Independent Auditor’s Report
June 21, 2024

The Board of Directors
SEIKITOKYU KOGYO CO., LTD.
Ernst & Young ShinNihon LLC
Tokyo, Japan中川
政人
Masato Nakagawa
Designated Engagement Partner
Certified Public Accountant

中村崇
Takashi Nakamura
Designated Engagement Partner
Certified Public Accountant

OpinionPursuant to Article 444, paragraph 4 of the Companies Act, we have audited the accompanying
consolidated financial statements, which comprise the consolidated balance sheet, the consolidated
statement of income, the consolidated statement of changes in net assets, and notes to theconsolidated financial statements of SEIKITOKYU KOGYO CO., LTD. and its consolidated
subsidiaries (the Group) applicable to the fiscal year from April 1, 2023 to March 31, 2024.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position and results of operations of the Group applicable tothe fiscal year ended March 31, 2024, in accordance with accounting principles generally
accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of theGroup in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

Other Information
The other information comprises the information included in a disclosure document that
contains audited consolidated financial statements but does not include the consolidated financial
statements and our auditor’s report thereon. We have concluded that the other information does
not exist. Accordingly, we have not performed any work related to the other information.
Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing theGroup’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the consolidated financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation in accordancewith accounting principles generally accepted in Japan.

・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.
We communicate with the Corporate Auditor and the Board of Corporate Auditors regarding,among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statementthat we have complied with the ethical requirements regarding independence that are relevant toour audit of the consolidated financial statements in Japan, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, actions taken to eliminate threats or safeguards applied to reduce threats to an
acceptable level.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

SEIKITOKYU KOGYO CO., LTD.
Consolidated Balance Sheetfor the year ended M arch 31, 2024

U.S. dollars(thousands)(Note 2)2024

Yen(millions)
2024

AssetsLiabilities and Net assets
Current liabilities:

Current assets:
Cash and deposits

U.S. dollars(thousands)(Note 2)2024

Yen(millions)2024¥

Trade receivables
Notes receivables
Accounts receivables
Total trade receivables

Inventories
Cost on uncompleted construction contracts
Raw materials and supplies
Total inventories

13,440$88,7682,080
28,55430,634

13,739188,583
202,322

105
430
535

694
2,838
3,532

2,545
47,154

16,809311,431

26,880177,533

266

1,760

Short-term loans payable (Note 5)
Trade payables
Notes payables
Accounts payables
Total trade payables

¥

106

$

700

6,554
14,81021,36443,287
97,812141,099

940
641
18
19
1,736
3,889
28,713

6,207
4,234
121
125
11,46425,691
189,641

Long-term loans payable (Notes 5 and 10)
Other non-current liabilities
Total non-current liabilities

6,700
96
6,796

44,251632
44,883

Total liabilities

35,509234,524

2,000

13,209512
37,816(787)
39,541

3,383
249,761(5,197)
261,156

104
(37)
926
993

686
(248)
6,114
6,552

40,534

267,708

Income taxes payable
Advances received on uncompleted construction contracts
Provision for warranties for completed construction
Provision for loss on construction contracts
Provision for bonuses
Other current liabilities
Total current liabilities
Non-current liabilities:

Other current assets
Total current assets

Non-current assets:
Property, plant and equipment (Notes 4 and 5)
Intangible assets

Net assets:
Shareholders’ equity (Note 7):
Share capital
Authorized - 150,000,000 shares
Issued- 37,424,507 shares
Capital surplus
Retained earnings
Treasury stock - 955,786 shares
Total shareholders’ equity

Investment and other assets
Investment securities
Other securities (Note 10)

375

2,478

Deferred tax assets

926

6,115

Net defined benefit asset

63

413

Guarantee deposits and other investments (Note 6)

379

2,502

1,743

11,50828,889190,801

Total investments and other assets
Total non-current assets
Total assets¥

76,043$

Accumulated other comprehensive income:Unrealized gain on investment securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets

502,232

Total liabilities and net assets

See accompanying notes to consolidated financial statements.

1¥

76,043$502,232SEIKITOKYU KOGYO CO., LTD.
Consolidated Statement of Income
for the year ended March 31, 2024

U.S. dollars(thousands)(Note 2)2024

Yen(millions)2024
Completed construction contracts:
Net sales
Cost of sales
Gross profit¥

70,31262,271
8,041$

464,381
411,272
53,109Finished goods:
Net sales
Cost of sales
Gross profit

17,637
15,7371,900

116,485
103,935
12,550Power business:
Net sales
Cost of sales
Gross profit

88
83
5

584
552
32

Total:Net sales
Cost of sales
Gross profit

88,03778,091
9,946

581,450
515,759
65,691

Selling, general and administrative expenses:
Operating income

5,855
4,091

38,66927,022Other income (Note 8) :Interest and dividends
Other
Subtotal

9
408
417

60
2,696
2,756

Other expenses (Note 9):
Interest
Impairment loss (Note 12)
Other
Subtotal

55
300
127
482

366
1,983
841
3,190

4,026

26,588

1,211
75

7,996
492

2,740

18,100

Profit before income taxes
Income taxes
Current
Deferred
Net income¥

Net profit attributable to owners of parent
2

2,740

$

18,100SEIKITOKYU KOGYO CO., LTD.
Consolidated Statement of Changes in Net Assets
for the year ended March 31, 2024

Shareholders' equity (Notes 2 and 7)
Share capital

Capital surplus

Retained earnings

Total shareholders'equityTreasury stock(Millions of yen)
Balance at April 1, 2023

¥

2,000

¥

500

¥

37,810

¥

(804)

¥

39,506

Changes during the period
Dividend of surplus(2,734)

Net income attributable to owners of parent

2,740(2,734)
2,740

Purchase of treasury stock

12

Disposal of treasury stock
Net changes of items other thanshareholders' equity

(0)

17

29
－

－

Total changes during period
Balance as of March 31, 2024

(0)

¥

2,000

12
¥

512

6
¥

37,816

17
¥

(787)

35
¥

39,541

Accumulated other comprehensive income
Unrealized gain on
investment securities

Foreign currencytranslation adjustment

Remeasurements ofdefined benefit plans

Total accumulated othercomprehensive income

Total net assets(Millions of yen)
Balance at April 1, 2023

¥

34

¥

(20)

¥

140

¥

154

¥

39,660Changes during the period
Dividend of surplus(2,734)

Net income attributable to owners of parent

2,740

Purchase of treasury stock(0)

Disposal of treasury stock
Net changes of items other thanshareholders' equity

29
70

(17)

786

839

Total changes during period

70

(17)

786

839

Balance as of March 31, 2024

¥

104

¥

(37)

3

¥

926

¥

993

839
874
¥

40,534SEIKITOKYU KOGYO CO., LTD.
Consolidated Statement of Changes in Net Assets
for the year ended March 31, 2024

Shareholders' equity (Notes 2 and 7)
Share capital

Capital surplus

Retained earnings

Total shareholders'equityTreasury stock(Thousands of U.S. dollars)
Balance at April 1, 2023$

13,209

$

3,303

$

249,721$(5,308)$260,925

Changes during the period
Dividend of surplus(18,060)

Net income attributable to owners of parent

18,100(18,060)
18,100Purchase of treasury stock
Disposal of treasury stock
Net changes of items other thanshareholders' equity

80

(4)

115

195

111

231

－
－

Total changes during period
Balance as of March 31, 2024

(4)$

13,209

80
$

3,383

40
$

249,761$(5,197)$

261,156

Accumulated other comprehensive income
Unrealized gain on
investment securities

Foreign currencytranslation adjustment

Remeasurements ofdefined benefit plans

Total accumulated othercomprehensive income

Total net assets$$(Thousands of U.S. dollars)
Balance at April 1, 2023

$

226

$

(136)

$

925

1,015

261,940

Changes during the period
Dividend of surplus(18,060)

Net income attributable to owners of parent

18,100Purchase of treasury stock(4)

Disposal of treasury stock
Net changes of items other thanshareholders' equity

195
460

Total changes during period
Balance as of March 31, 2024

(112)

460
$

686

5,189

(112)
$

(248)

4

5,537

5,189
$

6,114

5,537

5,537
$

6,552

5,768
$

267,708

Notes to the Consolidated Financial Statements

1.

Summary of Significant Accounting Policies(a) Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements have been prepared from the accounts
maintained by SEIKITOKYU KOGYO CO., LTD. (the “Company”) and its consolidated subsidiaries
in accordance with the provisions set forth in the Companies Act of Japan and in conformity withaccounting principles generally accepted in Japan, which may differ in some material respects fromaccounting principles generally accepted and applied in countries and jurisdictions other than Japan.
Certain items presented in the Japanese consolidated financial statements have been reclassified forpresentation solely for the convenience of readers outside Japan.
In addition, the notes to the consolidated financial statements include certain information which is not
required under accounting principles generally accepted in Japan but is presented herein as additional
information.
(b) Consolidation Policies
The accompanying consolidated financial statements include the accounts of the Company and its
significant subsidiaries. All significant intercompany accounts, intercompany transactions andunrealized profits have been eliminated in consolidation.
As of March 31, 2024, the number of consolidated subsidiaries was 11 and none of the subsidiaries
and affiliates are accounted for by the equity method. Major consolidated subsidiaries are SHINSEIKI
KOGYO CO., LTD., SEIKITOKYU MYANMAR ROAD CO., LTD. and ST SERVICE CO., LTD.
Non-consolidated subsidiary is CHUGAI ENGINEERING CO., LTD. The non-consolidated
subsidiary has been excluded from the scope of the consolidation as it is small in scale and the total
amounts of the non-consolidated subsidiary’s assets, net sales, equity in net income/loss, and equity inretained earnings do not have material impact on the consolidated financial statements.
(c) Closing Dates for Consolidated Subsidiaries
All the subsidiaries are consolidated using their financial statements as of their respective fiscal year
end, which falls on March 31 as same as the consolidated fiscal year end.

5

(d) Method of Accounting for Significant revenues and expenses
The Company and its consolidated subsidiaries (the “Group”) have applied the Accounting Standard
for Revenue Recognition (Accounting Standards Board of Japan No. 29, March 31, 2020) and the
Implementation Guidance on Accounting Standard for Revenue Recognition (Accounting Standards
Board of Japan Guidance No. 30, March 31, 2020).
The Group's main businesses are construction business and manufacturing and sales business ofpavement materials. The details of performance obligations in each business are as follows.
Construction business
The Group is engaged in paving, civil engineering and other businesses related to construction workin general and is obligated to perform construction work under construction contracts with its
customers. Under such construction contracts, since the value of the property increases and thecustomer obtains control of the asset as the Group proceeds with the construction work, theperformance obligation is satisfied over a certain period of time and is satisfied as the construction
progresses over the contract period. Therefore, the measurement of the degree of completion of thesatisfaction of performance obligations for construction work, etc. is based on the percentage ofincurred costs up to the end of each reporting period to the estimate of total construction cost. For
construction contracts for which the percentage-of-completion for satisfaction of performanceobligations cannot be estimated reasonably, revenue is recognized on a cost recovery method only tothe extent of contract costs incurred will be recoverable. The transaction price is determined by thepayments from customers contract, and the payments from customers are received in stages at thetime stipulated in the contract. The amount of payments from customers does not include any
significant financing component. There is no significant variable consideration that could change theamount of the payments from customers.
Manufacturing and sales business of pavement materials
The Group manufactures and sells asphalt mixture and other construction materials and is obligated todeliver the goods under sales contracts with customers. The performance obligation is satisfied at thetime the goods are delivered, and revenue is recognized at the time of delivery. The transaction priceis determined by the contract with the customer and is received in accordance with the contract. The
amount of payments from customers does not include any significant financing component. There isno significant variable consideration that could change the amount of the payments from customers.
(e) Inventories
Inventories are stated at cost, cost being determined by the identified cost method for cost on
uncompleted construction contracts or by the moving average method for raw materials and supplies.
Cost of inventories for raw materials and supplies is written-down when their carrying amounts
become unrecoverable.
(f)

Investments
Other securities (securities which are neither trading, held-to-maturity securities nor investments in
subsidiaries and affiliates) with market value are carried at the market value on the balance sheet date.
The difference between the acquisition cost and the market value of other securities is recognized as
unrealized gain on investment securities in the consolidated balance sheet, net of tax effect.
Non-marketable securities classified as other securities are carried at cost. The cost of other securities
sold is computed based on the moving average method.

(g) Property, Plant and Equipment (Excluding leased assets)
The Group computes depreciation of Property, plant and equipment by the declining balance method,6

however, buildings (excluding structures attached to the buildings) acquired on or after April 1, 1998
are depreciated by the straight-line method. Rates for depreciation are based on the estimated useful
lives of the assets according to their general class, type of construction, and use.
The estimated useful lives are principally as follows:
Buildings and structures ...................................................... 7 to 50 years
Machinery, vehicle, tools, furniture and fixtures ................ 5 to 7 years(h) Intangible Assets (Excluding leased assets)
Computer software for internal use is amortized by the straight-line method over the estimated useful
lives (5 years).
(i)

LeasesDepreciation of leased assets under finance leases that do not transfer ownership of the leased assets
to the lessee is calculated by the straight-line method over the lease period with a residual value of
zero.

(j)

Income Taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements forthe year ended March 31, 2024 with respect to the differences between the financial reporting and tax
bases of assets and liabilities, and were measured using the enacted tax rates which will be in effectwhen the differences are expected to be reversed. Valuation allowances are recognized for thedeferred tax assets that are not considered to be recoverable.

(k) Allowance for Doubtful Accounts
General provision for doubtful accounts is recorded by applying a certain reserve percentage of thereceivables based on the experience from past transactions. When considered necessary, specificreserves are recognized based on the assessment of individual receivables.
(l)

Provision for Warranties for Completed Construction
Provision for warranties for completed construction is recorded at an estimated amount, based on theactual number of defects and related warranty costs stipulated in completed construction contracts.

(m) Provision for Loss on Construction Contracts
Provision for loss on construction contracts is recorded for estimated future losses related to theconstruction contracts in progress.
(n) Provision for Bonuses
Provision for bonuses is stated at the estimated amount of bonuses which the Group is anticipated to
pay to their employees.

7(o) Accounting Treatment of Retirement Benefit Payments
In order to provide employee retirement benefits, net defined benefit asset or liability for employees
has been recorded as the amount of retirement benefit obligations after deducting pension plan assets,
calculated based on the estimated amounts for the obligation for employees' retirement benefits andpension plan assets.
Prior service cost is amortized by the straight-line method over 13 years, which is shorter than the
average remaining years of service of the employees.
Actuarial gains and losses are amortized from the following year in which the gains or losses arerecognized. Amortization is primarily calculated by the straight-line method over 10 years, which isshorter than the average remaining years of service of the employees.
Unrecognized prior service costs and unrecognized actuarial gains and losses are recorded asremeasurements of defined benefit plans in accumulated other comprehensive income in net assets
after consideration of tax effects.
(p) Accounting Principles and Procedures Adopted When Provisions of Relevant Accounting Standards
are Unclear
With respect to construction projects and asphalt plants conducted by the Company as a joint venturewith other companies, the Company accounts for them in proportion to its own share ratio.
(q) Significant Accounting Estimates
Estimate of the total construction cost in revenue recognized when performance obligations are
satisfied over a specified over time:
Revenue recognized when performance obligations are satisfied over a specified over time was¥68,952 million (U.S.$455,398 thousand) for the consolidated fiscal year ended March 31, 2024.
Calculation method:
Revenue recognized when performance obligations are satisfied over a specified over time ismeasured based on the progress of completion at the end of the consolidated fiscal year. The
progress of completion is calculated based on the proportion of the cost incurred as of the end of
the consolidated fiscal year to the estimated total cost of the project.
The total construction cost is accumulatively estimated based on objective prices such as standard
unit price approved internally and quotation obtained from suppliers. Such estimations of total
construction cost are reviewed as of the closing date, according to construction status, actual costs
incurred or requests of specification changes received from customers.
Key assumptions:
Since each of the construction is highly individualized and basic specifications and work content
are based on customer’s instructions, it is necessary to sufficiently incorporate the characteristicsof the construction in estimating total construction cost. In doing so, certain assumptions andjudgments are required based on specialized knowledge of construction and construction experiencesuch as unit price and quantity of materials and labor.
Impact on consolidated financial statements for the next consolidated fiscal year:
Since construction work generally takes a long period of time, key assumptions may change due
to fluctuation of unit price of materials and labor, changes of construction contract during
construction and delay of construction due to bad weather, etc., which may affect consolidated
8

financial statements for the next consolidated fiscal year.
Estimate of the impairment of fixed assets of Manufacturing and sales business of pavement materials:
Fixed assets of Manufacturing and sales business of pavement materials was ¥17,292 million(U.S.$114,206 thousand) and impairment loss was ¥300 million (U.S.$1,983 thousand) for the
consolidated fiscal year ended March 31, 2024.
Calculation method:
The Group determines the cash-generating units by the smallest group of assets that generates
cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
The Group is assessing the recognition of impairment losses for asphalt plants that haveindications of impairment. An impairment loss is recognized when the undiscounted future cash
flows from the relevant asset group are less than the carrying amounts. The carrying amounts ofsuch assets are reduced to their recoverable amounts. The recoverable amount of such asset
groups is measured based on fair value or value in use.
Key assumptions:
The key assumptions used in the calculation of undiscounted future cash flows are sales volumes,
sales prices and raw material prices for each asphalt plant. Sales volumes, sales prices and raw
material prices are determined based on historical experience, trends in raw material prices and theextent to which raw material prices are passed through to product prices.
Impact on consolidated financial statements for the next consolidated fiscal year:
Key assumptions are subject to change based on trends in sales volumes, sales prices, raw material
prices and other factors. If the recoverable amount decreases, an impairment loss may be recognizedin the financial statements for the next consolidated fiscal year.
2.

Basis of Translation
The consolidated financial statements as of and for the year ended March 31, 2024 presented herein are
denominated in Japanese yen and, solely for the convenience of the readers, have been translated into
U.S. dollars at the rate of ¥151.41 = U.S.$1, the approximate rate of exchange in effect on March 31,
2024. This translation should not be construed as a representation that any of the yen amounts could be
converted into U.S. dollar amounts at the above or any other rate.

9

3.

Dividends
1) Dividends paid

Resolution

Type ofsharesYen(millions)Total
dividends

U.S. dollars(thousands)
Total
dividends

Source ofdividends

Yen
Dividends
per share

U.S. dollars
Dividends
per share

Recorddate

Effective
date

Annual general meetingof shareholders on
June 23, 2023

Commonstock¥1,093$7,221Retainedearnings¥30.00$0.20

March 31,2023

June 26,
2023

Meeting of board
directors on
November 6, 2023

Commonstock¥1,641$10,839

Retainedearnings¥45.00$0.30

September
30, 2023

December4, 2023

2) Dividends with a record date in the year ended March 31, 2024 and an effective date in the year
ending March 31, 2025:

Resolution
Annual general meetingof shareholders on
June 21, 2024

4.

Type ofsharesCommonstock

Yen(millions)Total
dividends

U.S. dollars(thousands)
Total
dividends¥1,641$10,839

Source ofdividends

Yen
Dividends
per share

U.S. dollars
Dividends
per share¥45.00$0.30

Retainedearnings

Recorddate
March 31,2024

Effective
date
June 24,2024

Property, Plant and Equipment
Property, plant and equipment at March 31, 2024 are as follows:

Buildings and structures
Machinery, equipment, vehicles, tools, furniture andfixtures
Land
Total

10

Yen
(millions)
2024

U.S. dollars(thousands)
2024¥27,598$150,180

4,433
14,849¥26,880

29,27998,074$177,533

5.

Collateral Assets and Corresponding Liabilities
The following assets are provided as collateral for the borrowings at March 31, 2024:

Building and structures
Land
Total

Yen
(millions)
2024

U.S. dollars(thousands)
2024¥1,461492¥1,953$ 19,652
3,247$12,899

Yen(millions)
2024

U.S. dollars(thousands)
2024¥1,1001,700¥1,800$ 11,660
11,228$11,888

Corresponding Liabilities at March 31, 2024

Short-term loans payable
Long-term loans payable
Total
6.

Receivables Fully Offset Against Allowance for Doubtful Accounts

Long-term trade receivables
7.

Yen(millions)
2024

U.S. dollars(thousands)
2024

¥466

$3,079

Shareholders’ Equity
In accordance with the Companies Act of Japan (the “Act”), the Company provides legal retained
earnings, which is included in retained earnings. The Act requires that an amount equal to at least 10%of the amounts to be disbursed as distribution of earnings be appropriated to the legal retained earnings
until the total of the legal retained earnings plus the legal capital surplus or either of them equals 25%of the share capital account.
The Act further provides that neither legal capital surplus nor the legal retained earnings is available forthe payment of dividends, but either may be used to reduce or eliminate accumulated deficits by aresolution of the shareholders, or may be transferred to the share capital account by a resolution of theshareholders. The Act also provides that, if the total amount of legal capital surplus and the legal
retained earnings exceeds 25% of the amount of share capital, the excess may be distributed to theshareholders, either as a return of capital or as dividends, subject to the approval of the shareholders.

11

8.

Other Income
The composition of “Other income” for the year ended March 31, 2024 is as follows:

Interest income
Dividend income
Rent income
Foreign exchange gains
Gain on sales of non-current assets
Settlement income
Gain on reversal of liabilities
Other
Total
9.

Yen
(millions)
2024

U.S. dollars(thousands)
2024

¥200
9
20
43
35
120
155
35
¥417

$1,111
59
133
283
233
792
1,027
228
$2,756

Other Expenses
The composition of “Other expenses” for the year ended March 31, 2024 is as follows:

Interest expenses
Guarantee commission
Composition expenses for syndicated loan
Loss on sales of non-current assets
Loss on retirement of non-current assets
Impairment loss
Other
Total

12

Yen
(millions)
2024

U.S. dollars(thousands)
2024

¥555
18
21
2
31
300
55
¥482

$3,366
119
142
15
202
1,983
363
$3,19010. Financial Instruments
1) Financial Instruments
Cash of the Group is managed through short-term deposits. Funds are provided mainly by borrowings
from banks.
Customers’ credit risk on trade receivables (notes and accounts) is mitigated through credit control.
The Group assess fair values of investment securities quarterly at market quotations.
Funds from short-term loans payable and long-term loans payable are used for operating funds andcapital investment.
2) Fair value of financial instruments
The following table presents the carrying amounts of financial instruments on the consolidated balance
sheet and the fair value at March 31, 2024, and the difference thereof.
Non-marketable securities (¥203 million (U.S.$1,343 thousand) recorded on the consolidated balance
sheet for the fiscal year ended March 31, 2024) are not included in “Investment securities” below. In
addition, since cash and deposits, trade receivables, trade payables, and short-term loans payable aresettled on a short-term basis, the carrying amounts approximate fair values. Therefore, notes have been
omitted.
Yen (millions)
Fair
value
¥172
¥172

AssetsInvestment securities:
Total

Carrying
amount¥172¥172

Investment securities:
Total

U.S. dollars (thousands)
Carrying
Fair
Unrealized
amountvalue
gain (loss)$1,136$1,136$–$1,136$1,136$–

Liabilities
Long-term Loans payable:
Total

Carrying
amount¥6,800¥6,800Long-term Loans payable:
Total

U.S. dollars (thousands)
Carrying
Fair
Unrealized
amountvalue
gain (loss)$44,911$44,911$–$44,911$44,911$–13

Yen (millions)
Fair
value
¥6,800¥6,800

Unrealized
gain (loss)¥–¥–

Unrealized
gain (loss)¥–¥–

3) Breakdown of fair value of financial instruments by level
The fair value of financial instruments is classified into the following three levels based on theobservability and materiality of the inputs used to determine fair value.
Level 1 fair value: Fair value calculated based on (unadjusted) quoted prices in active markets for
identical assets or liabilities
Level 2 fair value: fair value calculated using directly or indirectly observable inputs other than Level 1
inputsLevel 3 fair value: Fair value calculated using significant unobservable inputs.
When multiple inputs that have a significant effect on fair value are used, fair value is classified into thelevel with the lowest priority in the calculation of fair value among the levels to which those inputs
belong.
Financial assets and liabilities recognized with fair value in the consolidated balance sheet at March 31,
2024 are as follows:
Yen (millions)Level1
Level2
Level3
Total
Investment securities
¥172
¥–
¥–
¥172
Available-for-salesecurities
Stocks:U.S. dollars (thousands)
Level2
Level3

Level1
Investment securities
Available-for-salesecurities
Stocks:$–$1,136$–

Total$ 1,136

Financial assets and liabilities not recognized with fair value in the consolidated balance sheet at March
31, 2024 are as follows:
Yen (millions)Level1
Level2
Level3Total
Long-term Loans payable:¥–¥6,800U.S. dollars (thousands)
Level2
Level3

Level1Long-term Loans payable:¥–$–$44,911$–¥6,800Total$44,911(Note) Explanation of valuation techniques and inputs used in the calculation of fair value
Investment securities:
Fair value of equity securities is determined using prices quoted on exchanges and classified as Level 1
fair value because they are traded in an active market.
Long-term Loans payable:
Fair value is calculated by discounting the total amount of principal and interest by the interest rate thatwould be applicable to a similar new borrowing, and is classified as Level 2 fair value. The "Current
portion of long-term loans payable ¥100 million (U.S.$660 thousand)" included in "Short-term loans
payable" under "Current liabilities" in the consolidated balance sheets is calculated as long-term loans
payable.
14

11. Amounts Per Share
Amounts per share as of and for the year ended March 31, 2024 are as follows:
As of March 31

Net assets

Yen
2024

U.S. dollars
2024¥1,111.46

$7.34

Yen
2024

U.S. dollars
2024¥75.16$0.50

For the year ended March 31

Net Income
12. Impairment Loss

The Group recognized impairment loss for the following assets or groups of assets.
Yen(millions)

U.S. Dollars(thousands)

Use

Classification

Location

Business assets

Buildings,
structures,
machinery,equipment, tools,
furniture and land

Kumamoto
Prefecture

¥128

$847

Business assets

Buildings,
structures,
machinery,equipment, tools,
furniture and land

Gifu
Prefecture

84

555

Business assets

Buildings,
structures,
machinery,equipment, tools,
furniture and land

Hokkaido
Prefecture

31

208

Business assets

Buildings,
structures,
machinery,equipment,
vehicles, tools,
furniture andfixtures

Aichi
Prefecture

29

191

Business assets

Buildings,
structures,
machinery, tools
and furniture

Kanagawa
Prefecture

28

182

Total

－

－

¥300

$1,98315

The Group determines the cash-generating units by the smallest group of assets that generates cash
inflows that are largely independent of the cash inflows from other assets or groups of assets.
The Group recognized impairment loss of ¥300 million (U.S.$1,983 thousand) in other expenses due toa significant decline in profitability for assets or groups of assets for the current consolidated fiscal
year. The carrying amounts of such assets were reduced to their recoverable amounts.
The breakdown is as follows: Buildings and structures: ¥91 million (U.S.$603 thousand), Machinery,equipment, vehicles, tools, furniture, fixtures: ¥166 million (U.S.$1,093 thousand), Land: ¥43 million(U.S.$287 thousand).
The recoverable amount of such assets or asset groups is measured based on sales value or value in use.

16

13. Revenue Recognition
1) Breakdown of revenue
The breakdown of revenues by major goods and services and their relevance to the segments for theyear ended March 31, 2024 are as follows:

Construction
business
Asphalt pavement
Concrete pavement
Civil engineering works, etc.
Asphalt mixtures
Other products (Note 1)
Others
Revenue from contracts withcustomers
Revenue from other sources(Note 2)
Revenue from externalcustomers¥52,115
1,258
16,939
–
–
–

¥

–
–
–
11,292
6,345
–

¥

Total

–
–
–
–
–
15

¥52,115
1,258
16,93911,2926,345
15

70,312

17,63715

87,964

–

–

73

73

70,312

17,637

88

88,037

Construction
business
Asphalt pavement
Concrete pavement
Civil engineering works, etc.
Asphalt mixtures
Other products (Note 1)
Others
Revenue from contracts withcustomers
Revenue from other sources(Note 2)
Revenue from externalcustomers

Yen (millions)
Manufacturing
and salesbusiness ofpavementmaterials
OthersU.S. dollars (thousands)
Manufacturing
and salesbusiness ofpavementmaterials
OthersTotal$344,197
8,306
111,878
–
–
–

$–
–
–
74,58041,905
–

$–
–
–
–
–
100

$344,197
8,306
111,878
74,58041,905100

464,381

116,485100

580,966

–

–

484

484

464,381

116,485584

581,450(Note 1) Other products represent revenues recognized from contracts for the sale of asphalt emulsion,crushed stone and other products.
(Note 2) Revenue from other sources is derived from rental income in accordance with AccountingStandards Board of Japan No. 13, "Accounting Standard for Lease Transactions”.

172) Contract Balance
Receivables arising from contracts with customers, contract assets, and contract liabilities at the
beginning and end of the period are as follows. In the consolidated balance sheets, receivables arisingfrom contracts with customers and contract assets are included in accounts receivables, and contract
liabilities are included in advances received on uncompleted construction contracts.
Yen (millions)
Beginning
Endingbalancebalance
1 April 2023
31 March 2024
Receivables arising fromcontracts with customers
Contract assets
Contract liabilities

U.S. dollars (thousands)
Beginning
Endingbalancebalance
1 April 2023
31 March 2024

¥31,325¥22,951$206,886$151,580

7,490
1,571

7,666
641

49,471
10,37350,633
4,234

Contract assets relate to the Group's rights to payments from customers for work that has created an asset
controlled by the customer at the end of the consolidated fiscal year but has not yet been invoiced.
Contract assets are transferred to receivables when the right to payment becomes unconditional.
Contract liabilities are those for which the Group has received payment from the customer for the Group's
obligation to transfer goods or services to the customer or for which payment is due.
Revenue recognized during the current year amounted to ¥1,550 million (U.S.$10,240 thousand), which
was included in the contract liability balance as of the beginning of the year. Revenue recognized
during the current fiscal year from performance obligations satisfied in prior periods amounted to ¥702
million (U.S.$4,637 thousand).
Changes in contract assets in the current fiscal year were mainly due to revenue recognized inconnection with the progress of construction (increase in contract assets) and transfers to accounts
receivable (decrease in contract assets).
Changes in contract liabilities in the current fiscal year were mainly due to receipt of advance payments(increase in contract liabilities) and revenue recognition (decrease in contract liabilities).

3) Transaction price allocated to remaining performance obligations
The transaction prices allocated by the Group to unsatisfied performance obligations are as follows;

Construction
Total

Yen
(millions)

U.S. dollars(thousands)

2024

2024

¥44,262¥44,262$292,332$292,332

Explanation of expected timing ofsatisfaction
It is generally expected to be satisfied
within FY 2024-2025

For performance obligations, related to the manufacturing and sales business of pavement materials
for which the initially scheduled contract period is one year or less, the practical expedient method isapplied and the performance obligations is not included in the information on remaining performanceobligations.

18

14. Other Notes
In December 2020, the Company executed a syndicate loan contract with The Bank of Mitsubishi UFJ,
Ltd. serving as the arranger (of which, the balance of the term loan as of the end of fiscal year is ¥5,000
million (U.S.$33,023 thousand).
The following financial covenants are attached to the syndicate loan mentioned above;(a) The amount of net assets recorded on the balance sheet and consolidated balance sheet on the last
day of each accounting period in and after the fiscal year ended March 31, 2021 must be
maintained to at least 75% of the amount of net assets recorded on the balance sheet andconsolidated balance sheet for the fiscal year immediately preceding said fiscal year or for the
fiscal year ended March 31, 2020, whichever is the higher amount.
(b) Ordinary losses* must not be recorded in two consecutive periods on the statements of income orconsolidated statements of income in and after the fiscal year ended March 31, 2020.
*Ordinary income or loss is calculated by subtracting extraordinary income or loss pursuant toJapanese GAAP from income before income taxes.
(c) Net losses must not be recorded in two consecutive periods on the statements of income orconsolidated statements of income in and after the fiscal year ended March 31, 2020.
(d) The total coverage ratio for the consolidated balance sheet, consolidated statements of income, andconsolidated cash flow statement in and after the fiscal year ended March 31, 2021 must be
maintained at 15.0 or lower.
It is stipulated under the loan that, in the event of changes in accounting standards, all concerned
parties shall consult on the abovementioned financial covenants to determine the impact of the saidchanges.

19