NOK : Business Report for the 118th Term (Items subject to Electronic Provision Measures

BUSINESS REPORT for the 118th Term	(Translation)
April 1, 2023 to March 31, 2024

System for Ensuring Properness of Operations

(1) The details of the decisions on a system for ensuring properness of operations

Following are the details of the decisions regarding a system for ensuring the compliance of Directors' execution of their duties in line with the laws and regulations as well as with the Articles of Incorporation and a system for ensuring the properness of business operations of NOK CORPORATION (the "Company").

1. System for storing and managing information regarding the execution of duties by the Company's Directors
   In accordance with the relevant laws and regulations, the Articles of Incorporation and other rules established by the Company, departments in charge shall record and file minutes of meetings, including Annual Shareholders' Meetings and Board of Directors meetings, as well as approval documents and other authorizations. Directors and Corporate Auditors shall ensure a system that allows to inspect such documents.
2. Rules and other systems concerning loss risk management of the Company
   In accordance with the Risk Management Rules established by the Company, the Risk Management Committee shall take the initiative in identifying and analyzing underlying risks and promoting a cross-organizational risk management system. The Risk Management Committee shall report to Directors regarding the implementation status of said system on a regular basis and revise the system as necessary.
3. System for securing the efficiency of the execution of duties by the Company's Directors
   Directors shall hold Board of Directors meetings in accordance with Board of Directors Regulations. At these meetings, they shall determine allocation of their duties and important matters such as business strategies and management policy and appoint Operating Officers responsible for implementation of operations at individual divisions. Directors shall authorize them to execute operations at individual divisions, encourage them to execute operations quickly and accomplish objectives, and supervise them. The Directors shall clarify operational authorities and rules on decision-making in the Rules concerning the Operational Authorities of Upper Management. They shall ensure a system to execute their respective duties in an appropriate and efficient manner by monitoring the progress of business plans, managerial policies, and operational implementation plans at regular management meetings and through management reviews.
   In order to ensure the efficiency in the execution of duties by Directors, the Directors shall hold committee meetings including meetings of the Central Labor-Management Council consisting of the representatives of both the management team and employees, and explain and discuss business plans, important changes to organizational structures, and managerial policies.
4. ‌System for ensuring compliance in the execution of duties by the Company's Directors and employees with the relevant laws and regulations and the Articles of Incorporation
   Pursuant to the NOK Charter of Corporate Behavior, the Company shall clearly state that it places priority on compliance in its business activities. In accordance with compliance rules and Behavioral Guidelines Concerning Employee Compliance, the Company shall also provide training programs for its employees, thereby establishing and promoting a framework for compliance that conforms with the relevant laws and regulations, the Articles of Incorporation, and other rules established by the Company.
5. System for ensuring properness of operations of the Group consisting of the Company and its subsidiaries
   In accordance with the provisions of the Internal Control Rules, the Company shall establish the following systems for its subsidiaries to ensure the properness of operations of the Group as a whole.
   In addition, the Company, under the provisions of the Internal Control Rules regarding Financial Reporting, shall monitor the properness of operations based on Directors' instructions to ensure the credibility of the financial statements of the Company and its subsidiaries.
6. 1. System regarding reporting from subsidiaries to the Company regarding execution of duties by Directors, etc.
      In accordance with the provisions of the Internal Control Rules, the division responsible for supervising subsidiaries shall monitor the status of management of subsidiaries. The headquarters divisions shall give necessary instructions and support to subsidiaries regarding operations under their supervision and monitor the implementation status of the system.
   2. Rules and other system concerning loss risk management of subsidiaries
      In accordance with the Internal Control Rules, the headquarters divisions shall have subsidiaries establish a risk management system and report to the headquarters divisions and the divisions responsible for supervising subsidiaries regarding the implementation status of the system on a regular basis, and give instructions to subsidiaries to revise the system as necessary.
   3. System for securing the efficiency of the execution of duties by Directors, etc. of subsidiaries
      The management teams and managers of subsidiaries shall hold joint management meetings on a semiannual basis to share information and promote managerial transparency. At these meetings, attendees shall report on and discuss the progress of the Group's managerial policies and business plans, thereby ensuring efficiency in the management of the Group as a whole.
   4. System‌ for ensuring compliance in the execution of duties by Directors, etc. and employees of subsidiaries with the relevant laws and regulations and the Articles of Incorporation
      In accordance with the Internal Control Rules, the headquarters divisions shall require the subsidiaries to establish a charter of corporate behavior, compliance rules and behavioral guidelines concerning employee compliance to clearly state that they place priority on compliance in their business activities. In addition, the headquarters divisions shall also require the subsidiaries to establish and promote a framework for compliance that conforms with the relevant laws and regulations, the Articles of Incorporation, and other internal rules, and monitor the implementation status.
7. Matters concerning assistant employees in cases where the Company's Corporate Auditors request the Company to assign employees to assist them with their duties
   Regarding the employees who are required to assist Corporate Auditors with their duties, the Company shall assign personnel with expertise of laws and regulations who are capable of providing assistance to Corporate Auditors, upon discussions with the Corporate Auditors on the selection of assistant employees and the operational authorities thereof.
8. Matters regarding the independence of employees provided for in the preceding item from the Company's Directors and ensuring the effectiveness of instructions by the Company's Corporate Auditors to said employees
   Employees assigned to assist Corporate Auditors with their duties shall follow the directions and orders of Corporate Auditors in the execution of duties, attend the Board of Corporate Auditors meetings and other important meetings attended by Corporate Auditors to execute instructions from Corporate Auditors. The Company shall have discussions with Corporate Auditors regarding changes of said assistant employees.

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1. ‌System for reporting to the Company's Corporate Auditors by the Company's and its subsidiaries' Directors and employees and other system for reporting to the Company's Corporate Auditors
   The Auditing Committee for Internal Controls, an advisory body to the Board of Directors, shall, in accordance with the Internal Control Rules, conduct periodical internal audits on the state of the system to ensure the appropriateness of the Company's and its subsidiaries' operations, and report the results thereof to the Board of Corporate Auditors.
2. ‌System for ensuring that the person who made the report provided for in the preceding item shall not be subject to unfavorable treatment for reason of having made such report
   The Company shall prohibit unfavorable treatment of a person who made the report provided for in the preceding item for reason of having made such report, and communicate to that effect widely across the Company and its subsidiaries.
3. Matters‌ regarding the policy for handling expenses or payables in relation to execution of duties of the Company's Corporate Auditors, such as procedures for advance payment or reimbursement in relation to execution of such duties
   In accordance with the audit policy and audit plan formulated at the Board of Corporate Auditors meetings pursuant to the Board of Corporate Auditors Regulations, the Company shall secure expenses to enable Corporate Auditors to execute their duties appropriately.
4. Other systems for securing effective audits by the Company's Corporate Auditors
   In order to supervise the Directors' execution of their duties, in accordance with the audit policy and audit plan formulated at the Board of Corporate Auditors meetings pursuant to the Board of Corporate Auditors Regulations, the Company shall maintain a system that allows Corporate Auditors to attend the Board of Directors meetings and other important meetings and to investigate the Company's operational and financial conditions.
   The Independent Auditor and Corporate Auditors shall exchange opinions on a regular basis.
   In addition, joint meetings named "Management Supervision Meeting" with the participation of Representative Directors, External Directors and Corporate Auditors shall be held on a regular basis with a view to facilitating exchanges of opinions.

(2) Overview of the operational status of the systems for ensuring the properness of operations

In accordance with "the details of the decisions on a system for ensuring properness of operations" described in (1) above, the Company strives to develop systems and operate such systems appropriately. An overview of the operational status of such systems is as follows.

1. Overview of the operational status of the system for storing and managing information
   Minutes of meetings, including Shareholders' Meetings and Board of Directors meetings, approval documents and other authorizations are prepared and drawn up by departments in charge or drafting departments without delay and are managed and stored appropriately.
2. Overview of the operational status of the risk management system
   In accordance with the Risk Management Rules, the headquarters divisions have established a cross-organizational risk management system. The Risk Management Committee identifies and analyzes underlying risks and reports to Directors regarding the implementation status of such system.
3. Overview of the operational status of the system for securing efficient execution of duties
   Operating Officers and Upper Management are executing their duties promptly and efficiently in accordance with operational authorities and rules on decision-making. Their execution of duties is supervised by Directors at management meetings (two times in the current period), etc. The Company monitors if Directors' duties are executed appropriately and efficiently at the Board of Directors meetings (14 times in the current period, including meetings conducted by document means), the Central Labor-Management Council (18 times in the current period) and various other committee meetings.
4. Overview of the operational status of the system for ensuring compliance
   The Company communicates and ensures compliance with the NOK Charter of Corporate Behavior, the compliance rules and Behavioral Guidelines Concerning Employee Compliance. In addition, the Company continuously makes efforts for compliance with the relevant laws and regulations, the Articles of Incorporation and other rules established by the Company by implementing the month for promoting compliance, providing training programs for its employees and establishing a whistleblowing hotline, etc.
5. Overview of the operational status of the system for ensuring the properness of operations of the Group
6. 1. The Company has received reports as necessary on the management status of its subsidiaries and the status of progress for instructions and support provided by the Company.
   2. The Company has required its subsidiaries to establish risk management systems, and the headquarters divisions have received reports on the status of implementation of the systems.
   3. The Company holds joint management meetings twice a year to ensure the management efficiency of the Group as a whole.
   4. ‌The Company has required its subsidiaries to establish Charters of Corporate Behavior, compliance rules and Behavioral Guidelines Concerning Employee Compliance, and monitors the status of compliance with the relevant laws and regulations, the Articles of Incorporations and other rules established by the Company on a regular basis.
   5. The Company monitors the properness of operations to ensure the credibility of the financial statements of the Company and its subsidiaries once a year.
7. Overview of the operational status of the system for audit by Corporate Auditors
8. 1. The‌ Company has assigned personnel with expertise in laws and regulations who are capable of providing assistance to Corporate Auditors, upon consultation with Corporate Auditors on the selection of assistant employees.
   2. Employees‌ who are assigned to assist Corporate Auditors with their duties attend the Board of Corporate Auditors meetings, etc. and follow the instructions from Corporate Auditors in executing their duties.
   3. ‌The Auditing Committee for Internal Controls once a year checks the system for ensuring appropriateness of the Company's and its subsidiaries' operations, internal audits are conducted regularly by the internal audit department and other bodies, and the results are reported to the Board of Corporate Auditors.
   4. ‌The Company has included a provision in the compliance rules that prohibits unfavorable treatment of personnel for reason of having made a report to the whistleblowing hotline, and has communicated to that effect across the Company and its subsidiaries.
   5. The‌ Company secures expenses that allow Corporate Auditors to execute their duties appropriately in accordance with the audit policy and audit plans.
   6. ‌Corporate Auditors attend the Board of Directors meetings and other important meetings and investigate the Company's operational and financial conditions.
      In addition, Corporate Auditors exchange opinions with the Independent Auditor on a regular basis, and attends meetings named "Management Supervision Meeting" to be held four times a year to exchange opinions with Representative Directors and External Directors.

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Consolidated Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (From April 1, 2023 to March 31, 2024)

												(Millions of yen)
					Shareholders' equity
	Capital stock					Retained				Total
		Capital surplus		Treasury stock	shareholders'
			earnings
										equity
Balance at the beginning of current period	23,335		23,590		368,823		(4,741)		411,008
Changes of items during the period
Dividends from surplus							(15,134)				(15,134)
Profit attributable to owners of parent							31,602				31,602
Purchase of treasury stock										(10,000)		(10,000)
Disposal of treasury stock					8					727		736
Purchase of shares of consolidated subsidiaries				2,603							2,603
Net changes of items other than shareholders'
equity
Total changes of items during the period	-		2,612		16,467		(9,272)		9,807
Balance at the end of current period	23,335		26,203		385,291		(14,014)		420,815
	Accumulated other comprehensive income
										Non-	Total net
	Valuation			Foreign				Total accumulated
			Remeasurements	controlling
	difference on			currency	of defined	other	interests	assets
	available-for-		translation	comprehensive
		benefit plans
	sale securities		adjustment	income
Balance at the beginning of current period	59,186		46,440		5,790	111,417	54,920	577,346
Changes of items during the period
Dividends from surplus												(15,134)
Profit attributable to owners of parent												31,602
Purchase of treasury stock												(10,000)
Disposal of treasury stock												736
Purchase of shares of consolidated subsidiaries												2,603
Net changes of items other than shareholders'	12,785		22,339		18,696	53,821	(1,973)	51,847
equity
Total changes of items during the period	12,785		22,339		18,696	53,821	(1,973)	61,655
Balance at the end of current period	71,971		68,779		24,487	165,239	52,946	639,001

Note: Figures are rounded down to the nearest million yen.

Reference: Consolidated Cash Flows (From April 1, 2023 to March 31, 2024)

(Millions of yen)

From operating activities	From investing activities	From financing activities	Cash and cash equivalent at
the end of period
89,153	(29,722)	(34,038)	136,256

Note: Figures are rounded down to the nearest million yen.

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Notes to Consolidated Financial Statements

1. Notes regarding the basis for preparing consolidated financial statements

1. Scope of consolidation

1. Consolidated subsidiaries
2. 1. Number of consolidated subsidiaries: 92
   2. Names of major consolidated subsidiaries:

Thai NOK Co., Ltd.

Unimatec Co., Ltd.

Nippon Mektron, Ltd.

Mektec Corporation (Taiwan)

SYNZTEC Co., Ltd.

1. Unconsolidated subsidiaries
2. 1. Name of major unconsolidated subsidiary: Mektec Automation Technology Corporation (Zhuhai) Ltd.
   2. Reasons for exclusion from scope of consolidation
      The respective totals of total assets, net sales, net income/loss, retained earnings and the like of unconsolidated subsidiaries are all immaterial with respect to total assets, net sales, profit/loss attributable to owners of parent, retained earnings and the like on the consolidated financial statements. Therefore, they are not included in the scope of consolidation because they do not have a significant impact on the consolidated financial statements overall.

1. Application of the equity method of accounting

1. Unconsolidated subsidiaries and affiliates accounted for by the equity method
2. 1. Number of unconsolidated subsidiaries and affiliates accounted for by the equity method: 18
   2. Names of major unconsolidated subsidiaries and affiliates:

Eagle Industry Co., Ltd.

Pyung-Hwa Oilseal Industry Co., Ltd.

Freudenberg-NOK General Partnership

1. Unconsolidated subsidiaries and affiliates not accounted for by the equity method Names of major unconsolidated subsidiaries:
   Not applicable

1. Notes regarding changes of scope of consolidation and equity method affiliates

1. Change in scope of consolidation

1. Subsidiaries newly included in consolidation (3) Estoh Co., Ltd. and two others
2. Companies excluded from the scope of consolidation (2) Tokiwa Industry Co., Ltd. and one other

1. Change in scope of the equity method

Not applicable

(4) Matters concerning the business term of consolidated subsidiaries

There are 40 consolidated subsidiaries whose accounting periods differ from the consolidated accounting period and have their fiscal year end on December 31. Of these, important transactions made by NOK Inc., between the said accounting date and the consolidated accounting date have been adjusted to the extent necessary for consolidation. Mektec Manufacturing Corporation (Zhuhai) Ltd. and 38 other consolidated subsidiaries carry out provisional settlements of account based on full-year business results on March 31, the consolidated accounting date.

1. Matters concerning accounting policies

1. Valuation criteria and methods for principal assets
2. 1. Available-for-salesecurities

• Those other than shares and other securities without quoted market price

Stated‌ at market value. (Valuation difference is reported as a component of net assets. Cost of sales is calculated using the moving average method.)

• Shares and other securities without quoted market price

They are stated at cost with the cost being determined by the moving average method.

(b) Derivatives

They are stated at market price.

(c) Inventories

Finished‌ goods and work in process of the Company and its domestic consolidated subsidiaries are mainly valued at cost based on the retail method (balance sheet amounts are determined by writing down the book value according to the decrease in profitability). Meanwhile, raw materials and supplies are valued at cost based on the periodic average method (balance sheet amounts are determined by writing down the book value according to the decrease in profitability). For overseas consolidated subsidiaries, those are mainly valued at the lower of cost or market based on the moving average method or the first-infirst-out method.

1. Method of depreciation of principal noncurrent assets

1. Property, plant and equipment (excluding lease assets) Depreciation is computed by the straight-line method.
   The useful lives of major items of property, plant and equipment are as follows: Buildings and structures: 5-50 years
   Machinery, equipment and vehicles: 4-10 years
2. Intangible assets (excluding lease assets) Amortization is computed by the straight-line method.
3. Lease assets
   Lease assets related to finance leases other than those deemed to transfer ownership of leased property to the lessee by the Company
   Depreciation is calculated on the straight-line method over the lease period as the useful life and assuming no residual value.
4. Long-termprepaid expenses
   Amortization is computed on a straight-line basis.

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1. Accounting policies for principal allowances

1. Allowance for doubtful accounts
   To prepare for losses on bad debt, general claims are accounted using the loan loss ratio and doubtful claims are accounted as the expected unrecoverable amount taking into consideration of the recoverability of individual claims.
   As for overseas subsidiaries, estimated amount of allowance for doubtful accounts has been recorded depending primarily on the condition of receivables.
2. Provision for bonuses
   In order to prepare for the payment of employee bonuses, accrued bonuses based primarily on estimated payment amounts have been entered into the accounts.
3. Provision for share awards for directors (and other officers)
   In order to prepare for provision of shares of the Company's stock, etc. to directors and other officers of the Company and a portion of its subsidiaries, we have calculated the expected amount of provision.

1. Method for accounting for retirement benefits

1. Method for attributing expected retirement benefits to periods
   In the calculation of retirement benefit obligations, the method of attributing expected retirement benefits to periods up to the end of the current fiscal year is the benefit formula basis.
2. Method of expenses for actuarial differences

Actuarial differences are treated as expenses in equal installments using the straight-line method over a prescribed period of time (10 years) that is within the average remaining period of employment for the employees in question, beginning in the year following the fiscal year in which such calculations are made.

(v)Accounting policies for important revenue and expenses

Since the details of main performance obligations in main businesses related to revenue from contracts with customers of the Company and its consolidated subsidiaries in Japan and the timing when the performance obligations are typically satisfied (typical timing of revenue recognition) are described in "9. Notes regarding revenue recognition," this information has been omitted.

1. Method of hedge accounting

1. Method of hedge accounting
   Special treatment is applied as the interest rate swaps satisfy the requirements for special treatment.
2. Hedging instruments and hedged items

Hedging instruments:	Interest rate swaps
Hedged items:	Interest on borrowings

1. Hedging policy
   The interest rate swaps are made in order to hedge fluctuation risks in interest rates on borrowings.
2. Method of assessing hedge effectiveness
   Regarding the interest rate swaps, the Company assesses hedge effectiveness based upon the fulfillment of the requirements for special treatment.

1. Method and period of amortization of goodwill

For amortization of goodwill, a reasonable estimate of the effective period is created, and amortization is performed on a straight- line basis over this period.

1. 1. Other significant Items for preparing consolidated financial statements Application of the group tax sharing system
      The Company applies the group tax sharing system.
2. Notes regarding changes in presentation methods (Consolidated Balance Sheet)
   "Goodwill," which was included in "Intangible assets" in the previous fiscal year, is presented separately from the current fiscal year because of an increase in the materiality of the amount.
   As a result of the above, in the consolidated balance sheet of the previous fiscal year, ¥3,958 million that was previously included in "Intangible assets" has been reclassified as ¥141 million in "Goodwill" and ¥3,816 million in "Other."
3. Notes regarding accounting estimates
   The following is the information on accounting estimates recorded on the consolidated financial statements of the current fiscal year that may exert material effects on the consolidated financial statements of the next fiscal year.
   The Medium-term Management Plan in the text below is based on information, etc. accessible from the inside and outside of the Company at the time of preparation, with the use of estimates and assumptions regarding matters such as the growth rate of multiple markets in which the Company is participating and measures that the management has judged are feasible. There is the possibility that the numbers which are based on these estimates and assumptions may differ from the actual results.
4. 1. Deferred tax assets
   1. The amount recorded on the consolidated financial statements for the current fiscal year

(Millions of yen)

Deferred tax assets

Current fiscal year

6,000

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(ii) Information on the content of important accounting estimates concerning recognized items

For deferred tax assets, based on the scheduling for addition and subtraction of future taxable income, temporary differences, etc., the amount of deductible temporary differences that we have judged are recoverable in the future is recorded. The amount not expected to be recoverable is accounted as valuation allowance.

The future taxable income is based on estimates and assumptions made by the latest Medium-term Management Plan, feasible tax plans, etc., and overseas subsidiaries, etc. operating in the electronic product segment provide valuation allowance for loss carried forward, taking into account the uncertainty of future profitability.

If such estimates or assumptions are affected by any situation in the future, there is a possibility that the recoverability of deferred tax assets will change, and the amount of deferred tax assets will need correcting.

1. Loss on impairment

1. The amount recorded on the consolidated financial statements for the current fiscal year

(Millions of yen)

Property, plant and equipment

Loss on impairment

Current fiscal year

249,753

10,723

(ii) Information on the content of important accounting estimates concerning recognized items

For the noncurrent assets to which the Accounting Standard for Impairment of Noncurrent Assets applies that are not expected to recover the investment because of a decline in profitability due to factors such as changes in the market environment, we reduced their book value to the recoverable amount and recognized the amount of decrease as impairment loss.

The process of recognizing an impairment loss includes making a judgment on whether to recognize an impairment loss and calculating the value in use and the net realizable value. Such judgment and calculation are made on the basis of the estimates of future cash flows based on the latest Medium-term Management Plan and estimates of the values based on reasonable calculation.

In a case where such estimates of future cash flows or estimates of the values based on reasonable calculation need reviewing due to any situation in the future, there may be an additional impairment loss.

1. Net defined benefit asset and liabilities

1. The amount recorded on the consolidated financial statements for the current fiscal year

(Millions of yen)

Net defined benefit asset

Net defined benefit liabilities

Current fiscal year

13,428

46,945

(ii) Information on the content of important accounting estimates concerning recognized items

Retirement benefit asset and liability under the defined benefit plan adopted at the NOK Group are calculated by deducting the amount of pension assets from the amount of retirement benefit obligations that is calculated by discounting the expected retirement benefits recognized to arise by the end of the current fiscal year.

For such calculation, actuarial assumptions such as discount rates and expected rates of return on pension assets are used. Discount rates are determined on the basis of the yield of long-term government bonds at the end of the current fiscal year, and expected rates of return on pension assets are determined considering the current and expected allocation of pension assets, as well as the current and future expected long-term rate of return based on a wide range of assets that compose pension assets.

If such actuarial assumptions need reviewing due to changes in uncertain economic situations in the future, or the like, the amount of retirement benefit asset and liability and retirement benefit expenses from the next fiscal year may be significantly affected.

1. Assessment of goodwill

1. Amount recorded on the consolidated financial statements of the current fiscal year

(Millions of yen)

Goodwill

Current fiscal year

10,512

(ii) Information on the content of important accounting estimates concerning recognized items

The NOK Group records excess earning power calculated based on the business plans of acquired companies at the time of stock purchase as goodwill, and it is amortized on a straight-line basis over its effective period. For goodwill impairment, it is judged whether or not there are signs of impairment, and if signs of impairment are recognized, it is decided whether or not there is the need to recognize an impairment loss based on future cash flows.

For the calculation of share value when deciding the acquisition cost for Estoh Co., Ltd., NOK adopted primarily the DCF method assuming the business plans that had been disclosed, and utilized multiple methods of calculating corporate value including comparable company analysis. Evaluation and calculation were performed with comprehensive consideration for these results.

Future business plans involve uncertainty in management judgments and estimates. In the event of a change to the preconditions and assumptions of the estimates, there is the possibility of a significant effect on assessment of goodwill in the consolidated financial statements of the following fiscal year.

4. Notes regarding the consolidated balance sheet
(1) Pledged assets
(i) Assets pledged as security
	Buildings and structures	¥224 million
	Machinery, equipment, and vehicles	¥7 million
	Total	¥232 million
(ii) Secured liabilities corresponding to the above
	Short-term loans payable	¥51 million
	Long-term loans payable	¥8 million
	Total	¥59 million
(2) Accumulated depreciation of property, plant and equipment	¥608,404 million

Accumulated depreciation of property, plant and equipment includes accumulated impairment loss.

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(3) Trade notes, etc. maturing on the closing date

‌The accounting process for trade notes maturing on the closing date processes the notes on the date of note clearing. Because the last day of the current fiscal year was a bank holiday, the following trade notes, etc. maturing on the closing date are included in the

	balance at the end of the fiscal year.
	Notes receivable	¥166 million
	Electronically recorded monetary claims	¥1,251 million
5. Notes regarding the consolidated statement of income
(1) Impairment loss

In the current fiscal year, the NOK Group recorded impairment loss on the following asset groups.

(i) Overview of asset groups for which impairment loss was recognized

Location	Description	Classification
Nihonmatsu City, Fukushima Prefecture,	Business assets	Machinery, equipment and vehicles, buildings and structures, land,
and others	etc.
Miharu Town, Tamura District, Fukushima	Business assets	Machinery, equipment and vehicles
Prefecture
Tamura City, Fukushima Prefecture	Idle assets	Land
Kitaibaraki City, Ibaraki Prefecture	Idle assets	Construction in progress
Kamisu City, Ibaraki Prefecture	Idle assets	Buildings and structures, land, etc.
Kikugawa City, Shizuoka Prefecture	Business assets	Buildings and structures, machinery, equipment and vehicles, etc.
Shenzhen City, China	Business assets	Machinery, equipment and vehicles, construction in progress, etc.
Budweis, Czech Republic, and others	Business assets	Machinery, equipment and vehicles, tools, furniture and fixtures, etc.

(ii) Ground for recognition of impairment loss

As for the asset groups, future recoverability was examined because of their indication of impairment due to a decline of profitability along with changes in market and business environment. Accordingly, the NOK Group reduced their book value to the recoverable amount, and recognized the amount of decrease as impairment loss under extraordinary loss.

(iii) Components of impairment loss

(Millions of yen)

Type of noncurrent assets	Amount
Buildings and structures	2,765
Machinery, equipment and vehicles	5,481
Tools, furniture and fixtures	1,103
Land	1,074
Construction in progress	298
Total	10,723

(iv) Method of grouping assets

The NOK Group groups assets based on, in principle, division in accordance with business segment under management accounting, deeming it as the smallest unit that generates cash flows. However, the NOK Group groups assets of some consolidated subsidiaries by the unit of subsidiary company. Moreover, corporate assets such as head office are categorized into shared assets, since these assets do not generate independent cash flows as assets that contribute to the generation of future cash flows of multiple assets or groups of assets.

Idle assets and assets to be disposed of are grouped for individual assets.

(v) Method of determining recoverable amount

The recoverable amount is determined based on the net realizable value. The net realizable value is evaluated using the disposal value.

(2) Business restructuring expenses

The Company recorded ¥1,753 million in expenses related to early retirement of employees, etc. due to structural reform of the Electronic Product business, etc.

6. Notes regarding the consolidated statement of changes in net assets

(1) Matters concerning the total number of shares issued

	Number of shares at the	Increase in number of	Decrease in number of	Number of shares at the
Type of shares	beginning of the current	shares during the	shares during the	end of the current
	fiscal year	current fiscal year	current fiscal year	fiscal year
Common shares	173,138,537 shares	- shares	- shares	173,138,537 shares
(2) Matters concerning the number of treasury stock shares
	Number of shares at the	Increase in number of	Decrease in number of	Number of shares at the
Type of shares	beginning of the current	shares during the	shares during the	end of the current
	fiscal year	current fiscal year	current fiscal year	fiscal year
Common shares	3,680,752 shares	5,435,308 shares	553,666 shares	8,562,394 shares

Notes: 1. The‌ increase in the number of shares of treasury stock is due to the purchase of 308 odd-lot shares, and to the acquisition of 5,435,000 shares of treasury stock based on a resolution of a Board of Directors meeting held on November 8, 2023.

1. The‌ decrease in the number of shares of treasury stock is due to a decrease of 83,366 shares resulting from provision of stock to eligible individuals from the Board Incentive Program (BIP) Trust, the sale of 461,300 shares from the Employee Stock Ownership Plan (J-ESOP) to the NOK Stock Ownership Association, and 9,000 shares that are the attributable portion to the Company out of the treasury stock (the Company's stock) sold by entities accounted for using the equity method.
2. The‌ number of shares of treasury stock at the end of the fiscal year consists of 1,716,500 shares owned by the Board Incentive Program (BIP) Trust and 1,244,500 shares owned by the Employee Stock Ownership Plan (J-ESOP).

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1. Matters concerning dividends

1. Payment of dividends

		Total amount	Dividends per share
(Resolution)	Type of shares	of dividends	Record date	Effective date
(Yen)
		(Millions of yen)
The Annual Shareholders'	Common shares	8,652	50.0	March 31, 2023	June 29, 2023
Meeting held on June 28, 2023
The Board of Directors	Common shares	6,489	37.5	September 30, 2023	December 4, 2023
meeting held on November 8, 2023

Notes: 1. Total‌ amount of dividends resolved by the Annual Shareholders' Meeting held on June 28, 2023 includes dividends of 89 million yen paid for the Company's stock owned by the Board Incentive Program (BIP) Trust and 85 million yen paid for the Company's stock owned by the Employee Stock Ownership Plan (J-ESOP).

2. Total‌ amount of dividends resolved by a Board of Directors meeting held on November 8, 2023 includes dividends of 65 million yen paid for the Company's stock owned by the Board Incentive Program (BIP) Trust and 55 million yen paid for the Company's stock owned by the Employee Stock Ownership Plan (J-ESOP).

1. Dividends‌ for which the effective date will fall after the end of the current fiscal year among those whose record date is within the current fiscal year

		Total amount of	Source of	Dividends
(Resolution)	Type of shares	dividends	per share	Record date	Effective date
dividends
		(Millions of yen)	(Yen)
The Annual Shareholders'	Common shares	8,381	Retained earnings	50.0	March 31, 2024	June 27, 2024
Meeting held on June 26, 2024

Note: Total‌ amount of dividends resolved by the Annual Shareholders' Meeting held on June 26, 2024 includes dividends of 85 million yen paid for the Company's stock owned by the Board Incentive Program (BIP) Trust and 62 million yen paid for the Company's stock owned by the Employee Stock Ownership Plan (J-ESOP).

7. Notes regarding financial instruments

1. Matters regarding the situation of financial instruments

1. Policy for handling financial instruments
   The NOK Group has a policy of managing funds by investing in safe and secure targets and raising funds mainly by means of loans from financial institutions. For derivatives, the NOK Group uses forward exchange contracts and currency swaps based on actual demand and does not carry out speculative transactions of any kind.
2. Details and risks of financial instruments and risk management system
   Notes and accounts receivable - trade, and electronically recorded monetary claims, are operating receivables that are exposed to credit risk of customers. With regard to this risk, the NOK Group adopts a system to manage due dates and balance of individual business partners and ascertain the credit status of principal business partners semiannually in accordance with the credit management regulations of the NOK Group.
   Shares are investment securities and exposed to the market price fluctuation risk. The shares possessed by the NOK Group are mainly those of the companies with which the NOK Group has business relations, the fair values of which are ascertained periodically and reported to officers in charge of finance.
   Employees who receive loans from the Company are obligated to provide collateral. In addition, there are regulations that the balance of the loan upon retirement shall be offset by the retirement allowance.
   Accounts payable - trade are trade liabilities and become due within one year.
   Short-term loans payable are mainly for raising funds pertaining to business transactions, while long-term loans payable (to be payable within five years in principle) are for raising funds for capital investment. Floating interest rate loans are exposed to interest rate fluctuation risk. For some floating interest rate long-term loans payable, derivative transactions (interest rate swaps) are used for each loan contract as hedging instruments to hedge risks of fluctuations in interest rates on loans and to fix the amount of interest on loans. Because the hedge meets the requirements of special treatment of interest rate swaps, assessment of hedge effectiveness has been omitted and replaced with the judgment thereof.
   The NOK Group carries out and manages derivative transactions in accordance with internal regulations which stipulate the authorities to carry out transactions. The NOK Group carries out derivative transactions only with financial institutions with high credit ratings in order to reduce the credit risk.
   Trade liabilities and loans are exposed to liquidity risk. Individual companies of the NOK Group manage them by means such as planning monthly cash flow management.
   Deposits received from employees yield fixed interest rate and are not exposed to interest rate fluctuation risk.
3. Additional explanation of matters regarding fair value, etc. of financial instruments

The amounts, etc. of contracts related to derivative transactions in "(2) Matters regarding fair value, etc. of financial instruments" do not themselves indicate the market risk associated with the derivative transactions.

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(2) Matters regarding fair value, etc. of financial instruments

As of March 31, 2024, the amount recorded in the consolidated balance sheet, fair value, and difference between them are as shown in the table below. Shares and other securities without quoted market price (¥64,302 million on the consolidated balance sheet) are not included in "(1) Investment securities." As for "Cash and deposits," "Notes and accounts receivable - trade," "Electronically recorded monetary claims," "Accounts payable - trade," "Short-term loans payable" and "Deposits received from employees," since these accounts are settled in a short period of time, the fair value is nearly equal to the book value, and thus the information has been omitted.

(Millions of yen)

		Amount recorded in	Fair value	Difference
		consolidated balance sheet
(1)	Investment securities	123,705	123,705	-
(2)	Long-term loans receivable from employees	1,495	1,583	88
Total assets	125,200	125,288	88
(1)	Long-term loans payable	18,871	18,826	(45)
Total liabilities	18,871	18,826	(45)
Total derivative transactions (*)	(111)	(111)	-

1. 1. Amounts‌ of claims and liabilities derived from derivative transactions are shown in net amount. Amounts in parentheses show that those are net liabilities.
2. Matters regarding the breakdown by appropriate classification of fair values of financial instruments

Based on the observability and the materiality of the inputs used to measure the fair value, fair values of financial instruments are classified into the following three levels:

Level 1 fair value: ‌Fair value measured using quoted prices in active markets that are observable inputs for measurement of fair values

Level 2 fair value: Fair‌ value measured using inputs other than those used to measure level 1 fair value among observable inputs for measurement of fair values

Level 3 fair value: Fair value measured using unobservable inputs for measurement of fair values

In cases where multiple inputs are used to measure the fair value, the fair value of financial instruments is classified to the lowest priority level of fair value measurement to which each input belongs.

(i) Financial assets and financial liabilities using fair value for their amounts recorded in the consolidated balance sheet

(Millions of yen)

Item			Fair values
Level 1	Level 2		Level 3	Total
Investment securities	123,705	-		-	123,705
Derivative transactions	-	111		-	111

(ii) Financial assets and financial liabilities not using fair value for their amounts recorded in the consolidated balance sheet

(Millions of yen)

Item				Fair values
Level 1		Level 2		Level 3	Total
Long-term loans receivable from employees		-	1,583		-	1,583
Long-term loans payable		-	18,826		-	18,826

Note: Explanation of evaluation techniques used for measuring fair value and inputs regarding measuring fair value Investment securities

Listed shares are measured using the quoted market price. Since listed shares are traded in an active market, their fair values are classified as level 1 fair value.

Derivative transactions

Derivatives are measured based on the price, etc. provided by financial institutions, and their fair values are classified as level 2 fair value.

Because derivative transactions to which the special treatment of interest rate swaps applies are treated together with long-term loans payable which may be hedged, the fair value of such derivative transactions is included in the fair value of such long-term loans payable.

Long-term loans receivable from employees

Long-term loans receivable from employees are classified by a certain period of time and measured using the present value calculated by discounting their future cash flow using the interest rate based on the yield of government bonds. Their fair values are classified as level 2 fair value.

Long-term loans payable

Because long-term loans payable with floating interest rate reflect market interest rates in a short period of time and the credit standing of the Company has not changed significantly since the loans were executed, the fair value is deemed nearly equal to the book value. Therefore, long-term loans payable with floating interest rate are measured using the book value, and their fair values are classified as level 2 fair value. In addition, long-term loans payable with fixed interest rate are classified by a certain period of time and measured using the present value calculated by discounting the total amount of the principal and interest using the interest rates considered to be applicable to similar loans. Their fair values are classified as level 2 fair value.

8. Notes regarding investment and rental properties

(1) Matters related to status of investment and rental properties

The Company and some consolidated subsidiaries have properties for rent in Kanagawa prefecture and other regions.

(2) Matters related to the fair value of investment and rental properties

(Millions of yen)

Amount on the consolidated balance sheet	Fair value
1,684	9,220

Notes: 1. The amount on the consolidated balance sheet is the amount of acquisition cost less accumulated depreciation and impairment loss.

2. ‌The fair values of investment and rental properties as of March 31, 2024 are estimated by the company that owns the property according to indicators thought to appropriately reflect market prices.

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9. Notes regarding revenue recognition

(1) Information on disaggregation of revenue from contracts with customers

The following is the information on disaggregation of revenue by major goods or services and major regional markets. Current fiscal year (April 1, 2023 to March 31, 2024)

					(Millions of yen)
			Reportable segments		Total
	Seal		Electronic product	Other
Major goods or services
Automotive-related		282,418	88,773	2,302	373,494
Electronics-related		-	271,061	-	271,061
Other general industrial machinery		80,186	-	25,759	105,946
Total		362,605	359,834	28,062	750,502
Major regional markets
Japan		216,814	11,119	14,397	242,332
China		62,771	249,475	7,653	319,901
Other Asian countries		55,495	67,213	5,665	128,374
Other		27,523	32,025	345	59,894
Total		362,605	359,834	28,062	750,502

Note: The amount is after deducting inter-segment sales or transfers.

(2) Information as a basis to understand revenue from contracts with customers

The Company and its consolidated subsidiaries recognize revenue based on the following five step approach. Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the separate performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

The Company and its consolidated subsidiaries have automotive manufacturers, construction machinery manufacturers, electronic equipment manufacturers and some others as major clients, and mainly manufacture and sell seal products, industrial functional parts, hydraulic equipment, plant machinery, nuclear power equipment, synthetic chemical products and electronic products.

The main performance obligations of the Company and its consolidated subsidiaries are to supply finished goods to customers. As the Company and its consolidated subsidiaries, in principle, judge that a performance obligation is satisfied when products are delivered and control is transferred to a customer, the Company and its consolidated subsidiaries recognize revenue at that point in time. However, for sales in Japan, in the case that a period between shipping and the transfer of control is typical, the Company and its consolidated subsidiaries recognize revenue at the time of shipping.

To determine a transaction price, we deduct discounts, in particular, from consideration promised in the contract with a customer.

The Company and its consolidated subsidiaries receive consideration for these performance obligations within approximately one year after such obligations are satisfied according to payment terms separately set forth, which does not include a significant financing component.

Please note that, for subcontract processing transactions with supply of materials for value that is a repurchase agreement are treated as financial transactions, and outstanding supplies at recipient of supplies are recognized as inventories. At the same time, the amount equivalent to the outstanding supplies at recipient of supplies is recognized as "Liabilities for subcontract processing transactions with supply of materials for value." For subcontract processing transactions with receipt of materials for value, only net amount of costs of conversion is recognized as revenue. Furthermore, the revenue of transactions where the Company is acting as an agent to sell products to a customer is recognized at the amount obtained by deducting payments to third parties from the entire amount of the consideration received from the customer.

1. Information for understanding the amounts of revenue for the current and subsequent fiscal years

1. Balance of contract assets and contract liabilities, etc.
   Description of contract assets and contract liabilities of the Company and its consolidated subsidiaries has been omitted because their balance is immaterial and there were no significant changes thereto. In addition, revenue recognized in the current fiscal year from performance obligations satisfied or partly satisfied in past periods is immaterial.
2. Transaction price allocated to the remaining performance obligations
   Description‌ of transaction price allocated to the remaining performance obligations of the Company and its consolidated subsidiaries has been omitted as a practical expedient because there were no significant contracts having an original expected duration of over one year. Moreover, any material consideration from contracts with customers was not included in the transaction price.

10. Notes regarding per-share information

(1)	Net assets per share	¥3,561.00
(2)	Net profit per share	¥188.34

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