2023
Kurimoto, Manufacturing the Future

ANNUAL REPORT
Year ended March 31, 2023

KURIMOTO, LTD.
In 1909 Kurimoto, Ltd. began operations as manufacturer of cast ironpipes for water and gas mains. With determination and foresight, thecompany soon began to diversify into other fields, serving the industrial
sector in a multitude of ways.
The major divisions of Kurimoto now provide ductile iron pipes, plant
equipment and engineering services, valves, and construction materials.
Involvement with and commitment to large-scale projects has enabled
Kurimoto to expand its areas of expertise, be it in land development,
industrial modernization, or urban renewal and construction. 12 factories
located throughout Japan comprise the company’s industrial base which,
together with 20 subsidiaries and 1 associate, make up the Kurimoto Group
employing about 2,100 people. Today, Kurimoto plays a vital role insupplying basic industrial products, machines, and services domesticallyand abroad.

Contents
Financial Highlights
Message from the President
Business Operations
Sustainability Approach and Initiatives

1
2
3

Financial Section

94Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows

Notes to Financial Statements
Independent Auditor’s Report
Corporate Information

14
25
29

Financial Highlights

Millions of yen (thousands of U.S. dollars) except per 100 share information

2023

2022

2021

2020

2019

2023

¥ 124,827¥ 105,954¥ 116,596¥ 109,904¥ 108,786$ 934,829

4,727

2,917

3,174

2,773

2,075

35,401

Total assets

145,164

139,722

134,477

134,216

136,469

1,087,127

Total shareholders’ equity(including Accumulated other comprehensive income)¥ 71,608¥ 66,342¥ 63,966¥ 57,892¥ 58,070$ 536,270

Profit (loss) attributable to owners of parent

38,727

23,91726,042

22,283

16,565290

Cash dividends

9,000

7,000

7,000

6,000

6,000

67

Years ended March 31

Net sales
Profit (loss) attributable to owners of parent

Per 100 shares of common stock

Note 1: The U.S. dollar amounts are calculated at the exchange rate of ¥133.53 to $1, the rate prevailing on March 31, 2023.
Note 2: The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) has been applied from the beginning of the fiscal year ended March 31,
2022, and key management indicators for the fiscal year ended March 31, 2022 and thereafter are those after the application of the said accounting standard.

160,000

Net Sales (¥ million)

140,000
120,000

108,786

109,904’19’20

116,596

124,827
105,954

100,000
80,0000’21’22Profit (loss) attributable to owners of parent (¥ million)

4,727

5,000
4,000
3,000
2,000

’23

3,174

2,773

2,917

2,075

1,000
0

400

’19

’21

’22

Net Income per Share of Common Stock (¥)

300
200

’20

165.65222.83’23387.27260.42239.17100
072,000

’19

’20

’21

’22

Shareholder’s Equity (¥ million)’23

71,60870,00066,34268,00066,00063,96664,00062,00060,00058,00058,07057,892’19’20

56,000
0

’21

1

’22

’23

Message from the President“Without fear of failure, we willcontinue seeking to produce new valuethat contributes to social infrastructure
and more.”Thank you for your ongoing supportof Kurimoto’s business activities.
Kurimoto was founded in February1909 to manufacture cast-iron pipe forwater supply based on our iron foundryexpertise. For 114 years now we havebeen committed to bringing people
greater comfort and safety by improvingsocial infrastructure, lifeline systems, andindustrial machinery. I thank you and allof the group’s stakeholders for yourongoing support.
Thanks to the loosening ofrestrictions amidst the pandemic, Japan’s
economy was on the path to recovery inthe current consolidated fiscal year, butother factors complicated the situation,
causing economic uncertainty. These
factors include Russia’s invasion of
Ukraine and the prolonged conflict
there, exchange rate fluctuations, andthe impact of rising prices in materials
and goods. In these circumstances, theKurimoto Group has been working toensure the stable production and supplyof products while taking measures toprevent the spread of COVID-19. We
have also strengthened our sales andcost-reduction efforts to fortify our
financial structure. As a result, in all
three of our business segments—lifeline
business, machinery system business, andindustrial materials business—thegroup’s consolidated net sales andoperating income improved over theprevious fiscal year.

In social infrastructure, particularly
in water supply, we are seeing a new
trend of pipeline design-build orders fora package that covers the entire processfrom water pipeline design toinstallation and maintenance. The Group
has already gotten multiple orders in thismethod. These new projects willundoubtedly have a positive impact on
business performance going forward.
There has also been a sharp increasein highway improvement projects. We
are providing new products andtechnologies, as well as carrying out
installation and offering other solutions
that facilitate road maintenance andupkeep.
In industrial equipment as well, newprojects are springing up with greater
frequency. For example, with thegrowing trend toward vehicle
electrification and autonomization,
there is a strong demand for lighter
vehicle bodies, and we are developing
strong, lightweight CFRP parts made ofcarbon fiber reinforced plastic
coordinated by the Kurimoto
Composite Center. Drawing upon thedevelopmental strength of Kurimoto topersist through difficulties and speed up
technological innovation, I am certainthat we will be able to build competitive
advantages.
The fact that we have been able torun our business successfully for such along time is due in no small part to theguidance and encouragement of our
stakeholders. I am extremely grateful forthat and hope you will continue to lend
us your warm support.

2

Kazutaka Kikumoto
President

June 2023

Kazutaka Kikumoto
President

Business Operations

Corporate group sales by business area (in millions of yen)

Industrial materials business

23.9%
127th
accounting period
124,827

Lifeline business

48.8%

Machinery system business

27.3%

Lifeline businessIndustrial materials business

Sales of the lifeline business amounted to 60,879 million yen, an increase of
3,401 million yen over the previous consolidated fiscal year, primarily due tosales growth recorded by the Pipe Systems Division and the Valve Systems
Division.
Operating income of this business rose to 3,679 million yen, an increase of
662 million yen over the previous consolidated fiscal year. Despite soaring raw
material prices, the Pipe Systems Division and the Valve Systems Division
increased sales mainly from the revision of selling prices, leading to the increasein operating income.

Sales of the industrial materials business were 29,845 million yen, an increaseof 3,464 million yen over the previous consolidated fiscal year. Growth in salesof air-conditioning products and noise-reduction products posted by theConstruction Materials Division and sewage products and FRP inspection
passages posted by the Plastic Products Division were key drivers for theincrease in overall segment sales.
Operating income of this business rose to 1,404 million yen, an increase of
364 million yen over the previous consolidated fiscal year. Despite the soaring
raw material prices, sales growth posted by the Construction Materials
Division and the Plastic Products Division was the main factor of the increasein operating income.

Machinery system business
The machinery system business enjoyed a 12,006 million yen increase in sales
over the previous consolidated fiscal year to 34,102 million yen. The increase ismainly driven by growth in sales of powder systems and press machines, which
was partly supported by the recovery from temporary restraint on investment
amid the COVID-19 pandemic, recorded by the Plant Engineering andMachinery Division, along with growth in sales of pulverizers and casting parts
posted by the Materials & Machinery Division.
Operating income of this business rose to 2,208 million yen, an increase of
1,770 million yen over the previous consolidated fiscal year. The major
contributor to the increase was the substantial increase in sales posted mainlyby the Plant Engineering and Machinery Division.

3

Sustainability Approach and Initiatives(2) Initiatives against Climate Change (Information Disclosure
Based on TCFD Recommendations)
Based on recommendations by the TCFD (Task Force on Climaterelated Financial Disclosure), Kurimoto is committed to disclosing
information on risks and opportunities posed by climate change
to our business in terms of governance, strategy, risk management,
and metrics and targets.

The Kurimoto Group’s approach to sustainability and its initiatives
are as follows.
Forward-looking statements are based on the group’s judgment asof the end of the current consolidated fiscal year.
(1) Basic Approach to Sustainability
Our company was founded 114 years ago by Yunosuke Kurimoto,who wished to “deliver hygienic and clean water to people
throughout the world.” Since then, the Group has passed down
this mindset and continued to carry out its business activities withthe aim of ensuring that people around the world can enjoy safe
and secure lives. In April 2023, to further step up these efforts,
we established the “Basic Sustainability Policy.” We will continue
to provide unique technologies, products, services, and optimal
systems, thereby enhancing our corporate value over the long term
and contributing to the realization of a sustainable society.

① GovernanceIn order to pursue the sustainable development of society andthe company, a CSR Committee chaired by the President has
been established to promote management from the perspective ofsustainability.
The committee meets twice a year to discuss climate change
as an important agenda item. Decisions made at the meetings
are reported to the Board of Directors and reflected in the
management of the entire group.
In fiscal 2021, the Board of Directors discussed the switch tocarbon-free electricity, the use of biofuels, and a production systemthat contributes to reducing greenhouse gas (GHG) emissions,resolving to reduce GHG emissions by 50% in fiscal 2030
compared to fiscal 2013.

Basic Sustainability Policy–
Creating a future through “Inheritance and Innovation!”
Based on our corporate creed and philosophy, we, the KurimotoGroup, aim to enhance our long-term corporate value andcontribute to the sustainable development of society and theearth with manufacturing that makes everyone happy, using thetechnology and experience (inheritance) we have cultivated since
our founding, as well as our creativity (innovation) and the spiritof challenging ourselves to overcome huge obstacles.

Fig. 1: Sustainability Promotion Organization Diagram
CSR Committee

CSR Promotion
Conference

Chair: President
Committee members: Directors, executive officers,
general managers, and representatives from the labor union

Board ofDirectors

Secretariat
Supervision /Reporting

CSR Promotion Division

Compliance Education
Subcommittee

Compliance & Risk
Management Committee

Risk Management
Subcommittee

Chair: President
Committee members:
Directors; executive officers;
general managers from the Head Office,branch offices, and factories;
representatives from the labor union; andcorporate lawyers
Secretariat

Information Security
Subcommittee

Legal Affairs Department

44Construction Business
Act Compliance
Subcommittee

Sustainability Approach andxxxxx
Initiatives
xxxxx② Strategy

the Intergovernmental Panel on Climate Change (IPCC) and
scenarios given by the International Energy Agency (IEA). The
RCP scenarios were used for the analysis of physical risks (physicalimpacts) due to climate change and the IEA scenarios were used
to analyze transition risks (impacts associated with the transition
to a decarbonized economy) (Table 1). The target time axis
was set to 2030, which is considered a critical point in time forachieving carbon neutrality by 2050.
Furthermore, we estimated the financial impact for calculable
items in order to understand the effects of climate change incomparison with conventional financial items (Fig. 2).

We conducted a scenario analysis to help understand risks andopportunities arising from climate change.

• Scenario Analysis Method
To clarify the influence of climate change on our business, weanalyzed the following two scenarios: the 1.5°C scenario, in
which temperature rise is controlled by proactive policies andregulations to address climate change, and the 4°C scenario,
in which passive responses accelerate climate change. In
analyzing each scenario, we referred to RCP scenarios given by

Table 1: Climate Change Scenarios Referenced in Scenario Analysis
A world where temperature rise is controlled by policies

A world undergoing temperature increases and climate change

1.5°C scenario

4°C scenario

The increase in temperature by 2100 is limited to 1.5°C
compared to levels in the late 19th century and risks pertaining
to the transition to a decarbonized society, such as theimplementation of carbon pricing (transition risks), affect theworld. The influence of physical risks is relatively small comparedto the 4°C scenario.

The temperature in 2100 rises by 4°C compared to temperatures in
the late 19th century, and climate change exerts physical effects on
the world such as disasters (physical risks). The influence of transition
risks is small, as there will be no strengthening of regulations on
climate change.

Transitionrisk

IEA Net Zero Emission by 2050 (NZE)IEA Sustainable Development Scenario（SDS）

IEA Stated Policies Scenario (STEPS)

Physicalrisk

IPCC RCP 2.6

IPCC RCP 8.5

Overview

Referencescenario* In the absence of information on the 1.5°C scenario, reference scenarios classified as 2°C scenarios were used.

•<4°C Scenario>
In the 4°C scenario, physical effects are expected to emerge invarious forms such as intensifying extreme weather brought about
by climate change. Risks pertaining to our business include windand flood damage to our facilities due to extreme weather, andresultant delays or stoppages in product sales. In view of the above,
we are developing a BCP that involves not only our company but
also our suppliers and promoting decentralized procurement to
mitigate risks. Opportunities, on the other hand, include increased
demand for iron pipes in pace with the expansion of water supply
networks, which are lifeline systems, as a result of intensifying
extreme weather. Going forward, as a corporate group involved
in social infrastructure, we will focus more on sales of products
related to disaster response.

Scenario Analysis Results (Table 2)<1.5°C Scenario>
In the 1.5°C scenario, the transition to a decarbonized society is
expected to have various effects on us, including the introductionof a carbon tax and the promotion of policies and regulations
related to renewable energy and energy conservation. Risks
pertaining to our business include the introduction of systems
related to carbon pricing (carbon tax and emissions trading
system) and policies on renewable energy and energy conservation,
as well as increased raw material costs. To address these issues, weare taking measures such as introducing carbon-free electricity
derived from renewable energy sources and reviewing energy
efficiency by optimizing our production facilities. Going forward,
we will also consider reducing the weights of products and theintroduction of alternative materials. Opportunities, on the other
hand, include increased sales with renewable energy and energysaving related products and products related to the secondary
battery manufacturing process due to the expected disseminationof renewable energy, further energy conservation in production
facilities used by customers, and increased demand for secondary
batteries on a global scale in step with the shift to EVs in theautomobile industry. In view of the above, we are working tostrategically expand sales of renewable energy-related products
such as valves for power generation facilities and plant equipment
for power generation, and energy-saving products and systems
such as twin-screw continuous kneaders used in the secondary
battery manufacturing process.

55

Sustainability Approach andInitiatives
xxxxx
xxxxx

Table 2: Scenario Analysis Results

Risks
Risks
Opportunities

Physical effects of climate change

Opportunities

Effects of the transition to a decarbonized economy

Effects of Climate-related Issues(Risks and Opportunities)

Severity Assessment
Potential Events

1.5°C
Scenario

4°C
ScenarioInternal Initiatives

Introduction of acarbon price[Company-wide]
The introduction of carbon taxes, emissions trading, andother carbon pricing mechanisms will incur costs, such as
tax payments and purchases of emission allowances,
depending on the amount of greenhouse gas (GHG)
emissions in a company.

High

Low

• Introduction of carbon-free electricity• Improving productivity by optimizing factoryequipment• Switch to low-carbon vehicles (commercial
vehicles)Regulations on theuse of fossil fuels[Lifeline]
The use of fossil fuels in iron pipe production will be
regulated, incurring costs in switching to alternative fuels.

MediumLow• Bio-coke introduction test

[Machinery system]
Sales from customers in the petrochemical and steel
MediumRegulation of plastics
industries will slow down, and demand for related products
will decline.

Low[Company-wide]• Renewable energy introduction will push up electricity
Introduction ofrenewable energy and costs.
energy conservation • Equipment costs will increase due to the need forcompanies to save energy, which will necessitate
policies
equipment renewal, etc.

High

Low

Low

Low

• Optimizing factory equipment to improve
productivity• Promoting equipment introduction through theintroduction of ICPInformation
disclosure
requirements[Machinery system]• CO2 emission calculation per product (CFP calculation) isrequested mainly by the automobile and battery industries,
and costs will be incurred to deal with these requests.
• If CFP is not calculated, our products will be excluded
from customers’ choices.

Changes in theenergy mix[Machinery system]
Demand for products related to coal-fired power generation Medium
will decline.

Low

Changes in raw
material costs[Company-wide]• Prices of fossil fuels used in manufacturing will fluctuate.
• Prices of steel and metals used as raw materials will rise
sharply.

High

Low

[Machinery system]
Recycling regulations Tightened recycling regulations will increase demand forrecycling business-related products.

MediumLow

Introduction of arenewable energy
policy[Machinery system / Lifeline]
Sales of products related to renewable energy will increase
with the spread of renewable energy.

MediumLow• Expanding sales in products related to renewableenergy(Valves for power generation facilities, plant
equipment for power generation, etc.)

Introduction of anenergy conservation
policy[Machinery system]
With the spread of EVs, demand for products related tosecondary batteries will increase.

MediumLow• Expanding sales in energy-saving products(Secondary battery manufacturing process
products, etc.)

Changes incustomer/investor
reputations[Company-wide]
Disclosure of proactive environmental initiatives will
increase opportunities to acquire new customers and makeinvestments and loans.

MediumLow• Information disclosure based on TCFD
recommendations• Disclosure of environmental information through
CSR reports• Consideration given to green procurement

Intensification of
extreme weather[Company-wide]• Delays in delivery, securing substitute products, etc. will
occur.
• Possibilities of damage to our equipment will increase.
• Reduced purchasing power with customers affected bydisaster will push down our sales.

MediumHigh• Promotion of our company’s BCP

Rising averagetemperatures[Company-wide]
Rising temperatures will increase air conditioning costs
during the summer months.

Low

Deteriorating
working conditions
Stricter labor laws

[Company-wide]• If outdoor work is involved, extreme summer heat will
reduce labor productivity, resulting in lower profitability.
• If labor laws are tightened, the working environment needs
to be improved.

Low

Low

Intensification of
extreme weather[Lifeline]
Extended water supply networks will increase demand foriron pipes.

Low

Medium6
6• Diversification of raw material procurement routes• Examination of alternative products

Medium • Appropriate temperature setting• Capital investment that contributes to improving
the working environment• Acquisition of Certified Health and Productivity
Management Organization Recognition (Large
Enterprise Category)• Focus on sales for products related to disaster
response

xxxxxSustainability Approach andxxxxx
Initiatives

Fig. 2: Estimated Financial Impacts
Increase

27.9

4,172.0-59.5

Fossil fuels, etc.

Increase of related
products

Raw material cost

Electricity priceOperating income
for FY2021

Operating income
after measures taken

Carbon tax(reduction achieved)

Fossil fuels, etc.

③ Risk Management

3,366.8-762.5

Carbon tax

380.4 3.009.9-440.7

Increase of related
products

Raw material cost

Electricity price

Carbon tax

Operating income
for FY2021-503.6

Amount (Million yen)

73.5

Natural disasters

Amount (Million yen)

353.5-805 million yen(-19%)

89.6-100.7-965.3 -59.7

Total

Carbon tax(reduction achieved)-1,162 million yen(-28%)

4,172.0

Decrease

Operating income
after measures taken

4°C Scenario

Natural disasters

1.5°C Scenario

Table 3: Greenhouse Gas (GHG) Emissions Reduction [t-CO2]

We have established a risk management system in place with theaim of enabling accurate management and implementation of
measures against various risks surrounding our business (Fig. 1).
Risks posed by climate change are integrated into the companywide risk management system in cooperation with the CSR
Committee. In accordance with our risk management regulations,risks related to each business division and our Group company
are identified and reviewed every three years, and a risk matrix is
prepared by the Risk Management Subcommittee, a specializedcommittee under the Compliance & Risk Management
Committee. Identified risks are assessed based on their type,severity, frequency or probability of occurrence, and impact onmanagement. Specifically, the risk matrix is prepared by classifying
risks into four categories: human, property, liability, and credit,
and by rating risks on four levels of severity (including impact
on management) and four levels of frequency or probability ofoccurrence (reviewed in April every year or when a significant
change arises in the business environment). The results are
examined and approved by the Compliance & Risk Management
Committee. For the management of assessed risks, we haveestablished a specialized subcommittee to study and implement
countermeasures. Matters discussed by the committee andspecialized subcommittee are shared by employees to promote
and implement initiatives. Through the risk management systemdescribed above, risks that could have a significant influence on
our business are identified and reflected in our management plan.

FY2013

FY2021

GHG emissions from our company’s operations(Scope 1 + Scope 2)

76,13462,823

Scope 1 (Emissions from fuel use)

50,01544,600

Scope 2 (Emissions from electricity use)

26,11918,223(Breakdown)

Scope of coverage: Kurimoto, Ltd. on a non-consolidated basis(3) Human Capital① Governance
We have established a framework centered on the Human
Resource Development Committee, which is chaired by the
President and composed of directors, to deliberate on companywide policies and initiatives that contribute to the utilization ofhuman resources (recruitment, staffing, appraisal, and training)and drive our company’s human capital management.
② Strategya) Personnel Policy
Based on the concept that “People are the most important
capital for companies,” the Kurimoto Group has set thefollowing personnel policy to achieve sustainable growth.
◇ We will reform the corporate culture and the mindsets andbehaviors of employees.
• We will develop a system that gives all employees
opportunities to take on challenges voluntarily supportsthem.
• We will promote the creation of an organization where
people take full responsibility for their actions and selfcontained.
• We aim to develop a corporate culture where all theabilities of those who belong to the organization aremobilized and demonstrated to foster creative and originalvalues.

④ Metrics and Targets

To assess and manage the progress of sustainability management
and the effects of policies and other measures on climate change,
we have set greenhouse gas emissions as metrics. Our target is to
reduce greenhouse gas emissions by 50% or more in fiscal 2030
compared to fiscal 2013. To achieve this goal, we will continue
moving forward with energy conservation at our factories andwith the introduction of renewable energy.
77

Sustainability Approach andInitiatives
xxxxx
xxxxx

◇ We will create a workplace that motivates employees.
• We will promote work-life balance and develop a flexible
mechanism that enables diverse human resources to work
actively.
• With an aim to improve employee engagement, we will
establish a system where those who have taken action andmade achievements are rewarded fairly regardless of age anddevelop a system where employees are motivated and canfeel happy.
◇ We will promote diversity initiatives.
• In line with our corporate creed of “cultivating wisdom
and asking many people for advice,” we create a work
environment where a diverse range of human resources,
including women, non-Japanese, people with disabilities,
and mid-career hires with various professional backgrounds
can play an active role, and create opportunities for themto build capacities required.
• By bringing together diverse values and making the mostof them, we aim to respond to the rapidly changing
market environment and achieve sustainable growth.

Promotion of diversified work styles
To create an environment that facilitates change, we
review our business processes to facilitate reform anddiversification of our work styles.
• Promotion of diversity
In order to diversify our human resources, we will conduct
recruitment activities with targets set for women, people
with disabilities, and mid-career hires, and promote thedevelopment of an environment that encourages these
employees to play active roles.
◇ Creating a human resource management system thatencourages individual development and growth and leverages
employee strengths• Early development of core human resources (for managers,
overseas reps, leaders, etc.)
Based on the future business concept, we formulate andanalyze human resource portfolios and make efforts in early
development of core human resources for the positions ofmanager, overseas representative, and leader.
• Fostering spontaneous career orientation and creating asystem for career development
In addition to establishing means for each employee torecognize their own strengths and for what they needto raise awareness, we enhance systems and tools to
support voluntary and spontaneous capacity building andstrengthening, including reskilling (training programs andeducational materials).
◇ Improvement of engagement (job satisfaction)• Initiatives to improve employee engagement
Given that the relationship between individuals and thecompany is more focused on equality, we will examine
the gap between “expectations” and “satisfaction” tobetter understand the current state of the workplace andresolve organizational issues, thereby improving employee
engagement.
• Revision to an improved (distinctive) personnel system
In preparation for the coming of the “100-year life era,”
we will establish a personnel system that enables employees
to realize “growth,” including the “extension of retirement
age,” as a foundation to sustain long-term job satisfaction.
•b) Human Resources Development Policy
Based on our corporate philosophy “We aim for the happinessof our employees and the happiness of mankind throughmanufacturing products,” we are striving to realize the basic
policy stated below.
◇ We will produce value-added products and services throughcapacity building for employees and revitalization of theorganization to create customer value and make social
contributions.
◇ We will support employees in their career development
and capacity building and foster abilities to make social
contributions as well as foster rich humanity as members ofsociety and as members of the organization.
As specific themes to work on, we are carrying out training
programs and other educational measures with a focus on thefollowing five items, thereby promoting employees’ capacity
building and improvement of organizational strength.
• Cultivation of a corporate culture that encourages
employees to study• Strengthening of the organizational management abilities
of management staff who play pivotal roles in corporate
management• Strengthening of conceptual skills (abilities to thinklogically and solve problems) of young and midlevel
employees• Finding and fostering candidates as the next executives andinnovative human resources• CSR education for work style reform, promotion ofdiversity, and achievement of a sustainable society③ Metrics and Targets

Regarding human capital, we have set and are monitoring thefollowing goals in terms of “diversity” and a “comfortable work
environment.”
Targets(%)

FY2022
Results (%)

Remarks

Percentage of women in managerial
positions3

0.3

Target for
FY2030Continuous employment rate ofregular hires after around 10 yearsof employment

80

62.8

Metricsc) Internal Environment Improvement Policy
Based on the aforementioned policy, with the following humanresources strategies set forth in the current three-year mid-termbusiness plan (fiscal 2021 to 2023), we are working to improve
the internal environment.
◇ Creating a corporate culture that encourages change andreform• Evaluation of action-for-change process
We highly evaluate taking on challenges without fear of
failure and review the target management system to utilize
results for capacity building.

Scope of coverage: Kurimoto, Ltd. on a non-consolidated basis

88Financial Section

Consolidated Balance Sheets
March 31, 2023 and 2022

Thousandsof U.S. dollars(Note 2)Millions of yen

Assets

2023

2023

2022

Current assets¥ 20,334¥21,358$ 152,281

50,60844,436

379,006

7

10

56

Merchandise and finished goods

11,338

9,736

84,913Work in process

6,246

8,575

46,782

Raw materials and supplies

3,804

3,650

28,491

Prepaid expenses and other current assets

1,253

1,507

9,389

Cash and deposits
Notes and accounts receivable-trade and contract assets
Notes and accounts receivable-trade— unconsolidated subsidiaries and affiliates

(127)

(126)

(952)

93,46689,149699,968

Buildings and structures

28,961

28,539216,893

Machinery, equipment and vehicles

57,70356,930432,138

Tools, furniture and fixtures

10,577

10,46979,215Land

13,846

13,787

103,697

Lease assets

1,100

299

8,239

Construction in progress

790

678

5,917

Accumulated depreciation(79,684)(78,179)(596,757)

Total property, plant and equipment

33,29532,525249,345

12,204

11,33391,400— unconsolidated subsidiaries and affiliates

142

192

1,068

Long-term loans — other

11

12

89

169

—

1,265

Other investments

1,458

1,458

10,923

Allowance for doubtful accounts

(227)

(83)

(1,701)

Deferred tax assets (Note 9)

3,177

3,337

23,797Long-term prepaid expenses and other

1,464

1,796

10,97018,402

18,047

137,813¥ 145,164¥139,722$1,087,127

Allowance for doubtful accounts
Total current assets

Property, plant and equipment

Investments and other assets
Investment securities — other
Investment securities

Long-term loans— unconsolidated subsidiaries and affiliates

Total investments and other assets
Total assets

9Financial Section

Thousandsof U.S. dollars(Note 2)Millions of yen

Liabilities and Shareholders’ Equity

2023

Current liabilities
Notes and accounts payable-trade
Notes and accounts payable-trade—— unconsolidated subsidiaries and affiliates
Short-term loans payable (Note 4)
Current portion of long-term debt (Note 4)
Lease obligations
Income taxes payable
Accrued liabilities
Advances received
Employees’ savings deposits
Other current liabilities
Total current liabilities
Long-term liabilities
Net defined benefit liability (Note 5)Long-term debt (Note 4)
Lease obligations
Provision for environmental measures
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities

Net assets
Shareholders’ equity
Capital stock
Authorized:
Issued:

2022

2023

¥ 29,556¥ 28,602$

54
19,850
696
65
2,231
4,841
1,830
407
2,776
62,311

59
22,250
1,222
33
426
3,736
2,628
403
2,484
61,846408
148,655
5,217
492
16,711
36,25813,7103,049
20,796466,646

8,347
118
830
13
324
254
9,889
72,200

8,830
714
68
20
319
302
10,256
72,10262,513
883
6,218
101
2,433
1,909
74,059540,706

31,186

31,186

233,551

6,873
30,828(1,778)

6,873
27,029(1,802)51,477
230,869(13,320)

67,10963,287

502,577

4,212
0
198

3,256
1
44

31,5491
1,489

221,347

39,376,600 shares
13,098,490 shares in 2022
13,098,490 shares in 2023

Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

10

87

(247)

652

4,498

3,054

33,692

1,355

1,277

10,15072,96367,619546,421¥145,164¥139,722$1,087,127

Financial Section

Consolidated Statements of Income
Years ended March 31, 2023 and 2022

Thousandsof U.S. dollars(Note 2)Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income and (expenses)
Interest and dividend income
Interest expense
Gain on sales of investment securities
Loss on valuation of investment securities
Loss on sales of investment securities
Loss on valuation of stocks of subsidiaries and affiliates
Provision for loss on litigation
Reversal of provision for loss on disaster
Fixed asset removal cost
Provision of allowance for doubtful accounts for subsidiaries and associates
Impairment loss
Others, net
Income before income taxes
Income taxes (Note 9)
Current
Deferred
Total
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

2023

2022

2023

¥ 124,827
95,477
29,34922,5096,840¥ 105,954
80,61525,33821,1664,172$ 934,829
715,029
219,800
168,569
51,230

416
(152)
95
—
—
(49)
—
—
(172)
(163)
(28)
93
6,879

369
(153)
23
(5)
(6)
(8)
(238)
247
—
—
(41)
22
4,381

3,117
(1,145)
713
—
—
(374)
—
—
(1,289)(1,226)(210)
702
51,517

2,490
(436)
2,054
4,824
97
4,727

727
577
1,304
3,077
159
2,917

18,653(3,266)
15,38636,130729$ 35,401¥¥

U.S. dollars(Note 2)

yen

2023
Net income per 100 shares:
Basic
DilutedCash dividends per 100 shares¥

38,72738,727
9,000

2022

2023

¥ 23,917
23,917
7,000

$

290
290
67

Consolidated Statements of Comprehensive Income
Years ended March 31, 2023 and 2022

Thousandsof U.S. dollars(Note 2)Millions of yen

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of the parent
Profit (loss) attributable to non-controlling interests

2023

2022

2023

¥

¥

3,077

$ 36,130

(49)
1
97
311
359
3,436
3,277
159

7,160
(7)
1,152
2,509
10,81546,945
46,215
729

4,824
956
(0)
153
335
1,444
6,268
6,171
97

11

Financial Section

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2023 and 2022

Millions of yen

Balance as of March 31, 2021

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2022

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Transfer to capital surplus fromretained earnings
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2023

Valuation
Foreign Remeasurements Nondifference on Deferred currency
net
gains
available- (losses)of defined controlling Total
assetson translation benefit
for-saleplansinterests
hedges adjustment
securities

Capitalstock

CapitalsurplusRetained Treasury
earnings
shares¥ 31,186¥ 6,873¥ 25,028 ¥ (1,817) ¥ 3,306

—
—
—
—

—
—
—
—

(916)
2,917
—
—

—
—
(0)
15

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(916)
2,917
(0)
15

—

—

—

—

(49)

1

97

310

133

492

¥ 31,186¥ 6,873¥ 27,029 ¥ (1,802) ¥ 3,256

¥ 1

—
—
—
—

—
—
—
(12)

(916)
4,727
—
—

—
—
(56)
80

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(916)
4,727
(56)
67

—

12

(12)

—

—

—

—

—

—

—

—

—

—

—

956

(0)

153

335

77

1,521

¥ 31,186¥ 6,873¥ 30,828 ¥ (1,778) ¥ 4,212

¥ 0

¥ 198

¥ —

¥ (52) ¥ (558) ¥ 1,144 ¥ 65,111¥ 44 ¥ (247)¥87¥ 1,277 ¥ 67,619¥ 1,355 ¥ 72,963

Thousands of U.S. dollars (Note 2)

Capitalstock
Balance as of March 31, 2022

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Transfer to capital surplus fromretained earnings
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2023

CapitalsurplusRetained Treasury
earnings
sharesValuation
Foreign Remeasurements Nondifference on Deferred currency
net
gains
available- (losses) on translation of defined controlling Total
assetsfor-salehedges adjustment benefit plans interests
securities$ 233,551 $ 51,477 $ 202,425 $(13,498) $ 24,389$ 8$ 336 $ (1,856) $ 9,569 $ 506,402

—
—
—
—

—
—
—
(94)

(6,862)35,401
—
—

—
—
(423)
602

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

(6,862)35,401
(423)
507

—

94

(94)

—

—

—

—

—

—

—

—

—

—

—

7,160

(7)

1,152

2,508

581

11,396$ 233,551 $ 51,477 $230,869 $(13,320) $ 31,549$ 1$1,48912$652 $ 10,150 $ 546,421

Financial Section

Consolidated Statements of Cash Flows
Years ended March 31, 2023 and 2022

Thousandsof U.S. dollars(Note 2)Millions of yen

2023
Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in notes and accounts payable-trade
Decrease (increase) in inventories
Interest and dividends income
Interest expenses
Loss (gain) on sales of short-term and long-term investment securities
Loss (gain) on valuation of short-term and long-term investment securities
Loss (gain) on sales of property, plant and equipment and intangible assets
Loss on retirement of property, plant and equipment and intangible assets
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for retirement benefits
Other, net

2023

2022

¥ 6,8792,930
28(6,925)
693
587
(416)
152
(95)
49
(4)
45
143
(0)
1,515

¥ 4,381
2,711
41
88
1,711
(4,057)
(369)
153
(17)
13
(1)
42
40
(26)
(1,118)$ 51,517
21,945
210(51,864)
5,193
4,398
(3,117)
1,145
(713)
374
(31)
341
1,078
(3)
11,346Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid

5,584
399
(152)
(766)

3,593
338
(153)
(964)

41,8202,989(1,144)(5,739)Net cash provided by (used in) operating activities

5,064

2,813

37,926

Net cash provided by (used in) investing activities
Purchase of short-term and long-term investment securities
Proceeds from sales of short-term and long-term investment securities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Collection of loans receivable
Other, net(4)634(2,379)
14
35
(41)

(0)
93
(2,488)
4
0
(65)

(37)
4,750
(17,823)
111
265
(307)

Net cash provided by (used in) investing activities(1,741)(2,455)(13,039)

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Dividends paid to non-controlling interests
Purchase of treasury shares(2,400)(37)
100(1,222)
(915)
(19)
(0)

1,930
(36)
200
(668)
(915)
(26)
(0)

(17,973)(277)
748(9,153)(6,857)(148)(4)

Net cash provided by (used in) financing activities(4,495)

482(33,665)

147

99

1,108

(1,024)
21,299939
20,359(7,669)159,508¥ 20,275¥ 21,299$ 151,838¥ 21,358(59)¥ 21,299$ 152,281(442)$ 151,838

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year

Note: Relation between the year-end balance of cash and cash equivalents and the items on the consolidated balance sheet:¥ 20,334(59)¥ 20,275

Cash and deposits
Time deposits due over three months
Cash and cash equivalents

13Notes to Financial Statements

Note 1. Significant Accounting Policies

securities into securities for buying & selling, stocks of their affiliates,and other securities.
Securities for buying & selling have been evaluated at market
value.
The stocks of their affiliates have been evaluated at book value.
Those other securities that have market value have been
evaluated at market value, and the unrealized profit or loss has beenreported as an independent item in Part of Capital after taxation.
Those other securities that do not have market value have been
evaluated at book value.
For the cases in which the value of those other securities withmarket value fell sharply, the relevant securities have been placed in
the balance sheet according to their market value, and the difference
between the book value and the market value has been recognized asa loss for the fiscal year. For the cases in which the net asset value of
those other securities without market value fell markedly, therelevant securities have been written down to the net asset value,
and the corresponding difference has been recognized as a loss.
Profit or loss in selling securities has been calculated based upon
the selling price by the moving average method, and included in
profit or loss.

Basis of Presenting Consolidated Financial Statements
Kurimoto, Ltd. (hereinafter referred to as “This Company”) and its
consolidated subsidiaries have presented their official accounting
records in the currency of yen and in accordance with theCommercial Code and the regulations of Securities & Exchange
Law, and in conformity with the generally accepted accounting
principles & practices of Japan (hereinafter called “Japan
Accounting Standard”).
Some part of the Japan Accounting Standard, in its method of
application and disclosure requirements, is different from theInternational Accounting Standard and some other countries’
accounting standards. Accordingly, the consolidated financial
statements attached hereto are prepared for readers who are wellacquainted with the Japan Accounting Standard.
The consolidated financial statements attached hereto have been
prepared in accordance with the Japan Accounting Standard
pursuant to the Securities & Exchange Law. Such consolidated
financial statements of This Company as were submitted to our
district’s Local Finance Bureau of the Ministry of Finance havebeen re-edited and translated into English.

Inventories
Inventories are principally stated at the cost determined by theaverage method or the specific cost method.

Consolidation Policies
These consolidated financial statements include the accounting
records of This Company and the companies over which This
Company either holds majority voting power or for which certain
other conditions verify This Company’s control over them. The
investment account of This Company in non-consolidated
subsidiaries or affiliates which are largely influenced by This
Company in their operational and financial policies have been
computed on the basis of equity-method investment balance.
The important credit & liability, trade, and unrealized profit
between and among consolidated companies have been eliminatedon a consolidation basis.

Fixed Assets (excluding lease assets)
Fixed assets are stated by book value. Method of depreciation ismainly the straight-line method by estimated useful life. Main
estimated useful lives are as follows.
Building and construction: 2 to 60 years.
Machinery and automotive equipment: 2 to 22 years.
The cost of repair or small amount reformation is expensed as
incurred, but any large scale repair or reformation is classified asassets.
Liability for Retirement Benefits
1. The Period Attribution Method for Projected Retirement
Benefits
As for the calculation of retirement benefits, the benefit formulabasis is applied for the attribution of projected retirement benefits
to the period up to the end of the fiscal year under review.
2. Mathematical Calculation for the Amortization of Actuarial
Differences
Actuarial differences are amortized by the straight-line method overa period within the average remaining service years for employees(mainly 10 years) at the time of recognition, and allocatedproportionately from the fiscal year following the respective fiscal
year of recognition.

Translation of Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies
have been translated into Japanese yen at the rate as of the date ofeach balance sheet presentation, and their exchange profit or loss
has been appropriated as their profit or loss in the current period.
The balance sheets of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rates except forshareholders’ equity accounts, which are translated at historicalrates. Income statements of consolidated overseas subsidiaries aretranslated at the average rates during the year. Translation
adjustments resulting from translating financial statements whose
accounts are denominated in foreign currencies are not included in
the determination of net income but are reported as “Foreign
currency translation adjustments” in a component of net assets andnon-controlling interests.

Research and Development and Computer Software
Research & development expenses have been charged as incurred.
Software expenses have been included mainly in long-term
prepaid expenses and other expenses, and depreciated by astraight-line method chiefly for five-year service life.

A Range of Funds in a Statement of Consolidated Cash Flow
A fund in a statement of consolidated cash flow (cash and its
equivalent) consists of cash in hand, ordinary deposits, andshort-term investments which have a term of redemption within
three months, carry low risk for value fluctuation and can bewithdrawn easily.

Income Taxes
As to the temporary difference in the book value of assets andliabilities for the purpose of financial accounting and taxation, thenet worth method has been used to figure deferred tax assets andliabilities.

Marketable and Investment Securities
This Company & its consolidated subsidiaries have specified the
purposes of their respective securities holdings, and classified those14

Notes to Financial Statements

Note 3. Significant
Accounting EstimatesXXXXXXXXXXPer Share Information
The computation of basic net income per share is based on theweighted average number of shares of common stock outstanding
during each period. The average number of shares used in thecomputation was 12,206,206 and 12,199,013 for the years ended
March 31, 2023 and 2022, respectively.

The
dollar aXXXXXXXXXXXXXXXX
1.
Recoverabilityof deferred tax assets(1) Amount recorded in the consolidated financial statements for thecurrent consolidated fiscal year

Recognition of earning cost
For construction work that was initiated this consolidated
accounting period, we will still use the percentage-of-completion
method for those ongoing projects with assured revenue by the endof the period (the cost-to-cost method will be used to estimate theprogress rate of construction), and the complete job method toother projects.

Millions of yen

Deferred tax assets

Marketable and Investments Securities
Other marketable securities as of March 31, 2023 are as follows.
Millions of yen

2023

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Marketvalue

Unrealized
gain (loss)¥ 5,846¥11,804¥ 5,958

Thousands of U.S. dollars

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Marketvalue

Unrealized
gain (loss)$ 43,782$ 88,402$ 44,620

2022

2023

¥ 3,177¥ 3,337$ 23,797

2. Calculation of retirement benefit obligations

2023
Carrying
amounts

2023(2) Information on the content of important accounting estimatesfor recognized items
Regarding the evaluation of the recoverability of deferred tax assets,
future taxable income is reasonably estimated, and valuation
allowance is recorded for any amount which is not deemed
recoverable.
If such estimate needs to be revised due to changes in uncertain
future economic conditions and other reasons, it may have asignificant impact on the amounts of deferred tax assets and income
taxes-deferred to be recognized in the consolidated financial
statements for the next consolidated fiscal year.

Consolidated Taxation System
We have adopted a consolidated taxation system.

Carrying
amounts

Thousandsof U.S. dollars(1) Amount recorded in the consolidated financial statements for thecurrent consolidated fiscal year
Millions of yen

Net defined benefit liability(Changes in accounting policies)(Application of Implementation Guidance on AccountingStandard for Fair Value Measurement)“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, June 17, 2021) is applied
from the beginning of the current consolidated fiscal year. In
accordance with the transitional treatment provided for in Article27-2 of the same Implementation Guidance, the new accounting
policy set forth in the same Implementation Guidance is to be
applied in the future. This change has no effect on the consolidated
financial statements.
Additionally, as for Matters regarding the breakdown of eachlevel of market value for financial instruments contained in Notes
to financial instruments, notes on investment trusts for the previous
consolidated fiscal year are omitted in accordance with Article 27-3of the same Implementation Guidance.

Thousandsof U.S. dollars

2023

2022

2023

¥ 8,347¥ 8,830$ 62,513(2) Information on the content of important accounting
estimates for recognized items
This Company and some of its subsidiaries have adopted a defined
benefit plan as an employee retirement benefit program. Liability
for retirement benefits and retirement benefit costs related toretirement benefit obligations are calculated based on thepreconditions used in actuarial calculations.
The preconditions used in actuarial calculations include many
estimates such as discount rates and long-term expected rate of
return on pension assets. If such estimate needs to be revised due tochanges in uncertain future economic conditions and other reasons,it may have a significant impact on the amount of liability for
retirement benefits and retirement benefit costs related toretirement benefit obligations to be recognized in the consolidated
financial statements for the next consolidated fiscal year onward.

Note 2. U.S. Dollar Amounts

3. Application of percentage-of-completion method

The dollar amounts are included solely for convenience: they should
not be construed as exact translations of current yen figures, nor are
they the dollar amounts into which yen amounts have been or could
be converted.
The exchange rate of US$1=¥133.53 as of March31, 2023, hasbeen used for the purpose of presenting the dollar amounts in theaccompanying consolidated financial statements.

(1) Amount recorded in the consolidated financial statements for thecurrent consolidated fiscal year
Millions of yen

Net sales

15

Thousandsof U.S. dollars

2023

2022

2023

¥ 18,293¥ 7,769$ 136,999

Notes to Financial Statements(2) Information on the content of important accounting estimatesfor recognized items
The percentage-of-completion method is applied to construction works
for which confirming the degree of completion until the end of thecurrent consolidated fiscal year is deemed certain (estimation of the
progress rate of construction work is based on the proportion of cost
incurred).
In applying the percentage-of-completion method, it is a prerequisitethat the total construction cost and progress rate, which are the basis forrevenue recognition, can be reasonably estimated. If such estimate needs
to be revised due to changes in uncertain future economic conditions
and other reasons, it may have a significant impact on the amount ofrevenue to be recognized in the consolidated financial statements forthe next consolidated fiscal year onward.

Note 5. Retirement Benefits
The following are matters concerning the defined benefit plan as ofMarch 31, 2023 and 2022, respectively.
(1) Movements in retirement benefit obligations except plan applied
simplified method

2023
Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at end of the year

Note 4. Short-term Bank Loans and Long-term Debt

2023
Loans from financial institution,due 2023 to 2024 withinterest rates between
0.30% and 0.49%
Sub-total
Less current portion of loans•• • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • •

814
814
696
¥ 118

1,936
1,936
1,222
¥ 714

2023
Balance at beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Benefits paid
Balance at end of the year

2023

6,101
6,101
5,217
$ 883

2023
2024
2025

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2022

2023

—
696
118
¥ 814

1,222
646
68
¥ 1,936

—
5,217
883
$ 6,101

Buildings and structures
Machinery, equipment
Land

Thousandsof U.S. dollars

2023

2023

¥ 3,179899
362¥ 4,441¥ 23,813
6,736
2,714
$ 32,264

¥

4,685
128
128
(9)
4,932

4,380 $
154
159
(9)
4,685 $¥¥

2023
Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Balance at end of the year

35,086963
960(68)36,941Thousandsof U.S. dollars

¥

¥

714
117
(67)
(8)
755

2023

2022

696 $
125
(71)
(35)
714 $

¥

¥

5,348
883
(505)
(66)
5,660

(4) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits including plan
applied simplified method

As is customary in Japan, short-term and long-term bank loans are
made under general agreements which provide that security andguarantees for future and present indebtedness will be given uponrequest of the bank, and that the bank shall have the right, as theobligations become due, or in the event of their default, to offset cash
deposits against such obligations due to the bank.
As of March 31, 2023, assets pledged as collateral for short-termbank loans were as follows:
Millions of yen

¥

2023

2022

Millions of yen

Thousandsof U.S. dollars

2023

Thousandsof U.S. dollars(3) Movements in net liability for retirement benefits based on thesimplified method

The aggregate annual maturities of long-term financial debt at
March 31, 2023 and 2022 respectively are as follows:
Millions of yen¥ 12,990 $ 95,868
634
4,590
17
196
(121)
(1,416)(718)(5,445)¥ 12,801 $ 93,793

Millions of yen

Thousandsof U.S. dollars

2022¥ 12,801
613
26
(189)
(727)
¥ 12,524

2023

2022

(2) Movements in plan assets except plan applied simplified method

The annual average interest rates applicable to short-term bankloans at March 31, 2023 and 2022 are 0.5% and 0.5%, respectively.
Short-term bank loans and long-term debt at March 31 wascomprised of the following:
Millions of yen

Thousandsof U.S. dollars

Millions of yen

Thousandsof U.S. dollars

Millions of yen

2023

2022

Funded retirement benefit obligations
Plan assets¥ 13,099(5,279)7,820¥ 13,365 $ 98,105(39,539)(5,036)58,565
8,329

Unfunded retirement benefit obligations
Total net liability (asset) for
retirement benefits at March 31

527

501

3,947

8,347

8,830

62,513

8,347
—

8,830
—

62,513—¥ 8,347¥ 8,830$ 62,513

Liability for retirement benefits
Asset for retirement benefits
Total net liability (asset) for retirement
benefits at end of the year

16

2023

Notes to Financial Statements

Note 6. Contingent Liabilities(5) Retirement benefit costs
Thousandsof U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Retirement benefit costs calculatedby the simplified method
Total retirement benefit costs forthe fiscal year

2023

2022

¥

¥

613
26
(128)
165

634 $
17
(154)
167

4,590
196
(963)
1,237

125

883

117
¥

793

¥

790

As of March 31, 2023 and 2022, This Company was contingently
liable as follows:

2023

$

Thousandsof U.S. dollars

Millions of yen

2023
As guarantor of indebtedness of
unconsolidated subsidiaries
and others

¥ 14

2022

¥ 29

2023

$ 111

5,944

Note 7. Derivatives and Hedging Activities
Some consolidated subsidiaries utilize derivatives of forward
exchange contract and interest-rate swap in order to hedge
exchange-rate fluctuation risk concerning foreign currency assets andliabilities and hedge against interest-rate fluctuation risk regarding
securities and debts.
As they trade these with major financial institutions, we assume
that the credit risks of these derivatives are low. The Accounting
Department implements and controls these forward exchange
contracts for our own company by way of in-house consultation anddecision.
As to the derivative trades by our consolidated subsidiaries, theirBusiness Management Department or General Affairs Department
implement and control them after their internal consultation anddecision and also notification to our company.

(6) Remeasurements of defined benefit plans(before tax effect deductions)Thousandsof U.S. dollars

Millions of yen

2023
Actuarial loss (gain)
Total

¥
¥

(482)
(482)

2023

2022

(448) $ (3,614)(448) $ (3,614)¥¥(7) Accumulated adjustments for retirement benefit(before tax effect deductions)Thousandsof U.S. dollars

Millions of yen

Unrecognized actuarial differences
Total

2023

2022

¥ (126)¥ (126)

¥
¥

356
356

(8) Accumulated adjustments for retirement benefit① Plan assets comprise:

2023

Equity securities
Cash and cash equivalents
Investment trust
Other
Total

55%
5%
37%
3%
100%

2023

$
$

(944)
(944)

Note 8. Research and Development Expenses
Research and development expenditures charged to income were¥1,600 million ($11,988 thousand) for the year ended March 31,
2023.

2022

53%
3%
41%
3%
100%

Note 9. Income Taxes
This Company and its domestic subsidiaries are subject to several
taxes based on income, which in the aggregate resulted in statutory
tax rates of approximately 30.6% and 30.6% for the year ended
March 31, 2023 and 2022, respectively.
The effective rates of income taxes reflected in the consolidated
statements of income differed from the statutory tax rates referred
to above for the year ended March 31, 2023 due principally to
expenses not deductible for income tax purposes, and temporary
differences between the tax basis of assets and liabilities and theirreported amounts in the financial statements.
The difference between the burden rate of corporate tax after
application of tax effect accounting and the statutory tax rate is notlisted as it was recorded as a net loss for the period under review
before adjustments for taxes, etc.
The tax effects of temporary differences that give rise tosignificant portions of the deferred tax assets as of March 31, 2023
and 2022 are presented below:② Long-term expected rate of return
Current and target asset allocations, historical and expected returns
on various categories of plan assets have been considered.

(9) Accumulated adjustments for retirement benefit
The principal actuarial assumption (expressed as weighted averages)
are as follows:
2023
Discount rateLong-term expected rate of return
Expected rate of salary increase2022

0.0%~0.8% 0.0%~0.8%
2.8%
3.6%
0.0%~5.6% 0.0%~5.5%

Defined contribution plans
The required contribution amount for consolidated subsidiaries forthe defined contribution plan was 169 million yen (1,267 thousand
US dollars) as of March 31, 2023.

17

Notes to Financial Statements

Thousandsof U.S. dollars

Millions of yen

Deferred tax assets
Net defined benefit liability
Accrued bonus indemnities
Allowance for doubtful accounts
Allowance for loss on construction work
Loss on revaluation of investment
securities
Amalgamated received property
Impairment loss
Operating loss carry-forwards
Elimination of inter-company profits
Other
Total gross deferred tax assets
Valuation allowance related to tax
loss carryforward
Valuation allowance related to total
deductible temporary differences
Subtotal of valuation allowance (Note 1)
Net deferred tax assets

2023

2022

2023

¥ 3,612845
64
164¥ 3,758580
25
98$ 27,054
6,335
486
1,233

140
543
21
193
34
1,079
6,701

142
543
13
145
43
1,027
6,377

1,053
4,072
160
1,448
254
8,086
50,187

(146)

(115)

(1,095)(1,545)(1,691)¥ 5,009(1,531)(1,646)(11,574)(12,670)$ 37,516¥ 4,730

The primary purpose of loans is raising funds for capital
investment and business structure reform. Of these, syndicate loans
and many other loans involve interest-rate fluctuation risk. In
addition, in order to avoid interest-rate fluctuation risk for part ofthe long-term debt, we employ derivative transactions (interest-rate
swap transaction) for hedging.
Derivative transactions are exchange forward contracts aimed at
hedging exchange-rate fluctuation risk related to operatingreceivables/payables denominated in foreign currencies, andinterestrate swaps aimed at hedging interest-rate fluctuation risk
related to debt.
(3) Risk Management for Financial Instruments
Credit Risk Management
For operating receivables and long-term debt, the operations
department of respective business segment of This Company employs
credit management regulations in order to periodically monitor the
status of its major business partners, manage due dates and balances ofeach business partner, and furthermore, identify business partners
with doubtful collectability and mitigate risks arising from theirdeteriorated financial position at an early date. Similar credit
management is conducted with its consolidated subsidiaries pursuant
to the credit management regulations of This Company.
As This Company’s transaction partners on derivative financial
instruments are highly reliable Japanese financial institutions, credit
risk is judged to be immaterial.

(Note 1)
Valuation allowance increased by 45 million yen (338 thousand US dollars). The primary factor of theincrease was an increase in the valuation allowance related to tax loss carryforward at consolidated subsidiaries.

Millions of yen

Deferred tax liabilities
Evaluated difference of othersecurities
Dividends receivable
Other
Total deferred tax liabilities
Net deferred tax assets

Thousandsof U.S. dollars

2023

2022

2023

¥ (1,745)(65)(21)(1,831)¥ 3,177¥ (1,296)(60)(36)(1,392)¥ 3,337$ (13,069)
(491)
(158)
(13,718)$ 23,797

Market Risk Management
This Company has entered into an exchange forward contract tohedge part of the risks arising from exchange-rate fluctuations for
operating receivables/payables denominated in foreign currencies.
With regard to floating rate debt, we closely monitor economic
and interest-rate outlooks and conduct fund raising suited to eachsituation, and employ interest-rate swap transaction in order tocontrol fluctuation risks in the interest rate for part of the debt.
As for marketable and investment securities, This Company
periodically seizes the trend of fair value and financial position of
the issuers (business partners) to continuously review the possession
situation, taking into account the market conditions and its
relationship with the business partners.
Derivative financial transactions are executed and managed bydepartments handling such transactions with approval of
authorized personnel, in accordance with the regulations specifying
transaction authority and transaction limit.
Similar management is conducted with its consolidated
subsidiaries pursuant to the regulations of This Company.

Note 10. Financial Instruments and Related Disclosures(1) Policy for Financial Instruments
The Group raises funds needed to implement financial and capital
investment plans (mainly through loans from banks). Its temporary
surpluses are mainly invested in highly liquid financial assets, while
short-term working capital is financed by loans from banks. The Group
employs derivative financial instruments for the purpose of avoiding
risks described later, and does not undertake speculative transactions.

Management of Liquidity Risk Related to Financing
Based on reports from each department, the financial department ofThis Company formulates and updates the financial plan in a timely
manner, and manages liquidity risk by way of maintaining
short-term liquidity. Financial plans of its consolidated subsidiaries
are reported to the financial department of This Company every
month in a timely manner, thereby controlling liquidity risk acrossthe Group.

(2) Nature and Extent of Risks Arising from Financial Instruments
Operating receivables, such as notes and accounts receivable-trade,
involve credit risk on the part of customers.
Foreign-currency-denominated operating receivables generated
by overseas operations, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
Marketable and investment securities, which are mainly equity
securities of affiliates, involve market fluctuation risk.
Operating payables, such as notes and accounts payable-trade,are generally due within five months. Part of them, denominated inforeign currencies, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
18

Notes to Financial Statements

Level 3 market value: Market value calculated using inputs
related to the calculation of unobservable market value.

(4) Fair Values of Financial Instruments
With regard to the fair value of financial instruments, in addition tobasing fair value on market value, the fair value of financial
instruments that have no available market value is determined byusing a rational method of calculation. However, as variables are
inherent in these value calculations, the resulting values may differ if
different assumptions are used.

When using multiple inputs that have a significant impact on
the market value calculation, the market value is classified into thelowest priority level in the calculation of market value calculation
among the respective levels to which each inputs belongs.
① Financial instruments recorded on the consolidated balance

Millions of yen

sheets at market value

2023
Investment securities
Total
Current portion of long-term debt
Long-term debt
Total
Derivative transactions

Carrying
amounts

Fair
value

¥ 11,804
11,804
696
118
¥
814
¥
0

¥ 11,804¥ 11,804

¥—
—

814

0

814
0

¥ 0
¥—

¥
¥

Unrecognizedgain (loss)

Level 1
Investment securities
Available-for-sale-securities
Securities
OthersDerivative transactions
Foreign currency forward exchange
Total assets

Millions of yen

2022

Investment securities
Total
Current portion of long-term debt
Long-term debt
Total
Derivative transactions

Carrying
amounts

Fair
value

¥ 10,912
10,912
1,222
714¥ 1,936¥1¥ 10,912
10,912

¥—
—

1,937

0

¥ 1,937
¥
1

¥ 0
¥—

Unrecognizedgain (loss)

Investment securities
Total
Current portion of long-term debt
Long-term debt
Total
Derivative transactions$ 88,402
88,402
5,217
883$ 6,101$1$ 88,402
88,402

$—
—

6,102

1

$ 6,102
1
$

$ 1
$—

Investment securities
Available-for-sale-securities
Securities
OthersDerivative transactions
Foreign currency forward exchange
Total assets

Unrecognizedgain (loss)

Investment securities
Available-for-sale-securities
Securities
OthersDerivative transactions
Foreign currency forward exchange
Total assets—¥ 11,8040¥0—0— ¥ 11,804

2022
Level 2 Level 3

Total¥ 10,571
340——— ¥ 10,571—
340—¥ 10,912

1¥11—— ¥ 10,913

2023
Level 2
Level 3

Total

$ 86,010
2,391

—
—

— $ 86,010
—
2,391

—
$ 88,402

1$1—
1— $ 88,403② Financial instruments other than those recorded on the

consolidated balance sheets at market value

Thousands of U.S. dollars

Market value (Millions of yen)

2023
¥ 542
¥ —

— ¥ 11,485—
319

Level 1

Note 2. Financial instruments whose fair values are not readily determinable

Unlisted equity securities
Investment in silent partnerships——

Market value (Thousands of U.S. dollars)

Derivative financial instruments
The fair value of derivatives are based on quoted price offered by counterparty financial institutions.
However, interest-rate swaps that are accounted for under the special method are combined with thelong-term debts that are hedged by these swaps. As a result, the fair value of these interest-rate swaps isincluded in the fair value of the corresponding long-term debts.

Millions of yen

Total¥ 11,485
319

Level 1

2023
Fair
value

2023
Level 2 Level 3

Market value (Millions of yen)Thousands of U.S. dollars
Carrying
amounts

Market value (Millions of yen)

$ 4,066$—

2023
Level 2
Level 3—— ¥ 814—— ¥ 814

Level 1Long-term loans payable
Total liabilities(5) Matters concerning the breakdown of each level of market
value for financial instruments
The market value of financial instruments is classified into thefollowing three levels according to the observability and importanceof the input related to the calculation of market value.
Level 1 market value: Of the inputs related to the calculation of
the observable market value, the market value of the asset or liability
formed in an active market and subject to the calculation of market
value.
Level 2 market value: Of the inputs related to the calculation ofobservable market value, the market value calculated using the
inputs related to the calculation of market value other than forLevel 1 input.

¥
¥

Total
814
814

Market value (Millions of yen)2022
Level 2
Level 3—— ¥ 1,937—— ¥ 1,937

Level 1Long-term loans payable
Total liabilities

Total¥ 1,937¥ 1,937

Market value (Thousands of U.S. dollars)2023
Level 2
Level 3—
— $ 6,102—— $ 6,102

Level 1Long-term loans payable
Total liabilities

Total$ 6,102$ 6,102(Note) Explanation of valuation techniques and inputs used to calculate market value

19

Notes to Financial Statements

Investment securities
Listed stocks and investment trust are valued using market prices.
Because listed stocks and investment trust are traded in active
markets, their market value is classified as Level 1 market value.

Derivative transactions
The fair value of derivatives are based on quoted price offered bycounterparty financial institutions and classified as Level 2.

Long-term loans payable
These are classified as Level 2 market value based on the total
amount of principal and interest and the present value discounted
by the interest rate and including the remaining period of the said
liability and credit risk.

Note 11. Revenue Recognition
1. Information on disaggregated revenue from contracts with customers
For the current consolidated fiscal year (from April 1, 2022 to March 31, 2023)
Millions of yen

Ductile iron pipes and various control valves
Industrial machinery and plant engineering
Cast iron/steel products
Construction materials
Various synthetic resin molded products

Lifelinebusiness¥ 60,879————

Reportable segment
Machinery systembusiness¥—
23,273
10,828——Industrial materials
business¥———
17,563
12,282¥ 60,879
23,273
10,82817,563
12,282

Revenue from contracts with customers¥ 60,879¥ 34,102¥ 29,845¥ 124,827

Sales to customers¥ 60,879¥ 34,102¥ 29,845¥ 124,827

Ductile iron pipes and various control valves
Industrial machinery and plant engineering
Cast iron/steel products
Construction materials
Various synthetic resin molded products

Lifelinebusiness$ 455,926————

Reportable segment
Machinery systembusiness$—
174,296
81,093——

Industrial materials
business$———
131,530
91,982$ 455,926
174,296
81,093
131,530
91,982

Revenue from contracts with customers$ 455,926$ 255,389$ 223,513$ 934,829

Sales to customers$ 455,926$ 255,389$ 223,513$ 934,829

Total

Thousands of U.S. dollars

Total

including installations of products sold. Regarding contracts forthese construction works, except immaterial ones with a very short
construction period, the degree of progress in fulfilling theperformance obligations is estimated and revenue is recognized overtime based on the degree of progress.
For transactions in which the Group is deemed to be acting as anagent in providing goods or services to customers, revenue isrecognized at the net amount after deducting the amount paid tothe supplier from the amount received from the customer.
Variable consideration such as sales commissions and sales
incentives for some transactions is deducted from net sales.
Consideration for transactions of merchandise and finishedproducts is generally received within one year after delivery of themerchandise and finished products. Consideration for transactionsof construction contracts is received either in stages according to theprogress in fulfilling the performance obligations or after the
performance obligations are fully satisfied, generally within one year
based on the terms of contract.

2. Basic information for understanding revenue fromcontracts with customers
The main business of the Group is the manufacture and sale ofmerchandise and finished goods in its reportable business segments:
Lifeline, Machinery System, and Industrial Materials. With respect
to the sale of these merchandise and finished goods, since theperformance obligation is deemed to have been fulfilled at the time
when the merchandise and finished goods are accepted andinspected by the customer, and the customer acquires control of
those merchandise and finished goods, revenue is usually recognizedat that time. However, in domestic sale of merchandise and finishedgoods, revenue is recognized at the time of shipment when it takes
place in a normal time period from the shipment to the transfer ofcontrol of the merchandise and finished goods to the customer, byapplying an alternative treatment stipulated in paragraph 98 of“Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, March 26, 2021).
In addition to the manufacture and sale of products, the Group also
engages in business related to the design and construction works

20Notes to Financial Statements

3. Information on the relationship between fulfillment of performance obligation based on contracts with customers and cash
flows arising from such contracts, and the amount and timing of revenue expected to be recognized in the next consolidated
fiscal year and beyond from contracts with customers existing at the end of the current consolidated fiscal year
(1) Balances of contract assets and contract liabilities

Millions of yen

Thousands of U.S. dollars

2023

2022

2023

Receivables from contracts with customers (beginning balance)¥ 40,543¥ 38,246$ 303,630

Receivables from contracts with customers (ending balance)¥ 41,637¥ 40,543$ 311,823

Contract assets (beginning balance)

¥

3,903

¥

4,956

$ 29,229

Contract assets (ending balance)

¥

8,978

¥

3,903

$ 67,238

Contract liabilities (beginning balance)

¥

2,628

¥

1,281

$ 19,688

Contract liabilities (ending balance)

¥

1,830

¥

2,628

$ 13,710

Note 12. Segment Information

Contract assets are rights of This Company and its consolidated
subsidiaries to consideration for performance obligations inconstruction contracts with customers that have been fulfilled but
unclaimed at the end of the current fiscal year. Contract assets aretransferred to receivables generated from contracts with customers
at the point when This Company and its consolidated subsidiaries’
rights to consideration become unconditional. Consideration forsuch performance obligations is billed and received in line with theterms of the contract.
Contract liabilities are primarily advances received from
customers in accordance with the payment terms of contracts withcustomers for which revenue is recognized upon fulfillment of
performance obligations. Contract liabilities are reversed uponrecognition of revenue.
Of the revenue recognized during the current fiscal year, theamount included in the beginning balance of contract liabilities was
2,423 million yen.

(1) Outline of Reportable Segments
This Company’s reportable segments are the components of ourbusiness (separate financial information for which is available), on
which periodical review is made for allocation of management
resources and appraisal of achievements by the board of directors.
Each product-based division at our headquarters compiles
comprehensive product strategies for domestic and overseas
business operations.
In other words, This Company consists of division-based
reportable segments; the Lifeline Consolidated Division, theMachinery System Consolidated Division and the Industrial
Materials Consolidated Division.
The Lifeline Consolidated Division specializes in the
manufacture of ductile iron pipes and accessories, various types ofadjusting valves, and other incidental works.
The Machinery System Consolidated Division specializes in the
manufacture of industrial equipment (various types of powder
processing equipment and press machines, etc.), steel casting andspecial steel casting, other incidental works and various types ofplant engineering.
The Industrial Materials Consolidated Division specializes in
the manufacture of ducts, polycon FRP pipes, various types ofsynthetic resin products, and other incidental works.

(2) Trading prices allocated to the remaining performanceobligations
This Company and its consolidated subsidiaries have applied apractical expedient to the notes to the trading prices allocated to theremaining performance obligations, and the notes do not include
contracts initially expected contract period of which is within one
year. The main components of the performance obligations are
related to construction contracts, and the total trading priceallocated to the remaining performance obligations and the
expected period for revenue recognition are as follows:
Fiscal year ended March 31, 2023
Millions of yen

Thousands of U.S. dollars

Within one year

¥ 13,819$ 103,493

More than one year

¥ 5,702$ 42,704

Total¥ 19,521$ 146,197

21

Notes to Financial Statements(2) Calculation method of: sales, profits/losses, assets, liabilities and other items for each reportable segment
The accounting procedures of the reportable segments are basically the same as the description in the “Important Items Concerning the
Presentation of Consolidated Financial Statements,” and any intersegment internal revenue/transfers etc., are represented based on actual
market prices.

(3) Information on sales, profits/losses, assets, liabilities and other items for each reportable segment
Segment information for the fiscal years ended March 2022 and 2023 is as follows:
Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Lifelinebusiness

2023
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1
—
(265)
(265)
(451)
32,798¥ 124,827—
124,827
6,840
145,164

2,393

537

2,930

3,281

¥ 162

¥ 60,879
137
61,017
3,679
58,315¥ 34,10285
34,1872,208
27,747¥ 29,845
42
29,8881,404
26,303¥ 124,827
265
125,092
7,292
112,365

1,278

536

579

¥ 1,572¥ 1,441

¥

267

¥

¥

Consolidated*2

¥

3,444

1. The minus 451 million yen segment income adjustment includes: 20 million yen resulting from the elimination of intersegment transactions; minus 656 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as 184 million yen resulting from inventory asset adjustment.
The 32,798 million yen segment asset adjustment includes: minus 7,445 million yen resulting from the elimination of intersegment transactions; and 40,243 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 537 million yen depreciation adjustment and 162 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Lifelinebusiness

2022
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1
—
(370)
(370)
(322)
32,961¥ 105,954—
105,954
4,172
139,722

2,292

419

2,711

2,077

¥ 383

¥ 57,478
127
57,605
3,016
56,310¥ 22,095
114
22,210437
23,768¥ 26,381
128
26,5091,040
26,682¥ 105,954
370
106,325
4,494
106,761

1,258

514

519

¥ 1,201

¥

474

¥

400

¥

Consolidated*2

¥

¥

2,460

1. The minus 322 million yen segment income adjustment includes: 19 million yen resulting from the elimination of intersegment transactions; minus 214 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 127 million yen resulting from inventory asset adjustment.
The 32,961 million yen segment asset adjustment includes: minus 6,757 million yen resulting from the elimination of intersegment transactions; and 39,719 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 419 million yen depreciation adjustment and 383 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

22

Notes to Financial Statements

Thousands of U.S. dollars

Lifelinebusiness

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

2023
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total$ 455,926
1,027
456,954
27,553436,720$ 255,389
639
256,028
16,538207,798$ 223,513
319
223,832
10,521
196,982$ 934,829
1,986
936,815
54,613
841,501

9,571

4,014

4,337

17,923$ 11,774$ 10,793

$

2,006

$

24,573Adjustment*1$$

Consolidated*2—(1,986)(1,986)(3,382)
245,625$ 934,829
934,829
51,2301,087,127

4,021

21,945

1,220$

25,794

1. The minus 3,382 thousand US dollar segment income adjustment includes: 155 thousand US dollars resulting from the elimination of intersegment transactions; minus 4,916 thousand US dollars resulting from allocationdifferences of selling & general administrative expenses and experiment & research expenses to be borne by each reportable segment; as well as 1,378 thousand US dollars resulting from inventory asset adjustment.
The 245,625 thousand US dollar segment asset adjustment includes: minus 55,758 thousand US dollars resulting from the elimination of intersegment transactions; and 301,384 thousand US dollars due to a working capitalsurplus, investment securities and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 4,021 thousand US dollar depreciation adjustment and 1,220 thousand US dollar adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specificreportable segment, and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

(Note) “Number of shares subject to Disposal” and “Total value of
Disposal” represent maximum values, which assume that all
employees eligible for the incentive scheme for the Plan (special
incentive scheme; hereinafter, the “Scheme”) join the Plan andagree to the Scheme. The Plan will conduct promotions for inviting
employees to join it with a sufficient notice period after the board
meeting of the Plan to be held on September 29, 2023, to solicit
applicants for the Plan. For this reason, the “Number of sharessubject to Disposal” and “Total value of Disposal” will be finalized
when the promotions end. The “Number of shares subject to
Disposal” and “Total value of Disposal” with the finalized numberof eligible employees will be announced promptly after the number
is finalized.

(4) Geographic Segments
Geographic segment information has been omitted, as thepercentage of “national” exceeded 90% in both sales and assets in all
segments.
(5) Sales to Foreign Customers
Foreign sales have been omitted, as they did not reach 10% ofconsolidated sales.

Note 13. Subsequent Events(Disposal of treasury stock through a third-party allocation)
Kurimoto, Ltd. hereby announces that at a meeting of the Board of
Directors held on September 28, 2023, its Board of Directors
resolved to dispose of the Company’s treasury stock through athird-party allocation (hereinafter, the “Disposal of Treasury Stock”
or “Disposal”) as follows.

2. Purpose and reasons for Disposal
The Company has resolved the details of the Scheme, which would
provide employees who are eligible to join the Plan and agree to the
Scheme (hereinafter, the “Eligible Employee(s)”) with a special
incentive for allotting the Company’s shares (hereinafter, the“Special Incentive”) and allocate shares of the Company to the Plan
by means of the payment of the Special Incentive, for the purpose ofenhancing their sense of participation in the management throughholding the treasury shares to be disposed of by the Company(hereinafter, the “Shares of the Company”) and increasing theirmotivation toward the mid-to-long term shareholder value of theCompany, and also helping the employees build assets as a welfare
policy. The Company resolved at a Board of Directors meeting held
on September 28, 2023, to dispose of 163,100 shares of its treasury
stock (equivalent to approx. 468,420,000 yen (3,507,975 US dollars))
to the Plan.

1. Overview of the Disposal of Treasury Stock(1) Disposal date

December 27, 2023

(2) Class and number of
163,100 shares of common stock
shares subject to Disposal of the Company (Note)(3) Disposal price

2,872 yen (21 US dollars) per share(4) Total value of Disposal

468,423,200 yen (3,507,999 US
dollars) (Note)(5) Disposal method(Grantees of shares)

By way of third-party allocation(Kurimoto employee stock
ownership plan; hereinafter, the“Plan”)(6) Other

The Disposal of Treasury Stock is
conditioned on the effectuationof the securities registration
statement in accordance with the
Financial Instruments andExchange Act.

23

Notes to Financial Statements④ Name of the company after acquisition(Business combinations)(Transactions under common control)

There is no change.

⑤ Other matters concerning the overview of the transaction

The investment ratio of Yamatogawa Co., Ltd., a consolidated
subsidiary of Kurimoto, Ltd., changed from 50% to 68.75% after
the transaction.

1. Regarding additional acquisition of shares of
Yamatogawa Co., Ltd., a consolidated subsidiary of
Kurimoto, Ltd.
(1) Overview of transaction① Name and business description of the acquired company
Name: Yamatogawa Co., Ltd.
Description of business: Sale of ductile iron pipes, synthetic resin
products, and various types of iron pipes② Acquisition dateAugust 1, 2023（deemed acquisition date: July 1）③ Legal form of acquisition
Acquisition of shares for cash
④ Name of the company after acquisition
There is no change.
⑤ Other matters concerning the overview of the transaction
The Company’s investment ratio changed from 95.05% to 100%after the transaction.

(2) Overview of accounting treatment applied
In accordance with the “Accounting Standard for Business
Combinations” and the “Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business
Divestitures,” we processed the business combination as atransaction with non-controlling interests among transactions
under common control.

Consideration
for acquisition

Cash 299 million yen (2,241 thousand US dollars)(2) Overview of accounting treatment applied
In accordance with the “Accounting Standard for Business
Combinations” and the “Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business
Divestitures,” we processed the business combination as atransaction with non-controlling interests among transactions
under common control.

Acquisition cost

299 million yen (2,241 thousand US dollars)(3) Matters regarding additional acquisition of the subsidiary’s
sharesAcquisition cost and breakdown by type of consideration(4) Matters regarding changes in the Company’s equity arisingfrom transactions with non-controlling interests① Main reason for changes in capital surplus

Additional acquisition of the subsidiary’s shares② Amount of capital surplus increased by transactions with

non-controlling interests
40 million yen (300 thousand US dollars)(3) Matters regarding additional acquisition of the subsidiary’s
sharesAcquisition cost and breakdown by type of consideration

Note 14. Additional Information

Consideration
for acquisition

Cash 138 million yen (1,038 thousand US dollars)

Acquisition cost

138 million yen (1,038 thousand US dollars)(The impact of COVID-19 on accounting estimates)
Forecasting how COVID-19 will spread and when it will subside isdifficult. Nonetheless, we have made accounting estimates based on
the information available at the time of preparation of theconsolidated financial statements.

(4) Matters regarding changes in the Company’s equity arisingfrom transactions with non-controlling interests① Main reason for changes in capital surplus

Additional acquisition of the subsidiary’s shares② Amount of capital surplus decreased by transactions with

non-controlling interests
17 million yen (134 thousand US dollars)

2. Regarding additional acquisition of a consolidated
subsidiary’s shares by another consolidated subsidiary
Yamatogawa Co., Ltd., a consolidated subsidiary of Kurimoto, Ltd.,acquired additional shares of Hokkaido Kanzai Co., Ltd., aconsolidated subsidiary of Kurimoto, Ltd.
(1) Overview of transaction① Name and business description of the acquired company
Name: Hokkaido Kanzai Co., Ltd.
Description of business: Sale of ductile iron pipes, etc.
② Acquisition dateJuly 28, 2023（deemed acquisition date: July 1）③ Legal form of acquisition
Acquisition of shares for cash
24Independent Auditor’s Report

Independent Auditor’s Report
To the Board of Directors of Kurimoto, Ltd.

OpinionWe have audited the accompanying consolidated financial statements of Kurimoto, Ltd. (the Company) and its consolidated subsidiaries (theGroup), which comprise the consolidated balance sheet as at March 31, 2023, and the consolidated statements of income, comprehensive
income, changes in net assets, and cash flows for the year then ended, and notes to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial positionof the Group as at March 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards arefurther described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements inJapan, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Reasonableness of Estimating Total Construction Cost in Revenue Recognition of Construction Contracts
Related to Machinery System Business
Key Audit Matters and Reasons for the Determination

Auditor’s Response

As stated in (Significant Accounting Estimates), the amount of

Our main audit procedures conducted to verify the reasonableness ofrevenue recognition of 18,293 million yen for construction contracts

estimating total construction cost related to the machinery systemin the consolidated income statement for the current consolidated

business are as follows.

fiscal year was mostly derived from the machinery system business of• We examined the effectiveness of the design and implementation

Kurimoto, Ltd.

of internal controls over the estimation of the total cost of

As stated in (Revenue Recognition) 2. Basic information for

construction.

understanding revenue from contracts with customers, regarding• We examined the effectiveness of the design and implementation

performance obligations set forth in construction contracts in theof internal controls to ensure that changes in circumstances after

machinery system business to be fulfilled over a certain period of

the start of construction are reflected in the total cost oftime, the Company estimates the degree of progress in fulfilling theconstruction in a timely and appropriate manner.
• We confirmed that the construction work whose total

performance obligations and recognizes revenue over that period oftime based on the degree of progress. The degree of progress isconstruction cost was reviewed at the end of the fiscal year wasdetermined based on the percentage of actual cost incurred before theconsistent with the estimate at completion.

25

Independent Auditor’s Report

Reasonableness of Estimating Total Construction Cost in Revenue Recognition of Construction Contracts
Related to Machinery System Business
Key Audit Matters and Reasons for the Determination

Auditor’s Response

end of the period to the total cost of construction.

• We confirmed that the total cost of uncompleted construction

In revenue recognition for construction contracts, the total

projects at the end of the fiscal year was consistent withconstruction cost should be estimated reasonably to estimate thedocumented evidence by the use of sampling.
• We confirmed by reviewing the meeting minutes that analysis ofdegree of completion.

causes was conducted when a significant change in the total cost

The total construction cost is characterized by fluctuation due toof construction occurred.

various changes in circumstances. In order to make a reliable estimate• We compared the pre-estimated total construction cost with itsof the total construction cost, the estimate needs to be appropriately

finalized or re-estimated amount, and analyzed the causes of thereviewed in comparison with the actual costs incurred. The total

discrepancies for construction projects with large discrepancies.

construction cost therefore has uncertainty in regard to the estimation• We conducted a comparative review of the profit margins ofof material cost, labor cost, and others.

construction contracts with those of similar construction

As stated above, estimating total construction cost involves

contracts.

uncertainty due to changes in the environment surrounding
construction contract, as well as the management’s decision. For thisreason, we judged that the said matter is particularly significant in theaudit of financial statements for the current consolidated fiscal year
and corresponds to a key audit matter.

Other information
The other information comprises the information included in the Annual Report, that contains audited consolidated financial statements but
does not include the consolidated financial statements and our audit report thereon. Management is responsible for preparation anddisclosure of the other information. Audit & Supervisory Board and its members are responsible for overseeing the Group’s reporting
process of the other information. Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is
to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing
to report in this regard.

26

Independent Auditor’s Report

Responsibilities of Management, Audit & Supervisory Board and its members for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern
and disclosing, as required by accounting principles generally accepted in Japan, matters related to going concern.
Audit & Supervisory Board and its members are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks. These audit procedures are based on auditor’s professional judgment and obtain audit evidence thatis sufficient and appropriate to provide a basis for our opinion.
• Consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, for the risk
assessments, while the purpose of the audit of the consolidated financial statements is not expressing an opinion on the effectiveness of
the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made bymanagement.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s reportto the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
• Evaluate whether the presentation and notes to the consolidated financial statements are in accordance with accounting principles
generally accepted in Japan, and the overall presentation, structure, and content of the consolidated financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of thegroup audit. We remain solely responsible for our audit opinion.

27

Independent Auditor’s Report

We communicate with Audit & Supervisory Board and its members regarding, among other matters, the planned scope and timing of theaudit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board and its members with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with Audit & Supervisory Board and its members, we determine those matters that were of mostsignificance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements and the notes with respect to the year ended March 31, 2023
are presented solely for convenience. Our audit also included the translation of Japanese yen amount into U.S. dollar amounts and, in our
opinion, such translation has been made on the basis described in Note 2 to the consolidated financial statements.
PKF HIBIKI AUDIT CORPORATION
Osaka, Japan
November 17, 2023

Masahiko Tomita[Representative Partner]
Engagement Partner
Certified Public Accountant
Katsuyuki Matsumoto[Representative Partner]
Engagement Partner
Certified Public Accountant
Haruhito Urabe[Representative Partner]
Engagement Partner
Certified Public Accountant

28

Corporate Information

Kurimoto, Ltd.

(as of June 28, 2023)

OutlineFoundedIncorporated
Common stock
Total assets
Employees

Offices
1909
1934¥31,186 million*¥139,722 million*
1,327*

Head Office12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Telephone: (06) 6538-7603
Fax: (06) 6538-7758
Tokyo Office16-2, Konan 2-chome, Minato-ku, Tokyo 108-0075, Japan
Telephone: (03) 3450-8611
Fax: (03) 3450-8504*as of March 31, 2023

Board of Directors
President

Kazutaka Kikumoto

Director and Senior
Managing Executive Officer

Yoshiaki Shingu

Directors andSenior Executive Officers

Akitoshi Oda
Yasuharu Yoshinaga
Yoshihiro Uraji
Hitoshi Marutani

Outside Directors

Keiko Kondo
Tomohiko Sato
Kiyoshi Sawai

Full-Time Audit &Supervisory Board Member

Yukitaka Fujimoto

Outside Audit &Supervisory Board Members

Maki Arita
Osamu Honda

ChairmanMoriyoshi Kushida

Senior Executive Officer

Shinya Kojima

Executive Officers

Yasuji Noguchi
Liao Jinsun
Masanobu Mino
Yasuo Sano
Yasushi Tabuchi
Hiroshi Fujimoto
Soichiro Nakanishi
Takanori Kuzuoka
Ken Kurimoto
Shin Matsumura

Stock

The Master Trust Bank of Japan, Ltd.
Taiyo Life Insurance Company
Custody Bank of Japan, Ltd.
Nippon Life Insurance Company
Resona Bank, Limited
Mizuho Bank, Ltd.

Tohoku Office12-30, 1-chome Honcho, Aoba-ku, Sendai 980-0014, Japan
Telephone: (022) 227-1872
Fax: (022) 227-8417
Nagoya Office
1-17-23, Meiekiminami, Nakamura-ku, Nagoya 450-0003, Japan
Telephone: (052) 551-6930
Fax: (052) 551-6940
Chugoku Office
7-19, Hondori, Naka-ku, Hiroshima 730-0035, Japan
Telephone: (082) 247-4132
Fax: (082) 247-4004
Kyushu Office
3-11, Hakataeki-minami 1-chome, Hakata-ku, Fukuoka
812-0016, Japan
Telephone: (092) 451-6622
Fax: (092) 471-7696
Europe Office
Address: Berliner Allee 40 40212 Dusseldorf, Germany
Telephone: +49-211-550-46411
Fax: +49-211-550-46420
Jakarta Office
Sahid Sudirman Center, 56th Floor Jl. Jend. Sudirman Kav. 86,
Jakarta 10220, Indonesia
Telephone: +62-21-8063-1861
Fax: +62-21-8063-1999

Banking References
Head OfficeMizuho Bank, Ltd. (Osaka Branch)Resona Bank, Limited (Osaka Banking Department)
Sumitomo Mitsui Banking Corporation (Midosuji Branch)
MUFG Bank, Ltd. (Osaka Main Office)(as of March 31, 2023)

Common Stock
Number of authorized shares
Number of issued shares
Number of shareholders

Principal Shareholders

Hokkaido Office3, Nishi 3-chome, Kitaichijo, Chuo-ku, Sapporo 060-0001, Japan
Telephone: (011) 281-3301
Fax: (011) 281-3369(as of June 28, 2023)

39,376,600
13,098,490
7,788

Tokyo OfficeMizuho Bank, Ltd. (Uchisaiwai-cho Branch)
MUFG Bank, Ltd. (Shimbashi Branch)Resona Bank, Limited (Shimbashi Branch)
Sumitomo Mitsui Banking Corporation (Hibiya Branch)(as of March 31, 2023)
Number ofshares held
(in thousands)

Ratio ofshareholding

1,215
1,209
951
678
444
362

9.9%
9.8%
7.7%
5.5%
3.6%
2.9%
29

Corporate Information

Kurimoto Group(as of June 28, 2023)

The Kurimoto Group consists of Kurimoto, Ltd. and 20 subsidiaries and 1 associate, including the following.
Kurimoto Trading Co., Ltd.

Kurimoto USA, Inc.

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Operations: Holding company
Readco Kurimoto, LLC

Kurimoto Logistics Corporation

Operations: Manufacture and sales of industrial machineryOperations: Procurement and transport of raw materials, castiron pipes, etc.

Kurimoto Polymers Co., Ltd.

Japan Castering Co., Ltd.

Operations: Manufacture and sales of rigid PVC pipes,
polyethylene pipes and profile extrusion products

Operations: Manufacture and sales of castings
Zentec Co., Ltd.
Yamatogawa Co., Ltd.

Operations: Maintenance and repair work of bridges and roads
Repair and reinforcement work of concrete structures

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Kurimoto Pipe Engineering Co., Ltd.
Motoyama Eng. Works, Ltd.
Operations: Manufacture and sales of industrial valves

Operations: Design, construction and management of pipelines,
operation and maintenance of pipelines

Ks-Tech Co., Ltd.

Riko, Ltd.

Operations: Manufacture, sales and construction of forging
machinery, forming machinery and related products

Operations: Production of valves
Kuritetsu (Shanghai) Trading Co., Ltd.

Hokkaido Kanzai Co., Ltd.

Operations: Wholesale of machinery equipment, steel, andnonmetallic products

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products
Yashima Chemical Engineering Co., Ltd.
Operations: Design, manufacture, sales, and maintenance ofchemical and pharmaceutical equipment
Nihon Kaiser Co., Ltd.
Operations: Manufacture and sales of half precast products
Kurimoto Business Associates Co., Ltd.
Operations: Management and leasing of real estate, staffing
service, travel agency, insurance agency

12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Telephone (06)6538-7603
Facsimile (06)6538-7758
URL https://www.kurimoto.co.jp/worldwide/en/30