Strengthening Compliance Through the CSR Management Committee and Internal Reporting System

「The principal compliance initiatives in fiscal 2025 were as follows: • In response to inappropriate accounting at a subsidiary in 2024, rolling out an awareness-reform project across the group, including establishing an organisation to strengthen group management, providing training to raise compliance awareness, revising internal rules and thoroughly implementing internal controls」

「Improvement of the global whistleblowing system」

「Following the findings of an investigation by an external investigation team and its recommendations for preventing recurrence, the Company formulated and disclosed recurrence-prevention measures, as described in the notice titled “Notice Concerning the Formulation of Recurrence-Prevention Measures and the Voluntary Return of Part of Executive Compensation,” published on 24 December 2024. The measures are outlined below: • Thoroughly communicating the need for compliance and appropriate accounting treatment • Strengthening the subsidiary management structure • Strengthening internal controls at the 2 consolidated subsidiaries in China • Expanding and embedding the internal whistleblowing system • Strengthening the internal audit function • Reviewing the inventory aging rules」

「In August 2024, the Company identified suspected inappropriate accounting under its internal rules, dating back to prior years, for inventories of purchased parts at 2 consolidated subsidiaries in China.」

「The Sustainability Management Committee comprises the Representative Director and President, all 5 directors who are Audit & Supervisory Committee members, and the executive officer responsible for sustainability, among others. The committee meets twice a year to supervise progress on the sustainability strategy, deliberate related matters and submit recommendations to the Board of Directors.」

「The principal compliance initiatives in fiscal 2021 were as follows: • Identifying and eliminating latent compliance risks • Distributing compliance information to all employees in the form of an email newsletter • Providing training in high-risk areas such as the prevention of unfair competition, the Subcontracting Act and information management」

「The principal compliance initiatives in fiscal 2020 were as follows: • Identifying and eliminating latent compliance risks • Distributing compliance information to all employees in the form of an email newsletter • Promoting compliance awareness and fostering an appropriate organisational culture through training in high-risk areas such as the prevention of unfair competition, the Subcontracting Act and information management」

「The principal compliance initiatives in fiscal 2019 were as follows: • Identifying and eliminating latent compliance risks • Distributing compliance information to all employees in the form of an email newsletter • Promoting compliance awareness and fostering an appropriate organisational culture through group training in high-risk areas such as the prevention of unfair competition, the Subcontracting Act and information management」

「In addition to the internal reporting office, where employees handle reports and consultations, the Company established a new independent office handled by outside directors and Audit & Supervisory Board members who are independent of the Company's business execution chain. The system allows whistleblowers to choose freely between the two offices.」

「The Company established a CSR promotion structure encompassing compliance by organising a CSR Management Committee chaired by the Representative Director and President. It is working to establish, embed and strengthen this structure, as well as to build, maintain and improve its internal control system.」