Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Balance Sheets
March 31, 2023 and 2022
Millions of yen
2023
2022

Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3 and 4)¥

Notes and accounts receivable trade andcontract assets (Note 3 and 13)
Allowance for doubtful accounts
Inventories
Other current assets
Total current assets

Property and equipment:
Land
Buildings and structures (Note 5)
Machinery and equipment
Vehicles and vessels
Construction in progress
Other
Total property and equipment
Less accumulated depreciation
Net property and equipment

Investments and other assets:
Investment securities (Notes 3 and 4)
Investments in unconsolidated subsidiaries andaffiliates (Note 3)
Employee retirement benefit asset (Note 6)
Deferred tax assets (Note 10)
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets- 6 -19,515299¥

13,737
830

Thousands of
U.S. dollars
2023$

146,729
2,248

18,718(67)
18,651
206
2,906
41,577

18,126(82)
18,044183
3,200
35,994

140,737(504)
140,233
1,549
21,850312,609

32,292
79,064
9,212
8,757
983
9,229
139,537(68,901)
70,63632,26978,162
8,947
8,546
365
8,120
136,409(65,909)70,500242,797594,466
69,26365,842
7,391
69,391
1,049,150(518,052)
531,098

9,619

8,910

72,323

8,101
4,125
913
2,206
(12)
24,952

7,643
3,961
863
2,030
(15)
23,392

60,91031,015
6,865
16,586(90)
187,609¥ 137,165¥ 129,886$

1,031,316

Current liabilities:
Short-term borrowings (Notes 3 and 5)¥
Current maturities of long-term debt (Notes 3 and 5)
Trade payables (Note 3)
Accrued expenses
Income taxes payable
Other current liabilities (Note 5 and 13)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 3 and 5)
Employee retirement benefit liability (Note 6)
Guarantee deposits received (Note 3)
Deferred tax liabilities for revaluation
Deferred tax liabilities (Note 10)
Other long-term liabilities (Note 5)
Total long-term liabilities
Total liabilities
Commitments and contingent liabilities (Notes 8 and 9)
Net assets (Note 7):
Shareholders’ equity:
Common stock: 240,000,000 shares authorized
and 67,142,417 shares issued
Capital surplus
Retained earnings
Less treasury stock, at cost: 2,897,602 shares in2023 and 2,838,228 shares in 2022
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains on available-for-salesecurities
Land revaluation decrement
Foreign currency translation adjustments
Retirement benefit adjustment (Note 6)
Total accumulated othercomprehensive income
Noncontrolling interests
Total net assets
Total liabilities and net assets

Millions of yen
2023
2022
2,458
5,174
10,472
1,947
1,417
3,660
25,1282,370
7,894
10,045
1,845
985
3,343
26,482$

18,481
38,90378,737
14,63910,65427,519188,933

20,043
2,134
2,075
3,695
2,155
2,194
32,29657,424

19,417
2,128
2,168
3,695
2,008
1,209
30,625
57,107

150,699
16,045
15,602
27,782
16,203
16,496
242,827
431,760

8,428
6,823
59,332

8,428
6,822
53,88463,36851,301
446,105(1,155)73,428(1,119)68,015(8,684)552,090

3,143(1,364)
822
580

2,710
(1,364)297
551

23,632(10,256)
6,180
4,361

3,181
3,132
79,741

2,194
2,570
72,77923,91723,549599,556¥ 137,165¥ 129,886

See accompanying Notes to Consolidated Financial Statements.

- 7 -

¥

Thousands of
U.S. dollars
2023$

1,031,316

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Income
For the Years Ended March 31, 2023 and 2022

Operating revenue (Note 13 and 14)¥

Operating costs and expenses(Notes 6 and 9)
Operating income

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023

134,064$¥

116,750

1,008,000

126,8147,250

110,081
6,669

953,489
54,511

485
(109)

517
(115)

3,647
(820)

950

873

7,143

(56)
430
1,700
8,950

(245)
(53)
426
1,403
8,072

(421)
3,233
12,782
67,293

Income taxes (Note 10):
Current
Deferred
Total income taxes

2,518
(99)
2,419

1,806
401
2,207

18,932(744)
18,188Net income

6,531

5,865

49,105

374

267

2,812

Other income (expenses):
Interest and dividend income
Interest expense
Equity in net earnings of unconsolidated
subsidiaries and affiliates
Loss on sale or disposal of property andequipment, net
Impairment loss on fixed assets
Others, net
Income before income taxes

Net income attributable to noncontrollinginterests
Net income attributable to owners of theCompany

Per share:
Net income
Cash dividends (Note 7)

¥

6,157

¥

5,598

$

Yen
¥

95.76
11.5

See accompanying Notes to Consolidated Financial Statements.

- 8 -

¥

46,293
U.S. dollars

87.14
10.50

$

0.72
0.09

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2023 and 2022
Millions of yen
2023
2022
Net income¥

Other comprehensive income (Note 11):
Net unrealized gains on available-for-salesecurities
Foreign currency translation adjustments
Retirement benefit adjustment
Share of other comprehensive income ofunconsolidated subsidiaries and affiliates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of the Company
Noncontrolling interests

¥

¥

6,531

5,865

$

49,105

434
688
29

202
256
17

3,263
5,173
218

28
1,179
7,710

17
492
6,357

211
8,865
57,9707,144566

See accompanying Notes to Consolidated Financial Statements.

- 9 -

¥

Thousands of
U.S. dollars
2023

¥

¥

6,070
287

$

$

53,7144,256

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2023 and 2022

Balance at April 1, 2021
Cumulative effects of changes inaccounting policies
Restated balance
Net income attributable to owners of theCompany
Cash dividends
Disposal of treasury stockand fractional shares, net of purchase
Purchase of additional shares of
consolidated subsidiaries
Reversal of land revaluation decrement
Net changes other than changes inshareholders’ equity
Balance at March 31, 2022
Cumulative effects of changes inaccounting policies
Restated balance
Net income attributable to owners of theCompany
Cash dividends
Disposal of treasury stock and fractional
shares, net of purchase
Purchase of additional shares of
consolidated subsidiaries
Net changes other than changes inshareholders’ equity
Balance at March 31, 2023

Shareholders' equity

Number ofshares ofcommonstock issued

Commonstock

67,142,417¥

Capitalsurplus8,428¥

Retainedearnings

6,788¥

Treasurystock

48,915¥(1,186)

Total
shareholders’equityNet
unrealized
gains onavailable-forsale securities¥¥

62,945

Accumulated other comprehensive incomeLandrevaluation
decrement
Millions of yen

2,509

¥

(1,339)

Total
accumulated
other

Foreigncurrencytranslation
adjustments

Retirement
benefitadjustment

comprehensive

¥

¥

¥

44

534

Minority
interests

income1,748¥

Total net
assets2,289¥

66,982

-

8,428

6,788

(13)
48,902(1,186)(13)
62,932

2,509(1,339)

44

534

1,748

2,289

(13)
66,969

-

-

-

5,598
(642)

-

5,598
(642)

-

-

-

-

-

-

5,598
(642)

-

-

32

-

67

99

-

-

-

-

-

-

99

-

-

2
-

26

-

2
26

-

-

-

-

-

-

2
26

67,142,417

8,428

-

53,884(1,119)68,015

201
2,710

(25)
(1,364)

253
297

17
551

446
2,194

281
2,570

727
72,779

¥

-

8,428

-

¥

6,822

¥

¥

¥

¥

¥

¥

¥

¥

¥

¥

-

(2)
53,882(1,119)(2)
68,0132,710(1,364)

297

551

2,194

2,570

(2)
72,777

-

-

6,157
(707)

-

6,157
(707)

-

-

-

-

-

-

6,157
(707)

-

-

-

-

(36)

(36)

-

-

-

-

-

-

(36)

-

-

1

-

-

1

-

-

-

-

-

-

1

67,142,417

¥

8,428

6,822

¥

6,823

-

¥

59,332¥(1,155)¥73,428

¥

433
3,143

¥

(1,364)

¥

525
822

¥

29
580

$

2,233

$

4,143

$ 16,496$ 19,323$ 547,210

¥

987
3,181

¥

562
3,132

¥

1,549
79,741Thousands of U.S. dollars
Balance at March 31, 2022$
Cumulative effects of changes inaccounting policies
Restated balance
Net income attributable to owners of theCompany
Cash dividends
Disposal of treasury stock and fractional
shares, net of purchase
Purchase of additional shares of
consolidated subsidiaries
Net changes other than changes inshareholders’ equity
Balance at March 31, 2023$
See accompanying Notes to Consolidated Financial Statement

63,368$51,293$ 405,143(8,413)$ 511,391-(15)
405,128(8,413)--

46,293(5,316)---63,36863,36820,376$ (10,256)(15)
511,376

20,376(10,256)

2,233

4,143

16,496

19,323(15)547,195-

46,293(5,316)

-

-

-

-

-

-

46,293(5,316)

-

(271)

(271)

-

-

-

-

-

-

(271)

8

-

-

8

-

-

-

-

-

-

8

-

$ 446,105(8,684)$ 552,090

3,256
23,632$ (10,256)

218
4,361

7,421
$ 23,917

4,226$ 23,549

11,647$ 599,556

51,293$51,301$$- 10 -

$

$

$

3,947
6,180

$

Japan Transcity Corporation and Consolidated Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2023 and 2022

Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation
Net change in employee retirement benefit asset/liability
Loss on sale or disposal of property and equipment, net
Equity(income) of unconsolidated subsidiaries and affiliates
Decrease (Increase) in trade receivables
Increase in inventories
Increase in trade payables
Others, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

Millions of yen
2023
2022
¥

8,950

¥

8,072

Thousands of
U.S. dollars
2023$

67,293

5,309
(119)
56
(950)
8
(23)
21
(426)
12,826
1,008(111)(2,127)
11,596

4,517
(196)
245
(873)
(2,166)(25)
209(1,708)
8,075
972
(117)
(1,669)7,261

39,918(895)
421(7,143)
60
(173)
158
(3,203)96,436
7,579(835)(15,992)
87,188Cash flows from investing activities:
Increase in property and equipment and intangible assets
Decrease in property and equipment and intangible assets
Decrease in short-term investments
Others, net
Net cash used in investing activities(3,526)35
610(85)(2,966)(2,585)
46
206
(186)
(2,519)(26,511)
263
4,586
(639)
(22,301)

Cash flows from financing activities:
Increase in long-term debt
Repayment of long-term debt
Increase in short-term borrowings
Dividends paid
Others, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

5,800
(7,894)
88
(707)
(545)
(3,258)406
5,778
13,737
19,515900(3,372)(642)(480)(3,594)275
1,423
12,314
13,73743,609(59,353)662(5,316)(4,098)(24,496)
3,053
43,444103,285
146,729¥

See accompanying Notes to Consolidated Financial Statements.

- 11 -¥$

Japan Transcity Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
1. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements of Japan Transcity Corporation (the“Company”) and its consolidated subsidiaries (together with the Company, the “Japan Transcity
Group”) have been prepared in accordance with the provisions set forth in the Financial Instrumentand Exchange Law of Japan and its related accounting regulations and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects
as to application and disclosure requirements from International Financial Reporting Standards(“IFRS”).
The accompanying consolidated financial statements have been restructured and translated into
English from the consolidated financial statements of the Company prepared in accordance withJapanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as
required by the Financial Instrument and Exchange Law of Japan. Certain supplementary
information included in the statutory Japanese language consolidated financial statements, but notrequired for fair presentation, has not been presented in the accompanying consolidated financial
statements.
Comparative figures have been reclassified to conform to the current year’s presentation.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for theconvenience of readers outside Japan, using the prevailing exchange rate at March 31, 2023, which
was approximately ¥133 to US$1.00. Such translation should not be construed as a representationthat the Japanese yen amounts have been, could have been or could in the future be converted into
U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries. Investments in certain unconsolidated subsidiaries and significant
affiliates are accounted for using the equity method. Investments in unconsolidated subsidiaries
and affiliates not accounted for using the equity method are stated at cost. Differences between theacquisition cost of investments in subsidiaries and the underlying equity in their net assets, adjusted
based on the fair value at the time of acquisition, are principally deferred as goodwill and amortizedover five years or recognized as gain on negative goodwill.
The numbers of consolidated subsidiaries, unconsolidated subsidiaries and affiliates for the years
ended March 31, 2023 and 2022 were as follows.
2023
2022
Consolidated subsidiaries:
Domestic
25
25
Overseas99Unconsolidated subsidiaries and affiliates accounted forusing the equity method
99Unconsolidated subsidiaries stated at cost
108
Affiliates stated at cost66

- 12 -

All intercompany accounts and transactions have been eliminated on consolidation.
The accompanying consolidated financial statements include the accounts of the overseas
consolidated subsidiaries (nine subsidiaries in 2023 and 2022, respectively). These overseas
consolidated subsidiaries close their books at December 31, which is three months earlier than theclosing of the books of the Company and its domestic consolidated subsidiaries. The Company
consolidated its overseas subsidiaries’ financial statements as of their year-end date. Significant
transactions for the period between the subsidiaries’ year-end date and the Company’s year-end datehave been adjusted on consolidation.
Unification of accounting policies applied to foreign subsidiaries for consolidated financial
statements
The “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements” issued by the Accounting Standards Board of Japan (“ASBJ”)(Practical Issues Task Force (“PITF”) No. 18) generally requires that accounting policies andprocedures applied by a parent company and its subsidiaries to similar transactions and events undersimilar circumstances be unified for the preparation of the consolidated financial statements. As atentative measure, however, PITF No. 18 allows a parent company to prepare consolidated financial
statements using foreign subsidiaries’ financial statements prepared in accordance with either
International Financial Reporting Standards or U.S. generally accepted accounting principles(GAAP). In this case, adjustments for the following five items are required in the consolidation
process so that their impact on net income is accounted for in accordance with Japanese GAAP,
unless such impact is immaterial.
(a) Goodwill not subject to amortization(b) Actuarial gains and losses of defined benefit retirement plans recognized outside profit or loss(c) Capitalized expenditures for research and development activities(d) Fair value measurement of investment properties and revaluation of property and equipment andintangible assets(e) Financial Instruments to reclassify amounts equivalent to gains or losses on disposal or losses on
impairment of the equity instruments to profit or loss for the period as a reclassification
adjustment on consolidation.
For the consolidation purposes of the Company, the accounts of the Company’s overseas
consolidated subsidiaries have been prepared in accordance with either International Financial
Reporting Standards or U.S. generally accepted accounting principles, with adjustments having been
made for the five items specified above as needed.
(b) Cash equivalents
The Japan Transcity Group considers highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.

- 13 -

(c) Investments and marketable securities
The Japan Transcity Group classifies certain investments in debt and equity securities as “held-tomaturity,” “trading” or “available-for-sale” securities for the purpose of determining the applicableaccounting method as stipulated by the accounting standard for financial instruments. Marketableavailable-for-sale securities with available market quotations are stated at fair value, and net
unrealized gains and losses on these securities, net of applicable income taxes, are reported asaccumulated other comprehensive income. Gains and losses on the disposition of investments insecurities other than equity securities without market prices are computed using the moving averagemethod. Investments in equity securities without market prices and without available market
quotations are carried at cost determined by the moving average method. Adjustments in the carrying
values of individual securities are charged to income through write-downs when a decline in value
is deemed other than temporary.
(d) Accounting for derivatives
Derivatives are valued at fair value if hedge accounting is not appropriate or when there is no hedging
designation, and gains and losses on the derivatives are recognized in current earnings. Under the
special treatment permitted by the accounting standard for financial instruments, hedging interest
rate swaps are accounted for on an accrual basis and recorded net of interest expenses generated
from the hedged borrowings if certain conditions are met.
(e) Inventories
Inventories consist of supplies and others. Inventories are stated at the lower of cost, determinedby the moving average method, or net realizable value.
(f) Allowance for doubtful accounts
An allowance for doubtful accounts is provided for certain doubtful or troubled receivables at theaggregate amount of estimated credit losses based on individual financial reviews. For otherreceivables, a general reserve calculated based on historical loss experience for a certain past period
is provided.
(g) Property and equipment, and depreciation, except for leases
Property and equipment, including significant renewals and additions, are stated at cost anddepreciated using straight-line method over the estimated useful life of the asset. Expenditures onmaintenance and repairs are charged to operating income as incurred. The capital gains directly
offset against the acquisition costs of tangible fixed assets to obtain tax benefits at March 31, 2023
and 2022 were as follows.

Building
Land¥

Millions of yen
2023
2022
100 ¥
100
100
100

Thousands of
U.S. dollars
2023
$
752
752

(h) Accounting for leases
Assets of finance leases that transfer ownership of the leased property to the lessee are depreciatedusing the same method used for nonlease property. Assets of finance leases that do not transfer
ownership of the leased property to the lessee are capitalized and depreciated over the lease termusing the straight-line method with the assumption that the residual value, or guaranteed residual
value when set by agreement, is zero.
- 14 -

(i) Accounting standard for impairment of fixed assets
The Company and its domestic consolidated subsidiaries have adopted the “Accounting Standard
for Impairment of Fixed Assets” issued by the Business Accounting Council of Japan and the related
practical guidance issued by ASBJ. The standard requires that a fixed asset be reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of theasset may not be recoverable. Impairment loss is to be recognized in the income statement by
reducing the carrying amount of the impaired asset or group of assets to the recoverable amount,measured at the higher of net selling price or value in use. Fixed assets include intangible assets aswell as land, buildings and other forms of property and are to be grouped at the lowest level forwhich there are identifiable cash flows separate from those of other groups of assets. For the
purpose of recognition and measurement of impairment loss, fixed assets other than idle or unused
property are grouped principally into cash generating units such as regional business divisions.
While no impairment loss was recorded for the year ended March 31, 2023, the Japan Transcity
Group recognized impairment loss for certain idle properties, as set forth in the table below, for theyear ended March 31, 2022. The loss was included in other expenses in the accompanying
consolidated statements of income.

Land
Buildings and structures
Other

¥
¥

Millions of yen
2023
2022
- ¥
37
15
1
- ¥
53

Thousands of
U.S. dollars
2023
$
$
-

(j) Revaluation of land
In accordance with the Law Concerning Revaluation of Land (the “Revaluation Law”), the Company
elected a one-time revaluation to restate the cost of land used for the Company’s business at values
rationally reassessed effective March 31, 2002, reflecting adjustments for land shape and otherfactors and based on municipal property tax bases. In accordance with the Revaluation Law, anamount equivalent to the tax effect on the difference between the original book value and thereassessed value was recorded as deferred tax liability under the revaluation account. The
remaining difference, net of the tax effects, was recorded as a land revaluation decrement accountincluded in accumulated other comprehensive income in the accompanying consolidated balance
sheets. At March 31, 2023 and 2022, the differences in the carrying value of land used for theCompany’s business after reassessment over the current market value at the fiscal year-end
amounted to ¥8,455 million ($63,571 thousand) and ¥8,463 million, respectively.

- 15 -

(k) Employee retirement benefits
Employees who terminate their service with the Japan Transcity Group are entitled to retirement
benefits generally determined by current basic rates of pay, length of service and conditions underwhich the termination has occurred.
In accordance with the accounting standard for employee retirement benefits, the Japan Transcity
Group recognizes retirement benefits for employees, including pension costs and related liabilities,
based on the actuarial present value of retirement benefit obligation using the actuarial appraisal
approach and the value of pension plan assets available for benefits at the fiscal year-end. In
calculating retirement benefit obligations, the Company has adopted the benefit formula basis as themethod for attributing the expected retirement benefits to accounting periods. Some consolidated
subsidiaries provide accrued retirement benefits for their employees mainly at the amounts of the
projected benefit obligations calculated using the simplified method as permitted by the accounting
standard for retirement benefits.
Actuarial differences arising from changes in the retirement benefit obligation or pension plan assets
not anticipated under previous assumptions or from changes in the assumptions themselves that are
yet to be recognized are amortized on a straight-line basis over ten years, a period not exceeding the
average remaining service period of employees, from the year following the year in which they arise.
Past service costs that are yet to be recognized are amortized on a straight-line basis over ten years,
a period not exceeding the average remaining service period of the employees, from the year inwhich such costs arise. Actuarial differences and past service costs that are yet to be recognized in
profit or loss have been recognized as retirement benefit adjustment under a component ofaccumulated other comprehensive income within the net assets section, after adjusting for tax effects,
and the difference between retirement benefit obligations and plan assets has been recognized as
employee retirement benefit liability or asset, without any adjustments, in the accompanying
consolidated balance sheets.
(l) Accounting policy for recognition of revenue and expenses
The Japan Transcity Group recognizes revenue in the amount it expects to receive in exchange forpromised goods or services when the control of those goods or services is transferred to customers.
The main performance obligations of integrated logistics services, which is our group's main
business, are storage and transportation services. Revenue from contracts with customers is
recognized primarily over a period of time and according to the progress of the services provided.
(m) Translation of foreign currency accounts
Receivables, payables and securities other than stocks of subsidiaries and certain other securities aretranslated into Japanese yen at year-end exchange rates. Transactions in foreign currencies arerecorded at the prevailing exchange rates on the transaction dates. Resulting translation gains andlosses are included in current earnings.
For financial statement items of overseas consolidated subsidiaries, all asset and liability accounts
are translated into Japanese yen by applying the exchange rates in effect at the fiscal year-end. All
income and expense accounts are translated at the average rates of exchange prevailing during the
fiscal year. Translation differences have been reported as foreign currency translation adjustments
under a component of accumulated other comprehensive income and noncontrolling interests in theaccompanying consolidated balance sheets.

- 16 -

(n) Income taxes
Income taxes are accounted for by the asset-liability method. Deferred tax assets and liabilities arerecognized as future tax consequences attributable to differences between the carrying amounts ofexisting assets and liabilities and their respective tax bases and operating loss carryforwards.
Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply totaxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
period that includes the enactment date.
(o) Enterprise taxes
The Japan Transcity Group records enterprise taxes based on the “added value” and “capital”
amounts when levied as size based corporate taxes for local government enterprise taxes and includes
such taxes in operating costs and expenses.
(p) Appropriation of retained earnings
Cash dividends are recorded in the fiscal year when a proposed appropriation of retained earnings isapproved by the board of directors and/or shareholders.
(q) Per share data
Net income per share is computed by dividing income available to common shareholders by theweighted average number of shares of common stock outstanding during the fiscal year. Cashdividends per share for each fiscal year in the accompanying consolidated statements of income
represent dividends declared by the Company as applicable to the respective years. Diluted net
income per share was not presented as of March 31, 2023 or 2022 due to the lack of any dilutive
shares.
(r) Change in accounting policy
ASC 842 Leases
At foreign subsidiaries that apply US GAAP, ASC 842 Leases has been adopted from the current
fiscal year. In accordance with the transitional treatment, the cumulative effect of adoption of thestandards was recognized on the date of adoption and was added to or subtracted from retained
earnings at the beginning of the current fiscal year. As a result, in the consolidated balance sheetof the current consolidated fiscal year, “Property and Equipment” increased by ¥126 million. In
addition, “Others” classified as current and noncurrent liabilities increased by ¥101 million and ¥27
million, respectively. The effects on the consolidated statement of income and earnings per share
information for the current consolidated fiscal year were inconsequential. Having reflected thecumulative effects on the opening balance of net assets for the current consolidated fiscal year, theopening balance of retained earnings in the consolidated statement of changes in net assets decreasedby ¥1 million.

- 17 -

(s) Accounting standards and guidance not yet adopted
The following accounting standards and guidance are those issued but not yet adopted.
・Accounting Standard for Current Income Taxes (ASBJ Statement No. 27, October 28, 2022,
ASBJ)
・ Accounting Standard for Presentation of Comprehensive Income (ASBJ Statement No. 25,
October 28, 2022, ASBJ)
・Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October28, 2022, ASBJ)① Overview
The transfer of JICPA’s practical guidelines on tax effect accounting to ASBJ was completedwith the issuance of standards and guidance that included ASBJ Statement No. 28, Partial
Amendments to Accounting Standard for Tax Effect Accounting (hereinafter collectively
referred to as “ASBJ Statement No. 28, etc.”) in February 2018. During deliberations, it had
been determined that the following two issues would be further discussed subsequent to theissuance of ASBJ Statement No. 28, etc. The above standards and guidance were issued as aresult of the discussions on the two issues below:
・Categories in which income tax expense should be recorded (taxes on other comprehensive
income)・Tax effects associated with sales of shares of subsidiaries, etc. (i.e., shares of subsidiaries oraffiliates) when the group taxation regime is applied② Effective date
The standards and guidance will be effective from the beginning of the fiscal year ending March
31, 2025.
③ Effects of application of the standards and guidance
The effects of the application of the Accounting Standard for Current Income Taxes, etc., on
the consolidated financial statements are currently being evaluated.

- 18 -

3. Fair Values of Financial Instruments(a) Qualitative information on financial instruments① Policies for using financial instruments
The Company limits the use of excess funds to short-term deposits and raises funds throughbank loans and bond issuances. Derivative instruments are used mainly to hedge against
variable interest rate risk and to compensate loss when an earthquake occurs and are notused for speculative purposes.
② Details of financial instruments, risks and risk management system
Trade notes and accounts receivable carry the credit risk of the Company’s trading partners.
To manage such risk and pursuant to internal regulations of the Company, the due dates
and balances of the receivables are managed for each counterparty, and the credit risks of
the Company’s main trading partners are identified every half year.
Although investments in securities are exposed to market price fluctuation risk, theCompany monitors the fair values of the shares of companies with which the Company has
business relationships.
Trade notes and accounts payable are due within one year.
Loans payable and short-term borrowings are used mainly to fund operating activities, andlong-term debt is used to fund capital investment.
Loans with variable interest rates involve the risk of interest rate fluctuation. For hedging
purposes, the Japan Transcity Group is a party to derivative instruments, such as interest
rate swap contracts, in the normal course of business to reduce its exposure to fluctuationsin interest rates. Evaluating hedge effectiveness has not been required because of the
exceptional treatment of interest rate swaps. The Company enters into derivative contracts
with financial institutions of high creditworthiness to reduce credit risk.
Guarantee deposits received consist mainly of deposit money for golf club memberships.
The Japan Transcity Group controls liquidity risk associated with operating payables andloans by its cash management systems, which control the funds of the Japan Transcity
Group as a whole.
③ Supplemental information on fair values
The contract amounts of derivative instruments under Note 3, “Fair Values of Financial
Instruments,” do not necessarily represent the market risk of the derivatives themselves.

- 19 -

(b) Fair values of financial instruments at March 31, 2023 and 2022
Carrying amounts, fair values and differences between carrying amounts and fair values of
relevant items are as follows:
Carrying value
At March 31, 2023:(1) Investment securities:
Marketable securities¥
Total assets¥(1) Long-term debt (*3)¥(2) Guarantee deposits received:
Deposits for golf courses
Total liabilities¥(*2)

Fair value
Millions of yen

9,052
9,052
25,217

¥
¥
¥

9,052
9,052
25,110

¥
¥
¥

(107)

1,971
27,188¥1,580
26,690

¥

(391)
(498)

Carrying value
At March 31, 2022:(1) Investment securities:
Marketable securities
(*2)

¥
¥
¥

Total assets(1) Long-term debt (*3)(2) Guarantee deposits received:
Deposits for golf courses
Total liabilities¥$
Total assets$(1) Long-term debt (*3)$(2) Guarantee deposits received:
Deposits for golf courses
Total liabilities$(*2)

Fair value
Millions of yen

Difference

8,415
8,415
27,311

¥
¥
¥

8,415
8,415
27,300

¥
¥
¥

(11)

2,065
29,376¥

1,779
29,079

¥

(286)
(297)

Carrying value
At March 31, 2023:(1) Investment securities:
Marketable securities

Difference

Fair value
Thousands of U.S. dollars

Difference

68,06068,060189,602$$$

68,06068,060188,797

$
$
$

(805)

14,819204,421$

11,880200,677$(2,939)(3,744)(*1)

Deposits and short-term receivables and payables are omitted because their fair values approximate theirbook values.
(*2) At March 31,2023 and 2022, nonmarketable securities (consolidated balance sheet amount: ¥567million($4,263 thousand)) and ¥495 million, respectively, stocks of nonconsolidated subsidiaries and affiliates(consolidated balance sheet amount: ¥8,101million ($60,910 thousand)and ¥7,643 million, respectively)
are not included in "(1) Investment securities: Marketable securities".
(*3) The fair value of interest-rate swaps under exceptional accounting treatment is included in the fair value ofthe corresponding long-term debt hedged by the derivative transactions.

- 20 -

Note 1. Scheduled redemption amounts after the fiscal year-end date for monetary claims andsecurities with maturity periods:
Due in one
year or less

Cash and cash equivalents ¥Short-term investments
Notes receivable
Trade receivables¥
Total

Due after
Due in one
Due after
one yearyear or lessone year
Millions of yen
2023
2022
¥
¥ 13,737¥
19,515-299
388
17,08337,285

¥

-

830
399
16,511¥ 31,477¥-

Due in one
Due after
year or lessone yearThousands of U.S. dollars
2023$ 146,729
$
-

2,248
2,917
128,444$ 280,338$(c) Fair value information for financial instruments by level of inputs
Based on the observability and the significance of the inputs used to determine fair values,
fair value information for financial instruments is presented by categorizing measurements
into the following three levels:
Level 1 fair value: fair value measured by quoted prices of identical assets or liabilities in
active markets.
Level 2 fair value: fair value measured using observable inputs other than Level 1.
Level 3 fair value: fair value measured using unobservable inputs.
When multiple inputs from different levels are used in measuring fair value, the Company
and its subsidiaries classify the fair values at the lowest level from which inputs are used.

- 21 --

At March 31, 2023:(1) Investment securities:
Marketable securities
Equity securities¥
Total assets¥(1) Long-term debt(2) Guarantee deposits
received: Deposits
for golf courses
Total liabilities

Total

¥
¥

-

¥
¥

-

¥
¥

9,042
9,042

¥

-

¥

25,110¥-¥25,110

¥

-

¥

1,580
26,690

¥

-

¥

1,580
26,690Fair value
Millions of yen
Level 2
Level 3

Level 1

Total

8,405
8,405

¥
¥

-

¥
¥

-

¥
¥

8,405
8,405

¥

-

¥

27,300¥-¥27,300

¥

-

¥

1,779
29,079

¥

-

¥

1,779
29,079At March 31, 2023:(1) Investment securities:
Marketable securities
Equity securities$
Total assets$(1) Long-term debt(2) Guarantee deposits
received: Deposits
for golf courses
Total liabilities

Level 1

9,042
9,042

At March 31, 2022:(1) Investment securities:
Marketable securities
Equity securities¥
Total assets¥(1) Long-term debt(2) Guarantee deposits
received: Deposits
for golf courses
Total liabilities

Fair value
Millions of yen
Level 2
Level 3

Fair value
Thousands of U.S. dollars
Level 2
Level 3

Level 1

Total

67,98567,985

$
$

-

$
$

-

$
$

67,98567,985$-$

188,797$-$

188,797$-$

11,880200,677$-$

11,880200,677(Note) Valuation techniques and inputs used in measuring fair values
Long-term debt
The total amount of principal and interest is calculated by the discounted present value
method based on the interest rate, with credit risk added, in accordance with the remaining
period of the debt, and is classified as Level 2 fair value. Long-term loans payable withfloating interest rates are subject to the special treatment of interest rate swaps and are
calculated using the total amount of principal and interest processed together with the interest
rate swaps.
- 22 -

Deposits for golf courses
Deposits for golf courses are calculated using the discounted present value method based on
future cash flows calculated based on an assumed repayment period and interest rates thattake credit risk into account and are classified as Level 2 fair value.
Derivatives① At March 31, 2023 and 2022, derivative transactions to which hedge accounting was notapplied comprised a derivative contract related to earthquakes with an outstanding contract
amount of ¥400 million ($3,008 thousand) and ¥400 million, respectively. As the fair value
for the contract was not considered determinable, the contract was not accounted for at fairvalue.
② Derivative transactions to which hedge accounting was applied and for which the contract
amounts or amounts equivalent to the principal set forth in the contracts as of the fiscal
year-end date were as follows.

Contract amount ( *1)¥
Contract amount due after one
year included in (*1)
Fair value

Millions of yen
2023
2022
2,000
¥
2,000
2,000

Thousands of
U.S. dollars
2023$
15,0382,000

15,038

(*2)
(*2)
(*2)
Method of hedge accounting applied: exceptional treatment for interest rate swaps
Type of derivative transaction: interest rate swap (fixed rate payment, floating ratereceipt)
Hedged item: long-term debt(*2) The fair value of interest rate swaps accounted for under exceptional accounting treatment isincluded in the fair value of the hedged items because the interest rate swaps are accounted
for as an integral part of the hedged items.
(*1)

4. Investments
At March 31, 2023 and 2022, short-term investments consisted of time deposits with an original
maturity of more than three months.
At March 31, 2023 and 2022, investment securities consisted of the following.

Marketable securities:
Equity securities
Other
Other nonmarketable securities

Millions of yen
2023
2022
¥

¥

9,042
10
9,052
567
9,619

¥

¥

Thousands of
U.S. dollars
2023

8,405 $
10
8,415
495
8,910 $

67,98575
68,0604,263
72,323Marketable investment securities classified as available-for-sale securities are stated at fair value
with unrealized gains and losses excluded from current earnings and reported as a net amount within
net assets until realized. At March 31, 2023 and 2022, gross unrealized gains and losses formarketable securities classified as available-for-sale securities were as follows.

- 23 -

Cost
Available-for-sale securities at March 31, 2023:
Equity securities
¥
4,435
Other
9
¥
4,444
Available-for-sale securities at March 31, 2022:
Equity securities
¥
4,423
Other
8
¥
4,431

Cost
Available-for-sale securities at March 31, 2023:
Equity securities$
33,346
Other
68$
33,414- 24 -

Gross
Gross
unrealized
unrealized
gains
lossesMillions of yen

Fair andcarrying
value

¥

(105)
(105)

¥

(121)
(121)

¥

¥
¥
¥

4,712
1
4,713

¥

4,103
2
4,105

¥

¥

¥

¥

¥

9,042
10
9,052
8,405
10
8,415

Gross
Gross
unrealized
unrealized
gains
lossesThousands of U.S. dollars

Fair andcarryingvalue$$ 67,985
75$ 68,060$

35,429735,436

$
$

(790)
(790)

5. Short-term Borrowings, Long-term Debt and Collateral
At March 31, 2023 and 2022, short-term borrowings consisted of the following.
Millions of yen
2023
2022

Unsecured short-term bank loans and bankoverdrafts with interest rates ranging from
0.07% to 0.313% per annum at March 31,
2023¥

2,458 ¥

2,370 $At March 31, 2023 and 2022, long-term debt consisted of the following.

¥

25,217(5,174)20,043¥18,481Thousands of
U.S. dollars
2023

Millions of yen
2023
2022
Unsecured long-term loans from banks andother financial institutions due through2029 with interest rates ranging from
0.18% to 2.375% per annum at March 31,
2023
Less portions with current maturities

Thousands of
U.S. dollars
2023

27,311(7,894)
19,417$

189,602(38,903)150,699

The aggregate amounts of long-term debt due annually at March 31, 2023 were as follows.
Millions ofThousands ofYear ending March 31,
yen
U.S. dollars
2024
2025
2026
2027
2028
2029 and thereafter¥¥

5,174 $
2,051
1,739
8,754
6,222
1,277
25,217 $38,902
15,421
13,07565,82046,782
9,602
189,602

At March 31, 2023, aggregate amounts of long-term lease obligations included in other current
liabilities and other long-term liabilities due annually were as follows.
Millions ofThousands ofYear ending March 31,
yen
U.S. dollars
2024
2025
2026
2027
2028
2029 and thereafter¥¥- 25 -

420 $
265
60
15
1
761 $

3,158
1,992
451
113
8
5,722

At March 31, 2023 and 2022, the following assets were pledged as collateral for current andnoncurrent payables.
Thousands of
U.S. dollars
Millions of yen
2023
2022
2023
Buildings

¥

4,452

¥

4,709 $

33,474

As is customary in Japan, substantially all loans from banks, including short-term loans, are madeunder general agreements which provide that at the request of the relevant bank the Japan Transcity
Group is required to provide collateral or guarantees or additional collateral or guarantees asappropriate with respect to loans and that all assets pledged as collateral under such agreements will
be used as collateral for all present and future indebtedness to the bank concerned. The Japan
Transcity Group has not received any such request. The general agreements further provide that thebanks have the right, as indebtedness matures or becomes due prematurely by reason of default, tooffset any deposits at the banks against any indebtedness due.

- 26 -

6.

Employee Retirement Benefits
The Company has defined benefit retirement plans. Some of the consolidated subsidiaries havedefined benefit plans to which the simplified method is applied. In addition, some consolidated
subsidiaries have defined contribution pension plans under certain pension funds organized by third
parties.
The following tables reconcile the retirement benefit liability (asset) and retirement benefit costs as
at and for the years ended March 31, 2023 and 2022.
Defined benefit plans except those to which the simplified method has been applied:

Movement in retirement benefit obligations:
Balance at beginning of year
Service cost
Interest cost
Actuarial differences
Benefits paid
Other
Balance at end of year

Millions of yen
2023
2022
¥

¥

8,259
417
19
(188)
(410)
2
8,099

¥

¥

8,293 $
419
11
(69)
(398)
3
8,259 $

Millions of yen
2023
2022

Movement in plan assets:
Balance at beginning of year
Expected return on plan assets
Actuarial differences
Contributions paid by the employer
Benefits paid
Other
Balance at end of year¥¥

Reconciliation from retirement benefit
obligations and plan assets to liability (asset)
for retirement benefits:
Funded retirement benefit obligations
Plan assets
Adjustment of asset ceiling
Unfunded retirement benefit obligations
Total net liability (asset) for employee
retirement benefits at end of year
Employee retirement benefit liability
Employee retirement benefit asset
Total net liability (asset) for retirement
benefits at end of year

- 27 -

11,092
223
(4)
158
(356)
11,113

¥

¥

¥

¥

7,006
(11,113)(4,107)
7
1,093¥(3,007)(3,007)

83,398
1,677
(30)
1,188
(2,677)
83,556

Thousands of
U.S. dollars
2023¥

7,164 $
(11,092)(3,928) $1,095

52,676(83,556)(30,880)
53
8,218

¥

(2,833) $(22,609)

1,103(3,936)8,226(30,835)(2,833) $(22,609)

1,094(4,101)¥62,0973,136
143(1,414)(3,083)15
60,894

Thousands of
U.S. dollars
2023

10,901 $
219
57
274
(361)
2
11,092 $Millions of yen
2023
2022

¥

Thousands of
U.S. dollars
2023¥

Retirement benefit costs:
Service cost
Interest cost
Expected return on plan assets
Actuarial differences amortization
Past service costs amortization
Total retirement benefit costs for the year

Retirement benefit adjustment, before taxes,
included in other comprehensive income:Actuarial differences
Total balance at end of year

Retirement benefit adjustment, before taxes,
included in accumulated other comprehensive
income:Actuarial differences that are yet to berecognized
Total balance at end of year
Plan assets:(1) Plan assets:
Bonds
Equity securities
General accountCommingled funds
Other
Total

Thousands of
U.S. dollars
2023

Millions of yen
2023
2022
¥

¥

417
19
(223)
(134)
(1)
78

¥

¥

419 $
11
(219)
(102)
109 $

Thousands of
U.S. dollars
2023

Millions of yen
2023
2022
¥
¥

43
43

¥
¥

24
24

Millions of yen
2023
2022

¥
¥

(831)
(831)

¥
¥

3,136
143
(1,677)(1,008)
(8)
586

$
$

323
323

Thousands of
U.S. dollars
2023(789) $
(789) $

(6,248)(6,248)

2023

2022

23%
37%
3%
21%
16%
100%

24%
34%
3%
23%
16%
100%

At March 31, 2023 and 2022, assets under the retirement benefit trust set up for corporate
pension plans accounted for 31% and 29% of the total plan assets, respectively.
Commingled funds consisted of bonds (62%) and equity securities (38%) at March 31, 2023
and consisted of bonds (60%) and equity securities (40%) at March 31, 2022.
(2) Long-term expected rate of return:Current and target asset allocations and historical and expected returns on various categories ofplan assets have been considered in determining the long-term expected rate of return.
Principal actuarial assumptions at March 31, 2023 and 2022 expressed as weighted averages.
2023
2022
Discount rate
0.5%
0.2%
Long-term expected rate of return
2.0%
2.0%
- 28 -

Defined benefit plans to which the simplified method has been applied:

Movement in liability for retirement benefits:
Balance at beginning of year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Other
Balance at end of year

Reconciliation from retirement benefit
obligations and plan assets to liability (asset)
for retirement benefits:
Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Total net liability (asset) for employee
retirement benefits at end of year
Employee retirement benefit liability
Employee retirement benefit asset
Total net liability (asset) for retirement
benefit at end of year

Millions of yen
2023
2022
¥

¥

1,000
225
(108)
(103)
2
1,016

¥

¥

993 $
194
(84)
(103)
1,000 $

Millions of yen
2023
2022

¥
¥
¥

2,409
(1,644)
765
251

¥

1,016

¥

¥

1,040
(24)
¥

1,016

Thousands of
U.S. dollars
2023

Thousands of
U.S. dollars
2023

2,364 $
(1,597)767 $233

18,113(12,361)
5,752
1,887

1,000

7,639

$

1,025
(25)
¥

7,519
1,692
(812)
(775)
15
7,639

1,000

7,819
(180)
$

7,639

Total retirement benefit costs for the fiscal years ended March 31, 2023 and 2022 based on thesimplified method were as follows:
Thousands ofMillions of yen
U.S. dollars
2023
2022
2023
¥
225
¥
194 $
1,692
Defined contribution plan:
For the years ended March 31, 2023 and 2022, the required contribution of the consolidated
subsidiaries to the defined contribution plan amounted to ¥44 million ($331 thousand) and ¥37
million, respectively.
7. Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be
designated as common stock. However, a company may, by a resolution of the board of directors,
designate an amount not exceeding one-half of the price of the new shares as additional paid-in
capital, which is included in capital surplus.
Under the Corporate Law, in cases in which a dividend distribution of surplus is made, the smallerof the amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the
total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in- 29 -

capital or legal earnings reserve. The legal earnings reserve has been included in retained earnings
in the accompanying consolidated balance sheets.
Under the Corporate Law, the legal earnings reserve and additional paid-in capital can be used toeliminate or reduce a deficit by a resolution at the shareholders’ meeting. The additional paid-in
capital or legal earnings reserve may not be distributed as dividends. All additional paid-in-capitaland legal earnings reserve may be transferred to other capital surplus and retained earnings,
respectively, which may become available for distribution as dividends.
At both March 31, 2023 and 2022, capital surplus principally consisted of additional paid-in capital.
In addition, retained earnings included the legal earnings reserve of the Company in the amount of¥1,200 million ($9,023 thousand) at both March 31, 2023 and 2022.
The maximum amount that the Company can distribute as dividends is calculated based on thenonconsolidated financial statements of the Company in accordance with Japanese laws andregulations.
During the year ended March 31, 2023, the Company paid interim dividends of ¥5.5 per shareamounting to ¥354 million ($2,662 thousand). In addition, at the annual shareholders’ meeting
held on June 29, 2023, the shareholders approved cash dividends of ¥6.0 per share amounting to¥385 million ($2,895 thousand). These appropriations had not been accrued in the consolidated
financial statements as of March 31, 2023 as such appropriations are recognized in the period inwhich they are approved by the shareholders.
8.

Contingent Liabilities
At March 31, 2023 and 2022, the Japan Transcity Group was contingently liable for reserved
guarantees of indebtedness of a certain unconsolidated subsidiary in the amount of ¥38 million($286 thousand) and ¥655 million, respectively.

9. Lease Commitments
As lessee, the Japan Transcity Group leases land and buildings to be used for office spaces andwarehouses principally under long-term cancelable and noncancelable operating lease agreements.
The Japan Transcity Group also leases computer equipment, other equipment and vehicles underleases which are generally noncancelable.
The aggregate future minimum payments for noncancelable operating leases at March 31, 2023 and2022 were as follows.

Operating leases:
Due within one year
Due after one year

Millions of yen
2023
2022
¥
¥

1,617
2,010
3,627

¥
¥

1,657
1,737
3,394

Thousands of
U.S. dollars
2023
$
$

12,158
15,11327,271

The company has applied “Leases” (IFRS 16 and ASC 842). Assets and liabilities recorded on thebalance sheet for which "Leases" has been applied are not included.

- 30 -

10. Income Taxes
The tax effects of temporary differences that gave rise to a significant portion of deferred tax assets
and liabilities at March 31, 2023 and 2022 were as follows.
Thousands ofMillions of yen
U.S. dollars
2023
2022
2023
Deferred tax assets:
Enterprise tax accruals
¥
78 ¥
64 $
587
Accrued bonuses to employees
379
366
2,850
Employee retirement benefit liability
340
337
2,556
Intercompany capital gains
251
245
1,887
Tax loss carryforwads (Note 1)
58
71
436
Impairment loss on fixed assets
19
Asset retirement obligations
251
32
1,887
Others
534
544
4,015
Subtotal
1,891
1,678
14,218Valuation allowance for tax loss carryforwards(Note 1)
(58)
(71)
(436)
Valuation allowance for deductible temporary
differences
(92)
(109)
(692)
Less valuation allowance
(150)
(180)
(1,128)Deferred tax assets
1,741
1,498
13,090
Deferred tax liabilities:
Employee retirement benefit asset
Deferred capital gain
Unrealized gains on available-for-salesecurities
OthersDeferred tax liabilities
Net deferred tax liabilities

¥

(185)
(524)

(128)
(524)

(1,391)(3,940)(1,407)(867)(2,983)(1,242)(1,217)(774)(2,643)(1,145)(10,579)(6,518)(22,428)(9,338)¥$(Note 1) Details of deferred tax assets for tax loss carryforwards by respective expiration periods
at March 31, 2023 and 2022 were as follows:

For the year ended March 31,
2023:
Tax loss carryforwards (*1)
Valuation allowance
Net deferred tax assets

2024

2025

-

2026

-

¥1
(1)
-

2028

2029 and
thereafter

Millions of yen
¥3
¥17
(3)
(17)
-

¥37
(37)
-

2027

Total

¥58
(58)
-

Thousands of U.S. dollars
Tax loss carryforwards (*1)
$7
$23
$128
$278
$436
Valuation allowance
(7)
(23)
(128)
(278)
(436)
Net deferred tax assets(*1) Tax loss carryforwards shown in the table above represent the amount of deferred tax assets after
multiplying the statutory tax rate.

- 31 -

For the year ended March 31,
2022:

2023

2024

2025

2026

2027

2028 and
thereafter

Total

Millions of yen
Tax loss carryforwards (*2)
¥ 2
¥ 4
¥ 7
¥ 9
¥
49
¥
71
Valuation allowance
(2)
(4)
(7)
(9)
(49)
(71)
Net deferred tax assets(*2) Tax loss carryforwards shown in the table above represent the amount of deferred tax assets after
multiplying the statutory tax rate.

In assessing the realizability of deferred tax assets, management of the Japan Transcity Groupconsiders whether part or all of the deferred tax assets will be realized. The ultimate realization ofdeferred tax assets is dependent upon the generation of future taxable income during the periods inwhich those temporary differences become deductible. At March 31, 2023 and 2022, a valuation
reserve was provided to reduce the deferred tax assets to amounts management believed would be
realizable.
Reconciliation of the difference between the Japanese statutory tax rate and the effective income tax
rate on pretax income reflected in the accompanying consolidated statements of income for the year
ended March 31, 2023 and 2022 were as follows.
Japanese statutory tax rate
Increase (decrease) due to:Permanently nondeductible expenses
Tax exempt income
Local minimum taxes per capita levy
Effect of elimination of dividend income
from subsidiaries for consolidation purpose
Equity in net earnings of unconsolidated
subsidiaries and affiliates
Valuation allowance
Retained earnings of subsidiaries
Tax rate differences with foreignsubsidiaries
Others
Effective income tax rate

- 32 -

2023
30.2%

2022
30.2%

1.0
(2.1)
0.4

0.9
(1.5)
0.5

1.8

1.8

(3.2)
(0.2)
1.0

(3.3)
(0.2)
0.6

(1.7)
(0.2)
27.0%

(1.3)
(0.4)
27.3%

11. Comprehensive Income
The amounts reclassified to profit (loss) in the current period that were recognized in othercomprehensive income in the current or previous periods and the tax effects for each component ofother comprehensive income for the years ended March 31, 2023 and 2022 were as follows.

Net unrealized gains on available-for-sale securities:
Increase during the year¥
Reclassification adjustments to profit or loss
Subtotal, before tax
Tax expense
Subtotal, net of tax
Foreign currency translation adjustments:
Increase during the year
Retirement benefit adjustment:
Increase during the year
Reclassification adjustments to profit or loss
Subtotal, before tax
Tax expense
Subtotal, net of tax
Share of other comprehensive income ofunconsolidated subsidiaries and affiliates
accounted for using equity method:
Increase during the year
Total other comprehensive income¥- 33 -

Millions of yen
2023
2022
633
(9)
624
(190)
434

290 $
(2)
288
(86)
202

4,759
(68)
4,691
(1,428)
3,263

688

256

5,173

177
(134)
43
(14)
29

126
(102)
24
(7)
17

1,331
(1,008)
323
(105)
218

28
1,179

¥

Thousands of
U.S. dollars
2023

¥

17
492

$

211
8,865

12. Related Party Transactions
There were related party transactions in connection with TAIYU KENSETSU CO., LTD. The
transaction prices were determined by negotiation based on estimated amounts of transactions
with other companies. At March 31, 2023 and 2022, related party transactions were as follows.
Millions of yen
2023
2022
Officers of the Company and their relatives(Equipment renovation work)
Transaction amounts
Balance at end of period

¥
¥

35
-

¥
¥

Thousands of
U.S. dollars
2023

187 $
12 $

263
-

ASBJ Statement No. 11, “Accounting Standard for Related Party Disclosures,” and ASBJ
Guidance No. 13, “Guidance on Accounting Standard for Related Party Disclosures,” both issued
by ASBJ on October 17, 2006, require certain additional related party disclosures. Pursuant tothe statement and guidance, information on a material affiliate, Chubu Coal Center Co., Ltd., hasbeen disclosed for the year ended March 31, 2022 as follows:
Millions of yen
2023
2022

Thousands of
U.S. dollars
2023

Total current assets
Total fixed assets

¥

- ¥
-

2,545 $
8,475-

Total current liabilities
Total fixed liabilities
Total net assets

¥

- ¥
-

846 $
86
10,088-Operating revenue
Income before income taxes
Net income

¥

- ¥
-

3,425 $
1,381
963

-

There were no material affiliates for the year ended March 31, 2023.

- 34 -

13. Revenue Recognition(a) Revenue from contracts with customers
Integrated Logistics Services

At March 31, 2023:
Revenue from contracts with customers
Other revenue
Revenue to external customers

Warehousing

Stevedoring

Domestictransportation

¥

¥

¥

¥

43,67043,670¥22,68822,688¥18,245
18,245International
multimodaltransportation¥

Others

Sub total

Millions of yen¥

45,78145,781¥¥¥ 132,134

1,750
1,750

¥ 132,134

Other services

¥
¥

1,055
875
1,930

Total

¥
¥

133,189875
134,064

Integrated Logistics Services

At March 31, 2022:
Revenue from contracts with customers
Other revenue
Revenue to external customers

Warehousing

Stevedoring

Domestictransportation

¥

¥

¥

¥

42,22942,229¥22,794
22,794¥18,962
18,962

International
multimodaltransportation¥

Others

Sub total

Millions of yen¥

29,237
29,237¥¥¥ 114,967

1,745
558
2,303

558
¥ 115,525

Other services

¥
¥

923
302
1,225

Total

¥
¥

115,890860
116,750

Integrated Logistics Services

At March 31, 2023:
Revenue from contracts with customers
Other revenue
Revenue to external customers

Warehousing

Stevedoring

Domestictransportation$$ 170,587$ 137,180$

328,346
328,346$ 170,587$ 137,180

International
multimodaltransportation$ 344,218

OthersThousands of U.S. dollars$ 344,218$$

13,15813,158Sub total$ 993,489$ 993,489- 35 -

Other services

$
$

7,932
6,579
14,511

Total$ 1,001,421
6,579$ 1,008,000

(b) Basic information for understanding revenue from contracts with customers
The Japan Transcity Group provides mainly integrated logistics services, including
warehousing, stevedoring, domestic transportation and international multimodaltransportation. The details of these main performance obligations and the timing of revenue
recognition are as follows.
① Warehousing
In the warehousing business, goods deposited by customers are stored in warehouses andstorage fees are received as compensation. In addition, the Japan Transcity Group carries
out warehousing, delivery and value-added services of deposited goods in connection with
its storage operations and receives cargo handling charges, delivery charges and valueadded service charges as compensation.
With respect to storage operations, revenue is recognized over the period of time fromwhen the contract is concluded to the satisfaction of the performance obligations andtransfer of services to the customer.
With respect to performance obligations related to operations other than storage operations,
if the contract provides for the provision of services over a certain period of time, revenue
is recognized in accordance with the period over which the service is provided. If thecontract provides for service compensation in accordance with the amount of goods,
revenue is recognized in accordance with the amount of goods in accordance with theprogress of the provision of services② Stevedoring
The stevedoring business connects marine transportation and land transportation at ports
and harbors. In the Japan Transcity Group, we conduct cargo loading and unloading
operations and cargo handling operations that require licenses from the Ministry of Land,
Infrastructure, Transport and Tourism, as well as related businesses.
These operations represent performance obligations related to work involving the
movement of customers' goods into and out of Japan, and revenue is recognized inproportion to the volume of work handled under contracts to transfer services to customers
as work progresses.
③ Domestic transportation and international multimodal transportation
In the domestic transportation business, vehicles and railways are used to transport goods
in Japan. In addition, in the international multimodal transport business, import and export
cargo is transported from the designated place of the consignor to the designated place ofthe consignee using the most appropriate means of transportation with the responsibility
maintained throughout the transportation.
Revenue is recognized over a period of time as under contracts to transfer services to acustomer as the performance obligations are satisfied, and the method of estimating the rateof progress in satisfying the performance obligations is based mainly on the estimatednumber of days of transportation. Revenue is recognized at a certain point in time forshipments for which the period from the start of service provision to the fulfillment of theperformance obligations is significantly short.
The transaction price is measured in terms of the amount expected to be received in exchange forthe promised goods or services when control of those goods or services is transferred to thecustomer. Consideration for the transaction is received within one year of the fulfillment of theperformance obligations and does not include significant financial factors. The Japan Transcity
Group does not have contracts that require the allocation of transaction prices because it determines
prices by providing customers with estimates corresponding to each performance obligation.

- 36 -

(c) Balance of contract assets and contract liabilities
At April 1, 2021:
Trade receivables fromcontracts with customers
Contract assets
Contract liabilities
At March 31, 2022:
Trade receivables fromcontracts with customers
Contract assets
Contract liabilities

At April 1, 2022:
Trade receivables fromcontracts with customers
Contract assets
Contract liabilities
At March 31, 2023:
Trade receivables fromcontracts with customers
Contract assets
Contract liabilities

Millions of yen¥

15,286434
297¥

16,9101,216
627
Thousands of
U.S. dollars

Millions of yen¥

16,910
1,216
627

$

138,607
9,967
5,139

¥

17,471
1,247
639

$

131,361
9,376
4,805

In the Japan Transcity Group, there were no significant transactions with an initial contract periodof more than one year.

- 37 -

14. Segment Information
1. General information about reportable segments
The reportable segments are constituent business units of the Japan Transcity Group for which separate financial information is obtained and examined regularly by the Board of Directors to evaluate business performance.
The Japan Transcity Group provides mainly integrated logistics services that consist of warehousing, stevedoring, domestic transportation and international multimodal transportation. Therefore, the Japan Transcity Group’sreported segment is “Integrated Logistics Services.”
2. Basis of measurement about reported segment profit, segment assets and other material items
The accounting for the segment is presented on an operating income basis. Intersegment operating revenues or transfer amounts are based on market price.
3. Information about reportable segment profit, segment assets and other material items
Information by segment as at or for the years ended March 31, 2023 and 2022 is as follows.
Integrated
Logistics Services
For the year ended March 31, 2023:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income
Identifiable assets
Depreciation
Investments in unconsolidated subsidiaries andaffiliates accounted for using the equity
methodCapital expenditures
For the year ended March 31, 2022:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income
Identifiable assets
Depreciation
Investments in unconsolidated subsidiaries andaffiliates accounted for using the equity
methodImpairment loss on fixed assets
Capital expenditures

¥
¥
¥

Other
Services

132,134
132,134
6,698¥

133,439
5,227

¥

¥

7,839
5,073

¥
¥
¥

1,930
1,383
3,313
591

¥

8,660
82

¥

¥

416

115,525
46
115,571
6,330¥

127,124
4,470

¥

7,381
53
2,948

Total
Millions of yen¥

Consolidated

134,064
1,383
135,447
7,289¥(1,383)(1,383)(39)¥

142,099
5,309¥(4,934)
-

¥

¥

7,839
5,489

1,225
1,443
2,668
366

¥

6,845
47

¥

335

Adjustment¥-

116,750
1,489
118,239
6,696¥

133,969
4,517

¥

7,381
53
3,283

- 38 -¥¥

137,165
5,309
7,839
5,489

(1,489)(1,489)(27)¥(4,083)-¥-134,064
134,064
7,250¥

116,750
116,750
6,669
129,886
4,517
7,381
53
3,283

Integrated
Logistics Services
For the year ended March 31, 2023:
Operating revenue:
External customers
Intersegment sales
Total operating revenue
Operating income$

993,489
993,489
50,361$

1,003,301
39,301$$

Identifiable assets
Depreciation
Investments in unconsolidated subsidiaries andaffiliates accounted for using the equity
methodCapital expenditures

$

Other
Services
Total
Thousands of U.S. dollars$

14,511
10,39824,9094,443$

65,113617$

58,94038,143Operating revenue to external customers:
For the year ended March 31, 2023
For the year ended March 31, 2022
Operating revenue to external customers:
For the year ended March 31, 2023¥$

1,068,414
39,918$$22,68822,794¥

1,008,000
1,008,000
54,511(37,098) $-1,031,316
39,91858,94041,271

18,245 ¥18,96245,781
29,237

Consolidated- $(10,398)(10,398)(293) $

International
Domestic
multimodaltransportation transportation
Millions of yen

Stevedoring

43,670 ¥42,2291,008,000
10,3981,018,398
54,804

3,128(Related information)
1. Information about products and services of “Integrated Logistic Services”
Warehousing$

Adjustment-

58,94041,271Others

Total

¥

1,750
2,303

¥

132,134
115,525$

13,158$993,489

Thousands of U.S. dollars$

328,346 $

170,587$

137,180 $344,218

2. Information about geographic areas(1) Operating revenue
For the year ended March 31, 2023 and 2022, operating revenue by geographic area was as follows.
Japan
For the year ended March 31, 2023:
Operating revenue
For the year ended March 31, 2022:
Operating revenue

For the year ended March 31, 2023:
Operating revenue

America
Millions of yen

Other

Total

¥

102,308 ¥22,061 ¥9,695 ¥

134,064¥

97,912 ¥11,985 ¥6,853 ¥

116,750

72,895 $1,008,000

Thousands of U.S. dollars$

769,233 $

165,872 $(2) Property and equipment
Both at March 31, 2023 and 2022, the Company omitted the disclosure of property and equipment because property and equipment in Japan accounted for more than 90% of the amounts of property and equipment reported
in the consolidated balance sheets.
3. Information about major customers
Both at March 31, 2023 and 2022, the Company omitted the disclosure of information about major customers because no customer had contributed 10% or more to operating revenue in the consolidated statements ofincome.

- 39 -

15. Subsequent Events
Based on a resolution of Board of Directors held on February 28, 2023, the Company issued corporate bonds
with the following terms and conditions.
Overview(a) Name of bonds
The 6th unsecured straight bonds (with inter-bond pari passu clause) (Green Bonds)(b) Total amount of issue
JPY 8,000 million(c) Coupon rate
0.505% per annum(d) Closing dateJune 15, 2023(e) Maturity dateJune 15, 2028(f) Use of proceeds
Acquisition of Mie Asahi Logistics Center that meets green bond eligibility requirements- 40 -

16. Condensed Financial Statements of Japan Transcity Corporation (Parent)
Presented below are the condensed Nonconsolidated Balance Sheets, Nonconsolidated Statements ofincome and Changes in Net Assets of Japan Transcity Corporation, the parent company.
Nonconsolidated Balance Sheets (Unaudited)Japan Transcity Corporation (Parent)

Thousands of
U.S. dollars
2023

Millions of yen
2023
2022
Current assets:
Cash and cash equivalents
Short-term investments
Trade receivables, net of allowance for
doubtful accounts
Inventories
Other current assets
Total current assets
Property and equipment, at costLess accumulated depreciation
Net property and equipment
Investments and other assets:
Investment securities
Investments in and long-term loans to
subsidiaries and affiliates
Prepaid pension cost
Other assets
Allowance for doubtful accounts
Total investments and other assets
Total assets¥¥- 41 -

13,343¥

10,20271

6100,323534

15,18592
2,907
31,598105,281(49,177)
56,104

15,34982
3,228
28,867
103,848(47,357)
56,491

114,173693
21,856
237,579
791,586(369,752)
421,834

8,706

8,115

65,459

4,560
3,283
1,944

4,532
3,132
1,859

(6)
18,487106,189(6)
17,632102,990

34,286
24,684
14,616(45)
139,000
798,413¥$$

Thousands of
U.S. dollars

Millions of yen
2023
Current liabilities:
Short-term borrowings
Current maturities of long-term debt
Trade payables
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
Long-term liabilities:
Long-term debt
Employee retirement benefit liability
Deferred tax liabilities for revaluation
Deferred tax liabilities
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities¥¥

12,312
7,619
7,598
903
791
2,228

2023

29,086

31,451

100,51136,83550,1506,993
9,203
15,000218,692

16,155
1,108
3,695
1,348
778
203
23,28752,373

15,254
1,072
3,695
1,323
53
215
21,61253,063

121,466
8,331
27,782
10,1355,850
1,526
175,090393,782

8,428
6,794
38,150(1,155)52,217

8,428
6,794
34,643(1,119)48,74663,36851,083286,842(8,684)
392,609

Net unrealized gains on available-for-salesecurities

2,963

2,545

22,278Land revaluation decrement(1,364)(1,364)(10,256)

1,599
53,816106,189

1,181
49,927
102,990

12,022404,631
798,413

Net assets:
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders' equity

13,368
4,899
6,670
930
1,224
1,995

2022

$

Accumulated gains (losses) from valuation
adjustment:

Total accumulated gains from valuation
adjustment
Total net assets
Total liabilities and net assets¥- 42 -¥$

Nonconsolidated Statements of Income (Unaudited)Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2023 and 2022

Operating revenue¥

Operating costs and expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense(Loss) gain on sale or disposal of property andequipment, net
Loss on liquidation of subsidiaries andassociates
Miscellaneous, net
Income before income taxes
Income taxes:
Current
Deferred
Total income taxes
Net income¥

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023

107,602$¥

98,051

102,9634,639

93,335
4,716

774,158
34,879

1,016
(105)

982
(99)

7,639
(789)

(51)

(255)

(383)

383
1,243
5,882

378
1,006
5,722

2,880
9,347
44,226

1,823
(155)
1,668

1,268
390
1,658

13,707(1,165)
12,542

4,214

¥

4,064

Yen

Per share:
Net income
Cash dividends¥- 43 -

809,037

65.53
11.50

¥

$

31,684

U.S. dollars
63.27
10.50

$

0.49
0.09

Nonconsolidated Statements of Changes in Net Assets (Unaudited)Japan Transcity Corporation (Parent)
For the Years Ended March 31, 2023 and 2022
Shareholders’ equity

Common stock
Balance at April 1, 2021
Cumulative effects of changes in accounting policies
Restated balance
Net income for the year
Cash dividends
Disposal of treasury stock and fractional shares, net ofpurchase
Reversal of land revaluation decrement
Net changes other than shareholders’ equity
Balance at March 31, 2022
Net income for the year
Cash dividends
Disposal of treasury stock and fractional shares, net ofpurchase
Reversal of land revaluation decrement
Net changes other than changes in shareholders’ equity
Balance at March 31, 2023

¥

¥

¥

8,428
8,428
8,428
8,428

¥

¥

¥

6,762
6,762
32
6,794
6,794

Total
shareholders’
Treasury stock
equityMillions of yen

Retainedearnings

Capital surplus¥¥¥

31,208(13)
31,195
4,064
(642)
26
34,643
4,214(707)
38,150

Accumulated gains (losses) from valuation adjustment
Total
Net unrealized
accumulatedLand
gains ongains fromrevaluation
available-forvaluation
sale securities
decrement
adjustment

¥

¥

¥

(1,186)(1,186)67(1,119)(36)(1,155)¥¥¥45,212(13)
45,199
4,064
(642)
99
26
48,746
4,214
(707)
(36)
52,217

¥

¥

¥

2,327
2,327
218
2,545
418
2,963

¥

¥

¥

(1,339)(1,339)(25)(1,364)(1,364)

¥

¥

¥

988
988
193
1,181
418
1,599

Total
net assets¥¥¥

46,200(13)
46,187
4,064
(642)
99
26
193
49,927
4,214
(707)
(36)
418
53,816

Thousands of U.S. dollars
Balance at March 31, 2022
Net income for the year
Cash dividends
Disposal of treasury stock and fractional shares, net ofpurchase
Reversal of land revaluation decrement
Net changes other than changes in shareholders’ equity
Balance at March 31, 2023$$

63,36863,368$$51,08351,083$$

260,474
31,684(5,316)
286,842$$- 44 -(8,413)(271)(8,684)$$

366,512
31,684(5,316)(271)
392,609$$

19,135
3,143
22,278$$(10,256)(10,256)

$

$

8,879
3,143
12,022$$

375,391
31,684(5,316)(271)
3,143
404,631