Toyoda Gosei Report 2019

TOYODA GOSEI REPORT 2019

1 Haruhinagahata, Kiyosu, Aichi, 452-8564, Japan

Public Relations Dept., General Administration Division Phone: +81-52-400-1452 Fax: +81-52-409-7491 https://www.toyoda-gosei.com/

2019.9.1,500 TP Japan We are a global company that delivers Management Philosophy Boundless Creativity and Social Contribution satisfaction to customers worldwide Good corporate citizenship Customer satisfaction We, as a good corporate citizen, contribute to We aim to provide products and services through safety, comfort, well-being the economy and society through community- with satisfying quality and price in a timely based business activities and social action manner, through forward-looking R&D and and the environment programs. production engineering. Conservation of global The Toyoda Gosei Group continues to meet Proper business operation environment and resources the needs of society through the provision We promote business operations with integ- We aim to conserve the global environment rity through the establishment of a system and resources in order to hand down a greener of automotive and other products using founded on thorough compliance and corpo- world to our children through every business rate ethics. activity, which includes cooperation with soci- rubber and plastic technology. ety and the development of an environment- friendly product and manufacturing process.

Sustainable growth Respect for the individual

We aim to build up the TG Group's collective We aim to establish a vibrant corporate culture strength through an open and fair relation- through respect for individuality and the value ship with suppliers, through a mutually of enhanced teamwork, based on shared strengthened corporate structure and inno- responsibility and mutual trust between vative management response to change. employees and management.

Editorial policy Reference guidelines

This report was compiled with the aim of providing share- ・ International Integrated Reporting Framework holders, investors, and all other stakeholders with a deeper (International Integrated Reporting Council (IIRC)) understanding of the Toyoda Gosei Group. It describes the ・ GRI Standards fiscal 2018 business performance of the Group and explains (Global Reporting Initiative) the Group’s strategy and efforts for creating medium- and ・ Environmental Reporting Guidelines, 2018 Edition long-term value. (Ministry of the Environment, Japan) Since the 2018 report issued last year, the Toyoda Gosei ・ Environmental Accounting Guidelines, 2005 Edition Report has been compiled as an integrated report. We have (Ministry of the Environment, Japan) tried to make it straightforward and understandable, with ＊Environmental data/ examples is available on reference to the International Integrated Reporting Frame- Contents our website. work (International Integrated Reporting Council (IIRC)) For CO2 emissions we received third-party 3 Management Philosophy, Editorial Policy for the IR section and the GRI Standards (Global Reporting verification. 4 History of Toyoda Gosei Initiative) for the ESG section. https://www.toyoda-gosei.com/csr Value Creation Strategy Period covered by report /environmental/report1/ 6 Toyoda Gosei’s Value Creation Process April 1, 2018 to March 31, 2019 8 Letter from the President This report principally covers the period above, but content 12 Medium- and Long-Term Business Plan, related to other periods may be included as needed. “2025 Business Plan” 18 Message from the Officer in Scope Charge of Finance Toyoda Gosei Group 20 Financial and Non-Financial Highlights The scope is outlined individually for some items. 22 Overview of Business

Date of issue Foundation Supporting Value Creation

September 2019 34 Sustainability ESG and SDGs (Last published in November 2018; issued once a year) 36 Environment 44 Social Disclaimer 52 Governance

Careful attention was paid to the content of this Report, but Financial Report accuracy and the timing of updates is not guaranteed and 60 Consolidated 10-Year Financial Summary Toyoda Gosei shall bear no responsibility for trouble, loss, or 62 Financial Review damage resulting from updates or errors in the information 64 Consolidated Financial Statement herein. 68 Company, Investor Information

2 We are a global company that delivers Management Philosophy Boundless Creativity and Social Contribution satisfaction to customers worldwide Good corporate citizenship Customer satisfaction We, as a good corporate citizen, contribute to We aim to provide products and services through safety, comfort, well-being the economy and society through community- with satisfying quality and price in a timely based business activities and social action manner, through forward-looking R&D and and the environment programs. production engineering. Conservation of global The Toyoda Gosei Group continues to meet Proper business operation environment and resources the needs of society through the provision We promote business operations with integ- We aim to conserve the global environment rity through the establishment of a system and resources in order to hand down a greener of automotive and other products using founded on thorough compliance and corpo- world to our children through every business rate ethics. activity, which includes cooperation with soci- rubber and plastic technology. ety and the development of an environment- friendly product and manufacturing process.

Sustainable growth Respect for the individual

Editorial policy Reference guidelines

Date of issue Foundation Supporting Value Creation

September 2019 34 Sustainability ESG and SDGs (Last published in November 2018; issued once a year) 36 Environment 44 Social Disclaimer 52 Governance

3 900 History of Toyoda Gosei 800

700 Net sales

600 （ Since its founding, Toyoda Gosei has provided new value to 500 Billions of yen

the world through manufacturing that meets the needs of 400

the times with original technology in the ﬁelds of rubber and plastics. 300 ） 200

100

0 1949 1960 1970 1980 1990 2000 2010 2018

Early years [1949～1979] Expansion [1980～1999] Becoming a global corporation [2000～2009] Providing new value [2010～]

1949 Nagoya Rubber Co., Ltd. 1980 Headquarters is relocated to present location 2000 Toyoda Gosei Europe N.V. is established 2013 Toyoda Gosei East Japan Co., Ltd. is established is established as a spin-off of (Kiyosu, Aichi Prefecture) 2001 Toyoda Gosei Asia Co., Ltd. is established GDBR Industria e Comercio de Componentes Quimicos e de the rubber research division of 1982 Bisai Plant is completed and begins operation 2005 ISO / TS16949 certiﬁcation Borracha Ltda. is established Toyota Motor Industry Co., Ltd. 1985 Capital participation in Tai-yue 2006 Toyoda Gosei (Shanghai) Co., Ltd. is established 2014 Toyoda Gosei Irapuato Mexico, S.A. de C.V. is established 1957 Haruhi Plant begins operation Rubber Industrial Co., Ltd. 2008 Toyoda Gosei Minda India 2016 Toyoda Gosei Minda India Pvt. Ltd. Completion of 1967 Inazawa Plant begins operation 1985 Company wins Deming Prize for Pvt. Ltd. is established Bawal Plant and start of operations 1973 Company name is changed to Total Quality Management 2009 Miwa Technical Center is 2018 Toyoda Gosei Minda India Pvt. Ltd. Completion of Toyoda Gosei Co., Ltd. 1986 TG Missouri Corporation is established established Gujarat Plant and start of operations. P.T. Toyoda 1976 Morimachi Plant begins operation 1997 Company obtains ISO 9001 Gosei Safety Systems Indonesia is established 1977 US Ofﬁce is established in Illinois Present Kitajima Technical Center is completed 2019 Hubei Toyoda Gosei Zheng Ao Rubber & Plastics 1978 Company is listed on the Nagoya Stock Exchange 1999 Company is listed on the Tokyo Stock Exchange Sealing Science and Technology Co., Ltd. Toyoda Gosei North America Corporation is established is established

Development history of technologies and products

Automotive Parts

Rubber 1953 1961 1977 1983 2011 Brake hoses Piston cups Constant velocity Nylon fuel hoses Lightweight radiator hoses joint boots

1963 Flocked glass runs 1950 1982 2003 2010 2014 2017 Weatherstrips Sound insulating glass runs Two-color molded Lightweight opening Plastic water pipes Glass run for opening trims trim weatherstrips ﬂush surface door

Plastics 1982 2000 2008 2015 2017 2018 2019 1954 1960 1974 Plastic fuel filler caps Noise absorbing air Plastic fuel filler pipes Capless fuel fillers Large radiator grilles Air conditioner Plastic turbo Plastic injection PP steering wheels Instrument panels intake ducts register with LED lighting ducts steering wheels

800

700 Net sales

600 （ Since its founding, Toyoda Gosei has provided new value to 500 Billions of yen the world through manufacturing that meets the needs of 400 the times with original technology in the ﬁelds of rubber and plastics. 300 ） 200

100

0 1949 1960 1970 1980 1990 2000 2010 2018

Early years [1949～1979] Expansion [1980～1999] Becoming a global corporation [2000～2009] Providing new value [2010～]

Development history of technologies and products

Automotive Parts

Rubber 1953 1961 1977 1983 2011 Brake hoses Piston cups Constant velocity Nylon fuel hoses Lightweight radiator hoses joint boots

1989 1998 2008 2017 Driver-side airbags Curtain airbags Rear-end impact airbags Steering wheel with grip sensor / new type of side airbag New Fields 2017 2018 2019 Conclusion of Development with World-class exclusive license EBM Corp. of current operation 1986 1991 2010 agreement with a prototype of achieved on Start of R&D for blue LEDs Success in Start of R&D for Advanced Softmaterials, the “SupeR BEAT” a vertical development of 2007 GaN power semiconductors Inc. for the main material heart surgery simulator GaN power blue LEDs is certiﬁed Start of R&D for (supramolecules) that uses e-Rubber semiconductor e-Rubber in e-Rubber 5 Toyoda Gosei’s Value Creation Process A society of well-being, safety and comfort Toyoda Gosei Provision of value Dealing with stakeholders Communicating with risks and many stakeholders opportunities that affect Toyoda Gosei c Value hain* Environmental and Resolving social issues social Deepening social issues problems ● Global warming Safety Development Interior s and ● Depletion of resources Systems and Technical Exteriors ● Water risks from droughts and ﬂoods Design

● Increasing number of Automobile endangered species Sales Procurement Business e-Rubber, Markets ● Aging populations GaN power Other activities that areas semiconductors, Weatherstrips Acceleration of give rise to LEDs, General technical innovation Production value in society Industry Products ● IoT/AI Functional ● Electriﬁcation Components Dealing with aging societies Changing values

● Diversiﬁcation of values ● Changing consumer behaviors ● Ownership → shares Achieving Contributing to a low-carbon society the local community Strengths of Toyoda Gosei Sustainable company Knowledge New business Provision of Global in the ﬁelds of growth safety and comfort development Network rubber and experiences plastics Return of value

Sources of value creation Toyoda Gosei’s value chain Social and * Financial Manufactured Intellectual Human relationship Natural Development and Technical Design Procurement Production Sales

● Commercialization in new fields ● Globally standardized know-how and ● Anticipating customer needs and utilizing core technologies processes introducing high value-added products ● Development of new technologies and ● Further promotion of TPS ● Shift of resources to key fields through products coping with CASE selection and concentration ● "Jidoka " and manpower saving utilizing IT ● Strategies of modularization and ● Pursuit of economies of scale and thoroughgoing Sincerity Activity Unity ● Reduction of environmental burden by system products efficiency and cost reduction activities production engineering reform

6 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Toyoda Gosei’s Value Creation Process A society of well-being, safety and comfort Toyoda Gosei Provision of value Dealing with stakeholders Communicating with risks and many stakeholders opportunities that affect Toyoda Gosei c Value hain* Environmental and Resolving social issues social Deepening social issues problems ● Global warming Safety Development Interior s and ● Depletion of resources Systems and Technical Exteriors ● Water risks from droughts and ﬂoods Design

Sources of value creation Toyoda Gosei’s value chain Social and * Financial Manufactured Intellectual Human relationship Natural Development and Technical Design Procurement Production Sales

7 Letter from the President

President

8 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Achieving sustainable growth by responding flexibly and rapidly to a dramatically changing environment

I would first like to extend my gratitude to our aspiration to grow as a “global company that acts flexibly shareholders, investors and all other stakeholders. and swiftly in today’s dramatically changing business environment, delivering the highest levels of satisfaction to Massive business environment change customers worldwide through safety, comfort, well-being and the environment.” We have established three pillars of The world economy is facing increasing uncertainty as activity to achieve our FY2025 business targets of sales tariffs rise between the USA and China, the North American exceeding ￥1 trillion, an operating profit ratio of 8%, and Free Trade Agreement (NAFTA) is reviewed, and the UK is ROE of 10%. leaving the EU. Effects are being felt in the form of a slowing FY2017 FY2025 economy in China, the world’s largest automobile market, （J-GAAP）（IFRS） and fears of an economic slowdown in the USA. Toyoda Revenue ￥807 billion ▲ ￥1 trillion Gosei has established a management system to deal with Operating profit ratio 5.1％ 8％ these risks and to respond flexibly and swiftly to changes ROE（Return on equity） 6.6％ 10％ in the external environment with the aim of achieving sustainable growth. Pillar I is “Venture into innovation, new mobility.” In the automobile industry, companies are intensifying One example of this in product development is our new efforts to strengthen competitiveness through business tie- air conditioner register with LED lighting, which uses ups and joint development with other industries. Toyoda resonant wireless power transfer technology for the first Gosei is moving boldly to meet new challenges without time in an automotive product. This is a modular product being constrained by the ways and customary practices that incorporates electronics technology in an automotive of the past. In this way we will contribute to society by product using our core technologies in rubber and plastics. delivering to the market at the earliest date new technologies and products that provide the highest levels of satisfaction through safety, comfort, well-being and the environment.

A look back on fiscal 2018

Last year, while continuing to refine our strengths as an expert in the fields of rubber and plastic with a global network, we also joined forces with suppliers, business partners, and startup ventures. Working together with a startup venture for the past year In May we issued the 2025 Business Plan, our medium- and a half, we have also developed a prototype for the and long- term business plan, which highlights our “SupeR BEAT” surgical training simulator that uses e-Rubber

9 Letter from the President

to reproduce the beating of the heart with great accuracy. Pillar III is “Innovative manufacturing at production e-Rubber is an artificial muscle material that functions with sites.” In addition to activities to raise productivity at our electricity. We have also set up a corporate venture capital manufacturing sites based on the Toyota Production System department to facilitate searches for new technologies that (TPS), we have begun new efforts to increase efficiency complement our existing technologies. using IT. Data are collected in manufacturing processes and big data analysis is used to quickly identify and resolve bottleneck processes. To strengthen the business foundation that supports activities in these three areas, we held the TG Global Summit 2018 in November. About 130 leaders from 65 group companies in 17 countries attended to discuss specific efforts to achieve business targets and share strategies for each region and field of business.

Pillar II is “Strategy for growing markets/fields,” in which we aim to further grow our business globally. In China, we have merged two production subsidiaries and made one company a wholly- owned subsidiary to establish the best production network for the nation as a whole. For rapid business decisions and efficient operations, we have changed the regional headquarters into a holding company and FY2019 is a year of business invested for the first time in a location in central China. execution with overwhelming speed In India, we established a new technical and sales office in Gurgaon, a suburb of Delhi, to enhance local product One of the key efforts in our 2025 Business Plan is to development. Operations have also started at the Gujarat execute business activities with “overwhelming speed.” Plant, expanding our local production network. We will improve efficiency in all aspects of our work for In Indonesia, we established a new company to meet the greater speed in every activity, without being constrained by huge increase in demand for airbags as safety regulations previous ways of doing things and customary practices. become stricter. Specifically,

Tianjin

Hubei China Zhangjiagang Shanghai

Haryana Fuzhou Rajasthan Foshan India

Bangaluru

Jakarta Indonesia

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Pillar I: We are increasing the speed of development of recycle resources through reuse of things such as wastewater new technologies, such as e-Rubber and power devices, generated in production, and to reduce the weight of and new products for use in CASE and modularization. We products by making them with plastic instead of metal will also strengthen tie-ups with startup ventures through through concerted activities with domestic and international corporate venture capital. group companies and suppliers. Pillar II: In China and India, where sales growth is In the field of social activities, we strive to put down local anticipated, we are conducting activities to grow while roots and grow with our communities. Social contribution ensuring profitability. In product development, we will activities by employees are actively pursued in all parts of increase the added value of exterior and interior products the world, and will continue. We also make efforts to develop with things such as millimeter-wave compatible emblems, people and workplaces that can support our business, and optimize the global supply system for airbag parts. nurturing professional staff who can thrive globally and Pillar III: Raising profitability is an issue we must promoting two-way communication between superiors and consider in working toward our business targets. We will subordinates. seek to improve consolidated performance centered on In the field of governance, we have developed and the Americas, where profitability is high, and accelerate operate an internal control system to ensure that work is restructuring of our business in the entire European done properly and efficiently. With the appointment of region while keeping an eye on changes in the business Mayumi Matsumoto as a Director, we have raised the level environment. of management monitoring and supervision by outside directors and audit and supervisory board members. ESG (environmental, social, governance) efforts Towards sustainable growth

These ideas were already reflected in our Management Toyoda Gosei celebrated its 70th anniversary on June 15, Philosophy, which was amended last year, but the ESG way 2019. This would not have been possible without everyone’s of thinking has attracted global attention recently. At Toyoda support, and we are deeply grateful. Gosei we have been focusing energy in each of these fields In 2015, the United Nations adopted the Sustainable since before the ESG concept gained prominence. Development Goals (SDGs) for 2030, and in recent years In the field of environmental preservation, Toyoda there is rising momentum for their achievement. We support Gosei ranked third in the corporate ranking of the 22nd the SDGs and are endeavoring to solve social problems Environmental Management Survey (manufacturing through our business activities. We will intensify and expand category) of the Nikkei Shimbun, up from tenth last year. these activities and raise our corporate value with the aim of This was in recognition of our efforts to promote biodiversity achieving sustainable development into the new Japanese by planting trees and creating biotopes on plant grounds, to era of Reiwa.

11 Medium- and Long-Term Business Plan, “2025 Business Plan”

In Toyoda Gosei’s 2025 Business Plan, our medium- and This shows not only numerical targets or how we seek long-term business plan, we lay out three key areas that to expand the scope of our business, but also new efforts take advantage of the Toyoda Gosei Group’s cultivated to contribute to society and to grow sustainably. strengths.

What we aspire to be Financial objectives

Toyoda Gosei aims to grow as a global company that FY2017 (J-GAAP) FY2025 (IFRS) acts flexibly and swiftly in today’s dramatically changing Revenue ￥807 billion ▲ ￥1 trillion business environment, delivering the highest levels of satisfaction to customers worldwide through safety, Operating profit ratio 5.1％ 8％ comfort, well-being and the environment ROE (Return on equity) 6.6％ 10％

Pillar Ⅰ Pillar Ⅱ Pillar Ⅲ Venture into innovation, Strategy for growing Innovative manufacturing new mobility markets/fields at production sites

New Technology, New Products Current Products Current Products ● Commercialization in the new ● Selection and concentration of ● Globally standardized production fields utilizing core technologies business resources know-how and processes ● Development of new technologies ● Make current products more highly ● " Jidoka" and manpower saving and products coping with CASE value-added utilizing IT ● Strategies of modularization and ● Business plan execution through cooperation ● Reduction of environmental burden system products with customers and business partners by production engineering reform

Enhancement of our business foundation

●Strengthening global operation ●HR development ●Business activities with integrity

In terms of immediate shareholder returns, we have set a consolidated dividend Financial Shareholder Policy payout ratio of at least 30%, and we will work to make a return to shareholders returns in various other forms as well from a comprehensive perspective.

Capital We will secure ¥50 billion per year by fiscal 2025 as funds for capital investment investment for growth.

In light of our operating environment, we will secure cash and deposits Cash on hand (excluding short-term borrowings) of around ¥30 billion above consolidated monthly sales, including risk-response funds.

Key words for our activities Pillar I. Venture into innovation, new mobility Power semiconductors High-value-added LEDs e-Rubber *CASE compliance

Consolidated net sales (100 million yen) Lighter weight Modularization FCV compliance Pillar II. Strategy for growing markets/ﬁelds Accelerated cooperation Expanded business in India Increased N. American capacity Expanded safety systems business Expanded fuel system business Increased non-Toyota sales Higher value-added interior and exterior products

Enhancement of the business foundation Pillar III. Innovative manufacturing at production sites Strengthened global management Global uniﬁcation of process know-how Automation/manpower reductions Improved proﬁtability in European business Flexible production Reduced costs TPS (Toyota Production System) IoT production control Strengthened supply chain Loss/waste reduction Reformed working practices ※CASE : Connected Autonomous Shared Electric 2017 2025

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Pillar Ⅰ Venture into innovation, new mobility ● Early realization of new business through innovative technology ・ Innovation derived from TG core technologies (rubber & plastic materials/LED) Course of ・ Contribution to near future needs of relief (environment and health), safety, and comfort action through differentiated technologies ●Development of new technologies and products responding to drastic changes of the car itself (CASE)

Key action items Key points for implementation

Early realization of new business through In “Venture into innovation,” we are looking toward the innovative technology early establishment of the new businesses that will be our next pillar. Crucial here will be to launch new technologies ●Develop and establish e-Rubber business and cultivate its market (innovative soft-robot) and business plans with consideration of the company’s ●Develop and commercialize power devices (High- business and value chain, and to accelerate innovations frequency power source, wireless power supply) with partners with whom we can carve out businesses ●Develop high-value-added LEDs and their applications together, without insisting on doing everything ourselves. Of course, we must not neglect to improve our own Development of new technologies and products technology when working together with good partners. responding to drastic changes of the car itself (CASE) In “Venture into new mobility,” we are working to ●Create new values/new products for the next gene- develop new technologies and products compatible with ration (Autonomous driving/vehicles, electrification) the drastic changes that are occurring in automobiles ●Enhance added-value of conventional products themselves (CASE). For example, by continuing to (Modularization, systemization) develop new products and raise the added value of existing ●Develop technology to sustain new products (Light products (modularization), we will be able to meet the new weight, innovative manufacturing processes) expectations of customers worldwide.

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Venture into innovation ❶ “e-Rubber,” a next-generation material that functions with electricity and mechanical force e-Rubber is a next-generation material developed with the combination of a material patented by Tokyo University and the rubber technology cultivated by Toyoda Gosei over 70 In off-pump surgery, a heart-lung years. It can serve two functions: as a lightweight, soft artificial SupeR BEAT is a training simulator machine is not used and the heart for coronary artery bypass surgery. continues to beat as the surgeon muscle (actuator), and as a sensor that can detect subtle Using e-Rubber, which expands sews the bypass graft into place. Off- pressure. We are working for practical applications in fields of and contracts in quick response to pump surgery reduces the burden on the patient, but requires great skill as anticipated growth in aging societies, such as industrial robots electricity switching on and off, it can also faithfully reproduce the surgeons must quickly sew a vessel or medical devices. irregular heartbeats that occur with a diameter of only 2 mm onto In a collaboration with EBM Corporation, a startup out during surgery. the surface of the beating heart. of Waseda University, we have developed a prototype heart surgery training simulator, SupeR BEAT. It has earned high Promising areas Robots Medicine Automobiles IoT/haptics Elder care/ welfare praise, and we are aiming to launch a commercial version of use soon. In May 2019 we began a joint project with Nagoya University and the city of Shinshiro to help extend healthy lifespan. Sensors using e-Rubber areRobots inserted into theMedicine soles Automobiles IoT/haptics Elder care/ welfare of shoes to gather data on changes in the walking posture of elderly people. The aim is to detect weakening of the legs so that preventive measures can be taken before people reach a state of requiring care assistance.

13 Medium- and Long-Term Business Plan, “2025 Business Plan”

Venture into innovation ❷ Vertical GaN power device

The LED technology we have developed over more than 30 In FY2018, by modifying the structure years is used in the development of the power devices, electronic of the GaN crystal, we achieved world- components used in power conversion. Gallium nitride (GaN), a class current flow of 100 amperes on key material in blue LEDs, has superior properties, such as high a single chip. We are working together breakdown voltage, for use in power devices. The application with semiconductor and electronics of our GaN crystallization technology together with a “vertical manufacturers to raise performance and structure” in which current flows perpendicularly to the substrate reliability for a practical high-performance has greatly improved the performance over that of conventional power semiconductor device. silicon power semiconductors.

Promising areas of use

Power transmission Wireless Medical Home appliances Mobility Industrial equipment Renewable energy systems power supply equipment

Electric vehicles Trains Particle therapy

Higher efficiency Lighter weight Higher output

Venture into new mobility

With advances in autonomous technology, we expect to electronic components into front grilles, cockpits, steering see an increase in parts equipped with sensing functions wheels and other interior and exterior products that we to perceive the surrounding environment, including other have developed and manufactured over many years. These vehicles, pedestrians, and road shape, and human-machine modular products offer both functionality that supports interface (HMI) functions for communication between safety and comfort and attractive design. vehicles and humans. We are integrating sensors and other

Next-generation cockpit module

Contact sensors Instrument panel Camera Touch sensor authentication transmissive display

●Smart steering wheels ●Multifunctional console ●Display instrument panel Drivers’ physical status sensed ・Movable console to accom- External and warning infor- with built-in cameras and sensors modate relaxation mode mation displayed on instru- (posture changes) ment panel ・Handier, more intuitive Next-generation cockpit module operation with touch panel

Next-generation front module

In December 2018, we announced an air In January 2019, we established a new conditioner register with LED illumination Corporate Venture Capital Department to that uses resonant wireless power transfer accelerate open innovation efforts for the technology for the first time in an automotive rapid development of new products by product. This register is currently used on combining external knowledge with in- the Lexus UX. The wireless technology house technology. The first case in which employed allows it was involved came in March 2019 with •Cameras and sensors that do not detract from for greater freedom investment in IMUZAK Inc., a Yamagata, attractive appearance. in the placement of Japan startup specializing in optical design •Car’s direction and other information commu- electronic components and assessment. Incorporating the nicated to people nearby with LED lights and design. knowledge of that company in the field of optics, we are developing exterior and other products that are transparent to the infrared light of optical sensors (LIDAR).

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Pillar Ⅱ Strategy for growing markets/fields

Course of ●Prioritized global sales expansion and securing profit action (selection and concentration of business resources)

Key action items Key points for implementation

Redefine the strategy by business field Looking at markets and trends for existing products by product field, we see much potential for growth including ●Weatherstrips: Noise reduction, profit reform in prioritized regions modularization and higher added value in IE products ●Functional Components: Focus on fuel systems and increased business in SS products with the favorable (weight reduction) conditions of increasing safety regulations. We are now ●Interiors and Exteriors: Increase value of products making solid preparation for this. On regional axes, we (decoration, millimeter-wave radar compatible emblem) need to ensure competitiveness in China, India and ●Safety Systems: Regional strategy focusing on profitability other emerging markets where automobile production is increasing, as well as in the major markets of North Prioritize regions for sales expansion America and elsewhere. There are many possibilities for ●North America: Enhance production capacity for major expanding sales to major customers, actively cultivating customers' production increases, sales expansion to new customers, and increasing future profits. non-Toyota/non-JPN OEMs To ensure that this potential growth in existing ●China: Sales expansion of global link cars (Toyota, products leads reliably to sales and profits, we will non-JPN OEMs) and new customers deploy a focused strategy, selecting and concentrating ●India: Sales expansion to catch up with the growth of management resources, pursuing economies of scale, the market (mainly J-OEMs) and thoroughly increasing efficiency.

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Building our network in China, the world’s largest market Active investment in the rapidly growing Indian market

Toyoda Gosei has established a business network that In India, the demand for airbags is expected to increase with can meet the needs of customers in China, the world’s both the rapidly rising number of automobiles manufactured largest market. In FY2018, we made Tianjin Star Light- , and regulations making safety equipment mandatory. In a wholly-owned subsidiary. This has increased the speed FY2018, we established a sales and technical office near the of management decisions. In July, two subsidiaries in headquarters of Maruti Suzuki, a major customer. In addition Foshan- were merged to increase management efficiency. to speeding up our business activities, this strengthens local In December, functions were strengthened by changing the development capabilities. In November, operations began at regional headquarters into a holding company. With these a production plant that supplies airbags and steering wheels moves, we have a system in place that can speed management to automakers. decisions in the China region. We have also invested in a weatherstrip manufacturer in central China.

Key business moves in FY2018 Production network in India Automobile production in India

(million) 800 Minda TG Rubber Pvt. Ltd. About 1.5 725 Tianjin Star Light becomes 700 a full subsidiary [April 2018] times greater 600 581 Weatherstrips Toyoda Gosei Minda India Pvt. Ltd. 500 Bawal Plant 427 448 Gurgaon Ofﬁce 400 375 387 Merger of two production subsidiaries in Zhangjiagang 300 269 Neemrana Plant (Zhangjiagang TG) [July 2018] Safety system products, 200 178 interior and exterior products Gujarat Plant Investment in Hubei Rock Rubber and 100 Seal Technology Co. Ltd.[December 2018], Strengthening of the control Toyoda Gosei Hubei Toyoda Gosei Zheng Ao Rubber & functions of Toyoda Gosei China 0 South India Pvt. Ltd. 2006 2009 2012 2015 2016 2017 2020 2023 (Year) Plastics Sealing Science and Technology (holding company created) established [May 2019] Weatherstrips [December 2018] (Forecast)

15 Medium- and Long-Term Business Plan, “2025 Business Plan”

Engineering, sales functions Business network in the Americas (engineering, sales, production locations)

enhanced in USA Toyoda Gosei North America Corporation The USA is a major market. To respond rapidly to the product development needs TGNA California Ofﬁce Detroit TGR Technical Center, LLC of customers there, an engineering and TG Missouri Corporation Headquarters Plant TG Fluid Systems USA Corporation sales office of our regional headquarters TG Missouri Corporation Indiana Plant Meteor Sealing Systems, LLC was established in the state of Ohio. It is TGNA Ohio Ofﬁce New located near the Ohio office of Honda R&D TG Automotive Sealing Kentucky, LLC TG Kentucky, LLC Dublin Americas, Inc., a major customer. Having Columbus TG Missouri Corporation Mississippi Plant LMI Custom Mixing, LLC design and sales capabilities for interior and Toyoda Gosei Texas, LLC exterior products and airbags at this location Toyoda Gosei Brownsville Texas, LLC will speed up development work.

Pillar III Innovative manufacturing at production sites

Course of ●Realizing highly value-added factories through innovative manufacturing at action production sites

Key action items Key points for implementation

●Globally standardize production processes and know- In the coming years existing products will need a further how competitive edge. To achieve that edge, we will need to make processes more efficient and versatile, standardize ●Develop compact and lean production lines, TPS effective new practices, knowledge and techniques across the promotion (1/n process, consolidation of supply parts, company, and create mechanisms so that these things can be flexible process with multiple products) shared and spread rapidly and globally to Group companies ●Promote manufacturing, “Jidoka” and manpower saving and vendors. We will also make efforts to allot resources utilizing IT (IoT, AI) to new fields and introduce automation and labor-saving ●Reduce environmental burden through production processes in aging societies with fewer workers. Processes will be carried out on compact, low-investment lines to improve engineering innovation and recyclable energy productivity. The key to all this will be IT. Utilizing IoT and AI, we will improve production and work efficiency and develop, from among engineers with knowledge in rubber and plastics, core data science personnel who can utilize big data to steadily innovate in production floor manufacturing.

PICK UP Weatherstrip production process kaizen

Process kaizen with the use of big data Causes of problems are newly Processes in which anti-defect identiﬁed with the use of big data measures have been taken We are increasing competitiveness with the utilization of big data that differs for structure or type and is generated in real time. At our Morimachi Plant (Shizuoka Prefecture, Japan), we have made improvements to reduce defects in the appearance quality of weatherstrips using technology to analyze this big data. Added to the experience accumulated Rubber materials Chemical Molding Vulcanizing Processing/ kneading process kneading process process process shearing by veteran workers, we are increasing the speed and accuracy A process that A process where sulfur Processes from raw materials to mixes the raw and other chemicals ﬁnished products of our process kaizen with the use of big data. materials in rubber are mixed in

16 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Skills Competition

A Mold Maintenance Skills Competition was held at the with the highest accuracy Nishimizoguchi Plant with the aims of improving the using files and measuring company’s manufacturing level and creating an atmosphere instruments. We will continue of respect for technical skills. Ten skilled workers selected from to raise the competitive ability departments that perform mold maintenance for interiors/ of our production sites by exteriors, weatherstrips and other products competed in the improving and passing on category of “Mold Finishing.” The goal was to produce work these skills. Skills competition

Basis for Action Enhancement of our business foundation

Course of ●Strengthen global management, HR development, and perform/undertake business action activities with integrity

Key action items Key points for implementation

Enhance global business management Today, TG’s international locations account for more than half of company profits, and it is important that we ● Self-sustainable overseas affiliates and governance by HQ strengthen global governance with independence in each ● Globally optimized production layout and logistics reform region and location and the head office in Japan serving ●Cooperation with global business partners as the global headquarters. These days it does not take ● Strengthen supply chain (production and supply system) much to shake the foundations of a business, and we ●Strengthen quality assurance systems(cope with need to focus efforts on thorough compliance and risk emerging countries and new technologies/products) management. At the same time, we are reforming cost HR development structures to improve profitability in key business areas, including radically changing previous ways of doing ●Development of global HR, professional HR things. ●Diversity, work style reform Developing our people is also important in achieving our goals. Whatever the challenge, human ability is what Business activities with integrity allows us to overcome it. We are conducting business ●Thorough compliance and enhancement of internal activities with integrity, and promoting diversity and controls as a company of integrity reform in the way we work.

PICK UP Management training for each Global Summit management level The TG Global Summit 2018 was held with the aims of sharing business Management training for different management levels conditions and issues and building Group solidarity. Leaders from all is held at various locations with the aim of improving domestic and international group companies were brought together. It the leadership and management skills of managers in was the first such summit in three years. Efforts were made to thoroughly domestic and international Group companies. familiarize the participants with specific efforts needed to achieve the In FY2018, mid- management targets in the 2025 Business Plan, so that they are known dle management throughout the Group. Business plans and training was held in employee education programs for each Europe. Over three region internationally were also shared. days, the participants In addition, participants inspected the learned the roles of latest production lines at the Morimachi management and Plant, the mother plant for weatherstrip methods to resolve

products, to learn about manufacturing problems that occur Participants in middle management technology in Japan. Inspection of Morimachi Plant in the workplace. training held in Europe

17 Message from the Officer in Charge of Finance

In this time of change, finance departments must take on the ever more important role of ensuring greater capital efficiency and profitability.

Masaki Oka Director, Corporate Officer Chief of Finance and Accounting Headquarters / Chief of IT Headquarters / Chief of Audit Division

Bolstering Our IR Activities Total number of contacts with institutional investors (including sell-side analysts) and individual investors As a listed company, Toyoda Gosei is accountable to （People） investors regarding its business administration, and is 800 expected to disclose appropriate information and enhance such disclosure. In addition, we see it as an important part of 600 investor relations (IR) to lower our capital cost by winning 521 proper valuation through constructive dialogue with the 456 448 Institutional investors capital market. We also believe that we can share the fruits 400 319 of our corporate growth by making use of stakeholders’ 301 Individual 210 opinions and ideas in our business management. In line with 179 investors 200 148 this thinking, we have set a major policy of our company: 76 obtaining proper valuation from the capital market and 0 society through dialogue with investors. 2013 2014 2015 2016 2017 2018 （FY） Under top management leadership, we are committed to strengthening our IR activities. In addition to the basic Capital Cost approach of holding results briefings, including conference calls, participating in conferences for overseas investors, and For several years now, our cost of equity capital and return visiting investors in Tokyo, we take part in more IR events on equity (ROE) have remained at roughly the same level, such as information sessions on our medium- and long-term indicating that we face a challenge in terms of creating business plan, small meetings at which the president speaks, shareholder value. Our 2025 Business Plan, which we plant tours, business briefings, and technology briefings. announced in May 2018, set out a target ROE of 10%. We are also aware that conveying the voice of investors to This target was established with the goals of increasing executives is another important role of IR. Accordingly, we shareholder value by achieving ROE that stably exceeds have improved our system of feeding information back to our cost of equity capital and of achieving the capital officers and senior management in a timely and appropriate efficiency needed for Toyoda Gosei to excel in the current manner. capital markets. The finance department will seek to create In recognition of such efforts to strengthen our IR shareholder value by reducing our cost of equity capital in activities, the Securities Analysts Association of Japan selected addition to increasing ROE. Toyoda Gosei as an excellent company that made “remarkable To secure an appropriate and stable share price and improvement in corporate disclosure” in fiscal 2018. Going reduce our cost of equity capital, it is important to give forward, we will continue to make IR activities a company- shareholders and investors a proper understanding of wide effort. Toyoda Gosei and get diverse shareholders and investors to invest in our company. Leaving major shareholders

18 Value Creation Strategy Foundation Supporting Value Creation Financial Report

such as Toyota Motor Corporation aside, our shareholder Financial policy composition includes about 5% individual investors, 20% foreign investors, and 15% Japanese institutional investors. Financial policy underpinning the 2025 Business As the percentage of individual investors is low, the first Plan, our medium- and long-term business plan step toward cultivating a diverse shareholder and investor In terms of immediate shareholder returns, base and securing share liquidity is to increase the number we have set a consolidated dividend payout of individual investors. Accordingly, we have started to Shareholder ratio of at least 30%, and we will work to make a return to shareholders in various boost IR efforts for individual investors. At present, we are returns other forms as well from a comprehensive working to increase individual investors by actively holding perspective. company information sessions targeting individual Capital We will secure ¥50 billion per year by fiscal investors in regions where recognition of Toyoda Gosei 2025 as funds for capital investment for investment is low. The finance department is determined to create growth. shareholder value by continuing to reduce our cost of In light of our operating environment, we equity capital. will secure cash and deposits (excluding Cash short-term borrowings) of around ¥30 on hand billion above consolidated monthly sales, including risk-response funds. Return on equity (ROE)

（%） 10.0 9.8 9.0 10-year average 7.0 Our Financial Policy 7.9 8.0 Our ratio of equity attributable to owners of parent to total 6.9 6.6 6.6 6.7 7.1 assets is 50.0%. Even as profitability struggles to grow, 6.0 we have continued to accumulate stable earnings, and so 5.2 we see this as adequate in terms of security. In terms of 4.0 4.1 financial leverage, on the other hand, we are aware that a certain amount of control is needed to achieve ROE of 10%. 2.0 Based on this awareness, in November 2018 we announced

0 the financial policy underpinning our 2025 Business Plan. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 （FY）〈IFRS〉 First, in terms of shareholder returns, we have set a consolidated dividend payout ratio of at least 30%, after Toward Achieving ROE of 10% securing funds to invest for growth, remaining aware of the financial balance to achieve ROE of 10%. Additionally, We recognize that raising profitability is our prime we aim to make a return to shareholders in various other necessity. In addition to ROE of 10%, our 2025 Business forms as well from a comprehensive perspective. Plan includes the targets of revenue of ¥1 trillion and As for capital investment, we plan to secure around an operating profit ratio of 8%. While revenue has been ¥50 billion per year as funds to invest for growth. This ¥50 growing steadily, however, our profitability has plateaued billion will be our largest-ever capital investment amount, over the past several years. No matter how much our sales and we see it as necessary to ensure continued growth in expansion bears fruit, we will not garner high valuation the automotive industry, which has entered a period of in the capital market as long as profits remain static. As transformation. the officer in charge of finance, I keep in mind that we, as Regarding cash on hand, we have made public the a listed company, are expected to produce profit growth approach we had adopted internally, and have made an consistent with sales growth, and I will attend to revenue external disclosure, which is to secure a level of funds that management for the Group accordingly. will allow us to conduct immediate operations even in the Our 2025 Business Plan sets out balanced global event of a financial crisis or natural disaster. When disclosing sales expansion and securing of profits as one action our financial policy, we have stated this point explicitly. policy. To improve our business portfolio, we will rethink The establishment of this financial policy has allowed unprofitable business and actively shift resources to us to organize our thinking regarding our shareholder priority fields. composition and balance sheet, and helped to ratchet the finance department up a level. With a view toward our major IR policy—obtaining proper valuation from the capital market and society through dialogue with investors— I hope to convey our initiatives and thinking to as many stakeholders as possible.

19 Financial and Non-Financial Highlights

Financial Data The Group adopted International Financial Reporting Standards(IFRS) effective from the first quarter of fiscal 2018, ended March 31, 2019.

Environment

Revenue Operating profit / Return on equity CO2 emissions per sales unit Waste volume per sales unit Water use per sales unit Profit attributable to owners of parent Japan consolidated (Toyoda Gosei Co., Ltd. Japan consolidated (Toyoda Gosei Co., Ltd. Japan consolidated (Toyoda Gosei Co., Ltd. （Billions of yen） 840.7 （Billions of yen） Operating profit （％） t-CO2 /¥100 million t/¥100 million 1,000 m3/¥100 million 807.9 （） and domestic affiliates) （） and domestic affiliates) （） and domestic affiliates) 781.8 Profit attributable to owners of parent 800 755.6 50 10 150 Outside Japan Global consolidated 15 Outside Japan Global consolidated 0.8 Outside Japan Global consolidated 727.8 42.8 41.6 40.6 0.72 11.3 40 36.5 8 111 11.1 0.7 600 35.1 7.1 107 107 103 0.64 0.65 6.6 6.4 6.7 100 95 0.71 0.62 100 10 （2013）（2012） 0.63 30 8.6 6 5.2 76 0.6 0.63 0.58 23.3 74 75 73 69 7.0 7.0 6.8 0.62 0.53 400 21.1 20.2 21.3 63 6.0 5.5 5.3 20 （2013） 0.5 0.54 16.2 4 48 45 43 42 0.52 0.46 50 37 5 5.3 33 4.4 4.0 200 （2012） 0.4 0.45 10 2 4.0 3.6 3.7 （2012） 3.2 3.2 2.8 0 0 0 0 0 0.0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Base year 2014 2015 2016 2017 2018 Base year 2014 2015 2016 2017 2018 Base year 2014 2015 2016 2017 2018 (FY) (FY) (FY) (FY) (FY) (FY) J-GAAP IFRS J-GAAP IFRS J-GAAP IFRS

Social

Capital investment / R&D expenses Basic earnings per share Annual dividends per share Average years of service for male and female No. of parental leaves taken No. of female managers [Toyoda Gosei Co., Ltd.] [Toyoda Gosei Co., Ltd.] [Toyoda Gosei Co., Ltd.]

Female Male Female Male （Billions of yen） Capital investment （Yen）（Yen）（Years）（People）（People） R&D expenses 60.0 19.5 80 200 60 56.0 56.0 56.0 20 18.6 80 20 180.09 53.0 18.0 17.9 17.9 70 64.7 165.04 163.44 156.49 15.5 63 16 14.8 11 58 61 60 54.4 55.2 53.4 15 13.8 13.8 60 6 53 15 125.42 12.7 7 12 46.8 40 6 10 40 100 10 40 10 30.0 59 8 29.5 28.4 27.1 27.8 57 51 47 49 20 6 6 20 5 20 5

0 0 0 0 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 (FY) (FY) (FY) (FY) (FY) (FY) J-GAAP IFRS J-GAAP IFRS J-GAAP IFRS

Governance

Cash and cash equivalents / Ratio of equity attributable to owners Employment rate of people with disabilities Labor accident rate (rate of lost-worktime injuries) No. of people who have taken compliance training Interest-bearing debt of parent to total assets [Japan] [Japan] [Japan ] No. of casualties in labor New employee training New manager training （Billions of yen） Cash and cash equivalents （％）（%）（%） Rate of lost-worktime accidents (people) （People） Designated legal affairs workshop (for mid-career injuries ＝ × 1 million Interest-bearing debt Total labor hours employees) 150 60 3 1.5 400 51.6 51.7 50.7 359 50.1 50.0 336 125.4 All manufacturing industries 1.15 1.20 317 2.41 1.06 1.06 108.2 107.3 2.38 2.33 1.02 300 277 97.9 100 97.5 40 1.0 244 85.284.7 89.0 2.08 2.14 78.3 2.2% 2 Transport equipment manufacturing industry 65.7 200 156 153 0.51 0.54 134 0.41 0.43 50 20 0.5 0.39 95 Statutory employment rate： 2.0% 100 63 Toyoda Gosei Co., Ltd. 109 107 0.08 0.06 0.064 0.062 72 0.25 57 56 0 0 1 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 (FY) (FY) (FY) (FY) (FY) J-GAAP IFRS J-GAAP IFRS

20 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Non-Financial Data

Environment

Social

Governance

21 Overview of Business

We supply automotive parts that use rubber and plastic polymer technology globally

Product field

Sales revenue by product area

Weatherstrips Interiors and Exteriors

¥ billion（15.4％） ¥334.1 billion（39.7％） 129.4 ¥840.7billion （FY2018） Functional Components Safety Systems Group companies ¥136.2 billion（16.2％） ¥240.8 billion（28.7％）

Automotive Parts 67companies

Asia Japan

Weatherstrips Opening trim Door glass runs weatherstrips 23 companies 18 companies

Functional Components

Plastic fuel filler pipes Plastic turbo ducts Brake hoses Americas Europe & Africa 21 5 companies companies Interiors and Exteriors Instrument panel modules Radiator grilles Console boxes and components

Safety Systems

Airbags Steering wheels Pop-up hood actuators (with built-in airbags)

Other Products

e-Rubber GaN power devices LEDs General Industry Products (Air purifiers, interior and exterior products for agricultural, construction, and industrial machines)

22 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Global Network

With 67 group companies in 17 countries/regions, Toyoda Gosei swiftly meets the needs of customers around the world. We have established sales and engineering systems that are customer-oriented and community-based with globally optimal systems of production and delivery.

Group companies

67companies

Asia 23 Japan companies 18 companies

Americas Europe & Africa 21 5 companies companies

Sales by region Employees by region

Japan Japan

¥377.9 billion 8,828（22.4％） Americas Americas

¥245.4 billion 14,091（35.7％） ¥ billion , 840.7 Asia 39 429 Asia （FY2018）（End of FY2018） ¥173.3 billion 13,420（34.0％） Europe & Africa Europe & Africa

¥43.9 billion 3,090（7.8％）

Note: Sales by region includes amounts for internal transactions within the Group, and so does not match the total value for consolidated sales.

23 Overview of Business / Automotive Parts

Weatherstrips Proportion of sales by product field

Weatherstrip products serve many functions. In addition to 15.4％ protecting the passenger cabin from rain, wind, and noise, they ensure the smooth functioning of doors and windows and give doors a satisfying sound when they close. We enjoy a top market 5-year sales trends share with global supply from 24 production sites worldwide and integrated manufacturing from materials development to in-house （Billions of yen） 400 kneading of materials, product development and design, production 300 preparations, and molding and processing. We continue to improve 200 our product planning and production technology abilities, and 129.4 actively propose new ideas to customers. We will also make further 100 efforts for lighter weights and recycling. 0 2014 2015 2016 2017 2018 （FY） J-GAAP IFRS

1 3

A A

A-A section A A

Sponge A-A section rubber A-A section

Decorative portion

1 Opening trim weatherstrips Sponging processes for rubber using our materials development and production technology reduce weight by about 30%. Our lineup of fabric and other decorative variations is used where the parts are visible from the vehicle cabin. 2 Door weatherstrips

24 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Main production sites

Location Name Location Name Shizuoka Toyoda Gosei Co., Ltd. Morimachi Plant Thailand Toyoda Gosei Rubber (Thailand) Co., Ltd. Hinode Gomu Kogyo Co., Ltd. Toyoda Gosei Minda India Pvt. Ltd. India Mie Kaiyo Gomu Co., Ltd. Minda TG Rubber Pvt. Ltd. Japan Chusei Gomu Co., Ltd. Toyoda Gosei Star Light (Tianjin) Auto Parts Co., Ltd. Miyagi TG East Japan Co., Ltd. Toyoda Gosei (Foshan) Rubber Parts Co., Ltd. Asia Fukuoka Toyoda Gosei Kyushu Co., Ltd. Fuzhou Fu-Yue Rubber & Plastic Industrial China TG Automotive Sealing Kentucky, LLC Co., Ltd. America Meteor Sealing Systems, LLC Hubei Toyoda Gosei Zheng Ao Rubber & Plastics Sealing Science and Technology Co., Ltd. LMI Custom Mixing, LLC Taiwan Tai-yue Rubber Industrial Co., Ltd. Toyoda Gosei Automotive Sealing Mexico, Americas Mexico S.A. de C.V. Germany Toyoda Gosei Meteor GmbH

Canada Waterville TG Inc. UK Toyoda Gosei UK Ltd. Europe & Africa GDBR Industria e Comercio de Componentes Czech Republic Toyoda Gosei Czech, s.r.o. Brazil Quimicos e de Borracha Ltda. South Africa Toyoda Gosei South Africa (Pty) Ltd.

A A-A section A-A section

A 3 Door glass runs 4 Weight has been reduced about 30% by switching Outer weatherstrips from rubber to rubber-plastic admixtures and adopting innovative design that allows certain sections to be made thinner.

A A-A section

5 Luggage weatherstrips

25 Overview of Business / Automotive Parts

Functional Components Proportion of sales by product field

Functional components such as fuel parts and flexible hoses support 16.2％ the basic automobile functions of running, stopping, and turning. We have a lineup of parts that are lighter and more compact than ever, giving us a top share in the world market with global supply 5-year sales trends from 21 locations worldwide. We are developing materials and products that take advantage of the characteristics of plastics and （Billions of yen） 400 rubber—flexibility, electric insulation, heat resistant conductivity, 300 and light weight—with a view to the widespread adoption of clean 200 energy vehicles including PHVs, EVs, and fuel cell vehicles. 136.2 100

0 2014 2015 2016 2017 2018 （FY） J-GAAP IFRS

■ Fuel Tank Peripheral Parts

Fuel filler caps Fuel filler lids

Fuel hoses and tubes (Engine-side hose included in photo)

Fuel filler hoses

Locknuts/pump gaskets

Roll-over valves Fill limit vent valves Inlet check valves

Hydrogen tank liners Capless fuel fillers Plastic fuel filler pipes

26 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Main production sites

Location Name Location Name

Toyoda Gosei Co., Ltd. Haruhi Plant TG Kentucky, LLC America Aichi Toyoda Gosei Co., Ltd. Heiwacho Plant TG Fluid Systems USA Corporation Americas Toyoda Gosei Rubber Mexico, S.A. de C.V. Toyoda Gosei Co., Ltd. Inazawa Plant Mexico Toyoda Gosei Irapuato Mexico, S.A. de C.V. Shizuoka Toyoda Gosei Co., Ltd. Morimachi Plant Toyoda Gosei (Thailand) Co., Ltd. Kanagawa Toyoda Gosei Co., Ltd. Kanagawa Plant Thailand Japan Toyoda Gosei Rubber (Thailand) Co., Ltd. Aichi FTS Co., Ltd. Toyoda Gosei Minda India Pvt. Ltd. Hinode Gomu Kogyo Co., Ltd. Asia India Minda TG Rubber Pvt. Ltd. Mie Kaiyo Gomu Co., Ltd. Indonesia PT. Toyoda Gosei Safety Systems Indonesia

Chusei Gomu Co., Ltd. Taiwan Tai-yue Rubber Industrial Co., Ltd.

Fukuoka Toyoda Gosei Kyushu Co., Ltd. Europe & Africa Czech Republic Toyoda Gosei Czech, s.r.o.

■ Engine Peripheral Parts

Resonators

Ventilation hoses

Reservoir tanks Air cleaner hoses Plastic turbo ducts

Intake manifold gaskets Noise absorbing air intake ducts Plastic water pipes

Cylinder head cover gaskets

Plastic air pipes

■ Parts for hybrids and EVs Engine covers

Radiator hoses Cooling ducts Battery insulating plates Battery cases Inverter covers

■ Chassis and Drive Train Parts

（Plastic）

（Rubber） 3 1 Constant velocity 2 Piston seals 3 Brake hoses 2 joint boots

Column hole covers Speedometer gears Transmission covers Piston cups

27 Overview of Business / Automotive Parts

Interiors and Exteriors Proportion of sales by product field

Instrument panels, console boxes, and other interior parts 39.7％ contribute greatly to comfortable vehicle cabins, while exterior parts such as radiator grilles and back door garnishes affect overall vehicle design. These are all things noticed by customers, and demand 5-year sales trends a high aesthetic sense and high quality. We have built a global network with 22 production locations, spread our technical abilities （Billions of yen） 400 from Japan to international locations, and refined our supply 334.1 300 and competitive strengths. We are also taking advantage of our 200 knowledge as a pioneer in LED development in efforts to develop automotive LED products. 100 0 2014 2015 2016 2017 2018 （FY） J-GAAP IFRS

■ Interiors

Instrument panel modules and components

Defroster nozzles

Ornamental panels

Registers

Console boxes Using traditional, pre- electronic Japanese Meter clusters Cup holders Glove compartments technology, the console box lid opens and closes smoothly without the use of a motor. Wood-grain panels and leather impart elegance.

28 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Main production sites

Location Name Location Name

Toyoda Gosei Co., Ltd. Inazawa Plant America Toyoda Gosei Texas, LLC

Aichi Toyoda Gosei Co., Ltd. Bisai Plant Mexico Toyoda Gosei Irapuato Mexico, S.A. de C.V.

Toyoda Gosei Co., Ltd. Seto Plant Canada TG Minto Corporation Americas Kanagawa Toyoda Gosei Co., Ltd. Kanagawa Plant GDBR Industria e Comercio de Componentes Quimicos e de Borracha Ltda. Toyoda Gosei Interior Manufacturing Co., Brazil Japan Pecval Industria Ltda. Aichi Ltd. TGAP Co., Ltd. Thailand Toyoda Gosei (Thailand) Co., Ltd.

Nagano Hoshin Gosei Co., Ltd. India Toyoda Gosei South India Pvt. Ltd.

Shizuoka TG Opseed Co., Ltd. Asia Tianjin Toyoda Gosei Co., Ltd. China Fukuoka Toyoda Gosei Kyushu Co., Ltd. Toyoda Gosei (Foshan) Auto Parts Co., Ltd.

TG Missouri Corporation Taiwan Fong Yue Co., Ltd. Americas America TG Kentucky, LLC Europe & Africa UK Toyoda Gosei UK Ltd.

Air conditioner register ■ Exteriors with LED lighting Radiator grilles Wireless power transfer We satisfy all sorts of user design technology based on preferences with our decorative magnetic resonant coupling technology, such as plating and is used for the first time in painting, and molding technology. an automotive part. This is also a means to prevent wire breakage from repeated manipulations of the knob and give greater freedom of design. Back door garnishes

Automotive headlamp LEDs

Shade Lens

Millimeter wave compatible emblems

LED cabin lamps Our decorative and molding technologies have enabled the development of vehicle emblems that are transmissible to millimeter wave radar while maintaining a plating-like shine.

Assist grips

29 Overview of Business / Automotive Parts

Safety Systems Proportion of sales by product field

We supply airbags that lessen the impacts on vehicle occupants 28.7％ during accidents, pop-up hood actuators that lessen the impact on the heads of pedestrians who are hit, and steering wheels with attractive designs from 20 production sites worldwide. We will 5-year sales trends continue our development efforts for airbags with ever higher performance while at the same time developing technologies that （Billions of yen） 400 meet the needs of emerging markets and actively pursuing technical 300 development that integrates preventive safety. 240.8 200

100

0 2014 2015 2016 2017 2018 （FY） J-GAAP IFRS

■ Airbags

2 3

6 4 6 8 7 1

1 Driver-side airbags 2 Curtain airbags

30 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Main production sites

Location Name Location Name

Toyoda Gosei Co., Ltd. Heiwacho Plant Thailand Toyoda Gosei (Thailand) Co., Ltd.

Vietnam Toyoda Gosei Haiphong Co., Ltd. Aichi Toyoda Gosei Co., Ltd. Bisai Plant Toyoda Gosei South India Pvt. Ltd. Ichiei Kogyo Co., Ltd. Japan India Toyoda Gosei Minda India Pvt. Ltd. Nagano Hoshin Gosei Co., Ltd. Asia Minda TG Rubber Pvt. Ltd. Miyagi TG East Japan Co., Ltd. Indonesia PT. Toyoda Gosei Safety Systems Indonesia

Fukuoka Toyoda Gosei Kyushu Co., Ltd. Tianjin Toyoda Gosei Co., Ltd. China America TG Missouri Corporation Toyoda Gosei (Zhangjiagang) Co., Ltd.

Mexico TAPEX Mexicana, S.A. de C.V. Taiwan Fong Yue Co., Ltd. Americas Czech Republic Toyoda Gosei Czech, s.r.o. GDBR Industria e Comercio de Componentes Brazil Europe & Africa Quimicos e de Borracha Ltda. South Africa Toyoda Gosei South Africa (Pty) Ltd.

3 Passenger-side airbags 4 Knee airbags 5 Seat cushion airbags

6 Side airbags 7 Rear-seat center airbags 8 Rear-end impact airbags

■ Pop-up Hood Actuators ■ Steering Wheels These actuators lift the hood and widen the space between hood and Our lineup of attractively designed wooden, leather, engine, reducing head or other impacts to pedestrians. and wood grain steering wheels are used by a wide range of customers.

Hood

Piston

31 介護・福祉介護・福祉 T/ハプティクス o I T/ハプティクス o I 自動車自動車 e-Rubber Haptics; ［irʌ'pt］ eR Hapt Haptics Sharing transmits the tactile sensation of nearby people An fingers. to your object’s hardness and softness is reproduced at a distance. （under development）介護・福祉医療 caregivers Medicine 介護・福祉介護・福祉 Movement support for support for Movement Elder care/ Welfare Elder care/ 医療 Development and spread of and spread Development a surgical training simulator training a surgical Tactile sensation Tactile is conveyed! ロボット T/ハプティクス IoT/Haptics Tactile sensors, Tactile Promising areas of use areas Promising pressure sensors pressure o I Robots T/ハプティクス T/ハプティクス e-Rubber o (soft robots) (soft ロボット o I Artificial muscle I 自動車 Future cars Future Automobiles 自動車自動車 Tactile robot hand robot Tactile development) (under the hand can feel This tactile robot softness of objects with sensors in the fingertips.

Power Power Power Sensor Sensor Sensor

source source source e-Rubber Elastic electrode Elastic electrode Elastic electrode 医療医療医療 electric signals electricity on-off Basic structure Expands and contracts with Expands and contracts Tactile/pressure sensor Tactile/pressure Power source (actuator) source Power Senses pressure and converts to and converts Senses pressure Dielectric layer (Slide Ring Material) Dielectric layer (Slide Ring Material) Dielectric layer (Slide Ring Material) e-Rubber Heart surgery training simulator training surgery Heart Using e-Rubber, which moves in quick response to electricity turning on/off, the simulator faithfully the beating of the heart. reproduces Exhibit examples We We are continuing to develop e-Rubber, an innovative, soft, polymer device that uses supramolecular Slide Ring sensors. or as touch or pressure source power of fields as a in a wide range use for is promising Material. e-Rubber ■ （SupeR BEAT）

Overview of Business / Other Products 32 ロボット

ロボットロボット Value Creation Strategy Foundation Supporting Value Creation Financial Report

■ GaN power devices With the application of LED technology, we are developing products that contribute to higher efficiency and greater compactness of power conversion equipment.

Power transistors （under development） Using gallium nitride (GaN) crystallization technology, we are developing products that contribute to greater efficiency and compactness of power conversion equipment.

■ LEDs LEDs with new added value are being developed.

Deep ultraviolet LED light Solar LEDs source modules Red, green, blue phosphor is An LED module that emits irradiated with violet light to deep ultraviolet light (UV-C), achieve a color tone close to which has a sterilizing effect, sunlight. is used for purposes such as water sterilization (ensuring drinking water, purifying wastewater)

■ General Industry Products We have used our automotive parts and LED technology to develop and produce products in various other fields.

Air purifiers Interior and exterior Dynamic dampers We handle many different products for agricultural, variations in function, design, construction, and industrial color and more. machinery

33 Sustainability ESG and SDGs

Policy for ESG

Toyoda Gosei is taking the nine actions below as With the company creed of “Boundless creativity key efforts in the area of ESG (environment, society, and social contribution,” we would like to contribute governance) to achieve sustainable growth. to a sustainable society through growth of the company. For that purpose we are taking initiative 1 Building Low-Carbon Societies to resolve the global problems of society and the 2 environment shown in the United Nation’s Sustainable Environment Building Recycling Societies Development Goals for international society by 2030. Building Environmental 3 Specifically, through various business activities that Management Systems we have advanced for the creation of a better society, Cultivating Global Personnel 4 such as providing airbags that reduce injuries during and Promoting Diversity accidents and lighter weight parts that contribute Creation of Safe and Pleasant to improved automobile fuel economy and reduced Society 5 Workplaces carbon emissions, we will meet the expectations 6 Higher Product Quality of our stakeholders around the world, including 7 Living with the Local Community customers, shareholders, investors, employees, and suppliers. 8 Improved Corporate Governance Governance 9 Strict Compliance

Relationships with stakeholders

Stakeholders Declaration Communication

We will provide in a timely manner products and services with quality and prices that satisfy ● CS/Business activities Customers customers, based on research and development ● Website and manufacturing technology that anticipates future changes.

● Financial statements (4 times/year)

● Our 2025 Business Plan clearly shows our Financial results briefings (2 times/year), Shareholders, annual shareholders’ meeting (1 time/year) medium- and long-term management targets ● Website investors and strategic policy for sustainable growth. ● Individual meetings ● IR tools (general reports, business reports)

● Intranet/in-house communications We respect the individuality of each person while ● Workshops at the same time increasing our collective strength ● Employee surveys (6 times/year) Employees through teamwork, achieving a vibrant corporate ● Central labor-management consultations culture with meaningful work based on labor- (5 times/year) management trust and mutual responsibility. ●Departmental labor-management consultations (6 times/year)

Based on open and equal relationships with suppliers, we strengthen each other’s corporate ● Procurement activities Suppliers cultures, strive for management innovation, ● Procurement liaison meetings and raise the collective Group strength.

We contribute as a good corporate citizen to development of the economy and society ● Contributing to the community through business Local communities through business activities rooted in each ● Participation in volunteer activities country and community and social contribution activities.

● National and local We have built systems for strict legal Complying with laws/regulations compliance and thorough corporate ethics, ●Participation in industry-academia-government governments, industry and conduct our business activities with collaboration projects organizations integrity. ● Participation in industry organizations

34 35 Financial Report Very high Respect for human rights

● Contributing to society products based on Hiring Creation of new

advanced technology through business activities ● ●

● environmentally-friendly societies Environmental preservation and building

● Supply chain management ● with stakeholders Communication

● Importance in Toyoda Gosei Healthy labor-management relations ● Foundation Supporting Value Creation Social contribution activities Higher employee satisfaction Corporate ethics and legal Corporate compliance ● ● Thorough Compliance Thorough ・

●

Degree of impact on stakeholders High Very high Value Creation Strategy Creation of Creation and safe pleasant workplaces Environmental Management Environmental Quality Higher Product Building Recycling Societies Building Recycling Occupational Health and Safety Health Occupational Living with the Local Community ・Compliance, management system creation system management ・Compliance, awareness of environmental ・Fostering ・ management ・Sound ・Reductions in waste ・Reductions usage of water ・Reduction

● ● ● ● ● Transparency in corporate in corporate Transparency and management governance Corporate Governance Corporate ・

● ）） emissions E 2 G （（） S （ Materiality determination Judging the importance of each element from internal and external perspectives Identifying issues Identifying 3 2 1

Social Development Development of people with an international outlook Promotion of work-life balance of work-life Promotion Personnel Building Low-Carbon ・Reductions in greenhouse gases in greenhouse ・Reductions ・Promotion of diversity ・Promotion ・・Reduction of CO ・Reduction

● ・ ● Societies Governance Environment STEP STEP STEP Materiality determination process Materiality determination The important issues identified in STEP2 were investigatedby a project team made up of people from relevant departments, and nine key issues were decided. This materiality is obviously of interest to and has a strong impact on stakeholders. These issues are positioned as important themes for the Toyoda as well. Gosei Group The issues for consideration identified in STEP 1 were placed on a materiality map. Based on interviews with experts and stakeholders, items placed in the “very high by region” either were to be issues of utmost importance. judged Through Through its business activities, the Gosei Toyoda Group contributes to the achievement of the sustainable development goals (SDGs) that international 2030. for targeting are society (all United Nations member nations) With reference to the Global Reporting Initiative (GRI) guidelines, we have thought about how we can contribute to achieving the 17 targets set in the SDG through the Toyoda Gosei Group business strategy, and the risks and opportunities of those businesses. associated with each SDGs toward Efforts Environment We contribute to preservation of the earth’s environment through all of our business activities to leave a greener, richer world for the future and our children. We obtain many resources from the earth—water, food and clothing as well as raw materials such as rubber, resin, and metal. At the same time, we inflict damage on the earth through the emission of greenhouse gases and depletion of resources as a result of overuse in our daily lives and business activities. To leave a rich, green earth to the children who will build the future, Toyoda Gosei has been implementing Environmental Action Plans every five years. We have also formulated a long-term vision in our TG 2050 Environmental Challenge and are working to preserve the environment. These activities have earned Toyoda Gosei a high ranking by the press and others, and we will further intensify our efforts. We will also continue working actively to create a corporate culture and develop personnel for the implementation of sustainable environmental preservation activities. Hiroshi Yasuda Director, Corporate Officer Chief of Environment Division / Chief of Production Headquarters / Chief of Safety & Health Promotion Division

Basic philosophy

The Toyoda Gosei Group formulated its 1st Environmental environmental activities. Action Plan in 1993 based on its environmental policy, and since To carry out environmental management that meets the that time has been actively confronting environmental issues. expectations of society, we have established environmental With the belief that environmental issues need to be operations in the Americas, China, and Asia, and have put tackled from a long-term perspective, we announced the TG in place a global system for area management in these four 2050 Environmental Challenge, our long-term environmental global regions including Japan. To achieve our TG 2050 targets, in February 2016. That same year we formulated Environmental Challenges, we are implementing group-wide our 6th Environmental Action Plan for activities and targets activities to meet FY2020 targets with a view to the medium over the five years until 2020, and have been promoting term until 2030.

Environmental Policy 1. Environmentally-friendly 2. Good corporate citizenship 3. While spreading corporate activities information on these We are keenly aware that all stages of our business As a good corporate citizen, we participate in, support, activities, we listen relate deeply to the environment, from development, and cooperate with environmental activities by many production, and sales activities to end-of-life disposal. The groups while also working on environmental activities to the opinions of Toyoda Gosei Group, including all internal departments, in the community and broader society. We also people at all levels of domestic and international affiliates, and suppliers, provide education for all employees to support them society and work to conducts all business activities with concern for the in becoming involved in environmental activities as improve our activities environment in cooperation and coordination with members of the community and society, and support customers, government authorities, and others. social contributions and volunteerism. wherever we can.

Products and TG 2050 Environmental Challenge technology Contribute to an —A Greener, Richer World for Our Children environmentally-friendly society through high polymer and LED The Toyoda Gosei Group specializes in the field of high Recycling technology Low carbon polymers—rubber and plastics. society society Minimize waste and Minimize plant Our symbol is the benzene ring, a hexagonal create resource ＣＯ２ and utilize recycling renewable hydrocarbon structure that is the starting point for systems energy polymers. Borrowing from the six sides of the benzene ring, the TG 2050 Environmental Challenge sets six challenges to strengthen our environmental efforts with a Recycling Environmental society preservation and long-term view to the year 2050. living with nature Minimize water usage and raise Strengthen and expand wastewater environmental protection quality and preservation Environmental activities management Foster an environmentally responsible corporate culture and employees 36 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Environmental organization

Our medium- and long-term policy and key action items are such as reductions in energy use, waste products, and VOC discussed and decided in an Environmental Committee chaired emissions, and preservation of the environment. In this way, by the company president. The Environmental Committee environmental preservation and management activities are consists of four subcommittees in the areas of products, conducted from an expert perspective. production, and quality. The subcommittees are further broken Liaison committees have also been established to share down into working groups that promote and manage areas information with related companies in Japan and abroad.

Environmental organizational structure

Products and Environmental Technology Products and Technology Environment Subcommittee Committee* ［Promotes and manages development of （Chairperson: Company environmentally-friendly products and technologies］ president） Production Technology Environment Subcommittee Production ［Promotes and manages development of environmentally-friendly processes (low waste emissions)］ Liaison Committee for Environmental Communication with Domestic Affiliates ［Manages, guides, and supports coordinated environmental ＊The position of the Production Environment Subcommittee Environmental efforts by affiliates and suppliers in Japan］ Committee within ［Promotes and manages technical development measures for the organization can reduced emissions from production processes］ Liaison Committee for Environmental Communication with Overseas Affiliates be seen in our Quality ［Manages, guides, and supports coordinated environmental Corporate Governance Assurance Subcommittee on Systems for SOC Regulations and Quality Assurance efforts by affiliates in other countries］ Organization Chart ［Develops systems for compliance with SOC regulations (see p. 53) and for quality control］ Deployment from the Environmental Committee and subcommittees to plants and other operations is done with the establishment of expert committees in accordance with the ISO 14001 system at each plant.

Risk and opportunity associated with climate change and resource depletion

The risks and opportunities associated with Risk Opportunity climate change and resource depletion are Development of lighter weight, next- Climate Cost increases from carbon tax generation automotive parts, cost recognized as an important management change and soaring energy prices reductions from efficient energy use issue. We are working to strengthen our Effects of water shortages and Cost reductions from re-use and responses to the overall financial and social floods on production activities decreased use of water Resource risks from the effects on economic and Cost increases from difficulty recycling Cost reductions from recycling in procuring materials, soaring production activities of more drastic abnormal technology, use of fewer materials material prices weather, changing precipitation patterns, Loss of trust in the company due to Management droughts and floods, from a global perspective environmental problems, including Raise brand strength by enhancing （regulatory based on laws, regulations and trends. legal violations, and insufficient environmental activities compliance） efforts to protect the environment.

Resource utilization and environmental emissions in business activities

To lessen the amount of energy, material and other resource kaizen in efforts to improve through business activities. inputs, and maximum product output, we are utilizing our skills The input resources we use include environmentally in product development, process development and workplace friendly materials and clean energy.

INPUT OUTPUT

Total material input 45,974t Rubber (rubber sheet) 17,820t Products Plastic 28,154t Excluding purchased parts, metal and liquid Emitted into the atmosphere Dust 0t ＊1 Total energy input 3,080,000GJ Heavy oil 10,000GJ CO2 12,900t-CO2 Volume of substances Purchased electricity 1,560,000GJ Kerosene 20,000GJ 6 gases 3,000t-CO2 subject to PRTR 115t City gas 1,310,000GJ LNG 120,000GJ SOx＊3 0t VOC＊5emissions 371t LPG 60,000GJ Gasoline 1,000GJ NOx＊4 88t Business activities

Water resource input 1,380,000㎡ Clean water 268,000㎡ Waste discharge General waste 12t Industrial water 737,000㎡ Underground water 375,000㎡ Landfill waste 0t For-profit disposal by sale 5,464t Incinerated waste 7t Volume of substances PRTR＊2 substances usage 800t Industrial waste 10,995t subject to PRTR 61t

＊6 ＊1 Gigajoule (1,000,000,000 joules) ＊6 Range of target: 4 plants of Haruhi, Wastewater Nitrogen emissions 9.7t ＊2 Pollutant Release and Transfer Register Inazawa, Heiwacho and Seto, Kitajima Total wastewater 890,000㎥ Phosphorus emissions＊6 0.6t ＊3 Sulfur Oxide Technical Center, Miwa Technical Volume of substances COD emissions＊6 4.8t ＊4 Nitrogen Oxide Center and Sun-Court Inoguchi subject to PRTR 0.15t ＊5 Volatile Organic Compounds

37 Environment

Environmental impact in the value chain

From the perspective of preserving the earth, we have CO2 Emissions by Scope Level surveyed and disclosed not only GHG emissions (Scope 1＊1, ＊2 Scope 2 ) in our business activities but also emissions FY2018 (Global) 1,976,000t -CO2 in our entire value chain including excavation of raw Scope 1, 2 543,000t -CO2 Scope 3 1,433,000t -CO2 ＊3 materials and product use and disposal (Scope 3 ). To ・Indirect emissions due to fuel, （Other indirect emissions） etc., from factories and other facilities increase precision for a more accurate picture, we reviewed (natural gas, heavy fuel, etc.) ・Indirect emissions associated with Raw materials/capital the calculation method and data collection for Scope 3. use of purchased electricity, etc. goods 1,336,000t -CO2

＊1 Greenhouse gas emissions emitted directly by the company itself (natural Employee commutes & business trips 22,000t -CO2 gas and other fossil fuels, etc.) Distribution 44,000t -CO2 ＊2 Indirectly emitted greenhouse gases (electricity, etc.) ＊3 Greenhouse gases emitted in the supply chain that are indirectly emitted by Other 31,000t -CO2 the company (manufacturing, transport, business travel, commuting, etc.)

Building low-carbon societies

In addition to lighter weight products that lead to improved vehicle fuel efficiency, we are reducing CO2 emissions through improved productivity and more efficient distribution.

Basic philosophy Keeping the rise in global temperature to below 2°C, as generation vehicles in addition to the manufacturing concluded in the Paris Agreement, is crucial and we must skills we have cultivated over time. Plans for execution are achieve greenhouse gas emissions of essentially zero by included in our 6th Environmental Action Plan with activity

the end of the century. With the aim of minimizing CO2 targets for FY2020. We are now formulating our mid-range

emissions as presented in the TG 2050 Environmental targets and scenarios for FY2030. To reduce CO2 emissions Challenge, we are utilizing new production techniques over the entire product lifecycle, we are making efforts to and product development skills with an eye toward next- increase efficiency in distribution and other areas.

Reducing CO2 emissions

The Toyoda Gosei Group is reducing CO2 emissions (per unit sales) in the product stage, production stage, and over the entire lifecycle to achieve the targets set for FY2020.

Product development stage: Environmentally-friendly product development In the product stage, we are making headway in providing materials (e.g., from metal or rubber to plastic) in parts for environmentally-friendly, next-generation instrument panel peripherals and other interior products vehicles and developing products with lighter weight for as well as in functional parts such as hoses, reducing the greater fuel efficiency and lower energy consumption number of components, integrating functions, and using across the areas of materials technology, product design, thinner material while ensuring strength. and production technology. Examples include switching

Production stage: Reductions with development of new processes, daily kaizen In the production stage, we are developing new production eliminate waste. Today, the TG ESCO (expert team that techniques that minimize energy usage and introducing conducts reduction activities with genchi-genbutsu) energy-saving equipment through the Production formed in 2016 is conducting kaizen activities that include Engineering Technology Environment Subcommittee the latest technologies and collecting and applying started in fiscal 2016. information on best practices from other companies. We also conduct regular kaizen to thoroughly

Recycling: Reductions in materials and parts procurement, more efficient distribution

Toyoda Gosei has prepared and distributed green We are also making active efforts to reduce CO2 procurement guidelines for materials and parts emissions over the lifecycle with more efficient procurement with low environmental impact. Together distribution, including reviews of truck allocation and with regular supplier surveys to ensure compliance, we transport modes with the aim of improving truck payloads also provide support when improvements are needed. and shortening distribution lines.

38 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Renewable energy We are moving toward a target of using renewable and wind clean energy generation equipment and the energy equivalent to 2% of our total global electricity purchase of green power. Our next challenge is to raise consumption by FY2020. This includes installation of solar clean energy levels to at least 20% globally by FY2030.

＊4 CO2 emissions, CO2 emissions per sales unit (index)

Global, consolidated Japan, consolidated 60 100 20 100

） 83 ） 2 2 O O C C

69 49.4 54.3 Target 17.3 14.5 Target 30 12％ 50 10 15％ 50

（10,000t decrease vs. （10,000t decrease vs. FY2012 FY2012 Emissions Emissions Emissions per sales unit (index) unit per sales Emissions 0 0 0 0 Emi ssi onsper sal esuni t(i ndex ) 2012 2015 2016 2017 2018 2020（Fiscal year） 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）（Base year）

＊4 CO2 emissions in distribution, CO2 emissions per sales unit (index) Target 17％ Toyoda Gosei Co., Ltd. Toyoda Gosei Co., Ltd. decrease vs. （Range: delivery distribution, intra-process distribution, procurement distribution） FY2012 20 100 94

） 85 ） 2.0 100 2 2 ndex) O O 15.4 i C C

t ( （12.8） 1.34 i 12.9 Target 1.07

10 50 1.0 8％ 50 al es un Target decrease vs. （10,000t （10,000t per s

17％ FY2012 s decrease vs. FY2012 Emissions Emissions Em ission 0 0 Emi ssi onsper sal esuni t(i ndex) 0 0 2012 2015 2016 2017 2018 2020（Fiscal year） 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）（Base year）

＊4 Emissions per sales unit (index) is a figure obtained taking FY2012 as 100 ＊5 Electricity: 0.3707t-CO2/MWh, class A fuel oil: 2.69577t-CO2/kL, 【CO 2 conversion factor】 LPG: 3.00397t-CO2/t, town gas: 2.1570t-CO2/1,000 Nm³, ＊5 The CO2 conversion factors used for Japan are the 1990 Keidanren factors. kerosene: 2.53155 t-CO2/ kL, LNG: 2.68682t-CO2/t, The CO2 conversion factors used for other countries are from the GHG gasoline: 2.36063t-CO2/kL (excluding external factors of gas companies’ town Protocol (2001). gas heat conversion)

Solar power generation graph（does not include stand-alone systems such as outside lights with solar panels）

Japan, consolidated Overseas afﬁliates

100 400 6,000 15,000

TianjinTG 293 4,000 10,000

50 Ltd. East Japan Co., TG (Miyagi) 200 7,247 Heiwacho Plant Heiwacho ZhangjiagangTG 2,000 5,000 Kitajima Technical Center Technical Kitajima

Sun Court Inoguchi Sun Court Foshan Haruhi Plant Safety Office Plant Safety Haruhi Miyoshi Distribution Center Miyoshi TGP TGRT 915kW Morimachi Plant Bisai Plant Total generation capacity (kW) capacity generation Total (kW) capacity generation Total

G eneration capacity (kW) 0 0 G eneration capacity (kW) 0 2007 2010 2011 2012 2013 2014 2015 2016 2017 2018（Fiscal year） 2007 2010 2011 2012 2013 2014 2015 2016 2017 2018（Fiscal year）

Reductions in 6 greenhouse gases ＊6

Of the six greenhouse gases, Toyoda Gosei Co., Ltd. uses Trend in greenhouse gas (6 gases) emissions (CO2 equivalents)

three (HFC, PFC, SF6) and is conducting activities to reduce all of them. By FY2015 we had completed a switch to Toyoda Gosei Co., Ltd.

） 2.0 alternative gases with a low environmental impact for the 2 O

C Target shield gas used in the production of steering wheel cores Recycling: Reductions in materials and parts procurement, more efficient distribution 1.3 62％ and other gases. This has resulted in an 74% decrease in decrease vs. 1.0 FY2012

greenhouse gases since FY2012. We will continue these （10,000t reduction activities in the future. 0.3 (0.5) ＊6 Hydrofluorocarbon (HFC), perfluorocarbon (PFC), sulfur hexafluoride Emissions 0 (SF6), methane (CH4), nitrous oxide (N2O), nitrogen trifluoride (NF3) 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）

39 Environment

Building Recycling Societies

Toyoda Gosei uses resources effectively and contributes to a recycling society by reducing waste volumes＊1 and water usage and designing products that are easily recyclable. ＊1 We are currently attempting to reduce waste volumes to meet our FY2020 target as we move toward minimization of industrial waste as set forth in the TG 2050 Environmental Challenge.

Basic philosophy To move closer to the recycling society envisioned in the Frequent water shortages and floods have become a TG 2050 Environmental Challenge, Toyoda Gosei aims major problem in all parts of the world. We are attempting to minimize industrial waste and water usage and we are to identify these risks in every country and region where making every effort to use resources effectively, reducing we have operations while also striving to give back to the materials usage and waste volumes through thorough community by reducing water usage, recycling water, and sorting and the design of easily recyclable products. releasing cleaner wastewater.

Waste reduction

Production To reduce waste in production processes and containers are used in the field and maintaining cleanliness. achieve our 2020 targets, we are combating waste at its We are also reducing packing material by putting lids source and recycling. on reusable containers and other changes, considering We have also started a waste reduction project with the balance between maintaining product quality and coordination among plants and production technology, reducing the use of packing materials. materials technology, and product design departments to strengthen efforts to combat waste at its source. At each Amounts of waste generated and disposed of（results for FY2018: Toyoda Gosei） plant, we are reducing waste through genchi-genbutsu Amount of internal reuse 2,333t Amount of (go and see), identifying items for reduction with the help compensated recycling of external experts, and implementing rubber, plastic, and (payment received) 5,464t liquid reductions. Study sessions are also held to promote waste reduction Amount Amount of of waste paid recycling at both domestic and international Group companies. 11,002t (payment made) 〈100%〉 Distribution The packing material used in product 10,995〈99.9%〉t Amount of Amount of transport is being reduced to prevent products from landﬁll incinerated Numbers in parentheses are waste waste the proportion of discarded being dirtied by increasing the number of times reusable 0〈0%〉t 7〈0.1%〉t materials volume

Waste volume, waste volume per sales unit (index)＊2

Japan, consolidated Toyoda Gosei Co., Ltd. ) ) x 20,000 100 20,000 100 x e e d 87 d n n i i ( ( (t) t 14,223 71 t 12,844 un i un i

s s

Target e e

l 11,002 Target l waste a a r s 10,000 10％ 50 10,000 12％ 50 r s e e of p decrease vs. p

decrease vs. e FY2012 FY2012 e um

12,331 um l l v o v o

Amount Amount of waste (t) ste ste a a W 0 0 0 0 W 2012 2015 2016 2017 2018 2020（Fiscal year） 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）（Base year）

Amount of distribution packing material used/Amount used per sales unit (index)＊3 Target Overseas afﬁliates Toyoda Gosei Co., Ltd. 6％ ※4 ) ) x 60,000 150 102 x e decrease vs. e d d n n i FY2013 1,000 100 i ( ( t t un i 740 un i

925 s 40,000 100 s e e l l a Target a r s 36,691 r s e e p 500 50 p

45 ％

e 8 20,000 50 decrease vs. e um um l FY2012 l v o v o

Amount of waste (t) 21,995 (t) used Amount ste ste a a W

0 0 0 0 W 2013 2015 2016 2017 2018 2020（Fiscal year） 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）（Base year）

＊2 The amount of waste per sales unit (index) is a figure obtained taking the base year as 100 ＊3 The amount of distribution packing material used per sales unit (index) is a figure obtained taking the base year as 100 ＊4 The amount of packing material used increased with increased shipments of service parts due to the heavy rains and floods in northern Kyushu in 2017 and western Japan in 2018, and larger part sizes.

40 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Decreased water usage

To achieve the 2020 targets, we are working on kaizen systematically upgraded to improve our processing ability through TG ESCO (expert team that conducts reduction so that wastewater is cleaner and the water recycling activities with genchi-genbutsu) activities. Today, water rate is higher. We will continue to reduce water usage use has been reduced 24% compared with FY2012 levels and manage wastewater in correspondence with local by decreasing loss and leakage in water use amounts. conditions, given the increasing importance of water. Wastewater treatment facilities are also being

Water use and water use per sales unit (index)＊5

Japan, consolidated Toyoda Gosei Co., Ltd. 400 100 200 100 184 76 260 63 Target Target 138 200 8％ 50 100 8％ 50 decrease vs. decrease vs. 199 FY2012 FY2012 Water use per sales unit (index) Water Water use (10,000 t) (10,000 use Water t) (10,000 use Water 0 0 use per sales unit (index) Water 0 0 2012 2015 2016 2017 2018 2020（Fiscal year） 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）（Base year）

Overseas afﬁliates ＊5 Water use per sales unit (index) is a figure obtained taking the base year as 100 400 100

66 202 Target 200 8％ 50 decrease vs. 194 FY2012 Water use (10,000 t) (10,000 use Water 0 0 use per sales unit (index) Water 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）

Environmental management

While working for environmental preservation, we are continuing employee training and education programs so that every employee can act with awareness of the environment.

Basic philosophy

Together with attempts to strengthen selection and control country and customer criteria. of chemical substances for the creation of products and We are also making aggressive efforts for education to processes that are friendly to people and the environment, raise the environmental awareness of employees and train we faithfully comply with laws and regulations in each personnel for sustainable environmental activities.

Control of chemical substances contained in products

To strengthen the management of chemical substances are revised. To respond to requests from automakers in in our products, we control legally regulated substances each country for information on chemical substances in in each country, substances that are self-regulated by products, we have devised mechanisms and conducted automakers, and substances covered by our own company systems for global collective management of chemical regulations. We watch the trends in European REACH＊6 substances that we are currently using in Japan, China, regulations and the EU RoHS Directive＊7 and have a Thailand and Vietnam. We will be steadily expanding this system in place to respond rapidly when these regulations system to places where it is not yet in use.

＊6 Registration, Evaluation, Authorization and Restriction of Chemicals ＊7 Restrictions on the use of specific hazardous substances contained in electrical and electronic equipment

41 Environment

ISO 14001 environmental audit ISO14001-certified production sites

Toyoda Gosei and its domestic and international affiliates Toyoda Gosei 10 plants* (FY2018) acquire ISO 14001 environmental management system

certification. Internal environmental audits are carried Affiliates in Japan 9 companies out by audit teams composed of members from business areas outside those being audited in order to raise the Americas: 12 companies, Asia: 8 Overseas Affiliates companies, China: 7 companies, independence and objectivity of the audits. Toyoda Gosei Europe/ Africa: 3 companies

Co., Ltd. commissions external reviews by the Japan ＊Currently 7 companies after establishing a subsidiary in Kyushu (Toyoda Quality Assurance Organization (JQA) to assess whether Gosei Kyushu Co., Ltd.) and transferring business from 3 Toyoda Gosei plants in Kyushu (Fukuoka Plant, Saga Plant, Kitakyushu Plant) (April our environmental management systems are run properly 2019) in accordance with ISO14001.

Activities to eliminate compliance and environmental violations and complaints Regular checks are conducted by expert departments and domestic and international affiliates, and take preventive maintenance and management are carried out to ensure measures. legal compliance and no environmental problems or We are ensuring proper disposal of equipment complaints. Preventive activities such as environmental containing polychlorinated biphenyl (PCB). So far, we preservation walks are also conducted to combat risks. have completed disposal of waste from 848 units. We are In addition, we analyze problems that occur at other continuing these efforts to dispose of untreated low-level companies, inspect similar facilities including those at PCB waste at an early date.

Environmental education

Toyoda Gosei educates employees on environmental with environmental regulations. The content each year problems including the destruction of nature emphasizes understanding and practices based on legal and environmental pollution, the impacts on the trends, with examples incorporated to create specific and environment of production activities, and compliance understandable teaching materials.

Environmental education system

Level-specific training ISO Education Affiliate Companies Affiliate Companies Toyoda Gosei Toyoda Gosei Japan Overseas Japan Overseas Education for new managers Education for environmental staff Education for those posted overseas Education to improve internal auditors’ skills Education to register internal auditors Education for environmental key persons Education for supervising managers Acquisition of environmental education qualifications Education for key environmental facility workers Education for new employees Education for general workers

Activities to raise environmental awareness We are attempting to raise the environmental awareness activities for ongoing environmental protection. of employees through Environment Month events, regular We also conduct a questionnaire survey of employees environmental lectures, and other activities so that all each year to assess their environmental awareness and employees have an awareness of the environment in their plan educational activities based on the results.

Environment Month Environment Month: Seeking Environment Month Eco tours Environmental forum Environmental exhibition Mottainai Ideas (observation of living creatures) Instructor: Taikan Oki, Special Adviser to the Don’t you have more mottainai? President, The University of Tokyo

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Other important issues

With awareness of environmental issues, every employee makes efforts to preserve the environment while recognizing the importance of protecting nature and biodiversity and contributing to the creation of environmentally-friendly societies.

Reduced use of substances of concern

In production processes, we are switching to water-based Volumes and flow of emitted PRTR substances paint and release agents, making painting lines more （Unit: t） Atmospheric emissions compact, improving coating efficiency, and making other 115 Recycled efforts to reduce Pollutant Release and Transfer Register 28 (PRTR) substances and volatile organic compounds Chemical (VOCs). substances Products handled 429 Through on-site visits, we also share information on 800 cases in which VOCs were successfully decreased to Released Released Amount Disposal into into Released transferred (amount promote reduction activities. waterways sewers into soil as waste treated) 0.15 0 0 61 167

VOC emissions/emissions per sales unit (index)＊3

Japan, consolidated Toyoda Gosei Co., Ltd. 500 100 500 89 100 427 454 70 Target 371 Target 250 6％ 50 250 6％ 50 decrease vs. decrease vs. 389 FY2012 FY2012 Emissions (t) Emissions (t) Emi ssi onsper sal esuni t(i ndex) 0 0 Emi ssi onsper sal esuni t(i ndex ) 0 0 2012 2015 2016 2017 2018 2020（Fiscal year） 2012 2015 2016 2017 2018 2020（Fiscal year）（Base year）（Base year）＊ Emissions per sales unit (index) is a figure obtained taking FY2012 as 100

Biodiversity The Toyoda Gosei Group is working actively to protect We will further enhance these activities in coordination nature and create environmentally-friendly societies with the Toyota Group, government agencies, NPOs and through our plant afforestation project, biotope creation others. and environmental education.

Mid-range plan for 2020 Plant afforestation We have drafted a mid-range plan for biodiversity Our plant afforestation project activities and are carrying out these activities with the was begun in 2009, and we have slogan “Working to save our water, the source of life on since planted about 300,000 earth.” trees at 28 locations around the world. The seedlings planted in Working to save our water, the source of life on earth these activities are grown in the TG Automotive Sealing Kentucky, Efforts to protect the water used at our plants from its source (mountains) to its destination (sea) LLC, / USA company. Tree planting in October 2018. Breeding endangered creatures Protecting rare species in biotopes From FY2017 ●Plant afforestation Biotope creation ●Biotope creation ●Creation of biotopes in Abundant water with abundant forests We are creating biotopes suited regulating ponds Heiwacho Plant “Toyoda Gosei Kimori no Sato ” (Completed in November 2018) to each area around the world. To for woodland Creation From FY2019 ● Clearing undergrowth (scheduled for June, October) make it easier to secure the space Protecting local aquatic life Fostering organisms in and minimize costs, we have been clean and beautiful seas Eradicating non-native species From FY2018 Environmental creating biotopes in regulating ●Eradication of lance-leaved coreopsis (June) preservation in tidal ﬂats Completion of biotope using a Environmental education through nature observation From FY2018 ponds in coordination with regulating pond* (Heiwacho) ● Eco tour (June) ●Preservation of Fujimae Tidal Flats (May, October) government agencies and others.

＊Basins are made in residential areas, industrial plants, and similar places. They function to limit local flooding by temporarily storing rainwater during torrential rains.

43 Social

Developing personnel who can thrive in a changing environment, and contributing to society through manufacturing As a good corporate citizen, the Toyoda Gosei Group aims to contribute to development of the economy and society through business activities rooted in each country and community and social contribution activities. To build a foundation for those endeavors, we are developing professionals who can act globally and promoting diversity and workstyle reforms. We respect the individuality of each person while increasing our collective strength through teamwork to achieve a vibrant corporate culture with meaningful work. We will continue to conduct research and development in anticipation of future changes, raise the level of our manufacturing technology, strengthen our supply chain and make constant kaizen efforts to satisfy our customers.

Hiromasa Zaitsu Chief of General Administration and Human Resources Headquarters

We are striving to create workplaces that are pleasant and conducive to producing good results, with the following key performance indicators.

Classification Item Target FY2018 results

Employee turnover rate Less than 3.0% 1.2%

Average overtime hours Less than 20 h/month 18.6 h/month Creating Annual paid leave taking rate 95% or higher 97.1% pleasant Number of people promoted from non-regular 1 30/year Starting from FY2019 workplace to regular employees environments Smoking prohibited Smoking prohibited on company premises Effective January 2020 during working hours No. of female managers 18 16

Percentage of women among new employees 20％ 21% Men: 8% Men: 4% Childcare leave taking rate 2 Promoting Women: 100% Women: 100% diversity No. of foreign national employees 30 22

Employment rate of people with disabilities 2.2% 2.33%

Number of young employees sent overseas for development 40 22

Percentage who have taken level-specific in-house training 100% of those targeted 99% Personnel Currently being implemented in 3 Successful execution of young employee 3-year development 100% technical departments. Implemented independence plans company-wide from 2019. Superior and subordinate self-reporting interview rate 100% 97%

Workstyle and cultural reforms

From FY2017 we began efforts to make work more The keys of workstyle reforms efficient with the use of IT and reviews of meeting structures with the aim of every employee thoroughly Changing our way executing his or her essential tasks. Overall activities of thinking entailing a range of efforts to change the way we work are Correction of conducted for workstyle reforms. To deal with changes long working hours and Increased work efﬁciency with a sense of speed and raise the quality of work, we labor compliance are communicating more closely than ever before in the Work culture reforms

workplace, eliminating waste, and adopting a working Creation of a workplace culture where Two-way Active bottom-up style with a varied pace. people are free to exchange all opinions communication proposals

44 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Conference on workstyle reform and better communication Work culture reform presentation Activity promotion character Kaikakuma (selected from employee submissions)

Examples of workstyle reform activities Trials of flexible work styles

Perspective Item Efforts

● 11:00 to 12:00 each day is set as “concentration time” (as Concentration on Establishment of a a rule, NO meetings, NO telephoning, NO instruction. essential work concentration time Workers are notified with music played at 11:00 a.m.)

● Abolishment of preliminary meetings, minimization of Review of meeting the number of participants, time, and frequency structure ● Thorough reinforcement in observing company rules and etiquette Arrangements, Glassed-in meeting spaces are set up in the center of the floor meetings forbidden ● Going beyond the fixed time every Wednesday and Increased work from going beyond Friday is forbidden as a rule As one part of our workstyle reforms, the following trials are efficiency the fixed time being undertaken in FY2019 for employees who are raising

● Reduction of travel time, increased work speed young children, caring for elderly or invalid persons, or Work kaizen using (introduction of mobile teleconferences, etc.) IT tools receiving medical treatment. ● Task automation with RPA*1 ❶Work from home Promotion of ● Departments conduct efforts with a “Reform leader” By making it possible to work from home, we provide an workplace-centered playing a central role for each workplace, and share environment where people can balance work and life, reforms information display their abilities, and do their jobs efficiently. ● Encourage general workplace employees to take full Encouraging people ❷Flexible, shorter working hours Workstyle with annual leave and 3-day weekends to take annual varied pace ● Set annual vacation targets for key positions and We have reviewed our previous system of short working vacation monitor whether this vacation is taken hours and are conducting a trial allowing flexible, short *1 Robotic process automation working hours suited to the individual’s job and lifestyle.

TG NEWS July 2019 Example of workplace reform activities

Five Articles for Officers 1. I will greet people with a smile 2. I will listen to team members talk until they are finished. 3. I will say “I appreciate your efforts” for positive information from team members, and “Thank you” for negative information. 4. I will back team members who take on challenges, and assume responsibility. 5. I will try to make myself better understood.

We aim to create an environment in which employees can discuss anything freely with each other, with officers themselves leading these changes (this year is 4th year) Toyoda Gosei Group Ekiden race (suppliers/affiliates also participate) 7

Respect for human rights Respect for individual human rights and privacy both in where the character and individuality of each person is and out of work are set in employee behavioral guidelines respected and that are free of discriminatory behavior, in the Toyoda Gosei Guidelines for Business Ethics. We sexual harassment and power harassment. are striving to create healthy and pleasant workplaces

Human rights education In both new employee education and new manager and outside of their work. Personnel are sent to external training, we provide education on human rights. training to learn in greater depth about rights problems. Employees learn about the current problems in human In these and other ways we are trying to train people with rights, so that they can act with increased awareness a superior sense of human rights. and respect for human rights and privacy both during

45 Social

Hiring of diverse personnel

Toyoda Gosei hires a diverse workforce and is making efforts to energize the company. We are creating an environment for fair and equal employment and training with respect for diversity.

Encouraging the active roles of women Workplaces that welcome people with disabilities A special organization established in 2010 has been We view the hiring of persons with disabilities as a active in the three key areas of (1) training and support social responsibility, and make active efforts in this for the active roles of female leaders, (2) reforming the area. The Committee for Employment of People with attitudes and behaviors of superiors, and (3) creating a fair Disabilities plays a central role in hiring, job assignments, workplace culture. Our aim is to create a situation in which education of managers and supervisors, establishment all people, regardless of sex, can be active and grow in a fair of stable positions, and awareness. We place particular environment. A working group of management volunteers emphasis on helping persons with disabilities establish was started in 2018 and has begun working to raise the stable positions, monitoring conditions through regular management level. The group is reviewing the work styles care interviews and improving the work environment of managers with the themes of promoting the active roles by identifying where they face problems. The entire of diverse employees and the work-life balance of managers Toyoda Gosei Group holds seminars on people with themselves and their subordinates. “Tea meetings” are disabilities to share information and create educational also held to listen to the troubles and thoughts of female opportunities. Work that people with disabilities can employees and perform is identified, and they are systematically hired strengthen personal and placed. In FY2018, 121 people with disabilities were connections. Together hired (as of January with creating an 1, 2019). This was a environment where hiring rate of 2.33%, people can work for exceeding our target long times with a (legally mandated sense of security, there employment rate is also support for ≥2.2%). Communication with sign language in the workplace career advancement. Workplace reform management class Changes in employment rate for people with disabilities What we want for each person (Toyoda Gosei Co., Ltd.) () 3 To be active and grow as an employee who can work 2.41% 2.38% 233 2.14% energetically and produce results in an open and fair 2.08% 2 environment. 2.2% Legally mandated rate 1 Three key priority measures for activity 2014 2015 2016 2017 2018（Fiscal year） Creation of an environment for stable Training and support Reforming the Creating work after retirement for the active roles of attitudes and a workplace We have established an environment so that employees female employees behaviors of superiors culture can work with assurance after retirement in a post- retirement rehiring system. Many people can make use Target values for 2020 of their high levels of skill and experience after they are rehired. A system of reduced working days and working ❶Women account for at least 20% of new graduates hired hours supports working styles for a good work-life balance. (office, technical positions) ❷Women occupy at least three times more key positions Trend in cumulative number of re-employed retirees (compared with 2014) （Persons） 500 2 373 400 329 347 348 300 200 100 0 2014 2015 2016 2017 2018（Fiscal year）

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Work-life balance

Toyoda Gosei Co., Ltd. is adopting a system wherein each We will provide education for the creation of employee can select a working style with consideration workplace environments where people can use these of work-life balance, supporting employees so that systems without hesitation, while continuing to enhance they can work with a sense of security and motivation. our support and policies. Support to balance childcare and work includes systems for shorter working hours and holiday day-care, plus Childcare leave Care leave Reduced working hours working parent networking events. For these efforts we FY2018 61 5 77＊1 have been certified by the Ministry of Health, Labor and ＊1 Childcare 69 /nursing care 5 /medical treatment 3 Welfare as a “Childcare Support Corporation.” For nursing care support we are also undertaking activities to increase knowledge and familiarize employees with our systems. We have established new systems for reduced days or reduced working hours so that patients can undergo treatment for disease while continuing to work, and for a balance “Kurumin” Next-Generation Nurturing Holiday day-care Working parent networking meeting between medical care and work. Support certification mark (support for childcare-work balance)

Personnel development

A global workforce of employees who Framework for personnel development that supports growth think and act independently In the Toyoda Gosei Group, our personnel management To raise the collective strength of Toyoda Gosei globally, system features aspiration interviews and visualization we are striving to develop people who can contribute to of mid- and long-term career design for each employee, that end and to create workplace environments where as well as rotation of young employees so that they each employee can display his or her full abilities. experience a wide range of work. We are also enhancing our level-specific and specialty training to give employees Personnel who can play active roles globally opportunities to acquire needed abilities and skills.

Personnel who are Personnel who are in demand Personnel development cycle in universal demand from the business environment Career design Aspiration interview and techniques globally Ability to transmit skills anywhere in the world Ability to play an active role high levels of skill Professionalism and innovations Ability to create high added value Ability to produce manufacturing innovations Ability to make Employees consider their Superiors and subordinates own career plan based on discuss challenges for career visions for each growth to help individuals department ﬁnd a mission and vision of what they would like to be

Appointment / Young employee rotation Personal overseas training transfer Experience of other growth A program for young areas, appointment to employees to work positions from a young age with local staff while learning the language Basic competencies needed in business and culture 1. Problem-solving 2. Ability to work 3. Basic skills Evaluation OJT OFF-JT ability in teams Fair, equitable and open Personnel development through on-the-job evaluations and training (OJT) . Skills improvement through TG Spirit (Toyoda Gosei Group’s shared values toward work) performance reviews in-house training by rank and role (OFF-JT)

Enhanced training programs, invigorated personnel development

A broad range of efforts based on individual career development visions are underway, including measures and study programs programs in Japan to develop people who can perform for all global globally and next generation leaders, and personnel employees. Overseas middle management training

47 Social

Level-specific education system

International Domestic Office, technical workers Skilled workers GLDP Division Global Leadership Development Program General Manager New Division General Manager training

GED Department General Global Executive Development New Department Deputy Manager, Division Deputy General Manager training General Manager GES Global Executive Seminar Group Manager, New Group Manager training New Section Manager training MMT Section Manager Middle Management Training New Manager training

Assistant Manager, New Division Assistant New Supervisor Supervisor Manager training training TWI-JI, JM, JR Overseas Training for Supervisor Midlevel New Team Leader training Midlevel employees employee training Midlevel Leader training program Second-year / Third-year training Second-year training New employees New employee training

Training manufacturing personnel With the aim of strengthening our production floors, the source of our competitiveness as a manufacturing company, we are enhancing technical education for employees of each level working at manufacturing sites and in each field of expertise. Technical education spanning four months was provided to 61 skilled workers who joined the company in April 2019. Following training in safety basics on the production floor (danger simulations) and basic manufacturing education including practical training in die maintenance, fabrication of two-legged walking robots, and disassembling and reassembling automobiles, they received practical training on a manufacturing shop floor for three months. New employee training

Aiming for “Zero Accidents” Toyoda Gosei Co., Ltd. aims for zero accidents through safety of high risk equipment where serious accidents Safe Personnel and Safe Workplace programs, with the (STOP 7) can occur. Risk assessments incorporating a president overseeing all efforts as the company’s general reverse KY (kiken yochi, or hazard prediction) approach health and safety manager. are conducted and measures are implemented with a The FY2018 Safe Personnel program focused on clear priority order. holding handrails on stairs and stopping and checking in both directions at stop points on walkways within plants Trends in rate of work accidents (rate of injuries resulting in lost work time) as keys for worker safety. We are trying to maintain these rules and raise compliance by posting guards. No. of casualties in occupational accidents Rate of injuries resulting in lost work time＝ ×1 million In Safe Workplace activities we aim to improve the () Total work hours 1.5

Whole manufacturing industry 1.20

1.0

Transportation equipment industry 0.54 0.5

Toyoda Gosei Co., Ltd. 2 0 Sentinel activity 2014 2015 2016 2017 2018（Years）

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Maintaining and improving mental and physical health Toyoda Gosei implements measures to maintain and promote employees’ mental and physical health.

Mental health activities Health education system

Toyoda Gosei Co., Ltd. provides regular mental health Department Group Division Assistant General Manager, Manager, Section General education for workers of each level, with emphasis on General Manager, Division Deputy Section leaders employees Manager Supervisor managers and supervisors to encourage management General Manager Manager with a view to mental health in the workplace and smooth communication. A bimonthly mental health bulletin is also Milestone age (35, 45 years old) health education/ locomotive syndrome prevention seminar distributed to all workers to improve self-care abilities. In each place of business, counseling is provided by in-house Assistant occupational health nurses, medical nurses and external Manager’s mental health manager / (follow-up) education supervisor mental counselors to maintain and promote mental health. health education

Mental health Physical health activities department deputy general manager education Together with various types of educational activity to maintain and promote health, health classes are held for employees at milestone ages with the aim of preventing lifestyle-related diseases. We are also putting effort into smoking cessation for smokers, and plan to implement a total ban on smoking on company premises starting in January 2020.

These activities and other efforts to consider employee health management from the perspective of company operation were recognized in February 2018 with certification as an “Outstanding Health Management Health seminar Corporation—White 500” by the Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi.＊＊ Nippon Kenko Kaigi: An organization formed to conduct effective activities in conjunction with private organizations and the full support of government agencies, in order to increase healthy lifespan and proper medical care for each person in Japan as the population rapidly ages and there are fewer children.

2019

Health exhibit

Uniform global quality assurance

Toyoda Gosei ensures quality in all business activities, from Fundamental principles of TQM development to production, based on our basic quality policy. Every one of our plants has obtained certification in the ISO 9001 (JQA-QM7318/QMA11826/QMA12841) and IATF16949 (JQA-AU124) international standards for quality management systems. Each plant also sets its own quality Customer first control goals for production. These goals are based on the principles of Total Quality Management, or TQM— activities designed to enhance the quality of products, work, and management, and increase the dynamism of individuals TQM and organizations, through constant improvement and the participation of all based on the “Customer First” principle. Constant Participation In addition, all Group companies use our Quality System improvement by all Global Standards, which incorporate quality improvement with rules and know-how to ensure quality.

49 Social

Monitoring and responding to manufacturing processes and market quality

Defect-free process completion is carried out in “jidoka,” we improve quality by creating processes that production and other processes for parts involved in do not produce or pass on any defects and developing the basic automotive functions of running, turning, and workers with a high sensitivity to safety and to avoiding stopping, as these parts are directly linked to safety. We mistakes. We also have fulltime auditors who audit and want the Toyoda Gosei name to equal quality in the improve processes at all production sites globally. minds of customers worldwide. For this purpose, we A system is in place so that whenever a quality problem advance quality assurance declaration activities at all occurs in the market, we can quickly investigate the causes production locations. This means that all employees based on information from automakers and implement make efforts to improve safety and the people in charge of prevention measures. When it is difficult to pinpoint the all manufacturing processes improve quality through the cause of a problem and develop solutions internally, development of people and processes. When a mechanism we work with the quality departments of automakers to that can ensure the target quality has been completed and take precise measures to prevent recurrence based on is in place, the manager makes an “assurance declaration” inspections with test vehicles and other means. In this to the president or site manager. The president or site way we prevent such quality defects from occurring in the manager then conducts a site inspection. Through next products.

Supply chain management

We aim to deepen, grow and develop our partnership with suppliers based on our basic procurement policy.

Basic procurement policy 1. Optimum global 2. Mutual growth based on 3. Thorough environmental procurement mutual trust protection and legal compliance In the process of procuring product materials, We want to grow together with our We do our utmost to ensure environmental products and parts, production equipment, dies/ business partners through dealings protection and legal compliance in all molds and other goods needed for our business, based on a long-term vision. To our development, design, and production we conduct comprehensive assessments of this end we work to build strong activities. In procurement we follow suppliers from a global perspective. This includes relationships of trust through close the principles of purchasing items with quality, cost, volume/delivery, technology, and the communication with suppliers. minimal environmental impact and supplier’s attitude to continuous improvement. conducting our activities in ways that We do our utmost to make purchases in a fair and reduce environmental impacts. open manner. We also exercise extreme care for full We also welcome proposals from suppliers for legal compliance and confidentiality in new technologies and methods and new products. relation to our procurement activities.

Support for suppliers We support strong supplier structures with “genchi- sectional committee activities we share information genbutsu” (go-and-see activities), and work for their necessary for quality improvements with suppliers. We growth. In addition to standardized work and defect also conduct checks and risk assessment for compliance prevention to avoid serious quality problems, and with Japan’s Industrial Safety and Health Act to help lowering of cost prices for higher competitiveness, we support the creation of safe workplaces and prevent fires involve suppliers in mold and product design. Through and disasters.

Green procurement We do our utmost for environmentally-friendly achieved, such as acquisition of ISO 14001 certification and procurement based on our Green Procurement Guidelines reduction of energy consumption and waste. We comply (4th Edition), which consist of three components: with increasingly strict chemical substance regulations establishing environmental management systems; around the world and monitor the chemicals contained improving regulatory compliance and environmental in items procured from suppliers. We also coordinate performance; and managing harmful substances. To reduce with suppliers in complying with European ELV (end- environmental impacts, we strive to enhance suppliers’ of-life vehicle) and REACH (Registration, Evaluation, internal organizations and systems and raise the level Authorization and Restriction of Chemicals) regulations, of their production activities. Positive results have been and in the management of volatile organic compounds.

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Collaboration with suppliers

Our partnerships with suppliers are very important to suppliers, where we share production information and us for smooth business operations. Every April, Toyoda information on quality improvements, compliance, Gosei Co., Ltd. holds a procurement policy briefing with safety, earthquake measures, confidentiality, chemical about 200 suppliers of products, machining processes, substance control and human resources development. materials, facilities, and molds. We inform suppliers of upcoming issues and efforts, including our business environment and direction, and share our procurement policy for the year with regard to safety, quality, delivery, price, technology, global expansion and CSR. We also give awards to show our appreciation to suppliers for achievements in their fields, while encouraging all suppliers to continue making progress. Every quarter, we hold a procurement liaison meeting with about 100 Procurement policy briefing, Japan Procurement policy briefing, China

Contributing to local communities

The Toyoda Gosei Group wants to earn the trust of employees around the world are making efforts to society through all its business activities, including the contribute to their communities in the four areas of social development and manufacture of products that satisfy welfare, environmental preservation, youth development, customers worldwide, environmental preservation, and community safety, and grow together with strong and social contribution. TG Group companies and their local roots.

Social Welfare Environmental Preservation

Introduction of fund-raising meals Wheelchair repair in welfare institutions Environmental education for elementary A total of more than 300,000 trees in cafeterias school students planted domestically and internationally

Youth Development Community Safety

Support for Boys and Girls Invention Club Sports clinics Anti-crime patrols Traffic safety patrols

Sports Promotion Since winning their first league championship in 2015, the Trefuerza volleyball team (currently, Nagoya Wolfdogs) has been in contention for the top spot every year. Our handball and basketball teams are also active in Japanese domestic leagues.

Trefuerza volleyball team Blue Falcons handball team Scorpions basketball team (currently, Nagoya Wolfdogs)

51 Governance

Building and operating transparent management systems for thorough Group-wide compliance The entire Toyoda Gosei Group is striving to enhance corporate governance so that we can continue as a company of integrity that is trusted by society. To build and maintain fair and transparent corporate governance systems, we are increasing the effectiveness of the monitoring and auditing of corporate management by outside directors and Audit & Supervisory Board members, while also installing internal control systems company-wide to ensure the propriety and efficiency of work. Through Group-wide compliance activities, we are pursuing thorough legal compliance and business ethics. We are also identifying risks with the potential to have a huge impact on our operations, and implementing risk management activities to prevent future problems.

Toru Koyama Executive Vice President Chief of Corporate Planning Division

Corporate governance

Basic philosophy We view the enhancement and strengthening of corporate In addition, Toyoda Gosei supports the Corporate governance with the aim of ensuring sound and efficient Governance Code formulated by the Financial Services corporate management to be crucial in achieving Agency and the Tokyo Stock Exchange, and has voluntarily sustainable growth. Based on this, we are building and implemented a range of policies based on the letter and maintaining fair and transparent management systems spirit of those principles and rules to enhance our corporate and organizational systems that can respond precisely to governance. environmental changes.

Corporate governance system Toyoda Gosei has adopted an audit and supervisory board the current system because audit, supervisory, and execution system and set up the shareholders’ meeting, Board of functions are well coordinated with each other under this Directors, Audit & Supervisory Board, and accounting auditors structure, with legality and efficiency of the Company's as statutory entities. We have also put in place internal auditors decision-making and business execution sufficiently ensured. and other internal control systems including internal audits. Also, in order to strengthen the supervisory function The Board of Directors consists of nine directors and holds of the Board of Directors and to increase the objectivity regular monthly meetings (extraordinary meetings held as and transparency of the decision-making process, we have needed), where matters prescribed by law and important established an Executive Appointment Committee and matters related to corporate management are reported, Executive Compensation Committee under the Board of discussed, and resolved. Directors as non-mandatory advisory committees. The roles A system of corporate officers is used to speed up decision- and membership of the two committees are as follows. making and business execution. For important business Name Role Members matters, monthly management meetings are held. Functional Deliberates and reports on meetings and committee meetings relevant to key areas such President Naoki proposals regarding the as technology, costs, and personnel are also held as needed for Executive Miyazaki (Chair) appointment and dismissal of directors and Audit & Supervisory Appointment Outside Director good management decisions. Board members The Audit & Supervisory Board consists of five members Committee Sojiro Tsuchiya Deliberates and reports on the compensation system for directors and holds regular meetings. Members also attend important and their individual compensation meetings such as Board of Directors’ meetings and audit each Deliberates and reports on department and subsidiary, through which they fulfill their Outside Director proposals regarding the Executive Kimio Yamaka appointment and dismissal of function of auditing corporate management. directors and Audit & Supervisory Compensation Outside Director Accounting auditors are external auditors who combine Board members Committee Mayumi Matsumoto Deliberates and reports on the auditing functions with a commitment to ensuring an compensation system for directors independent and fair auditing system. The Company adopts. and their individual compensation

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Internal control systems In accordance with the provisions of Japan’s Companies Act, establish related rules and guidelines, and handle internal Toyoda Gosei has formulated a Basic Policy on Establishing audits, compliance and risk management. Every year, Internal Controls. Under this policy, we are striving to ensure the Board of Directors checks the status of establishment appropriate operations by establishing internal control and operation of internal controls in an ongoing effort to systems, which help us deliberate important matters, improve and reinforce them.

Internal controls for the Toyoda Gosei Group To cultivate a healthy internal control environment at Toyoda receive regular business reports from subsidiaries and set up Gosei and its subsidiaries, all Group companies share its systems to confirm the propriety and legality of subsidiaries’ management philosophy. The Toyoda Gosei Group Charter businesses through advance approval reports. We also send for Business Ethics, a shared guideline for compliance, has non-executive directors and Audit & Supervisory Board also been instituted and expanded to subsidiaries. While members to key subsidiaries in a system to monitor and act respecting the independence of subsidiary management, we as a check on their business execution.

Corporate governance system chart List of major company meetings

Shareholders' Meeting Meeting Name Division in Charge

Appointment/Dismissal Appointment/Dismissal Appointment/ Dismissal Management Board of Directors General Administration Audit Audit & Cooperation Accounting Meetings Management Meeting Corporate Planning Board of Directors Supervisory Board Auditors Sales Meeting Sales Planning Consultation Report Supervision Technical Administration, Executive Executive Audit & Technical Development Appointment/ Submission/ Appointment Compensation Audit Supervisory Audit Production Engineering Dismissal Report Committee Committee Board Dept. Meeting Management Functional Profit and Cost Meeting Finance & Accounting Business Execution System Meetings Production Engineering Production Meeting President Management Direction/Supervision Purchasing Meeting Purchasing Report Business Execution Company Meetings Human Resources Meeting Human Resources Audit Audit Div. Corporate Officers Submission/ Management Meetings Compliance and Risk Legal, Corporate Report Cooperation with Audit & Management Committee Planning Supervisory Board and Functional/ Functional Meetings Accounting Auditor Business Divisions Decision/ Export Control Committee Corporate Planning Approval Committees Safety and Health Committee Safety & Health Promotion Subsidiaries Committees Environment Committee Environment Quality Committee Quality Assurance

Internal audits, Audit & Supervisory Board members’ audits, and accounting audits We have set up an Audit Division to handle internal statements and other important documents, and conduct audits. With the aims of achieving business objectives and on-site audits of offices and subsidiaries to audit the preventing misconduct and mistakes, internal audits are performance of duties by directors from the perspectives of conducted across the overall business (including audits of ensuring legality and appropriateness, protecting assets and functional departments) based on an internal auditing plan rights, and preventing loss. Moreover, a special department approved by management at the beginning of each term. has been established to assist the auditors’ audits. The results of internal audits are reported to The certified public accountants who performed the management, and audited departments are given accounting audits of Toyoda Gosei are Eiichi Yamanaka and recommendations for improvements based on the audit Tomohiro Nishimura of the firm PricewaterhouseCoopers results. The effectiveness of internal audits is increased by Aarata LLC. checking their improvement plans and results. Audit & Supervisory Board members, internal auditing Each Audit & Supervisory Board member follows the department personnel, and accounting auditors regularly auditing policy and audit plan established by the Audit meet to confirm their respective auditing systems, auditing & Supervisory Board when investigating the Company policy, auditing plans, implementation status, and audit and subsidiaries. They attend the meetings of important results. They cooperate in performing efficient and effective deliberative bodies and committees including the Board audits, contacting each other as needed to exchange ideas of Directors and management meetings, listen to reports and share information. on business from directors and others, inspect financial

53 Governance

Outside directors and outside Audit & Supervisory Board members

Toyoda Gosei appointed three outside directors, Sojiro Election of outside directors and outside Tsuchiya, Kimio Yamaka, and Mayumi Matsumoto, at its annual Audit & Supervisory Board members shareholders’ meeting on June 14, 2019. Hideomi Miyake was also appointed as an outside Audit & Supervisory Board member. Appointment Name Independent Reason for appointment director Together with current outside Audit & Supervisory Board members Takeshi Uchiyamada and Masami Hadama, a total of To reflect his extensive experience Sojiro and deep insight as a corporate ○ three outside Audit & Supervisory Board members have now been Tsuchiya manager in the management of appointed. Toyoda Gosei When electing outside directors, emphasis is placed on To reflect his extensive experience extensive experience and deep insight in corporate management and deep insight in policy finance Kimio and other areas, in addition to outside requirements from the Outside ○ and the environmental and energy Yamaka fields in the management of Companies Act. The outside Audit & Supervisory Board members directors Toyoda Gosei elected are people with deep experience and knowledge in their field of specialty and corporate management. They also stand as To reflect her extensive experience and high-level insight as a news outsiders with little direct vested interest and a certain distance Mayumi anchor and researcher in the broad ○ from the management team. Matsumoto fields of social issues, environment and energy in the management of Outside Audit & Supervisory Board members attend Toyoda Gosei directors’ meetings and serve to raise the viability of management To reflect his extensive experience oversight, such as seeking proper explanations for the status Takeshi and deep insight as a corporate of the performance of the Board of Directors. They also visit Uchiyamada manager in the auditing of Toyoda Gosei offices and subsidiaries as appropriate to conduct direct audits Outside Audit & while coordinating with other auditors. They meet regularly To reflect his extensive experience Masami with accounting auditors and personnel of the internal auditing Supervisory ○ and deep insight in law in the Board Hadama auditing of Toyoda Gosei department, which has an internal control auditing function, to members confirm their respective auditing plans, implementation status, To reflect his extensive experience Hideomi and deep insight as a corporate ○ and auditing results, and contact them as needed to exchange Miyake manager in the auditing of Toyoda opinions and share information for efficient and effective auditing. Gosei

Messages from the outside directors

Counting on “One Team, One TG” in a radically changing situation In the course of experiencing manufacturing and the automotive industry and being a company director since my appointment as an outside director in June 2016, I have gained a sense of Toyoda Gosei’s integrity and technical competence as well as its emphasis on a sense of unity so that its many personnel can spread diverse products globally. Currently, I specialize in environmental and energy research at a think tank and university, based on my experience in finance and research at a government-run financial institution. I will engage in long-term corporate management and business decisions from a neutral standpoint, and focus on offering advice, drawing on my experience in making forecasts and Kimio Yamaka proposals regarding a radically changing energy situation. Outside director

Hoping to contribute in view of SDG initiatives and environmental technology trends I have worked as an anchor and reporter on a TV news program and, since 2008, I have been engaged in research and education in the environmental and energy fields at the University of Tokyo. One thing that has stayed consistent over that time is my commitment to verifying things with my own eyes by going out to the scene and listening to people. I believe that Toyoda Gosei’s management philosophy of “Boundless Creativity and Social Contribution” reflects a spirit of tirelessly moving forward, overcoming difficulties in any era, taking as strengths its creativity and technological capabilities to blaze a path into the future. Going forward, I hope to contribute to an increase in our corporate value and contribute Mayumi Matsumoto to growth with initiatives that address sustainable development goals (SDGs) through Outside director business activities, in view of environmental technology trends. (newly appointed)

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Executive compensation Officer compensation

Director compensation consists of base compensation The total compensation for each officer class, the total by and bonuses. The base compensation is within a range each type of compensation, and the number of officers with an upper limit decided at the general shareholders’ receiving the compensation meeting, and determined in consideration of the duties Total executive Total amount by type of Number of of each position. The amount of bonuses is calculated in Officer class compensation compensation (Millions of yen) subject officers consideration of business performance and other factors, (Millions of yen) Base compensation Bonuses (People) and determined through a resolution at the general Directors (excluding 407 311 96 9 shareholders’ meeting. outside directors) The base compensation of Audit & Supervisory Board Audit & Supervisory Board members (excluding outside 76 76 — 2 members is determined in consultation with the Audit & members) Supervisory Board members and within a range with an Outside officers 58 58 — 6 upper limit decided at the general shareholders’ meeting. Note: Bonuses are the provision of allowance in the given fiscal year.

Ensuring the effectiveness of the Board of Directors

At Toyoda Gosei, the Board of Directors Office conducts multiple perspectives and the results are reported to the annual interviews of all directors and Audit & Supervisory Board of Directors. Board members, including outside ones, on the effectiveness The results of the assessment for fiscal 2018 showed of the Board of Directors. The roles and responsibilities of the that the Board displayed a sufficient level of effectiveness. Board of Directors, the level of discussions, opportunities to Meaningful opinions were expressed in the assessment improve effectiveness and other matters are assessed from process, and efforts to improve the effectiveness will continue.

Communication with shareholders and investors

For constructive dialogue with shareholders and insider information emerges in the Company, it is tightly investors, we have established a system for conducting controlled as part of thorough information management. such dialogue in a coordinated manner, planning opportunities and sharing necessary information. Main IR activities This dialogue is carried out through financial results Targeted persons IR activities briefings or small meetings for institutional investors Individual discussions, with explanations by the Company’s president or Domestic institutional financial results investors (including relevant officer; plant tours for institutional investors briefings, facility tours, securities analysts) with explanations by the officer in charge; direct visits telephone conferences ●Issuance of the by the officer and persons in charge of IR to institutional “Toyoda Gosei Overseas Individual discussions, Report” investors; and other means. Based on the opinions and institutional participation in IR ● desires of shareholders and investors obtained, further investors events Dissemination of financial opportunities for dialogue are being enhanced. ●Briefings for individual information and investors IR materials on In compliance with fair disclosure rules, Toyoda Gosei Individual ●Plant tours after annual the website shareholders and restricts dialogue with shareholders and investors and shareholders’ meeting investors thoroughly controls information in the Company during ●Issuance of “Report on Business Results” a silent period before earnings reports are released. If

Compliance Basic philosophy

Toyoda Gosei’s management philosophy states, “We the entire Toyoda Gosei Group worldwide, and Group promote business operations with integrity through companies in Japan and other countries formulate their the establishment of a system founded on thorough own behavioral guidelines based on the Charter. Toyoda compliance and corporate ethics.” We strive for thorough Gosei Co., Ltd. has also established the Toyoda Gosei compliance in all areas based on this philosophy. Behavioral Ethics Guidelines, which it expects every The Toyoda Gosei Group Charter for Business Ethics employee to follow, and has worked to familiarize all sets forth shared values and behavioral standards for employees with these guidelines.

55 Governance

Compliance system Compliance

Toyoda Gosei has established the Compliance and Risk Corporate activities Management Committee with the Company’s president Support for the Management Support for the serving as chairman and all company officers as members. compliance system compliance system Domestic Philosophy Overseas Together with compliance advocates in each division, the afﬁliates Toyoda Gosei Group affiliates committee works for thorough compliance with a unified Charter for Business Ethics approach between management and the workplace. Toyoda Gosei Guidelines for In Japan, regular compliance liaison conferences are Business Ethics All company executives Compliance advocates from each division held with Group companies. Group companies in other Corporate Ethics Committee Compliance and Risk Company-wide Compliance countries have established compliance committees, Management Committee Advocates’ Meeting appointed compliance advocates, or set up other Legal affairs/ Ensuring Internal and external compliance systems suited to the circumstances in their compliance compliance Compliance and harassment workshops consultation services offices region and company. Compliance activities are carried out in coordination with Toyoda Gosei.

Specific efforts

Compliance consultation office Efforts to prevent violations of anti-trust laws To identify and resolve compliance problems at an Toyoda Gosei has prepared guidelines for Japan and key early stage, Toyoda Gosei has established internal and regions where Group companies are located (United external compliance consultation services offices and an States, EU, China, Thailand, India, Brazil, and others), and internal harassment consultation office. is undertaking efforts globally to prevent anti-competitive Group companies in Japan have their own consultation acts at Toyoda Gosei Group companies. offices, in addition to which they have established a joint Specific behavioral guidelines that Toyoda Gosei external compliance consultation office together with expects employees to follow in various business activities, Toyoda Gosei. Group companies in other countries have especially sales activities, are embodied in the Codes of established external or internal consultation offices. Conduct for Antitrust Law Compliance in the Company’s internal regulations, and thorough compliance is expected Compliance activity checks and kaizen of employees. Toyoda Gosei conducts compliance entrenchment Continuing education activities are also conducted questionnaires of all employees each year to confirm through special training in competition laws and regular penetration of compliance transparency and whether there compliance training for each level within the Company. are signs of violations. Kaizen activities are then conducted based on the results. Anti-bribery efforts For Group companies in Japan and other countries, a Toyoda Gosei has formulated Global Anti-Bribery Guidelines voluntary check sheet is used to check their basic policy as a common guide to conducting transparent and sound and systems for compliance, the status of compliance business activities globally, and is doing its utmost to with important laws including anti-trust laws and bribery prevent bribery and corruption and corruption laws, and risks in key areas such as human at all Toyoda Gosei Group resources, finance, sales, procurement, safety, and quality. companies. Education activities Based on the results, kaizen activities are conducted. are continuously conducted for employees through training for

each level and risk. Compliance training

Risk management

Basic philosophy

With the aims of preventing risks that could have grave For each type of risk in safety, quality, and the consequences for management and minimizing damage environment, the department in charge has established in the event that adverse events do occur, we identify risks regulations and key points and conducts proper business in each function and make decisions on how to respond management, such as implementing measures as needed in the Compliance and Risk Management Committee and based on assessments of operational status. general meetings. Moreover, Risk Management and Response Guidelines

56 Value Creation Strategy Foundation Supporting Value Creation Financial Report

have been established. These guidelines summarize basic to prevent potential risks and to respond appropriately matters related to risks and show the behaviors to adopt and quickly in the event that problems occur.

Crisis Management Project in anticipation of large-scale earthquake disasters

Earthquakes occur frequently in Japan, and we have put and for alternative production in a production recovery into place a crisis management system in the event of a system. Recovery training for design drawings and other massive earthquake based on the principles of human life data is also carried out so that product development can first, community support, and early recovery. Specifically, be continued even after disasters. In addition, workshops in addition to infrastructure and system measures based to strengthen crisis management not only in our own on the project, we have conducted resilience training more companies but also at affiliates and suppliers are conducted than 100 times for directors and members of anti-disaster regularly. Assessments using anti-earthquake measures departments since fiscal 2013. These efforts are based on implementation status check sheets, clarification of weak our belief that improving the skills of response personnel is points with graphs, introduction of responses taken at Toyoda essential. We have also established specific procedures for Gosei and other companies, and cooperative preparation of the recovery of affected buildings, facilities, and processes business continuation plans（BCPs） are carried out.

Efforts to date Disaster response

Classification Measures Disaster outbreak̶First response Recovery Permanent ● Earthquake resistance measures for buildings and facilities ● Establishment of a disaster prevention center to serve as an operations base for the Warning & entire company for antidisaster department operations Monitoring Team Emergency ● Equipping all locations with a multi-channel access radio system (which is used in Task Force Facility and Japan for various purposes, from daily work to emergency and disaster situations) Disaster occurs equipment and satellite phones Emergency earthquake alert measures ● Installment of a crisis management server (earthquake-resistant structure) and emergency power generators ● Operation of a disaster recovery system for restoration of damaged systems and First Response data centers (special facilities equipped with and operating computers, data Task Force Life Support Production communications, and other devices) Restoration Task Force Advance Team Task Force ● Introduction of site and building safety decisions (investigative team) ● Maintenance of supply chain information ● Teleconference system for multiple locations using tablet computers System ● Earthquake bulletin and employee safety information system training measures Instructions ● Employee safety follow-up system incorporating arrival and departure times at District company and business trip data Task Force Reports ● Preparation of a BCP

Strengthening information security measures and raising awareness

To strengthen the control of confidential information, are assigned in all departments, and confidentiality annual checks of the compliance status of each division education activities are conducted based on information based on company confidentiality management system security operating standards and a confidential regulations are conducted together with onsite audits. Self- information management manual. Security control inspections are also done at Group companies in Japan education is also conducted for new employees. and overseas business bases. Confidentiality officers

Enhanced measures

Classification Measures Tangible ● Printing restrictions with ID card authentication on multifunction machines and dedicated drawing printers Prevention measures of leaks from negligence Intangible ● Data encryption of all PCs measures ● Security measures when sending emails out of the Company (cc to superiors and encryption of attached files)

Tangible ● Increased surveillance cameras ● Restrictions on writing onto external storage media Prevention of measures ● Installation of wire locks to prevent PC theft malicious ● Confidentiality pledge ● System use records and access log records monitoring unauthorized Intangible ● Stricter applications for taking items from premises ● Strengthened hacking prevention measures (Internet) leaks measures ● Restricted file server access ●Prevention of unauthorized connection of terminals brought in from outside

● New employee education Educational activities ● On-site checks of each department ●Company-wide security control voluntary (ethics) ● Training in responding to standard email inspections using check sheets

57 Governance

Management Members （As of August 1, 2019）

Naoki Miyazaki Masakazu Hashimoto Toru Koyama Tomonobu Yamada President Executive Vice President Executive Vice President Director, Corporate Officer

1980 Joined Toyota Motor Company 1980 Joined Toyota Motor Company 1982 Joined Toyoda Gosei 1981 Joined Toyoda Gosei 2008 Managing Officer, Toyota Motor 2002 Joined Toyoda Gosei 2005 General Manager, Development 2007 General Manager, First Sales Corp. Division, Safety Systems Division, Toyoda Gosei 2005 General Manager for Business Unit, Toyoda Gosei 2013 Senior Managing Officer, Toyota Technology, Safety Systems 2010 Director, Toyoda Gosei Motor Corp. Business Unit, Toyoda Gosei 2012 Corporate Officer, Toyoda 2012 Corporate Officer, Toyoda Gosei Gosei; President, Toyoda Gosei 2014 Executive Vice President, Toyoda 2012 Corporate Officer, Toyoda North America Corp. 2014 Managing Officer, Toyoda Gosei; Gosei Gosei Chief, Sales Headquarters, 2015 Managing Officer, Toyoda Gosei 2015 President, Toyoda Gosei 2014 Managing Officer, Toyoda Toyoda Gosei (current) (current) Gosei 2016 In charge of Corporate 2016 Director, Toyoda Gosei; Planning Division, Toyoda 2016 Senior Managing Officer, President, Toyoda Gosei Gosei; Director, Toyoda Toyoda Gosei; Chief, Research (Shanghai) Co., Ltd. (current) Gosei; Chief, Purchasing & Development Headquarters Headquarters, Toyoda Gosei 2018 Senior Managing Officer, Toyoda Gosei (current) Toyoda Gosei; oversees 2018 Senior Managing Officer, 2017 Director, Toyoda Gosei General Industry Products Div., Toyoda Gosei Toyoda Gosei 2018 Executive Vice President, 2019 Executive Vice President, Toyoda Gosei (current) 2019 Director, Corporate Officer Toyoda Gosei (current); Chief (current); Chief of General of Corporate Planning Division, Industry Products Division, Toyoda Gosei (current) Toyoda Gosei(current)

Hiroshi Yasuda Masaki Oka Sojiro Tsuchiya Kimio Yamaka Director, Corporate Officer Director, Corporate Officer Outside Director Outside Director

1982 Joined Toyoda Gosei 1985 Joined Toyota Motor Corp. 1975 Joined Nippondenso Co., Ltd. 1980 Joined Japan Development Bank 2006 General Manager, Planning 2012 Project Senior Manager, 2002 Director, Denso Corp. Division, Safety Systems Finance & Accounting Division, 2007 Deputy Director-General, 2004 Managing Officer, Denso Corp. Business Unit, Toyoda Gosei Toyota Motor Corp. Development Bank of Japan 2007 Senior Managing Director, 2010 President, Toyoda Gosei Czech, 2014 General Manager, Related Business 2009 Director of the Energy Strategy Denso Corp. s.r.o. Department, Toyota Motor Corp. Institute Co., Ltd. (current) 2011 Executive Vice President, 2012 Corporate Officer, Toyoda Gosei 2015 Adviser, Toyoda Gosei; Corporate 2016 Director, Toyoda Gosei Denso Corp. Officer, Toyoda Gosei; General (current) 2016 Director, Managing Officer, Toyoda Manager, Finance & Accounting 2013 Advising Executive Engineer, Gosei; Chief, Production Headquarters, Division, Toyoda Gosei; in charge of Denso Corp. Toyoda Gosei (current); General IT Planning Division, Toyoda Gosei Manager, Plastic Parts Production 2015 Director, Toyoda Gosei Center, Toyoda Gosei; President, 2016 Deputy Chief, Finance & Accounting (current); Adviser, Denso Corp. Tianjin Toyoda Gosei Co., Ltd. Headquarters, Toyoda Gosei; in charge of Audit Division, Toyoda Gosei 2017 Oversees Quality Assurance Headquarters, Toyoda Gosei 2017 Chief, Finance & Accounting Headquarters, Toyoda Gosei (current) 2018 Director, Senior Managing Officer, Toyoda Gosei 2018 Director, Managing Officer, Toyoda Gosei; Chief, IT Headquarters, 2019 Director, Corporate Officer, Toyoda Toyoda Gosei (current) Gosei (current); Chief of Safety & Health Promotion Division, 2019 Director, Corporate Officer, Toyoda Environment Division, Production Gosei (current); Chief of Audit Headquarters, Toyoda Gosei (current) Division, Toyoda Gosei (current)

58 Value Creation Strategy Foundation Supporting Value Creation Financial Report

Corporate Officers

Takashi Ishikawa Ryo Onishi Yoshiyuki Fujita Junichiro Kako Mayumi Matsumoto Katsumi Tanabe Hitoshi Mizutani Outside Director Audit & Supervisory Board Member Audit & Supervisory Board Member Hiroki Fukui 1987 Contract newscaster, TV Asahi 1981 Joined Toyota Motor Sales Co., 1982 Joined Toyoda Gosei Corporation Ltd. Todd Huber 2009 Deputy General Manager, 1993 Contract newscaster, Japan 2006 General Manager, European Finance & Accounting Division, Broadcasting Corporation Business Dept., Toyota Motor Toyoda Gosei Hiroyasu Hirayama Corp. 2003 Freelance announcer, Horipro Inc. 2010 Executive Vice President, TG 2012 Project Senior Manager, TME- Missouri Corp. 2008 Collaborative Researcher, Research Japan, Toyota Motor Corp. Center for Advanced Science and 2015 General Manager, Finance Technology, The University of Tokyo 2013 Auditor, Toyoda Gosei; & Accounting Division, Corporate Officer, Toyoda Gosei Toyoda Gosei; Deputy 2009 Project Researcher, same as above General Manager, Finance & 2017 Full-Time Audit & Supervisory 2011 Director, principal researcher, Accounting Division, Toyoda Board Member, Toyoda Gosei International Environment and Gosei (current) Economy Institute (current) 2016 Full-Time Audit & Supervisory 2014 Visiting Associate Professor, Special Board Member Toyoda Gosei Division of Environmental and Energy (current) Science, Komaba Organization for Educational Excellence (KOMEX), The University of Tokyo (current) 2017 Director, Japan Council for Renewable Energy (current) 2019 Director, Toyoda Gosei (current)

Takeshi Uchiyamada Masami Hadama Hideomi Miyake Outside Audit & Supervisory Board Member Outside Audit & Supervisory Board Member Outside Audit & Supervisory Board Member

1969 Joined Toyota Motor Company 1993 Public Prosecutor 1968 Joined Toyoda Iron Works Co., Ltd. 1998 Director, Toyota Motor Corp. 2006 Public Prosecutor, Special Investigation Dept., Tokyo 1993 Director, Toyoda Iron Works 2001 Managing Director, Toyota District Public Prosecutors Co., Ltd. Motor Corp. Office 1999 Managing Director, Toyoda 2003 Senior Managing Director, 2007 Registered lawyer, partner at Iron Works Co., Ltd. Toyota Motor Corp. TMI Associates (current) 2003 Senior Managing Director, 2005 Executive Vice President, 2008 Professor, Sophia University Toyoda Iron Works Co., Ltd. Toyota Motor Corp. Graduate School of Law 2005 President, Toyoda Iron Works 2012 Vice Chairman of the Board of 2012 Representative, TMI Partners Co., Ltd. Directors, Toyota Motor Corp. 2014 Audit & Supervisory Board 2011 Chairman, Toyoda Iron Works 2013 Chairman of the Board of Member, Toyoda Gosei Co., Ltd. Directors, Toyota Motor Corp. (current) (current) 2015 Audit & Supervisory Board Member, Toyoda Gosei 2018 Audit & Supervisory Board (current) Member, Toyoda Gosei (current) 2016 Senior Adviser, Toyoda Iron Works Co., Ltd. (current)

59 Financial Report

Consolidated 10-Year Financial Summary

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 FY2018 J-GAAP （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended IFRS （Fiscal year ended （Fiscal year ended March 31, 2010） March 31, 2011） March 31, 2012） March 31, 2013） March 31, 2014） March 31, 2015） March 31, 2016） March 31, 2017） March 31, 2018） March 31, 2018） March 31, 2019）

Operating results Net sales 495,002 516,982 504,518 599,615 689,477 727,846 781,886 755,601 806,938 Revenue 807,958 840,714

Operating profit 26,202 29,952 20,415 36,706 43,798 41,603 42,824 40,675 41,136 Operating profit 35,179 36,525

Ordinary profit 26,574 27,549 20,287 36,777 45,847 43,792 41,490 39,007 43,200

Profit before income taxes 23,926 27,192 19,076 36,571 46,101 39,851 36,710 31,288 35,775 Profit before tax 35,507 37,356

Profit attributable to owners of parent＊1 14,255 17,116 8,971 21,429 26,214 21,155 20,255 16,233 21,175 Profit attributable to owners of parent 21,361 23,309

Financial position Cash and deposits 67,783 56,586 70,715 79,073 92,364 85,283 78,388 97,553 104,309 Cash and cash equivalents 97,991 107,311

Current assets 198,537 183,293 229,238 244,798 279,281 291,246 281,212 305,273 328,524 Current assets 357,666 382,106

Property, plant and equipment 194,457 191,261 183,864 196,163 210,214 250,557 241,408 245,666 259,537 Property, plant and equipment 241,581 257,728

Non-current assets 235,807 233,268 225,555 244,846 262,596 316,926 306,160 315,425 333,819 Non-current assets 321,819 326,023

Total assets 434,344 416,562 454,794 489,644 541,877 608,172 587,373 620,699 662,388 Total assets 679,485 708,129

Short-term loans payable＊2 19,355 20,200 23,300 35,978 39,069 41,848 21,073 31,762 43,722 Borrowings 43,722 32,396

Current liabilities 130,857 123,379 149,968 157,748 168,136 180,795 162,592 170,574 189,075 Current liabilities 195,392 194,309

Bonds payable 10,000 10,000 ------10,000 Bonds and borrowings 64,511 93,089 Long-term loans payable 34,245 19,348 34,397 23,329 31,138 42,929 44,691 57,261 54,458

Non-current liabilities 73,572 59,107 67,457 59,751 73,462 88,902 96,937 110,663 119,403 Non-current liabilities 118,435 133,674

Total liabilities 204,429 182,487 217,426 217,500 241,598 269,697 259,530 281,237 308,479 Total liabilities 313,828 327,983

Shareholders’ equity 221,724 233,365 238,400 255,201 275,840 289,321 301,756 311,127 324,890 Equity attributable to owners of parent

(Reference) Interest-bearing debt 63,600 49,548 57,698 59,307 70,207 84,777 65,765 89,023 108,181 (Reference) Interest-bearing debt 108,233 125,486

Cash flows Cash flows from operating activities 68,199 62,586 51,112 52,451 55,448 51,283 77,765 60,401 60,848 Cash flows from operating activities 44,004 57,463

Cash flows from investing activities （36,574）（52,579）（37,027）（40,989）（45,680）（62,432）（56,261）（82,131）（39,201） Cash flows from investing activities （21,832）（55,491） Cash flows from financing activities （7,426）（18,785） 2,224 （6,128）（732）（238）（24,736） 14,794 6,541 Cash flows from financing activities 5,966 7,749

Key performance Return on sales (%) 2.9 3.3 1.8 3.6 3.8 2.9 2.6 2.1 2.6 Profit attributable to owners of parent ratio (%) 2.6 2.8 indicators Total asset turnover (times) 1.20 1.22 1.16 1.27 1.34 1.27 1.31 1.25 1.26 Total asset turnover (times) 1.23 1.21

Equity ratio (%) 49.2 52.2 48.6 51.7 51.6 51.6 51.7 50.7 49.6 Ratio of equity attributable to owners of parent to total assets(%) 50.1 50.0

Return on equity (ROE) (%) 6.9 7.9 4.1 9.0 9.8 7.1 6.6 5.2 6.6 Return on equity (ROE) (%) 6.4 6.7

Capital investment 34,326 46,983 37,623 39,097 43,085 64,733 54,498 55,218 64,816 Capital investment 53,411 46,891

Depreciation and amortization 43,007 44,481 41,964 38,633 38,743 39,353 44,462 40,902 44,037 Depreciation and amortization 32,545 32,927

R&D expenses 26,066 25,617 25,936 27,279 29,170 29,579 28,409 27,164 27,864 R&D expenses 27,684 30,025

Number of employees at year-end (consolidated) 26,084 26,964 29,108 30,190 31,672 34,754 35,903 36,679 38,234 Number of employees at year-end (consolidated) 38,234 39,429

Per share Annual dividends 36.00 36.00 36.00 44.00 56.00 56.00 56.00 53.00 56.00 Annual dividends 56.00 60.00 information (yen) Earnings per share (EPS) 110.19 132.27 69.33 165.63 202.54 163.44 156.49 125.42 163.60 Earnings per share (EPS) 165.04 180.09

Dividend payout ratio (%) 32.67 27.22 51.93 26.57 27.65 34.26 35.79 42.26 34.23 Dividend payout ratio (%) 33.93 33.32

＊1 “Net income” for FY2010 or before ＊2 Including current portion of long-term loans payable and redemption of bonds within one year

60 Value Creation Strategy Foundation Supporting Value Creation Financial Report

(Millions of yen; rounded down to the nearest million yen) FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2017 FY2018 J-GAAP （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended （Fiscal year ended IFRS （Fiscal year ended （Fiscal year ended March 31, 2010） March 31, 2011） March 31, 2012） March 31, 2013） March 31, 2014） March 31, 2015） March 31, 2016） March 31, 2017） March 31, 2018） March 31, 2018） March 31, 2019）