Note: This document has been translated from the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document and the Japanese original, the original shallprevail. The Company assumes no responsibility for this translation or for direct, indirect or any otherforms of damages arising from the translation.

INFORMATION DISCLOSURE ON THE INTERNETREGARDING THE NOTICE OF
THE 85TH ANNUAL GENERAL MEETING OF SHAREHOLDERS
Notes to the Consolidated Financial Statements
Notes to the Non-consolidated Financial Statements(From April 1, 2021 to March 31, 2022)

OKUMURA CORPORATION
Notes to the Consolidated Financial Statements and Notes to the Non-consolidated Financial Statements areprovided to shareholders on the website of the Company (https://www.okumuragumi.co.jp/en/) in accordancewith laws and regulations and Article 30 of the Articles of Incorporation of the Company.

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Notes to the Consolidated Financial Statements
1. Notes on Significant Matters Serving as Basis for Preparation of Consolidated Financial Statements, etc.
(1) Scope of consolidation(i) Number of consolidated subsidiaries:
4
Names of consolidated subsidiaries:- Okumura Machinery Corporation- Taihei Real Estate Corporation- ISHIKARI BIO ENERGY GODO KAISHA- HIRATA BIO ENERGY GODO KAISHAThe Company established HIRATA BIO ENERGY GODO KAISHA on January 17, 2022 as a newconsolidated subsidiary.
(ⅱ) Number of non-consolidated subsidiaries:
9
Name of major non-consolidated subsidiaries:- Kazo Agricultural Village Drainage PFI Corporation(Reason of exclusion from the scope of consolidation)
Each non-consolidated subsidiary falls under a small company. The combined amounts of their total
assets, net sales, profit or loss (proportional amount of equity), retained earnings (proportionalamount of equity), and other items do not significantly affect the consolidated financial statements,
respectively. Therefore, the Company excludes these subsidiaries from the scope of consolidation.
(2) Application of equity method(ⅰ) No non-consolidated subsidiaries or associates apply the equity method.
(ⅱ) Name of major non-consolidated subsidiaries not accounted for by the equity method- Kazo Agricultural Village Drainage PFI Corporation
Number of associates not accounted for by the equity method: 6
Name of primary associates not accounted for by the equity method:- Swim City Kagoshima Corporation.
(Reason for not applying the equity method)
Regarding each non-consolidated subsidiary and associate not accounted for by the equity method,
their profit or loss (proportional amount of equity), retained earnings (proportional amount ofequity), and other items have an immaterial impact on the consolidated financial statements and do
not have significance as a whole. Therefore, the Company excludes these companies from the scopeof the equity method.
(3) Accounting policies(i) Valuation basis and method for significant assets• Securities
Held-to-maturity bonds
Amortized cost method (straight-line method)
Available-for-sale securities- Securities other than shares, etc. that do not have a market priceMarket value method (net unrealized gains on available-for-sale securities are recognizeddirectly in net assets, and cost of securities sold is calculated using the moving average method.)- Shares, etc. that do not have a market price
Valuation at cost using the moving average method- Equity investment in investment limited partnerships and similar partnerships (items deemed as
securities in accordance with Article 2, Paragraph 2 of the Financial Instruments and Exchange Act)
Amounts corresponding to equity interests are recognized on a net basis based on the recent
financial statements available according to the financial report date stipulated in partnershipcontracts.
• Derivatives
Market value method

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•

Inventories- Real estate for sale
Valuation at cost using the specific identification method (the consolidated balance sheet
amount is calculated by writing down the carrying amount based on a decreased profitability.)- Costs on construction contracts in progress
Valuation at cost using the specific identification method- Costs on real estate business
Valuation at cost using the specific identification method (the consolidated balance sheet
amount is calculated by writing down the carrying amount based on a decreased profitability.)- Work in process
Valuation at cost using the specific identification method(ⅱ) Depreciation or amortization method for significant depreciable assets or amortizable assets• Property, plant and equipment (excluding leased assets)
Declining-balance method. However, the straight-line method is applied to buildings (excluding
facilities attached to buildings) acquired on or after April 1, 1998, and facilities attached tobuildings and structures acquired on or after April 1, 2016.
Useful lives and residual values are calculated based on the same standards as prescribed in the
Corporation Tax Act. In addition, the assets acquired before March 31, 2007 are depreciated using
the straight-line method over five years beginning from the fiscal year subsequent to the fiscal year
when their depreciable amount is depreciated.
• Intangible assets (excluding leased assets)
Straight-line method. Useful lives are calculated based on the same standards as prescribed in the
Corporation Tax Act.
For internal-use software, however, the straight-line method is used based on the internallyavailable period of five years.
• Leased assets
Leased assets related to finance lease transactions without transfer of ownership.
The straight-line method is used by setting lease periods as useful lives and residual values as zero.
(ⅲ) Recognition of significant provisions• Allowance for doubtful accounts
To provide for bad debt expenses, estimated irrecoverable loan amount is calculated, based on thepast loan loss ratio for normal loans, and considering recoverability of each loan for certain loans
such as doubtful loans.
• Provision for warranties for completed construction
To provide for expenses such as warranty costs for defects in completed work, the estimated future
warranty costs are provided for net sales of completed construction contracts of the fiscal year
under review.
• Provision for bonuses
To provide for the future payments of employee bonuses, the estimated payment amountattributable to the fiscal year under review is provided.

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•

Provision for bonuses for directors (and other officers)
To provide for future payments of bonuses for directors and other officers, the estimated payment
amount attributable to the fiscal year under review is provided.
• Provision for loss on construction contracts
To provide for future losses on construction orders received, estimated losses are provided withrespect to construction projects for which eventual losses are expected and reasonably estimatedamong undelivered projects as of the end of the fiscal year under review.
(ⅳ) Recognition of significant revenues and expenses
Regarding the construction business, the primary business of the Group, the Company recognizes
revenue when control of a promised good or service is transferred to a customer.
The performance obligations for construction contracts in the construction business are mainly
construction and delivery of buildings, etc. When control of a good or service is transferred over time,
the Company applies the method of recognizing revenue over time as the performance obligations fora good or service are satisfied. The progress toward complete satisfaction of a performance obligationis measured based on the proportion of construction costs incurred by the end of the reporting period tothe total expected construction costs.
In some circumstances such as the first stage of a contract, the Company may not be able to reasonably
measure the progress toward complete satisfaction of a performance obligation but expect to recover
the costs. In those circumstances, the Company applies the cost recovery method.
Regarding construction contracts whose periods are very short from the initial transaction date of thecontract to the expected date of completely satisfying performance obligations, the Company does notrecognize revenue over time, but recognizes revenue when the performance obligations are satisfied
completely (the time of completing and delivering constructions).
(ⅴ) Significant hedge accounting method
In principle, the Company adopts the deferred hedge accounting.
The Company adopts special treatment for interest rate swaps that meet the requirements for special treatment.
(ⅵ) Other significant matters for preparation of the consolidated financial statements• Accounting method for estimated retirement benefits- Attribution method for estimated retirement benefits
In calculating retirement benefit liabilities, the benefit formula basis is used as a method of
attributing estimated retirement benefits to the period up to the end of the fiscal year under review.
- Expensing method for actuarial gains (losses) and past service costs
Actuarial gains (losses) are amortized using the straight-line method over certain years (ten years)
within the average remaining service period for employees at the time of recognition, and expensed
proportionally starting from the fiscal year following the respective fiscal year of recognition.
Past service costs are amortized using the straight-line method over certain years (ten years) within
the average remaining service period for employees at the time of recognition.
• Amortization method and period for goodwill
Goodwill is amortized over 17 years using the straight-line method.
• Accounting policies and procedures adopted when the provisions of the relevant accounting
standards are not clear
Accounting for works by joint ventures formed in order to take orders and carry out the works
jointly with several constructors are incorporated in the consolidated financial statements according
to the proportion of investment equities.
2. Notes on changes in accounting policies(1) Application of “Accounting Standard for Revenue Recognition” and other standards
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 31, 2020; hereinafter “Revenue Recognition Standard”) and other standards from the
beginning of the fiscal year under review. The Company recognizes revenue when control of promised
goods or services is transferred to a customer in an amount that reflects the consideration to which theCompany expects to be entitled in exchange for those goods and services.
Regarding the construction business, the primary business of the Group, the Company used to apply thepercentage-of-completion method for works for which the outcome of the construction activity isdeemed certain while applying the completed contract method for other construction contracts
including those that were commenced before March 31, 2009. For the works whose control of goods orservices is transferred over time, however, the Company has changed its method to recognize theirrevenue over time as the performance obligations for goods or services are satisfied. The progress-4-

toward complete satisfaction of a performance obligation is measured based on the proportion of
construction costs incurred by the end of the reporting period to the total expected construction costs. In
some circumstances such as the first stage of a contract, the Company may not be able to reasonably
measure the progress toward complete satisfaction of a performance obligation but expect to recover
the costs. In those circumstances, the Company applies the cost recovery method. The Company has
applied an alternative treatment for construction contracts whose periods are very short from the initialtransaction date of the contract to the expected date of completely satisfying performance obligations.
Specifically, the Company does not recognize revenue for those contracts over time but recognizes
revenue when the performance obligations are satisfied completely (the time of completing anddelivering constructions).
The Company applies the Revenue Recognition Standard, etc. in accordance with the transitional
treatment provided for in the proviso to Paragraph 84 of the Revenue Recognition Standard. The
cumulative impact of retrospectively applying the new accounting policies to prior periods is adjusted
to retained earnings at the beginning of the fiscal year under review, with the new accounting policies
applied from the beginning balance of the fiscal year under review. However, the Company applies themethod provided for in Paragraph 86 of the Revenue Recognition Standard and does not apply the new
accounting policies retrospectively to contracts for which substantially all revenue amounts has beenrecognized prior to the beginning of the fiscal year under review in accordance with the previous
treatment. In addition, applying the method stipulated in proviso (1) to Paragraph 86 of the Revenue
Recognition Standard, contract modifications that occurred prior to the beginning of the fiscal year
under review were accounted for based on the terms of the contract after reflecting all contract
modifications, with the cumulative impact adjusted to retained earnings at the beginning of the fiscal
year under review.
As a result, these changes have had an immaterial impact on operating profit, ordinary profit, profit
before income taxes, and net assets per share of the fiscal year under review. Since cumulative effects
are reflected on the net assets at the beginning of the fiscal year under review, the beginning balance ofretained earnings under the consolidated statement of changes in equity increased by ¥63 million.
(2) Application of “Accounting Standard for Fair Value Measurement” and other standards
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement
No. 30, July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the
beginning of the fiscal year under review, and will prospectively apply the new accounting policies
stipulated by the Fair Value Measurement Standard, etc. in accordance with the transitional treatment
provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). Thesechanges do not affect the consolidated financial statements. In addition, the Company includes notes onfair value information by level within the fair value hierarchy in “8. Notes on financial instruments.”
3. Notes on accounting estimates
Revenue recognition using the method to recognize revenue over time and provision for loss on
construction contracts(1) Amounts recorded in the consolidated financial statements for the fiscal year ended March 31, 2022
･ Net sales of completed construction contracts using themethod to recognize revenue over time
¥226,012 million･ Provision for loss on construction contracts¥973 million(2) Information about the contents of significant accounting estimates on the identified items(i) Calculation method
Net sales of completed construction contracts under the method to recognize revenue over time arerecorded by multiplying the total construction revenue by the percentage of completion. The
progress is estimated based on the proportion of construction costs incurred by the end of thereporting period to the total expected construction costs.
In addition, when it is probable that the total construction costs will exceed total construction
revenue, provision for loss on construction contracts will be recorded at the expected excess
amount (loss on construction contracts) less the profit or loss already recognized.
(ⅱ) Major assumptions
In the event an agreement on consideration for changes in design or scope of a construction is nottimely finalized in the contracts and other documents, the total construction revenue is obtained by-5-

estimating consideration based on the details of the change in works and other matters as instructed.
Total construction costs are estimated mainly considering the market conditions of materials andoutsourcing expenses and individual risk factors associated with the progress of works.
These estimates and underlying assumptions are continuously reviewed.
(ⅲ) Impact on the consolidated financial statements for the following fiscal year
Any changes in major assumptions might affect net sales of completed construction contracts andprovision for loss on construction contracts for the following fiscal year.
4. Additional information
Accounting estimates on the impact of COVID-19
The Group is responding to the COVID-19 pandemic through efforts to minimize the impact on its
business activities and implements measures to prevent infection with a focus on avoiding the “Three Cs”(Closed spaces with poor ventilation, Crowded places with many people nearby and Close-contact settings
such as close-range conversations). Measures include implementing remote working at offices acrossJapan and effective use of online meetings based on the policies and guidelines of national and local
governments.
In this context, the Group expects the impact of the pandemic on the Group’s business will be limited andthere was no significant impact of COVID-19 on the accounting estimates for the fiscal year ended March
31, 2022.
It is uncertain when COVID-19 will be contained and any significant changes in the business environment
due to the spread of COVID-19 might affect the accounting estimates in the following fiscal year onward.

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5. Notes to the consolidated balance sheet(1) Assets pledged as collateral and obligations related to collateral(i) The following assets are pledged as collateral for deposits received of ¥346 million.
Buildings¥975 million
Land¥1,479 million
Total¥2,454 million(ⅱ) The following assets are pledged as collateral for the performance obligations of contracts andother obligations of the PFI business
Investment securities¥15 million(ⅲ) The following assets are pledged as collateral for borrowings of subsidiaries and associates.
Investment securities¥61 million(ⅳ) The following assets are pledged as collateral for performance obligations of construction
contracts, etc.
Cash and deposits (time deposits)¥1,219 million
Collaterals corresponding to non-recourse obligations are included in “(2) Assets corresponding
to non-recourse obligations.”(2) Assets corresponding to non-recourse obligations
Amount of business assets of consolidated subsidiaries that operate the renewableenergy business corresponding to non-recourse borrowings¥27,596 million(3) Accumulated depreciation of property, plant and equipment¥18,144 million(4) Amounts of receivables arising from contracts with customers and contract assets, out of notes
receivable, accounts receivable from completed construction contracts and otherNotes receivable – trade¥3 million
Electronically recorded monetary claims – operating¥1,719 million
Accounts receivable from completed construction contracts¥51,093 million
Contract assets¥89,474 million(5) Amount of costs on construction contracts in progress corresponding to provision for loss on
construction contracts
Costs on construction contracts in progress and work in process related to construction contracts thatare expected to incur losses as well as provision for loss on construction contracts are presented as isand are not offset. The amount corresponding to provision for loss on construction contracts was ¥8
million, out of costs on construction contracts in progress related to construction contracts that are
expected to incur losses.
(6) Amount of contract liabilities out of advances received on construction contracts in progress
Contract liabilities¥11,253 million
6. Notes on the consolidated statement of income(1) Revenue from contracts with customers
The Company does not disaggregate revenue from contracts with customers and other revenue. The
amount of revenue from contracts with customers is as presented in “10. Notes on revenue
recognition, (1) Disaggregation of revenue from contracts with customers.”(2) Provision for loss on construction contracts out of cost of sales¥287 million(3) Total amount of research and development expenses¥1,629 million-7-7. Notes to the consolidated statement of changes in equity(1) Type and total number of shares issued
Type of shares

Number of shares
as of April 1, 2021

Increase in shares

Decrease in shares

Number of shares as ofMarch 31, 2022

Common stock

39,665,226––

39,665,226

Note: In line with the resolution by the Board of Directors held on March 7, 2022, the Company canceled its treasury shares
as of April 5, 2022. Accordingly, the total number of shares issued decreased by 1,000,000 to 38,665,226.

(2) Dividends(i) Dividends paid
Resolution

Type of shares

Total amount ofdividends(millions of yen)

Dividend pershare (yen)Record date

Effective date

Annual general meeting ofshareholders held on June29, 2021

Common stock

3,896

103

March 31,2021

June 30, 2021

Board of directors held on
November 11, 2021

Common stock

2,458

65

September
30, 2021

December 10,
2021(ⅱ) Dividends whose effective dates come in the following fiscal year out of those whose record dates
are attributable to the fiscal year under review
The Company plans to adopt a resolution as follows:
Resolution

Type of shares

Total amount ofdividends(millions of yen)Funds fordividend
payments

Dividend pershare (yen)Record date

Effective date

Annual general meetingof shareholders held on
June 29, 2022

Common
stock

3,934

Retainedearnings

107

March 31,2022

June 30,2022

8. Notes on financial instruments(1) Status of financial instruments(i) Group policy for financial instruments
The Group adopts a policy to raise funds through bank loans and manage its funds mainly throughshort-term deposits and savings under the principle of taking low risks and securing principals.
Derivatives are used to avoid the foreign exchange fluctuation risk of transactions denominated inforeign currencies and the interest rate fluctuation risk of borrowings, but not for speculative
purposes.
(ⅱ) Nature and risks of financial instruments and risk management system
Trade receivables, such as notes receivable – trade and accounts receivable from completed
construction contracts and other, are exposed to customer credit risk.
The Group manages these trade receivables by transaction in terms of dates and balances, andadopts the system to continuously monitor the status of trading partners from receipt of orders tocollection of receivables.
Securities and investment securities are held-to-maturity debt securities as well as equity securities
issued by the companies to whom the Group mainly has a business relationship and they are
exposed to market risk.
The Group regularly monitors the fair value, financial conditions of issuing companies (trading
partners), and other. The Group also continuously reviews its holding status of financial
instruments other than held-to-maturity debt securities in light of the relationship with trading
partners.
Most trade payables, such as notes payable - trade and accounts payable for construction contracts
and other, have a payment period within one year.
Borrowings are raised mainly as an operating fund, of which non-recourse borrowings arefinanced as the business fund for the renewable energy business of the consolidated subsidiary.
Trade payables and borrowings are exposed to liquidity risk, but the Group manages them bytaking measures such as developing monthly financing plans.
-8-Borrowings with floating interest rates are exposed to fluctuation risk. With respect to long-termborrowings and non-recourse borrowings, the Group utilizes derivatives (interest rate swaps) byindividual contract as hedging instruments to avoid the fluctuation risk of interest expenses and fix
interest expenses.
Foreign-currency-denominated debts resulting from the import of materials for the renewableenergy business are exposed to fluctuation risk, but the Group utilizes derivatives (comprehensive
forward exchange contracts transactions) as hedging instruments to avoid foreign exchange
fluctuations.
The hedge accounting method is as presented in the preceding “1. Notes on Significant Matters
Serving as Basis for Preparation of Consolidated Financial Statements, etc., (3) Accounting
policies, (ⅴ) Significant hedge accounting method.”
Derivative transactions are executed and managed in accordance with the internal rules that
stipulate the authority of transactions. In addition, the counterparties of derivatives are limited tomajor financial institutions with high creditworthiness, and the Group judges that these derivatives
entail low credit risk.
(ⅲ) Supplementary explanations on the fair value of financial instruments
Since fluctuation factors are considered in calculating the fair value of financial instruments, thevalue may fluctuate when different assumptions, etc. are adopted.
(2) Fair value of financial instruments
Carrying amounts, fair value, and their differences as of March 31, 2022, are as follows:
Carrying amount(i) Notes receivable, accounts receivable fromcompleted construction contracts and other
Allowance for doubtful accounts (*1)

Fair value(Millions of yen)
Difference

142,296(140)
142,156

142,154(1)(ⅱ) Investment securities
Available-for-sale securities(ⅲ) Long-term loans receivable
Allowance for doubtful accounts (*1)

55,01055,010
–
102
(0)
102
100
(1)
Total Assets
197,268
197,265(3)(i) Lease obligations22(0)(ⅱ) Long-term borrowings
5,100
5,087
(12)
(ⅲ) Non-recourse borrowings
21,062
20,973(89)
Total Liabilities
26,16426,063(101)
Derivative Transactions (*2)
3,229
3,229
–
(*1)
The Company deducted the allowance for doubtful accounts that are individually recorded for notes receivable,accounts receivable from completed construction contracts and other and for long-term loans receivable.
(*2)
Net receivables and debts resulting from derivative transactions are presented on a net basis, and items whose amounts
are debts on a net basis are presented in parentheses.
Notes 1. “Cash and deposits,” “notes payable, accounts payable for construction contracts and other,” and “short-termborrowings” are omitted because they comprise cash and also because carrying amount approximates their fair value
as they are short-term instruments.
2. Equity investment in the partnerships that record their equity interests on the consolidated balance sheet on a net
basis and other quasi-entities (¥441 million recorded on the consolidated balance sheet) are omitted.
3. Shares, etc. that do not have a market price (unlisted shares; ¥1,178 million recorded on the consolidated balance
sheet) are not included in “(ⅱ) Investment securities.”
4. Borrowings from Organization for Workers' Retirement Allowance Mutual Aid (long-term borrowings; ¥12 million
recorded on the consolidated balance sheet) and subletting to employees (long-term loans receivable; ¥14 million
recorded on the consolidated balance sheet) are omitted due to low significance.

(3) Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to theobservability and materiality of inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e. quoted prices in active
markets for assets or liabilities that are the subject of the measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value
measurement is categorized in its entirety in the level of the lowest priority in the entire measurement.
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(i) Financial instruments measured at fair value(Millions of yen)Classification
Investment securities
Available-for-sale securities
StocksDerivative transactions
Currency-related derivatives
Total Assets
Derivative transactions
Interest-rate-related derivatives
Total Liabilities

Fair value
Level 1

Level 2

Level 3

Total

55,010––55,010–55,010

3,369
3,369

–
–

3,369
58,379

–
–

(140)
(140)

–
–

(140)
(140)

(ⅱ) Financial instruments other than those measured at fair value(Millions of yen)
Fair value

Classification

Level 1
Level 2
Level 3
Total
Notes receivable, accounts receivable from–
142,154–
142,154
completed construction contracts and other
Long-term loans receivable
–
100
–
100
Total Assets–
142,255–
142,255
Lease obligations–
2–
2
Long-term borrowings
–
5,087
–
5,087
Non-recourse borrowings–
20,973–
20,973
Total Liabilities–
26,063–26,063
Note: A description of the valuation techniques and inputs used in the fair value measurements
Investment securities
Listed shares are valued using quoted prices. As listed shares are traded in active markets, their fair value is classified
as Level 1.
Derivative transactions
The fair value of interest rate swaps and forward exchange contracts is measured using the discounted cash flow
method based on observable inputs, such as interest rates and exchange rates, and is classified as Level 2. As interest
rate swaps subject to special treatment are treated together with long-term borrowings which are hedged items, thosederivatives are included in the fair value of the long-term borrowings.
Notes receivable, accounts receivable from completed construction contracts and other
The fair value of these items is measured using the discounted cash flow method based on the recoverable amountreflecting credit risk and an interest rate obtained from appropriate indicators such as government bond yields
according to maturity periods, for each receivable amount categorized by a specified period, and is classified as Level
2 because the impact of unobservable inputs on the fair value is immaterial.
Long-term loans receivable
The fair value of long-term loans receivable is categorized by individual loan contract and measured using thediscounted cash flow method based on future cash flows and an interest rate obtained by adding the credit spread togovernment bond yields and other appropriate indicators, and is classified as Level 2.
Lease obligations
The fair value of lease obligations is measured using the discounted cash flow method based on the total amount ofprincipals and interests, the remaining period of such obligations, and an interest rate obtained by adding credit risk,for each obligation amount categorized by a specified period, and is classified as Level 2.
Long-term borrowings and non-recourse borrowings
The fair value of these items is measured using the discounted cash flow method and categorized by individual
borrowing contract and classified as Level 2. Specifically, the borrowings with floating interest rates are measured
based on their carrying amounts because they reflect the market interest rates in a short term and their fair value
approximates carrying amounts. Meanwhile, the borrowings with fixed interest rates are valued based on future cash
flows and an interest rate obtained by adding the credit spread to government bond yields and other appropriate
indicators.

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9. Notes on real estate for rent
The Company and some consolidated subsidiaries own rental properties such as land, warehouses, andresidential buildings in Osaka and other areas.
Of rental properties, the properties that include the part used by the Company are classified as real estate
for rent in part.
The followings are carrying amounts, increase/decrease during the fiscal year under review, and fair value
for real estate for rent and real estate for rent in part.
(Millions of yen)
Carrying amount
Fair value as of
Increase/decrease
Balance as of
Balance as ofMarch 31, 2022
during the fiscal year
April 1, 2021
March 31, 2022
under review
Real estate for rent
35,326(992)
34,33464,839Real estate for rent in part
1,174
(30)
1,144
2,025
Total
36,501(1,023)35,47866,864
Note: 1. Carrying amounts are acquisition cost less accumulated depreciation.
2. Fair value of primary properties as of March 31, 2022 is measured in accordance with real-estate appraisal
performed by external real-estate appraisers. For other properties, the Group measures the amount (including thosemeasured using indicators) in accordance with its Real-Estate Appraisal Standard.

Profits or losses for real estate for rent and real estate for rent in part during the fiscal year under review
are as follows:(Millions of yen)Amounts on the consolidated statement of income
Rental revenue
Rental expenses
Difference
Real estate for rent
4,040
950
3,090
Real estate for rent in part
125
43
82
Total
4,166
993
3,172
Note: Rental revenue and the related rental expenses (depreciation, repair expenses, insurance expenses, taxes and dues, andothers) are recorded in “net sales in real estate business and other” and “cost of sales in real estate business and other,”respectively.

10. Notes on revenue recognition(1) Disaggregation of revenue from contracts with customers(Millions of yen)

Revenue from contracts
Net sales of completedwith customers
construction contracts
Other revenue
Revenue from contracts
Net sales in real estatewith customers
business and other
Other revenue

Domestic
government andmunicipal
offices

Domestic
private sector

96,350130,261

3,294

229,906

–

–

–

–

140

8,163

49

8,353

–

–

–

4,198

Overseas

Total(2) Underlying information in understanding revenue
The information is as presented in “1. Notes on Significant Matters Serving as Basis for Preparation ofConsolidated Financial Statements, etc., (3) Accounting policies, (ⅳ) Recognition of significant revenues
and expenses.”(3) Information for understanding revenue amounts for the fiscal year under review and the following fiscal
year onward(i) Balances of contract assets and contract liabilities, etc.
(Millions of yen)
Beginning balanceEnding balance
Receivables from contracts with customers
68,264
52,816
Contract assets
75,33589,474Contract liabilities
12,488
11,253
Notes: 1. Contract assets relate to the right of the Group, primarily based on the construction contracts with customers, toconsideration for goods or services for which control has been transferred to a customer. Once the Group has an
unconditional right to consideration, it reclassifies contract assets to receivables from contracts with customers. The
consideration is charged and received in accordance with the payment term determined with a customer by contract.
2. Contract liabilities primarily relate to advances received from customers based on the payment terms of
construction contracts with customers. Contract liabilities are reversed as revenue is recognized.

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The beginning balance of contract liabilities is included in revenue from contracts with customers for the fiscal year
under review in its almost entirety.
3. The amount of revenue recognized in the fiscal year under review from performance obligations that were satisfied(or partially satisfied) in previous periods (mainly fluctuations of transaction amounts based on changes in design orscope) is immaterial.

(ⅱ) Transaction price allocated to the remaining performance obligations
The transaction price allocated to the remaining performance obligations is ¥424,798 million (*1, 2),
and the Company expects to recognize the amount within five years in general.
*1. The transaction price describes the price allocated to the remaining performance obligations for the construction
business, the primary business of the Group.
*2. The transaction price includes the changes in design or scope for which an agreement on the consideration is notdetermined in the contracts and other documents. The transaction price for the changes in design or scope is estimatedbased on the details of the change in works and other matters as instructed.

11. Notes on per share information(1) Net assets per share¥4,540.26(2) Profit per share¥334.10
12. Notes on significant subsequent events
Cancellation of treasury shares
At the Board of Directors held on March 7, 2022, the Company resolved to cancel its treasury shares inaccordance with Article 178 of the Companies Act and implemented the process as follows:(1) Type of shares canceled
Common stock of the Company(2) Number of shares canceled
1,000,000 shares(ratio to the total number of shares issued before
cancellation: 2.52%)(3) Date of cancellation
April 5, 2022
(4) Total number of shares issued after cancellation
38,665,226 shares
13. Japanese yen amounts are rounded down to the nearest million.

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Notes to the Non-consolidated Financial Statements
1. Notes on significant accounting policies(1) Valuation basis and method for assets(i) Securities• Held-to-maturity bonds
Amortized cost method (straight-line method)• Shares of subsidiaries and associates and investments in capital of subsidiaries and associates
Valuation at cost using the moving average method• Available-for-sale securities- Securities other than shares, etc. that do not have a market priceMarket value method (net unrealized gains on available-for-sale securities are recognizeddirectly in net assets, and cost of securities sold is calculated using the moving average method.)- Shares, etc. that do not have a market price
Valuation at cost using the moving average method- Equity investment in investment limited partnerships and similar partnerships (items deemed as
securities in accordance with Article 2, Paragraph 2 of the Financial Instruments and Exchange Act)
Amounts corresponding to equity interests are recognized on a net basis based on the recent
financial statements available according to the reporting date stipulated in partnership contracts.
(ⅱ) Derivatives
Market value method(ⅲ) Inventories• Real estate for sale
Valuation at cost using the specific identification method (the balance sheet amount is calculated bywriting down the carrying amount based on a decreased profitability.)• Costs on construction contracts in progress
Valuation at cost using the specific identification method• Costs on real estate business
Valuation at cost using the specific identification method (the balance sheet amount is calculated bywriting down the carrying amount based on a decreased profitability.)(2) Depreciation or amortization method for non-current assets(i) Property, plant and equipment (excluding leased assets)
Declining-balance method. However, the straight-line method is applied to buildings (excluding
facilities attached to buildings) acquired on or after April 1, 1998, and facilities attached to buildings
and structures acquired on or after April 1, 2016.
Useful lives and residual values are calculated based on the same standards as prescribed in the
Corporation Tax Act. In addition, the assets acquired before March 31, 2007 are depreciated using
the straight-line method over five years beginning from the fiscal year subsequent to the fiscal year
when their depreciable amount was depreciated.
(ⅱ) Intangible assets (excluding leased assets)
Straight-line method. Useful lives are calculated based on the same standards as prescribed in the
Corporation Tax Act.
For internal-use software, however, the straight-line method is used based on the internally available
period of five years.
(ⅲ) Leased assets
Leased assets related to finance lease transactions without transfer of ownership.
The straight-line method is used by setting lease periods as useful lives and residual values as zero.

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(3) Recognition of provisions(i) Allowance for doubtful accounts
To provide for bad debt expenses, estimated irrecoverable loan amount is calculated, based on thepast loss ratio for normal loans, and considering recoverability of each loans such as doubtful loans.
(ⅱ) Provision for warranties for completed construction
To provide for expenses such as warranty costs for defects of completed work, the estimated future
warranty costs are provided for net sales of completed construction contracts of the fiscal year underreview.
(ⅲ) Provision for bonuses
To provide for the future payments of employee bonuses, the estimated payment amount attributable
to the fiscal year under review is provided.
(ⅳ) Provision for bonuses for directors (and other officers)
To provide for future payments of bonuses for directors and other officers, the estimated payment
amount attributable to the fiscal year under review is provided.
(ⅴ) Provision for loss on construction contracts
To provide for future losses on construction contracts, estimated losses are provided with respect toconstruction projects for which eventual losses are expected and reasonably estimated among
undelivered projects as of the end of the fiscal year under review.
(ⅵ) Provision for retirement benefits
To provide for retirement benefits for employees, the amount is recorded based on the estimatedamounts of retirement benefit liabilities and plan assets as of the end of the fiscal year under review.
• Attribution method for estimated retirement benefits
In calculating estimated retirement benefit liabilities, the benefit formula basis is used as a method of
attributing estimated retirement benefits to the period up to the end of the fiscal year under review.
• Expensing method for actuarial gains (losses) and past service costs
Actuarial gains (losses) are amortized using the straight-line method over certain years (ten years)
within the average remaining service period for employees at the time of recognition, and expensed
proportionally starting from the fiscal year following the respective fiscal year of recognition.
Past service costs are amortized using the straight-line method over certain years (ten years) within
the average remaining service period for employees at the time of recognition.
The amount is recorded as prepaid pension costs as of March 31, 2022.

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(4) Recognition of revenues and expenses
Regarding the construction business, the primary business of the Company, the Company recognizes
revenue when control of a promised good or service is transferred to a customer.
The performance obligations for construction contracts in the construction business are mainly
construction and delivery of buildings, etc. When control of a good or service is transferred over time,
the Company applies the method of recognizing revenue over time as the performance obligations for agood or service are satisfied. The progress toward complete satisfaction of a performance obligation ismeasured based on the proportion of construction costs incurred by the end of the reporting period to thetotal expected construction costs.
In some circumstances such as the first stage of a contract, the Company may not be able to reasonably
measure the progress toward complete satisfaction of a performance obligation but expects to recover
the costs. In those circumstances, the Company applies the cost recovery method.
Regarding construction contracts whose periods are very short from the initial transaction date of thecontract to the expected date of completely satisfying performance obligations, the Company does notrecognize revenue over time, but recognizes revenue when the performance obligations are satisfied
completely (the time of completing and delivering constructions).
(5) Hedge accounting method
In principle, the Company adopts the deferred hedge accounting. The Company adopts special treatment
for interest rate swaps that meet the requirements for special treatment.
(6) Other significant matters serving as basis for preparation of the non-consolidated financial statements(i) Accounting method for retirement benefits
In the balance sheet, unrecognized actual gains (losses) and unrecognized past service costs areaccounted for in the different accounting treatment from the consolidated balance sheet.
(ii) Accounting policies and procedures adopted when the provisions of the relevant accounting
standards are not clear
Accounting for works by joint ventures formed in order to take orders and carry out the works jointlywith several constructors are incorporated in the non-consolidated financial statements according to
the proportion of investment equities.

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2. Notes on changes in accounting policies(1) Application of “Accounting Standard for Revenue Recognition” and other standards
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 31, 2020; hereinafter “Revenue Recognition Standard”) and other standards from the
beginning of the fiscal year under review. The Company recognizes revenue when control of apromised goods or services is transferred to a customer in an amount that reflects the consideration towhich the Company expects to be entitled in exchange for those goods and services.
Regarding the construction business, the primary business of the Company, the Company used to apply
the percentage-of-completion method for works for which the outcome of the construction activity isdeemed certain while applying the completed contract method for other construction contracts
including those that were commenced before March 31, 2009. For the works whose control of goods orservices is transferred over time, however, the Company has changed its method to recognize theirrevenue over time as the performance obligations for goods or services are satisfied. The progress
toward complete satisfaction of a performance obligation is measured based on the proportion of
construction costs incurred by the end of the reporting period to the total expected construction costs.
In some circumstances such as the first stage of a contract, the Company may not be able to reasonably
measure the progress toward complete satisfaction of a performance obligation but expects to recover
the costs. In those circumstances, the Company applies the cost recovery method. The Company has
applied an alternative treatment for construction contracts whose periods are very short from the initialtransaction date of the contract to the expected date of completely satisfying performance obligations.
Specifically, the Company does not recognize revenue for those contracts over time but recognizes
revenue when the performance obligations are satisfied completely (the time of completing anddelivering constructions).
The Company applies the Revenue Recognition Standard, etc. in accordance with the transitional
treatment provided for in the proviso to Paragraph 84 of the Revenue Recognition Standard. The
cumulative impact of retrospectively applying the new accounting policies to prior periods is adjusted
to retained earnings at the beginning of the fiscal year under review, with the new accounting policies
applied from the beginning balance of the fiscal year under review. However, the Company applies themethod provided for in Paragraph 86 of the Revenue Recognition Standard and does not apply the new
accounting policies retrospectively to contracts for which substantially all revenue amounts has beenrecognized prior to the beginning of the fiscal year under review in accordance with the previous
treatment. In addition, applying the method stipulated in proviso (1) to Paragraph 86 of the Revenue
Recognition Standard, contract modifications that occurred prior to the beginning of the fiscal year
under review were accounted for based on the terms of the contract after reflecting all contract
modifications, with the cumulative impact adjusted to retained earnings at the beginning of the fiscal
year under review.
As a result, these changes have had immaterial impact on operating profit, ordinary profit, profit before
income taxes, and net assets per share of the fiscal year under review. Since cumulative effects arereflected on the net assets at the beginning of the fiscal year under review, the beginning balance ofretained earnings under the non-consolidated statement of changes in equity increased by ¥63 million.
(2) Application of “Accounting Standard for Fair Value Measurement” and other standards
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement
No. 30, July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the
beginning of the fiscal year under review, and will prospectively apply the new accounting policies
stipulated by the Fair Value Measurement Standard, etc. in accordance with the transitional treatment
provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). Thesechanges do not affect the non-consolidated financial statements.

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3. Notes on accounting estimates
Revenue recognition and provision for loss on construction contracts using the method to recognize
revenue over time(1) Amounts recorded in the non-consolidated financial statements for the fiscal year ended March 31,2022
 Net sales of completed construction contracts using the method to recognize
revenue over time
¥226,012 million
 Provision for loss on construction contracts¥973 million(2) Information about the contents of significant accounting estimates on the identified items
The information is the same as the nature of “3. Notes on accounting estimates” in the notes to theconsolidated financial statements.
4. Additional information
Accounting estimates on the impact of COVID-19
The information is the same as the nature of “4. Additional information” in the notes to the consolidated
financial statements.
5. Notes to the balance sheet(1) Assets pledged as collateral and obligations related to collateral(i) The following assets are pledged as collateral for deposits received of ¥243 million.
Buildings¥560 million
Land¥679 million
Total¥1,239 million(ⅱ) The following assets are pledged as collateral for construction assistance fund receivables based onbuilding rental contracts of subsidiaries and associates.
Land¥800 million(ⅲ) The following assets are pledged as collateral for the performance obligations of contracts andother obligations of the PFI business.
Investment securities¥15 million(ⅳ) The following assets are pledged as collateral for borrowings of subsidiaries and associates.
Shares of subsidiaries and¥1,110 million
associates, investments in capitalof subsidiaries and associates
Long-term loans receivable¥2,126 million“Other” under current assets¥205 million(accounts receivable – other)(ⅴ) The following assets are pledged as collateral for performance obligations of construction
contracts, etc.
Cash and deposits (time deposits)¥1,219 million(2) Accumulated depreciation of property, plant and equipment¥16,024 million(3) Monetary claims and monetary liabilities on subsidiaries and associates
Short-term receivables from subsidiaries and associates¥6,835 million
Short-term liabilities from subsidiaries and associates¥1,959 million
Long-term receivables from subsidiaries and associates¥7,527 million(4) Amounts of receivables arising from contracts with customers and contract assets, out of accounts
receivable from completed construction contracts
Accounts receivable from completed construction contracts¥49,382 million
Contract assets¥89,474 million(5) Amount of costs on construction contracts in progress corresponding to provision for loss on
construction contracts
Costs on construction contracts in progress related to construction contracts that are expected to incur
losses as well as provision for loss on construction contracts are presented as is and are not offset. The
amount corresponding to provision for loss on construction contracts was ¥8 million, out of costs on
construction contracts in progress related to construction contracts that are expected to incur losses.
(6) Amount of contract liabilities out of advances received on construction contracts in progress
Contract liabilities¥11,253 million- 17 -

6. Notes to the statement of income(1) Net sales attributable to subsidiaries and associates¥5,825 million(2) Purchase amount from subsidiaries and associates out of cost of sales¥2,221 million(3) Transaction volume other than business transactions with subsidiaries and¥404 million
associates(4) Revenue from contracts with customers
The Company does not disaggregate revenue from contracts with customers and other revenue. The
amount of revenue from contracts with customers is as presented in “10. Notes on revenue
recognition, (1) Disaggregation of revenue from contracts with customers.”(5) Provision for loss on construction contracts out of cost of sales of completed¥287 million
construction contracts(6) Total amount of research and development expenses¥1,623 million
7. Notes to the statement of changes in equity
Type and number of treasury shares
Increase in shares
Number of shares as
Type of shares
during the fiscalof April 1, 2021
year under review
Common stock

1,838,723

1,053,879

Decrease in shares
during the fiscal
year under review

Number of shares asof March 31, 2022

134

2,892,468

Notes: 1. Details of the increase in shares are as follows:
Purchase of fractional shares
Purchase of treasury shares in accordance with the resolution by the Boardof Director
Purchase of shares held by untraceable shareholders in accordance withthe resolution by the Board of Directors
2. Details of the decrease in shares are as follows:
Selling of fractional shares upon requests to add those shares to holdings

1,435 shares
1,000,000 shares
52,444 shares
134 shares

8. Notes on tax effect accounting
The primary causes of recording deferred tax assets and deferred tax liabilities are as follows:
Deferred tax assets
Loss on valuation of securities¥2,489 million
Loss on valuation of inventories¥1,191 million
Provision for bonuses¥1,128 million
Allowance for doubtful accounts¥647 million
Accounts payable for construction contracts and accrued expenses¥443 million
Provision for loss on construction contracts¥297 million
Other¥339 million
Deferred tax assets (subtotal)¥6,538 million
Valuation allowance¥(4,506) million
Total deferred tax assets¥2,031 million
Deferred tax liabilities
Valuation difference on available-for-sale securities¥(9,305) million
Reserve for tax purpose reduction entry of non-current assets¥(1,586) million
Prepaid pension costs¥(907) million
Other¥(80) million
Total deferred tax liabilities¥(11,880) million
Deferred tax liabilities (net)¥(9,848) million- 18 -

9. Notes on transactions with related parties
Subsidiaries, associates, and others
Type

Subsidiary

Name of companies

Taihei Real Estate
Corporation

Ownership
ratio ofvoting rights

Directownership
100%

Relateddetails

Transaction
details

FinancialsupportLoan andrep
ayment offunds
Interest
received

Transaction
amountItem

Ending balanceLong-term¥44 million loans
receivable¥4,080 million¥68 million––

Accounts
receivable
DirectReceipt ofReceipt offrom
Associates
ownership construction construction ¥5,259 million¥4,342 million
completed36%
ordersordersconstruction
contracts
Notes: 1. An interest rate related to the lending of funds is determined reasonably in light of market interest rates. Collaterals
are not received. In addition, transaction amounts are stated on a net basis.
2. After price negotiations, receipt of construction orders is determined in the same manner as general transaction
conditions.
3. Transaction amount does not include consumption and other taxes, and the ending balance includes consumption
and other taxes.
Kaizuka Civic
Core Support
Company
Limited.

10. Notes on revenue recognition(1) Disaggregation of revenue from contracts with customers(Millions of yen)Domestic
government
and municipal
offices

Domestic
private sector

Overseas

Total

Net sales of
Revenue from contracts with
96,350130,262
3,294
229,907
completedcustomers
construction
Other revenue––––
contracts
Revenue from contracts with
Net sales in real
140
3,353
46
3,540
customers
estate business andother
Other revenue
–
–
–
3,781
(2) Underlying information in understanding revenue
The information is as presented in “1. Notes on Significant Matters Serving as Basis for Preparation ofConsolidated Financial Statements, etc., (3) Accounting policies, (ⅳ) Recognition of significant revenues
and expenses” of the notes to the consolidated financial statements.

11. Notes on per share information(1) Net assets per share(2) Profit per share¥4,383.46¥338.72

12. Notes on significant subsequent events
Cancellation of treasury shares
At the Board of Directors held on March 7, 2022, the Company resolved to cancel its treasury shares inaccordance with Article 178 of the Companies Act and implemented the process as follows:(1) Type of shares canceled
Common stock of the Company
1,000,000 shares (ratio to the total number of shares issued before(2) Number of shares canceled
cancellation: 2.52%)(3) Date of cancellation
April 5, 2022
(4) Total number of shares issued
38,665,226 shares
after cancellation
13. Japanese yen amounts are rounded down to the nearest million.

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