Table of Contents

No.1-7628

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF JUNE 2021

COMMISSION FILE NUMBER: 1-07628

HONDA GIKEN KOGYO KABUSHIKI KAISHA

(Name of registrant)

HONDA MOTOR CO., LTD.

(Translation of registrant’s name into English)

1-1, Minami-Aoyama 2-chome, Minato-ku, Tokyo 107-8556, Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒    Form 40-F  ☐            

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 


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Contents

Exhibit 1:

Notice of Convocation of the 97th Ordinary General Meeting of Shareholders of the Company has been uploaded on June 1, 2021 to the Company’s website shown below.

https://global.honda/investors/stock_bond/meeting.html

Exhibit 2:

The English translation of Report of Independent Directors of the Company.


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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

HONDA GIKEN KOGYO KABUSHIKI KAISHA
(HONDA MOTOR CO., LTD.)

/s/ Masao Kawaguchi

Masao Kawaguchi

General Manager
Finance Division
Honda Motor Co., Ltd.

Date: June 1, 2021


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LOGO

Securities Code Number: 7267

NOTICE OF CONVOCATION OF

THE 97TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

TO BE HELD AT GRAND NIKKO TOKYO DAIBA, TOKYO, JAPAN

ON JUNE 23, 2021 AT 10:00 A.M.

(This is an abridged translation of the original notice

in the Japanese language mailed on June 4, 2021

to shareholders in Japan, and is for reference purposes only.)

 

HONDA MOTOR CO., LTD.

(HONDA GIKEN KOGYO KABUSHIKI KAISHA)

TOKYO, JAPAN


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[Abridged Translation]

June 4, 2021

To Shareholders:

Notice of Convocation of the 97th

Ordinary General Meeting of Shareholders

Dear Shareholders:

You are hereby notified that the 97th Ordinary General Meeting of Shareholders will be held as stated below.

We have decided to hold this meeting after taking appropriate measures to prevent the spread of the COVID-19 infection.

For your health and safety, you are urged to exercise your voting rights by mail or via the Internet in advance if possible and to refrain from coming to the venue, regardless of your health status.

If you exercise your voting rights by mail or via the Internet, please review the reference materials for the general meeting of shareholders mentioned below, and exercise your voting rights no later than 6:00 p.m. on Tuesday, June 22, 2021.

This general meeting of shareholders will be streamed live via the Internet, from the opening to the closing of the meeting.

 

Yours faithfully,
Toshihiro Mibe
President and Representative Director
Honda Motor Co., Ltd.
1-1, Minami-Aoyama, 2-chome
Minato-ku, Tokyo

Particulars

 

Time and Date    10:00 a.m. on Wednesday, June 23, 2021 (registration desks to open at 9:00 a.m.)
Place    Grand Nikko Tokyo Daiba
   Palais Royal ball room on the first basement level, at 2-6-1 Daiba, Minato-ku, Tokyo

Agenda

 

Matters to be reported

  

 

 

1. The Business Report, Consolidated Financial Statements and Unconsolidated Financial Statements for the 97th Fiscal Year (from April 1, 2020 to March 31, 2021);

  

2. The Results of the Audit of the Consolidated Financial Statements for the 97th Fiscal Year (from April 1, 2020 to March 31, 2021) by the Independent Auditors and the Audit and Supervisory Committee.

Matters to be

resolved

   First Item   Partial Amendments to the Articles of Incorporation
   Second Item   Election of Eleven (11) Directors

 

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Matters Posted on the Company’s Website

 

 

Regarding documents to be provided together with this Notice of Convocation, following items are posted on the Company’s website in accordance with provisions of laws and regulations and Article 15 of the Company’s Articles of Incorporation.

 

•  Business Report:

   OUTLINE OF BUSINESS
  

Changes in Financial Position and Results of Operations of the Group and the Parent Company, Principal Business Activities, Principal Business Sites

  

Employees of the Group and the Parent Company

   COMMON STOCK
  

Total Number of Shares Issued, Number of Shareholders, Major Shareholders

   STOCK WARRANTS
   CORPORATE OFFICERS
  

Principal Activities of Outside Directors during the Fiscal Year ended March 31, 2021

  

Summary of Content of Liability Limitation Contracts

   FINANCIAL AUDITOR
   THE COMPANY’S SYSTEMS AND POLICIES
  

Systems to Ensure the Appropriateness of Operations

  

Overview of Operating Status for Systems to Ensure the Appropriateness of Operations

•  Consolidated Financial Statements:

   Consolidated Statements of Comprehensive Income (reference)
   Consolidated Statements of Changes in Equity
   Consolidated Statements of Cash Flows (reference)
   Segment Information (reference)
   The Notes to the Consolidated Statutory Report

 

  

The Audit and Supervisory Committee and the financial auditor have audited documents that are subject to audit, including the above matters posted on the Company’s website.

 

 

If any revision is made to the reference materials for the general meeting of shareholders or the attached materials, the revision will be posted on the Company’s website.

 

   

Japanese https://www.honda.co.jp/investors/

   English https://global.honda/investors/

 

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Notes:

 

(1)

If there is no indication of approval or disapproval on a voting right exercise form in relation to any matter proposed to be resolved, it will be treated as a vote of approval for such matter.

 

(2)

If voting rights are exercised both through indications on the voting right exercise form by mail and through voting via the Internet, causing voting rights to be exercised more than once, the votes submitted via the Internet will be regarded as the effective votes.

 

(3)

If voting rights are exercised more than once via the Internet, the most recent votes submitted via the Internet will be regarded as the effective votes.

 

(4)

If you wish to exercise your voting rights by proxy, one other shareholder holding a voting right of the Company may attend the meeting as proxy. In this case, please submit a document that certifies your power of representation, such as a letter of attorney, to the Company. A person who is not a shareholder, such as a proxy who is not a shareholder or an accompanying person of a shareholder, may not attend the meeting.

 

  *

If you wish to exercise your voting rights via the Internet, please enter your vote for or against each of the proposals on the following voting rights exercise website.

https://evote.tr.mufg.jp/

Request: We request that when arriving at the meeting you present the voting right exercise form enclosed herewith to the meeting hall receptionist.

 

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REFERENCE MATERIALS FOR THE GENERAL MEETING OF SHAREHOLDERS

FIRST ITEM     Partial Amendments to the Articles of Incorporation

1. Reasons for Amendments

 

(1)

Transition to a company with three committees

The Company has been striving to enhance corporate governance as one of the most important tasks for its management, based on the Company’s Fundamental Beliefs, in order to strengthen the trust of our shareholders/investors, customers and society and to seek sustainable growth and the enhancement of corporate value over the mid- to long-term, thereby becoming “a company that society wants to exist.”

In order to further strengthen the supervisory functions of management by realizing a clear separation between supervisory functions and executive functions, the Company has decided to transition to a company with three committees, in which a majority of the members of each committee are outside directors, and which allows for the transfer of broad authority for business execution from the board of directors to executive officers, who assume clear legal responsibility.

Accordingly, the Company intends to make amendments to the Articles of Incorporation, including the establishment of new provisions concerning the Nominating Committee, Audit Committee, Compensation Committee, and Executive Officers, the deletion of provisions concerning Audit and Supervisory Committee Members and the Audit and Supervisory Committee, and other necessary amendments.

 

(2)

Introduction of measures for providing reference materials, etc. for the general meeting of shareholders in electronic format

The 2019 amendment of the Companies Act allows for measures for providing reference materials, etc. for the general meeting of shareholders in an electronic format, and from the enforcement date of the amended Companies Act concerning electronic provision measures, companies issuing book-entry transfer shares (listed companies) are obligated to stipulate in their articles of incorporation that they will take electronic provision measures for information that constitutes the content of reference materials for the general meeting of shareholders. Accordingly, the Company intends to make necessary amendments to the Articles of Incorporation.

 

(3)

Change in frequency of distributions of dividends

Article 34 of the Company’s current Articles of Incorporation stipulates that the record date for the distribution of dividends shall be four times a year (on June 30, September 30, December 31, and March 31), but going forward the Company intends to change its dividend policy and the frequency of the distribution of dividends to twice a year (an interim and a year-end dividend) in order to strive for a more stable and continuous return of profit to its shareholders even amid the changing business environment, aiming at a consolidated dividend payout ratio of 30%. Accordingly, the Company intends to make necessary amendments to the Articles of Incorporation.

 

(4)

Other general amendments

The Company intends to reorganize the article numbering to accommodate the newly established and deleted articles, as well as make other necessary amendments.

 

2.

Details of Amendments

The details of amendments are as follows;

The resolution pertaining to this proposal will take effect at the close of this general meeting of shareholders.

(Portions to be amended are underlined.)

 

Current Articles of Incorporation    Proposed Amendments
Article 1. through 3.    Articles 1. through 3.
[Omitted]    [Unchanged]
Article 4.     (Governance components)    Article 4.     (Governance components)

The Company shall have the following governance components as well as General Meetings of Shareholders and Directors, respectively.

  

The Company shall have the following governance components as well as General Meetings of Shareholders and Directors, respectively.

1.  Board of Directors

   1.     Board of Directors

2.  Audit and Supervisory Committee

   2.     Nominating Committee, Audit Committee, and Compensation Committee (“Nominating Committee, Etc.”)
[Newly established]    3.     Executive Officers

3.  Accounting Auditors

   4.     Accounting Auditors
Article 5. through 12.    Article 5. through 12.
[Omitted]    [Unchanged]

 

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Current Articles of Incorporation    Proposed Amendments
Article 13.     (Persons to convene meeting)    Article 13.     (Persons to convene meeting)

Except as otherwise provided by laws or ordinances, a general meeting of shareholders shall be convened by the President and Director, based upon the resolution of the Board of Directors. If the President and Director is prevented from so doing, one of the other Directors in the order fixed in advance by the Board of Directors shall convene the meeting.

  

Except as otherwise provided by laws and regulations, a general meeting of shareholders shall be convened by the Director who also serves as President and Executive Officer, based upon the resolution of the Board of Directors. If such position is vacant or such Director is prevented from so doing, one of the other Directors in the order fixed in advance by the Board of Directors shall convene the meeting.

Article 14.     (Chairman)    Article 14.     (Chairperson)

Chairmanship of a general meeting of shareholders shall be assumed by the Chairman of the Board of Directors or the President and Director pursuant to a resolution made in advance by the Board of Directors. If both the Chairman of the Board of Directors and the President and Director are prevented from so doing, one of the other Directors shall do so in the order fixed in advance by the Board of Directors.

  

Chairpersonship of a general meeting of shareholders shall be assumed by the Chairperson of the Board of Directors or the President and Executive Officer pursuant to a resolution made in advance by the Board of Directors. If both the Chairperson of the Board of Directors and the President and Executive Officer are prevented from so doing, one of the other Directors or Executive Officers shall do so in the order fixed in advance by the Board of Directors.

Article 15.     (Disclosure via Internet and Deemed Delivery of Reference Documents, etc. for General Meetings of Shareholders)    [Deleted]

Upon convening a general meeting of shareholders, the Company may deem that the information required to be described or indicated in the reference documents for the general meeting of shareholders, business reports, financial statements and consolidated financial statements shall have been provided to the shareholders when such information is disclosed, pursuant to laws or regulations, through a method that uses the Internet.

  
[Newly established]    Article 15.     (Provision of documents for general meeting of shareholders in electronic format)
  

Upon convening a general meeting of shareholders, the Company shall take the electronic provision measure provided for in Article 325-2 of the Company Law.

 

Among matters for which the electronic provision measure will be taken, the Company is not required to state all matters prescribed by the Ministry of Justice Order in the document that will be issued to shareholders who requested the issuance of the document stated in Article 325-5 of the Company Law by the record date.

Article 16. through 18.    Article 16. through 18.
[Omitted]    [Unchanged]
Article 19.     (Number of Directors)    Article 19.     (Number of Directors)

 

Directors of the Company shall be not more than twenty in number, of which the Directors who are Audit and Supervisory Committee Members shall be not more than seven in number.

  

 

Directors of the Company shall be not more than fifteen in number.

Article 20.     (Election of Directors)    Article 20.     (Appointment of Directors)

Directors shall be elected by the resolution of a general meeting of shareholders. Resolution of such elections shall be adopted by a majority of the votes of the shareholders present, who must hold one-third or more of the votes of all shareholders who are entitled to exercise their voting rights. A resolution for the election of Directors shall not be made by cumulative voting.

  

Directors shall be appointed by the resolution of a general meeting of shareholders. Resolution of such appointments shall be adopted by a majority of the votes of the shareholders present, who must hold one-third or more of the votes of all shareholders who are entitled to exercise their voting rights. A resolution for the appointment of Directors shall not be made by cumulative voting.

 

The election of Directors pursuant to the provisions of the preceding Paragraph shall be implemented, while making a distinction between Directors who are Audit and Supervisory Committee Members and other Directors.

  

 

[Deleted]

 

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Current Articles of Incorporation    Proposed Amendments
Article 21.     (Term of Office)    Article 21.     (Term of Office)

The term of office of Directors who are not Audit and Supervisory Committee Members shall expire at the close of the ordinary general meeting of shareholders relating to the business year ending within one year after their election to office.

  

The term of office of Directors shall expire at the close of the ordinary general meeting of shareholders relating to the business year ending within one year after their appointment to office.

The term of office of Directors who are Audit and Supervisory Committee Members shall expire at the close of the ordinary general meeting of shareholders relating to the business year ending within two years after their election to office.

   [Deleted]

The term of office of a Director who is an Audit and Supervisory Committee Member elected to fill the vacancy caused by the resignation of a Director who is an Audit and Supervisory Committee Member prior to the expiry of such Director’s term of office shall expire at the time of expiration of the term of office of his or her predecessor.

   [Deleted]
Article 22.     (Directors with executive powers)    Article 22.     (Directors with titles)

The Board of Directors shall appoint, pursuant to its resolutions, from among the Directors (excluding Directors who are Audit and Supervisory Committee Members) one President and Director and may appoint one Chairman of the Board of Directors, several Executive Vice Presidents and Directors, Senior Managing Directors and Managing Directors.

  

The Board of Directors may elect, pursuant to its resolutions, from among the Directors one Chairperson of the Board of Directors.

Article 23.     (Representative Directors)    [Deleted]

The President and Director shall represent the Company.

 

In addition to the preceding paragraph, the Board of Directors shall appoint, pursuant to its resolutions, from among the Directors (excluding Directors who are Audit and Supervisory Committee Members) Directors who shall each represent the Company.

  
Article 24. through 26.    Article 23. through 25.
[Omitted]    [Unchanged]
Article 27.     (Remuneration of Directors, etc.)    Article 26.     (Remuneration of Directors, etc.)

Remuneration, bonus and other proprietary benefits provided by the Company as compensation for the duties of Directors shall be determined by resolution of a general meeting of shareholders, while making a distinction between Directors who are Audit and Supervisory Committee Members and other Directors.

  

Remuneration, bonus and other proprietary benefits provided by the Company as compensation for the duties of Directors shall be determined by resolution of the Compensation Committee.

Article 28.     (Delegation of decisions on execution of important operations)    [Deleted]

The Board of Directors of the Company may delegate to a Director all or part of decisions on execution of important operations (excluding matters stipulated in the items of Article 399-13, Paragraph 5 of the Company Law) by its resolution.

  
Article 29.    Article 27.
[Omitted]    [Unchanged]
Chapter V. Audit and Supervisory Committee    [Deleted]
Article 30.     (Audit and Supervisory Committee)    [Deleted]

Except as provided by laws or ordinances or by the Articles of Incorporation, matters relating to the Audit and Supervisory Committee shall be governed by the Regulations of the Audit and Supervisory Committee established by the Audit and Supervisory Committee.

  

 

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Current Articles of Incorporation    Proposed Amendments
Article 31.     (Notice of meetings of Audit and Supervisory Committee)    [Deleted]

Notice of convocation of a meeting of the Audit and Supervisory Committee shall be sent to each Audit and Supervisory Committee Member three days prior to the date of the meeting, provided, however, that such period may be shortened in case of urgent necessity.

 

If the consent of all Audit and Supervisory Committee Member is obtained in advance, a meeting may be held without following the procedures for convening a meeting.

  
[Newly established]    Chapter V. Nominating Committee, Etc.
[Newly established]    Article 28.     (Nominating Committee, Etc.)
  

Members of Nominating Committee, Etc. shall be elected from among the Directors by a resolution of the Board of Directors.

 

Except as provided by laws and regulations or by the Articles of Incorporation, matters relating to the Nominating Committee, Etc. shall be governed by the Regulations of the Nominating Committee, Regulations of the Audit Committee, and Regulations of the Compensation Committee established by the resolution of the Board of Directors.

[Newly established]    Chapter VI. Executive Officers
[Newly established]    Article 29.     (Appointment of Executive Officers)
  

Executive Officers shall be appointed by the resolution of the Board of Directors.

[Newly established]    Article 30.     (Term of Office)
  

The term of office of Executive Officers shall expire at the close of the first meeting of the Board of Directors called after the close of the ordinary general meeting of shareholders relating to the business year ending within one year after their appointment to office.

[Newly established]    Article 31.     (Executive Officers with titles)
  

The Board of Directors shall elect, pursuant to its resolutions, from among the Executive Officers, one President and Executive Officer and may elect several Vice Presidents and Executive Officers, Senior Managing Executive Officers and Managing Executive Officers.

[Newly established]    Article 32.     (Representative Executive Officers)
  

The President and Executive Officer shall represent the Company.

 

In addition to the preceding paragraph, the Board of Directors may elect, pursuant to its resolutions, from among the Executive Officers, Executive Officers who shall each represent the Company.

[Newly established]    Article 33.     (Remuneration of Executive Officers)
  

Remuneration, bonus and other proprietary benefits provided by the Company as compensation for the duties of Executive Officers shall be determined by resolution of the Compensation Committee.

[Newly established]    Article 34.     (Exemption of Executive Officers’ Liabilities)
  

Pursuant to the provisions of Article 426, Paragraph 1 of the Company Law, the Company may, by a resolution of the Board of Directors, exempt Executive Officers (including former Executive Officers) that are set forth in Article 423, Paragraph 1 of the Company Law, from liability for damages to the extent permitted by laws and regulations.

 

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Current Articles of Incorporation    Proposed Amendments
Chapter VI. Accounts    Chapter VII. Accounts
Article 32. through 33.    Article 35. through 36.
[Omitted]    [Unchanged]
Article 34.     (Record date for dividend from surplus)    Article 37.     (Record date for dividend from surplus)

 

The record date for the dividends shall be June 30, September 30, December 31 and March 31 of each year.

 

In addition to the above, the Company may distribute dividends from surplus by determining any record date.

  

 

The record date for the dividends shall be September 30 and March 31 of each year.

 

In addition to the above, the Company may distribute dividends from surplus by determining any record date.

Article 35.     (Limitation period for dividend)    Article 38.     (Limitation period for dividend)
[Omitted]    [Unchanged]
Supplementary Provisions    Supplementary Provisions
Article 1.    Article 1.
[Omitted]    [Unchanged]
[Newly established]   

Article 2.     (Transitional measures regarding provision of documents for general meeting of shareholders in electronic format)

 

The deletion of Article 15 of the current Articles of Incorporation and the establishment of Article 15 in the amended Articles of Incorporation shall be effective from the date of enforcement provided for in the proviso to Article 1 of the Supplementary Provisions of the Act Partially Amending the Company Law (Act No. 70 of 2019) (the “Date of Enforcement”).

 

Notwithstanding the provisions of the preceding paragraph, Article 15 of the current Articles of Incorporation shall remain effective regarding any general meeting of shareholders held on a date within six months from the Date of Enforcement.

 

This Article shall be automatically deleted on the date when six months has passed from the Date of Enforcement or three months has passed from the date of the general meeting of shareholders in the preceding paragraph, whichever is later.

 

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SECOND ITEM        Election of Eleven (11) Directors

The term of office of each of the thirteen (13) current Directors is due to expire at the close of this general meeting of shareholders.

Meanwhile, the Company will transition to a company with three committees on the condition that the First Item “Partial Amendments to the Articles of Incorporation” is approved.

It is proposed that the following eleven (11) Directors, including five (5) Outside Directors, be elected at this meeting.

The resolution for this Item shall come into effect on the condition that the amendment given in the First Item becomes effective.

The names and particulars of the candidates for the position of Directors are provided below.

 

Candidate number   

Name

  

Current position

  

Responsibilities

  

Attendance record of
the Board of

Directors

  

Attendance

record of the

Audit and

Supervisory
Committee

1    Reappointment    Toshiaki Mikoshiba    Chairman and Director    Chairman of the Board of Directors   

11/11

100%

   —  
2    Reappointment    Toshihiro Mibe    President and Representative Director    Chief Executive Officer   

9/9

100%

   —  
3    Reappointment    Seiji Kuraishi    Executive Vice President and Representative Director   

Chief Operating Officer;

Corporate Brand Officer

  

11/11

100%

   —  
4    Reappointment    Kohei Takeuchi    Senior Managing Director    Chief Financial Officer; Compliance Officer   

11/11

100%

   —  
5    New appointment    Asako Suzuki    Operating Executive       —      —  
6    Reappointment    Masafumi Suzuki   

Director

(Full-time Audit and Supervisory Committee Member)

     

11/11

100%

  

10/10

100%

7    Reappointment   

Kunihiko Sakai
Outside
Independent Director

  

Director

(Audit and Supervisory Committee Member)

     

11/11

100%

  

10/10

100%

8    Reappointment   

Fumiya Kokubu
Outside
Independent Director

   Director      

8/9

89%

   —  
9    New appointment   

Yoichiro Ogawa
Outside
Independent Director

   —         —      —  
10    New appointment   

Kazuhiro Higashi
Outside
Independent Director

   —         —      —  
11    New appointment   

Ryoko Nagata
Outside
Independent Director

   —         —      —  

 

Note:

The attendance record of President and Representative Director Toshihiro Mibe and Director Fumiya Kokubu shows figures covering the meetings of the Board of Directors held after their assumption of office on June 19, 2020.

 

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  1

 

  

 

  Toshiaki Mikoshiba

 

  

 

Date of birth

November 15, 1957

 

  

 

  Reappointment  

 

 

 

LOGO

 

  

 

Current position      

 

  

 

  Chairman and Director

 

  

 

Responsibilities    

 

  

Chairman of the Board of

Directors

  

 

●  Number of shares of the Company held

   48,300 shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   11/11 (100%)

 

 

  

 

●  Term of office as Director

   (as of the close of this Meeting)

   4 years

 

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1980

  Joined Honda Motor Co., Ltd.    Apr. 2017    In Charge of Sales and Marketing of the Company

  Apr. 2011

  President of Guangqi Honda Automobile Co., Ltd.    Jun. 2017    Senior Managing Director

  Apr. 2014

  Managing Officer of the Company    Apr. 2018    President, Chief Executive Officer and Director of Honda North America, Inc.

  Apr. 2014

  Chief Officer for Regional Operations (Europe Region)    Nov. 2018    Chairman, Chief Executive Officer and Director of Honda North America, Inc.

  Apr. 2014

  President and Director of Honda Motor Europe Ltd.    Nov. 2018    Chairman, Chief Executive Officer and Director of American Honda Motor Co., Inc.

  Apr. 2015

  Senior Managing Officer of the Company    Apr. 2019    Chairman and Director of the Company (present)

  Apr. 2016

  Chief Officer for Regional Operations (North America)    Apr. 2019    Chairman of the Board of Directors (present)

  Apr. 2016

  President and Director of Honda North America, Inc.    Apr. 2019    Director in Charge of Government and Industry Relations

  Apr. 2016

 

President, Chief Executive Officer and Director of American Honda Motor Co., Inc.

 

         
  Reasons for nomination as a candidate for position of Director

Mr. Toshiaki Mikoshiba has broad experience primarily in the area of sales and marketing, as well as abundant international experience, and is familiar with the Company Group’s business including overseas operations.

 

In the fiscal year ended March 31, 2021, he has properly fulfilled his duties as Chairman and Director and Director in charge of Government and Industry Relations by enhancing the functions of the Company’s external relations, as well as overseeing business execution from a global perspective through managing the Board of Directors as its Chairman.

 

He has been nominated as a candidate for Director again, given that he is an exceptional person with both superior character and insight and is well qualified for continuing to assume a role in overseeing the entire business management of the Company from an objective, highly sophisticated and broader viewpoint.

 

 

 

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  2

 

  

 

  Toshihiro Mibe

 

  

 

Date of birth

July 1, 1961

 

  

 

  Reappointment  

 

 

LOGO   

 

Current position    

 

  

 

President and

Representative Director

 

  

 

Responsibilities    

 

   Chief Executive Officer
  

 

●  Number of shares of the Company held

   19,400 shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   9/9 (100%)

  

 

●  Term of office as Director

   (as of the close of this Meeting)

   1 year

 

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1987

  Joined Honda Motor Co., Ltd.    Apr. 2018    Executive Vice President and Director of Honda R&D Co., Ltd.

  Apr. 2012

  Managing Officer of Honda R&D Co., Ltd.    Apr. 2019    President and Representative Director of Honda R&D Co., Ltd.

  Apr. 2014

  Operating Officer of the Company    Apr. 2019    In Charge of Intellectual Property and Standardization of the Company

  Apr. 2014

  Executive in Charge of Powertrain Business for Automobile Operations    Apr. 2020    Senior Managing Officer

  Apr. 2014

  Head of Powertrain Production Supervisory Unit of Automobile Production for Automobile Operations    Apr. 2020    In Charge of Mono-zukuri (Research & Development, Production, Purchasing, Quality, Parts, Service, Intellectual Property, Standardization and IT)

  Apr. 2015

  Executive in Charge of Powertrain Business and Drivetrain Business for Automobile Operations    Apr. 2020    Risk Management Officer

  Apr. 2015

  Head of Drivetrain Business Unit in Automobile Production for Automobile Operations    Jun. 2020    Senior Managing Director

  Apr. 2016

  Senior Managing Officer and Director of Honda R&D Co., Ltd.    Jun. 2020    Director in Charge of Mono-zukuri (Research & Development, Production, Purchasing, Quality, Parts, Service, Intellectual Property, Standardization and IT)

  Apr. 2018

  Managing Officer of the Company    Apr. 2021    President and Representative Director (present)
         Apr. 2021   

Chief Executive Officer (present)

 

 

  Reasons for nomination as a candidate for position of Director

 

Mr. Toshihiro Mibe has broad experience primarily in the areas of R&D and production, and is familiar with the Company Group’s business including overseas operations.

 

In the fiscal year ended March 31, 2021, he was in charge of Mono-zukuri, and served as President and Representative Director of Honda R&D Co., Ltd. Since April 2021, he has properly fulfilled his duties as President and Representative Director and Chief Executive Officer of the Company by demonstrating strong leadership and being responsible for the management of the entire Company Group, as well as overseeing business execution.

 

He has been nominated as a candidate for Director again, given that he is particularly an exceptional person with both superior character and insight and is well qualified for continuing to assume a role as a corporate executive in order to achieve the realization of 2030 Vision.

 

 

 

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  3

 

  

 

  Seiji Kuraishi

 

  

 

Date of birth

July 10, 1958

 

  

 

  Reappointment  

 

 

LOGO   

 

Current position    

 

  

 

Executive Vice President and

Representative Director

 

  

 

Responsibilities    

 

  

 

Chief Operating Officer;

Corporate Brand Officer

 

  

 

●  Number of shares of the Company held

   38,700 shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   11/11 (100%)

 

 

  

 

●  Term of office as Director

   (as of the close of this Meeting)

   5 years

 

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1982

  Joined Honda Motor Co., Ltd.    Jun. 2016    Risk Management Officer

  Apr. 2011

  Operating Officer and Director    Jun. 2016    Corporate Brand Officer (present)

  Jun. 2011

  Operating Officer (resigned from position as Director)    Apr. 2017    Chief Operating Officer (present)

  Nov. 2013

  President of Honda Motor (China) Technology Co., Ltd.    Apr. 2017    In Charge of Strategy, Business Operations and Regional Operations

  Apr. 2014

  Managing Officer of the Company    Jun. 2017    Executive Vice President and Representative Director (present)

  Apr. 2016

  Senior Managing Officer    Apr. 2019    Director in Charge of Strategy, Business Operations and Regional Operations

  Jun. 2016

 

Executive Vice President, Executive Officer and Representative Director

 

   Apr. 2019    Chief Officer for Automobile Operations

 

  Reasons for nomination as a candidate for position of Director

 

Mr. Seiji Kuraishi has broad experience primarily in the areas of supply chain management and sales and marketing, as well as abundant international experience, and is familiar with the Company Group’s business including overseas operations.

 

In the fiscal year ended March 31, 2021, he has properly fulfilled his duties as Executive Vice President and Representative Director, Chief Operating Officer, and Director in charge of Strategy, Business Operations and Regional Operations by demonstrating strong leadership and being responsible for business execution of the entire Company Group, as well as overseeing business execution.

 

He has been nominated as a candidate for Director again, given that he is particularly an exceptional person with both superior character and insight and is well qualified for continuing to assume a role as a corporate executive in order to achieve the realization of 2030 Vision.

 

 

 

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  4

 

  

 

  Kohei Takeuchi

 

  

 

Date of birth

February 10, 1960

 

  

 

  Reappointment  

 

 

LOGO   

 

Current position    

 

  

 

Senior Managing Director

 

  

 

Responsibilities

 

   Chief Financial Officer; Compliance Officer
  

 

●  Number of shares of the Company held

   27,900 shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   11/11 (100%)

 

 

  

 

●  Term of office as Director

   (as of the close of this Meeting)

   8 years

 

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1982

  Joined Honda Motor Co., Ltd.    Jun. 2017    Senior Managing Director (present)

  Apr. 2011

  Operating Officer    Apr. 2019    Chief Financial Officer and Director in Charge of Finance and Administration (Accounting, Finance, Human Resources, Corporate Governance and IT)

  Apr. 2013

  Chief Officer for Business Management Operations    Apr. 2019    Compliance Officer (present)

  Jun. 2013

  Operating Officer and Director    Apr. 2020    Chief Financial Officer and Director in Charge of Finance and Administration (Accounting, Finance, Human Resources and Corporate Governance)

  Apr. 2015

  Managing Officer and Director    Apr. 2021    Chief Financial Officer (present)

  Apr. 2016

  Senior Managing Officer and Director      

  Apr. 2016

  Chief Officer for Driving Safety Promotion Center      

  Apr. 2017

 

Chief Financial Officer (Accounting, Finance, Human Resources, Corporate Governance and IT)

 

         

 

  Reasons for nomination as a candidate for position of Director

 

Mr. Kohei Takeuchi has broad experience primarily in the area of accounting and finance, as well as abundant international experience, and is familiar with the Company Group’s business including overseas operations.

 

In the fiscal year ended March 31, 2021, he has properly fulfilled his duties as Chief Financial Officer and Director in charge of Finance and Administration by demonstrating high degree of expertise and strong leadership, and being responsible for business execution of the entire Company Group, as well as overseeing business execution.

 

He has been nominated as a candidate for Director again, given that he is an exceptional person with both superior character and insight and is well qualified for continuing to assume a role as a corporate executive in order to achieve the realization of 2030 Vision.

 

 

 

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  5

 

  

 

  Asako Suzuki

 

  

 

Date of birth

January 28, 1964

 

  

 

  New appointment  

 

 

LOGO   

 

Current position    

 

  

 

Operating Executive

 

  

 

                        

                       
  

 

●  Number of shares of the Company held

   10,700 shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   –

 

  

 

●  Term of office as Director

   (as of the close of this Meeting)

   –

 

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1987

  Joined Honda Motor Co., Ltd.   Apr. 2019    Chief Officer for Human Resources and Corporate Governance Operations

  Apr. 2014

  President of Dongfeng Honda Automobile Co., Ltd.   Apr. 2020    Operating Executive (present)

  Apr. 2016

  Operating Officer of the Company     

  Apr. 2018

 

Vice Chief Officer for Regional Operations (Japan)

 

        

 

  Reasons for nomination as a candidate for position of Director

 

Ms. Asako Suzuki has broad experience primarily in the area of sales and marketing, accounting and finance, human resources and corporate governance, as well as abundant international experience, and is familiar with the Company Group’s business including overseas operations.

 

In the fiscal year ended March 31, 2021, she demonstrated high degree of expertise and strong leadership, and achieved satisfactory results as Chief Officer for Human Resources and Corporate Governance Operations.

 

She has been newly nominated as a candidate for Director, given that she is an exceptional person with both superior character and insight and is well qualified for assuming a role in overseeing the entire business management of the Company from an objective, highly sophisticated and broader viewpoint.

 

 

 

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  6

 

  

 

  Masafumi Suzuki

 

  

 

Date of birth

April 23, 1964

 

  

 

  Reappointment  

 

 

LOGO   

 

Current position    

 

  

Director

(Full-time Audit and Supervisory Committee Member)

     
  

 

●  Number of shares of the Company held

   55,420 shares

 

●  Attendance record of the Board of Directors

   11/11 (100%)

  

 

●  Special interest between the candidate and the Company

   None

  

 

●  Term of office as Director (Audit and Supervisory Committee Member)

   (as of the close of this Meeting)

   4 years

    

 

●  Attendance record of the Audit and Supervisory Committee

   10/10 (100%)

 

         

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1987

  Joined Honda Motor Co., Ltd.    Apr. 2013    General Manager of Accounting Division for Business Management Operations

  Apr. 2012

 

General Manager of Regional Operation Planning Office for Regional Operations (Europe, CIS, the Middle & Near East and Africa)

 

 

   Jun. 2017    Director (Full-time Audit and Supervisory Committee Member) (present)

  Reasons for nomination as a candidate for position of Director

Mr. Masafumi Suzuki held the position of General Manager of Accounting Division for Business Management Operations of the Company. He has high expertise and abundant experience in the areas of accounting and finance, and is familiar with the Company Group’s business including overseas operations.

In the fiscal year ended March 31, 2021, he has properly fulfilled his duties as Director who is an Audit and Supervisory Committee Member by auditing and overseeing the execution of duties by Directors.

He has been nominated as a candidate for Director again, given that he is an exceptional person with both superior character and insight and is well qualified for assuming a role in overseeing the entire business management of the Company from an objective, highly sophisticated and broader viewpoint.

 

 

 

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Table of Contents

 

  7

 

  

 

  Kunihiko Sakai

 

  

 

Date of birth

March 4, 1954

 

  

 

Reappointment

Outside

Independent Director

 

 

 

   LOGO

  

 

Current position        

 

  

 

Director

(Audit and Supervisory

Committee Member)

 

     
  

 

●  Number of shares of the Company held

   800 shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

●  Attendance record of the Board of Directors

  

●  Term of office as Outside Director (Audit and Supervisory

  

   11/11 (100%)

  

   Committee Member)

   (as of the close of this Meeting)

   2 years

    

●  Attendance record of the Audit and Supervisory Committee

   10/10 (100%)

 

         

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1979

  Public Prosecutor of Tokyo District Public Prosecutors’ Office    Apr. 2017    Registered with the Dai-Ichi Tokyo Bar Association

  Jun. 2012

  President of Research and Training Institute of Ministry of Justice    Apr. 2017    Advisor Attorney to TMI Associates (present)

  Jul. 2014

  Superintending Prosecutor of Takamatsu High Public Prosecutors’ Office    Jun. 2018    Audit and Supervisory Board Member (Outside) of Furukawa Electric Co., Ltd. (present)

  Sep. 2016

 

Superintending Prosecutor of Hiroshima High Public Prosecutors’ Office (resigned in March 2017)

 

   Jun. 2019   

Outside Director (Audit and Supervisory Committee Member) of the Company (present)

 

  (Significant concurrent positions)

  Lawyer, Advisor Attorney to TMI Associates, Audit and Supervisory Board Member (Outside) of Furukawa Electric Co., Ltd.

 

 

  1.

Reasons for nomination as a candidate for position of Outside Director

Mr. Kunihiko Sakai has high expertise and abundant experience as a legal affairs specialist having served as Public Prosecutor and a lawyer, including posts of Superintending Prosecutor at High Public Prosecutors’ Offices from July 2014 to March 2017.

He has properly fulfilled his duties as Outside Director who is an Audit and Supervisory Committee Member since June 2019 by auditing and overseeing the execution of duties by Directors from an independent standpoint.

He has no experience in corporate management except serving as Outside Director or Outside Corporate Auditor. However, he has been nominated as a candidate for Outside Director again, given that he is an exceptional person with both superior character and insight, in order for him to continue to oversee the entire business management of the Company from an objective, highly sophisticated and broader viewpoint by demonstrating his high degree of expertise and abundant experience.

 

  2.

Roles expected to fulfill after appointment

After his appointment, he is expected to contribute to strengthening the supervisory function of the Company’s management. He is also expected to fulfill a role in strengthening the transparency and objectivity of the process of selecting candidates for Directors, as well as strengthening the audit function, as a member of the nominating committee and audit committee.

 

  3.

Other matters related to the Outside Director candidate

 

  (1)

Mr. Kunihiko Sakai is a candidate for the position of Outside Director as defined in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Companies Act.

 

  (2)

Mr. Kunihiko Sakai fulfills the “Honda Motor Co., Ltd. Criteria for Independence of Outside Directors.” The Company has appointed him as an Independent Outside Director as stipulated by the rules of the Tokyo Stock Exchange and reported his appointment to the Tokyo Stock Exchange. If he is re-elected and assumes the position of Director, the Company plans to continue his appointment as an Independent Outside Director.

 

 

 

 

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Table of Contents

  8

 

  

 

  Fumiya Kokubu

 

  

 

Date of birth

October 6, 1952

 

  

 

  Reappointment  

  Outside  

  Independent Director  

 

 

LOGO   

 

Current position    

 

  

 

Director    

 

     
  

 

●  Number of shares of the Company held

   300 shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   8/9 (89%)

 

  

 

●  Term of office as Outside Director

   (as of the close of this Meeting)

   1 year

 

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1975

  Joined Marubeni Corporation    Apr. 2019    Chairman of the Board of Marubeni Corporation (present)

  Apr. 2012

  Senior Executive Vice President of Marubeni Corporation    Jun. 2019    Outside Director of Taisei Corporation (present)

  Jun. 2012

  Senior Executive Vice President, Member of the Board of Marubeni Corporation    Jun. 2020    Outside Director of the Company (present)

  Apr. 2013

  President and CEO, Member of the Board of Marubeni Corporation      
  (Significant concurrent positions)   

Chairman of the Board of Marubeni Corporation, Outside Director of Taisei Corporation

    

 

1. Reasons for nomination as a candidate for position of Outside Director

 

Mr. Fumiya Kokubu held positions of President and CEO, and Chairman of the Board of Marubeni Corporation from 2013, and has abundant experience and deep insight regarding corporate management.

 

He has properly fulfilled his duties as Outside Director since June 2020 by overseeing the entire business management of the Company from an independent standpoint.

 

He has been nominated as a candidate for Outside Director again, given that he is an exceptional person with both superior character and insight, in order for him to oversee the entire business management of the Company from an objective, highly sophisticated and broader viewpoint.

 

2. Roles expected to fulfill after appointment

 

After his appointment, he is expected to contribute to strengthening the supervisory function of the Company’s management. He is also expected to fulfill a role in strengthening the transparency and objectivity of the process of selecting candidates for Directors and the process of determining the compensation of Directors and Executive Officers, as the Chairperson of the Nominating Committee and a member of the compensation committee.

 

3. Other matters related to the Outside Director candidate

 

(1)  Mr. Fumiya Kokubu is a candidate for the position of Outside Director as defined in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Companies Act.

 

(2)  Marubeni Corporation, where Mr. Fumiya Kokubu currently holds the position of Chairman of the Board, the Company and their principal consolidated subsidiaries have business relationships. However, the amount of annual transactions between them is less than 1% of the consolidated sales revenue of the Company and the other party, and Mr. Fumiya Kokubu fulfills the “Honda Motor Co., Ltd. Criteria for Independence of Outside Directors.” The Company has appointed him as an Independent Outside Director as stipulated by the rules of the Tokyo Stock Exchange and reported his appointment to the Tokyo Stock Exchange. If he is re-elected and assumes the position of Director, the Company plans to continue his appointment as an Independent Outside Director.

 

 

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Table of Contents

 

  9

 

  

 

  Yoichiro Ogawa

 

  

 

Date of birth

February 19, 1956

 

  

 

  New appointment  

  Outside  

  Independent Director   

 

 

LOGO

 

  

 

Current position    

 

  

 

–    

 

     
  

 

●  Number of shares of the Company held

   – shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   –

 

 

  

 

●  Term of office as Outside Director

   (as of the close of this Meeting)

   –

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Oct. 1980

  Joined Tohmatsu & Aoki Audit Corporation (currently Deloitte Touche Tohmatsu LLC)    Jul. 2015    CEO of Deloitte Tohmatsu Group

  Mar. 1984

  Registered as Japanese Certified Public Accountant    Jun. 2018    Senior Advisor of Deloitte Tohmatsu Group (resigned in October 2018)

  Jun. 2011

  Vice Chairman of the Board of Directors of Deloitte Touche Tohmatsu Limited (United Kingdom)    Nov. 2018    Founder of Yoichiro Ogawa CPA Office (present)

  Oct. 2013

  Deputy CEO of Deloitte Touche Tohmatsu LLC    Jun. 2020    Outside Audit & Supervisory Board Member of Recruit Holdings Co., Ltd. (present)

  Oct. 2013

  Deputy CEO of Tohmatsu Group (currently Deloitte Tohmatsu Group)      

  Jun. 2015

  Global Managing Director for Asia Pacific of Deloitte Touche Tohmatsu Limited (United Kingdom) (resigned in May 2018)      
  (Significant concurrent positions)   

Certified Public Accountant, Founder of Yoichiro Ogawa CPA Office, Outside Audit & Supervisory Board Member of Recruit Holdings Co., Ltd.

 

    

 

1. Reasons for nomination as a candidate for position of Outside Director

 

Mr. Yoichiro Ogawa has high expertise and abundant experience as an accounting specialist having served as a Certified Public Accountant for many years, including posts of CEO of Deloitte Tohmatsu Group from July 2015 to May 2018. He has been newly nominated as a candidate for Outside Director, given that he is an exceptional person with both superior character and insight, in order for him to oversee the entire business management of the Company from an objective, highly sophisticated and broader viewpoint.

 

2. Roles expected to fulfill after appointment

 

After his appointment, he is expected to contribute to strengthening the supervisory function of the Company’s management. He is also expected to fulfill a role in strengthening the audit function, as well as strengthening the transparency and objectivity of the process of determining the compensation of Directors and Executive Officers, as the Chairperson of the Audit Committee and a member of the compensation committee.

 

3. Other matters related to the Outside Director candidate

 

(1)  Mr. Yoichiro Ogawa is a candidate for the position of Outside Director as defined in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Companies Act.

 

(2)  Deloitte Group, where Mr. Yoichiro Ogawa formerly belonged to, the Company and the Company’s principal consolidated subsidiaries have business relationships. However, the amount of annual transactions between them is less than 1% of the consolidated sales revenue of the Company and the other party, and Mr. Yoichiro Ogawa fulfills the “Honda Motor Co., Ltd. Criteria for Independence of Outside Directors.” If he is elected and assumes the position of Director, the Company plans to appoint him as an Independent Outside Director and report his appointment as Independent Outside Director to the Tokyo Stock Exchange.

 

 

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Table of Contents

 

  10

 

  

 

  Kazuhiro Higashi

 

  

 

Date of birth

April 25, 1957

 

  

 

  New appointment  

  Outside  

  Independent Director  

 

 

LOGO   

 

Current position     

 

  

 

 

     
  

 

●  Number of shares of the Company held

   – shares

 

  

 

●  Special interest between the candidate and the Company

   None

 

  

 

●  Attendance record of the Board of Directors

   –

 

 

  

 

●  Term of office as Outside Director

   (as of the close of this Meeting)

   –

 

 

  Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1982

  Joined Resona Group    Apr. 2017    Chairman of the Board, President and Representative Director of Resona Bank, Limited

  Apr. 2011

  Director, Deputy President and Representative Executive Officer of Resona Holdings, Inc.    Jun. 2017    Chairman of Osaka Bankers Association (resigned in June 2018)

  Apr. 2011

  Executive Officer of Resona Bank, Limited    Apr. 2018    Chairman of the Board, President, Representative Director and Executive Officer of Resona Bank, Limited

  Apr. 2012

  Representative Director, Deputy President and Executive Officer of Resona Bank, Limited    Apr. 2020    Chairman and Director of Resona Holdings, Inc. (present)

  Apr. 2013

  Director, President and Representative, Executive Officer of Resona Holdings, Inc.    Apr. 2020    Chairman and Director of Resona Bank, Limited (present)

  Apr. 2013

  Representative Director, President and Executive Officer of Resona Bank, Limited    Jun. 2020    Outside Director of Sompo Holdings, Inc. (present)

  Jun. 2013

  Chairman of Osaka Bankers Association (resigned in June 2014)      
  (Significant concurrent positions)

Chairman and Director of Resona Holdings, Inc., Chairman and Director of Resona Bank, Limited, Outside Director of Sompo Holdings, Inc.

 

 

1. Reasons for nomination as a candidate for position of Outside Director

 

Mr. Kazuhiro Higashi held positions of President and Chairman of Resona Holdings, Inc. from April 2013, and has abundant experience and deep insight regarding corporate management. He has been newly nominated as a candidate for Outside Director, given that he is an exceptional person with both superior character and insight, in order for him to oversee the entire business management of the Company from an objective, highly sophisticated and broader viewpoint.

 

2. Roles expected to fulfill after appointment

 

After his appointment, he is expected to contribute to strengthening the supervisory function of the Company’s management. He is also expected to fulfill a role in strengthening the transparency and objectivity of the process of determining the compensation of Directors and Executive Officers and the process of selecting candidates for Directors, as the Chairperson of the Compensation Committee and a member of the nominating committee.

 

3. Other matters related to the Outside Director candidate

 

(1)  Mr. Kazuhiro Higashi is a candidate for the position of Outside Director as defined in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Companies Act.

(2)  The aggregate amount of the Company Group’s borrowings from Resona Holdings, Inc. and its subsidiaries, where Mr. Kazuhiro Higashi currently holds the position of Chairman and Director, in the past three fiscal years is less than 1% of the amount of consolidated total assets of either of the two companies. Accordingly, Mr. Kazuhiro Higashi fulfills the “Honda Motor Co., Ltd. Criteria for Independence of Outside Directors.” If he is elected and assumes the position of Director, the Company plans to appoint him as an Independent Outside Director and report his appointment as Independent Outside Director to the Tokyo Stock Exchange.

 

(3)  The Company holds no shares of Resona Holdings, Inc. as of March 31, 2021.

 

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Table of Contents

 

  11

 

  

 

  Ryoko Nagata

 

  

 

Date of birth

July 14, 1963

 

  

 

  New appointment  

Outside

  Independent Director  

 

 

LOGO   

 

Current position     

 

  

 

 

     
  

 

●  Number of shares of the Company held

   – shares

 

  

 

●  Special interest between the candidate and the Company

   None

  

 

●  Attendance record of the Board of Directors

   –

  

 

●  Term of office as Outside Director

   (as of the close of this Meeting)

   –

 

 

 

 

Resume, current position, responsibilities and significant concurrent positions

 

  Apr. 1987

  Joined Japan Tobacco Inc.    Mar. 2018    Standing Audit & Supervisory Board Member of Japan Tobacco Inc. (present)

  Jun. 2008

  Executive Officer of Japan Tobacco Inc.      

  (Significant concurrent positions)

     

Standing Audit & Supervisory Board Member of Japan Tobacco Inc.

 

 

1.  Reasons for nomination as a candidate for position of Outside Director

Ms. Ryoko Nagata held positions of Executive Officer and Audit & Supervisory Board Member of Japan Tobacco Inc. from 2008, and has abundant experience and deep insight regarding corporate management and audit. She has been newly nominated as a candidate for Outside Director, given that she is an exceptional person with both superior character and insight, in order for her to oversee the entire business management of the Company from an objective, highly sophisticated and broader viewpoint.

2.  Roles expected to fulfill after appointment

After her appointment, she is expected to contribute to strengthening the supervisory function of the Company’s management. She is also expected to fulfill a role in strengthening the audit function, as a member of the audit committee.

3.  Other matters related to the Outside Director candidate

(1)   Ms. Ryoko Nagata is a candidate for the position of Outside Director as defined in Article 2, Paragraph 3, Item 7 of the Enforcement Regulations of the Companies Act.

 

(2)   Ms. Ryoko Nagata fulfills the “Honda Motor Co., Ltd. Criteria for Independence of Outside Directors.” If she is elected and assumes the position of Director, the Company plans to appoint her as an Independent Outside Director and report her appointment as Independent Outside Director to the Tokyo Stock Exchange.

 

 

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Table of Contents
Notes:   1.   Outline of contents of the limited liability contract
   

Mr. Kunihiko Sakai and Mr. Fumiya Kokubu are currently Directors of the Company. Based on Article 427, Paragraph 1 of the Companies Act and Article 29, Paragraph 2 of the Articles of Incorporation of the Company, the Company has entered into contracts with them, which limit their liabilities, in accordance with Article 423, Paragraph 1 of the Companies Act, to the minimum liability amount that is stipulated in Article 425, Paragraph 1 of the Companies Act.

 

In addition, if Mr. Kunihiko Sakai, Mr. Fumiya Kokubu, Mr. Yoichiro Ogawa, Mr. Kazuhiro Higashi and Ms. Ryoko Nagata are re-elected or elected and assume the positions of Director, the Company plans to continue or enter into such limited liability contract with each of them.

  2.   Outline of contents of the indemnity contract
    If the eleven (11) candidates are re-elected or elected and assume the positions of Director, the Company plans to enter into an indemnity contract with each of them, in accordance with Article 430-2, Paragraph 1 of the Companies Act, and the Company will indemnify them for expenses set forth in Item 1 of the same Paragraph to the extent stipulated by laws.
  3.   Outline of contents of the directors and officers liability insurance contract
    Mr. Toshiaki Mikoshiba, Mr. Toshihiro Mibe, Mr. Seiji Kuraishi, Mr. Kohei Takeuchi, Mr. Masafumi Suzuki, Mr. Kunihiko Sakai and Mr. Fumiya Kokubu are currently Directors of the Company. Based on Article 430-3, Paragraph 1 of the Companies Act, the Company has entered into a directors and officers liability insurance contract that includes them as the insured with an insurance company. The insurance contract covers legal damages and litigation expenses to be borne by the insured.
    In addition, if the eleven (11) candidates are re-elected or elected and assume the positions of Director, each Director will be included in the insurance contract as an insured. The Company intends to renew the contract under the same conditions at the next renewal.

<Reference: Planned committee structure>

If First Item “Partial Amendments to the Articles of Incorporation” and Second Item “Election of Eleven (11) Directors” are approved, the committee structure is planned to be as follows.

LOGO Chairperson of the Committee     LOGO Member

 

Candidate

number    

  

Name

  

nominating committee

  

audit committee

  

compensation

committee

2

      Toshihiro Mibe    LOGO      

3

      Seiji Kuraishi          LOGO

5

      Asako Suzuki       LOGO   

6

      Masafumi Suzuki       LOGO   

7

      Kunihiko Sakai    LOGO    LOGO   

8

      Fumiya Kokubu    LOGO       LOGO

9

      Yoichiro Ogawa       LOGO    LOGO

10

      Kazuhiro Higashi    LOGO       LOGO

11

      Ryoko Nagata       LOGO   

 

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Table of Contents
 

∎   Opinions of the Audit and Supervisory Committee

 

With respect to this proposal, following the explanation by Representative Directors regarding such matters as the views on and procedures for the selection of the candidates for the position of Directors as well as the background, expertise, performance, personality, and insight of each candidate and the roles to be assigned to each candidate, and after the exchange of views, the Audit and Supervisory Committee examined whether the selection of the candidates was carried out in accordance with the nomination policy specified in “Honda Corporate Governance Basic Policies.”

 

As a result of this, the Audit and Supervisory Committee has judged that the nomination procedure is appropriate and each candidate is qualified for the position of the Company’s Director.

 

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Table of Contents
 

∎   Criteria for Independence of Outside Directors

The Company’s board of directors will determine that an outside director is sufficiently independent from the Company if it determines that the said outside director satisfies the independence criteria stipulated by the Tokyo Stock Exchange and the requirements set forth below:

 

  1.

He/She is not, and has never been, any of the following during the last year:

 

  1)

a person who executes the business (*1) of a large shareholder (*2) of the Company;

 

  2)

a person who executes the business of (i) a major customer (*3) of the Company, or (ii) a company of which the Company is a major customer;

 

  3)

a person who executes the business of a major lender (*4) of the Company Group;

 

  4)

a person who executes the business of an audit corporation which conducts statutory audits for the Company or a person who handles the audit functions of the Company;

 

  5)

a consultant, an accounting specialist, or a legal expert (or, if the person in question is a corporation, an association, or any other similar organization, then a person who executes the business of that corporation, etc.) who receives a large amount (*5) of money, etc. from the Company, other than remuneration paid to directors of the Company;

 

2.

No family member or close relative (*6) of the outside director currently falls or at any point of time during the last year fell under any of items 1) through 5) in paragraph 1 above.

[End]

Established on May 15, 2015

Partly amended on June 15, 2017

Partly amended on February 9, 2021

 

  *1

A “person who executes the business” means an executive director, an executive officer, or an important employee including operating officer.

 

 

  *2

A “large shareholder” means a shareholder who directly or indirectly holds shares representing 10% or more of the total number of voting rights of the Company as of the end of a fiscal year.

 

 

  *3

A “major customer” means a customer of the Company where the annual amount of transactions between the customer and the Company exceeds 2% of the consolidated sales revenue of the Company or the said customer.

 

 

  *4

A “major lender” means a financial institution from which the Company Group borrows, where the aggregate amount of such borrowings exceeds 2% of the amount of consolidated total assets of the Company or the financial institution as at the end of a fiscal year.

 

 

  *5

A person receives a “large amount” if he/she receives consideration from the Company in excess of 10 million yen per year.

 

 

  *6

A “family member or close relative” means a spouse or first or second degree relative of an outside director.

 

 

 

∎   Honda Corporate Governance Basic Policies

As for “Honda Corporate Governance Basic Policies,” please refer to the following website.

Investor Relations > Management Policy > Corporate Governance

[URL] https://global.honda/investors/policy/governance.html

 

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Table of Contents

Business Report for the 97th Fiscal Year

For the Period From: April 1, 2020 To: March 31, 2021

 

1.

OUTLINE OF BUSINESS

 

(1)

Review of Operations

  The economic environment surrounding Honda, its consolidated subsidiaries and its affiliates accounted for under the equity method (hereinafter, the “Honda Group”) in the fiscal year ended March 31, 2021, continued to be difficult due to the spread of COVID-19 infection and the impact of semiconductor supply shortage. In the United States, the economy slowed down due to worsening unemployment rate and personal consumption, despite factors such as the effects of the government’s economic stimulus measures. In Europe, as the economic activity was restrained amid difficult economic conditions, the economy showed weakness. In Asia, the economy slowed in India, Thailand and Indonesia. Meanwhile, China experienced a moderate recovery due to factors including the effects of government stimulus measures. In Japan, economic activity was restricted and the economy slowed down.

  In the Honda Group’s principal markets, the motorcycle market shrank compared to the previous fiscal year in Brazil, Vietnam, India and Thailand, and shrank substantially in Indonesia. Compared to the previous fiscal year, the automobile market recovered in China, but shrank in India, the United States and Japan, and shrank significantly in Indonesia, Brazil, Europe and Thailand.

  In these circumstances, the Honda Group worked to strengthen its business structure in order to respond swiftly and accurately to the changing and varied needs of customers and society. On the research and development front, we made proactive efforts to develop safety and environmental technologies and advanced technologies to enhance the attractiveness of our products and transform mobility, utilizing open innovation with external partners. With regard to production, we strengthened our production structure and further pressed ahead with optimizing the production allocation and production capability to deal with changes in demand on a global basis. As for sales, we worked to enhance our product lineup through measures such as aggressively launching products that offer new value and delivering products globally.

  In April 2020, Honda initiated organizational changes to its functions related to the development of automobile products by unifying the structure with Sales, Engineering/production and Buying/purchasing. Due to this change, Honda will improve Mono-zukuri by establishing efficient and consistent operation from development to production. In addition, Honda R&D Co., Ltd. will make changes to its organizational structure to further strengthen its initiatives to “create new value by exploring unknown worlds,” which is the original purpose of the establishment of Honda R&D.

  Honda’s consolidated sales revenue for the fiscal year ended March 31, 2021 decreased by 11.8%, to JPY 13,170.5 billion from the fiscal year ended March 31, 2020, due mainly to decreased sales revenue in all business operations.

  Operating profit increased by 4.2%, to JPY 660.2 billion from the previous fiscal year, due mainly to decreased selling, general and administrative expenses as well as continuing cost reduction, which was partially offset by a decrease in profit attributable to decreased sales revenue and model mix. Profit before income taxes increased by 15.7%, to JPY 914.0 billion from the previous fiscal year. Profit for the year attributable to owners of the parent increased by 44.3%, to JPY 657.4 billion from the previous fiscal year.

 

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Motorcycle Business

  Consolidated unit sales totaled 10,264 thousand, a decrease of 17.4% from the previous fiscal year.

  Among all the regions, Asia had the highest consolidated unit sales, and sales of Activa and Shine in India were both favorable.

 

     Unit (Thousands)  
     Honda Group Unit Sales      Consolidated Unit Sales  
   Year ended
Mar. 31, 2020
     Year ended
Mar. 31, 2021
                   Year ended
Mar. 31, 2020
     Year ended
Mar. 31, 2021
               
   Change      %      Change      %  

Motorcycle business

       19,340          15,132          -4,208          -21.8          12,426          10,264          -2,162          -17.4  

Japan

     205        215        10        4.9        205        215        10        4.9  

North America

     330        332        2        0.6        330        332        2        0.6  

Europe

     239        234        -5        -2.1        239        234        -5        -2.1  

Asia

     17,262        13,319        -3,943        -22.8        10,348        8,451        -1,897        -18.3  

Other Regions

     1,304        1,032        -272        -20.9        1,304        1,032        -272        -20.9  

 

Note:

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries.

  With respect to Honda’s sales for the fiscal year by business segment, in motorcycle business operations, sales revenue from external customers decreased by 13.2%, to JPY 1,787.2 billion from the previous fiscal year, due mainly to decreased consolidated unit sales. Operating profit totaled JPY 224.6 billion, a decrease of 21.4% from the previous fiscal year, due primarily to a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by continuing cost reduction and decreased selling, general and administrative expenses.

Automobile Business

  Consolidated unit sales totaled 2,617 thousand, a decrease of 21.1% from the previous fiscal year.

  Among all the regions, North America had the highest consolidated unit sales, and sales of CR-V and Civic were favorable in the U.S.

 

     Unit (Thousands)  
     Honda Group Unit Sales      Consolidated Unit Sales  
   Year ended
Mar. 31, 2020
     Year ended
Mar. 31, 2021
                   Year ended
Mar. 31, 2020
     Year ended
Mar. 31, 2021
               
   Change      %      Change      %  

Automobile business

         4,790            4,546             -244            -5.1            3,318            2,617             -701          -21.1  

Japan

     672        592        -80        -11.9        589        520        -69        -11.7  

North America

     1,825        1,480        -345        -18.9        1,825        1,480        -345        -18.9  

Europe

     133        101        -32        -24.1        133        101        -32        -24.1  

Asia

     1,952        2,247        295        15.1        563        390        -173        -30.7  

Other Regions

     208        126        -82        -39.4        208        126        -82        -39.4  

 

Note:

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. Certain sales of automobiles that are financed with residual value type auto loans by our Japanese finance subsidiaries and sold through our consolidated subsidiaries are accounted for as operating leases in conformity with IFRS and are not included in consolidated sales revenue to the external customers in our Automobile business. Accordingly, they are not included in Consolidated Unit Sales, but are included in Honda Group Unit Sales of our Automobile business.

In automobile business operations, sales revenue from external customers decreased by 14.0%, to JPY 8,567.2 billion from the previous fiscal year due mainly to a decrease in consolidated unit sales. Operating profit totaled JPY 90.2 billion, a decrease of 41.1% from the previous fiscal year, due primarily to a decrease in profit attributable to decreased sales volume and model mix, which was partially offset by decreased selling, general and administrative expenses and continuing cost reduction.

Financial Services Business

Sales revenue from external customers in the financial services business operations decreased by 3.6%, to JPY 2,494.2 billion from the previous fiscal year due mainly to a decrease in revenues on disposition of lease vehicles. Operating profit increased by 62.5% to JPY 356.9 billion from the previous fiscal year due mainly to decreased selling, general and administrative expenses.

Life Creation and Other Businesses

  Consolidated unit sales in the life creation and other businesses operations totaled 5,623 thousand, a decrease of 1.4% from the previous fiscal year.

 

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  Among all the regions, North America had the highest consolidated unit sales, and sales of general purpose engine GCV160 and lawn mower HRN 216 were favorable in the U.S.

 

     Unit (Thousands)  
     Honda Group Unit Sales/ Consolidated Unit Sales  
   Year ended
Mar. 31, 2020
     Year ended
Mar. 31, 2021
               
   Change      %  

Life creation business

         5,701            5,623          -78          -1.4  

Japan

     312        336        24        7.7  

North America

     2,848        2,617        -231        -8.1  

Europe

     845        929        84        9.9  

Asia

     1,375        1,405        30        2.2  

Other Regions

     321        336        15        4.7  

 

Note:

Honda Group Unit Sales is the total unit sales of completed products of Honda, its consolidated subsidiaries and its affiliates and joint ventures accounted for using the equity method. Consolidated Unit Sales is the total unit sales of completed products corresponding to consolidated sales revenue to external customers, which consists of unit sales of completed products of Honda and its consolidated subsidiaries. In life creation business, there is no discrepancy between Honda Group Unit Sales and Consolidated Unit Sales for the year ended March 31, 2020 and 2021, since no affiliates and joint ventures accounted for using the equity method were involved in the sale of Honda power products.

Sales revenue from external customers in life creation and other businesses decreased by 1.2%, to JPY 321.7 billion from the previous fiscal year, due mainly to a decrease in sales revenue in other businesses. Honda reported an operating loss of JPY 11.6 billion, an improvement of JPY 13.4 billion from the previous fiscal year, due mainly to a decrease in selling, general and administrative expenses and effects of cost reduction, which was partially offset by a decrease in sales revenue in other businesses. Operating loss of aircraft and aircraft engines included in the life creation and other businesses segment was JPY 32.3 billion, a decrease of JPY 9.9 billion from the previous fiscal year.

 

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Sales Revenue Breakdown

 

 

     Yen (millions)  
     FY2020 From
April 1, 2019 to
March 31, 2020
(reference)
     FY2021 From
April 1, 2020 to
March 31, 2021
     Change from the previous fiscal year
(reference)
 
                                             (%)              

Grand Total

     14,931,009        13,170,519        -1,760,490        -11.8  

Japan

     1,985,945        1,849,268        -136,677        -6.9  

North America

     8,164,377        7,080,833        -1,083,544        -13.3  

Europe

     568,715        511,795        -56,920        -10.0  

Asia

     3,449,876        3,250,125        -199,751        -5.8  

Other Regions

     762,096        478,498        -283,598        -37.2  

Motorcycle Business

     2,059,335        1,787,283        -272,052        -13.2  

Japan

     77,241        88,129        10,888        14.1  

North America

     203,885        197,185        -6,700        -3.3  

Europe

     144,393        146,948        2,555        1.8  

Asia

     1,338,719        1,149,879        -188,840        -14.1  

Other Regions

     295,097        205,142        -89,955        -30.5  

Automobile Business

     9,959,080        8,567,205        -1,391,875        -14.0  

Japan

     1,473,730        1,321,487        -152,243        -10.3  

North America

     5,650,697        4,679,324        -971,373        -17.2  

Europe

     359,216        290,366        -68,850        -19.2  

Asia

     2,049,493        2,037,519        -11,974        -0.6  

Other Regions

     425,944        238,509        -187,435        -44.0  

Financial Services Business

     2,586,965        2,494,294        -92,671        -3.6  

Japan

     358,806        380,384        21,578        6.0  

North America

     2,176,653        2,070,569        -106,084        -4.9  

Europe

     11,873        11,219        -654        -5.5  

Asia

     14,778        15,060        282        1.9  

Other Regions

     24,855        17,062        -7,793        -31.4  

Life Creation & Other Businesses

     325,629        321,737        -3,892        -1.2  

Japan

     76,168        59,268        -16,900        -22.2  

North America

     133,142        133,755        613        0.5  

Europe

     53,233        63,262        10,029        18.8  

Asia

     46,886        47,667        781        1.7  

Other Regions

     16,200        17,785        1,585        9.8  

 

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(2)

Capital Expenditures

Capital expenditures during the fiscal year ended March 31, 2021 totaled JPY 321,294 million. The breakdown of capital expenditures by business segment was as follows:

In addition to investments for new model introductions, Honda’s capital expenditure was predominantly utilized for expanding, rationalizing, and renovating manufacturing facilities as well as for expanding sales and R&D facilities.

 

     Yen (millions), %  

Business Segment

   FY2020
(reference)
     FY2021      Change in amount
(reference)
     Change (%)
(reference)
 

Motorcycle Business

     67,827        30,483        -37,344        -55.1  

Automobile Business

     293,771        281,617        -12,154        -4.1  

Financial Services Business

     180        260        80        44.4  

Life Creation and Other Businesses

     13,865        8,934        -4,931        -35.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     375,643        321,294        -54,349        -14.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

Equipment on operating leases

     2,244,893        2,001,898        -242,995        -10.8  

Note: Intangible assets are not included in the table above.

 

(3)

Liquidity and Capital Resources

Honda meets its working capital requirements primarily through cash generated by operations, bank loans and corporate bonds. The outstanding balance of liabilities for Honda’s manufacturing and sales businesses at the end of the fiscal year ended March 31, 2021 was JPY 480.0 billion.

In addition, the Company’s finance subsidiaries fund financial programs for customers and dealers primarily from medium-term notes, bank loans, securitization of finance receivables and equipment on operating leases, commercial paper and corporate bonds. The outstanding balance of liabilities for Honda’s financial services subsidiaries at the end of the fiscal year was JPY 7,248.2 billion.

 

(4)

Preparing for the Future

 

  1)

Management Policies and Strategies

The Honda Group has two Fundamental Beliefs: “Respect for the Individual,” and “The Three Joys” (the Joy of Buying, the Joy of Selling, and the Joy of Creating). “Respect for the Individual” calls on Honda to nurture and promote these characteristics in our company by respecting individual differences and trusting each other as equal partners. “The Three Joys” are based on “Respect for the Individual,” and is the philosophy of creating joy together with everyone involved in Honda’s activities, with the joy of its customers as the driving force.

Based on these Fundamental Beliefs, the Honda Group strives to improve its corporate value by sharing joy with all people, and with our shareholders in particular, by practicing its Mission Statement: “Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction.”

The Honda Group has also defined its vision toward 2030 as “Serve people worldwide with the “joy of expanding their life’s potential,” and will take initiatives in the following three directions.

1. Toward a clean and safe / secure society

2. Creating value for “mobility” and “daily lives”

3. Accommodate the different characteristics of people and society

The Honda Group is thoroughly committed to the environment and safety, reaffirming the value of “eliminating the burden on the global environment” and “achieving safety that protects precious lives.”

 

  1.

Toward a clean and safe / secure society

Setting forth its goals of realizing 2050 carbon neutrality and zero traffic collision fatalities, the Honda Group will take initiatives in various areas.

 

  a.

Toward the realization of carbon neutrality

Going forward, the Honda Group will actively promote the introduction of electric vehicles based on electric-powered motor technology which it has been developing as a leader in environmentalism. The Honda Group aims to create a recycling-oriented society with “zero environmental impact” so that people can live sustainably on the earth toward the realization of carbon neutrality. Therefore, the Honda Group will work on the three pillars of carbon neutrality, clean energy and resource circulation. The Honda Group will set targets in line with the “1.5 Celsius scenario” of the Paris Agreement, aiming for zero environmental impact throughout the life cycle of our products, including not only the products produced and sold by the Honda Group, but also its corporate activities.

 

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  b.

Toward the realization of zero traffic collision fatalities

As part of its responsibility as a mobility company, the Honda Group is researching, developing, and working toward the adoption of safety technology based on its philosophy of “Safety for Everyone,” with the aim of realizing a “collision-free mobile society” where everyone who uses roads can live safely. The Honda Group will work toward the goal of zero traffic collision fatalities involving the Group’s motorcycles and automobiles globally by 2050. In addition to the collision safety features the Honda Group has long been working on, it is currently working toward the adoption and evolution of its safety and driver-assistive system, “Honda SENSING.”

In addition to such safety technology, the Honda Group has long been promoting awareness of traffic safety in order to realize a society where all people who use roads, such as drivers and pedestrians, can move safely with safety awareness. Going forward, the Honda Group will carry out this initiative globally.

 

  2.

Creating value for “mobility” and “daily lives”

The Honda Group will focus on three areas, namely mobility, robotics and energy, in order to provide people with the joy and freedom of mobility and the joy of making their lives better.

 

  a.

Joy and freedom of mobility

Using the Honda Group’s unique strengths resulting from its wide range of mobility products including motorcycles and automobiles, the Honda Group will use partnerships with other companies in various regions to begin new mobility services that provide mobility without restraint in every aspect of life.

 

  b.

Joy of making life better

The Honda Group will work on creating a system that allows people to share and enjoy safe and secure clean energy in their daily lives through mobility.

 

  3.

Accommodate the different characteristics of people and society

The Honda Group will provide optimal products and services for diverse society, and to all people with a wide variety of cultures and values, whether they live in developed or emerging nations.

As one of the initiatives in these directions, the Honda Group has begun taking initiatives to realize “Honda eMaaS” concept. By connecting mobility service and energy service, “Honda eMaaS” provides mobility to people while at the same time contributing to the expanded use of renewable energy.

This “Honda eMaaS” concept aims to seamlessly connect mobility and people’s daily lives and provide people with the joy of making their lives better in a carbon-free manner through integrated management of the Honda Group’s electric products such as electrified mobility and energy equipment, which are expected to increase in the future.

2) Management Challenges

The business environment surrounding the Honda Group has come to a major turning point. Values are diversifying, the population is aging, urbanization is accelerating, climate change is worsening, and the industrial structure is changing due to progress in technologies such as the use of electric-powered motors, autonomous driving and IoT, all on a global basis. In addition, values of the society and individuals as well as awareness of global environmental issues have changed dramatically due to the spread of COVID-19. It is vital to ensure “strong products, strong Mono-zukuri (the art of making things) and strong businesses” which are essential for future growth.

Looking at the market environment of motorcycle business operations, competition with not only existing manufacturers but also emerging manufacturers is intensifying. The operating environment continues to change more rapidly than ever as seen by the need to make efforts to deal with tighter environmental regulations in each country and expansion of new markets. The Honda Group has set a CO2 reduction target rate that far exceeds the governmental targets for all emerging countries, and is aiming to become an environmental leader in motorcycles, not only through the use of electric-powered motors, but also through improved fuel efficiency and the use of biofuels.

With regard to electrification in automobile business operations, the Honda Group will work to achieve carbon neutrality in accordance with the characteristics of each region, including customer acceptance, infrastructure environment and the spread of renewable energy.

The life creation and other businesses will provide new value for mobility and daily lives through the existing “provision of power products” and “new businesses for the future,” including the energy business. In addition, by connecting electrified mobility and energy services, the Honda Group will contribute to the expansion of free mobility and the use of renewable energy, and work toward the realization of carbon neutrality.

 

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3) Challenges to be Addressed Preferentially

Considering the business environment, the Honda Group will work on the following new challenges directed at the next generation to provide value unique to the Honda Group with a view to contributing to solving various social issues while continuing to achieve sustainable growth.

 

  1.

Prepare for future growth

a. Next-generation technologies

In the automobile industry in the future, the ability to respond to electrification, driver-assistive technologies, connected technologies and other technological innovations will likely determine the competitiveness of a company. The Honda Group will work to develop products and services equipped with such next-generation technologies in the motorcycle, automobile and life creation businesses, and ensure business feasibility as early as possible.

As for electrification, the Honda Group will further expand the lineup of EVs (electric vehicles) and FCVs (fuel cell vehicles) based on electric-powered motor technology it has been developing. To this end, the Honda Group will work to respond to changes in car manufacturing throughout the value chain. In particular, for batteries, the Honda Group is developing its proprietary all-solid-state batteries, and will begin verifying production technology on a demonstration line from the fiscal year ending March 31, 2021.

Regarding driver-assistive technologies, the Honda Group will work to promote and evolve “Honda SENSING,” a safety and driver-assistive system, for the purpose of preventing accidents. Going forward, the Honda Group will push ahead with efforts for joint development and commercialization in preparation for future society while utilizing partnerships with other companies, and leverage the knowledge and know-how accumulated through the research and development of level 3 automated driving to further enhance the intelligence of ADAS (advanced driver-assistance systems), which increases the percentage of collision patterns covered by ADAS. Through these efforts, the Honda Group will aim to realize a clean and safe /secure society.

b. New businesses

In “Honda eMaaS,” the Honda Group’s energy technology is expected to contribute to the effective utilization of electric power for society as a whole. For example, the Honda Group’s electrified mobility and energy equipment function as temporary electric power storage/discharge devices, contributing to stabilization of electric power. To this end, in the mobility service, efforts need to be made in the areas of mobility and goods transport services using electric vehicles. In the energy service, efforts need to be made in the area of mobile power supply, by not only “using” energy equipment as a power source for mobility but also enabling them to “create” electric power and “connect” with the power supplies for the household so that electricity can be used efficiently whenever and wherever needed.

The Honda Group intends to serve people worldwide with the “joy of expanding their life’s potential” by proposing solutions in these areas.

 

  2.

Solidify existing businesses

The Honda Group will enhance the business strategy formulation function by steadily proceeding with the next initiatives, and build a highly competitive Mono-zukuri foundation to realize strong businesses.

a. Build a structure to realize strategies

In order to build strong businesses that can immediately respond to changes in the environment and can provide products that satisfy customer needs in a timely manner, the Honda Group has established a unified operational structure which integrates S-E-D-B (Sales, Engineering, Development and Buying) areas.

This enables the formulation of business strategies based on a big-picture view of product planning, development, buying/purchasing, engineering/production and sales, and the swift implementation of such strategies. At the same time, the Honda Group will realize Mono-zukuri reform and stable production with high-precision development of new models through frontloading and operation which integrates the entire process from development through mass-production.

b. Mono-zukuri reform

In the automobile business, the Honda Group has strengthened its global models and regional models according to the needs of each region, with the aim of manufacturing challenging products unique to Honda. Efficient Mono-zukuri, in addition to product appeal, is indispensable for further enhancing the competitiveness of such models. To this end, the Honda Group is working to strengthen the structure in each area. Introducing the Honda Architecture, which is a company-wide initiative that increases the efficiency of development and expands parts-sharing for mass-production models, the Honda Group will sequentially apply it, starting with the global models, and expand its application. By doing so, Honda will enhance the efficiency of existing businesses and repurpose those man-hours to conduct research and development in advanced areas, thereby accelerating development for the future.

Steady progress is being made in optimizing the production capacity in all regions, and the Honda Group will improve its global capacity utilization rate.

 

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c. Further improve quality

To achieve a new level of outstanding quality of products, the Honda Group has continued activities to further improve quality at every stage: design, development, production, sales and service including suppliers. Going forward, the Honda Group will team up with other companies, including those from other industries, to challenge new forms of mobility that incorporate electrification, driver-assistive technologies and IoT in creating new value through open innovation. To that end, the Honda Group will evolve its activities to realize a new level of outstanding quality, by pursuing the utmost quality not only in products and services provided to customers but also in every area of business at all points of customer contact, alongside evolution in “mobility” and “daily lives.”

Also, in the automobile business, in April 2020 the quality innovation departments for all operations were integrated, and Quality Innovation Operations was newly established and commenced activities.

d. Continue to enhance Honda’s social reputation and communication with the community

In addition to continuing to provide products incorporating Honda’s advanced safety and environmental technologies, the Honda Group will continue striving to enhance its social reputation by, among other things, strengthening its corporate governance, compliance, and risk management, as well as participating in community activities and making philanthropic contributions.

Through these company-wide activities, Honda aims to be a company that society, which includes our shareholders, our investors and our customers, wants to exist.

 

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(5)  Changes in Financial Position and Results of Operations of the Group and the Parent Company

(a)  Changes in Results of Operations and Financial Position of the Group

 

    Yen (millions)  

Category

  IFRS  
  FY2018
94th fiscal year
(From April 1, 2017
to March 31, 2018)
    FY2019
95th fiscal year
(From April 1, 2018
to March 31, 2019)
    FY2020
96th fiscal year
(From April 1, 2019
to March 31, 2020)
    FY2021
97th fiscal year
(From April 1, 2020
to March 31, 2021)
 

Sales revenue

    15,361,146       15,888,617       14,931,009       13,170,519  

Operating profit

    833,558       726,370       633,637       660,208  

Profit before income taxes

    1,114,973       979,375       789,918       914,053  

Profit for the year attributable to owners of the parent

    1,059,337       610,316       455,746       657,425  

Basic earnings per share attributable to owners of the parent (Yen)

    590.79       345.99       260.13       380.75  

Total assets

    19,349,164       20,419,122       20,461,465       21,921,030  

Equity attributable to owners of the parent

    7,933,538       8,267,720       8,012,259       9,082,306  

Equity attributable to owners of the parent per share (Yen)

    4,461.36       4,698.74       4,640.46       5,260.06  

 

Notes:

  1.   Based on the provisions of Article 120-1 of the Ordinance of Companies Accounting, the Company’s consolidated financial statements have been prepared in accordance with IFRS.
  2.   The results of operations and financial position of the Group are indicated based on IFRS terminology.
  3.   The increase in sales revenue in the 95th fiscal year compared to the 94th fiscal year is due primarily to increased sales revenue in all business operations. The decreases in operating profit and profit before income taxes in the 95th fiscal year compared to the 94th fiscal year are mainly due to the impact in Europe related to changes of the global automobile production network and negative foreign currency effects. In addition, the decrease in profit for the year attributable to owners of the parent in the 95th fiscal year compared to the 94th fiscal year is mainly due to impacts of the enactment of the U.S. Tax Cuts and Jobs Act in the 94th fiscal year.
  4.   The status of the 97th fiscal year is as provided in “(1) Review of Operations” of “1. OUTLINE OF BUSINESS.”
  5.   Basic earnings per share attributable to owners of the parent is calculated based on the average number of shares outstanding during each year. There were no significant potentially dilutive common shares outstanding.
  6.   Equity attributable to owners of the parent per share is calculated based on the number of shares outstanding at the end of each fiscal year.
   

 

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(b)  Changes in Results of Operations and Financial Position of the Parent Company

 

    Yen (millions)  

Category

  FY2018
94th fiscal year
(From April 1, 2017
to March 31, 2018)
    FY2019
95th fiscal year
(From April 1, 2018
to March 31, 2019)
    FY2020
96th fiscal year
(From April 1, 2019
to March 31, 2020)
    FY2021
97th fiscal year
(From April 1, 2020
to March 31, 2021)
 

Net sales

    3,787,337       4,077,564       3,642,679       3,092,866  

Operating income

    108,542       1,012       (60,260     (150,932

Ordinary income

    484,060       534,031       512,028       359,362  

Net income

    383,461       362,203       373,027       373,372  

Net income per share (Yen)

    213.86       205.33       212.91       216.24  

Total assets

    2,849,028       2,982,107       3,126,421       3,383,432  

Net assets

    2,078,199       2,161,343       2,220,025       2,470,683  

Net assets per share (Yen)

    1,168.66       1,228.34       1,285.77       1,430.91  

 

Notes:   1.   Figures in parentheses represent losses.
  2.   Figures in millions of yen are rounded down to the nearest million.
  3.  

The decrease in operating income in the 95th fiscal year compared to the 94th fiscal year is mainly due to increases

in R&D expenses and SG&A expenses.

  4.   The decrease in net sales in the 96th fiscal year compared to the 95th fiscal year is due primarily to decreased net sales in automobile business operations. The decrease in operating income in the 96th fiscal year compared to the 95th fiscal year is mainly due to an increase in R&D expenses and a decreased sales and model mix, which was partially offset mainly by a decrease in SG&A expenses.
  5.   The decrease in net sales in the 97th fiscal year compared to the 96th fiscal year is due primarily to decreased net sales in automobile business operations. The increase in operating loss in the 97th fiscal year compared to the 96th fiscal year is mainly due to a decreased sales and model mix, which was partially offset mainly by a decrease in R&D expenses and a decrease in SG&A expenses.

 

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(6) Principal Subsidiaries

 

           

Voting

Rights

 

Principal Business Activities

Company Name

 

Capital

 

Ratio

 

Business Segment

 

Function

Honda R&D Co., Ltd.

(Note 3)

  (Saitama, Japan)   JPY 7,400 million   100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Research and development
Honda Finance Co., Ltd.   (Tokyo, Japan)   JPY 11,090 million   100.0%   Financial Services Business   Finance
American Honda Motor Co., Inc. (Note 4)   (U.S.A.)   USD 299 million   100.0%  

Motorcycle Business

Automobile Business

Financial Services Business

Life Creation and Other Businesses

  Coordination of Subsidiaries Operation / Sales
Honda Aero., Inc.   (U.S.A.)   USD 80 million   100.0%   Life Creation and Other Businesses   Manufacturing
Honda of America Mfg., Inc.   (U.S.A.)   USD 561 million   *100.0%   Automobile Business   Manufacturing
American Honda Finance Corporation   (U.S.A.)   USD 1,366 million   *100.0%   Financial Services Business   Finance
Honda Aircraft Company, LLC   (U.S.A.)   USD 160 million   *100.0%   Life Creation and Other Businesses   Research and development / Manufacturing / Sales
Honda Manufacturing of Alabama, LLC   (U.S.A.)   USD 400 million   *100.0%   Automobile Business   Manufacturing
Honda Manufacturing of Indiana, LLC   (U.S.A.)   USD 200 million   *100.0%   Automobile Business   Manufacturing
Honda Transmission Mfg. of America, Inc.   (U.S.A.)   USD 42 million   *100.0%   Automobile Business   Manufacturing
Honda R&D Americas, Inc.   (U.S.A.)   USD 22 million   *100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Research and development
Honda Canada Inc.   (Canada)   CAD 226 million   *100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Manufacturing / Sales
Honda Canada Finance Inc.   (Canada)   CAD 285 million   *100.0%   Financial Services Business   Finance
Honda de Mexico, S.A. de C.V.   (Mexico)   MXN 13,655 million   *100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Manufacturing / Sales
Honda Motor Europe, Ltd.   (U.K.)   GBP 665 million   100.0%  

Motorcycle Business

Automobile Business

Financial Services Business

Life Creation and Other Businesses

  Coordination of Subsidiaries Operation / Sales
Honda of the U.K. Manufacturing Ltd.   (U.K.)   GBP 670 million   *100.0%   Automobile Business   Manufacturing
Honda Finance Europe plc   (U.K.)   GBP 38 million   *100.0%   Financial Services Business   Finance
Honda Bank GmbH   (Germany)   EUR 78 million   *100.0%   Financial Services Business   Finance
Honda Turkiye A.S.   (Turkey)   TRY 180 million   *100.0%   Motorcycle business
Automobile business
  Manufacturing / Sales
Honda Motor (China) Investment Co., Ltd.   (China)   USD 132 million   100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Coordination of Subsidiaries Operation / Sales
Honda Auto Parts Manufacturing Co., Ltd.   (China)   USD 200 million   *100.0%   Automobile Business   Manufacturing

 

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Voting

Rights

 

Principal Business Activities

Company Name

 

Capital

 

Ratio

 

Business Segment

 

Function

Honda Motorcycle and Scooter India (Private) Ltd.   (India)   INR 3,100 million   *100.0%   Motorcycle Business   Manufacturing / Sales
Honda Cars India Limited   (India)   INR 10,727 million   *100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Manufacturing / Sales
P.T. Honda Precision Parts Manufacturing   (Indonesia)   USD 150 million   *100.0%   Automobile Business   Manufacturing
P.T. Honda Prospect Motor   (Indonesia)   USD 70 million   51.0%   Automobile Business   Manufacturing / Sales
Honda Malaysia Sdn Bhd   (Malaysia)   MYR 170 million   51.0%   Automobile Business   Manufacturing / Sales

Honda Philippines Inc.

(Note 5)

  (Philippines)   PHP 3,190 million   99.6%  

Motorcycle Business

Life Creation and Other Businesses

  Manufacturing / Sales
Honda Taiwan Co., Ltd.   (Taiwan)   TWD 3,580 million   100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Sales
Asian Honda Motor Co., Ltd.   (Thailand)   THB 10,888 million   100.0%  

Motorcycle Business

Automobile Business

Financial Services Business

Life Creation and Other Businesses

  Coordination of Subsidiaries Operation / Sales
Honda Leasing (Thailand) Co., Ltd.   (Thailand)   THB 5,550 million   *100.0%   Financial Services Business   Finance
Honda Automobile (Thailand) Co., Ltd.   (Thailand)   THB 5,460 million   *89.0%   Automobile Business   Manufacturing / Sales

Thai Honda Manufacturing Co., Ltd.

(Note 6)

  (Thailand)   THB 550 million   *72.5%  

Motorcycle Business

Life Creation and Other Businesses

  Manufacturing / Sales
Honda Vietnam Co., Ltd.   (Vietnam)   VND 1,190,822 million   *70.0%  

Motorcycle Business

Automobile Business

  Manufacturing / Sales
Honda Motor de Argentina S.A.   (Argentina)   ARS 14,116 million   *100.0%  

Motorcycle Business

Automobile Business

Life Creation and Other Businesses

  Manufacturing / Sales
Honda South America Ltda.   (Brazil)   BRL 119 million   100.0%  

Motorcycle Business

Automobile Business

Financial Services Business

Life Creation and Other Businesses

  Coordination of Subsidiaries Operation
Banco Honda S.A.   (Brazil)   BRL 524 million   *100.0%   Financial Services Business   Finance
Honda Automoveis do Brasil Ltda.   (Brazil)   BRL 882 million   *100.0%   Automobile Business   Manufacturing / Sales
Moto Honda da Amazonia Ltda.   (Brazil)   BRL 1,466 million   *100.0%  

Motorcycle Business

Life Creation and Other Businesses

  Manufacturing / Sales

 

Notes:   1.    Amounts of capital are rounded down to the nearest unit as indicated.
  2.    Ratios with * include ownership by consolidated subsidiaries.
  3.    During the fiscal year ended March 31, 2021, the Company integrated the automobile product development functions of the Company and Honda R&D Co., Ltd. excluding certain functions such as design, and merged one other company.
  4.    American Honda Motor Co., Inc. merged with Honda North America, Inc. and one other company during the fiscal year ended March 31, 2021.
  5.    Honda Philippines Inc., a consolidated subsidiary of the Company, has become a principle subsidiary of the Company due to the increased materiality of its business.
  6.    During the fiscal year ended March 31, 2021, Thai Honda Manufacturing Co., Ltd., A.P. Honda Co., Ltd., and one other company were merged to form a new company. The name of the new company will continue to be Thai Honda Manufacturing Co., Ltd.
  7.    For the fiscal year ended March 31, 2021, the number of consolidated subsidiaries was 348, including 38 companies mentioned above, and the number of affiliates accounted for under the equity method was 67.

 

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(7) Principal Business Activities

The Honda Group engages in the motorcycle business, automobile business, financial services business, and life creation and other businesses. Principal products and services, and functions of each business are as follows.

 

Business

  

Principal products and services

  

Function

Motorcycle Business    Motorcycles, all-terrain vehicles (ATVs), side-by-side and relevant parts    Research and development / Manufacturing / Sales and related services
Automobile Business    Automobiles and relevant parts    Research and development / Manufacturing / Sales and related services
Financial Services Business    Financial services    Retail loan and lease related to Honda products / Others
Life Creation and Other Businesses    Power products and relevant parts, and others    Research and development / Manufacturing / Sales and related services / Others

(8) Principal Business Sites

(a) The Company

 

Name

  

Location

Head office    Tokyo, Japan
Suzuka Factory    Mie, Japan
Saitama Factory    Saitama, Japan
Transmission Factory    Shizuoka, Japan
Kumamoto Factory    Kumamoto, Japan
Powertrain Unit Factory    Tochigi, Japan

(b) Subsidiaries

      For principal subsidiaries and their locations, please refer to “(6) Principal Subsidiaries.”

(9) Employees of the Group and the Parent Company

(a) Group Employees

 

Business Segment

   Number of Employees  
   FY2020
(reference)
    FY2021     Change (reference)  

Motorcycle Business

     47,013        (13,878     46,255        (12,270     -758        (-1,608

Automobile Business

     159,555        (17,968     153,413        (13,731     -6,142        (-4,237

Financial Services Business

     2,455        (100     2,385        (77     -70        (-23

Life Creation & Other Businesses

     9,651        (2,640     9,321        (2,083     -330        (-557
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total

     218,674        (34,586     211,374        (28,161     -7,300        (-6,425
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 
(b) Employees of the Parent Company                
     FY2020
(reference)
    FY2021     Change
(reference)
 

Number of employees

     25,379        (5,489     35,781        (3,964     10,402        (-1,525

Average age

     45.5       44.9       -0.6  

Average number of years Employed by the Company

     23.8       22.5       -1.3  

 

Notes:   1.    The number of employees of the Honda Group and the Parent Company refers to full-time employees. The average number of temporary employees is shown separately in parentheses.
  2.    The increase in the number of employees of the Parent Company was due to the integration of the automobile product development functions, excluding certain functions such as design, of the Parent Company and Honda R&D Co., Ltd. and the merger with Honda Engineering Co., Ltd.

 

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2. COMMON STOCK

 

(1) Total Number of Shares Issued    1,811,428,430 shares

 

(2) Number of Shareholders

  

 

208,126  

(3) Major Shareholders

 

Name

   Number of Shares
Held (thousands)
   Percentage against Total
Shares Issued (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

   164,774    9.5

Custody Bank of Japan, Ltd. (Trust Account)

   117,856    6.8

Moxley & Co. LLC

   70,044    4.1

SSBTC CLIENT OMNIBUS ACCOUNT

   57,133    3.3

Meiji Yasuda Life Insurance Company

   51,199    3.0

Tokio Marine & Nichido Fire Insurance Co., Ltd.

   35,461    2.1

Nippon Life Insurance Company

   28,666    1.7

MUFG Bank, Ltd.

   25,680    1.5

STATE STREET BANK WEST CLIENT – TREATY 505234

   25,255    1.5

Custody Bank of Japan, Ltd. (Trust Account 5)

   24,141    1.4

 

Notes:   1.    The number of shares described above rounds off figures of less than 1,000 shares.
  2.    Ownership percentages are calculated using the total number of shares issued minus treasury stock (84,157 thousand shares).
  3.    Moxley & Co. LLC is an official holder of stock of JPMorgan Chase Bank, which is a depositary institution for American Depositary Receipts (ADRs).

(4) Shares Issued to Corporate Officers as Compensation for the Performance of Their Duties During the Fiscal Year Ended March 31, 2021

 

Category

   Number of Shares
(shares)
     Number of eligible
Directors
(Number of persons)
 

Directors (excluding Audit and Supervisory Committee Members)

(excluding Outside Directors)

     7,800        1  

Outside Directors (excluding Audit and Supervisory Committee Members)

     —          —    

Directors (Audit and Supervisory Committee Members)

(excluding Outside Directors)

     —          —    

Outside Directors (Audit and Supervisory Committee Members)

     —          —    

 

Note:

The above number of shares does not include the number of shares converted into cash (7,888 shares for one director).

 

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• Breakdown of shares by shareholder type (reference)

 

 

LOGO

3. STOCK WARRANTS

No relevant information

 

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4. CORPORATE OFFICERS

(1) Directors (As of March 31, 2021)

 

Position

  

Name

  

Area of Responsibility

or Principal Occupations

Chairman and Director    Toshiaki Mikoshiba   

Chairman of the Board of Directors;

Director in Charge of Government and Industry Relations

President and Representative Director    Takahiro Hachigo    Chief Executive Officer
Executive Vice President and Representative Director    Seiji Kuraishi   

Chief Operating Officer;

Director in Charge of Strategy, Business Operations and Regional Operations;

Corporate Brand Officer

Senior Managing Director    Kohei Takeuchi   

Chief Financial Officer and Director in Charge of Finance and Administration (Accounting, Finance, Human Resources and Corporate Governance);

Chief Officer for Driving Safety Promotion Center;

Compliance Officer

Senior Managing Director    Toshihiro Mibe   

Director in Charge of Mono-zukuri (Research & Development, Production, Purchasing, Quality, Parts, Service, Intellectual Property, Standardization and IT);

Risk Management Officer

President and Representative Director of Honda R&D Co., Ltd.

Director   

Hiroko Koide

Outside

Independent Director

  

Outside Director of Mitsubishi Electric Corporation

Outside Director of J-OIL MILLS, Inc.

Director   

Fumiya Kokubu

Outside

Independent Director

  

Chairman of the Board of Marubeni Corporation

Outside Director of Taisei Corporation

Director and Advisor    Takanobu Ito   

Director

(Full-time Audit and Supervisory Committee Member)

   Masahiro Yoshida   

Director

(Full-time Audit and Supervisory Committee Member)

   Masafumi Suzuki   

Director

(Audit and Supervisory Committee Member)

  

Hideo Takaura

Outside

Independent Director

  

Certified Public Accountant;

Outside Director of Tokyo Electric Power Company Holdings, Inc.;

Outside Auditor of INCJ, Ltd.

Director

(Audit and Supervisory Committee Member)

  

Mayumi Tamura

Outside

Independent Director

   Outside Director of SHIMIZU CORPORATION

Director

(Audit and Supervisory Committee Member)

  

Kunihiko Sakai

Outside

Independent Director

  

Lawyer;

Advisor Attorney to TMI Associates;

Audit and Supervisory Board Member (Outside) of Furukawa Electric Co., Ltd.

 

Notes:

  1.    Directors Ms. Hiroko Koide, Mr. Fumiya Kokubu, Mr. Hideo Takaura, Ms. Mayumi Tamura and Mr. Kunihiko Sakai are Outside Directors in accordance with Article 2, Item 15 of the Companies Act.
  2.    The Company has appointed Ms. Hiroko Koide, Mr. Fumiya Kokubu, Mr. Hideo Takaura, Ms. Mayumi Tamura and Mr. Kunihiko Sakai as independent directors as provided for by the rules of the Tokyo Stock Exchange and reported their appointment to the Tokyo Stock Exchange.
  3.    The Company has business relationships, including the purchase of automobile parts, with Mitsubishi Electric Corporation, for which Ms. Hiroko Koide serves as an Outside Director, and with Furukawa Electric Co., Ltd. for which Mr. Kunihiko Sakai serves as an Audit and Supervisory Board Member (Outside).

 

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  4.    Both Mr. Masahiro Yoshida and Mr. Masafumi Suzuki have been appointed as Full-time Audit and Supervisory Committee Member to ensure the effectiveness of activities of the Audit and Supervisory Committee by sharing information obtained mainly through daily information collection and collaboration with internal audit departments among all Audit and Supervisory Committee Members.
  5.    Mr. Masafumi Suzuki, a Director who is an Audit and Supervisory Committee Member, has considerable operating experience regarding financial and accounting departments in the Company and its subsidiaries. In addition, Mr. Hideo Takaura, a Director who is an Audit and Supervisory Committee Member, has extensive knowledge and experience as a certified public accountant. Mr. Suzuki and Mr. Takaura have abundant knowledge related to finance and accounting.
  6.    The Company adopts the Operating Officer System to strengthen regional operations and local workplaces and to implement quick and appropriate decisions. The Operating Officers of the Company are as follows: (As of March 31, 2021)

 

Managing Officer    Michimasa Fujino    President and Director of Honda Aircraft Company, LLC
Managing Officer    Shinji Aoyama   

Chief Officer for Regional Operations (North America);

President, Chief Executive Officer and Director of American Honda Motor Co., Inc.

Managing Officer    Noriya Kaihara    Head of Business Supervisory Unit for Automobile Operations
Managing Officer    Mitsugu Matsukawa    President and Director of Honda of America Mfg., Inc.
Managing Officer    Noriaki Abe    Chief Officer for Motorcycle Operations
Managing Officer    Yasuhide Mizuno    Chief Officer for Automobile Operations
Managing Officer    Katsushi Inoue   

Chief Officer for Regional Operations (China);

President of Honda Motor (China) Investment Co., Ltd.;

President of Honda Motor (China) Technology Co., Ltd.

Managing Officer    Hisao Takahashi   

General Manager of Mono-zukuri Center for Automobile Operations;

Director of Honda R&D Co., Ltd.

 

  7.    As of April 1, 2021, the following promotion and assumption of office of Directors and Operating Officers were announced by the Company. Positions in the parenthesis are as of March 31, 2021.

 

President and Representative Director    Toshihiro Mibe    (Senior Managing Director)
Managing Officer    Keiji Ohtsu    (Operating Executive)
Managing Officer    Yoshishige Nomura    (Operating Executive)

 

  8.    The Company introduced the Operating Executive position effective April 1, 2020, with the aim of advancing its corporate executive structure and enabling the Company to address changes in the business environment with greater speed and flexibility. Operating Executives engage in company operations, with responsibility for business execution in their respective areas under the direction and supervision of management.

 

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(2) Remuneration of Directors, Etc.

(a) Total amount of remuneration of Directors, etc.

    Yen (millions)  
Item   Total amount of
remuneration, etc.
    Total amount by type of
remuneration, etc.
    Number of eligible
Directors

(Number of persons)
 
  Fixed
remuneration
    Performance-linked
remuneration
 
  Bonuses     Stock-based
remuneration
 
Directors (excluding Audit and Supervisory Committee Members) (excluding Outside Directors)     652       428       95       129       7  
Outside Directors (excluding Audit and Supervisory Committee Members)     33       33       —         —         3  
Directors (Audit and Supervisory Committee Members) (excluding Outside Directors)     145       145       —         —         2  
Outside Directors (Audit and Supervisory Committee Members)     50       50       —         —         3  
Total     883       658       95       129       15  

 

Notes:

  1.    Remuneration is limited to JPY 1,160 million per year for Directors (excluding Audit and Supervisory Committee Members) and JPY 270 million per year for Directors (Audit and Supervisory Committee Members).
  2.    The above shows the amounts of remuneration, etc. paid to the Company’s Directors by the Company during the fiscal year ended March 31, 2021, and includes the amounts paid to one Director (excluding Audit and Supervisory Committee Member) and one Outside Director (excluding Audit and Supervisory Committee Member) who resigned at the close of the ordinary general meeting of shareholders held on June 19, 2020.
  3.    Bonuses to Directors (excluding Audit and Supervisory Committee Members) are included in the previously mentioned maximum amount for remuneration to Directors (excluding Audit and Supervisory Committee Members), and the amount shown was decided by the meeting of the Board of Directors held on May 14, 2021.
  4.    The total amount of stock-based remuneration is the amount recorded as expenses related to the share delivery points granted during the fiscal year ended March 31, 2021 in connection with the directors’ remuneration BIP (Board Incentive Plan) trust. The remuneration falls under non-monetary remuneration.

(b) Matters related to performance-linked remuneration, etc.

Indicators for performance-linked remuneration are, for bonuses, business results for each fiscal year, dividends to shareholders, employee bonus levels, etc., and for stock-based remuneration, financial indicators such as the consolidated operating profit ratio, and the degree of growth in non-financial indicators such as brand value and ESG.

The reason for the selection of these indicators is that the Company judged that bonuses are important indicators to measure the contribution to corporate value and the degree to which corporate responsibility to shareholders and employees has been fulfilled in each fiscal year, and stock-based remuneration is important indicator to measure the contribution to the sustainable enhancement of corporate value over the mid- to long-term.

The amount of performance-linked remuneration is determined by the Board of Directors for bonuses based on the actual correlation between each indicator and the amount paid in the past and the business conditions at that time. The amount of stock-based remuneration is determined within a performance-linked coefficient of 50% to 150% based on a calculation method approved by the Board of Directors, with reference to the growth of each indicator over the three fiscal years.

Although the Company has not set specific targets for each indicator related to performance-linked remuneration, bonuses are evaluated based on the actual correlation between each indicator and the amount paid in the past and the business conditions at the time, and stock-based remuneration is evaluated based on the degree of growth over the three fiscal years.

As a result of the evaluation in the fiscal year ended March 31, 2021, bonuses were reduced by 20% compared to the base amount, and stock-based remuneration was paid with a performance-linked coefficient of 97%.

(c) Matters related to non-monetary remuneration, etc.

In order to function as a sound incentive for sustainable growth, in accordance with the criteria and procedures approved by the Board of Directors, the Company delivers and provides the Company’s shares and cash equivalent to the proceeds from the conversion of the Company’s shares, together with dividends accruing on the Company’s shares, in conjunction with mid- to long-term business performance.

The status of such delivery and benefits is as described in “2. COMMON STOCK (4) Shares Issued to Corporate Officers as Compensation for the Performance of Their Duties During the Fiscal Year Ended March 31, 2021.”

 

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(d) Matters related to the remuneration, etc. for Directors by resolution of the general meeting of shareholders

With respect to the remuneration, etc. of the Company’s Directors, the maximum amount of remuneration to Directors (excluding Directors who are Audit and Supervisory Committee Members) was set at 1,160 million yen per year (including up to 34 million yen per year for Outside Directors), and the maximum amount of remuneration to Directors who are Audit and Supervisory Committee Members was set at 270 million yen per year by resolution of the Ordinary General Meeting of Shareholders held on June 15, 2017. At the time of the resolution of this General Meeting of Shareholders, the number of Directors (excluding Directors who are Audit and Supervisory Committee Members) was nine (including two Outside Directors), and the number of Directors who are Audit and Supervisory Committee Members was five.

In addition, in accordance with a resolution of the Ordinary General Meeting of Shareholders held on June 14, 2018, the Company introduced a stock-based remuneration plan under which, in addition to the above-mentioned remuneration, the Company’s share and cash equivalent to the proceeds from the conversion of the Company’s shares will be delivered and provided, together with dividends accruing on the Company’s shares, to Directors and Operating Officers residing in Japan who conduct business execution from a trust to which the Company will contribute up to 3,910 million yen for a trust period of approximately three years. The number of Directors and Operating Officers eligible for this system at the time of the resolution at the said General Meeting of Shareholders is five and sixteen, respectively.

(e) Policy on determination of individual remuneration, etc., for Directors

 

  1.

Method of determining the policy for determining individual remuneration, etc., of Directors

The policy shall be determined by a resolution of the Board of Directors. When making decisions or changes to the determined policy, the Board of Directors shall deliberate after hearing the opinions formed by the Audit and Supervisory Committee in advance.

 

  2.

Overview of the policy for determining individual remuneration, etc., of Directors

The Company’s officer remuneration system is designed to motivate officers to contribute to the improvement of the Company’s business performance not only over the short-term, but also over the mid- to long-term, so that the Company can continuously enhance its corporate value, and it consists of monthly remuneration, a fixed amount of which is paid each month as remuneration for the execution of duties, bonuses linked to business performance for the relevant fiscal year, and stock-based remuneration linked to mid- to long-term business performance.

The monthly remuneration for each individual is based on the remuneration standards approved by the Board of Directors and is paid in an appropriate amount, taking into consideration factors such as the standards of other companies, in order to attract diverse and talented personnel.

Bonuses for individual employees are determined by a resolution of the Board of Directors and paid in cash, based on indicators such as business performance, dividends to shareholders, and employee bonus levels for each fiscal year, as well as the actual correlation between each indicator and the amount paid in the past, and the business conditions at the time.

In order to function as a sound incentive for sustainable growth, based on standards and procedures approved by the Board of Directors, individual stock-based remuneration is linked to mid- to long-term performance and paid in the form of the Company’s shares and cash. The indicator for stock-based remuneration is the degree of growth of financial indicators such as consolidated operating profit ratio and non-financial indicators such as brand value and ESG. The amount of stock-based remuneration is determined within a performance-linked coefficient of 50% to 150% based on a calculation method approved by the Board of Directors, with reference to the growth of each indicator over the three fiscal years.

The composition of monthly remuneration, bonuses and stock-based remuneration among the individual remuneration, etc., for Directors who conduct business execution is set so that monthly remuneration accounts for 50% and the total of bonuses and stock-based remuneration accounts for 50%.

Individual remuneration, etc., for Outside Directors and other Directors who do not conduct business execution (excluding Directors who are Audit and Supervisory Committee Members) consists solely of monthly remuneration.

Monthly remuneration is paid in a fixed amount every month as compensation for the execution of duties, and bonuses are paid once a year based on a resolution of the Board of Directors. As for stock-based remuneration, in accordance with the share delivery rules approved by the Board of Directors, a certain number of points are granted each year, and in principle, the points are converted into shares three years after the points are granted and a portion of the shares are converted into cash before payment.

Individual remuneration, etc., for Directors (excluding Directors who are Audit and Supervisory Committee Members) is determined in accordance with the remuneration standards, etc., approved by the Board of Directors and resolutions of the Board of Directors within the scope of authority granted by the General Meeting of Shareholders.

When making decisions or changes to the remuneration structure for the officers and remuneration standards, etc., the Board of Directors shall deliberate after hearing the opinions formed by the Audit and Supervisory Committee in advance.

Remuneration for Directors who are Audit and Supervisory Committee Members consists solely of monthly remuneration determined and paid through consultation among the Directors who are Audit and Supervisory Committee Members.

 

  3.

Reasons for the Board of Directors to determine that the details of individual remuneration, etc. for Directors are in line with the determination policy

The details of individual remuneration, etc., for Directors are determined by the remuneration standards, etc., approved by the Board of Directors within the scope of authority granted by the General Meeting of Shareholders, and the resolutions of the Board of Directors.

The Board of Directors includes five Outside Directors and when making decisions or changes to the remuneration structure for the officers and remuneration standards, etc., the Board of Directors shall deliberate after hearing the opinions formed by the Audit and Supervisory Committee in advance.

Therefore, the Board of Directors believes that the individual remuneration for Directors for the fiscal year ended March 31, 2021 is in line with the determination policy.

 

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(3) Principal Activities of Outside Directors during the Fiscal Year ended March 31, 2021

(a) Principal Activities during the Fiscal Year ended March 31, 2021

 

Position

  

Name

  

Attendance Record

  

Principal Activities during the Fiscal Year ended March 31, 2021

Director    Hiroko Koide    Attended all 11 meetings of the Board of Directors    As initially expected, she has made proactive statements at meetings including the Company’s Board of Directors based on her broad perspectives and extensive knowledge on corporate management cultivated through her experience working for foreign companies, including as an officer. She also inspects the Company’s business sites and holds discussions with the Executive Directors, thereby fully fulfilling her supervisory function over management from an independent standpoint.
Director    Fumiya Kokubu    Attended 8 out of 9 meetings of the Board of Directors    As initially expected, he has made proactive statements at meetings including the Company’s Board of Directors based on his broad perspectives and extensive knowledge on corporate management cultivated through his management experience at a trading company engaged in global business activities. He also inspects the Company’s business sites and holds discussions with the Executive Directors, thereby fully fulfilling his supervisory function over management from an independent standpoint.

Director

(Audit and Supervisory Committee Member)

   Hideo Takaura   

Attended all 11 meetings of the Board of Directors

Attended all 10 meetings of the Audit and Supervisory Committee

   As initially expected, he has made proactive statements at meetings including the Company’s Board of Directors and Audit and Supervisory Committee based on his broad perspectives, extensive knowledge and high level of expertise on finance cultivated through his experience as a certified public accountant. He also conducts audits, inspects the Company’s business sites and holds discussions with the Executive Directors, thereby fully fulfilling his supervisory function over management from an independent standpoint.

Director

(Audit and Supervisory Committee Member)

   Mayumi Tamura   

Attended all 11 meetings of the Board of Directors

Attended all 10 meetings of the Audit and Supervisory Committee

   As initially expected, she has made proactive statements at meetings including the Company’s Board of Directors and Audit and Supervisory Committee based on her broad perspectives and extensive knowledge on corporate management cultivated through her experience as an officer in the financial sector at multiple companies. She also conducts audits, inspects the Company’s business sites and holds discussions with the Executive Directors, thereby fully fulfilling her supervisory function over management from an independent standpoint.

Director

(Audit and Supervisory Committee Member)

   Kunihiko Sakai   

Attended all 11 meetings of the Board of Directors

Attended all 10 meetings of the Audit and Supervisory Committee

   As initially expected, he has made proactive statements at meetings including the Company’s Board of Directors and Audit and Supervisory Committee based on his broad perspectives, extensive knowledge and high level of expertise on law cultivated through his experience as a prosecutor and lawyer. He also conducts audits, inspects the Company’s business sites and holds discussions with the Executive Directors, thereby fully fulfilling his supervisory function over management from an independent standpoint.

 

Notes:

  1.    The attendance rate of all Internal Directors and Internal Directors who are Audit and Supervisory Committee Members was 100% at meetings of the Board of Directors and meetings of the Audit and Supervisory Committee, respectively.
  2.    The attendance record of Director Fumiya Kokubu shows figures covering the meetings of the Board of Directors held after his assumption of office on June 19, 2020.

 

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(b) Summary of Content of Liability Limitation Contracts

The Company has entered into liability limitation contracts with all Outside Directors based on Article 427, Paragraph 1 of the Companies Act and the Company’s Articles of Incorporation, to the effect of limiting the liability for damages, in accordance with Article 423, Paragraph 1 of the Companies Act, to the minimum liability amount that is stipulated in Article 425, Paragraph 1 of the Companies Act.

 

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5. FINANCIAL AUDITOR

(1) Name of Financial Auditor

      KPMG AZSA LLC

(2) Financial Auditor Remuneration, Etc., for the Fiscal Year ended March 31, 2021

 

Category

  Year ended March 31, 2020 (reference)     Year ended March 31, 2021  
  Remuneration for audit
certification services
(millions of yen)
    Remuneration for
non-audit services
(millions of yen)
    Remuneration for audit
certification services
(millions of yen)
    Remuneration for
non-audit services
(millions of yen)
 

The Company

    522       6       563       6  

Consolidated subsidiaries

    418       73       474       53  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    940       79       1,037       59  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

Notes:

  1.  

The Company’s Audit and Supervisory Committee has examined the financial auditor’s audit plan for the current fiscal year and the basis for calculation of estimates used as assumptions for remuneration, based on inspection and evaluation of the previous fiscal year’s auditing performance through materials obtained and reports received as necessary from directors, relevant internal departments and the financial auditor. As a result, it has agreed to the remuneration of the financial auditor as specified in Article 399, Paragraphs 1 and 3 of the Companies Act of Japan.

 

  2.  

The audit contract between the Company and its financial auditor does not itemize remuneration for auditing work based on the Companies Act of Japan, auditing work based on the Financial Instruments and Exchange Act of Japan and auditing work based on the Securities Exchange Act of the United States. Because of this and because it is impractical to itemize these categories of remuneration, the figure shown in “Remuneration for audit certification services” of the Company is a total figure.

 

  3.  

Non-audit services for which the Company pays remuneration to its financial auditor for duties other than those stipulated in Article 2, Paragraph 1 of the Certified Public Accountants Act in the current fiscal year consist of advice and guidance on accounting matters and information disclosure.

 

  4.   Of the Company’s principal subsidiaries, overseas subsidiaries are audited by financial audit companies other than the financial auditor employed by the Company.

(3) Policy Regarding Dismissal or Non-Re-Employment of Financial Auditor

In the case that the financial auditor is recognized to have committed a serious legal infraction, sharply lowered the quality of its audit services, or otherwise shown grounds for determining it is inappropriate for employment as a financial auditor, the Company’s Audit and Supervisory Committee shall dismiss the financial auditor in accordance with procedures stipulated in the Companies Act, or decide on proposals concerning the dismissal or non re-employment of the financial auditor to be submitted to the general meetings of shareholders.

 

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6. THE COMPANY’S SYSTEMS AND POLICIES

(1) Systems to Ensure the Compliance of the Directors’ Execution of Duties with Laws and Regulations and the Articles of Incorporation and Other Systems to Ensure the Appropriateness of Operations of the Company and the corporate group comprised of the Company and its subsidiaries

The Board of Directors of the Company has determined the Basic Policy on Development of Internal Control Systems as follows.

 

1.

Systems for ensuring that the execution of duties by Directors and employees complies with laws, ordinances, and the Company’s Articles of Incorporation

The Company will establish a code of conduct to be observed by its management and employees, such as conformity with applicable laws, ordinances, and internal rules and regulations, and it will endeavor to ensure that all management personnel and employees are made aware of and observe this code.

The Company will further develop its internal whistle-blowing systems to facilitate compliance.

The Company will install an officer to coordinate all compliance matters and will further develop its compliance systems.

 

2.

Systems related to retention and management of information on execution of duties by the Directors

The Company will establish a management policy for information related to the execution of duties by the Directors and appropriately retain and manage such information.

 

3.

Rules and other systems related to risk management

The Company will further develop systems for relevant boards and councils to make decisions regarding material matters of management after assessing and considering associated risks.

The Company will install an officer to coordinate all matters related to risk management, and it will establish rules on risk management and further develop its risk management systems.

 

4.

Systems for ensuring that the duties of the Directors are being executed efficiently

The Company will assign Operating Officers or Operating Executives to the headquarters of each region, business and function and to main divisions to facilitate the delegation of authority from Representative Directors and Executive Directors by implementing an Operating Officer and Operating Executive System and will further develop systems that enable prompt and appropriate decision making by clearly defining the scope of authorities delegated to Operating Officers or Operating Executives and the decision-making process.

To conduct management efficiently and effectively, the Company will establish midterm management plans and annual business plans, endeavor to share these plans, and supervise their progress.

 

5.

Systems for ensuring that the corporate group, comprised of the Company and its subsidiaries, conducts business activities appropriately

In addition to sharing the Company’s code of conduct for its management and employees as well as its basic policy on development of internal control systems with its subsidiaries, the Company will further develop systems for supervising its subsidiaries and endeavor to enhance the corporate governance of the Group.

The Company will further develop systems for reporting material matters of the management of subsidiaries to the Company.

The Company will share the risk management policy established by the Company with its subsidiaries and will further develop the risk management systems of the Group through such methods as establishing rules regarding reports from subsidiaries on material risks.

The Company will further develop the internal whistle-blowing systems of the Group in order to discover at an early stage and respond to issues such as violations of laws or ordinances within the Group.

The Company will enhance the internal auditing systems of the Group.

Note: In the above section, “Group” means the corporate group comprised of the Company and its subsidiaries.

 

6.

Provision of the Directors and employees who should support duties of the Audit and Supervisory Committee, independence of such Directors and employees from other Directors (excluding the members of the Audit and Supervisory Committee), and ensuring effectiveness of instructions to such Directors and employees

The Company will establish a staff organization directly under the Audit and Supervisory Committee to provide support for the Audit and Supervisory Committee.

 

7.

Systems for Directors and employees to report to the Audit and Supervisory Committee and other systems related to reporting to the Audit and Supervisory Committee

The Company will further develop systems for the managements and employees of the Company and its subsidiaries to report to the Audit and Supervisory Committee. No one making such a report will receive any disadvantageous treatment for doing so.

 

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8.

Other systems for ensuring the effectiveness of audits by the Audit and Supervisory Committee

In accordance with laws and ordinances, the Company will bear the necessary expenses for the members of the Audit and Supervisory Committee to execute their duties.

The Company will further develop other necessary systems for audits by the Audit and Supervisory Committee to be conducted effectively.

(2) Overview of Operating Status for Systems to Ensure the Compliance of the Directors’ Execution of Duties with Laws and Regulations and the Articles of Incorporation and Other Systems to Ensure the Appropriateness of Operations of the Company and the corporate group comprised of the Company and its subsidiaries

The Overview of Developing and Operating Status of Basic Policy on Development of Internal Control Systems stated above is as follows.

 

1.

Systems for ensuring that the execution of duties by Directors and employees complies with laws, ordinances, and the Company’s Articles of Incorporation

The Company has established the Honda Code of Conduct to clearly define the Company’s policy on legal compliance and the acts of integrity for its management and employees, and the Company endeavors to ensure that all management personnel and employees are made aware of and follow the Honda Code of Conduct through opportunities such as management training, training upon joining the Company, and level-specific employee training.

The Company has established the Business Ethics Kaizen Proposal Line as a point of contact for internal whistle-blowing.In addition to internal points of contact, the Company has also established an external point of contact in a law firm. These points of contact are operated under rules that include the protection of anyone making use of the Proposal Line.

The Senior Managing Director and Director in Charge of Finance and Administration (Accounting, Finance, Human Resources and Corporate Governance) has been appointed as a Compliance Officer.

The Company has established the Compliance Committee chaired by the Compliance Officer, and the Committee deliberates on material matters related to compliance.

In the fiscal year ended March 31, 2020, the Compliance Committee has held regular meetings and has deliberated on matters such as the status of establishment and operation of internal control systems, the operating status of the Business Ethics Kaizen Proposal Line and measures to improve compliance.

Each department has conducted an inspection of its legal compliance status using a control self-assessment (CSA) method, and the Audit Division has conducted an internal audit of those results.

 

2.

Systems related to retention and management of information on execution of duties by the Directors

The Company’s policy on information management is prescribed in the Document Management Policy, which also stipulates the management policy for information related to the execution of duties by the Directors.

In accordance with this Policy, minutes are prepared for each Board of Directors meeting and Executive Council meeting and permanently retained by the department in charge.

 

3.

Rules and other systems related to risk management

The relevant boards and councils such as the Board of Directors, Executive Council, and Regional Operating Boards deliberate upon material matters of management in accordance with each body’s rules of procedure and then make decisions regarding such matters after assessing and considering associated risks.

The Senior Managing Director and Director in Charge of Mono-zukuri (which includes R&D, Production, Purchasing, Quality, Parts, Service, Intellectual Property, Standardization and IT) has been appointed as a Risk Management Officer.

The Company has established the Honda Global Risk Management Policy, which prescribes the Company’s basic policy on risk management (such as business risks and disaster risks) as well as systems for collecting risk information and responding to risks when they arise.

Each department regularly conducts risk assessments in accordance with the Policy.

The Risk Management Officer monitors and supervises the status of responses to material risks, and sets up the Global Emergency Headquarters as necessary. The response by the Company to the spread of COVID-19 is being coordinated via the Global Emergency Headquarters and the Emergency Headquarters in each region. In addition, based upon the experience obtained from this situation, the Company is currently reviewing the risk management system of each department. The Company set up the Global Emergency Headquarters also for the purpose of dealing with the impact on the procurement of semiconductor-related components and implements measures to minimize that impact.

 

4.

Systems for ensuring that the duties of the Directors are being executed efficiently

For strengthening the business execution of each region and on-site, and prompt and appropriate managerial decisions, Operating Officers or Operating Executives, who are transferred the authority from Representative Directors and Executive Directors, are assigned to the headquarters of each region, business, and function and to main divisions as people responsible for handling business execution in the fields of which they are in charge.

 

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In addition to the Board of Directors, the Executive Council and the Regional Operating Boards have been established as bodies to make decisions on material matters of management, and each body’s rules of procedure clearly define the scope of authorities delegated to Executive Directors, Operating Officers and Operating Executives and the decision-making process. The Company has adopted a “company with the Audit and Supervisory Committee” structure, which enables the Company to strengthen the supervisory function of the Board of Directors and to extend the delegation of authority from the Board of Directors to the Executive Council meetings for further increased speed in decision-making.

The Board of Directors determines the management vision, the company-wide midterm management plans and the annual business plans, which are then shared throughout the Company through Executives including Chief Officers.

The Board of Directors receives reports on the progress of management vision and the company-wide midterm management plans for each fiscal year and on the progress of business plans for each quarter, thereby supervising the execution status thereof.

 

5.

Systems for ensuring that the corporate group, comprised of the Company and its subsidiaries, conducts business activities appropriately

The Company’s department in charge of internal control endeavors to ensure, both directly and through each regional headquarters, that the Company’s subsidiaries are made aware of the Honda Code of Conduct and the basic policy on development of internal control systems.

Each subsidiary has developed internal control systems appropriate to the laws and ordinances of the country in which it operates and to the business conditions of the subsidiary and regularly reports to the Company regarding the development and operating status of those systems.

People responsible for the supervision of each subsidiary have been appointed from among the Executive Directors, Operating Officers and Operating Executives with jurisdiction over the area related to the business of the relevant subsidiary. These people responsible regularly receive reports regarding business plans and management conditions from the subsidiaries for which they are responsible and supervise those subsidiaries in cooperation with business management departments and other related departments.

The Company requires subsidiaries to obtain prior approval from or make reports to the Company regarding material matters of the management of the subsidiary in accordance with the Company’s rules of procedure, and each subsidiary has developed its own approval rules that include the requirements of the Company.

The Company’s subsidiaries have developed risk management systems appropriate to their sizes and business conditions based on the Honda Global Risk Management Policy and report to the Company on material risks. The Company’s department in charge of risk management also verifies the development and operating status of the risk management systems of the subsidiaries.

The Business Ethics Kaizen Proposal Line of the Company accepts whistle-blowing reports from management, employees and affiliates of the Company and its subsidiaries, in addition to which each regional headquarters and other major subsidiary has established its own internal whistle-blowing point of contact.

The Audit Division, which directly reports to the president, conducts internal auditing of each department of the Company, provides supervision and guidance to internal audit departments in major subsidiaries, and conducts audits of subsidiaries directly when necessary.

 

6.

Provision of the Directors and employees who should support duties of the Audit and Supervisory Committee, independence of such Directors and employees from other Directors (excluding the members of the Audit and Supervisory Committee), and ensuring effectiveness of instructions to such Directors and employees

The Company has established the Audit and Supervisory Committee’s Division and appointed full-time staff members. The Division is independent from the chain of command of the Directors (excluding the members of the Audit and Supervisory Committee) of the Company, directly under the Audit and Supervisory Committee. The Audit and Supervisory Committee’s Division takes orders directly from and supports the Audit and Supervisory Committee so that its duties are executed efficiently.

 

7.

Systems for Directors and employees to report to the Audit and Supervisory Committee and other systems related to reporting to the Audit and Supervisory Committee

The Company has established its Standards for the Audit and Supervisory Committee Reports as a set of standards for reports to the Audit and Supervisory Committee, and the relevant departments of the Company regularly report to the Audit and Supervisory Committee regarding the business conditions and the development and operation status of internal control systems, such as those for compliance and risk management, of the Company and its subsidiaries. Additionally, if there are any matters that may significantly affect the Company, those are reported as well.

No one who has made a report to the Audit and Supervisory Committee is treated disadvantageously for having done so.

 

8.

Other systems for ensuring the effectiveness of audits by the Audit and Supervisory Committee

In order for the Company to bear the necessary expenses for the members of the Audit and Supervisory Committee to execute their duties, the Company secures the necessary budget every business year based on proposals from the Audit and Supervisory Committee.

The Audit and Supervisory Committee works closely with the Audit Division, which serves as the Company’s internal audit department, to conduct business audits of the Company and its subsidiaries. Additionally, two full-time members of the Audit and Supervisory Committee are appointed, and they attend Executive Council meetings and other important meetings as necessary.

 

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(3) POLICY REGARDING DECISIONS FOR DISTRIBUTION OF DIVIDENDS, ETC.

The Company strives to carry out its operations worldwide from a global perspective and to increase its corporate value. With respect to the redistribution of profits to its shareholders, which we consider to be one of the most important management issues, the distribution of dividends is determined after taking into account retained earnings for future growth and consolidated earnings performance, among other factors, from a long-term perspective. Dividends will be paid with a target of approximately 30% for the ratio of the dividend amount to consolidated profit for the year attributable to owners of the parent (payout ratio).

The Company’s basic policy on the distribution of dividends is to pay a dividend four times a year. The decision-making body for dividends is the Board of Directors.

The Company will also acquire its own shares at a timing it deems optimal with the goal of improving efficiency of the Company’s capital structure and implementing a flexible capital policy.

The Company will allocate retained earnings toward financing R&D activities that are essential for its future growth, capital expenditures and investment programs that will expand its operations, and maintaining sound financial conditions.

Total cash dividends for the year ended March 31, 2021 were JPY 110 per share. Quarterly cash dividends were first quarter cash dividends of JPY 11, second quarter cash dividends of JPY 19, third quarter cash dividends of JPY 26, and year-end cash dividends of JPY 54.

 

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Consolidated Financial Statements

Consolidated Statements of Financial Position

 

     Yen (millions)  

As of March 31, 2020 and 2021

   2020
(reference)
    2021  

ASSETS

    

Current assets:

    

Cash and cash equivalents

     2,672,353       2,758,020  

Trade receivables

     633,909       801,814  

Receivables from financial services

     1,878,358       1,794,654  

Other financial assets

     190,053       295,307  

Inventories

     1,560,568       1,545,600  

Other current assets

     365,769       383,696  
  

 

 

   

 

 

 

Total current assets

     7,301,010       7,579,091  
  

 

 

   

 

 

 

Non-current assets:

    

Investments accounted for using the equity method

     655,475       891,002  

Receivables from financial services

     3,282,807       3,619,896  

Other financial assets

     441,724       628,533  

Equipment on operating leases

     4,626,063       4,919,916  

Property, plant and equipment

     3,051,704       3,021,514  

Intangible assets

     760,434       818,763  

Deferred tax assets

     132,553       99,552  

Other non-current assets

     209,695       342,763  
  

 

 

   

 

 

 

Total non-current assets

     13,160,455       14,341,939  
  

 

 

   

 

 

 

Total assets

      20,461,465         21,921,030   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Trade payables

     958,469       1,088,061  

Financing liabilities

     3,248,457       3,005,624  

Accrued expenses

     449,716       415,106  

Other financial liabilities

     209,065       182,145  

Income taxes payable

     43,759       47,793  

Provisions

     287,175       362,151  

Other current liabilities

     593,447       614,577  
  

 

 

   

 

 

 

Total current liabilities

     5,790,088       5,715,457  
  

 

 

   

 

 

 

Non-current liabilities:

    

Financing liabilities

     4,221,229       4,715,361  

Other financial liabilities

     303,570       280,809  

Retirement benefit liabilities

     578,909       358,532  

Provisions

     238,439       278,890  

Deferred tax liabilities

     698,868       842,001  

Other non-current liabilities

     344,339       357,141  
  

 

 

   

 

 

 

Total non-current liabilities

     6,385,354       6,832,734  
  

 

 

   

 

 

 

Total liabilities

     12,175,442       12,548,191  
  

 

 

   

 

 

 

Equity:

    

Common stock

     86,067       86,067  

Capital surplus

     171,823       172,049  

Treasury stock

     (273,940     (273,786

Retained earnings

     8,142,948       8,901,266  

Other components of equity

     (114,639     196,710  
  

 

 

   

 

 

 

Equity attributable to owners of the parent

     8,012,259       9,082,306  

Non-controlling interests

     273,764       290,533  
  

 

 

   

 

 

 

Total equity

     8,286,023       9,372,839  
  

 

 

   

 

 

 

Total liabilities and equity

     20,461,465       21,921,030  
  

 

 

   

 

 

 

 

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Consolidated Statements of Income

 

     Yen (millions)  

Years ended March 31, 2020 and 2021

   2020
(reference)
    2021  

Sales revenue

     14,931,009       13,170,519  

Operating costs and expenses:

    

Cost of sales

     (11,851,659     (10,439,689

Selling, general and administrative

     (1,641,590     (1,331,728

Research and development

     (804,123     (738,894
  

 

 

   

 

 

 

Total operating costs and expenses

     (14,297,372     (12,510,311
  

 

 

   

 

 

 

Operating profit

     633,637       660,208  
  

 

 

   

 

 

 

Share of profit of investments accounted for using the equity method

     164,203       272,734  

Finance income and finance costs:

    

Interest income

     49,412       19,805  

Interest expense

     (24,689     (13,877

Other, net

     (32,645     (24,817
  

 

 

   

 

 

 

Total finance income and finance costs

     (7,922     (18,889
  

 

 

   

 

 

 

Profit before income taxes

     789,918       914,053  

Income tax expense

     (279,986     (218,609
  

 

 

   

 

 

 

Profit for the year

     509,932       695,444  
  

 

 

   

 

 

 

Profit for the year attributable to:

    

Owners of the parent

     455,746       657,425  

Non-controlling interests

     54,186       38,019  
     Yen  

Earnings per share attributable to owners of the parent

    

Basic and diluted

     260.13       380.75  

 

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Consolidated Statements of Comprehensive Income (reference)

 

     Yen (millions)  

Years ended March 31, 2020 and 2021

   2020     2021  

Profit for the year

           509,932             695,444  

Other comprehensive income, net of tax:

    

Items that will not be reclassified to profit or loss

    

Remeasurements of defined benefit plans

     (102,983     238,262  

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

     (23,361     67,603  

Share of other comprehensive income of investments accounted for using the equity method

     (1,550     4,910  

Items that may be reclassified subsequently to profit or loss

    

Net changes in revaluation of financial assets measured at fair value through other comprehensive income

     279       (43

Exchange differences on translating foreign operations

     (293,201     239,097  

Share of other comprehensive income of investments accounted for using the equity method

     (30,393     27,350  
  

 

 

   

 

 

 

Total other comprehensive income, net of tax

     (451,209     577,179  
  

 

 

   

 

 

 

Comprehensive income for the year

     58,723       1,272,623  
  

 

 

   

 

 

 
  

 

 

   

 

 

 

Comprehensive income for the year attributable to:

    

Owners of the parent

     24,287       1,214,757  

Non-controlling interests

     34,436       57,866  

 

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Consolidated Statements of Changes in Equity

Years ended March 31, 2020 (reference) and 2021

 

    Yen (millions)  
    Equity attributable to owners of the parent     Non-controlling
interests
    Total
equity
 
    Common
stock
    Capital
surplus
    Treasury
stock
    Retained
earnings
    Other
components
of equity
    Total  

Balance as of April 1, 2019

    86,067       171,460       (177,827     7,973,637       214,383       8,267,720       298,070       8,565,790  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the year

               

Profit for the year

          455,746         455,746       54,186       509,932  

Other comprehensive income, net of tax

            (431,459     (431,459     (19,750     (451,209
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the year

          455,746       (431,459     24,287       34,436       58,723  

Reclassification to retained earnings

          (102,437     102,437       —           —    

Transactions with owners and other

               

Dividends paid

          (196,795       (196,795     (55,693     (252,488

Purchases of treasury stock

        (96,284         (96,284       (96,284

Disposal of treasury stock

        171           171         171  

Share-based payment transactions

      363             363         363  

Equity transactions and others

                (3,049     (3,049
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

      363       (96,113     (196,795       (292,545     (58,742     (351,287
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other changes

          12,797         12,797         12,797  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2020

    86,067       171,823       (273,940     8,142,948       (114,639     8,012,259       273,764       8,286,023  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income for the year

               

Profit for the year

          657,425         657,425       38,019       695,444  

Other comprehensive income, net of tax

            557,332       557,332       19,847       577,179  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the year

          657,425       557,332       1,214,757       57,866       1,272,623  

Reclassification to retained earnings

          245,983       (245,983     —           —    

Transactions with owners and other

               

Dividends paid

          (145,090       (145,090     (43,348     (188,438

Purchases of treasury stock

        (6         (6       (6

Disposal of treasury stock

        160           160         160  

Share-based payment transactions

      226             226         226  

Equity transactions and others

                2,251       2,251  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners and other

      226       154       (145,090       (144,710     (41,097     (185,807
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of March 31, 2021

    86,067       172,049       (273,786     8,901,266       196,710       9,082,306       290,533       9,372,839  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Consolidated Statements of Cash Flows (reference)

 

     Yen (millions)  

Years ended March 31, 2020 and 2021

   2020     2021  

Cash flows from operating activities:

    

Profit before income taxes

     789,918       914,053  

Depreciation, amortization and impairment losses excluding equipment on operating leases

     699,877       624,239  

Share of profit of investments accounted for using the equity method

     (164,203     (272,734

Finance income and finance costs, net

     (47,892     22,630  

Interest income and interest costs from financial services, net

     (130,636     (137,178

Changes in assets and liabilities

    

Trade receivables

     132,702       (133,788

Inventories

     (59,931     68,281  

Trade payables

     (141,159     101,301  

Accrued expenses

     (4,529     (40,927

Provisions and retirement benefit liabilities

     118       106,829  

Receivables from financial services

     103,614       (59,934

Equipment on operating leases

     (270,677     (161,579

Other assets and liabilities

     (20,524     (72,473

Other, net

     10,959       5,190  

Dividends received

     185,742       191,112  

Interest received

     288,821       236,729  

Interest paid

     (162,263     (113,100

Income taxes paid, net of refunds

     (230,522     (206,272
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     979,415       1,072,379  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Payments for additions to property, plant and equipment

     (370,195     (318,410

Payments for additions to and internally developed intangible assets

     (231,063     (232,727

Proceeds from sales of property, plant and equipment and intangible assets

     17,638       6,770  

Payments for acquisitions of subsidiaries, net of cash and cash equivalents acquired

     (3,047     2,230  

Payments for acquisitions of investments accounted for using the equity method

     (14,584     (110,747

Proceeds from sales of investments accounted for using the equity method

     —         12,570  

Payments for acquisitions of other financial assets

     (282,806     (433,375

Proceeds from sales and redemptions of other financial assets

     265,980       276,808  

Other, net

     (1,404     —    
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (619,481     (796,881
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from short-term financing liabilities

     9,037,608       9,115,347  

Repayments of short-term financing liabilities

     (9,039,601     (9,294,859

Proceeds from long-term financing liabilities

     2,021,173       1,948,835  

Repayments of long-term financing liabilities

     (1,676,504     (1,798,429

Dividends paid to owners of the parent

     (196,795     (145,090

Dividends paid to non-controlling interests

     (54,280     (41,755

Purchases and sales of treasury stock, net

     (96,113     154  

Repayments of lease liabilities

     (78,659     (67,628

Other, net

     (4,240     (555
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (87,411     (283,980
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (94,291     94,149  
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     178,232       85,667  
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of year

     2,494,121       2,672,353  
  

 

 

   

 

 

 

Cash and cash equivalents at end of year

     2,672,353       2,758,020  
  

 

 

   

 

 

 

 

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Table of Contents

The Notes to the Consolidated Statutory Report

Significant Accounting Policies:

 

1.

Consolidated subsidiaries

Number of consolidated subsidiaries (including structured entities): 348

Corporate names of principal consolidated subsidiaries:

American Honda Motor Co., Inc., Honda of America Mfg., Inc., Honda Canada Inc.,

Honda R&D Co., Ltd., American Honda Finance Corporation

 

2.

Affiliates and joint ventures accounted for using the equity method

Number of affiliates and joint ventures: 67

Corporate names of major affiliates and joint ventures:

Dongfeng Honda Automobile Co., Ltd., GAC Honda Automobile Co., Ltd., Dongfeng Honda Engine Co., Ltd.

 

3.

Changes of consolidated subsidiaries, affiliates and joint ventures

Consolidated subsidiaries (including structured entities):

Newly formed consolidated subsidiaries: 9

Reduced through reorganization: 18

Affiliates and joint ventures:

Newly formed affiliates and joint ventures: 1

Reduced through reorganization: 7

 

4.

Accounting standards of consolidated financial statements

The Company prepares its consolidated financial statements in conformity with International Financial Reporting Standards (“IFRS”) in accordance with Article 120-1 of the Ordinance of Companies Accounting. The Company omits some disclosure items and notes in accordance with the second sentence of Article 120-1 of the Ordinance of Companies Accounting.

 

5.

Basis and method of valuation for financial assets

 

  (1)

Non-derivative financial assets

(Financial assets measured at amortized cost)

A financial asset is classified into financial assets measured at amortized cost when the asset is held within a business model whose objective is to hold the asset in order to collect the contractual cash flows, and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets measured at amortized cost are initially measured at their fair value, and are subsequently measured at amortized cost using the effective interest method.

(Financial assets measured at fair value through other comprehensive income)

A financial asset in debt securities is classified into financial assets measured at fair value through other comprehensive income when the asset is held within a business model whose objectives are to hold the asset in order to collect the contractual cash flows as well as to sell the asset, and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt securities classified as financial assets measured at fair value through other comprehensive income are initially measured at their fair value, and subsequent changes in fair value of the investment, except for impairment gains or losses and foreign exchange gains or losses, are presented in other comprehensive income.

In addition, Honda elects to designate investments in equity securities, such as shares held for maintaining and strengthening trade relationships, as financial assets measured at fair value through other comprehensive income. Equity securities designated as financial assets measured at fair value through other comprehensive income are initially measured at their fair value, and subsequent changes in fair value of the investment are presented in other comprehensive income.

(Financial assets measured at fair value through profit or loss)

Financial assets measured at fair value that are not classified or designated as financial assets measured at fair value through other comprehensive income are classified into financial assets measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are initially measured at their fair value, and subsequent changes in fair value are recognized in profit or loss.

 

  (2)

Derivatives

Derivatives are initially recognized as assets and measured at fair value, when Honda becomes a party to the contractual provision of the derivatives. Subsequent changes in fair value of derivatives are recognized in profit or loss in the period of the changes.

 

6.

Basis and method of valuation for inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes purchase costs and conversion costs, and it is determined principally by using the first-in first-out method.

 

7.

Basis and method of valuation and depreciation method for equipment on operating leases

Equipment on operating leases is initially measured at cost. Depreciation of equipment on operating leases is calculated using the straight-line method over the lease term. The depreciable amount is the cost of the equipment less its residual value.

 

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8.

Basis and method of valuation and depreciation method for property, plant and equipment

Property, plant and equipment is initially measured at cost. Depreciation of property, plant and equipment, except for land that is not subject to depreciation, is calculated using the straight-line method over the estimated useful life. The depreciable amount is the cost of the asset less the respective estimated residual values. Right-of-use assets from lease transactions are initially measured at cost and depreciated by the straight-line method from the lease commencement date to the end of the useful life of right-of-use assets or the end of the lease period, whichever is earlier.

 

9.

Basis and method of valuation and amortization method for intangible assets

(Research and development)

Capitalized development cost is measured at the sum of expenditures for development incurred between when the foregoing conditions for capitalization are initially met and when the development is completed, and includes all directly attributable costs to the development process. Capitalized development cost is amortized using the straight-line method over the expected product life cycle of the developed product.

Expenditures on research and other development expenditures which do not meet the foregoing conditions are expensed as incurred.

(Other intangible assets)

Other intangible assets are initially measured at cost and principally amortized using the straight-line method over their estimated useful lives.

 

10.

Impairment

 

  (1)

Financial assets measured at amortized cost

(Receivables from financial services – Allowance for credit losses)

The allowance for credit losses is management’s estimate of expected credit loss (ECL) on receivables from financial services.

The allowance for credit losses on financial assets which have experienced a significant increase in credit risk since initial recognition is measured at amounts equal to lifetime ECL. The allowance for credit losses on financial assets which have not experienced a significant increase in credit risk is measured at amounts equal to 12-month ECL. Lifetime ECL represents ECL that results from all possible default events over the expected life of a financial asset. 12-month ECL is the portion of lifetime ECL that results from default events that are possible within 12 months after the reporting date. ECL is a probability-weighted estimate of the difference between the contractual cash flows and the cash flows that the entity expects to receive, discounted at the original effective interest rates.

When determining whether credit risk has increased significantly, the finance subsidiaries assess financial assets either individually based primarily on delinquencies or collectively for groups of financial assets with shared risk characteristics such as the period of initial recognition, collateral type, original term and credit score considering relative changes in expected default rates since initial recognition.

 

  (2)

Equipment on operating leases, property, plant and equipment and intangible assets

At the end of the reporting period, the carrying amount of equipment on operating leases, property, plant and equipment, and intangible assets are assessed to determine whether or not there is any indication of impairment. If there is such an indication, the recoverable amount of such asset is estimated and compared with the carrying amount of the asset as a test of impairment.

 

11.

Provisions for product warranties

Honda recognizes provisions for product warranties to cover future product warranty expenses. Honda recognizes costs for general warranties on products Honda sells and for specific warranty programs, including product recalls. Honda provides for general estimated warranty costs at the time products are sold to customers. Honda also provides for specific estimated warranty program costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

 

12.

Post-employment benefits

For defined benefit plans, the present value of defined benefit obligations less the fair value of plan assets is recognized as either a liability or an asset in the consolidated statements of financial position.

The present value of defined benefit obligations and service costs are principally determined for each plan using the projected unit credit method. The discount rate is determined by reference to market yields at the end of the reporting period on high quality corporate bonds that is consistent with the currency and estimated term of the post-employment benefit obligation. Net interest on the net defined benefit liability (asset) for the reporting period is determined by multiplying the net defined benefit liability (asset) by the discount rate.

Past service cost defined as the change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment is recognized in profit or loss upon occurrence of the plan amendment or curtailment.

Honda recognizes the difference arising from remeasurement of present value of the defined benefit obligation and the fair value of the plan asset in other comprehensive income when it is incurred, and reclassifies it immediately to retained earnings.

 

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Accounting Estimates:

The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amount of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

These estimates and underlying assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about accounting estimates and assumptions that have significant effects on the amounts reported in the consolidated financial statements is as follows

 

1.

Valuation of financial assets measured at amortized cost and debt securities classified into financial assets measured at fair value through other comprehensive income: Yen (millions)

 

     Mar. 31, 2021  

Financial assets measured at amortized cost

  

Trade receivables

     801,814  

Receivables from financial services

     5,414,550  

Other financial assets

     392,200  

Debt securities classified into financial assets measured at fair value through other comprehensive income

  

Other financial assets

     10,134  

 

2.

Fair value of financial instruments (Note on Financial Instruments)

 

3.

Net realizable value of inventories: Yen (millions)

 

     Mar. 31, 2021  

Inventories

     1,545,600  

 

4.

Recoverable amount of non-financial assets: Yen (millions)

 

     Mar. 31, 2021  

Equipment on operating leases

     4,919,916  

Property, plant and equipment

     3,021,514  

Intangible assets

     818,763  

 

5.

Measurement of provisions: Yen (millions)

 

     Mar. 31, 2021  

Provisions

     641,041  

 

6.

Measurement of net defined benefit liabilities (assets): Yen (millions)

 

     Mar. 31, 2021  

Retirement benefit assets

     168,488  

Retirement benefit liabilities

     358,532  

Retirement benefit assets is included in other non-current assets in the consolidated statements of financial position.

 

7.

Recoverability of deferred tax assets: Yen (millions)

 

     Mar. 31, 2021  

Deferred tax assets

     99,552  

Deferred tax liabilities

     842,001  

 

8.

Likelihood and magnitude of outflows of resources embodying economic benefits required to settle contingent liabilities

 

  (1)

Claims and Lawsuits

Honda is subject to potential liability under various lawsuits and claims. Honda recognizes a provision for loss contingencies when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Honda reviews these pending lawsuits and claims periodically and adjusts the amounts recognized for these contingent liabilities, if necessary, by considering the nature of lawsuits and claims, the progress of the case and the opinions of legal counsel.

With respect to product liability, personal injury claims or lawsuits, Honda believes that any judgment that may be recovered by any plaintiff for general and special damages and court costs will be adequately covered by Honda’s insurance and provision. Punitive damages are claimed in certain of these lawsuits.

 

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After consultation with legal counsel, and taking into account all known factors pertaining to existing lawsuits and claims, Honda believes that the ultimate outcome of such lawsuits and pending claims should not result in liability to Honda that would be likely to have an adverse material effect on its consolidated financial position or results of operations.

 

  (2)

Loss related to airbag inflators

Honda has been conducting market-based measures in relation to airbag inflators. Honda recognizes a provision for specific warranty costs when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. There is a possibility that Honda will need to recognize additional provisions when new evidence related to the product recalls arises. However, it is not possible for Honda to reasonably estimate the amount and timing of potential future losses as of the date of this report.

 

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Notes to Consolidated Statements of Financial Position:

1. The allowance for assets are as follows: Yen (millions)

 

     Mar. 31, 2020      Mar. 31, 2021  

The allowance for doubtful trade receivables

     11,302        10,521  

The allowance for credit losses for receivables from financial services

     63,468        37,366  

The allowance for doubtful other financial assets

     3,364        3,358  
2. Net book value of pledged assets and secured liabilities are as follows: Yen (millions)

 

     Mar. 31, 2020      Mar. 31, 2021  

Pledged assets:

     

Trade receivables

               22,093        19,789  

Receivables from financial services

     1,140,583        1,086,786  

Inventories

     17,956        —    

Equipment on operating leases

     81,501        122,320  

Property, plant and equipment

     1,478        2,138  

Secured liabilities:

     

Financing liabilities

(Current liabilities)

     604,195        598,382  

Financing liabilities

(Non-current liabilities)

     551,403        495,207  
3. The accumulated depreciation and impairment losses for assets are as follows: Yen (millions)

 

     Mar. 31, 2020      Mar. 31, 2021  

Equipment on operating leases

             1,277,511          1,382,793  

Property, plant and equipment

     5,696,263        6,070,430  
4. Honda has entered into various guarantee agreements which are primarily for employee bank loans to cover their housing costs as follows: Yen (millions)

 

     Mar. 31, 2020      Mar. 31, 2021  

Bank loans of employees for their housing costs

     10,100        8,343  

If an employee defaults on his/her loan payments, Honda is required to perform under the guarantee. The undiscounted maximum amount of Honda’s obligation to make future payments in the event of defaults is shown above. As of March 31, 2021, no amount has been accrued for any estimated losses under these obligations, as it is probable that the employees will be able to make all scheduled payments.

 

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Notes to Consolidated Statements of Changes in Equity:

 

     Mar. 31, 2020      Mar. 31, 2021  

1. The number of shares outstanding

     1,811,428,430        1,811,428,430  
     Mar. 31, 2020      Mar. 31, 2021  

2. The number of treasury shares

     84,818,644        84,773,162  

 

3.

The total amount of dividends for the fiscal year ended March 31, 2021 was JPY 145,090 million. The Company distributes year-end cash dividends of JPY 93,272 million to the shareholders of record as of March 31, 2021.

Note on Financial Instruments:

Current Status of Financial Instruments

 

1.

Risk Management

Honda has manufacturing operations throughout the world and sells products and components to various countries. In the course of these activities, Honda holds trade receivables arising from business activities, receivables from financial services, trade payables, and financing liabilities, and is thus exposed to market risk, credit risk, and liquidity risk associated with the holding of such financial instruments.

These risks are evaluated by Honda through periodic monitoring.

 

2.

Market Risk

Honda is exposed to the risk that the fair value or future cash flows of a financial instrument fluctuates because of changes in foreign currency exchange rates and interest rates.

Honda uses derivatives that consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements, and interest rate swap agreements to reduce primarily the risk that future cash flows of a financial instrument fluctuates because of changes in foreign currency exchange rates and interest rates.

Derivatives are used within the scope of actual demand in accordance with risk management policies. In addition, Honda does not hold any derivatives for trading purposes.

 

3.

Credit Risk

Honda is exposed to the risk that one party to a financial instrument causes a financial loss for the other party by failing to discharge an obligation. Honda reduces the risk of financial assets other than derivatives in accordance with credit administration rules. Honda reduces the risk of derivatives by limiting the counterparties to major international banks and financial institutions that meet internally established credit guidelines.

 

4.

Liquidity Risk

Honda raises funds by commercial paper, bank loans, medium-term notes, corporate bonds, securitization of finance receivables and equipment on operating leases. Honda is exposed to liquidity risk that Honda would not be able to repay liabilities on the due date due to the deterioration of the financing environment.

Exposure to liquidity risk is managed by maintaining sufficient capital resources, a sufficient level of liquidity, and a sound balance sheet.

Fair Value of Financial Instruments

The carrying amounts and fair value of financial instruments as of March 31, 2021 are as follows: Yen (millions)

 

     Carrying Amount      Fair Value  

Assets

     

Receivables from financial services

     5,414,550        5,488,065  

Debt securities

     251,759        251,759  

Equity securities

     344,205        344,205  

Derivatives

     108,978        108,978  

Liabilities

     

Financing liabilities

     7,720,985        7,809,379  

Derivatives

     82,256        82,256  

Measurement methods and assumptions used to measure the fair values of financial instruments are as follows:

 

1.

Cash and cash equivalents, trade receivables and trade payables

The fair values approximate their carrying amounts due to their short-term maturities.

 

2.

Receivables from financial services

The fair value of receivables from financial services is measured primarily by discounting future cash flows using the current interest rates applicable for these receivables of similar remaining maturities.

 

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3.

Debt securities

Debt securities consist mainly of mutual funds, corporate bonds, local bonds, and auction rate securities. The fair value of mutual funds with an active market is measured by using quoted market prices. The fair values of corporate bonds and local bonds are measured based on proprietary pricing models provided by specialists and/or market makers, and the models obtain a wide array of market observable inputs such as credit ratings and discount rates. To measure fair value of auction rate securities, Honda uses a third-party developed valuation model which obtains a wide array of market observable inputs, as well as unobservable inputs including probability of passing or failing auction at each auction.

 

4.

Equity securities

The fair value of equity securities with an active market is measured by using quoted market prices. The fair value of equity securities with no active market is measured mainly by using the comparable company valuation method and other appropriate valuation methods. Where cost represents the best estimate of fair value of equity securities with no active market, such cost is treated as fair value.

 

5.

Derivatives

Derivatives consist mainly of foreign currency forward exchange contracts, foreign currency option contracts, currency swap agreements, and interest rate swap agreements. The fair values of foreign currency forward exchange contracts and foreign currency option contracts are measured by using market observable inputs such as spot exchange rates, discount rates, and implied volatility. The fair values of currency swap agreements and interest rate swap agreements are measured by discounting future cash flows using market observable inputs such as LIBOR rates, swap rates, and foreign exchange rates. The credit risk of the counterparties is considered in the valuation of derivatives.

 

6.

Financing liabilities

The fair value of financing liabilities is measured by discounting future cash flows using interest rates currently available for liabilities of similar terms and remaining maturities.

 

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Notes to Information about Per Common Share:

Equity per share attributable to owners of the parent and basic earnings per share attributable to owners of the parent are as follows: Yen

 

     Mar. 31, 2020      Mar. 31, 2021  

Equity per share attributable to owners of the parent

     4,640.46        5,260.06  

Basic earnings per share attributable to owners of the parent

     260.13        380.75  

Equity per share attributable to owners of the parent has been computed by dividing equity attributable to owners of the parent by the number of shares outstanding at the end of the period. The numbers of shares outstanding at the end of the years ended March 31, 2020 and 2021 were 1,726,609,786 and 1,726,655,268, respectively.

Basic earnings per share attributable to owners of the parent has been computed by dividing earnings attributable to owners of the parent by the weighted average number of shares outstanding during the period. The weighted average numbers of shares outstanding for the years ended March 31, 2020 and 2021 were 1,752,006,211 and 1,726,638,088, respectively. There were no significant potentially dilutive common shares outstanding for the years ended March 31, 2020 or 2021.

Regarding the Notes for the Previous Fiscal Year

The notes for the previous fiscal year are contained as additional information for reference.

 

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Segment Information (reference)

(a) Segment information based on products and services

As of and for the year ended March 31, 2020

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life
Creation

& Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

         2,059,335          9,959,080          2,586,965          325,629         14,931,009        —           14,931,009  

Intersegment

     —          235,558        13,972        25,025       274,555        (274,555     —    

Total

     2,059,335        10,194,638        2,600,937        350,654       15,205,564        (274,555     14,931,009  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     285,668        153,323        219,704        (25,058     633,637        —         633,637  

Segment assets

     1,483,888        7,821,499        10,282,136        354,472       19,941,995        519,470       20,461,465  

Depreciation and amortization

     67,512        555,153        823,996        14,742       1,461,403        —         1,461,403  

Capital expenditures

     93,871        498,260        2,248,597        17,611       2,858,339        —         2,858,339  

 

As of and for the year ended March 31, 2021

 

 

     Yen (millions)  
     Motorcycle
Business
     Automobile
Business
     Financial
Services
Business
     Life
Creation

& Other
Businesses
    Segment
Total
     Reconciling
Items
    Consolidated  

Sales revenue:

                  

External customers

         1,787,283          8,567,205          2,494,294          321,737         13,170,519        —           13,170,519  

Intersegment

     —          212,144        12,494        20,107       244,745        (244,745     —    

Total

     1,787,283        8,779,349        2,506,788        341,844       13,415,264        (244,745     13,170,519  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Segment profit (loss)

     224,608        90,255        356,980        (11,635     660,208        —         660,208  

Segment assets

     1,555,057        8,643,109        10,832,645        374,169       21,404,980        516,050       21,921,030  

Depreciation and amortization

     68,258        515,241        825,975        15,644       1,425,118        —         1,425,118  

Capital expenditures

     48,800        500,431        2,006,264        11,609       2,567,104        —         2,567,104  

Notes:

 

1.

Intersegment sales revenues are generally made at values that approximate arm’s-length prices.

 

2.

Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items amounted to JPY 787,022 million and JPY 696,327 million for the year ended March 31, 2020 and 20201, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

 

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(b) Supplemental geographical information based on the location of the Company and its subsidiaries

As of and for the year ended March 31, 2020

 

     Yen (millions)  
     Japan     North
America
     Europe      Asia      Other
Regions
    Total      Reconciling
Items
    Consolidated  

Sales revenue:

                    

External customers

     2,307,523       8,167,345        561,856        3,207,470        686,815       14,931,009        —         14,931,009  

Inter-geographic areas

     2,115,411       389,474        210,713        652,231        6,825       3,374,654        (3,374,654     —    

Total

     4,422,934       8,556,819        772,569        3,859,701        693,640       18,305,663        (3,374,654     14,931,009  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     (28,162     305,315        14,996        319,565        37,289       649,003        (15,366     633,637  

Assets

     4,889,920       11,375,801        689,158        2,851,027        518,445       20,324,351        137,114       20,461,465  

Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets

     3,003,416       4,755,072        58,735        658,397        109,046       8,584,666        —         8,584,666  

 

As of and for the year ended March 31, 2021

 

 

     Yen (millions)  
     Japan     North
America
     Europe      Asia      Other
Regions
    Total      Reconciling
Items
    Consolidated  

Sales revenue:

                    

External customers

     2,190,797       7,081,264        503,549        2,966,814        428,095       13,170,519        —         13,170,519  

Inter-geographic areas

     1,677,038       399,573        178,300        491,965        6,400       2,753,276        (2,753,276     —    

Total

     3,867,835       7,480,837        681,849        3,458,779        434,495       15,923,795        (2,753,276     13,170,519  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Operating profit (loss)

     (75,935     455,888        27,460        251,886        (5,034     654,265        5,943       660,208  

Assets

     5,295,475       12,209,455        677,066        3,267,417        482,918       21,932,331        (11,301     21,921,030  

Non-current assets other than financial instruments, deferred tax assets and net defined benefit assets

     3,050,270       5,039,085        60,790        666,795        117,528       8,934,468        —         8,934,468  

Notes:

 

1.

Major countries or regions in each geographic area:

 

North America    United States, Canada, Mexico
Europe    United Kingdom, Germany, Belgium, Italy, France
Asia    Thailand, Indonesia, China, India, Vietnam
Other Regions    Brazil, Australia

 

2.

Sales revenues between geographic areas are generally made at values that approximate arm’s-length prices.

 

3.

Reconciling items include elimination of intersegment transactions and balances as well as unallocated corporate assets. Unallocated corporate assets, included in reconciling items amounted to JPY 787,022 million and JPY 696,327 million for the year ended March 31, 2020 and 2021, respectively, which consist primarily of the Company’s cash and cash equivalents and financial assets measured at fair value through other comprehensive income.

 

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Independent Auditor’s Report

To the Board of Directors of

Honda Motor Co., Ltd.:

Opinion

We have audited the consolidated financial statements, which comprise the consolidated statement of financial position, the consolidated statement of income, the consolidated statement of changes in equity and the related notes of Honda Motor Co., Ltd. (“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), as at March 31, 2021 and for the year from April 1, 2020 to March 31, 2021 in accordance with Article 444-4 of the Companies Act.

In our opinion, the consolidated financial statements referred to above, which were prepared in accordance with the second sentence of Article 120-1 of the Ordinance of Companies Accounting that prescribes some omissions of disclosure items required under International Financial Reporting Standards, present fairly, in all material respects, the consolidated financial position and the results of operations of the Group for the period, for which the consolidated financial statements were prepared.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the second sentence of Article 120-1 of the Ordinance of Companies Accounting that prescribes some omissions of disclosure items required under International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with the second sentence of Article 120-1 of the Ordinance of Companies Accounting that prescribes some omissions of disclosure items required under International Financial Reporting Standards.

The audit and supervisory committee is responsible for overseeing the directors’ performance of their duties with regard to the design, implementation and maintenance of the Group’s financial reportin