ｆAnnual Report 2023
Year ended March 31, 2023

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

2
8
11
13
13
14
15
16
57
60
61

Operational Results2

1. Operational Results(1) Analysis of Operational Results<Summary of Operational Results for the Consolidated Fiscal Year ended March 31, 2023>
In the fiscal year under review, the Japanese economy showeda gradual recovery trend in its activities due to the lifting of
movement restrictions and easing of various measures imposed
under the COVID-19 pandemic. However, the economic
environment remained unstable and difficult due to rising prices
caused by soaring raw material and energy prices, the continued
shortage of semiconductors, an economic downturn caused by
global monetary tightening among other factors, the prolonged
Russia-Ukraine crisis and other present and future risk factors
seen here and there.
Representative Director,
President, CEO
Tatsuya Nunohara

Under these circumstances, our Group strived to implement
various measures, including helping to resolve social issues
and pursuing value, and strengthening its profit structure by improving productivity. We didso as we moved forward with the first year of our new three-year medium-term
management plan, 2022–24 “Creating The Future As One” (April 1, 2022, to March 31,2025), which provides the first step toward the realization of our long-term management
vision “Kyokuto Kaihatsu 2030” in the fiscal year ending March 2031 (FY2030).
With a view to improving capital efficiency and increasing corporate value, we significantly
enhanced shareholder dividends while purchasing treasury shares. As a result, the total
return ratio is expected to be approximately 125%. We also took steps such as cancellingtreasury shares, utilizing interest-bearing debt, and expanding our stock compensation
system for officers and employees.
As a result of keenly focusing on our overseas business, SATRAC in India performed well. In
Indonesia, sales and profits of local Group companies were favorable and overseas business
contributed significantly to the Group’s overall business performance.
In terms of capital investment, we proceeded with the plan to construct the Group’s researchand development site (Technical Center). The purpose of this project is to strengthen our
R&D structure so that we can accommodate social changes toward carbon neutrality,
including enhancing research and development of new technologies such as the IoT and AI,
establishing a collaborative structure within the Group, accelerating the development of
new products, and improving product quality.
In addition, we actively pursued activities aimed at increasing corporate value, which
included investing in a new trailer plant of our subsidiary NIPPON TREX,
service-designated plants in the Kyushu region through M&A, and upgrading aimed atstrengthening directly managed service centers.
As a result, in the current consolidated fiscal year, net sales decreased by 3,820 million yen (3.3%)
compared with the preceding consolidated fiscal year to 113,089 million yen. Operating income decreased
by 5,982 million yen (85.8%) to 991million yen, and the current net income attributable to owners of theparent decreased by 10,693 million yen (74.9%) to 3,580 million yen.

Operational Results

3

We would like to present the summary of business on a consolidated basis by segment in comparison withthe preceding fiscal year.
i) Specialty Truck Segment
Although domestic orders remained firm, both sales and profits were significantly affectedby surging raw material and energy prices, as well as by the stagnation in production due
to a limited supply of truck chassis in Japan caused by semiconductor shortages. On top ofrevising product prices, the Group worked to strengthen and streamline production
through capital investment, etc. as described above. We also promoted activities tostrengthen our stock-type business such as services and maintenance.
Furthermore, we launched a refuse truck equipped with a new type of load cell (measuring
device) in July 2022 and a tailgate lifter with a maximum allowable lift load of 1,500 kg, anincrease of 500 kg from the current product, in January 2023. Subsequently in February
2023, we developed a new type of dump truck equipped with a measuring device that
achieves ultra-high precision and accurate measurement of load capacity. Through these
efforts, we strengthened our product lineup in line with user needs and promoted researchand development of new technologies such as the IoT and AI for the future.
Net sales in the Specialty Truck Segment decreased by 2,124 million yen (2.2%) to 96,477 million yen.
Segment profit decreased by 5,037 million yen to loss of 555 million yen.

New dump truck with weighing device

New tailgate lifter

New refuse truck with weighing device

Operational Results

4ii) Environmental Equipment and Systems Segment
In terms of plant construction, we strived to attract orders for new projects while proceeding withthe construction of properties for which orders have been received. New orders received included
an order from Kitahiroshima City, Hokkaido in June 2022 for the construction of a combustible
waste relay facility, an order from the Kamiina Wide Area Union in Nagano Prefecture in
February 2023 for core improvement and operation of a clean center, and an order from
Nishinomiya City, Hyogo Prefecture in March 2023 for the construction and operation of acrushing and sorting facility.
At the same time, we focused on the stock-type business such as maintenance andentrusted operation.

Net sales in the Environmental Equipment and Systems Segment decreased by 1,320 million yen(11.3%) to 10,327 million yen. Segment profit decreased by 329 million yen (15.7%) to 1,768
million yen.

Recycle center in Tsu

Biogas plant in Okayamaiii) Parking and Other Operations Segment
Rental income significantly decreased as a result of selling real estate for rent in the previous
period with a view to concentrating management resources and improving capital efficiency.
On the other hand, in the parking business, both sales and profits were strong.
For multistory parking systems, the Group focused on the stock-type business, such as upgrading
and maintenance, along with actively attracting orders for new properties.
In the area of coin-operated parking, we worked to secure sales and profit as operating rates
gradually improved from the impact of COVID-19.
Net sales in the Parking and Other Operations Segment decreased by 365 million yen (5.0%) to
6,895 million yen. Segment profit decreased by 486 million yen (42.6%) to 656 million yen.
(* As of April 1, 2022, the segment name of the Real Estate Rental Segment has been changed to the Parking
and Other Operations Segment. )Toll parking (Coin-operated)

Multi-story parking equipment

Operational Results

5<Forecast of Operations for the Next Consolidated Fiscal Year ending March 31, 2023>
The Japanese economy showed a gradual recovery trend in its activities due to thelifting of movement restrictions and easing of various measures imposed under the
COVID-19 pandemic. Going forward, we expect economic activities to shift towardfurther normalization in the post-COVID environment.
The Group has established a basic policy for COVID-19 as “Giving top priority to the safety ofcustomers, local communities, and Group employees while ensuring balance with business
continuation.” Through the implementation of various measures, the Group has striven to reduce
the risk of infection.As a result, all infected persons (employees who tested positive) had mild
symptoms, and there was hardly any impact on business activities. The Group implemented thefollowing measures.
1. Implemented teleworking/staggered work hours and allowed commuting by personal car.
2. Promoted digitization to continue business amid stay-at-home requests using videoconferencing and online meetings.
3. Plants and service bases continued to run normally while implementing sufficient
infection-control measures.
For the Group’s mainstay Specialty Truck Segment, the Group has a backlog of orders ofapproximately 80 billion yen (as of March-end 2023) which is equivalent to over nine months’
worth of consolidated net sales of the Specialty Truck Segment. And No major problems occurredin plants’ production activities.
The Environmental Equipment and Systems Segment was operating normally without any delay,
etc. in construction work due to the nature of public works that are essential to people’s daily lives.
The operating rate has been high also for entrusted operation, etc. There was almost no
impact on business performance in the segment.
In the Real Estate Rental Segment, both sales and profit improved in thecoin-operated parking as operating rates gradually improved from the impact of
COVID-19.
Under these circumstances, in the second year of our medium-term management
plan 2022–24 “Creating The Future As One” (3-year plan; April 1, 2022, to March 31,2025), which was formulated as the first step toward realizing the long-term
management vision “Kyokuto Kaihatsu 2030” with a view toward the fiscal year
ending March 2031 (FY2030), the Group will continue to work toward achieving theplan. We will strive to build a solid foundation through strengthening synergies in theGroup and actively investing in growth. We have also set concrete numerical targets
and policies. Meanwhile, we will pay close attention to the current and future
economic conditions and other trends and respond flexibly such as by considering andimplementing policy revisions, etc. as needed.
Please refer to “(2) Mid-to-Long Term Management Strategy” in “2. Management
Policy” for the revisions.

Operational Results

6

Furthermore, we will continue aiming to increase corporate value through aggressive
capital investment going forward. This includes putting in place a research anddevelopment site (Technical Center) aimed at strengthening the R&D structure that canaccommodate changes in society toward carbon neutrality, based primarily on researchand development of new technologies such as the IoT and AI. We will also establish acollaborative structure within the Group, accelerate development of new products, andenhance product quality while establishing a new plant for trailer production at our
subsidiary NIPPON TREX, and pursuing a plan to make large-scale capital investment for
the future to strengthen the core business.
(2) Analysis on Financial Conditionsi) Situations of Assets, Liabilities and Net WorthIn the current consolidated fiscal year, total assets increased by 3,806million yen (2.5%) from the end of
the preceding fiscal year to 158,156 million yen.
Current assets decreased by 2,802 million yen (2.9%) to 93,474 million yen, due to decreases in cash anddeposits, etc.
Non-current assets (property, plant and equipment, intangible assets and investments and other assets)
increased by 8,461 million yen (21.3%) to 64,681 million yen, due to acquisition of lands, etc.
Regarding liabilities, current liabilities decreased by 3,847 million yen (11.4%) to 29,838 million yen due
to decreases in notes and accounts payable, etc. Non-current liabilities increased by 8,701 million yen(113.7%) to 16,353 million yen due to increases in corporate bonds and long-term loans payable, etc.
Total net assets decreased by 1,047 million yen (0.9%) to 111,964 million yen due to the dividend
payment, etc.
As a result, the capital adequacy ratio stood at 70.5% as of the end of the current fiscal year (73.0% at theend of the preceding fiscal year) due to the significant increase in shareholder dividends as a flexible
policy to strengthen capital efficiency, as well as the acquisition of treasury stock and the use ofinterest-bearing debt, etc.
ii) Cash Flow Situation
Consolidated cash and cash equivalents at the end of period decreased by 5,184 million yen (13.9%)
compared with the end of the preceding fiscal year to 32,064 million yen. Cash flow by activity type issummarized as follows:
Cash Flow from Operating Activities
Net cash used by operating activities amounted to 3,416 million yen (a decrease of 10,283 million yen
compared with the preceding fiscal year). This was because of decreasing of net profit before tax, etc.
Cash Flow from Investing Activities
Net cash used by investing activities amounted to 6,823 million yen (an decrease of 17,485 million yen
compared with the preceding fiscal year). This was because of acquisition of non-current assets, etc.

Operational Results

7

Cash Flow from Financing Activities
Net cash provided by financing activities amounted to 5,121 million yen (an increase of 6,677 million
yen compared with the preceding fiscal year). This was because of long-term loan and Issuance ofcorporate bonds, etc.
(3) Principal policy for return of profits to shareholders and payment of dividends for the current
year and next year
The Group regards the return of profits to shareholders as one of the most importantmanagement policies. Its basic dividend policy is to determine dividends bycomprehensively taking into account future business development, economic conditions,and other factors, as well as trends in business performance, while striving to improve its
business performance and financial position. In order to achieve sustainable growth andincrease corporate value, we will continue to focus on distributing dividends toshareholders at a high level and on a stable basis and pay dividends to shareholders instages, taking into account trends in business performance while pursuing a higher payout
ratio.
The Meeting of Shareholders on June 28th, 2022 resolved and passed to pay a dividend of 32 yen per share at
the end of March 2022 as originally proposed by management, making its annual dividend 54 yen per shareincluding an interim dividend, increased by 12 yen compared with the preceding fiscal year.

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

Management Policy

8

2. Management Policy(1) Basic Management Policy of the Company
The management philosophy of the Kyokuto Kaihatsu Group is "Value technology and trust, make concerted
efforts to develop the company, and widely contribute to the society."
Our ultimate goal in the management policy is to implement corporate policy recognizing a social role andresponsibility as a public company in a strong relationship with various stakeholders such as customers,
business partners, shareholders, employees, and local societies. In addition, by providing safe, effective andhigh quality products and services through our fair and sound business activities, the Kyokuto Kaihatsu Groupseeks to bring about greater contribution to our society and maximize corporate value.
With this management policy, we devote ourselves to three major business domains including Specialty Truck,
Environmental Equipment and Systems, and Parking and Other Operations.
As of April 1, 2022, the segment name of the Real Estate Rental Segment has been changed to the Parking andOther Operations Segment.
(2) Mid-to-Long Term Management Strategy
Under the long-term management vision “Kyokuto Kaihatsu 2030” that looks toward 2030 andthis medium-term management plan 2022–24 “Creating The Future As One” (3-year plan;
April 1, 2022 – March 31, 2025), which signifies the first step toward realizing the long-term
management vision, the Group is pursuing priority strategies toward growth of the Group
based on the following policies.
As part of the addition and revision of the medium-term management plan, we will revise thetarget of consolidated operating income margin from 9% or more to 7% or more due to thedeterioration of economic conditions and markets from the beginning of the plan.
We also decided to disclose ROE in our medium-term management plan. In view of current
market trends, ROE for the final year of the medium-term management plan (fiscal year
ending March 2025) is expected to be 6%.
The Company has decided to increase the total return ratio to 100% during the term of thismedium-term management plan. (Our initial target was to achieve a total return ratio of 50%
in the final fiscal year.)
The Group’s ROE target is 10% as set in its long-term management vision. We will continue tostrengthen capital efficiency and further increase corporate value.
In order to promote management that is conscious of the cost of capital, the Company has
decided to disclose the weighted average cost of capital (WACC) from now on. Based on careful
examination including the assessment of external experts, the Company’s WACC is estimatedto be approximately 6% (of which, cost of shareholders’ equity is about 7%).
【Long-term Management Vision “Kyokuto Kaihatsu 2030”】
The Group’s long-term management vision is to be “a global comprehensive infrastructure
manufacturer that contributes to the realization and development of a sustainable society.”(1) Sustainability vision
・ CO2 emission reduction rate

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

・ Recycling rate

: Maintain at 99.0% or higher

Management Policy

9(2) Consolidated financial performance vision
・ Net sales: 200 billion JPY
・ Operating income margin: 10% or more
・ ROE
:10%
【Medium-Term Management Plan 2022–24 “Creating The Future As One”】
In this medium-term management plan, formulated as the first step of the long-term
management vision, we set out four basic policies and will resolutely carry out the plan in
an aim to establish a comprehensive foundation for the Kyokuto Kaihatsu Group. In
addition, in order to improve corporate value, we will implement strategies that take into
consideration the balance between "active investment in growth" and "return to society
and stakeholders" by utilizing the funds and interest-bearing debt obtained through ourbusiness activities to date.
1. Basic policies(1) Contributing to solving social issues and pursuing value provision(2)Improving productivity and strengthening income structure(3)Building a strong business foundation that supports sustainable growth
and reform(4)Optimally distributing cash flow aimed at improving corporate value
2. Sustainability targets (fiscal year ending March 2025)
・CO2 emission reduction rate
: minus 10% or more
* Basic unit compared with FY2020 for Kyokuto Kaihatsu Kogyo, NIPPON TREX,
and Kyokuto Kaihatsu Parking.

・ Recycling rate

: Maintain at 99.0% or higher

3. Consolidated financial performance targets (fiscal year ending March 2025)
・ Consolidated net sales: Over 140 billion JPY(including new M&A growth)・ Consolidated operating income margin: 7% or more
(Initial target: 9% or more)*The Company has made the above revision due to the deterioration in economic
conditions and markets from the initial state.
・ ROE: 6% (Newly disclosed from now on)*The Group’s target is 10%, as stated in “(2) Consolidated financial performance
vision” of the Long-Term Management Vision “Kyokuto Kaihatsu 2030,” but inview of current market trends, the target is expected to be as indicated above forthe final year of this medium-term management plan.
4. Financial policies
・ Strategic investment: Over 30 billion JPY for growth investment and approx.
(Result for the fiscal year ended March 2023 :11.8
billion JPY)
10 billion JPY for new M&A investment over the threeYears

Management Policy

・ Shareholder returns

10: Total payout ratio: 100%
(During the period of this plan),*The Company decided to raise the target for total
return ratio in the final fiscal year of the plan fromthe initial target of 50% as indicated above.
Lower limits of annual dividend per share: 54 JPY+ flexible purchase of treasury shares

5. Capital cost (End of March 2023)
・ WACC: Estimated to be approximately 6%(Of which, cost of stockholders' equity : estimated to be approximately 7%)(3) Targeted management index
In the long-term management vision “Kyokuto Kaihatsu 2030,” our consolidated financial
performance targets are net sales of 200 billion yen or more, operating income margin of 10% or
more, and ROE of 10%.
In addition, for the term ending March 2025, the last fiscal year of the medium-term
management plan 2022–24 “Creating The Future As One” (3-year plan; April 1, 2022 to March
31, 2025), our consolidated financial performance targets are net sales of 140 billion yen or more
and operating income margin of 7% or more.

BalanceIncome
SheetsConsolidated StatementsConsolidatedof Comprehensive

11

CONSOLIDATED BALANCE SHEETSAt March 31, 2023 and 2022

Thousands of
U.S. dollars(Note 1)Millions of yen
ASSETS
Current assets:
Cash and deposits (Notes 7 & 8)
Short-term securities (Notes 7 & 8)
Trade notes receivable (Note 8 & 16)
Trade accounts receivable (Note 8 & 16)
Contract assets (Note 16)
Electronically recorded monetary claims - operating (Note 8 & 16)
Merchandise & finished goods
Work in process
Raw materials & supplies
Other current assets (Note 8)
Allowance for doubtful accounts
Total current assets

2023¥

Property, plant and equipment (Note 9):Land
Buildings and structures
Machinery, equipment and vehicles
Construction in progress
Other
Total
Accumulated depreciation
Net property, plant and equipment

Intangible assets
Goodwill (Note 17)
Customer-related assets
Other
Total
Investments and other assets:
Investment securities (Notes 3 & 8)
Deferred tax assets (Note 13)
Long-term loans receivable (Note 8)
Other assets
Allowance for doubtful accounts (Note 8)
Total investments and other assets
Total non-current assets
Total
The accompanying notes are an integral part of these statements.

¥

2022

2023

19,331 ¥14,301
4,475
22,107
1,715
8,417
1,371
8,453
11,4601,899(54)
93,47525,815
11,5006,647
23,078
495
8,300
2,462
6,946
9,816
1,273
(55)
96,277$27,55334,80021,264
2,224
6,098
91,939(43,705)
48,23422,001
32,24520,707933
5,649
81,535(41,763)
39,772

206,326
260,597
159,237
16,65645,661
688,477(327,282)
361,195

684
422
1,190
2,296

771
450
1,223
2,444

5,125
3,160
8,912
17,197

12,546
343
420
1,737
(895)
14,15164,681
158,156 ¥

14,023
281
456
1,994
(897)
15,85758,073
154,350

93,9502,568
3,147
13,006(6,702)
105,969
484,361
1,184,337$

144,759
107,089
33,513
165,547
12,84563,028
10,267
63,29585,815
14,220(402)
699,976

Consolidated Statements of Comprehensive Income

Thousands of
U.S. dollars(Note 1)Millions of yen
LIABILITIES AND NET ASSETS
Current liabilities:
Short-term bank loans (Note 4)
Current portion of long-term bank loans (Notes 4 & 8)
Trade notes and accounts payable
Electronically recorded obligations - operating
Accrued expenses
Income taxes payable
Other current liabilities (Note 4 & 16)
Total current liabilities

2023¥

Non-current liabilities:
Bonds payable (Notes 4 & 8)
Long-term bank loans (Notes 4 & 8)
Net defined benefit liabilities (Note 5)
Liabilities for directors' retirement benefits
Deferred tax liabilities (Note 13)
Other non-current liabilities (Notes 4 & 8)
Total non-current liabilities
Total liabilities

Net assets:
Shareholders' equity:
Share capital (Note 11):
Authorized-170,950,672 shares
Issued-42,737,668 shares in 2022
40,150,000 shares in 2023
Capital surplus (Note 11)
Retained earnings
Treasury stock, at cost (Note 11):2,849,820 shares in 2022
1,825,291 shares in 2023
Total shareholders' equity
Accumulated other comprehensive income (Note 14):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total
The accompanying notes are an integral part of these statements.

¥

12

2022

2023

902 ¥
25
9,619
9,292
4,649
1,484
3,867
29,838965
28
14,756
8,458
4,594
1,129
3,756
33,686

$

2,800
7,341
98
107
4,815
1,193
16,354
46,192

242
186
144
5,862
1,219
7,653
41,33920,96854,969736
802
36,053
8,936
122,464
345,906

11,90011,67985,362

11,90011,83986,435

89,11187,457639,228(1,801)
107,140(2,081)
108,093(13,490)
802,306

4,403
96
(101)
4,398
426
111,964
158,156 ¥

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

32,967719(754)
32,932
3,193
838,431
1,184,337

$

6,755
192
72,026
69,58034,816
11,11228,961
223,442

Consolidated Statements of Comprehensive Income

13

CONSOLIDATED STATEMENTS OF INCOME
Years ended March 31, 2023 and 2022

Thousands of
U.S. dollars(Note 1)Millions of yen
Net sales (Note 16)
Cost of sales (Note 15)
Gross profit
Selling, general and administrative expenses (Note 12)
Operating income¥

Other income (expenses):
Interest and dividend income
Interest expense
Gain (loss) on sales of investment securities, net
Gain (loss) on sales or disposition of property and equipment, net
Share of profit (loss) of entities accounted for using equity method
Foreign exchange gain (loss)
Other-net
Other income -net
Income before income taxes and non-controlling interests
Income taxes (Note 13):
Current
Deferred
Total income taxes
Net income
Net income (loss) attributable to non-controlling interests
Net income attributable to owners of the parent¥

2023
113,089 ¥
97,082
16,00715,016
991

2022
116,91095,742
21,16814,194
6,974

$

343
(42)
968
3,162
(5)
(161)
(5)
4,260
5,251

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

2,572
(318)
7,249
23,679(40)(1,204)(38)
31,90039,324

2,576
(994)
1,582
3,669
88
3,581 ¥

2,771
3,635
6,406
14,266(8)
14,274

19,289(7,443)
11,84627,478663
26,815$

U.S. dollars(Note 1)

Yen
2023
Amounts per shares:
Basic net income
Diluted net income
Cash dividends applicable to earnings of the year¥

2023
846,856
726,987
119,869
112,445
7,424

2022

90.91 ¥
54.00

358.35
54.00

2023
$

0.68
0.40

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended March 31, 2023 and 2022

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

Other comprehensive income (Note 14):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income in affiliates accounted forby the equity method
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
The accompanying notes are an integral part of these statements.

¥

2023
3,669 ¥

2022
14,266$2023
27,478

(196)
26
(36)
24

(333)
(18)
107
52

(1,466)
190
(271)
178

(182)

(192)

(1,369)3,487 ¥

14,074

3,385
102

14,053
21$

26,10925,350759

89,11187,457639,228(17,654)(13,490)

(195)

4,593

(221)

4,814

4,814

income

101

325

21

304

304

interests(2,380)113,011(200)(1,837)

14,274186(0)100,5881

100,587

(101)

plans

(276)

(478)

of defined benefit

Remeasurements(1,465)34,397

incomecomprehensive

otheraccumulated

Total

4,398

(94)
111,964

759

2,434

interests

controllingNon-(17,820)846,273

assetsTotal netThousands of U.S. dollars

426

802,306(17,654)

26,81532,967719(754)

32,932

3,193

838,431(706)(17,654)

26,815

-

277

442

adjustments

translation

currency

Foreign

Accumulated other comprehensive income

96

1,523

(1,466)34,433sale securities

available-for-gain onUnrealized

4,403(2,358)

3,581-(17,820)

18,719

(37)

(64)

106

(170)

(170)

Total
net assets

1,523

809,442

equityshareholders'(17,820)(1,524)
26,815

107,140(2,358)

3,581

Total

plans

Noncontrolling

-

37

59

6

53

53

adjustments

othercomprehensive

204

(195)

4,598

(333)

4,931

4,931

sale securitiesof defined benefit

Remeasurements

Total
accumulated

Millions of yen-(15,587)

stock

Treasury(1,801)

1,198(17,195)

647,262

earnings

Retained

Shareholders' equity

85,362(2,358)325

88,656surpluscapital89,111

Capital11,6792,500(2,380)(2,380)currencytranslation

gain onavailable-for-Foreign

Unrealized

Accumulated other comprehensive income

204

108,093(2,081)(1,837)

14,274

186

(0)

168

(0)

1

95,469equity95,470

(204)
3,581

Total
shareholders'(2,249)(2,249)stock

Treasury160(2,296)86,435(1,837)

14,27473,998

1

73,997

earnings

Retained

Shareholders' equity

44

11,83918

11,821

Share

11,90011,90011,90011,821

surplus11,900capitalThe accompanying notes are an integral part of these statements.

Balance, March 31, 2023

Other net changes in the year

Cash dividends paid

Appropriation

Net income attributable to owners of the parent

Cancellation of treasury stock

Disposal of treasury stock$$

Balance, March 31, 2022

Purchases of treasury stock

¥

¥

¥

Balance, March 31, 2023

Other net changes in the year

Cash dividends paid

Appropriation

Net income attributable to owners of the parent

Cancellation of treasury stock

Disposal of treasury stock

Purchases of treasury stock

Balance, March 31, 2022

Other net changes in the year

Cash dividends paid

Appropriation

Net income attributable to owners of the parent

Disposal of treasury stock

Purchases of treasury stock

Restated balance, March 31, 2021

Cumulative effects of changes in accounting policies

Balance, March 31, 2021

CapitalShareCONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years ended March 31, 2023 and 2022

Consolidated Statements of Changes in Net Assets
14Consolidated Statements of Cash Flows

15

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2023 and 2022

Thousands of
U.S. dollars(Note 1)Millions of yen
2023
Operating activities:
Income before income taxes and non-controlling interests
Depreciation and amortization
Amortization of goodwill
Loss (gain) on sales of investment securities, net
Share of loss (profit) of entities accounted for using equity method
Loss (gain) on sales or disposition of property and equipment, net
Interest and dividend income
Interest expenses
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Increase (decrease) in net defined benefit liabilities
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for others
Increase (decrease) in consumption taxes payable
Other, net
Sub totalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

2023

5,251 ¥
2,884
95
(968)
5
(3,239)
(343)
42
1,803
(2,041)(4,243)
(142)
(3)
(133)
(424)
(144)
(1,600)400(42)(2,175)(3,417)

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

Investing activities:
Purchases of securities and investments
Proceeds from sales of securities and investments
Proceeds from maturity of securities and investments
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Net decrease (increase) in short-term loans receivable
Payments of long-term loans receivable
Proceeds from collection of long-term loans receivable
Other,net
Net cash used in investing activities(1,590)2,209(11,422)
3,934
10
(5)
41
(1)
(6,824)

(6)
197
600
(5,633)
15,46342(1)10,662(11,907)
16,541(85,529)
29,459
75
(37)
307
(8)
(51,099)

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

(72)
7,200
(103)
2,800
(55)
(2,380)88(2,356)
5,122

216
165
(201)
(52)
(0)
154
(1,837)(1,555)(541)
53,916(772)
20,968(410)(17,820)657(17,643)
38,355

Foreign currency translation adjustments on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 7)(66)(5,185)37,24932,064 ¥35
16,00921,24037,249(497)(38,826)
278,934
240,108

The accompanying notes are an integral part of these statements.

¥

2022

¥

$

$

39,324
21,594708(7,249)40(24,254)(2,572)318
13,504(15,286)(31,771)(1,062)(24)(996)(3,174)(1,078)(11,978)
2,996
(316)
(16,287)(25,585)

Basis of Presenting Consolidated Financial Statements

16

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Kyokuto Kaihatsu Kogyo
Co., Ltd. (the “Company”) and its consolidated subsidiaries (collectively the“Group”) have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting
regulations, and in conformity with accounting principles generally accepted inJapan, which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
In preparing the accompanying consolidated financial statements, certain
reclassifications have been made to the consolidated financial statements issued
domestically, in order to present them in a form which is more familiar to readers
outside Japan.
In addition, the notes to consolidated financial statements include additional
information which is not required under generally accepted accounting principles
and practices in Japan.
The financial statements presented herein are expressed in Japanese yen and,solely for the convenience of the readers, have been translated into U.S. dollars
at the rate of ¥133.54=US$1, the approximate exchange rate on March 31, 2023.
These translations should not be construed as representations that the Japanese
yen amounts actually are, have been or could be converted into U.S. dollar
amounts.

2. Summary of Significant Accounting Policies(a) Consolidation
The consolidated financial statements include the accounts of the Company andits 11 significant subsidiaries. Investments in 5 nonconsolidated subsidiaries and
1 affiliated company are accounted for by the equity method.
Under the concept of control or significant influence, those companies in which
the Company, directly or indirectly, is able to exercise control over operations are
fully consolidated, and those companies which the Group has the ability to
exercise significant influence (affiliated companies) are accounted for by theequity method.

Basis of Presenting Consolidated Financial Statements

17

On March 31, 2023, 6 subsidiaries are excluded from scope of consolidation. As tothese, investments in 5 nonconsolidated subsidiaries other than Eco Facility
Nishinomiya Co., Ltd. are accounted for by the equity method. These companies
are not material in terms of total assets, net sales, net income and retained
earnings and do not have any significant impact on the consolidated financial
statements.
Among the consolidated subsidiaries, the balance sheet date for Kyokuto
Kaihatsu(Kunshan)

Machinery

Co.,

Ltd.,

and

PT.

KyokutoIndomobil

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

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

(c) Short-term Securities and Investment Securities
The Group classifies their securities which have readily determinable fair values
as held-to-maturity debt securities, available-for-sale securities, depending on
management’s intent.
(Held-to-maturity debt securities)
Held-to-maturity debt securities are stated at amortized cost.

Basis of Presenting Consolidated Financial Statements

18(Available-for-sale securities)
Securities other than shares that do not have a market value are stated at fairvalue, with unrealized gains or losses, net of applicable taxes, and reported inaccumulated other comprehensive income. The cost of available-for-sale securities
sold is determined based on the moving average method.
Shares that do not have a market value are stated at cost determined by themoving average method.
(d) Inventories
Merchandises are stated at cost determined by the specific identification method,or if lower, the net realizable value.
Raw materials, finished goods and work in process are stated at cost determinedby the periodic average method, or if lower, the net realizable value.
Supplies are stated at cost determined by the last purchase cost method, or if
lower, the net realizable value.

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

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

Basis of Presenting Consolidated Financial Statements

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

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

(i) Revenue Recognition
In terms of revenue from contracts with customers of the Group, the contents of the main
performance obligations and the usual timing of satisfaction of performance obligations(at the usual timing of revenue recognition) are as follows.
In the domestic sales of merchandise or finished goods, the period for which the control ofmerchandise or finished goods is transferred to the customers after shipping is usual, therevenue is recognized at the shipping applied to the alternative treatment provided in
Paragraph 98 of ”Implementation Guidance on Accounting Standard for Revenue
Recognition” .
・Specialty truck businessIn “Specialty truck business”, the Group operates the manufactures and sales of thespecialty trucks such as dump tracks and tailgate lifters, and also, the after-sales services
such as the sales of the related components or inspection and maintenance.
In terms of sales of finished goods and components, revenue is recognized at the time ofshipping. In terms of providing the inspection and maintenance, “Maintenance packcontract” is entered into with customer, and the transaction price is allocated to contents
of inspection in the contract, so revenue is recognized over a certain period based on theimplementation of inspection.

Basis of Presenting Consolidated Financial Statements

20

Payment terms are decided based on contracts with customers, the considerations oftransaction are mostly received within 3 months after delivery, and do not include asignificant financing component.
・Environmental equipment and systems business
In “Environmental equipment and systems business”, the Group operates the constructionof recycling facilities such as bulky garbage facilities and recycling centers, and also, theafter-sales services such as the sales of the related components or inspection andmaintenance. In addition, some consolidated subsidiaries operate the business ofproviding the service, working and management related to these facilities and equipment.
In terms of construction contracts, the performance obligation satisfies for a certain period.
So, revenue is recognized based on the measure of progress towards the complete
satisfaction of the performance obligation, exclude the contracts of short construction
period. The method used to estimate the progress towards the satisfaction of theperformance obligation is the input method based on the ratio of the actual costs to thetotal estimated costs. In terms of sales of recycling facilities and related components,
revenue is recognized at the time of shipping to customers. In terms of service such as
inspection, maintenance, working and management, revenue is recognized over time
based on the occasion of each service under comprehensive maintenance contracts orworking consignment contracts.
Payment terms are decided based on contracts with customers, the considerations oftransaction are received for several times depending on the progress of construction. So,
they do not include a significant financing component.

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

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

Basis of Presenting Consolidated Financial Statements

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

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

(n) Per Share Information
Basic net income per share is computed based on net income available to common
stockholders and the weighted average number of shares of common stock
outstanding during each period. The average numbers of shares used in thecomputations are 39,390 and 39,832 thousand shares for 2023 and 2022,
respectively.
Diluted net income per share is not disclosed because the Company had nopotentially dilutive shares outstanding at these balance sheet dates.
Cash dividends per share shown in the statements of income are the amounts
applicable to the respective years.

Basis of Presenting Consolidated Financial Statements

22(o) Significant Accounting Estimates(Goodwill and Customer-related assets)(i) Amount recorded in the consolidated financial statements for the fiscal year

Thousands ofMillions of yen

U.S. dollars

2023

2022

2023

Goodwill

\ 684

\ 771

$ 5,125

Customer-related assets

\ 422

\ 450

$ 3,160(ii) Information concerning significant accounting estimates for identifiable items
Goodwill and Customer-related assets of the newly consolidated subsidiary areamortized under the straight-line method, using rates based on the estimated useful livesof assets, below. The recognition and measurement of Goodwill and Customer-related
assets are based on estimates or assumptions set using some factors such as future cash
flow and discount rates. However, when these assumptions may be affected by changes
in uncertain future economic conditions, the impairment losses related these assets may
be recognized in the future.
Estimated useful lives

Years

Goodwill10

Customer-related assets

16(Impairment losses of Property, plant and equipment)(i) Amount recorded in the consolidated financial statements for the fiscal year
There is not applicable for the fiscal year.
(ii) Information concerning significant accounting estimates for identifiable items
The impairment losses of the assets which have indication of impairment were notrecognized since the estimated future cash flow calculated under the business plans ofeach segment exceeds carrying amount of the assets. The assets which have indication of
impairment are below. However, when the business plan will be needed the review or
update since affection of future market environment, the impairment losses of the assets
may be recognized in the future.

Basis of Presenting Consolidated Financial Statements

23

Thousands ofSpecialty truck
Environmental

equipment

Millions of yen

U.S. dollars

2023

2022

2023

\ 9,037\ 555$ 67,674

645

647

4,831

139

−

1,042

9,821

\ 1,202$ 73,547

andsystems
Parking and other operations
Total

\

(p) Changes in accounting policies(Application of Implementation Guidance on Accounting Standard for Fair Value
Measurement)
The Company has applied the “Implementation Guidance on Accounting Standard for
Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021; hereinafter the “Fair
Value Measurement Implementation Guidance”) from the beginning of the fiscal year
ended March 31, 2023, and will prospectively apply the new accounting policies stipulatedby the Fair Value Measurement Implementation Guidance in accordance with thetransitional treatment set forth in Paragraph 27-2 of the Fair Value Measurement
Implementation Guidance. This does not affect the consolidated financial statements.

(q) Accounting Standards issued but not yet applied- “Accounting Standard for Current Income Taxes” (ASBJ Statement No.27,
October 28, 2022)- “Accounting Standard for Presentation of Comprehensive Income” (ASBJ
Statement No.25, October 28, 2022)- “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance
No.28, October 28, 2022)(i) Overview
In the course of deliberations on the transfer of the practical guidelines on tax
effect accounting by Japanese Institute of Certified Public Accountants to
Accounting Standards Board of Japan (ASBJ), the results of the deliberations on
the following two issues that were decided to be reviewed after the publication of“Partial Amendments to Accounting Standard for Tax Effect Accounting”, etc.
(ASBJ Statement No.28) in February 2018 were published.
・the classification of income taxes in the case where other comprehensive
income is taxedBasis of Presenting Consolidated Financial Statements

24・the treatment of tax effects related to the sale of shares in subsidiaries andaffiliates when thegroup taxation regime is applied(ii) Scheduled date of application
To be applied from the beginning of the fiscal year ending March 31, 2025.
(iii) Effects of application of these standards etc.
The effects of the application of the aforementioned standards and guidance on
the Company’s consolidated financial statements are currently under theassessment.

(r) Additional information(Accounting estimates of the impacts of the COVID-19 infection)
The Company believes that it is difficult to predict how the impacts of the
COVID-19 infection will spread or when they will converge. However, we makethe accounting estimates based on the assumption which the impact on financial
position and operating results of the Group will continue for a certain period in
the fiscal year ending March 31, 2024 based on external information available atthis time.
(Granting Company Stock to Employees through a Trust)The board of directors held on November 11, 2020 resolved to introduce a"Trust-type Employee Stockholding Incentive Plan [E-Ship🄬]"(hereinafter; “thisPlan”). The objective is to incentivize all employees to improve the Company's
corporate value in the medium-to-long term, enhance employee benefits, andencourage growth of the Company constantly through employee’s motivation towork by equity participation as a shareholder. The Company is accounting forthis Plan in according with “Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees etc. through Trusts” (ASBJ PITF No. 30,
March 26, 2015).
As well, this Plan terminated in September, 2022.

Basis of Presenting Consolidated Financial Statements

25(1) Incentive plan overview
This Plan is available to all employees who belong to the Kyokuto Kaihatsu
Employee Shareholding Association (hereinafter; “ESA”). Under this Plan, theCompany

establishes

Shareholdinga

Association

trust,

calledExclusivethe
Trust""Kyokuto

Kaihatsu(hereinafter;"theEmployee
Employee

Shareholding Association Trust") through a trust bank. The Employee
Shareholding Association Trust will estimate the number of shares that the
Employee Shareholding Association is likely to acquire over the 3 years after theestablishment of the trust, and will accept this amount in advance throughthird-party allotment from the Company. The fund will be borrowed fromfinancial institutions. The Employee Shareholding Association Trust will thencontinuously sell shares to the Shareholding Association, and if an amountequivalent to net gain on sale of the shares has accumulated in the Employee
Shareholding Association Trust at the end of the trust period, the said amountwill be distributed as residual assets to the members of the Employee
Shareholding Association who meet the beneficiary eligibility criteria. Note that
the Company will guarantee loans taken to accept the shares and thus will repay
any outstanding portion of the loans, if an amount equivalent to loss on sale ofshares has accumulated in the Employee Shareholding Association Trust at theend of the trust period due to a drop in the market price of the Company's shares.
(2) Residual Company shares held in the Employee Shareholding Association
Trust
Any residual shares of the Company held in the Employee Shareholding
Association Trust have been recorded at the Employee Shareholding Association
Trust's book value (excluding incidental expenses) as treasury stock under Net
assets in the accompanying consolidated balance sheets. At March 31, 2023, itstreasury stock was not applicable because of termination of this Plan during thisfiscal year. The book value of the treasury stock at March 31, 2022 was ¥ 87
million (62,300 shares).
(3) Book value of debt recorded through the application of the total amountmethodAt March 31, 2023, debt was not applicable because of termination of this Plan
during this fiscal year. The book value of debt recorded at March 31, 2022 was¥ 76 million.

Basis of Presenting Consolidated Financial Statements

26(Disposal of treasury stock as Restricted Stock Compensation Plan)
The Company resolved, at the meeting of board of directors held on June 28, 2022,
to dispose treasury stock as follows, and the payment has been completed on July21, 2022.
1. Outline of the disposal(1) Payment dateJuly 21, 2022

(2) Class and number of

21,200 shares (common stock) of the Company

shares to be disposed(3) Disposal price¥ 1,434 ($ 10.74) per share(4) Total value of the¥ 30,400,800 ($ 227,653)

disposal(5) Allottees and number- Directors of the Company (excluding outside

thereof, number of

directors)

shares to be disposed

5 persons and 8,200 shares- Executive Officers who do not hold concurrent
position as Director of the Company
10 persons and 7,000 shares- Directors of the domestic subsidiaries
12 persons and 4,600 shares- Executive Officers who do not hold concurrent
position as Director of the domestic subsidiaries
7 persons and 1,400 shares(6) Others

The

Company

Statement

filed

in

the

accordance

Securities
with

Registration

theFinancial

Instruments and Exchange Act regarding the disposalof treasury stock.
2. Purposes and reasons of the disposal
The Company resolved, at the meeting of board of directors held on May 13, 2021,
to introduce a restricted stock compensation plan (hereinafter; the “Plan”) for the
Directors of the Company (excluding outside directors) (hereinafter; the “Eligible
Directors”), Executive Officers who do not hold concurrent position as Director of
the Company, Directors of the domestic subsidiaries, and Executive Officers who
do not hold concurrent position as Director of the domestic subsidiaries(hereinafter; the “Eligible Directors, etc.”) in order to provide an incentive for the
Eligible Directors, etc. to improve sustainably the Company’s corporate value
and in order to further promote shared values with shareholders, as a newBasis of Presenting Consolidated Financial Statements

27

remuneration plan. And more, at the 86th General Meeting of Shareholders heldon June 25, 2021, regarding the Plan, it was approved by the shareholders thatthe total amount within ¥ 50 million should provide to the Eligible Directors asmonetary compensation to acquire the Restricted Stock by way of contribution
assets, the Company would issue or dispose the common stock within 50
thousand shares, and the period of the restriction to transfer would be 3 years,
etc.
(Disposal of treasury stock as restricted stock incentive for Employee
Shareholding Association)
The Company resolved, at the meeting of board of directors held on November 10,
2022, to introduce the restricted stock incentive plan for Employee Stockholding
Association (hereinafter; the “Plan”) and to dispose of treasury stock as restricted
stock (hereinafter; the “Treasury Stock Disposal” or “Disposal”) for Kyokuto
Kaihatsu Employee Shareholding Association (hereinafter; the “ESA”) based on
the Plan. And also, the Company disposed of treasury stock as follows:
1. Outline of the disposal(1) Payment dateFebruary 1, 2023

(2) Class and number of

61,640 shares (common stock) of the Company

Shares to be disposed(3) Disposal price¥ 1,382 ($ 10.35) per share(4) Total value of the¥ 85,186,480 ($ 637,910)

disposal(5) Method of disposal

Third party allotment(Scheduled allottee)（Kyokuto Kaihatsu Employee Shareholding
Association 61,640 shares）(6) OthersThetreasurystock

disposal

wassubjecttoeffectuation of Securities Registration Statement inaccordance with the Financial Instruments andExchange Act.

Basis of Presenting Consolidated Financial Statements

28

2. Purposes and reasons of the disposal
The Company resolved to introduce the Plan, and under the Plan, the Company
provided among employees in the Company who were members of ESA and who
haveagreed

to

the

Plan

(hereinafter;the“Eligible

Employees”)

withopportunities for acquiring the restricted stock (the common stock of theCompany) to be issued or disposed of by the Company through the ESA, as ameasure to enhance the welfare of the Eligible Employees, ESAs to support
property accumulation of the Eligible Employees, as well as to provide them an
incentive to sustainably improve the Company’s corporate value and in order tofurther promote shared values with shareholders.

3. Securities
The following were a summary of available-for-sale securities at March 31, 2023
and 2022:
Millions of yen

Available-for-sale securities
Gross

Gross

Book Value

unrealized

unrealized(Estimated

Cost

gains

lossesfair value)

Equity securities¥ 4,130¥ 6,446

Other securities

227−

March 31, 2023
Market value available:

Subtotal¥ 4,357

¥

6,446

¥

(92)

¥

(10)
¥

(102)

217
¥

Market value not available:
Total

10,484
10,701
1,845¥

12,546

Basis of Presenting Consolidated Financial Statements

29

Millions of yen

Available-for-sale securities
Gross

Gross

Book Value

unrealized

unrealized(Estimated

Cost

gains

lossesfair value)

Equity securities¥ 5,362¥ 6,798(162)¥

Other securities

227−

March 31, 2022
Market value available:

Subtotal¥ 5,589

¥

6,798

¥

(6)
¥

11,998
221

(168)

¥

12,219Market value not available:

1,804

Total

¥

14,023Thousands of U.S. dollars

Available-for-sale securities
Gross

Gross

Book Value

unrealized

unrealized(Estimated

Cost

gains

lossesfair value)

Equity securities$ 30,924$ 48,272$ (691)$ 78,505

Other securities

1,702

−

(77)

1,625

$ 32,626$ 48,272$ (768)$ 80,130

March 31, 2023
Market value available:

SubtotalMarket value not available:
Total

13,820$ 93,950

No impairment losses were recorded during the fiscal year ended March 31, 2023 and2022.

4. Short-term Bank Loans and Long-term Debts
The annual average interest rates applicable to short-term bank loans at March
31, 2023 and 2022 were 0.38% and 0.74%, respectively.
Long-term debts at March 31, 2023 and 2022 consisted of the following:Basis of Presenting Consolidated Financial Statements

30

Thousands ofMillions of yen

Bonds payable
Long-term bank loans
Lease obligations
Total

¥

U.S. dollars

2023

2022

2023

2,800

−

$ 20,968

270

55,161

143

750

413

$ 76,879

7,366

¥

100
¥ 10,266¥

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

Millions of yen

U.S. dollars

2024

¥

$

64

481

2025

28

214

2026

20

148

2027

13

96

10,14175,94010,266$ 76,879

2028 and thereafter
Total

¥

Long-term bank loans for Trust-type Employee Stockholding Incentive Plan
[E-Ship🄬] (¥ 76 million) at March 31, 2022 was redeemed because of terminationof its Plan during the fiscal year ended March 31, 2023.
To set up a commitment line by multiple finance institutions, the Company
renewed an agreement with a syndicate of 6 banks for the fiscal years ended
March 31, 2022, and during the fiscal year ended March 31, 2023, these
agreements were expired.
The unexecuted balance of lending commitments of the Company at March 31,
2022 was as follows:
Millions of yen

2023

2022

Total lending commitments−¥ 5,000

Less amounts currently executed−−

Unexecuted balance−¥ 5,000

31

Basis of Presenting Consolidated Financial Statements

5. Retirement Benefits
The Company, a domestic subsidiary and 2 foreign subsidiaries have defined
benefit corporate pension plans and lump-sum retirement benefit plans. Other
domestic subsidiaries join the Smaller Enterprise Retirement Allowance Mutual
Aid Scheme which is a kind of defined contribution plans.
The changes in defined benefit obligations for the fiscal years ended March 31,
2023 and 2022 were as follows:
Thousands ofMillions of yen

U.S. dollars

2023

2022

2023

¥ 8,217¥ 8,261$ 61,536

Service cost

527

540

3,950

Interest cost

34

23

252

Actuarial gains or losses

(153)

(56)

(1,147)Retirement benefits paid

(502)

(554)

(3,760)Translation adjustments

1

3

10

8,217

$ 60,841

Benefit obligations at beginning of year

Benefit obligations at end of year

¥ 8,124¥

The changes in plan assets for the fiscal years ended March 31, 2023 and 2022
were as follows:
Thousands ofPlan assets at beginning of year

Millions of yen

U.S. dollars

2023

2022

2023

¥

¥

7,921

$ 60,141

8,031

Expected return on plan assets

161

157

1,202

Actuarial gains or losses

(224)

47

(1,675)Contributions from employers

474

408

3,551

Retirement benefits paid

(416)

(502)

(3,114)

Plan assets at end of year

¥ 8,026

8,031$ 60,105¥

The reconciliation of the defined benefit obligations and plan assets to the net
defined benefit liabilities recognized in the consolidated balance sheet as ofMarch 31, 2023 and 2022 were as follows:Basis of Presenting Consolidated Financial Statements

32

Thousands ofFunded benefit obligations
Plan assets at end of year

Millions of yen

U.S. dollars

2023

2022

2023

¥

¥

8,182

$ 60,614

8,026

8,031

60,105

68

151

509

30

35

227

8,094

Non funded benefit obligations
Net amount of liabilities and assets
recognized in consolidated balance

¥

98

¥

186

$

736

¥

98

¥

186

$

736

sheet
Net defined benefit liabilities
Net defined benefit assets

−

−

−

Net amount of liabilities and assets
recognized in consolidated balance

¥

98

¥

186

$

736

sheet
The retirement benefit expenses for the fiscal years ended March 31, 2023 and2022 were as follows:
Thousands ofService cost

Millions of yen

U.S. dollars

2023

2022

2023

¥

¥

$

527

Interest cost
Expected return on plan assets
¥

3,950

34

23

252

(161)

(157)

(1,202)

19

50

140

Recognition of actuarial gains or losses
Severance and pension costs

540

419

¥

456

$

3,140

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

U.S. dollars

2023

2022

2023

Recognized actuarial gains or losses

¥

( 52)

¥

154

$

( 392)

Total

¥

( 52)

¥

154

$

( 392)

Remeasurements of defined benefit plans recognized in accumulated othercomprehensive income (amount before income tax effect) were as follows:Basis of Presenting Consolidated Financial Statements

33

Thousands ofMillions of yen

U.S. dollars

2023

2022

2023

Unrecognized actuarial gains or losses

¥

145

¥

92

$

1,088

Total

¥

145

¥

92

$

1,088

The components of plan assets as of March 31, 2023 and 2022 were as follows:
Ratio

2023

2022

Bonds

56%

54%

Securities

23%

23%

General account asset

12%

16%

Other

9%

7%

Total

100%

100%

The major actuarial assumptions for the fiscal years ended March 31, 2023 and2022 were as follows:
Ratio

2023

2022

The Company and a domestic subsidiary

0.0 to 1.1%

0.0 to 0.8%

A foreign subsidiary

5.5 to 7.5%

3.6 to 7.8%

The Company and a domestic subsidiary

2.0%

2.0%

A foreign subsidiary−%−%

The Company and a domestic subsidiary

4.4 to 8.8%

4.4 to 8.8%

A foreign subsidiary

5.0 to 8.0%

7.0 to 10.0%

Discount rateLong-term rate of return on plan assets

Future salary increaseLong-term rate of return on plan assets was determined by considering thecurrent and future portfolio of plan assets and the current and future long-term
performance of various assets comprise the plan assets.
The required amount of the defined contribution pension plan were ¥ 139 million($ 1,040 thousand) and ¥ 136 million for the fiscal years ended March 31, 2023
and 2022 in the Company and other domestic subsidiaries.

34

Basis of Presenting Consolidated Financial Statements

6. Contingencies
At March 31, 2023 and 2022, the Group was contingently liable as follows:
Thousands ofMillions of yen

U.S. dollars

2022

2023

2023
As a guarantor of indebtedness of :
Other

¥

4

¥

5

$

29

As a guarantor for performance
guarantee insurance of :Nonconsolidated subsidiary
Total

108
¥

807

−

112

¥

5

$

836

7. Cash and cash equivalents
Cash and cash equivalents at March 31, 2023 and 2022 were as follows:
Thousands ofCash and deposits
Short-term securities
Securities with redemption term of over 3
monthsTime deposits with an original maturity ofover 3 months
Guarantee for issuance of a letter of credit
to the bank
Cash and cash equivalents

Millions of yen

U.S. dollars

2023

2022

2023

¥ 19,331¥ 25,815$ 144,759

14,301

11,500107,089(1,501)−(11,237)

(39)

(39)

(292)

(28)

(27)

(211)

¥ 32,064¥ 37,249$ 240,108

Basis of Presenting Consolidated Financial Statements

35

8. Financial Instruments and Related Disclosures(1) Policy for financial instruments
The Group manages funds by utilizing short-term deposits, etc. and raises
money by borrowing from financial institutions and by issuing bonds.
Derivatives are used, not for speculative nor trading purpose, but to hedge
the exposure to foreign exchange rate risks with the debts and credits
denominated in foreign currencies and interest rate risks associated withcertain interest payments on borrowings.
(2) Types of financial instruments and related risk, and risk management for
financial instruments
Trade notes and accounts receivable are exposed to credit risk in relation tocustomers. In order to monitor credit risk, the Group manages, according to
the credit management guideline of the Group, the due date and the balanceof operating receivables from customers.
Investment securities consist of mainly equity securities issued by theGroup’s business partners and these securities are exposed to market risk.
The Group periodically monitors the fair value of such equity securities,
which is reported to the board meeting.
Trade notes and accounts payable have payment due dates mainly within 1
year. Trade notes and accounts payable denominated in foreign currencies are
exposed to the market risk of fluctuation in foreign currency exchange rate.
Such risk is hedged principally by forward foreign currency contract.
Short-term bank loans are raised mainly in connection with businessactivities and long-term bank loan and bonds payable, which are due mainly
within 5 years, are raised principally for the purpose of making capital
investments. Long-term debts with variable interest rates are exposed tointerest rate fluctuation risk, so the Group enters into interest rate swap
transactions to manage such interest rate exposure.
Derivatives are managed in accordance with policies and procedures for risk
assessment (see Note 10 “Derivatives”) and also the Group enters into
derivative transactions only with financially stable financial institutions to
reduce institutions’ credit risk.
Based on a report from the Company and consolidated subsidiaries, theGroup prepares and updates its cash flow plans on a monthly basis to manage
the Group’s liquidity.

Basis of Presenting Consolidated Financial Statements

36(3) Supplementary explanation of the estimated fair value of financial
instruments
With regard to the below mentioned contract prices etc. of derivatives, thecontract prices themselves do not present the market risk on the derivativetransactions.
(4) Fair values of financial instruments
Summarized in the table below are the carrying amounts and the estimated fairvalue of financial instruments outstanding at March 31, 2023 and 2022. Financial
instruments for which do not have a market value are not included in the tablebelow.
Millions of yen

Carrying
March 31, 2023

Investment securities

UnrecognizedamountFair value

gain/loss¥ 10,701¥ 10,701¥

Long-term loans receivable (*1)

446

Allowance for doubtful accounts (*2)

(177)

−

269

270

1

Long-term bank loans (*1)

(7,366)(7,378)(12)

Bonds payable(2,800)(2,810)(10)Millions of yen

Carrying
March 31, 2022

Investment securities

amountFair value

gain/loss¥ 12,219¥ 12,219¥

Long-term loans receivable (*1)

482

Allowance for doubtful accounts (*2)(177)

Long-term bank loans (*1)

Unrecognized
−

305

307

2

(270)

(270)

−

Basis of Presenting Consolidated Financial Statements

37

Thousands of U.S. dollars

Carrying
March 31, 2023

Investment securities

UnrecognizedamountFair value

gain/loss$ 80,130$ 80,130$

Long-term loans receivable (*1)

3,342

Allowance for doubtful accounts (*2)

(1,325)

−

2,017

2,025

8

Long-term bank loans (*1)

(55,161)(55,250)(89)

Bonds payable(20,968)(21,040)(72)(*1) The carrying amounts of current portion of long-term loans receivableamounting \ 26 million ($ 195 thousand) and \ 26 million which are disclosed in“Other Current Assets” at March 31, 2023 and 2022 are included in Long-term loans
receivable. The carrying amounts of current portion of long-term bank loans areincluded in Long-term bank loans.
(*2) The amount is the allowance for doubtful accounts with respect to long-termloans receivable individually.
(*3) The fair value of “Cash and deposits”, “Short-term securities”, “Trade notes
receivable”, “Trade accounts receivable”, “Electronically recorded monetaryclaims – operating”, “Short-term bank loans”,

Trade notes and accounts

payable”, and “Electronically recorded obligations – operating” are not disclosed
because these are settled in a short period of time and their fair values areapproximately the same as the book value.
Financial instruments for which do not have a market value at March 31,
2023 and 2022 consist of the following:Thousands ofMillions of yen

Non-listed equity securities

U.S. dollars

2023

2022

2023

¥

¥

$13,820

1,845

1,804

The annual maturities of financial assets and investment securities with
contractual maturities subsequent to March 31, 2023 and 2022 were as
follows:

38

Basis of Presenting Consolidated Financial Statements

Millions of yen
Due in 1 year

Due after 1 year

Due after 5 years

March 31, 2023

or less

through 5 years

through 10 years

Cash and deposits¥ 19,331

¥

¥

−

−

Trade notes receivable

4,475

−

−

Trade accounts receivable

22,107

−

−

8,417

−

−

14,301−−

Electronically recorded monetaryclaims - operating
Short-term securities

Total

¥

¥ 68,631−¥−

Millions of yen
Due in 1 year

Due after 1 year

Due after 5 years

March 31, 2022

or less

through 5 years

through 10 years

Cash and deposits¥ 25,815

¥

¥

−

−

Trade notes receivable

6,647

−

−

Trade accounts receivable

23,078

−

−

8,300

−

−

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

Total

¥

¥ 75,340−¥−

Thousands of U.S. dollars

March 31, 2023
Cash and cash equivalents

Due in 1 year

Due after 1 year

Due after 5 years

or less

through 5 years

through 10 years$ 144,759

$

−

$

−

Trade notes receivable

33,513−−

Trade accounts receivable

165,547−−

63,028−−107,089−−

Electronically recorded monetaryclaims - operating
Short-term securities
Total$ 513,936$−$(5) Breakdown of financial instruments by each fair value level
The fair values of financial instruments are categorized into the following threelevels, in accordance with the observability and materiality of the inputs used in
the fair value calculation.

−

Basis of Presenting Consolidated Financial Statements

39

Level 1 fair value: Fair value calculated using the market price in an
active market among the observable input relating to
the calculating the fair value for an identical asset or
liability.
Level 2 fair value: Fair value calculated using inputs among theobservable input relating to the calculating the fairvalue, other than the Level 1 inputs.
Level 3 fair value: Fair value calculated using inputs that cannot be
observed.
In cases where several inputs which have a material effect on the calculation of
the fair value are used, among the levels to which the respective inputs belong,the fair value is categorized at the level with the lowest priority in the fair value
calculation.
Financial instruments with the carrying amount recorded using the fair value
subsequent to March 31, 2023 and 2022 were as follows:

Millions of yen
March 31, 2023

Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities¥ 10,484

¥

217

¥

−

¥ 10,701

Total¥ 10,484

¥

217

¥

−

¥ 10,701

Millions of yen
March 31, 2022

Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities¥ 11,998

¥

221

¥

−

¥ 12,219

Total¥ 11,998

¥

221

¥

−

¥ 12,219

Thousands of U.S. dollars
March 31, 2023

Fair value
Level 1

Level 2

Level 3

Total

Investment securities
Other securities$ 78,505

$

1,625

$

−

$ 80,130

Total$ 78,505

$

1,625

$

−

$ 80,130

40

Basis of Presenting Consolidated Financial Statements

Financial instruments other than those recorded using the fair value subsequent
to March 31, 2023 and 2022 were as follows:

Millions of yen
March 31, 2023

Fair value
Level 1

Level 2

Level 3Total

Long-term loans receivable

¥

−

¥

270

¥

−

¥

270

Assets Total

¥

−

¥

270

¥

−

¥

270

Long-term bank loans

¥

−

¥

7,378

¥

−

¥

7,378

Bonds payable
Liabilities Total

2,810

−
¥

−

¥

10,188

2,810

−
¥

¥

−

10,188Millions of yen
March 31, 2022

Fair value
Level 1

Level 2

Level 3Total

Long-term loans receivable

¥

−

¥

307

¥

−

¥

307

Assets Total

¥

−

¥

307

¥

−

¥

307

Long-term bank loans

¥

−

¥

270

¥

−

¥

270

Liabilities Total

¥

−

¥

270

¥

−

¥

270

Thousands of U.S. dollars
March 31, 2023

Fair value
Level 1

Level 2

Level 3Total

Long-term loans receivable

$

−

$

2,025

$

−

$

2,025

Assets Total

$

−

$

2,025

$

−

$

2,025

Long-term bank loans

$

−

$

55,250$−$55,25021,040$−76,290$−Bonds payable
Liabilities Total

−
$

−

$

21,040$Explanation of the valuation methods and inputs used in calculating fair values
Investment securities
Listed shares are valued using the market price. Because listed sharesare traded on active markets, their fair value is categorized as a level 1
fair value.
Bonds investment trust are measured at the quoted price obtained fromcounterparty financial institutions, their fair value is categorized as alevel 2 fair value.

76,290Basis of Presenting Consolidated Financial Statements

41

Long-term loans receivable
The fair value of long-term loans receivable is calculated using thediscounted method based on estimated interest rates if similar new loantransaction is performed in the current period, their fair value iscategorized as a level 2 fair value.
Long-term bank loans and Bonds payable
The fair value of long-term bank loans and bonds payable are calculatedusing the discounted method based on estimated interest rates if similar
new borrowings are entered into in the current period, their fair value iscategorized as a level 2 fair value.
Long-term bank loans for Trust-type Employee Stockholding Incentive
Plan [E-Ship🄬] at March 31, 2022 was valued using the book value,
because this was based on floating interest rates and reflect market
interest rates within a short period of time, the fair value wasapproximately the same as the book value, their fair value wascategorized as a level 2.

9. Investment Property
The company and certain subsidiaries hold some rental properties including landin Kanagawa and other areas (“investment properties”). The amounts of net
income related to investment properties (rental income is recognized in operating
revenue and rental expense is principally charged to operating expenses) were
¥ 537 million ($ 4,019 thousand) and ¥ 948 million for the fiscal years ended
March 31, 2023 and 2022, respectively. Additionally, gain on sales of property
and equipment related to certain investment property in an amount of ¥ 13,222
million was recognized in other income for the fiscal year ended March 31, 2022.
The carrying amount, changes in such balances and market prices of investment
properties were as follows:
Millions of yen

Carrying amount

Fair value

Increase/
April 1, 2022

¥ 4,824(decrease)¥ 846

March 31, 2023

March 31, 2023

¥ 5,670¥ 5,139

Basis of Presenting Consolidated Financial Statements

42

Millions of yen

Carrying amount

Fair value

Increase/
April 1, 2021

(decrease)¥ 7,121¥ (2,297)

March 31, 2022

March 31, 2022

¥ 4,824¥ 4,247

Thousands of U.S. dollars

Carrying amount

Fair value

Increase/
April 1, 2022

$ 36,127(decrease)$ 6,335

March 31, 2023

March 31, 2023

$ 42,462$ 38,480(a) Carrying amount is net of accumulated depreciation and accumulated
impairment losses, if any.
(b) Increase during the fiscal year ended March 31, 2023 was mainly due to thefloor for tent of a parts of the group head office building in amount of¥ 1,173 million ($ 8,787 thousand). Decrease during the fiscal year ended
March 31, 2023 was mainly due to the change of use to sales branch inamount of ¥ 314 million ($ 2,348 thousand).
Increase during the fiscal year ended March 31, 2022 was mainly due to theexpenditure of the guide signs of the coin parking business in amount of¥ 40 million. Decrease during the fiscal year ended March 31, 2022 wasmainly due to the sale of Mizuho Shopping Center in an amount of ¥ 2,239
million.
(c) Fair value at March 31, 2023 and 2022 were principally measured based on thereal estate appraisal assessed by the external real estate appraiser. In the casethat there was a certain sales price under a contract, the sales price was adopted
as the fair value.

10. Derivatives
Derivative financial instruments are utilized by the Company principally to
reduce interest rate risk and foreign exchange rate risk. The Company has
established a control environment which includes policies and procedures for risk
assessment and for the approval, reporting and monitoring of transactions
involving derivative financial instruments. The Company does not hold or issue
derivative financial instruments for trading purposes.

Basis of Presenting Consolidated Financial Statements

At March 31, 2023 and 2022,

43

the notional amounts and the estimated fair valueof derivative financial instruments, for which deferred hedge accounting has
been applied or has not been applied were none, respectively.

11. Shareholders’ Equity
Changes in common stock and additional paid-in capital have resulted from thefollowing:

Millions of yen
Number of

Share

Capitalshares issued

capitalsurplus42,737,668¥ 11,900¥ 11,821−−

18

Balance at March 31, 2022

42,737,668

11,90011,839Movement of stock during 2023

(2,587,668)

−

(160)

Balance at March 31, 2023

40,150,000¥ 11,900¥ 11,679

Balance at March 31, 2021
Movement of stock during 2022

Thousands of U.S. dollars

Balance at March 31, 2022

Share

Capital

Cap ital

surplus$ 89,111$ 88,656−(1,199)$ 89,111$ 87,457

Movement of stock during 2023
Balance at March 31, 2023

Increases of capital surplus during 2022 was due to the disposal of treasury stock,decrease of capital surplus during 2023 was mainly due to cancellation oftreasury stock.
The Company adopted 100 shares of common stock as “unit amount of shares”. A
holder of shares representing less than one unit cannot exercise any voting rights
with respect to such shares. However, the holder is entitled to receive dividends
and other distributions. A holder of a fraction of a unit may at any time request
the Company to purchase such shares at the prevailing market price.
The shares held by the Employee Shareholding Association (62,300 shares) was
included in the number of treasury stock at March 31, 2022.

Basis of Presenting Consolidated Financial Statements

44

During 2023, the increase of treasury stock was due to the purchase of odd-lot
shares (357 shares) and the acquisition without consideration associated withthe retirement of object persons of the restricted stock compensation (22 shares),and purchase based on resolution of board of directors (1,707,900 shares). The
decrease of treasury stock was due to the disposal of treasury stock as restricted
stock compensation (82,840 shares) and the sales to Shareholding Associationfrom the Employee Shareholding Association (62,300 shares),and cancellation
based on resolution of board of directors (2,587,668 shares).
During 2022, the increase of treasury stock was due to the purchase of odd-lot
shares (189 shares) and the acquisition without consideration associated withthe retirement of object persons of the restricted stock compensation (150 shares).
The decrease of treasury stock was due to the disposal of treasury stock as
restricted stock compensation (20,200 shares) and the sales to Shareholding
Association from the Employee Shareholding Association (109,100 shares).

12. Research and Development
Research and development expenditure which is included in “Selling, generaland administrative expenses” were ¥ 1,584 million ($ 11,861 thousand) and¥ 1,514 million for the fiscal years ended March 31, 2023 and 2022, respectively.

13. Income Taxes
The Company and its domestic subsidiaries are subject to several taxes based on
income, which in the aggregate resulted in a statutory tax rate of approximately
30.58% for the fiscal years ended March 31, 2023 and 2022. Foreign subsidiaries
are subject to income taxes of the countries in which they operate.
The tax effects of significant temporary differences which resulted in deferred
tax assets and liabilities at March 31, 2023 and 2022 were as follows:Basis of Presenting Consolidated Financial Statements

45

Thousands ofMillions of yen

2023

2022

U.S. dollars

2023

Deferred tax assets:
Tax loss carry forward

¥

465

¥

222

$

3,484

Allowance for doubtful accounts

292

239

2,187

Accrued Bonuses

705

705

5,278

Provision for product warranties

220

250

1,651

Provision for loss on construction contracts

275

118

2,058

Accrued corporation enterprise tax

111

117

827

Loss on valuation of inventories

140

76

1,051

Forecast of construction cost

55

69

410

Net defined benefit liabilities

28

55

213

200

200

1,497

173

183

1,294

124

124

928

Excess depreciation

402

382

3,013

Other

656

710

4,910

3,846

3,450

28,801

(259)

(208)

(1,938)(1,051)(1,087)(7,873)

Valuation allowance sub-total(1,310)(1,295)(9,811)

Total deferred tax assets¥ 2,536¥ 2,155$ 18,990

Fixed assets – elimination of intercompany
profits
Loss on impairment of long-lived assets
Loss on valuation of investment for
subsidiaries and affiliates

Deferred tax assets sub-total
Less valuation allowance
relevant to tax loss carry forward
Less valuation allowance
relevant to total deductible
temporary differenceBasis of Presenting Consolidated Financial Statements

46

Thousands ofMillions of yen

U.S. dollars

2023

2022

2023

¥ (1,939)¥ (2,034)$ (14,523)(3,536)(1,828)(26,482)(172)(2,473)(1,286)(1,296)(1,317)(9,700)

(65)

(84)

(484)

(7,008)(7,736)(52,475)¥ (4,472)¥ (5,581)$ (33,485)

Deferred tax liabilities:
Unrealized gain on investment securities
Reduction reserve for fixed assets
Special reduction reserve for fixed assets
Unrealized gain on subsidiaries’ fixed assets
by revaluation at the beginning of
consolidation
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)(Note) Tax loss carry forward and related deferred tax assets by expiration
periods were as follows.
At March 31, 2023
Millions of yen

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

64

53

18

40

87

203

465

(64)

(53)

(4)

(38)

(87)

(13)

(259)

−

−

14

2

−

190

206

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets

Basis of Presenting Consolidated Financial Statements

47

At March 31, 2022
Millions of yen

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

6

69

66

24

38

19

222

(6)

(69)

(66)

(24)

(37)

(6)

(208)

−

−

−

−

1

13

14

After 1After 2After 3After 4

year

year

year

year

throughthroughthroughthrough

2years

3years

4years

5years

481

398

133

301

655

1,516

3,484

(481)

(398)

(24)

(282)

(655)

(98)

(1,938)

−

−

109

19

−

1,418

1,546

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets

At March 31, 2023
Thousands of U.S. dollars

Within
1
year

After
5

Total

years

Tax losscarryforwardValuation
allowance
Deferredtax assets(a) Tax loss carry forward is shown as an amount multiplied by the statutory tax
rate.
(b) The deferred tax assets of ¥ 206 million ($ 1,546 thousand) and ¥ 14 million
were recognized for the balance of tax loss carry forward (an amount
multiplied by the statutory tax rate) of ¥ 465 million ($ 3,484 thousand) and¥ 222 million at March 31, 2023 and 2022, respectively.
Valuation allowance has not been recognized in the portion of tax loss
carryforward based on judgement of recoverability through future taxable
income.

Basis of Presenting Consolidated Financial Statements

48

The reconciliation between the statutory tax rate and the effective income tax
rate for the year ended March 31, 2023 and 2022 were omitted because thedifference is less than 5% of the statutory income tax rate.

14. Comprehensive Income
The components of other comprehensive income for the fiscal years ended March 31,
2023 and 2022 were as follows:
Thousands ofMillions of yen

2023

U.S. dollars

2022

2023

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

¥

677

¥

(465)

$

5,073

Reclassification adjustments for gain (loss)

(968)

(13)

(7,249)Amount before income tax effect

(291)

(478)

(2,176)

95

145

710

Income tax effect
Total

¥

(196)

¥

(333)

$

(1,466)

¥

26

¥

(18)

$ 190

Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments for gain (loss)

−

−

−

Amount before income tax effect

26

(18)

190

Income tax effect

−

−

−
$ 190

Total

¥

26

¥

(18)

¥

(71)

¥

104

Remeasurements of defined benefit plans:
Gains (Losses) arising during the year

$

(532)

Reclassification adjustments for gain (loss)

19

50

140

Amount before income tax effect

(52)

154

(392)

Income tax effect

16

(47)

121

Total

¥

(36)

¥

107

$

(271)

¥

24

¥

52

$

178

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

−

Total
Total other comprehensive income

¥
¥

−

24

(182)

¥
¥

−

52

(192)

$
$

178
(1,369)Basis of Presenting Consolidated Financial Statements

49

15. Provision of reserve for Losses on Construction Contracts
Provision of reserve for losses on construction contracts included in Cost of Sales
were ¥ 837 million ($ 6,264 thousand) and ¥ 385 million for the fiscal years
ended March 31, 2023 and 2022, respectively.

16. Revenue from Contracts with Customers(1) Disaggregation of revenue
Disaggregation of revenue is disclosed in Note 17.
(2) Basic information to understand revenue from contracts with customers
Basic information to understand revenue from contracts with customers is disclosed
in Note 2(i).
(3) Contract balances
Thousands ofMillions of yen

U.S. dollars

2023

2022

2023

¥

¥

41,457$ 284,744

34,99938,025

262,088

495

1,558

3,711

1,715

495

12,845Contract liabilities (beginning balance)

652

386

4,880

Contract liabilities (ending balance)

369

652

2,760

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

38,025Contract assets are primarily consideration for on-going construction. Contract liabilities
are advances received on construction contracts in progress and sales of specialty trucks.
Contract liabilities are included in other current liabilities in the accompanying
consolidated balance sheets.
Of the revenue recognized during the fiscal year ended March 31, 2023, the amountincluded in contract liabilities at the beginning of the fiscal year was \ 618 million ($ 4,625
thousand), and during the year ended March, 31, 2022, it was \335 million.
The decrease of contract assets for the fiscal year ended March 31, 2022 was mainly due tothe completion of on-going construction.

Basis of Presenting Consolidated Financial Statements

50

The increase of contract assets for the fiscal year ended March 31, 2023 was mainly due tothe recognition of revenue from of on-going construction, and increase of construction
projects.
The increase of contract liabilities for the fiscal year ended March 31, 2022 was mainly
due to the increase of advances received on construction contracts in progress.
The decrease of contract liabilities for the fiscal year ended March 31, 2023 was mainly
due to the transfer to revenue from advances received on construction contracts inprogress.
(4) Transaction price allocated to the remaining performance obligations
The Group applies the practical expedient and the contracts whose initial expected
terms are 1 year or less aren’t included in the note of transaction price allocated to theremaining performance obligations.
Performance obligations mainly relate to the manufactures and sales of specialty
trucks and “Maintenance pack contract” in “Specialty truck business” and construction
contracts such as construction of recycling facilities and comprehensive maintenancecontracts in “Environmental equipment and systems business”.
The total amount of transaction price allocated to the remaining performance obligations
by prospective satisfaction period at March 31, 2023 and 2022 were as follows:
Thousands ofMillions of yen

2023
Within 1 year¥

30,971

2022¥

U.S. dollars

2023

21,584$ 231,923

After 1 year through 2 years

19,421

10,067

145,430

After 2 year through 3 years

6,189

4,197

46,348After 3 years

13,454

9,717

100,748

45,565$ 524,449

Total

¥

70,035¥In terms of transaction price related to construction contracts, the amount was allocatedbased on the timing of prospective completion due to uncertain ratio of the cost incurredfor each year. They approximately will be completed within 4 years and revenue will berecognized.

Basis of Presenting Consolidated Financial Statements

51

17. Segment Information(1) Description of reportable segments
The Group’s reportable segments are those for which separately financial
information is available and regular evaluation by the Board of Directors is being
performed in order to decide how resources are allocated among the Group. The
Group conducts several types of businesses including specialty truck business,environmental equipment and systems and real estate rental business. The
Company and its consolidated subsidiaries are engaged in each business as anindependent management unit. The Group consists of three reportable segments,
which are “Specialty truck” (Industry A), “Environmental equipment andsystems” (Industry B) and “Parking and other operations” (Industry C). Industry
A manufactures and distributes specialty trucks such as dump trucks, tailgate
lifters, tank trucks, refuse trucks, trailers, etc. Industry B manufactures anddistributes recycle facilities, including maintenance and consignment business.
Industry C manufactures multistory parking equipment and offers operating
services for toll parking.
(2) Methods of measurement for the amounts of sales, profit, assets, liabilities,
and other items for each reportable segment
The accounting policies of each reportable segment are consistent to those
disclosed in Note 2, “Summary of Significant Accounting Policies”. Intersegment
sales or transfers are based on the market prices.

Basis of Presenting Consolidated Financial Statements

52(3) Information about sales, profit, assets and other items for the fiscal years
ended March 31, 2023 and 2022 were as follows:
Millions of yen
Reportable segments
Consolidated(Note a)(Note b)Industry

IndustryA

BC\ 96,277\ 3,744\ 5,837\ 105,858−\ 105,858

100

6,583

−

6,683

−

6,683

96,377

10,327

5,837

112,541−

112,541

65

−

483

548

−

548

96,442

10,327

6,320

113,089－

113,089

5

−

576

581

(581)

－

96,447

10,327

6,896

113,670(581)

113,089

Segment profit

(556)

1,768

656

1,868

(877)

991

Segment assets

86,452

6,887

11,790105,12953,027

158,156

2,443

72

283

2,798

17

2,815

3,281

123

456

3,860

7,945

11,805

2023

Total

Reconciliations

Industry

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

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of ¥ (877) million which
consisted of elimination of intersegment transactions in an amount of ¥ 12
million and corporate expenses which were not allocated to each reportablesegment in an amount of ¥ (889) million. Corporate expenses were mainly
general administrative expenses not attributable to any other reportablesegments.
Reconciliations of segment assets were surplus fund (Cash and deposits andShort-term securities), long-term investment fund (Investment securities), andhead office building (Property, plant and equipment) of the Company.
(b) Segment profit was reconciled with operating income in the consolidated
statements of income.

Basis of Presenting Consolidated Financial Statements

53

Millions of yen
Reportable segments
Consolidated(Note a)(Note b)Industry

IndustryA

BC\ 98,409\ 3,621\ 5,473\ 107,503−\ 107,503

83

8,026

−

8,109

−

8,109

98,492

11,647

5,473

115,612−

115,612

55

−

1,243

1,298

−

1,298

98,547

11,647

6,716

116,910－

116,910

25

0

545

570

(570)

－

98,572

11,647

7,261

117,480(570)

116,910Segment profit

4,481

2,098

1,143

7,722

(748)

6,974

Segment assets

83,268

8,145

11,443102,856

51,494

154,350

2,441

74

357

2,872

1

2,873

3,840

73

1,245

5,158

－

5,158

2022

Total

Reconciliations

Industry

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

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of ¥ (748) million which
consisted of elimination of intersegment transactions in an amount of ¥ 12
million and corporate expenses which were not allocated to each reportablesegment in an amount of ¥ (760) million. Corporate expenses were mainly
general administrative expenses not attributable to any other reportablesegments.
Reconciliations of segment assets were surplus fund (Cash and deposits andShort-term securities) and long-term investment fund (Investment securities) of
the Company.
(b) Segment profit was reconciled with operating income in the consolidated
statements of income.

Basis of Presenting Consolidated Financial Statements

54

Thousands of U.S. dollars
Reportable segments

2023

Industry

Industry

IndustryA

B

C$ 720,958$ 28,039

747

49,295

721,705

Total

Reconciliations

Consolidated(Note a)(Note b)Net sales:
Goods or service transferred$ 43,706 $ 792,703－$ 792,703－

50,042－50,042

77,33443,706

842,745－842,745

491

－

3,620

4,111

－

4,111

722,196

77,33447,326

846,856－

846,856

40

－

4,313

4,353

(4,353)－722,236

77,334

51,639851,209(4,353)846,856

Segment profit(4,162)

13,242

4,918

13,998(6,574)

7,424

Segment assets

647,386

51,57588,287787,248

397,089

1,184,337

18,294543

2,118

20,955

128

21,08324,567921

3,417

28,90559,49588,400at a point in time
Goods or service transferredover time
Revenue from contracts withcustomers
Other revenue
External customers
Intersegment sales or transfers
Total

Other items:
Depreciation
Increase in tangible andintangible fixed assets(a) Reconciliations of segment profit in an amount of $ (6,574) thousand which
consisted of elimination of intersegment transactions in an amount of $ 88
thousand and corporate expenses which were not allocated to each reportablesegment in an amount of $ (6,662) thousand. Corporate expenses were mainly
general administrative expenses not attributable to any other reportablesegments.
Reconciliations of segment assets were surplus fund (Cash and deposits andShort-term securities) and long-term investment fund (Investment securities) ,and head office building (Property, plant and equipment ) of the Company.
(b) Segment profit was reconciled with operating income in the consolidated
statements of income.

Basis of Presenting Consolidated Financial Statements

55(4) Amortization and unamortized balances of goodwill by reportable segment
for the fiscal years ended March 31, 2023 and 2022 were as follows:
Millions of yen

2023

Industry

Industry

IndustryA

B

C

Reconciliations

Amortization

¥ 95

¥ －

¥ －

¥ －

Unamortized balances

684

－

－

－

Consolidated
¥

95
684

Millions of yen

2022

Industry

Industry

IndustryA

B

C

Reconciliations

Amortization

¥ 85

¥ －

¥ －

¥ －

Unamortized balances

771

－

－

－

Consolidated
¥

85
771

Thousands of U.S. dollars
Industry

Industry

Industry

2023

A

B

C

Amortization$

Unamortized balances

Reconciliations

Consolidated

708

$ －

$ －

$ －

$ 708

5,125

－

－

－

5,125

18. Subsequent Event(Appropriations of the Company’s retained earnings)
The following appropriations of the Company’s retained earnings in respect of
the fiscal year ended March 31, 2023 were as proposed by the Board of Directors
and approved by the shareholders at the annual general meeting held on June 27,
2023.
Thousands ofAppropriations
Cash dividends of ¥ 27 ($ 0.20) per share

Millions of yen

¥

1,035

U.S. dollars

$

7,749

(Purchase of treasury stock and completion of purchase)
Based on the resolution of the meeting of the board of directors held on June 6, 2022,
the Company has purchased the Treasury Stock from April 1, 2023 to April 10, 2023
below. With these purchases of treasury stock, the purchase based on its resolution
has completed.

Basis of Presenting Consolidated Financial Statements

56

Details of purchase(1) Class of share:

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

73,800 shares(3) Total amount:¥ 121 million ($905 thousand)(4) How to purchase:

From the market of Tokyo Stock Exchange(Reference information)
1. Details of the resolution of the meeting of the board of directors held on June 6,2022 relating to the purchase of treasury stock(1) Class of share:

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

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

Up to ¥ 2,500,000,000 ($18,721 thousand)(4) Period:

From July 1, 2022 to June 30, 2023

2 The accumulated numbers and amount of treasury stock after the meeting of theboard of directors (held on June 6, 2022) is described above.
(1) Total numbers of purchase

1,781,700 shares(2) Total amount of purchase¥ 2,500 million ($ 18,720 thousand)Independent
Auditor’s
ReportBasis of Presenting Consolidated
Financial
Statements

57

Independent
Auditor’s
ReportBasis of Presenting Consolidated
Financial
Statements

58Independent
Auditor’s
ReportBasis of Presenting Consolidated
Financial
Statements

59

Board of Directors andStatutory
Auditors
Corporate
Information
CORPORATE INFORMATION
Kyokuto Kaihatsu Kogyo Co., Ltd.
Established: June 1, 1955
Paid-in Capital: 11,899,867,400 yen (March 31, 2023)
Number of Employees: consolidated 3,201; non-consolidated 1,104 (March 31, 2023)
Headquarters:
Kyokuto Group Head Office Building, 2-5-11, Awajimachi, Chuo-ku, Osaka,
541-8519, Japan
Tel.+81-6-6205-7800, Fax.+81-6-6205-7830
Tokyo Office (Overseas Business Department):
3-15-10, Higashi-shinagawa, Shinagawa-ku, Tokyo, 140-0002, Japan
Tel.+81-3-5781-9828, Fax+81-3-5781-3431
Plants:Yokohama Plant
Occupies 96,657 ㎡
Located in Yamato, Kanagawa (Japan)
Nagoya Plant
Occupies 109,611 ㎡
Located in Komaki, Aichi (Japan)
Miki Plant
Occupies 100,728 ㎡
Located in Miki, Hyogo (Japan)
Fukuoka Plant
Occupies 43,503 ㎡
Located in Iizuka, Fukuoka (Japan)
Head Plant of NIPPON TREX Co., Ltd.
Occupies 125,285 ㎡
Located in Toyokawa, Aichi (Japan)
Otowa Plant of NIPPON TREX Co., Ltd.
Occupies 20,889 ㎡
Located in Toyokawa, Aichi (Japan)
Mito Plant of NIPPON TREX Co., Ltd.
Occupies 36,367 ㎡
Located in Toyokawa, Aichi (Japan)
Plant of KYOKUTO KAIHATSU (KUNSHAN) MACHINERY CO., LTD.
Occupies 83,140 ㎡
Located in Kunshan, Jiangsu (China)
Plant of SATRAC ENGINEERING PRIVATE LIMITED
Occupies 24,292 ㎡
Located in Nidavanda Village, Nelmangala, Bangalore (India)
Plant of PT KYOKUTO INDOMOBIL MANUFACTURING INDONESIA
Occupies 20,028 ㎡
Located in Purwakarta, Jawa Barat (Indonesia)

60Board of Directors and Statutory Auditors

BOARD OF DIRECTORS AND STATUTORY AUDITORS
Tatsuya Nunohara,

Representative Director, President, CEO

Kazuhiko Harada,

Senior Managing Director, Senior Managing Executive Officer

Takeo Norimitsu,

Director, Associate Senior Executive Officer

Noboru Horimoto,Director, Associate Senior Executive Officer

Teruyuki Kizu,

Director, Associate Senior Executive Officer

Hiroyuki Terakawa,

Outside Director

Keiko Kaneko,

Outside Director

Takanobu Tomohiro,

Outside Director

Akira Sakurai,Standing Auditor

Hiroaki Kuriyama,

AuditorKuniaki Fujiwara,

Outside Corporate Auditor

Nobuhiro Asada,Outside Corporate Auditor

Fumihiro Takasaki,

Associate Senior Executive Officer

Yukihiro Hosozawa,

Executive Officer

Shinichi Takahama,Executive Officer

Yutaka Yoshida,

Executive Officer

Masashi Ushio,

Executive Officer

Shinsaku Chijiiwa,

Executive Officer

Tatsuya Nomura,

Executive Officer

Keisuke Iwata,

Executive Officer

Mamoru Shimizu,

Executive Officer

Koh Yamamoto,Executive Officer

Tetsuya Ichimura,

Executive Officer

Shigeyuki Satake,Executive Officer

Satoshi Okamoto,Executive Officer

61