Notice Regarding Receipt of the Third-Party Committee’s Investigation Report (Final Report) and Our Response

Overview of Investigation Results

Nidek Co., Ltd. acknowledged that the investigation conducted by the third-party committee revealed numerous instances of accounting fraud across group locations, significantly impacting past consolidated financial statements. The major fraud types included failure to record valuation losses on inventories, evasion of fixed asset impairment, capitalization of expenses, and overstatement of accounts receivable. As a result, net assets at the end of the first quarter of fiscal 2025 were preliminarily estimated to have decreased by approximately 139.7 billion yen.

Cause Analysis and Recurrence Prevention Measures

The investigation identified the primary cause of the accounting fraud as strong performance pressure from top management centered on Mr. Nagamori. Mr. Nagamori continuously demanded achievement of excessively high performance targets, exerting intense pressure on executives and subsidiaries. The accounting and internal audit departments failed to function as adequate checks, and the legal compliance department avoided raising issues. Outside directors were not adequately informed of the core problems, and the audit and supervisory committee did not function effectively. Nidek is formulating an improvement plan that includes revising the target-setting process, ensuring independence of the accounting function, strengthening the internal audit system, and enhancing the role of outside directors.