Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [Cover - Table 4]

KYOKUTO KAIHATSU KOGYO Co.,Ltd.

KYOKUTO KAIHATSU KOGYO Co.,Ltd.

INTEGRATEDREPORT
2023

Please use the contacts below for any inquiries regarding this booklet.

CSR, Corporate Planning Department, Management headquarters
Tel

06 6205 7806

Web

www.kyokuto.com

Company names, product names, logos, etc. are trademarks or registered trademarks of each company.

INTEGRATED REPORT 2023

Kyokuto Kaihatsu Kogyo Co., Ltd.

FY 2022（year ending March 2023）

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P1 - P2] Introduction

INTEGRATED REPORT 2023｜

Management Philosophy｜

Valuing technology and trust, make concerted
efforts to develop the company, and widely contribute to society

OUR PURPOSE

Since our founding, our management philosophy has been to “aim to be a company that
contributes to society by respecting the skills and trust that have been passed down to us.”

An unchanging mission that responds to change
Our business is strongly connected to "solving social issues'' and "creating a sustainable society.''
Amid the rapidly changing global situation, all group companies and｜Company Principles｜

employees will continue to take on the challenge of fulfilling their respective missions
based on our management philosophy, with the aim of becoming a global comprehensive
infrastructure manufacturer that leads the industry.

Trust

Reliability Harmony“To be a trusted company”“Carry out reliable work”“In the spirit of harmony and cooperation”
PhilosophyIn order to actualize our founding spirit and management philosophy
through our daily work, we uphold “Trust, Reliability, Harmony”
as the guiding principles for our employees.

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P3 - P4] Contents/Editorial Policy

INTEGRATED REPORT 2023

CONTENTS｜Integrated Report 2023｜

OUR PURPOSE/Management Philosophy▶ 01

Vision and Growth Strategy

Sustainability Initiatives& Company Principles
Table of Contents/Editorial Policy▶ 03

Top Message▶ 05

Becoming a global comprehensive
infrastructure manufacturer by supporting

Value Creation Model▶ 13｜Local Communities｜ Sustainable “City andKyokuto's sustainability management▶ 15

Community Building”

Responding to risks and opportunities▶ 16■ Trusted Manufacturing■ Participation in Local Communities■ Organizational Governancean ever-changing society with an unchanging mission｜Environment｜ “Manufacturing” that Considers■ Human Rights/Labor Practices

▶ 61

65

the Global Environment■ Climate Change and Environment

What should be done to develop human resources
who will be responsible for creating value for society■ Stakeholder dialogue■ Fair Operating Practices/Consumer Issues〜Taking on the challenge of renewable energy■ Community Participation & Collaboration

05

▶ 57

Sustainability Promotion Systems▶ 24Long-term Management Vision▶ 27

Medium-term Management Plan Progress▶ 29

Financial Officer’s Message▶ 31

Governance Initiatives

that leads to solutions for both regional andenvironmental issues〜｜ Governance ｜ “Building an Organization” ▶ 7 2■ Toward a Decarbonized Society

Trusted by Society■ Toward a Recycling-oriented Society/ Conservation of■ Corporate Governance

Ecosystem■ Outside Directors’ Meeting

Kyokuto Group Foundation

Data Collection/Corporate Profile

History of Growth▶ 09

Our Group’s Strengths

▶ 11

31

61
Taking on the challenge of renewable energy that
leads to solutions for both regional andenvironmental issues

Business Strategies
Kyokuto's Business Sectors▶ 33

Special Purpose Vehicles Business▶ 35

Environmental Equipment and Systems
Business
Car Parking Systems Business▶ 41

Kyokuto's Global Expansion▶ 51｜Human Resource｜ “Creating a society”▶ 67

Sustainability Data

▶ 79

Key Financial data

▶ 81

Stock Information▶ 88

Corporate Profile▶ 89

External Evaluation/Award▶ 91

Dialogue with Stakeholders▶ 92

where everyone is respected■ Stakeholder dialogue〜What should be done to develop human resources who will be
responsible for creating value for society〜▶ 47■ Diversity management■ Work-life balance■ Creating a rewarding organization/Consideration of human rights■ Occupational Health and Safety■ Health Management■ Editorial policy[Reference guidelines]
ISO26000 Guidelines, Ministry of the Environment Environmental Reporting
Guidelines (2018 Edition), Ministry of Economy, Trade and Industry "Guidance forCollaborative Value Creation", IIRC "International Integrated Reporting Framework"■ Kyokuto Kaihatsu Group Website/Social Media

OutlineESG/sustainability info.

Integrated report
CSR Web site

https://www.kyokuto.com/csr/

Japanesehttps://www.kyokuto.com/

Englishhttps://www.kyokuto.com/en/

Shareholder & investor info.

IR Web site

https://www.kyokuto.com/ir/

Comprehensive

Financial

Organizations This reports on the activities of the Kyokuto Kaihatsu Group,
centered on Kyokuto Kaihatsu Kogyo Co., Ltd., including ourreported:domestic and overseas affiliated companies.
Period ofApril 1, 2022 to March 31, 2023
report:(Some articles include content from April 2023 onwards.)
TargetTo all stakeholders involved with the Kyokuto Kaihatsu Group
readers:
Date of issue: Published: Month: Publication date: October 2023

Non-financial

This report was created with the intention of conveying the Group's value
creation story in an easy-to-understand manner to a wide range ofstakeholders, including shareholders and investors.
The automobile industry is currently said to be undergoing a
once-in-a-century period of transformation.
It describes how we will respond to these turbulent times and how we willrealize a sustainable society by leveraging our group's collective strengths.
We value the opportunity to have dialogue with everyone, using the integrated
report as a starting point. We would appreciate it if you could give us any
feedback that you may have.

■ Information Disclosure System

Updated with the latest information.
Kyokuto Kaihatsu Kogyo official
social media account
KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P5 - P6] Top Message

Top Message｜

To p M e s s a g e｜

Top Message

Becoming a global comprehensive infrastructure manufacturer
by supporting an ever-changing society with an unchanging mission
In our long-term management vision, we declare that our goal by 2030 is to become a "industry-leading global

KYOKUTOGroup Foundation

comprehensive infrastructure manufacturer that contributes to the realization of a sustainable society'' based on"outstanding technological capabilities'' and "unwavering quality.'' This shows us the path we should take, and it is also
the image of the company we wish for the company to become. As the world and industry continue to change,
our mission from the time of our founding to support infrastructure remains unchanged. We view recent major changes
in the social environment as "opportunities," and continue to be a group that creates value by working to help resolve

It has been a while since the automobile industry wassaid to be undergoing a once-in-a-century period oftransformation, but in order to continue to meet theever-changing market needs, we will be left behind if
we continue to make the same products as before. In
particular, automobiles, including our own special
purpose vehicles, are now part of the essential
infrastructure for society, and at the same time, they
are also a source of large amounts of CO2
emissions, which is a cause of global warming. For
example, in the past, dump trucks tended to be heavy
due to an emphasis on sturdiness, but recently there
has been a demand for environmental performancesuch as reduced CO2 emissions and loading
efficiency. In addition, the logistics industry is also
undergoing changes such as legislation related to theshortage of drivers and a review of work styles. We
need to take some measures to address these
problems, such as increasing the size of vehicles. In
order to quickly respond to this ever-changing
environment, we are currently planning to start atechnical center in Toyota City, (Aichi Prefecture) to
conduct research and development in special
purpose vehicles. At this facility, tests of developed
products that had previously been conducted throughsimulations and partial tests will be conducted infull-scale, actual operation, allowing us to identify
and improve defects that could not be anticipatedusing conventional methods in the shortest possible
time. With this facility, we will achieve the solid
quality and outstanding technical capabilities as set
forth in our long-term management vision. We aim tobecome a manufacturer that achieves this,significantly shortens the development cycle, andgenerates high competitiveness.

We expect the supply of truck chassis to gradually
recover. It is important to constantly obtain
information from the ever-changing market andincrease productivity while eliminating waste andunreasonableness. Fortunately, due to therelationships of trust we have cultivated with truck
manufacturers, we have a system in place tocooperate with each other, so we hope that throughthis effective cooperation, this will have a positive
impact on our business results.
On the other hand, although issues such as soaring
prices continue to remain, the infrastructure that
supports society and the economy must continue tobe maintained. In addition to these, proactive
solutions are needed to address growing risks suchas climate change and other disasters. Keeping in
mind the mission of contributing to the developmentof infrastructure that is essential for people's lives, wewill pursue both the realization of a sustainable
society and the growth of our group.

KYOKUTO INTEGRATED REPORT 2023

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Data Collection
Corporate Profile

KYOKUTOTOPMESSAGEFor the fiscal year ending March 2023, group sales
were 113,089 million yen and operating income was
991 million yen. This was the result of the impact ofsoaring prices from raw materials and energy, as well
as longer truck chassis delivery times due to ashortage of semiconductors. Under thesecircumstances, in order to maintain the quality of our
products and continue to provide products thatsatisfy our customers, with the understanding of ourcustomers, we have revised our selling prices instages from last year to date.

GovernanceInitiatives

Kyo kuto K aihat su Ko gyo C o., Ltd.

■ Continuing to challenge newtechnologies to respond to changes in theindustry

Sustainability
Initiatives

Re p re s e nt at i ve D ire c to r, Pre si de nt , C EO

■ FY2022 was affected by stagnation inchassis production due to soaring prices
and semiconductor shortages

Business Strategies

TAT S U YA N U N O H A R A

Vision and
Growth Strategy

existing social issues.

06

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P7 - P8] Top Message■ Becoming a company that all
stakeholders, including employees, can beproud ofWe appreciate your continued understanding andsupport for our group.

In the car parking systems business, we announced
an EV charging equipment installation and charging
management service for multilevel parking systems
and toll parking. Although Japan is an advanced
automobile country, the reality is that the spread of
EV cars is slower than in Europe and the UnitedStates. This situation can be highlighted from thelack of charging spots in the city. In order to further
popularize EV cars, which are expected to have asignificant effect on global warming, we, as amanufacturer of multi-story parking lots forcondominiums, need to respond to this situation assoon as possible.

Sustainability
Initiatives
GovernanceInitiatives

We believe that pro-actively developing products andservices that contribute to help solving social issues
in each of our businesses, including carbon neutrality,
will lead to increase both of our corporate and social
value. We must not only reduce CO2 emitted directlyfrom business activities, such as installing solar
panels and storage batteries at factories, but also
work to reduce CO2 from a value chain perspective,
such as product use and facility operation.

Data Collection
Corporate Profile

Although this initiative is not directly related tobusiness results, we have begun a new sponsorshipof the Osaka Philharmonic Orchestra as a culturalcontribution. I think the development of Osaka, ournew base, will energize us as well. I feel that
protecting and nurturing Osaka's culture is a major
responsibility as a company.

The medium-term management plan lists“strengthening synergies among the group'' as animportant area. The technical center I mentioned
earlier also serves as a place to maximize synergy
effects. In other words, it is a place where thetechnological capabilities of both Kyokuto Kaihatsu
Kogyo and NIPPON TREX are combined. The sameis true for manufacturing overseas, and I believe it isimportant to consciously combine the best parts ofeach organization. The words “trust,” “reliability,” and“harmony” in our company principles are very

meaningful words, but they are also essential
concepts for us to grow as a group. Based on thespirit of our management philosophy and company
principles, which we have cherished since ourfounding, we will continue to speedily provide
technology and products with the mission of
supporting people's infrastructure, and work to createa sustainable society.

Business Strategies

In terms of work styles and diversity, I feel it isimportant to create an environment where all
employees, regardless of gender, can achieve
greater work levels and to help provide motivation forthem to become managers. As men's childcare leaveis gradually becoming more commonplace, I feel thatit needs to become more widespread and we need tochange to a society where men take part in childcare
as a matter of course. Additionally, unfortunately,
there are very few female managers and leaders at
this stage, but from now on we would like toencourage more female employees to aim for
managerial positions. To this end, we are improving
the workplace environment and conducting"unconscious bias training". On the other hand, sincelast year we have had a female director serve as an
outside director. I feel that the Board of Directors
have become more lively than ever before because
we can now express opinions from a different
perspective than men.

In our environmental equipment and systems
business, we have been constructing and managing
the operation of recycling facilities ordered bymunicipalities across Japan.
In recent years, population decline and depopulation
have created new issues regarding the operating
efficiency of garbage collection and treatment
facilities, and we are beginning to take new measures
to address these issues. We are also working to
expand the availability of renewable energy. To date,
we have delivered new energy facilities using
biomass and biogas power generation facilities thatutilize livestock manure and food waste. New
projects are currently underway. We will continue tofocus on proposals that meet local needs in order tofurther create a sustainable society that is resilient toclimate change and disaster risks.

■ Cherishing the group's harmony"
Aiming for further corporate growth bystrengthening our synergies

Vision and
Growth Strategy

The effects of relocation are also reflected in humanperformance, such as recruitment activities andemployee motivation. Especially from now on, it will
become more difficult to secure human resources. I
feel that we must focus on improving operational
efficiencies and promoting diversity using DX (digitaltransformation) as priority issues. For example,
digital tools are becoming more important than everin sales activities. The use of tablets and otherdevices not only allows for more detailed proposals
to be created more quickly, but also improves thequality of communication itself. Successful results atwork also lead to a person's sense of fulfillment andmotivation, so it is necessary to make more effective
use of digital transformation.

In Japan, I feel that the expansion of the special
purpose vehicle market has reached its limit. In thisenvironment, it is not easy to significantly increase
market share. So the next thing we are thinking about
is taking on the challenge of overseas markets.
Currently, overseas sales account for approximately
10% of sales in the special purpose vehicles
business, with India and Indonesia performing
particularly well.
In India, where growth is expected to continue to be
driven by domestic demand, supported by population
growth, we would like to continue to focus on
increasing production capacity.

KYOKUTOGroup Foundation

In February 2023, we moved our head office from
Nishinomiya City, Hyogo Prefecture to Osaka City,
Osaka Prefecture. Although it was sad to leave theplace where we have grown together since 1957, weare not only getting closer to our customers and havebetter access to information, but we are also looking
forward to improving our Business Continuity Plan
(BCP) and security. The decision to relocate wasalso taken into consideration to counter businessrisks such as the strengthening of the company's
operations etc.

■ Development of products and services
centered on carbon neutrality

Top Message

KYOKUTOTOPMESSAGETop Message

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P9 - P10] Company Development

GROWTHHISTORYKYOKUTO Group Foundation

History of Growth

1991

Top Message

The Kyokuto Kaihatsu Group has always provided products that meet the needs of society
and contribute to its development. We will continue to flexibly respond to the changing times
and contribute to the realization of a sustainable society.

2017“Single car carrier truck” launched
By lowering the loading platform to theground level, it can be used to load
low-height luxury cars and sports cars.

“25-m double-trailer truck” launched
Capable of transporting two large trucks witha single vehicle. Reduced CO2 emissions
and fuel consumption by approximately 40%
while maintaining the logistics volume.

2022

2022

2020

Head Office moved to Osaka
We moved our head office to
Osaka for the purpose of BCP
measures and further securing
human resources.

Sales(million Yen)
140,000-

1981

1964“Tailgate lifter” launched“Detachable body truck” launched
Separating containers fromvehicles made it possible to streamline
logistics operations such as transportation,
cargo handling, and storage of goods.
Greater efficiency in transportation andimproved vehicle operation rates werealso achieved by greatly streamlining
cargo handling and saving labor.

This reduced the burden of loading andunloading heavy loads by saving labor incargo handling work.
120,000-

1970
Entry into the recycling plant business“Vertical type pulverizer” launchedThis made it easier to landfill andincinerate by pulverizing bulky
waste. We also contribute to thepromotion of recycling and otherresource recovery.

1998“CG1000 tailgate lifter” launched
Even though it is a van-type truckequipped with tail gate lifter, the reardoor can be opened and closed at any
time, so it can connect to dock shelters*.

*An air-tight device for filling the gap between theloading platform of a vehicle and the loading portof a warehouse or factory.

“Refuse truck safety support system”
launched
Improved safety and workability have beenachieved by adopting high-performancecameras and AI to detect “people.”

2007

1966
“Squeeze type concrete pump” launchedThis greatly improved the productivity ofconcrete pouring80,000-100,000-“Car Pochette” launched
In order to solve the problem of parking
in urban areas, we developed multistory
parking equipment using technology wedeveloped for special purpose vehicles.

1995
Itami/Head Plant
integrated into Miki Plant

Shinko Automobile
Co., Ltd. includedin Group

80,000-60,000-1979“Pneumatic bulk carrier” launchedThis made efficient transportation ofPower possible

Miki Plant went into operation

1971

1962

40,000-1970

Yokohama Plant
went into operation

Fukuoka Plant
went into operation

1961

20,000-20,000-went into
operation

1955

Kyokuto Kaihatsu
Kikai Kogyo Co., Ltd.
established

0-

0-

|

|

|

|

|

|

|

1955

1965

1975

1985

1995

2005

2015

Era of Establishment

Era of Growth

Era of Transformation

Era of Integration

Era of Selection and concentration

Era of Sustainable Growth

1955〜

1963〜

1971〜

1987〜

1995〜

2006〜

KYOKUTO INTEGRATED REPORT 2023

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10

Data Collection
Corporate Profile

Head Plant
went into
1959
Nagoya Plant operation

GovernanceInitiatives

Company name changed to
Kyokuto Kaihatsu Kogyo Co., Ltd.
Itami Plant went into operation
40,000-

Sustainability
Initiatives

1967

60,000-PT. Kyokuto
Indomobil
Manufacturing
Indonesia(Indonesia)
established120,000-

2002

Entry into the mechanical multistory parking
equipment businessTwo-stage home parking system“Press type refuse truck” launched
By compressing collected refuse with astrong force, volume reduction andtransportation efficiency were achieved
simultaneously.

2012

Kyokuto Kaihatsu(Kunshan) Machinery Co.,Ltd.
(China) established

1989
1972

NIPPON TREX Co., Ltd.
included in Group2016
Mori Plant Co., Ltd.
included in Group

Business Strategies

2003

140,000-2018

Hokuriku Heavy
Industries, Ltd.
included in Group

2020

100,000-

Sales(million Yen)

Vision and
Growth Strategy

1964

SATRAC ENGINEERINGPRIVATE LIMITED(India) included in GroupKYOKUTOGroup Foundation

Head Office
moved to OsakaKyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P11 - P12] Group Strengths/Financial Highlights

GROUP
STRENGTHSKYOKUTO Group Foundation

Our Group’s Strengths

These capital are the strengths that allows us to meet the expectations of our stakeholder and a source of sustainable growth.

■ Intellectual Capital■ Human Capital

Consolidated Financial Highlights
We are building a sound financial base that supports sustainable growth.

■ Financial Capital

Employees

3,201

R&D expenses

Special Purpose Vehicle BusinessWe are engaged in research and development activities infields so that we can respond quickly to the needs ofsociety.
｜

Major R&D Activities

Development of New
Products andTechnologies

442

120,000

Exploration of
New Fields｜
Improvement of
Existing Products

14,000117,170

80,0008,000

60,0006,000

40,0004,000

20,0002,000

FY2018FY2019FY2020

FY2021

FY2022(Mar. 2019)(Mar. 2020)(Mar. 2021)(Mar. 2022)(Mar. 2023)

Ordinary income■

Manufacturing
Capital

8,817

9,253

Capital investment

11,804 million yen*FY2022 results (consolidated)

Ag g r e s s i ve c a p i t a l i nve st m e nt s a r e b e i n g m a d e tostrengthen and improve the efficiency of our production
system, to expand our service system, to cope with risks
such as aging and deterioration of each site, and to
introduce new technologies.

366

433

(Special Purpose Vehicles
companies
locations
Business)*As of the end of March 2023 *Kyokuto Kaihatsu Kogyo service factory

In cooperation with service factories throughout Japan, we
have established a system to respond quickly to producttroubles.

FY2019(Mar. 2020)

FY2020(Mar. 2021)

FY2021(Mar. 2022)

FY2022(Mar. 2023)

14,274

8,675

10,000

7,567

8,000

6,000

6,000

4,000

4,000

1,187

2,000

6,284

6,073

6,774
3,580

2,000
0

0

FY2018FY2019FY2020

FY2021

FY2022(Mar. 2019)(Mar. 2020)(Mar. 2021)(Mar. 2022)(Mar. 2023)

FY2018(Mar. 2019)

FY2019(Mar. 2020)

FY2020(Mar. 2021)

FY2021(Mar. 2022)

FY2022(Mar. 2023)*In FY2021 (fiscal year ended March 31, 2022), a gain on sale of fixed
assets of 13,223 million yen was recorded.

■

Sales breakdown by segment FY2022■

ROE/ROA(fiscal year ended March 31, 2023)

Parking and Other Operations Business

6.1%

ROE (Return on Equity)

Special Vehicles Business

84.8%

（%）
14.0

ROA (Return on Assets)

13.4

12.0

Environmental Equipment
and Systems Business

10.0

9.1%

8.0
6.0

Service Factories

FY2018

9.6
7.1
4.5

6.7

7.0

4.4

4.9

Data Collection
Corporate Profile■

Our group is also working to produce clean energy byintroducing solar power generation systems at former
factory sites and factories. Kyokuto Kaihatsu Kogyo Miki
Plant will continue to make new capital investments andcontribute to a carbon-neutral society, such as solar panels
that will be installed in fiscal 2023 using a pond near the
Miki Plant.

991

GovernanceInitiatives

Aiming to collect information in various fields andcontribute to local communities, we join variousorganizations and promote activities in cooperation with
them.

6,974

12,00012,000*FY2022 results (Total of Kyokuto Kaihatsu Kogyo and NIPPON TREX)

9,080

Sustainability
Initiatives*As of March 2023 (Kyokuto Kaihatsu Kogyo non-consolidated)

8,493

Net income attributable to owners of parent
14,0004,528,470kWh

8,554(Mar. 2019)

14,000■ Natural Capital

Solar power generation

0(Million Yen)

8,000

189

12,00010,00010,000

Number of organizations joined:

113,089(Million Yen)

(Special Purpose Vehicles Business: 103, Environmental
Equipment and Systems Business: 7, Parking and Other Operations Business: 5)■ Social and Relationship Capital

116,910

Business Strategies

115■

120,173

114,301

100,000

0

Number of applications for
Industrial property rights:

Operating profit

Vision and
Growth Strategy

2,636

123
Environmental Equipment
and Systems Business■(Million Yen)

140,000*FY2022 results (consolidated)

A diverse range of employees work to support the Group.
Parking and Other Operations
Business

1,583 million yen

Sales(Million Yen)KYOKUTOGroup Foundation■*As of the end of March 2023 (consolidated)

Top Message

The Kyokuto Kaihatsu Group has its own unique capital that has been accumulated throughout its history.

3.2

4.0
2.0

2.3

0

FY2018(Mar. 2019)

FY2019(Mar. 2020)

FY2020(Mar. 2021)

FY2021(Mar. 2022)

FY2022(Mar. 2023)*In FY2021 (year ending March 2022), a gain on sale of fixed
assets of 13,223 million yen was recorded.

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P13 - P14] Value Creation Model

Value Creation Model｜Management Philosophy｜

Value technology and trust, make concerted efforts

Top Message

VALUE
CREATION
MODEL

Vision and Growth Strategy

to develop the company, and widely contribute to society

Business Model

Developing Products for the Improvementof Social Infrastructure▶

KYOKUTOGroup Foundation

Social Issues

Social Contributions
through Business

Output/Outcome

P33-56(Priority Management Issues)Special Purpose Vehicles Business

Environmental Equipment and Systems Business

Car Parking Systems Business

FY2022
Output/Outcome

Vision and
Growth Strategy

Materiality

SDGs【Performance】FY2022
6,895
10,327

Branding

Sales

Improving brand value and reputationEenvironment

Conserving ecosystem

S

P72-77Work Style Reform

96,447

Special Purpose Vehicles Business

Environmental Equipment and Systems Business
Parking and Other Operations▶ P12
Business*Intragroup sales of 5.81 million yen were eliminatedon consolidated basis.

E Environmental contribution

Promotion of work style reforms■ CO₂ reduction: 4.4% reduction▶ P67-70(Compared to FY2013)*Calculated based on output level (CO2 emissions/sales)

society

The Kyokuto Kaihatsu Group SDGs Declaration

Management Systems

Realizing a society in which
everyone participates
governance

Balancing social sustainability
with economic activity▶ P92

Carbon neutrality/Environmental Issues
Initiatives toward a decarbonized society, arecycling-oriented society, andecosystem conservation▶ P19-20・63-64

Kyokuto Kaihatsu 2030

Long-Term Management vision−

Business Performance Vision

Medium-Term Management Plan

■ Satisfaction with work-life balance: 58.1%−■ Percentage of employee taking paid leave: 74.2%

Sustainability Vision▶ P27-28

Contribution to Local Communities
Coexistence and co-prosperity
with local communities▶ P59-60

G Strengthening ourbusiness foundation▶ P80■ Capital investment: 11,804 million yen

Creating The Future As One−−▶ P29-30

Health and Productivity Management▶ P71

Risks and Opportunities■ Ratio of female employee ratio: 11.0%

2022-2024
Promoting the health of employees
and their families▶ P80

S Contributing to people■ No. of applications for industrial property right:
115
▶ P11

Data Collection
Corporate Profile

Realization an economy and society
resilient against risks

Efficient management using amanagement systems■ Resource recycling rate: 97.0%▶ P26

GovernanceInitiatives

Creating livable anddisaster-resistant communities

G

Governance
Building an organization
resilient against risks ▶

Sustainability
Initiatives

Suppressing global warming
Realizing a recycling-oriented society(Million Yen)OUTPUT

Social issues
affecting the
Kyokuto Kaihatsu Group

Business Strategies

113,089

▶ P91

INPUT

Our Group’s Capital

Human CapitalIntellectual
CapitalSocial and
Relationship
CapitalNatural Capital

Manufacturing
CapitalFinancial
Capital▶ P11-12▶ P16-23

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P15 - 16] Kyokuto’s Sustainabilit y Management

Vision and Growth Strategy

Kyokuto's Sustainability Management

Responding to Risks and Opportunities [Organizational Governance]
Top Message■ Understand social issues■ Risks and opportunities/Materiality
Principles of Social
Responsibility

Core Subject(1) Organizational governance(1) Accountability(2) Human rights(2) Transparency(3) Labor practices(3) Ethical actions(4) The Environment(4) Respect for interests of(5) Fair business practices(5) Respect for the rule of law(6) Consumer issues(6) Respect for international

As policies and guidelines related to information disclosure are revised, not only the promptness of disclosure and thereliability of data, but also "easy to understand'' factor are now required. On the other hand, there is a trend toward
organizational consolidation and overseas expansion in order to achieve corporate targets, and the impact that businessactivities have on and are received from society has become larger and more complex.

KYOKUTOGroup Foundation

Our Group has incorporated sustainability at the core of its
business strategy and is implementing sustainability
management to meet the diverse needs and expectationsof stakeholders in the context of social challenges.Our aim
is to achieve both the realization of a sustainable society
and the enhancement of our Group’s social value by
fulfilling the principles of social responsibility for the core
subjects related to our stakeholders.

stakeholders

Lorem ipsum(7) Community participation

norms of conduct(7) Respect for human rights

and cooperation

Vision and
Growth Strategy■ Flow of Identifying Materialities (Priority Management Issues)

Understanding social issues

2

Clarify stakeholder needs and expectations

3
4

Assess risks and opportunities for needs and expectations

expectations

Active stakeholder engagement, respecting needs and expectations■

Continuation of business activities and stable, future-oriented management■

Timely and appropriate information disclosure■

Dissemination of information with consideration for privacy and appropriate■

Diversity in management, etc.

Sustainability
Initiatives

Stakeholder needs and■Business Strategies

1

information management without leakage or fabrication

Select high-risk and opportunity items = identifying materiality(priority management issues)(1) Serious violation of obligations to comply with laws, regulations, group regulations, etc.
GovernanceInitiatives(2) Inappropriate information disclosure and lack of transparency(3) Failure to achieve medium- to long-term and single-fiscal year management targets(1) Understand the impact the SDGs and various
challenges facing a sustainable society has on ourGroup.

｜

Referenced Framework, Guidelines, etc.

｜

(4) Deterioration of business efficiency due to mismatch of processes with objectives andgoals(5) Inappropriate management judgment

Data Collection
Corporate Initiative(2) Based on the international guideline standard for social
responsibility, ISO 26000, the needs and expectations of
the Group’s stakeholders in realizing a sustainable
society are clarified through questionnaires andinterviews.

(3) With regard to clarified needs and expectations, themagnitude of risks and opportunities are assessed fromthe two perspectives of “degree of interest andimportance for stakeholders” and “degree of impact for
the Group.”(4) Based on the results of risk and opportunity
assessments, items of high risk and opportunity are
selected as materialities (priority management issues).
Materialities approved by the Board of Directors after
deliberation by the Sustainability Committee (seebelow).

Risks and opportunities■ Monitoring of materiality by the Sustainability Committee■ Expanding and strengthening the Group's information disclosure media■ Applications and integration of ISO management system to each group company■ Promotion of inner branding

Action■ Business Continuity Management (BCM)■ Improving information security■ GRI Standard■ OECD Guidelines for Multinational Enterprises■ ISO26000■ Task Force on Climate-related Financial Disclosures (TCFD)■ Sustainable Development Goals (SDGs)■ International Integrated Reporting Council (IIRC) “International■ The 10 principles of the United Nations Global Compact (UNGC)

Integrated Reporting Framework”■ Promoting stakeholder engagement■ Response to third-party evaluation

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P17 - P18] Responding to risks and oppor tunities (Stable supply of doors and products)

Vision and Growth Strategy

Responding to Risks and Opportunities [Human Rights]

Responding to Risks and Opportunities [Labor Practices]■ Understand social issues

Employees and users are becoming increasingly diverse due to the declining birthrate, aging population, and changes in the social

Problems in the supply chain, such as regional conflicts and semiconductor supply shortages, have direct and indirect impact
on the Group's production plans and cause long working hours. The labor shortage seen in the domestic manufacturingindustry in general, and the resulting increase in the number of inexperienced, foreign, and elderly workers, is a similar trend
in our group. The proportion of workers with less experience is also increasing.

environment. In addition, the number of work style options is increasing due to the spread of unknown infectious diseases such as the novel
coronavirus and seasonal influenza, and the accompanying development of remote work. As economic globalization progresses, business
opportunities are increasing, both directly and indirectly, to be involved in human rights and environmental issues unique to countries andregions.

Top Message■ Understand social issues

KYOKUTOGroup Foundation
Vision and
Growth Strategy
Business Strategies■ Respect for human rights■ Guaranteed workers' rights■ Respond to human rights issues appropriately

Stakeholder needs■ Consider occupational health and safety

and expectations■ Avoid complicity in human rights violations

and expectations■ Appropriate evaluation and compensation for labor■ Developing worker skills and creating motivation(1) Human rights violations due to harassment(2) Promoting growth opportunities for individuals and companies byrecognizing unconscious bias
(3) Difficulty in hiring and separation/retirement due to lack of work style
options(4) Being complicit in human rights issues through procurement activities(5) Relief from human rights violations by establishing a system for relief andsupport(1) Increase in accidents, injuries, and mental illnesses caused by excessive fatigue caused
by long working hours(2) Increase in the number of people leaving their jobs and loss of employment opportunities
due to long working hours, etc.
(3) Improving safety and productivity by strengthening measures to address the diversificationof human resources, including inexperienced and elderly workers(4) Improved employee motivation by increasing communication between the employees andthe management(5) Increase in health problems such as lifestyle-related diseases due to changes in lifestyle
habits and working environment(6) Improving productivity and creativity through appropriate staffing and skill development

Risks and opportunities

GovernanceInitiatives

Risks and opportunities■ Eliminate discrimination

Sustainability
Initiatives

Stakeholder needs

Data Collection
Corporate Initiative■ Implementation of human rights due diligence

Action■ Improving female recruitment ratio■ Operation of occupational safety and health management system■ Strengthening anti-harassment measures■ Thorough management of working hours■ Promoting sustainable procurement■ Expansion of management system regarding conflict minerals

Action■ Improving automation rate in production process■ Conducting dialogue with labor unions and employees■ Adoption of universal design in workplaces, products and services■ Promotion of health management■ Establishment of a consultation desk for group companies■ Promotion of taking paid leave

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P19 - P20] Responding to risks and oppor tunities (Business continuit y / Human rights)

Vision and Growth Strategy

Responding to Risks and Opportunities [Climate Change and Environment]■

Risk Management
Classification of Risk

Major classification

Minor classification

Business Impact
Index

Our group has expressed support for the recommendations of the Task Force on Climate-related Financial

Price of carbon Expenditure

Disclosures (TCFD), and is promoting information disclosure based on the TCFD framework, while working to*1
Transition risks

the energy

energy mix affect CO2 emission
reduction targets, and lead to review ofelectricity supply and demand contracts,
which in turn increase electricity costs.

Expendituremixes

In order to achieve carbon neutrality by 2050, the Japan Auto Body Industries Association, of which our group is a member, set its own

policy trends
High

Low

■ Promoting energy conservation■ Switching to low-emission

High

Low

High

Low

power planstargets based on the Paris Agreement, and simultaneously established a subcommittee and has held frequent study sessions for member
companies. On the other hand, the direction for decarbonizing trucks has not yet been determined, and there are many uncertainties
regarding the power source for the bodywork. Due to the effects of global warming, it is becoming essential for our group and our suppliers totake measures to prevent heatstroke among factory workers.

Expenditure

Droughts andother water
stress

Revenue*2

temperature control, such as heatstrokein plants, will increase.

systems in plants■ Insulation measures for factorybuildings■ Due to abnormal drying, demand for sprinkler
Hightrucks for dust control of roads andforestation maintenance increases.

■ Expansion of water tank

Low

truck production lines■ If damage to inventory or production■ Presentation of medium- to long-term plans for carbon neutrality by 2050 from industry organizations■ Requests from major business partners for carbon neutrality and appropriate management of environmentally hazardous
substances
Physical risks Intensification Expenditureof abnormal
Revenueweather

Our Group recognizes that responding to environmental issues, including climate change, is one of our key management issues, and has
established the"Long-term Management Vision —Kyokuto Kaihatsu 2030—" and the
The Sustainability Committee (chaired by the Representative Director, President, CEO), which reports directly to the Board of Directors,

Very
Low

■ Risk assessment within yourcompany and supply chain■ Measures against water intoplants■ Expansion of water tanktruck production lines■ Renewal of body production
line for mid-sized rear dump
trucksLowdetermines plans and monitors the status of climate change risks and opportunities for assessment, management, and improvement.

■ Promotion of staggered work

■ Due to a pandemic caused by an unknown*Climate change risks and opportunities are handled by the Carbon Neutral/Environmental Issues group within the Sustainability Committee.

Changes inbiodiversity

Expenditure

Sustainability
Initiatives"Medium-term Management Plan 2022-24 —Creating The Future As One—".

facility troubles occur due to frequent
torrential rains or typhoons, repair andrestoration costs will increase.
■ If there is an abnormality in the supply ofmaterials due to damage to outsourcing
contractors and the supply chain, plant
operations will be suspended or stalled.
■ There will be increased demand for relief
water tankers and vehicles for collecting
disaster waste for areas affected by the
overflow of rivers and flooding damage.
■ Demand for special purpose civilengineering vehicles will increase asurban infrastructure for disasterprevention is expanded.

Business Strategies■ Governance■ Expansion of air conditioning■ The cost of measures related to room

Vision and
Growth Strategy■ Stakeholder needs and expectations

Rise inaveragetemperature

KYOKUTOGroup Foundation■ Understanding social issues■ Monitoring of carbon priceprocurement materials and the fuel for
its transportation, increases
transportation costs.•■ Manufacturing costs increase incountries where the price of carbon ishigh.

■ Changes in emission factors due toChanges in

Responding to risks

Top Message■ The introduction of a carbon tax on■ Information disclosure in line with TCFD recommendations

strengthen engagement with stakeholders.

Possibility
Impactofonoccurrence business

Consideration

hours and telecommuting

pathogen, business activities may be

Mediumsuspended or stagnant, resulting in lower

Low■ Promotion of online
meetings

sales and a decline in trust with stakeholders.

■ Strategy
Our Group uses the following criteria as a time perspective when determining risks and opportunities.
Short-term: Within approximately one year. Annual goals that are formulated and reviewed every year■

GovernanceInitiatives*1 Expenditure: Negative impact on revenue *2 Revenue: Positive impact on profit■ Definition of temporal perspectives

Indicators and Targets

Medium-term: One to three years. Medium-term goals are reviewed every three years
Long-term: three to nine years. Long-term goals over five years■ Metrics for assessing risks and oppor tunities in line with■ Carbon neutral

strategies and risk management processes

CO2 emissions in FY2024: -10% compared to 2020

■ Impact of risks and opportunities on business, strategy and financial planning

CO2 emissions in FY2030: -38% compared to 2013

Our Group relies on the automobile-related business for more than 80% of its sales, and climate-related risks include anticipated operational

Data Collection
Corporate Profile*Output level (emissions/sales)■ Recycling

shutdowns and declines in sales, as well as risks and opportunities related to resource circulation and ecosystems. We define matters that
affect corporate value from a medium- to long-term perspective as having a significant financial or strategic impact. The threshold is less than

Waste recycling rate of 99.0% or more

5% of net-sales and a financial impact of 30 million yen or more.

■ WasteProhibiting use of hazardous substances, restricting use of plastic■ Resilience of strategies based on various climate-related scenarios, including the below-2°C scenario
Our group has developed a strategy that assumes that the average global temperature will rise by 1.5°C compared to preindustrial revolution levels.
“Transition risk” refers to the risks that occur when the social system changes toward a decarbonized society. In addition, the risks associated withclimate change, such as heat waves, droughts, floods, storms, and sea level rise, are defined as "physical risks," and the Sustainability Committee is■ Data regarding Scope 1, Scope 2, and Scope 3 and relatedrisks

For actual data, see page 79
Related risks are listed above■ Objectives and performance used to manage risks and

See above for goals

opportunities

For details, see page 79

working to develop countermeasures for each of the anticipated risks and opportunities.

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P21 - P22] Response to risks and oppor tunities (Information securit y, Customer satisfaction, Global risks)

Vision and Growth Strategy

Responding to Risks and Opportunities [Fair Operating Practices]

Responding to Risks and Opportunities [Consumer Issues]With the globalization of supply chains, the effects of regional conflicts and national policies are becoming more evident in the
procurement of materials and energy. Although the number of domestic suppliers closing due to difficulties in continuingbusiness caused by factors such as the aging of the population is slowing down, there is a possibility that the number ofsuppliers that are disrupting business will increase again as material and energy prices continue to soar. Furthermore, a value
chain perspective is required when it comes to sustainability initiatives, and specific actions are now required in all areas suchas human rights due diligence and Scope 3 (greenhouse gas emissions).

In Japan, due to labor shortages from the population decline, anyone can now become a user of our products. Furthermore,
the diversity of employees and suppliers involved in product production within our group is increasing, and there are concerns
about maintaining and passing on technology and skills. On the environmental front, efforts from a value chain perspective
are required to realize a low-carbon and recycling-oriented society, as well as improving the environmental performance of
products is also important.

KYOKUTOGroup Foundation■ Understand social issues

Top Message■ Understand social issues

Vision and
Growth Strategy
Business Strategies

and expectations■■

Clean business activities free from corruption
Consideration and collaboration with supply chains

Stakeholder needs
and expectations

Risks and opportunities(1) Accidents and disasters during product use(2) Increased sales opportunities by making products suitable for morediverse users(3) Contribution to the global warming due to CO2 emitted fromproducts(4) Loss of sales opportunities due to products not meeting ethical needs ofthe market(5) Leakage of customer information, etc.

Action■ Promoting universal design of products■ Establishment of product design standards that strengthen items related tothe environment, safety, and human rights■ Thorough customer information management■ Expansion of ISO9001 certification

KYOKUTO INTEGRATED REPORT 2023

Data Collection
Corporate Profile

Action■ Application of procurement policies and procurement guidelines to theentire group■ Building a management system for supply chain risks■ Strengthening information security■ Expansion of systems related to privacy protection■ Implementation of education on related laws such as the Subcontract Act■ Providing products and services that meet user needs■ Providing safe and easy-to-use products (products that can be used withconfidence)■ Energy-saving and low greenhouse gas emission products■ Trouble-resistant products and prompt service systems

GovernanceInitiatives

Risks and opportunities(1) Human rights violations and environmental pollution in supply chains(2) Fraud such as bribery in order-taking activities, etc.
(3) Procurement stagnation due to suppliers going out of business or goingbankrupt(4) Achieve greenhouse gas reduction targets in the value chain(5) Leakage of transaction information(6) Copyright infringement, etc.

Sustainability
Initiatives

Stakeholder needs

21

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P23 - P24] Response to risks and oppor tunities (Par ticipation and collaboration in the communit y)

Vision and Growth Strategy

Responding to Risks and Opportunities [Community Participation and Collaboration]

Sustainability Promotion Systems [Role of the Sustainability Committee]
Top Message■ Understand social issues

Risks and opportunities

As the birthrate continues to decline, a decreasing population is becoming a significant and serious problem in regional cities.
The cities where our group's factories are located are no exception, and securing and training human resources to engage in

Organizational governance

Human rights

Labor practices

Fair business practices

Consumer issues

Community participationand cooperation

manufacturing helps maintain the vitality of not only our group but also local communities. In addition, it is necessary toaggregate the knowledge of each sector to rationally and efficiently solve a wide range of local issues such as welfare,

Determine materiality based on risk andopportunity assessments,

KYOKUTOGroup Foundation

environment, and disaster prevention to realize a sustainable society.

Climate change andthe environment

and manage highly related items into groups (see pages 16-25)

Materiality
Branding

Improving brand value and reputation
Building an organization resilient against risks

Workstyle Reforms

Initiatives towards a decarbonized society, a recycling-oriented society,and ecosystem conservation

Health and Productivity Management

Promoting the health of employees and their families

Contribution to Local Communities

Coexistence and co-prosperity with local communities

GovernanceWorkstyle Reforms
GovernanceInitiatives

Management Systems
Carbon Neutrality andEnvironmental Issues
Health and Productivity
Management
Contribution to
Local Communities

Data Collection
Corporate Profile■

Branding

Auditing Department

Sustainability Committee

ActionCarbon Neutrality andEnvironmental Issues

The Group has established a Sustainability
Committee, chaired by the President, tomanage identified materiality. The
Sustainability Committee sets goals, develops
countermeasures, monitors the status ofinitiatives, and regularly reports to the Boardof Directors regarding the status of risks andopportunities associated with changes in theinternal and external environment and theseven material issues. In addition, theAuditing Department conducts an audit oncea year to objectively evaluate theappropriateness and validity of our initiatives.

(1) Complaints from the community(2) Environmental pollution such as destruction of local ecosystems(3) Development of local areas through collaboration with the local community(4) Developing local human resources■ Conclusion of comprehensive collaboration agreements at major locations■ Acceptance of factory tours■ Cooperation and sponsorship of local events■ Support for sports and cultural activities■ Participation in social contribution/volunteer activities

Efficient management using a management systems

Board of Directors

Risks and opportunities

Management Systems

Sustainability
Initiatives

and expectations

Promotion of workstyle reforms

Business Strategies

Stakeholder needs■ Understanding the region■ Participation in the community■ Providing a place for local employment (giving back to the local economy)■ Investing in local communities

Vision and
Growth Strategy

Governance

Active Schedule

Period

I
Apr.

May

II
Jun.

Jul.

Aug.

III
Sept.

Oct.

Nov.

IV
Dec.

Jan.

Feb.

Mar.

Committee
Internal Audits

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P25 - P26] Risks and Oppor tunities/Materialit y

Vision and Growth Strategy

Sustainability Promotion Systems [Response to Materiality]
Main activities details
Target values are in parentheses
Improving brand value and reputation

Branding■ Expanding and strengthening the group's
information disclosure media■ Promotion of inner branding■ Response to third-party evaluation

Governance

Promotion of work style reforms

Workstyle
Reforms

Efficient management using a management system

Management

Carbon Neutrality

IssuesHealth andProductivity

Contribution to
Local
Communities■ Analysis of health issues and implementation ofcountermeasures■ Promotion of awareness activities
Co-existence and xco-prosperity with local
communities■ Cooperation and sponsorship of local events■ Conclusion of comprehensive collaborationagreements at major locations■ Acceptance of factory tours■ Participation in social contribution/volunteer
activities■ SDGs Partnerships

develop the company, and widely contribute to society.”
Based on this management philosophy, we will work

We are working with companies, governments, andproactively to achieve the SDGs (Sustainable Development

organizations to resolve issues related to sustainability.

Goals) by simultaneously resolving social issues related to■ Implementation of in-house training(online) regarding the Subcontract
Act■ Selection of a document management
system that complies with theElectronic Bookkeeping Act■ Preparing SAQ's for supply chains

There are concerns that as the group
expands, monitoring will become lessthorough. Additionally, as legal managers
and other competent people may be absent
due to retirement, etc.; if this is the case,human resources development should be
carried out in a more planned manner.

■ Analysis of overtime hours■ Dissemination of systems related toleave such as planned paid leave■ Consideration of regulations regarding
telecommuting■ Holding a subcommittee on promoting
the advancement of women■ Implement unconscious bias training for
managers

There appears to be room for
improvement regarding paperless
operations. Also promote thedigitization of methods for creating
and distributing meeting materials.

｜Environment｜ “Manufacturing” That Considers the Global Environment• We will strive to reduce the environmental impact at all stage of the supply chain.
• We will promote the 3Rs (Reduce, Reuse, Recycle) for our products and promote energy
conservation to produce environmentally conscious products.

■ Human rights due diligence manual*1
production■ FE-Auto ISO9001 registration
examination■ On-site survey to obtain ISO9001
certification for Shinko Automobile

We hope that progress will continue
as planned.

｜People｜ “Creating a Society” in Which Each and Every Person is Respected• We will strive to create a work environment in which all employees can demonstrate theirabilities to the fullest extent possible with a sense of fulfillment and job satisfaction.
• We will promote the creation of products that are safe and easy to use for all customers.
• We will promote the creation of products that consider people at all stages of the supply chain.

■ Miki Plant reservoir solar power
generation plan *2■ Survey on the status of waste treatment
at group companies

Perform more precise data analysis
and identify areas for improvement inmore detail. Additionally, as an
initiative towards Scope 3 (Category11), consider highly effective measures
regarding product life cycle
assessment.

Activities

SDGs｜Local communities｜ Sustainable “City and Community Building”• We will contribute to the development of disaster-resistant urban infrastructure.
• We will contribute to eliminating labor shortages in all fields by realizing efficienttransportation and savings in labor.
• We will contribute to the creation of a recycling-oriented society by building a foundation forresource recycling.

｜Governance｜ “Building and Organization” Trusted by Society• We will identify Group risks and opportunities, managing them with a management
system.
• We will value dialogue with stakeholders and respond to their needs and expectations.
• We will promote sound corporate management in accordance with compliance.

■ Implementation of stress checks andanalysis of results■ Creating a health management “strategy
map”

Further increase indicators related
to health and promote multifaceted
efforts.

■ Sponsoring local events such as the Yamato
Industrial Fair and Komaki Citizen Festival■ Acceptance of factory tours■ Accepting junior high school students for work
experience

We hope that progress will continue asplanned.

For more information on social contribution through business, please refer to pages 33-56.
*1 “Manual for Practicing Human Rights Due Diligence ~Responsible Corporate Behavior in the Human Rights Field~” https://www.ungcjn.org/objective/procurement/web/hrdd.html*2 Solar power generation for self-consumption (panel output 2,575kW) using reservoirs (Kitani Pond and Okazaki Pond) near the Miki Factory (Miki City, Hyogo Prefecture).

■ United Nations Global Compact (UNGC)
In November 2016, Kyokuto Kaihatsu Kogyo signed theUnited Nations Global Compact (UNGC). The UNGC
subcommittees share the latest trends and examples of
initiatives related to sustainability, and work on creating
tools to support corporate sustainability promotion. We will

fulfill our role as a member of theinternational community byimplementing the 10 principles ofconduct related to human rights, labor,
the environment, and corruption
required by the United Nations.
United Nations
Global Compact (UNGC)■ Participation in regional platforms

Data Collection
Corporate Profile

Management

Promoting the health of employees and theirfamilies“valuing technology and trust, make concerted efforts toGovernanceInitiatives

andEnvironmental

Initiatives toward a decarbonized society, arecycling-oriented society, and ecosystemconservation■ Reducing CO2 emissions(10% decrease compared to FY2020 in 2024)■ Scope 3 compliance across the group■ Waste recycling rate of 99.0% or more *3■ Implementation of appropriate management of
substance of concern (SOC) throughout the group“governance” while pursuing corporate economic value.
The Kyokuto Kaihatsu Group’s management philosophy is

Sustainability
Initiatives

Systems■ Implementation of human rights due diligence■ Obtained ISO9001 certification for FE-Auto and Shinko
Automobile.
■ Expanding the scope of ISO14001 certification to major
locations■ Obtained ISO45001 certification at major locations■ Management system integration

Proactively utilize specializedorganizations for measures that will
improve brand value. In addition, we will
review the multiple information disclosure
media that have been used to date, andstrive to provide more information that iseasy to understand and has appeal.

“local communities,” “the environment,” “people,” andBusiness Strategies■ Reduction in total working hours (minus 5%*3)■ Improving paid leave acquisition rate (70% or
more*3)■ Improving work-life balance satisfaction(70% or more*3)■ Improving female recruitment ratio(13% or more in 3 years from 2022 to 2024)■ Started operating YouTube and Facebook at
Kyokuto Kaihatsu and distributed videos for in-house education on SDGs and materiality■ CDP response■ NIPPON TREX certified as a “Toyokawa Brand”■ Kyokuto Kaihatsu Group SDGs Declaration

Vision and
Growth Strategy■ Strengthening compliance systems■ Establishment of document management
systems■ Promotion of BCM■ Improving information security■ Building a system for supply chain risks■ Promoting stakeholder engagement

Instructions for the next year

KYOKUTOGroup Foundation

Building an organization resilient against risks

Summary of 2022

Top Message

Materiality

Sustainability Promotion Systems [SDGs Declaration]

We aim to solve regional issues and create new innovations by collaborating with local governments and local businesses.
｜

Part of the subscription platform■ Regional Revitalization SDGs Public-Private Collaboration Platform(Kyokuto Kaihatsu Kogyo)■ Kansai SDGs Platform (Kyokuto Kaihatsu Kogyo)■ Kanagawa SDGs Partner (Kyokuto Kaihatsu Kogyo)■ Toyohashi City SDGs Promotion Partner (NIPPON TREX)■ Participation in “Komaki SDGs Declaration” (Kyokuto Kaihatsu Kogyo)｜

Kanagawa
SDGs
Partner

Toyohashi
City SDGs
Promotional partner

Construction began in June 2023 and is scheduled to be completed in December of the same year.
*3 Target: Kyokuto Kaihatsu Kogyo, NIPPON TREX, Kyokuto Kaihatsu Parking

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P27 - P28] Long-term Management Vision

Vision and Growth Strategy｜

Long- term Management Vision｜■ Management Performance Vision (FY2030)

Operating margin: 10% or more

Sales: 200 billion yen■ Sustainability Vision (FY2030)[Environment] Manufacturing Visionthe "local communities", "environment", and "people" while simultaneously pursuing economic value for the company.
Our long-term management vision −Kyokuto Kaihatsu 2030−aims to be a group that continues

CO2
Decarbonizationthat leads its industry and contributes to therealization and development of a sustainable society

Outstanding Technology

In 100 years, global warming is expected to raise
global temperatures by up to 4°C. Aiming to becomecarbon neutral by 2050, our Group will promotedecarbonization efforts in products, services, andmanufacturing, primarily at plants that consume large
amounts of energy.

The effective use of existing resources will lead to a
suppression of environmental destruction causedby activities such as new resource extraction anddeforestation. Our Group aims to reduce theamount of waste generated in its business activities
and at the same time promote recycling in order toachieve zero landfill waste for the entire Group.

Chemical substances that do not or are difficult toreturn to nature have a large impact not only onhumankind but also on ecosystems. Our Group will
ban the use of hazardous chemical substances in its
products and promote the elimination of plastic in
manufacturing.

Solid Quality

the realization of a sustainable society by concentrating all our management resources on solving social issues, building■ Three steps for realizing our vision
3rd STEP

Strengthening synergy within theGroup
Aggressive investment in growth
Strengthening R&D systems inorder to address social issues
Steady progress toward therealization and development of asustainable society*■ Developing and expanding
businesses that make full use of theGroup’s comprehensive capabilities■ Strengthening the Group’s influence
by balancing a high level ofproductivity with quality■ Actively responding to social issues*■ Coexistence of outstanding
technological capabilities andsolid quality■ Achieving stable and efficientprofit generation■ Further expanding businessactivities and areas of social
contribution**Specific items• Management of greenhouse gases,
including in the supply chain• Expanding diversity management to
the Group• Expanding risk management to theGroup*Specific items• Committing to carbon neutrality inthe value chain• Achieving a work-life balanceGroup-wide• Establishing a Group-wide risk
management system

TERM : FY2025-27

TERM : FY2028-30

Safety and HealthManagement of humanrights violation risks

Satisfaction withwork-life balance: 70% *2

Acquisition of
ISO45001 certification

Ratio of women to men
employed (in Japan):
20% *3The position work has in life haschanged greatly with the times.
Better work-life balance createsa win-win-win relationship for
individuals, companies, andsociety. In addition to allowing
employees to take annual paid
leave, the Group also
implements systems andin-house training in order torealize flexible working styles
and achieve a work-life balance
for employees.

The health and safety of workers
are a prerequisite for developing
business. Due to the diversificationof working individuals and changes
in employment patterns, the risk of
injury and accident is also
increasing. Our Group is committed
to improving safety and health ofworkplace safety and health andthe health of employees throughthe PDCA cycle, as well as tocreating a workplace where
everyone can continue to work withpeace of mind.

With globalization, the declining
birthrate, and an aging population,companies are not only required toinnovate, but also to take advantage ofthe abilities and individuality of adiverse range of people, such as
women, the elderly, foreigners, andpeople with disabilities. Our Group will
promote the creation of a workplace
where individuals can experience
growth by creating an environment
where a variety of people can workwith a sense of fulfillment andenthusiasm.

With more globalization, corporate
supply chains are expanding
worldwide. As a result, there is anincreased risk of humanrights-related complianceviolations, including unfair working
conditions, unsafe working
conditions, harassment, anddiscrimination. Our Group will
manage and address human rights
risks at all stages of its operations.

Diversity[Governance] Organizational Vision

Strengthening risk management system and building
a business continuity management system (BCM)

Risk Response

Sustainable Procurement

Promoting sustainable procurement

In addition to risk management with regard to various aspects such as quality, theIn order to realize a sustainable society, consideration must be given to theenvironment, and occupational safety, it is also necessary to deal withentire value chain, from the procurement of materials and energy to the use

unexpected risks that could lead to business suspensions, such as naturaland disposal of products and services, as well as to activities within thedisasters, infectious diseases, and conflicts. Our Group is identifying risks related

business site. Our Group considers not only costs but also environmental andto business continuity and striving to strengthen our risk system and enhance ourhuman impacts when selecting materials and energy for its products andorganizational capabilities through the PDCA cycle management system.

services.

Data Collection
Corporate Profile

2nd STEP

Work-Life Balance

GovernanceInitiatives

1st STEP

Human Rights

Sustainability
Initiatives

on the spirit of “technological capabilities,” “trust,” and “cooperation” that we have nurtured since our founding.

TERM : FY2022-24(Zero landfill waste)[People] Social Development Vision

Recognizing the changes in the social environment surrounding our Group as an opportunity, we will contribute to*Specific items• Establishing a carbon neutral
production foundation• Developing infrastructure fordiversity management• Establishing a risk management
system(Compared to FY2013)

Business Strategies

Opportunity

A global comprehensive infrastructure manufacturer

38% reduction of CO2 emissions*1

Conserving the Ecosystem

Prohibiting the use of hazardous
chemical substances andreducing the use of plastics

Vision and
Growth Strategy

Dramaticchanges in
expected social
structure

Resource Conservation

Maintaining a recycling rate of
99.0% or higher

KYOKUTOGroup Foundation

to provide value to society while flexibly responding to a dramatically changing environment.

Top Message

lThe Kyokuto Kaihatsu Group hopes to realize a sustainable society by helping to resolve social issues related to

ROE: 10%*1 Intensity compared to FY2013 for Kyokuto Kaihatsu Kogyo, NIPPON TREX, and Kyokuto Kaihatsu Parking (CO2 emissions (tons)/sales (million yen))*2 FY2021 results: Kyokuto Kaihatsu Kogyo non-consolidated 58.1% (evaluated based on the results of employee awareness surveys)*3 Average results for the last three years

KYOKUTO INTEGRATED REPORT 2023

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28

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P 29 - P 30] Medium-term Management Plan

Vision and Growth Strategy

2. Progress for each basic policy

Medium-Term Management Plan 2022-24 Creating The Future As One Progress❶

As the first step toward realizing our long-term management vision - Kyokuto Kaihatsu 2030, we will actively invest in■ Special purpose vehicles business■ Environmental equipment and systems business ■ Car parking systems business■ Expanding product lineup including 25m double■ Demonstration experiments started in Tatsuno

articulated trucks to solve 2024 issues in thetransportation industry (see page 38)■ Delivery of the first next-generation lithium-ion
battery locomotive (see page 40)

1. Progress towards target value

Consolidated Results Targets❷

Due to the deterioration of economic conditions and markets since the beginning of the plan, we have revised the consolidated performance targets in the medium-term management plan.
Additionally, we will set new targets for ROE as of fiscal 2024.

Group consolidated results

140 billion yen or more
Operating profit margin: 7% or more

Net Sales: 113 billion yen

113,089

Net Sales:

0.9
Sales (million yen)
Operatingprofit margin (%)

FY2022

FY2023

FY2024(2) Maintain recycling rate (zero landfill waste) of 99.0% or more

(Intensity compared to FY 2020 at Kyokuto Kaihatsu Kogyo, NIPPON TREX, andKyokuto Kaihatsu Parking)■■ Environmental equipment and systems business ■ Car parking systems business■ Construction of a new factory at Kyokuto Kaihatsu■ Received order for core improvement work andKogyo Fukuoka Factory to increase production oflarge dump trucks■ To acquire new customers, Hokuriku Heavy
Industries concludes a partnership agreementwith Yashimakizai Co., Ltd., a trading company
specializing in railways.

❸

operation/maintenance of Clean Center Yaotome from
Nagano Prefecture Kamiina Regional Union (see page 45)■ Received order for highly efficient waste transfer system incollaboration with special purpose vehicles business (seepage 46)

Producing and distributing educational materials (videos, etc.) to disseminate
sustainability issues and initiatives within the group.
With the relaxation of COVID-19 control measures, we have resumed exhibiting at
various exhibitions.

■ Strengthening governance and risk tolerance

Intensity (CO 2 emission ÷ sales)(intensity)

21,353

21,27718,091
0.198

0.20

0.199

0.193

10,000

0.18

0.180

0

0.16

FY2019FY2020

FY2021

FY2022FY2019FY2020

FY2021

FY2022

0.201

0.198

0.193

0.199

0.180

3.3%

-6.5%

Target: Maintain over 99%*1

97.0%*1 Maintain the same level as Kyokuto Kaihatsu Kogyo's
recycling rate (99.5%) in FY2021

Donated a garbage truck to the Solomon Islands in collaboration with Nishinomiya
City (see page 60)
Continue to accept factory tours, workplace experience, etc.

The total CO2 emissions of Kyokuto Kaihatsu Kogyo,
NIPPON TREX, and Kyokuto Kaihatsu Parking in fiscal 2022
was 18,091 tons. In addition, the intensity was 0.180, which
was -6.5% compared to the base year of 2020 (0.193).
Although we were able to significantly reduce emissions byreviewing our electricity procurement sources, the decline insales due to production stagnation caused by semiconductor
shortages had a negative impact on emissions intensity.

Recycling rate performance [FY2022]

Recycling rate result:■ Contributing to local communities❹*2 87.4% (FY2021 results)

Implementation of training to encourage male employees to take childcare leave
Certified as an excellent health management corporation (Kyokuto Kaihatsu
Kogyo, NIPPON TREX)■ Promoting carbon neutrality and responding toenvironmental issues
Consider installing solar power generation panels at the reservoir near Kyokuto
Kaihatsu Kogyo Miki Factory (scheduled for completion in 2023), and at the new
NIPPON TREX factory (scheduled for completion in 2024), etc.
A technical study meeting regarding sewage treatment technology was held
between Kyokuto Kaihatsu Kogyo Environmental equipment and systembusiness and Mori Plant.

Optimal distribution of cash flow to improve corporate value
Cash flow from operations will be used for strategic investments and dividends to accelerate the growth cycle, taking into
account the optimal balance between growth and returns.
Investment plan (3 years)

The total amount of waste generated by Kyokuto Kaihatsu Kogyo, NIPPON TREX,
and Kyokuto Kaihatsu Parking in fiscal 2022 was 2,132 tons. Of this amount, 2,068
tons, or 97.0%, is reused, including that through heat recovery. To date, Kyokuto
Kaihatsu Kogyo has achieved a recycling rate of over 99% , and in this medium-term
management plan, Kyokuto Kaihatsu Kogyo, NIPPON TREX, and Kyokuto Kaihatsu
Parking, which account for approximately 90% of the group's waste *2, have reachedthat level. Although we have not reached the target value in fiscal 2022, we will
discuss thorough separation of waste and search for reuse sites through the
Sustainability Committee and other organizations to further improve the recycling
rate.

Implement unconscious bias training

Data Collection
Corporate Profile

FY2018Compared to FY2020

FY2018■ Promoting workstyle reforms and health and productivity
management

GovernanceInitiatives

0.201

22,838CO2 emission

to create orders for multi-story parking lot renewal
projects■ Developing excellent new business sites for coinparking and improving unprofitable business sites

We will build up human resources and organizations that can respond flexibly to changes in the environment byencouraging reform and taking on challenges at one’s own volition, while at the same time pursuing work style reform,business improvement, human resource development, and safety assurance.

Continued implementation of in-house information security education andcompliance education

CO 2 emissions■ Developing new systems and promoting proposals

Building a solid business foundation that supports sustainable growth and innovation

FE-Auto acquires ISO9001

22,25920,000■(Kyokuto Kaihatsu Kogyo, NIPPON TREX, and Kyokuto Kaihatsu Parking are included in the scope of calculation)

CO2 emissions [FY2022]（t）
30,000■ Special purpose vehicles business

Sustainability
Initiatives(1) Reduce CO2 emissions by 10% or more in FY2024

Productivity improvements and reinforcing profitability■ Strengthening branding

Sustainability Goals

locations (4 vehicle berths) (see page 50)

Business Strategies

Operating profit margin: 0.9%

In the mainstay special purpose vehicles business, bothsales and operating income were significantly affected bystagnation in production due to supply restrictions on truck
chassis from semiconductor shortages and other factors,
as well as soaring prices for raw materials and energy.
Additionally, although the environmental equipment andsystem business and parking business performed
relatively well, both sales and profits decreased comparedto the previous fiscal year. On the other hand, in theoverseas business included in the special purpose
vehicles business, both sales and operating income
increased significantly compared to the previous fiscal
year, driven by strong demand for mineral resources inIndia and Indonesia, where our group's manufacturingbases are located.

■ Installed EV charging equipment at 3 business

Vision and
Growth Strategy

Consolidated performance results [FY2022]

new business locations (see page 50)

By enhancing synergies among the Group in all business functions, such as sales and services, and development andproduction, and by maximizing the effects of investments and aggressively developing overseas businesses, we will
improve profit margins and create new revenue sources.

Sales: 140 billion yen or more (including new M&A growth) Operating margin: 9% or more ⇒ 7% or more (revised) ROE: 6% (new)■■ Installation of cashless and flapless devices at

KYOKUTOGroup Foundation

We have set "consolidated performance targets" and "sustainability targets" for FY2024, the final year of our medium-term
management plan.

City, Hyogo Prefecture to build a heat supply
business model (see page 45)■ A food waste composting facility aimed at
reducing food loss has been completed in Mie
Prefecture (see page 46)

Top Message

By providing products and services that are truly needed by society in a timely manner, we will contribute to theenhancement and sophistication of social infrastructure. At the same time, we will earnestly address and resolve social
issues common to the world, starting with the SDGs.

further growth and strengthen synergies between the group, thereby building irreplaceable high technological capabilities
and productivity towards a sustainable future. We will continue to develop our foundation as a well-equipped global company.

Contributing to solving social issues and seeking to provide value

Growth investment: Over 30 billion yen
New M&A investment: approx. 10 billion yen

Investment performance (FY2022)
Growth investment: 11.8 billion yen■ Investment to strengthen the group's management base
Started construction of a new NIPPON TREX trailer production plant(scheduled for completion in 2024)■ Investing and giving back to social issues andstakeholder needs
Implemented BCP measures investment at major locations, including
relocation of Kyokuto Kaihatsu Kogyo headquarters.
Achieving a total return ratio of 100% (continued during this medium-term
management plan)
To improve capital efficiency, we borrowed 10 billion yen and reduced
cross-shareholdings.

Promoting construction plans for the group research and development base(technical center)
Acquired all shares of Kyushu Special Motors Naka Co., Ltd. (April 2023)
Acquired 90% shares of Australian distributor (July 2023) (see page 55)
KYOKUTO INTEGRATED REPORT 2023

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30

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P31 - P32] Financial Manager ’s Message

Vision and Growth Strategy｜｜

Financial O f f icer ’s Message

Growth investment plan to achieve medium- to long-term plans■ FY2022 affected by a semiconductor shortage
and rising raw material prices

54

50

20 18.0
10
0

20.0

10

16

2011

2012

22.9

21

26
23.8

31
20.4

34

16.6

36
19.9

38
24.0

40
26.2

2014

2015

2016

2017

58

60.0
50.0

42

40.0
30.0

24.7

20.0

15.1

2013

54

2018

10.0

0
2019 2020 2021 2022 2023
Estimate (Fiscal
year)■ About shareholder returns

and Senior Managing Executive Officer,
Kyokuto Kaihatsu Kogyo Co., Ltd.

FINANCIALOFFICERMESSAGE

Investment
amountApprox. 8.5
billion yen[Plan and progress]
For the past five years, we have been making our own
buildings earthquake resistant to ensure the safety of ouremployees and build more disaster-resistant businessstructures. As part of this effort, we relocated our head officein February 2023. We are also taking measures in our
medium-term management plan for our factories and sales
offices. It also creates opportunities for organizations andindividuals to grow at the same time, such as responding tovarious foreseeable risks such as climate change andpandemics, and creating systems that respect the values ofdiverse people and allow each person to demonstrate theirabilities. We will continue to strive to achieve sustainable
management.

Investment amount(million yen)

Main contents

CO 2 emissions
reduction

10■ Updating to energy-saving
equipment

Energycreation595■ Establishment of solar power
generation facilityHightemperature
measures74■ Air conditioning equipment■ Heat insulation measures

PeopleWork stylereform3■ Childbirth and childcare manual■ Diversity training

BCP

Earthquake
resistancemeasures8,405■ Head office relocation■ Building seismic reinforcement
or reconstruction

Environment

4 Strengthening research anddevelopment

Investment
amountApprox. 6
billion yen[Plan and progress]
We are proceeding with plans for a technical center(tentative name) that will serve as a hub for our group's
technologies. Performance tests that were previously
conducted at general test facilities can now be performed
in-house, significantly shortening the development period.
It also allows for quicker responses to rapidly changing
market needs. Particularly in times of major change, suchas the conversion of trucks to EVs and FCVs, significant
effects can be expected. It will also have an importantmeaning as a place for synergy and innovation throughtechnological exchange within the group.

5 New M&A’s

Investment
amountApprox. 10
billion yen[Plan and progress]
Our group has set out our vision for the year 2030 in our
long-term management vision −Kyokuto Kaihatsu
2030−. To meet the various needs that change with thetimes and achieve our sales target of 200 billion yen, wemust not only rely on the technologies we have cultivatedover the years, but also collaborate with organizations
where we can expect synergy effects. Therefore, we needto actively engage in M&A. Of course, this is not limited toJapan, but we would like to proceed from a global
perspective. As for the progress to date, domestically wehave established Kyushu Tokusyu Motors, which was also
our designated service factory in April 2023, and foroverseas, in July 2023, we established the Import
Machinery and Equipment Pty Ltd (currently Kyokuto
Australia Pty Ltd.), which was a special purpose vehicle
sales agent in Australia. These are just some of the details.
We will continue to view the world's various challenges asopportunities and contribute globally to the development of
infrastructure for the sustainable development of society.

KYOKUTO INTEGRATED REPORT 2023

31

Data Collection
Corporate Profile

Senior Managing Director in charge of FinanceApprox. 3
billion yen

Item

GovernanceInitiatives

K A ZUHIKO HAR ADA

Investment
amount[Plan and progress]
Our group currently has production bases in three countries:
China, India, and Indonesia. In particular, demand forspecial purpose vehicles is increasing significantly in India
and Indonesia, driven by active infrastructure investment
and strong demand for resources. To continue meeting thisdemand, we are proceeding with the construction of new
factories and the introduction of equipment that will help
improve productivity. For example, we are planning to build
a new factory near Chennai, a city in southeastern India.
Additionally, we increased production capacity at ourIndonesian factory by adding plasma cutting machines andwork cranes. We will continue to actively invest to meet thedemands and needs of overseas countries, including China.

3 BCP measures/SDGs initiatives

Main CSR investments in FY2022

Approx. 10
billion yen[Plan and progress]
Developing infrastructure and maintaining logistics for asustainable society will become increasingly important in the
future. At the same time, the working environment isundergoing major changes, including a declining populationand diversification of human resources. Under thesecircumstances, it is an important mission for our group tocontinue to provide "work-related vehicles''. The production
line for medium-sized rear dump trucks at Kyokuto Kaihatsu
Kogyo's Yokohama Plant has further reduced labor byincreasing the number of automatic welding robots, reducing
risks hidden in the production process, such as the impact
on quality due to differences in skills. The digitization of
know-how related to welding and peripheral operations also
helps to maintain a high level of quality. We will also
continue to improve the production line for small rear dump
trucks. In addition, NIPPON TREX is also building a newfactory to respond to the expected increasing demand fortrailers in the logistics industry, where increased cargohandling volume and labor shortages require increased
operational efficiency.

2 Investment in overseas bases■

Sustainability
Initiatives

In the medium-term management plan 2022-2024, we haverevised the total return ratio from the original target of 50%
to 100% in the final year. The year-end dividend for the fiscal
year ending March 31, 2023 will be 27 yen per share asplanned, and with the addition of the interim dividendof 27 yen per share, the annual dividend will be 54
yen per share - the same amount as theprevious fiscal year. The total return ratio,
including the acquisition of treasury stock,
was approximately 125%. The Group willcontinue to focus on paying both high-leveland stable dividends to shareholders, andwill continue to implement shareholder
returns in stages with an eye toward higher
payout ratios, while considering otherbusiness performance trends.

Investment
amountBusiness Strategies

As I mentioned earlier, we expect profitability
to improve gradually, but full-scale
improvement will not occur until the fiscal
year ending March 2025. Considering thissituation, in our most recent report, we haverevised downward the operating profit margin
target set in our medium-term management
plan from 9% or better to 7% or better. At thesame time, we announced a new predicted
return on equity (ROE) of approximately 6%.
Going forward, we will continue to control equity
capital through shareholder returns and othermeasures, while further improving profitability,
aiming for an operating profit margin of 10%,which is the goal of our long-term management
vision.

60

30

1 Strengthening of the main factory of
the special purpose vehicles business101.0 150.0
59.0

40

The plans and progress are as follows.

Vision and
Growth Strategy■ Revision of target figures in themedium-term management plan

per share (yen)(%)

30 billion yen and new M&A investment of 10 billion yen.

KYOKUTOGroup Foundation

Last year, the first year of the medium-term management
plan 2022-2024, domestic orders remained steady in major
segments, but profits were affected by limited supply ofdomestic truck chassis due to semiconductor shortages andsharp rises in raw material and energy prices. As a result,despite the strong performance of overseas subsidiaries(India and Indonesia), this segment suffered its first
operating loss since the fiscal year ended March 2010.
Regarding the fiscal year ending March 31, 2024, as wemove towards the second half, we expect the semiconductor
shortage to be resolved and the backlog of orders that havebeen building up to decrease. We also expect that therevision of the sales price of special purpose vehicles madein 2022 will have a positive impact on our future
performance.

Dividend payout ratio (%)

Annual dividend amount

(yen)
70

In the medium-term management plan 2022-2024, we have set a growth investment of approximately
Top Message

Aiming for sustainable corporate management byconsidering the optimal balance between growth and return32

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P33 - P34] Introduction to all businesses

Business Strategies

Becoming an industry-leading global
comprehensive infrastructure manufacturer｜

Kyo k u t o’s B u s i n e s s S e c t o r s

We conduct business related to resource recycling, including thedevelopment of garbage crushers and the design, construction,and operation of recycling facilities. We are also developing abiomass business that uses waste and forest resources.
■ Related social issues▶ P35

Suppression of
global warming

We manufacture and sell special purpose vehicles that areused in fields such as construction, logistics and labor saving,

Creation ofrenewable energy

Promotion of resource
circulation

KYOKUTOGroup Foundation

Special Purpose
Vehicles Business▶ P41

Top Message｜

Environmental Equipment andSystems BusinessSpread of local energy

and the environment, as well as maintenance vehicles (trackand overhead wire maintenance vehicles) to ensure safe and■ Affiliated companies

services, and sell used special purpose vehicles.
■ Related social issues

National land conservation

Logistics improvement

Promotion of resource circulation

Preparation and expansion forsanitary environments

Safe railway operation■ Affiliated companies
NIPPON TREX Co., Ltd.

Kyokuto Service Engineering
Hokkaido Co., Ltd.

Mori Plant Co., Ltd.

In the main, repairs and operates

In Hokkaido, repairs and operates

Develops equipment for treating organic

Operates and manages the Funabashi

outsourced bulky waste treatment andoutsourced bulky waste processing,wastewater and composting equipment. They

City Nishiura Resource Recycling

recycling treatment facilities at aroundrecycling processing, and waste solid

are also developing systems to generate

Facility, a facility in Funabashi City,

30 locations nationwide that Kyokuto

fuel facilities installed by Kyokuto

biogas from methane fermentation of waste

Chiba Prefecture that extracts

and food residue, and technology forresources from non-combustible

Kaihatsu Kogyo has installed.

Kaihatsu Kogyo.

deodorization.

garbage and bulky garbage.

Car Parking Systems Business

FE-AUTO Co., Ltd.

Shinko Automobile Co., Ltd.

Manufactures trailers, wing bodies, etc. at

Repairs special purpose vehicles and sells parts at

Manufactures, sells, repairs, and distributes

three production bases: Head Office, Otowa

seven directly managed service centers acrossparts for special purpose vehicles in

Office, and Mitsu Office. Also has multiple

Japan (Sendai, Tokyo, Yokohama, Gifu, Osaka

Hokkaido, Japan. In particular, the productsales and repair bases across the country to

and Himeji). The used car division sells used

lineup is characterized by its ability to meetsystems for condominiums and buildings, and perform

provide generous user support, including

special purpose vehicles as well.

the unique needs of Hokkaido, such as therenovation work. We also install and operate coin parking

transportation of wood chips and heating fuel.

Hokuriku Heavy Industries Ltd.
Mainly manufacture, sell, repair, and sell parts forcars and locomotives that are in demand overseas.

Kyushu Tokusyu Motors Co., Ltd

Repairs special purpose vehicles, sell parts,

Has two service bases in Fukuoka Prefecture,and mount on trailers and tractors.

where they repair special purpose vehicles
and sell parts. They also sell used special

Are also working on next-generation lithium-ion
battery-equipped vehicles aimed at creating apurpose vehicles. Joined our group in April

decarbonized society.

2023.

We manufacture and sell mechanical multi-level parking

lots.
■ Related social issues

Eliminate traffic congestion

Promote use of open space

GovernanceInitiatives

special railway vehicles such as railway maintenanceInoue Motor Co., Ltd.

▶ P47

Sustainability
Initiatives

parts sales.

Eco Facility
Funabashi Co., Ltd.

Business Strategies

Suppression of global warming

Kyokuto Service
Engineering Co., Ltd.

Vision and
Growth Strategy

smooth railway operation. We also provide repairs, after-sales

Revitalize local areas■ Affiliated companies

Overseas Expansion

special purpose vehicles in China, Indonesia, India, and▶ P51

other countries to meet the needs of rapidly developing Asia

Kyokuto Kaihatsu Parking Co., Ltd.

Sasashima Live Parking Co., Ltd.

We manufacture, sell, and repair mechanical multilevel parking

We operate Sasashima Live Parking located in the Nakamurasystems. We also develop and operate coin parking mainly inward of Nagoya City.

Data Collection
Corporate Profile

We have established manufacturing and sales bases forurban areas.

and surrounding regions.
■ Overseas bases｜

KYOKUTO SPECIAL AUTOMOBILE TRADING(SHANG HAI) CO., LTD. (China)

KYOKUTO KAIHATSU (KUNSHAN)
MACHINERY CO.,LTD. (China)

PT. Kyokuto Indomobil Manufacturing

PT. Kyokuto Indomobil Distributor

SATRAC ENGINEERING

Indonesia (Indonesia)

Indonesia (Indonesia)

PRIVATE LIMITED (India)

Located in Shanghai, we procure and sell special

At our factory in Kunshan City, Jiangsu Province,

At a factory located near the capital, Jakarta, we

We mainly sell special purpose vehicles

Based in Bengaluru in the south, we primarily

Located near the eastern city of Brisbane, we sell,

purpose vehicle parts for the group.

we manufacture and sell special purpose vehicles

primarily manufacture special purpose vehicles

manufactured by PT. Kyokuto Indomobil

manufacture and sell special purpose vehicles forrepair, and sell parts for the Group's special purpose

as well as manufacture special purpose vehicle

for the domestic market in Indonesia.

Manufacturing Indonesia in Jakarta, the capital.

the domestic market in India.

vehicles. The company joined our group in Julyparts for the group.

Kyokuto Australia Pty Ltd(Australia)

2023.

KYOKUTO INTEGRATED REPORT 2023

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34

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P 35 - P 36] Special Purpose Vehicles Business, Business Model/Business Over view

Business Strategies｜

Business Strategies｜■ Market environmenta growing need for larger vehicles to transport speciallyequipped large-capacity cargo such as trailers and dump
trucks. In the future, unprecedented dramatic changes are
expected, such as the electrification of truck chassis andadvances in autonomous driving technology. Although theprogress of EVs in truck chassis is expected to have apositive impact on the realization of carbon neutrality, there
are many issues such as charging systems and vehicle
prices, and it is expected of the industry that these issues
are overcome quickly and that peripheral and related
technologies will be developed.

Due to stagnation in parts procurement from a shortage ofsemiconductors, the number of regular truck sales andregistrations in FY2022 has significantly decreased
compared to the previous year, but demand for trucks itself
remains strong. The situation continues that supply is notkeeping up with demand. In addition, energy costs andprocurement costs in general are soaring, which is having
an impact on the business performance of each company.
On the other hand, due to the ever-increasing volume ofcargo handled and the worsening driver shortage, there is■ Wide product lineup (comprehensive special purpose■ Improving productivity to compensate

vehicle manufacturer)

for low automation rate due to high-mix,■ Sales and service system covering the whole country

which consists of the engine, driver's seat (cabin), and frame, and the other is the

low-volume production■ Owns large-scale electrode-position coating equipment■ Has production bases in Asia, which are expected to develop

Strengths

Tasks■ Owns in-house functional parts factories"bodywork'' that is mounted on top of the chassis. Our group manufactures bodywork
chassis manufactured by truck manufacturers. In addition to directly managed service
factories, the Group also has affiliated service factories, providing nationwide
coverage for after-sales maintenance.
Opportunities
Maintenance /repair request

Order

Completed vehicle
Completed vehicle

Customer

Maintenance /repairTruck manufacturers

Parts■ KYOKUTO SPECIAL AUTOMOBILE
TRADING (SHANG HAI) CO., LTD.
■ KYOKUTO KAIHATSU (KUNSHAN)
MACHINERY CO., LTD.

■ Developing products that contribute to solving social issues■ Construction of a technical center for the purpose of group technical collaboration■ Development and sales of EV special purpose vehicles and hybrid railway vehicles that contribute to the realization of carbon neutrality■ Responding for larger and lighter vehicles to counter driver shortages and improve logistics efficiency■ Creating products that anyone can use safely and securely using AI/IoT, in line with the diversification of users■ Initiatives to extend the lifespan of products that reduce the burden on users and promote the 3Rs by expanding service locations, etc.

GovernanceInitiatives

Chassis■ Kyokuto Kaihatsu Kogyo Co., LTD.
■ NIPPON TREX Co., Ltd.
■ SATRAC ENGINEERING PRIVATE LIMITED■ PT.Kyokuto Indomobil Manufacturing Indonesia■ PT.Kyokuto Indomobil Distributor Indonesia

Sustainability
Initiatives■ Private service factory
Spare parts

Orderchassis■ Long-term strategies■ Affiliated service factoryOrderbodywork

Dealer■ FE-AUTO Co., Ltd.
■ Shinko Automobile Co., Ltd.
■ Inoue Motor Co., Ltd.
■ Kyushu tokusyu Motors
Co., Ltd.

Threats■ Difficulty in securing human resourcesand outflow due to deterioration of theworkplace environment and stagnation ofwork style reforms, etc.
■ Delay in chassis delivery due tosemiconductor shortage■ Increased costs due to soaring energy andmaterial prices■ Closure or downsizing of suppliers oraffiliated service locations

Business Strategies■ Increasing demand for construction special purpose
vehicles due to national resilience■ Increase in emergency response vehicles due to
growing severity of climate change-related disasters■ Increased demand for large vehicles due to increase
in EC and driver shortage■ Addition of new features due to diversification of
product users■ Room to create new added value for special purpose
vehicles through technological innovations such as
electrification and autonomous driving

in response to customer orders received through dealers, and ships them mounted on■ Renewal of aging factories and equipment

Vision and
Growth strategy

Special purpose vehicles are mainly composed of two parts. One is the "chassis,''KYOKUTOGroup Foundation

Special Purpose Vehicles Business

Top Message

SPECIALPURPOSE VEHICLESBUSINESS■ Special purpose vehicles business performance trends (including overseas business)
Supplier

Operating profit

120,000
100,000

102,076

94,88899,551

98,571

96,44780,00060,00040,00020,00005,615
FY20186,417
FY20196,880
FY20204,481
FY2021555
FY2022

Although domestic demand continued
to be strong from last year, thestagnation in production due to ashortage of semiconductors had asignificant impact on sales and profits.
Furthermore, due to delays inproduction, we continued to be unable
to reflect the soaring prices of raw
materials and energy in our earnings.
However, the situation is gradually
improving. In the future, we plan tostrengthen our production facilities tomeet market demand and enhance ourfacilities and systems to develop
products that will help solve social
issues.

KYOKUTO INTEGRATED REPORT 2023

Data Collection
Corporate Profile*The above flow is for the main custom-made products, and will vary depending on the product type.

Sales(million yen)

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P37 - P38] Special Purpose Vehicles Business_ Af filiate Company Top Comments / FY2022 Topics

Business Strategies｜C o m m e n t s f r o m t o p e x e c u t i v e s o f s p e c i a l p u r p o s e v e h i c l e b u s i n e s s a f f i l i a t e s｜｜

F Y 202 2 To p i c s｜

Top Message

Solving the challenges of the logistics industry by creating
valuable products that meet the needs of the times

TOPICS
2022■ Roles and responsibilities as a trailer
manufacturer with the No. 1 market share inJapan

New factory under construction at NIPPON TREX Headquarters Officeindustry, such as CO2 generated by vehicles, driver
shortages due to population decline, and the 2024 logistics
problem. Additionally, as a leading trailer company, we aim
to eliminate vehicle fire accidents caused by brake dragging
and are strongly promoting the development of braketemperature monitoring systems to maintain safe andsmooth logistics. In this way, if we view social issues asbusiness opportunities, there are still situations
where our company can demonstrate its brandvalue.

AFFILIATEDCOMPANYTOP COMMENTIn the logistics industry, the decline in the number of drivers
due to the declining birthrate and aging of the population
has become a serious issue. Additionally, with theimplementation of work style reform laws such as caps on
overtime work from 2024, there are concerns that theamount of cargo and distance that can be transported by asingle driver will decrease. Our group companies include
Kyokuto Kaihatsu Kogyo, which has manufactured logistics
vehicles such as tank trucks and powder and granularmaterials carriers, as well as cargo handling labor-saving
equipment (Tailgate lifter), and NIPPON TREX, which has
produced trailers and wing van trucks. Throughtransportation, we will continue to support the logistics
industry, which is changing not only by issues related todrivers, but also by changes in the times and environment,such as advances in technology and the diversification oflifestyles.

NIPPON TREX offers double articulated trucks whichconnect trucks and trailers so that one driver can carry theload of two vehicles, and swap bodies which allows drivers
to concentrate on driving duties by separating cargohandling. Here, we aim to improve transportation efficiency
and reduce driver workload through relay transportation. In
2019, we received the Green Logistics Partnership
Conference Special Award for our joint transportation
efforts (Yamato Transport/Nippon Express/Seino
Transport/Japan Post) using double articulated trucks, andthis has been attracting attention from the transportationindustry. Additionally, starting in 2020, initiatives using
NIPPON TREX's products are expanding, with SLOC
(mainline relay transportation service) evaluation trials
using swap bodies starting mainly with Denso. We willcontinue to propose new products as solutions to logistics
problems.

Changing the current state of logistics through safe
and secure large-capacity transportation｜ Yosuke Oka, 1st R & D Group, R &D Department, NIPPON TREX｜

Since its introduction in 2017, NIPPON TREX has been working
with the government, transportation companies, and shippers todevelop the double articulated trucks. As this is a larger type of
vehicle that has never existed before, it is equipped with a variety ofsafet y equipment, which protects the safet y and secur it y oftransport companies and shippers.
We believe that double articulated trucks, which allow one driver totransport two trucks, can contribute to solving the 2024 problem
and reducing CO2 emissions. We would like to continue to develop
products that can contribute to social activities.

Products to become more widely used throughimprovements and addition of variations｜ Hiroaki Shinyama, 1st R & D Group, R &D Department, NIPPON TREX｜

Recently, swap bodies have been attracting attention as one of thesolutions to the 2024 problem, but in reality, nearly 20 years havepassed since they came on the market. The specifications started
w i t h a m a n u a l w i n g b o d y, a n d n o w w e h a v e a d o p t e delectro-hydraulic technology to improve usability, added van bodies

and flat bodies as body variations, and have now even reached thepoint where we are prototyping a refrigerated van body. With theestablishment of a unified standard for bodies, we look forward tofurther expansion in the future.

KYOKUTO INTEGRATED REPORT 2023

Data Collection
Corporate Profile

NIPPON TREX Co., Ltd.

■ Toward solving the 2024 logistics problem

GovernanceInitiatives

Representative Director and President of

The industry is undergoing changes,
including the consolidation and closure oftransportation companies. Logistics are
essential to people's lives, and tomaintain and develop the service, it isessential to improve the quality of not
only the hardware (products) but also thesoftware (services). To this end, we are
actively working to improve our service
capabilities, including expanding
our service bases andinvesting in our people
through training andeducation. We willcontinue to play a role inthe development of thelogistics industry, and at
the same time aim to be
a company that spreads
wealth and dreams tosociety.

■ Manufacturing that supports transportation

Sustainability
Initiatives

F U M I H I R O TA K A S A K I■ Turning our strengths not only
in hardware but also in software
into competitivenessSwap wing bodyBusiness Strategies

One of the material issues of the Kyokuto
Kaihatsu Group that we are particularly focusing
on is branding. The reason behind the creation of
the new Marketing Department is to create an
opportunity for customers, society, and ourcompany to grow together by making our value
known not only to the logistics industry but also toshippers beyond that industry. The fact that wehave been recognized by Aichi Prefecture as an"Aichi Brand" is proof that our achievements todate have been well received by Aichi Prefectureand society, and we will continue to create valuethat contributes to society withoutceasing. For example, the double
articulated trucks and swap
bodies that we manufacture
are products that are directly
connected to solving various
issues faced by the logistics

Double articulated truck

Vision and
Growth Strategy■ Leading to solutions to social issues
by providing valuable transportationequipment

KYOKUTOGroup Foundation

NIPPON TREX Co., Ltd., established in 1964, will celebrate its
60th anniversary next year. Up until now, we have been
responsible for about half of the group's special purpose
vehicle business's sales through the manufacture and sale oflogistics products, mainly trailers, wing bodies, and vanbodies. We maintain the No. 1 share in the domestic market
for trailer sales, and we are proud that our unique
technological capabilities and responsiveness have beenhighly praised by our customers. We have already exchanged
technology with Kyokuto Kaihatsu Kogyo in areas such as
manufacturing dump trailers, but we recognize that we must
continue to meet the changing needs of society by creating
further synergies in the future.

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P39 - P40] Special Purpose Vehicles Business (2023 Topics)

TOPICS
2022

Business Strategies｜

F Y 202 2 To p i c s

toward the realization of a recycling-oriented society− Launch of “refuse truck with shaft-type measuring device”
garbage collection trucks with new weighing devices −■ Next-generation locomotives that contribute to a
decarbonized society− Sales of new lithium-ion battery locomotives −Efforts toward decarbonization are required in various
industries, and the electrification of rolling stock is progressingin the railway and steel industries as well. In March 2023,
Hokuriku Heavy Industries delivered two new lithium-ion
battery locomotives. The locomotive delivered on this occasion
was a large vehicle with a weight of 55 tons, and is the first of
its kind in Japan (according to Hokuriku Heavy Industry
research). Although there are challenges specific toelectrification, such as charging time and mileage, there is a lot− Manufacture of slurry lorries and chip transport
trailers −by manufacturing high-quality, made-to-order products thatmeet individual needs, and providing comprehensive
after-sales service to ensure that they can be used for alonger period.

Slurry tanker− Donation of refuse truck to Dominican Republic −In developing countries where infrastructure development isdelayed in areas such as civil engineering, environmental
sanitation, firefighting, and disaster recovery, it is often difficult toobtain vehicles for construction and maintenance, and delays in
disaster response and widening economic disparities are serious
problems. In developing countries such as the Dominican Republic,
while economic development has continued steadily in recent
years, the amount of waste generated has increased dramatically,
causing public health problems due to outdoor dumping and riverpollution from sewage from garbage dumps. This has become asocial issue. In FY2022, FE-Auto donated two refuse trucks thatwere refurbished from used vehicles to help solve the waste
problem in the Dominican Republic. In addition, we are planning toship two water tank trucks in 2023 as part of our vehicle donation
project for developing countries, which we are carrying out at therequest of the Society for Promotion of Japanese Diplomacy. Evenif a vehicle has finished its useful life in Japan, there are regions
and countries overseas that still need it. The vehicle reuse

initiatives promoted by our group not only make effective use ofresources, but also lead to the development of developing
countries.

Data Collection
Corporate Profile

Shinko Automobile, located in Ishikari City, Hokkaido, is alocally-based company that manufactures special purpose
vehicles that meet local issues and needs, as well as repairingand maintaining them. The company's tanker truck
manufacturing plant is able to meet the demand for slurry(liquid manure) tanker trucks, which are in constant demand in
Hokkaido. They also manufacture chip transport trailers fortransporting wood chips produced in areas with thriving
forestry industries in Hokkaido, contributing to thedevelopment of local industry. Our group will continue tocontribute to solving the problems faced by our customers

New lithium-ion battery locomotive
Photo provided by: JAPAN TRANSPORT ENGINEERING COMPANY

GovernanceInitiatives

customer needs in Hokkaidoof interest from private railway companies and steel
manufacturing companies, and we look forward to future
improvements.

Tailgate lifter G III 1500

■ Contributing to solving infrastructure issues indeveloping countries■ Contributing to local communities by meeting

Training session at Inoue Motor

Sustainability
Initiatives

Kyokuto Kaihatsu Kogyo's "Tailgate lifter'' is a product thatsaves labor when loading and unloading heavy loads byusing an elevating platform attached to the rear of the truck
bed. The Tailgate lifter G III 1500, released in January2023, has a maximum lift load of 1,500 kg, an increase of
500 kg from the existing 1,000 kg, making it suitable forlarger medical equipment and other devices that werepreviously considered difficult to transport. It can also
handle heavy items such as equipment for events andconcerts. We will continue to develop new products basedon the labor-saving technology and know-how that we havecultivated over the years in the logistics industry, where thelabor shortage is becoming more and more serious as thevolume of cargo handling increases year by year.

Our group also puts a lot of effort into after-sales service sothat our customers can use our products safely for a longer
period. In addition to providing a diverse service menu, we
provide training to service personnel in charge of inspections
and repairs, as well as training for users - the people that use
our products - encouraging them to prevent problems andrespond quickly. In fiscal 2022, Kyokuto Kaihatsu Kogyo held
148 seminars for users and an additional 129 seminars forservice factories, providing safety guidance and productknowledge. In September 2022 and February 2023, Kyokuto
Kaihatsu Kogyo and NIPPON TREX jointly held trailer
maintenance seminars with the aim of strengthening synergies
between the groups.

Inoue Motor, which provides after-sales service for NIPPONTREX products, holds classes on trailer maintenance forforeign mechanics and others with the aim of passing on skills.

Business Strategies

maximum lift load 1.5 times greater than conventionalmodels− Launch of "Tailgate lifter G III 1500" rear-retractable
tailgate lifter −− Education on product use and service technology
improvement −Vision and
Growth Strategy■ Meeting a wider range of logistics needs with a"Refuse truck with shaft-type measuring device” - Comparisons with conventional models■ To ensure long and safe use of our products

KYOKUTOGroup Foundation

Society as a whole needs to realize a recycling-oriented
society to reduce waste and conserve resources. Since therelease of the refuse truck with shaft-type measuring
device, a garbage collection truck equipped with a weighing
device, in 2002, Kyokuto Kaihatsu Kogyo has been
contributing to waste reduction by managing and utilizing
information such as the weight of collected items andcollection dates and times for each customer. In July 2022,
we launched a new type of garbage collection truck with aweighing device, the refuse truck with shaft-type measuring
device. By lowering the height of the input port and theoverall height of the vehicle compared to previous scale
packers, this product achieves the same usability and work

efficiency as conventional products without a weighing
device, while maintaining the same loading capacity. We
will continue to provide new value by developing user-friendly
products, realize specifications that are easier for customers
to use, and respond to the diversifying market environment.

Top Message■ Providing products that are easier to use and select｜Refuse truck donated to the Dominican Republic
Photo provided by: the Society for Promotion of Japanese Diplomacy

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P41 - P42] Environmental Equipment and Systems Division (Business Model/Business Over view)

Business Strategies

Business Strategies｜

Environmental Equipment and Systems Businessbiomass resources that contribute to carbon
neutrality■ Securing human resources involved in

Tasks■ Increasing demand for regional energy as national
resilience increases■ Utilizing forest resources to create a recyclingoriented society■ Increasing need for waste transfer facilities due towider area of waste collection
Opportunities ■ Increasing needs for biomass and resource-recycling
businesses to achieve carbon neutrality

facility operation and management■ Increase in accidents and injuries due toincreasing diversity of facility workers■ Intensifying competition due to rapid
increase in companies entering theThreats

renewable energy market

Sustainability
Initiatives

Design and constructionof recycle facilities

Strengths■ Development of technologies utilizing

Business Strategies

Local government■ High construction track record (more than 200 recycling
plants established)■ High-level know-how regarding facility operation
management (management results of over 35 facilities)■ Unique crushing technology specialized for waste
treatment■ High-level sewage purification technology derived
from organic waste■ Accumulated know-how regarding biomass and biogas

Vision and
Growth Strategy

The mainstay of our Environmental Equipment and Systems Business is the construction ofrecycling plants equipped with pulverizers and the maintenance, management, andoperation of facilities. Facilities are mainly for the local governments, with competitive
bidding testing technical capabilities and ability to make proposals. Furthermore, Kyokuto
Service Engineering and Kyokuto Service Engineering Hokkaido are companies that
operate and maintain facilities, and the knowledge gained through operation andmaintenance is reflected in plant design. Recently, we have also been developing renewableenergy facilities that utilize organic raw materials such as biogas and biomass. As the
projects and scale of these processes differ for each customer, we examine and propose theoptimal treatment method for each customer.

farming are popular. At the same time, the shrinking of local
economy due to population decline is also a serious
problem, and needs related to efficient waste collection andcross-area collection to ensure stable operation of waste
treatment facilities are becoming more pronounced. In
addition, although the amount of waste generated isdecreasing due to population decline, there are challenges
in recycling methods for a wide variety of plastic waste, andaccidents such as f ires c aused by disc arded lithium
batteries are on the rise.

With the trend toward carbon neutrality and away fromfossil fuels, there is a growing movement to generateenergy from existing resources such as waste and forest
resources. In addition, from the perspective of building
disaster-resistant countries and regions, making local
economies more independent is an issue, and there is aneed to realize a renewable energy-oriented economy andsociety that utilizes local resources. One example is the
movement to extract biogas from livestock manure and use
it as an energy source in areas where livestock and dairy

KYOKUTOGroup Foundation｜■ Market environment
Top Message

ENVIRONMENTAL
EQUIPMENT AND
SYSTEMS BUSINESS■ Long-term strategies

Operation
consignment

GovernanceInitiatives■ As population decline and regional depopulation progress, we will develop technologies and provide solutions tailored to theneeds of each local government. We will also work to develop technologies related to biomass energy suitable as
autonomous decentralized energy■ Develop high-level safe facilities and equipment that accommodate a diverse workforce, including the elderly and women,
and introduce them at business sites

Maintenanceandmanagement■ Kyokuto Service■ Kyokuto Kaihatsu Kogyo Co.,Ltd.

Engineering Co., Ltd.
■ Kyokuto Service■ Environmental Equipment and Systems Business performance trends

Engineering Hokkaido Co., Ltd.
Sales

(million yen)

Operating profit

12,952
11,473
10,000were few completed properties and plant

11,647

11,028although we received new orders, there

Data collection
Corporate Profile

15,000In the fiscal year ending March 31, 2023,

construction sales decreased. On the

10,327other hand, sales in stock business fields

8,457

such as contracted plant operation andmaintenance remained steady. From next

5,000

2,581

0

FY20181,813

FY20191,994

FY20202,098

FY2021

fiscal year onward, we anticipate more
1,768
FY2022stable performance due to thecompletion of properties currently underconstruction.

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P43 - P4 4] Environmental Equipment and Systems Division _ Af f iliate Company Top Comments/2022 Topics

Business Strategies｜C o m m e n t s f r o m t o p e x e c u t i v e s o f E n v i r o n m e n t a l E q u i p m e n t a n d S y s t e m s B u s i n e s s a f f i l i a t e s｜｜

F Y 202 2 To p i c s｜

Top Message

Building a future recycling-oriented society
based on relationships of trust with people

TOPICS
2022■ Pursuing “safety,” “peace of mind,” and “stable
operation” based on knowledge gained on site

■ Becoming a company that provides value to thecommunity through thorough safety
management■ Aiming for a recycling-oriented society■ Continuing to contribute to local resource circulation− Order received for "Tobu General Processing
Center Crushing and Sorting Facility Development
and Operation Project −Reusing existing resources without using new resources isessential for achieving both conservation of the naturalenvironment and ecosystems and economic development.
In order to effectively reuse the waste generated fromeveryday life and economic activities, it is essential not only
to raise individual awareness of recycling, but also todevelop more precise equipment to recover resources fromwaste. The maintenance and operation of high-quality
facilities are required. Kyokuto Kaihatsu Kogyo, which was
one of the first companies in Japan to develop recycle
facilities, will continue to contribute to the realization of arecycling-oriented society using the technology andknow-how the company has cultivated over the years.

In March 2023, we received an order from Nishinomiya
City, Hyogo Prefecture for the "Tobu General Processing
Center Crushing and Sorting Facility maintenance andoperation project." This project is due to the aging of the"Seibu (West) General Processing Center Crushing andSorting Facility" and in line with the integration of the "Tobu(East) General Processing Center PET Bottle Compression
Facility" and the "Seibu (West) General Processing Center
Recycling Plaza (educational facility)". The project will
construct and operate a comprehensive material recycling
promotion facility equipped with crushing, sorting,compression, packaging, and storage functions.
Additionally, our group will be entrusted with the operationand maintenance of this facility for a 20-year period. By
developing and renovating facilities that have supported
local communities for many years, the entire group willcontinue to contribute to the realization of arecycling-oriented society.

Kyokuto Service Engineering Co., Ltd.

AFFILIATEDCOMPANYTOP COMMENT

Data collection
Corporate Profile

Representative Director and President ofGovernanceInitiatives

S AT O R U YA M A N E

Nishinomiya City Tobu General Processing Center Crushing and Sorting Facility - Completion image

Sustainability
Initiatives

As a company responsible for this type of lifestyleinfrastructure, we take thorough measures to prevent fires
and industrial accidents based on our belief that
we will never stop operating our facilities. Recent
initiatives include the introduction of safety
education for employees through simulated
accident experiences using VR. We also
work to raise local environmental
awareness by responding to requests fortours of our facilities and actively
participating in local government
environmental events. In addition, we arecontinuing to operate waste treatment
facilities that energize local societies andeconomies through the employment of
employees, including job creation in rural
areas and employment of people withdisabilities. We will continue to workon improving safety management
and operational quality toprevent facility suspensions
due to fires or industrial
accidents, and aim to be
a company that can befurther trusted by the
local community.

Business Strategies

Securing human resources is an important issue forfurther business expansion. As part of our efforts
to achieve this, we are hiring employees as
full-time employees, creating a clean workplaceenvironment that is easy for elderly and female
employees to work in, and reviewing our
personnel evaluation system. Although ourcompany has a large number of male
employees, we have established a working group
centered on female employees, and byencouraging the exchange of opinions amongfemale employees across the country, we are
improving the workplace environment andincreasing motivation. In order to maintain safe
and secure facility operations, we will continue tolisten to our employees and work to create amore comfortable working environment foreveryone.

Female employee working group
Vision and
Growth Strategy■ Human resources strategy to create aworkplace environment where everyone canwork comfortably

KYOKUTOGroup Foundation

Kyokuto Service Engineering Co., Ltd., was established in 1993
as a company responsible for operating environmental
sanitation plants constructed by Kyokuto Kaihatsu Kogyo Co.,
Ltd. (hereinafter referred to as "Kyokuto Kaihatsu"). While thenumber of competitors specializing in operation
management is increasing, we are currently responsible forthe operation of 31 facilities nationwide, with our strength incomprehensive proposals that go beyond operation, such as
improving facilities and extending the life of equipment
through collaboration with Kyokuto Kaihatsu. We arecontributing to improving the brand value of the groupthrough synergy effects with Kyokuto Kaihatsu, such as
applying knowledge gained on site to plant design.

｜ Masaya Uemura, 1st Engineering Group, Engineering Dept.,
Environmental Equipment and Systems Division, Kyokuto Kaihatsu Kogyo｜

Acquiring orders through collaboration within the group
In order to gain a deeper understanding of the information
provided by customers, this project not only conductedprescribed interviews but also actively exchanged in opinions
in an effort to understand the intentions behind the materials
presented. As a result of these efforts, our group was able toreceive the order for this project. I believe that the sales andtechnology departments, as well as Kyokuto Service
Engineering, who are experts in facility management, worked
together to come up with a proposal that was well received byour customers.

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P45 - P46] Environmental Equipment and Systems Division (2023 Topics)

TOPICS
2022

Business Strategies｜

F Y 202 2 To p i c s− Order received for the "Clean Center Yaotome core
improvement maintenance operation project" −Kyokuto Kaihatsu Kogyo installed a wood biomass boiler at
JUNG RING, a container house experience showroom in
Tatsuno City, Hyogo Prefecture, (Managed by: Genichi Co.,
Ltd.). Kyokuto Kaihatsu Kogyo will install a wood biomass boiler
packaged in a container house to conduct a demonstration
project that contributes to decarbonization (scheduled to becompleted in November 2023). This facility plans to effectively
utilize local woody biomass raw materials as fuel for the boiler,and use the heat for hot water and space heating within thefacility. We hope that the showroom will be an opportunity forthe general public to visit, as well as local governments andcompanies interested in using wood biomass boilers, to learn− Order received for "Toyokoro Biogas Plant
Construction Project" −As society as a whole is required to respond to carbon
neutrality, the creation of a recycling-oriented society throughpower generation using renewable energy from familiar
resources, and clean energy that does not emit CO2 and is
attracting attention. In March 2023, Kyokuto Kaihatsu Kogyo
completed construction work for a Toyokoro biogas plantordered by J-Lead, an agricultural cooperative that produces
raw milk in the Toyokoro Town of Hokkaido (basic design:
Biomass Research Co., Ltd., construction contractor: IWATACHIZAKI Inc.). This is Toyokoro Town's first biogas plant thatuses livestock manure. The facility plans to separate thedigestive fluid generated at the plant into solid and liquid, dry
the solid content, and reuse it as cowshed bedding, thereby■ Contributing to the creation of arecycling-oriented society through the effective
use of food waste− Construction of food residue composting facility in
Mie Prefecture −Mori Plant received an order for the composting facility
equipment for the methane fermentation and composting
facility built by Daiei Kankyo Co., Ltd. in Iga City, Mie
Prefecture with the aim of effectively utilizing food waste,
and the construction was completed in September 2022.
The composting facility has a processing capacity of 92
tons per day, and the compost building has four verticalfermentation composting devices that perform high-speed
fermentation processing. We have installed a bag breaker
to remove unsuitable materials from food residues broughtin from various food factories, and a classifier to sift thefinished compost into a size that is easy to spread on themaking it self-sufficient in bedding. Our group will be in chargeof the plant design and construction of the medium-temperature
fermentation system, aiming for completion in September 2025.
This initiative will not only have a major impact on the realizationof circular farms, but will also contribute to the realization of adecarbonized society.

Toyokoro biogas plant (under construction)

fields. In addition, we have achieved a plant design that isfriendly to workers, such as installing large deodorizing
equipment next to the composting building to prevent odors
generated from the composting process.

Data collection
Corporate Profile− Introduction of wood biomass boiler to "JUNG
RING"−

about our group's activities for a decarbonized society andresource recycling. We will continue to propose optimal
solutions tailored to local needs through our group's biomass
products, and contribute to the realization of a sustainable
future with a decarbonized society and resource recycling.

■ Contributing to solving pollution problems andachieving carbon neutrality

GovernanceInitiatives■ Biomass business contributing to a
decarbonized society and resource circulation

Experiencing a forklift forward/reverse accident
using the VR danger experience device

Kitahiroshima City combustible waste transfer facility
Completion image

Sustainability
Initiatives

Kyokuto Service Engineering and Kyokuto Service
Engineering Hokkaido are mainly contracted by local
governments to operate local waste treatment and recycle
facilities, and to play a role in supporting the local resource
circulation system. What we are focusing on is the safe,
secure, and stable operation management of facilities, witha focus on health and safety initiatives. In 2022, Kyokuto
Service Engineering introduced a VR (Virtual Reality)
danger experience device. This device aims to improvesafety awareness using VR goggles, a low-floor shaking
device, and tactile reproduction gloves. This allows
employees to experience the horror of industrial accidents
by simulating multiple dangerous situations such as falls

Due to the declining population and shrinking local
economies, waste disposal areas are becoming larger. In
June 2022, we received an order from Kitahiroshima City,
Hokkaido for the construction of a combustible wastetransfer facility. By installing a waste transfer facility(satellite center), we are contributing to a more efficient andeconomical transportation of waste. Garbage generated
from households is collected by small collection vehicles
and transported to the garbage transfer facility. Once acertain amount of garbage has accumulated, it iscompressed using Kyokuto Kaihatsu Kogyo's compactor(garbage compression) equipment, then transferred to a
special vehicle (detachable body truck) and transported all
together to an incineration facility. By setting up waste

Business Strategies−Focusing on education to prevent occupational
accidents by introducing VR hazard experienceequipment−

and electric shocks with their five senses. Additionally, as
the device is transportable, allowing safety training courses
using the device to be held at various workplaces. In the
future, our group will continue to work on improving theworking environment and educating our employees in order
to conduct operations that put safety first.

− Order received for "combustible waste transfer
facility construction work" −transfer facilities while paying attention to the balance
between the amount of waste and the distance it istransported, we are able to reduce transport costs, reducethe burden on workers, and contribute to a decarbonizedsociety.

Vision and
Growth Strategy■ Continuing to support local communities withsafe, secure, and stable recycle facility
operations

Clean Center Yaotome - Renovation completion image■ Highly efficient garbage collection improving
work efficiency and contributing todecarbonization

KYOKUTOGroup Foundation

In recent years, instead of closing and rebuilding aging
recycle facilities, there has been a gradual increase in theuse of the "stock management method,'' in which theprocessing system is reviewed and large-scale facility
renovations are carried out. In March 2023, we received anorder from the Kamiina Wide Area Union for the Clean
Center Yaotome core improvement maintenance operation
project, which also adopted this stock management
method. Our group will optimize and simplify the processing
flow for each building and major equipment, and at thesame time be involved in core improvement work that
promotes energy conservation, as well as all operations
and maintenance of facilities (Kyokuto Kaihatsu Kogyo,
Kyokuto Service Engineering, Yamaura Corp. joint venture).
We will contribute to a recycling-oriented society through astock management method that improves and maintains
facilities rather than rebuilding them, and at the same time,
contribute to a more decarbonized society by improving
equipment and processing flows that promote energy
conservation.

Top Message■ “Responsibility to create” fulfilled throughstock management｜

Vertical fermentation composting equipment

Wood biomass boiler installation image
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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P47 - P48] Car Parking Systems Business (Business Model/Business Over view)

Business Strategies

CAR PARKINGSYSTEMS
BUSINESSBusiness Strategies｜

In Japan, the shift to EVs is expected to accelerate,
although the trend has been slower compared to Europe
and the US.
In the field of multistorey parking equipment and toll
parking, there is an urgent need to respond to the shift toEVs, and the installation of charging equipment is
becoming more necessary. In the field of toll parking, whichtargets general customers, there is a tendency for
operations that incorporate IT, such as cashless payments
and image monitoring to become more widespread.
Information security is also becoming more important as

Strengths

Multistorey parking equipment■ Securing and developing technicaland IT personnel■ Quality control of overseas suppliers

Tasks

Toll parking■ High market share and awareness in the Kansai region

Toll parking■

Opportunities ■ Reducing administrative costs by improving IT

Multistorey parking equipment
Order

Threats■ Changes in needs due to aging users

Toll parking■ Increasing market share outside Kansai

Multistorey parking equipment andtoll parking■ Increased material and energy costs■ Delivery delays due to semiconductor
shortage■ Lack of human resources formaintenance companies■ Decrease in number of cars owned

Business Strategies

Multistorey parking equipment■ Demand for charging equipment due to theadvancement of EVs■ Demand for replacement of multistorey parking
equipment due to aging condominiums

Vision and
Growth Strategy

The Car Parking Systems Business consists of a multistorey parking equipment
business that manufactures and sells mechanical multistorey parking equipment forapartment complexes such as condominiums. It also has a toll parking business that
installs and operates toll parking lots. When installing a mechanical multistorey
parking lot in a newly built condominium, we receive an order from the generalcontractor, but after the installation, we have to contract with the building owner for
operation and management. On the other hand, toll parking will enter into a leaseagreement with the land owner of the business site, and Kyokuto Kaihatsu Parking
installs the equipment and operates the business.

Multistorey parking equipment■ Delivery record of 81,700 pallets for multistorey
parking equipment■ Industry's first remote-controlled mutistorey parking
equipment■ Contracted maintenance company for over
20 companies in JapanKYOKUTOGroup Foundation

Car Parking Systems Businesswell as improving the overall efficiency of facility
management. On the other hand, advances in operational
technology have simplified facilities, making it more
possible to utilize land in shorter periods of time. This is
expected to have a positive impact on parking and open
space issues in urban and residential areas. In addition, in
the field of multi-story parking systems, renovation work is
progressing steadily, especially in condominiums where it istime to replace the equipment, and there are expectations
for further improvements in convenience using IT.

Top Message｜■ Market environment

Order■ Long-term strategies

Renewal contract
Installation
Maintenance contract■■ Kyokuto Kaihatsu Parking Co., Ltd.

Maintenance■ Increase in business locations and improved area share■ Establishment of stock business in multistorey parking
equipment (timely response using maintenancecontracts and IT)
GovernanceInitiatives

Condominium owner

Toll parking■ Promotion of cashless / flap-less (lock free) toll parking

Multistorey parking equipment■ System development to increase convenience andsafetyNew contract

Sustainability
Initiatives

Construction company■ Monetizing EV charging management

Toll parking

P■ Car Parking Systems Business performance trends

Lease agreement■ Kyokuto Kaihatsu Parking Co., Ltd.
Rent

8,000

7,189

7,035

Operating profit

7,261

7,131

6,895

6,000

4,000

2,000

1,161

1,142

1,140

1,143

656

0

FY2018FY2019FY2020

FY2021

FY2022*The above sales include sales from F.E.E Co., Ltd., which operates cafeterias and non-life insurance agencies within our group,
as well as from real estate lease companies.

In the fiscal year ending March 31,
2023, although there was a significant
decrease in rental income due to thesale of rental properties, sales andprofits in the parking businessremained strong. In the multistorey
parking equipment business, we
focused on stock businesses such as
renewal work and after-sales services.
Additionally, in the toll parking
business, occupancy rates improved
due to the impact of the COVID-19
pandemic, and we were able to steadily
increase sales and profits.

KYOKUTO INTEGRATED REPORT 2023

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Data collection
Corporate Profile

Land owner

Sales(million yen)48

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P49 - P50] Car Parking Systems Business _ Af f iliate Company Top Comments / 2022 Topics

Business Strategies｜

Comments from top executives of Car Parking Systems Business af filiates■ Establishing a stable stock business withdetailed services

AFFILIATEDCOMPANYTOP COMMENT− Development of remote request system −Conventionally, multistorey parking equipment had to be
operated while confirming safety on operation panels next tothem in order to call up a pallet (the platform on which thevehicle is placed) due to safety concerns, resulting in longwaiting times. In order to shorten this waiting time and makepallet calling easier, in FY2021 we started developing asystem that allows remote control of calling the vehicle, theremote request system, and it was completed the following
year (FY2022). We have decided that the first remote request■ Contributing to carbon neutrality by supporting EV−Unique EV charging management service −Electric vehicles (EVs) are expected to become more
popular in the future due to the growing demand for carbon
neutrality worldwide. In line with this, we are working toquickly create an EV charging environment at our group's
multistorey parking systems and toll parking. We willcontinue to develop multistorey parking equipment with EV
chargers installed on all pallets, as well as toll parking withan EV charging environment. In addition, we will develop an
EV charging management system that will undertake
everything from installing EV charging equipment tocharging management services, and service■ Easy-to-use and safe toll parking for everyone− Responding to cashless and flap-less (lock free)trends −In our toll parking business, we aim to create toll parking
that is convenient and safer for everyone, and we arepromoting cashless payments and flap-less (lock free)parking, which does not have flaps (locks) that can cause
accidents. As of March 2023, our group's toll parking has
11,669 spaces open. In order to make effective use of landand solve transportation issues in urban areas, we will

system, which meet the customer needs, will be installed in
December 2023 and we will continue to develop specifications
that will link it with robot gates using ETC.

Remote request system ® and remote controller

commencement is scheduled for October 2023. We willcontinue to contribute to carbon neutrality through thedevelopment of charging infrastructures.

EV charging management app screen
Data collection
Corporate Profile

of Kyokuto Kaihatsu Parking Co., Ltd.

■ Creating a system that meets the needs of society

Remote monitoring system application screen

GovernanceInitiatives

President and Representative Director

At Kyokuto Kaihatsu Parking, we are focusing on the stockbusiness of multisorey parking equipment. In this work,
service personnel are unable to make timely proposals forrepairing equipment that has been delivered for many
years, and are unable to work efficiently because they arebusy dealing with sudden problems. The solution has beena long-standing issue. In 2021, in order to help solve theseissues, we developed a "remote monitoring system" thatuses IoT to remotely check the status of multistorey parking
systems. This makes it possible to remotely collectinformation necessary for maintenance, such as the input
status of limit switches that detect the operating status of

the equipment, the number of operations, and past faults
history, making it possible to quickly recover from problems
and make more accurate maintenance plans. We willcontinue to provide products and maintenance thateveryone can continue to use more safely, and will also
focus on promoting improved work styles for employees
and maintenance businesses by introducing common
platforms.

Sustainability
Initiatives

Y U TA K A YO S H I D A− Development of remote monitoring system for
multistorey parking equipment −TOPICS
2022

Business Strategies

The toll parking business is a business aimed
at making effective use of land for land owners,
local governments, commercial facilities, etc.,
and currently has approximately 12,000
parking spaces. Recently, in response to
the growing need for cashless
payments, we have begun
introducing a system thatallows payments using
two-dimensional codes. We are

The parking business started about 30 years
ago as a division of Kyokuto Kaihatsu Kogyo
Co., Ltd., and since then, we have taken on
challenges in a variety of fields regardless ofthe business platform, using the technology
we have cultivated in special purpose
vehicles. Going forward, we will not only
need to accurately grasp and respond to thediversifying needs of society, such as theaging of drivers and other users and lifestylechanges due to digitalization, but also
provide services that have never existed
before, making it necessary to make newsuggestions. We will launch a carbon
neutral charging management service
for EV vehicles, in October of thisyear, and will work to build asystem that will provide greater
convenience to users. We aim
to become a company thatcan contribute broadly tosociety while further
improving our ability torespond to challenges
one step ahead of
the rest of theindustry andmaintaining a spiritof challenge.

■ Working toward safer and longer-lasting products｜

Vision and
Growth Strategy■ Sustainability initiatives that lead to
comfort for everyone■ Responding to social changes and continuing
to be a “challenging force”

F Y 202 2 To p i c s

KYOKUTOGroup Foundation

Our business primarily consists of two pillars: mechanicalmultistorey parking equipment business and toll parking
business. Mechanical multistorey parking systems havebeen installed in approximately 3,000 locations, including
apartment complexes and tenant buildings. We position thismaintenance work as the core of our stock business, andwe strive to maintain long-term relationships with users andmanagers so that they can use our products safely and withpeace of mind. In today's world where cars have become apart of our daily life, parking lots are essential
infrastructure, and after-sales services such as their
management and maintenance are extremely important.
For example, a newly developed remote monitoring systemallows us to respond quickly to problems by constantly
monitoring the situation. In addition, the vast amount of
information that has been accumulated allows us toaccurately suggest the timing for repair work andparts replacement, which is expected to prevent
unexpected problems from occurring. In thisway, by utilizing the latest technologies such as
IT, we are now able to provide more detailed
services.

also eliminating flap-type (barrier) lock plates andintroducing a system that uses cameras to read license
plates to manage usage status. In this way, we are working
on development of services that are less stressful forcustomers. On the other hand, we have developed asystem for the mechanical multistorey parking system thatallows you to remotely request to bring your car. Previously,
it was necessary to operate the control panel directly forsafety reasons, but the new system now passes the strict
safety standards and allows pallets to be called up from a
distance using a remote control. You can request yourvehicle without stress even in harsh weather such as windand rain or cold winter. By promoting ways to make the useof mechanical multistorey parking systems more
comfortable, we will improve the motorized society, and willfurther work to improve the supporting infrastructure.

｜

Top Message

Armed with the spirit of challenge,
contributing to society through unconventional manufacturing｜continue to promote new development and work on making
new development sites cashless and flap-less (no lockplates). (New introduction results for FY2022: cashlesssystems 66%, flap-less systems 51%)

Flap-less parking space
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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P51 - P52] Overseas Expansion (Business Model/Business Over view)

Business Strategies｜｜

Overseas Manufacturing Bases

Kyokuto’s Overseas Expansion
Africa, Latin America, etc., and are used actively. Also, there are three overseas production sites. By providing high quality products that
long-term performance has been proven domestically to these countries, we contribute to infrastructure improvement of new emerging
countries, especially in Asia, and grow as the global company. We will continue to aim to become a "global comprehensive infrastructure
manufacturer,'' as set forth in our long-term management vision, by establishing new production, sales, and service bases, expanding our
product lineup, and strengthening collaboration among group companies.

■《China》

KYOKUTO KAIHATSU (KUNSHAN) MACHINERY CO., LTD.

Kyokuto Kaihatsu (Kunshan) Machinery manufactures
special purpose vehicles such as concrete mixer trucks forthe local and surrounding areas, as well as parts andcomponents for the Group's manufacturing bases in Japan.
Concrete mixer trucks have been exported to many

countries, including Southeast Asia and Australia, and havecontributed to infrastructure development in each country.
In the future, we plan to continue to improve the quality of
our mainstay concrete mixer trucks and expand
specifications to meet the needs of each country.
Furthermore, we will also aim to expand the production
lineup and amount of supply for parts we are supplying toGroup companies in Japan.

Top Message

In addition to the nationwide use, the products of Kyokuto Kaihatsu Kogyo are exported to 150 countries such as Asia, Oceania, Middle East,KYOKUTOGroup Foundation

KYOKUTO SPECIAL AUTOMOBILEANLIM CO., LTD.

TRANSCENDENT HEAVYMACHINERY SDN. BHD.
Plant

KYOKUTO KAIHATSU(KUNSHAN) MACHINERY CO., LTD.

Concrete mixer trucks■《India》
SATRAC ENGINEERING PRIVATE LIMITED
Since its establishment in 1997, SATRAC ENGINEERING
has built a solid position in the special purpose vehicle
market in India, with its high-quality manufacturing, sales
network and service system that covers all of India, andproduct development capabilities that can flexibly respondto diverse needs. In addition to its main products, rear

dump trucks and trailers, they also manufacture fuel tanktrucks and pneumatic bulk carrier. Since becoming amember of our Group in 2020, we have continued to growfurther through the synergy created by the Group. The
Indian economy is expected to continue to grow in the
future. In order to continue contributing to the customers
and local communities, SATRAC ENGINEERING isplanning to construct multiple additional factories in India,
as well as a new factory in Chennai, which is currently
underway.

Business Strategies

Products manufactured in Japan
have been exported to more than150 countries through ODA, truck
manufacturers' sales networks,
and our own sales network.

Vision and
Growth Strategy

TRADING (SHANG HAI) CO., LTD.

Sustainability
Initiatives

JIE NENG POWER
INDUSTRY CO., LTD.

Plant

SATRAC ENGINEERINGPRIVATE LIMITED

Rear dump trucks

PT. Kyokuto Indomobil Manufacturing Indonesia

sales company, Kyokuto Indomobil Distributor Indonesia, toprovide products to various fields of local infrastructuredevelopment and material transportation. In Indonesia, we
expect demand for resources such as coal and nickel toremain strong for the time being. In particular, for ourmainstay large rear dump trucks, we will be expanding ourlineup with a focus on transporting resources at mines andare planning factory expansion.

Data collection
Corporate Profile

Kyokuto Indomobil Manufacturing Indonesia wasestablished in 2012 as a joint venture with the Indomobil
Group, which is part of the Salim, a prominent local
conglomerate. They manufacture large rear dump trucks,
concrete mixer trucks and tailgate lifters, and work with our

PT. Kyokuto Indomobil
Manufacturing Indonesia

GovernanceInitiatives■ 《Indonesia》

PT. Kyokuto Indomobil
Distributor Indonesia
Plant

Dump trailers

SHITSU INDUSTRIAL
SINGAPORE PTE LTD.

Kyokuto Australia Pty Ltd

OVERSEAS
OPERATIONPS EQUIPMENT LTD.

Overseas

Overseas

Group companies

sales agents

Rear dump trucks

Tailgate lifters

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P53 - P5 4] Overseas Expansion _ Af f iliate Company Top Comments/2022 Topics

Business Strategies｜

Comments from top executives of overseas expansion af filiates｜■ Building Customer Trust with the Latest
Production Technology and High-quality
Products

AFFILIATEDCOMPANYTOP COMMENTCSR activities
Disinfectant spray truck

As a result of focusing on developing new products andacquiring new customers against the backdrop of strong
demand for special purpose vehicles, in 2022 thecumulative shipments since the company's founding in
1997 exceeded 35,000 units, and sales volume, net sales,
and operating income will all increase, showing the highest
level ever. It is certain that India's population will overtake
China and become the world's largest by mid-2023.
Furthermore, as the proportion of young people is high,further population growth and associated economic growth
are expected. At the same time, as infrastructuredevelopment progresses, demand for special purpose
vehicles is likely to remain strong. In addition to contributing

Reaching out to help solve local issues and develop together
We are very proud that SATRAC ENGINEERING continues tosupport local communities and schools through CSR
activities. Of course, our activities have a positive impact on
the communities and schools we support, but we also feel that
we are indirectly contributing to improving the standard ofStrength of unity leads to greater results
The group activities and sporting events that SATRACENGINEERING organizes within the company play a very
important role in increasing employee engagement and also
contribute to strengthening the cohesion between different
departments. Through these activities and events, I learned

Ambulance purchased

As internal events, the Company held Annual Day in April anda Sports Day in September. On the Annual Day, which wasattended by all SATRAC ENGINEERING employees at the
beginning of the fiscal year, they shared business goals,
organized speeches by celebrities, gave employee awards,
and had a great social gathering. Cricket and volleyball games
were organized by the departments on Sports Day, which
deepened the friendships among employees. These events
increased engagement between the company and its
employees, as well as among themselves.

｜Ragib Saifi - Manufacturing Dept., SATRAC ENGINEERING｜

living and education in India. For us as employees, this has
also led to raising awareness regarding CSR activities. We
would like to continue working to help SATRAC foster strong
ties with local communities and employees through CSR
activities.

Data collection
Corporate Profile

SATRAC ENGINEERING PRIVATE LIMITEDSATRAC ENGINEERING returns a portion of its profits tosociety through CSR activities. In 2022, the Company
made a donation to an NGO (Akshaya Patra) that provides
free lunch to children in public schools. They alsopurchased an ambulance for the general public and
SATRAC ENGINEERING employees to assist in medical
emergencies.

GovernanceInitiatives

Managing Director of■ Local community contribution activities andemployee participation events

Sustainability
Initiatives

MRINAL BANT WAL

SATRAC ENGINEERING has been supplying products thatmeet various needs, mainly rear dump trucks and trailers,in order to contribute to the growing Indian economy andthe infrastructure development that supports it. In 2020,
when the COVID-19 pandemic began to spread in India, theCompany was among the first to develop disinfectant sprayvehicles for spraying disinfectants and launched multiple
products into the market. The company's strength lies in its
flexibility and development ability, which allows it to quickly
link social conditions and market needs to productdevelopment.

through our products, we will contribute to regional
development in a variety of ways, including job creation
through expanded production capacity and technology
transfer.

Business Strategies

Our company is actively involved in achieving carbon
neutrality and addressing environmental challenges, which
are significant concerns for the Kyokuto group. Through our
product-focused initiatives, we are attempting to improvethe efficiency of payload and fuel consumption by
developing lightweight and aerodynamically efficient
products compared to those with conventional designs.
Recently, we have also commenced mass production oftipper trucks for electric vehicles (EVs). On the other hand,as an internal initiative, we are striving to reduceenergy consumption through production
efficiency and enhance the yields of raw
materials. In our office operations, wehave set a goal to achieve complete

SATRAC is currently experiencing significant sales growth.
However, on the other hand, our production capacity is notenough to accommodate the demand, therefore it isimperative for us to expand our aforesaid capacity. Now, weare planning the expansion of our current plant andconstruction of new plants in multiple regions of India. Oneof these new plants, located in Chennai, is expected tocommence its operations in the fiscal
year 2025. We plan to gradually
increase our production
capacity and introduce new
products, such as refuse trucks
and concrete mixer trucks, toour product lineup by
leveraging our technicalexpertise and know-how from
Kyokuto Kaihatsu and Kyokuto
group companies. Our goal is
to continue providing enduring
value to society by expanding
the areas in which we cancontribute.

■ Achieving the best performance since
establishment in a market full of potential｜

Vision and
Growth Strategy■ Addressing Social Challenges and Fulfilling
our Responsibilities through our Products andBusinesses■ Aiming for Further Leap and Value Creation
through Kyokuto Group Synergy

F Y 202 2 To p i c s

KYOKUTOGroup Foundation

We, SATRAC, are based in Bengaluru, Southern India, andrespond to domestic demand in India with a wide range of
products, including tipper trucks, trailers, tankers, andbulkers. In 2020, we joined the Kyokuto Kaihatsu group andhave steadily increased our sales as its overseas businessbase. Amidst current rapid economic development in India
with a population exceeding 1.3 billion, we are experiencing
a significant surge in demand for special-purpose vehicles,
driven by the expansion of its domestic infrastructure. In
this backdrop and in line with the Indian government's
policies promoting innovation and digitalization, we havealso introduced AI-powered latest production technologies
to achieve higher-quality production. As a result, we havesucceeded in adding new strength to our current
high-quality products with superior design, and have gained
high reliability from our customers.

paperless operations within two years, aiming to reduceresources and energy consumption while enhancing
operational efficiency. In addition, we plan to install solar
panels at upcoming manufacturing plants. These efforts not
only address the environmental challenges but also
contribute to enhancing our company's value in various
aspects, including the enhancement of value added to our
products. In the years ahead, we remain committed toactively fulfilling our responsibilities toward social
challenges and aspire to grow as a sustainable company.

｜

Top Message

Connecting group synergies
for value creation in India

TOPICS
2022｜Kalpalata Sahu - Accounts & Finance Dept., SATRAC ENGINEERING｜

that in order for the team to achieve its desired goals, it isessential that all members of the team work together as one. I
believe it is important for each member of the team to beaware that if someone on the team is facing difficulties, thosearound them will actively support them.

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P55 - P56] Overseas Expansion (Additional)

TOPICS
2022

Business Strategies｜

F Y 202 2 To p i c s■ Role as the “power behind the scene” that supports
manufacturing in Japan■ Continuing to support global sustainability
from Japancustom-made products based on detailed requests fromeach country. If the product is exported with specifications
for use in Japan, it may not be suitable for the local usage
environment. During the design process, we consider whatkind of specifications will definitely lead to solving local
issues. In order to prevent damage or failure even in harshusage environments, we sometimes make changes such as
using stronger materials than usual or intentionally making
the structure simpler than products for Japan. Furthermore,when we deliver our products to a different destination, we
provide training to users on how to use and maintain our
products, and support them so that they can use thevehicles safely and securely for a long time.

Refuse truck for Belize■ Example of export through ODA■ Belize: refuse trucks, rear dump trucks■ Ghana: freezer vans
■ Honduras: rear dump trucks, water tank trucks

Data collection
Corporate Profile

through ODA (Official Development Assistance) is one ofthese activities, and we can provide a variety of exports on
special purpose vehicles and railway vehicles depending oneach country's issues (waste problems, water shortages,
infrastructure development, frozen and refrigerated
transportation, railway maintenance, etc.). They are often

GovernanceInitiatives

The Kyokuto Group exports products manufactured at
production bases in Japan to countries around the world,
including Asia, the Middle East, Africa, and Central andSouth America, contributing to solving local issues. Export

Since its establishment in 2002, Kyokuto Special Vehicle
Trading (Shanghai) has been procuring various parts in
China to supply special purpose vehicle manufacturingbases in Japan. The number of parts procured overseas
continues to increase due to costs and other procurement
risks. Under these circumstances, in order to quickly
respond to various needs such as ensuring quality andshort delivery times, we have been promoting productivity
improvements such as improving internal systems andintroducing testing equipment. We are also working tostrengthen relationships with suppliers in China by holding
regular meetings to exchange opinions with them. Last
year, we were recognized as an "Excellent Cooperative
Enterprise'' by the Waigaoqiao Free Trade Zone, where weare registered. In 2020, we obtained a safe production
license in China and are strengthening our management ofoccupational safety and health, including ensuring thesafety and health of our employees and taking initiatives toprevent accidents. Additionally, when the COVID-19
pandemic hit, various problems arose, including delays inexports to Japan and supply chain disruptions due tolockdowns etc. However, Kyokuto Special Vehicle Trading(Shanghai) was able to carry out the business as planned,
unaffected. As evidenced by its track record of "zeroturnover" in the past three years during the COVID-19
pandemic, Kyokuto Special Vehicle Trading (Shanghai) isbuilding a sustainable and strong organization as a basethat supports "procurement," which is the foundation of thegroup's manufacturing.

Sustainability
Initiatives

Scene from the contract closing ceremony

45m³ large-capacity rear dump truck

Business Strategies

In July 2023, the Kyokuto Group acquired 90% of theoutstanding shares of Import Machinery and Equipment Pty
Ltd, which had previously been a special purpose vehicle
distributor in Australia, and changed the company name to
Kyokuto Australia Pty Ltd. In Australia, demand for concrete
mixer trucks is strong due to construction investment andinfrastructure development. At Kyokuto Australia, we modify
the concrete mixer unit manufactured by Kyokuto Kaihatsu(Kunshan) Machinery to local specifications and then sell it
by mounting it on a truck chassis locally. In the future, wewill improve productivity through Group collaboration andexpand sales of products such as concrete pump trucks
and tailgate lifters. The Company will also be used as aparts supply base for small and medium-sized rear dump
trucks exported from Japan to Australia, and will continue
to contribute to the construction and maintenance ofAustralia's social infrastructure.

In FY2022, Kyokuto Indomobil Manufacturing Indonesia andKyokuto Indomobil Distributor Indonesia achieved record
highs in unit sales, net sales, and operating income. In
Indonesia, demand for large rear dump trucks used in coalmines is increasing due to the strong demand for coal.
Taking advantage of this opportunity, we have developed
new large-capacity rear dump trucks with cargo box
volumes of 40m³ and 45m³, reflecting customers' needs forloading capacity in product manufacturing. Simply
increasing the volume of the cargo box has the
disadvantage of making the vehicle too heavy andincreasing the risk of rollover, but by reviewing theconventional body structure, coal can now be transported
more safely and efficiently carried out even under the harshroad conditions of mines. In Indonesia, demand for coal is
expected to remain strong in line with economic growth.
Additionally, demand for resources such as nickel is
expected to grow due to the trend toward decarbonization.
In order to continue to respond more stably and efficiently toresource development, which is the foundation ofIndonesia's economy, and its related needs, Kyokuto
Indomobil Manufacturing Indonesia is working to increase
its production capacity by introducing new equipment andimproving production processes. In the future, we willdevelop new products for mining and expand sales of
products other than rear dump trucks. On the other hand, as
an effort to deepen stakeholders' understanding of thecompany and products, Kyokuto Indomobil Manufacturing
Indonesia has held factory tours for customers to learn
about the manufacturing process, quality control system,
and work environment. This creates an opportunity forpeople to see our operations in person. We are also working
to increase employee engagement by holding events for
employees and their families, such as family gatherings
where they can enjoy meals and games, and fishing
tournaments.

Vision and
Growth Strategy■ Grouping distributors in Australia and starting“Kyokuto Australia”

Concrete mixer trucks for customers in Taiwan■ Achieving record performance with new
products that meet local needs

KYOKUTOGroup Foundation

Following an order for 100 concrete mixer trucks for Taiwan
in February 2022, we secured an additional order for 250
units in December later that year. In the first half of 2022,
there were times when production was disrupted due tolockdowns to curb the spread of the COVID-19 pandemic,
but by working to improve productivity through reducing
man-hours and improving setups, we were able to continue
to respond to meet local needs and expectations. As theGroup aims to expand overseas sales, Kyokuto Kaihatsu(Kunshan) Machinery, as a hub factory for concrete mixer
trucks, collaborates with Kyokuto Kaihatsu Kogyo's
overseas divisions and sales agents in each country tocreate detailed product specifications that meet eachcountry's unique needs. By reflecting the above, we will
create products that are even more widely accepted.

Top Message■ Exporting concrete mixer trucks with a focus
on Southeast Asia and Oceania｜

Inspection work at the warehouse■ Sudan: steel cargo trucks, skip loaders

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P57 - P58] [Local Communities] Sustainable “Communit y Development ”

Sustainability Initiatives｜

Local Communities｜■ Training for passing on skills

With the aim of improving quality and passing on skills, we
conduct "welding skill tests" and "painting skill tests" forworkers involved in product manufacturing to further ensure
quality in important parts. Additionally, the tests are
conducted in contest formats, which serves as a greater
motivation for improving skills.

In order to pass on the technical capabilities of our Group to
future generations, each Group company provides various
types of education for its successors. The fabrication
department of Hokuriku Heavy Industries' systematicallypromotes initiatives to pass on skills, such as holding
opportunities three times a year for young employees tolearn the essence of product manufacturing, such as setup
and work know-how, from veteran employees.

Top Message■ Skill test

Sustainable “City and Community Building”

KYOKUTOGroup Foundation

In order to support local infrastructure, the Kyokuto Kaihatsu Group
strives to provide products and services that meet the needs of local communities.
To this end, we are focusing on collaborating withlocal communities and customers, while improving our technology and services.

Welding skill test
Skills training at Hokuriku Heavy Industries

We have established a system to quickly respond to
product problems by collaborating with service factories
across the country. In March 2022, we renovated the
FE-Auto Gifu Service Center to expand our stock businessand improve the quality of after-sales service bystrengthening our service system. Additionally, in April
2023, in order to strengthen the special vehicle service
system in the Kyushu region, Kyushutokusyu Motors Co.,
Ltd. was added to the Group as a wholly owned subsidiaryof FE-Auto.

In order to realize a sustainable society, our Group believes
that it is important not only to consider the environment andhuman rights in products and services, but also to continue
to pass them on to future generations. Needs for products
and services will become more diverse in the future due toincreasingly strict environmental regulations and theglobalization of product use regions. On the other hand, inJapan, there are problems such as a decreasing working
population and an aging workforce, and in these difficult
circumstances, we would like to continue to provide thesame quality to the market as before. Our group is working
to address these issues in cooperation with internal andexternal partner factories and business partners.

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atio
ata
rm
hd
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oug
thr

Vehicle Management
Support System
Kyokuto Data Sharing Service
3 advantages

Improving collection operations
Labor saving in daily reports
Streamlining vehicle maintenance

Accesson PCs and tablets

The skills of workers are an important element that forms the basis of
manufacturing. One of Q-Pro's activities is the "Welding Quality
Improvement Project," in which Kyokuto Kaihatsu Kogyo's four domestic
factories are engaged in activities aimed at maintaining and improving
welding quality. In addition to the in-house welding skills test, which is
conducted under strict evaluation standards, we regularly hold welding
technology exchanges, which are extended to external partnercompanies, to improve skills and knowledge and share awareness. We
continue to promote the maintenance and improvement of product

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be us eda s a d ail y re pa te rort

i a lsDriverData collection
Corporate Profile

Person managing
the vehicle

Aiming for "No. 1 welding quality for special purpose vehicles"

Sen
da
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reg
i

Server

d
we
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m

In order to meet the diverse needs of our customers,
we are not only improving quality, costs, and delivery
times, but also improving equipment and facilities forcontinuous production, training human resources,
and preparing manuals. Since FY2020, we havebeen engaging in our Three “Don’t” Activities (don’tm a n u f a c t u r e , d o n’ t p a s s o n t o t h e f o l l o w i n gprocesses, and don’t accept defective products fromprevious processes) in order to achieve higher levelsof quality and efficiency.
In addition, in order to pass on the technology andknow-how we have cultivated over the years to future
generations, we hold various training sessions andeducation, including welding and painting skill
certifications etc.

GovernanceInitiatives■ Sustainable manufacturing

Sustainability
Initiatives■ Service bases

using the app.
mationinfor■ Q-Pro initiatives

ng
rati
pe
ro
ste

Improving quality and passing on skills

Registering

Workstyle reforms

Kyokuto Kaihatsu Kogyo has developed a vehicle
management support system in FY2020 that uses IoT toremotely monitor a vehicle's cumulative operating hours,
number of operations, inspection history, periodic
replacement status, etc. By introducing this system, we
have not only improved operational efficiency, but also
contributed to the prevention of breakdowns andmalfunctions. Kyokuto Kaihatsu Parking has developed aremote monitoring system for multistorey parking
equipment using the mechanism of the management
support system. (see page 50)

ain
Vehicle s
ten
tatus
and
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ce
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Trusted Manufacturing■ After-sales service using IoTBusiness Strategies

RelatedMateriality

In order to ensure the long and safe use of products
delivered to customers, we have established service bases
throughout Japan and provide a full range of after-sales
services. In addition, we have established various
after-sales follow-up systems, such as maintenance packs
that cover periodic inspections and maintenance for a fixedfee, and the vehicle management support system, in aneffort to prevent breakdowns and other issues fromoccurring.

Vision and
Growth Strategy

Improvement and enhancement ofservices

Accesson their smartphones｜Shinobu Matsuura - Nagoya Plant Manufacturing Dept., Kyokuto Kaihatsu Kogyo｜

quality both inside and outside the company. Further to this, in the"Welding Challenge," indirect departments such as design, production
technology, and purchasing can experience welding work, allowing themto experience first-hand the impact that the accuracy of drawings andordered materials has on welding work, and welding from theirrespective perspectives, including easier working environments. Goingforward, Q-Pro will continue to promote initiatives that improve skill
levels through collaboration across organizations and products, andthrough friendly competition between workers.

FE-Auto Gifu Service Center

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P59 - P60] (Par ticipating in Local Communities)

Sustainability Initiatives■ Content aimed at children

Our group contributes to the development of children andstudents who will lead the next generation by offeringfactory tours, developing content for children called"Working Automobile Research,'' and accepting internships
and work experience programs.

We are developing content for children called "Working
Automobile Research'' on our website and booklets. By
visually introducing our Group's products and activities inan easy-to-understand and fun way, we foster the next
generation and promote understanding of our Group. In
October 2022, we distributed "Working Automotive
Workbook" to elementary schools near Kyokuto Kaihatsu
Kogyo's main bases.

■ Plant tours

Top Message

Nurturing the next generation

KYOKUTOGroup Foundation

We hold tours of factories, products, and completed
facilities for local residents, students, and others with theaim of increasing interest in manufacturing, understandingof local industries, and promoting local involvement.

Participation in Local Communities

RelatedMateriality

Contribution
to LocalCommunities

The Kyokuto Group is engaged in local environmental
conservation and disaster prevention activities in order tofulfill our responsibilities as a member of the local
community. In addition, by actively participating in local
events and festivals, we are deepening our interactions withlocal residents and local organizations, and are working tobuild better relationships.

We participate in and support various festivals and events
organized by local organizations. By exhibiting our products
at events, we help local residents understand the roles that
the Group’s products play in society, and contribute to thepromotion of local industries and regional revitalization.

■ Local environmental conservation activities
and disaster prevention activities

In October: “ Working Automobiles Assemble!” at Tojoko
Toy Kingdom (Kyokuto Kaihatsu Kogyo)

In October: Ishikari City Manufacturing Companies Tourand Exchange (Shinko Automobile)

In October: “ Working Automobiles Assemble!” at Mt. FUJI

Kyokuto Service Engineering's Otsu Office operates a plant that
handles the crushing and processing of local waste, and receives
many requests for tours from various organizations. The mostcommon of these requests are social studies field trips forelementary school students. The curriculum guidelines forfourth-year students stipulates that students should study projects
that support the health and living environment of local people, suchas waste treatment, and in 2023, 22 schools participated in theSocial contribution activities■ Participation in the TABLE FOR TWO Program

We actively promote various social contribution activities,
including donating products to developing countries.

F.E.E., which operates cafeterias on Group premises,
participates in the TABLE FOR TWO program, which donates
school lunches to children in developing countries by eating
healthy menu items at the cafeteria.

■ Donating our products
In July 2022, Kyokuto Kaihatsu Kogyo collaborated with
Nishinomiya City, Hyogo Prefecture to donate two refuse
trucks manufactured by Kyokuto Kaihatsu Kogyo, which had
expired in Nishinomiya City and were refurbished by FE-Auto.
They were donated to Honiara City, Guadalcanal Province,
Solomon Islands. We work together through public-private
partnerships to build relationships in local communities andcontribute to the improvement of environmental hygiene indeveloping countries.

CHILDREN’S WORLD (Kyokuto Kaihatsu Kogyo)

In March: “ Working Automobiles Coming to Hokoten!” at(NIPPON TREX)

Donated: 182,580 yen ＝ worth 9,129 school lunches■ A helping hand with used stamps
NIPPON TREX supports the activities of the NPO "Japan
Committee, Vaccines for the World's Children (JCV)'' and is
promoting the collection of used stamps throughout thecompany. The used stamps collected are sold by JCV tocollectors in Japan and overseas, and the proceeds areused by JCV to work with UNICEF to deliver vaccines tochildren around the world.
■

Data collection
Corporate Profile

Toyohashi Machinaka Pedestrian Paradise

FY2022 results■

GovernanceInitiatives

At each Group base, we periodically clean the areas
surrounding our business sites. We also actively participate
in local environmental activities such as the Yamato
Environment Improvement Association in Yamato City,
Kanagawa Prefecture. From the perspective of local
disaster prevention, we participate in local self-defense firebrigades to help protect the local community from any fires
at our factories and to ensure that business continuity is not
disrupted. Kyokuto Kaihatsu Kogyo’s Miki Plant is amember of the “Corporate fire brigade,” which engages infirefighting activities in cooperation with local fire brigades.

In FY2022, we participated in the following events.
(Number of events has decreased due to the COVID-19
pandemic.)｜Masahiro Jo - Otsu Sales Office, West Japan Operations Div.,
Business Operations Headquarters, Kyokuto Service Engineering Co., Ltd.｜
two-month period from May to June. A total of nearly 2,000 students
visited the plant for the tour. In particular, the video of waste being
put into a pulverizer and the demonstration of waste put in by a cranereceived a great response, and many questions were asked during
the question-and-answer session after the tour. I feel that plant tours
are a good opportunity to learn about work initiatives that support
society.

Communicating safe, secure, and stable plant operations to society

Sustainability
Initiatives■ Participation in events

Working Automobile Workbook

Business Strategies

Coexistence with local communities

Vision and
Growth Strategy

Hokuriku Heavy Industries Plant TourHow stamps turn into vaccines
Stamp collectors
in Japan and overseas

Refuse trucks donated50 80

Communtiy cleaning“Working Automobiles Coming to Hokoten!”

NIPPON TREXJCV UNICEF

Children around the world

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P61- P62] Stakeholder dialogue (Environment)

Sustainability Initiatives｜

Dialogue

Initiatives for the Environment｜

leads to solutions for both regional and environmental issues
The environmental business of our group is based on the two pillars of "design and construction" and "operation and maintenance" of recycling plants. In
recent years, we have been constructing biogas plants that use livestock manure and food waste as raw materials, and are also working on woodbiomass-related initiatives that utilize local forest resources, actively working to solve social issues through our business activities.
This time, we welcome Ms. Emiko Hazama from the NPO Learning and Ecological Activities Foundation for Children (LEAF), to discuss with Mr. Kato and Mr.
business.

■

Creating recycling plants that truly works
with the local community

GovernanceInitiatives
Data collection
Corporate Profile

STAKEHOLDERDIALOGUE

Representative Director,■ Hazama: You mentioned that stable supply ofenergy sources is an issue, but isn't there also an
issue with the supply of electricity generated by thebiogas plant?
■ Kato: That's exactly right. The balance between
demand and supply is extremely important.
Nii: In terms of electricity, there are areas wheretransmission lines are not yet in place, and this is also
an issue for the region.
■ Hazama: In Europe, the spread of renewable energy
is completely different because of the development oftransnational power transmission systems.
Japan is facing the challenge of improving its electricity
supply system. I believe that it is important in energy
issues to successfully combine macro initiatives at thenational level with micro initiatives such as local
production for local consumption in villages andcommunities.
■ Nii: I feel that local production and consumption ofenergy will attract more and more
attention moving forward. For
example, electricity accounts forabout 20% of the energy used insociety, and the rest is consumed
as motive power and thermalenergy. We would like to help
expand local production andlocal consumption of energy
other than electrical energy,
such as using wood chips for

Sustainability
Initiatives

Deputy Manager of Environmental Solution
Division, Environment Business Department,
Kyokuto Kaihatsu Kogyo Co., Ltd.

EMIKO HA Z AMA

Working towards the goal of local generationand consumption of energy

Business Strategies

KENJIRO NII■■ Hazama: Environmental issues are diverse, and thetechnological capabilities of companies are essential
to solving them. We expect your company to play arole in connecting the various sectors, including
government bodies, businesses, and citizens, whomust cooperate in order to move forward.
■ Kato: Thank you.
In fact, I was involved in the planning and constructionof a biogas power generation facility in 2021 that will
use food waste as raw material, and when I saw what
was being discarded, many of the food items had just
expired, and I was heartbroken with what was
discarded as waste. I felt that "throwing away food" wasnot the best choice from the standpoint of social ethics,
and I felt very conflicted about it. There are many
situations where I feel the need for fundamental socialchange.
■ Hazama: Food loss is a major issue.
At this moment in time, we need such facilities, but
the ideal would be to realize a waste-free society andresource recycling at the same time.
■ Nii: I think that in order to solve environmental
problems, it is necessary to look at the overall balanceand explore the optimal system with various people.
■ Hazama: What's wonderful about hearing yourstories so far is that they don't just recycle waste,they always focus on the local community and solve
the problems that occur there.
I have high expectations for the corporate activities of
Kyokuto Kaihatsu Kogyo, in that its core businessitself contributes to social issues.
■ Kato: We will continue to use technology to connect
local governments, companies, citizens, and otherpeople, and work to realize a sustainable society
using a variety of approaches.
Thank you for your time.

Vision and
Growth Strategy■ Kato: Ms. Hazama, thank you for your time today.
I understand that you specialize in public policy, and I
would like to hear your opinions based on yourexperience in the private sector and in local government.
■ Hazama: Thank you.
Environmental issues cannot be solved by government
bodies alone, so efforts by private companies are also
very important. What does your company do in theenvironmental business?
■ Kato: First, I would like to talk about the recycling
plant. Our company conducts business related tothe design, construction, operation, andmaintenance of waste treatment facilities,
mainly crushers that crush
non-combustible waste and oversize
waste.
In recent years, the market itself has
been shrinking due to increased
awareness of recycling and a declining
population, but on the other hand, there
has been an increase in the number oflarge-scale facilities due to the expansionof areas and the need to rebuild thesefacilities due to aging.
■ Nii: In addition, we respond to any
changes in laws related to recycling, suchas new laws regarding plastics.
■ Hazama: I believe that there
is an urgent need toaddress the recyclingof plastics.
Furthermore, Japan

also has the problem of energy shortages. It isdifficult to promote energy policies all at once, but if
local energy initiatives begin to circulate well, I
believe they will spread to the entire country.
Your company is also working on biomass-related
initiatives that utilize local resources.
■ Nii: In the wood biomass field, we offer a wood chip
drying container system. The key feature is that thewood chips can be dried inside the container andtransported as is. This system has been introduced
into the Hokusetsu Satoyama Regional Circulationand Symbiosis Project being promoted by Hyogo
Prefecture not far from here.
■ Hazama: This is an excellent example of acommunity-based approach to a
recycling-oriented society.
Efforts are being made in various
industries to utilize renewable energy
using local resources, but I believe thata stable supply of energy sources is an
issue.
We believe that by taking into account the
local natural environment, a streamlined
resource cycle is created, resulting in asustainable system that is truly rooted in
the local community.
■ Kato: As a regional resource circulation
system, we have been working on RDF(Refuse Derived Fuel) since the early
1990s, and we have our own unique
technology. For a while, dioxins generated
from waste incineration facilities was a
problem. Dioxins aredecomposed by hightemperatures, therefore it isnecessary to maintain the■ A mission to create the infrastructure of theenvironmentKYOKUTOGroup Foundation

Nii from the Environmental Business Division of Kyokuto Kaihatsu Kogyo Co., Ltd. about the initiatives, challenges, and direction of the Group's environmental

hot water boilers to supply thermal energy.

Top Message

Taking on the challenge of renewable energy thatincinerator above a certain temperature.
This can be difficult for small-scale waste incinerators
due to problems such as securing the amount of waste,
and some local governments have tackled this problem
by repurposing the waste that was previously
incinerated as RDF material. Our RDF technology was
first used in a central heating system in Sapporo Cityand has been in use for over 40 years.
■ Hazama: There are examples of area-based
zero-emission initiatives currently, but has this been
going on for 40 years?
■ Nii: In Hokkaido, we are also working on biogas power
generation using the gas and heat generated byanaerobic fermentation of livestock manure. Thissystem produces a large amount of liquid fertilizer, andin Hokkaido there is a demand for fertilizer for dairy
feed, so a cycle is established in which it is spread on
pastures and other areas.
■ Hazama: Energy is an important factor in realizing
strong local communities from the perspective of
national land resilience.
I believe that demand for initiatives in local areas will
increase even more in the future.

T S U YO S H I K AT O
Deputy General Manager,

NPO Learning and Ecological

Sales Division, Environment Business

Activities Foundation for Children

Department Sales Headquarters,
Kyokuto Kaihatsu Kogyo Co., Ltd.

KYOKUTO INTEGRATED REPORT 2023

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P63 - P6 4] [Environment] “ Manufacturing” with consideration for the global environment

Sustainability Initiatives

Toward a Recycling-oriented Society｜ Conservation of Ecosystem
Environment｜

Waste reduction“Manufacturing” that Considers the
Global Environment
The Kyokuto Kaihatsu Group aims to coexist with local communities through"monozukuri" (manufacturing), and at the same time, promotes the conservation of
the global environment and ecosystems throughout the supply chain.

Effective utilization of water resources
The Group is implementing water conservation measures inall processes, not only from a cost perspective, but also toensure that the Company's business activities are not■ FY2030 Target [Sustainability Vision]

Management of chemical substances
The Group is promoting manufacturing of products that do
not use SOCs (chemicals that are harmful to the humanbody and the environment).

Environmental conservation activities
In addition to promoting initiatives that do not emit pollutants
during the manufacturing process, the Group also carries out
activities to preserve the environment, such as tree-planting
activities.

CO2 emissions: Down by 38% comparedto FY2013(Scope 1, 2)

Food loss: 23% reduction compared to FY2020

disrupted in the event of water usage restrictions due todisasters or other reasons. At Kyokuto Kaihatsu Yokohama
Plant, a killer agent is added to the circulating water in thepaint booths, and the circulating water is used repeatedly
without draining during cleaning, thereby reducing
wastewater discharge.

SOC-free products are indicated with a SOC-free mark on
the product catalogs and brochures.

SOC-free mark
Data Collection
Corporate Profile

Our group will promote decarbonization in the value chain
with the aim of achieving carbon neutrality in 2050.

F.E.E, which operates the Group's employee cafeteria, isworking to improve the accuracy of meal count management by
reducing the difference between the number of meals preparedand the number of meals actually served in the plant cafeteria.
In FY2022, waste was reduced through research and analysisof popular and unpopular menu items and improved menu
content to reduce leftover food. This resulted in a 23%
reduction for the entire group compared to FY2020.

■ FY2022 Results
New Environmental Standard Conformity Label■ Solar power generation business

Kyokuto Kaihatsu Kogyo is currently conducting solar
power generation projects at its Fukuoka Plant, the former
Tohoku Plant site, and the NIPPON TREX Otowa Office.
Additionally, from FY2023 to FY2024, Kyokuto Kaihatsu's
Miki Plant will install a solar power generation system using
a nearby reservoir, and a total of six sites, including the
Fukuoka Plant and the new NIPPON TREX Plant, will begin
generating solar power for their own consumption.
Through these initiatives, Kyokuto will aim to achieve thegroup's CO2 emissions reduction targets.

■ Food loss reduction

GovernanceInitiatives■ CO2 emissions reduction target

Introduction of LEDs for lighting inside all group factories
are underway.
The Company is also working on heat insulation and heatshielding measures for factory buildings to create a safe
and comfortable work environment.
In the manufacturing process, Kyokuto is working to reduce
waste and complaints, leading to a reduction in CO2emissions through improved productivity.

(Zero landfill waste)

Sustainability
Initiatives

The Kyokuto Group has set greenhouse gas emission
reduction targets in line with the Paris Agreement and is
working to reduce CO2 emissions from its businessactivities.
In addition to the Group's own emissions, the company will
also consider emissions from procurement of parts andmaterials, product use, and disposal, and work with
suppliers, product users, and other stakeholders to reduce
CO2 emissions throughout the product lifecycle and value
chain.
Kyokuto will also aim to quickly realize a carbon-neutral
society by proactively creating energy by installing solar
power generation facilities on factory roofs and idle land
from the perspective of making effective use of the site.

Recycling rate: maintained at 99.0% or higher■ Number of meals provided (8 offices): average of 44,000 meals/month■ Average amount of waste generated: 4,064kg/month reduced to
3,129kg/month

Carbon neutrality /Environmental
issues■ Introducing energy-saving equipment andstreamlining work processes■ FY2030 Target [Sustainability Vision]

Business Strategies

Basic approach to reduce CO2 emission

The entire Kyokuto Group is committed to reducing theamount of waste generated through its operations andpromoting recycling.

Vision and
Growth Strategy

Toward a Decarbonized Society

RelatedMateriality■ Waste reduction target

KYOKUTOGroup Foundation

In order to reduce the amount of scrap generated throughthe Company's business, Kyokuto is promoting
environmentally friendly manufacturing through suchmeasures as improving the yield rate when cutting steel
sheets in the forming process and setting the company's
own evaluation standards for the 3Rs (reduce, reuse,recycle) at the product design stage. The Company also
calls request the suppliers to reduce excessive packaging
and to process used packaging materials for reuse ascushioning materials, thereby making effective use ofresources and reducing waste. When processing waste, theCompany preferentially contracts with industrial waste
processing companies that actively engage in recycling
processing and with companies certified as excellent.
Initiatives for reducing food waste is also taking place in thecompany cafeteria.

Carbon neutrality /Environmental
issuesTop Message｜

RelatedMateriality

resources.
Acacia trees planted by NIPPON TREX are used as floorboard
products.

■ Tree-planting activities
Solar panels at Kyokuto's former Tohoku Plant

NIPPON TREX has been planting acacia trees in Sabah, Malaysia
since May 2004, promoting coexistence with limited forest

Planted acacia trees

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P65 - P66] Stakeholder dialogue (Human Resources)

Sustainability Initiatives｜

Dialogue

Creating society where everyone is respected｜■ Current status and issues for promoting
diversity■ Kurisue: A variety ofpeople including thosefrom overseas work at
our factory.

HIDEYUKI KURISUE

Data Collection
Corporate Profile

STAKEHOLDERDIALOGUE■ Instilling diversity throughsharing of successful
initiatives

GovernanceInitiatives

DIVERSITY OFFICE KITAO CO., LTD

Sustainability
Initiatives

Representative Director and President■ Kurisue: Until now, Kyokuto has
conducted employee
awareness surveys once
every three years.
While there are several

Business Strategies

M A R I KO K I TA O

■ The idea is not to cut
working hours but toimprove the quality

Vision and
Growth Strategy■ Kurisue: Today, I would like to discuss with Ms.
Kitao about various opinions regarding the Kyokuto
Group's initiatives. First of all, what is yourimpression of our group's initiatives for promoting
diversity?
■ Kitao: I think the word "wakyo (Harmony)" in yourcompany principle is wonderful from the perspectiveof diversity. I believe that "wakyo" is a world of
diversity which can only be created with theexistence of something different. Because thepromotion of diversity is highly associated withcorporate philosophy and company policy, itcannot be promoted unless the company isconsistent in its values. This is one of the
difficulties in promoting diversity in acompany.
■ Kurisue: That's certainly true.
The challenge for the Group is that, due tothe nature of our industry, the proportion of
women in our workforce is low. In order for
employees to recognize each other's
diverse values, incorporate new opinions,and promote innovation, we need to utilize
a variety of human resources, including
women, the elderly, non-Japanese, andpeople with disabilities, and we areworking to raise awareness toward thisgoal through projects and training.
In addition, the FY2030 target of thelong-term management vision aims for a 20% female
ratio in the number of recruits.
■ Kitao: I think it is very good that numerical targets
are set.
However, it is not a good idea to focus too much on
target numbers and make unreasonable promotions
or hirings.
I think it would be best to move forward with athorough analysis of the current situation and makeadjustments as necessary to suit the situation.
What about the attrition rate for female employees?
■ Kurisue: I think the attrition rate is relatively low.
Although some people who actually work at thecompany say that there is still a long way to go, wefeel that working conditions are
improving. For female employees tofurther demonstrate their abilities
after joining the company, I feelthat expanding the range of
positions in which they can play
an active role is an important
issue for the future.

KYOKUTOGroup Foundation

The Kyokuto Group handles products that contribute highly to society, and believes that it is necessary to develop human resources
who are highly motivated and can continue to contribute to society, and to create a work environment where employees can continue
to work with peace of mind.
The interview with Mariko Kitao of DIVERSITY OFFICE KITAO, which provides diversity and work-life balance consulting services tovarious companies, and Hideyuki Kurisue, General Manager of Human Resources Department of Kyokuto Kaihatsu Kogyo, discusses
the current situation and issues related to diversity and the ideal state in order to continue creating value for society.

In such a situation, it is necessary to control theunconscious bias in order to accept the different
values of each individual and to encourage them tomaximize their individual abilities. Therefore, sincelast year, we have been conducting unconscious bias
training for those in managerial positions.
■ Kitao: I think training is very good.
On the other hand, there is no point in the training if
the end result is "I learned a lot;" it must be reflected
into their actions.
And to realize that, the process of "experiencing it" isimportant.
■ Kurisue: Getting them to take action...it's
challenging.
■ Kitao: Ideally, diversity should be included in theevaluation items, but if it is difficult to include it
suddenly, an award system would be a good idea.
There are also examples where training instructors
are recruited internally rather than requesting
external personnel. What is effective is sharing
success stories. Knowing that respecting andpromoting diversity will lead to improved
performance will lead to increased motivation.
■ Kurisue: There are systems to recognize
individuals and groups who have contributed tobusiness performance, but there has never been one
related to diversity, so your proposal is interesting.
■ Kitao: If it cannot be said that diversity is
progressing in the industry, I think being able to takethe lead could actually become a competitive
advantage.
■ Kurisue: By prioritizing what we cando here, we can accumulate successful
experiences and share them, leading toengagement.
Recognizing individuality andencouraging those around them toaccept it.
I would like to continue to actively work
to create such an atmosphere.
Thank you very much for giving us thisopportunity to discussing the theme ofdiversity with you.

Top Message

What should be done to develop human resources be
responsible for creating value for society

issues that require improvement, such as women in
key positions and improving internal engagement, thesurvey found that the underlying issues is the
problem of long working hours.
■ Kitao: First of all, it is necessary to clearly identify
the causes of long working hours.
Some tasks take lots of time, while in other cases,
some tasks are taking more time than necessary as
employees tackle tasks at their own pace when they
do not need to take that time. So it would be good toanalyze the cause of the problem carefully before
considering countermeasures.
■ Kurisue: For example, we have seen that factories
spend a lot of time checking for defects in order toproduce products of better quality. These factors may
be the cause of long working hours. Under thesecircumstances, the Work Style Reform Project is
promoting various measures to curb long working
hours. However, rather than simply cutting down ontime, it is also necessary to examine the content ofwork and improve the quality of labor.
■ Kitao: Aren't there cases where you believe that it's
not possible to reduce overtime work?
In order to change your mindset from "it is notpossible" to "it is possible," I think it's important toreview your previous assumptions and find out why
something can't be done.
In particular, I would like managers to take theinitiative in pursuing the essence of the value of workand managing their own work styles to not waste
time. Superiors leaving the workplace on time would
be a great role model. To this end, I think
it is important to clarify the direction thecompany is aiming for. Whatnumerical targets have you set forwork-life balance?
■ Kurisue: The work-life balancesatisfaction level according to theemployee awareness survey was
58% in FY2021.
The target for FY2030 is 70%.
From now on, we must actively
promote initiatives not only inKyokuto Kaihatsu Kogyo, but also
in the entire Group.

General Manager,
Human Resources Department,
Kyokuto Kaihatsu Kogyo Co., Ltd.

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P67- P68] [People] Creating a societ y where each and ever y person is respectedSustainability Initiatives
RelatedMateriality

Work-life balance｜

Human Resources

Work style reform｜“Creating a society” where
everyone is respected

To create an environment where each employee can beproductive in both their work and personal life, and create avirtuous cycle for each other, it is important to improve
productivity and reduce total working hours.
To this end, we are promoting digitalization of indirect
operations and automation of manufacturing processes.

Promoting the creation of a workplace where all employees of the
Kyokuto Kaihatsu Group can bring out the best of theirindividuality and ideas in a safe and lively manner.

Air conditioning equipment installed at the Yokohama Plant

Vision and
Growth Strategy

RelatedMateriality

Kyokuto Kaihatsu Kogyo's Yokohama Plant has installed large-scale air
conditioning to countermeasures against the heat and cold at the production
site. Until now, spot coolers have been installed and frequent breaks anddrinking water were recommended as countermeasures against hightemperatures in the summer, but the introduction of this air conditioning

KYOKUTOGroup Foundation

In recent years, we have introduced AI, IoT, and various
systems to improve work efficiency, and are promoting thedigitalization of simple and analog tasks.
We have also introduced robots and automated machines｜Tetsuya Sakamoto, Administration Division, Yokohama Plant
Kyokuto Kaihatsu Kogyo｜system has lowered the temperature of the entire work site, significantly
reducing the risk of heat stroke.
Although short-term costs increased due to the operation of air conditioning insummer and winter, we feel that the total effect, including safety andproduction efficiency, was more than worth it.

In order to promote the creation of a workplace that makes
the most of diversity, we promote education on
unconscious bias and basic diversity education.
In FY2022, e-learning on the basics of unconscious bias
was carried out, mainly for managers at Kyokuto Kaihatsu
Kogyo. In the online training session that followed, group
discussions on real-life work-related topics helped
participants deepen their understanding of how to deal withunconscious bias and diversity in specific situations. From
FY2023 onwards, we plan to expand the scope of training
and create an environment that incorporates a range ofperspectives on diversity.
■ Kyokuto Farm

Utilizing diversity for personal and organizational growth - After sitting the Unconscious Bias training -In order to realize a society where diverse human resources canplay an active role and where people can balance work and family,
it is essential that work, housework, and childcare become
gender-neutral.
To encourage male employees to take childcare leave, the Groupis promoting the creation of a workplace where it is easy to takesuch leave and educating the employees about the system.

■ Diverse working styles at different life stages
We have systems such as leave, shortened working hours, andflexible working hours to enable employees to balance work andfamily life at various stages of life, including childbirth, childcare,and nursing care.
Kyokuto Kaihatsu Kogyo has prepared a Maternity Leave andChildcare Leave Handbook (before leave) for female employees
taking childcare leave and their superiors to promote
understanding of maternity leave and childcare leave.
Moving forward, we plan to divide this manual into sections suchas after giving birth and returning to work, men taking childcare
leave, and taking nursing care leave, etc., and plan tocommunicate knowledge and information to employees.

■ FY2022 Results

Percentage of male employees
taking childcare leave:25%*Result for the entire Kyokuto Kaihatsu Group

Data Corporate
Corporate Profile

We opened the Kyokuto Kashiwa Farm in 2018 and the
Kyokuto Yachiyo Farm in 2019 with the aim of creating aworkplace where people with disabilities can work and beas themselves on a long-term basis. Ingredients grown at
the farm are used in the group's cafeteria.

The Company has established a system that allows flexible
work arrangements, such as shorter hours, leaves, and flexible
working hours, so that we can support our employees
according to their various circumstances, including family
situations and their own health conditions.
In addition, we are promoting in-house education andimproving materials to increase understanding and awarenessof the system.

GovernanceInitiatives

The Kyokuto Group considers the diversity of ouremployees to be an asset, and believes it is important topromote the recruitment of diverse human resources andthe development and utilization of their abilities, regardlessof gender, age, nationality, disability, experience, etc. At thesame time, we recognize the individuality of everyone
involved in the Group and strive to create an environment inwhich both parties can work with vigor and enthusiasm. We
have a personnel system that provides learning
opportunities such as in-house education andcorrespondence courses, as well as opportunities toexperience various types of jobs based on aself-assessment system and personal interviews.
Furthermore, we aim to create a workplace environmentand organization where everyone can make the most of
their individuality and strengths, such as by operating the
Kyokuto Farm as a place where employees with disabilities
can work in their own way.

■ Encouraging male employees to take childcare leave

Sustainability
Initiatives

Respect for diversity

Promoting diverse work styles

Business Strategies

Work style reform■ Education on diversity

I learned that dealing with unconscious bias is similar to treating
lifestyle-related diseases, and that it is important to remain
continually aware of it, which reminded me of the meaning ofcontinuing to learn. What struck me in the promotion of diversity isthat the solution to labor shortages must be accompanied by thepromotion of diversity and increased productivity. I strongly feel that
it is becoming difficult to secure human resources. We would like toaddress this issue by promoting diversity and increasing

into the production process to stabilize product quality andimprove work efficiency and safety at our factories.
In addition, we are working to prevent heat stroke andimprove work comfort by promoting the installation of air
conditioning systems in factories as a measure against heatand cold.

■ Initiatives towards improving productivity and work
style reform

Creating a comfortable working environment using air conditioning equipment

Diversity management

Top Message

Realizing work style reform

Maternity Leave and Childcare Leave Handbook (before leave)｜ Kazuhiko Akatsuka, Fukuoka Plant, Kyokuto Kaihatsu Kogyo ｜productivity.
I learned that it is difficult to completely eliminate the unconscious
bias and that it is important to be aware of it and consciously
control it. What I can do is to stop and think about whether I am
biased in evaluating my subordinates and creating opportunities.
I was reminded of my wish to emphasize diversity and contribute to
the sustainable growth of myself and organization, and theresolution of social issues.

"I'm glad I took the opportunity"
I was reluctant to take childcare leave, but I took the plunge and took twomonths of childcare leave. During the period, each day passed so quickly
that I felt once again how busy childbirth was at home. On the other hand,
I am glad I took the leave it because my wife and children felt they had
peace of mind.
I was also grateful to the people around me who helped me.

｜

Kazuya Nishiyama, Chubu Parts Center, Service
Headquarters, Kyokuto Kaihatsu Kogyo ｜[Comment from the manager] As a result of starting preparations
immediately after discussing taking childcare leave, we were able
to handle the situation without major disruption. The other membersof the division were also cooperative, and I was able to experience
the growth of each and every member of the division.

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P69 - P70] (Creating a rewarding organization / Consideration of human rights / Occupational health and safet y)

Sustainability Initiatives
RelatedMateriality

Occupational Health and Safety

We are promoting safety measures regarding equipment inorder to create a workplace environment where everyone
can work safely.
In FY2022, we installed LED markers on forklifts and

Top Message

Initiatives for equipment safety

Work style reform

standardized inspection charts for forklifts and overheadcranes.
In addition, in workplaces where there are many elderly
employees, we are working on initiatives to create aworkplace for all age groups by promoting various safety
and burden-reducing improvements in facilities.

Creating a rewarding organization

RelatedMateriality

Work style reform

Training session using VR simulation device and the VR screen

simulation device■ Welfare system

We aim to create a workplace where employees are aware of theirassigned roles and are able to grow independently and happily. We
also provide training for employees at each stage, as well as
education for self-development and skill development.

At Kyokuto, awards are presented to employees who have madesignificant contributions to the company's development in order tomotivate employees.
In addition, the Group has various welfare programs, including
subsidies for club activities and recreation within the Group, theintroduction of the Welfare Club, and a loan program.

The Group is committed to manufacturing products that do
not use conflict minerals, which can be a cause of humanrights abuse, environmental destruction, and funding for

Initiatives for employee human rights
To create a workplace where everyone can work withpeace of mind, we carry out anti-harassment training byspecialized instructors for managers. We have establisheda Corporate Ethics Helpline as a point of contact forAwards ceremony

RelatedMateriality

Governancearmed groups in conflict zones. We also encouragesustainable procurement that takes into consideration not
only our own profits but also the environment and humanrights throughout the entire supply chain.
To fulfill our responsibility to maintain international peaceand security, we apply the Security Export Regulations
when exporting goods and providing technology.

employees to safely discuss ethical violations in theworkplace.
The anonymity of the reporting system is ensured, and thesystem is operated with a follow-up system in place toensure that those who seek advice are not disadvantaged.

As convenient as mechanical devices are, the students
were able to experience in a safe manner that if they areused incorrectly, they can lead to serious accidents. It wasa valuable experience to be able to visually see areenactment of an accident involving chopsticks.

I feel that I was able to learn once again the importance ofsafety measures and the dangers of being overconfident
in mechanical equipment. I was able to understand theimportance of following work procedures and performing
work, and my awareness of safety has further improved.

■ Safety patrol■ Improving awareness of safety within the

To create a workplace free of occupational accidents, eachGroup site conducts safety patrols to identify unsafe
conditions and behaviors in operations and facilities, andshare near-miss events for the purpose of correction andprevention.
In addition to daily patrols, "top patrols" are also conducted
regularly with top management present.

"Top patrols"Group
To achieve a workplace free of occupational accidents
throughout the Group, we regularly hold safetyconventions, safety promotion meetings, and safety
awareness meetings to raise safety awareness andcommunicate safety measures.
In addition, each group company prepares its own safety
and health activity plan according to the issues it faces, andwe share the progress of each company while promoting
safety and health activities.

Data Collection
Corporate Profile

Manufacturing with consideration forhuman rights｜Masahiro Shoda, Safety Promotion Division,
Kyokuto Service Engineering ｜Updating the awareness of safety through safety simulation training

GovernanceInitiatives

Consideration of human rights

Safety work training vehicle

Sustainability
Initiatives

We offer rank-specific training to acquire the skills required for thejob, and career training to support individual career development.
In addition, to encourage employees to develop their abilities on
their own initiative, we have established various programs related toself-development, including a self-development correspondence
course incentive program, a qualification acquisition incentive
program, and a video training service.

To have our employees realize the dangers of occupational
accidents and raise their awareness of safety, we provide
safety simulation education and VR safety simulation
devices that simulate accidents that could occur in actual
work. By using a safety work training vehicle equipped withsimulation device on a wing van, flexible training can beprovided at each site within the Group.

Business Strategies

Increasing loyalty and motivation

New employee training

Vision and
Growth Strategy

We are promoting group-wide initiatives to raise safety
awareness in a variety of situations, including safety
training using safety work training vehicles, safety patrols tocheck dangerous areas and unsafe behavior in theworkplace, and special training for employees with lessthan five years of experience.

■ Safety simulation education, VR safety■ Education and raising awareness of employees

KYOKUTOGroup Foundation

Safety education

Kyokuto Kaihatsu Group Safety Convention

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P71- P72] (Health Management)

Sustainability Initiatives

Governance Initiatives
RelatedMateriality

Health Management

Health Management｜

Top Message

WORK & WELLNESS

Governance ｜〜Exciting work x Healthy and rich life 〜■ Key control items and final target indexes■ Mental healthStress check - overall health risk: 90 or below■ Work style reform

The Company is building a system to make appropriate and speedy decisions
on the management policies and strategies of the Kyokuto Kaihatsu Group forthe coexistence and co-prosperity of society and the company.

■ Examples of events & subsidy system implemented
within the Group■ Walking campaigns■ Participation in FUN+WALK PROJECT(sponsored by Japan Sports Agency)■ Online fitness■ Holding seminars for female employees■ Complete ban on smoking and implementing
measures to support smoking cessation■ Subsidy for secondary examination costs■ Subsidy for N-NOSE primary cancer screening test
■ Implementation of tetanus vaccination for field workers

Corporate GovernanceBusiness Strategies

Work engagement: 2.5 or above

Various events and assistance are provided to promote
employee health, including prevention of lifestyle-relateddiseases and infectious diseases, and support for smoking
cessation.

Vision and
Growth Strategy■ Lifestyle improvement
Health checkup comprehensive judgment
finding rate: 65% or below“Building an Organization” Trusted by Society■ Health promotion events and subsidy system

KYOKUTOGroup Foundation

We are promoting health management initiatives under the
motto of "WORK & WELLNESS - Exciting work x Healthy
and rich life" so that all employees of the Group can engage
in exciting work with vigor and enthusiasm.
Specifically, we are implementing various measures suchas events and assistance programs to promote health,offering healthy menus in the cafeteria, and providing
health consultations by affiliated public health nurses.

Basic Policy- Interview with partnering medical professionals We will explore the challenges and the future of healthmanagement for our group through an interview with Ms. Yuko
Sato of SOMPO Health Support Inc., who is in charge of healthconsultations for our group as an affiliated medical practitioner,and Masahiro Kasai, Safety Promotion Department Manager,
promoting health management.

Changes in corporate governance
2015

2016

Appointment of
Outside Directors

2 Posts

Board of Directors
effectivenessevaluation

Board of Directors
effectiveness evaluation
introduction

Nominating
Committee

2017

2018

2019

2020

2021

2023

3 Posts（1 female）
Evaluationby thirdparty institution
Establishment of Compensation Committee

Establishment of Nominating Committee

Compensation
SystemIntroduction of restricted
share compensation system

MissionStatement

Kyokuto Kaihatsu Group
Code of Conduct formulation

Establishment of
Sustainability
Committee

2022

Data Collection
Corporate Profile

Compensation
Committee

Left: Yuko Sato, SOMPO Health Support Inc.;
Right: Masahiro Kasai, Safety Promotion Department,
Kyokuto Kaihatsu Kogyo

from decision-making to execution. The Company considers it animportant management issue to build good relationships withvarious stakeholders, including customers, employees, business
partners, shareholders and investors, and local communities, while
enhancing corporate ethics and being aware of its social
responsibilities and roles as a company and as a member of society
through sound corporate activities.

GovernanceInitiatives■ Kasai: Ms. Sato has been involved in the healthmanagement of our group since 2016.
Have there been any noticeable changes so far?
■ Sato: Although the number of interviews itself has notchanged significantly, I feel that there has been a positivechange in the content of the consultations.
For example, I am seeing an increase in the number ofconsultations about preventive measures, such as how todeal with stress and improving the work environment inorder to improve their health, from early consultations when
they start feeling unwell.
■ Kasai: It would be nice if there is a growing interest
among employees in working healthier.
On the other hand, I believe that health management is notproperly communicated within the company.
■ Sato: That's right.
Since it is important for people to be aware that they are
responsible for their own health, it may be a good idea toprovide training to help them acquire health literacy.
■ Kasai: I see.
Are there any other issues you have noticed during theconsultations?
■ Sato: It seems that people who work in factories tend to

The Group's management focuses on expanding corporate value
by making prompt decisions on management policies andstrategies in response to changes in the business environment, andby strengthening the system for implementing those policies andstrategies in a reliable, speedy, and timely manner.
We are also strengthening our auditing and supervisory functions toensure compliance with laws, regulations, and rules in the process

Sustainability
Initiatives

Employee healthwork long hours, perhaps because of the type of theiroccupation.
■ Kasai: We are aware of this and would like to make gooduse of health management in our efforts towards solving
this.
■ Sato: To approach this issue from the perspective of
health, I recommend improving sleep quality.
Not getting enough sleep in busy schedules can lead tomental and physical problems.
Why not have them learn the basic concept of self-care
first, and then provide information on how to improve their
sleep quality?
■ Kasai: Thank you for the detailed advice.
I would like to further increase employee and company
engagement through health management.

Sustainability
Committee establishment

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P73 - P74] Governance Initiatives

Governance Initiatives

List of Officers (as of end of June 2023)

Corporate Governance System■ Schematic diagram of the corporate governance system including an overview of the internal control system

General Meeting of Shareholders
Appoint

Nominating Committee

Consultation/Report

Board of Auditors

Board of Directors

Cooperation
Accounting
Audit

Monitoring and Reporting

Ta k e o N o r i m i t s u
Director, Associate Senior Executive Officer

Attended 16/16 of Board of Directors Meeting in FY2022
Joined company
General Manager, Engineering Dept., Miki Plant
General Manager, Development Dept.
Executive Officer, Deputy Executive General Manager,
Engineering Div.
2015 Apr. Executive General Manager, Engineering Div.,
General Manager, Engineering Management Dept.
2017 Apr. Executive General Manager, Production Div.
2017 Jun. Director
2018 Apr. Executive General Manager, SPV Div.
2020 Jun. Representative Director, President, CEO (current)
1982 Apr.
2010 Apr.
2012 Apr.
2013 Apr.

Audits &Investigations

Consultation &ReportingKazuhiko Harada
Senior Managing Director, Senior Executive Officer

Accounting Auditor

Attended 16/16 of Board of Directors Meeting in FY2022

1980 Apr. Joined company
2007 Apr. Director, General Manager, Financial Dept.,
NIPPON TREX Co., Ltd.
2011 Apr. General Manager, Finance Dept.,
Kyokuto Kaihatsu Kogyo Co., Ltd.
2012 Apr. Director, Executive Officer, General Manager, General Affairs
Dept., General Manager, Corporate Planning Dept.,
NIPPON TREX Co., Ltd.
2016 Apr. Executive Officer, General Manager, Finance Dept.,
Kyokuto Kaihatsu Kogyo Co., Ltd.
2019 Apr. Executive General Manager, Administration Div.,
General Manager, Corporate Planning Dept.
2019 Jun. Director
2021 Apr. Associate Senior Executive Officer
2022 Apr. Senior Executive Officer (current)
2022 Jun. Senior Managing Director (current)

Attended 16/16 of Board of Directors Meeting in FY2022
1982 Apr.
2011 Apr.
2017 Jun.
2018 Apr.

2019 Jun.
2020 Sep.
2022 Apr.

Joined company
Executive Officer, General Manager, Overseas Business
Development Dept.
Director (current)
Director, KYOKUTO SPECIAL AUTOMOBILE TRADING(SHANG HAI) CO., LTD.
Director, KYOKUTO KAIHATSU (KUNSHAN)
MACHINERY CO., LTD.
Associate Senior Executive Officer (current)
Director, SATRAC ENGINEERING PRIVATE LIMITED(current)
Executive General Manager, Administration Div. (current)
General Manager, Corporate Planning Dept. (current)

KYOKUTOGroup Foundation

Compensation Committee

Appoint

Ta t s u y a N u n o h a r a
Representative Director, President, CEO

Top Message

Shareholders & Investors

Instructions & Reporting

Cooperation

Business Operations Committee(Executive Officers)

Sustainability Committee

Noboru HorimotoTe r u y u k i K i z u

Director, Associate Senior Executive Officer

Director, Associate Senior Executive Officer

Attended 16/16 of Board of Directors Meeting in FY2022

Instructions & Reporting

Progress Management & Reporting

Internal Audit Division1988 Apr.
2010 Apr.
2011 Apr.
2013 Oct.
2019 Apr.
2019 Jun.
2022 Apr.
2023 Apr.

ReportReportJoined company
General Manager, Engineering Dept., Environmental Div.
Executive Officer
General Manager, Environmental Planning Dept.,
Environmental Div.
Division Director, Environmental Div. (current)
Director (current)
Associate Executive Officer (current)
Executive General Manager, Engineering Dept.,
Environmental Div. (current)

Attended 16/16 of Board of Directors Meeting in FY2022
1992 Nov.
2016 Apr.
2017 Apr.
2018 Apr.
2021 Apr.
2022 Apr.

2022 Jun.

Joined company
Plant Head, Miki Plant
Plant Head, Yokohama Plant
Executive Officer
Associate Executive Officer (current)
Division Director, SPV Div. (current)
Representative Director, KYOKUTO SPECIAL
AUTOMOBILE TRADING (SHANG HAI) CO., LTD. (current)
Representative Director, KYOKUTO KAIHATSU (KUNSHAN)
MACHINERY CO., LTD.
Director (current)

H i r o y u k i Te r a k a w a
Director (Outside, Independent Officer)

Attended 11/11 of Board of Directors Meeting in FY2022*Held 11 times after being appointed
1979 Apr.
2007 Oct.
2009 Apr.
2013 Apr.
2015 Apr.
2017 Apr.
2017 Dec.
2018 Jan.
2022 Apr.
2022 Jun.

Whistleblowing System
Internal

Joined Hanshin Electric Railway Co., Ltd.
Director, Senior Executive Officer, Hankyu Hanshin
Building Management Co., Ltd.
Director, Hanshin Electric Railway Co., Ltd.
Director, Associate Senior Executive Officer
Executive General Manager, Real Estate Business Div.
Senior Management Director
Representative Director, Chairman, Hankyu Hanshin
Management Co., Ltd.
Director, Building Owners & Managers Association, Osaka
Director, Japan Life-Style Culture Association (current)
Outside Director (current), Independent Officer, Kyokuto
Kaihatsu Kogyo Co., Ltd. (current)

Business Strategies

Operations
Audit

Business Divisions

Vision and
Growth Strategy

Management Meeting

External (lawyer)

Sustainability
Initiatives■ Overview of each committee
Composition

Times hosted
in FY2022

Board of Directors

8 Directors (incl. 3 Outside Directors) 4 Auditors(incl. 2 External Auditors)

16

Board of Auditors

4 Auditors (incl. 2 External Auditors)

13

Business Operations
Meeting

Compensation
Committee
Nominating
Committee

Sustainability Committee

5 Directors, 1 full-time Auditor
18 Executive Officers (5 in concurrent position
as Director), 1 full-time Auditor
3 Directors (2 Outside Directors) *5 Directors (3 Outside
Directors) from FY2023

32
12
3

3 Directors (2 Outside Directors) *5 Directors (3 Outside
Directors) from FY2023

3

3 Directors, 7 Department Managers

3

Make important management decisions and supervise the executionof duties in order to improve corporate value
Based on audit policies, etc., audits the execution of duties by Directors and supervises
management by investigating the status of operations and assets.
Deliberates on important matters and specific countermeasuresfor business execution.
Each Executive Officer reports on the progress of the department in charge,
promoting thorough implementation of business plans and ensuring business performance.
The Outside Director acts as the chair and deliberates on
executive remuneration.
The Outside Director acts as the chair and deliberates on
appointment of senior management and candidates.
The Representative Director and President acts as the chair andaims to deepen sustainability management.

■ System for correction and relief

Important management issues (materiality) are managed
and monitored by the Sustainability Committee (chaired by
the Representative Director and President), which is madeup of related parties from each group company. The
appropriateness of these activities in general is ensured
through audits by the Audit Division.
It is stipulated in the internal policies that parties who reportto or consult the point of contact will not be treatedunfavorably due to their actions.
(See P24 for details)

In order to prevent negative effects on management and torespond to problems as soon as they occur, we haveestablished a whistleblowing system (with the
Representative Director and President in overall charge)
based on the Whistleblower Protection Act (the internal
contact point is the Manager of the Audit Division and theexternal contact point is an outside attorney). It is stipulated
in the internal policies that parties who report to or consult
the point of contact will not be treated unfavorably due totheir actions.

Ta k a n o b u To m o h i r o
Director (Outside, Independent Officer)

Attended 10/11 of Board of Directors Meeting in FY2022*Held 11 times after being appointed
1981 Apr. Joined Matsushita Electric Industrial Co., Ltd. (current
Panasonic Holdings Corporation)2007 Apr. Executive General Manager, Information Security Dept.
2014 Apr. Director in charge of Personal Information Protection, Legal
Affairs2014 Oct. Executive General Manager, Security and Compliance Dept.,
Benesse Holdings Inc.
2016 Jun. Executive General Manager, Information Security Dept.
2016 Nov. Vice Chief Director, Information Network Legal Society
2018 Apr. Associate Professor, Business Law, Business Administration,
Osaka University of Economics
2019 Jun. Outside Director, Independent Officer, Marudai Food Co., Ltd.
(current)

2023 Newly appointed

1991 Apr.
1994 Apr.
2004 Apr.
2016 Apr.
2020 Apr.
2021 Apr.

Attorney registration
Joined Kogoshi Takizawa Law Office (current Kobe Kaito
Law Office)Partner, Kobe Kaito Law Office (current)
Vice Chairman, Hyogo Bar Association
Outside Auditor, Sawai Pharmaceutical Co., Ltd. (current
Sawai Group Holding Co., Ltd.)
Chairman, Hyogo Bar Association
Executive Director, Japan Federation of Bar Associations
Executive Director, Kinki Federation of Bar Associations
Chairman, Regular members Council of the Hyogo Bar
Association

Akira Sakurai
Standing Auditor

Attended 11/11 of Board of Directors Meeting in FY2022*Held 11 times after being appointed
1981 Apr.
2000 May
2006 Apr.
2009 Apr.
2013 Apr.
2015 Apr.
2017 Apr.
2019 Apr.

Joined company
Representative Director, President, Softec Co., Ltd.
General Manager, Information Systems Dept.
General Manager, General Affairs and Human
Resources Dept.
Executive Officer, Deputy Executive General Manager,
Administration Div.
Involved in CSR Dept.
General Manager, Human Resources Dept.
Director, Associate Executive Officer, Executive General
Manager, Administration Div.,
General Manager Audit Dept., NIPPON TREX Co., Ltd.

Hiroaki Kuriyama

Kuniaki Fujiwara

Nobuhiro Asada

Auditor

Auditor (External, Independent Officer)

Auditor (Outside, Independent Officer)

2023 Newly appointed
1980 Apr.
2007 May
2009 Apr.
2012 Apr.
2014 Apr.
2015 Apr.
2017 Apr.
2019 Apr.

2023 Jun.

Joined company
General Manager, Product Planning Dept.
General Manager, Production Promotion Dept.
Plant Head, Miki Plant
Executive Officer
Executive General Manager, Sales Div.
Director, Associate Senior Executive Officer,
NIPPON TREX Co., Ltd.
Representative Director, President, Kyokuto Kaihatsu
Parking Co., Ltd.
Representative Director, President, Sasashima Live
Parking Co., Ltd.
Auditor, Kyokuto Kaihatsu Kogyo Co., Ltd. (current)

Attended 16/16 of Board of Directors Meeting in FY2022
1978 Apr.
2007 Apr.
2009 Apr.
2009 May
2009 Jun.
2011 Apr.
2013 Oct.
2018 Jun.
2019 Jun.

Joined Taiyo Kobe Bank Ltd. (current Sumitomo Mitsui
Banking Corporation)
Executive Officer, Sumitomo Mitsui Banking Corporation
Resignation, Sumitomo Mitsui Banking Corporation
Senior Executive Officer, Ginsen Co., Ltd.
Senior Managing Director
Vice President, Executive Officer, Sakura KCS Corporation
Representative Director, President, CEO
Outside Auditor, Sanyo Color Works, Ltd. (current)
Outside Auditor, Independent Officer, Kyokuto Kaihatsu
Kogyo Co., Ltd. (current)

Data Collection
Corporate Profile■ Monitoring initiatives for sustainability

Keiko Kaneko
Director (Outside, Independent Officer)

GovernanceInitiatives

Management
Meeting

Objective

2023 Newly appointed

1998 Apr.
2010 Apr.
2012 Apr.

2013 Apr.
2016 Jul.
2021 Oct.
2023 Jun.

Attorney registration, Joined Rokko Sogo Law Office(current Rokko Law Office)Vice Chairman, Hyogo Bar Association
Vice Chairman, Legal Training Committee, Japan
Federation of Bar Associations
Chairman, Legal Training Committee, Hyogo Bar
Association
Deputy Director, Hyogo Regional Office, Japan Legal
Support Center
Committee, Hyogo Prefecture Administrative Appeal (current)
Committee, Hyogo Prefecture Labor Commission Arbitrator(current)
Outside Auditor, Independent Officer, Kyokuto Kaihatsu
Kogyo Co., Ltd. (current)

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P75 - P76] Governance Initiatives

Governance Initiatives■ Composition of Directors and Auditors■ Ratio of Outside Directors on
the Board of Directors■ Ratio of female Directors■ Ratio of External Officers(Director / Auditor)

Females

3

3/8

1/8

37.5%
InsideMales

InsideOfficers

577■ Skill matrix (knowledge, experience, ability, etc. of each director)
Takeo
Norimitsu

NoboruHorimoto

41.7%

Hiroyuki
Terakawa*

Keiko
Kaneko*Tomohiro
Takanobu*

Committee, chaired by an Outside Director, as a voluntary advisorybody.
In order to further share value with our shareholders, we will continue
to closely monitor social trends and consider reviewing theperformance-linked compensation system that is appropriate for theCompany.

Overview of decision-making policy

Finance /Accounting capital policy

Legal Governance
Human Resources
Labor Diversity

Sustainability
IT・DX

Evaluation of effectiveness of Board of
Directors

The Company's current Board of Directors composition, management, support system, etc. are generally appropriate
and have been evaluated to be effective.
Although there are no immediate issues, we will work on each issue identified in the survey to further strengthen the
Company's governance and revitalize the Board of Directors in order to realize a more sophisticated Board of
Directors.

Issues to resolve to improve theeffectiveness of the Board of Directors

Composition andmanagement of
the Board of Directors

C omposition of the B oard of D irec tor s c onsider ing the
proportion of independent Outside Directors and diversity

Increased communication opportunities, mainly for outside
officers, in light of changes in social demands in response to the
COVID-19 pandemic

Management andBusiness Strategies

Reviewing the appropriateness of cross holding andaddressing issues relating to sustainability

Increase opportunities for discussion of management strategies
and human resource strategies based on these strategies,
including those outside of Board of Directors meetings

Corporate ethics
and riskmanagement

Appropriate supervision by the Board of Directors, including
building an internal control system, understanding crises, andplanning responses

Further thorough dissemination of the internal whistleblowing
systemPerformancemonitoring andmanagement evaluation& compensation

Appointment of directors based on the qualifications and skill
matrix of directors required for the Board of Directors

Basic compensation

Performance-based
compensation
Non-monetary compensation(Restricted share)(5) Determination of individual compensation for directors
Regarding the amount of individual compensation for
directors, the Representative Director and President isdelegated the specific details based on a resolution of theBoard of Directors, and determines the amount of basic
compensation and evaluation distribution of
performance-linked compensation for each director.
The Board of Directors shall consult the Compensation
Committee and obtain its report in order to ensure that its
authority is properly exercised, and the Representative
Director and President, to whom the authority is delegated,shall make decisions in accordance with the contents of thereport.
Regarding share-based compensation, the number ofshares to be allocated to each individual director shall bedecided by the Board of Directors based on the opinions of
the Compensation Committee.

■ Non-monetary compensation, etc.
The compensation shall be restricted shares, and theBoard of Directors shall decide on the details of suchshares, the policy regarding the determination of thecalculation method of the number of shares, and the timing
and conditions of granting compensation, etc., after
comprehensively considering the Company's performance,
environment, and other factors.

Data Collection
Corporate Profile

Points that were evaluated as ensuring effectiveness■ Performance-based compensation, etc.
Monetary compensation shall reflect the performancetargets in order to raise awareness of the need to improve
performance in each fiscal year, and shall be determinedbased on the degree of achievement of consolidated
operating income targets for each fiscal year.

5

GovernanceInitiatives

Target of investigation: all Directors and Auditors (total 12 members)
Period of investigation: March 2023
Method of investigation: online survey by an external institution (identified survey)
Details of the investigation: composition of the Board of Directors, knowledge-experience balance, content andmanagement of the Board of Directors, system that support the Board of Directors(3) Performance-based compensation, etc. andnon-monetary compensation, etc.

30

Sustainability
Initiatives

management vision. In order to achieve themanagement plan and to better execute management
aimed at increasing corporate value, an external
investigation and analysis were conducted.
A summary of the latest evaluations and results is asfollows.

(2) Basic compensation
The basic compensation of the Company's directors shallbe a monthly fixed compensation, which shall be
determined based on their position, responsibilities, andyears in office, taking into consideration the standards atother companies, the Company's business performance,
and the level of employee salaries, while comprehensively
considering all factors.

65

Business Strategies(Note) 1. The Company has created a skill matrix to ensure the diversity of the Board of Directors by clarifying the wealth of experience and high level views of each director in order to achieve
the medium-term management plan and long-term management vision.
2. The skills possessed by each director are based on past career experience, experience based on position, and high level of expertise in the current position, and do not represent all knowledge.

(4) Remuneration composition ratio

Vision and
Growth Strategy

International Strategy

Evaluation resultsfor FY2022■(1) Basic policy
The Company's basic policy is to link the remuneration of
directors to shareholders' profits in order to fully function as
an incentive to continuously increase corporate value, andto set the compensation of individual directors at an
appropriate level based on their respective responsibilities.
Directors' remuneration shall consist of base compensation
as fixed compensation, performance-linked compensation,etc., and non-monetary compensation, etc.
Outside directors who are responsible for the supervisory
function shall receive only base compensation in light of
their duties.

Sales / Marketing

Method of
Evaluation

In order to create a compensation system that fully functions as anincentive for the sustainable improvement of corporate value, islinked to shareholder returns, and is also based on the medium-term
management plan, the Company has established the content of
individual compensation for directors. The decision policy regarding
this has been established as follows.
In addition, to ensure transparency in determining Executive Officer
compensation, the Company has established a Compensation* indicates Outside Director

Teruyuki
Kizu

Corporate Management /Business Strategy
Production /Technology development

In order to improve corporate value and strengthen
corporate governance over the medium to long term,
the Company conducts a Board of Directors evaluation
for the purpose of confirming whether the Board of
Directors is functioning effectively.
FY2022 was the first year of the new medium-term
management plan, which focuses on the long-term

Remuneration for Officers

KYOKUTOGroup Foundation

Skills of the directors

KazuhikoHarada5

5 / 12

12.5%

Tatsuya
Nunohara

OutsideOfficers

Top Message

1

OutsideDiscussions on succession plan by the Nominating andCompensation Committee and reporting to the Board of
Directors to the extent possible
Improving performance monitoring with reference to external
information

KYOKUTO INTEGRATED REPORT 2023

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P77- P78] Governance initiatives

OUTSIDE DIRECTORSMEETING

Governance Initiatives｜

Outside Directors Meeting｜

Officer classification

Total amount of
Total amount of compensation by type (million yen)compensation, etc.
Performance-basedNon-monetary(million yen)Fixed compensation
Retirement benefits compensation, etc.
compensation

Number ofapplicableofficers (persons)

142

85

44

-

11

7

Auditors(excluding Outside Auditors)

24

24

-

-

-

3

External Officers

40

40

-

-

-

6

■ Auditor remuneration

The remuneration is paid within the limit of 300 million yen
per year as resolved at the 79th Ordinary Meeting of
Shareholders held on June 26, 2014.

The remuneration is paid within the limit of 48 million yen peryear as resolved at the 73rd Ordinary Meeting of
Shareholders held on June 25, 2008.
Remuneration for auditors is determined throughdiscussions among auditors, taking into consideration
full-time, part-time, and division of duties.

In addition to the above, the restricted share compensation
system, which falls under non-monetary compensation, is
paid within 50 million yen per year and 50,000 shares per
year, as resolved at the 86th Ordinary Meeting of
Shareholders held on June 25, 2021.

each share.
As a result, if there are any stocks that are not deemed to contributeto the expansion of the Group's corporate value over the medium tolong term and the smooth promotion of business, we willcomprehensively consider the profits and losses, financial plans,
tax effects, etc. that will occur in the relevant fiscal year. The Boardof Directors will determine details such as the shares to be sold andthe number of shares to be sold, and after conducting necessary
and sufficient communication with the target company, we will carryout the sale in a timely and appropriate manner.
In addition, this progress will be followed up at the Board of
Directors meeting every quarter.

(million yen)

No. of stocks
held

15,000

Amount of shares
held recorded on BS

Evaluation of ESG and sustainability initiatives■ Terakawa: I feel that the Company's environmental initiatives
are on par with the rest of the world.
I think it is wonderful that the content is consistent with theCompany's policies and has received a certain level ofrecognition, including continued selection for inclusion in the
FTSE Blossom Japan Sector Relative Index, a leading ESG
investment index.
■ Kaneko: On the other hand, I feel that there is still roomfor growth in the field of women's empowerment. Creating anenvironment that is comfortable for women to work in alsomeans creating an environment that is comfortable foreveryone, so I hope that the Company will consciously work

GovernanceInitiatives■ Status of cross holding reduction■

Sustainability
Initiatives

In order to expand our corporate value and profit, we hold shares incompanies that we deem necessary as part of our management
strategy, such as business alliances and strengthening business
relationships, as well as to build good relationships with ourbusiness partners and local communities and to promote smoothbusiness operations. However, in accordance with the intent of the
Corporate Governance Code, we are diligently working to disposeof or reduce as quickly as possible those shares that have little
relationship with us or contribute little to the enhancement of ourcorporate value, based on a comprehensive review of their cost ofcapital and contribution to our business performance. Specifically,
the Board of Directors formulates an annual plan, and after fully
considering the opinions of independent external officers andauditors, confirms and verifies the significance of cross holdings for■ Terakawa: I believe that speaking from an outside
perspective will contribute to revitalizing the Board of
Directors.
Additionally, based on my many years of sales experience, I
would like to proactively make recommendations, especiallyregarding the numerical targets of the Group.
What is important in the medium-term management plan is
the goal of 200 billion yen in sales as well as the process ofachieving that target, and I would like to pay close attention
to this point.
■ Kaneko: I find my role in facilitating substantive discussions
by speaking from a third party's objective perspective.
In particular, I would like to actively provide advice on the
promotion of diversity, including questioning the traditional
values and views of management with regard to thepromotion of appointing women in management positions.
■ Tomohiro: Recently, I feel that the responsibilities androles that society demands of companies are becoming
more and more significant.
I would like to make use of my experience as an external
auditor at other companies to provide objective opinions that
include a social perspective on company policies.
I also believe that it is important to balance the discussion
while taking a variety of perspectives into account when
deciding on a policy, and I hope to contribute to deepening
the discussion in this regard.

Business Strategies

Policies regarding cross-shareholdings■ Roles required as Outside Directors and issues you
wish to focus on

Vision and
Growth Strategy■ Director remuneration■ Terakawa: It has been about a year since I was appointed
as a Director, and I can feel that there is a sincere attitude toanswer even simple questions.
Everyone is actively exchanging opinions, and there is anatmosphere in which even non-specialists feel comfortable
expressing their opinions, and I feel that in a good sense,
the corporate culture has taken root in a natural way. At thesame time, when important decisions are required, such as
relocating the head office, M&A, or investing in overseas
business, the Company has the foresight to make decisions
that focus on the essence, and it can be seen that the
President is at the forefront of making accurate decisions.
■ Kaneko: It is also impressive that young people are
actively participating in the Board of Directors meetings. The
materials distributed are logical and easy to understand, andI can imagine that they were well thought out at the
management meeting held beforehand. When it comes tosetting goals, I feel a sense of responsibility of the Company,as decisions are made based on the Company's vision
rather than just discussing numbers. Even though thesemiconductor shortage is causing a negative impact on
business performance, the Company is promoting positive
investments to solidify its footing, and I have the impressionthat it is a steady company.
■ Tomohiro: The Company has established a solid position in
special fields such as special purpose vehicles, pulverizing plants
and parking lots, and I got the impression that each employee
takes responsibility and pride in their work. I feel that the company
principle "Trust - Reliability - Harmony" has permeated thecompany as its corporate spirit.

toward the targets through measures and efforts that are notbound by a conventional approach.
■ Tomohiro: It is also important to proactively set goals andprioritize them.
In addition, the targets of zero landfill waste and a 38%
reduction in CO2 emissions (FY2030) are commendable,
and I hope that they will be pursued with enthusiasm as they
are reviewed.

KYOKUTOGroup Foundation

Directors(excluding Outside Directors)■ Corporate culture and Board of Directors of Kyokuto
Kaihatsu GroupTop Message■ FY2022 Officer Remuneration(Number of brands)

60
12,500

Data Collection
Corporate Profile■ Number of sales since FY2017
10,0003018 brands,
approx. 4 billion yen worth

7,500

5,000

0

FY2017FY2018FY2019FY2020

FY2021

HIROYUKI TERAKAWA

KEIKO KANEKOTAKANOBU TOMOHIRO

Kyokuto Kaihatsu Kogyo Co., Ltd.

Kyokuto Kaihatsu Kogyo Co., Ltd.

Kyokuto Kaihatsu Kogyo Co., Ltd.

Outside Director

Outside Director

Outside Director

FY2022KYOKUTO INTEGRATED REPORT 2023

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K YOKUTO K AIHATSU KOGYO CO.,LTD. 2023 Integrated Repor t [P79 - P80] Sustainabilit y data collection

Data Collection Corporate Profile

Sustainability Data Collection■

Environment■

Energy usage■

Total VOC volume (t)Intensity (g/m²)(crude oil equivalent)

Total (in Japan)
Kyokuto Kaihatsu Kogyo
Domestic affiliated companies
Total of affiliated companies overseas
Group total

10,325
6,951
3,374
414
10,739

11,204
7,127
4,077
376
11,580

FY2020

FY2021

FY2022

11,134
6,965
4,169
400
11,534

10,999
6,883
4,116
1,444
12,443

10,505
6,351
4,154
1,589
12,094■ CO2 emissions Total emissions Target: across the Kyokuto Kaihatsu Group *Expanded targets to all Group companies including overseas from FY2021
CO 2Emissions (t-CO2) Total (in Japan)
Kyokuto Kaihatsu Kogyo
Domestic affiliated companies
Total of affiliated companies overseas
Group total

19,625
12,627
6,998
1,290
20,91523,41715,0298,388
954
24,371

FY2020

FY2021

FY2022

21,71813,751
7,967
1,223
22,941

22,402
15,0807,322
4,861
27,263

19,546
11,538
8,008
5,353
24,899FY2013 (reference year) FY2019

FY2022

Scope 1 (direct emissions)
Total
Kyokuto Kaihatsu Kogyo
Domestic affiliated companies
Affiliated companies overseas
Scope 2 (indirect emissions from energy sources) Total*Based on market
Kyokuto Kaihatsu Kogyo
Domestic affiliated companies
Affiliated companies overseas
Scope 2 Total*Based on location
Kyokuto Kaihatsu Kogyo
Domestic affiliated companies
Affiliated companies overseas
Total greenhouse gas emissions Total *Market-based*Location-based

9,316
4,504
4,776
36
11,599
8,123
2,222
1,254
14,657
10,555
3,095
1,007
20,91523,973

8,763
4,450
4,193
120
15,608
10,5794,195
834
14,125
9,220
4,220
685
24,371
22,888

7,680
4,237
3,319
124
15,261
9,514
4,648
1,099
14,487
8,764
4,787
936
22,941
22,167

8,186
4,754
3,099
333
19,077
10,326
4,223
4,528
16,995
8,360
4,713
3,922
27,26325,181

8,433
4,134
3,729
570
16,466
7,404
4,279
4,783
16,709
7,843
4,705
4,161
24,89925,142Market-based: method that uses emission factors based on electricity purchase contracts.
Location-based: method using national average emission factor. Expanded data collection targets to include domestic and overseas Group companies from FY2021■ Emissions per intensity

Calculation based on med-term management plan target standards
Target: Kyokuto Kaihatsu Kogyo, NIPPON TREX, Kyokuto Kaihatsu Parking

Solar power generation■

Basic information Target: across the Kyokuto Kaihatsu Group

Item

Employees No.

Item

Female assistant managers (people)

24,899113,089
0.22
-4.4
12.2

FY2018FY2019FY2020

FY2021

FY2022

22,259110,987
0.201-

22,838115,171
0.198-

21,277110,260
0.193-

21,353
107,099
0.199
3.3%

18,091
100,248
0.180
-6.5%

Target: across the Kyokuto Kaihatsu GroupKyokuto Kaihatsu Kogyo Fukuoka Plant: 1.5MW scale (kWh)Kyokuto Kaihatsu Kogyo Former Tohoku Plant: 1.5MW scale (kWh)NIPPON TREX Otowa Office: 0.35MW scale (kWh)FY2019FY2020

FY2021

FY2022

1,908,170 1,722,740 1,789,776 1,697,768 1,876,940
2,218,019 2,347,819 2,166,445 2,369,608 2,134,630
525,965
520,697
521,956
516,900
517,7034,652,154 4,591,256 4,478,177 4,585,079 4,528,470

FY2020

FY2021

FY2022

223,693
188,600

207,318
184,348236,617
203,474

280,869
201,625

243,716
228,197

FY2018FY2019FY2020

FY2021

FY2022

2,456
2,414
42
98.3

2,681
2,639
42
98.4

2,345
2,303
42
98.2

2,426
2,388
38
98.4

2,132
2,068
64
97.0

3,201
2,857
344
33
663
760
818
680
231
16

Average age (years)
Average no. of years of service (years)
Hiring (people) Recruiting of new graduates

FY2022Item

Percentage of female assistant managers (%)
Foreign Employees Employees of foreign nationality (people)
Technical intern trainees (people)
Employees with disability (people)
People rehired after retirement (people)■

FY2019Item

Promoting the active participation of women
Percentage of female managers (%)

27,263116,910
0.233
1.3
18.9

FY2018FY2022

41.6
12.4
58
53
5
210
185
25

Males
Females
Mid-career recruitment
Males
Females
Attrition rate for new graduate
recruitments within 3 years (%)

12.1

Diversity Target: across the Kyokuto Kaihatsu GroupFY2022

22,941
117,170
0.196
-14.8
-

61
98

FY2022

Total
Males
Females
Under 20
20s
30s
40s
50s
60s
Over 70

FY2021

24,371
120,173
0.203
-11.7
-

FY2018Total

Human Resources

FY202020,91590,911
0.230
-

75
103

Work-life balance

5
1.4
11
4.4
98
61
50
210

All
employees

Regularemployees

Part time
Fixed term

Wage difference between male and female employees (%)

Kyokuto Kaihatsu Kogyo
NIPPON TREX

59.4
73.9

64.6
77.4

Percentage of female recruits (%)

62.2
72.8
12.4

Target: consolidated companies in Japan(applying calculation range according to FY2030 target→P28)

Target: across the Kyokuto Kaihatsu GroupItem

FY2022Childcare leave taken (people) Total
Males
Females
Childcare leave taken (%) Males
Females
Paid leave Average no. of leave days taken (days)
Average acquisition rate (%) *1

28
21
7
25.0
77.8
12.3
74.2

Item

Work hours
Occupational

Data Collection
Corporate Profile

CO2 emissions (t)Net sales (million yen)
Intensity
Reduction rate compared to FY2020 (%)

FY2013 (reference year) FY2019

72
96

GovernanceInitiatives

CO2 emissions (t)Net sales (million yen)
Intensity
Results compared to FY2013 (%)
Results compared to FY2020 (%)■■

Female managers (people)

Calculation for across the Kyokuto Kaihatsu Group

68
79

Waste management status Target: Kyokuto Kaihatsu Kogyo, NIPPON TREX, Kyokuto Kaihatsu Parking

Total amount of waste (t)Amount recycled (t)Final disposal amount (t)Recycling rate (%)

■

71
89

Sustainability
Initiatives

FY2021

FY2022Business Strategies

FY2020Emissions (t-CO2) Emissions (t-CO2) Emissions (t-CO2) Emissions (t-CO2) Emissions (t-CO2)

FY2021

Vision and
Growth Strategy■ Breakdown of calculations based on the Greenhouse Gas Protocol Target: across the Kyokuto Kaihatsu GroupFY2020

Water resource input / discharge amount Target: Kyokuto Kaihatsu Kogyo, NIPPON TREX, Kyokuto Kaihatsu Parking

Input amount (m³)
Discharge (m³)■

FY2019KYOKUTOGroup Foundation

FY2013 (reference year) FY2019■

FY2018Top Message

FY2013 (reference year) FY2019

Energy usage (kL)

Discharge of chemical substances (total VOC volume) Target: Kyokuto Kaihatsu Kogyo

FY2022

Total work hours
2,153.8
Monthly average overtime hours
26.2
Total (cases)
50

accidents

Accidents w/out lost work (cases)
Accidents with lost work (cases)
No. of fatal incidents
Work-life balance satisfaction *3(Excl. overseas) *2

34
16
0
58.1

*1 No. of paid leave days taken during the fiscal year / no. of paid leave days granted for the fiscal year (not including days carried over)*2 This number includes the number of occupational accidents of partner companies and contractors working in the factory.
*3 Evaluation based on the results of an employee awareness survey.
- Accidents without lost work time: occupational accidents in which the employee received medical treatment at a medical institution and did not miss a day of work since the day
following the day of the event (including those which the lost time does not exceed one day)- Accidents with lost work time: occupational accidents which the employee required leave of one day or longer

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P81 - P82] Financial Data

Data Collection
Corporate Profile

Key Financial Data■

Changes in Key Management Indicators (11 years)
FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022Unit(As of end of Mar 2013)(As of end of Mar 2014)(As of end of Mar 2015)(As of end of Mar 2016)(As of end of Mar 2017)(As of end of Mar 2018)(As of end of Mar 2019)

Sales

million yen

76,72490,911

99,331

103,862

106,745

112,690

114,301

120,173

117,170

116,910113,089

Gross profit

million yen

15,972

20,207

20,95822,11023,492

23,241

22,31022,94523,161

21,16816,007

Selling, general and administrative expenses (excluding R&D expenses)

million yen

9,675

10,774

10,054

10,20010,82911,41812,35012,972

12,571

12,68013,431

Research and development expenses

million yen

1,162

1,394

1,485

1,409

1,515

1,577

1,405

1,479

1,509

1,513

1,583

Operating profit

million yen

5,134

8,037

9,418

10,50011,146

10,245

8,554

8,493

9,080

6,974

991

Income before income taxes

million yen

5,325

7,213

7,026

9,449

10,753

9,889

9,155

8,699

9,126

20,671

5,251

Tax expendituremillion yen

2,154

3,559

2,683

3,408

2,804

3,040

3,094

2,730

2,407

6,405

1,581

Net income attributable to owners of the parent

million yen

3,171

3,645

4,332

6,034

8,130

7,190

6,284

6,073

6,774

14,274

3,580

Total assets

million yen

97,894

110,743

119,120

120,539

128,542

138,859

138,878

136,579

142,740

154,350

158,156

Corporate bonds and borrowings

million yen

6,596

8,281

8,191

8,892

6,779

5,519

4,138

2,206

1,044

1,234

11,068

Net worthmillion yen

58,85062,77968,617

71,66580,10787,03090,157

92,181

100,282

112,686

111,537

Net income per share

yen

79.82

91.76

109.06151.88204.66180.99158.20152.87170.49358.35

90.91

Net assets per shareyen

1,481.22

1,580.16

1,727.14

1,803.87

2,016.39

2,190.68

2,269.44

2,320.42

2,522.28

2,825.08

2,910.33

Cash dividend

yen

16.0

21.0

26.0

31.0

34.0

36.0

38.0

40.0

42.0

54.0

54.0

Dividend payout ratio

%

20.0

22.9

23.8

20.4

16.6

19.9

24.0

26.2

24.7

15.1

59.0

Cash and cash equivalents (end balance)

million yen

6,466

14,378

10,102

12,613

17,584

21,357

19,08320,065

21,24037,24832,064

Cash flow from operating activities

million yen

1,768

9,387

1,097

6,910

11,973

10,857

4,029

5,799

8,263

6,867

-3,416

Cash flow from investment activities

million yen-3,256-2,038-4,177-3,434-3,274-4,083-3,230-2,746-4,304

10,661-6,823

Cash flow from financing activities

million yen-2,245476-1,221-948-3,773-2,973-3,056-2,284-2,771-1,555

5,121

Depreciation expenses

million yen

1,511

1,678

1,792

1,979

2,212

2,528

2,644

2,624

2,805

2,908

2,883

Gross profit margin

%

20.8

22.2

21.1

21.3

22.0

20.6

19.5

19.1

19.8

18.1

14.2

Operating profit margin

%

6.7

8.8

9.5

10.1

10.4

9.1

7.5

7.1

7.7

6.0

0.9

Return on assets (ROA)

%

3.3

3.5

3.8

5.0

6.5

5.4

4.5

4.4

4.9

9.6

2.3

Return on equity (ROE)

%

5.6

6.0

6.6

8.6

10.7

8.6

7.1

6.7

7.0

13.4

3.2

Equity ratio

%

60.1

56.7

57.6

59.5

62.3

62.7

64.9

67.5

70.3

73.0

70.5

million yen

1,986

2,247

2,678

2,785

2,725

3,202

2,066

3,973

3,850

5,157

11,804(As of end of Mar 2021)(As of end of Mar 2022)(As of end of Mar 2023)

Top Message(As of end of Mar 2020)

Profit and loss information (fiscal year)

KYOKUTOGroup Foundation
Vision and
Growth Strategies

Financial status (end of fiscal year)

Business Strategies

Information per share

Sustainability
Initiatives

Cash flow (fiscal year)

GovernanceInitiatives

Capital investment

Data Collection
Corporate Profile

Other financial information*Net worth = net assets - non-controlling interests

KYOKUTO INTEGRATED REPORT 2023

81

82

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P83 - P8 4] Financial Data

Data Collection
Corporate Profile■

Consolidated Balance Sheet(Unit: million yen)

(Unit: million yen)Previous consolidated FY

Current consolidated FY

Previous consolidated FY

Current consolidated FY(March 31, 2022)(March 31, 2023)(March 31, 2022)(March 31, 2023)

Liabilities

Current assets

Current liabilities
19,331

Notes and accounts payable - trade

14,756

9,618

Bills receivable

6,646

4,475

Electronically recorded monetary claims

8,457

9,291

Accounts receivable

23,078

22,107

Short-term loans

965

902

495

1,715

Long-term loans scheduled to be paid within one year

27

25

Electronically recorded monetary claims

8,299

8,416

Accrued corporate taxes, etc.

1,129

1,483

Securities

11,50014,300Accrued consumption tax, etc.

1,096

596

Goods and products

2,462

1,371

Accrued expenses

4,593

4,649

Work in progress

6,945

8,452

Product warranty reserve

817

721

Raw materials and supplies

9,815

11,459Reserve for construction losses

387

898

Prepaid expenses

361

416

Other

1,454

1,651

Other

911

1,482

Total current liabilities

33,686

29,838

Allowance for doubtful accounts

-55

-53

96,276

93,474

Corporate bonds

−

2,800

Fixed assets

Long-term loans

241

7,340

Tangible fixed assets

Liabilities related to retirement benefits

186

98

143

107

Contract assets

Total current assets

Fixed liabilities

12,343

Reserve for Directors’ retirement benefits

Machinery, equipment and vehicles (net)

5,505

5,052

Deferred tax liability

5,861

4,814

Land

22,00027,552

Other

1,219

1,193

Construction in progress

933

2,224

Total fixed liabilities

7,652

16,353

Other (net amount)

927

1,060

41,33846,192

39,772

48,233

Total liabilities

Sustainability
Initiatives

10,405Business Strategies

Buildings and structures (net)Total tangible fixed assets

Vision and
Growth Strategies

25,814KYOKUTOGroup Foundation

Cash and deposits

Top Message

AssetsNet assets
Intangible fixed assets

Shareholder equity
770

684

Capital11,89911,899Customer-related assets

450

422

Capital surplus

11,83911,679

Other

1,222

1,190

Earned surplus

86,43585,362

Total intangible fixed assets

2,444

2,296

Treasury stock-2,081-1,801

108,092

107,139

4,598

4,402

Total shareholder equity

GovernanceInitiatives

Goodwill

Investment and other assets
Investment securities

Accumulated other comprehensive income

12,546Long-term loans

456

420

Valuation difference on available-for-sale securities

Long-term prepaid expenses

430

341

Foreign currency translation adjustments

59

96

Deferred tax assets

280

342

Cumulative amount of adjustments related to retirement benefits

-63

-100

Other

1,563

1,395

4,593

4,397

Allowance for doubtful accounts

-896

-895

Total investment and other assets

15,85614,151

Non-controlling interests

324

426

Total fixed assets

58,07364,681

Total net assets

113,011

111,964

Total assets

154,350

158,156

Total liabilities and equity

154,350

158,156

Total accumulated other comprehensive income

KYOKUTO INTEGRATED REPORT 2023

Data Collection
Corporate Profile

14,022

83

84

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P85 - P86] Financial Data

Data Collection
Corporate Profile■

Consolidated Profit and Loss Statement(Unit: million yen)Previous consolidated FY
April 1, 2021 toMarch 31, 2022

Current consolidated FY■

Consolidated Statements of Changes in Net Assets

Previous consolidated fiscal year (April 1, 2021 to March 31, 2022)

April 1, 2022 toMarch 31, 2023

73,998-2,24995,4704,930

Current period changeamount

−

−

−

−

−

Payment of dividends

Equity method investment gains

95

1,187

-1,837−-1,837

−

−

−

−

−

-1,837−−

14,274−

14,274

−

−

−

−

−

14,274160

Acquisition of treasury stock

−

−

−

-0

-0

−

−

−

−

−

-0

83

158

Disposal of treasury stock

125

366

−

18

−

168

186

−

−

−

−

−

186

Current period changes in
items other thanshareholders’ equity(net amount)

−

−

−

−

−

-332

5

106

-220

20

-199

Total amount of changes forthe current period−

18

12,436167

12,622

-332

5

106

-220

20

12,422

11,89911,83986,435-2,081

108,092

4,598

59

-63

4,593

324

113,011

Non-operating expenses−

5

Extraordinary income
Gains on sales of fixed assets

13,223

3,283

Gains on sales of investment securities

14

988

Subsidy income

50

−

Other

0

11

Balance,
March 31, 2022

Business Strategies−

Vision and
Growth Strategies

7,567

−

Net profit attributable toowners of parent

KYOKUTOGroup Foundation

11,820

Balance,
April 1, 2021

Top Message

11,899173

Ordinary income−−

Exchange gains

Total non-operating expenses−−

Balance at the beginning of
the period reflecting changes
in accounting policies

Miscellaneous expenses

−

1

343

−

−

−

327

Exchange losses−

1

Interest and dividends received

Equity method investment losses−−

Cumulative effect of changes
in accounting policies

42

100,588

−

991

41

304

-170

6,974

Interest expenses

4,814

53

Operating profit

562

-170

4,930

15,015105

53

95,46814,194718

1-2,249Selling, general and administrative expenses

123−

73,997

16,007

Total non-operating income−

11,82021,168

Miscellaneous income−

11,89997,081Gross profit

114

100,587

Total
shareholders’equity113,089−

304

Treasurystock

95,741−

4,814

Earnedsurplus116,910

−

Total
net
assetsCapitalsurplus

Cost of sales

Non-operating income

Noncontrollinginterests

Other
Foreign currency Cumulative
adjustment
Total accumulated
valuationtranslation
amountother comprehensive
difference
related toadjustment retirement
incomebenefits
on securities

Capital

Net sales

Insurance surrender value(Unit: million yen)

Accumulated other comprehensive income

Shareholders’ equity

Total extraordinary income
Extraordinary loss

121

Fixed asset reduction loss

48−

Loss on sales of investment securities

1

19

Losses due to disaster

35

23

Other

40

53

Total extraordinary losses

183

218

Income before income taxes

20,671

5,251

Corporate tax, resident tax and business tax

2,770

2,575

Corporate tax, etc. adjustment amount

3,635

-994

Total corporate tax, etc.

6,405

1,581

Net income

14,265

3,669

Net income attributable to non-controlling shareholders or net loss attributable to non-controlling shareholders (-)
Net income attributable to owners of parent-8

88

14,274

3,580

Net income

14,265

3,669

Valuation difference on available-for-sale securities

-332

-195

Foreign currency translation adjustments

-17

25

Adjustments related to retirement benefits

106

-36

Share of other comprehensive income of entities accounted for using equity method

51

23

Other comprehensive income

Total of other comprehensive income

-191

-182

Comprehensive income

14,074

3,486(Breakdown) Comprehensive income related to owners of parent

14,053

3,385

20

101

Comprehensive income related to non-controlling shareholders(Unit: million yen)

Accumulated other comprehensive income

Shareholders’ equity

Non-

Total
net
income4,593

324

113,011−−−-2,357

−

−

−

−

3,580

−

−

−

−

−

-2,379

203

−

−

−

−

−

203

2,499

−

−

−

−

−

−

−

−

−

−

-195

36

-36

-195

101

-94

-160

-1,072

280

-952

-195

36

-36

-195

101

-1,047

11,67985,362-1,801

107,139

4,402

96

-100

4,397

426

111,964

CapitalCapitalsurplus

EarnedsurplusTreasury
stock

Total
shareholders’equityOthervaluationdifference
on securities

11,89911,83986,435-2,081

108,092

4,598

59

-63

Payment of dividends−−-2,357−-2,357−−

Net income attributable toowners of parent

−

−

3,580

−

3,580

−

Acquisition of treasury stock

−

−

−

-2,379-2,379

Disposal of treasury stock

−

43

−

159

Cancellation of treasury
stock

−

-203

-2,296

Current period changes in
items other thanshareholders’ equity(net amount)−−

Total amount of changes forthe current period−
11,899Balance,
April 1, 2022

Balance,
March 31, 2023

Foreign currency Cumulative
Total accumulated controlling
adjustment
amountother comprehensive
translation
related toincomeinterests
adjustment retirement
benefits

KYOKUTO INTEGRATED REPORT 2023

Data Collection
Corporate Profile■ Consolidated statement of comprehensive income

Current consolidated fiscal year (April 1, 2022 to March 31, 2023)

GovernanceInitiatives

4,282

56

Sustainability
Initiatives

13,287

Loss on disposal of fixed assets

85

86

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P87 - P88] Financial Data

Data Collection
Corporate Profile■

Consolidated Cash Flow Statement(Unit: million yen)Previous consolidated FY
April 1, 2021 toMarch 31, 2022

April 1, 2022 toMarch 31, 2023

20,671

5,251

Depreciation expenses

2,883

84

94

Increase / decrease in liability related to retirement benefits (- indicates a decrease)

-2

-141

Increase / decrease in allowance for doubtful accounts (- indicates a decrease)3-3

Increase / decrease in other provisions (- indicates a decrease)

-69

-133

Interests and dividends received

-327

-343

41

42

Other non-operating profit / loss (- indicates profit)

-223

63

Equity method investment profit / loss (- indicates profit)-95

5Gain / loss on sale of securities (- indicates gain)

-12

-968

-13,223-3,28333

44

Gain / loss on disposal of fixed assets (- indicates gain)

4,535

1,803

Increase / decrease in inventories (- indicates an increase)-2,172-2,041

Increase / decrease in trade payables (- indicates a decrease)-2,014-4,242

Increase / decrease in accrued consumption taxes, etc. (- indicates a decrease)

-325

-423

Other

383

-207
-1,599349

400

Interest payment amount

-41

-42

Amount of corporate taxes, etc. paid

-3,637-2,174

Cash flow from operating activities

6,867-3,416

Cash flow from investment activities

Tokyo Stock Exchange Prime Market

Number of shares constituting one unit

100 shares

Ticker symbol

7226

Total number of authorized shares

170,950,672 sharesFiscal year

From April 1 to March 31 of the following year

Total number of issued shares

40,150,000 shares

Every June

Number of shareholders

3,810 shareholders

Ordinary general meetingof shareholders
Dividend recipient shareholder
determination date■

End of period March 31
Interim period September 30

Major shareholders
Number of shares
Shareholding
owned (1,000 shares)
ratio (%)

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

4,438

11.58

INTERTRUST TRUSTEES (CAYMAN) LIMITEDSOLELY IN ITS CAPACITY AS ・・・・・・・・・・・・・・・・・
TRUSTEE OF JAPAN-UP (Standing proxy: Mizuho Bank, Ltd. Settlement Sales Department)

2,217

5.79

Sumitomo Mitsui Banking Corporation・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1,600

4.18

Kyokuto Kaihatsu Kyoeikai ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1,530

3.99

Custody Bank of Japan, Ltd.・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1,498

3.91

Custody Bank of Japan, Ltd. (Trust account) ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1,274

3.33

Mitsubishi UFJ Trust and Banking Corporation ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1,012

2.64

Kyokuto Kaihatsu Employee Stock Ownership Association・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1,005

2.62

-5,633-11,421

Proceeds from sales of fixed assets

15,463

3,934

-5

-89

197

2,208

Ikuo Miyahara・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

814

2.12

-1,500DFA INTL SMALL CAP VALUE PORTFOLIO・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

773

2.02

Expenditures for acquisition of investment securities
Proceeds from sale of investment securities
Expenditures for acquisition of securities−

Proceeds from redemption of securities

600

−

−

Payments of long-term loans receivable−

10

Collection of long-term loans receivable

42

40

Other

-1

-1

10,661-6,823

Increase / decrease in short-term loans (- indicates an increase)(Note) Shareholding ratio is calculated after deducting Company held treasury stock (1,825,000 shares).

-5■

Stock distribution by owner
Treasury stock

4.5%

Financial institutions

1 person / 1,825,291 shares

Cash flow from financing activities
Increase / decrease in short-term loans payable (- indicates a decrease)

215

-72

Proceeds from long-term loans payable

165

7,200

Repayments of long-term loans payable-200

3,405 people / 9,056,775 shares

Purchase of treasury shares-0-2,37987

Repayments of lease obligations

-51

-54

Cash dividends paid

-1,836-2,356

Cash flow from financing activities-1,555

5,121

34

-66

Increase / decrease in cash and cash equivalents (- indicates a decrease)

16,008-5,184

Cash and cash equivalents at beginning of period

21,24037,248Cash and cash equivalents at end of period

37,24832,064

Effect of exchange rate change on cash and cash equivalents

Data Collection
Corporate Profile

Individuals and others

2,800

153

32.5%

24 people / 13,032,732 shares

22.6%

−

-103

Proceeds from issuance of bonds
Proceeds from sales of treasury shares

GovernanceInitiatives

Cash flow from investment activities

Sustainability
Initiatives

Expenditures for acquisition of fixed assets

Business Strategies

10,197

Amount of interest and dividends received

Subtotal

Listing exchange

Vision and
Growth Strategies

Increase / decrease in trade receivables (- indicates an increase)

Basic information

KYOKUTOGroup Foundation

2,908

Goodwill amortization amount■Top Message

Income before income taxes

Gain / loss on sale of fixed assets (- indicates gain)*As of March 31, 2023

Current consolidated FY

Cash flow from operating activities

Interest expenses

Stock Information

Total

40,150,000 Shares
Financial instruments
business operators

0.7%

23 people / 287,362 shares

Foreign corporations, etc.

25.1%

175 people / 10,085,756 shares

Other domestic corporations

14.6%

182 people / 5,862,084 shares

KYOKUTO INTEGRATED REPORT 2023

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Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P89 - P9 0] Corporate Prof ile

Data Collection
Corporate Profile

Corporate Profile(As of end of September 2023)

Kyokuto Kaihatsu Kogyo Co., Ltd.

Kyokuto Group Head Office Building,

Shinko Automobile Co., Ltd.

2-5-11 Awajimachi, Chuo-ku Osaka

KYOKUTOGroup Foundation

Head Office

COMPANYOVERVIEWTop Message

Company
NameGroup companies and production bases(As of end of September 2023)

541-0047 Japan
Phone 06-6205-7800
Websitewww.kyokuto.com

Establishment

June 1, 1955

Capital11,899 million yen

Number of
employees

Consolidated 3,201 people
Non-consolidated 1,104 people

Kyokuto Service Engineering Hokkaido Co., Ltd.

Hokuriku Heavy Industries, Ltd.
Business Strategies

FE-AUTO
Gifu Service Center

Vision and
Growth Strategies

FE-AUTO
Sendai Service Center

Kyokuto Kaihatsu Kogyo
Nagoya Plant

Inoue Motor Co., Ltd.

Kyokuto Kaihatsu Kogyo Co., Ltd.

Sasashima Live Parking Co., Ltd.

Head Office

Kyokuto Kaihatsu Parking Co., Ltd.
Kyokuto Kaihatsu Kogyo Miki Plant■

Affiliated company information(As of end of September 2023)■ Special purpose vehicles business

Kyokuto Service
Engineering Co., Ltd.

Kyokuto Service Engineering Co., Ltd.

NIPPON TREX Co., Ltd.

Kyokuto Service Engineering Hokkaido Co., Ltd.

FE-AUTO Co., Ltd.

Mori Plant Co., Ltd.

Shinko Automobile Co., Ltd.

Eco Facility Funabashi Co., Ltd.

Hokuriku Heavy Industries, Ltd.

Eco Facility Nishinomiya Co., Ltd.

Kyokuto Kaihatsu Kogyo Fukuoka Plant

FE-AUTO
Yokohama Service Center

FE-AUTO
Himeji Service Center

GovernanceInitiatives

Domestic bases

Eco Facility Funabashi Co., Ltd.

Kyushu Tokusyu
Motors Co., Ltd■ Environmental equipment and systems business

Sustainability
Initiatives

FE-AUTOTokyo Service Center

Kyokuto Kaihatsu Kogyo
Yokohama Plant
NIPPON TREX Otowa Office

FE-AUTO Co., Ltd.
Eco Facility
Nishinomiya Co., Ltd.

NIPPON TREX Co., Ltd.
Headquarters and Head Office

FE-AUTO
Osaka Service Center

NIPPON TREX
Mito OfficeInoue Motor Co., Ltd.

International bases■ Parking and Other Operations Business
Kyokuto Kaihatsu Parking Co., Ltd.

KYOKUTO SPECIAL AUTOMOBILE TRADING (SHANG HAI) CO., LTD. (China)

Sasashima Live Parking Co., Ltd.

KYOKUTO KAIHATSU (KUNSHAN) MACHINERY CO., LTD. (China)

F.E.E. Co., Ltd.

Mori Plant Co., Ltd.

Data Collection
Corporate Profile

Kyushu Tokusyu Motors Co., Ltd.

FE-AUTO
Nagoya Service Center

F.E.E. Co., Ltd.

SATRAC ENGINEERING PRIVATE LIMITED (India)
PT. Kyokuto Indomobil Manufacturing Indonesia (Indonesia)
PT. Kyokuto Indomobil Distributor Indonesia (Indonesia)
Kyokuto Australia Pty Ltd (Australia)

Kyokuto Kaihatsu Kogyo and NIPPON TREXGroup subsidiary headquarters

FE-AUTO service centersproduction base

KYOKUTO INTEGRATED REPORT 2023

89

90

Kyokuto Kaihatsu Kogyo Co., Ltd. 2023 Integrated Repor t [P91 - P92] Corporate Prof ile

Data Collection
Corporate Profile■

External Evaluation/Awards

The Kyokuto Group has obtained quality management system(ISO9001) and ISO14001 (environmental management
system) certifications.
■ Newly added certification target ISO9001: 2015 Registration date June 16, 2023

Design & Specifications

Concrete distributor PZ01-10 received the 2022 Good Design Award. [Kyokuto Kaihatsu Kogyo]

Registeredbusiness operator
Address■■ Other

Concrete distributor PZ01-10
elevator shaft improves installation workability and safety at
the same time. The system has received high praise as asystem that could become the standard for mid- to high-rise
construction sites in the future.

3-15-10 Higashi-Shinagawa, Shinagawa-ku, Tokyo

Scope ofregistered activities

Repair of Special Purpose Vehicles, design andmanufacture of special tank trucks

Related offices

Service Division■ Tokyo Service Center■ Yokohama Service Center

KYOKUTOGroup Foundation

Concrete distributors use the boom section of a concrete
pump truck to place concrete at high places such asbuilding construction sites, attracting attention as a productthat meets the needs for efficiency and labor savings. In
particular, it was recognized that the use of an emergency

FE-AUTO Co., Ltd.

■ Selected by Aichi Prefecture as a “Company Recipient ofa Certificate of Appreciation for the 150th Anniversary of
Aichi Prefectural Government” [NIPPON TREX]■ Selected for the "Traffic Safety Activities Award" by the
Koshien Police Station [Kyokuto Kaihatsu Kogyo]■ Certified as a "Toyokawa Brand" by the Toyokawa City
Tourism Association [NIPPON TREX]■ Awarded as an “Excellent Union Company” by the
Waigaoqiao Union General Assembly in Shanghai City
[KYOKUTO SPECIAL AUTOMOBILE TRADING (SHANG
HAI)]■ Certified as a safety production standardization company(Class 3) by the Safety Production Association[KYOKUTO SPECIAL AUTOMOBILE TRADING (SHANG
HAI)]Top Message■

ISO certification■ Nagoya Service Center■ Osaka Service Center■ Himeji Service Center■ Sendai Service Center

Vision and
Growth Strategies■ Gifu Service Center

Business Strategies

Dialogue with Stakeholders
Concrete distributor PZ01-10

Through dialogue with our stakeholders, we are working to meet their respective challenges and expectations.

Recent Good Design Award Record
2020■ Wood pellet air conveyance unit

Stakeholder

MethodStakeholder dialogue

Sustainability
Initiatives■

Related pages■ Wood chip drying container system
2021■ Refuse truck safety support system■ 10t large rear dump truck wear-resistant steel plate (HARDOX) specification

SRI (Socially Responsible Investment)

Kyokuto Kaihatsu Kogyo and
NIPPON TREX were recognized as"Excellent Health Management
Corporations 2023" (Large
Corporations Division) by the
Ministry of Economy, Trade andIndustry and NIPPON KENKO
KAIGI.

Business partners■ Various seminars

P58■ Creating better products■ Customer consultation desk,
disclosure of recall information

Company website■ Improving the workplace environment, reviewing laborand personnel policies■ Strengthening labor-management relations, and creating
a comfortable and rewarding workplace■ Various research■ Promoting mutual understanding and building better
relationships■ Various meetings and training■ Improving t he qualit y of management t hroughdialogue■ Ordinary General Meeting of Shareholders

Shareholders

Kyokuto Kaihatsu Kogyo has beencertified as a Sports Yell Company
2023 by the Japan Sports Agency as
a company that actively promotes
sports to improve the health of its
employees.

■ Collective bargaining

P65-66■ Evaluation interviews, employee awareness surveys

P69-71■ Labor-management council

P58■ Business partner evaluation■ Financial results briefing■ Publication of “Securities Report” and “Quarterly
Report”

Investors

Data Collection
Corporate Profile

Kyokuto Kaihatsu Kogyo has been selected as a constituent
stock (out of 605 companies) of the FTSE Blossom Japan
Sector Relative Index, a leading index for ESG investment.
These are indexes that focus on the environment, society,and governance, developed by FTSE Russell, a subsidiaryof the London Stock Exchange Group, and also by theGovernment Pension Investment Fund (GPIF), which
actively promotes ESG investment. It is used as animportant investment decision criterion by investors aroundthe world, and this is the second time, following last year,that the company has been selected.

■ Health management

Employees■ Promoting mutual understanding, building better relationships

GovernanceInitiatives■*Also selected as Good Design Best 100

CustomerCompany website■ Publication of IR report■ Publication of corporate governance report

Local community■ Promoting mutual understanding and building better
relationships■ Organizing events and factory tours■ Understanding social needs■ Participation in economic / industry organizations andlocal organizations■ Participation in local events

P59-62KYOKUTO INTEGRATED REPORT 2023

9192