systems andrelatedchemicals

–

1,413

Notes: 1. The transaction amounts listed above do not include consumption taxes, but the balance at end of period includes
consumption taxes.
2. Conditions of transaction and policies for deciding conditions of transaction are determined by referencing
general trading conditions in consideration of market prices, etc.
3. Interest rates on loans of funds and that on deposits of funds are reasonably determined taking interest rates on
the market into account. For transaction amounts, the average balance during the fiscal year is indicated.
4. Dividend income is rationally determined pursuant to certain standards based on the amount of surplus able to be
distributed.
5. The Company provides debt guarantees on their loans from financial institutions. The Company does not receive
guarantee fees.

- 14 -

9. Notes to per share information
Net assets per share
Basic earnings per share¥4,083.48¥277.56

Notes: 1. When calculating net assets per share, common shares of the Company held by the Officer Share Delivery Trust
have been included in treasury shares excluded from the total number of issued shares at the end of the period (85thousand shares at the end of the fiscal year under review).
2. When calculating basic earnings per share, common shares of the Company held by the Officer Share Delivery
Trust have been included in treasury shares excluded from the calculation of the average number of shares during
the period (47 thousand shares in the fiscal year under review).

10. Notes to significant subsequent events
Not applicable.
Figures are rounded down to the nearest unit.

- 15 -