Notice of Convocation of
the 74th Ordinary General Shareholders’ Meeting:Internet Disclosure Items

Contents
1. Business Report
System to Ensure Execution of Business and Overview of
Its Operational Status

1

2. Consolidated Financial Statements
Consolidated Statements of Changes in Shareholders’ Equity

5

Notes to Consolidated Financial Statements

7

3. Nonconsolidated Financial Statements
Nonconsolidated Statements of Changes in Shareholders’Equity16

Notes to Nonconsolidated Financial Statements

18

74th Fiscal Year

(April 1, 2023–March 31, 2024)

Rinnai Corporation

Pursuant to applicable laws and the Corporation’s Articles ofIncorporation, the above items are not included in the Notice ofConvocation for shareholders who have made a written request.
At this Ordinary General Shareholders’ Meeting, the Corporation will
uniformly distribute a document describing items related to the matterssubject to the measures for provision in electronic format, excluding theabove items, regardless of whether or not a request for delivery of such
document has been made.

0I. Business Report

System to Ensure Execution of Business and Overview of Its Operational
Status
1. An overview of systems to ensure appropriateness of business activities
An overview of systems to ensure that execution of business by directors
conforms to legal regulations and the Articles of Incorporation, as well as othersystems to ensure appropriateness of business activities, is given below.
(1) System to ensure that execution of business by directors and employeesof the Corporation and its subsidiaries conforms to legal regulations andthe Articles of Incorporation• To ensure that directors and employees of the Corporation and its
subsidiaries are constantly aware of the need to observe legal regulations
and the Articles of Incorporation when executing their duties, the Group has
formulated Rinnai Group Code of Ethics, which consists of the Company
Motto, Brand Promise, and the Rinnai Code of Conduct. The Corporationand its subsidiaries shall work to ensure that all directors and employees
are fully familiarized with the Rinnai Group Code of Ethics.
• In addition to establishing the Business Ethics Committee, we shallformulate basic policy of corporate ethics and promote compliance withthose ethics.
• If a director becomes aware of an incident in which there is suspicion of amajor legal violation, he or she shall immediately report the incident to the
Audit & Supervisory Board and the Board of Directors.
• The Corporation has set up a Corporate Ethics Hotline as an internalreporting system to handle incidents in which there is suspicion of a major
legal violation. Operation of the hotline is based on the Corporation’s
business ethics manual.
• If an Audit & Supervisory Board member believes there is a problem with theinternal compliance system or Corporate Ethics Hotline, he or she shallconvey his or her opinion and seek measures to correct the situation.
(2) System for storing and managing information related to the execution ofduties by directors• Information related to the execution of duties by directors shall be stored
and managed appropriately according to the Corporation’s internal
procedures for managing paper and electronic documents, in a manner
appropriate to its storage medium and in an easily retrievable form.
(3) Regulations and other systems for managing the risk of loss at the
Corporation and its subsidiaries• As part of its risk management system, we shall determine risk
management regulations and promote internal checks and awarenessactivities on a Groupwide basis, according to relevant regulations under the
Risk Management Committee chaired by the president. Risk Management
Committee shall determine who is responsible for each risk.
(4) System to ensure efficient execution of duties by directors of the
Corporation and its subsidiaries• To ensure that directors execute their duties in an efficient manner, Boardof Directors’ meetings shall be held on a regular basis to discuss anddebate important matters and make executive decisions.
• Directors formulate management strategy and track the progress ofmanagement plans at the Groupwide executive meeting held every year.
1• Execution of business based on decisions made at Board of Directors’
meetings shall be performed by the relevant director according to the
Corporation’s rules and procedures.
• The Corporation formulates the Group management direction, management
plan and management numerical targets in each fiscal year, based on themedium-term management plan, medium-term numerical targets, andmanagement indicators. Each department formulates an action plan,
according to the Corporation-wide plan and target for each fiscal year, andthe Corporation practices consistent management of each department.
(5) System to ensure appropriate operations in the Corporation and its
subsidiaries• To ensure that business at Rinnai Group companies is conducted
appropriately, the Corporation shall formulate Rinnai Code of Conduct toserve as a behavioral guide for Rinnai Group companies. Based on thecharter, Group companies shall create their own specific regulations.
• Business control of Rinnai Group companies shall be based on
management procedures and the relevant companies’ procedures andreporting rules determined by provisions for controlling Rinnai Group
companies.
• Internal audits by the Internal Control Office and relevant divisions werecarried out in accordance with the business content and operating scale ofeach Group company.
(6) System applicable to employees who support to Audit & Supervisory
Board members; and system to ensure effective execution of instructions
to such employees• The Internal Control Office shall provide support to Audit & Supervisory
Board members. An employee assigned to provide support shall givepriority to instructions given by the relevant Audit & Supervisory Board
member. In the event that a dedicated employee is required due to thenature of the duties, members of the Board of Directors and the Audit &Supervisory Board shall select the employee after proper discussion.
• Changes in personnel and assessment of performance of assigned
persons as support staff for Audit & Supervisory Board members shallrequire the consent of the Audit & Supervisory Board.
(7) System for reporting to Audit & Supervisory Board members; othersystems to ensure effective execution of duties by Audit & Supervisory
Board members• Directors and employees shall report immediately to the Audit &Supervisory Board incidents that could cause significant damage to theoperations or business performance of the Corporation and its subsidiaries.
Moreover, Audit & Supervisory Board members can request reports fromdirectors and employees at any time as required.
• The Audit & Supervisory Board shall hold regular meetings withrepresentative directors, outside directors, the Internal Control Office, andthe accounting auditor to exchange opinions and ensure proper
communication of intentions.
(8) System to ensure that individuals who have made reports to the Audit &Supervisory Board as described in (7) above will not be treatedunfavorably (put at a disadvantage) on the basis of such reports• Every effort shall be made to ensure that directors and employees of the
Corporation and its subsidiaries who report information to a member of the
Audit & Supervisory Board will not be treated unfavorably on the basis of2the report given.
(9) Matters concerning expenses incurred by a member of the Audit &Supervisory Board in the process of executing duties• Total costs incurred in the process of executing duties by a member of the
Audit & Supervisory Board shall be covered by the Corporation based on
application by said member.
2. An overview of the operational status of systems to ensure
appropriateness of business activities
An overview of operational status of systems to ensure appropriateness ofbusiness activities in the fiscal year under review is given below.
(1) Matters related to compliance• We worked to instill a deeper awareness of the Rinnai Code of Conduct
and appropriate behavior among all employees. We conducted a survey togauge the level of employee awareness and disclosed the results.
• As part of our main internal compliance education activities, we conductedinternal training for management on the theme of harassment prevention.
Messages from president regarding compliance were also disseminatedinternally to raise awareness.
• As for our whistleblowing system, we established corporate ethics
counseling contact points inside and outside the Corporation and appointed
an outside law firm to handle external inquiries. However, there were nologged reports of suspected serious legal or regulatory violations during the
fiscal year under review.
(2) Matters related to risk management• The Risk Management Committee, which is comprised of executive officers
and divisional heads and chaired by the president, met regularly (four times
per year). A person with responsibility in each department gave a report on
the implementation status of in-house checks and associatedimprovements pertaining to risk-related issues (including cyber security,
response in the event of natural disaster) within the Corporation and at
Group companies. The content was reviewed, information was shared, andefforts were made to prevent potential risks from becoming reality.
(3) Matters related to execution of duties by directors• During the fiscal year in review, the Board of Directors met 15 times todiscuss and approve key agenda items and receive business reports.
• The executive meeting, attended by executives responsible for operating
divisions at the Corporation and at Group companies, met regularly toreview progress on annual business plans and confirm status towardachieving goals and any issues requiring attention.
• The minutes of Board of Directors’ meetings and Executive Committee
meetings, along with approval documents, in written form were properly
stored and managed.
(4) Matters related to appropriateness of the Group’s business• Key business management issues at Group companies were properly
handled in accordance with approval rules established under the
Corporation’s management rules. Also, through regular opportunities toprovide updates on business activities and the delivery of monthly business
reports, the Corporation was able to confirm the status of progress on fiscal
management plans and pinpoint issues requiring attention.
• Internal audits by the Internal Control Office were carried out based on
3

plans drafted to match the business content and operating scale of eachGroup company. In addition, to ensure the effectiveness of internal audits,
the Corporation reports regularly (twice a year) to management and the
Audit & Supervisory Board on the status of internal control audits. Details ofinternal control reports are also conveyed to the Board of Directors.
(5) Matters related to ensuring the effectiveness of audits by members of the
Audit & Supervisory Board• Members of the Audit & Supervisory Board held regular meetings based on
the audit plan determined by the Audit & Supervisory Board. Members of
the Audit & Supervisory Board attended meetings of the Board of Directors,
Executive Committee, Risk Management Committee, and other bodies andstated their opinions, as necessary. They also looked over approval
documents, monthly business reports, and records of important meetings toverify their contents. Furthermore, members of the Audit & Supervisory
Board communicated with the accounting auditor and exchanged opinions
regarding the audit plan proposed by the accounting auditor and the results
obtained through the audit. In addition, members of the Audit & Supervisory
Board exchanged opinions with the representative director, outside
directors, and the Internal Control Office.

4II. Consolidated Financial Statements
Consolidated Statements of Changes in Shareholders’ Equity
Year ended March 31, 2024

(Millions of yen)

Shareholders’ equity
Commonstock

Balance at the beginning ofcurrent term
Dividends paid
Net income attributable to ownersof the parent company
Acquisition of treasury stock
Disposition of treasury stock
Cancellation of treasury stock
Transfer from earned surplus tocapital surplus
Net other changes thanshareholders’ equity during thecurrent term
Total net changes during thecurrent term
Balance at the end of current
term

6,484

Capitalsurplus

Earnedsurplus

8,428

334,946

Treasurystock(12,290)

Total
shareholders’equity337,569(8,443)
26,667(8,443)
26,667(10,001)690
10,665(10,001)
679
—
—

7,546

1,354

8,900

342,493(10,936)

346,470(11)(10,665)
10,676(10,676)

—

—

6,484

8,428

5

(Millions of yen)

Balance at the beginning ofcurrent term
Dividends paid
Net income attributable to owners of
the parent company
Acquisition of treasury stock
Disposition of treasury stock
Cancellation of treasury stock
Transfer from earned surplus tocapital surplus
Net other changes thanshareholders’ equity during thecurrent term
Total net changes during thecurrent term
Balance at the end of current
term

Other accumulated comprehensive income
Unrealized
NonForeign
Remeasure- Total othergain (loss)
exchangements ofaccumulated controllingontranslation
defined comprehensive interests
marketableadjustment benefit plansincomesecurities

6,161

14,2486,171

26,582

Total net
assets

43,048407,199(8,443)
26,667(10,001)
679
—
—

2,528

8,423

3,770

14,722

6,615

21,337

2,528

8,423

3,770

14,722

6,615

30,2388,690

22,671

9,941

41,304

49,663

437,4386

Notes to Consolidated Financial Statements[Notes to Significant Accounting Policies of Consolidated Financial
Statements]
1. Scope of Consolidation(1) Number of consolidated subsidiaries and names of major companies
Consolidated subsidiaries:
38 companies
Major consolidated subsidiaries: RB Controls Co., Ltd., Gastar Co., Ltd.,and Shanghai Rinnai Co., Ltd.
iZone Pty., Ltd. is newly included in the scope of consolidation due to theacquisition of its shares on October 4, 2023.
(2) Major nonconsolidated subsidiaries:
Nonconsolidated subsidiary: Rinnai UK Ltd.
Reason for exclusion: The above nonconsolidated subsidiary is excluded from thescope of consolidation because its activities have not been
deemed material, and total assets, net sales, net income
and earned surplus of the nonconsolidated company are
not significant compared to the consolidated amounts.
2. Application of Equity Method(1) Number and names of nonconsolidated subsidiaries and affiliatedcompanies for which the equity method is applied:
Number of nonconsolidated subsidiaries for which the equity method is applied: 0(2) Major nonconsolidated subsidiaries and affiliated companies for which
the equity method is not applied:
Name of major nonconsolidated subsidiary: Rinnai UK Ltd.
Name of major affiliated company:
Mikuni RK Corporation
Reason for exclusion: The above companies are excluded from application underthe equity method because their net income and earned
surplus are not significant compared with the consolidated
amounts and their activities are not deemed material.
3. Fiscal Year-End of Consolidated Subsidiaries
Subsidiaries for which the fiscal year-end date differs from the date of theconsolidated term (fiscal year-end date: December 31): Rinnai Australia Pty., Ltd.,
Rinnai America Corporation, Rinnai New Zealand Ltd., Rinnai Holdings (Pacific)
Pte Ltd., Rinnai Hong Kong Ltd., Rinnai Taiwan Corporation, Rinnai Korea
Corporation, Shanghai Rinnai Co., Ltd., Rinnai (Thailand) Co., Ltd., Rinnai Viet
Nam Co., Ltd., RB Korea Ltd., Rinnai Canada Holdings Ltd., Rinnai Brazil Heating
Technology Ltd., P.T. Rinnai Indonesia, Rinnai Italia s.r.l., Guangzhou Rinnai Gas
and Electric Appliance Co., Ltd, Rinnai Manufacturing Malaysia Sdn Bhd, Central
Heating New Zealand Ltd., Industrias Mass S.A. de C.V., iZone Pty., Ltd., andother eight companies.
In preparing its consolidated financial reports, the Corporation uses
financial statements available as of the settlement date. However, the Corporation
addresses adjustments necessary from a consolidated perspective should materialtransactions occur between January 1 and the consolidated fiscal year-end of
March 31.

7

4. Matters Concerning Accounting Policies(1) Valuation standards and calculation methods for significant assets(a) Securities and investments in securities
Other securities than stocks without market value are stated at market value.
(Unrealized gain or loss, net of income taxes is reported in net assets, while any
cost of sales is calculated based on the moving-average cost method.)
Stocks without market value are stated at cost using the moving-average cost
method.
(b) Inventories
Products
Valued at cost using the first-in, first-out method (balance sheet amount is writtendown to net selling value if profitability of assets has decreased).
Raw materials and stores
Valued at cost using the last purchase price method (balance sheet amount iswritten-down to net selling value if profitability of assets has decreased).
(2) Depreciation of fixed assets
Property, plant and equipment (excluding leased assets)
The Corporation and its domestic consolidated subsidiaries use the decliningbalance method (but the straight-line method for buildings, not including
attachments, acquired on or after April 1, 2007, and for facilities attached tobuildings and structures that were acquired on or after April 1, 2016). Overseas
subsidiaries use the straight-line method.
The estimated useful lives of principal items are as follows:
Buildings and structures: 7–50 years
Machinery, equipment and vehicles: 7–17 years
Tools, furniture, and fixtures: 2–15 years
Intangible fixed assets (excluding leased assets)
The Corporations use the straight-line method.
However, software for internal use is amortized over the useful period (five years)of software used by each of the Corporations.
Leased assets
Leased assets are depreciated over the useful life of assets, equal to the lease term,by the straight-line method with zero residual value.
(3) Accounting for major accruals
Allowances for doubtful accounts
The Corporations provide for possible loan losses and records on the books theamounts that are unlikely to be recovered. Primarily, this consists of an allowancefor general claims, calculated according to historical loss ratios, and an allowance
for specific claims, such as bankrupted or doubtful loans calculated based on thepotential to recover respective credits.
Accrued employees’ bonuses
Accrued employees’ bonuses are provided for at the estimated amounts, which are
to be paid for services rendered prior to the term-end.
Allowance for product guarantee
The Corporation and some of its consolidated subsidiaries, as contingency against
outlays of free-of-charge repair costs for their products, have estimated a productguarantee expense amount based on past performance.
8

Allowances for environmental measures
Allowances for environmental measures are provided for at the reasonableestimated amounts, which are to be paid for future environmental measures.
(4) Basis for recording important income and expenses
The main performance obligations of the principal operations of the Corporationand its consolidated subsidiaries related to revenues arising from contracts withcustomers and the usual time at which such performance obligations are fulfilled(the normal time at which revenues are recognized) are as follows.
Sales of products and merchandise
The Group primarily manufactures and sells heat-related products and recognizes
revenue from these sales at the time of delivery of the products. The customer
obtains control of the products at the time of delivery. For sales in Japan, revenue
from such products is recognized at the time of shipment since the period between
the time of shipment and the time of delivery is a normal period.
Under its product sales contract, the Corporation has a product warranty
obligation to repair or replace, free of charge, any product due to failure or defects
that occur after delivery. This warranty obligation is recognized as an allowance for
product guarantee because it provides assurance to the customer that the productwill perform as intended according to the specifications set forth in the contract
with the customer.
Revenue is recognized based on the transaction price set in the contract
with the customer. When a product is sold with a rebate, which is conditional on thecustomer purchasing a certain amount of the product within a certain period of time,
the transaction price is calculated based on the consideration promised to thecustomer in the contract, less the estimated amount of rebate.
Since considerations for transactions are received within one year of
fulfillment of the performance obligation, they do not include a significant financial
component.
(5) Method and Period of Goodwill Amortization
Amortization of goodwill is calculated by the straight-line method over a period offive or ten years.
(6) Other Significant Accounting Policies
Translation of major foreign-currency assets and liabilities
Claims and credits denominated in foreign currencies are translated into yen atspot market exchange rates prevailing at the term-end, and gains or losses are
credited or charged to income as incurred.
The assets and liabilities of overseas subsidiaries are translated into yen at the
spot rates prevailing at the term-end, while earnings and expenditures aretranslated into yen amounts at the average exchange rate for the term. Differences
arising from translation are included in non-controlling interests and in the foreignexchange translation adjustment of net assets on the consolidated balance sheets.
Major hedge-accounting methods
Hedge-accounting method
The Corporation applies deferred hedge accounting. In addition, receivables andpayables in foreign currencies are valued at historical rates when they are properly
hedged under the hedge accounting rules.
Exchange contracts on transactions undertaken among consolidated
companies are accounted for at fair value and gains or losses are recognized as
incurred. There were no applicable items at the end of the fiscal year under review.

9

Hedging method and hedging targets
Hedging methods and hedging targets for which hedge accounting was applied in
the year under review are as summarized below.
• Hedging method: Forward exchange contracts• Hedging targets: Anything with the potential for loss due to fluctuations
in currency prices
Hedging policy
The purpose is to avert risk prompted by fluctuating exchange rates, within thetargeted claims and obligations. No speculative trading is conducted.
Method for effectively assessing hedge transactions
The Corporations utilize forward exchange contracts that ensure effective hedging.
Other
The Corporations execute derivative transactions within limits determined by theircorporate rules.
Accounting standard for assets and liabilities related to retirement benefits
Assets and liabilities related to retirement benefits are booked according toprojected retirement benefit obligations and pension plan assets at fiscal year-end.
Note that, in calculating retirement benefit obligations, the Corporation applied thebenefit formula standard for attributing projected retirement benefits to a period up
to the end of the fiscal year in review.
Prior service costs are expensed using the straight-line method over a fixed
period (five years) within the average remaining service period of employees at thetime the costs are incurred.
Actuarial differences are proportional amounts calculated by the straight-line
method over a fixed period (10 years) within the average remaining service periodof employees at the time such gains or losses are realized in each fiscal year andexpensed from the fiscal year following the one in which the difference occurred.
Unrecognized actuarial differences are adjusted for tax effect and booked in
the net assets section as a component of other accumulated comprehensive
income with said amounts recorded as an accumulated retirement benefit
adjustment increase or decrease (Remeasurements of defined benefit plans).

[Notes to Revenue Recognition]

1. Breakdown of revenue from contracts with customers
The Group is engaged in the business of manufacturing and selling heat-related
products and parts and other peripheral businesses.
Below is a breakdown of revenues by product category.
Year ended March 31, 2024 (From April 1, 2023 to March 31, 2024)

OthersTotal

98,46758,011
6,431

3,213

10,400

—

—

—

1,700

21,746

2,286

354

1,973

—

4,651

1,513

433

11,212

27,156
192,3543,140
57,8752,285 1,626
30,338 71,886

4,608
31,874579
14,913Australia

China

15,679 66,467— 3,792

South
Korea
15,438
7,175(¥ millions)

UnitedStates51,166—Japan
Water heaters
KitchenappliancesAir
conditioning
appliances
Commercialuse equipment
Others
Total

Reportable Segments

Indonesia
151
12,66916,468 263,839
8,846 90,495

3,495 42,891
30,943 430,18610Notes: 1. The above figures indicate amounts after elimination of intersegment transactions.
2. “United States” include sales from subsidiaries in Canada and Mexico, which conduct
integrated business activities based on comprehensive sales strategies.
3. “Australia” include sales from a subsidiary in Malaysia, which complements the production
system, and conducts integrate business activities.
4. “Others” indicate geographical segments which are not included in reportable segments, andinclude sales from subsidiaries in Taiwan, Thailand, Vietnam, New Zealand, Brazil andother regions.

2. Basis for understanding revenue from contracts with customers
Information that provides a basis for understanding revenues from contracts withcustomers is described in “Notes to Significant Accounting Policies of Consolidated
Financial Statements, 4. Matters concerning accounting policy, (4) Standards forrecording important income and expenses.”
3. Information for understanding revenues for the fiscal year under review andthereafter (consolidated basis)(1) Balance of contract assets, contract liabilities, etc.
Below is a breakdown of receivables, contract assets, and contract liabilities
arising from contracts with customers.
In the Consolidated Balance Sheets, receivables and contract assets
arising from contracts with customers are included in “Notes and accounts
receivable and contract assets” and “Electronically recorded monetary claims,” andcontract liabilities are included in “Other” under current liabilities.
(¥ millions)Fiscal 2024
(at March 31, 2024)
Receivable arising from contracts with customers
89,215(at beginning of period)
Receivable arising from contracts with customers
104,532(at end of period)
Contract assets (at beginning of period)
84
Contract assets (at end of period)
41
Contract liabilities (at beginning of period)
1,833
Contract liabilities (at end of period)
3,153
Notes: 1. Contract liabilities relate to payments received in advance of performance under thecontract and are reversed upon recognition of revenue.
2. Of the revenue recognized in the year under review, the amount included in contract
liabilities at the beginning of the period was ¥1,865 million. The difference from the
beginning balance shown above is due to fluctuations in foreign exchange rates.

(2) Transaction prices allocated to remaining performance obligations
The Corporation and its consolidated subsidiaries apply the practical expedientmethod in noting transaction price allocated to remaining performance obligations
and do not include contracts with an initial expected term of one year or less in thenotes. At the end of the fiscal year under review, unfulfilled performanceobligations amounted to ¥133 million, all of which are expected to be recognized
as revenue within one year after the balance sheet date.

11

[Notes to Consolidated Balance Sheets]

1. Assets pledged as collateral and related liabilities(Millions of yen)
Pledged assets:
Cash and deposits
9
Land
2,359
Total
2,368
Liabilities related to pledged assets:
Accrued payables

1

2. Accumulated depreciation of property, plant, and equipment
Accumulated depreciation of property, plant, and equipment amounted to ¥150,569
million.
3. Trade notes receivable discounted
Trade notes receivable discounted amounted to ¥339 million.

[Notes to Consolidated Statements of Changes in Shareholders’Equity]1. Class and number of shares issued at the fiscal year-end, March 31, 2024
Common stock: 146,677,171 shares
2. Items regarding dividends(1) Dividends paid
Resolution
General shareholders’meeting on
June 29, 2023
Directors’ meeting on
November 7, 2023

Type of
stock

Total
dividends

Dividend
per share

Recorddate

Effective dateCommonstock¥4,147
million¥85

March 31,2023

June 30, 2023

Commonstock¥4,296
million¥8,443
million¥30

September
30, 2023

December 8,
2023

―

―

―

Total

―

(2) The effective date for dividends with a record date of March 31, 2024, shall be adate after the close of books for said consolidated period.
Its resolution regarding dividends of common stock is scheduled at the generalshareholders’ meeting at June 27, 2024, as follows. The Corporation plans touse earned surplus as the source of dividends.
Resolution

Type of
stock

Total
dividends

Dividend
per share

Recorddate

Effective
date

Generalshareholders’meeting on
June 27, 2024

Commonstock¥4,296
million¥30

March 31,2024

June 28,2024

Note: On April 1, 2023, the Corporation conducted a 3-for-1 stock split of shares ofcommon stock. The “Dividend per share”, of which record date is March 31, 2023,
is the amount before the stock split.

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[Notes to Financial Products]

1. Status of Financial Products
Fund management within the Rinnai Group is executed mainly by deposits,
augmented by safe, short-term investments in securities.
The Corporation reduces its client credit risk with regard to notes andaccounts receivable and electronically recorded monetary claims in accordancewith its rules for sales credits. Investment securities held by the Corporation are
mainly stocks or bonds, and the Corporation evaluates the fair value of marketablesecurities on a quarterly basis.
2. Fair Values of Financial Products
The stated values, fair values, and difference between stated and fair values of
relevant items in the consolidated balance sheets for the year ended March 31,
2024, are shown below.
(Millions of yen)

Marketable securities and investment
securities
Other securities

Balance sheet
amountFair value

46,624

46,624

Difference-

Notes: 1. Cash is omitted, and specific components (such as deposits, notes
receivable, accounts receivable and contract assets, electronicallyrecorded receivables, negotiable certificates of deposit included insecurities, notes and accounts payable, electronically recorded
payables, accounts payable, accrued consumption taxes, and accrued
income taxes) are also omitted because they are all settled over shortterm periods and their market values mostly in line with book values.
2. Stocks without market prices are not included in “Marketable securities
and investment securities.” The amount recorded in the Consolidated
Balance Sheets of such stocks is shown below.
March 31, 2024(¥ millions)
Unlisted stocks545

3. Breakdown of the fair value of financial products by level
The fair value of financial products is classified into the following three levels
based on the observability and materiality of the inputs used to calculate fair value.
Level 1 fair value: Calculated based on quoted market prices for assets or liabilities
formed in an active market and subject to fair value calculations, among inputs
used to calculate observable fair value
Level 2 fair value: Calculated using inputs for fair value calculations other thanLevel 1 inputs calculations, among inputs used to calculate observable fair value
Level 3 fair value: Calculated using inputs for unobservable fair value calculations
When multiple inputs that have a significant impact on fair value calculations areused, fair value is classified to the level with the lowest priority in fair value
calculation, among the levels to which each of those inputs belongs.

13

Financial products recorded in consolidated balance sheets at fair value
Fair value (¥ millions)Level 1
Level 2
Level 3Marketable securities andinvestment securities

Total

Other securities
Stocks

20,614――

20,614

Bonds―

26,009―26,009Note: Valuation methods used to calculate fair value and inputs related to fair value
calculation
Marketable securities and investment securities
Listed stocks, bonds and investment trusts are valued using quoted
market prices. Since listed stocks are traded in active markets, their fairvalue is classified in the Level 1 category.
On the other hand, bonds held by the Corporation are classified in theLevel 2 category because they are infrequently traded in the market andare not given quoted prices in active markets.

[Notes on rental properties]

The Corporation and some of its consolidated subsidiaries own commercial
facilities (including land) for rental purposes in Tokyo and other areas. Rental
income from those properties in the fiscal year under review was ¥116 million(rental income recorded under other income and major rental expenses recorded
under other expenses), and the impairment loss was ¥220 million (recorded under
extraordinary losses).
The consolidated balance sheet amounts, changes during the period, andmarket value of such rental properties are shown below.
(¥ millions)Fiscal 2024
Consolidated balance sheet amount
Beginning of period
519
Change during period+25,202
End of period
25,722Market value at end of period
26,153
Notes:
1. Consolidated balance sheet amounts refer to the acquisition cost lessaccumulated depreciation and accumulated impairment loss.
2. The main increase during the fiscal year under review was the acquisition of realestate (¥25,441 million).
3. The market value of real estate at the end of the period was mainly calculated
in-house based on a real estate price survey report by an outside real estateappraiser (adjusted using indexes, etc.).

[Note to Per Share Data]

1. Net assets per share: ¥2,707.86
2. Net income per share: ¥184.75

14

[Notes to Significant Subsequent Events]

Share buyback and Cancellation
At its meeting held on May 9, 2024, the Board of Directors of the Corporation resolved
the following matter related to a share buyback pursuant to Article 156 of theCompanies Act of Japan as applied to Article 165 (Paragraph 3) of the same Act, and acancellation of those shares pursuant to the Article 178 of the same Act.
1. Reason for share buyback and cancellation
To improve shareholder return and capital efficiency and thus further enhance
corporate value.
2. Details of share buyback(1) Type of shares to be
Common stock of the Corporationacquired(2) Total number of shares to be 4,000,000 shares (maximum)
acquired(2.79% of total shares issued andoutstanding (excluding treasury stock))(3) Total value of shares to be¥10 billion (maximum)
acquired(4) Acquisition period
May 10, 2024–January 31, 2025
(5) Acquisition method
Open-market purchase through discretionary
trading
3. Details of Cancellation(1) Type of shares to becancelled:(2) Total number of shares to becancelled:(3) Planned cancellation date:Common stock of the Corporation
All of the shares acquired as described in 2.
above
February 13, 2025

[Other Note]

Amounts less than one million yen are omitted from the financial statements.

15

III. Financial Statements
Nonconsolidated Statements of Changes in Shareholders’ Equity
Year ended March 31, 2024

(Millions of yen)

Shareholders’ equity
Capital surplus

Earned surplus
Other legal reserve

Commonstock

Balance at the
beginning of current
term

6,484

Capitalreserve

Other
capitalsurplusTotal
capitalsurplus

8,743

—

8,743

Net changes during
the current term
Dividends paid
Net income
Reversal of generalreserve
Acquisition of treasury
stock
Disposition of treasury
stock
Cancellation oftreasury stock
Transfer from earned
surplus to capitalsurplus
Net changes other thanshareholders’ equity
during the current
term
Total net changes
during the current
term
Balance at the end ofcurrent term

(11)

Generalreserve

Retainedearnings
carriedforwardTotal
earnedsurplus1,614 180,000

36,030217,645(8,443)
19,828(10,000) 10,000(8,443)
19,828—(10,676)(10,676)

Legal
reserve(11)(10,665) (10,665)
10,676
10,676————— (10,000)

10,707

707

6,484

8,743

—

8,743

1,614 170,000

46,738218,35316

(Millions of yen)
Shareholders’ equity
Treasurystock

Balance at the beginning of current term
Net changes during the current term
Dividends paid
Net income
Reversal of general
Acquisition of treasury stock
Disposition of treasury stock
Cancellation of treasury stock
Transfer from earned surplus to capitalsurplus
Net changes other than shareholders’equity during the current term
Total net changes during the current
term
Balance at the end of current term

(12,290)(10,001)690
10,665

Total
shareholders’equity220,583

Other adjustments
Unrealized
gain onTotal othermarketableadjustments
securities

5,961

Total net
assets5,961

226,544(8,443)
19,828—(10,001)
679——(8,443)
19,828—(10,001)
679
—
—
2,448

2,448

2,448

1,354

2,061

2,448

2,448

4,510

(10,936)

222,645

8,409

8,409

231,05517

Nonconsolidated Financial Statements[Notes to Significant Accounting Policies of Nonconsolidated Financial
Statements]
1. Valuation Standards and Calculation Methods for Significant Assets(1) Securities and investments in securities
Stocks of subsidiaries and affiliates are stated at cost using the moving-average
cost method.
Other securities than stocks without market value are stated at market value.
(Unrealized gain or loss, net of income taxes is reported in net assets, while any
cost of sales is calculated based on a moving-average cost method.)
Stocks without market value are stated at cost using the moving-average cost
method.
(2) Inventories
Products
Valued at cost using the first-in, first-out method (balance sheet amount iswritten-down to net selling value if profitability of assets has decreased).
Raw materials and stores
Valued at cost using the last purchase price method (balance sheet amount iswritten-down to net selling value if profitability of assets has decreased).
2. Depreciation of fixed assets
Property, plant and equipment (excluding leased assets)
The Corporation uses the declining-balance method for depreciating tangible fixed
assets (but the straight-line method for buildings, not including attachments,
acquired on or after April 1, 2007, and for facilities attached to buildings andstructures that were acquired on or after April 1, 2016).
The estimated useful lives of principal items are as follows:
Buildings: 7–50 years
Machinery and equipment: 10–17 years
Tools, furniture, and fixtures: 2–15 years
Intangible fixed assets (excluding leased assets)
The Corporation uses the straight-line method.
However, software for internal use is amortized over the useful period (five years)of software used by the Corporation.
Leased assets
Leased assets on finance lease transactions that do not transfer ownership are
depreciated over the useful life of assets, equal to the lease term, by the straightline method with zero residual value.
3. Translation of Major Foreign-Currency Assets and Liabilities
Claims and credits denominated in foreign currencies are translated into yen atspot market exchange rates prevailing at the term-end, and gains or losses are
credited or charged to income as incurred.
4. Accounting for Major Accruals
Allowances for doubtful accounts
The Corporation provides for possible loan losses and records on the books theamounts that are unlikely to be recovered. Primarily, this consists of an allowancefor general claims, calculated according to historical loss ratios, and an allowance
for specific claims, such as bankrupted or doubtful loans calculated based on thepotential to recover respective credits.
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Accrued employees’ bonuses
Accrued employees’ bonuses are provided for at the estimated amounts, which are
to be paid for services rendered prior to the term-end.
Allowance for product guarantees
The Corporation, as contingency against outlays of free-of-charge repair costs for
its products, has estimated a product guarantee expense amount based on past
performance.
Accrued employees’ retirement benefits
Pension costs for employees are accrued based on the projected benefit
obligations and pension assets at the term-end. Note that, in calculating retirement
benefit obligations, the Corporation applied the benefit formula standard for
attributing projected retirement benefits to a period up to the fiscal year in review.
Actuarial differences are proportional amounts calculated by the straightline method over a fixed period (10 years) within the average remaining service
period of employees at the time such gains or losses are realized in each fiscal
year and expensed from the fiscal year following the one in which the difference
occurred.
5. Basis for recording income and expenses
The main performance obligations of the principal operations of the Corporation
related to revenues arising from contracts with customers and the usual time atwhich such performance obligations are fulfilled (the normal time at which revenues
are recognized) are as follows.
Sales of products and merchandise
The Corporation mainly manufactures and sells heat-related products andrecognizes revenue from these sales at the time of delivery of the products, since
the customer obtains control over the products at the time of delivery. For sales inJapan, revenue from such products is recognized at the time of shipment, since
the period between the time of shipment and the time of delivery is a normal
period.
Under its product sales contract, the Corporation has a product warranty
obligation to repair or replace, free of charge, any product due to failure or defects
that occur after delivery. This warranty obligation is recognized as an allowance for
product guarantee because it provides assurance to the customer that the productwill perform as intended according to the specifications set forth in the contract
with the customer.
Revenue is recognized based on the transaction price set in the contract
with the customer. When a product is sold with a rebate, which is conditional on
the customer purchasing a certain amount of the product within a certain period oftime, the transaction price is calculated based on the consideration promised to thecustomer in the contract, less the estimated amount of rebate.
Since considerations for transactions are received within one year of
fulfillment of the performance obligation, they do not include a significant financial
component.
6. Other Significant Accounting Policies
Accounting for retirement benefits
The accounting method for unrecognized prior service costs and unrecognizedactuarial differences for retirement benefits is different from that applied in
preparing the consolidated financial statements.
19

[Note to Revenue Recognition]

The basis for understanding revenue from contracts with customers is described in“Notes to significant accounting policies, 5. Basis for recognition of revenue andexpenses.”[Notes to Balance Sheets]

1. Accumulated depreciation of property, plant, and equipment
Accumulated depreciation of property, plant, and equipment amounted to¥58,173 million.
2. Monetary receivables for affiliates
Short-term monetary receivables¥12,924 million
Long-term monetary receivables¥122 million
3. Monetary payables for affiliates
Short-term monetary payables¥6,854 million
4. Monetary payables for directors and Audit & Supervisory Board members¥311 million
5. Contingent liabilities
Liability for guarantees(Millions of yen)
Rinnai Technica Co., Ltd.
2,051
RB Controls Co., Ltd.
993
Rinnai Precision Co., Ltd.
269
Yanagisawa Manufacturing Co., Ltd.
99
Noto Tech Co., Ltd.
6
Total
3,420
Notes and bills receivable discounted
94[Note to Statements of Income]Transaction with affiliates
Operating transactions
Net sales
Cost of sales
Other transactions¥45,326 million¥67,019 million¥7,825 million[Note to Statements of Changes in Shareholders’ Equity]

Class and number of shares of treasury stock at the end of the fiscal year underreview
Common stock
3,473,623 shares

20

[Notes to Tax-Effect Accounting]Composition of assets and liabilities of deferred income taxes(Millions of yen)
Deferred income taxes (assets):
Valuation decrease on taxable securities
926
Accrued business taxes
241
Allowance for employees’ bonuses
846
Allowance for product guarantees
244
1,085
Accrued employees’ retirement benefits
Other
1,023
Subtotal
4,368
Valuation reserve(1,014)
Total deferred income taxes (assets)
3,353
Deferred income taxes (liabilities):
Prepaid pension costs
4,557
Unrealized gain on marketable securities
3,138
Total deferred income taxes (liabilities)
7,695
Deferred income taxes (liabilities) (net)
4,341[Notes to Related Party Transactions]
Subsidiaries
Name ofcompany
Rinnai
America
Corporation

RinnaiTechnica
Co., Ltd.

Percentage ofownershipwith voting
rightsDirect 100%

Relations
Sales ofproducts
Purchase of
products

Direct 100%

Concurrent
officerpositions
Guarantee of
liabilities

Amount(¥ millions)

Accounts

Year-endbalance(¥ millions)

Sales ofproducts1

16,388

Accounts
receivable

9,252

Purchase of
products2

18,054

Guarantee of
liabilities3

1,931

2,051

Accounts
payableTransactions

Transaction Conditions
Notes: 1. With regard to the sales of products, transaction conditions are decided
by negotiation after the Corporation has offered a price.
2. With regard to the purchase of products, transaction conditions are
decided by negotiation after the Corporation has received estimates.
3. The Corporation has guaranteed debts regarding electronically recordedmonetary claims, and figures indicate the guaranteed amount at the
fiscal year-end. The Corporation does not receive a guarantee charge.

21

[Notes to Per Share Data]

1. Net assets per share: ¥1,613.47
2. Net income per share:¥137.37[Notes to Significant Subsequent Events]

Share buyback and cancellation
These notes are omitted here because same notes are indicated in “Notes toConsolidated Financial Statements” and “Notes to Significant Subsequent Events.”[Other Note]

Amounts less than one million yen are omitted from the financial statements.

22