Report of Business Operations for the56th Business Period (Business Period
ended October 2020) (Attachment to the Notification and Invitation to the 56th
Regular General Meeting of the Shareholders)
From November 1, 2019 to October 31, 2020
1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Resultsa) Summary of consolidated fiscal year operating results (From November 1, 2019 to October 31, 2020)
During the consolidated fiscal year under review, Japan’s economy continued to be unpredictable, withcorporate earnings and the employment environment on an improving trend, but with greatly restrictedeconomic activities due to the spread of the novel coronavirus disease (COVID-19). Also, the outlook for thebusiness conditions of the global economy remained unclear due to movement restrictions and city
lockdowns caused by COVID-19, in addition to the effects of the trade frictions between the US and China.

In the construction industry where the Kanamoto Group belongs, public sector investments were firm,
mainly in construction related to restoration, recovery and prevention from natural disasters, and in the
promotion of the national resilience related to measures against the aging of infrastructure, while for theprivate sector construction investments there are concerns that capital investment is cooling due to a
decline in investment sentiment, and other conditions that demand close attention persist.

In such circumstances, the Group has worked to achieve its Medium-Term Corporate Management Plan
“Creative 60” (FY2020-2024) by promoting three key measures: expansion of domestic bases for operations,overseas expansion, and optimization of internal operations. In addition, while implementing measuresagainst infections and reducing fixed costs, we also strove to further increase corporate value by training
personnel for the future, strengthening the foundation of the alliance group at in Japan and abroad, andimplementing an asset strategy that pays close attention to the market environment.

Consequently, in the fiscal year ended October 31, 2020 net sales fell 0.9% from the prior consolidated
fiscal year level to ￥179,053 million. On the earnings front, operating profit decreased 20.1% year-on-yearto ￥14,250 million, ordinary profit fell 21.9% to ￥14,268 million, and profit attributable to owners of parent
fell 25.9% to ￥8,466 million, due to such factors as the extension of the used construction equipment
operation period as planned at the beginning of the fiscal year, and the impact of increased depreciation
associated with additional capital investment for disaster recovery.

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

b) Summary of consolidated operating results by business segment[Business related to the Construction Equipment Rental Division]
In the construction-related business, which is Kanamoto’s core business, public sector investments wererelatively steady due to the full-scale implementation of construction related to disaster recovery,
infrastructure and disaster prevention, but private sector construction investments did not reach a fullfledged recovery in rental demand for construction equipment, as construction was canceled or postponed atsome sites.
In addition, the Group has strengthened its operations bases by working on business alliances that are
expected to have high synergistic effects in Japan and abroad, and by expanding its product lineup to
immediately meet a wide variety of demands. As a result, sales by region in this business were up 3.1% in
the Hokkaido Region, down 1.6% in the Tohoku Region, down 0.7% in the Kanto & Koushinetsu Region, up
4.8% in the Nishi-nihon Region, and up 1.7% in the Kyushu & Okinawa Region.
In addition, used construction equipment sales decreased 26.4% year-on-year, as Kanamoto carried out
the sale as planned at the beginning of the fiscal year.

Reflecting these factors, the Kanamoto Group posted net sales in the construction-related businesses of￥160,826 million, a decrease of 0.6% year-on-year, and operating profit of ￥12,852 million, a decrease of
22.1%.

[Other Businesses]
In the Company’s other businesses, sales performed well in the welfare and information-related business,while the steel products-related business was affected by the fall in steel materials prices, resulting in a
3.4% decrease year-on-year in net sales to ￥18,226 million and a 6.1% increase in operating profit to ￥969
million.

(Millions of yen)

55th Business Period

56th Business PeriodBusiness PeriodBusiness Period

ended October 2019

ended October 2020

161,831

160,826-0.6

Other Businesses

18,862

18,226

-3.4

Total

180,694

179,053-0.9

Segment

Change fromprior year (%)

Business related to theConstruction Equipment
Rental Division(2) Financing activities
1) Funds Procurement
Funds procurement through capital increase or the issuance of corporate bonds has not been performed
during the current consolidated fiscal year.

2) Capital investment
Capital investment implemented by the Kanamoto Group during the current consolidated fiscal year

totaled ￥38,585 million. This included purchases of rental equipment of ￥34,113 million, and investments inassets used by the group, including the establishment, relocation and expansion of branches, of ￥4,471
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: Specialized Equipment Engineering Division, Arao Equipment Center(Arao City, Kumamoto Prefecture)
Kurashiki Branch (Kurashiki City, Okayama Prefecture)
Sapporo Small Equipment Center (Sapporo City)
Closed branches: Aomori Equipment Center (Aomori City, Aomori Prefecture)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 acquired the Construction Equipment Business Division from YAMAMOTO CO., LTD. on April
30, 2020.
5) Succession to rights and obligations concerning the businesses of other corporations etc. byabsorption and merger or absorption and division
The Company had no material items to report.
6) Acquisition or disposal of shares, other equity or subscription rights to shares of other companies
The Company acquired all of the shares of SOOKI HOLDINGS Co., Ltd. on September 30, 2020 tostrengthen its measuring instrument business domain, and SOOKI HOLDINGS Co., Ltd. became aconsolidated subsidiary of the Company.

(3) Financial position and profit and loss in the current business period and three
immediately prior business periods(Millions of yen except per share data, which are in yen)

56th Business Period

Category

53th Business Period

54th Business Period

55th Business Period(current consolidated fiscal(Business Period ended(Business Period ended(Business Period endedyear)

October 2017)

October 2018)

October 2019)(Business Period ended
October 2020)

Net sales

158,428

168,188

180,694

179,053

Ordinary income

17,193

17,925

18,277

14,268

Profit attributable to10,744

11,857

11,4308,466

owners of parent
Net income per share

304.05335.54295.30221.45

Total assets

227,155

241,374

268,182

300,362

Net assets

91,788102,031

121,779

126,188

Net assets per share

2,440.41

2,707.49

2,981.68

3,150.30(4) Issues to be Addressed by the Company
With the economic outlook remaining uncertain due to such factors as the spread of the novel coronavirus
disease (COVID-19), the situation is unpredictable.
In the construction equipment rental business, which is a core business of the Kanamoto Group, it isimportant to select assets that match the characteristics of sales areas and customers’ needs. Based on thecollected data, the Company must build an asset portfolio structure aimed at maximizing operational
efficiency and establish a strong 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 atrend of mergers and acquisitions due to a further increase in distinction and selection. The Company will
make efforts to develop employees with the knowledge 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 to become a general
rental company, we will strengthen cooperation with the Group companies and relationships with alliancecompanies to increase synergy effects between the Group.

2) Deepen asset strategies
In introducing 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 thecomposition of the assets to be introduced and appropriate amount thereof by thoroughly examining themarket and earnings characteristics not only at present, but also looking forward.
3) Optimizing Maintenance Costs
Maintaining and improving 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 andoptimizing the expertise of the Group in terms of expenditures.

4) Promotion of overseas businessIn addition to strengthening sales activities in the countries whose markets we have currently entered, we
also seek to increase profitability through thorough asset and revenue management.

(5) Main businesses (As of October 31, 2020)
Activities

Main products and services

Business related to the

Rental and sale of equipment and instruments for use in construction, temporary

Construction Equipment

materials for construction use, safety products for the construction industry,

Rental Division

measuring instrument and modular housing units for temporary use
Sale of steel products such as steel bar, steel plate and round bar, contract
construction, rental and sale of computers and computer peripheral equipment、

Other Businesses

Rental and sales of social-welfare-service and nursing-care equipment(6) Main offices of the Kanamoto Group (As of October 31, 2020)
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 located in 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)
Business related to theConstruction Equipment
Rental Division

RegionKanamotoJapan

Overseas

Other Businesses

Consolidated
subsidiaries

Kanamoto

Consolidated
subsidiaries

Hokkaido

66

23

3

0

Tohoku

56

12

0

0

Kanto

38

28

1

3

Chubu

23

9

0

0

Kinki

8

18

0

9

Chugoku

3

3

0

11

Shikoku

4

1

0

0

Kyushu

3

82

0

22

China

0

1

0

0

Australia

0

9

0

0

Total

387

49

2) Number of Kanamoto Group employees
Number of
employees
Business related to the Construction Equipment Rental Division
Other Businesses

3,168
305

203

All companies (shared)

3,676

Total

Notes：1. Figures are the number of full-time employees and do not include directors, temporary or parttime employees.
2. The number of employees increased by 395 compared to the end of the previous fiscal year.
This is mainly due to the increase in number of employees by 146 due to the consolidation of
the SOOKI HOLDINGS Co., Ltd. Group and by 93 due to the consolidation of the KANAMOTO
AUSTRALIA HOLDINGS PTY LTD Group in the current consolidated fiscal year.
3. Employees designated as “All companies (shared)” are individuals affiliated with management
departments who cannot be classified in a specific segment.

3) Number of Kanamoto employees
Number of employees

Change compared withend of prior fiscal year

1,999

Average length of

Average age

service38.2＋60

11.0 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(Unit: Millions of yen; Thousands of yuan)

Kanamoto’s
Company name

Capitalownership

Main activities(%)
Rental and sale of furniture, fixtures andAssist Co., Ltd.

136

100.0

Kanatech Co., Ltd.

100

100.0

Kanki Corporation

99

93.6

Kyushu Kensan Co., Ltd.

70

90.1

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

safety products
Design and sale of modular housing units for
temporary use
Rental and sale of construction equipment
Rental and sale of construction equipment
centered on foundation equipment

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

NISHIKEN CO., LTD.

1,049

77.6

temporary materials for construction use,social-welfare-service and nursing-careequipment
Unite Co., Ltd.

1,144

66.9

Rental and sale of road construction
equipment, road construction works
Developing a business in the rental anddesign, manufacture and sale of specialized

KG Flowtechno Co., Ltd.

20

100.0

equipment used for projects such as ground
improvement work and the construction ofunderground structures

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

2,376

100.0

Rental and sale of construction equipment

5,687

100.0

Holding Company

Note：1. There are no specified wholly-owned subsidiaries as of the end of this fiscal year.
2. The holding ratio in Kanki Corporation and NISHIKEN CO., LTD. is calculated excluding treasury shares.

(8) Primary lenders and amount of borrowing (As of October 31, 2020)
Financial institution

Loan balance(Millions of yen)

MUFG Bank, Ltd.

5,885

North Pacific Bank, Ltd.

4,640

Mizuho Bank, Ltd.

3,775

The Hokkaido Bank, Ltd.

3,720

The 77 Bank, Ltd.

3,675

JA - Hokkaido Shinren

3,115

The Norinchukin Bank

2,820

The Aomori Bank, Ltd.

1,305

The Bank of Fukuoka, Ltd.

1,075

THE NISHI-NIPPON CITY BANK, LTD.

1,075

(9) Basic Policy Concerning Distribution of Earnings and Dividends for the Consolidated
Fiscal Year under Review and Next Consolidated Fiscal Year
Distribution of earnings to shareholders is a key management issue. The dividend policy of Kanamoto is toprovide shareholders with a consistent and stable dividend
regardless of the business environment. Furthermore, the Company aims to implement profit distribution inline with earnings performance. Moreover, it is the basic policy of Kanamoto to sufficiently build up its retained
earnings, which is essential for strengthening financial position and to implement aggressive businessexpansion.
For the fiscal year ended October 2020, the Board of Directors has decided to pay a
year-end dividend of ￥40 and an annual dividend of ￥65 per share (which includes aninterim dividend of ￥25).
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, 2020)
1) Total number of shares authorized

130,000,000 shares

2) Shares issued and outstanding

38,742,241 shares(including 939,142 shares of treasury stock)3) Number of shareholders

9,5364) Principal shareholders (ten largest)
Number ofPercentage ofshares held

total(‘000 shares)(%)

Custody Bank of Japan, Ltd. (Trust account)

3,483

9.21

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

1,486

3.93

ORIX Corporation

960

2.54

Kanamoto Capital Company

915

2.42

The Hokkaido Bank, Ltd.

888

2.35

Tokio Marine & Nichido Fire Insurance Co., Ltd.

802

2.12

North Pacific Bank, Ltd.

763

2.02

Custody Bank of Japan, Ltd. (Trust account 5)

702

1.86

SSBTC CLIENT OMNIBUS ACCOUNT

698

1.85

Custody Bank of Japan, Ltd. (Trust account 9)

668

1.77

Shareholder nameNote：1. Percentage of total is calculated excluding treasury shares (939,142 shares).
2. The Company holds treasury share numbering 939,142 hundred shares. However, the Company
is excluded from the above list of Principal shareholders.

5) Other important matters concerning stocks
Pursuant to a resolution made at the board of directors' meeting held on March 17, 2020, the Company
acquired 935,800 shares of treasury stock between March 18, 2020 and June 17, 2020 (in terms of tradedates) through buying on the market.

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

4. Matters Concerning Company Directors (As of October 31, 2020)(1) Summary of directors and auditors
Name

Position and duties

Main concurrent positions at other entities

KanchuChairman of the Board and Representative

Chairman of the Board, Kanamoto (China)

Kanamoto

Director

Investment Co., Ltd.
President and Representative Director, Toyo
Industry Co., Ltd.
Chairman of the Board and Representative
Director, Unite Co., Ltd.
Chairman of the Board and Representative
Director, KG Flowtechno Co., Ltd.

TetsuoKanamoto

President and CEO, Corporate Officer; andPresident and Representative Director, Soki

GeneralHoldings Co., Ltd.

Manager,Business

Coordination

Headquarters

Chairman of the Board, KANAMOTO (HK) CO.,LTD.
Representative Director, Kanamoto & JP Nelson
Equipment (S) PTE. Ltd.
President and Representative
Director,Kanamoto Australia Holdings PTY.
Ltd.

Hitoshi

Director, Corporate Officer; and Division

President

NaritaManager, Management Planning Division

Kanatech Co., Ltd.

Director,

Corporate

Officer;Manager,

Construction

Equipment

Division
RentalTatsuoDivision; Regional Manager, Construction

Kanamoto

Equipment Rental Division Hokkaido Region;and Manager in charge of Steel Sales
Division
Director, Corporate Officer; Deputy Division

MasakazuManager,

Construction

HirataDivision;andDivision

Equipment

RentalManager,

Used

Equipment Sales Division
Hiroyuki
Isono

Director,

Corporate

Officer;

DivisionManager, Accounting Division; Manager, Bill
Collection Center

andRepresentative

Director,Yuichi Asano

Director, Corporate Officer; and Division
Manager, Credit Management Division
Director,

Corporate

Kazunori

Manager

Human

Hashiguchi

GeneralManager,

Officer;

Division

Resources

Division;

Business

Development

OfficeSusumu
Naito
Eiji

Director (Outside Director)

Director (Outside Director)

Arita
Motoki
Yonekawa
Ayako
TabataEichu
Kanamoto
NaoyukiYokotaNoriakiIkushima
KatsunoriMatsushita
YasushiIshiwaka

Director (Outside Director)

Director (Outside Director)

Chairperson,

SocialMedicalCorporation

Hokuyukai
LawyerStanding Corporate Auditor

Standing Corporate Auditor

Auditor (Outside Auditor)

Auditor (Outside Auditor)

Auditor (Outside Auditor)

Certified public accountant

Notes: 1. Directors Susumu Naito, Eiji Arita, Motoki Yonekawa and Ayako Tabata are Outside Directors.
2. Corporate Auditors Noriaki Ikushima, Katsunori Matsushita and Yasushi Ishiwaka are Outside
Corporate Auditors.
3. Corporate Auditor Katsunori Matsushita has many years of experience in the banking business, andhas considerable knowledge of finance and accounting.
4. Corporate Auditor Yasushi Ishiwaka is a certified public accountant with considerable knowledge offinance 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 and Ayako Tabata as “independent officers” as provided by the rules, etc., of bothexchanges.
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 of Corporate Auditors Noriaki Ikushima,

Katsunori Matsushita and Yasushi Ishiwaka as “independent officers” as provided by the rules, etc., ofboth exchanges.
7. Based on the provision of Article 427 paragraph 1 of the Companies Act, the Company has enteredagreements with its outside directors and outside auditors that 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 for damages based on said agreement is the amount provided by the law.

(2) Total remuneration and other amounts paid to Directors and Auditors
Classification

Number of compensatedCompensation amountindividuals(Millions of yen)

Director

11(2)

101(3)

Auditor (Outside Auditor)

6 (4)

30 (4)

Total

17(6)

132 (7)

Notes：1. Two Directors (Outside Directors) who received no remuneration are not included in the compensatedindividuals indicated above.
2. Total compensation paid to Directors does not include ￥87 million equivalent to the employee salary
portion (including bonuses) paid to Directors serving concurrently as employees.
3. The maximum compensation for Directors was established at a maximum annual amount of ￥240
million (however, not including the employee salary portions) by a resolution of the 26th Regular
General Meeting of the Shareholders convened onJanuary 24, 1991.
4. The maximum compensation for Auditors was established at a maximum annual amount of ￥50
million by a resolution of the 42nd Regular General Meeting of the Shareholders convened on
January 26, 2007.

(3) Matters concerning Outside Directors
1) Concurrent posts held by Company executives including positions at other companies
Director Motoki Yonekawa is the Chairperson of Social Medical Corporation Hokuyukai. There is no special
relationship between Social Medical Corporation Hokuyukai and the Company.

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
Director

Name

Activities

SusumuAttended five of the six Board of Directors meetings held during the fiscal year andNaito

appropriately

contributed

thenecessaryadviceandproposalsconcerningresolutions and discussions.
After inauguration attended all of the five Board of Directors meetings held during
Director

Eiji Arita

the fiscal year and appropriately contributed the necessary advice and proposals
concerning resolutions and discussions.

Director

Director

Motoki
Yonekawa

Ayako
TabataAttended five of the six Board of Directors meetings held during the fiscal year andappropriately

contributed

thenecessaryadviceandproposalsconcerning

resolutions and discussions.
After inauguration attended all of the five Board of Directors meetings held during
the fiscal year and appropriately contributed the necessary advice and proposals
concerning resolutions and discussions.
Attended all of the six Board of Directors meetings and all of the eight Board ofAuditor

NoriakiIkushima

Corporate Auditors meetings held during the fiscal year, and appropriately
contributed the necessary advice and proposals based on his experience
involvement in administration and management through his participation inmunicipal government.
Attended all of the six Board of Directors meetings and all of the eight Board ofAuditor

KatsunoriMatsushita

Corporate Auditors meetings held during the fiscal year, and appropriately
contributed the necessary advice and proposals based on his many years of
employment and experience at financial institutions and his experience as astanding auditor at other companies.
After inauguration attended all of the five Board of Directors meetings and all ofAuditorYasushithe four Board of Corporate Auditors meetings held during the fiscal year andIshiwaka

appropriately contributed the necessary advice and proposals based mainly on his
expert perspective as a certified public accountant.

Note：In addition to the above, to achieve more rapid decision-making the Company implemented resolutions inwriting 14 times based on the provision of Article 370 of the Companies 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 thecurrent fiscal year
Total amount of cash and other financial interests Kanamoto and its subsidiarycompanies will pay to the Company’s independent auditors

45

63

Note：1. The amount of compensation and other benefits pertaining to the current fiscal year is reported inthese total amounts because the amounts of the audit fees etc. for audits based on the Companies
Act and audits based on the Financial Instruments and Exchange Act are not classified separately andcannot 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 theaccounting 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, as business outside of the business set forth in Article 2 paragraph 1 of the Certified Public
Accountants Act, has commissioned the agreed procedural business to the accounting auditor, and is paying
a fee for this.

(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 no prospect of improvement, the Audit
Committee shall dismiss the accounting auditor by unanimous decision.
Furthermore, the Board of Corporate Auditors shall decide whether to dismiss or refuse to reappoint theaccounting auditor in cases that the Board of Corporate Auditors judges that 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 and independence 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 April 23, 2015, the Company has resolved to partiallyrevise its "Basic Policy on Establishment of an Internal Control System." In conjunction with this, theCompany has also revised its system to ensure that Company directors comply with laws and the Company’s
Articles of Incorporation in the execution of their duties and its systems to ensure that other Company
operations are appropriate. A summary of the Company’s decisions concerning the above revisions isprovided below.

1) System to ensure directors and employees comply with laws and the Articles ofIncorporation in the execution of their duties
Kanamoto Company, Ltd. and its subsidiaries have prepared Ethics Guidelines as part of 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 for compliance 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 toresolve problems quickly when consultations or reports are received directly from employees and otherindividuals, 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 tothe 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 execution of directors’
dutiesKanamoto retains documents and various information in accordance with laws and ordinances and its
internally established document administration regulations and document retention rules. Information iscontrolled in accordance with internal information management regulations and general data management
rules, and personal data are administered in accordance with the Kanamoto Rules on Personal Data
Protection and the Company’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 thebusiness activities of each division, and prepared systems to avoid such risks. This has created a systemcapable of clarifying the authority and responsibilities of each division, supervising risk management
conditions throughout the organization 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 makeflexible decisions concerning the execution and supervision of management strategies and the Company’sbusiness 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 and medium-term future, which gives the managers ofeach 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 at achieving its
goals. Kanamoto has also introduced the corporate officer system to accelerate management decisionmaking and clarify supervisory authority and responsibility 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 the corporate group
comprised of the parent company and subsidiaries
To apply Kanamoto’s Ethics Guidelines correspondingly to each company in the Kanamoto Group, theCompany has decided to enlarge the scope of the Compliance Committee and the consultation and reporting
system to every group firm, to ensure the effectiveness of business activities is as extensive as possible.
In addition, in accordance with the provisions of the Financial Instruments and Exchange Act, theCompany 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 andoperating process control activities, create internal control systems that enable the Company to makeproper and effective assessments and conduct appropriate operations. Furthermore, under Kanamoto’s
internal management system concerning financial reporting, each organization (individual) has affirmed thefollowing 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 the financial 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, theeffectiveness of the internal controls related to financial reporting at Kanamoto and its affiliated companies onbehalf of the Company’s managers in accordance 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 with auditors’ activities
Kanamoto currently does not employ any individuals to assist the auditors in their activities, but should it
become necessary, the Company will hire audit staff. During a period the auditors specify, the management
authority for the nominated employees will be transferred to the auditors, and the employees will notreceive instructions or orders from the Company’s directors, thereby ensuring the effectiveness of
instructions from auditors.

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

8) System for directors and employees to report to the auditors, other systems 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 the Board of Directors,
and also attend important meetings and committees, in order to understand other important decisions andthe circumstances of execution of the Company’s business activities. If the directors and employees ofKanamoto 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 and request for managerial
decision, and if necessary can request explanations from the directors and employees. Those who reported
to the auditors shall not be treated unfavorably on the grounds of giving such report.
The auditors also meet regularly with the president and representative director, to exchange opinions
concerning issues the Company should address and important audit matters. After audits are completed, theInternal Control and Auditing Office promptly submits an Auditors’ Report concerning the audit results to thepresident and representative director and the auditors.
The auditors and the Internal Control and Auditing Office also exchange information and cooperate inother 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 theexecution of auditors' duties
In regards to procedures for prepayment or reimbursement of expenses arising from execution ofauditors' duties and processing of expenses or liabilities arising from execution 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 forth provisions to block alltransactions and relationships with antisocial forces, individuals and groups that threaten the order andsafety 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 such as internal training. Moreover, in an emergency the Company will cooperate with thepolice authorities having jurisdiction, its advising attorney and other institutions and individuals, toorganizationally block and eliminate unwarranted demands from antisocial elements.

(2) Operating Effectiveness of Internal Controls
In accordance with the provisions of the Financial Instruments and Exchange Act, Kanamoto and its
subsidiaries evaluate the design and operating effectiveness of internal controls for each period and havethe accounting auditor conduct audits on the appropriateness.
In addition, for the purpose of maintaining and enhancing the level of control, the Internal Control and
Auditing Office conducts audits of Kanamoto and its affiliated companies for each period, and whennecessary, 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

56th Business Period
From November 1, 2019
to October 31, 2020

Kanamoto Co., Ltd.

Consolidated Balance Sheet(As of October 31, 2020)( Millions of Yen)
Classification

AmountClassification(Assets)
Current assets

Amount(Liabilities)
120,952

Current liabilities

87,606

Cash and deposits

48,563

Notes and accounts payable-trade37,975

Notes and accounts receivable trade41,451

Short-term loans payable

13,977

Electronically recorded monetaryclaims - operating

6,166

Current portion of bonds payable

Merchandise and finished goods

1,205

Lease obligations

1,342

44

Uncompleted construction
expenditure

148

Income taxes payable

2,401

Raw materials and supplies

1,234

Provision for bonuses

1,462

construction machine parts

19,918

Accounts payable-other

25,489

Other

2,495

Other

4,913

Allowance for doubtful accounts－230

Noncurrent liabilities
Long-term loans payable

86,56730,082

Total non-current assets

179,410

Bonds payable

24

Property, plant and equipment

156,164

Lease obligations

2,857
52,246

Rental equipment

98,557Long-term accounts payable-other

Buildings and structures

16,510Net defined benefit liability

498

Machinery, equipment and vehicles

1,585

Asset retirement obligations

545

Deferred tax liabilities

221

Other

91

Tools, furniture and fixtures
Land

481
37,421

Lease assets
Construction in progress
Intangible assets

29

Total Liabilities

1,577
8,954

174,174(Net Assets)
Shareholders’ equity

117,744

Goodwill

7,499

Capital stock

17,829

Other

1,455

Capital surplus

19,324Retained earnings

82,599

8,974

Treasury stock－2,009Deferred tax assets

2,377

Accumulated othercomprehensive income

1,346

Other

3,557

Valuation difference on available-forsale securities

1,522

Allowance for doubtful accounts－618

Foreign currency translation
adjustment－126

Remeasurements of defined benefit
plans

－49

Investments and other assets
Investment securities

14,291

Minority interests

Total Assets

300,362

7,097

Total Net Assets

126,188

Total liabilities and net assets

300,362

Consolidated Statement of Income(From November 1, 2019 to October 31, 2020)(Millions of Yen)
Classification

AmountNet sales

179,053

Cost of sales

127,925

Gross profit

51,128Selling, general and administrative expenses

36,877

Operating income

14,250Non-operating income

740

Interest income and dividends

215

Insurance income

77

Rent income

86

Temporary transfer charges income

91

Reversal of allowance for doubtful accounts

28

Other

241

Non-operating expenses

722

Interest expenses

82

Foreign exchange losses

75

Loss on lease cancellation

60

Provision of allowance for doubtful accounts

340

Other

163

Ordinary income

14,268Extraordinary income

30

Gain on sales of non-current assets

17

Subsidy income

12

Extraordinary loss

567

Loss on sales and retirement of noncurrent assets

206

Loss on valuation of investment securities

171

Loss on valuation of shares of subsidiaries andassociates

188

Income before income taxes and minority interests

13,731

Income taxes-current

4,785

Income taxes-deferred

－381

4,403

Income before minority interests

9,327

Minority interests in income

860

Profit attributable to owners of parent

8,466

Consolidated statements of income and consolidated statements of comprehensive
incomeConsolidated statements of income
Fiscal year ended October 31, 2020
(Millions of yen)
Shareholders' equity
Capital stock
Balance at beginning ofcurrent period

Capital surplus

17,829Retained earnings

19,324

Total shareholders'

Treasury shares

76,638equity－9113,783

Changes of items during
periodDividends of surplus
Profit attributable toowners of parent
Change in ownershipinterest of parent due to－2,505－2,505

8,466

8,466

－0

transactions with noncontrolling interests－0

Acquisition of treasury－2,000stock－2,000Net changes of items otherthan shareholders' equity–

Total changes of items

–

－0

5,960

－2,0003,960

17,82919,324

82,599－2,009117,744

during period
Balance at end of current
periodAccumulated other comprehensive income
Valuationdifference on
available-forsale
securities
Balance at beginning ofcurrent period

1,918

Deferred

Total

Foreign

gains orlosses on

currencytranslation

hedgesadjustment
0－192

Remeasureme accumulated
nts of defined
benefit plansothercomprehensi

Noncontrollinginterests

Total net
assetsve income
－2

1,723

6,272

121,779

Changes of items during
periodDividends of surplus
Profit attributable toowners of parent
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Acquisition of treasurystock
Net changes of items otherthan shareholders' equity
Total changes of items
during period
Balance at end of current
period–－2,505

–

8,466

–

－0

–

－2,000

－395

－0

66

－46

－376

825

448

－395

－0

66

－46

－376

825

4,409

1,522

–

－126

－49

1,346

7,097

126,188

The Accounting Auditor’s Report of Consolidated Financial Statements
Independent Auditor’s Report
December 18, 2020
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 the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated
statement of income, the consolidated statement of changes in equity and the notes to theconsolidated financial statements, of Kanamoto Co., Ltd. (“the Company”) applicable to the fiscal year
from November 1, 2019 to October 31, 2020.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position and results of operations of the Kanamoto Group, which consisted of theCompany and its consolidated subsidiaries, in the fiscal year under review in accordance withaccounting 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
Audit of the Consolidated Financial Statements section of our report. We are independent of theCompany 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 our otherethical responsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
As stated in the notes (Changes in accounting policies that are difficult to distinguish from changes inaccounting estimates), some domestic consolidated subsidiaries previously used the declining-balancemethod for depreciation of rental assets, but have switched to the straight-line method from thecurrent consolidated fiscal year.
This matter does not affect our opinion.

Responsibilities of Management, Corporate Auditors and the Board of Corporate Auditors for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements 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 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 whether
it is appropriate to prepare the consolidated financial statements with the assumption of the Group’s
ability to continue as a going concern and disclosing, as required by accounting principles generally
accepted in Japan, matters related to going concern.
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 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 toissue an auditor’s report that includes our opinion 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 the audit in order todesign 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 theGroup’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
the consolidated financial statements and, based on the audit evidence obtained, whether amaterial uncertainty exists related to events or conditions that may cast significant doubt on theGroup’s ability to continue as a going concern. If we conclude that a material uncertainty exists, weare 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 on material 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 ourauditor’s report. However, future events or conditions may cause the Group to cease to continue asa going concern.
• Evaluate whether the presentation of the consolidated financial statements and the notes thereto
are in accordance with accounting standards generally accepted in Japan, as well as evaluate theoverall presentation, structure and content of the consolidated financial statements, including therelated notes thereto, and whether the consolidated financial statements fairly represent theunderlying transactions and accounting events.

• Obtain sufficient and appropriate audit evidence regarding the financial information of theCompany 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 theconsolidated 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 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 wehave complied with the ethical requirements in Japan regarding independence that are relevant to our
audit of the financial statements, and communicate with them all relationships and other matters that
may reasonably be thought 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 the Certified Public AccountantsAct.

Financial Statements

55th Business Period
From November 1, 2019
to October 31, 2020

Kanamoto Co., Ltd.

Balance Sheet(As of October 31, 2020)
Classification

Amount( Million of Yen)
Classification(Assets)
Current assets

Amount(Liabilities)
80,10561,719Current liabilities

Cash and deposits

30,761

Notes payable-trade

20,910Notes receivable-trade

5,664

Accounts payable-trade

6,152

Electronically recorded monetaryclaims – operating

5,088

Short-term loans payable

9,860

Accounts receivable, trade19,449

Income taxes payable

Merchandise and finished goods

947

298

Provision for bonuses

Costs on uncompleted
construction contracts

58

Accounts payable-otherRaw materials and supplies

756

Accrued expenses

463

Construction machine parts

16,260Notes payable-facilities

990

Prepaid expenses

325

Short-term loans receivable

693

Other

804

Allowance for doubtful accounts–55

Noncurrent assets
Property, plant and equipment

151,904

1,439

Noncurrent liabilities

66,487Long-term loans payable

23,490Long-term accounts payable-other

42,655

Asset retirement obligations

341

114,062

Rental equipment

65,587

Buildings

9,610

Structures

2,465

Machinery and equipment

1,050

Vehicles and delivery equipment

41

Tools, furniture and fixtures

246

Land

33,672

Construction in progress

1,388

Intangible assets

Other

769
20,186

Total Liabilities

128,207(Net Assets)
Shareholders’ equity
Capital stock

102,289
17,829

Capital surplus

19,337

Legal capital surplus

18,950

Other capital surplus

387

876

Retained earnings

67,130Software780

Legal retained earnings

1,375

Telephone subscription right20

Other retained earnings

76

Reserve for advanced depreciationof noncurrent assets

Other
Investments and other assets

22

General reserve

57,731

Investment securities

4,732

Retained earnings brought

8,001

Stocks of subsidiaries andaffiliates

28,849Treasury stock–2,009Valuation and translation
adjustments

1,512

Investments in capital

36,96565,75510Long-term loans receivable

1,764

Other

2,614

Allowance for doubtful
accounts–1,007

Total Assets

232,009

Valuation difference on
available-for-sale securities

Total Net Assets

Liabilities and Total Net Assets

1,512

103,802232,009

Statement of Income(From November 1, 2019 to October 31, 2020)(Million of Yen)
Classification

AmountNet sales

118,654

Cost of sales

88,411Gross profit

30,243

Selling, general and administrative expenses

22,072

Operating income

8,170

Non-operating income

1,082Interest income and dividends

269

Rent income

329

Temporary transfer charges income

210

Reversal of allowance for doubtful accounts

56

Other

216

Non-operating expenses

549

Interest expenses

40

Foreign exchange losses

75

Provision of allowance for doubtful accounts

257

Other

176

Ordinary income

8,702

Extraordinary income

15

Gain on sales of noncurrent assets

3

Subsidy income

12

Extraordinary loss

462

Loss on sales and retirement of noncurrent assets

101

Loss on valuation of investment securities

171

Loss on valuation of shares of subsidiaries and associates

188

Income before income taxes

8,256

Income taxes-current

2,620

Income taxes-deferred-221

Net income

2,399
5,856

Statement of Changes in Net Assets(From November 1, 2019 to October 31, 2020)(Million of Yen)
Shareholders’ equity
Retained earnings

Capital surplus

Other retained earnings

Capital stock
Legal capital

Other capital

Total capitalsurplussurplussurplusReserve forLegal retained
earnings

Retained

advanced

Generalearnings

depreciation ofreservebrought

noncurrent assets

Balance at beginning of current period

17,82918,950387

19,337

1,375

Total retained
earnings

forward22

51,731

10,65063,780Changes of items during period
Provision of general reserve－–6,000–

Dividends of surplus－–2,505-2,505

Profit

－

5,856

5,856

Acquisition of treasury stock－－

Net changes of items other thanshareholders’ equity－－

Total changes of items during period
Balance at end of current period

－

－

－

－

－

－

6,000

–2,6493,350

17,82918,950387

19,3371,375

2257,731

8,001

67,130Shareholders' equity
Treasury stock

Balance at beginning of current period

6,000

–9

Valuation and translation adjustments

Total

Valuation difference on

Total valuation and translation

shareholders’equity

available-for-sale securities

adjustments

100,938

1,884

Total net assets

1,884

102,823–－–

Dividends of surplus-2,505－-2,505

Profit

5,856

－

5,856

–2,000－–2,000Changes of items during period
Provision of general reserve

Acquisition of treasury stock–2,000Net changes of items other thanshareholders’ equity

－

–371

–371

–371

Total changes of items during period–2,000

1,350

–371

–371

978

Balance at end of current period–2,009102,289

1,512

1,512

103,802

The Accounting Auditor’s Report of Financial Statements
Independent Auditor’s Report
December 18, 2020
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 theaccompanying financial statements, which comprise the balance sheet, the statement of income, thestatement of changes in equity, the notes to financial statements, and the supplementary schedules(collectively, “financial statements, etc.”) of Kanamoto Co., Ltd. (the “Company”), applicable to the56th Business Period from November 1, 2019 to October 31, 2020.
In our opinion, financial statements, etc. referred to above present fairly, in all material respects, thefinancial position and results of operations of Kanamoto Co., Ltd. in the fiscal year under review inaccordance 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
Audit of the 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 financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Responsibilities of Management, Corporate Auditors and the Board of Corporate Auditors for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in Japan; this includes the maintenance andoperation of such internal control as management determines is necessary to enable the preparationand fair presentation of financial statements that are free from material misstatement, whether due tofraud or error.
In preparing the financial statements, management is responsible for assessing whether it isappropriate to prepare the financial statements with the assumption of the Group’s ability to continue
as a going concern and disclosing, as required by accounting principles generally accepted in Japan,
matters related to going concern.
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
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in Japan; this includes the maintenance andoperation 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 tofraud or error.
In preparing the financial statements, management is responsible for assessing whether it isappropriate to prepare the financial statements with the assumption of the Group’s ability to continue
as a going concern and disclosing, as required by accounting principles generally accepted in Japan,
matters related to going concern.
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 Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion on the financial statements based on our audit from an independent
point of view. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate they could reasonably be expected to influence the decisions of users taken on thebasis of the 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 financial statements, whether due tofraud 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 sufficientand appropriate to provide a basis for our opinion.
• Consider, in making those risk assessments, internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances, while the purpose of the audit of
the 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 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
the 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 tocontinue 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
to the financial statements on material uncertainty are inadequate, to express a qualified opinion
with exceptions on the 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 theGroup to cease to continue as a going concern.
• Evaluate whether the presentation of the financial statements and the notes thereto are inaccordance with accounting standards generally accepted in Japan, as well as evaluate the overall
presentation, structure and content of the financial statements, including the related notes thereto,
and whether the 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 wehave complied with the ethical requirements in Japan regarding independence that are relevant to our
audit of the financial statements, and communicate with them all relationships and other matters that
may reasonably be thought 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 the Certified Public AccountantsAct.

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 56rd Business Period from
November 1, 2019 through October 31, 2020. After discussing the audit results based on the reports,
we have 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 theexecution of their duties, 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 Boardof Corporate Auditors and in compliance with the audit policy and audit plan, and gathering informationand striving to improve the audit environment, each Corporate Auditor performed audits according to
the following 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
as necessary.
(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 Boardof 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 thestatus of operation 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 andthe Company’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(Business Accounting Council, October 28, 2005), 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 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
the Company 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 oflaws or the Company’s Articles of Incorporation by any of the Directors in carrying out the duties
and responsibilities 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 behighlighted 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) 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, 2020
Kanamoto Co., Ltd.
The Board of Corporate Auditors
Standing Corporate Auditor
Standing Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor

Eichu Kanamoto
Naoyuki Yokota
Noriaki Ikushima
Katsunori Matsushita
Yasushi Ishiwaka

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