2021
Kurimoto, Manufacturing the Future

ANNUAL REPORT
Year ended March 31, 2021

KURIMOTO, LTD.
In 1909 Kurimoto, Ltd. began operations as manufacturer of cast ironpipes for water and gas mains. With determination and foresight, thecompany soon began to diversify into other fields, serving the industrial
sector in a multitude of ways.
The major divisions of Kurimoto now provide ductile iron pipes, plant
equipment and engineering services, valves, and construction materials.
Involvement with and commitment to large-scale projects has enabled
Kurimoto to expand its areas of expertise, be it in land development,
industrial modernization, or urban renewal and construction. 12 factories
located throughout Japan comprise the company’s industrial base which,
together with 20 subsidiaries and 1 associate, make up the Kurimoto group
employing about 2,100 people. Today, Kurimoto plays a vital role insupplying basic industrial products, machines, and services domesticallyand abroad.

Contents
Financial Highlights
Message from the President
Business Operations

1
2
3

Financial Section

4

Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows

Notes to Financial Statements
Independent Auditor’s Report
Corporate Information

9
17
21

Financial Highlights

Millions of yen (thousands of U.S. dollars) except per 100 share information

2021

2020

2019

2018

2017

2021

¥ 116,596¥ 109,904¥ 108,786¥ 107,122¥ 101,647$ 1,053,174

3,174

2,773

2,075

2,400

4,103

28,673

Total assets

134,477

134,216

136,469

135,122

129,2121,214,683

Total shareholders’ equity(including Accumulated other comprehensive income)¥ 63,966¥ 57,892¥ 58,070¥ 58,351¥ 55,599$ 577,784

Profit (loss) attributable to owners of parent

26,042

22,283

16,565

19,16732,605235

Cash dividends

7,000

6,000

6,000

6,000

5,000

63

Years ended March 31

Net sales
Profit (loss) attributable to owners of parent

Per 100 shares of common stock

Notes 1: The U.S. dollar amounts are calculated at the exchange rate of ¥110.71 to $1, the rate prevailing on March 31, 2021.
Notes 2: We have been carrying out consolidation of shares at a rate of one share per 10 shares of common stock since October 1, 2016, and have also revised the figures before 2016 for net
income per 100 shares and dividend per 100 shares.
Notes 3: Along with the change in the unit of investment from 1,000 to 100 shares on October 1, 2016, net income and dividend, which used to be indicated per 1,000 shares, have beenchanged to be indicated per 100 shares.

160,000

Net Sales (¥ million)

140,000
120,000
100,000

101,647

107,122

108,786

109,904

’18

’19

’20

116,596

80,0000’17’21Profit (loss) attributable to owners of parent (¥ million)
5,000
4,000

4,103

3,000

2,400

2,075

2,000

2,773

3,174

1,000
0

400

’17

’18

’19

’20

’21

Net Income per Share of Common Stock (¥)
326.05300

191.67200

165.65222.83260.42100
066,000

’17

’18

’19

’20

’21

Shareholder’s Equity (¥ million)
63,96664,00062,00060,00058,00056,00058,351

58,070’18’1957,89255,59954,00052,00050,000
0

’17

1

’20

’21

Message from the President“We will work together as Team
Kurimoto to evolve a bold culture as anorganization to take on all challenges.”Thank you for your ongoing supportof Kurimoto’s business activities.
Kurimoto was founded in February1909 to manufacture cast-iron pipe forwater supply based on our iron foundryexpertise. For over 110 years now wehave been committed to bringing people
a higher quality of living by improvingsocial infrastructure, lifeline systems,
and industrial machinery. Thanks go out
to all stakeholders in this group for yourongoing support.
In fiscal 2020, the final year of ourlast three-year mid-term business plan,even with the impact of the pandemic,
consolidated results exceeded initial
forecasts in both sales and profits, withan increase in revenues and profits fromthe previous year. We steadily achieved
and exceeded all numerical goals set up
in the three-year plan, which called forincreasing growth. These results reaffirm
that our businesses support essential
work, considered as such by society,particularly amidst the global pandemic.
Nevertheless, it is beyond a year since
the beginning of COVID-19’s spread,
there are still no signs of the virus
abating. The business climate in which
our group operates is also starting to beaffected by fears of increasingtransmission. Conditions remain quite
tough in some segments and uncertainty
continues to intensify.

So, while anyone can not predict theend of the pandemic, to set a pathforward for Kurimoto that will bringsteady, sustainable growth, we devised a
new three-year mid-term business planthat started in fiscal 2021. Withjustifiable faith that society’s demand forwhat we offer will remain strong, thisnew three-year plan aims to shore up thefoundations of our existing businesses
and accelerate growth in new businesses
spawned over the last three years, allwith a long-term outlook that is directed
toward national resilience and carbon
neutrality.

The fact that we have been able torun our business successfully for such along time is due in no small part to theguidance and encouragement of our
stakeholders.
I am extremely grateful and hope you
will continue to lend us your warm
support.

Changes in the social climate present
an opportunity for us to resolve internal
issues, apply business process
reengineering to establish a new normal,
and strengthen our management basethrough workforce strategy plus
corporate social responsibility, which
includes working toward the SDGs andimproving environmental, social, andgovernance measures.
As our group, we will rally aroundthe idea of Team Kurimoto, and basedon our management philosophy we will
cultivate an organizational culture oftaking on challenges bravely rather thanbeing paralyzed by a fear of making
mistakes. We aim to create a better
future for people and society “with calmand resolve” by providing optimal
systems to our customers acrossproducts, operations, and services. Thishas been our mission and will continue
to guide the Kurimoto Group going
forward.

2

Kazutaka Kikumoto
President

June 2021

Kazutaka Kikumoto
President

Business Operations

Corporate group sales by business area (in millions of yen)

Industrial materials business25.1 %
125th
accounting period
116,596

Pipe system business48.2 %

Machinery system business26.7 %

Pipe system businessIndustrial materials business

Sales of the pipe system business were 56,185 million yen, an increase of
1,809 million yen over the previous consolidated fiscal year. Increased
shipment recorded by the Ductile Iron Pipe Division, coupled with steadyshipment to meet private demand in the Valve Systems Division, was theprimary factor of the increase in sales.
Operating income of this business rose to 3,087 million yen, an increase of
749 million yen over the previous consolidated fiscal year, mainly because we
focused on the improvements of various costs, also supported by the sales
growth in the Ductile Iron Pipe Division and Valve Systems Division.

Sales of the industrial materials business were 29,226 million yen, a decrease of
1,653 million yen over the previous consolidated fiscal year. Despite steadyshipment of products for power systems and railways recorded by the Plastic
Products Division, shipment of air conditioning and other products decreased
due partly to a decrease in construction works in the Construction Materials
Division.
Operating income of this business came to 1,074 million yen, a decrease of
197 million yen over the previous consolidated fiscal year. The sales growth in
the Plastic Products Division and our efforts to improve various costs could
not offset the significant impact of the sales decline posted by theConstruction Materials Division.

Machinery system business
The machinery system business enjoyed sales growth driven by an increase in
shipment of large projects and a progress made by large projects adopting thepercentage-of-completion method in the Plant Engineering and Machinery
Division, and other factors. As a result, sales of this business rose to
31,184 million yen, an increase of 6,537 million yen compared to the previous
consolidated fiscal year.
Although sales increased as stated above, operating income fell to 610 million
yen, a decrease of 409 million yen over the previous consolidated fiscal year,
mainly because additional work occurred for some plant projects in the Plant
Engineering and Machinery Division.

3

Financial Section

Consolidated Balance Sheets
March 31, 2021 and 2020

Thousandsof U.S. dollars(Note 2)Millions of yen

Assets

2020

2021

2021

Current assets¥ 20,418¥ 20,388$ 184,428

43,15541,193389,809

47

35

427

Merchandise and finished goods

10,194

10,445

92,079Work in process

4,965

8,868

44,852

Raw materials and supplies

2,733

2,605

24,693

Prepaid expenses and other current assets

1,234

1,285

11,154

(115)

(152)

(1,040)82,634

84,669746,404

Buildings and structures

28,00026,859252,916

Machinery, equipment and vehicles

55,98455,205505,687

Tools, furniture and fixtures

10,337

10,14993,376Land

13,80813,787

124,729

Cash and deposits
Notes and accounts receivable-trade
Notes and accounts receivable-trade— unconsolidated subsidiaries and affiliates

Allowance for doubtful accounts
Total current assets

Property, plant and equipment

403

400

3,645

Construction in progress

1,054

1,806

9,522

Accumulated depreciation(76,702)(75,341)(692,825)

Total property, plant and equipment

32,88632,867

297,052

11,4758,250

103,651— unconsolidated subsidiaries and affiliates

200

172

1,814

Long-term loans — other

12

13

116

Lease assets

Investments and other assets
Investment securities — other
Investment securities

Long-term loans— unconsolidated subsidiaries and affiliates
Other investments
Allowance for doubtful accounts
Deferred tax assets (Note 9)Long-term prepaid expenses and otherTotal investments and other assets
Total assets

4

—

20

—

1,378

1,445

12,450

(54)

(164)

(495)

4,041

5,526

36,507

1,902

1,414

17,181

18,956

16,679171,226¥ 134,477¥ 134,216$ 1,214,683

Financial Section

Thousandsof U.S. dollars(Note 2)Millions of yen

Liabilities and Shareholders’ Equity
Current liabilities
Notes and accounts payable-trade
Notes and accounts payable-trade—— unconsolidated subsidiaries and affiliates
Short-term loans payable (Note 4)
Current portion of long-term debt (Note 4)
Lease obligations
Income taxes payable
Accrued liabilities
Advances received
Employees’ savings deposits
Other current liabilities
Total current liabilities
Long-term liabilities
Net defined benefit liability (Note 5)Long-term debt (Note 4)
Lease obligations
Provision for environmental measures
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities

Net assets
Shareholders’ equity
Capital stock
Authorized:
Issued:

2021

2020

2021

¥ 27,074¥ 28,806$50
20,320
668
34
618
3,891
1,281
392
3,210
57,543

63
20,670
2,375
31
1,258
3,892
3,351
390
2,484
63,325457
183,542
6,042
312
5,585
35,154
11,5783,541
29,003519,767

9,305
1,736
89
20
318
351
11,822
69,366

10,494
705
72
20
318
401
12,01375,33984,054
15,689
808
185
2,880
3,172
106,790
626,558

31,186

31,186281,691

6,873
25,028(1,817)

6,873
22,587(1,831)

62,087226,073(16,415)

61,271

58,816553,437

3,306
(52)
(558)

771
(4)
(1,690)29,865(470)(5,048)

2,695

(923)

24,346

244,551

39,376,600 shares
13,098,490 shares in 2020
13,098,490 shares in 2021

Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

5

1,144

984

10,34065,111

58,876588,124¥ 134,477¥ 134,216$ 1,214,683

Financial Section

Consolidated Statements of Income
Years ended March 31, 2021 and 2020

Thousandsof U.S. dollars(Note 2)Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income and (expenses)
Interest and dividend income
Interest expense
Gain on sales of investment securities
Insurance income
Loss on valuation of investment securities
Loss on disaster
Arrangement fee
Others, net
Income before income taxes
Income taxes (Note 9)
Current
Deferred
Total
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

2021

2020

2021

¥ 116,596
90,58226,014
21,341
4,673¥ 109,904
83,786
26,117
21,7774,340$ 1,053,174
818,194
234,980
192,767
42,212

332
(150)
1
—
(6)
(0)
(153)
(157)
4,538

329
(143)
148
382
(355)
(552)
—
(135)
4,014

2,999
(1,361)
17
—
(61)
(7)
(1,381)(1,420)40,997

1,174
13
1,188
3,350
176
3,174

1,389
(113)
1,275
2,739
(34)
2,773

10,609122
10,73230,265
1,591
28,673¥¥

U.S. dollars(Note 2)yen

Net income per 100 shares:
Basic
DilutedCash dividends per 100 shares

2021

2020

¥ 26,042
26,0427,000¥ 22,283
22,283
6,000

Consolidated Statements of Comprehensive Income
Years ended March 31, 2021 and 2020

2021

2020

¥

¥

3,350
2,535
(47)
1,131
3,619
6,970
6,793
176

6

2021
$

235
235
63

Thousandsof U.S. dollars(Note 2)Millions of yen

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of the parent
Profit (loss) attributable to non-controlling interests

$

2,739
(1,242)(9)(248)(1,500)
1,239
1,273
(34)

2021
$

30,26522,899(428)
10,22332,69462,95961,363
1,595

Financial Section

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2021 and 2020

Millions of yen

Balance as of March 31, 2019

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Cancellation of treasury shares
Change in ownership interest of parent
due to transactions with
non-controlling interests
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2020

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2021

Valuationdifference on Foreign Remeasurements Noncurrency
net
available- translation of defined controlling Total
assetsfor-salebenefit plans interests
securities adjustment

Capitalstock

CapitalsurplusRetainedearnings

Treasuryshares¥ 31,186¥ 6,880 ¥ 21,178¥ (1,750)¥ 2,013¥ 5¥ (1,442)¥ 797 ¥ 58,867

—
—
—
—
—

—
—
—
—
—

(754)
2,773
—
—
(610)

—
—
(700)
9
610

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(754)
2,773
(700)
9
—

—

(6)

—

—

—

—

—

—

(6)

—

—

—

—

(1,241)

(9)

(248)

186

(1,313)¥ 6,873 ¥ 22,587¥ (1,831)

¥ 771

¥ (4)

¥ (1,690)¥ 31,186¥ 984 ¥ 58,876

—
—
—
—

—
—
—
—

(733)
3,174
—
—

—
—
(0)
14

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(733)
3,174
(0)
14

—

—

—

—

2,535

(47)

1,131

160

3,779

¥ 31,186¥ 6,873¥ 25,028¥ (1,817)¥ 3,306¥ (52)¥ (558)¥ 1,144 ¥ 65,111

Thousands of U.S. dollars (Note 2)

Balance as of March 31, 2020

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2021

Retainedearnings

TreasurysharesValuationdifference on Foreign Remeasurements Noncurrency
net
available- translation of defined controlling Total
assetsfor-salebenefit plans interests
securities adjustment

Capitalstock

Capitalsurplus$ 281,691$ 62,087 $ 204,022 $ (16,539) $ 6,966$ (41) $ (15,268) $ 8,892 $ 531,811

—
—
—
—

—
—
—
—

(6,621)
28,673
—
—

—
—
(4)
128

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(6,621)
28,673
(4)
128

—

—

—

—

22,898(428)

10,2201,447

34,138$ 281,691$ 62,087 $ 226,073 $ (16,415) $ 29,865

7$ (470) $ (5,048) $ 10,340 $ 588,124

Financial Section

Consolidated Statements of Cash Flows
Years ended March 31, 2021 and 2020

Thousandsof U.S. dollars(Note 2)Millions of yen

2021

2020

¥ 4,5382,520(3,942)
(867)
4,017
(332)
150
6
6
37
62
(146)
441
926

¥ 4,0142,401
6,102(4,636)(3,264)
(329)
143
(148)
355
(9)
49
1
653
728

$ 40,997
22,769(35,612)(7,838)36,288(2,999)
1,361
55
61
339
563
(1,324)
3,984
8,369

Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid

7,419
329
(150)
(1,691)

6,061
337
(144)
(701)

67,0162,979(1,357)(15,280)

Net cash provided by (used in) operating activities

5,907

5,552

53,358Net cash provided by (used in) investing activities
Purchase of short-term and long-term investment securities
Proceeds from sales of short-term and long-term investment securities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Purchase of stocks of subsidiaries and affiliates
Collection of loans receivable
Other, net

(263)
525
(4,270)
26
(20)
21
(54)

(87)
159
(4,239)
26
(13)
10
192

(2,380)4,746(38,570)
242
(180)
192
(488)

Net cash provided by (used in) investing activities(4,034)(3,951)(36,438)

(350)
(39)
1,700
(2,375)
(733)
(16)
(0)

414
(33)
200
(2,111)
(754)
(11)
(700)

(3,161)(360)
15,355(21,455)(6,626)
(147)
(4)

—
—
—

120
(54)
160

—
—
—

(1,815)(2,769)(16,400)

(28)

(8)

(259)

Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year28
20,330(1,177)21,507

258
183,639

Cash and Cash Equivalents at End of Year¥ 20,359¥ 20,330$ 183,897

Note: Relation between the year-end balance of cash and cash equivalents and the items on the consolidated balance sheet:
Cash and deposits¥ 20,418(58)
Time deposits due over three months¥ 20,359
Cash and cash equivalents¥ 20,388(57)¥ 20,330$ 184,428(530)$ 183,897

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in notes and accounts payable-trade
Decrease (increase) in inventories
Interest and dividends income
Interest expenses
Loss (gain) on sales of short-term and long-term investment securities
Loss (gain) on valuation of short-term and long-term investment securities
Loss (gain) on sales of property, plant and equipment and intangible assets
Loss on retirement of property, plant and equipment and intangible assets
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for retirement benefits
Other, net

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Dividends paid to non-controlling interests
Purchase of treasury shares
Proceeds from changes in ownership interestsin subsidiaries that do not result in change in scope of consolidation
Purchase of treasury shares of subsidiaries
Proceeds from disposal of treasury shares of subsidiaries
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents

8

2021

Notes to Financial Statements

Note 1. Significant Accounting Policies

securities into securities for buying & selling, stocks of their affiliates,and other securities.
Securities for buying & selling have been evaluated at market
value.
The stocks of their affiliates have been evaluated at book value.
Those other securities that have market value have been
evaluated at market value, and the unrealized profit or loss has beenreported as an independent item in Part of Capital after taxation.
Those other securities that do not have market value have been
evaluated at book value.
For the cases in which the value of those other securities withmarket value fell sharply, the relevant securities have been placed in
the balance sheet according to their market value, and the difference
between the book value and the market value has been recognized asa loss for the fiscal year. For the cases in which the net asset value of
those other securities without market value fell markedly, therelevant securities have been written down to the net asset value,
and the corresponding difference has been recognized as a loss.
Profit or loss in selling securities has been calculated based upon
the selling price by the moving average method, and included in
profit or loss.

Basis of Presenting Consolidated Financial Statements
Kurimoto, Ltd. (hereinafter referred to as “This Company”) and its
consolidated subsidiaries have presented their official accounting
records in the currency of yen and in accordance with theCommercial Code and the regulations of Securities & Exchange
Law, and in conformity with the generally accepted accounting
principles & practices of Japan (hereinafter called “Japan
Accounting Standard”).
Some part of the Japan Accounting Standard, in its method of
application and disclosure requirements, is different from theInternational Accounting Standard and some other countries’
accounting standards. Accordingly, the consolidated financial
statements attached hereto are prepared for readers who are wellacquainted with the Japan Accounting Standard.
The consolidated financial statements attached hereto have been
prepared in accordance with the Japan Accounting Standard
pursuant to the Securities & Exchange Law. Such consolidated
financial statements of This Company as were submitted to our
district’s Local Finance Bureau of the Ministry of Finance havebeen re-edited and translated into English.

Inventories
Inventories are principally stated at the cost determined by theaverage method or the specific cost method.

Consolidation Policies
These consolidated financial statements include the accounting
records of This Company and the companies over which This
Company either holds majority voting power or for which certain
other conditions verify This Company’s control over them. The
investment account of This Company in non-consolidated
subsidiaries or affiliates which are largely influenced by This
Company in their operational and financial policies have been
computed on the basis of equity-method investment balance.
The important credit & liability, trade, and unrealized profit
between and among consolidated companies have been eliminatedon a consolidation basis.

Fixed Assets (excluding lease assets)
Fixed assets are stated by book value. Method of depreciation ismainly the straight-line method by estimated useful life. Main
estimated useful lives are as follows.
Building and construction: 2 to 60 years.
Machinery and automotive equipment: 2 to 22 years.
The cost of repair or small amount reformation is expensed as
incurred, but any large scale repair or reformation is classified asassets.
Liability for Retirement Benefits
1. The Period Attribution Method for Projected Retirement
Benefits
As for the calculation of retirement benefits, the benefit formulabasis is applied for the attribution of projected retirement benefits
to the period up to the end of the fiscal year under review.
2. Mathematical Calculation for the Amortization of Actuarial
Differences
Actuarial differences are amortized by the straight-line method overa period within the average remaining service years for employees(mainly 10 years) at the time of recognition, and allocatedproportionately from the fiscal year following the respective fiscal
year of recognition.

Translation of Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies
have been translated into Japanese yen at the rate as of the date ofeach balance sheet presentation, and their exchange profit or loss
has been appropriated as their profit or loss in the current period.
The balance sheets of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rates except forshareholders’ equity accounts, which are translated at historicalrates. Income statements of consolidated overseas subsidiaries aretranslated at the average rates during the year. Translation
adjustments resulting from translating financial statements whose
accounts are denominated in foreign currencies are not included in
the determination of net income but are reported as “Foreign
currency translation adjustments” in a component of net assets andnon-controlling interests.

Research and Development and Computer Software
Research & development expenses have been charged as incurred.
Software expenses have been included mainly in long-term
prepaid expenses and other expenses, and depreciated by astraight-line method chiefly for five-year service life.

A Range of Funds in a Statement of Consolidated Cash Flow
A fund in a statement of consolidated cash flow (cash and its
equivalent) consists of cash in hand, ordinary deposits, andshort-term investments which have a term of redemption within
three months, carry low risk for value fluctuation and can bewithdrawn easily.

Income Taxes
As to the temporary difference in the book value of assets andliabilities for the purpose of financial accounting and taxation, thenet worth method has been used to figure deferred tax assets andliabilities.

Marketable and Investment Securities
This Company & its consolidated subsidiaries have specified the
purposes of their respective securities holdings, and classified those9Notes to Financial Statements

Per Share Information
The computation of basic net income per share is based on theweighted average number of shares of common stock outstanding
during each period. The average number of shares used in thecomputation was 12,189,514 and 12,447,790 for the years ended
March 31, 2021 and 2020, respectively.

If such estimate needs to be revised due to changes in uncertain
future economic conditions and other reasons, it may have a significant
impact on the amounts of deferred tax assets and income taxes-deferred
to be recognized in the consolidated financial statements for the next
consolidated fiscal year.

Recognition of earning cost
For construction work that was initiated this consolidated
accounting period, we will still use the percentage-of-completion
method for those ongoing projects with assured revenue by the endof the period (the cost-to-cost method will be used to estimate theprogress rate of construction), and the complete job method toother projects.

2. Calculation of retirement benefit obligations(1) Amount recorded in the consolidated financial statements for thecurrent consolidated fiscal year
Millions of yen

Net defined benefit liability

Consolidated Taxation System
We have adopted a consolidated taxation system.

Millions of yen

2021

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Marketvalue

Unrealized
gain (loss)¥ 6,434¥ 11,048¥ 4,613

Thousands of U.S. dollars

2021

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Carrying
amounts

Marketvalue

Unrealized
gain (loss)$ 58,120$ 99,795$ 41,675

2021$ 84,054

3. Application of percentage-of-completion method

Note 2. U.S. Dollar Amounts(1) Amount recorded in the consolidated financial statements for thecurrent consolidated fiscal year

The dollar amounts are included solely for convenience: they should
not be construed as exact translations of current yen figures, nor are
they the dollar amounts into which yen amounts have been or could
be converted.
The exchange rate of US$1=¥110.71 as of March 31, 2021, hasbeen used for the purpose of presenting the dollar amounts in theaccompanying consolidated financial statements.

Net salesThedollar aXXXXXXXXXXXXXXXX
1.
Recoverabilityof deferred tax assets(1) Amount recorded in the consolidated financial statements for thecurrent consolidated fiscal year
Millions of yen

Thousandsof U.S. dollars

2021

2021

¥ 4,041$ 36,507

Millions of yen

Thousandsof U.S. dollars

2021

2021

¥ 11,318$ 102,231(2) Information on the content of important accounting estimatesfor recognized items
The percentage-of-completion method is applied to construction works
for which confirming the degree of completion until the end of thecurrent consolidated fiscal year is deemed certain (estimation of the
progress rate of construction work is based on the proportion of cost
incurred).
In applying the percentage-of-completion method, it is a prerequisitethat the total construction cost and progress rate, which are the basis forrevenue recognition, can be reasonably estimated. If such estimate needs
to be revised due to changes in uncertain future economic conditions
and other reasons, it may have a significant impact on the amount ofrevenue to be recognized in the consolidated financial statements forthe next consolidated fiscal year onward.

Note 3. Significant
Accounting EstimatesXXXXXXXXXX

Deferred tax assets

2021¥ 9,305(2) Information on the content of important accounting estimatesfor recognized items
The Company and some of its subsidiaries have adopted a defined
benefit plan as an employee retirement benefit program. Liability for
retirement benefits and retirement benefit costs related to retirement
benefit obligations are calculated based on the preconditions used in
actuarial calculations.
The preconditions used in actuarial calculations include many
estimates such as discount rates and long-term expected rate of returnon pension assets. If such estimate needs to be revised due to changes in
uncertain future economic conditions and other reasons, it may have asignificant impact on the amount of liability for retirement benefits andretirement benefit costs related to retirement benefit obligations to berecognized in the consolidated financial statements for the next
consolidated fiscal year onward.

Marketable and Investments Securities
Other marketable securities as of March 31, 2021 are as follows.

Carrying
amounts

Thousandsof U.S. dollars(2) Information on the content of important accounting estimatesfor recognized items
Regarding the evaluation of the recoverability of deferred tax assets,
future taxable income is reasonably estimated, and valuation
allowance is recorded for any amount which is not deemed
recoverable.
10Notes to Financial Statements

Note 4. Short-term Bank Loans and Long-term Debt

(2) Movements in plan assets except plan applied simplified method

The annual average interest rates applicable to short-term bankloans at March 31, 2021 and 2020 are 0.5% and 0.5%, respectively.
Short-term bank loans and long-term debt at March 31 wascomprised of the following:

Loans from financial institution,due 2021 to 2024 withinterest rates between
0.30% and 0.48%
Sub-total
Less current portion of loans•• • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • •

2021

2020

2021

2,405
2,405
668
¥ 1,736

3,081
3,081
2,375
¥ 705

21,731
21,731
6,042$ 15,689

Balance at beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Benefits paid
Balance at end of the year

2021
2022
2023
2024

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2020

2021

—
668
1,156
580
¥ 2,405

2,375
108
595
1
¥ 3,081—
6,042
10,443
5,245$ 21,731

Buildings and structures
Machinery, equipment
Land

2021

¥ 3,239929
771¥ 4,940$ 29,257
8,393
6,972
$ 44,623

Thousandsof U.S. dollars

2020

623
121
(27)
(20)
696

¥

¥

¥

2021

597 $
106
(56)
(24)
623 $

¥

5,629
1,096
(250)
(186)
6,289

Thousandsof U.S. dollars

Millions of yen

2021

2020

Funded retirement benefit obligations
Plan assets¥ 13,540(4,712)
8,827¥ 13,727 $ 122,302(3,666)(42,569)
10,06079,732

Unfunded retirement benefit obligations
Total net liability (asset) for
retirement benefits at March 31

478

434

4,321

9,305

10,49484,054

9,305—

10,494—84,054—¥ 9,305¥ 10,494$ 84,054

Liability for retirement benefits
Asset for retirement benefits
Total net liability (asset) for retirement
benefits at end of the year

2021(5) Retirement benefit costs

Note 5. Retirement Benefits
The following are matters concerning the defined benefit plan as ofMarch 31, 2021 and 2020, respectively.

Millions of yen

2021¥ 13,216
657
14
(182)
(715)
¥ 12,990

2020

Thousandsof U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Retirement benefit costs calculatedby the simplified method
Total retirement benefit costs forthe fiscal year

(1) Movements in retirement benefit obligations except plan applied
simplified method

Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at end of the year¥

30,210
671
8,814
(126)
39,570(4) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits including plan
applied simplified method

Thousandsof U.S. dollars

2021

¥

3,992 $
104
(679)
(72)
3,344 $¥

2021
Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Balance at end of the year

As is customary in Japan, short-term and long-term bank loans are
made under general agreements which provide that security andguarantees for future and present indebtedness will be given uponrequest of the bank, and that the bank shall have the right, as theobligations become due, or in the event of their default, to offset cash
deposits against such obligations due to the bank.
As of March 31, 2021, assets pledged as collateral for short-termbank loans were as follows:
Millions of yen

3,344
74
975
(14)
4,380

Millions of yen

Thousandsof U.S. dollars

2021

¥

2021

(3) Movements in net liability for retirement benefits based on thesimplified method

The aggregate annual maturities of long-term financial debt at
March 31, 2021 and 2020 respectively are as follows:
Millions of yen

2020

2021

Thousandsof U.S. dollars

Millions of yen

Thousandsof U.S. dollars

Millions of yen

Thousandsof U.S. dollars

2021¥ 12,877 $ 119,378
5,937
683
129
10
(1,644)83(6,464)(438)¥ 13,216 $ 117,336

11

2021

2020

¥

¥

2021

683 $
10
(104)
403

5,937
129
(671)
4,267

121

106

1,096

¥ 1,191¥ 1,100$ 10,759

657
14
(74)
472

Notes to Financial Statements(6) Remeasurements of defined benefit plans(before tax effect deductions)Thousandsof U.S. dollars

Millions of yen

Actuarial loss (gain)
Total

liabilities and hedge against interest-rate fluctuation risk regarding
securities and debts.
As they trade these with major financial institutions, we assume
that the credit risks of these derivatives are low. The Accounting
Department implements and controls these forward exchange
contracts for our own company by way of in-house consultation anddecision.
As to the derivative trades by our consolidated subsidiaries, theirBusiness Management Department or General Affairs Department
implement and control them after their internal consultation anddecision and also notification to our company.

2021

2020

2021

¥ (1,630)¥ (1,630)

¥ 359
¥ 359

$ (14,727)$ (14,727)(7) Accumulated adjustments for retirement benefit(before tax effect deductions)Thousandsof U.S. dollars

Millions of yen

2021
Unrecognized actuarial differences
Total

804
804

¥
¥

2020

¥ 2,435¥ 2,435(8) Accumulated adjustments for retirement benefit①Plan assets comprise:

2021

Equity securities
Cash and cash equivalents
Investment trust
Other
Total

61%
4%
31%
4%
100%

2021

$
$

Note 8. Research and Development Expenses

7,270
7,270

Research and development expenditures charged to income were
¥1,797 million ($16,237 thousand) for the year ended March 31,
2021.

Note 9. Income Taxes

2020

53%
3%
39%
5%
100%

The Company and its domestic subsidiaries are subject to several
taxes based on income, which in the aggregate resulted in statutory
tax rates of approximately 30.6% and 30.6% for the year ended
March 31, 2021 and 2020, respectively.
The effective rates of income taxes reflected in the consolidated
statements of income differed from the statutory tax rates referred
to above for the year ended March 31, 2021 due principally to
expenses not deductible for income tax purposes, and temporary
differences between the tax basis of assets and liabilities and theirreported amounts in the financial statements.
The difference between the burden rate of corporate tax after
application of tax effect accounting and the statutory tax rate is notlisted as it was recorded as a net loss for the period under review
before adjustments for taxes, etc.
The tax effects of temporary differences that give rise tosignificant portions of the deferred tax assets as of March 31, 2021
and 2020 are presented below:②Long-term expected rate of return
Current and target asset allocations, historical and expected returns
on various categories of plan assets have been considered.
(9) Accumulated adjustments for retirement benefit
The principal actuarial assumption (expressed as weighted averages)
are as follows:
2021
Discount rateLong-term expected rate of return
Expected rate of salary increase

2020

0.0%~0.8% 0.0%~0.5%
2.3%
2.7%
0.0%~5.4% 0.7%~5.2%

Defined contribution plans
The required contribution amount for consolidated subsidiaries forthe defined contribution plan was 190 million yen (1,716 thousand
US dollars) as of March 31, 2021.

Deferred tax assets
Net defined benefit liability
Accrued bonus indemnities
Allowance for doubtful accounts
Allowance for loss on construction work
Loss on revaluation of investment
securities
Amalgamated received property
Impairment loss
Operating loss carry-forwards
Elimination of inter-company profits
Other
Total gross deferred tax assets
Valuation allowance related to tax
loss carryforward
Valuation allowance related to total
deductible temporary differences
Subtotal of valuation allowance (Note 1)
Net deferred tax assets

Note 6. Contingent Liabilities
As of March 31, 2021 and 2020, the company was contingently
liable as follows:
Thousandsof U.S. dollars

Millions of yen

2021
As guarantor of indebtedness of
unconsolidated subsidiaries
and others

¥ 41

2020

¥ 53

Thousandsof U.S. dollars

Millions of yen

2021

$ 370

Note 7. Derivatives and Hedging Activities
Some consolidated subsidiaries utilize derivatives of forward
exchange contract and interest-rate swap in order to hedge
exchange-rate fluctuation risk concerning foreign currency assets and

2021

2020

2021

¥ 4,194617
18
148¥ 4,556581
59
56$ 37,891
5,577
169
1,338

144
543
1
192
27
1,137
7,026

284
543
1
265
25
1,302
7,676

1,306
4,911
9
1,738
248
10,272
63,464

(164)

(249)

(1,482)(1,428)(1,592)¥ 5,433(1,492)(1,742)¥ 5,934(12,901)(14,384)$ 49,080(Note 1)
Valuation allowance increased by 149 million yen (1,353 thousand US dollars). The primary factor of theincrease was an increase in the valuation allowance related to tax loss carryforward at consolidated subsidiaries.

12

Notes to Financial Statements

Millions of yen

2020

2021
Deferred tax liabilities
Evaluated difference of othersecurities
Dividends receivable
Other
Total deferred tax liabilities
Net deferred tax assets¥ (1,307)(50)(33)(1,391)¥ 4,041

¥

(335)
(50)
(22)
(407)
¥ 5,526

Thousandsof U.S. dollars

instruments are highly reliable Japanese financial institutions, credit
risk is judged to be immaterial.

2021

Market Risk Management
This company has entered into an exchange forward contract tohedge part of the risks arising from exchange-rate fluctuations for
operating receivables/payables denominated in foreign currencies.
With regard to floating rate debt, we closely monitor economic andinterest-rate outlooks and conduct fund raising suited to eachsituation, and employ interest-rate swap transaction in order tocontrol fluctuation risks in the interest rate for part of the debt.
As for marketable and investment securities, This Company
periodically seizes the trend of fair value and financial position of
the issuers (business partners) to continuously review the possession
situation, taking into account the market conditions and its
relationship with the business partners.
Derivative financial transactions are executed and managed bydepartments handling such transactions with approval of
authorized personnel, in accordance with the regulations specifying
transaction authority and transaction limit.
Similar management is conducted with its consolidated subsidiaries
pursuant to the regulations of This Company.

$ (11,809)
(460)
(303)
(12,572)$ 36,507

Note 10. Financial Instruments and Related Disclosures(1) Policy for Financial Instruments
This Group raises funds needed to implement financial and capital
investment plans (mainly through loans from banks). Its temporary
surpluses are mainly invested in highly liquid financial assets, while
short-term working capital is financed by loans from banks. This Group
employs derivative financial instruments for the purpose of avoiding
risks described later, and does not undertake speculative transactions.

Management of Liquidity Risk Related to Financing
Based on reports from each department, the financial department ofThis Company formulates and updates the financial plan in a timely
manner, and manages liquidity risk by way of maintaining
short-term liquidity. Financial plans of its consolidated subsidiaries
are reported to the financial department of This Company every
month in a timely manner, thereby controlling liquidity risk acrossThis Group.

(2) Nature and Extent of Risks Arising from Financial Instruments
Operating receivables, such as notes and accounts receivable-trade,
involve credit risk on the part of customers.
Foreign-currency-denominated operating receivables generated byoverseas operations, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
Marketable and investment securities, which are mainly equity
securities of affiliates, involve market fluctuation risk.
Operating payables, such as notes and accounts payable-trade, aregenerally due within five months. Part of them, denominated inforeign currencies, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
The primary purpose of loans is raising funds for capital investment
and business structure reform. Of these, syndicate loans and manyother loans involve interest-rate fluctuation risk. In addition, inorder to avoid interest-rate fluctuation risk for part of the long-term
debt, we employ derivative transactions (interest-rate swap
transaction) for hedging.
Derivative transactions are exchange forward contracts aimed at
hedging exchange-rate fluctuation risk related to operatingreceivables/payables denominated in foreign currencies, andinterestrate swaps aimed at hedging interest-rate fluctuation risk
related to debt.
(3) Risk Management for Financial Instruments

Credit Risk Management
For operating receivables and long-term debt, the operations
department of respective business segment of This Company employs
credit management regulations in order to periodically monitor the
status of its major business partners, manage due dates and balances ofeach business partner, and furthermore, identify business partners
with doubtful collectability and mitigate risks arising from theirdeteriorated financial position at an early date. Similar credit
management is conducted with its consolidated subsidiaries pursuant
to the credit management regulations of This Company.
As This Company’s transaction partners on derivative financial
13Notes to Financial Statements(4) Fair Values of Financial Instruments
With regard to the fair value of financial instruments, in addition tobasing fair value on market value, the fair value of financial
instruments that have no available market value is determined byusing a rational method of calculation. However, as variables are
inherent in these value calculations, the resulting values may differ if
different assumptions are used.

Derivative financial instruments
The fair value of derivatives are based on quoted price offered by counterparty financial institutions.
However, interest-rate swaps that are accounted for under the special method are combined with thelong-term debts that are hedged by these swaps. As a result, the fair value of these interest-rate swaps isincluded in the fair value of the corresponding long-term debts.
Note 2. Financial instruments whose fair values are not readily determinable

Millionsof yenUnlisted equity securities
Investment in silent partnerships

Millions of yen

2021

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Carrying
amounts

Fair
value

Unrecognizedgain (loss)¥ 20,418
43,203
11,04874,66927,124
20,320668
1,736¥ 49,850¥ 20,418
43,203
11,04874,66927,124
20,320

¥—
—
—
—
—
—

2,406

0

¥ 49,851

¥ 0

2020

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Fair
value

¥ 20,388
41,2297,822
69,43928,87020,6702,375
705¥ 52,621¥ 20,388
41,2297,822
69,43928,87020,670

¥—
—
—
—
—
—

3,081

0

¥ 52,622¥ 0

Unrecognizedgain (loss)

Thousands of U.S. dollars

2021

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Carrying
amounts

Fair
value

$ 184,428
390,236
99,795
674,460
245,009
183,542
6,042
15,689$ 450,283$ 184,428
390,236
99,795
674,460
245,009
183,542

$—
—
—
—
—
—

21,7353$ 450,286$ 3$ 5,61158$

Unlisted equity securities
These instruments are not included in investment securities as they
have no market value and their fair values are extremely difficult tomeasure.

Millions of yen
Carrying
amounts¥ 621¥ 6

Thousandsof U.S. dollars

Unrecognizedgain (loss)

Note 1. Method of calculating the fair value of financial instruments and matters related to marketablesecurities and derivatives
AssetsCash and deposits, and notes and accounts receivable-trade
As these instruments are settled in the short term and their fair values and book values are nearly
identical, their book values are taken to be their fair values.
Investment securities
The fair values of investment securities are determined by their prices on stock exchanges.
Liabilities
Notes and accounts payable-trade, and short-term loans payable
As these instruments are settled in the short term and their fair values and book values are nearly
identical, their book values are taken to be their fair values.
Long-term debt and current portion of long-term debt
The fair value of long-term debt is determined by discounting the total amount of principal and interest
with the assumed interest rate on new loans of the same type. With respect to part of long-term debts
with floating-rate interest, special treatment of the interest-rate swap is adopted. The value of that
long-term debt is calculated from principal and interests, which is handled together with the interest-rate
swap, with interest rates reasonably estimated to be applied to similar debts.

14

Notes to Financial Statements

Note 11. Segment Information

The Machinery System Consolidated Division specializes in the
manufacture of industrial equipment (various types of powder
processing equipment and press machines, etc.), steel casting andspecial steel casting, other incidental works and various types ofplant engineering.
The Industrial Materials Consolidated Division specializes in the
manufacture of ducts, polycon FRP pipes, various types of synthetic
resin products, and other incidental works.

(1) Outline of Reportable Segments
The Company’s reportable segments are the components of ourbusiness (separate financial information for which is available), on
which periodical review is made for allocation of management
resources and appraisal of achievements by the board of directors.
Each product-based division at our headquarters compiles
comprehensive product strategies for domestic and overseas
business operations.
In other words, the Company consists of division-based reportablesegments; the Pipe System Consolidated Division, the Machinery
System Consolidated Division and the Industrial Materials
Consolidated Division.
The Pipe System Consolidated Division specializes in the
manufacture of ductile iron pipes and accessories, various types ofadjusting valves, and other incidental works.

(2) Calculation method of: sales, profits/losses, assets, liabilities
and other items for each reportable segment
The accounting procedures of the reportable segments are basicallythe same as the description in the “Important Items Concerning the
Presentation of Consolidated Financial Statements,” and any
intersegment internal revenue/transfers etc., are represented basedon actual market prices.

(3) Information on sales, profits/losses, assets, liabilities and other items for each reportable segment
Segment information for the fiscal years ended March 2020 and 2021 is as follows:
Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2021
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1
—
(266)
(266)
(99)
34,639¥ 116,596—
116,596
4,673
134,477

2,176

344

2,520

2,550

¥ 850

¥ 56,185
96
56,282
3,087
52,891¥ 31,184
129
31,313
610
21,874¥ 29,226
41
29,267
1,074
25,072¥ 116,596
266
116,863
4,772
99,838

1,246

442

488

¥

982

¥

883

¥

685

¥

Consolidated*2

¥

¥

3,401

1. The minus 99 million yen segment income adjustment includes: 16 million yen resulting from the elimination of intersegment transactions; minus 107 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 8 million yen resulting from inventory asset adjustment.
The 34,639 million yen segment asset adjustment includes: minus 5,810 million yen resulting from the elimination of intersegment transactions; and 40,449 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 344 million yen depreciation adjustment and 850 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2020
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1
—
(479)
(479)
(290)
35,571¥ 109,904—
109,904
4,340
134,216

2,099

302

2,401

3,759

¥ 1,200¥ 54,376
245
54,622
2,338
53,690¥ 24,647
142
24,7901,020
22,293¥ 30,879
90
30,9701,272
22,660¥ 109,904
479
110,383
4,631
98,644

1,226

426

447

937

¥ 1,110¥ 1,712¥¥

Consolidated*2

¥

¥

4,960

1. The minus 290 million yen segment income adjustment includes: 21 million yen resulting from the elimination of intersegment transactions; minus 392 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as 79 million yen resulting from inventory asset adjustment.
The 35,571 million yen segment asset adjustment includes: minus 3,526 million yen resulting from the elimination of intersegment transactions; and 39,098 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 302 million yen depreciation adjustment and 1,200 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

15

Notes to Financial Statements

Thousands of U.S. dollars

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2021
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total$ 507,505
872
508,378
27,890477,752$ 281,681
1,165
282,846
5,514
197,579$ 263,987
372
264,360
9,703
226,469$ 1,053,174
2,411
1,055,585
43,109901,801

11,257

3,992

4,411

19,661

$

8,870

$

$

7,978

6,191

$

Consolidated*2

Adjustment*1

23,039$$—(2,411)(2,411)(896)
312,881$ 1,053,174—
1,053,174
42,212
1,214,683

3,108

22,7697,685$

30,724

1. The minus 896 thousand US dollar segment income adjustment includes: minus 150 thousand US dollars resulting from the elimination of intersegment transactions; 969 thousand US dollars resulting from allocationdifferences of selling & general administrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 77 thousand US dollars resulting from inventory asset adjustment.
The 312,881 thousand US dollar segment asset adjustment includes: minus 52,482 thousand US dollars resulting from the elimination of intersegment transactions; and 365,364 thousand US dollars due to a working capitalsurplus, investment securities and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 3,108 thousand US dollar depreciation adjustment and 7,685 thousand US dollar adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specificreportable segment, and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

(4) Geographic Segments
Geographic segment information has been omitted, as thepercentage of “national” exceeded 90% in both sales and assets in all
segments.
(5) Sales to Foreign Customers
Foreign sales have been omitted, as they did not reach 10% ofconsolidated sales.

Note 12. Subsequent Events
Cash Dividends
Cash dividends of the Company’s retained earnings for the year ended
March 31, 2021 were proposed by the Board of Directors and approvedby the shareholders at the annual general meeting held on June 25,
2021, as follows:
Millionsof yenCash dividends (¥40.0 per share)¥ 488

Thousandsof U.S. dollars$ 4,414

Note 13. Additional Information(The impact of COVID-19 on accounting estimates)
Forecasting how COVID-19 will spread and when it will subside isdifficult. Nonetheless, we have made accounting estimates based on
the information available at the time of preparation of theconsolidated financial statements.

16Independent Auditor’s Report

Independent Auditor’s Report
To the Board of Directors of Kurimoto, Ltd.

OpinionWe have audited the accompanying consolidated balance sheet of Kurimoto, Ltd. (the “Company”) and its consolidated subsidiaries as ofMarch 31, 2021, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, all expressed inJapanese yen.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of the Company and its consolidated subsidiaries as of March 31, 2021, and the consolidated results of their operations and their
cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards arefurther described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Company and its consolidated subsidiaries in accordance with the ethical requirements that are relevant to our audit of theconsolidated 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.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Reasonableness of Estimating Total Construction Cost in Applying the Percentage-of-Completion Method
for Machinery System Business
Key Audit Matters and Reasons for the Determination

Auditor’s Response

As stated in (Note 3. Significant Accounting Estimates), 11,318 million

Our main audit procedures performed to verify the reasonablenessyen of sales based on the percentage-of-completion method recordedof estimating total construction cost related to the machineryin the consolidated statements of income for the current consolidated

system business are as follows.

fiscal year are mostly derived from the machinery system business.

(1) Evaluation of internal controls• The effectiveness of the design and operation status of

The percentage-of-completion method is applied as the standard
for recording revenue from construction contracts of the machineryinternal controls related to the process of formulating thesystem business. The percentage-of-completion method is applied toconstruction cost estimate (working budget) was evaluatedwith a particular focus on the following internal controls.

construction contracts for which confirming the degree of• Internal control to ensure that the estimated costs andcompletion is deemed certain. In applying it, it is necessary to

man-hours for each construction project are properly

reasonably estimate the total construction revenue, total construction

accumulatedcost, and the progress of construction at the end of the consolidated• Internal control to reflect changes in the situation after the

fiscal year.

17Independent Auditor’s Report

Reasonableness of Estimating Total Construction Cost in Applying the Percentage-of-Completion Method
for Machinery System Business
Key Audit Matters and Reasons for the Determination

Auditor’s Response

The total construction cost, which forms the basis for recording

start of construction to working budget in a timely andrevenue based on the percentage-of-completion method, isappropriate manner

characterized by fluctuation with various changes in circumstances.

(2) Examination of the reasonableness of estimating total

In order to make a reliable estimate of the total construction cost, theconstruction costestimate needs to be appropriately reviewed in comparison with the• In order to evaluate the reasonableness of estimating total

actual costs incurred. The total construction cost therefore has

construction cost based on the working budget formulated

uncertainty in regard to the estimation of material cost, labor cost,for each construction contract, audit procedures including theand others.

followings were implemented.

As stated above, the estimation of the total construction cost

• We reviewed the cost breakdown of working budget, andinvolves uncertainty due to changes in the environment surrounding

checked the estimated costs for each construction project

construction contract, as well as the management’s decision.

against purchase orders and other calculation documents,

Considering these, we judged that said matter is particularly

which are the basis of the estimate, or compared with actual

significant in the audit of the consolidated financial statements forcosts incurred by a similar type of construction in the past.

the current consolidated fiscal year and corresponds to a key audit

After that, we examined whether the contents of work,

matter.

estimated man-hours, and the data used for the estimation
were appropriate for the contents of the work.
• We evaluated the accuracy of the latest working budget bycomparing it with the initial working budget and looking into
the differences.
• Regarding the timeliness of revision of working budget, we

checked whether the revision for construction works
requiring revision was reflected in a timely manner by
asking the persons in charge of such construction works.

Responsibilities of Management, Audit & Supervisory Board and its members1 for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting
principles generally accepted in Japan, 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 Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting.
Audit & Supervisory Board and its members are responsible for overseeing the Company and its consolidated subsidiaries’ financial
reporting process.

18

Independent Auditor’s Report

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks. These audit procedures are based on auditor’s professional judgment and obtain audit evidence thatis sufficient and appropriate to provide a basis for our opinion.
• In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made bymanagement.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
• Evaluate whether the presentation and notes to the consolidated financial statements are in accordance with accounting principles
generally accepted in Japan, and the overall presentation, structure, and content of the consolidated financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company
and its consolidated subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision, and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board and its members regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board and its members with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

19

Independent Auditor’s Report

From the matters communicated with Audit & Supervisory Board and its members, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in accordance with the basis stated in Note 1 and Note 2 to the consolidated financial statements. Such U.S. dollar amounts arepresented solely for the convenience of readers outside Japan.

Interest required to be disclosed by the Certified Public Accountants Act of Japan2
Our firm and its engagement partners do not have any interest in the Company and its consolidated subsidiaries which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
PKF HIBIKI AUDIT CORPORATION
Osaka, Japan
December 20, 2021

Tomita Masahiko[Representative Partner]
Engagement Partner
Certified Public Accountant
Matsumoto Katsuyuki[Representative Partner]
Engagement Partner
Certified Public Accountant
Urabe Haruhito[Partner]
Engagement Partner
Certified Public Accountant

20

Corporate Information

Kurimoto, Ltd.

(as of June 25, 2021)

OutlineFoundedIncorporated
Common stock
Total assets
Employees

OfficesHead Office12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Fax: (06) 6538-7758
Telephone: (06) 6538-7603

1909
1934
¥31,186 million*¥118,238 million*
1,342*

Tokyo Office16-2, Konan 2-chome, Minato-ku, Tokyo 108-0075, Japan
Telephone: (03) 3450-8611
Fax: (03) 3450-8504*as of March 31, 2021

Board of Directors

Hokkaido Office3, Nishi 3-chome, Kitaichijo, Chuo-ku, Sapporo 060-0001, Japan
Telephone: (011) 281-3301
Fax: (011) 281-3369(as of June 25, 2021)

President

Kazutaka Kikumoto

ChairmanMoriyoshi Kushida

Director and Senior Managing
Executive Officers

Hirobumi Okada

Director andManaging Executive Officers

Mikio Yaji

Director andSenior Executive Officers

Yoshiaki Shingu
Akitoshi Oda

Outside Director

Keiko Kondo
Tomohiko Sato

Full-Time Audit &Supervisory Board Member

Minoru Murata

Outside Audit &Supervisory Board Members

Maki Arita
Osamu Honda

Senior Executive Officers

Shinya Kojima
Yasuharu Yoshinaga
Yoshihiro Uraji

Executive Officers

Takehisa Fukui
Takao Ueda
Yasuji Noguchi
Hitoshi Marutani
Liao Jinsun
Masanobu Mino
Yasuo Sano
Yasushi Tabuchi
Hiroshi Fujimoto

Stock

Tohoku Office12-30, 1-chome Honcho, Aoba-ku, Sendai 980-0014, Japan
Telephone: (022) 227-1872
Fax: (022) 227-8417
Nagoya Office
1-17-23, Meiekiminami, Nakamura-ku, Nagoya 450-0003, Japan
Telephone: (052) 551-6930
Fax: (052) 551-6940
Chugoku Office
7-19, Hondori, Naka-ku, Hiroshima 730-0035, Japan
Telephone: (082) 247-4132
Fax: (082) 247-4004
Kyushu Office
3-11, Hakataeki-minami 1-chome, Hakata-ku, Fukuoka
812-0016, Japan
Telephone: (092) 451-6622
Fax: (092) 471-7696
Europe Office
Address: Berliner Allee 40 40212 Dusseldorf, Germany
Telephone: +49-211-550-46411
Fax: +49-211-550-46420
Jakarta Office
Address: Sahid Sudirman Center, 56th Floor Jl. Jend. Sudirman Kav. 86,
Jakarta 10220, Indonesia
Telephone: +62-21-8063-1861
Fax: +62-21-8063-1999

Common Stock
Number of authorized shares
Number of issued shares
Number of shareholders

39,376,600
13,098,490
7,508

Principal Shareholders(as of March 31, 2021)

Taiyo Life Insurance Company
Custody Bank of Japan, Ltd.
Nippon Life Insurance Company
The Master Trust Bank of Japan, Ltd.
Resona Bank, Limited
Mizuho Bank, Ltd.

Banking References(as of March 31, 2021)

Number ofshares held
(in thousands)

Ratio ofshareholding

1,209
798
678
588
444
362

9.89%
6.53%
5.55%
4.81%
3.63%
2.96%

Head OfficeMizuho Bank, Ltd. (Osaka Branch)Resona Bank, Limited (Osaka Banking Department)
Sumitomo Mitsui Banking Corporation (Midosuji Branch)
MUFG Bank, Ltd. (Osaka Main Office)Tokyo OfficeMizuho Bank, Ltd. (Uchisaiwai-cho Branch)
MUFG Bank, Ltd. (Shimbashi Branch)Resona Bank, Limited (Shimbashi Branch)
Sumitomo Mitsui Banking Corporation (Hibiya Branch)21

Corporate Information

Kurimoto Group(as of June 25, 2021)

Kurimoto Group consists of Kurimoto, Ltd. and 21 subsidiaries, including the following.
Kurimoto Trading Co., Ltd.

Kurimoto Business Associates Co., Ltd.

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Operations:

Kurimoto Logistics Corporation

Kurimoto USA, Inc.

Operations: Procurement and transport of raw materials, castiron pipes, etc.

Operations:Management and leasing of real estate, staffing
service, travel agency, insurance agency

Holding company

Readco Kurimoto, LLC
Japan Castering Co., Ltd.

Operations:

Manufacture and sales of industrial machineryOperations: Manufacture and sales of castings
Kurimoto Polymers Co., Ltd.
Yamatogawa Co., Ltd.

Operations:Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Manufacture and sales of rigid PVC pipes,
polyethylene pipes and profile extrusion products

Zentec Co., Ltd.
Motoyama Eng. Works, Ltd.

Operations:Operations: Manufacture and sales of industrial valves

Maintenance and repair work of bridges and roads
Repair and reinforcement work of concrete structures

Ks-Tech Co., Ltd.

Kurimoto Pipe Engineering Co., Ltd.

Operations: Manufacture, sales and construction of forging
machinery, forming machinery and related products

Operations:

Hokkaido Kanzai Co., Ltd.

Riko, Ltd.

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Operations:

Design, construction and management of pipelines,
operation and maintenance of pipelines

Production of valves

Kuritetsu (Shanghai) Trading Co., Ltd.
Yashima Chemical Engineering Co., Ltd.

Operations:Operations: Design, manufacture, sales, and maintenance ofchemical and pharmaceutical equipment

Wholesale of machinery equipment, steel, andnonmetallic products

Kurimoto (Philippines) Corporation
Nihon Kaiser Co., Ltd.
Operations: Manufacture and sales of half precast products

12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Telephone (06)6538-7603
Facsimile (06)6538-7758
URL http://www.kurimoto.co.jp/english/

Operations:

Construction, installation works, electric works,
piping works, repairs and maintenance and staff
service of various kinds of plants