[Cover][Document being filed]Annual Securities Report[Legal basis]

Article 24, Paragraph 1 of the Financial Instruments andExchange Act[Submitted to]

Director-General of the Kanto Local Finance Bureau[Date of submission]

June 30, 2022

[Fiscal year]

96th term (from April 1, 2021 to March 31, 2022)[Company name]

DKK Co., Ltd.

[Company name in English]

DKK Co., Ltd.

[Position and name of representative]

Tadatoshi Kondo, President and Representative Director[Location of Headquarters]

3-3-1 Marunouchi, Chiyoda-Ku, Tokyo[Phone number]+81-3-3216-1671 (main line)[Contact person]

Toshihisa Takayama, Managing Officer and Head of Finance
Department[Location of nearest contact]

3-3-1 Marunouchi, Chiyoda-Ku, Tokyo[Phone number]+81-3-3216-1671 (main line)[Contact person]

Toshihisa Takayama, Managing Officer and Head of Finance
Department[Places where the document will be

Osaka Branch of DKK Co., Ltd.

made available for viewing](2-30 Toyotsu-cho, Suita-shi, Osaka)
Nagoya Branch of DKK Co., Ltd.
(1-4-13 Higashi-Sakura, Higashi-ku, Nagoya-shi, Aichi)
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)-1-

Part 1. [Company Information]
I. [Company Overview]
1. [Key Performance Indicators](1) Consolidated performance indicators, etc.
Term

92nd

93rd

94th

95th

96th

Month of fiscal year-end

March 2018

March 2019

March 2020

March 2021

March 2022

Net sales(millions of yen)

43,02244,75745,016

41,47833,968

Ordinary income(millions of yen)

1,823

2,943

2,774

1,799

448

Net income attributable
to shareholders of(millions of yen)

804

1,524

1,789

1,155

705

Comprehensive income (millions of yen)

1,696

1,062

1,401

2,219

195

Net assets(millions of yen)

45,52245,96346,30947,991

46,609Total assets(millions of yen)

61,68762,437

61,20862,46356,336

Net assets per share(yen)

3,648.43

3,680.74

3,760.57

3,908.32

3,938.79

Net income per share

(yen)

65.84

124.78148.08

96.14

59.51

(yen)

－

－

－

－

－

Equity ratio

(%)

72.3

72.0

73.8

75.2

81.5

Return on equity

(%)

1.8

3.4

4.0

2.5

1.5

Price-to-earnings ratio

(x)

48.0

26.7

16.8

28.3

37.9

(millions of yen)

2,398

3,177

1,543

1,447

4,166

Cash flows frominvesting activities(millions of yen)

(3,610)(1,120)(1,261)(1,402)

2,680

Cash flows fromfinancing activities(millions of yen)

(1,506)(626)(1,069)(633)(4,139)(millions of yen)

10,066

11,494

10,931

10,30013,140

1,257

1,213

1,344

1,266

1,184

parent company

Diluted net income per
share

Cash flows frombusiness activities

Cash and cash
equivalents at end ofterm
Number of employees[Average number of
temporary employees](persons)

[138]

[148]

[164]

[150]

[124]

Notes:1 No figures are provided for “diluted net income per share” as there are no dilutive shares.
2 The Company began to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29
issued on March 31, 2020), etc. at the beginning of the current consolidated fiscal year, and the figures for key
performance indicators for the current consolidated fiscal year are those after the standard, etc. were applied.

-2-(2) Performance indicators of the filing company
Term

92nd

93rd

94th

95th

96th

Month of fiscal year-end

March 2018

March 2019

March 2020

March 2021

March 2022

Net sales(millions of yen)

33,572

34,47635,93034,30827,310Ordinary income(millions of yen)

1,414

2,221

2,025

1,305

759

Net income(millions of yen)

888

1,168

1,278

792

1,032

Capital(millions of yen)

8,774

8,774

8,774

8,774

8,774

14,084,845

14,084,845

14,084,845

14,084,845

14,084,845

Issued shares(shares)

Net assets(millions of yen)

35,22835,36034,882

36,05135,343

Total assets(millions of yen)

47,39447,63745,61447,342

42,574(yen)

2,882.98

2,893.91

2,902.73

2,999.65

3,032.73

45.00

45.00

45.00

45.00

60.00

Net assets per share
Dividend per share(including interim dividend
per share)(yen)

Net income per share

(yen)

72.67

95.59

105.79

65.96

87.01

(yen)

－

－

－

－

－

Equity ratio

(%)

74.3

74.2

76.5

76.2

83.0

Return on equity

(%)

2.5

3.3

3.6

2.2

2.9

Price-to-earnings ratio

(x)

43.5

34.8

23.6

41.2

25.9

Payout ratio

(%)

61.92

47.08

42.54

68.22

68.96

569

563

582

591

590

[116]

[136]

[117]

Diluted net income per
share

Number of employees

(0.0)

(0.0)

(0.0)

(0.0)

(0.0)

[Average number of
temporary employees](persons)

Total shareholder yield

(%)

116.3

123.9

95.9

105.4

91.1

(TOPIX total return index
for comparison)(%)(115.9)(110.0)(99.6)(141.5)(144.3)Highest share price

(yen)

3,435
(589)

3,590

3,905

2,999

2,835

Lowest share price

(yen)

2,715

2,179

1,921

2,226

2,180

[99]

[89]

(514)
Notes:1 No figures are provided for “diluted net income per share” as there are no dilutive shares.
2 The highest and lowest share price figures are those recorded on the first section of the Tokyo Stock Exchange.
3 DKK Co., Ltd. implemented a one-for-five reverse stock split on October 1, 2017. The highest and lowest shareprices in the 92nd term are figures reached after the reverse stock split, with pre-split figures indicated inparentheses.
4 The Company began to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29
issued on March 31, 2020), etc. at the beginning of the current fiscal year, and the figures for key performanceindicators for the current consolidated fiscal year are those after the standard, etc. were applied.

-3-2. [History]
In March 1938, Nihon Musen Denshin KK (Japan Wireless Telegraph Company) and Kokusai Denwa KK, whichhave operated international wireless telecommunication and wireless telephone services in Japan, merged under aspecial law to form Kokusai Denki Tsushin KK (International Telecommunications Company) under the guidance ofthe former Ministry of Communications. The new company developed and operated domestic and international
telecommunication services as a government-controlled entity.
In March 1947, after the decision to liquidate the company was made under the policy of the Supreme Commander
for Allied Powers, its telecommunications facilities and all its employees were transferred to the Ministry ofCommunications and the company underwent liquidation proceedings.
While the nation was recovering from the ravages of World War II, demand for telecommunication and its
importance grew. To address this public situation, a plan was made to establish a new company by taking over someof the facilities of the former company. A “decision development plan alteration authorization request” was submitted
under the Enterprise Reorganization Act in March 1950 and was approved in May of the same year.
DKK Co., Ltd. as it is known today was thus established in June 1950 with a capital of 50 million yen. Its businesspurpose was the design, manufacture, construction, and maintenance of telecommunication facilities and leasing offacilities.
The following are the key changes DKK went through leading up to today.
May 1952

Built the Haneda Plant in Ota Ward, Tokyo and began manufacturing applied high-frequency devices
and providing high-frequency heat treating services. Opened the Yosami branch office in Kariya, Aichi
Prefecture.
Leased high-powered low frequency transmitting facility to the Defense Facilities Administration

July 1956

Agency and began maintenance and operation services.
Opened an office in Chiyoda Ward, Tokyo and began headquarters operations.

July 1959 Began over-the-counter trading on the Tokyo Stock Exchange.
Sept. 1960 Built Kawagoe Plant in Oi (currently known as Fujimino), Saitama Prefecture. Manufacture of radio
towers and other steel structures starts. Established KK Denki Kogyo Antenna Seisakusho, acompany at the Kawagoe Plant specializing in manufacture of antennas (company renamed to Denko
Oct. 1961

Tekko KK in April 1965; predecessor of Denko Co., Ltd.). (presently a consolidated subsidiary)
Listed on the second section of the Tokyo Stock Exchange.

Jan. 1965

Built Hamamatsu Plant in Hamamatsu, Shizuoka Prefecture to expand the contract high-frequency
heat treating service.

Mar. 1965

Sold land in Shinagawa Ward, Tokyo to the Tokyo metropolitan government. Transferred operations of
the Telecommunication Division to the Kawagoe Plant in Oi (currently known as Fujimino), Saitama

Prefecture and renamed Kawagoe Plant to Kawagoe Office.
June 1967 Built Suzuka Plant in Suzuka, Mie Prefecture, to expand the contract high-frequency heat treating
July 1968

service in the Chukyo region.
Built Atsugi Plant in Aikawa, Aiko District, Kanagawa Prefecture to expand the manufacture of applied

Dec. 1970

high-frequency devices and contract heat treating service.
The Company makes Fukoku Tsushin Kogyo KK (presently Fukoku Denko Co., Ltd.), a Fukuoka
builder and seller of telecommunication equipment, an affiliate (a consolidated subsidiary presently).
(presently a consolidated subsidiary)Oct. 1971

The Company makes Fuji Kogyo KK (presently Denko Co., Ltd.), a Noda, Chiba Prefecture company
which process hot-dip galvanizing, an affiliate. (presently a consolidated subsidiary)Feb. 1972

Built Kanuma Plant in Kanuma, Tochigi Prefecture, moved the antenna production division at the
Kawagoe Office to the Kanuma Plant, and began manufacturing antennas, including microwave

antennas, as a plant specialized in antenna production.
June 1973 Made Sanei Kinzoku Kogyo KK, a manufacturer of parabolic antenna-related equipment in Kita Ward,
Feb. 1974

Tokyo, an affiliate (presently a consolidated subsidiary).(presently a consolidated subsidiary)
The Company establishes Denki Kogyo Koji KK (presently DKC Co., Ltd.), which constructs
telecommunication facilities, inside the Kawagoe Office in Oi-machi (present Fujimino), Saitama
Prefecture. (presently a consolidated subsidiary)-4-

July 1976

Established Omoto Industry Co., Ltd. (currently known as Koshuha Co., Ltd., ), a company in Isehara,
Kanagawa Prefecture specialized in manufacture of electric machinery, devices, etc.(presently aconsolidated subsidiary)

June 1981 Built a new Kawagoe Plant in Kawagoe, Saitama Prefecture. Started full-blown production of large
steel structures as a plant dedicated to manufacture of such structures.
June 1990 DKK Sino-Thai Engineering Co., Ltd., which construct telecommunication facilities, etc. overseas,
established in Bangkok, Thailand. (presently a consolidated subsidiary)Nov. 1990
Apr. 1991

Moved company shares to the first section of the Tokyo Stock Exchange.
Established Shiga Plant in Minakuchi (currently known as Koka), Koka District, Shiga Prefecture.
Established Denko Techno Heat Co., Ltd., a company in the Shiga Plant specialized in contract highfrequency heat treating service.(presently a consolidated subsidiary)

June 1996 Merged Denko Tekko KK and Fuji Kogyo KK, both consolidated subsidiary of the Company, andrenamed to Denko Co., Ltd.
Mar. 1998

Established Denko Metallurgical Technologies Co., Ltd., a company in the headquarters in Chiyoda
Ward, Tokyo specialized in sales of sells vacuum furnaces, etc.

Apr. 1998

Transferred the manufacturing divisions of Hamamatsu and Suzuka Plants to Denko Techno Heat Co.,Ltd.

May 2004

DKK of America, Inc., which provides maintenance services for high-frequency induction heating
equipment, supports sales operation for such equipment, and manufactures and repairs heating coils,
established in the U.S. state of Indiana. (presently a consolidated subsidiary)Aug. 2004

Built Kariya Plant in Kariya, Aichi Prefecture to expand the contract high-frequency heat treating
service.

Apr. 2010
Feb. 2011

Merged Denko Metallurgical Technologies Co., Ltd. with Koshuha Co., Ltd. by acquisition.
Transferred the manufacturing division of the Kanuma Plant to Denko Tech KK.

Apr. 2012
May 2012

Merged Denko Tech KK with Denko Seisakusho Co., Ltd. by acquisition.
DKK (Thailand) Co., Ltd., which sells telecommunication-use antennas, repairs heating coils for highfrequency induction heating equipment, and sells other components and equipment, established in
Ayutthaya, Thailand. (presently a consolidated subsidiary)Oct. 2012

Denki Kogyo (Changzhou) Heat Treatment Equipment Co., Ltd., which repairs and manufactures
heating coils for high-frequency induction heating equipment and sells other components andequipment, established in the Chinese province of Jiangsu. (presently a consolidated subsidiary)Sept. 2013 DKK Manufacturing (Thailand) Co., Ltd., which manufactures telecommunication-use antennas andheating coils for high-frequency induction heating equipment, established in Ayutthaya, Thailand.
(presently a consolidated subsidiary)Jan. 2017

DTHM, S.A de C.V., a provider of IH Heat-Treatment Processing services, established in the Mexican
state of Guanajuato. (presently a consolidated subsidiary)Mar. 2018

Korea Denkikogyo Co., Ltd., which manufactures high-frequency induction heating equipment andsells other components and equipment, established in Incheon, South Korea. (presently a

July 2019consolidated subsidiary)
Established DKK North America, Inc., a company in Texas, U.S. specialized in import and saleAug. 2019

communications antennas.
Established Wireless R&D Center, a facility in Yokohama, Kanagawa Prefecture where research andOct. 2021

development of next-generation technology in 5G and beyond are conducted.
Established Future Research Center in Yokohama, Kanagawa Prefecture to pursue research andApr. 2022

development activities aimed at developing new business areas that will drive the Company’s future.
The Company’s stock listing shifted from the Tokyo Stock Exchange’s First Section to the Primemarket of the same exchange as the exchange introduced market restructuring.

-5-

3. [Description of Business Operations]
The DKK Group (the “Group” hereafter) consists of the company filing the consolidated financial statements (the“Company” hereafter) and 14 subsidiaries.
The Company operates mainly in two areas: telecommunication and radio frequency businesses. It also leases
facilities and sells electric power. The Company expands its business by work closely together with Group companies.
Key businesses the Group operates, positioning of affiliate companies in their respective business areas, and theirrelationship with segments are as follows.
Telecommunication Business: The Company manufactures and constructs antennas, reflectors, steel towers,
structures, telecommunications facilities, and equipment. The below describes therelationships with the affiliate companies.
Denko Co., Ltd.
Manufactures and sells steel structures, etc. and performs plating work. Also
(consolidated subsidiary) does part of the Company’s construction of antennas, steel towers, etc. andDenko Seisakusho Co., Ltd.

plating work on steel towers, steel building frameworks, etc.
Processes metals and machinery parts. Also does part of the Company’s(consolidated subsidiary) manufacture and processing of antennas and telecommunication equipment.
DKC Co., Ltd.
Performs construction work of telecommunication facilities for the Company.
(consolidated subsidiary)
Fukoku Denko Co., Ltd.
Performs part of design and manufacture of the Company’s wired and wireless(consolidated subsidiary) telecommunication equipment.
DKK Sino-Thai Engineering
Undertakes construction of telecommunication facilities overseas for theCo., Ltd.
Company.
(consolidated subsidiary)
Koshuha Co., Ltd.
Manufactures electric machineries, devices, etc. for the Company.
(consolidated subsidiary)
DKK MANUFACTURING

Manufactures antennas, telecommunication equipment, etc. for the Company.

(THAILAND) CO., LTD.
(consolidated subsidiary)
DKK (THAILAND) CO., LTD. Sells antennas, telecommunication equipment, etc. of the Company.
(consolidated subsidiary)
DKK North America, Inc.

Sells antennas, telecommunication equipment, etc. of the Company.

(non-consolidated subsidiary)-6-Radio Frequency Business: The Company manufactures and sells high-frequency induction heating equipment
and provides contract high-frequency heat treating service. The below describes therelationships with the affiliate companies.
Denko Techno Heat Co., Ltd. Mainly provides contract high-frequency heat treating service.
(consolidated subsidiary)
Koshuha Co., Ltd.
Manufactures and processes high-frequency induction heating equipment, etc.
(consolidated subsidiary) for the Company and provides contract high-frequency heat treating service.
DKK of America,Inc.
Undertakes maintenance service for and supports sales of high-frequency(consolidated subsidiary) induction heating equipment as well as manufactures and repairs heating
DENKI KOGYO(CHANGZHOU) HEATTREATMENT EQUIPMENT

coils.
Repairs and manufactures heating coils used in the Company’s highfrequency induction heating equipment and sells components and equipment.

CO., LTD.
(consolidated subsidiary)
DKK MANUFACTURING(THAILAND) CO., LTD.

Manufactures heating coils used in the Company’s high-frequency induction
heating equipment.

(consolidated subsidiary)
DKK (THAILAND) CO., LTD. Repairs heating coils used in the Company’s high-frequency induction heating(consolidated subsidiary) equipment and sells components and equipment.
DTHM,S.A. DE C.V.

Mainly provides contract high-frequency heat treating service.

(consolidated subsidiary)
KOREA DENKIKOGYO. Co.,Ltd.

Mainly manufactures high-frequency induction heating equipment, etc. andsells components and equipment.

(consolidated subsidiary)
Other Businesses: This division mainly operates a facility leasing service and electric power sales business. It
leases land, buildings, etc. owned by the Company and sells power from solar plants.
The diagram below shows the above-described roles and relationships between different operations and divisions.

-7-

(Consolidated subsidiary)
DKK of America, Inc.
DENKI KOGYO (CHANGZHOU) HEATTREATMENT EQUIPMENT CO., LTD.
KOREA DENKIKOGYO. Co., Ltd.

(Consolidated subsidiary)(non-consolidated subsidiary)(Consolidated subsidiary)

DKK (THAILAND) CO., LTD.

DKK North America, Inc.

DTHM, S.A. de C.V.

DKK Co., Ltd.

(Consolidated
subsidiary)
Denko Techno HeatCo., Ltd.

Telecommunication Business(Consolidated subsidiary)
Koshuha Co., Ltd.
DKK MANUFACTURING(THAILAND) CO., LTD.

Others(Consolidated subsidiary)(Consolidated subsidiary)
Denko Co., Ltd.
Fukoku Denko Co., Ltd.
DKC Co., Ltd.
DKK Sino-Thai Engineering Co.,
Denko Seisakusho Co.,
Ltd.
Ltd.

Contract work

Product delivery

Facility leasing-8-

Customers

Radio Frequency
Business4. [Status of Subsidiaries and Affiliates]
Consolidated subsidiaries
Name

Denko Co., Ltd.

Denko Seisakusho Co.,Ltd.

Location

Kawagoe, Saitama
Prefecture

Kanuma, Tochigi
Prefecture

Capital(millions of yen)

70

92

Principal businessTelecommunication
Business

Telecommunication
Business

DKC Co., Ltd.

Fujimino, Saitama
Prefecture

Fukoku Denko Co., Ltd.

Hakata Ward,
Fukuoka, Fukuoka
Prefecture

17

Telecommunication
Business

Ayutthaya, Thailand

Millions of baht
8

Telecommunication
Business

DKK Sino-ThaiEngineering Co., Ltd.
(See Note 3.)

Denko Techno Heat Co.,Ltd.

Koshuha Co., Ltd.

DKK of America, Inc.

DENKI KOGYO(CHANGZHOU) HEATTREATMENTEQUIPMENT CO., LTD.

Kariya, Aichi
Prefecture

Aikawa, Aiko District,
Kanagawa Prefecture

Indiana, U.S.

Jiangsu Province,
China

20

70

50

Thousands ofdollars
300

Millions of yuan
6

Telecommunication
Business

Radio Frequency
Business

Telecommunication
Business
Radio Frequency
Business

Radio Frequency
Business

Radio Frequency
Business-9-

Votingpower (%)

Description of relationship

100

Undertakes manufacture of antennas,
steel towers, and steel building
frameworks and plating work on themfor the Company.
Rents the Company’s land, buildings,
etc.
Concurrent directorships: none

100

Manufactures and processes
antennas, telecommunicationequipment, etc. for the Company.
Rents the Company’s land, buildings,
etc.
Concurrent directorships: none

100

Performs construction work oftelecommunication facilities for theCompany.
Rents the Company’s land, buildings,
etc.
Concurrent directorships: none

100

Undertakes design of and construction
work for the Company’s wired andwireless telecommunicationequipment.
Concurrent directorships: none49

Undertakes construction of overseas
telecommunication facilities for theCompany.
Concurrent directorships: none100

Mainly provides contract highfrequency heat treating service.
Rents the Company’s land, buildings,
etc.
Concurrent directorships: none

100

Manufactures electric machineries,
devices, etc. for the Company,
manufactures and processes highfrequency induction heating
equipment, etc., and provides contract
high-frequency heat treating service.
Rents the Company’s land, buildings,
etc.
Concurrent directorships: none

100

Undertakes maintenance service forand supports sales of high-frequency
induction heating equipment as well as
manufactures and repairs heatingcoils.
Concurrent directorships: none

70

Repairs and manufactures heatingcoils used in the Company’s highfrequency induction heating equipment
and sells components and equipment.
Concurrent directorships: noneName

Location

DKK MANUFACTURING
Ayutthaya, Thailand(THAILAND) CO., LTD.

DKK (THAILAND) CO.,LTD.

DTHM,S.A. DE C.V.

KOREA DENKIKOGYO.
Co., Ltd.

Capital(millions of yen)

Millions of baht
118

Principal businessTelecommunication
Business
Radio Frequency
Business

Votingpower (%)

Description of relationship

100

Manufactures the Company’s
antennas, telecommunicationequipment, etc. and heating coils usedin high-frequency induction heating
equipment.
Rents the Company’s equipment, etc.
Concurrent directorships: none

Bangkok, Thailand

Millions of baht
8

Telecommunication
Business
Radio Frequency
Business

61(12)

Sells antennas and telecommunicationequipment as well as othercomponents and equipment etc. of theCompany and repairs heating coils
used in high-frequency induction
heating equipment.
Concurrent directorships: none

Guanajuato, Mexico

Thousands of
pesos
180,000

Radio Frequency
Business

100(60)

Mainly provides contract highfrequency heat treating service.
Concurrent directorships: none78

Mainly manufactures high-frequency
induction heating equipment, etc. andsells other components andequipment.
Concurrent directorships: none

Incheon, South Korea

Millions of won
1,020

Radio Frequency
Business

Notes:1 The names of businesses in the “Principal business” column are of those provided in the financial information
by segment.
2 None of the companies have submitted securities registration statements or annual securities reports.
3 Although the Company holds shares of less than 50% in DKK Sino-Thai Engineering Co., Ltd., it is included as
an affiliate company because the Company effectively controls it.
4 The figures in parentheses in the “Voting power (%)” column indicate indirect ownership and is included in
respective main figures.

5. [Status of Employees](1) Status at consolidated companies(As of March 31, 2022)
Segment

Number of employees

Telecommunication Business

808

(103)

Radio Frequency Business

315

(19)

Overall (common)

61

(2)

1,184

(124)

Total

Notes: 1 The number of employees represents the number of permanent employees; the number of temporary
employees is indicated in parentheses in annual average figures.
2 The number of employees in the “Overall (common)” row is that of employees belonging to administrative
divisions that cannot be classified into specific segments.

- 10 -

(2) Status at filing company
Number of employees
590

Average number of years ofservice

Average age
(89)

45.4

Segment(As of March 31, 2022)
Average annual salary(in thousands of yen)

15.9

6,089

Number of employees

Telecommunication Business

420

(85)

Radio Frequency Business

109

(2)

Overall (common)

61

(2)

590

(89)

Total

Notes: 1 The number of employees represents the number of permanent employees; the number of temporary
employees is indicated in parentheses in annual average figures.
2 Average annual salary includes bonuses and extra wages.
3 The number of employees in the “Overall (common)” row is that of employees belonging to administrative
divisions that cannot be classified into specific segments.
(3) Situation of the labor union
The labor union of the company filing the consolidated financial statements was formed on March 17, 1957 andcurrently has 301 members. The organization belongs to the Japanese Association of Metal, Machinery, andManufacturing Workers (JAM), a member organization the Japanese Trade Union Confederation (JTUC-Rengo).
Labor unions of consolidated subsidiaries are formed by Denko Co., Ltd. and Fukoku Denko Co., Ltd.
All the companies have a good labor-management relationship, and there is no particular issue worthy of mention.

- 11 -

II. [Business Overview]
1. [Management Policies, Management Environment, and Pressing Issues]
Any forward-looking statement in the below text is based on the Group’s judgment made as of now at the end of thisconsolidated fiscal year.
(1) The Company’s basic management policy
DKK’s most crucial basic policy in terms of management is to enhance the corporate value and meet expectationsof shareholders and customers. The Company pursues the policy by following the management philosophy of beinga “forward-looking company with a fighting spirit, seeking to capture the needs of the times early and never being
afraid of failures.” In addition, in order to “provide outstanding products to society and contribute to society” to pursue
the policy, the Company implements measures aimed at promoting steady technological development and improving
product quality and performance under the key management policy set every year, based on the rich expertise andexperience in telecommunication and applied high-frequency technologies gained over many years.
Furthermore, the Group established a Sustainability Basic Policy in November 2021, which lays out its policy tocontribute to realizing a sustainable society through corporate activity and its responsibility toward our society andstakeholders. We are engaging in corporate activity (sustainability management) based on this policy.
(2) Target key performance indicators (KPIs)
The Group aims to ensure efficient operation and business expansion by focusing on stable expansion of thebusiness foundation. The Group has the target return on equity (ROE) of 5% by the fiscal year ending March 2025
and, from there, will work to improve it further.
Furthermore, the Group has named five material issues for its sustainability management from a medium- tolong-term perspective, namely, “Workplace culture and work style reforms,” “Strengthening corporate governance,”“Contribution to social infrastructure development,” “Promote environmental management,” and “Creation of new
businesses.” It aims to contribute to the sustainable growth of society and maintain and improve its corporate value
by setting key performance indicators to evaluate efforts to address them, as described below, and ensure steady
execution. We will regularly review and update the priority initiatives and KPIs through discussion at the
Sustainability Committee, the Executive Committee and the Board of Directors.
The applicable scope of each KPI/medium- to long-term target is indicated with the following symbols:〇: DKK nonconsolidated ◎: DKK and domestic group companies ■: All DKK group companies (including overseas companies)

Workplace culture and work style reforms
KPI / medium- to long-term goals
Priority initiatives

Specific initiatives

Note: We aim to continue working every year on theitems for which no target fiscal year is indicated.

Respect of employee humanrights (including those of partnercompanies)• Conduct human rights training to raiseawareness about respect for human rights

Employees attending human rights training sessions:100%◎

Eradication of harassment• Awareness-raising to eradicate harassment• Monitoring through employee satisfaction
surveyEmployees attending harassment training sessions:100%◎

Ratio of female managers: At least 15%(FY2025)○

Ratio of employees with disabilities: Adhere to legal
requirements◎

Establish system to employ ages up to 70 (FY2025)○

Reduction in average total working hours in a year:
Over 1,800 hours (FY2025)
Less than 1,800 hours (FY2030)◎

Hiring diverse human resources;
promoting women’s
empowerment

Productivity improvement using
digital transformation (DX)• Develop a structure for diversity and inclusion
promotion• Improve productivity through digitalization ofwork processes and smartification of plants

Strengthening corporate governance
Priority initiatives
Management prioritizing
compliance

Specific initiatives･ Promote compliance programs･ Strengthen operation of compliance training
programs• Enhance/expand disclosed documents; early
disclosure of English versions of thePromotion of communication with
documents
stakeholders• Enhance/expand communication between
investors and management team
Maintain transparency ofmanagement• Conduct Board of Directors effectivenessevaluation• Improve Board of Directors effectiveness

Enhancing information security• Obtain ISO 27001 certification• Conduct security training- 12 -KPI / medium- to long-term goals
Note: We aim to continue working every year on theitems for which no target fiscal year is indicated.
Compliance education sessions for officers and division
chiefs: At least once every year◎

Attendance at compliance training sessions: 100%◎

Participation of director and outside directors in dialogue
with investors○

Board of Directors effectiveness evaluation: Once every
year
Rate of Directors’ attendance at Board meetings in a
year: At least 80%
DKK and group companies in Japan obtain ISO 27001
certification (FY2025)○◎◎

Attendance rate of security training sessions: 100%◎Contribution to social infrastructure development
Priority initiatives

Specific initiatives

Construction of stronger
information infrastructure• Strengthen delivery of carrier 5G- and local
5G-related products• Appropriate update and maintenance ofsystems and equipment

Secure safety through promotionof disaster-prevention business• Enhance/expand disaster-prevention
information provision systems by updating
disaster-prevention systems• Reinforce disaster-prevention functions byproviding our systems, including information
cameras, water level gauges, etc.

Reinforce safety of car society• Boost sale of induction-heating equipment for
automotive safety system components

Secure safety and quality• Improve technology for processing quality• Assess risks regarding quality and safety;
carry out risk mitigation activities

KPI / medium- to long-term goals
Note: We aim to continue working every year on theitems for which no target fiscal year is indicated.

Sales from communication equipment
update/maintenance deals, local governments disasterprevention function reinforcement deals, induction
heating equipment for safety device systemcomponents, etc.: at least 15% FY2020 ratio (FY2025)◎

Percentage of our engineers holding government
certification related to business evaluation application: atleast 70% (FY2025)○

Introduce advanced safety vehicles (ASVs) to companyowned cars: Begin ASV introduction (FY2030)◎

Promote environmental management
Priority initiatives

Promote carbon neutral

Specific initiatives• Raise environmental awareness across theCompany through environmental education• Promote efforts to reduce greenhouse gas
emissions• Enhance power-saving features of products• Install solar panels at our facilities• Buy power generated using renewable energy
sources, etc.

KPI / medium- to long-term goals
Note: We aim to continue working every year on theitems for which no target fiscal year is indicated.
Amount of Scope 1, 2 greenhouse gas emissions:
Reduction of at least 30% vs. FY2019 level■(FY2030)
Amount of Scope 3 greenhouse gas emissions:
Reduction of at least 15% vs. FY2019 level(FY2030)■

Promotion of renewable energy usage: Not quantitative
target set (Items followed)*◎

Promotion of realizing circularsociety• Promote efforts to control generation of waste; Ratio of total emissions recycled into resources: At
least 50% (FY2030)
waste recycling through separation into types• Promote three Rs through coordinated efforts in Amount of waste discharged (t): Not quantitative target
supply chainsset (Items followed)*

Expansion of environmental
products• Work out DKK Group green purchasing
Develop products that reduce environmental impacts by
guidelines; promote green purchasing
10%:○• Develop environmental products; promote sales
At least 16 equipment types (FY2030)
expansion activities*◎◎

We are examining impacts and compiling basic data for followed items. Current period is for assessing impacts and wehave not set quantitative targets.
Targets will be set after the impact assessment is completed.

Creation of new businesses

Priority initiatives

Specific initiatives

KPI / medium- to long-term goals
Note: We aim to continue working every year on theitems for which no target fiscal year is indicated.

• Participate in academic societies, study groups andother groups for the purpose of creating new market
Using wireless and radio frequency / new product candidates
technologies in new areas• Develop a system in which ideas that can lead tonew businesses are collected and shared
Increase of joint development, collaborating companies and• New hires for new business development
M&A instances:• Develop application programs that can be used for • At least five new projects initiated each year (FY2025)• Total of at least five projects executed (FY2030)
service business
Entry into service business○• Develop organizational structure for service
business• Accelerate service expansion through collaboration
with other companies(3) The Company’s medium- to long-term management strategy
The Company has the basic principles of responding quickly to changes in the management environment, seeking
to ensure continuity of business and stable revenue, and ensuring increase of corporate value by undertaking
initiatives for continuous improvement in corporate governance.
Under our medium- to long-term management strategy, as described in the Medium- and Long-Term Management- 13 -

Strategy disclosed in March 2021, we are working toward the goal of achieving the Group’s ideal of “Pioneering the
Future” by actively contributing to society, improving corporate value, and achieving growth. For this, we set three
growth strategies of “Creation of new business,” “Further expansion of existing business,” and “Strengthening of our
financial foundation” and are working on them.
Under the “Creation of new businesses” strategy, we will develop new revenue sources that differ from those ofexisting businesses through business style transformation, expansion of customer base, and pursuit of differentiation.
In terms of new businesses, we will work to develop new business areas in which we can take advantage of thewireless communication technology, which is our strength, with a focus on local 5G and including adoption of otherwireless technologies as a way to take advantage of our wireless technologies to develop new markets. Local 5G
has the potential to offer opportunity for us to find customers that are different from existing ones. We regard it as apromising market where we can develop markets by taking advantage of our strengths based on the technologies
we have developed over the years. In the radio frequency business, we will actively work on initiatives targeting
nonautomotive areas to capture emerging demand. By finding new uses for high-frequency induction heating
technology, we aim to develop new markets, including the industrial waste processing industry, and contribute topromoting environmental management.
In terms of “Further expansion of existing business,” expansion of existing business areas related to social
infrastructure is an important theme. We aim to expand business in peripheral areas of the businesses regarded as
the pillars, including mainly mobile communication-related, fixed wireless communication-related, broadcastingrelated, and radio frequency businesses, seeking to expand our stable revenue base by introducing products thatfeature new technologies. We will work toward contributing to society and increasing our corporate value bychanneling management resources while making appropriate capital investment.
We will also work on “Strengthening of our financial foundation” to support the growth strategies in thesebusinesses. The information communication-related industries, including telecommunication, and the applied highfrequency devices industries including mainly the automotive industry, where the Company belongs, have entered aphase of major change driven by technological innovation. By stepping up forward-looking research and development
work, we will carry out capital measures and financial strategies to put our capital to maximum use and channel ourbusiness resources into appropriate areas.
“Strengthening of our financial foundation” requires a corporate governance perspective. Our fundamental
approach to corporate governance is to increase social credibility and corporate value of the Company by ensuringtransparent and sound management. We remain committed to efforts to strengthen corporate governance, including
efforts to maintain soundness, effectiveness and transparency of the Board of Directors, promotion of a complianceprogram aimed at realizing compliance management, and reduction in cross-held shares. Note that specific efforts
for these measures made in the current consolidated fiscal year are described in the Corporate Governance Reportposted on our website in May 2022.
In addition, we established “DKK-Plan2025,” a medium-term business plan, in May 2022 in order to clearly state
the goals and what to focus on and promote for the three years from fiscal year ending March 2023, as part of theeffort to realize the vision of the Medium- and Long-Term Management Strategy above. DKK-Plan2025 has the basic
policy of ”Improve corporate value through promotion of sustainability management” and lays out the priority
measures of ”Strengthening of our financial foundation,” “Optimizing business portfolio,” and “Realizing new businesscreation early.” In order to realize the Company’s ideal (“Pioneering the Future”) of sustainable growth throughsolution of social issues, we have positioned the three years to the fiscal year ending March 2025 as a period for“laying the foundation for growth.” We will work to build a solid business foundation under DKK-Plan2025 to allow theGroup to develop and grow permanently. See the Company’s website for detailed information.
(4) Management environment
During the fiscal year under review, the Japanese economy has shown signs of recovery from the impact of the
COVID-19 pandemic. Corporate earnings recovered as economic activity returned in Japan and overseas. As
corporate revenues recovered, signs of recovery are seen also in capital expenditures and the employment
environment. Consumer spending are also returning. On the other hand, an impact on corporate earnings from spikes
in oil prices and material costs have emerged. The future of the Japanese economy thus still remains uncertain.
In the telecommunications industry in which the Group operates, signs have emerged indicating demand for 5Guse antennas may increase in earnest in the mobile communication-related segment. In the fixed wirelesscommunication-related segment, demand for administrative radio systems for disaster prevention use has decreased
sharply. In the broadcasting-related segment, demand from broadcasters for facility replacement and maintenance- 14 -

has decreased. In the applied high-frequency devices industry, some signs of recovery have emerged for demandfor capital expenditures in the automotive segment, but the recovery remains slow.
As stated above, the business environment surrounding the Group remains uncertain amid an adverse situation
created by a rapidly changing business environment, a tougher price-cutting competition and the COVID-19
pandemic, as well as a prolonged semiconductor shortage, a weaker yen and a spike in material prices.
(5) Issues the Company needs to address
Key issues for the Group include the vulnerability of its business format to customers’ capital expenditure trends,
as well as responses to the business environment affected by, among other things, delays in launches of new
businesses due to a slow growth of local 5G use, a spike in material prices, and significant fluctuations in foreignexchange rates. The Group aims to address these by working to realize efforts for new businesses early, optimize
selling prices, reduce costs, and reform the manufacturing structure, among other things.
In such an environment, we aim to maximize corporate value by optimizing the business portfolio, and introduce
new segmentations of Solutions Business and New Radio Frequency Areas to add to the existing businesses to begrown into core businesses in the future.
In terms of existing businesses, we will work to expand market shares, improve profitability, make social
contribution and improve corporate value. In the mobile communication-related segment, we aim to take advantageof the newly developed wireless equipment to capture demand for 5G-use antennas, which is expected to remain
steady. In addition, we will work to capture demand for maintenance work on mobile communication steel towers. In
the fixed wireless communication-related segment, demand pushbacks are expected for administrative radio systems
for disaster prevention use amid the impact from the pandemic, but demand is expected to recover over a medium
term. We will continue to put effort into capturing demand. In the broadcasting-related segment, we aim to steadily
work to capture demand for updating or maintaining broadcasting equipment, even though customer enthusiasm formaking capital expenditures remains unlikely to return to levels before the previous consolidated fiscal year as in the
fixed wireless communication-related segment. In the radio frequency business, we aim to strengthen coordination
with overseas offices while closely monitoring the business environment, reinforce efforts to capture demand driven
by capital expenditure led by Japanese automotive manufacturers, and actively promote efforts to stimulate new
demand in areas other than the automotive segment. In both areas of business, we will work to expand businessareas by accurately grasping needs in the market and developing emerging demand, in anticipation of the next
generation, under a coordinated effort across the Group.
The Group has established the Sustainability Basic Policy and named five material issues (“Workplace culture
and work style reforms,” “Strengthening corporate governance,” “Contribution to social infrastructure development,”“Promote environmental management” and “Creation of new businesses”) to promote sustainability management.
For the next fiscal year, we have established five key management policies, namely, “Boost corporate power by
realizing workplace cultural reforms,” “Maximize profits of the Group as a whole with strong determination,”“Promote work process reforms without being constrained by existing methods,” “Be thorough in ensuring
compliance and managing risks” and “Realize social contribution and development/growth by actively practicing
environmental management,” to promote sustainability-oriented management. We will engage in business activities
under the basic policy of DKK-Plan2025, namely, “Improve corporate value through promotion of sustainability
management.”(Management philosophy)- Providing outstanding products to society and contribute to society-

Being a forward-looking company with a fighting spirit, seeking to capture the needs of the times early andnever being afraid of failures-

Constantly working to improve productivity and trying to secure reasonable profits at all times
Striving to help improve living of employees, developing and growing the company under the spirit of “onecompany, one family”(Material issues to realize sustainability management)
Material issues: “Workplace culture and work style reforms,” “Strengthening corporate governance,”“Contribution to social infrastructure development,” “Promote environmental management” and “Creation of
new businesses”- 15 -

(Vision and strategies of Medium- and Long-Term Management Strategy)
Vision: Realize our ideal of “Pioneering the future”
Strategies: “Creation of new business,” “Further expansion of existing business,” and “Strengthening of our
financial foundation”(Basic policy and priority measures of Medium-Term Business Plan)
Basic policy: “Improve corporate value through promotion of sustainability management”
Priority measures: “Strengthening of our financial foundation,” “Optimizing business portfolio,” and “Realizing
new business creation early”- 16 -(Key management policies for next fiscal year (fiscal year ending March 2023))
Overall goal: “Improve corporate value through promotion of sustainability management”
Policies: “Boost corporate power by realizing workplace cultural reforms,” “Maximize profits of the Group as awhole with strong determination,” “Promote work process reforms without being constrained by existing
methods,” “Be thorough in ensuring compliance and managing risks” and “Realize social contribution anddevelopment/growth by actively practicing environmental management”
We conducted an internal investigation in response to whistleblowing in the current fiscal year. An outline of thewhistleblowing incident and results of the investigation are posted on the Company’s website(https://www.denkikogyo.co.jp/). The investigation found inadequacies in the operation of internal control systems.
Our Board of Directors took the above matter seriously and worked out the measures mainly to enhance
governance systems and monitoring functions to prevent recurrence, as described below, and has carried them
out.
(i)
(ii)

Establishment and execution of compliance program
Establishment of Nomination Committee(iii) Launch of Executive Committee(iv) Strengthening of secretarial divisions’ function(v) Reforms of Administrative Supervisory Division’s organizational structure(vi) Compliance training for officers, etc.
We will continue to work diligently to improve and strengthen corporate governance and coordinate efforts acrossthe entire company to restore trust.

- 17 -

2. [Risk Factors]
Among the matters regarding situations of business, accounting, etc. described in the annual securities report, key
risks that the management recognized as potentially having significant impact on the financial positions, operational
results, and cash flows of the consolidated companies include the following.
Note that any forward-looking statement in the below text is based on the Group’s judgment current as of the endof the current consolidated fiscal year.
(Risks related to fluctuations in financial positions, operating results, and cash flows)(i) Risks latent in business expansion overseas
In overseas business expansion, the Group’s business operation, financial position, operating results, and cash
flows may be affected if social confusion arises, including unexpected changes in laws or regulations,aggravation of political or economic situations, natural disasters, epidemic, disputes, terrorism, and strikes. As
part of efforts to address these risks, the Group is working to collect information, including those on tax systems,
laws and regulations, and political and economic situations in the countries where we operate.
Items including assets, debts, revenues and costs denominated in local currencies in the financial statementsof the Company’s subsidiaries are converted to yen in creating consolidated financial statements. Regarding
import and export transactions in foreign currencies, amounts converted and booked in yen are exposed to therisk of fluctuation in exchange rates at the time of conversion. The Group is working to minimize such risk using
forward exchange contracts, etc.
(ii) Revenue recognition for construction contracts, equipment installment work, etc.
For some of the Group’s construction contracts, equipment installment work, if control over goods or services istransferred to the customer over a certain period of time, revenue is recognized over the period as theperformance obligation to transfer the said goods or services to the customer is fulfilled. We are working tomanage costs appropriately through measures including review of estimated total cost and planned periods forindividual projects on an ongoing basis. If review of these becomes necessary, it may inflict a significant impact
on the Group’s earnings and financial position. To address this risk, the Group is working to improve the precisionof total cost estimates and reflect this in financial results as appropriate.
(iii) Impairment of non-current assets
The Company applies the Accounting Standard for Impairment of Fixed Assets and the Guidance on
Accounting Standard for Impairment of Fixed Assets on its accounts. If the Company ends up recognizing
impairment losses due to changes in fair values or the business environment, it may affect the Group’s earnings
and financial position. After considering potential risks and measures to address them at the time of designinginvestment plans, the Group analyzes profitability and makes investment decisions.
(iv) Impact of share prices due to market trends
The Group holds securities, mainly including shares in transacting financial institutions, affiliates, and importantbusiness partners, that are intended to be held for a long term, from the medium- to long-term perspective toimprove corporate value. As these securities may affect the Group’s business earnings and financial position if
the market deteriorates or the investees’ earnings slump, we work to minimize such risk by examining transaction
status of each issue of the shares held and monitoring market trends at all times. In accordance with a policy to
reduce cross-held shares, the Group has adhered to the basic policy of not holding such shares unless there is a
viable purpose of holding.
(v) Retirement benefit liabilities
The Group’s retirement benefit expenses and obligations are calculated based on actuarial assumptions andexpected rate of return on pension assets. Therefore, as impact of any change in the actuarial assumptions
would be systematically recognized into the future, it would affect costs recognized and debts booked in futureterms.
In the future, any change in retirement benefit plans, any change in discount rates due to changing financial
market conditions, or deterioration in investment returns may affect the Group’s earnings or financial position. Asan effort to address such risks, the Group has worked to mitigate the risk of additional contribution by partiallyintroducing defined contribution pension plans and making appropriate investment allocation, accounting forsafety and profitability, in pension asset investment.

- 18 -

(vi) Industry trends
Although the Group endeavors to win orders at fair values and increase profits by reducing costs, the Group’s
earnings and financial position may be affected if it fails to achieve initial sales and profit targets, depending on
the trends in demand situations of the related industries, including intensified price competition, technologicalinnovations or rises in purchase prices of production materials, such as steel. The Group is working to increase
earnings by constantly monitoring trends of other companies in the industry, working to increase efficiency ofoperations, and boosting profits through cost-reducing activities, in addition to responding to technologicalinnovations in a timely manner.
(Risks related to reliance on specific business partners, products, technologies, etc.)(i) Risks related to reliance on specific business partners
Telecommunication business relies heavily on mobile communication-related companies and broadcasters andradio frequency business on automakers and other companies in the automotive industry for orders and sales.
Fluctuations in demand arising from capital expenditures among these customers may significantly affect theGroup’s earnings and financial position. In terms of purchasing, there is risk that the Group’s earnings andfinancial position may be affected if we fail to meet requirements of these business operators due to a problem
arising from excessive reliance on a specific business partner. The Group, while working to maintain and develop
existing business relationships, aims to pursue reforms of business styles and expansion and differentiation of
our customer base to expand the scope of business and create new revenue sources that are different fromthose of existing businesses. Regarding its supply system, the Group is working to grasp production situations ofbusiness partners and situations of material procurement, etc. and build alternative business partners asnecessary.
(ii) Product defects, disasters/accidents at plants
The Group is working to make sure quality control and safety are maintained. However, there is no guaranteethat no defects would be produced or no accidents would happen regarding any of our products and construction
projects. Any occurrence of defects in our products or disasters and accidents in our construction projects may
affect not only the Group’s reputation but also its earnings and financial position. The Group manufactures
products and performs construction work under quality control standards (ISO9001), excluding some plants andsubsidiaries. It has purchased damage insurance policies to cover liability for potential damage related toconstruction work it performs or products it manufactures.
(Others)(i) Occurrence of significant incidents leading to lawsuits
There was no lawsuit brought against the Group in the current consolidated fiscal year that may significantly
affect its future earnings. However, the Group’s earnings and financial position may be affected in the future in
the course of operating its business if claims are brought against the Group in the form of lawsuit or otherwise inrelation to a wide range of potential incidents, including product defects and accidents in construction work. In
order to be prepared for lawsuit risk, the Group works to make sure product quality and safety are maintained
and laws and regulations are complied with.
(ii) Intellectual property rights
If lawsuit, complaints, etc. arise regarding intellectual property rights owned by the Group, the Group’s earnings
and financial position may be affected. The Group strives to obtain and protect useful intellectual property rights
related to its business activity.
(iii) Legal restraints
In operating business, the Group is subject to statutory regulations based on laws including the Construction
Business Act and the Product Liability Act. The Group’s earnings and financial position may be affected if it isdeemed to have violated laws as a result of factors such as wrong interpretation of laws. The Group works tomake sure internal controls are maintained and laws and regulations are complied with.

- 19 -

(iv) Large-scale natural disasters
If large-scale natural disasters, such as earthquakes and typhoons, as well as other events, cause confusion,
directly or indirectly, to the Group’s operations, including a halt to production lines, its earnings and financial
position may be significantly affected. In order to be prepared for events such as disasters, minimize damage,and ensure continuation of business operation, the Group has worked out a business continuity plan (BCP) andis taking necessary measures for it.
(v) Impact of COVID-19
Spread of COVID-19 is still affecting the Group and has caused a significant impact on order-taking activities in
the industries in which the Group operates. If the impact remains in the telecommunication business going
forward, slump in customers and supply chains, postponement in bidding and construction work, etc. may
happen. In the radio frequency business, decreased production and suspension or postponement of capitalspending in the automotive industry may result in a significant decrease in orders for mainstay induction heating
equipment and heat-treatment processing services. Although we expect the business environment to recover for
all of the divisions as the coronavirus pandemic ends, but any further spread of the disease or emergence of adifferent disease could affect the Group’s earnings and financial position. The Group is working to ensure
employees’ health by calling on them to wash hands, sanitize, wear a face mask, measure bodily temperature,etc. We also encourage them to use video conferencing, telecommute, and rethink their work styles.
(vi) Information security
The Group manages information of a large number of customers and business partners required to operate thebusiness and holds confidential information regarding technology, sales, and other aspects of our business.
There is the possibility that unexpected events, including computer virus infection, unauthorized access tocompany systems, targeted fraudulent emails that disguise as insiders, and cyberattacks, and inappropriate
release of information by employees using social media, may cause system troubles, leak of confidential
information, internet fraud damage, loss of important business information, etc. and affect the Group’s earnings
and financial position. The Group is working to avoid such risks and minimize their impact by regularly giving
training and thoroughly taking information security management steps, including audits.
(vii) Risk of misconduct, unlawful acts, etc.
The Group is doing its utmost to prevent misconduct, unlawful acts, etc. by executives or employees. If an
incident involving misconduct, unlawful act, etc. nevertheless occurs, it may impact the Group’s earnings andfinancial position, depending on its content or size. In order to avoid risks posed by misconduct, unlawful acts,
etc., the Company introduced a compliance program and has worked to enhance and strengthen it. It is also
working to avoid these risks and minimize potential impacts through audits and compliance education.
(viii) Securing human resources
If we fail to secure sufficient number of human resources possessing sufficient knowledge and technology,
especially in technological divisions, or if the optimum employee age makeup is lost, making it difficult to maintainappropriate staff assignments, it may affect the Group’s earnings or financial position. The Group is working tosecure necessary human resources and skills by using temporary staff and hiring mid-career personnel, as wellas educating employees.
(ix) M&A
One of the Group’s strategies is M&A. If the business does not proceed as planned after an M&A, it may affect
the Group’s earnings or financial position. The Group’s policy is to go along the basic policy on M&A.

- 20 -

3. [Management’s Analysis of Financial Position, Operating Results, and Cash Flows](1) Overview of Operating Results, Etc.
The overview of the Group’s financial position, operating results, and cash flows (“Operating Results, Etc.”
hereafter) in the current fiscal year are as follows.
(i) Status of financial position and operating resultsa. Financial position
Total assets at the end of the current consolidated fiscal year decreased 6.126 billion yen from a year earlier to56.336 billion yen.
Current assets decreased by 4.432 billion yen from a year earlier to 40.989 billion yen. The main factors were an
8.068 billion yen decrease in accounts receivable including notes receivable, despite a 1.157 billion yen increase ininventories and a 2.170 billion yen increase in deposits paid included in “Others.”
Non-current assets decreased 1.694 billion yen from a year earlier to 15.347 billion yen. The main factors
included a decrease of 1.559 billion yen in investment securities.
Current liabilities decreased 3.866 billion yen from a year earlier to 6.330 billion yen. The main factors included a
3.034 billion yen decrease in trade payables including notes payable, a 0.391 billion yen decrease in income taxes
payable, and 0.238 billion yen decrease in accrued consumption taxes included in “Others.”
Fixed liabilities decreased 0.878 billion yen from a year earlier to 3.397 billion yen.
The main factors included a 0.154 billion yen decrease in long-term loans payable and a 0.355 billion yen decreasein long-term accounts payable included in “Others.”
Net assets decreased 1.381 billion yen from a year earlier to 46.609 billion yen. The main factors were a 0.197
billion yen increase in retained earnings, a 0.851 billion yen decrease by purchase of treasury stock, a 0.397 billion
yen decrease in valuation difference on available-for-sale securities, and a 0.312 billion yen decrease in noncontrolling interests.
b. Operating results
During the fiscal year under review, the Japanese economy has shown signs of recovery from the impact of the
COVID-19 pandemic. Corporate earnings recovered as economic activity returned in Japan and overseas. As
corporate revenues recovered, signs of recovery are seen also in capital expenditures and the employment
environment. Consumer spending are also returning. On the other hand, an impact on corporate earnings fromspikes in oil prices and material costs have emerged. The future of the Japanese economy thus still remains
uncertain.
In the telecommunications industry in which the Group operates, signs have emerged indicating demand for 5Guse antennas may increase in earnest in the mobile communication-related segment. In the fixed wirelesscommunication-related segment, demand for administrative radio systems for disaster prevention use has
decreased sharply. In the broadcasting-related segment, demand from broadcasters for facility replacement andmaintenance has decreased. In the applied high-frequency devices industry, some signs of recovery have emerged
for demand for capital expenditures in the automotive segment, but the recovery remains slow.
Under such circumstances, the Group actively engaged in activities to stimulate demand, worked to expand profit
through efforts to improve efficiency and reduce costs, and endeavored to improve business performance.
As a result, the amount of orders received decreased 3.9% year-on-year to 35.052 billion yen while net sales fell
18.1% from a year earlier to 33.968 billion yen.
In terms of profit, operating income decreased 96.6% year-on-year to 0.053 billion yen, ordinary income dropped
75.1% from a year earlier to 0.448 billion yen, and net income attributable to shareholders of the parent decreased
38.9% year-on-year to 0.705 billion yen.
The Company began to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29
issued on March 31, 2020), etc. at the beginning of the current consolidated fiscal year in accordance with thetransitional handling. For detailed information, see “V. [Financial Information], 1. [Consolidated Financial
Statements, Etc.], (1) Consolidated financial statements, Notes, (Changes in accounting policies), (Application of
Accounting Standard for Revenue Recognition, etc.).”Results by segment are as follows. (Results of reportable segments, etc. include intersegment sales, etc.)- 21 -

(Telecommunication Business)
In the mobile communication-related segment of this business, there have been signs that demand from mobile
carriers’ capital expenditures for antennas that support frequency bands allotted to 5G may grow in earnest, but
supply shortage of components and other impacts of the COVID-19 pandemic have dampened demand. In the
fixed wireless communication-related segment, demand from administrative radio systems for disaster prevention
use driven by local-government moves to enhance or digitize anti-disaster systems has sharply decreased as it has
been postponed due to the impact from the COVID-19 pandemic, etc. In the broadcasting-related segment,
demand for update and maintenance on equipment from broadcasters has decreased or been postponed. In othersegments, we are developing demand for LED aviation obstacle lights and thermal camera systems. Our businessenvironment is becoming more severe in all segments due to intensified price competitions. Amid such anenvironment, we have actively worked to capture demand and improve productivity in these business segments,
but cost pressure from factors such as a spike in material prices and spending on measures to address supply
shortage of components have made a significant impact on the earnings of the current fiscal year.
As a result, the amount of orders received decreased 9.2% year-on-year to 26.682 billion yen, while net sales
came to 25.926 billion yen, down 23.7% from a year earlier. Segment income (operating income) decreased 48.1%
from a year earlier to 2.010 billion yen.
(Radio Frequency Business)
In this business, the mainstay high-frequency induction heating equipment segment experienced a sharp fall indemand due to the COVID-19 pandemic but after a subsequent demand recovery in overseas markets, signs ofrecovery has emerged for the demand driven by capital expenditures in the automotive industry. For the heattreatment processing services, there have been signs of recovery from the impact of the COVID-19 pandemic, but
the impact of the worldwide semiconductor shortage on the overall industry appears to remain for a long term andthe impacts of automakers’ production adjustment have been felt. Under such circumstances, the radio frequency
business has worked to expand profits by developing new markets and new users, as well as improving
productivity, while closely monitoring the business environment. In this business, just as in the telecommunication
business, spikes in material costs, etc. has resulted in cost pressure.
As a result, the amount of orders received increased 17.7% year-on-year to 8.370 billion yen while net sales rose
7.1% from a year earlier to 7.959 billion yen. Segment income (operating income) increased 21.5% from a year
earlier to 1.058 billion yen.
(Other Businesses)
Other businesses include facility-leasing business which leases land, offices, etc. to subsidiaries and electric
power sales business. Net sales of the business increased 0.1% from a year earlier to 330 million yen. Segment
income (operating income) increased 6.0% from a year earlier to 0.167 billion yen.
(ii) Cash flows
Cash and cash equivalents (“Funds” hereafter) increased 2.840 billion yen year-on-year to 13.140 billion yen at
the end of the current consolidated fiscal year.
Cash flow situations and factors behind them in the current consolidated fiscal year are as follows.
(Cash flows from business activities)
Funds obtained as a result of business activities came to 4.166 billion yen, compared with 1.447 billion yen
obtained a year earlier. This is mainly as a result of the increase factors, including a change in notes and accounts
receivable-trade of 8.076 billion yen, exceeding the decrease factors, including a change in inventories of 1.375
billion yen and a change in notes and accounts payable-trade of 3.059 billion yen.
(Cash flows from investing activities)
Funds obtained as a result of investing activities came to 2.680 billion yen, compared with 1.402 billion yen used
a year earlier. This is attributed mainly to increase factors, including 2.948 billion yen earned from a net increase intime deposits and 1.233 billion yen earned from sale of investment securities, partially offset by decrease factors,
including 1.408 billion yen spent on the acquisition of property, plant, and equipment and intangible assets.

- 22 -(Cash flows from financing activities)
Funds used as a result of financing activities came to 4.139 billion yen, compared with 0.633 billion yen used ayear earlier. This is attributable mainly to decrease factors including 1.049 billion yen spend on the purchase oftreasury stock, a decrease of 2.170 billion yen in deposits for purchase of treasury stock, and 0.543 billion yen
spent on the payout of dividends.
(iii) Results of production, orders received, and salesa. Production results
A breakdown of production results by business segment in the current consolidated fiscal year is shown below.
Segment

Output (millions of yen)

Year-on-year change (%)

Telecommunication Business

12,692(10.0)

Radio Frequency Business

8,055

9.8

20,748

(3.2)

Total

Notes: 1 Amounts are based on sales prices; intersegment transactions have been offset.
2 In the telecommunication business, production results related to construction projects are excluded from theabove production results due to difficulty in defining the results.
b. Results of orders received
A breakdown of orders received by business segment for the current consolidated fiscal year is as follows.
Orders received
Segment

Amount(millions of yen)Order backlog

Year-on-yearchange (%)

Amount(millions of yen)

Year-on-yearchange (%)

Telecommunication Business

26,682

(9.2)

8,815

5.9

Radio Frequency Business

8,370

17.7

2,766

14.4

35,052(3.9)

11,582

7.8

Total

c. Sales results
A breakdown of sales results by business segment in the current consolidated fiscal year is as follows.
Segment

Telecommunication
Business

Net sales (millions of yen)

Construction
work
Equipment andmaterials sales
Subtotal

Radio Frequency Business
Other Businesses
Total

Year-on-year change (%)

13,183(33.3)

12,725(10.2)

25,908(23.7)

7,959

7.1

100

(4.0)

33,968(18.1)

Notes: 1 Intersegment transactions have been offset.
2 The “Other Businesses” segment, which is not included in reportable segments, includes facility-leasing andelectric power sales businesses.
3 Breakdown of sales results by major counterparties and ratio of sales result to total sales
Previous consolidated fiscal year
Current consolidated fiscal year
(from April 1, 2020
(from April 1, 2021
to March 31, 2021)
to March 31, 2022)
Counterparty
Net sales
Net sales
Ratio (%)
Ratio (%)
(millions of yen)(millions of yen)
NTT DOCOMO, INC.

4,221

- 23 -

10.2

4,874

14.4

Non-consolidated operating results are provided below for reference.
Telecommunication Businessa. Orders received, net sales, carryovers, and works completed

Fiscal year

Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Sales category

Construction
work
Equipment andmaterials sales
Total

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Construction
work
Equipment andmaterials sales
Total

Carryover
OrdersCarryover to next termfrom
Net sales ofreceived thisTotal
previous
this term
term(millions of
Backlog
Including work done
term(millions of(millions ofyen)(millions ofworth...
(millions of
yen)
yen)
yen)
(%, millions of yen)
yen)

Works
completedthis term(millions of
yen)

9,851

13,54023,392

17,653

5,738

6.5

375

17,674

2,095

11,327

13,423

11,690

1,732

67.3

1,165

11,83911,947

24,86836,81529,344

7,470

20.6

1,541

29,513

5,467

11,607

17,075

11,784

5,290

1.4

73

11,482

1,732

11,461

13,193

10,422

2,771

49.1

1,361

10,618

7,199

23,06930,26822,207

8,061

17.8

1,435

22,101

Notes: 1 Regarding projects ordered in and before the previous fiscal year for which ordered amount has since beenchanged due to contract changes, the figures of the orders received this term reflect such changes. Therefore,changes are also reflected in the net sales of this term.
2 The figures of works completed included in works carried over to next period are estimated value of works
completed included in backlog, reflecting the progress of each project to the accrued costs of unfinished work.
3 Work done = net sales of this term + work carried over to next term - work carried over from previous term
4 A gap has resulted for the carryover from previous term due to changes in the accounting policies. For detailed
information, see “V. [Financial Information], 1. [Consolidated Financial Statements, Etc.], (1) Consolidated
financial statements, Notes, (Changes in accounting policies), (Application of Accounting Standard for Revenue
Recognition, etc.).”b. Breakdown of orders received by method
Methods for receiving orders are broadly divided into non-competitive and competitive orders.
Fiscal year

Non-competitive orders (%)

Competitive orders (%)

Total (%)

Previous fiscal year
(from April 1, 2020
to March 31, 2021)

23.8

76.2

100

Current fiscal year
(from April 1, 2021
to March 31, 2022)

29.1

70.9

100

Note: Above percentage figures are based on contract amount.
c. Consolidated net sales
Fiscal year
Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Category

Public(millions of yen)

Private(millions of yen)Total
(millions of yen)

Construction work

See Note 1.

9,350

8,303

17,653Equipment andmaterials sales

See Note 2.

321

11,369

11,6909,671

19,67329,344

Total
Current fiscal year
(from April 1, 2021
to March 31, 2022)

Construction work

See Note 1.

4,263

7,521

11,784Equipment andmaterials sales

See Note 2.

147

10,274

10,422

4,411

17,79522,207

Total
Notes: 1 Sales of completed construction contracts
2 Net sales of goods

3 Key projects that contributed to sales are as shown in the below table.

- 24 -

Key projects contributing to sales in previous fiscal year
Customer

Project description

NTT DOCOMO, INC.

Delivery of base station antennas

KDDI CORPORATION

Delivery of base station antennas

Towada municipality

Project to service new broadcast-type administrative radio systems for disasterprevention use

Tomioka municipality

Project to service digital administrative radio systems for disaster prevention use

Kobayashi municipality

Project to service digital 280MHz radio broadcast system

Key projects contributing to sales in the current fiscal year
Customer

Project description

NTT DOCOMO, INC.

Delivery of base station antennas

KDDI CORPORATION

Delivery of base station antennas and wireless equipment

SoftBank Corp.

Delivery of base station antennas

Unnan municipality

Project to service digital 280MHz radio broadcast system

Takasago municipality

Digitalization project on administrative radio broadcast systems for disasterprevention use

4 Net sales of customers who represent at least 10% of overall sales and its ratio to the overall sales
Previous fiscal year NTT DOCOMO, INC.
4,221 million yen
14.4%
Previous fiscal year KDDI CORPORATION
Current fiscal year NTT DOCOMO, INC.

3,517 million yen
4,874 million yen

12.0%
22.0%

Current fiscal year KDDI CORPORATION

2,283 million yen

10.3%

d. Backlog (as of March 31, 2022)
Category

Public (millions of yen)

Construction work

Private (millions of yen)

Total (millions of yen)

3,500

1,789

5,290

Equipment and materials sales

331

2,439

2,771

Total

3,832

4,229

8,061

Below table shows key projects included in the order backlog.
Customer

Project description

Target completion date

Kumamoto Defense BranchTransmitting Station Ebino (3) Steel tower branch wire
update work

December 2024

Yaeyama General Area Association of
Municipalities

Yaeyama district radio relay station functional
enhancement projectCity of Hiroshima

Administrative radio systems for disaster prevention
use communication equipment update project

November 2023

SOLCOM Co., Ltd.

City of Nagato fiberoptic network development project
development work

April 2022

OTV CO., LTD.

Head office 500KVA emergency generator update work

March 2023

- 25 -March 2023

Radio Frequency Businessa. Production results
Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Amount (millions of yen)Amount (millions of yen)

Category

Contract high-frequency hardening service

72

83

High-frequency induction heating equipment

4,474

4,615

Total

4,547

4,698

Note: The yen amounts are selling prices.
b. Results of orders received
Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Two fiscal years
prior
Category

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Order backlog Orders received Order backlog Orders received Order backlog(millions of yen) (millions of yen) (millions of yen) (millions of yen) (millions of yen)Contract high-frequency
hardening service
High-frequency induction
heating equipment
Total

－

72

－

83

－

1,950

4,219

1,608

5,574

2,431

1,950

4,292

1,608

5,658

2,431

Note: Volume is not shown due to difficulty caused by a wide variety of order items.
c. Sales results

Category

Previous fiscal year
(from April 1, 2020
to March 31, 2021)
Amount(millions of yen)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Constituent ratio (%)

Amount(millions of yen)

Constituent ratio (%)

Contract high-frequency
hardening service

72

1.6

83

1.7

High-frequency induction
heating equipment

4,560

98.4

4,689

98.3

Total

4,633

100

4,772

100

Notes: 1 Volume is not shown due to difficulty caused by a wide variety of sold items.
2 Net sales of customers who represent at least 10% of overall sales and its ratio to the overall sales
Previous fiscal year

Current fiscal year

TOYOTSU MACHINERYCORPORATION
Toyota Tsusho Corporation
TOYOTSU MACHINERY

1,437 million yen

31.0%

563 million yen

12.2%

1,156 million yen
24.2%
CORPORATION
3 The amount combining this term’s net sales of equipment and materials of the telecommunication business andthe above sales results corresponds to net sales of goods provided in the filing company’s profit and loss
statement.

- 26 -

Other Businesses
a. Sales results

Category

Previous fiscal year
(from April 1, 2020
to March 31, 2021)
Amount(millions of yen)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Constituent ratio (%)

Amount(millions of yen)

Constituent ratio (%)

Facility-leasing business

230

69.7

237

71.7

Electric power sales business

100

30.3

93

28.3

Total

330

100

330

100

(2) Analysis and review of Operating Results, Etc. from management viewpoint
The management’s understanding and details of analysis and review regarding Operating Results, Etc. of theGroup are as follows.
Matters herein regarding the future reflect judgment made at the end of the current consolidated fiscal year.
(i) Understanding, analysis, and discussion of financial position and Operating Results, Etc.
For details of the Group’s financial position in the current consolidated fiscal year, see “II. [Business Overview], 3.
[Management’s Analysis of Financial Position, Operating Results, and Cash Flows], (1) Overview of Operating
Results, Etc., (i) Status of financial position and operating results, a. Financial position.”In the Group’s Operating Results, Etc. in the current consolidated fiscal year, both revenue and profit decreased,with net sales totaling 33.968 billion yen, down 18.1% from a year earlier, and operating income totaling 0.053 billion
yen, down 96.6% from a year earlier.
Factors that may give significant impact on the Group’s operating results include changes in external environment,
including the impact of COVID-19, and industry and customer trends, which may prevent us from achieving targets,as stated in “II. [Business Overview], 2. [Risk Factors].”
In terms of our understanding, analysis, and discussion of operating results by segment, in the telecommunication
business segment, there have been signs that demand from mobile carriers’ capital expenditures for antennas that
support frequency bands allotted to 5G may grow in earnest in the mobile communication-related segment, but
component supply shortage and other impacts of the COVID-19 pandemic have dampened demand. In the fixedwireless communication-related segment, demand from administrative radio systems for disaster prevention use
driven by local-government moves to enhance or digitize anti-disaster systems has sharply decreased as it has been
postponed due to the impact from the COVID-19 pandemic, etc. In the broadcasting-related segment, demand for
update and maintenance on equipment from broadcasters has decreased or been postponed. In other segments, weare developing demand for LED aviation obstacle lights and thermal camera systems. Our business environment is
becoming more severe in all segments due to intensified price competitions. Amid such an environment, we haveactively worked to capture demand and improve productivity in these business segments. However, both revenue
and profit decreased from a year earlier in the current consolidated fiscal year. On the other hand, in the radio
frequency business, the mainstay high-frequency induction heating equipment segment experienced a sharp fall indemand due to the COVID-19 pandemic but after a subsequent demand recovery in overseas markets, signs ofrecovery has emerged for the demand driven by capital expenditures in the automotive industry. For the heattreatment processing services, there have been signs of recovery from the impact of the COVID-19 pandemic, but
the impact of the worldwide semiconductor shortage on the overall industry appears to remain for a long term andthe impacts of automakers’ production adjustment have been felt. Under such circumstances, the radio frequency
business has worked to expand profits by developing new markets and new users, as well as improving productivity,
while closely monitoring the business environment.
For details of net sales and operating profit, see “II. [Business Overview], 3. [Management’s Analysis of Financial
Position, Operating Results, and Cash Flows], (1) Overview of Operating Results, Etc., (i) Status of financial positionand operating results, b. Operating results.”
Operating income decreased 96.6% year-on-year to 0.053 billion yen, but ordinary income decreased 75.1%
from a year earlier to 0.448 billion yen as the non-operating balance improved partly because foreign exchange
gains were booked. Net income attributable to shareholders of the parent company decreased 38.9% from a year
earlier to 0.705 billion yen partly because gain on sales of investment securities increased.

- 27 -

Under such circumstances, the Company strives to operate business while trying to respond quickly to changes in
the management environment, seek to ensure continuity of the business and stable revenue, and ensure increase incorporate value. We will strive to raise our corporate value and meet expectations of our shareholders and customers
under the Company’s management philosophy of “providing outstanding products to society and contributing tosociety,” “being a forward-looking company with a fighting spirit, seeking to capture needs of the times early andnever being afraid of failures,” “constantly working to improve productivity and trying to secure reasonable profits at
all times,” and “striving to help improve living of employees, developing and growing the company under the spirit of‘one company, one family,’ respecting harmony of group members,” and the growth strategy stated in II. [Business
Overview], 1. [Management Policies, Management Environment, and Pressing Issues], (3) The Company’s mediumto long-term management strategy.
As regards the future outlook, although there have been some signs of recovery in the domestic economy, futureremains uncertain as the adverse situation amid the COVID-19 pandemic remains and the impact of prolonged
semiconductor shortage, a weaker yen and a spike in material prices remains. In terms of the environment
surrounding the Group, demand for 5G-use antennas is expected to remain steady in the mobile communicationrelated segment. As such, we aim to actively work to capture demand, taking advantage of the newly developed
wireless equipment. We also plan to work to capture demand for maintenance on mobile communication steel towers.
In the fixed wireless communication-related segment, demand pushbacks are expected for administrative radio
systems for disaster prevention use amid the impact from the pandemic, but demand is expected to recover over a
medium term. We thus will continue to put effort into capturing demand. In the broadcasting-related segment, we will
work to capture demand for update and maintenance on broadcasting equipment from broadcasters. In terms of new
businesses, we will actively put effort into developing new markets using our wireless technology, in addition to efforts
demand development for LED aviation obstacle lights, thermal camera systems, etc. In the radio frequency business,
we aim to strengthen coordination with overseas offices while closely monitoring the business environment, reinforce
efforts to capture demand driven by capital expenditure led by Japanese automotive manufacturers, and actively
promote efforts to stimulate new demand in areas other than the automotive segment.
(ii) Analysis and discussion of cash flows and information on financial resources for capital and liquidity of funds
In the Group’s cash flow in the current consolidated fiscal year, the balance of cash and cash equivalents at theend of the current consolidated fiscal year increased 2.840 billion yen from a year earlier to 13.140 billion yen as
funds totaling 4.166 billion yen from business activities and 2.680 billion yen from investing activities were gained
while 4.139 billion yen was used in financing activities. The balance of cash and deposits, including time deposits
whose maturity is over three months, decreased 0.109 billion yen from the end of the previous consolidated fiscal
year to 18.886 billion yen.
For analysis of cash flows, see “II. [Business Overview], 3. [Management’s Analysis of Financial Position, Operating
Results, and Cash Flows], (1) Overview of Operating Results, Etc., (ii) Cash flows.”
In terms of financial resources for capital and liquidity of funds of the Group, the main use of the Group’s working
capital is operating expenses, including expenses for buying products and materials, outsourcing expenses,
manufacturing expenses, distribution cost, and general and administrative expenses. The fundamental source of
these funds is the Company’s own funds and short-term borrowing from financial institutions. If it becomes necessary
to make capital expenditures for purposes such as reinforcement, rationalization, and upgrade of production facilities
or obtain long-term working capital, the Company may use leasing or take out long-term loans from financial
institutions.
The Company worked out “Capital Allocation.” In the future, it will carry out investments aimed at realizing growthstrategies in addition to shareholder returns and human resource investment by raising the levels of fund procurement
using leverage, along with asset it owns and funds gained in operating cash flows.
(iii) Significant accounting estimates and underlying assumptions
The Group’s consolidated financial statements were prepared in accordance with accounting standards generally
accepted in Japan. In preparing the consolidated financial statements, specific costs or losses expected in the future
are recognized as such if their amounts can be estimated reasonably with reference to past results or according togiven situations. Note, however, that actual results may differ from these estimates as they have uncertainty specificto estimates.
Significant accounting estimates and assumptions used in preparing the consolidated financial statements are as
follows.

- 28 -

As there is significant uncertainty as to the potential impact of COVID-19, it is difficult to reflect the impact of suchfactors in estimates in future business plans, etc., but we examined the figures using information available at the endof the fiscal year.
(Revenue recognition for construction contracts, equipment installment work, etc.)
Of the accounting estimates used for revenue recognition for construction contracts, equipment installment
contracts, etc. and assumptions used for such estimates, important items are as described in “V. [Financial
Information], 1. [Consolidated Financial Statements, Etc.], (1) Consolidated financial statements, Notes, (Significant
accounting estimates).”(Impairment of non-current assets)
The Group reduces the book value of a non-current asset or a group of non-current assets that shows signs of
impairment to a recoverable amount if the total amount of undiscounted future cash flows from such an asset or an
asset group is less than the book value and books the amount of such reduction as an impairment loss. We proceed
carefully in detecting signs of impairment and recognizing or measuring impairment losses, but there is risk that
impairment write-downs may become necessary due to potential changes in conditions or assumptions of estimates,
which could arise from changes in business plans or the market environment.
(Provision for retirement benefits)
The Group made an allowance for employees’ retirement benefit expenses based on estimated amounts ofretirement benefit liabilities and pension assets at the end of each consolidated fiscal year. These are booked byincorporating significant estimates of discount rates, rates of pay hike, mortality rates, expected long-term rates ofreturn on pension assets, etc.
(Deferred tax assets)
The Group books deferred tax assets resulting from deductible temporary differences where sufficient taxable
income can be secured based on future profit plans or if they are judged to have the potential to be collected. As thepossibility for deferred tax assets to be collected depends on estimates of future taxable income, there is risk thatdeferred tax assets may be reduced and tax expenses may be booked due to changes in conditions or assumptions
for such estimates which result in decreases.

4. [Important Contracts]
There are no special matters to be noted.

5. [Research and Development Activities]
In terms of research and development activity, the Group has the goal of contributing to permanent growth anddevelopment through creative ideas and superior technology and focused on development of competitive products that
capture market needs, speedy product development and research, and development that forms the basis for futurebusiness expansion. These goals are aimed at maintaining our focus on mobile communication-, fixed wirelesscommunication-, broadcasting-, and radio frequency-related segments as strategic pillars from the medium- to longterm perspective while supporting the Group’s expansion into peripheral areas of these segments. For this, sales,
plant/on-site work, and development divisions work together to promote research and development in a coordinatedeffort.
Under the Group’s research and development structure, development and design divisions of the Company andconsolidated subsidiaries, led by the Wireless R&D Center set up in August 2019 and the Future Research Center set
up in October 2021, in principle coordinate efforts and cooperate with their respective, related divisions to work on
projects. The Group is also working to speed up development of new technologies by strengthening coordination withexternal research entities through industry-academia collaborations, etc.
Details of research and development activities conducted by individual segments in the current consolidated fiscal
year are as follows.
In the telecommunication business, we stepped up and expanded efforts on 5G in the mobile communication-related
segment. We are conducting development of multifrequency antennas which support both existing and 5G frequency- 29 -

bands, radio equipment compliant with the O-RAN interface specifications for 5G open networks, mobile communication
antennas targeted at overseas markets, and 5G wireless repeaters, as well as research and development related toantennas using the metamaterials technology and communication area design using reflectors. In addition, we areworking on system development projects to take advantage of the knowledge gained through radio wave propagationand transmission tests using local 5G experimental test stations and research and development projects that support
the Company’s comprehensive 5G solutions, using commercial 5G stations set up at our plants. To address Beyond
5G and 6G, we are conducting research and development on new antenna technologies for communication systems
that use even higher frequency bands. In the broadcasting-related segment, we are developing antennas for 8K
broadcast and FM antennas. In the fixed wireless communication-related segment, we are conducting research anddevelopment of public-use radio antennas, parabolic antennas for satellite communication, devices for administrative
radio systems for disaster prevention use, etc. In developing products, we have worked to make them smaller, improvetheir performance, and lower the prices, as well as focused on the pursuit of developing unique technologies tostrengthen our market competitiveness. In addition, we identified customer needs early and made technology andproduct proposals in a timely manner. In developing new businesses, our divisions coordinated efforts on thedevelopment of LED aviation obstacle lights and new navigation aid lights, development of system solutions including
monitoring systems using thermal cameras. In the area of basic research, we are actively engaging in research anddevelopment of communications systems that use advanced technologies, including the metamaterials technology, andantennas using new materials to address scenery protection in collaboration with universities and external research
entities in anticipation of future technological developments.
In the radio frequency business, we are actively adopting new technologies, including IoT, and working to improve
performance, reduce size and costs of equipment, as well as develop equipment that can address wide-ranging needs.
In addition, we are continuously engaging in research and development projects for technologies to reduce costs ofheating coils and improve quality of heat-treatment services, including a method to manufacture heating coils using
metal 3D printers and heat treatment simulation technologies. Furthermore, we are working on the development of uses
for the induction heating technology targeting a broad range of industries, a carburizing processing technology using
high frequencies, and a new technology using superheated steam.
In the current consolidated fiscal year, the Company spent a total of 1,940 million yen on research and development.
Research and development activities by segment are as follows.
(Telecommunication Business)
Research and development costs totaled 1,710 million yen in the current consolidated fiscal year.
- Mobile communication-, broadcasting-, and fixed wireless communication-related segments(1) Development of 5G equipment-related development and beyond 5G technology(2) Development of new antenna technologies(3) Development of mobile communication antenna systems targeting domestic market(4) Development of mobile communication antenna systems targeting overseas markets(5) Development of broadcasting and communication antennas(6) Development of antenna systems for specialized machinery projects- Facility-related segment(1) Research and development on low frequency communication- New areas(1) Development of system solutions(2) Development of 280MHz administrative radio systems for disaster prevention use(Radio Frequency Business)
Research and development costs totaled 229 million yen in the current consolidated fiscal year.
- Induction heating-related segment(1) Improvement of performance and functions of existing equipment(2) Expansion of use of heat treatment and induction heating technologies(3) Development of uses for superheated steam equipment(4) Development of high-frequency oscillators- 30 -

III. [Facilities]
1. [Outline of Capital Expenditures]
In the current consolidated fiscal year, capital expenditures totaled 1,083 million yen, as we expanded, rationalized
and updated production equipment.
Capital expenditures by segment are as follows.
Note that there was no retirement or sale of important facilities in any of the below segments.
(Telecommunication Business)
In the current consolidated fiscal year, capital expenditures totaled 779 million yen, used mainly for updating
aging equipment and measuring instruments.
(Radio Frequency Business)
In the current consolidated fiscal year, capital expenditures totaled 192 million yen mainly for updating aging
equipment.
(Other Businesses)
In the current consolidated fiscal year, capital expenditures totaled 13 million yen mainly for updating buildings
leased to consolidated subsidiaries and aging equipment used in solar power sales business.
(Common across companies)
In the current consolidated fiscal year, capital expenditures totaled 97 million yen mainly for updating or newly
installing equipment for administrative operation at the headquarters of the filing company.

2. [Main Facilities](Telecommunication Business)(1) Filing company(As of March 31, 2022)
Book value (millions of yen)
Plant/office(location)

Description of facility

Facility for design,
Kawagoe Officemanufacture, and(Fujimino,
construction of
Saitamatelecommunication
Prefecture)facilities

Buildings
andstructures

Machinery, Land (areaLeaseequipment,in sq.
Othersassetsand vehicles
meters)66

3

14(18,489.51)

Total

1

22

108

－

13

262

17

824

1,689

Number of
employees

44(24)

Facility for design,
Kawagoe Plant(Kawagoe,
SaitamaPrefecture)

Kanuma Plant(Kanuma,Tochigi
Prefecture)

manufacture, andconstruction of as well
as plating work on
telecommunication

60
187

0

(48,944.97)<125.49>756

46(20,248.03)<215.50>

9(2)

facilities and steelbuilding frameworks
Facility for design,
manufacture, andconstruction of
telecommunication

43

facilities- 31 -

153(7)

(2) Domestic subsidiaries(As of March 31, 2022)
Book value (millions of yen)Company

Plant/office
Description of facility Buildings(location)
andstructures

Number of
Machinery, Land (areaemployees
Leaseequipment,in sq.
Others Total
assetsand vehicles
meters)Facility for design,

DenkoCo., Ltd.

Headquarters

manufacture, andconstruction of as(Kawagoe,well as plating
work onSaitamaPrefectur

telecommunication
facilities and steele)building
frameworks

Headqua
Denko
rters
Seisakus (Kanuma
ho Co.,Ltd.

, Tochigi
Prefectur
e)

24

223

54

81

－
(-)

－

44

292

－

9

515

58
(2)

Facility for design,
manufacture, andconstruction of
telecommunication
facilities370(11,991.00)

72(9)

Notes: 1 The “Others” book value is the sum total of “tools, furniture, and fixtures,” “construction in progress,” and“intangible assets.”
2 The figures in the angle brackets (“<>”) indicate facilities leased to entities other than consolidated subsidiaries,
shown in square meters.
3 There is no key equipment that is being suspended.
4 Figures in parentheses in the number of employees column indicate additional numbers of temporary
employees.
(Radio Frequency Business)(1) Filing company(As of March 31, 2022)
Book value (millions of yen)
Plant/office(location)

Atsugi Plant(Aikawa, Aiko
District,
Kanagawa
Prefecture)

Description of facility

Buildings
andstructures

Machinery, Land (areaLeaseequipment,in sq.
Othersassetsand vehicles
meters)Manufacturing
facility for highfrequency hardening
service and applied

335

49

1,189
(35,969.54)

9

23

Total

Number of
employees

1,607<312.17>high-frequency
devices86(2)

Notes: 1 The “Others” book value is the sum total of “tools, furniture, and fixtures,” “construction in progress,” and“intangible assets.”
2 The figures in the angle brackets (“<>”) indicate facilities leased to entities other than consolidated subsidiaries,
shown in square meters.
3 There is no key equipment that is being suspended.
4 Figures in parentheses in the number of employees column indicate additional numbers of temporary
employees.

3. [Plans for Construction and Retirement of Facilities]
There is no plan to newly construct or retire important facilities.

- 32 -

IV. [Status of Filing Company]
1. [Status of Company’s Shares](1) [Total number of shares, etc.](i) [Total number of shares]
Class
Common stock

56,000,000

Total

56,000,000(ii) [Issued shares]
At end of fiscal year underreview
Class(shares)(March 31, 2022)

Commonstock

Total number of shares authorized to be issued

As of the date ofsubmission(shares)(June 30, 2022)

Name of listed or authorized
financial instruments exchangeTokyo Stock ExchangeFirst section (as of fiscal year-

14,084,845

14,084,845

end)
Prime market (as of date ofsubmission)

Total

14,084,845

14,084,845－

Remarks

Number of sharesconstituting one
unit:
100
－

(2) [Situation of share options](i) [Share option plans]
There are no matters to be noted.
(ii) [Details of rights plans]
There are no matters to be noted.
(iii) [Other situations of share options]
There are no matters to be noted.
(3) [Execution status of corporate bond certificates, etc. with share options subject to exercise value change]
There are no matters to be noted.
(4) [Trends in total number of issued shares, capital stock, etc.]
Change innumber of
Increase
Total
total
Changes in
Balance of(decrease) in Balance of legal
number ofDateoutstanding
capital stock
capital stock legal capital
capital surplus
outstanding
shares(millions of yen) (millions of yen) surplus(millions of yen)sharesIssued(millions of yen)shares
October 1, 2017(56,339,381) 14,084,845
8,774
9,677
－
－
See Note.
Note: The Company implemented a one-for-five reverse stock split on October 1, 2017. As a result, the total number ofissued shares decreased 56,339,381 to 14,084,845.

- 33 -

(5) [Status of shareholders](As of March 31, 2022)
Status of shares (Number of shares consisting one unit: 100)
Category

Status ofsharesbelow unit
IssuedsharesGovernment
and local
public entities

Financial
institutions

Financial
instruments
business
operators

－

23

27

99

89

8

4,608

4,854

－

－

43,624

5,440

8,965

28,96735

53,293140,324

52,445

－

31.09

3.88

6.39

20.64

0.02

37.98

100.00－Other
entities

Foreign entities, etc.
NonIndividuals
individuals

Individuals,
etc.

Total

Number ofshareholders(persons)
Number ofshares held
(unit)
Percentageof shares
held

Note: 23,500 units of the treasury stocks totaling 2,350,037 are included in “Individuals, etc.,” while the remaining 37
shares are included in “Status of shares less than one unit.”- 34 -

(6) [Status of major shareholders]Name

Location

The Master Trust Bank of Japan, Ltd. (trust
account)

2-11-3, Hamamatsucho, Minato-ku, Tokyo(As of March 31, 2022)
Percentage of
total number
Number ofof shares held
shares held
relative to the(thousands
totalof shares)
outstanding
shares
1,480

12.61

Custody Bank of Japan, Ltd. (trust account)

1-8-12, Harumi, Chuo-ku, Tokyo

834

7.11

Nippon Life Insurance Company

1-6-6, Marunouchi, Chiyoda-ku, Tokyo

444

3.78

441

3.76

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/JANUS
HENDERSON HORIZON FUND

33 RUE DE GASPERICH, L-5826
HOWALD-HESPERANGE,(Standing proxy: Custody Service
Department, Tokyo branch of The Hongkong

LUXEMBOURG(3-11-1, Nihonbashi, Chuo-ku, Tokyo)

and Shanghai Banking Corporation Limited)
Sumitomo Mitsui Trust Bank, Ltd.

1-4-1, Marunouchi, Chiyoda-ku, Tokyo

372

3.17

MUFG Bank, Ltd.

2-7-1, Marunouchi, Chiyoda-ku, Tokyo

360

3.06

Sumitomo Mitsui Banking Corporation

1-1-2, Marunouchi, Chiyoda-ku, Tokyo

352

3.00

Nomura Securities Co., Ltd.

1-13-1, Nihonbashi, Chuo-ku, Tokyo

329

2.80

DKK Client Stock Ownership

3-3-1, Marunouchi, Chiyoda-Ku, Tokyo

325

2.77

308

2.62

5,247

44.72

MAPLES CORPORATE SERVICES LTD,OASIS JAPAN STRATEGIC FUND LTD.CLIENT ACCOUNTPO BOX 309, UGLAND HOUSE SOUTH
CHURCH STREET, GEORGE TOWN,(Standing proxy: Citibank, N.A., Tokyo
Branch)GRAND CAYMAN KY1-1104, CAYMANISLANDS(6-27-30, Shinjuku, Shinjuku-ku, Tokyo)

Total

-

Notes: 1 Numbers of shares related to trust services included in the above number of shares held are as follows.
The Master Trust Bank of Japan, Ltd. (trust account): 745 thousand shares
Custody Bank of Japan, Ltd. (trust account): 602 thousand shares
2 A statement of changes to a statement of large-volume holdings that was made available for public viewing on
July 21, 2021 indicates Sumitomo Mitsui Trust Bank, Ltd. and its joint holders were holding the following shares
as of July 15, 2021. However, the said parties are not included in the status of major shareholders shown
above because the Company was not able to confirm the actual number of shares held as of March 31, 2022.
The information in the statement of changes to a statement of large-volume holdings is as follows.
Number ofshares held
Ownership ratio
Name
Location(thousands of(%)
shares)Sumitomo Mitsui Trust Bank, Ltd.

1-4-1, Marunouchi, Chiyoda-ku, Tokyo

372

2.64

Sumitomo Mitsui Trust AssetManagement Co., Ltd.

1-1-1, Shibakoen, Minato-ku, Tokyo

283

2.01

Nikko Asset Management Co., Ltd.

9-7-1, Akasaka, Minato-ku, Tokyo

147

1.05

- 35 -

3 A statement of changes to a statement of large-volume holdings that was made available for public viewing on
October 28, 2021 indicated Oasis Management Company Limited held the following shares as of October 21,
2021. However, the said party is not included in the status of major shareholders shown above because theCompany was not able to confirm the actual number of shares held as of March 31, 2022.
The information in the statement of changes to a statement of large-volume holdings is as follows.
Number ofshares held
Ownership ratio
Name
Location(thousands of(%)
shares)c/o Maples Corporate Services Limited, PO
Oasis Management Company
Box 309, Ugland House, Grand Cayman,
1,050
7.45
Limited
KY1-1104, CAYMAN ISLANDS
4 A statement of changes to a statement of large-volume holdings that was made available for public viewing on
April 7, 2022 indicates Nomura Securities Co., Ltd. and its joint holders were holding the following shares as ofMarch 31, 2022. However, the said parties are not included in the status of major shareholders shown above
because the Company was not able to confirm the actual number of shares held as of March 31, 2022.
The information in the statement of changes to a statement of large-volume holdings is as follows.
Number ofshares held
Ownership ratio
Name
Location(thousands of(%)
shares)
Nomura Securities Co., Ltd.
Nomura International plc
Nomura Asset Management Co.,Ltd.

1-13-1, Nihonbashi, Chuo-ku, Tokyo
1 Angel Lane, London EC4R 3AB, United
Kingdom
2-2-1, Toyosu, Koto-ku, Tokyo

328

2.33

121

0.87

491

3.49

(7) [Status of voting rights](i) [Issued shares](As of March 31, 2022)
Category

Number of shares

Number of voting rights

Remarks

Shares without voting rights

－

－

－

Shares with restricted voting
rights (treasury stocks, etc.)

－

－

－

－

－

－

－

－

Shares with restricted voting
rights (others)
Shares with full voting rights(treasury stocks, etc.)(Treasury stock)
Common stock

2,350,000

Shares with full voting rights(others)

Common stock

11,682,400

Shares less than one unit

Common stock

52,445－－

14,084,845－－

Issued shares
Total number of voting rights

116,824

116,824－－－

Notes: 1 Common stock in the “Shares with full voting rights (treasury stocks, etc.)” does not include the Company’s
shares totaling 80 thousand shares held by the employee stock ownership plan (ESOP) trust account for
officers that the Company introduced.
2 Common stock in “shares less than one unit” includes treasury stock totaling 37 shares held by the Company.

- 36 -

(ii) [Treasury stock, etc.]

Holder name(Treasury stock)
DKK Co., Ltd.
Total

Location

3-3-1 Marunouchi,
Chiyoda-Ku, Tokyo－

Number ofshares held in
own name

Number ofshares held inothers’ names(As of March 31, 2022)
Percentage of total
number of shares
Total number of held relative to total
shares heldnumber of issued
shares(%)

2,350,000－

2,350,000

16.68

2,350,000－

2,350,000

16.68- 37 -

(8) [Details of stock ownership plans for company officers and employees](Share-based compensation scheme for directors)
The Company and some of its consolidated subsidiaries have a share-based compensation scheme (the “Scheme”
hereafter) for their directors, excluding outside directors, with a purpose of establishing a clear connection between
directors’ compensation and stock value and motivating them to contribute to a mid- to long-term increase inearnings and corporate value.
(i) Overview of share-based compensation scheme for directors
Under the Scheme, the Company’s shares are held in the account of an employee stock ownership plan (ESOP)
trust for officers (the “Trust” hereafter) established on Company funds and the number of shares corresponding to
the points assigned to each director are granted to the director through the Trust in accordance with the sharegranting rules established by the Company’s Board of Directors and those of some of its consolidated subsidiaries.
Directors are granted the Company’s shares when they retire from directorship, in principle.
The number of shares held in the trust account at the end of the current consolidated fiscal year totaled 80,632(74,400 at the time the Trust was established and 50,000 at the time of addition to the account).
(ii) Total number of shares planned to be granted to qualified directors
80,632 shares(iii) Scope of individuals qualified for rights including beneficiary rights under the scheme
Directors who satisfy requirements to be beneficiaries- 38 -

2. [Status of Acquisition of Treasury Stock][Class of shares, etc.] Acquisition of common stock pursuant to Article 155, Items (iii) and (vii) of the Companies Act(1) [Status of acquisition of treasury stock based on General Meeting of Shareholders resolutions]
There are no matters to be noted.
(2) [Status of acquisition of treasury stock based Board of Directors Meeting resolutions]
Acquisition pursuant to Article 155, Item (iii) of the Companies Act
Category

Number of shares

Status of resolution of the Board of Directors meeting held on
May 14, 2021
(Period of share acquisition: May 17, 2021 to July. 31, 2021)

Total value (millions of yen)

135,000300－－

131,700

299

3,300

0

Percentage of shares yet to be acquired at the end of current
fiscal year

2.4

0.0

Treasury stock acquired during the period－－

Percentage of shares yet to be acquired at the day of filing

2.4

0.0

Treasury stock acquired before current fiscal year
Treasury stock acquired in current fiscal year
Total number and value of remaining shares subject to resolution

Category

Number of shares

Status of resolution of the Board of Directors meeting held on
November 10, 2021
(Period of share acquisition: November 11, 2021)

Total value (millions of yen)

120,000305－－

120,000305

Total number and value of remaining shares subject to resolution－－

Percentage of shares yet to be acquired at the end of current
fiscal year－－

Treasury stock acquired during the period－－

Percentage of shares yet to be acquired at the day of filing－－

Treasury stock acquired before current fiscal year
Treasury stock acquired in current fiscal year

Note: Acquisition through the Tokyo Stock Exchange’s off-auction own share repurchase system (ToSTNeT-3).
Category

Number of shares

Status of resolution of the Board of Directors meeting held on
February 10, 2022
(Period of share acquisition: February 14, 2022 to December 31,
2022)

Total value (millions of yen)

1,100,000

2,500

－

－

Treasury stock acquired in current fiscal year

139,300

328

Total number and value of remaining shares subject to resolution

960,700

2,171

87.3

86.8

234,500

569

66.0

64.0

Treasury stock acquired before current fiscal year

Percentage of shares yet to be acquired at the end of current
fiscal year
Treasury stock acquired during the period
Percentage of shares yet to be acquired at the day of filing

Note: “Treasury stock acquired during the period” does not include the number of shares acquired under the treasury
stock acquisition program in a period from June 1, 2022 to the date when the annual securities report was
submitted.

- 39 -

(3) [Status of acquisition of treasury stock not based on General Meeting of Shareholders or Board of Directors
meeting resolutions]
Acquisition pursuant to Article 155, Item (vii) of the Companies Act
Category

Number of shares

Total value (millions of yen)

Treasury stock acquired in current fiscal year392

0Treasury stock acquired during the period－－

Note: The “Treasury stock acquired during the period” row does not include the number of shares acquired under the
below-unit share purchase program in a period from June 1, 2022 to the date when the annual securities report
was submitted.
(4) [Status of disposal and ownership of treasury stock]
Current fiscal year
Category

Number ofsharesShare acquisition period

Total amount ofdisposal(millions of yen)

Number ofsharesTotal amount ofdisposal(millions of yen)

Treasury stock made available through tender offer

－

－

－

－

Treasury stock retired

－

－

－

－

Treasury stock transferred for reasons of merger,
share exchange, share granting, or company split

－

－

－

－

Others (sale of below-unit shares in response torequests for sales)

－

－

－

－

50,000114－－

2,350,037－

2,584,537－

Other (disposal of treasury stock through private
offering)
Number of treasury stocks held

Notes: 1 The number of treasury stocks disposed of during the share-acquisition period does not include shares soldthrough sale of below-unit shares in a period from June 1, 2022 to the date when the annual securities report
was submitted.
2 The “Other (disposal of treasury stock through private offering)” in the current fiscal year is a disposal throughprivate offering to Sumitomo Mitsui Trust Bank, Ltd. (trust account) (retrustee: Custody Bank of Japan, Ltd.
(trust account)) conducted on August 27, 2021 in association with the addition to trust of the share-based
compensation scheme.
3 The number of treasury stocks held during the share-acquisition period does not reflect below-unit sharespurchased or sold in a period from June 1, 2022 to the date when the annual securities report was submitted.
4 The number of treasury stock held in the current fiscal year and the share-acquisition period does not include
the Company’s shares held in the account of the employee stock ownership plan (ESOP) trust for officers.

- 40 -

3. [Dividend Policy]
The Company has a basic dividend policy in which it considers improving efficiency of shareholders’ equity anddistribution of profits to shareholders as an important management goal and aims to pay out dividends to shareholders
on an ongoing basis by operating business in a stable manner. As regards our dividend policy, we adopted in
November 2021 a policy to bolster shareholder returns in which we link payouts to the earnings of the current fiscal
year with a target payout ratio of 40% on a consolidated basis while aiming to not allow the dividend on equity ratio(DOE) on a consolidated basis to fall below 1.5%.
The Company’s basic policy is to pay dividends of surplus twice a year, at midterm and end of fiscal year. The Boardof Directors and the General Meeting of Shareholders are respectively responsible for decisions on interim and end-ofterm payouts. The Company’s articles of incorporation stipulate it can pay out interim dividends with September 30 as
the record date every year based on resolution by the Board of Directors.
In the current fiscal year, the Company decided to pay 60 yen per share for the fiscal year-end dividend, as targetedat the time the dividend policy was changed. Furthermore, the Company bought back shares as a measure toenhance shareholder returns and improve capital efficiency in accordance with “Capital Allocation” disclosed in
February 2022. In terms of treasury shares the Company buys back, we have worked out a policy of actively seeking
to cancel the portion that exceed what we deem necessary while continuing to consider ways to use them for the
purpose of expanding the scope of our business areas and acquiring technologies. We plan to continue holding the
portion representing about 10% of the total number of outstanding shares and cancel the rest.
The Company intends to put retained earnings to effective use for investment to revitalize existing businesses andexpand the scope of its business, such as research and development, as well as for the provision of necessary funds
for bolstering corporate strength in preparation for the future.
Note: Distribution of retained earnings for which the record date belongs to the current fiscal year is as follows.
Date of resolution
June 29, 2022

Total dividend (millions of yen)

Resolution ofGeneral Meeting of

704

Shareholders- 41 -

Dividend per share (yen)60

4. [Status of Corporate Governance](1) [Status of corporate governance](i) Basic view on corporate governance
The Company’s basic view on corporate governance is to increase social trust of the company and maximize
corporate value by ensuring transparency and soundness of business operation.
To achieve this, we will strive to take measures under the key management policy worked out every year sothat all stakeholders are satisfied.
Furthermore, in order to ensure transparency and soundness of business operation, we adopted a corporate
auditor system with an audit structure comprised of four corporate auditors, including two outside auditors.
In terms of compliance, we give top priority over thorough adherence to corporate ethics, strive to enhanceinternal rules and raise awareness about them, and take measures to ensure operations are compliant with law.
As part of the effort, we established a “DKK Group Corporate Conduct Charter” and strive to raise employee
awareness about the charter for the entire group. The charter is a specific policy on corporate conduct to ensure
the Company complies with law and specifies target corporate behaviors and expected image of employees,
aiming to create a workplace full of employees with initiative and creativity.
In an effort to enhance compliance, the Company regularly holds Compliance Committee meetings andstrives to prevent violations of law as well as educate employees on compliance, give guidance to them, andraise their awareness about compliance. The Company also corrects any misconduct and gives guidance andoversight on individuals involved.
In terms of the Group’s risk management, in order to realize appropriate risk management for the Group as awhole, the Company enhances a solid risk management system for the Company as a whole by setting up a Risk
Management Committee to raise risk management awareness of all officers and employees and maintaining a
structure that can respond to unexpected material crises in a swift and accurate manner.
(ii) Overview of corporate governance structure and reason for adoption
The Company has in place a corporate governance structure as described below to increase trust of the
public and maximize corporate value by ensuring transparency and soundness of operation. We believe thestructure is working as a function to monitor the Company’s business operation to a sufficient degree and is themost suitable for its governance.
(Board of Directors)
The Board of Directors, comprised of nine members including four outside directors, provides oversight on
execution of duties under the motto of obtaining information early and making decisions quickly, giving top priority
to discussing sufficiently and reaching conclusion speedily, and clarifying division of responsibilities. In monthly
meetings as well as extraordinary meetings called as necessary, the Board of Directors makes decisions on
matters provided by the law and important matters regarding the operation of the Company, analyzes monthly
operating results, take necessary measures, assesses the outcomes, and conducts deliberations from theviewpoint of compliance with laws and articles of incorporation and appropriateness of operations.
Furthermore, the Company has established Nomination Committee and Compensation Committee, in whichchairperson is elected from among independent outside directors, who represent the majority in each, asadvisory bodies to the Board. These provide new functions for enhancing and strengthening the management
and governance systems by enhancing objectivity and transparency of the decision-making process of directors’compensation and personnel for the management ranks that play the role of ensuring the Company’s sustainablegrowth and helping it gain trust.
The Board is comprised of the following individuals, as of the date of filing:
Tadatoshi Kondo (President and Representative Director), Kazuhiro Ito (Director and Senior Executive
Managing Officer), Tsuyoshi Shimoda (Director and Managing Officer), Takashi Asai (Director and Managing
Officer), Toshiro Kawahara (Director and Managing Officer), Hidehiro Tsukano (Outside Director), Jean-Francois
Minier (Outside Director), Ryoko Takeda (Outside Director), and Atsushi Takahashi (Outside Director)- 42 -

(Board of Auditors)
The Company has adopted a corporate auditor system. The Board of Auditors, comprised of four corporate
auditors including two outside members, audits execution of duties by directors and their compliance with laws,
articles of incorporation, etc. through daily audit activities, including attendance at the Board of Directors
meetings, etc.
The corporate auditors include the following individuals, as of the date of filing:
Toshio Akahane (Corporate Standing Auditor), Nobuo Funabashi (Corporate Standing Auditor), Hiroshi
Matsubayashi (Outside Auditor), and Yuka Matsuda (Outside Auditor)(Compliance Committee)
We have developed a compliance program aimed at raising awareness for compliance among all executives
and employees, including directors and managing officers, enhancing a mutual deterrent function and eradicatingharassment. We aim to improve compliance levels for the Company as a whole by promoting this program.
Members of the Compliance Committee as of the date of filing are as follows:
Tadatoshi Kondo (President and Representative Director), Kazuhiro Ito (Director and Senior Executive
Managing Officer), Tsuyoshi Shimoda (Director and Managing Officer), Takashi Asai (Director and Managing
Officer), Mitumasa Ninomiya, Toshihisa Takayama, Hiroyuki Tanaka, and Takahiro Tomioka
The following diagram shows how the Company’s corporate governance is structured.

General Meeting of Shareholders
Appointment & dismissal

Appointment & dismissal

Management supervision

Audit
Board of Auditors

Nomination
Committee

Board of Directors

Audit

AdviceEvaluation

Collaborating andreportingRatio of outside directors: 4/9(Independent outside directors total three)

Accounting Auditors

Proposing andreporting

Reporting

Audit

Ratio of outside directors: 3/4

ReportingRatio of outside auditors: 2/4

Compensation
Committee

Proposing, reporting,and making
recommendations

Ratio of outside directors: 3/4

Appointment, dismissal,
reporting, and supervision

Execution of duties
President & Representative
Director

Reporting

Proposing andreporting

Givingdirections

Sustainability Committee

Proposingandreporting

Collaborating
and reporting

Executive
Committee

Compliance Committee
Risk Management Committee

Information Security Committee
Proposing andreporting

Audit Office

Audit

Giving directions
and supervising

Headquarters divisions / business divisions (administrative
divisions) / group companies- 43 -

(iii) Other matters relating to corporate governance<Status of internal controls and risk management systems; status of structure for ensuring appropriateness ofoperation of subsidiaries>
The Company positions compliance with law and adherence to social ethics as the basis for its businessactivity and strives to strengthen its internal control structure to ensure its operation remains appropriate by
establishing and raising the awareness of the Corporate Conduct Charter.
The Company works to strengthen and ensure internal control systems in accordance with basic policies
regarding internal control systems approved by the Board of Directors and enhances internal control byexamining operational statuses of such basic policies and reviewing their details as necessary.
In addition, the Company raises awareness about compliance by creating “DKK Standard,” which outlines
action guidelines, including the management philosophy and the Group Corporate Conduct Charter, and basic
views on safety, product quality, information management, etc., and distributing it to directors and employees of
the Company and group companies. It also has introduced a group whistleblowing system and strived to inform
employees about it.
The Company has resolved to develop a structure for internal controls in accordance with the Companies Act
and regulations relative to the application of the said act, as described below:(Structure to ensure execution of duties by the Group’s directors and employees complies with laws and thearticles of incorporation)- The Company shall establish a Corporate Conduct Charter, inform directors and employees of the Group
about it, and place compliance with laws, internal rules, including the articles of incorporation, and social
ethics as the basis for its corporate activity.
- The Company shall establish the Compliance Committee as a body to deliberate issues regarding complianceand an advisory body to the officer in charge of compliance stipulated under compliance rules.
- The officer in charge of compliance shall supervise divisions in charge of compliance to promote complianceand ensure propagation, consciousness-raising, and education of the importance of complying with laws,
regulations, internal rules, and social norms for the Group’s directors, auditors, and all employees.
- The Company shall develop a group whistleblowing system and prepare measures to address potential
incidents in which execution of duties by group directors or employees violate law, the articles ofincorporation, etc.

- 44 -

- The Compliance Committee shall advise the officer in charge of compliance about the necessity of stopping
any act in violation of laws, the articles of incorporation, etc. when such an act occurs, prompt the officer tostop such acts, and work out measures to prevent recurrence.
- Divisions responsible for audit shall conduct audits in accordance with internal rules to determine whether
execution of duties by the Group’s directors and employees complies with laws and is appropriate. The
divisions shall report the results to the President and corporate auditors as well as the Board of Directors.
(Structure for storage and management of information regarding execution of duties by directors)- Information regarding directors’ execution of duties shall be stored and managed appropriately in accordancewith laws, as well as internal rules established separately.
- The Compliance Committee members, directors, and corporate auditors may view information about
directors’ execution of duties at any time.
(Other structures, including rules on management of damage risk of the Group)- The Company shall take appropriate measures to mitigate risks by having each division classify identified
risks into categories of economic change, product quality, safety management, violation of laws, etc.
according to the nature of their operations. It shall have administrative divisions collect and organize thisinformation for promoting crisis management throughout the entire company and report it to the Board of
Directors.
- For Group companies, supervisory divisions that are operational units shall administer group companies
appropriately according to their operational formats and administrative divisions shall provide overall
supervision.
- Administrative divisions shall create manuals on risk management, internal rules, etc. and disseminate
information about them, as necessary, and review and maintain them appropriately, as necessary. If damage
is or is expected to be incurred, the head of each supervisory division that has recognized the risk shallimmediately report the situation to the administrative division and the director in charge, call a meeting ofmembers from relevant divisions to determine causes and work out measures under the leadership of thedirector in charge, and report the progress and results to the Board of Directors.
(Structure to ensure group directors are carrying out duties efficiently)- Under the group management philosophy, the Group’s Board of Directors, in accordance with the mediumterm business plan and the key management policies created annually, as well as the policy management
created by each division/department based on them, acts to achieve the goals specified in them.
- The Company’s Board of Directors shall make decisions on matters after discussing them at meetings held
once each month.
- The company shall maintain a structure in which the Board can efficiently carry out duties by establishing andreviewing rules on authority and division of responsibility as necessary.
(Structure to ensure appropriateness of operations at the corporate group comprised of the Company and its
subsidiaries)- The Company shall regard risk management and its compliance structure particularly as an issue common
across Group members and create a structure for internal coordination in accordance with the relevant rules
by appropriately conducting mutual notification, discussions, information sharing, instructions, communication,etc. for the goal of enhancing internal control structures at Group companies.
- Administrative divisions shall grasp situations of Group companies’ operations by having them report regularly
through supervisory divisions.
- Directors and Group company Presidents shall have the authority and responsibility for establishing andoperating internal controls to ensure that duties are carried out appropriately.
- The Company shall ensure reliability and appropriateness of financial reports by Group companies inaccordance with the Financial Instruments and Exchange Act, by developing an internal control system thatenables effective and appropriate evaluation and ensuring their appropriate operation.
(Matters concerning structure regarding employees who support duties of corporate auditors as well as steps
to ensure independence of such employees from directors and effectiveness of corporate auditors’ directions
to such employees)- 45 -

- The Board of Auditors shall select employees specialized for supporting corporate auditors’ duties upon
discussion with directors whenever such employees are necessary.
- Employees instructed by corporate auditors to support their audit work shall not accept directions or orders of
directors, etc. Transfers and evaluation of as well as disciplinary actions for such employees shall respect
opinions of the Board of Auditors.
(Structure in which the Group’s directors and employees, or employees who was briefed by them, report tocorporate auditors, structure regarding other forms of reporting to corporate auditors, and structure to ensure
audits by corporate auditors are conducted in an effective way)
- The Group’s directors and employees shall provide, at corporate auditors’ request, the Board of Auditors inadvance with information required for them to conduct audits in accordance with the audit standards forcorporate auditors, including information specified by law and matters that may inflict material impact on the
Company.
- Content of important circulated memos for approval shall be reported by passing on the documents tocorporate auditors.
- Corporate auditors shall meet with directors as necessary and exchange views with the internal audit divisionand the audit corporation in accordance with the above mentioned audit standards for corporate auditors.
- If an incident that may inflict a significant impact on the Company or a compliance-related issue is found, theGroup’s directors or employees shall immediately report it to corporate auditors.
- The Company shall not treat the reporting directors or employees in a disadvantageous way because of theirreporting and shall make sure the Group’s directors and employees are fully informed of such a ban.
- The Company shall comply with any request to refund payments corporate auditors made in advance or
expenses incurred by them or repay debts they took on in relation to execution of their duties, unless theCompany can prove that such expenses or debts are not related to execution of the corporate auditors’
duties.
(Systems to eliminate influence of anti-social forces)- The Company shall act dauntlessly against anti-social forces in accordance with the Corporate Conduct
Charter. The Company shall establish a supervisory division solely responsible for leading measures tocounter anti-social forces, collect and manage information about them, and work closely with external entities,
including police, anti-organized-crime-group entities, and lawyers to develop and reinforce systems toeliminate anti-social forces.
<Overview of liability limitation agreements>
The Company has signed an agreement with all outside directors to limit liabilities of each under Article 423,
Paragraph 1 of the Companies Act, pursuant to provisions set forth in Article 427, Paragraph 1 of the same Act.
Under this agreement, if the Company assumes an outside director is liable for damage that arose due tonegligence on their part, the above liability for damage will be limited up to the amount stipulated by law or a
specified level above it, only if the director is deemed to have acted in good faith and is not guilty of grossnegligence in performing the duties that led to the liability.
<Overview of officers’ liability insurance contract>
The Company has entered into an officers’ liability insurance contract with an insurance company as
stipulated in Article 430-3, Paragraph (1) of the Companies Act. The contract covers all directors and corporate
auditors of the Company and its subsidiaries, and these insured parties do not pay premiums. This insurance
contract will cover legal damages, litigation expenses, etc. borne by the insured parties in the event that a claim
for damages is made against an insured party owing to actions performed by the insured party based on his or
her position.
<Number of directors>
The articles of incorporation stipulate that the number of directors be no more than 11.
<Resolutions of the General Meeting of Shareholders concerning the election and dismissal of directors>- 46 -

Resolutions on the appointment of directors are stipulated to require attendance of shareholders holding onethird or more of the votes of the shareholders who are entitled to vote and approval based on the majority ofthese voting rights. Resolutions on the appointment of directors are also stipulated not to be based on
cumulative voting. The articles of incorporation stipulate that resolutions on the dismissal of directors require
attendance of shareholders holding one-third or more of the votes and approval based on at least two-thirds ofthese voting rights.
<Acquisition of treasury stock>
The articles of incorporation stipulate that the Company may acquire treasury stock through market
transactions, etc. upon resolutions of the Board of Directors pursuant to provisions set forth in Article 165,
Paragraph 2 of the Companies Act, in order to enable flexible execution of management measures, including
financial measures, in response to changes in economic climate.
<Liability exemption for directors and corporate auditors>
For the purpose of allowing directors and corporate auditors to play their expected roles to the full extent in
performing their duties, the articles of incorporation stipulate that the Company may exempt them from liability
for damage, to the extent permitted by laws and regulations, by a resolution of the Board of Directors asprovided in Article 426, Paragraph 1 of the Companies Act.
<Interim dividends>
The articles of incorporation stipulate that the Company may pay out interim dividends by a resolution of theBoard of Directors for the purpose of flexibly distributing profits to shareholders, pursuant to provisions of Article
454, Paragraph 5 of the Companies Act.
<Requirements for special resolutions of General Meeting of Shareholders>
The articles of incorporation stipulate that special resolutions of General Meeting of Shareholders as
stipulated in Article 309, Paragraph 2 of the Companies Act require attendance of shareholders holding onethird or more of the votes of the shareholders who are entitled to vote and approval based on at least two-thirdsof these voting rights, for the purpose of ensuring smooth operation of General Meeting of Shareholders.
The Company has stipulated a basic policy on how individuals responsible for deciding policy on financial affairs
and business operation ought to be. At the 80th General Meeting of Shareholders on June 29, 2006, it introduced
the policy on potential attempts to buy large amounts of the Company’s shares and has maintained it for the purposeof maximizing either the Company’s corporate value or our shareholders’ shared benefits. More recently, the policy
was approved, with some changes, by the shareholders at the 95th General Meeting of Shareholders on June 29,
2021 (the policy reflecting the changes to be referred to as the “Plan” hereafter).
Since a new management system was inaugurated on June 29, 2021, we have taken measures that contribute toimproving governance, such as reforming of corporate culture and strengthening of compliance systems, which have
paid off. In addition, we worked out a medium-term business plan and fleshed out medium-term strategies for
improving corporate value. We have carried out measures to help achieve medium- to long-term growth, under the
new management system, but aim to go beyond them and introduce further measures for growth.
Although the Plan was scheduled to expire on June 30, 2024, the Board of Directors resolved at a meeting on May
12, 2022 to abolish the Plan on that date before the expiration of the effective period, as measures to improve
corporate value were carried out and after considering comprehensive factors, including recent trends of defensive
measures against acquisition and opinions of shareholders, including Japanese and foreign institutional investors.
The Company aims to work to maximize either the Company’s corporate value or shared benefits of shareholders
even after the Plan was abolished.
The abolished details, etc. (matters provided in Article 118, Paragraph 3 of the Regulation for Enforcement of theCompanies Act) are as follows.
(1) Details of the basic policy
If a party intending to purchase large amounts of the Company’s shares emerges, we, as a listed company, believe
decisions on issues including whether to sell the shares to such a party and whether to give up management of theCompany to such a party should be left to judgment of the shareholders.

- 47 -

However, not a small number of recent attempts at buying large amounts of shares have had the potential of
inflicting irrecoverable damage to the Company’s corporate value and shared interests of shareholders.
If those who make decisions on financial and operational policies of the Company do not recognize the importanceof the sources of the Company’s corporate value or the importance of maintaining and strengthening such sourcesin the medium- to long-term perspective, it may not only undermine maximization of the Company’s corporate valueor the shareholders’ shared interests but also damage management resources, both tangible and intangible, including
the relationship of trust with a broad range of stakeholders.
Based on the view above, the Company’s Board of Directors resolved at a meeting on May 18, 2018 to maintainthe policy on potential attempts to buy large amounts of the Company’s shares, with partial changes (the “Old Plan,”hereafter). If maximization of the Company’s corporate value or shared interests of the shareholders is at stake, suchas potential damage to sources of the Company’s corporate value in a long-term perspective due to acquisition ofshares that carry voting rights totaling 20% or higher of the total voting rights by specific individuals or groups, wewould regard such individuals or groups as inappropriate for controlling decisions on policies of the Company’s
financial affairs or business operation, and would take appropriate measures, depending on the situation and within
the bounds permitted by laws and the Company’s articles of incorporation, to maximize the Company’s corporate
value and shared interests of shareholders.
As the Old Plan expired on June 30, 2021, the Company’s Board of Directors resolved at a meeting on June 2 ofthe same year to maintain the Old Plan with some changes made from July 1, 2021. This plan was approved byshareholders at the 95th General Meeting of Shareholders on June 29, 2021. Please refer to “(3) Effort to prevent
persons judged inappropriate in accordance with the basic policy from controlling decisions on the Company’s
financial affairs and business operation” below for details of the Plan.
One of the key changes from the Old Plan made to the Plan is the introduction of an information provision request
period in which the Company can request additional information from Large-Scale Purchasers as Large-Scale
Purchase information, which is aimed at preventing arbitrary operation by the Company’s Board of Directors fromdelaying procedures.
Another is a stipulation requiring that the Corporate Value Committee be comprised only of outside directors andoutside auditors (including their substitutes) who are independent from the management team which performs dutiesof the Company.
(2) Special efforts contributing to the execution of the basic policy(i) Details of business, management philosophy, etc. of the Company
The Company and its subsidiaries (the “Group” hereafter) operates mainly in the telecommunication and radio
frequency businesses.
In the telecommunication business, the Group mainly designs, manufactures, and constructs antennas and steel
towers for information communication and broadcasting purposes in the information communications industry.
The radio frequency business belongs to the applied high-frequency devices industry. The Group designs andmanufactures induction heating equipment using high frequencies and provides hardening services using heating
equipment.
Since its foundation in 1950, the Company has stuck with the motto of providing products that satisfy customers
and made steady efforts with a goal of always maintaining technologies at highest levels in the industry under the
management philosophy of “being a forward-looking company with a fighting spirit, seeking to capture needs of thetimes early and never being afraid of failures” and “providing superior products to society and contributing to society.”
We believe this has helped the Group win significant trust and support in the industry, especially from customers.
(ii) Efforts to improve corporate value
The Company has the basic principles of responding quickly to changes in the management environment, seeking
to ensure continuity of business and stable revenue, and ensuring increase of corporate value. Specifically, under
our medium- to long-term management strategy, which is described in the Medium- and Long-Term Management
Strategy disclosed in March 2021, we are working toward the goal of achieving the group’s ideal of “Pioneering the
Future” by actively contributing to society, improving corporate value, and achieving growth. For this, we set three
growth strategies of "Creation of new business," "Further expansion of existing business," and "Strengthening of our
financial foundation."
Under the “Creation of new business” strategy, we will develop new revenue sources that differ from those ofexisting businesses through business style transformation, expansion of customer base, and pursuit of differentiation.
As for new business, we will focus efforts on developing new markets outside the automotive industry in the radio- 48 -

frequency business, in addition to local 5G. Local 5G has the potential to offer opportunity for us to find newcustomers. We regard it as a promising market which we can develop by taking advantage of the strengths basedon our existing technologies. As for the target of market development effort in the radio frequency business, we will
focus efforts on the development of markets outside the existing automotive industry, including the food industry.
In existing business areas, we aim to expand business in peripheral areas of the businesses that remain
important and regarded as the pillars, including mainly mobile communication-related, fixed wirelesscommunication-related, broadcasting-related, and radio frequency businesses, seeking to expand our stablerevenue base by introducing products that feature new technologies.
We will also work to strengthen our business foundation to support the growth strategies in these businesses. The
information communication-related industries and the applied high-frequency devices industries including mainly theautomotive industry, where the Company belongs, have entered a phase of major change driven by technologicalinnovation. By further stepping up research and development efforts focused on the era to come, we will expand
business and contribute to the further development of social infrastructure. In addition, we will carry out capital
measures and financial strategies to put our capital to maximum use and channel our business resources into
appropriate areas.
Strengthening the business foundation requires a corporate governance perspective. Our fundamental approachto corporate governance is to increase social credibility and corporate value of the Company by ensuringtransparent and sound management. We will continue to take measures for sustainable growth, including
effectiveness evaluation of the Board of Directors, establishment of Nomination Committee, and reduction in crossheld shares, in an era of rapid change.
We believe it is very important to continue to practice the basic views expressed in our management philosophy,
which forms the basis of these management plans, and attach importance to maintaining a long-term relationship oftrust with customers and other stakeholders who are essential for the Group’s growth in order for the Group tocontinue improving corporate value.
(3) Effort to prevent persons judged inappropriate in accordance with the basic policy from controlling decisions on
the Company’s financial affairs and business operation
The plan is aimed at enabling the Company’s shareholders to appropriately judge whether or not to respond to an
act of large-scale purchase (defined below) by persons who plan to engage in such an act or are already in theprocess of doing so (“Large-Scale Purchaser” hereafter), the Company’s Board of Directors to present, uponrecommendation by the Corporate Value Committee (defined below), to the Company’s shareholders opinions for oragainst the act of large-scale purchase or alternative plans, etc. to the acquisition proposal, business plans, etc.
presented by the Large-Scale Purchaser (the “Alternative Proposal” hereafter), or negotiate with the Large-Scale
Purchaser for the Company’s shareholders, by asking such persons to provide necessary information regarding theact of large-scale purchase in advance and allow a period for consideration and negotiation, aiming thus to maximize
the Company’s corporate value and the shared interests of the Company’s shareholders. With respect to (i)acquisition of shares, etc. issued by the Company through purchase or other means that results in a Large-Scale
Purchaser holding a stake of 20% or larger in the Company, (ii) acquisition of shares, etc. issued by the Company
through purchase or other means that results in a Large-Scale Purchaser and its specially related parties holding a
combined stake of 20% or larger in the Company, and (iii) persons who plan to take action that constitute or have thepotential to constitute either an agreement or other acts by a shareholder that can result in such a shareholder beinga joint shareholder with another shareholder or a group of other shareholders, or an act by a shareholder of
establishing a relationship under which the shareholder controls another or vice versa or both take action jointly (Thisis limited, however, to cases in which the combined stake of the shareholder and the other in the Company is at least20%.), whether or not the actions specified in the above (i) or (ii) are taken (a “Large-Scale Purchase” hereafter), theCompany has introduced a rule under which it will request applicable persons to provide sufficient information to theCompany’s Board of Directors and allow a period in which the Board can review the act of Large-Scale Purchase,
form opinions, devise an Alternative Proposal, and conduct negotiations before a Large-Scale Purchase. If this rule
is not adhered to, the Company may introduce defensive measures for the purpose of protecting the shared interestsof shareholders. Defensive measures the Company takes against attempts at Large-Scale Purchase under this Plan
would in principle use share options granted without cost, but other defensive measures may be taken if it is deemed
appropriate to take other defensive measures permissive under laws or the Company’s articles of incorporation.
In maintaining the defensive measures against acquisition under the Plan, the Company set up a Corporate Value
Committee comprised of at least three members selected from among the Company’s outside directors and outside- 49 -

auditors (including their substitutes) independent from the management team directly involved in the Company’s
operation to eliminate the possibility that the Company’s Board of Directors may make arbitrary judgment regarding
defensive measures, etc. The Corporate Value Committee examines information necessary for it to review details ofacquisition plans, including a tender-offer explanation, provided by persons planning to initiate Large-Scale Purchase,and makes recommendation to the Company’s Board of Directors on whether the Company should take defensive
measures based on the Plan. If the Corporate Value Committee decides that the Company should seek shareholder
judgment by calling a shareholders meeting (“Meeting to Confirm Shareholders Wishes” hereafter), it may
recommend to the Company’s Board of Directors that holding a Meeting to Confirm Shareholders Wishes isappropriate.
The Company’s Board of Directors votes to decide whether or not to introduce defensive measures or cancel
them, respecting recommendations by the Corporate Value Committee to the maximum extent possible. If the
Corporate Value Committee recommends that it is appropriate to call a Meeting to Confirm Shareholders Wishes,
the Company’s Board of Directors may call such a meeting to seek shareholder judgment on whether to introduce
defensive measures. If the meeting is called, the Company’s Board of Directors will follow the outcome of such ameeting on whether to introduce defensive measures. If such a vote is taken, the Company will disclose informationthat is deemed appropriate, including opinions of the Company’s Board of Directors, to shareholders in a timely andappropriate manner in accordance with applicable laws and regulations, as well as rules of financial instrument
exchanges.
For further details of the Plan, please refer to “Notice on the continuation of the policy regarding acts of Large-Scale
Purchase (defensive measures against acquisition)” on the Company’s website(https://www.denkikogyo.co.jp/ir/ir/pdf/2021/20210602_release4.pdf).
(4) Judgment by the Board of Directors regarding efforts in the above (2) and (3) and its backgroundAs described in the above (2) and (3), the plan has remained in place for the purpose of maximizing theCompany’s corporate value and the shared interests of its shareholders and is in line with the basic policy in theabove (1).
Fairness and objectivity of the decision to maintain this plan is ensured as it has been approved at a General
Meeting of Shareholders, fairness of the Board of Directors’ judgment is ensured as the Board is obligated torespect the Corporate Value Committee’s recommendations to the maximum extent possible when taking defensive
measures, and the plan is slated to expire on June 30, 2024 and can be abolished at any time on resolution by theCompany’s General Meeting of Shareholders or the Board of Directors. It thus would not undermine sharedinterests of the Company’s shareholders and is not intended to allow the Company’s officers to maintain theirpositions.

- 50 -

(2) [Officers](i) List of Directors and Auditors

Male: 11, female: 2 (percentage of female officers: 15.4%)
Official title

Name

Date of birthWork history
Apr. 1995
Apr. 2016

July 2018
President &Representative
Director

Tadatoshi
Kondo

August 28, 1971

July 2019

June 2020

Apr. 2021
Apr. 1985
Apr. 2009

July 2015

June 2016

Director and Senior
Executive Managing
OfficerJune 2018
Kazuhiro Ito

March 14, 1962

Apr. 2019

June 2019
June 2020
Apr. 2021- 51 -

Term

Number ofshares held
(thousandsof shares)

Joins the Company
Head of North America Promotion
Division of Overseas Business
Promotion Supervisory Division of
the Company
Managing Officer, Full-time
Deputy Head of Overseas
Business Supervisory Division of
the Company
Managing Officer, Head of
Equipment Supervisory Divisionof the Company
Director, Managing Officer, Headof Wireless R&D Center, andHead of Equipment Supervisory
Division of the Company
President and Representative
Director of the Company (current)

See Note 2.

5

Joins the Company
Radio Frequency Sales Manager
of Sales Supervisory Division II of
the Company
Managing Officer and SalesManager of Radio Frequency
Supervisory Division of theCompany
Director, Managing Officer, andHead of Radio Frequency
Supervisory Division of theCompany
Director, Managing Director, andHead of Radio Frequency
Supervisory Division of theCompany
Director, Senior Executive
Managing Officer, and Head ofRadio Frequency Supervisory
Division of the Company
Director and Senior Executive
Managing Officer of the Company
Director and Managing Executive
Officer of the Company
Director and Senior Executive
Managing Officer of the Company(current)

See Note 2.

7

Official title

Name

Date of birthWork history
Apr. 1988
Apr. 2010

July 2011

July 2012

June 2013

Apr. 2017

Director and Managing
Officer
Head of Crisis
Management Office

Tsuyoshi
ShimodaApril 12, 1964

Dec. 2017

Apr. 2019

July 2019

Apr. 2021
Apr. 2022- 52 -

Joins the Company
Technical Manager of Equipment
Supervisory Division of theCompany
Deputy Supervisory Head of
Equipment Supervisory Divisionof the Company
Managing Officer and Deputy
Supervisory Head of Equipment
Supervisory Division of theCompany
Director, Managing Officer, andHead of Equipment Supervisory
Division of the Company
Director, Managing Officer, Headof Equipment Supervisory
Division, and Head of Overseas
Business Supervisory Division of
the Company
Director, Managing Officer, andHead of Overseas BusinessSupervisory Division of theCompany
Director, Managing Officer, Headof Overseas BusinessSupervisory Division, and Deputy
Supervisory Head of
Administrative Supervisory
Division of the Company
Director, Managing Officer, and
Deputy Supervisory Head of
Administrative Supervisory
Division of the Company
Director and Managing Officer of
the Company
Director, Managing Officer andHead of Crisis Management
Office (current)

Term

See Note 2.

Number ofshares held
(thousandsof shares)

5

Official title

Name

Date of birthWork history
Apr. 1995
Apr. 2016

Apr. 2017

Apr. 2019

Apr. 2020

May 2020
Director and Managing
Officer
Takashi Asai
Head of President’s
OfficeMay 1, 1972

Apr. 2021

June 2021
July 2021
Apr. 2022- 53 -

Joins the Company
Head of Hokkaido Branch of
Branch Supervisory Division of
the Company
Central Sales Manager of BranchSupervisory Division andOverseas Sales Manager ofOverseas Business Supervisory
Division of the Company
Managing Officer and Head ofBranch Supervisory Division of
the Company
Managing Officer and Head of
New Business Promotion Officeof the Company
Managing Officer and Head ofFacility Engineering Supervisory
Division of the Company
Managing Officer, Head of
Administrative Supervisory
Division, Head of Secretarial
Section, and Head of Safety andQuality Management Division of
the Company
Director, Managing Officer, Headof Administrative Supervisory
Division, Head of Secretarial
Section, and Head of Safety andQuality Management Division of
the Company
Director, Managing Officer andHead of Secretarial Section of theCompany
Director, Managing Officer andHead of President’s Office of theCompany (current)

Term

See Note 2.

Number ofshares held
(thousandsof shares)

2

Official title

Name

Date of birthWork history
Apr. 1991
July 1992

July 2008

July 2019
Director and Managing
Officer
Head of R&D
Supervisory Center

ToshiroKawahara

Aug. 2019
March 9, 1967

June 2020
Apr. 2021
June 2021
April 2022

Apr. 1981
June 2009
May 2011

Apr. 2014
June 2015

Apr. 2016

Directors

Hidehiro
TsukanoMarch 21, 1958

Apr. 2017

June 2017

June 2019

May 2020
June 2021
July 2021- 54 -

Term

Number ofshares held
(thousandsof shares)

Joins NIPPON TELEGRAPH AND
TELEPHONE CORPORATION
R&D Division of NTT Mobile
Communications Network, Inc.
(presently NTT DOCOMO, Inc.)
General Manager of WirelessAccess Development Division of
NTT DoCoMo, Inc. (currently NTT
DOCOMO, Inc.)
Joins the Company; Full-time
Head of Technology Development
Supervisory Division
Chief Researcher of Wireless
R&D Center and Full-time Headof Technology Development
Supervisory Division of theCompany
Deputy Head of Wireless R&D
Center of the Company
Head of Wireless R&D Center of
the Company
Director, Managing Officer, Headof Wireless R&D Center of theCompany
Director, Managing Officer, Headof R&D Supervisory Center of theCompany (current)

See Note 2.

1

Joins FUJITSU LIMITED
Head of Corporate Strategy Officeof FUJITSU LIMITED
Corporate Executive Officer andHead of Corporate Strategy Officeof FUJITSU LIMITEDManaging Executive Officer and
CFO of FUJITSU LIMITED
Director, Managing Executive
Officer, and CFO of FUJITSU
LIMITED
Director, Senior Managing
Executive Officer, and CFO of
FUJITSU LIMITED
Director, Corporate Executive
Officer, Vice President, and CFOof FUJITSU LIMITED
Representative Director, Vice
President, and CFO of FUJITSU
LIMITED
Corporate Executive Officer andVice Chairman of FUJITSU
LIMITED
Advisor to NTT Advanced
Technology Corporation
Director of the Company (current)
Head of IOWN Integrated
Innovation Center of NIPPONTELEGRAPH AND TELEPHONECORPORATION (current)

See Note 2.

－

Official title

Name

Date of birthWork history
Sept. 1992
Mar. 1995

Feb. 1997

Mar. 1998

Mar. 2009

Apr. 2013
Directors

Jean-Francois November 20, 1970
Minier

Nov. 2013
Nov. 2016

Jan. 2019
Apr. 2020

Ryoko Takeda

July 5, 1970

Apr. 1998

Registered as lawyer; joins
Nishimura & Partners (presently
Nishimura & Asahi)
Special Counsel of City-Yuwa
Partners (current)
Certified as Certified Fraud
Examiner (CFE)
Bar examiner and examiner forthe preliminary bar examination(responsible for administrativeacts)
Director of the Company (current)

See Note 2.

－

Joins Tohmatsu & Co. (presently
Deloitte Touche Tohmatsu LLC)
Registered as certified public
accountant
Partner of Deloitte Touche
Tohmatsu LLC
Representative member ofPartners SG Audit Corporation(current)
Director of the Company (current)

See Note 2.

－

Feb. 2016

June 2021
Oct. 2000
June 2004
AtsushiTakahashi

October 13, 1976－

Director of the Company (current)
Representative Director of LES
ROIS MAGES JAPON CO., LTD.
(current)

Oct. 2016

Directors

See Note 2.

June 2021
Dec. 2021

Dec. 2014

Directors

Equity derivatives trader ofIndosuez W.I. Carr Securities Ltd.
Vice President and equity
derivatives trader of Morgan
Stanley
Associate Director and Head of
OTC Equity Derivatives Trading of
NatWest Markets
CEO Asia-Pacific and Tokyo
Branch Manager of Dresdner
Kleinwort
In charge of Japanese company
development of AVISA Partners
Representative Director andChairman of Intime
Managing Director and Head of
Asia of Moore Group Limited
Advisor to Chairman forInternational Relations (pro bono)of Kyoto Prefectural Union ofAgricultural Cooperatives
Advisor to CEO Japan and Korea
of Buhler Group
Non-Executive Director and Headof Corporate Development, North
East Asia, of First Names Group
Corporate Projects Director, Asiaof United Company RUSAL
Special Advisor to CEO of Les
Rois MagesManaging Director of Kroll, LLC.

Term

Number ofshares held
(thousandsof shares)

July 2014
Aug. 2020

June 2021- 55 -

Official title

Name

Date of birthWork history
Mar. 1976
Aug. 2007

Mar. 2011
June 2013
Aug. 2013
Corporate standing
auditors

ToshioAkahaneMay 12, 1957
Apr. 2015

Apr. 2017

Apr. 2019
June 2020
Nov. 1983
Aug. 2007

Apr. 2009

July 2013

Apr. 2016

Corporate standing
auditors

Nobuo
Funabashi

July 11, 1958

June 2018

Apr. 2020

June 2021- 56 -

Term

Number ofshares held
(thousandsof shares)

Joins Maritime Self-Defense
Force
Chief of Planning Section,
Systems Planning Department,
Maritime Self-Defense Force
Director of Auditors Office,Maritime Staff Office
Joins the Company
Head of Ebino Techno Center,
Facility Supervisory Division of
the Company
Head of Ebino Techno Center,
Facility Engineering Supervisory
Division of the Company
Head of Myanmar Office forOverseas Business Supervisory
Division of the Company
Head of Business Administration
Department of the Company
Corporate Standing Auditor of theCompany (current)

See Note 4.

4

Joins the Company
Government Sector SalesManager of Sales Supervisory
Division II of the Company
Head of Tokyo Branch of BranchSupervisory Division of theCompany
Managing Officer, Head of BranchSupervisory Division, and Head ofTokyo Branch of the Company
Head of Overseas Business
Promotion Supervisory Division,
Deputy Supervisory Head ofBranch Supervisory Division, andProject Promotion Manager ofOverseas Business Promotion
Supervisory Division of theCompany
Councilor of Human Resources
Department of Administrative
Supervisory Division (seconded to
Zephyr Corporation) of theCompany
Councilor of Human Resources
Department of Administrative
Supervisory Division (seconded to
Denko Techno Heat Co., Ltd. ) of
the Company
Corporate Standing Auditor of theCompany (current)

See Note 5.

4

Official title

Name

Date of birthWork history
Apr. 1983
June 2007
Apr. 2014

Sept. 2014

Apr. 2016
Auditors

HiroshiMatsubayashi

June 28, 1960

Apr. 2017

June 2019

June 2021
Apr. 1985
Oct. 1991
Oct. 1992

Auditors

Yuka Matsuda September 19, 1960

Apr. 1995
Apr. 1999
July 2002
July 2014
July 2021
July 2021

Term

Number ofshares held
(thousandsof shares)

Joins The Nippon Fire & Marine
Insurance Co., Ltd.
Manager of Shiga Branch,
NIPPONKOA Insurance Co., Ltd.
Executive Officer and General
Manager of Corporate Sales
Department No. 4 of
NIPPONKOA Insurance Co., Ltd.
Managing Executive Officer andGeneral Manager of Corporate
Sales Department No. 4 ofSompo Japan Nipponkoa
Insurance Service Co., Ltd.
Managing Executive Officer andGeneral Manager of Kansai
Division No. 2 of Sompo Japan
Nipponkoa Insurance Service
Co., Ltd.
Managing Executive Officer,
General Manager of Kanagawa
Division, and General Manager of
Shizuoka Division of Sompo
Japan Nipponkoa Insurance
Service Co., Ltd.
Managing Director of Sompo
Japan Nipponkoa Welfare
Foundation (presently Sompo
Welfare Foundation) (current)
Corporate Auditor of theCompany (current)

See Note 5.

－

Joins Citibank, N.A., Tokyo
BranchJoins Chuo Shinko Audit
Corporation
Joins Chuo Coopers LybrandInternational Tax Office (presently
PwC Tax Japan)
Registered as certified public
accountant
Registered as certified public tax
accountant
Partner of PwC Tax Japan
Director of PwC Tax Japan
Corporate Auditor of theCompany (current)
Representative of Yuka Matsuda
CPA and Public Tax Accountant
Office (current)

See Note 6.

－

Total

31

Notes: 1 Directors Hidehiro Tsukano, Jean-Francois Minier, Ryoko Takeda, and Atsushi Takahashi are outside directors.
2 The term of the directors is from the conclusion of the General Meeting of Shareholders relating to the fiscal
year ended March 2022 to the conclusion of the General Meeting of Shareholders relating to the fiscal year
ending March 2023.
3 Auditors Hiroshi Matsubayashi and Yuka Matsuda are outside auditors.
4 The term of Corporate Standing Auditor Toshio Akahane is from the conclusion of the General Meeting of
Shareholders relating to the fiscal year ended March 2020 to the conclusion of the General Meeting of
Shareholders relating to the fiscal year ending March 2024.
5 The term of Corporate Standing Auditors Nobuo Funabashi and Corporate Auditor Hiroshi Matsubayashi is fromthe conclusion of the General Meeting of Shareholders relating to the fiscal year ended March 2021 to theconclusion of the General Meeting of Shareholders relating to the fiscal year ending March 2025.

- 57 -

6 The term of Corporate Auditor Yuka Matsuda is from July 1, 2021 to the conclusion of the General Meeting of
Shareholders relating to the fiscal year ending March 2025.
7 The Company has appointed a substitute corporate auditor as stipulated in Article 329, Paragraph 3 of theCompanies Act in the event the number of corporate auditors may fall short of the number required by law. The
following table shows a career summary of the substitute corporate auditor.
Name

Date of birth

Career summary and roles at other entities

Apr. 1973

Term

Number ofshares held
(thousandsof shares)

Joins Nihon Cement Co., Ltd. (currently
Taiheiyo Cement Corporation)

Apr. 2004

Overseas Company Vice President andGeneral Manager, Marketing & Trading
Department, Overseas Company of Taiheiyo
Cement Corporation

Apr. 2006

Advisor, Overseas Company Vice President,
and General Manager, Marketing & Trading
Department, Overseas Company of Taiheiyo
Cement Corporation

Apr. 2008

Managing Executive Officer and Overseas
Company President of Taiheiyo Cement
Corporation

Ryuichi Hirai

July 22, 1950

June 2008

Director, Managing Executive Officer andOverseas Company President of Taiheiyo

See Note.

－

Cement Corporation
June 2010

Director, Managing Executive Officer, andSenior General Manager, International
Business Division of Taiheiyo Cement
Corporation

Apr. 2012

Representative Director, Senior Executive
Officer, and Senior General Manager,
International Business Division of Taiheiyo
Cement Corporation

Apr. 2013

Director of Taiheiyo Cement Corporation

June 2013

Counselor of Taiheiyo Cement Corporation

Oct. 2018

Deputy Representative Director of
DIRECTFORCE (current)

Note: The term of a substitute corporate auditor is from the time the position is taken until the expiration of theterm of the corporate auditor he/she has replaced.
(ii) Status of outside directors and outside auditors
There are four outside directors and two outside auditors. Five out of the six outside directors and outside
auditors (excluding Hidehiro Tsukano) satisfy the Tokyo Stock Exchange’s requirement for independent directors
and auditors. They were appointed as such because of their high independence, which makes them free from therisk of causing conflicts of interest with general shareholders.
We appointed Hidehiro Tsukano as outside director, judging that he is the right person to help enhance ourmanagement strategies, investor relations activities, and corporate governance. He possesses ample knowledge
and experience, as well as broad expertise required for a business executive, which he acquired through his
experience as CFO and other positions at a comprehensive IT service and equipment company.
We appointed Jean-Francois Minier to outside director as we judged that he is suited for the role of helping
maintain and improve transparency and soundness of the management and reinforce corporate governance. He
possesses ample knowledge and experience, as well as broad expertise that he acquired at international
financial institutions.
Ryoko Takeda is a lawyer versed in corporate law and has sufficient knowledge for governing corporate- 58 -

management. We decided she is suited for our purpose of strengthening corporate governance and thus
appointed her outside director.
We appointed Atsushi Takahashi as outside director, judging that he is the right person to help improve
corporate governance as he has audited many companies as a certified public accountant and thus possesses
specialized knowledge and experience, as well as broad expertise.
We appointed Hiroshi Matsubayashi to outside auditor as we judged that he is suited for the role of helping
reinforce the audit structure and expect him to be able to provide us with objective audits and advice from a
broad perspective based on knowledge and experience he acquired through his previous job at a non-life
insurance company.
We appointed Yuka Matsuda to outside auditor because we judged her to be suitable for the role of helping toreinforce the audit structure as she is a certified public accountant and certified tax accountant versed incorporate financial affairs and accounting and has sufficient expertise for governing corporate management.
The Company does not have any particular rules about how we should ensure independence of outside
directors or outside auditors in appointing them. Our basic policy on these roles is to select individuals whom we
can expect to play an objective and appropriate role of providing oversight or audit based on specialized
knowledge in accordance with standards required by the Companies Act or the Tokyo Stock Exchange and who
do not have the risk of causing conflicts of interest with general shareholders.
None of the outside directors or outside auditors have special interests in the Company. In cases in which anyof the outside directors or outside auditors, excluding Hidehiro Tsukano, is serving or served in the past as
employee, director, or auditor at other companies, there are no special interests between the Company and suchcompanies. Hidehiro Tsukano is a former representative director of FUJITSU LIMITED, which has business deals
with the Company. However, the Company’s deals with FUJITSU LIMITED represent only a fraction of theCompany’s net sales. While Ryoko Takeda is a Special Counsel of City-Yuwa Partners and the Company uses
City-Yuwa’s counsel service, the deal with the law firm does not affect her independence as the total amount of
the fees the Company paid to the law firm in the current fiscal year is minimal compared to the Company’s sales.
The situation of the outside directors’ and outside auditors’ holdings of the Company’s shares is as described in“(i) List of Directors and Auditors.”(iii) Supervision or audits and internal audits by outside directors or outside auditors, their cooperation in audits bycorporate auditors and account audits, and their relationship with the internal control division
As for the Company’s internal audit structure, the Audit Office (comprised of four members) leads internal
audits to examine the execution of duties, as well as audits of Group companies. Internal audits, which areconducted under internal audit rules, are conducted with an aim to protect the Company’s assets and improve its
management efficiency by examining and assessing execution of business activities from the perspective oflegality and efficiency.
The outside directors attend the Board of Directors meetings, where each speaks out from an objective
standpoint in an effort to ensure validity and appropriateness of directors’ decisions.
The Board of Auditors is comprised of four members, including two outside members. The Company has astructure in which execution of duties by the directors is checked by corporate auditors to a sufficient degree inentire aspects of management through their daily audit and other activities, including attendance at Board of
Directors meetings and other important meetings in accordance with audit policies set by the Board of Auditorsand duties assigned to each. Yuka Matsuda is qualified as certified public accountant and certified public tax
accountant. She has an appropriate level of knowledge of financial affairs and corporate accounting.
To ensure cooperation between different bodies, the Board of Auditors, accounting auditors, and the internal
audit division share information and exchange views at regular intervals and whenever necessary.
The outside directors perform their roles and duties from an independent standpoint from the management andcontrolling shareholders, including provision of supervision to ensure the implementation of corporate
governance from a third-party standpoint, through the Board of Directors. The outside auditors collect necessary
information and express opinions through attendance at the Board of Directors and Board of Auditors meetingsand execution of audits, and conduct audits in a coordinated effort with accounting auditors, the internal audit
division, and the division in charge of internal control. Outside directors and outside auditors each support
enhancement of supervision on management, ensuring appropriateness of operation to a sufficient degree.

- 59 -

(3) [Status of audits](i) Status of audits by corporate auditors
a. Organization of audits by Board of Auditors, members, and procedures
The Company’s Board of Auditors is comprised of four members, including two outside members (one of thetwo has sufficient knowledge about corporate finance and accounting).
b. Activities of corporate auditors and Board of Auditors
In the current fiscal year, the Company called 20 Board of Auditors meetings. Auditor Tsuchiya attended eightof eight meetings, Auditor Tamiya seven of eight meetings, Auditor Kobayashi eight of nine meetings, Auditor
Akahane 20 of 20 meetings, Auditor Funabashi 12 of 12 meetings, Auditor Matsubayashi 12 of 12 meetings,
and Auditor Matsuda 11 of 11 meetings.
Topics discussed by the Board of Auditors included audit policies and plans; situation of preparation,
construction, and operation of internal control systems; and validity of audit methods employed by theaccounting auditors and their audit results.
Activities of corporate auditors conducted partly using methods such as phone and the internet included
attendance at important meetings such as Board of Directors meetings; review of documents relating toimportant decisions; communication with directors; review of operation at headquarters, plants, and branches
and situations of their assets; communication and exchange of information with subsidiary directors andcorporate auditors; review of business reports from subsidiaries; and review of accounting auditors’ reports on
implementation situations and results of audits. They also discussed key audit matters, received reports on thesituation of audit of such matters, and requested explanation as necessary. Corporate auditors also reviewed
reports from the internal audit division on the situation of execution and results of audits.
As the incident reported using the whistleblowing system in April 2021 was alleged to be an incident that may
fall under Article 382 of the Companies Act, an investigative audit was performed, led by the Board of Auditorsin accordance with the authority specified in the provisions of Article 381 of the same Act. For the investigation,
an independent external law firm was enlisted to offer investigative assistance, including legal advice, tocomplement the legal interpretation of the Board of Auditors.
As the investigation found defects in some aspects of the operation of the internal control systems,
recommendations regarding measures to prevent recurrence were made on issues including reforms of thecorporate culture and governance systems, improvement in the awareness about compliance throughmanagement prioritizing compliance, and control systems for entertainment expenses.
Improvement measures were taken in a timely and appropriate manner on the defects that have been
discovered. As stated in “II. [Business Overview], 1. [Management Policies, Management Environment, and
Pressing Issues], (5) Issues the Company needs to address,” it was confirmed that preventive measures had
been taken.
(ii) Status of internal audits
As for the Company’s internal audit structure, the Audit Office (comprised of four members) leads internal
audits to examine the execution of duties, as well as audits of Group companies. In accordance with internal
audit rules, internal audits are conducted with an aim to protect the Company’s assets and improve its
management efficiency by examining and assessing execution of business activities from the perspective oflegality and efficiency.
Auditors, Audit Office, and accounting auditors exchange information and views between them, such as
regularly reporting or explaining to one another about plans, progress, and results of audits each conduct.
(iii) Status of accounting auditsa. Name of audit corporation
Deloitte Touche Tohmatsu LLC
b. Period audits were conducted
11 years- 60 -

c. Certified public accountants who performed audits
Kenji Morita
Yoshie Moritake
The number of years of audits is omitted because it is less than seven.
d. Composition of assistants involved in audit work
Assistants involved in the Company’s accounting audit are composed of 8 certified public accountants and 17
others.
e. Policy and reason for appointing audit corporation
The Company evaluates and selects an external accounting auditor upon formulating evaluation criteria for
aspects, including quality control, audit team structures, etc. of audit firms, in the “Evaluation of Independent
Accounting Auditors and Selection Criteria.”
f. Evaluation of the audit corporation by corporate auditors and the Board of Auditors
The Company’s corporate auditors and the Board of Auditors evaluate the audit corporation. For thisevaluation, the Board of Auditors has set “Evaluation Criteria for Accounting Auditors” in aspects including
quality control by the audit firm, the audit team, audit fees, communication with corporate auditors, relationshipwith the management, group audits, and risk of misconduct. Using these, the Board reviews quality of audits,
expertise, independence, etc. and evaluates the audit corporation by receiving regular reports on audits andreviews from the audit corporation, being present at audits by the audit team, and collecting information on theaudit corporation from finance divisions and internal control audit divisions. As a result, the Company decided
not to pursue submission of a proposal regarding dismissal or rejection of reappointment of the accounting
auditor to the General Meeting of Shareholders.
(iv) Detail of audit fees, etc.
a. Fees for certified public accountants performing audits
Previous consolidated fiscal year
Category

Audit fees
(millions of yen)

Filing company
Consolidated
subsidiaries
Total

Current consolidated fiscal year

Non-audit fees
(millions of yen)

Audit fees
(millions of yen)

Non-audit fees
(millions of yen)

46

7

69

－

－

－

－

－

46

7

69

－

Notes: 1 In addition to the above, there is 7 million yen in additional fees for audits conducted in the previous consolidated
fiscal year for the current consolidated fiscal year.
2 Non-audit services at the Company are advisory service regarding the introduction of new revenue recognition
criteria.
b. Fees paid to the same network (Deloitte) the certified public accountants performing audits belong to(excluding a.)Previous consolidated fiscal year
Category

Audit fees
(millions of yen)

Filing company
Consolidated
subsidiaries
Total

Current consolidated fiscal year

Non-audit fees
(millions of yen)

Audit fees
(millions of yen)

Non-audit fees
(millions of yen)

－

0

－

0

－

－

－

3

－

0

－

4

Note: Non-audit services at the Company and its consolidated subsidiaries are tax advisory services and transfer pricing
taxation documentation services.

- 61 -

c. Details of fees based on other important audit and attestation services
There are no matters to be noted.
d. Policy on determining audit fees
The articles of incorporation stipulate that the Company set the amount of audit fees for accounting auditors
after the representative director obtains consent from the Board of Auditors.
e. Reasons the Board of auditors gave consent to fees for the accounting auditor
The Board of Auditors gave consent to the amount of fees to the accounting auditor (Companies Act Article
399, Paragraph 1) after checking and reviewing analysis and evaluation of the audit work in the previous fiscal
year, the schedule of audits and personnel assignment plans in the audit plans, the status of the accounting
auditor’s execution of duties, validity of fee estimates, etc., in accordance with the “Practical Guidelines on
Collaboration With Accounting Auditors” published by the Japan Audit & Supervisory Board Members
Association.
(4) [Remuneration of directors and auditors](i) Matters regarding policies for deciding remuneration of directors and auditors and methods for calculating theamounts
The Company has the following policy on directors’ compensation and follows this policy in deciding thecomposition and amounts of directors’ compensation.
A. Method used to establish policy for deciding compensation for each director and other details
The Company’s Board of Directors approved a policy for deciding compensation for each director and otherdetails at a meeting held on July 29, 2021.
B. Outline of policya. Basic policy
The basic policy on compensation, etc. of the Company’s directors call for the use of a scheme thatfunctions sufficiently as an incentive to work toward sustainable improvement in corporate value over a
medium to long term and is linked with shareholder interests to promote sharing of awareness about interests
with shareholders to realize the Company’s ideal of “Pioneering the Future” in accordance with the March 26,
2021 Medium- and Long-Term Management Strategy. The policy also calls for compensation for each director
to be set at reasonable levels based on the duties of each. Specifically, it calls for compensation, etc. for
directors to be comprised of basic compensation as fixed compensation, bonuses (performance-linked
compensation, etc.), and share-based compensation (non-cash compensation, etc.), while compensation, etc.
for outside directors, who perform supervisory functions on the management, shall comprise only basic
compensation in view of the nature of their duties.
b. Policy for deciding amount of basic compensation for each individual (including policy for deciding timing or
conditions of payment)
The policy calls for basic compensation for the Company’s directors to take the form of monthly fixed
payments of cash. Compensation levels are decided in a comprehensive manner, reflecting the rank, duties,
and years of service of the individual, with levels at other companies, the Company’s earnings, and employee
salary levels taken into consideration. The “levels at other companies” are the levels at companies of similar
sizes in Japan, which are determined using compensation survey data by specialized external agencies.
c. Policy for deciding details of performance indicators regarding bonuses (performance-linked compensation,etc.) and method for calculating the amounts (including policy for deciding timing or conditions of payment)
Bonuses are paid in cash and reflect key performance indicator levels to raise directors’ consciousness
about improving performance each fiscal year. With this as the basic policy, we select net income attributable
to shareholders of the Company as the calculation indicator from among the indicators of profit in each fiscal
year and pay bonuses annually during a specified period in amounts calculated according to the degree ofachievement against target levels. While the Board of Directors may sometimes decide not to pay bonuses,
the target of performance-linked compensation for the current fiscal year was set at 1.2 billion yen in
estimated net income attributable to shareholders of the Company. The outcome was 0.705 billion yen, and- 62 -

the Board of Directors resolved not to pay bonuses to directors or auditors for the 96th term.
d. Policy for deciding details of share-based compensation (non-cash compensation, etc.) and method for
calculating the number of shares (including policy for deciding timing or conditions of payment)
Under the Company’s share-based compensation scheme, the Company’s shares are held in the accountof an employee stock ownership plan (ESOP) trust for officers (the “Trust” hereafter) established on Company
funds and the number of shares corresponding to the points assigned to each director are granted to thedirector through the Trust in accordance with the share-granting rules established by the Company’s Board of
Directors. The points are calculated according to each director’s rank in accordance with the share-granting
rules. As a general rule, shares are granted to directors when they resign as director.
e. Policy for deciding ratios of the amounts of basic compensation, performance-linked compensation, noncash compensation, etc. to the amount of each director’s compensation
The basic policy for the ratios of different types of compensation for directors, including representative
directors, is to maintain a scheme in which the weight of performance-linked compensation, etc. and, toincentivize them to put effort into achieving medium- to long-term goals, non-cash compensation, etc. islarger, taking into account levels at other companies. The Compensation Committee discusses specific ratios
for each type of compensation and offers advice and recommendations to the Board of Directors.
f. Matters regarding the method for deciding details of compensation for each director and important mattersregarding decisions
The Company seeks the Compensation Committee’s opinion about compensation proposals that specify
the amount of compensation for each individual and include the amount, timing or conditions of payment, andratios of basic compensation, performance-linked compensation, etc., non-cash compensation, etc. and otherportions worked out based on the above policy within the scope approved by the General Meeting of
Shareholders. The Board of Directors makes the decision, respecting the committee’s advice andrecommendations.
The Compensation Committee is comprised of up to four members, including multiple outside directors
appointed through the Board of Directors’ resolution and a representative director. A committee chairperson iselected from among independent outside directors. The Compensation Committee offers advice andrecommendations to the Board of Directors. The content is specified to be on the amount of basic
compensation for each director and the evaluation-based allocation of bonus, which is the performance-linked
compensation reflecting the director’s performance in their assigned role. Amounts of share-based
compensation (non-cash compensation, etc.) are decided in accordance with the share-granting rules
adopted by the Board of Directors.
C. Reason why Board of Directors judged that details of individual directors’ compensation, etc. relating to thecurrent fiscal year are in line with the policy
The Board of Directors judged that the amounts of compensation for respective directors relating to thecurrent fiscal year that the Compensation Committee decided are in line with the policy as the Board confirmedthat the method of deciding the amounts of compensation and the details of the compensation thus decided arein line with the policy and the role of the Compensation Committee is functioning to a satisfying degree.
D. Resolution of General Meeting of Shareholders regarding compensation for directors and auditors
Directors’ compensation is limited up to 500 million yen annually under a resolution approved at the 80th
General Meeting of Shareholders held on June 29, 2006. There were 11 directors (including an outside
director) as of the end of the said meeting.
Auditors’ compensation is limited up to 80 million yen annually under a resolution agreed on at the 80th
General Meeting of Shareholders held on June 29, 2006. There were four auditors (including two outside
auditors) as of the end of the said meeting.
The share-based compensation scheme for the Company’s directors (excluding outside directors) was
introduced under a resolution approved at the 91st General Meeting of Shareholders held on June 29, 2017.
There were seven directors (excluding outside directors) who qualified for the scheme as of the end of the said
meeting. A resolution to grant severance payment of retirement bonuses was adopted at the 90th General
Meeting of Shareholders held on June 29, 2016 for auditors and at the 91st General Meeting of Shareholders
held on June 29, 2017 for directors.

- 63 -

(ii) Total amount of remuneration and other payments, total amount of remuneration and other payments by type,and number of eligible officers by officer category
Total amount of Total amount of remuneration and other payments
by type (millions of yen)remuneration andNumber of
Officer category
other payments
Basic
Share-based eligible officers
Bonuses(millions of yen)compensationcompensation
Directors
174
161
13
8
－
(excluding outside directors)
Auditors(excluding outside auditors)

28

28

－

－

3

Outside directors and auditors

69

69

－

－

11

(iii) Total amount of consolidated remuneration and other payments awarded to individual officers
Figures are not provided as there is no individual whose consolidated remuneration or other payments
amounted to 100 million yen or higher.
(5) [Stocks held by the Company](i) Standards and policy on classification of investment stocks
Stocks held purely for investment purpose include those owned for changes in their values or their dividends,
while those held for purposes other than pure investment include, in addition to the same purpose, stocks owningof which is expected to help maintain or reinforce relationships, ensure smooth operation, create synergy andhelp us grasp developments in the industry to which the Group belongs, as well as to contribute to improving theGroup’s corporate value over a medium to long term.
(ii) Investment stocks held for purposes other than pure investment
a. Policy on holding stocks and method to verify rationale for holding them as well as detail of examination by
the Board of Directors, etc. on advisability of holding individual stock issues(Policy on holding stocks)- That it helps maintain or reinforce relationships and ensure smooth operation of business- That it is expected to help us grasp developments in the industry to which the Company belongs andcreate synergy- That it is expected to contribute to increasing corporate value of the Group over a medium to long term
(Method to verify rationale for holding stocks)
We examine the rationality of holding stocks upon studying returns, risk factors, etc. from the perspectiveof improving corporate value over a medium to long term, taking into consideration importance inmanagement strategies and strengthening of relationship with business partners. In examining therationality, we consider comprehensive factors including expected synergy in consideration of content ofbusiness deals and degree of contribution to medium- to long-term management strategies andimprovement of corporate value.
(Detail of examination by the Board of Directors, etc. on advisability of holding individual stock issues)
In accordance with the policy to reduce cross-held shares, we report to the Board of Directors multiple
times every year on quantitative aspects, including the dividend yield, in addition to the situation andpurpose of holding using outcomes of regular discussions by accounting divisions, upon which the Board
deliberates the benefits of holding. If such examination reveals that an issue no longer has considerable
significance of possession, we try to improve the situation for a certain period or proceed to reduce theholding.

- 64 -

b. Number of issues and amounts on balance sheet
Number of issues

Total amount on balance sheet(millions of yen)

Unlisted stocks

20

101

Stocks other than unlisted stocks

17

3,637

(Issues for which the number of shares increased in the current fiscal year)
Total amount of acquisition costs
Number of issues pertaining to increases in numberof shares (millions of yen)

Reason for increases in
number of shares

Unlisted stocks

－

－

－

Stocks other than unlisted stocks

－

－

－

(Issues for which the number of shares decreased in the current fiscal year)
Total amount of sales value
Number of issues pertaining to decreases in numberof shares (millions of yen)
Unlisted stocks－－

Stocks other than unlisted stocks

6

1,354

- 65 -

c. Information on number of shares and amounts on the balance sheet by stock issue of specified investment
stocks and deemed shareholdings
Specified investment stocks
Current fiscal year Previous fiscal year
Issue

Sompo Holdings,
Inc.

Situation of
Number of shares Purpose of holding, quantitative benefits of holding theholding, and reason of increases in shares Company’s
Amount on balance Amount on balancesharessheet
sheet(millions of yen)(millions of yen)
The company has insurance deals withthe company and holds this stock for the
purpose of enhancing business risk
181,874
181,874 management.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report toNo (Note 2)
the Board of Directors at two or more ofits meetings about quantitative aspects,
978771 including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.
Number of shares

484,970

484,970

Mitsubishi UFJ
Financial Group,
Inc.

368

85,646286

85,646

Sumitomo Mitsui
Financial Group,
Inc.

334

343

- 66 -The bank, which is a key transacting
financial institution, provides us withsales information and information usefulfor our overseas operations. We hold theshares to facilitate and stabilizefinancing activities.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

No (Note 2)

The bank, which is a key transacting
financial institution, provides us withsales information and information usefulfor our overseas operations. We hold theshares to facilitate and stabilizefinancing activities.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

No (Note 2)

Current fiscal year Previous fiscal year
Issue

Nippon Television
Holdings, Inc.

Situation of
Number of shares Purpose of holding, quantitative benefits of holding theholding, and reason of increases in shares Company’s
Amount on balance Amount on balancesharessheet
sheet(millions of yen)(millions of yen)
The telecommunication business has
transactions related to update andmaintenance of broadcast equipment
231,900
231,900 with the company. We hold its shares tofacilitate business activity in the
broadcasting-related segment.
Although it is difficult to quantify benefitsof holding the shares in light of the
No (Note 2)
above purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
295
337 including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.
Number of shares- 67 -

Current fiscal year Previous fiscal year
Issue

Number of shares

Number of shares Purpose of holding, quantitative benefits ofAmount on balance Amount on balance holding, and reason of increases in shares
sheet
sheet
(millions of yen)(millions of yen)

127,900

127,900

EXEO Group, Inc.

289

65,651373

65,651

Sumitomo Mitsui
Trust Holdings, Inc.

262

322,700

253

393,700

Asahi BroadcastingGroup Holdings
Corporation

230

286

- 68 -

Situation ofholding theCompany’s
shares

The telecommunication business hasorder-taking and -placing transactions
for base station antennas, etc. with thiscompany. We hold the shares tofacilitate business activity in the mobile
communication-related segment.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

Yes (Note 1)

The bank, which is a key transacting
financial institution, provides us withsales information and information usefulfor our overseas operations. We hold theshares to facilitate and stabilize stocktransfer agent services and financing
activities.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

No (Note 2)

The telecommunication business has
transactions related to update andmaintenance of broadcast equipmentwith the company. We hold its shares tofacilitate business activity in the
broadcasting-related segment.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

YesCurrent fiscal year Previous fiscal year
Issue

Number of shares

Number of shares Purpose of holding, quantitative benefits ofAmount on balance Amount on balance holding, and reason of increases in shares
sheet
sheet
(millions of yen)(millions of yen)

136,900

136,900NIPPONDENSETSU
KOGYO CO., LTD.

216

529,700

265

529,700NIPPON
CONCRETE
INDUSTRIES CO.,
LTD.
154

218

- 69 -

Situation ofholding theCompany’s
shares

The telecommunication business hasorder-taking and -placing transactions
for base station antennas, etc. with thiscompany. We hold the shares tofacilitate business activity in the mobile
communication-related segment.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

Yes

We hold the shares to facilitate
exchange of information with thecompany, including information on future
product development and industry
trends.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to
the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

YesCurrent fiscal year Previous fiscal year
Issue

Number of shares

Number of shares Purpose of holding, quantitative benefits ofholding, and reason of increases in shares
Amount on balance Amount on balance
sheet
sheet
(millions of yen)(millions of yen)

Situation ofholding theCompany’s
shares

We hold the shares to facilitate
exchange of information with the
54,900312,000

company, including information on future
product development and industry
trends.
Although it is difficult to quantify benefits

FUJI
CORPORATION

of holding the shares in light of theabove purpose, each year, we report toNo

the Board of Directors at two or more ofits meetings about quantitative aspects,
122

884

including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

We hold the shares to facilitate
exchange of information with the
70,00070,000company, including information on future
product development and industry
trends.
Although it is difficult to quantify benefits

TOKYO TEKKO
CO., LTD．

of holding the shares in light of theabove purpose, each year, we report toYes

the Board of Directors at two or more ofits meetings about quantitative aspects,
93

132

including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.
The telecommunication business has
transactions related to aviation obstacle
lights, etc. We hold the shares to47,50095,000facilitate business activity in aviation
obstacle lights-related areas.
Although it is difficult to quantify benefitsof holding the shares in light of the

Hibiya Engineering,Ltd.

above purpose, each year, we report to
the Board of Directors at two or more of87

184

its meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

- 70 -Yes

Current fiscal year Previous fiscal year
Issue

Number of shares

Number of shares Purpose of holding, quantitative benefits ofholding, and reason of increases in shares
Amount on balance Amount on balance
sheet
sheet
(millions of yen)(millions of yen)
We hold the shares to facilitate
exchange of information with the
61,00061,000Situation ofholding theCompany’s
sharescompany, including information on future
product development and industry
trends.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to

NAKAYO, INC.

Yes

the Board of Directors at two or more ofits meetings about quantitative aspects,
69

93

including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.
The telecommunication business hasorder-taking and -placing transactions

70,30070,300for parabolic antennas, etc. with thiscompany. We hold the shares tofacilitate business activity in the fixedwireless communication-related
segment.
Although it is difficult to quantify benefits

IKEGAMITSUSHINKI CO.,LTD.

of holding the shares in light of theabove purpose, each year, we report to44

62

the Board of Directors at two or more ofits meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

- 71 -Yes

Current fiscal year Previous fiscal year
Issue

Number of shares

Number of shares Purpose of holding, quantitative benefits ofholding, and reason of increases in shares
Amount on balance Amount on balance
sheet
sheet
(millions of yen)(millions of yen)

Situation ofholding theCompany’s
shares

We hold the shares to facilitate
exchange of information with the
16,50016,500company, including information on future
product development and industry
trends.
Although it is difficult to quantify benefitsof holding the shares in light of theabove purpose, each year, we report to

Riken CorporationYes

the Board of Directors at two or more ofits meetings about quantitative aspects,
40

41including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

We hold this stock to facilitate exchange
32,00032,000of information with the company with anaim of helping future productdevelopment, etc. in the radio frequency
business.
Although it is difficult to quantify benefitsof holding the shares in light of theOrigin Co., Ltd.

above purpose, each year, we report to
the Board of Directors at two or more of
38

46

Yes

its meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

The radio frequency business has
business deals related to induction

21,40021,400heating equipment with this company.
We hold the shares to facilitate businessactivity in the radio frequency-relatedareas.
Although it is difficult to quantify benefitsof holding the shares in light of the

UNIVANCE
CORPORATION

above purpose, each year, we report to
the Board of Directors at two or more of10

9

its meetings about quantitative aspects,
including the dividend yield, in addition
to the situation and purpose of holding
them, etc., upon which the Board
deliberates the benefits.

- 72 -

No

Current fiscal year Previous fiscal year
Issue

Number of shares

Number of shares Purpose of holding, quantitative benefits ofholding, and reason of increases in shares
Amount on balance Amount on balance
sheet
sheet
(millions of yen)(millions of yen)－

501,800－

305－

25,000－163－

27,900－84

Neturen Co., Ltd.

NEC Corporation

The Aichi Bank, Ltd.

Situation ofholding theCompany’s
sharesAll shares were sold after we examined
the benefits of holding.

No

All shares were sold after we examined
the benefits of holding.

No

All shares were sold after we examined
the benefits of holding.

Yes

Notes: 1 Kyowa Exeo Corporation changed its trade name to EXEO Group, Inc. on October 1, 2021.
2 Sompo Holdings, Inc., Mitsubishi UFJ Financial Group, Inc., Sumitomo Mitsui Financial Group, Inc., Nippon
Television Holdings, Inc., and Sumitomo Mitsui Trust Holdings, Inc. hold the Company’s shares through theirrespective subsidiaries.
Deemed shareholdings
There are no matters to be noted.
(iii) Investment stocks held purely for the purposes of investment
There are no matters to be noted.

- 73 -

V. [Financial Information]
1 Methods of preparing consolidated financial statements and financial statements(1) The Company’s consolidated financial statements are prepared in accordance the Ordinance on Terminology,
Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No.
28 of 1976) and recorded in accordance with the Ordinance for Enforcement of the Construction Business Act(Ordinance of the Ministry of Construction No. 14 of 1949).
(2) The Company’s financial statements are based on provisions set forth in Article 2 of the Regulation on
Terminology, Forms, and Preparation Methods of Financial Statements (Ministry of Finance Order No. 59 of 1963)and prepared in accordance with the said regulation and the Ordinance for Enforcement of the Construction
Business Act (Ordinance of the Ministry of Construction No. 14 of 1949).

2 Audit certificate
The Company had Deloitte Touche Tohmatsu LLC performed audits on the consolidated financial statements forthe consolidated fiscal year (from April 1, 2021 to March 31, 2022) and the non-consolidated financial statements forthe non-consolidated fiscal year (from April 1, 2021 to March 31, 2022), in accordance with provisions set forth in
Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.

3 Special efforts to ensure appropriateness of consolidated financial statements, etc.
The Company makes special efforts to ensure appropriateness of consolidated financial statements, etc.
Specifically, we have membership in the Financial Accounting Standards Foundation and participate in training
programs, etc. organized by the foundation as well as other entities in order to maintain a structure that allows us tounderstand details of accounting standards, etc. appropriately.

- 74 -

1. [Consolidated Financial Statements, Etc.](1) [Consolidated financial statements](i) [Consolidated balance sheet](Millions of yen)Previous consolidated fiscal year
(March 31, 2021)

Current consolidated fiscal year
(March 31, 2022)

18,995663

18,886
440

1,135

878

12,002

5,127

7,034
－
339
*1 4,511
742(3)
45,421

4,489
1,832
117
*1 5,890
3,328(2)
40,98911,046
9,502
7,187
2,241
293
44
(23,181)
7,134
575

11,061
9,540
7,510
2,241
237
186
(23,869)6,907
648*2 7,025*2 5,465

3
580
615
1,155
(47)
9,332
17,042
62,463

2
611
780
980
(49)
7,791
15,34756,336

AssetsCurrent assets
Cash and deposits
Notes receivable-trade
Electronically recorded monetary claimsoperating
Accounts receivable from completed
construction contracts
Accounts receivable-trade
Contract assets
Costs on uncompleted construction contracts
Other inventories
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant, and equipment
Buildings and structures
Machinery, equipment, and vehicles
Tools, furniture, and fixtures
Land
Lease assets
Construction in progress
Accumulated depreciation
Total property, plant, and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Net defined benefit assets
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets- 75 -

(Millions of yen)Previous consolidated fiscal year
(March 31, 2021)

Current consolidated fiscal year
(March 31, 2022)

6,950

3,916

*4 280

*4 80

6

180

62
613

53
221

51

－

－

323

37

26

77
612
36

173
621
6

34

47

1,432
10,196

680
6,330

433
95
－

279
67
29

102

52

2,905
49
689
4,275
14,472

2,840
49
78
3,397
9,727

8,774
9,731
31,830(5,088)45,248

8,774
9,723
32,028(5,940)44,586

1,270

873

11
40
401

37
87
318

1,724

1,317

1,018
47,991
62,463705
46,60956,336

Liabilities
Current liabilities
Notes payable, accounts payable forconstruction contracts, and others
Short-term loans payable
Long-term loans payable to be repaid within a
year
Lease obligations
Income taxes payable
Advances received on uncompleted
construction contracts
Contract liabilities
Allowance for warranties on completed
construction contracts
Allowance for product warranties
Allowance for employees’ bonuses
Allowance for directors’ bonuses
Allowances for losses on construction
contracts
OthersTotal current liabilities
Fixed liabilities
Long-term loans payable
Lease obligations
Allowance for product warranties
Allowances for share-based remuneration for
directors and corporate auditors
Net defined benefit liability
Asset retirement obligations
OthersTotal fixed liabilities
Total liabilities
Net assets
Shareholders’ equity
CapitalCapital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets- 76 -

(ii) [Consolidated statement of income and consolidated statement of comprehensive income][Consolidated statement of income](Millions of yen)Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

19,775
21,597*1 10541,47813,183
20,684*1 10033,968Net sales
Sales of completed construction contracts
Net sales of goods
Sales in other businessTotal net sales
Cost of sales
Cost of sales of completed construction contracts
Cost of finished goods soldCost of sales in other businessTotal cost of sales
Gross profit
Gross profit on completed construction contracts
Gross profit on finished goods
Gross profit on other businessTotal gross profit
Selling, general, and administrative expenses
Operating income
Non-operating income
Interest income
Interest on securities
Dividend income
Foreign exchange gains
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Commitment fee
OthersTotal non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income- 77 -

16,391

10,746*2, *4 17,309*2, *4 16,976*1 49
33,750*1 47
27,770

3,383
4,288
*1 55
7,727
*3, *4 6,143
1,583

2,436
3,708
*1 52
6,198
*3, *4 6,145
53

4
7
164
－
148
325

3
6
172
147
155
484

28
59
21
109
1,799

26
49
13
89
448

165
165

589
589

(Millions of yen)Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

318
318
1,647
630
(91)
539
1,108
(47)

170
170
867
242
21
264
602
(103)

1,155

705

Extraordinary losses
Loss on valuation of investment securities
Total extraordinary losses
Net income before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net income
Loss attributable to non-controlling interests
Net income attributable to shareholders of parent
company- 78 -

[Consolidated statement of comprehensive income](Millions of yen)Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

1,108

602

883

(397)

39
(188)

25
47

377

(83)

*1 1,111*1 (406)

2,219

195

2,320

298

(100)

(102)

Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable toshareholders of parent
Comprehensive income attributable to noncontrolling interests- 79 -

(iii) [Consolidated statement of changes in equity]
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021)(Millions of yen)
Shareholders’ equity
CapitalBalance at beginning of current
term

Capital surplus
8,774

Retained earnings

9,731

Total shareholders’equityTreasury stock

31,218(5,093)

44,631

Cumulative effect of changein accounting policy－

Balance at beginning of current
year after change inaccounting policy is applied

8,774

9,731

31,218(5,093)

44,631

Changes of items during term
Dividends of surplus

(543)

(543)

Net income attributable toshareholders of parent
company

1,155

1,155

Purchase of treasury stock
Disposal of treasury stock

0

(2)

(2)

7

7

Net changes of items otherthan shareholders’ equity
Total changes of items during
term

－

0

611

4

616

Balance at end of current term

8,774

9,731

31,830(5,088)45,248

Accumulated other comprehensive income
Valuationdifference on
available-forsale
securities
Balance at beginning of current
term

386

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

(27)

175

Total
Remeasureme accumulated
nts of defined otherbenefit plans comprehensi
ve income
24559

Noncontrollinginterests

1,119

Cumulative effect of changein accounting policy
Balance at beginning of current
year after change inaccounting policy is applied

Total net
assets46,309
－

386

(27)

175

24

559

1,119

46,309Changes of items during term
Dividends of surplus(543)

Net income attributable toshareholders of parent
company

1,155

Purchase of treasury stock(2)

Disposal of treasury stock

7

Net changes of items otherthan shareholders’ equity

883

39

(135)

377

1,165

(100)

1,064

Total changes of items during
term

883

39

(135)

377

1,165

(100)

1,681

Balance at end of current term

1,270

11

40

401

1,724

1,018

47,991- 80 -

Current consolidated fiscal year (from April 1, 2021 to March 31, 2022)(Millions of yen)
Shareholders’ equity
CapitalBalance at beginning of current
term

Capital surplus
8,774

Retained earnings

9,731

31,830

Cumulative effect of changein accounting policy

Total shareholders’equityTreasury stock(5,088)45,24835

Balance at beginning of current
year after change inaccounting policy is applied

8,774

9,731

35

31,865(5,088)45,283

Changes of items during term
Dividends of surplus

(543)

(543)

Net income attributable toshareholders of parent
company

705

705

Purchase of treasury stock
Disposal of treasury stock(8)(1,049)(1,049)197

189

Net changes of items otherthan shareholders’ equity
Total changes of items during
term

－

(8)

162

(851)

(697)

Balance at end of current term

8,774

9,723

32,028(5,940)44,586

Accumulated other comprehensive income
Valuationdifference on
available-forsale
securities
Balance at beginning of current
term

1,270

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment
11

40

Total
Remeasureme accumulated
nts of defined otherbenefit plans comprehensi
ve income
401

1,724

Noncontrollinginterests

1,018

Cumulative effect of changein accounting policy
Balance at beginning of current
year after change inaccounting policy is applied

Total net
assets47,991
35

1,270

11

40

401

1,724

1,018

48,026

Changes of items during term
Dividends of surplus(543)

Net income attributable toshareholders of parent
company

705

Purchase of treasury stock(1,049)

Disposal of treasury stock189

Net changes of items otherthan shareholders’ equity

(397)

25

47

(83)

(407)

(312)

(719)

Total changes of items during
term

(397)

25

47

(83)

(407)

(312)

(1,417)

Balance at end of current term

873

37

87

318

1,317

705

46,609- 81 -

(iv) [Consolidated statement of cash flows](Millions of yen)Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

1,647
1,322

867
1,381

145

8

26

(30)

52

(240)

(78)

－

19

24

(15)

0

(10)

12

(134)

96

(177)
28
(7)
(165)
318

(182)
26
(92)
(589)
170

(1,378)

8,076

83

221

578
(263)

(1,375)251(228)(3,059)

(342)

(16)

(36)

(331)

219
32
1,635
180
(28)
(339)
1,447

(612)
54
4,661
180
(36)
(639)
4,166

Cash flows from business activities
Net income before income taxes
Depreciation
Increase (decrease) in allowance for employees’
bonuses
Increase (decrease) in allowances for directors’
bonuses
Increase (decrease) in net defined benefit liability
Increase (decrease) in allowances for retirement
bonuses for directors and corporate auditors
Increase (decrease) in allowances for sharebased remuneration to officers for directors andcorporate auditors
Increase (decrease) in allowances for doubtful
accounts
Increase (decrease) in allowances for loss on
construction contracts
Increase (decrease) in allowances for productwarranties
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in costs on uncompleted
construction contracts
Decrease (increase) in inventories
Decrease (increase) in other assets
Increase (decrease) in notes and accounts
payable-trade
Increase (decrease) in advances received on
uncompleted construction contracts
Increase (decrease) in accrued consumption
taxes
Increase (decrease) in other liabilities
OthersSubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Cash flows from business activities- 82 -

(Millions of yen)Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)(33,211)32,211(27,849)
30,797(1,187)(1,408)

25

12

(166)
507

(659)
1,233

422

550

(3)
1
(1)
(1,402)

(0)
1
4
2,680

(114)

(200)

93
－
(71)
7
(2)

－
(13)
(67)
114
(1,049)－(2,170)

(545)
－
(633)

(543)
(209)
(4,139)

(43)

132

(630)

2,840

Net cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Expenses for purchase of property, plant, andequipment and intangible assets
Proceeds from sale of property, plant, andequipment and intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of investment
securities
Payments of loans receivableCollection of loans receivable
OthersNet cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans
payableProceeds from long-term loans payable
Repayment of long-term loans payable
Repayments of lease obligations
Proceeds from sales of treasury stock
Purchase of treasury stock
Decrease (increase) in deposits for purchase oftreasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Cash flows from financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of term
Cash and cash equivalents at end of term

- 83 -

10,931

10,300*1 10,300*1 13,140

[Notes](Notes on the going concern assumption)
There are no matters to be noted.
(Important matters that form basis for preparation of consolidated financial statements)
1 Matters pertaining to scope of consolidation(1) Number of consolidated subsidiaries: 13
Names of major consolidated subsidiaries
This information is omitted because it is detailed in I. [Company Overview], 4. [Status of Subsidiaries
and Affiliates].
(2) Non-consolidated subsidiaries
DKK North America, Inc.
Reason for excluding the companies from the scope of consolidation
The non-consolidated subsidiaries are excluded from the scope of consolidation because they aresmall companies and none of whose total assets, net sales, net profit/loss (amounts commensurate withstake), or retained earnings (amounts commensurate with stake) has any significant impact on the
consolidated financial statements.
2 Matters concerning application of equity method
Names of non-consolidated subsidiaries to which equity method is not applied
DKK North America, Inc.
Reason for not applying the equity method
The companies are excluded from the application of the equity method because they have minor impact
on the net profit and loss (amounts commensurate with respective stakes) or retained earnings (amounts
commensurate with respective stakes) and have little overall importance.
3 Matters regarding business years, etc. of consolidated subsidiaries
The fiscal year-end for these consolidated subsidiaries is December 31: DKK Sino-Thai Engineering Co.,
Ltd., DKK of America, Inc., DENKI KOGYO (CHANGZHOU) HEAT TREATMENT EQUIPMENT CO., LTD.,DKK MANUFACTURING (THAILAND) CO., LTD., DKK (THAILAND) CO., LTD., DTHM, S.A de C.V., and
KOREA DENKIKOGYO. Co., Ltd.
In preparing consolidated financial statements, we used financial statements as of the end of the fiscal year
and made adjustments necessary for consolidation regarding important transactions that took place from thenuntil the consolidated fiscal year-end.
4 Matters regarding accounting policy(1) Standards and method for valuation of important assets(i) Securities
Bonds held to maturity
We used the amortized cost method (straight-line method).
Other securitiesThose other than stocks, etc. not quoted in the market
The fair value method (all valuation gains or losses reported as component of net assets; cost of
securities sold calculated under moving average method) is used.
Stocks, etc. not quoted in the market
The moving average cost method is used.
(ii) Derivatives
The fair value method is used.

- 84 -

(iii) Inventories
Costs on uncompleted construction contracts
The cost method determined by the specific identification method is used.
Products
The cost method determined by specific identification method or weighted average method (bookvalue reduced to reflect lowering profitability) is used.
Work in process
The cost method determined by specific identification method (book value reduced to reflect
lowering profitability) is used.
Raw materials and supplies
The cost method determined by moving average method (book value reduced to reflect loweringprofitability) is used.
(2) Method for depreciating important depreciable assets(i) Property, plant, and equipment (excluding lease assets)
The Company and its domestic consolidated subsidiaries use the declining balance method. However,facilities attached to buildings as well as structures acquired on and after April 1, 2016, in addition tobuildings (excluding facilities attached to buildings) are depreciated by straight-line method. Useful livesof principal assets are as follows.
Buildings and structures: 2–45 years
Machinery, equipment, and vehicles: 2–17 years
Tools, furniture, and fixtures: 2–20 years
The straight-line method is used for overseas consolidated subsidiaries.
(ii) Intangible assets (excluding lease assets)
The straight-line method is used.
For software (internal use), the straight-line method based on the period in which they were available foruse in the Company (five years) is used.
(iii) Lease assets (lease assets relating to finance lease transactions without transfer of ownership)
The straight-line method, in which the lease period is the useful life and the residual value is zero, isused.
(3) Standards for important allowances(i) Allowance for doubtful accounts
In order to be prepared for losses incurred from a bad debt from trade accounts receivable, loans
receivable, etc., we estimated irrecoverable amounts using loan loss ratio for general accounts
receivable and reviewed collectability of specified accounts individually, including doubtful accounts.
(ii) Allowance for warranties on completed construction contracts
In order to be prepared for expenses such as repair expenses for completed construction contracts, webooked the total of estimated amounts for future repairs based on actual compensation on completed
construction contracts in past years and estimates for individual instances whose amounts havesignificance.
(iii) Allowance for product warranties
In order to be prepared for future guarantee expenses, etc. on delivered products, we booked the totalof estimated guarantee expenses based on actual guarantee results in past years and estimates forindividual instances whose amounts have significance.
(iv) Allowance for employees’ bonuses
Expected amounts of payments are booked for bonuses to be paid to employees.

- 85 -

(v) Allowance for directors’ bonuses
In order to be prepared for payments of bonuses to directors and corporate auditors, a portion of
expected payments that should be charged in the current consolidated fiscal year was booked.
(vi) Allowances for losses on construction contracts
In order to be prepared for future losses related to construction contracts, allowances were booked forcontracts yet to be delivered at the end of the current consolidated fiscal year that were deemed to havestrong possibility of causing losses and for which amounts of such losses can be estimated to areasonable degree of accuracy, in amounts of estimated losses.
(vii) Allowances for share-based remuneration for directors and corporate auditors
This amount was booked based on the estimated amount of share-provision liabilities at the end of thecurrent consolidated fiscal year, in order to prepare for provision of the Company’s shares to theCompany’s and some of its consolidated subsidiaries’ directors (excluding outside directors) inaccordance with the share-granting rules.
(4) Methods of account processing pertaining to retirement benefits(i) Period-corresponding method for estimated retirement benefits
In calculating retirement benefit obligations, benefit formula criteria were used as the method to attribute
estimated retirement benefit payouts to the period until the end of the current consolidated fiscal year.
(ii) Method for amortizing unrecognized actuarial differences and unrecognized prior service costs
Entire amounts of unrecognized prior service costs were charged to expenses in the year of theiroccurrence.
Actuarial differences are amortized over the period of five years, which is within the average remaining
service period of employees at the time of occurrence in each consolidated fiscal year, using thestraight-line method from the following consolidated fiscal year when the actuarial difference isrecognized.
(5) Standards for recording significant revenues and expenses
The Company recognizes revenues at the time the control of the promised goods or services is judged
to have been transferred to the customer in the amount it expects to receive in exchange for the goods
or services.
The content of key performance obligation and the ordinary timing of recognizing revenues in the key
businesses are as described in the “Notes (Revenue recognition)” to the consolidated financial
statements.
(6) Standards for translating significant assets or liabilities denominated in foreign currencies into Japanesecurrency
Monetary claims and liabilities in foreign currencies were converted to yen amounts using the spot
exchange rates at the fiscal year-end, and foreign exchange differences were recognized as gains orlosses. Assets and liabilities of overseas consolidated subsidiaries, etc. were converted to yen amounts
using the spot exchange rates at the end of the fiscal year. Revenues and expenses were converted toyen amounts using the average exchange rates during the period. Foreign exchange differences were
included in foreign currency translation adjustments and non-controlling interests under net assets.
(7) Important hedge accounting methods(i) Hedge accounting methods
Deferral hedge accounting is used.
(ii) Hedging instruments and hedged items
Hedging instruments: forward exchange contracts
Hedged item: forecasted transaction in foreign currency- 86 -

(iii) Hedging policy
The Group uses forward exchange contracts to hedge risks on exchange rate fluctuations ininternational transactions. Forward exchange contracts were executed upon approval obtained througha round robin approval process. Execution and management of subsequent contracts are handled by
the accounting division. Forward exchange contracts are the only derivative transaction used as a riskhedging instrument.
(iv) Method for assessing effectiveness of hedges
Effectiveness is judged by comparing the amount of the cumulative total of market fluctuations of thehedged item or cash flow fluctuations and the cumulative total of market fluctuations of the hedging
instrument or cash flow fluctuations over a period from the execution of a forward exchange contract
until the point of time when effectiveness is assessed and basing the decision on the amounts ofchanges of both.
(8) Scope of funds in consolidated statement of cash flows
The scope of funds (cash and cash equivalents) in the consolidated statement of cash flows includes
cash on hand, demand deposits, and short-term investments that are redeemable in three months or lessfrom each acquisition date, have high liquidity, are readily convertible into cash, and are exposed toinsignificant risk of changes in value.
(Significant accounting estimates)
Revenue recognition for construction contracts, equipment installment work, etc. (“Construction Contracts,etc.” hereafter)(1) Amount booked on consolidated financial statements of current consolidated fiscal year
(Millions of yen)Previous consolidated

Current consolidated fiscal

fiscal year

year

Net sales of Construction Contracts, etc.
related to performance obligation that is fulfilledover a certain period of time

3,517

2,432

(2) Information regarding details of significant accounting estimates pertaining to recognized items
For some of the Group’s Construction Contracts, etc., we in the past applied the percentage-of-completion
method if their achievement is recognized to have certainty regarding the progress. We have changed to amethod in which, if control over goods or services is transferred to the customer over a certain period of time,revenue is recognized over the certain period as the performance obligation to transfer the said goods orservices to the customer is fulfilled. Measurement of progress regarding fulfillment of performance obligation iscarried out based on the ratio of the cost materialized by the last date of each reporting period to the total of
expected costs.
We revise the assumptions used in estimating total costs whenever necessary. When there is any change,
we book its impact in the consolidated fiscal year when the amount of impact can be estimated with reliability.
It is possible that initial estimates may be changed in the future due to potential changes in assumptions for
estimates of total cost (changes in designs, natural disasters, etc.), which may have a significant impact onamounts to be recognized on the consolidated financial statements pertaining to the next consolidated fiscalyear.

- 87 -

(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition, etc.)
The Company began applying the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29
issued on March 31, 2020) at the beginning of the current consolidated fiscal year. It now recognizes revenues
at the time the control of the promised goods or services has been transferred to the customer in the amount it
expects to receive in exchange for the goods or services.
As a result, for some of the Group’s Construction Contracts, etc., we in the past applied the percentage-ofcompletion method if their achievement is recognized to have certainty regarding the progress. We havechanged to a method in which, if control over goods or services is transferred to the customer over a certain
period of time, revenue is recognized over the certain period as the performance obligation to transfer the said
goods or services to the customer is fulfilled. Measurement of progress regarding fulfillment of performanceobligation is carried out based on the ratio of the cost materialized by the last date of each reporting period tothe total of expected costs.
The application of the Accounting Standard for Revenue Recognition follows the transitional handlingspecified in the proviso to Paragraph 84 of the Standard. The amount of cumulative impact, worked out by
retrospectively applying the new accounting policy to the periods before the beginning of the current
consolidated fiscal year, is added to or subtracted from the retained earnings at the beginning of the current
consolidated fiscal year, and the new accounting policy begins to be applied from the beginning balance for the
fiscal year. In addition, the method specified in note (1) for Paragraph 86 of the Accounting Standard for
Revenue Recognition is applied, and account processing is carried out for the contract changes made before
the beginning of the current consolidated fiscal year in accordance with contract terms after all contractchanges are reflected, and the amount of cumulative impact from this is added to or subtracted from theretained earnings at the beginning of the current consolidated fiscal year.
“Notes receivable, accounts receivable from completed construction contracts, and others,” which appeared
under “Current assets” in the consolidated balance sheet for the previous consolidated fiscal year, is included
in “Notes receivable-trade,” “Electronically recorded monetary claims-operating,” “Accounts receivable fromcompleted construction contracts,” “Accounts receivable-trade,” and “Contract assets,” beginning in the current
consolidated fiscal year, while “Advances received on uncompleted construction contracts” and “Other
Businesses,” which appeared under “Current liabilities,” are included in “Contract liabilities” and “Other
Businesses,” beginning in the current consolidated fiscal year. The Company did not introduce reclassification
using the new presentation method in the previous consolidated fiscal year in accordance with the transitional
handling stipulated in Paragraph 89-2 of the Accounting Standard for Revenue Recognition.
As a result, net sales decreased 55 million yen, cost of sales decreased 37 million yen, and operating
income, ordinary income and net income before income taxes each declined 18 million yen at the end of thecurrent consolidated fiscal year. Furthermore, the initial balance of retained balance for the current fiscal year
increased by 35 million yen.
The impact on the per-share information is shown in the corresponding part.
The “Revenue recognition” notes for the previous consolidated fiscal year are omitted in accordance with thetransitional handling specified in Paragraph 89-3 of the Accounting Standard for Revenue Recognition.
(Accounting Standard for Fair Value Measurement, etc.)
The Company began applying the Accounting Standard for Fair Value Measurement (ASBJ Statement No.
30 issued on July 4, 2019), etc. at the beginning of the current consolidated fiscal year, and plans to apply the
new accounting policy prescribed by the Accounting Standard for Fair Value Measurement, etc. in accordancewith the transitional handling specified by Paragraph 19 of the Accounting Standard for Fair Value
Measurement and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No.
10 issued on July 4, 2019) into the future. Note that this does not have any impact on the consolidated
financial statements.
We decided to add notes about matters regarding level-by-level breakdown of fair value of financial
instruments in the “Notes on financial instruments.” However, these notes do not include content pertaining to
the previous consolidated fiscal year in accordance with the transitional handling specified in Paragraph 7-4 ofthe Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No.
19 released July 4, 2019).

- 88 -

(Accounting standards that were not used, etc.)- Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31
released June 17, 2021, Accounting Standards Board of Japan)(1) Overview
The Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No.
31, Accounting Standards Board of Japan) was revised on June 17, 2021. When it was announced on July4, 2019, the guidance said that, as reviewing “fair value measurement of investment trusts” with relevant
parties was believed to take a certain period and notes on fair values of “investments in partnerships, etc. forwhich an amount equivalent to the interest is carried on the balance sheet in the net amount” would requirea certain review, these reviews would be conducted over about a year after the release of the AccountingStandard for Fair Value Measurement. Now the revised guidance was released.
(2) Planned date of application
To be applied from the beginning of the year ending March 2023.
(3) Impact of applying the accounting standard
Amounts of potential impact of the application of the Implementation Guidance on Accounting Standard for
Fair Value Measurement on consolidated financial statements is currently being assessed.
(Change in method of presentation)(Consolidated balance sheet)“Notes receivable-trade,” “Electronically recorded monetary claims-operating,” “Accounts receivable fromcompleted construction contracts,” and “Accounts receivable-trade,” which were included in “Notes receivable,accounts receivable from completed construction contracts, and others” under “Current assets” in the previous
consolidated fiscal year. They are shown as separate items beginning in the current consolidated fiscal year toenhance clarity of disclosure. We rearranged the financial statements of the previous consolidated fiscal year
to reflect this change in presentation.
As a result, the 20,836 million yen indicated as “Notes receivable, accounts receivable from completed
construction contracts, and others” under “Current assets” in the consolidated balance sheet for the previous
consolidated fiscal year has been reclassified into 663 million yen in “Notes receivable-trade,” 1,135 million yen
in “Electronically recorded monetary claims-operating,” 12,002 million yen in “Accounts receivable fromcompleted construction contracts” and 7,034 million yen in “Accounts receivable-trade.”(Consolidated statement of income)“Dividend income of life insurance” appeared as a line item under “Non-operating income” in the previous
consolidated fiscal year is now included in “Others” in the current consolidated fiscal year as the item’s amount
has become insignificant. We rearranged the financial statements of the previous consolidated fiscal year toreflect this change in presentation.
As a result, the 33 million yen shown in “Dividends income of life insurance” under “Non-operating income”
on the consolidated statement of income in the previous consolidated fiscal year is reclassified into “Others.”- 89 -

(Additional information)(Share-based compensation scheme for directors)
The Company and some of its consolidated subsidiaries have a share-based compensation scheme (the“Scheme” hereafter) for their directors, excluding outside directors, with a purpose of establishing a clear
connection between directors’ compensation and stock value and motivating them to contribute to a mid- to longterm increase in earnings and corporate value.
(1) Overview of transactions
Under the Scheme, the Company’s shares are held in the account of an employee stock ownership plan
(ESOP) trust for officers (the “Trust” hereafter) established on Company funds and the number of sharescorresponding to the points assigned to each director are granted to the director through the Trust in accordancewith the share-granting rules established by the Company’s Board of Directors and those of some of its
consolidated subsidiaries. Directors are granted the Company’s shares when they retire from directorship, in
principle.
(2) The Company’s shares remaining in the trust account
The Company’s shares remaining in the trust account are recognized as treasury stock under net assets atthe book value in the trust account (excluding associated expenses). This treasury stock totaled 57,551 sharesworth 160 million yen in book value at the end of the previous consolidated fiscal year and 80,632 shares worth
199 million yen in book value at the end of the current consolidated fiscal year.
(Impacts of COVID-19 pandemic on accounting estimates)
Spread of COVID-19 is still affecting the Group and has caused a significant impact on order-taking activities
in the industries in which the Group operates. Although it is difficult to predict how the pandemic may develop
going forward or when it may run its course with certainty, the Company, based on the information collectedfrom internal and external sources, assumes that the trend will remain for a certain period and is working to
make accounting estimates, including collectability of impairment losses on non-current assets and deferred
tax assets. We note that if COVID-19 pandemic further spreads or remains for longer, it may affect the Group’s
earnings and financial position.

- 90 -

(Notes on consolidated balance sheet)*1: Breakdown of other inventories
Previous consolidated fiscal year
(March 31, 2021)

Current consolidated fiscal year
(March 31, 2022)

Products
Work in process

1,104 million yen
1,804 million yen

2,328 million yen
1,834 million yen

Raw materials and supplies

1,601 million yen

1,728 million yen

4,511 million yen

5,890 million yen

Total*2: Amounts attributable to non-consolidated subsidiaries are as follows.

Investment securities (stocks)

Previous consolidated fiscal year
(March 31, 2021)

Current consolidated fiscal year
(March 31, 2022)

53 million yen

53 million yen*3: Debt guarantees
The Company guarantees bank loans taken out by affiliates, etc., as listed below.
Previous consolidated fiscal year
(March 31, 2021)
Bank loans payable by DKK North America,
Inc.
Bank loans payable by employees, etc.
Total

- million yen

Current consolidated fiscal year
(March 31, 2022)
36 million yen

0 million yen

0 million yen

0 million yen

36 million yen*4: The Company is in specified commitment line contracts (loan commitment agreements) with its key
transacting financial institutions to maintain flexibility and safety for funding needs and mitigate financial
risks.
Previous consolidated fiscal year
(March 31, 2021)

Current consolidated fiscal year
(March 31, 2022)

Total amount of specified commitment line
contracts

14,000 million yen

7,000 million yen

Amount executed by the end of the current
consolidated fiscal year

- million yen- million yen

14,000 million yen

7,000 million yen

Difference- 91 -

(Notes on consolidated statement of income)*1: Sales in other business, cost of sales in other business, and gross profit-other business show net sales,
cost of sales, and gross profit attributable to the Group’s facility leasing and electric power sales
businesses.
*2: Provision of allowances for losses on construction contracts included in cost of sales are as follows.
Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

34 million yen

47 million yen*3: Major items and amounts included in selling, general, and administrative expenses are as follows.
Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)
Employees' salaries and allowances

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

2,538 million yen

2,759 million yen

Provision for bonuses
Provision for directors’ bonuses

206 million yen
36 million yen

209 million yen
6 million yen

Retirement benefit expenses
Provision for directors’ retirement benefits

149 million yen
0 million yen

73 million yen- million yen

Allowances for share-based compensation
for directors

26 million yen

24 million yen

1,266 million yen

1,149 million yen

Research and development expenses*4: Research and development expenses included in general and administrative expense and manufacturing
expenses for this period are as follows.
Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

2,064 million yen

1,940 million yen- 92 -

(Notes on consolidated statement of comprehensive income)*1: Amounts of reclassification adjustments and tax effect relating to other comprehensive income are as
follows.
Previous consolidated fiscal year Current consolidated fiscal year
(from April 1, 2020
(from April 1, 2021
to March 31, 2021)
to March 31, 2022)
Valuation difference on available-for-sale securities:
Amount booked

1,439 million yen

Reclassification adjustments

16 million yen

(165)

(589)

Before tax effect

1,273

(572)

Amount of tax effect

(390)

175

Valuation difference on available-for-salesecurities

883

(397)

Deferred gains or losses on hedges:
Amount booked

62

95

(5)

(58)

Before tax effectAmount of tax effect

57
(17)

37
(11)

Deferred gains or losses on hedges

39

25

Foreign currency translation adjustment:
Amount booked

(188)

47

－

－

(188)

47

－

－

(188)

47

Reclassification adjustments

Reclassification adjustments
Before tax effectAmount of tax effectForeign currency translation adjustment
Remeasurements of defined benefit plans, net oftax:
Amount booked

463

27

80

(146)

Before tax effectAmount of tax effect

543
(166)

(119)
36

Remeasurements of defined benefit plans, netof tax

377

(83)

1,111

(406)

Reclassification adjustments

Total other comprehensive income- 93 -

(Notes on consolidated statement of changes in equity)
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021)
1 Matters regarding issued shares
At beginning of current
Class of shares
Increase
Decreaseconsolidated fiscal year
Common stock
14,084,845－(shares)
2 Matters regarding treasury stock
At beginning of current
Class of sharesconsolidated fiscal year
Common stock
2,067,876(shares)

Increase

At end of current
consolidated fiscal year

At end of current
consolidated fiscal year

Decrease
908

14,084,845

－

2,588

2,066,196

Notes: 1 The Company sold 372,000 shares of treasury stock (before reverse stock split) to Sumitomo Mitsui Trust Bank,
Ltd. (Custody Bank of Japan, Ltd.) (the “Trust Account,” hereafter) on August 28, 2017 following upon the
introduction of a share-based compensation scheme for directors. However, on the recognition that the Company
and the Trust Account is inseparable, assets and liabilities, including treasury stock held in the Trust Account, as
well as its expenses and revenues are booked in the consolidated balance sheet, consolidated statement ofincome, consolidated statement of changes in equity, and consolidated statement of cash flows. The numbers oftreasury stocks include 57,551 shares of the Company (after reverse stock split) held in the Trust Account at theend of the current consolidated fiscal year. Japan Trustee Services Bank, Ltd. changed the trade name to
Custody Bank of Japan, Ltd. on July 27, 2020 because of a merger.
2 Breakdown of the increase is as follows.
Increase due to purchase of shares less than one unit: 908 shares
3 Breakdown of the decrease is as follows.
Issuance of treasury stocks to retiring directors under share-based compensation scheme: 2,468 shares
Decrease due to sale of shares less than one unit: 120 shares
3 Matters regarding dividends(1) Cash dividends paid
Resolution

Class of shares

Total dividends(millions of yen)

Dividend per share(yen)

Common stock

543

45.00

Record date

Effective date

March 31, 2020

June 29, 2020

June 26, 2020
General Meetingof Shareholders

Note: The total amount of payouts includes 2 million yen in dividends for the Company’s shares held in the trust accountat Custody Bank of Japan, Ltd., which was set up at the time the share-based compensation scheme for directors
was introduced.
Japan Trustee Services Bank, Ltd. changed the trade name to Custody Bank of Japan, Ltd. on July 27, 2020
because of a merger.
(2) Dividends whose record date is in the current consolidated fiscal year and effective date in the next fiscal
year
Resolution

Class ofshares

Source funds
for dividends

June 29, 2021
General Meeting

CommonRetainedstock

earningsof Shareholders

Total dividends
Dividend per(millions ofshare (yen)
yen)
543

45.00

Record date

Effective date

March 31, 2021

June 30, 2020

Note: The total amount of payouts includes 2 million yen in dividends for the Company’s shares held in the trust accountat Custody Bank of Japan, Ltd., which was set up at the time the share-based compensation scheme for directors
was introduced.
Japan Trustee Services Bank, Ltd. changed the trade name to Custody Bank of Japan, Ltd. on July 27, 2020
because of a merger.

- 94 -

Current consolidated fiscal year (from April 1, 2021 to March 31, 2022)
1 Matters regarding issued shares
At beginning of current
Class of sharesconsolidated fiscal year
Common stock
14,084,845(shares)
2 Matters regarding treasury stock
At beginning of current
Class of sharesconsolidated fiscal year
Common stock
2,066,196(shares)

Increase

At end of current
consolidated fiscal year

Decrease－

14,084,845－

Increase

Decrease

441,392

At end of current
consolidated fiscal year

76,9192,430,669

Notes: 1 The Company sold 372,000 shares of treasury stock (before reverse stock split) to Sumitomo Mitsui Trust Bank,
Ltd. (Custody Bank of Japan, Ltd.) (the “Trust Account,” hereafter) on August 28, 2017 following upon the
introduction of a share-based compensation scheme for directors. However, on the recognition that the Company
and the Trust Account is inseparable, assets and liabilities, including treasury stock held in the Trust Account, as
well as its expenses and revenues are booked in the consolidated balance sheet, consolidated statement ofincome, consolidated statement of changes in equity, and consolidated statement of cash flows. The numbers oftreasury stocks include 80,632 shares of the Company (after reverse stock split) held in the Trust Account at theend of the current consolidated fiscal year.
2 Breakdown of the increase is as follows.
Acquisition of treasury stock under resolution at May 14, 2021 Board of Directors meeting: 131,700 shares
Acquisition of treasury stock under resolution at November 10, 2021 Board of Directors meeting: 120,000 shares
Acquisition of treasury stock under resolution at February 10, 2022 Board of Directors meeting: 139,300 shares
Acquisition of treasury stock under share-based compensation scheme: 50,000 shares
Increase due to purchase of shares less than one unit: 392 shares
3 Breakdown of the decrease is as follows.
Disposal of treasury stock under share-based compensation scheme: 50,000 shares
Issuance of treasury stock to retiring directors under share-based compensation scheme: 26,919 shares
3. Matters regarding dividends(1) Cash dividends paid
Resolution

Class of shares

Total dividends(millions of yen)

Dividend per share(yen)

Common stock

543

45.00

Record date

Effective date

March 31, 2021

June 30, 2020

June 29, 2021
General Meetingof Shareholders

Note: The total amount of payouts includes 2 million yen in dividends for the Company’s shares held in the trust accountat Custody Bank of Japan, Ltd., which was set up at the time the share-based compensation scheme for directors
was introduced.
(2) Dividends whose record date is in the current consolidated fiscal year and effective date in the next fiscal
year
Resolution

Class ofshares

Source funds
for dividends

June 29, 2022
General Meeting

CommonRetainedstock

earningsof Shareholders

Total dividends
Dividend per(millions ofshare (yen)
yen)
704

60.00

Record date

Effective date

March 31, 2022

June 30, 2022

Note: The total amount of payouts includes 4 million yen in dividends for the Company’s shares held in the trust accountat Custody Bank of Japan, Ltd., which was set up at the time the share-based compensation scheme for directors
was introduced.

- 95 -

(Notes on consolidated statement of cash flows)*1: The relationship between the term-end balance of cash and cash equivalents and the amount shown on the
consolidated balance sheet is as follows.

Cash and deposit accountTime deposits with a deposit period
exceeding three months
Cash and cash equivalents

Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

18,995 million yen

18,886 million yen(8,694 million) yen(5,745 million) yen

10,300 million yen

13,140 million yen- 96 -

(Notes on leasing transactions)(Lessee side)
Finance lease transactions
Finance lease transactions without transfer of ownership(i) Lease assets
Property, plant and equipment: mainly vehicles and computer-related equipment
Intangible assets: software(ii) Depreciation method of lease assets
The straight-line method, in which the lease period is the useful life and the residual value is zero, isused.
(Notes on financial instruments)
1 Matters regarding status of financial instruments(1) Policy on financial instruments
The Group’s policy for fund management is to invest in safe financial assets and its policy for fundprocurement is to use bank loans. Derivatives are used to avoid risks described below. The policy is not toengage in speculative transactions.
(2) Details of financial instruments, associated risks, and risk management
Notes receivable, accounts receivable from completed construction contracts, and others, which areoperating receivables, are exposed to customers’ credit risk. To address these risks, we manage due dates
and balances for each customer and monitor credit statuses of key customers at regular intervals inaccordance with the Group’s credit management rules. Some of these risks involve foreign currency
denominated items exposed to risk of currency fluctuations, and those reaching specified amounts arehedged using forward exchange contracts.
Investment securities are exposed to the risk of market fluctuation. They are mainly shares of companies
with whom we have business relationship. We work to grasp their fair values and financial conditions of theissuers regularly.
Notes payable, accounts payable for construction contracts and other, and income taxes payable, which
are trade payables, have due dates no longer than one year. Some of these are related to import of raw
materials and are denominated in foreign currencies, which makes them exposed to risk of currency
fluctuations. We hedge risks of those reaching specified amounts using forward exchange contracts.
Short-term loans payable and long-term loans payable are for fund procurement related to operationaltransactions, while lease obligations related to finance lease transactions are for the purpose of procuring
funds necessary for capital investment. The longest of their due dates arrive in five years from the fiscal
year-end (vs. six years in the previous consolidated fiscal year). Loans payable mainly have fixed interest
rates.
These current liabilities and loans payable, including trade payables, are exposed to liquidity risk. The
Group members manage these by, for example, work out funding plans each month.
The derivative transactions are forward exchange contracts aimed at hedging fluctuation risk of foreignexchange related to trade receivables and payables denominated in foreign currencies. Derivativetransactions are executed and managed in accordance with internal rules that specify transaction authority.
For information regarding hedge accounting, including hedge instruments, hedged items, hedging policy,
and method for assessing effectiveness of hedges, see Important matters that form basis for preparation of
consolidated financial statements, 4. Matters regarding accounting policy, (7) Important hedge accounting
methods.
(3) Supplementary explanation of matters related to market values of financial instruments
Since various factors of fluctuation are accounted for in estimating fair values of financial instruments, fairvalues may change if different assumptions are used.

- 97 -

2 Matters regarding fair values, etc. of financial instruments
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021)
The amounts on the consolidated balance sheet, their fair values, and differences between them as ofMarch 31, 2021 are as follows.
(Millions of yen)Amount indicated on
consolidated balance
sheet

Fair value

Difference(1) Investment securities*2
Bonds held to maturity

1,566

1,561

(5)

Other securities

5,303

5,303

－

6,870

6,865

(5)

440

439

(0)

157

155

(1)

Total liabilities

598

595

(2)

Derivatives*4

6

6

－

Total assets(1) Long-term loans payable (including thosepayable to be repaid within a year)(2) Lease obligations*3*1: “Cash and deposits,” “Notes receivable-trade,” “Electronically recorded monetary claims-operating,” “Accounts
receivable from completed construction contracts,” “Accounts receivable-trade,” “Notes payable, accounts payable
for construction contracts, and others,” “Short-term loans payable,” and “Income taxes payable” are omitted
because they are cash and their fair value approximates their book value as they are settled in a short term.
*2: Financial instruments for which fair values are very difficult to determine(Millions of yen)
Category

Amount indicated on consolidated balance sheet

Unlisted stocks

155

These are not included in “(1) Investment securities” under “Assets” as they do not havemarket prices and it is very difficult to determine fair values.
*3: Lease obligations are shown as the sum total of current liabilities and fixed liabilities.
*4: Net debts and credits accrued on derivatives are shown in net amounts.
Notes:1 Amounts of monetary claims and securities that have maturities expected to be redeemed after the
consolidated fiscal year-end(Millions of yen)

Cash and deposits
Notes receivable-trade
Electronically recorded monetary claimsoperating
Accounts receivable from completed
construction contracts
Accounts receivable-trade

Within 1 year

Over 1 year
Within 5 years

Over 5 years
Within 10 years

Over 10 years

18,995

－

－

－

663

－

－

－

1,135

－

－

－

12,002

－

－

－

7,034

－

－

－

－

700

850

－

39,831

700

850

－

Investment securities
Bonds planned to be held until maturity(corporate bonds)
Total- 98 -

2 Amounts of long-term loans payable and lease obligations planned to be repaid after the consolidated fiscal
year-end(Millions of yen)
Within 1 year

Over 1 year
Over 2 years Over 3 years Over 4 years
Over 5 years
Within 2 years Within 3 years Within 4 years Within 5 years

Long-term loans payable

6

175

71

77

71

38

Lease obligations

62

46

27

16

4

0

68

221

98

94

76

39

Total

Current consolidated fiscal year (from April 1, 2021 to March 31, 2022)
The amounts on the consolidated balance sheet, their fair values, and differences between them as ofMarch 31, 2022 are as follows.
(Millions of yen)Amount indicated on
consolidated balance
sheet

Fair value

Difference(1) Investment securities*2
Bonds held to maturity

1,459

1,449

(10)

Other securities

3,850

3,850

－

5,310

5,299

(10)

459

459

(0)

121

119

(1)

Total liabilities

581

579

(1)

Derivatives*4

54

54

－

Total assets(1) Long-term loans payable (including thosepayable to be repaid within a year)(2) Lease obligations*3*1: “Cash and deposits,” “Notes receivable-trade,” “Electronically recorded monetary claims-operating,” “Accounts
receivable from completed construction contracts,” “Accounts receivable-trade,” “Notes payable, accounts payable
for construction contracts, and others,” “Short-term loans payable,” and “Income taxes payable” are omitted because
they are cash and their fair value approximates their book value as they are settled in a short term.
*2: Stocks, etc. not quoted in the market are not included in “(1) Investment securities.” The amount of the financial
instruments indicated on the consolidated balance sheet is as follows.
(Millions of yen)
Category

Amount indicated on consolidated balance sheet

Unlisted stocks155*3: Lease obligations are shown as the sum total of current liabilities and fixed liabilities.
*4: Net debts and credits accrued on derivatives are shown in net amounts.

- 99 -

Notes:1 Amounts of monetary claims and securities that have maturities expected to be redeemed after the
consolidated fiscal year-end(Millions of yen)
Within 1 year

Over 1 year
Within 5 years

Over 5 years
Within 10 years

Over 10 years

18,886

－

－

－

440

－

－

－

878

－

－

－

5,127

－

－

－

4,489

－

－

－

Bonds planned to be held until maturity(corporate bonds)

300

400

750

－

Total

30,122

400

750

－

Cash and deposits
Notes receivable-trade
Electronically recorded monetary claimsoperating
Accounts receivable from completed
construction contracts
Accounts receivable-trade
Investment securities

2 Amounts of long-term loans payable and lease obligations planned to be repaid after the consolidated fiscal
year-end(Millions of yen)
Within 1 year

Over 1 year
Over 2 years Over 3 years Over 4 years
Over 5 years
Within 2 years Within 3 years Within 4 years Within 5 years

Long-term loans payable

180

78

86

71

35

7

Lease obligations

53

34

22

9

1

－

233

112

108

81

37

7

Total

- 100 -

3 Matters regarding level-by-level breakdown of fair value measurements of financial instruments
Fair value measurements of financial instruments are classified into the three levels according to thedegrees of observability of the input used in measuring fair values and its importance, as described below.
Level 1 fair value: Fair value measured using the (unadjusted) market price in the market in which theequivalent assets or debts are actively traded
Level 2 fair value: Fair value measured using directly or indirectly observable inputs excluding those fallingunder Level 1
Level 3 fair value: Fair value measured using important, unobservable inputs
If multiple inputs that can have a significant impact on the measurement of fair values are used, of thelevels that these inputs respectively fall under, the fair value is classified into the level with lowest level ofpriority in the measurement of fair value.
(1) Financial instruments carried in consolidated balance sheet at fair value
Current consolidated fiscal year (March 31, 2022)
Category

Fair value (millions of yen)
Level 1

Level 2

Level 3

Total

Investment securities
Other securities

3,850

－

－

3,850

－

54

－

54

3,850

54

－

3,904

Derivatives
Total assets(2) Financial instruments other than those carried in consolidated balance sheet at fair value
Current consolidated fiscal year (March 31, 2022)
Category

Fair value (millions of yen)
Level 1

Level 2

Level 3

Total

Investment securities
Bonds held to maturity
Total assets
Long-term loans payable (including thosepayable to be repaid within a year)
Lease obligations
Total liabilities

－

1,449

－

1,449

－

1,449

－

1,449

－

459

－

459

－

119

－

119

－

579

－

579

Note: Explanation of valuation technique used to measure fair value and inputs used to measure fair value
Investment securities
Listed shares are evaluated using their market quotation. As listed shares are traded in active markets, theirfair value is classified into Level 1 fair value. On the other hand, the bonds the Company intends to hold until
their maturity have low trading frequency in the market and are not regarded as market prices in an active
market. Therefore, their fair value is classified into Level 2 fair value.
Derivatives
Fair value of forward exchange contracts are measured by the discounted cash flow method using
observable inputs, including interest rates and exchange rates, and are classified into Level 2 fair value.
Long-term loans payable (including those payable to be repaid within a year) and lease obligations
Fair value of these are calculated by the discounted cash flow method based on the combined total ofprincipal and interest, the remaining life of the debt and the interest rate reflecting the credit risk and areclassified into Level 2 fair value.

- 101 -

(Notes on securities)
1 Bonds held to maturity
Previous consolidated fiscal year (March 31, 2021)(Millions of yen)
Category

Amount indicated on
consolidated balance
sheet

Bonds whose fair values exceed amounts on
the consolidated balance sheet
Bonds whose fair values do not exceed
amounts on the consolidated balance sheet
Total

Fair value

Difference

450

450

0

1,116

1,111

(5)

1,566

1,561

(5)

Current consolidated fiscal year (March 31, 2022)(Millions of yen)
Category

Amount indicated on
consolidated balance
sheet

Bonds whose fair values exceed amounts on
the consolidated balance sheet
Bonds whose fair values do not exceed
amounts on the consolidated balance sheet
Total

Fair value

Difference

－

－

－

1,459

1,449

(10)

1,459

1,449

(10)

2 Other securities
Previous consolidated fiscal year (March 31, 2021)(Millions of yen)
Category

Amount indicated on
consolidated balance
sheet at end of theconsolidated fiscal year

Acquisition costs

Difference

Those whose values on consolidatedbalance sheet exceed acquisition costs
Stocks

3,558

1,609

1,948

3,558

1,609

1,948

Stocks

1,594

1,730

(136)

Others

150

155

(4)

Subtotal

1,744

1,885

(140)

Total

5,303

3,495

1,807

SubtotalThose whose values on consolidatedbalance sheet do not exceed acquisitioncosts- 102 -

Current consolidated fiscal year (March 31, 2022)(Millions of yen)Amount indicated on
consolidated balance
sheet at end of theconsolidated fiscal year

Category

Acquisition costs

Difference

Those whose values on consolidatedbalance sheet exceed acquisition costs
Stocks

2,684

1,233

1,451

2,684

1,233

1,451

Stocks

962

1,172

(210)

Others

204

210

(5)

Subtotal

1,166

1,382

(216)

Total

3,850

2,616

1,234

SubtotalThose whose values on consolidatedbalance sheet do not exceed acquisitioncosts

3 Other securities sold
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021)
Class

Sales price(millions of yen)

Stocks
Total

Total gains on sale(millions of yen)

Total losses on sale(millions of yen)

364

165

－

364

165

－

Current consolidated fiscal year (from April 1, 2021 to March 31, 2022)
Class
Stocks
Total

Sales price(millions of yen)

Total gains on sale(millions of yen)

Total losses on sale(millions of yen)

1,354

589

－

1,354

589

－

4 Securities that were written down
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021)
Loss on valuation of investment securities of 318 million yen was booked as a result of write-down on
securities in the current consolidated fiscal year.
In carrying out write-downs, we consider recoverability of the fair value of each issue. If its value has
dropped 50% or more, we decide that it has no possibility of regaining its fair value and write down any such
issue. If the value has dropped at least 30% but less than 50%, we consider recoverability of each issue
and write down the amount judged to require writing down.
Current consolidated fiscal year (from April 1, 2021 to March 31, 2022)
Loss on valuation of investment securities of 170 million yen was booked as a result of write-down on
securities in the current consolidated fiscal year.
In carrying out write-downs, we consider recoverability of the fair value of each issue. If its value has
dropped 50% or more, we decide that it has no possibility of regaining its fair value and write down any such
issue. If the value has dropped at least 30% but less than 50%, we consider recoverability of each issue
and write down the amount judged to require writing down.

- 103 -

(Notes on retirement benefits)
1 Overview of retirement benefit program adopted
The Company’s retirement benefit plans include defined benefit pension plan (fund and contract type),
defined contribution pension plan, and retirement lump-sum plan. Domestic consolidated subsidiaries havedefined benefit pension plan (fund type), defined contribution pension plan, and retirement lump-sum planand use the simplified method for calculating retirement-benefit liabilities. Extra retirement allowances may
be given to some employees.
2 Defined benefit plans(1) Adjustment table for balances of retirement benefit liabilities at the beginning and end of the fiscal year
(excluding plans using the simplified method)
Previous consolidated fiscal year Current consolidated fiscal year
(from April 1, 2020

(from April 1, 2021

to March 31, 2021)

Balance of retirement benefit liabilities at
beginning of fiscal year
Service costs

5,274 million yen

5,054 million yen

225

220

15
16

15
86

(477)

(317)

5,054

5,059

Interest costs
Actuarial differences booked
Retirement benefits paid
Balance of retirement benefit liabilities at end of
fiscal year

to March 31, 2022)(2) Adjustment table for balances of pension assets at beginning and end of fiscal year (excluding plans
using the simplified method)
Previous consolidated fiscal year Current consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Balance of pension assets at beginning of fiscal
year
Expected return on pension assets
Actuarial differences booked
Contribution from business owner
Retirement benefits paid
Balance of pension assets at end of fiscal year

(from April 1, 2021
to March 31, 2022)

3,224 million yen

3,520 million yen

9
480
94
(288)

10
113
92
(213)

3,520

3,523

(3) Adjustment table for balances of pension benefit liabilities of plans using the simplified method at the
beginning and end of fiscal year
Previous consolidated fiscal year Current consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Balance of liabilities for retirement benefits at
beginning of fiscal year
Retirement benefit expenses
Retirement benefits paid
Amount of contribution to plans

930 million yen

Balance of liabilities for retirement benefits at endof fiscal year

- 104 -

(from April 1, 2021
to March 31, 2022)

790 million yen

(19)
(101)
(18)

31
(111)
(18)

790

692

(4) Reconciliation of closing balances of retirement benefit liabilities and pension assets, and liabilities andassets for retirement benefits booked on the consolidated balance sheet (including plans using thesimplified method)
Previous consolidated fiscal year

Current consolidated fiscal year

(March 31, 2021)(March 31, 2022)

Funded retirement benefit obligations
Pension assets

4,252 million yen(4,833)

4,244 million yen(4,856)

Unfunded retirement benefit obligations

(580)
2,905

(611)
2,840

Net amount of liabilities and assets on
consolidated balance sheet

2,324

2,228

Net defined benefit liability
Net defined benefit assets

2,905
(580)

2,840
(611)

Net amount of liabilities and assets on
consolidated balance sheet

2,324

2,228

(5) Amounts of retirement benefit expenses and their components
Previous consolidated fiscal year Current consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Service costs

225 million yen

Interest costs
Expected return on pension assets
Amortization of actuarial differences
Retirement benefit expenses calculated using thesimplified method
Retirement benefit expenses related to defined
benefit plans(from April 1, 2021
to March 31, 2022)

220 million yen

15
(9)
80

15
(10)
(146)

(19)

31

291

109

(6) Remeasurements of defined benefit plans, net of tax
Details of items (before tax effect deduction) booked in remeasurements of defined benefit plans, net oftax are as follows.
Previous consolidated fiscal year Current consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Actuarial differences
Total(from April 1, 2021
to March 31, 2022)(543 million) yen

119 million yen

(543)

119

(7) Remeasurements of defined benefit plans
Details of items (before tax effect deduction) booked in remeasurements of defined benefit plans are as
follows.
Previous consolidated fiscal year Current consolidated fiscal year
(March 31, 2021)

Unrecognized actuarial differences
Total- 105 -

(March 31, 2022)(578 million) yen(458 million) yen

(578)

(458)

(8) Matters regarding pension assets(i) General breakdown of pension assets
Percentages of key components of total pension assets are as follows.
Previous consolidated fiscal year Current consolidated fiscal year
(March 31, 2021)

Bonds
StocksInsurance assets (general account)
OthersTotal(March 31, 2022)

39%
27
29
5

38%
28
28
6

100

100

(ii) Method for determining expected long-term rates of return
The Company considers current and expected allocation of pension assets and current and expectedlong-term rates of return on various components of pension assets to determine the expected long-term
rates of return on pension assets.
(9) Notes on assumptions for actuarial calculation
Key assumptions for actuarial calculation (Figures are weighted averages.)
Previous consolidated fiscal year Current consolidated fiscal year
(March 31, 2021)

Discount rate
Expected long-term rate of return
Expected rate of pay hike

0.3%
0.3%
2.3%

(March 31, 2022)

0.3%
0.3%
2.3%

3 Defined contribution plans
The amount of required contribution to defined contribution plans from the Company and domestic
consolidated subsidiaries is 44 million yen in the previous consolidated fiscal year and 43 million yen in thecurrent consolidated fiscal year.

- 106 -

(Notes on tax effect accounting)
1 Breakdown of deferred tax assets and deferred tax liabilities by key factors(Deferred tax assets)
Allowance for employees’ bonuses
Net defined benefit liability
Allowances for share-based remuneration forPrevious consolidated fiscal year
(March 31, 2021)

Current consolidated fiscal year
(March 31, 2022)

193 million yen

196 million yen

775 million yen

830 million yen

directors and corporate auditors
Loss on valuation of investment securities

40 million yen

24 million yen

140 million yen

104 million yen

Losses on valuation of golf club membership
Impairment losses

42 million yen
57 million yen

34 million yen
55 million yen

Valuation difference on available-for-salesecurities

43 million yen

66 million yen

Losses carried forward
Others

185 million yen
549 million yen

357 million yen
440 million yen

Deferred tax assets subtotal

2,027 million yen

2,110 million yen

Valuation allowance(624 million) yen(636 million) yen

Total deferred tax assets

1,403 million yen

1,474 million yen(1 million) yen(1 million) yen(596 million) yen(444 million) yen(189 million) yen(247 million) yen

Total deferred tax liabilities(788 million) yen(693 million) yen

Net amount of deferred tax assets

615 million yen

780 million yen(Deferred tax liabilities)
Reserve for advanced depreciation of noncurrent assets
Valuation difference on available-for-salesecurities
Others- 107 -

2 Breakdown by major causes of significant differences between statutory effective tax rate and actual effective
tax rate for income taxes after application of tax effect accounting
Previous consolidated fiscal year
(March 31, 2021)
Statutory effective tax rate
(Adjustments)

Current consolidated fiscal year
(March 31, 2022)

30.6%
1.1%

Notes are omitted because thedifference between the statutory
effective tax rate and actual
effective tax rate for income taxes

Items excluded from deductible expenses,
including entertainment expenses

after application of tax effectaccounting is no greater than 5%of the statutory effective tax rate.

Allowance for directors’ bonuses

0.7%

Items excluded from gross profits, including
dividend income(0.6)%

Inhabitant taxes on per capita basis
Change in valuation allowance

2.4%
2.1%

Difference in tax rates from domestic
consolidated subsidiaries

1.5%

Difference in tax rates from overseas
consolidated subsidiaries

0.4%

Tax credit
Others(5.7)%
0.3%

Actual effective tax rate for income taxes after

32.7%

application of tax effect accounting- 108 -

(Revenue recognition)(1) Information on disaggregation of revenue from contracts with customers
Current consolidated fiscal year (from April 1, 2021 to March 31, 2022)(Millions of yen)
Reportable segment
Total

Other
Businesses

Total

Telecommunication
Business

Radio
Frequency
Business

Construction work

13,183－

13,183－

13,183Equipment and materials sales,
etc.

12,725

7,959

20,684－

20,684

－

－

－

100

100

25,908

7,959

33,867100

33,968

Power sales revenue, etc.
Sales to external customers(2) Information that forms the basis for understanding revenues
The Company recognizes revenues in relation to contracts with customers in the amount it expects toreceive in exchange for promised goods or services at the time their control is transferred to the customer
in accordance with the five-step approach as described below.
Step 1: Identify contract with customer
Step 2: Identify performance obligations under contract
Step 3: Calculate transaction prices
Step 4: Allocate transaction prices to performance obligations under contract
Step 5: Recognize revenues at the time the performance obligations are fulfilled or as their fulfillment
progresses.
In recognizing revenues, the Company identifies performance obligations based on contracts withcustomers regarding Construction Contracts, etc., equipment and materials sales, etc. and power sales
revenue, etc. in the telecommunication business, the radio frequency business and the other businesses,
which are the Group’s core business segments, and judges that the Group’s performance obligations are
fulfilled and recognizes revenues normally at the timing described below.
(i) Revenues related to Construction Contracts, etc.
Revenues related to Construction Contracts, etc. mainly include Construction Contracts, etc. intelecommunication business, etc. and equipment installment work in radio frequency business and arerecognized over a certain period as performance obligations are fulfilled. Measurement of progress
regarding fulfillment of performance obligation is carried out based on the ratio of the cost materialized by
the last date of each reporting period to the total of expected costs. As the price for the transaction is paid
to us within one year after the delivery, no significant financing component is included.
(ii) Revenues related to sale of products
Revenues related to sale of products mainly include equipment and materials sales, etc. intelecommunication business and radio frequency business. Performance obligations are judged at thetime of delivery to be fulfilled when the customer has gained control of the product and the revenue at thatpoint is recognized. Note that revenues are recognized at the time of shipment for sale of some products
as the period from the product’s shipment to the transfer of its control to the customer is a normal period.
As the price for the transaction is paid to us within one year after the delivery, no significant financing
component is included.

- 109 -

(3) Information used to understand the amount of revenues in the current consolidated fiscal year, and the next
consolidated fiscal year and beyond(i) Balances of contract assets and contract liabilities, etc.
(Millions of yen)
Current consolidated
fiscal year
Receivables arising from contracts withcustomers (balance at beginning of fiscal

17,615year)
Receivables arising from contracts withcustomers (balance at end of fiscal year)

10,936

Contract assets (balance at beginning offiscal year)

3,601

Contract assets (balance at end of fiscal

1,832

year)
Contract liabilities (balance at beginning of

381

fiscal year)
Contract liabilities (balance at end of fiscal
year)

323

Contract assets pertain to prices related to incomplete Construction Contracts, etc. for which revenues
are recognized for Construction Contracts, etc. Such assets are switched to receivables arising fromcontracts with customers at the time the rights to the prices becomes unconditional.
Contract liabilities are prices received from customers before the performance of obligations based on
the contract. These are switched to revenues as the fulfillment of performance obligations progresses or at
the time obligations are performed.
Increase or decrease in contract assets arose mainly from revenue recognition (increase in contract
assets) and a switch to operating receivables (decrease in contract assets).
Of the revenues recognized for the current consolidated fiscal year, the amount included in the balanceof contract liabilities at the beginning of the fiscal year is 282 million yen. The revenues recognized fromthe performance obligations that were fulfilled in the past period in the current fiscal year totals 98 million
yen.
(ii) Transaction prices allocated to remaining performance obligations
The combined total of transaction prices allocated to remaining performance obligations and the period
in which revenue recognition is expected are as follows.
Practical expedient is applied for those whose contracts are for an initial expected period of up to one
year. They are not included in the amounts below.
(Millions of yen)
Within 1 year
Current consolidated
fiscal year

Over 1 year
4,585

- 110 -

Total
1,112

5,698

(Segment information, etc.)[Segment information]
1 Overview of reportable segments
The Company’s reporting segments are those units of the Company for which separate financial
information is available and which the Board of Directors regularly conducts reviews to decide allocation ofmanagement resources and assess business performance.
The Company has operational units assigned with specific products and services. Each of them,including Group companies, designs comprehensive strategies for their respective products and services
and operates business.
Therefore, the Company has set telecommunication business and radio frequency business asreportable segments based on types of their products and services, ways of providing them, productmarkets, etc., with these operational units as the basis.
Key business areas of the respective segments are as show in the below table.
Reportable segment

Telecommunication Business

Main business areas
Manufacture, construction, and sale of antennas, reflectors, steel towers, steel
structures, etc.
Plating work on telecommunication equipment, steel building framework, etc.
Construction work for telecommunication facilities
Manufacture and sale of high-frequency induction heating equipment and relatedRadio Frequency Businessequipment
Manufacture and sale of high-frequency power source devices for plasma, etc.
Contract high-frequency heat treating service

2 Methods for calculating amounts of net sales, profit/loss, assets, liabilities, etc. by reportable segment
The accounting methods of reported business segments are the same as those described in “Importantmatters that form basis for preparation of consolidated financial statements.”
Profit in the reportable segments is based on operating profit. Intersegment revenues and transfers arecalculated using prevailing market prices.

- 111 -

3 Information on amounts of net sales, profit/loss, assets, liabilities, etc. by reportable segment
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021)
Reportable segment
Telecomm Radio
unication
Frequency
Business Business

Others
Total(See Note 1.)

Total(Millions of yen)Amountindicated on
Adjustments consolidated(See Note 2.) financial
statements(See Note 3.)

Net sales
Sales to external customers
Intersegment sales or transfers
Total

33,942
20
33,962

Segment income

3,876

Segment assets

31,0687,430 41,372
20－

7,430 41,392
870

4,747

11,432 42,501

105 41,478－

41,478

245

(245)

－

330 41,723(245)

41,478

4,905(3,321)

1,583

776 43,277

19,186

62,463

225

158

Other items
Depreciation

898

327

1,225

71

1,297

25

1,322

Increase in property, plant, andequipment and intangible assets

961

152

1,114

－

1,114

276

1,390

Notes: 1 The “Others” segment, which is not included in reportable segments, includes facility leasing and electric powersales businesses.
2 Details of adjustments are as follows.
(1) Adjustment to segment income of (2,763 million) yen includes (97 million) yen in eliminations ofintersegment transactions and (2,665 million) yen in corporate expenses that are not allocated to any
particular reportable segment. Corporate expenses are mainly general and administrative expenses that(2)

are not attributable to any reportable segments.
Adjustment to segment assets is a corporate asset that is not allocated to reportable segments.
Corporate assets are primarily the Company’s cash and deposits, etc. of the headquarters that are notallocated to reportable segments.

(3)

(4)

Adjustment to depreciation is a corporate expense that is not allocated to reportable segments.
Corporate expenses are mainly general and administrative expenses that are not attributable to any
reportable segments.
Adjustment to increase in property, plant, and equipment and intangible assets is the amount of capital
expenditures of the corporate assets that is not allocated to reportable segments. Corporate assets aremainly capital expenditures at the headquarters that are not attributable to any reportable segments.

3 Adjustments are made to reconcile segment income with operating income in the consolidated statement ofincome.

- 112 -

Current consolidated fiscal year (from April 1, 2021 to March 31, 2022)
Reportable segment
Telecomm Radio
unication
Frequency
Business Business

Others
Total(See Note 1.)

Total(Millions of yen)Amountindicated on
Adjustments consolidated(See Note 2.) financial
statements(See Note 3.)

Net sales
Sales to external customers

25,908

7,959

33,867100

33,968－33,968

18

－

18

229

248

(248)

－

25,926

7,959

33,885330

34,216(248)

33,968Segment income

2,010

1,058

3,068

167

3,235

(3,182)53

Segment assets

23,922

11,59335,516719

36,235

20,101

56,336

954

309

1,264

66

1,330

50

1,381

779

192

972

13

986

97

1,083

Intersegment sales or transfers
Total

Other items
Depreciation
Increase in property, plant, andequipment and intangible
assets

Notes: 1 The “Others” segment, which is not included in reportable segments, includes facility leasing and electric powersales businesses.
2 Details of adjustments are as follows.
(1) Adjustment to segment income of (3,182 million) yen includes (116 million) yen in eliminations ofintersegment transactions and (3,066 million) yen in corporate expenses that are not allocated to any
particular reportable segment. Corporate expenses are mainly general and administrative expenses that(2)

are not attributable to any reportable segments.
Adjustment to segment assets is a corporate asset that is not allocated to reportable segments.
Corporate assets are primarily the Company’s cash and deposits, etc. of the headquarters that are notallocated to reportable segments.

(3)

(4)

Adjustment to depreciation is a corporate expense that is not allocated to reportable segments.
Corporate expenses are mainly general and administrative expenses that are not attributable to any
reportable segments.
Adjustment to increase in property, plant, and equipment and intangible assets is the amount of capital
expenditures of the corporate assets that is not allocated to reportable segments. Corporate assets aremainly capital expenditures at the headquarters that are not attributable to any reportable segments.

3 Adjustments are made to reconcile segment income with operating income in the consolidated statement ofincome.

- 113 -

[Related information]
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021)
1 Information by product/service
This information is omitted because similar information is shown in “Segment information.”
2 Information by region(1) Net sales(Millions of yen)
Japan

Asia

38,147

North America
2,265Europe528

Others
210

Total
326

41,478

Note: Net sales are classified by country or region based on locations of customers.

(2) Property, plant, and equipment
This information is omitted because the amount of property, plant, and equipment in Japan exceeds
90% of the amount of property, plant, and equipment on the consolidated balance sheet.
3 Information by major customer(Millions of yen)
Name of customer

Net sales

NTT DOCOMO, INC.

Related segment
4,221

Telecommunication BusinessCurrent consolidated fiscal year (from April 1, 2021 to March 31, 2022)
1 Information by product/service
This information is omitted because similar information is shown in “Segment information.”
2 Information by region(1) Net sales(Millions of yen)
Japan

Asia

31,026

North America
1,772

876

EuropeOthers
24

Total
269

33,968

Note: Net sales are classified by country or region based on locations of customers.

(2) Property, plant, and equipment
This information is omitted because the amount of property, plant, and equipment in Japan exceeds
90% of the amount of property, plant, and equipment on the consolidated balance sheet.
3 Information by major customer(Millions of yen)
Name of customer

Net sales

NTT DOCOMO, INC.

Related segment
4,874- 114 -

Telecommunication Business[Information on impairment losses on non-current assets by reportable segment]
There are no matters to be noted.
[Information on amortization of goodwill and unamortized balances by reportable segment]
There are no matters to be noted.
[Information on gains on negative goodwill by reportable segment]
There are no matters to be noted.
[Information on related parties]
There are no matters to be noted.

- 115 -

(Per-share information)
Previous consolidated fiscal year
(from April 1, 2020
to March 31, 2021)

Current consolidated fiscal year
(from April 1, 2021
to March 31, 2022)

Net assets per share

3,908.32 yen

3,938.79 yen

Net income per share

96.14 yen

59.51 yen

Notes:1 No figures are provided for “diluted net income per share” as there are no dilutive shares.
2 Data used in calculating the net income per share are as follows.
Previous consolidated fiscal Current consolidated fiscal
year
year
Item
(from April 1, 2020
(from April 1, 2021
to March 31, 2021)
to March 31, 2022)
Net income attributable to shareholders of parent (millions of
1,155
705
yen)
Amount not attributable to common shareholders (millions of－－yen)
Net income attributable to shareholders of parent pertaining
1,155
705
to common stock (millions of yen)
Average number of common shares during the period

12,018,103

11,861,833

3 We included the Company’s shares held in the trust account of Custody Bank of Japan, Ltd. as trust assets forthe share-based compensation scheme for directors in the treasury stock deducted in the calculation of theaverage number of shares over the period in calculating net income per share (58,374 shares in the previous
consolidated fiscal year and 72,808 shares in the current consolidated fiscal year).
4 Data used in calculating the net assets per share are as follows.
Previous consolidated fiscal Current consolidated fiscal
Item
year
year
(March 31, 2021)(March 31, 2022)
Total net assets (millions of yen)

47,991

46,609Amount deducted from total net assets (millions of yen)

1,018

705

(Including non-controlling interests of:)(1,018)(705)

Net assets related to common stock at end of fiscal year
46,97245,903(millions of yen)
Number of common shares at end of fiscal year used in
12,018,649
11,654,176
calculating net assets per share
5 We included the Company’s shares held in the trust account of Custody Bank of Japan, Ltd. as trust assets forthe share-based compensation scheme for directors in the treasury stock deducted in the calculation of thenumber of shares at the end of the fiscal year in calculating net income per share (57,551 shares in theprevious consolidated fiscal year and 80,632 shares in the current consolidated fiscal year).
6 As stated in “Changes in accounting policies,” the Company has adopted the “Accounting Standard for
Revenue Recognition” (ASBJ Statement No. 29 issued on March 31, 2020), etc. and follows the transitional
handling specified in the proviso to Paragraph 84 of the “Accounting Standard for Revenue Recognition.” As aresult, net assets per share decreased by 1.10 yen and net income per share decreased by 1.09 yen in thecurrent consolidated fiscal year.
(Significant events after balance-sheet date)
There are no matters to be noted.

- 116 -

(v) [Consolidated supplementary schedules][Schedule of corporate bonds]
There are no matters to be noted.
[Schedule of borrowings, etc.]
Balance atBalance at end of Average interest
beginning ofcurrent term
ratecurrent term
(millions of yen)(%)(millions of yen)

Category

Short-term loans payable
Long-term loans payable to be repaid
within a year
Lease obligations to be repaid within ayear
Long-term loans payable(excluding those to be repaid within a year)
Lease obligations(excluding those to be repaid within a year)
Total

Due date

280

80

0.9

－

6

180

1.7

－

62

53

－

－

433

279

3.7

2023-2027

95

67

－

2023-2025

878

661

－

－

Note: 1 Annual amount of long-term loans payable and lease obligations (excluding those to be repaid within a year)
planned to be repaid within five years after the consolidated fiscal year-end
Over 1 year and up to 2 Over 2 years and up to Over 3 years and up to Over 4 years and up toCategoryyears
3 years
4 years
5 years(millions of yen)(millions of yen)(millions of yen)(millions of yen)
Long-term loans
78
86
71
35
payableLease obligations

34

22

9

1

Total

112

108

81

37

2 The average interest rate figures are weighted average rates on closing balances of the respective loans, etc.
3 Average interest rate is not shown for lease obligations as they are booked on the consolidated balance sheet
in amounts before deduction of interest-equivalent amounts included in total lease charges.
[Table of asset retirement obligations]This table was omitted because the amount of asset retirement obligations at the beginning and end of thecurrent consolidated fiscal year is no greater than 1% of the sum of liabilities and net assets at the beginning andend of the current consolidated fiscal year.
(2) [Others]
Quarterly information for current consolidated fiscal year
(Cumulative period)
Net sales(millions of yen)

Quarterly net income (loss)(millions of yen)
before taxes
Quarterly net income (loss)
attributable to shareholders of (millions of yen)
parentQuarterly net income (loss)(yen)
per share(Accounting period)
Quarterly net income (loss) per
share

Second quarter

Third quarter

Current
consolidated
fiscal year

6,649

14,87023,63933,968

(330)

(147)

252

867

(126)

18

312

705

(10.57)

1.52

26.24

59.51

Second quarter

Third quarter

Fourth quarter

12.16

24.85

33.54

First quarter

First quarter(yen)(10.57)- 117 -

2. [Non-consolidated Financial Statements, Etc.](1) [Financial statements](i) [Balance sheet](Millions of yen)Previous fiscal year
(March 31, 2021)
AssetsCurrent assets
Cash and deposits
Deposits paid
Notes receivable-trade
Electronically recorded monetary claimsoperating
Accounts receivable from completed
construction contracts
Accounts receivable-trade
Contract assets
Products
Costs on uncompleted construction contracts
Work in process
Raw materials and supplies
Short-term loans receivable from subsidiaries
and affiliates
Prepaid expenses
Consumption taxes refund receivable
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant, and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
VehiclesAccumulated depreciation
Vehicles, net
Tools, furniture, and fixtures
Accumulated depreciation
Tools, furniture, and fixtures (netamount)Land
Lease assets
Accumulated depreciation
Lease assets, net
Construction in progress
Total property, plant, and equipment
Intangible assets
Software
OthersTotal intangible assets- 118 -

Current fiscal year
(March 31, 2022)

10,523－231

10,167
2,170
208

961

627

10,7604,410*1 5,838*1 3,721

－
1,058
316
1,215
888

1,907
2,316
57
1,297
897

283

295

128
－
341
(1)
32,546

180
127
582
(1)
28,967

8,298(6,538)
1,760
1,062
(949)
113
1,508
(1,164)
343
67
(66)
1
6,351
(5,475)

8,336(6,670)
1,665
1,096
(969)
127
1,508
(1,218)
289
58
(58)
0
6,678
(5,823)

875

855

1,772
150
(96)
54
23
4,945

1,772
143
(93)
49
31
4,792

524
19
544

595
19
614

(Millions of yen)Previous fiscal year
(March 31, 2021)
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Long-term loans to employees
Long-term prepaid expenses
Prepaid pension cost
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes payable-trade
Electronically recorded obligations-operating
Accounts payable for construction contracts
Accounts payable-tradeLong-term loans payable to be repaid within a
year
Lease obligations
Accounts payable-other
Income taxes payable
Accrued consumption taxes
Advances received on uncompleted
construction contracts
Advances received
Contract liabilities
Deposits received
Allowance for warranties on completed
construction contracts
Allowance for product warranties
Allowance for employees’ bonuses
Allowance for directors’ bonuses
Allowances for losses on construction
contracts
Notes payable-facilities
Electronically recorded obligations-nonoperating
OthersTotal current liabilities
Fixed liabilities
Long-term loans payable
Lease obligations
Allowance for product warranties
Provision for retirement benefits
Allowances for share-based remuneration for
directors and corporate auditors
Asset retirement obligations
OthersTotal fixed liabilities
Total liabilities- 119 -

Current fiscal year
(March 31, 2022)

6,749
877
1
77
185
459
993
(37)
9,306
14,79647,342

5,236
1,268
1
50
202
620
860
(40)
8,199
13,60742,5741,041
1,048*1 2,567*1 1,549322
472*1 1,268*1 1,139

－

130

19
665
485
117

21
404
170
－

44

－

17
－
61

－
247
39

31

21

39
426
19

171
431
－

4

0

4

0

21

11

4
8,170

4
4,856

130
40
－
2,298

－
33
29
2,196

102

52

49
500
3,120
11,291

49
12
2,373
7,230

(Millions of yen)Previous fiscal year
March 31, 2021
Net assets
Shareholders’ equity
CapitalCapital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for dividends
Reserve for directors’ retirement
allowance
Reserve for advanced depreciation of
non-current assets
General reserve
Retained earnings brought forward
Total retained earnings
Treasury stock
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 120 -

Current fiscal year
(March 31, 2022)

8,774

8,774

9,677
53
9,731

9,677
45
9,723

1,227

1,227

30

30

108

108

4

4

12,671
7,326
21,367(5,088)34,785

12,671
7,849
21,889(5,940)34,447

1,254

858

11
1,266
36,05147,34237
896
35,34342,574

(ii) [Statement of income](Millions of yen)Previous fiscal year
(from April 1, 2020
to March 31, 2021)
Net sales
Sales of completed construction contracts
Net sales of goods
Sales in other businessTotal net sales
Cost of sales
Cost of sales of completed construction contracts
Cost of finished goods soldCost of sales in other businessTotal cost of sales
Gross profit
Gross profit on completed construction contracts
Gross profit on finished goods
Gross profit on other businessTotal gross profit
Selling, general, and administrative expenses
Directors' compensation
Employees' salaries and allowances
Provision for bonuses
Provision for directors’ bonuses
Retirement benefit expenses
Allowances for share-based compensation for
directors
Legal welfare expenses
Welfare expenses
Repair and maintenance
Stationery expenses
Correspondence and transportation expenses
Power utilities expenses
Advertising expenses
Provision of allowances for doubtful accounts
Entertainment expenses
Contribution
Rents
Depreciation
Taxes and dues
Insurance expenses
Miscellaneous expenses
Research and development expenses
Total selling, general, and administrative
expenses
Operating income

Current fiscal year
(from April 1, 2021
to March 31, 2022)

17,653
16,324*1 33034,308- 121 -

11,784
15,195*1 33027,310*3 14,753*3 9,717*2, *3, *4 13,480*2, *3, *4 12,637*1 172*1 16328,40522,5172,900
2,844*1 158
5,903

2,066
2,557
*1 167
4,792

243
1,548
161
19
123

246
1,628
163
－
34

15

13

254
30
2
49
168
11
163
1
46
0
256
46
195
53
208
1,180

255
34
1
40
152
9
93
1
17
49
262
38
178
64
310
1,056

*4 4,780*4 4,653

1,122

139

(Millions of yen)Previous fiscal year
(from April 1, 2020
to March 31, 2021)
Non-operating income
Interest income
Interest on securities
Dividend income
Foreign exchange gains
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Commitment fee
OthersTotal non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities
Total extraordinary losses
Income before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net income- 122 -

Current fiscal year
(from April 1, 2021
to March 31, 2022)
6
7
161
－
106
281

5
6
*3 387
165
120
685

9
59
28
98
1,305

9
49
5
64
759

165
165

589
589

318
318
1,153
444
(84)
360
792

170
170
1,178
159
(12)
146
1,032

[Report on cost of sales of completed construction contracts] (Telecommunication business)
Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Note
numb Amount (millions of yen)erConstituent
ratio
(%)

Amount (millions of yen)

Constituent
ratio
(%)

I. Materials cost

6,003

40.7

2,137

22.0

II. Labor cost

286

1.9

244

2.5

(286)

(1.9)

(244)

(2.5)

III. Outsourcing costs

5,803

39.4

4,856

50.0

IV. Expenses

2,658

18.0

2,479

25.5

(1,639)(11.1)(1,584)(16.3)

14,753

100

9,717

100

Category(including cost of outsourced
labor of:)(including personnel
expenses of:)
Total

Note: The Company’s cost calculation is based on individual cost calculations per construction contract or property.

- 123 -

(iii) [Statement of changes in equity]
Previous fiscal year (from April 1, 2020 to March 31, 2021)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings
Reserve

Capital Legal

Other
capitalsurpluscapitalsurplusTotal
capitalsurplus

Legal

Reserveretainedfor special

earnings

depreciationReserveforReserveforadvancedfordirectors’depreciati

dividends

retirement

on of non-allowance

current

Generalreserve

Retainedearnings
brought
forward

4 12,271

7,428

Total
retainedearnings

assetsBalance at beginning of current term

8,774

9,677

53

9,731

Cumulative effect of change inaccounting policy
Balance at beginning of current year
after change in accounting policy isapplied

1,227

48

30

108

－
8,774

9,677

53

9,731

21,118
－

1,227

48

30

108

4 12,271

7,428

21,118Changes of items during term
Dividends of surplus

－

(543)

(543)

Net income

－

792

792

Reversal of reserve for special
depreciation

－

48

－

Provisions of general reserve

－

(400)

－

Reversal of reserve for advanced
depreciation of non-current assets

－

0

－

Purchase of treasury stock

－

－

0

－

－

－

0

Disposal of treasury stock
Net changes of items other thanshareholders’ equity
Total changes of items during term
Balance at end of current term

(0)

－

0

0

－

(48)

－

－

(0)

400

(101)

249

8,774

9,677

53

9,731

1,227

－

30

108

4 12,671

7,326

21,367

Valuation and translation
adjustments
Valuation

Total
Treasury shareh
stockolders’equitydifferenceonavailablefor-salesecurities(5,093)Cumulative effect of change inaccounting policy
Balance at beginning of current year
after change in accounting policy isapplied400－

Shareholders’equityBalance at beginning of current term

(48)

34,531

372

Deferred
gains orlossesonhedgesTotalvaluationandtranslation
adjustments

(21)

350

34,882－－350

34,882

(543)

－

(543)

－
(5,093)

Total net
assets34,531372(21)

Changes of items during term
Dividends of surplus

792

－

792

Reversal of reserve for special
depreciation

－

－

－

Provisions of general reserve

－

－

－

Reversal of reserve for advanced
depreciation of non-current assets

－

－

－

Net income

Purchase of treasury stock

(2)

(2)

－

(2)

Disposal of treasury stock

7

7

－

7

Net changes of items other thanshareholders’ equity

－

882

32

915

915

Total changes of items during term

4

254

882

32

915

1,169

Balance at end of current term

(5,088)34,785

1,254

11

1,266

36,051- 124 -

Current fiscal year (from April 1, 2021 to March 31, 2022)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings
Reserve

Capital Legal

Other
capitalsurpluscapitalsurplusTotal
capitalsurplusLegalretainedearnings

Reservefor
specialdeprecia
tion

ReserveforReserveforadvancedfordirectors’depreciati

dividends

retirement

on of non-allowance

current

Total
retainedearnings

Generalreserve

Retainedearnings
brought
forward

4 12,671

7,326

21,367

33

33

7,360

21,400assetsBalance at beginning of current term

8,774

9,677

53

9,731

Cumulative effect of change inaccounting policy
Balance at beginning of current year
after change in accounting policy isapplied

1,227

30

－

108

－
8,774

9,677

53

9,731

1,227

30

－

108

4 12,671

Changes of items during term
Dividends of surplus

－

(543)

(543)

Net income

－

1,032

1,032

Reversal of reserve for special
depreciation－－

Provisions of general reserve－－

Reversal of reserve for advanced
depreciation of non-current assets－

Purchase of treasury stock

－

－

(8)

－

－

－

(8)

Disposal of treasury stock
Net changes of items other thanshareholders’ equity
Total changes of items during term
Balance at end of current term

(8)

(8)

－

－

－

－

(0)

－

489

488

8,774

9,677

45

9,723

1,227

－

30

108

4 12,671

7,849

21,889Valuation and translation
adjustments
Valuationdifferenceonavailablefor-salesecurities(5,088)Cumulative effect of change inaccounting policy

34,785

1,254

Deferred
gains orlossesonhedgesTotalvaluationandtranslation
adjustments

11

33(5,088)34,818

1,254

Total
net
assets11

1,266

36,051

－

33

1,266

36,085

Changes of items during term
Dividends of surplus

(543)

－

(543)

Net income

1,032

－

1,032

Reversal of reserve for special
depreciation

－

－

－

Provisions of general reserve

－

－

－

Reversal of reserve for advanced
depreciation of non-current assets

－

－

－

Purchase of treasury stock(1,049)(1,049)－(1,049)

Disposal of treasury stock

197

189

－

189

Net changes of items other thanshareholders’ equity
Total changes of items during term
Balance at end of current term

－

－

Total
Treasury shareh
stockolders’equityBalance at beginning of current year
after change in accounting policy isapplied0－Shareholders’equityBalance at beginning of current term

(0)

－

(396)

25

(370)

(370)

(851)

(371)

(396)

25

(370)

(741)

(5,940)34,447

858

37

896

35,343- 125 -

[Notes](Significant accounting policies)
1 Standards and methods of securities valuation(1) Bonds held to maturity
We used the amortized cost method (straight-line method).
(2) Shares of subsidiaries and affiliates
The moving average cost method is used.
(3) Other securitiesThose other than stocks, etc. not quoted in the market
The fair value method (all valuation gains or losses reported as component of net assets; cost of
securities sold calculated under moving average method) is used.
Stocks, etc. not quoted in the market
The moving average cost method is used.
2 Standards and methods of derivatives valuation, etc.
(1) Derivatives
The fair value method is used.
3 Standards and method of inventories valuation(1) Costs on uncompleted construction contracts
The cost method determined by the specific identification method is used.
(2) Products
The cost method determined by specific identification method or weighted average method (book value
reduced to reflect lowering profitability) is used.
(3) Work in process
The cost method determined by specific identification method (book value reduced to reflect loweringprofitability) is used.
(4) Raw materials and supplies
The cost method determined by moving average method (book value reduced to reflect loweringprofitability) is used.
4 Depreciation methods of non-current assets(1) Property, plant, and equipment (excluding lease assets)
The declining-balance method is used. However, facilities attached to buildings as well as structuresacquired on and after April 1, 2016, in addition to buildings (excluding facilities attached to buildings) aredepreciated by straight-line method. Useful lives of principal assets are as follows.
Buildings and structures: 2–45 years
Machinery, equipment, and vehicles: 2–17 years
Tools, furniture, and fixtures: 2–20 years(2) Intangible assets (excluding lease assets)
The straight-line method is used.
For software (internal use), the straight-line method based on the period in which they were available foruse in the Company (five years) is used.
(3) Lease assets (lease assets relating to finance lease transactions without transfer of ownership)
The straight-line method, in which the lease period is the useful life and the residual value is zero, is used.

- 126 -

5 Standards for recording allowances(1) Allowance for doubtful accounts
In order to be prepared for losses incurred from a bad debt from trade accounts receivable, loans
receivable, etc., we estimated irrecoverable amounts using loan loss ratio for general accounts receivable
and reviewed collectability of specified accounts individually, including doubtful accounts.
(2) Allowance for warranties on completed construction contracts
In order to be prepared for expenses such as repair expenses for completed construction contracts, webooked the total of estimated amounts for future repairs based on actual compensation on completed
construction contracts in past years and estimates for individual instances whose amounts havesignificance.
(3) Allowance for product warranties
In order to be prepared for future guarantee expenses, etc. on delivered products, we booked the total of
estimated guarantee expenses based on actual guarantee results in past years and estimates for individual
instances whose amounts have significance.
(4) Allowance for employees’ bonuses
Allowances are booked based on expected amounts of payments for bonuses to be paid to employees.
(5) Allowance for directors’ bonuses
In order to be prepared for payments of bonuses to directors and corporate auditors, a portion of expected
payments that should be charged in the current fiscal year was booked.
(6) Allowances for losses on construction contracts
In order to be prepared for future losses related to construction contracts, allowances were booked forcontracts yet to be delivered at the end of the current fiscal year that were deemed to have strong possibilityof causing losses and for which amounts of such losses can be estimated to a reasonable degree of
accuracy, in amounts of estimated losses.
(7) Provision for retirement benefits
In order to be prepared to give retirement benefits to employees, these provisions were booked based on
estimated amounts of retirement benefit liabilities and pension assets at the end of the current fiscal year.
(i) Period-corresponding method for estimated retirement benefits
In calculating retirement benefit obligations, benefit formula criteria were used as the method to attribute
estimated retirement benefit payouts to the period until the end of the current fiscal year.
(ii) Method for amortizing unrecognized actuarial differences and unrecognized prior service costs
Entire amounts of unrecognized prior service costs were charged to expenses in the year of theiroccurrence.
Actuarial differences are amortized over the period of five years, which is within the average remaining
service period of employees at the time of occurrence in each fiscal year, using the straight-line methodfrom the following fiscal year when the actuarial difference is recognized.
(8) Allowances for share-based remuneration for directors and corporate auditors
This amount was booked based on the estimated amount of share-provision liabilities at the end of thecurrent fiscal year, in order to be prepared for provision of the Company’s shares to its directors (excluding
outside directors) in accordance with the share-granting rules.
6 Standards for recording revenues and expenses
The Company recognizes revenues at the time the control of the promised goods or services is judged tohave been transferred to the customer in the amount it expects to receive in exchange for the goods orservices.
Notes about the content of key performance obligation and the ordinary timing of recognizing revenues in
the key businesses are omitted as the same content is described in the ”Notes (Revenue recognition)” to theconsolidated financial statements.

- 127 -

7 Hedge accounting methods(1) Hedge accounting methods
Deferral hedge accounting is used.
(2) Hedging instruments and hedged items
Hedging instruments: forward exchange contracts
Hedged item: forecasted transaction in foreign currency(3) Hedging policy
The Company uses forward exchange contracts to hedge risks on exchange rate fluctuations ininternational transactions. Forward exchange contracts were executed upon approval obtained through around robin approval process. Execution and management of subsequent contracts are handled by the
Finance Department. Forward exchange contracts are the only derivative transaction used as a riskhedging instrument.
(4) Method for assessing effectiveness of hedges
Effectiveness is judged by comparing the amount of the cumulative total of market fluctuations of thehedged item or cash flow fluctuations and the cumulative total of market fluctuations of the hedging
instrument or cash flow fluctuations over a period from the execution of a forward exchange contract until
the point of time when effectiveness is assessed and basing the decision on the amounts of changes ofboth.
8 Other matters that form basis for preparation of non-consolidated financial statements(1) Accounting treatment of retirement benefit
The accounting method of unrecognized actuarial differences pertaining to retirement benefits is different
from their accounting method on the consolidated balance sheet.

- 128 -

(Significant accounting estimates)
Revenue recognition for construction contracts, equipment installment work, etc. (“Construction Contracts,etc.” hereafter)(1) Amount booked on non-consolidated financial statements of current fiscal year
(Millions of yen)Previous fiscal year
Net sales of Construction Contracts, etc.
related to performance obligation that is fulfilled

Current fiscal year

3,504

2,429

over a certain period of time(2) Information regarding details of significant accounting estimates pertaining to recognized items
The calculation method, etc. of the amount in (1) are the same as the details of “Notes (Significant
accounting estimates) Revenue recognition for construction contracts and equipment installment work, etc.
(“Construction Contracts, etc.,” hereafter)) of the consolidated financial statements.

- 129 -

(Changes in accounting policies)(Application of Accounting Standard for Revenue Recognition, etc.)
The Company began to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29
issued on March 31, 2020) at the beginning of the current fiscal year. It now recognizes revenues at the time
the control of the promised goods or services has been transferred to the customer in the amount it expects toreceive in exchange for the goods or services.
As a result, for some of the Company’s Construction Contracts, etc., we in the past applied the percentageof-completion method if their achievement is recognized to have certainty regarding the progress. We havechanged to a method in which, if control over goods or services is transferred to the customer over a certain
period of time, revenue is recognized over the certain period as the performance obligation to transfer the said
goods or services to the customer is fulfilled. Measurement of progress regarding fulfillment of performanceobligation is carried out based on the ratio of the cost materialized by the last date of each reporting period tothe total of expected costs.
The application of the Accounting Standard for Revenue Recognition, etc. follows the transitional handlingspecified in the proviso to Paragraph 84 of the standard. The amount of cumulative impact, worked out by
retrospectively applying the new accounting policy to the periods before the beginning of the current fiscal
year, is added to or subtracted from the retained earnings at the beginning of the current fiscal year, and the
new accounting policy begins to be applied from the beginning balance for the fiscal year. In addition, themethod specified in note (1) for Paragraph 86 of the Accounting Standard for Revenue Recognition is applied,
and account processing is carried out for the contract changes made before the beginning of the current fiscal
year in accordance with contract terms after all contract changes are reflected, and the amount of cumulative
impact from this is added to or subtracted from the retained earnings at the beginning of the current fiscal year.
“Notes receivable-trade,” “Electronically recorded monetary claims-operating,” “Accounts receivable fromcompleted construction contracts,” and “Accounts receivable-trade,” which appeared under “Current assets” inthe balance sheet for the previous fiscal year, are included in “Notes receivable-trade,” “Electronically recordedmonetary claims-operating,” “Accounts receivable from completed construction contracts,” “Accounts
receivable-trade,” and “Contract assets” beginning in the current fiscal year, while “Advances received on
uncompleted construction contracts” and “Advances received,” which appeared under “Current liabilities,” arenow included in “Contract liabilities.” The Company did not introduce reclassification using the newpresentation method in the previous fiscal year in accordance with the transitional handling stipulated in
Paragraph 89-2 of the Accounting Standard for Revenue Recognition.
As a result, net sales decreased 89 million yen, cost of sales decreased 63 million yen, and operating
income, ordinary income and profit before income taxes each declined 25 million yen in the current fiscal year.
The initial balance of retained earnings for the current fiscal year increased by 33 million yen.
The “Revenue recognition” notes pertaining to the previous fiscal year are omitted in accordance with thetransitional handling specified in paragraph 89-3 of the Accounting Standard for Revenue Recognition.

- 130 -

(Accounting Standard for Fair Value Measurement, etc.)
The Company began applying the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No.
30 issued on July 4, 2019), etc. at the beginning of the current fiscal year and plans to apply the new
accounting policy prescribed by the Accounting Standard for Fair Value Measurement, etc. in accordance withthe transitional handling specified by Paragraph 19 of the Accounting Standard for Fair Value Measurement
and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10 issued on
July 4, 2019) into the future. Note that this does not have any impact on the financial statements.
(Change in method of presentation)(Statement of income)“Dividend income of life insurance” appeared as a line item under “Non-operating income” in the previous
fiscal year is now included in “Others” in the current fiscal year as the item’s amount has become insignificant.
We rearranged the non-consolidated financial statements of the previous fiscal year to reflect this change inpresentation.
As a result, the 32 million yen shown in “Dividends income of life insurance” under “Non-operating income”
on the non-consolidated statement of income in the previous fiscal year is reclassified into “Others.”(Additional information)(Share-based compensation scheme for directors)
The Company has a share-based compensation scheme (the “Scheme” hereafter) for the Company’s directors(excluding outside directors) with a purpose of clarifying connection between directors’ remuneration and stock
value and incentivizing them to contribute to increasing earnings and corporate value over a medium to longterm.
(1) Overview of transactions
Under the Scheme, the Company’s shares are held in the account of an employee stock ownership plan
(ESOP) trust for officers (the “Trust” hereafter) established on Company funds and the number of sharescorresponding to the points assigned to each director are granted to the director through the Trust in accordancewith the share-granting rules established by the Company’s Board of Directors. Directors are granted theCompany’s shares when they retire from directorship, in principle.
(2) The Company’s shares remaining in the trust account
The Company’s shares remaining in the trust account are recognized as treasury stock under net assets atthe book value in the trust account (excluding associated expenses). This treasury stock totaled 57,551 sharesworth 160 million yen in book value at the previous fiscal year-end and 80,632 shares worth 199 million yen inbook value at the end of the current fiscal year.
(Impacts of COVID-19 pandemic on accounting estimates)
Spread of COVID-19 is still affecting the Company and has caused a significant impact on order-taking
activities in the industries in which the Company operates. Although it is difficult to predict how the pandemic
may develop going forward or when it may run its course with certainty, the Company, based on theinformation collected from internal and external sources, assumes that the trend will remain for a certain period
and is working to make accounting estimates, including collectability of impairment losses on non-current
assets and deferred tax assets. We note that if COVID-19 pandemic further spreads or remains for longer, it
may affect the Company’s earnings and financial position.

- 131 -

(Notes on balance sheet)*1: Assets and liabilities relating to subsidiaries and affiliates
Those included in line items but are not shown separately are as follows.
Previous fiscal year
(March 31, 2021)

Current fiscal year
(March 31, 2022)

Accounts receivable-trade

187 million yen

287 million yen

Accounts payable for construction
contracts

588 million yen

163 million yen

Accounts payable-trade

369 million yen

364 million yen*2: Debt guarantees
The Company applies debt guarantees to amounts borrowed from financial by the following affiliates, etc.
Previous fiscal year
(March 31, 2021)
Debt guarantees by KOREA
DENKIKOGYO. Co., Ltd.
Bank loans payable by DKK North America,
Inc.
Bank loans payable by employees, etc.
Total

Current fiscal year
(March 31, 2022)

6 million yen- million yen- million yen

36 million yen

0 million yen

0 million yen

7 million yen

36 million yen*3: The Company is in specified commitment line contracts (loan commitment agreements) with its key
transacting financial institutions to maintain flexibility and safety for funding needs and mitigate financial
risks.

Total amount of specified commitment line
contracts
Amount executed by end of the current
fiscal year
Difference

Previous fiscal year
(March 31, 2021)

Current fiscal year
(March 31, 2022)

14,000 million yen

7,000 million yen- million yen- million yen

14,000 million yen

7,000 million yen- 132 -

(Notes on statement of income)*1: Sales in other business, cost of sales in other business, and gross profit-other business show net sales,
cost of sales, and gross profit attributable to the Company’s facility leasing and electric power sales
businesses.
*2: Provision of allowances for losses on construction contracts included in cost of sales are as follows.
Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

4 million yen

0 million yen*3: Those relating to subsidiaries and included in line items are as follows.
Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

Purchase amount

5,909 million yen

4,647 million yen

Dividend income- million yen

218 million yen*4: Research and development expenses included in general and administrative expense and manufacturing
expenses for the period are as follows.
Previous fiscal year
(from April 1, 2020
to March 31, 2021)

Current fiscal year
(from April 1, 2021
to March 31, 2022)

2,019 million yen

1,892 million yen(Notes on securities)
Amount on balance sheet of stocks, etc. not quoted in the market(Millions of yen)
Category

March 31, 2021

Shares of subsidiaries

March 31, 2022
877

- 133 -

1,268

(Notes on tax effect accounting)
1 Breakdown of deferred tax assets and deferred tax liabilities by key factors
Previous fiscal year
(March 31, 2021)(Deferred tax assets)
Allowance for doubtful accounts

Current fiscal year
(March 31, 2022)

2 million yen

3 million yen

Allowance for employees’ bonuses
Provision for retirement benefits

130 million yen
647 million yen

132 million yen
672 million yen

Allowances for share-based remuneration for
directors and corporate auditors

28 million yen

10 million yen

Loss on valuation of investment securities
Losses on valuation of golf club membership

140 million yen
38 million yen

104 million yen
30 million yen

Impairment losses
Valuation difference on available-for-sale

54 million yen

53 million yen

42 million yen

65 million yen

securities
Others

371 million yen

311 million yen

1,457 million yen

1,383 million yen(389 million) yen(234 million) yen

1,067 million yen

1,148 million yen

Reserve for advanced depreciation of noncurrent assets(1 million) yen(1 million) yen

Valuation difference on available-for-salesecurities(596 million) yen(444 million) yen(9 million) yen(82 million) yen(607 million) yen(528 million) yen

459 million yen

620 million yen

Deferred tax assets subtotal
Valuation allowance
Total deferred tax assets(Deferred tax liabilities)

OthersTotal deferred tax liabilities
Net amount of deferred tax assets

2 Breakdown by major causes of significant differences between statutory effective tax rate and actual effective
tax rate for income taxes after application of tax effect accounting
Previous fiscal year
March 31, 2021
Statutory effective tax rate
(Adjustments)
Items excluded from deductible expenses,
including entertainment expenses
Items excluded from gross profits, including
dividend income
Inhabitant taxes on per capita basis
Withholding tax related to dividends fromCurrent fiscal year
(March 31, 2022)
30.6%

Notes are omitted because thedifference between the statutory
effective tax rate and actual

0.6%

effective tax rate for income taxes
after application of tax effect(6.3)%

accounting is no greater than 5%of the statutory effective tax rate.

3.1%
1.9%

overseas subsidiaries
Change in valuation allowance(13.2)%Tax credit
Others(3.9)%(0.3)%

Actual effective tax rate for income taxes after

12.4%

application of tax effect accounting- 134 -

(Revenue recognition)
Notes about the information that forms the basis for understanding revenues generated from contracts withcustomers are omitted as the same content is described in the “Notes (Revenue recognition)” to theconsolidated financial statements.
(Significant events after balance-sheet date)
There are no matters to be noted.

- 135 -

(iv) [Supplementary schedules][Schedule of securities][Stocks]
Number of shares
Issued shares

Amount on balance
sheet(millions of yen)

Sompo Holdings, Inc.

181,874

978

Mitsubishi UFJ Financial Group, Inc.

484,970

368

Sumitomo Mitsui Financial Group, Inc.

85,646334

Nippon Television Holdings, Inc.

231,900

295

EXEO Group, Inc.

127,900

289

Sumitomo Mitsui Trust Holdings, Inc.

65,651

262

Asahi Broadcasting Group Holdings Corporation

322,700

230

Issue

InvestmentOther

NIPPON DENSETSU KOGYO CO., LTD.

136,900216

securities

securities

NIPPON CONCRETE INDUSTRIES CO., LTD.

529,700

154

FUJI CORPORATION

54,900122

TOKYO TEKKO CO., LTD．

70,00093

Hibiya Engineering, Ltd.

47,50087

NAKAYO, INC.

61,00069

IKEGAMI TSUSHINKI CO., LTD.

70,30044

Riken Corporation

16,50040

Others (22 issues)

129,879

150

Total

2,617,320

3,738

Issue

Total face value

Amount on balance
sheet(millions of yen)

300 million yen

300

400 million yen

406

300 million yen

303

450 million yen

450

1,450 million yen

1,459[Bonds]Mitsubishi UFJ Financial Group, Inc. 16th
unsecured corporate bonds with early redemption
clauseInvestment
securities

Bonds held
to maturity

Sumitomo Mitsui Financial Group, Inc. first series
unsecured corporate bond
SoftBank Group Corp. 48th series unsecured
corporate bonds
SoftBank Group Corp. 5th series unsecured
corporate bonds (subordinated)
Total- 136 -

[Others]
Number ofAmount on balance
investment units,
sheet
etc.
(millions of yen)(million units)

Classes and issues

Investment
securities

Other
securities(Investment trust beneficiary certificates)
Goldman Sachs Asset Management LP Variety
Open
Total

46

38

46

38

[Schedule of property, plant, and equipment, etc.]
Asset type

Accumulated
Balance at
Amount of writeIncrease during Decrease during Balance at end depreciation/am
Balance at end
beginning ofoffs of current
current term
current termof current term ortization at endof current term
current term
term
(millions of yen) (millions of yen) (millions of yen) of current term
(millions of yen)(millions of yen)(millions of yen)(millions of yen)

Property, plant, andequipment
Buildings

8,298

42

4

8,336

6,670

136

1,665

Structures

1,062

33

－

1,096

969

20

127

Machinery andequipment

1,508

7

7

1,508

1,218

61

289

Vehicles

67

－

9

58

58

0

0

Tools, furniture, andfixtures

6,351

555

227

6,678

5,823

571

855

Land

1,772

－

－

1,772

－

－

1,772

Lease assets

150

14

22

143

93

19

49

Construction inprogress

23

647

639

31

－

－

31

19,236

1,301

911

19,626

14,833809

4,792

Software

708

222

62

868

273

89

595

Lease assets

12

－

－

12

12

－

－

16

－

－

16

－

－

16

7

－

－

7

4

0

3

Total intangible
assets

744

222

62

905

290

89

614

Long-term prepaid
expenses

162

25

0

188

138

52

50

Total property, plant,
and equipment
Intangible assets

Telephonesubscription rights
Right of using
facilities

Notes:1 The main item contributing to the increase in the amount of “tools, furniture, and fixtures” is radio wave
measurement devices.
2 Increase in the construction in progress was driven by increases in “Buildings,” “Machinery and equipment,”
and “Tools, furniture, and fixtures” shown above, while decrease was driven by transfers to the main noncurrent assets account.
3 Software that has been amortized by the end of the previous term and whose balance at the end of the year
has fallen to zero are deducted from the balance of software at the beginning of current term.
4 Long-term prepaid expenses that has been amortized by the end of the previous term and whose balance atthe end of the year has fallen to zero are deducted from the balance of long-term prepaid expenses at the
beginning of current term.

- 137 -

[Schedule of allowances]
Category

Balance at
Decrease during Decrease during
Increase during
Balance at end of
beginning ofcurrent term
current term
current term
current term
current term
(intended use)
(Others)(millions of yen)(millions of yen)(millions of yen)(millions of yen) (millions of yen)

Allowance for doubtful
accounts

39

2

－

0

41

31

114

123

0

21

39

295

126

6

201

426

431

426

－

431

19

－

19

－

－

4

4

8

－

0

102

24

75

－

52

Allowance for warranties oncompleted construction
contracts
Allowance for productwarranties
Allowance for employees’
bonuses
Allowance for directors’
bonuses
Allowances for losses on
construction contracts
Allowances for share-based
remuneration for directors
and corporate auditors

Notes:1 The amount of allowance for doubtful accounts in the “Decrease during current term (Others)” column is due toa difference between the estimated and actual amounts.
2 The amount of allowances for warranty on completed construction contracts in the “Decrease during current
term (Others)” column is due to the difference between the estimated and actual amounts.
3 The amount of allowances for product warranties in the “Decrease during current term (Others)” column is due
to a difference between the estimated and actual amount.
(2) [Details of principal assets and liabilities]
This information is omitted as consolidated financial statements are prepared.
(3) [Others]
There are no matters to be noted.

- 138 -

VI. [Outline of Filing Company’s Share Management]
Fiscal year:

From April 1 to March 31

General Meeting of Shareholders

June

Record date

March 31

Record date for dividends ofsurplusNumber of shares constituting a
unit

September 30 and March 31
100

Purchase/sale of shares less than
one unit

Place of handling

Administrator of shareholder
registry(Special account)
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Stock Transfer Agency Business Planning Department, Sumitomo Mitsui Trust Bank
Ltd.
(Special account)
1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Sumitomo Mitsui Trust Bank, Ltd.

Broker－Trade commissions

A separately specified amount equivalent to commissions for entrusting trading ofshares

Method of releasing public notices Electronic public notice (See Note 1.)
Special offers to shareholders

None

Notes:1 The Company releases public notices in the following method. “The Company releases public notices using theelectronic public notice. However, if release of an electronic public notice has become impossible due tounavoidable events, such as accidents, it releases it on the Nihon Keizai Shimbun (Nikkei) newspaper. “The website for the Company’s electronic public notice is: https://www.denkikogyo.co.jp/info.html
2 The articles of incorporation stipulate that no rights other than those specified below can be exercised
regarding shares less than one unit.
(1) Rights specified in the items of Article 189, Paragraph 2 of the Companies Act.
(2) Right to make requests specified under the provisions of Article 166, Paragraph 1 of the Companies Act.
(3) Right to be granted allotment of shares for subscription or allotment of share options for subscription
according to the number of shares held by shareholders.
(4) Right to request the Company sell to the shareholder a number of shares that, together with sharesconstituting less than one unit held by the shareholder, constitute one unit.

- 139 -

VII. [Additional Information on Filing Company]
1. [Information on Filing Company’s Parent Company]
The Company does not have a parent company, etc. stipulated in the provisions of Article 24-7, Paragraph 1 of the
Financial Instruments and Exchange Act.

2. [Other Additional Information]
The Company submitted the following documents in a period between the beginning of the current fiscal year and thedate of submission of the annual securities report.
Annual securities report,
(1)

(2)

(3)

(4)

its attachments, andconfirmation letter

Internal Control Report

Quarterly Report and its
Confirmation Letter

Fiscal year:

From April 1, 2020

(95th)to March 31, 2021

Fiscal year:

From April 1, 2020

(95th)to March 31, 2021

First quarter of 96th

From April 1, 2021

term

to June 30, 2021

Second quarter ofFrom July 1, 2021

96th term

to September 30, 2021

Third quarter of 96th

From October 1, 2021

term

to December 31, 2021

June 30, 2020
Submitted to DirectorGeneral of the Kanto
Finance Bureau
June 30, 2020
Submitted to DirectorGeneral of the Kanto
Finance Bureau
August 13, 2021
Submitted to DirectorGeneral of the Kanto
Finance Bureau
November 12, 2021
Submitted to DirectorGeneral of the Kanto
Finance Bureau
February 14, 2022
Submitted to DirectorGeneral of the Kanto
Finance Bureau

Extraordinary report
Extraordinary report pursuant to Article 19, Paragraph 2, Item (ix)-2 (results of exercise of voting rights at a
general shareholders’ meeting) of the Cabinet Office Ordinance on Disclosure of Corporate Affairs, Etc.
Submitted to Director-General of the Kanto Finance Bureau on July 1, 2021

(5)

Share buyback report
Reporting period (from June 1, 2021 to June 30, 2021): Submitted to Director-General of the Kanto Local
Finance Bureau on July 12, 2021
Reporting period (from July 1, 2021 to July 31, 2021): Submitted to Director-General of the Kanto Local
Finance Bureau on August 11, 2021
Reporting period (from November 1, 2021 to November 30, 2021): Submitted to Director-General of the Kanto
Local Finance Bureau on December 10, 2021
Reporting period (from February 1, 2022 to February 28, 2022): Submitted to Director-General of the Kanto
Local Finance Bureau on March 10, 2022
Reporting period (from March 1, 2022 to March 31, 2022): Submitted to Director-General of the Kanto Local
Finance Bureau on April 11, 2022
Reporting period (from April 1, 2022 to April 30, 2022): Submitted to Director-General of the Kanto Local
Finance Bureau on May 10, 2022
Reporting period (from May 1, 2022 to May 31, 2022): Submitted to Director-General of the Kanto Local
Finance Bureau on June 10, 2022

(6)

Securities registration statement and its attachments
Securities registration statement regarding disposal of treasury stock through private offering
Submitted to Director-General of the Kanto Finance Bureau on August 11, 2021

- 140 -

(7)Amendment statement for securities registration statement and confirmation letter
Amendment statement for securities registration statement regarding securities registration statement
submitted on August 11, 2021
Submitted to Director-General of the Kanto Finance Bureau on August 13, 2021

(8)

Amendment report for annual securities report and confirmation letter
Fiscal year (94th term) (from April 1, 2019 to March 31, 2020)
Submitted to Director-General of the Kanto Finance Bureau on June 23, 2021

- 141 -

Part 2. [Information on Guarantors, Etc. of Filing Company]
There are no matters to be noted.

- 142 -

Independent Auditor’s Report and Internal Control
Audit Report
June 29, 2022

DKK Co., Ltd.
To the Board of Directors
Deloitte Touche Tohmatsu LLC
Tokyo office

Designated and Engagement Partner,
Executive Member

Certified Public
Accountant

Kenji Morita

Designated and Engagement Partner,
Executive Member

Certified Public
Accountant

Yoshie Moritake[Audit on Financial Statements]
OpinionPursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited theconsolidated financial statements included in the Financial Information, namely, the consolidated balance sheet, theconsolidated statement of income, the consolidated statement of comprehensive income, the consolidated statement ofchanges in equity, the consolidated statement of cash flows, the important matters that form basis for preparation of
consolidated financial statements, other notes, and the consolidated supplementary schedules, of DKK Co., Ltd. for the
fiscal year from April 1, 2021 to March 31, 2022.
In our opinion, the consolidated financial statements mentioned above fairly indicated, in all material aspects, thefinancial position of DKK Co., Ltd. and its consolidated subsidiaries as of March 31, 2022 and their operating results andconditions of cash flows of the consolidated fiscal year ended on the same day, in accordance with corporate accounting
standards generally accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are detailed in Auditor’s Responsibilities in Audit of Consolidated Financial Statements. We are independentof the Company and its consolidated subsidiaries in accordance with the requirements for professional ethics in Japan, andwe have fulfilled our other ethical responsibilities as an auditor. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
Key audit matters
Key audit matters are the matters financial auditors judged particularly important in their capacity as specialists in auditing
the consolidated financial statements of the current consolidated fiscal year. Key audit matters are the matters that wereaddressed in the process of carrying out audits on the consolidated financial statement as a whole and in forming the audit
opinion. We do not express views on these matters individually.

- 143 -

1. Rationality of estimates on progress related to performance obligations that are fulfilled over a certain period of time
Details of key audit matters and reason for decision

Responses in auditing

As stated in the Notes (Significant accounting estimates)to the consolidated financial statements, DKK Co., Ltd.

In order to assess the rationality of the estimated rate ofprogress pertaining to the fulfillment of performanceand its consolidated subsidiaries recognize, for some of
their Construction Contracts, etc., revenues over a certain

obligations in the Construction Contracts, etc. of thetelecommunication business and radio frequency

period as the performance obligations to transfer goods orservices to the customer are fulfilled. The Group disclosed

business, we took mainly the following audit measures.
(1) Evaluation of internal control

that the sales from such contracts booked in the current
consolidated fiscal year totaled 2,432 million yen.

We conducted evaluation on the validity of the
preparation and operation of internal control pertaining to

Measurement of progress regarding fulfillment of
performance obligations is estimated based on the ratio of

the process of working out execution plans for construction
work, etc., with a focus on the internal control forthe cost materialized by the last date of each reporting
period to the total of expected costs (“Total Estimatedconfirming that estimated costs and man-hours ofindividual work details have been calculated appropriately.

Costs” hereafter).
In order to satisfy the specifications that meet customer(2) Evaluation of rationality of estimated completion rates
We took the following audit measures to evaluate therequests, the required materials, personnel and theperiods until completion are examined for Construction

rationality of the Total Estimated Costs based on theexecution plans worked out for respective Construction

Contracts, etc. of the telecommunication business and theradio frequency business, and execution plans showing

Contracts, etc. in estimating the completion rates.
(i) We identified instances in which there is a degree of

Total Estimated Costs are worked out based on the resultsof this examination. As matters including work details may

diversion between the completion rate of Construction
Contracts, etc. at the end of the current consolidated

be altered due to facts that may come to light after thework is underway or changes in the situation at the site offiscal year and the work completion rate in the executionplans, and instances in which there is a degree of

construction, there is uncertainty about the work details
required to complete the construction and man-hour

diversion between the Total Estimated Costs at the endof the current consolidated fiscal year and the Total

estimates.
Therefore, in the calculation of net sales for which the

Estimated Costs at the end of the immediately preceding
fiscal quarter.

completion rate needs to be estimated for the fulfillment of
performance obligations, there are major assumptions in(ii) We carried out the following to evaluate the rationalityof key assumptions that form the basis for the estimatedthe estimates of the completion rate calculated based on
the Total Estimated Costs and the cost actually incurred.

completion rates for Construction Contracts, etc.
identified above.

As Total Estimated Costs have uncertainty related tochanges in the environment surrounding Construction- We asked appropriate persons in charge to explain thereason why the cost completion rate diverged from theContracts, etc. and are impacted by the management’s
judgment, we judged that the matter constitutes a key

work completion rate in the execution plans and thereason why the Total Estimated Costs diverged fromaudit matter.

the Total Estimated Costs at the end of theimmediately preceding fiscal quarter.
- We checked with the outsourcees about thetransactions regarding the deals in which there was adegree of diversion between the work completion rateand cost completion rate.
- We examined the reason why the Total EstimatedCosts changed from the end of the immediately
preceding fiscal quarter and examined the precision of
the Total Estimated Costs in light of the executionplans and the situations in which the costs wereincurred.
- We checked to see if the Total Estimated Costs werecompared with the cost-calculation documents they
were based on and if the costs actually incurred weretallied based on the cost sheets in estimating thecompletion rate.

- 144 -

2. Evaluation of the situation of internal control improvement based on measures to prevent recurrence centered on reinforcement togovernance systems and audit functions
Details of key audit matters and reason for decision

Responses in auditing

As described in “Notable matters” in the internal control reportfor the fiscal year ended March, 2021, DKK Co., Ltd. has said it
aims to conduct internal investigation and carry out measures toprevent recurrence in response to whistleblowing about (1)investigation and processing regarding acts of harassment, (2)suspicious entertainment expenses, and (3) deals suspected tocause conflicts of interest.
As stated in “II. [Business Overview], 1. [Management Policies,
Management Environment, and Pressing Issues], (5) Issues theCompany needs to address” of the annual securities report and“Notable matters” in the internal control report for the fiscal year
ended March 2022, the Board of Directors resolved to approve
the following measures to prevent recurrence, which aim mainly toenhance governance systems and monitoring functions andconfirmed the situation of execution of the preventive measures in
the current consolidated fiscal year.
(i) Establishment and execution of compliance program
The Board of Directors shall develop a compliance program
aimed at raising awareness for compliance among all executives
and employees, including directors and managing officers, which
incorporates measures to enhance a mutual deterrent function
especially among directors, managing officers and employees inmanagerial ranks and eradicate harassment. The Board shall
examine the situation of the program’s execution in a timely
manner.
(ii) Establishment of Nomination Committee
Establish Nomination Committee the majority of whose
members comprise outside directors and auditors for the purposeof enhancing independence, objectivity and accountability offunctions of the Board of Directors related to the appointment ofrepresentative directors, directors, auditors, and managing
officers.
(iii) Launch of Executive Committee
Establish Executive Committee tasked to regularly discuss
management issues, etc. and decide guidelines and policies formeasures, with all internal directors and managing officers, etc. incharge of execution of duties participating, in order to share
management issues and ensure transparency of management.
(iv) Strengthening of secretarial divisions’ function
In order to ensure mutual deterrent, strengthen rules forapprovals and conduct regular internal audits, etc. on theoperation of secretarial divisions.
(v) Reforms of Administrative Supervisory Division’sorganizational structure
In order to eliminate concentration of authority in administrative
divisions and ensure mutual deterrent within these divisions,abolish Administrative Supervisory Division and position Business
Planning Department, General Affairs Department, Human
Resources Department, Finance Department and Information
Systems Division as being given equal power.
(vi) Compliance training for officers, etc.
In order to raise awareness of directors about their role,
conduct regular compliance education/training programs for
managing officers and directors when they are appointed andsubsequently.

We carried out mainly the following procedures in order toevaluate the development and operation situations of Companywide internal control based on the measures to prevent
recurrence, which are focused on measures to enhance thegovernance systems and monitoring functions.
- We reviewed minutes of the Board of Directors and Executive
Committee meetings and materials for consideration andreporting about the situation of execution of the measures toprevent recurrence regarding the content and the situation of
execution of the preventive measures, exchanged opinions withthe president and representative director and the officer incharge of compliance, and had the grasp of the concept of thepreventive measures.
- We exchanged opinions about effectiveness of the measures toprevent recurrence with the president and representative
director, members of the Board of Auditors, and Audit Officeand had the overall picture of the efforts and action plans toprevent recurrence.
- We examined the situation of progress of the schedule for the
introduction of the recurrence prevention measures designedby the Company and reviewed the evaluation results of the
improvement situation of internal control based on therecurrence prevention measures designed by the Company.
- In evaluating the development of Company-wide internal control
and the situation of its operation, we interviewed the executives
and persons in charge of responsible divisions and reviewed
relevant vouchers to examine if the internal control system
altered based on the preventive measures against recurrence
have been developed and operated in an effective manner, as
described below.
(i) In order to find out if a compliance system has been developedand effective efforts to raise awareness about compliance arebeing made, we interviewed members of the Compliance
Committee and reviewed compliance-related rules, minutes
from the Compliance Committee meetings, etc.
(ii) In order to find out if independence and objectivity of the Boardof Directors’ function is maintained and accountability isensured, we examined effectiveness evaluation of the Board by
the Nomination Committee, an advisory panel to the Board, andminutes from its meetings.
(iii) In order to find out if management issues are shared andtransparency of management is maintained, we examined
minutes from Executive Committee meetings.
(iv) In order to find out if mutual deterrence function is functioning
between directors, we interviewed persons in charge ofsecretarial divisions and reviewed materials from internal audits
on the operation of these divisions.
(v) In order to find out if the business administration system isoperated appropriately in an effective manner, we asked
questions to administrative divisions, the Board of Auditors, and
the Audit Office and reviewed rules related to committees,
minutes from meetings of the Executive Committee and othercommittees, etc.
(vi) In order to find out if efforts are made to raise awarenessabout the role of directors, we reviewed the complianceprogram and materials for compliance education programs andlist of their participants.

The measures to prevent recurrence include improvement
matters of internal control of the Company as a whole. As
Company-wide internal control forms the foundation of internal
control of operational processes related to financial reporting, we
judged that evaluation of the development and operation
situations of Company-wide internal control related to therecurrence prevention measures are a key audit matter.

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Other information
Among the information included in a securities report, “Other information” is information other than consolidated
financial statements, nonconsolidated financial statements or audit reports on them. The responsibility of the management
is to prepare and disclose the other information. Corporate auditors and the Board of Auditors are responsible foroverseeing directors’ performance in relation to preparation and operation of the reporting processes for the otherinformation.
The scope of our audit opinion on consolidated financial statements does not include the other information. We are notin a position to express our opinion on the other information.
Our responsibility in auditing consolidated financial statements is to go over the other information in its entirety and, inthe process of the going over, try to find out if there are significant discrepancies between the other information and theconsolidated financial statements or the knowledge we gained through the process of auditing, and pay attention to findout if there are any signs of significant errors, other than the aforementioned significant discrepancies, in the otherinformation.
If we judge that there are significant errors in the other information based on the work we have done, we are required
to report on that fact.
There is no matter we must report on regarding the other information.
Responsibilities of Management, Corporate Auditors, and Board of Auditors for Consolidated Financial Statements
The Company’s management is responsible for preparing and properly presenting consolidated financial statements inaccordance with corporate accounting standards generally accepted in Japan. This includes design and operation ofinternal controls judged to be necessary by the management for preparing and properly presenting consolidated financial
statements free of material misstatement arising from fraud or error.
In preparing the consolidated financial statements, the management is responsible for assessing whether preparing
such statements based on the going concern assumption is appropriate. If it finds it necessary to disclose information
pertaining to a going concern in accordance with corporate accounting standards generally accepted in Japan, themanagement is responsible for disclosing such information.
Corporate auditors and the Board of Auditors are responsible for overseeing directors’ performance in relation topreparation and operation of the Company’s financial reporting processes.
Auditor’s Responsibilities in Audit of Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance that the consolidated financial statements as a whole are free ofmaterial misstatements, whether due to misconduct or error, based on the audit we conduct and to express our opinion
from an independent standpoint in an auditor’s report. Misstatements may arise due to misconduct or error and are judged
to be material if, individually or in aggregate, they may reasonably be expected to affect decisions of users of theconsolidated financial statements.
We carry out the following, in accordance with auditing standards generally accepted in Japan and through the process
of audits, exercising professional judgment and maintaining professional skepticism.
- We identify and assess risks of material misstatement, whether due to fraud or error. In addition, we design and follow
audit procedures suited to material risks of misstatements. Audit procedures are selected and applied by our judgment.
Furthermore, we obtain audit evidence sufficient and appropriate for providing a basis for our opinion.
- Although the audit on consolidated financial statements is not intended to express opinions as to the effectiveness ofinternal control, we examine internal controls concerning audits in conducting risk assessment, aiming to design
appropriate auditing procedures suited to the given situation.
- We evaluate appropriateness of accounting policies adopted by the management and how they are applied, as well as
rationality of accounting estimates made by management, and validity of related notes.
- We judge whether it is appropriate for the management to create the consolidated financial statements on the assumptionof the Company being a going concern and whether there are matters that can give rise to material doubts about thegoing concern assumption or material uncertainty about the situation, based on audit evidences obtained. If we conclude
that there is material uncertainty about the going concern assumption, we are required, in the auditor’s report, to callattention to the notes to the consolidated financial statements and, if the notes to the consolidated financial statements
on material uncertainty are not appropriate, express an opinion with an excepted matter about the consolidated financial
statements. Our conclusions are based on the audit evidences we obtained by the date of the auditor’s report, but theCompany may cease to be a going concern depending on events or situations in the future.

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- We review presentation of the consolidated financial statements and the notes to them to judge whether they comply withcorporate accounting standards generally accepted in Japan, assess presentation, structure, and content of theconsolidated financial statements along with related notes, and judge whether the consolidated financial statements fairly
present underlying transactions and accounting events.
- We obtain sufficient and appropriate audit evidences about financial information of the Company and its consolidated
subsidiaries for the purpose of expressing an opinion on the consolidated financial statements. We are responsible forthe direction, supervision, and implementation of the audit on the consolidated financial statements. We take sole
responsibility for our audit opinion.
We report to the corporate auditors and the Board of Auditors on the planned scope and timing of the audit, significant
findings, including any significant deficiencies in internal controls identified in the course of the audit, and other mattersrequired under audit standards.
We notify the corporate auditors and the Board of Auditors that we complied with independence-related requirements ofprofessional ethics in Japan and inform them of matters that may reasonably be thought to have an impact on our
independence, as well as details of safeguards, if any, taken to eliminate or mitigate factors that may become ahinderance.
Among the matters we discussed with the corporate auditors and the Board of Auditors, we identify the matters judged
especially important for audits of the consolidated financial statements of the current consolidated fiscal year as key audit
matters, and describe them in auditor’s reports. However, we do not describe such matters if their public disclosure is
prohibited under laws, regulations, etc. or, if, in very rare cases, we decide we should not report them because thedisadvantages that arise from reporting them in auditor’s reports are reasonably expected to exceed the public interest.
[Audit of Internal Control]
OpinionPursuant to Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited DKK Co., Ltd.’sinternal control report as at March 31, 2022.
In our opinion, the internal control report referred to above, which presents that internal controls over financial reporting
as of March 31, 2022 of DKK Co., Ltd. is effective, presents fairly, in all material respects, the result of the assessment oninternal controls over financial reporting in compliance with standards for assessment of internal controls over financial
reporting generally accepted in Japan.
Basis for Audit Opinion
We conducted our internal control audit in accordance with auditing standards for internal controls over financial
reporting generally accepted in Japan. Our responsibilities under those standards are detailed in Auditor’s Responsibilities
in Audit of Internal Controls. We are independent of the Company and its consolidated subsidiaries in accordance with therequirements for professional ethics in Japan, and we have fulfilled our other ethical responsibilities as an auditor. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management, Corporate Auditors, and Board of Auditors for Internal Control ReportManagement is responsible for preparing and operating internal controls over financial reporting and for the preparationand fair presentation of the internal control report in accordance with standards for assessment of internal controls overfinancial reporting generally accepted in Japan.
Corporate auditors and Board of Auditors are responsible for overseeing and verifying the preparation and operation ofinternal controls over financial reporting.
Internal controls over financial reporting may not completely prevent or detect misstatements.
Auditor’s Responsibilities in Audit of Internal Controls
Our responsibility is to reasonably ascertain that the internal control report is free of material misstatement, based on
our internal control audit, and to express an opinion about the internal control report from an independent standpoint in theinternal control audit report.
We carry out the following, in accordance with auditing standards for internal controls over financial reporting generally
accepted in Japan and through the process of audits, exercising professional judgment and maintaining professional
skepticism.

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- We follow audit procedures to obtain audit evidences for the assessment results on internal controls over financial
reporting in the internal control report. We select and apply procedures for internal control audit based on the materialityof effect on the reliability of financial reporting.
- We review the overall presentation of the internal control report, including the statements made by management on thescope, procedures, and results of the evaluation on the internal controls relating to financial reporting.
- We obtain sufficient and appropriate audit evidences regarding the assessment results on internal controls over financial
reporting in the internal control report. We are responsible for the direction, supervision, and implementation of the audit
on the internal control report. We take sole responsibility for our audit opinion.
We inform the corporate auditors and the Board of Auditors of the planned scope and timing of our internal control audit
and report to them the results of the internal control audit, any significant deficiencies in internal controls requiring
disclosure, and results of any corrective measures taken on them, as well as other matters required under internal audit
standards.
We notify the corporate auditors and the Board of Auditors that we complied with independence-related requirements ofprofessional ethics in Japan and inform them of matters that may reasonably be thought to have an impact on our
independence, as well as details of safeguards, if any, taken to eliminate or mitigate factors that may become ahinderance.
Conflicts of Interest
Our firm and engagement partners have no interest in the Company or its consolidated subsidiaries which should be
disclosed pursuant to the Certified Public Accountants Act.
Notes: 1 The original copy of the auditor’s report is in the custody of the Company.
2 XBRL data is excluded from the scope of the audit.

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Independent Auditor’s Report
June 29, 2022

DKK Co., Ltd.
To the Board of Directors
Deloitte Touche Tohmatsu LLC
Tokyo office

Designated and Engagement Partner,
Executive Member

Certified Public
Accountant

Kenji Morita

Designated and Engagement Partner,
Executive Member

Certified Public
Accountant

Yoshie Moritake

OpinionPursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited DKK Co., Ltd.’s
non-consolidated financial statements for the 96th term, the fiscal year spanning from April 1, 2021 to March 31, 2022,
included in the “Financial Information,” namely, the balance sheet, the statement of income, the statement of changes inequity, important accounting policies, other notes, and supplementary schedules.
In our opinion, the consolidated financial statements mentioned above fairly indicated, in all material aspects, DKK Co.,
Ltd.’s financial position as of March 31, 2022 and its operating results of the fiscal year ended on the same day, in
accordance with corporate accounting standards generally accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities underthose standards are detailed in Auditor’s Responsibilities in Audit of Non-Consolidated Financial Statements. We are
independent of the Company in accordance with the requirements for professional ethics in Japan, and we have fulfilled
our other ethical responsibilities as an auditor. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
Key audit matters
Key audit matters are the matters financial auditors judged particularly important in their capacity as specialists inauditing the non-consolidated financial statements of the current fiscal year. Key audit matters are the matters that wereaddressed in the process of carrying out audits on the non-consolidated financial statement as a whole and in forming theaudit opinion. We do not express views on these matters individually.
1. Rationality of estimates on progress related to performance obligation that are fulfilled over a certain period of time
As stated in the Notes (Significant accounting estimates) to the non-consolidated financial statements, DKK Co., Ltd.
recognizes, for some of Construction Contracts, etc., revenues over a certain period as the performance obligations totransfer goods or services to the customer are fulfilled. The Company disclosed that the sales from such contracts bookedin the current fiscal year totaled 2,429 million yen.
Note that we omitted the description of the content of the key audit matters, the reasons of decision, and auditing
measures as its content is the same as the key audit matters (1. Rationality of estimates on progress related toperformance obligations that are fulfilled over a certain period of time) described in the auditor’s report on the consolidated
financial statements.

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2. Evaluation of the situation of internal control improvement based on measures to prevent recurrence centered on
reinforcement to governance systems and audit functions
We omitted the description of the content of the key audit matters, the reasons of decision, and auditing measures as its
content is the same as the key audit matters (2. Evaluation of the situation of internal control improvement based on
measures to prevent recurrence centered on reinforcement to governance systems and audit functions) described in theauditor’s report on the consolidated financial statements.
Other information
Among the information included in a securities report, “Other information” is information other than consolidated
financial statements, nonconsolidated financial statements or audit reports on them. The responsibility of the management
is to prepare and disclose the other information. Corporate auditors and the Board of Auditors are responsible foroverseeing directors’ performance in relation to preparation and operation of the reporting processes for the otherinformation.
The scope of our audit opinion on non-consolidated financial statements does not include other information. We are notin a position to express our opinion on other information.
Our responsibility in auditing non-consolidated financial statements is to go over the other information in its entirety and,in the process of the going over, try to find out if there are significant discrepancies between the other information andeither the non-consolidated financial statements or the knowledge we gained through the process of auditing, and pay
attention to find out if there are any signs of significant errors, other than the aforementioned significant discrepancies, inthe other information.
If we judge that there are significant errors in the other information based on the work we have done, we are required toreport on that fact.
There is no matter we must report on regarding the other information.
Responsibilities of Management, Corporate Auditors, and the Board of Auditors for Non-Consolidated Financial
Statements
The Company’s management is responsible for preparing and properly presenting non-consolidated financial
statements in accordance with corporate accounting standards generally accepted in Japan. This includes design andoperation of internal controls judged to be necessary by the management for preparing and properly presenting nonconsolidated financial statements free of significant material misstatement arising from fraud or error.
In preparing the non-consolidated financial statements, the management is responsible for assessing whether preparing
such statements based on the going concern assumption is appropriate. If it finds it necessary to disclose information
pertaining to a going concern in accordance with corporate accounting standards generally accepted in Japan, themanagement is responsible for disclosing such information.
Corporate auditors and the Board of Auditors are responsible for overseeing directors’ performance in relation topreparation and operation of the Company’s financial reporting processes.
Auditor’s Responsibilities in Audit of Non-Consolidated Financial Statements
Our responsibility is to obtain reasonable assurance that the non-consolidated financial statements as a whole are freeof material misstatements, whether due to misconduct or error, based on the audit we conduct and to express our opinion
from an independent standpoint in an auditor’s report. Misstatements may arise due to misconduct or error and are judged
to be material if, individually or in aggregate, they may reasonably be expected to affect decisions of users of the nonconsolidated financial statements.
We carry out the following, in accordance with auditing standards generally accepted in Japan and through the process
of audits, exercising professional judgment and maintaining professional skepticism.
- We identify and assess risks of material misstatement, whether due to fraud or error. In addition, we design and follow
audit procedures suited to material risks of misstatements. Audit procedures are selected and applied by our judgment.
Furthermore, we obtain audit evidence sufficient and appropriate for providing a basis for our opinion.
- Although the audit on non-consolidated financial statements is not intended to express opinions as to the effectiveness ofinternal control, we examine internal controls concerning audits in conducting risk assessment, aiming to design
appropriate auditing procedures suited to the given situation.
- We evaluate appropriateness of accounting policies adopted by the management and how they are applied, as well as
rationality of accounting estimates made by management, and validity of related notes.

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- We judge whether it is appropriate for the management to create the non-consolidated financial statements on theassumption of the Company being a going concern and whether there are matters that can give rise to material doubts
about the going concern assumption or material uncertainty about the situation, based on audit evidences obtained. If
we conclude that there is material uncertainty about the going concern assumption, we are required, in the auditor’sreport, to call attention to the notes to the non-consolidated financial statements and, if the notes to the nonconsolidated financial statements on material uncertainty are not appropriate, express an opinion with an excepted
matter about the non-consolidated financial statements. Our conclusions are based on the audit evidences we obtainedby the date of the auditor’s report, but the Company may cease to be a going concern depending on events orsituations in the future.
- We review presentation of the non-consolidated financial statements and the notes to them to judge whether they
comply with corporate accounting standards generally accepted in Japan, assess presentation, structure, and content of
the non-consolidated financial statements along with related notes, and judge whether the non-consolidated financial
statements fairly present underlying transactions and accounting events.
We report to the corporate auditors and the Board of Auditors on the planned scope and timing of the audit, significant
findings, including any significant deficiencies in internal controls identified in the course of the audit, and other mattersrequired under audit standards.
We notify the corporate auditors and the Board of Auditors that we complied with independence-related requirements ofprofessional ethics in Japan and inform them of matters that may reasonably be thought to have an impact on our
independence, as well as details of safeguards, if any, taken to eliminate or mitigate factors that may become ahinderance.
Among the matters we discussed with the corporate auditors and the Board of Auditors, we identify the matters judged
especially important for audits of the non-consolidated financial statements of the current fiscal year as key audit matters,
and describe them in auditor’s reports. However, we do not describe such matters if their public disclosure is prohibited
under laws, regulations, etc. or, if, in very rare cases, we decide we should not report them because the disadvantages
that arise from reporting them in auditor’s reports are reasonably expected to exceed the public interest.
Conflicts of Interest
Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to theprovisions of the Certified Public Accountants Act.

Notes: 1 The original copy of the auditor’s report is in the custody of the Company.
2 XBRL data is excluded from the scope of the audit.

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[Cover][Document being filed]Internal Control Report[Legal basis]

Article 24-4-4, Paragraph 1 of the Financial Instruments andExchange Act[Submitted to]

Director-General of the Kanto Local Finance Bureau[Date of submission]

June 30, 2022

[Company name]

DKK Co., Ltd.

[Company name in English]

DKK Co., Ltd.

[Position and name of representative]

Tadatoshi Kondo, President and Representative Director[Name and position of chief financial

There are no matters to be noted.

officer][Location of Headquarters]

3-3-1 Marunouchi, Chiyoda-Ku, Tokyo[Places where the document will be

Osaka Branch of DKK Co., Ltd.

made available for viewing](2-30 Toyotsu-cho, Suita-shi, Osaka)
Nagoya Branch of DKK Co., Ltd.
(1-4-13 Higashi-Sakura, Higashi-ku, Nagoya-shi, Aichi)
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)- 152 -

1. [Matters concerning basic framework of internal controls over financial reporting]President and Representative Director Tadatoshi Kondo is responsible for preparing and operating internal controls
over the Company’s and its consolidated subsidiaries’ financial reporting and has prepared and operated internal
controls over financial reporting in accordance with the basic framework of internal controls called for in “On the
Revision of the Standards and Practice Standards for Management Assessment and Audit concerning Internal
Control Over Financial Reporting (Council Opinions)” released by the Business Accounting Council.
Internal controls aim to achieve their goals within a reasonable scope through a unified structure in which basic
elements of internal controls work together in an organic way. For this reason, internal controls over financial
reporting may not completely prevent or detect misstatements.

2. [Scope of assessment, record date, and matters relating to assessment procedures]
Assessment of internal controls over financial reporting was conducted with March 31, 2022, or the last day of thisfiscal year, as the record date in accordance with generally accepted assessment standards for internal controls overfinancial reporting.
In this assessment, the management first assessed company-level internal controls that would have a material
impact on the reliability of overall financial reporting on a consolidated basis, and, based on the results, then selected
the operational processes to be assessed. In the process-level control assessment, the management assessed theeffectiveness of internal control by analyzing the operational processes thus selected, identifying key controls thatwould have a material impact on the reliability of the financial reporting, and assessing the preparation and operationof such key controls.
The management determined the scope of assessment of internal controls over financial reporting by selecting theCompany and consolidated subsidiaries based on the materiality of their potential impacts on the reliability of financial
reporting. The materiality of potential impacts on the reliability of financial reporting was determined by taking into
consideration both quantitative and qualitative aspects and the management reasonably determined the scope ofassessment of process-level controls based on the results of the company-level control assessment conducted on the
Company and its 10 consolidated subsidiaries. Three of our consolidated subsidiaries were excluded from the scopeof this assessment as they were judged to have insignificant impact from the viewpoint of materiality of amounts andquality.
For the purpose of determining the scope of process-level control assessment, net sales of operational locations in
the previous consolidated fiscal year (after eliminating transactions between consolidated companies) were added
together in a descending order of the figure for each, and one operational location that contributed approximately twothirds to the consolidated net sales in the previous consolidated fiscal year was selected as the “significant businesslocation.” In the significant business location thus selected, operational processes related to the accounts that areclosely associated with the Company’s business objectives, including net sales, accounts receivable from completed
construction contracts, accounts receivable-trade, and inventories, were included in the scope of assessment.
Furthermore, regardless of the significant business location selected, the management set a scope that includes
other operational locations by adding assessment of certain operational processes related to significant accounts
involving estimates and forecasts where occurrence of material misstatement is highly likely and operational
processes that involve businesses or services that conduct high-risk transactions, in view of the degree of potential
impact they may have on financial reporting.

3. [Matters regarding assessment results]
Based on the result of the above-described assessment, the management judged that internal controls of theCompany and its consolidated subsidiaries over their financial reporting were effective as of the end of the current
fiscal year.

4. [Supplementary information]
There are no matters to be noted.

5. [Notable matters]
Regarding situations of improvement in internal control systems based on measures to prevent recurrence,
including formulation of a compliance program, we confirmed the execution situations of specific efforts for recurrence
prevention measures, as stated in “II. [Business Overview], 1. [Management Policies, Management Environment, and
Pressing Issues], (5) Issues the Company needs to address” in Annual Securities Report for the 96th term.

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[Cover][Document being filed]

Confirmation Document[Legal basis]

Article 24-4-2, Paragraph 1 of the Financial Instruments andExchange Act[Submitted to]

Director-General of the Kanto Local Finance Bureau[Date of submission]

June 30, 2022

[Company name]

DKK Co., Ltd.

[Company name in English]

DKK Co., Ltd.

[Position and name of representative]

Tadatoshi Kondo, President and Representative Director[Name and position of chief financial
officer]

There are no matters to be noted.

[Location of Headquarters]

3-3-1 Marunouchi, Chiyoda-Ku, Tokyo[Places where the document will bemade available for viewing]

Osaka Branch of DKK Co., Ltd.
(2-30 Toyotsu-cho, Suita-shi, Osaka)
Nagoya Branch of DKK Co., Ltd.
(1-4-13 Higashi-Sakura, Higashi-ku, Nagoya-shi, Aichi)
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)- 154 -

1. [Matters regarding appropriateness of content of annual securities report]
The Company’s President and Representative Director Tadatoshi Kondo confirmed that the content of theCompany’s annual securities report for the 96th term (from April 1, 2021 to March 31, 2022) was preparedappropriately in accordance with provisions in the Financial Instruments and Exchange Act.

2. [Notable matters]
There are no special matters to be noted.

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