Report of Business Operations for the 59th Business Period(Business Period ended October 2023) (Attachment to the
Notification and Invitation to the 59th Regular General Meeting of
the Shareholders) From November 1, 2022 to October 31, 2023

1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Resultsa) Summary of consolidated fiscal year operating results (From November 1, 2022 to
October 31, 2023)
During the fiscal year under review, Japan’s economy showed signs of a gradual
recovery due to the normalization of economic activities accompanying the easing of
regulations that were implemented in response to COVID-19. However, the outlook
remained uncertain due to rising raw material prices caused by unstable international
conditions as well as due to global monetary tightening, fluctuations in financial andcapital markets and other factors.

In the construction industry in which the Group is involved, construction investment
was relatively steady due to a gradual recovery of private sector construction investment
in addition to stable public sector investment. However, in addition to concerns about
delays in equipment supply due to rising construction costs and semiconductor supply
shortages, the situation still requires monitoring mainly regarding restrained capital
investment due to an economic recession.

In such circumstances, in order to achieve the goals of its Medium-Term Corporate
Management Plan “Creative 60” (FY2020-2024), the Group promoted regional strategies
to enhance profit margins and maximize synergistic effects by efficiently using
management resources, and also promoted reorganizing the organizational structureand strengthening collaboration between departments, strengthened the asset
management system in order to improve utilization rates and optimize the rental unit
price, advanced its execution and management capabilities, and worked to expand thestable earnings foundation.

Consequently, in the fiscal year ended October 31, 2023, the Group reported net salesof ￥197,481 million, an increase of 5.0% year on year. On the earnings front, partly due
to investment in human resources in preparation for the future in addition to increases in
depreciation

andselling,

generalandadministrative

expensescausedbyanabsorption-type merger within the Group, operating profit was ￥11,958 million, adecrease of 9.6% year on year, ordinary profit was ￥12,488 million, a decrease of 9.4%

year on year, and profit attributable to owners of parent was ￥6,721 million, a decreaseof 19.5% year on year.

Results for each of the Company’s business segments were as follows.

b) Summary of consolidated operating results by business segment[Construction Equipment Rental Business]
In the construction-related business, which is Kanamoto’s core business, although
there were differences by region, the strength of rental demand for construction
equipment has continued to return due to the progress of various types of large-scale
projects, such as the construction of semiconductor plants in Hokkaido and Kyushu, andsecurity-related construction in addition to the continuation of redevelopment work inurban areas, extension projects for bullet trains and renewable energy-related work.
In addition to pursuing more efficient use of its assets in order to strengthen its ability
to respond to various types of construction projects, etc., the Group also worked to solve
issues related to the stable supply of rental equipment in relation to the increase of
construction demand while it promoted technological development and businessalliances aimed at realizing DX at construction sites and reducing environmental impact.

As a result, sales by region in this business were up 1.1% in the Hokkaido Region, up
8.4% in the Tohoku Region, up 5.0% in the Kanto & Koushinetsu Region, up 1.2% in the
Nishi-nihon Region, and up 8.7% in the Kyushu & Okinawa Region.
Used construction equipment sales increased 5.0% year on year, as Kanamotoproceeded with sales in accordance with the initial plan in order to maintain an
appropriate asset mix while carrying out the extension of the rental equipment operation
period.

Reflecting these factors, the Group posted net sales in the construction-related
businesses of ￥178,087 million, an increase of 4.5% year on year, and operating profit of￥10,309 million, a decrease of 10.4% year on year.

[Other Businesses]
In the Group’s other businesses, net sales was ￥19,393 million, an increase of 10.2%
year on year, and operating profit was ￥1,144 million, a decrease of 7.1% year on year,
as the business related to the Steel Sales Division as well as the business related to the
Information Products Division and welfare-related business performed as planned.

(Millions of yen)

58th Business Period

59th Business PeriodBusiness Period ended

Business Period ended

October 2022

October 2023

170,433

178,087

4.5

Other Businesses

17,594

19,393

10.2

Total

188,028

197,4815.0

Segment

Construction Equipment
Rental BusinessChange fromprior year (%)(2) Financing activities
1) Funds Procurement
Funds procurement through capital increase or the issuance of corporate bonds has notbeen performed during the current consolidated fiscal year.

2) Capital investment
Capital investment implemented by the Kanamoto Group during the current
consolidated fiscal year totaled ￥43,926 million. This included purchases of rental
equipment of ￥38,553 million, and investments in assets used by the group, including theestablishment, relocation and expansion of branches, of ￥5,372 million.

< Main branches newly established in the Corporate Group >During the consolidated fiscal year under review, Kanamoto newly opened 3
branches .
Kanamoto Co., Ltd.
New branches:

Inzai Branch(Inzai City, Chiba Prefecture)
Ota Branch(Ota City, Gunma Prefecture)
Higashikawa Equipment Center (Higashikawa Town, Kamikawa County,
Hokkaido)

Closed branches:

Rikuzentakata Branch(Rikuzentakata City, Iwate Prefecture)
Office of the Keihin District of East Japan Works (Kawasaki-ku,
Kawasaki-shi)

3) Transfer, absorption, division or new establishment of businesses
The Company had no material items to report.
4) Receipt of businesses from other companies
The Company had no material items to report5) Succession to rights and obligations concerning the businesses of othercorporations etc. by absorption and merger or absorption and division
The Company had no material items to report6) Acquisition or disposal of shares, other equity or subscription rights to shares ofother companies
The Company had no material items to report(3) Financial position and profit and loss in the current business period andthree immediately prior business periods(Millions of yen except per share data, which are in yen)

Category

56th Business Period

57th Business Period

58th Business Period(Business Period(Business Period(Business Period

ended October 2020) ended October 2021)

ended October 2022)

59th Business Period(current consolidated fiscal year)(Business Period ended
October 2023)

Net sales

179,053

189,416

188,028

197,481

Ordinary income

14,26815,391

13,78012,488

8,466

8,907

8,345

6,721

221.45235.55224.64

185.40Total assets

301,533

303,754305,320

316,440

Net assets

126,188

134,917140,611

143,677

3,150.30

3,357.10

3,571.98

3,729.73

Profitattributable toowners of parent
Net income per
share

Net assets per
share

Note：1. During the 57th Business Period, the Company finalized the provisional accounting
treatment for business combinations. As a result, figures for the 56th Business Period
are amounts that reflect the finalization of the provisional accounting treatment.
2. Given that the Company has applied the “Accounting Standard for Revenue
Recognition” (ASBJ Statement No. 29 of March 31, 2020) and relevant ASBJ
regulations from the beginning of the 58th Business Period, the above figures for the
58th Business Period (Business Period ended October 2022) and onward are amounts
subsequent to the application of said accounting standard and relevant ASBJ
regulations.

(4) Issues to be Addressed by the Company
In the construction equipment rental business, which is a core business of theKanamoto Group, it is important to select rental assets that match the characteristics ofsales areas and customers’ needs. Based on the collected data, the Company must build
an asset portfolio structure aimed at maximizing operational efficiency and establish astrong earnings structure with a detailed operation. In addition, the Company also needs
to aspire to be a “general rental company” that provides one-stop and comprehensive
customer service, not just rental of goods.

1) Strengthen human resources training, and also Kanamoto Group alliances
In the construction equipment rental industry, intensifying competition between
companies could lead to a trend of mergers and acquisitions due to a further increase indistinction and selection. The Company will make efforts to develop employees with theknowledge and skills appropriate for a leader in the construction equipment rental
industry, and we will work to develop human resources that can adapt to businessexpansion in Japan and overseas.
Also, in order to expand the business domains that are essential for the Company tobecome a general rental company, we will strengthen cooperation with the Group
companies and relationships with alliance companies to increase synergy effects between
the Group.

2) Deepen asset strategies
In introducing rental assets, we give top priority to market needs, but in recent years
the particulars of domestic construction demand, such as ICT techniques, are changing,and therefore we ultimately determine the composition of the assets to be introduced andappropriate amount thereof by thoroughly examining the market and earnings
characteristics not only at present, but also looking forward.
To improve operational efficiency of assets, the Group will work to further strengthen
systems for collaborative cohesion within the Group.
3) Optimizing Maintenance Costs
Maintaining and improving rental asset value is the very lifeline of the construction
equipment rental business, and maintenance costs are essential to that end, but we aim
to reduce the cost ratio by consolidating and optimizing the expertise of the Group interms of expenditures.

4) Increasing profitability
The Company recognizes the importance of establishing a link between our efforts andincreasing profitability. With this goal in mind, we will work on training personnel,

strengthening cooperation inside the Group and through alliances, enhancing asset
strategy, and streamlining maintenance costs. In order to ensure the effective utilizationof management resources, we will either consolidate, close or merge business offices ofalliance companies that have experienced profitability drops as a result of operational
redundancy in a region, and changes in the external environment. Moreover, as thepurchase prices of the Company’s main rental assets are rising, we aim to improve theutilization of those rental assets and take measures to adjust the rental unit price toappropriate pricing while carefully explaining to customers the reasons behind this.

5) Promotion of overseas businessAt each overseas business location, the Group will strive to create a stronger
underpinning for revenue through strengthening the sales structure, including partner
strategies, and giving utmost attention to asset and revenue management.
The Group aims to continue to further enhance overseas businesses as future growthengines.

(5) Main businesses (As of October 31, 2023)
Activities

Main products and services
Rental and sale of equipment and instruments for use in construction,

Construction Equipment

temporary materials for construction use, safety products for theRental Businesses

construction industry, measuring instrument and modular housing units
for temporary use
Sale of steel products such as steel bar, steel plate and round bar, contract

Other Businesses

construction, rental and sale of computers and computer peripheral
equipment、 Rental and sales of social-welfare-service and nursing-careequipment(6) Main offices of the Kanamoto Group (As of October 31, 2023)
1) Main offices and facilities
Kanamoto’s Head Office and Operations Control Headquarters are located in Chuo-ku
in Sapporo, Hokkaido, and the Company’s Business Coordination Headquarters is locatedin Minato-ku in Tokyo.
The number of branches in each of the Company’s operating regions is shown below.

■Number of offices by region (excluding non-operating divisions)
Construction Equipment
Rental Business

RegionConsolidated

KanamotoJapan

Overseassubsidiaries

Other Businesses
Consolidated

Kanamoto

subsidiaries

Hokkaido

81

27

3

0

Tohoku

58

36

0

0

Kanto

42

29

1

5

Chubu

24

9

0

0

Kinki

9

16

0

9

Chugoku

4

4

0

11

Shikoku

4

1

0

1

Kyushu

4

80

0

25

China

0

3

0

0

Australia

0

10

0

0

Total

441

55

2) Number of Kanamoto Group employees
Number of
employees
Construction Equipment Rental Business

3,373

Other Businesses

338

All companies (shared)

199
Total

3,910

Notes：1. Figures are the number of full-time employees and do not include directors, temporary
or part-time employees.
2. The number of employees increased by 78 compared to the end of the previous fiscal
year.
3. Employees designated as “All companies (shared)” are individuals affiliated withmanagement departments who cannot be classified in a specific segment.

3) Number of Kanamoto employees
Number of
employees
2,020

Change comparedwith end of prior

Average age

fiscal year
－8

39.6

Average length ofservice12.5 years

Note：Figures are the number of full-time employees and do not include temporary or part-time
employees.

(7) Important parent company affiliates and subsidiary companies
1) Parent company affiliates
The Company had no items to report.

2) Subsidiaries
Company name

Assist Co., Ltd.

Kanatech Co., Ltd.
Kanki Co., Ltd.

CapitalKanamoto’s

Main activities(Millions of yen) ownership (%)

136

100.0

Rental and sale of furniture, fixtures and safety
products
Design and sale of modular housing units for

100

100.0

temporary use

99

100.0

Rental and sale of construction equipment
Developing a business in the rental and design,
manufacture and sale of specialized equipment

KG Flowtechno Co., Ltd.

20

100.0

used for projects such as ground improvement
work and the construction of undergroundstructures

CENTRAL Co., Ltd.

Rental and sales of construction machinery,
410

100.0

equipment, temporary house

SOOKI HOLDINGS Co., Ltd.

1

100.0

Holding Company

Daiichi Kikaisangyo Co., Ltd.

20

100.0

Rental and sale of construction equipment

Toyo Industry Co., Ltd.

31

100.0

Shield tunneling method-related peripheral
equipment rentals and sales
Rental and sales of construction machinery,

NISHIKEN CO., LTD.

1,119

80.6

temporary materials for construction use,social-welfare-service and nursing-careequipment

Unite Co., Ltd.
Kanamoto (China)
Investment Co., Ltd.
Kanamoto Australia Holdings
Pty Ltd

Rental and sale of road construction equipment,

1,144

66.9

2,376

100.0

Rental and sale of construction equipment

5,687

100.0

Holding Company

road construction works

Notes：There are no specified wholly-owned subsidiaries as of the end of this fiscal year.

(8) Primary lenders and amount of borrowing (As of October 31, 2023)
Financial institution

Loan balance(Millions of yen)

MUFG Bank, Ltd.

6,715

North Pacific Bank, Ltd.

6,340

The 77 Bank, Ltd.

4,995

The Hokkaido Bank, Ltd.

4,640

JA - Hokkaido Shinren

4,405

Mizuho Bank, Ltd.

2,720

The Norinchukin Bank

2,455

THE NISHI-NIPPON CITY BANK, LTD.

1,310

The Aomori Bank, Ltd.

1,220

The Bank of Fukuoka, Ltd.

1,125

(9) Basic Policy Concerning Distribution of Earnings and Dividends for theConsolidated Fiscal Year under Review and Next Consolidated Fiscal Year
Distribution of earnings to shareholders is a key management issue. The dividend policyof Kanamoto is to provide shareholders with a consistent and stable dividend
regardless of the business environment. Furthermore, the Company aims to implement
profit distribution in line with earnings performance. Moreover, it is the basic policy ofKanamoto to sufficiently build up its retained earnings, which is essential forstrengthening financial position and to implement aggressive business expansion.
For the fiscal year ended October 2023, the Board of Directors has decided to pay a
year-end dividend of ￥40 and an annual dividend of ￥75 per share (which includes aninterim dividend of ￥35).
Furthermore, the Company aims to allocate retained earnings to capital investments,
including facilities investment for rental equipment and other assets. Note that thecompany is putting a share buyback program into place to facilitate the flexible
implementation of capital policies.

(10) Summary of other important matters concerning the corporate group
There are no material events that should be reported.

2. Matters Concerning the Company’s Stock
Summary of Common Stock (As of October 31, 2023)
1) Total number of shares authorized

130,000,000 shares

2) Shares issued and outstanding

38,742,241 shares(including 2,681,810 shares of treasury stock)3) Number of shareholders

8,6314) Principal shareholders (ten largest)
Number of
Shareholder nameshares held

Percentage of(Thousandshares)total(%)

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

4,623

12.82

Custody Bank of Japan, Ltd. (Trust account)

2,696

7.48

ORIX Corporation

960

2.66

Kanamoto Capital Company

915

2.54

SMBC Nikko Securities Inc.

899

2.49

The Hokkaido Bank, Ltd.

888

2.47

Tokio Marine & Nichido Fire Insurance Co., Ltd.

802

2.23

North Pacific Bank, Ltd.

763

2.12

Denyo CO., Ltd,

625

1.73

HOKUETSU INDUSTRIES CO., LTD.

619

1.72

Notes：1. Percentage of total is calculated excluding treasury shares (2,681 thousand shares).
2. The Company holds treasury share numbering 2,681 thousand shares. However, theCompany is excluded from the above list of Principal shareholders.

5) Status of shares granted to officers of the Company as compensation for
their execution of duties during the fiscal year under review
Classification

Number of shares

Eligible for issuanceDirectors

8,600 shares

7 directors

Note： Details of the Company’s share-based remuneration are presented in “2) Mattersconcerning non-monetary remuneration, etc.

6) Other important matters concerning stocks
Pursuant to a resolution made at the Board of Directors meeting held on December 9,2022, the Company acquired 900,300 shares of treasury stock through buying on themarket during the period from December 12, 2022 to March 23, 2023.
Also, Pursuant to a resolution made at the Board of Directors meeting held on
December 8, 2023, the Company will acquire up to 900,000 shares of treasury stock at a
total cost of no more than ￥2.0 billion between December 11, 2023 and August 30, 2024
through buying on the market in order to increase shareholders’ value.

3. Matters Concerning Stock Acquisition Rights etc.
The Company had no material items to report.

4. Matters Concerning Company Directors (As of October 31, 2023)(1) Summary of directors and auditors
Name
KanchuKanamoto

GenderMale

Position and duties

Main concurrent positions at otherentities

Chairman of the Board andChairman of the Board, Kanamoto

Representative Director(China) Investment Co., Ltd.
President and Representative Director,
Toyo Industry Co., Ltd.
Chairman of the Board andPresident and CEO, Corporate
TetsuoKanamoto

Male

Officer; General Manager,
Business Coordination
Headquarters

Representative Director, Unite Co., Ltd.
Chairman of the Board andRepresentative Director, KG FlowtechnoCo., Ltd.
President and Representative Director,
Soki Holdings Co., Ltd.
Chairman of the Board andRepresentative Director, Kanki Co., Ltd.

TatsuoKanamoto

Director, Corporate Officer;
MaleManager in charge of Steel Sales
Division
Director, Corporate Officer;

Kazunori
Hashiguchi

Division Manager Human
Male

Resources Division; General
Manager, Business Development
Office

Akira

Male

Director, Corporate Officer;

President and Representative Director,

Sannomiya

Division Manager, Business

Kanatech Co., Ltd.

Administration Division; andDivision Manager, Used Products
Sales Division
Director, Corporate Officer;
Division Manager, Construction
Equipment Rental Division and
Jun
Watanabe

Male

Division Manager, Construction

President and Representative Director,

Equipment Rental Division

KG Flowtechno Co., Ltd.

National Special Demand Sales
Division; and General Manager
New Products OfficeDirector, Corporate Officer;
Division Manager, Accounting
Shun
HiroseMale

Division; and General Manager,
Public Relations Office; serving
concurrently as Manager, Bill
Collection Center

HideakiYamashita
Susumu
Naito
Eiji
Arita
Motoki
Yonekawa
Ayako
TabataTetsuya
Okawa
Eichu
Kanamoto
NaoyukiYokotaNoriakiIkushima
Yasushi

Director, Corporate Officer;
Male

Division Manager, Overseas
Business Division

Male

Director (Outside Director)

Male

Director (Outside Director)

Male

Director (Outside Director)

FemaleDirector (Outside Director)

LawyerMale

Director (Outside Director)

Lawyer

MaleStanding Corporate Auditor

MaleStanding Corporate Auditor

MaleAuditor (Outside Auditor)

Male

Auditor (Outside Auditor)

Certified public accountant

Ishiwaka
Iwao
Takeuchi

Male

Auditor (Outside Auditor)

Notes: 1. Directors Susumu Naito, Eiji Arita, Motoki Yonekawa, Ayako Tabata and Tetsuya
Okawa are Outside Directors.
2. Corporate Auditors Noriaki Ikushima, Yasushi Ishiwaka and Iwao Takeuchi are
Outside Corporate Auditors.
3. Corporate Auditor Naoyuki Yokota and Corporate Auditor Iwao Takeuchi has many
years of experience in the banking business, and has considerable knowledge offinance and accounting.
4. Corporate Auditor Yasushi Ishiwaka is a certified public accountant with considerable
knowledge of finance and accounting.
5. The Company has notified the Tokyo Stock Exchange and Sapporo Securities
Exchange, the exchanges on which Kanamoto’s shares are listed, of the positions of
directors Susumu Naito, Eiji Arita, Motoki Yonekawa, Ayako Tabata and Tetsuya
Okawa as “independent officers” as provided by the rules, etc., of both exchanges.
6. The Company has notified the Tokyo Stock Exchange and Sapporo Securities
Exchange, the exchanges on which Kanamoto’s shares are listed, of the positions ofCorporate Auditors Noriaki Ikushima, Yasushi Ishiwaka and Iwao Takeuchi as“independent officers” as provided by the rules, etc., of both exchanges.
7. Based on the provision of Article 427 paragraph 1 of the Companies Act, theCompany has entered agreements with its outside directors and outside auditorsthat limits their liability for compensation for damages under Article 423 paragraph
1 of the same law. The amount of the limit on the liability for compensation fordamages based on said agreement is the amount provided by the law.

(2) Summary of the directors and officers liability insurance policy
The Company and certain subsidiaries has entered into a directors and officers liability
insurance policy as provided for in Article 430-3 paragraph (1) of the Companies Act withan insurance company.
1) Scope of insureds
The Company’s and certain subsidiarie’s directors, auditors and corporate officers2) Summary of insurance policy terms

The insurance policy covers losses that may arise when the insured assumes liability
incurred in the course of the performance of duties or receives claims related to the
pursuit of such liability. However, certain reasons, such as claims for damages pertaining
to intentional violations of laws, will not be covered so as not to impair theappropriateness of the performance of duties by the insured. The full amount of theinsurance premiums is borne by the Company.

(3) Total remuneration and other amounts paid to Directors and Auditors
1) Total amount of remuneration for the fiscal year under review

Classification

Number ofCompensationcompensatedamountAuditor(Outside Auditor)
Total(Millions of yen)

(Millions of yen)

Basic reward

Non-monetary
remuneration,
etc.

12(3)

115 (5)101 (5)

14(－)

6(4)

30 (5)

30 (5)

－(－)

18(7)

146(10)132(10)14(－)

individuals
Director

Remuneration by type

Notes：1. Two Directors (Outside Directors) who received no remuneration are not included in
the compensated individuals indicated above.
2. Total compensation paid to Directors does not include ￥94 million equivalent to theemployee salary portion (including bonuses) paid to Directors serving concurrently
as employees.

2) Matters concerning non-monetary remuneration, etc.
The Company has introduced a restricted share-based remuneration plan for directors(excluding outside directors; hereinafter, the “Eligible Directors”) with the aim ofproviding an incentive to sustainably increase the corporate value, and further promoteshared value with shareholders. Eligible Directors shall, pursuant to a resolution of theBoard of Directors of the Company, make contributions in-kind of all of the monetary
remuneration claims received to have common shares of the Company issued or
disposed of. The total amount of these monetary remuneration claims shall be no morethan ￥100 million per year, and the total number of common shares of the Company tobe issued or disposed of through this plan shall be no more than 50,000 shares per year.
In addition, the Restriction Period shall be the period specified by the Board of Directorsof the Company within the range of three to 30 years from the day on which the Eligible
Director receives the allotment of shares, and in case that an Eligible Director retires
from the position specified by the Board of Directors of the Company before theexpiration of the Restriction Period, upon such retirement, the Company shall acquire theallotted shares without contribution unless that retirement was due to the expiration of
the Eligible Director’s term of office, death, or other justifiable reason.

3) Matters concerning the resolution of the General Meeting of the Shareholders
on remuneration, etc. for directors and auditors
At the 26th Regular General Meeting of the Shareholders held on January 24, 1991, it
was resolved that remuneration paid to directors shall be no more than ￥240 million peryear (excluding salaries and bonuses received as an employee). The number of directors
at the conclusion of the said Regular General Meeting of the Shareholders was nine.
Furthermore, at the 56th Regular General Meeting of the Shareholders held on January
28, 2021, it was resolved that, separately from the above-mentioned annual
remuneration, restricted share-based remuneration for directors (excluding outside
directors) shall be no more than ￥100 million per year. The number of directors at theconclusion of the said Regular General Meeting of the Shareholders was nine.
At the 42nd Regular General Meeting of the Shareholders held on January 26, 2007, it
was resolved that remuneration paid to auditors shall be no more than ￥50 million per
year. The number of auditors at the conclusion of the said Regular General Meeting of the
Shareholders was two.

4) Matters concerning the policy for determining details of remuneration, etc. forindividual directors
Many directors of the Company concurrently serve as corporate officers. Directors’
remuneration is a fixed amount paid in respect of management decision-making and theperformance of supervisory functions, while corporate officers’ remuneration is paid
based on an assessment of business performance. Since a certain portion of the
remuneration is linked to business performance and therefore functions as an incentive,
directors’ remuneration and corporate officers’ remuneration are considered on a clearly
separate basis.
Remuneration for outside directors shall be a fixed amount in light of their roles andindependent position.
Remuneration for directors is entrusted solely to the President and CEO according to a
resolution of the Board of Directors and is determined based on an evaluation of eachdirector within the remuneration limits decided at the General Meeting of the
Shareholders.

5) Matters concerning delegation of the determination of the details of
remuneration, etc. for individual directors
Based on a resolution of the Board of Directors, the individual remuneration amount isdelegated to the President and CEO Tetsuo Kanamoto. The reason for this delegation isthat the Company has judged the President and CEO as appropriate to conduct
evaluations of the departments that each director is in charge of while considering theCompany’s overall performance.
The Board of Directors has judged that individual remuneration, etc. are in accordancewith the determination policy.

(4) Matters concerning Outside Directors
1) Concurrent posts held by Company executives including positions at othercompanies
The Company had no material items to report.

2) Concurrent service as an outside director at other companies
The Company had no material items to report.

3) Relationships with specified related parties including main customers
The Company had no material items to report.

4) Activities during the current fiscal year
Classification

Name

Activities
Attended all of the five Board of Directors meetings held during the

Director

Susumu Naito

fiscal year and appropriately contributed the necessary advice andproposals.
Attended all of the five Board of Directors meetings held during the

Director

Eiji Arita

fiscal year and appropriately contributed the necessary advice andproposals.
Attended all of the five Board of Directors meetings held during the

Director

Motoki Yonekawa

fiscal year and appropriately contributed the necessary advice andproposals.
Attended all of the five Board of Directors meetings held during the

Director

Ayako Tabatafiscal year and appropriately contributed the necessary advice andproposals.
Attended all of the five Board of Directors meetings held during the

Director

Tetsuya Okawa

fiscal year and appropriately contributed the necessary advice andproposals.
Attended four of the five Board of Directors meetings and all of the

Auditor

Noriaki Ikushima

eight Board of Corporate Auditors meetings held during the fiscal
year, and appropriately contributed the necessary advice andproposals based on his experience involvement in administration andmanagement through his participation in municipal government.
Attended all of the five Board of Directors meetings and all of the eight
AuditorYasushi Ishiwaka

Board of Corporate Auditors meetings held during the fiscal year, andappropriately contributed the necessary advice and proposals based
mainly on his expert perspective as a certified public accountant.
After inauguration attended all of the four Board of Directors
meetings and all of the four Board of Corporate Auditors meetings

AuditorIwao Takeuchi

held during the fiscal year, and appropriately contributed thenecessary advice and proposals based on his many years of
employment and experience at financial institutions and his
experience as a standing auditor at other companies.

Note： In addition to the above, to achieve more rapid decision-making the Company
implemented resolutions in writing 4 times based on the provision of Article 370 of theCompanies Act.

5. Matters Concerning Independent Auditors(1) Name
Ernst & Young ShinNihon LLC(2) Amount of compensation and other benefits
Amount paid
(Millions of yen)Amount paid for compensation etc. as independent auditors pertaining to
the current fiscal year
Total amount of cash and other financial interests Kanamoto and its
subsidiary companies will pay to the Company’s independent auditors

55

75

Notes：1. The amount of compensation and other benefits pertaining to the current fiscal year
is reported in these total amounts because the amounts of the audit fees etc. foraudits based on the Companies Act and audits based on the Financial Instruments
and Exchange Act are not classified separately and cannot be substantively classified
in the audit agreement between the Company and its independent auditors.
2. The Board of Corporate Auditors comprehensively examined the details of audit
plans by the accounting auditor, the status of its execution of duties in accounting
and others audit, as well as referring to past remuneration of the accounting auditor
before agreeing on the remuneration amount, etc. for the accounting auditor.

(3) Details of Non-audit Duties

The Company had no material items to report.

(4) Policy for deciding on dismissal or refusal of reappointment
If the Board of Corporate Auditors judges that the accounting auditor falls under any of
the items in Article 340, paragraph (1) of the Companies Act, and that there is noprospect of improvement, the Audit Committee shall dismiss the accounting auditor byunanimous decision.
Furthermore, the Board of Corporate Auditors shall decide whether to dismiss or refuse
to reappoint the accounting auditor in cases that the Board of Corporate Auditors judgesthat the above action is needed, such as when it is recognized that audits cannot be
conducted appropriately due to the occurrence of events that harm the competence andindependence of the accounting auditor.

6. System and Operating Status for Ensuring Appropriate Business
Operations(1) System for Ensuring Appropriate Business Operations
Pursuant to the Board of Directors meeting held on January 28, 2021, the Company
has resolved to partially revise its "Basic Policy on Establishment of an Internal Control
System." In conjunction with this, the Company has revised its matters concerning
individuals requested by the auditors to assist with auditors’ activities. A summary of theCompany’s decisions concerning the above revisions is provided below.

1) System to ensure directors and employees comply with laws and the
Articles of Incorporation in the execution of their duties
Kanamoto Company, Ltd. and its subsidiaries have prepared Ethics Guidelines as partof the corporate philosophy, and use these as the Company standard for compliance.
Under the Compliance Committee chaired by Kanamoto’s president, the Company has
disseminated these Guidelines throughout the Company and established a system forcompliance with laws and the Ethics Guidelines, and has prepared a handbook
summarizing Kanamoto’s corporate philosophy and employee conduct standards, which
it distributes to all executives and regular employees to increase compliance awareness.
As a consultation and reporting system, Kanamoto also has set up in-house and external
compliance hotlines, and created a system to resolve problems quickly when
consultations or reports are received directly from employees and other individuals, while
strictly observing confidentiality and ensuring that individuals who report problems do
not suffer any disadvantages. Furthermore, the Company has established a Legal Section
reporting directly to the president, to act as an advisory panel for important legal issues,

and a system to enable the Company to give proper legal consideration to all decision
making.

2) System for preserving and managing information concerning the executionof directors’ duties
Kanamoto retains documents and various information in accordance with laws andordinances and its internally established document administration regulations anddocument retention rules. Information is controlled in accordance with internal
information management regulations and general data management rules, and personal
data are administered in accordance with personal data protection rules and theCompany’s personal data protection manual.

3) Rules and other systems concerning management of loss risk
Kanamoto and its subsidiaries have established mechanisms to recognize and evaluate
risks related to the business activities of each division, and prepared systems to avoid
such risks. This has created a system capable of clarifying the authority andresponsibilities of each division, supervising risk management conditions throughout theorganization under the Board of Directors and discovering new risks. If unforeseen
circumstances have occurred that will have a serious effect on the Company operations,or if there is concern such circumstances might occur, the Company and its subsidiaries
will respond appropriately, and take measures to prevent a recurrence, based on its
Emergency Response Manual (Contingency Plan).

4) System for ensuring efficient execution of directors’ duties
In addition to its regular Board of Directors meetings, Kanamoto and its subsidiaries
hold extraordinary Board of Directors meetings from time to time as necessary to decide
important matters and to make flexible decisions concerning the execution andsupervision of management strategies and the Company’s business plans. The
Company's Board of Directors receives reports on important matters including thefinancial condition and other matters of the Company's subsidiaries. For its management
plan, the Company establishes budgets for the next business fiscal year andmedium-term future, which gives the managers of each division the Company’s overall
objectives based on specific numerical targets. Each division sets division-wide
objectives, and executes progress management and specific measures aimed atachieving its goals. Kanamoto has also introduced the corporate officer system toacceleratemanagement

decision-making

andclarifysupervisory

authorityandresponsibility for plan execution, and each corporate officer is responsible for achieving
the management plan approved by the Board of Directors. To respond quickly to thesevere pace of change in its management environment, the Company has also shortened
the directors’ term of office to one year.

5) System to ensure appropriate activities at Kanamoto and within thecorporate group comprised of the parent company and subsidiaries
To apply Kanamoto’s Ethics Guidelines correspondingly to each company in the
Kanamoto Group, the Company has decided to enlarge the scope of the Compliance
Committee and the consultation and reporting system to every group firm, to ensure theeffectiveness of business activities is as extensive as possible.
In addition, in accordance with the provisions of the Financial Instruments andExchange Act, the Company and its affiliates maintain an excellent management
environment, and work to strengthen company-wide internal controls, internal controls
pertaining to settlement of accounts financial reports and operating process control
activities, create internal control systems that enable the Company to make proper andeffective assessments and conduct appropriate operations. Furthermore, underKanamoto’s

internal

management

systemconcerning

financialreporting,eachorganization (individual) has affirmed the following roles.
[1] Managers have the final responsibility for all of the organization’s activities, and prepare
and implement internal controls based on this basic policy.
[2] The Board of Directors has supervisory responsibility for the preparation and operation of
the managers’ internal controls, and monitors and supervises managers to ensure thefinancial reporting and internal controls are executed properly.
[3] The auditors monitor and verify the financial reporting and preparation and operation of
the internal controls from an independent standpoint.
[4] The Internal Control and Auditing Office objectively evaluates from an independent
standpoint, the effectiveness of the internal controls related to financial reporting at
Kanamoto and its affiliated companies on behalf of the Company’s managers inaccordance with the audit rules, and when necessary makes proposals concerning
improvements and corrections and reports to the managers and Board of Directors.

6) Matters concerning individuals requested by the auditors to assist withauditors’ activities
With regard to employees to assist auditors in their activities, the Company will appoint
audit staff to provide operational assistance upon request of auditors. With regard to thematters designated by auditors to be provided assistance for, the management authority
for the nominated employees will be transferred to the auditors, and the employees will
not receive instructions or orders from the Company’s directors, thereby ensuring theeffectiveness of instructions from auditors.

7) Matters related to the independence of employees in the preceding
paragraph from directors
Personnel matters for employees assigned to audit activities (appointments, transfersand evaluations) will have the consent of the auditors.

8) System for directors and employees to report to the auditors, othersystems concerning reports to auditors, and other systems to ensure
audits are performed effectively
To perform audits of the directors, the Company’s auditors attend the meetings of theBoard of Directors, and also attend important meetings and committees, in order tounderstand other important decisions and the circumstances of execution of theCompany’s business activities. If the directors and employees of Kanamoto and its
subsidiaries discover facts that might cause the Company considerable harm, they are toreport immediately to the auditors. The standing auditors will circulate a report andrequest for managerial decision, and if necessary can request explanations from thedirectors and employees. Those who reported to the auditors shall not be treatedunfavorably on the grounds of giving such report.
The auditors also meet regularly with the president and representative director, toexchange opinions concerning issues the Company should address and important audit
matters. After audits are completed, the Internal Control and Auditing Office promptly
submits an Auditors’ Report concerning the audit results to the president andrepresentative director and the auditors.
The auditors and the Internal Control and Auditing Office also exchange informationand cooperate in other ways with outside specialists, including the accounting auditors
and the Company’s attorneys.

9) Matters regarding policies related to processing of expenses or liabilities
arising from the execution of auditors' duties
In regards to procedures for prepayment or reimbursement of expenses arising fromexecution of auditors' duties and processing of expenses or liabilities arising fromexecution of auditors' duties, such expenses or liabilities are accounted for upon requests
made by the auditors, except where the requests cannot be considered necessary for the
execution of auditors' duties.

10) System for eliminating antisocial forces
In its Ethics Guidelines, Kanamoto has adopted a resolute stance and set forthprovisions to block all transactions and relationships with antisocial forces, individuals
and groups that threaten the order and safety of society and the stable operation of firms.
In addition to gathering information from specialized external agencies and other sources

at an internal division, the Company works to educate employees through programs suchas internal training. Moreover, in an emergency the Company will cooperate with thepolice authorities having jurisdiction, its advising attorney and other institutions andindividuals, to organizationally block and eliminate unwarranted demands from antisocial
elements.

(2) Operating Effectiveness of Internal Controls
In accordance with the provisions prescribed by laws and regulations, Kanamoto andits subsidiaries evaluate the design and operating effectiveness of internal controls foreach period and have the accounting auditor conduct audits on the appropriateness.
In addition, for the purpose of maintaining and enhancing the level of control, theInternal Control and Auditing Office conducts audits of Kanamoto and its affiliatedcompanies for each period, and when necessary, reports to the managers, Board of
Directors, Board of Auditors and Internal Control Committee.

7. Kanamoto’s Basic Policy Concerning Dividends
The Company had no applicable items to report.

Consolidated Financial Statements

59th Business Period
From November 1, 2022
to October 31, 2023

Kanamoto Co., Ltd.

Consolidated Balance Sheet(As of October 31, 2023)( Millions of Yen)
Classification

AmountClassification(Assets)
Current assets
Cash and deposits

Amount(Liabilities)
120,298

Current liabilities

87,62445,611

Notes and accounts payable - trade

36,077

Notes and accounts receivable trade and contract asset

41,048

Short-term loans payable

15,500Electronically recorded monetaryclaims - operating

11,474

Lease liabilities

1,645

Merchandise and finished goods

1,442

Income taxes payable

2,657

Raw materials and supplies

1,574

Provision for bonuses

1,676

Construction machine parts

15,962

Accounts payable - other

26,075

Other

3,453

Other

3,992

Allowance for doubtful accounts－269

Non-current liabilities

85,139Long-term borrowings

35,796

196,141

Lease liabilities

3,626

173,977

Long-term accounts payable-other

42,324

Rental equipment, net

110,685

Retirement benefit liability

354

Buildings and structures, net

20,413

Asset retirement obligations

686

Machinery, equipment andvehicles, net

1,752

Deferred tax liabilities

Tools, furniture and fixtures

620

Total non-current assets
Property, plant and equipment

Land

39,511

Lease assets
Construction in progress
Intangible assets

Other

60
Total Liabilities

166
827

2,288

172,763(Net Assets)
Shareholders’ equity

129,198

5,778

Share capital

17,829Goodwill

3,163

Capital surplus

19,432Customer relationship

1,244

Retained earnings

97,842

Other

1,369

Treasury shares－5,906

Investments and other assets

16,386

Accumulated othercomprehensive income

5,296

Investment securities

10,637

Valuation difference on
available-for-sale securities

Deferred tax assets

2,013

Deferred gains or losses on hedges

Long-term loans receivable

1,702

Foreign currency translation
adjustment

2,343

Other

2,508

Remeasurements of defined benefit
plans

－30

Allowance for doubtful accounts－476

Non-controlling interests
Total Net Assets

Total Assets

316,440

Total liabilities and net assets

2,983
0

9,181
143,677
316,440

Consolidated Statement of Income(From November 1, 2022 to October 31, 2023)(Millions of Yen)
Classification

AmountNet sales

197,481

Cost of sales

140,630

Gross profit

56,850

Selling, general and administrative expenses

44,892

Operating profit

11,958Non-operating income

998Interest income and dividends

281

Insurance clain income

69

Rent income

77

Temporary transfer charges income

57

Foreign exchange gains

111

Reversal of allowance for doubtful accounts

83

Other

316

Non-operating expenses

468

Interest expenses

127

Loss on cancellation of lease

39

Waste disposal costs

73

Other

228

Ordinary profit

12,488Extraordinary income

287

Gain on sales of non-current assets

57

Gain on sale of investment securities

221

Gain on sale of shares of subsidiaries andassociates
Gain on receipt of donated non-current assets

07Extraordinary loss

668

Impairment losses

195

Loss on sale and retirement of non-current assets

467

Loss on valuation of investment securities

6

Profit before income taxes

12,106

Income taxes-current

4,480

Income taxes-deferred

184

Income before minority interests
Minority interests in income
Profit attributable to owners of parent

4,664
7,441
720
6,721

Consolidated statements of income and consolidated statements ofcomprehensive income
Consolidated statements of income

Fiscal year ended October 31, 2023

(Millions of yen)
Shareholders' equity
Share capital
Balance at beginning ofcurrent period

Capital surplus

17,829Retained earnings

Treasury shares

94,399－3,945

19,332

Total shareholders'equity127,616

Changes during period
Dividends of surplus
Profit attributable toowners of parent－2,739－2,739

6,721

6,721

－538

－538

Change in scope of
consolidation
Change in ownershipinterest of parent due to98transactions with

98

non-controlling interests
Purchase of treasury
sharesRestricted stock0

compensation－1,999－1,99939

40

Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

–

99

3,443

－1,9601,582

17,82919,432

97,842－5,906

129,198

Accumulated other comprehensive income

Balance at beginning ofcurrent period

Totalaccumulated Non-controlli
ng interests
other

Valuation

DeferredForeign

Remeasure-mdifference on
available-for-gains orlosses on

currencytranslation

ents ofdefinedsale securities

hedgesadjustment

benefit planscomprehendsive income

2,198

-37

4,342

2,181

–

8,652

Total net
assets140,611

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Change in scope of
consolidation
Change in ownershipinterest of parent due totransactions with
non-controlling interests
Purchase of treasury
sharesRestricted stockcompensation
Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period–-2,739

–

6,721

–

-538

–

98

–

-1,999

–

40

802

0

144

7

953

528

1,482

802

0

144

7

953

528

3,065

2,983

0

2,343

-30

5,296

9,181

143,677

The Accounting Auditor’s Report of Consolidated Financial Statements
Independent Auditor’s Report
December 18, 2023
Kanamoto Co., Ltd.
To the Board of Directors,
Ernst & Young ShinNihon LLC
Sapporo Office, Japan
Tatsuro Hayashi
Designated limited liability partner
Managing Partner
Certified public accountant
Mitsuhiro Fujimori
Designated limited liability partner
Managing Partner
Certified public accountant
Audit Opinion
Pursuant to Article 444, Section 4 of the Companies Act, we have audited theaccompanying consolidated financial statements, which comprise the consolidatedbalance sheet, the consolidated statement of income, the consolidated statement ofchanges in equity and the notes to the consolidated financial statements, of KanamotoCo., Ltd. (“the Company”) applicable to the fiscal year from November 1, 2022 to
October 31, 2023.
In our opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position and results of operations of theKanamoto Group, which consisted of the Company and its consolidated subsidiaries,
in the fiscal year under review in accordance with accounting principles generally
accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted inJapan. 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 Company and its consolidated
subsidiaries in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Japan, and we have fulfilled ourother ethical responsibilities in accordance with these requirements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Other information
The other information comprises the information included in the Company’s Report ofBusiness Operations and its supplementary schedules. Management is responsible forpreparing and disclosing the other information. Corporate Auditors and the Board of
Corporate Auditors are responsible for overseeing the Directors’ execution of duties

relating to the design, implementation and maintenance of the Company’s reporting
other information process.
The other information does not fall under the scope of our opinion on the consolidated
financial statements, etc., and we express no opinion on the other information.
Our responsibility in auditing the consolidated financial statements, etc. is to readthrough the other information and, in the course of reading, consider whether there
are any material differences between the other information and the consolidated
financial statements, etc. or our knowledge obtained in the course of our audit, andto pay attention to whether there are any other signs of material errors in the otherinformation in addition to such material differences.
If, based on the work we have performed, we determine that there are material
errors in the other information, we are required to report that fact. We have nothing
to report with respect to the other information.
Responsibilities of Management, Corporate Auditors and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of theconsolidated financial statements in accordance with accounting principles generally
accepted in Japan; this includes the maintenance and operation of such internal
control as management determines is necessary to enable the preparation and fairpresentation 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 forassessing whether it is appropriate to prepare the consolidated financial statementswith the assumption of the Group’s ability to continue as a going concern anddisclosing, as required by accounting principles generally accepted in Japan, mattersrelated to going concern.
Corporate Auditors and the Board of Corporate Auditors are responsible foroverseeing the Directors’ performance of duties within the maintenance andoperation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes ouropinion on the consolidated financial statements based on our audit from an
independent point of view. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate they could reasonably be
expected to influence the decisions of users taken on the basis of the consolidated
financial statements.
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, and design and perform audit
procedures responsive to those risks. Selecting audit procedures to be applied is at
the discretion of the auditor. Obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion.
•

Consider, in making those risk assessments, internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances,while the purpose of the audit of the consolidated financial statements is not
expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used by management andtheir method of application, as well as the reasonableness of accounting estimatesby management and related notes thereto.
• Conclude on the appropriateness of management’s use of the going concern
basis for preparing the consolidated financial statements and, based on the audit
evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as agoing concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related notes to the consolidated
financial statements or, if the notes to the consolidated financial statements onmaterial uncertainty are inadequate, to express a qualified opinion with exceptions
on the consolidated financial statements. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Group to cease to continue as a going concern.
• Evaluate whether the presentation of the consolidated financial statements andthe notes thereto are in accordance with accounting standards generally acceptedin Japan, as well as evaluate the overall presentation, structure and content of theconsolidated financial statements, including the related notes thereto, andwhether the consolidated financial statements fairly represent the underlying
transactions and accounting events.
• Obtain sufficient and appropriate audit evidence regarding the financial
information of the Company and its consolidated subsidiaries to express an opinion
on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the audit of the consolidated financial statements.
We remain solely responsible for our audit opinion. We communicate with
Corporate Auditors and the Board of Corporate Auditors regarding the planned
scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit, andother matters required by auditing standards.
We also provide Corporate Auditors and the Board of Corporate Auditors with astatement that we have complied with the ethical requirements in Japan regarding
independence that are relevant to our audit of the financial statements, andcommunicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards inorder to eliminate or reduce obstruction factors.
Conflicts of Interest
Our firm and the designated engagement partners have no interest in the Company
and its consolidated subsidiaries which should be disclosed in accordance with theCertified Public Accountants Act.

Non-Consolidated
Financial Statements

59th Business Period
From November 1, 2022
to October 31, 2023

Kanamoto Co., Ltd.

Balance Sheet(As of October 31, 2023)( Million of Yen)
Classification

AmountClassification(Assets)
Current assets

Amount(Liabilities)
72,65260,711

Current liabilities

Cash and deposits

21,164

Notes payable-trade18,562

Notes and accounts receivable trade and contract asset

25,768

Accounts payable-trade

6,759

Electronically recordedmonetary claims – operating

8,202

Short-term loans payable

11,385Merchandise and finished
goods

430

Income taxes payable

1,278

Raw materials and supplies

975

Provision for bonuses

771

Construction machine parts

12,464

Prepaid expenses

459

Accounts payable-other

20,209Accrued expenses

492

Short-term loans receivable

2,167

Notes payable-facilities

736

Other

1,068

Other

515

Allowance for doubtful accounts
Noncurrent assets
Property, plant and equipment–49
157,882
115,984

Noncurrent liabilities

62,820Long-term borrowings

27,270Rental equipment, net

66,103Long-term accounts payable-other35,175

Buildings, net

10,796

Asset retirement obligations

Structures, net

2,461

Machinery andequipment,net

1,069

Vehicles and delivery
equipment

76

Tools, furniture and fixtures

301

Land

34,767

Total Liabilities

374
123,531(Net Assets)
Shareholders’ equity

104,144

Share capital

17,829

Capital surplus

19,341

Construction in progress

407

Intangible assets

405

Legal capital surplus

18,950322

Other capital surplus

390

SoftwareTelephone subscription right

19

Other

63

Legal retained earnings

1,375

41,492Other retained earnings

71,503

Investments and otherassetsInvestment securities
Stocks of subsidiaries andaffiliates

6,632
28,737

Deferred tax assets

469

Investments in capital10

Long-term loans receivable

5,237

Other

1,358

Allowance for doubtful
accounts–954

Total Assets

230,535

Retained earnings

Reserve for advanced depreciationof noncurrent assets

72,87922

General reserve

62,731Retained earnings brought
forward8,749

Treasury stock
Valuation and translation
adjustments
Valuation difference on
available-for-sale securities–5,9062,859
2,859

Total Net Assets

107,003

Liabilities and Total Net Assets

230,535

Statement of Income(From November 1, 2022 to October 31, 2023)(Million of Yen)
Classification

AmountNet sales

119,441

Cost of sales

89,649Gross profit

29,792

Selling, general and administrative expenses

24,032

Operating income

5,759

Non-operating income

1,454Interest income and dividends

459

Rent income

327

Temporary transfer charges income

236

Foreign exchange gain

113

Reversal of allowance for doubtful accounts

72

Other

245

Non-operating expenses

441

Interest expenses

71

Provision of allowance for doubtful accounts

109

Other

259
6,772

Ordinary income
Extraordinary income

183

Gain on sales of noncurrent assets

17

Gain on sale of investment securities

165

Gain on valuation of shares of subsidiaries and0

Extraordinary loss

1,208

Loss on sales and retirement of noncurrent assets

386

Loss on valuation of shares of subsidiaries and associates

822

Income before income taxes

5,747

Income taxes-current

2,191

Income taxes-deferred–32

Net income

2,158
3,588

Statement of Changes in Net Assets(From November 1, 2022 to October 31, 2023)(Million of Yen)

Shareholders’ equity
Retained earnings

Capital surplus

Other retained earnings

Capital stock

Balance at beginning of current period

17,829Legal capital

Other capital

Total capitalsurplussurplussurplus18,950390

19,340Legal retained
earnings

Reserve foradvanceddepreciation of
noncurrent assets

1,375

22

Retainedearnings
brought
forwardGeneralreserve
62,731

Total retained
earnings

7,900

70,030Changes of items during period
Dividends of surplus－–2,739-2,739Profit

－

3,588

3,588

Acquisition of treasury stock

－

－

0

－

－

－

Transfer-restricted stock-based
compensation0

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

－

－

0

0

－

－

－

848

848

17,82918,950390

19,341

1,375

22

62,731

8,749

72,879

Shareholders' equity

Balance at beginning of current period

Valuation and translation adjustments
Total net assets

Treasury stock

Total
shareholders’equity

Valuation difference on
available-for-sale securities

Total valuation and translation
adjustments–3,945105,255

2,137

2,137

107,392－-2,739Changes of items during period
Dividends of surplus-2,739ProfitAcquisition of treasury stock
Transfer-restricted stock-based
compensation

3,588

－

3,588

–1,999–1,999－–1,999

39

40

－

40

722

722

Net changes of items other thanshareholders’ equity
Total changes of items during period
Balance at end of current period－722–1,960–1,110

722

722

–388

–5,906104,144

2,859

2,859

107,003

The Accounting Auditor’s Report of Financial Statements
Independent Auditor’s Report
December 18, 2023
Kanamoto Co., Ltd.
To the Board of Directors,

Ernst & Young ShinNihon LLC
Sapporo Office, Japan
Takuro Hayashi
Designated limited liability partner
Managing Partner
Certified public accountant
Mitsuhiro Fujimori
Designated limited liability partner
Managing Partner
Certified public accountant
Audit Opinion
Pursuant to Article 436, paragraph (2), item (i) of the Companies Act, we have audited the accompanying
financial statements, which comprise the balance sheet, the statement of income, the statement ofchanges in equity, the notes to non-consolidated financial statements, and the supplementary schedules(collectively, “financial statements, etc.”) of Kanamoto Co., Ltd. (the “Company”), applicable to the 59th
Business Period from November 1, 2022 to October 31, 2023.
In our opinion, non-consolidated financial statements, etc. referred to above present fairly, in all material
respects, the financial position and results of operations of Kanamoto Co., Ltd. in the fiscal year underreview in accordance with accounting principles generally accepted in Japan.
Basis for Audit 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 Auditof the Non-consolidated Financial Statements section of our report. We are independent of the Company
and its non-consolidated subsidiaries in accordance with the ethical requirements that are relevant to our
audit of the financial statements in Japan, and we have fulfilled our other ethical responsibilities inaccordance with these requirements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.
Other information
The other information comprises the information included in the Company’s Report of Business
Operations and its supplementary schedules. Management is responsible for preparing and disclosing

the other information. Corporate Auditors and the Board of Corporate Auditors are responsible foroverseeing the Directors’ execution of duties relating to the design, implementation and maintenanceof the Company’s reporting other information process.
The other information does not fall under the scope of our opinion on the non-consolidated financial
statements, etc., and we express no opinion on the other information.
Our responsibility in auditing the non-consolidated financial statements, etc. is to read through theother information and, in the course of reading, consider whether there are any material differences
between the other information and the non-consolidated financial statements, etc. or our
knowledge obtained in the course of our audit, and to pay attention to whether there are any othersigns of material errors in the other information in addition to such material differences.
If, based on the work we have performed, we determine that there are material errors in the otherinformation, we are required to report that fact. We have nothing to report with respect to the otherinformation.
Responsibilities of Management, Corporate Auditors and the Board of Corporate Auditors for the
Non-Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the non-consolidated financial
statements in accordance with accounting principles generally accepted in Japan; this includes themaintenance and operation of such internal control as management determines is necessary to enable
the preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing whether it is appropriate
to prepare the non-consolidated financial statements with the assumption of the Group’s ability tocontinue as a going concern and disclosing, as required by accounting principles generally accepted inJapan, matters related to going concern.
Corporate Auditors and the Board of Corporate Auditors are responsible for overseeing the Directors’
performance of duties within the maintenance and operation of the financial reporting process.
Responsibilities of Management, Corporate Auditors and the Board of Corporate Auditors for the
Non-Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the non-consolidated financial
statements in accordance with accounting principles generally accepted in Japan; this includes themaintenance and operation of such internal control as management determines is necessary to enable
the preparation and fair presentation of non-consolidated financial statements that are free frommaterial misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements, management is responsible for assessing
whether it is appropriate to prepare the non-consolidated financial statements with the assumption of theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
Corporate Auditors and the Board of Corporate Auditors are responsible for overseeing the Directors’
performance of duties within the maintenance and operation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-Consolidated Financial Statements

Our responsibilities are to obtain reasonable assurance about whether the non-consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion on the non-consolidated financial statements based on our
audit from an independent point of view. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate they could reasonably be expected to influence the decisionsof users taken on the basis of the non-consolidated financial statements.
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 non-consolidated financial statements,
whether due to fraud or error, and design and perform audit procedures responsive to those risks.
Selecting audit procedures to be applied is at the discretion of the auditor. Obtain audit evidence thatis sufficient and appropriate to provide a basis for our opinion.
• Consider, in making those risk assessments, internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, while the purpose of the audit of thefinancial statements is not expressing an opinion on the effectiveness of the Group’s internal control.
•

Evaluate the appropriateness of accounting policies used by management and their method of

application, as well as the reasonableness of accounting estimates by management and related notes
thereto.
• Conclude on the appropriateness of management’s use of the going concern basis for preparing thenon-consolidated financial statements and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related notes to the financial statements or, if the notes tothe financial statements on material uncertainty are inadequate, to express a qualified opinion withexceptions on the non-consolidated financial statements. 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 of the financial statements and the notes thereto are in accordancewith accounting standards generally accepted in Japan, as well as evaluate the overall presentation,
structure and content of the non-consolidated financial statements, including the related notes thereto,
and whether the non-consolidated financial statements fairly represent the underlying transactions
and accounting events.
We communicate with Corporate Auditors and the Board of Corporate Auditors regarding the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit, and other matters required by auditing standards.
We also provide Corporate Auditors and the Board of Corporate Auditors with a statement that we havecomplied with the ethical requirements in Japan regarding independence that are relevant to our audit of
the non-consolidated financial statements, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards in order to eliminate or reduce obstruction factors.

Conflicts of Interest
Our firm and the designated engagement partners have no interest in the Company and its consolidated
subsidiaries which should be disclosed in accordance with the Certified Public Accountants Act.

Audit Report
The Board of Corporate Auditors has received the audit reports prepared by each of the Corporate
Auditors concerning the business performance of the Directors during the 59th Business Period from
November 1, 2022 through October 31, 2023. After discussing the audit results based on the reports, wehave prepared this Audit Report and report as follows as the consensus of opinion of the Board of
Corporate Auditors.
1. Procedures and details of the audits by the Corporate Auditors and the Board of Corporate Auditors(1) The Board of Corporate Auditors establishes the audit policies, audit plans and other matters, andreceives reports concerning the implementation of audits and the audit result from each of the Corporate
Auditors as well as reports from the Directors and the Accounting Auditor concerning the execution of theirduties, and requests explanations as necessary.
(2) In addition to communicating with the Directors, the internal audit division, employees and otherindividuals in accordance with the standards for Corporate Auditors and audits provided by the Board of
Corporate Auditors and in compliance with the audit policy and audit plan, and gathering information andstriving to improve the audit environment, each Corporate Auditor performed audits according to thefollowing procedures:(i) Each Corporate Auditor attended the Board of Directors meetings and other important meetings,
received reports from Directors, employees and other individuals on their execution of duties andrequested explanations from the Directors, other employees and other individuals when necessary as
well as reviewed documents concerning matters such as important decisions and conducted
inspections of the business and financial condition at the Company’s Head Office and main branches.
With respect to subsidiaries, each Corporate Auditor communicated and exchanged information with
the Directors and Corporate Auditors of such subsidiaries and received business reports therefrom asnecessary.
(ii) Each Corporate Auditor regularly received reports from the Company’s Directors and employees,
and requested explanations and clarified opinions when necessary, regarding the contents of Board of
Director resolutions concerning the establishment of the organization provided in Article 100 paragraph(1) and paragraph (3) of the Ordinance for Enforcement of the Companies Act, and the status ofoperation of the organization (internal controls system) that has been established based on said
resolutions, as the organization necessary to ensure that the Directors comply with laws and theCompany’s Articles of Incorporation in the execution of their duties as described in the Report ofBusiness Operations and to ensure the appropriateness of other operations of the corporate group,
which consists of a stock company and the subsidiaries thereof.
(iii) Each Corporate Auditor monitored and verified whether or not the Accounting Auditor performed
audits properly while maintaining an independent position as well as received reports from the
Accounting Auditor on the execution of duties thereby and requested explanations when necessary.
Each Corporate Auditor was also notified by the Accounting Auditor that the System for Securing theProper Performance of Duties (matters listed in the items of Article 131 of the Ordinance on Company
Accounting) was developed in accordance with the Standards for Quality Control of Audits (BusinessAccounting Council), and requested explanations as necessary.
Based on the above procedures, the Board of Corporate Auditors reviewed the Report of BusinessOperations and the supporting schedules, the Non-Consolidated Financial Statements (Balance Sheet,
Statement of Income, Statement of Changes in Net Assets and Notes to the Financial Statements) and the
supporting schedules and the Consolidated Financial Statements (Consolidated Balance Sheet,
Consolidated Statement of Income, Consolidated Statement of Changes in Net Assets and Notes to theConsolidated Financial Statements) for the business period.
2. Result of audit(1) Audit result of the Report of Business Operations, etc.
(i) The Report of Business Operations and its supporting schedules fairly represent the condition of theCompany in accordance with the laws of Japan and the Articles of Incorporation of the Company.
(ii) We have determined that there was no serious occurrence of improper activity or violation of laws
or the Company’s Articles of Incorporation by any of the Directors in carrying out the duties andresponsibilities of their office.
(iii) In our opinion, the details of the Board of Directors resolutions concerning the internal controls
system are appropriate. We also have determined that there are no matters that should be highlighted
as a concern with regard to the information contained in the Report of Business Operations and the
Directors in carrying out their duties concerning the internal controls system.
(2) Non-Consolidated Financial statement and audit result of the supporting schedules
In our opinion, the audit procedures and audit results received from the Accounting Auditor Ernst & Young
ShinNihon LLC are appropriate.
(3) Audit result of consolidated financial statements
In our opinion, the audit procedures and audit results received from the Accounting Auditor Ernst & Young
ShinNihon LLC are appropriate.
December 25, 2023
Kanamoto Co., Ltd.
The Board of Corporate Auditors
Standing Corporate Auditor

Eichu Kanamoto

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Standing Corporate Auditor

Naoyuki Yokota

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Outside Corporate Auditor

Noriaki Ikushima

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Outside Corporate Auditor

Yasushi Ishiwaka

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Outside Corporate Auditor

Iwao Takeuchi

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