Independent auditor’s report
To the Board of Directors of DAIHO CORPORATION:
OpinionWe have audited the accompanying consolidated financial statements of DAIHO CORPORATION(“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), which
comprise the consolidated balance sheets as at March 31, 2023 and 2022, the consolidated statements ofincome, comprehensive income, changes in net assets and cash flows for the years then ended, andnotes, comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2023 and 2022, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Reasonableness of the Company’s estimate of total construction costs in the construction
contracts
The key audit matter

How the matter was addressed in our audit

As described in Note 2 (22) “Significant
accounting estimates” to the consolidated
financial statements, the Company
recognized total sales of ¥156,050 million, of
which ¥145,569 million revenue recognizedbased on the progress toward satisfaction of
performance obligations satisfied over time

The primary procedures we performed to assess
whether the Company’s estimate of total construction
costs in the construction contracts was reasonable
included the following:(1) Internal control testing(excludes those contracts applying the cost
recovery method) and its allowance forlosses on construction contracts amounted to¥1,610 million.
As described in Note2 (7) “Revenue and cost
recognition”, revenue from construction
contracts is recognized over time based on
the progress towards satisfaction of theperformance obligations. The estimates ofprogress are calculated as the percentage ofthe cumulative construction cost incurredcompared to the estimated total costs. In
order to estimate progress towards
satisfaction of the performance obligations
reasonably, it is particularly necessary toestimate total construction costs reasonably.
As also described in Note 2 (12) “Allowance
for losses on construction contracts” that is toestimate for losses on construction contracts,
the Company provides an allowance for thelosses on construction contracts, which are
expected to be incurred in the next fiscal year
and after, when the estimated construction
costs will certainly exceed the ordered
contract amount and such losses can bereasonably estimated.
The details of construction contracts arehighly unique, as basic specifications andwork details are prepared based on
customers’ instructions. Therefore, it isdifficult to determine criteria that are
uniformly applicable to all construction
contracts, when it comes to estimating thetotal construction costs in the construction
contracts. Specifically, estimating the total
construction costs involved a high degree of
uncertainty as described below, andmanagement’s determination of the following
aspects of construction had a significant
effect on the estimated total construction
costs at the end of the fiscal year:
・whether all construction details required
to completely fulfill a construction
contract were specified, and theestimated construction costs that were
determined necessary were included in

We tested the design and operating effectiveness ofcertain of the Company’s internal controls relevant to
the process of estimating total construction costs. In
this assessment, we focused our testing on thefollowing controls:
・controls to prepare and approve a project budget
on which the estimate of total construction costs
was based; and・controls to timely and reasonably reflect changes
in circumstances that occurred during the processof construction in the estimate of total
construction costs.
(2) Assessment of the reasonableness of theestimated total construction costs
In order to assess the reasonableness and accuracy ofthe estimated total construction costs, we compared theactual construction costs at the end of the current fiscal
year or the revised estimated total construction costswith the most recent estimate of total construction
costs. Based on the results of this assessment, we
inquired of management and the personnel responsible
for construction work about the basis used for
preparing the estimated total construction costs. In
addition, we:・assessed whether the total construction costs
included were construction costs in line with theconstruction details agreed upon with customers,
as well as ensured they did not include any items
that were not agreed upon with customers, bycomparing construction contracts and statementsof construction items with respective construction
costs included in the estimated total construction
costs;
・compared the estimated construction costs foreach construction included in the estimated total
construction costs with external service providers’written estimates on which the estimatedconstruction costs were based, or the details of theinternally prepared documents supporting thosecosts;
・assessed whether the estimated total construction
costs were timely and reasonably revised bycomparing the actual construction costs at the endof the current fiscal year with the estimated total
construction costs; andthe estimated total construction costs;
and・whether a change made to a
construction contract based onagreement newly reached between
concerned parties during the process ofconstruction, changes in work due tochanges in construction conditions that
occurred subsequent to the start ofconstruction, and incidents that did notexist when the most recent estimate of
the total construction costs was revised
were timely and reasonably reflected in
the estimated total construction costs.

・with respect to the construction contracts whose
value was significant, inspected construction
timelines and assessed whether the estimated total
construction costs were revised by reflectingchanges in work due to changes in construction
conditions occurred after the launch of
construction.
・observed certain of the construction sites that weresignificant in value, and understood the details of
constructions and the status of the items includedin the estimated total construction costs.

We, therefore, determined that ourassessment of the reasonableness of theCompany’s estimate of total construction
costs in the construction contracts was of themost significant in our audit of theconsolidated financial statements for thecurrent fiscal year, and accordingly, a key
audit matter.
Other Information
The other information comprises the information included in the Annual Report, but does not include
the consolidated financial statements, the financial statements, and our auditor’s reports thereon.
We do not perform any work on the other information as we determine such information does not exist.
Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors
for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee 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 from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

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, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness 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 orconditions that may cast significant doubt on the Group’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’sreport 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’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

KPMG AZSA LLC
Tokyo Office, Japan
October 6, 2023

DAIHO CORPORATIONCONSOLIDATED BALANCE SHEETSMarch 31, 2023 and 2022

Millions of yen
2023
2022

ASSETS
Current assets:
Cash and time deposits (Notes 15 and 21)¥ 28,074
Trade notes and accounts receivable (Notes 3,17 and 21)
99,018
Electronically recorded monetary claims - operating (Note 21)
315
Short-term loans receivable (Note 21)
2
Allowance for doubtful accounts(5)
Costs on uncompleted construction contracts
and other (Notes 4 and 10)
2,222
Advances paid (Note 21)
11,025
Income taxes refund receivable
51
Other current assets
1,283
Total current assets
141,988
Property and equipment:
Land
Buildings and structures
Machinery and equipment
Leased assets
Construction in progress
Accumulated depreciation
Net property and equipment
Intangible assets
Investments and other non-current assets:
Investment securities (Notes 7, 8 and 21)
Long-term loans receivable (Note 21)
Deferred tax assets (Note 13)
Other non-current assets
Allowance for doubtful accounts
Total investments and other non-current assets
Total assets

See accompanying notes.

¥

19,780100,889301
2(6)Thousands of
U.S. dollars(Note 1)
2023$

210,244741,541
2,359
14
(37)

2,303
13,367525
3,003
140,167

16,64082,565381
9,608
1,063,341

8,588
10,813
7,557
170
1,075
28,205

8,662
10,880
8,053
145
214
27,95564,31580,97856,5941,273
8,050
211,225(10,873)
17,332(10,804)
17,151(81,427)
129,798

601

231

4,500

8,206
406
1,039
913
(129)
10,437

8,044
2,659
850
623
(106)
12,071

61,454
3,040
7,781
6,837
(966)
78,162¥ 170,359¥ 169,621$ 1,275,810

DAIHO CORPORATIONCONSOLIDATED BALANCE SHEETSMarch 31, 2023 and 2022

Millions of yen
2023
2022

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term loans payable (Notes 5,9 and 21)
Trade notes and accounts payable (Note 21)
Electronically recorded obligations – operating (Note 21)
Advances received on uncompleted construction contracts (Note 3)
Income taxes payable (Note 17)
Accrued consumption taxes
Allowance for losses on construction contracts (Note 10)
Deposits received (Note 21)
Allowance for warranties for completed construction
Other current liabilities
Total current liabilities¥

950
34,59910,652
9,322
1,918
2,576
1,610
19,5861,047
1,561
83,826¥

6,100
34,991
10,409
9,959
558
36
855
21,174687
1,673
86,445

Thousands of
U.S. dollars(Note 1)
2023
$

7,114
259,110
79,772
69,812
14,363
19,291
12,057
146,678
7,840
11,690627,769

Non-current liabilities:

Convertible bond-type bonds with share acquisition rights(Notes 9 and 21)
Long-term loans payable (Notes 9 and 21)
Deferred tax liabilities (Note 13)
Net defined benefit liability (Note 11)
Provision for share-based remuneration
Provision for directors' retirement benefits
Provision for executive officers' retirement benefits
Other long-term liabilities
Total long-term liabilities
Total liabilities

26
6,000
－
6,302
191
35
25
772
13,354¥

97,180

1,463
－
8
6,267
162
－
－
781
8,683
¥

95,128194
44,933－47,195
1,430
262
187
5,781
100,007$727,776

Contingent liabilities (Note 12)
Net assets (Note 14):
Shareholders' equity (Note 25):
Common stock
Authorized - 32,000,000 shares- 18,083,163 shares
IssuedCapital surplus
Retained earnings
Less: Treasury stock, at cost
Accumulated other comprehensive income (Note 22) :Unrealized gains on securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans (Note 11)
Subscription rights to shares (Note 24)
Non-controlling interests
Total net assets
Total liabilities and net assets

See accompanying notes.

¥

30,736
21,746
20,843(1,959)10,5499,059
56,753(3,725)230,180
162,854
156,092(14,670)

510
(43)
152

747
(31)
28

3,819
(322)
1,138

166
1,026
73,179170,359266
845
74,493
169,621

1,243
7,683
548,034$ 1,275,810¥

DAIHO CORPORATIONCONSOLIDATED STATEMENTS OF INCOME
Years ended March 31, 2023 and 2022

Sales (Note 17) :¥Costs and expenses:
Cost of sales (Note 10)
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Guarantee commission
Commission fee
Gain (loss) on sale and disposal of property andequipment
Foreign currency exchange gain (loss), net
Loss on litigation (Note 20)
Impairment loss (Note 6)
Gain on sales of investment securities (Note 7)
Other, net
Income before income taxes and non-controlling interests
Income taxes (Note 13):
Current
Deferred
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of parent

Amounts per share of common stock:
Net income (Note 23)
Diluted net income per share (Note 23)
Cash dividends applicable to the year

See accompanying notes.

¥¥

Millions of yen
2023
2022

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

156,050

156,520$ 1,168,651

144,055
6,929
150,985

141,329
6,333
147,662

1,078,821
51,8901,130,719

5,064

8,857

37,924

175
(59)
(62)
(486)

191
(52)
(72)
(194)

1,310
(441)
(464)
(3,639)

(40)
355
(15)
(45)
258
62
142
5,207

156
532
(18)
(297)
221
72
538
9,395

(299)
2,658
(112)
(337)
(1,932)464
1,063
38,994

2,206
(97)
3,098
184
2,914

2,782
429
6,184
196
5,987

$

16,520(726)
23,2001,377
21,822346.28326.36243.00U.S. dollars(Note 1)
$
1.24
1.22
1.72

¥

¥

Yen
165.52¥163.53230.00DAIHO CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended March 31, 2023 and 2022

Millions of yen
2023
2022
Net income¥

Other comprehensive income: (Note 22)
Unrealized gains or losses on securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans (Note 11)
Total other comprehensive income

3,098

¥

(237)
(11)
123
(126)

6,184

Thousands of
U.S. dollars(Note 1)
2023
$

(893)
(8)
66
(835)

23,201(1,775)
(82)
921
(944)

Comprehensive income

¥

2,972

¥

5,348

$

22,257

Comprehensive income attribute to:
Owners of parent
Non-controlling interests

¥

2,788
184

¥

5,151
196

$

20,8791,378

See accompanying notes.

DAIHO CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2023 and 2022

Thousands of
U.S. dollars(Note 1)Millions of yen
Cash flows from operating activities:
Income before income taxes and non-controlling interests
Adjustments to reconcile income before income taxes andnon-controlling interests to net cash provided by operating activities:
Depreciation and amortization
Impairment loss
Loss on litigation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for warranties for completed construction
Increase (decrease) in provision for bonuses
Increase (decrease) in net defined benefit liability
Increase (decrease) in allowance for losses on construction contracts
Increase (decrease) in provision for share-based remuneration(Gain) loss on sale and disposal of property and equipment
Interest and dividend income
Interest expense
Foreign currency exchange (gains) losses, net
Loss (gain) on sales of investment securities(Increase) decrease in receivables and other current assets(Increase) decrease in inventories
Increase (decrease) in payables and accrued expenses
Increase (decrease) in advances received on uncompleted contracts(Increase) decrease in other assets
Increase (decrease) in other liabilities
Other, net
SubtotalInterest and dividend received
Interest paid
Income taxes paid
Income taxes refund
Payments for loss on litigation
Net cash provided by (used in) operating activities

2023
¥

5,207

2022
¥

9,395

2023
$

38,994

1,007
45
15
21
359
(12)
157
755
68
40
(175)
59
(129)
(259)
1,858
151
(152)
(636)
3,633
758
498
13,274
187(61)(1,144)614(14)
12,856

1,432
297
18
23
(1,334)
15
153
564
69
(156)
(191)
52
(189)
(221)
(10,118)
781
1,139
1,615
2,150
4,577
194
10,270188(52)(4,859)
－
(9)
5,537

7,541
337
112
157
2,688
(89)
1,175
5,654
509
299
(1,310)441(966)(1,939)13,9141,130(1,138)(4,762)
27,207
5,676
3,729
99,4081,400(456)(8,567)
4,598(104)
96,277

Cash flows from investing activities:
Deposit in time deposits
Withdrawal from time deposits
Proceeds from sales of property and equipment
Payments for purchase of property and equipment
Payments for retirement of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from withdrwal of investment securities
Payments for long-term loans receivable(Increase) decrease in short-term loans receivableCollection of long-term loans receivable
Other, net
Net cash provided by (used in) investing activities

(10)
10
74
(1,038)
(41)
(287)
(764)
467
55
－
10
2,268
14
758

(10)
10
610
(2,072)
(12)
(100)
(657)
459
－
(605)
3
180
－
(2,194)

(74)
74
554
(7,773)(307)(2,149)(5,721)
3,497
411
－
74
16,984
104
5,676

Cash flows from financing activities:
Net (increase) decrease in short-term lons payable
Proceeds from issuance of common shares
Proceeds from long-term loans payable
Repayment of long-term loans payable
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Cash and cash equivalents at end of year (Note 15)(2,000)40,188
5,878(3,150)(42,015)(4,256)(3)(71)(5,431)
90
8,273
19,751
28,025(5,000)－－－(4,769)(1,995)(2)(203)(11,971)
176(8,451)
28,20319,751(14,977)
300,966
44,020(23,590)(314,648)(31,872)(22)(531)(40,672)
674
61,956
147,914
209,877

See accompanying notes.

¥

¥

$

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of DAIHO CORPORATION (the “Company”) and its
consolidated subsidiaries (together, the “Companies”) have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations and in
conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to the application and disclosure requirements from International Financial ReportingStandards.
The accompanying consolidated financial statements have been restructured and translated into English fromthe consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Finance as required by the Japanese Financial
Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese
language consolidated financial statements, but not required for fair presentation, is not presented in theaccompanying consolidated financial statements.
The translation of the Japanese yen amounts to U.S. dollars is included solely for the convenience of readers
outside Japan, using the prevailing exchange rate as at March 31, 2023, which is ¥133.53 to U.S. $1. The
convenience translations should not be construed as representations that the Japanese yen amounts have been,
could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.
Amounts less than one million yen have been omitted. As a result, the total amounts in Japanese yen andtranslated U.S. dollars shown in the consolidated financial statements and notes to the consolidated financial
statements do not necessarily agree with the sum of the individual amounts.
2. Significant accounting policies(1) Principles of consolidation(Significant consolidated subsidiaries)
Morimoto Corporation
Daiho Painting Industry Company Limited
Daiho real Estate Company Limited
Shinwa Machinery Company Limited
Thai Daiho Company Limited(Non-consolidated subsidiaries)
Madagascar Daiho Corporation
Masters Comfort Company Limited
The consolidated financial statements as of March 31, 2023 include the accounts of the Company and its 8
subsidiaries. The other 2 subsidiaries are not consolidated as they have no material effect on the accompanying
consolidated financial statements. All significant intercompany transactions and accounts have been
eliminated.
Investments in other subsidiaries and affiliated companies are stated at cost since the Company’s equity in net
income or retained earnings in such companies is not material.
(2) Inventories
Costs on uncompleted construction contracts, and costs of the real estate business and raw materials andsupplies are stated at cost as determined on a specific basis. Costs of the real estate business and raw materials
and supplies are measured at the lower of cost or net realizable value.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(3) Property, equipment and depreciation
Property and equipment are stated at cost. Depreciation is computed principally based on the decliningbalance method. Buildings (excluding fixtures attached to buildings) acquired on or after April 1, 1998 andfixtures attached to buildings and structures acquired on or after April 1, 2016 are depreciated using thestraight-line method.
Estimated useful lives of the property and equipment are as follows:
Buildings and structures
Machinery and equipment2023
3 to 50 years
2 to 20 years

2022
3 to 50 years
2 to 20 years(4) Intangible assets (excluding leased assets)
Intangible assets with finite useful lives are amortized using the straight-line method over their usefull lives.
The useful lives are determined using the same standard as set out in the Corporation Tax Law, provided
however that software (for internal use) is subject to the straight-line method over the internally available
period of five years.
(5) Lease assets
Leased assets arising from finance leases that do not transfer ownership of the lease property to the lessee aredepreciated over the lease term using the straight-line method with a residual value of zero.
(6) Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the year-end
rates.
Items denominated in foreign currencies of foreign subsidiaries and affiliates are translated into Japanese yenat the current rate at the end of the fiscal year for all assets and liabilities, and at the average rate during the
fiscal year for revenues and expenses.
(7) Revenue and cost recognition
The details of the main performance obligations related to revenue from construction contracts with theCompanies’ customers in the main projects and the ordinary timing of satisfaction of these performanceobligations are as follows.
Since the performance obligations under construction contracts in the Civil engineering business and Building
construction business are satisfied over time as the construction progress, revenue associated with these
construction contracts is recognized based on the progress towards satisfaction of the performance obligations
except when the contract amount is small or the period is very short. The progress is estimated using thepercentage-of-completion method and the percentage at the end of the consolidated fiscal year is determinedas the percentage of the cost incurred compared to the estimated total costs, so called "cost-proportional
method". Except in the initial stages of the contracts, revenue is also recognized using the cost recovery
method when it is not possible to reasonably estimate the progress towards satisfaction of performanceobligations, but it is probable that the costs incurred will be recovered at the time of completion of
construction.
In the current fiscal year, there were no construction contracts with significant financial components includedin the transaction price. The timing of receipt of the transaction consideration varies depending on the terms ofthe contract, but it is generally received within one year.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(8) Marketable securities and investment securities
The Companies have neither trading securities nor held-to-maturity debt securities. Equity securities issued bysubsidiaries, which are not consolidated or accounted for using the equity method, are stated at the movingaverage cost. Available-for-sale securities with fair market values are stated at fair market value, andunrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate
component of net assets on the Consolidated financial statements of Comprehensive Income. Realized gains
and losses on the sale of such securities are computed using the moving-average cost. Equity securities
without market prices are stated at the moving-average cost.
(9) Costs of research and development
All research and development costs are charged to income as incurred. Costs of research and development for
the years ended March 31, 2023 and 2022 totaled ¥213 million ($1,596 thousand) and ¥183 million,
respectively.
(10) Allowance for doubtful accounts
The Companies provide an allowance for doubtful accounts based principally on the historical bad debt ratio
during a certain reference period, plus the estimated uncollectible amount based on the analysis of certain
individual accounts, including claims in bankruptcy.
(11) Allowance for warranties for completed construction
The allowance for warranties for completed construction is provided to cover expenses for defects claimed
concerning the completed work, based on the estimated amount for compensation to be paid in the future forthe work completed during the fiscal year.
(12) Allowance for losses on construction contracts
The Companies provide an allowance for losses on uncompleted construction contracts at the fiscal year-end
when losses are certainly anticipated for the next fiscal year onward, and such losses can be reasonably
estimated.
(13) Provision for share-based remuneration
To prepare for the delivery of shares to directors, the Company recognizes an amount based on the expectedboard benefit obligations at the end of the current fiscal year in accordance with the “Rules on Provision of
Shares to Officers.”(14) Provision for directors' retirement benefits
To prepare for the payment of the amount required to be paid to directors at the end of the fiscal year based on
the internal rules for directors' retirement benefits, certain consolidated subsidiaries provide for the amountbased on the internal rules for directors' retirement benefits at the end of the current fiscal year.
(15) Provision for executive officers’ retirement benefits
To prepare for the payment of the amount required to be paid to executive officers at the end of the fiscal year
based on the internal rules for executive officers’ retirement benefits, certain consolidated subsidiaries provide
for the amount based on the internal rules for executive officers’ retirement benefits at the end of the current
fiscal year.
(16) Net defined benefit liability(A) Method of attributing expected benefit to periods
The Companies determine the method of attributing expected benefit to periods based on a benefit formula.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(B) Method of processing actuarial gains and losses
Actuarial gains and losses are recognized as expenses using the straight-line method over 10 years, which falls
within the average of the estimated remaining service years of the employees, commencing from thesucceeding period.
(C) Adoption of simplified method for small entities
Certain subsidiaries calculate net defined benefit liability and retirement benefit expenses by using a simplified
method in which retirement benefit obligations are equal to the amount that would be paid if all employees
resigned voluntarily at the end of the fiscal year.
(17) Income taxes
Income taxes consist of corporation, enterprise and inhabitants taxes. The Companies recognize the tax effects
of temporary differences between the financial statement basis and the tax basis of assets and liabilities. The
provision for income taxes is computed based on the pretax income included in the consolidated financial
statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities
for the expected future tax consequences of temporary differences.
(18) Derivatives and hedging activities
Forward foreign exchange contracts are utilized by the Companies to manage their exposures to fluctuations inforeign currency. The Companies do not enter into derivatives for trading or speculative purposes.
The Companies record derivative financial instruments at fair value and recognize changes in the fair value as
gains or losses unless the derivative instruments are used for hedging purposes. When a forward foreignexchange contract meets certain conditions, the hedged item is translated at the corresponding forward foreignexchange contract rate. The following summarizes hedging derivative financial instruments used by theCompanies and the items hedged:
Hedging instruments
Forward foreign exchange contracts
Foreign currency deposits

Items hedged
Foreign currency payables
Scheduled transactions denominated in foreign currencies

The Companies confirm that key terms and conditions of the hedging instruments and the hedged transactions
are substantially the same to ensure the effectiveness for offsetting the fluctuation in fair value from the start of
the transaction and thereafter.
(19) Amounts per share of common stock
Net income per share is computed using the weighted-average number of shares of common stock outstanding
during the year. Cash dividends per share represent dividends declared as applicable to the respective years.
(20) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term
highly liquid investments with maturities not exceeding three months at the time of purchase are considered tobe cash and cash equivalents.
(21) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the accompanying consolidated financial statements forthe following year upon the shareholders’ meeting approval.
(22) Significant accounting estimates
Estimate of total construction costs in applying the percentage-of-completion method and recognizing anallowance for losses on construction contract

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(Carrying amounts in the current year’s consolidated financial statements)

2023

2022

Thousands of
U.S. dollars
2023

145,569¥ 144,259$ 1,090,159

1,610

855

12,057

Millions of yen
Construction revenue using the percentage-ofcompletion method
Allowance for losses on construction contracts¥(Other information that assists users of consolidated financial statements in understanding the nature of theestimates)
For construction contracts, the Companies apply the method of recognizing revenue over a period of timeusing the cost-to-cost method as performance obligations are fulfilled. In applying the method of recognizing
revenue over time, it is necessary to be able to reasonably estimate the progress of fulfillment of performanceobligations, and to do so, it is necessary to be able to reasonably estimate the total construction costs.
In addition, in order to prepare for losses on construction contracts, the amount of loss expected to be incurredin the next fiscal year onward is recognized as an allowance for losses on construction contracts when theestimated total cost of construction work will certainly exceed the contract amount, and the amount of suchlosses can be reasonably estimated.
Construction contracts are characterized by their strong individuality, as the basic specifications and work
content are based on the customer's instructions. Therefore, when applying the method of recognizing revenue
over a certain period of time and estimating the total construction cost to be considered in recording aprovision for contract loss, there is no uniform criterion applicable to all construction contracts. Accordingly,
estimating total construction costs is subject to high uncertainties.
If it becomes necessary to revise the estimate of the total cost of construction work, it may have a significant
impact on sales and the amount of provision for loss on construction work in the next fiscal year.
(23) Changes in accounting policies(Adoption of the Implementation Guidance on Accounting Standard for Fair Value Measurement)
The Companies have adopted the “Implementation Guidnace on Accounting Standard for Fair Value
Measurement” (ASBJ Statement No.31, June 17, 2021, hereinafter the “Guidance on fair value measurement
accounting standard”) from the beginning of the current fiscal year.
Accordingly, the Companies have applied new accounting policies under the Guidance on fair value
measurement accounting standard prospectively in accordance with the transitional treatment set out inParagraph 27-2 of the Guidance. The adoption of the Guidance has no impact on the consolidated financial
statements.
In addition, in accordance with Paragraph 27-3 of the Guidance on the fair value measurement accounting
standard, fair value information of investment trusts for the fiscal year ended March 31, 2022, is not disclosed
in fair value information of financial instruments by level of inputs included in “Note 21 Financial
instruments.”(Provision for directors’ retirement benefits)
From the current fiscal year, due to the establishment of internal rules for directors’ retirement benefits, certain
consolidated subsidiaries have changed the accounting policy of directors’ retirement benefits from themethod to be treated as expenses at the time of payment to the method to be provided for the amount based on
the internal rules for directors' retirement benefits at the end of the current fiscal year as provision for
directors’ retirement benefits.
As a result of this change, the amount required to be paid as directors’ retirement benefits at the end of thecurrent fiscal year, which amounts to ¥35 million ($263 thousand), is included in selling, general andDAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
administrative expenses. As a result, operating income and income before income taxes and non-controllinginterests decreased by ¥35 million ($263 thousand) compared with the same method previously adopted.
(Provision for executive officers’ retirement benefits)
From the current fiscal year, due to the establishment of internal rules for executive officers’ retirement
benefits, certain consolidated subsidiaries have changed the accounting policy of executive officers’ retirement
benefits from the method to be treated as expenses at the time of payment to the method to be provided for theamount based on the internal rules for executive officers' retirement benefits at the end of the current fiscal
year as provision for executive officers’ retirement benefits.
As a result of this change, the amount required to be paid as executive officers’ retirement benefits at the endof the current fiscal year, which amounts to ¥25 million ($192 thousand), is included in selling, general andadministrative expenses. As a result, operating income and income before income taxes and non-controllinginterests decreased by ¥25 million ($192 thousand) compared with the same method previously adopted.
(24) Unadoped accounting standards(Standards and guidance not yet adopted)
The following accounting standards and guidance have been issued but not yet adopted.
- “Accounting Standard for Current Income Taxes” (ASBJ Statement No.27, October 28, 2022, ASBJ)- “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No.25, October 28,
2022, ASBJ)- “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No.28, October 28, 2022,
ASBJ)(A) Overview
In February 2018, ASBJ Statement No. 28, “Partial Amendments to Accounting Standard for Tax EffectAccounting,” etc. (hereinafter referred to as “ASBJ Statement No. 28, etc.”) were issued, and the transfer of
JICPA's practical guidelines on tax effect accounting to ASBJ was completed. During their deliberations, it
had been determined that the following two issues would be further discussed subsequent to the issuance of
ASBJ Statement No. 28, etc. The above standards and guidance were issued as a result of the deliberations on
the two issues below:- Categories in which income tax expense should be recorded (taxation on other comprehensive income)- Tax effects associated with sales of shares of subsidiaries, etc. (i.e., shares of subsidiaries or affiliates)when the group taxation regime is adopted(B) Effective date
Effective from the beginning of the fiscal year ending March 31, 2025.
(C) Effects of the adoption of the standards
The effects of the adoption of Accounting Standard for Current Income Taxes, etc. are currently being evaluated.
(25) For preparation of consolidated financial statements(A) Accounting policies and procedures which are adopted when the provisions of the relevant accounting
standards are not clear(Accounting of Joint Venture)
The Company and certain consolidated subsidiaries incorporate Joint Ventures into their accounting byrecording the amount of revenue and cost of sales associated with construction contracts according to theinterests held in the Construction Joint Venture.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(26) Changes in presentation of financial statements(Consolidated balance sheets)“Accrued consumption taxes” have been presented separately from March 31, 2023 due to their increasedmateriality. The consolidated financial statements as of March 31, 2022 have been reclassified to reflect thischange in presentation of financial statements.
As a result, “Other current liabilities” in “Current liabilities” in the amount of ¥888 million in the consolidatedbalance sheets as of March 31, 2022, was reclassified to “Accrued consumption taxes” in the amount of ¥36
million and “Other” in “Current liabilities” in the amount of ¥852 million.
3. Trade notes and accounts receivable, advances received on uncompleted construction contracts
The balances of receivables from contracts with customers, contract assets and contract liabilities included in
trade notes and accounts receivable and advances received on uncompleted construction contracts are as
follows:
Thousands ofMillions of yen
U.S. dollars
2023
2022
2023
Trade notes and accounts receivable
Balance at the beginning of the year¥
75,298¥ 55,234$
563,903
Balance at the ending of the year
60,87975,298455,920
Receivables fromcontracts with customers
Balance at the beginning of the year
25,892
37,666
193,903
Balance at the ending of the year
38,45525,892287,987
Advances received on uncompleted
construction contracts
Balance at the beginning of the year
9,959
10,01074,582
Balance at the ending of the year
9,322
9,959
69,812
4. Costs on uncompleted construction contracts and other
Costs on uncompleted construction contracts and other are as follows:
Millions of yen
Costs on uncompleted construction contracts
Real estate business
Raw materials and supplies

¥

2023
2,050
86
85

¥

2022
1,729
474
100

Thousands of
U.S. dollars
2023$
15,352
644
636

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
5. Commitment line agreements
The Company has entered into commitment line agreements for borrowings with five financial institutions forthe purpose of efficient funding. The unused commitment line of credit based on such agreements forborrowings as of March 31, 2023 and 2022 is as follows:
Millions of yen
Commitment line
Short-term loans payable

¥
¥

2023
5,000
－
5,000

¥
¥

2022
15,000－15,000Thousands of
U.S. dollars
2023$
37,444－37,444$

6. Impairment losses on fixed assets
For the year ended March 31, 2023, the Companies recognized impairment loss on fixed assets as follows:
Major use
Idle assets

Land

Idle assets

Land

Asset category

Location
Ibaraki-city, Osaka-prefecture
Joetsu-city, Niigata-prefecture,and 1
otherAmount¥45 millions($337 thousand)¥0 millions($0 thousand)Assets for business use are grouped based on managerial accounting units (per branch), and idle assets andassets used for rent are grouped based on individual assets.
Carrying amounts of certain assets used for idle properties were devalued to their recoverable amounts, due tolowered profitability or substantial declines in the fair market value.
As a result, the Companies recognized an impairment loss on fixed assets of ¥45 million ($337 thousand).
Recoverable amounts of certain assets are measured at net selling price at disposition. The Companies use
appraisal value or route price for idle assets.
For the year ended March 31, 2022, the Companies recognized impairment loss on fixed assets as follows:
Major use
Idle assets
Idle assets
Idle assets

Asset category
Land
Land
Land and buildings

Idle assets

Land

Location
Yokohama-city,Kanagawa-prefecture
Niigata-city,Niigata-prefecture
Yuzawa-town,Minamiuonumacouty,Niigata-perefecture
Minamisouma-city,
Fukushima-prefecture, and 2 others

Amount¥208 millions¥76 millions¥12 millions¥0 millions

Assets for business use are grouped based on managerial accounting units (per branch), and idle assets andassets used for rent are based on individual assets.
Carrying amounts of certain assets used for equipment assets and idle properties were devalued to theirrecoverable amounts, due to lowered profitability or substantial declines in the fair market value.
As a result, the Companies recognized an impairment loss on fixed assets of ¥297 million.
Recoverable amounts of certain assets are measured at net selling price at disposition. The Companies use
appraisal value or route price for idle assets, and estimated selling price or route price for real estate for sale.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
7. Market value information for securities(A) The following tables summarize acquisition costs and book values of securities with available fair values
as of March 31, 2023 and 2022:
Available-for-sale securities:(1) Securities with book values exceeding acquisition costs

Type
Equity securities
Bonds
Others
Total

Type
Equity securities
Bonds
Others
Total

Acquisition
cost
¥
1,070
10
277
¥
1,357

Acquisition
cost
¥
3,623
10
77
¥
3,711

Millions of yen
2023
Book value
¥
2,067
10
308
¥
2,386

Difference
¥
997
0
31
¥
1,028

Millions of yen
2022
Book value
4,824
10
91
¥
4,925
¥

Difference
1,200
0
14
¥
1,214
¥

Thousands of U.S. dollars
2023

Acquisition
Type
cost
Book value
Equity securities
$
8,013
$
15,479Bonds
74
74
Others
2,074
2,306
Total
$
10,162$
17,868(2) Securities with book values not exceeding acquisition costs

Type
Equity securities
Others
Total

Acquisition
cost
¥
3,734
271
¥
4,006

Difference
$
7,466
0
232
$
7,698

Millions of yen
2023
Book value
¥
3,492
237
¥
3,729

Difference
¥
(242)
(34)
¥
(276)

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
Millions of yen
2022

Acquisition
cost
¥
1,248
279
¥
1,528

Type
Equity securities
Others
Total

Acquisition
cost$
27,9632,029$
30,000Type
Equity securities
Others
Total

Book value
1,127
276
¥
1,403

Difference
(121)
(2)
¥
(124)

¥

¥

Thousands of U.S. dollars
2023
Book value
26,151
1,774$
27,926

Difference(1,812)(254)$(2,066)$$(B) Available-for-sale securities sold and the related gains and losses
Total sales and the related gains and losses of available-for-sale securities are as follows:

Equity securities
Sales
Related gains
OthersSales
Related gains
Related losses

Thousands of
U.S. dollars
2023

Millions of yen
2023
2022

Type
¥

404
255

¥

428
221

59
3
2

$

3,025
1,909

31
7
－

441
22
14

8. Pledged assets
As of March 31, 2023 and 2022, the following assets of the Companies are pledged to guarantee money.

Investment securities

Millions of yen
2023
2022
¥
10
¥

10

Thousands of
U.S. dollars
2023
$
74

9. Short-term and long-term loans payable and Convertible bond-type bonds with share acquistion
rightsShort-term loans payable consisted mainly of bank overdrafts. The weighted average interest rates as at March
31, 2023 and 2022 were 0.6% per annum.
Long-term loans consisted mainly of bank overdrafts. The weighted average interest rate as at March 31, 2023
and 2022 were 0.7% per annum and 0.8% per annum.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
The annual maturities of long-term loans payable as of March 31, 2023 and 2022 are as follows:

Within one year
Over one year and less than two years
Over two years and less than three years
Over three years and less than four years
Over four years and less than five years
Total

¥

Millions of yen
2023
2022
－
¥
3,150
－
－
－
－
－
－
－
6,000
6,000
3,150

Thousand of
U.S. dollars
2023
－
$
－
－
－
44,93344,933

The annual maturities of Convertible bonds with subscription rights to shares payable as of March 31, 2023
and 2022 are as follows:

Within one year
Over one year and less than two years
Over two years and less than three years
Over three years and less than four years
Over four years and less than five years
Total

Millions of yen
2023
2022
－
－
¥
¥
－
－
－
26
－
1,463
－
－
26
1,463

Thousand of
U.S. dollars
2023
－
$
－
194
－
－
194

10. Allowance for losses on construction contracts
Costs on uncompleted construction contracts for which a construction loss is anticipated and allowance forlosses on construction contracts are presented without being offset.
The amount of allowance for losses on construction contracts, matching the amount of costs on uncompleted
construction contracts, is ¥143 million ($1,070 thousand) and ¥56 million for the years ended March 31, 2023
and 2022, respectively. The amount of allowance for losses on construction contracts included in cost of salesis ¥1,227 million ($9,188 thousand) and ¥780 million for the years ended March 31, 2023 and 2022,
respectively.
11. Net defined benefit liability(1) As of March 31, 2023 and 2022, the Company and certain consolidated subsidiaries provide two types ofseverance and retirement benefit plans: defined contribution pension plans and severance lump-sum payment
plans based on points. Other consolidated subsidiaries provide unfunded lump-sum payment plans.
(2) The following table shows the movement in retirement benefit obligations for the years ended March 31,
2023 and 2022 (including the adoption of a simplified method to compute their retirement benefit obligations
as permitted by Japanese GAAP).

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022

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

Millions of yen
2023
2022
6,267
¥
6,179
517
522
51
50
(70)
(12)
(462)
(472)
6,302
¥
6,267

Thousands of
U.S. dollars
2023$
46,933
3,871
381
(524)
(3,459)$47,195(3) The reconciliation between retirement benefit obligations and net defined benefit liability (including the
adoption of the simplified method stated above) is as follows:

Unfunded retirement benefit obligations
Total net defined benefit liability at the end of
the respective fiscal year¥

Defined benefit liability
Total net defined benefit liability at the end of
the respective fiscal year¥

Millions of yen
2023
2022
6,302
¥
6,267
6,302
6,302

Thousands of
U.S. dollars
2023$
47,195

6,267
¥

6,302

6,267

47,195$

6,267

47,19547,195(4) The components of retirement benefit expenses for the years ended March 31, 2023 and 2022 (retirement
benefit expenses in the consolidated subsidiaries using the simplified method are recorded in service cost) are
as follows:

Service cost
Interest cost
Net actuarial loss amortization
Total retirement benefit expenses for therespective fiscal year¥¥

Millions of yen
2023
2022
517
522
¥
51
50
53
53
621

¥

626

Thousands of
U.S. dollars
2023
$
3,871
381
396
$

4,650

(5) The remeasurements of defined benefit plans (before considering tax effect) are as follows:

Actuarial difference
Total remeasurements for the respective fiscal
year

¥
¥

Millions of yen
2023
2022
123
¥
66
123

¥

66

Thousands of
U.S. dollars
2023
$
921
$

921

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(6) The accumulated remeasurements of defined benefit plans before considering tax effect are as follows:

Actuarial gains and losses that are yet to berecognized
Total balance at the end of respective fiscal year

Thousands of
U.S. dollars
2023

Millions of yen
2023
2022
¥
¥

(152)
(152)

¥
¥

(28)
(28)

$
$

(1,138)(1,138)(7) The principal actuarial assumptions as at March 31, 2023 and 2022 (expressed as weighted averages) are
the discount rates of 0.8–1.0%.
(8) Defined contribution pension plan
The amount to be paid by the Companies to the defined contribution pension plan was ¥166 million($1,247thousand) and ¥168 million for the years ended March 31, 2023 and 2022, respectively.
12. Contingent liabilities
The Companies are contingently liable as a guarantor of indebtedness of customers aggregating is ¥3 million($28 thousand) and ¥4 million as at March 31, 2023 and 2022, respectively.
The Companies are also contingently liable as a guarantor of the repayment of advance payment for sales to
MORIMOTO Co.,Ltd. and KOSE R.E. Co.,Ltd., which amounted to ¥342 million ($2,562 thousand) as at
March 31, 2023.

MORIMOTO Co.,Ltd.
KOSE R.E. Co.,Ltd.

¥¥

Millions of yen
2023
2022
－
324
¥
－
17
－
342
¥

Thousands of
U.S. dollars
2023$(2,426)(127)$(2,562)

13. Income taxes
Income taxes consist of taxes on corporation, enterprise and inhabitants.
The Companies are subject to a number of taxes based on income, which, in the aggregate, resulted in anormal rate of 30.6% in Japan for the year ended March 31, 2023 and 2022. The following table summarizes
the main differences between the statutory tax rate and the Companies' effective tax rate for the year ended
March 31, 2023 and 2022.
Statutory tax rate
Permanent differences:Non-deductible expenses
Per capita inhabitants taxes
Increase (Decrease) in valuation allowance
Tax deduction for wage increases and productivity
improvement
Other
Effective tax rate

2023
30.6

%

2022
30.6

1.4
2.8
7.6
(0.7)

0.5
1.6
2.0
(0.2)

(1.2)
40.5

(0.3)
34.2

%

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
Main components of the Companies’ deferred tax assets and liabilities as of March 31, 2023 and 2022 are as
follows:
Thousands ofMillions of yen
U.S. dollars
Deferred tax assets:
2023
2022
2023
Net defined benefit liability
¥
2,032
¥
1,945
$
15,217
Allowance for losses on construction contracts
494
261
3,699
Allowance for warranties for completed
320
210
2,396
construction
Excess bonuses accrued
290
293
2,171
Impairment loss on fixed assets
193
183
1,445
Write-down of inventories (*1)
136
137
1,018
Enterprise taxes payable
131
96
981
Allowance for doubtful accounts
89
30
666
Subscription rights to shares
51
81
381
Tax loss carryforwards
15
60
112
Other
315
278
2,359
Subtotal
4,071
3,579
30,487
Valuation allowance (*2)(2,730)(2,333)(20,444)
Total deferred tax assets
1,341
1,245
10,042
Deferred tax liabilities:
Unrealized gains on securities
(242)
(342)
(1,812)
Deferred gains on property and equipment
(50)
(52)
(374)
Temporary differences on assets acquired
(8)
(8)
(59)
through transfers of business
Other
(0)
(0)
(0)
Total deferred tax liabilities
(301)
(403)
(2,254)
Net deferred tax assets (liabilities)
¥
1,039
¥
841
$
7,781
(*1) “Write-down of inventories” is concerning the real estate reclassified from current assets to non-current
assets by the change of the purpose.
(*2) “Valuation allowance” increased by ¥397 million ($2,965 thousand). The main reason of this increase isdue to an increase in allowance for losses on construction contracts .
14. Net assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated ascommon stock. However, a company may, by a resolution of the Board of Directors, designate an amount notexceeding one-half of the price of the new shares as additional paid-in capital, which is included in capitalsurplus.
Under the Japanese Corporate Law (“the Law”), in cases where a dividend distribution of surplus is made, thesmaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the
total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or
legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
Under the Law, companies are required to set aside an amount equal to at least 10% of the aggregate amountof cash dividends and other cash appropriations as legal earnings reserve until the total of legal earnings
reserve and additional paid-in capital equal 25% of common stock.
Under the Japanese Commercial Code (“the Law”), legal earnings reserve and additional paid-in capital could
be used to eliminate or reduce a deficit by a resolution of the shareholders’ meeting or could be capitalized bya resolution of the Board of Directors. Under the Law, both of these appropriations generally require aresolution of the shareholders’ meeting.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law,however, on the condition that the total amount of legal earnings reserve and additional paid-in capital remains
equal to or exceeds 25% of common stock, these are available for distribution by resolution of theshareholders’ meeting. Under the Law, all additional paid-in capital and all legal earnings reserve may betransferred to other capital surplus and retained earnings, respectively, which are potentially available fordividends. The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statements of the Company in accordance with Japanese laws and regulations.
At the annual shareholders’ meeting held on June 29, 2023, the shareholders approved cash dividends
amounting to ¥4,072 million ($30,501 thousand). The appropriations were not reflected in the consolidated
financial statements as of March 31, 2023. Such appropriations are recognized in the period when they are
resolved.
15. Cash and cash equivalents
Reconciliations of cash and time deposits shown in the consolidated balance sheets and cash and cash
equivalents shown in the consolidated financial statements of cash flows as of March 31, 2023 and 2022 are as
follows:

Cash and time deposits
Less: Time deposits with maturities exceeding
three months
Separate deposits with stock benefit trust
Cash and cash equivalents

Millions of yen
2023
2022
¥
28,074¥
19,780

¥

(10)
(39)
28,025

¥

(10)
(18)
19,751Thousands of
U.S. dollars
2023$ 210,244

$

(74)
(292)
209,877

16. Significant non-cash transactions
Changes in the amount of convertible bond-type bonds with share acquisition rights presented in the
consolidated financial statements of cash flows as of March 31, 2023 and 2022 are as follows:
Millions of yen
2023
2022
Gain on disposal of treasury stock due to exercise ofshare acquisition rights
Amount of decrease in treasury stock due toexercise of share acquisition rights
Amount of decrease in convertible bond-type bonds
with share acquisition rights due to exercise ofshare acquisition rights
17. Revenue recognition

¥

(516)

¥

(490)

Thousands of
U.S. dollars
2023$(3,864)

1,953

2,223

14,625

1,437

1,733

10,761(A) Disaggregation of revenue from contracts with customers
Disaggregation of revenue from contracts with customers are as described in the “Segment information”.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(B) Information related to the relationship between the satisfaction of performance obligations based oncontracts with customers and the cash flows resulting from such contracts, as well as the amounts andtiming of revenue from contracts with customers that existed as of March 31, 2023, which is expected tobe recognized in or after the fiscal year ending March 31, 2024.
(1) Balances of contract assets and contract liabilities
Millions of yen

Receivables from contracts
with customers
Contract assets
Contract liabilities

Balance as ofMarch 31, 2023¥

Balance as ofApril 1, 2022

Thousands of
U.S. Dollars
Balance as ofMarch 31, 2023

38,455 ¥25,892 $287,987

60,87975,298455,920

9,322
9,959
69,812Contract assets relate to the Company and its consolidated subsidiaries' rights to consideration forcompleted construction contracts with clients that have been completed but not yet invoiced as of thebalance sheet date. The contract assets are reclassified to receivables arising from contracts withcustomers when the Company and its subsidiaries' rights to the consideration become unconditional. The
consideration for such completed work is invoiced upon completion of the work and received withinapproximately one year, in accordance with the terms of payment.
Contract liabilities primarily relate to advances received from customers based on payment terms forconstruction contracts with clients for which revenue is recognized. Contract liabilities are reversed upon
revenue recognition.
The revenues included in the beginning balances of contract liabilities for the fiscal years ended March 31,
2023 and 2022, were ¥8,479 million ($63,498 thousand) and ¥8,367 million, respectively.
In addition, there was no significant change in the assets and liabilities recognized at the beginning of thecurrent and previous fiscal years.
The amounts of revenues recognized for the fiscal years ended March 31, 2023 and 2022 (mainly, due tochanges in transaction prices) in the past with the satisfaction of performance obligations were ¥4,890
million ($36,620 thousand) and ¥5,740 million, respectively.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(2) Transaction price allocated to the remaining performance obligations
The total transaction price allocated to the remaining performance obligations at the end of the current
fiscal year is ¥267,770 million ($2,005,3177 thousand). These remaining performance obligations are
expected to be recognized as revenue generally within five years, the details are as follows:
Millions of yen

Within one year
Over one year
and less than two
yearsOver two years
and less than
three years
Over three years
Total

Balance as of
Balance as ofMarch 31, 2023
April 1, 2022¥
135,839 ¥
131,130

Thousands of U.S.
Dollars
Balance as ofMarch 31, 2023$
1,017,291

76,584

68,955573,534

37,37917,968
267,770

43,626
13,339257,050

279,929
134,561
2,005,317

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
18. Segment information(1) General information about reportable segments
The Companies’ reportable segments include operating units of the business, for which separate financial
information is available, and which are reviewed regularly by the Board of Directors to determine the
distribution of management resources and evaluate business results. Accordingly, the company has threereportable segments: “Civil engineering”, “Building construction” and “Other”.
(2) Methods of measurement for the amounts of sales, income, assets and other items for each reportablesegment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2,“Significant Accounting Policies”
Segment income is based on the operating income of the consolidated financial statements of income.
(3) Information about sales, income, assets and other items is as follows:Year ended
March 31, 2023

Sales:
Domestic sales
International sales
Revenue generated
from contracts withcustomers
Outside customers

Millions of yen
Civilengineering

Building
construction¥

66,793¥ 75,604

9,706

241

76,50076,500¥ 75,845¥ 75,845

－

9

667

676

(676)

－

76,50075,855

4,371

156,727(676)

156,050¥¥

Intersegment
Total

Other
¥

¥
¥

Reconciliations(#1･#2･#4)

Total

3,704
－

¥

3,704
3,704

¥
¥

146,102¥

9,948
156,050
156,050－

Consolidated
(#3)

¥

9,948

－
¥
¥

－
－

146,102¥¥

156,050
156,050

Segment income

¥

3,798

¥

860

¥

385

¥

5,044

¥

20

¥

5,064

Identifiable assets
Depreciation andamortization
Capitalexpenditures¥

92,527¥ 75,469

¥

5,783

¥

173,781¥(3,421)¥

170,359

635

338

46

1,019

(12)

1,007

1,430

391

17

1,839

(60)

1,779

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
Year ended
March 31, 2022

Sales:
Domestic sales
Intemational sales
Revenue generated
from contracts withcustomers
Outside customers

Millions of yen
Civilengineering

Building
construction¥¥

80,061
6,262¥

Intersegment
Total

86,32486,324¥

Other

66,177336
66,51366,513

3,682

¥

¥

149,922

3,682
3,682

¥

¥

6,598

－

¥

Reconciliations(#1･#2･#4)

Total

Consolidated
(#3)

－

¥

149,922¥

156,520
156,520

6,598－

156,520
156,520

¥

－
－

－

5

778

784

(784)

－

86,324

66,5194,461

157,304(784)

156,520

Segment income

¥

5,419

¥

2,973

¥

451

¥

8,844

¥

13

¥

8,857

Identifiable assets
Depreciation andamortization
Capitalexpenditures¥

98,370¥69,005

¥

5,125

¥

172,501¥(2,879)¥169,621

1,055

328

62

1,447

(14)

1,432

1,681

505

8

2,195

－

2,195

Year ended
March 31, 2023

Thousands of U.S. dollars
Civil
engineering

Building
construction$ 500,209$ 566,194

72,687

Other

Total
$ 1,094,151

1,804$ 27,739－$ 572,904$ 572,904$ 567,999$ 567,999$ 27,739$ 27,739

$
$

－

67

4,995

572,904

568,066

32,734

Reconciliations(#1･#2･#4)

Consolidated(#3)

Sales:
Domestic sales
International sales
Revenue generated
from contracts withcustomers
Outside customers
Intersegment
Total
Segment income$

28,443

Identifiable assets
Depreciation andamortization
Capitalexpenditures$ 692,930

$

6,440

$

$

－

$ 1,094,151－

74,500－－$ 1,168,651$ 1,168,651

5,062(5,062)

1,173,721(5,062)－
1,168,651

74,5001,168,651
1,168,651

$
$

2,883

$

37,774$

149$

37,931$ 565,183$ 43,308$

1,301,437$ (25,619)$ 1,275,810

4,755

2,531

344

7,631

(89)

7,541

10,7092,928

127

13,772(449)

13,322#1. Reconciliations of segment income amounting to ¥20 million ($149 thousand) and ¥13 million for theyears ended March 31, 2023 and 2022 are eliminations of intersegment transactions.
#2. Reconciliations of identifiable assets amounting to ¥ (3,421) million ($25,619 thousand) and ¥ (2,879)
million for the years ended March 31, 2023 and 2022 are eliminations of intersegment transactions.
#3. Consolidated amounts of segment income above correspond to the amounts of operating income in the
consolidated financial statements of income.
#4. All assets are allocated to the respective business segments.
#5. Sales are mainly revenue generated from contacts with customers, and other sales are not material.
(4) Related information(a) Information by product or service

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
As the same information is disclosed in "(1) General information about reportable segments," thisinformation is omitted.
(b) Information by region(Sales)Disclosure of sales information by region is omitted as the proportion of sales in Japan to total sales is over90%.
(Property and equipment)
Disclosure of property and equipment information by region is omitted as the proportion of property andequipment in Japan to total property and equipment is over 90%.
(c) Information about major customers
For sales to external customers, sales to any specific customer account for less than 10% of net sales in the
consolidated financial statements. Therefore, this information is omitted.
(5) Information about impairment loss on fixed assets by reportable segment for the year ended March 31,
2023, is as follows:(Fiscal year March 31, 2023)(Millions of yen)
Elimination
Civil
Building
Other
and/orTotal
engineering
construction
corporate
Impairment
loss on fixed－ ¥－ ¥assets
¥
22 ¥
23 ¥
45

Civil
engineering
Impairment
loss on fixed
assets$Building
construction

164 $(Thousands of U.S. Dollar)
Elimination
and/orTotal
corporate

Other

172 $

－

$

(Fiscal year March 31, 2022)
Civil
engineering
Impairment
loss on fixed
assets¥Building
construction

165 ¥(6) Amortization and balance of goodwill by reportable segment
Not applicable(7) Amount of gain on negative goodwill by reportable segment
Not applicable$

337(Millions of yen)
Elimination
and/orTotal
corporate

Other

131 ¥

－

－

¥

－

¥

297

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
19. Information on related parties
Year ended March 31, 2023
Name: Masters Comfort Company Limited
Attribution: Non-consolidated subsidiary

Capital: ¥4 million ($30 thousand)Equity ownership percentage of the Company: 50%

Millions of yen
Transaction
amountLoan of funds

Repayment of funds
Receipt of interest
Work fee
Construction fee
Construction sales(Long-term loans－ receivable)(Advances received
on uncompleted
construction¥ 2,250 contacts)(Other current
42 assets)119
5

Thousands of
U.S. dollars
Balance at end(Long-term loans－ receivable)

Repayment of funds(Advances received
on uncompleted
construction$ 16,850 contacts)

Receipt of interest
Work fee(Other current
314 assets)
486

Construction fee
Construction sales

¥ 405

65
1,925
359
Thousands of
U.S. dollars
Transaction
amountLoan of funds

Millions of yen
Balance at end$ 3,033891
37

14,416
2,688

Transaction terms and policies for determining transaction terms(Note1). With regard to loan and collection of funds, efficient management of funds is carried out amonggroup companies, and interest rates are determined in consideration of market interest rates. We do not accept
or provide collateral.
(Note2). Work fee is based on the normal terms and conditions of business based on prices agreed between theparties.
(Note3). Orders for construction work are determined through price negotiations, taking market prices into
consideration.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
Year ended March 31, 2022
Name: Masters Comfort Company Limited
Attribution: Non-consolidated subsidiary

Capital: ¥4 million
Equity ownership percentage of the Company: 50%

Millions of yen
Balance at end

Millions of yen
Transaction
amountLoan of funds(Long-term loans¥ 605 receivable)

Receipt of interest(Advances received
on uncompleted
construction
180 contacts)(Other current
60 assets)

Work fee(Trade notes and
65 accounts receivable)

Repayment of funds

Construction fee
Construction sales¥ 2,655

59
16
1,722

557
2,067

Transaction terms and policies for determining transaction terms(Note1). With regard to loan and collection of funds, efficient management of funds is carried out amonggroup companies, and interest rates are determined in consideration of market interest rates. We do not accept
or provide collateral.
(Note2). Work fee is based on the normal terms and conditions of business based on prices agreed between theparties.
(Note3). Orders for construction work are determined through price negotiations, taking market prices into
consideration.

20. Loss on litigation
Components of the loss on litigation for the years ended March 31, 2023 and 2022 are as follows:
Thousands ofMillions of yen
U.S. dollars
2023
2022
2023
¥
2
¥
9
$
14
Settlement packages
13

Others
Total

¥

15

8
¥

18

97
$

112

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
21. Financial instruments
Information on financial instruments for the years ended March 31, 2023 and 2022 is as follows:(A) Status of financial instruments(1) Policy for financial instruments
The Companies limit their fund management to short-term deposits and raise funds through borrowings
from financial institutions including banks.
The Company use derivatives for the purpose of avoiding risks as described below and not for
speculative transactions.
(2) Types of financial instruments, related risk and risk management
Trade notes and accounts receivable and electronically recorded monetary claims - operating are
exposed to credit risk in relation to customers. The Companies regularly monitor the credit standing of
their main customers, due dates and outstanding balances of individual customers.
Advances paid is a credit occurring mainly through construction transactions excluded trade notes andaccounts receivables, and the account is exposed to credit risk in relation to customers.
Investment securities are exposed to the risk of market price fluctuations. Those securities arecomposed mainly of the shares of other companies with which the Companies have a business
relationship. The fair values of those securities are periodically reviewed and reported to the Board of
Directors.
Long-term loans receivable are mainly loans to affiliated companies and the repayment schedule ismanaged.
Trade notes and accounts payable and electronically recorded obligations – operating have payment
due dates mainly within one year.
The purpose of loans payable is mainly for working capital finance.
Borrowings are primarily used to raise funds for business transactions, and borrowings with variableinterest rates are exposed to interest rate fluctuation risk.
Convertible bond-type bonds with share acquisition rights are intended to raise funds necessary forworking capital and capital investment.
Derivatives used by the company are forward foreign exchange contracts for the purpose of hedging
exchange rate fluctuations, which affect overseas transactions. The execution and management ofderivative transactions are conducted in accordance with the Company’s internal regulations.
Furthermore, in actual operations, derivative transactions are entered into only with financial
institutions that possess high credit ratings in order to mitigate the counterparties’ default risks.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(B) Fair values of financial instruments
Book values of the financial instruments included in the consolidated balance sheet and their fair values as
at March 31, 2023 and 2022 are as follows. The following table does not include equity securities withoutmarket prices (Refer to #2 below). Notes are omitted for cash, as the fair values of deposits, trade notes andaccounts recevable, electronically recorded monetary claims - operating, short-term loans receivable, tradenotes and accounts payable, electronically recorded obligations-operating, short-term loans payable anddeposits received their book values due to their short maturities.
Millions of yen
2023
Book value
Fair value
Difference
Investment securities－
Other securities
¥
¥
¥
6,116
6,116
Long-term loans receivable
406
404
(2)
Total assets
¥
¥
¥
6,523
6,521
(2)
Long-term loans payable
¥
¥
¥
6,000
6,058
58
－
Convertible bond-type bonds with shares acquisition rights
26
26
Total liabilities
¥
¥
¥
6,026
6,084
58

Investment securities
Other securities
Long-term loans receivable
Total assets
Current portion of long-term loans payable
Convertible bond-type bonds with shares acquisition rights
Total liabilities

Investment securities
Other securities
Long-term loans receivable
Total assets
Long-term loans payable
Convertible bond type bonds with subscription rights to shares
Total liabilities

Book value

Millions of yen
2022
Fair value

Difference

¥

¥

¥

¥
¥
¥

6,329
2,659
8,988
3,150
1,463
4,613

¥
¥
¥

6,329
2,639
8,969
3,136
2,184
5,320

¥
¥
¥

－
(19)
(19)
(13)
721
707

Book value

Thousands of
U.S. dollars
2023
Fair value

Difference

$

$

$

$
$

$

45,802
3,040
48,85044,933
194
45,128$$$45,802
3,025
48,83545,368194
45,562

$
$

$

－
(14)
(14)
434
－
434

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
#1. As quoted prices are not readily available for unlisted stocks and the future cash flows cannot be estimatedreliably, the fair value of the items is deemed to be extremely difficult to measure and are not included in“(2) Investment securities other securities".
Thousands of
U.S. dollars

Millions of yen
2023
2022
¥ 2,089¥ 1,715

Unlisted stocks

2023$ 15,644#2. Monetary claims and Securities with scheduled redemption amounts maturing after March 31, 2023

Type
Cash and time deposits
Trade notes and accounts receivable
Electronically recorded monetaryclaims - operating
Short-term loans receivable
Advances paid
Investment securities
Available-for-sale securities
with contractual maturities
Long-term loans receivable
Total

Type
Cash and time deposits
Trade notes and accounts receivable
Electronically recorded monetaryclaims - operating
Short-term loans receivable
Advances paid
Investment securities
Available-for-sale securities
with contractual maturities
Long-term loans receivable
Total

Within one year¥
28,074
99,018¥Millions of yen
2023
Over one year
Over five years
but within five
but within ten
years
years
－
－
¥
¥
－
－

－
－

315
2
11,025

－
－
－

－
－
－

－
－
－

－
－
138,437

10
406
416

－
－
－

－
－
－

¥

¥

Within one year

Millions of yen
2022
Over one year
Over five years
but within five
but within ten
years
years

¥

¥

¥

¥

Over tenyears

19,780100,889

－
－

¥

－
－

¥

Over ten
years

¥

－
－

301
2
13,367

－
－
－

－
－
－

－
－
－

－
－
134,341

10
2,659
2,669

－
－
－

－
－
－

¥

¥

¥

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022

Type
Cash and time deposits
Trade notes and accounts receivable
Electronically recorded monetaryclaims - operating
Short-term loans receivable
Advances paid
Investment securities
Available-for-sale securities
with contractual maturities
Long-term loans receivable
Total

Within one year$
210,244741,541$

Thousands of U.S. dollars
2023
Over one year
Over five years
but within five
but within ten
years
years
－
－
$
$
－
－

$

Over ten
years
－
－

2,359
14
82,565

－
－
－

－
－
－

－
－
－

－
－
1,036,748

74
3,040
3,115

－
－
－

－
－
－

$

$

#3. Other interest-bearing liabilities amounts maturing after March 31, 2023
Millions of yen
2023
Over twoOver oneyears andOver threeyear andless thanyears andless thanthreeless thanWithin one
Type
year
two years
years
four years
Short-term－－－loans payable
¥
950
¥
¥
¥
Long-term
－
－
－
－
loans
Convertiblebond-typebonds withshare
acquisition－－－rights
26
－
－
Total
950
26

$

Over four
years andless than
five years

Over five
years

¥

¥

－

－

6,000

－

－
6,000

－
－

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022

Type
Short-termloans payable
Current portionof long-termloans payable
Convertiblebond-typebonds withshare
acquisitionrights
Total

Within one
year

Over oneyear andless than
two years

Millions of yen
2022
Over twoyears andOver threeless thanyears andthree
less thanyears
four years

Over four
years andless than
five years

Over five
years

¥

¥

¥

¥

¥

2,950

－

－

¥

－

－

－

3,150

－

－

－

－

－

－

6,100

－
－

－
－

1,463
1,463

－
－

－
－

Within one
year

Over oneyear andless than
two years

Over four
years andless than
five years

Over fiveyears

Millions of yen
2023
Over twoyears andOver threeless thanyears andthree
less thanyears
four years

Type
Short-term－－－－loans payable
$
7,114
$
$
$
$
Long-term
－
－
－
－
loans
44,933
Convertiblebond-typebonds withshare
acquisition－－－－rights
194
－
－
Total
7,114
194
44,933(C) Fair value information of financial instruments by level of inputs
The fair values of financial instruments are categorized into the following three levels based on theobservability and significance of the inputs used to calculate fair values.

$

－
－

－
－

Level 1 Fair Values: Of observable inputs used in fair value measurement, fair values measured at quoted
prices in active maukets for identical assets or liabilities.
Level 2 Fair Values: Of observable inputs used in fair value measurement, fair values measured using inputs
other than Level 1 inputs
Level 3 Fair Values: Fair values measured using unobservable inputs
If multiple inputs are used in the calculation of fair value, the fair value is categorized in its entirety based on
the lowest level of a significant input.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
(1) Financial instruments which are recognized at fair value in the consolidated balance sheets

Investment securities
Available-for-salesecurities
Equity securities
Government bonds
Investment trusts
Total assets

As of March 31, 2023
Fair value (Millins of Yen)
Level 2
Level 3

Level 1¥5,560 ¥
10
－
5,570

－ ¥
－
546
546

Total

－ ¥
－
－
－

5,560
10
546
6,116

As of March 31, 2022
Fair value (Millins of Yen)
Level 2
Level 3

Level 1
Total
Investment securities
Available-for-salesecurities
Equity securities
－ ¥
－ ¥
¥
5,951 ¥
5,951
Government bonds
－
－
10
10
Total assets
－
－
5,961
5,961
* The investment trusts to which transitional measures are not included in the above. The book value of theinvestment trusts on the consolidated balance sheets is ¥368 million.

Investment securities
Available-for-salesecurities
Equity securities
Government bonds
Investment trusts
Total assets

As of March 31, 2023
Fair value (Thousands of U.S. Dollars)
Level 2
Level 3

Level 1$

41,638 $74－
41,713

－ $
－
4,088
4,088

Total

－ $
－
－
－

41,63874
4,088
45,802(2) Financial instruments which are not recognized at fair value in the consolidated balance sheets

Long-term loans
receivable
Total assets
Long-term loans
Convertible bond-typebonds with shareacquisition rights
Total liabilities

As of March 31, 2023
Fair value (Millins of Yen)
Level 2
Level 3

Level 1
¥

Total

－ ¥
－
－

404 ¥
404
6,058

－ ¥
－
－

404
404
6,058

－
－

26
6,084

－
－

26
6,084

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022

Long-term loans
receivable
Total assets
Current portion of longterm loans
Convertible bond-typebonds with shareacquisition rights
Total liabilities

As of March 31, 2022
Fair value (Millins of Yen)
Level 2
Level 3

Level 1
¥

Total

－ ¥
－

2,639 ¥
2,639

－ ¥
－

2,639
2,639

－

3,136

－

3,136

－
－

2,184
5,320

－
－

2,184
5,320

As of March 31, 2023
Fair value (Thousands of U.S. Dollars)
Level 2
Level 3

Level 1
Total
Long-term loans－ $－ $receivable$
3,025 $
3,025
Total assets
－
－
3,025
3,025
Long-term loans－－
45,36845,368
Convertible bond-typebonds with share－－acquisition rights
194
194
Total liabilities－－
45,56245,562(Note) Description of the valuation techniques and inputs used to measure fair value- Investment securities
The fair values of the listed equity securities and government bonds are estimated based on quoted
market prices, and these securities are traded in active markets. Therefore, these securities areclassified as Level 1 inputs.
The fair values of the investment trusts with no market transaction price are based on the net asset
value. They are and classified as Level 2 inputs if there is no material restriction to requireconsiderations for risks from market participants in relation to their cancellation or repurchaserequests.
- Long-term loans receivable
The fair values of long-term loans receivable, which are categorized by certain period, are calculated
based on the present value of the future cash flows that is discounted by the interest rate that is
estimated by adding a credit risk spread to the appropriate risk-free rate, such as the rate of return forgovernment bonds. Therefore, long-term loans receivable are classified as Level 2 inputs.
- Long-term loans
The fair values of long-term loans are based on the present value of discounted cash flows using the
supposed interest rate which may be applicable to the same kind of borrowing. Therefore, long-termloans are classified as Level 2 inputs.
- Convertible bond-type bonds with share acquisition rights
The fair values of convertible bonds are estimated based on quoted market prices, but the convertible
bonds are not traded in active markets. Therefore, the convertible bonds are classified as Level 2
inputs.

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
22. Accounting standards for presentation of comprehensive income
Amounts reclassified to net income in the current period that are recognized in other comprehensive income inthe current or previous periods and the tax effects for each component of other comprehensive income are as
follows:
Millions ofMillions ofThousands ofyenyen
U.S. dollars
2023
2022
2023
Unrealized gains on securities
¥
¥
$
(82)
(1,050)(614)
Increase (decrease) during the year
(254)
(228)
(1,902)
Reclassification adjustments(337)(1,279)(2,533)
Subtotal, before tax
100
385
748
Tax (expense) or benefit
(237)
(893)
(1,775)
Subtotal, net of tax
Foreign currency translation
adjustments
Increase (decrease) during the year

(11)

(8)

(82)

Remeasurements of defined benefit
plans
Increase (decrease) during the year

70

12

524

Reclassification adjustments
Subtotal, before tax
Tax (expense) or benefit
Subtotal, net of tax
Total other comprehensive income

53
123
－
123
(126)

53
66
－
66
(835)

396
921
－
921
(943)

¥

¥

$

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
23. Per share information

Net assets per share¥

Net income per share
Diluted earnings per share

Yen
2023
2022
4,083.36¥ 4,204.58
165.52346.28163.53326.36

U.S. dollars
2023
$
30.58
1.24
1.22

Basis of the calculation of net income per share and diluted earnings per share is as follows:(Net income per share)
Profit attributable to owners of parent
Amount not belonging to ordinary shareholders
Net income attributable to owners of parent related
to common stock

¥

2,914

¥

－

¥

Weighted average number of ordinary shares(thousands of shares)(Diluted earnings per share)
Adjustment of profit attributable to owners ofparentThousands of
U.S. dollars
2023

Millions of yen
2023
2022

2,914

5,987
－

¥

5,987

17,607

17,291

0
(0)

0
(0)

¥

Fees (after deduction of tax equivalent)$

21,822－$

21,822
17,607$

1(1)

The Company's shares remaining in the trust, which are recorded as treasury shares in shareholders' equity, areincluded in the number of treasury shares to be deducted in the calculation of the average number of shares
during the period for the calculation of net income per share and diluted net income per share. It is also
included in the number of treasury shares to be deducted from the total number of issued shares at the end of
the period when calculating net assets per share. In calculating net income per share and diluted net income
per share, the average number of shares of the treasury stock deducted during the period was 98,308 shares in
the previous fiscal year and was 84,385 shares in the current fiscal year. The number of shares of treasury
stock deducted in the calculation of net assets per share at the end of the period was 93,800 shares for theprevious fiscal year and 78,500 shares for the current fiscal year.
The dilutive factor included in calculating diluted net income per share is as follows:
2023
Subscription rights to shares (thousands of shares)

215

2022
1,057

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
24. Stock options
No stock option expense is accounted for under selling, general and administrative expenses in the
consolidated statement of income for the fiscal years ended March 31, and 2023 and 2022.
A. Outline of stock options
Title and number ofgrantees
Number of stock
options (a)Grant date
Exercise conditions
Intended service
periodExercise period

FY 2014 stock options
7 Directors
8 Corporate officers
52,800 common shares

FY 2015 stock options
7 Directors
11 Corporate officers
106,600 common shares

FY 2016 stock options
7 Directors
11 Corporate officers
89,000 common shares

March 2, 2015(b)
No particular set

March 1, 2016(b)
No particular set

March 1, 2017(b)
No particular set

From March 3, 2015 toMarch 2, 2035

From March 2, 2016 to
March 1, 2036

From March 2, 2017 toMarch 1, 2037

Notes:(a) The number of stock options means the total shares to be issued upon the exercise of subscription rights toshares.
(b) The following working conditions are required to be met.
(1) The grantees can exercise their rights from the following day of the day after one year from when the
grantees lost their position as director or corporate officer. This period is limited to 9 years from the date.
(2) The grantees cannot exercise their rights if one of the following matters happen.
The grantee commits a crime that results in imprisonment, or worse, during the time as a director or corporate
officer.
The grantees or legal heirs offer to waive all their rights or a part of their rights in writing using the format
provided by the Company.
(3) A grantee’s legal heir can exercise the rights within six months from the date the grantee passes away
regardless of the condition mentioned above (1).
(Excluding those who succeeded again from the legal heirs when they pass away during that period)

DAIHO CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023 and 2022
B. Scale and changes in stock options
The following describes the scale and changes in stock options that existed during the fiscal year ended March
31, 2023. The number of stock options is translated into the number of shares.
Fiscal year ended March 31, 2023:
Number of stock options
Before vested:
As of March 31, 2022
GrantedForfeited
VestedOutstanding
After vested:
As of March 31, 2022
VestedExercised
Forfeited
Outstanding

FY 2014 stock options

FY 2015 stock options

FY 2016 stock options

19,40014,0005,400

42,00018,40023,60040,40017,40023,000600
14,00014,600-3,200
18,40010,60011,0002,800
17,40011,4008,800

Price information
FY 2014 stock options FY 2015 stock options FY 2016 stock options
Exercise price¥1 ($0.007) per share¥1 ($0.007) per share¥1 ($0.007) per share
Average price when
¥4,295 ($32.17)¥4,294 ($32.16) per¥4,277 ($32.03) per
exercised
per share
share
share
Fair value at the grant date ¥3,480 ($26.06) per¥2,035 ($15.24) per¥2,435 ($18.24) per
share
share
share
As of October 1, 2018, the Company carried out a share consolidation at a ratio of 5 common shares to 1. The
share prices are calculated after taking into account the share consolidation.
C. Estimation of the number of stock options vested
Because it is difficult to reasonably estimate the number of options that will expire in the future, the number of
options that have been forfeited is reflected.