ｆAnnual Report 2022
Year ended March 31, 2022

CONTENTS
Operational Results
Management Policy
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows
Basis of Presenting Consolidated Financial Statements
Independent Auditor’s Report
Corporate information
Board of Directors and Statutory Auditors

2
8
10
12
12
13
14
15
54
57
58

Operational Results2

1. Operational Results(1) Analysis of Operational Results<Summary of Operational Results for the Consolidated Fiscal Year ended March 31, 2022>
In the fiscal year under review, the Japanese economy
temporarily showed a moderate recovery trend in conjunction
with the penetration of vaccines amid the ongoing impact of
COVID-19. However, the future remained uncertain due togeopolitical risks from the Russia-Ukraine crisis, semiconductor
shortages, high crude oil prices, and soaring raw material prices.
Working against this backdrop, our Group strived to continue its businessactivities while placing the highest priority on the safety of customers,
local residents, and employees.
At the same time, we implemented various measures and worked togenerate profits with an eye to improving our corporate quality anddeepening our social value, as we moved forward with the final yearof our medium-term management plan 2019–21 “To the Growth Cycle”(3 year plan; April 1, 2019 – March 31, 2022).

Representative Director,
President, CEO
Tatsuya Nunohara

As announced in the press release "Notice Concerning Transfer of Non-Current Assets andRecording of Extraordinary Income (Gain on Sale of Non-Current Assets)" on March 30,
2021, the Company recorded an extraordinary income of approximately 13 billion yen in the
consolidated financial closing for the fiscal year ended March 31, 2022.
As a result, in the current consolidated fiscal year, net sales decreased by 260 million yen (0.3%) comparedwith the preceding consolidated fiscal year to 116,910 million yen. Operating income decreased by 2,106
million yen (23.2%) to 6,974 million yen, and the current net income attributable to owners of the parent
increased by 7,499 million yen (110.7%) to 14,274 million yen.
We would like to present the summary of business on a consolidated basis by segment in comparison withthe preceding fiscal year.
i) Specialty Truck Segment
Although domestic demand remained firm, earnings were affected by sluggish production
in various sectors due to semiconductor shortages and higher prices of steel and othermaterials. The Group actively sought to receive orders while implementing
infection-control measures and worked to improve productivity by introducing new
products and streamlining production facilities.
At the Yokohama Plant, through pursuing large-scale capital investment aimed at
improving productivity, we automated the body production line for medium-sized rear
dump trucks, one of our main products. We will continue to strengthen our special-purpose
vehicles business by improving productivity at each production site.
The Company’s "large-sized rear dump truck wear-resistant steel plating (HARDOX)
specifications" and the safety support system equipped with image recognition AI for
garbage trucks won the 2021 GOOD DESIGN AWARD. The "large-sized rear dump truck

Operational Results

3wear-resistant steel plating (HARDOX) specifications" were selected as one of the GOOD
DESIGN BEST 100, awarded to 100 products that received a particularly high rating fromthe judging committee among the award recipients. In addition, regarding the safety
support system equipped with image recognition AI for garbage trucks, 31 garbage trucks
equipped with the system have been delivered to Fukaya City, Saitama Prefecture. We will
strive to strengthen our attractive product lineup so that we can continue to meet customer
needs.
Efforts were also made at the Group companies to strengthen the earnings base throughcapital investment.
NIPPON TREX Co., Ltd., a group company that manufactures and sells trailers, truck
bodies, etc. opened a directly managed service center in Kitakyushu City to strengthen its
stock-type business and improve the quality of after-sales service.
Hokuriku Heavy Industries, Ltd., a group company that manufactures and sells railway
rolling stock for track maintenance, etc., has completed constructing a new plant and officewith an approximately 50% increase in production capacity. We will contribute to theconstruction, maintenance and management of social infrastructure in Japan and overseas
through the manufacture of "working vehicles" and "working rolling stock."In overseas markets, the Group worked to secure sales and profits by expanding sales of
special-purpose vehicles, led by Satrac in India.
Net sales in the Specialty Truck Segment decreased by 979 million yen (1.0%) to 98,571 million yen.
Segment profit decreased by 2,399 million yen (34.9%) to 4,481 million yen.

New detachable body truck

New piston concrete pump truck
PY140-36A”

Safety support system equipped with image
recognition AI for garbage trucks(This image is an image of detection. )Medium-sized rear dump trucks body
automation line at the Yokohama plant

Operational Results

4ii) Environmental Equipment and Systems Segment
In the field of plant construction, the Group actively worked to attract orders for new projects andproceeded with the construction of properties for which orders have been received while also
focusing on the stock-type business such as maintenance and entrusted operation.
As for new construction projects, we received orders from the Engaru Regional Wide Area Union
in Hokkaido for the construction of a material recycling promotion facility from FY2021 to
FY2023 and from Kawaguchi City, Saitama Prefecture for the construction, operation andmanagement of the Totsuka Environmental Center in Kawaguchi City.

Net sales in the Environmental Equipment and Systems Segment increased by 618 million yen(5.6%) to 11,647 million yen. Segment profit increased by 103 million yen (5.2%) to 2,098 million
yen.

Biogas plant in Okayama

Recycle center in Nahaiii) Real Estate Rental Segment
For multistory parking systems, the Group continued to focus on actively attracting orders for new
properties and promoting the stock-type business such as renewal and maintenance. In Indonesia,
we completed the construction of a large-scale multistory parking system the order for which we
received through a local subsidiary, and will promote sales by emphasizing the convenience ofmultistory parking systems.
In the area of coin-operated parking, the situation improved moderately from a decline in operating
rates caused by the impact of COVID-19.
Net sales in the Real Estate Rental Segment increased by 129 million yen (1.8%) to 7,261 million
yen. Segment profit increased by 2 million yen (0.2%) to 1,143 million yen.

Multi-story parking equipment in Indonesia

Toll parking (Coin-operated)

Operational Results

5<Forecast of Operations for the Next Consolidated Fiscal Year ending March 31, 2022>
In the fiscal year under review, the Japanese economy temporarily showed amoderate recovery trend in conjunction with the penetration of vaccines for
COVID-19. However, the impact of the pandemic is still ongoing, and we expect that
we will need to continue keeping a close watch on future trends.
The Group has established a basic policy for COVID-19 and projected the impact of the spread of
COVID-19 as follows.
The Group has established a basic policy for COVID-19 as “Giving top priority to the safety ofcustomers, local communities, and Group employees while ensuring balance with business
continuation.” Through the implementation of various measures, the Group has striven to reduce
the risk of infection. The Group’s current situation and countermeasures are as provided below.
1. Employees who tested positive for COVID-19 all had mild symptoms, and there was no
impact on business operations.
2. Implemented teleworking/staggered work hours and allowed commuting by personal car.
3. Promoted digitization to continue business amid stay-at-home requests using videoconferencing and online meetings.
4. Plants and service bases continued to run normally while implementing sufficient
infection-control measures.
For the Group’s mainstay Specialty Truck Segment, the Group has a backlog of orders ofapproximately 60 billion yen (as of March-end 2022) which is equivalent to over six months’
worth of consolidated net sales of the Specialty Truck Segment. No major problems have occurredin plants’ production activities.
Concerns about a prolonged impact of COVID-19 and further spread of infections are as listed
below.
1. Delay and cancellation of new business negotiations during sales activities.
2. Delay in installation of truck chassis in production activities and impact on supply chains,
including procurement of parts.
The Environmental Equipment and Systems Segment is operating normally without any delay, etc.
in construction work due to the nature of public works that are essential to people’s daily lives.
Entrusted operations, etc. have also been busy with a higher operating rate caused partly byincreases in household waste. It is expected that there will be almost no impact on businessperformance in the segment.
In the Real Estate Rental Segment*, the coin-operated parking business and others
have experienced lower operating rates in all business locations, due to a decline incustomer traffic caused by restrictions on going out. Recently, however, the situation
has been moderately improving.
*
As of April 1, 2022, the segment name of the Real Estate Rental Segment has been changed to theParking and Other Operations Segment.
Under these circumstances, Our aim is to realize the long-term management vision

Operational Results

6“Kyokuto Kaihatsu 2030,” which was formulated with a view toward FY2030, andachieve the new medium-term management plan 2022–24 “Creating The Future As
One” (3-year plan; April 1, 2022 – March 31, 2025), which was formulated as the firststep toward realizing the long-term management vision. To this end, the Group is
striving to build a solid foundation through strengthening synergies in the group andactively investing in growth. We have also set concrete numerical targets and policies.
Meanwhile, we will pay close attention to the current and future economic conditions
and other trends and respond flexibly such as by considering and implementing policy
revisions, etc. as needed.
(2) Analysis on Financial Conditionsi) Situations of Assets, Liabilities and Net WorthIn the current consolidated fiscal year, total assets increased by 11,609million yen (8.1%) from the end of
the preceding fiscal year to 154,350 million yen.
Current assets increased by 11,953 million yen (14.2%) to 96,276 million yen, due to increases in cash
and deposits, etc.
Non-current assets (property, plant and equipment, intangible assets and investments and other assets)
decreased by 344 million yen (0.6%) to 58,073 million yen, due to decreases in long-term loans receivable,
etc.
Regarding liabilities, current liabilities decreased by 3,055 million yen (4.9%) to 33,686 million yen due todecreases in notes and accounts payable, etc. Non-current liabilities increased by 2,240 million yen(41.4%) to 7,652 million yen due to increases in deferred tax liability, etc.
Total net assets increased by 12, 424 million yen (12.4%) to 113,011 million yen due to the posting of net
profit, etc. attributable to owners of parent.
As a result, the capital adequacy ratio stood at 73.0% as of the end of the current fiscal year (70.3% at theend of the preceding fiscal year).
ii) Cash Flow Situation
Consolidated cash and cash equivalents at the end of period increased by 16,008 million yen (75.4%)
compared with the end of the preceding fiscal year to 37,248 million yen. Cash flow by activity type issummarized as follows:
Cash Flow from Operating Activities
Net cash provided by operating activities amounted to 6,867 million yen (a decrease of 1,396 million yen
compared with the preceding fiscal year). This was because of the posting of net profit before tax, etc.
Cash Flow from Investing Activities
Net cash provided by investing activities amounted to 10,661 million yen (an increase of 14,966 million
yen compared with the preceding fiscal year). This was because of sale of non-current assets, etc.

Operational Results

7

Cash Flow from Financing Activities
Net cash used by financing activities amounted to 1,555 million yen (an increase of 1,216 million yen
compared with the preceding fiscal year). This was because of dividends paid, etc.
(3) Principal policy for return of profits to shareholders and payment of dividends for the current
year and next year
The Group regards the return of profits to shareholders as one of the most importantmanagement policies. Its basic dividend policy is to determine dividends bycomprehensively taking into account future business development, economic conditions,and other factors, as well as trends in business performance, while striving to improve its
business performance and financial position. In order to achieve sustainable growth andincrease corporate value, we will continue to focus on distributing dividends toshareholders at a high level and on a stable basis and pay dividends to shareholders instages, taking into account trends in business performance while pursuing a higher payout
ratio.
The Meeting of Shareholders on June 28th, 2022 resolved and passed to pay a dividend of 32 yen per share at
the end of March 2022 as originally proposed by management, making its annual dividend 54 yen per shareincluding an interim dividend, increased by 12 yen compared with the preceding fiscal year.

As for our policy for return of profits to shareholders in the new medium-term
management plan (2022 to 2024), the Company will continue to pay a minimum annual
dividend of 54 yen per share from the fiscal year ending March 2023 and aim to increase
the value of shares by achieving a total return ratio of 50% in the fiscal year ending March
2025.
Based on the aforesaid policy under the new medium-term management plan, for the year
ending March 2023, management plans to pay a minimum annual dividend of 54 yen per
share (including an interim dividend of 22 yen), the same amount as in the preceding fiscal
year.

Management Policy

8

2. Management Policy(1) Basic Management Policy of the Company
The management philosophy of the Kyokuto Kaihatsu Group is "Value technology and trust, make concerted
efforts to develop the company, and widely contribute to the society."
Our ultimate goal in the management policy is to implement corporate policy recognizing a social role andresponsibility as a public company in a strong relationship with various stakeholders such as customers,
business partners, shareholders, employees, and local societies. In addition, by providing safe, effective andhigh quality products and services through our fair and sound business activities, the Kyokuto Kaihatsu Groupseeks to bring about greater contribution to our society and maximize corporate value.
With this management policy, we devote ourselves to three major business domains including Specialty Truck,
Environmental Equipment and Systems, and Real Estate Rental.
As of April 1, 2022, the segment name of the Real Estate Rental Segment has been changed to the Parking andOther Operations Segment.
(2) Mid-to-Long Term Management Strategy
Under the long-term management vision “Kyokuto Kaihatsu 2030” that looks toward 2030 andthis new medium-term management plan 2022–24 “Creating The Future As One” (3-year plan;
April 1, 2022 – March 31, 2025), which signifies the first step toward realizing the long-term
management vision, the Group is pursuing priority strategies toward growth of the Group
based on the following policies.
【Long-term Management Vision “Kyokuto Kaihatsu 2030”】
The Group’s long-term management vision is to be “a global comprehensive infrastructure
manufacturer that contributes to the realization and development of a sustainable society.”(1) Sustainability vision
・ CO2 emission reduction rate

: minus 38%* Basic unit compared with FY2013 for Kyokuto Kaihatsu Kogyo, NIPPON TREX,
and Kyokuto Kaihatsu Parking.

・ Recycling rate

: Maintain at 99.0% or higher(2) Consolidated financial performance vision
・ Net sales: 200 billion JPY
・ Operating income margin: 10% or more
・ ROE
:10%

【New Medium-Term Management Plan 2022–24 “Creating The Future As One”】
In this medium-term management plan, formulated as the first step of the long-term
management vision, we set out four basic policies and will resolutely carry out the plan in
an aim to establish a comprehensive foundation for the Kyokuto Kaihatsu Group. In
addition, in order to improve corporate value, we will implement strategies that take into
consideration the balance between "active investment in growth" and "return to society
and stakeholders" by utilizing the funds and interest-bearing debt obtained through ourbusiness activities to date.

Management Policy

9

1. Basic policies(1) Contributing to solving social issues and pursuing value provision(2)Improving productivity and strengthening income structure(3)Building a strong business foundation that supports sustainable growth
and reform(4)Optimally distributing cash flow aimed at improving corporate value
2. Sustainability targets (fiscal year ending March 2025)
・CO2 emission reduction rate
: minus 10% or more
* Basic unit compared with FY2020 for Kyokuto Kaihatsu Kogyo, NIPPON TREX,
and Kyokuto Kaihatsu Parking.

・ Recycling rate

: Maintain at 99.0% or higher

3. Consolidated financial performance targets (fiscal year ending March 2025)
・ Consolidated net sales: Over 140 billion JPY(including new M&A growth)・ Consolidated operating income margin: 9% or more
4. Financial policies
・ Strategic investment

・ Shareholder returns: Over 30 billion JPY for growth investment and approx.
10 billion JPY for new M&A investment over the threeyears: Total payout ratio: 50% (FY ending March 2025),
Lower limits of annual dividend per share: 54 JPY(3) Targeted management index
In the long-term management vision “Kyokuto Kaihatsu 2030,” our consolidated financial
performance targets are net sales of 200 billion yen or more, operating income margin of 10% or
more, and ROE of 10%.
In addition, for the term ending March 2025, the last fiscal year of the new medium-term
management plan 2022–24 “Creating The Future As One” (3-year plan; April 1, 2022 to March
31, 2025), our consolidated financial performance targets are net sales of 140 billion yen or more
and operating income margin of 9% or more.

Consolidated Statements of Comprehensive Income

10

CONSOLIDATED BALANCE SHEETSAt March 31, 2022 and 2021

Thousands of
U.S. dollars(Note 1)Millions of yen
ASSETS
Current assets:
Cash and deposits (Notes 8 & 9)
Short-term securities (Notes 8 & 9)
Trade notes and accounts receivable (Note 9)
Trade notes receivable (Note 9 & 17)
Trade accounts receivable (Note 9 & 17)
Contract assets (Note 17)
Electronically recorded monetary claims - operating (Note 9 & 17)
Merchandise & finished goods
Work in process
Raw materials & supplies
Other current assets (Note 9)
Allowance for doubtful accounts
Total current assets

2022¥

Property, plant and equipment (Note 10):Land (Note 5)
Buildings and structures (Note 5)
Machinery, equipment and vehicles
Construction in progress
Other
Total
Accumulated depreciation
Net property, plant and equipment

Intangible assets
Goodwill
Customer-related assets
Other
Total
Investments and other assets:
Investment securities (Notes 3, 6 & 9)
Deferred tax assets (Note 14)
Long-term loans receivable (Note 9)
Other assets
Allowance for doubtful accounts (Note 9)
Total investments and other assets
Total non-current assets
Total
The accompanying notes are an integral part of these statements.

¥

2021

2022

25,815 ¥11,5006,647
23,078
495
8,300
2,462
6,946
9,816
1,273
(55)
96,277

9,703
12,20035,129
7,886
1,772
6,588
8,613
2,495
(63)
84,323$22,001
32,24520,707933
5,649
81,535(41,763)
39,77221,01834,773
20,368291
5,440
81,890(41,955)
39,935

179,728
263,418
169,1637,625
46,147
666,081(341,170)
324,911

771
450
1,223
2,444

803
449
817
2,069

6,297
3,681
9,991
19,96914,023
281
456
1,994
(897)
15,85758,073
154,350 ¥

14,388
264
1,964
1,980
(2,182)
16,41458,418142,741

114,555
2,295
3,727
16,286(7,327)
129,536
474,416
1,260,928$

210,888
93,94754,299188,533
4,049
67,802
20,11856,74280,187
10,397(450)
786,512

Consolidated Statements of Comprehensive Income

Thousands of
U.S. dollars(Note 1)Millions of yen
LIABILITIES AND NET ASSETS
Current liabilities:
Short-term bank loans (Notes 4)
Current portion of long-term bank loans (Notes 4 & 9)
Trade notes and accounts payable
Electronically recorded obligations - operating
Accrued expenses
Income taxes payable
Other current liabilities (Note 4 & 17)
Total current liabilities

2022¥

Non-current liabilities:
Long-term bank loans (Notes 4 & 9)
Net defined benefit liabilities (Note 6)
Liabilities for directors' retirement benefits
Deferred tax liabilities (Note 14)
Other non-current liabilities (Notes 4, 5 & 9)
Total non-current liabilities
Total liabilities

Net assets:
Shareholders' equity:
Common stock (Note 12):
Authorized-170,950,672 shares
Issued-42,737,668 shares in 2022 and 2021
Capital surplus (Note 12)
Retained earnings
Treasury stock, at cost (Note 12):2,978,781 shares in 2021
2,849,820 shares in 2022
Total shareholders' equity
Accumulated other comprehensive income (Note 15):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total
The accompanying notes are an integral part of these statements.

¥

11

2021

2022

965 ¥
28
14,756
8,458
4,594
1,129
3,756
33,686740
23
16,547
9,150
4,814
2,096
3,372
36,742

$

242
186
144
5,862
1,219
7,653
41,339

282
340
152
2,295
2,343
5,412
42,154

1,975
1,522
1,176
47,884
9,959
62,516
337,708

11,90011,83986,435

11,90011,82173,997

97,21396,717706,114(2,081)
108,093(2,249)95,469(17,004)
883,040

4,598
59
(64)
4,593
325
113,011
154,350 ¥

4,931
53
(170)
4,814
304
100,587
142,741

37,564483(521)
37,5262,654
923,220
1,260,928

$

7,885
225
120,549
69,092
37,5299,226
30,686275,192

Consolidated Statements of Comprehensive Income

12

CONSOLIDATED STATEMENTS OF INCOME
Years ended March 31, 2022 and 2021

Thousands of
U.S. dollars(Note 1)Millions of yen
Net sales (Note 17)
Cost of sales (Note 16)
Gross profit
Selling, general and administrative expenses (Note 13)
Operating income¥

Other income (expenses):
Interest and dividend income
Interest expense
Gain (loss) on sales of investment securities, net
Gain (loss) on sales or disposition of property and equipment, net
Share of profit (loss) of entities accounted for using equity method
Loss on valuation of investment securities (Note 3)
Provision of allowance for doubtful accounts
Foreign exchange gain (loss)
Other-net
Other expenses -net
Income before income taxes and non-controlling interests
Income taxes (Note 14):
Current
Deferred
Total income taxes
Net income
Net loss attributable to non-controlling interests
Net income attributable to owners of the parent¥

2022
116,910 ¥95,742
21,16814,194
6,974

2021
117,170
94,00923,161
14,081
9,080

$

327
(41)
13
13,16795
173(36)
13,69820,672

618
(42)
(20)
83
(16)
(104)
(489)
91
(74)
47
9,127

2,673
(339)
102
107,566
780
1,415
(297)
111,900
168,873

2,771
3,635
6,406
14,266(8)
14,274 ¥

3,178
(770)
2,408
6,719
(55)
6,774

22,63329,69752,330116,543(66)
116,609$

U.S. dollars(Note 1)

Yen
2022
Amounts per shares:
Basic net income
Diluted net income
Cash dividends applicable to earnings of the year¥

2022
955,069
782,141
172,928
115,955
56,9732021

358.35 ¥54.00

170.49
42.00

2022
$

2.93
0.44

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended March 31, 2022 and 2021

Thousands of
U.S. dollars(Note 1)Millions of yen
Net income¥

Other comprehensive income (Note 15):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income in affiliates accounted forby the equity method
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
The accompanying notes are an integral part of these statements.

¥

2022
14,266 ¥

2021
6,719

$

2022
116,543

(333)
(18)
107
52

2,377
(74)
486
(23)

(2,719)
(143)
873
421

(192)

2,766

(1,568)14,074 ¥9,485

14,053
21

9,565
(80)

$

114,975

114,806169

97,213

97,21396,717

149

96,56896,568surplusstock

97,213

Capital11,83918

11,821

11,821

Common11,90011,90011,900142

11,679surplus11,900stock

The accompanying notes are an integral part of these statements.

Balance, March 31, 2022

Other net changes in the year

Cash dividends paid

Appropriation

Net income attributable to owners of the parent

Disposal of treasury stock

Purchases of treasury stock

Restated balance, March 31, 2021$$

Balance, March 31, 2021

Cumulative effects of changes in accounting policies

¥

¥

¥

Balance, March 31, 2022

Other net changes in the year

Cash dividends paid

Appropriation

Net income attributable to owners of the parent

Disposal of treasury stock

Purchases of treasury stock

Restated balance, March 31, 2021

Cumulative effects of changes in accounting policies

Balance, March 31, 2021

Other net changes in the year

Cash dividends paid

Appropriation

Net income attributable to owners of the parent

Disposal of treasury stock

Purchases of treasury stock

Balance, March 31, 2020

CapitalCommonCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years ended March 31, 2022 and 2021

706,114(15,009)

116,609604,51410

604,504

earnings

Retained

Shareholders' equity

86,435(1,837)

14,27473,998

1

73,997(1,510)6,774

68,733earnings

Retained

Shareholders' equity

Total

(0)

(3)

(17,004)

883,040(15,009)

116,609

1,523

(3)
1,374

779,920

10

779,910equityshareholders'

Total

108,093(18,375)(18,375)

stock

Treasury(2,081)(1,837)

14,274

186

(0)
168

95,4701

95,469(2,249)(2,249)(1,510)

6,774

335

(289)

(289)
193

90,159equityshareholders'(2,153)stock

Treasurycurrency

adjustments

sale securities

37,564(2,717)40,281

483

44

439

439

currencytranslation

gain onavailable-for-Foreign

40,281

plans

(64)

106

(170)

(170)

487

(657)

of defined benefit

Remeasurements

(521)

871

(1,392)(1,392)plans

of defined benefit

Remeasurements

Accumulated other comprehensive income

59

6

53

53

(74)

127

adjustments

Unrealized

4,598

(333)

4,931

4,931

2,378

2,553

sale securities

translation

gain onavailable-for-Foreign

Unrealized

Accumulated other comprehensive income
Total

37,526(1,802)

39,32839,328incomecomprehensive

otheraccumulated

Total

4,593

(221)

4,814

4,814

2,791

2,023

incomecomprehensive

otheraccumulated
Non-

Total

113,011(200)(1,837)

14,274186(0)100,5881

100,587

2,711(1,510)

6,774

335

(289)

92,566

net assets

2,654

169

2,485

2,485

interests

controllingNon-

923,220(1,633)(15,009)

116,609

1,523

(3)

821,73310

821,723

assetsTotal netThousands of U.S. dollars

325

21

304

304

(80)

384

interests

controlling

Millions of yen

Consolidated Statements of Changes 13
in Net Assets

Consolidated Statements of Cash Flows

14

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2022 and 2021

Thousands of
U.S. dollars(Note 1)Millions of yen
2022
Operating activities:
Income before income taxes and non-controlling interests
Depreciation and amortization
Amortization of goodwill
Loss on valuation of investment securities
Loss (gain) on sales of investment securities, net
Share of loss (profit) of entities accounted for using equity method
Loss (gain) on sales or disposition of property and equipment, net
Interest and dividend income
Interest expenses
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Increase (decrease) in net defined benefit liabilities
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for others
Increase (decrease) in consumption taxes payable
Other, net
Sub totalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

¥

2021

2022

20,672 ¥
2,909
85
(13)
(95)
(13,190)
(327)
41
4,536
(2,172)(2,015)
(2)
4
(70)
(325)
159
10,197349(41)(3,638)
6,867

9,127
2,805
40
104
20
16
(125)
(618)
42
(76)
(96)
(1,504)
65
492
(121)
(36)
370
10,505637(41)(2,837)
8,264

(6)
197
600
(5,633)
15,463

(47)
101
586
(3,356)
172

(47)
1,611
4,902
(46,021)
126,32242(1)10,662(1,822)(10)71(0)(4,305)344(10)
87,101

Financing activities:
Net increase (decrease) in short-term bank loans
Proceeds from long-term bank loans
Repayment of long-term bank loans
Payment for redemption of bonds
Payment of finance lease obligations
Purchases of treasury stock
Proceeds from sales of treasury stock
Dividends paid
Net cash used in financing activities

216
165
(201)
(52)
(0)
154
(1,837)(1,555)

(822)
288
(675)
(50)
(49)
(289)
335
(1,509)(2,771)

1,761
1,348
(1,639)
(424)
(3)
1,256
(15,005)(12,706)

Foreign currency translation adjustments on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 8)35
16,00921,24037,249 ¥

(13)
1,175
20,065
21,240285
130,779
173,517304,296

Investing activities:
Purchases of securities and investments
Proceeds from sales of securities and investments
Proceeds from maturity of securities and investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of shares of subsidiaries resulting in change in scope of
consolidation (Note 18)
Disbursement of loans receivableCollection of loans receivable
Other,net
Net cash used in investing activities

The accompanying notes are an integral part of these statements.

¥

$

$

168,873
23,762
691
(102)
(780)
(107,754)(2,673)339
37,054(17,744)(16,460)
(19)
32
(568)
(2,656)
1,310
83,305
2,853(339)(29,720)
56,099Basis of Presenting Consolidated 15
Financial Statements

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Kyokuto Kaihatsu Kogyo
Co., Ltd. (the “Company”) and its consolidated subsidiaries (collectively the“Group”) have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting
regulations, and in conformity with accounting principles generally accepted inJapan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
In preparing the accompanying consolidated financial statements, certain
reclassifications have been made to the consolidated financial statements issued
domestically, in order to present them in a form which is more familiar to readers
outside Japan.
In addition, the notes to consolidated financial statements include additional
information which is not required under generally accepted accounting principles
and practices in Japan.
The financial statements presented herein are expressed in Japanese yen and,solely for the convenience of the readers, have been translated into U.S. dollars
at the rate of ¥122.41=US$1, the approximate exchange rate on March 31, 2022.
These translations should not be construed as representations that the Japanese
yen amounts actually are, have been or could be converted into U.S. dollar
amounts.

Basis of Presenting Consolidated 16
Financial Statements

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts of the Company andits 11 significant subsidiaries. Investments in 5 nonconsolidated subsidiaries and
1 affiliated company are accounted for by the equity method.
Under the concept of control or significant influence, those companies in which
the Company, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies which the Group has the ability to
exercise significant influence (affiliated companies) are accounted for by theequity method.
On March 31, 2022, 5 subsidiaries are excluded from scope of consolidation. As tothese, investments in all nonconsolidated subsidiaries are accounted for by theequity method. These companies are not material in terms of total assets, net
sales, net income and retained earnings and do not have any significant impact
on the consolidated financial statements.
Among the consolidated subsidiaries, the balance sheet date for Kyokuto
Kaihatsu(Kunshan)

Machinery

Co.,

Ltd.,

and

PT.

KyokutoIndomobil

Manufacturing Indonesia is December 31. They are consolidated using thefinancial statements as of their balance sheet date. Significant inter-company
transactions between their balance sheet date and consolidated balance sheet
date are adjusted for consolidation.
Furthermore, the balance sheet date for Kyokuto Special Automobile Trading(Shanghai) Co., Ltd. under the equity method is different from the consolidatedbalance sheet date, but no adjustments were made.
All significant inter-company balances and transactions have been eliminated in
the consolidated financial statements. All material unrealized gains resulting frominter-company transactions have been eliminated.
Assets and liabilities of the consolidated subsidiaries at the time of investment
are all valued at fair value. The goodwill is being amortized on a straight-line
basis over estimated useful lives or 5 years in situations in which the useful lives
cannot be estimated. However, insignificant goodwill is charged to expenses
when incurred.

Basis of Presenting Consolidated 17
Financial Statements(b) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible into
cash and exposed to insignificant risk of changes in value. All of cash equivalentsmature or become due within three months from the date of acquisition.

(c) Short-term Securities and Investment Securities
The Group classifies their securities which have readily determinable fair values
as held-to-maturity debt securities, available-for-sale securities, depending on
management’s intent.
(Held-to-maturity debt securities)
Held-to-maturity debt securities are stated at amortized cost.
(Available-for-sale securities)
Securities other than shares that do not have a market value are stated at fairvalue, with unrealized gains or losses, net of applicable taxes, and reported inaccumulated other comprehensive income. The cost of available-for-sale securities
sold is determined based on the moving average method.
Shares that do not have a market value are stated at cost determined by themoving average method.
(d) Inventories
Merchandises are stated at cost determined by the specific identification method,or if lower, the net realizable value.
Raw materials, finished goods and work in process are stated at cost determinedby the periodic average method, or if lower, the net realizable value.
Supplies are stated at cost determined by the last purchase cost method, or if
lower, the net realizable value.

(e) Depreciation
Depreciation is principally computed under the straight-line method, using rates
based on the estimated useful lives of the assets (except for lease assets). The
useful lives are principally ranging from 7 to 60 years for buildings andstructures, and 4 to 17 years for machinery, equipment and vehicles.
Amortization of intangible assets is computed by the straight-line method.

Basis of Presenting Consolidated 18
Financial Statements(f) Retirement Benefits
Net defined benefit liabilities are recorded for employees’ pension and severance
payments based on the projected benefit obligations and the fair value of plan
assets at the balance sheet date.
In calculating the projected retirement obligations, the straight-line attribution
is applied for allocation of projected benefits to the periods until the end of thecurrent fiscal year.
Actuarial gains or losses are amortized by declining-balance method over statedyears that do not exceed the average remaining service period of the employees(10 years) beginning with the year following the year which incurred.

(g) Allowance for Doubtful Accounts
The allowance for doubtful accounts is provided against potential losses oncollections at an amount determined using a historical bad debt loss ratio and an
amount individually estimated on the collectability of receivables that are
expected to be uncollectible due to bad financial condition or insolvency of the
debtor.

(h) Asset Retirement Obligations
Asset retirement obligations are defined as a statutory or similar obligation withregard to the removal of tangible fixed assets and are incurred when tangible
fixed assets are acquired, constructed, developed or used in an ordinary way. The
asset retirement obligation is recognized as the sum of the discounted cash flow
required for the future asset retirement and is recorded in the period in which
the obligation is incurred if a reasonable estimate can be made.

(i) Revenue Recognition
In terms of revenue from contracts with customers of the Group, the contents of themain performance obligations and the usual timing of satisfaction of performanceobligations (at the usual timing of revenue recognition) are as follows.
In the domestic sales of merchandise or finished goods, the period for which thecontrol of merchandise or finished goods is transferred to the customers after
shipping is usual, the revenue is recognized at the shipping applied to the alternative
treatment provided in Paragraph 98 of ”Implementation Guidance on AccountingStandard for Revenue Recognition” (ASBJ Guidance No.30, March 26, 2021).

Basis of Presenting Consolidated 19
Financial Statements
・Specialty truck businessIn “Specialty truck business”, the Group operates the manufactures and sales of thespecialty trucks such as dump tracks and tailgate lifters, and also, the after-sales
services such as the sales of the related components or inspection and maintenance.
In terms of sales of finished goods and components, revenue is recognized at the timeof shipping. In terms of providing the inspection and maintenance, “Maintenancepack contract” is entered into with customer, and the transaction price is allocated tocontents of inspection in the contract, so revenue is recognized over a certain period
based on the implementation of inspection.
Payment terms are decided based on contracts with customers, the considerations oftransaction are mostly received within 3 months after delivery, and do not include asignificant financing component.
・Environmental equipment and systems business
In “Environmental equipment and systems business”, the Company and its
subsidiaries operate the construction of recycling facilities such as bulky garbage
facilities and recycling centers, and also, the after-sales services such as the sales of
the related components or inspection and maintenance. In addition, someconsolidated subsidiaries operate the business of providing the service, working andmanagement related to these facilities and equipment.
In terms of construction contracts, the performance obligation satisfies for a certain
period. So, revenue is recognized based on the percentage of completion of satisfactionof the performance obligation, exclude the contract of short construction period. The
method used to estimate the progress towards the satisfaction of the performanceobligation is the input method based on the ratio of the actual costs to the total
estimated costs. In terms of sales of recycling facilities and related components,
revenue is recognized at the time of shipping to customers. In terms of service such as
inspection, maintenance, working and management, revenue is recognized over time
based on the occasion of each service under comprehensive maintenance contracts orworking consignment contracts.
Payment terms are decided based on contracts with customers, the considerations oftransaction are received for several times depending on the progress of construction.
So, they do not include a significant financing component.

(j) Allowance for Losses on Construction Contracts
Estimated losses on construction contracts are charged to income in the period inwhich they are identified.

Basis of Presenting Consolidated 20
Financial Statements(k) Leases
Finance lease transactions, except for immaterial or short-term finance leasetransactions which are accounted for as operating leases, are capitalized torecognize lease assets and lease obligations in the balance sheet. Suchcapitalized lease assets are depreciated by the straight-line method over thelease terms assuming no residual value.

(l) Income Taxes
The asset and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary differences
between the carrying amount and tax bases of assets and liabilities, andoperating loss carry-forwards.

(m) Derivatives
All derivatives, except for certain foreign exchange forward contracts andinterest rate swap contracts described below, are stated at fair value. If
derivative financial instruments are used as hedges and meet certain hedging
criteria, the Group defers recognition of gains or losses resulting from a change
in the market value of the derivative financial instruments until the related
gains or losses on the hedged items are recognized. Accounts payable hedged byforeign exchange contracts which meet certain hedging criteria are translated attheir contracted rates. Interest rate swaps which meet certain hedging criteria
are accounted for as if the interest rate applied to the swaps had originallyapplied to the underlying debt.

(n) Per Share Information
Basic net income per share is computed based on net income available to common
stockholders and the weighted average number of shares of common stock
outstanding during each period. The average numbers of shares used in thecomputations are 39,832 and 39,734 thousand shares for 2022 and 2021,
respectively.
Diluted net income per share is not disclosed because the Company had nopotentially dilutive shares outstanding at these balance sheet dates.
Cash dividends per share shown in the statements of income are the amounts
applicable to the respective years.

Basis of Presenting Consolidated 21
Financial Statements

As described in (p), the Company and its domestic consolidated subsidiaries havechanged accounting treatment for revenue recognition by applying the new
accounting standards for revenue recognition from the beginning of the fiscal
year ended March 31, 2022. As a result, the effect of earnings per share isimmaterial.

(o) Significant Accounting Estimates(Goodwill and Customer-related assets)(i)

Amount recorded in the consolidated financial statements for the fiscal year

Thousands ofMillions of yen

U.S. dollars

2022

2021

2022

Goodwill

¥

771

¥

803

$ 6,297

Customer-related assets

¥

450

¥

449

$ 3,681(ii) Information concerning significant accounting estimates for identifiable items
Goodwill and Customer-related assets of the newly consolidated subsidiary areamortized under the straight-line method, using rates based on the estimated useful
lives of assets, below. The recognition and measurement of Goodwill andCustomer-related assets are based on estimates or assumptions set using somefactors such as future cash flow and discount rates. However, when theseassumptions may be affected by changes in uncertain future economic conditions,the impairment losses related these assets may be recognized in the future.
Estimated useful lives

Years

Goodwill10

Customer-related assets

16(Impairment losses of Property, plant and equipment)(i)Amount recorded in the consolidated financial statements for the fiscal year

There is not applicable for the fiscal year.
(ii) Information concerning significant accounting estimates for identifiable items
The impairment losses of the assets which have indication of impairment were notrecognized since the estimated future cash flow calculated under the business plansof each segment exceeds carrying amount of the assets. The assets which haveindication of impairment are below. However, when the business plan will be needed
the review or update since affection of future market environment, the impairment

Basis of Presenting Consolidated 22
Financial Statements

losses of the assets may be recognized in the future.

Thousands ofMillions of yen
Specialty truck business
Environmental equipment andsystems business
Real estate rental business
Total

U.S. dollars

2022

2021

2022

¥

¥

538

$ 4,534

647

647

5,289

−

−

−

¥ 1,202¥ 1,185$ 9,823555(p) Changes in accounting policies(Application of Accounting Standard for Revenue Recognition, etc.)
The Group applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020; hereinafter the “Revenue Recognition Standard”),
etc. from the beginning of the current fiscal year, the Group now recognizes revenue
when control of promised goods or services is transferred to a customer in an amountthat reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services.
The main changes that have been made are as follows:
Revenue recognition of construction contracts
The percentage-of-completion method was previously used for the construction which
the outcome of the construction activity was deemed reliably during the course of theactivity, otherwise the completed-contract method was used, however from the fiscal
year under review, the Company and its domestic subsidiaries have changed to berecognized when the performance obligation satisfied for a certain period, exclude thecontract of short construction period.
The method used to estimate the progress towards the satisfaction of the performanceobligation is the input method based on the ratio of the actual costs to the total
estimated costs.
In applying the Revenue Recognition Standard, etc., in accordance with thetransitional treatment set forth in the proviso to Paragraph 84 of the Revenue
Recognition Standard, the cumulative effects of retrospectively applying new
accounting policy to the periods prior to the beginning of the current fiscal year wereadded to or subtracted from retained earnings at the beginning of the current fiscal
year, and the new accounting policy has been applied from the beginning balance. As

Basis of Presenting Consolidated 23
Financial Statementsa result of the above, for the current period ended March 31, 2022, net sales increasedby ¥ 1 million ($ 11 thousand), cost of sales increased by ¥ 0 million ($ 5 thousand),and operating income and income before income taxes and non-controlling interests
each increased by ¥ 0 million ($ 6 thousand). The effects of beginning balance ofretained earnings were immaterial.
Due to the application of the Revenue Recognition Standard, etc., “Trade notes andaccounts receivable,” which had been reported under “current assets” on the balance
sheet in the previous fiscal year, are now included in “Trade notes receivable”, “Tradeaccounts receivable”, and “Contract assets”. In accordance with the transitional
treatment set forth in Paragraph 89-2 of the Revenue Recognition Standard, figures
for the previous fiscal year have not been reclassified as current year.
Note also that, in accordance with the transitional treatment set forth in Paragraph89-3 of the Revenue Recognition Standard, “Notes Regarding Revenue Recognition”
for the previous fiscal year was not disclosed.
(Application of accounting standards for calculating fair market values)
The Company has applied the “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019; hereinafter the “Fair Value Measurement
Standard”), etc. from the beginning of the fiscal year, and will prospectively apply the
new accounting policies stipulated by the Fair Value Measurement Standard, etc. inaccordance with the transitional treatment set forth in Paragraph 19 of the Fair
Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). This does not affectthe consolidated financial statements.
And also, the notes of items regarding the details of each level for the fair value offinancial instruments, etc. are disclosed in “Financial Instruments and Related
Disclosures”. However, in accordance with the transitional treatment set forth inParagraph 7-4 of the “Guidance on Disclosures about Fair Value of Financial
Instruments” (ASBJ Guidance No.19, July 4, 2019), that notes were not disclosed.

(q) Accounting Standards issued but not yet applied-“Implementation

Guidanceon

AccountingStandard

for

Fair

Value

Measurement” (ASBJ Guidance No.31, June 17, 2021)(i) Overview
Implementation Guidance on Accounting Standard for Fair Value Measurement(ASBJ Guidance No. 31) published on July 4, 2019 was revised on June 17, 2021.
When the guidance was published, it indicated that because a certain period ofBasis of Presenting Consolidated 24
Financial Statements

time may be required to discuss the fair value measurement of the investment
trust with the people involved and in order to consider the notes regarding thefair value of investments in the unions or other organizations reported by net
amount of equity on the balance sheet, around 1 year was required for discussion
and consideration after publication of Accounting Standard for Fair Value
Measurement.
As a result, the guidance has been revised and published on June 17, 2021.
(ii) Scheduled date of application
To be applied from the beginning of the fiscal year ending March 2023.
(iii) Effects of application of these standards
The effects of the application of the aforementioned guidance on the Company’s
consolidated financial statements are currently under the assessment.

(r) Additional information(Accounting estimates of the impacts of the COVID-19 infection)
The Company believes that it is difficult to predict how the impacts of the
COVID-19 infection will spread or when they will converge. However, we makethe accounting estimates based on the assumption which the impact on financial
position and operating results of the Group will continue for a certain period in
the fiscal year ending March 31, 2023 based on external information available atthis time.
(Granting Company Stock to Employees through a Trust)The board of directors held on November 11, 2020 resolved to introduce a"Trust-type Employee Stockholding Incentive Plan [E-Ship🄬]"(hereinafter, “thisPlan”). The objective is to incentivize all employees to improve the Company's
corporate value in the medium-to-long term, enhance employee benefits, andencourage growth of the Company constantly through employee’s motivation towork by equity participation as a shareholder. The Company is accounting forthis Plan in according with “Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees etc. through Trusts” (ASBJ PITF No. 30,
March 26, 2015).

Basis of Presenting Consolidated 25
Financial Statements(1) Incentive plan overview
This Plan is available to all employees who belong to the Kyokuto Kaihatsu
Employee Shareholding Association (hereinafter, “Shareholding Association”).
Under this Plan, the Company establishes a trust, called the "Kyokuto Kaihatsu
Employee Shareholding Association Exclusive Trust" (hereinafter "the Employee
Shareholding Association Trust") through a trust bank. The Employee
Shareholding Association Trust will estimate the number of shares that the
Employee Shareholding Association is likely to acquire over the 3 years after theestablishment of the trust, and will accept this amount in advance throughthird-party allotment from the Company. The fund will be borrowed fromfinancial institutions. The Employee Shareholding Association Trust will thencontinuously sell shares to the Shareholding Association, and if an amountequivalent to net gain on sale of the shares has accumulated in the Employee
Shareholding Association Trust at the end of the trust period, the said amountwill be distributed as residual assets to the members of the Employee
Shareholding Association who meet the beneficiary eligibility criteria. Note that
the Company will guarantee loans taken to accept the shares and thus will repay
any outstanding portion of the loans, if an amount equivalent to loss on sale ofshares has accumulated in the Employee Shareholding Association Trust at theend of the trust period due to a drop in the market price of the Company's shares.
(2) Residual Company shares held in the Employee Shareholding Association
Trust
Any residual shares of the Company held in the Employee Shareholding
Association Trust have been recorded at the Employee Shareholding Association
Trust's book value (excluding incidental expenses) as treasury stock under Net
assets in the accompanying consolidated balance sheets. The book value of thetreasury stock at March 31, 2022 and 2021 are ¥ 87 million ($ 711 thousand,
62,300 shares) and ¥ 242 million (171,400 shares), respectively.
(3) Book value of debt recorded through the application of the total amountmethodThe book value of debt recorded through the application of the total amountmethod at March 31, 2022 and 2021 are ¥ 76 million ($ 617 thousand) and ¥ 249
million, respectively.

Basis of Presenting Consolidated 26
Financial Statements

3. Securities
The

following

wereasummaryofheld-to-maturity

securities

andavailable-for-sale securities at March 31, 2022 and 2021:
Millions of yen

Available-for-sale securities

March 31, 2022

Gross

Gross

Book Value

unrealized

unrealized(Estimatedgains

lossesfair value)

(162)

¥

Cost

Market value available:
Equity securities¥ 5,362

Other securities

227

Subtotal¥ 5,589

¥

6,798

¥

(6)

−
¥

6,798

¥

(168)

11,998221¥

Market value not available:

12,219
1,804

Total

¥

14,023

Millions of yen

Available-for-sale securities

March 31, 2021

Gross

Gross

Book Value

unrealized

unrealized(Estimatedgains

lossesfair value)

Cost

Market value available:
Equity securities¥ 5,372

Other securities

229

Subtotal¥ 5,601

¥

7,192

¥

7,192

¥

(5)

−
¥

(71)

¥

(76)

224
¥

Market value not available:
Total

12,493
12,717
1,671¥

14,388

Basis of Presenting Consolidated 27
Financial Statements

Thousands of U.S. dollars

Available-for-sale securities
Gross

Gross

Book Value

unrealized

unrealized(Estimated

Cost

gains

lossesfair value)

Equity securities$ 43,805$ 55,530$ (1,321)$ 98,014

Other securities

1,856

−

(48)

1,808

Subtotal$ 45,661$ 55,530$ (1,369)$ 99,822

March 31, 2022
Market value available:

Market value not available:

14,733

Total$ 114,555

Impairment losses of available-for-sale securities which were recorded during the
fiscal year ended March 31, 2021 were immaterial, and as for the fiscal year ended
March 31, 2022, there were not applicable.
4. Short-term Bank Loans and Long-term Debts
The annual average interest rates applicable to short-term bank loans at March
31, 2022 and 2021 were 0.74% and 1.09%, respectively.
Long-term debts at March 31, 2022 and 2021 consisted of the following:Thousands ofMillions of yen

Long-term bank loans

2022

2021

¥

¥

270

305

U.S. dollars

2022
$

2,200

Lease obligations

143

159

1,168

Other

−

210

−

Total

¥

413

¥

674

$

3,368

Basis of Presenting Consolidated 28
Financial Statements

Aggregate annual maturities of long-term debts subsequent to March 31, 2022
were as follows:
Thousands ofYear ending March 31
2023

Millions of yen¥

U.S. dollars

77

$

631

2024

59

477

2025

32

259

2026

18

150

2027 and thereafter

151

1,234

337

$ 2,751

Total¥

Long-term bank loans for Trust-type Employee Stockholding Incentive Plan
[E-Ship🄬] (¥ 76 million, $ 617 thousand) are not included in the above schedule,
since it is difficult to calculate the amount of the annual maturities.
To set up a commitment line by multiple finance institutions, the Company
renewed an agreement with a syndicate of 6 banks for the fiscal years ended
March 31, 2022 and 2021, respectively.
The unexecuted balance of lending commitments of the Company at March 31,
2022 and 2021 were as follows:
Thousands ofMillions of yen

Total lending commitments
Less amounts currently executed
Unexecuted balance

U.S. dollars

2022

2021

2022

¥ 5,000¥ 5,000$ 40,846−−−¥ 5,000¥ 5,000$ 40,846

5. Pledged Assets
The following assets were pledged as collateral for the following borrowings at
March 31, 2021, and there were not applicable at March 31, 2022:
Millions of yen

2021
Land
Buildings
Total

¥

750
1,487

¥ 2,237

Basis of Presenting Consolidated 29
Financial Statements

Millions of yen

2021
Other non-current liabilities¥ 1,087

Total¥ 1,087

6. Retirement Benefits
The Company, a domestic subsidiary and 2 foreign subsidiaries have defined
benefit corporate pension plans and lump-sum retirement benefit plans. Other
domestic subsidiaries join the Smaller Enterprise Retirement Allowance Mutual
Aid Scheme which is a kind of defined contribution plans.
The changes in defined benefit obligations for the fiscal years ended March 31,
2022 and 2021 were as follows:
Thousands ofMillions of yen

U.S. dollars

2022

2021

2022

¥ 8,261¥ 7,996$ 67,489

Service cost

540

522

4,414

Interest cost

23

10

192

Actuarial gains or losses

(56)

99

(460)

Retirement benefits paid

(554)

(373)

(4,525)

−

8

−

3

(1)

21

8,261

$ 67,131

Benefit obligations at beginning of year

Increase of benefit obligation due to a newly
consolidated subsidiary
Translation adjustments
Benefit obligations at end of year

¥

8,217

¥

The changes in plan assets for the fiscal years ended March 31, 2022 and 2021
were as follows:
Thousands ofPlan assets at beginning of year

Millions of yen

U.S. dollars

2022

2021

2022

¥

¥

7,028

$ 64,716

7,921

Expected return on plan assets

157

141

1,282

Actuarial gains or losses

47

605

384

Contributions from employers

408

466

3,335

Retirement benefits paid

(502)

(319)

(4,108)

7,921$ 65,609

Plan assets at end of year

¥

8,031

¥

Basis of Presenting Consolidated 30
Financial Statements

The reconciliation of the defined benefit obligations and plan assets to the net
defined benefit liabilities recognized in the consolidated balance sheet as ofMarch 31, 2022 and 2021 were as follows:
Thousands ofFunded benefit obligations

Millions of yen

U.S. dollars

2022

2021

2022

¥

¥

8,229

$ 66,845

8,031

7,921

65,609

151

308

1,236

35

32

286

8,182

Plan assets at end of year
Non funded benefit obligations
Net

amountofliabilities

andassetsrecognized in consolidated balance sheet
Net defined benefit liabilities

¥

186

¥

340

$

1,522

¥

186

¥

340

$

1,522

Net defined benefit assets
Netamountofliabilities−
andassetsrecognized in consolidated balance sheet

¥

186

−
¥

340

−
$

1,522

The retirement benefit expenses for the fiscal years ended March 31, 2022 and2021 were as follows:
Thousands ofService cost

Millions of yen

U.S. dollars

2022

2021

2022

¥

¥

$

540

Interest cost
Expected return on plan assets
¥

4,414

23

10

192

(157)

(141)

(1,282)

50

195

411

Recognition of actuarial gains or losses
Severance and pension costs

522

456

¥

586

$

3,735

Remeasurements of defined benefit plans recognized in other comprehensive
income (amount before income tax effect) were as follows:
Thousands ofMillions of yen

U.S. dollars

2022

2021

2022

Recognized actuarial gains or losses

¥

154

¥

701

$

1,256

Total

¥

154

¥

701

$

1,256

Basis of Presenting Consolidated 31
Financial Statements

Remeasurements of defined benefit plans recognized in accumulated othercomprehensive income (amount before income tax effect) were as follows:
Thousands ofMillions of yen

U.S. dollars

2021

2022

2022
Unrecognized actuarial gains or losses

¥

92

¥

245

$

751

Total

¥

92

¥

245

$

751

The components of plan assets as of March 31, 2022 and 2021 were as follows:
Ratio

2022

2021

Bonds

54%

54%

Securities

23%

22%

General account asset

16%

17%

Other

7%

7%

Total

100%

100%

The major actuarial assumptions for the fiscal years ended March 31, 2022 and2021 were as follows:
Ratio

2022

2021

The Company and a domestic subsidiary

0.0 to 0.8%

0.0 to 0.6%

A foreign subsidiary

3.6 to 7.8%

3.7 to 8.0%

The Company and a domestic subsidiary

2.0%

2.0%

A foreign subsidiary−%−%

The Company and a domestic subsidiary

4.4 to 8.8%

4.3 to 8.8%

A foreign subsidiary

7.0 to 10.0%

7.0 to 10.0%

Discount rateLong-term rate of return on plan assets

Future salary increaseLong-term rate of return on plan assets was determined by considering thecurrent and future portfolio of plan assets and the current and future long-term
performance of various assets comprise the plan assets.
The required amount of the defined contribution pension plan were ¥ 136 million($ 1,107 thousand) and ¥ 126 million for the fiscal years ended March 31, 2022
and 2021 in the Company and other domestic subsidiaries.

Basis of Presenting Consolidated 32
Financial Statements

7. Contingencies
At March 31, 2022 and 2021, the Group was contingently liable as follows:
Thousands ofMillions of yen

U.S. dollars

2021

2022

2022
As a guarantor of indebtedness of :
Other
Total

¥

5

¥

7

$

45

¥

5

¥

7

$

45

8. Cash and cash equivalents
Cash and cash equivalents at March 31, 2022 and 2021 were as follows:
Thousands ofMillions of yen

Cash and deposits
Short-term securities
Securities with redemption term of over 3
monthsTime deposits with an original maturity ofover 3 months
Guarantee for issuance of a letter of credit
to the bank
Cash and cash equivalents

U.S. dollars

2022

2021

2022

¥ 25,815¥ 9,703$ 210,888

11,50012,20093,947

−

(600)

−

(39)

(39)

(319)

(27)

(24)

(220)

¥ 37,249¥ 21,240$ 304,296

9. Financial Instruments and Related Disclosures(1) Policy for financial instruments
The Group manages funds by utilizing short-term deposits, etc. and raises
money by borrowing from financial institutions and by issuing bonds.
Derivatives are used, not for speculative nor trading purpose, but to hedge
the exposure to foreign exchange rate risks with the debts and credits
denominated in foreign currencies and interest rate risks associated withcertain interest payments on borrowings.

Basis of Presenting Consolidated 33
Financial Statements(2) Types of financial instruments and related risk, and risk management for
financial instruments
Trade notes and accounts receivable are exposed to credit risk in relation tocustomers. In order to monitor credit risk, the Group manages, according to
the credit management guideline of the Group, the due date and the balanceof operating receivables from customers.
Investment securities consist of mainly equity securities issued by theGroup’s business partners and these securities are exposed to market risk.
The Group periodically monitors the fair value of such equity securities,
which is reported to the board meeting.
Trade notes and accounts payable have payment due dates mainly within 1
year. Trade notes and accounts payable denominated in foreign currencies are
exposed to the market risk of fluctuation in foreign currency exchange rate.
Such risk is hedged principally by forward foreign currency contract.
Short-term bank loans are raised mainly in connection with businessactivities and long-term bank loan and bonds payable, which are due mainly
within 5 years, are raised principally for the purpose of making capital
investments. Long-term debts with variable interest rates are exposed tointerest rate fluctuation risk, so the Group enters into interest rate swap
transactions to manage such interest rate exposure.
Derivatives are managed in accordance with policies and procedures for risk
assessment (see Note 11 “Derivatives”) and also the Group enters into
derivative transactions only with financially stable financial institutions to
reduce institutions’ credit risk.
Based on a report from the Company and consolidated subsidiaries, theGroup prepares and updates its cash flow plans on a monthly basis to manage
the Group’s liquidity.
(3) Supplementary explanation of the estimated fair value of financial
instruments
With regard to the below mentioned contract prices etc. of derivatives, thecontract prices themselves do not present the market risk on the derivativetransactions.
(4) Fair values of financial instruments
Summarized in the table below are the carrying amounts and the estimated fairvalue of financial instruments outstanding at March 31, 2022 and 2021. Financial
instruments for which do not have a market value are not included in the tablebelow.

Basis of Presenting Consolidated 34
Financial Statements

Millions of yen

Carrying
March 31, 2022

Investment securities

account

Fair value

gain/loss¥ 12,219¥ 12,219¥

Long-term loans receivable (*1)

482

Allowance for doubtful accounts (*2)(177)

Long-term bank loans (*1)

Unrecognized
−

305

307

2

(270)

(270)

−
Millions of yen

Carrying
March 31, 2021

Investment securities

UnrecognizedamountFair value

gain/loss¥ 12,717¥ 12,717¥

Long-term loans receivable (*1)

1,990

Allowance for doubtful accounts (*2)

(1,475)

−

515

516

1

Long-term bank loans (*1)

(305)

(305)

−

Long-term deposits

(210)

(215)

(5)

Thousands of U.S. dollars

Carrying

Unrecognized

March 31, 2022

account

Fair value

gain/loss

Investment securities$ 99,822$ 99,822$

Long-term loans receivable (*1)

3,940

Allowance for doubtful accounts (*2)

(1,446)Long-term bank loans (*1)

−

2,494

2,509

15

(2,200)(2,200)−(*1) The carrying amounts of current portion of long-term loans receivableamounting ¥ 26 million ($ 213 thousand) and ¥ 26 million which are disclosed in“Other Current Assets” at March 31, 2022 and 2021 are included in Long-termloans receivable. The carrying amounts of current portion of long-term bankloans are included in Long-term bank loans.
(*2) The amount is the allowance for doubtful accounts with respect to long-termloans receivable individually.
(*3) The fair value of “Cash and deposits”, “Short-term securities”, “Trade notes
receivable”, “Trade accounts receivable”, “Electronically recorded monetaryclaims – operating” “Trade notes and accounts payable”, and “Electronicallyrecorded obligations – operating” are not disclosed because these are settled in ashort period of time and their fair values are approximately the same as the bookBasis of Presenting Consolidated 35
Financial Statements

value.
Financial instruments for which do not have a market value at March 31,
2022 and 2021 consist of the following:Thousands ofMillions of yen

Non-listed equity securities

U.S. dollars

2022

2021

2022

¥

¥

1,671

$14,733

1,421

−

1,804

Long-term deposits−

The annual maturities of financial assets and investment securities with
contractual maturities subsequent to March 31, 2022 and 2021 were as
follows:
Millions of yen

March 31, 2022
Cash and deposits

Due in 1 year

Due after 1 year

Due after 5 years

or less

through 5 years

through 10 years¥ 25,815

¥

−

¥

−

Trade notes receivable

6,647

−

−

Trade accounts receivable

23,078

−

−

8,300

−

−

11,500−−Electronically recorded monetaryclaims - operating
Short-term securities

Total¥ 75,340

¥

−

¥

−

Millions of yen
Due in 1 year

Due after 1 year

Due after 5 years

March 31, 2021

or less

through 5 years

through 10 years

Cash and deposits¥ 9,703

Trade notes and accounts receivable

35,129

−

−

7,886

−

−

12,200−−Electronically recorded monetaryclaims - operating
Short-term securities

Total¥ 64,918

¥

¥

−

−

¥

¥

−

−

Basis of Presenting Consolidated 36
Financial Statements

Thousands of U.S. dollars
Due in 1 year

Due after 1 year

Due after 5 years

or less

through 5 years

through 10 years

March 31, 2022
Cash and cash equivalents$$ 210,888$−−

Trade notes receivable

54,299−−Trade accounts receivable

188,533−−

67,802−−

93,947−−

Electronically recorded monetaryclaims - operating
Short-term securities
Total

$

$ 615,469$−−(5) Breakdown of financial instruments by each fair value level
The fair values of financial instruments are categorized into the following threelevels, in accordance with the observability and materiality of the inputs used in
the fair value calculation.
Level 1 fair value: Fair value calculated using the market price in an
active market among the observable input relating to
the calculating the fair value for an identical asset or
liability.
Level 2 fair value: Fair value calculated using inputs among theobservable input relating to the calculating the fairvalue, other than the Level 1 inputs.
Level 3 fair value: Fair value calculated using inputs that cannot be
observed.
In cases where several inputs which have a material effect on the calculation of
the fair value are used, among the levels to which the respective inputs belong,the fair value is categorized at the level with the lowest priority in the fair value
calculation.
Financial instruments with the carrying amount recorded using the fair value
subsequent to March 31, 2022 were as follows:

Millions of yen
Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities¥ 11,998

¥

221

¥

−

¥ 12,219

Total¥ 11,998

¥

221

¥

−

¥ 12,219

Basis of Presenting Consolidated 37
Financial Statements

Thousands of U.S. dollars
Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities$ 98,014

$

1,808

$

−

$ 99,822

Total$ 98,014

$

1,808

$

−

$ 99,822

Financial instruments other than those recorded using the fair value subsequent
to March 31, 2022 were as follows:

Millions of yen
Fair value
Level 1

Level 2

Level 3Total

Long-term loans receivable

¥

−

¥

307

¥

−

¥

307

Assets Total

¥

−

¥

307

¥

−

¥

307

Long-term bank loans

¥

−

¥

270

¥

−

¥

270

Liabilities Total

¥

−

¥

270

¥

−

¥

270

Thousands of U.S. dollars
Fair value
Level 1

Level 2

Level 3Total

Long-term loans receivable

$

−

$

2,509

$

−

$

2,509

Assets Total

$

−

$

2,509

$

−

$

2,509

Long-term bank loans

$

−

$

2,200

$

−

$

2,200

Liabilities Total

$

−

$

2,200

$

−

$

2,200

Explanation of the valuation methods and inputs used in calculating fair values
Investment securities
Listed shares are valued using the market price. Because listed sharesare traded on active markets, their fair value is categorized as a level 1
fair value.
Bonds investment trust are measured at the quoted price obtained fromcounterparty financial institutions, their fair value is categorized as alevel 2 fair value.
Long-term loans receivable
The fair value of long-term loans receivable is calculated using thediscounted method based on estimated interest rates if similar new loantransaction is performed in the current period, their fair value iscategorized as a level 2 fair value.

Basis of Presenting Consolidated 38
Financial Statements

Long-term bank loans
The fair value of long-term bank loans is calculated using the discounted
method based on estimated interest rates if similar new borrowings areentered into in the current period, their fair value is categorized as a level2 fair value.
Long-term bank loans for Trust-type Employee Stockholding Incentive
Plan [E-Ship🄬] is valued using the book value, because this is based on
floating interest rates and reflect market interest rates within a shortperiod of time, the fair value is approximately the same as the book value,
their fair value is categorized as a level 2.
10. Investment Property
The company and certain subsidiaries hold some rental properties including landin Kanagawa and other areas (“investment properties”). The amounts of net
income related to investment properties (rental income is recognized in operating
revenue and rental expense is principally charged to operating expenses) were
¥ 948 million ($ 7,744 thousand) and ¥ 765 million for the fiscal years ended
March 31, 2022 and 2021, respectively. Additionally, gain on sales of property
and equipment related to certain investment property in an amount of ¥ 13,222
million ($ 108,013 thousand) was recognized in other income for the fiscal year
ended March 31, 2022.
The carrying amount, changes in such balances and market prices of investment
properties were as follows:
Millions of yen

Carrying amount

Fair value

Increase/
April 1, 2021

¥ 7,121(decrease)¥ (2,297)

March 31, 2022

March 31, 2022

¥ 4,824¥ 4,247
Millions of yen

Carrying amount

Fair value

Increase/
April 1, 2020

¥ 6,912(decrease)¥ 209

March 31, 2021

March 31, 2021

¥ 7,121¥ 19,931

Basis of Presenting Consolidated 39
Financial Statements

Thousands of U.S. dollars

Carrying amount

Fair value

Increase/
April 1, 2021

$ 58,175(decrease)$ (18,764)

March 31, 2022

March 31, 2022

$ 39,411$ 34,694(a) Carrying amount is net of accumulated depreciation and accumulated
impairment losses, if any.
(b) Increase during the fiscal year ended March 31, 2022 was mainly due to theexpenditure of the guide signs of the coin parking business in amount of¥ 40 million ($ 327 thousand). Decrease during the fiscal year ended March
31, 2022 was mainly due to the sale of Mizuho Shopping Center in an
amount of ¥ 2,239 million ($ 18,291 thousand).
Increase during the fiscal year ended March 31, 2021 was mainly due to theexpenditure of land for relocation of Tohoku branch in an amount of ¥ 328
million. Decrease during the fiscal year ended March 31, 2021 was mainly
due to depreciation in an amount of ¥ 134 million.
(c) Fair value at March 31, 2022 and 2021 were principally measured based on thereal estate appraisal assessed by the external real estate appraiser. In the casethat there was a certain sales price under a contract, the sales price was adopted
as the fair value.
11. Derivatives
Derivative financial instruments are utilized by the Company principally to
reduce interest rate risk and foreign exchange rate risk. The Company has
established a control environment which includes policies and procedures for risk
assessment and for the approval, reporting and monitoring of transactions
involving derivative financial instruments. The Company does not hold or issue
derivative financial instruments for trading purposes.
At March 31, 2022 and 2021,

the notional amounts and the estimated fair valueof derivative financial instruments, for which deferred hedge accounting has
been applied or has not been applied were none, respectively.
12. Shareholders’ Equity
Changes in common stock and additional paid-in capital have resulted from thefollowing:Basis of Presenting Consolidated 40
Financial Statements

Millions of yen

Balance at March 31, 2020
Movement of stock during 2021
Balance at March 31, 2021
Movement of stock during 2022
Balance at March 31, 2022

Number ofCommonCapitalShares issued

Stock

Surplus42,737,668¥ 11,900¥ 11,679

−

−

142

42,737,668

11,90011,821−−18

42,737,668¥ 11,900¥ 11,839

Thousands of U.S. dollars

Balance at March 31, 2021
Movement of stock during 2022
Balance at March 31, 2022

CommonCapitalStock

Surplus$ 97,213$ 96,568−

149$ 97,213$ 96,717

Increases of capital surplus during 2022 and 2021 were due to the disposal oftreasury stock.
The Company adopted 100 shares of common stock as “unit amount of shares”. A
holder of shares representing less than one unit cannot exercise any voting rights
with respect to such shares. However, the holder is entitled to receive dividends
and other distributions. A holder of a fraction of a unit may at any time request
the Company to purchase such shares at the prevailing market price.
The shares held by the Employee Shareholding Association (62,300 and 171,400
shares) were included in the number of treasury stock at March 31, 2022 and2021.
During 2022, the increase of treasury stock was due to the purchase of odd-lot
shares (189 shares) and the acquisition without consideration associated withthe retirement of object persons of the restricted stock compensation (150 shares).
The decrease of treasury stock was due to the disposal of treasury stock as
restricted stock compensation (20,200 shares) and the sales to Shareholding
Association from the Employee Shareholding Association (109,100 shares).

Basis of Presenting Consolidated 41
Financial Statements

During 2021, the increase of treasury stock was due to the purchase of odd-lot
shares (538 shares) and the acquisition by the Employee Shareholding
Association (204,400 shares). The decrease of treasury stock was due to the salesof odd-lot shares (52 shares), the sales to the Employee Shareholding Association(204,400 shares) and the sales to Shareholding Association from the Employee
Shareholding Association (33,000 shares).
13. Research and Development
Research and development expenditure which is included in “Selling, generaland administrative expenses” were ¥ 1,514 million ($ 12,365 thousand) and¥ 1,509 million for the fiscal years ended March 31, 2022 and 2021, respectively.
14. Income Taxes
The Company and its domestic subsidiaries are subject to several taxes based on
income, which in the aggregate resulted in a statutory tax rate of approximately
30.58% for the fiscal years ended March 31, 2022 and 2021. Foreign subsidiaries
are subject to income taxes of the countries in which they operate.
The tax effects of significant temporary differences which resulted in deferred
tax assets and liabilities at March 31, 2022 and 2021 were as follows:
Thousands ofMillions of yen

2022

2021

U.S. dollars

2022

Deferred tax assets:
Tax loss carry forward

¥

222

¥

175

$

1,816

Allowance for doubtful accounts

239

380

1,952

Accrued Bonuses

705

762

5,759

Provision for product warranties

250

269

2,042

Provision for loss on construction contracts

118

14

967

Accrued corporation enterprise tax

117

155

960

Loss on valuation of inventories

76

142

619

Forecast of construction cost

69

40

560

Net defined benefit liabilities

55

101

447

200

200

1,633

231

231

1,891

Fixed assets – elimination of intercompany
profits
Loss on impairment of long-lived assets

Basis of Presenting Consolidated 42
Financial Statements

Loss on valuation of investment for

124

438

1,012

Excess depreciation

382

385

3,121

Other

710

689

5,797

3,498

3,981

28,576

(208)

(174)

(1,699)(1,135)(928)(9,271)

Valuation allowance sub-total(1,343)(1,102)(10,970)

Total deferred tax assets¥ 2,155¥2,879$ 17,606

subsidiaries and affiliates

Deferred tax assets sub-total
Less valuation allowance
relevant to tax loss carry forward
Less valuation allowance
relevant to total deductible
temporary difference

Thousands ofMillions of yen

U.S. dollars

2022

2021

2022

¥ (2,034)¥ (2,179)$ (16,618)

Reduction reserve for fixed assets(1,828)(1,369)(14,931)

Special reduction reserve for fixed assets(2,473)−(20,199)(1,317)(1,311)(10,762)

(84)

(51)

(685)

(7,736)(4,910)(63,195)¥ (5,581)¥ (2,031)$ (45,589)

Deferred tax liabilities:
Unrealized gain on investment securities

Unrealized gain on subsidiaries’ fixed
assets by revaluation at the beginning of
consolidation
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)(Change in presentation methods)
From the fiscal year ended March 31, 2022, “ Provision for loss on construction
contracts” which was included in “Other” on the breakdown of deferred tax assets
for the previous fiscal year, is presented separately because its amount has
become significant.

The breakdown of deferred tax assets for the previous fiscal

year has been reclassified to reflect this change in presentation method.
As a result, ¥ 703 million which was presented in “Other” on the breakdown ofdeferred tax assets for the previous fiscal year has been reclassified as ¥ 14
million in “Provision for loss on construction contracts” and ¥ 689 million in“Other”.

Basis of Presenting Consolidated 43
Financial Statements(Note) Tax loss carry forward and related deferred tax assets by expiration
periods were as follows.
At March 31, 2022
Millionsof yenAfter 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

6

69

66

24

38

19

222

(6)

(69)

(66)

(24)

(37)

(6)

(208)

−

−

−

−

1

13

14

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

33

5

60

57

20

−

175

(33)

(5)

(60)

(57)

(19)

−

(174)

−

−

−

−

1

−

1

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets
At March 31, 2021
Millions of yen

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets

Basis of Presenting Consolidated 44
Financial Statements

At March 31, 2022
Thousands of U.S. dollars

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

52

562

535

196

312

159

1,816

(52)

(562)

(535)

(196)

(305)

(49)

(1,699)

−

−

−

−

7

110

117

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets(a) Tax loss carry forward is shown as an amount multiplied by the statutory tax
rate.
(b) The deferred tax assets of ¥ 14 million ($ 117 thousand) and ¥ 1 million wererecognized for the balance of tax loss carry forward (an amount multiplied by
the statutory tax rate) of ¥ 222 million ($ 1,816 thousand) and ¥ 175 million
at March 31, 2022 and 2021, respectively.
Valuation allowance has not been recognized in the portion of tax loss
carryforward based on judgement of recoverability through future taxable
income.
The reconciliation between the statutory tax rate and the effective income tax
rate for the fiscal years ended March 31, 2022 and 2021 were as follows:
2021
Statutory tax rate

30.58%

Non-deductible expenses for income tax purpose

0.40

Non-taxable dividend income(0.39)

Inhabitant per capita tax

0.99

Tax credit(1.33)

Change in valuation allowance(5.11)

Equity in earnings of affiliated companies

0.05

Other

1.19

Effective tax rate

26.38%

Basis of Presenting Consolidated 45
Financial Statements

The reconciliation between the statutory tax rate and the effective income tax rate forthe fiscal year ended March 31, 2022 was omitted because the difference is less than
5% of the statutory income tax rate.
15. Comprehensive Income
The components of other comprehensive income for the fiscal years ended March 31,
2022 and 2021 were as follows:
Thousands ofMillions of yen

2022

U.S. dollars

2021

2022

Unrealized gain on available-for-sale securities:
Gains (Losses) arising during the year

¥

(465)

¥

3,400

$

(3,800)Reclassification adjustments for gain (loss)

(13)

22

(102)

Amount before income tax effect

(478)

3,422

(3,902)

Income tax effect145(1,045)

1,183

Total

¥

(333)

¥

(18)

¥

2,377

$

(2,719)Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments for gain (loss)
Amount before income tax effect
Income tax effect
Total

¥

(74)

$

(143)

−

−

−

(18)

(74)

(143)

−

−

−

¥

(18)

¥

(74)

$

(143)

¥

104

¥

506

$

845

Remeasurements of defined benefit plans:
Gains (Losses) arising during the year
Reclassification adjustments for gain (loss)

50

195

411

Amount before income tax effect

154

701

1,256

Income tax effect

(47)

(215)

(383)

Total

¥

107

¥

486

$

873

¥

52

¥

(50)

$

421

Share of other comprehensive income inaffiliates accounted for by equity method:
Gains (Losses) arising during the year
Reclassification adjustments for gain (loss)
Total
Total other comprehensive income

27

−
¥
¥

52

(192)

¥
¥

−

(23)
2,766

$
$

421
(1,568)

Basis of Presenting Consolidated 46
Financial Statements

16. Provision of reserve for Losses on Construction Contracts
Provision of reserve for losses on construction contracts included in Cost of Sales
were ¥ 385 million ($ 3,144 thousand) and ¥ 97 million for the fiscal years ended
March 31, 2022 and 2021, respectively.
17. Revenue from Contracts with Customers(1) Disaggregation of revenue
Disaggregation of revenue is disclosed in Note 18.
(2) Basic information to understand revenue from contracts with customers
Basic information to understand revenue from contracts with customers is disclosed
in Note 2(i).
(3) Contract balances
Thousands ofMillions of yen

U.S. dollars

2022

2022

¥

41,457$ 338,670

38,025

310,634

1,558

12,730Contract assets (ending balance)

495

4,049

Contract liabilities (beginning balance)

386

3,150

Contract liabilities (ending balance)

652

5,323

Receivables from contracts with customers(beginning balance)
Receivables from contracts with customers(ending balance)
Contract assets (beginning balance)

Contract assets are primarily consideration for on-going construction. Contract
liabilities are advances received on construction contracts in progress and sales of
specialty trucks. Contract liabilities are included in other current liabilities in theaccompanying consolidated balance sheets.
Of the revenue recognized during the fiscal year ended March 31, 2022, the amountincluded in contract liabilities at the beginning of the fiscal year was ¥ 335 million($ 2,742 thousand).
The decrease of contract assets for the fiscal year ended March 31, 2022 was mainly
due to the completion of on-going construction.
The increase of contract liabilities for the fiscal year ended March 31, 2022 wasmainly due to the increase of advances received on construction contracts in progress.

Basis of Presenting Consolidated 47
Financial Statements(4) Transaction price allocated to the remaining performance obligations
The Group apply the practical expedient and the contracts whose initial expected
terms are 1 year or less aren’t included in the note of transaction price allocated to theremaining performance obligations.
Performance obligations mainly relate to the manufactures and sales of specialty
trucks and “Maintenance pack contract” in “Specialty truck business” andconstruction contracts such as construction of recycling facilities and comprehensive
maintenance contracts in “Environmental equipment and systems business”.
The total amount of transaction price allocated to the remaining performanceobligations by prospective satisfaction period at March 31, 2022 was as follows:
Thousands ofMillions of yen

2022
Within 1 year

2022

21,584$ 176,328

After 1 year through 2 years

10,067

82,238After 2 year through 3 years

4,197

34,290After 3 years

9,717

79,37745,565$ 372,233

Total

¥

U.S. dollars¥

In terms of transaction price related to construction contracts, the amount wasallocated based on the timing of prospective completion due to uncertain ratio of thecost incurred for each year. They approximately will be completed within 4 years andrevenue will be recognized.
18. Segment Information(1) Description of reportable segments
The Group’s reportable segments are those for which separately financial
information is available and regular evaluation by the Board of Directors is being
performed in order to decide how resources are allocated among the Group. The
Group conducts several types of businesses including specialty truck business,environmental equipment and systems and real estate rental business. The
Company and its consolidated subsidiaries are engaged in each business as anindependent management unit. The Group consists of three reportable segments,
which are “Specialty truck business” (Industry A), “Environmental equipment
and systems business” (Industry B) and “Real estate rental business” (Industry
C). Industry A manufactures and distributes specialty trucks such as dump
trucks, tailgate lifters, tank trucks, refuse trucks, trailers, etc. Industry B
manufactures and distributes recycle facilities, including maintenance andconsignment business. Industry C manufactures multistory parking equipment
and offers operating services for toll parking and real estate rental services.

Basis of Presenting Consolidated 48
Financial Statements(2) Methods of measurement for the amounts of sales, profit, assets, liabilities
and other items for each reportable segment
The accounting policies of each reportable segment are consistent to those
disclosed in Note 2, “Summary of Significant Accounting Policies”. Intersegment
sales or transfers are based on the market prices.
As described in Note 2(p), the Group consolidated subsidiaries has changed
accounting treatment for revenue recognition and the method for measuring
reportable segment profit or loss by applying the new accounting standards forrevenue recognition from the beginning of the fiscal year ended March 31, 2022.
As a result, in the fiscal year, sales to customers increased by ¥ 1 million ($ 11thousand) and segment profit increased by ¥0 million ($ 6 thousand) in“Environmental equipment and systems business”.
(3) Information about sales, profit, assets and other items for the fiscal years
ended March 31, 2022 and 2021 were as follows:
Millions of yen
Reportable segments

2022

Industry

Industry

IndustryA

BC¥ 98,409¥ 3,62183

8,026

98,492

Total

Reconciliations

Consolidated(Note a)(Note b)Net sales:
Goods or service transferred¥ 5,473 ¥ 107,503−¥ 107,503

−

8,109

−

8,109

11,647

5,473

115,612−

115,612

55

−

1,243

1,298

−

1,298

98,547

11,647

6,716

116,910－

116,910

25

0

545

570

(570)

－

98,572

11,647

7,261

117,480(570)

116,910Segment profit

4,481

2,098

1,143

7,722

(748)

6,974

Segment assets

83,268

8,145

11,443102,856

51,494

154,350

2,441

74

357

2,872

1

2,873

3,840

73

1,245

5,158

－

5,158

at a point in time
Goods or service transferredover time
Revenue from contracts withcustomers
Other revenue
External customers
Intersegment sales or transfers
Total

Other items:
Depreciation
Increase in tangible andintangible fixed assets

Basis of Presenting Consolidated 49
Financial Statements(a) Reconciliations of segment profit in an amount of ¥ (748) million which
consisted of elimination of intersegment transactions in an amount of ¥ 12
million and corporate expenses which were not allocated to each reportablesegment in an amount of ¥ (760) million. Corporate expenses were mainly
general administrative expenses not attributable to any other reportablesegments.
Reconciliations of segment assets were surplus fund (cash and deposits andsecurities) and long-term investment fund (investment securities) of theCompany.
(b) Segment profit was reconciled with operating income in the consolidated
statements of income.
Millions of yen
Reportable segments
Consolidated(Note a)(Note b)Industry

IndustryA

BC¥ 99,534¥ 11,028¥ 6,608¥ 117,170－¥ 117,170

17

0

524

541

(541)

－

99,551

11,0287,132

117,711(541)

117,170

Segment profit

6,881

1,995

1,140

10,016

(936)

9,080

Segment assets

82,8497,833

12,482

103,164

39,577

142,741

2,346

68

373

2,787

1

2,788

2,334

41

669

3,044

－

3,044

2021

Total

Reconciliations

Industry

Net sales:
External customers
Intersegment sales or transfers
Total

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of ¥ (936) million which
consisted of elimination of intersegment transactions in an amount of ¥ 12
million and corporate expenses which were not allocated to each reportablesegment in an amount of ¥ (948) million. Corporate expenses were mainly
general administrative expenses not attributable to any other reportablesegments.
Reconciliations of segment assets were surplus fund (cash and deposits andsecurities) and long-term investment fund (investment securities) of theCompany.
(b) Segment profit was reconciled with operating income in the consolidated
statements of income.

Basis of Presenting Consolidated 50
Financial Statements

Thousands of U.S. dollars
Reportable segments
Consolidated(Note a)(Note b)Industry

IndustryA

B

C$ 803,926$ 29,579$ 44,712$ 878,217－$ 878,217

680

65,570－66,250－66,250804,606

95,14944,712

944,467－

944,467448－

10,154

10,602－

10,602805,054

95,14954,866

955,069－

955,069

203

1

4,456

4,660

(4,660)－805,257

95,15059,322

959,729(4,660)955,069

Segment profit

36,60817,142

9,339

63,089(6,116)56,973

Segment assets

680,236

66,536

93,483

840,255

420,673

1,260,928

19,944605

2,914

23,463

5

23,46831,369594

10,16942,132－

42,132

2022

Total

Reconciliations

Industry

Net sales:
Goods or service transferred
at a point in time
Goods or service transferredover time
Revenue from contracts withcustomers
Other revenue
External customers
Intersegment sales or transfers
Total

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of $ (6,116) thousand which
consisted of elimination of intersegment transactions in an amount of $ 98
thousand and corporate expenses which were not allocated to each reportablesegment in an amount of $ (6,214) thousand. Corporate expenses were mainly
general administrative expenses not attributable to any other reportablesegments.
Reconciliations of segment assets were surplus fund (cash and deposits andsecurities) and long-term investment fund (investment securities) of theCompany.
(b) Segment profit was reconciled with operating income in the consolidated
statements of income.
(4) Amortization and unamortized balances of goodwill by reportable segment
for the fiscal years ended March 31, 2022 and 2021 were as follows:Basis of Presenting Consolidated 51
Financial Statements

Millions of yen
Industry

Industry

Industry

A

B

C

2022

Reconciliations

Amortization

¥ 85

¥ －

¥ －

¥ －

Unamortized balances

771

－

－

－

Consolidated
¥

85
771

Millions of yen
Industry

Industry

Industry

A

B

C

2021

Reconciliations

Amortization

¥ 40

¥ －

¥ －

¥ －

Unamortized balances

803

－

－

－

Consolidated
¥

40
803

Thousands of U.S. dollars
Industry

Industry

Industry

2022

A

B

C

Amortization

$

691

$ －

$ －

$ －

$ 691

6,297

－

－

－

6,297

Unamortized balances

Reconciliations

Consolidated

19. Subsequent Event(Appropriations of the Company’s retained earnings)
The following appropriations of the Company’s retained earnings in respect of
the fiscal year ended March 31, 2022 were as proposed by the Board of Directors
and approved by the shareholders at the annual general meeting held on June 28,
2022.
Thousands ofAppropriations
Cash dividends of ¥ 32 ($ 0.26) per share

Millions of yen

¥

1,278

U.S. dollars$

10,433(Purchase of Treasury Stock)
At the meeting of the board of directors held on June 6, 2022, the Company has
resolved to purchase of its treasury stock in accordance with Article 156 of theCompanies Act of Japan, as applied pursuant to paragraph 3 of Article 165 of theCompanies Act of Japan.

Basis of Presenting Consolidated 52
Financial Statements

1. Reason for purchase of treasury share
To make it possible to carry out a flexible capital management policy in response tochanges in the business environment, the Company would purchase the treasury
stock. The Company will use the treasury stock for improvement of the corporate
value and stock value.
2. Details of purchase(1) Class of share:

Ordinary shares of the Company(2) Total number of shares of common stock
to be repurchased:

Up to 2,000,000 shares(5.0% of the total number of shares of common stock outstanding excluding treasury stock)(3) Total amount:

Up to ¥ 2,500,000,000 ($20,423 thousand)(4) Period:

From July 1, 2022 to June 30, 2023

(Disposal of Treasury Stock as Restricted Stock Compensation Plan)At the meeting of the board of directors held on June 28, 2022, the Company has
resolved to conduct a disposal of its treasury stock as restricted stock compensation(hereinafter “Disposal of Treasury Stock” or “Disposal”) as follows;
1. Overview of the Disposal(1) Payment dateJuly 22, 2022

(2) Class and number of shares for

21,200 ordinary shares of the Company

the disposal(3) Disposal price¥ 1,434 ($ 11.71) per share(4) Total value of the disposal¥ 30,400,800 ($ 248 thousand)(5) Persons eligible for allotment of

Directors of the Company (excluding outside directors):

shares and number thereof, and5 persons, 8,200 shares

number of shares for allotment

Executive officers who do not concurrently serve as
directors of the Company:
10 persons, 7,000 shares
Directors of domestic subsidiaries of the Company:
12 persons, 4,600 shares
Executive officers who do not concurrently serve as
directors of domestic subsidiaries of the Company:
7 persons, 1,400 shares(6) Other

The Company has submitted a Securities Notice basedon the Financial Instruments and Exchange Act for the
Disposal of Treasury StockBasis of Presenting Consolidated 53
Financial Statements

2. Purpose of and Reason for the Disposal
At the meeting of the board of directors held on May 13, 2021, the Company resolved
to introduce “Restricted Share-based Remuneration Plan” (hereinafter “The Plan”) to
the “Eligible Directors, etc.” who are directors of the Company (hereinafter “Eligible
Directors”), excluding outside directors, and executive officers, excluding concurrent
directors of the Company, directors of domestic subsidiaries of the Company andexecutive officers excluding concurrent directors of domestic subsidiaries of theCompany for the purpose of providing incentives to increase corporate value
continuously as well as further aligning shared values with shareholders for Eligible
Directors, etc..
Also, at the 86th annual general meeting of shareholders held on June 25, 2021, asmonetary compensation to serve as invested assets to acquire the restricted stocks, it
was approved that the amount of the Plan for the Eligible Directors shall not exceed
JPY 50 million ($ 408 thousand), and that the Company’s shares shall be issued or
disposed within 50,000 shares per 1 year, and that the restricted period on stocktransfer shall be 3 years, etc..

Basis of Presenting Consolidated 54
Independent Auditor’s Report
Financial Statements

Basis of Presenting Consolidated 55
Independent Auditor’s Report
Financial Statements

Basis of Presenting Consolidated 56
Independent Auditor’s Report
Financial Statements

Board of Directors andStatutory
Auditors
Corporate
Information
CORPORATE INFORMATION
Kyokuto Kaihatsu Kogyo Co., Ltd.
Established: June 1, 1955
Paid-in Capital: 11,899,867,400 yen (March 31, 2022)
Number of Employees: consolidated 3,138; non-consolidated 1,093 (March 31, 2022)
Headquarters:
6-1-45, Koshienguchi, Nishinomiya-shi, Hyogo, 663-8545 Japan
Tel.+81-798-66-1000, Fax.+81-798-66-8146
Tokyo Office (Overseas Business Department):
3-15-10, Higashi-shinagawa, Shinagawa-ku, Tokyo, 140-0002, Japan
Tel.+81-3-5781-9828, Fax+81-3-5781-3431
Plants:Yokohama Plant
Occupies 96,657 ㎡
Located in Yamato, Kanagawa (Japan)
Nagoya Plant
Occupies 109,611 ㎡
Located in Komaki, Aichi (Japan)
Miki Plant
Occupies 100,728 ㎡
Located in Miki, Hyogo (Japan)
Fukuoka Plant
Occupies 43,503 ㎡
Located in Iizuka, Fukuoka (Japan)
Head Plant of NIPPON TREX Co., Ltd.
Occupies 125,285 ㎡
Located in Toyokawa, Aichi (Japan)
Otowa Plant of NIPPON TREX Co., Ltd.
Occupies 20,889 ㎡
Located in Toyokawa, Aichi (Japan)
Mito Plant of NIPPON TREX Co., Ltd.
Occupies 36,367 ㎡
Located in Toyokawa, Aichi (Japan)
Plant of KYOKUTO KAIHATSU (KUNSHAN) MACHINERY CO., LTD.
Occupies 83,140 ㎡
Located in Kunshan, Jiangsu (China)
Plant of SATRAC ENGINEERING PRIVATE LIMITED
Occupies 24,292 ㎡
Located in Nidavanda Village, Nelmangala, Bangalore (India)
Plant of PT KYOKUTO INDOMOBIL MANUFACTURING INDONESIA
Occupies 20,028 ㎡
Located in Purwakarta, Jawa Barat (Indonesia)

57

Board of Directors and Statutory Auditors

BOARD OF DIRECTORS AND STATUTORY AUDITORS
Tatsuya Nunohara,

Representative Director, President, CEO

Kazuhiko Harada,

Senior Managing Director, Senior Managing Executive Officer

Takeo Norimitsu,

Director, Associate Senior Executive Officer

Noboru Horimoto,Director, Associate Senior Executive Officer

Teruyuki Kizu,

Director, Associate Senior Executive Officer

Akira Michigami,

Outside Director

Hiroyuki Terakawa,

Outside Director

Keiko Kaneko,

Outside Director

Akira Sakurai,Standing Auditor

Soichiro Ochi,

AuditorYoshihiko Norikura,

Outside Corporate Auditor

Kuniaki Fujiwara,

Outside Corporate Auditor

Fumihiro Takasaki,

Associate Senior Executive Officer

Yukihiro Hosozawa,

Executive Officer

Shinichi Takahama,Executive Officer

Yutaka Yoshida,

Executive Officer

Masashi Ushio,

Executive Officer

Shinsaku Chijiiwa,

Executive Officer

Tatsuya Nomura,

Executive Officer

Keisuke Iwata,

Executive Officer

Mamoru Shimizu,

Executive Officer

Koh Yamamoto,Executive Officer

Tetsuya Ichimura,

Executive Officer

58