Takasago Thermal Engineering : CORPORATE GOVERNANCE REPORT

Last Updated: June 22, 2021

Takasago Thermal Engineering Co., Ltd.

Kazuhito Kojima, President and Representative Director, COO Contact: Yoshiyuki Hara, Director and CFO TEL:[phone] Ticker code: 1969 https://www.tte-net.com

The corporate governance of Takasago Thermal Engineering (the "Company") is described below.

I Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

The basic policy of corporate governance of the Company is to secure the legality, transparency and agility of corporate management and improve the management efficiency in order to earn the trust of society and improve corporate value in the medium and long terms. For details, see [Principle 3-1 Full Disclosure] (ii) below.

[Reasons for Non-Compliance with the Principles of the Corporate Governance Code]

The Company is in compliance with the principles of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code] Update

[Principle 1-4Cross-Shareholdings]

The Company's basic policy is not to hold cross-shareholdings in order to achieve the sustainable enhancement of corporate value, except in cases where important strategic cooperation and the maintenance and development of business relationships are recognized. For shares that have already been held, the Company periodically and continuously judges the appropriateness of holding the same from the following viewpoints, and examines the results at meetings of the Board of Directors every year, and in principle, considers reducing stockholdings of which the significance of holding is not recognized.

• Whether or not it leads to the enhancement of the Company's corporate value over the medium to long term, such as the maintenance of smooth and favorable business relationships and business synergy.
• Whether or not it has an adverse effect on the Company's financial soundness.
• Whether or not the return from stockholdings, including related transaction profits, dividends, etc., exceeds the cost of capital.

Regarding the exercise of voting rights, the Company makes a decision on whether each agenda contributes to improving the corporate value of an issuer and to the interests of the Company as a shareholder and properly exercises voting rights.

In light of the above criteria, the Company sold 6 out of 110 stocks that were held at the beginning of FY2020.

[Principle 1-7 Related Party Transactions]

The Company, in conducting a transaction with any officer thereof, has the following system in place so that such transaction does not harm the interests of the Company and shareholders.

• In principle, internal rules prohibit all directors and executive officers from conducting a transaction or a competing transaction for themselves or others by using their position at work.
• However, internal rules also stipulate that reporting to the Board of Directors is required if an adequate reason exists, and that if a transaction is actually conducted, important matters concerning such transaction should be reported to the Board without delay.
• Internal rules require audit & supervisory board members to monitor and review competing transactions, conflict-of-interest transactions, provision of property benefits with no charge by the Company (including provision of property benefits with significantly limited counter-performance) and irregular transactions with subsidiaries and shareholders to see if there is any violation of the duties of directors.
• The Company requires its officers to submit a "Letter of Confirmation" concerning related party transactions at the end of every fiscal year, and the Board of Directors monitors if such transactions are conducted. If such transaction of high importance is conducted, the Company discloses it in accordance with the Companies Act and the Financial Instruments and Exchange Act.
  There is no shareholder who owns 10% or more of the Company's voting rights. However, in conducting a transaction with such s hareholder, the Company, as with any regular transaction, judges the necessity thereof based on the decision-making standards stipulated by internal rules. The Company shall obtain prior approval of the Board of Directors for any transaction of high importance and non-regular ones.

[Principle 2-6 Roles of Corporate Pension Funds as Asset Owners]

As the Company has a defined benefit corporate pension plan, in managing the reserve fund, it works to appoint a person with expertise and qualifications for pension management to fulfill the expected function as an asset owner. In terms of management, the Corporate Pension Management Committee monitors the status of management and determines a management policy.

[Principle 3-1 Full Disclosure]

1. Management Policy, Management Principles, Long-Term Management Vision and Medium-Term Management Plan

The management policy of the Company is "Contribution to society through personal harmony and creativity." Its management principles consist of "To serve society through the development of business activities that focus on the creation of the best product quality," "To develop technology that serves our customers' needs and utilizes the creativity of all employees" and "To enhance personal character and harmony between people by nurturing talent a nd promoting mutual respect."

The Company created "GReeN PR!DE 100," the Group's long-term management vision, with a view to the 100th anniversary of its foundation in 2023. The vision intends to realize a "Corporate group continuously meeting customer expectations and always relied on and trusted by them," a n "Environmental company whose presence is admired in the global market" and an "Environmental solution professional contributing to the global environment" and shift from an independent contractor to a general engineering company.

Based on the achievements of "iNnovate on 2016," the medium-term business plan with the "Establishment of the foundations for innovation" as the first step (FY2014 - 2016) toward the realization of the long-term vision, the Company has been committed to "iNnovate on 2019 just move on!," the medium-term business plan with the "Bold implementation of innovations for growth" as the second step (FY2017 - 2019). In addition, the Company newly established the new medium-term management plan "iNnovate on 2023 go beyond!" as the final step (FY2020 - 2023). Currently, the Company is implementing various growth strategies under the basic policies of "steady evolution into a multi-disciplinary equipment business," "establishment of the second and third core businesses," and " further enhancement of employee engagement," in order to "Strengthen the management infrastructure," as outlined in the medium-term management plan. The Company will regularly announce the progress of these strategies, including efforts to address sustainability issues (such as responding to climate change, human resources, and investing in

intellectual property).

1. Basic Views on Corporate Governance and Basic Policy Based on the Principles of the Code

With "Contribution to society through personal harmony and creativity" as the corporate mission, the Company positions at its root ESG and CSR management that contributes to the resolution of issues faced by stakeholders, including shareholders, employees, customers, subcontractors and communities, and works to earn the trust of society through its corporate activities.

The Company also considers strengthening of corporate governance as one of the important management issues and works to achieve sustainable growth and medium- and long-term improvement of corporate value through enforcing effective corporate governance.

1. Securing the Rights and Equal Treatment of Shareholders

(Securing the Rights of Shareholders)

The Company recognizes that shareholders are important stakeholders and develops an environment where they can fairly exercise their rights. The Company also works to secure the equality of minority shareholders and foreign shareholders and ensure that they can properly exercise the ir rights as well.

(Basic Strategy for Capital Policy)

The Company enhances the trust of stakeholders such as shareholders, customers and suppliers by securing a stable financial base. At the same time, the Company works to realize efficient corporate management based on ROE with an awareness that efficiency and adequacy of capital such as effective use thereof is an important issue.

For profit allocation, the Company positions the return of profits to shareholders as one of its priority management issues, and the basic policy is to return profits to shareholders through dividends. Beginning with the interim and year-end dividends for the fiscal year ending March 31, 2022, the Company will not reduce the dividend during the period covered by the current medium-term management plan ("iNnovate on 2023 go beyond!") (April 1, 2020 to March 31, 2024), and will increase the dividend in line with earnings growth. The Company intends to further enhance the return of profits to shareholders.

For the sustainable growth of the Group and medium- and long-term improvement of corporate value, the Company uses internal reserves as funds to develop technology and reinforce the financial standing to strengthen its competitiveness and for business and capital alliances to expand its business domains and other purposes.

In addition, the Company promotes shareholder returns by flexibly implementing share buybacks that comprehensively take into account market co nditions, capital levels, business investment opportunities, and other factors, while taking into account "soundness" and "capital efficiency."

2. Appropriate Cooperation with Stakeholders Other Than Shareholders

(Management Principles)

Based on the management principles, "Best product quality, unique technology development and human resource development and m utual respect," the Company believes that cooperation with all stakeholders is essential for sustainable growth and medium- and long-term improvement of corporate value. In order to do this, the management leads activities to nurture a corporate culture that respects the rights and positions of stakeholders and corpora te ethics.

(Sustainability)

Given the recent growing awareness of social and environmental issues on a global level, the Company bears social responsibilities while striving to enhance its corporate value, engaging in ESG-oriented management in an effort to contribute to the realization of a sustainable society.

The Company actively promotes fair and transparent management, including thorough enforcement of corporate ethics, activities that contribute to environmental conservation, such as decarbonization as an environment creator and consideration of climate change initi atives, and activities that contribute to the provision of distinctive technologies and the highest quality based on customer needs, improvement of employee engagement, and the fostering of a corporate culture in which diverse human resources can thrive.

3. Ensuring Appropriate Information Disclosure and Transparency

(Full Disclosure)

Regardless of whether required by law or not, the Company works to maintain timely and proper information disclosure from the perspective of protecting investors and earning the trust of the capital market.

In disclosing information, the Company works to be accurate and easy to understand so that it can have constructive dialogue with its shareholders.

(Accounting Auditors)

Accounting auditors, in collaboration with audit & supervisory board members and relevant departments such as Accounting & Finance and Internal Audit, work to secure an audit plan and a system and conduct a proper audit.

The Company promptly reports any event which affects accounting to the auditing firm and consults with and notifies it of an accounting policy. Accounting auditors work to understand accurate background information and the facts of such event to form an opinion .

4. Responsibilities of the Board

(Roles and Responsibilities of the Board)

The Company develops and uses a system including an optional committee so that the Board of Directors can fully perform its main roles and responsibilities:

"Presentation of directions such as corporate strategy," "Development of environment which supports risk taking" and "Highly effective supervision of the management and directors."

The Board of Directors makes important decisions for business execution and supervises performance of duties by directors to improve the efficiency of business management and secure the legality and validity of business execution.

(Use of Independent Outside Directors)

The Company utilizes judgments of outside directors independent from the management to promote "Segregation of supervision an d execution of management" and secure the independence and objectivity of the Board of Directors in supervising business management.

The Company believes that independent outside directors can have discussions which contribute to the sustainable growth of the Company and medium- and long- term improvement of corporate value by offering useful advice and opinions on a management policy and improvement of business management from an independent perspective based on their expertise, abundant experience and knowledge. At the General Meeting of Shareholders held in June 2021, the Company raised the ratio of outside directors from 36.4% (4 of the 11 directors are independent outside directors) to 50% (5 of the 10 directors are independent outside directors).

(Evaluation of Effectiveness of the Board)

The Company checks whether the entire Board of Directors properly functions or not, so that it can effectively perform its roles and responsibilities. While regularly analyzing and evaluating the effectiveness of the entire Board of Directors based on self-assessment of the respective director and audit & supervisory board members, the Company directly obtains advice and opinions on this analysis and evaluation from outside directors and outside audit & supervisory board members, and takes proper measures to solve issues, if any.

The Company uses the results of analysis of this evaluation to improve the Board of Directors' decision-making/supervisory function. For details, see [Supplementary Principle 4-11-3 Analysis/Evaluation of Effectiveness of the Board, Disclosure of Summary of Results Thereof] below.

5. Dialogue with Shareholders

(Dialogue with Shareholders)

The Company believes listening to shareholders and taking proper measures lead to the sustainable growth and medium - and long-term improvement of corporate value. Thus, the Company commits to building a constructive relationship with shareholders through dialogue with shareholders and disclosure of materials. For details, see [Principle 5-1 Policy for Constructive Dialogue with Shareholders] below.

1. Policy and Procedures for the Board of Directors to Determine Remuneration of Executives and Directors

With regard to the individual remuneration, etc. of the Company's directors, for the purpose of growing its business over the medium to long term and continuously and sustainably improving its corporate value and the common interests of its shareholders, the Company has decided, by resolution of the Board of Directors, to adopt a policy of having a remuneration system that functions as one of the sound incentives (motivation) in consideration of trends in corporate governance, survey data from external specialist organizations, the remuneration levels of other companies, and other factors. In addition, the individual remuneration, etc. for audit & supervisory board members are determined through discussion by audit & supervisory board members within the maximum amount of the total remuneration, etc. of audit & supervisory board members determined by a resolution of the General Meeting of Shareholders.

The content of individual remuneration, etc. for directors is determined by a resolution of the Board of Directors. In making such determination, the Nomination and Remuneration Committee, which consists of seven members, four of whom are independent outside directors, met nine times in total in the recent fiscal year. In these meetings, the Committee deliberates the appropriateness of the remuneration, the system design, etc. and considers the draft in a diversified manner, including consistency with this policy. The Board of Directors also fundamentally respects the report thereon. Therefore, the Company has determined that the content of the individual remuneration, etc. for directors related to the recent fiscal year is in line with this policy.

The following is a summary of the policy for determining the content of individual remuneration for officers of the Company.

The Company determines, based on a resolution of a shareholder meeting, the maximum limit of total remuneration of each direc tor and audit & supervisory board member.

To enhance the independence, objectivity and transparency of officer remuneration, the Company established, as an optional advisory body, the Nomination and Remuneration Committee, which consists of the Chairman and Director, the President and Director, and independent outside directors. After discussions at a meeting of the Committee, the Company determines, based on a resolution of the Board of Directors, the director remuneration, etc.

The remuneration of directors consists of basic remuneration, a bonus as a short-term (annual) incentive, and a trust-type stock compensation plan as a medium- and long-term incentive, and the composition ratio is set in consideration of this policy.

The Company's policy is to reduce the proportion of basic remuneration and increase the proportion of bonuses and a trust -type stock compensation plan as the rank increases. The proportion of basic remuneration, bonuses, and a trust-type stock compensation plan on the basis of the President and Representative Director's standard payment ratio is 60%: 20%: 20%.

The Company only pays basic remuneration to independent outside directors and pays no bonus or stock-related remuneration to them. Basic remuneration is fixed remuneration determined according to one's title and is paid monthly.

For bonuses, for the purpose of boosting the motivation to achieve a single-year performance goal, etc., the Company introduced a system where bonuses fluctuate between 50% to 150% depending on the base amount by position, according to the previous year's earnings (profit attributable to owner s of parent from the viewpoint of sharing performance with shareholders, ratio of net income to consolidated sales from the viewpoint of profitability, and consolidated sales from the viewpoint of the sustainable growth of the Group) as well as qualitative evaluation of each officer (degree of achievement of individual goal, training of successors, improvement of corporate value, efforts toward SDGs, vitalization of the Board of Directors and compliance). Bonuses are paid at a certain time each year.

The purpose of the trust-type stock compensation plan is to further motivate them to contribute to higher profits and improve corporate value in the medium and lo ng terms. In June of each year, points are granted based on base points that are predetermined according to one's position and multiplied by a performance-linked coefficient that varies according to the degree of achievement against the target values of the performance indicators for the fiscal year ending on the last day of March of the same year. Shares of the Company equivalent to the cumulative points are delivered at the time of retirement. The performance-linked coefficient is designed to vary within the range of 0% to 150%, depending on the degree of achievement of targets, etc. for financial indicators (consolidated sales, consolidated ordinary income, consolidated ROE, etc.) and non-financial indicators (CO2 emissions, etc.) for each fiscal year.

Number of points granted = Base amount of stock compensation by position / Average acquisition price of shares of the Company (*1) × Performance-linked coefficient of financial indicators (*2) × Performance-linked coefficient of non-financial indicators (*3)

*1. Average acquisition unit price of shares of the Company through a trust. If the trust period is extended, the average acquisition price of shares of the Company acquired through the trust after the extension.

*2. Performance-linked coefficient of financial indicators = Consolidated sales coefficient × 30% + Consolidated ordinary income coefficient × 60% + Consolidated ROE coefficient × 10%

*3. CO2 emissions are used as a non-financial indicator.

As with directors, remuneration of executive officers consists of basic remuneration, bonus as a short -term (annual) incentive and trust-type stock compensation as a medium- and long-term incentive, and is determined based on a resolution of the Board of Directors after discussion by the Nomination and Remuneration Committee.

Each director (except for independent outside directors) and executive officer shall endeavor to acquire shares of the Company by way of optional contribution through the director shareholding association.

The remuneration of audit & supervisory board members only consists of basic remuneration whose amount is determined through discussions by audit & supervisory board members by considering the details, volume and difficulty of the duties of each audit & supervisory board member and the extent of responsibilities in a comprehensive manner. A fixed amount is paid each month. No bonus or stock-related remuneration is paid to audit & supervisory board members in light of their duties.

Conceptual image of director's remuneration

1) Directors

Type of remuneration	Date of resolution	Eligible person	Amount	Number of members at
				the time of resolution
Basic remuneration and bonus	June 29, 2010	Director	¥550 million or less	12
			(in one fiscal year)
Stock compensation	June 22, 2021	Director (except for outside director)	¥769 million or less	5 directors and 23
		and executive officer	(in three fiscal years)	executive officers who
			158,200 shares or less	do not concurrently
			(in one fiscal year)	serve as a director

1. Audit & Supervisory Board Members

Type of remuneration	Date of resolution	Eligible person	Amount	Number of members at the time of resolution
Basic remuneration	June 26, 2018	Audit & Supervisory	¥120 million or less in a year	5
		Board Member

performance-linked compensation in recent fiscal years>

The Company determines the bonus paid to each director based on his/her performance, duties, degree of contribution, etc. in a comprehensive manner. For the purpose of boosting the motivation to achieve a single-year performance goal, etc., performance indicators for the recent fiscal year are composed of the results for the previous year's earnings (profit attributable to owners of parent from the viewpoint of sharing performance with shareholders, consolidated operating profit from the viewpoint of profitability, and consolidated sales from the viewpoint of sustainable growth of the Group) as well as qualitative evaluation of each director (degree of achievement of individual goal, training of successors, improvement of corporate value, efforts toward SDGs, vitalization of the Board of Directors and compliance). In addition, regarding the performance evaluation for the recent fiscal year, it was difficult to come up with an outlook for the external environment at the start of the recent fiscal year, and it was difficult to anticipate the performance forecast based on target values. Therefore, after deliberation by the Nomination and Remuneration Committee, the Company decided to calculate the amount of individual payments under a mechanism that varies between 0% and 150% of the base amount by position in accordance with the rate of change from the previous fiscal year in relation to the following indicators. The actual results related to indicators for the recent fiscal year are as follows:

Indicator	Actual results (rate of change from the previous fiscal year)
Profit attributable to owners of parent	(23.5%)
Consolidated operating profit	(31.3%)
Consolidated sales	(14.2%)

decision-making authority>

The Board of Directors determines the amount of remuneration of directors after discussions at the Nomination and Remuneration Committee. For an overview of the Committee, see "2. Matters on Functions of Business Execution, Auditing/Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)."

The Company determines the amount of each type of remuneration within the limit stipulated by shareholders' meetings.

As basic remuneration is determined based on the amount by position stipulated by resolutions of the Board of Directors, there is no room for discretion of Representative Directors or the Nomination and Remuneration Committee in principle. Bonus is calculated by the formula by position stipulated by resolutions of the Board of Directors. The Board approves its amount after the Nomination and Remuneration Committee verifies the appropriateness. Stock compensation is determined based on the formula by position stipulated by resolutions of the Board of Directors.

The scope of employees discussed by the Nomination and Remuneration Committee concerning remuneration includes directors (except for outside directors) and executive officers.

The Office of the Nomination and Remuneration Committee is established in the Corporate Planning Division and convenes meetings and provides prior explanation in accordance with the "Rules for Nomination and Remuneration Committee." What is discussed in those meetings is reported to the Board of Directors at the discretion of the chairperson.

The Nomination and Remuneration Committee held nine meetings during last fiscal year and discussed validity of the remuneration to each director proposed by the Company given the level of fulfillment of one's function while discussing the method of calculating performance-linked compensation. The Board of Directors received reports on discussions at the Committee. In addition to the remuneration of directors, the Nomination and Remuneration Committee deliberated on matters related to the

appointment and dismissal of executives and reported the results to the Board of Directors. All directors who are members of the Committee attended all nine meetings of the Committee.

1. Policy and Procedures for the Board of Directors to Appoint/Dismiss Executives and Nominate Candidates for Directors and Audit & Supervisory Board Members

To enhance the objectivity and transparency of appointment/dismissal of executives as well as nomination of candidates for di rectors and audit & supervisory board members, the Company, as an optional advisory body, established the Nomination and Remuneration Committee which consists of the Chairman and Director, the President and Director, and independent outside directors. After discussions at the Committee, candidates are submitted to the Board of Directors for further deliberation. However, for audit & supervisory board members, approval of the Audit & Supervisory Board is obtained when submitting candidates to the Board of Directors for deliberation. As of the submission of this Report, five out of seven members of the Committee are independent outside directors.

The criteria for appointment of directors include knowledge of business operation with excellent foresight, insight and objec tive judgment, ability to exercise leadership for sustainable growth of the Group and improvement of corporate value, ability to make an active and positive contribution to development of the next- generation executives, great character with popularity, high ethical standards and courage, ability to perform one's duty with no physical or mental problem and freedom from any problem such as having a vested interest. In addition to the above criteria, for directors who are not outside directors, sufficient experience and knowledge to manage the area he or she is in charge of and a sense of balance as well as leadership to execute business from the perspective of total optimization are required. For outside directors, an ability to supervise and check business management from an independent perspective by using abundant experience and knowledge of the area of expertise and corporate management is required. For the standards to secure the independence of independent outside directors , see [Principle 4-9 Independence Standards and Qualification for Independent Outside Directors] below.

The criteria for appointment of audit & supervisory board members include quality to fulfill responsibilities of audit & supervisory board members with high ethical standards, physical and mental fitness and freedom from any problem such as having a vested interest. In addition to the above criteria, for audit & supervisory board members who are not outside audit & supervisory board members, sufficient experience and knowledge of the Company's businesses and ability to conduct a proper audit are required. For outside audit & supervisory board members, an ability to conduct a proper audit from an independent perspective by using abundant experience and knowledge of the area of expertise and corporate management is required. For the standards to secure the independence of independent outside audit & supervisory board members, see [Principle 4-9 Independence Standards and Qualification for Independent Outside Directors] below.

The criteria for appointment of executive officers include an ability to perform important management in terms of corporate strategy supported by a high level of professionalism and track record, ability to exercise leadership for sustainable growth of the Group and improv ement of corporate value, ability to make an active and positive contribution to development of the next-generation executives, great character with popularity, high ethical standards and courage, ability to perform one's duty with no physical or mental problem and freedom from any problem such as having a vested interest.

When executives are considered to lack aptitude in light of the above-mentioned standards, the Nomination and Remuneration Committee may discuss dismissal of such executives.

1. Explanation of Each Appointment/Dismissal and Nomination When the Board Appoints/Dismisses Executives and Nominates Candidates for Directors and Audit & Supervisory Board Members Based on (ii) Above

The Company, in nominating candidates for directors and audit & supervisory board members, specifies the reason for selecting each candidate in a notice of a general shareholder meeting. The explanations for nomination of current directors and audit & supervisory board members as candidates therefor are shown below.

Atsushi Ouchi: Chairman and Representative Director, CEO

Having served as President and Representative Director since April 2010 and Director, Chairman and President since April 2016, Atsushi Ouchi engages in management by exercising his leadership as the Group CEO. We believe that, as Chairman and CEO, he can be expected to achieve the Group's sustainable growth as well as medium and long-term improvement in corporate value and to revitalize and strengthen the functions of the Board of Directors.

Kazuhito Kojima: President and Representative Director, COO; Global Business Planning Headquarters, and Research and Development Headquarters

Through the execution of the air conditioning equipment business, Kazuhito Kojima has gained abundant experience and deep insight in the design/construction of building equipment relating to the Group's businesses. He has also fulfilled his executive responsibilities through the devel opment of the Group's medium-term/annual business plans and through structural reforms and ESG/SDG-conscious corporate planning operations. We believe that, as President and COO, he can be expected to achieve the Group's sustainable growth as well as medium and long-term improvement in corporate value and to revitalize and strengthen the functions of the Board of Directors.

Yoshiyuki Hara: Director and Senior Managing Executive Officer, CFO; Risk Management Office, and Property Development Management Department

Yoshiyuki Hara has gained advanced knowledge in finance and banking field through his years of service with financial institutions. He has also fulfilled his executive responsibilities associated with accounting, finance, and planning-related operations toward the enhancement of the Group's corporate governance and management foundation. We believe that, as CFO, he can be expected to achieve the Group's sustainable growth as well as medium and long -term improvement in corporate value and to revitalize and strengthen the functions of the Board of Directors.

Tadashi Kamiya: Director and Managing Executive Officer; Chief Executive Officer of Business Management Headquarters; Director in Charge of Quality Environment & Safety Control, Total Engineering, Group Companies, and Sales & Marketing Headquarters

Through the execution of the air conditioning equipment business, Tadashi Kamiya has gained abundant experience and deep insight in the design/construction of building equipment relating to the Group's businesses. He has also fulfilled his executive responsibilities through business management and productivity improvemen t in the air conditioning equipment business. We believe that, as Director in Charge of Quality Environment & Safety Control including core business management, he can be expected to achieve the Group's sustainable growth as well as medium and long-term improvement in corporate value and to revitalize and strengthen the functions of the Board of Directors.

Toshikazu Yokote: Director and Managing Executive Officer, CDXO; Director in Charge of Compliance, Corporate Operations Headquarters, and DX Management Headquarters

Through the execution of the air conditioning equipment business, Toshikazu Yokote has gained abundant experience and deep insight in the design/construction of building equipment relating to the Group's businesses. He has also fulfilled his executive responsibilities through the enhan cement of the management foundation, as Officer in charge of human resources, general affairs, accounting & finance, legal-related operations and DX management. We believe that, as Director in Charge of Compliance including overall corporate management, he can be expected to achieve the Group's sustainable growth as well as medium and long-term improvement in corporate value and to revitalize and strengthen the functions of the Board of Directors.

Kazuo Matsunaga, Director

An explanation is shown below in "Reasons for Appointment" of the said Outside Director.

Kiyoshi Fujimura, Director

An explanation is shown below in "Reasons for Appointment" of the said Outside Director.