Nichireki : Integrated Report 2023 (for printing)

Nichireki Group

Integrated Report 2023

Nichireki Group's Corporate Philosophy

Basic philosophy (Spirit of sowing the seeds)

Sowing the seeds, giving them water, letting them flower, and reaping the fruits

Continuously creating new business through the accumulation of unceasing effort

Management philosophy

To ensure the Nichireki Group contributes to society by creating roads:

We will provide road paving materials and their corresponding construction methods to satisfy requirements for outstanding functionality and cost.

We will offer advanced consulting that watches vigilantly over roads, which are the common assets of the people.

We will implement construction technology that is trusted by customers.

By completely unifying these elements, the Nichireki Group considers its management philosophy as the aim of remaining a highly profitable corporate group that spearheads the creation of roads worthy of the trust of its stockholders and a wide range of customers. We also strive to ensure that every employee in the Group can exercise his or her abilities to the fullest through meaningful work.

"Sow the Seeds"

"Let us advance forward by sowing the good seeds." This is the motto of the Nichireki Group.

Let us sow the strong seeds that will not die even if a severe drought strikes. By the sweat of our brow, let us spread fertilizer.

Then the plants will grow up to bear good fruit. Even if we do not harvest the fruits ourselves,

I believe this:

If we do not sow the seeds and spread fertilizer,

but only aim to gain the fruits, we will never enjoy

true prosperity.

Eiichi Ikeda (Founder)

1 Nichireki Group

Editorial Policy

The purpose of the Integrated Report is to assist the stakeholders in understanding our activities that contribute to society by introducing the Nichireki Group's Corporate Philosophy and reporting a wide range of topics such as our corporate activities based on the Medium-term Management Plan, financial information

and business challenges. This report includes a message from the President, the Medium-term Management Plan and other key Environmental, Social, and Governance (ESG) information that helps start dialogue, as well as our initiatives for sustainability issues comprehensively and concisely. In preparing this report, we referenced guidelines such as International Integrated Reporting Framework advocated by International Integrated Reporting Council (IIRC) and Guidance for Collaborative Value Creation issued by the Ministry of Economy, Trade and Industry.

Contents

About the Nichireki Group

Business of the Nichireki Group	3		About
Business Domain of the Nichireki Group	5		the
	Nichireki
History of the Nichireki Group	7
Message from the President	9		Group
Financial Highlights	13
Toward Sustainable Growth of the		TowardSustainableGrowth theNichirekiGroup
Nichireki Group
Value Creation Process	15
Strengths in Business Process	17
Vision for the 100th Anniversary of
Our Foundation	19
Progress with Implementing the
Medium-term Management Plan	21		of
Foundation for Sustainable Growth
(ESG Management)
Environmental		Foundation	Environmental
To Sustain Rich Global Environment	23
Responding to Climate Change	25
Eco-friendly Products and
Construction Methods	27
Social	37	for
Toward a Rewarding Work Environment
SustainableGrowth	Social
Implementing Initiatives for Occupational
Health and Safety	40
Enhancing the Supply
Chain Management	43
Taking on Initiatives as an		(ESG
R&D-oriented Company	46
Communicating with Society	48	Management)
Governance
Corporate Governance	51		Governance
Internal Control and Compliance	55
Risk Management	60
Directors and Auditors	63

Data Section

Period Covered

Fiscal Year Ended March 31, 2023 (April 1, 2022 to March 31, 2023) (Information on or after April 1, 2023 is partially included)

Organizations Covered NICHIREKI CO., LTD. and its subsidiaries and associates (consisting of 34 consolidated subsidiaries and 4 associates)

Month Published

October 2023

Disclaimer on Forward-looking Statements

The earnings forecast and other forward-looking statements herein are based on information currently available to the Company and certain assumptions deemed reasonable as of the date of publication of this report. Actual results may differ significantly from the forecast due to a wide range of factors.

Financial and Non-financial Data	65	Data
Company Information	71
Global Network	72	Section

Integrated Report 2023

2

Business of the Nichireki Group

The Nichireki Group develops business activities that offer a wide variety of products, works, technologies, and so forth mainly related to road paving.

Applied and Processed Asphalt*1 Products Business

Manufacturing and sales of applied and processed asphalt products including asphalt emulsions,*2 modified asphalt,*3 bridge deck waterproofing materials, road surface repairing materials, crack repairing materials, landscape paving materials, and industrial products, as well as manufacturing, processing, and sales of construction and civil engineering materials

Rapid breaking asphalt emulsion	Low-carbon modified asphalt for long-life pavement	Emulsion based cold mix bump repairing material
SUPER TACKZOL	SUPER SHINAYAKAPHALT	SUPER ROMEN PATCH

Road Paving Business

Contracting for road paving, bridge deck waterproofing, water and sewage and other civil engineering work, including relevant survey and diagnosis, design, and administration processes

On-site base course recycling construction method	High-performance bridge deck waterproofing method	DX compatible road surface condition measuring vehicle
STABI-CEMENT RC construction method	HQ HIBRANE AU construction method	SMART ROMEN CATCHER LY Jr.

Glossary

*1.	Asphalt	: Refined from crude oil. Black in color and a solid body at room temperature, but becomes liquid
		when heated. Mainly used in asphalt pavement.
*2.	Asphalt emulsion	: Made by emulsifying asphalt and water, and maintains a liquid body at room temperature.
		Mainly used for bonding pavement layers together and in a cold mixture for paving.
*3.	Modified asphalt	: A high-performance asphalt made by adding various modifiers to the asphalt.

Mainly used in roads with heavy traffic and pavements that require drainage, reduced noise features, and so on.

3 Nichireki Group

Composition of Net Sales and Operating Profit

Other		Applied and Processed	Other		Applied and Processed
	Asphalt Products Business		Asphalt Products Business
0.4%		2.1%
34.7%	55.3%

FY2022	FY2022
Net sales	Operating profit
¥78,397	¥10,869
million	million*
Road Paving	Road Paving
Business	Business

64.9%

42.6%

* Amount before adjustment of ¥3,303 million, which includes elimination of inter-segment transactions and corporate expenses

Toward Sustainable Growth of About the Nichireki Group

the Nichireki Group

Business Model

The Nichireki Group's main strength lies in its R&D capabilities, which demonstrate creativity and uniqueness, while incorporating new technologies from other areas, to come up with new products and construction methods that satisfy customer requests and issues as well as market needs.

Another of the Group's unique points is its ability to consistently serve as all types of players involved in road pavement business by itself, such as the role of consulting firms and design firms that make propositions on products and construction methods, as well as the role of materials manufacturers and construction companies.

Survey and diagnosis to	Design and proposal for optimal
support road infrastructure	maintenance & management
management	plans and repair methods
Survey and	Design and
diagnosis	proposal

	Environmental
Foundation for SustainableGrowth
Social
(ESGManagement)

Construction

and management

Development

Manufacture

and sales

Development of eco- friendly products and construction methods

Governance

Safe and high-quality construction and management utilizing ICT and robotic construction machinery

Manufacture and sales of high value-added products that offer superior environmental performance

Data Section

Integrated Report 2023

4

Business Domain of the Nichireki Group

Nichireki Group's technologically advanced products and construction methods, etc. are used not only for general road paving but also in various surrounding areas.

HQ HIBRANE AU	SUPER SURFTREAT
construction method	construction method
(high-performance bridge deck	(asphalt emulsion surface treatment
waterproofing method)	construction method)

L-seal tape

(molded water cut-off material for bridge ends)

SMART SHOBAN

CATCHER

(DX compatible non-destructive bridge deck survey vehicle)

THERMOTEC construction method

(heat-blocking paving)

POLYPHALT SS

(flow and wear resistant modified asphalt)

Viaduct

Parking lot

Airport	Bridge joint

NEOTAIYU SEALCOLD

(oil-resistant joint sealant)

Harbor

CONTAINERPHALT S

(modified asphalt for ultra heavy loads)

Railway

Station

Seamless joint

(embedded-type expansion joint)

CA mortar filling construction method

(Shinkansen slab track filling construction method)

SUPER ROMENPATCH

(emulsion based cold mix bump repairing material)

COALCUT R construction method

(resin-basedanti-skid paving)

5 Nichireki Group

SHINAYAKAPHALT	STABI-CEMENT RC		RESCUEPATCH
construction method	CRACKSEAL NX
(modified asphalt for long-lasting	(on-site base course recycling	(high durability, all-weather type cold
paving)	construction method)	(hot applied crack sealant)	applied patching material)
EMULTEC SAMI		THERMOTEC construction	COALCUT R construction
construction method	SUPER TACKZOL
(crack prevention cushion layer	method	method
construction method)	(rapid breaking asphalt emulsion)	(heat-blocking paving)	(resin-basedanti-skid paving)

Toward

About the Nichireki Group

Pavement marking

General road

Highway

Tunnel

Pedestrian bridge

Sidewalk	Manhole
Park
Cycling	Promenade
path

Lining

Road marking

COLORPHALT CLEAR

(colored paving)

SEROSEAL

(hot applied joint sealant for concrete joints)

Sustainable Growth of the Nichireki Group

	Environmental
Foundation for SustainableGrowth
Social
(ESG Management)
Governance

ASWOOD paving

(wood chip paving)

COLORPHALT KT method	MR² method	SUPER ROMENPATCH	COLORPHALT TO
(emulsion based cold mix bump	construction method
(resin mortar based color paving)	(manhole top repairing method)	repairing material)	(natural stone paving)

Data Section

Integrated Report 2023

6

long lasting

History of the Nichireki Group

Founded by Eiichi Ikeda in October 1943, the Nichireki Group has continued to deliver to the market many originally developed products and construction methods relating to road paving, including asphalt emulsion, modified asphalt, bridge deck waterproofing products and construction method, on-site base course recycling construction method, and surface processing construction method. Ever since its foundation, we maintained our policy to fulfill the social responsibilities required of companies in such time or social environment, which is to develop eco-friendly products

Nichireki's History

Foundation and development

1943	Eiichi Ikeda founds Nihon Rekisei Kagaku Kogyosho to
	engage in construction waterproofing works using asphalt
1946	The Company begins to undertake paving construction works
1949	The Company establishes the Company
1950	The Company builds an asphalt emulsion plant and
	laboratory in Oku, Tokyo
1954	The Company changes its name to Nichireki Kagaku Kogyo
	Co., Ltd. due to company split and merger, etc.
1961	Japan's first cationic asphalt emulsion, CATIOZOL, is
	awarded the Tanahashi Invention Award
1963	The Company issues and distributes the first volume of
	Asphalt Paving Course (eight volumes in total)

Nichireki's Technology

Strengthens corporate culture and develops internal foundations

1968	The Company builds a new head office building in Kudan,
	Chiyoda-ku, Tokyo (to present)
1969	The Company introduces a computer system utilizing telex
	network to offices throughout Japan
1973	The Company participates in Research Survey Committee
	on Bridge Deck Pavement of Long Bridges (Honshu-Shikoku
	Bridge) established within the Japan Road Association
1974	The Company is listed on the First Section of both Tokyo
	Stock Exchange and Osaka Securities Exchange
1975	The Company opens the Ikeda Museum of 20th Century Art
	in Ito City, Shizuoka
1977	The Company opens a technical research center in Oyama
	Plant in Tochigi Prefecture
1980	The Company is registered with the Minister of Construction
	as a construction consultant in road department

Products

Construction methods

コンサルティング

（調査・診断技術）

Joint material, waterproofing material for concrete

paving long lasting

Rain-resistant emulsion CATIOZOL long lasting 1

On-site mixing method to enhance durability of gravel road safety 1

POLYPHALT SS to address rutting long lasting 2

EMULSION A used in the track of Shinkansen long lasting

SINOPHALT to address cracks in bridge steel deck plate

pavement 3

STABI-CEMENT RC construction method for repairing the

existing pavement on-site CO2 emission reduction recycling

1	CATIOZOL for improving gravel
	roads into pavements with the
External Environment	on-site mixing method

Reconstruction after WWII-Dawn of road construction and improvement

1945 End of World War II

1948 Ministry of Construction is established

1954 First Road Improvement Five-Year Plan is approved by Cabinet

1956 Japan Highway Public Corporation is established

1959 Metropolitan Expressway Public Corporation is established

1962 Hanshin Expressway Public Corporation is established

1964 Class-4 special improvement business starts

2	POLYPHALT SS for addressing	3	SINOPHALT used for long-span
	rutting caused by the		bridges
	advancement of motorization		(Honshu-Shikoku Bridge)

Advancement of motorization

1966 Beginning of era of private car ownership; advancement of motorization

1969 Tomei Expressway is fully completed

1970 Honshu-Shikoku Bridge Authority is established

1972 Reversion of Okinawa to Japan

1973 First oil crisis

7 Nichireki Group

CO2 emission reduction long lasting

CO2 emission reduction recycling

and construction methods with reduced CO2 emission, longer life, recyclability, and safety functions and performance, as well as to provide safe and secure paving for road administrators and ultimately the users of the road. We have also put our efforts in sophisticated consulting business utilizing road surface survey technology to keep a close eye on the road conditions. Going forward, under the swift and accurate decision-making, we will pull our strength together to make resilient responses and continue to grow into a sustainable corporate group.

Vision for the 100th

Anniversary of Our

Foundation

Deliver peace of mind to all stakeholders by creating roads

About the Nichireki

Beginning of management based on the Medium-term Management Plan

1985	The Company is registered with the Minister of
	Construction as a surveyor
1989	The Company starts the First Medium-term
	Management Plan
1994	The Company changes its name to NICHIREKI CO.,
	LTD.
1999	The Company begins disclosure of consolidated
	financial statements
2002	The Company starts overseas business by establishing
	Beijing Luxin Dacheng Exquisite Paving Co., Ltd. in
	Beijing, a joint venture between Japan and China
2003	The Company implements an area-based business
	structure to facilitate the integrated operation of

branch and group companies within the jurisdiction of the branch

ROMENPATCH for reducing noise and vibration caused by

bumps safety

TOUGHPHALT SUPER for porous paving safety 4 AF PHALT for recycled mixture recycling

ASWOOD paving utilizing timber obtained from forest-thinning

operations 5

EMULTEC construction method to extend the life of the paved road

ROMEN CATCHER LY for inspecting road surface condition ROMEN CATCHER FWD for diagnosing paving strength

Reconstructs internal foundations and strengthens corporate governance

2006	The Company discloses basic policy for establishing internal control
	system
2008	The Group acquires ISO 9001
2012	The Group acquires ISO 14001
2014	The Company converts its consolidated subsidiaries into wholly-owned
	subsidiaries
2016	The Company completes the new laboratory building in the Technical
	Research Center
2017	The Company newly establishes a plant in Fengxian Chemical Industrial
	District in Shanghai
2020	The Company acquires land in Tsukubamirai City to construct a
	production and logistics base
2022	The Company selects and shifts to the Prime
	Market of the Tokyo Stock Exchange following
	the market reform
2023	The Company marks the 80th anniversary of
	foundation on October 26

Modified asphalt for warm mix for reducing temperature during production and construction

CO2 emission reduction

SUPER TACKZOL with immediately breaking even at night or at low temperatures

long lasting

L-seal tape to prevent leakage from junctures long lasting

SUPER SHINAYAKAPHALT for long-life pavement CO2 emission reduction long lasting SUPER CONTAINERPHALT for paving roads with ultra heavy loads

CO2 emission reduction long lasting

SUPER SURFTREAT construction method for road surface protection CO2 emission reduction	long lasting
STABI-CEMENT RC construction method using ICT CO2 emission reduction recycling	6

HQ PAVERANE construction method for high-durabilitywater-proofing bridge deck

CO2 emission reduction long lasting

SMART SHOBAN CATCHER to determine the structural soundness of the bridge deck top surface using AI

SMART Road Surface Inspection Service to determine the priority of pavement repair using AI GLOCAL-EYEZ for easy inspection of roads with a smartphone 7

Toward Sustainable Growth of Group

the Nichireki Group

	Environmental
Foundation for SustainableGrowth
Social
(ESG Management)
Governance

4	TOUGHPHALT SUPER for	5	ASWOOD paving with recycled
	controlling water splashing in the		timber obtained from forest-thinning
	rain to increase visibility and safety		operations that are often burnt

Introduction of paving with low-environmental burden and establishment of performance specifications

1991 Collapse of Japan's economic bubble

1995 The Great Hanshin-Awaji Earthquake

2001 Ministry of Land, Infrastructure, Transport and Tourism is established

Enactment of "Technical Standards and Commentaries for the Structure of Pavement"

Establishment of performance specifications of paving structure

2005 Privatization of the four road-related public corporations

6	STABI-CEMENT RC	7	GLOCAL-EYEZ for inspecting
	construction method with		roads with a smartphone

road stabilizers using ICT

The first year of social capital maintenance / Major renewals

2008 Global Financial Crisis of 2008

2009 Incorporation of revenue source specified for roads into general revenue

2011 The Great East Japan Earthquake

2013 The first year of social capital maintenance (full-scale anti- decrepitude measures began)

2020 COVID-19 pandemic

2021 Tokyo Olympic and Paralympic Games

2022 Russia-Ukraine Crisis

Data Section

Integrated Report 2023

8

Message from the President

Commit to strive for resilient

Manabu Obata

President and Representative Director

Address the surge in raw material costs through initiatives that embody our "spirit of sowing the seeds"

Nichireki has inherited a corporate culture based onthe spirit of sowing the seeds, which has been in place ever since our foundation. Under a management philosophy ofcontributing to society by creating roads, we provide a wide range of products, technologies, and construction services connected with road paving.

In our business, where asphalt is the primary product, we've been deeply impacted by the recent spike in crude oil prices. During FY2022, the cost of raw materials rose to approximately 1.5 times that of the previous fiscal year when accounting for foreign exchange factors, placing us in an unprecedented situation. Amid this environment, we've done our utmost to absorb the rising costs while continuing to fulfill our social responsibility to provide road infrastructure, all the while being guided by the spirit of sowing the seeds, which is embedded into our corporate culture.

We continue to serve traditional needs through our provision of paving materials and construction methods. However, this year has been one of focused planning and action, as we reconsider what is needed to more broadly distribute the products and methods that Nichireki has independently developed -onesthat bring greater social value. Such efforts, based on our spirit of sowing the seeds, have given us confidence in overcoming a challenging business environment and have consequently contributed to our market expansion.

In Japan, there is an ongoing "Five-Year Acceleration Plan for Disaster Prevention, Disaster Mitigation, and Building National Resilience." Substantial budget allocationsare anticipated for the development and maintenance of the nation's road networks, which are the "blood vessels" supporting both society and industry.

Mindful that the effective utilization of roads contributes to national strength, Nichireki is committed to making contributions to Japan's growth through our business activities. We will continue to developand offer products and construction methods that ensure transportation safety and security, that are resilient

9 Nichireki Group