Annual Report2023

Profile
Since Okumura was established in 1907,
our mission has been to contribute tosociety through our business under our
corporate mottos, “steadfast
management” and “sincere operation.”
We will continue to accumulate a
wealth of technical expertise and, as a
general contractor company with aharmonious mix of civil engineering andarchitectural construction, make steadystrides forward in our aim to realize
comfortable, safe and secure lives forpeople, and a sustainable society as well.

Contents
1
2
4
6
10
12
13
14
15
16
40
43
44
45

Financial Highlights
To Our Shareholders
Review of Operations
TopicsConsolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Breakdown of Orders (Nonconsolidated)
Network
Board of Directors / Investor Information

Financial Highlights
Okumura Corporation Annual Report 2023

For the years ended March 31

2021

2022

Consolidated:

2023

2023
Thousands of
U.S. Dollars

Millions of Yen¥220,712¥242,459¥249,443$1,867,927

Operating income

12,88012,647

11,84788,719Net income attributable to owners of the parent

10,285

12,542

11,262

84,332

Total assets

329,005

332,349

343,728

2,573,969

Total equity

167,964

167,425

173,216

1,297,109

Net sales

Per Share:

Yen

U.S. Dollars

Basic net income¥271.90¥334.11¥306.08$2.29

Cash dividends applicable to the year

140.00172.00223.001.67*“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc. have been applied from the beginning of the fiscal period of March 2022. Accordingly, the summaries of business results for the fiscal period of March 2022 and thereafter represent performance results after
applying the said accounting standards, etc.
Note:	The U.S. dollar amounts included herein are presented solely for convenience of the reader. Such dollar amounts have been translated from yenat the approximate exchange rate in Tokyo on March 31, 2023, of ¥133.54=$1.

Net Sales

Net income attributable to owners of the parent(Millions of Yen)

300,000

Total Equity(Millions of Yen)

15,000(Millions of Yen)
200,000

240,000

12,000160,000

180,000

9,000

120,000

120,000

6,000

80,00060,0003,000

40,000

0

0

0

2021

2022

2023

2021

2022

2023

2021

2022

2023

Disclaimer Regarding Forecasts and Projections
This Annual Report includes forecasts, projections and other predictive statements that represent Okumura’s assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving clients and other factors, and involve risks, variables and uncertainties.
The Okumura Group’s actual performance results may differ from those projected in this Annual Report. Consequently, no guarantee is presented or implied as tothe accuracy of specific forecasts, projections or predictive statements contained herein.

1

To Our Shareholders

We would like to thank our shareholders for their continuing support and encouragement and wish eachone of them the greatest success in their endeavors.

2

A general overview of our business performance for the fiscal period of March 2023 (April 1,
2022 to March 31, 2023) is provided below.

Results for the Year Ended March 31, 2023
During the period under review, socioeconomic activity progressively returned to normal, due mainly tothe relaxation of movement restrictions implemented in response to the novel coronavirus (COVID-19),
but the pace of recovery in the Japanese economy remained sluggish due to factors such as the soaring
price of goods resulting from the deteriorating global situation. In this climate, construction investment
was robust against the backdrop of elevated demand for capital investment in the private sector.
However, the construction industry continued to face an unpredictable business environment with theimpact of soaring materials prices, etc.
In these circumstances, the Company’s consolidated net sales increased 2.9% year on year to¥249,443 million, which led to an increase of 0.5% year on year in consolidated gross profit to ¥32,001
million. Consolidated operating income decreased 6.3% year on year to ¥11,847 million, primarily due toincreases in selling, general and administrative expenses, and net income attributable to owners of theparent decreased 10.2% year on year to ¥11,262 million.

Dividend for the Year Ended March 31, 2023
The Company decided to pay a dividend of ¥223.00 per share (interim dividend of ¥66.00, year-end
dividend of ¥157.00) for the period ended March 31, 2023 based on its policy regarding profit sharing.
Under the Medium Term Business Plan (FY2022-FY2024), we have revised its shareholder return
policy as follows, to achieve the further enhancement of profit sharing.

Shareholder Return Policy
Basic policy
To distribute profits in line with business performance and flexibly implement thepurchase of treasury stock, premised on the continuation of stable dividends.

Policy from FY2022 to FY2024(

Consolidated payout ratio of 70% or more
Dividend on equity ratio (DOE) of 2.0% or more, regardless of business performance.
Note: Dividend on equity ratio (DOE) = Total annual dividends (interim + year-end) ÷ equity)

Okumura Corporation Annual Report 2023

3

Medium Term Business Plan
Despite fears of the impact of a further rise in the price of goods and a downturn in economy overseas,
the outlook for the Japanese economy is expected to follow a recovery trajectory underpinned mainly
by domestic demand due to progressively more vigorous socioeconomic activity. In the constructionindustry, although construction investment is forecast to remain strong, still the business environment
does not warrant excessive optimism due to factors such as the uncertainty surrounding movements inmaterials prices, which remain at an elevated level.
Under these circumstances, the Okumura Group will aim to continue to grow into the future by
responding to the trust placed in us by society through reliable technologies and honest business
operations. This includes developing businesses and services that anticipate changing social needs andundertaking initiatives for ESG/SDGs in an integrated manner. We will push ahead with initiatives
founded on the basic policies for business strategies upheld in our Medium Term Business Plan (FY2022FY2024), the second step toward the realization of our “Vision toward 2030.”
Specifically, we will pursue the “enhancement of corporate value” by improving our productivity
and technological advantage through companywide structural reforms, including a radical review ofbusiness processes, and the promotion of digital transformation (DX) and strategic technologicaldevelopments, while also working to reinforce our ESG/SDG initiatives. Regarding the “expansion ofbusiness domains,” we are further expanding our new businesses and real estate business, including thelaunch of commercial operations at our biomass power generation plants in Hokkaido and Fukushima
Prefecture as renewable energy businesses that contribute to achieving a decarbonized society. We arealso building the foundations for our overseas business. We will continue with our efforts to “leverage
our human resources” by upgrading our internal programs to help employees achieve a good work-lifebalance and undertaking other measures to promote work style reform, as well as giving our diverse
people the opportunity to flourish and promoting initiatives to strengthen staff education.
The Company looks forward to the continued support and guidance of our shareholders.
June 2023

Takanori Okumura
President and Representative Director

Review of Operations
CIVIL ENGINEERING
Major Projects Completed

4Construction of Futtsu-Chiba High-voltage Main Line

Hokuriku Shinkansen Bullet Train’s Shin-Hokuriku Tunnel (Tajiri area)

Work period: July 2018 to May 2022
Kisarazu shield tunnel: 2,212 m, Obitsugawa shield tunnel: 2,398 m, Anesaki
shield tunnel: 1,390 m, Kaneda shield tunnel: 2,555 m

Work period: March 2016 to June 2022
Tunnel length: 2,170 m, NATM, inclined shaft: 712 m

Power Generation Equipment Renewal Work (Penstock andHeadrace) of the Misumigawa Power Plant

Improvement Work of Toin Industrial Park’s Periphery

Work period: August 2018 to March 2023
Penstock replacement: 497 m (diameter 1,600 mm), headrace
reinforcement: 1,500 m (horseshoe shape, radius 1.0 m), cableway
equipment (fixed cable cranes): 1 unit rated at 4.0 t (540 m) and 1 unit rated
at 2.6 t (220 m)

Work period: September 2020 to November 2022
Work area: 14.7 ha, road earthwork: 50,800 m3 of excavation, 162,200 m3 ofroad embankment, reservoir construction: 1 location, sheet pile revetment
work: 998 sheets, drain facility construction: 1 set, pre-cast slab concrete
work: 585 m, retaining wall work: 329 m, sewage pipework: 649 m, sewage
manhole: 19 locations, drain structure, road drainage: 2,014 m, irrigation
ditch: 545 m, paving work: 8,821 m2, construction of pump facility: 1 set,
service water pipe laying work: 1,000 m, structure removal work: 1 set

Orders Received
Baoshan Water supply and
Sewerage Tunnel

Akita Expressway’s Sannai
TunnelWork period: August 2022 to May
2024
Shield tunneling : length 2,813 m,
internal diameter: 3.9 m, 2 TBMs, soil
improvement: 1 set

Work period: August 2022 to June
2027
Yuda IC to Sannai Tunnel, NATM tunnel
length: 2,438.0 m, two lanes, cut andfill volume: 80,000 m3, tunnel
excavation volume: 230,000 m3

Construction of Main Part ofUnderground Cut-off Channel
for Uzuma River a Class A River
Work period: March 2023 to March 2026
Construction length: 2,344.3 m,
EPB shield (segment external diameter:
6.0 m), 2,336.9 m launching shaft
construction (press-in open caisson
method): 1 set

Anti-seismic Reinforcement Work ofUpper Section (2021-2-Kan Bridge)
Work period: July 2022 to February 2027
Plant production: approx. 400 t, antiseismic connectors (rubber-clad chains):
387 sets, anti-seismic connectors (PCcable connectors): 15 sets, bridge pierand structure widening: 3 sets, bearing
reinforcement devices (lateral force
dispersion): 432 sets, bearing
replacement: 2 sets, structural repairs:
196 locations, on-sight painting: approx.
500 m2, temporary construction: 1 set,common temporary construction cost: 1
set, detailed design cost: 1 set

Okumura Corporation Annual Report 2023

BUILDINGS
Major Projects Completed

5

Yawata City Hall

Building 3 of Setsunan University’s Neyagawa Campus

Work period: February 2019 to March 2023
Structure: RC and Steel (partially SRC)
Total floor space: 22,500 m2

Work period: August 2021 to January 2023
Structure: Steel
Total floor space: 12,313.00 m2

Meiji Co., Ltd.’s Eniwa Plant

Akashi Cocoro no Hospital’s West Wing

Work period: October 2020 to June 2022
Structure: Steel
Total floor space: 18,779.9 m2

Work period: June 2019 to February 2023
Structure: RC
Total floor space: 6,252 m2 (including demolition of RC building with two stories
high totaling 3,000 m2)

Orders Received
New NITORI Satte DC

GLP Chibakita ProjectWork period: August 2022 to March
2024
Structure: RC and steel
Total floor space: 175,254.07 m2

Work period: February 2023 to
February 2024
Structure: Steel
Total floor space: 22,651.47 m2

New Main Building of the Nanto
BankWork period: February 2023 to
October 2024
Structure: Steel
Total floor space: 14,267.76 m2

RA Nara Hotel ProjectWork period: January 2023 to May
2024
Structure: Steel
Total floor space: 13,498 m2

Topics
Sustainability-related Initiatives

6

Under the Okumura Group’s basic philosophy of “creating andsustaining an environment that is friendly to both people and theplanet,” we strive to prevent environmental pollution, reduce
environmental burden, and protect the environment. We are working
toward the “realization of a sustainable society” in addressing
sustainability issues, including climate change, based on a recognitionof these as key management issues.
We declared our endorsement of the Task Force on Climate-Related
Financial Disclosures (TCFD) in April 2022. We will aim to realize asustainable society as we push ahead with the disclosure of climatechange-related information based on the four frameworks in the TCFD
recommendations: (1) Governance, (2) Strategy, (3) Risk Management,and (4) Metrics and Targets.

Note: The Task Force on Climate-Related Financial Disclosures (TCFD) wasestablished by the Financial Stability Board (FSB) to consider how to engage inthe disclosure of climate-related information.

(1) Governance

We have established the ESG/SDGs Promotion Committee under thesupervision of the Board of Directors to deliberate on climate-related
policies and the evaluation and management of risks andopportunities, as well as other issues related to ESG/SDGs for thepromotion of strategic initiatives
The committee is chaired by the President (top management) andcomposed of the heads of each Head Office section and the presidentsof the East Japan and West Japan Branch Offices. The results of its
deliberations are submitted or reported to the Board of Directors asnecessary, and a framework is in place for appropriate monitoring by
the Board of Directors.
Board of Directors
Supervise
Management Committee
Submit/report(at least once per year)

ESG/SDGs Promotion Committee (held at least twice per year)
President and Representative Director
General Manager of Marketing &Sales Headquarters

General Manager of Civil
Engineering Headquarters

General Manager of Building
Headquarters

General Manager of
Administration Headquarters

General Manager of Safety,
Quality & Environment

General Manager of Investment
Development Headquarters

General Manager of ICTManagement Center

General Manager of Technology
Headquarters

Operational Reform Promotion Project Leader
General Manager of East Japan
Branch Office

General Manager of West Japan
Branch Office

ReportDirectHeadquarters and other sections
ReportDirectEast Japan and West Japan Branch Offices
ReportDirectBranches(2) Strategy

We analyze the impact that risks and opportunities will have on theorganization, including those related to climate associated with an
examination (scenario analysis) based on the “2°C or lower scenario”
and the “4°C scenario.” *Please refer to Table 1.
• 2°C or lower scenario: A scenario that assumes that the rise inaverage global temperatures will be kept well within 2°C above
pre-industrial levels and continuing efforts will be made to keep
the rise in temperatures within 1.5°C.
• 4°C scenario: A scenario that assumes that the rise in average global
temperatures will be approximately 4°C above pre-industrial levels.
Specifically, we analyze the risks and opportunities associated with
ESG/SDGs, including climate-related risks and opportunities, and theimpact of these risks and opportunities materialize. We assess thesignificance of each scenario in terms of the two axes of probability
and impact, then pinpoint the ESG/SDGs-related issues for the
Okumura Group. In addition to identifying the need to “contribute toresilient infrastructure development” and “pursue environmentallyfriendly businesses” as climate-related material issues (materiality), we
have identified the need to “promote workstyle reforms,” whichconstitutes the foundation of our business activities, as an ESG/SDGsrelated material issue (materiality). By reflecting measures to solvethese issues in each division’s plans for business promotion, we
undertake initiatives for business activities and ESG/SDGs.

(3) Risk Management

The ESG/SDGs Promotion Committee analyzes, identifies, evaluatesand manages risks associated with ESG/SDGs, and the results arereflected in measures taken by each division. *Please refer to Table 1.

(4) Metrics and Targets

At the Okumura Group, we set the following targets for the reductionof greenhouse gas (GHG) emissions. They are used as metrics andtargets to evaluate and manage climate-related risks andopportunities. We obtained SBT certification for these targets inJanuary 2023.
Note: SBT (Science Based
Targets): These are greenhousegas emission reduction targets
set by companies to meet thegoals of the Paris Agreement(to keep the rise in average
global temperatures wellwithin 2°C above pre-industrial
levels and continue efforts tokeep the rise in temperatures
within 1.5°C) with the target
years 5-15 years from now.

Metrics*1

GHG Emission Reduction Targets for
FY2030 (Total Emissions)*2

Scope 1+2

25% (from FY2020)

Scope 313% (from FY2020)*1 Scope 1: Direct greenhouse gas emissions from sources that are owned orcontrolled by the company
Scope 2: Indirect greenhouse gas emissions from the use of electricity, heatand vapor supplied by other companies
Scope 3: Other indirect greenhouse gas emissions that are a consequence of
the activities of the company, but occur from sources not owned orcontrolled by the company*2 (Reference)
Total emissions in FY2020
Scope 1+2: 41,466.13t-CO2 Scope 3: 1,180,258.95t-CO2
Total emissions in FY2022
Scope 1+2: 54,122.45t-CO2 Scope 3: 1,243,914.93t-CO2

Okumura Corporation Annual Report 2023

Table 1: ESG/SDGs-related material issues (materiality)
ESG

ESG/SDGs-related risks
and opportunities

SDGs

Impact if the risk oropportunity
materializes*1

Type of risk oropportunity

TimingThe OkumuraGroup’s
ESG/SDGs-related
challenges*3

5Physical risk
(acute) / transition
risk (regulatory,
market)Short,
mediumand long
term

Contribution toresilientinfrastructuredevelopment ★

5

Physical risk
(acute, chronic) /transition risk
(regulatory,
reputation)

Short,
mediumand long
term

Promotion ofenvironmentallyfriendly businesses★

Short,
Transition risk
and(regulatory, market) medium
long term

Promotion of
decarbonization★

Significance Significanceunder the under the
2°C or lower
4°C
scenario*2 scenario*2

Deterioration of thefoundation for livelihoodand industry due to thefailure of infrastructure,
as well as damages toassets heldE

Destruction of the naturalenvironment due to risingtemperatures associatedwith climate change anddevelopment without
regard for the environment

Destruction of ecosystems
and the pollution of water
sources; decline in orders
received due to thedeterioration of corporate
valuation

4

E

Skyrocketing materials andoutsourcing costs due tothe introduction of carbon
taxes (carbon pricing)associated with climatechangeDecline in profitability due
to the increase inconstruction costs

4

3

E

Waste of the natural
resources contained inconstruction materials

Decline in sustainability
due to the depletion ofnatural resources

3

3

Transition risk
(market)Medium andlong term

Effective use ofresources throughrecycling

S

Dangerous working
environments

Decline in worker
motivation

3

3

Physical risk (acute) /transition risk
(market)Short andmediumterm

Safe and secure
working environments

S

Increase in vacant houses
and shops, as well asderelict buildings

Deterioration in the public security
and hygienic environment, disasters
due to building collapse, and adecrease in real estate rental income

33

Physical risk
Medium and(chronic) / transition long termrisk (market)

Effective use of realestate stock

S

Lack of diversity in working
environments

Outflow of female employees
and other diverse talent, andthe loss of employment
opportunities

33

Physical risk (acute) /transition risk
(market)Promotion ofdiversity-focusedmanagement

E
and
S

Deterioration in working
environments due to risingtemperatures associatedwith climate change

Increase in the risk ofheatstroke and rise inconstruction costs due tolower labor productivity

34

Physical risk
Short,(chronic) / transition medium andrisk (market)
long term

Promotion of
mechanization, laborsaving and greater
efficiency★

E

Increase in demand formore energy-savingbuildings as climatechange countermeasures

Progressive shift toenergy-saving buildings

4

3

Products andservices, market

Short,
medium andlong term

Energy-saving designof buildings★

S

Advance of ICT and its
application to construction
techniques

Better construction
techniques through ICT

3

3

Products andservices, market

Short,
medium andlong term

Enhancement oftechnical capabilities
and productivity
through ICT

S
and
G

Rise in demand forhigh-quality infrastructure

Construction of long-lived
infrastructure3

3Products andservices, resilience

Medium andlong term

Assurance andenhancement ofconstruction quality

Rise in demand for clean
energy as a climate change
countermeasure

Spread of power
generation methods with
low CO2 emissions

4

3

Products andservices, energy
sources, market

Short,
medium andlong term

Promotion ofrenewable energy
businesses★

Promotion of collaboration
with local communities
and companies

Demonstration of synergies
through partnerships withlocal communities andcompanies

3

3

Products andservices, market

Short,
Collaboration withmedium and local communities andlong termcompanies

S

Reduction in overtime
work through more
efficient operations

Increase in the attractionof the constructionindustry and thepromotion of employee
health4

4Products andservices

Short andmediumterm

Promotion ofworkstyle reforms

S

Progressively more diverse
workstyles and greater
employment mobility

Realization of diverse
workstyles

3

3

Products andservices

Short andmediumterm

Promotion of decent
work

S
and
G

Opportunities

E

Risks

E

Increasingly frequent anddevastating large-scaledisasters due to abnormal
weather associated withclimate change as well as
earthquakes and typhoons

4

Short andmediumterm*1 Negative impact is described for risks and positive impact is described for opportunities.
*2 Significance is evaluated using the two axes of probability and impact. Each is given a score from 1 to 5, with 5 indicating the highest degree of significance(5: Extremely high; 4: High; 3: Medium; 2: Low; 1: Extremely low).
*3 The ESG/SDGs-related material issues (materiality) for the Okumura Group are indicated in bold and underlined type. The ★ and ★ marks indicate climate change-related issues.

7Topics
The ISHIKARI New Port Biomass Power Station in Hokkaido
Commences Commercial Operation

8

ISHIKARI BIO ENERGY GODO KAISHA, jointly invested by Okumura
Corporation, Kyuden Mirai Energy Company, Inc. and New Circle
Energy Co., Ltd., has completed the construction of the ISHIKARI New
Port Biomass Power Station in Ishikari city, Hokkaido, and commercial
operation began on March 2, 2023.
The power station, with a capacity of 51,500kW, is fueled byconfirmed-sustainable wood pellets and PKS (palm kernel shells).
Okumura supports the running, management and administration of
the power station and Kyuden Mirai Energy Company, Inc. provides alltechnological support, to enable long-term stable operation.
It is located in the Ishikari Bay New Port Industrial Park, which the
Ishikari municipal government aims to turn into an RE zone (insidewhich 100% of the energy used for business activities is derived fromrenewable energy sources). We will strive to contribute to regional
decarbonization with the understanding and cooperation of the local
community, local government and other relevant bodies.

Exterior of the ISHIKARI New Port Biomass Power Station

Okumura will continue to actively promote businesses utilizing
renewable energy, aiming to achieve a sustainable society.

The Hietakun® Mass Concrete Pipe Cooling Control System is
Registered on NETIS
Okumura, in collaboration with ACTIO CORPORATION, has developed asystem to automatically regulate the volume and flow direction ofcooling water to boost the effectiveness of pipe cooling (a method used
to reduce the temperature by circulating water through pipes placed
within the concrete) used to control thermal cracks in mass concrete(concrete with a large structural cross-section). We have registeredtrademarks for the new system under the name Hietakun®, andregistered it on the New Technology Information System (NETIS)
operated by the Ministry of Land, Infrastructure, Transport and Tourism.
This system automatically adjusts the volume of cooling water flow
to reduce the temperature of the concrete towards the target

management level asymptotically. Moreover, by automaticallyreversing the flow of cooling water to reduce the temperature
difference between concrete near the entrance and exit of the cooling
pipe, it prevents thermal cracks in the concrete arising from cement
hydration heat. The cooling status can be checked remotely throughan online monitoring system, enabling a reduction in the workrequired to manage the temperature of the concrete.
We will spread and expand this system to enhance the quality ofconcrete structures where thermal cracking is anticipated to occur andcontribute to labor-saving.

Overview of the pipe cooling control system
Concrete
Flow direction

Normal operation

Flow direction

Flow volume
control valve set

Flow direction
control valve set

Water temperature
control unit

Flow direction
control valve set

Water temperature
control unit

Concrete
Flow direction

Reverse operation

Flow direction

Flow volume
control valve set

Okumura Corporation Annual Report 2023

Support for the Food Loss Reduction Project and the Shogaisha Jiritsu
Suishin Kikou Association
Okumura supports the Corporate Food Loss Reduction Projectplanned and operated jointly by Nikkeisha, Inc. and Ame Kaze Taiyo.
Under this project, companies distribute nonstandard food products
and excess stock of food products to their employees for effective
consumption, thus contributing to society and promoting a deeper
understanding of the SDGs within each company. In a survey
conducted after the project was implemented, most of Okumura’s
employees responded that their interest in the issue of food loss andthe SDGs had increased, and we believe that employees have a greaterawareness of the SDGs as a result.

Osaka Head Office (Osaka)

We have also signed an official partnership agreement with the
Shogaisha Jiritsu Suishin Kikou Association to support people withdisabilities to live independent lives through the organization’s
Paralym Art program. Artworks created by artists with disabilities who
are registered with Paralym Art are displayed at 25 locations, including
Okumura’s Head Office and other main offices, as well as on temporary
fencing at its working construction sites.
We will continue to contribute to achieving the SDGs throughinitiatives such as these, in addition to our business activities.

9

Hospital construction site (Fukuoka)

Operation of the Okumura Commemorative Museum
In 2007, we built the Okumura Commemorative Museum in Nara, aregion deeply connected with Okumura Corporation, to show ourgratitude for the opportunity to celebrate our centennial anniversary.
The museum is designed in harmony with the atmosphere of thisancient capital. It features relaxation spaces where visitors can rest atease and display spaces showing Okumura’s history and technologies.
Admission is free of charge. The museum incorporates seismic
isolation technology, one of Okumura’s areas of special expertise, anda space where visitors can learn about how actual Seismic Isolation
System is installed. It also features an earthquake and seismic isolation
experience simulator that enables visitors to experience the feeling ofan earthquake and the effect of seismic isolation, as well ascomparative seismic isolation models, by which visitors can observe
the difference depending on the presence or absence of Seismic
Isolation System, and a model shield machine.
The museum also provides a space for performances by amateur
musicians, and concerts are held for the enjoyment of visitors.
Please take time to visit when you are next in Nara.

A concertConsolidated Balance Sheet
Okumura Corporation and Consolidated Subsidiaries
March 31, 2023

ASSETS

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2023

2022

2023

¥ 48,793¥ 31,622$  365,381

1,451

1,534

10,869Current assets:
Cash and cash equivalents (Note 14)
Time deposits (Notes 14 and 16)
Receivables:

10

3,007

1,723

22,514

126,717

133,967

948,909

Unconsolidated subsidiaries and associated companies (Note 14)

2,743

6,618

20,542

Other

5,936

10,03044,454

Allowance for doubtful receivables (Note 14)

(142)

(152)

(1,067)

Trade notes (Note 14)
Trade accounts (Note 14)

Inventories (Note 5)

6,912

5,466

51,760Prepaid expenses and other

3,438

1,207

25,744

Total current assets

198,855

192,015

1,489,106

34,66834,667

259,606

Buildings and structures (Note 16)

22,84015,273

171,034

Machinery and equipment

19,169807

143,544

Furniture and fixtures

389

387

2,915

Lease assets (Note 13)

6

2

47

Property, plant and equipment (Notes 6 and 7):
Land (Note 16)

Construction in progress
Total property, plant and equipment

50

22,240374

77,12273,376

577,520

54,69856,415

409,603

307

318

2,296

Investments and other assets:
Investment securities (Notes 4, 14 and 16)
Investments in and advances to unconsolidated subsidiaries and associated companies (Notes 14 and 16)
Long-term loans receivable (Note 14)

12

14

90

Asset for retirement benefits (Note 8)

4,435

5,077

33,212

3

3

24

Goodwill

379

408

2,835

Other assets

9,861

6,679

73,840

Deferred tax assets (Note 10)

Allowance for doubtful receivables (Note 14)
Total investments and other assets
Total
See notes to consolidated financial statements.

(1,944)(1,956)(14,557)

67,751

66,958507,343¥343,728¥332,349$2,573,969

Okumura Corporation Annual Report 2023

LIABILITIES AND EQUITY

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2023

2022

2023

¥ 10,710¥  9,481$   80,204

Current liabilities:
Short-term bank loans including current portion of long-term debt (Notes 7, 13 and 14)
Payables:Trade notes (Note 14)

3,003

2,460

22,490Trade accounts (Note 14)

47,26548,869353,938

Other

3,313

575

24,809Advances received on construction projects in progress

12,594

11,537

94,311

Income taxes payable

3,051

1,656

22,844

505

540

3,779

Allowance for losses on construction contracts

1,566

973

11,728Deposits received (Note 16)

20,062

25,610150,230

Suspense receipt of consumption taxes

17,93918,051

134,333

Other

9,040

7,059

67,696129,048

126,811966,362

3,115

5,114

23,328

Allowance for warranty work on construction projects

Total current liabilities
Long-term liabilities:
Long-term debt (Notes 7, 13,14 and 15)
Non-recourse loans (Notes 7, 14, 15 and 16)

26,00321,063

194,722

Deferred tax liabilities (Note 10)

11,99911,65989,852

347

277

2,596

Total long-term liabilities

41,464

38,113

310,498

Total liabilities

170,512

164,924

1,276,860

19,83919,839148,562

Other

Commitments and contingent liabilities

Equity (Notes 9, 17 and 18):
Common stock
authorized, 96,000,000 shares; issued, 38,665,226 shares*
Capital surplus

26,24026,240196,498

Retained earnings

103,827

101,711

777,498(5,185)(8,062)(38,831)

Unrealized gain on available-for-sale securities

24,802

24,666

185,723

Deferred gain on hedges

1,830

1,099

13,703

662

1,465

4,959

Total

27,294

27,230204,385

Noncontrolling interests

1,201

467

8,997

Total equity

173,216

167,425

1,297,109

Total¥343,728¥332,349$2,573,969

Treasury stock—at cost
1,860,310 shares in 2023 and 2,892,468 shares in 2022*
Accumulated other comprehensive income:Defined retirement benefit plans*The cancellation of treasury stock (1,000,000 shares) conducted on April 5, 2022 has been reflected in the number of shares.

11

Consolidated Statement of Income
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2023

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2023

2022

2023

¥249,443
217,442
32,001¥242,459
210,62131,838$1,867,927
1,628,288
239,639

Selling, general and administrative expenses (Note 12)
Operating income

20,154
11,847

19,191
12,647150,920
88,719Other income (expenses):
Interest and dividend income
Interest expense
Gain on sale of investment securities
Other—net
Other income —net

1,190
(550)
3,056
(207)
3,489

1,240
(394)
3,201
508
4,555

8,908
(4,122)
22,886(1,549)26,123

Income before income taxes

15,336

17,202

114,842

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

4,693
100
4,793

4,225
964
5,189

35,144748
35,892

10,543(719)¥ 11,262

12,013(529)¥ 12,542

78,950(5,382)$   84,332

Yen

U.S. Dollars(Note 1)

¥ 334.11
172.00$ 2.291.67

Net sales
Cost of sales
Gross profit

12

Net income
Net loss attributable to noncontrolling interests
Net income attributable to owners of the parent

Per share of common stock (Notes 2.o and 18):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

¥ 306.08
223.00Consolidated Statement of Comprehensive Income
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2023

Net income
Other comprehensive income (loss) (Note 17):
Unrealized gain (loss) on available-for-sale securities
Deferred gain on hedges
Defined retirement benefit plans
Total other comprehensive income (loss)
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

Okumura Corporation Annual Report 2023

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2023

2022

2023

¥10,543¥12,013$78,950

136
1,461
(803)
794
¥11,337(6,292)
3,149(287)(3,430)¥ 8,583

1,017
10,943(6,012)
5,948$84,898¥11,32512¥ 7,537
1,046$84,80890

13

Consolidated Statement of Changes in Equity
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2023

Thousands

Millions of Yen
Accumulated othercomprehensive income (loss)

Number ofshares ofcommonstock
outstanding

14

BALANCE, APRIL 1, 2021 (aspreviously reported)
Cumulative effect of accounting change
BALANCE, APRIL 1, 2021 (asrestarted)
Net income attributable to owners of the parent
Cash dividends, ¥168 per share
Purchase of treasury stock
Disposal of treasury stock
Net change in the year
BALANCE, MARCH 31, 2022
Net income attributable to owners of the parent
Cash dividends, ¥173 per share
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock*
Net change in the year
BALANCE, MARCH 31, 2023

37,827

Commonstock

Unrealized
gain onDefinedavailable- Deferred retirement
Capital Retained Treasury
for-sale gain (loss)
benefit Noncontrolling
surplus earnings
stock securities on hedges
interests
plans¥19,839 ¥26,240 ¥ 95,460¥(4,637) ¥30,958¥ (475)¥1,753Total
equity¥(1,174) ¥167,964

—

—

—

64

—

—

—

—

—

64

37,827

19,83926,24095,524(4,637)30,958

(475)

1,753

(1,174)

168,028——(1,054)0—36,773
—
—
(2)
34
—
—
36,805—— 12,542————(6,355)—————(3,425)
—
—
0
—
0
—
—
—
—
—
(6,292)
19,839 26,240 101,711 (8,062) 24,666—— 11,262———— (6,364)
—
—
—
—
—
(5)
—
—
6
—
94
—
—
(6) (2,782)
2,788
—
—
—
—
—
136
¥19,839 ¥26,240 ¥103,827 ¥(5,185) ¥24,802

—
—
—
—
1,574
1,099
—
—
—
—
—
731
¥1,830——12,542——(6,355)——(3,425)
—
—
0
(288)
1,641
(3,365)1,465
467 167,425——
11,262——(6,364)
—
—
(5)
—
—
100
—
—
—
(803)
734
798
¥  662 ¥ 1,201 ¥173,216

Thousands of U.S. Dollars(Note 1)
Accumulated othercomprehensive income (loss)

Commonstock

BALANCE, MARCH 31, 2022
Net income attributable to owners of the parent
Cash dividends, $1.30 per share
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock*
Net change in the year
BALANCE, MARCH 31, 2023

Unrealized
gain onavailableCapital Retained Treasury
for-salesurplus earnings
stock securities$148,562 $196,498 $761,648 $(60,371) $184,706—— 84,332———— (47,655)
—
—
—
—
—
(40)
—
—
45
—
708
—
—
(45) (20,827) 20,872
—
—
—
—
—
1,017
$148,562 $196,498 $777,498 $(38,831) $185,723

See notes to consolidated financial statements.
*The Company cancelled some treasury stock (1 million shares) on April 5, 2022.

DefinedDeferred retirement
gain onbenefit Noncontrollinginterests
hedgesplans$ 8,232
—
—
—
—
—
5,471
$13,703$10,971—————(6,012)$ 4,959

Total
equity$3,500 $1,253,746—
84,332—(47,655)
—
(40)
—
753
—
—
5,497
5,973
$8,997 $1,297,109

Consolidated Statement of Cash Flows
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2023

Okumura Corporation Annual Report 2023

Millions of Yen

Thousands of
U.S. Dollars(Note 1)

2023

2022

2023

¥15,336¥17,202$114,842(3,388)2,302
30(3,024)(6,994)
1,804
30(3,201)(25,369)
17,236
222(22,641)

9,841
(568)
(878)
3,095
1,058
(515)
(5,549)161
2,565
17,901

1,125
2,261
2,215
4,932
(4,176)
(517)
1,048
2,560
1,087
18,28973,697(4,255)(6,578)23,176
7,919(3,857)(41,551)
1,206
19,205134,047

Investing activities:
Net decrease in time deposits
Payments for purchases of securities
Proceeds from sales of securities
Purchases of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Collection of loans receivable
Other—net
Net cash provided by (used in) investing activities

140
(761)
5,592
(4,115)
19
13
(115)
773

39
(136)
5,192
(7,912)1
35
26(2,755)

1,046(5,699)41,878(30,814)
139
98
(860)
5,788

Financing activities:
Decrease in short-term bank loans—net
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from non-recourse loans
Repayments of non-recourse loans
Purchase of treasury stock
Disposal of treasury stock
Dividends paid
Proceeds from share issuance to noncontrolling shareholders
Other—net
Net cash used in financing activities

(833)
2,000
(2,002)
5,947(1,007)(30)
0(6,368)722(1)(1,572)

(31)
—
(2)
4,927
(93)
(3,256)1(6,350)595(1)(4,210)(6,235)
14,977(14,991)
44,536(7,539)(228)
3(47,687)
5,407(11)(11,768)

69
17,171
31,622¥48,793

168
11,492
20,130¥31,622515
128,582
236,799$365,381

Operating activities:
Income before income taxes
Adjustments for:
Income taxes—paidDepreciation and amortization
Amortization of goodwill
Gain on sale of investment securities
Changes in assets and liabilities:
Decrease in trade notes and accounts receivable
Decrease (increase) in accumulated costs of construction projects in progress
Decrease (increase) in other inventories
Increase in trade notes and accounts payable
Increase (decrease) in advances received on construction projects in progress
Increase in asset for retirement benefits
Increase (decrease) in deposits received
Other—net
Total adjustments
Net cash provided by operating activities

Foreign currency translation adjustments on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
See notes to consolidated financial statements.

15

Notes to Consolidated Financial Statements
Okumura Corporation and Consolidated Subsidiaries
Year Ended March 31, 2023

16

1. Basis of Presentation of Consolidated Financial
Statements
The accompanying consolidated financial statements havebeen prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its
related accounting regulations and in accordance withaccounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure requirements of International Financial ReportingStandards.
In preparing these consolidated financial statements,
certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domesticallyin order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications
have been made in the 2022 consolidated financial statements to conform to the classifications used in 2023.
The consolidated financial statements are stated inJapanese yen, the currency of the country in which Okumura
Corporation (the “Company”) is incorporated and operates.
The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience of readers
outside Japan and have been made at the rate of ¥133.54 to$1, the approximate rate of exchange at March 31, 2023.
Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S.
dollars at that or any other rate.
2. Summary of Significant Accounting Policies
a. Consolidation — The consolidated financial statements
as of March 31, 2023, include the accounts of the Company
and its 4 (4 in 2022) significant subsidiaries (together, the“Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, andthose companies over which the Group has the ability to
exercise significant influence are accounted for by the equity
method.
Investments in 9 (9 in 2022) unconsolidated subsidiaries
and 6 (6 in 2022) associated companies are stated at cost. If
the equity method of accounting had been applied to theinvestments in these companies, the effect on the accompanying consolidated financial statements would not be material.
The excess of the cost of acquisition over the fair valueof the net assets of an acquired subsidiary at the date ofacquisition is amortized over a period of 17 years.
All significant intercompany balances and transactions
have been eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within theGroup is also eliminated.
b. Cash Equivalents — Cash equivalents are short-term
investments that are readily convertible into cash andexposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificates ofdeposit and commercial paper, all of which mature or
become due within 3 months of the date of acquisition.

c. Inventories — Construction projects in progress and workin process are stated at cost, determined by the specific identification method.
Real estate held for sale and development projects inprogress are stated at the lower of cost, determined by the
specific identification method, or net selling value, which isdefined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses.
d. Marketable and Investment Securities — Marketable
and investment securities are classified and accounted for,depending on management’s intent, as follows:(1) held-to-maturity debt securities, for which there is a positive intent and ability to hold to maturity, are reported atamortized cost; and(2) available-for-sale securities, which are not classified as
held-to-maturity are reported at fair value, with unrealized
gains and losses, net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities, which do
not have a market price, are stated at cost determined by themoving-average method. For other-than-temporary declines
in fair value, investment securities are reduced to net realizable value by a charge to income.
Investments in limited partnerships, which are considered securities under Article 2, Clause 2 of the Japanese
Financial Instruments and Exchange Act, are recorded underthe equity method and based on the latest consolidated
financial statements available on the reportable date ruled by
the partnership contracts.
e. Property, Plant and Equipment — Property, plant andequipment are stated at cost. Depreciation, except for leaseassets, is computed by the declining-balance method basedon the estimated useful lives of the assets, while the straightline method is applied to buildings acquired on or after April
1, 1998 and building improvements and structures acquiredon or after April 1, 2016, and lease assets. The range of useful lives is principally from 3 to 60 years for buildings andstructures, from 2 to 17 years for machinery and equipment,
and from 2 to 15 years for furniture and fixtures. Lease assets
under finance lease arrangements are depreciated using thestraight-line method over the terms of the respective leases
without any salvage value.
Accumulated depreciation totaled ¥19,762 million($147,989 thousand) and ¥18,144 million as of March 31,
2023 and 2022, respectively.
f. Long-Lived Assets — The Group reviews its long-lived
assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset
group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows
expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss
would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is
the higher of the discounted cash flows from the continued
use and eventual disposition of the asset or the net selling
price at disposition.

Okumura Corporation Annual Report 2023

g. Allowance for Doubtful Receivables — The allowancefor doubtful receivables is stated in amounts considered to beappropriate based on the Group’s past credit loss experienceand an evaluation of estimated losses in the receivables outstanding.
h. Allowance for Warranty Work on Construction
Projects — The allowance for warranty costs for completed
work is provided at the amount of warranty costs based on
past loss experience.
i. Allowance for Losses on Construction Contracts — An
allowance for losses on construction contracts is provided
with respect to construction projects for which eventual losses are reasonably expected and estimated.
j. Employees’ Retirement Benefits — The Company andcertain consolidated subsidiaries have a contributory fundedpension plan covering substantially all of its employees.
The Company and certain consolidated subsidiaries
account for the liability for retirement benefits based on the
projected benefit obligations and plan assets at the balance
sheet date. The projected benefit obligations are attributed toperiods on a benefit formula basis. Actuarial gains and losses
and past service costs that are yet to be recognized in profit
or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and arerecognized in profit or loss over 10 years but no longer thanthe expected average remaining service period of theemployees.
k. Asset Retirement Obligations — An asset retirement
obligation is recorded for a legal obligation imposed either by
law or contract that results from the acquisition, construction, development and normal operation of a tangible fixed
asset and is associated with the retirement of such tangible
fixed asset. The asset retirement obligation is recognized as
the sum of the discounted cash flows required for the future
asset retirement and is recorded in the period in which the
obligation is incurred if a reasonable estimate can be made. If
a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation isincurred, the liability should be recognized when a reasonable estimate of the asset retirement obligation can be made.
Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related fixed asset by theamount of the liability. The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is
accreted to its present value each period. Any subsequent
revisions to the timing or the amount of the original estimateof undiscounted cash flows are reflected as an adjustment tothe carrying amount of the liability and the capitalized
amount of the related asset retirement cost.
l. Construction Contracts — Regarding the construction
business, the primary business of the Group, the Group recognizes revenue when control of promised goods or services
is transferred to a customer.

The performance obligations for construction contracts
in the construction business are mainly construction anddelivery of buildings, etc. When control of goods or services
is transferred to a customer over time, the Group recognizes
revenue over time as the performance obligation is satisfied
by transferring promised goods or services to a customer. 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, if the Group may not be able to reasonably measure
the progress toward complete satisfaction of a performanceobligation but expect to recover the costs, the Group applies
the cost recovery method.
Regarding construction contracts whose periods are very
short from the initial transaction date of the contract to the
expected date of completely satisfying performance obligations, the Group does not recognize revenue over time, but
recognizes revenue when the performance obligations are
satisfied completely (the time of completing and delivering
constructions).
m. Income Taxes — The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach isused to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets
and liabilities. Deferred taxes are measured by applying currently enacted income tax rates to the temporary differences.
n. Derivatives and Hedging Activities — The Group uses
derivative financial instruments to manage its exposures tofluctuations in foreign exchange and interest rates. Foreign
currency forward contracts are utilized by the Group to
reduce foreign currency exchange rate risks on foreign currency denominated trade payables for imported materials. In
addition, interest rate swaps are utilized by the Group to
reduce interest rate risks on long-term loans. The Group does
not enter into derivatives for trading or speculative purposes.
Interest rate swaps that qualify for hedge accounting
and meet specific matching criteria are not remeasured atmarket value, but the differential paid or received under theswap agreements is recognized and included in interest
expense or income.
o. Per Share Information — Basic net income per share iscomputed by dividing net income attributable to commonshareholders by the weighted-average number of commonshares outstanding for the period.
Diluted net income per share is not disclosed because
there are no securities with a dilutive effect upon exercise orconversion into common stock.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective fiscal years, including dividends to be
paid after the end of the year.

17

18

p. Accounting Policy Disclosures, Accounting Changes
and Error Corrections — Under Accounting Standards
Board of Japan (“ASBJ”) Statement No. 24, “AccountingStandard for Accounting Policy Disclosures, Accounting
Changes and Error Corrections,” and ASBJ Guidance No. 24,“Guidance on Accounting Standard for Accounting Policy
Disclosures, Accounting Changes and Error Corrections,”
accounting treatments are required as follows:(1) Changes in Accounting Policies:
When a new accounting policy is applied following revisionof an accounting standard, the new policy is applied retrospectively unless the revised accounting standard includes
specific transitional provisions, in which case the entity shallcomply with the specific transitional provisions.
(2) Changes in Presentation:
When the presentation of financial statements is changed,
prior-period financial statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates:
A change in an accounting estimate is accounted for in the
period of the change if the change affects that period only,
and is accounted for prospectively if the change affects boththe period of the change and future periods.
(4) Corrections of Prior-Period Errors:
When an error in prior-period financial statements is discovered, those statements are restated.
q. Accounting Policies and Procedures Which Are
A d o p t e d W h e n t h e P ro v i s i o n s o f t h e R e l e v a n t
Accounting Standards Are Not Clear
Accounting for works by joint ventures formed, in order totake orders and carry out the works jointly with several constructors, are incorporated in the consolidated financial statements according to the proportion of investment equities.
r. Accounting Changes
Application of Implementation Guidance on AccountingStandard for Fair Value Measurement
The Group has applied the “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, June 17, 2021; hereinafter “Implementation
Guidance on Fair Value Measurement Standard”) from the
beginning of the fiscal year ended March 31, 2023, and willprospectively apply the new accounting policies stipulated by
the Implementation Guidance on Fair Value Measurement
Standard in accordance with the transitional treatment provided in Paragraph 27-2 of the Implementation Guidance on
Fair Value Measurement Standard. These changes do notaffect the consolidated financial statements.

3. Significant Accounting Estimates
Revenue Recognition over Time and Allowance forLosses on Construction Contracts(1) A mounts recorded in the consolidated financial statements for the fiscal years ended March 31, 2023 and2022
Millions of Yen
2023
2022

Construction revenues
recognized over time
Allowance for losses on
construction contracts

Thousands of
U.S. Dollars
2023¥232,023 ¥226,012 $1,737,478
1,566

973

11,728(2) Information about the contents of significant accounting
estimates on the identified items
1) Calculation method
Construction revenues recognized over time are recognized by multiplying the total construction revenue by
progress, which is estimated based on a proportion of
construction costs incurred by the end of each reporting period to the estimated total construction costs.
In addition, when it is probable that the total construction costs will exceed total construction revenue,
an allowance for losses on construction contracts will
be recorded at the expected excess amount (loss on
construction contracts) less the profit or loss alreadyrecognized.
2) Major assumptions
For example, in the event an agreement on consideration for changes in design or scope of a construction
are not timely finalized in the contracts and other documents, the total construction revenue is obtained byestimating consideration based on the details of thechange in works and other matters as instructed.
Total construction costs are estimated mainly considering the market conditions of materials and subcontract
costs and individual risk factors associated with theprogress of works.
These estimates and underlying assumptions are continuously reviewed.
3) Impact on consolidated financial statements for the following fiscal year
Any changes in major assumptions as of March 31,
2023 might affect construction revenue and allowance
for losses on construction contracts for the following
fiscal year.

Okumura Corporation Annual Report 2023

4. Marketable and Investment Securities
Marketable and investment securities as of March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022

Non-current:
Marketable equity securities
Non-marketable equity securities and otherTotal¥52,879
1,819¥54,698¥55,010
1,405¥56,415

Thousands of
U.S. Dollars
2023$395,977
13,626$409,603

19

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

March 31, 2023

Securities classified as:
Available-for-sale:
Equity securities

Cost

Unrealized
Gains

Unrealized
LossesFair Value¥18,682¥34,214¥17¥52,879

Cost

Unrealized
Gains

Unrealized
LossesFair Value¥20,940¥34,126¥56¥55,010

Cost

Unrealized
Gains

Unrealized
LossesFair Value$139,899$256,208$130$395,977

Millions of Yen

March 31, 2022

Securities classified as:
Available-for-sale:
Equity securities

Thousands of U.S. Dollars

March 31, 2023

Securities classified as:
Available-for-sale:
Equity securities

The information for available-for-sale securities which were sold during the years ended March 31, 2023 and 2022 is asfollows:
Millions of Yen

March 31, 2023

Available-for-sale:
Equity securities

Proceeds

Realized
Gains

Realized
Losses¥5,592¥3,056¥33

Proceeds

Realized
Gains

Realized
Losses¥5,045¥3,201¥—

Proceeds

Realized
Gains

Realized
Losses$41,878$22,886$245

Millions of Yen

March 31, 2022

Available-for-sale:
Equity securities

Thousands of U.S. Dollars

March 31, 2023

Available-for-sale:
Equity securities

The impairment losses on unlisted available-for-sale equity securities for the year ended March 31, 2023, was ¥19 million ($141
thousand).
The impairment losses on unlisted available-for-sale equity securities for the year ended March 31, 2022, was ¥6 million.

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

20

¥3,181
959
796
1,231
745
¥6,912

Construction projects in progress
Real estate held for sale
Development projects in progress
Work in process
Other
Total

¥2,613
1,081
983
697
92
¥5,466

Thousands of
U.S. Dollars
2023$23,820
7,182
5,965
9,216
5,577
$51,760

6. Investment Property
The Group owns certain rental properties such as residential buildings, warehouses, and land in Osaka and other areas. Somerental warehouses leased to third parties of which the Company utilizes a part are classified as rental properties in part.
The net of rental income and operating expenses for those rental properties was ¥3,205 million ($23,998 thousand) and¥3,173 million for the years ended March 31, 2023 and 2022, respectively.
In addition, the carrying amounts, changes in such balances and market prices of such properties were as follows:

Rental properties
Rental properties in part
Total

Rental properties
Rental properties in part
Total

April 1,
2022

¥34,334
1,144¥35,478

April 1,
2021

¥35,327
1,175¥36,502

Increase/
Decrease¥(206)(32)¥(238)

Increase/
Decrease¥(993)(31)¥(1,024)

Carrying AmountMillions of Yen
Fair Value

March 31,2023

March 31,2023

Carrying AmountMillions of Yen
Fair Value

March 31,2022

March 31,2022

¥34,128
1,112¥35,240¥34,334
1,144¥35,478¥65,375
2,025¥67,400¥64,8392,026¥66,865

Thousands of U.S. Dollars
Carrying Amount
Fair Value

Rental properties
Rental properties in part
Total

April 1,
2022

$257,108
8,568$265,676

Increase/
Decrease$(1,541)(241)$(1,782)

March 31,2023

$255,567
8,327$263,894

March 31,2023

$489,555
15,162$504,717

Notes:(1) Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation and accumulated
impairment losses, if any.
(2) Fair value of properties as of March 31, 2023 and 2022 is measured in accordance with real-estate appraisal performed byreal-estate appraisers for primary properties. The amount measured by the Group is in accordance with its Real-EstateAppraisal Standard for other properties (including those measured using indicators).

Okumura Corporation Annual Report 2023

7. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans at March 31, 2023 and 2022, consisted of notes to banks and bank overdrafts. The annual interest rates
applicable to the short-term bank loans ranged from 0.7% to 4.5% at March 31, 2023 and 0.7% to 1.3% at March 31, 2022.
Long-term debt at March 31, 2023 and 2022, consisted of the following:
Millions of Yen

Thousands of
U.S. Dollars

2023

2022

2023

¥7,11226,003
7
33,122(4,004)¥29,118¥7,11421,063
2
28,179(2,002)¥26,177$53,258
194,72252
248,032(29,982)$218,050

Year Ending March 31

Millions of Yen

Thousands of
U.S. Dollars

2024
2025
2026
2027
2028
2029 and thereafterTotal¥4,002
5,293
3,029
1,886
3,610
15,295¥33,115$29,968
39,636
22,67914,12627,033
114,538$247,980

Millions of Yen

Thousands of
U.S. Dollars

2023

2022

2023

Amount of business assets of a consolidated subsidiary engaged in renewable energy¥40,367
business pledged as collateral for non-recourse loans¥27,596$302,286

Loans from banks and other financial institutions, due serially to 2037
with interest rates ranging from 0.5% to 6.0%
UnsecuredNon-recourse loans
Obligations under finance leases
Total
Less current portionLong-term debt, less current portion

Annual maturities of long-term debt, excluding finance leases, at March 31, 2023, were as follows:

Assets pledged as collateral for non-recourse debt

21

8. Employees’ Retirement Benefits
Most of the employees of the Company and certain consolidated subsidiaries are covered by a contributory trusted pension
plan.
The Company and certain consolidated subsidiaries have a cash balance plan (pension plan linked to the market interest
rates) based on the Defined Benefit Corporate Pension Law.
(1) The changes in defined benefit obligations for the years ended March 31, 2023 and 2022, were as follows:

22

Balance at beginning of year
Current service costs
Interest costs
Actuarial losses
Benefits paid
Past service costs
Balance at end of year

2023

Millions of Yen
2022

Thousands of
U.S. Dollars
2023¥19,894
1,220
100
10
(765)
373
¥20,832¥19,349
1,187
97
13
(752)
—
¥19,894$148,975
9,136
745
75
(5,730)2,796$155,997

2023

Millions of Yen
2022

Thousands of
U.S. Dollars
2023¥24,971
225
(218)
1,054
(765)
¥25,267¥24,323
219
158
1,023
(752)
¥24,971$186,993
1,683(1,634)
7,897(5,730)$189,209(2) The changes in plan assets for the years ended March 31, 2023 and 2022, were as follows:

Balance at beginning of year
Expected return on plan assets
Actuarial gains (losses)
Contributions from the employer
Benefits paid
Balance at end of year

(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit
obligation and plan assets was as follows:

Defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation
Net asset arising from defined benefit obligation

Asset for retirement benefits
Net asset arising from defined benefit obligation

2023

Millions of Yen
2022

Thousands of
U.S. Dollars
2023¥20,832(25,267)(4,435)—¥(4,435)¥19,894(24,971)(5,077)—¥(5,077)$155,997(189,209)(33,212)—$(33,212)

2023

Millions of Yen
2022

Thousands of
U.S. Dollars2023¥(4,435)¥(4,435)¥(5,077)¥(5,077)$(33,212)$(33,212)(4) The components of net periodic benefit costs for the years ended March 31, 2023 and 2022, were as follows:

Service costs
Interest costs
Expected return on plan assets
Recognized actuarial gains
Amortization of past service costs
Net periodic benefit costs

2023

Millions of Yen
2022

Thousands of
U.S. Dollars
2023¥1,220
100
(225)
(527)
(28)
¥540

¥1,187
97
(219)
(522)
(37)
¥506

$9,136745(1,683)(3,950)(207)$4,041

Okumura Corporation Annual Report 2023

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

Actuarial losses
Past service costs
Total¥  (756)(401)¥(1,157)

Millions of Yen
2022¥(377)(37)¥(414)

Thousands of
U.S. Dollars
2023$(5,660)(3,003)$(8,663)(6) Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement
benefit plans as of March 31, 2023 and 2022, were as follows:
2023

Unrecognized actuarial gains
Unrecognized past service costs
Total¥(1,097)143¥  (954)

Millions of Yen
2022¥(1,853)(258)¥(2,111)

Thousands of
U.S. Dollars
2023$(8,214)
1,068$(7,146)(7) Plan assets
a. Components of plan assets
Plan assets as of March 31, 2023 and 2022, consisted of the following:
Debt investments
Equity investments
Life insurance general account assets
Others
Total

2023

2022

43%
11
32
14
100%

43%
12
31
14
100%

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

2023

2022

0.5%
0.9

0.5%
0.9

23

24

9. Equity
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the
Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. Additionally, for companies that meet certain criteria including (1) having
a Board of Directors, (2) having independent auditors, (3) having an Audit and Supervisory Committee, and (4) the term ofservice of the directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, theBoard of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the Company hasprescribed so in its articles of incorporation. However, the Company does not meet all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity accountcharged upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve
may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in
capital, other capital surplus and retained earnings can be transferred among the accounts within equity under certain conditions upon resolution of the shareholders.
c. Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolutionof the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to theshareholders which is determined by a specific formula. Under the Companies Act, stock acquisition rights are presented as aseparate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.

Okumura Corporation Annual Report 2023

10. Income Taxes
The Group is subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 30.6% for the years ended March 31, 2023 and 2022.
The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2023 and 2022, are as follows:

Deferred tax assets:
Impairment losses on securities
Tax loss carryforwards (Note)
Write-down of inventories and others
Allowance for bonuses
Allowance for doubtful accounts
Accrued expenses
Allowance for losses on construction contracts
Other
Less valuation allowance on tax loss carryforward
Less valuation allowance on sum of future deductible temporary difference
Total
Deferred tax liabilities:
Net unrealized gains on available-for-sale securities
Retained earnings appropriated for special allowance
Deferred gain on hedges
Asset for retirement benefits
Total
Net deferred tax liabilities

Millions of Yen

Thousands of
U.S. Dollars

2023

2022

2023

¥1,749
1,550
1,134
1,057
639
518
479
632
(1,550)(4,101)2,107¥1,894
1,128
1,199
1,152
648
617
298
421
(1,128)(4,194)2,035$ 13,096
11,608
8,488
7,919
4,787
3,879
3,589
4,733
(11,608)(30,708)
15,783(9,424)(1,708)(1,614)(1,357)(14,103)¥(11,996)(9,412)(1,694)(1,031)(1,554)(13,691)¥(11,656)(70,572)(12,792)(12,084)(10,163)(105,611)$(89,828)(Note) Tax loss carryforwards and amount of deferred tax assets by maturity
Millions of Yen

March 31, 2023

Tax loss carryforwards*
Valuation allowance
Deferred tax assets

Within one
year

¥—
—
—

Over one year Over two years
within two
within three
years
years

¥3
(3)
—

¥ 95
(95)
—

Over three Over four years
years within
within five
four years
years Over five years

¥ 47
(47)
—

¥—
—
—

¥ 1,405(1,405)—

Total¥ 1,550(1,550)—Millions of Yen

March 31, 2022

Tax loss carryforwards*
Valuation allowance
Deferred tax assets

Within one
year

¥—
—
—

Over one year Over two years
within two
within three
years
years

¥—
—
—

¥3
(3)
—

Over three Over four years
years within
within five
four years
years Over five years

¥ 95
(95)
—

¥ 47
(47)
—

¥ 983
(983)
—

Total

¥ 1,128(1,128)—

Thousands of U.S. Dollars

March 31, 2023

Tax loss carryforwards*
Valuation allowance
Deferred tax assets

Within one
year

$—
—
—

Over one year Over two years
within two
within three
years
years

$ 20
(20)
—

$ 710
(710)
—

Over three Over four years
years within
within five
four years
years Over five years

$ 353
(353)
—

$—
—
—

$ 10,525(10,525)—

Total$ 11,608(11,608)—* The tax loss carryforwards presented above are the amounts multiplied by the effective statutory tax rate.

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated statement of income for the years ended March 31, 2023 and 2022 is omitted since the difference is 5% orless of the normal effective statutory tax rate.

25

11. Revenue Recognition(1) Disaggregation of revenue from contracts with customers
Please see Note 19 “Segment Information.”(2) Underlying information in understanding revenue from contracts with customers
Please see 2. Summary of Significant Accounting Policies, l. Construction Contracts.
(3)	Satisfaction of performance obligations based on contracts with customers and relationship with cash flows arising fromsuch contracts, and the amount and timing of revenue from contracts with customers existing at the end of the fiscal year
expected to be recognized in the following fiscal years

26

a. Balances of contract assets and contract liabilities, etc.
Millions of Yen
2023

Receivables from contracts with customers
Contract assets
Contract liabilities

Thousands of U.S. Dollars
2023

2022

BeginningbalanceEndingbalance

BeginningbalanceEndingbalance¥52,816
89,474
11,254¥60,545
71,903
12,192¥68,264
75,335
12,489¥52,816
89,474
11,254

BeginningbalanceEndingbalance$395,510 $453,383
670,018
538,439
84,27491,301(Note) 1.	Contract assets primarily relate to the right of the Group, primarily based on the construction contracts with customers, to consideration for goods or services for which control has been transferred to a customer. Once theGroup has an unconditional right to consideration, it reclassifies contract assets to receivables from contracts withcustomers. 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 that are reversed as revenue is recognized. The beginning balanceof contract liabilities is included in revenue from contracts with customers for the fiscal years ended March 31,
2023 and 2022 in its almost entirety.
3.	The amount of revenue recognized in the fiscal years ended March 31, 2023 and 2022 from performance obligations that were satisfied (or partially satisfied) in previous periods (mainly fluctuations of transaction amounts basedon changes in design or scope) is immaterial.
b. Transaction prices allocated to remaining performance obligations
The transaction prices allocated to remaining performance obligations that are unsatisfied as of March 31, 2023 and2022 amounted to ¥468,149 million (*1, 2) ($3,505,686 thousand) and ¥424,798 million (*1, 2), respectively, and revenue is expected to be recognized within approximately 5 years.
*1 The transaction prices describe the price allocated to the remaining performance obligations for the construction business, the primary business of the Group.
*2 The transaction prices include the changes in design or scope for which an agreement on the consideration is notdetermined in the contracts and other documents. The transaction prices for the changes in design or scope are estimated based on the details of the change in works and other matters as instructed.

Okumura Corporation Annual Report 2023

12. Research and Development Costs
Research and development costs charged to income were ¥1,771 million ($13,266 thousand) and ¥1,630 million for the years
ended March 31, 2023 and 2022, respectively.
13. Leases
Operating leases
Future minimum lease receivables or payments under noncancelable operating leases at March 31, 2023 and 2022, were as
follows:

As a lessor:
Due within one year
Due after one year
Total
As a lessee:
Due within one year
Due after one year
Total

Millions of Yen

Thousands of
U.S. Dollars

2023

2022

2023

¥2,302
17,930¥20,232¥2,233
12,996¥15,229$17,235
134,267$151,502

¥88
630
¥718

¥

$664
4,716
$5,380

¥

89
718
807

27

14. Financial Instruments and Related Disclosures(1) Disclosures on financial instruments
1) Group policy for financial instruments
At the Group level, cash surpluses, if any, are invested in low-risk financial assets. Short-term bank loans are used to fundits ongoing operations. Derivatives are not used for speculative purposes, but to manage its exposure to fluctuations inforeign currency exchange and interest rates.

282) Nature and extent of risks arising from financial instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk. Marketable and investment
securities, mainly held-to-maturity securities and equity instruments of customers and suppliers of the Group, are exposedto the risk of market price fluctuations.
Payment terms of payables, such as trade notes and trade accounts, are mostly less than one year.
Bank loans are utilized to finance principally working capital and non-recourse loans are used for financing therenewable energy business of a consolidated subsidiary.
3) Risk management for financial instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables based on internal guidelines, which include
continuously determining customers’ circumstances from the phase of accepting orders to that of collection of the receivables, along with monitoring of payment terms and balances of each transaction.
Market risk management (foreign exchange risk and interest rate risk)
Marketable and investment securities are managed by monitoring market values and the financial position of issuers on aregular basis. Also, the Group continuously reviews its possession of those securities, except for held-to-maturity securities.
Payables denominated in foreign currencies in association with import of materials for renewable energy business are
exposed to fluctuations in foreign exchange rates. The Group utilizes derivative instruments (comprehensive long-term foreign currency forward contracts) as hedging instruments to manage these market risks.
Bank loans with floating interest rates are exposed to fluctuations in interest rates. With respect to certain short-termbank loans and non-recourse loans, the Group utilizes derivatives (interest rate swaps) by individual contract as hedging
instruments to avoid the fluctuation risk of interest expenses and fix interest expenses. The hedge accounting method is
described in Note 2.n.
Please see Note 15 for more details about derivatives.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The
Group manages its liquidity risk by making the appropriate cash schedule on a monthly basis.

Okumura Corporation Annual Report 2023

(2) Fair value of financial instruments
Millions of Yen

Carrying
AmountFair Value

Unrealized
Gain/Loss

Receivables—trade notes and accounts
Allowance for doubtful receivables (*4)
Net
Investment securities (*3)
Available-for-sale securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable (*4)
Net
Total

¥132,455(137)
132,318¥132,253¥(65)

52,87992(0)92¥185,289

52,879—88¥185,220(4)¥(69)

Lease liabilities
Long-term bank loans
Non-recourse loans
Total
Derivatives (*5)

¥7
3,100
26,003¥29,110¥5,507¥7
3,094
25,729¥28,830¥5,507

¥(0)
(6)
(274)
¥(280)¥—March 31, 2023(*1) The fair value of “Cash and cash equivalents,” “Time deposits,” “Marketable securities,” “Payables – Trade notes,
accounts, etc.” and “Short-term loans” is omitted because they are cash and the carrying amount approximates the fairvalue because of their short maturities.
(*2) Investments in equity instruments that do not have a quoted market price in an active market are not included in above“Investment securities.” Such amount of financial instruments (unlisted equity securities) recorded in the consolidated balance sheet was ¥1,360 million.
(*3) Investments in limited partnerships and other similar entities recorded in a net amount of equity equivalents in the consolidated balance sheet are not included. Such investments recorded in the consolidated balance sheet amounted to ¥675 million.
(*4) Allowance for doubtful receivables recorded on “Receivables – trade notes and accounts” or “Long-term loans receivable”
is individually recognized and deducted from such receivables.
(*5) Net receivables and payables generated from derivatives are presented in net amounts and net payables are shown inparentheses.
Millions of Yen

Carrying
AmountFair Value

Unrealized
Gain/Loss

Receivables—trade notes and accounts
Allowance for doubtful receivables (*4)
Net
Investment securities
Available-for-sale securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable (*4)
Net
Total

¥142,296(140)
142,156¥142,155¥(1)55,010103(0)103¥197,269

55,010—101¥197,266

(2)
¥(3)

Lease liabilities
Long-term bank loans
Non-recourse loans
Total
Derivatives (*5)

¥2
5,100
21,063¥26,165¥3,230¥2
5,088
20,973¥26,063¥3,230

¥(0)
(12)
(90)
¥(102)¥—March 31, 2022

29

30

(*1) The fair value of “Cash and cash equivalents,” “Time deposits,” “Payables – Trade notes, accounts, etc.” and “Short-termloans” is omitted because they are cash and the carrying amount approximates the fair value because of their short maturities.
(*2) Investments in limited partnerships and other similar entities recorded in a net amount of equity equivalents in the consolidated balance sheet are omitted. Such investments recorded in the consolidated balance sheet amounted to ¥441 million.
(*3) Investments in equity instruments that do not have a quoted market price in an active market are not included in above“Investment securities.” Such amount of financial instruments (unlisted equity securities) recorded in the consolidated balance sheet was ¥1,179 million.
(*4) Allowance for doubtful receivables recorded on “Receivables – trade notes and accounts” or “Long-term loans receivable”
is individually recognized and deducted from such receivables.
(*5) Net receivables and payables generated from derivatives are presented in net amounts and net payables are shown inparentheses.
Thousands of U.S. Dollars

Carrying
AmountFair Value

Unrealized
Gain/Loss

Receivables—trade notes and accounts
Allowance for doubtful receivables (*4)
Net
Investment securities (*3)
Available-for-sale securities
Long-term loans receivable
Allowance for doubtful long-term loans receivable (*4)
Net
Total

$991,875(1,023)990,852$990,366$(486)395,977685(1)
684$1,387,513

395,977—661$1,387,004(23)$(509)Lease liabilities
Long-term bank loans
Non-recourse loans
Total
Derivatives (*5)

$52
23,214
194,722$217,988$41,238$49
23,170
192,672$215,891$41,238

$(3)
(44)
(2,050)$(2,097)$—March 31, 2023(*1) The fair value of “Cash and cash equivalents,” “Time deposits,” “Marketable securities,” “Payables – Trade notes,
accounts, etc.” and “Short-term loans” is omitted because they are cash and the carrying amount approximates the fairvalue because of their short maturities.
(*2) Investments in equity instruments that do not have a quoted market price in an active market are not included in above“Investment securities.” Such amount of financial instruments (unlisted equity securities) recorded in the consolidated balance sheet was $10,182 thousand.
(*3) Investments in limited partnerships and other similar entities recorded in a net amount of equity equivalents in the consolidated balance sheet are not included. Such investments recorded in the consolidated balance sheet amounted to $5,056
thousand.
(*4) Allowance for doubtful receivables recorded on “Receivables – trade notes and accounts” or “Long-term loans receivable”
is individually recognized and deducted from such receivables.
(*5) Net receivables and payables generated from derivatives are presented in net amounts and net payables are shown inparentheses.

Okumura Corporation Annual Report 2023

(Note) 1 Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen

March 31, 2023
Cash and cash equivalents, Time deposits
Receivables—trade notes and accounts
Long-term loans receivable
Total

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years

Due after
10 Years¥50,244
94,760—¥145,004¥—37,541
75¥37,616

¥—
154
29
¥183

¥—
—
—
¥—

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years

Due after
10 Years¥33,156
112,226—¥145,382¥—29,92683¥30,009

¥—
144
33
¥177

¥—
—
—
¥—

Due in 1 Yearor Less

Due after
1 Year through5 Years

Due after
5 Years through10 Years

Due after
10 Years$376,250
709,601—$1,085,851$—281,118561$281,679

$—
1,156
214
$1,370$———$—Millions of Yen

March 31, 2022
Cash and cash equivalents, Time deposits
Receivables—trade notes and accounts
Long-term loans receivable
Total

Thousands of U.S. Dollars

March 31, 2023
Cash and cash equivalents, Time deposits
Receivables—trade notes and accounts
Long-term loans receivable
Total(Note) 2 Please see Note 7 for annual maturities of long-term debt.

31

32

(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 the observability and materiality of inputs used to measure fair value.
Level 1 fair value: Fair value measured by using quoted prices in active markets for assets or liabilities that are the subject ofthe measurement.
Level 2 fair value: Fair value measured by using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured by 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.
1) Financial instruments measured at fair values in the consolidated balance sheet
Millions of Yen

March 31, 2023
Investment securities
Available-for-sale securities:
Equity securities
Derivatives
Currency relatedInterest rate related
Total assets

Level 1

Level 2

Level 3

Fair value
Total¥52,879¥—¥—¥52,879——¥52,879

5,180
327¥5,507

—
—
¥—

5,180
327
¥58,386
Millions of Yen

March 31, 2022
Investment securities
Available-for-sale securities:
Equity securities
Derivatives
Currency related
Total assets
Derivatives
Interest rate related
Total liabilities

Level 1

Level 2

Level 3

Fair value
Total¥55,010¥—¥—¥55,010—¥55,010

3,370¥3,370—¥—3,370¥58,380¥—¥—¥(140)¥(140)¥—¥—¥(140)¥(140)Thousands of U.S. Dollars

March 31, 2023
Investment securities
Available-for-sale securities:
Equity securities
Derivatives
Currency relatedInterest rate related
Total assets

Level 1

Level 2

Level 3

Fair value
Total$395,977$—$—$395,977——$395,977

38,793
2,445$41,238——$—

38,7932,445$437,215

Okumura Corporation Annual Report 2023

2) Financial instruments not measured at fair values in the consolidated balance sheet
Millions of Yen

March 31, 2023
Receivables—trade notes and accounts
Long-term loans receivable
Total assets
Lease liabilities
Long-term debt
Non-recourse loans
Total liabilities

Level 1

Level 2

Level 3

Fair value
Total

¥—
—
¥—
¥—
—
—
¥—

¥132,253
88¥132,341¥7
3,094
25,729¥28,830

¥—
—
¥—
¥—
—
—
¥—

¥132,253
88¥132,341¥7
3,094
25,729¥28,830
Millions of Yen

March 31, 2022
Receivables—trade notes and accounts
Long-term loans receivable
Total assets
Lease liabilities
Long-term debt
Non-recourse loans
Total liabilities

Level 1

Level 2

Level 3

Fair value
Total

¥—
—
¥—
¥—
—
—
¥—

¥142,155
101¥142,256¥2
5,088
20,973¥26,063

¥—
—
¥—
¥—
—
—
¥—

¥142,155
101¥142,256¥2
5,088
20,973¥26,063

Thousands of U.S. Dollars

March 31, 2023
Receivables—trade notes and accounts
Long-term loans receivable
Total assets
Lease liabilities
Long-term debt
Non-recourse loans
Total liabilities

Level 1

Level 2

Level 3

Fair value
Total

$—
—
$—
$—
—
—
$—

$990,366
661$991,027$49
23,170
192,672$215,891

$—
—
$—
$—
—
—
$—

$990,366
661$991,027$49
23,170
192,672$215,891

33

(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 values are categorized as
Level 1.
Derivatives
The fair values of interest rate swaps and forward exchange contracts are measured by using the discounted present value
techniques based on observable inputs, such as interest rates and exchange rates, and are categorized as Level 2.

34

Trade notes and accounts receivable
The fair values of these items are measured by using the discounted present value techniques based on the recoverable
amount reflecting 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 are categorized as Level 2
because the impact of unobservable inputs on the fair value is immaterial.
Long-term loans receivable
The fair values of long-term loans receivable are measured separately for each loan agreement using the discounted present
value techniques based on future cash flows and an interest rate obtained by adding the credit spread to appropriate indicators such as government bond yields for each loan agreement, and are categorized as Level 2.
Lease liabilities
The fair values of lease liabilities are measured by using the discounted present value techniques based on the total amountof principals and interests, the remaining period of such liabilities, and an interest rate obtained by adding credit risk, foreach liabilities amount categorized by a specified period, and are categorized as Level 2.
Long-term debt and non-recourse loans
The fair values of these items are measured separately for each loan agreement. The fair values of floating rate borrowings
are measured as carrying value because their rates reflect the market interest rates in a timely manner and their carrying values approximate fair value. The fair values of fixed-rate borrowings are measured by using the discounted present value
techniques based on future cash flows and an interest rate obtained by adding the credit spread to appropriate indicatorssuch as government bond yields. The fair values are categorized as Level 2.

Okumura Corporation Annual Report 2023

15. Derivatives
The Group enters into derivatives, in the normal course of business, to reduce the exposure to fluctuations in foreign exchange
and interest rates. The primary classes of derivatives used by the Group are foreign currency forward contracts and interest rate
swaps.
The Group does not hold or issue derivatives for trading purposes.
Because the counterparties to these derivatives are limited to major financial institutions, the Group does not anticipate
any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate theauthorization and credit limit amount.
Derivative transactions to which hedge accounting is not applied:
There were no derivative transactions to which hedge accounting is not applied at March 31, 2023 and 2022.
Derivative transactions to which hedge accounting is applied:
Millions of Yen

Hedged item

Contract
amountContract
amount due
after one year

Foreign currency forward contracts
Buying: U.S. Dollars

Foreign currency
denominatedforward contracts¥46,625¥42,543¥5,180Interest rate swaps
Floating-rate receipt, fixed-rate payment
Interest rate swaps
Floating-rate receipt, fixed-rate payment

Non-recourse
loans
Short-termbank loans

18,88817,215

326

4,000

—

Note

March 31, 2023

Fair value

Note: Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market
value but the differential paid or received under the swap agreement is recognized and included in interest expense or
income. The fair value of such interest rate swaps is included in those of the hedged items (i.e., short-term bank loans).
Millions of Yen

Hedged item

Contract
amountContract
amount due
after one year

Foreign currency forward contracts
Buying: U.S. Dollars

Foreign currency
denominatedforward contracts¥47,960¥45,902¥3,370Interest rate swaps
Floating-rate receipt, fixed-rate payment
Interest rate swaps
Floating-rate receipt, fixed-rate payment

Non-recourse
loansLong-termbank loans

19,664

18,888

(140)

4,000

4,000

Note

March 31, 2022

Fair value

Note: Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market
value but the differential paid or received under the swap agreement is recognized and included in interest expense or
income. The fair value of such interest rate swaps is included in those of the hedged items (i.e., long-term bank loans) in
Note 14.

35

Thousands of U.S. Dollars

Hedged item

Contract
amountContract
amount due
after one year

Foreign currency forward contracts
Buying: U.S. Dollars

Foreign currency
denominatedforward contracts$349,146$318,582$38,793

Interest rate swaps
Floating-rate receipt, fixed-rate payment
Interest rate swaps
Floating-rate receipt, fixed-rate payment

Non-recourse
loans
Short-termbank loans

141,444

128,9142,438

29,954—

Note

March 31, 2023

36

Fair value

Note: Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at market
value but the differential paid or received under the swap agreement is recognized and included in interest expense or
income. The fair value of such interest rate swaps is included in those of the hedged items (i.e., short-term bank loans).
16. Assets Pledged as CollateralLand in the amount of ¥21 million ($156 thousand) is pledged for a deposit received from a lessee related to a fixed-term landleasehold at March 31, 2023. Land in the amount of ¥1,458 million ($10,920 thousand) and buildings in the amount of ¥934
million ($6,994 thousand) are pledged as construction assistance funds pursuant to building lease contracts at March 31, 2023.
Investment securities in the amount of ¥16 million ($118 thousand) and investments in and advances to unconsolidated
subsidiaries and associated companies in the amount of ¥69 million ($514 thousand) are pledged as collateral for contract performance obligation of the private finance initiative (PFI) business, and the loans of an affiliate, respectively, at March 31, 2023.
Time deposits in the amount of ¥1,329 million ($9,955 thousand) are pledged as security for performance obligation of
construction contracts at March 31, 2023.
Assets pledged as collateral for non-recourse debts are business assets of a consolidated subsidiary engaged in renewableenergy business for the amount of ¥40,367 million ($302,286 thousand) at March 31, 2023.
17. Other Comprehensive Income
The components of other comprehensive income (loss) for the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen

Thousands of
U.S. Dollars

2022

2023

¥3,171 (3,023)148(12)¥ 136¥(5,758)(3,201)(8,959)2,667¥(6,292)$23,746 (22,641)
1,105
(88)
$ 1,017¥ 2,865
(821)
2,044
(583)
¥1,461¥4,180—
4,180(1,031)¥3,149$21,454(6,149)15,305(4,362)$10,943¥(592)(565)(1,157)354¥ (803)
¥794

¥145
(559)
(414)
127
¥ (287)¥(3,430)$(4,436)(4,227)(8,663)2,651$(6,012)$5,948

2023

Unrealized gain (loss) on available-for-sale securities
Gain (loss) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gain on hedges
Gain arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined retirement benefit plans
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Total other comprehensive income (loss)

Okumura Corporation Annual Report 2023

18. Subsequent Events
Appropriation of Retained Earnings
The following appropriation of retained earnings at March 31, 2023, was approved at the Company’s shareholders’ meeting
held on June 29, 2023:
Year-end cash dividends, ¥157 ($1.18) per share

Millions of Yen

Thousands of
U.S. Dollars¥5,778$43,271

Disposal of Treasury Stock through Third-Party Allotment in Accordance with the Introduction of Employee Stock Ownership
Plan
The Company resolved to dispose of treasury stock through third-party allotment (hereinafter, the “Disposal of Treasury
Stock”) at the Board of Directors’ meeting held on May 12, 2023, as described below.
(1) Overview of disposal
1) Date of disposal
May 29, 2023
2) Number of shares to bedisposed of
275,000 shares of common stock of the Company
3) Disposal price¥3,490 ($26.13) per share¥959,750,000 ($7,186,985.17)
4) Total disposal amount5) Allottee
Custody Bank of Japan, Ltd. (Trust Account)6) Other	The Disposal of Treasury Stock shall be conditional upon the filing of a securities registration
statement pursuant to the Financial Instruments and Exchange Act becoming effective.
(2) Purpose and reasons for disposal
At the Board of Directors’ meeting held on March 3, 2023, the Company resolved to introduce an employee stock ownership plan (hereinafter, the “Plan” and the trust agreement to be concluded with Resona Bank, Limited with respect to thePlan shall be referred to as the “Trust Agreement.” In addition, the trust to be established based on the Trust Agreement
shall be referred to as the “Trust.”), which is designed for the Company’s employees (hereinafter, the “Employees”) andaims to enhance the Employees’ motivation and morale to contribute to the improvement of the Company’s medium tolong-term performance and increase of its corporate value.
The Disposal of Treasury Stock refers to the disposal of treasury stock made to Custody Bank of Japan, Ltd. (Trust
Account), the re-trustee of Resona Bank, Limited, which is the trustee of the Trust, by means of third-party allotment inconjunction with the introduction of the Plan.
The number of shares to be disposed of is equivalent to the total number of shares expected to be granted to the
Employees during five fiscal years, based on the Stock Benefit Regulations established by the Company upon the introduction of the Plan. Such number of shares represents 0.71% of a total of 38,665,226 issued shares as of March 31, 2023
(0.75% of a total of 366,441 voting rights as of March 31, 2023 and all rounded off to two decimal places). The
Company believes that the number of shares to be disposed of and the scale of dilution to be caused by the Disposal ofTreasury Stock are reasonable, and therefore has determined that such disposal will have a minimal impact on the secondary market.
Outline of the Trust Agreement
1) Name
Employee Stock Ownership Plan
2) Trustor
The Company
3) Trustee
Resona Bank, Limited		Resona Bank Limited will enter into a specific comprehensive trust agreement with Custody
Bank of Japan, Ltd. and Custody Bank of Japan, Ltd. will serve as the re-trustee.
4) Beneficiaries	The Employees who meet the beneficial requirements as stipulated in the Stock Benefit
Regulations
5) Trust administrator
Selected from among the Employees6) Type of trust
Money held in trust other than a money trust (third-party benefit trust)7) Date of execution of theTrust Agreement
May 29, 2023
8) Date on which money isplaced in trust
May 29, 2023
9) Trust period
From May 29, 2023 until the termination of the Trust		(No specific termination date is set, and the Trust will continue as long as the Plan continues.)

37

19. Segment Information
1. Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by
the Company’s management is being performed in order to decide how resources are allocated among the Group.
Therefore, the Group’s reportable segments consist of “Civil engineering,” “Architectural construction,” and “Investment
development.”

38

2. Methods of measurement for the amounts of sales, profit, assets, liabilities and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies.”
3. Information about sales, profit, assets, liabilities, other items and disaggregation of revenue is as follows:
Millions of Yen
2023

Sales
Domestic public agencies
Domestic non-government
Overseas
Revenue from contracts
with customers
Revenue from othersources
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation
Amortization of goodwill

Reportable segment
Investment
development
Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)

¥ 93,006
141,576
5,985

¥ 18
4,653
7

¥ 93,024
146,229
5,992

¥

—
—
—

¥ 93,024
146,229
5,992

3,918

240,5674,678

245,245—

245,245

—

4,198

4,198

—

4,198

—

4,198

97,286

139,363

8,116

244,765

4,678

249,443—

249,443—
97,286
8,771—
139,363
674

37
8,153
1,871

37
244,802
11,316

2,363
7,041
614

2,400
251,843
11,930(2,400)(2,400)(83)—
249,443
11,847

¥566
—

¥722
—

¥969
30

¥2,25730¥52—¥2,309
30

¥(7)
—

¥2,30230

Civil
engineering

Architectural
construction¥64,975
26,5875,724¥ 28,005
111,097
261

¥ 26
3,892
—

97,286

139,363—

Millions of Yen
2022

Sales
Domestic public agencies
Domestic non-government
Overseas
Revenue from contracts
with customers
Revenue from othersources
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation
Amortization of goodwill

Reportable segment
Investment
development
Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)

¥ 96,371
130,8823,294¥ 121
7,543
49¥ 96,492
138,425
3,343

¥ —
—
—

¥ 96,492
138,4253,343

640

230,547

7,713

238,260—

238,260

—

4,199

4,199

—

4,199

—

4,199

93,307

136,600

4,839

234,746

7,713

242,459—

242,459—
93,3079,548

1136,601
463

35
4,874
2,113

36
234,782
12,124

423
8,136
422

459
242,918
12,546

(459)
(459)
101

—
242,459
12,647

¥570
—

¥780
—

¥403
30

¥1,75330¥58—¥1,811
30

¥(7)
—

¥1,80430

Civil
engineering

Architectural
construction¥62,145
27,8683,294¥ 34,206
102,394
—

¥ 20
620
—

93,307

136,600—

Okumura Corporation Annual Report 2023

Thousands of U.S. Dollars
2023

Sales
Domestic public agencies
Domestic non-government
Overseas
Revenue from contracts
with customers
Revenue from othersources
Sales to externalcustomers
Intersegment
sales or transfers
Total
Segment profit
Other:
Depreciation
Amortization of goodwill

Reportable segment
Investment
development
Total

Other
(Note 1)

Total

Reconciliations(Note 2)

Consolidated(Note 3)

$ 696,466
1,060,177
44,818$ 137
34,84347$ 696,603
1,095,020
44,865$———$ 696,603
1,095,020
44,86529,3391,801,461

35,027

1,836,488—

1,836,488—

31,43931,439—31,439—31,439728,520

1,043,602

60,778

1,832,900

35,027

1,867,927—

1,867,927—
728,520
65,682—
1,043,602
5,046

275
61,05314,011275
1,833,175
84,73917,70052,727
4,601

17,975
1,885,902
89,340(17,975)(17,975)(621)—
1,867,927
88,719$4,240—$5,405—$7,255222$16,900
222

$388
—

$17,288222$(52)—$17,236
222

Civil
engineering

Architectural
construction$486,561
199,095
42,864$ 209,707
831,941
1,954$ 19829,141—

728,520

1,043,602—

Notes:
1. “Other” is a business segment which is not included in any reportable segment and includes business related to
manufacturing and sale of construction machinery, materials, and so on.
2. Reconciliations to segment profit in the amount of ¥(83) million ($(621) thousand) and ¥101 million for the years ended
March 31, 2023 and 2022, respectively, include eliminations of intersegment transactions.
3. The consolidated amounts of segment profit above correspond to the amounts of operating income in the consolidated
statement of income.

39Independent Auditor‘s Report
Deloitte Touche Tohmatsu LLC
Yodoyabashi Mitsui Building
4-1-1 Imabashi, Chuo-ku
Osaka 541-0042
Japan
Tel: +81 (6) 4560 6000
Fax: +81 (6) 4560 6001
www.deloitte.com/jp/en

INDEPENDENT AUDITOR’S REPORTTo the Board of Directors of Okumura Corporation:

40

OpinionWe have audited the consolidated financial statements of Okumura Corporation and its consolidated subsidiaries (the“Group”), which comprise the consolidated balance sheet as of March 31, 2023, and the consolidated statement of income,consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement ofcash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, all expressed in Japanese yen.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as of March 31, 2023, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S.
dollar amounts are presented solely for the convenience of readers outside Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements sectionof our report. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan,
and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated
financial statements of the current period. The matter was addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.
Revenue recognized over time
Key Audit Matter Description
As described in Note 2.l. “Summary of Significant Accounting
Policies – Construction Contracts” to the consolidated financial
statements, the Group recognizes revenue over time as theGroup satisfies the performance obligations by transferring
control of a promised good or service to a customer.
Revenues recognized over time were JPY 232,022 million out
of total construction revenue of JPY 236,649 million for thecurrent year.
As described in Note 3. “Significant Accounting Estimates,”
construction revenues recognized over time based on satisfying performance obligations according to the construction
contracts are recognized by multiplying the total construction
revenue by the stage of completion of the contract, which is
calculated as a percentage of actual costs incurred at the balance sheet date. The measurement of the total construction
revenue, the total construction costs and the stage of completion of the contract involve significant estimates andjudgments made by management.
The reliability of estimating the total construction revenue
and the total construction costs in applying revenue recognition over time has a significant impact on the consolidated
financial statements where a higher estimation uncertainty
may exist in relation to the following matters:

How the Key Audit Matter Was
Addressed in the Audit
Based on our understanding of the business environment surrounding the Group and its industry, we evaluated the designand operating effectiveness of internal controls, including
Information Technology controls, over the process of revenue
recognition over time based on satisfaction of the performanceobligations. Our procedures related to estimated total construction revenue and total construction costs were as follows:(1) Estimated total construction revenue
We performed inquiries and inspected related documents
to test the design and operating effectiveness of internal
controls related to the determination of the estimatedcontract amount. This included approval of the reports on
certain projects prepared by estimating the contract
amount for the agreed upon changes in each construction
project, and monitoring activities.
(2) Estimated total construction costs
We performed inquiries and inspected related documents
to test the design and operating effectiveness of internal
controls related to approval of the reports on working
budget, construction projects and costs incurred to date,and monitoring activities.

Okumura Corporation Annual Report 2023

Revenue recognized over time
Key Audit Matter Description(1) Estimating total construction revenue
During construction, when changes in the design or scopeof construction are agreed with customers but the construction contract has not been revised to update thecontract amount in a timely manner, the total construction revenue may be revised using the estimated contract
amount based on amendments mutually agreed with customers (the “estimated contract amount”).
Management’s estimate of the total construction may
affect the accuracy of the construction revenue.
(2) Estimating total construction costs
It may be necessary to modify total construction costs due
to unexpected events, changes in market conditions suchas materials and subcontracting costs, and accelerating
construction in response to potential delays during construction. If total construction costs are not updated in atimely manner, or if management’s estimate is not reasonable, it may affect the accuracy of the construction
revenue and the allowance for losses on construction contracts.
We determined applying revenue recognition over time to bea key audit matter because of the possible significant impactof accounting estimates of total construction revenue andtotal construction costs on the consolidated financial statements.

How the Key Audit Matter Was
Addressed in the Audit
In addition, we assessed the reasonableness of the construction revenue recognized over time by performing an analysisof the quarterly progress of revenues and gross profits
against the business plan in each branch office. Such analysis
identified branch offices with significant fluctuations in revenues and profit margins near the end of the period. We also
inspected related documents, performed inquiries of construction managers, performed site observations forconstruction projects that possessed characteristics such as
those with significantly higher or lower profit margins ratio,
large fluctuating profit margins ratio, deficit projects, projects
with large estimated contract amounts, or large-scale projects.
Specifically, for the estimate of total construction revenue
and total construction costs, we performed the following:(1) Estimated total construction revenue
We tested the estimated contract amount by inspection of
documents underlying the estimate, inspection of meeting
minutes with customers and inquiries of construction
managers.
In addition, for construction projects that contained estimated contract amounts in the prior year, we inspected
revised construction contracts signed in the current year
and compared the updated amounts in the contracts withtotal construction revenue estimated in the previous year.
(2) Estimated total construction costs
For samples of construction projects selected, we compared total construction costs with the original estimate
identifying the reason for the change, inspected the orderconfirmation for purchase orders issued, quotation orunderlying documents prior to the order, performed inquiries of the construction managers, and inspected thevendor invoices, as necessary.

Other Information
Management is responsible for the other information. The Audit and Supervisory Committee is responsible for overseeing the
Directors’ execution of duties relating to the design and operating effectiveness of the controls over the other information. The
other information comprises the information included in the annual report, but does not include the consolidated financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate theGroup or to cease operations, or has no realistic alternative but to do so.
The Audit and Supervisory Committee is responsible for overseeing the Directors’ execution of duties relating to the designand operating effectiveness of the controls over the Group’s financial reporting process.

41

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing
standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:42• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks. The procedures selected depend on the auditor’s judgment. In
addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theGroup’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordance withaccounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within theGroup to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision andperformance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with it all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit and Supervisory Committee, we determine those matters that were ofmost significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matteror when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

July 28, 2023

Member of
Deloitte Touche Tohmatsu Limited

Breakdown of Orders (Nonconsolidated)
Okumura Corporation
Year Ended March 31, 2023

Okumura Corporation Annual Report 2023

Construction Orders Awarded

2023

Millions of
Yen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

68.6

27,20098,231
1,334
126,765100  %

94,784
121,879
7,039¥223,702

Composition
ratio

Millions of
Yen

40.2%

¥ 62,145
27,8683,294
93,30757.5

34,206102,395—
136,60197.7
2.3100  %

96,351
130,2633,294
229,908
7,322¥237,230

Composition
ratio

Millions of
Yen

48.0%

¥118,664
66,293
15,512200,46952.0

51,047102,010
1,334
154,391

100  %

169,711
168,303
16,846¥354,860

71,263
196,924
11,730¥279,917
2023

Millions ofYen¥ 64,975
26,587
5,724
97,28628,004
111,098261
139,363
92,979137,685
5,985
236,649
5,617¥242,266

Year-end Backlog¥101,991
66,47022,591
191,052
46,003161,072—
207,075
147,994
227,542
22,591¥398,127

Composition
ratio

Thousands of
U.S. Dollars

43.3%$  361,702
200,425
95,874
658,001

56.7

171,942
1,274,218(8,034)
1,438,126100  %

533,6441,474,643
87,840$2,096,127

Composition
ratio

Thousands of
U.S. Dollars

39.3%$  486,561
199,096
42,863
728,52057.6

209,707
831,941
1,954
1,043,602

96.9
3.1100  %

696,268
1,031,037
44,817
1,772,122
42,063$1,814,185

Composition
ratio

Thousands of
U.S. Dollars

56.5%$  763,745
497,753
169,1731,430,671

43.5

344,492
1,206,170—
1,550,662

100  %

1,108,237
1,703,923
169,173$2,981,333

2023

2022

2023

Millions of
Yen

Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Total:
Domestic:
Public sector
Private sector
Overseas
Total

31.4%

¥ 67,584
23,648
5,705
96,93722,961
170,159(1,073)
192,047

Net Sales

Construction business
Civil engineering:
Domestic:
Public sector
Private sector
Overseas
SubtotalArchitectural construction:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Subtotal:
Domestic:
Public sector
Private sector
Overseas
Subtotal
Real estate investment, development business and other
Total

Millions ofYen¥ 48,302
26,76512,80387,8702023

2022

Composition
ratio

2023

2022

43

Network

Head and Branch Offices

44

Consolidated Subsidiaries

Head Office
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295

Hokuriku Office2-3-26, Higashi Ohdori, Chuo-ku,
Niigata 950-0087, Japan
TEL: +81-25-241-6160 FAX: +81-25-241-6364

Tokyo Head Office
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8103

Nagoya Branch
29-8, Takebashi-cho, Nakamura-ku,
Nagoya 453-8555, Japan
TEL: +81-52-451-1101 FAX: +81-52-452-4331

Technical Research Institute387, Ohsuna, Tsukuba 300-2612, Japan
TEL: +81-29-865-1521 FAX: +81-29-865-1522

Kansai Branch
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

East Japan Branch Office
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8111

Nara Office38-3, Takama-cho, Nara 630-8241, Japan
TEL: +81-742-22-5001 FAX: +81-742-27-0192

West Japan Branch Office
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6623-7692

Kobe Office2-2-16, Isobe dori, Chuo-ku,
Kobe 651-0084, Japan
TEL: +81-78-221-9355 FAX: +81-78-251-3374

West Japan Branch Office (HARUKAS Office)
26F ABENO HARUKAS,1-1-43 Abenosuji,
Abeno-ku, Osaka 545-6026, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6621-1921

Hiroshima Branch
1-7-22, Kokutaiji-machi, Naka-ku,
Hiroshima 730-0042, Japan
TEL: +81-82-241-2246 FAX: +81-82-243-1416

Sapporo Branch
2-1-18, Kita Yojo Nishi,
Chuo-ku, Sapporo 060-0004, Japan
TEL: +81-11-261-9261 FAX: +81-11-251-5345

Shikoku Branch
2-3-11, Kotobuki-cho,Takamatsu 760-0023, Japan
TEL: +81-87-851-9008 FAX: +81-87-822-9286

Tohoku Branch
2-11-18 Chuo,
Aoba-ku, Sendai 980-8482, Japan
TEL: +81-50-3495-2020 FAX: +81-50-3495-2030

Kyushu Branch
2-19-1, Sanno, Yahata Higashi-ku,
Kitakyushu 805-8531, Japan
TEL: +81-93-671-3131 FAX: +81-93-661-1543

Tokyo Branch
5-6-1, Shiba, Minato-ku,
Tokyo 108-8381, Japan
TEL: +81-3-3454-8111 FAX: +81-3-5427-8116

Fukuoka Office
1-13-8, Yakuin, Chuo-ku,
Fukuoka 810-0022, Japan
TEL: +81-92-741-4431 FAX: +81-92-741-4740

Higashikanto Office18-14, Shinmachi, Chuo-ku,
Chiba 260-0028, Japan
TEL: +81-43-241-2255 FAX: +81-43-244-5911

Taiwan Branch
Rm.A, 11F-3, No.51, Hengyang Rd.,
Zhongzheng Dist.,Taipei City 100504, Taiwan(R.O.C.)TEL: +886-2-2311-7080 FAX: +886-2-2311-7076

Yokohama Office
60, Nihon Ohdori, Naka-ku,
Yokohama 231-0021, Japan
TEL: +81-45-662-1361 FAX: +81-45-641-3502

Singapore Branch
175A Bencoolen Street, #05-06 Burlington
Square, Singapore 189650
TEL: +65-6884-6830 FAX: +65-6884-6831

Okumura Machinery Corporation
3-5-26, Himejima, Nishiyodogawa-ku,
Osaka 555-0033, Japan
TEL: +81-6-6472-3461 FAX: +81-6-6477-6801
Business line:Design, manufacture, sales, andrepair of construction/industrial machines anddevices
Taihei Real Estate Corporation[Head Office]5-16-7, Shiba, Minato-ku,
Tokyo 108-0014, Japan
TEL: +81-3-5439-5401 FAX: +81-3-5439-5402[Osaka Branch]
2-2-2, Matsuzaki-cho, Abeno-ku,
Osaka 545-8555, Japan
TEL: +81-6-6625-3959 FAX: +81-6-6629-3938
Business line: Real estate, land and building
management
ISHIKARI BIO ENERGY GODO KAISHA
2-763-3, Shinko, Chuo,
Ishikari 061-3242, Japan
TEL: +81-133-77-5318 FAX: +81-133-77-5319
Business line: Power generation using renewable energy and sales of electricity
HIRATA BIO ENERGY GODO KAISHA
23-8 Tsubouchi, Tonoko, Hirata-mura,
Ishikawa-gun, Fukushima-ken 963-8204 Japan
No.1 Power planet
TEL: +81-247-57-7351 FAX: +81-247-57-7352
No.2 Power planet
TEL: +81-247-57-6562 FAX: +81-247-57-6563
Business line: Power generation using renewable energy and sales of electricity

Board of Directors

Investor Information(As of June 29, 2023)(As of March 31, 2023)

Directors

Corporate Data

President and Representative Director
Takanori Okumura
Representative Director
Atsushi Tanaka
Directors
Yuichi Mizuno
Toru Osumi
Masahiro Kaneshige
Tamotsu Tsuchiya
Yasuyuki Nakatani
Rieko Ueda

Head Office	OKUMURA CORPORATION
2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
EstablishedFebruary 22, 1907
Capital¥19.8 billion

Director (Audit and Supervisory Committee Member)
Tetsuo Kodera

Group Employees
2,281

Director (Full-time Audit and Supervisory Committee Member)
Kazutoshi Abe

Stock Information

Directors (Audit and Supervisory Committee Member)
Hiroyo Yashiro
Kenji Nishihara
Eiji Maeda

Stock Exchange Listings
Tokyo

Note: Rieko Ueda, Tetsuo Kodera, Hiroyo Yashiro, Kenji Nishihara and Eiji Maeda areoutside directors.

Executive Vice Presidents
Yuichi Mizuno*
Hajime Kosaka
Senior Managing Executive Officers
Shunso Iijima
Kenji Kotera
Atsushi Tanaka*
Managing Executive Officers
Hiroyuki Hayashi
Toru Osumi*
Kazuyuki Yoshimi
Masahiro Kaneshige*
Wataru Onishi
Tamotsu Tsuchiya*
Sawayuki Kawatani
Kazutoshi Yuyama
Takanori Hayashi
Akira Okada
Executive Officers
Naoki Magoori
Hirohide Taniguchi
Yoshinori Yasui
Kunitake Konishi
Nobuharu Suga
Yasuhiko Goto
Hiroki Machida
Kazuyoshi Okuma
Hiroyuki Matsushima
Akira Sasaki

Transfer Agent
Sumitomo Mitsui Trust Bank, Limited
Major Shareholders
Shareholder

Executive Officers

Takami Nakada
Koji Furusawa
Masanari Kashiki
Junichi Hori
Kenichi Abe
Koichi Isogami
Yasuyuki Nakatani*
Yuji Yamamoto
Yoshihiro Kadotani
Kazutaka Kuno

Note: Those officers marked with an asterisk (*) work as directors.

45

Shares held Shareholding(thousands)
ratio

The Master Trust Bank ofJapan, Ltd. (Trust Account)

4,820

13.10%

Okumura Employees’
Shareholding Association

1,921

5.22

Custody Bank of Japan,
Ltd. (Trust Account)

1,426

3.88

Resona Bank, Limited.

1,214

3.30

Sumitomo Realty &Development Co., Ltd.

1,210

3.29

Nippon Life Insurance Company

643

1.75

Sumitomo Mitsui Banking Corporation

556

1.51

The Bank of New York,
Treaty Jasdec Account

555

1.51

State Street Bank andTrust Company 505001

541

1.47

JPMorgan Securities Japan Co., Ltd.

498

1.35

Note:
1. The Company holds 1,860,310 shares of treasury stock, which are excluded
from the above.
2. Shareholding ratio is computed excluding treasury stock.

2-2-2, Matsuzaki-cho, Abeno-ku, Osaka 545-8555, Japan
TEL: +81-6-6621-1101 FAX: +81-6-6627-5295
https://www.okumuragumi.co.jp

Printed in Japan