Makita : Report of Management on Internal Control over Financial Reporting

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

1. Matters Relating to the Basic Framework for Internal Control over Financial Reporting

   Munetoshi Goto, President, Representative Director, and Yukihiro Otsu, Director, Corporate Officer, General Manager of Administration Headquarters, are responsible for designing and operating effective internal control over financial reporting of Makita Corporation, and have designed and operated internal control over financial reporting in accordance with the basic framework for internal control set forth in ""The Standards and Practice Standards for Management Assessment and Audit of Internal Control Over Financial Reporting"" revised by the Business Accounting Council.

2. Matters Relating to Scope of Assessment, the Assessment Date, and Assessment Procedures

   The internal control is designed to achieve its objectives to the extent reasonable through the effective function and combination of its basic elements. Therefore, there is a possibility that misstatements may not be completely prevented or detected by internal control over financial reporting.

   In conducting this assessment, we evaluated internal controls which may have a material effect on the entire financial reporting in a consolidation (in what follows "entity-level controls") and based on the result of this assessment, we appropriately selected business processes to be evaluated, analyzed these selected business processes, identified key controls that may have a material impact on the reliability of our financial reporting, and assessed the design and operation of these key controls. These procedures have allowed us to evaluate the effectiveness of its internal controls.

   We determined the required scope of assessment of internal control over financial reporting for the Company, as well as its consolidated subsidiaries, from the perspective of the materiality that may affect the reliability of our financial reporting.

   The materiality that may affect the reliability of the financial reporting is determined taking into account the materiality of quantitative, qualitative impacts and their likelihood of occurrence. We confirmed that we had reasonably determined the scope of assessment of internal controls over business processes in light of the results of assessment of entity-level controls conducted for the Company and its consolidated subsidiaries. We did not include those consolidated subsidiaries which do not have any quantitatively or qualitatively material impacts and their likelihood of occurrence on the consolidated financial statement in the scope of assessment of entity-level controls.

   Regarding the scope of evaluation of internal control over business processes, the business structures of Makita Group companies can be considered to be roughly the same, and it is considered appropriate to measure their importance using quantitative criteria., and their importance can be measured by quantitative standards. Therefore, we accumulated business units in descending orders of total forecasting revenue from sales for this fiscal year, and those business units whose combined amount of forecasting revenue from sales reaches approximately two-thirds of total forecasting revenue from sales on a consolidated basis were selected as "significant business units.", in addition, with regard to production facilities whose consolidated net revenues are offset by intra-group transactions, the Company has defined also ""significant business units"" as those that account for approximately two-thirds of the Company's projected production volume.

   At the selected significant business units, we included, in the scope of assessment, those business processes leading to sales, accounts receivables which are account items related to a company's revenue-generating activities, as well as the business processes leading to inventory, which are important for determining the operating performance and financial position of a company's main business, as significant accounts. Furthermore, not only at selected significant business units, but also at other business units, we added to the scope of assessment, as business processes having greater materiality considering their impact on the financial reporting, those business processes relating to greater likelihood of material misstatements and significant accounts involving estimates and the management's judgment, and those business processes relating to business or operation dealing with high-risk transactions.

3. Matters Relating to the Result of the Assessment

   As a result of the assessment above, we concluded that our internal control over financial reporting was effective as of March 31, 2025.

4. Supplementary Matters

   None

5. Special Notes

None