This document has been translated from the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original
shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any
other forms of damages arising from the translation.
(Securities code: 4028)
June 8, 2022
To Those Shareholders with Voting Rights
Hideo Takahashi
Executive Director, President
ISHIHARA SANGYO KAISHA, LTD.
3-15, Edobori 1-chome, Nishi-ku, Osaka

NOTICE OF THE 99th ORDINARY GENERAL MEETING OF SHAREHOLDERSFirstly, we would like to extend our sincere thanks for your ongoing support.
We are pleased to inform you that the 99th Ordinary General Meeting of Shareholders will be held as
follows.
To prevent the spread of the new coronavirus (COVID-19) and ensure the safety of all shareholders, werequest shareholders to exercise their voting rights in advance, in writing or via the Internet, etc., and torefrain, wherever possible, from attending the General Meeting of Shareholders in person.
Please exercise your voting rights in writing or via the Internet, etc. by 5:30 p.m. on Monday, June 27,
2022, after reading the attached REFERENCE DOCUMENT FOR THE GENERAL MEETING OF
SHAREHOLDERS.
1.
2.

3.

Date and Time: 10:00 a.m., Tuesday, June 28, 2022 (Reception opens: 9:00 a.m.)
Venue: Hall on the 5th floor of Shin-Ishihara Building, at 3-15, Edobori 1-chome, Nishi-ku,
Osaka(Shin-Ishihara Building: Please use Exit 5-B of Higobashi Station, Osaka Metro
Yotsubashi Line.)
Objectives of the Meeting
Reports:
1. The Business Report, the Consolidated Financial Statements for the 99th Fiscal Term (from
April 1, 2021 to March 31, 2022), and the Audit Reports thereof prepared by the Accounting
Auditor and the Audit & Supervisory Board
2. The Non-consolidated Financial Statements for the 99th Fiscal Term (from April 1, 2021 toMarch 31, 2022)
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 Nine (9) Directors
Proposal No. 4: Election of One (1) Substitute Audit & Supervisory Board Member
Proposal No. 5: Determination of Compensation for the Grant of Restricted Stock Compensation to
Directors (Excluding Outside Directors)-1-

4. How to Exercise Your Voting Rights
If you are attending the General Meeting of Shareholders
Please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at themeeting.
Date & Time: 10:00 a.m., Tuesday, June 28, 2022
(Reception opens: 9:00 a.m.)

If you are exercising your voting rights in writing
Please indicate your approval or disapproval of the matters to be resolved on the Voting Rights
Exercise Form enclosed herewith, and return it to us.
Deadline: The form should arrive by 5:30 p.m., Monday, June 27, 2022.

If you are exercising your voting rights via the Internet, etc.
Please first read the attached Guidance on the Exercise of Voting Rights via the Internet, etc. (p. 3)
and indicate your approval or disapproval.
Deadline: Votes should be accepted by 5:30 p.m., Monday, June 27, 2022.
◼ If you have exercised your voting rights both in writing and via the Internet, etc., the votes cast via the Internet, etc. shallbe deemed valid. If you have exercised your voting rights via the Internet, etc. multiple times, the votes cast last shall bedeemed valid.
◼ The costs incurred for access to the website for the exercise of voting rights via the Internet (such as Internet connection
fees, phone charges, etc.) shall be borne by the shareholders.
◼ Depending on your Internet environment, ISP service, or device model, you may not successfully be able to use thewebsite to exercise your voting rights via the Internet.

5. Disclosure via the Internet
The items listed below are made available on our website on the Internet (URL below) in accordancewith laws and regulations, as well as the provisions of Article 19 of our Articles of Incorporation, andare therefore not included in the reference documents attached hereto.
(1) Notes to Consolidated Financial Statements(2) Notes to Non-consolidated Financial Statements
Thus, the reference documents attached hereto constitute part of the subjects audited by the Audit &Supervisory Board Members and the Accounting Auditor in preparing their Audit Reports.
Our website (https://www.iskweb.co.jp/ir/stockholders.html)
If any situation arises that requires amendment to the REFERENCE DOCUMENT FOR THE
GENERAL MEETING OF SHAREHOLDERS, the Business Report, the Consolidated Financial
Statements, or the Non-consolidated Financial Statements, such amendment will be posted on the
Company’s website (https://www.iskweb.co.jp).

-2-

Guidance on the Exercise of Voting Rights via the Internet, etc.
How to scan the QR code
“Smart Voting”
You can log in to the voting rights exercise
website without entering a “voting rights
exercise code” and a “password.”

Please use your smartphone to scan the“voting rights exercise website login QR
code” on the bottom right of the voting
rights exercise form.
Please enter your vote for each proposal
by following the instructions on thescreen.

Voting rights can be exercised only once
using “Smart Voting.”
If you want to change your vote after
exercising your voting rights, please enter
the “voting rights exercise code” and“password” on the voting rights exercise
form to log in to the voting rights exercise
website by following the instructions under“How to enter a voting rights exercise code
and a password” on the right hand side, andexercise your voting rights again.
* You can access the voting rights exercise
website on the right hand side by scanning
the QR code again.
* “QR code” is a registered trademark of
DENSO WAVE INCORPORATED.
Please call the number on the righthand side, if you have any questions
relating to the exercise of voting rights
via the Internet.

How to enter a voting rights exercise code and apassword
The voting rights exercise website:

https://www.web54.net
Please access the voting rights exercise
website.



Please enter the “voting rights exercisecode” on the bottom left of the reverse sideof the voting rights exercise form.



Please enter the “password” on the bottom
left of the reverse side of the voting rights
exercise form.



Please enter your vote for each proposal byfollowing the instructions on the screen.

Transfer Agency Web Support
Hotline, Sumitomo Mitsui Trust Bank

0120-652-031
Business hours: 9:00 a.m. to 9:00 p.m.

To institutional investors
In addition to the exercise of voting rights via the Internet as stated above, you may use the electronic voting
platform operated by ICJ, Inc. only if you apply for its use in advance.

-3-

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposals and References

Proposal No. 1

Appropriation of Surplus

One of the most important management policies of the Company is to increase corporate value while
returning profits to our shareholders.
Our basic principle for dividends is to continue to implement stable dividend distribution according toour business performance, taking into comprehensive consideration the business trends, financial
condition, and need to enhance our internal reserve for business expansion into the future.
Based on this policy, we have decided to pay a year-end dividend of 36 yen per share, an 18-yen increase
from that for the previous fiscal year, as summarized below.
1.

Type of dividend property
Cash

2.

Matters concerning the allocation of dividend property to shareholders and the total
amount thereof
36 yen per share of common stock of the Company
Total: 1,438,315,308 yen

3.

Date on which the dividend of surplus takes effectJune 29, 2022

-4-

Proposal No. 2

Partial Amendments to the Articles ofIncorporation

1.

Reasons for amendments(1) Addition of a business objective
With the Company’s commercialization of the world’s first blue phalaenopsis , we propose to add abusiness objective to Article 2 of the current Articles of Incorporation, and renumber the subsequent
objectives accordingly.
(2) Introduction of a system for electronic provision of materials for General Meetings ofShareholders
As the amended provisions stipulated in the proviso of Article 1 of the supplementaryprovisions of the “Act Partially Amending the Companies Act” (Act No. 70 of 2019) will be
enforced on September 1, 2022, we propose to amend the Company’s Articles ofIncorporation of the Company as follows, to prepare for the introduction of a system forelectronic provision of materials for General Meetings of Shareholders:
1) The proposed Article 19, Paragraph 1 provides that information contained in the referencematerials for the General Meeting of Shareholders, etc. shall be provided electronically.
2) The purpose of the proposed Article 19, Paragraph 2 is to establish a provision to limit thescope of matters to be included in the paper copy to be sent to shareholders who haverequested it.
3) The provisions related to the internet disclosure of the reference materials for the General
Meeting of Shareholders, etc. (Article 19 of the current Articles of Incorporation) will
become unnecessary and will therefore be deleted.
4) In line with the above establishment and deletion of the provisions, supplementaryprovisions related to the effective date, etc. shall be established.
1. Details of amendments
The details of the amendments are as follows.
(Amended parts are underlined.)
Current Articles of Incorporation

Proposed Amendments(Objectives)
Article 2
The objectives of the Company shallbe to conduct the following businesses:(Objectives)
Article 2 The objectives of the Company shallbe to conduct the following businesses:(1) to (3)(Omitted)(1) to (3) (Unchanged)(Newly established)(4) to (11)(4) Production, sale, export and import ofplants(5) to (12) (Unchanged)(Omitted)-5-

Current Articles of Incorporation

Proposed Amendments(Disclosure of Reference Materials for General
Meeting of Shareholders by Internet)
Article 19 For holding the General Meeting of
Shareholders, the Company may deem it tohave disclosed the information regarding thematters to be stated or indicated on thereference materials for the General Meeting of
Shareholders, business report, financial
statements and consolidated financial
statements to shareholders by disclosing suchinformation by means of using Internet inaccordance with provisions of the Ordinanceof the Ministry of Justice.

(Deleted)(Newly established)(Measures for providing information in electronic
format, etc.

)
2. Article 19 The Company shall, whenconvening a General Meeting of
Shareholders, provide information containedin the reference materials for the General
Meeting of Shareholders, etc. in electronic
format. Among the matters to be provided inelectronic format., the Company may choose
not to include all or part of the matters
stipulated in the Ordinance of the Ministry ofJustice in the paper copy to be sent toshareholders who have requested it by therecord date for voting rights.
Article 20 to Article 46 (Omitted)(Newly established)

Article 20 to Article 46 (Unchanged)(Supplementary Provisions)
1. The amendments to Article 19(Measures forproviding information in electronic format,etc.) of Incorporation shall come into effecton September 1, 2022 (the “Effective Date”),
which is the date of enforcement of theamended provisions stipulated in the proviso
of Article 1 of the supplementary provisionsof the Act Partially Amending the Companies
Act (Act No. 70 of 2019).
2. Notwithstanding the provisions of thepreceding paragraph, Article 19 (Disclosureof Reference Materials for General Meetingof Shareholders by Internet) of the Articles ofIncorporation shall remain in force withrespect to a General Meeting of Shareholders
to be held on a date within six months fromthe Effective Date.

-6-

Current Articles of Incorporation

Proposed Amendments

3. These supplementary provisions shall bedeleted after the lapse of six months from the
Effective Date or the lapse of three months
from the date of the General Meeting of
Shareholders set forth in the preceding
paragraph, whichever is later.
REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Proposal No. 3

Election of Nine (9) Directors

The terms of office of all current nine (9) Directors will expire at the conclusion of this General Meetingof Shareholders.
We therefore propose that nine (9) Directors (three (3) of which are Outside Directors) be elected.
The candidates for Directors are as follows:
Candidate
No.

Full name1

KenichiTanaka2

Hideo
Takahashi

3

Kiyomitsu
Yoshida4

Yasunobu
Kawazoe5

Masaki
Shimojo6

Hiroshi
Okubo

7
8
9

Executive Director,
Chairman
Executive Director,
Reappointment President & Chief
Executive Officer
Director, Senior
Managing
Executive Officer,
Organic Chemicals
Reappointment
Business, Directorof Biosciences
Business
Headquarters
Director, Managing
Executive Officer,
Reappointment Director of Finance& Accounting
Headquarters
Director, Managing
Executive Officer,
Director of
Inorganic
Chemicals Sales &Reappointment Marketing, R&D
Strategy
Headquarters
Assistant Directorof R&D Strategy
Headquarters
Managing
Executive Officer,
Director ofNew
appointment Corporate
Administration &Planning
Headquarters
Director [Outside]
Reappointment[Independent]
Director [Outside]
Reappointment[Independent]
Director [Outside]
Reappointment[Independent]
Reappointment

Hiroshi
KatsumataTatsuoHanazawa
Satoshi Ando

Reappointment

Posts andTerm ofresponsibilities held office asat the Company
Director

Candidate for reappointment

Attendanceat Board of
Directors
meetings

Corporate
strategy

Expertise and experience possessed by each candidate for Director
Domestic andProduction Legal and Risk Personnel and international
Financial
and R&D
management General affairs
marketaccounting
expansion

8 years100%(15/15)⚫

3 years100%(15/15)⚫

⚫

4 years87%(13/15)⚫

⚫

3 years100%(15/15)⚫

2 years100%(15/15)

⚫

-

-

⚫

100%
(15/15)100%(15/15)100%(15/15)⚫

5 years
3 years
2 years

New appointment

⚫

ESG

⚫
⚫

⚫

⚫

⚫

⚫

⚫

⚫

⚫

⚫
⚫
⚫

Candidate for new Director⚫

[Outside] Outside Officer⚫

⚫
⚫

[Independent] Independent Officer

Notes:
1. The table above indicates a maximum of three main areas where each candidate for Director possesses expertise andexperience.
2. Nomination of the candidates for Directors is decided at the Board of Directors after consulting with the Personnel
Committee, consisting of independent Outside Directors and Outside Audit & Supervisory Board Members. The Board of
Directors nominates the persons who are deemed appropriate as candidates for Directors after comprehensive examinationof their personalities, knowledge, abilities, etc. based on the perspective of prompt and proper decision making.
3. The Company has concluded a directors and officers liability insurance contract with an insurance company, as prescribedin Article 430-3, Paragraph 1 of the Companies Act, with all Directors as the insured. The insurance covers legal damages
and litigation expenses in the event that a claim for damages is made against the insured during the insurance period due to-7-⚫

improper actions (including errors of omission) committed by the insured in his/her capacity as such. The Company is fully
responsible for paying the insurance premium. The Company intends to include all candidates for Directors, if appointed, in
the insured under this insurance contract. The Company intends to renew this insurance contract under the same terms
when it comes due for renewal.

-8-

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

1

Kenichi Tanaka (Born on January 18, 1954)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
22,600 shares
Term of office as Director
8 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
15 times / 15 meetings (100%)

April 1976
April 2009
June 2011
June 2012
June 2014
June 2015

February 2016

June 2017

June 2021

Joined the Company
Executive Officer, and Acting Director of
General Affairs Headquarters
Executive Officer, and Director of General
Affairs Headquarters
Managing Executive Officer, and Directorof General Affairs Headquarters
Director, Managing Executive Officer, andDirector of General Affairs Headquarters
Executive Director, President & Chief
Executive Officer, Chief Compliance
Officer (CCO), Chairman of Compliance
Committee, Director of Business Strategy
Office, and Director of General Affairs
Headquarters
Executive Director, President & Chief
Executive Officer, Chief Compliance
Officer (CCO), Chairman of Compliance
Committee, and Director of General Affairs& Human Resources Headquarters
Executive Director, President & Chief
Executive Officer, Chief Compliance
Officer (CCO), and Chairman ofCompliance Committee
Executive Director, Chairman (to date)◆ Reason for nomination as a candidate for Director

Since assuming office as President and Chief Executive Officer in June 2015, Mr. Kenichi Tanaka has
demonstrated strong leadership in his management of the Company, formulating Vision 2030, theCompany’s long-term vision for the year 2030 that forms the foundation for two Mid-Term
Management Plans and the current Mid-Term Plan. He has accurately and efficiently engaged in the
management and administration of the entire Group. Since June 2021, he has focused on enhancing
the effectiveness of the Board of Directors and supervising management as Executive Director,
Chairman.
He is deeply familiar with the Group’s external environment and corporate governance. Expectationsof his contribution to the sustained improvement of the corporate value of the Company resulted in ourdecision to re-appoint him as a candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Kenichi Tanaka.

-9-Candidate No.

2

Hideo Takahashi (Born on December 4, 1956)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
11,100 shares
Term of office as Director
3 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
15 times / 15 meetings (100%)

April 1980
June 2013
June 2014
June 2015
October 2015

June 2018
June 2019
June 2021

Joined the Company
Executive Officer, and Deputy Director of
R&D Strategy Headquarters
Executive Officer, and Acting Director of
R&D Strategy Headquarters
Executive Officer, and Director of R&D
Strategy Headquarters
Executive Officer, Director of R&D
Strategy Headquarters and Battery & Power
Generation Materials Development
Promotion Headquarters
Managing Executive Officer, and Directorof R&D Strategy Headquarters
Director, Managing Executive Officer, andDirector of Yokkaichi Plant
Executive Director, President & Chief
Executive Officer (to date)

Major other offices concurrently held
Director and Chairman at ISK AMERICAS INCORPORATED◆ Reason for nomination as a candidate for Director

Mr. Hideo Takahashi has experience including research, product development, sales and served as
Director of a plant and Director of R&D Strategy Headquarters. He was appointed President and Chief
Executive Officer in June 2021. Since assuming office, he has properly made decisions and conductedsupervision on important business execution and management based on his abundant experience andachievements.
Since assuming office as President and Chief Executive Officer, he has used his experience,achievements and leadership to guide management of the entire Group to achieve the goals of theCompany’s long-term vision, Vision 2030. We expect that Mr. Takahashi will contribute to thesustained improvement of the corporate value of the Group. This resulted in our decision to re-appoint
him as a candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Hideo Takahashi.

- 10 -

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

3

Kiyomitsu Yoshida (Born on May 19, 1958)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
9,200 shares
Term of office as Director
4 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
13 times / 15 meetings (87%)

April 1981
June 2014
May 2016

June 2016

June 2017

June 2018

January 2019

February 2019

June 2019

June 2021

Joined the Company
Executive Officer, and Acting Director ofCentral Research InstituteExecutive Officer, Acting Director ofCentral Research Institute, and Director of
Animal Health Headquarters
Executive Officer, Director of Central
Research Institute, and Director of Animal
Health Headquarters
Managing Executive Officer, Director ofCentral Research Institute, and Director of
Animal Health Headquarters
Director, Managing Executive Officer,
Deputy Director of Biosciences Sales &Marketing, and Director of Animal Health
Headquarters
Director, Managing Executive Officer,
Director of Biosciences Sales & Marketing,and Director of Animal Health
Headquarters
Director, Managing Executive Officer,
Director of Biosciences Business
Headquarters, and Director of Animal
Health Headquarters
Director, Managing Executive Officer, andDirector of Biosciences Business
Headquarters
Director, Senior Managing Executive
Officer, Organic Chemicals Business, andDirector of Biosciences Business
Headquarters (to date)

Major other offices concurrently held
Director and Chairman at ISK BIOSCIENCES CORPORATION
Director and Chairman at ISK BIOSCIENCES EUROPE N.V.

◆ Reason for nomination as a candidate for Director

Mr. Kiyomitsu Yoshida has been engaged in sales, research & development, operation of a research
institute, etc., mainly in the organic chemicals department, and has properly made decisions andconducted supervision on important business execution and management based on his abundant
experience and achievements.
Since taking charge of the Organic Chemicals Business in June 2021, he has been engaged in planningand examining, or supervising the execution of, management strategies across the bioscience andhealthcare fields. We expect that Mr. Yoshida will contribute to the sustained improvement of thecorporate value of the Group. This resulted in our decision to re-appoint him as a candidate for our
Director.
Note: No special-interest relationships exist between the Company and Mr. Kiyomitsu Yoshida.

- 11 -

Candidate No.

4

Yasunobu Kawazoe (Born on August 5, 1958) Reappointment
A brief summary of his career, posts and responsibilities held, andother major offices concurrently held

Number of the Company’s shares held
18,900 shares
Term of office as Director
3 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
15 times / 15 meetings (100%)

April 1982

Joined Long-Term Credit Bank of Japan,
Limited (currently Shinsei Bank, Limited)
April 2012
Executive Officer, and General Manager ofInstitutional Credit Management Division,
Shinsei Bank, Limited
April 2015
Managing Executive Officer, Chief Risk
Officer, and Head of Risk Management
Group, Shinsei Bank, Limited
April 2016
Managing Executive Officer, and Head of
Credit Risk Management, Shinsei Bank,
LimitedDecember 2016 Retired from Shinsei Bank, Limited
January 2017
Advisor to Ishihara Sangyo Kaisha, Ltd.
June 2017Managing Executive Officer, and Directorof Finance & Accounting Headquarters
June 2019
Director, Managing Executive Officer, andDirector of Finance & Accounting
Headquarters (to date)◆ Reason for nomination as a candidate for Director

Mr. Yasunobu Kawazoe, has properly made decisions and conducted supervision on importantbusiness execution and management in fields related to the strengthening of governance, in addition tofinance and accounting, based on his abundant experience and achievements, by making effective useof his many years of experience and expertise related to finance and accounting that he had cultivated
at a financial institution.
We expect that Mr. Kawazoe will contribute to the sustained improvement of the corporate value of
the Group by utilizing his experience and knowledge for the Board of Directors in planning andexamining, or supervising the execution of, management strategies. This resulted in our decision to reappoint him as a candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Yasunobu Kawazoe.

- 12 -

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

5

Masaki Shimojo (Born on April 14, 1960)

Reappointment

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
7,000 shares
Term of office as Director
2 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
15 times / 15 meetings (100%)

April 1983
October 2016
June 2019

June 2020

June 2021

Joined the Company
Executive Officer, and Director of
Inorganic Chemicals Sales & Marketing
Managing Executive Officer, Director of
Inorganic Chemicals Sales & Marketing,and Director of R&D Strategy Headquarters
Director, Managing Executive Officer,
Director of Inorganic Chemicals Sales &Marketing, and Director of R&D Strategy
Headquarters
Director, Managing Executive Officer, andDirector of Inorganic Chemicals Sales &Marketing, R&D Strategy Headquarters
Assistant Director of R&D Strategy
Headquarters (to date)

Major other offices concurrently held
Director and Chairman at ISHIHARA CORPORATION (U.S.A.)
Chairman at ISK TAIWAN CO., LTD.

◆ Reason for nomination as a candidate for Director

Mr. Masaki Shimojo has been engaged in sales, research, product development, and production, etc.
mainly in the inorganic chemicals department. He has properly made decisions and conductedsupervision on important business execution and management in the fields of research, development,
and domestic and international market expansion, based on his abundant experience and achievements.
We expect that Mr. Shimojo will contribute to the sustained improvement of the corporate value of theGroup by utilizing his experience and knowledge for the Board of Directors in planning andexamining, or supervising the execution of, management strategies. This resulted in our decision to reappoint him as a candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Masaki Shimojo.

- 13 -

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

6

Hiroshi Okubo (Born on December 9, 1961)
New appointment
A brief summary of his career, posts and responsibilities held, andother major offices concurrently held

Number of the Company’s shares held
5,286 shares

April 1986
June 2016

Term of office as Outside Director-

July 2017
Attendance at Board of Directors
meetings-

June 2020

June 2020

June 2021

Joined the Company
Seconded to ISK ENGINEERINGPARTNERS CORPORATION (Executive
Officer)
Seconded to FUJI TITANIUM INDUSTRY
CO., LTD. (Director, Managing Executive
Officer)
General Manager of Corporate Planning &Administration Division, Corporate
Administration & Planning Headquarters
Executive Officer, Deputy Director of
Corporate Administration & Planning
Headquarters
Managing Executive Officer, Director of
Corporate Administration & Planning
Headquarters (to date)◆ Reason for nomination as a candidate for Director

Mr. Hiroshi Okubo has experience in production, environment, safety and health, and other divisionsat plants, as well as in the management of subsidiaries and affiliates. He was appointed Executive
Officer in 2020, and is engaged in corporate administration and planning.
His abundant operational knowledge and experience have enabled him to properly execute his duties.
We expect that Mr. Okubo will contribute to the sustained improvement of the corporate value of theGroup. This resulted in our decision to appoint him as a new candidate for our Director.
Note: No special-interest relationships exist between the Company and Mr. Hiroshi Okubo.

- 14 -

Candidate No.

7

Hiroshi Katsumata (Born on April 1, 1952)
Reappointment

Outside Officer

Independent Officer

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
7,200 shares
Term of office as Outside Director
5 years (at the conclusion of this General
Meeting of Shareholders)
Attendance at Board of Directors
meetings
15 times / 15 meetings (100%)

April 1977

Joined Ministry of International Trade andIndustry (currently Ministry of Economy,
Trade and Industry)
February 1995 General Manager of Natural Resources
Department, Chubu Bureau of Trade andIndustry
June 1997
Deputy Director-General of Planning
Department, New Energy and Industrial
Technology Development Organization
July 1999
Manager of Environmental Research andTechnology Division, Planning and
Coordination Bureau, Environment Agency(currently Ministry of the Environment)
December 2000 Manager of Vienna Center, Japan External
Trade Organization
June 2003
Managing Director, Plastic Waste
Management InstituteJune 2006
Executive Officer, and Deputy General
Manager of Technological Affairs Division,
Taiyo Nippon Sanso Corporation
June 2009
Senior Executive Officer, and Deputy
General Manager of Technological Affairs
Division, Taiyo Nippon Sanso Corporation
June 2011
Senior Executive Officer, and General
Manager of Technological Affairs Division,
Taiyo Nippon Sanso Corporation
June 2012Managing Director, and General Manager
of Technological Affairs Division, Taiyo
Nippon Sanso Corporation
June 2014
Senior Managing Director, and General
Manager of Technological Affairs Division,
Taiyo Nippon Sanso Corporation
June 2015
Director Senior Managing Executive
Officer, and General Manager ofTechnological Affairs Division, Taiyo
Nippon Sanso Corporation
June 2017
Director, TM Air Co., Ltd.
June 2017
Outside Director of the Company (to date)June 2018
Advisor to TM Air Co., Ltd.
June 2019
Part-time Consultant for TM Air Co., Ltd.

- 15 -

◆ Reason for nomination as a candidate for Outside Director and summary of expected roles

Mr. Hiroshi Katsumata, currently serving as Outside Director of the Company, has diverse experienceand specialized insight in public administration, as well as experience in corporate management as
Director of an industrial gas business operator. These qualities enable him to provide appropriate
advice and supervision, especially in the fields of management strategy, research, and development. In
addition, he also serves as Chairman of the Personnel Committee and a member of the Compensation
Committee and Evaluation Committee, actively expressing his opinions. For these reasons, he isexpected to perform his duties as Outside Director adequately from an independent standpoint. This
resulted in our decision to re-appoint him as a candidate for our Outside Director.
Notes:
1. No special-interest relationships exist between the Company and Mr. Hiroshi Katsumata.
2. Mr. Hiroshi Katsumata is a candidate for Outside Director.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Director that sets a limit on the liability for damages
under Article 423, Paragraph 1 of the Companies Act. The Company has entered into an agreement on
limitation of liability (the larger of an amount determined in advance, which shall be equal to or more than 10
million yen, and an amount prescribed by laws and regulations) with Mr. Hiroshi Katsumata, and will renew thecurrent agreement with him upon the approval of his re-election at this General Meeting of Shareholders.
4. Mr. Hiroshi Katsumata meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the Tokyo Stock Exchange (TSE). The
Company has notified the TSE of his election as an Independent Officer as required by the TSE. If his reelection is approved at this General Meeting of Shareholders, the Company will continue to appoint him as an
Independent Officer.

- 16 -

Candidate No.

8

Tatsuo Hanazawa (Born on April 30, 1951)
Reappointment

Outside Officer

Independent Officer

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
2,400 shares

April 1975

Term of office as Outside Director
3 years (at the conclusion of this General
Meeting of Shareholders)August 1990

Attendance at Board of Directors
meetings
15 times / 15 meetings (100%)

May 1992
July 1995
July 1997

July 1999
April 2000

July 2001
July 2002

January 2004

October 2005

April 2006

April 2013
June 2019- 17 -

Joined Ministry of Agriculture and Forestry(currently Ministry of Agriculture, Forestry
and Fisheries)
Research Administrator of Administration
Division, Food and Marketing BureauCounselor, Embassy of Japan in the
People’s Republic of China
Councilor, Cabinet Councilors’ Office inInternal Affairs, Cabinet Secretariat
Manager of Mountainous and Snowy
Regions Development Division, National
Land Agency
Manager of Upland Crop Division,
Agricultural Production Bureau
Deputy Director-General of Hokuriku
Regional Agricultural Administration
OfficeDirector-General of Kinki Chugoku
Regional Forest Office
Assistant Vice-Minister, Minister’s
Secretariat and Land and Water Bureau,
Ministry of Land, Infrastructure, Transport
and Tourism
Director of Selection and Evaluation
Committee, Bio-Oriented Technology
Research Advancement Institution, National
Agriculture and Food Research
Organization
Executive Director of Japan Food Industry
Center (currently Japan Food Industry
Association)
Executive Director of Japan Food Industry
Center and Japan Food Safety Management
System Assessment & Registration Senior
Manager
Executive Director of Japan Food Industry
Association
Outside Director of the Company (to date)◆ Reason for nomination as a candidate for Outside Director and summary of expected roles

Mr. Tatsuo Hanazawa, currently serving as Outside Director of the Company, has experience andknowledge of public administration, especially of agricultural policies both inside and outside Japan,
and experience in the environmental field. Based on this experience, he provides appropriate advice
and supervision of the management of the Company, in the fields of expansion of the domestic andoverseas markets and environmental issues. In addition, he also serves as Chairman of theCompensation Committee and a member of the Personnel Committee and Evaluation Committee,
actively expressing his opinions. Mr. Hanazawa has never in the past been involved in the
management of a company except as an Outside Director. However, for these reasons, he is expected
to perform his duties as Outside Director adequately from an independent standpoint. This resulted inour decision to re-appoint him as a candidate for our Outside Director.
Notes:
1. No special-interest relationships exist between the Company and Mr. Tatsuo Hanazawa.
2. Mr. Tatsuo Hanazawa is a candidate for Outside Director.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Director that sets a limit on the liability for damages
under Article 423, Paragraph 1 of the Companies Act. The Company has entered into an agreement on
limitation of liability (the larger of an amount determined in advance, which shall be equal to or more than 10
million yen, and an amount prescribed by laws and regulations) with Mr. Tatsuo Hanazawa, and will renew thecurrent agreement with him upon the approval of his re-election at this General Meeting of Shareholders.
4. Mr. Tatsuo Hanazawa meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the TSE. The Company has notified the TSE of
his election as an Independent Officer as required by the TSE. If his re-election is approved at this General
Meeting of Shareholders, the Company will continue to appoint him as an Independent Officer.

- 18 -

REFERENCE DOCUMENT FOR THE GENERAL MEETING OF SHAREHOLDERS
Candidate No.

9

Satoshi Ando (Born on April 27, 1974)
Reappointment

Outside Officer

Independent Officer

A brief summary of his career, posts and responsibilities held, andother major offices concurrently held
Number of the Company’s shares held
1,000 shares

October 2001

Term of office as Outside Director
2 years (at the conclusion of this General
Meeting of Shareholders)

October 2001
May 2015

Attendance at Board of Directors
meetings
15 times / 15 meetings (100%)

May 2016

June 2020

Admitted to the bar (Dai-Ichi Tokyo Bar
Association)
Joined Onishi Shoichiro Law OfficeSenior Partner of Onishi Shoichiro Law
Office (to date)Outside Director (Audit & Supervisory
Committee Member) of TOHO CO., LTD.
(to date)
Outside Director of the Company (to date)

Major other offices concurrently held
Attorney-at-law
Outside Director (Audit & Supervisory Committee Member) of TOHOCO., LTD.

◆ Reason for nomination as a candidate for Outside Director and summary of expected roles

Mr. Satoshi Ando, currently serving as Outside Director of the Company, has advanced professional
expertise as an attorney-at-law, as well as extensive experience and broad insight in corporate legal
affairs. He provides appropriate advice and supervision of the management of the Company, in thefields of law, risk management, finance, and accounting, from an independent and legal standpoint. In
addition, he also serves as a member of the Compensation Committee, Personnel Committee andEvaluation Committee, actively expressing his opinions. Mr. Ando has never in the past been involvedin the management of a company except as an Outside Director. However, for these reasons, he isexpected to perform his duties as Outside Director adequately from an independent standpoint. This
resulted in our decision to re-appoint him as a candidate for our Outside Director.
Notes:
1. No special-interest relationships exist between the Company and Mr. Satoshi Ando.
2. Mr. Satoshi Ando is a candidate for Outside Director.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Director that sets a limit on the liability for damages
under Article 423, Paragraph 1 of the Companies Act. The Company has entered into an agreement on
limitation of liability (the larger of an amount determined in advance, which shall be equal to or more than 10
million yen, and an amount prescribed by laws and regulations) with Mr. Satoshi Ando, and will renew thecurrent agreement with him upon the approval of his re-election at this General Meeting of Shareholders.
4. Mr. Satoshi Ando meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the TSE. The Company has notified the TSE of
his election as an Independent Officer as required by the TSE. If his re-election is approved at this General
Meeting of Shareholders, the Company will continue to appoint him as an Independent Officer.

- 19 -

Proposal No. 4

Election of One (1) Substitute Audit &Supervisory Board Member

At the 98th Ordinary General Meeting of Shareholders held on June 25, 2021, Mr. Yasuhiro Koike waselected as a substitute Audit & Supervisory Board Member. His term of office will terminate at the timeof the start of the forthcoming General Meeting of Shareholders. Therefore, one (1) substitute Audit &Supervisory Board Member shall be appointed anew in the case that a vacancy occurs in the statutory
number of auditors.
This proposal has obtained the consent of the Audit & Supervisory Board.
The candidate for substitute Audit & Supervisory Board Member is as follows:

Yasuhiro Koike (Born on July 31, 1962)
Reappointment

Substitute Outside Audit & Supervisory Board

Independent Officer

A brief summary of his career and posts held, and other major
offices concurrently held
Number of the Company’s shares held
0 shares

April 1991
April 1998
April 2004
April 2012
April 2019

Admitted to the bar (Osaka Bar
Association)
Opened Koike Law OfficeOpened Ohara & Koike Law OfficeVice-president of Osaka Bar Association
Executive Governor of Japan Federation of
Bar Associations

Major other offices concurrently held
Attorney-at-law◆ Reason for nomination as a candidate for substitute Outside Audit & Supervisory Board Member

Mr. Yasuhiro Koike has professional knowledge and experience of legal practice and sufficient insight
into corporate management, which endorses the view that he has the ability to carry out his
professional duties as a substitute Outside Audit & Supervisory Board Member from an independentand unbiased perspective.
Notes:
1. No special-interest relationships exist between the Company and Mr. Yasuhiro Koike.
2. Mr. Yasuhiro Koike is a candidate for a substitute Outside Audit & Supervisory Board Member.
3. Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulate that theCompany may enter into an agreement with an Outside Audit & Supervisory Board Member that sets a limit on
the liability for damages under Article 423, Paragraph 1 of the Companies Act. The Company will enter into anagreement on limitation of liability (the larger of an amount determined in advance, which shall be equal to or
more than 10 million yen, and an amount prescribed by laws and regulations) with Mr. Yasuhiro Koike, if hiselection is approved at this General Meeting of Shareholders and he assumes his Audit & Supervisory Board
Member role.
4. Mr. Yasuhiro Koike meets the requirements of the “Criteria for the Independence of Outside Officers at theCompany” and the requirements for Independent Officer set by the TSE. If his election is approved at this
General Meeting of Shareholders and he assumes his Audit & Supervisory Board Member role, the Company
will notify the TSE of Mr. Yasuhiro Koike’s nomination as an Independent Officer as required by the TSE.
5. The Company has concluded a directors and officers liability insurance contract with an insurance company, asprescribed in Article 430-3, Paragraph 1 of the Companies Act, with all Audit & Supervisory Board Members
as the insured. The insurance covers legal damages and litigation expenses in the event that a claim for damages
is made against the insured during the insurance period due to improper actions (including errors of omission)committed by the insured in his/her capacity as such. If the election of Mr. Yasuhiro Koike is approved at this
General Meeting of Shareholders and he assumes his Audit & Supervisory Board Member role, then he will be- 20 -

included in the insured under this insurance contract. The Company intends to renew this insurance contract
under the same terms when it comes due for renewal.

(Reference)
Criteria for the Independence of Outside Officers at the Company

An Outside Director or Outside Audit & Supervisory Board Member shall be deemed independent if
he/she falls under none of the following criteria:
1. A person who is or was within the past 10 years an executive of business*1 of the corporate groupcomposed of the Company and its subsidiaries (hereinafter, “the Group”)
2. A person who is or was within the past five years a major shareholder (holding 10% or more of total
voting rights) of the Company or an executive of business thereof
3. A person who is a client of the Group and whose transactions with the Group exceeded 2% of theconsolidated annual sales of the Group in one of the recent three business years, or the executive of
business thereof
4. A person for whom the Group is a client and whose transactions with the Group exceeded 2% of its
consolidated annual sales in one of its recent three business years, or the executive of business thereof
5. An accounting professional, legal professional, or other consultant or a member of a group thereof
who receives from the Group a large amount of money or other financial benefit*2 besides the officer’s
remuneration
6. A person who receives or has received within the past three years a large amount of donation or otherassistance*3 from the Group, or the executive of business thereof
7. A spouse or a relative within the second degree of kinship of any person who falls under any of thecriteria 1 through 6 above, or a relative who lives with such a person.
*1: “An executive of business” refers to the person defined in Article 2, Paragraph 3 (6) of theOrdinance for Enforcement of the Companies Act.
*2: “A large amount of money or other financial benefit” refers to over 10 million yen of regularannual compensation on average over the past three years.
*3: “A large amount of donation or other assistance” refers to over 10 million yen of an annual total
amount of donation or assistance.

- 21 -

Proposal No. 5

Determination of Compensation for the Grant of
Restricted Stock Compensation to Directors(Excluding Outside Directors)

Compensation, etc. for Directors not exceeding 460 million yen per annum (not including compensation
received in the capacity of an employee, for Directors who serve concurrently as employees) was approvedby the 82nd Ordinary General Meeting of Shareholders held on June 29, 2005.
As part of a review of the compensation system for officers, we request approval to provide
compensation for the grant of restricted stock to Directors (excluding Outside Directors; hereinafterreferred to as “Eligible Directors”), with the aim of providing an incentive to strive for the sustained
improvement of the Company’s corporate value, and further promote shared values between Eligible
Directors and all shareholders.
Compensation under this proposal shall be provided to Eligible Directors in the form of monetary claims
for the delivery of restricted stock. The total amount of the monetary claims to be provided to Eligible
Directors shall not exceed 90 million yen annually (not including remuneration received in the capacity ofan employee, for Directors who serve concurrently as employees). The Board of Directors shall determine
the specific timing and allocation of this compensation to each Eligible Director.
There are currently nine (9) Directors, including three (3) Outside Directors. If Proposal No. 3 isapproved and passed as proposed, there will be nine (9) Directors, including three (3) Outside Directors.
Eligible Directors shall receive common shares of the Company through issuance or disposal, in returnfor contribution in kind of all monetary claims provided under this proposal, based on a resolution of theBoard of Directors. The total number of common shares to be issued or disposed of shall not exceed 95,000
shares per year. However, should the Company’s common shares undergo a share split (including allotmentof the Company’s common shares without contribution), consolidation of shares, or other cause
necessitating adjustment to the total number of common shares to be issued or disposed of, with an effective
date on or after the date of the approval and passing of this Item by the General Meeting of Shareholders,
the total number of common shares shall be adjusted as necessary within a reasonable range.
The amount to be paid in per share shall be determined by the Board of Directors, based on the closing
price of the Company’s common shares on the Tokyo Stock Exchange on the last business day before thedate of the resolution of the Board of Directors (if trading is not effected on that date, the closing price on
the last trading day of the Company’s shares preceding the resolutions) within a range that is notparticularly favorable to the Eligible Directors receiving the common shares. The issuance or disposal ofcommon shares to Eligible Directors, and the receipt of monetary claims as contribution in kind, shall be
conditional upon the Company concluding a restricted stock allotment agreement (hereinafter the“Allotment Agreement”) that includes the content shown below, with each Eligible Director. The
maximum amount of compensation, the total number of the Company’s common shares to be issued or
disposed of, and other conditions regarding the delivery of restricted stock to Eligible Directors under this
proposal, are determined based on the purpose described above, the Company’s business conditions, theCompany’s decision policy regarding the details of compensation for individual Directors, and otherrelevant matters, and are considered appropriate. (If this proposal is accepted and passed, then the
Company’s decision policy regarding the details of compensation for individual Directors will be amended
as shown under [Reference] below.)[Summary of the contents of the Allotment Agreement](1) Transfer Restriction Period
Under the Allotment Agreement, an Eligible Director must not transfer, pledge or otherwise dispose ofcommon shares of the Company allotted under the Allotment Agreement (hereinafter the “Allotted
Shares”) from the day when the shares were allotted until the time immediately after the Eligible
Director retires from the post as an officer of the Company that has been predesignated by theCompany’s Board of Directors (hereinafter the “Transfer Restriction Period”). These restrictions are
hereinafter referred to as the “Transfer Restrictions.”(2) Treatment at the time of retirement
In the event that an Eligible Director retires from the post at the Company predesignated by theCompany’s Board of Directors prior to the expiration of a period predesignated by the Company’s- 22 -

Board of Directors (hereinafter the “Service Period”), except where due to the expiration of the Eligible
Director’s term of office, death or other proper cause, the Company shall rightfully acquire the Allotted
Shares for no consideration.
(3) Removal of the Transfer Restrictions
Where an Eligible Director has served continuously in a post as an officer of the Company that has beenpredesignated by the Company’s Board of Directors, for the duration of the Service Period, theCompany shall remove the Transfer Restrictions pertaining to all Allotted Shares held by the Eligible
Director at the expiration of the Transfer Restriction Period. However, where an Eligible Director retires
from the predesignated post as an officer of the Company, for a reason that is not a proper reason, after
the expiration of the Service Period but prior to the expiration of the Transfer Restriction Period, then
the number of Allotted Shares from which the Transfer Restrictions are removed, and the timing of thisremoval, shall be adjusted reasonably as necessary. The Company shall rightfully acquire, for no
consideration, the remaining Allotted Shares that have not been released from the Transfer Restrictions,
immediately subsequent to the release from the Transfer Restrictions in accordance with the provisions
above.
(4) Treatment in the case of organizational restructuring, etc.
Notwithstanding the provisions in (1) above, where a merger agreement with the Company as the nonsurviving company, a share exchange agreement where the Company becomes a wholly-owned
subsidiary, a share transfer plan or another matter concerning an organizational restructuring etc. isapproved by the Company’s General Meeting of Shareholder (or the Company’s Board of Directors,
for organizational restructuring etc. that does not require the approval of the General Meeting of
Shareholders) during the Transfer Restriction Period, the Transfer Restrictions may be removed before
the effective date of the organizational restructuring etc. by resolution of the Board of Directors, for anumber of the Allotted Shares to be determined reasonably based upon the length of the period fromthe day when the Transfer Restriction Period commenced to the day when the organizational
restructuring etc. was approved. The Company shall rightfully acquire, for no consideration, theremaining Allotted Shares for which the Transfer Restrictions have not been removed immediately
subsequent to the removal of the Transfer Restrictions in accordance with the provisions above.
(5) Other matters
Other matters concerning the allotment agreement shall be determined by the Company’s Board of
Directors.
[Reference]
If this proposal is approved and passed as proposed, then the content of the decision policy regarding
the details of compensation, etc. for individual Directors, after the amendments planned by the Company,
will be as presented below.
1) Decision policy regarding the amount and calculation method of compensation, etc. for individual
Directors
The standards for basic compensation and performance-linked compensation are based on rank inaccordance with the Officers Compensation Regulations decided by the Board of Directors. Basiccompensation is paid based on the Officers Compensation Regulations, in amounts corresponding
to the roles and responsibilities of Directors and Executive Officers. Remuneration for Outside
Directors is composed only of basic compensation because of their position independent frombusiness execution.
2) Details of performance indicators, the decision policy for calculating the amount or number for
performance-linked compensation, etc.
Under the Officers Compensation Regulations decided by the Board of Directors, performancelinked compensation, which is part of compensation, etc. for Directors (excluding Outside Directors),
comprises annual performance-linked compensation aimed at ensuring objectivity and linkage with
the Company’s financial results, and long-term performance-linked compensation. The amount ofannual performance-linked compensation is calculated and determined upon comprehensive
consideration of factors including the results of corporate activities, such as net income attributableto owners of parent, and individual performance evaluation.
3) Details of non-monetary compensation, etc., and the decision policy for calculating the amount or
number for non-monetary compensation, etc. or the calculation method thereof- 23 -

Non-monetary compensation, which is part of compensation, etc. for Directors (excluding Outside
Directors), comprises restricted stock. The maximum total amount of monetary claims provided forthe grant of restricted stock to Directors (excluding Outside Directors) is 90 million yen per annum(not including compensation received in the capacity of an employee, for Directors who serve
concurrently as employees), and the maximum total number of common shares to be issued or
disposed by the Company is 95,000 shares. However, should the Company’s common shares
undergo a share split (including allotment of the Company’s common shares without contribution),
consolidation of shares, or other cause necessitating adjustment to the total number of commonshares to be issued of disposed, the total number of common shares shall be adjusted as necessary
within a reasonable range. The Board of Directors determines the specific timing and allocation ofthis compensation to each Director.
4) Proportional amounts of compensation, etc. for individual Directors
The proportion of basic compensation and performance-linked compensation, etc. is proposed,
taking into account each year’s financial results, etc., by the Executive Director, President, who isdelegated authority by resolution of the Board of Directors. It is then referred to the Compensation
Committee for deliberation, and determined by the Board of Directors, after discussion among
Executive Directors, based on the report by the Compensation Committee.
5) Decision policy on the timing and conditions for paying compensation, etc. to Directors
It is prescribed in the Officers Compensation Regulations decided by the Board of Directors thatbasic compensation shall be calculated per calendar month, and the amount for each month shall be
paid on the same day as salaries for employees and that performance-linked compensation, etc. shallbe paid on the same day as summer bonuses for employees.
6) Delegation of authority concerning the determination of compensation, etc. for individual Directors
Compensation, etc. for individual Directors of the Company is proposed by the Executive Director,
President, who is delegated authority by resolution of the Board of Directors. It is then referred to
the Compensation Committee for deliberation, and determined by the Executive Director, President
after discussion among Executive Directors, based on the report by the Compensation Committee.
The details of compensation, etc. for individual Directors are determined after deliberation by theCompensation Committee, which is composed of Independent Outside Directors and Independent
Outside Audit & Supervisory Board Members. The Compensation Committee provides advice andrecommendations, based on the information from officers’ compensation surveys carried out by
third party firms, and each member’s insight, before the decision is made, in order to ensure that the
Executive Director, President exercises his authority appropriately.

- 24 -

(Appendix)

Business Report(April 1, 2021 - March 31, 2022)

I. Overview of the Corporate Group
1. Business Progress and Results(1) Business Conditions
The outlook for the global economy remains uncertain due to factors such as the worldwide
COVID-19 pandemic. However, with the roll-out of vaccinations, business conditions have begun
to recover overall, albeit to varying degrees in different industries, countries, and regions. In
addition, the currency market trended towards a weaker yen. Nevertheless, conditions remain
extremely adverse, with the global economy negatively impacted by rising geopolitical risk,
including the Russia-Ukraine situation, in addition to procurement issues for semiconductors andother parts and materials, logistics delays and soaring marine freight costs due to a container
shortage, and a dramatic rise in fuel and resource prices. The environments for the Group’s main
businesses are as follows. In the inorganic chemicals business, an expansion in demand in theelectronic component materials field added to strong demand for use in automotive andconstruction. In the organic chemicals business, income from domestic sales of the main
agrochemicals declined, while sales overseas were robust, mainly for fungicides and herbicides,
partly due to expanded crop production in the Americas. This was despite signs of disruption inoverseas supply chains.
Under these conditions, the Group established its long-term vision, “Vision 2030 – Originality.
Acceleration. Global Reach. Transforming Lives Through the Power of Chemistry,” announced
the Mid-Term Management Plan “Vision 2030 Stage I” for the three years from fiscal 2021 to
fiscal 2023, and engaged in key measures aimed at creating sustainable corporate value by
promoting stronger management initiatives incorporating the perspectives of ESG and the SDGs.
As a result, the Company posted consolidated net sales of ¥110.9 billion (up ¥9.1 billion YoY) andconsolidated operating income of ¥11.5 billion (up ¥6.3 billion YoY) for the fiscal year ended
March 31, 2022 (the “current fiscal year”). Consolidated ordinary income was ¥13.2 billion (up¥7.3 billion YoY) mainly due to a foreign exchange gain resulting from a weaker yen in terms of
non-operating income. Net income attributable to owners of parent was ¥11.6 billion (up ¥8.3
billion YoY).

Results for each business segment were as follows.
[Inorganic Chemicals Business]
Demand for titanium dioxide recovered in Japan and overseas, mainly for use in automotive andconstruction, with net sales amounting to ¥45.9 billion (up ¥8.0 billion YoY). In functional
materials, demand for materials for electronics components related to automotive and 5G increased
significantly, and sales of electro-conductive materials were also strong, leading to net sales of¥13.8 billion (up ¥1.9 billion YoY).
Income also increased, boosted by the contribution of factors such as lower fixed costs due to an
improvement in operating rates and the penetration of sales price revisions in Japan and overseas,in addition to the rise in revenue and income due to a recovery in market conditions. This was
despite negative factors such as soaring raw materials and fuel prices.
As a result, net sales for the inorganic chemicals business were ¥59.8 billion (up ¥10.0 billion
YoY), and operating income was ¥6.0 billion (up ¥5.0 billion YoY).
[Organic Chemicals Business]
Overseas sales of agrochemicals were strong, not significantly impacted by COVID-19 orabnormal weather conditions. Revenue from Europe increased, due mainly to increased demand
for fungicides and herbicides. The Americas saw robust sales, due to factors such as strong sales offungicides in South America, due mainly to an expansion in crop production, and strong sales of
new herbicide products in North America, in addition to an improvement in distribution stock.
- 25 -Domestic sales declined year over year, due to factors such as a decrease in sales of the mainstay
nematicides and fungicides.
As a result, net sales for the organic chemicals business were ¥48.2 billion (on a par with theprevious fiscal year), and operating income was ¥7.7 billion (up ¥1.4 billion YoY).
[Other Businesses]
Net sales in other businesses were ¥2.7 billion (down ¥0.7 billion YoY), and operating income was¥0.4 billion (on a par with the previous fiscal year).
(2)

Capital Expenditures
Capital expenditures during the current fiscal year amounted to ¥4.5 billion, mainly comprising¥3.3 billion in the inorganic chemicals business and ¥0.9 billion in the organic chemicals business.

(3)

Financing
Investment in the maintenance and renewal of facilities increased year over year, while researchand development costs decreased.
The necessary funds were procured from internal reserves rather than through loans from financial
institutions, and interest-bearing debt at the end of the current fiscal year decreased by ¥9.6 billion
year over year to ¥50.4 billion.
The Group will consider further procurement of funds while monitoring increases in the cost of inraw materials and energy, and the transfer of these costs onto product prices.

(4)

Issues to Be Addressed
The Group has been implementing its long-term vision, “Vision 2030” and the Mid-Term
Management Plan “Vision 2030 Stage I” (for fiscal 2021-2023), founded on this vision.
1) Long-term vision “Vision 2030”
We took the opportunity of the 100th anniversary of the Group’s founding to visualize our ideal
for the Group in 2030, ten years from now, and establish “Originality. Acceleration. Global Reach.
Transforming Lives Through the Power of Chemistry.” as our long-term vision, “Vision 2030.”
We aim to achieve the following management targets and policy approach.
 Management targets (2030)
Consolidated net sales: over ¥200.0 billion
Consolidated operating income ratio: 15% or greater
ROE: 10% or greater
Shareholder returns: maintain stable shareholder returns
 Basic policy approach
We will strive to achieve Vision 2030, focusing our value creation on three strengths that theGroup has developed over many years, based on its corporate philosophy.
<Three strengths>“Quality” for safety and security, to contribute to social development, protection of life andenvironmental preservation
Leading-edge “technological development” supported by diverse human resources“Management drive” based on a high awareness of compliance
In an increasingly uncertain business environment involving soaring prices for raw materials andfuel, rising geopolitical risk, COVID-19, carbon neutrality and rapid digitalization, the Groupwill contribute to realizing a sustainable society while simultaneously enhancing corporate value
through its business activities.
We will continually promote management initiatives incorporating the perspectives of ESG and
the SDGs and further strengthen the business base. On this firm foundation, we will strive
together as a Group to achieve Vision 2030, based on the policies of the inorganic and organic
chemicals businesses.
 Business policies and key measures
1) Inorganic chemicals business- 26 -

Business policy: Create new value based on the technologies developed for titanium
dioxide products, to support the environment and digital society, andcontribute to the realization of a sustainable society.
Key measures: - Diversify the optical characteristics of titanium dioxide to achieve newvalue creation- Contribute to the resolution of social issues including the spread of ICT
and the shift to electric vehicles through functional materials- Reform production structures to achieve both a reduction inenvironmental impact and an increase in production efficiency
2) Organic chemicals businessBusiness policy: Supply unique products that directly enhance customer value across theworld, and support people’s nutrition, health and life to contribute to therealization of a sustainable society.
Key measures: - Promote development and commercialization with an awareness of theentire value chain- Refine and evolve proprietary technologies to accelerate value creation
and return to a growth trajectory- Achieve global lowest-cost manufacture and stable customer supply ofmain products2) Mid-Term Management Plan (for fiscal 2021-2023) “Vision 2030 Stage I”
 Basic policy
This Mid-Term Management Plan, “Vision 2030 Stage I,” is the first of three stages backcast
from the long-term vision, “Vision 2030.” The basic policy of the plan is to aim to create
sustainable corporate value by promoting stronger management initiatives incorporating theperspectives of ESG and the SDGs.
 Management targets, etc. for fiscal 2023
Consolidated net sales: over ¥125.0 billion
Consolidated operating income ratio: 13% or greater
ROE: 10% or greater
Shareholder returns: Continue to pay stable dividends that reflect consolidated financial results
Fiscal 2021 results

Fiscal 2023 plan

Net sales¥110.9 billion¥125.0 billion

13%

Operating income¥11.5 billion¥16.6 billion

44%

Ordinary income¥13.2 billion¥15.8 billion

19%¥11.6 billion¥12.4 billion

6%

10%

13%

–

14%

10% or greater–

Net income attributable toowners of parent
Operating income ratio
ROE

Change Key measures
The key measures to be implemented across the Group and within each business are as follows.
We will review the business plan each fiscal year, and strive to achieve performance targets forthe final fiscal year of the plan.
Group▪ Strengthen sustainable management initiatives incorporating the perspectives of ESG and theSDGs▪ Identify material factors and strengthen initiatives related to each material factor▪ Drive work style reform through the promotion of DX and greater operational efficiency▪ Continue and strengthen compliance management- 27 -

▪
▪
▪
▪
▪

Strengthen risk management
Expand the top line
Strengthen the capacity to create new businesses and productsContinue initiatives to reform internal structures and attitudes to achieve Vision 2030
Conduct thorough capital cost management, such as improvement along the whole cash
conversion cycle

Inorganic chemicals business▪ Raise the sales proportion of highly functional, high value-added products▪ Implement sales expansion strategies for electronic component materials and electroconductive materials▪ Accelerate development of new products to drive further growth▪ Achieve more favorable procurement terms for ore, the main raw material▪ Promote cost reduction at the Yokkaichi Plant through waste reduction and better
manufacturing and operating processes▪ Launch a master plan to optimize manufacturing bases▪ Create a road map towards reducing greenhouse gas emissions
Organic chemicals business▪ Achieve global lowest-cost manufacturing of our main agrochemical agents and ensure stablesupply, to expand our share of the global market▪ Reduce manufacturing costs and expand demand for the next main agrochemical products▪ Develop and commercialize biorational products and embed IPM*
▪ Implement strategic and innovative sales initiatives, such as the use of multiple agrochemicals
sales companies▪ Acquire and maintain agrochemicals registration in countries around the world▪ Expand the business scale by promoting corporate acquisitions and corporate alliances▪ Refine our chemosynthesis technologies and strengthen our traditional foundation▪ Expand sales of our veterinary pharmaceuticals around the globe*Integrated pest management
3) Sustainable management
We established the Sustainability Promotion Committee in November 2021, with the aim ofstrengthening the Group’s sustainable management base.
At present, we are engaged in formulating the details of initiatives to address the 8 issues
identified in 2021 as the highest priority for the Group and establishing KPIs (key performanceindicators), with the involvement of business departments across the Company. We intend to
disclose them in the Integrated Report for the current fiscal year. The outline of these activities
are as follows:• Environmental initiatives
Climate change countermeasures are an urgent global issue, and we are preparing fordisclosure under the TCFD framework. In addition, we are engaged in formulating aroadmap towards carbon-neutral status in 2050, including a GHG emissions reduction planto guide our energy transition, as we have a coal boiler at the Yokkaichi Plant.
• Social initiatives
In addition to considering the establishment of KPIs to ensure diversity among core
corporate personnel, we are engaged in formulating a human rights policy for the Group,and considering specific measures and initiatives for health and productivity management.
• Governance initiatives- 28 -

The Sustainability Promotion Committee is chaired by the Executive Director, President,
and mainly composed of Directors and Executive Officers, under the supervision of theBoard of Directors.
The Sustainability Promotion Committee reports on the progress of its work to the Board of
Directors every three months, and a system is in place to submit for deliberation or report
items considered at the Committee to the Board of Directors.

- 29 -

2.

Trends in Assets and Income

Item

The 96th
fiscal year
ended
March 31,2019

(Millions of yen, unless otherwise specified)
The 99th
The 97th
The 98th
fiscal year
fiscal year
fiscal year
ended
ended
ended
March 31,
March 31,
March 31,
2022
2020
2021
(Current
fiscal year)
101,066
101,774
110,955
5,345
5,944
13,272

Net sales
106,441
Ordinary income
11,144
Net income attributable to
8,683
2,359
3,373
11,690owners of parent
Net income per share (Yen)
217.2559.03
84.41
292.58
Total assets
168,689
172,437
180,021
185,758
Total net assets
75,33576,66979,51591,869Notes: 1. Net income per share is calculated based on the average number of outstanding
shares during the period, after deducting the number of shares of treasury stock.
2. In the 96th fiscal year, demand for titanium dioxide, the main product of the
inorganic chemicals business, was strong within Japan and overseas. From the
middle of the fiscal year onward however, a sense of uncertainty grew concerning
the outlook for demand and market conditions, due to the impact of a slowdown in
the Chinese economy. There were signs of a recovery in the global shipping value
for agrochemicals, the main product of the organic chemicals business, with an
improvement in the previously subdued market environment in South America. As
a result, net sales declined, but operating income and ordinary income increased.
Net income attributable to owners of parent increased, partly due to the absence of
extraordinary losses recorded in the previous fiscal year, related to the recognitionof a provision for implementation of environmental and safety arrangements.
3. In the 97th fiscal year, domestic demand for titanium dioxide, the main product of
the inorganic chemicals business, was strong during the first half of the fiscal
year, but showed signs of a downturn after the consumption tax hike. Overseas,
demand declined, primarily in Asia, with the impact of a slowdown in the Chinese
economy, and market conditions trended downward. The recovery continued in
the global shipping value for agrochemicals, the main product of the organic
chemicals business, against the backdrop of strong crop production in Brazil, anagricultural superpower. However, the impact of extraordinary weather events wasobserved in Japan and Europe, the Group’s main markets. As a result, net sales,
operating income, ordinary income and net income attributable to owners ofparent for the fiscal year all declined.
4. In the 98th fiscal year, sales of titanium dioxide, the main product of the inorganic
chemicals business, fell dramatically in the first half of the fiscal year due to theimpact of COVID-19, resulting in a large year-on-year decline. In functional
materials, however, sales of highly functional, high value-added products recovered
during the second half of the fiscal year to increase year-on-year. In the organic
chemicals business, the impact of COVID-19 on crop production was only limited,and sales of the main agrochemical products were strong, particularly overseas. As
a result, net sales increased, but operating income declined. Ordinary income andnet income attributable to owners of parent increased, mainly due to a foreignexchange gain resulting from a weaker yen in terms of non-operating income.
5. Please refer to 1. Business Progress and Results above for details on the 9 9th
fiscal year.
6. The Company has applied the “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020) and other guidance from the beginningof the current fiscal year. Assets and income for the current fiscal year arepresented after the application of these accounting standards.

- 30 -

3. Significant Parent Companies and Subsidiaries, etc. (As of March 31, 2022)(1) Relationship with Parent
Not applicable.
(2) Significant Subsidiaries, etc.
1) Significant Subsidiaries

Name
ISK BIOSCIENCES K.K.

Ownership
Ratio (%)

CapitalMain Business¥600 million

100

ISK AMERICASINCORPORATED

US$27,253 thousand

100

ISK BIOSCIENCES
EUROPE N.V.

€7,436 thousand

100¥100 million

100

Trading

ISHIHARA TECHNO
CORPORATION

Agrochemical sales
Management andadministration ofsubsidiaries in the
United States
Management of theEuropean agrochemicals
business; manufactureand sale ofagrochemicals

FUJI TITANIUM
INDUSTRY CO., LTD.

¥1,926 million

100

Manufacture and sale oftitanium dioxide,
functional materials, etc.

ISK ENGINEERINGPARTNERSCORPORATION¥100 million

100

Construction2) Significant Affiliates
Name

2.
4.

Main Business

15
Sale of materials related[15]
to agriculture
On March 22, 2022, CERTIS EUROPE B.V. became an equity method affiliate
through an exchange of shares with BELCHIM CROP PROTECTION N.V.,
which was previously an equity method affiliate.
The figure shown in square brackets [ ] in the Ownership Ratio column represents
the indirect ownership ratio.

CERTIS EUROPE B.V.
Notes: 1.

Ownership
Ratio (%)

Capital€1,790 thousand

Principal Businesses (As of March 31, 2022)
Business Segment
Details of BusinessInorganic chemicals business
Manufacture and sale of titanium dioxide, functional
materials, electronics materials, plaster, etc.
Organic chemicals business
Manufacture and sale of herbicides, pesticides,
disinfectants, plant growth regulators, organicintermediates and pharmaceuticals; manufacture and saleof veterinary drugs
Other businesses
Construction, trading, etc.

- 31 -

5. Principal Business Locations (As of March 31, 2022)(1) The Company
Name
Location
Osaka Head OfficeOsaka City, Osaka Prefecture
Yokkaichi Plant
Yokkaichi City, Mie Prefecture
Central Research InstituteKusatsu City, Shiga Prefecture
Tokyo Branch
Chiyoda-ku, Tokyo
Chubu Branch
Yokkaichi City, Mie Prefecture
Singapore Branch
Singapore
Sapporo Sales Office
Sapporo City, Hokkaido
Sendai Sales OfficeSendai City, Miyagi Prefecture
Fukuoka Sales Office
Fukuoka City, Fukuoka Prefecture(2) Subsidiaries
Name
ISK BIOSCIENCES K.K.
ISK AMERICAS INCORPORATEDISK BIOSCIENCES EUROPE N.V.
ISHIHARA TECHNO CORPORATION
FUJI TITANIUM INDUSTRY CO., LTD.
ISK ENGINEERING PARTNERSCORPORATION

Location
Chiyoda-ku, Tokyo
Ohio, United States
Belgium
Osaka City, Osaka Prefecture
Kobe City, Hyogo Prefecture
Yokkaichi City, Mie Prefecture

6.

Employees (As of March 31, 2022)
Business Segment
Number of Employees
YoY Change
Inorganic chemicals business
958-6
Organic chemicals business572+1
Other businesses
121+4
Corporate (common)
99
+8
Total
1,750
+7
Note: The number of employees represents the number of active personnel employed.
Corporate (common) employees mainly comprise those employed at theadministration department at the head office, who do not belong to any reportablesegment.

7.

Major Lenders (As of March 31, 2022)
Lender
Shinsei Bank, Limited
Sumitomo Mitsui Banking Corporation
Development Bank of Japan Inc.
The Norinchukin BankJA Mie Shinren

Balance of Loans (in millions of yen)
9,090
6,215
4,467
4,079
2,854

- 32 -

II. Status of the Company
1.

Shares (As of March 31, 2022)(1) Total Number of Shares Authorized to be Issued

100,000,000 shares(2) Total Number of Shares Outstanding

40,383,943 shares(including 430,740 shares of treasury stock)
26,853 persons(3) Number of Shareholders(4) Major Shareholders (Top10)

Investment to the Company
Number of Shares ofShareholding Ratio
the Company Held(Thousand shares)(%)

Name of Shareholder

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

4,626

11.58

Custody Bank of Japan, Ltd. (trust account)

3,764

9.42

MITSUI & CO., LTD.

2,019

5.05

Toagosei Co., Ltd.

1,722

4.31

BNP PARIBAS SECURITIES SERVICESPARIS/JASDEC/FBB SEC/BELCHIMMANAGEMENT

1,440

3.60

UPL Japan GK

1,170

2.93

Ishihara Sangyo Kaisha Client Stock Ownership
Association

986

2.47

Ishihara Sangyo Kaisha Employee Stock Ownership
Association

801

2.01

Fumiya Shino

733

1.84

DFA INTL SMALL CAP VALUE PORTFOLIO

700

1.75

Notes: 1. The shareholding ratio is calculated after deducting treasury stock.
2. Shares held by The Master Trust Bank of Japan, Ltd. (trust account) and Custody
Bank of Japan, Ltd. (trust account) are held in connection with their trust operations.
3. The 1,440 thousand shares of the Company held by BNP PARIBAS SECURITIESSERVICES PARIS/JASDEC/FBB SEC/BELCHIM MANAGEMENT are effectively
owned by Belchim Management N.V.
(5) Other Important Matters Concerning Shares
Not applicable.

2. Stock Acquisition Rights (As of March 31, 2022)
Not applicable.
- 33 -

3. Company Officers(1)

Directors and Audit & Supervisory Board Members (As of March 31, 2022)
Major Other Offices
Name
Posts
Responsibilities
Concurrently Held

Kenichi Tanaka

Executive Director,
Chairman

Hideo Takahashi

Executive Director,
President (Chief
Executive Officer)

Director and Chairman at ISKAMERICASINCORPORATED
Organic Chemicals
Business
Director of
Biosciences Business
Headquarters

Kiyomitsu Yoshida

Director(Senior Managing
Executive Officer)

Yasunobu Kawazoe

Director
Director of Finance &(Managing Executive Accounting
Headquarters
Officer)

Masaki Shimojo

Director of Inorganic
Chemicals Sales &MarketingDirector
R&D Strategy(Managing Executive Headquarters
Officer)
Assistant Director of
R&D Strategy
Headquarters

Hisashi Takenaka

Director
Director of Yokkaichi(Managing Executive Plant
Officer)

Hiroshi Katsumata

Director

Tatsuo Hanazawa

Director

Satoshi Ando

Taizo Kato

Director and Chairman at ISK
BIOSCIENCESCORPORATION
Director and Chairman at ISK
BIOSCIENCES EUROPE N.V.

Director and Chairman at
ISHIHARA CORPORATION(U.S.A.)
Chairman at ISK TAIWAN
CO., LTD.

Director

Attorney-at-law
Outside Director (Audit &Supervisory Committee
Member) of TOHO CO., LTD.

Standing Audit &Supervisory Board
MemberAudit & Supervisory Board
Member at ISHIHARATECHNO CORPORATION
Audit & Supervisory Board
Member at ISK BIOSCIENCES
K.K.
Audit & Supervisory Board
Member at FUJI TITANIUM
INDUSTRY CO., LTD.
- 34 -Name

Yoshihito Akiyama

Yoshitaka Akikuni

Masaaki Harima

Notes:

Posts

Responsibilities

Major Other Offices
Concurrently HeldStanding Audit &Supervisory Board
MemberAudit & Supervisory Board
Member at ISHIHARATECHNO CORPORATION
Audit & Supervisory Board
Member at ISKENGINEERING PARTNERSCORPORATION

Standing Audit &Supervisory Board
MemberAudit & Supervisory Board
Member at ISK BIOSCIENCES
K.K.
Audit & Supervisory Board
Member at FUJI TITANIUM
INDUSTRY CO., LTD.
Audit & Supervisory Board
Member at ISKENGINEERING PARTNERSCORPORATION

Audit & Supervisory
Board Member

Attorney-at-law
Outside Director, Toyobo Co.,
Ltd.
Chairman of Osaka Prefectural
Pollution Review Board
Member of Sakai City Audit
Committee

1. Of the Directors, Mr. Hiroshi Katsumata, Mr. Tatsuo Hanazawa and Mr. Satoshi Ando
are Outside Directors.
2. Of the Audit & Supervisory Board Members, Mr. Yoshitaka Akikuni and Mr.
Masaaki Harima are Outside Audit & Supervisory Board Members.
3. No special-interest relationships exist between the Company and TOHO CO.,LTD., at which Outside Director Mr. Satoshi Ando concurrently serves.
ISK BIOSCIENCES K.K., FUJI TITANIUM INDUSTRY CO., LTD. and ISK
ENGINEERING PARTNERS CORPORATION, at which Outside Audit &Supervisory Board Member Mr. Yoshitaka Akikuni concurrently serves, aresubsidiaries of the Company.
No special-interest relationships exist between the Company and Toyobo Co.,
Ltd., at which Outside Audit & Supervisory Board Member Mr. Masaaki Harima
concurrently serves.
4. Changes in Directors and Audit & Supervisory Board Members during thecurrent fiscal year were as follows:
1) At the conclusion of the 98th Ordinary General Meeting of Shareholders heldon June 25, 2021, Director Mr. Teruaki Matsue left office due to the expirationof his term of office, and Audit & Supervisory Board Member Mr. Michiyoshi
Arata left office due to resignation.
2) Mr. Hisashi Takenaka was newly elected and appointed to the post of Director,
and Mr. Yoshihito Akiyama was newly elected and appointed to the post of
Audit & Supervisory Board Member at the 98th Ordinary General Meeting of
Shareholders held on June 25, 2021.
3) Mr. Yasuhiro Koike was elected as a substitute Audit & Supervisory Board
Member at the 98th Ordinary General Meeting of Shareholders held on June25, 2021.
- 35 -

5. Outside Directors Mr. Hiroshi Katsumata, Mr. Tatsuo Hanazawa and Mr. SatoshiAndo, and Outside Audit & Supervisory Board Members, Mr. Yoshitaka Akikuni
and Mr. Masaaki Harima have been registered with the TSE as Independent
Officers as stipulated by its regulations.

- 36 -

(2) Total amount of compensation, etc. for Directors and Audit & Supervisory Board
Members
Total Amount of Compensation, etc.
Total Amount of
Number ofby type (million yen)
Post
Compensation,
Eligible
Basic
Performance-linked
etc. (million yen)
Recipients
Compensation
Compensation
Directors
241
203
37
10
[of which Outside
[25]
[25]
[0]
[3]
Directors]
Audit & Supervisory
Board Members
66
66
0
5
[of which Outside
[30]
[30]
[0]
[2]
Audit & Supervisory
Board Members)
Total
308
270
37
15
Note: Decision policy regarding the amount and calculation method of compensation, etc. forindividual Directors
1) Decision policy regarding the amount and calculation method of compensation, etc.
for individual Directors
The standards for basic compensation and performance-linked compensation are
based on rank in accordance with the Officers Compensation Regulations decided by
the Board of Directors. Basic compensation is paid based on the Officers
Compensation Regulations, in amounts corresponding to the roles andresponsibilities of Directors and Executive Officers.
Compensation for Audit & Supervisory Board Members is determined throughdiscussion among Audit & Supervisory Board Members.
The maximum amount of compensation for Directors was determined as 460 million
yen per annum by the 82nd Ordinary General Meeting of Shareholders held on June29, 2005. There were 12 incumbent Directors at the conclusion of that Ordinary
General Meeting of Shareholders. The maximum amount of compensation for Audit& Supervisory Board Members was determined as 90 million yen per annum at the
71st Ordinary General Meeting of Shareholders held on June 29, 1994. There werefour incumbent Audit & Supervisory Board Members at the conclusion of that
Ordinary General Meeting of Shareholders. Only basic compensation is paid to
Outside Directors and Audit & Supervisory Board Members.
2) The amounts of compensation, etc. and the number of recipients shown in the table
above include compensation, etc. for one Director and one Audit & Supervisory
Board Member who retired at the conclusion of the 98th Ordinary General Meetingof Shareholders held on June 25, 2021.
3) Details of performance indicators, the decision policy for calculating the amount or
number for performance-linked compensation, etc.
Under the Officers Compensation Regulations decided by the Board of Directors,
performance-linked compensation comprises annual performance-linked
compensation aimed at ensuring objectivity and linkage with the Company’s
financial results, and long-term performance-linked compensation. The amount ofannual performance-linked compensation is calculated and determined upon
comprehensive consideration of factors including the results of corporate activities,
such as net income attributable to owners of parent, and individual performance
evaluation. Long-term performance-linked compensation is calculated based on the
degree to which the net income targets under the Mid-Term Management Plan havebeen achieved.
(Targets and results for indicators associated with performance-linked compensation)
Consolidated operating indicator targets under the Mid-Term Management Plan
[Fiscal 2021]
Net income attributable to owners of parent: 3.6 billion yen (result: 11.6 billion
yen)[Fiscal 2022]- 37 -

4)

5)

6)

7)

Net income attributable to owners of parent: 6.9 billion yen[Fiscal 2023]
Net income attributable to owners of parent: 12.4 billion yen
Delegation of authority concerning the determination of compensation, etc. forindividual Directors
Compensation, etc. for individual Directors of the Company is proposed by
Executive Director, President, Mr. Hideo Takahashi, who is delegated authority by
resolution of the Board of Directors. It is then referred to the Compensation
Committee for deliberation, and determined the Executive Director, President after
discussion among Executive Directors, based on the report by the Compensation
Committee.
The reason for delegating this authority is that the Executive Director, President,
who chairs the Board of Directors, is most aptly suited to evaluating each Director
based on his or her rank, and in accordance with his or her responsibilities and roles,
etc., while maintaining a comprehensive view of the Company as a whole.
The details of compensation for individual Directors are determined after
deliberation by the Compensation Committee. The Compensation Committee
provides advice and recommendations, based on the information from officers’
compensation surveys carried out by third party firms, and each member’s insight,
before the decision is made, in order to ensure that the Executive Director, President
exercises his authority appropriately. The Board of Directors therefore deems thedetails of compensation for individual Directors to be in accordance with thedecision policy set forth above.
Details of non-monetary compensation, etc., and the decision policy for calculating
the amount or number for non-monetary compensation, etc. or the calculation
method thereof
The Company has introduced a system of monetary compensation.
Proportional amounts of compensation for individual Directors
The proportion of basic compensation and performance-linked compensation, etc. is
proposed, taking into account each year’s financial results, etc., by the Executive
Director, President, who is delegated authority by resolution of the Board of
Directors. It is then referred to the Compensation Committee for deliberation, anddetermined by resolution of the Board of Directors, after discussion among
Executive Directors, based on the report by the Compensation Committee.
Decision policy on the timing and conditions for paying compensation, etc. to
Directors
It is prescribed in the Officers Compensation Regulations decided by the Board of
Directors that basic compensation shall be calculated per calendar month, and theamount for each month shall be paid on the same day as salaries for employees andthat performance-linked compensation, etc. shall be paid on the same day as summer
bonuses for employees.

(3)

Summary of Agreement on Limitation of Liability
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Articles of Incorporation stipulatethat the Company may enter into an agreement with an Outside Director or Outside Audit &Supervisory Board Member that sets a limit on the liability for damages under Article 423,
Paragraph 1 of the Companies Act. The limitation of liability, provided the Outside Director or
Outside Audit & Supervisory Board Member acted in good faith and without gross negligence,shall be the larger of an amount determined in advance, which shall be equal to or more than 10
million yen, and an amount prescribed by laws and regulations. Accordingly, the Company hasentered into liability limitation agreements with all Outside Directors and Outside Audit &Supervisory Board Members.

(4)

Summary of the Directors and Officers Liability Insurance Contract
The Company has concluded a directors and officers liability insurance contract with an insurancecompany, in accordance with the provisions of Article 430-3, Paragraph 1 of the Companies Act.
1) Insured parties
Directors, Audit & Supervisory Board Members and Executive Officers of the Company and its- 38 -

subsidiaries and affiliates, and employees of the Company’s subsidiaries and affiliates inmanagement positions who may be subject to litigation at affiliates.
2) Summary of the insurance contract
The insurance covers legal damages and litigation expenses in the event that a claim fordamages is made against the insured during the insurance period due to improper actions(including errors of omission) committed by the insured in his/her capacity as such. However,individual officers, etc. are not covered by the insurance for damages arising from criminal acts
such as offering or receiving bribes, or intentional unlawful acts, to ensure the proper executionof duties by officers, etc. The Company is fully responsible for paying the insurance premium.

- 39 -

(5) Outside Directors and Outside Audit & Supervisory Board Members
1) Main activities of Outside Directors and Outside Audit & Supervisory Board Members
Post

Director

Director

DirectorStanding Audit &Supervisory Board
MemberAudit &
Supervisory Board
MemberName

Hiroshi Katsumata

Main Activities
Mr. Hiroshi Katsumata attended all 15 meetingsof the Board of Directors held during the current
fiscal year. He expressed opinions as necessary,with an external perspective from an objective andneutral standpoint, utilizing his diverse experiencein public administration, as well as extensive
experience and insight as a company manager of
an industrial gas business operator.

Tatsuo Hanazawa

Mr. Tatsuo Hanazawa attended all 15 meetings ofthe Board of Directors held during the current
fiscal year. He expressed opinions as necessary,with an external perspective from an objective andneutral standpoint, utilizing his diverse experienceand knowledge in public administration,
especially of agricultural policies both inside andoutside Japan.

Satoshi Ando

Mr. Satoshi Ando attended all 15 meetings of theBoard of Directors held during the current fiscal
year. He expressed opinions as necessary with an
external perspective from an objective and neutral
standpoint, mainly utilizing professional
knowledge, cultivated as an attorney-at-law andabundant experience related to corporate legal
affairs.

Yoshitaka Akikuni

Mr. Yoshitaka Akikuni attended all 15 meetingsof the Board of Directors and all 13 meetings of
the Audit & Supervisory Board held during thecurrent fiscal year. He expressed opinions asnecessary, with an external perspective from an
objective and neutral standpoint, mainly utilizing
wide-ranging knowledge cultivated during his
service at financial institutions, and experience asa corporate auditor at a chemical businesscompany, etc.

Masaaki Harima

Mr. Masaaki Harima attended all 15 meetings ofthe Board of Directors and all 13 meetings of the
Audit & Supervisory Board held during thecurrent fiscal year. He expressed opinions asnecessary with an external perspective from an
objective and neutral standpoint, utilizing
professional knowledge, cultivated mainly as an
attorney-at-law and abundant experience related
to corporate legal affairs.

2) Details of situations where decisions on the Company’s business policy or other matters werechanged due to the opinions of Outside Directors or Outside Audit & Supervisory Board
Members
Not applicable.
- 40 -

3) Any incident or scandal in business execution at the Company during the fiscal year that
violated laws, regulations, or the Articles of Incorporation, or were otherwise improper
Not applicable.
4) Duties performed in relation to expected roles of Outside Directors during the fiscal year
Outside Directors Mr. Hiroshi Katsumata, Mr. Tatsuo Hanazawa and Mr. Satoshi Ando attended
all meetings of the Board of Directors held during the fiscal year. In addition, Mr. Hiroshi
Katsumata and Mr. Tatsuo Hanazawa attended all 10 meetings, and Mr. Satoshi Ando attended 9
meetings, of the Executive Management Committee, a body established under the Board of
Directors to enable swifter decision making by the Board of Directors and more efficiently
supervise and evaluate the execution status of important items of business, held during the fiscal
year. At these meetings, they expressed their opinions without reserve on overall important mattersconcerning management of the Company and important items of business execution, based on
their extensive experience and insight.
5) Any opinions of Outside Directors or Outside Audit & Supervisory Board Members regarding
matters related to Outside Directors or Outside Audit & Supervisory Board Members
Not applicable.

- 41 -

4.

Accounting Auditor(1)

Accounting Auditor’s Name
Ernst & Young ShinNihon LLC(2)Accounting Auditor’s Compensation, etc.
Accounting Auditor’s compensation, etc., for the fiscal year ended March 31, 20 22:
70 million yen
Total cash and other proprietary benefits payable by the Company and its subsidiaries
to the Accounting Auditor:
85 million yen
Notes: 1. Under the audit agreement with the Accounting Auditor, audit compensation is notdistinguished between that pertaining to audits based on the Companies Act, andaudits based on the Financial Instruments and Exchange Act, which are effectively
inseparable. The amount shown above therefore represents the total, undivided
amount.
2. ISK BIOSCIENCES EUROPE N.V., a significant subsidiary of the Company, is
audited by Ernst & Young, Reviseurs d’Entreprises.
3. The Audit & Supervisory Board has given its consent to the compensation, etc.
for the Accounting Auditor in accordance with Article 399, Paragraph 1 of theCompanies Act, after confirming the audit plan, status of audit execution, basis
for calculating the expected compensation, etc., based on the Practical
Guidelines for Coordination with Accounting Auditors published by the Japan
Audit & Supervisory Board Members Association.

(3)

Policy on Determination of Dismissal or Non-reappointment of Accounting Auditor
Where deemed necessary, due to the incapacity of the Accounting Auditor to execute its
duties or other reason, the Audit & Supervisory Board shall determine the content of a
proposal on the dismissal or non-reappointment of the Accounting Auditor, to be submitted
to the General Meeting of Shareholders.
Moreover, if the Accounting Auditor falls under any of the items set forth in Article 340,
Paragraph 1 of the Companies Act, the Audit & Supervisory Board shall dismiss the
Accounting Auditor through the unanimous consent of all its Members. In this event, an
Audit & Supervisory Board Member selected by the Audit & Supervisory Board shall reporton the dismissal of the Accounting Auditor, and the reason for the dismissal, at the first
General Meeting of Shareholders held after the dismissal.

- 42 -

5.

Systems to Ensure the Proper Business Operation of the Corporate Group
Composed of the Company and Its Subsidiaries, Including Systems to Ensurethat Directors Execute Duties in Line with Relevant Laws, Regulations and the
Articles of Incorporation, and Status of Their Operation
The Company’s Board of Directors has resolved on the following basic policy regarding systems toensure proper business operation of the corporate group composed of the Company and its subsidiaries(referred to hereinafter as the Group), including systems to ensure that Directors execute duties in linewith laws, regulations and the Articles of Incorporation.

(1)

Systems to Ensure that the Execution of Duties by Directors and Employees Complies with
Laws, Regulations and the Articles of Incorporation
1) The Company has adopted a management structure that places priority on compliance withlaws, rules and societal norms.
2) The Company has established the ISK Group Code of Conduct, which stresses the importanceof compliance activities, and makes sure that Directors and employees follow them strictly.
3) The Company has established a Compliance Committee, headed by the Director in charge ofCompliance. This committee creates and implements plans to develop and maintain thecompliance structure.
4) Company policy dictates that should it be discovered that any Director or employee of theCompany has acted illegally, transgressed the Company’s Articles of Incorporation, or acted
in a way that raises the risk of a legal transgression, the incident must be reported
immediately. Furthermore, all records of the reports and investigation are to be kept strictly
confidential to ensure that those who report such incidents are not subject to repercussions.
5) The Company has established an Office of Internal Audit to conduct regular audits, andwhich reports directly to the Executive Director, President.

(2)

Recording and Managing Information Regarding the Activities of Directors
The Company maintains written records of the minutes of Board of Directors meetings,
proposals submitted for consideration, and other important documents used in the course of
Directors’ duties. These documents are stored and managed in a way that corresponds to thelegal regulations governing official documents, as well as all internal rules and regulations.

(3)

Rules and Structures Intended to Manage Risk of Loss
1) A set of Risk Management Regulations has been established to express the Company's basic
stance on risk management and to help guard against the risk of unexpected losses.
2) The Company seeks to identify the various types of risk that emerge in the course of normal
business activities, taking steps to ensure that each sector of business operations is aware ofrisk factors that may affect them, and takes steps to manage such risks.
3) When events occur that could have an important impact on the Company's management andbusiness activities, the Corporate Risk Management Committee takes action under the Risk
Management Regulations, and assumes control of the operating divisions in order tominimize and address problems.

(4)

Structures to Ensure That the Duties of Directors Are Executed Efficiently
1) The Board of Directors meets regularly, a minimum of once a month, to make decisions onimportant issues that affect the Company, and to oversee the activities of its Directors. In thecase of priority issues that relate to management and business execution, the Executive
Management Committee, made up of Board members who are associated with the issue,
discusses it first, and then reports to the entire Board for a final decision.
2) The Company establishes clear and specific numerical targets for achievement, in an effort toimprove management efficiency.
3) The Board of Directors allocates duties and work responsibilities to individual Directors, andeach Director reports back to the Board of Directors regarding progress in completing theallocated business tasks.

- 43 -

(5)Measures to Ensure Proper Business Operation of the Group1) The Company ensures proper group management based on regulations established concerning
the basic policies for the execution of its subsidiaries and affiliates’ business activities, andfor the various work processes concerning management of subsidiaries and affiliates.
2) Subsidiaries report regularly to the Company on important information such as businessperformance and financial condition, based on the aforementioned regulations.
3) Subsidiaries guard against the risk of unexpected losses in accordance with the Risk
Management Regulations established by the Company, and immediately report to theCompany, endeavor to contain and resolve the situation in the case of an emergency.
4) Subsidiaries comply with laws, rules and societal norms, in accordance with the ISK Group
Code of Conduct established by the Company. The Company's internal whistleblower system
is also applicable to subsidiaries.

(6)

Employees Assigned as Requested to Assist the Duties of Audit & Supervisory Board
Members, Measures to Ensure the Independence of These Employees from the Influence of
Directors, and Measures to Ensure the Effectiveness of Directions Given to These Employees
1) Audit & Supervisory Board Members may request that the Company assign personnel toassist them in carrying out their duties. When this need arises, Directors cooperate with Audit& Supervisory Board Members to select individuals who are able to provide assistance.
2) When Audit & Supervisory Board Members ask to have employees assigned to assist with
their activities, the views of the Audit & Supervisory Board are given top priority inselecting, transferring and evaluating such employees. This is intended as a way to ensurethat the employees can act independently, without influence from Directors.
3) Employees who assist Audit & Supervisory Board Members in carrying out their duties do
not work concurrently in any other section, and must only follow the directions and orders of
the Audit & Supervisory Board Members.

(7)

Structure for Reporting Information to Audit & Supervisory Board Members, Including
Reports Provided by Directors and Employees of the Group, and Structures to Ensure That
the Person Reporting Information Is Not Disadvantaged as a Result
1) Audit & Supervisory Board Members of the Company attend meetings of the Board of
Directors and the Executive Management Committee, as well as other important company
meetings. They are also provided with access to documents regarding all important proposals
and resolutions made by management personnel.
2) Directors and employees of the Company are required to provide necessary reports andinformation to Audit & Supervisory Board Members, as stipulated in the Company’s internal
regulations regarding reporting to Audit & Supervisory Board and its members.
3) Directors, Audit & Supervisory Board Members and employees of subsidiaries are required toprovide necessary reports and information to the Company’s Audit & Supervisory Board
Members as stipulated in the Company’s internal regulations regarding reporting to Audit &Supervisory Board and its members.
4) The Company prohibits any disadvantageous treatment of its Directors or employees, orDirectors, Audit & Supervisory Board Members or employees of subsidiaries, as a result ofreporting to the Company’s Audit & Supervisory Board Members. This information is madeknown broadly among the Group’s Directors, Audit & Supervisory Board Members andemployees.

(8)

Policy on the Treatment of Expenses and Liabilities Arising from the Execution of Duties by
Audit & Supervisory Board Members, Including Processes for Prepaying or Reimbursing
Such Expenses
Should the Company receive a prepayment or similar request based on Article 388 of theCompanies Act for expenses incurred by an Audit & Supervisory Board Member in theexecution of his/her duties, the section responsible examines the request and, except where
deemed unnecessary for the execution of duties by the Audit & Supervisory Board Member,promptly processes the relevant expenses or liabilities.

- 44 -

(9)Structures to Ensure That the Duties of Audit & Supervisory Board Members Are Executed
Effectively
1) The Executive Director, President holds regular meetings with Audit & Supervisory Board
Members in order to exchange opinions regarding the improvement of the audit environment
for Audit & Supervisory Board Members, and promote mutual understanding.
2) To ensure the effectiveness of auditing activities, Directors are responsible for ensuring that
there is close cooperation between Audit & Supervisory Board Members and the Office ofInternal Audit.

(10) Structures to Ensure the Reliability of Financial Reporting Activities
In order to ensure the reliability of financial reporting, the Company and its subsidiaries andaffiliates have established a structure to operate appropriately, and to improve and evaluate
internal controls governing the preparation of financial reports, in accordance with the
Financial Instruments and Exchange Act and other relevant laws and regulations.
(11) Basic Stance on Measures to Prevent Interaction with “Antisocial Groups”
1) The Company strictly prohibits any activity or interaction with “antisocial groups” which
may threaten public order or present a danger to the general public. The Company shall be
resolute in avoiding any such contact, and will under no circumstances give in to
unreasonable demands or pressure from any such group.
2) In order to ensure that no such relationships or activities arise, a section of the General
Affairs Division has been assigned specifically to cooperate with police, corporate lawyers
and other outside organizations to combat the influence of corporate racketeers. This division
will collect relevant information on a daily basis and establish a system to deal with
unexpected incidents involving such groups.
[Overview of the Status of Operation of Systems to Ensure Proper Business Operations]
Overview of the status of operation in the current fiscal year is as follows.
(1) Compliance
1) The Company holds biannual meetings of its Compliance Committee, to confirm and discussmatters such as the compliance implementation structure and the status of complianceeducation, in accordance with the Company’s corporate philosophy.
2) The ISK Group Code of Conduct requires that any person who discovers an actual or possible
violation of compliance by an organization member, where resolution or improvement i sdifficult through the usual chain of command, must report this through the Company’s
whistleblower system.
(2) Execution of Duties by Directors
1) The Board of Directors meets each month as a rule, and holds extraordinary meetings as
required, based on the Company’s Company Rules and Board of Directors Rules. In addition,
the Board of Directors deliberates and passes resolutions on matters concerning management
policy and important business execution, after these have first been thoroughly considered by
the Executive Management Committee.
2) The Company establishes a group management plan to serve as a goal, clarifies the measuresnecessary to achieve this goal, and monitors their progress through the Board of Directors.
3) Important documents concerning the execution of duties by Directors, such as the minutes ofBoard of Directors meetings, are properly stored and managed in a way that corresponds tolegal regulations and the Company’s internal rules such as the Document Management
Regulations.

- 45 -

(3)Risk Management Structure1) The Company engages in risk management, appropriately assesses risk, and has implemented
the necessary measures to prevent, mitigate, transfer, or otherwise prepare for risk, based on
the impact and likelihood of occurrence, to ensure that the Group attains optimal results.
2) The Company holds biannual meetings of the Corporate Risk Management Committee,
chaired by the Executive Director, President, to check the results of risk assessment,
designate “risks for priority measures” that would materially impact the Company’s businessactivities, and deliberate and resolve on measures to address these risks. The results of this
deliberation are reported to the Board of Directors.
3) The Company implements regular training sessions to address the risk of disasters.

(4)Group Management Structure1) The Company ensures a proper group management structure, including the establishm ent of asystem to receive advance applications or reports concerning the execution of importantduties from subsidiaries that fulfill certain criteria, based on regulations establishedconcerning the basic policies for the execution of its subsidiaries and affiliates’ businessactivities.
2) The Company implements audits of its subsidiaries and affiliates as necessary, based on theInternal Audit Regulations.

(5)

Execution of Duties by Audit & Supervisory Board Members
1) Audit & Supervisory Board Members attend important meetings, including meetings of theBoard of Directors and the Executive Management Committee, comprehend important
decision-making processes, and the status of the execution of duties, request explanation sfrom Directors or others as necessary, and express opinions.
2) Audit & Supervisory Board Members hold regular meetings with the Executive Director,
President in order to exchange opinions regarding matters such as issues to be addressed, andpromote mutual understanding. Moreover, in the course of their audit duties, Audit &Supervisory Board Members coordinate with the Office of Internal Audit, including holding
regular meetings, in order to implement organized and effective audits.

- 46 -

6.

Policy Regarding Decisions on Dividends of Surplus, etc.
One of the most important management policies of the Company is to return profits to ourshareholders while raising the Company’s corporate value. The Company’s basic principle fordividends is to continue to implement stable dividend distribution according to our businessperformance, taking into comprehensive consideration the business trends, financial condition, andneed to enhance our internal reserve for business expansion into the future.
Based on this dividend policy, the Company requests the General Meeting of Shareholders to resolve
on a year-end dividend of 36 yen per share for the current fiscal year.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Reference:
Amounts and numbers of shares presented in this business report have been rounded down to thenearest unit, and percentages have been rounded off to the nearest unit.

- 47 -

Consolidated Balance Sheet(As of March 31, 2022)
Description
ASSETS
Current assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful receivables
Non-current assets
Property, plant and equipment
Buildings and structures
Machinery, equipment andvehiclesLand
Leased assets
Construction in progress
Other
Intangible assets
Software
Software in progress
Leased assets
Other
Investments and other assets
Investments in securities
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful receivables

Amount[185,758]
121,389
27,073
3,768
29,525441
32,813
4,633
20,051
4,190(1,109)64,36946,535
15,40020,770(Millions of yen)AmountLIABILITIES[93,889]
Current liabilities
46,731
Notes and accounts payable - trade
17,739
Short-term bank loans
7,770
Current portion of long-term bank
8,298
loans
Current portion of bonds
1,118
Lease obligations
355
Accrued income taxes
1,242
Contract liabilities
20
Accrued expenses
4,728
Provision for bonuses
851
Provision for implementation ofenvironmental and safety81
arrangements
Description

Provision for maintenance

5,359
829
3,327
847
1,018
519
484
3
11
16,815
7,456
8,883
10
550
(85)

Provision for loss on withdrawal
from business
Other
Long-term liabilities
Bonds
Long-term bank loans
Lease obligations
Provision for implementation ofenvironmental and safety
arrangements
Provision for maintenance
Retirement benefit liability
Asset retirement obligations
Other

NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive
income (loss)
Valuation difference on availablefor-sale securities
Translation adjustments
Remeasurements of defined benefit
plans
Total assets
185,758
Total liabilities and net assets
Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 48 -

336
169
4,020
47,157
3,898
24,831555
1,384
83
13,058160
3,185[91,869]
91,90543,42010,62738,592
(734)
(36)
405
(297)
(143)
185,758

Consolidated Statement of Income(April 1, 2021 - March 31, 2022)(Millions of yen)
Description

AmountNet sales

110,955

Cost of sales

78,297Gross profit

32,657

Selling, general and administrative expenses

21,100Operating income

11,557

Non-operating income
Interest income

16

Dividend income

180

Equity in earnings of affiliates

533

Foreign exchange gains

1,597

Gain on sales of raw materials

103

Other

288

2,720

Non-operating expenses
Interest expense

539

Financial fee

258

Other

206

Ordinary income

1,005
13,272Extraordinary income
Gain on forgiveness of debts
Gain on change in equity
Other
Extraordinary losses
Loss on disposal of non-current assets
Loss on impairment
Loss on valuation of investment securities
Other
Income before income taxes
Income taxes – current
Income taxes – deferred
Net income
Net income attributable to owners of parent

552
2,736
170
969
163
2,344
162
1,533
(132)

Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 49 -

3,459

3,640
13,091
1,401
11,69011,690Consolidated Statement of Changes in Net Assets(April 1, 2021 - March 31, 2022)(Millions of yen)
Shareholders’ equity

Balance at April 1, 2021
Cumulative effects ofchanges in accounting
policies
Restated balanceCommonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders'equity43,42010,627

27,872(730)

81,189

–

–

(251)

–

(251)

43,42010,627

27,621(730)

80,938

–

–

(719)

–

(719)

–

–

11,690–11,690

–

–

–

(4)

(4)

–

0

–

0

0

–

–

–

–

–

–

0

10,970(3)

10,96743,42010,62738,592(734)

91,905

Changes of items during
periodDividends of surplus
Net income
attributable to ownersof parent for theperiodAcquisition oftreasury stock
Disposal of treasury
stock
Other changes
Total changes of items
during period
Balance at March 31,
2022- 50 -

Accumulated other comprehensive income (loss)
Valuation
Total accumulated
Remeasuremen
Total net assets
difference on Translationotherts of defined
available-for- adjustments
comprehensive
benefit planssale securities
income (loss)
Balance at April 1,
2021
Cumulative effects ofchanges in accounting
policies(308)(1,286)(78)(1,674)79,515

–

–

–

–

(251)

(308)

(1,286)(78)(1,674)

79,263

Dividends of surplus

–

–

–

–

(719)

Net income
attributable to ownersof parent for theperiod––––11,690Acquisition oftreasury stock

–

–

–

–

(4)

Disposal of treasury
stock

–

–

–

–

0

Other changes

714

988

(64)

1,638

1,638

Total changes of items
during period

714

988

(64)

1,638

12,605

Restated balance
Changes of items
during period

Balance at March 31,
405
(297)
(143)
(36)
91,8692022
Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 51 -

Non-consolidated Balance Sheet(As of March 31, 2022)
Description
ASSETS
Current assets
Cash and deposits
Notes receivable – trade
Accounts receivable – trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Advance payments to suppliers
Prepaid expenses
Short-term loans receivable
Other
Allowance for doubtfulreceivables
Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Leased assets
Construction in progress
Intangible assets
Software
Software in progress
Leased assets
Other
Investments and other assets
Investments in securities
Shares of subsidiaries and affiliates
Long-term loans receivable from employees
Long-term prepaid expenses
Deferred tax assets
Other
Allowance for doubtful receivables

Amount[159,036]
101,907
21,7842,160
35,02723,561
3,750
12,530
1,493
463
952
1,455
(1,271)
57,12936,9906,876
4,829
16,523
40
612
4,265
656
3,185
971
475
484
3
8
19,166
1,924
10,192
59
161
6,670
243
(85)

(Millions of yen)AmountLIABILITIES[83,476]
Current liabilities
45,542
Notes payable – trade253
Accounts payable – trade
14,234
Short-term bank loans
7,680
Current portion of long-term bank loans
7,311
Current portion of bonds
1,118
Lease obligations
306
Accrued income taxes
1,045
Contract liabilities
20
Accounts payable - other
3,296
Accrued expenses
3,168
Deposits received
4,377
Provision for bonuses
599
Provision for implementation ofenvironmental and safety81
arrangements
Provision for loss on withdrawal
169
from business
Provision for maintenance
336
Other
1,543
Description

Long-term liabilities
Bonds
Long-term bank loans
Lease obligations
Long-term deposits received
Provision for retirement benefits
Provision for implementation ofenvironmental and safety
arrangements
Provision for maintenance
Asset retirement obligations
Other

NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forward
Treasury stock
Valuation and translation adjustments
Valuation difference on availablefor-sale securities
Total assets
159,036
Total liabilities and net assets
Note: Figures presented in the financial statements are rounded down to the nearest million yen.
- 52 -

37,934
3,898
19,353418
68
11,212
1,384
83
160
1,354
[75,559]
75,29343,420
9,796
9,155
641
22,314469
21,845
21,845
(238)
266
266
159,036

Non-consolidated Statement of Income(April 1, 2021 - March 31, 2022)(Millions of yen)
Description

AmountNet sales

89,142

Cost of sales

64,564Gross profit

24,577

Selling, general and administrative expenses

15,526

Operating income

9,051

Non-operating income
Interest income

11

Dividend income894

Foreign exchange gains

1,384

Gain on sales of raw materials

103

Other

163

2,557

Non-operating expenses
Interest expenses

508

Financial fee

242

Other

151

Ordinary income
Extraordinary income
Gain on forgiveness of debts
Other
Extraordinary losses
Loss on disposal of non-current assets
Loss on valuation of investment securities
Loss on impairment
Other
Income before income taxes
Income taxes – current
Income taxes – deferred
Net income

903
10,706

552
50
889
2,342
12
162
740
281

Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 53 -

603

3,407
7,901
1,022
6,878

Non-consolidated Statement of Changes in Net Assets(April 1, 2021 - March 31, 2022)(Millions of yen)
Shareholders’ equity
Commonstock
Balance at April 1,
2021
Cumulative effects
of changes inaccounting policies

Capital surplus
Legal capitalsurplus

Other capitalsurplus

Total capitalsurplus43,420

9,155

641

9,796

–

–

–

–

43,420

9,155

641

9,796

–

–

–

–

–

–

–

–

Net income

–

–

–

–

Acquisition oftreasury stock
Disposal oftreasury stock

–

–

–

–

–

–

0

0

Other changes

–

–

–

–

Total changes of
items during period
Balance at March
31, 2022

–

–

0

0

43,420

9,155

641

9,796

Restated balance
Changes of items
during period
Dividends ofsurplus
Provision oflegal retained
earnings due todividends ofsurplus- 54 -

Shareholders’ equity
Retained earnings
Legalretainedearnings
Balance at April 1,
2021
Cumulative effects
of changes inaccounting policies

Other retained
earnings
Retained earnings
brought forward

Total
retainedearnings

Treasury
stock

Total
shareholders’equity397

15,786

16,184(234)

69,167

–

(28)

(28)

－

(28)

397

15,757

16,155(234)

69,138

–

(719)

(719)

–

(719)

71

(71)

–

–

–

Net income

–

6,878

6,878

–

6,878

Acquisition oftreasury stock
Disposal oftreasury stock

–

–

–

(4)

(4)

–

–

–

0

0

Other changes

–

–

–

–

–

71

6,087

6,159

(3)

6,155

469

21,84522,314(238)

75,293

Restated balance
Changes of items
during period
Dividends ofsurplus
Provision oflegal retained
earnings due todividends ofsurplus

Total changes of
items during period
Balance at March
31, 2022- 55 -

Valuation and translation adjustments
Valuation
Total valuation and Total net assets
difference ontranslation
available-for-saleadjustments
securities
Balance at April 1,
2021

(464)

(464)

68,702

Cumulative effects ofchanges in accounting
policies

–

–

(28)

(464)

(464)

68,673

Dividends ofsurplus

–

–

(719)

Provision of legal
retained earnings
due to dividends ofsurplus–––

Net income

–

–

6,878

Acquisition oftreasury stock
Disposal of treasury
stock

–

–

(4)

–

–

0

Other changes

731

731

731

Total changes of items
during period

731

731

6,886

Balance at March 31,
2022

266

266

75,559

Restated balance
Changes of items
during period

Note: Figures presented in the financial statements are rounded down to the nearest million yen.

- 56 -

Accounting Auditor’s Audit Report on the Consolidated Financial Statements (duplicated copy)

Independent Auditor’s Report(English Translation)
May 16, 2022
To the Board of Directors
ISHIHARA SANGYO KAISHA, LTD.
Ernst & Young ShinNihon LLC
Osaka, Japan
Masahiko Inoue
Designated Engagement Partner
Certified Public Accountant
Daiji Tokuno,
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant 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 net assets, and notes to consolidated
financial statements of ISHIHARA SANGYO KAISHA, LTD. and its consolidated subsidiaries (the“Group”) applicable to the fiscal year from April 1, 2021 to March 31, 2022.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position and results of operations of the Group applicable to the fiscal
year ended March 31, 2021, in accordance with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Consolidated Financial Statements section of our report. We are independent of the Group inaccordance with the ethical requirements in Japan that are relevant to our audit of the consolidated
financial statements, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Other Information
Other information refers to the business report and supplementary schedules. Management is responsible
for the preparation and disclosure of other information. The Audit & Supervisory Board and its members
are responsible for overseeing performance of duties by directors in developing and operating thereporting process for other information.
Other information is not included in the scope of our opinion on the consolidated financial statements,
and we express no opinion on it.
Our responsibility with respect to the audit of the consolidated financial statements is to read throughother information and, in this process, to consider whether any material differences exist between otherinformation and the consolidated financial statements or knowledge we have gained through the auditing
process; also, to remain alert for any other indications of material error in other information.
We are required to report any matter that we consider constitutes a material error in other information,
based on the work we have undertaken.
We have nothing to report regarding other information.
- 57 -

Responsibilities of Management, the Audit & Supervisory Board and Its Members 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, including theestablishment and operation of such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial statements, management is responsible to evaluate whether it isappropriate to prepare the consolidated financial statements as a going concern. As required byaccounting principles generally accepted in Japan, if it is necessary for the Group to disclose mattersrelating to a going concern, the management has the responsibility to disclose such information.
The Audit & Supervisory Board and its members are responsible for overseeing performance of duties bydirectors in developing and operating the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance, based on the audit we conducted, about whether
the consolidated financial statements as a whole are free from material misstatement, whether due tofraud or error, and to issue an auditor’s report that includes our opinion regarding the consolidated
financial statements from an independent viewpoint. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
We perform the following procedure in accordance with auditing standards generally accepted in Japan,
while exercising professional judgment and maintaining professional skepticism throughout the audit
process: Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. Design and perform audit procedures responsive to those risks. The
selection and application of audit procedures are at our discretion. Obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
 Consider internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances for our risk assessments, while the purpose of the audit of the consolidated
financial statements is not expressing an opinion on the effectiveness of the Group’s internal control.
 Evaluate the appropriateness of accounting policies and accounting methods adopted by the
management, the reasonableness of accounting estimates made by the management, and theappropriateness of the related notes to the consolidated financial statements.
 Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty regarding the going concern assumption exists, we are
required to draw attention in our auditor’s report that the related notes to the consolidated financial
statements should be considered. Or, if any note to the consolidated financial statements regarding
significant uncertainty is inadequate, we are required to express a modified opinion on the
consolidated financial statements. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
 Evaluate whether the presentation of the consolidated financial statements and notes comply with thecorporate accounting principles generally accepted in Japan, and whether the overall presentation,
structure and contents of the consolidated financial statements, including the related notes, accurately
represent the underlying transactions and events.
 Obtain sufficient and appropriate audit evidence regarding the financial information of the Company
and its consolidated subsidiaries to express an opinion on the consolidated financial statements. We- 58 -

are responsible for the direction, supervision and performance of the audit of the consolidated
financial statements. We remain solely responsible for our audit opinion.
We communicate with the Audit & Supervisory Board and its members regarding the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal
control, that we identify during our audit, and other matters required by audit standards.
We also report to the Audit & Supervisory Board and its members that we have complied with the ethicalrequirements in Japan regarding independence that are relevant to our audit of the financial statements,
matters that are reasonably considered to affect the independence of us, and where applicable, related
safeguards taken to remove or reduce factors that could hinder our independence.
Interest
Our firm and its designated engagement partners do not have any interest in the Company and its
consolidated subsidiaries which is required to be disclosed pursuant to the provisions of the Certified
Public Accountants Act of Japan.

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Accounting Auditor’s Audit Report on the Non-consolidated Financial Statements (duplicated copy)

Independent Auditor’s Report(English Translation)
May 16, 2022
To the Board of Directors
ISHIHARA SANGYO KAISHA, LTD.
Ernst & Young ShinNihon LLC
Osaka, Japan
Masahiko Inoue
Designated Engagement Partner
Certified Public Accountant
Daiji Tokuno,
Designated Engagement Partner
Certified Public Accountant
OpinionPursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement ofchanges in net assets, and notes to financial statements, and the supplementary schedules thereto(“financial statements, etc.”) of ISHIHARA SANGYO KAISHA, LTD. (the “Company”) applicable tothe 99th fiscal year from April 1, 2021 to March 31, 2022.
In our opinion, the accompanying financial statements, etc. present fairly, in all material respects, thefinancial position and results of operations of the Company applicable to the fiscal year ended March 31,
2021, in accordance with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Auditof the Financial Statements, etc. section of our report. We are independent of the Company in accordancewith the ethical requirements in Japan that are relevant to our audit of the financial statements, and wehave fulfilled our other ethical responsibilities in accordance with these requirements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
Other information refers to the business report and supplementary schedules. Management is responsible
for the preparation and disclosure of other information. The Audit & Supervisory Board and its members
are responsible for overseeing performance of duties by directors in developing and operating thereporting process for other information.
Other information is not included in the scope of our opinion on the financial statements, etc., and we
express no opinion on it.
Our responsibility with respect to the audit of the financial statements, etc. is to read through otherinformation and, in this process, to consider whether any material differences exist between otherinformation and the financial statements, etc. or knowledge we have gained through the auditing process;also, to remain alert for any other indications of material error in other information.
We are required to report any matter that we consider constitutes a material error in other information,
based on the work we have undertaken.
We have nothing to report regarding other information.

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Responsibilities of Management, the Audit & Supervisory Board and Its Members for the Financial
Statements, etc.
Management is responsible for the preparation and fair presentation of the financial statements, etc. inaccordance with accounting principles generally accepted in Japan, including the establishment andoperation of such internal control as management determines is necessary to enable the preparation offinancial statements, etc. that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, etc., management is responsible to evaluate whether it isappropriate to prepare the financial statements, etc. as a going concern. As required by accounting
principles generally accepted in Japan, if it is necessary for the Company to disclose matters relating to agoing concern, the management has the responsibility to disclose such information.
The Audit & Supervisory Board and its members are responsible for overseeing performance of duties bydirectors in developing and operating the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements, etc.
Our responsibilities are to obtain reasonable assurance, based on the audit we conducted, about whether
the financial statements, etc. as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion regarding the financial statements, etc.
from an independent viewpoint. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements, etc.
We perform the following procedure in accordance with auditing standards generally accepted in Japan,
while exercising professional judgment and maintaining professional skepticism throughout the audit
process. We also: Identify and assess the risks of material misstatement of the financial statements, etc., whether due tofraud or error. Design and perform audit procedures responsive to those risks. The selection andapplication of audit procedures are at our discretion. Obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
Consider internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances for our risk assessments, while the purpose of the audit of the financial statements, etc. is not
expressing an opinion on the effectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies and accounting methods adopted by the management,
the reasonableness of accounting estimates made by the management, and the appropriateness of the related
notes to the financial statements, etc.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty regarding the going concern assumption exists, we are
required to draw attention in our auditor’s report that the related notes to the financial statements, etc.
should be considered. Or, if any note to the financial statements, etc. regarding significant uncertainty
is inadequate, we are required to express a modified opinion on the financial statements, etc. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
 Evaluate whether the presentation of the financial statements, etc. and notes comply with thecorporate accounting principles generally accepted in Japan, and whether the overall presentation,
structure and contents of the financial statements etc., including the related notes, accurately represent
the underlying transactions and events.
We communicate with the Audit & Supervisory Board and its members regarding the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal
control, that we identify during our audit, and other matters required by audit standards.
We also report to the Audit & Supervisory Board and its members with a statement that we havecomplied with the ethical requirements in Japan regarding independence that are relevant to our audit of- 61 -

the financial statements, matters that are reasonably considered to affect the independence of us, andwhere applicable, related safeguards taken to remove or reduce factors that could hinder our
independence.
Interest
Our firm and its designated engagement partners do not have any interest in the Company which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

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Audit & Supervisory Board’s Audit Report (duplicated copy)

Audit Report(English Translation)
The Audit & Supervisory Board prepared this audit report regarding the performance of duties byDirectors for the 99th fiscal year from April 1, 2021 to March 31, 2022, upon deliberation based on audit
reports from individual Audit & Supervisory Board Members and reports as follows.
1. Methods and Details of Audit by Audit & Supervisory Board and its members(1) The Audit & Supervisory Board established the audit policy, allocation of duties, etc., and received
reports from each Audit & Supervisory Board Member regarding the state of implementation of
his or her audits and results thereof, as well as received reports from Directors, etc., and theaccounting auditor regarding performance of their duties, and sought explanations as necessary.
(2) Each Audit & Supervisory Board Member complied with the auditing standards established by the
Audit & Supervisory Board, in accordance with the audit policy, allocation of duties, etc.,
communicated with the Directors, the internal audit department, other employees, etc., and madeefforts to collect information and improve the audit environment, and conducted audits by thefollowing methods:
1) We attended the meetings of the Board of Directors, the Executive Management Committee, andother important meetings, received reports from Directors, Executive Officers, employees, etc.,
regarding the state of performance of their duties, sought explanations as necessary, inspected
important approval documents, etc., and investigated the state of activities and property at thehead office and other main business offices of the Company. With respect to subsidiaries, wecommunicated and exchanged information with Directors, Audit & Supervisory Board Members,
employees, etc., of the subsidiaries, and ascertained the status of business, management andadministration.
2) With respect to the systems stipulated in Article 100, Paragraphs 1 and 3 of the Ordinance for
Enforcement of the Companies Act to ensure the proper business operation of a corporate groupcomposed of a parent and its subsidiaries, including systems to ensure compliance of the duties
performed by directors and reported in business reports with relevant laws, regulations and the
Articles of Incorporation of the Company (“internal control system”), the Audit & Supervisory
Board Members regularly received reports from Directors, Executive Officers, employees, etc.,
asked for explanations and expressed opinions as needed, regarding the resolutions adopted by
the Board of Directors on the establishment of such system, the system established in accordancewith the resolutions, and the status of improvement and operation of the system.
3) We monitored and verified whether the accounting auditor maintained independence andimplemented appropriate audits, and we received reports from the accounting auditor regarding
the state of performance of their duties and sought explanations as necessary. In addition, we
received notice from the accounting auditor that systems for ensuring that the correct
performance of duties (matters set forth in each item of Article 131 of the Regulation on
Corporate Accounting) are organized in accordance with the Standards for Quality Control of
Audit (Business Accounting Council, October 28, 2005) and other relevant standards, and sought
explanations as necessary.
Based on the above methods, we examined the business report and supplementary schedules thereto,
non-consolidated financial statements (non-consolidated balance sheet, non-consolidated statement ofincome, non-consolidated statement of changes in net assets, and related notes) and supplementaryschedules thereto, and the consolidated financial statements (consolidated balance sheet, consolidated
statement of income, consolidated statement of changes in net assets, and related notes) for the fiscal year
under review.

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2. Results of Audit(1) Results of audit of the business report and other relevant documents
1) We recognize the business report and supplementary schedules thereto represent the situation of
the Company correctly in accordance with laws, regulations, and the Articles of Incorporation.
2) We do not recognize any misconduct related to Directors’ execution of their duties or material
facts that constitute violations of laws, regulations or the Articles of Incorporation.
3) We recognize the contents of the resolutions by the Board of Directors regarding the internal
control system are appropriate. We do not recognize any matters to be noted on the contents ofthe business report regarding the said internal control system or Directors’ execution of duties.
(2) Results of the audit of the non-consolidated financial statements and supplementary schedules
theretoWe recognize the methods and results of audits by Ernst & Young ShinNihon LLC, theaccounting auditor, are appropriate.
(3) Results of the audit of consolidated financial statements
We recognize the methods and results of audits by Ernst & Young ShinNihon LLC, theaccounting auditor, are appropriate.
May 17, 2022
Audit & Supervisory Board,
ISHIHARA SANGYO KAISHA, LTD.
Standing Audit & Supervisory Board Member
Standing Audit & Supervisory Board Member
Standing Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)
Audit & Supervisory Board Member(Outside Audit & Supervisory Board Member)- 64 -

Taizo Kato
Yoshihito Akiyama
Yoshitaka Akikuni
Masaaki Harima