Annual Securities Report(Report in accordance with Article 24, paragraph (1) of
the Financial Instruments and Exchange Act)English excerpt translation of the “Yukashoken-Houkokusho”
for the 43rd fiscal year (from April 1, 2021 to March 31, 2022)

KYORITSU MAINTENANCE CO., LTD.
E04908

1. Consolidated Financial Statements, Etc.
(1) Consolidated Financial Statements
1) Consolidated balance sheet(Millions of yen)
As of March 31, 2021

As of March 31, 2022

24,588
9,702

37,942–

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Notes and accounts receivable - trade, andcontract assets
Real estate held for sale
Real estate under construction held for sale
Costs on uncompleted construction contracts
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Guarantee deposits
Leasehold deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Deferred assets
Bond issuance costs
Other
Total deferred assets
Total assets–*6

15,959
1,670
513
9,562
(52)
61,944

89,488(36,079)
53,408*4,*6 45,827
11,27816,463(12,070)
4,393
114,907
4,235

-1-

*1

11,856

7,681
7,719
61
*4 7,769(76)
72,953
*6

*4

*4,*6

85,313(38,276)
47,037*4,*6 39,359
13,173
16,984(13,335)
3,648
103,218
3,384

*3,*4

*3

4,499
1,388
16,48916,912
7,029*4 11,144(119)
57,344
176,487

3,151
1,709
18,826
19,0336,928*4 12,133(122)
61,660168,264600–
600
239,032502
2505
241,723

(Millions of yen)
As of March 31, 2021

As of March 31, 2022

4,667
12,702
5,280
1,764
714
37

6,202
14,820
5,080
1,035
979
76

3

5

Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of bonds payable
Income taxes payable
Provision for bonuses
Provision for bonuses for directors
Provision for warranties for completed
construction
Other
Total current liabilities
Non-current liabilities
Bonds payable
Convertible bonds with share acquisitionrightsLong-term borrowings
Long-term guarantee deposits received
Deferred tax liabilities
Retirement benefit liability
Provision for retirement benefits for directors
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Unrealized holding gain (loss) on securities
Deferred gain (loss) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeTotal net assets
Total liabilities and net assets

24,677
49,848

*4

-2-

*2

21,23449,43328,54023,46030,142

30,11253,003
3,367
350
1,045
252
699
997
118,398
168,247*4

61,961
2,992
7
1,013
254
610
1,291
121,703
171,137

7,964
12,821
50,831(357)
71,2597,964
12,821
50,383(361)
70,807

55
–
(555)
24

82
225
(583)
53

(474)

(221)

70,784
239,032

70,586
241,723

2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income(Millions of yen)
For the year ended
March 31, 2021
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Welfare expenses
Provision for bonuses
Provision for bonuses for directors
Retirement benefit expenses
Provision for retirement benefits for directors
Promotion expenses
Commission expenses
Provision of allowance for doubtful accounts
Outsourcing expenses
Rent expenses
Depreciation
Other
Total selling, general and administrative
expenses
Operating profit (loss)
Non-operating income
Interest income
Dividend income
Subsidy income
Income from guarantee deposits uponcancellation
Compensation income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Expenses for measures against novel infectious
diseaseSettlement package
Other
Total non-operating expenses
Ordinary profit (loss)

*2

-3-

For the year ended
March 31, 2022

121,281111,293
9,987*1 173,701
151,659
22,042

5,162
1,029
140
35
149
1
1,822
4,917
7
1,829
1,338
345
2,264

5,309
991
293
77
136
1
1,916
6,839
32
1,813
751
413
2,035

*2

19,044

20,610(9,057)

1,431

83
99
777

108
86
600

129

105

937
262
2,290

465
342
1,708

455

603

502

195

29
1,362
2,349
(9,116)

147
378
1,326
1,814

(Millions of yen)
For the year ended
March 31, 2021
Extraordinary income
Gain on sale of shares of subsidiaries andassociates
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on impairment of non-current assets
Loss from natural disasters
Loss on facility closure
Loss on temporary closure
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Current
Deferred
Total income taxes
Profit (loss)
Profit (loss) attributable to owners of parent*3

For the year ended
March 31, 2022

–

196

153
153

–
196

442
–
2,531
2,886
45
5,907
(14,870)
1,012(3,718)(2,705)(12,164)(12,164)

-4-

*3

51
65
453
–
40
611
1,399
1,233
(372)
860
539
539

Consolidated statement of comprehensive income(Millions of yen)
For the year ended
March 31, 2021
Profit (loss)
Other comprehensive income
Unrealized holding gain (loss) on securities
Deferred gain (loss) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of parent(12,164)

539

173
–
42
61
* 277
(11,887)

26
225
(28)
29
252
791

(11,887)-5-

For the year ended
March 31, 2022*

791

3) Consolidated statement of changes in net assets
For the year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)(Millions of yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

7,961

12,81764,281

(355)

3

3

Total shareholders’equity84,706

Changes during period
Issuance of new shares exercise of share acquisitionrights6

Cash dividends(1,286)(1,286)

Loss attributable to owners ofparent(12,164)(12,164)

Change in scope of
consolidation–

Purchase of treasury shares
Disposal of treasury shares

0

(2)

(2)

0

0

Other changes in the year net
Total changes during the year
Balance at end of period

33(13,450)(2)(13,447)

7,964

12,821

50,831(357)

71,259

Accumulated other comprehensive income
Unrealized
holding gain
(loss) on
securities
Balance at beginning of period(117)

Deferred gain
(loss) on hedges

Foreign currencytranslation
adjustments

–

(597)

Remeasurements of defined
benefit plans
(36)

Total
accumulated
othercomprehensive
income(751)

Total net assets

83,954

Changes during period
Issuance of new shares exercise of share acquisitionrights6

Cash dividends(1,286)

Loss attributable to owners ofparent(12,164)

Change in scope of
consolidation–

Purchase of treasury shares(2)

Disposal of treasury shares

0

Other changes in the year net

173

–

42

61

277

277

Total changes during the year

173

–

42

61

277

(13,169)

Balance at end of period

55

–

(555)

24

(474)

70,784-6-

For the year ended March 31, 2022 (from April 1, 2021 to March 31, 2022)(Millions of yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

7,964

12,821

50,831(357)

Total shareholders’equity71,259Changes during period
Issuance of new shares exercise of share acquisitionrights–Cash dividends

(779)

(779)

Profit attributable to ownersof parent

539

539

Change in scope of
consolidation

(206)

(206)

Purchase of treasury shares

(4)

(4)
–

Disposal of treasury shares
Other changes in the year net
–

–

(447)

(4)

(451)

7,964

12,821

50,383(361)

70,807

Total changes during the year
Balance at end of period

Accumulated other comprehensive income
Unrealized
holding gain
(loss) on
securities
Balance at beginning of period

55

Deferred gain
(loss) on hedges

Foreign currencytranslation
adjustments

–

(555)

Remeasurements of defined
benefit plans
24

Total
accumulated
othercomprehensive
income(474)

Total net assets

70,784

Changes during period
Issuance of new shares exercise of share acquisitionrights–Cash dividends(779)

Profit attributable to ownersof parent

539

Change in scope of
consolidation(206)

Purchase of treasury shares(4)

Disposal of treasury shares–

Other changes in the year net

26

225

(28)

29

252

252

Total changes during the year

26

225

(28)

29

252

(198)

Balance at end of period

82

225

(583)

53

(221)

70,586-7-4) Consolidated statement of cash flows(Millions of yen)
For the year ended
March 31, 2021
Cash flows from operating activities
Profit (loss) before income taxes
Depreciation and amortization
Amortization of long-term prepaid expenses
Amortization of guarantee deposits
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Subsidy income
Income from guarantee deposits uponcancellation
Compensation income
Expenses for measures against novel infectious
diseaseLoss on temporary closure
Loss on facility closure
Settlement package
Loss from natural disasters
Loss (gain) on sale of shares of subsidiaries andassociates(Increase) decrease in trade receivables(Increase) decrease in accounts receivable - other(Increase) decrease in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued expenses
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in deposits received
Increase (decrease) in guarantee deposits
received
Other
SubtotalInterest and dividends received
Interest paid
Income taxes refunded
Income taxes paid
Proceeds from subsidy income
Proceeds from compensation
Payments of expenses for measures against novel
infectious disease
Payments for loss on temporary closure
Payments for loss on facility closure
Settlement package paid
Net cash provided by (used in) operating
activities-8-

For the year ended
March 31, 2022

(14,870)
4,962
445
304
(1,389)
(182)
455
(931)

1,399
6,070
470
322
264
(195)
603
(600)

(129)

(105)

(937)

(465)

502

195

2,886
2,531
29
–

–
453
147
65

–

(196)

1,356
(28)
(6,059)(5,457)
240
1,516
7
608

(2,140)2,048
17,1001,526(191)(2,273)
4,633
(629)

(114)

(299)

490
(13,763)
103
(455)
0
(1,223)
931
937

(425)
27,78090(592)
2(1,956)
600
465

(502)

(195)

(2,521)(1,312)
(29)

–
(325)
(147)

(17,835)

25,721

(Millions of yen)
For the year ended
March 31, 2021
Cash flows from investing activities
Purchase of securities
Proceeds from sales of securities
Purchase of property and equipment
Proceeds from sale of property and equipment
Purchase of intangible assets
Purchase of long-term prepaid expenses
Loan advances
Collection of loans receivable
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee
deposits
Investments in insurance funds
Proceeds withdrawn from insurance funds
Other
Net cash provided by (used in) investing
activities
Cash flows from financing activities
Increase (decrease) in short-term borrowings net
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Dividends paid
Other
Net cash provided by financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of theyear
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at the end of the year*

-9-

For the year ended
March 31, 2022

(776)
1,243
(7,099)
12
(533)
(607)
(763)
912
(1,503)–
1,056(10,594)
6
(352)
(133)
(530)
167
(5,869)116

480(1,018)
24
(14)

(991)
30
0

(10,006)(16,731)

950

2,400

34,900(4,101)
30,043(25,268)(2)(1,285)(996)
34,23912,480(4,643)–(5,280)
(4)
(781)
(40)
4,130

22

(1)

6,419

13,118

17,792

24,212–234

24,212*

37,565

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of KYORITSU MAINTENANCE CO., LTD. (the“Company”) and its consolidated subsidiaries (collectively the “Group”) have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations,and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements of International Financial Reporting Standards(“IFRS”).
Current practice has been to retain the classification used in the financial statements.
Japanese yen figures less than one million yen are rounded down to the nearest million yen, except for per sharedata. The total Japanese yen amounts shown in the consolidated financial statements and notes thereto do notnecessarily agree with the sum of the individual amounts.

Notes to Consolidated Financial Statements
Notes - Significant accounting policies for preparation of consolidated financial statements
1. Consolidation(1) Number of consolidated subsidiaries: 12
Names of consolidated subsidiaries
Kyoritsu Estate Co., Ltd.
Kyoritsu Trust Co., Ltd.
Kyoritsu Insurance Service Co., Ltd.
Kyoritsu Foods Service Co., Ltd.
Kyoritsu Oasis Co., Ltd.
Kyoritsu Foods Management Co., Ltd.
Japan Placement Center Co., Ltd.
Kyoritsu Financial Service Co., Ltd.
Builnet Co., Ltd.
Central Builwork Co., Ltd.
Gennanso Co., Ltd.
Kyoritsu Maintenance Korea Co., Ltd.
Kyoritsu Oasis Co., Ltd. and Gennanso Co., Ltd. are included in the scope of consolidation in the year
ended March 31, 2022 because their materiality has increased.
Kyoritsu Foods Management Co., Ltd. was established in the year ended March 31, 2022 and includedin the scope of consolidation because of its materiality.
In addition, Kyoritsu Foods Business Co., Ltd. was excluded from the scope of consolidation because it
has been merged by Kyoritsu Foods Service Co., Ltd. on October 1, 2021.
(2) Number of non-consolidated subsidiaries: 4Names of non-consolidated subsidiaries
Kyoritsu Assist Co., Ltd.
Ryokan Okunobo Co., Ltd.
Kyoritsu Maintenance (Thailand) Co., Ltd.
Kyoritsu Maintenance Sriracha Co., Ltd.
Reason for exclusion from scope of consolidation
Non-consolidated subsidiaries are excluded from the scope of consolidation because their total assets,
net sales, profit or loss, and retained earnings have minimal impact on the consolidated financial
statements and are immaterial as a whole, do not have material effects on the consolidated financial
statements.

- 10 -

2. Equity Method Accounting(1) Non-consolidated subsidiaries and associates accounted for by the equity method
There were no items to be reported.
(2) Non-consolidated subsidiaries or associates not accounted for by the equity method
Non-consolidated subsidiaries and affiliates not accounted for by the equity method are Oh-shima Forum Co.,
Ltd. and six other companies. These companies are excluded from the scope of equity method because theirprofit or loss and retained earnings have minimal impact on the consolidated financial statements and are
immaterial as a whole.
3.

Disclosure about fiscal years, etc. of consolidated subsidiaries
The fiscal year-end of all consolidated subsidiaries coincides with the consolidated fiscal year-end.

4. Disclosure of accounting policies(1) Valuation criteria and methods for significant assets
1) Securities(i) Held-to-maturity bonds
Measured at amortized cost using the straight-line method.
(ii) Other securities
Other than equity securities without market prices
Measured at fair value (net unrealized gains or losses are reported as a separate component of net
assets, and the cost of securities sold is calculated using the moving-average method).
Equity securities without market prices
Mainly measured at cost determined by the moving-average method.
Investments in investment limited partnerships and other similar partnerships (those regarded as
securities pursuant to Article 2, Paragraph 2 of the Financial Instruments and Exchange Act) arerecorded at the net amount of the Company’s share of equity based on the latest financial
statements available according to the financial reporting dates stipulated in the partnershipagreements.
2)

Derivatives
Derivatives are measured at fair value.

3)

Inventories(i) Costs on uncompleted construction contracts
Stated at cost determined by the specific identification method.
(ii) Real estate held for sale and real estate under construction held for saleStated at the lower of cost, determined by the specific identification method, or net realizablevalue.
(iii) Merchandise and finished goods, and raw materials and supplies
Stated at the lower of cost, determined by the last purchase price method, or net realizable value.

(2) Method of depreciation and amortization of major depreciable and amortizable assets
1) Property and Equipment (except for Leased Assets)
Property and equipment are stated at cost.
Depreciation of property and equipment of the Company and its domestic consolidated subsidiaries iscalculated using the declining-balance method based on the estimated useful lives of the assets, while
the straight-line method is applied to buildings (except for facilities attached to buildings that belong tobusinesses other than the resort business) and facilities attached to buildings and structures acquired on
or after April 1, 2016.
Depreciation of property and equipment of foreign consolidated subsidiaries is calculated using thestraight-line method.
The useful lives of major items are as follows:
Buildings and structures
3 to 47 years- 11 -

2)

Intangible Assets (except for Leased Assets)
Intangible assets are amortized using the straight-line method.
Software for internal use is amortized using the straight-line method over the expected useful life (fiveyears).

3)

Leased Assets
Leased assets are depreciated by the straight-line method based on the assumption that the useful lives
are equal to the lease terms and the residual value is equal to zero.
Finance lease transactions that did not transfer the ownership of the leased assets to the lessee andcommenced on or before March 31, 2008 are accounted for as operating lease transactions.
(3) Method of accounting for deferred assets
Bond issuance costs
Amortized using the straight-line method over the period up to the redemption of the bonds.
(4) Accounting for significant allowances and provisions
1) Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided for possible losses arising from trade receivables, loans
receivable, and other receivables at an amount determined based on the historical experience of bad
debts with respect to normal receivables, and an estimate of uncollectible amounts determined byreference to specific doubtful receivables from customers who are facing financial difficulties.
2)

Provision for Bonuses
Employees’ bonuses are accrued at the end of the year to which such bonuses are attributable.

3)

Provision for Bonuses for Directors
Directors’ bonuses are accrued at the end of the year based on the estimated amounts payable.

4)

Provision for Warranties for Completed Construction
To provide for payments of warranties for completed construction, the Company records a discrete
estimate of the warranties in addition to an amount required based on past experience.

5)

Provision for Loss on Construction Contracts
To provide for future loss on construction contracts, the Company records a discrete estimate of loss on
construction contracts at the end of the year for which eventual losses are reasonably expected andestimated.

6)

Provision for Retirement Benefits for Directors
Retirement benefits for directors are recorded at an amount required to be paid at the end of the year
based on internal rules. The Company and its six domestic consolidated subsidiaries revised the rules onretirement benefits for directors in March 2002 and June 2008, respectively, and have not provided thecorresponding amount for directors since April 2001 and July 2008, respectively.

(5) Method of recognizing retirement benefits
1) Method of attributing estimated retirement benefits to periods
Retirement benefit obligations are attributed to periods on a benefit formula basis.
2)

Method of amortizing actuarial gains or losses and past service cost
Prior service cost is amortized as incurred by the straight-line method over a fixed period (three or five
years), which is shorter than the average remaining years of service of the employees.
Actuarial differences are amortized from the year following the year in which the differences arerecognized by the straight-line method over a fixed period (three or five years), which is shorter than the
average remaining years of service of the employees.
- 12 -

(6) Recognition of significant revenues and expenses
The Group’s principal businesses are the Dormitory Business, the Hotel Business, the Comprehensive
Building Management Business, the Food Service Business, and the Development Business.
Dormitory Business
The Dormitory Business includes the operation and management of student dormitories, employee
dormitories, Domeal, and contracted dormitories, and provision of rooms and dormitory services based on
occupancy contracts with customers. The Group recognizes rent, management fees, occupation fees, renewal
fees, etc. under such occupancy contracts as revenue in accordance with accounting standards for leases. For
dormitory services, the Group’s performance obligation is satisfied when the rendering of the services iscompleted and therefore revenue is recognized at that point in time. The Group also sells everyday goods toresidents. Because the performance obligation is satisfied when the ownership of the goods is transferred tothe customer, revenue is recognized at that point in time. The transaction price and payment terms for the saleof everyday goods to residents are determined by the sales contracts with the residents.
Hotel BusinessIn the Hotel Business, the Company operates The Dormy Inn (limited-service hotel) and resorts (resort hotel)
businesses, providing customers with lodging, meals, and other services. Since customers receive the benefitof the entire service related to the lodging, the entire service including meals is a single performanceobligation, which is satisfied at the point in time when the rendering of the entire service is completed. For
customers who stay consecutive nights, the Group recognizes revenue as if the performance obligation issatisfied on a nightly basis since the customers receive the benefit of each night. The Group determines thetransaction price and agrees with the customer upon the accommodation reservation. Payment is usuallyaccepted upon check-in or check-out.
Comprehensive Building Management BusinessIn the Comprehensive Building Management Business, the Group is engaged mainly in building management
services including facility management, cleaning, security, and repair of dormitories, hotel facilities, andoffice buildings. These operations are considered to have a single performance obligation to provide services
to organize the occupancy environment of buildings at the appropriate time based on a plan and to maintainthe property in a consistent condition. As these performance obligations are satisfied over the contract period,
the Company recognizes revenue by prorating the transaction price on a monthly basis based on the contract
with the customer. The transaction price and its payment terms are determined by the outsourcing contract.
Food Service BusinessIn the Food Service Business, the Group is mainly engaged in contracted operation such as of hotel
restaurants, contracted food service, and restaurant business. In the businesses of contracted operation such asof hotel restaurants and contracted food service, the Group mainly contracts to provide services incidental to
the Company’s Hotel and Dormitory Businesses. Because the performance obligation is satisfied when therendering of the services is completed, revenue is recognized at that point in time. Transaction price andpayment terms are determined by contract. In the restaurant business, the Group provides meal services tocustomers, and the performance obligation is satisfied when the rendering of the services is completed so theGroup recognizes revenue at that point in time. The transaction price is determined by the Group and agreed
with the customer upon a meal order. Payment is usually received at the time the customer leaves the venue.
Development BusinessIn the Development Business, the Company is engaged in real estate planning, design, construction,brokerage business, the condominium business, the real estate sale and leaseback business, etc. In theconstruction business, the Group performs construction work based on construction contracts with customers.
Under such construction contracts, the value of the property increases and the customer takes control of theasset as the Group proceeds with the construction of the main body of the property. The performanceobligation is an obligation that is satisfied over a specified period of time, and is satisfied as the construction
progresses over the contract period. Therefore, in construction projects, etc., revenue is recognized inaccordance with the progress of construction. Progress is measured by the input method based on cost
- 13 -

incurred, as the cost incurred is considered to contribute to, and be generally proportional to, the entity’s
progress in meeting its performance obligations. However, for projects for which the degree of progresscannot be reasonably measured, the cost recovery basis is applied until such time as this becomes possible.
For other businesses, the performance obligation is satisfied when the rendering or delivery of the services iscompleted, and revenue is recognized at that point in time. The transaction price and its payment terms are
determined by contract.
With regard to the above performance obligations, no material financial element is included in the amount ofconsideration. There are no material variable considerations that could change the amount of consideration.
In recognizing revenue, the Company uses alternative treatments of materiality, etc.
(7) Foreign currency transactions
Assets and liabilities of foreign subsidiaries are translated into Japanese yen at the spot exchange rate as of thebalance sheet date, and revenue and expense accounts are translated into Japanese yen at the averageexchange rate. Differences arising from such translation are shown as foreign currency translation
adjustments under accumulated other comprehensive income as a separate component of net assets.
(8) Significant hedge accounting methods
1) Hedge accounting
The deferral hedge accounting is applied. However, exceptional method is applied to interest rate swaps
that satisfy the requirements for hedge accounting.
2)

Hedging instruments and hedged items
Interest rate swaps are used as hedging instruments for interest on borrowings.

3)

Hedging policies
The Company has a policy of hedging against the risk of future market fluctuations in interest rates anddoes not engage in speculative transactions or derivative transactions for the purpose of earning shortterm trading profits or losses.

4)

Assessing hedge effectiveness
The Company verifies that the variability rate of the hedged item and the hedging instrument is basicallyin the range of 80% to 125%. However, if the hedge meets the requirements of exceptional method ofinterest rate swaps, assessment of hedge effectiveness has been omitted and replaced with the judgment
thereof.

5)

Other matters
The Group uses interest rate swaps to hedge against interest rate fluctuation risk on borrowings inaccordance with the financing plan approved by the Board of Directors.

(9) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, readily available deposits, and short-term investments thatare readily convertible into cash and that are exposed to insignificant risk of changes in value, all of whichmature or become due within three months of the date of acquisition.
(10) Other key matters for the preparation of consolidated financial statements
1) Application of the consolidated taxation system
The Group has applied the consolidated taxation system from the year ended March 31, 2022.
2)

Application of tax effect accounting for the transition from the consolidated taxation system to the grouptax sharing system
The Company and some consolidated subsidiaries in Japan will make a transition from the consolidated
taxation system to the group tax sharing system from the year ending March 31, 2023. However, as foritems regarding the transition to the group tax sharing system introduced in the “Act Partially Amending- 14 -

the Income Tax Act” (Act No. 8 of 2020) and items revised on non-consolidated taxation system inconnection with the transition to the group tax sharing system, the Company and some consolidated
subsidiaries in Japan have not applied the provisions of Paragraph 44 of the “Guidance on AccountingStandard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Guidance No. 28,
February 16, 2018) as allowed by the provisions of Paragraph 3 of the “Tax Effect Accounting for theTransition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ Practical
Issues Tax Force (PITF) No. 39, March 31, 2020). Accordingly, amounts of deferred tax assets anddeferred tax liabilities are determined in accordance with the provisions of the tax law before revision.
From the beginning of the year ending March 31, 2023, the “Practical Solution on the Accounting andDisclosure Under the Group Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021), which
stipulates accounting treatment and disclosure for corporate income tax and local corporate income tax
as well as tax effect accounting when the group tax sharing system is applied, will be applied.
Notes - Significant accounting estimates
1. Impairment of non-current assets (Hotel Business)(1) Amount recorded in the consolidated financial statements for the year ended March 31, 2022
(Millions of yen)
For the year ended
March 31, 2022

For the year ended
March 31, 2021
364–

Property and equipment relating to the Hotel Business

54,312

61,932Intangible assets relating to the Hotel Business

1,951

1,409

Loss on impairment relating to the Hotel Business(2) Other information for understanding of users of consolidated financial statements
1) Calculation method
The Group classifies assets into asset groups mainly by business location, and of the asset groups forwhich it determines that there are indications of impairment, if the total amount of the undiscounted
future cash flows is less than the carrying amount, then the carrying amount of the asset group is
written down to the recoverable amount and the difference is recognized as an extraordinary loss on the
consolidated statement of income for the year ended March 31, 2022, in accordance with theaccounting standards for the impairment of non-current assets.
The recoverable amount is measured at higher of net realizable value of the asset groups or their value
in use. Net realizable value is determined based on information such as real estate appraisal value, andvalue in use is determined by discounting future cash flows at rates based on profit plans.
2)

Key assumptions
The key assumptions used in the calculation of the recoverable amount of each asset group are average
daily rates, occupancy rates, and the extent to which the COVID-19 pandemic will impact the businessin the future, and the timing when the pandemic will be contained. The impact of COVID-19 isassumed to continue for a certain period of time, and the average daily rates, occupancy rates anddiscount rate are reasonably set based on the information and materials available as of March 31, 2022.

3)

Impact on next year’s consolidated financial statements
There is a high degree of uncertainty in estimating the key assumptions, namely, average daily rates,
occupancy rates, and discount rate for each asset group and the extent to which the COVID-19
pandemic will impact the business in the future, and the timing when the pandemic will be contained. If
it becomes necessary to revise these assumptions due to future trends in COVID-19 or changes in
economic or financial conditions, it may affect the loss on impairment of non-current assets for the nextyear.

- 15 -

2. Recoverability of deferred tax assets(1) Amount recorded in the consolidated financial statements for the year ended March 31, 2022
For the year ended
March 31, 2021

(Millions of yen)
For the year ended
March 31, 2022

Deferred tax assets, net

6,678

6,921

(The amount before offset with deferred tax liabilities)

7,029

6,928

(2) Other information for understanding of users of consolidated financial statements
1) Calculation method
The Group determines the recoverability of deferred tax assets on deductible temporary differences andtax loss carryforwards in consideration of estimated future taxable income based on future businessplans and other factors.
2)

Key assumptions
The key assumptions underlying the business plan, which serve as the basis for estimated taxable
income, are the impact of the COVID-19 pandemic on the business in the future and the timing withwhich the pandemic will be contained and Ukraine situation, etc., as well as the resulting average dailyrates and occupancy rates of each business location in the Hotel Business. These assumptions are basedon the assumption that the impact of COVID-19 will continue for a certain period of time and arereasonably established based on the information and materials available as of March 31, 2022.

3)

Impact on next year’s consolidated financial statements
There is a high degree of uncertainty surrounding the key assumptions, namely, the impact of the
COVID-19 pandemic on the business in the future and the timing with which the pandemic will becontained and Ukraine situation, etc., as well as the resulting average daily rates and occupancy rates ofeach business location in the Hotel Business. If it becomes necessary to revise these assumptions due tofuture trends in COVID-19 or changes in economic or financial conditions, the estimated amount of
taxable income may change, which may have a significant impact on the judgment of the recoverabilityof deferred tax assets.

Notes - Changes in accounting policies
Application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations
The Group has decided to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020) and relevant ASBJ regulations from the beginning of the year ended March 31, 2022, andrecognize revenue when control of promised goods or services is transferred to customers at an amount expected tobe received in exchange for the goods or services.
Accordingly, the Group records sales from home-delivery services for hotels, which were previously recorded on agross basis, at a net amount calculated by deducting consideration paid to transportation companies fromconsideration received from customers. Furthermore, sales on consignment for passenger tickets, and goods forstores etc., are also recorded at a net amount calculated by deducting consideration paid to contractors fromconsideration received from customers.
The application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations is subject tothe transitional treatment provided for in the proviso to Paragraph 84 of the Accounting Standard for Revenue
Recognition. The cumulative effect of the retrospective application, assuming the new accounting policy had been
applied to periods prior to the beginning of the year ended March 31, 2022, was added to or deducted from theopening balance of retained earnings for the year ended March 31, 2022, and thus the new accounting policy wasapplied from such opening balance.

- 16 -

As a result, net sales and cost of sales decreased by 611 million yen and 611 million yen, respectively, compared tothe application of the previous accounting standard, but the impact on operating profit is insignificant. In addition,
there is no impact on the opening balance of retained earnings for the year ended March 31, 2022.
Due to the application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations, “Notes
and accounts receivable - trade,” which was presented in “Current assets” in the consolidated balance sheet as ofMarch 31, 2021, has been included in “Notes and accounts receivable - trade, and contract assets” from the year
ended March 31, 2022. Pursuant to the transitional treatment provided for in Paragraph 89-2 of the AccountingStandard for Revenue Recognition, figures for the year ended March 31, 2021 have not been restated in accordancewith the new approach to presentation.
Application of the Accounting Standard for Fair Value Measurement and relevant ASBJ regulations
The Group has decided to apply the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30,
July 4, 2019) and relevant ASBJ regulations from the beginning of the year ended March 31, 2022, and apply the
new accounting policy provided for by the Accounting Standard for Fair Value Measurement and relevant ASBJ
regulations prospectively in accordance with the transitional treatment provided for in Paragraph 19 of the
Accounting Standard for Fair Value Measurement, and Paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019). There is no impact on the consolidated financial statements.
In addition, the Group has decided to provide notes on matters regarding the breakdown by level of fair values offinancial instruments, etc. in “Notes - Financial instruments.” However, of these notes, those related to the year
ended March 31, 2021 are not provided, pursuant to the transitional treatment provided for in Paragraph 7-4 of the“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19,
July 4, 2019).

Notes - Accounting standards issued but not yet effective- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31,
June 17, 2021)(1) Overview
The “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31) was revised on June 17, 2021. When the implementation guidance was first announced on July 4, 2019, as
the review of “fair value measurement of investment trusts” was considered to take a certain period of time
for the deliberation with related parties and as the notes on fair values of “investments in partnerships forwhich an amount equivalent to the interest is recorded on the balance sheet at net amount” required a certain
review, the implementation guidance mentioned that those reviews would be implemented for approximately
one year after the announcement of the “Accounting Standard for Fair Value Measurement.” Now thosepoints for review were amended and the revised implementation guidance was announced.
(2) Scheduled date of application
The Company and its domestic consolidated subsidiaries will apply the implementation guidance from the
beginning of the year ending March 31, 2023.
(3) Impact of application of accounting standard and implementation guidance
The Company and its domestic consolidated subsidiaries are currently in the process of determining theimpact of the “Implementation Guidance on Accounting Standard for Fair Value Measurement.”
Notes - Changes in presentation
Consolidated statement of income“Commission expenses,” which was presented separately under non-operating expenses for the year ended March
31, 2021, is included and presented in “Other” under non-operating expenses for the year ended March 31, 2022, as
the amount became immaterial. “Settlement package” which was included in “Other” under non-operating
expenses for the year ended March 31, 2021, is presented separately for the year ended March 31, 2022, as theamount became material.
- 17 -

The relevant items in the consolidated financial statements for the year ended March 31, 2021 have been
reclassified in order to reflect these changes.
As a result, 978 million yen that was shown as “Commission expenses” and 413 million yen shown as “Other”
under non-operating expenses in the original consolidated statement of income for the year ended March 31, 2021,
are reclassified into 29 million yen shown as “Settlement package” and 1,362 million yen shown as “Other” in thereclassified consolidated statement of income.

Consolidated statement of cash flows“Commission expenses - non-operating,” “Loss on impairment of non-current assets” and “Increase (decrease) inadvances received” which were presented separately under “Cash flows from operating activities” for the year
ended March 31, 2021, are included in “Other” under “Cash flows from operating activities” for the year ended
March 31, 2022, as the amount became immaterial.
“Settlement package,” “(Increase) decrease in accounts receivable - other” and “Settlement package paid” whichwere included in “Other” under “Cash flows from operating activities” for the year ended March 31, 2021, arepresented separately for the year ended March 31, 2022, as the amounts became material.
“Income from guarantee deposits upon cancellation” which was included in “Increase (decrease) in guarantee
deposits received” under “Cash flows from operating activities” for the year ended March 31, 2021, is presented
separately for the year ended March 31, 2022, as the amounts became material.
“Payments of commission for syndicated loans” which was presented separately under “Cash flows from financing
activities” for the year ended March 31, 2021, is included in “Other” under “Cash flows from financing activities”
for the year ended March 31, 2022, as the amount became immaterial.
The relevant items in the consolidated financial statements for the year ended March 31, 2021 have been
reclassified in order to reflect these changes.
As a result, under “Cash flows from operating activities” for the year ended March 31, 2021, 978 million yen thatwas shown as “Commission expenses – non-operating,” 442 million yen that was shown as “Loss on impairment of
non-current assets,” negative 579 million yen that was shown as “Increase (decrease) in advances received” andnegative 380 million yen that was shown as “Other” are reclassified into 29 million yen shown as “Settlement
package,” negative 28 million yen shown as “(Increase) decrease in accounts receivable - other,” negative 29
million yen shown as “Settlement package paid” and 490 million yen shown as “Other.”
Negative 243 million yen that was shown as “Increase (decrease) in guarantee deposits received” under “Cashflows from operating activities” in the original consolidated statement of cash flows for the year ended March 31,
2021, is reclassified into negative 129 million yen shown as “Income from guarantee deposits upon cancellation,”and negative 114 million yen shown as “Increase (decrease) in guarantee deposits received” in the reclassified
consolidated statement of cash flows.
Negative 922 million yen that was shown as “Payments of commission for syndicated loans” and negative 74
million yen that was shown as “Other” under “Cash flows from financing activities” in the original consolidated
statement of cash flows for the year ended March 31, 2021, are reclassified into negative 996 million yen shown as“Other” in the reclassified consolidated statement of cash flows.

- 18 -

Notes - Consolidated balance sheet*1 Of the amount of “Notes and accounts receivable - trade, and contract assets,” the amounts of receivables
arising from contracts with customers and contract assets are as follows:(Millions of yen)
As of March 31, 2022
–
8,109
400

Notes receivable - trade
Accounts receivable - trade
Contract assets*2 Of the amount of “Other” under current liabilities, the amount of contract liabilities is as follows:(Millions of yen)
As of March 31, 2022
Contract liabilities

11*3 Investment securities in non-consolidated subsidiaries and associates were as follows:(Millions of yen)
As of March 31, 2021

As of March 31, 2022

1,853

524

Investment securities (equity
securities)*4 Assets pledged as collateral and obligations secured by collateral
Assets pledged as collateral were as follows:(Millions of yen)
As of March 31, 2021
Buildings and structures
Land
Investment securities (Note 2)
Other under current assets (Note 2)
Other under investments and otherassets (Note 2)
Total

As of March 31, 2022

2,754
4,499
20
–

[2,054][2,324]
[–]
[–]

2,657
4,499
–
20

[1,983][2,324]
[–]
[–]

20

[–]

20

[–]

7,293
[4,378]7,196[4,308]Notes: 1. Figures in parentheses represent the book value of assets pledged as collateral.
2. These assets were pledged as collateral for guarantee deposits of the building lots and buildings
transaction business.

The above assets were pledged as collateral for the following liabilities:(Millions of yen)
As of March 31, 2021

As of March 31, 2022

7,130
[–]
7,130

7,130
[–]
7,130

Long-term borrowings[Of which, current-portion]
Total- 19 -

5 Guarantee obligations
The Company provides guarantee obligations as follows:(Millions of yen)
As of March 31, 2021

As of March 31, 2022

3,548

3,297

194
3,742

202
3,499

Guarantee of dormitory/hotel lessor’s
obligations to financial institutions
based on the deposit agreement forguarantee deposits
Other
Total

*6 The amount transferred due to a change in the purpose of holding was as follows:(Millions of yen)
As of March 31, 2021

As of March 31, 2022

From property and equipment to realestate under construction held for sale

–

6,579

From property and equipment to realestate for sale120–

Notes - Consolidated statement of income*1 Revenue from contracts with customers
Net sales are not presented with revenue from contracts with customers separated from other revenues. The
amount of revenue from contracts with customers has been provided in “Notes to Consolidated Financial
Statements, Notes - Revenue recognition, 1. Information on disaggregation of revenue from contracts withcustomers.”*2 Research and development costs included in general and administrative expenses were as follows:(Millions of yen)
For the year ended March 31, 2021

For the year ended March 31, 2022

(April 1, 2020 to March 31, 2021)(April 1, 2021 to March 31, 2022)

300

339

*3 Loss on impairment
The Group recognized loss on impairment on the following asset groups:
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Millions of yen)
Asset
Loss oncategory
impairment
Land andbuildings,
364
etc.

Location

Usage

KYORITSU MAINTENANCE CO., LTD.
Hotels (Karuizawa Town, Kitasaku County, Nagano, Japanand 3 other offices)

HotelsKYORITSU MAINTENANCE CO., LTD.
Dormitories (Chiyoda-ku, Tokyo, Japan and 6 other offices)

Dormitories

Buildings

41

Kyoritsu Foods Service Co., Ltd.
Restaurants (Chuo-ku, Tokyo, Japan)

Restaurants

Buildings

37

The Group mainly considers each of its offices as a separate asset group. In addition, idle assets with noprospect for future use are treated as a separate group of assets. With respect to the above hotels,
dormitories, restaurants, since there is little prospect for recovery of the invested capital due to a significant
decline in profitability and fair value, the Group wrote down the book values of these assets to their- 20 -

recoverable amounts and recorded a loss on impairment of non-current assets in extraordinary losses in theamount of 442 million yen.
The breakdown of loss on impairment of non-current assets was buildings of 389 million yen, structures of
33 million yen, fixtures of 3 million yen, land of 16 million yen, and other of 0 million yen.
The recoverable amounts of land and buildings, etc. are measured at their net realizable value based on theirappraisal value made by real estate appraisers, or their value in use, which is calculated by discounting
future cash flows at 4.7%.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
Usage

Asset
category(Millions of yen)
Loss onimpairment

KYORITSU MAINTENANCE CO., LTD.
Dormitories (Saga City, Saga, Japan and 3 other offices)

Dormitories

Buildings

49

Kyoritsu Foods Service Co., Ltd.
Restaurants (Chuo-ku, Tokyo, Japan and 1 other office)Restaurants

Buildings

2

Location

The Group mainly considers each of its offices as a separate asset group. In addition, idle assets with noprospect for future use are treated as a separate group of assets. With respect to the above dormitories andrestaurants, since there is little prospect for recovery of the invested capital due to a significant decline inprofitability and fair value, the Group wrote down the book values of these assets to their recoverable
amounts and recorded a loss on impairment of non-current assets in extraordinary losses in the amount of
51 million yen.
The breakdown of loss on impairment of non-current assets was buildings of 51 million yen and structuresof 0 million yen.
The recoverable amounts of buildings are measured at their net realizable value based on their appraisal
value made by real estate appraisers, or their value in use, which is calculated by discounting future cash
flows at 4.5%.

- 21 -

Notes - Consolidated statement of comprehensive income* Reclassification adjustments to profit or loss and tax effects related to other comprehensive income(Millions of yen)
For the year ended March 31,
2021

For the year ended March 31,
2022(April 1, 2020 to March 31, 2021)(April 1, 2021 to March 31, 2022)

Unrealized holding gain (loss) on securities:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before tax effectTax effectUnrealized holding gain (loss) on
securities
Deferred gain (loss) on hedges:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before tax effectTax effect
Adjustments to deferred gain (loss) onhedgesForeign currency translation adjustments:
Gains (losses) arising during the year
Remeasurements of defined benefit plans:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before tax effectTax effectRemeasurements of defined benefit plans
Total other comprehensive income- 22 -

248
0
249
(76)

26
12
38
(12)

173

26

–
–
–
–

324
–
324
(99)

–

225

42

(28)

75
13
88
(27)
61
277

48
(6)
41
(12)
29
252

Notes - Consolidated statement of changes in net assets
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
1. Class and number of shares issued and treasury shares(Thousands of shares)
April 1, 2020

Increase

Decrease

March 31, 2021

Shares issued
39,2180–39,21939,2180–39,219Common shares (Notes 2, 3)

228

0

0

229

Total

228

0

0

229

Common shares (Note 1)
Total
Treasury shares

Notes: 1. The increase in shares issued of 0 thousand shares was due to the exercise of share acquisition rights
attached to convertible bonds with share acquisition rights.
2. The increase in treasury shares of 0 thousand shares was due to the purchase of shares of less than one unit.
3. The decrease in treasury shares of 0 thousand shares was due to requests for purchase of shares of less than
one unit.

2. Information on share acquisition rights
Year-endbalance
March 31, (Millions of
2021
yen)

Number of shares (Thousands of shares)
Company
nameDescription

2016 Share Acquisition
RightsKYORITSU(Notes 1, 2)
MAINTENANCE
CO., LTD.
2021 Share Acquisition
Rights(Notes 1, 3)
Total

Class of shares

April 1,
2020

Increase

Decrease

Common shares

3,309

–

3,309

–

–

Common shares

–

6,365

–

6,365

–

3,309

6,365

3,309

6,365

–

–

Notes: 1. The share acquisition rights in the above table are share acquisition rights attached to convertible bonds
with share acquisition rights recorded in liabilities using the lump-sum method.
2. The decrease in 2016 share acquisition rights was due to the exercise and redemption of share acquisitionrights.
3. The increase in 2021 share acquisition rights was due to the issuance of convertible bonds with shareacquisition rights.

3. Information on dividends(1) Dividends paid
Resolution
Ordinary general
meeting ofshareholders held on
June 26, 2020
Board of Directors’
meeting held on
November 9, 2020

Class of shares

Total amount(Millions of yen)

Per shareamount (Yen)Common shares

896

23

Common shares

389

10

- 23 -

Record date

Effective date

March 31, 2020

June 29, 2020

September 30, 2020 December 7, 2020

(2) Dividends whose effective date falls after the end of the year
Resolution

Class ofsharesTotalamount(Millions ofyen)

Source ofdividends

Ordinary general
meeting ofshareholders heldon June 25, 2021

Commonshares389

Retainedearnings

Per shareamount (Yen)10

Record date

Effective date

March 31, 2021

June 28, 2021

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
1. Class and number of shares issued and treasury shares(Thousands of shares)
April 1, 2021

Increase

Decrease

March 31, 2022

Shares issued
Common shares

39,219––39,219Total

39,219––39,219

229

1

–

230

229

1

–

230

Treasury shares
Common shares (Note)
Total
Note:

The increase in treasury shares of 1 thousand shares was due to the purchase of shares of less than one unit.

2. Information on share acquisition rights
Year-endbalance
March 31, (Millions of
2022
yen)

Number of shares (Thousands of shares)
Description

Class of sharesClassification
2021 Share Acquisition
Rights(Note)
Total
Note:

Common shares–

April 1,
2021

Increase

Decrease

6,365

–

–

6,365

–

6,365

–

–

6,365

–

The share acquisition rights in the above table are share acquisition rights attached to convertible bonds withshare acquisition rights recorded in liabilities using the lump-sum method.

3. Information on dividends(1) Dividends paid
Resolution
Ordinary general
meeting ofshareholders held on
June 25, 2021
Board of Directors’
meeting held on
November 9, 2021

Class of shares

Total amount(Millions of yen)

Per shareamount (Yen)Common shares

389

10

Common shares

389

10

- 24 -

Record date

Effective date

March 31, 2021

June 28, 2021

September 30, 2021 December 6, 2021

(2) Dividends whose effective date falls after the end of the year
Resolution

Class ofsharesTotalamount(Millions ofyen)

Source ofdividends

Per shareamount (Yen)Record date

Effective dateOrdinary general
meeting ofCommonRetained
March 31, 2022
June 29, 2022
389
10
shareholders held
sharesearnings
on June 28, 2022
The Companies Act of Japan provides that an amount equal to at least 10 percent of distributions paid in cash be
appropriated as a legal reserve until the aggregated amount of the legal capital surplus and the legal retained earnings
equals 25 percent of share capital.
The portion of such aggregated amount in excess of 25 percent of share capital may become available for
distributions subsequent to release of such excess to capital surplus and retained earnings.

Notes - Consolidated statement of cash flows* Reconciliation of cash and cash equivalents at the end of the year and the amount recorded in the consolidatedbalance sheet(Millions of yen)
For the year ended
March 31, 2021

For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Cash and deposits
Time deposits with maturity over three months
Cash and cash equivalents

24,588(376)
24,21237,942(376)
37,565

Notes - Leases
1. Finance lease transactions(As Lessee)
Finance lease transactions that do not transfer ownership
1) Details of leased assets
Property and equipment
Buildings and structures in the Dormitory Business.
2) Method of depreciation of leased assets
As described in “Significant accounting policies for preparation of consolidated financial statements, 4.
Disclosure of accounting policies, (2) Method of depreciation and amortization of major depreciable andamortizable assets.”
Of finance lease transactions that do not transfer the ownership, lease transactions that commenced on or
before March 31, 2008 are accounted for as operating lease transactions. The details are as follows.

- 25 -

(1) Acquisition cost, accumulated depreciation and net book value of leased property(Millions of yen)
As of March 31, 2021
Accumulated depreciation

Acquisition cost
Buildings and structures
Total

8,010
8,010

Net book value

5,151
5,151

2,859
2,859
(Millions of yen)

As of March 31, 2022
Accumulated depreciation

Acquisition cost
Buildings and structures
Total
Note:

8,010
8,010

Net book value

5,464
5,464

2,546
2,546

Acquisition cost is calculated inclusive of interest expenses because the ratio of the year-end balanceof future minimum lease payments to the year-end balance of property and equipment was low.

(2) Future minimum lease payments as of March 31, 2021 and 2022 were as follows:(Millions of yen)
As of March 31, 2021
Future minimum lease payments
Due within one year
Due after one year
Total
Note:

312
2,546
2,859

As of March 31, 2022
312
2,233
2,546

Future minimum lease payments are calculated inclusive of interest expenses because the ratio of theyear-end balance of future minimum lease payments to the year-end balance of property andequipment was low.

(3) Lease payments and depreciation(Millions of yen)

Lease payments
Depreciation

For the year ended
March 31, 2021
(April 1, 2020 to March 31, 2021)
312
312

For the year ended
March 31, 2022
(April 1, 2021 to March 31, 2022)
312
312(4) Method of calculating depreciation equivalent
Depreciation is calculated using the straight-line method based on the assumption that the useful lives of theleased assets are equal to the lease term and the residual value is equal to zero.
(Loss on impairment)
There was no loss on impairment allocated to leased assets.

- 26 -

2. Operating leases
Future minimum lease payments/receipts under non-cancelable operating leases(As Lessee)(Millions of yen)
As of March 31, 2021
Due within one year
Due in more than one year
Total

9,508
99,975
109,484

As of March 31, 2022
12,244
128,720
140,965(As Lessor)(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Due within one year
1,004
981
Due in more than one year
886
685
Total
1,890
1,666
Note: The future minimum lease receipts in the above table were related to lease agreements of theDormitory Business, etc.

Notes - Financial instruments
1. Matters concerning the status of financial instruments(1) Group policy for financial instruments
The Group raises required funds mainly through the issuance of corporate bonds and bank borrowings basedon its capital investment plan, and short-term working capital through bank borrowings. Temporary surplus
funds, if any, are invested in highly secure financial assets. In addition to using derivatives to avoid risks as
described below, the Group enters into hybrid financial instrument transactions with embedded derivatives forthe purpose of managing surplus funds. As for such hybrid financial instrument transactions, the Group uses
only those that are judged to be highly secure based on the assessment of their characteristics.
Regarding interest rate-related derivatives, interest rate swap transactions are currently used to convert
variable interest rates of borrowings into fixed interest rates. In the case where interest rate conditions change,
while interest rate swap transactions to convert fixed interest rates into variable interest rates may be used, theGroup intends to use them only for long-term monetary receivables and payables with fixed interest rates tothe extent of achieving the purpose of adjusting to prevailing market interest rates.
(2) Nature and extent of risks arising from financial instruments
Trade receivables, such as notes and accounts receivable - trade, are exposed to customer credit risk. In
addition, securities and investment securities, which consist of held-to-maturity debt securities, equity
securities of other companies held for the purpose of strengthening business relationships with the Group, andsecurities for pure investment purposes, are exposed to the risk of market price fluctuations. While some ofthem take the form of hybrid financial instruments, which are exposed to the risks of fluctuation in stock
prices and foreign currency exchange rates, etc. as well as the credit risk of issuers, the Group does notconduct high-risk transactions based primarily on its policy to guarantee the principal amount. Guarantee andleasehold deposits are pledged in relation to lease agreements. Although they are exposed to debtor credit
risk, they shall, in principle, be returned in a lump sum at the termination of the agreements.
Payment terms of most trade payables, such as notes and accounts payable - trade, are within one month. As
for liabilities such as borrowings and bonds payable, short-term borrowings are primarily for raising funds for
operating transactions, while long-term borrowings, bonds payable, and convertible bonds with shareacquisition rights are primarily for raising funds for capital investments. Some of them are exposed to the riskof interest rate fluctuations. Guarantee deposits received, which are taken as deposits concerning leaseagreements, shall be returned in a lump sum at the termination of the agreements. These obligations are
exposed to liquidity risk.
- 27 -

Derivative transactions are primarily interest rate swaps to hedge fluctuations in the interest rates ofborrowings and bonds payable, and are exposed to the risk of fluctuation in interest rates and counterparty
risk. Information on hedging instruments and hedged items, hedging policy, and assessment of hedge
effectiveness is included in “Significant hedge accounting methods” in the “Disclosure of accounting
policies.”(3) Risk management for financial instruments
1) Credit risk management
As for trade receivables and long-term loans receivable, each responsible department of the Company
monitors the financial positions of major counterparties as necessary, and controls the balances andmaturity dates of receivables of each client so as to detect and mitigate any concerns about collectability as
early as possible, based on its internal rules. The Company’s consolidated subsidiaries manage theirreceivables in the same manner as the Company in accordance with the Company’s internal rules.
Held-to-maturity debt securities consist solely of highly rated debt securities such as government bonds,
and therefore their credit risk is minimal.
The Group enters into derivative transactions to mitigate counterparty risk only with domestic financial
institutions with a sound credit profile.
2) Market risk management
The Company uses interest rate swaps as hedging instruments on each loan contract to hedge thefluctuation in interest rates of borrowings. As for the risk of fluctuation in interest rates, the Company
monitors the market interest rates on a regular basis.
As for securities and investment securities, the Company monitors fair values, stock prices, foreign
currency exchange rates, and financial positions of issuers on a regular basis. In addition, as for securities
other than held-to maturity debt securities, the Company continuously reviews its portfolio taking into
account its relationship with counterparties.
As for derivative transactions, the Company requires authorization procedures based on its administrative
authority rules such as the board of directors’ meetings, and the Corporate Planning Department manages
the balances and maturity dates of derivative transactions. The Company’s consolidated subsidiaries
manage their derivative transactions in the same manner as the Company in accordance with theCompany’s rules.
3) Management of liquidity risk related to fund-raising
The Company manages liquidity risk by maintaining one month’s worth of net sales as liquidity on hand,as well as having the Corporate Planning Department prepare and update funding plans on a timely basis
based on reports from each department.
(4) Supplementary explanation on fair value of financial instruments
The fair values of financial instruments are based on market prices in active markets. If a market price is notavailable, another rational valuation technique is used instead. Since various assumptions and factors arereflected in estimating the fair value, different assumptions and factors could result in a different fair value.

- 28 -

2. Fair value of financial instruments
Book values and fair values of financial instruments, and the difference between the two as of March 31, 2021
and 2022 were as follows.
As of March 31, 2021
(Millions of yen)Book value

Fair value

Difference(1) Investment securities

2,172

2,172

0

(2) Guarantee deposits

12,403

11,984(418)(3) Leasehold deposits

16,912

13,267(3,645)

Total assets

31,48827,423(4,064)(1) Short-term borrowings

8,900

8,901

1

471

471

(0)

33,82033,84020

30,14231,015873

56,80657,160

353

2,929

2,911

(18)

133,069

134,300

1,230(2) Short-term guarantee deposits
received(3) Current portion of bonds payable andbonds payable(4) Convertible bonds with shareacquisition rights(5) Current portion of long-termborrowings and long-term borrowings(6) Long-term guarantee deposits received
Total liabilities
(*1)

(*2)

The note on cash is omitted. Information on deposits, notes and accounts receivable - trade, and notes andaccounts payable - trade is omitted, because these items are settled in a short period and therefore their fairvalues approximate the book values.
The following financial instruments are not included in “(1) Investment securities” because their fair values are
deemed extremely difficult to determine since their market prices are not available. The amounts of thesefinancial instruments recorded in the consolidated balance sheet are as follows:(Millions of yen)Classification

As of March 31, 2021

Investments in non-consolidated subsidiaries and affiliates

1,853

Unlisted equity securities

177

Investments in silent partnerships

269

Investments in investment partnerships

19

Other

6

- 29 -

As of March 31, 2022
(Millions of yen)Book value(1) Securities

Fair value

Difference

20

20

0

(2) Investment securities

2,191

2,191

–

(3) Guarantee deposits

13,526

12,919(607)(4) Leasehold deposits

19,033

14,768(4,265)

Total assets

34,771

29,898(4,872)(1) Short-term borrowings

11,30011,300

0

475

475

–

28,54028,874334

30,11232,9042,791

65,481

66,277

796

2,630

2,607

(22)

138,539

142,440

3,900

324

324

–

(2) Short-term guarantee deposits
received(3) Current portion of bonds payable andbonds payable(4) Convertible bonds with shareacquisition rights(5) Current portion of long-termborrowings and long-term borrowings(6) Long-term guarantee deposits received
Total liabilities
Derivatives
(*1)

(*2)

The note on cash is omitted. Information on deposits, notes and accounts receivable - trade, and notes andaccounts payable - trade is omitted, because these items are settled in a short period and therefore their fairvalues approximate the book values.
Equity securities without market prices are not included in “(2) Investment securities.” The amounts of thesefinancial instruments recorded in the consolidated balance sheet are as follows:(Millions of yen)Classification

As of March 31, 2022

Investments in non-consolidated subsidiaries and affiliates

524

Unlisted equity securities

160

Investments in silent partnerships

269

Other

6

- 30 -

Notes:1. Maturity analysis for monetary receivables and securities with contractual maturities
As of March 31, 2021
(Millions of yen)Due in one
year or less

Cash and deposits
Deposits
Notes and accounts
receivable - trade
Investment securities
Held-to-maturity debt
securities
Government andmunicipal bonds
Other securities with
contractual maturities(1) Debt securities (Other)(2) Other
Guarantee deposits
Leasehold deposits
Total

Due after one year
through five years

Due after five years
through ten years

Due after ten years

24,496

–

–

–

9,702

–

–

–

–

20

–

–

–
–
1,306
903

–
1
2,686
2,017

–
–
1,129
2,480

1,200
6
7,280
11,511

36,408

4,724

3,610

19,999Due after one year
through five years

Due after five years
through ten years

Due after ten years

37,837–––

11,455

–

–

–

20

–

–

–

–
–
1,643
882
51,838

–
–
2,186
2,422
4,608

–
–
1,120
2,802
3,923

1,200
6
8,576
12,92522,708

As of March 31, 2022
(Millions of yen)Due in one
year or less
Cash and deposits
Deposits
Notes and accounts
receivable - trade
Investment securities
Held-to-maturity debt
securities
Government andmunicipal bonds
Other securities with
contractual maturities(1) Debt securities (Other)(2) Other
Guarantee deposits
Leasehold deposits
Total- 31 -

Notes:2. Maturity analysis for bonds payable, long-term borrowings, and other interest-bearing liabilities
As of March 31, 2021
(Millions of yen)
Due after one Due after two Due after three Due after four
Due in one
Due after
year through years through years through years throughyear or lessfive years
two years
three years
four years
five years

Short-term borrowings

8,900

–

–

–

–

–

Bonds payable

5,280

5,080

4,880

4,880

4,680

9,020

Convertible bonds withshare acquisition rights

–

–

–

–

30,000–Long-term borrowings

3,802

3,504

7,681

7,293

6,737

27,786

Total

17,982

8,584

12,561

12,173

41,41736,806

As of March 31, 2022

Due in one
year or less(Millions of yen)
Due after one Due after two Due after three Due after four
Due after
year through years through years through years throughfive years
two years
three years
four years
five years

Short-term borrowings

11,300

–

–

–

–

–

Bonds payable

5,080

4,880

4,880

4,680

4,680

4,340

Convertible bonds withshare acquisition rights

–

–

–

30,000––Long-term borrowings

3,520

9,247

8,860

8,303

7,969

27,580Total

19,90014,127

13,74042,983

12,64931,9203. Breakdown by level of fair values of financial instruments, etc.
Fair values of financial instruments are classified into the following three levels in accordance with theobservability and materiality of inputs for fair value measurement.
Level 1 fair value: Fair value measured by using quoted prices for assets or liabilities that are subject to thefair value measurement concerned which are formed in active markets, of observable
inputs for fair value measurement
Level 2 fair value:

Fair value measured by using inputs for fair value measurement other than Level 1 inputs,of observable inputs for fair value measurement

Level 3 fair value:

Fair value measured by using unobservable inputs for fair value measurement

If multiple inputs that have a material impact on fair value measurement are used, the fair value is classified
into the lowest priority level in fair value measurement, of the levels to which each input belongs.

- 32 -

(1) Financial instruments recorded at fair value in the consolidated balance sheet
As of March 31, 2022
(Millions of yen)Classification
Securities and investment
securities
Other securities
Equity securities
Debt securities
Other
Derivative transactions
Interest rate-related derivatives
Total assets

Fair value
Level 1

Level 2

Level 3

Total

–

–
1,140

60

–

–
–

989
1,140
60

–

324
1,465

–
–

324
2,516

989

1,050

–

(2) Financial instruments other than financial instruments recorded at fair value in the consolidated balance
sheet
As of March 31, 2022
(Millions of yen)Classification
Securities and investment
securities
Held-to-maturity debt securities
Government bonds
Guarantee deposits
Leasehold deposits
Total assets
Short-term borrowings
Short-term guarantee deposits
received
Current portion of bonds payable
and bonds payable
Convertible bonds with shareacquisition rights
Current portion of long-termborrowings and long-termborrowings
Long-term guarantee deposits
received
Total liabilities
Note:

Fair value
Level 1

Level 2

Level 3

Total

20

–

–
–
–

12,91914,76827,687
11,300

–
–
–
–
–

20
12,91914,76827,707
11,300

–

475

–

475

–

28,874–28,87432,904––32,904–

66,277–

66,277

–

2,607

–

2,607

32,904

109,536–

142,440

20

Explanation of valuation techniques used to measure fair value and inputs for fair value measurement
Securities and investment securities
Listed equity securities, investment trusts, government bonds and other debt securities are valued
using quoted prices. Since listed equity securities, investment trusts and government bonds aretraded in active markets, their fair values are classified as Level 1 fair value. On the other hand,because other debt securities held by the Company are infrequently traded in markets and quoted
prices of other debt securities are not regarded as the quoted prices in active markets, their fairvalues are classified as Level 2 fair value.

- 33 -

Derivative transactions
The fair values of interest rate swaps are measured at the quoted price obtained from financial
institutions, and classified as Level 2 fair value. However, interest rate swaps accounted for using
the exceptional method are accounted for together with the hedged long-term borrowings.
Therefore, their fair values are included in the fair values of the relevant long-term borrowings(refer to “Long-term borrowings” below).
Guarantee deposits and leasehold deposits
The fair values of guarantee deposits and leasehold deposits are stated at present value calculated
based on the amount of receivables discounted by interest rates that take into account thecontractual periods and credit risk for each receivable categorized according to certain periods,
and classified as Level 2 fair value.
Convertible bonds with share acquisition rights
The fair values of convertible bonds with share acquisition rights are measured using quoted
prices. Because convertible bonds with share acquisition rights are traded in active markets, theirfair values are classified as Level 1 fair value.
Short-term borrowings, and current portion of long-term borrowings and long-term borrowings
The book values of short-term borrowings, and current portion of long-term borrowings and longterm borrowings with variable interest rates approximate the fair values because the interest rates
reflect market interest rates in the short term, and the Company’s credit status has not changed
significantly since initiating the borrowings. Therefore, the book values are used for their fairvalues. Those with fixed interest rates are stated at present value calculated based on the total
amount of principal and interest (*) categorized according to certain periods discounted by interest
rates that take into account the periods up to maturity and credit risk. All the fair values areclassified as Level 2 fair value.
(*) For borrowings hedged by interest rate swaps subject to the exceptional method, the total
amount of principal and interest is calculated using the rates of the said interest rate swaps
Short-term guarantee deposits received and long-term guarantee deposits received
The fair values of short-term guarantee deposits received and long-term guarantee deposits
received are stated at present value calculated based on the amount of liabilities categorizedaccording to certain periods discounted by interest rates that take into account the periods up to
maturity and credit risk, and classified as Level 2 fair value.
Current portion of bonds payable and bonds payable
The fair values of current portion of bonds payable and bonds payable are stated at present value
calculated based on the total amount of principal and interest discounted by interest rates that take
into account their remaining periods and credit risk, and classified as Level 2 fair value.

- 34 -

Notes - Securities
1. Held-to-maturity debt securities
As of March 31, 2021
Type(1) Government andmunicipal bonds
Debt securities with fairvalue exceeding bookvalue

Debt securities with fairvalue not exceeding
book value

Book value(Millions of yen)
Difference

Fair value
20

20

0

(2) Corporate bonds

–

–

–

(3) Other–––

Subtotal

20

20

0

(1) Government andmunicipal bonds

–

–

–

(2) Corporate bonds

–

–

–

(3) Other

–

–

–

–

–

–

20

20

0

Subtotal
Total

As of March 31, 2022
Type(1) Government andmunicipal bonds
Debt securities with fairvalue exceeding bookvalue

Debt securities with fairvalue not exceeding
book value

Book value(Millions of yen)
Difference

Fair value
20

20

0

(2) Corporate bonds

–

–

–

(3) Other–––

Subtotal

20

20

0

(1) Government andmunicipal bonds

–

–

–

(2) Corporate bonds

–

–

–

(3) Other

–

–

–

–

–

–

20

20

0

Subtotal
Total- 35 -

2. Other securities
As of March 31, 2021
Type

Securities with bookvalue exceedingacquisition cost

Securities with bookvalue not exceedingacquisition cost

Book value(1) Equity securities(2) Debt securities
1) Government
and municipal
bonds2) Corporate
bonds3) Other(3) Other
Subtotal(1) Equity securities(2) Debt securities
1) Government
and municipal
bonds2) Corporate
bonds3) Other(3) Other
Subtotal
Total(Millions of yen)
Difference

Acquisition cost

523

256

267

–

–

–

–

–

–

–
60
584
460

–
59
316
555

–
1
268
(95)

–

–

–

–

–

–

1,107
–
1,567
2,152

1,200
–
1,755
2,071

(92)
–
(187)
80

Acquisition cost

(Millions of yen)
Difference

As of March 31, 2022
Type

Securities with bookvalue exceedingacquisition cost

Securities with bookvalue not exceedingacquisition cost

Book value(1) Equity securities(2) Debt securities
1) Government
and municipal
bonds2) Corporate
bonds3) Other(3) Other
Subtotal(1) Equity securities(2) Debt securities
1) Government
and municipal
bonds2) Corporate
bonds3) Other(3) Other
Subtotal
Total- 36 -

542

256

285

–

–

–

–

–

–

–
60
602
447

–
59
315
555

–
1
286
(107)

–

–

–

–

–

–

1,140
–
1,588
2,191

1,200
–
1,755
2,071

(59)
–
(166)
120

3. Sales of other securities
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Millions of yen)Type

Proceeds from sales

Realized gain

Realized loss

(1) Equity securities

–

–

–

(2) Debt securities
1) Government andmunicipal bonds

–

–

–

2) Corporate bonds

–

–

–

3) Other

–

–

–

–

–

–

–

–

–

(3) OtherTotal

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Millions of yen)Type

Proceeds from sales

Realized gain

Realized loss

(1) Equity securities

–

–

–

(2) Debt securities
1) Government andmunicipal bonds

–

–

–

2) Corporate bonds

–

–

–

3) Other

–

–

–

–

–

–

–

–

–

(3) OtherTotal

4. Impairment of securities
No impairment loss of securities was recorded for the year ended March 31, 2021.
The Group recorded an impairment loss of investment securities of 17 million yen (unlisted equity securities of
17 million yen) for the year ended March 31, 2022.
For securities with quoted market prices, if the fair value of the securities declines by 50% or more of theacquisition cost, the acquisition cost will be written down to the fair value. If the fair value of the securities
declines between 30% and 50% of the acquisition cost, the acquisition cost will be written down to the amountdeemed appropriate taking into consideration their recoverability. With respect to the impairment of equity
securities whose fair value cannot be reliably determined, if the net asset value declines significantly due, forexample, to deterioration of the financial position of the issuers, the acquisition cost will be written down to theamount deemed appropriate, taking into consideration their recoverability on a case-to-case basis.

- 37 -

Notes - Derivatives
1. Derivative transactions to which hedge accounting is not applied
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
There were no items to be reported.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
There were no items to be reported.
2. Derivative transactions to which hedge accounting is applied
Interest rate-related derivatives
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Millions of yen)
Hedge
Contract amountType of derivative Major hedged
accounting
Contract amount due after one
Fair valuetransactions
item
methodyear
Exceptional
Interest rate
method forswaps
Long-term
629
343(Note)
interest rate
Receive variableborrowings
swaps/ pay fixed
Note: Interest rate swaps accounted for using the exceptional method are accounted for together withthe hedged long-term borrowings. Therefore, their fair values are included in the fair values of
the relevant long-term borrowings.

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Millions of yen)Hedge
accounting
methodContract amountType of derivative Major hedged
Contract amount due after one
transactions
item
year
Interest rate
Deferred hedge swaps
Long-term
62,00062,000accounting
Receive variableborrowings/ pay fixed
Exceptional
Interest rate
method forswaps
Long-term
343
200
interest rate
Receive variableborrowings
swaps/ pay fixed
Total

62,34362,200Fair value(Note 1)
324

(Note 2)324

Notes: 1. Method for measuring fair value: The fair value is measured at the quoted price obtained
from financial institutions.
2. Interest rate swaps accounted for using the exceptional method are accounted for together
with the hedged long-term borrowings. Therefore, their fair values are included in the fairvalues of the relevant long-term borrowings.

- 38 -

Notes - Retirement benefits
1. Outline of retirement benefits plans
The Company and some of its consolidated subsidiaries have defined benefit corporate pension plans and lumpsum retirement payment plans as defined benefit plans, as well as defined contribution pension plans as defined
contribution plans, while other consolidated subsidiaries have lump-sum retirement payment plans. Also, insome cases, the Group may pay additional retirement benefits upon the retirement of employees, etc.
A part of tax-qualified retirement pension plans of the Company and some of its consolidated subsidiaries wastransferred to defined benefit corporate pension plans on March 29, 2011, and the remaining part excluded fromthe transfer due to system revision was liquidated. In addition, certain lump-sum retirement payment plans weresuspended, and defined contribution pension plans were introduced.
Certain consolidated subsidiaries apply the simplified method in the calculation of retirement benefit liability
and asset and retirement benefit expenses under defined benefit corporate pension plans and lump-sum
retirement payment plans.
2. Defined benefit plans(1) Changes in retirement benefit obligations, excluding plans applying the simplified method, for the years
ended March 31, 2022 and 2021 were as follows:
For the year ended
March 31, 2021

(Millions of yen)
For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Retirement benefit obligations at the
beginning of the year
Service cost
Interest cost
Actuarial gains and losses
Retirement benefits paid
Retirement benefit obligations at the end of
the year

1,840

1,873

181
12
12
(172)

182
13
(14)
(122)

1,873

1,932

(2) Changes in plan assets, excluding plans applying the simplified method, for the years ended March 31,
2022 and 2021 were as follows:
For the year ended
March 31, 2021

(Millions of yen)
For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Plan assets at the beginning of the year
Expected return on plan assets
Actuarial gains and losses
Contributions by the employer
Retirement benefits paid
Plan assets at the end of the year

879
17
87
101
(70)
1,015

1,015
20
33
113
(57)
1,125

(3) Changes in retirement benefit liability and asset of defined benefit plans applying the simplified method forthe years ended March 31, 2022 and 2021 were as follows:
For the year ended
March 31, 2021

(Millions of yen)
For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Retirement benefit liability at the beginning of
the year
Retirement benefit expenses
Retirement benefits paid
Contribution to the plans
Net retirement benefit liability and asset at theend of the year
- 39 -

179

186

36
(17)
(12)

41
(10)
(12)

186

205

(4) Reconciliation between the funded status of the plans and the amounts recognized in the consolidatedbalance sheet as of March 31, 2022 and 2021 was as follows:
As of March 31, 2021
Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Net defined benefit liability and asset in the
consolidated balance sheet
Retirement benefit asset
Retirement benefit liability
Net defined benefit liability and asset in the
consolidated balance sheet(Millions of yen)
As of March 31, 2022

1,053
(1,187)
(134)
1,195

1,111
(1,304)
(192)
1,206

1,061

1,013

–
1,045

–
1,013

1,045

1,013

(5) The components of retirement benefit expenses for the years ended March 31, 2022 and 2021 were as
follows:

For the year ended
March 31, 2021

(Millions of yen)
For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Service cost
218
224
Interest cost
12
13
Expected return on plan assets
(17)
(20)
Amortization of actuarial gains and losses
13(6)
Retirement benefit expenses
226
211
Note: Retirement benefit expenses of the consolidated subsidiaries applying the simplified method were
included in service cost.

(6) Remeasurements of defined benefit plans, net of tax
The components of remeasurements of defined benefit plans (before tax effects) under other comprehensive
income for the years ended March 31, 2022 and 2021 were as follows:
For the year ended
March 31, 2021

(Millions of yen)
For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Actuarial gain and loss
Total

(88)
(88)

(41)
(41)

(7) Remeasurements of defined benefit plans
The components of remeasurements of defined benefit plans (before tax effects) under accumulated othercomprehensive income as of March 31, 2022 and 2021 were as follows:
As of March 31, 2021
Unrecognized actuarial gain and loss
Total

(35)
(35)

- 40 -(Millions of yen)
As of March 31, 2022
(77)
(77)

(8) Plan assets
1) Main components of plan assets
Fair values of plan assets, by major category, as a percentage of total plan assets as of March 31, 2022
and 2021 were as follows:
As of March 31, 2021
Debt securities
Equity securities
General accounts of life insurance companies
Other
Total

26.6%
28.2
44.1
1.1
100.0

As of March 31, 2022
26.4%
28.5
43.9
1.2
100.0

2) Method for establishing long-term expected rate of return on plan assets
The long-term expected rates of return on plan assets has been estimated based on the current andanticipated allocation of plan assets to each asset class and the current and long-term expected rate of
return on the various asset classes.
(9) Calculation basis for actuarial assumption
The main actuarial assumptions used for the years ended March 31, 2022 and 2021 were as follows:
As of March 31, 2021
Discount rates
Long-term expected rates of return on plan
assetsExpected rates of salary increase

As of March 31, 2022

0.1 - 0.9%

0.1 - 0.9%

2.0%

2.0%

2.94 - 6.92%

2.94 - 6.92%

3. Defined contribution plans
The amounts paid to defined contribution plans by the Company and its consolidated subsidiaries is 111 million
yen for the year ended March 31, 2021 and 96 million yen for the year ended March 31, 2022.
Notes - Stock options
There were no items to be reported.

- 41 -

Notes - Tax effect accounting
1. Significant components of deferred tax assets and deferred tax liabilities(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Deferred tax assets
Investment securities
54
64
Allowance for doubtful accounts
54
63
Accrued taxes
69
189
Provision for bonuses
221
304
Retirement benefit liability
328
321
Provision for retirement benefits for directors
79
79
Dividend income as repayment of investments
904
904
Loss on impairment of non-current assets
538
470
Asset retirement obligations
462
486
Accrued expenses
72
44
Unrealized gains
1,242
1,132
Non-deductible consumption taxes
41
30
Tax loss carryforwards (Note 2)
6,567
6,624
Other
124
221
Deferred tax assets subtotal
10,762
10,938Valuation allowance relating to tax loss
(1,442)(1,523)carryforwards (Note 2)
Valuation allowance relating to total amount of(1,872)(1,926)
future deductible temporary differences
Valuation allowance subtotal (Note 1)(3,314)(3,449)Total deferred tax assets
7,448
7,488
Deferred tax liabilities
Real estate held for sale
(338)
–
Land
–
(33)
Reserve for advanced depreciation of non(312)(308)
current assets
Asset retirement obligations
(83)
(80)
Unrealized holding gain (loss) on securities
(25)
(37)
Deferred gain (loss) on interest rate swap–
(99)
hedges
Other
(10)
(8)
Total deferred tax liabilities
(769)
(567)
Net deferred tax assets
6,678
6,921
Note: Expected maturity of the deferred tax assets after the balance sheet date for tax loss carryforwards
As of March 31, 2021
(Millions of yen)
Due after
Due after
Due after
Due after
Due intwo years
three
one yearfour years Due after
one yearthroughyears
Total
throughthroughfive years
or lessthreethrough
two years
five years
years
four years
Tax loss carryforwards(*)
1
12
38
123
141
6,250
6,567
Valuation allowance
(1)
(12)
(38)
(123)
(141)
(1,125)(1,442)
Deferred tax assets
–
–
–
–
–
5,125
5,125
(*) The amount of tax loss carryforwards was calculated by multiplying the statutory tax rate.
- 42 -

As of March 31, 2022
(Millions of yen)Due inone yearor less

Due after
one yearthrough
two years

Due after
two years
through
three
years

Due after
three
years
throughfour years

Due after
four years
throughfive years

Due after
five years

Total

Tax loss
12
39
127
146
177
6,119
6,624
carryforwards(*1)
Valuation allowance
(12)
(39)
(127)
(146)
(177)
(1,018)(1,523)
Deferred tax assets(*2)
–
–
–
–
–
5,101
5,101
(*1) The amount of tax loss carryforwards was calculated by multiplying the statutory tax rate.
(*2) The Group recorded deferred tax assets of 5,101 million yen as a result of tax loss carryforwards arising fromthe impact of an expansion in COVID-19 infections. The Company and all domestic consolidated subsidiaries
have introduced the consolidated taxation system. Accordingly, when determining the recoverability of deferred
tax assets, the future taxable income of the consolidated taxable entity is used for income taxes (national-leveltaxes) and the future taxable income of each consolidated taxable company is used for local taxes. For tax loss
carryforwards, the Group conducts scheduling of the future expected fiscal years and expected amount of
deduction of the tax loss carryforwards based on estimates of the forecasted future taxable income, and records
the amount that is expected to be recovered as deferred tax assets.

2. Reconciliation between the statutory tax rates and the effective tax rates reflected in the consolidated statementof income for the years ended March 31, 2022 and 2021 was as follows:
As of March 31, 2021
Statutory tax rate
(Reconciliation)
Permanent difference due to non-deductible
expenses such as entertainment expenses
Permanent difference due to non-taxable
income such as dividend income
Inhabitant tax on per capita basis
Valuation allowance
Unrealized gains
Differences in tax rates applicable tosubsidiaries
Other - net
Actual effective tax rate after application of tax
effect accounting

Notes - Business combinations
There were no items to be reported.

- 43 -

As of March 31, 2022

30.62%

30.63%(0.68)

9.37

0.09(0.75)(1.88)(14.10)
0.02

21.55
21.41
(0.68)(1.43)

4.65

5.56(24.70)

18.20

61.48

Notes - Asset retirement obligations
Assets retirement obligations recorded in the consolidated balance sheeta. Outline of asset retirement obligations
Obligation to restore the site to its original condition, etc. based on the fixed-term land lease agreements ofa part of the hotel business, etc.
Obligation to restore the site to its original condition, etc. based on the real estate lease agreements of a partof the hotel business, etc.
Obligation costs for the removal of hazardous substances generated from the dismantlement of Groupowned properties.
With respect to certain costs above, the Group reasonably estimates the unrecoverable amounts of theleasehold and guarantee deposits related to the real estate lease agreements, and charges such amount toincome in the year to which such costs are attributable, instead of recording the liabilities as asset
retirement obligations.
b. Calculation method of asset retirement obligations
As for the obligation to restore the site to its original condition, etc. based on the fixed-term land leaseagreements of a part of the hotel business, etc., the Group calculates the amounts of the asset retirement
obligations based on an estimated period of use of such real estate of between 20 years and 51 years
considering the applicable period under such agreements and using discount rates ranging from 0.363% to2.293%.
As for the obligation to restore the site to its original condition, etc. based on the real estate leaseagreements of a part of the hotel business, etc., the Group calculates the amounts of the asset retirement
obligations based on an estimated period of use of such real estate of between 3 years and 20 years
considering the applicable period of depreciation and using discount rates ranging from 0.000% to 3.000%.
As for obligation costs for the removal of hazardous substances generated from the dismantlement ofGroup-owned properties, the Group calculates the amounts of the asset retirement obligations based on an
estimated period of use of such buildings of between 22 years and 25 years considering the applicable
period of depreciation and using discount rates ranging from 1.178% to 2.273%.
c.

Changes in asset retirement obligations(Millions of yen)
For the year ended
March 31, 2021

For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021)(April 1, 2021 to March 31, 2022)

597

699

252

60

4

3

(158)

(153)

3

1

699

610

Asset retirement obligations at the
beginning of the year
Increase due to acquisition of property
and equipment
Unwinding of discountDecrease due to settlement of asset
retirement obligations
Foreign currency translation differences
Asset retirement obligations at the end of
the year- 44 -

Notes - Real estate held for rental
The Group owns dormitories and office buildings (including land) which are held for rental in Tokyo and otherareas.
Book value, net increase or decrease during the year, and fair value of real estate held for rental for the years
ended March 31, 2022 and 2021 were as follows:(Millions of yen)
For the year ended
March 31, 2021

For the year ended
March 31, 2022

(April 1, 2020 to March 31, 2021)(April 1, 2021 to March 31, 2022)

Book value
Balance at the beginning of the39,92939,245year
Net increase (decrease) during the
(683)
772
year
Balance at the end of the year
39,24540,018Fair value at the end of the year
54,11952,991
Notes: 1. Book value represents acquisition cost less accumulated depreciation and accumulated impairment losses.
2. Fair value at the end of the year is primarily calculated by real estate appraisers based on the real estateappraisal standard (including amounts for which adjustments were made using indicators, etc.).

Income and expenses in relation to real estate held for rental for the years ended March 31, 2022 and 2021 wereas follows:(Millions of yen)
For the year ended
March 31, 2022

For the year ended
March 31, 2021
(April 1, 2020 to March 31, 2021)

Rental income
Rental expenses
Net
Other

(April 1, 2021 to March 31, 2022)

5,765
3,210
2,555
0

Note: Rental income and rental expenses were included in net sales and cost of sales, respectively.

- 45 -

6,238
3,485
2,752
0

Notes - Revenue recognition
1. Information on disaggregation of revenue from contracts with customers.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Millions of yen)
Reportable Segments

Dormitory

Comprehensive
Food Service Development
Building
Management

Hotel

Subtotal

Other(Note 1)

Total

Student dormitories

4,000

–

–

–

–

4,000

–

4,000

Employee dormitories

2,533

–

–

–

–

2,533

–

2,533

94

–

–

–

–

94

–

94

Contracted
dormitories

4,059

–

–

–

–

4,059

–

4,059

Dormy Inn–

35,249–––35,249–35,249Resorts–

27,411–––

27,411–

27,411

Office-building
management
Residential building
management

–

–

3,681

–

–

3,681

–

3,681

–

–

3,454

–

–

3,454

–

3,454

Food service

–

–

–

789

–

789

–

789

Development

–

–

–

–

38,97538,975–38,975

Other

–

–

–

–

–

–

13,91013,91010,68862,6607,136

789

38,975120,251

13,910134,161

36,235

–

350

–

2,151

38,736

802

39,53946,92462,6607,487

789

41,126

158,988

14,713

173,701

DomealRevenue fromcontracts withcustomers
Other revenue(Note 2)
Sales to externalcustomers

Notes:

1. The “Other” segment consists of the following businesses not included in the reportable segments: theSenior Life Business (management and operation of senior residences), the Public Kyoritsu Partnership(PKP) Business (services provided under contract to local governments), support for people who live
alone, the insurance agency business, comprehensive human-resource services, the financial business, theadministrative outsourcing business, and other businesses incidental thereto.
2. Other revenues include interest income, etc. under the ASBJ Statement No. 10 “Accounting Standard for
Financial Instruments,” rental income, etc. under the ASBJ Statement No. 13 “Accounting Standard forLease Transactions,” proceeds from sales of real estate properties, etc. under Accounting PracticeCommittee Statement No. 15 “Practical Guidelines on Accounting by Transferors for Securitization ofReal Property by Using Special Purpose Companies.”

2. Information that forms the basis for understanding revenue from contracts with customers
Information that forms the basis for understanding revenue from contracts with customers is as described in“Notes - Significant accounting policies for preparation of consolidated financial statements, 4. Disclosure ofaccounting policies, (6) Recognition of significant revenues and expenses.”- 46 -

3. Information on relation between satisfaction of performance obligations under contracts with customers andcash flows arising from these contracts, and amount and timing of revenue expected to be recognized in andafter the year ending March 31, 2023 from contracts with customers that existed at the end of the year ended
March 31, 2022
(1)

Balances of contract assets and contract liabilities, etc.
Opening balance and closing balance of receivables arising from contracts with customers, contract assets andcontract liabilities are as follows.
(Millions of yen)
Opening balance
Closing balance(April 1, 2021)(March 31, 2022)
Receivables arising from contracts
6,610
8,109
with customers
Contract assets
1,421
400
Contract liabilities
434
11
Receivables arising from contracts with customers represent accounts receivable - trade and notes receivable - trade
for which the rights to payment had become unconditional as at the end of the fiscal year, and others.
Contract assets relate to the Group’s rights to consideration for works that have created assets controlled bycustomers but not been billed as at the end of the fiscal year. Contract assets are reclassified to receivables when therights to payment become unconditional.
Contract liabilities represent the Group’s obligations to transfer goods or services to customers for which the Group
received consideration from customers or which have become due for receiving consideration.
Of revenue recognized during the year ended March 31, 2022, revenue included in the opening balance of contract
liabilities is 434 million yen. There is no revenue that was recognized in the year ended March 31, 2022 fromperformance obligations that were satisfied in past periods.

(2)

Transaction price allocated to remaining performance obligations
Information on the total amount of transaction price allocated to remaining performance obligations and period
during which revenue is expected to be recognized is omitted, because there is no such period exceeding one year.

- 47 -

Notes - Segment information, etc.
[Segment information]
1. General information of reportable segments
The Group’s reportable segments are components for which separate financial information is available andwhose operating results are regularly reviewed by the board of directors’ to decide on the allocation ofoperating resources and assess their performance.
The Group establishes business sections for individual services (or subsidiaries for some services) within
the Group. Each business section or subsidiary drafts strategies and engages in business activities for its
services.
Accordingly, the Group consists of service-specific segments based on these business sections andsubsidiaries. Its five reporting segments are the Dormitory Business, the Hotel Business, theComprehensive Building Management Business, the Food Service Business, and the Development
Business.
The outline of the respective reportable segments are as follows:
Dormitory Business: Operation and management of student dormitories, employee dormitories, Domeal,and contracted dormitories
Hotel Business: The Dormy Inn (limited-service hotel) and resorts (resort hotel) businesses
Comprehensive Building Management Business: Office-building management and residential building
management
Food Service Business: Businesses related to restaurants, contracted food service, hotel restaurants, andother facilities operated under contract
Development Business: Construction, planning, design, and brokerage businesses, the condominium
business, the real-estate sale and leaseback business, and other development-related businesses
2. Methods to determine amounts of net sales, profit or loss, assets and other items of each segment
The accounting policies of each reportable segment are consistent with those disclosed in “Notes Significant accounting policies for preparation of consolidated financial statements.”
Segment profit is based on operating profit.
Intersegment sales and transfers are determined based on prevailing market prices.

- 48 -

3. Information about net sales, profit or loss, assets and other items by reportable segment
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)(Millions of yen)
Reportable segment
Comprehensive
Building
Management

Food
Service

Development

Subtotal

Other(Note 1)

Total

Adjustment Consolidated(Note 2)
(Note 3)

DormitoryHotel

46,19046,159

7,166

657

6,082

106,256

15,024

121,281–

121,281

298

86

8,846

4,634

6,527

20,393486

20,879(20,879)–

Total

46,48946,246

16,012

5,291

12,610126,650

15,510142,160(20,879)

121,281

Segment profit (loss)

4,903(13,130)

624

(10)

650

(6,961)606(6,355)(2,701)(9,057)

Segment assets

54,074

105,849

11,3491,893

28,530201,698

12,344

214,042

24,989239,032

1,355

3,353

78

58

42

4,888

131

5,020

(58)

4,962

41

364

–

37

–

442

–

442

–

442

1,967

10,43126

3

3

12,43275

12,507(66)

12,440Net sales
Sales to externalcustomers
Intersegment sales ortransfers

Other
Depreciation
Loss on impairment
of non-current
assetsIncrease in property
and equipment, andintangible assets

Notes: 1.

2.

The “Other” segment consists of the following businesses not included in the reportable segments: theSenior Life Business (management and operation of senior residences), the Public Kyoritsu Partnership(PKP) Business (services provided under contract to local governments), support for people who live
alone, the insurance agency business, comprehensive human-resource services, the financial business,
the administrative outsourcing business, and other businesses incidental thereto.
The details of the adjustments were as follows:(Millions of yen)Segment profit (loss)
Elimination of intersegment transactions(213)

Corporate expenses (Note)(2,488)

Total(2,701)

Note: Corporate expenses primarily consist of expenses related to the administrative departments suchas the accounting department at the head office.
(Millions of yen)Segment assets
Elimination of intersegment transactions(13,857)

Corporate assets (Note)

38,846

Total

24,989Note: Corporate assets consist of cash and deposits at the head office, investment securities, assets of
the administrative departments, and deferred tax assets.
3.

Segment profit (loss) is adjusted with operating loss in the consolidated statement of income.

- 49 -

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)(Millions of yen)
Reportable segment
Comprehensive
Building
Management

Food
Service

Development

Subtotal

Other(Note 1)

Adjustment Consolidated(Note 2)
(Note 3)Total

DormitoryHotel

46,92462,6607,487

789

41,126

158,988

14,713

173,701–

173,701

322

111

7,621

6,038

(464)

13,628481

14,109(14,109)–

Total

47,246

62,772

15,108

6,827

40,661

172,616

15,195

187,811(14,109)173,701

Segment profit (loss)

4,554(9,451)

258

(74)

8,608

3,894

459

4,354

(2,922)

1,431

Segment assets

55,778100,361

18,811

2,283

22,024

199,260

15,991

215,251

26,471

241,723

1,410

4,387

70

71

42

5,981

130

6,112

(41)

6,070

49

–

–

2

–

51

–

51

–

51

2,373

6,985

39

130

–

9,528

55

9,584

(64)

9,519

Net sales
Sales to externalcustomers
Intersegment sales ortransfers

Other
Depreciation
Loss on impairment
of non-current
assetsIncrease in property
and equipment, andintangible assets

Notes: 1.

2.

The “Other” segment consists of the following businesses not included in the reportable segments: theSenior Life Business (management and operation of senior residences), the Public Kyoritsu Partnership(PKP) Business (services provided under contract to local governments), support for people who live
alone, the insurance agency business, comprehensive human-resource services, the financial business,
the administrative outsourcing business, and other businesses incidental thereto.
The details of the adjustments were as follows:(Millions of yen)Segment profit (loss)
18

Elimination of intersegment transactions
Corporate expenses (Note)(2,941)

Total(2,922)

Note: Corporate expenses primarily consist of expenses related to the administrative departments suchas the accounting department at the head office.
(Millions of yen)Segment assets
Elimination of intersegment transactions(18,535)

Corporate assets (Note)

45,006

Total

26,471

Note: Corporate assets consist of cash and deposits at the head office, investment securities, assets of
the administrative departments, and deferred tax assets.
3.

4.

Segment profit (loss) is adjusted with operating profit in the consolidated statement of income.

Changes in reportable segments, etc.
Application of the Accounting Standard for Revenue Recognition and relevant ASBJ regulations
As stated in “Notes - Changes in accounting policies,” the Group has applied the Accounting Standard for
Revenue Recognition and relevant ASBJ regulations from the beginning of the year ended March 31, 2022,- 50 -

and changed accounting treatment for revenue recognition. Accordingly, the method for profit or loss ofoperating segments has been changed in the same manner.
Due to this change, net sales and cost of sales in “Hotel” decreased by 305 million yen and 305 million
yen, respectively, and net sales and cost of sales in “Other” decreased by 305 million yen and 305 million
yen, respectively, compared to the previous method. However, the impact on segment profit and loss isinsignificant.
[Information associated with reportable segments]
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
1. Information by product and service(Millions of yen)Student
dormitories

Sales toexternalcustomers

Employeedormitories

DomealContracted
dormitories

23,558 13,765

4,809

4,058

Dormy Inn

Resort25,233 20,926

OfficeResidentialbuildingbuilding
Food Service Development
management management

3,885

3,281

657

Other

Consolidated

6,082 15,024 121,281

2. Information by geographical area
(1) Net sales
This information is omitted because sales to external customers in Japan exceeded 90% of net sales in
the consolidated statement of income.
(2) Property and equipment
This information is omitted because the balance of property and equipment in Japan exceeded 90% of
the total balance of property and equipment in the consolidated balance sheet.
3. Information by major customer
This information is omitted because the Group does not have any major customers that account for 10% ormore of net sales in the consolidated statement of income.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
1. Information by product and service(Millions of yen)Student
dormitories

Sales toexternalcustomers

Employeedormitories

DomealContracted
dormitories

25,193 12,938

4,732

4,059

Dormy Inn

Resort35,249 27,411

OfficeResidentialbuildingbuilding
Food Service Development
management management

4,017

3,469

Other

Consolidated

789 41,126 14,713 173,701

2. Information by geographical area
(1) Net sales
This information is omitted because sales to external customers in Japan exceeded 90% of net sales in
the consolidated statement of income.
(2) Property and equipment
This information is omitted because the balance of property and equipment in Japan exceeded 90% of
the total balance of property and equipment in the consolidated balance sheet.
3. Information by major customer
This information is omitted because the Group does not have any major customers that account for 10% ormore of net sales in the consolidated statement of income.

- 51 -

[Information about loss on impairment of non-current assets by reportable segment]
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
This information is omitted because the same information has been presented in 3. Information about net
sales, profit or loss, assets, and other items by reportable segment.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
This information is omitted because the same information has been presented in 3. Information about net
sales, profit or loss, assets, and other items by reportable segment.
[Information about amortization of goodwill and year-end balance of goodwill by reportable segment]
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
There were no items to be reported.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
There were no items to be reported.
[Information about gain on negative goodwill by reportable segment]
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
There were no items to be reported.
For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
There were no items to be reported.

- 52 -

[Information on related parties]
For the year ended March 31, 2021 (April 1, 2020 to March 31, 2021)
1. Related party transactions
Transactions of the Company with related parties
Directors and major shareholders, etc. (limited to individuals) of the Company(Millions of yen)
Type

Name

Director

Haruhisa
IshizukaCompany, etc.
whose majorityof voting rights
is held by a
Milestone
director and/or Co., Ltd.
his/her relative (Notes 2, 3)(including thesaid company’s
subsidiaries)

Notes:

Location–

Katsushika-ku, Tokyo

CapitalBusiness/
occupation

Chairman of the–Company

100

Real estate rental
business, etc.

Percentage
of voting Relationshiprights (held)

Directly held
2.71%

Directly held
10.94%

Leasing ofreal estateTransaction

Rent expenses ofdormitories andhotels

Leasing of Rent expenses ofreal estate
dormitories

Transaction
amountAccounts

Year-endbalance

Other incurrent assets

10

Leaseholddeposits

182

177

Other incurrent assets
Leaseholddeposits

16

Guarantee
deposits

15

69

1. The rent expenses in the above tables are determined through price negotiations with reference to theprevailing transactions in the neighborhood.
2. The Company’s chairman, Haruhisa Ishizuka and his relative hold 100% of Milestone Co., Ltd.’s voting
rights.
3. The Company’s chairman, Haruhisa Ishizuka, serves as Milestone Co., Ltd.’s representative director, andhis spouse, Motoe Ishizuka, who holds 0.03% of the Company’s voting rights, serves as Milestone Co.,
Ltd.’s president.

2. Notes on the parent company or significant associates
There were no items to be reported.

- 53 -

6

For the year ended March 31, 2022 (April 1, 2021 to March 31, 2022)
1. Related party transactions
Transactions of the Company with related parties
Directors and major shareholders, etc. (limited to individuals) of the Company(Millions of yen)
Type

Name

Director

Director

Director

Haruhisa
Ishizuka

Koji Nakamura

Yasuo Ohara

Location Capital

–

–

–

Company, etc.
whose majorityof voting rights
is held by a Milestone Co.,
Katsushika
director and/orLtd.
-ku, Tokyo
his/her relative (Notes 2, 3)(including thesaid company’s
subsidiaries)

Notes:

Business/
occupation

Chairman of the–Company

President of the–Company

Percentage
of voting Relationshiprights (held)

Directly held
2.71%

Directly held
0.02%

Executive Director Directly held–of the Company
0.01%

Transaction
amountAccounts

Year-endbalance160

Other incurrent assets

16

17

Leaseholddeposits

199

16

Other incurrent assets

0Receipt ofinterest

0Long-term
loans
receivable

16

Lending of funds

14

Other incurrent assets

0Transaction

Rent expenses ofdormitories andhotels
Leasing ofreal estate
Payment ofleaseholddeposits
Lending offunds(Note 4)

Lending offunds(Note 4)

Lending of funds

Receipt ofinterest
Rent expenses ofdormitories

100

Real estate rental
business, etc.

Directly held
10.94%

Leasing ofreal estate

Repayment ofleaseholddeposits

Long-term
loans
receivable
Other incurrent assets
75
Guarantee
deposits
0

16

Leaseholddeposits

14
2
15

–

1. The terms and conditions of the transactions in the above tables are determined in the same way as the terms
and conditions of general transactions with parties unrelated to the Company, and interest rates on funds lentare determined reasonably in consideration of market interest rates.
2. The Company’s chairman, Haruhisa Ishizuka and his relative hold 100% of Milestone Co., Ltd.’s voting
rights.
3. The Company’s chairman, Haruhisa Ishizuka, serves as Milestone Co., Ltd.’s representative director, andhis spouse, Motoe Ishizuka, who holds 0.03% of the Company’s voting rights, serves as Milestone Co.,
Ltd.’s president.
4. The above lending of funds was carried out in relation to the purchase of the Company’s shares through onmarket trade, which is in line with the Guidelines on Possession of the Company’s Shares by Officers
established by the Company.

2. Notes on the parent company or significant associates
There were no items to be reported.

- 54 -

Notes - Per share data
(Yen)
For the year ended
March 31, 2021
(April 1, 2020 to March 31, 2021)

For the year ended
March 31, 2022
(April 1, 2021 to March 31, 2022)

Net assets per share

1,815.45

1,810.40

Basic earnings (loss) per share(311.98)

13.83

–

–

Diluted earnings per share

Notes: 1. Diluted earnings per share for the year ended March 31, 2021 is not presented because a loss per share wasrecorded, and also because there were no potential shares with dilutive effects. Diluted earnings per share forthe year ended March 31, 2022 is not presented because there were no potential shares with dilutive effects.
2. The basis of calculation for basic earnings (loss) per share is as follows:
For the year ended
March 31, 2021
(April 1, 2020 to March 31,

For the year ended
March 31, 2022
(April 1, 2021 to March 31,

2021)

2022)

Basic earnings (loss) per share
Profit (loss) attributable to owners of parent
Profit (loss) not attributable to commonshareholders
Profit (loss) attributable to owners of parent
attributable to shareholders of common stock
Weighted-average number of common stock
outstanding during the year

(Millions of yen)

(12,164)

539(Millions of yen)––

(Millions of yen)

(12,164)

539

38,990,301

38,989,870(Shares)

Outline of potential common stock excluded from the calculationof diluted EPS due to its non-dilutive effectEuro yen-denominated Euro yen-denominatedConvertible-Bond-Type Convertible-Bond-Type
Bonds With Share
Bonds With Share
Acquisition Rights due Acquisition Rights due
2026 by resolution of2026 by resolution of
the Board of Directors’ the Board of Directors’
meeting held on January meeting held on January
13, 2021 (Number of
13, 2021 (Number ofshare acquisition rights: share acquisition rights:
3,000 units)
3,000 units)

Notes - Subsequent events
Introduction of restricted share-based remuneration plan
At the Board of Directors meeting held on May 13, 2022, the Company reviewed the executive remuneration planand resolved to introduce a restricted share-based remuneration plan (hereinafter referred to as the “Plan”). The Plan
was approved and adopted at the 43rd Ordinary General Meeting of Shareholders held on June 28, 2022.

1. Purpose of introduction of the Plan, and other matters(1) Purpose of introduction of the Plan
The Plan has been introduced as a remuneration plan to allocate restricted shares to the Company’s
Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors;
hereinafter referred to as “Eligible Directors”) in order to have Eligible Directors share the merits and risksof fluctuating share prices with shareholders and further increase their incentive to contribute to theenhancement of increasing share price and corporate value.

- 55 -

(2) Conditions for introduction of the Plan
Because, under the Plan, monetary compensation receivable is to be paid as remuneration to allocate
restricted shares to Eligible Directors, the introduction of the Plan is subject to approval of shareholders forthe payment of such remuneration at this General Meeting of Shareholders. At the 40th Ordinary General
Meeting of Shareholders held on June 26, 2019, the remuneration amount for the Company’s Directors(excluding Directors who are Audit and Supervisory Committee Members) was approved as a maximum
amount of 1,000 million yen per year (not including the employee’s salaries portion for Directors who also
serve as employees). At this General Meeting of Shareholders, however, in comprehensive consideration ofvarious matters such as the level of contribution of Eligible Directors in the Company, as a separate portion
to the aforementioned remuneration amount for Directors, it was resolved that the total amount of monetarycompensation receivable to be paid as remuneration, etc. regarding transfer restricted shares for Eligible
Directors shall be no more than 200 million yen per year.

2.

Overview of the Plan
(1) Allocation of Transfer Restricted Shares and payment
Based on resolutions of the Board of Directors, the Company shall provide Eligible Directors anamount of monetary compensation receivable within the aforementioned annual limit as remuneration
etc., regarding Transfer Restricted Shares, and each Eligible Director shall receive their allocation ofTransfer Restricted Shares by paying all of the monetary compensation receivable by the method of inkind contribution.
The amount to be paid for Transfer Restricted Shares shall be determined by the Board of Directors
within the scope of an amount that is not particularly advantageous to Eligible Directors who will
receive the Transfer Restricted Shares, based on the closing price of the Company’s common stock on
the Tokyo Stock Exchange on the business day immediately preceding the date of each resolution of
the Board of Directors meeting on the date of issuance or disposition (if there was no trading on thatdate, the closing price of the most recent preceding trading date).
In addition, the aforementioned monetary compensation receivable shall be paid on condition that
Eligible Directors enter into an agreement for the allocation of Transfer Restricted Shares that includes
their consent to the aforementioned in-kind contribution and the provisions stipulated in (3) below.
(2) Aggregate number of Transfer Restricted Shares
The aggregate number of Transfer Restricted Shares to be allocated to Eligible Directors shall not exceed
260,000 Transfer Restricted Shares per fiscal year.
However, in the case where the Company conducts stock splits (including gratis allocations of its commonshares) or reverse stock splits of its common shares on or after the date of the approval of this Proposal, or in
any other case where an adjustment of the aggregate number of Transfer Restricted Shares to be allocated isrequired to be made, the aggregate number of the Transfer Restricted Shares shall be adjusted to within areasonable extent.

(3) Contents of agreement for the allocation of Transfer Restricted Shares
When allocating Transfer Restricted Shares, the agreement for the allocation of Transfer Restricted Shares
to be executed between the Company and Eligible Directors who will receive an allocation of Transfer
Restricted Shares based on resolutions of the Board of Directors shall contain the following content.
(i)

Details of Transfer Restrictions

Eligible Directors who receive an allocation of Transfer Restricted Shares may not transfer, set apledge, set a transfer security right, gift inter vivos, bequest, or make any other disposal (hereinafterreferred to as “Transfer Restrictions”) of the Transfer Restricted Shares they received (hereinafterreferred to as the “Allocated Shares”) to a third party during the period from the date they receive theallocation of Transfer Restricted Shares to the date of their retirement from their position as either- 56 -

Director or Executive Officer of the Company or its subsidiaries (hereinafter referred to as the“Transfer Restriction Period”).
(ii) Free-of-charge acquisition of Transfer Restricted Shares

In the case where Eligible Directors who received an allocation of Transfer Restricted Shares retire
from or leave their positions as Directors or Executive Officers of the Company and its subsidiaries
from the start date of the Transfer Restriction Period until the day before the date of the subsequent
General Meeting of Shareholders, the Company shall duly acquire the Allocated Shares free-of-charge
except in the case of a legitimate reason accepted by the Board of Directors.
In addition, of the Allocated Shares, at the time the aforementioned Transfer Restriction Period in (i)expires, the Company shall duly acquire free-of-charge any shares for which the transfer restrictions
have not been lifted based on the provision of a reason for lifting the transfer restrictions as in (iii)
below.
(iii) Lifting of Transfer Restrictions
The Company shall lift the Transfer Restrictions for all of the Allocated Shares as of the time when theTransfer Restriction Period expires, on the condition that the Eligible Directors who received an allocationof Transfer Restricted Shares have been in positions as either Director or Executive Officer of the Company
or its subsidiaries continuously from the start date of the Transfer Restriction Period until the date of thesubsequent General Meeting of Shareholders.
However, in the case where the Eligible Directors retire from or leave their positions as Directors or
Executive Officers of the Company and its subsidiaries from the start date of the Transfer Restriction
Period until the day before the date of the subsequent General Meeting of Shareholders for a legitimate
reason accepted by the Board of Directors, the number of Allocated Shares for which the Transfer
Restrictions will be lifted and the timing for lifting the Transfer Restriction shall be reasonably adjusted asnecessary.
(iv) Treatment in the event of organization restructuring, etc.

In the case where proposals regarding merger contracts under which the Company becomes theabsorbed company, share exchange agreements or share transfer plans under which the Company
becomes a wholly owned subsidiary, or any other organization restructuring, etc. are approved at theGeneral Meeting of Shareholders of the Company (or at a meeting of the Board of Directors of theCompany in case where approval by the General Meeting of Shareholders of the Company is not
required for the said organization restructuring, etc.) during the Transfer Restriction Period, theCompany shall lift, based on the resolution of the Board of Directors, the Transfer Restrictions before
the effective date of the said organization restructuring, etc., with regard to the Allocated Shares in thenumber reasonably determined by taking into account the period from the start date of the Transfer
Restriction Period to the approval date of the said organization restructuring, etc.
Furthermore, in the case provided for above, the Company shall duly acquire free-of-charge the
Allocated Shares for which the Transfer Restrictions have not been lifted, at the time immediately after
the lifting of Transfer Restrictions.

- 57 -

5) Annexed consolidated detailed schedules[Annexed consolidated detailed schedule of corporate bonds]
Company name

KYORITSU
MAINTENANCE CO.,
LTD.

Total

Bond nameDate of issuance

Balance as of
Balance as ofApril 1, 2021 March 31, 2022
(Millions of yen) (Millions of yen)Interest rate
(per annum)

Collateral

Date ofmaturity

17th Series Unsecured
Corporation Bond

November 30,
2011

200
[200]

–
[–]

1.47%

None

November30, 2021

18th Series Unsecured
Corporation Bond

March 29,
2013

200
[100]

100
[100]

0.98%

None

March 29,2023

19th Series Unsecured
Corporation Bond

March 29,
2013

200
[100]

100
[100]

0.94%

None

March 29,2023

20th Series Unsecured
Corporation Bond

March 31,
2015

800
[200]

600
[200]

0.88%

None

March 31,2025

21st Series Unsecured
Corporation Bond

December 30,
2016

4,800
[800]

4,000
[800]

0.52%

None

December30, 2026

22nd Series Unsecured
Corporation Bond

March 31,
2017

2,400
[400]

2,000
[400]

0.39%

None

March 31,2027

23rd Series Unsecured
Corporation Bond

March 31,
2017

2,400
[400]

2,000
[400]

0.50%

None

March 31,2027

24th Series Unsecured
Corporation Bond

March 30,
2018

6,300
[900]

5,400
[900]

0.52%

None

March 30,2028

25th Series Unsecured
Corporation Bond

March 30,
2018

3,290
[470]

2,820
[470]

0.35%

None

March 30,2028

26th Series Unsecured
Corporation Bond

March 30,
2018

3,150
[450]

2,700
[450]

0.14%

None

March 30,2028

27th Series Unsecured
Corporation Bond

March 29,
2019

5,600
[700]

4,900
[700]

0.44%

None

March 30,2029

28th Series Unsecured
Corporation Bond

March 29,
2019

2,400
[300]

2,100
[300]

0.16%

None

March 30,2029

29th Series Unsecured
Corporation Bond

March 29,
2019

2,080
[260]

1,820
[260]

0.27%

None

March 30,2029

Euro yen-denominatedConvertible-Bond-Type
Bonds With Share
Acquisition Rights due
2026(Note 2)January 29,
2021

30,142[–]

30,112
[–]

None

None

January 29,
2026

–

–

63,962[5,280]58,652[5,080]–––Notes: 1. Figures in brackets represent current portion of bonds payable.
2. The details of convertible bonds with share acquisition rights were as follows:
Euro yen-denominatedBondmaturity due 2026
Type of shares to be issued

Common stock

Issue price of share acquisition rights (Yen)

GratisIssue price of shares (Yen)

4,713

Total issue price (Millions of yen)

30,150Total issue price of shares issued upon exercise ofshare acquisition rights (Millions of yen)–

Percentage of share acquisition rights granted (%)

100
From February 12, 2021
to January 15, 2026

Exercise period for share acquisition rights

Note: When a holder makes a request to exercise their share acquisition rights, it shall be deemed that thefull amount to be paid at the exercise of the share acquisition rights has been paid in, and that therelated bonds with share acquisition rights have been redeemed in full. The said request shall bedeemed to have been made when the share acquisition rights are exercised.
- 58 -

3.

Amounts to be redeemed within five years after the consolidated balance sheet date are as follows:(Millions of yen)Due in one year
or less
5,080

Due after one year Due after two years Due after three years Due after four years
through two years through three years through four years through five years
4,880

4,880

[Annexed consolidated detailed schedule of borrowings]
Balance as of
Balance as ofClassification
April 1, 2021
March 31, 2022
(Millions of yen) (Millions of yen)

34,680

Average interest
rate
(%)

4,680

Repayment term

Short-term borrowings

8,900

11,3000.42–

Current portion of long-termborrowings

3,802

3,520

0.63

–

Current portion of lease obligations

21

39

3.37

–

Long-term borrowings (excluding
current portion)

53,003

61,961

0.57

2022 - 2031

Lease obligations (excluding
current portion)

354

698

3.37

2041

Other interest-bearing liabilities

–

–

–

–

66,081

77,520

–

–

Total

Notes: 1. The average interest rates shown above are the weighted average interest rates applicable to the year-end
balance of the borrowings, etc.
2. The scheduled redemption amounts of long-term borrowings and lease obligations (excluding current
portion) for the five years subsequent to March 31, 2022 were as follows:(Millions of yen)Classification
Long-term borrowings
Lease obligations

Due after one year Due after two years Due after three years Due after four years
through two years through three years through four years through five years
9,247

8,860

8,303

7,969

41

42

44

46

[Annexed consolidated detailed schedule of asset retirement obligations]This information is omitted pursuant to the provisions of Article 92-2 of the Ordinance on Consolidated
Financial Statements, since the respective amounts of asset retirement obligations as of April 1, 2021 andMarch 31, 2022 were 1% or less of the total of liabilities and net assets as of the same dates.

- 59 -

(2) Others
1) Quarterly information for the year ended March 31, 2022
(Cumulative period)
Net sales (Millions of yen)
Profit (loss) before income taxes (Millions ofyen)Profit (loss) attributable to owners of parent(Millions of yen)
Basic earnings (loss) per share (Yen)(Three-month period)
Basic earnings (loss) per share (Yen)First threemonthsFirst six months

29,64367,713105,066

173,701(3,705)(5,384)(5,092)

1,399(2,799)(4,076)(3,930)539(71.80)(104.55)(100.82)

13.83

First quarter

Second quarter

Third quarter

Fourth quarter(71.80)(32.75)

3.73

114.652) Litigation
There were no items to be reported.

- 60 -First ninemonthsFor the year