(Note) This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.

Kanematsu Corporation(Stock Exchange No.: 8020)

NOTICE OF THE
129TH ORDINARY
GENERALMEETING OF
SHAREHOLDERS
Date: June 27, 2023 (Tuesday) at 10:00 a.m.
Place: Tosho Shibusawa Hall, The Tokyo
Chamber of Commerce and Industry(5th Floor)
Marunouchi Nijubashi Building
3-2-2 Marunouchi, Chiyoda-ku, Tokyo
Items to Be Resolved:
Item 1: Election of Seven (7) Directors
Item 2: Election of Three (3) Audit &Supervisory Board Members
Item 3: Election of One (1) Substitute Audit &Supervisory Board Member
Item 4: Revision of the Amount ofCompensation for Directors
Deadline for exercising voting rights inwriting or via the Internet, etc.:
No later than 5:15 p.m. on June 26, 2023
(Monday)
CONTENTS
To Our Shareholders _____________________________ 2
Notice of the 129th Ordinary General Meeting of
Shareholders ___________________________________ 3(Attached documents)
Business Report ________________________________ 21
Consolidated Financial Statements _________________ 47
Non-consolidated Financial Statements _____________ 50
Audit Reports _________________________________ 53* The place of the meeting will be different from theprevious meeting. Please make sure you attend themeeting in the correct location.

CORPORATE PRINCIPLE“Let us sow and nurture the seeds of global prosperity”“Sow a seed now,” and take action to benefit people around the globe, bade our founder, Fusajiro Kanematsu,
setting a standard of public duty that we at Kanematsu continue to uphold through a commitment to ethicalbusiness principles and corporate responsibility.
The beliefs and philosophies that inspired Fusajiro Kanematsu in the late nineteenth century Meiji period, atime when Japan was striving to build a national economy, were encapsulated in the document Our Beliefs:
Kanematsu’s Guiding Principles in 1967, on the occasion of our merger with The Gosho Company.

Our Beliefs: Kanematsu’s Guiding Principles
1.

Reflecting the pioneering spirit of our predecessors, we believe that fairness and justice should guide ourbusiness dealings and the wise use of creative imagination and ingenuity will bring prosperity.

2.

Our purpose as a Company is not only to build a sound and flourishing business, but to fulfill our
responsibilities as a corporate citizen, contributing to society and the security and well-being of all.

3.

As members of a corporation, we act not as individuals but as representatives of that organization and assuch we are bound by Company rules and attendant loyalties and must work together with a spirit ofcooperation while cultivating mutual understanding and respect for fellow members.

1

To Our Shareholders
I would like to express my sincere gratitude toyou, our shareholders, for your continued
support.
The global economy in fiscal 2022 faced aprolonged war between Russia and Ukraine, as
well as inflation and monetary tightening invarious countries, which put downward pressureon economic growth, and also increased
downward pressure from concerns about thefinancial system originating in the U.S. The
future business environment also remains
uncertain.
Amid this environment, the Kanematsu Group
has set “pursuing DX on a groupwide basis” as
one of its priority initiatives under,a six-year medium-term vision to celebrate the135th anniversary of its founding. In order torealize integrated group management and further
accelerate the promotion of DX and GX, theGroup conducted tender offers for listed
consolidated subsidiaries, Kanematsu Electronics
Ltd. and Kanematsu Sustech Corporation, whichwere successfully completed. We will continue topursue a variety of measures to further enhance
corporate value of the Kanematsu Group. In thisway, the Kanematsu Group will further work tomeet the expectations of our stakeholders, withthe aim of continuously generating value that is
unique to the Kanematsu Group.
I would like to take the opportunity to ask ourshareholders for your continued understanding andsupport.

Yoshiya Miyabe
President2

(Stock Exchange No.: 8020)

June 9, 2023

NOTICE OF
THE 129TH ORDINARY GENERAL MEETING OF SHAREHOLDERS
Dear Shareholder:
We cordially notify you of the 129th Ordinary General Meeting of Shareholders of Kanematsu Corporation(hereinafter “the Company”), to be held as indicated below.
In convening this General Meeting of Shareholders, we have taken measures for providing information that
constitutes the content of reference documents for the general meeting of shareholders, etc. in electronic
format (matters to be provided in electronic format), which are posted on each of the following websites.
Please access any of these websites to confirm the information.
[The Company’s website]
https://www.kanematsu.co.jp/en/ir/shareholders_meeting/[Website for informational materials for the general meeting of shareholders]
https://d.sokai.jp/8020/teiji/ (in Japanese)[Tokyo Stock Exchange website (Listed Company Search)]https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show (in Japanese)(Please access the TSE website above, enter “Kanematsu” in “Issue name (company name)” or our stock
exchange No. “8020” in “Code” and search, select “Basic information” and “Documents for public
inspection/PR information,” and check “Notice of General Shareholders Meeting/Informational Materials for
a General Shareholders Meeting” section under “Filed information available for public inspection.”)3

We ask that you please use your own judgment when visiting the venue of the general meeting ofshareholders, taking into consideration your own physical condition.
Instead of attending the meeting in person, you may exercise your voting rights by one of the following
methods. After reviewing the enclosed reference materials, please exercise your voting rights no later than
5:15 p.m. on Monday, June 26, 2023 (JST).
Sincerely,
Yoshiya Miyabe, President
Kanematsu Corporation
119 Ito-machi, Chuo-ku, Kobe

[Exercising voting rights by electromagnetic means (via the Internet, etc.)]
Please indicate “for” or “against” for each agenda item by the above mentioned exercise deadline.
[Exercising voting rights in writing]
Please indicate “for” or “against” for each agenda item listed in the enclosed Ballot Form, and return itto the Company no later than the above mentioned exercise deadline.

4Meeting Details
1. Date: June 27, 2023 (Tuesday) at 10:00 a.m.
2. Place: Tosho Shibusawa Hall, The Tokyo Chamber of Commerce and Industry (5th Floor)
Marunouchi Nijubashi Building, 3-2-2 Marunouchi, Chiyoda-ku, Tokyo* The place of the meeting will be different from the previous meeting. Please make sure you attend
the meeting in the correct location.
3. Meeting Agenda
Items to Be Reported:
1.
Business Report, Consolidated Financial Statements and Audit Reports of Consolidated Financial
Statements by the Accounting Auditor and the Audit & Supervisory Board, for the 129th Fiscal Term(April 1, 2022 to March 31, 2023)
2.
Non-consolidated Financial Statements for the 129th Fiscal Term (April 1, 2022 to March 31, 2023)
Items to Be Resolved:
Item 1: Election of Seven (7) Directors
Item 2: Election of Three (3) Audit & Supervisory Board Members
Item 3: Election of One (1) Substitute Audit & Supervisory Board Member
Item 4: Revision of the Amount of Compensation for Directors
If there are any amendments to the matters to be provided in electronic format, a statement to that effect and the matters both before
and after the amendments will be posted on each of the aforementioned websites.
At this General Meeting of Shareholders, the Company will uniformly send documents containing the matters to be provided inelectronic format, regardless of whether or not a request for delivery of the documents has been made. Of the matters to be provided inelectronic format, pursuant to laws and regulations and provisions of Article 15 of the Articles of Incorporation of the Company, theNotes to the Consolidated Financial Statements and Notes to the Non-consolidated Financial Statements will not be included in the
documents to be sent to shareholders.
Accordingly, the Consolidated Financial Statements and Non-consolidated Financial Statements included in this documents are a partof the documents audited by the Accounting Auditor and the Audit & Supervisory Board Members during preparation for the
Independent Auditors’ Audit Reports and the Audit report, respectively.
[Information on Live Streaming]
For shareholders who are unable to attend the general meeting of shareholders, the Company plans to provide live video and audio
streaming via the Internet.
Please note that you will not be able to ask questions or exercise voting rights through the live streaming. For details, please refer tothe enclosed “Guide to the Live Streaming of the General Meeting of Shareholders. (in Japanese)”5Reference Materials for the General Meeting of Shareholders
Item 1: Election of Seven (7) Directors
The terms of office for all seven (7) Directors will expire at the conclusion of this General Meeting of
Shareholders. Accordingly, the Company proposes to elect seven (7) Directors.
The candidates for Director are as follows.
Candidate No.

1 Kaoru Tanigawa

Reelection

Date of Birth

Number of the Company’s
shares owned

September 24, 1958

38,600 shares○ Career Summary, Positions and Responsibilities in the Company(Significant Concurrent Positions)Apr. 1981
Joined the Company
Jul. 2004
General Manager, Somerset Branch, Kanematsu USA Inc.
Jan. 2008
General Manager, Information & Electronics Department, the Company
Jun. 2010
Temporary transferred to Kanematsu Communications Ltd.
Director, Kanematsu Communications Ltd.
Apr. 2011
General Manager, Corporate Planning Department, the Company
Jun. 2013
Director, the Company
Jun. 2014
Retired from office of Director of the Company according to revision forimprovement of executive officer system
Managing Executive Officer, the Company
Jun. 2015
Director, Senior Managing Executive Officer, the Company
Jun. 2017
President, the Company
Jun. 2021
Chairman, the Company (To the present)(Incumbent) Chief Officer, Internal Auditing Dept.
○ Reasons for Nomination as Candidate for Director

While serving as President from 2017, Mr. Kaoru Tanigawa was responsible for making
decisions on important matters in the management and supervision of the execution ofoperations, with a wealth of experience, track record, and knowledge as a manager. Sincebeing appointed as Chairman in 2021, he has contributed to supervising the managementof the Kanematsu Group and enhancing corporate governance, and is thus re-nominatedas a candidate for Director.

6

Candidate No.

2 Yoshiya Miyabe

Reelection

Date of Birth

Number of the Company’s
shares owned

January 21, 1959

26,100 shares○ Career Summary, Positions and Responsibilities in the Company(Significant Concurrent Positions)Apr. 1983
Joined the Company
Apr. 1999
Manager, Section 1, Industrial Electronics Department, the Company
Jun. 2001
Worked at Chicago Branch, Kanematsu USA Inc.
Feb. 2006
General Manager, Industrial Electronics Department, the Company
Jun. 2012
Director, the Company
Jun. 2014
Retired from office of Director of the Company according to revision forimprovement of executive officer system
Managing Executive Officer, the Company
Jun. 2018
Director, Senior Managing Executive Officer, the Company
Jun. 2021
President, the Company (To the present)○ Reasons for Nomination as Candidate for Director

Since joining the Company, Mr. Yoshiya Miyabe has been engaged primarily in the motor
vehicles and parts and industrial electronics businesses. He was appointed as a Director in2012 and has contributed to strengthening revenue base such as through development ofoverseas supply chains. He has wealth of experience and broad knowledge. Since being
appointed as President in 2021, he has demonstrated leadership in promoting the Group’s
management, and is thus re-nominated as a candidate for Director.

Candidate No.

3 Tetsuro Tsutano

Reelection

Date of Birth

Number of the Company’s
shares owned

April 3, 1969

25,600 shares○ Career Summary, Positions and Responsibilities in the Company(Significant Concurrent Positions)Apr. 1992
Joined the Company
Aug. 2007 Manager, Managerial Accounting Section, Accounting Department, theCompany
Apr. 2012Manager, Finance Section, Finance Department, the Company
Apr. 2013
General Manager, Finance Department, the Company
Jun. 2017
Director, Executive Officer, the Company
Jun. 2018
Director, Senior Executive Officer, the Company (To the present)(Incumbent) Chief Officer, Corporate Planning, IT Planning, Technologies and Business
Collaboration○ Reasons for Nomination as Candidate for Director

Mr. Tetsuro Tsutano has been engaged in corporate planning, IT planning, technologies
and business collaboration. He has contributed to the development of management
strategies, business expansion, promotion of DX and sustainability. Due to his expertisein finance and accounting, wealth of experience and broad knowledge, he is re-nominatedas a candidate for Director.

7

Candidate No.

4 Shuji Masutani

Reelection

Date of Birth

Number of the Company’s
shares owned

December 7, 1965

4,000 shares○ Career Summary, Positions and Responsibilities in the Company(Significant Concurrent Positions)Apr. 1990
Joined the Company
Oct. 2006
Manager, Section No.1, Business Accounting Department, the Company
Apr. 2008
Manager, Section No.4, Business Accounting Department, the Company
Aug. 2010 Manager, Accounting Section, Accounting Department, the Company
Jun. 2012
General Manager, Business Accounting Department, the Company
Jun. 2019
Temporary transferred to Kanematsu Sustech Corporation
Director, Kanematsu Sustech Corporation
Jun. 2021
Executive Officer, the Company
Jun. 2022
Director, the Company (To the present)(Incumbent) Chief Officer, Finance, Accounting, Business Accounting○ Reasons for Nomination as Candidate for Director

Since joining the Company, Mr. Shuji Masutani has been engaged in finance andaccounting and has wealth of experience in operations and broad knowledge. He also has
served as Director of a Group company and thus has expertise in the Group’s
management. Accordingly, he is re-nominated as a candidate for Director.

8

Candidate No.

5 Yuko Tahara

Outside Independent
Director
officer

Reelection

Date of Birth

Number of the Company’s
shares owned

October 9, 1959

0 shares○ Career Summary, Positions and Responsibilities in the Company

Apr. 1991
Aug. 1993
Jul. 1998
Jun. 2012
Jun. 2018
Jun. 2019
Apr. 2020

Apr. 2021

Joined MANPOWER JAPAN Co., Ltd.
Joined RIC Co., Ltd
General Manager, House Electrification Promotion Office, RIC Co., Ltd
President and CEO, Basic Inc. (To the present)
Representative Director, Frame & Work Module Promotion Association(present Knowledge Management Lab) (To the present)
Outside Director (Audit and Supervisory Committee Member),
Sanyo Homes Corporation (To the present)
Outside Director, the Company (To the present)
Visiting Professor, Research Institute of Advanced Education, The
Graduate School of Information & Communication (present The Graduate
School of Social Design)
Professor, School of Professional Education, The Graduate School ofInformation & Communication (present The Graduate School of Social
Design) (To the present)○ Significant Concurrent Positions

President and CEO, Basic Inc.
Representative Director, Knowledge Management Lab
Outside Director (Audit and Supervisory Committee Member), Sanyo Homes
Corporation○ Reasons for Nomination as Candidate for Outside Director and Outline of

Expected Roles
Ms. Yuko Tahara possesses a wealth of experience in corporate management and deep
insight gained through experiences in human resources and organizational consulting
businesses. The Company expects that based on such qualities, she will be continuously
committed to management advisory and appropriate supervision of the execution ofoperations. Thus, she is re-nominated as a candidate for Outside Director. If she iselected, she will be involved in the determination of officer compensation and theselection of candidates for officers of the Company, etc. from an objective and impartial
standpoint as the committee chair of the Compensation Committee and a member of theNominating Committee.

9Candidate No.

6 Kazuhiro Tanaka

Reelection

Outside Independent
Director
officer

Date of Birth

Number of the Company’s
shares owned

August 31, 1966

0 shares○ Career Summary, Positions and Responsibilities in the Company

Apr. 1990
Apr. 1999
Apr. 2003
Apr. 2007
Apr. 2010
Apr. 2018
Jan. 2019

Jun. 2020

Joined The Industrial Bank of Japan, Limited
Assistant Professor, Graduate School of Business Administration, Kobe
University
Assistant Professor, Graduate School of Commerce and Management,
Hitotsubashi University
Associate Professor, Graduate School of Commerce and Management,
Hitotsubashi University
Professor, Graduate School of Commerce and Management, Hitotsubashi
University
Professor, Graduate School of Business Administration, Hitotsubashi
University (To the present)
Dean, Graduate School of Business Administration, Hitotsubashi
University
Dean, Faculty of Commerce and Management, Hitotsubashi University
Outside Director, the Company (To the present)○ Significant Concurrent Positions

Professor, Graduate School of Business Administration, Hitotsubashi University○ Reasons for Nomination as Candidate for Outside Director and Outline of

Expected Roles
Mr. Kazuhiro Tanaka is a university professor specializing in business administration andhas extensive expertise and deep insight regarding corporate management. The Company
expects that based on such qualities, he will be continuously committed to managementadvisory and appropriate supervision of the execution of operations. Thus, he is renominated as a candidate for Outside Director. If he is elected, he will be involved in theselection of candidates for officers of the Company and the determination of officer
compensation, etc. from an objective and impartial standpoint as the committee chair of
the Nominating Committee and a member of the Compensation Committee.
Although Mr. Kazuhiro Tanaka has not been involved in corporate management in ways
other than being an outside corporate officer, the Company judges he will appropriately
fulfill his duties as an Outside Director based on the above reasons.

10Candidate No.

7 Hiroyuki Sasa

Reelection

Outside Independent
Director
officer

Date of Birth

Number of the Company’s
shares owned

September 14, 1955

0 shares○ Career Summary, Positions and Responsibilities in the Company

Apr. 1982
Apr. 2001
Apr. 2005
Apr. 2007
Jun. 2007
Apr. 2012
Apr. 2019
Jun. 2020
Jun. 2022

Joined Olympus Optical Co., Ltd. (present Olympus Corporation)
General Manager, Endoscope Business Planning Dept., Olympus
Corporation
Division Manager, the First Development Division, Olympus Medical
Systems Corp.
Division Manager, Marketing Division, Olympus Medical Systems Corp.
Executive Officer, Olympus Corporation,
Director, Olympus Medical Systems Corp.
Director, Representative Executive Officer, President, Olympus
Corporation
Director, Olympus Corporation
Outside Director, Kyosan Electric Manufacturing Co., Ltd. (To the present)
Outside Director, the Company (To the present)○ Significant Concurrent Positions

Outside Director, Kyosan Electric Manufacturing Co., Ltd.
○ Reasons for Nomination as Candidate for Outside Director and Outline of

Expected Roles

Mr. Hiroyuki Sasa has served as Director, Representative Executive Officer, andPresident of Olympus Corporation and possesses a wealth of experience in corporate
management and deep insight. The Company expects that based on such qualities, hewill be continuously committed to management advisory and appropriate supervisionof the execution of operations. Thus, he is re-nominated as a candidate for Outside
Director. If he is elected, he will be involved in the selection of candidates forofficers of the Company and the determination of officer compensation, etc. from an
objective and impartial standpoint as a member of the Nominating Committee andthe Compensation Committee.
(Notes) 1. There is no special interest between any of the candidates and the Company.
2. Ms. Yuko Tahara, Mr. Kazuhiro Tanaka and Mr. Hiroyuki Sasa are candidates for Outside Director.
3. At the conclusion of this meeting, the tenure as Outside Director for Ms. Yuko Tahara, Mr. Kazuhiro Tanaka
and Mr. Hiroyuki Sasa will have been as follows.
Ms. Yuko Tahara:
Four years
Mr. Kazuhiro Tanaka: Three years
Mr. Hiroyuki Sasa:
One year
4. The Company has entered into agreements with Ms. Yuko Tahara, Mr. Kazuhiro Tanaka and Mr. Hiroyuki
Sasa with regard to limitation of liability for damages stipulated in Article 423, paragraph 1 of the Companies
Act, pursuant to the provisions of Article 427, paragraph 1 of the said act. If their reelection is approved andadopted, the Company plans to renew these agreements with them. The maximum amount of liability fordamages under these agreements is the minimum liability amount provided for in Article 425, paragraph 1 of
the Companies Act.
5. The Company has entered into an indemnification agreement with its incumbent Directors as stipulated in
Article 430-2, paragraph 1 of the Companies Act, and a summary of the details of such indemnificationagreement is presented in “3. (3) Summary of Details of Indemnification Agreement” of the Business Report.
If their reelection is approved, the Company plans to renew the agreement with them.
6. The Company has entered into a directors and officers liability insurance policy with an insurance company as
stipulated in Article 430-3, paragraph 1 of the Companies Act, and a summary of the contents of the insurance
policy is presented in “3. (4) Summary of Directors and Officers Liability Insurance Policy” of the Business
Report. If each candidate is elected and appointed as Director, each of them will be insured under the
insurance policy. The Company plans to renew the insurance policy with the same contents at the next
renewal.

11

7. The Company has submitted notification to Tokyo Stock Exchange, Inc. that Ms. Yuko Tahara, Mr. Kazuhiro
Tanaka and Mr. Hiroyuki Sasa have been appointed as independent officers as provided for by the
aforementioned exchange.

12

Item 2: Election of Three (3) Audit & Supervisory Board Members
The terms of office for Audit & Supervisory Board Members, Mr. Tetsuro Murao, Mr. Yusaku Kurahashi and
Ms. Nobuko Inaba will expire at the conclusion of this General Meeting of Shareholders. Accordingly, theCompany proposes to elect three (3) Audit & Supervisory Board Members.
The candidates for Audit & Supervisory Board Members are as follows.
Prior to our proposal of this item, we have already obtained the consent of the Audit & Supervisory Board.

Candidate No.

1 Yoshio Tajima

Newelection

Date of Birth

Number of the Company’s
shares owned

October 11, 1961

600 shares○ Career Summary and Positions in the Company(Significant Concurrent Positions)Apr. 1984
Joined the Company
Sep. 1996
Temporary transferred to Yokohama Tyre Australia Pty., Ltd.
General Manager, Corporate Planning Department, Yokohama Tyre
Australia Pty., Ltd.
Jun. 2001
Team Leader, Managerial Accounting Team, Accounting Department, theCompany
Jun. 2003
Manager, Managerial Accounting Section, Treasury Department, theCompany
Jul. 2005
Treasurer, Kanematsu USA Inc.
Aug. 2010 Temporary transferred to Kanematsu Chemicals Corporation
General Manager, Administration Division,
General Manager, Accounting & Finance Department,
Kanematsu Chemicals Corporation
Nov. 2011
Temporary transferred to Kanematsu Communications Ltd.
Assistant Officer, Corporate Division,
General Manager, Corporate Planning Office,General Manager, Accounting & Finance Department,
Chief Officer, Information System Office,Kanematsu Communications Ltd.
Jun. 2014
Director, Kanematsu Communications Ltd.
Jun. 2016
Managing Director, Kanematsu Communications Ltd.
Apr. 2017
Director, Managing Executive Officer, Kanematsu Communications Ltd.
(To the present)○ Reasons for Nomination as Candidate for Audit & Supervisory Board Member

Since joining the Company, Mr. Yoshio Tajima has been engaged in accounting andfinance, and has broad knowledge in finance and accounting, including serving as
General Manager of the Accounting & Finance Department of Kanematsu Chemicals
Corporation and Managing Director of Kanematsu Communications Ltd. He also has awealth of experience in corporate management. Accordingly, he is newly nominated as a
candidate for Audit & Supervisory Board Member.

13

Candidate No.

Audit &
2 Yusaku Kurahashi Reelection Outside
Independent
Supervisory
Board Member

officer

Date of Birth

Number of the Company’s
shares owned

October 29, 1980

0 shares○ Career Summary and Positions in the Company

Dec. 2007
Dec. 2007
Jan. 2015
Jun. 2019
Jun. 2020
Apr. 2023

Registered as attorney at law
Joined Nakamura, Tsunoda & Matsumoto
Partner of Nakamura, Tsunoda & Matsumoto
Outside Audit & Supervisory Board Member, the Company (To thepresent)
Outside Director (Audit & Supervisory Committee Member), UNITED
ARROWS LTD. (To the present)
Opened Kurahashi Law Office
Representative Partner, Kurahashi Law Office (To the present)○ Significant Concurrent Positions

Representative Partner, Kurahashi Law OfficeOutside Director (Audit & Supervisory Committee Member), UNITED ARROWS LTD.
○ Reasons for Nomination as Candidate for Outside Audit & Supervisory Board

MemberMr. Yusaku Kurahashi has reflected his specialist knowledge and experience as an
attorney and his in-depth knowledge of corporate legal affairs in the auditing of theCompany. Thus, he is re-nominated as a candidate for Outside Audit & Supervisory
Board Member.
Although Mr. Yusaku Kurahashi has not been involved in corporate management inways other than being an outside corporate officer, the Company judges he willappropriately fulfill his duties as an Outside Audit & Supervisory Board Member basedon the above reasons.

14

Candidate No.

3 Nobuko Inaba

Reelection

Number of the Company’s
Outside Audit &Date of Birth
Independent
shares owned
Supervisory
officer
Board Member
September 28, 1966
0 shares○ Career Summary and Positions in the Company

Apr. 1989
Oct. 1993
Jul. 1999
Jul. 2001
Oct. 2005
Jul. 2007

Jun. 2014

Oct. 2014

Dec. 2014
Jun. 2019
Jun. 2021
Jul. 2021

Joined Nippon Telegraph And Telephone Corporation
Joined Century Audit Corporation (present Ernst & Young ShinNihon
LLC)
Transferred to Inspection Department, Financial Supervisory Agency(present Financial Services Agency)
Returned to Shin Nihon & Co. (present Ernst & Young ShinNihon LLC)
Opened Inaba Certified Accounting Office
Representative, Inaba Certified Accounting Office (To the present)
Founded PAS Co., Ltd. (present Hayabusa Consulting Corporation)
Representative Director, PAS Co., Ltd. (present Hayabusa Consulting
Corporation) (To the present)
Outside Director, The Towa Bank, Ltd.
Outside Corporate Auditor, Yachiyo Bank, Limited (present Kiraboshi
Bank, Ltd.)
Outside Corporate Auditor, Tokyo TY Financial Group, Inc. (present
Tokyo Kiraboshi Financial Group, Inc.) (To the present)

Senior Partner, Hayabusa Tax Corporation (To the present)
Outside Corporate Auditor, DeNA Co., Ltd. (To the present)
Outside Audit & Supervisory Board Member, the Company (To thepresent)
Senior Partner, Yasumori Audit Corporation (To the present)○ Significant Concurrent Positions

Representative, Inaba Certified Accounting Office
Representative Director, Hayabusa Consulting Corporation
Senior Partner, Hayabusa Tax Corporation
Senior Partner, Yasumori Audit Corporation
Outside Corporate Auditor, Tokyo Kiraboshi Financial Group, Inc.
Outside Corporate Auditor, DeNA Co., Ltd.
○ Reasons for Nomination as Candidate for Outside Audit & Supervisory Board

MemberMs. Nobuko Inaba possesses specialist knowledge and experience relating to accounting
and tax affairs, which she accumulated as a certified public accountant and as a certified
public tax accountant. She is re-nominated as a candidate for Outside Audit &Supervisory Board Member as she is expected to reflect such qualifications on auditingof the Company.

15

(Notes) 1. There is no special interest between any of the candidates and the Company.
2. Mr. Yusaku Kurahashi and Ms. Nobuko Inaba are candidates for Outside Audit & Supervisory Board
Member.
3. Kiraboshi Bank, Ltd. (formerly Yachiyo Bank, Limited), a subsidiary of Tokyo Kiraboshi Financial Group,
Inc. (formerly Tokyo TY Financial Group, Inc.), where Ms. Nobuko Inaba serves as an Outside Corporate
Auditor, announced that it punitively dismissed one of its employees for embezzling funds from customers’
deposit accounts as a disciplinary action in July 2018, which is during Ms. Nobuko Inaba’s term of office. Ms.
Nobuko Inaba was not aware of the employee’s conduct until an internal investigation was implemented at therequest of the customer in July 2018. She had been thoroughly raising awareness of compliance including thatof group companies at the Board of Directors, etc., as an Outside Corporate Auditor. Moreover, since thediscovery of such conduct, she made proposals to further strengthen the compliance system and to thoroughly
implement preventive measures on the Group as a whole, and has been monitoring the progress of suchproposals.
4. At the conclusion of this meeting, Mr. Yusaku Kurahashi’s tenure as Outside Audit & Supervisory Board
Member will have been four years. At the conclusion of this meeting, Ms. Nobuko Inaba’s tenure as Outside
Audit & Supervisory Board Member will have been two years.
5. The Company has entered into agreements with Mr. Yusaku Kurahashi and Ms. Nobuko Inaba with regard tolimitation of liability for damages stipulated in Article 423, paragraph 1 of the Companies Act, pursuant to theprovisions of Article 427, paragraph 1 of the said act. If their reelection is approved and adopted, theCompany plans to renew these agreements with them. The Company plans to enter into a similar agreementwith Mr. Yoshio Tajima, if his election is approved and adopted. The maximum amount of liability fordamages under these agreements is the minimum liability amount provided for in Article 425, paragraph 1 of
the Companies Act.
6. The Company has entered into an indemnification agreement with its incumbent Audit & Supervisory Board
Members as stipulated in Article 430-2, paragraph 1 of the Companies Act, and a summary of the details ofsuch indemnification agreement is presented in “3. (3) Summary of Details of Indemnification Agreement” ofthe Business Report. If the reelection of Mr. Yusaku Kurahashi and Ms. Nobuko Inaba is approved, theCompany plans to renew these agreements with them. If the election of Mr. Yoshio Tajima, a new candidate,is approved, the Company plans to enter into a similar agreement with him.
7. The Company has entered into a directors and officers liability insurance policy with an insurance company as
stipulated in Article 430-3, paragraph 1 of the Companies Act, and a summary of the contents of the insurance
policy is presented in “3. (4) Summary of Directors and Officers Liability Insurance Policy” of the Business
Report. If each candidate is elected and appointed as Audit & Supervisory Board Member, each of them will
be insured under the insurance policy. The Company plans to renew the insurance policy with the samecontents at the next renewal.
8. The Company has submitted notification to Tokyo Stock Exchange, Inc. that Mr. Yusaku Kurahashi and Ms.
Nobuko Inaba have been appointed as independent officers as provided for by the aforementioned exchange.

16

Item 3: Election of One (1) Substitute Audit & Supervisory Board Member
In order to prepare for the event that the number of Audit & Supervisory Board Members falls below the required
number stipulated by laws and regulations, the Company proposes to elect one (1) substitute Audit &Supervisory Board Member.
The candidate for substitute Audit & Supervisory Board Member is as follows.
Prior to our proposal of this item, we have already obtained the consent of the Audit & Supervisory Board.

Outside Audit &Supervisory Board
MemberNoriko Ichiba

Independent
officer

Date of Birth

Number of the Company’s
shares owned

May 15, 1971

0 shares○ Career Summary and Positions in the Company

Oct. 1992
Jul. 1997
Aug. 1999
May 2000
Nov. 2002
Aug. 2006
Aug. 2008
Oct. 2008
Jun. 2021
Jul. 2022

Mar. 2023

Joined Tohmatsu & Co. (present Deloitte Touche Tohmatsu LLC)
Joined Tadao Kato Accounting Office
Joined Taiyo Audit Corporation (present Grant Thornton Taiyo LLC)
Registered as a certified public accountant
Representative, Ichiba Certified Public Accountant Office (To the present)
Joined COMPASS Co., Ltd. (To the present)
Registered as a certified public tax accountant
Representative, UPRISE Certified Tax Accountant’s Co. (To the present)
External Corporate Auditor, Daiho Corporation (To the present)
Supervisory Director, Ichigo Office REIT Investment Corporation (To thepresent)

Outside Audit & Supervisory Board Member, Nisshinbo Holdings Inc.
(To the present)○ Significant Concurrent Positions

Representative, Ichiba Certified Public Accountant Office
Representative, UPRISE Certified Tax Accountant’s Co.
External Corporate Auditor, Daiho Corporation
Supervisory Director, Ichigo Office REIT Investment Corporation
Outside Audit & Supervisory Board Member, Nisshinbo Holdings Inc.
○ Reasons for Nomination as Candidate for Substitute Outside Audit & Supervisory

Board Member
The Company expects that Ms. Noriko Ichiba’s specialist knowledge and experience
relating to accounting and tax affairs, which she accumulated as a certified public
accountant and as a certified public tax accountant, can be of benefit to the auditing of
the Company. Thus, she is nominated as a substitute Outside Audit & Supervisory Board
Member. Although Ms. Noriko Ichiba has not been involved in corporate management inways other than being an outside corporate officer, the Company judges she willappropriately fulfill her duties as an Outside Audit & Supervisory Board Member basedon the above reasons.

17(Notes) 1. There is no special interest between Ms. Noriko Ichiba and the Company.
2. Ms. Noriko Ichiba is a candidate for substitute Outside Audit & Supervisory Board Member.
3. If Ms. Noriko Ichiba is appointed as Audit & Supervisory Board Member, the Company plans to enter into anagreement with her with regard to limitation of liability for damages stipulated in Article 423, paragraph 1 of
the Companies Act, pursuant to the provisions of Article 427, paragraph 1 of the said act. The maximum
amount of liability for damages under this agreement is the minimum liability amount provided for in Article
425, paragraph 1 of the Companies Act.
4. If Ms. Noriko Ichiba is appointed as Audit & Supervisory Board Member, the Company plans to enter into anagreement based on the provisions in Article 430-2, paragraph 1 of the Companies Act with her, under which
the Company will cover the expenses set forth in Article 430-2, paragraph 1, item 1 of the Companies Act andthe loss set forth in item 2 of the same paragraph within the extent stipulated by laws and regulations.
5. The Company has entered into a directors and officers liability insurance policy with an insurance company as
stipulated in Article 430-3, paragraph 1 of the Companies Act, and a summary of the contents of the insurance
policy is presented in “3. (4) Summary of Directors and Officers Liability Insurance Policy” of the Business
Report. If Ms. Noriko Ichiba is appointed as Audit & Supervisory Board Member, she will be insured under
the insurance policy. The Company plans to renew the insurance policy with the same contents at the next
renewal.
6. If Ms. Noriko Ichiba is appointed as Audit & Supervisory Board Member, the Company plans to submit
notification to Tokyo Stock Exchange, Inc. that she is appointed as an independent officer as provided for by
the aforementioned exchange.

18

Item 4: Revision of the Amount of Compensation for Directors
Regarding the amount of compensation for Directors of the Company, at the 121st Ordinary General Meetingof Shareholders held on June 24, 2015, the Company obtained approval to set the maximum amount ofcompensation per year to ¥300 million (including ¥40 million for Outside Directors, which was approved at the128th Ordinary General Meeting of Shareholders held on June 24, 2022) and this approval remains effective todate. The Company proposes to revise the amount of compensation for Directors in consideration of subsequentchanges in social conditions and various other circumstances.
As up until now, the amount of compensation for Directors does not include the portion of employee’s salaryfor Directors who concurrently serve as employees.
We request approval for changing the amount of compensation to be paid for Directors to ¥450 million or lessper year (including ¥40 million for Outside Directors), including bonuses.
We believe that this proposal is reasonable as it was resolved by the Board of Directors after deliberation by theCompensation Committee, while giving due consideration to factors such as the Company’s business scale, theofficer compensation system, the payout criteria, the current number of officers, and future trends,
comprehensively.
The policy for determining the content of compensation for individual Directors is as described in the “3 (5)Directors’ and Audit & Supervisory Board Members’ Compensation, Etc.” of the Business Report.
Currently, seven (7) Directors (including three (3) Outside Directors) are in office, and if Item 1 is approved,
seven (7) Directors (including three (3) Outside Directors) will be in office.

19

(Reference) Skill Matrix
The Company formulated, its medium-term vision for the six years ending fiscal 2024, in which we will celebrate the 135th anniversary of its founding. In the first three years of, we continued to further promote businesses underthe basic policies for sustained growth in core businesses, expansion of scale through business investments, and profit growth with increased additional value. In the final three years, in addition to realizing these basic policies, we added the commitment
to promoting SDGs and DX to its priority initiatives, and as a trading company, we will drive the business development on a global scale. In order to make headway with these initiatives, the Board of Directors has positioned it as important responsibility
to provide effective advice and supervision from a strategic and holistic perspective on the management issues to realize “.” Accordingly, the Company has designated the following nine areas related to its priority initiatives as the skills that theBoard of Directors ought to possess: “Corporate management,” “Business strategy planning,” “Human resource management,” “Governance,” “Investment judgment,” “Finance,” “Managerial idea of SDGs (ESG),” “Technology/DX,” and “Innovation.”“○” in the table indicates the areas of expertise and experiences possessed, and “◎” indicates the areas where particular contributions can be expected.
Professional background
History of corporate officer outside the Company (including subsidiaries and affiliates)

History of corporate officer/chief officer
in the Company

Kaoru
Tanigawa

Yoshiya
MiyabeTetsuroTsutanoDirector

Shuji
Masutani

Yuko
TaharaDirector(outside)Kazuhiro
TanakaDirector(outside)

Outside Director (incumbent)

Outside Director (incumbent)
Hiroyuki
Sasa

Audit & Supervisory Board Member

Audit &
Supervisory
Board
Member(full-time)

Outside Audit & Supervisory Board Member
Audit &
(incumbent)
Yusaku Supervisory
Kurahashi
Board
MemberOutside Audit & Supervisory Board Member(incumbent)
NobukoInaba

31

Director(outside)

President, an overseas subsidiary (Hong Kong)
Audit & Audit & Supervisory Board Member (incumbent)
Supervisory
Motohisa
Board
Hirai
Member(full-time)

YoshioTajimaBusiness segment(yr[s].)
Chief Officer, Electronics & Devices Division
1 Electronics & devices (mobile)
Divisional Chief Officer, Electronics & Devices
3 Electronics & devices (semiconductor components andChief Officer, Corporate Planning
2 manufacturing equipment)
Chairman Chief Officer, Internal Auditing Dept. (incumbent)
2 Electronics & devices (electronic devices and materials)
President
4 Electronics & devices (electronic devices and materials)
Chairman (incumbent)
2Electronics & devices (ICT solutions)
Deputy Chief Officer, Electronics & IT Division
1 Motor vehicles & aerospace (aerospace)
Chief Officer, Motor Vehicles & Aerospace Division 1 Motor vehicles & aerospace (motor vehicles and parts)
Motor vehicles & aerospace (motor vehicles and parts)
President Divisional Chief Officer, Motor Vehicles &Aerospace Division
7 Electronics & devices (electronic devices and materials,
President (incumbent)
2 environment-related business)
Chief Officer, Finance, Accounting, Business
Other (investment judgment, fund management)
Accounting
4
Director
Chief Officer, Corporate Planning (incumbent)
2
Chief Officer, IT Planning (incumbent)
2
Chief Officer, Finance, Accounting, BusinessElectronics & devices (electronic devices and materials,
Director
Accounting (incumbent)
2 environment-related business)
Outside Director (incumbent)
4

Audit &
Supervisory
Board
Member

1 Electronics & devices (electronic devices and materials,
3 environment-related business)
Electronics & devices (electronic devices and materials,
environment-related business)
Electronics & devices (electronic devices and materials,
environment-related business)
Other (supplies)
Steel, materials & plant (chemicals)Electronics & devices (mobile)

4

2Company name/title
Director, Kanematsu Communications Ltd.
Director, Kanematsu Semiconductor Taiwan Ltd.

Global(overseas job
experience)USA(yr[s].)
15

Member of the Board, Kantatsu Co., Ltd.
Director, Kanematsu Industrial and Trading (Dalian F.T.Z) Co.,Ltd.
Director, Kanematsu Electronics Ltd.
Director, Shintoa Corp.
USA
Director, Kanematsu Mexico S. de R.L. de C.V.
Director, Kaneyo Co., Ltd.
Director, Kanematsu Sustech Corporation
Director, AZ-Star Co., Ltd.

USA

Medium- and long-term management strategies and skills that the Board of Directors need to have
Medium- to long-term enhancement of corporate value
Business investment
Sustainability, promotion of DX
Corporate
management

Business strategy Human resource
planning
management

UK
Germany

President and CEO, Basic Inc. (incumbent)
Representative Director, Knowledge Management Lab(incumbent)
Outside Director (Audit and Supervisory Committee Member),
Sanyo Homes Corporation (incumbent)
Professor, School of Professional Education, The Graduate
School of Social Design (incumbent)
Worked at The Industrial Bank of Japan, Limited
Professor, Graduate School of Business Administration,
Hitotsubashi University (incumbent)
Dean, Faculty of Commerce and Management, Hitotsubashi
University
Executive Officer, Olympus Corporation
USA
Director, Olympus Medical Systems Corp.
Director, Representative Executive Officer, President, Olympus
Corporation
Outside Director, Kyosan Electric Manufacturing Co., Ltd.
(incumbent)
Managing Director, Kanematsu-NNK Corp. (present
Germany
Kanematsu Sustech Corporation)
Hong Kong
Senior Managing Director, Kanematsu-NNK Corp. (present
Kanematsu Sustech Corporation)
Adviser, Kanematsu-NNK Corp. (present Kanematsu Sustech
Corporation)
Yokohama Tyre Australia Pty., Ltd.
Australia
USA
Kanematsu Chemicals Corporation
Director, Managing Executive Officer, Kanematsu
Communications Ltd. (incumbent)
Registered as attorney at law and Partner of Nakamura, Tsunoda& Matsumoto
Outside Director (Audit & Supervisory Committee Member),
UNITED ARROWS LTD. (incumbent)
Representative Partner, Kurahashi Law Office (incumbent)
President, Inaba C.P.A. Office (incumbent)
Representative Director, Hayabusa Consulting Corporation(incumbent)
Senior Partner, Hayabusa Tax Corporation (incumbent)
Senior Partner, Yasumori Audit Corporation (incumbent)
Outside Audit & Supervisory Board Member, Tokyo Kiraboshi
Financial Group, Inc. (incumbent)
Outside Corporate Auditor, DeNA Co., Ltd. (incumbent)

20

Investment
judgment

Finance

Managerial idea
Technology/DXof SDGs (ESG)

Innovation

◎

◎

○

◎

◎

○

○

◎

○

◎

◎

○

○

◎

○

○

◎

◎

○

◎

◎

◎

○

◎

◎

10

4

◎
Director, Kanematsu Sustech Corporation

Governance

2
2

○

◎

◎

◎

◎

◎

◎

5

◎

◎

○

◎

6
3

◎
4
5

◎

◎

○

◎

◎

○

(Attached documents)

BUSINESS REPORT (from April 1, 2022 to March 31, 2023)
1. Items Regarding Status of Group Operations(1) Overview of Operations
During the fiscal year under review, the global economy saw signs of soft-landing with the worldwide
inflations and monetary tightening policies reaching a turning point, although uncertainties such as thelengthening of the Russia-Ukraine war and disruptions in some of the supply chains dragged on. The
downward pressure on the economy resulting from concerns about the financial systems originating in
the U.S., however, has reignited uncertainty about the global economy.
The U.S. economy sent mixed signals. Concerns emerged for economic recession because of the impactof the failure of a medium-sized bank in March against the background of the rapidly progressing
monetary tightening due to the priority placed on the control of inflation. Meanwhile, the employment
situation and personal consumption remained solid and investments in energy increased due to theimpact of the Russia-Ukraine situation.
In Europe, although the supply-demand tightening of energy caused by the Russia-Ukraine situation was
avoided, the persistent inflationary pressure and concerns over financial systems kept uncertainties about
the future.
In China, the abandonment of the zero-COVID policy had led to an increase in infections and cooled
consumption, but consumption was recovering, and the economy moved to the recovery trend as the
spread of infections abated.
In Japan, personal consumption and inbound demand recovered following the relaxation of restrictions
placed on activities. Demands for capital investments and IT investments were also strong. However, therising resources and commodities prices and cheaper yen, as well as the slowdown in overseas
economies, placed a downward pressure.
In this environment, the results of the Group in the fiscal year under review are as shown below.
Revenue increased in almost all businesses centered on the feedstuff business and the steel tubing
business, which were supported by rallying market conditions, and the energy business, where thetrading volume of crude oils and petroleum products increased due to the rising crude oil prices. While
profit decreased in the mobile business affected by lower fee income resulting from the smaller-thanexpected number of units sold and in the meat products business impacted by market setbacks in meatproducts in general since summer, profit increased mainly in the energy business and the steel tubing
business, thanks to the recovery in demand and the rising market conditions, and the ICT solutions
business supported by robust digital investment demands of customers.
As a result, consolidated revenue increased ¥143,445 million (18.7%) year on year, to ¥911,408 million.
Consolidated gross profit also increased ¥19,093 million (17.1%) from a year earlier, to ¥130,894
million. Consolidated operating profit rose ¥9,549 million (32.5%) from a year earlier, to ¥38,896
million, reflecting an increase in gross profit, despite a rise in selling, general and administrative
expenses. Largely due to the rise in operating profit, profit before tax increased ¥6,931 million (24.1%)
year on year, to ¥35,696 million, and profit attributable to owners of the parent rose ¥2,589 million(16.2%) year on year, to ¥18,575 million.
As for the financial position, total assets increased ¥43,132 million from the end of the previous fiscal
year, to ¥677,588 million. Interest-bearing debt increased ¥84,442 million from the end of the previous
fiscal year, to ¥227,894 million, mainly due to a rise in short-term borrowings for the tender offers theCompany had made. Net interest-bearing debt after deducting cash and deposits rose ¥96,706 million
from the end of the previous fiscal year, to ¥147,948 million. Interest-bearing debt does not include leaseliabilities. In terms of equity, equity attributable to owners of the parent fell ¥30,959 million from theend of the previous fiscal year, to ¥128,525 million, mainly due to a fall in capital surplus following the21acquisition of additional shares of Kanematsu Electronics Ltd. As a result, the ratio of equity attributableto owners of the parent came to 19.0%. The net debt-equity ratio (“net DER”) was 1.15 times.
Overview of performance by business segment

Revenue¥282,513 million (up 10.6% year on year)

The ICT solutions business performed well, mainly due to an increase in projects
related to security and networking, as well as an improvement in delivery delays.
The semiconductor parts and manufacturing equipment business remained strong
with the growth in shipments of semiconductor and LCD panel related manufacturing equipment andconsumables on the back of robust demand. The mobile business was weak due to sluggish growth insales volume and the smaller fee income due to revisions to fee terms and conditions, among otherfactors. As a result, overall segment revenue and profit increased year on year.

Revenue¥340,448 million (up 19.3% year on year)

The grain and feedstuff business performed well, partly due to improved
profitability. In the foods business, transactions of products for the retail market
remained solid. The meat products business was weak due to the market downturn in the livestock
products in general since the summer season. As a result, overall segment revenue and operating profit
increased, while profit for the year attributable to owners of the parent decreased year on year.

Revenue¥193,393 million (up 30.7% year on year)

The steel tubing business performed well due to growth in U.S. domestic energy
investment and higher steel tubing prices. The energy business remained strong
mainly due to rising market conditions and sales of marine fuel to ocean-goingvessels. The machine tools and industrial machinery business performed solidly due to increased
domestic capital investment demand. As a result, overall segment revenue and profit increased year on
year.

Revenue¥81,344 million (up 23.6% year on year)

The aerospace business performed solidly due to delivery of products for existing
contracts and recovery in demand. The motor vehicles and parts business was
weak as soaring transportation costs put pressure on profits, despite a recovery
trend in demand. As a result, overall segment revenue increased while profit decreased year on year.

Revenue¥13,707 million (up 2.3% year on year)

In the other business segment, revenue increased while profit decreased year on
year.
22

(Revenue by business segment)
Business Segment

Amount(million yen)

Share of Total Revenue(%)

Year-on-year Change(%)

Electronics & Devices

282,513

31.0

10.6

Foods, Meat & Grain

340,448

37.4

19.3

Steel, Materials & Plant

193,393

21.2

30.7

Motor Vehicles &Aerospace

81,344

8.9

23.6

Other

13,707

1.5

2.3

Total

911,408

100.0

18.7

(Note) Inter-segment transactions have been eliminated.

(2) Capital Investment
No items to report.
(3) Financing Activities
In its financing activities, the Group follows a basic policy of low-cost and stable financing which isessential to achieve “sustainable growth” targeted in the medium-term vision for the six years
In the current fiscal year, the Group mainly procured funds using indirect financing thanks to good
relations with banks, insurance companies and other financial institutions. The Group also procured
funds from capital markets by issuing straight corporate bonds as a means of raising long-term capital.
In the current fiscal year, the Company borrowed ¥58.4 billion to finance the acquisition of common
stock of Kanematsu Electronics Ltd. through a tender offer. In addition, the Company redeemed ¥5.0
billion of straight corporate bonds that had matured.
As a result, at the end of the current fiscal year, the balance of net interest-bearing debt stood at¥147,948 million, a year-on-year increase of ¥96,706 million from the end of the previous fiscal year.
(4) Status of Significant Business Realignments(i) Acquisition of additional shares of Kanematsu Electronics Ltd.
The Company conducted a tender offer under the Financial Instruments and Exchange Act for the common
stock of Kanematsu Electronics Ltd., a consolidated subsidiary of the Company, and acquired additional
shares of Kanematsu Electronics Ltd.
(ii) Acquisition of additional shares of Kanematsu Sustech Corporation
The Company conducted a tender offer under the Financial Instruments and Exchange Act for the common
stock of Kanematsu Sustech Corporation, a consolidated subsidiary of the Company, and acquired
additional shares of Kanematsu Sustech Corporation.

23.

(5) Issues to Be Addressed
In its medium-term vision,for the six-year period (from April 2018 through March 2024),
the Group aims for sustainable growth in its fundamental businesses, with its policy of expanding therevenue base and pursuing the acquisition of added value through business investments in business areasthat contain strengths.
In addition, the Company has set “SDGs initiatives” and “Group-wide promotion of digitaltransformation (DX)” as priority initiatives, and is working to build a stable and sustainable supply
chain, while actively promoting “Green transformation (GX)” to achieve a decarbonized society.
The Company focuses on capital efficiency based on a stable earnings and financial structure, setting thepayout ratio (total return ratio) at 30%-35%.
(1) Quantitative targets[] Final Year
Target(the fiscal year ending
March 31, 2024)

March 31, 2024
Forecasts

March 31, 2023
Results

Consolidated profit
for the year

¥20.0 billion¥23.5 billion¥18.6 billion

ROE

10% - 12%

17.2%

12.9%

Total return ratio

30% - 35%

32.0%

33.7%

(Note) Consolidated profit for the year is profit for the year attributable to owners of the parent.

(2) Priority initiatives and progress at the end of current fiscal year(i) Sustainable growth in fundamental businesses, the expansion of the revenue base through business
investments, and acquisition of added value
The Company will work toward sustainable growth in fundamental businesses and carry out growthinvestment while achieving a balance between capital and risk assets, on the ground of its soundfinancial structure. The Company promoted business investments in areas of strength and in
business areas under the themes of environment, society and safety as activities toward theachievement of SDGs in the two strategies focused on the “revenue base expansion” and the “value
added.” The main results in the current fiscal year are as follows.
•
For investments mainly for expansion of the revenue base, Kanematsu Electronics Ltd.
acquired NIHON ACCESS CO., LTD., and the Company acquired secondary mobile phonesales agencies.
•
For investments mainly for acquisition of added value, the Company invested in a
manufacturing equipment system integrator and in a Japanese-style yakiniku (barbecued meat)
chain.
(ii) Response to technological innovation
The Company will make “innovation investment” in areas peripheral to the current business areas
for future growth, promote and expand new businesses structured around advanced technologies
such as IoT and AI and also work to promote DX on a group-wide basis.
In the current fiscal year, the Company invested in a startup manufacturer aiming to implement
carbon nanotubes in society and a venture-backed company with plastic recycling technology, withthe aim of promoting new businesses based on advanced technologies.
(iii) Establishment of management infrastructure for achieving sustainable growth24In the current fiscal year, the Company relocated its Tokyo Head Office on November 21, 2022. We
will introduce Activity Based Working (ABW), in which employees select their seats according to
the nature of their work, to improve work efficiency and promote the creation of new businesses bystimulating communication across departmental and group company boundaries. In addition, for thesustainable growth of both the Company and the society, the Company is promoting managementwith more consideration for SDGs, led by the Sustainability Management Committee and theSustainability Management Section. In the current fiscal year, the Company signed the United
Nations Global Compact, joined the Global Compact Network Japan, and formulated a humanrights policy and key human rights issues based on the policy.
In addition, the Company conducted tender offers from January to March 2023, with the aim ofmaking Kanematsu Electronics Ltd. and Kanematsu Sustech Corporation, both listed consolidated
subsidiaries, wholly owned subsidiaries of the Company.
In order to promote DX, GX, and other initiatives, we believe it is essential to acceleratecollaboration between the Company, Kanematsu Electronics Ltd., which has abundant ICT anddigital knowledge and digital human resources in the DX field, and Kanematsu Sustech
Corporation, which has technologies and construction methods that contribute to decarbonization in
the GX field, as well as to strengthen the integrated management between the Company and the twocompanies in order to execute the Group’s management strategies in a flexible manner.
In order to achieve this, the Company recognizes the need to further strengthen its capital
relationship with the two companies and, while resolving the issue of conflict of interest between
the Company and minority shareholders of the two companies in connection with the parentsubsidiary listing, to mutually utilize necessary management resources such as information, knowhow, human resources, sales infrastructure, and funds possessed by the Group, and to establish a
structure that will enable the Group to further demonstrate synergies among Group companies.
Based on this recognition, the aforementioned tender offers were implemented in order to further
enhance corporate value of the Group by further accelerating DX and GX initiatives throughunrestricted mutual utilization of management resources and accelerated decision-making, with theaim of realizing integrated group management at the optimal timing with an eye to the start of the
new Medium-Term Business Plan.
By implementing the above initiatives, in the current fiscal year, the profit for the year attributableto owners of the parent amounted to ¥18.6 billion. Furthermore, the ratio of profit for the year
attributable to owners of the parent to equity attributable to owners of the parent or equity capital(ROE) came to 12.9%, and return on invested capital (ROIC) (Note) was 5.6%.
(Note) ROIC = Profit for the year ÷ Invested capital (Interest-bearing debt + Shareholders’ equity)
The year-end dividend will be ¥37.50 per share as the revised forecast for the dividend announced
on November 4, 2022. The annual dividend per share will be ¥75 per share, including an interim
dividend of ¥37.50 per share already paid. As a result, the payout ratio will be 33.7%.
(3) Forecast for the next fiscal year
In the next fiscal year, China’s economy is expected to recover as consumption is rapidly returning
due to the lifting of the zero COVID policy. Meanwhile, the prolonged situation in Russia andUkraine and the resulting fragmentation of global markets, continued inflation, and the adverse
effects that the rapid monetary tightening in various countries is having on the financial system arecauses for concern as factors that could slow down the global economy.
The Japanese economy is expected to recover moderately due to inbound demand from overseas
visitors and growth in personal consumption, while the slowdown of overseas economies will put
downward pressure on the economy.
In this environment, the Company forecasts profit for the year attributable to owners of the parentof ¥23.5 billion for the fiscal year ending March 31, 2024, exceeding the target of ¥20.0 billion set
forth in the medium-term vision,, partly due to the inclusion of 100% of profit for theyear, which had been attributable to non-controlling interests, resulting from Kanematsu Electronics
Ltd. becoming a wholly owned subsidiary.
25

As for the forecast for the dividend in the next fiscal year, the Company plans to pay ¥90 per share.
The payout ratio is expected to be 32.0%.

*Note on earnings forecasts
The earnings forecasts and other forward-looking statements contained in this material are based on information
currently available to the Company and certain assumptions that the Company considers reasonable. The Company
makes no guarantees with respect to the achievement of its earnings forecasts or forward-looking statements.
Actual earnings and other results may differ significantly from the forecasts due to various factors.

26

(6) Trend in Assets and Profit/Loss126th Term
(FY2020)

Category

127th Term
(FY2021)128th Term
(FY2022)129th Term
(Fiscal year under review)

million yen
Revenue
Profit for the year
million yen
attributable toowners of the parentyen
Basic earnings per share

721,802649,142

767,963(FY2023)
911,408

14,39913,315

15,986

18,575172.43

159.44

191.42222.38

Total assets

million yen

551,671557,495

634,456

677,588

Total equity

million yen

166,174

180,492

199,282

143,423(Notes) 1. Pursuant to Article 120, paragraph 1 of the Regulations on Corporate Accounting, the Company has been
preparing its consolidated financial statements in accordance with the International Financial ReportingStandards (IFRSs).
2. Basic earnings per share is calculated based on the average number of shares during the period after theshares of the Company owned by the stock issuance trust for officers are deducted.

(7) Significant Subsidiaries
Company Name

EquityCapitalShare(million yen)(%)

Major Areas of Operation

Kanematsu Electronics Ltd.

9,031 100.00 System integration of ICT equipment andservices therefor

Kanematsu Communications Ltd.

1,425 100.00 Sales of mobile communications devices;mobile internet systems and services

Kanematsu Sustech Corporation

3,325

Manufacture and sales of preservative-treated
89.86 wood products; ground inspection services
and improvement work; installation and salesof security cameras

Kanematsu Trading Corp.

260 100.00 Sales of general steel and construction
materials

Kanematsu KGK Corp.

706 100.00 Sales of machine tools and industrial
machinery

Kanematsu Petroleum Corp.
Shintoa Corp.

Kanematsu USA Inc.

1,000 100.00 Sales of petroleum products and liquid
petroleum gas
Sales of pet food, grain and feedstuff,
500 100.00 beverages for vending machines, steel andplastic products, aircraft engines, etc.
(thousandUSD) 100.00 Export/import and sales of merchandise
100,000(Notes) 1. On March 31, 2023, the Company made a request to Kanematsu Electronics Ltd.’s non-controlling interest
to sell all of the shares they owned in Kanematsu Electronics Ltd. (9.29%) pursuant to Article 179,
paragraph 1 of the Companies Act. Kanematsu Electronics Ltd.’s Board of Directors accepted this request
as of the same date. Accordingly, the Company reported in its accounting records that it owned a 100%
equity in Kanematsu Electronics Ltd. as of the end of the fiscal year under review.
2. Kanematsu (Hong Kong) Ltd. was excluded from significant subsidiaries because its business wastransferred to Kanematsu Trading (Hong Kong) Ltd., and its business activities ceased in the previous
fiscal year.

27

(8) Major Areas of Operation (as of March 31, 2023)
The Group provides a broad array of products and services in diverse fields such as electronics anddevices, foods and grain, steel, materials and plant, and motor vehicles and aerospace through theorganic integration of domestic and international business networks, expertise acquired in each businessarea, and the functions of a trading company, including commodities trading, information gathering,market exploration, business development and organization, risk management, and logistics.

(9) Major Business Locations (as of March 31, 2023)(i) The Company’s Major Offices
Japan:

Kobe Head Office (Chuo-ku, Kobe)
Tokyo Head Office (Chiyoda-ku, Tokyo)
Osaka Branch (Chuo-ku, Osaka)

Overseas: Manila Branch(Note) The Company relocated its Tokyo Head Office from Minato-ku, Tokyo on November 21, 2022.

(ii) Major Subsidiaries’ Offices
Japan:

Kanematsu Electronics Ltd. (Chuo-ku, Tokyo)
Kanematsu Communications Ltd. (Shibuya-ku, Tokyo)
Kanematsu Sustech Corporation (Chuo-ku, Tokyo)
Kanematsu Trading Corp. (Chuo-ku, Tokyo)
Kanematsu KGK Corp. (Chuo-ku, Tokyo)
Kanematsu Petroleum Corp. (Chiyoda-ku, Tokyo)
Shintoa Corp. (Chiyoda-ku, Tokyo)

Overseas: Kanematsu USA Inc. (U.S.A.)(10) Employees (as of March 31, 2023)

Electronics & Devices

Number of Employees(persons)
4,773

Year-on-Year Change(persons)
380

Foods, Meat & Grain

783

9

Steel, Materials & Plant

1,252

28

Motor Vehicles & Aerospace

363

(13)

Other

229

(1)

Corporate (Common)

466

17

7,866

420

Business Segment

Total(Note) The number of employees is the number of workers.

28

(11) Major Lenders (as of March 31, 2023)
Loan Balance at End of Fiscal Year(million yen)
94,790

Lender
MUFG Bank, Ltd.
Mizuho Bank, Ltd.

25,419The Norinchukin Bank

16,645

Sumitomo Mitsui Trust Bank, Limited

16,294

Aozora Bank, Ltd.

15,137(12) Other Significant Matters
No items to report.

29

2. Items Regarding Shares of the Company (as of March 31, 2023)(1) Number of Shares Authorized to Be Issued

200,000,000 shares(2) Number of Issued Shares

84,500,202 shares(including 263,928 shares of treasury stock)(3) Number of Shareholders

32,329(4) Principal Shareholders (top 10 shareholders)Number of
Shares Held(thousand shares)

Shareholding
Ratio
(%)

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

13,107

15.56

Custody Bank of Japan, Ltd. (Trust account)

5,072

6.02

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,322

2.75

SSBTC CLIENT OMNIBUS ACCOUNT

2,142

2.54

MSIP CLIENT SECURITIES

1,894

2.24

The Bank of New York Mellon 140044

1,418

1.68

MUFG Bank, Ltd.

1,417

1.68

STATE STREET BANK AND TRUST COMPANY 505103

1,287

1.52

BNYM AS AGT/CLTS NON TREATY JASDECBBHFOR UMB BANK, NATIONAL ASSO-PEAR TREE
POLARIS VAL SM CAP FD

1,273

1.51

1,265

1.50

Shareholder Name

(Note) The shareholding ratio is calculated after the treasury stock (263,928 shares) was deducted. Treasury stock(263,928 shares) does not include the shares of the Company owned by the stock issuance trust for officers(667,100 shares).

(5) Shares Issued to the Company’s Officers as Compensation for the Execution of Their Duties
during the Fiscal Year under Review
Class and Number of Shares
Directors (excluding
Outside Directors)

The Company’s common stock

19,151 shares

Number of Persons
Granted1(Note) No shares were granted to Outside Directors and Audit & Supervisory Board Members as compensation for
the execution of their duties during the fiscal year under review.

30

3. Items Regarding Directors/Audit & Supervisory Board Members of the Company(1) Directors and Audit & Supervisory Board Members (as of March 31, 2023)
Title

Responsibilities in the Company
and Significant Concurrent Positions

Name

Chairman

Kaoru Tanigawa

Chief Officer, Internal Auditing Dept.

President

Yoshiya Miyabe

Director

Tetsuro Tsutano

Chief Officer, Corporate Planning, IT Planning,Technologies and Business Collaboration
Director, Kanematsu Electronics Ltd.

Director

Shuji Masutani

Chief Officer, Finance, Accounting, Business Accounting

Director

Yuko Tahara

President and CEO, Basic Inc.
Representative Director, Knowledge Management Lab
Outside Director (Audit and Supervisory Committee
Member), Sanyo Homes Corporation

Director

Kazuhiro Tanaka

Professor, Graduate School of Business Administration,
Hitotsubashi University

Director

Hiroyuki Sasa

Outside Director, Kyosan Electric Manufacturing Co., Ltd.

Audit & Supervisory Board
Tetsuro Murao
Member (Full-time)
Audit & Supervisory Board Motohisa Hirai
Member (Full-time)
Audit & Supervisory Board
Yusaku Kurahashi
MemberAttorney at law
Outside Director (Audit and Supervisory Committee
member), UNITED ARROWS LTD.

Audit & Supervisory Board Nobuko Inaba
MemberCertified public accountant and certified public tax
accountant
Representative Director, Hayabusa Consulting Corporation
Outside Audit & Supervisory Board Member, Tokyo
Kiraboshi Financial Group, Inc.
Outside Corporate Auditor, DeNA Co., Ltd.

(Notes) 1. Ms. Yuko Tahara, Mr. Kazuhiro Tanaka and Mr. Hiroyuki Sasa are Outside Directors as stipulated in
Article 2, item 15 of the Companies Act.
2. Mr. Yusaku Kurahashi and Ms. Nobuko Inaba are Outside Audit & Supervisory Board Members as
stipulated in Article 2, item 16 of the Companies Act.
3. The Audit & Supervisory Board Members’ financial and accounting insight is as follows:•

Audit & Supervisory Board Member Tetsuro Murao has the experience of serving for many years incorporate management at important positions, giving him a suitable level of insight concerning financeand accounting.

•

Audit & Supervisory Board Member Motohisa Hirai has the experience of serving for many years incorporate management at important positions, giving him a suitable level of insight concerning financeand accounting.

•

Audit & Supervisory Board Member Nobuko Inaba is qualified as a certified public accountant and asa certified public tax accountant, giving her a suitable level of insight concerning accounting and tax
affairs.

4. The Company has submitted notification to Tokyo Stock Exchange, Inc. that Outside Directors Yuko
Tahara, Kazuhiro Tanaka and Hiroyuki Sasa, and Outside Audit & Supervisory Board Members Yusaku
Kurahashi and Nobuko Inaba have been appointed as independent officers as provided for by the
aforementioned exchange.

31

5. The Company adopts the executive officer system. As of April 1, 2023, the following people hold theposition of Executive Officer.
Title

Name

* President

Yoshiya Miyabe

Senior Managing
Executive Officer

Responsibilities in the Company

Toshihide Motoshita

Chief Officer, Credit Control, Legal andCompliance

Senior Managing
Executive Officer

Eiji Kan

Chief Officer, Steel, Materials & Plant Division,
Green Transformation Committee Chair
General Manager, Osaka Branch
General Manager, Nagoya BranchManaging
Executive Officer

Masahiro Harada

Chief Officer, Electronics & Devices Division,
Digital Transformation Committee Chair

Senior Executive
Officer

Kazuo Tanaka

Chief Officer, Human Resources and General
Affairs, Traffic and Insurance* Senior Executive
Officer

Tetsuro Tsutano

Chief Officer, Corporate Planning, IT Planning,Technologies and Business Collaboration

Ryoichi Kidokoro

Chief Officer, Motor Vehicles & Aerospace
Division

Hiroshi Yamashina

President, Kanematsu USA Inc.

Executive Officer

Osamu Iwata

Deputy Chief Officer, Steel, Materials & Plant
Division

Executive Officer

Yoichiro Muramatsu

President, Kanematsu G.m.b.H
President, Kanematsu Europe PLC

Executive Officer

Jun Nakajima

Chief Officer, Grain, Oilseeds & Feedstuff
Division

Executive Officer

Toru Hashimoto

Chief Officer, Meat Products Division

Executive Officer

Koichi Nishimura

Chief Officer, Foods Division

Executive Officer

Akihiko Fujita

Deputy Chief Officer, Electronics & Devices
Division
General Manager, Electronics Planning Office

Executive Officer

Kaori Kusuda

Deputy Chief Officer, Internal Auditing Dept.
General Manager, Internal Auditing Dept.

* Executive Officer

Shuji Masutani

Chief Officer, Finance, Accounting, BusinessAccounting

Senior Executive
Officer
Senior Executive
Officer(Note) The Executive Officers marked by an asterisk (*) concurrently hold the position of Director.

(2) Summary of Details of Limited Liability Agreement
Pursuant to the provisions of Article 427, paragraph 1 of the Companies Act, the Company has
concluded an agreement with Outside Directors Yuko Tahara, Kazuhiro Tanaka and Hiroyuki Sasa, Audit& Supervisory Board Members Tetsuro Murao and Motohisa Hirai, and Outside Audit & Supervisory
Board Members Yusaku Kurahashi and Nobuko Inaba, respectively, to make the limitation of liability
for damages as stipulated in Article 423, paragraph 1 of the Companies Act, up to the maximum amount,which is the amount stipulated in Article 425, paragraph 1 of the said act.

32

(3) Summary of Details of Indemnification Agreement
The Company has entered into an indemnification agreement with Directors Kaoru Tanigawa, Yoshiya
Miyabe, Tetsuro Tsutano, Shuji Masutani, Yuko Tahara, Kazuhiro Tanaka, and Hiroyuki Sasa and Audit& Supervisory Board Members Tetsuro Murao, Motohisa Hirai, Yusaku Kurahashi, and Nobuko Inaba as
stipulated in Article 430-2, paragraph 1 of the Companies Act, under which the Company will cover the
expenses set forth in Article 430-2, paragraph 1, item 1 of the Companies Act and the loss set forth initem 2 of the same paragraph within the extent stipulated by laws and regulations. However, in order toensure that this indemnification agreement does not impair the proper execution of duties by corporate
officers, indemnification does not cover legal expenses in excess of the amount normally required orlosses incurred when corporate officers perform their duties in bad faith or through gross negligence.

(4) Summary of Directors and Officers Liability Insurance Policy
The Company has entered into a directors and officers liability insurance policy as stipulated in Article
430-3, paragraph 1 of the Companies Act with an insurance company. The insurance policy includes the
Directors, Audit & Supervisory Board Members, Executive Officers, etc. of the Company as theinsureds. The insurance premiums are fully borne by the Company.
The insurance covers losses that may arise due to an insured’s assumption of liability incurred in thecourse of the performance of duties, or receipt of claims pertaining to the pursuit of such liability. The
insurance policy also provides for certain exclusions of liability, such as not cover damages caused byfactors such as legal violations or personal benefits.

(5) Directors’ and Audit & Supervisory Board Members’ Compensation, Etc.
(i) Policy on Determining the Content of Officer Compensation, Etc.
At the Board of Directors meeting held on February 22, 2021, the Company resolved to adopt a policy
for determining the content of compensation, etc. for individual Directors. Upon making the resolution,
the Board consulted the Compensation Committee in advance regarding the details of the resolution to
be made, and received recommendations. With respect to the compensation, etc. for individual Directors
for the fiscal year under review, the Board of Directors has determined that the compensation, etc. is inline with the policy after confirming that the method of determining it and the resultant compensation,etc. are consistent with the policy and that when making decisions, recommendations from theCompensation Committee have been respected.
The details of the policy for determining the content of compensation, etc. for individual Directors are as
follows.
1.

Basic policy
The basic policy for compensation for Directors of the Company is to adopt a compensation systemthat is linked to the interests of shareholder, in order to ensure the system functions sufficiently as
an incentive to sustainably enhance corporate value, while also ensuring that, when making
decisions about the compensation of individual Directors, this compensation is at a level appropriate
to their respective responsibilities. Specifically, compensation for executive Directors consists ofbasic compensation as fixed compensation, performance-linked compensation, etc. and stockcompensation. Compensation for Outside Directors, who perform supervisory functions, consistsof only basic compensation in light of their duties.

2.

Policy on determining the amount of basic compensation for individuals
The basic compensation for Directors of the Company is a monthly fixed compensation, and isdetermined in accordance with their positions and responsibilities, after comprehensively taking
into consideration the level of compensation at peers, the business performance of the Company,
and salary levels for employees.
33

3.

Policy on determining the content of performance-linked compensation, etc. and non-monetarycompensation, etc. and the methods for calculating the amount or number of shares of suchcompensation
In order to enhance officers’ awareness of enhancing business performance each fiscal year,
performance-linked compensation, etc. is cash compensation that reflects the performance indicator(profit for the year attributable to owners of the parent). An amount calculated based on theperformance indicator and its value is paid as a bonus at a certain time each year. The performanceindicator to be used is determined when a Medium-Term Business Plan is formulated in a way thatis consistent with the plan, and is revised as appropriate with changes in the environment,
considering any recommendations from the Compensation Committee.
In order to enhance officer’s awareness of contributing to the medium- to long-term enhancementof business performance and the increase in corporate value of the Company, non-monetarycompensation, etc. is stock compensation that reflects the performance indicator (profit for the year
attributable to owners of the parent). The number of shares to be granted is calculated in accordancewith the level of achievement of performance targets set forth in the Medium-Term Business Planand other factors, and is delivered upon retirement. The performance indicator to be used and its
target value are determined when a Medium-Term Business Plan is formulated in a way that is
consistent with the plan, and are revised as appropriate with changes in the environment,
considering any recommendations from the Compensation Committee.

4.

Policy on determining the proportion of compensation amounts of monetary compensation,
performance-linked compensation, etc. and non-monetary compensation, etc. in the amount ofcompensation, etc. for individual Directors
The proportion of each type of compensation for executive Directors is considered by theCompensation Committee, taking into account compensation levels benchmarked againstcompanies of a similar business scale to the Company or in a related industry or business format.
The Board of Directors determines the details of compensation, etc. for individual Directors within
the scope of the proportion of compensation for each type of compensation indicated in therecommendation of the Compensation Committee, while also respecting the content of thisrecommendation. Furthermore, in terms of general amounts for the proportion of each type ofcompensation, the ratio is as follows: basic compensation: performance-linked compensation, etc.:
non-monetary compensation, etc. = 40% - 70%: 15% - 45%: 15% - 30%. (If the level ofachievement of performance targets is 100%.)

5.

Policy on determining the content of compensation, etc. for individual Directors
The Board of Directors determines the amount of basic compensation for individual Directors andthe method to determine performance-linked compensation after consulting the Compensation
Committee regarding a draft proposal and receiving a recommendation, while also respecting thecontent of this recommendation. Regarding the method of determining non-monetarycompensation, etc., the Board of Directors determines the number of shares to be allocated to eachindividual Director based on a recommendation from the Compensation Committee.

34

(ii) Total Amount of Compensation, etc. for the Fiscal Year under Review
Total Amount of Compensation, etc. by Type(million yen)

Category

Total Amount(million yen)

Monetary Compensation, Etc.

Non-Monetary
Compensation,
Etc.

PerformanceLinked
Compensation,
Etc.

PerformanceLinked Stock
Compensation

Basic
Compensation

Number of
Persons

Directors (excluding
Outside Directors)

246

150

46

49

5

Outside Directors

28

28

–

–

3

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

57

57

–

–

2

Outside Audit &Supervisory Board
Members

19

19

–

–

2

Total

350

255

46

49

12

(Notes) 1. Regarding the amount of monetary compensation, etc. for Directors, at the 121st Ordinary General
Meeting of Shareholders held on June 24, 2015, the Company obtained approval to set the maximum
amount of compensation per year to ¥300 million (including ¥40 million for Outside Directors, which wasapproved at the 128th Ordinary General Meeting of Shareholders held on June 24, 2022). The Company
had seven Directors (including two Outside Directors) at the conclusion of the 121st Ordinary General
Meeting of Shareholders, and seven Directors (including three Outside Directors) at the conclusion of the128th Ordinary General Meeting of Shareholders.
2. Regarding the amount of monetary compensation, etc. for Audit & Supervisory Board Members, at the
121st Ordinary General Meeting of Shareholders held on June 24, 2015, the Company obtained approval
to set the maximum amount of compensation per year to ¥84 million. The Company had four Audit &Supervisory Board Members (including three Outside Audit & Supervisory Board Members) at theconclusion of the General Meeting of Shareholders.
3. Separate from the monetary compensation, etc., at the 124th Ordinary General Meeting of Shareholders
held on June 22, 2018, the Company obtained approval for a trust, set up by the Company by contributing
money to it, to acquire shares of the Company, and for a performance-linked stock compensation system
under which shares of the Company are granted to eligible Directors (excluding Outside Directors)
through the trust of an amount equivalent to the number of points that corresponds to the eligible
Director’s position and achievement levels, etc. with respect to performance targets. This system has been
established to operate with a trust period of about six years from August 2018 to August 2024, with amaximum number of points to be granted to eligible Directors (excluding Outside Directors) of 140,000
points (where 1 point is equal to 1 share of the Company) multiplied by the number of years of the trust
period. The maximum amount of money to be contributed by the Company to acquire Company shares
needed to deliver to Directors has been set at ¥450 million, and the method to acquire shares of theCompany has been designated as either through the stock market (including off-floor trading) or from theCompany by means of the disposal of treasury stock. Directors receive the Company’s shares upon theirretirement, in principle.
The Company had five Directors (excluding Outside Directors) at the conclusion of the General Meetingof Shareholders.
4. The performance indicator related to performance-linked compensation, etc. and non-monetarycompensation, etc. is profit for the year attributable to owners of the parent, which was ¥18,575 million for35

the fiscal year under review. The reasons for selecting this indicator is described in “(i) Policy on
Determining the Content of Officer Compensation, Etc. 3. Policy on determining the content of
performance-linked compensation, etc. and non-monetary compensation, etc. and the methods forcalculating the amount or number of shares of such compensation.”
5. Performance-linked compensation, etc. is calculated by multiplying profit for the year attributable toowners of the parent, as shown in the Annual Securities Report, by 0.25% (or ¥0 if profit for the year
attributable to owners of the parent is less than ¥5.0 billion) or ¥50 million, whichever is less.
6. The performance-linked stock compensation is subject to an evaluation period, which is the period set for
the Medium-Term Business Plan (from April 1, 2018 to March 31, 2024), and the amount of theperformance-linked stock compensation is equal to the aggregate of the amounts calculated using theformula provided below for each year of the aforementioned evaluation period (amounts less than one yen
are rounded up). Note that the result of profit for the year attributable to owners of the parent shall be
profit for the year attributable to owners of the parent shown in the Annual Securities Report in the final
fiscal year of the aforementioned evaluation period.
Formula for calculating the amount of performance-linked stock compensation:
Profit for the year attributable to owners of the parent of less than ¥5.0 billion:¥0
Profit for the year attributable to owners of the parent of ¥5.0 billion or more and less than ¥25.0 billion:
Profit for the year attributable to owners of the parent x 0.18%
Profit for the year attributable to owners of the parent of ¥25.0 billion or more and less than ¥30.0 billion:
Profit for the year attributable to owners of the parent x 0.20%
Profit for the year attributable to owners of the parent of ¥30.0 billion or more:¥60 million
In case of death or resignation of a Director during the evaluation period, the amount of performancelinked stock compensation is calculated by substituting the evaluation period from the beginning of theMedium-Term Business Plan (or from the fiscal year including the month in which the Director became a
Director if the Director newly became a Director during the period covered by the evaluation) to the fiscal
year that ends immediately prior to the date of death or resignation.
7. The amount of performance-linked stock compensation (¥49 million) is the amount recorded as costs for
performance-linked stock compensation in the fiscal year under review.
8. The Company had four Directors (excluding Outside Directors), three Outside Directors, two Audit &Supervisory Board Members (excluding Outside Audit & Supervisory Board Members), and two Outside
Audit & Supervisory Board Members at the end of the fiscal year under review. The reason for thedifference with the number of persons shown in the above table is the inclusion of one Director who
retired at the conclusion of the 128th Ordinary General Meeting of Shareholders held on June 24, 2022.

(6) Items Regarding Outside Directors/Audit & Supervisory Board Members(i) Status of Significant Concurrent Positions of Other Companies, etc. and Relationships Between the
Company and Those Companies, Etc.
・ Director Yuko Tahara is the President and CEO of Basic Inc., the Representative Director of
Knowledge Management Lab, and an Outside Director (Audit and Supervisory Committee
Member) of Sanyo Homes Corporation. There are no special trading relationships between the
Company and Basic Inc., the Company and Knowledge Management Lab, or the Company andSanyo Homes Corporation.
・ Director Kazuhiro Tanaka is a Professor of Graduate School of Business Administration,
Hitotsubashi University. There are no special trading relationships between the Company and
Hitotsubashi University.
・ Director Hiroyuki Sasa is an Outside Director, Kyosan Electric Manufacturing Co., Ltd. There areno special trading relationships between the Company and Kyosan Electric Manufacturing Co., Ltd.
・ Audit & Supervisory Board Member Yusaku Kurahashi is an Outside Director (Audit andSupervisory Committee member) of UNITED ARROWS LTD. There are no special trading
relationships between the Company and UNITED ARROWS LTD.
36

・ Audit & Supervisory Board Member Nobuko Inaba is the Representative Director of Hayabusa
Consulting Corporation, an Outside Audit & Supervisory Board Member of Tokyo Kiraboshi
Financial Group, Inc., and an Outside Corporate Auditor of DeNA Co., Ltd. There are no special
trading relationships between the Company and Hayabusa Consulting Corporation, the Company
and Tokyo Kiraboshi Financial Group, Inc., or the Company and DeNA Co., Ltd.

(ii) Key Activities in the Fiscal Year under Review

Category

Name

Yuko Tahara

Director

Kazuhiro
TanakaHiroyuki
Sasa

Attendance
at Meetingsof theBoard ofDirectors

20/20

20/20

17/17

Attendance
at Meetingsof the Audit&
Supervisory
Board

Remarks and Duties Performed
regarding Roles Expected of Outside
Directors–

She provides advice on management andappropriately supervises the execution ofoperations based on her wealth ofexperience in corporate management anddeep insight gained through experiences inhuman resources and organizational
consulting businesses.
In addition, as the committee chair of theCompensation Committee and a memberof the Nominating Committee, shedeliberates on the determination of officer
compensation, etc. and the selection ofcandidates for officers of the Company
from an objective and impartial standpoint,
and provides recommendations to theBoard of Directors.

–

He is a university professor specializing inbusiness administration and provides
advice on management and appropriately
supervises the execution of operations
based on his extensive expertise and deep
insight regarding corporate management.
In addition, as the committee chair of theNominating Committee and a member of
the Compensation Committee, hedeliberates on the selection of candidates
for officers of the Company and thedetermination of officer compensation, etc.
from an objective and impartial standpoint,
and provides recommendations to theBoard of Directors.

–

He provides advice on management andappropriately supervises the execution ofoperations based on his wealth ofexperience and deep insight in corporate
management.
In addition, as a member of theNominating Committee and theCompensation Committee, he deliberates
on the selection of candidates for officersof the Company and the determination of
officer compensation, etc. from an
objective and impartial standpoint, andprovides recommendations to the Board of
Directors.

37

Category

Audit &
Supervisory
Board
MemberName

Attendance
at Meetingsof theBoard ofDirectors

Attendance
at Meetingsof the Audit&
Supervisory
Board

YusakuKurahashi

19/20

13/13

He properly offers necessary comments
based on his specialist knowledge andexperience as an attorney at law.

13/13

She properly offers necessary comments
based on her specialist knowledge andexperience as a certified public accountant
and a certified public tax accountant.

Nobuko
Inaba

18/20

Remarks and Duties Performed
regarding Roles Expected of Outside
Directors(Note) Director Hiroyuki Sasa was elected at the 128th Ordinary General Meeting of Shareholders heldon June 24, 2022, and because of this, the numbers shown for meetings of the Board of Directors
held differ from those of other Outside Directors and Outside Audit & Supervisory Board
Members.

38

4. Status of Accounting Auditor(1) Name of Accounting Auditor
PricewaterhouseCoopers Aarata LLC(2) Amount of Compensation, etc.
Category
The Company
Consolidated subsidiaries
Total

Audit Fees
(million yen)
157
216
373

Non-audit Fee(million yen)0–0(Notes) 1. The audit contract between the Company and the Accounting Auditor does not clearly distinguishbetween compensation paid for the audit conducted in accordance with the Companies Act andcompensation paid for the audit conducted in accordance with the Financial Instruments and ExchangeAct. Accordingly, the amount of Audit Fees includes the compensation, etc. paid for the audit conductedin accordance with the Financial Instruments and Exchange Act.
2. The amount of Non-audit Fee includes the compensation, etc. paid for agreed processing services
associated with the tax declarations, etc. of overseas offices as part of tasks other than work set forth in
Article 2, paragraph 1 of the Certified Public Accountants Act (non-auditing tasks).
3. After having performed the necessary verification as to the appropriateness of matters such as the content
of the Accounting Auditor’s audit plan, the status of performance of their duties, and the basis for the
calculation of the estimated compensation for the Accounting Auditor, the Audit & Supervisory Board
has consented to the amount of compensation, etc. to be paid to the Accounting Auditor.
4. Among significant subsidiaries of the Company, Kanematsu USA Inc. is audited (within the meaning of
being audited as required by the Companies Act [including laws and regulations in other countries
equivalent to the said law]) by audit firms (including entities possessing the qualifications in othercountries equivalent to these qualifications) other than PricewaterhouseCoopers Aarata LLC.

(3) Policy Regarding Dismissal or Non-reappointment of Accounting Auditor
If it is deemed that the Accounting Auditor falls within any of the items of Article 340, paragraph 1 of
the Companies Act and that no improvement in the situation is expected, the Audit & Supervisory Board
shall dismiss the Accounting Auditor based on the consent of all the Audit & Supervisory Board
Members. Besides the foregoing, if the Accounting Auditor is deemed unable to adequately performtheir duties, the Audit & Supervisory Board shall decide the details of a proposal on the dismissal or
non-reappointment of the Accounting Auditor, and the Board of Directors will submit the proposal to theGeneral Meeting of Shareholders on the basis of that decision.

39

5. Corporate Structure and Policies(1) Systems for Ensuring Appropriate Business Operations and Operation Status of the System(i) Systems for Ensuring Appropriate Business Operations
The details of the systems for ensuring appropriate business operations resolved by the Board of
Directors of the Company are as follows. (Final revision made on June 24, 2022)“Basic Policy on the Establishment of Internal Control Systems”
The Company’s “Basic Policy on the Establishment of Internal Control Systems” is set forth inaccordance with Article 362, paragraph 4, item 6 of the Companies Act, and Article 100, paragraphs 1
and 3 of the Regulations for Enforcement of the Companies Act as follows.
As part of the Company’s “Corporate Principle,” the Company has set forth “Our Beliefs” as mainstay
bases of management.
<Our Beliefs>(i) Reflecting the pioneering spirit of our predecessors, we believe that fairness and justice should
guide our business dealings and the wise use of creative imagination and ingenuity will bringprosperity.
(ii) Our purpose as a Company is not only to build a sound and flourishing business, but to fulfill our
responsibilities as a corporate citizen, contributing to society and the security and well-being ofall.
(iii) As members of a corporation, we act not as individuals but as representatives of that organization
and as such we are bound by Company rules and attendant loyalties and must work together with aspirit of cooperation while cultivating mutual understanding and respect for fellow members.
In addition, the Company has set forth “Kanematsu’s Code of Conduct” as guidelines for daily
operations.
The respective items set forth in the Companies Act and the Regulations for Enforcement of theCompanies Act are as follows.
(1) Systems for Ensuring Execution of Duties by Directors and Employees of the Company inCompliance with Laws and Regulations, and the Articles of Incorporation(i) In light of the importance of corporate legal compliance, the Company has set up an Internal
Control and Compliance Committee to strengthen its compliance system.
(ii) The Company has created a Compliance Handbook filled with countermeasures for specific caseexamples that can be read on the Company’s intranet in order to ensure full compliance awarenessfrom the Directors down to all employees.
(iii) The Company has introduced a hotline system for directly reporting to or consulting with theInternal Control and Compliance Committee or an outside lawyer, and it has created the Hotline
Operation Rules.
(iv) The Company works to enhance education and training to ensure not only compliance with laws
and regulations but also constant attention to sensible behavioral ethics.
40

(v) The Company clearly states in its Compliance Handbook that it cuts off all ties with antisocial
forces, and it ensures that this position is widely known.
(2) Systems for Retention and Managing Information Concerning the Execution of Duties byDirectors of the Company(i) The Board of Directors Rules stipulates that the minutes of the Board of Directors meetings mustbe held for a period of 10 years at the Company’s Head Office.
(ii) In its Detailed Rules for Document Retention, the Company has established standards for theretention and disposal of accounting records, balance sheets, agreements and contracts concerning
the basic rights and obligations of the Company, certificates related to properties, and other similar
documents, and retains documents according to these rules.
(iii) The Company has established in these Detailed Rules for Document Retention, a system thatenables any documents deemed necessary for the execution of Directors’ duties to be readappropriately.
(3) Regulations and Other Systems for Management of the Risk of Loss of the Company(i) With respect to business risks that may affect the Company’s operations, such as market risk,
credit risk, investment risk, or country risk, the Company has designated departments responsible
for each type of risk based on the Rules on Delegation of Authority, established internal
regulations and detailed enforcement regulations, and prepared Operational Guidelines. It has also
taken measures to ensure everyone has received necessary information through training, etc.
(ii) The Company sets up cross-departmental committees as necessary to control risks.
(iii) To comprehensively assess risks facing the Company, promote operational effectiveness andefficiency, and ensure the reliability of financial reporting, the Company has established theInternal Control and Compliance Committee as a groupwide organization.
(iv) The Company has established an internal approval request system based on the Rules on
Delegation of Authority to minimize business risks. The Project Deliberation Committee considers
important investments and loans by comprehensively examining relevant risks.
(v) To address the risk of crises related to the occurrence of major events, such as natural disasters, theCompany has put in place a system, including specific rules and guidelines of action, to ensure theappropriate management of the Group at such extraordinary times.
(4) Systems for Ensuring that Directors of the Company Appropriately and Efficiently Execute
Duties(i) The Company has established the Board of Directors Rules and in principle it holds regular Boardof Directors meetings once per month and extraordinary Board of Directors meetings as necessary.
While deciding matters stipulated by laws and regulations, or the Articles of Incorporation,
management policy and other important matters, the Board of Directors, which is composed by
Directors including Outside Directors, also supervises the execution of duties by the Directors.
Audit & Supervisory Board Members also attend the Board of Directors meetings and state theiropinions.
(ii) The Company has adopted an executive officer system to improve the flexibility of businessexecution by speeding up management decision making and by further clarifying roles and41

responsibilities through the separation of supervisory and executive functions. The Executive
Officers, who are appointed by the Board of Directors, are in charge of the execution of company
business.
(iii) The Company has set up a Management Committee composed of Executive Officers, including the
Chairman and the President, in order to realize speedier decision making and flexible
management. The Committee establishes basic policies for the Company’s general businessexecution in accordance with policies determined by the Board of Directors and provides
instruction and guidance on the execution of business.
(iv) The Company has established the Rules on Delegation of Authority, which sets forth therelationships between the allocated duties of Directors, Executive Officers and employees and theauthority delegated to them, and criteria so that the corporate business activities can be carried out
fairly under an organized structure.
(v) So as to enhance debate and speed up decision making on important projects, the Company has
established the Project Deliberation Committee to consider and discuss matters from a
Companywide perspective and submit recommendations to the designated decision makers before
the matters are decided by the decision makers set forth in the Rules on Delegation of Authority.
(vi) The Company establishes Companywide targets by preparing a Medium-Term Business Plan for
the Company’s business operations that takes into account the future business environment, and, in
addition, formulating an annual business plan every fiscal year. Each division formulates andexecutes concrete strategies for achieving these targets.
(vii) To ensure that proper accounting records are kept and to monitor appropriate business execution,
the Company has established Auditing Rules, in accordance with which the Internal Auditing
Department conducts internal audits of all divisions and subsidiaries.
(5) Systems for Ensuring Appropriate Business Operations by the Company and its Subsidiaries(hereinafter, the “Group”)(i) While respecting the autonomy of subsidiaries’ management, the Company has set up a system
whereby subsidiaries, in principle, obtain in advance the Company’s approval based on joint
discussion for the establishment of basic policies and important management matters inaccordance with the Details of Delegation of Authority for Business Operations of Subsidiaries
and Affiliates, provided for in the Rules on Delegation of Authority. The Company has also set upa system for affiliates whereby in principle, intra-company approval of the affiliate is obtained
beforehand for important management matters that are subject to final decision by shareholders’vote at a General Meeting of Shareholders.
(ii) The senior management of the Company and its major subsidiaries and affiliates meet several
times a year and at other times as necessary to share information on management matters. Thesemeetings are aimed at ensuring mutual understanding and a shared awareness of corporate
governance issues.
(iii) For the purpose of coordinating the Company’s activities to control and manage risks with those of
its subsidiaries, the Company provides guidance and suggests adjustments for the risk
management activities of subsidiaries while conducting internal audits into the control andmanagement of business risks in subsidiaries.
42

(iv) The Company provides its subsidiaries with guidance on how to establish their own crisis
management systems, and it makes the necessary adjustments to ensure the Group can stage acoordinated response if a crisis risk occurs.
(v) The Company formulates a Medium-Term Business Plan and an annual business plan every fiscal
year for the business operations of the Group, and it provides guidance to subsidiaries forformulating and executing concrete measures to achieve these plans.
(vi) The Company has established a Compliance Handbook that covers the business operations of theGroup and makes every effort to ensure the officers and employees of the Group become
familiarized with the content. In addition, the Company has established a system whereby theCompany’s Internal Control and Compliance Committee controls and promotes compliance acrossthe entire Group.
(6) Matters Concerning the Employees Who Are to Assist Audit & Supervisory Board Membersof the Company(i) The Company ensures that a system is in place to assist in an Audit & Supervisory Board
Member’s performance of duties if an Audit & Supervisory Board Member requests the placementof an employee to assist in such duties.
(7) Matters Concerning the Independence of the Employees Who Are to Assist Audit &Supervisory Board Members of the Company From the Directors, and the Effectiveness ofInstructions From Audit & Supervisory Board Members to Said Employees(i) The Company takes care to ensure that the employees who are to assist in the Audit & Supervisory
Board Members’ performance of duties are independent from the Directors and that Audit &Supervisory Board Members are able to effectively instruct the said employees.
(8) Systems for Reporting to Audit & Supervisory Board Members of the Company(i) Directors and employees must promptly report to an Audit & Supervisory Board Member withrespect to any discovery of an incident where a Director is in violation of laws and regulations, oran incident that threatens to cause significant damage to the Company.
(ii) The Directors who are in charge of the Internal Control and Compliance Committee must report to
the Audit & Supervisory Board Members at least once a month concerning the circumstances ofoperations relating to compliance in the Group, on a case-by-case basis, about material matters.
(iii) Directors and employees, if so requested by Audit & Supervisory Board Members, shall promptly
report matters relating to business executions.
(iv) In addition to attending the Board of Directors meetings, Audit & Supervisory Board Members
shall attend the Management Committee meetings, Project Deliberation Committee meetings,
Internal Control and Compliance Committee meetings, as well as any other important conferenceor committee meeting, and receive reports on important management matters within the Group toeffectively conduct Audit & Supervisory Board Members’ audits. Also, in cases when notattending such meetings, the Audit & Supervisory Board Members shall be given explanation on
the agenda items of the meeting, and allowed the opportunity to read the meeting materials, suchas internal circulars for managerial decision and reports, and the minutes of the meeting.

43

(v) Audit & Supervisory Board Members shall regularly hold Group Company Audit & Supervisory
Board Member Liaison Meetings at which Group-company Audit & Supervisory Board Members
attend, and facilitate information sharing among Group-company Audit & Supervisory Board
Members.
(vi) It is prohibited throughout the Group to dismiss or otherwise disadvantageously treat a person
making a report to the Audit & Supervisory Board Members because of the act of making thereport.
(9) Other Systems for Ensuring Efficient Audits by Audit & Supervisory Board Members of theCompany(i) Audit & Supervisory Board Members are provided preliminary explanations with respect toannual plans for internal audits to be implemented by the internal auditing departments, and they
may state their opinions when deemed necessary. Moreover, Audit & Supervisory Board Members
may be appropriately provided reports regarding the status of internal audit implementation within
the Group, and may state their opinions concerning the performance of additional audits, measures
to improve business operations and other such statements, when deemed necessary.
(ii) Audit & Supervisory Board Members shall ensure the Accounting Auditor’s independence fromthe Directors and be provided preliminary reports on the Accounting Auditor’s audit plan. In
addition, the Audit & Supervisory Board Members’ consent is one of the required steps to approve
the Accounting Auditor’s compensation and the non-auditing tasks requested of the Accounting
Auditor.
(iii) Audit & Supervisory Board Members and the Audit & Supervisory Board shall meet regularly
with the Representative Directors, and in addition to making sure of their understanding of theRepresentative Directors’ management policy, they shall exchange opinions in regard to not only
the issues to be addressed by the Company and the risks faced by the Company, but also the statusof the environment that has been set up for the Audit & Supervisory Board Member’s audits andthe important issues concerning audits to deepen a mutual awareness and relationship of trust with
the Representative Directors.
(iv) If an Audit & Supervisory Board Member requests upfront payment or reimbursement for thepayment of expenses needed for executing his/her duties, the Company shall pay such expenses
promptly.

(ii) Summary of Operation Status of the Systems for Ensuring Appropriate Business Operations
In accordance with the above-mentioned basic policy, the Company has set internal control
systems in place. A summary of the operation status for the fiscal year under review is provided
below.
• Status of Compliance and Risk Management
The President and other Executive Officers repeatedly made statements to employees of theCompany and officers and employees of its subsidiaries about the importance of compliance andthe need to establish ethics of individual employees. In addition, continuous efforts were made to
instill and enhance awareness of compliance through such means as case introductions at internal
compliance trainings for officers and employees and thorough execution of immediate report uponrecognition of concerns over violation of compliance.
To realize greater efficiency and effectiveness of operational controls and risk management, the44Company revised its internal rules such as Corporate Rules including the Rules on Delegation of
Authority as appropriate in light of changes in laws and regulations and in the external
environment. In addition, in order to expand the system for responding to whistleblowing, we
revised the Hotline Operation Rules in accordance with the guidelines published by the Consumer
Affairs Agency in line with revisions of the Whistleblower Protection Act. As measures for
operational risk management, the Company conducted drills on suspicious e-mails to raiseawareness of information security and alerted employees to business e-mail fraud. Furthermore, itis the Company’s policy to avoid, in principle, transactions related to Russia and Belarus, including
not only direct suppliers but also producers and end-users in the supply chain.
The Internal Control and Compliance Committee was held in total four times to discuss suchmatters as the establishment, operation, evaluation, and improvement of internal control systems in
the Company and its subsidiaries with the viewpoint of conducting a comprehensive evaluation of
the risks.
In addition, the issues and information relating to the overall internal control, compliance and risk
management of the Group were shared by way of holding the Affiliate Presidents Meeting, where
the senior management of the Company and its major subsidiaries and affiliates gather, twice.
• Status of Performance of Duties by Directors, etc.
The Board of Directors meetings, which in principle are held monthly, were held in total 20 times.
At these meetings, management policies and other important matters of the Company and theGroup, such as the management principle, medium- to long-term strategy, and corporate
governance were decided.
Management Committee meetings, which in principle are held twice monthly, were held in total 28
times to discuss matters relating to the leadership and guidance of business execution inaccordance with the management policy established by the Board of Directors. In addition, Project
Deliberation Committee meetings, which in principle are held twice monthly, were held in total 27
times to submit recommendations to the designated decision makers on important projects basedon the preliminary deliberation.
The Company has a controlling division set up to manage matters relating to management ofsubsidiaries. This division received submissions from subsidiaries to approve important matters inadvance and requested subsidiaries to provide reports regarding such matters.
The President’s speech and the intranet were used at each milestone to inform and instill
employees regarding the priority initiatives of the medium-term vision “” and future
efforts. As a specific initiative, we established a new Green Transformation Committee in June
2022 to promote decarbonization of the entire supply chain. In addition, as a voluntary corporate
initiative concerning human rights, labor, the environment, and anti-corruption, we haveformulated the Kanematsu Group’s Human Rights Policy and expressed our support for the United
Nations Global Compact. We are rolling out SaaS, data business, etc. for the DX business. The
Company also invests in innovation to promote and expand new businesses based on advanced
technologies. In terms of human resources, we were selected as a 2023 Certified Health &Productivity Management Outstanding Organization for the third consecutive year. We also
received the Eruboshi certification, which is granted by the Ministry of Health, Labour andWelfare to companies that promote the advancement of women. From the next fiscal year, we will
promote diversity, equity & inclusion (DE&I) and further enhance various initiatives.
• Status of Securing the Effectiveness of Audits by Audit & Supervisory Board Members
In conducting audits of the execution of duties by Directors, the Audit & Supervisory Board
Members received reports from the Representative Directors, other Directors and Executive
Officers, General Managers, and other employees as appropriate concerning the execution ofbusiness operations and the status of risk management, and attended all Board of Directors
meetings and Management Committee meetings, in addition to important meetings andcommittees. In addition, the Audit & Supervisory Board Members received reports from theRepresentative Directors of major Group companies, concerning the execution of business
operations and other information, and shared information as appropriate with the Group
45

companies’ Audit & Supervisory Board Members through holding Group Company Audit &Supervisory Board Member Meetings and through individual meetings.
The Internal Auditing Department, which is a department for internal audits, conducted regularmeetings with the Audit & Supervisory Board Members to explain matters pertaining to the annual
plan, the status of audit implementation, and the results of internal audits, etc., including those forsubsidiary audits for the purpose of coordinating the internal audits and Audit & Supervisory
Board Members’ audits.
In addition, the Audit & Supervisory Board Members met regularly with the Accounting Auditor toconfirm the Accounting Auditor’s independence from the Directors, and to evaluate the system andoperation quality of the Accounting Auditor by exchanging opinions on the accounting audit’s planand status of implementation, matters that have an effect on the Company’s business performanceand financial position, key audit matters, and other matters.

(2) Policy Concerning Decisions on Dividends from Surplus, etc.
The Company regards providing returns to shareholders as a critical management issue. The Company’s
basic policy in this regard is to provide distribution of profit that is reflective of business results, while
maintaining a balance between returns to shareholders and an appropriate level of internal reserves for
growth investment in the future.
In the medium-term vision, the Company has set its target payout ratio (total return ratio) at
30% - 35%, with the aim of paying stable and continuous dividends.
Pursuant to the provisions in Article 459, paragraph 1 of the Company Act, it is stipulated in the Articles
of Incorporation of the Company that dividends from surplus can be determined by a resolution of theBoard of Directors. Likewise, the record date of the interim dividend and of the year-end dividend
should be September 30 and March 31 of every fiscal year, respectively, as stipulated in the Articles ofIncorporation and dividend shall be paid twice annually by a resolution of the Board of Directors, inprinciple.

46

Consolidated Financial Statements
Consolidated statement of financial position (As of March 31, 2023)(Million yen)
Item

AmountASSETS

Item

Amount515,954

LIABILITIESCurrent liabilities

436,469

Cash and cash equivalents

79,462

Trade and other payables

206,609

Trade and other receivables

245,890

Bonds and borrowings

162,189

Inventories

156,071

Current assets

Lease liabilities

7,685

Other financial assets

5,633

Other financial liabilities

23,939Other current assets

28,896

Income taxes payable

6,488

Provisions
Non-current assets

358

Other current liabilities

161,634

29,199Property, plant and equipment

47,188Goodwill

14,481

Bonds and borrowings

65,704

Intangible assets

28,055

Lease liabilities

12,992

Investments accounted for using theequity method

19,947

Other financial liabilities

3,512

Retirement benefit liabilities

6,198

Trade and other receivables

1,606

Provisions

2,155

Other investments

37,888Deferred tax liabilities

5,975

Other financial assets

6,656

Other non-current liabilities

1,156

Deferred tax assets

2,221

Other non-current assets

3,589

Non-current liabilities

Total liabilities

97,695534,164
EQUITY

EquityShare capital
Capital surplus

80,543

Treasury stock(1,259)Other components of equity

21,460Total equity attributable to ownersof the Parent
Non-controlling interests
677,588–

Retained earnings

Exchange differences on translationof foreign operations
Financial assets measured at fairvalue through other comprehensive
incomeCash flow hedges

Total assets

27,781

8,878
11,829752
128,525
14,898

Total equity

143,423

Total liabilities and equity

677,588(Note) Figures are rounded down to the nearest million yen.

47

Consolidated statement of income (From April 1, 2022 to March 31, 2023)(Million yen)
Item

AmountRevenue

911,408

Cost of sales(780,513)

Gross profit

130,894

Selling, general and administrative expenses(96,305)

Other income (expenses)
Gain (loss) on sale or disposal of property, plant and equipment andintangible assets, net
Impairment loss on property, plant and equipment and intangible
assetsOther income

(263)

6,006

Other expenses(1,016)(419)

Operating profit

4,307
38,896

Finance income
Interest income

441

Dividend income

1,062

Other finance income

315

1,819

Finance costs
Interest expenses(3,885)

Other finance costs(611)

Share of profit (loss) of investments accounted for using the equity
method(4,497)(521)

Profit before tax

35,696

Income tax expense(10,987)

Profit for the year

24,709Profit for the year attributable to:
Owners of the Parent

18,575

Non-controlling interests

6,133(Note) Figures are rounded down to the nearest million yen.

48

Consolidated statement of changes in equity (From April 1, 2022 to March 31, 2023)(Million yen)
Equity attributable to owners of the Parent
Other components of equity

Balance as of March 31, 2022

Share capital

Capital surplus

27,781

27,164Retained earnings

89,280

ProfitTreasury stock(1,305)

5,296

10,068

3,581

2,126

3,581

2,126

–

–

18,575

Other comprehensive income
Total comprehensive income
for the year

Financial assets
Exchangemeasured at fairdifferences onvalue through othertranslation ofcomprehensive
foreign operations
income––18,575

Dividends–(6,055)

Dividends paid to noncontrolling interests
Acquisition of treasury stock(2)

Disposition of treasury stock

(0)

47

Change due to businesscombination
Equity transactions with noncontrolling interests(47,290)

Share-based paymenttransactions

106

Put options granted to noncontrolling interests
Total transactions with owners(1,972)–

Reclassification from retained
earnings to capital surplus(49,157)(6,055)21,993(21,993)

Reclassification from othercomponents of equity toretained earnings
Balance as of March 31, 2023

45

736
27,781–80,543(365)(1,259)8,878

11,829Total othercomponents ofequityTotal equity
attributable toowners of the
ParentNon-controllinginterests

Total equity

16,563

159,484

39,798199,282–

18,575

6,133

24,709Equity attributable to owners of the Parent
Other components of equity
Cash flow hedges
Balance as of March 31, 2022

1,198

Remeasurement ofdefined benefit
pension plans–

ProfitOther comprehensive income

(445)

371

5,633

5,633

949

6,583

(445)

371

5,633

24,2097,082

31,292

Dividends–(6,055)

Dividends paid to noncontrolling interests––

Total comprehensive income
for the year

(6,055)(2,376)(2,376)

Acquisition of treasury stock

–

(2)

(2)

Disposition of treasury stock

–

47

47

Change due to businesscombination

–

–

1,188

1,188

Equity transactions with noncontrolling interests–(47,290)(30,795)(78,086)

Share-based paymenttransactions

–

106

106

Put options granted to noncontrolling interests–(1,972)(1,972)–(55,168)

–

–

–

(371)

(736)

–

–

–

21,460128,525

Total transactions with owners––

Reclassification from retained
earnings to capital surplus
Reclassification from othercomponents of equity toretained earnings
Balance as of March 31, 2023

752

(Note) Figures are rounded down to the nearest million yen.

49

(31,982)

14,898(87,150)

143,423

Non-consolidated Financial Statements
Non-consolidated balance sheet (As of March 31, 2023)(Million yen)
Item

AmountASSETS
Current assets
Cash and bank deposits
Notes receivable
Accounts receivable
Short-term investments
Inventories
Advance payments to suppliers
Prepaid expenses
Short-term loans receivable
Short-term loans to affiliates
Other accounts receivable
Derivatives
Other
Allowance for doubtful accounts

199,316
9,833
1,384
76,013
1
61,812
2,625
1,095
4
34,596
4,625
2,014
5,329
(21)

Long-term assets
Tangible fixed assets
Buildings
Machinery and equipment
VehiclesTools and fixtures
Land
Lease assets
Intangible fixed assets
SoftwareOther

181,335
2,484
1,435
207
0
483
5
351
697
652
45

Investments and other assets
Investments in securities
Shares of affiliates
Equity investments
Equity investment in affiliates
Long-term loans receivable
Long-term loans to employees
Long-term loans to subsidiaries andaffiliates
Doubtful accounts
Long-term prepaid expenses
Prepaid pension costs
Other
Allowance for doubtful accounts
Deferred assets
Bond issuance costs
Total assets

178,153
23,245
143,890
1,578
6,141
1,257
7
2,521
265
133
279
1,642
(2,807)65
65
380,717

Item
LIABILITIESCurrent liabilities
Notes payable
Import bills payable
Accounts payable
Short-term borrowings
Lease obligations
Other accounts payable
Accrued expenses
Accrued income taxes
Advances received
Deposits received
Deferred revenue
Asset retirement obligations
Derivatives
Other provisions
Other
Non-current liabilities
Bonds
Long-term borrowings
Lease obligations
Provision for employees’ retirement
and severance benefits
Provision for stock benefits
Asset retirement obligations
Deferred tax liabilities
Other
Total liabilities
NET ASSETS
Shareholders’ equity
Common stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Voluntary reserve
Retained earnings brought forward
Treasury stock
Valuation and translation adjustments
Net unrealized gains on securities, netof tax
Net losses on deferred hedges, net oftax
Total net assets
Total liabilities and net assets(Note) Figures are rounded down to the nearest million yen.

50

Amount210,945119
57,907
24,245
108,119
228
9,099
2,682
393
2,173
4,310
39
280
1,310
19
17
63,59915,00046,234
169
18
383
356
1,303
134
274,544
100,120
27,781
26,887
26,887046,701
131
46,5691,836
44,733(1,248)
6,051
5,237
814
106,172
380,717Non-consolidated statement of income (From April 1, 2022 to March 31, 2023)(Million yen)
Item

AmountRevenue

393,934

Cost of sales

375,563

Gross profit

18,370

Selling, general and administrative expenses

18,416

Operating loss

(45)

Non-operating income
Interest income

885

Dividend income

9,757

Foreign exchange gains

4,157

Other

465

15,266

Non-operating expenses
Interest expenses

2,634

Other

374

Ordinary income

3,009
12,211

Extraordinary gains
Gain on sale of tangible fixed assets

12Gain on sale of intangible fixed assets

1

Gain on sale of investments in securities

413

427

Extraordinary losses
Loss on disposal of fixed assets

36

Loss on sale of investments in securities

2

Impairment loss on investments in securities

1,504

Loss on refunding due to capital reduction of subsidiaries andaffiliates
Provision of allowance for doubtful accounts for subsidiaries andaffiliates and loss on affiliated business
Income before income taxes

2,278

Income taxes - current

1,030

Income taxes - deferred(962)

Net income

3

3,823
8,815
68
8,747

(Note) Figures are rounded down to the nearest million yen.

51

Non-consolidated statement of changes in equity (From April 1, 2022 to March 31, 2023)(Million yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Commonstock

Balance at the beginningof the fiscal year

Legal capital Other capital Total capitalsurplussurplussurplus27,781

26,887026,887

Legalretainedearnings

Voluntary
reserve

Retainedearnings
brought
forwardTotal
retainedearnings

131

1,836

42,09344,061

Changes during the fiscal
year
Dividends–(6,107)(6,107)

Net income

–

8,747

8,747

Acquisition of treasury
stock

–

–

Disposition of treasury
stock

–

–

Net changes of items
other than shareholders’equity during the fiscal
year

–

–

Total changes during
the fiscal year

–

–

–

–

–

–

2,640

2,640

Balance at the end of the
fiscal year

27,781

26,887026,887131

1,836

44,73346,701

Shareholders’ equity

Balance at the beginningof the fiscal year

Valuation and translation adjustments

Treasury stock

Total
shareholders’equity(1,294)97,435Net unrealized
Net gains (losses) Total valuation
gains onon deferred
and translation
securities, net ofhedges, net of tax
adjustments
tax
4,025

1,186

Total net assets

5,211

102,646

Changes during the fiscal
year
Dividends(6,107)–(6,107)

Net income

8,747

–

8,747

Acquisition of treasury
stock

(2)

(2)

–

(2)

Disposition of treasury
stock

47

47

–

47

Net changes of items
other than shareholders’equity during the fiscal
year

–

1,211

(371)

840

840

Total changes during
the fiscal year

45

2,685

1,211

(371)

840

3,525

Balance at the end of the
fiscal year

(1,248)100,120

5,237

814

6,051

106,172(Note) Figures are rounded down to the nearest million yen.

52

Independent Auditors’ Audit Report
May 23, 2023
To the Board of Directors ofKanematsu Corporation
PricewaterhouseCoopers Aarata LLC
Designated Limited Liability Partner,
Certified Public Accountant:
Takayoshi Yano
Designated Limited Liability Partner,
Certified Public Accountant:
Masaki Nitta
Designated Limited Liability Partner,
Certified Public Accountant:
Shinya Hiraoka
OpinionPursuant to Article 444, paragraph 4 of the Companies Act, we have audited the consolidated financial statements,
namely, the consolidated statement of financial position, the consolidated statement of income, the consolidated
statement of changes in equity and the notes to the consolidated financial statements, of Kanematsu Corporation(the “Company”) for the fiscal year from April 1, 2022 to March 31, 2023.
In our opinion, the consolidated financial statements referred to above were prepared in accordance with accounting
standards that omit some disclosure items required under International Financial Reporting Standards pursuant to
the latter part of Article 120, paragraph 1 of the Regulations on Corporate Accounting, and present fairly, in allmaterial respects, the financial position and results of operations of the Company and its consolidated subsidiaries
for the period covered by these consolidated financial statements.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility under
the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Consolidated Financial
Statements.” We are independent of the Company and its consolidated subsidiaries in accordance with theprovisions related to professional ethics in Japan, and we comply with other ethical responsibilities as auditors. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Other information
Other information consists of the business report and the supplementary schedules. Management is responsible forthe preparation and disclosure of the other information. Audit & Supervisory Board Members and the Audit &Supervisory Board are responsible for monitoring the performance of duties by the Directors in designing andoperating the process for reporting the other information.
The other information is not subject to our opinion on the consolidated financial statements and we do not express
any opinion on the other information.
Our responsibility for the audit of the consolidated financial statements is to read the other information and, in
doing so, to examine whether there is any material difference between the other information and the consolidated
financial statements, as well as the knowledge that we acquired during the audit process, and to pay attention towhether there is any sign of material misstatement in the other information other than such material difference.
If we determine that there is material misstatement in the other information based on the work we conducted, weare required to report that fact.
We have no matters to report as to the other information.

53

Responsibility of Management, Audit & Supervisory Board Members, and the Audit & Supervisory Board for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with accounting standards that omit some disclosure items required under International Financial
Reporting Standards pursuant to the latter part of Article 120, paragraph 1 of the Regulations on Corporate
Accounting, and for designing and operating such internal control as management determines is necessary to enable
the preparation and fair presentation of the consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing these consolidated financial statements, management is responsible for evaluating the appropriatenessof preparing the consolidated financial statements on a going concern assumption, excluding the cases wheremanagement intends to liquidate or suspend the business or when there are no realistic alternatives other than the
aforementioned, and disclosing matters related to a going concern when disclosure is obligatory based on
accounting standards that omit some disclosure items required under International Financial Reporting Standards
pursuant to the latter part of Article 120, paragraph 1 of the Regulations on Corporate Accounting.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for monitoring theperformance of duties by the Directors in designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
The auditor’s responsibility is to obtain reasonable assurance on if the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to express an opinion on these consolidated
financial statements from an independent position in the audit report based on the audit conducted by the auditor.
Misstatement can occur due to fraud or error, and its materiality is determined by reasonably estimating whether it
individually or cumulatively influences the decision-making of the users of the consolidated financial statements.
The auditor conducts the following in accordance with auditing standards generally accepted in Japan and makes
judgements as professional specialist throughout the auditing process, while maintaining professional skepticism.
 Identify and assess the risks of material misstatement due to fraud or error. Design and perform audit
procedure that deals with the risks of material misstatement. The selection and application of the audit
procedures depend on the auditor’s judgment. Moreover, obtain sufficient and appropriate audit evidence toprovide a basis for expressing the audit opinion.
 The purpose of the audit of the consolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk assessments, the auditor considers
internal controls relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
 Evaluate the appropriateness of accounting policies used by management and the application methods thereof,
as well as the reasonableness of accounting estimates made by management and the propriety of relevant
notes.
 Conclude whether the preparation of consolidated financial statements by management under the going
concern assumption is appropriate or not and, based on the audit evidence obtained, conclude if there arematerial uncertainties regarding events and conditions where significant doubt is cast upon the going concern
assumption. When there are material uncertainties regarding the going concern assumption, the auditor isrequired to raise awareness concerning the notes to the consolidated financial statements in the audit report.
When the notes to the consolidated financial statements regarding material uncertainties are concluded to beinappropriate, it is required that the auditor expresses a qualified opinion with exceptions on the consolidated
financial statements. Although the conclusion by the auditor is based on audit evidence obtained up until theissue date of the audit report, there are possibilities where the Company may not continue as a going concern
due to future events and conditions.
 Evaluate whether the presentation and the relevant notes of the consolidated financial statements are preparedin accordance with accounting standards that omit some disclosure items required under International
Financial Reporting Standards pursuant to the latter part of Article 120, paragraph 1 of the Regulations on
Corporate Accounting, as well as evaluate whether the presentation, structure and content of the consolidated
financial statements, including the relevant notes, and the transactions and accounting events based on the
consolidated financial statements are presented fairly.
 Obtain sufficient and appropriate audit evidence concerning the financial information of the Company and its
subsidiaries in order to express an opinion on these consolidated financial statements. The auditor is
responsible for instructing, monitoring, and performing the audit of the consolidated financial statements. The
auditor is solely responsible for the audit opinion.
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The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board on the scope andthe performing period of the audit planned, important matters related to the audit including material weakness ininternal control identified during the audit, and other matters required by the auditing standards.
The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board on compliance ofthe provisions related to professional ethics in Japan concerning independence, matters which are reasonably
considered to be of influence on the independence of the auditor, and any safeguard measures taken to eliminate or
reduce hindering factors.
Conflicts of Interest
We have no interest in the Company and its consolidated subsidiaries which should be disclosed in compliance with
the Certified Public Accountants Act.

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Independent Auditors’ Audit Report
May 23, 2023
To the Board of Directors ofKanematsu Corporation
PricewaterhouseCoopers Aarata LLC
Designated Limited Liability Partner,
Certified Public Accountant:
Takayoshi Yano
Designated Limited Liability Partner,
Certified Public Accountant:
Masaki Nitta
Designated Limited Liability Partner,
Certified Public Accountant:
Shinya Hiraoka
OpinionPursuant to Article 436, paragraph 2, item 1 of the Companies Act, we have audited the non-consolidated financial
statements, namely, the non-consolidated balance sheet, the non-consolidated statement of income, the nonconsolidated statement of changes in equity, the notes to the non-consolidated financial statements, and the
supplementary schedules (hereinafter the “non-consolidated financial statements and others”), of Kanematsu
Corporation (the “Company”) for the 129th fiscal term from April 1, 2022 to March 31, 2023.
In our opinion, the non-consolidated financial statements and others referred to above present fairly, in all material
respects, the financial position and results of operations of the Company for the period covered by these nonconsolidated financial statements and others in conformity with accounting principles generally accepted in Japan.
Basis for the Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibility under
the auditing standards is stated in “Auditor’s Responsibility for the Audit of the Non-consolidated Financial
Statements and Others.” We are independent of the Company in accordance with the provisions related toprofessional ethics in Japan, and we comply with other ethical responsibilities as auditors. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Other information
Other information consists of the business report and the supplementary schedules. Management is responsible forthe preparation and disclosure of the other information. Audit & Supervisory Board Members and the Audit &Supervisory Board are responsible for monitoring the performance of duties by the Directors in designing andoperating the process for reporting the other information.
The other information is not subject to our opinion on the non-consolidated financial statements and others and we
do not express any opinion on the other information.
Our responsibility for the audit of the non-consolidated financial statements and others is to read the otherinformation and, in doing so, to examine whether there is any material difference between the other information andthe non-consolidated financial statements and others, as well as the knowledge that we acquired during the audit
process, and to pay attention to whether there is any sign of material misstatement in the other information otherthan such material difference.
If we determine that there is material misstatement in the other information based on the work we conducted, weare required to report that fact.
We have no matters to report as to the other information.

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Responsibility of Management, Audit & Supervisory Board Members, and the Audit & Supervisory Board for the
Non-consolidated Financial Statements and Others
Management is responsible for the preparation and fair presentation of these non-consolidated financial statements
and others in accordance with accounting principles generally accepted in Japan, and for designing and operatingsuch internal control as management determines is necessary to enable the preparation and fair presentation of the
non-consolidated financial statements and others that are free from material misstatement, whether due to fraud or
error.
In preparing these non-consolidated financial statements and others, management is responsible for evaluating theappropriateness of preparing the non-consolidated financial statements and others on a going concern assumption,and disclosing matters related to a going concern when disclosure is obligatory in accordance with accounting
principles generally accepted in Japan.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible for monitoring theperformance of duties by the Directors in designing and operating the financial reporting process.
Auditor’s Responsibility for the Audit of the Non-consolidated Financial Statements and Others
The auditor’s responsibility is to obtain reasonable assurance on if the non-consolidated financial statements andothers as a whole are free from material misstatement, whether due to fraud or error, and to express an opinion onthese non-consolidated financial statements and others from an independent position in the audit report based on theaudit conducted by the auditor. Misstatement can occur due to fraud or error, and its materiality is determined byreasonably estimating whether it individually or cumulatively influences the decision-making of the users of the
non-consolidated financial statements and others.
The auditor conducts the following in accordance with auditing standards generally accepted in Japan and makes
judgements as professional specialist throughout the auditing process, while maintaining professional skepticism.
 Identify and assess the risks of material misstatement due to fraud or error. Design and perform audit
procedure that deals with the risks of material misstatement. The selection and application of the audit
procedures depend on the auditor’s judgment. Moreover, obtain sufficient and appropriate audit evidence toprovide a basis for expressing the audit opinion.
 The purpose of the audit of the non-consolidated financial statements and others is not to express an opinion
on the effectiveness of the entity’s internal control, but in making these risk assessments, the auditor considers
internal controls relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
 Evaluate the appropriateness of accounting policies used by management and the application methods thereof,
as well as the reasonableness of accounting estimates made by management and the propriety of relevant
notes.
 Conclude whether the preparation of the non-consolidated financial statements and others by management
under the going concern assumption is appropriate or not and, based on the audit evidence obtained, conclude
if there are material uncertainties regarding events and conditions where significant doubt is cast upon thegoing concern assumption. When there are material uncertainties regarding the going concern assumption, theauditor is required to raise awareness concerning the notes to the non-consolidated financial statements andothers in the audit report. When the notes to the non-consolidated financial statements and others regarding
material uncertainties are concluded to be inappropriate, it is required that the auditor expresses a qualified
opinion with exceptions on the non-consolidated financial statements and others. Although the conclusion by
the auditor is based on audit evidence obtained up until the issue date of the audit report, there are possibilities
where the Company may not continue as a going concern due to future events and conditions.
 Evaluate whether the presentation and the relevant notes of the non-consolidated financial statements andothers are prepared in accordance with accounting principles generally accepted in Japan, as well as evaluate
whether the presentation, structure and content of the non-consolidated financial statements and others,
including its relevant notes, and the transactions and accounting events based on the non-consolidated
financial statements and others are presented fairly.
The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board on the scope andthe performing period of the audit planned, important matters related to the audit including material weakness ininternal control identified during the audit, and other matters required by the auditing standards.
The auditor reports to Audit & Supervisory Board Members and the Audit & Supervisory Board on compliance ofthe provisions related to professional ethics in Japan concerning independence, matters which are reasonably
considered to be of influence on the independence of the auditor, and any safeguard measures taken to eliminate or
reduce hindering factors.

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Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public
Accountants Act.

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Audit Report
The Audit & Supervisory Board, hereby reports as follows regarding the performance of duties by the
Directors of Kanematsu Corporation (the “Company”) during its 129th fiscal term, from April 1, 2022 toMarch 31, 2023. This Audit Report was prepared based on reports prepared by each Audit & Supervisory
Board Member, and as a result of subsequent deliberations.
1.

Method of the audits by the individual Audit & Supervisory Board Members and the Audit & Supervisory
Board; content of audits(1) In addition to receiving reports on the progress in and results of audits by the individual Audit &Supervisory Board Members, based on the Audit & Supervisory Board’s policies and audit plans forthe current fiscal term, the Audit & Supervisory Board also received reports from the Directors andthe Accounting Auditor regarding the performance of its duties, and requested explanations from it
as necessary.
(2) In accordance with the auditing standards set forth by the Audit & Supervisory Board, and incompliance with the policies and audit plans for the current fiscal term, each of the Audit &Supervisory Board Members worked to communicate with the Directors, the Internal Auditing
Department, and other employees in collecting information and establishing an appropriate audit
environment, and audits were implemented as follows:(i) Audit & Supervisory Board Members participated in meetings of the Board of Directors andother key meetings, received reports from the Directors and other employees regarding theperformance of their duties, and when necessary, requested explanations of those reports. Audit& Supervisory Board Members also reviewed key decision documents, and conducted surveysof the operations and assets of both the head office and major local offices. Regarding
subsidiaries, Audit & Supervisory Board Members worked to communicate with thosesubsidiaries’ Directors, Audit & Supervisory Board Members and other parties and received
business reports from subsidiaries as necessary.
(ii) As for the details of the resolution of the Board of Directors related to the establishment of thesystems as indicated in the Business Report to ensure that the execution of the duties of
Directors conform to laws and regulations and the Articles of Incorporation, and the systems
necessary to ensure appropriate operations of corporations and their subsidiaries as stipulated in
Article 100, paragraphs 1 and 3 of the Regulations for Enforcement of the Companies Act, andthe condition of the systems put in place in accordance with the aforesaid resolution (internal
control system), we received periodical reporting from the Directors and other employees,
sought explanations as necessary, and provided our recommendations.
(iii) While also monitoring and reviewing the audit of the Accounting Auditor to ensure it
maintained an independent position and conducted its audits fairly, Audit & Supervisory Board
Members received reports from them regarding the performance of its duties, and whennecessary, asked for further explanation regarding those reports. Audit & Supervisory Board
Members also received notice from the Accounting Auditor in accordance with “the system forensuring appropriate execution of its duties” (as enumerated in each item of Article 131 of theRegulations on Corporate Accounting) in compliance with the “Quality Control Standards
Relating to Auditing” (adopted by the Business Accounting Deliberations Council on October28, 2005), and, where necessary, Audit & Supervisory Board Members requested further
explanation regarding that notice.
Based on the above methods, Audit & Supervisory Board Members proceeded to review theBusiness Report and supplementary schedules, the Non-consolidated Financial Statements (consistof the non-consolidated balance sheet, the non-consolidated statement of income, the nonconsolidated statement of changes in equity, and the notes to the non-consolidated financial
statements) with supplementary schedules, and the Consolidated Financial Statements (consist of theconsolidated statement of financial position, the consolidated statement of income, the consolidated
statement of changes in equity, and the notes to the consolidated financial statements) for the fiscal
year under review.

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2.

Audit Results(1) Results of Audit of Business Report, etc.
(i) The Audit & Supervisory Board confirms that the Business Report and supplementary schedules
conformed to laws and regulations, and the Articles of Incorporation, and that they accurately
present the situation of the Company.
(ii) With respect to the performance of duties by Directors, the Audit & Supervisory Board foundno improper acts or important violation of laws and regulations or the Articles of Incorporation.
(iii) The Audit & Supervisory Board confirms that decisions by the Board of Directors regarding theCompany’s internal control systems to be fair and adequate, and found no areas that require
mention regarding the description of the internal control systems in the Business Report and theperformance of duties by Directors.
(2) Results of Audit of Non-consolidated Financial Statements and Supplementary Schedules
The Audit & Supervisory Board confirms that the methods used and results achieved by the
Accounting Auditor, PricewaterhouseCoopers Aarata LLC, to be fair and adequate.
(3) Results of Audit of Consolidated Financial Statements
The Audit & Supervisory Board confirms that the methods used and results achieved by the
Accounting Auditor, PricewaterhouseCoopers Aarata LLC, to be fair and adequate.
May 24, 2023
Audit & Supervisory Board
Kanematsu Corporation
Tetsuro Murao
Audit & Supervisory Board Member (Fulltime)
Motohisa Hirai
Audit & Supervisory Board Member (Fulltime)
Yusaku Kurahashi
Outside Audit & Supervisory Board Member
Nobuko Inaba
Outside Audit & Supervisory Board Member

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