HAZAMA ANDO CORPORATIONFINANCIAL REVIEW 2023
Year ended March 31, 2023

CONTENTS
Consolidated Financial Review ���������������������������������������������������������������������� 1
Consolidated Balance Sheets ������������������������������������������������������������������������� 4
Consolidated Statements of Income �������������������������������������������������������������� 6
Consolidated Statements of Comprehensive Income ������������������������������������� 7
Consolidated Statements of Changes in Net Assets ��������������������������������������� 8
Consolidated Statements of Cash Flows ������������������������������������������������������ 10
Notes to Consolidated Financial Statements ������������������������������������������������ 12
Independent Auditor‘s Report ��������������������������������������������������������������������� 37

Consolidated Financial Review
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2023, 2022, 2021, 2020 and 2019

Summary

2023

2022

2021

2020

2019

Thousands of
U.S. dollars
2023¥345,858
26,288372,146
330,123
42,023¥316,154
24,140340,294
293,432
46,862¥331,695
20,451
352,146
303,981
48,165¥358,191
19,945378,136
330,918
47,218¥334,245
25,727359,972
314,180
45,792$2,589,921
196,855
2,786,776
2,472,091
314,685

22,17020,26120,80822,517

22,100166,018

19,853

26,601

27,357

24,701

23,692

148,667

15,18817,671

17,18916,804

8,863

113,734¥318,014
176,689
141,325¥295,333
153,650
141,683¥339,387
192,711
146,676¥339,772
202,873
136,899¥349,657
215,974
133,683$2,381,414
1,323,117
1,058,297¥32,272¥(36,086)¥29,155¥(3,103)¥5,900$241,666(4,740)(4,549)(3,954)(3,016)(2,357)(35,495)(18,425)(22,565)(12,656)(13,244)(7,780)(137,974)

Millions of yen
Operating results:
Revenues
		Construction contracts
		Other activities
		TotalCost of sales
Gross profit
Selling, general and		administrative expenses
Operating income
Profit attributable to		 owners of parent
Financial position:
Total assets
Total liabilities
Total net assets
Cash flows:
Cash flows from operating		activities
Cash flows from investing		activities
Cash flows from financing
		activities

Yen
Per share amounts:
Profit attributable to		 owners of parent
		Basic
		Diluted
Dividends
		Common stock
Net assets

U.S. dollars¥94.02—¥98.8498.84¥89.8089.78¥84.4284.40¥45.21
44.20

$0.70
—

40.00
897.8440.00
834.0030.00
782.2830.00
704.8630.00
664.780.30
6.72

Note: 1. U.S. dollar amounts in this Financial Review are translated from yen at the rate of ¥133.54 to US$1.00 for convenience.
2. The Company has applied Accounting Standards Board of Japan (“ASBJ”) Statement No. 29, “Accounting Standard for
Revenue Recognition” (March 31, 2020), etc. since the beginning of the fiscal year ended March 31, 2022 (“fiscal 2022”),
thereby information above for the fiscal year 2021 have been adjusted retrospectively.

1Financial Review
Note on Figures for the Previous Consolidated Fiscal Year
The Company has applied ASBJ Statement No. 29, “Accounting Standard for Revenue Recognition” (March 31, 2020), etc. since
the beginning of the consolidated fiscal year 2022, and thereby each figure for the consolidated fiscal year 2021 in this “Financial
Review” is retroactively adjusted.
Revenues
Revenues in fiscal 2023 totaled ¥372,146 million (US$2,786,776 thousand), of which ¥345,858 million (US$2,589,921 thousand)came from construction projects and ¥26,288 million (US$196,855 thousand) from other activities. These two business segments
accounted for 92.9% and 7.1%, respectively, of total revenues.
Costs and Expenses
Cost of sales amounted to ¥330,123 million (US$2,472,091 thousand), which is equivalent to 88.7% of revenues. Selling, generaland administrative expenses amounted to ¥22,170 million (US$166,018 thousand), which is equivalent to 6.0% of revenues.
Operating income reached ¥19,853 million (US$148,667 thousand), and the operating margin was 5.3%. Profit attributable toowners of parent amounted to ¥15,188 million (US$113,734 thousand). Basic profit attributable to owners of parent per share was¥94.02 (US$0.70). HAZAMA ANDO CORPORATION paid dividend of ¥20 (US$0.150) per share for the fiscal year ended
March 31, 2022 on June 30, 2022, and paid interim dividend of ¥20 (US$0.150) per share for the fiscal year ended March 31, 2023
on December 5, 2022.
Financial Position and Analysis
Total assets amounted to ¥318,014 million (US$2,381,414 thousand), total liabilities amounted to ¥176,689 million(US$1,323,117 thousand), and total net assets amounted to ¥141,325 million (US$1,058,297 thousand) at the end of fiscal 2023.
Net worth to total assets ratio was 44.2%. Net assets per share amounted to ¥897.84 (US$6.72).
Cash Flows
Cash and cash equivalents at the end of the year increased by ¥9,586 million (US$71,784 thousand) to ¥74,326 million(US$556,582 thousand).
Net cash provided by operating activities amounted to ¥32,272 million (US$241,666 thousand) mainly because cash increasing
factors such as income before income taxes of ¥22,299 million (US$166,984 thousand) and an increase in advances received of¥15,021 million (US$112,483 thousand) absorbed cash decreasing factors such as an increase in notes and accounts receivable of¥4,647 million (US$34,799 thousand) and an increase in consumption taxes refund receivable of ¥3,737 million (US$27,984
thousand).
Net cash used in investing activities amounted to ¥(4,740) million (US$(35,495) thousand) mainly because cash decreasing
factors such as purchase of marketable securities and investment securities of ¥3,071 million ($22,997 thousand), and purchase ofproperty, plant and equipment of ¥2,999 million (US$22,458 thousand) absorbed cash increasing factors such as proceeds fromwithdrawal of time deposits of ¥1,467 million (US$10,986 thousand).
Net cash used in financing activities amounted to ¥(18,425) million (US$(137,974) thousand) mainly because cash decreasing
factors such as purchase of treasury stock of ¥10,632 million (US$79,617 thousand), cash dividends paid of ¥6,656 million(US$49,843 thousand), and repayment of long-term loans payable of ¥4,953 million (US$37,090 thousand) absorbed cash
increasing factors such as proceeds from long-term loans payable of ¥4,611 million (US$34,529 thousand).
Construction Business (Non-Consolidated Construction Projects)
As HAZAMA ANDO CORPORATION’s construction business accounts for a large percentage of consolidated group business,
the financial performance of the business is presented below for reference.
Millions of yen
Revenues
Civil engineering
		Domestic			Government sector
			Private sector
		Overseas
Subtotal
Building construction
		Domestic			Government sector
			Private sector
Overseas
Subtotal
Total construction projects

2

Thousands of
U.S. dollars
2023

2023

2022

2021

2020

2019

¥77,905
48,2997,226
133,430¥76,436
48,201
7,627
132,264¥85,011
43,6907,275
135,976¥78,588
35,983
9,743
124,314¥70,268
40,531
7,991
118,790$583,383
361,682
54,111
999,176

33,388152,339
20,477206,204¥339,634

26,662
144,759
7,106
178,527¥310,791

18,592
164,058
9,563
192,213¥328,189

30,131
180,720
16,363
227,214¥351,528

26,932
161,430
20,497
208,859¥327,649

250,023
1,140,774
153,340
1,544,137$2,543,313

Revenue from the civil engineering category accounted for ¥133,430 million (US$999,176 thousand), or 39.3% of total revenue
from construction projects, with domestic projects contributing ¥126,204 million (US$945,065 thousand), or 94.6%.
The government sector contributed ¥77,905 million (US$583,383 thousand), or 61.7% of total domestic civil engineering
revenue, while private-sector civil engineering revenue amounted to ¥48,299 million (US$361,682 thousand), or 38.3% of total
domestic civil engineering revenue. Overseas civil engineering revenue reached ¥7,226 million (US$54,111 thousand), equivalent
to 5.4% of total revenue in the civil engineering category.
Revenue from the building construction category accounted for ¥206,204 million (US$1,544,137 thousand), or 60.7% of total
construction revenue. Domestic projects accounted for ¥185,727 million (US$1,390,797 thousand), or 90.1%.
The government sector contributed ¥33,388 million (US$250,023 thousand), or 18.0% of total domestic building construction
revenue, while private-sector building construction revenue amounted to ¥152,339 million (US$1,140,774 thousand), or 82.0% of
total domestic building construction revenue. Overseas building construction revenue reached ¥20,477 million (US$153,340
thousand), equivalent to 9.9% of total revenue in the building construction category.
Total overseas construction revenue reached ¥27,703 million (US$207,451 thousand) and accounted for 8.2% of total
construction revenue. Civil engineering projects and building construction accounted for 26.1% and 73.9% of this total,
respectively.
Millions of yen
Orders Received
Civil engineering
Building construction
Total construction projects

2023¥103,275
244,946¥348,221

2022¥122,593
187,250¥309,843

2021¥101,528
199,341¥300,869

2020¥193,575
186,706¥380,281

2019¥192,179
235,473¥427,652

Thousands of
U.S. dollars
2023$773,364
1,834,252$2,607,616

Orders received for construction projects during fiscal 2023 amounted to ¥348,221 million (US$2,607,616 thousand). Overseas
work contributed 7.9% of orders in the construction category. Civil engineering orders amounted to ¥103,275 million(US$773,364 thousand), or 29.7% of total construction orders. Building construction orders amounted to ¥244,946 million(US$1,834,252 thousand), which is equivalent to 70.3% of total construction orders.
Millions of yen
Year-end Backlog
Civil engineering
Building construction
Total construction projects

2023¥290,138
237,932¥528,070

2022¥320,145
198,538¥518,683

2021¥329,718
189,606¥519,3242020¥364,120
182,579¥546,699

2019¥294,914
223,318¥518,232

Thousands of
U.S. dollars
2023$2,172,668
1,781,728$3,954,396

Order backlog for construction projects at the end of fiscal 2023 amounted to ¥528,070 million (US$3,954,396 thousand), withcivil engineering work accounting for ¥290,138 million (US$2,172,668 thousand), or 54.9%, and building construction accountingfor ¥237,932 million (US$1,781,728 thousand), or 45.1%.

3

Consolidated Balance Sheets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
March 31, 2023 and 2022

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

Millions of yen
2023

2022

¥75,598¥66,081

AssetsCurrent assets:
Cash and time deposits (Notes 20 and 21)$566,108

Receivables (Notes 8, 21 and 26):
3,219

6,900

24,105

141,875

133,531

1,062,416

Inventories (Notes 3 and 6)

10,746

12,00680,470

Other (Note 5)

14,102

9,567

105,601

(160)

(14)

(1,198)245,380

228,071

1,837,502

Land

15,487

15,853

115,973

Buildings and structures

23,48922,894

175,895

Machinery and equipment

11,29812,92584,604

Notes
Accounts

Less allowance for doubtful accounts
Total current assets

Property, plant and equipment (Notes 5, 7, 13, 14 and 15):

3,206

1,915

24,00753,48053,587400,479(22,125)(23,400)(165,680)

31,35530,187

234,799

24,73920,784

185,255

Investments in unconsolidated subsidiaries and affiliates (Note 21)

282

176

2,112

Long-term loans receivable (Note 5)

63

74

472

Other
Less accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Investment securities (Notes 5, 21 and 22)

Net defined benefit asset (Note 24)

3,519

2,546

26,352

Deferred tax assets (Note 25)

6,455

7,091

48,337
50,112Other (Note 5)

6,692

6,405

Less allowance for doubtful accounts

(471)

(1)

(3,527)

Total investments and other assets

41,27937,075309,113¥318,014¥295,333$2,381,414

Total assets

See accompanying notes.

4Millions of yen

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

2023

2022

¥12,157¥12,178$91,036

4,333

4,498

32,447

127

237

951

58,03752,745434,604

Liabilities and Net Assets
Current liabilities:
Short-term loans payable (Notes 4 and 21)
Current maturities of long-term loans payable (Notes 4 and 21)
Current portion of bonds (Notes 4 and 21)
Payables (Note 21):
Accounts
Income taxes payable

3,962

3,072

29,669Advances received (Notes 9, 10 and 26)

37,53923,553281,107

Accrued expenses

83

36

622

Provision for losses on construction contracts (Note 6)

654

596

4,897

Provision for losses on fire disaster

—

3,921

—

Other (Notes 9 and 26)
Total current liabilities

47,32539,553354,388

164,217140,389

1,229,721

36

163

270

Long-term liabilities:
Bonds (Notes 4 and 21)
Long-term loans payable, less current maturities (Notes 4 and 21)

7,463

7,640

55,886

Net defined benefit liability (Note 24)

3,198

3,816

23,948Provision for environmental spending

139

139

1,041

Provision for management board incentive plan trust

207

163

1,550

Provision for employee stock ownership plan trust

304

—

2,276

32

37

240

1,093

1,303

8,185

Total long-term liabilities

12,472

13,261

93,396

Total liabilities

176,689

153,650

1,323,117

Deferred tax liabilities (Note 25)
Other

Net assets (Notes 18 and 19):
Shareholders’ equity:
Capital stock
Common stock

Authorized – 400,000,000 shares
17,00617,006

127,348

Capital surplus

17,05817,058

127,737

Retained earnings

122,656

114,124

918,496

Less treasury stock, at cost

(21,106)(10,422)(158,050)

135,614

137,766

1,015,531

3,846

2,997

28,800

Deferred gains or losses on hedges

179

(346)

1,340

Foreign currency translation adjustment

203

86

1,520

				

Issued – 181,021,197 shares

Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities

Accumulated remeasurements of defined benefit plans

644

418

4,823

Total accumulated other comprehensive income

4,872

3,155

36,483

839

762

6,283

Non-controlling interests
Total net assets

141,325

141,683

1,058,297

Total liabilities and net assets¥318,014¥295,333$2,381,414

5Consolidated Statements of Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2023 and 2022

Millions of yen

Revenues (Notes 16, 26 and 27):
Construction contracts
Other activities
Cost of sales:
Construction contracts (Note 11)
Other activities (Note 12)
Gross profit
Selling, general and administrative expenses (Note 12):		Operating income
Other income (expenses):
Interest and dividends income
Foreign exchange gain
Late charges income
Interest expense
Share of loss of entities accounted for using equity method
Foreign exchange loss
Commission fee
Compensation for damage
Compensation received for damage
Reversal of provision for losses on fire disaster
Subsidy income
Gain on sales of noncurrent assets (Note 13)
Gain on sales of investment securities (Note 22)
Losses on fire disaster
Impairment losses (Note 15)
Loss on tax purpose reduction entry of noncurrent assets
Loss on sales of noncurrent assets (Note 14)
Loss on retirement of noncurrent assets
Loss on valuation of investment securities (Note 22)
Head office relocation expenses
Loss on litigation
Other, net
Income before income taxes
Income taxes (Note 25):
Current
DeferredProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

2023

2022

¥345,858
26,288372,146¥316,154
24,140340,294$2,589,921
196,855
2,786,776

306,531
23,592
330,123
42,023
22,17019,853

273,099
20,333
293,432
46,862
20,261
26,601

2,295,425
176,666
2,472,091
314,685
166,018
148,667

448
330
—
(351)
(53)
—
(187)
(428)
2,700
306
95
64
180
—
(75)
(91)
—
(73)
(72)
(339)
(4)
(4)
2,446
22,299

317
—
166
(321)
(273)
(104)
(155)
(377)
—
—
67
—
241
(181)
—
(67)
(19)
(115)
(27)
(306)
(42)
(15)
(1,211)
25,390

3,355
2,471
—
(2,628)(397)—(1,400)(3,205)
20,219
2,292
711
479
1,348
—
(562)
(681)
—
(547)
(539)
(2,539)(30)(30)
18,317
166,984

6,978
143
7,121
15,178(10)¥15,188

6,769
949
7,718
17,672
1¥17,671

52,254
1,071
53,325
113,659(75)$113,734

Yen
Per share amounts (Note 28):
Profit attributable to owners of parent
		Basic
		Diluted
Cash dividends applicable to the year
		Common stock

See accompanying notes.

6

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

U.S. dollars(Note 1)
2023

2023

2022

¥94.02—¥98.84
98.84

$0.70
—

40.00

40.00

0.300

Consolidated Statements of Comprehensive Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2023 and 2022

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

Millions of yen
2023

2022

¥15,178¥17,672$113,659

Valuation difference on available-for-sale securities

849

(758)

6,358

Foreign currency translation adjustment

207

35

1,550

Remeasurements of defined benefit plans

226

137

1,692

525

(345)

3,931

ProfitOther comprehensive income		Share of other comprehensive income of entities accounted for using equity
methodTotal other comprehensive income (Note 17)
Comprehensive income

1,807

(931)

13,531

16,985

16,741

127,190

16,905

16,735

126,591

80

6

599

Comprehensive income attribute to:Comprehensive income attribute to owners of the parent
Comprehensive income attribute to non-controlling interests

See accompanying notes.

7

Consolidated Statements of Changes in Net Assets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2023 and 2022

Millions of yen
Shareholders’ equity
Capital stock
Balance at April 1, 2021

¥17,006

CapitalsurplusRetainedearnings

Treasury
Stock¥19,919¥115,086¥(10,188)

Cash dividends paid

(6,423)

   Profit attributable to owners of parent

17,671

Acquisition of treasury stock(15,328)(23)

46

Cancellation of treasury stock

Disposal of treasury stock(15,048)

15,048Transfer from other retained earnings to other capital surplus

12,210(12,210)¥17,058¥114,124

Net changes in items other than shareholders’ equity
Balance at April 1, 2022

¥17,006¥(10,422)(6,656)

Cash dividends paid

15,188

   Profit attributable to owners of parent(10,692)

Acquisition of treasury stock

8

Disposal of treasury stock
Net changes in items other than shareholders’ equity
Balance at March 31, 2023

¥17,006¥17,058¥122,656¥(21,106)Millions of yen
Accumulated other comprehensive income
Share
Accumulated
Foreign
Valuation
Deferred gains
currency remeasurements subscription
difference onor losses onrightsof definedtranslation
available-forhedges
adjustment benefit planssale securities
Balance at April 1, 2021

¥3,755

¥—

¥56

¥281

¥3

Noncontrollinginterests¥758

Cash dividends paid

¥146,676(6,423)

   Profit attributable to owners of parent

17,671

Acquisition of treasury stock(15,328)

Disposal of treasury stock

23

Cancellation of treasury stock—

Transfer from other retained earnings to other capital surplus—

Net changes in items other than shareholders’ equity
Balance at April 1, 2022

(758)

(346)

30

137

(3)

4

(936)

¥2,997¥(346)

¥86

¥418

¥—

¥762

¥141,683(6,656)

Cash dividends paid

15,188

   Profit attributable to owners of parent(10,692)

Acquisition of treasury stock

8

Disposal of treasury stock
Net changes in items other than shareholders’ equity
Balance at March 31, 2023

8

Total

849

525

117

226

—

77

1,794

¥3,846

¥179

¥203

¥644

¥—

¥839

¥141,325

Thousands of U.S. dollars (Note 1)
Shareholders’ equity

Balance at April 1, 2022

Capital stock

CapitalsurplusRetained
Earnings

Treasurystock$127,348$127,737$854,605$(78,044)(49,843)

Cash dividends paid

113,734

   Profit attributable to owners of parent(80,066)

Acquisition of treasury stock60

Disposal of treasury stock
Net changes in items other than shareholders’ equity
Balance at March 31, 2023

$127,348$127,737$918,496$(158,050)

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Share
Accumulated
Foreign
Valuation
Deferred gains
currency remeasurements subscription
difference onor losses onrightsof definedtranslation
available-forhedges
adjustment benefit planssale securities
Balance at April 1, 2022

$22,442$(2,591)$644$3,131$—

Noncontrollinginterests$5,706

113,734(80,066)

Acquisition of treasury stock60

Disposal of treasury stock
Balance at March 31, 2023

$1,060,978(49,843)

Cash dividends paid
   Profit attributable to owners of parent

Net changes in items other than shareholders’ equity

Total

6,358

3,931

876

1,692

—

577

13,434$28,800$1,340$1,520$4,823$—$6,283$1,058,297

See accompanying notes.

9Consolidated Statements of Cash Flows
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2023 and 2022

Millions of yen

Cash flows from operating activities:
Income before income taxes
Adjustment to reconcile income before income taxes to net
cash provided by operating activities:
		 Depreciation and amortization
		 Loss on tax purpose reduction entry of noncurrent assets
Subsidy income
		 Compensation received for damage
Loss on fire disaster		Impairment losses
Increase (decrease) in allowance for doubtful accounts
		 Increase (decrease) in provision for warranties for completed construction
		 Increase (decrease) in provision for losses on construction contracts
Increase (decrease) in provision for losses on fire disaster
Increase (decrease) in net benefit defined liability
Decrease (increase) in net benefit defined asset
		 Interest and dividends income
		Interest expense
		 Foreign exchange loss (gain)
		 Loss (gain) on sales of investment securities
Share of loss (profit) of entities accounted for using equity method
Changes in assets and liabilities:
Decrease (increase) in notes and accounts receivable
		 Decrease (increase) in costs on uncompleted construction contracts
		 Decrease (increase) in other inventories
		 Decrease (increase) in advances paid
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in notes and accounts payable
		 Increase (decrease) in advances received
		 Increase (decrease) in deposit received
Increase (decrease) in consumption tax payable
		Other, net
SubtotalInterest and dividends received
Interest paid
Compensation for damage paid
Income taxes paid
Proceeds from compensation received for damage
Proceeds from insurance income
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of marketable securities and investment securities
Proceeds from sales of marketable securities and investment securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Proceeds from refund of leasehold and guarantee deposits
Payments for investments in capital of subsidiaries and affiliates
Proceeds from subsidies
Other, net
Net cash used in investing activities

10

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

2023

2022

¥22,299¥25,390$166,984

2,100
91
(95)
(2,700)
—
75
615
1,341
58
(306)
(195)
(1,077)
(448)
351
(370)
(180)
53

2,410
67
(67)
—
181
—
2
(687)
(653)
(2,075)(4,965)(1,719)
(317)
321
181
(241)
273

15,726681(711)(20,219)
—
562
4,605
10,042434(2,291)(1,460)(8,065)(3,355)2,628(2,771)(1,348)397(4,647)
409
851
(169)
(3,737)
7,327
15,021
6,836(1,027)(2,430)40,046419(350)(5,468)(6,205)2,700
1,130
32,272(18,962)
1,518
893
606
(118)
(23,506)(9,151)
3,525(2,521)
4,430(25,185)291(298)(2,211)(8,683)——(36,086)(34,799)
3,063
6,373
(1,266)(27,984)
54,867
112,483
51,191(7,691)(18,196)
299,880
3,138(2,621)(40,947)(46,465)
20,2198,462
241,666(1,241)
1,467(3,071)336(2,999)
347
713
—
95
(387)
(4,740)(1,346)
1,282
(434)
359
(2,558)21
236(1,876)67(300)(4,549)(9,293)
10,986(22,997)
2,516(22,458)
2,599
5,339
—
711
(2,898)(35,495)

Millions of yen

Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 20)

2023

2022

(81)
4,611
(4,953)(237)(10,632)(6,656)(3)(474)(18,425)479
9,586
64,740¥74,326(31)
4,291(4,571)(292)(15,328)(6,423)(2)(209)(22,565)(95)(63,295)
128,035¥64,740

Thousands of
U.S. dollars(Note 1)
2023
(607)
34,529(37,090)(1,775)(79,617)(49,843)(22)(3,549)(137,974)
3,587
71,784
484,798$556,582

See accompanying notes.

11Notes to Consolidated Financial Statements
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2023 and 2022

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of HAZAMA ANDO CORPORATION (“the Company”) and its
consolidated subsidiaries (collectively, “the Companies”) have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English with some expanded
descriptions from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act.
Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required
for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amount into U.S. dollars are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2023, which was ¥133.54 to U.S. $1.00. The convenience translations should not
be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted
into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies(1) Consolidation and equity method accounting(a) Consolidation
As of March 31, 2023 and 2022, the number of consolidated subsidiaries was six, namely, Hazama Ando Kogyo Co., Ltd.,
Aoyama Kiko Co., Ltd., Ryoko Kaihatsu Co., Ltd., HAZAMA ANDO (THAILAND) CO., LTD., PT. Hazama Ando Murinda(Indonesia) and VIETNAM DEVELOPMENT CONSTRUCTION CO., LTD.
The Company had one principal unconsolidated subsidiary, Todai Interact PFI Co., Ltd. Todai Interact PFI Co., Ltd. was
excluded from the scope of consolidation because it does not have a significant impact on the group or its consolidated financial
statements in terms of total assets, revenues, profit (loss) (amount corresponding to the Company’s equity) and retained earnings(amount corresponding to the Company’ equity), and is immaterial as a whole.
(b) Equity method accounting
As of March 31, 2023 and 2022, there were no unconsolidated subsidiaries. The Company had one affiliate accounted for using
the equity method, namely, Sakaide Biomass Power LLC. Sakaide Biomass Power LLC was accounted for using the equity
method from the fiscal year ended March 31, 2022 because it was established in that year. The Company had one principal
unconsolidated subsidiary not accounted for using the equity method, namely, Todai Interact PFI Co., Ltd. The Company had one
principal affiliate not accounted for using the equity method, namely, Choshi Gakko Kyushoku Service Co., Ltd. These companies
were excluded from the scope of the equity method as they do not have a significant impact on the consolidated financial
statements in terms of profit (loss) (amount corresponding to the Company’s equity) and retained earnings (amount corresponding
to the Company’ equity) , and are immaterial as a whole.
(c) Fiscal years of consolidated subsidiaries
The fiscal year closes on December 31 at three foreign consolidated subsidiaries including HAZAMA ANDO (THAILAND) CO.,LTD. These subsidiaries were consolidated using their financial statements as of that date, with necessary adjustments made toreflect any significant transactions that occurred from January to March 31.
All other consolidated subsidiaries close their fiscal years on March 31.
(2) Foreign currency translation
Revenues and expenses denominated in foreign currencies are translated at the rates of exchange prevailing when transactions are
made. Assets and liabilities denominated in foreign currencies are generally translated at the rates of foreign exchange prevailingat the balance sheet date and the resulting translation gains or losses are included in earnings.
(3) Securities
Available-for-sales securities are accounted for as follows:(a) Securities other than those without market prices are stated at fair value (with the entire amounts of valuation differences
recorded directly into net assets, and cost of sales calculated using the moving-average method).
(b) Securities without market prices are stated at moving-average cost.
Investments in investment limited partnerships and similar partnerships (that are deemed as securities under Article 2, Paragraph 2of the Financial Instruments and Exchange Act) are stated at the amount corresponding to the Company’s interests of thepartnership’s equity based on the latest financial statements available according to the financial reporting dates stipulated in thepartnership agreements. The amount corresponding to the Company’s interests of profits or losses resulting from the operations of
the partnership is recorded in other income or expenses and added to or deducted from investment securities.

12(4) Derivatives
Derivatives are stated at fair value.
(5) Inventories(a) Real estate for sale
Real estate for sale is stated at cost based on the specific-identification method (with amount shown on balance sheet written down
as profitability declines).
(b) Costs on uncompleted construction contracts
Costs on uncompleted construction contracts are stated at cost based on the specific-identification method.
(c) Costs on other business
Costs on other business are stated at cost based on the specific-identification method (with amount shown on balance sheet written
down as profitability declines).
(d) Raw materials and supplies
Raw materials and supplies are stated at cost based on the moving-average method (with amount shown on balance sheet written
down as profitability declines).
(6) Property, plant and equipment and intangible assets(a) Property, plant and equipment (except for leased assets)
Depreciation of buildings (excluding facilities attached to buildings) and facilities attached to buildings and structures which wereacquired on or after April 1, 2016 is recorded using the straight-line method, except that the declining-balance method is applied
to buildings of one consolidated subsidiary. Depreciation of other property, plant and equipment is recorded using the decliningbalance method over estimated useful lives.
Useful lives and residual values are estimated according to Japanese tax regulations.
(b) Intangible assets (except for leased assets)
Amortization of intangible fixed assets is recorded using the straight-line method. Useful lives are estimated according to Japanese
tax regulations.
Software for internal use is amortized over the estimated useful life of five years, using the straight-line method.
(7) Lease transactions
Finance leases which do not transfer ownership of leased assets
Leased assets arising from finance lease transactions which do not transfer ownership to the lessee are depreciated to a residual
value of zero by the straight-line method using the contract term as useful life.
(8) Allowance for doubtful accounts
To prepare for credit loss on receivables, collectability of normal receivables is estimated by applying the historical overall credit
loss rates, and collectability of doubtful receivables is analyzed individually and the estimated uncollectible amount is recorded.
(9) Provision for warranties for completed construction
To prepare for repairs on completed construction, the provision is recorded based on the actual repair rate in a certain period oftime, and based on the estimated future repair costs of specific projects.
(10) Provision for bonuses
To prepare for the payment of employee bonuses, an amount corresponding to the amount of estimated bonus payments toemployees is recorded.
(11) Provision for losses on construction contracts
To prepare for future losses related to construction contracts, the amount of estimated losses is recorded for the construction
contracts when losses are probable to occur and such losses can be reasonably estimated.
(12) Provision for losses on fire disasterTo prepare for future losses due to the fire, the amount of estimated losses other than construction costs at the end of theconsolidated fiscal year is recorded in the provision for losses on fire disaster.
(13) Provision for environmental spending
To prepare for the treatment of Polychlorinated Biphenyl waste, which is obligated by the “Act on Special Measures Concerning
Promotion of Proper Treatment of PCB Waste,” the estimated cost for treatment is recorded.

13

(14) Provision for management board incentive plan trust
To prepare for future awards of the Company’s stock to the directors and executive officers, the estimated cost for stock award
obligation based on predetermined regulations for awarding stock is recorded.
(15) Provision for employee stock ownership plan trust
To prepare for future awards of the Company’s stock to employees, the estimated cost for stock award obligation based on
predetermined regulations for awarding stock is recorded.
(16) Retirement and severance benefits
Retirement benefit obligation is calculated by allocating the estimated retirement benefit amount to periods until the end of thecurrent consolidated fiscal year on a benefit formula basis. Actuarial differences are recognized in expenses using the straight-line
method over periods less than the average of the estimated remaining years of service (9 years) commencing with the succeeding
period. Prior service costs are recognized in expenses using the straight-line method over periods less than the average of theestimated remaining years of service (3 years) commencing with the present period.
Some of the Companies including the Company adopt certain lump-sum payment plans, and apply a simplified method where
the amount that would be required for voluntary termination at the fiscal year-end is recorded as retirement benefit obligation in
the calculation of net defined benefit liability and retirement benefit costs.
(17) Significant recognition criteria for revenue and cost(a) Recognition criteria for revenue arising from contracts with customers
The Company’s primary performance obligation is construction of civil engineering and building in Japan and overseas. In
principle, the Company makes estimates for every construction contract. The Company enters into a construction contract with acustomer after agreeing on a contract amount based on the estimate and contract terms (e.g., payment term), and afterwards,
recognizes a contract amount (excluding consumption tax) as the transaction price. This process is also applied to construction
works for additional and specification changes to an original agreement. If a customer agrees on additional construction works, but
a construction contract has not yet been concluded, revenue is recognized as the transaction price only to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognized will not occur.
The Company recognizes revenue from construction of civil engineering and building at an amount expected to be received in
exchange for goods or services when control over the promised goods or services is transferred to the customer. If control over thepromised goods or services is transferred to the customer over time, revenue is recognized based on progress toward complete
satisfaction of a performance obligation. The outcome of a construction contract is measured based on the proportion of
construction costs incurred by the end of the reporting period to the total expected construction costs. In some circumstances, theCompany may not be able to reasonably measure the outcome of a performance obligation, but expects to recover the costs
incurred in satisfying the performance obligation. In those circumstances, the Company recognizes revenue only to the extent of
the costs incurred until such time that it can reasonably measure the outcome of the performance obligation. For a construction
contract where the period from the date of the contract commencement to the date when the performance obligation is expected to
be fully satisfied is very short, the Company applies the alternative treatment; and recognizes revenue when the performanceobligation is fully satisfied, instead of recognizing revenue over time. Incidentally, the Company has no significant financing
components in contracts with customers at the end of the current consolidated fiscal year.
The performance obligation and the timing for revenue recognition in reportable segments (including civil engineering andbuilding) are as follows:Business segments

Major performance obligations

Civil engineering and Building

Construction in Japan and overseas

Group business

Sales of construction materials: at a point
in time when the product is transferred toSales of construction materials andthe customer.
Construction of civil engineering andConstruction of civil engineering andbuildings by consolidated subsidiaries
buildings: same as the Civil engineeringand Building segment.

Other businessCommissioned business in research and At a point in time when the deliverables
study
are transferred to the customer.

(b) Recognition criteria for recording revenue and cost from finance lease transactions
Revenue and cost are recognized at a point in time of receipt of lease payment.

14

When to recognize revenue
As described above.

(18) Hedging transactions(a) Hedge accounting method
In principle, the deferred hedge method is applied. For monetary receivables and payables denominated in foreign currencies withforward foreign exchange contracts, the allocation method is applied. For interest rate swap contracts that meet specific matching
criteria, special case interest swap treatment is applied.
(b) Hedging instruments and hedged items
Hedging instruments are derivative transactions such as interest rate swap contracts and forward foreign currency contracts.
Hedged items are assets or liabilities with a probability of losses due to fluctuations in markets and other factors for which
fluctuations are not reflected in their valuation, or whose cash flows are fixed and thereby such fluctuations are avoided.
(c) Hedging policy
Currently or in the future, the Company uses derivative transactions only when there are assets or liabilities to be hedged, and does
not use them for trading or speculative purposes.
(d) Method of evaluating hedge effectiveness
The Company evaluates hedge effectiveness by comparing the cumulative changes in markets or cash flows of hedged items andthose of the hedging instruments during the period from the inception date of hedging to the evaluation date of hedge
effectiveness. However, the evaluation of hedge effectiveness is omitted for interest rate swap contracts to which special caseinterest swap treatment is applied.
(19) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments that are readily convertible into
cash and are exposed to insignificant risk of changes in value, all of which mature or become due within three months of the dateof acquisition.
See Note 20 “Cash and Cash Equivalents” for a reconciliation of cash and cash equivalents reported in the consolidated
statements of cash flows with cash and time deposits reported in the consolidated balance sheets.
(20) Other significant matters in preparation of the consolidate financial statements(Accounting policies and procedures applied in the absence of specific regulations in relevant accounting standards, etc.)
The Company accounts for joint venture constructions according to the investment ratio.
(21) Significant accounting estimates(Estimate of total construction costs in relation to revenue recognition)(a) Amount recorded in the consolidated financial statements for the current consolidated fiscal year:
Millions of yen
Revenues from completed construction contracts recognized over time
Total

2023
¥332,100¥332,100

2022¥301,927¥301,927

Thousands of
U.S. dollars
2023$2,486,895$2,486,895(b) Information on nature of significant accounting estimate for identified item
The Company recognizes over time “Revenues of completed construction contracts” and “Cost of completed construction
contracts” of constructions whose total amounts of revenues, costs, and progresses can be estimated reliably as of the accountclosing date. In estimating total amount of cost, the Company creates an individual working budget which incorporates factors
specific to each project based on past construction results, and reflects modifications of construction content due to changes in thesituations after the start of construction and so on in the budget as they arise. However, increases in construction cost caused by an
unexpected event (e.g., surges in subcontracting, material, and equipment costs, and additional cost for correction) will affect theCompany’s future business performance.
(22) Changes in accounting policy
For the fiscal year ended March 31, 2023
(Application of “Implementation Guidance on Accounting Standard for Fair Value Measurement”)
The Company has applied ASBJ Guidance No. 31 “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (June 17, 2021) (hereinafter referred to as “the Guidance”) since the beginning of the fiscal year ended March 31,2023; and prospectively applies the new accounting policies specified in the Guidance, in accordance with the transitional
treatment specified in Paragraph 27-2 of the Guidance. The application of the Guidance does not affect the consolidated financial
statements for the fiscal year ended March 31, 2023.

15

For the fiscal year ended March 31, 2022
(Application of “Accounting Standard for Revenue Recognition,” etc.)
The Company has applied ASBJ Statement No. 29, “Accounting Standard for Revenue Recognition” (March 31, 2020)(hereinafter referred to as “the Revenue Recognition Standard”), etc. since the beginning of the fiscal year ended March 31, 2022;
and recognizes revenue at an amount expected to be received in exchange for goods or services when control over the promised
goods or services is transferred to the customer. The Company had previously applied the percentage of completion method forrecognizing revenue from a construction contract when an outcome of progress part of the construction was deemed certain;otherwise the completed contract method was applied; however, in accordance with the Revenue Recognition Standard, theCompany has changed it to the method which recognizes revenue over time as a performance obligation to transfer goods orservices to a customer is satisfied when control over the goods or services is transferred to the customer over time. The outcome ofa construction contract is measured based on the proportion of construction costs incurred by the end of the reporting period to thetotal expected construction costs. In some circumstances, the Company may not be able to reasonably measure the outcome of aperformance obligation, but expects to recover the costs incurred in satisfying the performance obligation. In those circumstances,
the Company recognizes revenue only to the extent of the costs incurred until such time that it can reasonably measure theoutcome of the performance obligation. For a construction contract where the period from the date of the contract commencement
to the date when the performance obligation is expected to be fully satisfied is very short, the Company applies the alternative
treatment; and recognizes revenue when the performance obligation is fully satisfied, instead of recognizing revenue over time. In
principle, this change in accounting policy has been applied retrospectively.
(Accounting Standard for Fair Value Measurement.)
The Company has applied ASBJ Statement No. 30 “Accounting Standard for Fair Value Measurement” (July 4, 2019) (hereinafterreferred to as “the Fair Value Measurement Standard”), etc. since the beginning of the fiscal year ended March 31, 2022; andprospectively applies the new accounting policies specified in the Fair Value Measurement Standard, etc., in accordance with thetransitional treatment specified in both Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of ASBJ
Statement No. 10 “Accounting Standard for Financial Instruments” (July 4, 2019). The application of the standards does not affectthe consolidated financial statements for the fiscal year ended March 31, 2022.
In addition, notes on details of financial instrument by fair value levels, etc. have been made in Note 21 “Financial
Instruments.”(23) Changes in presentation(Consolidated Statements of Income)“Gain on extinguishment of debt” which was presented separately for the fiscal year ended March 31, 2022 is included in “Other,
net” under other income (expenses) for the fiscal year ended March 31, 2023, as it accounts for less than 10% of the total amountof non-operating income.
On the other hand, “Commission fee” which was included in “Other, net” under other income (expenses) for the fiscal year
ended March 31, 2022 is presented separately for the fiscal year ended March 31, 2023, as it accounts for more than 10% of thetotal amount of non-operating expenses.
The consolidated financial statements for the fiscal year ended March 31, 2022 have been reclassified in order to reflect thesechanges in presentation. As a result, “Gain on extinguishment of debt” of ¥187 million and “Other, net” of ¥(357) million underother income (expenses) in the consolidated statements of income for the fiscal year ended March 31, 2022 have been reclassified
into “Commission fee” of ¥(155) million and “Other, net” of ¥(15) million.
(Consolidated Statements of Cash Flows)“Loss (gain) on sales of property, plant and equipment” which was presented separately for the fiscal year ended March 31, 2022
is included in “Other, net” under cash flows from operating activities for the fiscal year ended March 31, 2023 due to a decrease inquantitative materiality.
On the other hand, “Decrease (increase) in consumption taxes refund receivable” which was included in “Other, net” undercash flows from operating activities for the fiscal year ended March 31, 2022 is presented separately for the fiscal year ended
March 31, 2023 due to an increase in quantitative materiality.
The consolidated financial statements for the fiscal year ended March 31, 2022 have been reclassified in order to reflect thesechanges in presentation. As a result, “Loss (gain) on sales of property, plant and equipment” of ¥14 million and “Other, net” of¥4,298 million under cash flows from operating activities in the consolidated statements of cash flows for the fiscal year ended
March 31, 2022 have been reclassified into “Decrease (increase) in consumption taxes refund receivable” of ¥(118) million and“Other, net” of ¥4,430 million.
“Payments of leasehold and guarantee deposits” which was presented separately for the fiscal year ended March 31, 2022 isincluded in “Other, net” under cash flows from investing activities for the fiscal year ended March 31, 2023 due to a decrease inquantitative materiality
On the other hand, “Proceeds from refund of leasehold and guarantee deposits” which was included in “Other, net” under cash
flows from investing activities for the fiscal year ended March 31, 2022 is presented separately for the fiscal year ended March 31,
2023 due to an increase in quantitative materiality.

16

The consolidated financial statements for the fiscal year ended March 31, 2022 have been reclassified in order to reflect thesechanges in presentation. As a result, “Payments of leasehold and guarantee deposits” of ¥(104) million and “Other, net” of ¥40
million under cash flows from investing activities in the consolidated statements of cash flows for the fiscal year ended March 31,
2022 have been reclassified into “Proceeds from refund of leasehold and guarantee deposits” of ¥236 million and “Other, net” of¥(300) million.
(24) Additional information(Performance-linked stock compensation plan)
The Company has introduced a performance-linked stock compensation plan for directors and executive officers and an employee
stock ownership plan trust as a performance-linked stock compensation plan.
(a) Performance-linked stock compensation plan for directors and executive officers(i) Transaction summary
The Company has introduced a performance-linked stock compensation plan as an incentive plan for its directors and executive
officers (the “Directors”). The plan is highly transparent and objective and closely linked with the Company’s performance for the
Directors, with the goal of increasing awareness of the importance of contributing to further enhancing the corporate value andperformance over the medium to long term.
The Company’s stock is acquired through the Board Incentive Plan Trust (“BIP Trust”) and awarded to the Directors according
to their rank and performance targets achieved.
(ii) The Company’s own stock in the Trust
The Company’s own stock in the Trust is recorded in treasury stock under net assets based on the book value in the Trust(excluding ancillary expenses). The book value of these shares of treasury stock in the Trust at the end of fiscal years ended March
31, 2023 and 2022 were ¥445 million (US$3,332 thousand) and ¥453 million, respectively, while the number of such treasury
stock was 628,754 shares and 639,519 shares, respectively.
(b) Employee stock ownership plan trust(i) Transaction summary
The Company resolved to introduce the Employee Stock Ownership Plan Trust (“ESOP Trust”) as an incentive plan for its
employees (the “Employees”) at the Board of Directors meeting held on May 27, 2022. The ESOP Trust is an incentive plan
intended to improve employee treatment and raise their awareness about the Company’s performance over the medium to longterm and its stock price, thereby to further promote business operations aimed at the sustainable improvement of corporate value.
At the same time, it is designed to strengthen the linkage with the development of the Company’s future management personnel
and the development of the Company and its corporate value.
The Company’s stock is acquired through the ESOP Trust and awarded to beneficiaries, who are the Employees meetingcertain requirements, according to their working status and performance targets achieved during the trust period.
(ii) Accounting treatment
To prepare for future awards of the Company’s stock to the Employees, the estimated cost for stock award obligation based on
predetermined regulations for awarding stock is recorded as provision for employee stock ownership plan trust.
(iii) The Company’s own stock in the Trust
The Company’s own stock in the Trust is recorded in treasury stock under net assets based on the book value in the Trust(excluding ancillary expenses). The book value and the number of these shares of treasury stock in the Trust at the end of the fiscal
year ended March 31, 2023 were ¥630 million (US$ 4,718 thousand) and 706,400 shares, respectively.
(25) Income taxes
The Companies recognize tax effects of temporary differences between the book values of assets and liabilities for tax andfinancial reporting purposes. The provision for income taxes is computed based on the pretax income included in the consolidated
statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected
future tax consequences of temporary differences.
(26) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the accompanying consolidated financial statements for the following year
upon the shareholders’ meeting approval.
(27) Amounts per share
Basic profit attributable to owners of parent per share is based on the weighted average number of common stock outstanding
during the period, and diluted profit per share reflects the potential dilution that could occur if preferred stock were converted into
common stock or share subscription rights were exercised. Diluted profit per share for the fiscal year ended March 31, 2023 is notpresented because the Company had no potential shares.
Cash dividends per share represent amounts applicable for the respective years on accrual basis.
Net assets per share of ¥897.84 (US$6.72) and ¥834.00 were reported at March 31, 2023 and 2022, respectively.

17

3. Inventories
Inventories at March 31, 2023 and 2022 consisted of the following:
Millions of yen
Costs on uncompleted construction contracts
OthersTotal

2023¥3,667
7,079¥10,7462022¥4,076
7,930¥12,006

Thousands of
U.S. dollars
2023$27,460
53,010$80,470

4. Short-Term Loans Payable, Long-Term Loans Payable and Bonds
Short-term loans payable are represented mainly by loan on deed. The average interest rates of short-term loans payable were1.3% and 1.1% at March 31, 2023 and 2022.
Bonds at March 31, 2023 and 2022 are summarized below:
Millions of yen
2023
Bonds from insurance companies and others due serially through 2024:
Unsecured 0.1% (average interest rates)
Less current maturities
Total

2022

¥163
(127)
¥36

¥346
(183)
¥163

Thousands of
U.S. dollars
2023$1,221(951)$270

Long-term loans payable at March 31, 2023 and 2022 are summarized below:
Millions of yen
2023
Long-term loans payable from banks, insurance companies, and others due serially through 2029:
Secured 1.5% (average interest rates)¥386
Unsecured 1.2% (average interest rates)
11,410Less current maturities(4,333)
Total¥7,4632022¥471
11,667(4,498)¥7,640Thousands of
U.S. dollars
2023$2,89185,442(32,447)$55,886

Repayment schedules for bonds are summarized below:
Years ending March 31,
2024
2025
2026
2027
2028
Total

Millions of yen
¥127
¥36
—
—
—
¥163

Thousands of
U.S. dollars
$951
$270
—
—
—
$1,221

Repayment schedules for long-term loans payable are summarized below:
Years ending March 31,
2024
2025
2026
2027
2028
Total

Millions of yen¥4,333
3,225
2,246
1,402
513
¥11,719

Thousands of
U.S. dollars$32,447
24,15016,81910,4993,841$87,756

As is customary in Japan, long-term and short-term bank loans are made under general agreements which provide that additional
security and guarantees for present and future indebtedness will be given under certain circumstances at the request of the banks,
and that any collateral furnished will be applicable to all indebtedness due to that bank.
In addition, the agreements provide that the bank has the right to offset cash deposited against any long-term and short-termloans payable that become due and in case of default and certain other specified events, against all other loans payable to the bank.
Such rights have never been exercised by the bank.
18

5. Pledged Assets
The following assets were pledged to secure short-term loans payable, long-term loans payable and certain other obligation atMarch 31, 2023 and 2022:
Millions of yen
Property, plant and equipment
Investment securities
Investments and other assets: other (Investments in capital)
Other assets
Total

2023
¥1,396
84
1,676
68¥3,2242022¥1,45084
1,257
82¥2,873Thousands of
U.S. dollars
2023$10,454
629
12,551
509$24,143

6. Estimated Loss on Uncompleted Construction Contracts
Amount of costs on uncompleted construction contracts for which a construction loss is anticipated and provision for losses on
construction contracts are presented without being offset.
Millions of yen
2023
Amount of costs on uncompleted construction contracts for which a construction
loss is anticipated, corresponding with provision for losses on construction
contracts

¥11

2022
¥—

Thousands of
U.S. dollars
2023
$82

7. Tax Purpose Reduction Entry
Amount of tax purpose reduction entry deducted from corresponding acquisition costs due to receiving subsidies at March 31,
2023 and 2022 are as follows:
Millions of yen
Type of assets
Land
Buildings and structures
Machinery and equipment
Total

2023
¥91
434
28
¥553

2022
¥—
434
28
¥462

Thousands of
U.S. dollars
2023
$681
3,250
210
$4,141

8. Receivables from Contracts with Customers and Contract Assets
Of “Receivables” recorded in the consolidated balance sheets, amounts of “Receivables from contracts with customers” and“Contract assets” at March 31, 2023 and 2022 are as follows:

2023¥1,047
2,167

2022¥3,947
2,952

Thousands of
U.S. dollars
2023$7,84016,22730,155936
110,770¥145,075

15,794
1,135
116,580¥140,408

225,813
7,009
829,489$1,086,378

Millions of yen
Receivables
Notes
Electronically recorded monetary claims - operating
Accounts
		 Completed construction contracts
		Others
Contract assets
Total

19

9. Contract Liabilities
Contract liabilities included in “Advances received” and “Other” on the consolidated balance sheets at March 31, 2023 and 2022
are as follows:
Millions of yen
  Contract liabilities
Total

2023
¥37,489¥37,4892022¥23,500¥23,500

Thousands of
U.S. dollars
2023$280,732$280,732

10. Advances Received
As is customary in Japan, the Companies normally receive payments from customers on a progress basis in accordance with theterms of the respective construction contracts.
11. Provision for Losses on Construction Contracts Included in Construction Contracts under Cost of Sales
Provision for losses on construction contracts included in construction contracts under cost of sales for the fiscal years ended
March 31, 2023 and 2022 were ¥438 million (US$3,280 thousand) and ¥546 million, respectively.
12. Research and Development Expenses
Research and development expenses included in manufacturing costs and general and administrative expenses amounted to ¥3,142
million (US$23,529 thousand) and ¥2,755 million for the fiscal years ended March 31, 2023 and 2022, respectively.
13. Gain on Sales of Noncurrent Assets
Gain on sales of noncurrent assets for the fiscal years ended March 31, 2023 and 2022 are as follows:

2022
¥—
—
¥—

Thousands of
U.S. dollars
2023
$307
172
$479

2022
¥19
¥19

Thousands of
U.S. dollars
2023
$—
$—

Millions of yen
Type of assets
Land and buildings
Other
Total

2023
¥41
23
¥64

14. Loss on Sales of Noncurrent Assets
Loss on sales of noncurrent assets for the fiscal years ended March 31, 2023 and 2022 are as follows:
Millions of yen
Type of assets
Land and buildings
Total

20

2023
¥—
¥—

15. Impairment Losses
The Company recognized impairment losses for the fiscal year ended March 31, 2023 as follows:
Use

Type of assets

Location

Rental assets
Idle assets
Total

Land
Land

Kanagawa Prefecture
Chiba Prefecture

Millions of yen
¥26
49
¥75

Thousands of
U.S. dollars
$195
367
$562

The Company groups its assets based on the units that it can continuously grasp their incomes and expenses, in principle. In
addition, rental assets and idle assets are grouped by individual property and determined whether or not impairment losses arerecognized.
The Company wrote down the book value to the recoverable amounts of rental assets due to declines in market prices andprofitability and for idle assets, due to a decline in market prices, and thereby recorded the amounts of such reduction as  
impairment losses in other expenses.
The recoverable amounts are measured at net selling prices, which are calculated based on real estate appraisal value.
No impairment losses were recognized for the fiscal year ended March 31, 2022.
16. Revenue Arising from Contracts with Customers
The Company does not disaggregate revenues from contracts with customers and other sources of revenue. Revenue arising fromcontracts with customers for the fiscal years ended March 31, 2023 and 2022 are ¥370,593 million (US$2,775,146 thousand)¥338,910 million, respectively.
17. Comprehensive Income
Amounts reclassified to profit for the fiscal years ended March 31, 2023 and 2022 that were recognized in other comprehensive
income in the current or previous periods and tax effects for each component of other comprehensive income are as follows:
Millions of yen
Valuation difference on available-for-sale securities:
Increase (decrease) during the year
Reclassification adjustment
Sub-total, before tax
Tax benefit or (expense)
Sub-total, net of tax
Foreign currency translation adjustment:
Increase (decrease) during the year
Reclassification adjustment
Sub-total, before tax
Tax benefit or (expense)
Sub-total, net of tax
Remeasurements of defined benefit plans:
Increase (decrease) during the year
Reclassification adjustment
Sub-total, before tax
Tax benefit or (expense)
Sub-total, net of tax
Share of other comprehensive income of entities accounted for using equity
method:Increase (decrease) during the year
Reclassification adjustment
Adjustment for acquisition cost of assets
Sub-total, before tax
Tax benefit or (expense)
Sub-total, net of tax
Total other comprehensive income

Thousands of
U.S. dollars
2023

2023

2022

¥1,417
(180)
1,237
(388)
849

¥(794)(246)(1,040)282(758)$10,611(1,348)9,263(2,905)
6,358

¥207
—
207
—
207

¥35
—
35
—
35

$1,550
—
1,550
—
1,550

¥367
(41)
326
(100)
226

¥127
70
197
(60)
137

$2,748
(307)
2,441
(749)
1,692

¥573
—
(48)
525
—
525
¥1,807¥(345)
—
—
(345)
—
(345)
¥(931)$4,291
—
(360)
3,931
—
3,931
$13,53121

18. Net Assets
Under the Japanese Companies Act (“the Act”), the entire amount paid for new shares is required to be designated as common
stock (or preferred stock). However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding
one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus in the accompanying
consolidated balance sheets.
Under the Act, in cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividendor the excess, if any, of 25% of common stock and preferred stock over the total of additional paid-in capital and legal earnings
reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained
earnings in the accompanying consolidated balance sheets.
Under the Act, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit or could becapitalized generally by a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Act, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which arepotentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial
statements of the Company in accordance with the Act.
19. Consolidated Statements of Changes in Net Assets(1) Common stock issued
The numbers of shares of common stock issued during the fiscal years ended March 31, 2023 and 2022 are as follows:

Common stock

Common stock

April 1, 2022
181,021

Thousands of shares
2023
Increase
Decrease——

March 31, 2023
181,021

April 1, 2021
200,343

Thousands of shares
2022
Increase
Decrease—
19,322

March 31, 2022
181,021

The reason for the changes is as follows:
Decrease due to cancellation of treasury stock 19,322 thousand shares(2) Treasury stock outstanding
The numbers of shares of treasury stock outstanding during the fiscal years ended March 31, 2023 and 2022 are as follows:

Common stock

April 1, 2022
12,050Thousands of shares
2023
Increase
Decrease
12,511
11

March 31, 2023
24,550Note: The number of shares of treasury stock at the beginning and the end of the fiscal year ended March 31, 2023 includes the Company’s stock
held in the BIP Trust of 639 thousand shares and 628 thousand shares, respectively. In addition, the number of treasury stock at the end of
the fiscal year ended March 31, 2023 includes the Company’s stock held in the ESOP Trust of 706 thousand shares.

The main reasons for the changes are as follows:
Increase due to repurchase of shares of less than one unit
2 thousand shares
Increase due to acquisition of the Company’s stock by the ESOP Trust                         706 thousand shares
Increase due to repurchase of the Company’s stock based on the provision of the articles of incorporationin accordance with Article 459, Paragraph 1 of the Companies Act11,734 thousand shares
Increase due to repurchase of stock owned by missing shareholders                             68 thousand shares
Decrease due to claims to additionally purchase shares of less than one unit
0 thousand shares
Decrease due to the delivery of the Company’s stock by the BIP Trust                          10 thousand shares

22

Common stock

April 1, 2021
13,818

Thousands of shares
2022
Increase
Decrease
17,61819,386

March 31, 2022
12,050Note: The number of treasury stock at the beginning and the end of the fiscal year ended March 31, 2022 includes the Company’s stock held in the
BIP Trust of 357 thousand shares and 639 thousand shares, respectively.

The main reasons for the changes are as follows:
Increase due to repurchase of shares of less than one unit
3 thousand shares
Increase due to acquisition of the Company’s stock by the BIP Trust                           311 thousand shares
Increase due to repurchase of the Company’s stock based on the provision of the articles of incorporationin accordance with Article 459, Paragraph 1 of the Companies Act17,303 thousand shares
Decrease due to cancellation of treasury stock
19,322 thousand shares
Decrease due to the appropriation of treasury stock for delivery of stock
34 thousand shares
Decrease due to claims to additionally purchase shares of less than one unit
0 thousand shares
Decrease due to the delivery of the Company’s stock by the BIP Trust                          29 thousand shares
20. Cash and Cash Equivalents
Cash and cash equivalents reported in the consolidated statements of cash flows at March 31, 2023 and 2022 were reconciled withcash and time deposits reported in the consolidated balance sheets as follows:

2023¥75,598

2022¥66,081

Thousands of
U.S. dollars
2023$566,108(1,272)(1,341)(9,526)¥74,326¥64,740$556,582

Millions of yen
Cash and time deposits
Time deposits with maturities of exceeding
3-month from the date of acquisition
Total: Cash and cash equivalents

21. Financial Instruments(1) Status of financial instruments(a) Policies for using financial instruments
The Companies raise funds mainly by borrowings from bank and bond issues, and restrict temporary surplus funds to low-risk
assets such as deposits. Derivative transactions are employed for hedging the risk described below, and never used for speculation.
(b) Details of financial instruments and related risks
Notes and accounts receivable are exposed to the credit risk of customers. Foreign currency-dominated notes and accounts
receivable are also exposed to foreign exchange risk.
Investment securities which are mainly stocks held for maintaining the relationship with business partners are exposed tomarket price fluctuation risk.
Notes and accounts payable are mostly settled within one year.
Loans payable are primarily used to fund daily business transactions. Those with variable interest rates are exposed to interest
rate risk.
Loans payable, notes and accounts payable are also exposed to liquidity risk.
Derivative transactions entered into by the Companies are forward foreign exchange contracts to hedge foreign currency
exchange risk involving overseas business and interest rate swap contracts to hedge interest rate risk involving loans payable.
Refer to Note 2 (18) “Hedging transactions” for information about hedging instruments and hedging items, the hedging policy
and method of evaluating hedging effectiveness concerning the hedge accounting methods adopted by the Companies.
(c) Policies and processes for risk management
In order to control customers’ credit risk, each business and sales management division within the Companies conduct periodic
monitoring of key transaction partners and attempt to find out deterioration of the financial situation at the initial stage underinternal credit policies.
For the purpose of hedging foreign exchange risk, the Companies manage fluctuations in foreign exchange rates by project andcurrency, and forward foreign exchange contracts are used for a part of high probability transactions. In addition, the Companies
monitor fluctuations in interest rates by loan contract, and use interest rate swap contracts on an individual contract basis to avoid
interest rate risk and fix the interest expense of some long-term loans payable.

23

The fair value of investment securities is periodically reported to the officer in charge at each of the Companies. Holdings ofinvestment securities are reviewed in an ongoing manner taking into account the relationship with the issuers.
With respect to derivative transactions, based on each company’s internal rules prescribing the authority to execute andmanage transactions, responsibilities and business practice, the head of the administrative division approves transactions while thefinance division executes the transaction, confirms its details and manages its risk. The status of derivative transactions isperiodically reported to the officer in charge at each of the Companies. In handling derivatives, the Companies deal only withcredit-worthy banks to reduce credit risk.
In order to manage liquidity risk, the Companies update their financial plans monthly.
(d) Supplementary description of fair value of financial instruments
Since certain assumptions are used for estimating fair value, fair value may fluctuate if different assumptions are applied. In
addition, the derivative contract amounts described in Note 23 “Derivative Financial Instruments” are not indicative of actual
market risk involved in derivative transactions.
(e) Concentration of credit risk
Trade receivables for specific and large-scale customers at March 31, 2023 and 2022 accounted for 12.1% and 10.3%,
respectively, of the total trade receivables in the consolidated financial statements. Since these large-scale customers aregovernment agencies, credit risk is extremely low.
(2) Fair value of financial instruments
The following table summarizes the book value and fair value of financial instruments at March 31, 2023:

Type
Assets
Receivables:		Notes		Accounts
Marketable securities and		Investment securities:
Available-for-sale securities
Total assets
Liabilities
Bonds
Long-term loans payable,		 less current maturities
Total liabilities
Derivative transactions

Book value

Millions of yen
Fair value

Difference

Thousands of U.S. dollars
Book value
Fair value
Difference¥3,219141,875¥3,219141,830¥—(45)$24,105
1,062,416$24,105
1,062,079

$—
(337)

17,571¥162,665

17,571¥162,620—¥(45)

131,579$1,218,100

131,579$1,217,763—$(337)

¥36

¥36

¥(0)

$270

$270

$(0)

7,463

7,458

(5)

55,88655,848(38)¥7,499¥—¥7,494¥—¥(5)¥—$56,156$—$56,118
$—

$(38)
$—

Stocks and other financial instruments with no market prices are not included in “Marketable securities and Investment
securities.” Their amounts recorded in the consolidated balance sheets as of March 31, 2023 are as follows:
Unlisted stocks, etc. ¥4,206 million (US$31,496 thousand)With respect to investments in partnerships, etc. recorded at the amount corresponding to the Company's interests of thepartnership's equity, their fair value and differences from book value are not presented in the above table by applying the treatment
provided in Paragraph 24-16 of the Fair Value Measurement Guidance. The amounts recorded in the consolidated balance sheets
as of March 31, 2023 are as follows:
Investments in partnerships, etc. recorded at the amount corresponding to the Company's interests of the partnership's equity¥3,244 million (US$24,292 thousand)24

The following table summarizes the book value and fair value of financial instruments at March 31, 2022:

Type
Assets
Receivables:		Notes		Accounts
Marketable securities and		Investment securities:
Available-for-sale securities
Total assets
Liabilities
Bonds
Long-term loans payable,		 less current maturities
Total liabilities
Derivative transactions

Book value

Millions of yen
Fair value¥6,900133,531¥6,900133,497¥—(34)

16,462¥156,893

16,462¥156,859

—
¥(34)

¥163

¥162

¥(1)

7,640

7,642

2

¥7,803¥—¥7,804¥—¥1¥—

Difference

Stocks and other financial instruments with no market prices are not included in “Marketable securities and Investment
securities.” Their amounts recorded in the consolidated balance sheets as of March 31, 2022 are as follows:
Unlisted stocks, etc. ¥4,498 million
Notes:
1. “Cash and time deposits” consists of cash and deposits which are to be settled in a short period and their book value approximates their fairvalue. Therefore, it is not mentioned in this section.
2. “Payables (Accounts in Current liabilities),” “Short-term loans payable,” and “Current portion of bonds” are to be settled in a short period andtheir book value approximates their fair value. Therefore, they are not mentioned in this section.

(3) Derivative transactions
See Note 23 “Derivative Financial Instruments.”(4) Redemption schedules for cash and time deposits, receivables, held-to-maturity debt securities, and other at March 31, 2023
and 2022 are as follows:
Millions of yen
2023¥75,598Over
1 yearless than
5 years¥—Over
5 yearsless than
10 years¥—

3,219
129,489¥208,306—
12,386¥12,386——¥—

Within1 yearCash and time deposits
Receivables:
Notes
Accounts
Total

Cash and time deposits
Receivables:
Notes
Accounts
Total

Thousands of U.S. dollars
2023
Over
Over
Within1 year
5 years
1 yearless thanless than
5 years
10 years$566,108$—$—
24,105
969,665$1,559,878—
92,751$92,751

—
—
$—

Over
10 yearsWithin1 year¥—¥66,081

—
—
¥—

6,900
121,585¥194,566

2022
Over
Over
1 year
5 yearsless thanless than
5 years
10 years¥—¥——
11,946¥11,946

—
—
¥—

Over
10 years
¥—
—
—
¥—

Over
10 years
$—
—
—
$—

25

(5) Redemption schedules for bonds, long-term loans payable and other interest-bearing liabilities as of March 31, 2023 and 2022
is as follows:

Within1 yearShort-term loans payable
Bonds
Long-term loans payable
Total¥12,157
127
4,333¥16,617

Within1 yearShort-term loans payable
Bonds
Long-term loans payable
Total$91,036951
32,447$124,434

Within1 yearShort-term loans payable
Bonds
Long-term loans payable
Total¥12,178
237
4,498¥16,913Over
1 yearless than
2 years¥—
36
3,225¥3,261Millions of yen
2023
Over
Over
2 years
3 yearsless thanless than
3 years
4 years
¥—
¥—
—
—
2,246
1,402
¥2,246¥1,402Over
4 yearsless than
5 years
¥—
—
513
¥513

Over
1 yearless than
2 years$—
270
24,150$24,420

Thousands of U.S. dollars
Over
Over
2 years
3 yearsless thanless than
3 years
4 years$—$———
16,81910,499$16,819$10,499Over
4 yearsless than
5 years$——
3,841$3,841Over
1 yearless than
2 years
¥—
127
3,410
¥3,537

Millions of yen
2022
Over
Over
2 years
3 yearsless thanless than
3 years
4 years
¥—
¥—
36
—
2,304
1,323
¥2,340¥1,323Over
4 yearsless than
5 years
¥—
—
480
¥480

Over
5 years
¥—
—
77
¥77

Over
5 years
$—
—
577
$577

Over
5 years
¥—
—
123
¥123

(6) Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to the observability and materiality of
inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e. quoted prices in active markets for assets or liabilities
that are the subject of the measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized in its
entirety in the level of the lowest level input that is significant to the entire measurement.
(a) Financial instruments measured at fair value at March 31, 2023 and 2022
Millions of yen

Level 1Marketable securities andinvestment securities
Available-for-sale securities
		Stock		Total assets
Not applicable
Total liabilities

26¥17,571¥17,571¥—¥—2023
Fair value
Level 2
Level 3

¥—
¥—
¥—
¥—

¥—
¥—
¥—
¥—

Total

Level 1

¥17,571¥17,571¥—¥—¥16,642¥16,642¥—¥—2022
Fair value
Level 2
Level 3

¥—
¥—
¥—
¥—

¥—
¥—
¥—
¥—

Total

¥16,462¥16,462¥—¥—

Level 1
Marketable securities andinvestment securities
Available-for-sale securities
		Stock		Total assets
Not applicable
Total liabilities$131,579$131,579$—$—

Thousands of U.S. dollars
2023
Fair value
Level 2
Level 3

$—
$—
$—
$—

$—
$—
$—
$—

Total

$131,579$131,579$—$—(b) Financial instruments other than those measured at fair value at March 31, 2023 and 2022
Millions of yen

Level 1
Receivables:
Notes
Accounts
		Total assets
Bonds
Long-term loans payable, lesscurrent maturities
Total liabilities

¥—
—
¥—
¥—

¥—

Level 1
Receivables:
Notes
Accounts
		Total assets
Bonds
Long-term loans payable, lesscurrent maturities
Total liabilities

2023
Fair value
Level 2
Level 3Total

¥3,219141,830¥145,049
¥36

¥—
—
¥—
¥—

¥3,219141,830¥145,049
¥36

7,458

—

¥7,494¥—

Thousands of U.S. dollars
2023
Fair value
Level 2
Level 32022
Fair value
Level 2
Level 3

Total

¥—
—
¥—
¥—

¥6,900133,497¥140,397
¥162

¥—
—
¥—
¥—

¥6,900133,497¥140,397
¥162

7,458

—

7,642

—

7,642

¥7,494¥—¥7,804¥—¥7,804

Level 1

Total

$—
—
$—
$—

$24,105
1,062,079$1,086,184
$270

$—
—
$—
$—

$24,105
1,062,079$1,086,184$270—

55,848—55,848$—$56,118$—$56,118

Note: Description of assessment method and input for measuring fair valueMarketable securities and investment securities
Listed stocks are valued at market price. Their fair value is classified into Level 1 fair value as they are traded in active markets.
Receivables
The fair value of receivables are classified by certain periods, and then measured using the discounted cash flow method based on the amountsof receivables, remaining periods to maturity, and interest rates reflecting credit risk. Therefore, they are classified into Level 2 fair value.
Bonds
The fair value of bonds payable are measured using the discounted cash flow method based on the total amounts of principal and interest,
remaining periods to maturity, and interest rates reflecting credit risk. Therefore, they are classified into Level 2 fair value.
Long-term loans payable, less current maturities
The fair value of long-term loans payable are measured by discounting total amounts of principal and interest at interest rates applied to similar
new borrowings. However, the fair value of long-term loans payable that have variable interest rates are recorded at book value, since theinterest rates are to be renewed at regular intervals based on conditions and reflect market interest rates in a short period of time, and therefore
the book value is considered to approximate fair value. Some of the long-term loans payable that have variable interest rates are subject to thespecial case interest swap treatment. Therefore, they are measured by discounting the total amounts of principal and interest which are treated
together with the interest rate swap contracts at interest rates reasonably expected to be applied to similar new borrowings. Accordingly, they
are classified into Level 2 fair value.

2722. Securities(1) The following table summarizes the book value and acquisition cost of available-for-sale securities at March 31, 2023 and2022:
Millions of yen
TypeBook value
Securities with book value exceeding acquisition costStock
¥14,395
Sub total
14,395
Securities with book value not exceeding acquisition costStock
¥3,176
Sub total
3,176
Total
¥17,571

2023
Acquisition cost2022
Acquisition cost

DifferenceBook value

Difference¥8,013
8,013¥6,382
6,382¥12,984
12,984¥7,8407,840¥5,144
5,144¥3,932
3,932¥11,945¥(756)(756)¥5,626¥3,4783,478¥16,462¥4,233
4,233¥12,073¥(755)(755)¥4,389Thousands of U.S. dollars
2023
Type
Book value Acquisition cost Difference
Securities with book value exceeding acquisition cost
$60,005$47,791
Stock$107,796
Sub total
60,00547,791
107,796
Securities with book value not exceeding acquisition cost
$29,444$(5,661)
Stock$23,783
Sub total
29,444(5,661)
23,783
Total$131,579$89,449$42,130(2) Total sales, related gains and losses of available-for-sale securities for the years ended March 31, 2023 and 2022 are as
follows:
Millions of yen
Type
Stock
Sales
Related gains

2023
¥336
180

2022
¥358
241

Thousands of
U.S. dollars
2023$2,516
1,348(3) Write down of securities
The Company recognized a loss on valuation of investment securities of ¥72 million (US$539 thousand) and ¥27 million for theyears ended March 31, 2023 and 2022, respectively.
If fair value declines by 50% or more of the acquisition cost, the book value is written down to the fair value. If fair value
declines between 30% and 50% of the acquisition cost, the book value is written down to a reasonable amount taking into
consideration its recoverability and other factors. With respect to unlisted stocks, if the net asset value declines by 50% or more of
the acquisition cost, the book value is in principle written down accordingly.
23. Derivative Financial Instruments
Derivative transactions subject to hedge accounting at March 31, 2023 and 2022 are as follows:(Currency-related transactions)
An affiliated company accounted for by equity-method (hereinafter referred to as “the Affiliated Company”) uses forward foreignexchange contracts to hedge foreign currency exchange risks in foreign currency transactions. For these forward foreign exchange
contracts, hedge accounting is applied to forecasted foreign currency transactions which are the hedged items. However, forward
foreign exchange contracts of the Affiliated Company are not recorded in the consolidated balance sheets, therefore their fair value
is not contained in “Derivative transactions” in Note 21 “Financial Instruments (2) Fair value of financial instruments.”

28

(Interest-related transactions)
Millions of yen

Type ofderivative transactions
Special case interest rate swap treatment:Interest rate swap contracts:
To pay fixed, to receive variable

Type ofderivative transactions
Special case interest swap treatment:Interest rate swap contracts:
To pay fixed, to receive variable

Main items
hedgedLong-termloans payable

Main items
hedgedLong-termloans payable

2023
Contract amount
Settled overTotal
1 year
¥745

¥460

Fair
value

Note 22022
Contract amount
Settled overTotal
1 year
¥1,077

¥745

Fair
value

Note 2Thousands of U.S. dollars
2023
Contract amount
Fair
Settled over
value
Total
1 year$5,579$3,445Note 2

Notes:
1. Fair value is based on the prices obtained from counterparty financial institutions.
2. The fair value of interest rate swaps subject to special case interest swap treatment are included in the fair value of long-term loans payable
since such interest rate swap contracts are treated together with the long-term loans payable being hedged.
3. The Affiliated Company uses interest rate swap contracts to hedge risks of fluctuations in interest rates on loans payable, but it is notincluded in the above table. Hedge accounting is applied to these interest rate swap contracts, designating the loans payable as the hedged
item. However, the Affiliated Company’s loans payable are not recorded in the consolidated balance sheets, therefore their fair value is notcontained in “Derivative transactions” in Note 21 “Financial Instruments (2) Fair value of financial instruments.”

24. Retirement Benefits
The Companies adopt the lump-sum payment plan and the retirement benefit pension plan as their defined benefit plan.
The Companies calculate net defined benefit liability and retirement benefit costs under certain lump-sum payment plans using
the simplified method.
Although the Company had several types of retirement benefit plans due to its merger with ANDO Corporation as of April 1,
2013, the Company integrated these retirement benefit plans and transitioned to defined benefit plans as of April 1, 2014.
Defined benefit plans
Millions of yen

Thousands of
U.S. dollars
2023

2023

2022

(1) Changes in retirement benefit obligation
Balance at April 1, 2022 and 2021
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at March 31, 2023 and 2022

¥30,256
1,343
303
(284)
(1,776)¥29,842¥30,170
1,372
302
142
(1,730)¥30,256$226,569
10,0572,269(2,127)(13,299)$223,469(2) Changes in plan assets
Balance at April 1, 2022 and 2021
Expected return on plan assets
Actuarial gain (loss)
Contributions paid by the employer
Contribution of securities to retirement benefit trust
Benefits paid
Balance at March 31, 2023 and 2022

¥30,462
392
82
1,804
—
(1,160)¥31,580¥23,467
294
269
2,547
5,000
(1,115)¥30,462$228,111
2,936
614
13,509—(8,686)$236,484

29

Millions of yen

Thousands of
U.S. dollars
2023

2023

2022

¥1,476223(301)
19¥1,417¥1,448243(218)
3¥1,476$11,053
1,670(2,254)142$10,611(4) Reconciliation of retirement benefit obligation and plan assets to net defined benefit liability (asset)
Funded retirement benefit obligation¥29,842
Plan assets(31,580)
Sub total(1,738)
1,417
Unfunded retirement benefit obligation(321)
Total net liability (asset) at March 31, 2023 and 2022

¥30,256(30,462)
(206)
1,476
1,270

$223,469(236,484)(13,015)
10,611(2,404)

3,198(3,519)¥(321)

3,816(2,546)¥1,27023,948(26,352)$(2,404)(3) Changes in net defined benefit liability using the simplified method
Balance at April 1, 2022 and 2021
Retirement benefit costs
Benefits paid
Other
Balance at March 31, 2023 and 2022

Net defined benefit liability
Net defined benefit asset
Total net liability (asset) at March 31, 2023 and 2022

Note: Retirement benefit obligation under the lump-sum payment plan is included in funded retirement benefit obligation because a retirement
benefit trust has been established for the lump-sum payment plan. In addition, the retirement benefit trust that has been established for the lumpsum payment plan is included in plan assets.
Millions of yen

Thousands of
U.S. dollars
2023

2023

2022

¥1,343
303
(392)
(41)
223
¥1,436¥1,372
302
(294)
70
243
¥1,693$10,057
2,269(2,936)(307)
1,670$10,753(6) Remeasurements of defined benefit plans
Net actuarial gain
Total remeasurements of defined benefit plans

¥326
¥326

¥197
¥197

$2,441$2,441(7) Accumulated remeasurements of defined benefit plans
Unrecognized actuarial differences
Total accumulated remeasurements of defined benefit plans¥(928)¥(928)¥(602)¥(602)$(6,949)$(6,949)

2023
40%
20
15
9
16
100%

2022
40%
19
15
10
16
100%

(5) Retirement benefit costs
Service cost
Interest cost
Expected return on plan assets
Net actuarial loss (gain)
Retirement benefit costs using the simplified method
Total retirement benefit costs for the fiscal years ended March 31, 2023 and 2022

(8) Plan assets
1. Plan assets comprise:
		Bonds
		Stock
		 General account assets (life insurance companies)
		 Cash and deposits
		Other		TotalNote: The retirement benefit trust that has been established for the corporate pension plan accounts for 12% and 11% of the total plan assets at
March 31, 2023 and 2022.

2. Long-term expected rate of return:
The Company determines the long-term expected rate of return by taking into account the current and future allocation of plan
assets and expected returns from their diverse asset classes.
30

(9) Actuarial assumptions
The principal actuarial assumptions at March 31, 2023 and 2022 (expressed as weighted averages) are as follows:
2023
1.0%
1.2%

Discount rateLong-term expected rate of return

2022
1.0%
1.3%

25. Income Taxes
Differences between the statutory effective tax rate and the effective tax rate for the fiscal years ended March 31, 2023 and 2022
are not disclosed, since the difference between the statutory effective tax rate and the effective tax rate is less than 5% of thestatutory effective tax rate.
Significant components of deferred tax assets and liabilities at March 31, 2023 and 2022 are as follows:
Thousands of
U.S. dollars
2023

Millions of yen
2023

2022

Deferred tax assets:
Net defined benefit liability
OthersGross deferred tax assets
Less: Valuation allowance
Total deferred tax assets¥4,0199,644
13,663(2,684)
10,979¥4,252
8,955
13,207(2,299)10,908$30,096
72,218102,314(20,099)
82,215

Deferred tax liabilities:
Valuation difference on available-for-sale securities
OthersTotal deferred tax liabilities
Net deferred tax assets

1,776
2,780
4,556
¥6,423

1,387
2,467
3,854
¥7,054

13,30020,81834,118$48,097

26. Revenue Recognition(1) Information on disaggregation of revenue arising from contracts with customers for the fiscal years ended March 31, 2023 and2022 is as follows:

Goods or services transferred over time
Goods or services transferred at a point
in time
Revenue arising from contracts withcustomers
Other revenue
Revenue from external customers

Goods or services transferred over time
Goods or services transferred at a point
in time
Revenue arising from contracts withcustomers
Other revenue
Revenue from external customers

Civil
engineering¥132,828

Millions of yen
2023
Reportable segments
Building
Consolidated
Sub total
construction
subsidiaries¥193,330¥5,942¥332,100

Other

Total

¥—

¥332,100

610

12,81820,602

34,0304,463

38,493

133,438

206,148

26,544366,130

4,463

370,593—
133,438—
206,148

862
27,406862
366,992

691
5,154

1,553
372,146

Civil
engineering$994,668

Thousands of U.S. dollars
2023
Reportable segments
Building
Consolidated
Sub total
construction
subsidiaries$1,447,731$44,496$2,486,895

Other

Total

$—

$2,486,895

4,568

95,986

154,276

254,830

33,421

288,251

999,236

1,543,717

198,772

2,741,725

33,421

2,775,146—
999,236—
1,543,717

6,455
205,227

6,455
2,748,180

5,175
38,596

11,6302,786,776

31

Goods or services transferred over time
Goods or services transferred at a point
in time
Revenue arising from contracts withcustomers
Other revenue
Revenue from external customers

Civil
engineering¥131,595

Millions of yen
2022
Reportable segments
Building
Consolidated
Sub total
construction
subsidiaries¥165,277¥5,055¥301,927

Other

Total

¥—

¥301,927

334

13,25018,88432,4684,515

36,983

131,929

178,527

23,939334,395

4,515

338,910—
131,929—
178,527837
24,776837
335,232

547
5,062

1,384
340,294

Notes:
1. “Other” consists of operations not attributed to “Reportable segments” and includes research and other activities.
2. Construction contracts whose revenues are recognized when performance obligations are fully satisfied are included in “Goods or services
transferred at a point in time” in accordance with the alternative treatment specified in Paragraph 95 of “Implementation Guidance on
Accounting Standard for Revenue Recognition.”(2) Fundamental information for understanding revenue from contracts with customers
As described in Note 2 “Summary of Significant Accounting policies (17) Significant recognition criteria for revenue and cost(a) Recognition criteria for revenue arising from contracts with customers.”(3) Information for understanding amount of revenue in current and subsequent consolidated fiscal years(a) Receivables and contract balances at the beginning and end of period
Millions of yen
2023
Receivables from contracts with customers
  (Balance at beginning of period)
Receivables from contracts with customers(Balance at end of period)
Contract assets
  (Balance at beginning of period)
Contract assets(Balance at end of period)
Contract liabilities
  (Balance at beginning of period)
Contract liabilities(Balance at end of period)2022

Thousands of U.S.
dollars
2023¥23,828¥24,416$178,433

34,30523,828

256,889

116,580

97,029872,997

110,770

116,580

829,489

23,50032,338

175,977

37,48923,500280,732“Contract assets” are assets related to rights to remuneration for revenues recognized over time arising from construction projects
whose performance obligations (e.g., completion and delivery of a construction contract object) are not yet fully satisfied. The
assets are transferred to “Receivables from contracts with customers” when the performance obligations are fully satisfied.
“Contract liabilities” are liabilities recorded as advances received (e.g., “advances received on uncompleted construction
contracts”) arising from constructions whose revenues are recognized over time and reversed as the corresponding revenues arerecognized. The balance at beginning of period is largely recognized as revenue in the consolidated fiscal year.
The amount of revenue recognized in the fiscal years ended March 31, 2023 and 2022 from performance obligations that weresatisfied (or partially satisfied) in previous periods, is immaterial.
(b) Transaction prices allocated to remaining (or partially satisfied) performance obligations at end of period
At the end of the fiscal years ended March 31, 2023 and 2022, the total amount of transaction price allocated to remaining
performance obligations was ¥528,070 million (US$3,954,396 thousand) and ¥518,683 million, respectively. The amount islargely due to construction of civil engineering and buildings and approximately 80% is expected to be recognized as revenue
within two years.

3227. Segment Information(1) General information about reportable segments
Each reportable segment of the Companies consists of a business unit for which discrete financial information is available.
Reportable segments are reviewed periodically at the Board of Directors meeting in order to determine distribution of management
resources and evaluate their business results.
Among the Companies which mainly operate the construction and construction-related business, the Company serves as thegeneral constructor. The Company categorizes its business into the civil engineering business unit and the building construction
business unit, and each business unit formulates comprehensive strategies and operates business activities for order taking andproduction in Japan and overseas. Consolidated subsidiaries operate business by formulating their respective strategies incooperation with the Company.
Accordingly, the Companies classify their business segments based on products and services, into three reportable segments,
namely, “Civil engineering segment,” “Building construction segment” and “Consolidated subsidiaries segment.”
The major products and services of each segment are as follows:
Reportable segments
Civil engineering
Building construction
Consolidated subsidiaries

Major products and services
Civil engineering of the Company in Japan and overseas
Building construction of the Company in Japan and overseas
Constructions and sales of construction materials of consolidated subsidiaries(2) Measurement of segment profit or loss, segment assets or liabilities and other material items per reportable segment
Accounting methods of reportable segments are largely the same as those set forth in “Summary of Significant Accounting
Policies.” Segment profit or loss is based on operating income in the consolidated statements of income. Intersegment transactions
and transfers are based on fair market prices.
Assets are not allocated to the Civil engineering segment and the Building construction segment, since these segments do notfinancially administer assets. However, corresponding depreciation expenses including amortization of intangible fixed assets arereasonably allocated to these segments depending on how much they benefit from these assets.
(3) Segment revenues, segment profit or loss, segment assets or liabilities and other material items per reportable segment(a) Segment information as of and for the fiscal year ended March 31, 2023 is as follows:
Millions of yen
Reportable segments
Civil
Building Consolidated
engineering construction subsidiaries
Fiscal year ended March 31, 2023:
Revenues:
External customers¥133,438¥206,148¥27,406
Intersegment—
56
66,010Total
133,438
206,204
93,416
Segment profit
14,999
9,391
1,597
Assets
Note 4Note 438,384
Other material items:
Depreciation
434
671
651
and amortization
Capital expenditures
Note 4Note 4
247

Reconciliation Consolidated

Other

Total

¥366,992
66,066
433,058
25,987
222,569¥5,154
16
5,170
208
7,861

¥372,146
66,082438,228
26,195
230,430¥—(66,082)(66,082)(6,342)87,584¥372,146—
372,146
19,853
318,014

1,756

78

1,834

266

2,100

2,870

398

3,268

538

3,806

Sub total

33

Thousands of U.S. dollars
Reportable segments
Other
Civil
Building Consolidated
Sub totalengineering construction subsidiaries
Fiscal year ended March 31, 2023:
Revenues:
External customers$999,236 $1,543,717$205,227 $2,748,180$38,596
Intersegment—419
494,309494,728
120
Total
999,236
1,544,136
699,536
3,242,908
38,716
Segment profit
112,318
70,324
11,959194,601
1,557
Assets
Note 4Note 4287,434
1,666,684
58,866
Other material items:
Depreciation
3,250
5,025
4,875
13,150584
and amortization
Capital expenditures
Note 4Note 4
1,850
21,492
2,980

Total

Reconciliation Consolidated$2,786,776
494,848
3,281,624
196,158
1,725,550$— $2,786,776(494,848)—(494,848) 2,786,776(47,491)
148,667
655,864
2,381,414

13,734

1,992

15,72624,472

4,029

28,501

Notes:
1. “Other” consists of operations not attributed to “Reportable segments” and includes research and other activities.
2. Reconciliation amounts were as follows:(i)	Reconciliation of segment profit amounting to ¥(6,342) million (US$(47,491) thousand) includes ¥4 million (US$30 thousand) inintersegment eliminations and others, and ¥(6,346) million (US$(47,521) thousand) in corporate expenses. Corporate expenses aremainly general and administrative expenses, which are not attributed to reportable segments.
(ii) 	Reconciliation of segment assets amounting to ¥87,584 million (US$655,864 thousand) includes ¥(15,390) million (US$(115,246)
thousand) in intersegment eliminations and others, and ¥102,974 million (US$771,110 thousand) in corporate assets. Corporate assets
are mainly cash and deposits, investment securities and others, which are not attributed to reportable segments.
3. Segment profit is adjusted to operating income of the consolidated statements of income.
4. As discussed in Note 27. (2), increases in assets and capital expenditures are not allocated to the Civil engineering segment and the Building
construction segment, since these segments do not financially administer assets. The total amount of segment assets attributed to the Civil
engineering segment and Building construction segment amounted to ¥184,185 million (US$1,379,250 thousand), and capital expendituresof these segments amounted to ¥2,623 million (US$19,642 thousand).

(b) Segment information as of and for the fiscal year ended March 31, 2022 is as follows:
Millions of yen
Reportable segments
Civil
Building Consolidated
engineering construction subsidiaries
Fiscal year ended March 31, 2022:
Revenues:
External customers¥131,929¥178,527¥24,776
Intersegment—
061,483
Total
131,929
178,527
86,259Segment profit
15,825
13,331
2,490
Assets
Note 4Note 4
42,163
Other material items:
Depreciation
593
800
617
and amortization
Capital expenditures
Note 4Note 4604

Reconciliation Consolidated

Other

Total

¥335,232
61,483396,715
31,646
216,853¥5,062
16
5,078
596
7,497

¥340,294
61,499401,793
32,242
224,350¥—(61,499)(61,499)(5,641)
70,983¥340,294—
340,294
26,601
295,333

2,010

75

2,085

325

2,410

2,668

79

2,747

437

3,184

Sub total

Notes:
1. “Other” consists of operations not attributed to “Reportable segments” and includes research and other activities.
2. Reconciliation amounts were as follows:(i)	Reconciliation of segment profit amounting to ¥(5,641) million includes ¥41 million in intersegment eliminations and others, and¥(5,682) million in corporate expenses. Corporate expenses are mainly general and administrative expenses, which are not attributed toreportable segments.
(ii)	Reconciliation of segment assets amounting to ¥70,983 million includes ¥(20,187) million in intersegment eliminations and others, and¥91,170 million in corporate assets. Corporate assets are mainly cash and deposits, investment securities and others, which are not
attributed to reportable segments.
3. Segment profit is adjusted to operating income of the consolidated statements of income.
4. As discussed in Note 27. (2), increases in assets and capital expenditures are not allocated to the Civil engineering segment and the Building
construction segment, since these segments do not financially administer assets. The total amount of segment assets attributed to the Civil
engineering segment and the Building construction segment amounted to ¥174,690 million, and capital expenditures of these segments
amounted to ¥2,064 million.

34

(4) Entity‑wide disclosures(a) Information about products and services
Disclosure of information about products and services is omitted, since reportable segments of the Companies are classified
by their products and services.
(b) Information about geographic areas
		(Revenues)
Revenue information about geographic areas for the fiscal years ended March 31, 2023 and 2022 are as follows:
Millions of yen
2023¥343,319
28,827¥372,146

Geographic areas
Japan
Other
Total

2022
¥324,476
15,818¥340,294

Thousands of
U.S. dollars
2023$2,570,908
215,868$2,786,776

Note: Revenues are classified into countries and regions according to the location of the customers.

		(Property, plant and equipment)
Disclosure of property, plant and equipment information categorized by geographic areas is omitted, since property, plantand equipment in Japan account for over 90% of total property, plant and equipment.

(c) Information about major customers
Disclosure of information about major customers is omitted, since revenues from no single customer account for 10% ormore of consolidated revenues in the consolidated statements of income for the fiscal years ended March 31, 2023 and2022.
(d) Information about impairment losses on noncurrent assets by reportable segment
Impairment losses on noncurrent assets by reportable segment for the fiscal year ended March 31, 2023 are as follows:
Millions of yen
2023

Impairment losses

Civil
engineering¥—

Reportable segments
Building
Consolidated
construction
subsidiaries
¥—
¥—

Other

Eliminations
and others

¥26

¥49

Total
¥75

Thousands of U.S. dollars
2023

Impairment losses

Civil
engineering$—

Reportable segments
Building
Consolidated
construction
subsidiaries
$—
$—

Other

Eliminations
and others

$195

$367

Total
$562

No impairment losses were recognized for the fiscal year ended March 31, 2022.
28. Amounts per Share of Common Stock
Basis of calculation of basic and diluted profit attributable to owners of parent per share (the “EPS”) for the fiscal year ended
March 31, 2023 is as follows:
Profitattributable toowners of parent
Fiscal year ended March 31, 2023:
Profit attributable to owners of parent
Basic EPS-Profit available to common shareholders

Millions of yen¥15,188¥15,188

Weightedaverage
sharesThousands ofshares161,531

EPS
Yen¥94.02

U.S. dollars
$0.70

35

Notes:1. The Company’s stock held in the BIP Trust and the ESOP Trust are included in the treasury stock which is excluded from the weightedaverage number of shares in the calculation of profit attributable to owners of parent per share. The weighted-average number of sharesissued and outstanding during the fiscal year ended March 31, 2023 were 19,489 thousand shares including those held in the BIP Trust andthe ESOP Trust of 632 thousand shares and 470 thousand shares, respectively.
2. Diluted EPS for the fiscal year ended March 31, 2023 is not presented because the Company had no potential shares.

Basis of calculation of basic and diluted profit attributable to owners of parent per share (the “EPS”) for the fiscal year ended
March 31, 2022 is as follows:
Profitattributable toowners of parent
Fiscal year ended March 31, 2022:
Profit attributable to owners of parent
Basic EPS-Profit available to common shareholders
Effect of dilution
Shares adjusted by share subscription rights
Diluted EPS-Profit for computation

Millions of yen

Weightedaverage
sharesThousands ofsharesEPS
Yen¥17,671¥17,671

178,786¥98.84—¥17,6718
178,794¥98.84

29. Events after the reporting period
The Company resolved that its Board of Directors at a meeting held on August 8,2023 to dispose of treasury shares through athird-party allotment (hereinafter referred to as the “Disposal of Treasury Shares”).
(a) Outline of disposal(ⅰ) Date of disposal(ⅱ) Number of shares to be disposed of(ⅲ) Price of disposal(ⅳ) Total price of disposal(ⅴ) Subscribers

August 30, 2023
2,312,000 shares of common stock¥1,131 (US$8.47) per share¥2,615 million (US$19,582 thousand)The Master Trust Bank of Japan, Ltd. (Board Incentive Plan Trust Account for
officers’ compensation): 863,000 shares (¥976 million (US$7,309 thousand))		The Master Trust Bank of Japan, Ltd. (Employee Stock Ownership Plan Trust
Account): 1,449,000 shares (¥1,639 million (US$12,273 thousand))(ⅵ) Other
The Disposal of Treasury Shares is subject to the effectuation of the notification
under the Financial Instruments and Exchange Act.
(b) Outline of disposal
The Disposal of Treasury Shares will be conducted through a third-party allotment to The Master Trust Bank of Japan, Ltd. (BIP
Trust Account for officers’ compensation) and The Master Trust Bank of Japan, Ltd. (ESOP Trust Account), the joint trustees
under the BIP Trust Agreement for officers’ compensation and the ESOP Trust Agreement both concluded between the Company
and Mitsubishi UFJ Trust and Banking Corporation, for the extension of the BIP Trust and the ESOP Trust.
30. Stock Option Plans
For the fiscal year ended March 31, 2023
Not applicable.
For the fiscal year ended March 31, 2022
(1) No cost for stock options is recognized for the fiscal year ended March 31, 2022.

36

(2) The stock options outstanding at March 31, 2022 are mainly as follows:(a) Content

Persons granted
Class and numberof shares
Date of grantCondition ofvesting rights

Length of service
Exercisable period

The third seriesof sharesubscription rights (A)June 29, 2010
Directors of the Company: 8
Executive officers: 8
90,000 sharesof common stock
July 16, 2010
The person who exercises
share subscription rights shallbe a director, or executive
officer of the Company, who
remained in service from theseventh stockholders’ meeting
to the eighth stockholders’meeting.
However, this condition iswithdrawn in case of death orloss of position due to theCompany’s circumstances.
From July 16, 2010
to July 15, 2011
From July 16, 2011
to July 15, 2021

The fourth seriesof sharesubscription rights (A)June 29, 2011
Directors of the Company: 9
Executive officers: 13
85,800 sharesof common stock
July 15, 2011
The person who exercises
share subscription rights shallbe a director, or executive
officer of the Company, who
remained in service from theeighth stockholders’ meeting
to the ninth stockholders’meeting.
However, this condition iswithdrawn in case of death orloss of position due to theCompany’s circumstances.
From July 15, 2011
to July 14, 2012
From July 15, 2012
to July 14, 2022(b) Number and price
The third
series of sharesubscription
rights (A)The fourth
series of sharesubscription
rights (A)Non-vested shares
   At the beginning of the year
Granted during the year
Forfeited and expired during the year
Vested during the year
At the end of the year
Vested shares
   At the beginning of the year
Vested during the year
Exercised during the year
Forfeited or expired during the year
Unexercised at the end of the year
Exercise price
Average stock price at exercise
Fair value price at the grant date

—
—
—
—
—

—
—
—
—
—

18,000—18,000
—
—
¥1
¥826
¥72

16,500—16,500
—
—
¥1
¥838
¥111

(3) Estimation of fair value of stock options
The Company has not granted any stock options to its employees for the fiscal year ended March 31, 2022.
(4) Estimation of the number of vested stock options
As it is generally difficult to reasonably estimate how many stock options will be forfeited in the future, only actual forfeited
numbers are reflected.

37

Independent Auditor’s Report

Independent Auditor’s Report
To the Board of Directors of HAZAMA ANDO CORPORATION:
OpinionWe have audited the accompanying consolidated financial statements of HAZAMA ANDO CORPORATION(“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprise theconsolidated balance sheets as at March 31, 2023 and 2022, the consolidated statements of income,comprehensive income, changes in net assets and cash flows for the years then ended, and notes, comprising asummary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2023 and 2022, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with accounting principles
generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have 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 ouraudit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters.

38

Reasonableness of the Company’s estimate of the total construction costs in relation to revenue recognition
The key audit matter
How the matter was addressed in our audit
The Company and its consolidated subsidiaries   The primary procedures we performed to assess
provide construction service, as described in Note 26 w h e t h e r t h e C o m p a n i e s ’ e s t i m a t e o f t o t a l“ R e v e n u e r e c o g n i t i o n , ( 1 ) I n f o r m a t i o n o n construction costs in relation to revenue recognition
disaggregation of revenue arising from contracts was reasonable included the following:with customers” to the consolidated financial (1) Internal control testingstatements, of the revenue from the construction
service, the revenue recognized for the performance We tested the design and operating effectiveness of
obligation satisfied over time amounted to ¥332,100 certain of the Company’s internal controls relevant
million, representing 89% of the Revenues in the to the process of preparing a project budget. In thisassessment, we focused our testing on the following
consolidated financial statements.
controls:•	controls to ensure compliance with the internal
As described in Note 2 “Summary of Significant
rules for preparing a project budget, including
Accounting Policies, (17) Significant recognition
how to accumulate work hours of each activity,
criteria for revenue and cost” to the consolidated
what information and data to be used, and how tofinancial statements, the Company and its
reflect the risk of any uncertainties within the
consolidated subsidiaries recognize the revenue forbudget; andthe performance obligation satisfied over time basedon the progress towards satisfaction of performance •	controls to reflect any changes in circumstancesthat occur after the start of construction within the
obligations. The estimate of this progress is
project budget in a timely and appropriate manner.
calculated as the percentage of incurred construction
costs to the total construction costs.
(2) A ssessment of the reasonableness of theestimated total construction cost
As described in Note 2 “Summary of Significant We selected mainly construction contracts for which
Accounting Policies, (21) Significant accounting total construction revenue exceeded a certain amountestimates (Estimate of total construction costs in and those for which construction margin changed byrelation to revenue recognition)” to the consolidated more than a certain level, as construction contracts
financial statements, total construction costs are for which estimated total construction costs or theirbased on the past construction works and reflect changes might have a significant effect. In order toconditions specific to each project. Therefore, the assess the reasonableness of the key assumptions
preparation of a project budget, which provided the adopted in preparing the project budgets, which werebasis for estimating total construction costs for the used as the basis for estimating total construction
project, involved a high degree of uncertainty. costs, for the selected construction contracts, among
Specifically, management’s determination of the others, we:following aspects of construction had a significant •	a s s e s s e d w h e t h e r t h e e s t i m a t e d c o s t s o feffect on the estimated total construction costs at theconstruction work necessary to fulfill theend of the fiscal year.
construction contract were included in the projectbudget by inquiring the personnel responsible for•	Whether the work necessary to fulfill theconstruction work about relationships between
construction contract was identified and thecost items and amounts of the project budget andestimated costs were included in the project
the content of the relevant activities andbudget; andcomparing the estimated costs with various•	Whether any changes in work due to changes indocuments obtained, such as a construction
circumstances that occurred subsequent to thetimeline;
start of construction were reflected within the
project budget in a timely and appropriate •	c o m p a r e d t h e t o t a l o f t h e a c t u a l c o s t o f
constructions and the future expected amountmanner.
with the initial project budget, examined variances
between them, and assessed whether the causes ofWe, therefore, determined that our assessment of thethose variances were reflected in the project
reasonableness of the Company’ estimate of total
budget to assess the accuracy of the project
construction costs in relation to revenue recognitionbudget; andwas the most significant in our audit of the •	inquired of several people, including theconsolidated financial statements for the current
personnel responsible for construction work andfiscal year, and accordingly, the key audit matter.
the head of accounting, about their judgment on
any changes in circumstances that occurred after
the start of construction and updates of the projectbudget as well as compared their responses with
the internal and external documents, that served
as the basis for their responses, to assess theappropriateness of their judgment.

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Other Information
The other information comprises the information included in the Financial Review, but does not include theconsolidated financial statements, the financial statements, and our auditor’s reports thereon. Management is
responsible for the preparation and presentation of the other information. Corporate auditors and the board ofcorporate auditors are responsible for overseeing the directors’ performance of their duties with regard to thedesign, implementation and maintenance of the reporting process for 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 otherinformation and, in doing so, consider whether the other information is materially inconsistent with theconsolidated 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 otherinformation, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance 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 tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in Japan and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performance of
their duties with regard to the design, implementation and maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards generally accepted in Japan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:•	
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are•	appropriate in the circumstances, while the objective of the audit is not to express an opinion on theeffectiveness of the Group’s internal control.
•	
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management.
•	Conclude on the appropriateness of management’s use of the going concern basis of accounting and basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.

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•	
Evaluate whether the presentation and disclosures in the consolidated financial statements are in accordancewith accounting standards generally accepted in Japan, the overall presentation, structure and content of theconsolidated financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
•	
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely responsible
for our audit opinion.
We communicate with corporate auditors and the board of corporate auditors regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have compliedwith relevant ethical requirements regarding independence, and communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we determine
those matters that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat 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.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2023 are presented solely for convenience. Our audit also included the translation of yen amounts
into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1 tothe consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of theCertified Public Accountants Act of Japan.

Satoshi Hosoya
Designated Engagement Partner
Certified Public Accountant

Daio Aida
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
August 21, 2023

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

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