バルカー（7995） – Notice of Convocation Annual General Meeting 2022

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. NOTICE OF THE 122ND ANNUAL GENERAL MEETING OF SHAREHOLDERS VALQUA, LTD. – 1 – Securities code: 7995 Corporate Image we aim to become in the coming 100th anniversary A Challenging Company that Challenges the Future and the Unknown – To contribute to the richness of human race and global environment – 1. Endless pursuit and monitoring of growth strategy 2. Strengthening management foundation that will solidify company growth 3. Active engagement in “environment, society, and corporate governance” in becoming a better global citizen Corporate Philosophy THE VALQUA WAY – 2 – Greetings We thank our shareholders for their continuous patronage. The Company has decided to hold the 122nd Annual General Meeting of Shareholders on Wednesday, June 22, 2022. You are cordially invited to attend the meeting. In the current fiscal year, heightened global tensions brought the emergence of geopolitical risks, and the international community faced an unprecedented crisis. We are living in an era that will be characterized as a major historical turning point when we look back in the future, and we believe that we will have to continue dealing with dramatic changes as we move forward. Despite such dramatic changes in the global situation, we have been working to strengthen our product competitiveness and supply capacity for growth markets and to reform the structure of our business in line with the strategies described in “New Frontier 2022” (NF2022), the Company’s medium-term management plan. As a result of these efforts, we have been able to achieve all-time high consolidated business performance while also completing NF2022 a year ahead of schedule, and we will launch NF2023 in the 123rd term. Under NF2023, we will take on the challenge of laying the foundations for new growth ahead of the 100th anniversary of our founding through a “change of mindset” and “bold corporate transformation,” with the aim of being a company that continues to create new value through both Hardware and Services (H&S) to earn the trust of our customers based on “THE VALQUA WAY.” We would like to ask our shareholders for further support. June 2022 Toshikazu Takisawa Representative Director, Chairman and CEO Yoshihiro Hombo Representative Director, President and COO – 3 – To our shareholders: Securities code: 7995 June 3, 2022 Yoshihiro Hombo Representative Director and President VALQUA, LTD. 1-1, Osaki 2-chome, Shinagawa-ku, Tokyo Notice of the 122nd Annual General Meeting of Shareholders We hereby notify you that the 122nd Annual General Meeting of Shareholders of VALQUA, LTD. (the “Company”) will be held as indicated below. Institutional investors can utilize the electronic voting platform operated by ICJ, Inc. 1. Date and time Wednesday, June 22, 2022, at 10:00 a.m. (JST) 2. Venue Large Conference Room, Head Office of VALQUA, LTD. 24th Floor, ThinkPark Tower, 1-1, Osaki 2-chome, Shinagawa-ku, Tokyo 3. Purpose of the meeting Matters to be reported 4. Matters regarding the (1) In the event that the exercise of voting rights document does not exercise of voting rights 1. The Business Report and the Consolidated Financial Statements for the 122nd fiscal year (from April 1, 2021 to March 31, 2022), and the results of audits of the Consolidated Financial Statements by the Financial Auditor and the Board of Corporate Auditors 2. The Non-consolidated Financial Statements for the 122nd fiscal year (from April 1, 2021 to March 31, 2022) Matters to be resolved Proposal No. 1: Appropriation of Surplus Proposal No. 2: Partial Amendment to the Articles of Incorporation Proposal No. 3: Election of One Auditor indicate approval or disapproval of the proposals, it shall be treated as indicating the intention to approve the proposals. (2) In the event that voting rights are exercised in duplicate, in writing and via the internet, etc., the vote via the internet, etc. shall be treated as valid. (3) In the event that voting rights are exercised multiple times via the internet, etc. only the last vote exercised shall be treated as valid. (4) In the event that voting rights are exercised by proxy on the appointed date, they may be delegated to one other shareholder who possesses voting rights. In such a case, please submit documentation which certifies the proxy rights. – 4 – 5. Guide to internet-based (1) This notice is also posted on the Company’s website disclosure (https://www.valqua.co.jp). (2) Regarding the documents which should be attached to this notice, the “Consolidated Statement of Changes in Net Assets” and “Notes to the Consolidated Financial Statements” of the Consolidated Financial Statements as well as the “Non-consolidated Statement of Changes in Net Assets” and “Notes to the Non-consolidated Financial Statements” of the Non-consolidated Financial Statements are posted on the Company’s website (https://www.valqua.co.jp) as stipulated by the laws and regulations and the provisions of Article 16 of the Company’s Articles of Incorporation, so they are not listed in the attached documents of this notice. Accordingly, the documents attached to this notice are part of the Consolidated Financial Statements and the Non-consolidated Financial Statements that were audited by the Auditors and the Financial Auditors when preparing the audit report or the financial audit report. (3) In the event that corrections are made to the Reference Documents for the General Meeting of Shareholders, the Business Report, the Non-consolidated Financial Statements, and the Consolidated Financial Statements, the edited corrections shall be posted on the Company’s website (https://www.valqua.co.jp). – 5 – [Attached document] Business Report (from April 1, 2021 to March 31, 2022) 1. Status of the corporate group (1) Progress and results of operations 1) Business overview In the fiscal year under review, although the spread of COVID-19 was curbed to some extent, the Japanese economy faced a limited recovery in private consumption due to the impact of restrictions on activities and concerns over re-spread of infection by mutant strains of the virus, in addition to heightened caution about rising prices. In the manufacturing industry, to which the Company belongs, although production trends were favorable, especially for capital goods, production in some industries was hampered by shortages of semiconductors and other components and the stagnation of logistics, and higher prices for raw materials and other items put pressure on corporate earnings. Meanwhile, in overseas economies, private consumption and corporate production activities began to improve, especially in developed countries. However, the momentum of recovery slowed toward the end of the fiscal year under review, weighed down by rising distribution costs and resource prices and the re-spread of infections by mutant strains of the virus, as well as the emergence of geopolitical risks, such as Russia’s invasion of Ukraine. Under such a business environment, the Group has been working to strengthen our product competitiveness and supply capacity for growth markets such as semiconductors and to reform corporate and business structure in line with the strategies described in “New Frontier 2022” (NF2022), the three-year medium-term management plan that was in its second year in the fiscal year under review. As a consequence, the Group reports the following consolidated results for the fiscal year under review: net sales of ¥53,167 million (18.9% increase year on year), operating profit of ¥6,972 million (100.6% increase year on year), ordinary profit of ¥7,193 million (95.8% increase year on year), and profit attributable to owners of parent of ¥4,841 million (56.7% increase year on year). Consolidated operating profit and profit attributable to owners of parent in the fiscal year under review exceeded the management targets set under medium-term management plan NF2022, which had next fiscal year as its final year. 2) Overview of business by segment Net sales by segment of the Group were as follows: Category Seal Products Business High Performance Plastics Products Business Silicon Wafer Reclaim and Other Businesses Total Net sales Current fiscal year Millions of yen 34,995 Previous fiscal year Millions of yen 31,349 Changes Millions of yen 3,645 Changes (%) 15,088 3,082 53,167 10,742 2,625 44,717 4,346 457 8,449 % 11.6 40.5 17.4 18.9 (Note) Figures are rounded down to the nearest million. (2) Capital expenditures Capital expenditures during the fiscal year ended March 31, 2022 reached ¥4,200 million based on completed construction work. The Group primarily invested in enhancing production capacity, streamlining, doing research and development and renewing a new ERP system. – 6 – (3) Financing activities During the fiscal year under review, the Group raised ¥1,072 million from long-term borrowings for business operations such as making capital investment. (4) Business transfers, absorption-type company split, or incorporation-type company split (5) Transfer of business from other companies Not applicable. Not applicable. Not applicable. Not applicable. (8) Issues to be addressed (6) Succession of rights and obligations regarding the business of another corporation, etc. due to absorption-type merger or absorption-type company split (7) Acquisition or disposal of another company’s shares or other equity or share acquisition rights, etc. As we begin the fiscal year ending March 31, 2023, we have noted many uncertainties in the business environment surrounding the Company that could have an impact on the global economic recovery, such as the COVID-19 pandemic and the situation in Ukraine. Given these business conditions, the Company formulated a two-year medium-term management plan, “New Frontier 2023” (NF2023), which started in the fiscal year ending March 31, 2023. The plan expresses our commitment in the following basic policy: In a rapidly changing global situation, we will uphold our customers’ trust according to “THE VALQUA WAY,” aiming to become a company that continues to create new value through both Hardware and Services (H&S). 1. Adopt new materials and enter new markets and businesses by accelerating a bold strategy for M&As and business alliances 2. Decisively move forward with supply chain reforms in response to increasing geopolitical 3. Establish an AI/IT solutions business that can continuously create value for our customers 4. Accelerate R&D and human resource development in order to expand into new business risks areas 5. Further strengthen existing businesses by increasing capital investment and enhancing sales channels With this policy, we have made it more certain that we will achieve our long-term management targets of consolidated net sales of ¥80.0 billion and ROE of 15% or higher by the fiscal year ending March 31, 2027, in which we will celebrate the 100th anniversary of the Company’s founding. We will also steadily accelerate these strategies while maintaining our firm commitment to further expansion of the range of our business activities. With respect to the Seal Products Business, we will work to enhance profitability based on the selection and focus of our existing core areas while strengthening cooperation between manufacturing, sales, and engineering in new and high growth areas, further improve QCDS (Quality, Cost, Delivery and Service) from a customer perspective, and provide the Company’s original seal engineering services. In the advanced industries market, where the Company expects continued growth in the future, the Company aims to expand dramatically by working diligently to enhance a global solution deployment, development and manufacturing organization for high-performance seal products. – 7 – With respect to the High Performance Plastics Business, the Company plans to increase the scale of the business and enhance profitability by actively developing new materials and creating high value-added for the business. With respect to the Silicon Wafer Reclaim and Other Businesses, we will steadily execute investment tied to growth and improving earning capacity based on “Establish an AI/IT solutions business that can continuously create value for our customers,” which will be one of the basic policies of NF2023. Moreover, we will apply the “core technologies” cultivated to date in new product development and existing businesses, and aggressively invest in R&D and strengthen our development system to expand into new growth areas. With respect to the deployment of business overseas, we will further enhance our risk management system, including decisive implementation of supply chain reforms to address geopolitical risks, execute a differentiation strategy centered on the H&S Business, and expand business into new markets. Sustainability within the Group consists of achieving sound and sustainable growth and a sustainable society based on the corporate philosophy known as “THE VALQUA WAY.” We believe we will contribute to our stakeholders around the world by promoting sustainability activities through our business activities. Regarding human resource development, in an environment where the world faces an unprecedented crisis, we will go back to strengthening visionary management and work actively to develop core human resources who will continue to create new value by instilling “THE VALQUA WAY” into worksites. In conjunction with the promotion of NF2023, we will take on the challenge of laying the foundations for new growth ahead of the 100th anniversary of our founding through a change of mindset and bold corporate transformation. Moreover, the entire Group will boldly take on the challenge of successfully executing the strategy together while flexibly adapting to dramatic social changes in addition to strengthening the creation of a Group system for risk management and adhering to compliance. – 8 – (9) Summary of assets and profit or loss Net sales Ordinary profit (Millions of yen) 53,16751,24348,21244,7175,791(Millions of yen) Profit attributable to owners of parent (Millions of yen) 7,1934,0874,8414,2563,6732,9183,090119th term 120th term 121st term 122st term119th term 120th term 121st term 122st term119th term 120th term 121st term 122st termBasic earnings per share Total assets Net assets (Yen) 273.98(Millions of yen) 60,200232.43165.85175.2749,53548,12852,69134,37834,930(Millions of yen) 40,97937,274 119th term 120th term 121st term 122st term119th term 120th term 121st term 122st term119th term 120th term 121st term 122st termCategory Net sales Ordinary profit Profit attributable to owners of parent Basic earnings per share Total assets Net assets (Millions of yen) (Millions of yen) (Millions of yen) (Yen) (Millions of yen) (Millions of yen) 119th term (Fiscal year ended March 31, 2019) 120th term (Fiscal year ended March 31, 2020) 121st term (Fiscal year ended March 31, 2021) Current fiscal year (Fiscal year ended March 31, 2022) 51,243 48,212 44,717 53,167 5,791 4,256 3,673 7,193 4,087 232.43 49,535 2,918 165.85 48,128 3,090 175.27 52,691 4,841 273.98 60,200 34,378 34,930 37,274 40,979 Net assets per share (Yen) 1,867.57 1,893.45 2,019.94 2,246.76 (Notes) 1. Figures are rounded down to the nearest million. 2. Basic earnings per share are calculated based on the average total number of issued shares, excluding treasury shares, during the term. end of the term. 3. Net assets per share are calculated based on the total number of issued shares excluding treasury shares at the 4. In the 120th term, our corporate production activities were significantly affected by the global spread of COVID-19. However, the Group worked to develop and reinforce the corporate foundation to realize “sound and sustainable growth” by executing the strategies described in the “New Valqua Stage Eight” (NV·S8) eighth medium-term management plan. 5. In the 121st term, we were strongly affected by the spread of COVID-19 infections. However, the Group promoted strategies for further expansion in the future by executing the strategies described in the “New Valqua Stage Eight” (NV·S8) eighth medium-term management plan. 6. The situation in the current fiscal year is as described in “Progress and results of operations” in section (1) above. 7. The Company adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant ASBJ regulations from the beginning of the fiscal year under review. Figures for the fiscal year under review are after the adoption of the accounting standard and relevant ASBJ regulations. – 9 – (10) Parent company and major subsidiaries 1) Relationship with the parent company Not applicable. 2) Major subsidiaries Company name Share capital Major businesses Company’s shareholding ratio VALQUA NGC, INC. US$2,437 thousand 100% VALQUA AMERICA, INC. US$1,260 thousand 100% Product sales within each business VALQUA TECHNO CO., LTD. VALQUA SES CO., LTD. VALQUA SEAL SOLUTIONS CO., LTD. KYUSHU VALQUA CO., LTD. VALQUA FFT INC. VALQUA METAL TECHNOLOGY CO., LTD. VALQUA SEAL PRODUCTS (SHANGHAI) CO., LTD. VALQUA (SHANGHAI) TRADING CO., LTD. SHANGHAI VALQUA FLUOROCARBON PRODUCTS CO., LTD. VALQUA KOREA CO., LTD. TAIWAN VALQUA ENGINEERING INTERNATIONAL, LTD. VALQUA VIETNAM CO., LTD. VALQUA INDUSTRIES (THAILAND), LTD. ¥30 million 100% Product sales within each business ¥30 million 100% Product sales within each business ¥90 million 100% Manufacturing of seal products ¥30 million 100% Manufacturing of seal products, and solar power generation business ¥472 million 83.6% Silicon wafer reclaiming and sales ¥33 million 67.0% Manufacturing of seal products and high performance plastic products Manufacturing and sales of high performance plastic products ¥1,150 million 100% Manufacturing of seal products and high performance plastic products and product sales within each business RMB1,655 thousand 100% Product sales within each business RMB65,550 thousand 100% Manufacturing and sales of high performance plastic products KRW10,859 million 100% NT$100 million 100% US$3,000 thousand 100% 126 million of Thai Baht 95.3% Manufacturing of seal products and product sales within each business Manufacturing of seal products and high performance plastic products and product sales within each business Manufacturing of seal products and product sales within each business Manufacturing of seal products and product sales within each business VALQUA INDUSTRIES SINGAPORE PTE. LTD. (Notes) 1. As of March 31, 2022, the Company has 18 consolidated subsidiaries including the companies listed above. Product sales within each business US$2,500 thousand 100% (11) Major businesses (as of March 31, 2022) Business division Main products and businesses Seal Products Business Plant, equipment, and piping gaskets Equipment gland packing Various rubber products (O-rings, etc.) for industrial and transportation equipment Rubber molded products for semiconductor manufacturing equipment Automobile parts High Performance Plastics Products Business Fluorocarbon materials (sheets, rods, etc.) Fluorocarbon molded products Fluorocarbon film and tape products Fluorocarbon lining products and related services Silicon Wafer Reclaim and Other Businesses Silicon wafer reclaiming LED lighting Solar power generation H&S Business – 10 – Company name Name Location (12) Major sales office and plants (as of March 31, 2022) Domestic VALQUA, LTD. VALQUA TECHNO CO., LTD. VALQUA SES CO., LTD. VALQUA SEAL SOLUTIONS CO., LTD. KYUSHU VALQUA CO., LTD. VALQUA FFT INC. VALQUA METAL TECHNOLOGY CO., LTD. Overseas Head office MRT Center Osaka Sales Office Nagoya Sales Office Kitakyusyu Sales Office Shinagawa-ku, Tokyo Machida-shi, Tokyo Osaka-shi, Osaka Nagoya-shi, Aichi Kitakyushu-shi, Fukuoka Head office Head office Head office Head office Head office Head office Shinagawa-ku, Tokyo Ichihara-shi, Chiba Gojo-shi, Nara Iizuka-shi, Fukuoka Shinagawa-ku, Tokyo Shinshiro-shi, Aichi Company name Country name Location VALQUA NGC, INC. VALQUA AMERICA, INC. United States United States Houston, Texas Sunnyvale, California VALQUA SEAL PRODUCTS (SHANGHAI) CO., LTD. VALQUA (SHANGHAI) TRADING CO., LTD. SHANGHAI VALQUA FLUOROCARBON PRODUCTS CO., LTD. China China China VALQUA KOREA CO., LTD. South Korea TAIWAN VALQUA ENGINEERING INTERNATIONAL, LTD. Taiwan VALQUA VIETNAM CO., LTD. VALQUA INDUSTRIES (THAILAND), LTD. VALQUA INDUSTRIES SINGAPORE PTE. LTD. Vietnam Thailand Singapore Shanghai Shanghai Shanghai Seoul Kaohsiung Hai Duong Province Samut Prakan Singapore – 11 – (13) Employees (as of March 31, 2022) 1) Employees of the Group Number of employees 1,772 (171) Change from the end of previous fiscal year Decrease of 28 (increase of 10) (Note) The number of employees excludes employees transferred from a Group company to an outside Group company, and includes employees transferred from an outside Group company to a Group company, and the number of temporary employees is indicated in parentheses as the average number of employed persons during the year. 2) Employees of the Company Number of employees Average age Average length of service 410 (110) 47.1 years old 18.3 years (Note) The number of employees excludes employees transferred from the Company to an outside company, and includes employees transferred from an outside company to the Company, and the number of temporary employees is indicated in parentheses as the average number of employed persons during the year. Change from the end of previous fiscal year Decrease of 23 (increase of 5) Lender Outstanding borrowings (14) Major lenders (as of March 31, 2022) Sumitomo Mitsui Banking Corporation Mizuho Bank, Ltd. Sumitomo Mitsui Trust Bank, Limited Sumitomo Mitsui Banking Corporation (China) Limited (Notes) 1. Figures are rounded down to the nearest million. efficiently and stably acquire operating funds. Millions of yen 2,471 1,830 500 181 2. The Company entered into a commitment line agreement for a total amount of ¥3.0 billion with the main bank to – 12 – Shareholder name Ratio of shares held 2. Shares of the Company (as of March 31, 2022) (1) Total number of authorized shares: (2) Total number of issued shares: (3) Number of shareholders: (4) Major shareholders (top 10) The Master Trust Bank of Japan, Ltd. (Trust Account) Custody Bank of Japan, Ltd. (Trust Account) JPMorgan Chase Bank, N.A. 385174 Sumitomo Mitsui Banking Corporation Valqua Tokyo Kyoeikai The Sumitomo Mitsui Trust Bank, Limited Toshikazu Takisawa Daikin Industries, Ltd. MSIP CLIENT SECURITIES Shiiko Takisawa 68,000,000 shares 18,688,733 shares 30,691 Number of shares held Thousands of shares 2,450 1,095 579 537 515 400 376 285 258 243 (Note) The Company holds 1,000 thousand treasury shares but is not included in the list of major shareholders shown above. The ratio of shares held is calculated by deducting treasury shares. (5) Status of the shares granted to the Company’s officers as consideration for the execution of duties during the fiscal year ended March 31, 2022 Number of shares Number of grantees Directors (excluding outside Directors) Outside Directors Auditors 21,000 shares 0 shares 0 shares (Note) The content of share-based remuneration of the Company is described in “4. (4) Remuneration, etc. for Directors 3. Share acquisition rights, etc. of the Company and Auditors.” Not applicable. % 13.86 6.19 3.27 3.04 2.92 2.26 2.13 1.61 1.46 1.38 4 0 0 – 13 – 4. Officers (1) Directors and Auditors (as of March 31, 2022) Position in the Company Name Responsibility in the Company and significant concurrent positions outside the Company Representative Director and Chairman Representative Director and President Toshikazu Takisawa CEO Yoshihiro Hombo Mutsuo Aoki Gota Nakazawa COO Outside Director of Tosoh Corporation Managing Executive Officer CTO, CQO Managing Executive Officer CDO, Corporate Transformation Division Director of TORANOTEC Ltd. Advisory Member of ITOCHU Corporation Director of PARCO CO., LTD. Outside Director of JSR Corporation Outside Auditor of Asahi Mutual Life Insurance Company Outside Director of J. FRONT RETAILING Co., Ltd. Representative Director of B-mind Co., Ltd. Outside Director of TAKARA & COMPANY LTD. Outside Director of TOLI Corporation Chikako Sekine Mikiko Saito Representative Director and CEO of SMO Inc. Takahiko Hachinohe Hidenori Takahashi Attorney at law Senior Partner of Hachinohe Law Office Certified Public Accountant Outside Director of PENTA-OCEAN CONSTRUCTION CO., LTD. Director Tadayuki Seki Standing Auditor Akio Ko Director Director Director Director Auditor Auditor (Notes) 1. Directors Tadayuki Seki, Chikako Sekine, and Mikiko Saito are outside Directors. Moreover, Auditors Takahiko Hachinohe and Hidenori Takahashi are outside Auditors. 2. Auditor Akio Ko was previously involved in the operations of the Company’s finance division for many years and possesses considerable knowledge about corporate finance and accounting. 3. Auditor Takahiko Hachinohe is a licensed attorney at law and possesses considerable knowledge about corporate legal affairs. 4. Auditor Hidenori Takahashi is a licensed Certified Public Accountant and possesses considerable knowledge about corporate finance and accounting. 5. The Company has submitted notification to the Tokyo Stock Exchange that Directors Tadayuki Seki, Chikako Sekine, and Mikiko Saito as well as Auditors Takahiko Hachinohe and Hidenori Takahashi have been designated as independent officers as provided for by the aforementioned exchange. 6. Director Tadayuki Seki will resign as the Director of PARCO CO., Ltd. on May 26, 2022 and assume a post as the Director of Daimaru Matsuzakaya Department Stores Co., Ltd. on the same date. 7. Director Chikako Sekine assumed a post as the outside Director of TOLI Corporation on June 23, 2021. – 14 – Executive Officers (excluding Executive Officers who also serve as Directors) (as of April 1, 2022) Position in the Company Name Responsibility in the Company Managing Executive Officer Kenichi Kobayashi Managing Executive Officer Shinya Sakurai Director of High Performance Seals Group Senior Executive Officer Nobutoshi Morita Senior Executive Officer Yoshiaki Tsubakiyama Senior Executive Officer Senior Executive Officer Toshiharu Takisawa Director of H&S Sales Group Tadashi Ogawa Chairman Secretary Senior Executive Officer Mamiko Yatabe Senior Executive Officer Satoshi Ueki Senior Executive Officer Daisuke Kanda Executive Officer Hiroshi Tatsuta Executive Officer Atsushi Nobe Director of Overseas Business Group, Recycle Wafer Business, International Business Support Center Deputy Director of Overseas Business Group, ASEAN Business Development General Manager of Corporate Transformation Division CCO, General Manager of Compliance Supervisory Division, Legal Division, Environmental Management Division General Manager of Corporate Planning Group, Investor Relations Division Director of High Performance Plastics and Products Group General Manager of General Affairs Group, IT Strategy Division General Manager of Human Resources Group, Corporate Philosophy Division, Human Resources Development Center Director of Production and Procurement Group, Safety Management Deputy Director of Production and Procurement Group, General Manager of Production and Procurement Planning Division Executive Officer Executive Officer Katsutoshi Fuseya Masahiro Imai Deputy Director of H&S Sales Group Executive Officer Tomoko Goto Executive Officer Sadayuki Kadowaki General Manager of Finance Group CEO: Chief Executive Officer COO: Chief Operating Officer CTO: Chief Technology Officer CQO: Chief Quality Officer CDO: Chief Digital Officer CCO: Chief Compliance Officer (2) Summary of details of limited liability agreements Outside Directors Tadayuki Seki, Chikako Sekine, and Mikiko Saito as well as outside Auditors Takahiko Hachinohe and Hidenori Takahashi have entered into limited liability agreements with the Company under Article 427, Paragraph (1) of the Companies Act, and the maximum amount of liability for damages under these agreements is the minimum liability amount provided for under laws and regulations. (3) Summary of directors and officers liability insurance policy The Company and an insurance company have entered into a directors and officers liability insurance policy under Article 430-3, Paragraph (1) of the Companies Act, appointing as the insured persons Directors, Auditors and Executive Officers (including those who are in the position during the fiscal year ended March 31, 2022) of the Company and its subsidiaries listed in “1. (10) Parent company and major subsidiaries,” and the Company bears the total amount of premium. The summary of the insurance policy is as follows. Based on it, the insurance company compensates for any damage that may be incurred while the insureds bear liability related to the execution of their – 15 – duties or receive a claim pursuing such liability, and the policy is renewed every year. The Company plans to maintain the policy at the next time of renewal. (4) Remuneration, etc. for Directors and Auditors 1) Total amount of remuneration, etc. for the fiscal year ended March 31, 2022 Category Total amount of remuneration, etc. (millions of yen) Total amount of remuneration, etc. by type (millions of yen) Fixed remuneration Performance-based remuneration, etc. Non-monetary remuneration, etc. Number of applicable officers Directors (included outside Directors) Auditors (included outside Auditors) Total (included outside Directors and outside Auditors) 436 (34) 39 (20) 475 (55) 320 (34) 39 (20) 359 (55) 70 (–) – 70 (–) 45 (–) – 45 (–) 9 (4) 3 (2) 12 (6) (Notes) 1. The table above includes two Directors (including one outside Director) who resigned at the end of the 121st Annual General Meeting of Shareholders held on June 16, 2021. 2. The total amount of remuneration, etc. for Directors does not include the employee salaries for employees who also serve as Director and ¥15 million of retirement benefit for a director who resigned at the end of the 121st Annual General Meeting of Shareholders. 3. Performance-based remuneration etc. for Directors should motivate Directors to perform their duties fully. To evaluate company performance comprehensively and adequately, we consider important management indicators related to performance, including operating profit, profit and ROE. The actual results are described in “1 (9) Summary of assets and profit or loss,” “Consolidated Financial Statements,” “Non-consolidated Financial Statements,” etc. 4. Non-monetary remuneration, etc. for Directors is remuneration related to restricted shares, and the amount recorded as expenses for the fiscal year under review is shown. In addition, the conditions, etc. of the allotment are stated in “4. (4) 2) Policy for decisions on the content of remuneration, etc. for officers” and the allotment status of the fiscal year ended March 31, 2022 is listed in “2. (5) Status of the shares granted to the Company’s officers as consideration for the execution of duties during the fiscal year ended March 31, 2022.” 5. At the 118th Annual General Meeting of Shareholders held on June 20, 2018, it was resolved that the amount of remuneration, etc. for Directors will be ¥500 million or less per year (for outside Directors: ¥60 million or less per year). (The employee salaries for employees who also serve as Directors are not included.) There were six Directors (including three outside Directors) at the end of the Annual General Meeting of Shareholders. In addition, at the 119th Annual General Meeting of Shareholders held on June 20, 2019, it was resolved that the total number of restricted shares allotted in each fiscal year would be 30,000 shares or less within the maximum amount of remuneration per year stated above as remuneration, etc. related to restricted shares for Directors (excluding outside Directors). There were four Directors (excluding outside Directors) at the end of the Annual General Meeting of Shareholders. 6. At the 118th Annual General Meeting of Shareholders held on June 20, 2018, the amount of remuneration, etc. for Auditors was resolved to be ¥100 million or less per year. There were four Auditors at the end of the Annual General Meeting of Shareholders (which includes three outside Auditors). 7. The Board of Directors entrusts the determination of the concrete amount of fixed remuneration (fixed amount remuneration) and performance-based remuneration (bonus for officers) for each Director to the Representative Director, Chairman and CEO, Toshikazu Takisawa. The reason for the entrustment is that the Company judged that it is adequate to assign the duty to evaluate each Director while taking into account the Company’s overall performance, etc. to the Representative Director, Chairman and CEO. 8. As for individual remuneration, etc. for Directors in the fiscal year ended March 31, 2022, Representative Director, Chairman and CEO, who is entrusted by the Board of Directors, decided the details of fixed remuneration (fixed amount remuneration) and performance-based remuneration (bonus for officers) within the maximum amount of remuneration approved at the Annual General Meeting of Shareholders. Non-monetary remuneration (remuneration related to restricted shares) was determined based on the resolution of the Board of Directors meeting. Since individual remuneration, etc. for Directors are decided with the procedure, the Board of Directors assesses that the content is in line with the policy. – 16 – 2) Policy for decisions on the content of remuneration, etc. for officers At the Board of Director meeting held on February 24, 2021, the Company resolved the policy for deciding remuneration, etc. for Directors. The policy for decisions on the content of individual remuneration, etc. for Directors is as follows: a) Basic policy The Company considers that the role of the officers is to improve its corporate value based on the group-wide management policy and strategies. We position the remuneration for Directors as an incentive, and offer a level of remuneration which is adequate for the role, responsibilities and performance of Director as the basic policy. To be more specific, it consists of fixed remuneration (remuneration of determined amount), performance-based remuneration (officer’s bonus) and non-monetary remuneration (remuneration related to restricted shares). However, to outside Directors, we provide only fixed remuneration (remuneration of determined amount) based on consideration of their duties. b) Policy for fixed remuneration (fixed amount remuneration) (including the policy for the timing of provision and conditions) Fixed remuneration (fixed amount remuneration) for Directors shall be monthly remuneration, consisting of monthly basic remuneration and fixed-amount remuneration determined based on whether a Director has representation rights or not, their position (Chairman or President), and whether they are full-time or part-time personnel. (Moreover, when a Director concurrently serves as Executive Officer, the fixed remuneration is determined separately from remuneration for officers.) This is decided based on their position and basic amount for the group considering the years of service, contribution, experience, specialties, etc. c) Policy for performance-based remuneration (bonus for officers) (including the policy for the timing of provision and conditions) Performance-based remuneration (bonus for officers) should motivate Directors to perform their duties fully and is provided at fixed times of the year. To be more specific, we consider important business-related management indicators, including operating profit, profit and ROE, to evaluate corporate performance comprehensively and appropriately. As for individual performance-based remuneration (bonus for officers), after calculating a base amount which has the ratio of fixed remuneration (fixed amount remuneration) and performance-based remuneration (bonus for officers) as specified e) below, we shall decide the payment amount to be within the range of 0 to 150% of the base amount based on the performance level and the status of each director’s execution of priority measures, etc. in the fiscal year ended March 31, 2022. d) Policy for non-monetary remuneration (remuneration related to restricted shares) (including the policy for the timing of provision and conditions) Non-monetary remuneration for Directors (remuneration related to restricted shares) is designed to have our Directors share the merits and risks of fluctuations in the stock price with shareholders, and improve their motivation to contribute to stock price increases and the improvement of corporate value. We calculate the number of allotted shares having a fixed remuneration (fixed amount remuneration) (for employees who also serve as Directors, the employee salaries shall be included) as a base amount after giving consideration to job position. In accordance with the regulations for the remuneration related to restricted shares, the number of allotted shares shall be determined at the Board of Directors meeting, and provided at fixed times of the year. In addition, when the transfer restriction of a share allotment agreement with restriction on transfer has not been lifted until the maturity of transfer restriction period (the period which should 30 years or over and defined by the Board of Directors) or a person who resigned from the post of the Company’s Director, employee, etc. or left the Company prior to the first Annual General Meeting of Shareholders after the start of the transfer restriction period, the Company is entitled to receive restricted shares free of charge. e) Policy for the ratio of remuneration, etc. The ratio of remuneration for Directors other than outside Directors by type shall be set in a way that functions as a sound incentive for the Company’s sustainable growth. To be more specific, the Company uses the standard ratio of fixed remuneration (fixed amount remuneration), performance- – 17 – based remuneration (bonus for officers) and non-monetary remuneration (remuneration related to restricted shares) of 7:2:1 as a guide, and determines the actual amount while taking into account the job position and level of remuneration. f) Matters related to the entrustment of decisions on remuneration, etc. Among the components of individual remuneration, etc. for Directors, as for fixed remuneration (fixed amount remuneration) and performance-based remuneration (bonus for officers), the Company entrusts the determination of concrete details to the Representative Director and Chairman based on the resolution of the Board of Directors meeting. The scope of such authority is determination of the concrete allotment to each Director, based on the assumption that it should be within the maximum amount of remuneration approved at the Annual General Meeting of Shareholders and comply with the policy stated above and the regulations for remuneration for officers. As for non-monetary remuneration (remuneration related to restricted shares) of individual remuneration, etc. for Directors, the amount shall be determined at the Board of Directors meeting within the maximum amount of remuneration approved at the Annual General Meeting of Shareholders based on the regulations for the remuneration related to restricted shares. (5) Matters regarding outside Directors and outside Auditors 1) Significant concurrent positions and relationship with the Company of outside Directors and outside Auditors Outside Director Tadayuki Seki concurrently serves as an Advisory Member of ITOCHU Corporation, a Director of PARCO CO., LTD., an outside Director of JSR Corporation, an outside Auditor of Asahi Mutual Life Insurance Company, and an outside Director of J. FRONT RETAILING Co., Ltd. There are no matters of particular note between the Company and ITOCHU Corporation or JSR Corporation. Moreover, the Company has no business relations with PARCO CO., LTD., Asahi Mutual Life Insurance Company, or J. FRONT RETAILING Co., Ltd. Outside Director Chikako Sekine concurrently serves as Representative Director of B-mind Co., Ltd., outside Director of TAKARA & COMPANY LTD, and outside Director of TOLI Corporation. The Company has no business relations with B-mind Co., Ltd., TAKARA & COMPANY LTD or TOLI Corporation. Outside Director Mikiko Saito concurrently serves as the representative Director and CEO of SMO Inc. The Company does not have any business relations with SMO Inc. Outside Auditor Takahiko Hachinohe is an attorney at law and the Senior Partner of Hachinohe Law Office. The Company has no business relations with Hachinohe Law Office. Outside Auditor Hidenori Takahashi is a Certified Public Accountant and an outside Director of PENTA-OCEAN CONSTRUCTION CO., LTD. The Company has no business relations with PENTA-OCEAN CONSTRUCTION CO., LTD. – 18 – 2) Major activities in the fiscal year ended March 31, 2022 Category Name Activities Outside Director Tadayuki Seki Outside Director Chikako Sekine Outside Director Mikiko Saito Outside Auditor Takahiko Hachinohe Outside Auditor Hidenori Takahashi He attended all 14 of Board of Directors meetings, made appropriate remarks required for the deliberation of proposals from the viewpoint of business judgment-related supervision and advice as an expert of management, and served to secure the validity and adequateness of decision-making properly. She attended 13 out of 14 Board of Directors meetings, made appropriate remarks required for the deliberation of proposals from the viewpoint of business judgment-related supervision and advice as an expert of management, and served to secure the validity and adequateness of decision-making properly. She attended all 11 of Board of Directors meetings held following her assumption of office on June 16, 2021, made appropriate remarks required for the deliberation of proposals from the viewpoint of business judgment-related supervision and advice as an expert of management, and served to secure the validity and adequateness of decision-making properly. He attended all 14 of Board of Directors meetings and all 15 of the Board of Corporate Auditors, and he made appropriate remarks required for the deliberation of proposals primarily from his expert viewpoint as an attorney at law. He attended all 14 of Board of Directors meetings and all 15 of Board of Corporate Auditors, and he made appropriate remarks required for the deliberation of proposals primarily from his expert viewpoint as a Certified Public Accountant. – 19 – 5. Financial Auditor (1) Name of Financial Auditor: Ernst & Young ShinNihon LLC (2) Audit fees, etc. for Financial Auditor for the fiscal year ended March 31, 2022 1) Audit fees for Financial Auditor for the fiscal year ended March 31, 2022: ¥53 million 2) Total amount of cash and other compensation payable by the Company and its subsidiaries: ¥57 million (Notes) 1. The amount of audit fees for audit services under the Companies Act and audit services under the Financial Instruments and Exchange Act are not clearly segregated in the auditing agreement between the Company and the Financial Auditor. As it is impracticable to segregate them, the audit fee amount for the fiscal year under review indicates the total amount. 2. The Board of Corporate Auditors agreed on the amount of the audit fees for the Financial Auditor etc. after performing the required verification of the details of the Financial Auditor’s audit plan and whether or not the Financial Auditor’s performance and the basis of calculation for the audit fee estimate were appropriate. 3. Certain consolidated subsidiaries of the Company are audited by Certified Public Accountants (or auditing firms) other than the Company’s Financial Auditor. (3) Description of non-auditing services The Company commissions the Financial Auditor to perform services, etc. related to advice and guidance on the application of new revenue recognition standards as non-auditing services outside the scope of services stipulated in Article 2, Paragraph (1) of the Certified Public Accountants Act. (4) Policy for decisions on dismissal and non-reappointment of Financial Auditor In the event that there is an impediment to the execution of a Financial Auditor’s duties and it is deemed necessary to do so, the Board of Corporate Auditors shall decide on the details of a proposal to dismiss or non-reappointment the Financial Auditor to be submitted to the General Meeting of Shareholders. Moreover, if the Board of Corporate Auditors determines that the Financial Auditor is subject to any of the items under Article 340, Paragraph (1) of the Companies Act, the Financial Auditor shall be dismissed based on the consent of all Auditors. – 20 – 6. Company systems and policies (1) System for ensuring the appropriateness of operations The “Basic Approach to the Internal Control System” resolved by Board of Directors as a system for the Company to ensure the appropriateness of operations is as follows. (Final revision: April 22, 2015) 1) System for ensuring that the performance of duties by Directors and employees conforms to the laws and regulations as well as the Articles of Incorporation The Company considers adhering with compliance as the universally most important issue and declares the principle of “fair and square” which should be followed within “THE VALQUA WAY” basic policy as the additional conduct guideline of “adherence with compliance and conscientious conduct” which all Group employees are thoroughly being made aware of. Enact and distribute a compliance manual while establishing a group compliance system centered around the Compliance Committee to develop rules corresponding to the various laws and regulations, provide training, and practice compliance under the system. Specifically, the position of Chief Compliance Officer (CCO) was established on January 1, 2007, as an officer who presides over compliance related matters, and the CCO reports on the compliance situation for the entire Group to the Compliance Committee on a regular basis. In order to make the establishment of the compliance system effective, strengthen the audit system within the Group and have the Auditors audit the performance of duties by the Directors and employees based on the auditing standard of the Auditors and set up an Internal Audit Division which is independent of other divisions as an internal audit division. Moreover, establish a whistleblowing system within the Group to receive compliance-related consultations and reports. Regarding the elimination of antisocial forces, the Company declares in the compliance manual that it shall “confront antisocial forces” based on a law-abiding spirit and a firm sense of ethics, exclude all relationships with antisocial forces with a resolute attitude, and devote itself to fair and transparent corporate activities. 2) System for storing and managing information pertaining to the performance of duties by Directors Regarding the internal creation, storage, and preservation, etc. of documents, in principle such tasks shall be carried out based on the document management regulations. In particular, Board of Directors meeting minutes, Managing Director meeting minutes, and other various committee meeting minutes pertaining to the performance of duties by Directors, shall be appropriately preserved according to the procedures, etc. stipulated by each department in charge, and a management system shall be implemented. Moreover, documents requesting managerial decisions, various application documents, and other documents which record the performance of duties shall also be preserved according to these procedures, and a management system shall be constructed. 3) Regulations and other systems for managing exposure to loss The Company shall strive to construct a global risk management system for the entire Group. In particular, enact and develop rules and manuals, etc. for risks pertaining to disasters, the environment, quality, and export controls, etc. within each department in charge and prevent the manifestation of risks while also adopting measures in advance to minimize losses in the unlikely event that risks manifest. Moreover, establish basic handling procedures and measures in advance to continue and recover operations in an emergency situation while also developing a system to promptly report the corresponding situation to higher officials and interested parties. 4) System for ensuring the efficient performance of duties by Directors Position Board of Directors as a supervisory authority of business execution carried out through decision making and the Executive Officers to improve the corporate value of the entire Group, and the Executive Officers shall adopt an executive officer system to execute business in accordance with the management policies and strategies decided by Board of Directors. The Directors shall attend important Executive Officer meetings, etc. to counsel and supervise the business execution of the Executive Officers. Clearly define the segregation of duties and authority of Directors, Executive Officers, and employees in the basic management regulations, regulations for official authority, – 21 – segregation of business regulations, and other internal regulations while also striving for efficiency at all times based on those regulations. 5) System for ensuring the appropriateness of operations within the business group composed of the Company and subsidiaries Fundamentally, items 1) through 4) above shall be applied to each Group company, and the effectiveness of the control increased through the strengthening of information exchange within the Group, personnel exchange, and other collaboration systems. Moreover, establish an audit system within the Group to implement compliance and risk management in a unified and efficient manner. In addition, establish a system so that transactions within the Group was processed appropriately in accordance with laws and regulations, internal rules, etc. A. System for reporting to the Company about matters pertaining to the performance of duties by subsidiary Directors, etc. Based on the enacted subsidiary management regulations for the purpose of achieving sound and efficient execution and operation of Group-wide operations, subsidiaries shall report to the Company regarding the details of periodically convened meetings of Board of Directors and executive meetings, and establish a system for such reporting through the Company’s approval procedure as needed. B. Regulations and other systems for managing subsidiary exposure to loss Based on the regulations and manuals, etc. relating to risk management developed according to the Group risk management system, the subsidiaries shall prevent the manifestation of risks while also adopting measures in advance to minimize losses in the unlikely event that risks manifest. Moreover, the subsidiaries shall establish basic handling procedures and measures in advance to continue and recover operations in an emergency situation, promptly report to the Company in the event that such a situation occurs, and create a system to immediately take measures. C. System for ensuring the efficient performance of duties by Directors, etc. of subsidiaries The Company shall establish the Group medium-term management plan, and each Group company as well as its Officers and employees shall establish an efficient and sound system of execution to perform duties based on that plan. Moreover, funds shall be managed in a centralized and unified manner on the financial side for the optimization of Group finance. D. System for ensuring that the performance of duties by Directors, etc. and employees of subsidiaries conforms to the laws and regulations as well as the Articles of Incorporation The Company shall construct a Group compliance system as described in 1), and the subsidiaries shall observe the compliance related regulations including the compliance manuals based on said system. Moreover, the Company shall implement Group compliance training and practice, etc. as needed for the subsidiaries as part of said system. 6) Matters concerning the relevant employee and the employee’s independence from the Directors as well as matters with respect to ensuring the effectiveness of instructions from the Auditors to the relevant employee in the event that the Auditors request that an employee be placed to assist in those duties In the event that the Auditors request that an employee be placed to assist in the performance of duties, an assisting employee shall be placed after consultations between the Directors and Auditors. In order to ensure the relevant employee’s independence from the Directors in such a case, the Auditors shall directly issue work instructions to the relevant employee, and the consent of the Auditors shall be required for deciding changes and other matters involving authority over personnel matters. 7) System for Directors and employees to report to the Auditors as well as a system to ensure that the reporting party does not receive unfavorable treatment as a result of submitting the relevant report, and a system for providing other reports to the Auditors. In addition to attending Board of Directors meeting, Managing Director meeting, Executive Officer meeting, etc., the Auditors shall audit the execution of duties by the Directors and Executive Officers by inspecting, etc. important approval documents, etc. while also periodically convening the Board of Corporate Auditors and engaging in a mutual exchange of information. Moreover, a system shall be constructed for the Directors, Executive Officers, and employees to provide timely and necessary – 22 – information to the Auditors. Furthermore, in order to make the provision of said information effective, the Group whistleblowing system shall be clearly defined the systemic prohibition of unfavorable treatment of those who are reporting the information. 8) System to allow for Directors, Auditors, and employees, etc. of subsidiary or parties who receive a report from such persons to report to the Company Auditors as well as a system to ensure that the reporting party does not receive unfavorable treatment as a result of submitting the relevant report Establish a system to report to the Auditors the details of Board of Directors and executive meetings of subsidiary and the results of internal Group audits performed by the Company’s internal audit division. Moreover, a system shall be constructed for the subsidiary’s Officers and employees to provide timely and necessary information to the Auditors. Furthermore, the Group whistleblowing system which covers part of said system shall cover all Group employees and a prohibition on unfavorable treatment of persons reporting information shall be similarly applied to all Group employees. 9) Pre-payment of expenses which occur in conjunction with the execution of Auditor duties, expenses occurring due to reimbursement procedures and the execution of other relevant duties, or matters concerning policies pertaining to debt processing Expenses required by the Auditors for the execution of duties shall be included in the budget in advance. Moreover, the provision that the expenditure of emergency or extraordinary expenses may be later claimed for reimbursement is established within the auditing standard of the Auditors and a system for appropriate management of such claims shall be constructed. 10) Other systems for ensuring the efficient performance of audits by the Auditors In addition to attending Board of Directors meetings, the Auditors shall exchange opinions with the Representative Director as needed while also engaging in regular exchanges of opinions with the Financial Auditors as well as the Internal Audit Division. Moreover, the Auditors shall ensure opportunities to interview to the Company’s Directors, Executive Officers, and employees as well as the subsidiary’s Officers and employees. 11) System for ensuring the appropriateness of financial reports Internal controls pertaining to financial reports shall be constructed based on the Financial Instruments and Exchange Act, evaluations and reporting shall be conducted in the appropriate manner, and system to ensure the credibility and appropriateness of financial reports shall be developed and operated. (2) Overview of the operational status of systems for ensuring the appropriateness of operations An overview of the operational status of systems for ensuring the appropriateness of operations during the fiscal year under review is as follows. 1) Compliance related initiatives Compliance training and training on other topics were continuously conducted for the Group’s employees to raise their awareness of compliance issues. In addition, as for the “Compliance Handbook” published with specific case studies and solutions added and distributed during the previous fiscal year as a compliance manual, the Group started rollout of its local language versions to overseas bases. With respect to the Group whistleblowing system, the Group’s employees are continuously being made aware that there is a compliance-consultation and whistleblowing-reporting desk and that persons who provide information shall not receive unfavorable treatment. Furthermore, the CCO reports to the Compliance Committee headed by the Representative Director, Chairman and CEO regarding compliance initiatives for the entire Group. 2) Initiative concerning the preservation and management of information The Group engages in preservation management within the departments in charge of meeting minutes for Board of Directors and other important meetings, documents requesting managerial decisions, various application documents, and other documents concerning the execution of duties according to the document management regulations and other related regulations. – 23 – 3) Initiative concerning the management of exposure to loss The Group practices risk management based on the crisis management regulations. During the fiscal year under review, we took measures to secure the effectiveness of the “Business Continuity Plan (BCP) Manual,” which was newly formulated in the previous fiscal year. Regarding the operation of an emergency contact system in a crisis situation, periodic exercises are carried out to verify the effectiveness of the system. The Risk Management Committee tracks progress including measures to identify new risks such as geopolitical risks and cyber security risks and deal with them. 4) Initiative concerning the appropriateness and efficiency of the execution of duties The Group decides the management policies and strategies through Board of Directors, and the Executive Officers follow those decisions to execute duties in an appropriate and efficient manner. The Directors involved in the execution of duties verify the execution status through monthly Executive Officer meetings and regularly convened reviews by strategy and region to provide counseling and supervision. Moreover, regarding the individual execution of duties, the necessary approvals are received, and the procedural appropriateness is ensured based on Board of Directors regulations, Managing Director regulations, Subsidiary Management regulations, etc. Moreover, cash management services are used on the financial side to manage the optimization of the Group finance. 5) Initiative concerning the execution of duties by Auditors In addition to attending Board of Directors and other important meetings, Auditors receive reports about the results of internal Group audits by the Company’s internal audit division, order additional audits, and receive those results, etc. Moreover, Auditors periodically exchange opinions with the Financial Auditors and the Internal Audit Division as well as the Representative Director, Chairman and CEO and Representative Director, President and COO when necessary. In addition, Standing Auditors appropriately interview Directors, Executive Officers, and important employees of the Group and receive reports as necessary. 6) Initiative to ensure the appropriateness of financial reports Regarding the appropriateness of financial reports, the Group obtains reports from the Internal Audit Division about the results of internal control evaluations, receives result explanations, and verifies that the appropriateness and credibility of financial reports is being ensured. – 24 – (Millions of yen) Amount 60,200 34,935 8,144 2,557 2,460 12,033 34 3,940 962 2,164 1,539 1,119 (22) 25,264 17,545 7,799 3,543 1,445 4,002 493 261 1,516 1,331 184 6,202 4,047 291 912 950 (0) 60,200 Consolidated Financial Statements Consolidated balance sheet (as of March 31, 2022) Assets Current assets Item Cash and deposits Notes receivable – trade Electronically recorded monetary claims – operating Accounts receivable – trade Contract assets Merchandise and finished goods Work in process Raw materials and supplies Accounts receivable – other Other Allowance for doubtful accounts Non-current assets Property, plant and equipment Buildings and structures Machinery, equipment and vehicles Tools, furniture and fixtures Land Leased assets Construction in progress Intangible assets Software Other Investments and other assets Investment securities Deferred tax assets Retirement benefit asset Other Allowance for doubtful accounts Total assets – 25 – Item Amount 19,220 13,336 5,721 927 1,463 77 188 1,122 1,094 193 485 508 70 1,484 5,883 3,632 306 1,184 472 288 (40,979) 37,545 13,957 4,061 21,043 (1,517) 2,183 1,625 447 110 1,250 60,200 Liabilities Current liabilities Notes and accounts payable – trade Electronically recorded obligations Short-term borrowings Current portion of long-term borrowings Lease obligations Accounts payable – other Income taxes payable Accrued consumption taxes Contract liabilities Provision for bonuses Provision for bonuses for directors (and other officers) Other Non-current liabilities Long-term borrowings Lease obligations Deferred tax liabilities Retirement benefit liability Other Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Accumulated other comprehensive income Valuation difference on available-for-sale securi