HAZAMA ANDO CORPORATIONFINANCIAL REVIEW 2022
Year ended March 31, 2022

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, 2022, 2021, 2020, 2019 and 2018

Summary
Thousands of
U.S. dollars

Millions of yen
Operating results:
Revenues
Construction contracts
Other activities
Total
Cost of sales
Gross profit
Selling, general andadministrative expenses
Operating income
Profit attributable toowners 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

2022

2021

2020

2019

2018

2022

¥316,154
24,140¥331,695
20,451¥358,191
19,945¥334,245
25,727¥348,879
28,142$2,582,747
197,206

340,294
293,432
46,862352,146
303,981
48,165378,136
330,918
47,218359,972
314,180
45,792

377,021319,666
57,3552,779,953
2,397,124
382,829

20,26120,80822,517

22,10021,640165,518

26,601

27,357

24,701

23,69235,715

217,311

17,671

17,18916,804

8,863

23,862

144,359¥295,333
153,650
141,683¥339,387
192,711
146,676¥339,772
202,873
136,899¥349,657
215,974
133,683¥329,778
207,378
122,400$2,412,654
1,255,208
1,157,446¥(36,086)¥29,155¥(3,103)¥5,900¥38,127$(294,796)(4,549)(3,954)(3,016)(2,357)(2,261)(37,162)(22,565)(12,656)(13,244)(7,780)(3,962)(184,340)

Yen
Per share amounts:
Profit attributable toowners of parent
Basic
DilutedDividends
Common stock
Net assets

U.S. dollars¥98.8498.84¥89.8089.78¥84.4284.40¥45.2144.20¥128.97
119.41

$0.81
0.81

40.00
834.0030.00
782.2830.00
704.8630.00
664.7825.00
651.770.33
6.81

Note: 1. U.S. dollar amounts in this Financial Review are translated from yen at the rate of ¥122.41 to US$1.00 for convenience.
2. The dividend per share for 2018 includes a ¥5 special dividend.
3. The Company has adopted ASBJ Statement No.29, “Accounting Standard for Revenue Recognition” (March 31, 2020),
etc. since the beginning of fiscal year 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 adopted ASBJ Statement No.29, “Accounting Standard for Revenue Recognition” (March 31, 2020), etc. since
the beginning of the current consolidated fiscal year, and thereby each figure for the consolidated fiscal year 2021 in this “Financial
Review” is retroactively adjusted.
Revenues
Revenues in fiscal 2022 totaled ¥340,294 million (US$2,779,953 thousand), of which ¥316,154 million (US$2,582,747 thousand)came from construction projects and ¥24,140 million (US$197,206 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 ¥293,432 million (US$2,397,124 thousand), which is equivalent to 86.2% of revenues. Selling, generaland administrative expenses amounted to ¥20,261 million (US$165,518 thousand), which is equivalent to 6.0% of revenues.
Operating income reached ¥26,601 million (US$217,311 thousand), and the operating margin was 7.8%. Profit attributable toowners of parent amounted to ¥17,671 million (US$144,359 thousand). Basic profit attributable to owners of parent per share was¥98.84 (US$0.81). HAZAMA ANDO CORPORATION paid dividend of ¥20 (US$0.163) per share for the fiscal year ended March
31, 2021 on June 30, 2021, and paid interim dividend of ¥20 (US$0.163) per share for the fiscal year ended March 31, 2022 on
December 6, 2021.
Financial Position and Analysis
Total assets amounted to ¥295,333 million (US$2,412,654 thousand), total liabilities amounted to ¥153,650 million (US$1,255,208
thousand), and total net assets amounted to ¥141,683 million (US$1,157,446 thousand) at the end of fiscal 2022.
Net worth to total assets ratio was 47.7%. Net assets per share amounted to ¥834.00 (US$6.81).
Cash Flows
Cash and cash equivalents at the end of the year decreased by ¥63,295 million (US$517,074 thousand) to ¥64,740 million(US$528,878 thousand).
Net cash used in operating activities amounted to ¥(36,086) million (US$(294,796) thousand) mainly as the result of decreasein notes and accounts payable amounted to ¥23,506 million (US$192,027 thousand), increase in notes and accounts receivableamounted to ¥18,962 million (US$154,906 thousand), decrease in advances received on uncompleted construction contracts
amounted to ¥9,151 million (US$74,757 thousand), income before income taxes amounted to ¥25,390 million (US$207,418
thousand), and increase in deposit received amounted to ¥3,525 million (US$28,797 thousand).
Net cash used in investing activities amounted to ¥(4,549) million (US$(37,162) thousand) mainly as a result of purchase ofproperty, plant and equipment amounted to ¥2,558 million (US$20,897 thousand), payments for investments in capital ofsubsidiaries and associates amounted to ¥1,876 million (US$15,326 thousand), and proceeds from withdrawal of time deposits
amounted to ¥1,282 million (US$10,473 thousand).
Net cash used in financing activities amounted to ¥(22,565) million (US$(184,340) thousand) mainly as a result of purchase oftreasury stock amounted to ¥15,328 million (US$125,219 thousand), cash dividends paid amounted to ¥6,423 million (US$52,471
thousand), repayment of long-term loans payable amounted to ¥4,571 million (US$37,342 thousand), and proceeds from long-termloans payable amounted to ¥4,291 million (US$35,054 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.
Thousands of
U.S. dollars

Millions of yen
Revenues

2

2022

2021

2020

2019

2018

2022

Civil engineering
Domestic
Government sector
Private sector
Overseas¥76,436
48,201
7,627¥85,011
43,6907,275¥78,588
35,983
9,743¥70,268
40,531
7,991¥88,070
34,0725,331$624,426
393,767
62,307

Subtotal

132,264

135,976

124,314

118,790

127,473

1,080,500

Building construction
Domestic
Government sector
Private sector
Overseas

26,662
144,759
7,106

18,592
164,058
9,563

30,131
180,720
16,36326,932
161,430
20,497

27,716
168,806
19,473217,809
1,182,575
58,051

Subtotal

178,527

192,213227,214

208,859

215,995

1,458,435

Total construction projects¥310,791¥328,189¥351,528¥327,649¥343,468$2,538,935

Revenue from the civil engineering category accounted for ¥132,264 million (US$1,080,500 thousand), or 42.6% of total revenue
from construction projects, with domestic projects contributing ¥124,637 million (US$1,018,193 thousand), or 94.2%.
The government sector contributed ¥76,436 million (US$624,426 thousand), or 61.3% of total domestic civil engineering
revenue, while private-sector civil engineering revenue amounted to ¥48,201 million (US$393,767 thousand), or 38.7% of total
domestic civil engineering revenue. Overseas civil engineering revenue reached ¥7,627 million (US$62,307 thousand), equivalent
to 5.8% of total revenue in the civil engineering category.
Revenue from the building construction category accounted for ¥178,527 million (US$1,458,435 thousand), or 57.4% of total
construction revenue. Domestic projects accounted for ¥171,421 million (US$1,400,384 thousand), or 96.0%.
The government sector contributed ¥26,662 million (US$217,809 thousand), or 15.6% of total domestic building construction
revenue, while private-sector building construction revenue amounted to ¥144,759 million (US$1,182,575 thousand), or 84.4% of
total domestic building construction revenue. Overseas building construction revenue reached ¥7,106 million (US$58,051
thousand), equivalent to 4.0% of total revenue in the building construction category.
Total overseas construction revenue reached ¥14,733 million (US$120,358 thousand) and accounted for 4.7% of total
construction revenue. Civil engineering projects accounted for 51.8% of this total, and building construction for 48.2%.
Thousands of
U.S. dollars

Millions of yen
Orders Received

2022

2021

2020

2019

2018

2022

Civil engineering
Building construction¥122,593
187,250¥101,528
199,341¥193,575
186,706¥192,179
235,473¥123,469
225,723$1,001,495
1,529,695

Total construction projects¥309,843¥300,869¥380,281¥427,652¥349,192$2,531,190

Orders received for construction projects during fiscal 2022 amounted to ¥309,843 million (US$2,531,190 thousand). Overseas
work contributed 4.2% of orders in the construction category. Civil engineering orders amounted to ¥122,593 million(US$1,001,495 thousand), or 39.6% of total construction orders. Building construction orders amounted to ¥187,250 million(US$1,529,695 thousand), which is equivalent to 60.4% of total construction orders.
Thousands of
U.S. dollars

Millions of yen
Year-end Backlog

2022

2021

2020

2019

2018

2022

Civil engineering
Building construction¥320,145
198,538¥329,718
189,606¥364,120
182,579¥294,914
223,318¥221,679
196,300$2,615,350
1,621,910

Total construction projects¥518,683¥519,324¥546,699¥518,232¥417,979$4,237,260

Order backlog for construction projects at the end of fiscal 2022 amounted to ¥518,683 million (US$4,237,260 thousand), withcivil engineering work accounting for ¥320,145 million (US$2,615,350 thousand), or 61.7%, and building construction accountingfor ¥198,538 million (US$1,621,910 thousand), or 38.3%.

3

Consolidated Balance Sheets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
March 31, 2022 and 2021

Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

2022

¥66,081¥129,317$539,833

AssetsCurrent assets:
Cash and time deposits (Notes 4 and 28)
Receivables (Note 28):
6,900

6,901

56,368

133,531

114,560

1,090,850

Inventories (Notes 5 and 8)

12,006

14,41798,080

Other (Note 7)

9,567

9,023

78,155

(14)

(12)

(114)

228,071

274,206

1,863,172

Land

15,85315,800129,507

Buildings and structures

22,894

23,649187,028

Machinery and equipment

12,92512,013

105,588

Other

1,915

818

15,64453,58752,280437,767(23,400)(22,724)(191,161)

30,18729,556

246,606

Notes
Accounts

Less allowance for doubtful accounts
Total current assets

Property, plant and equipment (Notes 7, 9,15, 16 and 17):

Less accumulated depreciation
Net property, plant and equipment

Investments and other assets:
20,784

21,521

169,790

Investments in unconsolidated subsidiaries and affiliates

176

176

1,438

Long-term loans receivable (Note 7)

74

133

605

Investment securities (Notes 3, 7 and 28)

Net defined benefit asset

2,546

707

20,799Deferred tax assets (Note 21)

7,091

7,819

57,928Other (Note 7)

6,405

5,270

52,324

(1)

(1)

(8)

Less allowance for doubtful accounts
Total investments and other assets
Total assets
See accompanying notes.

4

37,07535,625

302,876¥295,333¥339,387$2,412,654

Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

2022

¥12,178¥12,166$99,485

4,498

4,147

36,745

237

292

1,936

－

17,824－52,74555,841

430,888

Liabilities and Net Assets
Current liabilities:
Short-term loans payable (Notes 6 and 28)
Current maturities of long-term loans payable (Notes 6 and 28)
Current portion of bonds (Notes 6 and 28)
Payables (Note 28):
Notes
Accounts
Income taxes payable

3,072

4,907

25,096

Advances received (Note 18)

23,55332,405

192,411

Accrued expenses

36

36

294

Provision for losses on construction contracts (Note 8)

596

1,249

4,869

Provision for losses on fire disaster

3,921

5,996

32,032Other

39,55338,899323,119

140,389

173,762

1,146,875

163

400

1,332

Long-term loans payable, less current maturities (Notes 6 and 28)

7,640

8,271

62,413Net defined benefit liability (Note 20)

3,816

8,858

31,174

Provision for environmental spending

139

139

1,135

Provision for management board incentive plan trust

163

117

1,332

Total current liabilities
Long-term liabilities:
Bonds (Notes 6 and 27)

Deferred tax liabilities (Note 21)
Other

37

37

302

1,303

1,127

10,645

Total long-term liabilities

13,261

18,949108,333

Total liabilities

153,650

192,7111,255,208

Net assets (Notes 23 and 24):
Shareholders’ equity:
Capital stock
Common stock

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

138,927

Capital surplus

17,05819,919139,351

Retained earnings

114,124

115,086

932,309

Less treasury stock, at cost

(10,422)(10,188)(85,140)

137,766

141,823

1,125,447

Valuation difference on available-for-sale securities

2,997

3,755

24,483

Deferred gains or losses on hedges(2,827)

Issued – 181,021,197 shares

Total shareholders’ equity
Accumulated other comprehensive income:

(346)

－

Foreign currency translation adjustment

86

56

703

Accumulated remeasurements of defined benefit plans

418

281

3,415

Total accumulated other comprehensive income

25,774

3,155

4,092

Share subscription rights

－

3

－

Non-controlling interests

762

758

6,225

Total net assets

141,683

146,676

1,157,446

Total liabilities and net assets¥295,333¥339,387$2,412,654

5

Consolidated Statements of Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021

Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

2022

¥316,154
24,140¥331,695
20,451$2,582,747
197,206

340,294352,146

2,779,953

273,099
20,333

287,252
16,7292,231,019
166,105

293,432

303,9812,397,124

46,862
20,261

48,16520,808382,829
165,518

26,601

27,357217,311

Interest and dividends income
Late charges income
Gain on extinguishment of debt
Interest expense
Foreign exchange loss
Compensation for damage
Share of loss of entities accounted for using equity method
Gain on sales of noncurrent assets (Note 16)
Gain on sales of investment securities
Gain on reversal of provision for losses on fire disaster
Subsidy income
Loss on sales of noncurrent assets (Note 17)
Loss on tax purpose reduction entry of noncurrent assets
Loss on valuation of investments securities
Loss on retirement of noncurrent assets
Head office relocation expenses
Impairment loss (Note 15)
Loss on litigation

317
166
187
(321)
(104)
(377)
(273)
－
241
－
67
(19)
(67)
(27)
(115)
(306)
－
(42)

366
－
24
(333)
(19)
(134)
－
13
160
28
355
－
(355)
－
(20)
－
(885)
(75)

2,590
1,356
1,528
(2,622)(850)(3,080)(2,230)
－
1,969
－
547
(155)
(547)
(221)
(939)
(2,500)－(343)

Losses on fire disaster

(181)

(25)

(1,479)(2,917)

Revenues (Notes 19, 25, and 26):
Construction contracts
Other activities
Cost of sales (Notes 13, 25, and 26):
Construction contracts
Other activities
Gross profit
Selling, general and administrative expenses (Notes 14 and 26):
Operating income
Other income (expenses):

Other, net
Income before income taxes(357)(1,370)(1,211)(2,270)(9,893)25,39025,087

207,418

6,769
949

7,790
138

55,298
7,753

Income taxes (Note 21):
Current
DeferredProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

7,718

7,928

63,051

17,672

17,159144,367

1

(30)

8

¥17,671¥17,189$144,359

2022

2021

U.S. dollars(Note 1)2022

¥98.8498.84¥89.80
89.78

$0.81
0.81

40.00

30.00

0.326

Yen
Per share amounts (Note 27):
Profit attributable to owners of parent
Basic
DilutedCash dividends applicable to the year
Common stock
See accompanying notes.
6Consolidated Statements of Comprehensive Income
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021

Thousands of
U.S. dollars(Note 1)Millions of yen
2022

2021

2022

¥17,672¥17,159$144,367

(758)

1,875

(6,192)Foreign currency translation adjustment

35

(108)

286

Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted for using
equity method

137

1,568

1,119

(345)

－

(2,818)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities

Total other comprehensive income (Note 22)
Comprehensive income
Comprehensive income attribute to:Comprehensive income attribute to owners of the parent
Comprehensive income attribute to non-controlling interests

(931)

3,335

(7,605)

16,741

20,494

136,762

16,735
6

20,571(77)

136,71349

See accompanying notes.

7

Consolidated Statements of Changes in Net Assets
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021

Millions of yen
Shareholders’ equity
Capital stock

Balance at April 1, 2020

¥17,006

CapitalsurplusRetainedearnings¥19,926¥103,700¥(5,284)

1

Cumulative effects of changes in accounting policies
Restated balance

Treasury
Stock¥17,006¥19,926¥103,700

Cash dividends paid

(5,803)

Profit attributable to owners of parent

17,189¥(5,284)(4,936)

Acquisition of treasury stock(7)

Disposal of treasury stock

32

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, 2021

¥17,006¥19,919¥115,086

Cash dividends paid

(6,423)

Profit attributable to owners of parent

17,671¥(10,188)(15,328)

Acquisition of treasury stock
(23)

46

Cancellation of treasury stock(15,048)

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

12,210(12,210)¥17,058¥114,124

Disposal of treasury stock

Net changes in items other than shareholders’ equity
Balance at March 31, 2022

¥17,006¥(10,422)

Millions of yen
Accumulated other comprehensive income
Share
Valuation
Foreign
Deferred gains
Accumulated
subscription
difference on
currency
or losses on
remeasurements ofrightsavailable-for-saletranslation
hedgesdefined benefit planssecurities
adjustment
Balance at April 1, 2020

¥1,880¥－¥117¥(1,287)¥4

Noncontrollinginterests¥837¥1,880¥－¥117¥(1,287)¥4¥837¥136,899

Cash dividends paid

(5,803)

Profit attributable to owners of parent

17,189Acquisition of treasury stock(4,936)

Disposal of treasury stock

25

Cancellation of treasury stock－

Transfer from other retained earnings to other capital surplus－

Net changes in items other than shareholders’ equity

1,875

－

(61)

1,568

(1)

(79)

3,302

Balance at April 1, 2021

¥3,755

¥－

¥56

¥281

¥3

¥758

¥146,676

Cash dividends paid

(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 March 31, 2022

8¥136,899
1

Cumulative effects of changes in accounting policies
Restated balance

Total

(758)

(346)

30

137

(3)

4

(936)

¥2,997¥(346)

¥86

¥418

¥－

¥762

¥141,683

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

Balance at April 1, 2021

Capital stock

CapitalsurplusRetained
Earnings

Treasurystock$138,927$162,723$940,168$(83,228)$138,927$162,723$940,168$(83,228)

Cumulative effects of changes in accounting policies
Restated balance
Cash dividends paid

(52,471)

Profit attributable to owners of parent

144,359(125,219)

Acquisition of treasury stock(188)

Disposal of treasury stock

376(122,931)

Cancellation of treasury stock
Transfer from other retained earnings to other capital surplus

122,931

99,747(99,747)$139,351$932,309

Net changes in items other than shareholders’ equity
Balance at March 31, 2022

$138,927$(85,140)

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income
Valuation
Foreign
Accumulated
gains
difference on Deferredcurrency
remeasurements
or losses onavailable-fortranslationof defined
hedgessale securities
adjustment
benefit plans

Balance at April 1, 2021

Sharesubscription
rights

Noncontrollinginterests

Total$30,675$－$457$2,296$25$6,192$1,198,235$30,675$－$457$2,296$25$6,192$1,198,235

Cumulative effects of changes in accounting policies
Restated balance
Cash dividends paid

(52,471)

Profit attributable to owners of parent

144,359

Acquisition of treasury stock(125,219)

Disposal of treasury stock

188

Cancellation of treasury stock－

Transfer from other retained earnings to other capital surplus－

Net changes in items other than shareholders’ equity(6,192)(2,827)

246

1,119

(25)

33

(7,646)

Balance at March 31, 2022

$24,483$(2,827)$703$3,415$－$6,225$1,157,446

See accompanying notes.

9Consolidated Statements of Cash Flows
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021

2022

2021

Thousands of
U.S. dollars(Note 1)
2022

¥25,390¥25,087$207,418

2,410
－
67
(67)
181
2
(687)
(653)
(2,075)(4,965)(1,719)
(317)
321
181
(241)
14

2,080
885
355
(355)
25
(2)
(241)
294
(703)
(1,912)
(448)
(366)
333
(73)
(160)
(13)

19,688
－
547
(547)
1,479
16
(5,612)(5,335)(16,951)(40,560)(14,043)(2,590)2,622
1,479(1,969)114(18,962)
1,518
893
606
(23,506)(9,151)
3,525(2,521)
273
4,298(25,185)291(298)(2,211)(8,683)(36,086)

16,247(668)(4,137)991(8,290)(3,469)
3,050
3,254
－
5,866
37,630
393
(356)
(756)
(7,756)29,155(154,906)
12,401
7,295
4,951(192,027)(74,757)
28,797(20,595)
2,230
35,112(205,743)
2,377(2,434)(18,062)(70,934)(294,796)(1,346)
1,282
(434)
359
(2,558)21
67(1,876)(104)
40(4,549)

(61)
221
(429)
299
(2,935)
17
355
－
(955)
(466)
(3,954)(10,996)
10,473(3,545)
2,933(20,897)172
547(15,326)(850)
327(37,162)

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
Impairment loss
Loss on tax purpose reduction entry of noncurrent assets
Subsidy income
Loss on fire disaster
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for warranties for completed construction
Increase (decrease) in provision for loss 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
Loss (gain) on sales of property, plant and equipment
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
Increase (decrease) in notes and accounts payable
Increase (decrease) in advances received
Increase (decrease) in deposit received
Increase (decrease) in consumption tax payable
Share of loss (profit) of entities accounted for using equity method
Other, net
SubtotalInterest and dividends received
Interest paid
Compensation for damage paid
Income taxes paid
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 short-term and long-term investment securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Proceeds from subsidies
Payments for investments in capital of subsidiaries and associates
Payments of leasehold and guarantee deposits
Other, net
Net cash used in investing activities

10Millions of yen
2022

2021

(31)
4,291
(4,571)(292)(15,328)(6,423)(2)(209)(22,565)(95)(63,295)
128,035¥64,740(92)
4,107(5,535)(342)(4,936)(5,803)(3)(52)(12,656)
28
12,573
115,462¥128,035

Thousands of
U.S. dollars(Note 1)
2022

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 4)(253)
35,054(37,342)(2,386)(125,219)(52,471)(16)(1,707)(184,340)(776)(517,074)
1,045,952$528,878

See accompanying notes.

11Notes to Consolidated Financial Statements
HAZAMA ANDO CORPORATION and Consolidated Subsidiaries
For the years ended March 31, 2022 and 2021

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of HAZAMA ANDO CORPORATION (“the Company”) and its consolidated
subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange
Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial ReportingStandards.
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 Law.
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, 2022, which was ¥122.41 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
The consolidated financial statements include the accounts of the Company and its significant subsidiaries (“the Companies”). All
significant intercompany transactions and unrealized profits and losses among the Companies have been eliminated in consolidation.
All companies are required to consolidate all significant investees, which are controlled through substantial ownership ofmajority voting rights or existence of certain conditions. Investments in affiliates over which the Company has the ability to exercise
significant influence over operating and financial policies of the investees, are accounted for by the equity method.
Investments in remaining unconsolidated subsidiaries and affiliates, which have immaterial effect on the consolidated financial
statements, are accounted for at cost. Such investments are adjusted for any non-recoverable diminution in value, and income fromthese unconsolidated subsidiaries and affiliates is recognized only when the Companies receive dividends therefrom.
(2) 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 estimates for every construction contract. The Company enters into a construction contract with a customer
after an agreement 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 a transaction price. This process is also applied to a construction for additionaland specification changes to an original agreement. Even if a construction contract has not yet been entered into, an expected
contract amount is to be recognized as a transaction price only if the construction contract is certainly expected to be made in the
future.
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. The Company
recognizes revenue over time as a performance obligation to transfer goods or services to a customer is satisfied when control overthe goods or services is transferred to the customer over time. The Company measures progress related to satisfaction of aperformance obligation based on a percentage of the construction costs incurred by the end of each reporting period to the total
expected construction costs. If it is impossible to estimate reasonably a progress of satisfaction of a performance obligation, but
probable that the costs incurred will be recovered, the Company recognizes revenue using “the cost recovery method”. For aconstruction 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 theperformance obligation 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.

12The performance obligation and the timing for revenue recognition in reportable segments (including civil engineering andbuilding) are as follows:Business segments
Civil engineering and Building

Major performance obligations
Construction in Japan and overseas

Group business

Sales of construction materials andConstruction of civil engineering andbuilding by consolidated subsidiaries

Other businessCommissioned business in research andstudy

When to recognize revenue
As described above.
Sales of construction materials: at a point intime when a deliverable of business istransferred to the customer.
Construction of civil engineering andbuilding: same as business segment “Civil
engineering and Building.
At a point in time when a deliverable ofbusiness is transferred to the customer.

(b)Recognition criteria for recording revenue and cost from finance lease transaction
Revenue and cost are recognized at a point in time of receipt of lease payment.
(3) 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.
(4) Cash and cash equivalents
Cash and cash equivalents include cash on hand, highly liquid investments with maturity of three month or less from the purchasedate. See Note 4 as to 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.
(5) 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.
(6) Inventories
Inventories are stated at cost as determined on a specific project basis.
(7) Securities
Available-for-sales securities are as follows:
Securities other than those without market prices are stated at fair values (with the entire amounts of valuation differences
recorded directly into net assets, and the cost of sales calculated using the moving average method).
Securities without market value are stated at moving-average cost.
(8) Derivatives and hedging transactions
Derivative financial instruments are stated at fair value and changes in the fair value are recognized as gains or losses unlessderivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition ofgains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on the hedged
items are recognized.
If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable or payable,(a) the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payable translated using
the spot rate at the inception date of the contract and the book value of the receivable or payables is recognized in the consolidated
statements of income in the period which includes the inception date, and(b) the discount or premium on the contract (that is the difference between the Japanese yen amount of the contract translated using
the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over the termof the contract.
Also, if interest rate swap contracts are used as hedge and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract
was executed.

13

The Companies use forward foreign currency contracts and interest rate swap contracts as derivative financial instruments only
for the purpose of mitigating future risks of fluctuation of foreign currency exchange rates and interest rate increases.
The Companies evaluate hedge effectiveness by comparing the cumulative changes in cash flows from or the changes in fairvalue of hedged items and the corresponding changes in the hedging derivative instruments during the period from the inception
date of hedging to the evaluation of hedge effectiveness. However, the evaluation of hedge effectiveness is omitted for interest rate
swap contracts as they meet certain hedging criteria.
(9) Property, plant and equipment, depreciation
Property, plant and equipment are carried at cost. Depreciation of buildings (excluding facilities attached to buildings) and facilities
attached to buildings and structures, which were acquired since April 1, 2016 is mainly recorded on the straight-line method, anddepreciation of other property, plant and equipment is recorded on the declining-balance method over estimated useful lives, exceptthat the declining-balance method is applied to buildings of one consolidated subsidiary.
Expenditures for significant renewals and betterments are capitalized, while expenditures for normal repairs and maintenanceare charged to expense when incurred.
(10) 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.
(11) 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 the current
consolidated fiscal year is recorded in the provision for losses on fire disaster.
(12) 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) Provision for management board incentive plan trust
To prepare for future awards of the Company’s stock to the Directors, the estimated cost for stock award debt based on
predetermined regulations for awarding stock is recorded.
(14) Retirement and severance benefits
The 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 period less than the average of the estimated remaining service lives (9 years) commencing with the succeeding period.
Prior service costs are recognized in expenses using the straight-line method over period less than the average of the estimatedremaining service lives (3 years) commencing with present period.
The Company has calculated retirement and severance benefits and retirement benefit costs under certain lump-sum payment
plans using simplified method.
(15) Lease transactions(a) Finance leases which transfer ownership of leased assets
Leased assets arising from finance lease transactions which transfer ownership to the lessee are depreciated by the same method as
the depreciation of fixed assets.
(b) 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.
(16) Income taxes
The Companies recognize tax effects of temporary differences between the carrying amounts 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.
(17) 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.

14

(18) 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.
Cash dividends per share represent amounts applicable for the respective years on accrual basis.
A net asset per share is reported at the amounts of ¥834.00 (US$6.81) and ¥782.28 at March 31, 2022 and 2021, respectively.
(19) Other significant matters in preparation of the consolidate financial statements(Accounting policies and procedures adopted in the absence of specific regulations in relevant accounting standards, etc.)
The Company does accounts processing for joint venture constructions according to each investment ratio.
(20) 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

Thousands of
U.S. dollars
2022

2022

2021

Net sales of completed construction contracts calculated by the recognizingrevenue-over-time method¥301,927

316,618$2,466,522

Total¥301,927

316,618$2,466,522(b) Information on nature of significant accounting estimate for identified item
The Company adopts the recognizing-revenue-over-time method and uses it to record “Net sales 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 account closing 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 ofconstruction nature due to changes in the situations after the start of construction and so on in the budget as they arise. However,an increase in construction cost caused by an unexpected event (e.g., increasing costs of subcontract, material, equipment, andadditional cost for correction) will affect its future business performance.
(21) Changes in accounting policy(Application of “Accounting Standard for Revenue Recognition”, etc.)
The Company has adopted ASBJ Statement No.29, “Accounting Standard for Revenue Recognition” (March 31, 2020) (hereinafterreferred to as “the Accounting Standard”), etc. since the beginning of the current consolidated fiscal year; and recognizes revenue
at an amount expected to be received in exchange for goods or services when control over the promised goods or services istransferred to the customer. The Company had previously adopted the percentage of completion method for recognizing revenue
from a construction contract when an outcome of progress part of the construction was deemed certain ; otherwise the completed
contract method was adopted; however, thereby the Company has changed it to the method which recognizes revenue over time asa performance obligation to transfer goods or services to a customer is satisfied when control over the goods or services istransferred to the customer over time. The Company measures progress related to satisfaction of a performance obligation basedon a percentage of the construction costs incurred by the end of each reporting period to the total expected construction costs. If it
is impossible to estimate reasonably a progress of satisfaction of a performance obligation, but probable that the costs incurred will
be recovered, the Company recognizes revenue using “the cost recovery method”. 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; andfinancial statements for the previous consolidated fiscal year have been adjusted retrospectively. However, the following methods
specified in the Accounting Standard, paragraph 85 have been applied.
(1) For contracts in which almost all amounts of revenue were recognized in accordance with a previous treatment prior to thebeginning of previous consolidated fiscal year, the comparative information shall not be adjusted retrospectively.
(2) For amounts of variable consideration included in contracts in which almost all amounts of the revenue were recognized inaccordance with a previous treatment prior to the beginning of current consolidated fiscal year, the comparative information shallbe adjusted retrospectively using the amount at the time when an uncertainty regarding the amount of variable consideration is
resolved.

15

As a result, compared with those before the retrospective application;
In the consolidated balance sheet for the previous consolidated fiscal year, “Accounts receivables” increased by ¥71 million ($580
thousand), “Inventories” decreased by ¥294 million ($2,402 thousand), “Advances received” decreased by ¥223 million ($1,822
thousand). In addition, the balance of retained earnings brought forward at the beginning of previous consolidated fiscal year
increased by ¥0 million, as the cumulative effect was reflected in net assets at the beginning of previous consolidated fiscal year.
In the consolidated statements of income for the previous consolidated fiscal year, “Revenues” increased by ¥145 million ($1,185
thousand), “Cost of sales” increased by ¥146 million ($1,193 thousand), and “Operating income” and “Income before income
taxes” decreased by ¥0 million respectively.
In the consolidated statement of cash flows for the previous consolidated fiscal year, “Income before income taxes” decreased by¥0 million ($0 thousand).
In the consolidated statement of shareholders' equity for the current consolidated fiscal year, the balance of retained earnings
brought forward at the beginning of current consolidated fiscal year increased by ¥0 million ($0 thousand), as the cumulative
effect was reflected in net assets at the beginning of previous consolidated fiscal year.
Net income per share decreased by ¥0.00 (US$0.00).
In accordance with the transitional treatment specified in the Accounting Standard Paragraph 89-3, “Notes on revenue recognition”
for the previous consolidated fiscal year is not prepared.
(Accounting Standard for Fair Value Measurement.)
The Company has adopted ASBJ Statement No.30 “Accounting Standard for Fair Value Measurement” (July 4, 2019) (hereinafterreferred to as “the Accounting Standard”), etc. since the beginning of current consolidated fiscal year; and adopts the new
accounting policies specified in the Accounting Standard , etc. into the future, in accordance with the transitional treatment specified
in both the Accounting Standard paragraph 19 and ASBJ Statement No.10 “Accounting Standard for Financial Instruments” (July4, 2019) Paragraph 44-2. For your information, there is no impact caused by the application on the consolidated financial statements.
In addition, in “28. Financial Instruments” details of financial instrument by fair value levels, etc. is prepared. However, in
accordance with the transitional treatment specified in ASBJ Guidance No.19 “Guidance on Disclosures about Fair Value of
Financial Instruments” (July 4, 2019) Paragraph 7-4, one for the previous consolidated fiscal year is not prepared.
(22) Changes in presentation(Consolidated Statements of Income)“Gain on extinguishment of debt” which was included in “Other, net” under other income (expenses) in the previous year ispresented separately, as it accounts for more than 10% of the total amount of non-operating incomes from the current consolidated
fiscal year. Consolidated financial statements for the previous consolidated fiscal year have been reclassified in order to reflect thischange in presentation. As a result, ¥104 million in “Other, net” presented in under other income (expenses) in the consolidated
statements of income for the previous consolidated fiscal year has been reclassified into ¥24 million in “Gain on extinguishmentof debt” and ¥80 million in “Other, net”.
“Commission fee” which was presented separately in the previous year is included in “Other, net” under other income (expenses),
as it accounts for less than 10% of the total amount of non-operating expenses from the current consolidated fiscal year.
“Compensation for damages” which was included in “Other, net” under other income (expenses) in the previous year is presented
separately, as it accounts for more than 10% of the total amount of non-operating expenses from the current consolidated fiscal
year. Consolidated financial statements for the previous consolidated fiscal year have been reclassified in order to reflect thischange in presentation. As a result, ¥(850) million in “Commission fee” and ¥(733) million in “Other, net” presented in under otherincome (expenses) in the consolidated statements of income for the previous consolidated fiscal year has been reclassified into¥(134) million in “Compensation for damages” and ¥(1,448) million in “Other, net”.
(23) New accounting standard, etc. not yet applied• “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021)(a) Summary
The guidance establishes;
treatment for calculation of investment trust fair value and note.
treatment for note on fair value of investment in partnership, etc. whose net amount of equity interest is to be recorded onbalance sheet.
(b) Scheduled date of application
Scheduled date of application is from April 1, 2022.
(c) Effect of application of accounting standard
There is no impact on consolidated financial statements.

16

(24) Additional information(Performance-linked stock compensation plan for directors and executive officers)(a) Transaction summary
The Company was resolved to introduce a performance-linked stock compensation plan as an incentive plan for its directors andexecutive 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 thecorporate value and performance 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 in accordancewith performance targets achieved.
(b) 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 treasury stock in the Trust as of the current fiscal year
were ¥ 453 million ($3,701 thousand) and 639,519shares, respectively.
3. Securities(1) The following tables summarize book values and acquisition costs of available-for-sale securities at March 31, 2022 and 2021:
Millions of yen
Book values
Type
Securities with book values exceeding acquisition costs
Equity securities¥12,984
Sub total

2022
Acquisition
costs

12,984

Securities with book values not exceeding acquisition costs
Equity securities¥3,478Sub total
Total

2021
Acquisition
costs

DifferenceBook values

Difference¥7,840¥5,144¥14,890¥8,886¥6,004

7,840

5,144

14,890

8,886

6,004

¥4,233¥(755)¥2,719¥3,294¥(575)

3,478

4,233

(755)

2,719

3,294

(575)

¥16,462¥12,073¥4,389¥17,609¥12,180¥5,429Thousands of U.S. dollars
Book values

Type
Securities with book values exceeding acquisition costs
Equity securities$106,070

2022
Acquisition
costs

Difference$64,047$42,023

64,04742,023

Securities with book values not exceeding acquisition costs
Equity securities$28,413$34,581$(6,168)

Sub total

Sub total
Total

106,070

28,41334,581(6,168)$134,483$98,628$35,855(2) Total sales, related gains and losses of available-for-sale securities for the year ended March 31, 2022 and 2021 are as follows:

Type

2022

2021

Thousands of
U.S. dollars
2022

Equity securities
Sales
Related gains

¥358
241

¥299
160

$2,925
1,969

Millions of yen

17

4. Cash and Cash Equivalents
Cash and cash equivalents reported in the consolidated statements of cash flows at March 31, 2022 and 2021 were reconciled withcash and time deposits reported in the consolidated balance sheets as follows:
Millions of yen

Thousands of
U.S. dollars
2022

2022

2021

Cash and time deposits
Time deposits with maturities of exceeding
3-month from the date of acquisition¥66,081¥129,317$539,833(1,341)(1,282)(10,955)

Total: Cash and cash equivalents¥64,740¥128,035$528,878

5. Inventories
Inventories at March 31, 2022 and 2021 consisted of the following:
Millions of yen

Thousands of
U.S. dollars
2022

2022

2021

Accumulated Costs on uncompleted construction contracts
Others¥4,076
7,930¥5,594
8,823$33,298
64,782

Total¥12,006¥14,417$98,080

6. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans are represented mainly by loan on deed. The average interest rates of short-term loans were 1.1% and 1.2%
at March 31, 2022 and 2021.
Bonds at March 31, 2022 and 2021 are summarized below:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Long-term debt from bonds, insurance companies, and others due serially through 2024:
Unsecured 0.2% (average interest rates)
Less current maturities

¥400
(237)

¥692
(292)

$3,268(1,936)

Total

¥163

¥400

$1,332Long-term loans payable at March 31, 2022 and 2021 are summarized below:
Millions of yen

18

Thousands of
U.S. dollars
2022

2022

2021

Long-term debt from banks, insurance companies, and others due serially through 2029:
Secured1.5% (average interest rates)
Unsecured 1.2% (average interest rates)
Less current maturities¥471
11,667(4,498)¥557
11,861(4,147)$3,847
95,311(36,745)

Total¥7,640¥8,271$62,413

Repayment schedules for bonds are summarized below:

2023
2024
2025
2026
2027

¥237
127
36
－
－

Thousands of
U.S. dollars$1,936
1,038
294
－
－

Total

¥400

$3,268Millions of yen

Years ending March 31,

Repayment schedules for the long-term loans payable are summarized below:

2023
2024
2025
2026
2027

¥4,498
3,410
2,304
1,323
480

Thousands of
U.S. dollars$36,745
27,857
18,822
10,808
3,921

Total

¥12,015$98,153

Millions of yen

Years ending March 31,

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-term
debt that become due and in case of default and certain other specified events, against all other debts payable to the bank. Suchrights have never been exercised by the bank.
7. Pledged Assets
The following assets were pledged to secure short-term bank loans, long-term debt and certain other obligation at March 31, 2022
and 2021:
Thousands of
U.S. dollars

Millions of yen
2022

2021

2022

Property, plant and equipment
Investment securities
Investments and other assets: other (Investments in capital)
Other assets¥1,45084
1,257
82¥1,50484－
96$11,845686
10,269670

Total¥2,873¥1,684$23,470

8. Estimated Loss on Uncompleted Construction Contracts
Amount of costs on uncompleted construction contracts for which a construction loss is anticipated and reserve for expected losses
on construction contracts in process are presented without being offset.
Thousands of
U.S. dollars

Millions of yen

Amount of costs on uncompleted construction contracts for which aconstruction loss is anticipated, matching with reserve for expected
losses on construction contracts in process

2022

2021

¥－

¥363

2022
$－

19

9. Tax Purpose Reduction Entry
Amount of tax purpose reduction entry deducted from corresponding acquisition costs due to receiving subsidies for the year ended
March 31, 2022 and 2021 are as follows:

2022

2021

Thousands of
U.S. dollars
2022

Buildings and structures
Machinery and equipment

¥434
28

¥395
－

$3,545
229

Total

¥462

¥395

$3,774

Millions of yen
Type of assets

10. Contingent Liabilities(1) At March 31, 2022 and 2021, the Companies had the following contingent liabilities for loan guaranteed:

2022

2021

Thousands of
U.S. dollars
2022

¥－

¥0

$－

¥－

¥0

$－

Millions of yen
Guarantees for loan
Loans of employees
Total(2) other
Regarding the fire occurred at the building under construction then by the Company in Tama city, Tokyo on July 26, 2018, theCompany recognized expected compensation for damages under the construction contracts and fire-damaged equipment outside of
the construction range other than the construction costs in the provision for losses on fire disaster.
However, the Company does not record expected compensation for damages that cannot be reasonably estimated in the provision
for losses on fire disaster.
For the contingent liability above, the Company has reached a final agreement with the parties concerned regarding compensation
for damages between the end of the current consolidated fiscal year and the date of securities report filing, and therefore the amountof loss on compensation for damages and others has been almost fixed. The details are described in "30. Events after the reporting
period".
11. Receivables from Contracts with Customers and Contract Assets
Of “Receivables” recorded in the consolidated balance sheet, amounts of “Receivables from contracts with customer” and “Contract
assets” are as follows:
Thousands of
U.S. dollars

Millions of yen
Receivable

2022

Notes
Electronically recorded monetary claim - operating
Accounts
Completed construction contracts
OthersContract assets¥3,9472,952$32,244
24,116

15,794
1,135
116,580129,025
9,272
952,373

Total¥140,408$1,147,030

12. Contract Liabilities
Contract liabilities included in “Advances received” and “Other” on the consolidated balance sheet are as follows:
Thousands of
U.S. dollars

Millions of yen
2022

20

Contract liabilities¥23,500$191,978Total¥23,500$191,97813. Provision for Losses on Construction Contracts Included in Cost of Sales of Construction Contracts
Provision for losses on construction contracts included in cost of sales of construction contracts for the fiscal year ended March 31,
2022 and 2021 were ¥546 million (US$4,460 thousand) and ¥1,154 million, respectively.
14. Research and Development Expenses
Research and development expenses included in manufacturing costs, and selling, general and administrative expenses amounted
to ¥2,755 million (US$22,506 thousand) and ¥2,832 million for the years ended March 31, 2022 and 2021, respectively.
15. Impairment Loss
No impairment loss is recognized for the year ended March 31, 2022.
Impairment loss for the year ended March 31, 2021 is as follows:
Location

Use

Type of assets

Miyagi Prefecture

Real estate rent

Land

Millions of yen
¥885
¥885

Total

The Company generally does asset grouping in the units of assets that it can continuously grasp their incomes and expenses.
Due to an aging deterioration, the Company decided to rebuild “Tohoku branch building” which had been used as a business asset.
At the same time, the Company changed the use of part of the said asset (building and its land) to rental use for the purpose of
expanding profits from non-construction businesses. Accordingly, the Company considered the profitability of the rental use partand wrote down the book value to a recoverable amount.
For your information, recoverable amounts are measured based on net selling prices, and net selling prices are evaluated based onreal estate appraisal values.
16. Gain on Sales of Noncurrent Assets
Gain on sales of noncurrent assets for the year ended March 31, 2022 and 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen
Type of assets

2022

2021

2022

Other

¥－

¥13

$－

Total

¥－

¥13

$－

17. Loss on Sales of Noncurrent Assets
Loss on sales of noncurrent assets for the year ended March 31, 2022 and 2021 are as follows:
Thousands of
U.S. dollars

Millions of yen
Type of assets

2022

2021

2022

Land and Buildings

¥19

¥－

$155

Total

¥19

¥－

$155

18. 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.
19. Revenue Arising from Contracts with Customers“Revenues” in consolidated statements of income are not represented as “Revenue arising from contracts with customers” and“Other revenue” separately. “Revenue arising from contracts with customers” are ¥338,910 million (US$2,768,646 thousand).
21

20. Net Defined Benefit Liability
The Company and its consolidated subsidiaries have adopted the lump-sum payment plan and the retirement benefit pension planas their defined benefit plan.
The Company and its consolidated subsidiaries have calculated net defined benefit liability and retirement benefit costs undercertain lump-sum payment plans using simplified method.
Although the Company had adopted a multiple of retirement benefit plans due to its merger with ANDO Corporation as ofApril 1, 2013, the Company integrated these retirement benefit plans and migrated into defined benefit plans as of April 1, 2014.
Defined benefit plans
Millions of yen(1) Movement in retirement benefit obligations
Balance at April 1, 2021 and 2020
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at March 31, 2022 and 2021
(2) Movement in plan assets
Balance at April 1, 2021 and 2020
Expected return on plan assets
Actuarial loss (gain)Contributions paid by the employer
Contribution of securities to retirement benefit trust
Benefits paid
Balance at March 31, 2022 and 2021
(3) Movement in simplified method
Balance at April 1, 2021 and 2020
Retirement benefit costs
Benefits paid
Other
Balance at March 31, 2022 and 2021

Thousands of
U.S. dollars
2022

2022

2021

¥30,170
1,372
302
142
(1,730)¥30,744
1,410
307
(349)
(1,942)$246,467
11,2082,467
1,160(14,133)¥30,256¥30,170$247,169¥23,467
294
269
2,547
5,000
(1,115)¥19,454
225
1,537
3,571
－
(1,320)$191,708
2,402
2,198
20,807
40,846(9,109)¥30,462¥23,467$248,852¥1,448243(218)
3¥1,486
251
(300)
11

$11,829
1,985(1,781)25¥1,476¥1,448$12,058¥30,170(23,467)$247,169(248,852)(4) Reconciliation from retirement benefit obligations and plan assets to liability (asset) for retirement benefits
Funded retirement benefit obligation¥30,256
Plan assets(30,462)
Sub total
Unfunded retirement benefit obligation

(206)
1,476

6,703
1,448

(1,683)
12,058

Total net liability (asset) for retirement benefits at March 31, 2022 and 2021

1,270

8,151

10,375Net defined benefit liability
Net defined benefit asset

3,816(2,546)

8,858
(707)

31,174(20,799)

Total net liability (asset) for retirement benefits at March 31, 2022 and 2021

¥1,270¥8,151$10,375(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 lump-sum payment plans. In addition, the retirement benefit trust that has been established for the lump-sum
payment plan is included in plan assets.

22

2022

2021

Thousands of
U.S. dollars
2022¥1,372
302
(294)
70
243

¥1,410
307
(225)
375
251

$11,209
2,467(2,402)572
1,985¥1,693¥2,118$13,831(6) Remeasurements of defined benefit plans
Net actuarial loss

¥197

¥2,261$1,609Total adjustments for retirement benefit¥197¥2,261$1,609(7) Accumulated remeasurements of defined benefit plans
Actuarial gains and losses that are yet to be recognized¥(602)¥(405)$(4,918)

Total accumulated adjustments for retirement benefit¥(602)¥(405)$(4,918)

Millions of yen(5) Retirement benefit costs
Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Retirement benefit expenses by simplified method
Total retirement benefit costs for the fiscal year ended March 31, 2022 and 2021

(8) Plan assets
1. Plan assets comprise:
2022

2021

Bonds
Equity securities
General account assets
Cash and deposits
Other

40%
19
15
10
16

38%
18
14
14
16

Total

100%

100%

(Note) The retirement benefit trust that has been established for the corporate pension plan accounts for 11% and 11% of the total plan assets forthe year ended March 31, 2022 and 2021.
2. Long-term expected rate of return:Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining
the long-term expected rate of return.
(9) Actuarial assumptions
The principal actuarial assumptions at March 31, 2022 and 2021 (expressed as weighted averages) follow:
2022
Discount rateLong-term expected rate of return

1.0%
1.3%

2021
1.0%
1.2%

23

21. Income Taxes
Differences between the statutory tax rate and the effective tax rate for the year ended March 31, 2022 and 2021 were not disclosed,
since the difference between the statutory tax rate and the effective tax rate is less than 5% of the statutory effective tax rate.
Significant components of deferred tax assets and liabilities at March 31, 2022 and 2021 are as follows:
2022

2021

Thousands of
U.S. dollars
2022

Deferred tax assets:
Net defined benefit liability
Others¥4,252
8,955¥4,161
9,838$34,735
73,156Gross deferred tax assets
Less: Valuation allowance

13,207(2,299)13,999(2,628)107,891(18,781)

Total deferred tax assets

10,908

11,371

89,110

Deferred tax liabilities:
Valuation difference on available-for-sale securities
Others

1,387
2,467

1,669
1,920

11,331
20,153

Millions of yen

Total deferred tax liabilities

3,854

3,589

31,484

Net deferred tax assets¥7,054¥7,782$57,626

22. Comprehensive Income
Amounts reclassified to profit for the fiscal year ended March 31, 2022 and 2021 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

24

Thousands of
U.S. dollars
2022

2022

2021

Valuation difference on available-for-sale securities:
Increase (decrease) during the year
Reclassification adjustment¥(794)(246)¥2,903(158)$(6,486)(2,010)Sub-total, before tax
Tax (expense) or benefit(1,040)
282

2,745
(870)

(8,496)2,304

Sub-total, net of tax

(758)

1,875

(6,192)Foreign currency translation adjustment:
Increase (decrease) during the year
Reclassification adjustment¥35－¥(108)－$286－

Sub-total, before tax
Tax (expense) or benefit

35
－

(108)
－

286
－

Sub-total, net of tax

35

(108)

286

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

¥127
70

¥1,886375$1,037572

Sub-total, before tax
Tax (expense) or benefit

197
(60)

2,261
(693)

1,609
(490)

Sub-total, net of tax
Share of other comprehensive income of entities accounted for using equity
method:Increase (decrease) during the year
Reclassification adjustment

137

1,568

1,119

¥(345)¥－$(2,818)－

Sub-total, before tax
Tax (expense) or benefit(345)

Sub-total, net of tax

(345)

－
－
－
－

Total other comprehensive income¥(931)¥3,335－－(2,818)－(2,818)$(7,605)23. Net Assets
Under the Japanese Corporate Law (“the Law”), 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 Law, 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 Law, 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 Law, 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 Law.
24. Consolidated Statements of Changes in Net Assets(1) Common stock issued

Balance at April 1, 2020
Increase during the year
Decrease during the year

Number ofsharesCommonstock
200,343,397－－

Balance at April 1, 2021
Increase during the year
Decrease during the year

200,343,397－
19,322,200

Balance at March 31, 2022

181,021,197(2) Treasury stock outstanding

Balance at April 1, 2020
Increase during the year
Decrease during the year

Number ofsharesCommonstock
7,315,545
6,555,972
52,956

Balance at April 1, 2021
Increase during the year
Decrease during the year

13,818,561
17,618,601
19,386,242

Balance at March 31, 2022

12,050,920(Note) Stock owned by BIP Trust is included in Treasury stock at March 31, 2022 (Included amount: 639,519 shares).

25

25. Revenue Recognition(1) Information on disaggregation of revenue arising from contracts with customers for the year ended March 31, 2022 is as follows:
Millions of yen

Reportable segments
Building
Consolidated
construction
subsidiaries

Civil
engineering
Goods or Services transferred over time
Goods or Services transferred at a point
in time
Revenue arising from contracts withcustomers
Other revenue
Sales from external customers

Sub total

Other

Total

¥131,595¥165,277¥5,055¥301,927¥－¥301,927

334

13,25018,88432,4684,515

36,983

131,929

178,527

23,939334,395

4,515

338,910

－

－

837

837

547

1,384

131,929

178,527

24,776335,232

5,062

340,294

Thousands of U.S. dollars
Reportable segments

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

Other

Total

Civil
engineering

Building
construction

Consolidated
subsidiaries

Sub total$1,075,034$1,350,192$41,296$2,466,522$－$2,466,522

2,729

108,243

154,268

265,240

36,884

302,124

1,077,763

1,458,435

195,564

2,731,762

36,884

2,768,646

－

－

6,838

6,838

4,469

11,307

1,077,763

1,458,435

202,4022,738,600

41,3532,779,953

Notes:
1.“Other” is the segments not included in “Reportable segments” and consists of mainly research and other activities.
2. By applying the alternative treatment specified in “Implementation Guidance on Accounting Standard for Revenue Recognition”
Paragraph 95, “Goods or Services transferred at a point in time” includes construction contracts whose revenues are recognizedwhen the performance obligations are fully satisfied.
(2) Fundamental information for understanding revenue
As described in “2. Summary of Significant Accounting policies (2) 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)Balance of Receivables from contracts with customers, Contract assets, and Contract liabilities at beginning and end of period

Receivables from contracts with customers(Balance at beginning of period)
Receivables from contracts with customers(Balance at end of period)

Current consolidated fiscal year
Thousands ofMillions of yen
U.S. dollars¥24,416$199,461

23,828

194,657

Contract assets(Balance at beginning of period)

97,029792,656

Contract assets(Balance at end of period)

116,580

952,373

Contract liabilities(Balance at beginning of period)

32,338264,178

Contract liabilities(Balance at end of period)

23,500191,978“Contract assets” are assets related to rights to remuneration for revenues recognized over time from constructions whose
obligations (e.g., completion and delivery of a construction contract object) are not yet fully satisfied. The assets are transferred to“Receivables from the contracts with the customers” when the performance obligations are fully satisfied.
“Contract liabilities” are liabilities recorded as advance received (e.g., “advances received on uncompleted construction contracts”)
from constructions whose revenues are recognized over time and reduced as the corresponding revenues are recognized. Thebalance at beginning of period is largely recognized as revenue in current consolidated fiscal year.

26

(b)Total amount of transaction price allocated to remaining (or partially satisfied) performance obligations at the end of period
At the end of the current consolidated fiscal year, ¥ 518,683million (US$4,237,260 thousand) is the total amount of transaction
prices allocated to remaining performance obligations. The amount is largely from constructions of civil engineering and building
and approximately 80% is expected to be recognized as revenue within 2 years.
26. Segment Information(1) General information about reportable segments
Each reportable segment of the Companies is the business unit of the Companies, which discrete financial information is able toobtain. Reportable segments are reviewed periodically at the Board of Directors meeting in order to determine distribution ofmanagement resources and evaluate business results by each reportable segment.
The Companies mainly operate the construction and construction-related business. Among them the Company, the general
constructor, operates their businesses that are composed of the civil engineering and building construction, and each headquarter
plans and executes on their business strategy of production systems and sales process in Japan and overseas.
Furthermore, consolidated subsidiaries respectively develop their business by cooperating with the Company.
Accordingly, the Companies classify their business operating segments, identified by product and services, into three reportablesegments as “Civil engineering segment”, “Building construction segment” and “Consolidated subsidiaries segment”.
The major products and services of each segment are as follows:
Reportable segments

Major products and services

Civil engineering
Building construction
Consolidated subsidiaries

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) Basis of measurement about reported segment profit or loss, segment assets, segment liabilities and other material items
Accounting methods of reported segment are the same as that set forth in “Summary of Significant Accounting Policies”. The
segment profits or losses for each reportable segment are in conformity to the operating income of consolidated statements ofincome. Intersegment transactions and transfers are based on fair market prices.
Assets are not allocated to Civil engineering segment and Building construction segment, since the chief operating decision
maker has no financial information on assets in these segments. However, corresponding depreciation expenses including
amortization of intangible fixes assets are allocated to Civil engineering segment and Building construction segment according to
the reasonable criterion measured by depending on the degree on benefit.

27

(3) Information about reported segment profit or loss, segment assets, segment liabilities and other material items(a) Segment information as of and for the fiscal year ended March 31, 2022 is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2022:
Revenues:
Outside customers¥131,929
Intersegment－

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated¥178,5270¥24,776
61,483¥335,232
61,483¥5,062
16¥340,294
61,499¥ －(61,499)¥340,294－
340,294

Total

131,929

178,527

86,259396,715

5,078

401,793(61,499)

Segment profit

15,825

13,331

2,490

31,646596

32,242(5,641)

26,601

Assets

Note 4Note 4

42,163

216,853

7,497

224,350

70,983295,333

593

800

617

2,010

75

2,085

325

2,410

Note 4Note 4

604

2,668

79

2,747

437

3,184

Other material items:
Depreciation
and amortization
Capital expenditures

Thousands of U.S. dollars
Civil
engineeringYear ended March 31, 2022:
Revenues:
Outside customers$1,077,763
Intersegment－

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated$1,458,435
0$202,402
502,271$2,738,600
502,271$41,353131$2,779,953
502,402$ －(502,402)$2,779,953－
2,779,953

1,077,763

1,458,435

704,6733,240,871

41,484

3,282,355(502,402)

Segment profit

129,279

108,905

20,341

258,525

4,869

263,394(46,083)

217,311

Assets

Note 4Note 4344,441

1,771,530

61,245

1,832,775

579,879

2,412,654

Other material items:
Depreciation
and amortization
Capital expenditures

4,844

6,535

5,041

16,420613

17,033

2,655

19,688Note 4Note 4

4,934

21,796645

22,441

3,570

26,011

Total

Notes:
1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(5,641) million (US$(46,083) thousand), which included ¥41 million (US$335
thousand) of intersegment eliminations and others, and ¥(5,682) million (US$(46,418) thousand) of corporate expenses. Corporate
expenses were mainly general and administrative expenses, which are not attributed to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥70,983 million (US$579,879 thousand), which included ¥(20,187) million(US$(164,913) thousand) of intersegment eliminations and others, and ¥91,170 million (US$744,792 thousand) of corporate assets.
Corporate assets were mainly cash and time deposits, investment securities and others, which are not attributed to reportable segments.
3. Segment profit was adjusted to operating income of consolidated statements of income.
4. As discussed in Note 26. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker has no financial information on assets in these segments. Segment assets of Civil engineering segment and Building
construction segment are amounted to ¥174,690 million (US$1,427,089 thousand), and capital expenditures of these segments are amounted
to ¥2,064 million (US$16,862 thousand).

28

(b) Segment information as of and for the fiscal year ended March 31, 2021 is as follows:
Millions of yen
CivilengineeringYear ended March 31, 2021:
Revenues:
Outside customers¥135,986
Intersegment－

Reportable segments
Building
Consolidated
construction subsidiaries

Sub total

Other

Total

Reconciliations Consolidated¥192,2057¥19,092
46,093¥347,283
46,100¥4,86315¥352,146
46,115¥ －(46,115)¥352,146－

Total

135,986

192,21265,185393,383

4,878

398,261(46,115)352,146

Segment profit

17,67913,1071,640

32,426672

33,098(5,741)

27,357

Assets

Note 4Note 444,860201,337

7,718

209,055

130,332

339,387

568

802

491

1,861

95

1,956

124

2,080

Note 4Note 4

2,544

3,022

27

3,049

394

3,443

Other material items:
Depreciation
and amortization
Capital expenditures

Notes:
1. “Other” consisted of mainly research and other activities, which are not included in reportable segment.
2. Reconciliations amounts were as follows:(i) Reconciliations amount of segment profit was to ¥(5,741) million, which included ¥3 million of intersegment eliminations and others,and ¥(5,744) million of corporate expenses. Corporate expenses were mainly general and administrative expenses, which are not attributed
to reportable segments.
(ii) Reconciliations amount of segment assets was to ¥130,332 million, which included ¥(22,463) million of intersegment eliminations andothers, and ¥152,795 million of corporate assets. Corporate assets were mainly cash and time deposits, investment securities and others,
which are not attributed to reportable segments.
3. Segment profit was adjusted to operating income of consolidated statements of income.
4. As discussed in Note 26. (2), assets are not allocated to Civil engineering segment and Building construction segment, since the chief
operating decision maker has no financial information on assets in these segments. Segment assets of Civil engineering segment and Building
construction segment are amounted to ¥156,477 million, and capital expenditures of these segments are amounted to ¥478 million.

(4) Changes in reportable segments
As described in “2. Summary of Significant accounting policy (21) Changes in accounting policy”, the Company has adopted“Accounting Standard for Revenue Recognition”, etc. since the beginning of the consolidated current fiscal year and changed amethod of calculating sales and profit in reportable segments. Therefore, “(b) Segment information as of and for the fiscal year
ended March 31, 2021” is prepared by applying a method after the change.
(5) Related information(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)
Revenues information about geographic areas for the year ended March 31, 2022 and 2021 are as follows:

2022

2021

Thousands of
U.S. dollars
2022¥324,476
15,818¥334,286
17,860$2,650,731
129,222¥340,294¥352,146$2,779,953

Millions of yen

Geographic Areas
Japan
Other
Total

(Tangible fixed assets)
Disclosure of tangible fixed assets information about geographic areas is omitted, since the proportion of tangible fixed assets
in Japan to total tangible fixed assets is over 90%.

29

(c) Information about major customers
Disclosure of information about major customers is omitted, since net sales to no single customer represented 10% or moreof consolidated revenues of the consolidated statements of income for the year ended March 31, 2022.
(d) Information about impairment loss of fixed assets by reported segment
No impairment loss is recognized for the year ended March 31, 2022.
Impairment loss of fixed assets by reported segment of the year ended March 31, 2021 are as follows:
Millions of yen
2021

Impairment loss

Reportable segments
Building
Consolidated
Civil engineering
construction
subsidiaries
¥ －
¥ －
¥ －

Other

Eliminations
and others

¥885

Total

¥ －

¥885

(Note) The amount of "Other" relates to the asset whose use has been changed to rental use.
27. 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 year ended March 31,
2022 is as follows:
Profitattributable toowners of parent
Year ended March 31, 2022:

Millions of yen

Profit attributable to owners of parent¥17,671

Basic EPS-Profit available to common shareholders¥17,671

Effect of dilution
Shares adjusted by share subscription rights
Diluted EPS-Profit for computation－¥17,671

Weightedaverage
sharesThousands ofshares178,786

EPS
Yen

U.S. dollars¥98.84$0.81¥98.84$0.81

8178,794(Note) Shares in BIP Trust are included in treasury stock from which are deducted in calculating profit attributable to owners ofparent per share. The weighted-average number of shares issued and outstanding during the year ended March 31, 2022 were13,506 thousand including 545 thousand of shares in BIP Trust at the year ended March 31, 2022.
Basis of calculation of basic and diluted profit attributable to owners of parent per share (the “EPS”) for the year ended March 31,
2021 is as follows:
Profitattributable toowners of parent
Year ended March 31, 2021:

Millions of yen

Profit attributable to owners of parent¥17,189

Basic EPS-Profit available to common shareholders¥17,189

Effect of dilution
Shares adjusted by share subscription rights
Diluted EPS-Profit for computation－¥17,189

Weightedaverage
sharesThousands ofshares
191,421

EPS
Yen¥89.8040
191,461¥89.7828. 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 the lower
risk assets such as deposits. Derivative transactions are employed for hedging of the risk described below, and never use for
speculation.

30

(b) Detail of financial instruments and the related risks
Notes and accounts receivable are exposed to the credit risks in relation to customers. Foreign currency-dominated notes andaccounts receivable are also exposed to foreign exchange risk.
Investment securities which are mainly share held for keep the relationship with business partners are exposed to market pricefluctuation risk.
Notes and accounts payable are mostly settled within one year.
Borrowings are primarily for working funds. With variable interest rates, it is exposed to interest-rates risk.
Borrowings, notes and accounts payable are also exposed to liquidity risk.
Derivative transactions entered into by the Companies are foreign exchange contracts to hedge foreign currency exchange risk
involving oversea business and interest rate swap transactions to hedge interest-rates risk involving borrowing.
Refer to Note 2(8) “Derivatives and hedging transactions” for information about the hedging instruments and hedging items,
hedging policy and method of evaluating hedging effectiveness concerning the hedge accounting methods adopted by theCompanies.
(c) Policies and processes for risk management
In order to control customer’s 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 under theinternal credit policies.
For the purpose of hedging foreign exchange risk, the Companies conduct forward exchange contracts. The Companies also
conduct interest rate swap contracts to avert interest-rate risk by each long-term borrowing.
The fair value of investment securities is periodically reported to the Directors and Executive Officers. The possession situationof securities is also continually reviewed, taking into consideration of the Companies’ relationship with respective business
partners.
Derivative transactions are treated by the Finance Department in accordance with the established policies. The Companies deal
with credible banks to reduce the credit risk.
In order to manage the liquidity risk, the Companies update financial plan monthly.
(d) Supplementary description of fair value of financial instruments
Since certain assumptions are used for estimating fair values, fair values could be different if different assumptions are applied. In
addition, the derivative contract amounts described in Note 29 “Derivative Financial Instruments” are not indicative of actual
market risk involved in derivative transactions.
(e) Concentration of credit risk
The trade receivables for specific and large-scale customers accounted for 10.3% of the total trade receivables in the consolidated
financial statements of the current consolidated fiscal year. Since these large-scale customers are government agencies, the credit
risk is extremely low.
(2) Fair value of financial instruments
Following tables summarize book values and fair values of financial instruments at March 31, 2022:
Millions of yen
TypeAssets
Receivables:
Notes
Accounts
Marketable securities andInvestment securities:
Available-for-sale securities
Total assets
Liabilities
Bonds
Long-term loans payable,
less current maturities
Total liabilities
Derivative transactions

Book values

Fair values¥6,900133,531¥6,900133,497

Thousands of U.S. dollars
Difference

¥－
(34)

Book values

Fair values$56,368
1,090,850$56,368
1,090,572

Difference

$－
(278)

16,462

16,462－

134,483

134,483－¥156,893¥156,859¥(34)$1,281,701$1,281,423$(278)

¥163

¥162

¥(1)

$1,332$1,323

$(9)

7,640

7,642

2

62,41362,43017¥7,803¥7,804¥1$63,745$63,753

$8

¥－

¥－

¥－

$－

$－

$－

Stocks and other financial instruments with no market values are not included in “Marketable securities and Investment securities”.
Their amounts recorded in consolidated balance sheet for the current fiscal year are as follows;
Unlisted stocks, etc. ¥4,498million (US$36,745 thousand).

31

Following tables summarize book values and fair values of financial instruments at March 31, 2021:
Millions of yen
TypeAssets
Receivables:
Notes
Accounts
Marketable securities andInvestment securities:
Available-for-sale securities
Total assets
Liabilities
Bonds
Long-term loans payable,
less current maturities
Total liabilities

Book values

Fair values

Difference¥6,901
114,560¥6,901
114,542¥－(18)

17,60917,609－¥139,070¥139,052

¥(18)

¥400

¥399

¥(1)

8,271

8,280

9

¥8,671¥8,679

¥8

¥－

¥－

¥－

Derivative transactions

Unlisted stocks, etc. have no market values and it is quite difficult to grasp their market values. Therefore, they are not includedin “Marketable securities and Investment securities”. Their amounts recorded in consolidated balance sheet for the previous fiscal
year are as follows;
Unlisted stocks, etc. ¥4,088million.
Notes
1. "Cash and time deposits" consists of cash and deposits which are to be settled in a short period and have fair values approximatingbook values. Therefore, it is not mentioned in this section.
2. "Payables (Notes and Accounts in Current liabilities)”, “Short-term loans payable”, and “Current portion of bonds” are to besettled in a short period and have fair values approximating book values. Therefore, they are not mentioned in this section.
(3) Derivative transactions
See Note 29 “Derivative Financial Instruments”.
(4) Redemption schedules for cash and time deposits, receivables, held-to-maturity debt securities, and other at March 31, 2022
and 2021 are as follows:
Millions of yen
2022

2021
Over
5 yearsless than
10 years¥ －Cash and time deposits
Receivables:
Notes
Accounts¥66,0816,900
121,585－
11,946

－
－

－
－

6,901
104,547－
10,013

－
－

－
－

Total

¥194,566¥11,946¥ －¥ －¥240,766¥10,013

¥ －

¥ －

Over
5 yearsless than
10 years¥ －Over
10 yearsWithin1 year¥ －Thousands of U.S. dollars
2022$539,833

Over
1 yearless than
5 years$ －Over
5 yearsless than
10 years$ －56,368993,260－
97,590－－－－$1,589,461$97,590$ －$ －Within1 yearCash and time deposits
Receivables:
Notes
Accounts
Total
32¥129,317Over
1 yearless than
5 years¥ －Over
1 yearless than
5 years¥ －Within1 yearOver
10 years$ －Over
10 years¥ －(5) Redemption schedules for bonds, long-term debt and other interest-bearing liabilities as of March 31, 2022 and 2021 is asfollows:

Long-term loans payable¥12,178
237
4,498

Over
1 yearless than
2 years
¥ －
127
3,410

Total

¥16,913¥3,537

Within1 yearShort-term loans payablebonds

Within1 yearMillions of yen
2022
Over
Over
2 years
3 yearsless thanless than
3 years
4 years
¥ －
¥ －
36
－
2,304
1,323
¥2,340Over
4 yearsless than
5 years
¥ －
－
480

Over
5 years¥ －－123¥1,323¥480¥123

Thousands of U.S. dollars
Over
Over
Over
1 year
2 years
3 yearsless thanless thanless than
2 years
3 years
4 yearsOver
4 yearsless than
5 yearsOver
5 years

Long-term loans payable$99,485
1,936
36,745$ －1,038
27,857$ －294
18,822$ －－10,808

$ －
－
3,921

$ －
－
1,005

Total

$138,166$28,895$19,116$10,808$3,921$1,005Long-term loans payable¥12,166
292
4,147

Over
1 yearless than
2 years
¥ －
237
3,640

Millions of yen
2021
Over
Over
2 years
3 yearsless thanless than
3 years
4 years
¥ －
¥ －
127
36
2,552
1,445

Over
4 yearsless than
5 years
¥ －
－
634

Total

¥16,605¥3,877

Short-term loans payablebonds

Within1 yearShort-term loans payablebonds¥2,679

¥1,481¥634

Over
5 years
¥ －
－
－
¥ －

(6) Details of financial instruments by fair value levels
Fair values of financial instrument are classified into following three levels according to their observability and importance of
inputs for calculating the fair values.
Level 1 fair value: Fair values calculated by observable inputs that reflect market prices of subject assets or liabilities in active
market.
Level 2 fair value: Fair values calculated by observable inputs other than Level 1 inputs.
Level 3 fair value: Fair values calculated by unobservable inputs.
If multiple inputs with significant effects on the calculation are applied, a fair value is to be classified into the lowest of levels
in calculation priority to which the inputs belong.
(a) Financial instruments recorded at fair value in consolidated balance sheet for the current consolidated fiscal year

Thousands of U.S. dollars
Fair value

Millions of yen
Fair valueMarketable securities
investment securities

Level 1

Level 2

Level 3

total

Level 1

¥16,462¥ －¥16,462

－

¥ －
¥ －

Level 2

Level 3

¥ －¥16,462－¥16,462

¥ －

¥ －

¥ －

¥ －

total

$134,483$ －$ －$134,483$134,483－－$134,483

¥ －

$ －

$ －

$ －

$ －

¥ －

$ －

$ －

$ －

$ －

and

Available-for-sale securities
Stock
Total assets
Not applicable
Total liabilities

33

(b) Financial instruments other than those recorded at fair value in consolidated balance sheet for the current consolidated fiscal year
Thousands of U.S. dollars
Fair value

Millions of yen
Fair value

Level 1

Level 2

Level 3

¥ －－¥6,900133,497¥ －－¥6,900133,497$ －－$56,368
1,090,572$ －－$56,368
1,090,572

Total assets¥ －¥140,397¥ －¥140,397$ －$1,146,940$ －$1,146,940

Bonds
Long-term loans payable,
less current maturities
Total liabilities

¥ －

¥ 162

¥ －

¥ 162

$ －

$1,323$ －$1,323

－

7,642

－

7,642

¥ －

¥7,804¥ －¥7,804

Receivables:
Notes
Accounts

total

Level 1

Level 2

Level 362,430$ －$63,753

total

62,430$ －$63,753(Notes) Description of assessment method and input for calculating fair value.
Marketable securities and investment securities
Listed stocks are valued at market price. Fair values are classified into Level 1 fair value as traded in active markets.
Receivables
Fair values are classified by certain periods, and then calculated by “Discounted Cash Flow Method” at interest rates based onamounts of claim, remaining periods to maturity, and credit risks. Therefore, they are classified into Level 2 fair value.
Bonds
Fair values are calculated by “Discounted Cash Flow Method” at interest rates based on total amounts of principal and interest,
remaining terms of bond, and its credit risks. Therefore, they are classified into Level 2 fair value.
Long-term loans payable, less current maturities
Fair values are calculated by discounting total amounts of principal and interest at interest rates assumed to be made if theCompany were to newly borrow the same loans. However, fair values of long-term debt at variable interest rates are recorded atbook values, since the interest rates are to be renewed at regular intervals based on conditions and reflect market interest rates ina short period of time, and therefore the fair values are considered to approximate book values. Part of them are subject to an
exceptional treatment for interest rate swap. Therefore, they are calculated by discounting total amounts of principal and interest
processed with the swap at interest rates reasonably estimated to be applied if the Company were to newly borrow the same loans.
With these methods, they are classified into Level 2 fair value.

3429. Derivative Financial Instruments
Derivative transactions accounted for by the hedge accounting at March 31, 2022 and 2021 are as follows:(Currency-related transactions)
Since the current consolidated fiscal year, an affiliated company accounted for by equity-method in the Company's group(hereinafter referred to as “the Affiliated Company”) has used foreign exchange contract to hedge foreign currency exchange risks
in foreign currency transactions. For this foreign exchange contract, a hedge accounting is applied to forecasted foreign currencytransactions as the hedged item. However, foreign exchange contract of the Affiliated Company is not recorded in the consolidatedbalance sheet, therefore the fair value is not contained in “Derivative transactions” in “28. Financial Instruments (2) Fair value offinancial instruments”.
(Interest-related transactions)
Millions of yen
2022
Type ofderivative transactions

Main items
hedged2021

Contract amount
Settled overTotal
1 year

Fair
value

¥745

Note 2Contract amount
Settled overTotal
1 yearFair
value

Short-cut method:
Interest swap contract:
To pay fixed, to receive variable

Long-termloans payable¥1,077¥948¥675

Note 2Thousands of U.S. dollars
2022
Type ofderivative transactions

Main items
hedgedContract amount
Settled overTotal
1 yearFair
value$6,086Note 2

Short-cut method:
Interest swap contract:
To pay fixed, to receive variable

Long-termloans payable$8,798Note:
1. Fair value is based on the prices obtained from counterparty financial institutions.
2. The fair values of special case interest swap treatment are included in the fair value of long-term loans payable since suchinterest swap is treated together with long-term loans payable being hedged.
3. the Affiliated Company has used interest rate swap transaction to hedge risks of fluctuations in interest rates on loan payable,
but it is not contained in the above table. For this interest rate swap transaction, a hedge accounting is applied to the loan
payable as the hedged item. However, the Affiliated Company’s loan payable is not recorded in the consolidated balance
sheet, therefore the fair value is not contained in “Derivative transactions” in “28. Financial Instruments (2) Fair value offinancial instruments”.
30. Events after the reporting period
Regarding the fire occurred at the building under construction then by the Company in Tama city, Tokyo on July 26, 2018, theCompany has reached a final agreement with the parties concerned regarding the compensation for damages, and therefore theamount of loss on the compensation for damages and others has been almost fixed. Accordingly, following items will be recorded
in "other income" in the next consolidated fiscal year.
・Gain on reversal of provision for loss on damage due to fire
¥306 million (US$2,500 thousand).
・Compensation for damage received based on an agreement on the burden of the loss with the subcontractor involved in the case
¥2,700 million (US$22,057 thousand).

35

31. Stock Option Plans(1) No cost for stock options is recognized for the years ended March 31, 2022 and 2021.
(2) The stock options outstanding at March 31, 2022 are mainly as follows:(a) Content
The third series
The fourth seriesof shareof sharesubscription rights (A)subscription rights (A)June 29, 2010
Persons granted
Class and numberof shares
Date of grantCondition of
settlement rights

Length of service

June 29, 2011

Directors of the Company: 8
Executive officers: 8

Directors of the Company: 9
Executive officers: 13

90,000 sharesof common stock
July 16, 2010
The person who exercises
stock purchase rights shall bea director, or executive officerof the Company, who has
continued to work at theCompany from the seventh
stockholders’ meeting to theeighth stockholders’ meeting.
However, this condition isinvalid in case of death or lossof position due to theCompany circumstances.
From July 16, 2010

85,800 sharesof common stock
July 15, 2011
The person who exercises
stock purchase rights shall bea director, or executive
officer of the Company, who
has continued to work at theCompany from the eighth
stockholders’ meeting to theninth stockholders’ meeting.
However, this condition isinvalid in case of death orloss of position due to theCompany circumstances.
From July 15, 2011

Exercisable period

to July 15, 2011

to July 14, 2012

From July 16, 2011

From July 15, 2012

to July 15, 2021

to July 14, 2022(b) Number and price

The third
series of sharesubscription
rights (A)The fourth
series of sharesubscription
rights (A)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－－

18,00016,500Non-vested shares

Vested shares
At the beginning of the year
Vested during the year
Exercised during the year
Forfeited or expired during theyear
Unexercised at the end of the year
Exercise price－－

18,00016,500

－

－

－

－

¥1

¥1

Average stock price at exercise

¥826

¥838

Fair value price at the grant date

¥72

¥111

(3) Method to estimate fair value of stock options
The Company does not grant any stock options to its employees for the current consolidated fiscal year.
(4) Method to estimate number of vested stock options
As a reasonable estimate of the forfeited number of stock options in the future is generally difficult, the Company adopts a method
whereby only actual forfeited numbers are reflected.
36

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 ANDOCORPORATION (“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”),
which comprise the consolidated balance sheets as at March 31, 2022 and 2021, the consolidated statements
of income, comprehensive income, changes in net assets and cash flows for the years then ended, and notes,
comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Group as at March 31, 2022 and 2021, 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 accordancewith the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believethat 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 auditof the consolidated financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.

37

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 25 whether the Companies’ estimate of total“Revenue recognition, (1) Information on construction costs in relation to revenue recognition
disaggregation of revenue from contracts with was reasonable included the following:
customers” to the consolidated financial statements,(1) Internal control testingof the revenue from the construction service, therevenue recognized for the performance obligation We tested the design and operating effectiveness ofsatisfied over time amounted to ¥301,927 million, certain of the Company’s internal controls relevant torepresenting 89% of the Revenues in the consolidated the process of preparing a project budget. In thisfinancial statements.
assessment, we focused our testing on the following
controls:
As described in Note 2 “Summary of Significant
 controls to ensure compliance with the internal
Accounting Policies, (2) Significant recognition
rules for preparing a project budget, including
criteria for revenue and cost” to the consolidated
how to accumulate work hours of eachfinancial statements, the Company and its
activity, what information and data to be used,consolidated subsidiaries recognize the revenue forand how to reflect the risk of any uncertainties
the performance obligation satisfied over time based
within the budget; andon the progress towards satisfaction of performanceobligations. The estimate of this progress iscontrols to reflect any changes incalculated as the percentage of incurred construction
circumstances that occur after the start ofcosts to the total construction costs.
construction within the project budget in atimely and appropriate manner.
As described in Note 2 “Summary of Significant
Accounting Policies, (20) Significant accounting(2) Assessment of the reasonableness of theestimates (Estimate of total construction costs inestimated total construction cost
relation to revenue recognition)” to the consolidated
financial statements, total construction costs are We selected mainly construction contracts for whichbased on the past construction works and reflect total construction revenue exceeded a certain amountconditions specific to each project. Therefore, the and those for which construction margin changed by
preparation of a project budget, which provided the more than a certain level, as construction contracts
basis for estimating total construction costs for the for which estimated total construction costs or theirproject, involved a high degree of uncertainty. changes might have a significant effect. In order toSpecifically, management’s determination of the assess the reasonableness of the key assumptions
following aspects of construction had a significant adopted in preparing the project budgets, which wereeffect on the estimated total construction costs at the used as the basis for estimating total construction
costs, for the selected construction contracts, amongend of the fiscal year.
 Whether the work necessary to fulfill the others, we:construction contract was identified and the assessed whether the estimated costs of
estimated costs were included in the project
construction work necessary to fulfill thebudget; andconstruction contract were included in the Whether any changes in work due to changes
project budget by inquiring the personnel
in circumstances that occurred subsequent to
responsible for construction work about
the start of construction were reflected within
relationships between cost items and amounts
the project budget in a timely and appropriateof the project budget and the content of themanner.
relevant activities and comparing theestimated costs with various documents
We, therefore, determined that our assessment of theobtained, such as a construction timeline;
reasonableness of the Company’ estimate of total
construction costs in relation to revenue recognition
 compared the total of the actual cost of
was the most significant in our audit of theconstructions and the future expected amountconsolidated financial statements for the current
with the initial project budget, examinedfiscal year, and accordingly, the key audit matter.
variances between them, and assessed whether
the causes of those variances were reflected in
the project budget to assess the accuracy of the
project budget; and inquired of several people, including thepersonnel responsible for construction workand the head of accounting, about their
judgment on any changes in circumstancesthat occurred after the start of construction andupdates of the project budget as well ascompared their responses with the internal andexternal documents, that served as the basis
for their responses, to assess theappropriateness of their judgment.

38

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 bematerially 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
the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as 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 ofusers 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 amaterial 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 thatare 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 estimatesand related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that39

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.


Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation, structure
and content of the consolidated financial statements, including the disclosures, 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 orbusiness activities within the Group to express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of the group audit. We 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 havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, 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
determine that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended
March 31, 2022 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 to the 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.
Tatsunaga Fumikura
Designated Engagement Partner
Certified Public Accountant
Daio Aida
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
August 22, 2022

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.
40

Y08I Printed in Japan