2023
ANNUAL REPORT
Year ended March 31, 2023

DENYO CO., LTD. and Consolidated Subsidiaries

Contents
ProfileSince its establishment
in 1948, Denyo has been a pioneerin outdoor power source, developing
and manufacturing many original
products, including engine-driven
generators, engine-driven welders andengine-driven air compressors. Without
contenting ourselves with our current
market position or technical expertise,
we have boldly taken on new R&D
challenges and, as a result, we now
command a 70% share of the domestic
market for engine-driven generators,
our main product. The Denyo Group
comprises the Company and elevensubsidiaries and affiliate, along with its
production facilities in Southeast Asiaand the U.S., and R&D center in Japan.

Consolidated Financial Highlights
To Our Shareholders
Review of Operations
Overview of Product SegmentFinancial Review
Consolidated Balance SheetCompany Data
Executive Officers
Investor Information

1
2
4
6
8
10
31
32
35

Service Center
Kanto EstablishedDenyo established Service
Center Kanto in Sakura City,
Chiba as its East Japan base forlarge equipment maintenance.
This facility began operating on
March 1, 2023.
This reflects our plan to reinforce our structure for repairingand maintaining large equipment. We made this plan because demand has been strong
for generators for construction
work, including urban development construction and infra-

structure repair work, allowing
us to expect medium- to longterm growth in demand for large
generators.
Service Center Kanto enables generators to be maintainedindoors, from 1 kVA units up to
1,100 kVA-class large generators (weighing 15 tons with total
dimensions of approx. 6.5 m x
2.2 m x 2.8 m), which are ourlargest products. This in turn enables is to promptly repair andmaintain equipment.

We will also effective use thefacility to train engineers andstaff from service plants* all overJapan as part of our efforts todevelop human resources.
Following the opening of thisfirst service facility, we plan toestablish Service Center Nishi
Nihon in Okayama. We will moveahead with this plan to further
enhance our services.
* Servicing plant: Subcontracting companies that
preform servicing operations such as the inspection
and repair of Denyo products and sales of parts

Year ended March 31, 2023

Consolidated Financial Highlights
2023

Millions of Yen
2022

2021

Thousands of
U.S. Dollars
2023

Net Sales¥64,312¥55,168¥55,007$481,591

Total Assets

89,74480,77579,057672,041

Total Net Assets

68,65963,761

61,564514,145

Operating Income

4,874

3,654

5,333

36,501Net Income*

3,634

2,753

3,860

27,210Per Share Data

Yen

Total Net Assets

U.S. Dollars¥3,193.67¥2,963.99¥2,846.49$23.92Net Income*

175.64132.02185.13

1.32

Cash Dividends

50.00

47.00

47.00

0.37

Note:Transaction into U.S. dollars has been made, solely for the reader’s convenience, at the rate of ¥133.41 to U.S.$1, prevailing on the Tokyo Foreign Exchange
Market on March 31, 2023.

Net Sales

Net Income*¥ million

55,554

2019

4,071

64,31262,88755,0072020¥ million

2021

55,168

2022

3,860

3,167

2023

2019

3,634
2,753

2020

2021

2022

2023

* Net Income attributable to owners of the parent.

Total Assets

Total Net Assets¥ million

72,21074,08675,626

79,05780,77589,744

2019

2020

2021

2022

2023

¥ million

56,13356,29158,35461,564

2019

2020

2021

63,761

2022

68,6592023

1

Shoichi Shiratori
Representative
Director, Chairman

2

Takanori Yoshinaga,
PresidentIn the year ended March 31,2023, the 75th term, the consolidated net sales of the

Denyo Group increased 16.6% year on year, to ¥64,312 million (US$481,591 thousand). Ordinary profit increased 28.6% year on year
to ¥5,181 million (US$38,796 thousand), and profit attributable to owners of the parent was ¥3,634 million (US$27,210 thousand), up
32.0% year on year. Thus, both sales and profits increased significantly.
In the domestic business environment, economic activity has normalized gradually, and there were signs of a recovery of demand
related to events in addition to solid construction demand. The overseas business environment (the United States and other countries
and regions) recovered at a remarkable rate and shipments increased significantly. This was also boosted by the deprecation of the yen.
Meanwhile, manufacturing costs rose considerably, reflecting factors including persistently high raw materials prices, delivery delays
and shortages of production materials. Therefore, we asked customers to accept revised prices and made on-time delivery the top
priority. As a result, we were able to improve profits from the previous fiscal year.
Regarding the future outlook, public investment is expected to continue, including government measures for the Fundamental
Plan for National Resilience, etc., and investments in initiatives such as disaster prevention and mitigation initiatives will remain steady.
Strong demand is expected to remain in overseas markets as well. On the production front, however, we will maintain a cautious stancebecause issues such as rising raw materials prices, parts shortages and labor shortages have surfaced.
The current fiscal year is the final year of the Denyo 2023 three-year medium-term management plan. To achieve the plan, we willproactively developing products suited to the times and strive to ensure stable production through the cooperation of all the Group
companies around the world.
Regarding dividends for the year ended March 31, 2023, we paid an interim dividend of ¥23 (US$0.17) per share and decided to
pay an ordinary year-end dividend of ¥27 (US$0.20) per share. As a result, dividends for the full year came to ¥50 (US$0.37) per share.
We wish to thank all shareholders for their continued support for the Denyo Group going forward.
June 2023

Takanori Yoshinaga,
President

Shoichi Shiratori,
Representative Director,
Chairman

4

DENYO CO., LTD. and Consolidated Subsidiaries

Review of Operations

1

PL-241SLB, an LED floodlight featuring splitable lamps

Denyo developed the PL-241SLB LED floodlight featuring splitable lamps and began selling it in November 2022.
PL-241SLB features splitable lamps, which enable the easy setup and removal of the PL-241SLB and a wide range ofillumination angles, including wide-angle illumination and downward illumination.
Powered by lithium ion batteries, the unit is a noiseless, exhaust gasless and environmentally friendly floodlight that canbe used both indoors and outdoors.
It uses two removable and replaceable batteries. If one of the batteries runs out of electricity, the user can replace it with acharged battery while continuing to be illuminated because the floodlight
is able to operate on one battery.
The brightness level can be switched between high, medium, andlow using the control panel. Further, the unit indicates the remaining
illumination time and battery life, enabling people to use it without worry.
Denyo will continue to develop environmentally friendly products.

The splittable lamps permit easy setup and removal.

The batteries aredetachable.

PL-241SLB

Year ended March 31, 2023

2

TLG-8LSKE-D, a generator featuring simultaneous threephase and single-phase output

Denyo developed and started selling TLG-8LSKE-D in October 2022. Featuring Eco Base, TLG-8LSKE-D is a new model of
the TLG-8LSK-D compact, lightweight two-pole generator from the Simul Generator series of generators for the simultaneous
output of three-phase and single-phase power.
TLG-8LSKE-D is capable of simultaneously outputting three-phase four-wire and single-phase three-wire power, which isa feature of the Simul Generator series. This means that the single unit can be used for a wide range of purposes, such as
supplying three-phase power to a water pump or compressor and supplying single-phase power to lighting or air-conditioning
equipment in a temporary office.
TLG-8LSKE-D comes standard with Eco Base, which prevents the leakage of fuel and oil outside of the machine. Therefore,
it can be used in places with strict installation standards, such as rivers and ports. In addition, the unit can be optionallyequipped with four-wheel casters or a 600-mm rack, which are convenient for moving the generator on site.
Denyo will continue to develop products that cater to diverse needs.

Three-phase,four-wire output

Single-phase,
three-wire output

For motive power
Water pumps
Compressors
Belt conveyors, andother equipment

For power supply
Lighting Air conditioner
Office equipment
PCs, and other equipment

TLG-8LSKE-D

3

Nishihatsu signs an agreement on establishment of new
business facility with the Karatsu City government.

Nishihatsu Co., Ltd. (Karatsu City, Saga), a subsidiary manufacturing disaster relief
generators, plans to build a new headquarters factory in Karatsu City. A signingceremony for an agreement between Nishihatsu and the Karatsu City government on
the establishment of a new business facility was held at Karatsu City Hall in August2022.
During the ceremony, Mayor Tatsuro Mine of Karatsu City said, “Motivating people
to work in Karatsu by promoting local industries is essential for the developmentof Karatsu City. I appreciate your support.” President Michio Nonaka of Nishihatsu
expressed his determination, stating “We will continue to contribute to the region as
a company based in Karastu.”
Demand for disaster relief generators has remained high due to the frequent
occurrence of disasters in recent years. The new factory will feature higher
production efficiency enabled by the layout of the factory and a greater production
capacity so that products can be provided to even more customers. In addition,
Nishihatsu will also provide a better workplace environment for its employees andcontribute to the development of local industries.

Outline of the new headquarters factory
Location: Chichika, Karatsu City, Saga
Site area: 38,680 m2
Building area: 10,726 m2
Start of construction (plan): January 2023
Start of operation (plan): September 2024

5

6

DENYO CO., LTD. and Consolidated Subsidiaries

Overview of Product Segment
Business performance by product category
and domestic market share
Engine Generators
In the generator segment, among the products for thedomestic market, shipments of emergency generators fordisaster prevention equipment decreased, but shipmentsof portable generators, which are used mainly forconstruction work and events, remained steady. Regarding
products for overseas markets, products for the UnitedStates and Asia continued to trend toward recovery. As
a result, segment sales increased to ¥53,700 million(US$402,128 thousand), up 22.7% year on year.

Engine-driven
In the engine welders segment, sales decreased to ¥4,402
million (US$32,960 thousand), down 8.9% year on year.
This mainly reflected the impact of supply chain problemson the production of some products, more than offsetting
the resumption of product exhibitions which are major
sales opportunities in various parts of Japan as a result of
the easing of movement restrictions.

70%
Domestic
Market Share(Mobile Type)55%
Domestic
Market Share

Compressors
In the compressors segment, sales were ¥727 million(US$5,446 thousand), up 0.0% year on year. This is attributed
to an increase in shipments of engine compressors produced
locally in the U.S., offsetting a decrease in shipments ofengine compressors in Japan.

Other Products
In the other products segment, sales were ¥5,483 million(US$41,057 thousand), down 6.4% year on year. This reflecteda decrease in sales of parts incidental to products which morethan offset strong shipments of self-propelled lifters.

Note: Above domestic share is five year mean by our investigation

15%
Domestic
Market ShareDenyo Co., Ltd.
and Subsidiaries
Consolidated Financial Statements
for the Year Ended March 31, 2023,
and Independent Auditor's Report

8

DENYO CO., LTD. and Consolidated Subsidiaries

Financial Review
Business Environment and Results
During the fiscal year under review, the Japanese economy recovered
modestly, in part because economic activity began to normalize due tothe easing of COVID-19-related movement restrictions. Meanwhile, thefuture outlook for the global economy remained uncertain due to theimpact of events such as monetary restraint and surging prices, as wellas the rising geopolitical risks.
Regarding the business environment surrounding the Denyo Group,
products for the construction market, including products for urban redevelopment projects and infrastructure-related construction, were strong
in the domestic market. In overseas markets, demand remained strong
in the United States market, and our performance recovered steadily in
the Asia and Middle East markets as well, boosted by the depreciationof the yen and other factors. On the supply front, a parts shortage affected

the production of some products, and persistently high raw materials prices
caused manufacturing costs to rise.
In these conditions, the Denyo Group proactively ran booths at
product exhibitions and sought to increase orders received in overseas
markets. We also focused on ensuring stable supply, such as accommodating each other within the Group regarding production materials andsupporting each others’ production. As a result, net sales increased to¥64,312 million (US$481,591 thousand), up 16.6% year on year. On the
profit front, operating profit rose 33.4% year on year to ¥4,874 million(US$36,501 thousand), ordinary profit increased 28.6% year on year to¥5,181 million (US$38,796 thousand), and profit attributable to owners ofparent rose 32.0% year on year to ¥3,634 million (US$27,210 thousand).
This was partly due to the reflection of increased costs in sales prices.

Segment Information
In the generator segment, among the products for the domestic market,
shipments of emergency generators for disaster prevention equipment
decreased, but shipments of portable generators, which are used mainly
for construction work and events, remained steady. Regarding products
for overseas markets, products for the United States and Asia continued to trend toward recovery. As a result, segment sales increased to¥53,700 million (US$402,128 thousand), up 22.7% year on year.
In the engine welders segment, sales decreased to ¥4,402 million(US$32,960 thousand), down 8.9% year on year. This mainly reflected
the impact of the supply chain problems on the production of some products, more than offsetting the resumption of product exhibitions which
are major sales opportunities in various parts of Japan as a result of theeasing of movement restrictions.
In the compressors segment, sales were ¥727 million (US$5,446
thousand), up 0.0% year on year. This is attributed to an increase in shipments of engine compressors produced locally in the U.S., offsetting adecrease in shipments of engine compressors in Japan.
In the other products segment, sales were ¥5,483 million (US$41,057
thousand), down 6.4% year on year. This reflected a decrease in sales ofparts incidental to products which more than offset strong shipments ofself-propelled lifters.
Information by geographical area is as follows.
Consolidated results in each segment are based on the results of theCompany and its consolidated subsidiaries located in the specific region.
Accordingly, consolidated results in the Japan segment are for the period
from April 2022 to March 2023. Those in segments other than Japan are
for January to December 2022 because the fiscal year end of overseas
consolidated subsidiaries is December 31.

(Japan)In Japan, net sales increased to ¥43,893 million (US$328,683 thousand),up 1.5% year on year. This reflected strong demand in our core rental
market in Japan and the steady export of generators to the U.S. and Asianmarkets, more than offsetting the impact of the extension of construction
periods in some construction projects, which caused the postponement of
the delivery of emergency generators that are installed in buildings. However, segment profit decreased to ¥2,833 million (US$21,219 thousand),down 13.9% year on year, due in part to a rise in the cost to sales ratio that
resulted from surging raw materials prices.
(United States)
In the U.S., sales increased to ¥15,882 million (US$118,930 thousand), up
82.9% year on year, and segment profit was ¥831 million (US$6,222 thousand), as compared to a segment loss of ¥112 million (US$840 thousand)in the previous fiscal year. This reflected the effect of the weaker yen, in
addition to an increase in the shipments of generators to the rental market
on the back of the demand that remained at a high level.
(Asia)In Asia, demand for products for resource development and infrastructuredevelopment were trending toward recovery, mainly in the Southeast Asianmarket. A rise in the price competitiveness of products attributed to theweak yen also provided a boost. As a result, sales increased to ¥4,003
million (US$29,976 thousand), up 28.3% year on year, and segment profit
rose to ¥939 million (US$7,029 thousand), up 91.8% year on year.
(Europe)
In Europe, shipments to the UK market, the main sales destination, recovered, resulting in a rise in sales to ¥534 million (US$4,002 thousand), up
294.2% year on year, and segment profit of ¥23 million (US$174 thousand)as compared to a segment loss of ¥14 million (US$103 thousand) in theprevious fiscal year.

Net Income per Share

Cash Dividends per Share

Equity Ratio

(¥)

(¥)

(%)

194.32185.13175.64

46.00

47.00

47.00

2020

2021

2022

50.00

73.1

74.1

75.1

76.0

73.4

2023

2019

2020

2021

2022

2023

42.00

132.02149.83

2019

2020

2021

2022

2023

2019

Year ended March 31, 2023

Financial Position(Assets)
Total assets at the end of the fiscal year under review were ¥89,744 million(US$672,041 thousand), an increase of ¥8,970 million (US$67,170 thousand)from the end of the previous fiscal year.
Current assets at the end of the fiscal year under review were¥61,517 million (US$460,664 thousand), an increase of ¥4,645 million(US$34,783 thousand) from the end of the previous fiscal year. This was
mainly due to an increase in accounts receivable - trade of ¥2,316 million(US$17,344 thousand) and a rise in raw materials and supplies of ¥3,017
million (US$22,590 thousand). Non-current assets at the end of the fiscal
year under review were ¥28,227 million (US$211,377 thousand), an increase of ¥4,325 million (US$32,386 thousand) from the end of the previous fiscal year. This mainly reflected an increase in land of ¥1,428 million(US$10,693 thousand) and a rise in construction in progress of ¥1,324
million (US$9,916 thousand), which resulted chiefly from investment inconstruction of new headquarters and factory of Nishihatsu Co., Ltd., aswell as an increase in investment securities of ¥577 million (US$4,318
thousand) attributed mainly to the revaluation of stockholdings.
(Liabilities)
Total liabilities at the end of the fiscal year under review were ¥21,085

million (US$157,896 thousand), increasing ¥4,072 million (US$30,490
thousand) from the end of the previous fiscal year. Current liabilities atthe end of the fiscal year under review were ¥17,700 million (US$132,546
thousand), an increase of ¥3,431 million (US$25,690 thousand) fromthe end of the previous fiscal year. This was mainly due to an increasein trade notes and accounts payable - trade of ¥1,020 million (US$7,640
thousand) and an increase in short-term borrowings of ¥1,673 million(US$12,526 thousand) at Nishihatsu Co., Ltd. Non-current liabilities at theend of the fiscal year under review were ¥3,385 million (US$25,350 thousand), up ¥641 million (US$4,800 thousand) from the end of the previous
fiscal year. This mainly reflected a ¥508 million (US$3,805 thousand) risein long-term borrowings at Nishihatsu Co., Ltd.
(Net assets)
Net assets at the end of the fiscal year under review were ¥68,659 million (US$514,145 thousand), an increase of ¥4,898 million (US$36,680
thousand) from the end of the previous fiscal year. This was mainly due
to profit attributable to owners of parent of ¥3,634 million (US$27,210
thousand), a ¥2,004 million (US$15,006 thousand) rise in other comprehensive income, and cash dividends paid of ¥1,034 million (US$7,741
thousand).

Cash Flows
Consolidated cash and cash equivalents (hereinafter, cash) were¥22,331 million (US$167,223 thousand) at the end of the fiscal year
under review, decreasing ¥1,028 million (US$7,697 thousand) from theend of the previous fiscal year, despite the posting of profit before income
taxes of ¥5,218 million (US$39,076 thousand) which was more thanoffset by an increase in trade accounts receivable and inventories andthe purchase of property, plant and equipment.
(Cash flows from operating activities)
Net cash provided by operating activities was ¥2,031 million (US$15,212
thousand) (cash provided of ¥2,696 million (US$20,187 thousand) in
the previous fiscal year). This was largely due to profit before income
taxes of ¥5,218 million (US$39,076 thousand), depreciation of ¥1,266
million (US$9,484 thousand), and income taxes paid of ¥1,407 million(US$10,539 thousand).

(Cash flows from investing activities)
Net cash used in investing activities was ¥4,117 million (US$30,826 thousand) (cash used of ¥819 million (US$6,136 thousand) in the previous
fiscal year). This largely reflected the purchase of property, plant andequipment of ¥4,065 million (US$30,438 thousand) and proceeds fromsales of investment securities of ¥70 million (US$522 thousand).
(Cash flows from financing activities)
Net cash provided by financing activities was ¥938 million (US$7,021
thousand) (cash used of ¥1,644 million (US$12,309 thousand) in theprevious fiscal year). This was mainly due to an increase in short-termborrowings of ¥1,600 million (US$11,981 thousand) and dividends paidof ¥1,034 million (US$7,741 thousand).

Dividends
Denyo recognizes the importance of making further efforts to return
profits to shareholders while also investing in equipment and research& development to enhance and maintain product competitiveness andstriving to improve profitability and strengthen its financial structure. Ourpolicy is to distribute profits based on the comprehensive considerationof a wide range of factors including business performance and thepayout ratio.

Return on Average
Shareholders’ Equity

Return on Average
Assets (ROA)(%)

Price Earnings Ratio

(%)

7.4
5.9

6.7

5.7
4.6

2019

Regarding dividends for the fiscal year under review, we issued
an interim dividend of ¥23 (US$0.17) per share and decided to pay an
ordinary year-end dividend of ¥27 (US$0.20) per share based on the policy
above. As a result, dividends for the full year came to ¥50 (US$0.37). As
a consequence, the dividend payout ratio (consolidated) for the fiscal year
under review came to 28.5%.

2020

2021

2022

5.4
4.3

2023

2019

9.9
5.0
3.4

2020

2021

2022

4.3

9.1

2023

2019

2020

11.3

2021

12.4

9.7

2022

2023

9

10

DENYO CO., LTD. and Consolidated Subsidiaries

Consolidated Balance Sheet
Denyo Co., Ltd. and Subsidiaries · Year Ended March 31, 2023

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 15)
Receivables (Note 15):
		 Trade notes
		 Electronically recorded monetary claims—operating
		 Trade accounts
		 Associated companies (Note 21)
		Other
		 Allowance for doubtful receivables
Inventories (Note 5)
Prepaid expenses and other current assets

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)
2023

¥22,331¥23,359$167,223

3,021
3,643
13,308
2,086
449
(5)
16,414
270

4,102
3,335
11,425
1,403
116
(5)
12,861276

22,62327,281
99,656
15,6213,362(36)122,9112,023

			 Total current assets

61,51756,872

460,664

PROPERTY, PLANT AND EQUIPMENT:Land
Buildings and structures
Machinery and equipment (Note 14)
Furniture and fixtures
Construction in progress			Total
Accumulated depreciation

6,495
16,001
9,432
2,100
1,644
35,672(17,394)

5,067
14,120
8,593
2,129
320
30,229(15,464)

48,635
119,824
70,632
15,722
12,311
267,124(130,250)

			 Net property, plant and equipment

18,27814,765

136,874

7,597
1,072
287
993

7,203
889
226
820

56,889
8,028
2,149
7,437

9,949

9,138

74,503¥89,744¥80,775$672,041

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 15)
Investments in associated companies (Note 6)
Deferred tax assets (Note 11)
Other assets (Note 14)
			 Total investments and other assets

TOTAL
See notes to consolidated financial statements.

Year ended March 31, 2023

LIABILITIES AND EQUITYCURRENT LIABILITIES:
Short-term bank loans (Notes 7 and 15)
Current portion of long-term debt (Notes 7, 14 and 15)
Payables (Note 15):
		 Trade notes
		 Electronically recorded obligations—operating
		 Trade accounts
		 Associated companies
		Other
Accrued income taxes (Note 11)
Accrued expenses
Provision for product warranties
Other current liabilities

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)2023

¥1,810
100

¥210
20

$13,554
751

800
2,690
9,245
4
281
672
1,308
99
691

803
2,554
8,220
3
207
405
1,263
98
487

5,990
20,14569,228
28
2,104
5,031
9,795
741
5,179

Total current liabilities

17,70014,270132,546

LONG-TERM LIABILITIES:Long-term debt (Notes 7, 14 and 15)
Liability for retirement benefits (Note 9)
Deferred tax liabilities (Note 11)
Other long-term liabilities

1,694
513
1,168
10

1,141
458
1,113
32

12,684
3,843
8,744
79

				

3,385

2,744

25,3501,955
1,789
59,101

1,955
1,789
56,501

14,63913,394
442,569

				Total long-term liabilities

COMMITMENTS AND CONTINGENT LIABILITIES (Notes 14, 16 and 17)
EQUITY (Note 10):
Common stock—authorized, 97,811,000 shares;
issued, 22,859,660 shares in 2023 and 22,859,660 shares in 2022
Capital surplus
Retained earnings
Treasury stock—at cost, 2,226,890 shares in 2023 and2,140,078 shares in 2022 (Note 3)
Accumulated other comprehensive income:		 Unrealized gain on available-for-sale securities
		 Foreign currency translation adjustments
		 Defined retirement benefit plans				 Total
Noncontrolling interests(2,720)(2,598)(20,372)

3,500
2,321
(52)
65,894
2,765

3,209
591
(34)
61,413
2,348

26,21017,389(387)
493,442
20,703

				68,65963,761

514,145¥89,744¥80,775$672,041

TOTAL

Total equity

11

12

DENYO CO., LTD. and Consolidated Subsidiaries

Consolidated Statement of Income and Comprehensive Income
Denyo Co., Ltd. and Subsidiaries · Year Ended March 31, 2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)2023

NET SALES (Notes 12, 20 and 21)¥64,312¥55,168$481,591

COST OF SALES

50,67743,449379,488				

13,635

11,719102,103

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 13)

8,761

8,065

65,602

				

4,874

3,654

36,501

288
(51)
2
(4)

2,154
(383)
17
(29)
(1,469)
1,413
600
(230)
293
209
2,575

Gross profit
Operating income

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Gain on sale of property, plant and equipment
Loss on sale or disposal of property, plant and equipment
Loss from remittance fraud in foreign subsidiary
Foreign exchange (loss) gain
Equity in earnings of associated companies
Rent income
Commitment fee
Gain on sale of investment securities
Other—net				 Other income—net

(196)
189
80
(31)
39
28
344

226
(38)
4
(43)
(102)
33
42
82
(7)
29
36
262

INCOME BEFORE INCOME TAXES

5,218

3,916

39,076

INCOME TAXES (Note 11):
Current
Deferred

1,658
(150)

1,230
(36)

12,414(1,122)

				

1,508

1,194

11,292NET INCOME

3,710

2,722

27,784NET INCOME ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests

3,634
76

2,753
(31)

27,210574

NET INCOME— (Forward)¥3,710¥2,722$27,784

OTHER COMPREHENSIVE INCOME (Note 18):
Unrealized (loss) gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive (loss) income in associates

289
2,073
(18)
2

(434)
1,219
(23)
(0)

2,165
15,520
(133)
11

				

2,346

762

17,563COMPREHENSIVE INCOME¥6,056¥3,484$45,347

TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests¥5,638418¥3,304180$42,216
3,131

Total income taxes

Total other comprehensive income

Yen
PER SHARE OF COMMON STOCK (Notes 2.u and 19):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

¥175.64
50.00

U.S. Dollars¥132.02
47.00

$1.32
0.37

Year ended March 31, 2023

Consolidated Statement of Changes in Equity
Denyo Co., Ltd. and Subsidiaries · Year Ended March 31, 2023

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE,APRIL 1, 2021
Net income attributableto owners of the parent
Cash dividends,¥47 per share
Purchase of treasury
stock
Selling of treasury
stock
Disposal of treasury sharesto stock benefit trust
Net change in the year
BALANCE,MARCH 31, 2022
Net income attributableto owners of the parent
Cash dividends,¥48 per share
Purchase of treasury
stock
Selling of treasury
stock
Disposal of treasury sharesto stock benefit trust
Net change in the year
BALANCE,MARCH 31, 2023

Number of
Shares ofCommonStock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

Treasury
Stock20,856

1,955

1,779

54,766(2,351)

Unrealized
Gain onForeignDefinedAvailableCurrency Retirement
for-SaleTranslation
BenefitSecurities Adjustments
Plans

3,643

(416)

(11)

Total

59,365

Noncontrolling
Interests

2,199

Total
Equity61,564

2,753

2,753

2,753

(1,018)(1,018)(1,018)

(150)

(254)

(254)

(254)

14

17

17

17

10

20,720¥1,955¥1,789(10)¥56,501¥(2,598)

(434)

1,007

(23)

550

149

699

¥3,209

¥591

¥(34)

¥61,413¥2,348¥63,761

3,634

3,634

3,634

(1,034)(1,034)(1,034)

(100)

(136)

(136)

(136)

13

14

14

14

20,633¥1,955¥1,789¥59,101¥(2,720)

291

1,730

(18)

2,003

417

2,420

¥3,500¥2,321¥(52)¥65,894¥2,765¥68,659

Total

Noncontrolling
Interests

Total
Equity$459,882$17,583$477,465

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

BALANCE,MARCH 31, 2022

CommonStockCapitalSurplusRetained
Earnings

Treasury
Stock

Unrealized
Gain onForeignDefinedAvailableCurrency Retirement
for-SaleTranslation
BenefitSecurities Adjustments
Plans$14,639$13,394$423,100$(19,458)$24,034

Net income attributableto owners of the parent
Cash dividends,$0.36 per share
Purchase of treasury
stock$14,639

See notes to consolidated financial statements.

$13,394$(253)

27,21027,21027,210(7,741)(7,741)(7,741)(1,021)(1,021)(1,021)

107

107

107

Selling of treasury
stock
Disposal of treasury sharesto stock benefit trust
Net change in the year
BALANCE,MARCH 31, 2023

$4,426$442,569$(20,372)

2,176

12,963(134)

15,005

3,120

18,125$26,210$17,389$(387)$493,442$20,703$514,145

13

14

DENYO CO., LTD. and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
Denyo Co., Ltd. and Subsidiaries · Year Ended March 31, 2023

Millions of Yen
2022
2023

Thousands of
U.S. Dollars(Note 1)2023

OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:		 Income taxes paid
		 Depreciation and amortization
		 Loss on sale or disposal of property, plant and equipment—net
		 Gain on sale of investment securities
		 Equity in earnings of associated companies
		 Changes in assets and liabilities, net of effects:			 (Increase) decrease in trade notes and accounts receivable
			 Increase in inventories
			 Decrease in interest and dividends receivable
			 Increase in trade notes and accounts payable
			 Increase (decrease) in provision for allowance for doubtful accounts
			 Increase in liability for retirement benefits
Other—net				 Total adjustments¥5,218¥3,916$39,076(1,407)
1,266
2
(39)
(189)

(1,800)
1,361
39
(29)
(42)

(10,539)
9,484
13
(293)
(1,413)(1,215)(2,703)
10
591
0
19
478
(3,187)933(2,119)
12
534
(1)
8
(116)
(1,220)(9,097)(20,240)
76
4,428
2
146
3,569
(23,864)

				

2,031

2,696

15,212INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Investment in loans receivableCollections of loans receivable
Other—net(4,065)
(3)
70
(1)
1
(119)

(800)
(3)
82
(1)
4
(101)

(30,438)
(24)
522
(5)
9
(890)

				

Net cash used in investing activities(4,117)(819)(30,826)

FINANCING ACTIVITIES:
Increase (decrease) in short-term loans—net
Proceeds from long-term debt
Repayments of long-term debt
Purchases of treasury stock
Dividends paid
Other—net

1,600
509
(6)
(136)
(1,034)5(0)783(1,107)(255)(1,018)(47)

11,9813,812(45)(1,021)(7,741)35

938(1,644)

7,021

120

212

896

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS—(Forward)¥(1,028)¥445$(7,697)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

23,35922,914

174,920

CASH AND CASH EQUIVALENTS, END OF YEAR

¥22,331¥23,359$167,223

				Net cash provided by operating activities

Net cash used in financing activities

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH
EQUIVALENTS

See notes to consolidated financial statements.

Year ended March 31, 2023

Notes to Consolidated Financial Statements
Denyo Co., Ltd. and Subsidiaries · Year Ended March 31, 2023

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related
accounting regulations and in accordance with accounting
principles generally accepted in Japan (“Japanese GAAP”),
which are different in certain respects as to the application anddisclosure requirements of International Financial ReportingStandards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements asof March 31, 2023, include the accounts of the Company
and its 11 subsidiaries, including mainly “Denyo Kosan Co.,
Ltd.,” “Nishihatsu Co., Ltd.,” “Denyo America Corporation,”“Denyo Manufacturing Corporation,” “Denyo Asia Pte. Ltd.,”“Denyo United Machinery Pte. Ltd.,” “Denyo Europe B.V.,”“Denyo Vietnam Co., Ltd.” and “P.T. Dein Prima Generator”(together, the “Group”).
		 Under the control and influence concepts, thosecompanies in which the Company, directly or indirectly,
is able to exercise control over operations are fully
consolidated, and those companies over which theGroup has the ability to exercise significant influence areaccounted for by the equity method.
		 The investment in “New Japan Machinery Corporation,”an associated company, is accounted for by the equity
method.
		 All significant intercompany balances and transactions
have been eliminated in consolidation. All material
unrealized profit included in assets resulting fromtransactions within the Group is also eliminated.
		 “Denyo America Corporation,” “Denyo Manufacturing
Corporation,” “Denyo Asia Pte. Ltd.,” “Denyo United
Machinery Pte. Ltd.,” “Denyo Europe B.V.,” “Denyo Vietnam
Co., Ltd.” and “P.T. Dein Prima Generator” and two othersubsidiaries were consolidated using the financial
statements as of December 31 because the difference
between the fiscal year-end date of the subsidiaries andthat of the Company does not exceed three months.
Significant transactions between December 31 andMarch 31 are reflected in the accompanying consolidated
financial statements.
b. Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements—
Under Accounting Standards Board of Japan (“ASBJ”)
Practical Issues Task Force (“PITF”) No. 18, “Practical
Solution on Unification of Accounting Policies Applied
to Foreign Subsidiaries for the Consolidated Financial
Statements,” the accounting policies and procedures
applied to a parent company and its subsidiaries for similartransactions and events under similar circumstances
should in principle be unified for the preparation of theconsolidated financial statements. However, financial
statements prepared by foreign subsidiaries in accordance

present them in a form which is more familiar to readers outside
Japan.
The consolidated financial statements are stated in Japaneseyen, the currency of the country in which Denyo Co., Ltd. (the“Company”) is incorporated and operates. The translations ofJapanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and havebeen made at the rate of ¥133.54 to $1, the approximate rate ofexchange at March 31, 2023. Such translations should not be
construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.

with either International Financial Reporting Standards orgenerally accepted accounting principles in the UnitedStates of America (Financial Accounting Standards Board
Accounting Standards Codification) tentatively may be
used for the consolidation process, except for the following
items that should be adjusted in the consolidation process
so that net income is accounted for in accordancewith Japanese GAAP, unless they are not material: (a)amortization of goodwill; (b) scheduled amortization of
actuarial gain or loss of pensions that has been recorded inequity through other comprehensive income; (c) expensing
capitalized development costs of R&D; and (d) cancellationof the fair value model of accounting for property, plant andequipment and investment properties and incorporation of
the cost model of accounting; and (e) recording a gain orloss through profit or loss on the sale of an investment in an
equity instrument for the difference between the acquisition
cost and selling price, and recording impairment loss
through profit or loss for other-than-temporary declines
in the fair value of an investment in an equity instrument,
where a foreign associate elects to present in othercomprehensive income subsequent changes in the fairvalue of an investment in an equity instrument.
c. Cash and Cash Equivalents—Cash and cash equivalents
include cash on hand, bank deposits able to be withdrawn
on demand and short-term investments with an original
maturity of three months or less and are exposed toinsignificant risk of fluctuations in value.
d. Marketable and Investment Securities—Marketable
and investment securities are classified and accounted
for depending on management’s intent. Available-for-salesecurities are reported at fair value, with unrealized gains
and losses, net of applicable taxes, reported in a separate
component of equity.
		 Nonmarketable available-for-sale securities are stated atcost determined by the moving-average method. For otherthan-temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.
		 Effective April 1, 2021, the Company applied ASBJ
Statement No. 30, “Accounting Standard for Fair Value
Measurement” and ASBJ Guidance No. 31, “Implementation
Guidance on Accounting Standard for Fair Value
Measurement,” and revised related ASBJ Statements and
ASBJ Guidance (the “New Accounting Standards”). Under

15

16

DENYO CO., LTD. and Consolidated Subsidiaries

the New Accounting Standards, nonmarketable availablefor-sale equity securities are stated at cost, while under theprevious accounting standards, nonmarketable availablefor-sale securities are stated at cost. The Company applied
the New Accounting Standards prospectively. As a result,
there is no impact on the financial statements.
e. Allowance for Doubtful Accounts—The allowance for
doubtful accounts is stated in amounts considered tobe appropriate based on the Company’s past credit loss
experience and an evaluation of potential losses in thereceivables outstanding.
f. Inventories—Inventories are stated at the lower of cost,
determined by the first-in, first-out method for finishedproducts and work in process, and by the average method
for raw materials, or net selling value.
g. Property, Plant and Equipment—Property, plant andequipment are stated at cost. Depreciation of property,
plant and equipment of the Company and its consolidated
domestic subsidiaries is computed by the decliningbalance method based on the estimated useful lives of
the assets, while the straight-line method is applied tobuildings of the Company and its consolidated domestic
subsidiaries acquired on or after April 1, 1998, building
improvements and structures of the Company and its
consolidated domestic subsidiaries acquired on or after
April 1, 2016, and all property, plant and equipment ofconsolidated foreign subsidiaries. The range of useful lives
is principally from 7 to 50 years for buildings and structures,and from 2 to 12 years for machinery and equipment.
h. Long-Lived Assets—The Group reviews its long-lived
assets for impairment whenever events or changes incircumstance indicate the carrying amount of an asset
or asset group may not be recoverable. An impairment
loss is recognized if the carrying amount of an asset
or asset group exceeds the sum of the undiscounted
future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group.
The impairment loss would be measured as the amountby which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted
cash flows from the continued use and eventual dispositionof the asset or the net selling price at disposition.
i. Provision for Product Warranties—The provision for
product warranties is recorded to provide for future potential
costs, such as costs related to after-sales services within
the warranty period based on past experience.
j. Accrued Bonuses—Accrued bonuses to employees areprovided for at the estimated amounts that the Company
and its domestic subsidiaries are obligated to pay toemployees after the fiscal year-end, based on services
provided during the current period.
k. Retirement and Pension Plans—The Company, its
domestic subsidiaries and a certain foreign subsidiary
maintain defined benefit pension plans. Some foreignsubsidiaries maintain defined contribution pension plans.
		 The Company accounts for the liability for retirement
benefits based on the projected benefit obligations andplan assets at the balance sheet date. The projected
benefit obligations are attributed to periods on a benefit
formula basis.
		 The unrecognized actuarial gains and losses areamortized on a straight-line basis over a period of 5 years,
no longer than the expected average remaining service

period of the employees, from the year incurred. Actuarial
gains and losses that are yet to be recognized in profit
or loss are recognized within equity (accumulated othercomprehensive income), after adjusting for tax effects.
l. Employee Stockownership Plan—In accordance with
PITF No. 30, “Practical Solution on Transactions ofDelivering the Company’s Own Stock to Employees etc.
through Trusts,” upon transfer of treasury stock to theemployee stockownership trust (the “Trust”) by the entity,
any difference between the book value and fair value ofthe treasury stock is recorded in capital surplus. At yearend, the Company records (1) the Company stock held by
the Trust as treasury stock in equity, (2) all other assets
and liabilities of the Trust on a line-by-line basis, and (3) aliability/asset for the net of (i) any gain or loss on deliveryof the stock by the Trust to the employees, (ii) dividends
received from the entity for the stock held by the Trust, and(iii) any expenses relating to the Trust.
m. Revenue Recognition—The Group manufactures andsells industrial electrical machineries, such as enginedriven generators, engine-driven welders and enginedriven compressors, sells parts related to these products,
and provides installation services. The Group identifies its
performance obligations as the provision of products orservices that meet the specifications and quality promised
to customers. The sales contracts with customers include
the Group’s obligation to guarantee that the products
continually conform to the agreed specifications within thecertain warranty period after the sales, but do not include
the guarantee as additional services to customers. So theprovision for product warranties is recorded to provide for
future costs related to these warranties.
		 Revenue from the sales of products and parts is recognizedat the time the products and parts are delivered tocustomers because the Group determines that customers
obtain control of the products and parts, and theperformance obligations are satisfied at the time of deliveryof the products and parts based on the contract terms.
However, for sales in Japan, a period between shipping
and the transfer of control is typical in most cases, revenue
is mainly recognized at the time of shipping.
		 Revenue from the services such as installation works ismainly recognized at the time of inspection by customers
because the Group determines that the performanceobligations are satisfied at the time of completion ofservices.
		 To determine a transaction price, variable considerationsuch as discount, rebate and incentive payment isdeducted from consideration promised in the contract
with customers. The Group usually receives consideration
within one year after the performance obligations are
satisfied according to payment terms separately set forth,which does not include a significant financing component.
		 For subcontract processing transactions with supply ofmaterials for value that are repurchase agreements, theoutstanding supplies at recipient of supplies is recognized
as inventories. At the same time, the amount equivalent
to the outstanding supplies at recipient of supplies isrecognized as “Liabilities for subcontract processing
transactions with supply of materials for value.”n. Research and Development Costs—Research anddevelopment costs are charged to income as incurred.
o. Leases—In March 2007, the ASBJ issued ASBJ Statement

Year ended March 31, 2023

No. 13, “Accounting Standard for Lease Transactions,”
which revised the previous accounting standard for leasetransactions.
Under the previous accounting standard, finance leases
that were deemed to transfer ownership of the leased
property to the lessee were capitalized. However, otherfinance leases were permitted to be accounted for as
operating lease transactions if certain “as if capitalized”
information was disclosed in the notes to the lessee’s
financial statements. The revised accounting standard
requires that all finance lease transactions be capitalized
by recognizing lease assets and lease obligations in thebalance sheet. In addition, the revised accounting standard
permits leases that existed at the transition date and that
do not transfer ownership of the leased property to thelessee to continue to be accounted for as operating leasetransactions.
		 The Company applied the revised accounting standard
effective April 1, 2008.
		 All other leases are accounted for as operating leases.
p. Bonuses to Directors and Audit & Supervisory Board
Members—Bonuses to directors and Audit & Supervisory
Board members are accrued at the end of the year towhich such bonuses are attributable.
q. Income Taxes—The provision for income taxes iscomputed based on the pretax income included in the
consolidated statement of income and comprehensive
income. The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted
income tax rates to the temporary differences.
r. Foreign Currency Transactions—All short-term and longterm monetary receivables and payables denominated inforeign currencies are translated into Japanese yen at theexchange rates at the balance sheet date. The foreignexchange gains and losses from translation are recognizedin the accompanying consolidated statement of income
and comprehensive income.
s. Foreign Currency Financial Statements—The balance
sheet accounts of the consolidated foreign subsidiaries
are translated into Japanese yen at the current exchange
rate as of the balance sheet date except for equity, which
is translated at the historical rate. Differences arising fromsuch translation are shown as “Foreign currency translation
adjustments” under accumulated other comprehensive
income in a separate component of equity. Revenue andexpense accounts of consolidated foreign subsidiaries aretranslated into Japanese yen at the average exchange rate.
t. Derivatives and Hedging Activities—The Group uses
derivative financial instruments to manage its exposures
to fluctuations in foreign exchange, interest rates andraw material costs. Foreign exchange forward contracts,
currency swaps, interest rate swaps and commodity swaps
are utilized by the Group to reduce the risk of fluctuation offoreign currency exchange, interest rate and raw material
costs. The Group does not enter into derivatives for tradingor speculative purposes.
		 Derivative financial instruments are classified andaccounted for as follows: (a) all derivatives, except for
those that qualify for hedge accounting, are recognized aseither assets or liabilities and measured at fair value, andgains or losses on derivative transactions are recognizedin the income statement and (b) for derivatives used
for hedging purposes, if derivatives qualify for hedge
accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items,
gains or losses on derivatives are deferred until maturity of
the hedged transactions.
		 Interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not remeasured atmarket value but the differential paid or received under theswap agreements is recognized and included in interest
expense.
		 The commodity swaps which qualify for hedge
accounting are measured at market value at the balance
sheet date and the unrealized gains or losses are deferred
until maturity as deferred gain (loss) on derivatives underhedge accounting as a separate component of equity.
u. Per Share Information—Basic net income per share iscomputed by dividing net income attributable to commonshareholders by the weighted-average number of commonshares outstanding for the period, retroactively adjusted forstock splits.
		 Cash dividends per share presented in the accompanying
consolidated statement of income and comprehensive
income are dividends applicable to the respective fiscal
years, including dividends to be paid after the end of theyear.
v. New Accounting Pronouncements—Accounting Standard
for Corporate, Inhabitant and Enterprise Taxes (ASBJ Statement
No. 27, October 28, 2022)—Accounting Standard for Presentation of Comprehensive
Income (ASBJ Statement No. 25, October 28, 2022)—Guidance on Accounting Standard for Tax Effect Accounting(ASBJ Guidance No. 28, October 28, 2022)(1) Overview
In February 2018, ASBJ issued ASBJ Statement No. 28,“Partial Amendments to Accounting Standard for Accounting
for Tax Effect Accounting” and others (“ASBJ Statement No.
28, etc.”), and completed the transfer of practical guidelines ontax effect accounting from Japanese Institute of Certified Public
Accountants to ASBJ, and in the course of its deliberations, thefollowing two issues, which had been to be discussed again after
the release of ASBJ Statement No. 28, etc., were discussed andreleased.
• Classification of tax expenses (Taxation on Other
Comprehensive Income)• Tax effect on sales of shares of subsidiaries or affiliates
when the Group Taxation Regime is applied(2) Scheduled date of adoption
The standards will be adopted from the beginning of the fiscal
year ending March 31, 2025.
(3) Impact of adopting the accounting standards
The Company is in the process of measuring the effect ofapplying the standards in future applicable periods.

17

18

DENYO CO., LTD. and Consolidated Subsidiaries

3. STOCK GRANTING TRUST (“-JESOP” and “BBT”)
The Company has introduced a Stock Granting Trust (“J-ESOP”)
for the purpose of enhancing the benefits package to employees
and providing incentives for raising corporate value.
The Company grants employees points according to theircontinued services and results, and when the employees
retire, the Company delivers to them its own stock (or pays anequivalent amount in cash) corresponding to the number of theiraccumulated points through the Trust.

The Company has introduced a stock compensation plan for
directors called the “Board Benefit Trust (BBT).” The Company
grants its directors points according to the Company’s businessresults, etc., and the Company delivers to the directors who havebeneficiary rights its own stock corresponding to the number of
their accumulated points determined on a given date every year
through the Trust.
These Trusts held treasury stock as follows which was
included in the balance sheet of the Company:
Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022
¥486
(756)

Treasury stock(Number of shares (thousands of shares))

¥500
(769)

$3,638

4. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2023 and 2022, consisted of the following:Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022
Non-current:
Marketable equity securities
Nonmarketable equity securities¥6,724873¥6,310893$50,353
6,536

Total

¥7,597¥7,203$56,889

The cost and aggregate fair values of marketable and investment securities at March 31, 2023 and 2022, were as follows:
Millions of Yen
Unrealized
Gains

March 31, 2023

Cost

Securities classified as available-for-sale—
Equity securities¥1,800¥4,924¥1,807¥4,509Unrealized
LossesFair Value¥6,724

March 31, 2022
Securities classified as available-for-sale—
Equity securities¥6¥6,310Thousands of U.S. Dollars
March 31, 2023

Cost

Unrealized
Gains

Securities classified as available-for-sale—
Equity securities$13,481$36,872

Unrealized
LossesFair Value$50,353

The proceeds, realized gains and realized losses of the available for sale securities which were sold during the years ended March 31,
2023 and 2022, were as follows:
Thousands of U.S. Dollars

Millions of Yen
March 31, 2023
Available-for-sale—Equity securities

Proceeds

Realized
Gains

¥70

¥39

¥82

¥29

March 31, 2022
Available-for-sale—Equity securities

Realized
Loss

Proceeds

Realized
Gains

$522

$293

Realized LossYear ended March 31, 2023

5. INVENTORIESInventories at March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Finished products and merchandiseWork in process
Raw materials and supplies¥5,244
2,103
9,067¥5,0871,724
6,050$39,267
15,74967,895

Total¥16,414¥12,861$122,911

6. INVESTMENTS IN ASSOCIATED COMPANIESInvestments in associated companies at March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Investments—New Japan Machinery Corporation¥1,072¥889$8,028

Total¥1,072¥889$8,028

7. SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2023 and 2022, consisted of bank overdrafts. The weighted-average interest rates applicable to theshort-term bank loans were 0.4% and 0.4% at March 31, 2023 and 2022, respectively.
Long-term debt at March 31, 2023 and 2022, consisted of the following:

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Unsecured loans from banks, with interest
rate at 4.2% and 1.0% (2023 and 2022)
Lease obligations
		TotalLess current portion¥1,438
356
1,794
(100)

¥857
304
1,161
(20)

$10,7662,669
13,435(751)

Long-term debt, less current portion¥1,694¥1,141$12,684

Annual maturities of long-term debt at March 31, 2023, were as follows:Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars

2024
2025
2026
2027
2028
2029 and thereafter

¥100
100
1,028
93
91
382

$751
751
7,701
692
681
2,859

Total

¥1,794$13,435

8. COMMITMENT LINE CONTRACTS
In order to raise funds efficiently, the Company has entered into a commitment line contract with four financial institutions, of which
Mizuho Bank, Ltd. is the arranger. The contract provided the Company with a commitment line of ¥3,000 million ($22,465 thousand) as
of March 31, 2023. The Company had no borrowings outstanding under the agreement as of March 31, 2023.

19

20

DENYO CO., LTD. and Consolidated Subsidiaries

9. RETIREMENT AND PENSION PLANS
The Company has a defined benefit pension plan anddomestic subsidiaries also participate in the same plan. A
certain foreign subsidiary has its own defined benefit pension
plan and other foreign subsidiaries have defined contributionplans. In addition, the Company and domestic subsidiaries
have a stock granting retirement plan.

The projected benefit obligation of a certain domestic
subsidiary is calculated using a simplified method, whichis permitted for small companies in accordance with theaccounting standard for retirement benefits.

(1) The changes in defined benefit obligation for the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Balance at beginning of year
Current service cost
Interest cost
Actuarial (gains) losses
Benefits paid
Others¥2,712
188
26
(15)
(163)
10

¥2,692
182
25
37
(240)
16

$20,306
1,409
198
(108)
(1,223)
73

Balance at end of year

¥2,758¥2,712$20,655(2) The changes in plan assets for the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Balance at beginning of year
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
Others¥2,424
27
(52)
186
(158)
0

¥2,451
28
(33)
208
(231)
1

$18.152
203
(388)
1,393
(1,185)
1

Balance at end of year

¥2,427¥2,424$18,176(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligationand plan assets was as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Funded defined benefit obligation
Plan assets¥2,681
2,427¥2,634
2,424$20,074
18,176

			Total
Unfunded defined benefit obligation
Liability for stock granting retirement

254
77
182

210
77
171

1,898
581
1,364

Net liability arising from defined benefit obligation

¥513

¥458

$3,843

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Liability for retirement benefits

¥513

¥458

$3,843Net liability arising from defined benefit obligation

¥513

¥458

$3,843

Year ended March 31, 2023

(4) The components of net periodic benefit costs for the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses
Stock granting cost

¥188
26
(27)
12
39

¥182
25
(28)
36
50

$1,409
198
(203)
88
290

Net periodic benefit costs

¥238

¥265

$1,782(5) Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans
for the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022
Actuarial gains

¥(26)

¥(33)

Thousands of
U.S. Dollars
2023$(192)(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement
benefit plans as of March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022
Unrecognized actuarial gains

¥(74)

¥(49)

Thousands of
U.S. Dollars
2023$(558)(7) Plan assets
a. Components of plan assets
		 Plan assets as of March 31, 2023 and 2022, consisted of the following:
2023

2022

General account managed by a life insurance company
Other

97.0%
3.0

97.2%
2.8

Total

100.0%

100.0%

b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently
and in the future from the various components of the plan assets.
(8) Assumptions used for the years ended March 31, 2023 and 2022, are set forth as follows:

Discount rate
Expected rate of return on plan assets
Expected rate of future salary increase

2023

2022

Mainly 0.60%
Mainly 1.25%
Mainly 1.90%

Mainly 0.60%
Mainly 1.25%
Mainly 1.90%

10. EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies
Act that affect financial and accounting matters are summarized below:
directors being prescribed as one year rather than the normal
a. Dividends
two-year term by its articles of incorporation, the Board ofUnder the Companies Act, companies can pay dividends at any
Directors may declare dividends (except for dividends-in-kind) attime during the fiscal year in addition to the year-end dividend
any time during the fiscal year if the company has prescribed soupon resolution at the shareholders’ meeting. Additionally, forin its articles of incorporation. With respect to the third condition
companies that meet certain criteria including (1) having a
above, the Board of Directors of companies with (a) board
Board of Directors, (2) having independent auditors, (3) having
an Audit & Supervisory Board, and (4) the term of service of thecommittees (namely, appointment committee, compensation

21

22

DENYO CO., LTD. and Consolidated Subsidiaries

committee and audit committee) or (b) an audit and supervisorycommittee (as implemented under the Companies Act effective
May 1, 2015) may also declare dividends at any time becausesuch companies, by nature, meet the criteria under theCompanies Act. The Company is organized as a company with
an audit and supervisory committee, effective June 29, 2021.
The Company meets all the above criteria and, accordingly, theBoard of Directors may declare dividends (except for dividendsin-kind) at any time during the fiscal year.
		 The Companies Act permits companies to distributedividends-in-kind (noncash assets) to shareholders subject toa certain limitation and additional requirements.
		 Semiannual interim dividends may also be paid once a
year upon resolution by the Board of Directors if the articles
of incorporation of the company so stipulate. The Companies
Act provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The limitation
is defined as the amount available for distribution to theshareholders, but the amount of net assets after dividends
must be maintained at no less than ¥3 million.
b.	Increases/Decreases and Transfer of Common Stock, Reserveand Surplus
	The Companies Act requires that an amount equal to 10%
of dividends must be appropriated as a legal reserve (acomponent of retained earnings) or as additional paid-in capital(a component of capital surplus), depending on the equity
account charged upon the payment of such dividends, until theaggregate amount of the legal reserve and additional paid-in
capital equals 25% of the common stock. Under the Companies
Act, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Companies
Act also provides that common stock, legal reserve, additional
paid-in capital, other capital surplus and retained earnings canbe transferred among the accounts within equity under certain
conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
	The Companies Act also provides for companies to purchasetreasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock
purchased cannot exceed the amount available for distribution
to the shareholders which is determined by a specific formula.
Under the Companies Act, stock acquisition rights arepresented as a separate component of equity. The Companies
Act also provides that companies can purchase both treasury
stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component ofequity or deducted directly from stock acquisition rights.

11. INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted
in a normal effective statutory tax rate of approximately 30.6% for the years ended March 31, 2023 and 2022.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities
at March 31, 2023 and 2022, are as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Deferred tax assets:
¥204
33
49
157
17
122
74
21
327
(89)

¥197
35
43
121
19
113
77
32
251
(92)

$1,524
248
366
1,175
128
911
556
154
2,452
(665)

915

796

6,849

Deferred tax liabilities:
Reserve for deferred gains on sales of property
Unrealized gain on available-for-sale securities
Other

347
1,437
12

346
1,305
32

2,595
10,76089

			Total

1,796

1,683

13,444

Net deferred tax liabilities¥(881)¥(887)$(6,595)

Accrued bonuses
Provision for product warranties
Accrued enterprises taxes
Unrealized gain on sale of inventory
Unrealized gain on sale of property
Liability for retirement benefits
Loss on revaluation of investment securities
Tax loss carryforwards
Other
Less valuation allowance
			Total

Year ended March 31, 2023

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying
consolidated statement of income and comprehensive income for the year ended March 31, 2023, is as follows:
2023
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Income not recognizable for income tax purposes
Per capita portion of inhabitants’ taxes
Tax credits
Lower income tax rates applicable to income in certain foreign countries
Valuation allowance
Other—net

30.6%
2.1
(0.3)
0.6
(1.1)
(1.1)
(0.1)
(1.8)

Actual effective tax rate

28.9%

As the difference between the normal effective statutory
tax rate and the actual effective tax rate reflected in theaccompanying consolidated statement of income andcomprehensive income for the year ended March 31, 2022,
is less than 5% of the normal effective statutory tax rate, areconciliation is omitted.
At March 31, 2023, some subsidiaries have tax loss
carryforwards aggregating approximately ¥63 million ($471
thousand) which are available to be offset against taxable
income of such subsidiaries in future years.

12. REVENUE(1) Disaggregation of Revenues
Revenues from contracts with customers on a disaggregated basis for the years ended March 31, 2023 and 2022, were as follows:(a) Sales results by productMillions of Yen
2023

Thousands of U.S. Dollars

Generators Welders Compressors Others

Total

Generators Welders Compressors Others

Total

Products and services
Revenues from contracts
with customers
Other revenue¥53,700¥4,402¥727¥5,483 ¥64,312$402,128$32,960$5,446 $41,057 $481.591

53,700

4,402

727

5,483

64,312

402,128

32,960

5,446

Total

¥53,700¥4,402¥727¥5,483 ¥64,312$402,128$32,960$5,446 $41,057 $481,591

Products and services
Revenues from contracts
with customers
Other revenue¥43,754¥4,830¥727¥5,857 ¥55,168

43,754

4,830

727

5,857

Total

¥43,754¥4,830¥727¥5,857 ¥55,168

Asia

Other
Areas

Total

41,057 481,591

2022

55,168(b) Sales results by region
Millions of Yen

Thousands of U.S. Dollars

2023

Japan

North andCentralAmerica

Asia

Other
Areas

Total

Japan

North andCentralAmerica

Products and services
Revenues from contracts
with customers
Other revenue¥34,245¥21,617¥5,903¥2,547¥64,312$256,438$161,879$44,199$19,075$481,591

34,245

21,617

5,903

2,547

64,312

256,438

161,879

44,19919,075481,591

Total¥34,245¥21,617¥5,903¥2,547¥64,312$256,438$161,879$44,199$19,075$481,591

Products and services
Revenues from contracts
with customers
Other revenue¥34,632¥13,053¥4,596¥2,887¥55,168

34,632

13,053

4,596

2,887

55,168

Total¥34,632¥13,053¥4,596¥2,887¥55,168

2022

23

24

DENYO CO., LTD. and Consolidated Subsidiaries(2) Basic Information to Understand Revenues from Contracts with Customers
Basic information to understand revenues from contracts with customers is as stated in Note 2.m.
(3) Contract Balances
Contract liabilities consist mainly of advances received from customers before the performance obligations are satisfied andare reversed according to the recognition of revenue.
		 Contract liabilities at the beginning and end of the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Contract liabilities:
Balance at beginning of year
Balance at end of year

¥91
274

¥100
91

$681
2,051

Of revenue recognized during the current fiscal year, the amounts included in the balance at beginning of year were ¥83
million ($622 thousand) and ¥91 million for the years ended March 31, 2023 and 2022.
(4)	Transaction Prices Allocated to Remaining Performance Obligations
There were no significant contracts having an original expected duration of over one year at end of current fiscal year. For
contracts with an initially anticipated contract period within one year, description of transaction price allocated to remaining
performance obligations of the Group has been omitted applying a practical expedient. Moreover, there were not any
material consideration from contracts with customers which was not included in the transaction price.

13. RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥656 million ($4,909 thousand) and ¥608 million for the years ended March
31, 2023 and 2022, respectively.

14. LEASESThe Group leases certain vehicles and other assets under finance leases. Also, some foreign subsidiaries leases lands orother assets under operating leases which are included in non-current other assets in the consolidated balance sheet as rightof use assets applying International Financial Reporting Standards (IFRS) 16 or Accounting Standards Codification (ASC) 842.
Lease obligations were as follows:
Millions of Yen
2023
2022
Due within one year

Thousands of
U.S. Dollars
2023

Due after one year

¥27
329

¥20
284

$206
2,463

Total

¥356

¥304

$2,66915. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group invests cash surpluses in low-risk financial
assets such as commercial paper. Bank loans are used
to fund its ongoing operations. Derivatives are not used
for speculative purposes, but to manage exposure tofinancial risks as described in Note 16.
(2) Nature and Extent of Risks Arising from Financial
Instruments
Receivables, such as trade notes and trade accounts, areexposed to customer credit risk. Receivables in foreign
currencies are exposed to the market risk of fluctuation inforeign currency exchange rates.
Investment securities, mainly equity instruments ofcustomers and suppliers of the Company, are exposed to
the risk of market price fluctuations.
Payment terms of payables, such as trade notes andtrade accounts, are almost less than six months. Payables
in foreign currencies are exposed to the market risk offluctuation in foreign currency exchange rates.
Maturities of bank loans are less than six and elevenyears after the balance sheet date. A part of such bankloans is exposed to market risks from changes in variableinterest rates.
Derivatives mainly include interest rate swaps, commodity
swaps, forward foreign currency contracts, which are usedas necessary to manage exposure to market risks fromYear ended March 31, 2023

changes in interest rates of bank loans, from changes in
raw material (copper) prices, and from changes in foreign
currency exchange rates of receivables and advances.
Please see Note 16 for more detail about derivatives.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from acounterparty’s failure to repay or service debt according to
the contractual terms. The Company manages its credit risk
from receivables based on internal guidelines, which include
monitoring of payment term and balances of major customers
by the Sales Planning department to identify the default riskof customers at an early stage. Each consolidated subsidiaryalso manages its credit risk from receivables by an equivalentmethod.
Market risk management (foreign exchange risk and interest
rate risk)
Foreign currency trade receivables and payables are exposed
to market risk resulting from fluctuations in foreign currency
exchange rates. The Group reduces such foreign exchange
risk by balancing foreign currency trade receivables andpayables. Forward foreign currency contracts are used forsome foreign currency trade receivables and advances.
The Company keeps its borrowings within acceptable
limits and uses derivatives of interest rate swaps as necessary
to manage exposure to market risks from changes in interest
rates of loan payables. And the Company uses commodity
swaps to manage exposure to market risks from changes in
raw material (copper) prices.

The Company continuously reviews portfolios of securities
by periodically monitoring fair values of each security and thefinancial condition of the issuer as well as market conditions
and the relationship with the issuer.
In conducting derivative transactions, the division in chargeof each derivative transaction follows the internal policies
which prescribe the authority and the limit for each transaction.
The transaction data is reported to the management meetingon a monthly basis.
Liquidity risk management
Liquidity risk comprises the risk that the Company cannot
meet its contractual obligations in full on maturity dates. The
Company manages its liquidity risk by holding an adequate
volume of liquid assets along with adequate financial planningby the corporate treasury department.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are as follows:
Investments in equity instruments that do not have aquoted market price in an active market are not includedin the following table. The fair values of cash and cash
equivalents, receivables (trade notes, electronicallyrecorded monetary claims-operating and trade accounts),
payables (trade notes, electronically recorded obligationsoperating and trade accounts) and short-term bank loans
are not disclosed because their maturities are short andthe carrying values approximate fair value. Also, please
see Note 16 for details of the fair values of derivatives.

(a) Fair value of financial instruments
Millions of Yen
March 31, 2023

Carrying Amount

Fair Value

Investment securities¥6,724¥6,724

Total¥6,724¥6,724Long-term debt

¥1,365¥1,365

Total¥1,365¥1,365Investment securities¥6,310¥6,310Total¥6,310¥6,310Long-term debt

¥857

¥857

Total

¥857

¥857

Unrealized Gain/Loss

March 31, 2022

Thousands of U.S. Dollars
March 31, 2023

Carrying Amount

Fair Value

Investment securities$50,353$50,353

Total$50,353$50,353

Long-term debt

$10,222$10,222

Total$10,222$10,222

Unrealized Gain/Loss

25

26

DENYO CO., LTD. and Consolidated Subsidiaries(b) Carrying amount of investments in equity instruments that do not have a quoted market price in an active market
Millions of Yen
2023
2022
¥873

Unlisted equity instruments¥893

Thousands of
U.S. Dollars
2023$6,536(c) Maturity analysis for financial assets and securities with contractual maturities
Millions of Yen
Due inDue after One
One YearYear throughor Less
Five Years

March 31, 2023
Cash and cash equivalents

Thousands of U.S. Dollars
Due inDue after One
One YearYear throughor Less
Five Years

Receivables¥21,331
22,058$159,735
165,181

Total¥43,389$324,916

March 31, 2022
Cash and cash equivalents
Receivables¥22,359
20,265

Total¥42,624

Please see Note 7 for annual maturities of longterm debt and Note 14 for lease obligations.
(5) Financial Instruments Categorized by Fair Value Hierarchy
The fair value of financial instruments is categorized into the following three levels, depending on the observability andsignificance of the inputs used in making fair value measurements:
Level 1: Fair values measured by using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair values measured by using inputs other than quoted prices included within Level 1 that are observable forthe assets or liabilities, either directly or indirectly.
Level 3: Fair values measured by using unobservable inputs for the assets or liabilities.
If multiple inputs are used that have a significant impact on the measurement of fair value, fair value is classified at thelowest level in the fair value measurement among the levels to which each of these inputs belongs.
(a) The financial assets and liabilities measured at the fair values in the consolidated balance sheet
Total

Thousands of U.S. Dollars
Level 1
Level 2
Level 3
Total

¥6,724¥6,724$50,353$50,353

Total assets¥6,724¥6,724$50,353$50,353

March 31, 2022

Level 1Marketable and investment securities—
Investment securities¥6,310¥6,310Total assets¥6,310¥6,310March 31, 2023

Level 1Marketable and investment securities—
Investment securities

Millions of Yen
Level 2
Level 3

Millions of Yen
Level 2
Level 3Total

Year ended March 31, 2023

(b) The financial assets and liabilities not measured at the fair values in the consolidated balance sheet
Millions of Yen
Level 2
Level 3

Total

Marketable and investment securities—
Commercial paper¥1,000¥1,000$7,488$7,488

Total assets¥1,000¥1,000$7,488$7,488Long-term debt

¥1,365¥1,365$10,222$10,222

Total liabilities¥1,365¥1,365$10,222$10,222

Millions of Yen
Level 2
Level 3

Total

Marketable and investment securities—
Commercial paper¥1,000¥1,000Total assets¥1,000¥1,000Long-term debt

¥857

¥857

Total liabilities

¥857

¥857

March 31, 2023

March 31, 2022

Level 1

Level 1

Level 1Thousands of U.S. Dollars
Level 2
Level 3Total

The following is a description of valuation methodologies and inputs used for measurement of the fair value of assets andliabilities:
Marketable and Investment Securities
The fair values of commercial paper approximate carrying amounts because of its short maturities. Therefore, the carrying
amounts are regarded as the fair values. The fair values of investment securities are measured at the quoted market prices.
Since listed investment securities are traded in active markets, the fair values are categorized as Level 1. The fair valuesof other securities are classified as Level 2.
Long-Term Debt
The fair values of long-term debt are measured by using discounted present value techniques considering assumptions
including expected future cash flows and discount, and are classified as Level 2. However, the fair values of long-term
debt on floating rate approximate carrying amounts because it reflects market interest rates in short times. Therefore, thecarrying amounts are regarded as the fair values.

16. DERIVATIVESThe Group enters into derivatives, in the normal course ofbusiness, to reduce the exposure to fluctuations in foreignexchange rates, raw material prices and interest rates. The
primary derivative instruments used by the Company areforeign currency forward contracts, commodity swaps andinterest rate swaps.
It is the Group’s policy to use derivatives only for the
purpose of reducing market risks associated with assets andliabilities.

Because the counterparties to these derivatives arelimited to major international financial institutions, the Group
does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group havebeen made in accordance with internal policies which
regulate the authorization and credit limit amount.

Derivative Transactions to Which Hedge Accounting Is Not Applied
There are no applicable transactions.
Derivative Transactions to Which Hedge Accounting Is Applied
There are no applicable transactions.

27

28

DENYO CO., LTD. and Consolidated Subsidiaries

17. CONTINGENT LIABILITIESAt March 31, 2023, the Group had the following contingent liabilities:

Export trade bill discounted

Millions of Yen

Thousands of
U.S. Dollars¥346$2,592

18. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income, including reclassification adjustments and tax effects for the years ended March 31,
2023 and 2022, were as follows:
Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022
Unrealized (loss) gain on available-for-sale securities:(Losses) gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments—
Adjustments arising during the year
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income (loss) in
associates—(Losses) gains arising during the year
Total
Total other comprehensive income

¥436
(15)
421
(132)

¥(617)
(29)
(646)
212

$3,261
(109)
3,152
(987)

¥289

¥(434)$2,165¥2,073¥1,219$15,520¥2,073¥1,219$15,520

¥(40)
14
(26)
8

¥(49)
16
(33)
10

$(302)
110
(192)
59

¥(18)

¥(23)

$(133)

¥2

¥(0)

$11

¥2

¥(0)

$11

¥2,346¥762$17,563

19. NET INCOME PER SHARE
Basis for the computation of net income per share (“EPS”) for the years ended March 31, 2023 and 2022, is as follows:Year Ended March 31, 2023
Basic EPS—Net income available to common shareholders

Millions
Thousands ofof YenSharesNet Income
Attributable to
Owners of the
WeightedParent
Average Shares

Yen

U.S. Dollars

EPS¥3,634

20,687¥175.64$1.32¥2,753

20,853¥132.02$1.08

Year Ended March 31, 2022
Basic EPS—Net income available to common shareholders

As noted in Note 2.l, the Company applied PITF No. 30, “Practical Solution on Transactions of Delivering the Company’s Own Stockto Employees etc. through Trusts.” In calculating the number of weighted-average shares above, the number of shares that are held by
the Trust (763 thousand shares in 2023 and 761 thousand shares in 2022) is reflected.

Year ended March 31, 2023

20. SEGMENT INFORMATION
Under ASBJ Statement No. 17, “Accounting Standard for Segment Information Disclosures” and ASBJ Guidance No. 20,“Guidance on Accounting Standard for Segment Information
Disclosures,” an entity is required to report financial and descriptive information about its reportable segments. Reportablesegments are operating segments or aggregations of operating
segments that meet specified criteria. Operating segments arecomponents of an entity about which separate financial information is available and such information is evaluated regularly by
the chief operating decision maker in deciding how to allocate
resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as isused internally for evaluating operating segment performanceand deciding how to allocate resources to operating segments.
(1) Description of Reportable Segments
The Group’s reportable segments are those for which

separate financial information is available and regular
evaluation by the Company’s management is being
performed in order to decide how resources are allocatedamong the Group. Therefore, geographic segments of theGroup consist of Japan, United States of America, Asia andEurope. Japan includes the Company, “Denyo Kosan Co.,
Ltd.” and “Nishihatsu Co., Ltd.” United States of America
mainly includes “Denyo Manufacturing Corporation.” Asia
mainly includes “Denyo United Machinery Pte. Ltd.” Europe
consists of “Denyo Europe B.V.”(2) Methods of Measurement for the Amounts of Sales,
Profit (Loss), Assets and Other Items for Each Reportable
Segment
The accounting policies of each reportable segment areconsistent with those disclosed in Note 2, “Summary of
Significant Accounting Policies.”(3) Information about Sales, Profit (Loss), Assets and Other Items
Millions of Yen
2023
Reportable Segment
Japan

United Statesof America

Asia

Europe

Total

Sales:
Sales to external customers
Intersegment sales or transfers¥43,893
6,075¥15,882479¥4,003
6,146

¥534
4

¥64,312
12,704¥(12,704)

Total¥49,968¥16,361¥10,149¥538¥77,016¥(12,704)¥64,312Segment profit (loss)
Segment assets¥2,83372,575¥831
10,687¥939
12,449¥23659¥4,626
96,370¥248(6,626)¥4,87489,744

732
1,072

262

272

0

1,266
1,072

1,266
1,072

4,109

15

89

4,213

4,213

Other:
Depreciation and amortization
Investments in associated companies
Increase in property, plant andequipment and intangible assets

Reconciliations Consolidated¥64,312

Millions of Yen
2022
Reportable Segment
Japan

United Statesof America

Asia

Europe

Total

Sales:
Sales to external customers
Intersegment sales or transfers¥43,228
4,312¥8,685
312¥3,120
4,497

¥135
5

¥55,168
9,126¥(9,126)

Total¥47,540¥8,997¥7,617¥140¥64,294¥(9,126)¥55,168

Segment profit
Segment assets¥3,29067,414¥(112)
7,805¥489
10,926¥(14)476¥3,65386,621¥1(5,846)¥3,65480,775

840
889

237

284

0

1,361
889

1,361
889

796

15

28

839

839

Other:
Depreciation and amortization
Investments in associated companies
Increase in property, plant andequipment and intangible assets

Reconciliations Consolidated¥55,16829

30

DENYO CO., LTD. and Consolidated Subsidiaries

Thousands of U.S. Dollars
2023
Reportable Segment
Japan

United Statesof America

Asia

Europe

Total

Sales:
Sales to external customers
Intersegment sales or transfers$328,683
45,493$118,930
3,588$29,976
46,026$4,00230$481,591
95,137$(95,137)

Total$374,176$122,518$76,002$4,032$576,728$(95,137)$481,591

Segment profit (loss)
Segment assets$21,219
543,472$6,22280,030$7,02993,220$174
4,937$34,644
721,659$1,857(49,618)$36,501
672,041

5,484
8,028

1,962

2,037

1

9,484
8,028

9,484
8,028

30,773109

670

31,552

31,552Other:
Depreciation and amortization
Investments in associated companies
Increase in property, plant andequipment and intangible assets

Reconciliations Consolidated$481,591

Related Information(1) Information about Products and Services
Information about products and services for the years ended March 31, 2023 and 2022, is omitted since sales to externalcustomers in a single product line (generators, welders, compressors, and other related products) accounted for more than 90%of the total consolidated sales.
(2) Information about Major Customers
Sales to major customers for the years ended March 31, 2023 and 2022, are summarized as follows:
Thousands of U.S.
Dollars2023

Millions of Yen
Name of Customers
Multiquip Inc.

2023
¥15,8822022¥8,685$118,930

Related Segment
United States of America

21. RELATED-PARTY TRANSACTIONSThe Company sold its products to New Japan Machinery Corporation, an associated company. The transactions were made with usual
terms and conditions.
The transactions with the associates for the years ended March 31, 2023 and 2022, and related balances at March 31, 2023 and2022, were mainly as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Transactions—Sales¥2,710¥2,085$20,295

Balances:
Trade accounts receivable
Electronically recorded monetary claims—operating

¥862
1,210

¥429
958

$6,457
9,064

22. SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2023, was approved at the Company’s Board of Directors’
meeting held on May 16, 2023:

Year-end cash dividends, ¥27 ($0.20) per share******

Millions of Yen

Thousands of
U.S. Dollars¥579$4,334

Year ended March 31, 2023

Company Data
Company outline (As of March 31, 2023)
Company Name

Denyo Co., Ltd.

Established

July 2, 1948

Head Office

2-8-5, Nihonbashi-horidomecho, Chuo-ku,
Tokyo 103-8566, Japan
Tel:81-3-6861-1111 / Fax:81-3-6861-1181

Paid-in Capital¥1,954,833,520 (U.S.$ 14,638,561)

Authorized Shares

97,811,000

Issued Shares

22,859,660

Shareholders

7,472

Financial Year

April 1 to March 31

Employees

593 (1,381 consolidated)

Branch and Sales Offices

22

Directors, Audit Supervisory Board Members (As of June 29, 2023)
Representative Director, Chairman

Shoichi Shiratori

President

Takanori Yoshinaga

Director, Managing Executive Officer

Kensaku Moriyama

Chief Executive,
Sales Division

Director, Managing Executive Officer

Masao Yamada

Chief Executive,
Development Division,
Responsible for Production Division,
Overseas Manufacturing Subsidiary

Director, Managing Executive Officer

Makoto Tanabe

Chief Executive,
Administration Division

Director, Senior Executive Officer

Kenichi Otomo

Deputy Chief Executive Sales Division,
Head of International Sales Unit,
General Manager,
International Sales Department 1
Responsible for Overseas Sales
Subsidiary

Outside Director

Yoshio Takeyama

Director, Audit & Supervisory Committee Member

Toru Hiroi

Director, Audit & Supervisory Committee Member

Kazuyoshi Kubo

Ouside Director, Audit & Supervisory Committee
MemberKeiko Yamagami

Ouside Director, Audit & Supervisory Committee
Member

Masako Natori

Ouside Director, Audit & Supervisory Committee
MemberMakoto Koto

31

32

DENYO CO., LTD. and Consolidated Subsidiaries

Executive Officers
Senior Executive Officer

Yukio Nunogami

General Manager, West Japan Sales Department
Sales Division

Senior Executive Officer

Masakazu Minato

Head of Domestic Sales Unit, General Manager, East Japan
Sales Department
Sales Division

Senior Executive Officer

Noboru Chosei

Chief Executive
Quality Management Division

Executive Officer

Shoichi Fujimoto

General Manager, Engineering Department
Development Division

Executive Officer

Toshiki Miyamoto

Chief Executive
Production Division

Executive Officer

Shoichiro Fujimoto

General Manager
Planning & Coordination Office

Executive Officer

Hirokazu Tsukasaki

General Manager, Manufacuturing Department
Production Division

Executive Officer

Kenjiro Shirai

General Manager, Finance Department
Administration Division

Executive Officer

Koji Ikeda

Deputy General Manager, East Japan Sales Department
Sales Division

Executive Officer

Yoshihisa Furuta

Director of Denyo Kosan Co., Ltd.

Executive Officer

Takatoshi Ikeda

President of Denyo Manufacturing Corporation

Executive Officer

Junichiro Higaki

General Manager, Quality Management Department
Quality Management Division

Executive Officer

Takashi Ebihara

Deputy General Manager, West Japan Sales Department
Sales Division

Year ended March 31, 2023

Business Lines
Manufacture and sales of:Generators

Engine-driven Generators
Stand-by Generating Sets
General-use Generating Sets
AC Generators

Welders

Engine-driven Welders
Welding Generators
Welding Jigs
Automatic Welding Equipment

Compressors

Engine-driven Air Compressors
Motor-driven Air Compressors

Other Products

Self-propelled Lifters
Construction-related Machinery
Repair Parts

Plants and R&D Center and Service Center
Fukui Plant

Wakasa-cho, Fukui Prefecture

Shiga Plant

Konan, Shiga Prefecture

Laboratory & Training Center

Sakado, Saitama Prefecture

Service Center Kanto

Sakura, Chiba Prefecture

Fukui Plant

Laboratory & Training Center

33

34

DENYO CO., LTD. and Consolidated Subsidiaries

Denyo Group Companies
Denyo Kosan Co., Ltd.
2-8-5, Nihonbashi-horidomecho, Chuo-ku, Tokyo 103-8566, Japan
Paid-in Capital: ¥50 million
Business: Services and sales of industrial electrical machinery and parts
Nishihatsu Co., Ltd.
140, Chichika, Karatsu, Saga 847-0831, Japan
Paid-in Capital: ¥50 million
Business: Manufacture and sales of industrial electrical machinery
Denyo America Corporation
1450 Minor Road, Danville, Kentucky 40422 U.S.A
Paid-in Capital: US$ 5 million
Business: Sales of parts for industrial electrical machinery
Denyo Manufacturing Corporation
1450 Minor Road, Danville, Kentucky 40422 U.S.A
Paid-in Capital: US$ 6 million
Business: Manufacture and sales of industrial electrical machinery to the U.S. market
Denyo Asia Pte. Ltd.
No.9 Neythal Road, Singapore 628614
Paid-in Capital: ¥600 million
Business: Sales of industrial electrical machinery
Denyo United Machinery Pte. Ltd.
No.9 Neythal Road, Singapore 628614
Paid-in Capital: S$ 3 million
Business: Sales, leasing and rental of industrial electrical machinery
Denyo Europe B.V.
Naamrijk 1, 3454 PX De Meern, The Netherlands
Paid-in Capital: €4 million
Business: Sales of industrial electrical machinery
Denyo Vietnam Co.,Ltd.
Plot A3,Thang Long Industrial Park II, Lieu Xa Commune,Yen My, Hung Yen, Vietnam
Paid-in Capital: US$ 10 million
Business: Manufacture and sales of industrial electrical machinery
Denyo Trading Vietnam Co., Ltd.
Room 606.03, 6th Floor, Indochina Plaza Hanoi Tower, No. 241 Xuan Thuy Street,
Dich Vong Hau Ward, Cau Giay District, Hanoi City, Vietnam
Paid-in Capital: US$ 900 thousand
Business: Services and sales of industrial electrical machinery and repair parts
P.T. Dein Prima Generator
JL. Raya Bekasi Km.28, Medan Satria,Bekasi 17132 Jawa Barat, Indonesia
Paid-in Capital: Rp 13,563 million
Business: Manufacture and sales of industrial electrical machinery to the Indonesia market
New Japan Machinery Corporation
3-6-5, Shinyokohama, Kohoku-ku, Yokohama, Kanagawa 222-0033, Japan
Paid-in Capital: ¥495 million
Business: Sales and rental service of industrial electrical machineryYear ended March 31, 2023

Investor Information
Investor Information(As of March 31, 2023)

Head Office

2-8-5, Nihonbashi-horidomecho, Chuo-ku,
Tokyo 103-8566, Japan
Tel: 81-3-6861-1111 Fax: 81-3-6861-1181

Financial Year

April 1 to March 31

Common Stock

Authorized shares: 97,811,000
Issued shares: 22,859,660(Included 1,422,361 shares of Company’s own stock)

Stock Listing

Tokyo Stock Exchange, Prime Section (Code: 6517)

Shareholders

7,472

Transfer Agency

Tokyo Securities Transfer Agent Co., Ltd.
3-11, Kanda Nishiki-cho, Chiyoda-ku, Tokyo
101-0054, Japan

Major Shareholders(As of March 31, 2023)

Shares Held(Thousands)

Voting Right Ratio(%)

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

1,941

9.05

The SFP Value Realization Master Fund Ltd.

1,484

6.92

Kyuei Corporation

1,417

6.61

Mizuho Trust & Banking Co., Ltd.

1,055

4.92

The Dai-ichi Life Insurance Co., Ltd.

872

4.06

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

755

3.52

Denyo Shin-eikai Group

676

3.15

Tsurumi Manufacturing Co., Ltd

543

2.53

MUFG Bank, Ltd.

540

2.52

Custody Bank of Japan, Ltd. (Trust Account)

525

2.45

Shareholders

35https://www.denyo.co.jp
Head Office
2-8-5, Nihonbashi-horidomecho, Chuo-ku, Tokyo 103-8566, JapanTel
81-3-6861-1111
Fax
81-3-6861-1181