Report of Business Operations for the55th Business Period(Business Period ended October 2019) (Attachment to the
Notification and Invitation to the 54th Regular General Meeting of
the Shareholders)
From November 1, 2018 to October 31, 2019
1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Resultsa) Summary of consolidated fiscal year operating results (From November 1, 2018 to
October 31, 2019)
In the fiscal year under review, Japan’s economy maintained a moderate recovery trend,with continuous improvements in employment and income environments despite apparent
weaknesses in exports and production. However, the outlook for the business conditions
remained unclear due to foreign economic trends including Brexit issue, uncertainty over
governmental policies, effects of tensions regarding trade issues on the global economy, etc.
In the construction industry where the Kanamoto Group belongs, public sector investment
was solid, mainly in construction related to preventing and reducing damage from disasters
and maintenance, updates, etc. in response to the aging of social capital, and favorable
private sector construction investments were seen mainly in redevelopment projects, etc. inmajor metropolitan areas, while a chronic shortage of skilled construction workers,
persistently high material and equipment costs, and other conditions that demand close
attention persist.

In such circumstances, the Group moved forward aggressively with its regional strategy
and capital investment with the aim of ensuring earning opportunities for the entire Groupand achieving the “BULL55” medium-term vision (fiscal 2015 to fiscal 2019). Also, securing
and training the human resources who will lead the Group’s future is a priority issue in order
to commit to the long-term growth strategy and, anticipating the future of the overall
industry, the Group carried out personnel system reforms and other measures.

Consequently, in the fiscal year ended October 31, 2019 net sales rose 7.4% from theprior consolidated fiscal year level to ￥180,694 million. Operating profit increased 1.4% year
on year to ￥17,842 million, ordinary profit rose 2.0% to ￥18,277 million, and profit
attributable to owners of parent decreased 3.6% to ￥11,430 million.

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, rental
demand for construction equipment was solid as a whole, with transportation
infrastructure refurbishment related to the Tokyo Olympics and Paralympics,
large-scale redevelopment construction, construction projects related to national
resilience, etc. Further, the Group has worked to strengthen our response capabilities
by reconfiguring our existing rental equipment and augmenting our assets in order tostrengthen our support system for restoration and recovery from the natural disasters
that have been occurring one after another over recent years. As a result, sales byregion in this business were up 8.8% in the Hokkaido Region, down 2.0% in the Tohoku
Region, up 12.1% in the Kanto & Koushinetsu Region, up 8.8% in the Nishi-nihon
Region, and up 11.5% in the Kyushu & Okinawa Region.

In addition, used construction equipment sales increased 22.9% year-on-year, as
Kanamoto sold its equipment based on its initial plan in order to maintain a propercomposition of assets.

Reflecting

thesefactors,theKanamotoGroup

posted

net

sales

in

the

construction-related businesses of ￥161,831 million, an increase of 7.5% year-on-year,
and operating profit of ￥16,505 million, an increase of 0.9%.

[Other Businesses]
In the Company’s other businesses, net sales were up 6.9% from the same period of
the previous consolidated fiscal year to ￥18,862 million because of steady demand in
Kanamoto’s steel products-related, information and telecommunications-related, andwelfare-related businesses. Operating profit from these operations was up 7.9% to￥913 million.

(Millions of yen)

54th Business Period 55th Business Period Change from
Segment

Business PeriodBusiness Period

ended October 2018 ended October 2019prior year(%)

Business related to theConstruction Equipment

150,542

161,831

7.5

Other Businesses

17,646

18,862

6.9

Total

168,188

180,694

7.4

Rental Division(2) Financing activities
1) Funds Procurement
In the current consolidated fiscal year, capital increase through public offering, disposalof treasury shares by public offering, and capital increase through third-party allotment
took place as follows, and a total of ￥10,718 million was procured.

Number ofCategoryshares issued(‘000 shares)

Amount issued
per share(Yen)Amountprocured(Millions of yen)

Capital increase
through public

Payment date

2,250

3,152.40

7,092

750

3,152.40

2,364

400

3,152.40

1,260

November 28,
2018

offering
Disposal of treasury
sharesCapital increase
through third-party

November 28,
2018
December 19,

allotment

20182) Capital investment
Capital investment implemented by the Kanamoto Group during the current
consolidated fiscal year totaled ￥39,810 million. This included purchases of rental
equipment of ￥35,783million, and investments in assets used by the group, including theestablishment, relocation and expansion of branches, of ￥4,026 million.

< Main branches newly established in the Corporate Group >During the consolidated fiscal year under review, Kanamoto newly opened 8 branches
and closed 1 branch.
Kanamoto Co., Ltd.
New branches:

Hamamatsu Branch (Hamamatsu City, Shizuoka Prefecture)
Saku Branch (Saku City, Nagano Prefecture)
Naruse Dam Branch (Ogachi-gun, Akita Prefecture)
Kisarazu Branch (Kisarazu City, Chiba Prefecture)
Utsunomiya Chuo Branch (Utsunomiya City, Tochigi Prefecture)
Kyoto Branch (Kyoto City, Kyoto Prefecture)
Odawara Equipment Center (Odawara City, Kanagawa Prefecture)
Kitahiroshima Branch (Kitahiroshima City, Hokkaido)

Closed branches: Sanjo Branch (Sanjo City, Niigata 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 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 report.
6) 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)
55th Business Period

Category

52th Business Period

53th Business Period

54th Business Period(current consolidated(Business Period ended(Business Period ended(Business Period ended

fiscal year)

October 2016)

October 2017)

October 2018)(Business Period ended
October 2019)

Net sales

144,870

158,428

168,188

180,694

Ordinary income

14,405

17,193

17,925

18,277

8,098

10,744

11,857

11,430Net income per share229.16304.05335.54295.30Total assets

220,540

227,155

241,374

268,182

Net assets

81,434

91,788102,031

121,779

2,169.93

2,440.41

2,707.49

2,981.68

Profit attributable toowners of parent

Net assets per share

Note：The Group has applied the “Partial Amendments to Accounting Standard for Tax EffectAccounting” (ASBJ Statement No. 28, February 16, 2018) and relevant Guidances
effective from the beginning of the current consolidated fiscal year and total assets forthe 52nd to 54th Business Periods are stated reflecting the change in presentation, withthe amount after retroactive restatement.

(4) Issues to be Addressed by the Company
Currently, the core business of the Kanamoto Group is construction equipment rental.
Accordingly, on the back of its asset portfolio structure and scale, the Company must
establish a strong earnings structure supported by detailed operation. In addition, theCompany needs to expand areas and explore and target business domains in which
earnings are not substantially impacted by the domestic construction investment trend.

1) Strengthen human resources training, and also Kanamoto Group alliances
Human resources are an important driver of corporate growth. During the next several
years, intensified competition among companies, especially in the construction
equipment rental industry, is likely to reveal a clear distinction among companies andresult in poor performers falling to the wayside. Kanamoto plans to train its employees sothat they will possess the knowledge and skills fitting for people working at a leading
company in the construction equipment rental industry. The Company will also train
human resources that can immediately respond to business expansion in Japan andabroad.
Moreover, to expand business domains and areas, it is essential that Kanamoto fortify
Group company alliances and the relationships with alliance companies, based on which
Kanamoto will fully exert its comprehensive corporate vitality, leading to enhanced
synergy effects for the Group.

2) Deepen asset strategies
Customers’ needs and operational track records are certainly factors when selecting
which assets to introduce. However, after considering how the particulars of domestic
construction demand are changing, such as with respect to recent ICT techniques, forexample, we ultimately determine the appropriate amount and the composition of theassets to be introduced by thoroughly examining the market and earnings characteristics
of both the present and the future.

3) Continuous cost reductions
When introducing assets the Company utilizes a thorough benchmark system, andfurther aims to maintain and improve asset value by optimizing asset maintenance costs
based on its rental assets operating policies.

4) Promotion of overseas businessWe continue to promote sales activities, which are carried out in coordination withasset management and earnings management, in the countries whose markets we havecurrently entered, and at the same time, investigate the possibility of advancing into newareas and work to strengthen overseas bases.

(5) Main businesses (As of October 31, 2019)
Activities

Main products and services

Business related to the

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

Construction Equipment

temporary materials for construction use, safety products for theRental Division

construction industry 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

Other Businesses

equipment、 Rental and sales of social-welfare-service and nursing-careequipment(6) Main offices of the Kanamoto Group (As of October 31, 2019)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)
Business related to theConstruction Equipment
Rental Division

RegionConsolidated

KanamotoJapan

Overseas

Other Businesses

subsidiaries

Consolidated

Kanamoto

subsidiaries

Hokkaido

65

22

3

0

Tohoku

56

13

0

0

Kanto

38

25

1

3

Chubu

23

8

0

0

Kinki

8

15

0

9

Chugoku

2

2

0

11

Shikoku

4

1

0

0

Kyushu

2

74

0

22

China

0

1

0

0

Total

359

49

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

2,805

Other Businesses

286

All companies (shared)

190
Total

3,281

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 146 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
1,939

Change comparedwith end of prior

Average age

Average length ofservicefiscal year
74

38.0

10.8 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)Company name

CapitalKanamoto’s

Main activities

ownership (%)

Assist Co., Ltd.

136

100.0

Kanatech Co., Ltd.

100

100.0

Kanki Corporation

99

93.5

Kyushu Kensan Co., Ltd.

70

90.1

Daiichi Kikaisangyo Co., Ltd.

20

100.0

Toyo Industry Co., Ltd.

31

100.0

Rental and sale of furniture, fixtures and 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
Rental and sale of construction 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-careequipment

Unite Co., Ltd.

KG Flowtechno Co., Ltd.

1,144

66.9

20

100.0

Rental and sale of road construction equipment,road construction works
Developing a business in the rental and design,manufacture and sale of specialized equipmentused for projects such as ground improvement
work and the construction of undergroundstructures

Kanamoto (China)
Investment Co., Ltd.

CNY145,321

100.0

Rental and sale of construction equipment

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, 2019)
Financial institution

Loan balance(Millions of yen)

MUFG Bank, Ltd.

4,771

Mizuho Bank, Ltd.

3,035

North Pacific Bank, Ltd.

2,515

The Hokkaido Bank, Ltd.

2,135

The 77 Bank, Ltd.

1,910

JA - Hokkaido Shinren

1,590

The Norinchukin Bank

1,575

The Aomori Bank, Ltd.

1,220

The Akita Bank, Ltd.

985

The Bank of Fukuoka, Ltd.

985

(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 2019, the Board of Directors has decided to pay a
year-end dividend of ￥40 and an annual dividend of ￥65 per share (which includes aninterim 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 thecompany 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, 2019)1) Total number of shares authorized

130,000,000 shares

2) Shares issued and outstanding

38,742,241 shares(including 3,259 shares of treasury stock)3) Number of shareholders

8,7964) Principal shareholders (ten largest)
Number ofPercentage ofshares held

total(‘000 shares)(%)

Japan Trustee Services Bank, Ltd. (Trust account)

3,584

9.25

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

1,624

4.19

ORIX Corporation

960

2.48

Kanamoto Capital Company

915

2.36

The Hokkaido Bank, Ltd.

888

2.29

Tokio Marine & Nichido Fire Insurance Co., Ltd.

802

2.07

North Pacific Bank, Ltd.

763

1.97

Japan Trustee Services Bank, Ltd. (Trust account 9)

745

1.92

Japan Trustee Services Bank, Ltd. (Trust account 5)

626

1.62

Denyo Co.,Ltd.

625

1.61

Shareholder nameNote：Percentage of total is calculated excluding treasury shares (3,259 shares).

5) Other important matters concerning stocks
Based on a resolution at the Board of Directors meeting held on November 12, 2018,
the total number of issued shares increased by 2,650,000 shares as a result of theissuance of new shares for capital increases through a public offering with a payment
date of November 28, 2018 and through third-party allotment related to the sale byover-allotment with a payment date of December 19, 2018.

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

4. Matters Concerning Company Directors (As of October 31, 2019)(1) Summary of directors and auditors
Name

Main concurrent positions at other

Position and duties

KanchuChairmanoftheKanamoto

Representative Director

entities

Board

and

Chairmanofthe

Board,

Kanamoto(China) Investment Co., Ltd.
President and Representative Director,
Toyo Industry Co., Ltd.
Chairman

of

the

Board

and

Representative Director, Unite Co., Ltd.
TetsuoKanamoto

President and CEO, Corporate Officer;

Chairman

andRepresentative Director, KG Flowtechno

GeneralManager,Business

Coordination Headquarters

of

the

Board

and

Co., Ltd.
Chairman of the Board, KANAMOTO (HK)CO., LTD.
Representative Director, Kanamoto & JP
Nelson Equipment (S) PTE. Ltd.

Hitoshi

Director, Corporate Officer; and Division

President and Representative Director,

NaritaManager, Management Planning Division

Kanatech Co., Ltd.

Director,

Corporate

Officer;

DivisionManager, Construction Equipment Rental
TatsuoKanamoto

Division; Regional Manager, Construction
Equipment

RentalDivision

Hokkaido

Region; and Manager in charge of SteelSales Division
Director,
Masakazu
HirataDivision

Corporate

Officer;Manager,

DeputyConstruction

Equipment Rental Division; and Division
Manager, Used Equipment Sales Division

Hiroyuki
Isono
ManabuNagasakiDirector,

Corporate

Officer;

DivisionManager, Accounting Division; Manager,
Bill Collection Center
Director, Corporate Officer

Representative Director and President,
NISHIKEN CO., LTD.

Yuichi

Director, Corporate Officer; and Division

Asano

Manager, Credit Management Division
Director,

Corporate

Officer;

Division

Kazunori

Manager

Human

Resources

Division;

Hashiguchi

General Manager, Business Development
OfficeSusumuDirector (Outside Director)

Naito
Masayuki

Director (Outside Director)

OikawaMotoki
Yonekawa
Eichu
Kanamoto
NaoyukiDirector (Outside Director)

Chairperson, Social Medical Corporation
HokuyukaiStanding Corporate Auditor

Standing Corporate Auditor

YokotaAkio
Hashimoto
NoriakiAuditor (Outside Auditor)

LawyerAuditor (Outside Auditor)

Ikushima
KatsunoriMatsushita

Auditor (Outside Auditor)

Notes: 1. Directors Susumu Naito, Masayuki Oikawa and Motoki Yonekawa are Outside
Directors.
2. Corporate Auditors Akio Hashimoto, Noriaki Ikushima and Katsunori Matsushita are
Outside Corporate Auditors.
3. Corporate Auditor Katsunori Matsushita has many years of experience in the banking
business, and has considerable knowledge of finance and accounting.
4. 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, Masayuki Oikawa and Motoki Yonekawa as “independent
officers” as provided by the rules, etc., of both exchanges.
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 ofCorporate Auditors Akio Hashimoto, Noriaki Ikushima and Katsunori Matsushita as“independent officers” as provided by the rules, etc., of both exchanges.

6. Outside Corporate Auditor Akira Naoi passed away on April 29, 2019, and thus retired
from his office as Auditor on the same day.
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) Total remuneration and other amounts paid to Directors and Auditors
Classification

Number of compensatedCompensation amountindividuals(Millions of yen)

Director

12(1)112(1)

Auditor (Outside Auditor)

8 (6)28 (4)

Total

20(7)

141 (5)

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.
3. The maximum compensation for Directors was established at a maximum annual
amount of ￥240 million (however, not including the employee salary portions) by aresolution of the 26th Regular General Meeting of the Shareholders convened on
January 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 othercompanies
Director Motoki Yonekawa is the Chairperson of Social Medical Corporation Hokuyukai.
There is no special relationship between Social Medical Corporation Hokuyukai and theCompany.

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 five of the six Board of Directors meetings held during the

Director

Susumu Naito

fiscal year and appropriately contributed the necessary advice andproposals concerning resolutions and discussions.
Attended all of the six Board of Directors meetings held during the

Director

Masayuki Oikawa

fiscal year and appropriately contributed the necessary advice andproposals concerning resolutions and discussions.
Attended five of the six Board of Directors meetings held during the

Director

Motoki Yonekawa

fiscal year and appropriately contributed the necessary advice andproposals concerning resolutions and discussions.
Attended all of the six Board of Directors meetings and all of the eight

AuditorAkio Hashimoto

Board of Corporate Auditors meetings held during the fiscal year andappropriately contributed the necessary advice and proposals based
mainly on his expert perspective as an attorney-at-law.
Attended all of the four Board of Directors meetings and all of the six
Board of Corporate Auditors meetings held during the fiscal year until

AuditorAkira Naoi

resignation on April 29, 2019 and appropriately contributed thenecessary 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

Auditor

Noriaki Ikushima

held during the fiscal year, and appropriately contributed thenecessary advice and proposals based on his experience involvement in
administration and management through his participation in municipal
government.

After inauguration attended three of the four Board of Directors
meetings and three of the four Board of Corporate Auditors meetings
Auditor

Katsunori Matsushita

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 12 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

41

59

Note：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 plansby the accounting auditor, the status of its execution of duties in accounting andothers 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 businessto 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 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 April 23, 2015, the Company has
resolved to partially revise its "Basic Policy on Establishment of an Internal Control
System." In conjunction with this, the Company has also revised its system to ensurethat 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
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 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 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

and clarify

supervisory

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 thesevere 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
Kanamoto currently does not employ any individuals to assist the auditors in theiractivities, but should it become necessary, the Company will hire audit staff. During aperiod the auditors specify, the management authority for the nominated employees willbe transferred to the auditors, and the employees will not receive instructions or orders
from the Company’s directors, thereby ensuring the effectiveness of instructions fromauditors.

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 toreport 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 of the Financial Instruments and Exchange Act,
Kanamoto and its subsidiaries evaluate the design and operating effectiveness of internal
controls for each period and have the accounting auditor conduct audits on theappropriateness.
In addition, for the purpose of maintaining and enhancing the level of control, theInternal Control and Auditing Office conducts audits of Kanamoto and its affiliatedcompanies 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

55th Business Period
From November 1, 2018
to October 31, 2019

Kanamoto Co., Ltd.

Consolidated Balance Sheet(As of October 31, 2019)( Millions of Yen)
Classification

AmountClassification(Assets)
Current assets
Cash and deposits

Amount(Liabilities)
111,393

Current liabilities

78,51943,751

Notes and accounts payable-trade33,657

Notes and accounts receivable trade

39,574

Short-term loans payable

12,267

Electronically recorded monetaryclaims - operating

6,347

Lease obligations

Merchandise and finished goods

1,017

Income taxes payable

4,245

Uncompleted construction
expenditure

33

Provision for bonuses

1,320

Raw materials and supplies

800

Accounts payable-other

23,370construction machine parts

17,567

Other

2,772

Other

2,527

Allowance for doubtful accounts－225

Noncurrent liabilities

885

67,883Long-term loans payable

17,206

Lease obligations

1,800
48,043

Total non-current assets

156,789

Long-term accounts payable-other

Property, plant and equipment

141,084

Net defined benefit liability

285

Rental equipment

85,855

Asset retirement obligations

492

Buildings and structures

15,393

Other

55

Machinery, equipment and vehicles

1,451

Tools, furniture and fixtures
Land

471
37,211

Construction in progress

Intangible assets
Goodwill
Other

Total Liabilities

701

1,680
201
1,478

(Net Assets)
Shareholders’ equity
Capital stock

14,024

19,324
76,638Treasury stock
Accumulated othercomprehensive income

Deferred gains or losses on hedges

9,319

Foreign currency translation
adjustment

Deferred tax assets

1,714

Remeasurements of defined benefit
plans

Other

3,344

Allowance for doubtful accounts－353
268,182

17,829Retained earnings

Investment securities

Total Assets

113,783

Capital surplus

Valuation difference on
available-for-sale securities
Investments and other assets

146,403

Minority interests

－9
1,723
1,918

0
－192
－2
6,272

Total Net Assets

121,779

Total liabilities and net assets

268,182

Consolidated Statement of Income(From November 1, 2018 to October 31, 2019)(Millions of Yen)
Classification

AmountNet sales

180,694

Cost of sales

127,766

Gross profit

52,928Selling, general and administrative expenses

35,085

Operating income

17,842Non-operating income

815

Interest income and dividends

194

Insurance income

69

Rent income

80

Temporary transfer charges income

107

Reversal of allowance for doubtful accounts

14

Other

349

Non-operating expenses

380

Interest expenses

88

Foreign exchange losses

22

Stock issuance costs

46

Loss on lease cancellation

42

Other

181

Ordinary income

18,277Extraordinary income

74

Gain on sales of non-current assets

38

Subsidy income

19

Gain on sales of investment securities

15

Extraordinary loss
Loss on sales and retirement of noncurrent assets
Loss on valuation of shares of subsidiaries andassociates

627
189
438

Income before income taxes and minority interests

17,723

Income taxes-current

6,214

Income taxes-deferred－698

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

5,515

12,207777
11,430Consolidated statements of income and consolidated statements ofcomprehensive income
Consolidated statements of income

Fiscal year ended October 31, 2019

(Millions of yen)
Shareholders' equity
Capital stock
Balance at beginning of current
periodCapital surplus

Retained earnings

13,652

14,916

4,176

4,176

Treasury shares

67,086

Total shareholders'equity－2,12993,526

Changes of items during period
Issuance of new shares

8,353

Dividends of surplus－2,382－2,382

Change in scope of
consolidation

504

504

11,43011,430

Profit attributable to ownersof parent
Change in ownership interestof parent due to transactions

-13

－13

with non-controlling interests
Acquisition of treasury stock
Disposal of treasury shares

243

－0

－0

2,120

2,364

Net changes of items otherthan shareholders' equity–

Total changes of items during
periodBalance at end of current
period

4,176

4,407

9,552

2,120

20,257

17,82919,324

76,638－9113,783

Accumulated other comprehensive income

Balance at beginning of current
periodValuation

DeferredForeigndifference on
available-for-s

gains orlosses on

currencytranslation

ale securities

hedgesadjustment

2,148

0

－

ts of defined

Total
accumulated Non-controllin
g interests
otherbenefit planscomprehensiv

Remeasuremen

Total net
assetse income
5

2,153

6,351

102,031

Changes of items during period
Issuance of new shares

8,353

Dividends of surplus－2,382–

Change in scope of
consolidation

504

Profit attributable to ownersof parent
Change in ownership interestof parent due to transactions–

11,430–－13

with non-controlling interests
Acquisition of treasury stock－0

Disposal of treasury shares
Net changes of items otherthan shareholders' equity
Total changes of items during
periodBalance at end of current
period

2,364

–
－229

0

－192

－8

－430

－78

－509

－229

0

－192

－8

－430

－78

19,748

1,918

0

－192

－2

1,723

6,272

121,779

The Accounting Auditor’s Report of Consolidated Financial Statements
Independent Auditor’s Report
December 18, 2019
Kanamoto Co., Ltd.
To the Board of Directors,
Ernst & Young ShinNihon LLC
Kiyohiro Saito
Designated limited liability partner
Managing Partner
Certified public accountant
Mitsuhiro Fujimori
Designated limited liability partner
Managing Partner
Certified public accountant
Pursuant to Article 444, Section 4 of the Companies Act, we have audited theaccompanying consolidated financial statements, which comprise theconsolidated balance sheet, the consolidated statement of income, theconsolidated statement of changes in equity and the notes to the consolidated
financial statements, of Kanamoto Co., Ltd. (“the Company”) applicable to thefiscal year from November 1, 2018 to October 31, 2019.
Management’s Responsibility 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, and for designing and operating such internal
control as management determines is necessary to enable the preparationand fair presentation of the consolidated financial statements that are freefrom material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial
statements based on our audit from an independent perspective. We
conducted our audit in accordance with auditing standards generally acceptedin Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance as to whether the consolidated financial statements arefree from material misstatement.
An audit involves performing procedures to obtain audit evidence on theamounts and disclosures in the consolidated financial statements. The
procedures selected and applied depend on our judgment, including theassessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. The purpose of an audit of theconsolidated financial statements is not to express an opinion on theeffectiveness of the entity’s internal control, but in making these risk
assessments, we consider internal controls relevant to the entity’s preparationand fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances. An audit
also includes evaluating the appropriateness of accounting policies used, themethod of their application, and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of theconsolidated financial statements.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position and results ofoperations of the Kanamoto Group, which consisted of the Company and its
consolidated subsidiaries, in the fiscal year under review in accordance withaccounting principles generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company that should be disclosed in compliancewith the Certified Public Accountants Act.

Financial Statements

55th Business Period
From November 1, 2018
to October 31, 2019

Kanamoto Co., Ltd.

Balance Sheet(As of October 31, 2019)
Classification

AmountClassification(Assets)
Current assets( Million of Yen)
Amount(Liabilities)
78,67557,776

Current liabilities

Cash and deposits

30,534

Notes payable-trade

18,245

Notes receivable-trade

6,661

Accounts payable-trade

5,754Electronically recorded monetaryclaims – operating

5,523

Short-term loans payable

9,576

Accounts receivable, trade

19,184

Income taxes payable

3,014

Merchandise and finished goods

294

Provision for bonuses

779

Costs on uncompleted
construction contracts

31

Accounts payable-otherRaw materials and supplies

542

Accrued expenses

497

Construction machine parts

14,223

Notes payable-facilities

732

Other

456

Prepaid expenses

335

Short-term loans receivable

869

Other

547

Allowance for doubtful accounts–73

Noncurrent assets
Property, plant and equipment

135,389

Noncurrent liabilities

18,71953,465Long-term loans payable

13,925Long-term accounts payable-other

39,222

Asset retirement obligations

317

108,923

Rental equipment

61,583

Buildings

9,349

Structures

2,538

Machinery and equipment

1,030

Total Liabilities

111,241(Net Assets)

Vehicles and delivery equipment

33

Shareholders’ equity

100,938

Tools, furniture and fixtures

293

Capital stock

17,829

Capital surplus

19,33733,590Land
Construction in progress
Intangible assets

502

Legal capital surplus

18,950995

Other capital surplus

387

Software741

Telephone subscription right21

Legal retained earnings

1,375

232

Other retained earnings

62,404

Other
Investments and other assets

25,470Retained earnings

Reserve for advanced depreciation of
noncurrent assets

63,78022

Investment securities

5,462

General reserve

51,731

Stocks of subsidiaries andaffiliates

16,965Retained earnings brought
forward10,650Investments in capital10

Long-term loans receivable

1,620

Other

2,228

Allowance for doubtful
accounts–816

Total Assets

214,065

Treasury stock
Valuation andtranslation adjustments
Valuation difference on
available-for-sale securities

–9
1,884
1,884

Total Net Assets

102,823

Liabilities and Total Net Assets

214,065

Statement of Income(From November 1, 2018 to October 31, 2019)(Million of Yen)
Classification

AmountNet sales

121,965

Cost of sales

88,995Gross profit

32,970

Selling, general and administrative expenses

21,439Operating income

11,531Non-operating income

1,185Interest income and dividends

261

Rent income

318

Temporary transfer charges income

227

Reversal of allowance for doubtful accounts

78

Other

298

Non-operating expenses

265Interest expenses

44

Foreign exchange losses

14

Stock issuance costs

46

Other

160

Ordinary income

12,451

Extraordinary income

22

Gain on sales of noncurrent assets

6

Subsidy income

16

Extraordinary loss

440

Loss on sales and retirement of noncurrent assets

109

Loss on valuation of shares of subsidiaries and associates

331

Income before income taxes

12,033

Income taxes-current

4,165

Income taxes-deferred-532

Net income

3,632
8,400

Statement of Changes in Net Assets(From November 1, 2018 to October 31, 2019)(Million of Yen)

Shareholders’ equity
Retained earnings

Capital surplus

Other retained earnings

Capital stock
Legal capital

Other capital

Total capitalsurplussurplussurplusRetained

Reserve forLegal retained
earnings

advanced

Generalearnings

depreciation ofreservebrought

13,652

14,773

4,176

4,176

143

14,917

1,375

earnings

forwardnoncurrent assets

Balance at beginning of current period

Total retained

22

45,731

10,631

57,761

6,000–6,000–Changes of items during period
Issuance of new shares

4,176

Provision of general reserve–－

Dividends of surplus－-2,382-2,382

Profit

－

8,400

8,400

Disposal of treasury shares

243

243

－

－

－

Net changes of items other than shareholders’equityTotal changes of items during period

4,176

4,176

243

4,420

－

－

6,000

18

6,018

Balance at end of current period

17,82918,950387

19,3371,375

2251,731

10,65063,780Shareholders' equity
Treasury stock

Balance at beginning of current period–2,129Valuation and translation adjustments
Valuation difference on

Total valuation and translation

shareholders’equity

available-for-sale securities

adjustments

84,202

2,086

Total

Total net assets

2,086

86,288

8,353

－

8,353

–

－

–

-2,382－-2,382

8,400

－

8,400

－

2,364

–201

–201

–201

Changes of items during period
Issuance of new shares
Provision of general reserve
Dividends of surplus
Profit–0–0

Disposal of treasury shares
Net changes of items other thanshareholders’ equity

2,120

2,364

Total changes of items during period

2,120

16,736–201–201

16,534–9

100,938

1,884

1,884

102,823

Acquisition of treasury stock

Balance at end of current period–0The Accounting Auditor’s Report of Financial Statements
Independent Auditor’s Report
December 18, 2019
Kanamoto Co., Ltd.
To the Board of Directors,

Ernst & Young ShinNihon LLC
Kiyohiro Saito
Designated limited liability partner
Managing Partner
Certified public accountant
Mitsuhiro Fujimori
Designated limited liability partner
Managing Partner
Certified public accountant
Pursuant to Article 436, Section 2, Paragraph 1 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 financial statements, and the supplementary schedules, of Kanamoto Co.,
Ltd. (“the Company”) applicable to the 55rd Business Period from November 1, 2018 to October 31, 2019.
Management’s Responsibility for the Financial Statements and the Supplementary Schedules
Management is responsible for the preparation and fair presentation of the financial statements and the
supplementary schedules in accordance with accounting principles generally accepted in Japan, and fordesigning and operating such internal control as management determines is necessary to enable thepreparation and fair presentation of the financial statements and the supplementary schedules that are
free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the supplementary schedules
based on our audit from an independent perspective. We conducted our audit in accordance with auditing
standards generally accepted in Japan. Those standards require that we plan and perform the audit toobtain reasonable assurance as to whether the financial statements and the supplementary schedules arefree from material misstatement.
An audit involves performing procedures to obtain audit evidence on the amounts and disclosures in thefinancial statements and the supplementary schedules. The procedures selected and applied depend on
our judgment, including the assessment of the risks of material misstatement of the financial statements
and the supplementary schedules, whether due to fraud or error. The purpose of an audit of the financial
statements and the supplementary schedules is not to express an opinion on the effectiveness of theentity’s internal control, but in making these risk assessments, we consider internal controls relevant to
the entity’s preparation and fair presentation of the financial statements and the supplementaryschedules in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness, the method of their application, and the reasonablenessaccounting policies used by management and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements and the
supplementary schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the financial statements and the supplementary schedules referred to above present fairly,
in all material respects, the financial position and results of operations of Kanamoto Co., Ltd. in the fiscal
year under review in accordance with accounting principles generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company that should be disclosed in compliance 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 55rd Business Period from
November 1, 2018 through October 31, 2019. 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, 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 the Consolidated 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) 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, 2019
Kanamoto Co., Ltd.
The Board of Corporate Auditors
Standing Corporate Auditor

Eichu Kanamoto

Seal

Standing Corporate Auditor

Naoyuki Yokota

Seal

Outside Corporate Auditor

Akio Hashimoto

Seal

Outside Corporate Auditor

Noriaki Ikushima

Seal

Outside Corporate Auditor

Katsunori Matsushita

Seal